A N N U A L R E P O R T
Vysarn Limited (ABN 41 124 212 175) and incorporated entities
Annual Report for the financial year ending 30 June 2023
…the Company continued to successfully execute its
vision and strategy to become a leading end to end,
whole of life vertically integrated water service provider
Vysarn Limited (ABN 41 124 212 175) and controlled entities | ASX : VYS
1
CONTENTS3 Corporate Directory5 Chairman’s Letter to Shareholders6 Managing Director’s Report13 Directors’ Report21 Remuneration Report (Audited)28 Auditor’s Independence Declaration29 Consolidated Financial Statements29 Consolidated Statement of Profit or Loss and Other Comprehensive Income30 Consolidated Statement of Financial Position31 Consolidated Statement of Changes in Equity32 Consolidated Statement of Cash Flows33 Notes to the Consolidated Financial Statements65 Directors’ Declaration66 Independent Auditor’s Report73 Additional Shareholder InformationAnnual Report for the financial year ending 30 June 2023
2
This key acquisition expanded the group’s service
offering across four wholly owned subsidiaries in
water and environmental consultancy, hydrogeological
drilling, test pumping and aquifer injection
Vysarn Limited (ABN 41 124 212 175) and controlled entities | ASX : VYS
Corporate Directory
3
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
www.vysarn.com.au
Auditor
Bankers
Pitcher Partners BA&A Pty Ltd
Level 11, 12-14 The Esplanade
Perth, WA 6000
Westpac Banking Corporation
Level 3, Tower 2, Brookfield Place
123 St Georges Terrace
Perth, WA 6000
Share Registry
Securities
Exchange Listing
Automic Registry Services
Level 5, 191 St Georges Terrace
Perth, WA 6000
ASX Limited
Level 40, Central Park
152-158 St Georges Terrace
Perth, WA 6000
ASX Code: VYS
Annual Report for the financial year ending 30 June 2023
4
Corporate Directory
…future growth initiatives are being
actively pursued in water services
across multiple sectors and geographies
Vysarn Limited (ABN 41 124 212 175) and controlled entities | ASX : VYS Corporate Directory
Chairman’s Letter to Shareholders
5
CHAIRMAN’S LETTER
TO SHAREHOLDERS
Dear Shareholders
It is with pleasure that I present the 2023 Annual Report for Vysarn
Limited (Vysarn) and the financial results for the company. It was a period
that provided further validation of our long term strategy to become a
leading whole of life water service provider which in turn produced a year
of material earnings growth.
The core of Vysarn’s strategy continued to be successfully executed
in the period with the board and management focusing on increased
asset utilisation, incremental increases in work rates, the purchase and
deployment of new equipment, the expansion of our skilled workforce and
the targeted acquisition of complementary businesses.
Vysarn started the 2023 financial year with the acquisition of Project
Engineering (WA). This key acquisition expanded the group’s service
offering across four wholly owned subsidiaries in water and environmental
consultancy, hydrogeological drilling, test pumping and aquifer injection.
This importantly created a platform that now provides genuine end to
end water management from extraction to disposal. This vertical suite of
integrated service offerings now positions Vysarn as a unique business in
the Australian water sector.
With a focus on ultimately driving shareholder value, history suggests
that diversified sustainable businesses with fundamentally driven
characteristics like that of Vysarn often get rewarded over the long term
with an increase in value. This is more so for businesses that can also
provide a solid track record of year on year earnings growth.
The consolidated Vysarn entity produced earnings before interest tax
and depreciation of $12.45 million and net profit before tax of $7.08
million. Operational cashflow was $9.67 million with balance sheet net
tangible assets of $30.50 million of which $8.31 million was cash and cash
equivalents as at 30 June 2023.
Vysarn remains well funded and strongly positioned as it enters the next
financial year. Growth opportunities continue to be identified across the
subsidiaries, while future growth initiatives are being actively pursued in
water services across multiple sectors and geographies.
I’d like to take this opportunity to thank management and staff for their
significant effort over the course of the last financial year. Vysarn’s ability
to deliver on its strategy relies heavily on our team’s skills, focus and
diligence in executing their respective roles and the 2023 financial result is
certainly representative of that effort.
On behalf of the Board I would like to thank you again for your ongoing
support. We are genuinely excited by our future prospects and as always,
remain focused on rewarding shareholders with long term sustainable value.
Sincerely,
Peter Hutchinson
Chairman
24 August 2023
Annual Report for the financial year ending 30 June 2023 6
Managing Director’s Report
MANAGING DIRECTOR’S REPORT
Summary of Group Results for FY2023
REVENUE FROM OPERATIONS
$
M
EBITDA
$
NPBT
$
M
ASSETS : NET TANGIBLE
$
CASH & CASH EQUIVALENTS
$
M
M
M
FY2023 Results Commentary
Vysarn’s revenue from operations to 30 June 2023
of $64.96 million exceeded previous corresponding
period revenue from operations by $18.66 million.
Revenue from operations in FY2023 represents a
full twelve month operational contribution from
all of the Company’s wholly owned subsidiaries
across consultancy, hydrogeological drilling, test
pumping and managed aquifer recharge.
FY23 Key Financial Metrics
Description
FY23
$
FY22
$
Variance
Variance
$
Operational Revenue
64,957,156
46,297,406
18,659,750
EBITDA
NPBT
NPAT
12,453,788
9,075,292
3,378,496
7,075,570
4,095,180
2,980,390
3,872,558
2,856,729
1,015,829
Operational Cashflow
9,664,934
9,499,462
165,472
%
40%
37%
73%
36%
2%
Net Profit Before Tax (NPBT) was $7.08 million and
Net Profit After Tax (NPAT) was $3.87 million for the
12 months to 30 June 2023. The non-cash income
tax expense of $3.20 million in FY2023 reflects
the Company’s increase in existing deferred tax
liability, primarily due to a change in the Company’s
corporate tax rate and utilisation of the ATO’s
instant asset write-off. The Company has carried
forward tax losses of $4.09 million that can be
used to offset future income tax liabilities.
Operational Cashflow was $9.66 million. The
reduction in the conversion of earnings to
Operational Cash Flow compared to the previous
corresponding period is primarily a reflection of
increased working capital requirements created
by the redeployment of drill rigs to Tier 1 iron ore
miners with less favourable trading terms.
The Company has Net Tangible Assets (NTA) of
$30.50 million, representing a NTA backing of
$0.075 a share. Net Current Assets were $10.67
million, Cash and Cash Equivalent position was
$8.31 million and Net Debt was $1.39 million as at
30 June 2023.
Vysarn Limited (ABN 41 124 212 175) and controlled entities | ASX : VYS Managing Director’s Report
Operational Revenue
Managing Director’s Report
7
)
s
n
o
i
l
l
i
m
(
$
U
A
80
60
40
20
0
FY20
FY21
FY22
FY23
Operational Revenue
EBITDA
)
s
n
o
i
l
l
i
m
(
$
U
A
80
60
40
20
0
FY20
FY21
FY22
FY23
15
FY23
Operational Revenue
)
s
n
o
i
l
)
l
s
i
m
n
o
(
i
$
l
l
U
i
m
A
(
$
U
A
12
80
FY22
FY21
9
FY20
60
6
3
40
0
20
-3
0
NPBT
FY20
FY21
FY22
FY23
FY20
FY21
FY22
FY23
)
s
n
o
i
l
l
i
m
)
s
n
(
o
$
i
U
l
l
A
i
m
(
)
s
n
o
i
l
l
)
i
s
m
n
(
o
$
i
l
U
l
i
m
A
(
FY22
FY23
FY21
FY22
FY20
FY21
FY20
15
4
2
12
0
9
-2
6
-4
3
-6
0
-3
12.45m
9.07m
5.00m
FY20
-1.17m
FY20
FY21
FY22
FY23
FY21
FY22
FY23
9.50m
9.66m
FY23
FY21
FY22
FY20
FY21
FY20
6
6
4
4
2
2
0
-2
0
-4
-6
1.99m
1.71m
FY20
FY21
FY22
FY23
FY20
FY21
FY22
FY23
EBITDA
Performance Growth
Operational Revenue
15
8
EBITDA
6
FY23
64.96m
46.30m
25.82m
11.91m
FY20
FY21
FY22
FY23
FY20
FY21
FY22
FY23
$
U
A
NPBT
Operational Cashflow
7.07m
4.09m
1.14m
10
NPBT
8
8
FY23
FY22
)
s
n
o
i
l
l
)
i
s
m
n
(
o
i
$
l
l
U
i
m
A
(
$
U
A
12
80
9
60
6
3
40
0
20
-3
0
8
EBITDA
6
)
s
n
o
i
l
l
i
m
)
s
(
n
$
o
i
U
l
l
A
i
m
(
$
U
A
4
15
2
12
0
9
-2
6
-4
3
-6
0
-3
H1
H2
Total
H1
Operational Cashflow
Total
-4.72m
FY20
FY21
FY22
FY23
FY20
FY21
FY22
FY23
$
U
A
FY23 Group Financials Metrics by Subsidiary
Operational Cashflow
Operational Revenue
10
NPBT
8
8
)
s
n
o
i
l
Vysarn
6
6
l
i
)
m
s
n
(
Pentium Hydro
o
$
i
l
U
l
i
A
Pentium Test Pumping
m
$
Pentium Water
U
A
Project Engineering
4
4
2
2
0
(
FY20
-2
0
-4
Total
-6
($ ‘000s)
($ ‘000s)
($ ‘000s)
($ 000s)
10
-
-
-
21,977
29,005
50,982
1,423
1,715
1,336
2,351
2,759
4,066
3,968
FY21
FY22
3,181
FY23
7,150
(1,201)
)
s
n
3,733
o
i
l
l
i
(
m
595
$
305
U
A
809
29,083
35,873
64,957
4,241
8
6
4
2
0
FY20
FY21
FY22
FY23
Operational Cashflow
)
s
n
o
i
l
l
i
m
(
$
U
A
10
8
6
4
2
0
FY20
FY21
FY22
FY23
EBITDA
FY23
H2
FY22
($ 000s)
FY23
FY21
FY22
FY20
FY21
8,213
(1,642)
NPBT
H1
H2
Total
($ 000s)
($ 000s)
($ 000s)
($ 000s)
(2,843)
(1,206)
(1,695)
(2,901)
11,946
1,445
5,886
7,331
262
FY20
467
912
857
772
1,722
375
241
741
55
402
832
8,212
12,454
1,596
5,480
FY20
FY21
FY22
FY23
430
643
1,573
7,076
FY23
FY22
FY21
FY20
FY23
FY22
FY21
FY20
FY23
FY22
FY23
FY21
FY22
FY20
FY21
FY20
FY23
FY22
FY23
FY21
FY22
FY20
FY21
FY20
FY23
FY22
FY23
FY21
FY22
FY20
FY21
FY20
FY23
FY22
FY21
FY20
Annual Report for the financial year ending 30 June 2023
8
Managing Director’s Report
Pentium Hydro
www.pentiumhydro.com.au
As disclosed in previous market updates
throughout FY2023, wholly owned subsidiary
Pentium Hydro Pty Ltd (Pentium Hydro)
made a strategic decision to pull multiple rigs from
the field in the first half of the financial period
for compliance upgrades to meet Tier 1 iron ore
miner’s standards. While operational and financial
performance in the first half was subsequently
negatively affected, it provided an opportunity
to redeploy these rigs on improved terms. This
strategy was realised in the second half of FY2023
which helped underpin full redeployment of the
Pentium Hydro rig fleet as well as record second
half earnings for the subsidiary.
