ANNUAL
REPORT
2017
BUILDING THE
FOUNDATIONS
FOR TOMORROW
MESSAGE FROM CEO & MANAGING DIRECTOR
TABLE OF
CONTENTS
CHAIRMAN’S MESSAGE
BOARD OF DIRECTORS
EXECUTIVE LEADERSHIP
MESSAGE FROM THE CEO
ORGANISATIONAL STRUCTURE
PRODUCTIVITY FOCUS
DIRECTORS’ REPORT
REMUNERATION REPORT – AUDITED
AUDITORS’ INDEPENDENCE DECLARATION
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
5
6
7
8
15
16
19
26
33
34
35
36
37
38
61
62
67
69
This Full Year Statutory Accounts (Report) is lodged with the Australian Securities and Investment Commission (ASIC) and ASX Limited and is a summary of Tempo
Australia Limited’s (Tempo) operations, activities and financial position as at 31 December 2017. Any references in this report to ‘the year’ or ‘the reporting period’ relate
to the financial year, which is 1 January 2017 to 31 December 2017 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 QV1, Level 12 250 St Georges Terrace , Perth WA 6000 WA 6000, telephone 1300 554 474.
TEMPO AUSTRALIA LTD ANNUAL REPORT 2017
3
Forrestfield - Airport Link (courtesy Salini Impregilo Worldwide)
MESSAGE FROM THE CHAIRMAN
MESSAGE FROM CEO & MANAGING DIRECTOR
CHAIRMAN’S
MESSAGE
Dear Shareholder,
On behalf of the Board of Directors, I am pleased to present the Annual Report for year ending 31 December
2017 for Tempo Australia Limited.
Tempo has grown from a small operation to a thriving business which has invested heavily in developing
innovative new systems to deliver better construction and maintenance outcomes for our clients in a relatively
short period of time.
2017 was an extremely important year for the business. To ensure we are well-placed to take advantage of
opportunities as they emerge in tough market conditions in similar industries, we have further enhanced our
focus on creating productivity tool kits and employee engagement systems.
With this diversification strategy, Tempo acquired KP Electric (Australia) Pty Ltd in July 2017. This acquisition
has given Tempo a truly national presence. With recurring maintenance works with a diversified tier one client
base, an exceptional team of people and a national operations centre that handles requests and schedules
responses across Australia, this move has further solidified a strong foundation which better positions us for
future opportunities.
Further, throughout 2017 we continued to develop our business around construction and maintenance
activities to clients in the resources, energy, and asset management (both industrial and commercial) sectors.
In order to extract the best value from the work completed in these areas, the business will soon develop a
more efficient operational structure which the Chief Executive Officer will be leading.
On that note I will also take this opportunity to welcome Mr Ian Lynass who has recently been appointed
Chief Executive Officer of Tempo. Ian brings a wealth of operational experience and in-depth knowledge
of our key clients. The Board of Directors has great confidence that under his leadership Tempo will be
strategically placed to grow the business and take advantage of many emerging opportunities we are seeing
in the resources sector.
Finally, I wish to thank our executives and board members who have worked hard to further grow Tempo in
tough market conditions. I also want to thank our shareholders for their support and ongoing trust in our
mission of delivering excellent results.
Yours sincerely,
Carmelo (Charlie) Bontempo
Non-Executive Chairman
Tempo Australia Limited
TEMPO AUSTRALIA LTD ANNUAL REPORT 2017
5
BHP Olympic Dam (courtesy BHP)
TEMPO AUSTRALIA LTD ANNUAL REPORT 2017
4
BOARD AND LEADERSHIP TEAM
EXECUTIVE LEADERSHIP TEAM
BOARD OF
DIRECTORS
EXECUTIVE
LEADERSHIP
MR IAN LYNASS
Chief Executive Officer
Ian joined Tempo in January 2018 and become CEO in March of that year.
Previously he served as the Chief Executive Officer and Managing Director of
BIS Industries Limited from April 2010 to May 2015. Mr Lynass has considerable
leadership experience having worked in the defence, steel, petrochemical, mining
and industrial services markets for over 25 years. He has also held several senior
executive roles with Brambles and was instrumental in the sustainable growth of
BIS Industries Limited within the resources and industrial services sector. In 2012,
Mr Lynass was a recipient of the CEO Magazine CEO of the Year Award – Logistics
MR MICHAEL WEST
Chief Financial Officer and Company Secretary
Michael is a senior executive with over 17 years’ experience working in financial,
strategy and commercial roles in both ASX-listed and private companies in the
construction, maintenance, engineering, energy, private equity and investment
banking sectors. Michael joined Tempo in June 2014 as a Director, a position he
held for 10 months. During this time, he was appointed as CFO and Company
Secretary. He holds a Bachelor of Commerce and a Bachelor of Mechanical
Engineering (Honours Class I) from Sydney University, is a graduate of the
Australian Institute of Company Directors, and is currently completing his CPA
with CPA Australia.
MR CARMELO (CHARLIE)
BONTEMPO
Chairman
Carmelo has over 50 years’ experience
across Australia in construction and
maintenance activities in the resources,
oil & gas, and industrial sectors. He
was involved in major infrastructure
projects including works with North
West shelf gas, Alcoa, Shell’s Geelong oil
refinery, Argyle Diamonds, BHP Billiton,
and Woodside. He was one of the four
founding partners of United Construction
Holdings (today known as UGL Ltd), which
floated in 1994. He was also the Managing
Director of Monadelphous Group Limited
during the company’s early restructuring
period in the early 1990’s and a key
advisor to numerous private and publicly
listed companies in Australia.
MR GUIDO
BELGIORNO-NETTIS AM
Non-Executive Director and
Deputy Chairman
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.
MR IAN WIDDICOMBE
Non-Executive Director
With over 30 years’ experience in the oil
and gas industry with both operators and
contractors in Australia, Europe and Asia,
Mr Widdicombe has strong credentials
in operational delivery and corporate
oversight. Previously with Woodside, he
held Vice President role in Projects and in
Subsea and Pipelines. During his tenor,
he established and led the Karratha
Life Extension Program and was project
manager for the Angel Project. Prior to
Woodside, Mr Widdicombe was Regional
Manager Asia Pacific for DOF Subsea
Group and Offshore Operations Manager
for Clough. He holds a Civil Engineering
Degree from the Swinburne University
in Melbourne and is a Graduate of the
Australian Institute of Directors.
6
TEMPO AUSTRALIA LTD ANNUAL REPORT 2017
TEMPO AUSTRALIA LTD ANNUAL REPORT 2017
7
MESSAGE
FROM
THE CEO
DEAR SHAREHOLDER,
As your incoming Chief Executive Officer I am very proud
to be able to lead a company with deep heritage in the
Australian industry and that possesses a strong capability
in productivity based service delivery. We are an Australian
company listed on the ASX with a proven track record, and
strong shareholder support and confidence.
While we have experienced difficult market conditions this
year, our reported net profit result is disappointing and not
acceptable regardless.
Over the course of the next year I intend to build on our
extensive capabilities and reinvigorate our culture
centred around our productivity based service delivery
model. We will continue to further enhance our rigour
in financial management and build our excellent project
execution skills, all while striving for Zero Harm in all
facets of our business.
We will operate our business strategically, with a “One
Team, One Purpose” approach that will instil a culture that
exhibits customer centricity, dynamic service delivery,
and fosters a results oriented and highly accountable
environment. Through this approach, our people can
build compelling careers, our shareholders will be
rewarded for their resolute support, and our customers
will receive a level of excellence in service delivery at the
lowest possible cost.
Our recent acquisitions of Cablelogic and KP Electric
have created a substantial national network of offices
and resources that creates a renewed strength across
our chosen markets and commodities. We will focus on
building further diversity into our revenue streams that
will provide resilience in our ability to deliver consistent
returns to our shareholders.
As the resources market in Australia continues its
transition from development driven capex spending to a
more sustainable maintenance driven opex, we will seek
to remain relevant in these markets, while also seeking to
improve our exposure to major infrastructure projects over
the next few years.
MESSAGE FROM CEO & MANAGING DIRECTOR
POWER
Over the past year, we have invested in positioning Tempo
within the power market, and we are now starting to see
value in these relationships, plus greater awareness and
credibility in the sector. We have successfully integrated
our mechanical and LV/HV construction and engineering
services to position ourselves on key renewable prospects.
A validation of this effort has been the letter of intent
recently received to perform EPC works on two solar
projects in Victoria, and the award by Energy Solutions Pty
Ltd for the piling support services on the 112MW Karadok
PV Solar farm.
In this sector we will continue developing relationships
with power providers in order to broaden our presence in
the industry, while always ensuring that we are pursuing
work where we can offer a point of differentiation – either
through our deep understanding of HV and LV solutions, or
where large mechanical assembly work requiring strong
understanding of working in remote locations, logistical
challenges, and safety can act as differentiators.
TEMPO AUSTRALIA LTD ANNUAL REPORT 2017
9
Our challenge will be the development of a diversified
pipeline that is qualified through a stringent commercial
decision making process. This will need to be achieved
by utilising our resources for maximum success, and
improving our cash flow sustainably.
Our new strategy will be centred around ‘One Team, One
Purpose’ to build a diverse and resilient portfolio of long
term service based contracts in electrical, mechanical,
facilities management and telecommunications.
Our greatest strength is our internal IP designed and built
upon the unwavering principle of delivering real value
through productivity in all aspects of our service delivery
model. We will deliver this through key sector pillars,
namely Resources, Power, Commercial & Industrial and
Asset Management.
RESOURCES
Tempo will continue delivering project and shutdown
services for the oil & gas and mining industries. In this
sector, we are currently involved in shutdown support
work at the Santos Moomba field in South Australia, which
will see us carry out three shutdowns over the course of
2018. This work, of a primarily mechanical and structural
nature, was awarded as part of the extension of Tempo’s
MSA to 2020. Over the past year, we have achieved other
key successes in this market, which include the award
of our first ever mining contract outside of Western
Australia at BHP’s Olympic Dam mine site in Roxby Downs,
plus work with Inpex, Chevron, PTTEP, and Woodside
relating to hook-up, sustaining capital, and operations
and maintenance activities (specifically, in regards the
latter projects, in the field of engineering, electrical, and
telecommunication support).
Our focus now needs to be on integrating our service
capabilities, and ensuring we can support our existing
clients with broader offerings. This will to be done in
conjunction with our key international JV partners, where
appropriate. We will refocus our resources to regain our
relevance in this market by establishing our long standing
relationships and positioning to capture market share
in maintenance and project services and construction
activities as the sector starts to spend in this areas again.
BHP Whaleback (courtesy BHP)
8
TEMPO AUSTRALIA LTD ANNUAL REPORT 2017
“
Tempo will continue delivering project construction services
for the commercial & industrial sector, and focus primarily on
expanding its footprint nationally.
MESSAGE FROM CEO & MANAGING DIRECTOR
COMMERCIAL AND INDUSTRIAL
Tempo will continue delivering project construction
services for the commercial & industrial sector, and focus
primarily on expanding its footprint nationally. In this
sector we are currently involved in carrying out electrical
and telecommunication construction and roll-out projects
across Western Australia, Queensland, and South Australia.
Over the past year, we have been awarded a number of
projects which will be executed throughout 2018, such as
Meath Aged Care, David Jones, Western Power, and the
Southern Terminal substation in Perth.
Together with more conventional electrical construction
projects, our involvement in the installation and testing
of telecommunications infrastructure has also expanded.
On the back of relationships established with leading
telecommunication service providers, and our strong
performance, we currently have multiple construction
fronts involving the procurement, installation, and testing
of various telecommunications infrastructure (distributed
antenna systems, telecommunication towers, etc.) across
states, working on iconic assets and locations such as Perth
Airport, Brisbane’s Suncorp Stadium, Cairns Convention
Centre, and Kangaroo Island, to mention just a few.
Our national expansion will be carried out across both
conventional electrical works, and telecommunications
infrastructure projects. Particularly, in this sector will also
need to leverage the networks and footprint of our Asset
Management sector clients. Two key targets are to build
a sustainable amount of work from DAS projects across
Australia, and to extend our work fronts on telco towers
work beyond South Australia.
ASSET MANAGEMENT
This sector provides long term asset management
services for large private and public infrastructure
owners, national and regional blue chip clients, and
telecommunications infrastructure. Through this platform
Tempo delivers comprehensive electrical, mechanical,
facilities management, data and telecom services to
many of Australia’s largest corporations and government
institutions.
We are proud to be able to call many of Australia’s largest
companies, government institutions and owners of
Australian infrastructure long-term customers. Our core
focus is now to seek to broaden our services with this
customer base and to expand into adjacent markets.
The cornerstone of our strategy in this market is to
leverage our national footprint, deploying our centralised
National Operations Centre (NOC) from where all of our
national service contracts are planned, monitored remotely
and coordinated through our virtual service network.
We are now establishing this critical market disrupting
differentiator to allow us to deepen our relationships with
existing customers and expand our offerings across the
all market segments. This NOC is a key development in
our value proposition and will provide market leading
transparency for our customers in our delivery of
productivity based asset services.
