Update, page-18

Phew

While not currently binding, the Board is satisfied that the ongoing good faith negotiations are sufficiently progressed to request lifting of the suspension in trading.

The key terms that have been agreed in principle, and which the parties are currently operating in accordance with, are:

a) to convert the contracting model to a target cost estimate model. This removes the potential for unresolved claims causing any increased costs and aligns both parties to work in collaboration with each other to minimise potential cost increases;
b) costs will be managed through a fully transparent open-book unit-pricing mechanism; and
c) a cash neutral position meaning that the company will not require any additional working capital to fund the work under the contract or additional costs due to unresolved claims or variations.

The board believes that these changes to the management of the contract is an acceptable and good outcome for all of the parties. The changes mean that if the agreed target cost is achieved, the Company will maintain its initial profit from the contract. However, should the target cost be exceeded then Tempo’s profit margin will be at risk.

The Board is confident that with the preceding negotiated outcome and the lifting of the voluntary trading suspension that it is back to business as usual for Tempo.