More annual reports from Vysarn Limited:
2023 ReportA N N U A L R E P O R T
Vysarn Limited (ABN 41 124 212 175)
and incorporated entities
for the financial year ending 30 June 2022
vysarn.com.au
…the whole Company
has had a transformative
twelve months
1
CONTENTSCorporate Directory 2Chairman’s Letter to Shareholders 5Managing Director’s Report 6Directors’ Report 13Remuneration Report (Audited) 21Auditor’s Independence Declaration 28Consolidated Financial Statements 29Consolidated Statement of Profit or Loss and Other Comprehensive Income 29Consolidated Statement of Financial Position 30Consolidated Statement of Changes in Equity 31Consolidated Statement of Cash Flows 32Notes to the Consolidated Financial Statements 33Independent Auditor’s Report 64Additional Shareholder Information 71 Annual Report for the financial year ending 30 June 2022 2
CORPORATE DIRECTORY
DIRECTORS
Peter Hutchinson
Chairman
James Clement
Managing Director and CEO
Sheldon Burt
Executive Director
COMPANY SECRETARY
Matthew Power
REGISTERED
OFFICE
AND PRINCIPAL PLACE
OF BUSINESS
Level 1, 640 Murray Street
West Perth, WA 6005
Ph: +61 8 6182 1790
AUDITOR
Pitcher Partners BA&A Pty Ltd
Level 11, 12-14 The Esplanade
Perth, WA 6000
Corporate DireCtoryVysarn Limited (ABN 41 124 212 175) and controlled entities | ASX : VYS 3
SHARE REGISTRY
Automic Registry Services
Level 5, 191 St Georges Terrace
Perth, WA 6000
BANKERS
Westpac Banking Corporation
Level 3, Tower 2, Brookfield Place
123 St Georges Terrace
Perth, WA 6000
SECURITIES
EXCHANGE LISTING
ASX Limited
Level 40, Central Park
152-158 St Georges Terrace
Perth, WA 6000
ASX Code: VYS
Corporate DireCtoryAnnual Report for the financial year ending 30 June 2022 4
…the board and management
had a clear intention to execute
on the initial stages of the
company’s vertical integration
strategy in water services
Corporate DireCtoryVysarn Limited (ABN 41 124 212 175) and controlled entities | ASX : VYS 5
CHAIRMAN’S LETTER
TO SHAREHOLDERS
Dear Shareholders
It is with great pleasure that I present the 2022 Annual
Report for Vysarn Limited (Vysarn) and the financial results
for the company in what has proven to be a defining year in
the company’s early growth and strategic aspirations.
As Vysarn entered the 2022 financial year, the board and management
had a clear intention to execute on the initial stages of the company’s
vertical integration strategy in water services. The two main drivers
of the strategy were to diversify away from the concentration
risk associated with the single service nature of the company’s
hydrogeological drilling division and to broaden our service offerings
and earnings across multiple water focussed divisions. This approach
was designed to not only mitigate earnings concentration risks but to
drive shareholder value by creating a diverse basket of complimentary
and integrated water focused subsidiaries.
In executing the strategy, a number of key milestones were
achieved within the financial year with Vysarn moving from owning
and operating one wholly owned subsidiary to three. Vysarn made
its first acquisition in Yield Test Pumping (subsequently renamed
Pentium Test Pumping) to provide test pumping capability and
organically launched Pentium Water to provide water consultancy
and advisory capability. Future growth opportunities were also
identified in the period, with one such opportunity being Project
Engineering (WA) which the company recently settled on 30
September 2022.
The consolidated group entity produced earnings before interest,
tax and depreciation of $9.08 million, net profit before tax of $4.10
million, operational cashflow of $9.49 million, with a balance sheet
showing net tangible assets of $28.09 million of which $5.71 million
was cash and cash equivalents as at 30 June 2022.
Vysarn remains in good shape as it enters the next financial year
and continues to see material opportunities to grow each of its
subsidiaries, as well as capitalising on future growth options in the
wider water sector.
I’d like to thank management and staff for all their endeavours over
the last financial year. It’s been a highly successful year despite a
backdrop featuring significant challenges such as COVID-19, labour
shortages, cost pressures and supply chain disruptions.
On behalf of the Board I would like to thank you for your ongoing
support and patience as we grow the business. It is our intention to
reward shareholders with long term sustainable value.
Sincerely,
Peter Hutchinson
Chairman
30 September 2022
Chairman’s Letter to sharehoLdersAnnual Report for the financial year ending 30 June 2022 6
MANAGING DIRECTOR’S REPORT
SUMMARY OF GROUP RESULTS FOR FY2022
REVENUE
FROM OPERATIONS
$46.30
million
EBITDA
$9.08
million
NPBT
$4.10
million
NET TANGIBLE
ASSETS
$28.09
million
CASH
& CASH EQUIVALENTS
$5.71
million
FY2022 RESULTS COMMENTARY
Vysarn’s revenue from operations to 30 June
2022 of $46.30 million exceeded previous
corresponding period revenue from operations by
$20.47 million.
Revenue from operations in FY2022 represents a
full twelve month operational contribution from
the Company’s hydrogeological drilling division, a
nine month operational contribution from the test
pumping division (post acquisition in 2021) and
a five month operational contribution from the
consultancy division (post organic launch in 2022).
While revenue generated by the test pumping
and consultancy divisions were broadly in line
with management expectations, second half
revenue in the hydrogeological drilling division
was adversely and materially affected by
COVID-19 interruptions (as disclosed in ASX
announcement 5 May 2022).
Net Profit Before Tax (NPBT) was $4.10 million
and Net Profit After Tax (NPAT) was $2.86 million
for the 12 months to 30 June 2022. The tax
expense in FY2022 was non-cash due to the
Company employing carried forward tax losses
from previous financial periods. The Company
continues to carry tax losses of $11.27 million that
can be used to offset future taxable income.
The Company has Net Tangible Assets (NTA) of
$28.09 million, representing a NTA backing of
$0.072 a share. Net Current Assets were $3.98
million, Cash and Cash Equivalent position was
$5.71 million and net debt was $4.20 million as
at 30 June 2022.
FY22 KEY FINANCIAL METRICS
Description
FY22
$
FY21
$
Variance
Variance
$
Operational Revenue
46,297,406
25,824,506
20,472,900
EBITDA
NPBT
NPAT
Operational Cashflow
9,075,292
4,095,180
2,856,729
9,499,462
5,001,161
1,137,420
344,819
1,707,085
4,074,132
2,957,760
2,511,910
7,792,377
%
79
81
260
728
456
Managing Director’s reportVysarn Limited (ABN 41 124 212 175) and controlled entities | ASX : VYS 7
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GROUP OPERATIONS OVERVIEW
Operationally and structurally the whole Company has had a transformative twelve months. In this
FY22(A)
time the Company has pivoted away from being solely a hydrogeological driller, to having executed the
early stages of a clearly defined strategy to establish itself as a vertically integrated, whole of life water
service provider. Within the period this has been achieved by moving Pentium Hydro to an operational
steady state (albeit with COVID-19 interruptions), the acquisition and integration of Pentium Test
Pumping, the organic establishment of Pentium Water and completion of the ProEng acquisition.
FY20(A)
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Entering the new financial year, the Company is well positioned to meet continued demand for a
broad range of end to end water services across multiple sectors.
Managing Director’s reportAnnual Report for the financial year ending 30 June 2022
8
PENTIUM HYDRO
OPERATIONS
Throughout FY2022 Vysarn’s wholly owned
subsidiary Pentium Hydro Pty Ltd (www.
pentiumhydro.com.au) continued to focus on
achieving and maintaining the full deployment of
staff and equipment. Pleasingly, this objective was
successfully achieved in the December half of the
financial year providing the Company with valuable
insight into the operational and earnings capacity
of a fully deployed Pentium Hydro. COVID-19 case
numbers in the June half of the financial year
unfortunately created issues in worker availability
and client site access which in turn created short-
term interruptions in operational and earnings
momentum experienced in the December half.
Ongoing Master Service Agreements with
Fortescue Metals Group and Roy Hill Iron Ore
continued to underpin the majority of Pentium
Hydro’s asset utilisation. During the period,
Pentium Hydro entered into a Goods and
Services Contract with BHP Nickel West for the
provision of hydrogeological drilling services for
the supply of one rig suite with the potential for
an expanded scope of works in future periods.
Pentium Hydro also completed work for IGO,
Western Areas, Iluka Resources and Dacian Gold.
Leading into the new financial year Pentium Hydro
is well positioned to take advantage of additional
long term contract opportunities with tier one
resource companies that will support long term
full deployment and higher utilisation rates
across the drilling fleet. Commercial discussions
in this regard are well progressed. Importantly,
the realisation of these opportunities will help
avoid the mobilisation timing and operational
vagaries that often accompany short term fixed
scope work, in turn improving operations, asset
utilisation and margins.
While the domestic labour market for
hydrogeological drilling professionals and the
inflationary economic environment continued
to be challenging throughout the period, the
Company was still able to grow employee
headcount, keeping rigs fully resourced.
COVID-19 interruption was the major caveat in
the period regarding employee availability.
OUTLOOK
Management anticipates that for the twelve
months to 30 June 2023 (FY2023) opportunities
to maintain high utilisation rates across Pentium
Hydro’s rig suites will be underpinned not only
by the Company’s current multi-rig multi-year
contracts, but also by the additional award
of expected near term contracts to supply
hydrogeological drilling services to new tier one
resource clients. The opportunity to replicate
and then build on previous steady state earnings
performances in Pentium Hydro could however
be subject to COVID-19 interruptions, wet
weather, unforeseen repairs and maintenance
and other unbudgeted operational expenses.
Management’s key focus and strategic intent
for Pentium Hydro in FY2023 is to have all
twelve Company owned drill rigs plus associated
ancillary equipment deployed, fully utilised and
set under long term multi-year contracts, across
a balanced distribution of tier one resource
clients. Ongoing improvements in Pentium
Hydro’s safety and incremental operational
efficiencies will also continue to be pursued.
Managing Director’s reportVysarn Limited (ABN 41 124 212 175) and controlled entities | ASX : VYS 9
PENTIUM TEST PUMPING
OPERATIONS
The Company completed the acquisition of Yield
Test Pumping Pty Ltd in November 2021 with the
business subsequently renamed Pentium Test
Pumping Pty Ltd (www.pentiumtestpumping.com.
au). Via the acquisition, the Company assumed
the Master Service Agreement providing test
pumping services to Fortescue Metals Group,
strengthening the group’s relationship and suite
of service offerings to this key client.
Pentium Test Pumping exceeded initial
expectations in its first months of trading
with staff and management proving to be an
immediate cultural fit within the group. Of note,
the utilisation and operational performance of
the test pumping division was strong with clear
avenue for the addition of extra test pumping
units to service the resources sector as well as
the creation of ancillary down hole services.
OUTLOOK
It is anticipated that Pentium Test Pumping’s
current fleet of equipment will remain
fully utilised under its current contractual
arrangements with ongoing and increasing
opportunities to double shift the equipment at
intervals throughout FY2023.
Subject to current domestic supply chain
constraints it is also anticipated that a second
test pumping unit recently approved by the
board will be delivered and operational within
FY2023. Considerable research and development
has gone into the new unit to implement
structural and technological improvements
identified over time whilst operating Pentium
Test Pumping’s first generation equipment.
In addition to test pumping, the recent
acquisition of ProEng will provide Pentium
Test Pumping with an avenue to potentially
build significant and industry leading capability
in injection testing using the registered and
patented valve technology developed by ProEng.
Management intends to develop this capability
within Pentium Test Pumping as soon as
practicable post acquisition of ProEng.
Managing Director’s reportAnnual Report for the financial year ending 30 June 2022 10
PENTIUM WATER
OPERATIONS
In February 2022 the Company launched Pentium
Water Pty Ltd (www.pentiumwater.com.au) as
a wholly owned subsidiary of the Company to
provide consulting services covering ground
water, surface water and environmental planning.
Pentium Water has provided the Company with
an organic entry into the consulting sector and
in the early stages of operations has proved
to be a successful and strategically important
initial entry point into the design phase of the
Company’s vertical integration strategy.
Since its launch Pentium Water has been able
to establish a complement of staff across
disciplines in surface water, ground water,
environmental planning and water resource
engineering. The division has already established
a pipeline of future work across all disciplines
and capacity remains for future growth in the
consulting team. Subsequently, as it enters the
new financial year Pentium Water has positioned
itself to arrive at an initial steady state phase of
business operations.
As has been previously outlined, Pentium Water
is not expected to provide a material earnings
contribution to the group in its own right, but
rather it is anticipated that the line of sight that
the division will provide on forthcoming projects
and opportunities in the broader water sector will
be substantial. Pentium Water is already seeing
and providing new and material opportunities for
the Company to expand and invest beyond its
current capacity and suite of services.
One such early opportunity identified by Pentium
Water is the growing demand for managed
aquifer recharge capabilities and adjacent
services, particularly within the iron ore sector
in the Pilbara region of Western Australia.
The Company subsequently announced the
completion of the share sale agreement to
acquire Project Engineering (WA) Pty Ltd (ProEng)
on 30 September 2022. ProEng is a domestic
leader in the provision of managed aquifer
recharge technology.
OUTLOOK
Pentium Water’s consulting team has grown to
sixteen employees since its inception in February
2022. Management has established a pipeline of
future work for FY2023 to be executed across
scopes in ground water, surface water and water
resource engineering, as well as environmental
planning. The division’s clientele is diverse with
representation from the resource sector, large
scale urban developers and government agencies.
In addition to its primary initiative of delivering
consultancy services across multiple disciplines,
Pentium Water is expected to identify and
develop investment opportunities for the
Company across a broad spectrum of water
and environmental industries. The division has
visibility on material early-stage projects through
the provision of its front-end consultancy
services. In addition to the consultancy piece,
Pentium Water regularly identifies opportunities
to not only consult to projects but to co-invest
or own projects in its own right (subject to the
availability of funding).
The Company intends to foster and pursue
a number of these opportunities throughout
2023. Early stage opportunities identified by
Pentium Water have been in managed aquifer
recharge, water ownership, water infrastructure,
asset management, carbon farming, irrigated
agriculture, mine closure and urban rehabilitation.
Managing Director’s reportVysarn Limited (ABN 41 124 212 175) and controlled entities | ASX : VYS 11
FY23 GROUP OUTLOOK
PROENG
Noting the recent acquisition of ProEng,
management’s intention is to immediately
integrate the business within the group and to
deliver forecast earnings in line with what was
discovered during the due diligence process. This
will primarily be driven by earnings generated
by ProEng’s core competency in the provision of
managed aquifer recharge systems to tier one
iron ore clients in the Pilbara. Ancillary earnings
are expected to be generated by ongoing work in
the commercial fishing sector.
The Company will pursue organic growth
opportunities for ProEng as well as what
management views as material integration
opportunities with Pentium Test Pumping and
Pentium Water. As previously outlined, the
intention is to expand Pentium Test Pumping’s
service offering into injection testing and
Pentium Water’s service offering into managed
aquifer recharge consulting.
In addition, there is growing interest in managed
aquifer recharge systems and their ability to
assist in processes aimed at water harvesting
and water banking to future proof water supplies
from both regulated and non-regulated water
abstraction sources.
FY2023 GROUP OUTLOOK
Driving an increase in shareholder value
remains a key focus of Vysarn’s board and
management. The Company will continue
to execute the vertical integration strategy
patiently and meticulously. In past commentary
management has emphasised the need to
reduce concentration risk associated with the
capital intensive, single service nature of the
hydrogeological drilling division. This strategic
initiative is still at the forefront of board and
management thinking.
In line with the Company’s strategy, providing
multiple services via Pentium Water, Pentium
Hydro, Pentium Test Pumping and ProEng
will provide the Company with a broader and
differentiated competitive moat by being able
to better service clients across multiple fronts
as well as providing cross selling opportunities
across sectors, projects and clients.
With a focus on driving shareholder value,
diversification also provides an opportunity
for the expansion in valuation multiples as the
market recognises the value of a diverse portfolio
of services across water, diversified revenue
streams and a balanced mix of capital light and
capital intensive business units.
Vysarn is well positioned entering FY2023.
The Company continues to be sufficiently
funded, has a clearly defined strategy with early
execution success, has a broad range of growth
prospects and remains well placed to deliver
long term, sustainable value for its shareholders.
James Clement
Managing Director
30 September 2022
Managing Director’s reportAnnual Report for the financial year ending 30 June 2022 12
The Consolidated group
produced $9.5M in
operational cash flows
Managing Director’s reportVysarn Limited (ABN 41 124 212 175) and controlled entities | ASX : VYS 13
DIRECTORS’ REPORT
The Directors present their report together with the consolidated financial statements of
Vysarn Limited (“Vysarn” or “the Company”) and its controlled entities (“the Group”) for the
financial year ended 30 June 2022 and auditor’s report thereon.
1. DIRECTORS
The names and the particulars of the
Directors of the Company during the year
and to the date of this report are:
V Peter Hutchinson
Chairman
Appointed 27 October 2017
V James Clement
Managing Director and CEO
Appointed 3 February 2021
V Sheldon Burt
Executive Director
Appointed 15 May 2019
2. SIGNIFICANT CHANGES
IN STATE OF AFFAIRS
During the year, the Group continued to execute
its strategy to become an industry leading
vertically integrated water and environmental
services provider, as detailed in its review of
operations. In the opinion of the Directors, other
than as outlined in this report, there were no
significant changes in the state of affairs of the
Group that occurred during the financial year.
3. DIVIDENDS PAID OR
RECOMMENDED
There were no dividends paid, recommended
or declared during the current or previous
financial year.
4. REVIEW OF OPERATIONS
A review of the operations of the group during
the financial year are as follows:
A. THE GROUP’S OPERATIONS
V The Company’s wholly owned subsidiary
Pentium Hydro Pty Ltd (“Pentium Hydro”)
experienced significant growth in the financial
year as it approached steady state operations
and full asset utilisation. Pentium Hydro
continues to service major mining companies
that are experiencing growing dewatering
issues as a result of the increase in the
proportion of their economic ore bodies lying
below the water table.
V The Group acquired 100% of the issued
capital of Pentium Test Pumping Pty Ltd
(Pentium Test Pumping) (formerly Australian
Groundwater Solutions Pty Ltd trading as Yield
Test Pumping) and also organically established
Pentium Water during the period. Pentium
Test Pumping is a leading provider of test
pumping solutions to tier-1 resource clients in
Western Australia and provides the Group with
a unique and integrated service offering across
hydrogeological drilling and test pumping.
Pentium Water Pty Ltd (Pentium Water) was
established to provide consulting services in
ground water, surface water and environmental
planning. Pentium Water services the resource,
urban development, utility, government and
agricultural sectors.
B. THE GROUP’S BUSINESS
AND STRATEGY
V Vysarn aims to become an industry leading
vertically integrated water and environmental
services provider and is focused on building
value, scale and diversity through organic
growth and strategic acquisitions. The
Company experienced early strategy execution
success during the period through organic
growth and a strategic acquisition, growing its
services to include Pentium Hydro, Pentium
Water, and Pentium Test Pumping.
V Vysarn intends to build on its current
foundation of hydrogeological drilling, test
pumping and water consultancy by pursuing
further growth initiatives within the water and
environmental vertical, as well as exploring
adjacent service and sector opportunities
The Group’s operations and financial position
for the relevant period is further discussed in
“Note 6” on page 44.
5. LIKELY DEVELOPMENTS
The Group will continue to pursue new contract
opportunities in Australia for its hydrogeological
drilling, test pumping and water consultancy
focused business activities.
Directors’ reportAnnual Report for the financial year ending 30 June 2022 14
6. FINANCIAL PERFORMANCE
The profit for the Group after providing for
income tax amounted to $2.86 million (30 June
2021: $0.34 million).
Working capital, represented by current assets
less current liabilities, was $3.981 million (30 June
2021: $3.93 million). The Company had positive
cash flow from operating activities for the year
amounting to $9.50 million (2021: $1.71 million).
Operational revenue for the year ended 30 June
2022 was $46.30 million (2021: $25.8 million).
Growth was generated primarily from obtaining
new water well drilling contracts and deploying
additional drill rigs, the acquisition of Pentium Test
Pumping and organic growth of Pentium Water.
A. PRINCIPAL ACTIVITIES
The Group currently operates hydrogeological
drilling, test pumping and water consultancy
businesses predominately in Western Australia.
The Group aims to become a significant provider
of production critical water services and
solutions to industry in Australia.
The table below provides a comparison of the key results for the year ended 30 June 2022 to the
preceding year ended 30 June 2021:
STATEMENT OF PROFIT OR LOSS
Revenue from operations
Reported profit / (loss) after tax
STATEMENT OF FINANCIAL POSITION
Net Assets
Total Assets
Cash and cash equivalents
30-June-22
30-June-21
($)
($)
46,297,406
2,856,729
25,824,506
344,819
28,085,390
24,762,964
49,248,719
45,334,680
5,706,447
6,555,486
Directors’ reportVysarn Limited (ABN 41 124 212 175) and controlled entities | ASX : VYS
15
7. EVENT SUBSEQUENT TO
REPORTING DATE
The Company released the following material
ASX announcement post 30 June 2022:
V As announced on 11 August 2022, the Company
entered into a share sale agreement to acquire
Project Engineering (WA) Pty Ltd (“ProEng”).
Under the share sale agreement, the Company
will acquire 100% of the issued shares in ProEng
for a consideration of $2.60 million in cash.
