DXN Limited
(ACN 620 888 548)
FINANCIAL
Report
For the year ended 30 June 2024
1
2
CONTENTS
Appendix 4E
3
Vision and mission
6
Corporate directory
7
Chairman's report
8
Directors' report
10
Auditor's independence declaration
25
Consolidated statement of profit or loss and other comprehensive income
26
Consolidated statement of financial position
27
Consolidated statement of changes in equity
28
Consolidated statement of cash flows
29
Notes to the consolidated financial statements
30
Consolidated entity disclosure statement
66
Directors' declaration
67
Independent auditor's report to the members of DXN Limited
68
Shareholder information
72
DXN Limited
Appendix 4E
Preliminary final report
3
1. Company details
Name of entity:
DXN Limited
ABN:
46 620 888 548
Reporting period:
For the year ended 30 June 2024
Previous period:
For the year ended 30 June 2023
2. Results for announcement to the market
$
Revenues from ordinary activities
up
63.5% to
10,755,354
Loss from ordinary activities after tax attributable to the owners of DXN Limited
down
76.0% to
(2,303,165)
Loss for the year attributable to the owners of DXN Limited
down
76.0% to
(2,303,165)
Dividends
There were no dividends paid, recommended or declared during the current financial period.
Comments
Group revenues increased by 63.5%, which contributed to a 56.8% increase in gross profit to $5,852,317. The loss for the
Group after providing for income tax was $2,303,165 (FY23: loss of $9,612,620), which represents a significant improvement
in the performance of the Group and reflects the restructure of DXN that commenced in FY23.
The earnings before interest, tax, depreciation and amortisation ('EBITDA') amounted to $643,944 (FY23: loss of $4,963,265).
EBITDA and Underlying EBITDA are financial measures which are not prescribed by the Australian Accounting Standards
(‘AAS’) and represents the profit or loss under AAS adjusted for non-cash and non-operating items. The directors consider
EBITDA and Underlying EBITDA to be core earnings measures of the Group.
The following table summarises key reconciling items between statutory profit or loss after tax attributable to the owners of
DXN Limited and Underlying EBITDA.
Consolidated
2024
2023
$
$
Loss after tax
(2,303,165)
(9,612,620)
Add: finance costs
1,450,135
1,531,356
Add: depreciation and amortisation
1,496,974
3,117,999
EBITDA
643,944
(4,963,265)
Less: non-operating / non-cash items
Restructuring costs
752,405
-
Lease liability reversed
(24,811)
-
Equity-settled employee costs
101,561
36,670
Net foreign exchange loss/(gain)
20,353
(118)
Change in fair value of warrants
(275,000)
-
Underlying EBITDA
1,218,452
(4,926,713)
DXN Limited
Appendix 4E
Preliminary final report
4
3. Dividends
Current period
There were no dividends paid, recommended or declared during the current financial period.
Previous period
There were no dividends paid, recommended or declared during the previous financial period.
4. Net tangible assets
Reporting
period
Previous
period
Cents
Cents
Net tangible assets per ordinary security
(1.84)
(0.36)
Net tangible assets calculation above includes the right-of-use assets and lease liability.
The net tangible assets per ordinary shares has been calculated based on 184,889,354 ordinary shares being on issue. The
net tangible assets per ordinary share reported in the comparative period (30 June 2023) has been calculated based on
114,754,322 ordinary shares being on issue. This is the number of shares that would have been in existence at the end of
that reporting period had the consolidation of shares, which occurred in the current period, taken place as at 1 July 2022.
5. Control gained over entities
Not applicable.
6. Loss of control over entities
Not applicable.
7. Details of associates and joint venture entities
Not applicable.
8. Audit qualification or review
Details of audit/review dispute or qualification (if any):
The financial statements have been audited and an unmodified opinion has been issued.
DXN Limited
Appendix 4E
Preliminary final report
5
9. Attachments
Details of attachments (if any):
The Annual Report of DXN Limited for the year ended 30 June 2024 is attached.
10. Signed
Signed ___________________________
Date: 30 August 2024
Abigail Cheadle
Non-Executive Chair
Signed ___________________________
Shalini Lagrutta
Managing Director
6
VISION AND MISSION
OUR VISION:
To define the EDGE by bringing critical communication infrastructure
closer to our customers.
OUR MISSION:
We will be Australia’s leading edge infrastructure company for colocation and
turnkey solutions, building the best modular solutions safely, creating
value for our customers, staff and shareholders
OUR KEY VALUE PROPOSITIONS:
DESIGN
Deep domain knowledge in house skills including mechanical
electrical and structural engineering.
BUILD
Australian owned Prefabricated Modular manufacturer with the
highest quality standards that the data centre industry expects.
OPERATE
Secures, Maintains and Operates critical infrastructure.
CERTIFICATIONS AND GLOBAL STANDARDS
7
CORPORATE DIRECTORY
DIRECTORS
Abigail Cheadle
(Non-Executive Director and Chairman)
Brendan Power
(Non-Executive Director)
Shalini Lagrutta
(CEO and Managing Director)
Myo Myint Ohn
(Non-Executive Director)
COMPANY SECRETARY
Shelby Coleman
Hasaka Martin
SHARE REGISTRAR
Automic Pty Ltd
Level 5
191 St Georges Terrace
Perth WA 6000
BANKERS
ANZ
15 Hutton Street Osborne Park WA 6017
Westpac
341 George Street
Sydney NSW 2000
REGISTERED OFFICE
c/o Flexispace
Suite 2, Level 16
No. 1 Martin Place
Sydney NSW 2000
AUDITORS
Moore Australia Audit (WA)
Level 15 Exchange Tower
2 The Esplanade
Perth WA 6000
STOCK EXCHANGE
LISTING
DXN Limited shares are listed on the
Australian Securities Exchange (ASX
code: DXN)
PRINCIPAL OFFICE
c/o Flexispace
Suite 2, Level 16
No. 1 Martin Place
Sydney NSW 2000
SOLICITORS
Thomson Greer Lawyers Level
23, Rialto South Tower 525
Collins Street
Melbourne VIC 3000 Australia
Arnotts Technology Lawyers
Level 8, 23 Hunter Street
Sydney NSW 2000
HWL Ebsworth Lawyers
Level 14, Australia Square
264-278 George Street
Sydney NSW 2000
WEBSITE
https://dxn.solutions
CORPORATE GOVERNANCE STATEMENT
The directors and management are committed to conducting the business of DXN Limited in an ethical manner and in accordance with the highest
standards of corporate governance. DXN Limited has adopted and has substantially complied with the ASX Corporate Governance Principles and
Recommendations (Fourth Edition) ('Recommendations') to the extent appropriate for the size and nature of its operations. The Group’s Corporate
Governance Statement, which sets out the corporate governance practices that were in operation during the financial year and identifies and explains
any recommendations that have not been followed. The Appendix 4G is released to the ASX as part of the Annual Report. The Corporate Governance
Statement can be found on the Company’s website at https://dxn.solutions/corporate-governance/
DXN Limited
Chairman's report
30 June 2024
8
JOINT LETTER FROM CHAIR AND CEO
We are pleased to present DXN’s FY24 Annual Report covering the 12-month financial reporting period ended 30 June 2024.
DXN has two divisions, a modular division which designs, engineers, manufactures and supplies industry leading prefabricated
modular on-premises, on- site data centres (PMDC) globally and a data centre division which owns, operates, and maintains
critical data centre (DC) infrastructure on behalf of customers in Darwin and Hobart, referred to as SDC Darwin and TAS01,
respectively.
DXN welcomed a new board in 2HFY24 with serial tech entrepreneur Dr. Myo Ohn joining in March 2024, and a new Chair
appointed, Abigail Cheadle, with DXN’s CEO, Shalini Lagrutta, becoming Managing Director in May 2024. Brendan Power
also remains on the board.
During FY24, DXN:
●
exited from the Sydney DC (referred to as SYD01) in March 2024 saving approximately $1.4m per annum in lease costs
and related expenses over the remaining nine years of the lease.
●
Achieved cost savings.