BHP Olympic Dam (courtesy BHP)
10
TEMPO AUSTRALIA LTD ANNUAL REPORT 2017
11
MESSAGE FROM CEO & MANAGING DIRECTOR
MESSAGE FROM CEO & MANAGING DIRECTOR
LTI
4+ YEARS FREE
TRIFR
(PER MILLION MAN HOURS)
NET ASSETS
PIPELINE
SAFETY – ZERO HARM
Our performance through this year has continued to improve
as our statistics show, with a Total Recordable Incident Rate
of 3.25 per million man hours. Our teams have delivered a
solid performance at all operations this year.
Our focus now will move toward a culture of Zero Harm in all
aspects of our organisation, which will be represented by the
following:
Zero Harm to our people
Zero Harm to our environment
Zero Harm to our assets
Our primary value - Zero Harm - will be a front line focused
empowerment principle of change in our company. We believe
that our people, when given the authority to take charge
of their safety and that of their colleagues and mates, will
identify and mitigate risks faster and more sustainably than
simply setting rules at the top and expecting them to be
followed. We will seek at all times heightened engagement
with our people through in field leadership.
FINANCIAL PERFORMANCE
For the year ended 31 December 2017, Tempo reported
revenues of $19,634,907, a 76% decline in revenues since
fiscal year 2016.
The Net Loss after Tax delivered in 2017 was $1,047,007.
This result is reflective of the project deferrals and general
slowdown seen in the resources and oil & gas sectors
experienced by the Group during the year. This slowdown
was offset by contributions in electrical maintenance
activities in the second half following the acquisition of KP
Electric (Australia) Pty Ltd, and works in industrial and
commercial project activities. Additionally, impacting the
earnings, the company incurred expenses related to the
Group’s heavy tendering effort, acquisition expenses, and an
impairment of a client debt.
Net Assets value of $29,914,903 was reported for the full
fiscal year, which represents a decline of approximately 2%
compared to the previous year.
At the year end, Tempo had a cash balance of $11,017,288
and no substantial bank debt. There was a reduction in cash
over the course of the year, predominately as a result of the
acquisition of KP Electric (Australia) Pty Ltd, the increase in
working capital as a result of changing nature of activities
and high year end activities, the acquisition of plant and
equipment in the year, and the losses incurred in the year
(which impacts cash at the NPBT level – with cash benefits of
tax losses to benefit future years).
PRODUCTIVITY
We have been relentless in our drive to use of technology to
help us monitor and improve site based productivity. Our
systems enable the business to operate in real time, in a
paperless environment and enable the continuous collection
of information to form key performance indicators around
people, safety and assets across all divisions. This is enabled
also by the deployment of proprietary software, the most
appropriate plant/equipment and hardware systems, all
creating an efficient and effective operating methodology.
These systems include:
PRODUCTIVITY INTELLIGENCE
Tempo is acutely aware of the need to improve Tool Time
across all sites in Australia. As a team, and across the
industry in general, we believe that organisations need to
become more efficient at work planning and execution.
Tempo’s proprietary system solves the problem of providing
reliable daily leading indicators to drive efficiencies across
work sites through the access of live or daily data. This
system allows us to daily monitor the workforce’s productive
and non-productive time through the use of wearable
Productivity Cards, and the combination of micro and macro
fencing to monitor time in pre-determined work site areas.
The system allows us to develop a set of tool time norms
for resources, power, commercial& industrial and asset
management jobs used to drive continuous improvement.
OUTLOOK
We enter 2018 with work in hand of $40m spread over the
next two years, and a qualified pipeline in excess of $800m.
Securing profitable organic growth is our primary focus in
2018, with our national network and centralised National
Operating Centre, we are positioning ourselves to become
one of a few Australian market leading companies capable
of delivering diverse, complex service based solutions to the
resources, construction, electrical and telecommunications
industries within Australia.
The breadth of our service offerings and value propositions
deliver a diverse yet stable level of resilience to our revenue
stream (as each market follows different cycles), thus
providing Tempo with a level of surety as it grows revenues
across the portfolio.
My intention is to deliver sustainable growth through rigorous
commercial decision making. We will drive business
development strategically and operate the business with high
levels of accountability. This will require strong leadership
and exacting cost control at all times, coupled with excellence
in project execution.
Yours sincerely,
Ian Lynass
Chief Executive Officer
Tempo Australia Limited
12
12
TEMPO AUSTRALIA LTD ANNUAL REPORT 2017
TEMPO AUSTRALIA LTD ANNUAL REPORT 2016
TEMPO AUSTRALIA LTD ANNUAL REPORT 2017
13
MESSAGE FROM CEO & MANAGING DIRECTOR
ORGANISATION STRUCTURE
ORGANISATION
STRUCTURE
Tempo will deliver its services across four sector pillars:
Resources, Power, Commercial & Industrial, and Asset Management.
Tempo National Office and Depot
Network
DARWIN
BROOME
KARRATHA
PERTH
NEWCASTLE
CANBERRA
FREMANTLE
ADELAIDE
TOWNSVILLE
SUNSHINE COAST
BRISBANE
GOLD COAST
SYDNEY
MELBOURNE
HOBART
14
TEMPO AUSTRALIA LTD ANNUAL REPORT 2017
TEMPO AUSTRALIA LTD ANNUAL REPORT 2017
15
PRODUCTIVITY FOCUS
MESSAGE FROM CEO & MANAGING DIRECTOR
Tempo Tools Enabling Productivity Results
PRODUCTIVITY
FOCUS
Our suite of proprietary productivity tools gives us the unique opportunity
to get actual norms and measures of productive time across different sites
to be used as benchmarks and as measures for risk/reward.
16
TEMPO AUSTRALIA LTD ANNUAL REPORT 2017
LIVE SURVEY
VOCALISED
Tempo Productivity Intelligence Tool
GEOFENCING
ENGINE
ON-BOARD MEMORY CHACHE
LONG BATTERY LIFE
DIRECTORS’
REPORT
The directors present this 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 2017
and the auditor’s report thereon.
PRINCIPAL ACTIVITIES
During the year ended 31 December 2017 the Group generated revenues from maintenance, construction, and personnel
management activities, across the resources, power, industrial and commercial, and asset management sectors.
RESULTS
For the year ended 31 December 2017, Tempo reported revenues of $19,634,907, a 76% decline in revenues since
fiscal year 2016.
The Net Loss After Tax delivered in 2017 was $1,047,007. This result is reflective of the project deferrals and general
slowdown seen in the resources and oil & gas sectors experienced by the Group during the year. This slowdown was offset
by contributions in electrical maintenance activities in the second half following the acquisition of KP Electric (Australia)
Pty Ltd, and works in industrial and commercial project activities. Additionally, impacting the earnings, the company
incurred expenses related to the Group’s heavy tendering effort, acquisition expenses, and an impairment of a client debt.
Net Assets value of $29,914,903 was reported for the full fiscal year, which represents a decline of approximately 2%
compared to the previous year.
At the year end, Tempo had a net cash balance of $11,017,288 and no substantial bank debt. There was a reduction in cash
over the course of the year, predominately as a result of the acquisition of KP Electric (Australia) Pty Ltd, the increase
in working capital as a result of changing nature of activities and high year end activities, the acquisition of plant and
equipment in the year, and the losses incurred in the year (which impacts cash at the NPBT level – with cash benefits of
tax losses to benefit future years).
REVIEW OF OPERATIONS
Tempo provides sector specialist multidisciplinary maintenance and construction services to protect and
enhance clients’ investments.
Highlights of Tempo’s activities and operations for the year ended 31 December 2017 are presented as follows:
OPERATIONS
During 2017, the Group completed work on the Chevron-operated Barrow Island/Gorgon LNG Project to support the
Structural, Mechanical and Piping, Electrical & Instrumentation (SMPE&I) activities. The Company maintained its
operations in the industrial and commercial sectors (following the acquisition of Cablelogic in mid-2016). Projects in
this sector included an increasing level of work for leading international telecommunications providers for installation of
Distributed Antenna Systems (DAS).
The Group acquired the nationally operated electrical service business, KP Electric (Australia) Pty Ltd, in July 2017,
increasing Tempo’s capabilities in electrical in the commercial sector. Since the acquisition, the business has secured a
number of new contract and master service agreements with leading companies.
The Group also made excellent progress developing relationships and expertise in power and renewables, and continued
to develop a number of joint projects with large multinational corporations to focus on projects in specific sectors.
The Group also invested in further developing its management systems and proprietary productivity tool kit, including its
Productivity Intelligence (patent pending) device, which has gained excellent feedback from clients across the country.
During 2017, the Group maintained its accreditations for its quality management system to ISO 9001, its environment
management system to ISO14001:2015 and its occupational health and safety certification to ISO AS/NZS4801:2001.
BOARD AND MANAGEMENT
On 13 June 2017, Tempo strengthened its Board through the appointment of Non-Executive Directors, Mr Ian Widdicombe
and Mr Guido Bressani.
On November 2017, the company announced the retirement of Mr Brian Thomas as a Director of Tempo.
SIGNIFICANT CHANGES IN THE STATE OF AFFAIRS
Apart from the matters noted in the review of operations, after balance date events and in the financial statements and
accompanying notes attached, there were no other significant changes in the state of affairs.
AFTER BALANCE DATE EVENTS
On 19 January 2018, Tempo announced that Mr Ian Lynass joined the group as VP Strategy and Corporate Development,
effective 22January 2018. Mr Lynass previously served as the Chief Executive Officer and Managing Director of BIS
Industries Limited from April 2010 to May 2015, and has considerable leadership experience having worked in the defence,
steel, petrochemical, mining and industrial services markets for over 25 years. On 19 March 2018, Tempo announced that
Mr Lynass would succeed Mr Max Bergomi as CEO, with Mr Bergomi also resigning his position on the Board the same day.
On 22 January 2018, Tempo announced over $6 million in new contracts, including shutdown support services to Santos on
the Moomba gas facility, installations of DAS at Suncorp Stadium in Brisbane and the Cairns Convention Centre, and other
electrical project works.
On 27 February 2018, Tempo announced $11 million of contract wins, including MSA’s for maintenance and DAS actives for
major telecommunications clients. Tempo also announced the award of letter of intents for solar construction projects for
a multi-billion dollar international power company. The final award to Tempo of this work is contingent on the securing
power purchase agreements from the Victorian Renewable Energy Auction Scheme.
LIKELY DEVELOPMENTS
Tempo will continue its existing strategy of delivering specialist multidisciplinary maintenance and construction services
to clients in the resources, power and 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 maintained its 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
In 2017, the Company:
• cancelled 1,000,000 options, being unlisted options under the Tempo Employee Share Option Plan which had an exercise
price of $0.10 per ordinary share expiring 7/8/2017.
SHARES TRANSFERRED ON EXERCISE OF OPTIONS
Following the exercise of 3,500,000 options (2,000,000 class C options with exercise price of 14 cents, 1,500,000 unlisted
options with exercise price of 15 cents), there were 3,500,000 shares issued by the Tempo employee share trust.
INDEMNIFICATION AND INSURANCE OF DIRECTORS,
OFFICERS AND AUDITORS
For the year ended 31 December 2017, 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 agreed to indemnify its auditors, Ernst & Young, to the fullest extent permitted by applicable law and
professional regulations as part of the terms of its audit engagement agreement against claims by third parties arising
from the audit (for an unspecified amount). No payment has been made to indemnify Ernst & Young during or since the
financial year.
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 Non-Executive Chairman 31 March 2016
Experience and expertise:
Carmelo has over 50 years’ experience across Australia in construction and maintenance activities in the resources, oil
& gas, and industrial sectors. He was involved in major infrastructure projects including works with North West shelf
gas, Alcoa, Shell’s Geelong oil refinery, Argyle Diamonds, BHP Billiton, and Woodside. He was one of the four founding
partners of United Construction Holdings (today known as UGL Ltd), which floated in 1994. He was also the Managing
Director of Monadelphous Group Limited during the company’s early restructuring period in the early 1990’s 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 AND DEPUTY CHAIRMAN
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
20
21
TEMPO AUSTRALIA LTD ANNUAL REPORT 2017TEMPO AUSTRALIA LTD ANNUAL REPORT 2017DIRECTORS’ REPORTDIRECTORS’ REPORT MR DAVID IVERACH – ALTERNATE DIRECTOR TO GUIDO BELGIORNO-NETTIS AM
BEng Chem (Hons), Post grad diploma in Fuel Technology, PHD in high temperature combustion and two years in the USA
on a Harkness Fellowship at the Sloan School of Management at MIT as a Visiting Fellow in Economics and Innovation
Appointment: Initial appointment as alternate Director 9 February 2017
Retired: 21 March 2018
Experience and expertise:
David is the Senior Advisor to the owners of Transfield Holdings and Investment Director at Angophora Capital, the private
company of one of the Transfield owners. He is also Chairman of BioPower Systems (a start-up wave energy company)
and a Shadow Director of Sydney Harbour Tunnel (toll road). Former directorships include Perisher Ski Resort, Australian
Biodiesel Group and Brisbane Airtrain.