The purchase price assumes that ProEng is
acquired debt free. There is a provision within
the share sale agreement for an adjustment
to the cash consideration based on agreed
working capital. There is no other matter or
circumstance that has arisen since 30 June
2022 that has significantly affected, or may
significantly affect the Group’s operations, the
results of those operations or the Company’s
state of affairs in future financial years.
8. INDUSTRY AND
GEOGRAPHIC
EXPOSURES
The Group is exposed to the Australian mining
industry and the large scale domestic urban
development sector. On a geographic basis, the
Group is predominantly exposed to Western
Australia.
9. ENVIRONMENTAL
REGULATION
In the normal course of business, there are no
specific environmental regulations or requirements
that the Group is currently subject to.
Directors’ reportAnnual Report for the financial year ending 30 June 2022 16
10. INFORMATION ON DIRECTORS & COMPANY SECRETARY
PETER HUTCHINSON Chairman (Appointed 27 October 2017)
Experience and Expertise:
Mr Hutchinson holds a Bachelor of Commerce (UWA) and is a
Fellow of both the Australian Institute of Company Directors
and Certified Practicing Accountants.
Mr Hutchinson was a Non-Executive Director of Zeta Resources
(formerly Kumarina Resources Ltd). Mr Hutchinson was the
founding director of ASX listed Forge Group Ltd, floated in 2007
with a market capitalisation of $12m and reaching over $450m
at the time of Mr Hutchinson’s resignation as CEO and final sell
down in July 2012. Mr Hutchinson has chaired ASX listed company
Resource Equipment Ltd and was the founding shareholder and
Chairman of Mareterram Ltd, both the subject of successful
takeover bids at significant premiums to market prices.
Mr Hutchinson has substantial experience in mergers and
acquisitions, prospectus preparation, ASX listing, compliance and
corporate governance, company secretarial requirements and
exit strategies, and has been a Member of Audit, Remuneration
and Nomination Committees, often as Chairman.
Other current listed directorships:
N/A
Former listed directorships:*
N/A
Interests in shares:
57,000,000 fully paid ordinary shares
Interests in options:
10,000,000 options
JAMES CLEMENT Managing Director and CEO (appointed 3 February 2021)
Experience and Expertise:
Mr Clement holds a Master of Business Administration, a
Bachelor of Science, a Graduate Diploma of Agribusiness, a
Graduate Certificate in Applied Finance and is a Graduate
of the Australian Institute of Company Directors. He is an
experienced ASX company director with a demonstrated
history of successfully managing and leading businesses.
Prior to his appointment at Vysarn Ltd, Mr Clement was
previously the Managing Director and CEO of sustainable
agricultural company Mareterram Ltd. He led the cornerstone
asset acquisitions, the ASX listing of the company and its
subsequent successful takeover at a significant premium to
the market price.
Mr Clement is currently a director of the Fremantle Football
Club and is a past director and vice chairman of the Western
Australia Fishing Industry Council. He also has over a decade
of experience in finance and investment during his time as
an institutional dealer and retail fund manager for financial
service companies specialising in Western Australian small cap
industrial and resource companies.
SHELDON BURT Executive Director (appointed 15 May 2019)
Experience and Expertise:
Mr Burt is an Executive Director of Vysarn Limited and co-
founder of its subsidiary Pentium Hydro Pty Ltd. A drilling
industry professional with over 35 years national and
international experience, Mr Burt started his career in 1986 and
since that time has held various roles including field based
and operational responsibilities and senior management and
executive management.
Prior to forming Pentium Hydro and joining the Vysarn board
in 2019 Mr Burt was the co-founder and Managing Director of
SBD Drilling, a Perth based exploration drilling company with
successful operations in Australia and West Africa from 2004 to
2011 before selling and moving on to the role of General Manager
at Easternwell Minerals for 6 years between 2012 and 2018.
* Directorships held in the last 3 years
Other current listed directorships:
N/A
Former listed directorships:*
• Mareterram Limited
(ceased 15 April 2019)
Interests in shares:
13,500,000 fully paid ordinary shares
Interest in options:
10,000,000 options
Interest in performance rights:
5,000,000 performance rights
Other current listed directorships:
N/A
Former listed directorships:*
N/A
Interests in shares:
6,217,315
Interest in performance rights:
5,000,000
Directors’ reportVysarn Limited (ABN 41 124 212 175) and controlled entities | ASX : VYS 17
10. INFORMATION ON DIRECTORS & COMPANY SECRETARY continued…
MATTHEW POWER Company Secretary (appointed 30 June 2021)
Experience and Expertise:
Mr Power is a finance professional having acquired public company experience while previously
employed as group financial controller for Babylon Pump & Power Limited, a Perth based ASX mining
services company. Experienced in financial reporting and analysis, and company secretarial duties
in the public company environment, Mr Power holds a Bachelor of Commerce from Curtin University
(double major in Accounting & Finance) and a Graduate Diploma of Chartered Accounting with the
Chartered Accountants, Australia and New Zealand. Previously Mr Power worked in professional
insolvency and restructuring services, across a variety of industry sectors including resources and
mining, mining services, agribusiness and retail.
11. MEETINGS OF DIRECTORS
The number of meetings of the Company’s Board of Directors (‘the Board’) held during the year ended
30 June 2022, and the number of meetings attended by each Director is set out below:
Board Meetings
Audit and Risk Committee
Meetings
Remuneration Committee
Meetings
Held
Attended
Held
Attended
Held
Attended
Peter Hutchinson
James Clement
Sheldon Burt
12
12
12
12
12
12
2
2
2
2
2
2
1
1
1
1
1
1
Held: Represents the number of meetings held during the time the Directors held office.
Given the size of the Company, the full Board meet in their capacity as Audit and Risk Committee and
Remuneration and Nomination Committee (“Committees”) and all matters are dealt with by the full
Board in their capacity as members of the Committees.
12. INDEMNITY AND INSURANCE OF OFFICERS
To the extent permitted by law, the Company has
indemnified the Directors and executives of the
Company for costs incurred, in their capacity as
a Director or executive, for which they may be
held personally liable.
During the financial year, the Company paid
a premium in respect of a contract to insure
the Directors and executives of the Company
against a liability to the extent permitted by the
Corporations Act 2001. The contract of insurance
prohibits disclosure of the nature of the liability
and the amount of the premium.
The liabilities insured are legal costs that
may be incurred in defending civil or criminal
proceedings that may be brought against the
officers in their capacity as officers in the
Company, and any other payments arising from
liabilities incurred by the officers in connection
with such proceedings. This does not include
such liabilities that arise from conduct involving
a wilful breach of duty by the officers or the
improper use by the officers of their position or
of information to gain advantage for themselves
or someone else or to cause detriment to the
Company. It is not possible to apportion the
premium between amounts relating to the
insurance against legal costs and those relating
to other liabilities.
A. INDEMNITY AND INSURANCE
OF AUDITOR
The Company has not, during or since the end
of the financial year, indemnified or agreed to
indemnify the auditor of the Company or any
related entity against a liability incurred by
the auditor.
Directors’ reportAnnual Report for the financial year ending 30 June 2022
18
13. SHARES UNDER OPTION
At 30 June 2022 and as at the date of this report, the unissued ordinary shares of the Company under
options are as follows:
Grant Date
05 July 2019
03 February 2020
03 February 2020
Total
Expiration Date
05 July 2024
03 February 2023
03 February 2023
-
Exercise Price
($)
Number Under
Option
0.054
0.075
0.075
-
10,000,000
5,000,000
5,000,000
20,000,000
No shares have been issued during or since the year end as a result of the exercise of options.
14. SHARES UNDER PERFORMANCE RIGHTS
At 30 June 2022 and as at the date of this report, the unissued ordinary shares of the Company under
performance rights are as follows:
Grant Date
28-Aug-19
28-Aug-19
28-Aug-19
30-Jan-21
30-Jan-21
30-Jan-21
Date of
Vesting
1-Jul-22
1-Jul-23
1-Jul-24
1-Jul-22
1-Jul-23
1-Jul-24
Vesting Conditions
Number Under
Performance Rights
Employment and cumulative EPS condition
Employment and cumulative EPS condition
Employment and cumulative EPS condition
Employment and cumulative EPS condition
Employment and cumulative EPS condition
Employment and cumulative EPS condition
1,666,666
1,666,666
1,666,668
1,666,666
1,666,666
1,666,668
Total
10,000,000
15. PROCEEDINGS ON BEHALF OF THE COMPANY
No person has applied to the Court under section 237 of the Corporations Act 2001 for leave to bring
proceedings on behalf of the Company, or to intervene in any proceedings to which the Company is a party
for the purpose of taking responsibility on behalf of the Company for all or part of those proceedings.
Directors’ reportVysarn Limited (ABN 41 124 212 175) and controlled entities | ASX : VYS 19
16. NON-AUDIT SERVICES
The Company may decide to employ the auditor
on assignments in addition to their statutory
audit duties where the auditor’s expertise and
experience with the Company are important.
Non-audit services provided during the financial
year by the auditor are detailed below. The
Directors are satisfied that the provision of non-
audit services is compatible with the general
standard of independence for auditors imposed
by the Corporations Acts 2001.
30 June
2022
30 June
2021
$
$
Amount paid/payable to Pitcher Partners BA&A
Pty Ltd or related entities for non-audit services
Pitcher Partners
Accountants & Advisors
WA Pty Ltd – Taxation
compliance services
Total auditors’
remuneration for non-
audit services
19,730
20,750
19,730
20,750
In the event that non-audit services are provided
by Pitcher Partners BA&A Pty Ltd or related
entities, the Board has established certain
procedures to ensure that the provision of
non-audit services are compatible with, and do
not compromise, the auditors independence
requirement of the Corporation Act 2001.
These procedures include:
V Non-audit services will be subject to the
corporate governance procedures adopted by
the Company and will be reviewed by the Board
to ensure they do not impact the integrity and
objectivity of the auditor and other general
principles to independence as set out in APES
110 Code of Ethics for Professional Accountants
(including Independence Standards); and
V Ensuring non-audit services do not involve
reviewing or auditing the auditor’s own work,
acting in a management or decision-making
capacity for the Company, acting as advocate for
the Company or jointly sharing risks and rewards.
V Decision on non-audit services were decided
upon by the full Board in the absence of any
audit committee meetings.
17. AUDITOR’S
INDEPENDENCE
DECLARATION
The auditor’s independence declaration as
required under section 307C of the Corporations
Act 2001 (Cth) for the year ended 30 June 2022
has been received and can be found on page 28
of the financial report.
18. ROUNDING OF AMOUNTS
In accordance with ASIC Corporations (Rounding
in Financial/Director’s Reports) Instrument
2016/191, the amounts in the Directors’ report
and in the financial report have been rounded to
the nearest $1 (where rounding is applicable).
Directors’ reportAnnual Report for the financial year ending 30 June 2021 20
It’s been a highly
successful year
despite a backdrop
featuring significant
challenges.
Directors’ reportVysarn Limited (ABN 41 124 212 175) and controlled entities | ASX : VYS 21
REMUNERATION REPORT (AUDITED)
The remuneration report is set out under the
following main headings:
1. Introduction
2. Remuneration governance
3. Executive remuneration arrangement
4. Non-Executive Director fee arrangement
5. Details of remuneration
6. Share-based compensation
7. Loans to Directors and executives
8. Other transactions and balances with KMP
and their related parties
9. Key performance indicators of the Company
over the last 5 years
The remuneration report for the year ended
30 June 2022 outlines the remuneration
arrangement of the Company in accordance with
the requirements of the Corporations Act 2001
(Cth), as amended (the Act) and its regulations.
This information has been audited, as required
by section 308(3C) of the Act.
Details of the nature and amount of each
element of the remuneration of each of the Key
Management Personnel (“KMP”) of the Company
(the Directors and executives) for the year ended
30 June 2022 are set out below:
Key Management Personnel covered under this report are as follows:
Name
Status
Appointed
Resigned
Peter Hutchinson
Chairman
27 October 2017
James Clement
Managing Director and CEO
3 February 2021
Sheldon Burt
Executive Director
15 May 2019
-
-
-
1. INTRODUCTION
KMP have authority and responsibility for
planning, directing and controlling the major
activities of the Group. KMP comprise the
Directors of the Company.
Compensation levels for KMP are competitively
set to attract and retain appropriately qualified
and experienced Directors and executives. The
Board may seek independent advice on the
appropriateness of compensation packages,
given the trend in comparative companies both
locally and internationally and objectives of the
Company’s compensation.
A. PRINCIPLES USED TO DETERMINE
THE NATURE AND AMOUNT OF
REMUNERATION
The objective of the Company’s executive reward
framework is to ensure reward for performance
is competitive and appropriate for the results
delivered. The framework aligns executive reward
with the achievement of strategic objectives
and the creation of value for shareholders, and
it is considered to conform to the market best
practice for the delivery of reward. The Board of
Directors (“the Board”) ensures that executive
reward satisfies the following key criteria for
good reward governance practices:
V Competitiveness and reasonableness;
V Acceptability to shareholders;
V Performance linkage/alignment of executive
compensation;
V Transparency; and
V Capital management.
RemuneRation RepoRt (audited)Annual Report for the financial year ending 30 June 2022 22
1. Introduction continued…
The Board is responsible for determining and
reviewing remuneration arrangements for its
Directors and executives. The performance
of the Company depends on the quality of its
Directors and executives. The remuneration
philosophy is to attract, motivate and retain
high performing and high-quality personnel. The
Company has structured a market competitive
executive remuneration framework. The reward
framework is designed to align executive reward
to shareholders’ interests.
The Board has considered that it should seek to
enhance shareholders’ interests by:
V Focusing on shareholder value and returns; and
V Attracting and retaining high calibre executives.
Additionally, the reward framework should seek
to enhance executives’ interests by:
V Rewarding capability and experience;
V Reflecting a competitive reward for
contribution to growth in shareholder wealth;
V Providing a clear structure for earning rewards;
and
V Providing recognition for contribution.
2. REMUNERATION
GOVERNANCE
The Directors believe the Company is not
currently of a size nor are its affairs of such
complexity as to warrant the establishment of a
separate remuneration committee. Accordingly,
all remuneration matters are considered by the
full Board of Directors, in accordance with a
nomination and remuneration committee charter.
During the financial year, the Company did not
engage any remuneration consultants.
3. EXECUTIVE
REMUNERATION
ARRANGEMENT
The compensation structures are designed to
attract suitably qualified candidates, reward
the achievement of strategic objectives, and
achieve the broader outcome of creation of value
for shareholders. Compensation packages may
include a mix of fixed compensation, equity-based
compensation, as well as employer contributions
to superannuation funds. Shares and options may
only be issued to Directors subject to approval by
shareholders in a general meeting.
The compensation structures take into account:
V The capability and experience of the executive;
V The executive’s ability to control the relevant
segment’s performance; and
V The Company’s performance including:
The short-term incentives (“STI”) program is
designed to align the targets of the business
units with the performance hurdles of executives.
STI payments are granted to executives based
on specific annual targets and key performance
indicators (“KPI’s”) being achieved. KPI’s include
profit contribution, customer satisfaction,
leadership contribution and product management.
The long-term incentives (“LTI”) include long
service leave and share-based payments. Shares
are awarded to executives based on long-term
incentive measures and includes an increase
in shareholders’ value. The Board reviewed the
long-term equity-linked performance incentives
specifically for executives during the year ended
30 June 2022.
A. CONSOLIDATED ENTITY
PERFORMANCE AND LINK TO
REMUNERATION
Remuneration for certain individuals is directly
linked to the performance of the Company. A
portion of cash bonus and incentive payments,
including performance rights, are dependent on
defined earnings per share targets being met. The
remaining portion of the cash bonus and incentive
payments are at the discretion of the Board.
The Board is of the opinion that the continued
improved results can be attributed in part to the
adoption of performance-based compensation
and is satisfied that this improvement will
continue to increase shareholder wealth if
maintained over the coming years.
B. VOTING AND COMMENTS MADE
AT THE COMPANY’S 2021 ANNUAL
GENERAL MEETING (“AGM”)
The Company received more than 99% of “yes”
votes on its remuneration report for the 2021
financial year. The Company did not receive any
specific feedback at the AGM or throughout the
year on its remuneration practices.
The key terms of Mr Burt and Mr Clement’s
agreements are set out below;
JAMES CLEMENT
MANAGING DIRECTOR AND CEO
a. Term of agreement: commencing 3 February
2020 with indefinite duration.
b. Remuneration:
i. a base salary of $350,000 per annum,
including mandatory superannuation
contributions;
ii. a short-term cash incentive of up to
$150,000 per annum, subject to the
achievement of certain short-term
incentive key performance indicators; and
iii. a long-term incentive being the issue
of 5,000,000 performance rights and
10,000,000 options upon commencement.
c. General termination: the agreement can be
V The Company’s earnings; and
terminated:
V The growth in share price and delivering
constant returns on shareholder wealth.
i. by either party for no reason by giving
3 months’ notice in writing to the other
party; and
RemuneRation RepoRt (audited)Vysarn Limited (ABN 41 124 212 175) and controlled entities | ASX : VYS 3. executive Remuneration Arrangement continued…
ii. by the Company effective immediately in
the event the executive Director is guilty
of gross misconduct, becomes bankrupt or
insolvent, is convicted of a criminal offence
or other similar grounds.
4. NON-EXECUTIVE
DIRECTOR FEE
ARRANGEMENT
23
SHELDON BURT
EXECUTIVE DIRECTOR
a. Term of agreement: commencing 15 May 2019
with indefinite duration.
b. Remuneration:
i. a base salary of $300,000 per annum,
including mandatory superannuation
contributions;
ii. a short-term cash incentive of up to
$150,000 per annum, subject to the
achievement of certain short-term
incentive key performance indicators; and
iii. a long-term incentive being the issue of
5,000,000 performance rights.
c. General termination: the agreement can be
terminated:
i. by either party for no reason by giving
3 months’ notice in writing to the other
party;
ii. by the executive Director if the Company
breaches the agreement and does not
remedy the breach within 10 business days
on notice of breach; and
iii. by the Company effective immediately in
the event the executive Director is guilty
of gross misconduct, becomes bankrupt or
insolvent, is convicted of a criminal offence
or other similar grounds.
d. Termination on material diminution: an
executive Director can terminate the
agreement if he suffers material diminution in
his status or position in the Company. If this
occurs:
i. within 2 years of employment, the
Company will pay the executive Director an
amount equal to 3 months base salary, and
50% of the performance rights held by him
shall vest subject to any restrictions the
Board may impose; and
ii. after 2 years of employment, the Company
will pay the executive Director an amount
equal to 3 months base salary, and all of
the performance rights held by him shall
vest subject to any restrictions by the
Board may impose.
Fees and payments to non-executive Directors
reflect the demands and responsibilities of their
role. Non-executive Directors’ fees and payments
are reviewed annually by the Board. The Board
may, from time to time, receive advice from
independent remuneration consultants to ensure
non-executive Directors’ fees and payments are
appropriate and in line with the market. The
Chairman’s fees are determined independently
to the fees of other non-executive Directors
based on comparative roles in the external
market. The Chairman is not present at any
discussions relating to the determination of his
own remuneration.
The maximum aggregate amount of fees that
can be paid to non-executive Directors is
presently limited to an aggregate of $200,000
per annum and any change is subject to approval
by shareholders at the general meeting. Fees for
non-executive Directors are not linked to the
performance of the Company.
The table below summarises the annual fees
payable to non-executive Directors for the 2022
financial year (inclusive of superannuation):
BOARD FEES – PER ANNUM
d
r
a
o
B
$
Chair
60,000
e
e
t
t
i
m
m
o
C
$
-
l
a
t
o
T
$
60,000
Non-executive Directors may be reimbursed for
expenses reasonably incurred in attending to the
Company’s affairs. Non-executive Directors do
not receive retirement benefits. The Company or
the non-executive Directors can terminate the
above arrangements at any time upon written
notice being provided, with no minimum notice
period applicable.
RemuneRation RepoRt (audited)Annual Report for the financial year ending 30 June 2022 24
5. DETAILS OF REMUNERATION
Details of the remuneration of key management personnel of the Company are set out in
the following tables.
Short-term benefits
Post-
employment
Equity
Short-term
Salary,
Fees &
Commissions
STI cash
bonus
Non-
monetary
benefits
Other
employee
benefits
Post-
employment
Superannuation
Share-based
payments
$
$
$
$
$
$
Total
$
2022
CHAIRMAN
Peter Hutchinson
46,451
-
-
EXECUTIVE DIRECTORS
James Clement 1,2
293,372
59,724
34,934
Sheldon Burt 2
278,306
39,496
-
Total
618,129
99,220
34,934
-
-
-
-
4,661
-
51,112
23,844
24,072
57,115
468,989
46,259
388,133
52,577
103,374
908,234
1. The amount of $34,934 disclosed as a non-monetary benefit for Mr Clement is a salary sacrificed amount pertaining to a novated
lease on a motor vehicle.
2. Refer to “6. Share-based Compensation” on page 25 of the Remuneration Report for further information pertaining to share-
based payment expenses recognised for key management personnel.
Short-term benefits
Post-
employment
Equity
2021
Short-term
Salary,
Fees &
Commissions
STI cash
bonus
Non-
monetary
benefits
Other
employee
benefits
Post-
employment
Superannuation
Share-based
payments
$
$
$
$
$
$
Total
$
CHAIRMAN
Peter Hutchinson
38,356
EXECUTIVE DIRECTORS
James Clement1 2
309,919
Sheldon Burt 2
278,306
FORMER NON-EXECUTIVE DIRECTOR
Christopher Brophy 3
15,982
Total
642,563
-
-
-
-
-
-
18,444
-
-
18,444
-
-
-
-
-
3,644
-
42,000
21,637
21,694
44,552
394,552
43,742
343,742
1,518
-
17,500
48,493
88,294
797,794
1. The amount of $18,444 disclosed as a non-monetary benefit for Mr Clement is a salary sacrificed amount pertaining to a novated
lease on a motor vehicle.