●
Increased sales efforts on PMDC achieving $10.7m in revenue for the year including closing a contract for four cable
landing stations (CLS) for $5.7m for East Micronesia Cable System (EMCS), DXN’s largest contract to date. DXN also
commenced supplying a Global Internet Company.
●
Announced its Exclusive Global Distribution Agreement between DXN and Flow2Edge Holdings I Pte Ltd (Flow) is no
longer exclusive allowing DXN to pursue international markets directly.
●
Raised capital of $2.1m at $0.002 per share. DXN also completed a consolidation based on every 15 ordinary shares
being consolidated into 1 ordinary share.
FY24 Highlights:
●
FY24 revenue of $10,8m with $12.6m in modules order intake. An improvement of 202% on FY23, including the largest
order in DXN’s history to EMCS for $5.7m and a breakthrough into a Global Internet Company.
●
$1.2m in Underlying EBITDA taking out one-off restructuring costs and $644k Statutory EBITDA being DXN’s first
EBITDA positive financial year result.
●
$2.98m in cash at year end.
●
Exit from Sydney Data Centre.
●
Developed a High-Performance Compute (HPC) Artificial Intelligence (AI) Edge Module design to satisfy customer
demand.
●
Developed indoor-based application for innovative PMDC product suitable for the telecommunications market.
●
Improvements to Darwin and Hobart DCs continue to deliver.
●
Continuous improvement in supply chain and logistics management.
Modular Manufacturing
The DXN team are proud to have contracted 80+ modules to date and continues pursuing opportunities for growth from
industries such as mining, gas and energy, subsea, telecommunications and government - including Defence needing high
density power requirements to meet growing Edge AI demand. DXN is also contracting directly with Global Internet Companies
who require PMDC and CLS across the region.
During FY23, DXN implemented various operational processes to track and improve its margins for its modular manufacturing
business. This includes implementing systems (financial and operational) in place to improve its margins on projects. DXN
now has an analytical view of its build costs across its supply chain and continues to apply improvements to back-end
processes and systems.
DXN continues to deliver the high-quality solutions that its renowned for globally, focusing particularly on the Asia Pacific
region, and to develop new business models to suit our customer requirements, which will provide DXN with annual recurring
revenues.
Data Centre Operations
Following the successful exit of Sydney, DXN worked to streamline its DC businesses in Hobart and Darwin. Efficiencies are
being implemented through improved processes as well as new product offerings to customers.
Both Darwin and Hobart continued to perform in FY24 and as customer demand grows in each of these two DC sites, DXN
will continue to invest in them.
DXN Limited
Chairman's report
30 June 2024
9
Looking to the Future
With $8.9m in PMDC contracts going into FY25 and deals already closed in FY25 amounting to $1.03m, DXN is well positioned
for positive EBITDA in FY25.
DXN continues to attract blue-chip customers, including global internet companies.
As the demand for digital infrastructure grows globally, and the needs of the networks continue to evolve, the opportunity for
prefabricated modular data centres (PMDC) continues to grow. AI and machine learning will grow the demand even further.
Customers are demanding high quality quick deployments, in contrast to the long lead times for bricks and mortar alternatives.
DXN’s PMDC manufacturing is well placed to fill this demand with and sees opportunity for growth in its modular DCs in/ for:
●
CLS, where the anticipated APAC addressable market is driven global market in sub-sea deployment.
●
Telecommunications shelters (CEVs) where fibre infrastructure is being built on site.
●
Telecom exchanges requiring indoor prefabricated modular data centres.
●
Mining automation on site.
●
HPC solutions for AI based infrastructure deployments for training models and inference sites for finance, manufacturing
and automation industries.
●
Mobility information communications infrastructure (ICT) for Defence and government agencies.
●
Edge data centres (customer colocation sites between 100kw to 500kw power loads) deployed globally with APAC
anticipated to be the largest growing market.
Further geographical expansion is also on the radar in FY25. The APAC market is the largest growing market globally for
Edge DC and DXN is considered a quality builder of PMDC. Focusing on this market has minimal expense impact for DXN.
As the demand for digital infrastructure grows globally, and the needs of the networks continue to evolve, the opportunity for
PMDCs continues to grow. This will be further driven by the rise of AI and machine learning. Customers are demanding high
quality quick deployments in contrast to the long lead times for bricks and mortar alternatives. DXN PMDC offering is well
placed to fill this demand.
Finally, we wish to thank our fellow board members for their guidance and staff for their considerable contributions in
maximising the return for shareholders.
DXN Limited
Directors' report
30 June 2024
10
The directors present their report, together with the financial statements, on the consolidated entity (referred to hereafter as
the 'Group') consisting of DXN Limited (referred to hereafter as the 'Company' or 'parent entity') and the entities it controlled
at the end of, or during, the year ended 30 June 2024.
Directors
The following persons were directors of DXN Limited during the whole of the financial year and up to the date of this report,
unless otherwise stated:
Brendan Power
Myo Myint Ohn (appointed on 1 March 2024)
Shalini Lagrutta (appointed on 1 May 2024)
Abigail Cheadle (appointed on 1 May 2024)
Peter McGrath (resigned on 1 May 2024)
Tim Hannon (resigned on 1 May 2024)
Principal activities
DXN’s data centre manufacturing division (referred to as PMDC) engineers, constructs and commissions data centre (DC)
solutions globally. The Group’s DC infrastructure has a wide range of applications, which includes edge data centers1 and
telecommunications applications (satellite and cable landing stations (CLS)). The Group’s prefabricated modular construction
method reduces the on-site labour time and time to deploy and improves quality. DXN’s DC manufacturing solutions are ideal
for rapid deployment in both urban and remote locations. DXN’s PMDC provides space, power, cooling, and physical security
for clients to house their computer servers, related storage and networking equipment.
DXN’s other division operates data centres for customers in Darwin and Tasmania. During the year DXN exited the data centre
it operated in Sydney.
Dividends
There were no dividends paid, recommended or declared during the current or previous financial year.
Review of operations
Revenue increased by 63.5% over FY23 due principally to new modular contracts signed during the reporting year, namely
●
On 22 September 2023, DXN announced it executed a contract with the Government of Timor Leste for the design, build
and supply of a DXN cable landing station with total contract value of USD1.4m (AUD2.1m).
●
On 28 December 2023, DXN announced it executed a contract for design, supply and delivery of a modular data centre
with Stanmore SMC Pty Ltd for AUD1.9m.
●
●
On 9 May 2024, DXN announced that it signed contracts to supply four CLSs for a total contract value of $5.7m
(USD3.8m) for the East Micronesia Cable System (EMCS).
Revenue as at 30 June 2024, amounted to $10.8m including several purchase order from customers including a global
internet company.
Underlying EBITDA of $643,944 being the first full financial year of positive EBITDA for DXN. The loss for the Group after
providing for income tax amounted to $2,303,165 (FY23: loss of $9,612,620).
Earnings before interest, taxation, depreciation and amortisation ('EBITDA') and Underlying EBITDA are financial measure
which are not prescribed by Australian Accounting Standards (‘AAS’) and represents the profit or loss under AAS adjusted for
non-cash and non-operating items. The directors consider EBITDA and Underlying EBITDA to reflect the core earnings of the
Group. The following table summarises key reconciling items between statutory profit or loss after tax attributable to the owners
of DXN Limited and Underlying EBITDA.
DXN Limited
Directors' report
30 June 2024
11
1 Edge data centres are smaller, decentralized data centres that are located closer to the end users or devices they serve.
These facilities are designed to process data locally, reducing latency and improving performance for applications that
require real-time data processing. Ideal for prefabricated modular data centres (PMDC) such as the ones DXN
manufacture.