Operational performance in the period was
rewarded with an increase in rates by key clients
as well as several contract extensions. Pentium
Hydro successfully started double shifting one
rig in the period whilst continuing to pursue
opportunities for multiple rigs to double shift in
future financial periods.
The outlook for Pentium Hydro remains robust
with demand for dual rotary rigs particularly
strong. Due to limited supply of dual rotary rigs
in the Australian market, in hand with the long
lead times and prohibitive expense to import
new dual rotary rigs, Pentium Hydro anticipates
opportunities to increase the number of rigs
double shifting for clients to meet this demand.
Due to this ongoing demand, Pentium Hydro
continued its search for quality second hand dual
rotary rigs, both domestically and internationally.
As such, Pentium Hydro recently identified an
opportunity to acquire an additional used dual rotary
rig. Subject to proceeding with the rig’s acquisition,
it is anticipated that this rig will be acquired and
rebuilt to Tier 1 standards within FY2024.
The rig purchase being considered is not driven by
a strategy to grow the size of the Pentium Hydro
rig fleet, but rather to change the rig fleet mix
to consist primarily of dual rotary rigs. The board
and management view this initiative as a strategy
primarily designed to shore up an already strong
competitive moat for the hydrogeological drilling
division. In line with changing the rig fleet mix, it
is anticipated that the funding for such a purchase
and rebuild of an additional dual rotary rig will
in part be funded by the divestment of one of
Pentium Hydro’s non-core conventional rigs.
Operational improvements will continue to be
rolled out in FY2024 with the establishment
of a Pilbara based critical spares facility which
will help reduce any downtime associated with
programmed maintenance and breakdowns, as
well as a continued recruitment drive to bring
more experienced water well drillers, supervisors
and managers into the business.
The outlook for
Pentium Hydro remains
robust with demand
for dual rotary rigs
particularly strong
Vysarn Limited (ABN 41 124 212 175) and controlled entities | ASX : VYS Managing Director’s Report
Managing Director’s Report
9
Pentium Test Pumping
www.pentiumtestpumping.com.au
inside the September quarter of FY2024 with
multiple avenues of client enquiry providing
opportunities for high utilisation rates from the
outset. To support the deployment of the second
test pumping unit, considerable work has been
done in recent months to establish an expanded
test pumping technician team, to not only support
the deployment of the second test pumping unit
but also to provide the ability to pursue further
double shifting opportunities should they arise.
Incorporated within the new unit is the ability to
injection test in addition to test pumping. This has
been made possible via the inclusion of injection
technology acquired from Project Engineering.
The initial injection testing work will be conducted
under a commercial trial format on a client site
and project, flagged to begin in the first half
of FY2024. Subject to the success of the initial
trials and the growing propensity of key clients
to reinject surplus water via Manage Aquifer
Recharge, management anticipates that injection
testing has the potential to be a high growth and
material offering in Pentium Test Pumping’s suite
of services in future periods.
Pentium Test Pumping Pty Ltd (Pentium
Test Pumping) produced another strong
operational performance in FY2023.
Traditional day shift utilisation in the period was
high with a growing stream of double shifting
opportunities also being realised in the period.
The strong operational performance was rewarded
with an increase in rates and a contract extension
by Pentium Test Pumping’s key client.
The next generation test pumping unit did not
meet its initial anticipated deployment timeline of
30 June 2023, with the extension of the delivery
date due to delays in the construction and delivery
of the reel unit out of Queensland. Despite the
deployment delay, the advancement in technology
of Pentium Test Pumping’s second unit is in line
with expectations underpinning management’s
confidence that the unit will be industry leading in
its capability.
With the addition of a second technologically
advanced test pumping unit, Pentium Test
Pumping is anticipated to produce another strong
performance in FY2024. The second unit is on track
to be commissioned, deployed and operational
Incorporated within the
new unit is the ability to
injection test in addition
to test pumping
Annual Report for the financial year ending 30 June 2023 10
Managing Director’s Report
Pentium Water
www.pentiumwater.com.au
Wholly owned subsidiary Pentium Water Pty
Ltd (Pentium Water) completed its first full
year of operations in FY2023 after being
organically launched in February 2022 to provide
consulting services covering ground water, surface
water and environmental planning.
The business experienced material expansion in
staff head count growing to more than 20 advisors
providing advisory solutions to Tier 1 clients across
resources, urban development, utilities, government
and traditional owner groups. During this period
Pentium Water had early success in developing
its model to derive more revenue from lump sum
project work rather than the hourly rates model
associated with traditional consultancy practices.
While this model is designed to accentuate more
meaningful long term engagements with clients,
it has created an opportunity to incrementally
improve productivity (and margin) while supporting
the ability to grow the number of advisors and
specialisations across the team.
In the period Pentium Water’s advisory model
evolved to include Company backed internal
projects focussing on water and environmental
opportunities rather than purely advising clients
on their own projects. Pentium Water has
developed a portfolio of internal early stage
projects focussing on opportunities across water
pipeline infrastructure and associated mechanisms
to control, own or toll water. These early stage
projects in turn are creating partnerships and new
opportunities associated with the supply of large
volumes of water for irrigated agriculture and
carbon sequestering.
The outlook for Pentium Water is strong. Head
count is anticipated to grow in future periods with
the breadth of service offerings also anticipated
to widen. In addition to current specialisation in
ground water, surface water and environmental
planning, growth prospects are already being
developed to provide expanded capability in water
resource engineering, environmental monitoring,
mine closure, mine repurposing and traditional
owner engagement.
…growth prospects are
already being developed
to provide expanded
capability in water
resource engineering,
environmental
monitoring, mine closure,
mine repurposing
and traditional owner
engagement.
Vysarn Limited (ABN 41 124 212 175) and controlled entities | ASX : VYS Managing Director’s Report
Managing Director’s Report
11
Project Engineering
www.proengwa.com
The outlook for Project Engineering is strong with
management anticipating year on year growth in
MAR unit output in FY2024 underpinned by the
Western Australian iron ore sector, in addition to
ongoing business development paving the way
for an expansion into other commodities, sectors
and geographies.
During FY2023 the acquisition of wholly
owned subsidiary Project Engineering Pty
Ltd (Project Engineering) was completed
effective from 1 July 2022.
In its first year of operations under Vysarn
ownership, Project Engineering exceeded initial
expectations set during the acquisition due
diligence phase with material growth experienced
in the construction and provision of managed
aquifer recharge (MAR) units. This was primarily
driven by a more active business development
program which in turn provided opportunities
to start moving the business to a production
line model rather than manufacturing on a ‘just
in time’ basis. This approach has also enabled
Project Engineering to get greater visibility on
longer term MAR opportunities and to start
planning accordingly.
In response to this anticipated growth, Project
Engineering is currently sourcing new premises
that will enable the establishment of an expanded
MAR unit production line as well as bolstering
staff numbers and expertise. These strategic
initiatives will require a commensurate level of
increased investment.
In its first year of
operations under Vysarn
ownership, Project
Engineering exceeded
initial expectations set
during the acquisition
due diligence phase
Annual Report for the financial year ending 30 June 2023 12
Managing Director’s Report
FY24 Group Outlook
www.vysarn.com.au
FY2023 has proven to be another defining year for
Vysarn with the water services vertical integration
strategy maturing. The board and management
continue to maintain the view that one of the
largest and growing impediments to ongoing iron
ore production is the removal and disposal of
surplus water. This thematic has since proven to
be sound and has provided a unique opportunity to
build a business of scale in a short period of time.
While Vysarn anticipates continued growth
underpinned by the iron ore sector surplus water
thematic, the Company has also identified new
and real avenues for future growth across other
services, commodities, sectors and geographies.
In FY2023 the Company continued to successfully
execute its vision and strategy to become a
leading end to end, whole of life vertically
integrated water service provider. This
strict focus on strategy execution and
building scale through diversification
has the Company well positioned
with strong maintainable
earnings and cashflow.
M
E
T
N
The diversification across the vertical service
offerings will not only continue to insulate the
Company from the operational and financial risks
often associated with a single service model but will
help create long term shareholder value by driving
expanded valuation multiples traditionally afforded
to multi-faceted businesses. The early stages of this
thesis have already started to play out.
Vysarn is well positioned as it enters FY2024.
The Company is well funded, anticipates material
earnings growth and has identified a range of
organic and acquisitive growth prospects. As
always, the Company’s board and management
will continue to focus on driving long term and
sustainable value for its shareholders.
R O L
T & O W N E R S H I P
A s s e t
M a n a g e m e n t
•
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•
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•
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TAGE 4: C O
OL, CO N T AI N
S
R
T
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T
A
W
n
a
t
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Managed
Aquifer Recharge
Water Infrastructure Projects
n
m
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STA
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CONSULTIN
E
1:
G, E
Hydrogeology,
Hydrology &
Environmental
Consulting
N
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S
R
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&
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•Borefield Design
•Water Resource Engineering
P o w e r
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P
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Pump Station
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N & W ATER E
E 2: EXT
Vertical
Integration
Strategy
Entered
Under Assessment
Vysarn Limited (ABN 41 124 212 175) and controlled entities | ASX : VYS
Managing Director’s Report
Directors’ Report
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
2023 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 2020
V Sheldon Burt
Executive Director
Appointed: 15 May 2019
2. Significant Changes in
State of Affairs
During the year, the Group acquired 100% of the
issued capital of Project Engineering (WA) Pty Ltd,
a provider of managed aquifer recharge systems
utilising patent pending valve technology. The
Group also 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 other 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
Vysarn is focused on becoming Australia’s leading
water, carbon and environmental services provider.
Throughout the financial period, the Group
continued to focus on providing ‘end-to-end’ water
services to various sectors, including, resources,
urban development, government and utilities. The
Group’s operational entities now include:
V Pentium Hydro Pty Ltd (“Pentium Hydro”);
V Pentium Test Pumping Pty Ltd (“Pentium Test
Pumping”);
V Pentium Water Pty Ltd (“Pentium Water”); and
V Project Engineering (WA) Pty Ltd (“Project
Engineering”).
A review of the operations of the group during the
financial year are as follows:
A. The Group’s Operations:
V The Company’s hydrogeological drilling division
Pentium Hydro continued to experience
significant growth in the financial year as it
reached steady state operations. Pentium Hydro
repositioned itself to exclusively target multi-
year, multi-rig, contracts with tier-1 miners. The
significant and growing water issues across this
client base is anticipated to provide continued
earnings growth going forward.
V The Company’s Test Pumping division Pentium
Test Pumping continued to be a leading
provider of tailor-made test-pumping solutions
to tier-1 clients in Western Australia through
innovative test pumping technology and live
data collection solutions which accurately
characterise individual well, bore-field and
aquifer performance.
V The Group acquired 100% of the issued
capital of Project Engineering, establishing
the Company’s reinjection division. Project
Engineering continued to provide market
leading capability in managed aquifer recharge
(“MAR”) systems utilising patent pending valve
technology. The advanced MAR systems were
utilised by resource clients to re-inject water
back into aquifers during the period.
V The Company’s water consulting division
Pentium Water organically launched in February
2022 and has quickly grown to become one
of Australia’s premier advisers in mine water
management, urban water management and
environmental planning and management.
Annual Report for the financial year ending 30 June 2023
14
Directors’ Report
4. Review of Operations continued…
B. The Group’s Business and Strategy
Vysarn is a dynamic company, focused on the
integration and development of water specialised
services and technologies. Vysarn’s vertically
integrated model provides ‘end-to-end’ water
services to various sectors, including resources,
urban development, government, utilities and
agriculture. The efficient and environmentally
responsible management of water is a critical
and growing issue that the Company anticipates
will continue to present significant growth
opportunities, both vertically and horizontally.