He has over 40 years’ experience at the executive level in the private and public sectors. David has held a number of
executive positions in his 25 years with Transfield including at various times CEO Investments, CEO Energy, CEO Corporate
Services, Commercial Manager Construction and Executive Manager Project Development. He played leading roles in the
development of several landmark projects including the Nam Theun 2 hydro schem in Laos, the Sydney Airport railway
and privatised water treatment plants. He also played a key role in the formation of Transfield’s services business, now the
Spanish owned BroadSpectrum. Prior to joining Transfield he was Director General of Transport in the NSW Government
(under the Unsworth and Greiner Governments). Other Government positions included Head of Research Coordination at
the Public Service Board and Principal Engineer in the Environment Protection Authority.
Current directorships in other listed companies: None
Directorships in listed companies in the last three years: None
MR IAN WIDDICOMBE – NON-EXECUTIVE DIRECTOR
BEng Civil
Appointment: Initial appointment 13 June 2017
Experience and expertise:
With over 30 years’ experience in the oil and gas industry with both operators and contractors in Australia, Europe and
Asia, Mr Widdicombe has strong credentials in operational delivery and corporate oversight. Previously with Woodside,
he held Vice President role in Projects and in Subsea and Pipelines. During his tenor, he established and led the Karratha
Life Extension Program and was project manager for the Angel Project. Prior to Woodside, Mr Widdicombe was Regional
Manager Asia Pacific for DOF Subsea Group and Offshore Operations Manager for Clough. He holds a Civil Engineering
Degree from the Swinburne University in Melbourne.
Current directorships in other listed companies: None
Directorships in listed companies in the last three years: None
MR GUIDO BRESSANI – NON-EXECUTIVE DIRECTOR
Masters Degree Mech Eng, GAICD
Appointment: Initial appointment 13 June 2017
Experience and expertise:
Guido Bressani is a senior executive with more than twenty years’ leadership, consulting and engineering experience in
the resources and manufacturing industries worldwide. He is currently a leading consultant to clients in the resources
sector, based in Houston, USA. Previously, Mr Bressani served as CEO of Italian manufacturing company, STF Group,
during the start of their financial restructuring process in Italy, and as founding partner of a private equity backed start up
in Houston, USA. He also led the successful sale of the marine construction division of Clough to Sapura, and served as
CEO for three years thereafter. Prior to joining Clough, Mr Bressani worked with international EPCI contractor Saipem with
senior positions held in Europe, Middle East and South East Asia. He holds a Master’s Degree in Mechanical Engineering
from the Politecnico of Milan. He is also a graduate member of the Australian Institute of Company Directors.
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
Retired: 7 March 2017
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
MR BRIAN THOMAS – NON-EXECUTIVE DIRECTOR
BSc, MBA, Grad Cert App Fin Inv, SAFin, MAICD, MAusIMM
Appointment: Initial appointment 7 April 2015
Retired: 24 November 2017
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
Retired from board:19 March 2018
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
22
23
TEMPO AUSTRALIA LTD ANNUAL REPORT 2017TEMPO AUSTRALIA LTD ANNUAL REPORT 2017DIRECTORS’ REPORTDIRECTORS’ REPORT
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
David Iverach
Ian Widdicombe
Guido Bressani
Philip Loots
Brian Thomas
Max Bergomi
Total
Ordinary shares
42,021,632
38,000,000
-
-
858,361
-
-
Options and rights over
ordinary shares
2,000,000
-
-
-
5,335,000
2,750,000
86,214,993
4,750,000
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
Nil
COMPANY SECRETARY
MR MICHAEL WEST
B.Com (Finance and Economics), B.Eng. Mech (Hons 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 is a senior executive with over 17 years’ experience working in financial, strategy and commercial roles in both
ASX-listed and private companies in the construction, maintenance, engineering, energy, private equity and investment
banking sectors.
Michael joined Tempo in June 2014 as a Director, a position he held for 10 months. During this time, he was appointed as
CFO and Company Secretary. He holds a Bachelor of Commerce and a Bachelor of Mechanical Engineering (Honours Class
I) from Sydney University, is a graduate of the Australian Institute of Company Directors, and is currently completing his
CPA with CPA Australia.
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:
Directors’ Meetings
Audit & Compliance Committee
Eligible to attend
Attended
Eligible to attend
Attended
Carmelo Bontempo
Guido Belgiorno-
Nettis
David Iverach*
Ian Widdicombe*
Guido Bressani*
Philip Loots#
Brian Thomas#
Max Bergomi
12
12
4
7
7
2
10
12
11
8
4
6
7
2
9
12
4
4
-
2
2
1
3
-
3
4
-
2
2
1
3
-
* David Iverach joined as alternate director to Guido Belgiorno-Nettis on 9 February 2017. Ian Widdicombe and Guido
Bressani joined Board on 13 June 2017.
# Philip Loots and Brian retired from Board on 7 March 2017 and 24 November 2017 respectively
Nominations and Remuneration Committee
Risk, HSE and Commercial Committee
Eligible to attend
Attended
Eligible to attend
Attended
Carmelo Bontempo
Guido Belgiorno-
Nettis
David Iverach*
Ian Widdicombe*
Guido Bressani*
Philip Loots#
Brian Thomas#
Max Bergomi
2
2
-
1
1
-
1
-
2
2
-
1
1
-
1
-
4
4
-
2
2
1
3
-
3
4
-
2
2
1
3
-
* David Iverach joined as alternate director to Guido Belgiorno-Nettis on 9 February 2017. Ian Widdicombe and Guido
Bressani joined Board on 13 June 2017.
# Philip Loots and Brian retired from Board on 7 March 2017 and 24 November 2017 respectively
24
25
TEMPO AUSTRALIA LTD ANNUAL REPORT 2017TEMPO AUSTRALIA LTD ANNUAL REPORT 2017DIRECTORS’ REPORTDIRECTORS’ 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 structures remuneration so that it rewards those who perform and is strongly
aligned with the Company’s strategic direction and the creation of value to shareholders. 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.
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 and at the discretion of the
Board. 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. In the current year some of these
targets were achieved, however given the financial performance the Board exercised its discretion to not award STIP
payments for 2017.
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 (at the discretion of the Board) under the LTIP would likely 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. The TSR or future earnings per
share growth targets are chosen to embed shareholder interests directly into the remuneration structure. In the 2017 year
there was no award granted.
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 15 MAY 2017
ANNUAL GENERAL MEETING (‘AGM’)
At the last AGM held on 15 May 2017, 98.9% of the votes received supported the adoption of the remuneration report
for the year ended 31 December 2016. The Company did not receive any specific feedback at the AGM regarding its
remuneration practices.
DIRECTORS’ AND EXECUTIVES’ COMPENSATION
(a)Details of Directors and Key Management Personnel
The directors and key management personnel during the year ended 31 December 2017 were:
DIRECTORS
Carmelo Bontempo| Chairman
(Appointed Chairman 31 March 2016)
(Appointed as Executive Chairman 17 April 2014)
(Appointed as Chairman 7 February 2014)
Guido Belgiorno-Nettis | Non-Executive Director
(Joined as Non-Executive Director 22 December 2016)
David Iverach | Alternate Director to Guido Belgiorno-Nettis
(Joined as Alternate Director 9 February 2017)
Ian Widdicombe | Non-Executive Director
(Joined as Non-Executed Director 13 June 2017)
Guido Bressani | Non-Executive Director
(Joined as Non-Executed Director 13 June 2017)
Philip Loots | Non-Executive Director
(Retried 7 March 2017)
(Joined as Non-Executive Director 20 February 2014)
Brian Thomas | Non-Executive Director
(Retired 24 November 2017)
(Joined as Non-Executive Director 7 April 2015)
Max Bergomi | CEO and Managing Director
(Resigned from Board and ceased employment 19 March 2018)
(Joined Board as Managing Director on 31 March 2016)
(Began as CEO on 11 January 2016)
EXECUTIVE
Ian Lynass | Chief Executive Officer
(Appointed Chief Executive Officer 19 March 2018)
(Appointed 22 January 2018 as VP Strategy and Corporate Development)
Michael West | 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
(Ceased employment 22 February 2017)
(Appointed 5 November 2012)
26
27
TEMPO AUSTRALIA LTD ANNUAL REPORT 2017TEMPO AUSTRALIA LTD ANNUAL REPORT 2017REMUNERATION REPORT | AUDITEDREMUNERATION REPORT | AUDITED
KEY MANAGEMENT PERSONNEL COMPENSATION
Short-Term
Post-employment
Long-
term
Share-based
payment
Total
Total
Performance
Related
Salary
fees
Cash
bonus
Non-
monetary
Leave
entitle-
ment
accrued
Super-
annuation
Other
payments
Long
service
leave
provision
Options
granted
Rights
granted
2017
($)
($)
($)
($)
($)
($)
($)
($)
($)
($)
%
Carmelo
Bontempo
13,703
Max Bergomi
417,075
Daniel Hibbs*
73,755
Philip Loots*
2,500
Michael West
225,004
Brian Thomas* 31,965
Guido
Belgiorno-
Nettis
Guido
Bressani#
Ian
Widdicombe#
14,072
7,594
22,094
David Iverach#
-
Total
807,762
-
-
-
-
-
-
-
-
-
-
-
2016
($)
($)
($)
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
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
1,302
44,438
21,248
-
-
4,583
-
14,114
19,832
-
-
-
-
-
3,037
1,338
721
721
-
58,552
52,782
($)
($)
($)
-
-
-
-
-
-
-
1,303
19,462
30,818
-
19,462
2,603
73,648
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
106,212
-
121,217
2,017
31,467
164,698
680,943
-
-
-
6,563
-
-
78,338
9,063
1,178
-
-
-
-
-
-
-
-
-
-
-
170,712
430,840
-
-
-
-
-
35,002
15,410
8,315
22,815
-
3,195
144,242
335,410
1,401,943
88%
29%
0%
72%
40%
0%
0%
0%
0%
0%
($)
($)
($)
($)
%
-
-
-
-
-
-
-
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
80%
39%
4%
61%
40%
0%
* Daniel Hibbs ceased employment 22 February 2017, Philip Loots retired 8 March 2017, Brian Thomas retired 22
November 2017
# David Iverach joined the Board on 9 February 2017. Ian Widdicombe and Guido Bressani joined Board on 13 June 2017.
DIRECTORS’ AND EXECUTIVES’ EQUITY HOLDINGS
Shareholding
The number of ordinary shares in the parent entity held during the financial year by each director and key management
personnel of the consolidated entity, including their personally related parties, is set out below:
2017
Balance at the start
of the year
Granted as
remuneration
On exercise of options Net change other
Carmelo Bontempo
42,021,632
Guido Belgiorno-
Nettis
Brian Thomas
Daniel Hibbs*
Philip Loots*
David Iverach
Guido Bressani#
Ian Widdicombe
Michael West
Max Bergomi
Total
38,000,000
-
3,349,800
2,000,000
-
-
-
528,000
3,835,000
89,734,432
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
2,000,000
-
-
-
-
1,500,000
3,500,000
-
-
-
(3,349,800)
(4,000,000)
-
858,361
-
-
-
(6,491,439)
Balance at the end
of the year
42,021,632
38,000,000
-
-
-
-
858,361
-
528,000
5,335,000
86,742,993
Includes shares held directly, indirectly and beneficially by KMP.
* Daniel Hibbs ceased employment 22 February 2017, Philip Loots retired on 8 March 2017. The net change reflects that
they were not KMP at period end.
# Guido Bressani joined Board on 13 June 2017. The net change reflects the shareholding when he became a KMP
Option Holding
The number of options over ordinary shares in the parent entity held during the financial year by each director and key
management personnel of the consolidated entity, including their personally related parties is set out below:
Vested at 31 December 2017
2017
Balance at the
start of the year
Granted as
remuneration
Options
exercised
Net change
other*
Balance at the
end of the year
Exercisable Non exercisable
Carmelo
Bontempo
Guido
Belgiorno-
Nettis
Brian Thomas
Daniel Hibbs
2,000,000
-
-
-
Philip Loots
2,000,000
David Iverach
Guido Bressani
Ian
Widdicombe
Michael West
Max Bergomi
Total
-
-
-
-
1,500,000
5,500,000
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
(2,000,000)
-
-
-
-
(1,500,000)
(3,500,000)
-
-
-
-
-
-
-
-
-
-
-
2,000,000
-
-
-
-
-
-
-
-
-
2,000,000
-
-
-
-
-
-
-
-
-
-
-
2,000,000
-
-
-
-
-
-
-
-
-
2,000,000
28
29
TEMPO AUSTRALIA LTD ANNUAL REPORT 2017TEMPO AUSTRALIA LTD ANNUAL REPORT 2017REMUNERATION REPORT | AUDITEDREMUNERATION REPORT | AUDITED
Rights Holding
Performance Rights
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:
2017
Balance at the start of
the year
Granted as
remuneration
Rights vested
Rights lapsed
Balance at the end of
the year
Carmelo Bontempo
Guido Belgiorno-
Nettis
Brian Thomas
Daniel Hibbs
Philip Loots
David Iverach
Guido Bressani
Ian Widdicombe
Michael West
Max Bergomi
Total
-
-
-
-
-
-
-
-
2,000,000
4,000,000
6,000,000
No rights had vested at 31 December 2017.
