DXN Limited
(formerly The Data Exchange Network Limited)
(ACN 620 888 548)
ANNUAL REPORT
For the year ended 30 June 2019
For personal use only <2>
For personal use only CONTENTS
Letter From CEO .................................................................................................................................4
Corporate Directory ............................................................................................................................6
Directors’ Report.................................................................................................................................7
Auditor’s Independence Declaration ............................................................................................ 25
Statement of Profit or Loss and Other Comprehensive Income ............................................. 26
Statement of Financial Position .................................................................................................... 27
Statement of Changes in Equity .................................................................................................... 28
Statement of Cash Flows .............................................................................................................. 29
Notes to the Financial Statements ............................................................................................... 30
Directors’ Declaration ..................................................................................................................... 61
Independent Audit Report .............................................................................................................. 62
Corporate Governance Statement ................................................................................................ 67
Additional Shareholder Information ............................................................................................ 75
DXN Limited | ANNUAL REPORT <3>
For personal use only The Hon Paul
Fletcher, Minister for
Communications, Cyber
Security and the Arts and
Mr Madden at the opening
of DXN-SYD01
Letter from CEO
It is with great pleasure that I present
to our shareholders the 2019 Annual
Report. FY19 represented an exciting
and formative period for DXN with the
construction during the year of our
flagship data centre in Sydney Olympic
Park. The data centre was officially
opened on 13 September 2019 by the
Hon Paul Fletcher, Federal Minister
for Communications, Cyber Safety
and the Arts.
DXN is looking at setting new industry standards
for rapid deployment, reliability, efficiency,
sustainability, connectivity and security in edge
and modular data centres.
DXN’s core business is modular data centres and we
have two divisions that support our ambitions.
• DXN Data Centres division owns and operates
data centres
• DXN Modules division designs, manufactures and
commissions modular edge data centres
Both operations utilise our prefabrication plant in
Balcatta (Perth, Western Australia) to design, install
and commission the data centres.
DATA CENTRE DIVISION
DXN has spent the period since our last annual report
building our future - the completion of stage 1 of our
flagship data centre in Sydney Olympic Park, designed
and built to Uptime Institute’s Tier III design standards
and certified to their construction standards. In April
this year, post development approval and design
certification, DXN commenced work on its first Data
Centre (DC) at Sydney Olympic Park. Completed in
four months, the data centre was declared ready for
service in August 2019 and handed over to operations
ready for business, showcasing the rapid deployment
of DXN’s modular design and commissioning
techniques. Our sales team have been working hard
and successfully secured our first customer in the
data centre in the same week the data centre was
officially opened. The team have have built a strong
pipeline of sales opportunities that we are now busily
working on and we expect a solid year ahead.
The colocation market in Australia is still growing
at a compound annual growth rate (CAGR) of 9% pa
according to Frost and Sullivan’s Colocation report
2019. This is despite the increase in cloud providers
uptake of data centre space amongst the major
data centre providers, with the colocation market
being largely neglected as a direct result. DXN is
well positioned with its Sydney Data Centre
(DXN-SYD01) to service the Sydney market due
to its close proximity to the Paramatta CBD and
the technology hubs Macquarie Park.
The key driver of colocation uptake is that
corporations and government still have the bulk
of their IT workloads held in an on-premise data
centres. 1The study found that 65% of enterprises
still maintain on premise data centres with 22% is
in colocation facilities and only 13% of IT workload
is in the cloud. With continued growth in colocation
services in Australia and DXN-SYD01 in a good
location, DXN is well positioned for strong uptake of
services in our data centre by Government, Corporate,
Enterprise, Channel and Wholesale customers.
1: Jon Gold, Senior Writer, Network World: 65% of enterprise workloads still in on-premises data centers, study finds:
https://www.networkworld.com/article/3192988/65-of-enterprise-workloads-still-in-on-premises-data-centers-study-finds.html
<4>
For personal use only Our prefabricated
DXN Modules are
produced locally in
our manufacturing
facility in Perth,
Western Australia
DXN Limited | ANNUAL REPORT <5>
DXN MODULES DIVISION
The DXN Modules Division is focussed on building
data centre solutions for the EDGE Data Centre
market as well as modular solutions and our sales
team are busy working either directly or
in conjunction with partners. DXN are seeing
initial demand being heavily driven by Telco,
Government, Resources, Oil & Gas, Subsea cable
and datacentre operators.
The growth rate of the modular data centre market is
over 20% CAGR, with the market set to reach over $50
Billion by 2025 according to Global Market Insights
2019 report. The EDGE market is growing at a rate of
19% CAGR and expected to reach $14 Billion by 2024
according to the same report. DXN is well positioned
to service both the Edge and Modular DC markets.
During FY19, DXN added to our sales capability with
the recruitment of key people in South East Asia
and Australia. This has enabled DXN to realise new
markets and key opportunities and as at 30 June
2019, DXN has secured sales contracts totalling
approximately $2.5M, which are due to be completed
in FY20.
The team has built a substantial pipeline, with
exciting and substantial opportunities in Australia,
the Pacific region and South East Asia, which we are
looking forward to securing during FY20.
THE YEAR AHEAD
In FY19, DXN built a solid foundation for the DXN Data Centres and DXN
Modules divisions, our focus for the FY20 year will be to continue building
on the foundations set in 2019, with a series of goals centred around our
core business and our two divisions.
OUR PRIMARY GOALS FOR FY20:
•
•
•
•
•
•
Secure sales into our DXN-SYD01 to 1MW of committed capacity;
Target revenue from DXN Modules of $12 million;
Secure our First Edge data centre;
Focus on building out the Sydney Data Centre to 2MW;
Secure an anchor tenancy at our Melbourne data centre; and
ZERO HARM TO OUR PEOPLE
At DXN we are very excited by the year ahead and are looking forward to
achieving our goals for FY20.
On behalf of DXN, I would like to thank you for your ongoing support as we
continue our exciting growth trajectory and look forward to meeting those
who are able to join us at our upcoming Annual General Meeting.
“DXN is looking at setting
new industry standards for
rapid deployment, reliability,
efficiency, sustainability,
connectivity and security in
edge and modular
data centres.”
Matthew Madden
CEO
For personal use only CORPORATE
DIRECTORY
NON- EXECUTIVE
CHAIRMAN
Douglas Loh
CHIEF EXECUTIVE
OFFICER
Matthew Madden
NON-EXECUTIVE
DIRECTORS
Terry Smart
Richard Carden
Tim Desmond
John Duffin
John Baillie
COMPANY SECRETARY
George Lazarou
REGISTERED OFFICE
Level 28, AMP Tower
140 St Georges Terrace
PERTH WA 6000
PRINCIPAL OFFICE
9 Mumford Place
BALCATTA WA 6021
Telephone: +61 8 9288 1870
AUDITORS
Moore Stephens Perth
Level 15 Exchange Tower
2 The Esplanade
PERTH WA 6000
Telephone: +61 8 9225 5355
SHARE REGISTRAR
Automic Pty Ltd
Level 2
267 St Georges Terrace
PERTH WA 6000
Telephone: 1300 288 664
SOLICITORS
Steinepreis Paganin
Level 4, The Read Buildings
16 Milligan Street
PERTH WA 6000
Telephone: +61 8 9321 4000
BANKERS
ANZ
15 Hutton Street
OSBORNE PARK WA 6017
STOCK EXCHANGE
LISTING
Australian Securities Exchange
(Home Exchange: Perth, Western
Australia)
Code: DXN, DXNO
<6>
For personal use only DIRECTORS’
REPORT
The directors present the following report on DXN Limited (“the Company”) during or at the end of the financial
year ended 30 June 2019.
1. DIRECTORS
The names and details of the Company’s directors in office during and since the financial period end until the
date of the report are as follows.
Mr Douglas Loh
Mr Peter Christie
(resigned 31 January 2019)
Mr Terry Smart
Mr Richard Carden
Mr John Duffin
(appointed 1 October 2018)
Mr Tim Desmond
(appointed 1 October 2018)
Mr John Baillie
(appointed 23 May 2019)
INFORMATION ON DIRECTORS
Douglas Loh
Qualifications
Experience
Non-Executive Chairman
BEc (Hons), CPA, MAICD
Mr Loh has over 30 years of advisory, company management, investment
management, & market research experience with a focus on smaller companies.
He was a founding member of Acorn Capital in late 1998, Australia’s first boutique
investment manager specialising in the microcap sector. His 19-year career at Acorn
Capital included roles as the Head of Equities, CFO, COO and Executive Director of
the Company. Mr Loh, as Portfolio Manager was responsible for managing microcap
portfolios before becoming the Head of Equities, from 2013 to 2016. Mr Loh is also an
executive director of Biome Australia Limited, a microbiome health company.
Interest in Shares
1,387,500 Fully paid Ordinary Shares
400,000 Listed options exercisable at $0.10 on or before 13 May 2020
78,125 Options exercisable at $0.30 on or before 5 April 2021
1,800,000 Performance Rights
DXN Limited | ANNUAL REPORT <7>
For personal use only
INFORMATION ON DIRECTORS (Continued)
Terry Smart
Qualifications
Experience
Independent Non-Executive Director
Nil
Mr Smart has been Managing Director of The Good Guys at JB Hi-Fi Limited
(ASX:JBH) since April 18, 2017. Mr Smart served as the CEO of JB Hi-Fi Limited from
May 2010 to June 30, 2014. Mr Smart was a founding Director of JB H-Fi and served
as the COO from 2000. During his tenure at JB Hi-fi, Mr Smart was instrumental in
developing the company from initial public offering to a dominant Australian retailer
with a A$3B market cap. Prior to JB Hi-Fi, Mr Smart was the General Manager of
Operations of Kodaks'.
Interest in Shares
12,012,097 Fully paid Ordinary Shares
2,673,387 Listed options exercisable at $0.10 on or before 13 May 2020
10,000,000 Options exercisable at $0.30 on or before 30 November 2020
468,750 Options exercisable at $0.30 on or before 5 April 2021
Richard Carden
Non-Executive Director
Qualifications
Nil
Experience
Mr Carden is an Asia based business leader with over 25 years of experience in the
telecoms, data centre and IT industry. Richard has a solid track record in driving sales
productivity and revenue growth. He was previously the SVP Global Enterprise Sales
for Speedcast (ASX:SDA). Mr Carden joined Speedcast in 2013 when the company
had just been acquired for circa A$40M and as part of the Executive team developed
the M&A plus organic growth strategy that allowed the company to list in 2014 and
achieve a market cap of over A$1.5B in 2018. Prior, Mr Carden was the Global SVP for
Pacnet and responsible for over 300 sales staff and revenues of more than A$800M.
Earlier, Mr Carden spent almost 10 years in Japan in roles that included President &
CEO of Verizon, Japan.
Interest in Shares
2,650,000 Fully paid Ordinary Shares
1,000,000 Listed Options exercisable at $0.10 on or before 13 May 2020
62,500 Options exercisable at $0.30 on or before 5 April 2021
John Duffin
Qualifications
Experience
Independent Non-Executive Director (appointed 1 October 2018)
BSc(Hons), MSc(Dist), CEng, MIMechE, MCIBSE
Mr Duffin is an Asia-based business professional with over 20 years’ local
experience in the Asian Data Centre industry leading businesses focussing on
engineering Infrastructure consultancy, design, operations and certification. Mr
Dufin has extensive experience of critical facilities in the Hyperscale, Colocation,
Telecommunications and Financial Services sectors and has held positions including
Managing Director, South Asia for Uptime Institute, Technical Director for AECOM
(Singapore), Senior Associate for Arup (Australia) and Executive Director for DSCO
(Hong Kong). In 2019 Mr Duffin was awarded an Advanced Professional Diploma
for successfully completing the globally recognised Financial Times Non-Executive
Director Course.
Interest in Shares
Nil
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For personal use only INFORMATION ON DIRECTORS (Continued)
Tim Desmond
Qualifications
Experience
Non-Executive Director (appointed 1 October 2018)
Certified Data Centre Expert (CDCE)
Mr Desmond is a founder of DXN. Mr Desmond has over 15 years of experience in
mission critical operations of data centres with a specialisation in modular data
centre design, technology, manufacturing and applications. He has a focus on
customer lead design, supply chain vertical integration and lean manufacturing.
During his term as DXN’s Chief Technology Officer, Mr Desmond developed the
product set and solutions that make DXNs modules unique and cost effective. He was
also responsible for the overall design of the Sydney and Melbourne data centres. Mr
Desmond has a multi-industry background within military, mining, police, information
technology and banking data centres.
Interest in Shares
27,850,000 Fully paid Ordinary Shares
2,166,666 Options exercisable at $0.30 on or before 30 November 2020
John Baillie
Qualifications
Experience
Independent Non-Executive Director (appointed 23 May 2019)
Graduate of the Australian Institute of Company Directors (GAICD)
Graduate Diploma (Securities) from the Securities Institute of Australia
Mr Baillie has over 25 years’ experience in financial services, including wealth
management, corporate advisory, investor relations and private equity capital
raisings. Mr Baillie was a Senior Investment Advisor with Shaw and Partners
(formally Shaw Stockbroking) for 22 years, with a focus on portfolio management,
trading and private equity raisings. In 2015 Mr Baillie established JB & Partners
Corporate Advisory that specializes in strategic advice and succession planning
for private companies; particularly family businesses. He has advised in a diverse
range of industries, including financial services (particularly AFSL issues), FMCG
companies, e-Commerce and the funeral industry.
Interest in Shares
1,379,175 Fully paid Ordinary Shares
316,838 Listed Options exercisable at $0.10 on or before 13 May 2020
Peter Christie
Qualifications
Experience
Managing Director (resigned 31 January 2019)
Bachelor of Economics
Mr Christie is a co-founder and was previously the Managing Director of DXN Limited.
Prior to this Mr Christie was the founder and Executive Director of Datacentre
Limited, the first company to build a containerised data centre in Australia.
Previously, Mr Christie held the role of Global Account Director for Orange Business
Services Pty Ltd where he was responsible for a team delivering the global voice and
data network for one of Australia’s largest international mining companies.
Mr Christie has held business development leadership positions at TIBCO, Mincom
and Logica, working on projects across Australia, Asia and the Middle East.
Mr Christie has 25 years of experience in technology development having started as
a software engineer then moving into senior business development roles for major
public technology companies including Eastman Kodak, Unisys and Informix.
Interest in Shares
13,925,000 Fully paid Ordinary Shares
2,166,667 Options exercisable at $0.30 on or before 30 November 2020
The Directors have been in office to the date of this report unless otherwise stated.
DXN Limited | ANNUAL REPORT <9>
For personal use only INFORMATION ON DIRECTORS (Continued)
DIRECTORSHIPS OF OTHER LISTED COMPANIES
Directorships of other listed companies held by directors in the three (3) years immediately before the end of
the financial period are as follows:
Name
Douglas Loh
Richard Carden
Terry Smart
John Duffin
Tim Desmond
John Baillie
Company
Period of directorship
-
-
-
-
-
-
-
-
-
-
Blue Sky Alternatives Access Fund
Limited
29 November 2018 to present
Peter Christie
-
-
JOINT INTERIM CHIEF EXECUTIVE OFFICERS
SIMON FORTH
Mr Forth was appointed Joint Interim Chief Executive Officer on 1 February 2019.
Mr Forth joined the Company in November 2018 as our Chief Operating Officer. Mr Forth has overall
responsibilities for all manufacturing and construction activities of the Company, including construction of our
data centres, quality control, certifications and OHS.
Mr Forth has extensive experience and a proven track record in the development and execution of strategic
plans and process improvements, especially in the IT, engineering and manufacturing industries. Prior to joining
the Company, Mr Forth managed a multidiscipline engineering firm that specialises in the manufacture of plant
for the gas and mining sectors. He was also previously Executive Director at ASX-listed Legend Corporation – an
engineering solutions provider that operates in the IT, electrical and semiconductor industries.
On 19 August 2019, Mr Forth resumed his duties as the Chief Operating Officer.
RICHARD WHITING
Mr Whiting was appointed Joint Interim Chief Executive Officer on 1 February 2019.
Mr Whiting joined the Company in November 2018 as our Chief Commercial Officer. Mr Whiting has been
responsible for the establishment of front-of-house systems, documentation and processes, as well as
managing our wholesale relationships with major telecommunications providers. Mr Whiting’s responsibilities
included driving sales revenue and managing the sales team.
Mr Whiting joined the Company from ASX-listed Vocus Group Ltd where he was most recently Chief Executive
Officer - Western Region and General Manager of Sales Operations. Mr Whiting also previously held positions
including Chief Technology Officer for then ASX-listed Amcom Telecommunications and Managing Director of
then ASX-listed Amnet Limited
On 19 August 2019, Mr Whiting resumed his duties as Chief Commercial Officer
CHIEF EXECUTIVE OFFICER
MATTHEW MADDEN
Mr Matthew Madden was appointed Chief Executive Officer on 19 August 2019.
Mr Madden is a highly experienced data centre and telecommunications executive with a solid track record
of building and leading high performing teams, as well as a strategic focus on world-class customer care
underpinning long term partnerships. Mr Madden has broad experience in B2B telco, data centre and
technology companies having held a variety of senior executive positions including General Manager Corporate
and Enterprise markets at Nextgen Group, and Managing Director, Infoplex. At Nextgen, Mr Madden was
responsible for significant sales into the Metronode data centres for the corporate, enterprise and reseller
channels.
<10>
For personal use only COMPANY SECRETARY
The following person held the position of company secretary during and at the end of the financial period:
GEORGE LAZAROU
Mr Lazarou is a qualified Chartered Accountant with over 25 years’ experience, including five years as a partner
of a mid-tier accounting firm, specialising in the areas of audit, advisory and corporate services. Mr Lazarou
has extensive skills in the areas of corporate services, due diligence, independent expert reports, mergers &
acquisitions and valuations
2. PRINCIPAL ACTIVITIES
The principal activities of the Company during the financial period was building a Tier III data centre in Sydney
using our prefabricated modular technology, a second facility is planned for Melbourne. Data centres provide
space, power, cooling, and physical security for client to house their computer servers and related storage and
networking equipment. Data centres provide a recurring revenue stream and our modular approach allows us
to match our capital requirements with capacity sold, thereby reducing our upfront capital requirements. This
disruptive model is at the forefront of data centre engineering techniques. Our construction cost (per megawatt)
is less than our industry peers.
Our DXN Modules division engineers, constructs and commissions data centre solutions. Our data centre
infrastructure has a wide range of applications, these include hyperscale data centres, edge data centres, and
telecommunications applications (satellite, radio centres, cable landing stations). Our prefabricated construction
method reduces the on-site labour and time to deploy and improves quality. Solutions by DXN Modules are ideal
for rapid deployments in both urban and remote locations.
3. OPERATING RESULTS
The loss of the Company after providing for income tax amounted to $7,373,444 (2018: $5,736,986).
4. DIVIDENDS PAID OR RECOMMENDED
The directors do not recommend the payment of a dividend and no amount has been paid or declared by way of
a dividend to the date of this report.
5. REVIEW OF OPERATIONS
BUSINESS DEVELOPMENT
The Company has two core business operations, DXN Modules that deliver infrastructure solutions and DXN
Data Centres that provide colocation services. A colocation data centre provide space, power, cooling, and
physical security for client to house their computer servers and related storage and networking equipment.
Our DXN Modules division engineers, constructs and commissions data centre solutions. Our data centre
infrastructure has a wide range of applications, these include hyperscale data centres, edge data centres, and
telecommunications applications (satellite, radio centres, cable landing stations).
In the last 6 months, we have successfully recruited several new sales staff and restructured both the Data
Centre and Modules sections of the business to drive focus on the selling and promotion of the Company’s core
products.
DXN MODULES
Our data centre modules are turnkey prefabricated solutions that are scalable, purpose built and rapidly
deployable globally. They can be used for a number of applications – Edge Data Centres, Cable Landing
Stations, Telecommunications Facilities and more. The Company can deploy customised data centre capacity
to meet any technical specifications for commercial colocation class facilities and edge deployments. Our Tier
III / IV certified design designs also allow for personalisation of data centre requirements in a scalable and
cost-effective way. The Company have had success in the modules business with contracted module sales at
30 June 2019 of approx. $3.2 million to major customers including Nuie Telecom, Avaroa Cables and Radlink
Communications.
DXN Limited | ANNUAL REPORT <11>
For personal use only DXN DATA CENTRES
The Company offers more than just housing and powering a rack. Our Data Centre Services provide customers
with what’s needed to get running – an environment designed for world class reliability, telco and cloud
connectivity and state of the art security – plus what the ingredients to help them grow – scalability, flexibility
and affordability.
The Data Centre Services team has been working hard to identify prospects, opportunities and partners who
we can work with, as part of our go to market strategy. With DXN-SYD01 now “Ready For Service”, and with a
steady pipeline built over the past 6 months, the team will be progressing conversations with key partners and
prospects.
