Tempo Australia Ltd (ASX:TPP) has secured new construction contracts with a combined value of more than $6 million.
Importantly, the contracts span the industrial, commercial, telecommunications and resources sectors, providing diversification of income.
To put the value of these contracts in perspective, the construction and maintenance services group generated $6 million in revenues for the full six month period to June 30, 2017.
The new contracts also equate to 40% of the value of new contracts ($15 million) outlined in August when Tempo delivered its interim result.
New contracts indicate industry diversification strategy is on track
The company indicated at the half ending June 2017 that its ability to progress from a breakeven first half would depend on contract wins.
Tempo reports on a calendar year basis, and it would appear that the main focus will be on its ability to grow its order book in 2017/2018.
If the company can achieve this goal it could be viewed as laying the platform for an improved performance in 2018 as revenues from new contracts are recognised.
A small company with big-name clients
While Tempo has a nominal market capitalisation of circa $50 million it boasts high profile clients such as Nokia, Woolworths and Port of Melbourne.
Prior to the scale back in Gorgon LNG, work related to this project provided a robust source of revenue.
Revenues have been impacted by some larger projects being completed.
However, Tempo has a healthy balance sheet, finishing the six months to June 30, 2017 with net cash of $22.2 million.
Cashed up Tempo actively tendering for new work
Nearly 50% of the group’s share price is supported by cash.
This leaves it well-positioned to continue to tender for reasonable size contracts as industry conditions improve.
Tempo is reducing its dependence on resources sector work, particularly focusing on areas such as electrical and telecommunications services.
Some of the contracts that have just been secured relate to these sectors, and its success in this area has been assisted by last year’s acquisition of KP Electric.