Transactions with KMP
None in 2017.
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
(1,250,000)
(1,250,000)
-
-
-
-
-
-
-
-
2,000,000
2,750,000
4,750,000
Details concerning share-based compensation of directors and executives
Options
Carmelo
Bontempo
Financial
year
Options
awarded
during the
year No.
Grant
date
Fair value
per option
at award
date ($)
Vesting
date
Exercise
price
Expiry date
No. vested
during year
2016
2,000,000
9/06/16
$0.16
31/05/19
0.34
30/06/19
-
Philip Loots 2014
2,000,000
30/05/14
$0.02
22/02/17
0.14
21/03/17
2,000,000
Max
Bergomi
2016
1,500,000
11/02/16
$0.03
7/07/17
0.15
7/08/17
1,500,000
No.
lapsed
during
year
Value of
options
granted
in prior
year*
Value of
options
exercise
during the
year #
-
-
-
318,624
-
41,581
41,581
49,445
49,445
* Determined at the time of grant per AASB 2.
# Determined at the time of exercise at the intrinsic value.
Financial
year
Rights
awarded
during the
year No.
Grant
date
Fair
value per
rights at
award
date ($)
Vesting
date
Exercise
price
Expiry date
No.
vested
during
year
No. lapsed
during year
Value of
rights
granted in
prior year*
Value of
rights
exercise
during
the year
#
Michael
West
Max
Bergomi
Max
Bergomi
2016
2,000,000
10/06/16 $0.22
21/12/18
0.00
10/06/31
2016
2,500,000
10/06/16 $0.22
1/07/18
0.00
10/06/31
2016
1,500,000
10/06/16 $0.22
1/07/19
0.00
10/06/31
-
-
-
-
441,000
(1,250,000)
275,625
-
330,750
-
-
-
* Determined at the time of grant per AASB 2.
# Determined at the time of exercise at the intrinsic value.
Additional information
The earnings of the consolidated entity for the five years to 31 December 2017 are summarised below:
Revenue (excluding interest
income)
EBITDA
EBIT
Profit/(loss) after income tax
2017
($)
2016
($)
2015
($)
2014
($)
2013
($)
18,113,770
81,142,374
78,079,491
16,026,422
14,006,914
(1,793,556)
(2,396,666)
(1,047,007)
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)
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)
0.240
0.230
0.120
0.050
0.040
-
-
-
-
-
(0.435)
2.713
3.449
(0.772)
(0.294)
30
31
TEMPO AUSTRALIA LTD ANNUAL REPORT 2017TEMPO AUSTRALIA LTD ANNUAL REPORT 2017REMUNERATION REPORT | AUDITEDREMUNERATION REPORT | AUDITED
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:
Ian Lynass
Chief Executive Officer
Agreement commenced:
22 January 2018
Term of agreement:
Permanent full time
Details: Base salary of $250,000 per annum plus superannuation. Three (3) months termination notice by either party.
The employee will receive sign on offer of 500,000 performance rights subject to being an employee three years after
commencement date (good leaver provisions to apply). At the end of each year (first two years only), the Employee will
be eligible to be issued $350,000 of performance rights or equivalent under the companies ESIRP plan. The number of
shares is to be determined by the Volume Weighted Average Price (VWAP) of the shares in the month price to year end.
These rights will be subject to the following key terms and conditions: Vesting period of 3 years - based on continued
employment with company over that period (good leaver provisions to apply); EPS growth targets from base year to vesting
year (targets set by Board); and Total Shareholder Return growth vs ASX300 from base year to vesting year end
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).
Name:
Title:
Max Bergomi
Chief Executive Officer and Managing
Director (resigned 19 March 2018)
Agreement commenced:
11 January 2016
Term of agreement:
Permanent full time
Details: Base salary of $420,000 per annum plus superannuation. Employment may be terminated by the Company with
six months’ notice. Mr Bergomi may terminate by giving the Company three months’ notice. The Company can terminate
the ESA by giving the Company three months’ notice. The ESA contains a three month Australia wide restraint of trade
provision from the date employment ceases.
Signed in accordance with a resolution of the directors.
Ernst & Young
11 Mounts Bay Road
Perth WA 6000 Australia
GPO Box M939 Perth WA 6843
Tel: +61 8 9429 2222
Fax: +61 8 9429 2436
ey.com/au
Auditor’s Independence Declaration to the Directors of Tempo Australia
Limited
As lead auditor for the audit of Tempo Australia Limited for the financial year ended 31 December 2017, I
declare to the best of my knowledge and belief, there have been:
a) no contraventions of the auditor independence requirements of the Corporations Act 2001 in
relation to the audit; and
b) no contraventions of any applicable code of professional conduct in relation to the audit.
This declaration is in respect of Tempo Australia Limited and the entities it controlled during the financial
year.
Ernst & Young
Philip Teale
Partner
29 March 2018
Carmelo Bontempo
Director
Date: 29 March 2018
32
A member firm of Ernst & Young Global Limited
Liability limited by a scheme approved under Professional Standards Legislation
PT:CT:TEMPO:010
33
TEMPO AUSTRALIA LTD ANNUAL REPORT 2017TEMPO AUSTRALIA LTD ANNUAL REPORT 2017REMUNERATION REPORT | AUDITEDREMUNERATION REPORT | AUDITED
STATEMENT OF
COMPREHENSIVE INCOME
FOR THE YEAR ENDED 31 DECEMBER 2017
STATEMENT OF
FINANCIAL POSITION
AS AT 31 DECEMBER 2017
Revenue
Other income
Revenue and Other income
Employee and director benefits
Administration costs
Occupancy costs
Depreciation and amortisation
Other expenses
Listing and other statutory charges
Interest and finance charges
Other professional expenses
Total expenses
Consolidated entity
Note
2017 ($)
2016 ($)
3
3
4
8, 11
4
18,506,922
1,127,985
19,634,907
12,717,463
714,177
529,271
471,484
81,142,374
227,965
81,370,339
66,341,992
557,808
289,254
191,915
6,361,151
6,884,467
57,193
261,526
787,683
58,256
212,186
711,187
21,899,948
75,247,065
(Loss)/profit before income tax expense
(2,265,041)
6,123,274
Income tax benefit/(expense)
(Loss)/profit attributable to the members of the parent
Other comprehensive income
Total comprehensive (loss)/income
Net (loss)/profit attributable to members of the parent entity
Earnings per share
Basic earnings (loss) – cents per share
Diluted earnings (loss) – cents per share
5
17
17
1,218,034
(1,047,007)
-
(1,047,007)
(1,047,007)
(668,576)
5,454,698
-
5,454,698
5,454,698
(0.435)
(0.435)
2.713
2.713
34
CURRENT ASSETS
Cash and cash equivalents
Trade and other receivables
Inventories
Other assets
Total current assets
NON-CURRENT ASSETS
Plant and equipment
Goodwill
Intangibles
Deferred tax assets
Total non-current assets
Total assets
CURRENT LIABILITIES
Trade and other payables
Borrowing
Current tax liabilities
Provisions (including employee benefits)
Total current liabilities
NON-CURRENT LIABILITIES
Borrowings
Contingent consideration
Provisions (including employee benefits)
Total non-current liabilities
Total liabilities
Net assets
EQUITY
Contributed equity
Share based payment reserve
Accumulated losses
Total equity
Consolidated entity
Note
2017 ($)
2016 ($)
6
7
8
9
11
21
12
13
14
13
20
14
15
15
11,017,288
6,145,872
855,204
1,088,481
25,711,347
5,779,937
93,403
592,886
19,106,845
32,177,573
1,539,318
11,426,317
504,079
4,903,325
18,373,039
892,417
3,118,087
-
2,827,617
6,838,121
37,479,884
39,015,694
2,598,720
163,907
209,288
1,402,111
4,374,026
24,772
3,053,845
112,338
3,190,955
2,536,269
690,083
-
5,231,145
8,457,497
44,518
-
45,198
89,716
7,564,981
8,547,213
29,914,903
30,468,481
79,892,904
2,009,542
80,075,545
1,333,472
(51,987,543)
(50,940,536)
29,914,903
30,468,481
35
TEMPO AUSTRALIA LTD ANNUAL REPORT 2017TEMPO AUSTRALIA LTD ANNUAL REPORT 2017
STATEMENT OF
CHANGES IN EQUITY
FOR THE YEAR ENDED 31 DECEMBER 2017
STATEMENT OF
CASH FLOWS
FOR THE YEAR ENDED 31 DECEMBER 2017
Consolidated
Contributed equity
Accumulated losses
Share-based payments
reserve
Total equity
($)
($)
($)
($)
At 1 January 2016
70,153,493
(56,395,234)
182,682
13,940,941
Profit
Other comprehensive income
Total comprehensive income
Share issues
Share based payments
Options exercised
Treasury shares
Transaction costs
Acquisition of treasury shares
Tax effect relating to share based
payment
Tax effect relating to share issue cost
-
-
-
5,454,698
-
5,454,698
11,548,409
-
842,100
(19,125)
(214,204)
(2,247,980)
-
12,853
-
-
-
-
-
-
-
-
-
-
-
-
480,340
-
-
-
-
670,450
-
5,454,698
-
5,454,698
11,548,409
480,340
842,100
(19,125)
(214,204)
(2,247,981)
670,450
12,853
At 31 December 2016
80,075,546
(50,940,536)
1,333,472
30,468,482
At 1 January 2017
Loss
Other comprehensive income
Total comprehensive loss
Share based payments
Reversal of un-vested options
Options exercised
Treasury shares
Acquisition of treasury shares
Tax effect relating to share based
payment
-
80,075,545
(50,940,536)
1,333,472
-
-
-
-
-
505,000
(7,212)
(706,134)
-
(1,047,007)
-
(1,047,007)
-
-
-
-
-
-
179,813
-
-
-
520,104
(23,847)
-
-
-
-
179,813
30,468,481
(1,047,007)
-
(1,047,007)
520,104
(23,847)
505,000
(7,212)
(706,133)
25,704
Tax effect relating to share issue cost
25,704
At 31 December 2017
79,892,904
(51,987,543)
2,009,542
29,914,903
36
CASH FLOW FROM OPERATING ACTIVITIES
Receipts from customers
Payments to suppliers, employees
Income tax paid
Interest and finance charges paid
Interest received
Consolidated Entity
Note
2017 ($)
2016 ($)
20,460,764
(27,407,735)
(210,882)
(103,211)
393,152
96,339,903
(87,131,577)
(245,686)
170,677
-
Net cash (used in)/generated from operating activities
16
(6,867,912)
9,133,317
CASH FLOW FROM INVESTING ACTIVITIES
Payment for acquisition of business (net of cash acquired)
(6,660,067))
(605,159)
Proceeds from sale of property, plant and equipment
Intangibles
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
15
15
Equity issue transaction cost
Proceeds from borrowings
Loan repayment
Net cash provided by (used in) financing activities
Net (decrease)/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
91,455
(111,857)
(341,884)
(7,022,353)
(728,080)
505,000
-
190,290
(771,004)
(803,794)
(14,694,059)
25,711,347
11,017,288
-
-
(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
37
TEMPO AUSTRALIA LTD ANNUAL REPORT 2017TEMPO AUSTRALIA LTD ANNUAL REPORT 2017
NOTES TO THE
FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2017
NOTE 1: BASIS OF PREPARATION
Tempo Australia Limited is a company limited by shares incorporated and domiciled in Australia whose shares are
publically traded on the Australian Securities Exchange.
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.
Compliance with Australian Accounting Standards ensures that the financial statements and notes also comply with
International Financial Reporting Standards.
The financial statements were authorised for issue on 29 March 2018 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.
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 2017 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’ or ‘Group’.
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.
(B) FOREIGN CURRENCIES
The Group’s consolidated financial statements are presented in Australian dollars, which is also the parent company’s
functional currency. For each entity, the Group determines the functional currency and items included in the
financial statements of each entity are measured using that functional currency. The Group uses the direct method of
consolidation and on disposal of a foreign operation, the gain or loss that is reclassified to profit or loss reflects the
amount that arises from using this method.
(C) 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. A business combination is 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.
(D) 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 cost of services performed to date as a percentage of total anticipated
costs 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).
(E) 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 expected future payments to be made using the projected unit credit method. 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 high quality corporate bonds
with terms to maturity that match the expected timing of cash flows attributable to employee benefits.
SHARE BASED PAYMENTS
Equity-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.
The cost of equity-settled transactions are measured at fair value on grant date. Fair value of options 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.
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
38
39
TEMPO AUSTRALIA LTD ANNUAL REPORT 2017NOTES TO THE FINANCIAL STATEMENTSTEMPO AUSTRALIA LTD ANNUAL REPORT 2017 recognised in profit or loss for the period is the cumulative amount calculated at each reporting date less amounts
already recognised in previous periods.