SYDNEY DATA CENTRE (DXN-SYD01)
The Company has delivered a key milestone in the construction of our flagship Sydney data centre (DXN-SYD01)
with the DXN construction team handing control of the site to the DXN operations team. Achieving this milestone
is the culmination of a concerted effort by the entire team, from design and engineering, project management,
construction and operations.
Situated just 30 minutes from the Sydney CBD, in Sydney’s Olympic Park, DXN-SYD01 is 4,351m2 that has
been designed for a future capacity of 6 MW and more than 800 racks. The data centre has been designed
and constructed to meet the Uptime Institute’s Tier III and Tier IV standards using a modular design and
construction approach, the initial cluster is engineered, Tier III – Ready.
The construction project has been delivered in a compressed timeframe of 4 months, highlighting the benefits
of our prefabricated modular approach to the construction process. Construction commenced immediately
following the receipt of the commercial construction certificate on 17th April 2019. Development Approval was
received on 18th March 2019.
The subsequent milestone is the award, Tier Certification of Constructed Facility (TCCF) by the independent
specialist, Uptime Institute. The TCCF audit is taking place in late August 2019. Members from the Company’s
engineering, projects and operations team coordinated the test and certification activities with the audit
engineers from the Uptime Institute.
MELBOURNE DATA CENTRE (DXN-MEL01)
The Final Planning Permit for the facility was received in November 2018 and the Company is seeking approval
for the required power upgrade. Our manufacturing facility completed the construction of the modular facilities
for the Melbourne data centre. This includes two facility modules (58 racks), two telecommunications modules
and two power modules (switchboard & UPS). In addition, the Company has completed the manufacture of the
main Low Voltage switchboards for the facility. Critical plant is onsite and ready for installation, this includes
two generators, chillers and evaporative cooling units.
ENGINEERING & MANUFACTURING PROJECTS
DATA CENTRE DESIGN
In September and December 2018, the Company received the TIER-Ready III for our DXN-1400 modular solution
and the TIER-Ready IV award for our DXN-1200-TIV solution. The TIER-Ready award confirms our data centre
module designs confirms to stringent engineering and design standards.
SYNERGY DATA CENTRE
The Company won a competitive tender in 2H-FY18 to construct a small data centre on the site of the Kwinana
Power Station in Western Australia. The Company completed the manufacture of the modular data centre,
installation and the associated onsite construction activities. Certification testing is scheduled for mid-
September 2019, with final acceptance testing by Synergy expected to occur in late September/early October.
NIUE TELECOM
The Company was successful in winning the tender to supply Niue Telecom with a cable landing station (CLS).
A CLS has similar engineering and operational properties as a data centre. The Company has completed the
engineering, manufacture and factory acceptance testing of this module. This final phase of the project includes
the site installation and commissioning, this is scheduled to be completed in October/November 2019.
AVAROA CABLES LIMITED (ACL)
The ACL project is similar to the Niue project. The Company has completed the engineering, with the
manufacture of two CLS having commenced in July. The project includes the site installation and
commissioning, this is scheduled to be completed before the end of December 2019.
<12>
For personal use only RADLINK
In late May 2019, the Company entered into an agreement with communications specialist Radlink for the
supply of prefabricated modules. The modules shall house specialist radio communications equipment. The
Company’s engineering team has scheduled to complete the design in September, with the first module
scheduled to be completed in October 2019, with the project and final module scheduled to be completed before
the end of December 2019.
PROCESS IMPROVEMENTS
The Company expects operational activity to normalise post completion of the Sydney Data Centre . This
is supported with the development of a web-based systems that assist with process flow, authorisations
and data collection. These initiatives shall deliver further scheduling and process improvements in general
administration, procurement and manufacturing operations. In addition, the Company has invested in
Salesforce, to support the management of opportunities, engagements and service agreements by our business
development teams. The Company will also be using Salesforce Service Cloud to manage customer requests
and incidents.
CORPORATE
In December 2018, the Company raised $2,010,274 (before costs) through a placement of 12,972,512 fully paid
ordinary shares at $0.155.
The Company undertook a Share Purchase Plan in December 2018, with the Share Purchase Plan being
withdrawn in February 2019.
In March 2019, the Company lodged a Prospectus with ASIC in relation to an underwritten non-renounceable
pro-rata entitlement issue on the basis of eight and a half (8.5) new shares for every ten (10) shares held by
eligible shareholders on the record date, at an issue price of $0.05 per new share to raise up to approximately
$8.3 million (before costs) Each subscriber in the entitlement issue received one (1) free-attaching listed option
for every two (2) new shares subscribed for and issued, exercisable at $0.10 on or before 13 May 2020. A total
of 165,989,711 fully paid ordinary shares and 82,994,923 options exercisable at $0.10 on or before 13 May
2020, were issued on 13 May 2019.
On 24 June 2019, the Company issued 7,535,448 Performance Rights to employees as incentives pursuant
to the Company’s Employee Incentive Plan, subject to vesting conditions, expiring on various dates from 30
September 2019 to 26 June 2022.
6. SIGNIFICANT CHANGES IN STATE OF AFFAIRS
The following significant changes in the state of affairs of the Company occurred during the financial period:
•
•
•
In December 2018, the Company raised $2,010,274 (before costs) through a placement of 12,969,512
fully paid ordinary shares at $0.155.;
In March 2019, the Company lodged a Prospectus with ASIC in relation to an underwritten non-
renounceable pro-rata entitlement issue on the basis of eight and a half (8.5) new shares for every ten
(10) shares held by eligible shareholders on the record date, at an issue price of $0.05 per new share to
raise up to approximately $8.3 million (before costs) Each subscriber in the entitlement issue received
one (1) free-attaching listed option for every two (2) new shares subscribed for and issued, exercisable
at $0.10 on or before 13 May 2020. A total of 165,989,711 fully paid ordinary shares and 82,994,923
options exercisable at $0.10 on or before 13 May 2020, where issued on 13 May 2019; and
On 24 June 2019, the Company issued 7,535,448 Performance Rights to employees as incentives
pursuant to the Company’s Employee Incentive Plan, subject to vesting conditions, expiring on various
dates from 30 September 2019 to 26 June 2022;
There were no other significant changes in the state of affairs of the Company during the financial period.
DXN Limited | ANNUAL REPORT <13>
For personal use only 7. FUTURE DEVELOPMENTS
The Company intends to design, build, own and operates data centres. The Company is building a Tier III data
centre in Sydney using our prefabricated modular technology, a second facility is planned for Melbourne. Data
centres provide space, power, cooling, and physical security for client to house their computer servers and
related storage and networking equipment. Data centres provide a recurring revenue stream and our modular
approach allows us to match our capital requirements with capacity sold, thereby reducing our upfront capital
requirements. This disruptive model is at the forefront of data centre engineering techniques. Our construction
cost (per megawatt) is less than our industry peers.
Our DXN Modules division engineers, constructs and commissions data centre solutions. Our data centre
infrastructure has a wide range of applications, these include hyperscale data centres, edge data centres, and
telecommunications applications (satellite, radio centres, cable landing stations). Our prefabricated construction
method reduces the on-site labour and time to deploy and improves quality. Solutions by DXN Modules are ideal
for rapid deployments in both urban and remote locations. The Company has achieved an industry first and
become the first modular data centre developer in the world to receive both TIER-Ready III and TIER-Ready IV
design review awards.
8. AFTER REPORTING DATE EVENTS
On 22 July 2019, shareholders approved the issue of 1,800,000 performance rights, subject to vesting
conditions, expiring on 30 April 2020, to Mr Loh.
On 22 July 2019, shareholders approved the change of Company name to DXN Limited, ASIC approved the name
change on 22 July 2019.
Mr Matthew Madden commencing as Chief Executive Officer of the Company on 19 August 2019.
On 19 August 2019 the Company delivered a key milestone with the completion of the initial construction phase
of its flagship Sydney data centre (DXN-SYD01) located in Sydney Olympic Park.
No other matters or circumstances have arisen since the end of the financial period which significantly affected
or may significantly affect the operations of the Company, the results of those operations, or the state of affairs
of the Company in future financial years.
9. MEETINGS OF DIRECTORS
During the period, 11 meetings of directors were held. Attendances by each director during the period were
as follows:
Directors’ Meetings
Audit & Risk
Remuneration &
Nomination
Director
Eligible to
Attend
Attended
Eligible to
Attend
Attended
Eligible to
Attend
Attended
Douglas Loh (Chair)
Richard Carden
Terry Smart
John Duffin
(appointed 1 October 2018)
Tim Desmond
(appointed 1 October 2018)
John Baillie
(appointed 23 May 2019)
Peter Christie
(resigned 31 January 2019)
11
11
11
8
8
1
7
11
11
10
8
8
1
7
1
1
1
-
-
-
-
1
1
1
-
-
-
-
4
4
4
-
-
-
-
4
4
4
-
-
-
-
<14>
For personal use only 10. ENVIRONMENTAL ISSUES
The Company’s operations are not regulated by any significant environmental regulations under a law of the
Commonwealth or of a state or territory of Australia.
11. OPTIONS
At the date of this report unissued ordinary shares of the Company under option are:
Expiry Date
13 May 2020
30 November 2020
5 April 2021
Exercise Price
Number of Shares
$0.10
$0.30
$0.30
82,994,923
32,500,000
6,828,125
82,994,923 options with an exercise price of $0.10 and expiring on or before 13 May 2020 were issued on 13
May 2019. Nil options expired or were exercised during the period.
12. INDEMNIFYING OFFICERS OR AUDITOR
In accordance with the constitution, except as may be prohibited by the Corporations Act 2001 every Officer or
agent of the Company shall be indemnified out of the property of the Company against any liability incurred
by him in his capacity as Officer or agent of the Company or any related corporation in respect of any act or
omission whatsoever and howsoever occurring or in defending any proceedings, whether civil or criminal.
The Company has paid premiums to insure each Director and officer against liabilities for costs and expenses
incurred by them in defending any legal proceedings arising out of their conduct while acting in their capacity
of Director or officer of the Company, other than conduct involving a wilful breach of duty in relation to the
Company. The total amount of premiums paid was $39,294.
13. PROCEEDINGS ON BEHALF OF COMPANY
No person has applied for leave of Court to bring proceedings on behalf of the Company or 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 any part of these proceedings.
The Company was not a party to any such proceedings during the period.
14. AUDITORS INDEPENDENCE DECLARATION
The lead auditor’s independence declaration for the year ended 30 June 2019 has been received and can be
found on page 25 of the annual report.
15. NON-AUDIT SERVICES
The following non-audit services were provided by the entity’s auditor, Moore Stephens. 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 Act 2001. The nature and scope of each type of non-audit service
provided means that auditor independence was not compromised.
Moore Stephens or their related entities received or are due to receive the following amounts for the provision
of non-audit services:
Investigating Accountants Report
Tax Compliance Services
2019
$
-
8,800
8,800
2018
$
10,000
-
10,000
DXN Limited | ANNUAL REPORT <15>
For personal use only 16. DIVERSITY
The Company believes that the promotion of diversity on its Board and within the organisation generally is good
practice and is committed to managing diversity as a means of enhancing the Company’s performance. There
are currently no women on the Company’s board and only one woman filling senior management positions
within the Company, however the Company (as set out in the Diversity Policy, further information in relation
to which is set out on the Company’s website at https://dxn.solutions/ in the Corporate Governance section)
will focus on participation of women on its Board and within senior management and has set measureable
objectives for achieving gender diversity.
Gender diversity objectives for the employment of women are as follows:
•
•
•
to the Board – 20% by 2020;
to senior management (including board and company secretary) – 30% by 2020
to the organisation as a whole – 40% by 2020
As at the date of this report, the Company has the following proportion of women appointed:
•
•
•
to the Board – 0%
to senior management (including board and company secretary) – 10%
to the organisation as a whole – 14%
17. REMUNERATION REPORT - AUDITED
Details of key management personnel
The following persons were directors of the Company during the financial period unless otherwise stated:
Mr Douglas Loh
Mr Terry Smart
Non-Executive Chairman
Independent Non-Executive Director
Mr Richard Carden
Non-Executive Director
Mr John Duffin
Mr Tim Desmond
Mr John Baillie
Mr Peter Christie
Remuneration Policy
Independent Non-Executive Director (appointed 1 October 2018)
Non-Executive Director (appointed 1 October 2018)
Independent Non-Executive Director (appointed 23 May 2019)
Managing Director (resigned 31 January 2019)
The remuneration policy of the Company has been designed to align director and executive objectives with
shareholder and business objectives by providing a fixed remuneration component which is assessed on an
annual basis in line with market rates and offering specific long-term incentives based on key performance
areas affecting the Company’s financial results. The board believes the remuneration policy to be appropriate
and effective in its ability to attract and retain the best directors and executives to run and manage the
Company.
The board’s policy for determining the nature and amount of remuneration for board members and senior
executives of the Company is as follows:-
The remuneration policy, setting the terms and conditions for the executive directors and other senior
executives, was developed by the board. All executives receive a base salary (which is based on factors such
as length of service and experience) and superannuation. The board reviews executive packages annually by
reference to the Company’s performance, executive performance and comparable information from industry
sectors and other listed companies in similar industries.
The board may exercise discretion in relation to approving incentives, bonuses and options. The policy is to
attract the highest calibre of executives and reward them for performance that results in long-term growth in
shareholder wealth.
Executives are also entitled to participate in any employee incentive plan the Company adopts.
The executive directors and executives receive a superannuation guarantee contribution required by the
government, which is currently 9.5%, and do not receive any other retirement benefits.
<16>
For personal use only All remuneration paid to directors and executives is valued at the cost to the Company and expensed. Shares
given to directors and executives are valued as the difference between the market price of those shares and the
amount paid by the director or executive. Options are valued using a binomial option pricing method.
The board policy is to remunerate non-executive directors at market rates for comparable companies for time,
commitment and responsibilities. The board determines payments to the non-executive directors and reviews
their remuneration annually, based on market practice, duties and accountability.
Independent external advice is sought when required. The maximum aggregate amount of fees that can be
paid to non-executive directors is subject to approval by shareholders at the Annual General Meeting (currently
$500,000). Fees for non-executive directors are not linked to the performance of the Company. However, to align
directors’ interests with shareholder interests, the directors are encouraged to hold shares in the Company and
are able to participate in any employee incentive plan the Company adopts.
Performance based remuneration
The Company has a performance-based remuneration component built into director and executive
remuneration packages as disclosed in the “Compensation of Key Management Personnel” for the
year table on page 18.
Company performance, shareholder wealth and director’s and executive’s remuneration
The remuneration policy has been tailored to increase goal congruence between shareholders and directors
and executives. This will be facilitated through the issue of options or performance rights to the majority of
directors and executives to encourage the alignment of personal and shareholder interests. The Company
believes the policy will be effective in increasing shareholder wealth.
DXN Limited | ANNUAL REPORT <17>
For personal use only Compensation of key management personnel for the year ended 30 June 2019 and 30 June 2018
SHORT-TERM BENEFITS
POST EMPLOYMENT
EQUITY-BASED BENEFITS
TOTAL
Salary &
Fees
$
Cash
Bonus
$
Non-
Monetary
$
Super-
annuation
$
Termination
Benefits
$
Options or
Performance
Rights
$
% Performance
based of Total
Remuneration
$
Directors
Douglas Loh – Non-Executive Chairman1
2019
2018
107,700
7,500
-
-
Peter Christie – Managing Director 2
2019
2018
105,000
150,000
-
-
-
-
-
-
Terry Smart – Independent Non-Executive Director
2019
2018
36,000
33,000
-
-
-
-
Richard Carden – Non-Executive Director3
2019
2018
119,000
50,000
-
-
-
-
John Duffin – Independent Non-Executive Director4
2019
2018
27,000
-
-
-
-
-
John Baillie – Independent Non-Executive Director5
2019
2018
3,888
-
-
-
-
-
Kuek Jin Low – Non-Executive Director6
2019
2018
-
-
-
-
Dean Coetzee – Chief Sales Officer 7
2019
2018
135,000
150,000
-
-
-
-
-
-
5,700
713
9,975
14,250
3,420
3,135
-
-
-
-
-
-
-
-
-
-
-
-
102,243
-
-
-
-
-
-
-
-
-
-
-
90,000
-
Tim Desmond – Chief Technology Officer & Non-Executive Director 8
2019
2018
135,000
150,000
-
-
-
-
Simon Forth – Joint Interim Chief Executive Officer
2019
2018
132,048
-
-
-
-
-
-
-
12,545
-
Richard Whiting – Joint Interim Chief Executive Officer
2019
2018
130,800
-
-
-
-
-
-
-
George Lazarou – Chief Financial Officer and Company Secretary9
2019
2018
145,000
59,327
Total Remuneration
2019
2018
1,076,436
599,827
-
-
-
-
-
-
-
-
-
-
31,640
18,098
282,523
-
90,000
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
1,927
-
1,927
-
964
-
4,818
-
1.31%
-
1.45%
-
0.66%
-
0.35%
-
113,400
8,213
217,218
164,250
39,420
36,135
119,000
50,000
27,000
-
3,888
-
-
-
225,000
150,000
225,000
150,000
146,520
-
132,727
-
145,964
59,327
1,395,137
617,925
1.
Mr Loh provided consultancy services amounting to
$53,400 on normal commercial terms, through Emmanuel
Investment Holdings Pty Ltd, a Company Mr Loh has an
interest in. These are included in the remuneration above.
2. Resigned 31 January 2019
3.
Mr Carden provided consultancy services amounting to
$83,000 during the year on normal commercial terms.
These are included in the remuneration above.
4. Appointed 1 October 2018.
5. Appointed 23 May 2019.
6.
7.
Appointed 19 September 2017, Resigned
22 November 2017
Mr Coetzee receives his fees through The Data Exchange
Network Pte Ltd, a non-related entity.
8.
9.
Mr Desmond was appointed a director on 1 October 2018.
Mr Desmond was an Executive director until 31 March 2019
and became a Non-Executive Director on 1 April 2019. Mr
Desmond receives his fees through The Data Exchange
Network Pte Ltd, a non-related entity.
Citadel Capital Pty Ltd, a company Mr Lazarou has an
interest in, receives fees for Chief Financial Officer and
Company Secretarial Services on normal commercial
terms. These are included in the remuneration above.
<18>
For personal use only Options or performance rights issued as part of remuneration
During the financial period ended 30 June 2019, 4,500,000 performance rights were issued as part of
remuneration.
For details on the valuation of the Performance Rights, including models and assumptions used, please refer
to Note 28. There were no alterations to the terms and conditions of the Performance Rights granted as
remuneration since their grant date.
Remuneration policy of key management personnel
The objective of the Company’s executive reward framework is set to attract and retain the most qualified and
experienced directors and senior executives. The board ensures that executive reward satisfies the following
key criteria for good reward governance practices:
• Competitiveness
• Acceptability to shareholders
• Performance linkage
• Capital management
NON-EXECUTIVE DIRECTORS
The constitution of the Company provides that the non-executive Directors may collectively be paid as
remuneration for their services a fixed sum not exceeding the aggregate maximum sum per annum from
time to time determined by the Company in a general meeting (currently $500,000). The Chairman’s fees are
determined independently to the fees of non-executive Directors based on comparative roles in the external
market. The remuneration policy has been tailored to increase goal congruence between shareholders and
Directors. The Company will look to adopt an employee incentive plan to encourage the alignment of personal
and shareholder interests. The Company believes this policy will be effective in increasing wealth.
DIRECTORS’ FEES
A director may be paid fees or other amounts as the directors determine where a director performs special
duties or otherwise performs services outside the scope of the ordinary duties of a director. A director may also
be reimbursed for out of pocket expenses incurred as a result of their directorship or any special duties.
DXN Limited | ANNUAL REPORT <19>
For personal use only SERVICE AGREEMENTS
Remuneration and other terms of employment for key management personnel are formalised in service
agreements. Details of these agreements are as follows:-
Name:
Title:
Douglas Loh
Non-Executive Chairman
Agreement Commenced:
16 April 2018
Term of Agreement:
Subject to re - election every 3 years
Details:
Base salary of $60,000 per annum, plus superannuation, to be reviewed annually
by the Board. The Company has entered into a Consultancy Agreement with
Emmanuel investment Holdings Pty Ltd, with Douglas Loh being the nominated
person, for which Mr Loh will receive $1,200 (exclusive of GST) per day until the
commencement of the new CEO, being 19 August 2019.
Name:
Title:
Matthew Madden
Chief Executive Officer
Agreement Commenced:
19 August 2019
Term of Agreement:
The employment is for a minimum period of one year and thereafter shall
continue until terminated in accordance with the provisions for termination, being
by either party with 3 months’ notice.
Details:
There are three components to Mr Madden’s remuneration:
(a) Gross Annual Remuneration Package
Mr Madden will be paid a base annual remuneration of $300,000 plus statutory
superannuation contributions, which is capped at $25,000 per annum. The
employer may review the employee’s performance, remuneration and benefits in
accordance with the employer policy from time to time.
(b) Short Term Incentive Benefits
Subject to the Mr Madden’s continued employment by the Company at the
relevant Review Date, the Board may, in its absolute discretion, elect to provide
the Executive with an annual bonus up to an amount equal to 30% of the Base
Salary, plus superannuation, based on the Annual Review (STI Bonus).
