Vysam has today gone into a trading halt "pending an announcement in relation to a potential material acquisition and capital raising"

"the Company anticipates that the trading halt will end on the earlier of a release of an announcement to the market in relation to the material acquisition and capital raising, and the commencement of normal trading on Friday, 13 September 2024, and requests that the trading halt remain in place until that time"

Disc~ I hold in RL

 Acquisition of Waste Water Services Pty Ltd seems a good fit to broadening the scope of the company.

 Cash consideration of $7.5 million

Company will pay an Enterprise Value/EBITDA acquisition multiple of 3.27x

 Projected earnings per share accretion of greater than 20%

Company has identified immediate organic growth initiatives for WWS.

WWS has been operating for over 25 years, has 18 staff, a manufacturing facility in Western Australia, and has long standing blue chip Tier 1 clients across the mining, oil and gas and industrial sectors.

WWS Manufactured Products include:

• Specialised sewage transfer stations

• Industrial waste systems • Sewage treatment plants

• Potable water systems • Industrial and agricultural dosing systems

• Temporary sewage treatment plants and potable water plants for short-and long-term hire WWS Products and Services include:

• Department of Health monitoring of wastewater treatment plants • Software engineering incl. SCADA and remote monitoring

• Supply, repair and overhaul of pumps

• Sourcing and supply of spare parts

• Supply of chemicals for water and sewage treatment

• Servicing, training and audit of wastewater treatment plants 

Disc Held in RL - largest position.

Appointment of COO who seems a good pick. Previous company had contracts with WA's Water Corp. Also first licenses to allow KAC to conduct a drilling and test pumping program on Indee and Kangan Stations in the Pilbara region of Western Australia. VYS hit an ATH of 34c yesterday.

As previously stated by the Company, in preparation for Vysarn’s next leg of growth an appropriate level of investment will be made in key senior human resources to provide greater depth and capability within the Company’s executive leadership team. The appointment of Mr Dropulich as COO underpins this strategic growth initiative. 

Mr Steve Dropulich as Chief Operating Officer (COO). Mr Dropulich is a 30 year veteran of the Australian energy and infrastructure services sector having established and led market leading contracting companies in senior executive management roles across both public and private business. During his career Mr Dropulich has developed extensive experience in financial and commercial management, establishment of high performing teams, strategy formation and execution, as well as driving operational excellence.

Prior to joining Vysarn, Mr Dropulich was a founder of ASX listed energy and infrastructure services group Valmec Limited, where he was the Managing Director for over 10 years until its acquisition in 2021 by French company, Altrad Group. Following the acquisition, Mr Dropulich held the role of Altrad’s Executive Director of Operations for the Australian region. Mr Dropulich holds a Bachelor of Commerce in accounting and business law, is a Chartered Accountant, and is a member of the Australian Institute of Company Directors.

Data gathered during the drilling and test pumping program will form part of a hydrogeological assessment for the commercial development and approval process for an associated 5C groundwater license that will determine the viability of the aquifer on Indee and Kangan Stations for the offtake of up to 10GL of water per annum. Vysarn anticipates that the drilling and test pumping program will begin in the second half of calendar year 2024.

The market was disappointed with the results despite record revenues. I think there was expectation of info on a possible dividend which was mentioned earlier. Also the note about 2nd half likely to decrease due to "requirement to invest in further resources to support growth initiatives, the strategic rotation of drill rigs through compliance upgrades, project delays and potential other risks identified herein". I like the open discussion of risks which gives confidence in the long term prospects for the company. VAM has the potential for a major expansion with significant capital costs in the coming years. We could see the SP pull back a bit after a very strong run up from 9c and I am looking for an opportunity to reenter in SM. Still my largest holding in RL

The Company’s carry forward tax loss balance was fully utilised during the period.

Company was in a net cash position for the first time since the relisting of Vysarn in September 2019 with net cash of $1.69 million 

PW Management is aggressively targeting a 50% increase in staff numbers year on year to not only service growing client demand but to expand PW’s service offering in wider fields of adviser expertise across water and environment. 

PH the recent significant decline of the battery metal sector has created the potential for short term utilisation risk. Management is monitoring early signs of contagion in client confidence which is manifesting in scope of work and project investment decision delays. 

PH has a small exposure to the nickel sector which is currently experiencing systemic issues on a global scale. This presents immediate utilisation risks with management prudently preparing for reallocation of assets should the need arise. 

The dual rotary rig purchased internationally to replace a conventional rig in the PH fleet has had significant arrival and release delays due to the recent protracted industrial action on Australian ports. Management still intends to attempt to receive and upgrade the rig for deployment inside FY24 but anticipates there will be up to a 4 month delay 

PH rig suite was involved in a major flood event on a client’s mine site. The Company is currently negotiating an equitable settlement with the client and PH’s insurer.

VAM’s focus in coming financial periods will be to position the Company to be able to execute agreements securing long term water supply partnerships and securing long term off take. Should the Company be successful in securing such agreements, then VAM will turn its attention to securing funds for the construction of a major pipeline to convey water.

In preparation for the Company’s next leg of growth an appropriate level of investment will be made in the 2HFY24 to acquire further senior human resources in asset management, equipment maintenance, information technology and business optimisation. The Company continues to forecast meaningful year on year earnings growth for FY24. Nevertheless, with the requirement to invest in further resources to support growth initiatives, the strategic rotation of drill rigs through compliance upgrades, project delays and potential other risks identified herein, it is the Board’s current view that 2HFY24 EBT will not exceed 2HFY23 EBT.

Sharing my independent research notes on Vysarn Limited from September 2020 $VYS