2024
2023
Change
Change
$
$
$
%
Loss after tax
(2,303,165)
(9,612,620)
7,309,455
(76.0%)
Add: finance costs
1,450,135
1,531,356
(81,221)
(5.3%)
Add: depreciation and amortisation
1,496,974
3,117,999
(1,621,025)
(52.0%)
EBITDA
643,944
(4,963,265)
5,607,209
(113.0%)
Less: non-operating / non-cash items
Restructuring costs
752,405
-
752,405
-
Lease liability reversed
(24,811)
-
(24,811)
-
Equity-settled employee costs
101,561
36,670
64,891
177.0%
Net foreign exchange loss/(gain)
20,353
(118)
20,471
(17348.3%)
Change in fair value of warrants
(275,000)
-
(275,000)
-
574,508
36,552
537,956
1471.8%
Underlying EBITDA
1,218,452
(4,926,713)
6,145,165
(124.7%)
PMDC Manufacturing Division
●
The $5.7m contract to design and construct four CLSs for the East Micronesia Cable System (EMCS) is DXN's largest
contract to date.
●
The Exclusive Global Distribution License Agreement (Distribution Agreement) between DXN and Flow2 Edge Holdings
I Pte Ltd (Flow) is no longer exclusive, allowing DXN to pursue international markets directly.
●
During the reporting period, DXN continued to design, build, and deploy orders for blue chip customers.
●
DXN’s PMDC division realised the benefits of the cost savings from the restructure and efficiencies implemented across
the manufacturing and delivery process of the business.
DC Operations Division
●
On 22 November 2023, DXN announced it exited the Sydney data centre lease, thereby saving the Company $1.4m in
cash costs per annum in lease liabilities over the remaining nine years of the lease. In March 2024, DXN completed the
sale of the existing infrastructure assets for $600k.
●
DXN’s Hobart and Darwin DCs continue to perform as expected with plans to optimise but no plans to sell presently.
Business risks
DXN Limited, faces several material business risks that could impact its operations and financial performance. These risks
include market competition, as the data centre industry is highly competitive with numerous established players, which could
affect DXN’s market share and profitability. Additionally, the company is exposed to technological risks, given the rapid pace
of innovation in data centre technology. Failure to keep up with technological advancements or shifts in industry standards
could result in obsolete products or services. DXN is also subject to operational risks, such as the potential for supply chain
disruptions or failures in infrastructure and systems, which could impact its ability to deliver projects on time and within budget.
Moreover, regulatory and compliance risks, including changes in environmental regulations or data protection laws, could lead
to increased costs or operational constraints. Lastly, financial risks, including fluctuations in exchange rates, interest rates,
and the availability of capital, could affect DXN’s ability to finance its growth initiatives and maintain financial stability.
Significant changes in the state of affairs
On 21 August 2023, the Company issued 2,025,000 fully paid ordinary shares at $0.003 per share in lieu of fees payable to a
corporate advisor as approved by the Board of Directors.
AUD2.1m placement was made in two tranches to existing shareholders and new investors and was executed at 0.2cps
($0.002 per share).
●
Tranche 1 of the placement for the issue of 430m ordinary shares was made within the Company’s ASX Listing Rule 7.1
and 7.1A placement capacity and shares were allotted on 5 December 2023 raising an initial $860,000 (before costs).
●
Tranche 2 of the placement for the issue of 620m ordinary shares was completed following receipt of Shareholder
Approval at an Extraordinary General Meeting held on 22 January 2024 and the shares were allotted on 29 January 2024
raising an additional $1,240,000 (before costs).
DXN Limited
Directors' report
30 June 2024
12
On 22 January 2024, the Company held a general meeting of shareholders where shareholders ratified the issue of 430m
ordinary shares issued under Tranche 1 of the placement; approved an issue of 545m ordinary shares under Tranche 2 of the
placement; approved an issue of 75m shares to Directors participating under the Tranche 2 capital raise, approved an issue
of 70m options to directors; and approved a consolidation of capital on the basis of every 15 ordinary shares being consolidated
into 1 ordinary share in DXN. The consolidation of share capital was completed on 12 February 2024.
There were no other significant changes in the state of affairs of the Group during the financial year.
Matters subsequent to the end of the financial year
No matter or circumstance has arisen since 30 June 2024 that has significantly affected, or may significantly affect the Group's
operations, the results of those operations, or the Group's state of affairs in future financial years.
Likely developments and expected results of operations
DXN continues to look for opportunities to reduce costs in relation to corporate operating costs, DC operating costs and costs
of modular manufacturing builds particularly.
DXN expects to continue generating sales as DC demand is expected to grow.
Environmental regulation
The Group is not subject to any significant environmental regulation under Australian Commonwealth or State law.
Information on directors
Name:
Brendan Power
Title:
Non-Executive Director
Qualifications:
Brendan is GAICD and holds an MBA plus various diplomas in various disciplines.
Experience and expertise:
Brendan is the Managing Director of Clear to Work and Safe Food Pro Partners, both
large successful private companies in the education, hospitality, and software industries.
Brendan is also Chair of Bronco’s League Clubs and Power Tynan. Along with these
roles Brendan sits on numerous advisory boards. With over 30 years business
management experience he is a commercially astute project manager, public speaker
and published author with exceptional communication and negotiation skills, an in-depth
knowledge of purchasing, wholesaling, retail (including online) and employee
engagement. Brendan has a strong, proven history of successful business improvement
in a variety of challenging environments and is known for building high-performance
teams and cultures, and successfully coaching and mentoring individuals and groups to
achieve exceptional results.
Other current directorships:
None
Former directorships (last 3 years):
None
Special responsibilities:
Chair of the Audit & Risk Committee and Member of the Nomination and Remuneration
Committee
Interests in shares:
6,044,444 fully paid ordinary shares
Interests in options:
1,333,333 Unlisted Options, exercisable at $0.03 expiring 22 January 2028
Interests in rights:
None
DXN Limited
Directors' report
30 June 2024
13
Name:
Myo Myint Ohn (appointment on 1 March 2024)
Title:
Non-Executive Director
Qualifications:
Dr Ohn has an EMBA from Queensland University, a PhD in Aerospace Engineering
and a MASc in Photonics all from University of Toronto.
Experience and expertise:
Dr Ohn has been the Founder of several start-ups that have made advancements in
engineering leading to new products in established and emerging markets that involve,
Space Age Advanced Materials, Hypersonic Ballistics, Photonic Components, Fiber
Optic Communications, Financial Technologies and Internet Web 3.0. Dr Ohn has
worked for large cap NASDAQ listed companies in various roles from Business Unit
General Management, Corporate Strategy Head to Corporate M&A. At present, he is
CEO of several start-up companies that includes Campana Group, an operator of
wireline telecommunication services in South-East Asia.
Other current directorships:
The One Matrix Ventures
Former directorships (last 3 years):
None
Special responsibilities:
Chair of the Nomination and Remuneration Committee and Member of the Audit & Risk
Committee
Interests in shares:
28,333,333 fully paid ordinary shares
Interests in options:
None
Interests in rights:
None
Contractual rights to shares:
None
Name:
Shalini Lagrutta (appointed as Managing Director on 1 May 2024)
Title:
Chief Executive Officer and Managing Director
Qualifications:
Bachelors of Engineering BEng (Malaya), MAICD (Australian Company Directors)
Experience and expertise:
Shalini has been CEO of DXN since September 2022 and steps into the role as
CEO/Managing Director. On the back of the exit of the Sydney lease, a successful
capital raise as well as several modular data wins during FY24, Shalini and her team
has achieved DXN's first full financial year EBITDA positive result.
Other current directorships:
None
Former directorships (last 3 years):
None
Special responsibilities:
None
Interests in shares:
173,267 fully paid ordinary shares
Interests in options:
None
Interests in rights:
553,333 performance rights vesting on or before 30 June 2024
Name:
Abigail Cheadle (appointed on 1 May 2024)
Title:
Non-Executive Director and Chair
Qualifications:
Bachelor of Business, Member of the Institute of Chartered Accountants
Experience and expertise:
Abigail's career has spanned Asia, Europe, the Middle East, and Australia. Ms Cheadle
has led professional services practices for global firms, including EY, Deloitte, Kroll and
KordaMentha. With a focus on corporate strategy and risk management, she turned
around listed entities during the Asian Financial Crisis, most notably, Indonesian-listed
consumer finance company, BFI Finance Indonesia, during which time its market cap
increased over 13 times. She has been on nine ASX listed boards, two as Chair, seven
as ARC Chair and once as RNC Chair with an extensive background in professional
services, technology, consumer products, infrastructure, and renewable energy.