5. Likely Developments
The Group will continue to pursue new contract
opportunities in Australia for its hydrogeological
drilling, test pumping, reinjection and water
consultancy focused business activities.
6. Financial Performance
The profit for the Group after providing for income
tax amounted to $3.87 million (30 June 2022:
$2.86 million).
Working capital, represented by current assets
less current liabilities, was $10.67 million (30 June
2022: $3.98 million). The Company had positive
cash flow from operating activities for the year
amounting to $9.66 million (2022: $9.50 million).
Operational revenue for the year ended 30 June
2023 was $64.96 million (2022: $46.3 million).
Growth was generated primarily from obtaining
new water well drilling contracts, maintaining
steady state earnings and the acquisition of
Project Engineering.
The table below provides a comparison of the key
results for the year ended 30 June 2023 to the
preceding year ended 30 June 2022:
Statement of Profit or Loss
Revenue from operations
Reported profit / (loss) after tax
Statement of Financial Position
Net Assets
Total Assets
Cash and cash equivalents
30-June-23
30-June-22
($)
($)
64,957,156
46,297,406
3,872,558
2,856,729
32,923,665
28,085,390
60,079,390
49,248,719
8,309,432
5,706,447
A. Principal Activities
The Group currently operates hydrogeological drilling, test pumping, reinjection water services 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.
Vysarn Limited (ABN 41 124 212 175) and controlled entities | ASX : VYS
Directors’ Report
Directors’ Report
15
7. Event Subsequent to
Reporting Date
9. Environmental
Regulation
In the normal course of business, there are no
specific environmental regulations or requirements
that the Group is currently subject to.
There is no other matter or circumstance that has
arisen since 30 June 2023 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 & Geographic
Exposures
The Group is exposed to the Australian mining
industry, municipalities and the large scale
domestic urban development sector. On a
geographic basis, the Group is predominantly
exposed to Western Australia.
10. Information on Directors & Company Secretary
Peter Hutchinson
Chairman
(Appointed 27 October 2017)
James Clement
Managing Director and CEO
(appointed 3 February 2020)
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 (last 3 years):
N/A
Interests in shares:
69,100,000 fully paid ordinary shares
Interests in options: Nil
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.
Other current listed directorships:
N/A
Former listed directorships (last 3 years):
Mareterram Limited (ceased 15 April 2019)
Interests in shares:
15,166,666 fully paid ordinary shares
Interest in options:
10,000,000 options
Interest in performance rights:
3,333,334 performance rights
Annual Report for the financial year ending 30 June 2023
16
Directors’ Report
10. Information on Directors & Company Secretary continued…
Sheldon Burt
Executive Director
(appointed 15 May 2019)
Matthew Power
Company Secretary
(appointed 30 June 2021)
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.
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, operational
responsibilities, senior management, executive
management and company proprietorship.
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.
Mr Burt is a Member of the Australian Institute of
Company Directors.
Other current listed directorships:
N/A
Former listed directorships (last 3 years):
N/A
Interests in shares:
7,883,981
Interest in performance rights:
3,333,334
11. Meetings Of Directors
The number of meetings of the Company’s Board of Directors (‘the Board’) held during the year ended 30
June 2023, and the number of meetings attended by each Director is set out below:
Peter Hutchinson
James Clement
Sheldon Burt
Board Meetings
Audit and Risk
Committee Meetings
Remuneration
Committee Meetings
Held1
Attended2
Held1
Attended2
Held1
Attended2
8
8
8
8
8
8
2
2
2
2
2
2
1
1
1
1
1
1
1. Held: Represents the number of meetings held during the time the Directors held office.
2. 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.
Vysarn Limited (ABN 41 124 212 175) and controlled entities | ASX : VYS
Directors’ Report
Directors’ Report
17
12. Indemnity & 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.
13. Shares Under Option
At 30 June 2023 and as at the date of this report, the unissued ordinary shares of the Company under
options are as follows:
Grant Date
24-Nov-22
Total
Expiration
Exercise Price
Under Option
Date
30-Jun-24
-
($)
0.075
-
Number
10,000,000
10,000,000
10,000,000 shares were issued during or since the year end as a result of the exercise of options.
Refer to “Note 22: Share Based Payments” on page 53.
14. Shares Under Performance Rights
At 30 June 2023 and as at the date of this report, the unissued ordinary shares of the Company under
performance rights are as follows:
Grant Date
Date of Vesting
Vesting Conditions
28-Aug-19
28-Aug-19
30-Jan-21
30-Jan-21
Total
1-Jul-23
1-Jul-24
1-Jul-23
1-Jul-24
Employment and cumulative EPS condition
Employment and cumulative EPS condition
Employment and cumulative EPS condition
Employment and cumulative EPS condition
Number Under
Performance Rights
1,666,666
1,666,668
1,666,666
1,666,668
6,666,668
Annual Report for the financial year ending 30 June 2023 18
Directors’ Report
15. Proceeedings 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.
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.
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
Total auditors’ remuneration for non-audit services
26,050
26,050
19,730
19,730
30-June-23
30-June-22
$
$
Vysarn Limited (ABN 41 124 212 175) and controlled entities | ASX : VYS Directors’ Report
Directors’ Report
16. Non-audit Services continued…
19
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 2023
has been received and can be found on page 18 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).
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.
Annual Report for the financial year ending 30 June 2023
20
Directors’ Report
…strict focus on strategy
execution and building scale
through diversification
Vysarn Limited (ABN 41 124 212 175) and controlled entities | ASX : VYS Directors’ Report
Remuneration Report (Audited)
21
REMUNERATION REPORT (AUDITED)
The remuneration report for the year ended
30 June 2023 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.
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
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 2023 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 2020
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.
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.
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.
Annual Report for the financial year ending 30 June 2023 22
Remuneration Report (Audited)
1. Introduction continued…
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:
V The Company’s earnings; and
V The growth in share price and delivering
constant returns on shareholder wealth.
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 2023.
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 2022 Annual General
Meeting (“AGM”)
The Company received more than 99% of “yes”
votes on its remuneration report for the 2022
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 for the year ended
30 June 2023:
James Clement, Managing Director and CEO
a. Term of agreement: commencing 3 February
2020 with indefinite duration.
b. Remuneration:
i. a base salary of $425,000 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 upon
commencement and 10,000,000 options.
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;
and
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.
Vysarn Limited (ABN 41 124 212 175) and controlled entities | ASX : VYS Remuneration Report (Audited)
Remuneration Report (Audited)
3. Executive Remineration Arrangement continued…
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 upon
commencement.
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.
4. Non-Executive Director
Fee Arrangement
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 2023
financial year (inclusive of superannuation):
Board
Committee
Total
$
$
$
Board Fees – per annum
Chair
60,000
-
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.
Annual Report for the financial year ending 30 June 2023 24
Remuneration Report (Audited)
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
$
2023
Chairman
Peter Hutchinson
54,545
-
-
Executive Directors
James Clement1, 2
382,475
Sheldon Burt 2
Total
277,519
714,539
10,000
20,000
30,000
17,233
-
17,233
-
-
-
-
5,727
-
60,272
25,292
25,725
56,744
270,116
705,116
161,428
484,672
431,544
1,250,060
1. The amount of $17,233 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 Section 6 of this remuneration report for further information pertaining to share-based payment expenses recognised for key
management personnel.
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 Clement1, 2
293,372
59,724
34,934
Sheldon Burt 2
Total
278,306
618,129
39,496
99,220
-
34,934
-
-
-
-
4,661
-
51,112
23,844
24,072
52,577
57,115
468,989
46,259
388,133
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 Section 6 of this remuneration report for further information pertaining to share-based payment expenses recognised for key
management personnel.
The proportion of remuneration linked to performance and the fixed proportion are as follows:
Directors
Peter Hutchinson
James Clement
Sheldon Burt
Fixed Remuneration
At Risk STI
At Risk LTI
2023
2022
2023
2022
2023
2022
100%
60%
63%
100%
75%
78%
-
1%
4%
-
13%
10%
-
38%
33%
-
12%
12%
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.
Vysarn Limited (ABN 41 124 212 175) and controlled entities | ASX : VYS Remuneration Report (Audited)
Remuneration Report (Audited)
25
6. Share-based Compensation
A. Issue of Shares
During the year ended 30 June 2023 no share-based payments in the form of ordinary shares were
issued by the Company to key management personnel as remuneration.
B. Performance Rights
During the year ended 30 June 2023, the Company did not issue any performance rights as performance
incentives to key management personnel.
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:
n
o
i
t
a
s
n
e
p
m
o
c
s
a
d
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d
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No.
No.
g
n
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r
u
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t
s
e
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r
a
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y
e
h
t
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t
a
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r
e
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r
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y
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No.
No.
Key Management
Personnel
2023
Peter Hutchinson
-
James Clement
5,000,000
Sheldon Burt
5,000,000
Total
10,000,000
-
-
-
-
-
1,666,666
1,666,666
3,333,332
-
-
-
-
-
3,333,334
3,333,334
6,666,668
-
-
-
-
-
3,333,334
3,333,334
6,666,668
-
-
-
-
During the year ended 30 June 2023, 3,333,332 performance rights were exercised upon their vesting for
$Nil consideration, resulting in the issue of 3,333,332 fully paid ordinary shares.
Performance Rights on Issue at Year End
At 30 June 2023, the unissued ordinary shares of the Company under performance rights are as follows:
Number Under
Performance
Rights
Value at Grant
Date
($)
Date of Vesting
Management
Probability
Assessment
Tranche
30-Jun-23
2
3
3,333,332
3,333,336
Total
6,666,668
191,667
191,667
383,334
30-Jun-23
30-Jun-24
-
100%
100%
-
Fair Value
($)
191,667
191,667
383,334
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
2
3
Where the:
Number of Performance
Rights on Issue
Condition Test Date
Vesting Condition
3,333,333
3,333,334
30 June 2023
V Employment condition
30 June 2024
V 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).
Annual Report for the financial year ending 30 June 2023
26
Remuneration Report (Audited)
6. Share-based Compensation continued…
The executive performance rights were valued
based on the Company’s share price as at the
date of their approval for issue. A total valuation of
$383,334 has been determined for the remaining
tranches, assuming satisfaction of performance
conditions in full and 100% vesting rate.
The conditions for Tranche 2 of the performance
rights were successfully met during the period
and have subsequently vested. 100% of these
performance rights have been expensed in full
as at 30 June 2023. In respect of tranche 3 of
the performance rights, it was determined that
the achievement of the vesting conditions are
more likely then unlikely at this time noting the
Company’s operational steady state earnings. As a
result, tranche 3 has been assessed with a 100%
probability likelihood.
$341,635 in share-based payments was recorded
as an expense in the statement of profit or loss
and other comprehensive income during the year
ended 30 June 2023 (30 June 2022: $103,374) in
relation to the performance rights.
C. Options
During the year ended 30 June 2023, on 24
November 2022 the Company issued 10,000,000
Incentive Options to Mr. James Clement, with an
exercise price of $0.075 and an expiry date of 5
July 2024. No other options were issued to key
management personnel as remuneration.