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.
(F) INCOME TAX
TAX CONSOLIDATED GROUP
Tempo Australia Limited and its wholly-owned Australian controlled entities implemented the tax consolidation
legislation as of 1 July 2005.
The head entity, Tempo Australia Limited and the controlled entities in the tax consolidated group continue to account
for their own current and deferred tax amounts. The Group has applied the Group allocation approach in determining
the appropriate amount of current taxes and deferred taxes to allocate to members of the tax consolidated group.
In addition to its own current and deferred tax amounts, Tempo Australia Limited also recognises the current tax
liabilities (or assets) and the deferred tax assets arising from unused tax losses and unused tax credits assumed from
controlled entities in the tax consolidated group.
Assets or liabilities arising under tax funding agreements with the tax consolidated entities are recognised as amounts
receivable from or payable to other entities in the Group.
Any difference between the amounts assumed and amounts receivable or payable under the tax funding agreement are
recognised as a contribution to (or distribution from) wholly-owned tax consolidated entities
CURRENT 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 TAX
Deferred income tax is recognised using the full liability balance sheet approach. 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.
(G) 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.
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 the unexpired
period of the lease and the estimated useful lives of the improvements.
The useful live used are listed as below:
Asset Class
Furniture and fixtures
Computer equipment
Plant & Equipment
Motor Vehicles
Useful live
4 years
4 years
4 years
6 years
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.
(H) 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.
(I) INTANGIBLES
Customer relations 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.
Intangible assets acquired separately are measured on initial recognition at cost. The cost of intangible assets acquired
in a business combination is their fair value at the date of acquisition. Following initial recognition, intangible assets
are carried at cost less any accumulated amortisation and accumulated impairment losses. Internally generated
intangibles, excluding capitalised development costs, are not capitalised and the related expenditure is reflected in
profit or loss in the period in which the expenditure is incurred. The useful lives of intangible assets are assessed as
either finite or indefinite.
Intangible assets with finite lives are amortised over the useful economic life and assessed for impairment whenever
there is an indication that the intangible asset may be impaired. The amortisation period and the amortisation method
for an intangible asset with a finite useful life are reviewed at least at the end of each reporting period. Changes in
the expected useful life or the expected pattern of consumption of future economic benefits embodied in the asset
are considered to modify the amortisation period or method, as appropriate, and are treated as changes in accounting
estimates. The amortisation expense on intangible assets with finite lives is recognised in the statement of profit or loss
in the expense category that is consistent with the function of the intangible assets.
40
41
TEMPO AUSTRALIA LTD ANNUAL REPORT 2017TEMPO AUSTRALIA LTD ANNUAL REPORT 2017NOTES TO THE FINANCIAL STATEMENTSNOTES TO THE FINANCIAL STATEMENTS Intangible assets with indefinite useful lives are not amortised, but are tested for impairment annually, either
individually or at the cash-generating unit level. The assessment of indefinite life is reviewed annually to determine
whether the indefinite life continues to be supportable. If not, the change in useful life from indefinite to finite is made
on a prospective basis.
Gains or losses arising from derecognition of an intangible asset are measured as the difference between the net
disposal proceeds and the carrying amount of the asset and are recognised in the statement of profit or loss when the
asset is derecognised.
(J) 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.
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 indefinite useful lives.
(K) 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.
(L) 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.
Finncial 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.
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.
(M) GOODWILL
Goodwill is carried at cost less any accumulated impairment losses.
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 OF FINANCIAL ASSETS
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.
42
43
TEMPO AUSTRALIA LTD ANNUAL REPORT 2017TEMPO AUSTRALIA LTD ANNUAL REPORT 2017NOTES TO THE FINANCIAL STATEMENTSNOTES TO THE FINANCIAL STATEMENTS Trade and other receivables are initially recognised at fair value and subsequently measured at amortised cost using
the effective interest method, less an allowance account 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.
A liability 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 due to be settled within
12 months after the reporting period; or there is no unconditional right to defer the settlement of the liability for at least
12 months after the reporting period.. All other liabilities are classified as non-current.
Deferred tax assets and liabilities are always classified as non-current.
(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) TREASURY SHARES
Own equity instruments that are reacquired (treasury shares) are recognised at cost and deducted from equity. No gain
or loss is recognised in profit or loss on the purchase, sale, issue or cancellation of the Group’s own equity instruments.
(V) INVENTORIES
Inventories are valued at the lower of cost and net realisable value. Costs is determined on a weighted average basis
and includes direct costs and a portion of overheads. Inventories determined to be obsolete or damaged are written
down to net realisable value, being the estimated selling price less selling costs.
(W) 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
2017. 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. The Group intends to adopt these standards,
if applicable, when they become effective.
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. The Group’s assessment of the impact of this standard is still ongoing.
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 principles-based five-step model to be applied to all contracts with customers. Guidance is provided on topics
such as the point at which revenue is recognised, accounting for variable consideration, costs of fulfilling and obtaining
a contract and various related matters. New disclosures regarding revenue are also introduced. The Group plans
to adopt the new standard on 1 January 2018 using the retrospective approach with practical expedients. The new
standard will only be applied to contracts that remain in force at transition date. The Group’s assessment of the impact
of this standard is still ongoing.
AASB 16 Leases
This standard is applicable to annual reporting periods beginning on or after 1 January 2019. The standard provides a
new lessee accounting model which requires a lessee to recognise assets and liabilities for all leases with a term of
more than 12 months, unless the underlying asset is of low value. A lessee measures right-of-use assets similarly to
other non-financial assets and lease liabilities similarly to other financial liabilities. Assets and liabilities arising from
a lease are initially measured on a present value basis. The measurement includes non-cancellable lease payments
(including inflation-linked payments), and also includes payments to be made in optional periods if the lessee is
reasonably certain to exercise an option to extend the lease, or not to exercise an option to terminate the lease. AASB
16 contains disclosure requirements for lessees. The Group is continuing its work on the final impact of this standard.
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.
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.
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.
44
45
TEMPO AUSTRALIA LTD ANNUAL REPORT 2017TEMPO AUSTRALIA LTD ANNUAL REPORT 2017NOTES TO THE FINANCIAL STATEMENTSNOTES TO THE FINANCIAL STATEMENTS NOTE 3
REVENUE AND OTHER INCOME
Revenues from operations
Interest revenue
Other income
Total revenue and other income
NOTE 4
OTHER EXPENSES
Project material cost
Candidate screening cost
Movement in allowance account for doubtful debt
Equipment and subcontractor costs
Total other expenses
EMPLOYEE AND DIRECTOR BENEFITS EXPENSE
Salaries, wages and other expenses
Superannuation
Share based payment
Total employee and director benefits expense
NOTE 5
INCOME TAX
Current income tax
Current tax benefit/(expenses)
Adjustments in respect of previous years
Deferred income tax
(Originating)/ reversing temporary differences
Adjustments in respect of previous years
Income tax (benefit)/expense
Tax Reconciliation
A reconciliation between tax expense and the product of accounting profit before
income tax multiplied by the Group’s application income tax rate is as follows:
Accounting (loss)/profit before income tax
At the statutory income tax rate of 30% (2016: 30%)
Tax effect of amounts which are not deductible in calculating taxable income
Other
Adjustments in respect of previous years
Aggregate income tax expense
Consolidated entity
2017 ($)
2016 ($)
18,113,770
393,152
1,127,985
19,634,907
81,142,374
-
227,965
81,370,339
Consolidated entity
2017 ($)
2016 ($)
(3,899,920)
(86,193)
(296,097)
(2,078,941)
(6,361,151)
(2,797,003)
(274,731)
-
(3,812,733)
(6,884,467)
Consolidated entity
2017 ($)
2016 ($)
(11,248,623)
(63,005,547)
(948,736)
(520,104)
(2,856,105)
(480,340)
(12,717,463)
(66,341,992)
Consolidated entity
2017 ($)
2016 ($)
2,032,758
(4,498)
(1,165,082)
354,856
1,218,034
(2,265,041)
679,513
220,660
(36,995)
354,856
1,218,034
(370,636)
(158,245)
(1,248,498)
1,108,803
(668,576)
6,123,274
(1,836,983)
527,838
(468,234)
1,108,803
(668,576)
NOTE 6
RECEIVABLES
CURRENT
Trade receivables
Allowance for doubtful debts
Other receivables
Accrued income
Total current receivables
Consolidated entity
2017 ($)
2016 ($)
5,557,784
(296,097)
285,276
598,909
6,145,872
4,897,135
-
221,782
661,020
5,779,937
The Accrued income shown at each balance date has all been subsequently invoiced and converted to cash or retention.
The following table details the trade and other receivables exposed to credit risk with ageing analysis and impairment
provided for thereon. Amounts are considered as “past due” when the debt has not been settled; with the terms and
conditions agreed between the consolidated entity and the customer or counterparty to the transaction. Receivables
that are past due are assessed for impairment by ascertaining solvency of the debtors and are provided for where there
are specific circumstances indicating that the debt may not be fully paid to the consolidated entity.
The balances of receivables that remain within initial trade terms (as detailed in the table) are considered to be of high
credit quality.
Gross amount
Not due but
impaired
($)
($)
< 30
Past due but not impaired
31 - 60
($)
61 - 90
($)
>90
($)
2017
Trade and term receivables
5,261,687
296,097
829,219
545,268
81,760
83,710
Other receivables
Accrued income
Total
2016
285,276
598,909
-
-
-
-
-
-
-
-
-
-
6,145,872
296,097
829,219
545,268
81,760
83,710
Trade and term receivables
4,897,135
221,782
661,020
5,779,937
Other receivables
Accrued income
Total
NOTE 7
OTHER CURRENT ASSETS
Prepayments
Insurances
Other
Total other current assets
-
-
-
-
2,553,877
5,002
4,250
-
-
-
34,896
33,742
-
2,316
-
-
2,558,127
5,002
68,638
2,316
Consolidated entity
2017 ($)
2016 ($)
441,771
646,710
1,088,481
519,502
73,384
592,886
46
47
TEMPO AUSTRALIA LTD ANNUAL REPORT 2017TEMPO AUSTRALIA LTD ANNUAL REPORT 2017NOTES TO THE FINANCIAL STATEMENTSNOTES TO THE FINANCIAL STATEMENTS
NOTE 8
PLANT AND EQUIPMENT
Furniture and fixtures – Gross carrying value at cost
Furniture and fixtures - accumulated depreciation
Net book value furniture and fixture
Plant and equipment - Gross carrying value at cost
Plant and equipment - accumulated depreciation
Net book value plant and equipment
Computer equipment – Gross carrying value atat cost
Computer equipment– accumulated depreciation
Net book value computer equipment
Motor vehicles – Gross carrying value at cost
Motor vehicles – accumulated depreciation
Net book value motor vehicle
Total Gross carrying value at cost
Total accumulated depreciation
Total net book value
Reconciliations
Consolidated entity
2017 ($)
2016 ($)
201,745
(88,019)
113,726
255,718
(99,952)
155,766
833,949
(346,076)
483,873
919,006
(137,053)
781,953
2,210,418
(671,100)
1,539,318
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
Reconciliations of the carrying amounts of plant and equipment at the beginning and
end of the current financial year
Furniture and
fixtures
($)
Plant and
equipment
($)
IT
($)
Motor vehicles
($)
Total
($)
Balance at 1 January 2016
Additions
Additions through business combinations
Disposals
Depreciation expense
49,313
13,526
4,652
-
4,246
-
54,468
-
346,824
267,544
29,396
-
(12,001)
(10,059)
(143,648)
Balance at 31 December 2016
Additions
Additions through business combinations [note 20]
Disposals
Depreciation expense
55,490
68,458
49,446
-
48,655
20,950
133,957
-
500,116
98,139
43,962
(59,668)
(47,796)
(154,344)
(128,402)
(390,210)
-
(102,275)
(102,275)
Balance at 31 December 2017
113,726
155,766
487,873
781,953
1,539,318
-
-
347,864
(33,500)
(26,208)
288,156
154,337
570,137
400,383
281,070
436,380
(33,500)
(191,916)
892,417
341,884
797,502
NOTE 9
GOODWILL
Goodwill – at cost
Accumulated impairment losses
Net carrying amount
Reconciliations
Consolidated entity
2017 ($)
2016 ($)
11,426,317
3,118,087
-
-
11,426,317
3,118,087
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 [note 20]
Carrying amount at end of year
3,118,087
8,308,230
11,426,317
3,118,087
-
3,118,087
IMPAIRMENT DISCLOSURES
Goodwill of $3,118,087 is allocated to Tempo Construction & Maintenance Pty Ltd, a CGU that seeks make its profit from
construction, maintenance and labour hire activities.
The recoverable amount of the cash-generating unit is determined based on a value-in-use cal-culation. Value-in-use
is calculated based on the present value of cash flow projections over a 5-years period using an estimated growth rate
plus terminal value. 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 and the discount rate adjusted for risk in the
respective CGU.
