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A N N U A L R E P O R T
T E M P O AU ST R A L I A L I M I T E D
WE DELIVER TO OUR
CUSTOMERS COST
EFFECTIVE ASSET
AVAILABILITY THROUGH
SAFE, HIGH QUALITY
SERVICES EXPERTISE.
Contents Page
Chairman’s Letter
MD Review of Operations
Board of Directors
Directors’ Report
Remuneration Report – Audited
Auditor’s Independence Declaration
Consolidated Statement of Comprehensive Income
Consolidated Statement of Financial Position
Consolidated Statement of Changes in Equity
Consolidated Statement of Cash Flows
Notes to the Consolidated Financial Statements
Directors’ Declaration
Independent Auditor’s Report
Additional Information Required by ASX
Corporate Directory
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About this Report
These 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’s) operations, activities and financial position as at 31 December 2018.
Any references in this report to ‘the year’ or ‘the reporting period’ relate to the financial
year, which is 1 January 2018 to 31 December 2018 unless otherwise stated. All figures
used in this report are Australian Dollars unless otherwise stated.
Tempo Australia Limited (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 view 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, telephone
1300 554 474.
We are currently maintaining assets at some
of Australia’s busiest port facilities.
CH A I R M A N ’S
L E T T E R
Dear Shareholder,
2018 has been a transformational
year for Tempo Australia Limited.
We have restructured our company
from construction activities to
long-term annuity style contracts in
the maintenance services markets
with a core focus in electrical and
telecommunications contracting.
We expect improved trading
performance in 2019 from the solid work done in 2018. We
have refreshed the team and secured new contracts that are
in line with our new strategy, however we have much work
to do to deliver in 2019.
We safely delivered work with revenues of $42 million, 119%
up on prior year and an underlying EBITDA loss of
$2.2 million, whilst these results are disappointing, they
represent a difficult transformational year the business
has been through. Impacts to this year’s reported results
are mainly from non-recurring items, such as $3.1 million
impairment of goodwill for a labour hire acquisition
made in prior years, a $1.7 million cost of restructuring/
estimating costs, and tax and other adjustments due to new
legislation, which took effect in 2018.
The business is supported by a loyal customer base in our
target markets, with many of these relationships renewing
multiyear contracts throughout 2018.
We have a refreshed Board of experienced Directors, and
a capable leadership team, with many years of experience
and are focused on a future in markets where we believe we
are competitive and that can support our growth.
We remain confident that our new strategy will enable
the business to position itself to build momentum in the
services and telecommunications asset maintenance
markets.
During the year we have successfully integrated our
new acquisition Comsite. The acquisition complements
our already successful telecommunications business
and we anticipate a strong contribution from Tempo
Telecommunication Services in 2019.
I would like to acknowledge the strong support our
shareholders have provided to us this year and to the
diligent work my fellow Directors have committed their
time to.
A special thanks to our employees and leadership team
for their hard work and commitment through this
transitional year. We are looking forward to working
together to build a great services business.
Guido Belgiorno-Nettis AM
Chairman
T E M P O A U S T R A L I A L I M I T E D A N N U A L R E P O R T 2 0 1 8 1
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Tempo Service Electrician’s - Stephen Howle and
Craig Holman on site at Sydney Olympic Park.
2
Dear Shareholder,
Our results for 2018 reflect the significant renewal that has been undertaken throughout the business.
Throughout the period we renewed our strategy and invested in a highly skilled group of employees
to support our growth.
SAFETY
STRATEGY
Our safety focus continued throughout the year, and
as a result we successfully maintained our Lost Time
Injury Frequency Rate (LTIFR) at zero. However, our Total
Recordable Injury Frequency Rate (TRIFR) increased on our
2017 results, this was directly impacted by our increased
exposure hours across our electrical services, and contracts
such as the CBH Throughput Project and the Karadoc Solar
Farm Project.
Our drive to improve our safety culture has progressed well,
with key focus areas in leadership behaviours, risk awareness
and personal responsibility. Further improvements are to
be made on our critical risk awareness, the identification of
hazards and the reduction of near misses in everything we
do. As we improve our performance across all these areas,
we will become more productive and cost effective.
We have had success integrating and harmonising systems
across HSE, finance, payroll and customer relationship
management. This continued emphasis has resulted in
improved business efficiencies.
Our journey toward Zero Harm continues, with our core
focus on ensuring everyone comes home safely every day.
2014
2015
2016
2017
2018
LTIFR
1
0
-1
TRIFR
7
5
5
4
3
2
1
We have spent time this year clearly redefining our new
strategic direction, one which will achieve growth through
sustainable core markets and drive the future of Tempo. Our
new focus can also be clearly understood through our value
proposition.
“We deliver to our customers cost effective asset
availability through safe, high quality services expertise.”
“We keep you operating safely and reliably.”
To deliver on this strategy we will focus on three core
markets, which we firmly believe will deliver sustainable
growth opportunities through long term annuity-based
contracts. Our focus areas are:
• Asset Management and Maintenance
• Telecommunications
• Projects
The core values to deliver on this strategy are built upon the
foundation of:
• Zero Harm
• People and culture
• Unity, care and empathy
• Service excellence
By delivering every day on our value proposition, we will
become the first choice for customers and grow value for
our shareholders.
“We deliver to our
customers cost effective
asset availability through
safe, high quality
services expertise”
2014
2015
2016
2017
2018
T E M P O A U S T R A L I A L I M I T E D A N N U A L R E P O R T 2 0 1 8 3
M D R E V I E W O F O P E R A T I O N S
OPERATIONS
Throughout 2018 our focus centred on the full integration
of the KP Electric business, now re-branded as Tempo Asset
Management Services. The long-standing service offering of
the business has been the provision of electrical contracting,
primarily focused on preventative and repair services. The
business has a diverse customer base ranging from national
asset owners, ports, retailers and beyond. Current key clients
include Woolworths Group, Port of Melbourne, Port of
Fremantle, Sydney Olympic Park, Sydney Harbour Foreshore
Authority, Flight Centre Travel Group and Virgin Australia.
To deliver on our strategy, we will remain focused on long term
electrical maintenance contracts, once established we will seek
to expand in mechanical and facilities management services. We
will seek to work with our existing customers to further add value
through the integration of broader services offerings.
The electrical market in Australia provides a substantial platform
for us to expand upon. Through our established customer-base
we seek to value add by undertaking capital works on asset
upgrades and projects by leveraging on our project services
capabilities.
Our strategy to expand our service offering into the
telecommunications sector continued throughout the period.
In July 2018 we acquired Comsite services, the acquisition was
an asset purchase of two core contracts held with Nokia. The
business has been integrated and is now performing in line with
expectations through its first year.
The Tempo Telecommunication Services offering is centred
around electrical work in network maintenance services, in an
electrical contracting style. However, we have begun expanding
our services in this market to include facilities maintenance
services which we foresee to grow in demand.
We believe this is a sustainable growth market for Tempo
to pursue. With the rollout of 5G in Australia, we expect to
leverage on our project services capabilities, assisting customers
in a vertically integrated manner.
Tempo Project Services offering includes electrical installation,
commissioning and construction activities in the commercial and
industrial markets. Tempo’s project services has a solid long-
standing reputation specialising in the fibre optics installation
and termination space, as well as the HV install market.
Throughout the period we undertook the asset upgrade
activities for CBH Group, Cooper & Oxley for Meth Aged Care
Facility and Beon Energy Solutions for the Karadoc Solar Farm.
Our existing asset management/maintenance customers have
expansive multi-year capital works programs that we will look
to support through this offering. We expect to capture organic
growth opportunities each year.
The Tempo Project Services offering is diverse, and can provide
electrical, mechanical, civil, fibre optics and engineering
services through to the delivery of projects such as the Enel
Cohuna Solar Farm Project currently under construction in
Cohuna, Victoria.
Apprentice Electrician - James Shirkie
on site at Meth Aged Care Facility.
4
We are currently working on multi-year capital works
on behalf of our customers.
INNOVATION
We are continuously developing and applying advanced
technologies within the industry. Our development of
a custom drone (Genesis One), fitted with unique high
definition visual imaging technology, is a perfect example as
to how we’re seeking to deliver seamless integration of asset
management services and technology.
An example of this is our ability to support
telecommunication customers with asset inspections
using high definition visual imaging. Genesis One has
been developed in-house to substantially lessen the need
to undertake costly inspections at heights or in high-risk
environments such as towers or buildings with restricted
access.
With military grade thermal and RF sensors which were
designed and built by Tempo, and a drone that can provide
a safe and stable aerial platform in most environments.
People Profile – Andrew Tang
Service Technician, Andrew Tang is responsible
for scheduled and reactive maintenance, and
minor project works for our Sydney customer-
base. Andrew has been with the business since
mid-2016, initially working exclusively on our
Woolworths contract before moving into his
current role supporting a range of commercial,
industrial and telecommunication customers.
“In this role every day is different. We do a lot of
work on lighting and power installations, general
fault finding, and switchboard inspections. Aside
from the technical aspect, a key requirement of the
role is the customer interface which I really enjoy. I
think our job has similarities to that of a Doctor, we
diagnose conditions and prescribe solutions to our
customers.” said Andrew.
“We often work in unfamiliar environments, or
older buildings without electrical drawings which
makes fault finding more challenging. In these
instances, I get a real sense of achievement when
we accurately identify the root cause of problems
and provide solutions to our customers.”
“Tempo has an established niche within the
electrical industry, and I believe the company has
a bright future. I look forward to developing within
the business as it expands.” said Andrew.
T E M P O A U S T R A L I A L I M I T E D A N N U A L R E P O R T 2 0 1 8 5
M D R E V I E W O F O P E R A T I O N S
Service Electrician - Andrew Tang on
site at Sydney Harbour Foreshore
6
GROUP RESULTS
Revenue: $42M
Revenue for the year was $42 million which represents
a 119% increase on prior year, importantly to note most
of our revenue was delivered from service contracts in
sustainable annuity style contracts.
Our EBITDA (Earnings Before Interest Depreciation
and Amortisation) before impairments was a loss of
$2.2 million or a loss of $0.6 million adjusting for
non-recurring costs.
Our NPAT (Net Profit After Tax) loss of -$5.6 million
reported is the result of significant one-off, non-recurring
restructuring:
•
•
•
-$3.1 million relates to the impairment of good will
carried since 2012 associated with an acquisition
made in that year of a labour hire company;
-$1.1 million of the result is non-recurring
restructuring and restaffing costs; and
-$0.6 million are specific non-recurring estimating
costs incurred in 2018 from resource construction
no longer undertaken.
The 2018 results were further affected by new tax
regulations that resulted in adjustments of carried
forward tax losses, R&D claims and credits resulting in a
net taxation rate of only 5.9 per cent.
We believe the great work done means we are now well
placed to grow the company, this has been reflected
through significant revenue growth, our contract
wins throughout 2018 and new contracts for 2019,
notwithstanding the disappointing result in 2018 for our
shareholders and management.
We appreciate our shareholders support during this
very difficult year of transition for our company. We are
focused on delivery and an improved outcome in 2019.
30,000
25,000
20,000
15,000
10,000
5,000
H1 2017
H2 2017
H1 2018
H2 2018
EBITDA less non-recurring items
2015
2016
2017
2018
6,000
4,000
2,000
0
(2,000)
Cash used in operating activities
H1 2017
H2 2017
H1 2018
H2 2018
(1,000)
(2,000)
(3,000)
(4,000)
(5,000)
T E M P O A U S T R A L I A L I M I T E D A N N U A L R E P O R T 2 0 1 8 7
M D R E V I E W O F O P E R A T I O N S
E L E CT R I CA L
I N D U ST RY AT
A G L A N CE
Key Statistics Snapshot
Products and services segmentation (2018-19)
4.0%
Other services
24.4%
Electrical circuitry
Installation
36.2%
Maintenance
and repair
services
35.4%
Electrical circuitry
upgrade and renovation
Total $19.9bn
Major market segmentation (2018-19)
15.1%
Mixed
customers
15.2%
Heavy industrial
and engineering firms
35.1%
Residential builders
and households
34.6%
Commercial and retail property
developers and operators
Total $19.9bn
Total Enterprises
1.8%
TAS
7.0%
SA
11.1%
WA
1.2%
ACT
0.9%
NT
32.0%
NSW
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20.5%
QLD
25.5%
VIC
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TARGET MARKETS
OUTLOOK
Our focus is to expand our electrical maintenance
contracting offering throughout Australia. This market is
supported by strong demand in downstream industrial
markets and activities include the installation and
maintenance of basic electrical circuitry, lights, power assets,
facilities and instrumentation. All of which we have a long
track record in delivering for our customers.
Electrical service demand from the heavy industrial
infrastructure market is a key area of focus for Tempo as the
competitive landscape allows us to differentiate our service
offering through high quality trade services delivery. Tempo
has been successful in renewing its contracts in critical
infrastructure at the Port of Melbourne. In combination
with our Port of Fremantle work, we are developing a deep
understanding and capacity in maintaining such assets. We
look to expand this service in similar areas around Australia
in 2019.
Whilst the total number of contractors is high across
Australia, companies like Tempo have diversified into
telecommunications and cabling, renewable energy and
electrical maintenance have grown steadily over the past year.
FURTHER COST REDUCTIONS
Throughout 2018 our management team has been renewed
and we have reduced our overhead by some $2 million.
Further cost reductions are available to us as we improve the
efficiency of our businesses. As our teams grow and develop,
we expect to benefit from greater overhead leverage than
has been experienced in the past two years.
In 2019 we turn our minds to how we procure materials,
with the aim of consolidating our suppliers and improving
our cost base.
We have built a solid foundation upon which to grow.
We shifted the business away from resources construction,
our overhead has been designed for leverage, and we
have developed a strategy that will enable the company
to develop long term contracts with large Australian
businesses.
We refreshed our Board and leadership team to provide the
business with the guidance and strategic support required.
Importantly, we secured new works in our chosen markets.
This early success supports the Company’s new strategic
direction.
Management acknowledges with this growth in revenue,
working capital management will continue to be a focus.
However, Tempo does face some head winds as we will see
increased demand for skilled labour as resource company
projects commence in 2019, and the competition for good
people remains high.
We believe that our customers will choose to work with
Tempo for our commitment to safety, services expertise and
reliability as we continue to deliver good value for money.
We kindly thank our customers and shareholders for their
ongoing support as we transition Tempo for further growth.
Ian Lynass
Managing Director and CEO
People Profile – Luci Courtney
Project Manager, Luci Courtney is
responsible for ensuring our projects
remain on schedule, within budget
and without injury. Luci has been with
the business for 5 ½ years, she began
in a service coordinator role before
transitioning into projects. Thriving in
that role she stepped into a Project
Manager position in 2018 and hasn’t
looked back.
“Our project works include electrical
installations, fibre optics and
telecommunications. We work in
diverse sectors including commercial
construction, solar farms, industrial
and resources, I enjoy the variety as
it means every project is different.”
said Luci.
“I act as the interface between our
project team and our customer. I do a
lot of the planning and organising to
ensure we deliver on key milestones,
I enjoy the role I play and love seeing
it all come together.”
“I’m excited about Tempo’s strategy
as it’s a genuine value-add for our
customers. We have already begun
supporting our established asset
management customers on capital
works and asset upgrade projects,
having established relationships
with the customer and historical
knowledge about the assets is a
genuine advantage when it comes to
managing projects.” said Luci.
T E M P O A U S T R A L I A L I M I T E D A N N U A L R E P O R T 2 0 1 8 9
B OA R D O F
D I R E CTO R S
Guido Belgiorno-Nettis AM
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 several key
positions within the Transfield
Group, including Managing
Director, CEO Transfield Engineering and Construction,
and Project Development Director. In 2015 he founded
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.
1 0
We are currently maintaining assets for two of Australia’s
largest national telecommunications carriers.
Ian Lynass
David Iverach
MANAGING DIRECTOR AND CHIEF EXECUTIVE OFFICER
NON-EXECUTIVE DIRECTOR
Ian has over 25 years management
experience in the maintenance
services, defence, steel,
petrochemical and mining
industries. Before his appointment
as Chief Executive Officer and
Managing Director of Bis Industries
Pty Ltd in 2009, he accumulated
experience in a wide range of
operational and leadership areas throughout these
industries.
Ian has held key leadership positions nationally and
internationally holding the Managing Directors role for
Brambles Industrial Services – Northern Hemisphere and
then returning to Australia after successfully rebuilding the
business, he held Executive Director roles in Bis Industries
for Eastern and Western Australia. In 2012 Ian was a recipient
of the CEO Magazine CEO of the Year Award – Logistics.
In 2015 Ian co-founded GD Environmental Services in the
United Kingdom, a Waste Recycling company until his return
to Australia in 2017.
Ian was appointed Chief Executive Officer of Tempo
Australia in March 2018, and subsequently Managing
Director in August 2018. He is also serving as a Non-
Executive Director of WorkPac Group Pty Ltd and is
Chairman of the Engineering and Construction advisory
panel. Ian has held Board positions for Bis Industries Pty Ltd
and is Managing Director of Silhouette Global Solutions a
family owned consultancy business.
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, Ian 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
tenure, Ian established and led the Karratha Life Extension
Program and was Project Manager for the Angel Project.
Prior to Woodside, he was Regional Manager Asia Pacific for
DOF Subsea Group and Offshore Operations Manager for
Clough.
David has over 45 years’
experience at the executive level in
the public and private sectors and
has served on several boards.
Combined with 25 years with
Transfield, David provides
unbeatable corporate governance
leadership.
David’s time at Transfield includes a broad range of
strategic and operational positions. He played a leading
role in the formation of several Transfield businesses and
projects, including the formation of Transfield Services as
a standalone business unit and the entry of Transfield into
the renewable energy sector. Roles included Commercial
Director of Transfield Construction, CEO Energy, CEO
Investments and Project Director in the development phase
of several large-scale infrastructure projects.
Prior to joining Transfield in 1990, David was Director
General of Transport in the NSW Government with oversight
of rail, roads, ports, grain handling and public transport.
David has degrees in chemical engineering and fuel
technology including a PhD.
“The Board of Directors are
committed to establishing a
high-performing business,
with a focus on safety and
customer delivery. ”
T E M P O A U S T R A L I A L I M I T E D A N N U A L R E P O R T 2 0 1 8 1 1
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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 2018 and the auditor’s
report thereon.
PRINCIPAL ACTIVITIES
During the year ended 31 December 2018 the Group
generated revenues from asset management, maintenance
and construction across the telecommunications,
infrastructure, resources, power, industrial and commercial
sectors.