2. Refer to “6. Share-based Compensation” on page 25 of the Remuneration Report for further information pertaining to share-
based payment expenses recognised for key management personnel.
3. Resigned 28 January 2021.
The proportion of remuneration linked to performance and the fixed proportion are as follows:
Fixed Remuneration
At Risk STI
At Risk LTI
2022
2021
2022
2021
2022
2021
DIRECTORS
Peter Hutchinson
James Clement
Sheldon Burt
100%
75%
78%
100%
89%
87%
-
13%
10%
-
-
-
-
12%
12%
-
11%
13%
Cash bonuses are dependent on meeting defined performance measures. The amount of the bonus is
determined having regard to the satisfaction of performance measures and weightings. The maximum
bonus values are established at the start of each financial year and amounts payable are determined
in the final month of the financial year by the Board.
RemuneRation RepoRt (audited)Vysarn Limited (ABN 41 124 212 175) and controlled entities | ASX : VYS 25
6. SHARE-BASED COMPENSATION
A. ISSUE OF SHARES
During the year ended 30 June 2022 no share-based payments in the form of ordinary shares were
issued by the Company to key management personnel as remuneration.
Since the end of the financial year no ordinary shares have been granted to key management personnel.
B. PERFORMANCE RIGHTS
During the year ended 30 June 2022, the Company did not issue any performance rights as
performance incentives to key management personnel.
C. MOVEMENTS IN PERFORMANCE RIGHTS
The movement during the reporting period in the number of performance rights in the Company held,
directly, indirectly or beneficially, by each key management personnel, including their related parties,
is as follows:
Key Management Personnel
Opening
balance
Granted as
compensation
Exercised
Unvested,
Lapsed and
Cancelled
Closing
balance
Vested during
the year
2022
No.
No.
No.
No.
No.
No.
Peter Hutchinson
James Clement
Sheldon Burt
Total
-
5,000,000
5,000,000
10,000,000
-
-
-
-
-
-
-
-
-
-
-
-
-
-
5,000,000
1,666,666
5,000,000
1,666,666
10,000,000
3,333,332
PERFORMANCE RIGHTS ON ISSUE AT YEAR END
At 30 June 2022, the unissued ordinary shares of the Company under performance rights are as
follows:
Tranche
1
2
3
Number Under
Performance
Rights
3,333,333
3,333,333
3,333,334
Value at Grant
Date ($)
Date of Vesting
191,666
191,667
191,667
30-Jun-22
30-Jun-23
30-Jun-24
Total
10,000,000
575,000
-
Management
Probability
Assessment
30-Jun-22
Fair Value ($)
100%
191,666
0%
0%
-
-
-
191,666
Each performance right will convert on a 1:1 basis to fully paid ordinary shares upon achievement of
their relevant vesting conditions (refer below).
Tranche
Number of Performance
Rights on Issue
Condition Test Date
Vesting Condition
1
2
3
Where the:
3,333,333
3,333,333
3,333,334
30 June 2022
30 June 2023
30 June 2024
• Employment condition
• Cumulative EPS condition
V Employment condition – means the holder of the Rights remains employed by the Company at the
condition Test Date; and
V Cumulative EPS condition – means the earnings per share (EPS) based on the achievement of
compound annual growth in the Company’s EPS of 15% per annum from the financial year 30 June 2021,
subject to a minimum EPS of $0.01 for the financial year ending 30 June 2021. The EPS calculation will
be based on the Company’s cumulative net profit after tax up until the relevant condition test date
divided by the weighted average number of shares on issue over the relevant period, taking into account
any new shares issued (or cancelled by the Company in the relevant period).
RemuneRation RepoRt (audited)Annual Report for the financial year ending 30 June 2022
26
6. share-based Compensation continued…
The executive performance rights have been
valued based on the Company’s share price as
at the date of their approval for issue. A total
valuation of $575,000 has been determined,
assuming satisfaction of performance conditions
in full and 100% vesting rate.
It was put to the shareholders as an ordinary
resolution, that, pursuant to and in accordance
with Chapter 2E of the Corporations Act,
Listing Rule 6.23.4, and for all other purposes,
Shareholders approve the removal of the
cumulative EPS condition attached to Tranche
1 of the Director Performance Rights on the
terms and conditions in the Notice of Meeting.
The resolution was subsequently passed at
the Company’s Annual General Meeting on 25
November 2021. Accordingly, at 30 June 2022
the Company assessed the likelihood tranche 1
vesting to be 100%.
$103,374 in share-based payment was recorded
as an expense in the statement of profit or loss
and other comprehensive income during the year
ended 30 June 2022 (30 June 2021: $88,293) in
relation to the performance rights.
In respect of tranches 2 – 3 of the performance
rights, it was determined that, consistent with
its conclusion at 30 June 2021, the achievement
of the vesting conditions is unknown at this
point in time noting the uncertainty surrounding
the current COVID-19 economic environment and
global macroeconomic uncertainty.
As a result, no share-based payment was
recorded in relation to traches 2–3.
30-June-22
30-June-21
$
$
SHARE BASED PAYMENT EXPENSE –
PERFORMANCE RIGHTS
Share based payments
103,374
Total
103,374
88,293
88,293
D. OPTIONS
During the year ended 30 June 2022, no options
over ordinary shares have been granted to key
management personnel as remuneration. Further,
during the reporting period, there were no shares
issued on the exercise of options previously
granted as compensation.
I. OPTIONS OVER EQUITY INSTRUMENTS
During and since the end of the financial year,
the Company did not issue ordinary shares as
a result of the exercise of options (there are
no amounts unpaid on the shares issued).
The movement during the reporting period in
the number of options over ordinary shares
in the Company held, directly, indirectly
or beneficially, by each key management
personnel, including their related parties, is
as follows:
Key
Management
Personnel
Peter
Hutchinson
James
Clement
Sheldon
Burt
Chris
Brophy
Total
Opening
balance
Granted as
compensation Exercised
Expired
Closing
balance
Vested and
exercisable
at the end
of the year
Unvested
and not
exercisable
at the end
of the year
Vested
during the
year
10,000,000
10,000,000
-
-
20,000,000
-
-
-
-
-
-
-
-
-
-
- 10,000,000
- 10,000,000
- 10,000,000
- 10,000,000
-
-
-
-
-
-
-
-
- 20,000,000
- 20,000,000
-
-
-
-
-
II. SHAREHOLDING
The number of shares in the Company held during the financial year by each Director and other
members of key management personnel of the Company, including their personally related parties, is
set out below:
30 JUNE 2022
Peter Hutchinson
James Clement
Sheldon Burt
Total
Opening
balance
56,000,000
13,366,315
6,117,315
75,483,630
Received on
exercise of
options
Granted as
-
-
-
-
-
-
-
-
On-market
Purchases
1,000,000
133,685
100,000
1,233,685
Other
Closing
balance
57,000,000
13,500,000
6,217,315
76,717,315
-
-
-
-
RemuneRation RepoRt (audited)Vysarn Limited (ABN 41 124 212 175) and controlled entities | ASX : VYS 6. share-based Compensation continued…
30 JUNE 2021
Peter Hutchinson
56,000,000
James Clement
13,366,315
Sheldon Burt
Chris Brophy 1
Total
6,117,315
2,925,000
78,408,630
1. Resigned 29 August 2020
Opening
balance
Granted as
compensation
Received on
exercise of
options
Purchases
Other
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
(2,925,000)
-
(2,925,000)
75,483,630
27
Closing
balance
-
-
-
56,000,000
13,366,315
6,117,315
7. LOANS TO DIRECTORS AND EXECUTIVES
There are no loans to Directors or other KMP of the Company during the year ended 30 June 2022
(2021 $Nil).
8. OTHER TRANSACTIONS AND BALANCES WITH KMPS
AND THEIR RELATED PARTIES
Purchases from and sales to related parties are made on terms equivalent to those that prevail
in arm’s length transactions. The Company acquired the following services from entities that are
controlled by members of the Company’s KMP.
Some Directors, or former Directors of the Company, hold or have held positions in other companies,
where it is considered they control or significantly influence the financial or operating policies of
those entities. Transactions between related parties are on normal commercial terms and conditions
no more favourable than those available to other parties unless otherwise stated.
Transaction value
Payable balance
Related party
Nature of transactions
30-Jun-22
30-Jun-21
30-Jun-22
30-Jun-21
Onyx Corporate Pty Ltd /
Ms Kyla Garic
Accounting and company
secretarial services
$
N/A
$
$
$
61,047
-
5,533
1. Ms Garic was the former Company Secretary of the Company and a Director of Onyx Corporate Pty Ltd. Ms Garic resigned on 30
June 2021.
9. KEY PERFORMANCE INDICATORS OF THE COMPANY
OVER THE LAST 5 YEARS
Consolidated
30-June-22
30-June-21
30-June-21
30-June-19
30-June-18
($)
($)
($)
($)
($)
Revenue
46,297,406 25,824,506
11,912,589
163,459
132,453
Net profit / (loss) before tax
4,095,180
1,137,420
2,472,743
(483,826)
296,558
Net profit / (loss) after tax
2,856,729
344,819
4,835,295
(483,826)
296,558
Share price at start of year
Share price at end of year
Interim and final dividend
Basic profit / (loss) per share (cents)
0.095
0.073
-
0.007
0.050
0.095
-
0.001
N/A
0.050
-
N/A
N/A
-
N/A
N/A
-
0.018
(0.355)
0.218
REMUNERATION REPORT (END)
This report is made in accordance with a
resolution of Directors, pursuant to section
298(2)(a) of the Corporations Act 2001.
Signed in accordance with a resolution of the
Board of Directors.
James Clement
Managing Director and Chief Executive Officer
Dated 25 August 2022
RemuneRation RepoRt (audited)Annual Report for the financial year ending 30 June 2022
28
AUDITOR’S INDEPENDENCE
DECLARATION
Under Section 307C of the Corporations Act 2001
AUDITOR’S INDEPENDENCE DECLARATION
TO THE DIRECTORS OF VYSARN LIMITED
In relation to the independent audit for the year ended 30 June 2022, to the best of
my knowledge and belief
there have been:
(i) No contraventions of the auditor independence requirements of the Corporations
Act 2001; and
(ii) No contraventions of APES 110 Code of Ethics for Professional Accountants
(including Independence Standards).
This declaration is in respect of Vysarn Limited and the entities it controlled during
the year.
PITCHER PARTNERS BA&A PTY LTD
PAUL MULLIGAN
Executive Director
Perth, 25 August 2022
Pitcher Partners BA&A Pty Ltd
Adelaide Brisbane Melbourne Newcastle Perth Sydney
An independent Western Australian Company ABN 76 601 361 095.
Level 11, 12-14 The Esplanade, Perth WA 6000
Registered Audit Company Number 467435.
Liability limited by a scheme under Professional Standards Legislation.
Pitcher Partners is an association of independent firms.
Pitcher Partners is a member of the global network of Baker Tilly International
Limited, the members of which are separate and independent legal entities
AUDITORʼS INDEPENDENCE DECLARATION TO THE DIRECTORS OF VYSARN LIMITED 20 In relation to the independent audit for the year ended 30 June 2021, to the best of my knowledge and belief there have been: (i) No contraventions of the auditor independence requirements of the Corporations Act 2001; and (ii) No contraventions of APES 110 Code of Ethics for Professional Accountants (including Independence Standards).This declaration is in respect of Vysarn Limited and the entity it controlled during the year. PITCHER PARTNERS BA&A PTY LTD PAUL MULLIGAN Executive Director Perth, 27 August 2021 Pitcher Partners BA&A Pty LtdAn independent Western Australian Company ABN 76 601 361 095.Level 11, 12-14 The Esplanade, Perth WA 6000Registered Audit Company Number 467435.Liability limited by a scheme under Professional Standards Legislation.Adelaide Brisbane Melbourne Newcastle Perth SydneyPitcher Partners is an association of independent firms. Pitcher Partners is a member of the global network of Baker Tilly International Limited, the members of which are separate and independent legal entities.AUDITORʼS INDEPENDENCE DECLARATION TO THE DIRECTORS OF VYSARN LIMITED 20 In relation to the independent audit for the year ended 30 June 2021, to the best of my knowledge and belief there have been: (i) No contraventions of the auditor independence requirements of the Corporations Act 2001; and (ii) No contraventions of APES 110 Code of Ethics for Professional Accountants (including Independence Standards).This declaration is in respect of Vysarn Limited and the entity it controlled during the year. PITCHER PARTNERS BA&A PTY LTD PAUL MULLIGAN Executive Director Perth, 27 August 2021 Pitcher Partners BA&A Pty LtdAn independent Western Australian Company ABN 76 601 361 095.Level 11, 12-14 The Esplanade, Perth WA 6000Registered Audit Company Number 467435.Liability limited by a scheme under Professional Standards Legislation.Adelaide Brisbane Melbourne Newcastle Perth SydneyPitcher Partners is an association of independent firms. Pitcher Partners is a member of the global network of Baker Tilly International Limited, the members of which are separate and independent legal entities.Auditor’s independence declArAtionVysarn Limited (ABN 41 124 212 175) and controlled entities | ASX : VYS 29
CONSOLIDATED STATEMENT OF
PROFIT OR LOSS AND OTHER
COMPREHENSIVE INCOME
For The Year Ended 30 June 2022
Sales revenue
Cost of sales
Gross Profit
Other income
Administration and corporate expense
Employee benefits expense
Depreciation and amortisation expense
Finance expense
Profit / (loss) before income tax
Income tax benefit / (expense)
Profit / (loss) after income tax expense
Profit / (loss) after income tax expense for the year
attributable to the owners of Vysarn Limited
OTHER COMPREHENSIVE INCOME:
Items that may be reclassified subsequently to profit or loss
Other comprehensive income for the year, net of tax
Total comprehensive income / (loss) for the year attributable
to the owners of Vysarn Limited
Basic earnings per share for profit/(loss) attributable to
the owners of Vysarn Limited
Diluted earnings per share for profit/(loss) attributable to
the owners of Vysarn Limited
Consolidated Group
Notes
30 June 2022
30 June 2021
$
$
46,297,406
25,824,506
(31,377,746)
(16,932,476)
14,919,660
8,892,030
273,081
542,722
(1,923,001)
(1,383,824)
(4,194,343)
(3,040,766)
(4,502,758)
(3,436,923)
(477,458)
4,095,180
(1,238,451)
2,856,729
(435,819)
1,137,420
(792,601)
344,819
2,856,729
344,819
-
-
2,856,729
344,819
0.0073
0.0009
0.0068
0.0008
4
5
6
6
6
6
7
9
9
The accompanying Notes form part of these financial statements.
Consolidated FinanCial statementsAnnual Report for the financial year ending 30 June 2022 30
CONSOLIDATED STATEMENT OF
FINANCIAL POSITION
As at 30 June 2022
CURRENT ASSETS
Cash and cash equivalents
Trade and other receivables
Inventories
Other current assets
Prepayments and deposits
Total Current Assets
NON-CURRENT ASSETS
Plant and equipment
Right of use asset
Total Non-Current Assets
Total Assets
CURRENT LIABILITIES
Borrowings
Trade and other payables
Employee liabilities
Lease liability
Contingent consideration payable
Total Current Liabilities
NON-CURRENT LIABILITIES
Borrowings
Lease liability
Employee liabilities
Deferred tax liability
Contingent consideration payable
Total Non-Current Liabilities
Total Liabilities
Net Assets
SHAREHOLDERS’ EQUITY
Issued capital
Reserves
Retained earnings
Shareholders’ Equity
Notes
30 June 2022
30 June 2021
$
$
10
11
12
13
14
15
16
17
18
19
25
17
19
7
25
20
21
5,706,447
6,555,486
5,986,504
3,599,105
1,208,367
490,056
4,983,227
2,518,854
968,257
244,145
16,990,479
15,269,969
31,701,407
29,548,656
556,833
516,055
32,258,240
30,064,711
49,248,719
45,334,680
5,548,400
5,616,854
6,172,045
5,050,530
733,947
305,342
250,000
458,468
218,784
-
13,009,734
11,344,636
4,356,520
309,192
44,933
2,942,951
500,000
8,153,596
7,183,223
334,575
4,781
1,704,501
-
9,227,080
21,163,330
20,571,716
28,085,390
24,762,964
19,495,181
19,130,558
555,667
8,034,542
452,293
5,180,113
28,085,390
24,762,964
The accompanying Notes form part of these financial statements.
Consolidated FinanCial statementsVysarn Limited (ABN 41 124 212 175) and controlled entities | ASX : VYS CONSOLIDATED STATEMENT OF
CHANGES IN EQUITY
For The Year Ended 30 June 2022
31
Balance at 1 July 2020
Profit for the period
Other comprehensive income
Total comprehensive income for the period
TRANSACTIONS WITH OWNERS IN THEIR CAPACITY AS OWNERS:
Issue of shares
Capital raising costs
Share based payments
Total transactions with owners
-
(5,056)
-
(5,056)
88,293
88,293
Share Based
Payment
Reserve
Retained
earnings /
(Accumulated
losses)
Issued Capital
$
$
$
Total
$
19,135,614
364,000
4,835,294
24,334,908
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
344,819
344,819
-
-
344,819
344,819
-
-
-
-
-
(5,056)
88,293
83,237
2,856,729
2,856,729
-
-
2,856,729
2,856,729
-
-
-
-
375,000
(10,377)
103,374
467,997
555,667
8,034,542
28,085,390
Balance at 30 June 2021
19,130,558
452,293
5,180,113
24,762,964
19,130,558
452,293
5,180,113
24,762,964
Balance at 1 July 2021
Profit for the period
Other comprehensive income
Total comprehensive income for the period
TRANSACTIONS WITH OWNERS IN THEIR CAPACITY AS OWNERS:
Issue of shares
Capital raising costs
Share based payments
Total transactions with owners
Balance at 30 June 2022
375,000
(10,377)
-
364,623
19,495,181
103,374
103,374
The accompanying Notes form part of these financial statements.
Consolidated FinanCial statementsAnnual Report for the financial year ending 30 June 2022 32
CONSOLIDATED STATEMENT OF
CASH FLOWS
For The Year Ended 30 June 2022
CASH FLOWS FROM OPERATING ACTIVITIES
Receipts from customers
Payments to suppliers and employees
Interest received
Interest and other costs of finance paid
Notes
30 June 2022
30 June 2021
$
$
49,994,380
26,255,351
(40,050,856)
(24,145,714)
104
(444,166)
9,001
(411,553)
1,707,085
Net cash provided by operating activities
10a
9,499,462
CASH FLOWS FROM INVESTING ACTIVITIES
Payment for acquisition of assets
Purchase of plant and equipment
25
(2,140,015)
-
(5,015,343)
(6,694,451)
Proceeds from disposal of property, plant and equipment
424,138
376,593
Net cash used in investing activities
(6,731,220)
(6,317,858)
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from borrowings
Repayment of borrowings
Payments for principal portion of lease liabilities
Payment of capital/transaction costs
Net cash (used in)/provided by financing activities
4,499,153
5,085,684
(7,835,212)
(3,388,595)
(270,846)
(230,987)
(10,377)
(5,954)
(3,617,282)
1,460,148
Net increase/(decrease) in cash and cash equivalents
(849,039)
(3,150,627)
Cash and cash equivalents at beginning of financial year
6,555,486
9,706,113
Cash and cash equivalents at the end of financial year
10
5,706,447
6,555,486
The accompanying Notes form part of these financial statements.
Consolidated FinanCial statementsVysarn Limited (ABN 41 124 212 175) and controlled entities | ASX : VYS NOTES TO THE CONSOLIDATED
FINANCIAL STATEMENTS
33
NOTE 1: GENERAL INFORMATION
Vysarn Limited (“Vysarn” or “the Company”)
is a listed public Company limited by shares,
incorporated and domiciled in Australia. The
Company is a for-profit entity. Its registered
office and principal place of business is Level 1,
640 Murray St, West Perth WA 6005.
The financial statements are presented in
Australian dollars, which is the functional and
presentation currency of the Company and its
controlled entities (“the Group”).
The financial statements were authorised
for issue, in accordance with a resolution of
Directors, on 25 August 2022. The Directors have
the power to amend and reissue the financial
statements.
NOTE 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
A. STATEMENT OF COMPLIANCE
These financial statements are general purpose
financial statements which have been prepared in
accordance with Australian Accounting Standards
(“AASBs”) (including Australian interpretations)
adopted by the Australian Accounting Standard
Board (“AASB”) and the Corporations Act 2001.
These financial statements also comply with
International Financial Reporting Standards as
issued by the International Accounting Standards
Board (‘IASB’).
B. BASIS OF PREPARATION
The financial statements, except for cash
flow information, have been prepared on an
accruals basis and are based on historical costs,
modified, where applicable, by the measurement
at fair value of selected non-current assets,
financial assets and financial liabilities.
Critical Accounting Estimates
The preparation of financial statements in
conformity with AASBs requires management to
make judgements, estimates and assumptions
that affect the application of accounting policies
and the reported amounts of assets, liabilities,
income and expenses. Actual results may differ
from these estimates. Estimates and underlying
assumptions are reviewed on an ongoing
basis. Revisions to accounting estimates are
recognised in the period in which the estimate
is revised and in any future periods affected.
