Tempo Australia Ltd (ASX:TPP) Investor Presentation 27 th July 2012 An emerging resource services company
Disclaimer This presentation by Tempo Australia Ltd and the information contained herein should not be relied on as a representation of any matter that an existing investor, potential investor or their adviser should consider in evaluating the Company. Existing and potential investors must make their own independent assessment and investigation of the matter contained herein and should not rely on any statement or the adequacy or accuracy of the information provided. The Company and its related bodies corporate or any of its Directors, agents, officers or employees do not make any representation or warranty, express or implied, as to or endorsement of the Company, the accuracy or completeness of any information, statements or representations contained in the presentation, and they do not accept any liability whatsoever (including in negligence) for any information, representation or statement made in or omitted from this presentation. This document contains certain forward looking statements which involve known and unknown risks, delays and uncertainties not under the Company s control which may cause actual results performance or Company s results, achievements of the Company to be materially different from the results, performance or expectations implied by these forward looking statements. The Company makes no representation or warranty, express or implied, as to or endorsement of the accuracy or completeness of any information, statements or representations contained in this presentation with respect to the Company. 2
Introduction to the Board and Executives Richard (Dick) Wright Executive& Managing Director Held numerous directorships in private and publicly listed companies in Australia, Europe and the US including Rio Tinto, Fluor USA, Johns Perry, UIE (France), ADrail, Hancock Prospecting and Decmil. Founding Executive Chairman of Novacoat Holdings Ltd (later Decmil Group Ltd) and Managing Director driving phenomenal growth of the organisation from market capitalisation of $6m to $200min4years. Giuseppe Leone Chief Operating Officer 15 years experience in Industrial Services, the last 10 years with a UK Multinational Listed PLC servicing the oil and gas, power generation, chemical, minerals and mining sectors. Carmelo (Charlie) Bontempo - Director One of the four founding partners of United Construction Holdings(today known as UGL Ltd). Managing Director of Monadelphous Group Limited during the company s early restructuring period in the late 1990 s. Peter Dykes - Director Over 20 years of experience in the technology industry, advising some of Australia s largest corporate clients, including BHP Billiton, Boral and Telstra in respect of their research and development and commercialisation efforts. Robert Whitton - Chairman Chartered Accountant with in excess of 25 years of corporate re-organisation, currently a Director and head of Business Recovery at William Buck, Chartered Accountants& Advisors. 3
Company Overview Tempo Australia Ltd (ASX: TPP) An emerging resource services company providing: Engineering services; Construction, shutdown and maintenance services; and Sustaining capital services; to the mining, energy and petrochemical sectors(resources sector). Debtfree. Cash positive excluding acquisition costs. Strategic Focus Initially focused on building a profit base in Western Australia. Leveraging off the first acquisition (Industry Partners) to create a tier one Labour Management Services provider of Structural, Mechanical, Piping, Electrical and Instrumentation trades from local and overseas resources. Acquiring a construction and maintenance business. Acquiring an engineering business. Maintaining lean corporate overheads. 4
Corporate Overview Top 5 Share Holders* Carmelo Bontempo 11.9% Richard Wright 11.3% Peter Dykes 8.0% Gavin John Argyle 5.6% Autus Investments Pty Ltd 5.4% Capital Structure and Cash Shares on Issue 149.5M Approx. Market Cap Cash on Hand at30 June 2012 Debt $29.8M $2.5M Nil Volume (m) 5.0 4.5 4.0 3.5 3.0 2.5 2.0 1.5 1.0 0.5 Tempo Australia Limited Share Price Performance 0.0 0.00 20 Jul 11 17 Aug 11 14 Sep 11 12 Oct 11 09 Nov 11 07 Dec 11 04 Jan 12 01 Feb 12 29 Feb 12 28 Mar 12 25 Apr 12 23 May 12 20 Jun 12 18 Jul 12 0.30 0.27 0.24 0.21 0.18 0.15 0.12 0.09 0.06 0.03 Share Price (AUD/Share) 5 *Includes direct and indirect holdings Share Price Volume
Tempo Industry Partners The board is pleased to advise that the first acquisition is on course to achieve strong organic double digit growth in 2013. Smooth transition for the business, management and employees. Existing customers of the business have continued their support and new customers acquired. Former proprietor continues as the Business Development Manager to drive growth opportunities. Tempo Industry Partners is on target to achieving Revenues of $7.0M and EBIT contribution of$0.8mforh2,2012. The business is benefiting from the Directors high level network with blue chip mining companies and level one Engineering and Contracting companies. Enquiries and tendering activity have increased. Prequalification process underway for several major engineering contractors. Direct Marketing to major Pilbara iron ore miners and gas producers. 6
Major Projects Western Australia Major Projects (2012 2018) (A $ Billion) Committed/ Started Oil & Gas (Gorgon, Wheatstone) 105.3 Iron Ore (BHPBIO, RTIO, Roy Hill, FMG) 30.2 Other Minerals and Infrastructure 31.2 TOTAL CAPEX 166.7 7 Oil & Gas $105.3Bn 63% Source: WA Department of Mines and Petroleum. Mining and Petroleum Investment Update as at 31 March 2012 Other $31.2Bn 19% Iron Ore $30.2Bn 18% These projects will require 200,000 new jobs and significant opportunities for Tempo.
