Tempo Australia : Acquisition of KP Electric Presentation

COMPANY UPDATE

Acquisition of KP Electric

JULY 2017

CONTEXT

Overview of KP Electric	A nationally operated electrical service business, founded by Peter King in 1995. Recurring preventative, programmed, reactive, minor works and compliance electrical services. Clients include many of Australia's largest corporations and government institutions. Headquartered in Sydney, with 12 operating bases, and a large network of electricians across Australia. FY 2017 (June year end) EBITDA estimated to be approximately $2.7 million.
Transaction Summary	Upfront (100% cash) consideration of ~$6.8 million, representing a multiple of 2.5x FY17 estimated EBITDA. Deferred (100% cash) consideration payable over subsequent 2 years, as follows: ~$1.6 million in FY18 and FY19 (provided EBITDA of at least $2.4m in given year, or average over the 2 years is at least $2.4m); plus 20% of the amount by which EBITDA exceeds $2.4m in FY18 only. The Acquisition is expected to be EPS accretive immediately. KP Electric to be delivered with a sufficient level of working capital at completion, and no debt or surplus cash. Completion expected prior to end of July 2017 subject to satisfaction of standard conditions precedent.

STRATEGIC RATIONALE

Recurring Revenue Streams	Provides Tempo with profitable, low risk, and recurring earnings. Reduces dependence from lumpy resources based construction work. EPS value accretive transaction.
National Footprint	Enhances Tempo's footprint, establishing a stronger national presence with 12 operating bases across Australia. Supported by large workforce of electrical tradespeople employed nationally.
Sector Expansion	Establishes Tempo as a specialised national electrical and telecommunication maintenance service provider carrying out recurring preventative, programmed, reactive, and compliance electrical services.
Quality and Diversified Clients	KP Electric has many of Australia's largest corporations and government institutions as clients (see sample list below).
Increased Technical Capabilities	Facilitates the offering of a unique end-to-end service (installation, testing and maintenance) to telecom clients. Cross-selling opportunities from the relationships established with KP Electric's tier one clients. Organisational synergies by merging with Tempo's Perth metropolitan maintenance division.
Shared Values	Tempo and KP Electric have shared values and visions. Both organisations value the skills and expertise of their people and are highly committed to the use of technology to drive day to day efficiencies and productivity.

CORE MARKETS AND SERVICE OFFERINGS

National Maintenance	Electrical and lighting maintenance works, including planned and reactive maintenance preventative maintenance compliance testing fit-outs Able to offer a single point of contact and pricing structure for national clients.
National Infrastructure Projects and Maintenance	Working for large infrastructure sites such as ports, universities, councils and government precincts, etc. Comprehensive electrical, lighting, and security network maintenance and upgrades. Ability to work with partners to provide additional non-electrical services to clients.
Telecommunications	Electrical, data and other ancillary services for telecommunications facilities for companies such as Nokia and Ericsson. Non-electrical works, and potential installation and decommissioning, for telecommunication hubs. Battery, UPS and air conditioning replacement and testing for telecom huts.

KP Electric FY17 revenue split by market

Ports

29%

Retail & Wholesale 38%

Local Government 9%

Sport & Leisure 4%

Education 7%

Defence 2%

Telecoms 11%