The fair value of the options issued has been
determined using a Black-Scholes option pricing
model with the following inputs:
Managing Director Options
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
Valuation per option $
Total Valuation
10,000,000
24-Nov-2022
$0.085
14-Dec-2022
$0.075
37.33%
1.61 years
-
3.16%
$0.02247
$224,774
As per the ASX announcement on 6 February
2023, Mr James Clement was issued a further
10,000,000 Managing Director Options, as the
previous 10,000,000 options that he held lapsed
unvested. The new options issued have an expiry
date of 3 July 2024. An amount of $89,909 has
been expensed during the period noting the total
expense calculated as the value of the 10,000,000
Incentive Options will be recognised over the
remaining option term to July 2024 as a result of
their service condition for vesting.
Further, during the reporting period, 10,000,000
shares were issued on the exercise of the
Chairman’s Options previously granted as
compensation. The 10,000,000 options had an
exercise price of $0.054 per option. $540,000 was
received upon exercise of these options.
Options Over Equity Instruments
During the year, the Company issued 10,000,000 shares on the exercise of the Chairman’s Options
previously granted as compensation.
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:
e
c
n
a
l
a
b
g
n
n
e
p
O
i
n
o
i
t
a
s
n
e
p
m
o
c
s
a
d
e
t
n
a
r
G
d
e
s
i
c
r
e
x
E
d
e
r
i
p
x
E
e
c
n
a
l
a
b
g
n
i
s
o
l
C
Key Management
Personnel
Peter Hutchinson 10,000,000
- (10,000,000)
-
-
James Clement
10,000,000 10,000,000
- (10,000,000) 10,000,000
Sheldon Burt
Total
-
-
-
-
-
20,000,000 10,000,000 10,000,000 (10,000,000) 10,000,000
e
h
t
t
a
e
l
b
a
s
i
c
r
e
x
e
r
a
e
y
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f
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d
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t
s
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V
t
o
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d
n
a
d
e
t
s
e
v
n
U
e
h
t
t
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l
b
a
s
i
c
r
e
x
e
r
a
e
y
e
h
t
f
o
d
n
e
-
-
-
-
-
10,000,000
-
10,000,000
g
n
i
r
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t
s
e
V
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y
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h
t
-
-
-
-
Vysarn Limited (ABN 41 124 212 175) and controlled entities | ASX : VYS
Remuneration Report (Audited)
Remuneration Report (Audited)
6. Share-based Compensation continued…
27
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:
Opening
balance
No.
Granted as
compensation
No.
Received on
exercise of
options
No.
Received on
exercise of
performance
rights
No.
On-market
purchases
No.
Closing
balance
No.
30 June 2023
Peter Hutchinson
James Clement
Sheldon Burt
Total
30 June 2022
Peter Hutchinson
James Clement
Sheldon Burt
Total
57,000,000
13,500,000
6,217,315
76,717,315
56,000,000
13,366,315
6,117,315
75,483,630
-
-
-
-
-
-
-
-
10,000,000
-
-
10,000,000
-
1,666,666
1,666,666
3,333,332
2,100,000
-
-
2,100,000
69,100,000
15,166,666
7,883,981
92,150,647
-
-
-
-
-
-
-
-
1,000,000
133,685
100,000
1,233,685
57,000,000
13,500,000
6,217,315
76,717,315
7. Loans to Directors and Executives
There are no loans to Directors or other KMP of the Company during the year ended 30 June 2023 (2022 $Nil).
8. Other Transactions and Balances With KMPs and Their
Related Parties
During the year ended 30 June 2023, 10,000,000 options were issued to the Directors under the Managing
Director Options Offer. Additionally, 3,333,332 ordinary shares were issued to the Directors as a result of
a number of Performance Rights vesting and 10,000,000 ordinary shares upon exercise of options. Refer
to Section 6 of this Remuneration Report for further information.
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.
There were no purchases from and sales to related parties during the year (2022: $NIL).
9. Key Performance Indicators of the Company
Over the Last 5 Years
Consolidated
30-June-23
30-June-22
30-June-21
30-June-20
30-June-19
Revenue
Net profit / (loss) before tax
Net profit / (loss) after tax
Share price at start of year
Share price at end of year
Interim and final dividend
Basic profit / (loss) per share
REMUNERATION REPORT (END)
($)
64,957,156
7,075,570
3,872,558
0.073
0.132
-
0.0098
($)
46,297,406
4,095,180
2,856,729
0.095
0.073
-
0.0073
($)
25,824,506
1,137,420
344,819
0.050
0.095
-
($)
11,912,589
2,472,743
4,835,295
N/A
0.05
-
0.0009
0.0178
($)
163,459
(483,826)
(483,826)
N/A
N/A
-
(0.0035)
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 24 August 2023
Annual Report for the financial year ending 30 June 2023
28
Auditor’s Independence Declaration
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 2023, 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
MICHAEL LIPRINO
Executive Director
Perth, 24 August 2023
Vysarn Limited (ABN 41 124 212 175) and controlled entities | ASX : VYS Auditor’s Independence Declaration
Consolidated Financial Statements
29
CONSOLIDATED STATEMENT OF
PROFIT OR LOSS AND OTHER
COMPREHENSIVE INCOME
For The Year Ended 30 June 2023
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
The accompanying Notes form part of these financial statements.
Consolidated Group
Notes
30 June 2023
30 June 2022
$
$
64,957,156
46,297,406
(43,336,348)
(31,377,746)
21,620,808
14,919,660
159,000
273,081
(2,856,495)
(1,923,001)
(6,439,937)
(4,194,343)
(4,875,451)
(4,502,758)
(532,354)
(477,458)
7,075,570
4,095,180
(3,203,012)
(1,238,451)
3,872,558
2,856,729
3,872,558
2,856,729
-
-
3,872,558
2,856,729
0.0098
0.0073
0.0094
0.0068
4
5
6
6
6
6
7
9
9
Annual Report for the financial year ending 30 June 2023 30
Consolidated Financial Statements
CONSOLIDATED STATEMENT OF
FINANCIAL POSITION
As at 30 June 2023
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
Goodwill
Other non-current assets
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
The accompanying Notes form part of these financial statements.
Notes
30 June 2023
30 June 2022
$
$
10
11
12
13
14
15
16
25
17
18
19
25
17
19
7
25
20
21
8,309,432
5,706,447
10,395,786
5,986,504
4,281,967
2,175,239
886,537
3,599,105
1,208,367
490,056
26,048,961
16,990,479
31,346,083
31,701,407
265,282
2,409,334
9,730
556,833
-
-
34,030,429
32,258,240
60,079,390
49,248,719
4,453,742
5,548,400
9,212,147
1,196,522
267,063
250,000
6,172,045
733,947
305,342
250,000
15,379,474
13,009,734
5,248,685
4,356,520
65,309
61,314
309,192
44,933
6,145,964
2,942,951
254,983
11,776,255
500,000
8,153,596
27,155,729
22,163,330
32,923,665
28,085,390
20,029,354
19,495,181
623,211
555,667
12,271,100
8,034,542
32,923,665
28,085,390
Vysarn Limited (ABN 41 124 212 175) and controlled entities | ASX : VYS Consolidated Financial Statements
Consolidated Financial Statements
31
CONSOLIDATED STATEMENT OF
CHANGES IN EQUITY
For The Year Ended 30 June 2023
Issued Capital
Share Based
Payment
Reserve
$
$
Retained
earnings
$
Total
$
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
375,000
(10,377)
-
364,623
-
-
-
-
-
103,374
103,374
2,856,729
2,856,729
-
-
2,856,729
2,856,729
-
-
-
-
375,000
(10,377)
103,374
467,997
Balance at 30 June 2022
19,495,181
555,667
8,034,542
28,085,390
19,495,181
555,667
8,034,542
28,085,390
Balance at 1 July 2022
Profit for the period
Other comprehensive income
Total comprehensive income for the period
Transactions with owners in their capacity as owners:
Issue of shares
540,000
-
-
-
3,872,558
3,872,558
3,872,558
3,872,558
-
540,000
-
-
-
-
-
Options lapsed under the Managing
Director options offer
Options issued under the Managing
Director options offer
Options exercised under the Chairman
options offer
Capital raising costs
Share based payments
-
-
-
(123,000)
123,000
-
89,909
-
89,909
(241,000)
241,000
-
(5,827)
-
341,635
-
-
(5,827)
341,634
965,717
Total transactions with owners
534,173
-
364,000
Balance at 30 June 2023
20,029,354
623,211
12,271,100
32,923,665
The accompanying Notes form part of these financial statements.
Annual Report for the financial year ending 30 June 2023 32
Consolidated Financial Statements
CONSOLIDATED STATEMENT OF
CASH FLOWS
For The Year Ended 30 June 2023
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 2023
30 June 2022
$
$
67,491,783
49,994,380
(57,397,275)
(40,050,856)
29,587
(459,161)
104
(444,166)
Net cash provided by operating activities
10a
9,664,934
9,499,462
CASH FLOWS FROM INVESTING ACTIVITIES
Payment for acquisition of Project Engineering, net of cash
acquired
Payment for acquisition of Pentium Test Pumping
Purchase of plant and equipment
Proceeds from disposal of property, plant and equipment
Net cash used in investing activities
CASH FLOWS FROM FINANCING ACTIVITIES
25
25
(2,797,775)
-
-
(2,140,015)
(4,115,884)
(5,015,343)
110,831
424,138
(6,802,828)
(6,731,220)
Proceeds from the issue of shares
20
540,000
-
Proceeds from borrowings
Repayment of borrowings
Payments for principal portion of lease liabilities
Capital raising costs
Net cash used in financing activities
Net increase/(decrease) in cash and cash equivalents
Cash and cash equivalents at beginning of financial year
6,940,546
4,499,153
(7,420,849)
(7,835,212)
(312,991)
(270,846)
(5,827)
(10,377)
(259,121)
(3,617,282)
2,602,985
(849,039)
5,706,447
6,555,486
Cash and cash equivalents at the end of financial year
10
8,309,432
5,706,447
The accompanying Notes form part of these financial statements.
Vysarn Limited (ABN 41 124 212 175) and controlled entities | ASX : VYS Consolidated Financial Statements
Notes to the Consolidated Financial Statements
33
NOTES TO THE CONSOLIDATED
FINANCIAL STATEMENTS
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 24 August 2023. 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 40.
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 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.
The revised Conceptual Framework is applicable
to annual reporting periods beginning on or after
1 January 2022 and was first applied by the Group
in the financial year commencing 1 July 2022.
The application has not materially impacted the
financial statements of the Group.
Annual Report for the financial year ending 30 June 2023 34
Notes to the Consolidated Financial Statements
Note 2: Summary of Significant Accounting Policies continued…
E. Principles of Consolidation
The consolidated financial statements comprise
the financial statements of the Group and its
subsidiary as at 30 June 2023. 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.
G. Business Combination
A business combination is a transaction or
other event in which an acquirer obtains control
of one or more businesses and results in the
consolidation of the assets and liabilities acquired.
Business combinations are accounted for by
applying the acquisition method.
The consideration transferred is the sum of
the acquisition date fair values of the assets
transferred, equity instruments issued, or
liabilities incurred by the acquirer to former
owners of the acquiree. Deferred consideration
payable is measured at its acquisition date fair
value. Contingent consideration to be transferred
by the acquirer is recognised at the acquisition
date fair value. At each reporting date subsequent
to the acquisition, contingent consideration
payable is measured at its fair value with any
changes in the fair value recognised in profit
or loss unless the contingent consideration is
classified as equity, in which case the contingent
consideration is measured at its acquisition date
fair value.