The judgements estimates and assumptions
that have a significant risk of causing a material
adjustment to the carrying amounts of assets
and liabilities within the next financial year are
discussed in “Note 2AB” on page 41.
C. GOING CONCERN
The financial statements have been prepared on
the basis that the entity is a going concern, which
contemplates the continuity of normal business
activity, realisation of assets and settlement of
liabilities in the normal course of business.
The Directors have reviewed a budget/forecast
and having considered the above, are of the
opinion that the use of the going concern basis
is appropriate and that the Company will be able
to pay its debts as and when they fall due for the
next 12 months.
D. ADOPTION OF NEW
ACCOUNTING STANDARDS
The Company has adopted all of the new,
revised or amended Accounting Standards
and Interpretations issued by the Australian
Accounting Standards Board (‘AASB’) that are
mandatory for the current reporting period
Other than the changes described below, the
accounting policies adopted are consistent with
those of the previous financial year.
AASB 2019-1 Amendments to Australian
Accounting Standards – References to the
“Conceptual Framework”.
AASB 2019-1 amends Australian Accounting
Standards to reflect the issue of the Conceptual
Framework. The revised Conceptual Framework is
applicable to annual reporting periods beginning
on or after 1 January 2021 and early adoption
is permitted. The Conceptual Framework
contains new definition and recognition criteria
as well as new guidance on measurement
that affects several Accounting Standards.
Where the Company has relied on the existing
framework in determining its accounting policies
for transactions, events or conditions that are
not otherwise dealt with under the Australian
Accounting Standards, the may need to review
such policies under the revised framework. The
application of AASB 2019-1 has not materially
impacted the financial statements of the Group.
Notes to the CoNsolidated FiNaNCial statemeNtsAnnual Report for the financial year ending 30 June 2022 34
Note 2: Summary Of Significant Accounting Policies continued…
AASB 2019-5 Amendments to Australian
Accounting Standards – Disclosure of the
Effect of New IFRS Standards Not Yet Issued
in Australia.
AASB 2019-5 makes amendments to AASB 1054
Australian Additional Disclosures by adding a
disclosure requirement for an entity intending
to comply with IFRS Standards to disclose the
information required by paragraph 30 of AASB
108 (regarding disclosing the effect of new
standards not yet issued) to IFRS Standards
that have not yet been issued by the Australian
Accounting Standards Board. AASB 2019-5
mandatorily applies to annual reporting periods
commencing on or after 1 January 2021 and will
be first applied by the Group in the financial year
commencing 1 July 2021. The application of AASB
2019-5 has not materially impacted the financial
statements of the Group.
AASB 2020-8 Amendments to Australian
Accounting Standards – Interest Rate
Benchmark Reform – Phase 2.
AASB 2020-4 amends AASB 4 Insurance
Contracts, AASB 7 Financial Instruments:
Disclosures, AASB 9: Financial Instruments,
AASB 16: Leases and AASB 139 Financial
Instruments: Recognition and Measurement to
provide financial statement users with useful
information about the effects of the interest rate
benchmark reform on those entities financial
statements. AASB 2020-8 mandatorily applies
to annual reporting periods commencing on or
after 1 January 2021. The application of AASB
2020-8 has not materially impacted the financial
statements of the Group.
AASB 2021-3: Amendments to Australian
Accounting Standards – Covid-19-Related
Rent Concessions beyond 30 June 2021.
AASB 2021-3 amends AASB 16: Leases to
extend by one year the application period of the
practical expedient added to AASB 16 by AASB
2020-4. The practical expedient permits lessees
not to assess whether rent concessions that
occur as a direct consequence of the covid-19
pandemic and meet specified conditions are
lease modifications and, instead, to account
for those rent concessions as if they were
not modifications. The Standard extends the
practical expedient to rent concessions that
reduce only lease payments originally due on
or before 30 June 2022, provided the other
conditions for applying the practical expedient
are met. AASB 2021-3 mandatorily applies to
annual reporting periods commencing on or
after 1 April 2021 and is available for earlier
application. It will be applied by the Group in
the financial year commencing 1 July 2021. The
application of AASB 2021-3 has not materially
impacted the financial statements of the Group.
E. PRINCIPLES OF CONSOLIDATION
The consolidated financial statements comprise
the financial statements of the Group and
its subsidiary as at 30 June 2022. Control is
achieved when the Group is exposed, or has
rights, to variable returns from its involvement
with the investee and has the ability to affect
those returns through its power over the
investee. Specifically, the Group controls an
investee if and only if the Group has:
V Power over the investee (i.e. existing rights
that give it the current ability to direct the
relevant activities of the investee);
V Exposure, or rights, to variable returns from its
involvement with the investee, and
V The ability to use its power over the investee
to affect its returns.
When the Group has less than a majority of the
voting or similar rights of an investee, the Group
considers all relevant facts and circumstances in
assessing whether it has power over an investee,
including:
V The contractual arrangement with the other
vote holders of the investee,
V Rights arising from other contractual
arrangements,
V The Group’s voting rights and potential
voting rights.
The Group re-assesses whether or not it controls
an investee if facts and circumstances indicate
that there are changes to one or more of the
three elements of control. Consolidation of
a subsidiary begins when the Group obtains
control over the subsidiary and ceases when the
Group loses control of the subsidiary. Assets,
liabilities, income and expenses of a subsidiary
acquired or disposed of during the year are
included in the statement of profit or loss and
other comprehensive income from the date the
Group gains control until the date the Group
ceases to control the subsidiary.
F. ASSET ACQUISITION
Where an asset acquisition does not constitute
a business combination, or when the optional
concentration test under AASB 3 Business
Combinations has been applied, the assets
and liabilities acquired are assigned a carrying
amount based on their fair values in an asset
purchase transaction. No deferred tax will arise
in relation the acquired assets and assumed
liabilities, as the initial recognition exemption
for deferred tax under AASB 112 Income Taxes
applied. No goodwill will arise on the acquisition.
Notes to the CoNsolidated FiNaNCial statemeNtsVysarn Limited (ABN 41 124 212 175) and controlled entities | ASX : VYS 35
Depreciation
Depreciation is a systematic allocation of the
depreciable amount of an asset over its useful life.
The depreciable amount is the cost of the asset,
less its residual value. An asset is depreciated
from the date it is ready for use, meaning the date
it reaches the location and condition required
for it to operate in the manner intended by
management. Depreciation is recognised in profit
or loss on a straight-line basis over the estimated
useful lives of each part of the fixed asset item,
since this most closely reflects the expected
pattern of consumption of the future economic
benefits embodied in the assets.
The estimated useful lives are as follows:
V Plant and equipment: 2–10 years;
V Computer equipment: 3 years; and
V Trucks, trailers and light vehicles: 4–10 years.
Depreciation methods, useful lives and residual
values are reviewed at the end of each reporting
period and adjusted if appropriate.
J. RIGHT-OF-USE ASSETS
A right-of-use asset is recognised at the
commencement date of a lease. The right-of-
use asset is measured at cost, which comprises
the initial amount of the lease liability, adjusted
for, as applicable, any lease payments made at
or before the commencement date net of any
lease incentives received, any initial direct costs
incurred, and, except where included in the cost
of inventories, an estimate of costs expected to
be incurred for dismantling and removing the
underlying asset, and restoring the site or asset.
Right-of-use assets are depreciated on a straight-
line basis over the unexpired period of the lease or
the estimated useful life of the asset, whichever
is the shorter. Where the consolidated entity
expects to obtain ownership of the leased asset
at the end of the lease term, the depreciation is
over its estimated useful life. Right-of use assets
are subject to impairment or adjusted for any
remeasurement of lease liabilities.
The consolidated entity has elected not to
recognise a right-of-use asset and corresponding
lease liability for short-term leases with terms
of 12 months or less and leases of low-value
assets. Lease payments on these assets are
expensed to profit or loss as incurred.
Note 2: Summary Of Significant Accounting Policies continued…
G. TRADE RECEIVABLES
Trade receivables are amounts due from
customers for goods or services performed in the
ordinary course of business. They are generally
due for settlement within 30 days and therefore
are all classified as current. Trade receivables are
recognised initially at the amount of consideration
that is unconditional which is considered to be
fair value; none of the Group’s trade receivables
contain a financing component. The Group
holds the trade receivables with the objective to
collect the contractual cashflows and therefore
measures them subsequently at amortised cost
using the effective interest method.
The Group applies the AASB 9 simplified
approach to measuring expected credit losses
which uses a lifetime expected loss allowance
for all trade receivables and contract assets.
To measure the expected credit losses, trade
receivables have been grouped based on share
credit risk characteristics and the days past
due. The expected loss rates are based on
existing market conditions and forward-looking
estimates at the end of each reporting period.
H. INVENTORIES
Inventories, including raw materials and stores,
work in progress and contract fulfilment costs are
measured at the lower of cost and net realisable
value. The cost of inventories comprises;
expenditure incurred in acquiring the inventories
and the costs incurred in bringing them to their
existing location and condition, including direct
materials, direct labour and an appropriate
proportion of variable and fixed overhead
expenditure, the latter being allocated on the
basis of normal operating capacity. Net realisable
value is the estimated selling price in the ordinary
course of business, less the estimated costs of
completion and selling expenses.
I. PLANT & EQUIPMENT
Each class of plant and equipment is carried
at cost or fair value less, where applicable,
any accumulated depreciation. Historical cost
includes expenditure that Is directly attributable
to the acquisition of the items.
Subsequent costs are included in the asset’s
carrying amount or recognised as a separate
asset, as appropriate, only when it is probable that
future economic benefits associated with the Item
will flow to the Group and the cost of the item
can be measured reliably. All other repairs and
maintenance are charged to profit or loss during
the financial period in which they are incurred.
Gains and losses on disposal of an item of
property, plant and equipment are determined
by comparing the proceeds from disposal
with the carrying amount of property, plant
and equipment and are recognised net within
other income / (expense) in the statement of
profit or loss. The carrying amount of plant and
equipment is reviewed annually by Directors
to ensure it is not in excess of the recoverable
amount from these assets.
Notes to the CoNsolidated FiNaNCial statemeNtsAnnual Report for the financial year ending 30 June 2022 36
Note 2: Summary of Significant Accounting Policies continued…
K. LEASE LIABILITIES
A lease liability is recognised at the
commencement date of a lease. The lease liability
is initially recognised at the present value of the
lease payments to be made over the term of the
lease, discounted using the interest rate implicit
in the lease or, if that rate cannot be readily
determined, the consolidated entity’s incremental
borrowing rate. Lease payments comprise of fixed
payments less any lease incentives receivable,
variable lease payments that depend on an index
or a rate, amounts expected to be paid under
residual value guarantees, exercise price of a
purchase option when the exercise of the option
is reasonably certain to occur, and any anticipated
termination penalties. The variable lease payments
that do not depend on an index or a rate are
expensed in the period in which they are incurred.
Lease liabilities are measured at amortised cost
using the effective interest method. The carrying
amounts are remeasured if there is a change in
the following: future lease payments arising from
a change in an index or a rate used; residual
guarantee; lease term; certainty of a purchase
option and termination penalties. When a lease
liability is remeasured, an adjustment is made to
the corresponding right-of use asset, or to profit
or loss if the carrying amount of the right-of-use
asset is fully written down.
L. TRADE AND OTHER PAYABLES
Liabilities for trade creditors and other amounts
carried at cost which is the fair value of the
consideration to be paid in the future for goods
and services received, whether or not billed to
the Group. Interest, when charged by the lender,
is recognised as an expense on an accruals basis.
M. PROVISIONS
Provisions are recognised when the Group has
a legal or constructive obligation, as a result
of past events, for which it is probable that an
outflow of economic benefits will result and that
outflow can be reliably measured. Provisions
are measured using the best estimate of the
amounts required to settle the obligation at the
end of the reporting period.
N. BORROWINGS
Borrowings are initially recognised at fair value,
net of transaction costs incurred. Borrowings
are subsequently measured at amortised cost.
Any difference between the proceeds (net of
transaction costs) and the redemption amount
is recognised in the profit or loss over the period
of the borrowings using the effective interest
method. Fees paid on the establishment of
loan facilities, which are not incremental costs
relating the actual draw-down of the facility, are
recognised as prepayments and amortised on a
straight -line basis over the term of the facility.
Borrowings are classified as current liabilities
unless the Group has an unconditional right to
defer settlement of the liability for at least 12
months after the reporting date.
O. EQUITY AND RESERVES
Share capital represents the fair value of shares
that have been issued. Any transaction costs
associated with the issuing of shares are deducted
from share capital, net of any related income
tax benefits. The share-based payment reserve
records the value of share-based payments.
P. REVENUE RECOGNITION
Revenue from contracts with customers
The Group provides drilling services and hires
drill rigs and related equipment to the exploration
and mining industry pursuant to service contracts
with a variety of clients in the sector.
The revenue associated with drilling contracts is
recognised in accordance with AASB 15 Revenue
From Contracts from Customers, that is in a
manner that depicts the transfer of promised
goods or services to customers in an amount
that reflects the consideration to which the
Group is expected to be entitled in exchange for
those goods or services. Revenue from customer
contracts is recognised upon satisfaction of a
performance obligation under those contracts
either over time in accordance with specified
units of production (for example meters drilled
or hours worked) or a point in time when risks
and rewards pass to the customer under those
contracts (for example the sale of certain items
including consumables).
Dry hire revenue is recognised as the customer
simultaneously receives and consumes the
benefits, the Group has an enforceable right to
payment and as such the performance obligation
is satisfied over time.
For test pumping services provided under
contract, revenue is recognised in accordance
with a specified unit of production based on
rates agreed to with the customer (for example
activity completed or hours worked).
For consultancy services provided under
contract, revenue is recognised in accordance
with a specified unit of production based on
rates agreed to with the customer (for example
project reports completed, or hours worked).
The Group has no material contracts where the
period between the transfer of the promised
goods or services to the customer and payment by
the customer exceeds one year. As a consequence,
the Group does not adjust any of the transaction
prices for the time value of money.
Contract Assets and Liabilities
AASB 15 uses the terms “contract asset” and
“contract liability” to describe what is commonly
known as “accrued revenue” and “deferred
revenue.” Accrued revenue arises where work has
been performed however is yet to be invoiced.
Deferred revenue arises where payment Is
received prior to work being performed and is
allocated to the performance obligations within
the contract and recognised on satisfaction of
the performance obligation.
Notes to the CoNsolidated FiNaNCial statemeNtsVysarn Limited (ABN 41 124 212 175) and controlled entities | ASX : VYS 37
Note 2: Summary of Significant Accounting Policies continued…
Contract Fulfilment Costs
Costs generally incurred prior to the
commencement of a contract may arise due to
mobilisation/site setup costs as these costs are
incurred to fulfil a contract. Where the costs are
expected to be recovered, they are capitalised
and expensed over the period of revenue
recognition. Where the costs, or a portion of
these costs, are reimbursed by the customer,
the amount received is recognised as deferred
revenue.
Contract fulfilment costs are capitalised as
an asset when all the following are met: (i)
the costs relate directly to the contract or
specifically identifiable proposed contract; (ii)
the costs generate or enhance resources of the
consolidated entity that will be used to satisfy
future performance obligations; and (iii) the
costs are expected to be recovered. Contract
fulfilment costs are amortised on a straight-line
basis over the term of the contract, or a period
of 12 months for long term contracts greater
than 12 months in duration.
Interest
Interest revenue is recognised as interest
accrues using the effective interest method.
This is a method of calculating the amortised
cost of a financial asset and allocating the
interest income over the relevant period using
the effective interest rate, which is the rate that
exactly discounts estimated future cash receipts
through the expected life of the financial asset
to the net carrying amount of the financial asset.
Government Grants
Government grants are recognised where there
is reasonable assurance that the grant will
be received and all attached conditions will
be complied with. When the grant relates to
an expense item, it is recognised as income
on a systematic basis over the periods that
the related costs, for which it is intended to
compensate, are expensed.
When the grant relates to an asset, it is
recognised as reducing the carrying amount of
the asset.
Other Revenue
Other revenue is recognised when it is received
or when the right to receive payment is
established.
Q. BORROWING COSTS
Borrowing costs are recognised in profit or loss
in the period in which they are incurred.
R. EMPLOYEE BENEFITS
Wages, Salaries and Annual Leave
Liabilities for wages and salaries and annual
leave are recognised and measured as the
amount unpaid at the reporting date at current
pay rates in respect of employees’ services up to
that date.
Superannuation
Contributions to employee superannuation plans
are charged as an expense as the contributions
are paid or become payable.
Short-term Employee Benefits
Liabilities for wages and salaries, including non-
monetary benefits, annual leave and long service
leave expected to be settled wholly within 12
months of the reporting date are measured at
the amounts expected to be paid when the
liabilities are settled.
Other long-term Employee Benefits
The liability for annual leave and long service
leave not expected to be settled within 12
months of the reporting date are measured at
the present value of expected future payments
to be made in respect of services provided by
employees up to the reporting date using the
projected unit credit method. Consideration
is given to expected future wage and salary
levels, experience of employee departures and
periods of service. Expected future payments are
discounted using market yields at the reporting
date on corporate bonds with terms to maturity
and currency that match, as closely as possible,
the estimated future cash outflows.
Equity-settled Compensation
Share-based payments to Directors are
measured at the fair value of the instruments
issued and amortised over the vesting periods
see v. The fair value of performance rights is
determined using the satisfaction of certain
non-market performance criteria (performance
milestones). The number of share options and
probability of performance rights expected to
vest is reviewed and adjusted at the end of
each reporting period such that the amount
recognised for services received as consideration
for the equity instruments granted is based on
the number of equity instruments that eventually
vest. The fair value is determined using a Black
Scholes or Hoadley pricing model.
Notes to the CoNsolidated FiNaNCial statemeNtsAnnual Report for the financial year ending 30 June 2022 The Group initially measures the cost of equity-
settled transactions with employees by reference
to the fair value of the equity instruments at
the date at which they are granted. Estimating
fair value for share-based payment transactions
requires determination of the most appropriate
valuation model, which is dependent on the
terms and conditions of the grant.
This estimate also requires determination of
the most appropriate inputs to the valuation
model including the expected life of the
share option, volatility and dividend yield and
making assumptions about them, as well as an
assessment of the probability of achieving non-
market based vesting conditions.
The probability of achieving non-market based
vesting conditions of performance rights is
assessed at each reporting period.
The Company has applied judgement in
assessing the likelihood of achieving the
performance milestones in relation to the
performance rights issued in the period.
Any modification on the terms of share based
payments, the Group shall recognise, as a
minimum, the services received measured at the
grant date fair value of the equity instruments
granted, unless those equity instruments do
not vest because of failure to satisfy a vesting
condition (other than a market condition)
that was specified at grant date. This applies
irrespective of any modifications to the terms
and conditions on which the equity instruments
were granted, or a cancellation or settlement of
that grant of equity instruments.
U. FOREIGN CURRENCY
TRANSLATION
Foreign currency transactions
Foreign currency transactions are translated
into Australian dollars using the exchange rates
prevailing at the dates of the transactions.
Foreign exchange gains and losses resulting
from the settlement of such transactions and
from the translation at financial year-end
exchange rates of monetary assets and liabilities
denominated in foreign currencies are recognised
in profit or loss.
38
Note 2: Summary of Significant Accounting Policies continued…
S. FAIR VALUE MEASUREMENT
When an asset or liability, financial or non-
financial, is measured at fair value for
recognition or disclosure purposes, the fair value
is based on the price that would be received to
sell an asset or paid to transfer a liability in an
orderly transaction between market participants
at the measurement date; and assumes that the
transaction will take place either: in the principal
market; or in the absence of a principal market,
in the most advantageous market.
Fair value is measured using the assumptions
that market participants would use when pricing
the asset or liability, assuming they act in their
economic best interests. For non-financial
assets, the fair value measurement is based on
its highest and best use. Valuation techniques
that are appropriate in the circumstances
and for which sufficient data are available to
measure fair value, are used, maximising the use
of relevant observable inputs and minimising the
use of unobservable inputs.
Assets and liabilities measured at fair value are
classified into three levels, using a fair value
hierarchy that reflects the significance of the
inputs used in making the measurements.
Classifications are reviewed at each reporting
date and transfers between levels are
determined based on a reassessment of the
lowest level of input that is significant to the fair
value measurement.
For recurring and non-recurring fair value
measurements, external valuers may be used
when internal expertise is either not available or
when the valuation is deemed to be significant.
External valuers are selected based on market
knowledge and reputation. Where there is a
significant change in fair value of an asset or
liability from one period to another, an analysis is
undertaken, which includes a verification of the
major inputs applied in the latest valuation and
a comparison, where applicable, with external
sources of data.
T. SHARE BASED PAYMENTS
Share-based payments are measured at the
fair value of goods or services received or the
fair value of the equity instruments issued, if
it is determined the fair value of the goods or
services cannot be reliably measured, and are
recorded at the date the goods or services are
received. Share-based payment transactions
are recognised in equity if the goods or services
were received in an equity-settled share-based
payment transaction, or as a liability if the goods
and services were acquired in a cash settled
share-based payment transaction. The fair value
of options is determined using a Black-Scholes
or Hoadley pricing model. The number of share
options and performance rights expected to
vest is reviewed and adjusted at the end of each
reporting period such that the amount recognised
for services received as consideration for the
equity instruments granted is based on the
number of equity instruments that eventually vest.
