The Melton region of Western Melbourne has become the hot spot for political discourse. Its growing population is weighing heavy on the decisions made for the area, especially when it comes to its infrastructural development. To cater to this population growth, engineering company EVZ Limited (ASX:EVZ) has secured a contract with Aqua Metro to design and construct a new large water storage reservoir in Melbourne’s western growth corridor.
EVZ’s Brockman Engineering arm has been granted this contract worth $11 million. The Company will be designing and developing a thirty megalitre water storage tank at West Melton in Melbourne. The reservoir will be used on completion by Victorian water utility company Greater Western Water to increase the water supply to new residential and business communities in the Melton region.
Chief Executive Officer, Scott Farthing, commented, “We are excited by the opportunity to serve Aqua Metro and Greater Western Water develop new infrastructure for new residential and business communities in Melbourne’s western growth corridor.”
He added, “This contract win among others across our business maintains the momentum of success EVZ has accumulated in 2022. With a record backlog and strong balance sheet EVZ is well positioned to continue to organically grow our business as well as execute on value enhancing complimentary acquisitions.”
In FY22, EVZ reported revenue growth of over 17% on FY21 to $67.5 million. The increase in activity was boosted, in large part, by government measures. For instance, tendering activity during the year was high as the second group of federal governments “Boosting Australia’s Diesel Storage Program” (BADSP) grant-supported construction contracts were tendered to industry. The Company expects more such contracts to be tendered and awarded in the tank construction industry during FY23.
Brockman will get to take advantage of that, being one of the businesses that ushered in most of EVZ’s FY22 revenue. Brockman’s FY23 revenue is forecast to be over 40% higher than FY22, thanks to growing demand.
Overall, EVZ’s contracted backlog remains in excess of $100 million. This $11 million-contract, together with other new contract wins across the business, maintains the consolidated contracted backlog to over $100 million.
Melton’s growing population has been putting pressure on local governments to expedite developments in the region. For instance, Premier Daniel Andrews recently pledged $650 million to improve V/Line train services to Melton by reconstructing the station and extending platforms at Bacchus Marsh, Cobblebank, Rockbank, Caroline Springs, Deer Park and Ardeer stations. The problem is that it is taking forever to execute this plan, which might turn the cards in favour of the opposition party. While the growing population might not be good news for Andrews as he is forced to up his game, the subsequent demand for improved infrastructure is great news for companies like EVZ.
With over $134 million in new contract wins in FY22, the demand for EVZ services is at an all-time high across the Brockman, Syfon and TSF Power businesses.
The Company will start work on the water storage reservoir in Q3 FY2023, with an aim of completing it in Q3 FY2024.
Alinda is a Business Reporter for The Sentiment
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