Revenue 'Million For personal use only Group Revenue Growth Earnings will be maximised through acquisitions, managed organic growth and lean overheads. $90 $80 $70 $60 $50 $40 $30 $20 $10 $- Industry Partners Acquisition: 26 June,2012 C&M Acquisition: H2,2012 $18 $7 2012 FC Engineering Acquisition: Q1,2013 $7 $40 $20 2013 Plan 25% 25% $15 $50 $25 2014 Plan Engineering Services Construction & Maintenance Labour Management Services 8 Financial Years Ending 31 December
Growth Plans Build from Industry Partners existing Skilled Trades base Reputable and quality provider of trades. Tightly managed cost structure - scalable. Strong cash generation to fund growth opportunities. Access to local and international resources. Seize strategic expansion opportunities Acquire: Construction and maintenance business; and Engineering services business. Bolt-on acquisitions. Integration and synergy realization. Business transformation. Optimise organic growth Leverage Boards high level industry network. Fit for purpose, low overhead structure. Key operational personnel appointments. Market and geographical diversification. Training and development. 9
Criteria for Future Acquisitions Financial Metrics Business Characteristics Operational Characteristics Attractive margins. Low capital expenditure requirements. Healthy balance sheet. Strong cash generation. No major legal or financial compliance issues. Strong reputation and well respected in existing markets with strong customer relationships. Strong cultural fit with Tempo s core values. Multiple pathways for growth. Strong and experienced management. Good HR practices and people focused. Minimal staff turnover and access to quality staff. Execution, client and delivery focus with strong Operating Procedures. Ability to benefit from Directors core competencies and leverage off its high level and expansive network. Strong order book and visible pipeline for expansion. Robust and adaptable systems; Engineering systems; Project Management and Control systems; and Financial and Reporting systems. 10
The Group Structure Tempo Australia Ltd Board of Directors Group Management White Collar Stream Blue Collar Stream Tempo Engineering Tempo Construction & Maintenance Next Target, H1 2013: Engineering Industry Partners: Labour Management Services Next Target, H2 2012: Asset Management Strategic Bolt-On Strategic Bolt-On 11
About the Next Acquisition The Business West Australian based Asset Management company providing: Engineering; Construction and maintenance; Labour management services; Asset integrity services; and Heavy Mobile Mining Equipment wash facilities. to Australian and international mining companies and industry sectors with offices in Perth office and workshop facilities in the Eastern Goldfields. Qualified General Services Contractor with Rio Tinto and BHPBIO. Revenue of $20.3M and unaudited EBIT $2.7M for the financial year ending 30 June 2012. Majority of H2, 2012 revenue secured. To be acquired at a multiple of up to 3.5x 2012 EBIT. 12
About the Next Acquisition The Business Wash facilities include the design, construction, installation, commission and maintenance of industrial environmentally friendly and efficient facilities for the resources, rail and heavy duty transport sectors. Strong and experienced management with a track record of over 20 years. Health, Safety and Environmental policies, procedures and systems. Current workforce of 150. Numerous growth pathways. Small number of shareholders. Large client footprint. 13
Transaction Outline Proposed transaction based on a majority of scrip (approximately 65% to 70% in shares). Part of the total consideration subject to earn-out. Transaction is subject to completing due diligence and shareholder approval. Management committed to Tempo. Shares to be held in escrow. Share consideration will be allocated across numerous parties to the transaction. Acquisition Multiple of approximately 3.5x 2012 EBIT (subject to due diligence). Acquisition price in the range of $9.0M to $10.0M (subject to due diligence adjustments). 14
Proposed Capital Raising Planned capital raising of approximately $4.8M fund cash consideration component of the acquisition and working capital requirements for growth. Due diligence and Board approval and notice of EGM 6 to 8 weeks commencing early August 2012. Planned Completion of transaction by mid to late October 2012. 15
Forecast Earnings Post Transactions Revenue $ Million $100 $90 $80 $70 $60 $50 $40 $30 $20 $10 $0 25% 2012 FC 2013 Plan 2014 Plan Revenue $25.0 $67.0 $90.0 EBIT $ Million 14 12 10 25% 8 6 4 2 0 2012 FC 2013 Plan 2014 Plan EBIT* $1.0 $9.0 $12.4 16 *Normalised EBIT, assumes 1 acquisition in October 2012 and 1 acquisition H1 2013. No other cap raisings.
17 For personal use only