The following assumptions were used in the value-in-use calculations:
Year 2 and beyond Growth Rate (revenue and expense)
Discount Rate (post-tax)
Perpetuity factor for calculating terminal value
(1/(discount rate – growth rate)
5%
12.5%
10
The business has developed its cash flow model, using a combination of work in hand and a weighted pipeline approach
for currently know projects. Beyond the first year where visibility of projects is low, the model uses a fixed growth
rate. The growth rate was assessed by manage-ment as appropriate, based on the increased business development
activities of the group, the expanded markets it now operates in, along with signs of an improving resources market.
The growth rate used to determine the perpetuity factor for calculating terminal value is 2.5% which approximates
historic Australia inflation rates. 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.
Provisional goodwill of $8,308,230 is allocated to KP Electric Australia Pty Ltd, a CGU that seeks make its profit from
electrical maintenance activities across Australia. Goodwill has an infinite useful life.
The recoverable amount of the cash-generating unit is determined based on a value-in-use cal-culation. Value-in-use
is calculated based on the present value of cash flow projections over a 5-years period using an estimated growth rate
plus terminal value. 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 and the discount rate adjusted for risk in the
respective CGU.
The following assumptions were used in the value-in-use calculations:
Year 2 and beyond Growth Rate (revenue and expense)
Discount Rate (post-tax)
Perpetuity factor for calculating terminal value
(1/(discount rate – growth rate)
5%
12.5%
10
The business has developed its cash flow model, using a combination of work in hand and a weighted pipeline approach
for currently know projects. Beyond the first year where visibility of projects is low, the model uses a fixed growth rate.
The growth rate was assessed by manage-ment as appropriate, based on the increased business development activities
of the group, the expanded markets it now operates in, along with signs of an improving resources market. The
growth rate used to determine the perpetuity factor for calculating terminal value is 2.5% which approximates historic
Australia inflation rates.
The Directors believe that any reasonable change in the key assumptions on which the recover-able amount of the CGU
is based would not cause the CGU’s carrying amount to exceed its re-coverable amount.
48
49
TEMPO AUSTRALIA LTD ANNUAL REPORT 2017TEMPO AUSTRALIA LTD ANNUAL REPORT 2017NOTES TO THE FINANCIAL STATEMENTSNOTES 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 Directors believes it is appropriate to aggregate all construction and maintenance activities performed by the group
into one segment and oper-ates in one geographical area – Australia.
Major customers
The consolidated entity has a number of customers to which it provides services. The consoli-dated entity supplies a
single external customer who accounts for 9% of external revenue (2016: 82%). The next most significant customer
accounts for 8% (2016: 12%).
NOTE 11
INTANGIBLE ASSETS
Customer relationships – at cost [note 20]
Customer relationships – accumulated amortisation
Net book value customer contracts
Productivity tool – At cost
Productivity tool – Accumulated Amortisation
Net book value Productivity Tool
Reconciliations
Consolidated entity
2017 ($)
2016 ($)
473,496
(81,274)
392,222
111,857
-
111,857
Reconciliations of the carrying amounts of Intangibles at the beginning and end of the current financial year
Carrying amount at beginning of year
Additions through business combinations (customer relationships) [note 20]
Work in progress
Amortisation expense
Impairment
Carrying amount at end of year
-
473,496
111,857
(81,274)
-
504,079
-
-
-
-
-
-
-
-
-
-
-
-
Intangible assets have finite useful lives. The current amortisation charges for intangible assets are included under
depreciation and amortisation expense per the statement of comprehensive income.
The intangible asset - customer relationships, is expected to have a finite useful life of 3 years. It has been amortised on
straight line basis over 3 years.
Productivity tool forms part of the TCM cash generating unit and has been tested for impairment refer note 9 above.
Customers relationships forms part of the KP Electric cash generating unit and has been tested for impairment refer
note 9 above.
NOTE 12
PAYABLES
Trade payables
Other payables
Total payables
NOTE 13
BORROWINGS
Current
Consolidated entity
2017 ($)
2016 ($)
1,521,425
1,077,295
2,598,720
636,636
1,899,633
2,536,269
Consolidated entity
2017 ($)
2016 ($)
Other finance facilities (equipment, insurance, software)
163,907
690,083
Non-current
Other finance facilities (equipment, insurance, software)
Total borrowings
NOTE 13 CONTINUED
Financing arrangements
Access was available at the reporting date to the following line of credits:
Total facility limit
Total facility limit
24,772
188,679
44,518
734,601
Consolidated entity
2017 ($)
2016 ($)
10,188,679
10,734,601
10,188,679
10,734,601
Used at the reporting date
188,679
734,601
Unused at the reporting date*
10,000,000
10,000,000
Total facility limit
10,188,679
10,734,601
*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 2017 was 6.27%.
Other various financing agreements in place amount to $188,679, which relate to financing for equipment, software and
insurance funding. These agreements vary in interest rates from 2.69% to 8.3% and are generally secured against the
item purchased.
Bank Guarantees and Surety Bonds
The Company has access to Bank Guarantee facilities of up to $2,227,099 and surety bond facilities of $14.5 million.
As at 31 December 2017 the Company had bank guarantees issued of $227,099 which were secured by term deposits
and had $20,000 of surety bonds drawn which is secured by a second ranking general security interest given by the
Company.
50
51
TEMPO AUSTRALIA LTD ANNUAL REPORT 2017TEMPO AUSTRALIA LTD ANNUAL REPORT 2017NOTES TO THE FINANCIAL STATEMENTSNOTES TO THE FINANCIAL STATEMENTS
NOTE 14
PROVISIONS (INCLUDING EMPLOYEE BENEFITS)
Current provisions
Employee benefits
Other provisions
Total current provisions
Non - current provisions
Employee benefits
Total non - current provisions
Total provisions
Employee benefits
Consolidated entity
2017 ($)
2016 ($)
1,358,364
43,747
1,402,111
112,338
112,338
2,554,508
2,676,637
5,231,145
45,198
45,198
1,514,449
5,276,343
Provision for employee benefits represents amounts accrued for annual leave, sick leave and long service leave.
EMPLOYEE BENEFITS PROVISIONS
Carrying amount at the beginning of period
Additions through business combination
Additional provision made
Amounts used
Total employee benefits provisions
Other provisions
OTHER PROVISIONS
Carrying amount at the beginning of period
Additional provision made
Amounts used
Total other provisions
NOTE 15
CONTRIBUTED EQUITY
Ordinary shares fully paid
Treasury shares
Consolidated entity
2017 ($)
2016 ($)
2,599,706
820,625
1,252,548
(3,202,177)
1,470,702
5,414,406
-
20,860,105
(23,674,805)
2,599,706
Consolidated entity
2017 ($)
2016 ($)
2,676,637
1,069,061
(3,701,951)
43,747
2,168,867
3,763,019
(3,255,249)
2,676,637
Note
15(a)
15(c)
Consolidated entity
2017 ($)
2016 ($)
79,919,240
(26,336)
79,892,904
80,094,670
(19,125)
80,075,545
ORDINARY SHARES
Fully paid ordinary shares carry one vote per share and carry the right to dividends.
CAPITAL RISK MANAGEMENT
The consolidated entity’s objectives when managing capital are to safeguard its ability to continue as a going
concern, so it can provide returns for shareholders and benefits for other stakeholders and to maintain an
optimum capital structure to reduce the cost of capital. In order to maintain or adjust the capital structure,
the consolidated entity may adjust the dividends paid to shareholders or issue new shares. The consolidated
entity’s capital risk management policy remains unchanged from the Annual Report for the year ended 31
December 2016.
NOTE 15 CONTINUED
15(a) Movements in shares on issue
# of shares
($)
# of shares
Parent entity 2017
Parent entity 2016
Balance as at the beginning of the year
240,804,581
80,094,670
Issued during the year
Option exercised - proceeds received
Deduct: share issue costs
Deduct: cost of treasury shares allo-
cated under the Employee Share In-
centive Rights Plan during the year
Tax effect relating to share issue cost
-
-
-
-
-
-
505,000
-
(706,134)
25,704
195,440,059
45,364,522
-
-
-
-
($)
70,153,493
11,548,409
842,100
(214,204)
(2,247,980)
12,852
Balance as at the end of the year
240,804,581
79,919,240
240,804,581
80,094,670
Share based payment reserve
The Company offered employees participation in the employee share incentive rights plan as a long-
term incentive and as part of the remuneration arrangements. The amount expensed in the statement of
comprehensive income is determined by reference to the fair value of the options and performance rights at
the grant date.
15(b) Movements in share based payment reserve
Outstanding at beginning of year
Issue during the year
Share-based payment
Exercised during the year
Lapsed or expired during the year
Tax effect relating to share based payment
Outstanding at year end
Treasury Shares
2017
($)
2016
($)
1,333,472
182,682
-
-
520,104
490,007
-
(23,847)
179,813
-
(9,667)
670,450
2,009,542
1,333,472
During the year, the company has established an Employee Share Trust for the purpose of acquiring, holding and
transferring shares in connection with the Employee Share Option Plan established by the company for the benefits of
participants in those plans. Under the Trust, 8,421,000 shares were issued by the Trust to the participants.
2017
2016
15(c) Movements in treasury shares
Number
($)
Number
($)
Opening balance at beginning of the year
(85,000)
(19,125)
Acquisition of shares issued by the company
-
-
Acquisition of on-market shares
(3,524,733)
(708,530)
-
(6,408,307)
(2,097,693)
-
(1,184,015)
(409,121)
Issue of shares under Employee Share
Incentive Rights Plan
Other
Balance at year end
3,500,000
706,133
8,421,000
1,573,586
-
(109,733)
(4,814)
(26,336)
-
(85,000)
425
(19,125)
52
53
TEMPO AUSTRALIA LTD ANNUAL REPORT 2017TEMPO AUSTRALIA LTD ANNUAL REPORT 2017NOTES TO THE FINANCIAL STATEMENTSNOTES TO THE FINANCIAL STATEMENTS
NOTE 16
NOTE 18 CONTINUED
CASH FLOW INFORMATION
Reconciliation of the net profit (loss) after tax to the net cash flows from
operations
Net profit/(loss)
Non-operating cash items
Depreciation and amortisation
Interest expense on deferred consideration
Profit (loss) on sale of assets
ESOP, option and performance rights expenses
Changes in assets and liabilities
Receivables
Inventories
Other assets
Payables
Provisions
Deferred tax assets
Net operating cash flow
NOTE 17
EARNING PER SHARE
The following reflects the income and share data used in the calculations of basic and
diluted earnings per share
Net (loss)/profit after tax
Earnings used in calculating basic and diluted earnings per share
Weighted average number of ordinary shares used in calculating basic earnings per
share
Effect of dilutive securities
Share options and performance rights
Adjusted weighted average number of ordinary shares used in calculating diluted
earnings per share
Consolidated entity
2017 ($)
2016 ($)
(1,047,007)
5,454,698
471,484
158,315
10,822
496,257
2,122,198
(65,794)
(459,157)
(2,016,746)
(4,584,767)
(1,953,517)
191,915
-
-
480,765
15,140,240
3,704
(282,033)
(9,765,072)
(2,759,476)
668,576
(6,867,912)
9,133,317
Consolidated entity
2017 ($)
2016 ($)
(1,047,007)
(1,047,007)
5,454,698
5,454,698
240,804,581
201,074,294
-
-
240,804,581
201,074,294
Performance rights and options of 6,945,000 are considered anti-dilutive and have not been allowed for in the diluted
earnings per share calculation. There have been no transactions involving ordinary shares between the reporting date
and date of completion of these financial statements.
NOTE 18
LEASE EXPENDITURE COMMITMENTS
Operating leases (non-cancellable)
(a) Operating leases related to office
Minimum lease payments
- Not later than one year
- Later than one year and not later than five years
- Later than five years
Aggregate lease expenditure contracted for at reporting date
The entity had no capital commitments as at 31 December 2017 (2016: Nil)
Consolidated entity
2017 ($)
2016 ($)
361,831
350,253
322,020
39,811
-
361,831
270,733
79,520
-
350,253
FINANCE LEASE COMMITMENTS
Committed at the reporting date and recognised as liabilities payable:
- Not later than one year
- Later than one year and not later than five years
Total commitment
Less: future finance charges
Net commitment recognised as liabilities
Representing
- Other financing facilities - current (note 13)
- Other financing facilities - non-current (note 13)
Aggregate lease expenditure contracted for at reporting date
NOTE 19
Consolidated entity
2017 ($)
2016 ($)
163,907
24,772
-
188,679
163,907
24,772
188,679
690,083
44,518
-
734,601
690,083
44,518
734,601
RELATED PARTY AND KEY MANAGEMENT PERSONNEL DISCLOSURES
2017
2016
(a) The consolidated financial statements include the financial statements of Tempo Australia Limited and its controlled entities
listed below
Consolidated entity
Subsidiaries of Tempo Australia Limited
Tempo Resources Solutions Pty Ltd
Tempo Engineering Pty Ltd
Country of
Incorporation
Australia
Australia
Cablelogic Pty Ltd (formerly Tempo Engineering Services Pty Ltd)
Australia
Tempo Construction & Maintenance Pty Ltd
Australia
100%
100%
100%
100%
Tempo Personnel Management Pty Ltd (Formerly Industry
Partners Pty Ltd)
Tempo Global Pty Ltd
KP Electric (Australia) Pty Ltd
Australia
100%
Australia
Australia
100%
100%
100%
100%
100%
100%
100%
100%
-
(b) Aggregate Key Management personnel compensation
Short-term employment benefits
Post-employment benefits
Share based benefit
Others
Total benefits
Transactions with related parties
2017 ($)
2016 ($)
807,762
55,977
479,652
58,552
1,401,943
1,057,729
73,648
457,662
-
1,589,039
There were no other payments than payments for director’s fees with related parties during 2017.