REVIEW OF OPERATIONS & RESULTS
Tempo provides asset management, maintenance and
construction across the telecommunications, infrastructure,
resources, power, industrial and commercial sectors to
protect and enhance clients’ investments. Throughout 2018
our focus centred on the full integration of the KP Electric
business, now re-branded as Tempo Asset Management
Services (TAMS). The long-standing service offering of the
business has been the provision of electrical contracting,
primarily focused on preventative and repair services. The
business has a diverse customer base ranging from national
asset owners, ports, retailers and beyond. Current key clients
include Woolworths Group, Port of Melbourne, Port of
Fremantle, Sydney Olympic Park, Sydney Harbour Foreshore
Authority, Flight Centre Travel Group and Virgin Australia.
The net loss after tax was $5,648,445. This result was
impacted by impairments of $3,229,944 including goodwill
attributable to a personnel hire business acquired in 2012,
which management considers is no longer relevant to the
strategic direction of Tempo.
Revenue and other income has more than doubled at
$41,793,1870 compared to 2017, reflecting a full year
contribution from the acquisition of KP Electric (Australia) Pty
Ltd, six months of contribution from the acquisition of the
Comsite Services business, and the contribution from the
CBH Group throughput upgrade project. Net Assets value of
$24,284,902 was reported for the full year, which represents a
decline of approximately 19% compared to the previous year.
The 2018 results were further significantly affected by new
tax regulations that resulted in adjustments of carried
forward tax losses and R&D claims and credits resulting in a
net taxation rate of only 5.9%.
At the year end, Tempo had a cash balance of $4,766,390.
There was a reduction in cash over the course of the year,
predominately as a result of payment of the prior-year
deferred amounts relating to the acquisition of KP Electric
(Australia) Pty Ltd, the acquisition of the Comsite Services
business and the increase in working capital as a result of the
increased activities.
Our strategy is to remain focused on long term electrical
maintenance contracts. Once established we will seek to
expand in mechanical and facilities management services.
The Group will work with existing customers to further add
value through the integration of broader services offerings.
We believe the great work done means we are now well
underway to grow the company, this has been proven
through significant revenue growth, our contract wins
throughout 2018 and substantial new contracts for 2019,
notwithstanding the disappointing result in 2018 for our
shareholders and management. Management acknowledges
with this growth in revenue, working capital management
will continue to be a focus.
Highlights of Tempo’s activities and operations for the year
ended 31 December 2018 are presented as follows:
The Group continued to enhance and fully integrate the
nationally operated electrical service business, KP Electric
(Australia) Pty Ltd, acquired in July 2017, contributing for
the full year in 2018. Since the acquisition, the business
has secured a number of new contracts and master service
agreements with leading companies in addition to securing
extensions with existing customers.
The Group acquired the Comsite Services business, that
focusses on telecommunications infrastructure support in
regional NSW and QLD for major providers in Australia.
Solid contributions are being made from this business which
is being integrated with the KP Electric (Australia) Pty Ltd.
During 2018, the Group commenced and successfully
completed work on the CBH Throughput Upgrade 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).
During 2018, the Group maintained its accreditations for its
quality management system to ISO 9001, its environment
management system to ISO 14001:2015 and its occupational
health and safety certification to ISO AS/NZS4801:2001.
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 27 February 2019 Tempo announced that it had signed
a three-year contract with Woolworths Limited (Woolworths)
to provide national electrical maintenance services
estimated to be worth $20-25 million in revenue over an
initial three-year term. Tempo also announced that it had
executed the final contract with Enel Green Power Australia
Pty Ltd, in relation to the 34mW Cohuna Solar Farm. The
value of the works is $15.1 million over a twelve-month
construction period. With growth in revenue, working capital
management will continue to be a focus.
LIKELY DEVELOPMENTS
Throughout 2018 Tempo has restructured and reskilled the
company to ensure that we are fully capable of focusing
on our new strategy, to build upon our already successful
long-term annuity contracting businesses while continuing
to deliver specialist multidisciplinary maintenance and
construction services to key clients in the resources, power
and industrial and commercial sectors.
T E M P O A U S T R A L I A L I M I T E D A N N U A L R E P O R T 2 0 1 8 1 3
D I R E C T O R S ' R E P O R T
ENVIRONMENTAL REGULATION AND PERFORMANCE
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.
DIVIDENDS PAID, RECOMMENDED AND DECLARED
No dividends were paid, declared or recommended since the start of the financial year.
INDEMNIFICATION AND INSURANCE OF DIRECTORS, OFFICERS AND AUDITORS
For the year ended 31 December 2018, 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 the 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.
DIRECTORS
Mr Guido Belgiorno-Nettis AM – Non-Executive Chairperson
BE Civil; MBA; FIEAust
Appointment:
Reappointed to the Board as Non-Executive Chairperson 10 December 2018
Resigned as Non-Executive Director 19 November 2018
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 founded
Angophora Capital Pty Ltd.
Experience and
Expertise:
Guido is Chairperson 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.
Guido is currently a member of the Group’s Nominations and Remuneration Committee; the Risk, HSE
and Commercial Committee and the Audit & Compliance Committee. During his appointment as a
Non-Executive Director, but prior to his appointment as Non-Executive Chairperson, Guido was the
Chairperson of the Group’s Risk, HSE and Commercial Committee and a member of the Nominations
and Remuneration Committee and the Audit & Compliance Committee.
Directorships:
Current directorships in other listed companies: None
Directorships in listed companies in the last three years: None
1 4
Mr Ian Lynass – Chief Executive Officer (CEO) And Managing Director
Appointment:
Appointed as Chief Executive Officer 19 March 2018
Appointed Managing Director 28 June 2018
Ian has over 25 years management experience in the maintenance services, defence, steel,
petrochemical and mining industries. Before his appointment as Chief Executive Officer and Managing
Director of Bis Industries Pty Ltd in 2009, he accumulated experience in a wide range of operational
and leadership areas throughout these industries.
Experience and
Expertise:
Ian has held key leadership positions nationally and internationally holding the Managing Directors
role for Brambles Industrial Services – Northern Hemisphere and then returning to Australia after
successfully rebuilding the business, he held Executive Director roles in Bis Industries for Eastern and
Western Australia. In 2012 Ian was a recipient of the CEO Magazine CEO of the Year Award – Logistics.
In 2015 Ian co-founded GD Environmental Services in the United Kingdom, a Waste Recycling company
until his return to Australia in 2017.
Ian is also serving as a Non-Executive Director of WorkPac Group Pty Ltd and is Chairperson of the
Engineering and Construction advisory panel. Ian has held Board positions for Bis Industries Pty Ltd
and is Managing Director of Silhouette Global Solutions a family owned consultancy business.
Directorships:
Current directorships in other listed companies: None
Directorships in listed companies in the last three years: None
Mr David Iverach – Non-Executive Director
BEng Chem (Hons), Post-graduate 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
Appointed as Non-Executive Director 10 December 2018
Appointment:
Initial appointment as alternate Non-Executive Director to Guido Belgiorno-Nettis 9 February 2017 –
Resigned 21 March 2018
David has over 45 years experience at the executive level in the public and private sectors and has
served on several boards. Combined with 25 years with Transfield, David provides unbeatable corporate
governance leadership.
Experience and
Expertise:
David’s time at Transfield includes a broad range of strategic and operational positions. He played a
leading role in the formation of several Transfield businesses and projects, including the formation of
Transfield Services as a standalone business unit and the entry of Transfield into the renewable energy
sector. Roles included Commercial Director of Transfield Construction, CEO Energy, CEO Investments
and Project Director in the development phase of several large-scale infrastructure projects.
Prior to joining Transfield in 1990, David was Director General of Transport in the NSW Government with
oversight of rail, roads, ports, grain handling and public transport.
David is the current Chairperson of the Group’s Nominations and Remuneration Committee and the
Risk, HSE and Commercial Committee and a member of the Audit & Compliance Committee.
Directorships:
Current directorships in other listed companies: None
Directorships in listed companies in the last three years: None
T E M P O A U S T R A L I A L I M I T E D A N N U A L R E P O R T 2 0 1 8 1 5
D I R E C T O R S ' R E P O R T
Mr Ian Widdicombe – Non-Executive Director
BEng Civil
Appointment:
Appointed as Non-Executive Director 13 June 2017
With over 30 years experience in the oil and gas industry with both operators and contractors in
Australia, Europe and Asia, Ian 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 tenure, he established and led the Karratha Life Extension Program and was project manager for the
Angel Project. Prior to Woodside, Ian was Regional Manager Asia Pacific for DOF Subsea Group and
Offshore Operations Manager for Clough.
Experience and
Expertise:
Ian is a member of the Group’s Nominations and Remuneration Committee; the Risk, HSE and
Commercial Committee and the Chairperson of the Audit & Compliance Committee.
Directorships:
Current directorships in other listed companies: None
Directorships in listed companies in the last three years: None
Mr Carmelo Bontempo – Former Non-Executive Chairperson
Retired:
30 November 2018
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.
Prior to his retirement Mr Bontempo was the Chairperson of the Group’s Nominations and
Remuneration Committee and the Risk, HSE and Commercial Committee and a member of the Audit &
Compliance Committee.
Directorships:
Current directorships in other listed companies: None
Directorships in listed companies in the last three years: None
Mr Guido Bressani – Former Non-Executive Director
Master’s degree Mech Eng, GAICD
Resigned:
3 April 2018
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.
Directorships:
Current directorships in other listed companies: None
Directorships in listed companies in the last three years: None
1 6
Mr Chris Cook – Former Alternate Director to Guido Belgiorno-Nettis AM
B.Sci (Hon), MBA
Resigned:
19 November 2018
Experience and
Expertise:
Chris is currently an Investment Executive Director for Angophora Capital and also serves as an
investment advisor to Transfield Holdings. His experience extends from infrastructure development
and delivery to investment management, including investment company management, capital raising
and investor management. Chris has been involved in a number of Australia’s seawater desalination
projects, solar thermal power station project development in Europe, USA and the Middle East and a
submarine telecommunication cable project, the Australia Japan Cable.
Chris has served on the Advisory Board of Novatec Solar GmbH and remains on the Operations
Committee for the Sydney Harbour Tunnel and Investment Committee for Transfield Holdings.
Directorships:
Current directorships in other listed companies: None
Directorships in listed companies in the last three years: None
Mr Massimo Bergomi – Former Chief Executive Officer and Managing Director
B.Eng. (Management and Production), Graduate of Harvard Business School’s Advanced Management Program
Resigned:
19 March 2018
Massimo joined Tempo in January 2016 as Chief Executive Officer and on 31 March 2016 he additionally
became Tempo’s Managing Director. A highly experienced and successful engineering and oil and gas
industry executive, Massimo has held a number of high-profile senior leadership roles during his 20-year
career.
Experience and
Expertise:
Prior to joining Tempo, Massimo 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.
Massimo 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.
Directorships:
Current directorships in other listed companies: None
Directorships in listed companies in the last three years: None
Mr Scott Macdonald – Company Secretary
B.Eng. Mech (Hons), MBA, GAICD, GIA(Dip)
Appointment:
Appointment as Interim Executive Director 3 December 2018
Resigned as Interim Executive Director 10 December 2018
Experience and
Expertise:
Scott is a senior executive with over 30 years experience in the finance, commercial and M&A
disciplines for CPB Contractors, BHP, Brambles, BIS Industries and Wesfarmers.
Scott holds an MBA and BEng from UWA, a graduate diploma from the Governance Institute of
Australia and graduated the Company Directors course with AICD.
Directorships:
Current directorships in other listed companies: None
Directorships in listed companies in the last three years: None
T E M P O A U S T R A L I A L I M I T E D A N N U A L R E P O R T 2 0 1 8 1 7
D I R E C T O R S ' R E P O R T
COMPANY SECRETARY
Mr Scott Macdonald – Company Secretary
B.Eng. Mech (Hons), MBA, GAICD, GIA(Dip)
Appointment:
Appointed as CFO and Company Secretary 15 June 2018
Experience and
Expertise:
Scott is a senior executive with over 30 years experience in the finance, commercial and M&A
disciplines for CPB Contractors, BHP, Brambles, BIS Industries and Wesfarmers.
Scott holds an MBA and BEng from UWA, a graduate diploma from the Governance Institute of
Australia and graduated the Company Directors course with AICD.
Mr Michael West – Former Company Secretary
B.Com. (Finance and Economics), B.Eng. Mech (Hons 1), GAICD
Resignation:
15 June 2018
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, and is a graduate of the Australian
Institute of Company Directors.
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 and Compliance Committee
Eligible to Attend
Attended
Eligible to Attend
Attended
Guido Belgiorno-Nettis1
Ian Lynass2
David Iverach3
Ian Widdicombe
Carmelo Bontempo4
Chris Cook5
Guido Bressani6
Massimo Bergomi7
Scott Macdonald8
9
4
1
9
8
6
2
2
-
8
4
1
8
8
6
1
2
-
2
1
-
2
2
-
1
-
-
1
1
-
1
2
-
1
-
-
1. Guido Belgiorno-Nettis resigned as Non-Executive Director on 19 November 2018 and was appointed Non-Executive Chairperson on 10 December 2018.
2. Ian Lynass was appointed to Chief Executive Officer on 19 March 2018 and was appointed Managing Director on 28 June 2018.
3. David Iverach retired as Alternate Non-Executive Director to Guido Belgiorno-Nettis on 21 March 2018 and was appointed Non-Executive Director on 10 December 2018.
4. Carmelo Bontempo retired from the Board on 30 November 2018.
5. Chris Cook commenced as Alternate Non-Executive Director to Guido Belgiorno-Nettis on 21 March 2018 and resigned as Alternate Non-Executive Director on 19
November 2018.
6. Guido Bressani resigned as Non-Executive Director on 3 April 2018.
7. Massimo Bergomi resigned as Chief Executive Officer and Managing Director on 19 March 2018.
8. Scott Macdonald commenced as Interim Executive Director on 3 December 2018 and resigned as Interim Executive Director on 10 December 2018.
1 8
Guido Belgiorno-Nettis1
Ian Lynass2
David Iverach3
Ian Widdicombe
Carmelo Bontempo4
Chris Cook5
Guido Bressani6
Massimo Bergomi7
Scott Macdonald8
Nomination and Remuneration
Committee
Risk, HSE and Commercial Committee
Eligible to Attend
Attended
Eligible to Attend
Attended
1
-
-
1
1
-
-
-
-
1
-
-
1
1
-
-
-
-
1
-
-
1
1
-
-
-
-
1
-
-
1
1
-
-
-
-
1. Guido Belgiorno-Nettis resigned as Non-Executive Director on 19 November 2018 and was appointed Non-Executive Chairperson on 10 December 2018.
2. Ian Lynass was appointed to Chief Executive Officer on 19 March 2018 and was appointed Managing Director on 28 June 2018.
3. David Iverach retired as Alternate Non-Executive Director to Guido Belgiorno-Nettis on 21 March 2018 and was appointed Non-Executive Director on 10 December 2018.
4. Carmelo Bontempo retired from the Board on 30 November 2018.
5. Chris Cook commenced as Alternate Non-Executive Director to Guido Belgiorno-Nettis on 21 March 2018 and resigned as Alternate Non-Executive Director on
19 November 2018.
6. Guido Bressani resigned as Non-Executive Director on 3 April 2018.
7. Massimo Bergomi resigned as Chief Executive Officer and Managing Director on 19 March 2018.
8. Scott Macdonald commenced as Interim Executive Director on 3 December 2018 and resigned as Interim Executive Director on 10 December 2018.
DIRECTORS’ INTERESTS IN SHARES 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.
Guido Belgiorno-Nettis
Ian Lynass
David Iverach
Ian Widdicombe
TOTAL
Ordinary Shares
Rights over
ordinary shares
44,847,660
-
914,000
500,000
-
200,000
-
-
45,961,660
500,000
AUDITORS’ INDEPENDENCE DECLARATION
A copy of the auditors’ independence declaration in relation to the audit for the financial year is provided within this financial
report on page 28.
NON-AUDIT SERVICES
There were no non-audit services provided by the Group’s auditor, Ernst & Young during the year ended 31 December 2018 or
31 December 2017.
SHARE OPTIONS
Unissued shares
As at the date of this report, there were no unissued ordinary shares under options.
Shares issued as a result of the exercise of options
During the financial year no options were exercised.
ROUNDING
The amounts contained in the financial report have been rounded to the nearest $1,000 (where rounding is applicable) where
noted ($’000) under the option available to the company under ASIC Corporations (Rounding in Financial/Directors’ Reports)
Instrument 2016/191. The Company is an entity to which this legislative instrument applies.
T E M P O A U S T R A L I A L I M I T E D A N N U A L R E P O R T 2 0 1 8 1 9
R E M U N E R AT I O N R E P O RT
– AU D I T E D
No short-term incentives were granted and therefore
awarded during the year. Given the recent profitability and
cashflow of the Company, at the discretion of the Board, no
STIP incentives were awarded during the year. Given the
small size of the company the Remuneration Committee is
in the process of reviewing the STIP and metrics for KMP for
the current year.
Long-Term Incentive Plan (LTIP)
A Long-Term Incentive Plan (LTIP) has also been developed
which will grant 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. During the year 2,150,000 of rights
were vested to the value of $413,308.
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
director’s remuneration be determined periodically by a
general meeting. The most recent determination was at
the Annual General Meeting held on 31 May 2016, where
the shareholders approved an aggregate remuneration
of $500,000. Issue of options to Directors is voted on by
members at general meetings.
Voting and comments made at the Company's
31 May 2018 Annual General Meeting ('AGM')
At the last AGM held on 31 May 2018, 99.8% of the votes
received supported the adoption of the remuneration report
for the year ended 31 December 2017. The Company did
not receive any specific feedback at the AGM regarding its
remuneration practices.
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 performance
of the Company depends on the quality of its employees.
To grow, the Company must attract, motivate and retain
skilled employees, which includes the directors and
executives of the Company. To this end, the Company
utilises the principles of providing competitive rewards to
attract and retain high calibre executives. In determining
the remuneration levels of employees and executives, the
Company takes into consideration the performance of the
Group, operation, function and geographic regions as well
as that of the individual. 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 executives, the Company provides a remuneration
package that incorporates both fixed cash-based
remuneration and variable remuneration consisting of short
and long-term incentive opportunities, that may include,
performance-based cash remuneration and share-based
remuneration. Directors received fixed fees for their
services. 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.