Notes to the CoNsolidated FiNaNCial statemeNtsVysarn Limited (ABN 41 124 212 175) and controlled entities | ASX : VYS 39
Note 2: Summary of Significant Accounting Policies continued…
V. INCOME TAX
The income tax expense or benefit for the
period is the tax payable on that period’s taxable
income based on the applicable income tax rate
for each jurisdiction, adjusted by the changes in
deferred tax assets and liabilities attributable to
temporary differences, unused tax losses and
the adjustment recognised for prior periods,
where applicable.
Deferred tax assets and liabilities are recognised
for temporary differences at the tax rates
expected to be applied when the assets are
recovered or liabilities are settled, based on
those tax rates that are enacted or substantively
enacted, except for:
V When the deferred income tax asset or liability
arises from the initial recognition of goodwill
or an asset or liability in a transaction that is
not a business combination and that, at the
time of the transaction, affects neither the
accounting nor taxable profits; or
V When the taxable temporary difference is
associated with interests in subsidiaries,
associates or joint ventures, and the timing
of the reversal can be controlled and it is
probable that the temporary difference will
not reverse in the foreseeable future.
Deferred tax assets are recognised for deductible
temporary differences and unused tax losses
only if it is probable that future taxable amounts
will be available to utilise those temporary
differences and losses.
The carrying amount of recognised and
unrecognised deferred tax assets are reviewed
at each reporting date. Deferred tax assets
recognised are reduced to the extent that it is
no longer probable that future taxable profits
will be available for the carrying amount to be
recovered. Previously unrecognised deferred
tax assets are recognised to the extent that it
is probable that there are future taxable profits
available to recover the asset.
Deferred tax assets and liabilities are offset
only where there is a legally enforceable right
to offset current tax assets against current
tax liabilities and deferred tax assets against
deferred tax liabilities; and they relate to the
same taxable authority on either the same
taxable entity or different taxable entities which
intend to settle simultaneously.
Tax Consolidation
The Group and its wholly owned Australian
resident entity formed a tax-consolidated group
effective 28 August 2019. As a consequence,
all members of the tax-consolidated group are
taxed as a single entity from that date. The
head entity within the tax-consolidated group is
Vysarn Limited.
Current tax expense/income, deferred tax
liabilities and deferred tax assets arising from
temporary differences of the members of the tax-
consolidated group are recognised in the separate
financial statements of the members of the tax-
consolidated group using the “separate taxpayer
within group” approach by reference to the
carrying amounts of assets and liabilities in the
separate financial statements of each entity and
the tax values applying under tax consolidation.
Any current tax liabilities (or assets) and deferred
tax assets arising from unused tax losses of the
subsidiaries are assumed by the head entity in
the tax-consolidated group and are recognised
by the Group as amounts payable (receivable) to/
(from) other entities in the tax-consolidated group
in conjunction with any tax funding arrangement
amounts (refer below). Any difference between
these amounts is recognised by the Group as an
equity contribution or distribution.
The Group recognises deferred tax assets arising
from unused tax losses of the tax-consolidated
group to the extent that it is probable that
future taxable profits of the tax-consolidated
group will be available against which the asset
can be utilised.
Any subsequent period adjustments to deferred
tax assets arising from unused tax losses as a
result of revised assessments of the probability of
recoverability is recognised by the head entity only.
W. FINANCIAL INSTRUMENTS
Initial recognition and measurement
Financial assets and financial liabilities are
recognised when the Company becomes a party to
the contractual provisions to the instrument. For
financial assets, this is the date that the Company
commits itself to either the purchase or sale of
the assets (i.e. trade date accounting is adopted).
Classification and subsequent measurement
Financial Liabilities
Financial instruments are subsequently
measured at amortised cost using the effective
interest methods.
The effective interest method is a method
of calculating the amortised cost of a debt
instrument and of allocating interest expense
in profit or loss over the relevant period. The
effective interest rate is the internal rate of
return of the financial asset or liability. That is, it
is the rate that exactly discounts the estimated
future cash flows through the expected life of
the instrument to the net carrying amount at
initial recognition.
Financial Assets
Financial assets are subsequently measured at
fair value through profit or loss.
The initial designation of the financial
instruments to measure at fair value through
profit or loss is a one-time option on initial
classification and is irrevocable until the
financial asset is derecognised.
Notes to the CoNsolidated FiNaNCial statemeNtsAnnual Report for the financial year ending 30 June 2022 40
Note 2: Summary of Significant Accounting Policies continued…
Derecognition
Derecognition refers to the removal of a
previously recognised financial asset or financial
liability from the statement of financial position.
Derecognition of Financial Liabilities
A liability is derecognised when it is extinguished
(ie, when the obligation in the contract is
discharged, cancelled or expires). An exchange of
an existing financial liability for a new one with
substantially modified terms, or a substantial
modification to the terms of a financial liability
is treated as an extinguishment of the existing
liability and recognition of a new financial liability.
The difference between the carrying amount
of the financial liability derecognised and the
consideration paid and payable, including
any non-cash assets transferred or liabilities
assumed, is recognised in profit or loss.
Derecognition of Financial Assets
A financial asset is derecognised when the
holder’s contractual rights to its cash flows
expire, or the asset is transferred in such a way
that all the risks and rewards of ownership are
substantially transferred.
All the following criteria need to be satisfied for
derecognition of financial assets:
V the right to receive cash flows from the asset
has expired or been transferred;
V all risk and rewards of ownership of the asset
have been substantially transferred; and
V the Company no longer controls the asset (ie,
the Company has no practical ability to make
a unilateral decision to sell the asset to a
third party).
X. IMPAIRMENT OF
NON-FINANCIAL ASSETS
Goodwill and other intangible assets that
have an indefinite useful life are not subject
to amortisation and are tested annually for
impairment or more frequently if events or
changes in circumstances indicate that they
might be impaired. Other non-financial assets
are reviewed for impairment whenever events
or changes in circumstances indicate that the
carrying amount may not be recoverable. An
impairment loss is recognised for the amount by
which the asset’s carrying amount exceeds its
recoverable amount.
Recoverable amount is the higher of an asset’s
fair value less costs of disposal and value-in-
use. The value-in-use is the present value of the
estimated future cash flows relating to the asset
using a pre-tax discount rate specific to the
asset or cash-generating unit to which the asset
belongs. Assets that do not have independent
cash flows are grouped together to form a cash-
generating unit.
Y. GOODS AND SERVICES TAX (‘GST’)
AND OTHER SIMILAR TAXES
Revenues, expenses and assets are recognised
net of the amount of associated GST, unless the
GST incurred is not recoverable from the tax
authority. In this case it is recognised as part of
the cost of the acquisition of the asset or as part
of the expense.
Receivables and payables are stated inclusive
of the amount of GST receivable or payable.
The net amount of GST recoverable from, or
payable to, the tax authority is included in other
receivables or other payables in the statement
of financial position.
Cash flows are presented on a gross basis.
The GST components of cash flows arising
from investing or financing activities which are
recoverable from, or payable to the tax authority,
are presented as operating cash flows.
Z. ROUNDING OF AMOUNTS
In accordance with ASIC Corporations (Rounding
in Financial/Directors’ Reports) Instrument
2016/191, the amounts in the directors’ report
and in the financial report have been rounded to
the nearest one thousand dollars, or in certain
cases, to the nearest dollar (where indicated).
AA. NEW ACCOUNTING STANDARDS
NOT YET ADOPTED
Australian Accounting Standards and
interpretations that have recently been issued
or amended but are not yet mandatory, have
not been early adopted by the Company for the
annual reporting period ended 30 June 2022. The
Company’s assessment of the impact of these
new or amended Accounting Standards and
interpretations, most relevant to the Company,
are set out below.
AASB 2021-1: Amendments to Australian
Accounting Standards – Classification of
Liabilities as Current or Non-current.
AASB 2021-1 amends AASB 101 Presentation of
Financial Statements to clarify requirements for
the presentation of liabilities in the statement of
financial position as current or non-current. AASB
2021-1 mandatorily applies to annual reporting
periods commencing on or after 1 January 2023
and will be first applied by the Group in the
financial year commencing 1 July 2023.
AASB 2021-3 Amendments to Australian
Accounting Standards – Annual
Improvements 2018 – 2021 and Other
Amendments.
AASB 2021-3 amends AASB 1 First-time Adoption
of Australian Accounting Standards, AASB
3 Business Combinations, AASB 9 Financial
Instruments, AASB 116 Property, Plant and
Equipment, AASB 137 Provisions, Contingent
Liabilities and Contingent Assets and AASB 141
Agriculture as a consequence of the recent
issuance by IASB of the following IFRS: Annual
Improvements to IFRS Standards 2018-2121,
Reference to the Conceptual Framework,
Notes to the CoNsolidated FiNaNCial statemeNtsVysarn Limited (ABN 41 124 212 175) and controlled entities | ASX : VYS 41
Note 2: Summary of Significant Accounting Policies continued…
Property, Plant and Equipment: Proceeds before
Intended Use and Onerous Contracts – Cost of
Fulfilling a Contract. AASB 2021-3 mandatorily
applies to annual reporting periods commencing
on or after 1 January 2022 and will be first
applied by the Group in the financial year
commencing 1 July 2022.
AASB 2020-1: Amendments to Australian
Accounting Standards – Classification
of Liabilities as Current or Non-current,
AASB 2020-6 Amendments to Australian
Accounting Standards – Classification of
Liabilities as Current or Non-current –
Deferral of Effective Date.
AASB 2020-1 amends AASB 101 Presentation of
Financial Statements to clarify requirements for
the presentation of liabilities in the statement
of financial position as current or non-current. It
requires a liability to be classified as current when
entities do not have a substantive right to defer
settlement at the end of the reporting period.
AASB 2020-6 defers the mandatory effective
date of amendments that were originally made
in AASB 2020-1 so that the amendments are
required to be applied for annual reporting
periods beginning on or after 1 January 2023
instead of 1 January 2022. They will first be
applied by the Group in the financial year
commencing 1 July 2023.
AASB 2021-5 Amendments to Australian
Accounting Standards – Deferred Tax related
to Assets and Liabilities arising from a Single
Transaction.
AASB 2021-5 amends AASB 112 Income
Taxes to clarify the accounting for deferred
tax transactions that, at the time of the
transaction, give rise to equal taxable and
deductible temporary differences. In specified
circumstances, entities are exempt from
recognising deferred tax when they recognise
assets or liabilities for the first time. The
amendments clarify that the exemption does
not apply to transactions for which entities
recognise both an asset and a liability and
that give rise to equal taxable and deductible
temporary differences. This amending standard
mandatorily apply to annual reporting periods
commencing on or after 1 January 2023 and will
be first applied by the Group in the financial year
commencing 1 July 2023.
AASB 2020-3 Amendments to Australian
Accounting Standards – Annual
Improvements 2018 – 2020 and Other
Amendments.
AASB 2020-3 amends AASB 1 First-time Adoption
of Australian Accounting Standards, AASB
3 Business Combinations, AASB 9 Financial
Instruments, AASB 116 Property, Plant and
Equipment, AASB 137 Provisions, Contingent
Liabilities and Contingent Assets and AASB 141
Agriculture. AASB 2020-3 mandatorily applies to
annual reporting periods commencing on or after 1
January 2022 and will be first applied by the Group
in the financial year commencing 1 July 2022.
AASB 2021-7a Amendments to Australian
Accounting Standards – Effective Date of
Amendments to AASB 10 and AASB 128 and
Editorial Corrections [general editorials].
AASB 2021-7a amends various standards,
interpretations and other pronouncements
for editorial corrections made by accounting
standards boards since December 2017.
AASB 2021-7a mandatorily applies to annual
reporting periods commencing on or after 1
January 2022 and will be first applied by the Group
in the financial year commencing 1 July 2022.
AASB 2021-2: Amendments to Australian
Accounting Standards – Disclosure of
Accounting Policies and Definition of
Accounting Estimates.
AASB 2021-2 amends AASB 7 Financial
Instruments: Disclosures, AASB 101 Presentation
of Financial Statements, AASB 108 Accounting
Policies, Changes in Accounting Estimates and
Errors, AASB 134 Interim Financial Reporting and
AASB Practice Statement 2 Making Materiality
Judgements. AASB 2021-2 mandatorily applies to
annual reporting periods commencing on or after 1
January 2023 and will be first applied by the Group
in the financial year commencing 1 July 2023.
The likely impact of the above accounting
standards not yet adopted on the financial
statements of the Group is yet to be determined.
AB. CRITICAL ACCOUNTING
JUDGEMENTS, ESTIMATES AND
ASSUMPTIONS
The preparation of the financial statements
requires management to make judgements,
estimates and assumptions that affect the
reported amounts in the financial statements.
Management continually evaluates its
judgements and estimates in relation to assets,
liabilities, contingent liabilities, revenue and
expenses. Management bases its judgements,
estimates and assumptions on historical
experience and on other various factors,
including expectations of future events,
management believes to be reasonable under
the circumstances. The resulting accounting
judgements and estimates will seldom equal the
related actual results. The judgements estimates
and assumptions that have a significant risk of
causing a material adjustment to the carrying
amounts of assets and liabilities (refer to the
respective Notes) within the next financial year
are discussed below.
Coronavirus (COVID-19) Pandemic
Judgement has been exercised in considering
the impacts that the Coronavirus (COVID-19)
pandemic has had, or may have, on the
consolidated entity based on known information.
This consideration extends to the nature of
the products and services offered, customers,
supply chain, staffing and geographic regions in
which the consolidated entity operates. Other
than as addressed in specific Notes, there does
not currently appear to be either any significant
Notes to the CoNsolidated FiNaNCial statemeNtsAnnual Report for the financial year ending 30 June 2022 42
Note 2: Summary of Significant Accounting Policies continued…
impact upon the financial statements or any
significant uncertainties with respect to events
or conditions which may impact the consolidated
entity unfavourably as at the reporting date or
subsequently as a result of the Coronavirus
(COVID-19) pandemic.
Allowance for Expected Credit Losses
The allowance for expected credit losses
assessment requires a degree of estimation and
judgement. It is based on the lifetime expected
credit loss, grouped based on days overdue,
and makes assumptions to allocate an overall
expected credit loss rate for each group. These
assumptions include recent sales experience,
historical collection rates, the impact of
the Coronavirus (COVID-19) pandemic and
forward-looking information that is available.
The allowance for expected credit losses, as
disclosed below, is calculated based on the
information available at the time of preparation
as detailed in “Note 23” on page 55. The
actual credit losses in future years may be higher
or lower.
Income Tax
The Company is subject to income taxes in the
jurisdictions in which it operates. Significant
judgement is required in determining the
provision for income tax. There are many
transactions and calculations undertaken during
the ordinary course of business for which the
ultimate tax determination is uncertain. The
Company recognises liabilities for anticipated
tax audit issues based on the Company’s current
understanding of the tax law. Where the final tax
outcome of these matters is different from the
carrying amounts, such differences will impact
the current and deferred tax provisions in the
period in which such determination is made as
detailed in “Note 7” on page 45.
Share-Based Payments
The Company measures the cost of equity-
settled transactions with suppliers and
employees by reference to the fair value of the
goods or services received provided this can be
estimated reliably. If a reliable estimate cannot
be made the value of the goods or services is
determined indirectly by reference to the fair
value of the equity instrument granted. The
fair value of the equity instruments granted
is determined using the Black-Scholes option
pricing model taking into account the terms and
conditions upon which the instruments were
granted as detailed in “Note 22” on page 52.
The accounting estimates and assumptions
relating to equity-settled share-based payments
would have no impact on the carrying amounts
of assets and liabilities within the next annual
reporting period but may impact profit or loss
and equity.
Revenue from Contracts with Customers
The Company has applied the following
judgements that significantly affect the
determination of the amount and timing of
revenue from contracts with customers.
Revenue from customer contracts is recognised
upon satisfaction of a performance obligation
under those contracts either over time. For
drilling services provided under contract, revenue
is recognised in accordance with a specified
unit of production based on rates agreed to
with the customer (for example meters drilled
or hours worked). For test pumping services
provided under contract, revenue is recognised
in accordance with a specified unit of production
based on rates agreed to with the customer (for
example activity completed or hours worked). For
consultancy services provided under contract,
revenue is recognised in accordance with a
specified unit of production based on rates
agreed to with the customer (for example project
report completed or hours worked).
Dry Hire revenue is also recognised over a period
of time based on set day rates for supply, as the
customer simultaneously receives and consumes
the benefits provided by the Company.
The sale of goods (consumables) is recognised at a
point in time when control of the goods passes to
the customer under those contracts (for example
the sale of certain items including consumables).
Mobilisation/demobilisation revenue are distinct,
separately identifiable contractual performance
obligations and are recognised as revenue upon
completion of the mobilisation/demobilisation
event, once this performance obligation has
been satisfied.
Estimation of Useful Lives of Assets
The Group determines the estimated useful lives
and related depreciation for its property, plant
and equipment. The useful lives could change
significantly as a result of technical innovations
or other events. The depreciation charge will
increase where the useful lives are less than
previously estimated, or technically obsolete or
non-strategic assets have been abandoned or
sold will be written off or written down.
Business Combination vs Asset Acquisition
Where asset acquisitions do not constitute a
business, or when the optional concentration
test allowed under AASB 3 Business
Combinations has been applied, the carrying
amount of assets acquired and liabilities
assumed is based on their relative fair value.
Entities may choose to apply or not apply the
optional concentration test for each acquisition
made. The optional concentration test is deemed
to be met when substantially all of the fair
value of gross assets acquired are concentrated
in a single identifiable asset or group similar
identifiable assets.
Notes to the CoNsolidated FiNaNCial statemeNtsVysarn Limited (ABN 41 124 212 175) and controlled entities | ASX : VYS 43
Note 2: Summary of Significant Accounting Policies continued…
On 1 October 2021, the Group completed the
acquisition of Pentium Test Pumping Pty Ltd
(“PTP”) (formerly Australian Groundwater Solutions
Pty Ltd trading as Yield Test Pumping). Director
judgement was required in order to determine
whether the requirements of the optional
concentration test had been met. The Directors
procured an independent valuation report on the
acquired assets of PTP in order to determine the
fair value of plant and equipment assets acquired.
Having considered the contents of this report and
the suite of plant and equipment assets acquired,
it was determined that the optional concentration
test has been met and subsequently applied for
this transaction. Therefore, the transaction was
accounted for as an asset acquisition rather than
a business combination.
Contingent consideration, resulting from the
acquisition of PTP, is valued at fair value at the
the acquisition date as part of the consideration
paid for the acquisition. When contingent
consideration meets the definition of a financial
liability, it is subsequently measured at fair
value each reporting date. The determination
of the fair value is based on the probability
weighted average approach. The probability
weighted value of the contingent consideration
was then discounted to determine the net
present value of the contingent consideration.
$750,000 was recognised at the date of the
acquisition of PTP and remains unchanged as at
30 June 2022.
NOTE 3: OPERATING SEGMENTS
Identification of Reportable Segments
The Group as at 30 June 2022 had three
operating segments, as outlined below:
V Pentium Hydro;
V PTP; and
V Pentium Water.
The Group has identified its operating segments
based on the internal reports that are reviewed
and used by the Board of Directors (the chief
operating decision makers) in assessing
performance and in determining the allocation
of resources.
PTP and Pentium Water are new segments
for the year ended 30 June 2022, having been
respectively acquired and established in late
2021. Both PTP and Pentium Water have not
contributed revenue, results or assets in a
material manner to warrant their classification
as a reportable segment at 30 June 2022.
The Company has one reportable segment,
Pentium Hydro which is one of the Group’s
operational business unit. Revenue received
from this business unit is received solely from
external Australian customers. The major results
of the Group’s operating segments are consistent
with the presentation of these consolidated
financial statements.
The Group derived approximately 71% (2021: 94%)
of its revenue from contract with customers
from 3 Tier-1 Mining Companies with operations
based within the state of Western Australia.