54
55
TEMPO AUSTRALIA LTD ANNUAL REPORT 2017TEMPO AUSTRALIA LTD ANNUAL REPORT 2017NOTES TO THE FINANCIAL STATEMENTSNOTES TO THE FINANCIAL STATEMENTS
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 $605,159. This total
consideration represented the fair value of the net assets and hence no Goodwill or Intangibles were created as a result
of this transaction.
Details of the fair value are as follows.
Business combination
ASSETS
Trade and other receivables
Inventories
Property, plant and equipment
Total Assets
LIABILITIES
Borrowing
Accruals/provisions
Total liabilities
Total identifiable net assets at fair value
Cash used to acquire business
Acquisition costs expensed to profit or loss
Fair value
recognised on
acquisition ($)
629,441
97,107
436,380
1,162,928
105,223
452,546
557,769
605,159
605,159
81,122
On 24 July 2017, the Company entered into an agreement to acquire 100% of the voting rights of KP Electric (Australia)
Pty Ltd (“KP Electric”), a leading national electrical services provider, for the cash consideration transferred of
$6,680,067 (net of cash acquired $175,549) and contingent consideration of $2,895,531. The acquisition provides the
Company with a stronger national presence.
The accounting is provisional pending the receipt of final valuations. The valuation had not been completed by the date
the 2017 financial statements were approved for issue by the Board of Directors. The Goodwill represents the business’s
integrated national footprint, the assembled workforce and expected synergies with the existing business.
Details of the provisional fair value are as follows.
NOTE 20 CONTINUED
ASSETS
Cash and cash equivalents
Trade and other receivables
Inventories
Prepayments
Property, plant and equipment
Customer relationship intangibles
Deferred tax assets
Total Assets
LIABILITIES
Trade and other payables
Borrowing
Current tax payable
Provisions (including employee benefits)
Total liabilities
Total identifiable net assets at fair value
Cash used to acquire business
Contingent consideration arising on acquisition
Provisional goodwill arising on acquisition
Acquisition costs expensed to profit or loss
Provisional fair value
recognised on acquisition ($)
175,459
2,480,468
696,019
36,445
797,502
473,496
127,556
4,786,947
2,048,471
72,592
420,170
822,886
3,364,119
1,422,828
6,835,526
2,895,531
8,308,230
297,376
Since the acquisition in July to December 2017, the business has contributed $8,163,210 and $625,807 to the
consolidated revenue and profit after tax respectively. Had the acquisition occurred on 1 January 2017 (January to
December 2017), the business would have contributed $16,662,754 and $1,568,597 to revenue and profit after tax
respectively.
The contingent consideration requires the Company to pay the former owners of KP Electric where earnings targets
are met up to a maximum of $3,350,000 undiscounted. The fair value of contingent consideration was estimated
applying a probability weighted discounted cash flow model. The fair value measurement is based on inputs that are not
observable in the market which is AASB 13 Fair Value Measurement refers to as Level 3 inputs. The key assumption is
the probability of achieving the earnings targets which are assumed at 100%.
56
57
TEMPO AUSTRALIA LTD ANNUAL REPORT 2017TEMPO AUSTRALIA LTD ANNUAL REPORT 2017NOTES TO THE FINANCIAL STATEMENTSNOTES TO THE FINANCIAL STATEMENTS
(b) Liquidity risk
Prudent liquidity risk management implies maintaining sufficient cash to meet the ongoing expenditure requirements
whilst the group is in start-up phase. In addition to cash, the group also has access to working capital facilities with
a major Australian banking group. Management and the board monitor rolling forecasts of the consolidated entity’s
liquidity on the basis of expected cash flow.
(c) Fair value estimation
The fair value of financial assets and financial liabilities is estimated for recognition and measurement and for
disclosure purposes. The carrying value of trade receivables and payables is a reasonable approximation of their fair
values due to the short-term nature of trade receivables. The fair value of financial liabilities for disclosure purposes
is estimated by discounting the future contractual cash flows at the current market interest rate that is available to the
Group for similar financial instruments.
(d) Interest rate risk
The group has an exposure to interest rates through its working capital facilities and its borrowings for equipment,
insurances and software. Given the short term nature and size of the borrowings, the board believes there is no
material interest rate risk.
Parent Entity Information
2017 ($)
2016 ($)
Profit/(Loss) after income tax
Total comprehensive income
Total current assets
Total assets
Total current liabilities
Total liabilities
(1,916,083)
(1,916,083)
9,712,087
27,542,932
599,247
11,831,447
Parent Entity Information
2017 ($)
2016 ($)
Equity
Contributed equity
Accumulated losses
Total equity
Contingencies
84,882,896
(69,171,441)
15,711,485
The parent entity had no contingent liabilities as at 31 December 2017 (2016: Nil).
Capital Commitments
The parent entity had no capital commitments as at 31 December 2017 (2016: Nil).
(3,013,309)
(3,013,309)
25,708,858
32,370,180
16,148,222
16,295,277
83,676,122
(67,601,219)
16,074,903
NOTE 21
DEFERRED TAX ASSETS AND LIABILITIES
Deferred tax asset comprises temporary differences at-tributable to:
Carry forward tax losses
Accrued expenses
Employee benefits
Share based payment reserve
Trade and other receivables
Others
Offset of deferred tax liabilities
Balance as at year end
Deferred tax liability comprises temporary differences at-tributable to:
Inventory
Prepayment and receivables
Plant and equipment
Intangibles
Offset against deferred tax asset
Balance as at year end
DEFERRED TAX ASSETS AND LIABILITIES
Opening balance
Additions through business combination [note 20]
Charged to income
Charged to equity
Others
Closing balance
Consolidated entity
2017 ($)
2016 ($)
4,132,139
1,156,748
91,805
511,709
299,494
88,829
43,556
(264,207)
4,903,325
14,302
122,302
9,716
117,667
(264,207)
-
687,613
882,556
189,363
-
25,681
(114,344)
2,827,617
28,021
73,531
12,792
-
(114,344)
-
Consolidated entity
2017 Deferred
($)
2016 Deferred
($)
2,827,617
2,812,891
127,556
-
1,812,316
(139,695)
135,836
-
4,903,325
12,852
141,569
2,827,617
The Board believes these deferred tax assets will be able to be utilised by the Company in the future based on its
analysis of the future prospects of the business to generate taxable profits. This analysis has included reviews of the
current work in hand, pipeline and industry dynamics.
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.
The carrying value of financial instruments approximates the fair value carried in the books.
(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 allowance account 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, 29% ($1,539,957) of receivables were due. The largest debtor due at year end
represented 12.9% of total trade receivables, Subsequent to the year-end the Group has received payments from all of
its major debtors and as such the Group believes there is no material credit risk exposure to any single debtor or group
of debtors under financial instruments.
58
59
TEMPO AUSTRALIA LTD ANNUAL REPORT 2017TEMPO AUSTRALIA LTD ANNUAL REPORT 2017NOTES TO THE FINANCIAL STATEMENTSNOTES 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 ESIRP.
Options
Grant date Expiry date
Exercise
price
30/05/2014 21/03/2017
11/02/2016 7/08/2017
9/06/2016
30/06/2019
$0.14
$0.15
$0.36
Total Granted
Balance at
the start of
the year
2,000,000
1,500,000
2,000,000
5,500,000
Weight average exercise Price
$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
10/06/2016 10/06/2031
Total Granted
Weighted average price
NOTE 25
Exercise
price
Balance at
the start of
the year
$0.00
$0.00
$0.00
$0.00
$0.00
2,500,000
1,500,000
180,000
2,000,000
150,000
6,330,000
$0.22
-
-
-
-
-
-
-
-
-
-
-
-
AUDITORS REMUNERATION
Audit or review of the financial report
Ernst & Young
RSM Australia Partners
Total
Granted
Exercised
Expired /
forfeited/
other
Balance at
the end of
the year
Vested at the
end of year
Vesting
date
(2,000,000)
(1,500,000)
-
(3,500,000)
$0.14
-
-
-
-
-
-
-
-
-
-
2,000,000
2,000,000
$0.34
22/02/2017
7/0720/17
31/05/2019
Granted
Exercised
-
-
-
-
-
-
-
Expired /
forfeited/
other
Balance at
the end of
the year
(1,250,000)
1,250,000
-
1,500,000
(135,000)
45,000
-
-
2,000,000
150,000
(1,385,000) 4,945,000
$0.22
$0.22
Vested at the
end of year
Vesting
date
1/07/2018
1/07/2019
1/07/2018
21/12/2018
15/03/2018
-
-
-
-
-
-
-
Consolidated entity
2016 ($)
2015 ($)
70,000
-
70,000
64,000
64,000
NOTE 26 SUBSEQUENT EVENTS
On 19 January 2018, Tempo announced that Mr Ian Lynass joined the group as VP Strategy and Corporate Development
from the 22nd of January. Mr Lynass previously served as the Chief Executive Officer and Managing Director of BIS
Industries Limited from April 2010 to May 2015 and has considerable leadership experience having worked in the
defence, steel, petrochemical, mining and industrial services markets for over 25 years. On 19 March 2018, Tempo
announced that Mr Ian Lynass would take over from Mr Max Bergomi as CEO, with Mr Bergomi also resigning his
position on the Board that same day.
On 22 January 2018 Tempo announced over $6m in new contracts including shutdown support services to Santos on
the Moomba gas facility, installations of DAS at Suncorp Stadium in Brisbane and Cairns Convention Centre and other
electrical project works.
On 27 February 2018 Tempo announced $11m of contract wins including MSA’s for maintenance and DAS actives for
major telecommunications clients. Tempo also announced it was awarded a Letter Of Intents for solar construction
projects for a multi-billion dollar international power company. The final award to Tempo of this work is contingent on
the securing power purchase agreements from the Victorian Renewable Energy Auction Scheme.
NOTE 27 CONTINGENCIES
The consolidated entity has no contingent assets or liabilities as at 31 December 2017 (2016: nil).