No remuneration consultants were engaged during the year.
Short-Term Incentive Plan (STIP)
For Key Management Personnel (KMP), 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.
2 0
DIRECTORS’ COMPENSATION
The directors during the year ended 31 December 2018 were:
Guido Belgiorno-Nettis
• Appointed as Non-Executive Chairperson 10 December 2018
Non-Executive Chairperson
• Resigned as Non-Executive Director 19 November 2018
Ian Lynass
Chief Executive Officer and Managing Director
• Appointed Managing Director 28 June 2018
• Appointed Chief Executive Officer 19 March 2018
• Appointed 22 January 2018 as VP Strategy and Corporate Development
David Iverach
• Appointed as Non-Executive Director 10 December 2018
Non-Executive Director
• Retired as Alternate Non-Executive Director to Guido Belgiorno-Nettis 21 March 2018
Ian Widdicombe
Non-Executive Director
• Appointed as Non-Executive Director 13 June 2017
Carmelo Bontempo
Former Non-Executive Chairperson
• Retired 30 November 2018
Non-Executive Director
Chris Cook
• Resigned as Alternate Non-Executive Director to Guido Belgiorno-Nettis 10 December 2018
• Appointed as Alternate Non-Executive Director to Guido Belgiorno-Nettis 21 March 2018
Guido Bressani
Non-Executive Director
• Resigned as Non-Executive Director 3 April 2018
Massimo Bergomi
Chief Executive Officer and Managing Director
• Resigned from the Board and ceased employment 19 March 2018
Scott Macdonald
• Resigned as Interim Executive Director 10 December 2018
Chief Financial Officer and Company Secretary
• Appointed as Interim Executive Director 3 December 2018
EXECUTIVES’ COMPENSATION
Other key management personnel during the year ended 31 December 2018 were:
Scott Macdonald
Chief Financial Officer and Company Secretary
• Appointed as Chief Financial Officer and Company Secretary 15 June 2018
Michael West
• Resigned as Chief Financial Officer and Company Secretary and ceased employment
Former Chief Financial Officer and Company Secretary
with Tempo on 15 June 2018
T E M P O A U S T R A L I A L I M I T E D A N N U A L R E P O R T 2 0 1 8 2 1
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1
.
SHAREHOLDING OF KMP
Shares held in Tempo Australia Limited.
Balance
1 January
2018
Balance at
appointment
as KMP
Issued on exercise
of performance
rights
Net change
other#
Resignation/
Retirement
of KMP*
Balance
31 December
2018
Guido Belgiorno-Nettis1
38,000,000
Ian Lynass2
David Iverach3
Ian Widdicombe4
Scott Macdonald5
-
-
-
-
Carmelo Bontempo6
42,021,632
Chris Cook7
Guido Bressani8
212,791
858,361
Massimo Bergomi9
5,335,000
Michael West10
528,000
-
346,500
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
2,000,000
-
6,847,660
567,500
-
200,000
50,000
-
-
-
-
-
44,847,660
914,000
-
200,000
50,000
250,000
(42,271,632)
-
-
-
-
(212,791)
(858,361)
(7,335,000)
(528,000)
-
-
-
-
-
TOTAL
86,955,784
346,500
2,000,000
7,915,160
(51,205,784)
46,011,660
# These movements represent on-market purchase of shares during the year by the respective KMPs.
* This represents the balance of shares held by the KMP at date of their resignation
Includes shares held directly, indirectly and beneficially by KMP.
1. Guido Belgiorno-Nettis resigned as a Non-Executive Director on 19 November 2018 and was appointed Non-Executive Chairperson on 10 December 2018.
2. Ian Lynass commenced employment of 22 January 2018 and was appointed to Chief Executive Officer on 19 March 2018 and was appointed Managing Director on 28 June
2018. Prior to his appointment Mr Lynass held 346,500 shares. Mr Lynass and his related parties have subsequently bought a further 567,500 shares on-market.
3. David Iverach retired as Alternate Non-Executive Director to Guido Belgiorno-Nettis on 21 March 2018 and was appointed Non-Executive Director on 10 December 2018.
4. Ian Widdicombe joined as Non-Executive Director on 13 June 2017.
5. Scott Macdonald was appointed Chief Financial Officer and Company Secretary on 15 June 2018. He was appointed Interim Executive Director on 3 December 2018 and
resigned from the Board as Interim Executive Director on 10 December 2018.The shares acquired on-market were purchased after his appointment as Chief Financial
Officer and Company Secretary.
6. Carmelo Bontempo retired from the Board on 30 November 2018 and forfeited his share options. The net change reflects that they were not a Director at period end.
7. Chris Cook commenced as Alternate Non-Executive Director to Guido Belgiorno-Nettis on 21 March 2018 and resigned as Alternate Non-Executive Director on 19
November 2018.
8. Guido Bressani resigned as Non-Executive Director on 3 April 2018. The net change reflects that he was not a Director at year-end.
9. Massimo Bergomi resigned as Chief Executive Officer and Managing Director on 19 March 2018. The net change reflects that he was not a Director at year-end.
10. Michael West resigned as Chief Financial Officer and Company Secretary on 15 June 2018. The net change above reflects that he was not a KMP at year-end.
OPTION HOLDING OF KMP
The table below discloses the number of share options granted, vested or lapsed during the year. Share options do not carry
any voting or dividend rights, and can only be exercised once the vesting conditions have been met.
Balance at
the start of
the year
Granted as
remuneration
Options
exercised
Carmelo Bontempo1
2,000,000
TOTAL
2,000,000
-
-
No.
forfeited
during the
year
(2,000,000)
(2,000,000)
-
-
Balance at
the end of
the year
Exercisable
at end of
the year
Not
exercisable
at end of
the year
-
-
-
-
-
-
1. Carmelo Bontempo retired from the Board on 30 November 2018 and forfeited his options.
T E M P O A U S T R A L I A L I M I T E D A N N U A L R E P O R T 2 0 1 8 2 3
R E M U N E R A T I O N R E P O R T | A U D I T E D
RIGHTS HOLDING OF KMP
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.
Balance
at the
start of
the year
Granted as
remuneration
Rights
vested
Rights
forfeited
Balance
at the
end of
the year
Vested
at end
of year
Vested and
exercisable
at end of
year
Vested and
exercisable
at end of
year
Ian Lynass1
-
500,000
-
-
500,000
Massimo Bergomi2
2,750,000
-
(2,000,000)
(750,000)
Michael West3
2,000,000
600,000
-
(2,600,000)
-
-
TOTAL
4,750,000
1,100,000 (2,000,000)
(3,350,000)
500,000
-
-
-
-
-
-
-
-
-
-
-
-
1. Rights were granted at employment commencement and accordingly no ongoing performance conditions were set as this was issued as a sign on bonus.
The performance rights granted are subject to continued employment over three years of service.
2. Rights vested/forfeited during the year based on achievement/non-achievement of hurdles. The vested performance rights were converted to ordinary shares during the year.
3. Rights granted during the year had no ongoing performance conditions as a retention mechanism however they were forfeited on resignation.
OTHER TRANSACTIONS AND BALANCES WITH KMP AND THEIR RELATED PARTIES
PURCHASES
During the year the following purchases were made from entities related to key management personnel:
• $34,400 from Angophora Capital Pty Ltd, of which Guido Belgiorno-Nettis is a Director. This amount had not been paid at
31 December 2018.
• $9,091 from Bontempo Nominees Pty Ltd, of which Charlie Bontempo is a Director.
The purchases from related parties related to consulting and project management services and are on 30-day terms with no
interest penalties. Outstanding balances at year-end are unsecured and interest free and settlement occurs in cash.
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T E M P O A U S T R A L I A L I M I T E D A N N U A L R E P O R T 2 0 1 8 2 5
R E M U N E R A T I O N R E P O R T | A U D I T E D
ADDITIONAL INFORMATION
The earnings of the consolidated entity for the five years to 31 December 2018 are summarised below:
2018
$
2017
$
2016
$
2015
$
2014
$
Revenue and other income (excluding interest income)
41,690,555
18,113,770
81,142,374
78,079,491
16,026,422
EBITDA
EBIT
(5,400,483)
(1,793,556)
6,392,674
4,578,810
(1,859,910)
(6,038,665)
(2,396,666)
6,200,759
4,504,939
(1,935,510)
(Loss)/Profit after income tax
(5,648,445)
(1,047,007)
5,454,698
6,739,995
(1,306,483)
The factors that are considered to affect total shareholders return ('TSR') are summarised below
Share price at financial year end ($)
0.145
0.240
0.230
0.120
0.050
Total dividends declared (cents per share)
-
-
-
-
-
Basic (loss)/earnings per share (cents per share)
(2.344)
(0.435)
2.713
3.449
(0.772)
DIRECTOR AND KMP AGREEMENTS
The company currently has service agreements with its non-executive 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:
Guido Belgiorno-Nettis AM
Non-Executive Chairperson
Agreement Commenced:
10 December 2018
Details:
Name:
Title:
$15,000 per annum inclusive of superannuation (if applicable)
David Iverach
Non-Executive Director
Agreement Commenced:
10 December 2018
Details:
Name:
Title:
$15,000 per annum inclusive of superannuation (if applicable)
Ian Widdicombe
Non-Executive Director
Agreement Commenced:
13 June 2017
Details:
$15,000 per annum inclusive of superannuation (if applicable)
The company has non-fixed term employment contracts with its executives. The contracts detail the formal terms and conditions
of the employment.
Name:
Title:
Ian Lynass
Managing Director and Chief Executive Officer
Agreement Commenced:
22 January 2018
Terms of Agreement:
Permanent full time
Details:
Base salary of $250,000 per annum plus superannuation. Three months termination notice by
either party. The employee will receive a sign-on offer of 500,000 performance rights subject
to being an employee for three years after commencement date (good leaver provisions to
apply).
2 6
Name:
Title:
Scott Macdonald
Chief Financial Officer and Company Secretary
Agreement Commenced:
15 June 2018
Terms of Agreement:
Permanent full time
Details:
Name:
Title:
Base salary of $275,000 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
ESIRP subject to the satisfaction of specified milestones and performance criteria (both
individual and company).
Massimo Bergomi
Chief Executive Officer and Managing Director (resigned 19 March 2018)
Agreement Commenced:
11 January 2016
Terms of Agreement:
Permanent full time
Details:
Name:
Title:
Base salary of $420,000 per annum including 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 Mr Bergomi
three months’ notice.
Michael West
Chief Financial Officer and Company Secretary (resigned 15 June 2018)
Agreement Commenced:
26 September 2014
Terms of Agreement:
Permanent full time
Details:
Base salary of $225,000 per annum plus superannuation. Three months termination notice
requirement 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 ESIRP to the value up to 30% of base salary subject to the satisfaction of
specified milestones and performance criteria (both individual and company).
Signed in accordance with a resolution of the directors.
Guido Belgiorno-Nettis AM
Chairman
Date: 29 March 2019
T E M P O A U S T R A L I A L I M I T E D A N N U A L R E P O R T 2 0 1 8 2 7
AUDITOR’S INDEPENDENCE DECLARATION
AU D I TO R’S I N D E P E N D E N CE
D E CL A R AT I O N
AUDITORS INDEPENDENCE DECLARATION
2 8
18 | P A G E
CO NS O L I DAT E D STAT E M E N T
O F CO M P R E H E NS I V E I N CO M E
FOR THE YEAR ENDED 31 DECEMBER 2018
Consolidated entity
Revenue from contracts with customers
Other income
Revenue and Other income
Employee and director benefits
Administration costs
Occupancy costs
Depreciation and amortisation
Other expenses
Project material costs
Equipment and other subcontractor costs
Listing and other statutory charges
Interest and finance charges
Other professional expenses
Impairment expense
Total expenses
Note
4
4
6
12,13
5
13,14
2018
$’000
40,492
1,301
41,793
20,170
1,718
798
639
128
8,661
11,596
50
126
679
3,230
47,795
2017
$’000
18,114
1,521
19,635
12,717
715
529
471
382
3,900
2,079
57
262
788
-
21,900
Loss before income tax expense
(6,002)
(2,265)
Income tax benefit
Loss attributable to the members of the parent
Other comprehensive income
Total comprehensive loss
Net loss attributable to members of the parent entity
Loss per share
Basic loss – cents per share
Diluted loss – cents per share
The accompanying notes form part of these financial statements.
7
21
21
354
(5,648)
-
(5,648)
(5,648)
(2.3)
(2.3)
1,218
(1,047)
-
(1,047)
(1,047)
(0.4)
(0.4)
T E M P O A U S T R A L I A L I M I T E D A N N U A L R E P O R T 2 0 1 8 2 9
CO NS O L I DAT E D STAT E M E N T
O F F I N A N CI A L P OS I T I O N
AS AT 31 DECEMBER 2018
Consolidated entity
Note
2018
$’000
2017
$’000 Restated
(Note 2.4)
CURRENT ASSETS
Cash and short-term deposits
Trade and other receivables
Contract assets
Inventories
Prepayments
Total current assets
NON-CURRENT ASSETS
Plant and equipment
Goodwill
Intangible assets
Deferred tax assets
Total non-current assets
Total assets
CURRENT LIABILITIES
Trade and other payables
Interest bearing loans and borrowings
Current tax liabilities
Provisions
Total current liabilities
NON-CURRENT LIABILITIES
Interest bearing loans and borrowings
Contingent consideration
Provisions
Total non-current liabilities
Total liabilities
Net assets
EQUITY
Contributed equity
Share based payment reserve
Accumulated losses
Total equity
The accompanying notes form part of these financial statements.
3 0
8
9
10
11
12
13,14
13
7
16
17
7
18
17
18
19
19
4,766
5,411
2,723
402
394
13,696
2,312
9,230
466
5,318
17,326
31,022
3,831
1,326
-
679
5,836
843
-
58
901
6,737
24,285
80,341
1,580
(57,636)
24,285
11,017
5,658
763
400
1,089
18,927
1,539
11,793
504
4,831
18,667
37,594
2,879
164
209
1,236
4,488
25
3,054
112
3,191
7,679
29,915
79,893
2,010
(51,988)
29,915
CO NS O L I DAT E D STAT E M E N T
O F CH A N G E S I N E Q U I T Y
FOR THE YEAR ENDED 31 DECEMBER 2018
Consolidated
At 1 January 2017
Loss for the year
Other comprehensive income
Total comprehensive loss
Share based payments
Options exercised
Reversal of un-vested options
Treasury shares
Acquisition of treasury shares
Tax effect relating to share based payment
Tax effect relating to share issue cost
Contributed
Equity
Accumulated
losses
Share based
payments
reserve
Total equity
Note
$’000
$’000
$’000
$’000
80,075
(50,941)
1,334
-
-
-
-
505
-
(7)
(706)
-
26
(1,047)
-
(1,047)
-
-
-
-
-
-
-
-
-
-
520
-
(24)
-
-
180
-
30,468
(1,047)
-
(1,047)
520
505
(24)
(7)
(706)
180
26
At 31 December 2017
79,893
(51,988)
2,010
29,915
At 1 January 2018
Loss for the year
Other comprehensive income
Total comprehensive loss
Share-based payments
Reversal of un-vested options
Acquisition of treasury shares
Tax effect relating to share based
payments
Tax effect relating to share issue costs
Other contributed equity on settlement of
contingent consideration for acquisition of
KP Electric
25
79,893
(51,988)
2,010
-
-
-
-
-
(387)
-
(15)
850
(5,648)
-
(5,648)
-
-
-
-
-
-
-
-
-
427
(776)
-
(81)
-
-
29,915
(5,648)
-
(5,648)
427
(776)
(387)
(81)
(15)
850
At 31 December 2018
80,341
(57,636)
1,580
24,285
The accompanying notes form part of these financial statements.
T E M P O A U S T R A L I A L I M I T E D A N N U A L R E P O R T 2 0 1 8 3 1
CO NS O L I DAT E D STAT E M E N T
O F CAS H F LOWS
FOR THE YEAR ENDED 31 DECEMBER 2018
CASH FLOW FROM OPERATING ACTIVITIES
Receipts from customers
Payments to suppliers and employees
Income tax paid
Interest and finance charges paid
Interest received
Consolidated Entity
Note
2018
$’000
2017
$’000
43,001
(47,165)
(209)
(126)
103
20,461
(27,408)
(211)
(103)
393
Net cash used in operating activities
20
(4,396)
(6,868)
CASH FLOW FROM INVESTING ACTIVITIES
Payment for acquisition of businesses (net of cash acquired)
25
(2,411)
(6,660)
Proceeds from sale of property, plant and equipment
Intangibles
Payments for property plant and equipment
740
-
(689)
91
(112)
(341)
Net cash used in investing activities
(2,360)
(7,022)
CASH FLOW FROM FINANCING ACTIVITIES
Payment for acquisition of treasury shares
Proceeds from issue of equity instruments
Proceeds from borrowings
Repayment of borrowings
Net cash provided by / (used in) financing activities
Net decrease in cash and cash equivalents
Cash and cash equivalents at beginning of year
Total cash and cash equivalents at the end of the year
The accompanying notes form part of these financial statements.
19
19
17
17
(387)
-
1,149
(257)
505
(728)
505
190
(771)
(804)
(6,251)
(14,694)
11,017
4,766
25,711
11,017
3 2
N OT E S TO T H E CO NS O L I DAT E D
F I N A N CI A L STAT E M E N TS
FOR THE YEAR ENDED 31 DECEMBER 2018
1. Corporate information
The consolidated financial statements of Tempo Australia
Limited (the Company) and its subsidiaries (collectively,
the Group) were authorised for issue in accordance with
a resolution of the directors on 29 March 2019. Tempo
Australia Limited is a for profit company limited by shares,
incorporated in Australia whose shares are publicly traded
on the Australian Stock Exchange. The company’s registered
office is Level 3, 1060 Hay Street, West Perth WA 6005
Australia.
The nature of the operations and principal activities of the
consolidated entity are described in the Directors’ Report.
2. Significant accounting policies
2.1. Basis of preparation
The consolidated financial statements are general-
purpose financial statements, which have been prepared
in accordance with the requirements of the Corporations
Act 2001, Australian Accounting Standards and other
authoritative pronouncements of the Australian Accounting
Standards Board (AASB).
The consolidated financial statements have been
prepared on a historical cost basis, except for contingent
consideration payable which is measured at fair value.
The consolidated financial report is presented in Australian
dollars and all values are rounded to the nearest thousand
($’000), except when otherwise indicated, under the
option available to the company under ASIC Corporations
(Rounding in Financial/Director’s Reports) Instrument
2016/191. The Company is an entity to which this legislative
instrument applies.