NOTE 4: REVENUE FROM CONTRACTS WITH CUSTOMERS
REVENUE RECOGNISED OVER A PERIOD OF TIME FROM CONTRACTS WITH AUSTRALIAN
CUSTOMERS:
30-June-22
30-June-21
$
$
V Drilling services
V Dry-hire revenue
V Test Pumping Services
V Consultancy Services
Sub-total
34,744,037
18,905,624
1,252,086
1,549,210
1,551,623
666,383
-
-
38,214,129
20,454,834
REVENUE RECOGNISED AT A POINT IN TIME FROM CONTRACTS WITH AUSTRALIAN
CUSTOMERS
V Sale of goods (consumables)
V Mobilisation / demobilisation
Sub-total
Total revenue
7,353,187
4,544,529
730,090
825,143
8,083,277
5,369,672
46,297,406
25,824,506
Notes to the CoNsolidated FiNaNCial statemeNtsAnnual Report for the financial year ending 30 June 2022 44
NOTE 5: OTHER INCOME
Finance income
Fuel tax rebate
Other revenue
Cash boost stimulus (COVID-19)
Net gain on disposal of assets
Total
NOTE 6: EXPENSES
BREAKDOWN OF EXPENSES BY NATURE:
ADMINISTRATION AND CORPORATE EXPENSE
Office expenses
Corporate costs and compliance
Other expenses
Total
EMPLOYEE BENEFITS EXPENSE
Wages and salaries
Superannuation
Employment related taxes
Share-based payment expense
Other employment related expenses
Total
DEPRECIATION AND AMORTISATION EXPENSE
Plant and equipment depreciation
Land and buildings lease amortisation
Total
FINANCE COSTS
Interest expense
AASB 16Leases – interest expense
Bank fees
Total
30-June-22
30-June-21
$
104
8,818
155,307
-
108,852
273,081
$
9,001
33,650
77,077
150,000
272,994
542,722
30-June-22
30-June-21
$
$
583,303
1,278,002
61,696
469,762
896,195
17,867
1,923,001
1,383,824
2,889,681
2,333,829
225,003
939,716
103,374
36,569
-
536,003
88,293
82,641
4,194,343
3,040,766
4,253,346
3,227,648
249,412
209,275
4,502,758
3,436,923
444,166
21,479
11,813
477,458
409,134
18,398
8,287
435,819
Notes to the CoNsolidated FiNaNCial statemeNtsVysarn Limited (ABN 41 124 212 175) and controlled entities | ASX : VYS 45
NOTE 7: INCOME TAX EXPENSE
A. COMPONENTS OF INCOME TAX EXPENSE
Deferred tax
Under / (over) provision in prior years
Revaluation of deferred tax position due to change in tax rate
Income tax expense / (benefit)
30-June-22
30-June-21
$
$
1,297,728
14,914
(74,191)
1,238,451
194,756
684,997
(87,152)
792,601
B. PRIMA FACIE TAX PAYABLE
The prima facie tax payable on profit before income tax is reconciled to the income tax expense as follows:
Prima facie income tax payable on profit before income tax at 26%
1,021,806
295,732
ADD/(LESS) TAX EFFECT OF:
Entertainment
Inventory
Plant and equipment
Share based payments
Non-assessable cash boost payment
Under provision in prior period
Revaluation of deferred tax position due to change in tax rate
Income tax expense / (benefit) attributable to profit
C. CURRENT TAX LIABILITY
Current tax relates to the following:
CURRENT TAX LIABILITIES / (ASSETS)
Opening balance
Income tax
Instalments paid
D. DEFERRED TAX
Deferred tax relates to the following:
DEFERRED TAX ASSETS BALANCE COMPRISES:
Plant and equipment under lease
Accruals
Provisions - annual and long service leave
Borrowing costs
Capital raising costs
Business related costs
Tax losses
DEFERRED TAX LIABILITIES BALANCE COMPRISES:
Prepayments
Accrued income
Plant and equipment
Plant and equipment under lease
Spare parts
Net deferred tax
1,406
-
248,672
25,844
-
14,914
(74,191)
1,238,451
9
(84,940)
-
22,956
(39,000)
684,996
(87,152)
792,601
-
-
-
-
14,425
137,831
75,605
1,221
55,381
2,685
-
-
-
-
148,717
142,391
37,860
2,350
82,482
4,686
2,818,349
3,105,497
2,399,234
2,817,720
(124,012)
(26,930)
(1,401,669)
(395,599)
(4,509,747)
(3,908,261)
-
(13,020)
(134,174)
(57,257)
(6,048,448)
(4,522,221)
(2,942,951)
(1,704,501)
Notes to the CoNsolidated FiNaNCial statemeNtsAnnual Report for the financial year ending 30 June 2022 46
Note 7: Income Tax Expense continued…
30-June-22
30-June-21
$
$
E. DEFERRED INCOME TAX RELATED TO ITEMS CHARGED
OR CREDITED DIRECTLY TO EQUITY
Decrease / (increase) in deferred tax assets
(Decrease) / increase in deferred tax liabilities
2,594
-
2,594
898
-
898
F. DEFERRED INCOME TAX (REVENUE)/EXPENSE INCLUDED IN INCOME TAX
expense comprises:
Decrease / (increase) in deferred tax assets
(Decrease) / increase in deferred tax liabilities
Under provision in prior period
241,602
1,058,719
-
1,300,321
(428,737)
623,494
684,997
879,754
At 30 June 2022, the Company has carried forward revenue tax losses of $11,273,398 (2021:
$9,227,823). These losses remain available to offset against future taxable income amounts subject to
passing the ownership and business continuity tests as required by the Australian Taxation Office.
NOTE 8: REMUNERATION OF AUDITORS
During the financial year the following fees were paid or payable for services provided by the auditor
of the Company:
Remuneration of the auditor of the Company (Pitcher Partners BA&A Pty Ltd and its related entities) for:
Auditing or reviewing the financial reports
Non-audit services – tax compliance
Total
51,904
19,730
71,634
45,533
20,750
66,283
30-June-22
30-June-21
$
$
NOTE 9: EARNINGS PER SHARE
EARNINGS PER SHARE FOR (LOSS)/PROFIT
Profit / (Loss) after income tax attributes to the owners of
Vysarn Limited
Weighted average number of ordinary shares used in calculating
basic earnings per share
Weighted average number of ordinary shares used in calculating
diluted earnings per share
Basic earnings / (loss) per share
Diluted earnings / (loss) per share
30-June-22
30-June-21
$
$
2,856,729
344,819
Number
Number
389,969,563
386,955,864
419,969,563
416,955,864
Cents
0.0073
0.0068
Cents
0.00089
0.00083
Notes to the CoNsolidated FiNaNCial statemeNtsVysarn Limited (ABN 41 124 212 175) and controlled entities | ASX : VYS 47
Note 9: Earnings Per Share continued…
A. ACCOUNTING POLICY FOR EARNINGS PER SHARE
Basic earnings per share
Basic earnings or loss per share is calculated by dividing the profit or loss attributable to the owners
of the Company, excluding any costs of servicing equity other than ordinary shares, by the weighted
average number of ordinary shares outstanding during the financial year, adjusted for bonus elements
in ordinary shares issued during the financial year.
Diluted earnings per share
Diluted earnings per share adjusts the figures used in the determination of basic earnings per share
to take into account the after-income tax effect of interest and other financing costs associated with
dilutive potential ordinary shares and the weighted average number of shares assumed to have been
issued for no consideration in relation to dilutive potential ordinary shares.
NOTE 10: CURRENT ASSETS - CASH AND CASH EQUIVALENTS
Cash at bank
Total
30-June-22
30-June-21
$
5,706,447
5,706,447
$
6,555,486
6,555,486
Accounting Policy for Cash and Cash Equivalents
Cash and cash equivalents are short term, highly liquid investments that are readily convertible to
known amounts of cash and which are subject to an insignificant risk of changes in value. Cash and
cash equivalents includes cash on hand and deposits held at call with financial institutions with a
short maturity period of 90 days or less.
A. CASH FLOW INFORMATION
Profit / (loss) after income tax expense for the year
Non-cash flows in result from continuing activities:
Share based payments (benefit) / expense
Depreciation and amortisation
(Profit)/ loss on disposal of PPE
Tax expense / (benefit)
CHANGES IN ASSETS AND LIABILITIES:
(Increase) / decrease in inventories
(Increase) / decrease in trade and other receivables
Increase / (decrease) in employee entitlements
Increase / (decrease) in trade and other payables
Increase / (decrease) in other assets and liabilities
Net cash provided by operating activities
30-June-22
30-June-21
$
$
2,856,729
344,819
103,374
88,293
4,502,758
3,436,923
(108,852)
(272,994)
1,238,451
792,601
(1,080,252)
129,440
(1,003,277)
(2,277,340)
(514,673)
1,121,515
2,383,690
9,499,462
247,761
229,510
(1,011,928)
1,707,085
Non-cash Investing and Financing Activities
During the year, the Group recognised $21,479 (2021: $18,397) in interest expenses as a result of it’s
operating leases for premises utilised in its operations.
The Group also issued $375,000 of fully paid ordinary shares and assumed a number of assets and
liabilities as a result of the acquisition of PTP. Refer to “Note 25” on page 61 for further information.
Notes to the CoNsolidated FiNaNCial statemeNtsAnnual Report for the financial year ending 30 June 2022
48
NOTE 11: CURRENT ASSETS – TRADE AND
OTHER RECEIVABLES
Trade receivables
Total
30-June-22
30-June-21
$
$
5,986,504
4,983,227
5,986,504
45,983,227
For further information regarding trade and other receivables see “Note 23” on page 55.
Recoverability is based on the underlying terms of the contract.
Current trade receivables are non-interest bearing and generally on 30-day end of month terms.
Impairment and Risk Exposure
No impairment provision was recorded at 30 June 2022 based on management’s assessment.
Information about the impairment of trade receivables and the group’s exposure to credit risk, foreign
currency risk and interest rate risk can be found in “Note 23” on page 55.
NOTE 12: INVENTORIES
Consumables and spare parts – at cost
Total
Inventory is stated at the lower of cost or net realisable value.
NOTE 13: OTHER CURRENT ASSETS
Contract fulfilment costs
Total
30-June-22
30-June-21
$
3,599,105
3,599,105
$
2,518,854
2,518,854
30-June-22
30-June-21
$
1,208,367
1,208,367
$
968,257
968,257
Contract fulfilment costs are costs related to customer contracts that are used in satisfying
performance obligations to customers. These costs are expected to be recovered over the term of
contract and are amortised on a straight-line basis over the term of the contract or a period of 12
months for long term contracts greater than 12 months in duration. Refer to “Note 2P” on page 36.
for further information.
NOTE 14: PREPAYMENTS AND DEPOSITS
Deposits
Prepayments
Total
30-June-22
30-June-21
$
53,438
436,618
490,056
$
63,388
180,757
244,145
Notes to the CoNsolidated FiNaNCial statemeNtsVysarn Limited (ABN 41 124 212 175) and controlled entities | ASX : VYS NOTE 15: PLANT AND EQUIPMENT
49
PLANT AND EQUIPMENT
Cost
Accumulated depreciation
Net carrying amount
TRUCKS, TRAILERS AND LIGHT VEHICLES
Cost
Accumulated depreciation
Net carrying amount
OFFICE EQUIPMENT
Cost
Accumulated depreciation
Net carrying amount
TOTAL PLANT AND EQUIPMENT
Cost
Accumulated depreciation
Net carrying amount
30-June-22
30-June-21
$
$
28,375,076
25,149,836
(7,009,904)
(4,117,014)
21,365,172
21,032,822
13,408,543
10,342,420
(3,227,893)
(1,940,248)
10,180,651
8,402,172
281,935
(126,350)
155,585
167,201
(53,539)
113,662
42,065,554
35,659,457
(10,364,147)
(6,110,801)
31,701,407
29,548,656
Plant and
equipment
Trucks,
trailers
and light
vehicles
Office
Equipment
Assets Held
Not Ready
for Use
$
$
$
$
Total
$
CONSOLIDATED GROUP
Carrying amount at 30 June 2020
15,183,016
7,352,625
66,216
2,105,925
24,707,782
Additions
Disposals 1
5,924,335
2,003,827
90,432
(60,508)
(17,637)
Transfers from assets not held
ready for use
2,105,925
Transfer of Assets Held for Sale 2
127,264
-
-
-
-
-
Depreciation expense
(2,247,210)
(936,643)
(42,986)
Balance as at 30 June 2021
21,032,822
8,402,172
113,662
Carrying amount at 30 June 2021
21,032,822
8,402,172
Additions
2,867,169
472,878
113,662
113,889
Acquired as part of asset
acquisition (Note 25)
675,382
2,858,888
6,239
Disposals
(317,311)
(265,642)
Depreciation expense
(2,892,890)
(1,287,645)
(5,395)
(72,811)
Balance at 30 June 2022
21,365,172
10,180,651
155,585
-
-
8,018,594
(78,145)
(2,105,925)
-
-
-
-
127,264
(3,226,839)
29,548,656
- 29,548,656
-
-
-
-
-
3,453,936
3,540,509
(588,348)
(4,253,346)
31,701,407
1. Several items of plant and equipment were sold during the period resulting in a gain on disposal of assets of $108,852.
2. $127,264 was reclassified from assets held for sale back into Plant and Equipment and depreciation commenced in line with the
Company estimated useful life for relevant asset classes.
Notes to the CoNsolidated FiNaNCial statemeNtsAnnual Report for the financial year ending 30 June 2022 50
NOTE 16: RIGHT-OF-USE ASSETS
Operating leases – leasehold premises
NON-CURRENT
Land and buildings - right-of-use
Less: accumulated amortisation
Total
NOTE 17: BORROWINGS
CURRENT
Asset finance facilities (a) – at amortised cost
Current maturities of long-term bank loan (b) – at amortised cost
Sub-total
NON-CURRENT
30-June-22
30-June-21
$
$
1,095,323
(538,490)
556,833
828,948
(312,893)
516,055
30-June-22
30-June-21
$
$
3,054,858
2,493,542
5,548,400
3,196,246
2,420,608
5,616,854
Asset finance facilities (a) – at amortised cost
4,143,564
4,437,800
Long-term bank loan, net of current maturities (b) – at amortised
cost
Sub-total
Total
212,956
2,745,423
4,356,520
7,183,223
9,904,920
12,800,077
A. ASSET FINANCE FACILITIES
The asset finance facilities bear fixed interest at
fixed prevailing market rates (ranging from 3.3%
to 4.16%) and are primarily repayable over 2 to
4 years. The asset finance facilities are secured
via a registered GSA over plant and equipment
vehicles and drill rigs which were purchased
under the relevant agreements.
B. LONG-TERM BANK LOAN
The Group has a long-term bank loan with a major
bank which bears interest at a fixed rate of 4.41%
per annum and repayable over 4 years. The loan is
secured by items of plant and equipment obtained
as part of the acquisition from Ausdrill, the Group
has also provided a general security agreement
to the bank in respect of the Group’s existing and
future assets. The loan is repayable in monthly
instalments until its expiry in July 2023.
NOTE 18: TRADE AND OTHER PAYABLES
Trade payables
GST liability
Accruals
ATO client account
Deferred Revenue
Other payables
Total
30-June-22
30-June-21
$
$
5,808,637
3,649,783
22,971
186,833
47,063
32,184
74,357
(409)
326,916
290,210
738,302
45,728
6,172,045
5,050,530
Notes to the CoNsolidated FiNaNCial statemeNtsVysarn Limited (ABN 41 124 212 175) and controlled entities | ASX : VYS NOTE 19: EMPLOYEE LIABILITIES
The Group’s exposure to liquidity risk related to trade and other payables
is disclosed in “Note 23” on page 55.
51
CURRENT
Provision for annual leave
Superannuation liability
Sub-total
NON-CURRENT
Provision for long service leave
Sub-total
Total
NOTE 20: SHARE CAPITAL
30-June-22
30-June-21
$
$
257,487
476,460
733,947
44,933
44,933
778,880
140,835
317,633
458,468
4,781
4,781
463,249
30-June-22
30-June-21
$
$
A. SHARE CAPITAL
391,955,864 (30 June 2021: 386,955,864) fully paid ordinary shares
19,495,181
19,130,558
Ordinary Shares
During the 12-month period ended 30 June 2022,
the Group issued 5,000,000 ordinary shares (30
June 2021: nil). All issued shares are fully paid.
The issue of 5,000,000 Shares to PTP vendors
as consideration for the Company’s acquisition
of the entire issued capital of PTP under the
PTP offer. The Shares were valued based on the
Share Price of $0.075. Refer to “Note 25” on
page 61 for further information.
B. MOVEMENT IN ORDINARY CAPITAL
Ordinary shares entitle the holder to participate
in dividends and the proceeds on the winding
up of the company in proportion to the number
of and amounts paid on the shares held. The
fully paid ordinary shares have no par value and
the company does not have a limited amount of
authorised capital.
Ordinary Shares
No.
$
No.
$
At the beginning of the reporting period
386,955,864
19,130,558 386,955,864
19,135,614
30-June-22
30-June-22
30-June-21
30-June-21
23 NOVEMBER 2021
Shares issued as consideration for the
Company’s acquisition of the entire issued
capital of Australian Groundwater Solutions
Pty Ltd (“Note 25” on page 61)
Transaction costs
Total
5,000,000
375,000
-
(10,377)
-
-
-
(5,056)
391,955,864
19,495,181
386,955,864
19,130,558
Notes to the CoNsolidated FiNaNCial statemeNtsAnnual Report for the financial year ending 30 June 2022 52
NOTE 21: RESERVES
A. SHARE BASED PAYMENT RESERVE
20,000,000 options (30 June 2021: 20,000,000) and 10,000,000
performance rights (30 June 2021: 10,000,000l) on issue
B. MOVEMENT IN SHARE BASED PAYMENT RESERVE
SHARE BASED PAYMENT RESERVE
At the beginning of the period
Share based payments
Total
30-June-22
30-June-21
$
$
555,667
452,293
30-June-22
30-June-21
$
452,293
103,374
555,667
$
364,000
88,293
452,293
Refer to Note 22 below which outlines the movement in the current period’s share-based
payment expense.
NOTE 22: SHARE BASED PAYMENTS
During the year ended 30 June 2022 the Company recorded the following share-based payments:
Share Issue
Outside of the issue to vendors as part of the acquisition of PTP (Note 25), during the year ended 30
June 2022 no share-based payments in the form of ordinary shares were issued by the Company to
key management personnel as remuneration. Since the end of the financial year no ordinary shares
have been granted to key management personnel.
Options
During the year ended 30 June 2022 no options over ordinary shares have been granted to key
management personnel as remuneration. Further, during the reporting period, there were no shares
issued on the exercise of options previously granted as compensation (30 June 2021: nil).
OPTIONS
30-Jun-22
30-Jun-22
30-Jun-21
30-Jun-21
No.
$
No.
$
At the beginning of the reporting period
20,000,000
364,000
20,000,000
364,000
Options issued during the period
-
-
-
-
Total
20,000,000
364,000
20,000,000
364,000
The following options were outstanding as at 30 June 2022.
V Chairman Option Offer
The issue of 10,000,000 options exercisable at $0.054 on or before 28 August 2024 as performance
incentives under the Chairman options offer.
The options were issued to Chairman Mr Peter Hutchinson in lieu of cash fees for the first 6 months
following completion of the Acquisitions.
V Managing Director Option Offer
The issue of 10,000,000 options to Managing Director Mr James Clement as part of his remuneration
package. The shares were valued based on the public offer price of $0.054.
The options have been valued using a Hoadley option pricing model.
Notes to the CoNsolidated FiNaNCial statemeNtsVysarn Limited (ABN 41 124 212 175) and controlled entities | ASX : VYS Note 22: Shae Based Payments continued…
A. FAIR VALUE
The Hoadley option pricing model was used to determine the fair value of the unlisted options issued.
The Hoadley inputs and valuation were as follows:
Managing Director Options
53
Chairman Options
Class A
OPTIONS
Number of options
Grant date
Share price at grant date
Issue date
Exercise price
Expected volatility
Implied option life
Expected dividend yield
Risk free rate
Performance hurdle
Valuation per option $
Total valuation
10,000,000
5-Jul-19
$0.033
28-Aug-19
$0.054
100%
5 years
-
1.50%
-
$0.0241
$241,000
5,000,000
3-Feb-20
$0.67
3-Feb-20
$0.075
100%
3 years
-
0.70%
Class B
5,000,000
3-Feb-20
$0.67
3-Feb-20
$0.075
100%
3 years
-
0.70%
30 day VWAP
of $0.085
30 day VWAP
of $0.100
$0.012734
$63,670
$0.011866
$59,330
B. PERFORMANCE RIGHTS
During the year ended 30 June 2022, the Company did not issue any performance rights as
performance incentives to key management personnel.
PERFORMANCE RIGHTS
30-June-22
30-June-22
30-June-21
30-June-21
No.
$
No.
$
At the beginning of the reporting period
10,000,000
Performance rights issued during the period
-
Total
10,000,000
-
-
10,000000
-
10,000,000
-
-
-
As at 30 June 2022, 10,000,000 performance rights were on issue and outstanding. Each performance
right will convert on a 1:1 basis to fully paid ordinary shares upon achievement of their relevant vesting
conditions (refer below).
Tranche
Number of Performance
Rights on Issue
Condition Test Date
Vesting Condition
1
2
3
Where the:
3,333,333
3,333,333
3,333,334
30 June 2022
30 June 2023
30 June 2024
• Employment condition
• Cumulative EPS condition
V Employment condition – means the holder of the Rights remains employed by the Company at the
condition Test Date; and
V Cumulative EPS condition – means the earnings per share (EPS) based on the achievement of
compound annual growth in the Company’s EPS of 15% per annum from the financial year 30 June 2021,
subject to a minimum EPS of $0.01 for the financial year ending 30 June 2021. The EPS calculation will
be based on the Company’s cumulative net profit after tax up until the relevant condition test date
divided by the weighted average number of shares on issue over the relevant period, taking into account
any new shares issued (or cancelled by the Company in the relevant period).
Notes to the CoNsolidated FiNaNCial statemeNtsAnnual Report for the financial year ending 30 June 2022 54
Note 22: Share Based Payments continued…
Movements in Performance Rights
The movement during the reporting period in the number of performance rights in the Company held,
directly, indirectly or beneficially, by each key management personnel, including their related parties,
is as follows:
Key Management
Personnel
Opening
balance
Granted as
compensation
Exercised
Cancelled
Closing
balance
Vested during
the year
2022
No.
No.
No.
No.
No.
No.
Peter Hutchinson
-
James Clement
5,000,000
Sheldon Burt
5,000,000
Total
10,000,000
-
-
-
-
-
-
-
-
-
-
-
-
-
5,000,000
5,000,000
10,000,000
-
-
-
-
At 30 June 2022, the unissued ordinary shares of the Company under performance rights are as follows:
Class
A
B
C
Number Under
Performance
Rights
3,333,333
3,333,333
3,333,334
Value at Grant
Date ($)
Date of Vesting
191,666
191,667
191,667
1-Jul-22
1-Jul-23
1-Jul-24
-
Total
10,000,000
575,000
Management
Probability
Assessment
30-June-22
Fair Value ($)
100%
191,666
0%
0%
-
-
-
191,666
The performance rights have been valued based
on the Company’s share price as at the date
of their approval for issue. A total valuation of
$575,000 has been determined (30 June 2021:
$575,000), assuming satisfaction of performance
conditions in full and 100% vesting rate.
