Corporate Governance Statement
The Board is committed to achieving and demonstrating the highest standards of corporate governance. The Board continues to refine and
improve the governance framework and practices in place to ensure they meet the interests of shareholders. The Company complies with
the Australian Securities Exchange (ASX) Corporate Governance Council’s Corporate Governance Principles and Recommendations (the
Principles).
Tempo Australia Limited
ABN 51 000 689 725
Consolidated Financial Statements
For the Year Ended 31 December 2019
TABLE OF CONTENTS
FOR THE YEAR ENDED 31 December 2019
DIRECTORS’ REPORT ..................................................................................................................................................... 1
REMUNERATION REPORT – AUDITED ........................................................................................................................... 8
AUDITORS INDEPENDENCE DECLARATION ................................................................................................................. 14
CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME ..................................... 15
CONSOLIDATED STATEMENT OF FINANCIAL POSITION ............................................................................................. 16
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY .............................................................................................. 17
CONSOLIDATED STATEMENT OF CASH FLOWS .......................................................................................................... 18
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS ......................................................................................... 19
DIRECTORS’ DECLARATION ......................................................................................................................................... 58
INDEPENDENT AUDITOR’S REPORT ............................................................................................................................ 59
ADDITIONAL INFORMATION REQUIRED BY ASX ......................................................................................................... 65
CORPORATE DIRECTORY ............................................................................................................................................. 67
Corporate Governance Statement
The Board is committed to achieving and demonstrating the highest standards of corporate governance. The Board continues to refine and
improve the governance framework and practices in place to ensure they meet the interests of shareholders. The Company complies with
the Australian Securities Exchange (ASX) Corporate Governance Council’s Corporate Governance Principles and Recommendations (the
Principles).
DIRECTORS’ REPORT
DIRECTORS’ REPORT
The Directors present this report together with the financial report of the consolidated entity consisting of Tempo
Australia Limited (Tempo) and the entities it controls, for the financial year ended 31 December 2019 and the
auditor’s report thereon.
PRINCIPAL ACTIVITIES
During the year ended 31 December 2019 the Group generated revenues from asset management and maintenance
and construction across the telecommunications, infrastructure, resources, power, agricultural, industrial and
commercial sectors. The Group generated minor revenue from investments in solar projects (plant and equipment)
during 2019.
REVIEW OF OPERATIONS & RESULTS
The net loss after tax was $19.96M. This result was impacted by impairments of $15.68M including goodwill and
deferred tax assets attributable to businesses acquired in prior years, that have not at this point provided
sustainable trading profits to justify carrying forward these intangible assets.
Revenue and other income increased to $53.2M compared to $41.8M in 2018. All parts of the business contributed
to this increase.
The group had Net Assets value of $8.5M at the year end, with a cash balance of $7.3M, representing funds received
from the rights issue capital raise of approximately $3.7M and a cash positive operation of $2.9M for the last quarter
of the FY19.
The strategy for Tempo Asset Management Services (TAMS) is to remain focused on long term electrical
maintenance contracts, and progressively expand into mechanical and facilities management services, initially with
existing customers to add further value through the provision of broader service offerings.
The solar business has assembled a high-quality team of experienced people that are very familiar with the Energy
Sector in Australia. This team has executed existing projects well and further growth in this sector is expected.
The traditional construction arm has been more selective in tendering for the projects and it is pleasing that all
projects have been completed to clients’ satisfaction. This is expected to lead to repeat business.
Since the Tempo Board changes in late 2018 and early 2019, and then complemented by the new CEO and CFO
appointments made mid-year, the Group has stabilized its business and cash flows, introduced greater discipline in
contracting and project execution and honed the focus on growth opportunities. The focus for 2020 is to continue
with those actions and to achieve growth in a disciplined manner.
FUTURE DEVELOPMENTS AND EVENTS AFTER THE REPORT PERIOD
The Board of Tempo Australia has and will continue to address the potential effect of the Corona Virus on the
business. Immediate cost reductions have been identified and will be implemented over the coming month/s.
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DIRECTORS’ REPORT
The Tempo Business Executive and Board continues to examine any ongoing effects of CoVid-19 on our clients. We
are in regular contact with our main clients to see if there is any additional services we can deliver given that our
people are already at their sites.
We have implemented further WHS protocols with our PPE to maximise individuals protections – both of our staff
and of our client’s staff.
The Board is meeting Bi-weekly to review business levels and will continue to address costs and reductions in
working capital where possible.
We will continue to fulfill our continuous disclosure obligation and provide updates if and when necessary.
ENVIRONMENTAL REGULATION AND PERFORMANCE
During 2019 the Group maintained its accreditations for:
1. Quality management system to ISO 9001
2. Environment management system to ISO 14001:2015 and
3. Occupational health and safety certification to ISO AS/NZS4801:2001
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 2019, 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 continues 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.
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.
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DIRECTORS’ REPORT
DIRECTORS
MR GUIDO BELGIORNO-NETTIS AM – NON-EXECUTIVE CHAIRPERSON
BE Civil; MBA; FIEAust
Appointment: Appointed as Non-Executive Chairman 11 July 2019
Experience
and Expertise:
Appointed as Executive Chairman 29 April 2019
Appointed as Non-Executive Director 22 December 2016
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.
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
MR WILLIAM HOWARD – EXECUTIVE DIRECTOR
Appointment: Appointed as Executive Director 15 August 2019
Experience
and Expertise:
William brings significant experience to both these roles, having served for the past three years
as the CFO of a Financial Services company in Western Sydney, realigning financial systems,
operations and reporting, along with coordinating due diligence processes for interested
parties on potential acquisitions.
Prior to this, William had performed the role of General Manager Finance to a mining services
business in the Hunter Valley, whilst managing and operating his own labour hire company. The
preceding decade saw William as Regional Operations Manager at AJ Lucas and previous to that
with Lahey Constructions Pty Ltd as General Manager Finance.
William holds a Bachelor of Financial Administration and is a qualified Accountant.
Directorships: Current directorships in other listed companies: None
Directorships in listed companies in the last three years: None
DR DAVID IVERACH – NON-EXECUTIVE DIRECTOR
BEng Chem (Hons), Grad Dip Fuel Technology, PhD.
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DIRECTORS’ REPORT
Appointment: Appointed as Non-Executive Director 10 December 2018
Initial appointment as alternate Non-Executive Director to Guido Belgiorno-Nettis 9 February
2017 – Resigned 21 March 2018
Experience
and Expertise:
David has over 45 years’ experience at the executive level in the public and private sectors and
has served on several boards.
David’s time at Transfield included 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
MR CHARLES LOUIS ROTTIER – NON-EXECUTIVE DIRECTOR
BEng, GAICD and FIEAust
Appointment: Appointed as Non-Executive Director 19 March 2020
Experience
and Expertise:
Charles is an experienced executive and director with deep and broad experience with
engineering, construction and maintenance services companies.
Charles has experience working in Australia, New Zealand, Papua New Guinea, Singapore,
Thailand, Malaysia, China and the United Kingdom. Management responsibilities include full
P&L responsibility for Australian and International business units, managing due diligence and
integration of acquisitions and establishing new business opportunities for both stand-alone
businesses and significant joint ventures.
Until recently he was Chairman of LogiCamms. He is currently Chair of the Future Fuels CRC and
has previously held the roles of CEO of Austin Engineering Limited and EGM Engineering and
Construction at Transfield Services.
Directorships: Current directorships in other listed companies: None
Directorships in listed companies in the last three years: Chairman of LogiCamms from July 2019
to February 2020
MR IAN LYNASS – CHIEF EXECUTIVE OFFICER (CEO) AND MANAGING DIRECTOR
Resignation:
Experience
and Expertise:
Resigned as Non-Executive Director 16 August 2019
Resigned as Managing Director 29 April 2019
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
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DIRECTORS’ REPORT
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 IAN WIDDICOMBE – NON-EXECUTIVE DIRECTOR
BEng Civil
Resignation:
3 April 2019
Experience
and Expertise:
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.
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
COMPANY SECRETARY
MR WILLIAM HERBERT HOWARD – COMPANY SECRETARY
Appointment: Appointed as Executive Director 15 August 2019 and Company Secretary 15 July 2019
Experience
and Expertise:
William brings significant experience to both these roles, having served for the past three years
as the CFO of a Financial Services company in Western Sydney, realigning financial systems,
operations and reporting, along with coordinating due diligence processes for interested
parties on potential acquisitions.
Prior to this, William had performed the role of General Manager Finance to a mining services
business in the Hunter Valley, whilst managing and operating his own labour hire company. The
preceding decade saw William as Regional Operations Manager at AJ Lucas and previous to that
with Lahey Constructions Pty Ltd as General Manager Finance.
William holds a Bachelor of Financial Administration and is a qualified Accountant.
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)
Resignation:
17 April 2019
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DIRECTORS’ REPORT
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.
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’ 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.
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 14.
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Number Eligible to AttendNumber AttendedNumber Eligible to AttendNumber AttendedNumber Eligible to AttendNumber AttendedNumber Eligible to AttendNumber AttendedGuido Belgiorno-Nettis11212661144William Howard255441144David Iverach1212661144Ian Widdicombe33311----Ian Lynass46611----3. Ian Widdicombe was resigned as Non-Executive Director on 3 April 20194. Ian Lynass was resigned as Non-Executive Director on 16 August 2019Nomination and Remuneration CommitteeRisk, HSE and Commercial Committee1. Guido Belgiorno-Nettis was appointed as Non-Executive Director on 22 December 2016, Executive Chairman on 29 April 2019 and Non-Executive Chairman 11 July 20192. William Howard was appointed as Executive Director on 15 August 2019Directors’ MeetingsAudit and Compliance CommitteeGuido Belgiorno-NettisWilliam HowardDavid IverachRights over ordinary shares - 2,000,000 - Ordinary Shares 83,322,371 324,246 6,845,216
DIRECTORS’ REPORT
NON-AUDIT SERVICES
There were no non-audit services provided by the Group’s previous auditors, Ernst & Young (resigned on 3rd
December 2019). Fees paid to PKF (NS) Audit & Assurance Ltd Partnership (appointed from December 2019) for tax
and consulting services to the Group totalled $22,800.
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.
7 | P A G E
REMUNERATION REPORT |AUDITED
REMUNERATION REPORT – AUDITED
REMUNERATION POLICIES
The Board policy for determining the nature and amount of remuneration of directors and executives is agreed by
the Board of Directors as a whole. The Board structures remuneration so that it rewards those who perform and is
strongly aligned with the Company’s strategic direction and the creation of value to shareholders. The 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.
No short-term incentives were awarded during the year.
Long-Term Incentive Plan (LTIP)
A Long-Term Incentive Plan (LTIP) has also been developed which will grant eligible employees to performance
rights in the Company. Any issue (at the discretion of the Board) under the LTIP would likely be subject to vesting
over five 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. Nil rights were vested during the year 2019. There were 26M performance rights granted to senior
executives in 2019.