Mr Madden (in his sole discretion) can elect to have the STI Bonus (in whole
or in part) paid in Shares. The value of the Shares shall be the 15-day volume
weighted average price (VWAP) of Shares calculated on the day after release of
the Company’s full year financial accounts
(c) Long Term Incentive Benefits
Subject to compliance with the ASX Listing Rules and the Corporations Act,
within 30 business days after the Commencement Date, being 19 August 2019,
the Company will issue the following Performance Rights to Mr Madden (or his
nominee) in accordance with the terms and conditions of the Employee Incentive
Plan:
(a) 6,000,000 Performance Rights subject to the following vesting conditions:
(i) Milestone 1: 3,000,000 Performance Rights will vest on or before 30 June
2022, upon the achievement of the Sydney Data Centre owned by the
Company achieving either:
A. an annual gross revenue equal to or in excess of $15,000,000; or
B. filled capacity of 5 MW; or
C. sales equal to or in excess of 500 server racks; and
(ii) Milestone 2: 3,000,000 Performance Rights will vest upon DXN Modules
achieving total sales equal to or in excess of $50,000,000 or total sales
equal to or in excess of $25,000,000 are achieved over a rolling 12-month
period, both on or before 30 June 2022,
<20>
For personal use only Details:
Subject to compliance with the ASX Listing Rules and the Corporations Act, within
30 business days after the Commencement Date, being 19 August 2019, the
Company will issue the following options to subscribe for shares in the Company:
• 3,750,000 1-year Options (Tranche 1);
• 5,000,000 2-year Options (Tranche 2); and
• 7,500,000 3-year Options (Tranche 3),
on the terms and conditions as set out below:
(a) Tranche 1: to vest on achieving a Share price that is at least $0.15 for 10
consecutive trading days on ASX, calculated on a daily VWAP basis, within 1 year
from the Commencement Date or 31 August 2019, whichever is earlier;
(b) Tranche 2: to vest on achieving a Share price that is at least $0.25 for 10
consecutive trading days on ASX, calculated on a daily VWAP basis, within 2 years
from the Commencement Date or 31 August 2019, whichever is earlier; and
(c) Tranche 3: to vest on achieving a Share price that is at least $0.35 for 10
consecutive trading days on ASX, calculated on a daily VWAP basis, within 3 years
from the Commencement Date or 31 August 2019, whichever is earlier.
Name:
Title:
Terry Smart
Non-Executive Director
Agreement Commenced:
4 August 2017
Term of Agreement:
Subject to re - election every 3 years
Details:
Name:
Title:
Base salary of $36,000 plus superannuation per annum, to be reviewed annually
by the Board.
Richard Carden
Non-Executive Director
Agreement Commenced:
4 August 2017
Term of Agreement:
Subject to re - election every 3 years
Details:
Name:
Title:
Base salary of $36,000 plus superannuation per annum (if applicable), to be
reviewed annually by the Board.
John Duffin
Non-Executive Director
Agreement Commenced:
1 October 2018
Term of Agreement:
Subject to re - election every 3 years
Details:
Name:
Title:
Base salary of $36,000 plus superannuation per annum (if applicable), to be
reviewed annually by the Board.
Tim Desmond
Non-Executive Director
Agreement Commenced:
1 October 2018
Term of Agreement:
Subject to re - election every 3 years
Details:
Name:
Title:
Base salary of $36,000 plus superannuation per annum, to be reviewed annually
by the Board, commencing from 1 October 2019
John Baillie
Non-Executive Director
Agreement Commenced:
23 May 2019
Term of Agreement:
Subject to re - election every 3 years
Details:
Base salary of $36,000 plus superannuation per annum (if applicable), to be
reviewed annually by the Board
DXN Limited | ANNUAL REPORT <21>
For personal use only Name:
Title:
George Lazarou
Chief Financial Officer and Company Secretary
Agreement Commenced:
13 October 2017
Term of Agreement:
Shall continue until terminated in accordance with the terms of the Agreement
with Citadel Capital Pty Ltd
Details:
Name:
Title:
$15,000 per month exclusive of GST to be reviewed annually, plus payment of all
reasonable travelling and other incidental costs incurred while performing his
duties, with a 60 day termination notice by either party.
Simon Forth
Chief Operating Officer
Agreement Commenced:
1 February 2019
Term of Agreement:
3 month termination notice by either party.
Details:
Name:
Title:
Base salary of $200,000 per annum, plus superannuation, to be reviewed
annually, plus payment of all reasonable travelling and other incidental costs
incurred while performing his duties.
Richard Whiting
Chief Commercial Officer
Agreement Commenced:
1 February 2019
Term of Agreement:
3 month termination notice by either party.
Details:
Base salary of $200,000 per annum, plus superannuation, to be reviewed
annually, plus payment of all reasonable travelling and other incidental costs
incurred while performing his duties.
RETIREMENT BENEFITS
Other retirement benefits may be provided directly by the Company, if approved by shareholders.
SHAREHOLDINGS OF KEY MANAGEMENT PERSONNEL
The movement during the reporting period in the number of shares in the Company held, directly, indirectly or
beneficially, by each key management person, including related parties, is as follows:
2019
Balance at 1
July 2018
Holding on Date
of Appointment
Bought&
(Sold)
Douglas Loh
Richard Carden
Peter Christie*
Terry Smart
John Duffin**
587,500
650,000
13,925,000
5,375,000
-
Tim Desmond***
27,850,000
-
-
-
-
-
-
John Baillie ****
-
1,379,175
George Lazarou
875,000
Simon Forth*****
Richard Whiting*****
-
-
Dean Coetzee ******
27,850,000
-
-
-
-
800,000
2,000,000
-
6,637,097
-
-
-
265,625
700,000
700,000
-
Holding
on Date of
Resignation
-
-
Balance at
30 June 2019
1,387,500
2,650,000
13,925,000
-
-
-
-
-
-
-
-
12,012,097
-
27,850,000
1,379,175
1,140,625
700,000
700,000
27,850,000
-
77,112,500
1,379,175
11,102,722
41,775,000
47,819,397
* Resigned 31 January 2019
** Appointed as a Director on 1 October 2018
*** Appointed as a Director on 1 October 2018, resigned as a KMP on 31 March 2019
**** Appointed as a Director on 23 May 2019
***** Appointed Joint Interim CEO on 1 February 2019
****** Resigned as KMP on 31 March 2019
<22>
For personal use only SHAREHOLDINGS OF KEY MANAGEMENT PERSONNEL (CONTINUED)
2018
Balance at 4
August 2017
Holding on Date
of Appointment
Bought&
(Sold)
Holding
on Date of
Resignation
Balance at
30 June 2019
Richard Carden
-
Peter Christie
12,000,000
Terry Smart
Douglas Loh*
Dean Coetzee**
Tim Desmond***
Kuek Jin Low ****
George Lazarou
-
-
24,000,000
24,000,000
-
-
-
-
-
650,000
1,925,000
5,375,000
587,500
-
-
-
-
-
3,850,000
3,850,000
-
875,000
60,000,000
587,500
16,525,000
-
-
-
-
-
-
-
-
-
* Appointed as a Director on 16 April 2018
** Resigned as a Director on 29 January 2018, continued as a KMP
*** Resigned as a Director on 16 October 2017, continued as a KMP
**** Appointed as a Director on 19 September 2017, Resigned on 22 November 2017
650,000
13,925,000
5,375,000
587,500
27,850,000
27,850,000
-
875,000
77,112,500
OPTION HOLDINGS OF KEY MANAGEMENT PERSONNEL
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 person, including related parties, is as follows
2019
Balance at
1 July 2018
Holding
on Date of
Appointment
Expired Acquired
Holding
at Date of
Resignation
Balance at
30 June
2019
Total Vested
at 30 June
2019
Total
Exercisable
at 30 June
2019
400,000
1,000,000
-
-
478,125
478,125
478,125
1,062,500
1,062,500
1,062,500
-
2,166,667
-
-
-
2,673,387
-
-
-
273,055
350,000
350,000
-
-
-
-
-
-
-
13,142,137
13,142,137
13,142,137
-
-
-
2,166,666
2,166,666
2,166,666
316,838
429,305
350,000
350,000
316,838
429,305
350,000
350,000
316,838
429,305
350,000
350,000
-
2,166,667
-
-
-
5,046,442
4,333,334
18,295,572
18,295,572
18,295,572
Douglas Loh
Richard Carden
78,125
62,500
Peter Christie*
2,166,667
Terry Smart
10,468,750
John Duffin**
-
Tim Desmond***
2,166,666
-
-
-
-
-
-
John Baillie ****
-
316,838
George Lazarou
156,250
Simon Forth*****
Richard
Whiting*****
-
-
Dean Coetzee ******
2,166,667
-
-
-
-
17,625,625
316,838
-
-
-
-
-
-
-
-
-
-
-
-
* Resigned 31 January 2019
** Appointed as a Director on 1 October 2018
*** Appointed as a Director on 1 October 2018, resigned as a KMP on 31 March 2019
**** Appointed as a Director on 23 May 2019
***** Appointed Joint Interim CEO on 1 February 2019
****** Resigned as KMP on 31 March 2019
DXN Limited | ANNUAL REPORT <23>
For personal use only
OPTION HOLDINGS OF KEY MANAGEMENT PERSONNEL (CONTINUED)
2018
Balance at
4 August
2017
Holding
on Date of
Appointment
Expired Acquired
Holding
at Date of
Resignation
Balance
at 30 June
2018
Total Vested
at 30 June
2018
Total
Exercisable
at 30 June
2018
Richard Carden
Peter Christie
Terry Smart
Douglas Loh*
Dean Coetzee**
Tim Desmond***
Kuek Jin Low****
George Lazarou
-
-
-
-
-
-
-
-
-
-
-
-
78,125
-
-
-
-
78,125
-
-
-
-
-
-
-
-
-
62,500
2,166,667
10,468,750
-
2,166,667
2,166,666
-
156,250
17,187,500
-
-
-
-
-
-
-
-
-
62,500
62,500
62,500
2,166,667
2,166,667
2,166,667
10,468,750
10,468,750
10,468,750
78,125
78,125
78,125
2,166,667
2,166,667
2,166,667
2,166,666
2,166,666
2,166,666
-
-
-
156,250
156,250
156,250
17,265,625 17,265,625
17,265,625
* Appointed as a Director on 16 April 2018
** Resigned as a Director on 29 January 2018, continued as a KMP
*** Resigned as a Director on 16 October 2017, continued as a KMP
**** Appointed as a Director on 19 September 2017, Resigned on 22 November 2017
PERFORMANCE RIGHT HOLDINGS OF KEY MANAGEMENT PERSONNEL
The movement during the reporting period in the number of performance rights in the Company held, directly,
indirectly or beneficially, by each key management person, including related parties, is as follows:
2019
Simon Forth
Richard Whiting
George Lazarou
Balance at 1 July
2018
Issued During the
Year
Expired
Balance at 30 June
2019
Total Vested at 30
June 2019
-
-
-
-
1,800,000
1,800,000
900,000
4,500,000
-
-
-
-
1,800,000
1,800,000
900,000
4,500,000
-
-
-
-
OTHER TRANSACTIONS WITH RELATED PARTIES AND KEY MANAGEMENT PERSONNEL
Please refer to Note 23 for details of other transactions with key management personnel or their
related entities.
Signed in accordance with a resolution of the Board of Directors.
Douglas Loh
Non-Executive Chairman
Dated this 30th day of August 2019
<24>
For personal use only Level 15, Exchange Tower,
2 The Esplanade, Perth, WA 6000
PO Box 5785, St Georges Terrace,
WA 6831
T +61 (0)8 9225 5355
F +61 (0)8 9225 6181
AUDITOR’S INDEPENDENCE DECLARATION
UNDER S307C OF THE CORPORATIONS ACT 2001
TO THE DIRECTORS OF DXN LIMITED (formerly The Data Exchange Network Limited)
www.moorestephens.com.au
I declare that, to the best of my knowledge and belief, during the year ended 30 June 2019 there have
been no contraventions of:
i.
the auditor independence requirements as set out in the Corporations Act 2001 in relation to the
audit; and
ii. any applicable code of professional conduct in relation to the audit.
SUAN-LEE TAN
PARTNER
MOORE STEPHENS
CHARTERED ACCOUNTANTS
Signed at Perth this 30th day of August 2019
Liability limited by a scheme approved under Professional Standards Legislation. Moore Stephens - ABN 16 874 357 907. An independent member of Moore Stephens
International Limited - members in principal cities throughout the world. The Perth Moore Stephens firm is not a partner or agent of any other Moore Stephens firm.
23
DXN Limited | ANNUAL REPORT <25>
For personal use only
Annual Report 30 June 2019
STATEMENT OF PROFIT OR LOSS AND OTHER
COMPREHENSIVE INCOME
STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME
For the year ended 30 June 2019
For the year ended 30 June 2019
DXN Limited
Continuing operations
Sales to customers
Cost of Sales
Gross Profit
Revenue
R&D tax incentive claim
Export marketing development grant
Other income
Interest received
Expenses
Administration expenses
Amortisation - intangibles
Amortisation – deferred transaction costs
Compliance and legal expenses
Consultants and contractors
Depreciation
Employee expenses
Finance expenses
Foreign exchange loss
Impairment of trade receivables
Loss on sale of plant & equipment
Marketing expenses
Occupancy expenses
Telecommunication and technology expenses
Travel expenses
Note
2019
$
2018
$
2
15
11
3
1,403,528
1,982,984
(1,109,654)
293,874
(1,731,540)
251,444
1,182,552
55,310
-
142,848
1,380,710
(344,881)
(17,863)
-
(633,152)
(1,284,353)
(244,776)
(3,201,662)
(96,207)
(42,680)
(136,153)
(2,432)
(155,135)
(2,326,969)
(188,297)
(373,468)
(9,048,028)
-
-
31,538
45,877
77,415
(118,728)
(11,350)
(1,671,592)
(200,738)
(892,179)
(19,804)
(1,323,800)
(22,524)
(19,176)
-
-
(38,993)
(1,349,451)
(203,269)
(194,241)
(6,065,845)
Loss before income tax expense
Income tax expense
(7,373,444)
-
(5,736,986)
-
4
Total comprehensive loss for the period
(7,373,444)
(5,736,986)
Basic and diluted earnings per share (cents per share)
25
(3.50)
(5.88)
The Company’s potential ordinary shares were not considered dilutive as the Company is in a loss
position.
The accompanying notes form part of these financial statements.
<26>
24
For personal use only
Annual Report 30 June 2019
STATEMENT OF FINANCIAL POSITION
STATEMENT OF FINANCIAL POSITION
As at 30 June 2019
As at 30 June 2019
ASSETS
Current Assets
Cash and cash equivalents
Trade and other receivables
Other assets
Inventory
Deferred transaction costs
Total Current Assets
Non-Current Assets
Bank guarantees
Plant and equipment
Intangible
Total Non-Current Assets
TOTAL ASSETS
LIABILITIES
Current Liabilities
Trade and other payables
Income in advance
Borrowings
Provisions
Total Current Liabilities
Non-Current Liabilities
Borrowings
Total Current Liabilities
TOTAL LIABILITIES
NET ASSETS
EQUITY
Issued capital
Option reserve
Share based payments reserve
Accumulated losses
TOTAL EQUITY
Note
7
8
9
10
11
12
13
14
15
16
17
18
17
19
20
21
22
DXN Limited
2019
$
5,362,135
1,046,945
428,838
988,342
-
2018
$
12,047,724
1,216,811
717,251
220,113
-
7,826,260
14,201,899
3,071,000
11,142,255
290,459
1,071,000
355,912
142,171
14,503,714
1,569,083
22,329,974
15,770,982
1,152,021
1,261,112
869,849
84,499
877,168
105,781
-
77,133
3,367,481
1,060,082
2,088,372
2,088,372
-
-
5,455,853
1,060,082
16,874,121
14,710,900
29,662,628
310,302
11,621
(13,110,430)
20,137,584
310,302
-
(5,736,986)
16,874,121
14,710,900
The accompanying notes form part of these financial statements.
25
DXN Limited | ANNUAL REPORT <27>
For personal use only Annual Report 30 June 2019
STATEMENT OF CHANGES IN EQUITY
STATEMENT OF CHANGES IN EQUITY
For the year ended 30 June 2019
For the year ended 30 June 2019
DXN Limited
Issued
Capital
Option
Reserve
$
$
Share
Payments
Reserve
$
Accumulate
d Losses
Total
$
$
Balance at 1 July 2018
20,137,584
310,302
-
(5,736,986)
14,710,900
Total comprehensive income
for the period
Loss for the period
Other comprehensive income
Transaction with owners in
their capacity as owners:
Issue of shares
Capital raising costs
Issue of share-based
payments
-
-
-
10,309,760
(784,716)
-
-
-
-
-
-
-
-
-
-
(7,373,444)
-
(7,373,444)
(7,373,444)
-
(7,373,444)
-
-
11,621
-
-
-
10,309,760
(784,716)
11,621
Balance at 30 June 2019
29,662,628
310,302
11,621
(13,110,430)
16,874,121
Issued Capital
Option
Reserve
$
-
-
-
-
16,000,075
-
5,462,500
$
-
-
-
-
-
32
-
-
310,270
(1,324,991)
-
Balance at 4 August 2017
Total comprehensive income
for the period
Loss for the period
Other comprehensive income
Transaction with owners in
their capacity as owners:
Issue of shares
Issue of options
Conversion of convertible
notes at fair value
Options issued on conversion
of convertible note at fair
value
Capital raising costs
Balance at 30 June 2018
20,137,584
310,302
Share
Payments
Reserve
$
-
-
-
-
-
-
-
-
-
-
Accumulated
Losses
$
-
Total
$
-
(5,736,986)
-
(5,736,986)
(5,736,986)
-
(5,736,986)
-
-
-
-
-
16,000,075
32
5,462,500
310,270
(1,324,991)
(5,736,986)
14,710,900
The accompanying notes form part of these financial statements.
<28>
26
For personal use only
Annual Report 30 June 2019
STATEMENT OF CASH FLOWS
STATEMENT OF CASH FLOWS
For the year ended 30 June 2019
For the year ended 30 June 2019
Cash flows from operating activities
Receipts from customers
Payments to suppliers and employees
Interest received
Interest paid
R&D tax incentive claim
Export marketing development grant
Payment of deposit
Receipt of deposit
DXN Limited
Note
2019
$
2018
$
2,665,897
1,344,776
(10,775,847)
(6,397,805)
113,157
(70,753)
1,182,552
55,310
(30,565)
12,988
22,861
-
-
-
-
-
Net cash used in operating activities
26(a)
(6,847,261)
(5,030,168)
Cash flows from investing activities
Payment of deposits and guarantees
Purchase of plant and equipment
Purchase of intangible assets
Net cash used in financing activities
Cash flows from financing activities
Proceeds from convertible notes
Proceeds from the issue of shares and options
Payment of capital raising costs
Finance facility drawdown
Repayment of finance facility
Loans made to employee
Repayment of loans made to employees
Net cash provided by financing activities
Net increase in cash held
Cash and cash equivalents at beginning of period
(2,000,000)
(1,071,000)
(10,251,530)
(375,716)
(163,103)
(153,521)
(12,414,633)
(1,600,237)
-
4,370,000
10,309,760 16,000,107
(692,051)
(1,686,478)
3,447,734
(489,513)
(2,500)
2,875
-
-
(5,500)
-
12,576,305 18,678,129
(6,685,589) 12,047,724
12,047,724
-
Cash and cash equivalents at the end of the period 7,26(b)
5,362,135 12,047,724
The accompanying notes form part of these financial statements
27
DXN Limited | ANNUAL REPORT <29>
For personal use only NOTES TO THE FINANCIAL
STATEMENTS
For the period ended 30 June 2019
1.STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES
DXN Limited (the “Company”) is a Company domiciled in Australia and listed on the ASX.
The principal activities of the Company during the financial period was building a Tier III data centre in Sydney using our
prefabricated modular technology, a second facility is planned for Melbourne. Data centres provide space, power, cooling,
and physical security for client to house their computer servers and related storage and networking equipment. Data centres
provide a recurring revenue stream and our modular approach allows us to match our capital requirements with capacity
sold, thereby reducing our upfront capital requirements. This disruptive model is at the forefront of data centre engineering
techniques. Our construction cost (per megawatt) is less than our industry peers.
Our DXN Modules division engineers, constructs and commissions data centre solutions. Our data centre infrastructure has
a wide range of applications, these include hyperscale data centres, edge data centres, and telecommunications applications
(satellite, radio centres, cable landing stations). Our prefabricated construction method reduces the on-site labour and time to
deploy and improves quality. Solutions by DXN Modules are ideal for rapid deployments in both urban and remote locations.
The Company has achieved an industry first and become the first modular data centre developer in the world to receive both
TIER-Ready III and TIER-Ready IV design review awards.