The accounting policies have been consistently applied to
all the years presented, except for the impact of adopting
of new accounting standards. During the year ended 31
December 2018 the Group adopted AASB 15 Revenue from
contracts with customers and AASB 9 Financial instruments.
The impact of the adoption of these new standards is
discussed further in Note 2.4.
Compliance with International Financial Reporting
Standards (IFRS)
The financial report also complies with the IFRS as issued by
the International Accounting Standards Board (IASB).
2.2. Basis of consolidation
The consolidated financial statements comprise the
financial statements of the Company and its subsidiaries
as at 31 December 2018. Control is achieved when the
Group is exposed, or has rights, to variable returns from its
involvement with the investee and the ability to affect those
returns through its power over the investee. Specifically, the
Group controls an investee if, and only if, the Group has:
• Power over the investee (i.e., existing rights that give it
the current ability to direct the relevant activities of the
investee)
• Exposure, or rights, to variable returns from its
involvement with the investee
• The ability to use its power over the investee to affect
its returns
Generally, there is a presumption that a majority of voting
rights results in control. To support this presumption and
when the Group has less than a majority of voting or similar
rights of an investee, the Group considers all relevant facts
and circumstances in assessing whether it has power over an
investee, including:
The contractual arrangement(s) with the other vote holders
of the investee
• Rights arising from other contractual arrangements
• The Group’s voting rights and potential voting rights
The Group re-assesses whether it controls an investee if facts
and circumstances indicate that there are changes to one
or more of the three elements of control. Consolidation of
a subsidiary begins when the Group obtains control over
the subsidiary and ceases when the Group loses control
of the subsidiary. Assets, liabilities, income and expenses
of a subsidiary acquired or disposed of during the year
are included in the consolidated financial statements from
the date the Group gains control until the date the Group
ceases to control the subsidiary.
Profit or loss and each component of Other Comprehensive
Income (OCI) are attributed to the equity holders of the
parent of the Group and to the non-controlling interests,
even if this results in the non-controlling interests having
a deficit balance. When necessary, adjustments are made
to the financial statements of subsidiaries to bring their
accounting policies in line with the Group’s accounting
policies. All intra-group assets and liabilities, equity,
income, expenses and cash flows relating to transactions
between members of the Group are eliminated in full on
consolidation.
A change in the ownership interest of a subsidiary, without a
loss of control, is accounted for as an equity transaction.
If the Group loses control over a subsidiary, it derecognises
the related assets (including goodwill), liabilities, non-
controlling interest and other components of equity, while
any resultant gain or loss is recognised in profit or loss. Any
investment retained is recognised at fair value.
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2.3. Summary of significant accounting policies
• Expected to be realised or intended to be sold or
a.
Business combinations and goodwill
Business combinations are accounted for using the
acquisition method. The cost of an acquisition is measured
as the aggregate of the consideration transferred, which
is measured at acquisition date fair value, and the amount
of any non-controlling interests in the acquiree. For each
business combination, the Group elects whether to measure
the non-controlling interests in the acquiree at fair value or
at the proportionate share of the acquiree’s identifiable net
assets. Acquisition-related costs are expensed as incurred
and included in administrative expenses.
When the Group acquires a business, it assesses the financial
assets and liabilities assumed for appropriate classification
and designation in accordance with the contractual terms,
economic circumstances and pertinent conditions as at the
acquisition date.
Any contingent consideration to be transferred by the
acquirer will be recognised at fair value at the acquisition
date. Contingent consideration classified as equity is not
remeasured and its subsequent settlement is accounted
for within equity. Contingent consideration classified as
a liability that is a financial instrument and is measured at
fair value with the changes in fair value recognised in the
statement of profit or loss.
Goodwill is initially measured at cost (being the excess
of the aggregate of the consideration transferred and
the amount recognised for non-controlling interests and
any previous interest held over the net identifiable assets
acquired and liabilities assumed). If the fair value of the net
assets acquired is in excess of the aggregate consideration
transferred, the Group re-assesses whether it has correctly
identified all of the assets acquired and all of the liabilities
assumed and reviews the procedures used to measure
the amounts to be recognised at the acquisition date. If
the reassessment still results in an excess of the fair value
of net assets acquired over the aggregate consideration
transferred, then the gain is recognised in profit or loss.
After initial recognition, goodwill is measured at cost less
any accumulated impairment losses. For the purpose
of impairment testing, goodwill acquired in a business
combination is, from the acquisition date, allocated to each
of the Group’s cash-generating units that are expected to
benefit from the combination, irrespective of whether other
assets or liabilities of the acquiree are assigned to those
units.
Where goodwill has been allocated to a cash-generating
unit (CGU) and part of the operation within that unit is
disposed of, the goodwill associated with the disposed
operation is included in the carrying amount of the
operation when determining the gain or loss on disposal.
Goodwill disposed in these circumstances is measured
based on the relative values of the disposed operation and
the portion of the cash-generating unit retained.
b. Current versus non-current classifications
The Group presents assets and liabilities in the statement
of financial position based on a current/non-current
classification. An asset is current when it is:
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consumed in the normal operating cycle
• Held primarily for the purpose of trading
• Expected to be realised within twelve months after the
reporting period
or
• Cash or cash equivalent unless restricted from being
exchanged or used to settle a liability for at least twelve
months after the reporting period
All other assets are classified as non-current.
A liability is current when:
•
It is expected to be settled in the normal operating cycle
•
It is held primarily for the purpose of trading
•
It is due to be settled within twelve months after the
reporting period
or
• There is no unconditional right to defer the settlement of
the liability for at least twelve months after the reporting
period
The Group classifies all other liabilities as non-current.
Deferred tax assets and liabilities are classified as non-
current assets and liabilities.
c.
Revenue from contracts with customers
Revenue from contracts with customers is recognised when
goods and services are transferred to the customer at an
amount that reflects the consideration to which the Group
expects to be entitled in exchange for those goods and
services. The Group has generally concluded that it is the
principal in its revenue arrangements because it typically
controls the goods and services before transferring them to
the customer.
Maintenance and construction electrical services
The Group provides maintenance and construction electrical
services. The Group assesses each contract to identify
the performance obligations and transaction price within
the contract. The total transaction price is allocated to
performance obligations based on relative standalone
selling prices.
For those contracts where the customer simultaneously
receives and consumes the goods and service provided by
the Group; the Group’s performance creates or enhances
an asset that the customer controls as the asset is created
or enhanced; or work is performed on assets that have no
alternative use to the Group and the Group has a right to
payment for performance to date, revenue is recognised
over time. Where the criteria to recognise revenue over time
is not satisfied the group recognises revenue at a point in
time.
If the consideration in the contract includes a variable
amount, typically for cost plus contracts or contracts with
a schedule of rates, the Group estimates the amount of
the consideration to which it is entitled in exchange for
transferring the goods and services to the customer. The
variable consideration is estimated at contract inception
and constrained until it is highly probable that a significant
reversal of the cumulative revenue recognised will not
occur when the associated uncertainty with the variable
consideration is subsequently resolved. Certain contracts are
subject to claims which are enforceable under the contract. If
the claim does not result in any additional goods or services,
the transaction price is updated and the claim accounted for
as variable consideration.
Where appropriate, the Group applies the variable
consideration allocation exception to allocate variable
consideration to distinct services in a contract where the
contract includes a series of distinct services that form a
single performance obligation.
For other contracts where the Group has a right to
consideration in an amount that corresponds directly with
the value to the customer of the Group’s performance
completed to date, the Group utilised the practical
expedient to recognise revenue in the amounts to which the
Group has a right to invoice.
In all other cases, in recognising revenue over time, the
group applies an input method to measure the Group’s
progress towards satisfying the performance obligation
by comparing costs incurred to date, mainly labour and
consumables, to the total expected costs.
Project fulfilment costs
Contract fulfilment costs are expensed as incurred except
where they generate or enhance resources of the Group
that will be used to satisfy future performance obligations
in which case they are capitalised and amortised over the
course of the contract.
Contract assets
A contract asset is the right to consideration in exchange
for goods or services transferred to the customer. If the
Group transfers goods or services to a customer before the
customer pays consideration or before payment is due, a
contract asset is recognised for the earned consideration.
If the Group’s right to an amount of consideration is
unconditional (other than the passage of time), the contract
asset is classified as a receivable.
The disclosures of significant accounting judgements,
estimates and assumptions relating to revenue from
contracts with customers are provided in Note 3.
d. Government grants
Government grants are recognised where there is
reasonable assurance that the grant will be received and all
attached conditions will be complied with. When the grant
relates to an expense item, it is recognised as income on a
systematic basis over the periods that the related costs, for
which it is intended to compensate, are expensed. When the
grant relates to an asset, it is recognised as income in equal
amounts over the expected useful life of the related asset.
When the Group receives grants of non-monetary assets, the
asset and the grant are recorded at nominal amounts and
released to profit or loss over the expected useful life of the
asset, based on the pattern of consumption of the benefits
of the underlying asset by equal annual instalments.
e.
Income Tax
Current income tax
Current income tax assets and liabilities are measured
at the amount expected to be recovered from or paid to
the taxation authorities. The tax rates and tax laws used
to compute the amount are those that are enacted or
substantively enacted at the reporting date in the countries
where the Group operates and generates taxable income.
Current income tax relating to items recognised directly in
equity is recognised in equity and not in the statement of
profit or loss. Management periodically evaluates positions
taken in the tax returns with respect to situations in which
applicable tax regulations are subject to interpretation and
establishes provisions where appropriate.
Deferred tax
Deferred tax is provided using the full liability balance sheet
method on temporary differences between the tax bases of
assets and liabilities and their carrying amounts for financial
reporting purposes at the reporting date.
Deferred tax liabilities are recognised for all taxable
temporary differences, except:
• When the deferred tax liability arises from the initial
recognition of goodwill or an asset or liability in a
transaction that is not a business combination and, at the
time of the transaction, affects neither the accounting
profit nor taxable profit or loss
•
In respect of taxable temporary differences associated
with investments in subsidiaries, associates and interests
in joint arrangements, when the timing of the reversal
of the temporary differences can be controlled and it is
probable that the temporary differences will not reverse
in the foreseeable future
Deferred tax assets are recognised for all deductible
temporary differences, the carry forward of unused tax
credits and any unused tax losses. Deferred tax assets are
recognised to the extent that it is probable that taxable
profit will be available against which the deductible
temporary differences, and the carry forward of unused tax
credits and unused tax losses can be utilised, except:
• When the deferred tax asset relating to the deductible
temporary difference arises from the initial recognition of
an asset or liability in a transaction that is not a business
combination and, at the time of the transaction, affects
neither the accounting profit nor taxable profit or loss
•
In respect of deductible temporary differences associated
with investments in subsidiaries, associates and interests
in joint arrangements, deferred tax assets are recognised
only to the extent that it is probable that the temporary
differences will reverse in the foreseeable future
and taxable profit will be available against which the
temporary differences can be utilised
The carrying amount of deferred tax assets is reviewed at
each reporting date and reduced to the extent that it is no
longer probable that sufficient taxable profit will be available
to allow all or part of the deferred tax asset to be utilised.
Unrecognised deferred tax assets are re-assessed at each
reporting date and are recognised to the extent that it has
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become probable that future taxable profits will allow the
deferred tax asset to be recovered.
been discounted to their present values in determining
recoverable amounts.
Deferred tax assets and liabilities are measured at the tax
rates that are expected to apply in the year when the asset is
realised or the liability is settled, based on tax rates (and tax
laws) that have been enacted or substantively enacted at the
reporting date.
Deferred tax relating to items recognised outside profit or
loss is recognised outside profit or loss. Deferred tax items
are recognised in correlation to the underlying transaction
either in OCI or directly in equity.
Tax benefits acquired as part of a business combination,
but not satisfying the criteria for separate recognition at
that date, are recognised subsequently if new information
about facts and circumstances change. The adjustment is
either treated as a reduction in goodwill (as long as it does
not exceed goodwill) if it reflects new information obtained
about facts and circumstances that exist at the acquisition
date that, if known, would have affected the amount
recognised at that date where recognised during the
measurement period or recognised in profit or loss.
The Group offsets deferred tax assets and deferred tax
liabilities if and only if it has a legally enforceable right to
set off current tax assets and current tax liabilities and the
deferred tax assets and deferred tax liabilities relate to
income taxes levied by the same taxation authority on either
the same taxable entity or different taxable entities which
intend either to settle current tax liabilities and assets on
a net basis, or to realise the assets and settle the liabilities
simultaneously, in each future period in which significant
amounts of deferred tax liabilities or assets are expected to
be settled or recovered.
Tax consolidated group
Tempo Australia Limited and its wholly-owned Australian
resident subsidiaries formed a tax consolidated group with
effect from 1 July 2005.
In addition to its own current and deferred tax amounts,
Tempo Australia Limited also recognises the current tax
liabilities (or assets) and deferred tax liabilities (or assets)
arising from unused tax losses and unused tax credits assumed
from controlled entities in the tax consolidated group.
f.
Property plant and equipment
Plant and equipment is 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 the recoverable amount is
made when impairment indicators are present.
The carrying amount of plant and equipment is reviewed
annually by the 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
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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 and
diminishing-value 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 lives used are listed as below:
Asset Class
Furniture and fixtures
Computer equipment
Plant & Equipment
Motor Vehicles
Useful live
5 – 10 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.
g.
Leases
The determination of whether an arrangement is (or
contains) a lease is based on the substance of the
arrangement at the inception of the lease. The arrangement
is, or contains, a lease if fulfilment of the arrangement is
dependent on the use of a specific asset (or assets) and the
arrangement conveys a right to use the asset (or assets),
even if that asset is (or those assets are) not explicitly
specified in an arrangement.
Group as a lessee
A lease is classified at the inception date as a finance lease
or an operating lease. A lease that transfers substantially all
the risks and rewards incidental to ownership to the Group is
classified as a finance lease.
Finance leases are capitalised at the commencement of
the lease at the inception date fair value of the leased
property or, if lower, at the present value of the minimum
lease payments. Lease payments are apportioned between
finance charges and reduction of the lease liability so as to
achieve a constant rate of interest on the remaining balance
of the liability. Finance charges are recognised in finance
costs in the statement of profit or loss.
A leased asset is depreciated over the useful life of the
asset. However, if there is no reasonable certainty that the
Group will obtain ownership by the end of the lease term,
the asset is depreciated over the shorter of the estimated
useful life of the asset and the lease term.
An operating lease is a lease other than a finance lease.
Operating lease payments are recognised as an operating
expense in the statement of profit or loss on a straight-line
basis over the lease term.
h.
Borrowing costs
Borrowing costs directly attributable to the acquisition,
construction or production of an asset that necessarily takes
a substantial period of time to get ready for its intended use
or sale are capitalised as part of the cost of the asset. All
other borrowing costs are expensed in the period in which
they occur. Borrowing costs consist of interest and other
costs that an entity incurs in connection with the borrowing
of funds.
i.
Intangible assets
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. Refer to Note 13 for further
details.
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 depreciation and
amortisation expense category.
Intangible assets with indefinite useful lives are not
amortised, but are tested for impairment annually 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.
An intangible asset is derecognised upon disposal (i.e. at
the date the recipient obtains control) or where no future
economic benefits are expected from its use or disposal.
Any gain or loss arising upon derecognition of the asset
(calculated as the difference between the net disposal
proceeds and the carrying amount of the asset) is included
in the statement of profit and loss.
Intangible assets have been recognised relating to the
acquisition of customer contracts through business
combinations. These assets have been measured at their
fair value at the date of acquisition and are amortised using
the straight-line method over periods of between 2.5 and 3
years.
Research and development costs
Research costs are expensed as incurred. Development
expenditures on an individual project are recognised as an
intangible asset when the Group can demonstrate:
• The technical feasibility of completing the intangible
asset so that the asset will be available for use or sale
•
Its intention to complete and its ability and intention to
use or sell the asset
• How the asset will generate future economic benefits
• The availability of resources to complete the asset
• The ability to measure reliably the expenditure during
development
Following initial recognition of the development
expenditure as an asset, the asset is carried at cost less any
accumulated amortisation and accumulated impairment
losses. Amortisation of the asset begins when development
is complete, and the asset is available for use. It is amortised
over the period of expected future benefit. During the
period of development, the asset is tested for impairment
annually.
j.
Financial instruments
A financial instrument is any contract that gives rise to a
financial asset of one entity and a financial liability or equity
instrument of another entity. In 2018 the Group implemented
AASB 9 Financial Instruments. Tempo has disclosed the
current and prior year accounting policies as below.
Pre 1 January 2018 accounting policy
Initial recognition and measurement
Financial assets and financial liabilities are recognised when
the entity becomes a party to the contractual provisions to
the instrument. For financial assets, this is equivalent to the
date that the Company commits itself to either the purchase
or sale of the asset.
Financial assets are classified, at initial recognition, as
financial assets at fair value through profit or loss, loans and
receivables, held-to-maturity investments, available-for-sale
financial assets, or as derivatives designated as hedging
instruments in an effective hedge, as appropriate.
Financial instruments are initially measured at fair value
plus transaction costs, except where the instrument is
classified “at fair value through profit or loss”, in which case
transaction costs are expensed to profit or loss immediately.
Classification and subsequent measurement
Financial instruments are subsequently measured at fair value,
amortised cost using the effective interest method, or cost.
Amortised cost is calculated as the amount at which the
financial asset or financial liability is measured at initial
recognition less principal repayments and any reduction for
impairment, and adjusted for any cumulative amortisation of
the difference between that initial amount and the maturity
amount calculated using the effective interest method.
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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
and 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
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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.
Post 1 January 2018 accounting policy
Financial Assets
Initial recognition and measurement
Financial assets are classified at initial recognition, and
subsequently measured at amortised cost, fair value through
other comprehensive income (OCI), and fair value through
profit or loss.
The classification of financial assets at initial recognition
depends on the financial asset’s contractual cash flow
characteristics and the Group’s business model for
managing them. With the exception of trade receivables
that do not contain a significant financing component or
for which the Group has applied the practical expedient,
the Group initially measures a financial asset at its fair value
plus, in the case of a financial asset not at fair value through
profit or loss, transaction costs. Trade receivables that do not
contain a significant financing component or for which the
Group has applied the practical expedient are measured at
the transaction price determined under AASB 15. Refer to
the accounting policies in section (d) Revenue from contracts
with customers.