Other current directorships:
Shriro Holdings (ASX: SHM) (Chair), LGI Ltd (ASX: LGI) and Reef Casino Trust (ASX:
RCT).
Former directorships (last 3 years):
Booktopia Group Ltd (ASX: BKG); Novatti Group Ltd (ASX: NOV) and Isentia Group Ltd
(ASX: ISD)
Special responsibilities:
Chair of the Board and Member of the Audit & Risk Committee and Member of the
Nomination and Remuneration Committee
Interests in shares:
None
Interests in options:
None
Interests in rights:
None
DXN Limited
Directors' report
30 June 2024
14
Name:
Peter McGrath (resigned on 1 May 2024)
Title:
Former Independent Non-Executive Director and Chair
Qualifications:
B Eng MBA
Experience and expertise:
Peter’s business career spans 30 years in telecommunications, ICT and corporate
advisory, with over 20 years in senior leadership positions. Peter has been involved in
leadership as CEO of a number of major Australian telecommunications firms and he
also has extensive experience in equity capital markets and corporate finance. Peter is
currently an Executive Director and Chief Executive Officer of Comms Group Limited.
Other current directorships:
Comms Group Limited (CCG) - CEO & MD
Former directorships (last 3 years):
Powerhouse Ventures Limited (PVL)
Special responsibilities:
Former Member of the Audit & Risk Committee
Interests in shares:
Not applicable as no longer a director
Interests in options:
Not applicable as no longer a director
Interests in rights:
Not applicable as no longer a director
Name:
Tim Hannon (resigned on 1 May 2024)
Title:
Former Non-Executive Director
Qualifications:
Tim holds a Bachelor of Economics, Postgraduate Finance qualifications and an MBA
from Melbourne Business School.
Experience and expertise:
Tim is Managing Director of Natural Capital investment firm Gaia Natural Capital. Tim is
also a principal of Conrad Capital Group, a corporate advisory and funds management
group. Tim has 25 years’ experience in the investment and securities markets. Tim was
a former partner of Goldman Sachs where he enjoyed an 18-year tenure, holding roles
such as Head of Australian Equities, Head of Real Estate and Co-Manager of Global
Real Estate Securities portfolios. Tim was also founder and co-manager of the Goldman
Sachs Australian Infrastructure Securities Fund, and co-manager of the award-winning
Goldman Sachs Emerging Leaders Fund.
Other current directorships:
None
Former directorships (last 3 years):
Pure Profile and member of the investment committee
Special responsibilities:
None
Interests in shares:
Not applicable as no longer a director
Interests in options:
Not applicable as no longer a director
Interests in rights:
Not applicable as no longer a director
'Other current directorships' quoted above are current directorships for listed entities only and excludes directorships of all
other types of entities, unless otherwise stated.
'Former directorships (last 3 years)' quoted above are directorships held in the last 3 years for listed entities only and excludes
directorships of all other types of entities, unless otherwise stated.
Company secretaries
Shelby Coleman was appointed as a Joint Company Secretary on 13 May 2024. Shelby holds a Bachelor of Laws and a
Bachelor of Arts from Victoria University of Wellington. She is experienced in ASX and ASIC compliance, providing advice on
corporate governance and compliance issues as well as other regulatory matters. Shelby is an appointed Company Secretary
for a number of ASX listed, unlisted public and proprietary companies across a range of industries.
Hasaka Martin was appointed as a Joint Company Secretary on 13 May 2024. Hasaka is a Principal at Automic Group and
has over 15 years’ experience working with listed companies across many industries, in both in-house roles, as well as through
corporate service providers. Hasaka is an appointed Company Secretary for a number of listed entities. He is also a fellow of
the Governance Institute of Australia, a chartered secretary and holds post-graduate qualifications in corporate and securities
law.
Andrew Metcalfe resigned as Company Secretary on 13 May 2024. Andrew (CPA, FGIA, GAICD) is an experienced Chartered
Secretary and Governance Adviser with more than 25 years’ experience across a broad industry base, having worked with a
variety of Board and senior management team of ASX listed companies.
DXN Limited
Directors' report
30 June 2024
15
Meetings of directors
The number of meetings of the Company's Board of Directors ('the Board') and of each Board committee held during the year
ended 30 June 2024, and the number of meetings attended by each director were:
Full Board
Nomination and
Remuneration Committee
Audit & Risk Committee
Attended
Held
Attended
Held
Attended
Held
Brendan Power
6
6
1
1
2
2
Myo Myint Ohn1
3
3
1
1
1
1
Shalini Lagrutta2
6
6
1
1
2
2
Abigail Cheadle3
1
1
-
-
-
-
Peter McGrath4
5
5
-
-
2
2
Tim Hannon5
5
5
-
-
2
2
1
Myo was appointed on 1 March 2024
2
Shalini was appointed as Managing Director on 1 May 2024
3
Abigail was appointed on 1 May 2024
4
Peter resigned on 1 May 2024
5
Tim resigned on 1 May 2024
Held: represents the number of meetings held during the time the director held office or was a member of the relevant
committee.
Remuneration report (audited)
The remuneration report details the key management personnel ('KMP') remuneration arrangements for the Group, in
accordance with the requirements of the Corporations Act 2001 and its Regulations.
The remuneration report is set out under the following main headings:
●
Principles used to determine the nature and amount of remuneration
●
Details of remuneration
●
Service agreements
●
Share-based compensation
●
Additional information
●
Additional disclosures relating to KMP
KMP are those persons having authority and responsibility for planning, directing and controlling the activities of the entity,
directly or indirectly, including all directors.
The KMP of the Group consisted of the following directors of DXN Limited:
●
Brendan Power - Non-Executive Director (appointed on 27 March 2023)
●
Myo Myint Ohn - Non-Executive Director (appointed on 1 March 2024)
●
Shalini Lagrutta - Chief Executive Officer and Managing Director (appointed as Managing Director on 1 May 2024)
●
Abigail Cheadle - Non-Executive Director and Chair (appointed on 1 May 2024)
●
Peter McGrath - Former Independent Non-Executive Director and Chair (resigned on 1 May 2024)
●
Tim Hannon - Former Non-Executive Director (resigned on 1 May 2024)
●
Craig Beatton - Head of Finance (appointed on 18 January 2022, date of redundancy 31 August 2023)
●
Laila Green – Interim Chief Financial Officer (appointed 13 June 2024)
Changes since the end of the reporting period:
None
DXN Limited
Directors' report
30 June 2024
16
Principles used to determine the nature and amount of remuneration
The objective of the Group's executive reward framework is to ensure reward for performance is competitive and appropriate
for the results delivered. The framework aligns executive reward with the achievement of strategic objectives and the creation
of value for shareholders, and it is considered to conform to the market best practice for the delivery of reward. The Board of
Directors ('the Board') ensures that executive reward satisfies the following key criteria for good reward governance practices:
●
competitiveness and reasonableness;
●
acceptability to shareholders;
●
performance linkage / alignment of executive compensation; and
●
transparency.
The Nomination and Remuneration Committee is responsible for determining and reviewing remuneration arrangements for
its directors and executives. The performance of the Group depends on the quality of its directors and executives. The
remuneration philosophy is to attract, motivate and retain high performance and high-quality personnel.
In consultation with external remuneration consultants as required (refer to the section 'Use of remuneration consultants'
below), the Nomination and Remuneration Committee has structured an executive remuneration framework that is market
competitive and complementary to the reward strategy of the Group.
The reward framework is designed to align executive reward to shareholders' interests. The Board has considered that it
should seek to enhance shareholders' interests by:
●
having earnings as a core component of the plan design;
●
focusing on sustained growth in shareholder wealth, consisting of dividends and growth in share price, and delivering
constant or increasing return on capital as well as focusing the executive on key non-financial drivers of value; and
●
attracting and retaining high caliber executives.
Additionally, the reward framework should seek to enhance executives' interests by:
●
rewarding capability and experience;
●
reflecting competitive reward for contribution to growth in shareholder wealth; and
●
providing a clear structure for earning rewards.
In accordance with best practice corporate governance, the structure of non-executive director and executive director
remuneration is separate.