BASIS OF PREPARATION
The accounting policies set out below have been consistently applied to all periods presented.
Statement of Compliance
The financial report is a general purpose financial report which has been prepared in accordance with Australian Accounting
Standards (AASBs) (including Australian Interpretations) as issued by the Australian Accounting Standards Board (AASB)
and the Corporations Act 2001 for profit-oriented entities. The financial report of the Company complies with International
Financial Reporting Standards (lFRSs) as issued by the International Accounting Standards Board.
The financial statements were authorised for issue by the Board of Directors on 30 August 2019.
Basis of Measurement
The financial statements have been prepared on the historical cost basis except for the following material items in the
statement of financial position:
•
•
•
financial instruments at fair value through profit or loss are measured at fair value
available-for-sale financial assets are measured at fair value
liabilities for cash-settled share-based payment arrangements are measured at fair value
FUNCTIONAL AND PRESENTATION CURRENCY
These financial statements are presented in Australian dollars, which is the Company’s functional currency.
USE OF ESTIMATES AND JUDGEMENTS
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 estimates are revised and in any future periods affected.
Going Concern
The accounts have been prepared on the going concern basis, which contemplates continuity of normal business activities
and the realisation of assets and settlement of liabilities in the normal course of business. The Company incurred a loss
of $7,373,444 for the year ended 30 June 2019 (2018: $5,736,986) and operating cash outflows of $ 6,847,261(2018:
$5,030,168).
The ability of the Company to continue to pay its debts as and when they fall due is dependent upon the Company successfully
raising additional share capital and generating sufficient revenue.
<30>
For personal use only NOTES TO THE FINANCIAL STATEMENTS
For the year ended 30 June 2019
The Directors believe it is appropriate to prepare these accounts on a going concern basis because:
•
the Directors have an appropriate plan to raise additional funds as and when it is required, and the Directors believe
that the additional capital required can be raised in the market; and
•
the Directors have an appropriate plan to contain certain operating expenditure if appropriate funding is unavailable.
The accounts have been prepared on the basis that the Company can meet its commitments as and when they fall due and
can therefore continue normal business activities, and the realisation of assets and liabilities in the ordinary course of
business.
(a) Critical Accounting Judgements Estimates and Assumptions
The carrying amounts of certain assets and liabilities are often determined based on estimates and assumptions of future
events. The key estimates and assumptions that have a significant risk of causing a material adjustment to the carrying
amounts of certain assets and liabilities within the next annual reporting period are:
INCOME TAX EXPENSES
Judgement is required in assessing whether deferred tax assets and liabilities are recognised on the statement of financial
position. Deferred tax assets, including those arising from temporary differences, are recognised only when it is considered
more likely than not that they will be recovered, which is dependent on the generation of future assessable income of a nature
and of an amount sufficient to enable the benefits to be utilised.
IMPAIRMENT
The Company assesses impairment at each reporting date by evaluating conditions specific to the Company that may lead to
impairment of assets. Where an impairment trigger exists, the recoverable amount of the asset is determined. Value-in-use
calculations performed in assessing recoverable amounts incorporate a number of key estimates.
FAIR VALUE MEASUREMENT
The Company measures financial instruments, such as derivatives, at fair value at each balance sheet date. Also, from time
to time, the fair values of non-financial assets and liabilities are required to be determined, eg., when the entity acquires a
business, or where an entity measures the recoverable amount of an asset or cash-generating unit (CGU) at fair value less
costs of disposal.
Fair value is 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.
The fair value of an asset or liability is measured using the assumptions that market participants would use when pricing the
asset or liability, assuming that market participants act in their economic best interest.
A fair value measurement of a non-financial asset takes into account a market participant’s ability to generate economic
benefits by using the asset in its highest and best use or by selling it to another market participant that would use the asset in
its highest and
best use.
The Company uses valuation techniques that are appropriate in the circumstances and for which sufficient data are available
to measure fair value, maximising the use of relevant observable inputs and minimising the use of unobservable inputs.
Changes in estimates and assumptions about these inputs could affect the reported fair value.
ESTIMATION OF USEFUL LIFE OF ASSETS
The entity determines the estimated useful lives and related depreciation and amortisation charges for its property, plant
and equipment and finite intangible assets. The useful lives could change significantly as a result of technical innovations,
or some other event. The depreciation and amortisation charge will increase where the useful lives are less than previously
estimated lives, or technically obsolete or non-strategic assets that have been abandoned or sold will be written off or written
down.
(b) New and amended accounting policies adopted by the company
The Company has considered the implications of new or amended Accounting Standards which have become applicable
for the current financial reporting period and the Company had to change its accounting policies as a result of adopting the
following standards:
•
•
AASB 9: Financial Instruments; and
AASB 15: Revenue from Contracts with Customers
The impact of the adoption of these standards and the respective accounting policies is discussed below.
AASB 9: FINANCIAL INSTRUMENTS – ACCOUNTING POLICIES
AASB 9 replaces the “incurred loss” impairment model in AASB 139 Financial Instruments: “Recognition and Measurement”
with a forward-looking “expected credit loss” (ECL) model. It is no longer necessary for a loss event to occur before an
impairment loss is recognised under the new model. Under the ECL model, the Company assesses on a forward looking basis
DXN Limited | ANNUAL REPORT <31>
For personal use only NOTES TO THE FINANCIAL STATEMENTS
For the year ended 30 June 2019
on the expected credit losses associated with its financial assets. The impairment methodology applied depends on whether
there has been a significant increase in credit risk. The new impairment model applies to financial assets at amortised cost
and contract assets under AASB 15 Revenue from Contracts with Customers. The application of the new standard results
in a change in accounting policy. The Company applies the simplified approach permitted by AASB 9, which requires the
recognition of lifetime expected losses for accounts receivables and contract assets from initial recognition of such assets.
At every reporting date, the Company reviews and adjusts its historically observed default rates based on current conditions
and changes in the future forecasts. As regards other receivables, the Company considers they have low credit risk and hence
recognises 12-month expected credit losses for such item where appropriate. The expected losses (if any) are considered to
be insignificant to the Company. The adoption of AASB 9 has had no material impact on the results and financial position of
the Company for the current and prior years.
The measurement categories for all financial liabilities remain the same, the carrying amounts for all financial liabilities at 1
July 2018 have not been impacted by the initial application of AASB 9.
The Company did not designate or de-designate any financial asset or financial liability at fair value through profit or loss at 1
July 2018.
AASB 15: REVENUE FROM CONTRACTS WITH CUSTOMERS – ACCOUNTING POLICIES
AASB 15 establishes a single comprehensive model for entities to use in accounting for revenue arising from contracts with
customers. AASB 15 replaced AASB 118 “Revenue”, which covered revenue arising from sale of goods and rendering of
services, and AASB 111 “Construction Contracts”, which specified the accounting for construction contracts. Under AASB 15,
revenue is recognised when the customer obtains the promised good or service in the contract. This may be at a single point
in time or over time.
TIMING OF REVENUE RECOGNITION
Previously, revenue from the provision of modular data centre solutions is recognised only when the service or infrastructure
product has been provided, the amount of revenue can be measured reliably, and it is probable that the economic benefits
associated with the transaction will flow to the Company.
Under AASB 15, revenue is recognised when the customer obtains control of the promised service or infrastructure
product in the contract which may contain performance obligations. Under these performance obligations, customers may
simultaneously receive and consume the benefits as the Company performs, therefore contracted revenue is recognised over
time based on stage of completion of the contract or when these performance obligations are met.
AASB 15 provides a higher standard threshold for recognition of variations, claims and incentives which only allows revenue
from variations and claims to be recognised to the extent they are approved or enforceable under the contract. The amount of
revenue is then recognised to the extent it is highly probable that a significant reversal of revenue will not occur.
Revenue is allocated to each performance obligation and recognised as the performance obligation is satisfied which may
be at a point in time or over time. The Company measures revenue using the measure of progress that best reflects the
Company’s performance in satisfying the performance obligation within the contracts over time. The different methods of
measuring progress include an input method (e.g. costs incurred) or an output method (e.g. milestones reached). The same
method of measuring progress will be consistently applied to similar obligations.
AASB 15 identifies the following three situations in which control of the promised service or product is regarded as being
transferred over time:
(i) When the customer simultaneously receives and consumes the benefits provided by the entity’s performance, as
the entity performs;
(ii) When the entity’s performance creates or enhances an asset (for example work in progress) that the customer
controls as the asset is created or enhanced; or
(iii) When the entity’s performance does not create an asset with an alternative use to the entity and the entity has an
enforceable right to payment for performance completed to date.
If the contract terms and the entity’s activities do not fall into any of these 3 situations, then under AASB 15, the entity
recognises revenue for the service at a single point in time, being when control has passed. Transfer of risks and rewards of
ownership is only one of the indicators that is considered in determining when the transfer of control occurs.
Where the Company provides services to customers, the customer consumes and receive the benefit of the service as it is
performed. As such, any service revenue is recognised over time as the services are provided. Revenue for the sales of
incidental or minor goods are recognised when the customer obtains control of the goods.
(c) New accounting standards for application in future periods
The AASB has issued a number of new and amended Accounting Standards that have mandatory application dates for future
reporting periods, some of which are relevant to the Group. The directors have decided not to early-adopt any of the new and
amended pronouncements. The following sets out their assessment of the pronouncements that are relevant to the Group but
applicable in future reporting periods.
<32>
For personal use only
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 30 June 2019
– AASB 16: Leases (applicable to annual reporting periods beginning on or after 1 January 2019).
The Group has chosen not to early-adopt AASB 16. However, the Group has conducted a preliminary assessment of the
impact of this new Standard, as follows.
A core change resulting from applying AASB 16 is that most leases will be recognised on the balance sheet by lessees as the
standard no longer differentiates between operating and finance leases. An asset and a financial liability are recognised in
accordance to this new Standard. There are, however, two exceptions allowed: short-term and low-value leases.
BASIS OF PREPARATION
The accounting for the Group’s operating leases will be primarily affected by this new Standard.
AASB 16 will be applied by the Group from its mandatory adoption date of 1 July 2019. The comparative amounts for the year
prior to first adoption will not be restated, as the Group has chosen to apply AASB 16 retrospectively with cumulative effect.
While the right-of-use assets for property leases will be measured on transition as if the new rules had always been applied,
all other right-of-use assets will be measured at the amount of the lease liability on adoption (after adjustments for any
prepaid or accrued lease expenses).
The Group’s non-cancellable operating lease commitments amount to $21.97 million (2018: $23.36 million) as at the
reporting date.
The Group has performed a preliminary impact assessment and has estimated that on 1 July 2019, the Group expects to
recognise the right-of-use assets and lease liabilities of approximately $17.77million respectively.
The adjustment for AASB 16 will have a positive impact on EBITDA as the costs of operating leases (previously recognized
as part of EBIT expensed over the term of the lease) will now be excluded from EBITDA as lease costs will be recognised
separately in depreciation (for the right of use assets) while interest on lease liabilities will be disclosed as part of financing
costs.
(d) Intangible assets
Internally generated software
Internally developed software is capitalised at cost less accumulated amortisation. Amortisation is calculated using the
straight-line basis over the asset’s useful economic life which is generally three years. Their useful lives and potential
impairment are reviewed at the end of each financial year.
Licences/trademarks/copyrights
Certain licences, trademarks and copyrights that the Company possesses will be amortised over their useful life and
are carried at cost less impairment losses and are subject to impairment review at least annually and whenever there
is an indication that it may be impaired. Other licences that the Company acquires are carried at cost less accumulated
amortisation and accumulated impairment losses. Amortisation is recognised on a straight-line basis over the estimated
useful life. The estimated useful life and amortisation method are reviewed at the end of each annual reporting period.
Software under development
Costs incurred in developing products or systems and costs incurred in acquiring software and licences that will contribute
to future period financial benefits through revenue generation and/or cost reduction are capitalised to software and systems.
Costs capitalised include external direct costs of materials and services and employee costs.
Assets in the course of construction include only those costs directly attributable to the development phase and are only
recognised following completion of technical feasibility and where the Company has an intention and ability to use the asset.
Software under development shall only commence being amortised when the software is completed and ready for use.
Other licences that the Company acquires are carried at cost less accumulated amortisation and accumulated impairment
losses. Amortisation is recognised on a straight-line basis over the estimated useful life. The estimated useful life and
amortisation method are reviewed at the end of each annual reporting period.
(e) Cash and cash equivalents
Cash and cash equivalents includes cash on hand, deposits held at call with financial institutions, other short-term, highly
liquid investments with original maturities of three months or less that are readily convertible to known amounts of cash and
which are subject to an insignificant risk of changes in value.
(f) Plant and equipment
Plant and equipment is stated at cost less accumulated depreciation and accumulated impairment losses.
DXN Limited | ANNUAL REPORT <33>
For personal use only NOTES TO THE FINANCIAL STATEMENTS
For the year ended 30 June 2019
IMPAIRMENT
The carrying amounts of plant and equipment are reviewed for impairment when events or changes in circumstances
indicate the carrying value may not be recoverable. For an asset that does not generate largely independent cash flows,
the recoverable amount is determined for the cash-generating unit to which the asset belongs. If any such indication exists
and where the carrying values exceed the recoverable amount, the assets or cash generating units are written down to their
recoverable amount.
The recoverable amount of plant and equipment is the greater of fair value less costs to sell and value in use. In assessing
value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that
reflects current market assessments of the time value of money and the risks specific to the asset. Impairment losses are
recognised in the profit or loss in the statement of comprehensive income in the cost of sales line item.
DEPRECIATION
The depreciable amount of all fixed assets is depreciated on a straight line basis over their useful lives to the Company
commencing from the time the asset is held ready for use. The depreciation rates used for each class of depreciable assets
vary from 2.5% to 33.33%. Depreciation on assets under construction shall only commence when the assets construction is
completed and ready for use.
Gains and losses on disposals are determined by comparing proceeds with carrying amount. These are included in the profit
or loss in the statement of comprehensive income.
(g) Fair Value of Assets and Liabilities
The Company measures some of its assets and liabilities at fair value on either a recurring or non-recurring basis, depending
on the requirements of the applicable Accounting Standard.
Fair value is the price the Company would receive to sell an asset or would have to pay to transfer a liability in an orderly (ie
unforced) transaction between independent, knowledgeable and willing market participants at the measurement date.
As fair value is a market-based measure, the closest equivalent observable market pricing information is used to determine
fair value. Adjustments to market values may be made having regard to the characteristics of the specific asset or liability.
The fair values of assets and liabilities that are not traded in an active market are determined using one or more valuation
techniques. These valuation techniques maximise, to the extent possible, the use of observable market data.
To the extent possible, market information is extracted from either the principal market for the asset or liability (ie the
market with the greatest volume and level of activity for the asset or liability) or, in the absence of such a market, the most
advantageous market available to the entity at the end of the reporting period (ie the market that maximises the receipts from
the sale of the asset or minimises the payments made to transfer the liability, after taking into account transaction costs and
transport costs).
For non-financial assets, the fair value measurement also takes into account a market participant’s ability to use the asset in
its highest and best use or to sell it to another market participant that would use the asset in its highest and best use.
The fair value of liabilities and the entity’s own equity instruments (excluding those related to share-based payment
arrangements) may be valued, where there is no observable market price in relation to the transfer of such financial
instruments, by reference to observable market information where such instruments are held as assets. Where this
information is not available, other valuation techniques are adopted and, where significant, are detailed in the respective note
to the financial statements.
(h) Impairment of assets
At the end of each reporting period, the company assesses whether there is any indication that an asset may be impaired.
The assessment will include the consideration of external and internal sources of information. If such an indication exists,
an impairment test is carried out on the asset by comparing the recoverable amount of the asset, being the higher of the
asset’s fair value less costs to sell and value in use, to the asset’s carrying amount. Any excess of the asset’s carrying
amount over its recoverable amount is recognised immediately in profit or loss, unless the asset is carried at a revalued
amount in accordance with another Standard (e.g. in accordance with the revaluation model in AASB 116: Property, Plant
and Equipment). Any impairment loss of a revalued asset is treated as a revaluation decrease in accordance with that other
Standard.
Where it is not possible to estimate the recoverable amount of an individual asset, the company estimates the recoverable
amount of the cash-generating unit to which the asset belongs.
Impairment testing is performed annually for goodwill, intangible assets with indefinite lives and intangible assets not yet
available for use.
(i) Trade and other receivables
Trade and other receivables include amounts due from customers for goods sold and services performed over an ordinary
course of business. Receivables expected to be collected within 12 months of the end of the reporting period are classified
as current assets. All other receivables are classified as non-current assets.
<34>
For personal use only NOTES TO THE FINANCIAL STATEMENTS
For the year ended 30 June 2019
Trade and other receivables are initially recognised at fair value and subsequently measured using a forward looking
“expected credit loss” (ECL) model. Refer to notes 1(b) and 1(m) for further discussion on the application of the expected
credit loss model under AASB 9 Financial Instruments.
(j) Trade and other payables
Trade payables and other accounts payable are recognised when the Company becomes obliged to make future payments
resulting from the purchase of goods and services.
(k) Revenue Recognition
The Company has applied AASB 15: Revenue from Contracts with Customers using the cumulative effective method.
Therefore, the comparative information has not been restated and continues to be presented under AASB 118: Revenue. As
detailed in Note 1(b), AASB 15 establishes principles for reporting the nature, amount, timing, and uncertainty of revenue and
cash flows arising from the Company’s contracts with the customer, identify performance obligations in the contract, and
recognise revenue when performance obligations are satisfied.
The adoption of AASB 15 has not resulted in any adjustments to the amounts recognised in the current or previous financial
periods, hence comparatives were not required to be restated.
In the comparative period
Revenue was measured at the fair value of the consideration received or receivable after taking into account any trade
discounts and volume rebates allowed. When the inflow of consideration was deferred, it was treated as the provision of
financing and was discounted at a rate of interest that is generally accepted in the market for similar arrangements. The
difference between the amount initially recognised and the amount ultimately received was interest revenue.
Revenue from sale of goods was recognised at the point of delivery as this corresponds to the transfer of significant risks and
rewards of ownership of goods and the cessation of all involvement in those goods.
Revenue from rendering of services was recognised in proportion to the stage of completion of the work performed at the
reporting date.
Construction work in progress is measured at cost, plus profit recognised to date less any provision for anticipated future
losses. Cost includes both variable and fixed costs relating to specific contracts, and those costs that are attributable to the
contract activity in general and that can be allocated on a reasonable basis.
Revenue generated by the Company is categorised into the following major business activities:
Data Centre Services
Revenue is recognised only when the service has been provided, the amount of revenue can be measured reliably, and it is
probable that the economic benefits associated with the transaction will flow to the Company. Any upfront discounts provided
to customers are amortised over the contract term. This approach is considered consistent with AASB 15 in that revenue is
deferred and recognised over the term of the contract with the customer.
DXN Module Sales
The Company custom builds turnkey data centre modules for customers. Revenue is recognised only when control of the
module has transferred to the customer. For such transactions, this is when the modules are delivered, fully installed/
deployed, tested and formally accepted by the customer. Revenue from these sales is based on the price stipulated in
the contract and any agreed variations to the contract sum. Revenue is only recognised to the extent that there is a high
probability that a significant reversal of revenue will not occur.
AASB 15 also provides guidance relating to the treatment of contract costs, such as incremental costs of obtaining a contract.
From 1 July 2018, eligible costs that are expected to be recovered will be capitalised as a contract asset and amortised over
the term of the contract with the customer.
Interest Income
Interest income is recognised using the effective interest method. When a receivable is impaired, the Company reduces the
carrying amount to its recoverable amount, being the estimated future cash flow discounted at the original effective interest
rate of the instrument and continues unwinding the discount as interest income. Interest income on impaired loans is
recognised using the original effective interest rate.
Refundable Research & Development Tax Offset
The Company recognises refundable R & D tax offset as a government grant under AASB 120 Government Grants. Such
refunds are recognised on an accrual basis only when the amount can be measured reliably, and it is probable that the
economic benefits associated with the offset will flow to the Company.
(l)Income Tax
The income tax expense or revenue for the year is the tax payable on the current year’s taxable income based on the notional
income tax rate, adjusted by changes in deferred tax assets and liabilities attributable to temporary differences between tax
bases of assets and liabilities and their carrying amounts in the financial statements, and to unused tax losses.
DXN Limited | ANNUAL REPORT <35>
For personal use only NOTES TO THE FINANCIAL STATEMENTS
For the year ended 30 June 2019
A deferred tax asset for unused tax losses is recognised only if it is probable that future taxable amounts will be available to
utilise losses.
Deferred tax assets and liabilities are offset when there is a legally enforceable right to offset current tax assets and
liabilities and when the deferred tax balances relate to the same taxation authority. Current tax assets and liabilities are
offset where the entity has a legally enforceable right to offset and intends either to settle on a net basis, or to realise the
assets and settle the liability simultaneously.
(m) 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
asset (ie trade date accounting is adopted).