In order for a financial asset to be classified and measured
at amortised cost or fair value through OCI, it needs to give
rise to cash flows that are ‘solely payments of principal and
interest (SPPI)’ on the principal amount outstanding. This
assessment is referred to as the SPPI test and is performed
at an instrument level.
The Group’s business model for managing financial assets
refers to how it manages its financial assets in order to
generate cash flows. The business model determines
whether cash flows will result from collecting contractual
cash flows, selling the financial assets, or both.
Subsequent measurement
For purposes of subsequent measurement, financial assets
are classified in four categories:
• Financial assets at amortised cost (debt instruments)
• Financial assets at fair value through OCI with recycling of
cumulative gains and losses (debt instruments)
• Financial assets designated at fair value through OCI
with no recycling of cumulative gains and losses upon
derecognition (equity instruments)
• Financial assets at fair value through profit or loss
Financial assets at amortised cost (debt instruments)
This is the only category of financial asset that the Group
has. The Group measures financial assets at amortised cost
if both of the following conditions are met:
• The financial asset is held within a business model with
the objective to hold financial assets in order to collect
contractual cash flows
and
• The contractual terms of the financial asset give rise on
specified dates to cash flows that are solely payments
of principal and interest on the principal amount
outstanding
Financial assets at amortised cost are subsequently
measured using the effective interest (EIR) method and are
subject to impairment. Gains and losses are recognised in
profit or loss when the asset is derecognised, modified or
impaired.
The Group’s financial assets at amortised cost includes trade
and other receivables.
Derecognition
A financial asset (or, where applicable, a part of a financial
asset or part of a group of similar financial assets) is primarily
derecognised (i.e. removed from the Group’s consolidated
statement of financial position) when:
• The rights to receive cash flows from the asset have expired
or
• The Group has transferred its rights to receive cash
flows from the asset or has assumed an obligation to
pay the received cash flows in full without material delay
to a third party under a ‘pass-through’ arrangement;
and either (a) the Group has transferred substantially all
the risks and rewards of the asset, or (b) the Group has
neither transferred nor retained substantially all the risks
and rewards of the asset, but has transferred control of
the asset
When the Group has transferred its rights to receive cash
flows from an asset or has entered into a pass-through
arrangement, it evaluates if, and to what extent, it has
retained the risks and rewards of ownership. When it has
neither transferred nor retained substantially all of the risks
and rewards of the asset, nor transferred control of the asset,
the Group continues to recognise the transferred asset to
the extent of its continuing involvement. In that case, the
Group also recognises an associated liability. The transferred
asset and the associated liability are measured on a basis
that reflects the rights and obligations that the Group has
retained.
Continuing involvement that takes the form of a guarantee
over the transferred asset is measured at the lower of the
original carrying amount of the asset and the maximum
amount of consideration that the Group could be required
to repay.
Impairment of financial assets
Further disclosures relating to impairment of financial assets
are also provided in trade receivables including contract
assets (Note 9).
The Group recognises an allowance for expected credit
losses (ECLs) for all debt instruments not held at fair value
through profit or loss. ECLs are based on the difference
between the contractual cash flows due in accordance with
the contract and all the cash flows that the Group expects
to receive, discounted at an approximation of the original
effective interest rate. The expected cash flows will include
cash flows from the sale of collateral held or other credit
enhancements that are integral to the contractual terms.
ECLs are recognised in two stages. For credit exposures
for which there has not been a significant increase in credit
risk since initial recognition, ECLs are provided for credit
losses that result from default events that are possible within
the next 12-months (a 12-month ECL). For those credit
exposures for which there has been a significant increase
in credit risk since initial recognition, a loss allowance is
required for credit losses expected over the remaining life
of the exposure, irrespective of the timing of the default (a
lifetime ECL).
For trade receivables and contract assets, the Group applies
a simplified approach in calculating ECLs. Therefore, the
Group does not track changes in credit risk, but instead
recognises a loss allowance based on lifetime ECLs at each
reporting date. The Group has established a provision matrix
that is based on its historical credit loss experience, adjusted
for forward-looking factors specific to the debtors and the
economic environment.
The Group may consider a financial asset to be in default
when internal or external information indicates that the
Group is unlikely to receive the outstanding contractual
amounts in full before taking into account any credit
enhancements held by the Group. A financial asset is written
off when there is no reasonable expectation of recovering
the contractual cash flows.
Financial liabilities
Initial recognition and measurement
Financial liabilities are classified, at initial recognition, as
financial liabilities at fair value through profit or loss, loans
and borrowings, payables, or as derivatives designated as
hedging instruments in an effective hedge, as appropriate.
All financial liabilities are recognised initially at fair value
and, in the case of loans and borrowings and payables, net
of directly attributable transaction costs.
The Group’s financial liabilities include trade and other
payables, and loans and borrowings.
Subsequent measurements
All financial liabilities are subsequently measured at
amortised cost using the EIR method, unless they meet
certain criteria to be classified at fair value through profit or
loss in accordance with AASB 9.
Gains and losses are recognised in profit or loss when
the liabilities are derecognised as well as through the EIR
amortisation process.
Amortised cost is calculated by taking into account any
discount or premium on acquisition and fees or costs that
are an integral part of the EIR. The EIR amortisation is
included as finance costs in the statement of profit or loss.
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This category generally applies to interest-bearing loans and
borrowings. For more information, refer to Note 17.
The Group has not designated any financial liabilities as at
fair value through profit or loss.
Derecognition
A financial liability is derecognised when the obligation
under the liability is discharged or cancelled or expires.
When an existing financial liability is replaced by another
from the same lender on substantially different terms, or the
terms of an existing liability are substantially modified, such
an exchange or modification is treated as the derecognition
of the original liability and the recognition of a new liability.
The difference in the respective carrying amounts is
recognised in the statement of profit or loss.
k.
Inventories
Inventories are valued at the lower of cost and net realisable
value and are comprised entirely of consumables.
Cost is determined on a weighted average basis of the direct
costs of materials. Inventories determined to be obsolete or
damaged are written down to net realisable value.
Net realisable value is the estimated selling price in
the ordinary course of business, less estimated costs of
completion and the estimated costs necessary to make the
sale.
l.
Impairments of non-financial assets
Further disclosures relating to impairment of non-financial
assets are also provided in the following notes:
•
Intangible assets Note 13
• Goodwill Note 14
The Group assesses, at each reporting date, whether there is
an indication that an asset may be impaired. If any indication
exists, or when annual impairment testing for an asset
is required, the Group estimates the asset’s recoverable
amount. An asset’s recoverable amount is the higher of
an asset’s or CGU’s fair value less costs of disposal and its
value-in-use. The recoverable amount is determined for an
individual asset, unless the asset does not generate cash
inflows that are largely independent of those from other
assets or groups of assets. When the carrying amount of an
asset or CGU exceeds its recoverable amount, the asset is
considered impaired and is written down to its recoverable
amount.
In assessing value-in-use, the estimated future cash flows
are discounted to their present value using a post-tax
discount rate that reflects current market assessments of the
time value of money and the risks specific to the asset. In
determining fair value less costs of disposal, recent market
transactions are taken into account. If no such transactions
can be identified, an appropriate valuation model is used.
These calculations are corroborated by valuation multiples,
quoted share prices for publicly traded companies or other
available fair value indicators.
The impairment calculation is performed by the Group
using a value-in-use model with discounted cash flows. The
4 0
Group bases its impairment calculation on detailed budgets
and forecast calculations, which are prepared separately
for each of the Group’s CGUs to which the individual assets
are allocated. These budgets and forecast calculations
generally cover a five year period. A long-term growth rate is
calculated and applied to project future cash flows after the
fifth year.
Impairment losses of continuing operations are recognised
in the statement of profit or loss in expense categories
consistent with the function of the impaired asset.
For assets excluding goodwill, an assessment is made
at each reporting date to determine whether there is an
indication that previously recognised impairment losses no
longer exist or have decreased. If such indication exists, the
Group estimates the asset’s or CGU’s recoverable amount.
A previously recognised impairment loss is reversed only
if there has been a change in the assumptions used to
determine the asset’s recoverable amount since the last
impairment loss was recognised. The reversal is limited so
that the carrying amount of the asset does not exceed its
recoverable amount, nor exceed the carrying amount that
would have been determined, net of depreciation, had no
impairment loss been recognised for the asset in prior years.
Such reversal is recognised in the statement of profit or loss.
Goodwill is tested for impairment annually in December
and when circumstances indicate that the carrying value
may be impaired. Impairment is determined for goodwill by
assessing the recoverable amount of each CGU (or group of
CGUs) to which the goodwill relates. When the recoverable
amount of the CGU is less than its carrying amount, an
impairment loss is recognised. Impairment losses relating to
goodwill cannot be reversed in future periods.
Intangible assets with indefinite useful lives are tested for
impairment annually as at 31 December at the CGU level,
as appropriate, and when circumstances indicate that the
carrying value may be impaired.
m. Cash and short-term deposits
Cash and short-term deposits in the statement of financial
position comprise cash at banks and on hand and short-term
deposits with a maturity of three months or less, which are
subject to an insignificant risk of changes in value.
For the purpose of the consolidated statement of cash
flows, cash and cash equivalents consist of cash and short-
term deposits, as defined above, net of outstanding bank
overdrafts as they are considered an integral part of the
Group’s cash management.
n.
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.
o.
Provisions
Provisions are recognised when the Group has a present
obligation (legal or constructive) as a result of a past event,
it is probable that an outflow of resources embodying
economic benefits will be required to settle the obligation
and a reliable estimate can be made of the amount of
the obligation. When the Group expects some or all of a
provision to be reimbursed, for example, under an insurance
contract, the reimbursement is recognised as a separate
asset, but only when the reimbursement is virtually certain.
The expense relating to a provision is presented in the
statement of profit or loss net of any reimbursement.
If the effect of the time value of money is material, provisions
are discounted using a current pre-tax rate that reflects,
when appropriate, the risks specific to the liability. When
discounting is used, the increase in the provision due to the
passage of time is recognised as a finance cost.
p.
Superannuation, annual leave and long
service leave
Superannuation
The Group makes contributions as defined contributions.
There is no defined benefit superannuation scheme
operated by the Group.
Long service leave and annual leave
The Group does not expect its long service leave or annual
leave benefits to be settled wholly within 12 months of each
reporting date. The Group recognises a liability for long
service leave and annual leave measured as the present
value of expected future payments to be made in respect
of services provided by employees up to the reporting date
using the projected unit credit method. Consideration is
given to expected future wage and salary levels, experience
of employee departures, and periods of service. Expected
future payments are discounted using market yields at the
reporting date on high quality corporate bonds with terms
to maturity and currencies that match, as closely as possible,
the estimated future cash outflows.
q.
Share based payments
Some employees of the Group receive remuneration in the
form of share-based payments, whereby employees render
services as consideration for equity instruments (equity-
settled transactions).
Equity-settled Transactions
The cost of equity-settled transactions is determined by
the fair value at the date when the grant is made using an
appropriate valuation model, further details of which are
given in Note 27.
That cost is recognised in employee benefits expense
(Note 6), together with a corresponding increase in equity
(share-based payment reserves), over the period in which the
service and, where applicable, the performance conditions
are fulfilled (the vesting period). The cumulative expense
recognised for equity-settled transactions at each reporting
date until the vesting date reflects the extent to which the
vesting period has expired and the Group’s best estimate
of the number of equity instruments that will ultimately vest.
The expense or credit in the statement of profit or loss for
a period represents the movement in cumulative expense
recognised as at the beginning and end of that period.
Service and non-market performance conditions are not
taken into account when determining the grant date fair
value of awards, but the likelihood of the conditions being
met is assessed as part of the Group’s best estimate of
the number of equity instruments that will ultimately vest.
Market performance conditions are reflected within the
grant date fair value. Any other conditions attached to
an award, but without an associated service requirement,
are considered to be non-vesting conditions. Non-vesting
conditions are reflected in the fair value of an award and
lead to an immediate expensing of an award unless there
are also service and/or performance conditions.
No expense is recognised for awards that do not ultimately
vest because non-market performance and/or service
conditions have not been met. Where awards include a
market or non-vesting condition, the transactions are treated
as vested irrespective of whether the market or non-vesting
condition is satisfied, provided that all other performance
and/or service conditions are satisfied.
When the terms of an equity-settled award are modified, the
minimum expense recognised is the grant date fair value of
the unmodified award, provided the original vesting terms
of the award are met. An additional expense, measured as at
the date of modification, is recognised for any modification
that increases the total far value of the share-based payment
transaction, or is otherwise beneficial to the employee.
Where an award is cancelled by the entity or by the
counterparty, any remaining element of the fair value of the
award is expensed immediately through profit or loss.
The dilutive effect of outstanding options is reflected as
additional share dilution in the computation of diluted
earnings per share (further details are given in Note 21).
2.4. Changes in accounting policies and
disclosures
New and amended accounting standards and
interpretations
The Group applied AASB 9 Financial Instruments (AASB 9)
and AASB 15 Revenue from contracts with customers (AASB
15) for the first time during the current year. The nature and
effect of the changes as a result of adoption of these new
accounting standards are described below.
Several other amendments and interpretations apply for the
first time in 2018, but do not have a material impact on the
consolidated financial statements of the Group. The Group
has not early adopted any standards, interpretations or
amendments that have been issued but are not yet effective.
AASB 9
The Group has adopted AASB 9 as issued in July 2014
with the date of initial application being 1 January 2018.
In accordance with the transitional provisions in AASB
9, comparative figures have not been restated. AASB 9
replaces AASB 139 Financial Instruments: Recognition
and Measurement (AASB 139), bringing together all
three aspects of the accounting for financial instruments:
classification and measurement; impairment; and hedge
accounting. The accounting policies have been updated
to reflect the application of AASB 9 for the period from 1
January 2018 (see Note 2.3(j)).
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Classification and measurement
Under AASB 9, debt instruments are subsequently measured at fair value through profit or loss (FVPL), amortised cost, or fair
value through other comprehensive income (FVOCI). The classification is based on two criteria: the Group’s business model for
managing the assets; and whether the instruments’ contractual cash flows represent ‘solely payments of principal and interest’
on the principal amount outstanding (the ‘SPPI criterion’). The SPPI test is applied to the entire financial asset, even if it contains
an embedded derivative. Consequently a derivative embedded in a debt instrument is not accounted for separately.
At the date of initial application, existing financial assets and liabilities of the Group were assessed in terms of the requirements
of AASB 9. The assessment was conducted on instruments that had not been derecognised as at 1 January 2018. In this regard,
the Group has determined that the adoption of AASB 9 has impacted the classification of financial instruments at 1 January 2018
as follows:
Class of financial
instrument presented in
the statement of financial
position
Original measurement
category under AASB
139 (i.e. prior to
1 January 2018)
New measurement
category under
AASB 9 (i.e. from
1 January 2018)
Cash and cash equivalents
Loans and receivables
Trade and other receivables
Loans and receivables
Financial assets at
amortised cost
Financial assets at
amortised cost
Trade and other payables
Financial liability at
amortised cost
Financial liability at
amortised cost
Contingent consideration
Financial liability at fair
value
Financial liability at
fair value
Borrowings
Financial liability at
amortised cost
Financial liability at
amortised cost
Carrying value
under AASB 139 at
31 December 2017
Carrying value
under AASB 9 at
1 January 2018
$’000
11,017
6,421
2,879
3,054
189
$’000
11,017
6,421
2,879
3,054
189
The change in classification has not resulted in any re-measurement adjustments at 1 January 2018.
Impairment of financial assets
In relation to the financial assets carried at amortised cost, AASB 9 requires an expected credit loss model to be applied as
opposed to an incurred credit loss model under AASB 139. The expected credit loss model requires the Group to account
for expected credit losses and changes in those expected credit losses at each reporting date to reflect changes in credit
risk since initial recognition of the financial asset. In particular, AASB 9 requires the Group to measure the loss allowance at
an amount equal to lifetime expected credit loss (“ECL”) if the credit risk on the instrument has increased significantly since
initial recognition. On the other hand, if the credit risk on the financial instrument has not increased significantly since initial
recognition, the Group is required to measure the loss allowance for that financial instrument at an amount equal to the ECL
within the next 12 months.
As at 1 January 2018, the directors of the Company reviewed and assessed the Group’s existing financial assets for impairment
using reasonable and supportable information. The result of the assessment is as follows:
Items existing as at
1 January 2018 that are
subject to the impairment
provisions of AASB 9
Cash and cash equivalents
Trade receivables, other
receivables and contract
assets
Credit risk attributes
Cumulative additional
loss allowance recognised
on 1 January 2018
All balances are assessed to have low credit risk as they are
either on demand or have short term maturities and held with
reputable institutions with high credit ratings.
The Group applied the simplified approach and concluded that
no additional loss allowance was required at 1 January 2018.
$’000:
-
-
4 2
AASB 15
The Group has adopted AASB 15 as issued in May 2014
with the date of initial application being 1 January 2018.
In accordance with the transitional provisions in AASB 15
the standard has been applied using the full retrospective
approach. In this regard, the Group applied a practical
expedient and did not restate any contracts that were
completed at the beginning of the earliest period
presented.
AASB 15 supersedes AASB 118 Revenue (“AASB 118”),
AASB 111 Construction Contracts and related Interpretations
and it applies to all revenue arising from contracts with
customers, unless those contracts are in the scope of
other standards. The new standard establishes a five-step
model to account for revenue arising from contracts with
customers. Under AASB 15, revenue is recognised at an
amount that reflects the consideration to which an entity
expects to be entitled in exchange for transferring goods or
services to a customer.
Prior to the adoption of AASB 15, the Group accounted
for revenue from the provision of services with reference
to the stage of completion of the transaction at the end of
the reporting period, when the contract could be measured
reliably. The stage of completion was determined with
reference to the cost of services performed to date as a
percentage of total anticipated costs to be performed.
Where the outcome could not be estimated reliably, revenue
was only recognised to the extent that related expenditure
was recoverable. For jobs involving goods, the Group
recognises revenue on installation of the goods, when
risk and reward of ownership of the goods transfer to the
customer.
In accordance with AASB 15, the Group is required to
present a contract in the Statement of Financial Position
as a contract asset or contract liability depending on the
relationship between the Group’s performance and the
customer’s payment. The Group is obliged to present any
unconditional right to payment as a receivable. A contract
asset is considered to be unconditional if the right to receive
payment is only conditional on the passage of time. Under
AASB 118, amounts due from customers were previously
included in receivables.