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.
8 | P A G E
REMUNERATION REPORT |AUDITED
Voting and comments made at the Company's 30 April 2019 Annual General Meeting ('AGM')
At the last AGM held on 30 April 2019, 99.5% of the votes received supported the adoption of the remuneration
report for the year ended 31 December 2018. The Company did not receive any specific feedback at the AGM
regarding its remuneration practices.
DIRECTORS’ COMPENSATION
The directors during the year ended 31 December 2019 were:
Guido Belgiorno-Nettis
Executive Chairman
- Appointed as Non-Executive Chairman 11 July 2019
- Appointed as Executive Chairman 29 April 2019
- Appointed as Non-Executive Director 22 December 2016
William Howard
Executive Director
- Appointed as Executive Director 15 August 2019
- Appointed as Chief Financial Officer and Company Secretary 15 July 2019
David Iverach
Non-Executive Director
- Appointed as Non-Executive Director 10 December 2018
Ian Widdicombe
Former Non-Executive Director
- Resigned 3 April 2019
Ian Lynass
Former Chief Executive Officer and Managing Director
- Resigned as Non-Executive Director 16 August 2019
- Resigned as Managing Director 29 April 2019
EXECUTIVES’ COMPENSATION
Other key management personnel during the year ended 31 December 2019 were:
Paul Dalgleish
Chief Executive Officer
- Appointed as Chief Executive Officer 15 July 2019
Scott Macdonald
Former Chief Financial Officer and Company Secretary
- Resigned as Chief Financial Officer and Company Secretary and ceased
employment with Tempo 17 April 2019
9 | P A G E
REMUNERATION REPORT |AUDITED
DIRECTORS AND KMP REMUNERATION FOR THE YEARS ENDED 31 DECEMBER 2019 AND DECEMBER
2018
10 | P A G E
Short-term benefitsPost-employmentTermination paymentsTotal remunerationPerformance relatedSalary & Fees$Superannuation$Long service leave$Annual leave$Share Options$Performance Rights$$$201916,601------16,6010%201814,161------14,1610%2019127,91610,396-10,401-3,586-152,3002%2018--------201914,8461,410-----16,2560%201878875-----8630%2019168,00010,501-12,693-483,478-674,67172%2018--------20193,848325-----4,1730%201813,7041,302-----15,0060%2019303,02616,493---(25,147)26,320320,6922018236,85919,967-18,049-25,147-300,0228%2019171,31812,970-----184,2880%2018141,12212,008-8,435---161,5650%2019--------201812,5621,193--(168,169)--(154,414)0%201958,8945,595-5,591---70,0800%2018100,48813,853(2,017)51,744-66,102186,131416,30116%2019--------20185,000------5,0000%2019--------2018112,50115,157(1,178)22,045-(268,076)156,25036,6992019864,44857,691-28,685-461,91726,3201,439,0612018637,18563,555(3,195)100,273(168,169)(176,827)342,381795,2032. William Howard was appointed as Chief Financial Officer and Company Secretory on 15 July 2019, as Executive Director on 15 August 20193. 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 2018Massimo Bergomi9Scott Macdonald7Carmelo Bontempo8Guido Bressani10Michael West111. Guido Belgiorno-Nettis was appointed as Non-Executive Director on 22 December 2016, Executive Chairman on 29 April 2019 and Non-Executive Chairman 11 July 2019TOTAL DIRECTORS AND KMPPlease note that the comparatives have been restated for the classification of annual leave as a long-term benefit in line with accounting policy4. Paul Dalgleish was appointed as Chief Executive Officer on 15 July 20195. Ian Widdicombe resigned on 03 April 20196. Ian Lynass resigned as Managing Director on 29 April 2019 and resigned as Non-Executive Director on 16 August 20197. Scott Macdonald resigned as Chief Financial Officer and Company Secretary on 17 April 20198. Carmelo Bontempo retired from the Board on 30 November 2018 and forfeited his share options9. Massimo Bergomi resigned as Chief Executive Officer and Managing Director on 19 March 2018. He received $158,906 in rights and forfeited $92,80410. Guido Bressani resigned as Non-Executive Director on 3 April 2018.11. Michael West resigned as Chief Financial Officer and Company Secretary on 15 June 2018 and forfeited his rights.Long-term benefitsShare-based paymentsIan Widdicombe5Ian Lynass6David Iverach3Paul Dalgleish4Guido Belgiorno-Nettis1William Howard2
REMUNERATION REPORT |AUDITED
SHAREHOLDING OF KMP
Shares held in Tempo Australia Limited.
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.
11 | P A G E
Balance 1 January 2019Balance at appointment as KMPIssued on exercise of performance rightsNet change other #Resignation/Retirement of KMP*Balance 31 December 2019Guido Belgiorno-Nettis144,847,660--38,474,711-83,322,371William Howard2---324,246-324,246David Iverach3---6,845,216-6,845,216Paul Dalgleish4------Ian Widdicombe5------Ian Lynass6914,000----914,000Scott Macdonald750,000---(50,000)-TOTAL 45,811,660--45,644,173(50,000)91,405,8334. Paul Dalgleish was appointed as Chief Executive Officer on 15 July 20195. Ian Widdicombe resigned on 03 April 20196. Ian Lynass resigned as Managing Director on 29 April 2019 and resigned as Non-Executive Director on 16 August 20197. Scott Macdonald resigned as Chief Financial Officer and Company Secretary on 17 April 20193. 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# 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 resignationIncludes shares held directly, indirectly and beneficially by KMP.1. Guido Belgiorno-Nettis was appointed as Non-Executive Director on 22 December 2016, Executive Chairman on 29 April 2019 and Non-Executive Chairman 11 July 20192. William Howard was appointed as Chief Financial Officer and Company Secretory on 15 July 2019, as Executive Director on 15 August 2019Balance at the start of the yearGranted as remunerationRights vestedRights forfeitedBalance at the end of the yearVested at end of yearVested and exercisable at end of yearVested and exercisable at end of yearWilliam Howard1-2,000,000--2,000,000---Paul Dalgleish1-24,000,000--24,000,000---Ian Lynass2500,000--(500,000)----TOTAL500,00026,000,000-(500,000)26,000,000---1. The performance rights were granted at employment commencement and accordingly ongoing performance conditions were set as this was issued as a sign on bonus. The performance rights granted are subject to continued employment over five years of service.2. Rights granted were forfeited on resignation.
REMUNERATION REPORT |AUDITED
PERFORMANCE RIGHTS AWARDED, VESTED AND LAPSED DURING THE YEAR
The table below discloses the number of performance rights granted, vested or lapsed during the year.
ADDITIONAL INFORMATION
The earnings of the consolidated entity for the five years to 31 December 2019 are summarised below:
DIRECTOR AND KMP AGREEMENTS
The company currently has service agreements with its executive and 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:
Agreement Commenced:
Details:
Guido Belgiorno-Nettis
Non-Executive Director
22 December 2016
$15,000 per annum inclusive of superannuation (if applicable)
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Financial year grantedRights awarded during the year No.Grant dateFair value per right at award date ($)Vesting date¹Expiry dateNo. vested during yearNo. forfeited during yearValue of rights granted during the year²Value of rights vested during the year ($) ³William Howard20192,000,00015/07/19 0.02 14/07/24--3,586-Paul Dalgleish201924,000,00015/07/19 0.03 14/07/24--483,478-Ian Lynass 2018500,00022/03/180.1922/01/2126/03/33-(500,000)--1 The performance rights vested are subject to trading in Tempo shares on ASX achievements3 Determined at the time of exercise at the intrinsic value.2 Determined at the time of grant per AASB 2. 20192018201720162015$'000$'000$'000$'000$'000Revenue and other income (excluding interest income)53,21741,69118,11481,14278,079EBITDA(2,683)(5,400)(1,794)6,3934,579EBIT(14,645)(6,039)(2,397)6,2014,505(Loss)/Profit after income tax(19,964)(5,648)(1,047)5,4556,740Share price at financial year end ($)0.0490.1450.2400.2300.120Total dividends declared (cents per share)-----Basic (loss)/earnings per share (cents per share)(8.020)(2.344)(0.435)2.7133.449The factors that are considered to affect total shareholders return ('TSR') are summarised below
REMUNERATION REPORT |AUDITED
Name:
Title:
Agreement Commenced:
Details:
Name:
Title:
Agreement Commenced:
Terms of Agreement:
Details:
David Iverach
Non-Executive Director
10 December 2018
$15,000 per annum inclusive of superannuation (if applicable)
William Howard
Executive Director
15 July 2019
Permanent full time
Base salary of $295,000 per annum plus superannuation. Six months
termination notice by either party, STI up to 40% and performance rights subject
to the satisfaction of specified milestones and performance criteria (both
individual and company).
The company has non-fixed term employment contracts with its executives. The contracts detail the formal terms
and conditions of the employment.
Name:
Title:
Agreement Commenced:
Terms of Agreement:
Details:
Name:
Title:
Agreement Commenced:
Terms of Agreement:
Details:
Name:
Title:
Agreement Commenced:
Terms of Agreement:
Details:
Paul Dalgleish
Chief Executive Officer
15 July 2019
Permanent full time
Base salary of $360,000 per annum plus superannuation. Six months termination
notice by either party, performance rights and bonus subject to the satisfaction
of specified milestones and performance criteria (both individual and company).
Ian Lynass
Managing Director and Chief Executive Officer (Resigned as Managing Director
on 29 April 2019 and resigned as Non-Executive Director on 16 August 2019)
22 January 2018
Permanent full time
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).
Scott Macdonald
Chief Financial Officer and Company Secretary (Resigned 17 April 2019)
15 June 2018
Permanent full time
Base salary of $250,000 per annum plus superannuation. Three months
termination notice by either party. The employee will receive a sign-on offer of
500,000 performance rights subject to be an employee for three years after
commencement date (good leaver provisions to apply).
Signed in accordance with a resolution of the directors.
William Howard
Executive Director, Chief Financial Officer & Company Secretary
Date: 31 March 2020
13 | P A G E
AUDITOR’S INDEPENDENCE DECLARATION
AUDITORS INDEPENDENCE DECLARATION
14 | P A G E
CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND OTHER
COMPREHENSIVE INCOME
TEMPO AUSTRALIA LTD AND CONTROLLED ENTITIES
CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND OTHER
COMPREHENSIVE INCOME
FOR THE YEAR ENDED 31 DECEMBER 2019
The Group has initially applied AASB 16 using the cumulative effect method and has not restated comparatives. The comparatives
have been prepared using AASB 117 and related interpretations.