Financial instruments (except for trade receivables) are initially measured at fair value plus transaction costs, except where
the instrument is classified “at fair value through profit or loss”, in which case transaction costs are expensed to profit or loss
immediately. Where available, quoted prices in an active market are used to determine fair value. In other circumstances,
valuation techniques are adopted.
Trade receivables are initially measured at the transaction price if the trade receivables do not contain a significant financing
component or if the practical expedient was applied as specified in AASB 15.63.
Classification and subsequent measurement
Financial liabilities
Financial instruments are subsequently measured at:
•
•
amortised cost; or
fair value through profit or loss.
A financial liability is measured at fair value through profit and loss if the financial liability is:
•
•
•
a contingent consideration of an acquirer in a business combination to which AASB 3: Business Combinations applies;
held for trading; or
initially designated as at fair value through profit or loss.
All other financial liabilities are subsequently measured at amortised cost using the effective interest method.
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.
A financial liability is held for trading if:
•
•
•
it is incurred for the purpose of repurchasing or repaying in the near term;
part of a portfolio where there is an actual pattern of short-term profit taking; or
a derivative financial instrument (except for a derivative that is in a financial guarantee contract or a derivative that is
in a effective hedging relationships).
Any gains or losses arising on changes in fair value are recognised in profit or loss to the extent that they are not part of a
designated hedging relationship are recognised in profit or loss.
The change in fair value of the financial liability attributable to changes in the issuer’s credit risk is taken to other
comprehensive income and are not subsequently reclassified to profit or loss. Instead, they are transferred to retained
earnings upon derecognition of the financial liability. If taking the change in credit risk in other comprehensive income
enlarges or creates an accounting mismatch, then these gains or losses should be taken to profit or loss rather than other
comprehensive income.
A financial liability cannot be reclassified.
Financial assets
Financial assets are subsequently measured at:
amortised cost;
fair value through other comprehensive income; or
fair value through profit or loss.
•
•
•
<36>
For personal use only NOTES TO THE FINANCIAL STATEMENTS
For the year ended 30 June 2019
Measurement is on the basis of two primary criteria:
•
•
the contractual cash flow characteristics of the financial asset; and
the business model for managing the financial assets.
A financial asset that meets the following conditions is subsequently measured at amortised cost:
•
•
the financial asset is managed solely to collect contractual cash flows; and
the contractual terms within the financial asset give rise to cash flows that are solely payments of principal and
interest on the principal amount outstanding on specified dates.
A financial asset that meets the following conditions is subsequently measured at fair value through other
comprehensive income:
•
•
the contractual terms within the financial asset give rise to cash flows that are solely payments of principal and
interest on the principal amount outstanding on specified dates;
the business model for managing the financial assets comprises both contractual cash flows collection and the
selling of the financial asset.
By default, all other financial assets that do not meet the measurement conditions of amortised cost and fair value through
other comprehensive income are subsequently measured at fair value through profit or loss.
The Company initially designates a financial instrument as measured at fair value through profit or loss if:
•
•
•
- it eliminates or significantly reduces a measurement or recognition inconsistency (often referred to as “accounting
mismatch”) that would otherwise arise from measuring assets or liabilities or recognising the gains and losses on
them on different bases;
- it is in accordance with the documented risk management or investment strategy, and information about the
groupings was documented appropriately, so that the performance of the financial liability that was part of a Company
of financial liabilities or financial assets can be managed and evaluated consistently on a fair value basis;
- it is a hybrid contract that contains an embedded derivative that significantly modifies the cash flows otherwise
required by the contract.
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.
Equity instruments
At initial recognition, as long as the equity instrument is not held for trading and not a contingent consideration recognised by
an acquirer in a business combination to which AASB 3:Business Combinations applies, the Company has the option to make
an irrevocable election to measure any subsequent changes in fair value of the equity instruments in other comprehensive
income, while the dividend revenue received on underlying equity instruments investment will still be recognised in profit or
loss. The Company currently has no equity instrument financial assets.
Regular way purchases and sales of financial assets are recognised and derecognised at settlement date in accordance with
the Company’s accounting policy.
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.
DXN Limited | ANNUAL REPORT <37>
For personal use only NOTES TO THE FINANCIAL STATEMENTS
For the year ended 30 June 2019
Derecognition of financial assets
A financial asset is derecognised when the holder’s contractual rights to its cash flows expires, or the asset is transferred in
such a way that all the risks and rewards of ownership are substantially transferred.
All of the following criteria need to be satisfied for derecognition of financial asset:
•
•
•
the right to receive cash flows from the asset has expired or been transferred;
all risk and rewards of ownership of the asset have been substantially transferred; and
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).
On derecognition of a financial asset measured at amortised cost, the difference between the asset’s carrying amount and the
sum of the consideration received and receivable is recognised in profit or loss.
On derecognition of a debt instrument classified as at fair value through other comprehensive income, the cumulative gain or
loss previously accumulated in the investment revaluation reserve is reclassified to profit or loss.
On derecognition of an investment in equity which was elected to be classified under fair value through other comprehensive
income, the cumulative gain or loss previously accumulated in the investment revaluation reserve is not reclassified to profit
or loss, but is transferred to retained earnings.
IMPAIRMENT
The Company recognises a loss allowance for expected credit losses on:
•
•
•
•
financial assets that are measured at amortised cost or fair value through other comprehensive income;
contract assets (eg amounts due from customers under construction contracts);
loan commitments that are not measured at fair value through profit or loss; and
financial guarantee contracts that are not measured at fair value through profit or loss.
Loss allowance is not recognised for:
•
•
financial assets measured at fair value through profit or loss; or
equity instruments measured at fair value through other comprehensive income.
Expected credit losses are the probability-weighted estimate of credit losses over the expected life of a financial instrument.
A credit loss is the difference between all contractual cash flows that are due and all cash flows expected to be received, all
discounted at the original effective interest rate of the financial instrument.
The Company uses the following approach to impairment, as applicable under AASB 9: Financial Instruments:
•
the simplified approach
Simplified approach
The simplified approach does not require tracking of changes in credit risk at every reporting period, but instead requires the
recognition of lifetime expected credit loss at all times. This approach is applicable to:
•
trade receivables or contract assets that result from transactions within the scope of AASB 15: Revenue from
Contracts with Customers and which do not contain a significant financing component
In measuring the expected credit loss, a provision matrix for trade receivables is used taking into consideration various data
to get to an expected credit loss (ie diversity of customer base, appropriate groupings of historical loss experience, etc).
Recognition of expected credit losses in financial statements
At each reporting date, the Company recognises the movement in the loss allowance as an impairment gain or loss in the
statement of profit or loss and other comprehensive income.
The carrying amount of financial assets measured at amortised cost includes the loss allowance relating to that asset.
(n) Contributed equity
Ordinary shares are classified as equity. Incremental costs directly attributable to the issue of new shares or options are
shown in equity as a deduction, net of tax, from the proceeds.
<38>
For personal use only NOTES TO THE FINANCIAL STATEMENTS
For the year ended 30 June 2019
(o) Employee benefits
Provision is made for the company’s obligation for short-term employee benefits. Short-term employee benefits are benefits
(other than termination benefits) that are expected to be settled wholly before 12 months after the end of the annual
reporting period in which the employees render the related service, including wages, salaries and sick leave. Short-term
employee benefits are measured at the (undiscounted) amounts expected to be paid when the obligation is settled.
The company’s obligations for short-term employee benefits such as wages, salaries and sick leave are recognised as a part
of current trade and other payables in the statement of financial position. The company’s obligations for employees’ annual
leave and long service leave entitlements are recognised as provisions in the statement of financial position.
Equity-settled compensation
The Company operates an employee option and performance rights plan. Share-based payments to employees are measured
at the fair value of the instruments at grant date and amortised over the vesting periods. Share-based payments to non-
employees 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.
The corresponding amounts are recognised in the share payment reserve and statement of profit and loss respectively. The
fair value of options and performance rights are determined using the Black-Scholes or Binomial pricing model. The number
of performance rights and options 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.
(p) Inventories
Inventories are valued at the lower of cost and net realisable value.
Costs incurred in bringing each product to its present location and conditions are accounted for as follows:
•
•
Raw materials: purchase cost on a first-in/first-out basis; and
Finished goods and work in progress: cost of direct materials and labour and a portion of manufacturing overheads
based on the normal operating capacity but excluding borrowing costs.
Net realisable value is the estimated selling price in the ordinary course of business, less estimated costs of completion and
the estimated costs necessary to make the sale.
(q) Leases
Leases of fixed assets, where substantially all the risks and benefits incidental to the ownership of the asset – but not the
legal ownership – are transferred to the Company, are classified as finance leases.
Finance leases are capitalised by recognising an asset and a liability at the lower of the fair value of the leased property or
the present value of the minimum lease payments, including any guaranteed residual values. Lease payments are allocated
between the reduction of the lease liability and the lease interest expense.
Leased assets are depreciated on a straight-line basis over the shorter of their estimated useful lives or the lease term.
Lease payments for operating leases, where substantially all the risks and benefits remain with the lessor, are recognised as
expenses on a straight-line basis over the lease term. Lease incentives under operating leases are recognised as a liability
and amortised on a straight-line basis over the lease term.
DXN Limited | ANNUAL REPORT <39>
For personal use only
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 30 June 2019
2. REVENUE FROM CONTINUING ACTIVITIES
Sundry income
3. EXPENSES
Loss has been determined after the following specific
expenses:
- Amortisation of intangibles
- Amortisation of deferred transaction costs
- Auditing or reviewing the financial report
- Depreciation
- Operating lease expense – rental
Employee benefits expense:
- Annual leave
- Allowances
- Commissions
- Director’s fees
- Fringe benefits tax
- Long service leave
- Occupational health and safety
- Payroll tax
- Recruitment
- Share based payments
- Staff onboarding, training & welfare
- Superannuation
- Wages
2019
$
2018
$
-
31,538
17,863
-
47,000
244,776
2,097,420
65,421
76,863
51,463
158,998
15,997
(6,119)
-
192,592
28,278
11,621
2,444
280,700
2,323,404
11,350
1,671,592
33,000
19,804
881,707
63,560
2,147
-
90,500
-
13,573
9,290
29,140
-
-
-
112,057
1,003,533
3,201,662
1,323,800
<40>
For personal use only
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 30 June 2019
4.
INCOME TAX
(a)
The components of tax expense comprise:
Current tax
Deferred tax
Income tax expense
(b)
The prima facie tax benefit on loss from ordinary
activities before income tax is reconciled to the income
tax as follows:
Prima facie tax benefit on loss from ordinary activities
before income tax at 27.5% (2018: 27.5%)
Add tax effect of:
- Revenue losses not recognised
- Other non-deductible items
- Other non-assessable income
- Other deferred tax balances not recognised
Income tax expense
(c) Deferred tax recognised at 27.5% (2018: 27.5%) (Note 1):
Deferred tax liabilities
Accrued income
Prepayment
Deferred tax assets
Carried forward revenue losses
Net tax deferred
2019
$
-
-
-
2018
$
-
-
-
(2,027,697)
(1.577,671)
2,420,674
12,218
(326,302)
(78,893)
-
1,115,250
459,688
-
2,734
-
(14,494)
(16,818)
31,312
-
(6,330)
(1,720)
8,049
-
(d) Unrecognised deferred tax assets at 27.5% (2018:2018) (Note 1):
Carried forward revenue losses
Capital raising costs
Provisions and accruals
2,834,410
414,999
89,009
3,340,418
1,115,250
323,149
43,957
1,482,356
(e) The tax benefits of the above Deferred Tax Assets will only be obtained if:
(i)
(ii)
(iii)
the Company derives future assessable income of a nature and of an amount sufficient to enable
the benefits to be utilised;
the Company continues to comply with the conditions for deductibility imposed by law; and
no changes in income tax legislation adversely affect the Company in utilising the benefits.
Note 1 - the corporate tax rate for eligible companies will reduce from 30% to 25% by 30 June 2022 providing certain turnover
thresholds and other criteria are met. Deferred tax assets and liabilities are required to be measured at the tax rate that is expected
to apply in the future income year when the asset is realised or the liability is settled. The Directors have determined that the deferred
tax balances be measured at the tax rates stated.
DXN Limited | ANNUAL REPORT <41>
For personal use only
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 30 June 2019
5. AUDITOR’S REMUNERATION
2019
$
2018
$
Remuneration of the auditor Moore Stephens:
- Auditing and reviewing the financial statements of the Company
47,000
33,000
6. DIVIDENDS PAID OR PROVIDED FOR ON ORDINARY SHARES
No dividends were paid during the period. No recommendation for payment of dividends has been made.
7. CASH AND CASH EQUIVALENTS
Current
Cash at bank and on hand
Term Deposit 1
1 The maturity date of the term deposit was 7 August 2018.
8. TRADE AND OTHER RECEIVABLES
Current
Trade receivables 1
Less: Provision for loss allowance/impairment
GST receivable
Interest receivable
Loan to employee
1 Aging of gross carrying amounts due
0-30 days
30-60 days
60-90 days
90+ days
Loss allowance provision (100% relates to 90+ days)
Total
2019
$
2018
$
5,362,135
-
7,047,724
5,000,000
5,362,135 12,047,724
695,472
(131,657)
563,815
425,298
52,707
5,125
1,046,945
914,696
-
914,696
273,599
23,016
5,500
1,216,811
676,232
433,082
26,412
18,597
51,734
18,597
160,318
225,196
(131,657)
-
563,815 914,696
The loss allowance provision as at 30 June 2019 is determined as tabled above; the expected
credit losses also incorporate forward-looking information.
The following table shows the movement in lifetime expected credit loss that has been
recognised for trade and other receivables in accordance with the simplified approach set out
in AASB 9: Financial Instruments.
<42>
For personal use only
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 30 June 2019
8.
TRADE AND OTHER RECEIVABLES (Continued)
a.
Lifetime Expected Credit Loss:
Credit Impaired
(i)
Current trade receivables
(i)
Current trade receivables
Note
Opening
balance
under
AASB 139
1 July 2017
$
Adjust-
ment for
AASB 9
$
Net
measure-
ment of
loss
allowance
$
Closing
balance
30 June
2018
$
-
-
-
-
Opening
balance
under
AASB 139
1 July 2018
Adjust-
ment for
AASB 9
Net
measure-
ment of
loss
allowance
Closing
balance 30
June 2019
$
$
$
$
-
-
- 131,657 131,657
- 131,657 131,657
The Company applies the simplified approach to providing for expected credit losses prescribed by AASB
9, which permits the use of the lifetime expected loss provision for all trade receivables. To measure the
expected credit losses, trade receivables have been grouped based on shared credit risk characteristics
and the days past due.
Credit risk
The Company has no significant concentration of credit risk with respect to any single counterparty or
group of counterparties other than those receivables specifically provided for and mentioned within Note
8. The class of assets described as "trade and other receivables" is considered to be the main source of
credit risk related to the Group.
On a geographical basis, the Company’s credit risk exposure is located entirely within Australia.
The Company always measures the loss allowance for trade receivables at an amount equal to lifetime
expected credit loss. The expected credit losses on trade receivables are estimated using a provision
matrix by reference to past default experience of the debtor (where applicable) and an analysis of the
debtor's current financial position, adjusted for factors that are specific to the debtor, general economic
conditions of the industry in which the debtor operates and an assessment of both the current and the
forecast direction of conditions at the reporting date.
There has been no change in the estimation techniques used or significant assumptions made during the
current reporting period.
The Group writes off a trade receivable when there is information indicating that the debtor is in severe
financial difficulty and there is no realistic prospect of recovery; for example, when the debtor has been
placed under liquidation or has entered into bankruptcy proceedings, or when the trade receivables are
over two or more years past due, whichever occurs earlier. None of the trade receivables that have been
written off are subject to enforcement activities.
The Company does not currently hold any collateral as security.
DXN Limited | ANNUAL REPORT <43>
For personal use only
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 30 June 2019
9. OTHER ASSETS
Current
Prepayments
Deposits
10. INVENTORY
Current
Materials
Work in Progress – Customers 1
1 Relates to external customers
11. DEFERRED TRANSACTION COSTS
Current
Deferred transaction costs (convertible notes) – at fair value
Deferred transaction costs (convertible notes) – capital
raising costs
Amortisation of deferred transaction costs on conversion
12. BANK GUARANTEES
Non-Current
9 Mumford Place, Balcatta WA 1
5 Parkview Drive, Olympic Park, Sydney NSW 1
286-292 Lorimer Street, Port Melbourne, Victoria 1
ANZ Chattel Finance Facility 2
2019
$
411,261
17,577
428,838
2018
$
717,251
-
717,251
334,450
653,892
988,342
11,911
208,202
220,113
-
-
-
-
1,402,770
268,822
(1,671,592)
-
76,000
76,000
495,000
495,000
500,000
500,000
-
2,000,000
3,071,000 1,071,000
1 Relate to term deposits given to secure bank guarantees over leased premises. The bank guarantees are
restricted cash.
2 The term deposit is restricted cash and is provided as security for the ANZ Chattel Finance Facility per note 17.
The bank guarantees are restricted cash.
<44>
For personal use only
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 30 June 2019
13. PLANT AND EQUIPMENT
Plant and Equipment
At cost
Accumulated depreciation
ICT Hardware
At cost
Accumulated depreciation
Office Equipment
At cost
Accumulated depreciation
Motor Vehicles
At cost
Accumulated depreciation
Leasehold Improvements
At cost
Accumulated depreciation
Assets Under Construction 1
At cost
Accumulated depreciation
Total cost
Total accumulated depreciation
Total Written Down Value
1 Relates to the construction of data centres for Melbourne & Sydney
Movements in carrying amounts
Plant and Equipment
Carrying amount at beginning of reporting period
Additions
Disposals
Depreciation expense
Carrying amount at end of reporting period
ICT Hardware
Carrying amount at beginning of reporting period
Additions
Disposals
Depreciation expense
Carrying amount at end of reporting period
$
2019
$
2,821,167
(181,472)
2,639,695
2018
$
27,381
(3,560)
23,821
156,535
(60,842)
95,693
139,709
(14,300)
125,409
81,807
(16,007)
65,800
35,229
(1,943)
33,286
26,016
(2,276)
23,740
551,945
(3,630)
548,315
7,769,012
-
7,769,012
11,406,482
(264,227)
11,142,255
2019
$
23,821
2,793,786
-
(177,912)
2,639,695
125,409
18,244
(1,066)
(46,894)
95,693
-
-
-
-
-
-
173,396
-
173,396
375,715
(19,803)
355,912
2018
$
-
27,381
-
(3,560)
23,821
-
139,709
-
(14,300)
125,409
DXN Limited | ANNUAL REPORT <45>
For personal use only
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 30 June 2019
13. PLANT AND EQUIPMENT (CONTINUED)
Office Equipment
Carrying amount at beginning of reporting period
Additions
Disposals
Depreciation expense
Carrying amount at end of reporting period
Motor Vehicles
Carrying amount at beginning of reporting period
Additions
Disposals
Depreciation expense
Carrying amount at end of reporting period
Leasehold Improvements
Carrying amount at beginning of reporting period
Additions
Disposals
Depreciation expense
Carrying amount at end of reporting period
Assets Under Construction
Carrying amount at beginning of reporting period
Additions
Disposals
Depreciation expense
Carrying amount at end of reporting period
Total
2019
$
2018
$
33,286
49,010
(2,432)
(14,064)
65,800
-
26,016
-
(2,276)
23,740
-
551,945
-
(3,630)
548,315
-
35,229
-
(1,943)
33,286
-
-
-
-
-
-
-
-
-
-
173,396
7,595,616
-
-
7,769,012
-
173,396
-
-
173,396
11,142,255
355,912
<46>
For personal use only
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 30 June 2019
14. INTANGIBLES
Non-Current
Software at cost 1
Accumulated amortisation
Patents and Trademarks at cost 2
Accumulated amortisation
Software Development at cost 3
Accumulated amortisation
Total cost
Total accumulated amortisation
Total Written Down Value
1 Relates to acquired software and is amortised over a period of 3 years.
2 Relates to patents and is amortised over the estimated useful life of the patents.
3 Relates to the development costs spent to date on IoT software.
15. TRADE AND OTHER PAYABLES
Current (unsecured)
Trade creditors 1
Other creditors & accruals 2
Payroll liabilities
Terms and conditions relating to the above financial instruments.
1.
2.
Trade creditors are non-interest bearing and generally on 60 day terms.
Other creditors are non-interest bearing have no fixed repayment terms.
For further details refer to note 24 Financial Instruments.
16. INCOME IN ADVANCE
Current
Income in advance
2019
$
51,632
(26,621)
25,011
36,480
(2,592)
33,888
231,560
-
231,560
319,672
(29,213)
290,459
2018
$
47,848
(10,594)
37,254
33,986
(756)
33,230
71,687
-
71,687
153,521
(11,350)
142,171
2019
$
675,832
150,876
325,313
1,152,021
2018
$
642,637
36,170
198,361
877,168
2019
$
1,261,112
1,261,112
2018
$
105,781
105,781
The above balance relates to amounts received in advance from external customers for the
custom-built DXN data modules.