At 1 January 2017 and 1 January 2018, all revenue contracts
were assessed, and it was determined that the adoption
of AASB 15 had no significant impact on the Group other
than the reclassification of contract assets net of impairment
amounting to $320,000 at 1 January 2017 and $763,000 at 1
January 2018 from trade and other receivables.
Standards and interpretations issued but not yet
adopted
Australian Accounting Standards and Interpretations that are
issued, but are not yet effective, up to the date of issuance
of the Group’s financial statements are disclosed below.
The Group intends to adopt these new standards and
interpretation, if applicable, when they become effective.
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 expected impact of this
standard.
AASB Interpretation 23 Uncertainty over Income Tax
Treatment
The Interpretation addresses the accounting for income
taxes when tax treatments involve uncertainty that affects
the application of AASB 112 and does not apply to taxes or
levies outside the scope of AASB 112, nor does it specifically
include requirements relating to interest and penalties
associated with uncertain tax treatments. The Interpretation
specifically addresses the following:
• Whether an entity considers uncertain tax treatments
separately
• The assumptions an entity makes about the examination
of tax treatments by taxation authorities
• How an entity determines taxable profit (tax loss), tax
bases, unused tax losses, unused tax credits and tax rates
• How an entity considers changes in facts and
circumstances
An entity has to determine whether to consider each
uncertain tax treatment separately or together with one or
more other uncertain tax treatments. The approach that
better predicts the resolution of the uncertainty should be
followed. The interpretation is effective for annual reporting
periods beginning on or after 1 January 2019, but certain
transition reliefs are available. The Group will apply the
interpretation from its effective date. The Group are in the
process of assessing the impact of this interpretation.
AASB 2016-5 Amendments to Australian Accounting
Standards – Classification and Measurement of Share-
based Payment Transactions
This Standard amends AASB 2 Share-based Payment,
clarifying how to account for certain types of share-
based payment transactions. The amendments provide
requirements on the accounting for:
• The effects of vesting and non-vesting conditions on the
measurement of cash-settled share-based payments
• Share-based payment transactions with a net settlement
feature for withholding tax obligations
• A modification to the terms and conditions of a
share-based payment that changes the classification
of the transaction from cash-settled to equity-settled
The Group is in the process of assessing the impact of this
interpretation.
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AASB 2018-1 Amendments to Australian Accounting
Standards – Annual Improvements 2015–2017 Cycle
These improvements include:
AASB 3 Business Combinations
The amendments clarify that, when an entity obtains
control of a business that is a joint operation, it applies the
requirements for a business combination achieved in stages,
including remeasuring previously held interests in the assets
and liabilities of the joint operation at fair value. In doing so,
the acquirer remeasures its entire previously held interest in
the joint operation.
An entity applies those amendments to business
combinations for which the acquisition date is on or
after the beginning of the first annual reporting period
beginning on or after 1 January 2019, with early application
permitted. These amendments will apply on future business
combinations of the Group.
AASB 11 Joint Arrangements
A party that participates in, but does not have joint
control of, a joint operation might obtain joint control
of the joint operation in which the activity of the joint
operation constitutes a business as defined in AASB 3. The
amendments clarify that the previously held interests in that
joint operation are not remeasured.
An entity applies those amendments to transactions in which
it obtains joint control on or after the beginning of the first
annual reporting period beginning on or after 1 January
2019, with early application permitted. These amendments
are currently not applicable to the Group but may apply to
future transactions.
AASB 112 Income Taxes
The amendments clarify that the income tax consequences
of dividends are linked more directly to past transactions
or events that generated distributable profits than to
distributions to owners. Therefore, an entity recognises
the income tax consequences of dividends in profit or loss,
other comprehensive income or equity according to where
the entity originally recognised those past transactions or
events.
An entity applies those amendments for annual reporting
periods beginning on or after 1 January 2019, with
early application permitted. When an entity first applies
those amendments, it applies them to the income tax
consequences of dividends recognised on or after the
beginning of the earliest comparative period. Since the
Group’s current practice is in line with these amendments,
the Group does not expect any effect on its consolidated
financial statements.
AASB 123 Borrowing Costs
The amendments clarify that an entity treats as part of
general borrowings any borrowing originally made to
develop a qualifying asset when substantially all of the
activities necessary to prepare that asset for its intended use
or sale are complete.
An entity applies those amendments to borrowing costs
incurred on or after the beginning of the annual reporting
4 4
period in which the entity first applies those amendments.
An entity applies those amendments for annual reporting
periods beginning on or after 1 January 2019, with early
application permitted. Since the Group’s current practice is
in line with these amendments, the Group does not expect
any effect on its consolidated financial statements.
AASB 2018-6 Definition of a Business (Amendments to
AASB 3)
The Standard amends the definition of a business in
AASB 3 Business Combinations. The amendments clarify
the minimum requirements for a business, remove the
assessment of whether market participants are capable of
replacing missing elements, add guidance to help entities
assess whether an acquired process is substantive, narrow
the definitions of a business and of outputs, and introduce
an optional fair value concentration test.
The Group are in the process of assessing the impact of this
interpretation.
AASB 2018-7 Definition of Material (Amendments to
AASB 101 and AASB 108)
This Standard amends AASB 101 Presentation of Financial
Statements and AASB 108 Accounting Policies, Changes in
Accounting Estimates and Errors to align the definition of
‘material’ across the standards and to clarify certain aspects
of the definition. The amendments clarify that materiality
will depend on the nature or magnitude of information. An
entity will need to assess whether the information, either
individually or in combination with other information,
is material in the context of the financial statements. A
misstatement of information is material if it could reasonably
be expected to influence decisions made by the primary
users. Since the Group’s current practice is in line with these
amendments, the Group does not expect any effect on its
consolidated financial statements.
3. Significant accounting judgements,
estimates and assumptions
The preparation of the Group’s consolidated financial
statements requires management to make judgements,
estimates and assumptions that affect the reported amounts
of revenues, expenses, assets and liabilities, and the
accompanying disclosures, and the disclosure of contingent
liabilities. Uncertainty about these assumptions and
estimates could result in outcomes that require a material
adjustment to the carrying amount of assets or liabilities
affected in future periods.
Other disclosures relating to the Group’s exposure to risks
and uncertainties includes:
• Financial instruments risk management and policies
Note 17.
• Sensitivity analyses disclosures Notes 14.
Judgements
In the process of applying the Group’s accounting policies,
management has made the following judgements, which
have the most significant effect on the amounts recognised
in the consolidated financial statements:
Revenue from contracts with customers
The Group applied the following judgements that
significantly affect the determination of the amount and
timing of revenue from contracts with customers:
Determining the timing of electrical and
telecommunications repairs and maintenance services
The Group concluded that revenue for electrical and
telecommunications repairs and maintenance services
is to be recognised over time because the customer
simultaneously receives and consumes the benefits provided
by the Group. The fact that another entity would not need
to re-perform work that the Group has provided to date
demonstrates that the customer simultaneously receives
and consumes the benefits of the Group’s performance as it
performs.
Determining the timing of construction and electrical
project work
The Group concluded that revenue for electrical project
work and construction work is to be recognised over
time. Factors that were considered include the act that
the Group’s performance does not create an asset with
an alternative use, the Group is entitled to payment for
performance to date and the customer controls the asset as
the entity creates or enhances it.
The Group determined that the input method based on
costs incurred to date compared to total expected costs is
the best method in measuring progress because there is
a direct relationship between the Group’s effort (i.e. costs
incurred) and the transfer of services to the customer.
Estimates and assumptions
The key assumptions concerning the future and other key
sources of estimation uncertainty at the reporting date,
that have a significant risk of causing a material adjustment
to the carrying amounts of assets and liabilities within the
next financial year, are described below. The Group based
its assumptions and estimates on parameters available
when the consolidated financial statements were prepared.
Existing circumstances and assumptions about future
developments, however, may change due to market changes
or circumstances arising that are beyond the control of the
Group. Such changes are reflected in the assumptions when
they occur.
Revenue from contracts with customers - Variable
consideration
Certain contracts contain provisions for liquidated damages
which would be considered variable consideration. The
group has applied judgement in not constraining revenue
for this variable consideration on the basis that there is
no history of significant reversals of revenue in relation to
liquidated damages.
Impairment of non-financial assets
Impairment exists when the carrying value of an asset or cash
generating unit exceeds its recoverable amount, which is the
higher of its fair value less costs of disposal and its value-in-
use. The fair value less costs of disposal calculation is based
on available data from binding sales transactions, conducted
at arm’s length, for similar assets or observable market prices
less incremental costs of disposing of the asset. The value-
in-use calculation is based on a discounted cash flow (DCF)
model. The cash flows are derived from the budget for the
next five years and do not include restructuring activities
that the Group is not yet committed to or significant future
investments that will enhance the performance of the
assets of the CGU being tested. The recoverable amount
is sensitive to the discount rate used for the DCF model as
well as the expected future cash-inflows and the growth rate
used for extrapolation purposes. These estimates are most
relevant to goodwill and other intangibles with indefinite
useful lives recognised by the Group. The key assumptions
used to determine the recoverable amount for the different
CGUs, including a sensitivity analysis, are disclosed and
further explained in Note 15.
Provision for expected credit losses of trade receivables
and contract assets
The Group uses a provision matrix to calculate ECLs for
trade receivables and contract assets. The provision rates are
based on days past due for groupings of various customer
segments that have similar loss patterns (i.e., by geography,
product type, customer type).
The provision matrix is initially based on the Group’s
historical observed default rates and adjusted for forward-
looking information. At every reporting date, the historical
observed default rates are updated and changes in the
forward-looking estimates are analysed.
The assessment of the correlation between historical
observed default rates, forecast economic conditions
and ECLs is a significant estimate. The amount of ECLs
is sensitive to changes in circumstances and of forecast
economic conditions. The Group’s historical credit loss
experience and forecast of economic conditions may also
not be representative of customer’s actual default in the
future. The information about the ECLs on the Group’s trade
receivables and contract assets is disclosed in Note 9.
Taxes
Deferred tax assets are recognised for unused tax losses
to the extent that it is probable that taxable profit will be
available against which the losses can be utilised. Significant
management judgement is required to determine the
amount of deferred tax assets that can be recognised, based
upon the likely timing and the level of future taxable profits,
together with future tax planning strategies.
The Group has $11,407,000 (2017: $6,986,000) of tax losses
carried forward. These losses relate to subsidiaries that have
a history of losses, do not expire, and may be used to offset
taxable income elsewhere in the Group. The Group has
determined that its deferred tax assets is recoverable based
on the expectation of future taxable income and has no
unrecognised deferred tax assets. Further details on taxes
are disclosed in Note 7.
T E M P O A U S T R A L I A L I M I T E D A N N U A L R E P O R T 2 0 1 8 4 5
N O T E S T O T H E C O N S O L I D A T E D F I N A N C I A L S T A T E M E N T S
4. Revenue and other income
Revenues from contracts with customers
Interest revenue calculated using the effective interest method
Other income
Total revenue and other income
Consolidated entity
2018
$’000
40,492
103
1,198
2017
$’000
18,114
393
1,128
41,793
19,635
Revenue from contracts with customers by type of customer
Consolidated entity
Government and infrastructure
Commercial
Education and aged care
Resources
Other
2018
$’000
11,540
24,689
1,789
2,120
354
2017
$’000
6,541
8,230
609
1,697
1,037
Total revenue from contracts with customers
40,492
18,114
The transaction price allocated to the remaining performance obligations as described in Note 2.3(c) (unsatisfied or partially
unsatisfied as at 31 December) is as follows:
Consolidated
entity
2018
$’000
15,630
Consolidated entity
2018
$’000
110
-
18
128
2017
$’000
86
296
-
382
Within one year
5. Other expenses
Candidate screening cost
Movement in allowance for impairments
Movement in allowance for expected credit losses
Total other expenses
4 6
6. Employee and director expenses
Salaries, wages and other payroll expenses
Share based payments
Other staff expenses
Consolidated entity
2018
$’000
18,927
(349)
1,592
2017
$’000
11,775
520
422
Total employee and director expenses
20,170
12,717
Income tax
7.
The major components of income tax expense for the years ended 31 December 2018 and 2017 are:
Current income tax
Current tax benefit
Conversion of prior year balances to 27.5% tax rate
Adjustments in respect of previous years
Deferred income tax
Temporary differences
Adjustments in respect of previous years
Conversion of prior year balances to 27.5% tax rate
Income tax benefit reported in the income statement
Contributed Equity
Conversion of prior year balances to 27.5% tax rate
Blackhole expenses
Share-based payments reserve
Conversion of prior year balances to 27.5% tax rate
Employee share trust contributions
Income tax (expense)/benefit reported in the equity statement
Consolidated entity
2018
$’000
1,390
(344)
-
(527)
(104)
(61)
354
2017
$’000
2,033
-
(4)
(1,165)
354
-
1,218
Consolidated entity
2018
$’000
2017
$’000
(3)
(12)
(25)
(56)
(96)
-
26
-
180
206
T E M P O A U S T R A L I A L I M I T E D A N N U A L R E P O R T 2 0 1 8 4 7
N O T E S T O T H E C O N S O L I D A T E D F I N A N C I A L S T A T E M E N T S
Income tax (continued)
7.
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 before income tax
Tax at Australia’s statutory income tax rate of 27.5% (2017: 30%)
Tax effect of amounts which are not deductible in calculating taxable income
Conversion of prior year balances to 27.5% tax rate
Other
Adjustments in respect of previous years
Income tax benefit at the effective tax rate of 6% (2017: 54%)
Income tax benefit reported in the statement of comprehensive income
Deferred income tax at 31 December relates to the following:
Deferred tax assets
Carried forward tax losses
Research and development tax credits
Accrued expenses
Employee benefits
Share based payment reserve
Trade and other receivables
Others
Offset of deferred tax liabilities
Net deferred tax assets
Deferred tax liabilities
Inventory
Prepayment and receivables
Plant and equipment
Intangibles
Works in progress
Offset against deferred tax asset
Net deferred tax liabilities
Consolidated entity
2018
$’000
(6,002)
1,651
(888)
(405)
101
(105)
354
354
2017
$’000
(2,265)
680
-
-
184
354
1,218
1,218
Consolidated entity
2018
$’000
3,137
2,146
37
276
5
81
23
(387)
5,318
13
40
80
128
126
(387)
-
2017
$’000
2,024
2,036
92
512
299
89
43
(264)
4,831
14
122
10
118
-
(264)
-
In 2018 the Group disaggregated the carried forward tax losses and research and development tax credits to provide better
visibility.
4 8
The Group has recognised a deferred tax asset on carried forward losses and unused tax credits on the basis that it expects
sufficient future taxable income to be generated to utilise these carried forward losses and unused tax credits. In making this
determination the group has considered the additional contracts entered into during the year as well as the pipeline of projects
currently being negotiated with its customers.
The movement of the current and deferred tax relates to the following:
Consolidated Entity
Deferred
Income Tax
2018
$’000
4,831
354
305
(15)
(81)
(76)
5,318
5,318
5,318
Opening balance
Income tax benefit recognised in profit and loss
R&D income recognised as government grant
Charged to equity
Charged to reserves
Additions through business combination
Closing balance
-
Current
Income Tax
2018
$’000
-
-
-
-
-
-
Amounts recognised on the consolidated statement of financial position
Deferred tax asset
Closing Balance
8. Cash and short-term deposits
Cash at bank and on hand
Short term deposits
Cash and cash equivalents
9.
Trade and other receivables
CURRENT
Trade receivables
Allowance for impairments
Allowance for expected credit losses
Other receivables
Current
Income Tax
2017
$’000
-
-
-
-
-
(209)
(209)
Deferred
Income Tax
2017
$’000
2,828
1,218
594
135
-
56
4,831
4,831
4,831
Consolidated entity
2018
$’000
3,766
1,000
4,766
2017
$’000
2,856
8,161
11,017
Consolidated entity
2018
$’000
2017
$’000
Restated
4,944
5,431
-
(63)
530
(58)
-
285
Total current trade and other receivables
5,411
5,658
Trade receivables are non-interest bearing and are generally on terms of 14 to 60 days.
The Group assessed the impact of the integration of the KP Electric business for a full financial year and the acquisition of
Comsite Services for the 6 months and subsequently adjusted the gross carrying amount of the loss allowance.
T E M P O A U S T R A L I A L I M I T E D A N N U A L R E P O R T 2 0 1 8 4 9
N O T E S T O T H E C O N S O L I D A T E D F I N A N C I A L S T A T E M E N T S
Trade and other receivables (continued)
9.
Set out below is the movement in the allowance for expected credit losses of trade receivables:
As at 1 January
Provision for impairments
Provision for expected credit losses (Note 17)
Provision used during the period
As at 31 December
The information about the credit exposures are disclosed in Note 17.
10. Contract assets
Contract assets
Allowance for impairments
Allowance for expected credit loss
Total contract assets
Set out below is the movement in the allowance for expected credit losses of contract assets:
As at 1 January
Provision for impairments
Provision for expected credit losses (Note 17)
Written off during the period
Provision used during the period
As at 31 December
Consolidated entity
2018
$’000
58
-
5
-
63
2017
$’000
Restated
-
58
-
-
58
Consolidated entity
2018
$’000
2,774
-
(51)
2,723
2017
$’000
Restated
1,001
(238)
-
763
Consolidated entity
2018
$’000
238
-
18
(5)
(200)
51
2017
$’000
Restated
-
238
-
-
-
238
Contract assets are initially recognised for revenue earned from maintenance and constructions services where the receipt of
consideration is conditional. Once unconditional the amounts recognised as contract assets are reclassified to trade receivables.
Contract assets increased in 2018 due to increased volume from business acquisitions as well as more construction services
projects.
In 2018, $18,000 (2017 (Provision for impairment): $238,000) was recognised as provision for expected credit losses on contract
assets.
No revenue was recognised during the year (2017: Nil) for performance obligations satisfied in previous years.
5 0
11.