15 | P A G E
Note2019$'0002018$'000Revenue452,94440,492Other income42731,301Revenue and other income53,21741,793Employee and director benefits expense619,48720,170Administration costs1,3321,718Occupancy costs408798Depreciation and amortisation 12, 131,399639Other expenses5394128Project material costs10,6118,661Equipment and other subcontractor costs22,63411,596Listing and other statutory charges9450Interest and finance charges198126Other professional expenses940679Impairment expense13, 1410,3653,230Total expenses67,86247,795Loss before income tax expense(14,645)(6,002)Income tax (credit) / expense7(5,319)354Loss attributable to the members of the parent(19,964)(5,648)Other comprehensive income--Total comprehensive loss(19,964)(5,648)Net loss attributable to members of the parent entity(19,964)(5,648)Loss per shareBasic loss – cents per share21(8.0)(2.3)Diluted loss – cents per share21(8.0)(2.3)The accompanying notes from part of these financial statements.Consolidated entity
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
TEMPO AUSTRALIA LTD AND CONTROLLED ENTITIES
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
AS AT 31 DECEMBER 2019
The Group has initially applied AASB 16 using the cumulative effect method and has not restated comparatives. The comparatives
have been prepared using AASB 117 and related interpretations.
16 | P A G E
Note2019$'0002018$'000CURRENT ASSETSCash and cash equivalents87,3404,766Trade and other receivables910,4395,411Contract assets101,0162,723Inventories11505402Other assets461394Total current assets19,76113,696NON-CURRENT ASSETSPlant and equipment123,3382,312Goodwill13, 14-9,230Intangible Assets13-466Deferred tax assets7-5,318Total non-current assets3,33817,326Total assets23,09931,022CURRENT LIABILITIESTrade and other payables1610,4433,831Interest bearing loans and borrowings ©171,2851,326Provisions 18805679Total current liabilities12,5335,836NON-CURRENT LIABILITIESInterest bearing loans and borrowings (nc)171,948843Provisions (nc) 1811858Total non-current liabilities2,066901Total liabilities14,5996,737Net assets 8,50024,285EQUITYContributed equity 1984,05680,341Share option reserve192,0421,580Accumulated losses(77,598)(57,636)Total equity8,50024,285The accompanying notes from part of these financial statements.Consolidated entity
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
TEMPO AUSTRALIA LTD AND CONTROLLED ENTITIES
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 31 DECEMBER 2019
The Group has initially applied AASB 16 using the cumulative effect method and has not restated comparatives. The comparatives
have been prepared using AASB 117 and related interpretations.
17 | P A G E
ConsolidatedContributed equityAccumulated lossesShare Option ReserveTotal equityNote$'000$'000$'000$'000At 1 January 201879,893(51,988)2,01029,915Loss for the year-(5,648)-(5,648)Other comprehensive income----Total comprehensive loss -(5,648)-(5,648)Share based payments--427427Reversal of unvested options--(776)(776)Acquisition of treasury shares(387)--(387)Tax effect relating to share based payment--(81)(81)Tax effect relating to share issue cost(15)--(15)Other contributed equity on settlement of contingent consideration for acquisition of KP Electirc850--850At 31 December 201880,341(57,636)1,58024,285At 1 January 201980,341(57,636)1,58024,285Loss for the year-(19,962)-(19,962)Other comrehensive income----Total comprehensive loss -(19,962)-(19,962)Share Issues3,915--3,915Share based payments--495495Reversal of unvested options--(33)(33)Cost of Share Raising(200)--(200)At 31 December 201984,056(77,598)2,0428,500The accompanying notes from part of these financial statements.
CONSOLIDATED STATEMENT OF CASH FLOWS
TEMPO AUSTRALIA LTD AND CONTROLLED ENTITIES
CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED 31 DECEMBER 2019
The Group has initially applied AASB 16 using the cumulative effect method and has not restated comparatives. The comparatives
have been prepared using AASB 117 and related interpretations.
18 | P A G E
Note2019$'0002018$'000CASH FLOW FROM OPERATING ACTIVITIESReceipts from customers51,65243,001Payments to suppliers and employees(50,441)(47,165)Income tax paid-(209)Interest and finance charges paid(198)(126)Interest received45103Net cash generated by /(used in) operating activities201,058(4,396)CASH FLOW FROM INVESTING ACTIVITIESPayment for acquisition of business-(2,411)Proceeds from sale of property, plant and equipment12740Intangibles--Payments for property plant and equipment(353)(689)Net cash used in investing activities(341)(2,360)CASH FLOW FROM FINANCING ACTIVITIESPayment for shares acquisition of treasury shares19-(387)Proceeds from issue of equity instruments193,715-Proceeds from borrowings1716,4151,149Repayment of borrowings17(18,273)(257)Net cash generated by financing activities1,857505Net increase (decrease) in cash and cash equivalents2,574(6,251)Cash and cash equivalents at beginning of year4,76611,017Total cash and cash equivalents at the end of the year7,3404,766The accompanying notes from part of these financial statements.Consolidated entity
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2019
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2019
1
Corporate information
Change in accounting policy
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 26
March 2020. 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
c/o Company Matters Pty Limited, Level 12, 680
George Street, Sydney NSW 2000
The consolidated financial statements are presented
in Australian dollars which is the parent entity’s
functional and presentation currency
The nature of the operations and principal activities
of the consolidated entity are described in the
Directors’ Report.
Comparatives are consistent with prior years, except
for the information relating to leases due to the
modified retrospective adoption of AASB 16.
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.
2
Significant accounting policies
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).
New and amended accounting standards and
interpretations
The Group applied AASB 16 Leases (AASB 16) for the
first time during the current year. The nature and
effect of the changes as a result of adoption of this
new accounting standards are described below.
Several other amendments and interpretations apply
for the first time in 2019, 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 16 Leases
The Group has initially adopted AASB 16 Leases from
1 January 2019. AASB 16 introduced a single, on-
balance sheet accounting model for lessees. As a
result, the Group, as a lessee, has recognised right-of-
use assets representing its right to use the underlying
assets and lease liabilities representing its obligation
to make lease payments.
The Group has applied AASB 16 using the modified
retrospective approach, under which the cumulative
effect of initial application is recognised in retained
earnings at 1 January 2019. Accordingly, the
comparative information presented for 2018 has not
been restated – i.e. it Is presented, as previously
reported, under AASB 117. The details of the changes
in accounting policies are disclosed below.
Previously, the Group determined at contract
inception whether an arrangement was or contained
a lease under AASB Interpretation 4 Determining
Whether an Arrangement Contains a Lease. The
Group now assesses whether a contract is or contains
a lease based on the new definition of a lease. Under
AASB 16, a contract is, or contains, a lease if the
contract conveys a right to control the use of an
identified asset for a period of time in exchange for
consideration.
At inception or on reassessment of a contract that
contains a lease component, the Group allocates the
19 | P A G E
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2019
consideration in the contract to each lease and non-
lease component on the basis of their relative stand-
alone prices, although it uses the practical expedient.
Lease liabilities
At the commencement date of the lease, the Group
recognises lease liabilities measured at the present
value of lease payments to be made over the lease
term. The lease payments include fixed payments
(including in-substance fixed payments) less any lease
incentives receivable, variable lease payments that
depend on an index or a rate, and amounts expected
to be paid under residual value guarantees. The lease
payments also
include the exercise price of a
purchase option reasonably certain to be exercised by
the Group and payments of penalties for terminating
a lease, if the lease term reflects the Group exercising
the option to terminate. The variable lease payments
that do not depend on an index or a rate are
recognised as expense in the period on which the
event or condition that triggers the payment occurs.
In calculating the present value of lease payments,
the Group uses the incremental borrowing rate at the
lease commencement date if the interest rate implicit
in the lease is not readily determinable. After the
commencement date, the amount of lease liabilities
is increased to reflect the accretion of interest and
reduced for the lease payments made. In addition,
the carrying amount of lease liabilities is remeasured
if there is a modification, a change in the lease term,
a change in the in-substance fixed lease payments or
a change
in the assessment to purchase the
underlying asset.
Short-term leases and leases of low-value assets
The Group applies the short-term lease recognition
exemption to its short-term leases of machinery and
equipment (i.e., those leases that have a lease term
of 12 months or less from the commencement date
and do not contain a purchase option). It also applies
the lease of low-value assets recognition exemption
to leases of office equipment that are considered of
low value. Lease payments on short-term leases and
leases of low-value assets are recognised as expense
on a straight-line basis over the lease term.
The Group determines the lease term as the non-
cancellable term of the lease, together with any
periods covered by an option to extend the lease if it
is reasonably certain to be exercised, or any periods
covered by an option to terminate the lease, if it is
reasonably certain not to be exercised.
The Group has the option, under some of its leases to
lease the assets for additional terms of one to three
years. The Group applies judgement in evaluating
whether it is reasonably certain to exercise the option
to renew. That is, it considers all relevant factors that
create an economic incentive for it to exercise the
renewal. After the commencement date, the Group
reassesses the lease term if there is a significant event
or change in circumstances that is within its control
and affects its ability to exercise (or not to exercise)
the option to renew (e.g., a change in business
strategy).
Transition
At transition, for leases classified as operating leases
under AASB 117, lease liabilities were measured at
the present value of the remaining lease payments,
discounted at either the interest rate implicit in the
lease or the Group’s incremental borrowing rate.
lease
Right-of-use assets are measured at an amount equal
to the
liability, adjusted by the amount
depreciation that would have been recognised had
the asset been recognised at the start of the lease.
The Group used the following practical expedients
when applying AASB 16 to leases previously classified
as operating leases under AASB 117.
• Applied the exemption not to recognise right-of-
use assets and liabilities for leases with less than
12 months of lease term, remaining at the date
of transition.
• Excluded initial direct costs from measuring the
initial
the date of
right-of-use asset at
application.
The Group leases a number of motor vehicles and
items of plant and equipment. Many of these leases
were classified as finance leases under AASB 117. For
these finance leases, the carrying amount of the
associated right-of-use asset and the lease liability at
1 January 2019 were determined to be the carrying
amount of the lease asset and lease liability under
AASB 117 immediately before that date.
20 | P A G E
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2019
As a lessee
The Group leases many assets, including motor
vehicles and properties.
As a lessee the Group previously classified leases as
operating, or finance leases based on its assessment
of whether the lease transferred substantially all of
the risks and rewards of ownership. Under AAASB 16,
the Group recognises right-of-use assets and lease
liabilities for most leases – i.e. these leases are on-
balance sheet.
However, the Group has elected not to recognise
right-of-use assets and lease liabilities for some leases
where the right to control the identified asset is for a
period of less than twelve months and where the
underlying asset is of low value.
The Group presents right-of-use assets as it presents
underlying assets of the same nature that it owns. The
carrying amounts of right-of-use-assets are as below.
The Group presents lease liabilities in ‘Interest-
bearing loans and borrowings’ in the statement of
financial position.