Non-executive directors' remuneration
Fees and payments to non-executive directors reflect the demands and responsibilities of their role. Non-executive directors'
fees and payments are reviewed annually by the Nomination and Remuneration Committee. The Nomination and
Remuneration Committee may, from time to time, receive advice from independent remuneration consultants to ensure non-
executive directors' fees and payments are appropriate and in line with the market. The Chair's fees are determined
independently to the fees of other non-executive directors based on comparative roles in the external market. The Chair does
not vote on any resolutions relating to the determination of her own remuneration.
ASX listing rules require the aggregate non-executive directors' remuneration be determined periodically by a general meeting.
The most recent determination was at the Annual General Meeting held on 4 August 2017, where the shareholders approved
a maximum annual aggregate remuneration of $500,000.
Executive remuneration
The Group aims to reward executives based on their position and responsibility, with a level and mix of remuneration which
has both fixed and variable components.
The executive remuneration and reward framework has four components:
●
base pay and non-monetary benefits;
●
short-term performance incentives;
●
long-term incentives; and
●
other remuneration such as superannuation and long service leave.
The combination of these comprises the executive's total remuneration.
Fixed remuneration, consisting of base salary, superannuation and non-monetary benefits, are reviewed annually by the
Nomination and Remuneration Committee based on individual and business unit performance, the overall performance of the
Group and comparable market remunerations.
DXN Limited
Directors' report
30 June 2024
17
Executives may receive their fixed remuneration in the form of cash or other fringe benefits (for example motor vehicle benefits)
where it does not create any additional costs to the Group and provides additional value to the executive.
The short-term incentives (STI) program is designed to align the targets of the business units with the performance hurdles of
executives. STI payments are granted to executives based on specific annual targets and key performance indicators (KPIs)
being achieved. KPIs include profit contribution, customer satisfaction, leadership contribution and product management.
The long-term incentives (LTI) include share-based payments. Shares are awarded to executives over a period of three years
based on long-term incentive measures. The Nomination and Remuneration Committee reviewed the long-term equity-linked
performance incentives specifically for executives during the year ended 30 June 2024.
Consolidated entity performance and link to remuneration
Remuneration for certain individuals is directly linked to the performance of the Group. A portion of cash bonus and incentive
payments are dependent on earnings. The remaining portion of the cash bonus and incentive payments are at the discretion
of the Nomination and Remuneration Committee. Refer to the section 'Additional information' below for details of the earnings
and total shareholders' return for the last five years.
The Nomination and Remuneration Committee is of the opinion that the continued improved results can be attributed in part
to the adoption of performance-based compensation and is satisfied that this improvement will continue to increase
shareholder wealth if maintained over the coming years.
Use of remuneration consultants
During the year ended 30 June 2024, the Group did not engage the services of any external consultants.
Voting and comments made at the Company's 2023 Annual General Meeting ('AGM')
At the 2023 AGM, 96.57% of the votes received supported the adoption of the remuneration report for the year ended 30 June
2023. The Company did not receive any specific feedback at the AGM regarding its remuneration practices.
Details of remuneration
Amounts of remuneration
Details of the remuneration of KMP of the Group are set out in the following tables.
Short term benefits
Post-employment benefits
Share-
based
payments
Cash salary
Cash
Non-
Commiss-
Super-
Termination
Equity-
and fees
bonus
monetary
ions6
annuation
payments
settled
Total
2024
$
$
$
$
$
$
$
$
Non-Executive
Directors:
Brendan Power
41,900
-
-
-
4,609
-
40,000
86,509
Myo Myint Ohn1
14,032
-
-
-
-
-
-
14,032
Shalini Lagrutta2
300,000
-
-
172,670
25,729
-
-
498,399
Abigail Cheadle3
13,614
-
-
-
-
-
-
13,614
Peter McGrath4
68,142
-
-
-
-
-
60,000
128,142
Tim Hannon4
36,603
-
-
-
-
-
40,000
76,603
Other KMP:
Craig Beatton 5
33,333
-
-
-
3,667
28,086
-
65,086
Laila Green7
-
-
-
-
-
-
-
-
507,624
-
-
172,670
34,005
28,086
140,000
882,385
DXN Limited
Directors' report
30 June 2024
18
1
Represents remuneration from 1 March 2024 to 30 June 2024.
2
Represents remuneration from 1 July 2023 to 30 June 2024, but only appointed as Managing director on 1 May 2024
3
Represents remuneration from 1 May 2024 to 30 June 2024.
4
Represents remuneration till 1 May 2024.
5
Represents remuneration till 31 August 2023.
6
Represents commission earned on modular data centre manufacturing sales.
7
Appointed as Interim Chief Financial Officer on 13 June 2024 - no KMP accruals/payments during the year ended 30
June 2024.
Short term benefits
Post-employment benefits
Share-
based
payments
Cash salary
Cash
Non-
Commiss-
Super-
Termination
Equity-
and fees
bonus
monetary
ions(5)
annuation
payments
settled
Total
2023
$
$
$
$
$
$
$
$
Non-Executive
Directors:
Brendan Power1
11,308
-
-
-
1,187
-
-
12,495
Peter McGrath2
40,995
-
-
-
-
-
-
40,995
Tim Hannon1
18,076
-
-
-
-
-
-
18,076
Richard Carden3
21,550
-
-
-
-
-
-
21,550
John Baillie4
63,000
-
-
-
6,615
-
-
69,615
John
Dimitropoulos4
38,925
-
-
-
4,087
-
-
43,012
Other KMP:
Shalini Lagrutta
300,000
-
-
59,776
25,000
-
36,670
421,446
Craig Beatton
200,000
-
-
-
21,000
-
-
221,000
693,854
-
-
59,776
57,889
-
36,670
848,189
1
Represents remuneration from 27 March 2023 to 30 June 2023
2
Represents remuneration from 25 November 2022 to 30 June 2023, appointed as Chairman on 30 March 2023
3
Represents remuneration from 1 July 2022 to 25 November 2022
4
Represents remuneration from 1 July 2022 to 27 March 2023
5
Represents commission earned on modular data centre manufacturing sales
The proportion of remuneration linked to performance and the fixed proportion are as follows:
Fixed remuneration
At risk - STI
At risk - LTI
Name
2024
2023
2024
2023
2024
2023
Non-Executive Directors:
Brenan Power
54.0%
100.0%
-
-
46.0%
-
Myo Myint Ohn
100.0%
-
-
-
-
-
Shalini Lagrutta
65.4%
77.1%
34.6%
14.2%
-
8.7%
Abigail Cheadle
100.0%
-
-
-
-
-
Peter McGrath
53.0%
100.0%
-
-
47.0%
-
Tim Hannon
48.0%
100.0%
-
-
52.0%
-
Richard Carden
-
100.0%
-
-
-
-
John Baillie
-
100.0%
-
-
-
-
John Dimitropoulos
-
100.0%
-
-
-
-
Other KMP:
Craig Beatton
100.0%
100.0%
-
-
-
-
Laila Green
-
-
-
-
-
-
DXN Limited
Directors' report
30 June 2024
19
Service agreements
Remuneration and other terms of employment for KMP are formalised in service agreements. Details of these agreements
are as follows:
Name:
Shalini Lagrutta
Title:
Chief Executive Officer and Managing Director (appointed as Managing Director on 1
May 2024)
Agreement commenced:
19 January 2022
Term of agreement:
The employment is continuous until terminated in accordance with the provisions for
termination, being by either party with 3 months' notice.
Details:
There are three components to Shalini's remuneration:
(i) Gross annual remuneration package
Shalini will be paid a base annual remuneration of $300,000 plus statutory
superannuation contributions, which is capped at $27,500 per annum. The employer
may review the employee's performance, remuneration and benefits in accordance with
the employer policy from time to time.
(ii) Short term incentive benefits
Shalini will be entitled to receive an STI component of up to $125,000 based on
achieving agreed KPI's.
(iii) Long term incentive benefits
The LTI component has an annual grant value of up to 25% of the executive
remuneration package. The number of performance rights and/or options will depend
on the share price at the allocation or grant date.