DXN Limited | ANNUAL REPORT <47>
For personal use only
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 30 June 2019
17. BORROWINGS
Current
Convertible notes – at fair value 2
Transferred to issued capital on conversion – at fair value
Transferred to option reserve on conversion – at fair value
Chattel mortgage 1
Insurance premium funding
Less: Unexpired charges
Non-Current
Chattel mortgage 1
Less: Unexpired charges
2019
$
-
-
-
938,047
37,684
(105,882)
869,849
2,165,861
(77,489)
2,088,372
2018
$
5,772,770
(5,462,500)
(310,270)
-
-
-
-
-
-
-
1 A $5 million secured Chattel Finance Facility (revolving) with ANZ Bank to finance generators, chillers
and battery/power supply equipment. The interest rate is currently 4.83% pa, as well as a $200,000
secured Chattel Finance Facility with the ANZ Bank to finance various vehicles. The interest rate is
currently 4.83% pa.
Security
• Specific Commercial Agreement (Fixed Charge) – Cash Deposits with ANZ of $2m given by the
Company; and
• General Security Agreement (Fixed & Floating Charge) over the assets of the Company.
Conditions & Covenants
• Provision of semi-annual Financial Statements within 30 days of the end of each financial half
year;
• The Adjusted Gearing Ratio for each financial half year of the Company will not be greater than
1:1; and
• Adjusted Gearing Ratio is calculated as (Total Liabilities - Non-Current Subordinated Debt) divided
by (Tangible Net Worth + Non-Current Subordinated Debt.
The Company is in compliance with its financial covenants.
2 During the 2018 financial year, the Company entered into binding term sheets for the issue of 4,370,000
convertible notes at a face value of $1.00 each to raise a total of $4,370,000. The maturity date of the
convertible notes was 12 months after the date the convertible note was issued. No interest was payable
on the principal amount and the convertible notes automatically converted into shares at a 20% discount
to the price at which shares were offered under the Prospectus lodged with ASIC on 16 February 2018,
together with one free attaching option for every four shares.
18. PROVISIONS
Current
Annual Leave
Long Service Leave
The Company currently has 36 employees including Directors.
2019
$
2018
$
84,499 63,560
- 13,573
84,499 77,133
<48>
For personal use only
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 30 June 2019
19. ISSUED CAPITAL
361,271,724 (2018:182,312,501) fully paid ordinary shares
2019
$
29,662,628
2018
$
20,137,584
(a) Movements in fully paid ordinary shares on issue
2019
At the beginning of the reporting period
Shares issued during the period:
Shares subscribed for in placement at $0.155
Rights entitlement issue at $0.05
Less: Capital raising costs
Balance at 30 June 2019
At the beginning of the reporting period
Shares issued during the period:
Shares subscribed for
Shares subscribed for
Initial Public Offering shares
Conversion of convertible notes at fair value
Less: Capital raising costs
$
20,137,584
Number
182,312,501
2,010,274
8,299,486
(784,716)
12,969,512
165,989,711
-
29,662,628
361,271,724
2018
$
Number
-
-
60
15
16,000,000
5,462,500
(1,324,991)
60,000,000
15,000,000
80,000,001
27,312,500
-
Balance at 30 June 2018
20,137,584
182,312,501
(b) Terms of Ordinary Shares
Ordinary shares participate in dividends and the proceeds on winding up of the Company in proportion to the number
of shares held and in proportion to the amount paid up on the shares held.
At shareholder’s meetings each ordinary share is entitled to one vote in proportion to the paid up amount of the share
when a poll is called, otherwise each shareholder has one vote on a show of hands. These fully paid ordinary shares
have no par value.
(c) Capital risk management
The Company’s objectives when managing capital are to safeguard its ability to continue as a going concern, so that
it may continue to provide returns for shareholders and benefits for other stakeholders.
The Company has been able to have put in place a $5 million secured Chattel Finance Facility (revolving) with ANZ
Bank to finance generators, chillers and battery/power supply equipment and a $200,000 secured Chattel Finance
Facility with the ANZ Bank to finance various vehicles. Due to the nature of the Company’s activities, the primary
source of funding being equity raisings, given the early stage of its business. Accordingly, the objective of the
Company’s capital risk management is to balance the current working capital position against the requirements of
the Company to meet the building of its colocation data centres and general corporate overheads. This is achieved by
maintaining appropriate liquidity to meet anticipated operating requirements, with a view to initiating appropriate
capital raisings as required. The Company is not subject to any externally imposed capital requirements.
DXN Limited | ANNUAL REPORT <49>
For personal use only
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 30 June 2019
20. OPTION RESERVE
122,323,048 (2018:39,328,125 options)
(a) Movements in listed options on issue:
Options
At the beginning of the reporting period
Options issued during the period:
Options subscribed for as part of placement
Balance at 30 June 2019
Options
At the beginning of the reporting period
Options issued during the period:
Options subscribed for
Options issued on conversion at fair value
Balance at 30 June 2018
(b) Terms of Options
2019
$
310,302
2018
$
310,302
2019
$
Number
310,302
39,328,125
-
310,302
82,994,923
122,323,048
2018
$
Number
-
-
32
310,270
310,302
32,500,000
6,828,125
39,328,125
At the end of reporting period, there are 122,323,048 options over unissued shares as follows:
Expiry Date
13 May 2020
30 November 2020
5 April 2021
21. SHARE BASED PAYMENTS RESERVE
Share based payments at the beginning of the reporting period
Employee equity settled transactions (refer note 28)
Share based payments at the end of the reporting period
Exercise Price
Number of Options
$0.10
$0.30
$0.30
2019
$
-
11,621
11,621
82,994,923
32,500,000
6,828,125
122,323,048
2018
$
-
-
-
22. ACCUMULATED LOSSES
Accumulated losses at the beginning of the reporting period
Net loss attributable to members
Accumulated losses at the end of the reporting period
2019
$
(5,736,986)
(7,373,444)
(13,110,430)
2018
$
-
(5,736,986)
(5,736,986)
<50>
For personal use only
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 30 June 2019
23. RELATED PARTY DISCLOSURES
(a) Loans to key management personnel
There were no loans to key management personnel at the end of the period.
(b) Other transactions and balances with key management personnel
Mr Christie is a director and shareholder of Herdsman Lake Capital Asia Pte Ltd, and Mr Smart is a director
and shareholders of Smart Investments Pty Ltd as trustee for the Smart Capital Investment Fund, both of
which are shareholders of Datacentre Limited. The Company had a Service Supply Agreement in place
with Datacentre Limited to provide various services, which was terminated during the year. During the
period the Company made sales of $129,985 (2018: $305,852) to Datacentre Limited, with $56,250 (2018:
$284,085) included in trade receivables after providing for doubtful debts as at 30 June 2019. All
transactions were entered into on normal commercial terms.
Mr Christie is a director and shareholder of Herdsman Lake Capital Asia Pte Ltd, Mr Smart is a director
and shareholders of Smart Investments Pty Ltd as trustee for the Smart Capital Investment Fund and Mr
Lazarou is a director and shareholder of Eoz Pty Ltd as trustee for the Zeus Trust, all of which are
shareholders of Nexion Networks Pty Ltd. The Company had a Service Supply Agreement in place with
Nexion Networks Pty Ltd to provide various services, which was terminated during the year. During the
period the Company made sales of $134,333 (2018: $78,600) to Nexion Networks Pty Ltd, with $74,389
(2018: $78,600) included in trade receivables as at 30 June 2019. All transactions were entered into on
normal commercial terms.
Mr Douglas Loh is a director and shareholder of Emmanuel Investment Holdings Pty Ltd. During the period
Emmanuel Investment Holdings Pty Ltd received $47,700 (2018: $Nil) for the provision of Executive
Chairman services. These costs have been included in the compensation of key management personnel
for the period ended 30 June 2019. All transactions were entered into on normal commercial terms.
Mr George Lazarou is a director and shareholder of Citadel Capital Pty Ltd. During the period Citadel
Capital Pty Ltd received $145,000 (2018: $59,327) for the provision of Company Secretarial and Chief
Financial Officer services. These costs have been included in the compensation of key management
personnel for the period ended 30 June 2019. All transactions were entered into on normal commercial
terms.
Mr Dean Coetzee is a director and shareholder of The Data Exchange Network Pte Ltd, a Singapore
incorporated company. During the period The Data Exchange Network Pte Ltd invoiced $225,000 (2018:
$150,000) for the provision of Chief Sales Officer services. These costs have been included in the
compensation of key management personnel for the period ended 30 June 2019. All transactions were
entered into on normal commercial terms.
Mr Tim Desmond is a director and shareholder of The Data Exchange Network Pte Ltd, a Singapore
incorporated company. During the period The Data Exchange Network Pte Ltd invoiced $225,000 (2018:
$150,000) for the provision of Chief Technology Officer services. These costs have been included in the
compensation of key management personnel for the period ended 30 June 2019. All transactions were
entered into on normal commercial terms.
It should be noted that the Company has no equity interest in The Data Exchange Network Pte Ltd.
DXN Limited | ANNUAL REPORT <51>
For personal use only
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 30 June 2019
23.
RELATED PARTY DISCLOSURES (CONTINUED)
(c) Executive Agreement
On 1 February 2019 the Company entered into an Executive Services Agreements with Mr Simon
Forth and Mr Richard Whiting as Joint Interim Chief Executive Officers of the Company. Pursuant
to the terms of the Executive Services Agreement, both Mr Forth and Mr Whiting will be paid an
amount of $200,000 each per annum plus statutory superannuation, reviewed annually. The
Company will also pay reasonable travelling and other incidental costs incurred by Mr Forth and
Mr Whiting while performing their duties under their Executive Services Agreement.
Either Mr Forth and Mr Whiting or the Company may terminate the Executive Services Agreement
at any time on the giving of not less than 3 months’ notice in writing.
On 31 January 2019, Mr Peter Christie, who was the Managing Director of the Company resigned.
For the period ended 30 June 2019, an amount of $374,890 (2018: $164,250) including statutory
superannuation was paid or payable to the former Managing Director and the Interim Joint Chief
Executive Officers.
(d) Key management personnel compensation
The key management personnel compensation comprised:
Short term employment benefits
Post-employment benefits
Termination payments
Share based payments
2019
$
2018
$
1,076,436
31,640
282,523
4,818
1,395,137
599,827
18,098
-
-
617,925
Detailed remuneration disclosures are provided in the Remuneration Report on pages 16 to 24.
24.
FINANCIAL INSTRUMENTS
Financial Risk Management Objectives and Policies
The company has exposure to the following risks from their use of financial instruments:
(a)!
(b)!
(c)!
credit risk;
liquidity risk; and
market risk
This note presents information about the company’s exposure to each of the above risks, their objectives,
policies and processes for measuring and managing risk. The Board has overall responsibility for the
establishment and oversight of the risk management framework. The Board reviews and agrees policies
for managing each of these risks and they are summarised below.
The company’s principal financial instruments comprise cash. The company also has other financial
instruments such as receivables and payables which arise directly from its operations. For the period
under review, it has been the Company’s policy not to trade in financial instruments.
<52>
For personal use only
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 30 June 2019
24.
FINANCIAL INSTRUMENTS (CONTINUED)
Financial Instruments
Financial assets
Cash and cash equivalents
Trade and other receivables
Bank guarantees
Financial liabilities
At amortised cost:
Trade and other payables
Borrowings
2019
$
5,362,135
1,046,945
3,071,000
2018
$
12,047,724
1,216,811
1,071,000
9,480,080
14,335,535
1,152,021
2,958,221
4,110,242
877,168
-
877,168
(a) Credit risk
Credit risk refers to the risk that a counterparty will default on its contractual obligations
resulting in financial loss to the Company. The Company has adopted a policy of only dealing
with creditworthy counterparties and obtaining sufficient collateral where appropriate, as a
means of mitigating the risk of financial loss from defaults. The company only transacts with
entities that are rated the equivalent of investment grade and above.
The company’s exposure and the credit ratings of its counterparties are continuously
monitored. Credit exposure is controlled by counterparty limits that are reviewed and
approved by the Board annually.
The Company does not have any significant credit risk exposure to the bank, given total
borrowings are $2,958,221 and the bank has security over the borrowing via a $2,000,000
term deposit. The credit risk on liquid funds is reduced because the counterparty is a bank
with a high credit rating assigned by international credit rating agencies.
(b) Liquidity risk
Ultimate responsibility for liquidity risk management rests with the Board of Directors, who
have built an appropriate liquidity risk management framework for the management of the
company’s short, medium and long-term funding and liquidity management requirements.
The company manages liquidity risk by maintaining adequate reserves and banking facilities
and by continuously monitoring forecast and actual cash flows and matching maturity
profiles of financial assets and liabilities. The company had $5,200,000 in bank facilities
available, with $2,958,221 currently utilised and $2,241,779 in undrawn facilities at its
disposal as at reporting date.
The table below analyses the company’s financial liabilities into relevant maturity groupings
based on their contractual maturities. The amounts disclosed in the table are the contractual
undiscounted cash flows. Balances due within 12 months equal their carrying balances as the
impact of discounting is not significant.
DXN Limited | ANNUAL REPORT <53>
For personal use only
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 30 June 2019
24.
FINANCIAL INSTRUMENTS (CONTINUED)
Contractual maturities of
financial liabilities
Less than
1 year
1-2
years
2-5 years
>5
years
$
$
$
$
Total
contractual
cash flows
Carrying
Amount
$
30 June 2019
Trade and other payables
1,152,021
-
-
Borrowings
Net maturity
869,849
881,617
1,206,755
2,021,870
881,617
1,206,755
-
-
-
1,152,021
1,152,021
2,958,221
2,958,221
4,110,242 4,110,242
Contractual maturities of
financial liabilities
Less than
1 year
1-2
years
2-5 years
>5
years
$
$
$
$
Total
contractual
cash flows
Carrying
Amount
$
30 June 2018
Trade and other payables
Net maturity
(c)
Market risk
877,168
877,168
-
-
-
-
-
-
877,168
877,168
877,168
877,168
Market risk is the risk that changes in the market prices such as foreign exchange rates, interest
rates and equity prices will affect the company’s income or value of its holdings of financial
instruments. The company does not have any interest bearing short or long-term debt and therefore
the risk is minimal. The company limits its exposure to credit risk by only investing in liquid securities
and only with counterparties that have acceptable credit ratings.
(d)
Interest rate risk
Interest rate risk is the risk that the fair value of future cash flows of a financial instrument will
fluctuate due to changes in market interest rates. Current financial assets and financial liabilities are
generally not exposed to interest rate risk because of their short-term nature. The company’s cash
and cash equivalents at 30 June 2019 are fixed interest rate instruments. Therefore, they are not
subject to interest rate risk.
(e) Fair value measurements
The fair values of cash, receivables, trade and other payables approximate their carrying amounts
as a result of their short-term maturity.
25.
EARNINGS PER SHARE
2019
$
2018
$
(a) Loss used in the calculation of basic and dilutive earnings per share
for continuing operations
7,373,444
5,736,986
(b) Weighted average number of ordinary shares outstanding during
the reporting period used in calculation of basic and diluted earnings
per share
Number of
shares
2019
Number of
shares
2018
210,822,978
97,602,652
<54>
For personal use only
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 30 June 2019
26. CASH FLOW INFORMATION
(a) Reconciliation of cash flow from operations with loss from
ordinary activities after income tax.
Loss after income tax
Adjustment for;
Amortisation - intangibles
Amortisation – deferred transaction costs
Depreciation
Foreign exchange loss
Loss on sale of plant and equipment
Provision for doubtful debts
Share based payment
Changes in assets and liabilities
- Decrease/(Increase) in trade and other receivables
- (Increase) in prepayments
- (Increase) in inventory
- (Increase) in deposits
- (Decrease)/Increase in trade and other payables
- Increase in income in advance
- Increase in income in provisions
2019
$
2018
$
(7,373,444)
(5,736,986)
17,863
-
244,776
42,680
2,432
136,153
11,621
11,350
1,671,592
19,804
19,176
-
-
-
268,750
(319,069)
(768,229)
(17,577)
(255,914)
1,155,331
7,366
(1,118,646)
(717,251)
(220,113)
-
857,992
105,781
77,133
Net cash flow used in operating activities
(6,847,261)
(5,030,168)
(b) Reconciliation of cash and cash equivalents
Cash and cash equivalents comprises:
Cash at bank and on hand
Term deposit
(c) Acquisition of Entities
2019
$
2018
$
5,362,135
-
5,362,135
7,047,724
5,000,000
12,047,724
There was no acquisition of entities during the period.
(d) Non-cash financing and investing activities
There was no non-cash financing and investing activities during the period.
DXN Limited | ANNUAL REPORT <55>
For personal use only
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 30 June 2019
27.
SEGMENT INFORMATION
The Company has identified its operating segments based on the internal reports that are reviewed and
used by the board of directors in assessing performance and determining the allocation of resources. The
reportable segment is represented by the primary statements forming this financial report.
At the end of the reporting period, the Company was operating primarily in one segment, being modular
data centre solutions in Australia.
Major customers
During the period ended 30 June 2019, the Company supplied 7 (2018:3) single external customers with
data centre infrastructure, consulting services and computer equipment which accounted for 24%, 19%
and 57% of external revenue.
28.
SHARE BASED PAYMENTS
(a) Recognised employee share based payment expenses
The expense recognised for employee services received during the period are as follows:
Total expense rising from employee, consultant and Director share based
payment transactions
Performance Rights – 30 June 2019
2019
$
2018
$
11,621
-
On 24 June 2019, the Company granted 7,535,448 performance rights, subject to various vesting
conditions, expiring on various dates from 30 September 2019 to 26 June 2022.
A summary of main vesting conditions are as follows:
Senior Executives
•
•
•
achieving “Ready for Service” status for DXN-SYD01 by 19 August 2019;
achieving Uptime Institute Tier III accreditation by 19 September 2019; and
achieving any of the following combinations since appointment of interim joint CEO and up to
three (3) months after Uptime Institute Tier III accreditation
Reportable Pre-committed # Racks (PC) or
Sales of # Racks (Sales)
Module Sales (contracted)
12 (PC)
20 (PC)
27 (PC)
38 (PC)
8 (Sales)
13 (Sales)
18 (Sales)
25 (Sales)
A$2.00m
A$1.75m
A$1.50m
A$1.20m
Staff involved with Build of Sydney Data Centre
•
•
achieving “Ready for Service” status for DXN-SYD01 by 19 August 2019; and
achieving Uptime Institute Tier III accreditation by 19 September 2019.
<56>
For personal use only
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 30 June 2019
28.
SHARE BASED PAYMENTS (CONTINUED)
Sales Staff
•
•
•
twelve (12) months from date of employment;
twenty-four (24) months from date of employment; and
thirty-six (36) months from date of employment.
The value of performance rights granted during the period was calculated using the Black-Scholes Option
Pricing Model incorporating a Monte Carlo simulation and totalled $399,379. The expense during the year
ended 30 June 2019 amounted to $11,621 (2018: $Nil). The values and inputs are as follows:
Performance Rights
Performance rights issued
Underlying share value
Exercise price of performance rights
Risk free interest rate
Share price volatility
Expiration periods
Probability of meeting milestone hurdle
Valuation per performance right
7,535,448
$0.053
Nil
0.92-0.90%
75%
30 September 2019 to 26
June 2022
100%
$0.053
The expected life of the performance rights is based on historical data and is not necessarily indicative of
exercise patterns that may occur. The expected volatility reflects the assumption that historical volatility is
indicative of future trends, which may also not necessarily be the actual outcome.
The performance rights were subscribed for nil consideration per performance right, and no performance
rights have vested since the financial period.
(b)
Equity-settled share based payments
Options on conversion of convertible notes
On 5 April 2018, the Company issued 27,312,500 fully paid ordinary shares and 6,828,125 options
exercisable at $0.30 on or before 5 April 2021 on conversion of the convertible notes.
Inputs for measurement of issue date fair value
Options
The options were issued and vested during the financial period and were provided at no cost to the
recipient.
The value of the options issued and having vested during the period was calculated using a binomial
option pricing model and totalled $310,302. The values and inputs are as follows:
DXN Limited | ANNUAL REPORT <57>
For personal use only
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 30 June 2019
28. SHARE BASED PAYMENTS (CONTINUED)
Options – 5 April 2021 ($0.30)
Options issued
Underlying share value
Exercise price of options
Risk free interest rate
Expected future volatilty
Dividend yield
Expiration period
Valuation per option
A summary of the movements of all company options issued is as follows:-
6,828,125
$0.20
$0.30
2%
50%
0%
5 April 2021
$0.045
Options outstanding as at 4 August 2017
Options subscribed for
Convertible noteholder options
Options outstanding as at 30 June 2018
Options issued as part of placement
Options outstanding as at 30 June 2019
Options exercisable as at 30 June 2018
Options exercisable as at 30 June 2019
Number
-
32,500,000
6,828,125
39,328,125
82,994,923
122,323,048
39,328,125
122,323,048
Weighted
Average
Exercise
Price
-
$0.30
$0.30
$0.30
$0.10
$0.165
As at the date of this report, there were no options exercised during the period.