Goodwill represents the future economic
benefits arising from other assets acquired in a
business combination that are not individually
identifiable or separately recognised. Goodwill
is initially recognised at an amount equal to the
excess of: (a) the aggregate of the consideration
transferred, the amount of any non controlling
interest, and the acquisition date fair value of
the acquirer’s previously held equity interest (in
the case of a step acquisition); over (b) the net
fair value of the identifiable assets acquired, and
liabilities assumed. For accounting purposes, such
measurement is treated as the cost of goodwill at
that date.
If the net fair value of the acquirer’s interest in
the identifiable assets acquired and liabilities
assumed is greater than the aggregate of the
consideration transferred, the amount of any
non controlling interest, and the acquisition date
fair value of the acquirer’s previously held equity
interest, the difference is immediately recognised
as a gain in profit or loss.
Acquisition related costs are expensed as incurred.
Business combinations are initially accounted for
on a provisional basis. The fair value of assets
acquired, liabilities and contingent liabilities
assumed are initially estimated by the Company
taking into consideration all available information
at the reporting date. Fair value adjustments
on the finalisation of the Group accounting is
retrospective, where applicable, to the period the
combination occurred and may have an impact
on the assets and liabilities, depreciation and
amortisation reported.
Vysarn Limited (ABN 41 124 212 175) and controlled entities | ASX : VYS Notes to the Consolidated Financial Statements
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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.
K. 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.
H. 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.
I. 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.
J. 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.
Annual Report for the financial year ending 30 June 2023 36
Notes to the Consolidated Financial Statements
Note 2: Summary of Significant Accounting Policies continued…
L. 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.
M. 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.
N. 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.
O. 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.
P. 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.
Q. 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).
For engineering services provided under contract,
revenue is recognised in accordance with a
specified unit of production based on a rate
agreed to with the customer (for example MAR
units delivered 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
Vysarn Limited (ABN 41 124 212 175) and controlled entities | ASX : VYS Notes to the Consolidated Financial Statements
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Note 2: Summary of Significant Accounting Policies continued…
37
received prior to work being performed and is
allocated to the performance obligations within
the contract and recognised on satisfaction of the
performance obligation.
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 income 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.
R. Borrowing Costs
Borrowing costs are recognised in profit or loss in
the period in which they are incurred.
S. 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.
T. 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
Annual Report for the financial year ending 30 June 2023 38
Notes to the Consolidated Financial Statements
Note 2: Summary of Significant Accounting Policies continued…
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.
U. 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.
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.
V. 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.
W. 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.
Vysarn Limited (ABN 41 124 212 175) and controlled entities | ASX : VYS Notes to the Consolidated Financial Statements
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39
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.
X. 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.
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).
Y. 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-
Annual Report for the financial year ending 30 June 2023 40
Notes to the Consolidated Financial Statements
Note 2: Summary of Significant Accounting Policies continued…
generating unit to which the asset belongs. Assets
that do not have independent cash flows are
grouped together to form a cash-generating unit.
Z. 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.
AA. 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).
AB. 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 2023.
The Group’s assessment of the impact of these
new or amended Accounting Standards and
interpretations, most relevant to the Group, are
set out below.
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 2024 instead of 1 January 2023.
They will first be applied by the Group in the
financial year commencing 1 July 2024.
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 2024 and will
be first applied by the Group in the financial year
commencing 1 July 2024.
AASB 2021-2: Amendments to Australian
Accounting Standards – Disclosure of Accounting
Policies and Definition of Accounting Estimates
The main amendments relate to:
a. AASB 7 – clarifies that information about
measurement bases for financial instruments is
expected to be material to an entity’s financial
statements;
b. AASB 101 – requires entities to disclose their
material accounting policy information rather
than their significant accounting policies; and
c. AASB 108 – clarifies how entities should
distinguish changes in accounting policies and
changes in accounting estimates.
d. AASB 134 – to identify material accounting
policy information as a component of a
complete set of financial statements; and AASB
Practice Statement 2 – to provide guidance
on how to apply the concept of materiality to
accounting policy disclosures.
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.
AASB 2022-6 Amendments to Australian
Accounting Standards – Non-current Liabilities
with Covenants
AASB 2022-6 amends AASB 101 Presentation of
Financial Statements to improve the information
an entity provides in its financial statements
about liabilities arising from loan arrangements
for which the entity’s right to defer settlement of
those liabilities for at least twelve months after the
reporting period is subject to the entity complying
with conditions specified in the loan arrangement.
Practice Statement 2 Making Materiality
Judgements is also amended regarding assessing
whether information about covenants is material for
disclosure. AASB 2022-6 also amends AASB 2020-1
by deferring the application date by 12 months.
Vysarn Limited (ABN 41 124 212 175) and controlled entities | ASX : VYS Notes to the Consolidated Financial Statements
Notes to the Consolidated Financial Statements
Note 2: Summary of Significant Accounting Policies continued…
41
This amending standard mandatorily applies
to annual reporting periods commencing on
or after 1 January 2023 regarding the deferred
application date of AASB 2020-1 and the remaining
amendments to disclosures apply to annual
reporting periods commencing on or after 1
January 2024. This amendment to disclosures will
be first applied by the Group in the financial year
commencing 1 January 2024.
The likely impact of the above accounting
standards not yet adopted on the financial
statements of the Group is yet to be determined.
AC. 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.
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 53. 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.
Annual Report for the financial year ending 30 June 2023 42
Notes to the Consolidated Financial Statements
Note 2: Summary of Significant Accounting Policies continued…
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
The Group has determined that the acquisition
of Project Engineering (WA) Pty Ltd constitutes
a business combination in accordance with
the definitions and guidance provided by AASB
3 Business Combinations (“AASB 3”) and has
provisionally accounted for the acquisition
in accordance with that standard at 30 June
2023. In accordance with AASB 3 the assets
and liabilities acquired have been recorded by
the Group at their acquisition date fair values,
resulting in goodwill of $2,409,334.
Impairment of Goodwill
Goodwill is allocated to a cash generating unit
or units (CGU’s) according to management’s
expectations regarding which assets will be
expected to benefit from the synergies arising
from the business combination that gave rise to
the goodwill. The recoverable amount of a CGU is
based on value in use calculations. Refer to “Note
25” on page 61 for further information.
Note 3: Operating Segments
Identification of Reportable Segments
The Group has identified its reportable 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.
Revenue received from the reportable segments are received solely from external Australian customers.
The major results of the Group’s reportable segments are consistent with the presentation of these
consolidated financial statements.
Reportable Segments
1. Segmented external revenues
Pentium Hydro
Project Engineering
Pentium Test Pumping
Pentium Water
Vysarn
Total
2. Segmented net profit before tax
Pentium Hydro
Project Engineering
Pentium Test Pumping
Pentium Water
Vysarn
Total
3. Segmented assets
Pentium Hydro
Project Engineering
Pentium Test Pumping
Pentium Water
Vysarn
Total
30-June-23
30-June-22
$
$
50,982,210
44,071,400
7,149,711
-
2,759,291
1,559,623
4,065,944
666,383
-
-
64,957,156
46,297,406
7,330,593
1,572,778
430,122
642,516
5,552,258
-
342,363
(86,075)
(2,900,439)
(1,713,365)
7,075,570
4,095,181
47,480,967
43,713,972
5,057,288
5,321,623
1,517,579
701,936
-
4,472,267
858,618
203,863
60,079,393
49,248,720
Vysarn Limited (ABN 41 124 212 175) and controlled entities | ASX : VYS Notes to the Consolidated Financial Statements
Notes to the Consolidated Financial Statements
Note 3: Operating Segments continued…
43
Reportable Segments
4. Segmented liabilities
Pentium Hydro
Project Engineering
Pentium Test Pumping
Pentium Water
Vysarn
Total
30-June-23
30-June-22
$
$
19,002,728
18,518,391
3,643,460
1,221,779
747,082
2,540,679
-
1,101,088
603,419
940,432
27,155,728
21,163,330
Note 4: Revenue From Contracts With Customers
Revenue recognised over a period of time from contracts with Australian customers:
30-June-23
30-June-22
$
$
▪ Drilling services
▪ Engineering Services
▪ Dry-hire revenue
▪ Test Pumping Services
▪ Consultancy Services
Sub-total
38,487,910
34,744,037
7,149,711
1,682,335
2,705,170
4,077,439
-
1,252,086
1,551,623
666,383
54,102,565
38,214,129
Revenue recognised at a point in time from contracts with Australian customers:
▪ Sale of goods (consumables)
▪ Mobilisation / demobilisation
Sub-total
Total revenue
Note 5: Other Income
Interest income
Fuel tax rebate
Other revenue
Net gain on disposal of assets
Total
10,697,240
157,351
7,353,187
730,090
10,854,591
8,083,277
64,957,156
46,297,406
30-June-23
30-June-22
$
29,587
11,334
99,735
18,343
159,000
$
104
8,818
155,307
108,852
273,081
Annual Report for the financial year ending 30 June 2023 44
Notes to the Consolidated Financial Statements
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 - borrowings
▪ Interest - leases
▪ Bank fees
Total
30-June-23
30-June-22
$
$
869,080
1,938,110
49,305
583,303
1,278,002
61,696
2,856,495
1,923,001
4,525,756
2,889,681
304,680
1,139,588
431,544
38,369
225,003
939,716
103,374
36,569
6,439,937
4,194,343
4,563,099
4,253,346
312,353
249,412
4,875,452
4,502,758
443,174
15,987
73,193
532,354
444,166
21,479
11,813
477,458
Vysarn Limited (ABN 41 124 212 175) and controlled entities | ASX : VYS Notes to the Consolidated Financial Statements
Notes to the Consolidated Financial Statements
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)
B. Prima Facie Tax Payable
30-June-23
30-June-22
$
$
2,223,380
391,042
588,590
3,203,012
1,297,728
14,914
(74,191)
1,238,451
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 30%
(2022: 26%)
2,122,671
1,022,806
Add/(less) tax effect of:
Entertainment
Inventory
Plant and equipment
Share based payments
Transferred losses
Other non-deductible expenses
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
Spare parts
Net deferred tax
14,893
-
400,360
102,490
(30,826)
14,151
(9,317)
588,590
3,203,012
1,406
-
248,672
25,844
-
-
14,914
(74,191)
1,238,451
-
-
-
-
-
-
-
-
20,128
312,001
196,550
219
33,680
259
1,228,199
1,791,036
14,425
137,831
75,605
1,222
55,381
2,685
2,818,349
3,105,497
(47,709)
(124,012)
(1,249,514)
(1,401,669)
(6,639,777)
(4,509,747)
-
(13,020)
(7,937,000)
(6,048,448)
(6,145,964)
(2,942,951)
Annual Report for the financial year ending 30 June 2023 46
Notes to the Consolidated Financial Statements
Note 7: Income Tax Expense continued…
Note 7: Income Tax Expense continued…
30-June-23
30-June-22
$
$
E. Deferred income tax related to items charged or credited directly to equity
2,594
Decrease / (increase) in deferred tax assets
1,748
1,748
2,594
F. Deferred income tax (revenue)/expense included in income tax
expense comprises:
Decrease / (increase) in deferred tax assets
(Decrease) / increase in deferred tax liabilities
Change in tax rate and under provision
2,982,013
241,603
(758,633)
1,058,719
979,632
-
3,203,012
1,300,322
At 30 June 2023, the Company has carried forward revenue tax losses of $4,093,998 (2022: $11,2783,398).