On 22 July 2021, Shalini was issued with 8,300,000 performance rights, subject to the
following vesting conditions:
(a) 3 years of service (continued employment) with the Company from 1 July 2021 to 30
June 2024; and
(b) the Company achieving the following Compound Growth in Total Shareholder Return
(TSR CAGR) over the 3-year period from 1 July 2021 to 30 June 2024:
TSR CAGR
Less than
% Vesting
35.0%
35 – 45%
50 – 100% on a pro-rata basis
Greater than 45%
100%
In the event of cessation of employment during the 3-year period, without cause,
retirement or resignation, the Performance Rights will lapse.
In the event of cessation of employment during the 3-year period due to retrenchment,
death or disability, the Performance Rights will be pro-rated with Board discretion based
on the circumstances.
Any Performance Rights that do not vest and become exercisable in accordance with
the Vesting Conditions will automatically lapse.
Name:
Brendan Power
Title:
Non-Executive Director
Agreement commenced:
27 March 2023
Term of agreement:
Subject to re-election every 3 years
Details:
From 1 May 2023, the Director received a fixed director's fee of $41,900 per annum
From 1 July 2024, the Director receives a fixed director’s fee of $60,000 per annum, plus
superannuation payments where applicable
DXN Limited
Directors' report
30 June 2024
20
Name:
Myo Myint Ohn
Title:
Non-Executive Director (appointment on 1 March 2024)
Agreement commenced:
1 March 2024
Term of agreement:
Subject to re-election every 3 years
Details:
From 1 July 2024, the Director receives a fixed director’s fee of $60,000 per annum, plus
superannuation payments where applicable
Name:
Abigail Cheadle
Title:
Non-Executive Director (appointed on 1 May 2024)
Agreement commenced:
1 May 2024
Term of Agreement:
Subject to re-election every 3 years
Details:
From 1 July 2024, the Director receives a fixed director’s fee of $90,000 per annum,
plus superannuation payments where applicable
KMP have no entitlement to termination payments in the event of removal for misconduct.
Share-based compensation
Issue of shares
There were no other shares issued to directors and other KMP as part of compensation during the year ended 30 June 2024.
Options
The terms and conditions of each grant of options over ordinary shares affecting remuneration of directors and other KMP in
this financial year or future reporting years are as follows:
Number of
Fair value
options
Vesting date and
per option
Name
granted
Grant date
exercisable date
Expiry date
Exercise price at grant date
Brendan Power
1,333,333 23/01/2024
23/01/2024
22/01/2028
$0.0300
$0.022
Peter McGrath
2,000,000 23/01/2024
01/05/2024
22/01/2028
$0.0300
$0.022
Tim Hannon
1,333,333 23/01/2024
01/05/2024
22/01/2028
$0.0300
$0.022
Number of
Number of
Number of
Number of
options
options
options
options
granted
granted
vested
vested
during the
during the
during the
during the
year
year
year
year
Name
2024
2023
2024
2023
Brendan Power
1,333,333
-
-
-
Peter McGrath
2,000,000
-
2,000,000
-
Tim Hannon
1,333,333
-
1,333,333
-
Values of options over ordinary shares granted, exercised and lapsed for directors and other KMP as part of compensation
during the year ended 30 June 2024 are set out below:
Value of
Value of
Value of
Remuneration
options
options
options
consisting of
granted
exercised
lapsed/vested
options
during the
during the
during the
for the
year
year
year
year
Name
$
$
$
%
Brendan Power
40,000
-
-
46%
Peter McGrath
60,000
-
-
47%
Tim Hannon
40,000
-
-
52%
The number of options granted are adjusted for the share consolidation. Refer to note 27.
DXN Limited
Directors' report
30 June 2024
21
Options granted carry no dividend or voting rights.
Performance rights
There were no performance rights over ordinary shares issued to directors and other KMP as part of compensation that were
outstanding as at 30 June 2024.
The terms and conditions of each grant of performance rights over ordinary shares affecting remuneration of directors and
other KMP in this financial year or future reporting years are as follows:
Number of
Share price
Fair value
rights
Vesting date and
hurdle for
per right
Name
granted
Grant date
exercisable date
vesting
at grant date
Shalini Lagrutta
533,333 22 July 2021
14 July 2024
$0.0000
$0.013
The number of performance rights granted are adjusted for the share consolidation. Refer to note 27.
Performance rights granted carry no dividend or voting rights.
Additional information
The earnings of the Group for the five years to 30 June 2024 are summarised below:
2024
2023
2022
2021
2020
$
$
$
$
$
Sales revenue
10,755,354
6,576,190
15,386,453
8,035,137
5,188,280
EBITDA
643,944
(4,963,265)
(1,814,952) (2,619,320)
-
Loss after income tax
(2,303,165)
(9,612,620)
(6,902,449)
(4,812,631)
(12,590,529)
The factors that are considered to affect total shareholders return ('TSR') are summarised below:
2024
2023*
2022
2021
2020
Share price at financial year end ($)
-
-
-
0.01
0.01
Basic earnings per share (cents per share)
(1.55)
(8.52)
(0.50)
(0.45)
(2.57)
Diluted earnings per share (cents per share)
(1.55)
(8.52)
(0.50)
(0.45)
(2.57)
*
EPS is calculated based on the number of ordinary shares that would have been in existence had the share consolidation
occurred on 1 July 2022.
Additional disclosures relating to KMP
The number of shares in the Company held during the financial year by each director and other members of KMP of the Group,
including their personally related parties, is set out below:
Balance at
Received
Adjustment
Balance at
the start of
as part of
on share
Disposals/
the end of
the year
remuneration
Additions
consolidation
other
the year
Ordinary shares
Brendan Power
40,666,666
-
50,000,000
(84,622,222)
-
6,044,444
Myo Myint Ohn1
-
-
28,333,333
-
-
28,333,333
Shalini Lagrutta
3,383,877
-
(3,158,285)
-
(52,325)
173,267
Abigail Cheadle
-
-
-
-
-
-
Peter McGrath2
15,511,060
-
25,000,000
(37,810,323)
(2,700,737)
-
Tim Hannon
-
-
-
-
-
-
59,561,603
-
100,175,048 (122,432,545)
(2,753,062)
34,551,044
1
Additions represent shares held at date of appointment
2
Other represents shares held at resignation date
DXN Limited
Directors' report
30 June 2024
22
Option holding
The number of options over ordinary shares in the Company held during the financial year by each director and other members
of KMP of the Group, including their personally related parties, is set out below:
Balance at
Adjustment
Expired/
Balance at
the start of
on capital
exercised/
the end of
the year
Granted
consolidation
forfeited
the year
Options over ordinary shares
Brendan Power
-
20,000,000
(18,666,667)
-
1,333,333
Peter McGrath
-
30,000,000
(28,000,000)
-
2,000,000
Tim Hannon
-
20,000,000
(18,666,667)
-
1,333,333
-
70,000,000
(65,333,334)
-
4,666,666
Performance rights holding
The number of performance rights in the Company held during the financial year by each director and other members of KMP
of the Group, including their personally related parties, is set out below:
Balance at
Adjustment
Expired/
Balance at
the start of
on capital
exercised/
the end of
the year
Granted
consolidation
forfeited
the year
Performance rights over ordinary shares
Shalini Lagrutta
8,300,000
-
(7,746,667)
-
553,333
Balance at
the end of
Vested
Unvested
the year
Performance rights over ordinary shares
Shalini Lagrutta
-
553,333
553,333
This concludes the remuneration report, which has been audited.
Shares under option
Unissued ordinary shares of DXN Limited under option at the date of this report are as follows:
Exercise
Number
Grant date
Expiry date
price*
under option
22/10/2021
22/10/2024
$0.2100
725,924
23/01/2024
22/01/2028
$0.0300
4,666,666
5,392,590
*
Adjusted on share consolidation
No person entitled to exercise the options had or has any right by virtue of the option to participate in any share issue of the
Company or of any other body corporate.
Shares issued on the exercise of options
There were no ordinary shares of DXN Limited issued on the exercise of options during the year ended 30 June 2024 and up
to the date of this report.