29. EVENTS SUBSEQUENT TO REPORTING DATE
On 22 July 2019, shareholders approved the issue of 1,800,000 performance rights, subject to
vesting conditions, expiring on 30 April 2020, to Mr Loh.
On 22 July 2019, shareholders approved the change of Company name to DXN Limited, ASIC
approved the name change on 22 July 2019.
Mr Matthew Madden commencing as Chief Executive Officer of the Company on 19 August 2019.
On 19 August 2019 the Company delivered a key milestone with the completion of the initial
construction phase of its flagship Sydney data centre (DXN-SYD01) located in Sydney Olympic
Park.
No other matters or circumstances have arisen since the end of the financial period which
significantly affected or may significantly affect the operations of the Company, the results of
those operations, or the state of affairs of the Company in future financial years.
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NOTES TO THE FINANCIAL STATEMENTS
For the year ended 30 June 2019
30. CONTINGENT LIABILITIES
In the opinion of the directors there were no contingent liabilities at 30 June 2019, and the
interval between 30 June 2019 and the date of this report.
31. COMMITMENTS
Operating lease expenditure commitments
No later than 1 year
Between 1 and 5 years
Greater than 5 years
2019
$
1,447,072
6,702,812
13,821,423
21,971,307
2018
$
1,386,565
6,213,846
15,757,461
23,357,872
The Company is currently leasing premises at 9 Mumford Place, Balcatta WA for a period of 3
year commencing 20 November 2017, with an option to renew for a further 3 years.
The Company is currently sub-leasing premises at 5 Parkview Drive, Sydney Olympic Park NSW
for a period of 15 year commencing 1 February 2018, with an option to renew for a further 5
years.
The Company is currently leasing premises at 286-292 Lorimer Street, Port Melbourne, Victoria
for a period of 10 year commencing 1 February 2018, with an option to renew for 2 further terms
of 5 years each.
Capital expenditure commitments
No later than 1 year
Between 1 and 2 years
Greater than 2 years
2019
$
2,198,663
-
-
2,198,663
2018
$
908,197
-
-
908,197
The above capital expenditure commitments relate to commitments entered into with suppliers
as at 30 June 2019, for the construction of the Melbourne and Sydney datacentres. Further capital
expenditure commitments will arise as the Company enters into agreements with contractors
and suppliers.
Finance Lease / Chattel Mortgage Commitments
Payable – minimum payments:
not later than 1 year
–
between 1 and 5 years
–
Minimum payments
Less future finance charges
Present value of minimum payments
2019
$
2018
$
975,731
2,165,861
3,141,592
(183,371)
2,958,221
-
-
-
-
-
DXN Limited | ANNUAL REPORT <59>
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NOTES TO THE FINANCIAL STATEMENTS
For the year ended 30 June 2019
32. COMPANY DETAILS
The registered office is:
Level 28, AMP Tower
140 St Georges Terrace
Perth WA 6000
The principal place of business address is:
9 Mumford Place
Balcatta WA 6021
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DIRECTORS’
DECLARATION
The directors declare that:
1.
The financial statements, notes and additional disclosures included in the Directors’ report and designated
as audited, are in accordance with the Corporations Act 2001 and:
(a) comply with Accounting Standards and Corporations Regulations 2001;
(b) giving a true and fair view of the Company’s financial position as at 30 June 2019 and of its
performance for the period ended on that date;
(c) the financial statements are in compliance with International Financial Reporting Standards, as
stated in note 1 to the financial statements.
2. The Chief Executive Officer and Chief Financial Officer have declared that:
(a) the financial records of the company for the financial period have been properly maintained in
accordance with section 295A of the Corporations Act 2001;
(b) the financial statements and notes for the financial period comply with Accounting Standards; and
(c) the financial statements and notes for the financial period give a true and fair view.
3. In the directors’ opinion there are reasonable grounds to believe that the company will be able to pay its
debts as and when they become due and payable.
This declaration is made in accordance with a resolution of the Board of Directors.
Douglas Loh
Non-Executive Chairman
Dated this 30th day of August 2019
DXN Limited | ANNUAL REPORT <61>
For personal use only
INDEPENDENT AUDITOR’S REPORT
TO THE MEMBERS OF DXN LIMITED
(formerly The Data Exchange Network Limited)
Report on the Audit of the Financial Report
Opinion
Level 15, Exchange Tower,
2 The Esplanade, Perth, WA 6000
PO Box 5785, St Georges Terrace,
WA 6831
T +61 (0)8 9225 5355
F +61 (0)8 9225 6181
www.moorestephens.com.au
We have audited the financial report of DXN Ltd (the “Company”) which comprises the statement of
financial position as at 30 June 2019, the statement of profit or loss and other comprehensive income, the
statement of changes in equity and the 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 Company is in accordance with the Corporations Act
2001, including:
i. giving a true and fair view of the Company’s financial position as at 30 June 2019 and of its financial
performance for the year then ended; and
ii. 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 believe that the audit evidence we have obtained is sufficient and appropriate to provide
a basis for our opinion.
We are independent of the Company 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 (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.
Emphasis of Matter - Material Uncertainty Related to Going Concern
Without modification to our opinion expressed above, we draw attention to Note 1 “Going Concern” of the
financial statements which states that the financial statements have been prepared on a going concern
basis. Should the Company be unable to achieve the funding outcomes described in Note 1 and continue as
a going concern, it may be required to realise its assets and extinguish its liabilities other than in the normal
course of business and at amounts other than as stated in the financial report.
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 year. 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.
Liability limited by a scheme approved under Professional Standards Legislation. Moore Stephens - ABN 16 874 357 907. An independent member of Moore Stephens
International Limited - members in principal cities throughout the world. The Perth Moore Stephens firm is not a partner or agent of any other Moore Stephens firm.
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Key Audit Matters (continued)
Cash at Bank including Restricted Cash & Bank Guarantees
Refer to Notes 7 & 12 – total carrying value of $5.36 mill (cash at bank) & $3 mill (restricted cash/bank
guarantees)
The Company’s total cash at bank holdings (including
restricted cash / bank guarantees) comprised 39% of its
total assets by value.
Our procedures over the existence, completeness,
presentation and valuation of the Company’s cash
included the following:
• Documented and assessed the processes and
controls in place to record cash transactions;
• Agreed cash holdings to independent third-party
bank confirmations;
• Agreed those amounts classified as restricted cash
and bank guarantees to the terms and conditions
of the underlying contracts and assessed if these
were presented in accordance with AASB 101 and
107;
• Assessed the appropriateness of the disclosures
included in the primary financial statements and
notes to the financial report
We do not generally consider cash to be at a high risk of
significant misstatement, or to be subject to a significant
level of judgment because it is normally a liquid asset.
However, we determined this area to be key audit
matter due to the materiality in the context of the
financial statements and because a significant portion of
cash is subject to certain restrictions. Restricted cash is
required to be classified and presented differently under
AASB 101 Presentation of Financial Statements and AASB
107 Cash Flow Statements.
INDEPENDENT AUDITOR’S REPORT
TO THE MEMBERS OF DXN LIMITED
(formerly The Data Exchange Network Limited)
Report on the Audit of the Financial Report
Level 15, Exchange Tower,
2 The Esplanade, Perth, WA 6000
PO Box 5785, St Georges Terrace,
WA 6831
T +61 (0)8 9225 5355
F +61 (0)8 9225 6181
www.moorestephens.com.au
Opinion
2001, including:
Basis for Opinion
the Code.
auditor’s report.
We have audited the financial report of DXN Ltd (the “Company”) which comprises the statement of
financial position as at 30 June 2019, the statement of profit or loss and other comprehensive income, the
statement of changes in equity and the 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 Company is in accordance with the Corporations Act
i. giving a true and fair view of the Company’s financial position as at 30 June 2019 and of its financial
performance for the year then ended; and
ii. complying with Australian Accounting Standards and the Corporations Regulations 2001.
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 believe that the audit evidence we have obtained is sufficient and appropriate to provide
a basis for our opinion.
We are independent of the Company 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 (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
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
Emphasis of Matter - Material Uncertainty Related to Going Concern
Without modification to our opinion expressed above, we draw attention to Note 1 “Going Concern” of the
financial statements which states that the financial statements have been prepared on a going concern
basis. Should the Company be unable to achieve the funding outcomes described in Note 1 and continue as
a going concern, it may be required to realise its assets and extinguish its liabilities other than in the normal
course of business and at amounts other than as stated in the financial report.
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 year. 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.
Customer contracts – accuracy of revenue recognition, valuation of works in progress (WIP), trade accounts
receivable and income received in advance
Refer to Notes 1(k), 8, 10 & 16
For the year ended 30 June 2019, total revenue from
customers was $1.4 million, Works in Progress (WIP)
balance was $0.65 million, trade debtors were $0.56
million (net of credit loss allowance) and income in
advance was $1.26 million.
Our procedures included among others:
• Obtained an understanding of the processes and
relevant controls
for
relating
customer contracts to ensure compliance with
AASB 15;
to accounting
Revenue from customer contracts are recognised in
accordance with the underlying terms and conditions
described in the contract document, provided they fulfil
the criteria of AASB 15 Revenue from Contracts with
Customers.
• Read significant customer contracts to understand
the terms and conditions and their impact on
revenue recognition and accuracy/completeness of
income in advance. We previously confirmed the
accounting treatment with our Moore Stephens
National Head of Technical Accounting;
The measurement of revenue, WIP and income in
advance was a key audit matter due to the risk of
revenues and related costs being recorded in the wrong
accounting period or at amounts not justified. This
could arise from adopting incorrect assumptions or
estimates.
Total revenue also includes income from the sale of
goods when the significant risks and rewards of
ownership are transferred to the buyer and all the other
relevant conditions are fulfilled.
•
•
•
Tested
the accuracy and completeness of
contracting revenue and related cost of sales to
supporting documentation on a sample basis;
Performed cut-off testing on revenue to ensure
they were recorded accurately and
the
appropriate reporting period;
in
Examined costs included within WIP balances on a
sample basis by verifying the amounts to source
recoverability
documentation and
(if applicable),
through subsequent
discussions with management & review of other
supporting evidence;
tested
invoicing
its
Liability limited by a scheme approved under Professional Standards Legislation. Moore Stephens - ABN 16 874 357 907. An independent member of Moore Stephens
International Limited - members in principal cities throughout the world. The Perth Moore Stephens firm is not a partner or agent of any other Moore Stephens firm.
65
64
• Reviewed ageing of trade receivables and & testing
its recoverability to subsequent receipts. We also
discussed with management, reviewed Board
minutes and other documents concerning the
adequacy of the expected credit loss allowance;
• Reviewed the relevant disclosures contained in the
financial statements.
DXN Limited | ANNUAL REPORT <63>
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Key Audit Matters (continued)
Plant & Equipment – Carrying values of Capitalised Costs, Existence of Assets
Refer to Note 13
During the year ended 30 June 2019, the Company
incurred significant capital expenditures related to the
construction of its Sydney and Melbourne data centres.
Other major capital expenditures included significant
plant and equipment and
improvements
related to the Sydney premises.
leasehold
Our procedures included the following:
• Reviewing minutes of Board meetings, ASX
announcements and other reports for evidence of
any impairment indicators
• Held discussions with management concerning the
progress of the assets under construction
At 30 June 2019, the total value of Plant and Equipment
of $11.14 mill comprised 3 core categories, namely:
•
Plant & equipment $2.64 million (23%);
•
Leasehold improvements $0.55 mill (5%); &
• Assets Under Construction $7.77 mill (70%)
The carrying values of these assets were considered key
audit matters given the significance of these assets to
the Company’s statement of financial position and the
judgement involved in the assessment of impairment.
Note that given the infancy of the Company’s operations
and incomplete status of the Data Centres which are yet
to generate any revenues, we are unable to rely on
forecast cash flows as a reliable estimate of these assets’
value-in-use.
•
Testing expenditures related to these capitalised
costs during the year on a sample basis against
supporting documentation
supplier
invoices and various cost agreements and ensuring
such expenditures are appropriately recorded in
accordance with AASB 116 Property Plant &
Equipment;
such as
•
the existence audit assertion
In addressing
pertaining to the assets, we attended a tour of the
Sydney Data Centre / office in July 2019. Our
auditor (from the Moore Stephens Sydney office)
was able to physically inspect the construction
works in progress and sighted a number of major
items such as backup electric generators and water
chillers.
• Comparing
the market capitalisation of
the
Company against the book value of its total net
assets at balance date for any impairment triggers.
There were no such triggers given the year-end
market capitalisation of $18.8 mill exceeded the
net asset value of $16.87 mill.
• Reviewed the relevant disclosures contained in the
financial statements
Other Information
The directors are responsible for the other information. The other information comprises the information
included in the Company’s annual report for the year ended 30 June 2019, 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.
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 Company to
continue as a going concern, disclosing, as applicable, matters related to going concern and using the
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going concern basis of accounting unless the directors either intend to liquidate the Company or to cease
operations, or has no realistic alternative but to do so.
Auditor’s Responsibilities for the Audit of the Financial Report (continued)
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:
•
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
international omissions,
involve collusion,
fraud may
misrepresentation, or the override of internal control.
forgery,
• 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 Company’s internal control.
• Evaluate the appropriateness of accounting policies used and the reasonableness of
accounting estimates and related disclosures made by the directors.
• 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 Company’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 Company to cease to continue as a going concern.
• 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.
• Obtain sufficient appropriate audit evidence regarding the financial information of the
entities or business activities within the Company to express an opinion on the financial
report. We are responsible for the direction, supervision and performance of the Company
audit. We remain solely responsible for our audit opinion.
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, related safeguards.
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
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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 as included in the directors’ report for the year ended 30 June
2019.
In our opinion, the Remuneration Report of DXN Limited, for the year ended 30 June 2019 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.
SUAN LEE TAN
PARTNER
MOORE STEPHENS
CHARTERED ACCOUNTANTS
Signed at Perth on the 30th day of August 2019
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CORPORATE GOVERNANCE
STATEMENT
This Corporate Governance summary discloses the extent to which the Company will follow the recommendations set by the
ASX Corporate Governance Council in its publication Corporate Governance Principles and Recommendations (3rd Edition)
(Recommendations). The Recommendations are not mandatory, however the Recommendations that will not be followed have been
identified and reasons have been provided for not following them.
The Company’s Corporate Governance Plan has been posted on the Company’s website at www.dxn.solution
RECOMMENDATIONS(3RD EDITION)
COMPLY
EXPLANATION
Principle 1: Lay solid foundations for management and oversight
Recommendation 1.1
A listed entity should have and disclose a charter which sets
out the respective roles and responsibilities of the Board, the
Chair and management, and includes a description of those
matters expressly reserved to the Board and those delegated
to management.
YES
The Company has adopted a Board Charter that sets out the
specific roles and responsibilities of the Board, the Chair and
management and includes a description of those matters
expressly reserved to the Board and those delegated to
management.
The Board Charter sets out the specific responsibilities of
the Board, requirements as to the Board’s composition, the
roles and responsibilities of the Chairman and Company
Secretary, the establishment, operation and management
of Board Committees, Directors’ access to Company records
and information, details of the Board’s relationship with
management, details of the Board’s performance review and
details of the Board’s disclosure policy.
A copy of the Company’s Board Charter, which is part of the
Company’s Corporate Governance Plan, is available on the
Company’s website.
YES
(a) The Company has guidelines for the appointment and
Recommendation 1.2
A listed entity should:
(a) undertake appropriate checks before appointing a person,
or putting forward to security holders a candidate for
election, as a Director; and
(b) provide security holders with all material information
relevant to a decision on whether or not to elect or re-
elect a Director.
Recommendation 1.3
A listed entity should have a written agreement with each
Director and senior executive setting out the terms of
their appointment.
YES
selection of the Board in its Corporate Governance Plan.
The Company’s Nomination Committee Charter (in the
Company’s Corporate Governance Plan) requires the
Nomination Committee (or, in its absence, the Board) to
ensure appropriate checks (including checks in respect
of character, experience, education, criminal record and
bankruptcy history (as appropriate)) are undertaken before
appointing a person or putting forward to security holders
a candidate for election, as a Director.
(b) Under the Nomination Committee Charter, all material
information relevant to a decision on whether or not to
elect or re-elect a Director must be provided to security
holders in the Notice of Meeting containing the resolution
to elect or re-elect a Director..
The Company’s Nomination Committee Charter requires the
Nomination Committee (or, in its absence, the Board) to ensure
that each Director and senior executive is a party to a written
agreement with the Company which sets out the terms of that
Director’s or senior executive’s appointment.
The Company has written agreements with each of its
Directors and senior executives.
DXN Limited | ANNUAL REPORT <67>
For personal use only RECOMMENDATIONS(3RD EDITION)
Recommendation 1.4
The company secretary of a listed entity should be
accountable directly to the Board, through the Chair, on all
matters to do with the proper functioning of the Board.
COMPLY
YES
EXPLANATION
The Board Charter outlines the roles, responsibility and
accountability of the Company Secretary. In accordance with
this, the Company Secretary is accountable directly to the
Board, through the Chair, on all matters to do with the proper
functioning of the Board.
YES
(a) The Company has adopted a Diversity Policy which
provides a framework for the Company to establish and
achieve measurable diversity objectives, including in
respect of gender diversity. The Diversity Policy allows
the Board to set measurable gender diversity objectives,
if considered appropriate, and to assess annually both
the objectives if any have been set and the Company’s
progress in achieving them.
(b) The Diversity Policy is available, as part of the Corporate
Governance Plan, on the Company’s website.
(c)
(i) The measurable gender diversity objectives for each
financial year (if any), and the Company’s progress in
achieving them, will be detailed in the Company’s Annual
Report;
(ii) if it becomes necessary to appoint any new Directors or
senior executives, the Board will consider the application
of a measurable gender diversity objective requiring a
specified proportion of women on the Board and in senior
executive roles will, given the small size of the Company
and the Board, unduly limit the Company from applying
the Diversity Policy as a whole and the Company’s policy
of appointing based on skills and merit; and
(iii) the respective proportions of men and women on the
Board, in senior executive positions and across the
whole organisation (including how the entity has defined
“senior executive” for these purposes) for each financial
year will be disclosed in the Company’s Annual Report.
(a) The Company’s Nomination Committee (or, in its absence,
the Board) is responsible for evaluating the performance
of the Board, its committees and individual Directors on an
annual basis. It may do so with the aid of an independent
advisor. The process for this is set out in the Company’s
Corporate Governance Plan, which is available on the
Company’s website.
(b) The Company’s Corporate Governance Plan requires
the Company to disclose whether or not performance
evaluations were conducted during the relevant reporting
period. The Company intends to complete performance
evaluations in respect of the Board, its committees (if
any) and individual Directors for each financial year in
accordance with the above process.
Recommendation 1.5
A listed entity should:
(a) have a diversity policy which includes requirements for
the Board or a relevant committee of the Board to set
measurable objectives for achieving gender diversity and
to assess annually both the objectives and the entity’s
progress in achieving them;
(b) disclose that policy or a summary or it; and
(c) disclose as at the end of each reporting period:
(i) the measurable objectives for achieving gender diversity
set by the Board in accordance with the entity’s diversity
policy and its progress towards achieving them; and
(ii) either :
(A) the respective proportions of men and women on the
Board, in senior executive positions and across the whole
organisation (including how the entity has defined “senior
executive” for these purposes); or
(B) if the entity is a “relevant employer” under the Workplace
Gender Equality Act, the entity’s most recent “Gender
Equality Indicators”, as defined in the Workplace Gender
Equality Act.
Recommendation 1.6
A listed entity should:
YES
(a) have and disclose a process for periodically evaluating
the performance of the Board, its committees and
individual Directors; and
(b) disclose, in relation to each reporting period, whether a
performance evaluation was undertaken in the reporting
period in accordance with that process.
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For personal use only RECOMMENDATIONS(3RD EDITION)
Recommendation 1.7
A listed entity should:
COMPLY
YES
(a) have and disclose a process for periodically evaluating
the performance of its senior executives; and
(b) disclose, in relation to each reporting period, whether a
performance evaluation was undertaken in the reporting
period in accordance with that process.
EXPLANATION
(a) The Company’s Nomination Committee (or, in its absence,
the Board) is responsible for evaluating the performance of
the Company’s senior executives on an annual basis. The
Company’s Remuneration Committee (or, in its absence,
the Board) is responsible for evaluating the remuneration
of the Company’s senior executives on an annual basis.
A senior executive, for these purposes, means key
management personnel (as defined in the Corporations
Act) other than a non executive Director. The applicable
processes for these evaluations can be found in the
Company’s Corporate Governance Plan, which is available
on the Company’s website.
(b) The Company’s Corporate Governance Plan requires
the Company to disclose whether or not performance
evaluations were conducted during the relevant reporting
period. The Company intends to complete performance
evaluations in respect of the senior executives (if any)
for each financial year in accordance with the applicable
processes.