It was put to the shareholders as an ordinary
resolution, that, pursuant to and in accordance
with Chapter 2E of the Corporations Act,
Listing Rule 6.23.4, and for all other purposes,
Shareholders approve the removal of the
cumulative EPS condition attached to Tranche
1 of the Director Performance Rights on the
terms and conditions in the Notice of Meeting.
The resolution was subsequently passed at
the Company’s Annual General Meeting on 25
November 2021. Accordingly, at 30 June 2022
the Company assessed the likelihood tranche 1
vesting to be 100%.
$103,374 in share-based payment was recorded
as an expense in the statement of profit or loss
and other comprehensive income during the year
ended 30 June 2022 (30 June 2021: $88,293) in
relation to the performance rights.
In respect of tranches 2 – 3 of the performance
rights, it was determined that, consistent with its
conclusion at 30 June 2021, the achievement of
the vesting conditions is unknown at this point in
time. As a result, no share-based payment was
recorded in relation to tranches 2–3.
C. SHARE BASED PAYMENTS EXPENSE
Share based payment expense is comprised as follows:
Performance rights payments
Total share-based payments expense
30-June-22
30-June-21
$
103,374
103,374
$
88,293
88,293
Notes to the CoNsolidated FiNaNCial statemeNtsVysarn Limited (ABN 41 124 212 175) and controlled entities | ASX : VYS
55
NOTE 23: FINANCIAL INSTRUMENTS &
FAIR VALUE MEASUREMENT
A. FAIR VALUES
A number of the Group’s accounting policies and
disclosures require the determination of fair value,
for both financial and non-financial assets and
liabilities. Fair values have been determined for
measurement and/or disclosure purposes based
on the following methods. Where applicable,
further information about the assumptions made
in determining fair values is disclosed in the
Notes specific to that asset or liability.
i. FAIR VALUE OF FINANCIAL
INSTRUMENTS
Unless otherwise stated, the carrying
amounts of financial instruments
approximate their fair value. The carrying
amounts of trade receivables and trade
payables are assumed to approximate
their fair values due to their short-term
nature. The fair value of financial liabilities
is estimated by discounting the remaining
contractual maturities at the current market
interest rate that is available for similar
financial instruments.
ii. FAIR VALUE HIERARCHY
Financial instruments carried at fair value are
determined by valuation level, as determined
in accordance with the relevant accounting
standard. The different levels have been
defined as:
V Level 1: quoted prices (unadjusted) in
active markets for identical assets or
liabilities;
V Level 2: inputs other than quoted prices
included within Level 1 that are observable
for the asset or liability, either directly (i.e.
as prices) or indirectly (i.e. derived from
prices); and
V Level 3: inputs for the asset or liability that
are not based on observable market data
(unobservable inputs).
There have been no transfers between levels
during the current or prior year.
All financial assets and liabilities carried at
fair value are level 2 within the fair value
hierarchy. With respect to specific financial
assets and liabilities, the following valuation
methods have been used:
Term receivables and fixed interest securities
are determined by discounting the cash
flows, as at the market interest rates of
similar securities, to their present value.
Other loans and amounts due are
determined by discounting the cash flows, at
market rates of similar borrowings, to their
present value.
Contingent consideration payable has been
determined by discounting the cash flows,
at market rates of similar borrowings, to
their present value. The probability weighted
pay-out method has been utilised by
Management to determine the best estimate
of expected cashflows arising as a result of
the arrangement.
Other assets and other liabilities
approximate their carrying value. The carrying
amount of all financial assets and financial
liabilities approximate their fair value at
reporting date.
B. FINANCIAL RISK
MANAGEMENT OBJECTIVES
The Company’s activities expose it to a variety
of financial risks: market risk (including foreign
currency risk, price risk and interest rate risk),
credit risk and liquidity risk. The Company’s
overall risk management program focuses on
the unpredictability of financial markets and
seeks to minimise potential adverse effects on
the financial performance of the Company. The
Company uses different methods to measure
different types of risk to which it is exposed.
This Note presents information about the Group’s
exposure to each of the above risks, its objectives,
policies and processes for measuring and
managing risk, and the management of capital.
C. RISK MANAGEMENT FRAMEWORK
The Board of Directors has overall responsibility
for the establishment and oversight of the risk
management framework. Due to the size of the
Group, and its low nature of risk with respect
to financial risk management, the Board is of
the opinion that there is no need to establish a
Risk Management Committee for developing and
monitoring risk management policies.
Risk management policies are established to
identify and analyse the risks faced by the Group,
to set appropriate risk limits and controls, and
to monitor risks and adherence to limits. Risk
management policies and systems are reviewed
regularly to reflect changes in market conditions
and the Group’s activities. The Group, through
its training and management standards and
procedures, aims to develop a disciplined and
constructive control environment in which all
employees understand their roles and obligations.
i. MARKET RISK
Market risk is the risk that changes in market
prices, such as foreign exchange rates and
interest rates will affect the Group’s income
or the value of its holdings of financial
instruments. The objective of market risk
management is to manage and control
market risk exposures within acceptable
parameters, while optimising the return.
Notes to the CoNsolidated FiNaNCial statemeNtsAnnual Report for the financial year ending 30 June 2022
56
Note 23: Financial Instruments & Fair Value Measurement continued…
ii. FOREIGN CURRENCY RISK
iii. INTEREST RATE RISK
The Company is not exposed to any
significant foreign currency risk. The Group
is exposed to currency risk on administration
costs, purchases of spare parts and plant
and equipment that are denominated in
New Zealand dollars (NZD) and US dollars
(USD). The Group does not use currency
hedging for administration expenses as the
receipts in NZD and USD are used to meet
the liability obligations of the Group entities
denominated in NZD and USD.
The use of currency hedging for exposures
relating to spare parts and plant and
equipment purchases are assessed on a case
by case basis. As at 30 June 2022, the Group
is exposed to currency risk on administration
costs, purchases of spare parts and plant
and equipment that are denominated in
New Zealand dollars (NZD) and US dollars
(USD). During the financial year ended 30
June 2022, the Group did not enter into any
forward foreign currency contracts.
Exposure to interest rate risk arises on
financial assets and financial liabilities
recognised at the end of the reporting period
whereby a future change in interest rates will
affect future cash flows or the fair value of
fixed rate financial instruments. The Group is
also exposed to earnings volatility on floating
rate instruments.
The financial instruments which primarily
expose the Group to interest rate risk are
borrowings and cash and cash equivalents.
The Group manages its exposure to changes
in interest rates on borrowings by using
a mix of fixed and floating rate debt. The
Group is exposed to movements in market
interest rates on short term deposits. The
Directors monitor the Group’s cash position
relative to the expected cash requirements.
Where appropriate, surplus funds are placed
on deposit earning higher interest.
The Company’s only exposure to interest
rate risk is in relation to deposits held.
Deposits are held with reputable banking
financial institutions.
Profile
At the reporting date the interest rate profile of the Group’s variable interest-bearing financial
instruments was:
Variable rate instruments
Financial assets
Financial liabilities
Total
Carrying Amount
30-June-22
30-June-21
($)
($)
195,209
1,715,130
-
-
195,209
1,715,130
The table below illustrates the impact on profit before tax based upon expected volatility of interest
rates using market date and analysis forecasts.
Basis points
increase
effect on
profit before
tax
Basis points
change
Effect on
equity
Basis points
% change
Basis points
decrease
effect on
profit before
tax
Effect on
equity
30 JUNE 2022
Cash and equivalents
30 JUNE 2021
Cash and equivalents
50
50
976
976
8,576
8,576
50
50
(976)
(976)
(8,576)
(8,576)
Notes to the CoNsolidated FiNaNCial statemeNtsVysarn Limited (ABN 41 124 212 175) and controlled entities | ASX : VYS Note 23: Financial Instruments & Fair Value Measurement continued…
iv. OPERATIONAL RISK
V Compliance with regulatory and other legal
57
Operational risk is the risk of direct or indirect
loss arising from a wide variety of causes
associated with the Group’s processes,
personnel, technology and infrastructure,
and from external factors other than credit,
market and liquidity risks such as those
arising from legal and regulatory requirements
and generally accepted standards of
corporate behaviour. Operational risks arise
from all of the Group’s operations.
The Group’s objective is to manage
operational risk so as to balance the
avoidance of financial losses and damage
to the Group’s reputation with overall cost
effectiveness and to avoid control procedures
that restrict initiative and creativity. The
primary responsibility for the development
and implementation of controls to address
operational risk is assigned to senior
management within each business unit.
This responsibility is supported by the
development of overall Group standards for
the management of operational risk in the
following areas:
V Requirements for appropriate segregation
of duties, including the independent
authorisations of transactions;
V Requirements for the reconciliation and
monitoring of transactions;
requirements;
V Documentation of controls and
procedures;
V Requirements for the periodic assessment
of operational risks faced, and the
competency of personnel, adequacy of
controls and risk management procedures
to address the risks identified;
V Training and professional development;
V Ethical and business standards; and
V Risk mitigation, including insurance where
this is effective.
v. CAPITAL MANAGEMENT
The Board’s policy is to maintain adequate
capital so as to maintain investor, creditor
and market confidence and to sustain future
development of the business.
The Group’s debt and capital structure
includes ordinary share capital and loans
and borrowings. The Group is not subject
to externally imposed capital requirements.
Management effectively manages the Group’s
capital by assessing the Group’s financial
risk and adjusting its capital structure in
response to changes in these risks and in
the market. These responses include the
management of debt levels, distributions to
shareholders and share issues.
vi. CAPITAL MANAGEMENT
The Group’s debt-to-adjusted capital ratio at the end of the reporting period was as follows:
Total liabilities
Less: cash and cash equivalents
Net debt
Total capital
Debt-to-capital ratio at the end of the period
30-June-22
30-June-21
($)
($)
21,163,330
20,571,716
(5,706,447)
(6,555,486)
14,935,374
14,016,230
28,085,390
24,762,964
0.55
0.57
vii. CREDIT RISK
Credit risk is the risk of financial loss to the
Group if a customer or counterparty to a
financial instrument fails to meet its contractual
obligations and arises principally from the
Group’s receivables from customers.
Management has established a credit
policy under which each new customer and
counterparties to transactions are analysed
individually for creditworthiness before the
Group’s standard payment and delivery terms
and conditions are offered. The Group’s review
includes the use of external ratings, when
available. Such monitoring is used in assessing
receivables for impairment.
Risk is also minimised through investing surplus
funds in financial institutions that maintain
a high credit rating at least “A-“. The Group’s
exposure to credit risk is influenced mainly by
the individual credit characteristics of each
customer. 100% of revenue is attributable to
Australian entities.
Details with respect to credit risk of trade and
other receivables are provided below. Trade
and other receivables that are neither past
due nor impaired are considered to be of high
credit quality. Aggregates of such amounts are
detailed below.
Notes to the CoNsolidated FiNaNCial statemeNtsAnnual Report for the financial year ending 30 June 2022
58
Note 23: Financial Instruments & Fair Value Measurement continued…
Impairment of Financial Assets
The Group hold trade receivables that are
subject to the expected credit loss model. While
cash and cash equivalents are also subject to
the impairment requirements of AASB 9, the
identified impairment loss was immaterial.
Trade Receivables
The Group applies the AASB 9 simplified
approach to measuring the expected credit
losses which uses a lifetime expected loss
allowance for all trade receivables. The expected
credit losses have been grouped based on
shared credit risk characteristics and the days
past due.
The historical loss rates are adjusted to reflect
current and forward- looking information on
macroeconomic factors affecting the ability of
the customers to settle the receivables.
On that basis, the loss allowance as at 30 June
2022 and 1 July 2021 was determined as follows
for trade receivables:
Current
< 30
31 - 60
61 - 120
> 120
Total ($)
1-JULY-21
Expected loss rate
0%
0%
0%
0%
3%
Gross carrying amount -
trade receivables
Loss allowance
30-JUNE-22
4,983,227
4,983,227
-
-
-
-
-
-
-
-
4,983,227
-
Expected loss rate
0%
0%
0%
0%
3%
Gross carrying amount -
trade receivables
5,986,504
4,955,482
1,031,022
Loss allowance
-
-
-
-
-
- 5,986,504
-
-
Trade receivables are written off when there is
no reasonable expectation of recovery. Indicators
that there is no reasonable expectation of
recovery include, amongst others, the failure of
a debtor to engage in a repayment plan with the
Group and failure to make contractual payments
for a period of greater than 120 days past due.
Impairment losses on trade receivables are
presented as net impairment losses within
operating profit. Subsequent recoveries of
amounts previously written off are credited
against the same line item. The Group has not
recognised and impairment losses recognised
in the statement of profit or loss as at 30 June
2022 arising from contracts with customers.
The Group’s receivables consist of Tier 1/Tier
2 Mining companies on 30-day net terms with
no noted debtor payment issues to date since
commencement of current activities.
Exposure to Credit Risk
The carrying amount of the Group’s financial
assets represents the maximum credit exposure.
The credit risk on liquid funds is limited because
the counterparties are banks with a minimum
credit rating of AA assigned by reputable credit
rating agencies. The Group’s maximum exposure
to credit risk at the reporting date was:
Exposure to credit risk
Cash and cash equivalents - AA Rated
Trade receivables
Total
30-June-22
30 -June-21
($)
($)
5,706,447
6,555,486
5,986,504
11,692,951
4,983,227
11,538,713
Notes to the CoNsolidated FiNaNCial statemeNtsVysarn Limited (ABN 41 124 212 175) and controlled entities | ASX : VYS
59
Note 23: Financial Instruments & Fair Value Measurement continued…
Liquidity Risk
Liquidity risks arises from the possibility that the
Company might encounter difficulty in settling
its debts or otherwise meeting its obligation
related to financial liabilities. Vigilant liquidity
risk management requires the Company to
maintain sufficient liquid assets (mainly cash
and cash equivalents) to be able to pay debts as
and when they become due and payable.
The Company manages liquidity risk by
maintaining adequate cash reserves and
continuously monitoring actual and forecast
cash flows.
Remaining Contractual Maturities
The following tables detail the Company’s
remaining contractual maturity for its financial
instrument liabilities. The tables have been
drawn up based on the undiscounted cash flows
of financial liabilities based on the earliest date
on which the financial liabilities are required to
be paid. The tables include both interest and
principal cash flows disclosed as remaining
contractual maturities and therefore these totals
may differ from their carrying amount in the
statement of financial position.
1 year or less
Between 1
and 2 years
Between 2
and 5 years
Over 5 years
Total Remaining
contractual
cash flows
$
$
$
$
$
30 JUNE 2022
Non-derivatives
Interest bearing
Borrowings
Lease liability
Non-interest bearing
5,810,842
3,312,829
1,162,581
332,872
241,587
72,405
Trade and other payables
6,172,045
-
-
Contingent consideration
250,000
250,000
250,000
Total non-derivatives
12,565,759
3,804,417
1,484,985
30 JUNE 2021
Non-derivatives
Interest bearing
Lease liability
Trade payables
5,172,166
4,718,949
2,553,470
218,784
237,203
125,908
-
-
-
-
-
Non-interest bearing
Trade and other payables
5,081,537
Total non-derivatives
10,441,480
4,956,152
2,679,378
-
-
-
-
-
-
-
-
-
10,286,252
646,864
6,172,045
750,000
17,855,161
12,444,585
581,895
-
5,081,537
18,077,010
Notes to the CoNsolidated FiNaNCial statemeNtsAnnual Report for the financial year ending 30 June 2022 60
NOTE 24: RELATED PARTY TRANSACTIONS
A. INDIVIDUAL DIRECTORS AND EXECUTIVES COMPENSATION DISCLOSURES
Information regarding individual Directors and executives’ compensation and some equity instruments
disclosures as permitted by Corporations Regulations 2M.3.03 is provided in the remuneration report
section of the Directors’ Report. Apart from the details disclosed in this Note, no Director has entered
into a material contract with the Group since the end of the previous financial year and there were no
material contracts involving Directors’ interests existing at year-end.
Details of the remuneration of key management personnel of the Company are set out in the
following tables.
Short-term benefits
Short-term
Salary,
Fees &
Commissions
STI cash
bonus
Non-
monetary
benefits
Other
employee
benefits
Post-
employment
Equity
Post-
employment
Super-
annuation
Share-based
payments
2022
$
$
$
$
$
$
Total
$
CHAIRMAN
Peter Hutchinson
46,451
-
-
EXECUTIVE
DIRECTORS
James Clement 1, 2
293,372
Sheldon Burt 2
Total
278,306
618,129
59,724
39,496
99,220
34,934
-
34,934
-
-
-
-
4,661
-
51,112
23,844
24,072
57,115
468,989
46,259
388,133
52,577
103,374
908,234
1. The amount of $34,934 disclosed as a non-monetary benefit for Mr Clement is a salary sacrificed amount pertaining to a novated
lease on a motor vehicle.
2. Refer to “6. Share-based Compensation” on page 25 of the Remuneration Report for further information pertaining to share-
based payment expenses recognised for key management personnel.
B. SUBSIDIARIES
All inter-company loans are eliminated on consolidation and are interest free with no set repayment terms.
C. OTHER KEY MANAGEMENT PERSONNEL AND DIRECTOR TRANSACTIONS
Purchases from and sales to related parties are made on terms equivalent to those that prevail
in arm’s length transactions. The Company acquired the following services from entities that are
controlled by members of the Company’s KMP. Some Directors, or former Directors of the Company,
hold or have held positions in other companies, where it is considered they control or significantly
influence the financial or operating policies of those entities. Transactions between related parties are
on normal commercial terms and conditions no more favourable than those available to other parties
unless otherwise stated.
Transaction value
Payable balance
Related party
Nature of transactions
30-Jun-22
30-Jun-21
30-Jun-22
30-Jun-21
Onyx Corporate Pty
Ltd / Ms Kyla Garic 1
Accounting and company
secretarial services
$
N/A
$
61,047
$
-
$
5,533
1. Ms Garic was the former Company Secretary of the Company and Director of Onyx Corporate Pty Ltd. Ms Garic resigned on 30
June 2021.
Notes to the CoNsolidated FiNaNCial statemeNtsVysarn Limited (ABN 41 124 212 175) and controlled entities | ASX : VYS 61
NOTE 25: ACQUISITION OF PTP
SUMMARY OF ASSET ACQUISITION
On 29 September 2021 the Company entered
into a binding Share Sale Agreement for the
acquisition of 100% of the issued capital of
PTP. Under the terms of the acquisition, the
Company acquired 100% of the issued shares
in PTP for consideration of 5,000,000 Vysarn
shares and $2,500,000 cash, adjusted for post
working capital adjustments (herein referred to
as the “Transaction”).
The Company assumed control of the
trading activities of PTP with effect from
commencement of trade on 1 October 2021.
On 23 November 2021 the Company issued
5,000,000 Shares to the vendors of PTP as part
consideration for all of the issued capital of PTP.
PTP is an Australian company. The primary
reason for the Transaction was to vertically
integrate this service offering into the Company’s
existing waterwell bore drilling operation.
Having reviewed the terms of the Transaction,
the Group elected to apply the optional
concentration test in assessing its acquisition
of PTP. This has resulted in the acquisition being
accounted for as an asset acquisition rather than
a business combination. Details of the purchase
consideration and assigned fair value of assets
and liabilities acquired are as follows:
A. PURCHASE CONSIDERATION
Cash paid (net of working capital adjustments)
Contingent consideration payable
Acquisition related costs incurred
Ordinary shares issued (5,000,000 Shares at $0.075)
Fair value consideration
B. FAIR VALUE OF ACQUIRED ASSETS AND LIABILITIES ASSUMED
Property, plant and equipment
Cash and cash equivalents
Trade and other receivables
Trade and other payables
Total
30-Jun-22
$
2,140,015
750,000
65,509
375,000
3,330,524
3,540,509
4,861
343,713
(558,559)
3,330,524
Acquisition related costs of $65,509 were incurred and capitalised as a cost of the Transaction.
CONTINGENT CONSIDERATION PAYABLE
In accordance with the Share Sale Agreement,
the previous Managing Director and majority
shareholder (the “Executive”) of PTP agreed to
enter into an executive employment agreement
for a term of three years, to lead and grow the
business under Vysarn’s ownership. Under the
terms of his agreement, the Executive may
be entitled to an Annual Incentive Payment
(“AIP”) of up to $750,000 across the three year
term, subject to achievement of the following
“minimum benchmarks” by the end of each
relevant financial year:
V Year one: A minimum benchmark of $650,000
in Earnings Before Interest Taxes Depreciation
and Amortisation (“EBITDA”) operating one test
pumping rig;
V Year two: A minimum benchmark of $1,200,000
in EBITDA operating two test pumping rigs;
and
V Year three: A minimum benchmark of
$1,350,000 in EBITA operating two test
pumping rigs.
In the event that the actual EBITDA earnings
achieved in any financial year exceeds the
minimum benchmarks, the Executive may retain
the excess EBITDA in that year, up to a maximum
of $250,000, for payment in future years over the
three year term.
At the date of acquisition, Management
have assessed the value of the contingent
consideration based on the likelihood that the
above minimum benchmarks would be achieved
and recognised the amount payable in full at the
date of acquisition.