As a lessor
The Group currently does not undertake any activities
which would classify it as a lessor under AASB 16.
Impacts on financial statements
On transition to AASB 16, the Group recognised
additional right-of-use assets and additional lease
liabilities, recognising the difference in retained
earnings. The impact on transition is summarised
below.
When measuring lease liabilities for leases that were
classified as operating leases, the Group discounted
lease payments using the rate implicit in the lease
agreement, or the Group’s incremental borrowing
rate when the rate was not readily determined. The
weighted-average rate applied at transition was
4.84%.
Impacts for the period
As a result of initially applying AASB 16, in relation to
the leases that were previously classified as operating
leases, the Group recognised $935K of right-of-use
assets and $969K of lease liabilities as at 1 January
2019.
Also, in relation to those leases under AASB 16, the
Group has recognised depreciation and interest
expense, instead of operating lease expense. During
the twelve months ended 31 December 2019, the
Group recognised $799K of depreciation and $101K
of interest expense from these leases.
Basis of consolidation
The consolidated financial statements
include the
financial position and performance of controlled
entities from the date on which control is obtained
until the date that control is lost.
liabilities, equity,
Intragroup assets,
income,
expenses and cashflows relating to transactions
between entities in the consolidated entity have been
eliminated in full for the purpose of these financial
statements.
21 | P A G E
PropertyMotor Vehicles$'000$'000Balance at 1 January 2019755176Balance at 31 December 20194241,583Right-of-use assets1-Jan-19Right-of-use assets presented in property755 Right-of-use assets presented in motor vehicles176 Lease liabilities(965)Write of amortised incentive payment34 1-Jan-19Operating lease commitment at 31 December 2018 as disclosed in the Group’s consolidated financial statements1,487 Less exempted non-lease components(268)Discounted using the implicit interest rate or the Group’s incremental borrowing rate(53)Less recognition exemption for leases with less than 12 months of lease term at transition(390)Plus extensions not known at 31 December 2018189 Finance lease liabilities recognised as at 31 December 20181,020 Lease liabilities recognised at 1 January 20191,985
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2019
Appropriate adjustments have been made to a
controlled entity’s financial position, performance
and cash flows where the accounting policies used by
that entity were different from those adopted by the
consolidated entity. All controlled entities have a 30
June financial year end.
A list of controlled entities is contained in Note 24 to
the financial statements.
Subsidiaries
Subsidiaries are all entities over which the parent has
control. Control is established when the parent is
exposed to, or has rights to variable returns from its
involvement with the entity and has the ability to
affect those returns through its power to direct the
relevant activities of the entity.
Associates
investments
in associates, where the
investor has
Interests
significant influence over the investee, are accounted
for using the equity method in accordance with
AASB128
Joint
Ventures. Under this method, the investment is
initially recognised as cost and the carrying amount is
increased or decreased to recognise the investor’s
share of the profit or loss and other comprehensive
income of the investee after the date of acquisition.
in Associates and
Summary of significant accounting policies
a.
Current versus non-current classifications
The Group presents assets and liabilities in the
financial position based on a
statement of
current/non-current classification. An asset is current
when it is:
• Expected to be realised or intended to be sold or
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.
b.
Revenue from contracts with customers
that
Revenue from contracts with customers is recognised
when goods and services are transferred to the
customer at an amount
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.
reflects
identify
Maintenance and construction electrical services
The Group provides maintenance and construction
electrical services. The Group assesses each contract
the performance obligations and
to
transaction price within the contract. The total
transaction price
is allocated to performance
obligations based on relative standalone selling
prices.
the
those
the Group;
contracts where
For
customer
simultaneously receives and consumes the goods and
the Group’s
service provided by
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
is not satisfied the group
revenue over time
recognises revenue at a point in time.
If the consideration in the contract includes a variable
amount, typically for cost plus contracts or contracts
22 | P A G E
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2019
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
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.
uncertainty with
the
Where appropriate, the Group applies the variable
to allocate
consideration allocation exception
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.
c.
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.
d.
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
in which applicable tax
respect to situations
regulations are subject
interpretation and
establishes provisions where appropriate.
to
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
23 | P A G E
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2019
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
in subsidiaries,
investments
associated with
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
in subsidiaries,
investments
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
become probable that future taxable profits will allow
the deferred tax asset to be recovered.
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
in which
simultaneously,
significant amounts of deferred tax liabilities or assets
are expected to be settled or recovered.
in each future period
Tax consolidated group
its wholly owned
Tempo Australia Limited and
Australian resident subsidiaries
tax
formed a
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
24 | P A G E
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2019
and unused tax credits assumed from controlled
entities in the tax consolidated group.
e.
Property, plant and equipment
Property, 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
the asset’s employment and
subsequent disposal. The expected net cash flows
have been discounted to their present values in
determining recoverable amounts.
from
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
repairs and
reliably. All other
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
for use. Leasehold
improvements are depreciated over the shorter of
the unexpired period of the lease and the estimated
useful lives of the improvements.
is held ready
The useful lives used are listed as below:
f.
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.
g.
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
25 | P A G E
Furniture and fixtures5 – 10 yearsComputer equipment4 yearsPlant & Equipment4 yearsMotor Vehicles6 yearsProperty Right of Use1 – 4 years
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2019
indefinite life is reviewed annually to determine
whether
to be
supportable. If not, the change in useful life from
indefinite to finite is made on a prospective basis.
life continues
indefinite
the
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.
h.
Goodwill
is carried at cost
Goodwill
less accumulated
impairment losses. Goodwill is calculated as the
excess of the sum of:
• The consideration transferred;
• Any non-controlling interest; and
• The acquisition date fair value of any previously
held equity interest over the acquisition date fair
value of net identifiable assets acquired in a
business combination.
i.
Financial instruments
Financial instruments are recognised initially on the
date that the Group becomes party to the contractual
provisions of the instrument.
On initial recognition, all financial instruments are
measured at fair value plus transaction costs
Financial assets
All recognised financial assets are subsequently
measured in their entirety at either amortised cost or
fair value, depending on the classification of the
financial assets.
Classification
initial recognition, the financial assets were
On
measured at amortised cost.
Financial assets are not reclassified subsequent to
their initial recognition unless the Group changes its
business model for managing financial assets.
Amortised cost
Assets measured at amortised cost are financial
assets where:
•
•
the business model is to hold assets to collect
contractual cash flows; and
the contractual terms give rise on specified dates
to cash flows are solely payments of principal
the principal amount
and
outstanding.
interest on
The Group's financial assets measured at amortised
cost comprise trade and other receivables and cash
and cash equivalents in the consolidated statement
of financial position.
Subsequent to initial recognition, these assets are
carried at amortised cost using the effective interest
rate method less provision for impairment.
Interest income, foreign exchange gains or losses and
impairment are recognised in profit or loss. Gain or
loss on derecognition is recognised in profit or loss.
Impairment of financial assets and contract assets
Impairment of financial assets is recognised on an
expected credit loss (ECL) basis for the following
assets:
•
•
financial assets measured at amortised cost; and
contract assets.
reasonable
When determining whether the credit risk of a
financial assets has increased significant since initial
the
recognition and when estimating ECL,
Group considers
supportable
information that is relevant and available without
undue cost or effort. This includes both quantitative
analysis
and
based on the Group's historical experience and
informed credit assessment and including forward
looking information.
information
qualitative
and
and
The Group uses the presumption that an asset which
is more than 30 days past due has seen a significant
increase in credit risk.
26 | P A G E
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2019
The Group uses the presumption that a financial asset
is in default when:
•
•
the other party is unlikely to pay its credit
obligations to the Group in full, without recourse
to actions such as realising security (if any is
held); or
the financial assets is more than 90 days past
due.
Credit losses are measured as the present value of the
difference between the cash flows due to the
Group in accordance with the contract and the cash
flows expected to be received. This is applied using a
probability weighted approach.
Trade receivables and contract assets
trade
Impairment of
receivables and contract
assets have been determined using the simplified
approach in AASB 9 which uses an estimation of
losses. The Group has
lifetime expected credit
determined the probability of non-payment of the
receivable and contract asset and multiplied this by
the amount of the expected loss arising from default.
The amount of the impairment is recorded in a
separate allowance account with the loss being
recognised in other expense. Once the receivable is
determined to be uncollectable then the gross
carrying amount is written off against the associated
allowance.
Where the Group renegotiates the terms of trade
receivables due from certain customers, the new
expected cash flows are discounted at the original
effective interest rate and any resulting difference to
the carrying value is recognised in profit or loss.
Other financial assets measured at amortised cost
Impairment of other financial assets measured at
amortised cost are determined using the expected
credit loss model in AASB 9. On initial recognition of
the asset, an estimate of the expected credit losses
for the next 12 months is recognised. Where the asset
has experienced significant increase in credit risk then
the lifetime losses are estimated and recognised.
Financial liabilities
The Group measures all financial liabilities initially at
fair value
less transaction costs, subsequently
financial liabilities are measured at amortised cost
using the effective interest rate method.
The financial liabilities of the Group comprise trade
payables, bank and other loans and lease liabilities.
j.
Inventories
Inventories are valued at the lower of cost and net
realisable value and are comprised entirely of
consumables.
Cost is determined on a FIFO 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.
k.
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
27 | P A G E
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2019
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.
its
The impairment calculation is performed by the
Group using a value-in-use model with discounted
impairment
cash
flows. The Group bases
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 years 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
impairment expense.
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
loss been
recognised for the asset in prior years. Such reversal
is recognised in the statement of profit or loss.
impairment
is tested for
impairment annually
Goodwill
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
its carrying amount, an
impairment loss is recognised. Impairment losses
relating to goodwill cannot be reversed in future
periods.
less than
is
Intangible assets with indefinite useful lives are
tested for impairment annually as at 31 December at
level, as appropriate, and when
the CGU
circumstances indicate that the carrying value may be
impaired.
l.
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.
Outstanding bank overdrafts are considered as
current liabilities.
m.
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.
n.
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
the
as a
reimbursement is virtually certain. The expense
relating to a provision is presented in the statement
of profit or loss net of any reimbursement.
separate asset, but only when
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.
28 | P A G E
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2019
leave and
long
Equity-settled Transactions
o.
Superannuation, annual
service leave
Superannuation
The Group makes
contributions. There
superannuation scheme operated by the Group.
contributions as defined
is no defined benefit
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.
p.
Earnings per share
Basic earnings per share is calculated by dividing the
profit attributable to owners of the company by the
weighted average number of ordinary shares
outstanding during the year.
Diluted earnings per share adjusts the basic earnings
per share to take into account the after income tax
effect of interest and other financing costs associated
with dilutive potential ordinary shares and the
weighted average number of additional ordinary
shares that would have been outstanding assuming
the conversion of all dilutive potential ordinary
shares.