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
Note 9: Earnings Per Share
30-June-23
30-June-22
$
$
56,626
26,050
82,676
51,904
19,730
71,634
30-June-23
30-June-22
$
$
Earnings per share for (loss)/profit
Profit / (Loss) after income tax attributes to the owners of Vysarn
Limited
3,872,558
2,856,729
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
Number
Number
396,010,657
389,969,563
412,677,325
419,969,563
0.0098
0.0094
0.0073
0.0068
Vysarn Limited (ABN 41 124 212 175) and controlled entities | ASX : VYS
Notes to the Consolidated Financial Statements
Notes to the Consolidated Financial Statements
Note 9: Earnings Per Share continued…
47
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-23
30-June-22
$
8,309,432
8,309,432
$
5,706,447
5,706,447
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-23
30-June-22
$
$
3,872,558
2,856,729
431,544
103,374
4,875,451
4,502,758
(18,343)
(108,852)
3,203,012
1,238,451
(1,274,117)
(1,080,252)
(4,409,283)
(1,003,277)
478,957
3,040,102
(514,673)
1,122,515
(534,996)
2,383,690
9,664,935
9,499,462
Annual Report for the financial year ending 30 June 2023
48
Notes to the Consolidated Financial Statements
Note 11: Current Assets – Trade And Other Receivables
Trade receivables
Total
30-June-23
30-June-22
$
$
10,395,786
5,986,504
10,395,786
5,986,504
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 2023 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 the “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
Contract Assets
Other current assets
Total
30-June-23
30-June-22
$
4,281,967
4,281,967
$
3,599,105
3,599,105
30-June-23
30-June-22
$
591,254
1,523,280
60,705
$
806,469
342,469
-
2,175,239
1,208,367
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-23
30-June-22
$
-
886,537
886,537
$
53,438
436,618
490,056
Vysarn Limited (ABN 41 124 212 175) and controlled entities | ASX : VYS Notes to the Consolidated Financial Statements
Notes to the Consolidated Financial Statements
49
Note 15: Plant and Equipment
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
Leasehold improvements
Cost
Accumulated depreciation
Net carrying amount
Assets held not ready for use
Cost
Net carrying amount
Total plant and equipment
Cost
Accumulated depreciation
Net carrying amount
30-June-23
30-June-22
$
$
32,324,058
28,375,076
(10,079,196)
(7,009,904)
22,244,862
21,365,172
13,538,268
13,408,543
(4,610,282)
(3,227,893)
8,927,986
10,180,651
393,628
(224,600)
169,028
281,935
(126,350)
155,585
16,158
(11,950)
4,208
2,218,204
2,218,204
-
-
-
-
-
46,272,113
42,065,554
(14,926,028)
(10,364,147)
31,346,084
31,701,407
Plant and
equipment
Trucks,
trailers
and light
vehicles
Office
Equipment
Leasehold
Improvements
Assets Held
Not Ready
for Use
$
$
$
$
$
Total
$
Consolidated Group
Carrying amount at
30 June 2021
21,032,822
8,402,172
113,662
Additions
2,867,169
472,878
113,889
Acquired as part of asset
acquisition
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 as at 30 June 2022
21,365,172
10,180,651
155,585
21,365,172
10,180,651
155,585
Carrying amount at
30 June 2022
Additions
Disposals
-
-
-
-
-
-
-
- 29,548,656
-
-
-
-
-
-
3,453,936
3,540,509
(588,348)
(4,253,346)
31,701,407
31,701,407
1,791,947
164,739
111,998
16,158
2,218,204
4,303,046
(61,169)
(35,015)
(305)
(96,489)
(4,561,881)
Depreciation expense
(3,069,292)
(1,382,389)
(98,250)
(11,950)
Balance at 30 June 2023
20,026,658
8,927,986
169,028
4,208
2,218,204 31,346,083
(i) Several items of plant and equipment were sold during the period resulting in a gain on disposal of assets of $18,343.
Annual Report for the financial year ending 30 June 2023
50
Notes to the Consolidated Financial Statements
Note 16: Right-Of-Use Assets
Leasehold premises
NON-CURRENT
Land and buildings - right-of-use
Less: accumulated amortisation
Total
Note 17: Borrowings
CURRENT
Insurance premium funding (a) – at amortised cost
Asset finance facilities (a) – at amortised cost
Current maturities of long-term bank loan (b) – at amortised cost
Sub-total
NON-CURRENT
30-June-23
30-June-22
$
$
1,116,125
1,095,323
(850,843)
(538,490)
265,282
556,833
30-June-23
30-June-22
$
$
95,825
4,165,446
192,470
-
3,054,858
2,493,542
4,453,742
5,548,400
Asset finance facilities (a) – at amortised cost
5,248,685
4,143,564
Long-term bank loan, net of current maturities (b) – at amortised cost
-
212,956
Sub-total
Total
5,248,685
4,356,520
9,702,427
9,904,920
A. Asset Finance Facilities
The asset finance facilities bear fixed interest at
fixed prevailing market rates (ranging from 2.73%
to 6.5%) 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.
Vysarn Limited (ABN 41 124 212 175) and controlled entities | ASX : VYS Notes to the Consolidated Financial Statements
Notes to the Consolidated Financial Statements
51
Note 18: Trade and Other Payables
Trade payables
GST liability
Accruals
ATO client account
Deferred Revenue
Other payables
Total
Note 19: Employee Liabilities
CURRENT
Provision for annual leave
Provision for long Service leave
Superannuation liability
Sub-total
NON-CURRENT
Provision for long service leave
Sub-total
Total
30-June-23
30-June-22
$
7,147,477
406,065
967,867
-
12,555
678,183
$
5,808,637
22,971
186,833
47,063
32,184
74,357
9,212,147
6,172,045
30-June-23
30-June-22
$
$
559,538
34,314
602,670
1,196,522
257,487
-
476,460
733,947
61,314
61,314
44,933
44,933
1,257,836
778,880
The Group’s exposure to liquidity risk related to trade and other payables is disclosed in “Note 23” on
page 55.
Note 20: Share Capital
30-June-23
30-June-22
$
$
A. Share Capital
405,289,196 (30 June 2022: 391,955,864) fully paid ordinary shares
20,029,354
19,495,181
Ordinary Shares
During the 12-month period ended 30 June 2023, the Group issued 13,333,332 ordinary shares (30 June 2022:
5,000,000). All issued shares are fully paid.
The issue of 10,000,000 shares related to the exercise of options under the Chairman’s Offer, receiving
$540,000 in proceeds. The issue of 3,333,332 shares related to the vesting of tranche 1 of the Directors’
performance rights and were issued for $NIL consideration.
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.
Annual Report for the financial year ending 30 June 2023 52
Notes to the Consolidated Financial Statements
Note 20: Share Capital continued…
B. Movement in Ordinary Capital
Ordinary Shares
30-June-23
30-June-23
30-June-22
30-June-22
At the beginning of the
reporting period
Performance rights
vested during the period
Options exercised during
the period
13-Sept-22
11-May-23
No.
$
No.
$
391,955,864
19,495,181
386,955,864
19,130,558
3,333,332
-
5,000,000
375,000
Transaction costs
-
(5,827)
10,000,000
540,000
-
-
-
(10,377)
Total
405,289,196
20,029,354
391,955,864
19,495,181
Note 21: Reserves
A. Share Based Payment Reserve
10,000,000 options (30 June 2022: 20,000,000) and 6,666,668
performance rights (30 June 2022: 10,000,000) on issue
B. Movement in Share Based Payment Reserve
Share Based Payment Reserve
At the beginning of the period
Options lapsed under the Managing Director Options Offer
- Transfer to retained earnings
Options exercised and transferred to retained earnings
- Chairman Options Offer
Share based payments
Total
30-June-23
30-June-22
$
$
623,211
555,667
555,667
452,293
(123,000)
(241,000)
431,544
623,211
-
-
103,374
555,667
Refer to “Note 22” on page 53 which outlines the movement in the current period’s share-based
payment expense.
Vysarn Limited (ABN 41 124 212 175) and controlled entities | ASX : VYS
Notes to the Consolidated Financial Statements
Notes to the Consolidated Financial Statements
53
Note 22: Share Based Payments
During the year ended 30 June 2023 the Company recorded the following share-based payments:
Share Issue
3,333,332 performance rights were converted to fully paid ordinary shares and issued to Executive
Directors as part of the Performance Rights Incentive. These performance rights had been expensed in
full as at 30 June 2022. 10,000,000 options were converted to fully paid ordinary shares and issued to the
Chairman as part of the Chairman’s Options Offer. No further shares were issued during the year ended
30 June 2023.
Options
During the year ended 30 June 2023 the Company issued 10,000,000 options over ordinary shares under
the Managing Directors Options Offer (30 June 2022: nil). 10,000,000 options were exercised for $0.054
per option, which amounted to $540,000 in gross proceeds received.
Options
30-Jun-23
30-Jun-23
30-Jun-22
30-Jun-22
At the beginning of the reporting period
20,000,000
364,000
20,000,000
364,000
No.
(Cumulative in $)
No.
(Cumulative in $)
Managing Director options lapsed
during the period - transferred to
retained earnings
Chairman options exercised during
the period - transferred to retained
earnings
(10,000,000)
(264,000)
(10,000,000)
(123,000)
Options issued during the period under
the Managing Directors Options Offer (a)
10,000,000
89,909
-
-
-
-
-
-
Total
10,000,000
89,909
20,000,000
364,000
a. On 24 November 2022, the Company issued 10,000,000 Incentive Options to Mr. James Clement, with
an exercise price of $0.075 and an expiry date of 5 July 2024.
b. The value of the 10,000,000 Incentive Options will be recognised over the remaining option term to
their expiry on 3 July 2024 as a result of their service condition for vesting.
c. The weight average contractual life of options on issue is 1 year (2022: 0.6 years). The weighted average
exercise price of options on issue is $0.085 per option (2022: $0.075 per option).
The fair value of the options issued has been determined using a Black-Scholes option pricing model with
the following inputs:
Managing Director Options
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
Valuation per option $
Total valuation
10,000,000
24-Nov-2022
$0.085
14-Dec-2022
$0.075
37.33%*
1.61 years
-
3.16%
$0.02247
$224,774
* The volatility rate has been determined with reference to the entity’s historical volatility for a comparable period, factoring in
adjustments as a result of the COVID 19 Pandemic as well as the diversification of the Group’s business into a vertically integrated
water service and waterwell drilling provider.
An amount of $89,909 has been recognised as an expense in the Statement of profit or loss and other
comprehensive income during the period, noting the total expense calculated as the value of the
10,000,000 Incentive Options will be recognised over the remaining option term to 3 July 2024 as a result
of their service condition.
Annual Report for the financial year ending 30 June 2023 54
Notes to the Consolidated Financial Statements
Note 22: Share Based Payments continued…
Performance Rights
During the year ended 30 June 2023, the Company did not issue any performance rights as performance
incentives to key management personnel.
Performance rights
30-Jun-23
30-Jun-23
30-Jun-22
30-Jun-22
At the beginning of the reporting period
10,000,000
191,667
10,000000
191,667
No.
(Cumulative in $)
No.
(Cumulative in $)
Performance rights issued during
the period
Performance Rights exercised as
performance incentives to Executive
Directors
Expense recognised in the period for
existing performance rights – over their
vesting period
-
(3,333,332)
-
-
-
341,635
-
-
-
-
-
-
Total
6,666,668
533,302
10,000,000
191,667
As at 30 June 2023, 6,666,668 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
2
3
3,333,333
3,333,334
30 June 2023
▪ Employment condition
30 June 2024
▪ Cumulative EPS condition
Where the:
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).
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
2023
No.
No.
No.
No.
Peter Hutchinson
-
James Clement
5,000,000
Sheldon Burt
5,000,000
Total
10,000,000
-
-
-
-
-
1,666,666
1,666,666
3,333,332
-
-
-
-
Closing
balance
No.