Principle 2: Structure the Board to add value
Recommendation 2.1
The Board of a listed entity should:
(a) have a nomination committee which:
(i) has at least three members, a majority of whom are
independent Directors; and
YES
(a) The Company does have a Nomination Committee. The
Company’s Nomination Committee Charter provides for the
creation of a Nomination Committee (if it is considered it
will benefit the Company), with at least three members, all
of whom must be independent Directors, where possible,
and which must be chaired by an independent Director.
(ii) is chaired by an independent Director,
(b) The Company does have a Nomination Committee
and disclose:
(iii) the charter of the committee;
(iv) the members of the committee; and
(v) as at the end of each reporting period, the number of
times the committee met throughout the period and
the individual attendances of the members at those
meetings; or
(b) if it does not have a nomination committee, disclose
that fact and the processes it employs to address Board
succession issues and to ensure that the Board has the
appropriate balance of skills, experience, independence
and knowledge of the entity to enable it to discharge its
duties and responsibilities effectively.
Recommendation 2.2
A listed entity should have and disclose a Board skill matrix
setting out the mix of skills and diversity that the Board
currently has or is looking to achieve in its membership.
YES
Under the Nomination Committee Charter (in the Company’s
Corporate Governance Plan), the Nomination Committee (or,
in its absence, the Board) is required to prepare a Board skill
matrix setting out the mix of skills and diversity that the Board
currently has (or is looking to achieve) and to review this at
least annually against the Company’s Board skills matrix to
ensure the appropriate mix of skills and expertise is present
to facilitate successful strategic direction.
The Company has a Board skill matrix setting out the mix of
skills and diversity that the Board currently has or is looking
to achieve in its membership.
The Board Charter requires the disclosure of each Board
member’s qualifications and expertise. Full details as to each
Director and senior executive’s relevant skills and experience
are available on the Company’s website.
DXN Limited | ANNUAL REPORT <69>
For personal use only RECOMMENDATIONS(3RD EDITION)
Recommendation 2.3
A listed entity should disclose:
COMPLY
YES
(a) the names of the Directors considered by the Board to be
independent Directors;
(b) if a Director has an interest, position, association or
relationship of the type described in Box 2.3 of the ASX
Corporate Governance Principles and Recommendation
(3rd Edition), but the Board is of the opinion that it does
not compromise the independence of the Director, the
nature of the interest, position, association or relationship
in question and an explanation of why the Board is of that
opinion; and the length of service of each Director
Recommendation 2.4
A majority of the Board of a listed entity should be
independent Directors.
Recommendation 2.5
The Chair of the Board of a listed entity should be an
independent Director and, in particular, should not be the
same person as the CEO of the entity
Recommendation 2.6
A listed entity should have a program for inducting
new Directors and providing appropriate professional
development opportunities for continuing Directors to
develop and maintain the skills and knowledge needed to
perform their role as a Director effectively.
Principle 3: Act ethically and responsibly
Recommendation 3.1
A listed entity should:
(a) have a code of conduct for its Directors, senior executives
and employees; and
(b) disclose that code or a summary of it.
NO
NO
YES
YES
EXPLANATION
(a) The Board Charter requires the disclosure of the names of
Directors considered by the Board to be independent. The
Company will disclose those Directors it considers to be
independent in its Annual Report and on its ASX website.
The Board considers that Messrs Terry Smart, John Duffin
& John Baillie are independent Directors.
(b) There are no independent Directors who fall into this
category. The Company will disclose in its Annual Report
and ASX website any instances where this applies and
an explanation of the Board’s opinion why the relevant
Director is still considered to be independent.
(c) The Company’s Annual Report will disclose the length
of service of each Director, as at the end of each
financial year.
The Company’s Board Charter requires that, where practical,
the majority of the Board should be independent.
The Board currently comprises a total of six (6) Directors,
of whom three (3) are considered to be independent, with
the Chairman who has the casting vote not considered to be
independent. As such, the majority of the Board are
not independent
The Board Charter provides that, where practical, the Chair of
the Board should be an independent Director and should not
be the CEO/Managing Director.
The Chair of the Company is not an independent Director as he
took on the role of Executive Chairman for a 5 month period.
The Chairman is not the CEO/Managing Director.
In accordance with the Company’s Board Charter, the
Nominations Committee (or, in its absence, the Board)
is responsible for the approval and review of induction
and continuing professional development programs and
procedures for Directors to ensure that they can effectively
discharge their responsibilities. The Company Secretary
is responsible for facilitating inductions and professional
development.
(a) The Company’s Corporate Code of Conduct applies to the
Company’s Directors, senior executives and employees.
(b) The Company’s Corporate Code of Conduct (which forms
part of the Company’s Corporate Governance Plan) is
available on the Company’s website.
<70>
For personal use only RECOMMENDATIONS(3RD EDITION)
COMPLY
EXPLANATION
Principle 4: Safeguard integrity in financial reporting
Recommendation 4.1
The Board of a listed entity should:
(a) have an audit committee which:
(i) has at least three members, all of whom are non-
executive Directors and a majority of whom are
independent Directors; and
YES
(a) The Company does have an Audit and Risk Committee. The
Company’s Corporate Governance Plan contains an Audit
and Risk Committee Charter that provides for the creation
of an Audit and Risk Committee (if it is considered it will
benefit the Company), with at least three members, all of
whom must be independent Directors, and which must be
chaired by an independent Director who is not the Chair.
(ii) is chaired by an independent Director, who is not the
(b) The Company does have an Audit and Risk Committee.
Chair of the Board,
and disclose:
(iii) the charter of the committee;
(iv) the relevant qualifications and experience of the
members of the committee; and
(v) in relation to each reporting period, the number of
times the committee met throughout the period and
the individual attendances of the members at those
meetings; or
(b) if it does not have an audit committee, disclose that fact
and the processes it employs that independently verify
and safeguard the integrity of its financial reporting,
including the processes for the appointment and removal
of the external auditor and the rotation of the audit
engagement partner.
Recommendation 4.2
The Board of a listed entity should, before it approves the
entity’s financial statements for a financial period, receive
from its CEO and CFO a declaration that the financial records
of the entity have been properly maintained and that the
financial statements comply with the appropriate accounting
standards and give a true and fair view of the financial
position and performance of the entity and that the
opinion has been formed on the basis of a sound system
of risk management and internal control which is
operating effectively.
YES
The Company’s Audit and Risk Committee Charter requires
the CEO and CFO (or, if none, the person(s) fulfilling those
functions) to provide a sign off on these terms.
The Company intends to obtain a sign off on these terms for
each of its financial statements in each financial year.
Recommendation 4.3
A listed entity that has an AGM should ensure that its
external auditor attends its AGM and is available to answer
questions from security holders relevant to the audit.
YES
Principle 5: Make timely and balanced disclosure
The Company’s Corporate Governance Plan provides that the
Board must ensure the Company’s external auditor attends
its AGM and is available to answer questions from security
holders relevant to the audit.
Recommendation 5.1
A listed entity should:
(a) have a written policy for complying with its continuous
disclosure obligations under the Listing Rules; and
(b) disclose that policy or a summary of it.
YES
(a) The Board Charter provides details of the Company’s
disclosure policy. In addition, the Corporate Governance
Plan details the Company’s disclosure requirements as
required by the ASX Listing Rules and other relevant
legislation.
(b) The Corporate Governance Plan, which incorporates the
Board Charter, is available on the Company website.
DXN Limited | ANNUAL REPORT <71>
For personal use only RECOMMENDATIONS(3RD EDITION)
COMPLY
EXPLANATION
Information about the Company and its governance is
available in the Corporate Governance Plan which can be
found on the Company’s website.
The Company has adopted a Shareholder Communications
Strategy which aims to promote and facilitate effective two-
way communication with investors. The Strategy outlines
a range of ways in which information is communicated to
shareholders and is available on the Company’s website as
part of the Company’s Corporate Governance Plan.
Shareholders are encouraged to participate at all general
meetings and AGMs of the Company. Upon the despatch of any
notice of meeting to Shareholders, the Company Secretary
shall send out material stating that all Shareholders are
encouraged to participate at the meeting.
The Shareholder Communication Strategy provides that
security holders can register with the Company to receive
email notifications when an announcement is made by the
Company to the ASX, including the release of the Annual
Report, half yearly reports and quarterly reports. Links
are made available to the Company’s website on which all
information provided to the ASX is immediately posted.
Shareholders queries should be referred to the Company
Secretary at first instance.
(a) The Company does have an Audit and Risk Committee. The
Company’s Corporate Governance Plan contains an Audit
and Risk Committee Charter that provides for the creation
of an Audit and Risk Committee (if it is considered it will
benefit the Company), with at least three members, all of
whom must be independent Directors, where possible, and
which must be chaired by an independent Director.
A copy of the Corporate Governance Plan is available on the
Company’s website.
(b) The Company does have an Audit and Risk Committee.
(a) The Audit and Risk Committee Charter requires that the
Audit and Risk Committee (or, in its absence, the Board)
should, at least annually, satisfy itself that the Company’s
risk management framework continues to be sound.
(b) The Company’s Corporate Governance Plan requires the
Company to disclose at least annually whether such a
review of the company’s risk management framework has
taken place.
YES
YES
YES
YES
YES
Principle 6: Respect the rights of security holders
Recommendation 6.1
A listed entity should provide information about itself and its
governance to investors via its website.
Recommendation 6.2
A listed entity should design and implement an investor
relations program to facilitate effective two-way
communication with investors.
Recommendation 6.3
A listed entity should disclose the policies and processes
it has in place to facilitate and encourage participation at
meetings of security holders.
Recommendation 6.4
A listed entity should give security holders the option to
receive communications from, and send communications to,
the entity and its security registry electronically.
Principle 7: Recognise and manage risk
Recommendation 7.1
The Board of a listed entity should:
(a) have a committee or committees to oversee risk, each of
which:
(i) has at least three members, a majority of whom are
independent Directors; and
(ii) is chaired by an independent Director,
and disclose:
(iii) the charter of the committee;
(iv) the members of the committee; and
(v) as at the end of each reporting period, the number of
times the committee met throughout the period and
the individual attendances of the members at those
meetings; or
(b) if it does not have a risk committee or committees that
satisfy (a) above, disclose that fact and the process it
employs for overseeing the entity’s risk management
framework.
Recommendation 7.2
The Board or a committee of the Board should:
YES
(a) review the entity’s risk management framework with
management at least annually to satisfy itself that it
continues to be sound; and
(b) disclose in relation to each reporting period, whether
such a review has taken place.
<72>
For personal use only
RECOMMENDATIONS(3RD EDITION)
Recommendation 7.3
A listed entity should disclose:
COMPLY
YES
(a) if it has an internal audit function, how the function is
structured and what role it performs; or
(b) if it does not have an internal audit function, that fact and
the processes it employs for evaluating and continually
improving the effectiveness of its risk management and
internal control processes.
Recommendation 7.4
A listed entity should disclose whether it has any
material exposure to economic, environmental and social
sustainability risks and, if it does, how it manages or intends
to manage those risks.
YES
EXPLANATION
(a) The Audit and Risk Committee Charter provides for the
Audit and Risk Committee to monitor the need for an
internal audit function. The Charter outlines the monitoring,
review and assessment of a range of internal audit
functions and procedures.
(b) Given the size of the Company, no internal audit function is
currently considered necessary.
The Audit and Risk Committee Charter requires the Audit
and Risk Committee (or, in its absence, the Board) to assist
management determine whether the Company has any
material exposure to economic, environmental and social
sustainability risks and, if it does, how it manages or intends
to manage those risks.
The Company’s Corporate Governance Plan requires the
Company to disclose whether it has any material exposure to
economic, environmental and social sustainability risks and, if
it does, how it manages or intends to manage those risks. The
Company will disclose this information in its Annual Report
and on its ASX website as part of its continuous disclosure
obligations.
Principle 8: Remunerate fairly and responsibly
Recommendation 8.1
YES
(a) The Company does have a Remuneration Committee.
The Board of a listed entity should:
(a) have a remuneration committee which:
(i) has at least three members, a majority of whom are
independent Directors; and
(ii) is chaired by an independent Director,
and disclose:
(iii) the charter of the committee;
(iv) the members of the committee; and
(v) as at the end of each reporting period, the number of
times the committee met throughout the period and
the individual attendances of the members at those
meetings; or
(b) if it does not have a remuneration committee, disclose
that fact and the processes it employs for setting the
level and composition of remuneration for Directors and
senior executives and ensuring that such remuneration is
appropriate and not excessive.
Recommendation 8.2
A listed entity should separately disclose its policies and
practices regarding the remuneration of non-executive
Directors and the remuneration of executive Directors and
other senior executives and ensure that the different roles
and responsibilities of non-executive Directors compared to
executive Directors and other senior executives are reflected
in the level and composition of their remuneration.
The Company’s Corporate Governance Plan contains a
Remuneration Committee Charter that provides for the
creation of a Remuneration Committee (if it is considered it
will benefit the Company), with at least three members, all
of whom must be independent Directors, where possible,
and which must be chaired by an independent Director.
(b) The Company does have a Remuneration Committee.
YES
The Company’s Corporate Governance Plan requires the
Board to disclose its policies and practices regarding the
remuneration of Directors and senior executives, which is
disclosed on the Company’s website.
DXN Limited | ANNUAL REPORT <73>
For personal use only RECOMMENDATIONS(3RD EDITION)
Recommendation 8.3
A listed entity which has an equity-based remuneration
scheme should:
COMPLY
YES
(a) have a policy on whether participants are permitted
to enter into transactions (whether through the use of
derivatives or otherwise) which limit the economic risk of
participating in the scheme; and
(b) disclose that policy or a summary of it
EXPLANATION
(a) The Company currently does have an equity-based
remuneration scheme, which was approved by
shareholders at the AGM held on 29 November 2018.
The Employee Incentive Plan that was approved by
shareholders runs for 3 years and outlines a policy
on whether participants are permitted to enter into
transactions (whether through the use of derivatives or
otherwise) which limit the economic risk of participating in
the scheme.
(b) A summary of the key terms and key policy settings of the
Employee Incentive Plan were outlined in the Notice of
Annual General Meeting held on 29 November 2018.
<74>
For personal use only ADDITIONAL
SHAREHOLDER
INFORMATION
SHAREHOLDING
The distribution of members and their holdings of equity securities in the Company as at 16 September 2019
were as follows:
Number Held as at
16 September 2019
1- 1,000
1,001 - 5,000
5,001 – 10,000
10,001 - 100,000
100,001 and over
Class of Equity Securities
Fully Paid Ordinary Shares
19
124
162
647
311
TOTALS
1,263
Holders of less than a marketable parcel: 233
Substantial Shareholders
The names of the substantial shareholders listed in the Company’s register as at 16 September 2019:
Shareholder
Carason Ward Pte Ltd
Newgate Capital Partners Pty Ltd
SG Hiscock & Company
Voting Rights
Ordinary Shares
Number
55,700,000
55,132,474
35,690,776
In accordance with the Company’s Constitution, on a show of hands every member present in person or by
proxy or attorney or duly authorised representative has one vote. On a poll every member present in person
or by proxy or attorney or duly authorised representative has one vote for every fully paid ordinary share held.
On-market buyback
There is no current on-market buy-back.
Statement in relation to Listing Rule 4.10.19
The Directors of DXN Limited confirm in accordance with ASX Listing Rule 4.10.19 that during the financial
period ended 30 June 2019, the Company has used its cash, and assets that are readily convertible to cash,
in a way consistent with its business objectives.
DXN Limited | ANNUAL REPORT <75>
For personal use only
ADDITIONAL SHAREHOLDER INFORMATION (CONTINUED)
Securities subject to escrow
The Company has the following restricted securities:
(a) 75,487,500 fully paid ordinary shares are escrowed until 11 April 2020;
(b) 5,000,000 fully paid ordinary shares are escrowed until 11 April 2021;
(c) 32,500,000 options exercisable at $0.30 on or before 30 November 2020 are escrowed
until 11 April 2020;
(d) 609,375 options exercisable at $0.30 on or before 5 April 2021 are escrowed until 11 April 2020.
Unquoted Securities
Securities
Number of Securities
Number of Holders
Holders with more than 20%
Options - 30 November
2020
32,500,000
Options – 5 April 2021
6,828,125
Performance Rights
9,335,448
8
29
22
Smart Capital Investments Pty Ltd
– 30.77%;
IWG Holdings Pty Ltd – 23.08%
Ellerston Capital Limited – 32.04%
Nil
Twenty Largest Shareholders
The names of the twenty largest ordinary fully paid shareholders as at 16 September 2019 are as follows:
Number of Ordinary
Fully Paid Shares
Held
% Held of Issued
Ordinary Capital
61,167,474
55,700,000
46,947,929
13,925,000
8,066,000
5,062,500
4,691,642
4,588,684
3,500,000
3,365,751
3,100,000
3,017,650
2,775,000
2,366,911
2,315,221
2,000,000
2,000,000
2,000,000
1,900,000
1,850,000
16.93
15.42
13.00
3.85
2.23
1.40
1.30
1.27
0.97
0.93
0.86
0.84
0.77
0.66
0.64
0.55
0.55
0.55
0.53
0.51
230,339,762
63.76
Name
JP Morgan Nominees Australia Pty Ltd
Carason Ward Pte Ltd
HSBC Custody Nominees (Australia) Limited
Herdsman Lake Capital Asia Pte Ltd
F & T Spagnolo Pty Ltd
IWG Holdings Pty Ltd
BNP Paribas Nominees Pty Ltd
Mr Andrew Walsh
J & G Jennings Super Fund Pty Ltd
Three Zebras Pty Ltd
Ms Limei Chen
Carpe Diem Enterprises (Qld) Pty Ltd
Big F Investments Pty Ltd
Mr Christopher Dylan Judd & Mrs Rebecca Jane Judd
Citicorp Nominees Pty Ltd
Blackwood Bruce Trading Pty Ltd
Richard Carden
Mr Mun Fye Chang
Reyvel Pty Ltd
Werman Pty Ltd
TOTAL
<76>
For personal use only
OPTION HOLDERS
The distribution of members and their holdings of listed options in the Company as at 16 September 2019
were as follows:
Class of Equity Securities
Number Held as at
16 September 2019
Listed options exercisable at
$0.10 on or before 13 May 2020
1- 1,000
1,001 - 5,000
5,001 – 10,000
10,001 - 100,000
100,001 and over
TOTALS
3
84
68
204
95
454
Holders of less than a marketable parcel: 401
Twenty Largest Option Holders
The names of the twenty largest listed option holders as at 16 September 2019 are as follows:
Name
HSBC Custody Nominees (Australia) Limited
Woodross Nominees Pty Ltd
JP Morgan Nominees Australia Pty Ltd
Kembla No 20 Pty Ltd
Viking Wai Kin Kwok
F & T Spagnolo Pty Ltd
K & A Fisher Pty Ltd
Carpe Diem Enterprises (Qld) Pty Ltd
Three Zebras Pty Ltd
Quest Traders Pty Ltd
Mr Jeremy Hussein Rishani
Rylet Pty Ltd
BNP Paribas Nominees Pty Ltd
Envirotech Homes Pty Ltd
Blackwood Bruce Trading Pty Ltd
Ratatat Investments Pty Ltd
Richard Carden
Raven Investment Holdings Pty Ltd
Mrs Sangeeta Dhanorkar
Mr Andrew Walsh
TOTAL
Number of Listed
Options exercisable
at $0.10 on or before
13 May 2020 Held
% Held of
Listed Options
15,510,659
13,063,035
18.69
15.74
3,008,556
2,267,027
2,000,000
1,853,000
1,800,000
1,508,825
1,405,646
1,226,182
1,202,500
1,172,428
1,012,970
1,000,000
1,000,000
1,000,000
1,000,000
904,728
728,009
723,138
3.62
2.73
2.41
2.23
2.17
1.82
1.69
1.48
1.45
1.41
1.22
1.20
1.20
1.20
1.20
1.09
0.88
0.87
53,386,703
64.32
DXN Limited | ANNUAL REPORT <77>
For personal use only COMPANY SECRETARY
The name of the Company Secretary is
George Lazarou.
ADDRESS AND TELEPHONE DETAILS OF THE
ENTITY’S REGISTERED OFFICE
Level 28, AMP Tower
140 St Georges Terrace
PERTH WA 6000
Telephone: + (61) 8 9288 1870
ADDRESS AND TELEPHONE DETAILS OF THE
ENTITY’S ADMINISTRATIVE OFFICE
9 Mumford Place
BALCATTA WA 6021
Telephone: 1300 328 239
ADDRESS AND TELEPHONE DETAILS OF THE OFFICE
AT WHICH A REGISTER OF SECURITIES IS KEPT
Automic Pty Ltd
Level 2
267 St Georges Terrace
PERTH WA 6000
Telephone: 1300 288 664
SECURITIES EXCHANGE ON WHICH THE COMPANY’S
SECURITIES ARE QUOTED
The Company’s listed equity securities are quoted on
the Australian Securities Exchange.
<78>
For personal use only DXN Limited | ANNUAL REPORT <79>
For personal use only <80>
For personal use only