DXN Limited
Directors' report
30 June 2024
23
Shares under performance rights
Unissued ordinary shares of DXN Limited under performance rights at the date of this report are as follows:
Exercise
Number
Grant date
Expiry date
price
under rights
22/07/2021
14/07/2024
$0.0000
553,333
No person entitled to exercise the performance rights had or has any right by virtue of the performance right to participate in
any share issue of the Company or of any other body corporate.
Shares issued on the exercise of performance rights
There were no ordinary shares of DXN Limited issued on the exercise of performance rights during the year ended 30 June
2024 and up to the date of this report.
Shares under warrants
Unissued ordinary shares of DXN Limited under warrants at the date of this report are as follows:
Exercise
Number
Grant date
Expiry date
price
under
warrants
22/10/2021
22/10/2025
$0.0300
13,333,333
No person entitled to exercise the warrants had or has any right by virtue of the retention right to participate in any share issue
of the Company or of any other body corporate.
Shares issued on the exercise of warrants
There were no ordinary shares of DXN Limited issued on the exercise of warrants during the year ended 30 June 2024 and
up to the date of this report.
Indemnity and insurance of officers and auditor
The Company has indemnified the directors and executives of the Company for costs incurred, in their capacity as a director
or executive, for which they may be held personally liable, except where there is a lack of good faith.
During the financial year, the Company paid a premium in respect of a contract to insure the directors and executives of the
Company against a liability to the extent permitted by the Corporations Act 2001. The contract of insurance prohibits disclosure
of the nature of the liability and the amount of the premium.
Indemnity and insurance of auditor
The Company has not, during or since the end of the financial year, indemnified or agreed to indemnify the auditor of the
Company or any related entity against a liability incurred by the auditor.
During the financial year, the Company has not paid a premium in respect of a contract to insure the auditor of the Company
or any related entity.
Proceedings on behalf of the Company
No person has applied to the Court under section 237 of the Corporations Act 2001 for leave to bring proceedings on behalf
of the Company, or to intervene in any proceedings to which the Company is a party for the purpose of taking responsibility
on behalf of the Company for all or part of those proceedings.
Non-audit services
Details of the amounts paid or payable to the auditor for non-audit services provided during the financial year by the auditor
are outlined in note 33 to the financial statements.
The directors are satisfied that the provision of non-audit services during the financial year, by the auditor (or by another
person or firm on the auditor's behalf), is compatible with the general standard of independence for auditors imposed by the
Corporations Act 2001.
DXN Limited
Directors' report
30 June 2024
24
The directors are of the opinion that the services as disclosed in note 33 to the financial statements do not compromise the
external auditor's independence requirements of the Corporations Act 2001 for the following reasons:
●
all non-audit services have been reviewed and approved to ensure that they do not impact the integrity and objectivity of
the auditor; and
●
none of the services undermine the general principles relating to auditor independence as set out in APES 110 Code of
Ethics for Professional Accountants (including Independence Standards) issued by the Accounting Professional and
Ethical Standards Board, including reviewing or auditing the auditor's own work, acting in a management or decision-
making capacity for the Company, acting as advocate for the Company or jointly sharing economic risks and rewards.
Officers of the Company who are former partners of Moore Australia Audit (WA)
There are no officers of the Company who are former partners of Moore Australia Audit (WA).
Auditor's independence declaration
A copy of the auditor's independence declaration as required under section 307C of the Corporations Act 2001 is set out
immediately after this directors' report.
This report is made in accordance with a resolution of directors, pursuant to section 298(2)(a) of the Corporations Act 2001.
Signed in accordance with a resolution of the Board of Directors.
___________________________
Abigail Cheadle
Non-Executive Chair
30 August 2024
DXN Limited
Auditor's independence declaration
25
[
DXN Limited
Consolidated statement of profit or loss and other comprehensive income
For the year ended 30 June 2024
Consolidated
Note
2024
2023
*Re-
presented
$
$
The above consolidated statement of profit or loss and other comprehensive income should be read in conjunction with the
accompanying notes
26
Revenue from continuing operations
Sales to customers
5
10,755,354
6,576,190
Cost of goods sold
(4,903,037)
(2,844,872)
Gross margin
5,852,317
3,731,318
Other income
6
498,113
1,175,180
Expenses
Administration expenses
(524,947)
(432,954)
Compliance and legal expenses
(489,028)
(406,915)
Consultants and contractors
(685,270)
(463,694)
Depreciation and amortisation expenses
7
(1,496,974)
(3,117,999)
Employee benefits expenses
(2,677,674)
(3,356,562)
Impairment of non-financial assets
7
-
(3,561,289)
Impairment of inventories
(49,298)
(494,760)
Impairment of receivables
11
(22,174)
(18,311)
Loss on disposal of assets
(2,047)
(51,185)
Marketing expenses
(26,566)
(25,533)
Occupancy expenses
(989,609)
(776,869)
Research and development expenses
-
(38,970)
Telecommunication and technology expenses
(132,968)
(177,343)
Travel expenses
(106,905)
(65,378)
Finance costs
7
(1,450,135)
(1,531,356)
Loss before income tax expense
(2,303,165)
(9,612,620)
Income tax expense
8
-
-
Loss after income tax expense for the year attributable to the owners of DXN
Limited
(2,303,165)
(9,612,620)
Other comprehensive income for the year, net of tax
-
-
Total comprehensive loss for the year attributable to the owners of DXN
Limited
(2,303,165)
(9,612,620)
Note
2024
Cents
2023
Cents
Earnings per share for loss attributable to the owners of DXN Limited
Basic earnings per share
9
(1.55)
(8.52)
Diluted earnings per share
9
(1.55)
(8.52)
*
Refer to note 18 for details.
DXN Limited
Consolidated statement of financial position
As at 30 June 2024
Consolidated
Note
2024
2023
$
$
The above consolidated statement of financial position should be read in conjunction with the accompanying notes
27
Assets
Current assets
Cash and cash equivalents
10
2,983,785
710,209
Trade and other receivables
11
1,248,749
221,316
Inventories/work in progress
12
372,587
375,705
Bank guarantees and deposits
13
118,000
-
Other assets
14
161,746
141,436
4,884,867
1,448,666
Assets of disposal groups classified as held for sale
18
-
6,588,989
Total current assets
4,884,867
8,037,655
Non-current assets
Property, plant and equipment
15
1,806,872
1,159,693
Right-of-use assets
16
3,523,943
8,358,447
Intangibles
17
2,997,902
236,942
Bank guarantees and deposits
13
708,144
265,302
Other assets
14
238,333
423,333
Total non-current assets
9,275,194
10,443,717
Total assets
14,160,061
18,481,372
Liabilities
Current liabilities
Trade and other payables
19
1,548,799
976,154
Contract liabilities
20
3,484,648
698,271
Borrowings
21
84,848
143,844
Lease liabilities
22
660,519
716,011
Employee benefits
23
225,974
148,343
Income in advance
24
-
416,667
Other financial liabilities
25
300,000
910,315
6,304,788
4,009,605
Liabilities directly associated with assets classified as held for sale
26
-
1,928,973
Total current liabilities
6,304,788
5,938,578
Non-current liabilities
Borrowings
21
4,080,385
4,113,450
Lease liabilities
22
3,494,225
8,190,144
Employee benefits
23
36,278
14,344
Other financial liabilities
25
656,658
400,000
Total non-current liabilities
8,267,546
12,717,938
Total liabilities
14,572,334
18,656,516
Net liabilities
(412,273)
(175,144)
Equity
Issued capital
27
47,395,502
45,424,949
Reserves
28
405,789
1,428,566
Accumulated losses
(48,213,564)
(47,028,659)
Total deficiency in equity
(412,273)
(175,144)
DXN Limited
Consolidated statement of changes in equity
For the year ended 30 June 2024
The above consolidated statement of changes in equity should be read in conjunction with the accompanying notes
28
Total
deficiency in
equity
Issued
capital
Reserves
Accumulated
losses
Consolidated
$
$
$
$
Balance at 1 July 2022
43,471,842
1,391,896
(37,416,039)
7,447,699
Loss after income tax expense for the year
-
-
(9,612,620)
(9,612,620)
Other comprehensive income for the year, net of tax
-
-
-
-
Total comprehensive loss for the year
-
-
(9,612,620)
(9,612,620)
Transactions with owners in their capacity as owners:
Issue of shares (note 27)
2,125,000
-
-
2,125,000
Capital raising costs (note 27)
(171,893)
-
-
(171,893)
Share-based payments (note 28)
-
36,670
-
36,670
Balance at 30 June 2023
45,424,949
1,428,566
(47,028,659)
(175,144)
Total
deficiency in
