Discl: Held IRL 1.84%

SUMMARY

Looks like a pleasing on-track-run-rate-to-$20.0m-NPBT, half, sustaining the big jump between 1HFY25 to 2HFY25, into 1HFY26.

Operational update continues to be highly consistent against the VYS strategy and makes sound sense.

The only negative, more increased risk awareness really, was the flag that the macro situation on commodities could negatively impact the Iron Ore sector - but this impact will be offset by the Karriyarra scheme, hence the thinking to continue to keep the drill rig fleet in the Pilbara - this makes sense, and highlights the diversified nature of VYS’s operations.

Can’t quite understand the market’s reaction today, other than it probably ran too far ahead of the results and this is the re-calibration.

Anticipated earnings skew to 2HFY26 due to the timing of technology segment projects, did not materialise, so a very nice confidence boosting $10.0m NPBT this half.

1HFY26 NPBT includes material one-off costs (1) rapid national expansion of CMP Consulting (2) Non-cash cost $1.08m relating to Company performance rights (3) non-cash gain of $1.89m from fair value adjustment on the Contingnet Payable for CMP - this is good!

SEGMENT UPDATE

Industrial Segment

• Record half of earnings on the back of continuing high client demand - significant demand that returned across the entire iron ore sector in 2HFY25, continued in 1HFY26 and is expected to continue into 2HFY26
• Double shift of drill rigs and prudent rotation of equipment to a wider client base enabled a better return on assets
• Key in 2HFY26: Management of rig availability amidst drill rig rebuilds and purchases
• Revisited strategy to increase the size of the industrial fleet and continuing to reshape drill rig fleet mix to be skewed primarily towards owning and operating dual rotary rigs
• Rig Fleet Changes: (1) Newly purchased dual rotary rig to be deployed 3QFY26 (2) 2nd dual rotary rig purchased, to be deployed in 1HFY27 (3) Full rebuild of 2 existing rigs, to be redeployed late 2HFY26 (4) sale of non-core drill rigs
• Will continue to apply a commodity and geographic concentration strategy to service the Iron Ore sector in WA despite potential macro headwinds - underpinned by the need to address the substantial and growing water issue in the Pilbara

AdvisorySegment

• Earnings were in line with expectations, represent a steady baseline of work to existing and new clients
• Primary focus in 1HFY26 was rapid national expansion, hiring of key senior management and staff, establishing offices in BNE, PER and WLG and expanding of branding
• PER office won first work in mining from their traditional utility centricity
• Developing an early pipeline of international opportunities - (1) office in WLG sets VYS up in NZ where water reform and associated spend is imminent (2) ongoing development of relationship with Hazen & Sawyer that saw early works executed in both Aust and the US

Technology Segment

• Late client awards of a material wastewater treatment plant and an order of a large parcel of MAR units in the period, mitigating the earlier anticipated 2HFY26 skew
• Potential for the further award of an additional wastewater treatment plant and an additional MAR program in 2HFY26
• Continues to believe that MAR remains one of Iron Ore’s preferred methodologies for the disposal of surplus water now and into the future
• Continue to actively pursue and expansion in its breadth of products and service offerings in water abstraction, downhole monitoring and the installation, operations and maintenance of Company provided equipment - targeting first sales of these in 2HFY26

Asset Management

• No new updates on Karriyarra from what has been previously announced
• Targetting the issue of the Section 5C license, a binding water offtake or option agreement and in principl funding for the development of the associated KWS water infrastrcuture by the end of CY2026.

REVENUE

• Very good to see the sharp jump in revenue between 1HFY25 and 2HFY25, sustain through to 1HFY26, with a 62.9% jump in revenue v pcp and a 2% increase HoH
• Management reiterated that the technology segment has work in hand and anticipated award of work in 2HFY26 purely due to client timing of project commencements
• Corporate overheads were broadly in line HoH

EBITDA, NPAT

Nice on-uptrend result - no concerns!

CASH & BORROWINGS

• Despite lower cash from operations, the balance sheet has continued to show pink health
• Cash is up slightly and borrowings have dropped sharply to $0.18m

OUTLOOK AND GUIDANCE

Continue to target FY26 NPBT of $20.0m

Well placed to replicate 1HFY26 earnings, well positioned to action organic and acquisitive growth initiatives that would provide further YoY earnings growth heading into FY2027.

Building out a unique water services and infrastructure business in the Australian market with a growing exposure to 2 major Australian water fronts: (1) Pilbara region of WA and (2) Eastern seaboard utility spend - these provide VYS with genuine diversification opportunities across sectors, geographies and counter economic cycles.