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).
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 28.
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
that will ultimately vest. Market
instruments
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
29 | P A G E
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2019
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).
r. Share Capital
Ordinary shares are classified as equity. Incremental
costs directly attributable to the issue of ordinary
shares and share options which vest immediately are
recognised as a deduction from equity, net of any tax
effects.
s.
Segment reporting
Operating segments are presented using
the
information
'management approach', where the
presented is on the same basis as the internal reports
provided to the Chief Operating Decision Makers
('CODM'). The CODM is responsible for the allocation
of resources to operating segments and assessing
their performance.
3 Critical
Accounting
Estimates
and
Judgments
The preparation of the Group’s consolidated financial
to make
requires management
statements
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.
Judgements
the
electrical and
timing of
repairs and maintenance
Determining
telecommunications
services
The Group concluded that revenue for electrical and
and maintenance
repairs
telecommunications
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 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
its assumptions and
below. The Group based
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
variable
revenue
consideration on the basis that there is no history of
constraining
this
for
30 | P A G E
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2019
significant reversals of revenue
liquidated damages.
in relation to
Impairment review
losses of trade
Provision for expected credit
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
forward-looking estimates are
analysed.
in the
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
future. The
information about the ECLs on the Group’s trade
receivables and contract assets is disclosed in Note 9.
in the
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
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.
judgement
The Group has $15,070K (2018: $11,407K) 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 while its deferred tax assets are recoverable
based on the expectation of future taxable income
but have been reversed in the assets at 30 June 2019
as a matter of prudence. Further details on taxes are
disclosed in Note 7.
Financial assets (including receivables)
A financial asset not carried at fair value through
profit or loss is assessed at each reporting date to
determine whether there is objective evidence that it
is impaired. A financial asset is impaired if objective
evidence indicates that a loss event has occurred
after the initial recognition of the asset, and that the
loss event had a negative effect on the estimated
future cash flows of that asset that can be estimated
reliably.
Objective evidence that financial assets (including
equity securities) are impaired can include default or
delinquency by a debtor, restructuring of an amount
due to the Group on terms that the Group would not
consider otherwise, indications that a debtor or issuer
will enter bankruptcy, or the disappearance of an
active market for a security. In addition, for an
investment in an equity security, a significant or
prolonged decline in its fair value below its cost is
objective evidence of impairment.
The Group considers evidence of impairment for
receivables at both a specific asset and collective
individually significant receivables are
level. All
assessed for specific impairment. All individually
significant receivables found not to be specifically
impaired are then collectively assessed for any
impairment that has been incurred but not yet
identified. Receivables that are not
individually
significant are collectively assessed for impairment by
grouping together receivables with similar risk
characteristics.
In assessing collective impairment, the Group uses
historical trends of the probability of default, timing
of recoveries and the amount of loss incurred,
adjusted for management’s judgement as to whether
current economic and credit conditions are such that
the actual losses are likely to be greater or less than
suggested by historical trends.
An impairment loss in respect of a financial asset
measured at amortised cost is calculated as the
difference between its carrying amount and the
present value of the estimated future cash flows
discounted at the asset’s original effective interest
31 | P A G E
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2019
rate. Losses are recognised as profit or loss and
reflected in an allowance account against receivables.
Interest on the impaired asset continues to be
recognised through the unwinding of the discount.
When a subsequent event causes the amount of
in
loss to decrease, the decrease
impairment
impairment loss is reversed through profit or loss.
Non-financial assets
The carrying amounts of the Group’s non-financial
assets (other than inventories, construction work in
progress and deferred tax assets) are reviewed at
each reporting date to determine whether there is
any indication of impairment. If any such indication
exists, then the asset’s recoverable amount
is
estimated.
The recoverable amount of an asset or cash-
generating unit is the greater of its value in use and
its fair value less costs to sell. 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.
For the purpose of impairment testing, assets are
grouped together into the smallest group of assets
that generates cash inflows from continuing use that
are largely independent of
the cash inflows of other assets or Group’s of assets
(“the cash generating unit” or “CGU”). The Group’s
corporate assets do not generate separate cash
4
Revenue and other income
inflows. If there is an indication that a corporate asset
may be impaired, then the recoverable amount is
determined for the CGU to which the corporate asset
belongs.
An impairment loss is recognised if the carrying
amount of an asset or its CGU exceeds its recoverable
amount. Impairment losses are recognised in profit or
loss. Impairment losses recognised in respect of CGUs
are allocated first to reduce the carrying amount of
any goodwill allocated to the units and then to reduce
the carrying amount of the other assets in the unit
(group of units) on a pro-rata basis.
An impairment loss in respect of goodwill is not
reversed. In respect of other assets, impairment
losses recognised in prior periods are assessed at
each reporting date for any indications that the loss
has decreased or no longer exists. An impairment loss
is reversed if there has been a change in the estimates
used to determine the recoverable amount. An
impairment loss is reversed only to the extent that
the asset’s carrying amount does not exceed the
carrying amount that would have been determined,
net of depreciation or amortisation, if no impairment
loss had been recognised.
therefore
in an associate
Goodwill that forms part of the carrying amount of an
is not recognised
investment
separately, and
for
impairment separately. Instead, the entire amount of
is tested for
in an associate
the
impairment as a single asset when there is objective
evidence that the investment in an associate may be
impaired.
investment
is not
tested
32 | P A G E
2019$'0002018$'000Revenues from contracts with customers52,94440,492Interest revenue calculated using the effective interest method45103Other income2281,198Total revenue and other income53,21741,793Consolidated entity
DIRECTORS’ DECLARATION
The transaction price allocated to the remaining performance obligations as described in Note 2.4(b) (unsatisfied
or partially unsatisfied as at 31 December) is as follows:
5
Other expenses
6
Employee and director expenses
33 | P A G E
Revenue from contracts with customers by type of customer2019$'0002018$'000Government and infrastructure4,30411,540Commercial47,02224,689Education and aged care1,4611,789Resources1012,120Other56354Total revenues from contracts with customers52,94440,492Consolidated entity2019$'0002018$'000Within one year15,33815,630Total revenue and other income15,33815,630Consolidated entity2019$'0002018$'000Candidate screening cost145110Movement in allowance for expected credit losses24918Total other expenses394128Consolidated entity2019$'0002018$'000Salaries, wages and other expenses17,67917,396Superannuation expenses1,3131,531Share based payments495(349)Other staff expenses-1,592Total employee and director expenses19,48720,170Consolidated entity
DIRECTORS’ DECLARATION
7
Income tax
The major components of income tax expense for the years ended 31 December 2019 and 2018 are:
34 | P A G E
2019$'0002018$'000Current income taxCurrent tax benefit1,1671,390Conversion of prior year balances to 30% tax rate487(344)Defferred income taxTemporary differences68(527)Adjustments in repect of previous years-(104)Conversion of prior year balances to 30% tax rate3(61)ProvisionProvision Current year tax benefit(1,726)-Provision prior year DTA(5,319)-Income tax (credit) / expense reported in the income statement(5,319)354Consolidated entity2019$'0002018$'000Contributed EquityConversion of prior year balances to 30% tax rate2(3)Blackhole expenses(2)(12)Share-based payments reserveConversion of prior year balances to 30% tax rate-(25)Employee share trust contributions-(56)Income tax (credit) / expense reported in the equity statement-(96)Consolidated entity
DIRECTORS’ DECLARATION
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:
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 reverse
Trade and other receivables
Others
Offset of deferred tax liabilities
Deferred tax not recognised for current year
Deferred tax asset write down for prior year
Net deferred tax assets
Consolidated entity
2019
$'000
2018
$'000
4,521
2,341
124
346
61
96
-
(238)
(1,934)
(5,318)
3,137
2,146
37
276
5
81
23
(387)
-
-
-
5,318
35 | P A G E
2019$'0002018$'000Accounting loss before income tax(14,645)(6,002)Tax at Australia's statutory income tax rate of 30% (2018: 27.5%)4,3941,651Tax effect of amounts which are not deductible in calculating taxable income(3,158)(888)Conversion of prior year balances to 30% tax rate490(405)Others-101Adjustments in respect of previous years-(105)Income tax benefit at the effective tax rate of 11.8% (2018: 6%)1,726354Provision for Current year income tax benefit(1,726)-Provision for prior year DTA(5,319)-Income tax (credit) / expense reported in the income statement(5,319)354Consolidated entity
DIRECTORS’ DECLARATION
In 2019 the Group has written off a deferred tax asset on carried forward losses and unused tax credits.
36 | P A G E
01 Revenue2019$'0002018$'000Deferred tax assetsCarried forward tax losses4,5213,137Research and development tax credits2,3412,146Accrued expenses12437Employee benefits346276Share based payment reverse615Trade and other receivables9681Others-23Offset of deferred tax liabilities(238)(387)Deferred tax not recognised for current year(1,934)-Deferred tax asset write down for prior year(5,318)-Net deferred tax assets-5,318Deferred tax liabilitiesInventory1513Prepayment and receivables940Plant and equipment7280Intangibles-128Works in progress143126Offset against deferred tax asset(238)(387)Net deferred tax liabilities--Consolidated entity
DIRECTORS’ DECLARATION
The movement of the current and deferred tax relates to the following:
8
Cash and short-term deposits
9
Trade and other receivables
Trade receivables are non-interest bearing and are generally on terms of 14 to 60 days.
37 | P A G E
Current Income Tax 2019$'000Deferred Income Tax 2019$'000Current Income Tax 2018$'000Deferred Income Tax 2018$'000Opening balance-5,318-4,831Income tax (credit) / expense recognised in profit and loss-(5,318)-354R&D income recognised as government grant---305Charged to equity---(15)Charged to reserves---(81)Additions through business combination---(76)Closing balance---5,318Amounts recognised on the consolidated statement of financial positionDeferred tax asset---5,318Closing balance---5,318Consolidated entity2019$'0002018$'000Cash at bank and on hand7,3403,766Short term deposits-1,000Cash and cash equivalents7,3404,766Consolidated entity2019$'0002018$'000CURRENTTrade receivables10,2334,944Allowance for expected credit losses(321)(63)Other receivables527530Total current trade and other receivables10,4395,411Consolidated entity
DIRECTORS’ DECLARATION
Set out below is the movement in the allowance for expected credit losses of trade receivables:
The information about the credit exposures are disclosed in Note 17.
10
Contract assets
Set out below is the movement in the allowance for expected credit losses of contract assets:
Contract assets are initially recognised for revenue earned from maintenance and constructions services as receipt
of consideration is conditional on successful completion of performance obligations. Upon completion of these
services and acceptance by the customer, the amounts recognised as contract assets are reclassified to trade
receivables.
In 2019, $Nil (2018 Provision for doubtful debts: $18K) was recognised as provision for expected credit losses on
contract assets.
