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The West Perth-based, Tempo Australia Limited (ASX:TPP) is an integrated services provider, established in 2011 and specialising in the delivery of asset management solutions, electrical maintenance and infrastructure related to telecommunications. It serves a range of sectors comprising commercial and industrial assets, retail, renewable energy, ports, and transport infrastructure.
On February 27th, 2019, the company announced that it has entered into a three-year contract with Woolworths Limited to provide National Electrical Maintenance Services. The collaboration is based on the existing 12-year relationship with Woolworths and focussed on the benefits of providing safe, cost-effective and reliable services across the country. Moreover, the management at Tempo believes that the contract will build on its strategic focus to deliver long term annuity style work nationally.
The value of the contract is estimated to be somewhere between $ 20-25 million over the initial three-year term for Tempo. It also has an option for the inclusion of additional National Maintenance scope in the future, that would increase the value of the works, if implemented, to an estimated $ 5 million over the contract term, which is expected to commence on March 1st, 2019.
In addition, Tempo has also reported, further to the announcement released in September 2018, that it had received Limited Notice to Proceed from Enel Green Power Australia Pty Ltd. concerning the work on the 34MW Cohuna Solar Farm and the final contract has been executed. As mentioned, the value of the works for Tempo is around $ 15.1 million for a construction period of 12 months beginning March 1st, 2019.
At the beginning of February 2019, the company released its expected unaudited results for the full financial year 2018 (FY2018), which are less than satisfactory according to the management. The unaudited net loss after tax of approximately $ 1.4 million for the 12 months to December 31st, 2018 is expected prior to a non-cash impairment of approximately $ 3.1 million. As a result, the unaudited net loss after tax is estimated to be roughly $ 4.5 million, increasing year-on-year as compared to the $ 1.0 million recorded for the 12 months to December 31st, 2017 (FY2017).
Moreover, the company also expects the unaudited revenue of approximately $ 40.0 million for FY2018, a staggering improvement of over 200 per cent on the prior year FY2017. Besides, the estimations for FY2018 also include roughly $ 1.3 million of non-recurring restructuring costs resulting from the overhead reductions and structural changes to redirect the organisation to provide asset services and maintenance contracting. The nonrecurring overhead expenditure concerning resource construction activities that will be discontinued in 2019, is also expected to amount to approximately $ 0.7 million.
Tempo has a market cap of AUD 28.9 million, with ~ 240.8 million outstanding shares. At the close of the market trading on Wednesday, 27 February 2019, the TPP stock closed at a sell-off price of AUD 0.120, up by 4.348%, indicating an intra-day gain of AUD 0.005. Today (28 February), the stock is trading flat at AUD 0.120 (12:55 PM AEST).
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