Inventories
Consumables
Total inventories at the lower of cost and net realisable value
12. Plant and Equipment
Furniture and fixtures – gross carrying value at cost
Furniture and fixtures – accumulated depreciation
Net book value furniture and fixtures
Plant and equipment – gross carrying value at cost
Plant and equipment – accumulated depreciation
Net book value plant and equipment
Computer equipment – gross carrying value at 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 vehicles
Total gross carrying value at cost
Total accumulated depreciation
Total net book value
Consolidated entity
2018
$’000
402
402
2017
$’000
400
400
Consolidated entity
2018
$’000
468
(123)
345
1,236
(117)
1,119
941
(525)
416
776
(344)
432
3,421
(1,109)
2,312
2017
$’000
202
(88)
114
256
(100)
156
834
(346)
488
918
(137)
781
2,210
(671)
1,539
T E M P O A U S T R A L I A L I M I T E D A N N U A L R E P O R T 2 0 1 8 5 1
N O T E S T O T H E C O N S O L I D A T E D F I N A N C I A L S T A T E M E N T S
12. Plant and equipment (continued)
Reconciliation of the carrying amounts at the beginning and end of the current financial year:
Furniture
and fixtures
Plant and
equipment
Computer
equipment
Balance at 1 January 2017
Additions
Additions through business combinations
[Note 25]
Disposals
Depreciation expense
Balance at 31 December 2017
Additions
Additions through business combinations
[Note 25]
Disposals
Depreciation expense
Balance at 31 December 2018
$’000
$’000
55
69
50
-
(60)
114
329
-
(63)
(35)
345
49
21
134
-
(48)
156
925
63
(8)
(17)
1,119
$’000
500
98
44
-
(154)
488
110
-
(3)
(179)
416
Motor
vehicles
$’000
288
153
570
(101)
(129)
781
264
93
(500)
(206)
432
Total
$’000
892
341
798
(101)
(391)
1,539
1,628
156
(574)
(437)
2,312
The carrying value of plant and machinery held under finance leases contracts at 31 December 2018 was $890,000 (2017:
$28,000). Additions during the year include $947,000 (2017: $8,000) of plant and equipment and motor vehicles under finance
leases. Leased assets and assets under hire purchase contracts are pledged as security for the related finance lease liability.
13.
Intangible assets and Goodwill
Goodwill
$’000
Customer
Relationships
Productivity
Tool
$’000
$’000
3,118
-
8,675
11,793
555
12,348
-
-
473
473
275
748
-
112
-
112
-
112
Goodwill
$’000
Customer
Relationships
Productivity
Tool
$’000
$’000
-
-
-
-
3,118
3,118
-
81
81
202
-
283
-
-
-
-
112
112
Total
$’000
3,118
112
9,148
12,378
830
13,208
Total
$’000
-
81
81
202
3,230
3,513
Cost
Balance at 1 January 2017
Additions – internally developed
Acquisition of a subsidiary
Balance at 31 December 2017
Acquisition of a subsidiary
Balance at 31 December 2018
Amortisation and impairment
At 1 January 2017
Amortisation
Balance at 31 December 2017
Amortisation
Impairment
Balance at 31 December 2018
5 2
Net book value
At 31 December 2018
At 31 December 2017
Goodwill
$’000
9,230
11,793
Customer
Relationships
Productivity
Tool
$’000
466
392
$’000
-
112
Total
$’000
9,696
12,297
Management assessed the costs recognised at 31 December 2017 in relation to the productivity tool and subsequently impaired
them.
14. Goodwill impairments
For impairment testing, goodwill acquired through business combinations is assessed for impairment within cash generating
units (CGUs). As at 31 December 2017 it was determined that there were two CGUs, being (1) labour hire, construction and
maintenance, and (2) KP Electric.
Goodwill of $3,118,000 was allocated to the labour hire, construction and maintenance CGU as at 31 December 2017. This
goodwill was previously recognised as part of a business combination where the Group acquired Industry Partners Pty Ltd and
Immigration Partners Pty Ltd (subsequently Tempo Personnel Management Pty Ltd) on 26 June 2012. This acquisition sought
to make its profits from labour hire activities. During the period management identified that the labour hire activities would
not be continuing, and therefore these activities would be considered as a separate CGU to the remaining construction and
maintenance CGU. The labour hire activities ceased during the 2018 year and management fully impaired the goodwill as a
result of it being determined that the recoverable value of the CGU was nil.
Following the impairment of goodwill, it was determined that the remaining CGUs would be aggregated for the purposes
of testing the remaining Goodwill of $9,230,000 for impairment as all remaining CGU’s are interrelated within one operating
segment. The recoverable amount of the aggregated CGU was determined based on a value-in-use calculation using cash flow
projections from financial budgets approved by the Board. This budget was extrapolated to a five-year forecast based on the
assumptions detailed below.
The post-tax discount rate applied to cash flow projections is 11.50% (2017: 12.50%) and cash flows beyond the budget period
were extrapolated using a 2.4% growth rate (2017: 5%) that is the same as the long-term average growth rate for the electrical
services industry.
As a result of this analysis, there is headroom of $2,263,000 and management did not identify any further impairment.
Key assumptions used in value-in-use calculations and sensitivity to changes in assumptions
The calculation of value-in-use is most sensitive to the following assumptions:
• Gross margins
• Discount rates
• Growth rate estimates used to extrapolate cash flows beyond the forecast period
Gross margins – Gross margins are based on value achieved during 2018 of 18.2%, with a budgeted uplift of 1.5% associated
with the increased efficiency and higher margins generated from the Comsite acquisition. The gross margin used for cash flow
periods beyond the budget period was kept at 19.7%.
Decreased demand can lead to a decline in the gross margin. A decrease in the gross margin of 0.46% would result in
impairment.
Discount rates – Discount rates represent the current market assessment of the risks specific to the group of CGUs, taking into
consideration the time value of money and individual risks of the underlying assets that have not been incorporated in the cash
flow estimates. The discount rate calculation is based on the industry weighted average cost of capital (WACC). The WACC
considers both debt and equity.
A rise in the post-tax discount rate to 12.83% (i.e. +1.33%) would result in impairment.
Growth rate estimates – Rates are based on published industry research. A decrease to 1.1% in the long-term growth rate would
result in impairment.
T E M P O A U S T R A L I A L I M I T E D A N N U A L R E P O R T 2 0 1 8 5 3
N O T E S T O T H E C O N S O L I D A T E D F I N A N C I A L S T A T E M E N T S
15. Segment reporting
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. It was
concluded that the Group has one segment and the segment operates in only one geographical area, being Australia.
Major customers
The consolidated entity has a number of customers to which it provides services. The consolidated entity supplies a single
external customer which accounts for 24% of external revenue (2017: 9%). The next most significant customer accounts for 9%
(2017: 8%).
16. Trade and other payables
Trade payables
Other payables
Total payables
Consolidated entity
2018
$’000
2,068
1,763
3,831
2017
$’000
1,521
1,358
2,879
17. Financial liabilities
17.1. Financial liabilities: Interest-bearing loans and borrowing
Consolidated entity
Interest Rate
%
Maturity
2018
$’000
2017
$’000
Current interest-bearing loans and borrowings
Obligations under finance leases (Note 22)
4.80%
2019
NAB Invoice Finance Facility ($10,000,000 Facility)
6.59%
On Demand
Total current interest-bearing loans and borrowings
Non-current interest-bearing loans and borrowings
Obligations under finance leases (Note 22)
4.80%
2020-2022
Non-current interest-bearing loans and borrowings
Total interest-bearing loans and borrowings
177
1,149
1,326
843
843
2,169
164
-
164
25
25
189
Tempo has a $10,000,000 Invoice Finance Facility with the National Australia Bank Limited (‘NAB’). This facility attracts a variable
interest rate. At 31 December the effective rate was 4.80%. At 31 December 2018 $8,851,000 was unused (2017: $10,000,000).
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 Group has an asset finance leasing facility with NAB of $1,000,000. At 31 December 2018 the amount of the facility that was
unused was $126,000. This facility wasn’t in place at 31 December 2017.
Other finance leases in relation to financing of plant, vehicles and other equipment amount to $146,000 (2017: $189,000).
All finance liabilities are repayable on demand except for finance leases. Refer to Note 22 for the relevant maturity profile of
these finance leases.
5 4
17.2. Financial liabilities: Bank Guarantees and Surety Bonds
The Group has surety bond facilities of $7 million (2017: $14.5 million). At 31 December 2018 bonds valued at $795,000 had been
issued (2017: $20,000). The bond premium rate is 1.5% per annum on the face value of each bond.
As at 31 December 2018 the Company had bank guarantees issued of $75,000 (2017: $227,000) which were secured by term
deposits. Corresponding term deposits of $75, 000 (2017: $227,000) are recorded in other assets.
17.3. Fair values
The carrying value of all current financial assets and liabilities approximates the fair value largely due to the short-term
maturity of these instruments. Non-current financial liabilities are recognised at a discount value implicit in the finance leases
(refer Note: 22).
Set out below is a comparison of the carrying amounts and fair values of the Group’s financial instruments, other than those with
carrying amounts that are reasonable approximations of fair values:
Non-current interest-bearing loans and borrowings
Obligations under finance leases (Note 22)
Consolidated Entity
2018
2017
Carrying amount
Fair value
Carrying amount
Fair value
$’000
843
843
$’000
913
913
$’000
$’000
25
25
25
25
The fair value of obligations under finance leases is estimated by discounting future cash flows using rates currently available
for debt on similar terms, credit risk and remaining maturities. The valuation requires management to use unobservable inputs
in the model, of which the significant unobservable inputs are disclosed in the tables below (level3 in the fair value hierarchy).
Management regularly assesses a range of reasonably possible alternatives for those significant unobservable inputs and
determines their impact on the total fair value.
17.4. Changes in liabilities arising from financing activities
Consolidated Entity
1 January
2018
Cash flows
New Leases
Other
31 December
2018
Current interest-bearing loans and
borrowings (excluding items listed below)
Current obligations under finance leases
Non-current obligations under finance leases
164
25
Total liabilities from financing activities
189
-
1,149
(257)
-
892
-
186
902
-
1,149
84
(84)
177
843
1,088
-
2,169
Consolidated Entity
1 January
2017
Cash flows
New Leases
Other
31 December
2017
Current interest-bearing loans and
borrowings (excluding items listed below)
Current obligations under finance leases
Non-current obligations under finance leases
Total liabilities from financing activities
-
690
45
735
-
(736)
-
(736)
-
190
-
190
-
20
(20)
-
-
164
25
189
The ‘Other’ column includes is the reclassification of non-current portion of interest-bearing loans and borrowings (finance
leases) to current due to the passage of time.
T E M P O A U S T R A L I A L I M I T E D A N N U A L R E P O R T 2 0 1 8 5 5
N O T E S T O T H E C O N S O L I D A T E D F I N A N C I A L S T A T E M E N T S
17. Financial liabilities (continued)
17.5. Financial instruments risk management objectives and policies
The Group’s principal liabilities comprise loans and borrowings and trade and other payables. The main purpose of these
financial liabilities is to finance the Group’s operations. The Group’s principal financial assets include trade receivables and cash
and short-term deposits that derive directly from its operations. The Group has determined that there is no material market,
credit, liquidity or interest risk in relation to the cash or other receivables held in deposits.
The Group is exposed to market risk, credit risk and liquidity risk. Interest rate risks are not considered as significant. The
Group’s senior management oversees the management of these risks under the policies approved by the Risk, HSE and
Commercial Committee and the Board.
Market risk
Market risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market
price. Market risk comprises three types of risk, interest rate risk, foreign currency risk and other price risk, such as equity price
risk and commodity risk. Financial instruments affected by market risk include loans and borrowings, deposits and debt.
The sensitivity analyses in the following sections relate to the position as at 31 December in 2018 and 2017.
Interest Rate Risk
Interest rate risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes
in market interest rates. The Group’s long-term debt is secured with fixed interest rates. All long-term deposits have a fixed
interest rates. As a result, the Board believes there is no material interest rate risk.
Foreign currency risk
Foreign currency risk is the risk that the fair value or future cash flows of an exposure will fluctuate because of changes in foreign
exchange rates. The Group’s has minimal to this risk profile.
Other price risk
The Group does not have any equity instruments or commodity risk exposure.
Credit risk
Credit risk is the risk that a counterparty will not meet its obligations under a financial instrument or customer contract, leading
to a financial loss. The Group is exposed to credit risk from its operating activities (primarily trade receivables) and from its
financing activities, including deposits with reputable banks and financial institutions.
Credit quality of a customer is assessed prior to engagement. Outstanding customer receivables are regularly monitored. At
31 December 2018 the Group had 6 customers (2017: 8) that owed the Group more than $200,000 each and accounted for
approximately 57% (2017: 62%) of all receivables. There were 3 customers (2017: 3) with balances over $500,000 accounting for
45% of all receivables (2017: 32%) of the total receivables balance.
An impairment analysis is performed at each reporting date using a provision matrix to measure expected credit losses (“ECL”).
The provision rates are based on days past due for groupings of various customer segments with similar loss patterns. The
calculation reflects the probability-weighted outcome, the time value of money and reasonable and supportable information
that is available at the reporting date about past events, current conditions and forecasts of future economic conditions.
Generally, trade receivables are written-off if past due for more than one year and are not subject to enforcement activity. The
maximum exposure to credit risk at the reporting date is the carrying value of each class of financial assets disclosed in Note 9.
The Group does not hold collateral as security.
The Group evaluates the concentration risk with respect to trade receivables as low, as its customers are located within several
industries and operate in largely independent markets.
5 6
The customers are grouped into four different categories:
Customer Type
Listed public companies
Government departments/agencies
Not for profit organisations
Commercial businesses
Total trade receivables
Consolidated Entity
Risk Assessment
Very Low
Very Low
Very Low
Moderate
2018
$’000
3,718
764
135
327
4,944
2017
$’000
2,793
1,000
53
1,585
5,431
Historically the Group’s ECL has been extremely low. Impairment charges (under AASB 139) over the 5 years 2013 to 2017
inclusive averages to 0.023% of the total trade receivables per year.
Set out below is the information about the credit risk exposure on the Groups trade receivables and contract assets using a
provision matrix:
31 December 2018
Expected credit loss rate
Total gross carrying amount
Expected credit loss
Total ECL provision
31 December 2017
Total gross carrying amount
Trade receivables
Other receivables
Contract assets
Specific Provision
Total
Liquidity Risk
Contract
assets
$’000
1.84%
2,774
51
51
0-30 Days
31-60 Days
61-90 Days
>90 Days
Trade receivables
$’000
0.25%
1,724
4
4
$’000
0.25%
1,579
4
4
$’000
2.00%
680
14
14
$’000
4.25%
961
41
41
0-30 Days
31-60 Days
61-90 Days
>90 Days
$’000
$’000
$’000
$’000
3,975
285
1,001
(296)
4,965
829
545
-
-
-
-
-
-
829
545
82
-
-
-
82
Total
$’000
1.48%
7,718
114
114
Total
$’000
5,431
285
1,001
(296)
6,421
The Group monitors its risk of a shortage of funds using by utilising liquidity planning tools across a 15-month horizon.
The Group’s objective is to maintain a balance between continuity of funding and flexibility through the use of short-term
borrowings and finance leases. The Group assessed the concentration of risk with respect to refinancing its debt and concluded
it to be low. The Group has access to a variety of sources of funding and the majority of the debt maturing within 12 months can
be rolled over with existing lenders.
T E M P O A U S T R A L I A L I M I T E D A N N U A L R E P O R T 2 0 1 8 5 7
N O T E S T O T H E C O N S O L I D A T E D F I N A N C I A L S T A T E M E N T S
18. Provisions
Current provisions
Employee benefits
Other provisions
Total current provisions
Non - current provisions
Employee benefits
Total non - current provisions
Total provisions
Employee benefits
Consolidated entity
2018
$’000
679
-
679
58
58
2017
$’000
1,193
43
1,236
112
112
737
1,348
Provision for employee benefits represents amounts accrued for annual leave, rostered days off, staff retentions and long service
leave.
Consolidated entity
2018
$’000
1,305
-
1,103
(1,671)
737
2017
$’000
2,600
654
1,253
(3,202)
1,305
Consolidated entity
2018
$’000
43
-
(43)
-
2017
$’000
2,677
1,069
(3,703)
43
Carrying amount at the beginning of period
Additions through business combination
Additional provision made
Amounts used
Total employee benefits provisions
Other provisions
Carrying amount at the beginning of period
Additional provision made
Amounts used
Total other provisions
5 8
19. Contributed entity
Ordinary shares fully paid
Treasury shares
Other contributed equity
Consolidated entity
Note
19(a)
19(b)
19(c)
2018
$’000
79,491
-
850
2017
$’000
79,919
(26)
-
80,341
79,893
Ordinary Shares
Fully paid ordinary shares carry one vote per share and carry the right to dividends.
Consolidated entity
Consolidated entity
2018
2017
19(a) Movements in ordinary shares
# of shares
Balance as at the beginning of the year
240,804,581
Option exercised - proceeds received
Deduct cost of treasury shares
Tax effect relating to share issue cost
-
-
-
$’000
79,919
-
(413)
(15)
# of shares
240,804,581
-
-
-
$’000
80,094
505
(706)
26
Balance as at the end of the year
240,804,581
79,491
240,804,581
79,919
Treasury shares
The share-based payments reserve is used to recognise the value of equity-settled share-based payments provided to
employees, including key management personnel, as part of their remuneration. Refer to Note 27 for further details of the plan.
19(b) Movements in treasury shares
# of shares
$’000
# of shares
$’000
Consolidated entity
Consolidated entity
2018
2017
Balance as at the beginning of the year
Acquisition of on-market shares
Issue of shares under Employee Share Incentive
Rights Plan
Other
Balance as at the end of the year
19(c) Other contributed equity
(109,733)
(2,040,267)
2,150,000
-
-
(26)
(387)
413
-
-
(85,000)
(3,524,733)
3,500,000
-
(109,733)
(19)
(708)
706
(5)
(26)
Other contributed equity relates 3,863,636 ordinary shares that will be issued in July 2019 on settlement of contingent
consideration for acquisition of KP Electric. Refer to Note 25 for further details.
T E M P O A U S T R A L I A L I M I T E D A N N U A L R E P O R T 2 0 1 8 5 9
N O T E S T O T H E C O N S O L I D A T E D F I N A N C I A L S T A T E M E N T S
19. Contributed entity (continued)
Share based payments reserve
The share-based payments reserve is used to recognise the value of equity-settled share-based payments provided to
employees, including key management personnel, as part of their remuneration. Refer to Note 27 for further details of the plan.
Balance as at the beginning of the year
Share-based payments
Reversal of unvested options
Tax effect relating to share-based payments
Balance as at the end of the year
Capital risk management
2018
$’000
2,010
427
(776)
(81)
1,580
2017
$’000
1,334
520
(24)
180
2,010
For the purpose of the Group’s capital management, capital includes issued capital and all other equity reserves attributable
to the equity holders of the parent. The primary objective of the Group’s capital management is to maximise the shareholder
value. The Group’s objectives when managing capital is 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 2017.