No revenue was recognised during the year (2018: $Nil) for performance obligations satisfied in previous years.
38 | P A G E
2019$'0002018$'000As at 1 January6358Provision for expected credit losses (Note 17)2585As at 31 December32163Consolidated entity2019$'0002018$'000Contract assets1,0162,774Allowance for expected credit losses-(51)Total contract assets1,0162,723Consolidated entity2019$'0002018$'000As at 1 January51238Provision for expected credit losses (Note 17)-18Written off during the period-(5)Reversed during the period(51)-Provision used during the period-(200)As at 31 December-51Consolidated entity
DIRECTORS’ DECLARATION
11
Inventories
12
Plant and Equipment
39 | P A G E
2019$'0002018$'000Consumables505402Total inventories505402Consolidated entity2019$'0002018$'000Furniture and fixtures - gross carrying value at cost364468Furniture and fixtures - accumulated depreciation(135)(123)Net book value furniture and fixture229345Plant and equipment - gross carrying value at cost1,3651,236Plant and equipment - accumulated depreciation(348)(117)Net book value plant and equipment1,0171,119Computer equipment – gross carrying value at cost108941Computer equipment – accumulated depreciation-(525)Net book value Computer equipment108416Motor vehicles – gross carrying value at cost2,667776Motor vehicles – accumulated depreciation(889)(344)Net book value motor vehicle1,778432Property - gross carrying value Cost755- Property - accumulated depreciation(549)-Net book value Right of Use Assets - Property206-Total gross carrying value at cost5,2593,421Total accumulated depreciation(1,921)(1,109)Total net book value3,3382,312Consolidated entity
DIRECTORS’ DECLARATION
Reconciliation of the carrying amounts at the beginning and end of the current financial year:
The carrying value of plant and machinery held under finance leases contracts at 31 December 2019 was $912K
(2018: $890K). Additions during the year include $142K (2018: $947K) of plant and equipment and motor vehicles
under finance leases.
Leased assets under hire purchase contracts are pledged as security for the related finance lease liability:
40 | P A G E
Furniture and fixtures$'000Plant and equipment$'000Computer equipment$'000Motor vehicles$'000Building$'000Total$'000Balance at 1 January 2018114156488781-1,539Additions329925110264-1,628Additions through business combinations (Note 25)-63-93-156Disposals(63)(8)(3)(500)-(574)Depreciation expense(35)(17)(179)(206)-(437)Balance at 31 December 20183451,119416432-2,312Additions111113291,7005792,532Adjust on transition to IFRS 16---759176935Disposals(254)(37)(70)(12)-(373)Impairment on loss---(626)(169)(795)Depreciation expense(68)(181)(183)(461)(380)(1,273)Balance at 31 December 20191341,0141921,7922063,338Furniture and fixtures$'000Plant and equipment$'000Computer equipment$'000Motor vehicles$'000Building$'000Total$'000Balance at 1 January 2019---759176935Additions---1,2325791,811Depreciation expense---(408)(331)(739)Balance at 31 December 2019---1,5834242,007
DIRECTORS’ DECLARATION
13
Intangible assets
14
Goodwill impairments
During the year, the Group assessed its goodwill and intangible assets for impairment. The Group considers the
relationship between its market capitalisation and its book value, among other factors when reviewing for
indicators of impairment. Management found that the market capitalisation of the Group was below the book value
of its equity, indicating a potential impairment of goodwill and impairment of the assets.
As part of assessing for impairment, it was determined that the cash generating units (CGUs) of the Group would
be aggregated for the purposes of testing the goodwill of $9,230K due to the interrelated nature of operating
segments.
The recoverable amount of the aggregated CGU was determined based on a value-in-use calculation using cash
flow projections from financial forecasts. This forecast was extrapolated to a five-year forecast based on the
assumptions detailed below.
The post-tax discount rate applied to cash flow projections is 11.50% (2018: 11.50%) and cash flows beyond the
forecast period were extrapolated using a 2.4% growth rate (2018: 2.4%) that is the same as the long-term average
growth rate for the electrical services industry.
Trading during the six months to 30 June 2019 had been more difficult than had been anticipated. This led to
management reassessing the forecasts used as inputs to the value in use calculations which directly impacted the
results of the assessment.
As a result of this analysis, it was concluded that the carrying value of the CGU exceeded its recoverable amount,
and the goodwill associated with the CGU was subsequently recognised as a pre-tax impairment. In conjunction
with the impairment of the goodwill management also impaired the customer contracts that had been recognised
in conjunction with the goodwill when the assets were originally acquired.
41 | P A G E
Goodwill$'000Customer Relationships$'000Productivity Tool$'000Total$'000Balance at 1 January 201811,79347311212,378Acquisition of a subsidiary555275-830Amortisation-(283)-(283)Impairment(3,118)-(112)(3,230)Balance at 31 December 20189,230466-9,696Amortisation-(126)-(126)Impairment(9,230)(340)-(9,570)Balance at 31 December 2019----
DIRECTORS’ DECLARATION
15
Segment reporting
Segment reporting
The Group has identified its operating segment based on internal management reporting that is reviewed by the
Board of Directors (chief operating decision makers)) in assessing performance and determining the allocation of
resources. All segments operate only in one geographical area, being Australia.
(a) Segment performance
42 | P A G E
31-Dec-19Asset maintenance and serviceConstruction & electrical project workCorporate / unallocatedTotal$'000$'000$'000$'000RevenueSales22,93730,007-52,944Other revenue13110834273Total segment revenue23,06730,1153453,217Operating expenses24,88830,67140955,968Earnings before interest, tax, depreciation & amortisation (EBITDA)(1,821)(556)(375)(2,751)Depreciation and amortisation4392646951,399Earnings before interest and tax (EBIT)(2,260)(820)(1,070)(4,150)Interest expense474538131Income tax (credit)/expenses--5,3195,319Impairment of assets295810,06110,365Net profit/(loss) for the year(2,602)(874)(16,488)(19,964)31-Dec-18Asset maintenance and serviceConstruction & electrical project workCorporate / unallocatedTotal$'000$'000$'000$'000RevenueSales16,02722,8061,67840,510Other revenue1904526411,283Total segment revenue16,21723,2582,31941,793Operating expenses15,69423,2384,92643,859Earnings before interest, tax, depreciation & amortisation (EBITDA)52319(2,608)(2,066)Depreciation and amortisation40131469639Earnings before interest and tax (EBIT)483(111)(3,077)(2,705)Interest expense15262666Income tax (credit)/expenses--(354)(354)Impairment of assets-3,230-3,230Net profit/(loss) for the year468(3,367)(2,749)(5,648)
DIRECTORS’ DECLARATION
(b) Segment asset and liabilities
Major customers
The consolidated entity has a number of customers to which it provides services. The consolidated entity supplies
a single external customer which accounts for 29% of external revenue (2018: 24%). The next most significant
customer accounts for 25% (2018: 9%).
16
Trade and other payables
17
Financial liabilities
17.1
Financial liabilities: Interest-bearing loans and borrowing
43 | P A G E
31-Dec-19Asset maintenance and serviceConstruction & electrical project workCorporate / unallocatedTotal$'000$'000$'000$'000Total Assets7,1468,8547,09923,099Total Liabilities4,9818,63398514,59931-Dec-18Asset maintenance and serviceConstruction & electrical project workCorporate / unallocatedTotal$'000$'000$'000$'000Total Assets4,3604,77521,88831,022Total Liabilities1,7982,8127605,3702019$'0002018$'000Trade payables5,0132,068Other payables5,4301,763Total trade and other payables10,4433,831Consolidated entityInterest Rate%Maturity2019$'0002018$'000Current interest-bearing loans and borrowingsObligations under leases (Note 22)4.73%20201,038177Insurance Borrowing2.18%2020247-NAB Invoice Finance Facility ($10,000,000 Facility)5.34%On Demand-1,149Total current interest-bearing loans and borrowings1,2851,326Non Current interest-bearing loans and borrowingsObligations under leases (Note 22)4.83%2021- 20221,948843Total non- current interest-bearing loans and borrowings1,948843Total interest-bearing loans and borrowings3,2332,169Consolidated entity
DIRECTORS’ DECLARATION
Tempo has a $10M Invoice Finance Facility with the National Australia Bank Limited (‘NAB’). This facility attracts a
variable interest rate. At 31 December the effective rate was 5.34%. At 31 December 2019 $10M was unused (2018:
$8,851K). 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 $3,450K. At 31 December 2019 the amount of the facility
that was unused was $2,538K. At 31 December 2018, the Group has an asset finance leasing facility with NAB of
$1,000K and the amount of the facility that was unused was $126K.
Other finance leases in relation to financing of plant, vehicles and other equipment amount is Nil (2018: $146K).
Other leases in relation to plant, vehicles and other equipment amount to $2,074K. At 31 December 2018 the
amount relating to other leases was $146K. The application of AASB 16 and subsequent recognition of leases for
items previously classified as operating leases was recognised as a one-off adjustment on 1 January 2019 and
increased the balance relating to leases by $969K to $1,989K.
All finance liabilities are repayable on demand with the exception of finance leases. Refer to Note 22 for the relevant
maturity profile of these finance leases.
17.2
Financial liabilities: Bank guarantees and surety bonds
The Group has surety bond facilities of $7,000K (2018: $7,000K). At 31 December 2019 bonds valued at $2,002K
had been issued (2018: $795K). The bond premium rate is 1.5% per annum on the face value of each bond.
As at 31 December 2019 the Company had bank guarantees issued of $286K (2018: $75K) which were secured by
term deposits. Corresponding term deposits of $286K (2018: $75K) are recorded in other assets.
17.3
Fair values
The carrying value of all current financial assets and liabilities approximates the fair value largely due to the short-
term maturity of these instruments. Non-current financial liabilities are recognised at a discount value implicit in
the finance leases (refer Note: 22).
Set out below is a comparison of the carrying amounts and fair values of the Group’s financial instruments, other
than those with carrying amounts that are reasonable approximations of fair values:
The fair value of obligations under finance leases is estimated by discounting future cash flows using rates currently
available for debt on similar terms, credit risk and remaining maturities. The valuation requires management to use
unobservable inputs in the model, of which the significant unobservable inputs are disclosed in the tables below.
Management regularly assesses a range of reasonably possible alternatives for those significant unobservable
inputs and determines their impact on the total fair value.
44 | P A G E
Carrying amount$'000Fair value$'000Carrying amount$'000Fair value$'000Non-current interest-bearing loans and borrowings1,9482,053843913Obligations under finance leases (Note 22)1,9482,053843913Consolidated entity20192018
DIRECTORS’ DECLARATION
Changes in liabilities arising from financing activities
The ‘Other’ column includes is the reclassification of non-current portion of interest-bearing loans and borrowings
(finance leases) to current due to the passage of time.
