Industrial up-and-comer EVZ Limited (ASX: EVZ) has revealed the reason for its sudden trading halt on Monday this week – two new commercially significant and value accretive contracts that are sure to please shareholders.
Earlier this morning, EVZ said that subsidiary Brockman Engineering had been selected to form a contract for the design, fabrication and construction of a new drinking water tank at Mernda, Victoria for Yarra Valley Water.
The Mernda area is currently supplied by the Epping North Reservoir with new drinking water tank expected to raise the area’s water supply capacity.
Yarra Valley Water
Yarra Valley Water is proceeding with the new drinking water reservoir to accommodate growth and provide security of supply in Mernda’s distribution zone.
According to EVZ, the value of the contract is A$6.4 million with work expected to commence sometime in July 2018.
The company added that this project success will further support EVZ’s earnings and projected revenue growth strategy during the next financial year and the first half of 2020.
EVZ currently manages a portfolio of specialist businesses in the engineering services sector and operates through several subsidiaries Brockman Engineering, Syfon Systems and TSM Maintenance Services.
Together, these subsidiaries operate in several industrial areas such as power plant maintenance, fuel industry mechanical services including bulk tank design and construction, ‘syfonic’ stormwater and roof drainage.
In parallel to today’s multimillion dollar deal to expand Mernda’s water capacity, EVZ also said that Brockman Engineering would be performing “early works” commencing later this month, in anticipation of the new crude tank project at Mobil’s Altona Refinery. The value of the initial design contract is valued at around A$500,000.
Brockman Engineering specialises in segment designs, manufactures and installs large steel tanks, silos, cooling towers, pipe spooling, pressure vessels and fabricates structural steel.
If approved, the project will improve the efficiency of ExxonMobil’s local refining and supply operations. The early works include the preparation of the design documentation of the crude tank, tank foundation and associated civil works.
If the project proceeds into construction phase pending funding approval the value of the contract is anticipated to be somewhere in the region of $27 million, with EVZ saying that “revenue from this contract will be accretive during FY2019 and the first half of FY2020”.
EVZ said that it would publish further details regarding both deals, if and when it was issued with a notice to proceed to the construction phase.
Shares in EVZ sprung to as high as $0.032 per share on the double-barrelled news, their highest level in 3 years.