i recently took a 19.9% stake in BSA (the maximum I could...

i recently took a 19.9% stake in BSA (the maximum I could legally acquire w/out making a mandatory offer for the whole thing). make of that what you will, but here is the investment case in a nutshell. (always DYODD, this is not advice, just my opinion based solely on public information, and should not be relied upon at any time).

At 12c the current market cap is $9mm (75.3mm FDSO). The last balance sheet - Dec'24 - showed $11mm of net assets (book equity), including just $2mm of cash and $8mm (net) of positive working capital (ie receivables+contract assets less payables+contract liabilities). These asset categories have changed significantly since the last report, and I think the market is misunderstanding how much tangible asset value there is here.

For 3Q'25 (to March), BSA reported $8.6mm in EBITDA, $1.2mm in restructuring costs, and operating cash flow of $9.4mm. They do not report a quarterly balance sheet - but teasing out from prior quarters and reports, it looks like this $7.4mm in post-restructuring EBITDA equates to about $4.5mm in net income (ie increasing book equity) - assuming $1mm/qtr for D&A; 300k for interest expense/qtr; and a tax rate of 25% (maybe tax rare even lower than this given DTAs, more shortly). Hence book equity as of Mar'25 was around $15.5mm. OCF for the Mar qtr was $9.4mm - and since OCF comprises EBITDA less movement in working capital, interest expense and cash tax, we can deduce that the W/C benefit in the March quarter was about $2.7mm.

Ie, at Mar'25, the net assets were ~$15.5mm including a residual $5.3mm in net working capital.

Then at end-July they reported 4Q (Jun'25) numbers. This included a further $8.3mm in EBITDA (but $7.1mm in further restructuring costs so only $1.2mm 'net' EBITDA); $24mm of net cash; and an operating cash flow of $12.8mm FOR THE QUARTER. OK let's adjust net assets first: $1.2mm in EBITDA is probably a break-even or slightly positive net result - I think book equity as of Jun'25 is thus $16mm. OCF of $12.8mm was generated by EBITDA ($8.3mm) less cash tax (prob zero in the quarter) less interest expense (maybe $250k?) and adding working capital - thus, a positive working capital move of, lets say, $4mm in the quarter.

At year end, then, the net asset position is around $16mm, comprising $24mm cash; remaining net working capital of $1-$2mm; and maybe $1mm of PP&E. It seems to me - looking at the accounts and the already-booked $8.3mm of restructuring costs - that basically no other assets (tangible or otherwise are left). The key point is that the vast bulk of restructuring costs - the $8.3mm - have already been booked through the PnL and thus are reflected in book equity (even if the cash has not yet left the entity yet).

What are the residual liabilities? At Dec'24 the co reported $40mm of total liabilities - of which $26mm are negative working capital so already considered. $2mm of lease liabilities will have been fully worked through six months later (or small residual). Provisions reduce with business - clearly - so should be much lower than Dec ($7mm), maybe $2-3mm? and will likely relate to remaining Foxtel business (the last contract left) ie have assets/business to at least partially offset, it shold not be a pure cost center.

That leaves employee costs - $5mm on balance sheet in Dec - and we are told over $7mm will be for redundancies (and also separately that total cash out costs would be $10.5mm to restructure).

Net net, I think the $24mm Jun'25 cash balance will be reduced by $7.3mm (announced cash out redundancies); and a further $4-5mm to account for lease exits (small), further corporate overhead cuts; some true-up on residual provisions. This suggests pro forma net cash of say $12mm and residual book equity of maybe $14mm ($12mm cash, $3-5mm residual DTAs, and $1-3mm residual provisions).

If nothing else were on the table, and if this were not burning cash/sold as is (two assumptions), this would suggest ~19c per share of equity value.

The kicker of course is the massive tax loss position at the company (which is mostly NOT recognized in the balance sheet due to accounting quirks). BSA has $11mm of income tax losses, and $39mm of capital losses, with indefinite (ie perpetual) lives. Obviously, in the scope of the current situation, these have huge relevance for the value of the stub equity.

There are various tests you need to pass before you can use accumulated tax losses - but as long as the (assumed) acquiring entity passes the same/similar business test, these losses can be used by an acquirer. Hence, as long as the acquirer is an IT services/engineering/E&C firm providing networking services/maintenance, etc - for example any one of the under bidders or even the winner of the NBN contract - they could utilize these losses, over time, by using them to offset taxable income, and taxable capital gains, in their own business.

It is hard to put a precise $ value on $50mm of unutilized perpetual tax losses, but a rough metric may be 10-20c on the $, depending on the acquirer etc. At say 15c on the $, the value to BSA is another 10c a share, taking total value here close to 30c per share.

The final source of value is the listed shell. There is a world where some other company - unrelated to IT Services/networking/engineering - nevertheless likes/wants the listing and the cash balance and can sell an interesting equity story. In that case another business could be reverse merged into this shell, quite quickly and (in that scenario) would need to offer current owners more prospective upside than a 30c type outcome in a managed wind-down/sale scenario.

And if everything goes pear shaped, even in a 'hard' liquidation scenario with near zero for any intangibles; no value for the listing; and higher than expected run-off costs on the balance sheet, it looks like you have $5mm of excess buffer here at current prices.

DYODD.