Vysarn’s NewGround Acquisition Adds 25% EPS Accretion and Defensive Earnings

Vysarn Moves to Acquire NewGround in a Deal That Broadens Its Water Services Empire

Vysarn Limited (ASX: VYS) has announced a binding Share Sale Agreement to acquire NWG Enterprises Pty Ltd, trading as NewGround, a market-leading irrigation and water infrastructure business based in Western Australia. The Vysarn acquisition of NewGround water infrastructure business carries a total consideration of up to 33 million Vysarn shares and $25 million in cash, and is structured to be immediately earnings accretive while opening meaningful new revenue channels for the company.

This is a high-materiality announcement. The acquisition signals a significant strategic pivot, introducing a new operating segment and a defensive earnings profile that diversifies Vysarn well beyond its existing resources and utilities exposure.

A Structured Deal With Performance-Linked Upside

The Vysarn acquisition of NewGround water infrastructure business is structured in two parts: a fixed upfront payment and a series of contingent deferred payments tied to NewGround's future earnings performance over three years post-completion.

Upfront Consideration:

• $8.33 million in cash
• 28.6 million Vysarn shares valued at $0.7576 per share
• Total upfront equivalent consideration: $30.0 million
• 25.3 million shares escrowed for 12 months; 3.3 million shares escrowed for 24 months

Deferred Consideration Schedule (contingent on EBIT milestones):

This earn-out structure aligns the interests of NewGround's existing management with Vysarn shareholders. Deferred payments are only triggered if the business continues to grow its earnings, providing a built-in performance safeguard for Vysarn.

Acquisition Multiples at a Glance

Based on NewGround's assessed maintainable EBIT of $7.0 million, the deal implies the following Enterprise Value to EBIT (EV/EBIT) multiples depending on how many earn-out milestones are achieved:

These multiples remain relatively conservative for a business with NewGround's earnings profile and growth trajectory. Even at full consideration, the deal is priced at less than 6x maintainable EBIT, representing a disciplined entry point for what Vysarn describes as a market-leading operator.

Immediately Earnings Accretive by a Material Margin

One of the most compelling elements of this announcement is the anticipated earnings impact. Based on Vysarn's forecast FY2026 Net Profit Before Tax (as disclosed to the ASX on 2 March 2026) and NewGround's assumed maintainable NPBT, the acquisition is expected to be approximately 25% earnings per share (EPS) accretive to Vysarn shareholders on a pro forma basis.

"In line with the Company's strategy to build a multi-sectorial and multi-geographical, fundamentally driven integrated water services business, the acquisition of NewGround provides Vysarn with additional diversified sector exposure, revenue streams, and service capability."
— Vysarn Board

For investors, a 25% EPS accretion at the point of acquisition, before any realisation of growth synergies, is a significant figure. It suggests that even at the upfront consideration alone, the deal adds meaningful earnings power to the combined group.

Understanding Enterprise Value to EBIT: A Key Valuation Metric

EV/EBIT stands for Enterprise Value to Earnings Before Interest and Tax. It is a valuation multiple used to assess how much an acquirer is paying relative to a company's operating profitability.

Enterprise Value (EV) represents the total value placed on a business, incorporating both equity and debt obligations. It provides a comprehensive view of what it would cost to acquire the entire company.

EBIT measures a company's core operating earnings, stripping out the effects of financing decisions and tax structures. This makes it particularly useful for comparing companies with different capital structures.

Why Does This Matter for the Vysarn Deal?

A lower EV/EBIT multiple indicates a more attractively priced acquisition. At 4.3x on the upfront payment and a maximum of 5.9x if all earn-out milestones are hit, the Vysarn acquisition of NewGround water infrastructure business appears to be acquiring a cash-generative, established business at a reasonable market price for a services business of this nature.

Key Terms:

• EBIT — Earnings Before Interest and Tax; a core profitability measure
• NPBT — Net Profit Before Tax
• EPS Accretion — an increase in earnings per share resulting from an acquisition
• Earn-out — a deal structure where part of the purchase price is paid based on future performance
• Escrow — shares held and restricted from sale for a defined period post-transaction

Who Is NewGround?