17.4
Financial instruments risk management objectives and policies
The Group’s principal liabilities comprise loans and borrowings and trade and other payables. The main purpose of
these financial liabilities is to finance the Group’s operations. The Group’s principal financial assets include trade
receivables and cash and short-term deposits that derive directly from its operations. The Group has determined
that there is no material market, credit, liquidity or interest risk in relation to the cash or other receivables held in
deposits.
The Group is exposed to market risk, credit risk and liquidity risk. Interest rate risks are not considered as significant.
The Group’s senior management oversees the management of these risks under the policies approved by the Risk,
HSE and Commercial Committee and the Board.
Market risk
Market risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of
changes in market price. Market risk comprises three types of risk, interest rate risk, foreign currency risk and other
price risk, such as equity price risk and commodity risk. Financial instruments affected by market risk include loans
and borrowings, deposits and debt.
The sensitivity analysis in the following sections relate to the position as at 31 December in 2019 and 2018.
45 | P A G E
1-Jan-19$'000Cash flows$'000New Leases$'000Lease recognise as AASB 16$'000Others$'00031-Dec-19$'000Current interest-bearing loans and borrowings (excluding items listed below)1,149(902)---247Current obligations under leases177(956)3623921,0631,038Non-current obligations under leases843-1,625543(1,063)1,948Total liabilities from financing activities2,169(1,858)1,987935-3,233Consolidated entity1-Jan-18$'000Cash flows$'000New Leases$'000Others$'00031-Dec-18$'000Current interest-bearing loans and borrowings (excluding items listed below)-1,149--1,149Current obligations under finance leases164(257)18684177Non-current obligations under finance leases25-902(84)843Total liabilities from financing activities1898921,088-2,169Consolidated entity
DIRECTORS’ DECLARATION
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 variable 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 2019 the Group had 5 customers (2018: 6) that owed the Group more than $200K each
and accounted for approximately 84% (2018: 57%) of all receivables. There were 5 customers (2018: 3) with
balances over $500K accounting for 84% of all receivables (2018: 45%) of the total receivables balance.
An impairment analysis is performed at each reporting date using a provision matrix to measure expected credit
losses (“ECL”). The provision rates are based on days past due for groupings of various customer segments with
similar loss patterns. The calculation reflects the probability-weighted outcome, the time value of money and
reasonable and supportable information that is available at the reporting date about past events, current conditions
and forecasts of future economic conditions. Generally, trade receivables are written-off if past due for more than
one year and are not subject to enforcement activity. The maximum exposure to credit risk at the reporting date is
the carrying value of each class of financial assets disclosed in Note 9. The Group does not hold collateral as security.
The Group evaluates the concentration risk with respect to trade receivables as low, as its customers are located
within several industries and operate in largely independent markets.
The customers are grouped into four different categories:
Historically the Group’s ECL has been extremely low. Impairment charges (under AASB 139) over the 5 years 2014
to 2018 inclusive averages to 0.28% of the total trade receivables per year.
Set out below is the information about the credit risk exposure on the Groups trade receivables and contract assets
using a provision matrix:
46 | P A G E
2019$'000Risk Assessment2018$'000Listed public companies1,874Very Low3,718Government departments/agencies357Very Low764Not for profit organisations98Very Low135Commercial businesses811Very Low327Total trade receivables3,1404,944Consolidated entity
DIRECTORS’ DECLARATION
31 December 2019
31 December 2018
Liquidity Risk
The Group monitors its risk of a shortage of funds using by utilising liquidity planning tools across a 15-month
horizon.
The Group’s objective is to maintain a balance between continuity of funding and flexibility through the use of
short-term borrowings and finance leases. The Group assessed the concentration of risk with respect to refinancing
its debt and concluded it to be low. The Group has access to a variety of sources of funding and the majority of the
debt maturing within 12 months can be rolled over with existing lenders.
18
Provisions
47 | P A G E
0-30 Days31-60 Days61-90 Days>91 DaysTotal$'000$'000$'000$'000$'000$'000Expected credit loss rate0.00%0.08%0.49%9.50%17.81%2.85%Total gross carrying amount1,0166,2071,6391,41097711,250Expected credit loss-58134174321Total ECL Provision-58134174321Consolidated entityContract assets0-30 Days31-60 Days61-90 Days>91 DaysTotal$'000$'000$'000$'000$'000$'000Expected credit loss rate1.84%0.25%0.25%2.00%4.25%1.48%Total gross carrying amount2,7741,7241,5796809617,718Expected credit loss51441441114Total ECL Provision51441441114Contract assetsConsolidated entity2019$'0002018$'000Current provisionsEmployee benefits805679Total current provisions805679Non-current provisionsEmployee benefits11858Total Non-current provisions11858Total provisions923737Consolidated entity
DIRECTORS’ DECLARATION
Employee benefits
Provision for employee benefits represents amounts accrued for annual leave, rostered days off, staff retentions
and long service leave.
19
Contributed equity
19 (a) Ordinary Shares
Fully paid ordinary shares carry one vote per share and carry the right to dividends.
48 | P A G E
2019$'0002018$'000Carrying amount at the beginning of period7371,305Additional provision made7861,103Amounts used(600)(1,671)Total employee benefits provisions923737Other benefits2019$'0002018$'000Carrying amount at the beginning of period-43Additional provision made--Amounts used-(43)Total employee benefits provisions--Consolidated entityConsolidated entityNote2019$'0002018$'000Ordinary shares fully paid19 (a)84,05679,491Treasury shares19 (b)--Other contributed equity19 (c)-85084,05680,341Consolidated entityMovements in ordinary shares# of shares$'000# of shares$'000Balance as at the beginning of the year240,804,58179,491240,804,58179,919Shares issued – proceeds received101,730,9253,915--Costs of share issue-(200)-(413)Release of other contributed equity-850--Tax effect relating to share issue cost---(15)Balance as at the end of the year342,535,50684,056240,804,58179,491Consolidated entity2018Consolidated entity2019
DIRECTORS’ DECLARATION
19 (b) 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 28 for further
details of the plan.
19 (c) Other contributed equity
Other contributed equity relates 3,863,636 ordinary shares that were issued in August 2019 on settlement of
contingent consideration for acquisition of KP Electric, which was agreed in the amendment purchase agreement
in February 2018.
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 28 for further
details of the plan.
Capital risk management
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 2018.
49 | P A G E
Movements in treasury shares# of shares$'000# of shares$'000Balance as at the beginning of the year--(109,733)(26)Acquisition of on-market shares--(2,040,267)(387)Issue of shares under Employee Share Incentive Rights Plan--2,150,000413Other----Consolidated entity2019Consolidated entity201820192018$'000$'000Balance as at the beginning of the year1,5802,010Share-based payments487427Reversal of unvested options(25)(776)Tax effect relating to share-based payments-(81)
DIRECTORS’ DECLARATION
20
Cash flow reconciliation
21
Loss per share (LPS)
Basic LPS is calculated by dividing the loss for the year attributable to ordinary equity holders of the parent by the
weighted average number of the ordinary shares outstanding during the year.
There were no options outstanding at the end of 2019 (2018: Nil).
The following table reflects the loss and share data used in the basic EPS calculations:
50 | P A G E
2019$'0002018$'000Reconciliations of the net loss after tax to the net cash flows from operating activitiesNet Loss(19,964)(5,648)Non-operating cash itemsDepreciation1,273437Amortisation125201Impairment of intangible and tangible assets10,3653,230Provisions for expected credit losses207-(Profit)/loss on sale of assets(5)(165)ESOP,option and performance rights expenses462(349)Gain on settlement of contingent consideration fro KP Electric acqusition-(555)Changes in assets and liabilitiesTrade and other receivables and contract assets(3,320)(2,018)Inventories(103)(2)Other assets(67)694Trade and other payables6,577961Provisions190(605)Deferred tax assets5,318(577)Net Operating cash outflows1,058(4,396)Consolidated entity2019$'0002018$'000The following reflects the loss and share data used in the calculations of basic and diluted loss per shareNet loss after tax(19,964)(5,648)Loss used in calculating basic and diluted loss per share(19,964)(5,648)Weighted average number of ordinary shares used in calculating basic loss per share248,940,380240,804,581Consolidated entity
DIRECTORS’ DECLARATION
There have been no transactions involving ordinary shares between the reporting date and date of completion of
these financial statements.
22
Lease expenditure commitments
Operating lease commitments
The Group has entered into leases for property and motor vehicles, with lease terms between one and four years.
The Group has the option, under some of its leases, to lease the assets for additional terms of one to three years.
Future minimum rentals payable under non-cancellable operating leases as at 31 December are, as follows:
51 | P A G E
Effect of dilutive securitiesShare options--Adjusted weighted average number of ordinary shares used in calculating diluted earnings per share248,940,380240,804,5812019$'0002018$'000Depreciation charge for right-of-use assets: - Motor vehicles408- - Property331-Additions to right-of-use assets: - Motor vehicles1,992- - Property--Carrying value of right-of-use assets: - Motor vehicles1,583- - Property424-Interest expense on lease liabilities147-Short-term lease expense through profit or loss--Low value asset lease expense through profit or loss--Total cash outflow for leases1,064-Consolidated entity2019$'0002018$'000Within one year-761After one year but not more than five years-726More than five years--Aggregate lease expenditure contracted for at reporting date-1,487Consolidated entity
DIRECTORS’ DECLARATION
Lease commitments (2018: finance lease commitments)
The Group has leases for various items of plant and machinery. The Group’s obligations under leases are secured
by the lessor’s title to the leased assets. Future minimum lease payments under leases and hire purchase contracts,
together with the present value of the net minimum lease payments are, as follows:
Note 2.2 provides detail of the Group’s adoption of AASB 16: Leases. The Group applied the modified retrospective
approach and as such, comparative disclosure continues to distinguish between operating and finance leases.
23
Capital Commitments
The entity had no capital commitments as at 31 December 2019 (2018: Nil)
24
Group information
Information about subsidiaries
The consolidated financial statements of the Group include:
The immediate and ultimate holding company of the Group is Tempo Australia Ltd which is based and listed in
Australia.
52 | P A G E
Minimum Payments$'000Present value of Payment$'000Minimum Payments$'000Present value of Payment$'000Within one year1,1581,038220177After one year but not more than five years958884919843More than five years1,0951,064--Total minimum lease payments3,2112,9861,1391,020Less amounts representing finance charges(225)-(119)-Present value of minimum lease payments2,9862,9861,0201,02020192018Consolidated entityCountry of Incorporation20192018Tempo Resources Solutions Pty LtdAustralia100%100%Tempo Engineering Pty LtdAustralia100%100%Cablelogic Pty Ltd Australia100%100%Tempo Construction & Maintenance Pty LtdAustralia100%100%Tempo Personnel Management Pty LtdAustralia100%100%Tempo Global Pty LtdAustralia100%100%KP Electric (Australia) Pty LtdAustralia100%100%Consolidated entity
DIRECTORS’ DECLARATION
25
Related party disclosures
Note 24 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.