-
3,333,334
3,333,334
6,666,668
Vested during
the year
No.
-
-
-
-
During the year ended 30 June 2023, 3,333,332 performance rights vested and were exercised upon their
vesting for $Nil consideration, resulting in the issue of 3,333,332 fully paid ordinary shares.
Vysarn Limited (ABN 41 124 212 175) and controlled entities | ASX : VYS
Notes to the Consolidated Financial Statements
Notes to the Consolidated Financial Statements
Note 22: Share Based Payments continued…
55
Performance Rights
At 30 June 2023, the unissued ordinary shares of the Company under performance rights are as follows:
Class
B
C
Number Under
Performance
Rights
3,333,332
3,333,336
Total
6,666,668
Value at Grant
Date
Date of Vesting
($)
191,667
191,667
383,334
1-Jul-23
1-Jul-24
-
Management
Probability
Assessment
30-June-23
100%
100%
-
Fair Value
($)
191,667
191,667
383,334
The executive performance rights were valued based on the Company’s share price as at the date of
their approval for issue. A total valuation of $383,334 has been determined for the remaining tranches,
assuming satisfaction of performance conditions in full and 100% vesting rate.
The conditions for Tranche 2 of the performance rights were successfully met during the period and
subsequently vested on 1 July 2023. 100% of these performance rights have been expensed in full as at
30 June 2023. In respect of tranche 3 of the performance rights, it was determined that the achievement
of the vesting conditions are more likely then unlikely at this time noting the Company’s operational
steady state earnings and forecast growth rate. As a result, tranche 3 has been assessed with a 100%
probability likelihood.
$341,635 in share-based payments was recorded as an expense in the statement of profit or loss and
other comprehensive income during the year ended 30 June 2023 (30 June 2022: $103,374) in relation to
the performance rights.
Share Based Payments Expense
Share based payment expense is comprised as follows:
Options
Performance rights
Total share-based payments expense
30-June-23
30-June-22
$
89,909
341,635
431,544
$
-
103,374
103,374
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.
Annual Report for the financial year ending 30 June 2023 56
Notes to the Consolidated Financial Statements
Note 23: Financial Instruments & Fair Value Measurement continued…
With respect to specific financial assets and liabilities, the following valuation methods have been used:
V 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.
V Other loans and amounts due are determined by discounting the cash flows, at market rates of similar
borrowings, to their present value.
V Contingent consideration payable is carried at fair value and 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.
All financial assets and liabilities carried at fair value are level 2 within the fair value hierarchy. 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.
D. 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.
E. Foreign Currency 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 2023, 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 2023, the Group did
not enter into any forward foreign currency contracts.
F. Interest Rate Risk
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.
Vysarn Limited (ABN 41 124 212 175) and controlled entities | ASX : VYS Notes to the Consolidated Financial Statements
Notes to the Consolidated Financial Statements
Note 23: Financial Instruments & Fair Value Measurement continued…
57
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-23
30-June-22
-
195,209
2,570,214
2,570,214
-
195,209
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 2023
Financial liabilities
-50
12,851
12,851
30 June 2022
Cash and equivalents
-50
976
976
50
50
(12,851)
(12,851)
(976)
(976)
G. Operational Risk
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;
V Compliance with regulatory and other legal 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.
H. 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.
Annual Report for the financial year ending 30 June 2023 58
Notes to the Consolidated Financial Statements
Note 23: Financial Instruments & Fair Value Measurement continued…
The Group’s debt-to-adjusted capital ratio at the end of the reporting period was as follows:
Capital Management
Total liabilities
Less: cash and cash equivalents
Net debt
Total capital
Debt-to-capital ratio at the end of the period
30-June-23
30-June-22
($)
($)
27,155,729
22,163,330
(8,309,432)
(5,706,447)
18,846,297
15,456,883
32,923,664
28,085,390
0.57
0.55
I. 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.
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 2023 and 1 July 2022 was determined as follows for trade
receivables:
Current
< 30
31 - 60
61 - 120
> 120
Total
($)
1-July-22
Expected loss rate
0%
0%
0%
Gross carrying amount
- trade receivables
Loss allowance
30-June-23
Expected loss rate
Gross carrying amount
- trade receivables
5,986,504
4,955,482
1,031,022
-
0%
-
0%
-
0%
10,395,786
10,186,915
208,871
Loss allowance
-
-
-
0%
-
-
0%
-
-
3%
-
-
3%
-
-
5,986,504
-
10,395,786
-
Trade receivables are written off when there is no reasonable expectation of recovery. Indicators that
there is no reasonable expectation of recovery include, amongst others, the failure of a debtor to engage
in a repayment plan with the Group and failure to make contractual payments for a period of greater
than 120 days past due.
Impairment losses on trade receivables are presented as net impairment losses within operating profit.
Subsequent recoveries of amounts previously written off are credited against the same line item. The
Vysarn Limited (ABN 41 124 212 175) and controlled entities | ASX : VYS
Notes to the Consolidated Financial Statements
Notes to the Consolidated Financial Statements
Note 23: Financial Instruments & Fair Value Measurement continued…
59
Group has not recognised and impairment losses recognised in the statement of profit or loss as at
30 June 2023 arising from contracts with customers. The Group’s receivables primarily consist of Tier
1/Tier 2 Mining companies on 30-day net terms with no noted debtor payment issues to date since
commencement of current activities.
J. Exposure to Credit Risk
The carrying amount of the Group’s financial assets represents the maximum credit exposure. The credit
risk on liquid funds is limited because the counterparties are banks with a minimum credit rating of
AA assigned by reputable credit rating agencies. The Group’s maximum exposure to credit risk at the
reporting date was:
Exposure to credit risk
Cash and cash equivalents - AA Rated
Trade receivables
Total
30-June-23
30 -June-22
($)
($)
8,309,432
5,706,447
10,395,786
5,986,504
18,705,218
11,692,951
K. 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
$
$
$
$
$
Non-derivatives
30 June 2023
Interest bearing
Borrowings
Lease liability
Non-interest bearing
4,730,547
2,861,834
1,908,105
254,828
72,405
-
-
-
Trade and other payables
Contingent consideration
9,212,147
250,000
-
254,983
Total non-derivatives
14,447,522
3,189,222
1,908,105
30 June 2022
Interest bearing
Lease liability
Trade payables
5,810,842
3,312,829
332,872
241,587
1,162,581
72,405
Non-interest bearing
Trade and other payables
6,172,045
250,000
-
-
250,000
250,000
Total non-derivatives
12,565,759
3,804,416
1,484,986
-
-
-
-
-
-
-
-
-
9,500,486
327,233
9,212,147
504,983
19,544,849
10,286,252
646,864
6,172,045
750,000
17,855,161
Annual Report for the financial year ending 30 June 2023 60
Notes to the Consolidated Financial Statements
Note 24: Related Party Transactions
During the year ended 30 June 2023, 10,000,000 options were issued to the Directors under the Managing
Director Options Offer. Additionally, 3,333,332 ordinary shares were issued to the Directors as a result of
a number of Performance Rights vesting.
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
Post-
employment
Equity
Short-term
Salary, Fees &
Commissions
STI cash
bonus
Non-
monetary
benefits
Other
employee
benefits
Post-
employment
Superannuation
Share-based
payments
2023
$
$
$
$
$
$
Total
$
Chairman
Peter Hutchinson
54,545
-
-
Executive Directors
James Clement1, 2
382,475
Sheldon Burt 2
Total
277,519
714,539
10,000
20,000
30,000
17,233
-
17,233
-
-
-
-
5,727
-
60,272
25,292
25,725
56,744
270,116
161,428
705,116
484,672
431,544
1,250,060
3. The amount of $17,233 disclosed as a non-monetary benefit for Mr Clement is a salary sacrificed amount pertaining to a novated
lease on a motor vehicle.
4. Refer to Section 6 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.
Vysarn Limited (ABN 41 124 212 175) and controlled entities | ASX : VYS Notes to the Consolidated Financial Statements
Notes to the Consolidated Financial Statements
61
Note 25: Acquisition of Assets
A. Acquisition of Project Engineering
Summary of Business Combination
On 1 July 2022 the Company entered into a binding Share Sale Agreement for the acquisition of 100% of the
issued capital of Project Engineering. Under the terms of the acquisition, the Company acquired 100% of the
issued shares in Project Engineering for consideration of $4,280,805 cash, adjusted for post working capital
adjustments (“Transaction”).
The Company assumed control of the trading activities of Project Engineering with effect from 1 July
2022.
The Company paid $4,280,805 in cash to the vendors of Project Engineering as consideration for all of the
issued capital of Project Engineering.
Project Engineering is an Australian company. The Transaction was in line with the Company’s vertical
integration growth strategy in water services and will help to organically grow the Company’s existing
service offerings through injection testing and managed aquifer recharge consulting.
Having reviewed the terms of the Transaction, the Company has concluded that the Project Engineering
Transaction is most accurately reflected as a business combination for accounting purposes as per the
definitions and requirements of AASB 3. Details of the purchase consideration and assigned fair value of
assets and liabilities acquired are as follows:
Purchase Consideration
Cash paid (net of working capital adjustments)
Fair value consideration
Fair Value of Net Tangible Assets
Property, plant and equipment
Cash and cash equivalents
Trade and other receivables
Trade and other payables
Loans
Total
Goodwill
1-Jul-22
$
4,280,805
4,280,805
23,505
1,483,030
1,105,731
(739,166)
(1,628)
1,871,472
Excess of consideration over fair value of net assets acquired
2,409,334
$44,327 of acquisition related costs were incurred as a result of the above transaction and have been
expensed in the Statement of Profit or Loss and other Comprehensive Income for the year ended 30
June 2023 within Administration and corporate expenses.
Refer to “Note 3” on page 42 for further information regarding the contribution Project Engineering has
made since acquisition date.
Goodwill
The goodwill on acquisition comprises the operational expertise and industry know-how relating to the
Project Engineering business, as a specialised and industry focused hydraulic engineering business that
primarily services the resources sector in Western Australia. Goodwill is not deductible for tax purposes.
The recoverable amount of a CGU is based on value in use calculations. These calculations are based on
projected cash flows approved by management covering a period of 1 year (extrapolated to a maximum
of five years). Management’s determination of cash flow projections and gross margins are based on past
performance and its expectation for the future. The present value of future cash flows has been calculated
using an average growth rate of 3% for cash flows in year two to five which is based on the historical
average, a terminal value growth rate of 3% and a discount rate of 13% to determine value-in-use.
Annual Report for the financial year ending 30 June 2023 62
Notes to the Consolidated Financial Statements
Note 25: Acquisition of Assets continued…
B. 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:
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
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 2023, 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.
$245,017 was paid to the Executive during the 30 June 2023 year, with a further $504,983 expected to be
paid over the remaining relevant financial years as outlined above.
Vysarn Limited (ABN 41 124 212 175) and controlled entities | ASX : VYS Notes to the Consolidated Financial Statements
Notes to the Consolidated Financial Statements
63
Note 26: Parent Entity Disclosures
A. 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
B. Financial Performance
Loss for the year
Other comprehensive income
Total comprehensive income
30-June-23
30-June-22
$
$
17,705,705
15,352,274
(2,334,444)
353,463
15,371,261
15,705,737
890,161
1,650,518
2,540,679
179,318
761,115
940,433
12,830,582
14,765,304
20,029,354
19,495,181
623,210
555,667
(7,821,983)
(5,285,544)
12,830,581
14,765,304
30-June-23
30-June-22
$
$
(2,900,439)
(1,713,365)
-
-
(2,900,439)
(1,713,365)
C. 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.
Annual Report for the financial year ending 30 June 2023
64
Notes to the Consolidated Financial Statements
Notes to the Consolidated Financial Statements
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
Pentium Test Pumping Pty Ltd
Pentium Water Pty Ltd
Project Engineering (WA) Pty Ltd
Country of
Incorporation
Australia
Australia
Australia
Australia
Percentage Owned
30-Jun-23
30-Jun-2022
100%
100%
100%
100%
100%
100%
100%
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 2023.