DIRECTORS’
DECLARATION
FOR THE YEAR ENDED 31 DECEMBER 2017
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 2017 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 29 March 2018
60
61
TEMPO AUSTRALIA LTD ANNUAL REPORT 2017TEMPO AUSTRALIA LTD ANNUAL REPORT 2017NOTES TO THE FINANCIAL STATEMENTS
62
TEMPO AUSTRALIA LTD ANNUAL REPORT 2016
63
TEMPO AUSTRALIA LTD ANNUAL REPORT 2017TEMPO AUSTRALIA LTD ANNUAL REPORT 2017INDEPENDENT AUDITOR’S REPORTINDEPENDENT AUDITOR’S REPORTA member firm of Ernst & Young Global Limited Liability limited by a scheme approved under Professional Standards Legislation PT:CT:TEMPO:009 Ernst & Young 11 Mounts Bay Road Perth WA 6000 Australia GPO Box M939 Perth WA 6843 Tel: +61 8 9429 2222 Fax: +61 8 9429 2436 ey.com/au Independent auditor's report to the members of Tempo Australia Limited Report on the audit of the financial report Opinion We have audited the financial report of Tempo Australia Limited (the Company) and its subsidiaries (collectively the Group), which comprises the Statement of financial position as at 31 December 2017, the Statement of comprehensive income, the Statement of changes in equity and the Statement of cash flows for the year then ended, notes to the financial statements, including a summary of significant accounting policies, and the directors' declaration. In our opinion, the accompanying financial report of the Group is in accordance with the Corporations Act 2001, including: a) giving a true and fair view of the consolidated financial position of the Group as at 31December 2017 and of its consolidated financial performance for the year ended on that date; and b) complying with Australian Accounting Standards and the Corporations Regulations 2001. Basis for opinion We conducted our audit in accordance with Australian Auditing Standards. Our responsibilities under those standards are further described in the Auditor’s Responsibilities for the Audit of the Financial Report section of our report. We are independent of the Group in accordance with the auditor independence requirements of the Corporations Act 2001 and the ethical requirements of the Accounting Professional and Ethical Standards Board’s APES 110 Code of Ethics for Professional Accountants (the Code) that are relevant to our audit of the financial report in Australia. We have also fulfilled our other ethical responsibilities in accordance with the Code. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion. Key audit matters Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the financial report of the current year. These matters were addressed in the context of our audit of the financial report as a whole, and in forming our opinion thereon, but we do not provide a separate opinion on these matters. For each matter below, our description of how our audit addressed the matter is provided in that context. We have fulfilled the responsibilities described in the Auditor’s Responsibilities for the Audit of the Financial Report section of our report, including in relation to these matters. Accordingly, our audit included the performance of procedures designed to respond to our assessment of the risks of material misstatement of the financial report. The results of our audit procedures, including the procedures performed to address the matters below, provide the basis for our audit opinion on the accompanying financial report. A member firm of Ernst & Young Global Limited Liability limited by a scheme approved under Professional Standards Legislation PT:CT:TEMPO:009 1. KP electric acquisition Why significant How our audit addressed the key audit matter As disclosed in Note 20 to the financial statements, in July 2017, the Group completed an acquisition of 100% of the issued share capital of KP Electric (Australia) Pty Ltd and the business assets of KP Electric (WA) Pty Ltd (jointly referred to as “KP Electric”), for a total consideration of $9.7 million. The accounting for the acquisition is provisional as at 31 December 2017. We considered the audit of accounting for this acquisition to be a key audit matter as this was a significant transaction during the year which required significant judgement regarding the allocation of the purchase price to the assets and liabilities acquired. This required the Group to determine the provisional fair value of the assets and liabilities acquired including goodwill and other intangible assets. Our audit procedures included the following: • Assessed the determination of the fair value of the purchase consideration, which included contingent consideration. • Evaluated the Group’s identification of assets and liabilities, including identifiable intangible assets arising from the acquisition. • Involved our valuation specialists to consider the Group’s methodologies for determining the provisional fair value of the identifiable intangible assets and assessing the key assumptions and inputs used in measuring these provisional fair values. • Considered the adequacy of the related disclosures in the financial report. 2. Goodwill impairment Why significant How our audit addressed the key audit matter As disclosed in Note 9 the Group has a goodwill balance of 11.4 million at 31 December 2017. Accounting standards require goodwill to be tested for impairment annually. The impairment testing process is complex and judgmental and is based on assumptions and estimates that are affected by expected future performance and market conditions. The Group expects significant growth in future periods, based on the pipeline of projects on which the Group were bidding. Accordingly, this was considered to be a key audit matter. We assessed the appropriateness of the identification of CGUs and the allocation of assets to the CGUs. Involving our valuation specialists where considered appropriate, we assessed the key assumptions underlying the discounted cash flow valuation. In doing so, we: • Tested the mathematical accuracy of the discounted cash flow model. • Assessed key assumptions underlying the forecast cash flows, including working capital levels, allocation of corporate costs and the discount rate used. • Read the Board of Directors’ minutes and various operational reports and plans in order to understand the future plans of the Group and whether there was any information that potentially conflicted with the assumptions made in the Group’s cash flow forecasts. • Discussed with representatives of the Group, the assumptions specifically related to the future pipeline of projects on which the group is currently bidding and determined whether these were reasonable. • Assessed the Group’s current year results in comparison to prior year forecasts to assess historical forecast accuracy. • Assessed the Group’s assumptions for terminal growth rates in the discounted cash flow model in comparison to economic and industry forecasts. • Assessed the discount rates through comparing the weighted average cost of capital for the Group with comparable businesses. • We performed sensitivity analysis in respect of the assumptions noted above to ascertain the extent of changes in those assumptions which would materially impact the fair value of the CGUs. • We assessed the adequacy of the Group’s disclosures in Note 9 concerning the key assumptions and sensitivities. 64
65
TEMPO AUSTRALIA LTD ANNUAL REPORT 2017TEMPO AUSTRALIA LTD ANNUAL REPORT 2017INDEPENDENT AUDITOR’S REPORTINDEPENDENT AUDITOR’S REPORTA member firm of Ernst & Young Global Limited Liability limited by a scheme approved under Professional Standards Legislation PT:CT:TEMPO:009 3. Recoverability of deferred tax assets Why significant How our audit addressed the key audit matter The Group has a deferred tax asset (DTA) amounting to $4.9 million recognised at 31 December 2017. The Group recognises deferred tax assets to the extent that it is probable that future taxable income will be available against which unused tax losses, tax credits and deductible temporary differences can be utilised. This was considered to be a key audit matter as the assessment of future taxable income is complex and requires a significant level of judgment given the external economic environment and the inherent uncertainties in the key assumptions used in the assessment of future cash flows. Our audit procedures included the following: • Understood the Group’s process for forecasting future taxable income. • Assessed the Group’s current year results in comparison to prior year forecasts to assess historical forecast accuracy. • Evaluated the Group’s assumptions and estimates in relation to the likelihood of generating sufficient future taxable income based on these forecasts. • Assessed the recoverability of the DTA against the forecast future taxable income, taking into account the Group’s tax position, the amount and timing of forecast taxable income, and our knowledge and experience of the application of relevant tax legislation. • Considered the adequacy of the Group’s tax disclosures in the financial report. Information other than the financial report and auditor’s report thereon The directors are responsible for the other information. The other information comprises the information included in the Company’s 2017 Annual Report other than the financial report and our auditor’s report thereon. We obtained the Directors’ Report and the Additional information required by ASX that are to be included in the Annual Report, prior to the date of this auditor’s report, and we expect to obtain the remaining sections of the Annual Report after the date of this auditor’s report. Our opinion on the financial report does not cover the other information and we do not and will not express any form of assurance conclusion thereon, with the exception of the Remuneration Report and our related assurance opinion. In connection with our audit of the financial report, our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial report or our knowledge obtained in the audit or otherwise appears to be materially misstated. If, based on the work we have performed on the other information obtained prior to the date of this auditor’s report, we conclude that there is a material misstatement of this other information, we are required to report that fact. We have nothing to report in this regard. Responsibilities of the directors for the financial report The directors of the Company are responsible for the preparation of the financial report that gives a true and fair view in accordance with Australian Accounting Standards and the Corporations Act 2001 and for such internal control as the directors determine is necessary to enable the preparation of the financial report that gives a true and fair view and is free from material misstatement, whether due to fraud or error. In preparing the financial report, the directors are responsible for assessing the Group’s ability to continue as a going concern, disclosing, as applicable, matters relating to going concern and using the going concern basis of accounting unless the directors either intend to liquidate the Group or to cease operations, or have no realistic alternative but to do so. A member firm of Ernst & Young Global Limited Liability limited by a scheme approved under Professional Standards Legislation PT:CT:TEMPO:009 Auditor's responsibilities for the audit of the financial report Our objectives are to obtain reasonable assurance about whether the financial report as a whole is free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with the Australian Auditing Standards will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of this financial report. As part of an audit in accordance with the Australian Auditing Standards, we exercise professional judgment and maintain professional scepticism throughout the audit. We also: • Identify and assess the risks of material misstatement of the financial report, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control. • Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Group’s internal control. • Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by the directors. • Conclude on the appropriateness of the directors’ use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Group’s ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor’s report to the related disclosures in the financial report or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor’s report. However, future events or conditions may cause the Group to cease to continue as a going concern. • Evaluate the overall presentation, structure and content of the financial report, including the disclosures, and whether the financial report represents the underlying transactions and events in a manner that achieves fair presentation. • Obtain sufficient appropriate audit evidence regarding the financial information of the entities or business activities within the Group to express an opinion on the financial report. We are responsible for the direction, supervision and performance of the Group audit. We remain solely responsible for our audit opinion. We communicate with the directors regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit. We also provide the directors with a statement that we have complied with relevant ethical requirements regarding independence, and to communicate with them all relationships and other matters that may reasonably be thought to bear on our independence, and where applicable, related safeguards. 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 19 March 2018, 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)
Number of ordinary
shareholders
Number of ordinary
shares
% of issued capital
100,001 and Over
10,001 to 100,000
5,001 to 10,000
1,001 to 5,000
1 to 1,000
Total
165
413
118
286
258
220,685,153
18,072,693
964,506
997,447
84,782
1,240
240,804,581
91.64
7.51
0.40
0.41
0.04
100.00
Non marketable securities totalling a number of 235,061 ordinary shares are held by 340 shareholders (2016: 319).
There is no current on-market buy-back of securities.
OPTIONS AND PERFORMANCE RIGHTS
As at 29 March 2018 the Company had 8,745,000 unquoted options or performance rights over unissued ordinary shares
in the Company held 8 different holders.
VOTING RIGHTS
On show of hands: one vote for each member on poll: one vote for each share held.
66
67
TEMPO AUSTRALIA LTD ANNUAL REPORT 2017TEMPO AUSTRALIA LTD ANNUAL REPORT 2017INDEPENDENT AUDITOR’S REPORTA member firm of Ernst & Young Global Limited Liability limited by a scheme approved under Professional Standards Legislation PT:CT:TEMPO:009 From the matters communicated to the directors, we determine those matters that were of most significance in the audit of the financial report of the current year and are therefore the key audit matters. We describe these matters in our auditor’s report unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should not be communicated in our report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such communication. Report on the audit of the remuneration report Opinion on the remuneration report We have audited the Remuneration Report which is included as part of the directors' report for the year ended 31 December 2017. In our opinion, the Remuneration Report of Tempo Australia Limited for the year ended 31 December 2017, 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. Ernst & Young Philip Teale Partner Perth 29 March 2018 ADDITIONAL INFORMATION REQUIRED BY ASX
SUBSTANTIAL SHAREHOLDERS
The names of substantial shareholders disclosed in substantial holding notices given to the Company are:
Name
Number of ordinary
shares
% of issued capital
Bontempo Nominees Pty Ltd
Angophora Capital Pty Ltd
Pinnacle Investment management Group Limited and Pinnacle Investment
Management Limited
Lanyon Australian Value Fund
Anthony Barton and Associates
TOP 20 SHAREHOLDERS
42,021,632
38,000,000
16,371,003
15,440,460
15,000,000
17.45
15.78
6.80
6.41
6.20
Rank
Name
Number of ordinary
shares
% of issued capital
CORPORATE
DIRECTORY
BONTEMPO NOMINEES PTY LTD
ANGOPHORA CAPITAL PTY LTD
HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED
INGLEWOOD LODGE PTY LTD
J P MORGAN NOMINEES AUSTRALIA LIMITED
MR IVAN TANNER & MRS FELICITY TANNER
NATIONAL NOMINEES LIMITED
CITICORP NOMINEES PTY LIMITED
KAHLIA NOMINEES PTY LTD
MRS CHIARA RENIS
MISS SILVANA MASALKOVSKI
MR PAUL SANTILLO
VANAVO PTY LIMITED
CHEMCO SUPERANNUATION FUND PTY LTD
ZERO NOMINEES PTY LTD
MISS VICTORIA ROSE BARTON
MR ANTHONY PETER BARTON & MRS CORINNE HEATHER BARTON
OAKTONE NOMINEES PTY LTD
SUPER RAB PTY LTD
MRS CHIARA RENIS
MR ANTONIO SCAFFIDI & MRS MARIA SCAFFIDI
MRS JENNIFER ANNE CASHION
Total
Balance of register
Grand total
41,702,632
38,000,000
24,544,510
12,000,000
9,188,984
6,050,000
5,750,030
5,457,675
4,000,000
3,850,000
3,347,811
2,590,000
2,150,000
2,000,000
2,000,000
1,730,000
1,508,438
1,500,000
1,500,000
1,485,000
1,420,215
1,256,656
173,031,951
67,772,630
240,804,581
17.32
15.78
10.19
4.98
3.82
2.51
2.39
2.27
1.66
1.60
1.39
1.08
0.89
0.83
0.83
0.72
0.63
0.62
0.62
0.62
0.59
0.52
71.86
28.14
100.00
1
2
3
4
5
6
7
8
9
10
11
12
13
14
14
15
16
17
17
18
19
20
68
DIRECTORS
Carmelo Bontempo
Guido Belgiorno-Nettis Non-Executive Director
Ian Widdicombe
Chairman
Non-Executive Director and Deputy Chairman
LEADERSHIP TEAM
Ian Lynass
Michael West
Chief Executive Officer
Chief Financial Officer and Company Secretary
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
Ernst & Young
The Ernst & Young Building
11 Mounts Bay Road
Perth WA 6000
www.ey.com.au
SHARE REGISTRY
Link Market Services
Level 4, Central Park
152 St George’s Terrace
Perth WA 6000
T: 1300 554 474
www.linkmarketservices.com.au
SOLICITOR
Steinepreis Paganin
Level 4, The Read Buildings,
16 Milligan Street,
Perth WA 6000
T: 08 9321 4000
www.steinpag.com.au
69
TEMPO AUSTRALIA LTD ANNUAL REPORT 2017TEMPO AUSTRALIA LTD ANNUAL REPORT 2017
PAGE LEFT BLANK INTENTIONALLY
70
TEMPO AUSTRALIA LTD ANNUAL REPORT 2017
Forrestfield - Airport Link (courtesy Salini Impregilo Worldwide)
Level 1
111 Colin Street
WEST PERTH
Western Australia, 6005
Postal Address
PO Box 588
WEST PERTH
Western Australia, 6872
T +61 (8) 9460 1500
E info@tempoaust.com
72
SECTION HEADINGTEMPO AUSTRALIA LTD ANNUAL REPORT 2017