Each of the above entities is considered to be a related party due to common directorships between them and the
Group. The balances relate to director fee and capital raise underwriting fee. Outstanding balances $106K for
Angophora Capital Pty Ltd related to consulting fees at year-end, which are unsecured and interest free.
Compensation of key management personnel of the Group
26
Business combinations
Acquisitions in 2019
There were no business acquisitions in 2019.
Acquisitions in 2018
On 1 July 2018, the Group acquired assets and liabilities from Comsite Services Pty Ltd (“Comsite”), a non-listed
company based in Australia and specialising in end-to-end telecommunication maintenance services on mobile
network infrastructure across regional NSW, ACT and Southern Queensland. The Group acquired Comsite because
it enlarges the existing telecommunication maintenance services that was already offered to clients.
The fair values of the identifiable assets and liabilities of the Comsite business as at the date of acquisition were:
53 | P A G E
Purchases from related parties2019$'000Purchases from related parties2018$'000Angophora Capital Pty Ltd60 38 Bontampo Nominees Pty Ltd-10 D&T Superannuation Pty Ltd20 -Sadsacks Holding Pty Ltd2 -Consolidated entity2019$'0002018$'000Short-term employee benefits864 637 Post-employment benefits58 64 Long-term benefits29 97 Termination benefits26 342 Share-based payment462 (345)1,439795Consolidated entityTotal benefits
DIRECTORS’ DECLARATION
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 $560,000 of profits before tax from
continuing operation of the Group. It was not possible to identify what the business would have contributed if it
was acquired on 1 January 2018, due to the Group not having access to this financial information.
In December 2018 a termination to the business purchase agreement was signed with the former owner of Comsite
relinquishing their rights to future remuneration-based business performance. In January 2019 the former owner
resigned from their employment with the Group.
27
Parent company information
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Final fair value$'000ASSETSProperty, plant and equipment157Customer relationship intangibles275Total Assets432LIABILITIESBorrowings and interest-bearing liabilities148Deferred tax liability76Total liabilities224Total identifiable net assets at fair value208Cash used to acquire business763Goodwill arising on acquisition555The goodwill of $555,000 comprises the value of expected synergies arising from the acquisition, which is not separately recognised.
DIRECTORS’ DECLARATION
28
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 $495K (2018: $427K).
Movements during the year
The following tables illustrates the number and weighted average exercise prices (WAEP) of, and movements in,
share options and performance rights during the year.
Performance rights granted during the year are valued with reference to the share price at the grant date.
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2019$'0002018$'000Loss after income tax16,823(2,592)Total comprehensive loss16,823(2,592)Total current assets7,03031,908Total assets7,10051,064Total current liabilities9,44340,420Total liabilities9,53640,906EquityContributed equity84,60280,341Share based payment reserve1,7841,580Accumulated losses(88,822)(71,763)Total equity(2,436)10,158ContingenciesThe parent entity had no contingent liabilities as at 31 December 2019 (2018: Nil).Capital CommitmentsThe parent entity had no contingent liabilities as at 31 December 2019 (2018: Nil).
DIRECTORS’ DECLARATION
29
Auditors remuneration
The auditor of Tempo Australia Limited is PKF (NS) Audit & Assurance Ltd Partnership from 31 December 19, and
before that it was Ernst & Young Australia.
1. Among $91.8K, $40K was paid to Ernst & Young Australia for FY2018 additional auditing charges.
2. PKF (NS) Audit & Assurance Ltd Partnership were paid $22,800 for the consulting service provided during the year 2019.
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Options# of optionsWAEP# of optionsWAEPOutstanding as 1 January--2,000,000$0.34Granted during the year----Exercised during the year----Forfeited during the year--(2,000,000)$0.34Outstanding at 31 December----Consolidated entity2019Consolidated entity2018Performance rights# of sharesWAEP# of sharesWAEPOutstanding as 1 January500,000-4,945,000-Granted during the year26,000,000-4,700,000-Exercised during the year--(2,150,000)-Forfeited during the year(500,000)-(6,995,000)-Outstanding at 31 December26,000,000-500,000-Consolidated entity2019Consolidated entity20182019$2018$Audit or review of the financial reportsErnst & Young Australia 91,800¹85,400PKF (NS) Audit & Assurance Ltd Partnership²50,000-Total141,80085,400Consolidated entity
DIRECTORS’ DECLARATION
30
Post balance sheet events
The group has reviewed events since the 31 December 2019 and makes the following comments:
The Board of Tempo Australia has and will continue to address the potential effect of the Corona Virus on the
business. Immediate cost reductions have been identified and will be implemented over the coming month/s.
The Tempo Business Executive and Board continues to examine any ongoing effects of CoVid-19 on our clients. We
are in regular contact with our main clients to see if there is any additional services, we can deliver given that our
people are already at their sites.
We have implemented further WHS protocols with our PPE to maximise individuals’ protections – both of our staff
and of our client’s staff.
The Board is meeting Bi-weekly to review business levels and will continue to address costs and reductions in
working capital where possible.
We will continue to fulfill our continuous disclosure obligation and provide updates if and when necessary.
Other than as noted above, no circumstances have arisen since the end of the financial period which significantly
affected or could significantly affect the operations of the Group, the results of those operations, or the state of
affairs of the Group in future financial years.
31.
Contingencies
The consolidated entity has no contingent assets or liabilities as at 31 December 2019 (2018: Nil).
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DIRECTORS’ DECLARATION
DIRECTORS’ DECLARATION
FOR THE YEAR ENDED 31 DECEMBER 2019
The directors declare that the financial statements and notes are in accordance with the Corporations Act 2001
and:
a.
b.
c.
Comply with Accounting Standards, the Corporations Regulations 2001 and other mandatory professional
reporting requirements;
Give a true and fair view of the financial position of the consolidated entity as at 31 December 2019 and of
its performance as represented by the results of their operations and its cash flows, for the year ended on
that date; and
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.
William Howard
Executive Director, Chief Financial Officer & Company Secretary
Sydney
Date: 31 March 2020
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INDEPENDENT AUDITORS REPORT
INDEPENDENT AUDITOR’S REPORT
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INDEPENDENT AUDITORS REPORT
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INDEPENDENT AUDITORS REPORT
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INDEPENDENT AUDITORS REPORT
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INDEPENDENT AUDITORS REPORT
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INDEPENDENT AUDITORS REPORT
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ADDITIONAL INFORMATION REQUIRED BY THE ASX
ADDITIONAL INFORMATION REQUIRED BY ASX
CORPORATE GOVERNANCE STATEMENT
The purpose of Tempo Australia Ltd (“Tempo”) is to deliver to clients in the resources, industrial and commercial
sectors specialist multidisciplinary maintenance and construction services, which protect and enhance their
investments, without ever compromising on our values. Whilst doing this the Board is committed to providing a
satisfactory return to its shareholders and fulfilling its corporate governance obligations and responsibilities in the
best interests of the company and its shareholders. Good governance enables Tempo to deliver this purpose whilst
meeting the 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 22 February 2020, 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:
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:
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Category (Size of holding)Number of ordinary shareholdersNumber of ordinary shares% of issued capital100,001 and Over185328,838,190 96.00 10,001 to 100,00029611,900,653 3.47 5,001 to 10,000105814,342 0.24 1,001 to 5,000260903,887 0.26 1 to 1,00024578,434 0.02 Total1,091342,535,506 100.00 NameNumber of ordinary shares% of issued capitalANGOPHORA CAPITAL PTY LTD 83,322,37124.33BONTEMPO NOMINEES PTY LTD 41,702,63212.17HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED 40,916,48411.95
ADDITIONAL INFORMATION REQUIRED BY THE ASX
TOP 20 SHAREHOLDERS
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RankNameNumber of ordinary shares% of issued capital1ANGOPHORA CAPITAL PTY LTD 83,322,371 24.33 2BONTEMPO NOMINEES PTY LTD 41,702,632 12.17 3HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED 40,916,484 11.95 4J P MORGAN NOMINEES AUSTRALIA PTY LIMITED 19,936,098 5.82 5NATIONAL NOMINEES LIMITED 12,945,246 3.78 6MR IVAN TANNER & MRS FELICITY TANNER 11,050,000 3.23 7INGLEWOOD LODGE PTY LTD 10,000,000 2.92 8ZERO NOMINEES PTY LTD 7,230,000 2.11 9D & T SUPERANNUATION PTY LTD 6,845,216 2.00 10CITICORP NOMINEES PTY LIMITED 5,438,490 1.59 11KAHLIA NOMINEES PTY LTD 4,000,000 1.17 12TUBECHANGERS PTY LTD 3,863,636 1.13 13MISS SILVANA MASALKOVSKI 3,548,086 1.04 14MR PAUL SANTILLO 3,025,000 0.88 15CHEMBANK PTY LIMITED 2,800,000 0.82 15VANAVO PTY LIMITED 2,150,000 0.63 16MR ALEXANDER KING 2,032,500 0.59 17MR ANTONIO SCAFFIDI & MRS MARIA SCAFFIDI 2,030,000 0.59 18CHEMCO SUPERANNUATION FUND PTY LTD 2,000,000 0.58 19MASSIMO BERGOMI 2,000,000 0.58 20MRS JENNIFER ANNE CASHION 1,759,319 0.51 Total 268,595,078 78.41 Balance of register73,940,428 21.59 Grand total342,535,506100
CORPORATE DIRECTORY
CORPORATE DIRECTORY
DIRECTORS
Guido Belgiorno-Nettis
William Howard
David Iverach
Charles Louis Rottier
LEADERSHIP TEAM
Paul Dalgleish
Non-Executive Chairman
Executive Director, Chief Financial Officer and Company Secretary
Non-Executive Director
Non-Executive Director
Chief Executive Officer
STOCK EXCHANGE LISTING
The company’s shares are quoted on the Australian Stock Exchange under the code TPP.
REGISTERED OFFICE
c/o Company Matters Pty Limited
Level 12, 680 George Street
Sydney NSW 2000
PRINCIPAL PLACE OF BUSINESS
Level 12, 680 George Street
Sydney NSW 2000
+61 (8) 9460 1500
info@tempoaust.com
www.tempoaust.com
POSTAL ADDRESS
PO Box 588
West Perth WA 6872
AUSTRALIA
AUDITOR
PKF (NS) Audit & Assurance Ltd
Partnership
Level 8, 1 O'Connell St
Sydney NSW, 2000
+61 02 8346 6000
www.pkf.com.au
SHARE REGISTRY
Link Market Services
QV1, Level 12
250 St Georges Terrace
Perth WA 6000
+61 1300 554 474
www.linkmarketservices.com.au
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