Note 29: Events Subsequent After The Reporting Date
There is no other matter or circumstance that has arisen since 30 June 2023 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.
This acquisition, importantly, created a
platform that now provides genuine end to end
water management from extraction to disposal.
Vysarn Limited (ABN 41 124 212 175) and controlled entities | ASX : VYS Notes to the Consolidated Financial Statements
Notes to the Consolidated Financial Statements
Directors’ Declaration
65
DIRECTORS’ DECLARATION
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 2023 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 2023.
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 24 August 2023
Annual Report for the financial year ending 30 June 2023
66
Independent Auditor’s Report
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
entities (the “Group”), which comprises the consolidated statement of financial position
as at 30 June 2023, 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
2023 and of its financial performance for the year then ended; 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
Vysarn Limited (ABN 41 124 212 175) and controlled entities | ASX : VYS Independent Auditor’s Report
Independent Auditor’s Report
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
Revenue recognition
Refer to Note 2Q and Note 4 of the Financial Report
For the year ended 30 June 2023, the Group
had revenue of $64,957,156 from contracts
with customers for its hydrogeological and
dewatering business activities and contract
assets of $1,523,280 for goods/services yet
to be invoiced (accrued revenue).
In addition, the Group tracks a number
of costs associated with contracts with
customers through its contract fulfillment
costs. As at 30 June 2023, contract
fulfillment costs amounted to $591,254.
The determination of revenue recognition
requires Management judgements in
accounting for revenue, obligations,
discounts, incentives and rebates in
accordance with the Group’s identified
performance obligations as part of the
transaction, as required under AASB 15
Revenue from contracts with customers
(“AASB 15”).
Our procedures included, amongst others:
Understanding and evaluating the design
and implementation of the relevant controls
associated with the treatment of revenue,
contract assets, and contract fulfillment
costs, including, but not limited to, those
relating to identification of performance
obligations, discounts, incentives and rebates.
Testing the operating effectiveness of
relevant controls around revenue, contract
fulfillment costs, such as the review and
approval of progress claims and invoices by
customers.
Reviewing significant new contracts to
understand their terms and conditions,
including specified performance obligations
included within and whether Managements’
assessment for recognition of revenue,
contract assets, and contract fulfilment
costs 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,
contract asset, and contract fulfilment
cost amount recognised to the timing of
when the Group satisfies performance
obligations associated with the transaction
in accordance with AASB 15.
Assessing the entitlement and recoverability
for a sample of transactions within contract
assets, evaluating their consistency and
the basis of Management’s approach
for determining amounts recognised,
understanding and corroborating key
assumptions made, and recalculating
contract assets recognised.
Considering the adequacy of the disclosures
included within Note 2(q), Note 4 and Note
13 of the financial report.
Annual Report for the financial year ending 30 June 2023 68
Independent Auditor’s Report
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
Recoverability of Non-current assets
Refer to Note 2J, Note 15 and Note 25 of the financial report
Included in the consolidated statement of
financial position as at 30 June 2023 is an
amount of $34,030,430 relating to non-
current assets. This amount represents 57%
of total assets. $2,409,334 of this amount
relates to goodwill acquired in a business
combination.
AASB 136 Impairment of Assets (“AASB 136”)
requires an entity to test non-current assets
where there are indicators of impairment
and to test goodwill acquired in a business
combination for impairment annually.
The evaluation of the recoverable amount
of the Group’s cash generating units (‘CGUs)
requires significant Management judgement
in determining the key assumptions and
estimates, including but not limited to:
V growth rate assumptions; and
V discount factors
supporting the expected future cash flows
of the business and the utilisation of the
relevant assets.
Due to the significance to the Group’s
financial report and the level of
Management judgment involved in assessing
the recoverable amount of the Group’s
CGUs, we consider this to be a key audit
matter
Our procedures included, amongst others:
Understanding and evaluating the design
and implementation of the relevant
controls associated with the recognition of
non-current assets including capitalisation
of expenditure and the identification of
the CGUs.
Testing the operating effectiveness of
relevant controls around expenditure
capitalised as non-current assets, such as
the review and approval of expenditures
as per delegation of authority and capital
improvement approvals forms.
Assessing Management’s determination
of the Group’s CGUs based on our
understanding of the nature of the Group’s
businesses and how independent cash flows
are derived.
Evaluating and assessing the Group’s
assessment for impairment indicators
associated with its non-current assets for
each of it’s CGUs.
Critically evaluating and challenging
the methodology and key assumptions
around revenue and cost projections of
management in their preparation of forecast
models of the CGU encompassing goodwill
at 30 June 2023.
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 non-current assets as set
out within Note 2(j), Note 15 and Note 25 to
the financial report.
Vysarn Limited (ABN 41 124 212 175) and controlled entities | ASX : VYS Independent Auditor’s Report
Independent Auditor’s Report
69
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 – Project Engineering
Refer to Note 2(f), Note 2(b) and Note 25 of the financial report
On 1 July 2022 the Company entered into
a binding Share Sale Agreement for the
acquisition of 100% of the issued capital of
Project Engineering (WA) Pty Ltd (“ProEng”).
Under the terms of the acquisition, the
Company acquired 100% of the issued
shares in ProEng for consideration of
$2,600,000 cash, adjusted for post working
capital adjustments.
Our procedures included, amongst others:
Understanding and evaluating the design
and implementation of relevant controls
associated with the acquisition of ProEng.
Understanding and evaluating the key terms
and conditions associated within the Share
Sale Agreement for acquisition of ProEng.
Critically evaluating and challenging the
accounting treatment of the Group in
compliance with the requirements of AASB
3 and recognition of the acquisition of
ProEng as a business combination.
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 of
ProEng, and resulting goodwill recognised.
Checking the mathematical accuracy of the
calculations performed for the acquisition
accounting of ProEng.
Considering the adequacy of the disclosures
included within Note 2(f), Note 2(b) and
Note 25 of the financial report.
Annual Report for the financial year ending 30 June 2023 70
Independent Auditor’s Report
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 2(u) and Note 22 of the Financial Report
At 30 June 2023, a share-based payment
expense of $431,544 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
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.
Assessing the appropriateness of share-
based payment expensed during the year
pursuant to the requirements of Australian
Accounting Standards AASB 2 Share-based
Payment (“AASB 2”).
Assessing the Group’s accounting policy as
set out within Note 2(v) and disclosures
within Note 22 for compliance with the
requirements of AASB 2.
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 2023, 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.
Vysarn Limited (ABN 41 124 212 175) and controlled entities | ASX : VYS Independent Auditor’s Report
Independent Auditor’s Report
71
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.
Annual Report for the financial year ending 30 June 2023 72
Independent Auditor’s Report
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 2023. In our opinion, the Remuneration Report of Vysarn Limited,
for the year ended 30 June 2023, 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
MICHAEL LIPRINO
Executive Director
Perth, 24 August 2023
Vysarn Limited (ABN 41 124 212 175) and controlled entities | ASX : VYS Independent Auditor’s Report
Additional Shareholder Information
73
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 2
October 2023.
Corporate Governance
The Company’s 2023 Corporate Governance
Statement can be accessed at https://vysarn.com.
au/corporate-governance/
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.
Ordinary Share Capital
408,622,529 fully paid ordinary shares are held by
1,076 individual holders.
V Unlisted Options and Performance Rights:
Unlisted Options and Performance Rights do not
carry any voting rights.
Twenty Largest Shareholders
1 Molonglo Pty Ltd
Holder Name
Holding
% IC
69,100,000
16.91%
2 Garrison Holdings Pty Ltd
17,875,542
3 Mr Anthony John Power & Mrs Susan Janet Power
16,587,486
4 Mr Anastasios Karafotias
5 HSBC Custody Nominees (Australia) Limited
6 Mr Richard William Balston
7
Lonesearch Pty Ltd
8 Connada Pty Ltd
9 Mr Debesh Bhattarai
10 Richcab Pty Limited
11 National Nominees Limited
12 NJ Family Pty Ltd
13 Allora Equities Pty Ltd
14 BNP Paribas Nominees Pty Ltd
15
Yulgering Super Pty Ltd
16 Mr Frank Richardson & Mrs Lisa Joy Richardson
17 Mondo Electronics Pty Ltd
18 Richcab Pty Ltd
19 Cornucopia Assets Pty Ltd
20 Tombel Holdings Pty Ltd
Top 20 Total
Total issued capital
4.37%
4.06%
3.47%
3.05%
2.81%
2.73%
2.34%
2.14%
2.12%
14,176,621
12,442,847
11,500,000
11,166,666
9,550,648
8,750,000
8,676,098
8,159,574
2.00%
7,092,325
6,160,962
5,272,141
5,000,000
5,000,000
4,846,114
4,375,340
4,000,000
4,000,000
1.74%
1.51%
1.29%
1.22%
1.22%
1.19%
1.07%
0.98%
0.98%
233,732,364
57.20%
408,622,529
100.00%
Annual Report for the financial year ending 30 June 2023 74
Additional Shareholder Information
Substantial Shareholder
The names of Vysarn Limited’s substantial holders and number of shares in which each has a relevant
interest, as disclosed in substantial holding notices received by Vysarn Limited as at 2 October 2023, are
listed below:
Holder Name
Holding Balance
% of Issued Capital
Molonglo Pty Ltd
69,100,000
16.91%
Distribution of Shares
A distribution schedule of the number of holders of shares is set out below.
1 – 1,000
1,001 – 5,000
5,001 – 10,000
10,001 – 100,000
100,001 and over
Total
Fully Paid Ordinary Shares
Holders
Total Units
%
74
66
109
530
297
6,028
236,084
906,187
20,964,774
0.00%
0.06%
0.22%
5.13%
386,509,456
94.59%
1,076
408,622,529
100.00%
Restricted Securities
As at 2 October 2023 the Company does not have any ordinary fully paid shares held in escrow.
Unquoted Securities
As at 2 October 2023 the Company has on issue 10,000,000 Unlisted Options to one holder and 3,333,335
Performance Rights to two holders. The names of substantial security holders holding more than 20% of
an unlisted class of security are as follows:
Unlisted Options
Performance
Rights
-
10,000,000
-
1,666,668
1,666,667
-
10,000,000
3,333,335
Holder
Connada Pty Ltd
Lonesearch Pty Ltd
Holders individually less than 20%
Total
Unmarketable Parcels
Holdings of less than a marketable parcel of ordinary shares:
Holders: 95
Units: 51,696
On-market Buy Back
There is no current on-market buy-back.
Vysarn Limited (ABN 41 124 212 175) and controlled entities
Vysarn Limited (ABN 41 124 212 175) and controlled entities | ASX : VYS Additional Shareholder Information
We are genuinely excited by our future
prospects and as always, remain
focused on rewarding shareholders
with long term sustainable value
Vysarn Limited
ABN: 41 124 212 175
Level 1, 640 Murray St, West Perth WA 6005, Australia
PO Box 1974, West Perth WA 6872
T +61 (0) 8 6182 1790
E info@vysarn.com.au
vysarn.com.au