20. Cash flow reconciliation
Reconciliation of the net loss after tax to the net cash flows from operating activities
Net loss
Non-operating cash items
Depreciation
Amortisation
Impairment of intangible assets
Interest expense on deferred consideration
(Profit)/loss on sale of assets
ESOP, option and performance rights expenses
Gain on settlement of contingent consideration for KP Electric acquisition
Changes in assets and liabilities
Trade and other receivables
Inventories
Other assets
Trade and other payables
Provisions
Deferred tax assets
Net operating cash outflows
6 0
Consolidated entity
2018
$’000
2017
$’000
(5,648)
(1,047)
437
201
3,230
-
(165)
(349)
(555)
(2,018)
(2)
694
961
(605)
(577)
(4,396)
390
81
-
158
11
496
-
2,122
(66)
(459)
(2,016)
(4,584)
(1,954)
(6,868)
21. Loss per share (LPS)
Basic LPS is calculated by dividing the loss for the year attributable to ordinary equity holders of the parent by the weighted
average number of the ordinary shares outstanding during the year.
There were no options outstanding at the end of 2018 (2017: 2,000,000).
The following table reflects the loss and share data used in the basic EPS calculations:
The following reflects the loss and share data used in the calculations of basic and
diluted loss per share
Net loss after tax
Loss used in calculating basic and diluted loss per share
Consolidated entity
2018
$’000
2017
$’000
(5,648)
(5,648)
(1,047)
(1,047)
Weighted average number of ordinary shares used in calculating basic loss per share
240,804,581
240,804,581
Effect of dilutive securities
Share options
Adjusted weighted average number of ordinary shares used in calculating diluted
earnings per share
-
-
240,804,581
240,804,581
There have been no transactions involving ordinary shares between the reporting date and date of completion of these financial
statements.
22. Lease expenditure commitments
Operating lease commitments
The Group has entered into operating leases for property and motor vehicles, with lease terms between one and four years. The
Group has the option, under some of its leases, to lease the assets for additional terms of one to three years.
Future minimum rentals payable under non-cancellable operating leases as at 31 December are, as follows:
Within one year
After one year but not more than five years
More than five years
Aggregate lease expenditure contracted for at reporting date
The entity had no capital commitments as at 31 December 2018 (2017: Nil)
Consolidated entity
2018
$’000
761
726
-
1,487
2017
$’000
322
40
-
362
T E M P O A U S T R A L I A L I M I T E D A N N U A L R E P O R T 2 0 1 8 6 1
N O T E S T O T H E C O N S O L I D A T E D F I N A N C I A L S T A T E M E N T S
22. Lease expenditure commitments (continued)
Finance lease commitments
The group has finance leases for various items of plant and machinery. The Group’s obligations under finance leases are secured
by the lessor’s title to the leased assets. Future minimum lease payments under finance leases and hire purchase contracts,
together with the present value of the net minimum lease payments are, as follows:
Consolidated entity
2018
2017
Present value of
payments
Minimum
Payments
Present value of
payments
$’000
177
843
-
-
-
1,020
$’000
166
25
-
207
(19)
189
$’000
164
25
-
189
-
189
Minimum
Payments
$’000
220
919
-
1,139
(119)
1,020
Within one year
After one year but not more than five years
More than five years
Total minimum lease payments
Less amounts representing finance charges
Present value of minimum lease payments
23. Group information
Information about subsidiaries
The consolidated financial statements of the Group include:
Tempo Resources Solutions Pty Ltd
Tempo Engineering Pty Ltd
Cablelogic Pty Ltd
Tempo Construction & Maintenance Pty Ltd
Tempo Personnel Management Pty Ltd
Tempo Global Pty Ltd
KP Electric (Australia) Pty Ltd
Information about subsidiaries
Consolidated entity
Country of
Incorporation
Australia
Australia
Australia
Australia
Australia
Australia
Australia
2018
100%
100%
100%
100%
100%
100%
100%
2017
100%
100%
100%
100%
100%
100%
100%
The immediate and ultimate holding company of the Group is Tempo Australia Ltd which is based and listed in Australia.
6 2
24. Related party disclosures
Note 23 provides information about the Group’s structure, including details of the subsidiaries and the holding company. The
following table provides the total amount of transactions that have been entered into with related parties for the relevant year.
For the year ended 31 December 2017 there were no additional transactions with related parties.
Bontempo Nominees Pty Ltd
Angophora Capital Pty Ltd
* This amount is classified as trade payables.
Consolidated entity
Purchases from
related parties
Amounts owed to
related parties*
$’000
$’000
10
38
-
38
The balances relate to consulting and project management services and are on 30-day terms with no interest penalties.
Outstanding balances at year-end are unsecured and interest free and settlement occurs in cash.
Compensation of key management personnel of the Group
Short-term employee benefits
Post-employment benefits
Long-term benefits
Termination benefits
Share-based payment
Total benefits
Consolidated entity
2018
$’000
637
64
97
342
(345)
795
2017
$’000
807
53
62
-
480
1,402
T E M P O A U S T R A L I A L I M I T E D A N N U A L R E P O R T 2 0 1 8 6 3
N O T E S T O T H E C O N S O L I D A T E D F I N A N C I A L S T A T E M E N T S
25. Business combinations
Acquisitions in 2018
On 1 July 2018, the Group acquired assets and liabilities from Comsite Services Pty Ltd (“Comsite”), a non-listed company
based in Australia and specialising in end-to-end telecommunication maintenance services on mobile network infrastructure
across regional NSW, ACT and Southern Queensland. The Group acquired Comsite because it enlarged the existing
telecommunication maintenance services that was already offered to clients.
The fair values of the identifiable assets and liabilities of the Comsite business as at the date of acquisition were:
ASSETS
Property, plant and equipment
Customer relationship intangibles
Total Assets
LIABILITIES
Borrowings and interest-bearing liabilities
Deferred tax liability
Total liabilities
Total identifiable net assets at fair value
Cash used to acquire business
Goodwill arising on acquisition
Final fair value
$’000
157
275
432
148
76
224
208
763
555
The goodwill of $555,000 comprises the value of expected synergies arising from the acquisition, which is not separately recognised.
The business purchase agreement also contained clauses, relating to future payments to the former owners of Comsite, based
on business performance and the continued employment of the personnel. These payments were classified as remuneration for
post-combination services and were therefore not classed as contingent consideration on the Business Combination.
From the date of acquisition, Comsite contributed $1,678,000 of revenue and $560,000 of profits before tax from continuing
operation of the Group. It was not possible to identify what the business would have contributed if it was acquired on 1 January
2018, due to the Group not having access to this financial information.
In December 2018 a termination to the business purchase agreement was signed with the former owner of Comsite
relinquishing their rights to future remuneration-based business performance. In January 2019 the former owner resigned from
their employment with the Group.
6 4
Acquisitions in 2017
On 24 July 2017, the Group entered into an agreement to acquire KP Electric (Australia) Pty Ltd (“KP Electric”), a leading
national electrical services provider, for the cash consideration of $6,651,000 (net of cash acquired of $185,000) and contingent
consideration of $2,895,000. The acquisition provides the Group with a stronger national presence.
The accounting for this acquisition in the 31 December 2017 financial statements was provisional pending the finalisation of
the fair values of the assets and liabilities acquired. The goodwill represents the business’s integrated national footprint, the
assembled workforce and the expected synergies with the existing business. Details of the provisional fair value and final fair
value are as follows:
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
Provisional fair
value
$’000
Final fair value
$’000
175
2,480
696
36
798
473
128
185
2,570
241
36
798
473
55
4,786
4,358
2,048
2,221
73
420
823
20
404
657
3,364
3,302
Total identifiable net assets at fair value
1,422
1,056
Cash used to acquire business
Contingent consideration arising on acquisition
6,836
2,895
6,836
2,895
Goodwill arising on acquisition
8,309
8,675
T E M P O A U S T R A L I A L I M I T E D A N N U A L R E P O R T 2 0 1 8 6 5
N O T E S T O T H E C O N S O L I D A T E D F I N A N C I A L S T A T E M E N T S
25. Business combinations (continued)
The changes to the provisional accounting for the business combination took place as a result of management finalising their
review of the assets and liabilities acquired. The 2017 comparative information was restated to reflect the adjustment to the
provisional amounts. From the date of the acquisition to 31 December 2017, the business contributed $8,163,000 of revenue
and $626,000 of profits to the loss before tax for the year ended 31 December 2017. Had the acquisition occurred on 1 January
2017, the business would have contributed $16,663,000 of revenue and $1,569,000 of profits to the loss before tax for the year
ended 31 December 2017.
The contingent consideration related to an obligation for the Group 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 consideration was estimated by applying a
probability weighted discounted cash flow model. The fair value measurement is based on inputs that are not observable in
the open market which AASB 13: Fair Value Measurement refers to as Level 3 inputs. The key assumption was the probability of
achieving the earnings targets which was assumed as 100%.
In February 2018 an amendment was made to the share purchase agreement whereby the clauses relating to the contingent
consideration were deleted and were instead agreed to be settled by way of a deferred cash consideration of $1,000,000, which
was paid in July 2018, and $648,473, which was paid in December 2018, and the future issue of 3,863,636 ordinary shares in
July 2019. The shares to be issued have been classified as part of contributed equity in the consolidated statement of financial
position. As a result of these changes a gain of $555,000 was recorded in other income in the consolidated statement of
comprehensive income.
26. Parent company information
2018
$’000
(2,592)
(2,592)
31,908
51,064
40,420
40,906
2018
$’000
80,341
1,580
(71,763)
10,158
2017
$’000
(1,916)
(1,916)
9,712
27,543
599
11,831
2017
$’000
83,167
1,716
(69,171)
15,712
Parent Entity Information
Loss after income tax
Total comprehensive loss
Total current assets
Total assets
Total current liabilities
Total liabilities
Parent Entity Information
Equity
Contributed equity
Share based payment reserve
Accumulated losses
Total equity
Contingencies
The parent entity had no contingent liabilities as at 31 December 2018 (2017: Nil).
Capital Commitments
The parent entity had no capital commitments as at 31 December 2018 (2017: Nil).
6 6
27. Share based payments
An Employee Share Incentive Right Plan (ESIRP) was established by the Company and approved by shareholders at the general
meeting held in May 2013 and renewed at the general meeting held on 31 May 2016. Under the ESIRP 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 the ESIRP.
The expense recognised for employee services received during the year was $427,000 (2017: $520,104).
Movements during the year
The following tables illustrates the number and weighted average exercise prices (WAEP) of, and movements in, share options
and performance rights during the year.
Performance rights granted during the year (2017: Nil) are valued with reference to the share price at the grant date.
Consolidated entity
Consolidated entity
2018
2017
Options
Outstanding at 1 January
Granted during the year
Exercised during the year
# of options
2,000,000
-
-
WAEP
$0.34
-
-
# of options
5,500,000
-
(3,500,000)
Forfeited during the year
(2,000,000)
$0.34
-
Outstanding at 31 December
-
-
2,000,000
WAEP
$0.22
-
$0.14
-
$0.34
Consolidated entity
Consolidated entity
2018
2017
Performance rights
# of shares
WAEP
# of shares
WAEP
Outstanding at 1 January
Granted during the year
Exercised during the year
Forfeited during the year
Outstanding at 31 December
4,945,000
4,700,000
(2,150,000)
(6,995,000)
500,000
-
-
-
-
-
6,330,000
-
-
(1,385,000)
4,945,000
-
-
-
-
-
28. Auditors remuneration
The auditor of Tempo Australia Limited is Ernst & Young Australia.
Audit or review of the financial reports
Ernst & Young Australia
Total
Consolidated entity
2018
$
85,400
85,400
2017
$
70,000
70,000
29. Subsequent events
On 27 February 2019 Tempo announced that it had signed a three-year contract with Woolworths Limited (Woolworths) to
provide national electrical maintenance services estimated to be worth $20-25 million in revenue over the initial three-year term.
Tempo also announced that it had executed the final contract with Enel Green Power Australia Pty Ltd, in relation to the 34mW
Cohuna Solar Farm. The value of the works is $15.1 million over a twelve-month construction period which commenced on
1 March 2019.
30. Contingencies
The consolidated entity has no contingent assets or liabilities as at 31 December 2018 (2017: Nil).
T E M P O A U S T R A L I A L I M I T E D A N N U A L R E P O R T 2 0 1 8 6 7
D I R E CTO RS’
D E C L A R AT I O N
FOR THE YEAR ENDED 31 DECEMBER 2018
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 2018 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.
Guido Belgiorno-Nettis AM
Chairman
Perth
Date: 29 March 2019
6 8
INDEPENDENT AUDITORS REPORT
I N D E P E N D E N T
INDEPENDENT AUDITOR’S REPORT
AU D I TO R’S R E P O RT
T E M P O A U S T R A L I A L I M I T E D A N N U A L R E P O R T 2 0 1 8 6 9
75 | P A G E
I N D E P E N D E N T A U D I T O R ’ S R E P O R T
INDEPENDENT AUDITORS REPORT
7 0
76 | P A G E
INDEPENDENT AUDITORS REPORT
77 | P A G E
T E M P O A U S T R A L I A L I M I T E D A N N U A L R E P O R T 2 0 1 8 7 1
I N D E P E N D E N T A U D I T O R ’ S R E P O R T
INDEPENDENT AUDITORS REPORT
7 2
78 | P A G E
INDEPENDENT AUDITORS REPORT
79 | P A G E
T E M P O A U S T R A L I A L I M I T E D A N N U A L R E P O R T 2 0 1 8 7 3
I N D E P E N D E N T A U D I T O R ’ S R E P O R T
INDEPENDENT AUDITORS REPORT
7 4
80 | P A G E
A D D I T I O N A L I N F O R M AT I O N
R E Q U I R E D 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 Board’s intent. The governance structures and processes
are defined in Tempo’s Corporate Governance Statement which can be found at https://www.tempoaust.com/corporate.
SHAREHOLDER INFORMATION
The information below is current at 25 March 2019, 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
169
319
117
267
257
226,142,686
12,707,925
946,481
925,672
81,817
1,129
240,804,581
93.91
5.28
0.39
0.39
0.03
100
Non marketable securities totalling a number of 1,043,650 ordinary shares are held by 531 shareholders (2017: 340). There is no
current on-market buy-back of securities.
OPTIONS AND PERFORMANCE RIGHTS
As at 29 March 2018 the Company had 500,000 performance rights over unissued ordinary shares in the Company held by
one holder.
VOTING RIGHTS
On show of hands: one vote for each member on poll: one vote for each share held.
SUBSTANTIAL SHAREHOLDERS
The names of substantial shareholders disclosed in substantial holding notices given to the Company are:
Name
Angophora Capital Pty Ltd
Bontempo Nominees Pty Ltd
Lanyon Asset Management Pty Ltd
Number of ordinary
shares
% of issued capital
44,847,660
42,271,632
15,440,460
18.62
17.45
6.41
T E M P O A U S T R A L I A L I M I T E D A N N U A L R E P O R T 2 0 1 8 7 5
A D D I T I O N A L I N F O R M A T I O N R E Q U I R E D B Y A S X
TOP 20 SHAREHOLDERS
Rank
Name
Number of
ordinary shares
% of issued
capital
ANGOPHORA CAPITAL PTY LTD
BONTEMPO NOMINEES PTY LTD
HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED
J P MORGAN NOMINEES AUSTRALIA PTY LIMITED
INGLEWOOD LODGE PTY LTD
MR IVAN TANNER & MRS FELICITY TANNER
NATIONAL NOMINEES LIMITED
CITICORP NOMINEES PTY LIMITED
KAHLIA NOMINEES PTY LTD
MISS SILVANA MASALKOVSKI
MR PAUL SANTILLO
VANAVO PTY LIMITED
METANOMSKI INVESTMENTS PTY LTD
MR ANTONIO SCAFFIDI & MRS MARIA SCAFFIDI
CHEMCO SUPERANNUATION FUND PTY LTD
MASSIMO BERGOMI
SUPER RAB PTY LTD
MISS VICTORIA ROSE BARTON
MRS JENNIFER ANNE CASHION
KENNY FAMILY SUPERANNUATION FUND PTY LTD
SARGON CT PTY LTD
Total
Balance of register
Grand total
44,847,660
41,702,632
27,093,422
11,274,992
10,000,000
7,750,000
5,925,030
4,780,111
4,000,000
3,477,086
3,050,000
2,150,000
2,100,000
2,030,000
2,000,000
2,000,000
1,500,000
1,305,000
1,256,656
1,200,000
1,180,000
18.62
17.32
11.25
4.68
4.15
3.22
2.46
1.99
1.66
1.44
1.27
0.89
0.87
0.84
0.83
0.83
0.62
0.54
0.52
0.50
0.49
180,622,589
60,181,992
240,804,581
75.01
24.99
100.00
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
15
16
17
18
19
20
7 6
CO R P O R AT E
D I R E C TO RY
DIRECTORS
Guido Belgiorno-Nettis
Chairman
Ian Lynass
Managing Director and Chief Executive Officer
Ian Widdicombe
Non-Executive Director
David Iverach
Non-Executive Director
LEADERSHIP TEAM
Scott Macdonald
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
PRINCIPAL PLACE OF BUSINESS
POSTAL ADDRESS
Level 3, 1060 Hay Street
Level 3, 1060 Hay Street
West Perth WA 6005
AUSTRALIA
AUDITOR
Ernst & Young
West Perth WA 6005
+61 (8) 9460 1500
info@tempoaust.com
www.tempoaust.com
SHARE REGISTRY
Link Market Services
PO Box 588
West Perth WA 6872
AUSTRALIA
SOLICITOR
Steinepreis Paganin
The Ernst & Young Building
QV1, Level 12
Level 4, The Read Buildings
11 Mounts Bay Road
250 St Georges Terrace
Perth WA 6000
+61 (8) 9429 2222
www.ey.com.au
Perth WA 6000
+61 1300 554 474
16 Milligan Street
Perth WA 6000
+61 (8) 9321 4000
www.linkmarketservices.com.au
www.steinpag.com.au
T E M P O A U S T R A L I A L I M I T E D A N N U A L R E P O R T 2 0 1 8 7 7
T
E
M
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A
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S
T
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A
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I
A
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I
M
I
T
E
D
2
0
1
8
A
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A
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Tempo Australia Limited
1060 Hay Street
West Perth WA 6005
+61 8 9460 1500