As at 30 June 2022, the contingent consideration
remains recognised in full as payable given
Management’s expectations that the minimum
benchmarks for payment of the AIP will be met
over the three year period.
Notes to the CoNsolidated FiNaNCial statemeNtsAnnual Report for the financial year ending 30 June 2022 62
NOTE 26: PARENT ENTITY DISCLOSURES
FINANCIAL POSITION
ASSETS
Current assets
Non-current assets
Total Assets
LIABILITIES
Current liabilities
Non-current liabilities
Total liabilities
Net Assets
EQUITY
Share capital
Reserves
Retained losses
Total Equity
FINANCIAL PERFORMANCE
Loss for the year
Other comprehensive income
Total comprehensive income
30 June 2022
30 June 2021
($)
($)
15,352,274
16,293,613
353,463
3,620
15,705,737
16,297,233
179,318
761,115
940,433
116,873
169,688
286,561
14,765,304
16,010,672
19,495,181
19,130,558
555,667
452,293
(5,285,544)
(3,572,179)
14,765,304
16,010,672
(1,713,365)
(1,086,016)
-
-
(1,713,365)
(1,086,016)
GUARANTEES PROVIDED IN RELATION TO SUBSIDIARIES
The Company provides a parent-company guarantee in respect to finance facilities established by the
Company’s operating entities.
NOTE 27: CONTROLLED ENTITIES
The ultimate legal parent entity of the Group is Vysarn Limited, incorporated and domiciled in
Australia. The consolidated financial statements incorporate the assets, liabilities and results of the
following subsidiaries in accordance with the accounting policies described above.
Controlled Entities
Pentium Hydro Pty Ltd
Country of
Incorporation
Australia
Pentium Test Pumping Pty Ltd (acquired on 1 October 2021)
Australia
Pentium Water Pty Ltd (incorporated 8 December 2021)
Australia
Percentage Owned
30-Jun-22
30-Jun-2021
100%
100%
100%
100%
Nil
Nil
NOTE 28: COMMITMENTS AND CONTINGENCIES
The Directors are not aware of any other commitments or any contingent liabilities that may arise
from the Group’s operations as at 30 June 2022.
Notes to the CoNsolidated FiNaNCial statemeNtsVysarn Limited (ABN 41 124 212 175) and controlled entities | ASX : VYS
63
NOTE 29: EVENTS SUBSEQUENT TO REPORTING DATE
The Company released the following material ASX announcement post 30 June 2022:
As announced on 11 August 2022, the Company entered into a share sale agreement to acquire Project
Engineering (WA) Pty Ltd (“ProEng”). Under the share sale agreement, the Company will acquire
100% of the issued shares in ProEng for a consideration of $2.60 million in cash. The purchase price
assumes that ProEng is acquired debt free. There is a provision within the share sale agreement for an
adjustment to the cash consideration based on agreed working capital.
There is no other matter or circumstance that has arisen since 30 June 2022 that has significantly
affected, or may significantly affect the Group’s operations, the results of those operations or the
Company’s state of affairs in future financial years.
In the opinion of the Directors of Vysarn Limited:
1. The financial statements and Notes thereto are in accordance with the Corporations Act 2001,
including:
a. Giving a true and fair view of the Company’s financial position as at 30 June 2022 and of its
performance for the financial year ended on that date; and
b. Complying with Australian Accounting Standards (including the Australian Accounting
Interpretations), International Financial Reporting Standards and the Corporations Regulations
2001.
2. There are reasonable grounds to believe that the Company will be able to pay its debts as and
when they become due and payable.
3. The Directors have been given the declarations required by Section 295A of the Corporations Act
2001 from the Chief Executive Officer and Chief Financial Officer for the financial year ended 30
June 2022.
This declaration is made in accordance with a
resolution of the Board of Directors and is signed
for an on behalf of the Directors by:
James Clement
Managing Director and Chief Executive Officer
Dated 25 August 2022
Notes to the CoNsolidated FiNaNCial statemeNtsAnnual Report for the financial year ending 30 June 2022
64
INDEPENDENT AUDITOR’S REPORT
VYSARN LIMITED
ABN 41 124 212 175
INDEPENDENT AUDITOR’S REPORT
TO THE MEMBERS OF
VYSARN LIMITED
Report on the Audit of the Financial Report
Opinion
We have audited the financial report of Vysarn Limited (the “Company”) and its controlled
entity (the “Group”), which comprises the consolidated statement of financial position as
at 30 June 2022, the consolidated statement of profit or loss and other comprehensive
income, the consolidated statement of changes in equity and the consolidated statement
of cash flows for the year then ended, and notes to the financial statements, including a
summary of significant accounting policies, and the Directors’ declaration.
In our opinion, the accompanying financial report of the Group is in accordance with the
Corporations Act 2001, including:
(a) giving a true and fair view of the Group’s consolidated financial position as at 30 June
2022 and of its financial performance for the year then ended; and; and
(b) complying with Australian Accounting Standards and the Corporations Regulations 2001.
Basis for Opinion
We conducted our audit in accordance with Australian Auditing Standards. Our
responsibilities under those standards are further described in the Auditor’s Responsibilities
for the Audit of the Financial Report section of our report. We are independent of the Group
in accordance with the auditor independence requirements of the Corporations Act 2001 and
the ethical requirements of the Accounting Professional and Ethical Standards Board’s APES
110 Code of Ethics for Professional Accountants (including Independence Standards) “the
Code” that are relevant to our audit of the financial report in Australia. We have also fulfilled
our other ethical responsibilities in accordance with the Code.
We confirm that the independence declaration required by the Corporations Act 2001, which
has been given to the Directors of the Company, would be in the same terms if given to the
Directors as at the time of this auditor’s report.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide
a basis for our opinion.
Key Audit Matters
Key audit matters are those matters that, in our professional judgement, were of most
significance in our audit of the financial report of the current period. These matters were
addressed in the context of our audit of the financial report as a whole, and in forming our
opinion thereon, and we do not provide a separate opinion on these matters.
Pitcher Partners BA&A Pty Ltd
Adelaide Brisbane Melbourne Newcastle Perth Sydney
An independent Western Australian Company ABN 76 601 361 095.
Level 11, 12-14 The Esplanade, Perth WA 6000
Registered Audit Company Number 467435.
Liability limited by a scheme under Professional Standards Legislation.
Pitcher Partners is an association of independent firms.
Pitcher Partners is a member of the global network of Baker Tilly International
Limited, the members of which are separate and independent legal entities
Independent AudItor’s reportVysarn Limited (ABN 41 124 212 175) and controlled entities | ASX : VYS 65
VYSARN LIMITED
ABN 41 124 212 175
INDEPENDENT AUDITOR’S REPORT
TO THE MEMBERS OF
VYSARN LIMITED
Key Audit Matter
How our audit addressed the key audit
matter
Revenue recognition
Refer to Note 2Q and Note 4 of the Financial Report
At 30 June 2022, plant and equipment
totalling $31,701,407 represent a significant
portion of the Group’s consolidated
statement of financial position.
The evaluation of the recoverable amount
of these assets requires significant
Management judgement in determining the
key assumptions including revenue and
cost projections supporting the expected
future cash flows (“forecast models”) of the
business and the utilisation of the relevant
assets.
Our procedures included, amongst others:
Understanding and evaluating the design
and implementation of the relevant controls
associated with the recognition of revenue,
including, but not limited to, those relating
to identification of performance obligations,
discounts, incentives and rebates.
Reviewing significant new contracts to
understand their terms and conditions,
including specified performance
obligations included within and whether
Managements’ assessment for recognition
of revenue under these contract terms is in
accordance with AASB 15.
Testing a sample of transactions by
sighting evidence of signed contracts,
related invoices and comparing the
revenue amount recognised to the timing
of when the Group satisfies performance
obligations associated with the transaction
in accordance with AASB 15.
Considering the adequacy of the disclosures
included within Note 2(q) and Note 4 of the
financial report.
Independent AudItor’s reportAnnual Report for the financial year ending 30 June 2022 66
VYSARN LIMITED
ABN 41 124 212 175
INDEPENDENT AUDITOR’S REPORT
TO THE MEMBERS OF
VYSARN LIMITED
Key Audit Matter
How our audit addressed the key audit
matter
Carrying value of plant and equipment
Refer to Note 2J and Note 15 of the financial report
At 30 June 2021, plant and equipment
totalling $29,548,665 represent a significant
portion of the Group’s consolidated
statement of financial position.
The evaluation of the recoverable amount
of these assets requires significant
Management judgement in determining the
key assumptions including revenue and
cost projections supporting the expected
future cash flows (“forecast models”) of the
business and the utilisation of the relevant
assets.
Our procedures included, amongst others:
Understanding and evaluating the design
and implementation of the relevant controls
associated with the recognition of plant
and equipment including capitalisation of
expenditure.
Critically evaluating and challenging
the methodology and key assumptions
around revenue and cost projections
of management in their preparation of
forecast models of the Group which has
been deemed a single cash generating unit
(“CGU”) encompassing plant and equipment
on hand at 30 June 2022.
Evaluating and assessing the Group’s
assessment for impairment indicators
associated with its plant and equipment as
a single CGU.
Checking the mathematical accuracy of
forecast models and agreeing what has
been provided to the latest Board approved
forecasts.
Assessing the Group’s accounting policy
and disclosures for plant at equipment as
set out within Note 2J and Note 15 to the
financial report.
Independent AudItor’s reportVysarn Limited (ABN 41 124 212 175) and controlled entities | ASX : VYS 67
VYSARN LIMITED
ABN 41 124 212 175
INDEPENDENT AUDITOR’S REPORT
TO THE MEMBERS OF
VYSARN LIMITED
Key Audit Matter
How our audit addressed the key audit
matter
Acquisition of Assets – Pentium Test Pumping Pty Ltd
Refer to Note 2F, Note 2AB and Note 25 of the financial report
On 29 September 2021 the Company
entered into a binding Share Sale Agreement
(the “Acquisition”) for the acquisition of
100% of the issued capital of Pentium
Test Pumping Pty Ltd, formerly Australian
Groundwater Solutions, trading as Yield
Test Pumping (“PTP”). Under the terms of
the Acquisition, the Company acquired
100% of the issued shares in PTP for
consideration of 5,000,000 Vysarn shares,
$2,500,000 cash, adjusted for post working
capital adjustments, and a contingent
consideration payment of $750,000, payable
upon achievement of certain financial
performance milestones
The assessment of the requirements of the
optional concentration test allowed under
AASB 3 requires Management to meet the
relevant criteria required.
Our procedures included, amongst others:
Understanding and evaluating the design
and implementation of relevant controls
associated with the acquisition of Yield Test
Pumping.
Critically evaluating and challenging the
accounting treatment of the Group in
compliance with the requirements of AASB
3 and the circumstances of the acquisition
to determine if optional concentration test
is met on the relevant criteria.
Reviewing if the acquisition date and fair
value purchase consideration has been
determined correctly, and if in line with
AASB 3.
Critically evaluating the Group’s
determination of the fair value of the assets
and liabilities acquired in the Acquisition.
Checking the mathematical accuracy of the
calculations performed for the acquisition
accounting of PTP.
Considering the adequacy of the disclosures
included within Note 2F, Note 2AB and
Note 25 of the financial report.
Independent AudItor’s reportAnnual Report for the financial year ending 30 June 2022 68
VYSARN LIMITED
ABN 41 124 212 175
INDEPENDENT AUDITOR’S REPORT
TO THE MEMBERS OF
VYSARN LIMITED
Key Audit Matter
How our audit addressed the key audit
matter
Share-based Payments
Refer to Note 2V and Note 22 of the Financial Report
At 30 June 2022, a share-based payment
expense of $103,374 has been recorded.
Share-based payments involve significant
Management estimates and judgement in
their determination.
Share-based payments must be recorded
at fair value of the service provided, or in
the absence of such, at the fair value of the
underlying equity instrument granted. In
calculating the fair value there are a number
of management judgements including but
not limited to:
V Assessing the probability of achieving key
performance milestones in relation to
vesting conditions; and
V Assessing the fair value of the share
price on grant date, estimate of expected
future share price volatility, expected
dividend yield and risk-free rate of
interest.
Our procedures included, amongst others:
Understanding and evaluating the design
and implementation of the relevant controls
associated with the preparation of the
valuation model used to assess the fair
value of share-based payments, including
in relation to volatility of the underlying
security and the appropriateness of the
model used for valuation.
Critically evaluating and challenging
the methodology and assumptions of
management in their preparation of
valuation model, including management’s
assessment of likelihood of vesting, agreeing
inputs to internal and external sources of
information as appropriate, which includes
below but not limited to:
V Estimating the likelihood that the equity
instruments will vest;
V Estimating expected future share price
volatility;
V Expected dividend yield; and
V Risk-free rate of interest.
Assessing the appropriateness of
sharebased payment expensed during
the year pursuant to the requirements of
Australian Accounting Standards.
Assessing the Group’s accounting policy as
set out within Note 2V and disclosures within
Note 22 for compliance with the requirements
of AASB 2 Share-based Payment.
Other Information
The directors are responsible for the other information. The other information comprises the
information included in the Group’s annual report for the year ended 30 June 2022, but does
not include the financial report and our auditor’s report thereon.
Our opinion on the financial report does not cover the other information and accordingly we
do not express any form of assurance conclusion thereon.
In connection with our audit of the financial report, our responsibility is to read the
other information and, in doing so, consider whether the other information is materially
inconsistent with the financial report or our knowledge obtained in the audit or otherwise
appears to be materially misstated.
If, based on the work we have performed, we conclude that there is a material misstatement
of this other information, we are required to report that fact. We have nothing to report in
this regard.
Independent AudItor’s reportVysarn Limited (ABN 41 124 212 175) and controlled entities | ASX : VYS 69
VYSARN LIMITED
ABN 41 124 212 175
INDEPENDENT AUDITOR’S REPORT
TO THE MEMBERS OF
VYSARN LIMITED
Responsibilities of the Directors for the Financial Report
The directors of the Company are responsible for the preparation of the financial report
that gives a true and fair view in accordance with Australian Accounting Standards and the
Corporations Act 2001 and for such internal control as the directors determine is necessary
to enable the preparation of the financial report that gives a true and fair view and is free
from material misstatement, whether due to fraud or error.
In preparing the financial report, the directors are responsible for assessing the ability of
the Group to continue as a going concern, disclosing, as applicable, matters related to going
concern and using the going concern basis of accounting unless the directors either intend
to liquidate the Group or to cease operations, or have no realistic alternative but to do so.
Auditor’s Responsibilities for the Audit of the Financial Report
Our objectives are to obtain reasonable assurance about whether the financial report as a
whole is free from material misstatement, whether due to fraud or error, and to issue an
auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance,
but is not a guarantee that an audit conducted in accordance with the Australian Auditing
Standards will always detect a material misstatement when it exists. Misstatements can
arise from fraud or error and are considered material if, individually or in the aggregate, they
could reasonably be expected to influence the economic decisions of users taken on the
basis of this financial report.
As part of an audit in accordance with the Australian Auditing Standards, we exercise
professional judgement and maintain professional scepticism throughout the audit. We also:
V Identify and assess the risks of material misstatement of the financial report, whether
due to fraud or error, design and perform audit procedures responsive to those risks, and
obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion.
The risk of not detecting a material misstatement resulting from fraud is higher than for
one resulting from error, as fraud may involve collusion, forgery, intentional omissions,
misrepresentations, or the override of internal control.
V Obtain an understanding of internal control relevant to the audit in order to design
audit procedures that are appropriate in the circumstances, but not for the purpose of
expressing an opinion on the effectiveness of the Group’s internal control.
V Evaluate the appropriateness of accounting policies used and the reasonableness of
accounting estimates and related disclosures made by the directors.
V Conclude on the appropriateness of the directors’ use of the going concern basis of
accounting and, based on the audit evidence obtained, whether a material uncertainty
exists related to events or conditions that may cast significant doubt on the Group’s
ability to continue as a going concern. If we conclude that a material uncertainty exists,
we are required to draw attention in our auditor’s report to the related disclosures in
the financial report or, if such disclosures are inadequate, to modify our opinion. Our
conclusions are based on the audit evidence obtained up to the date of our auditor’s
report. However, future events or conditions may cause the Group to cease to continue as
a going concern.
V Evaluate the overall presentation, structure and content of the financial report, including
the disclosures, and whether the financial report represents the underlying transactions
and events in a manner that achieves fair presentation.
V Obtain sufficient appropriate audit evidence regarding the financial information of the
entities or business activities within the Group to express an opinion on the financial
report. We are responsible for the direction, supervision and performance of the Group
audit. We remain solely responsible for our audit opinion.
Independent AudItor’s reportAnnual Report for the financial year ending 30 June 2022 70
VYSARN LIMITED
ABN 41 124 212 175
INDEPENDENT AUDITOR’S REPORT
TO THE MEMBERS OF
VYSARN LIMITED
We communicate with the directors regarding, among other matters, the planned scope and
timing of the audit and significant audit findings, including any significant deficiencies in
internal control that we identify during our audit.
We also provide the directors with a statement that we have complied with relevant ethical
requirements regarding independence, and to communicate with them all relationships and
other matters that may reasonably be thought to bear on our independence, and where
applicable, actions taken to eliminate threats or safeguards applied.
From the matters communicated with the directors, we determine those matters that
were of most significance in the audit of the financial report of the current period and are
therefore the key audit matters. We describe these matters in our auditor’s report unless
law or regulation precludes public disclosure about the matter or when, in extremely rare
circumstances, we determine that a matter should not be communicated in our report
because the adverse consequences of doing so would reasonably be expected to outweigh the
public interest benefits of such communication.
Report on the Remuneration Report
Opinion on the Remuneration Report
We have audited the Remuneration Report included in pages 21 to 27 of the directors’ report
for the year ended 30 June 2022. In our opinion, the Remuneration Report of Vysarn Limited,
for the year ended 30 June 2022, complies with section 300A of the Corporations Act 2001.
Responsibilities
The directors of the Company are responsible for the preparation and presentation of the
Remuneration Report in accordance with section 300A of the Corporations Act 2001. Our
responsibility is to express an opinion on the Remuneration Report, based on our audit
conducted in accordance with Australian Auditing Standards.
PITCHER PARTNERS BA&A PTY LTD
PAUL MULLIGAN
Executive Director
Perth, 25 August 2022
AUDITORʼS INDEPENDENCE DECLARATION TO THE DIRECTORS OF VYSARN LIMITED 20 In relation to the independent audit for the year ended 30 June 2021, to the best of my knowledge and belief there have been: (i) No contraventions of the auditor independence requirements of the Corporations Act 2001; and (ii) No contraventions of APES 110 Code of Ethics for Professional Accountants (including Independence Standards).This declaration is in respect of Vysarn Limited and the entity it controlled during the year. PITCHER PARTNERS BA&A PTY LTD PAUL MULLIGAN Executive Director Perth, 27 August 2021 Pitcher Partners BA&A Pty LtdAn independent Western Australian Company ABN 76 601 361 095.Level 11, 12-14 The Esplanade, Perth WA 6000Registered Audit Company Number 467435.Liability limited by a scheme under Professional Standards Legislation.Adelaide Brisbane Melbourne Newcastle Perth SydneyPitcher Partners is an association of independent firms. Pitcher Partners is a member of the global network of Baker Tilly International Limited, the members of which are separate and independent legal entities.AUDITORʼS INDEPENDENCE DECLARATION TO THE DIRECTORS OF VYSARN LIMITED 20 In relation to the independent audit for the year ended 30 June 2021, to the best of my knowledge and belief there have been: (i) No contraventions of the auditor independence requirements of the Corporations Act 2001; and (ii) No contraventions of APES 110 Code of Ethics for Professional Accountants (including Independence Standards).This declaration is in respect of Vysarn Limited and the entity it controlled during the year. PITCHER PARTNERS BA&A PTY LTD PAUL MULLIGAN Executive Director Perth, 27 August 2021 Pitcher Partners BA&A Pty LtdAn independent Western Australian Company ABN 76 601 361 095.Level 11, 12-14 The Esplanade, Perth WA 6000Registered Audit Company Number 467435.Liability limited by a scheme under Professional Standards Legislation.Adelaide Brisbane Melbourne Newcastle Perth SydneyPitcher Partners is an association of independent firms. Pitcher Partners is a member of the global network of Baker Tilly International Limited, the members of which are separate and independent legal entities.Independent AudItor’s reportVysarn Limited (ABN 41 124 212 175) and controlled entities | ASX : VYS 71
ADDITIONAL SHAREHOLDER
INFORMATION
ASX ADDITIONAL INFORMATION
Additional information required by the ASX
Listing Rules and not disclosed elsewhere in
this report is set out below. The information is
effective as at 30 September 2022.
CORPORATE GOVERNANCE
The Company’s 2022 Corporate Governance
Statement can be accessed at https://vysarn.
com.au/corporate-governance/
ORDINARY SHARE CAPITAL
395,289,196 fully paid ordinary shares are held by
1,004 individual holders.
VOTING RIGHTS
Subject to the ASX Listing Rules, the Company’s
constitution and any special rights or restrictions
attached to a share, at a meeting of shareholders,
voting rights attached to each class of equity
security are as follows:
V Ordinary Shares: On a show of hands
each shareholder present at a meeting of
shareholders in person or by proxy shall have
one vote and, on a poll, has one vote for each
fully paid share held.
V Unlisted Options and Performance Rights:
Unlisted Options and Performance Rights do
not carry any voting rights.
TWENTY LARGEST SHAREHOLDERS
Molonglo Pty Ltd
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