Founded in 2018 by an executive with over 40 years of specific irrigation industry experience, NewGround has grown into a market-leading operator with more than 100 staff and facilities across Western Australia. It serves a blue-chip client base spanning local government, urban developers, sports precincts, and large-scale landscapers.

Its integrated business model spans the entire irrigation and water infrastructure value chain, combining project design, installation, maintenance, and wholesale distribution. This breadth provides both revenue diversification and margin opportunities through vertical integration.

What Services Does NewGround Offer?

NewGround's service capabilities include:

1. Project design of industrial irrigation systems
2. Irrigation and pump system installation
3. Ongoing maintenance of irrigation systems and turf assets
4. Contracted facilities management
5. Drainage and subsurface water management
6. Water efficiency and asset auditing
7. Earthmoving and civil works
8. Manufacture of irrigation and plumbing componentry
9. Wholesale distribution of irrigation and plumbing componentry
10. Vegetation management, turf management and renovation

This is not a narrow single-service business. Furthermore, NewGround's integrated supply chain enables it to wholesale and distribute products to third-party retailers and end customers, creating revenue streams that run parallel to, and independent of, its project and maintenance activities.

Strategic Rationale: Defensive Growth and a New Operating Segment

Vysarn's existing business is anchored in water services for the resources and utility sectors. That exposure has served the company well, but it also carries cyclical risk tied to commodity markets and resource capital expenditure cycles. The Vysarn acquisition of NewGround water infrastructure business directly addresses that vulnerability.

Three Strategic Pillars of the Deal

1. New Operating Segment — NewGround will form the foundation of a dedicated water infrastructure, irrigation, and facilities management division, expanding Vysarn's addressable market into government, urban development, and recreational infrastructure.

2. Defensive Earnings Profile — Vysarn's board explicitly characterises NewGround's earnings as countercyclical to its current resources and utilities exposure. Contracted maintenance, facilities management, and government relationships provide revenue streams that are not dependent on mining investment cycles.

3. National Growth Platform — Vysarn and NewGround have identified immediate national growth opportunities in facilities management, and medium-term opportunities to capture more of the water service value chain in the resources sector by leveraging NewGround's products and capabilities.

In addition, the acquisition is firmly in line with Vysarn's stated strategy: to build a multi-sectorial and multi-geographical integrated water services business.

Conditions and Timeline

The deal is not yet unconditional. Completion remains subject to the following conditions precedent, all of which must be satisfied or waived by 2 October 2026:

• Vysarn completing satisfactory due diligence on NewGround
• Vysarn securing funding sufficient to meet the upfront cash consideration on acceptable terms
• Obtaining consent or waivers from counterparties to material contracts containing change-of-control provisions

The cash component of the upfront consideration is expected to be funded through a combination of existing cash reserves and the drawdown of new acquisition debt facilities.

Investment Thesis: Scale, Diversification, and Earnings Quality

The NewGround acquisition advances Vysarn's investment case on multiple dimensions simultaneously.

For existing Vysarn shareholders, the key takeaway is that the company is not simply buying revenue. It is acquiring a structurally sound, earnings-generative business at a sensible multiple, with the deal structured to protect downside and reward continued outperformance.

For prospective investors, the combined group would present a broader and more resilient earnings base than Vysarn has historically offered, with meaningful near-term catalysts in the form of conditions being satisfied and completion of the transaction.

Why Investors Should Keep a Close Eye on Vysarn

Vysarn has moved decisively to acquire a well-established, cash-generative business at a disciplined valuation, with a deal structure that protects shareholders through performance-linked earn-outs. The strategic logic is clear: broaden the revenue base, introduce defensive earnings, and establish a platform for national expansion in water infrastructure and facilities management.

The announced ~25% EPS accretion on a pro forma basis is the kind of number that meaningfully re-rates an investment case, and that is before accounting for the growth opportunities Vysarn and NewGround have identified together.

With the condition precedent deadline set for 2 October 2026, the coming months will be the critical window for investors to monitor due diligence completion, debt facility confirmation, and any material contract consent outcomes.

Key Takeaway:

Vysarn has positioned itself as a diversified, integrated water services business with the NewGround acquisition, adding ~25% EPS accretion, a defensive earnings stream, and a national growth platform — all at a disciplined EV/EBIT entry multiple. With transaction completion targeted before October 2026, the next few months are pivotal for the Vysarn investment story.

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