equity
Issued
capital
Reserves
Accumulated
losses
Consolidated
$
$
$
$
Balance at 1 July 2023
45,424,949
1,428,566
(47,028,659)
(175,144)
Loss after income tax expense for the year
-
-
(2,303,165)
(2,303,165)
Other comprehensive income for the year, net of tax
-
-
-
-
Total comprehensive loss for the year
-
-
(2,303,165)
(2,303,165)
Transactions with owners in their capacity as owners:
Issue of shares (note 27)
2,100,000
-
-
2,100,000
Issue of shares - share-based payments (note 27)
6,075
-
-
6,075
Capital raising costs (note 27)
(135,522)
-
-
(135,522)
Transfer from accumulated losses
-
(1,118,260)
1,118,260
-
Share-based payments (note 28)
-
95,483
-
95,483
Balance at 30 June 2024
47,395,502
405,789
(48,213,564)
(412,273)
DXN Limited
Consolidated statement of cash flows
For the year ended 30 June 2024
Consolidated
Note
2024
2023
$
$
The above consolidated statement of cash flows should be read in conjunction with the accompanying notes
29
Cash flows from operating activities
Receipts from customers
12,900,580
8,850,520
Payments to suppliers and employees
(10,743,611)
(11,034,015)
R&D tax incentive claim
-
1,029,786
Government grants
246,895
67,567
Interest received
5,800
9,356
Interest paid
(363,056)
(453,733)
Bank guarantee for projects
(875,497)
-
Net cash from/(used in) operating activities
39
1,171,111
(1,530,519)
Cash flows from investing activities
Payments for plant and equipment
(38,937)
(136,278)
Payments for intangible assets
-
(197,786)
Warranty repayment
(144,436)
-
Net cash (used in) investing activities
(183,373)
(334,064)
Cash flows from financing activities
Proceeds from issue of shares and options
27,39
1,775,000
2,125,000
Payment of capital raising costs
27
(135,522)
(171,893)
Repayment of lease liabilities
39
(869,084)
(728,679)
Net cash from financing activities
770,394
1,224,428
Net increase/(decrease) in cash and cash equivalents
1,758,132
(640,155)
Cash and cash equivalents at the beginning of the financial year
1,268,293
1,924,767
Effects of exchange rate changes on cash and cash equivalents
(42,640)
(16,319)
Cash and cash equivalents at the end of the financial year
10
2,983,785
1,268,293
DXN Limited
Notes to the consolidated financial statements
30 June 2024
30
Note 1. General information
The financial statements cover DXN Limited and the entities it controlled (together referred to as the 'Group') at the end of, or
during, the year. The financial statements are presented in Australian dollars, which is DXN Limited's functional and
presentation currency.
DXN Limited is a listed public company limited by shares, incorporated and domiciled in Australia. Its registered office and
principal place of business is:
c/o Flexispace
Suite 2, Level 16
No. 1 Martin Place
Sydney NSW 2000
A description of the nature of the Group's operations and its principal activities are included in the directors' report, which is
not part of the financial statements.
The financial statements were authorised for issue, in accordance with a resolution of directors, on 30 August 2024. The
directors have the power to amend and reissue the financial statements.
Note 2. Material accounting policy information
The accounting policies that are material to the Group are set out below. The accounting policies adopted are consistent with
those of the previous financial year, unless otherwise stated.
New or amended Accounting Standards and Interpretations adopted
The Group has adopted all of the new or amended Accounting Standards and Interpretations issued by the Australian
Accounting Standards Board ('AASB') that are mandatory for the current reporting period. The adoption of these Accounting
Standards and Interpretations did not have any significant impact on the financial performance or position of the Group.
Any new or amended Accounting Standards or Interpretations that are not yet mandatory have not been early adopted.
Basis of preparation
These general purpose financial statements have been prepared in accordance with Australian Accounting Standards and
Interpretations issued by the Australian Accounting Standards Board ('AASB') and the Corporations Act 2001, as appropriate
for for-profit oriented entities. These financial statements also comply with International Financial Reporting Standards as
issued by the International Accounting Standards Board ('IASB').
Historical cost convention
The financial statements have been prepared under the historical cost convention except for liabilities for cash-settled share-
based payment arrangements which are measured at fair value.
Critical accounting estimates
The preparation of the financial statements requires the use of certain critical accounting estimates. It also requires
management to exercise its judgement in the process of applying the Group's accounting policies. The areas involving a
higher degree of judgement or complexity, or areas where assumptions and estimates are significant to the financial
statements, are disclosed in note 3.
Going concern
These financial statements 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 Group incurred a loss
of $2,303,165 (FY23: a loss of $9,612,620) for the period ended 30 June 2024 and operating cash inflow of $1,171,111 (FY23:
cash outflow of $1,530,519). The working capital deficit at balance date is $1,419,921 (FY23: surplus $2,099,077).
The ability of the Group to continue to pay its debts as and when they fall due is dependent upon the Group refinancing debt
facilities, successfully raising additional share capital, and generating ongoing revenue from new and existing moduluar DC
contracts and data centre operations.
DXN Limited
Notes to the consolidated financial statements
30 June 2024
Note 2. Material accounting policy information (continued)
31
The directors are of the view that there is sufficient working capital in the Group to pay its debts as and when they fall due on
the basis that DXN continues to generate ongoing revenues at current levels. The directors believe it is appropriate to prepare
these accounts on a going concern basis because:
●
of contracts which will generate $8.9m in revenue over the next 12-month period;
●
a developing pipeline of contracts that generate revenues over a 12–24-month period;
●
positive operating cash flows from operations with a cash balance of $2,983,785 as at 30 June 2024;
●
●
●
recurring revenue from DC operations;
DC assets reliable at more than book value; and
the ability to raise capital.
The financial statements have been prepared on the basis that the Group 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.
Parent entity information
In accordance with the Corporations Act 2001, these financial statements present the results of the Group only. Supplementary
information about the parent entity is disclosed in note 37.
Principles of consolidation
The consolidated financial statements incorporate the assets and liabilities of all subsidiaries of DXN Limited ('Company' or
'parent entity') as at 30 June 2024 and the results of all subsidiaries for the year then ended. DXN Limited and its subsidiaries
together are referred to in these financial statements as the 'Group'.
Subsidiaries are all those entities over which the Group has control. The Group controls an entity when the Group is exposed
to, or has rights to, variable returns from its involvement with the entity and has the ability to affect those returns through its
power to direct the activities of the entity. Subsidiaries are fully consolidated from the date on which control is transferred to
the Group. They are de-consolidated from the date that control ceases.
Intercompany transactions, balances and unrealised gains on transactions between entities in the Group are eliminated.
Unrealised losses are also eliminated unless the transaction provides evidence of the impairment of the asset transferred.
Accounting policies of subsidiaries have been changed where necessary to ensure consistency with the policies adopted by
the Group.
The acquisition of subsidiaries is accounted for using the acquisition method of accounting. A change in ownership interest,
without the loss of control, is accounted for as an equity transaction, where the difference between the consideration
transferred and the book value of the share of the non-controlling interest acquired is recognised directly in equity attributable
to the parent.
Where the Group loses control over a subsidiary, it derecognises the assets including goodwill, liabilities and non-controlling
interest in the subsidiary together with any cumulative translation differences recognised in equity. The Group recognises the
fair value of the consideration received and the fair value of any investment retained together with any gain or loss in profit or
loss.
Operating segments
Operating segments are presented using the 'management approach', where the information presented is on the same basis
as the internal reports provided to the Chief Operating Decision Makers ('CODM'). The CODM is responsible for the allocation
of resources to operating segments and assessing their performance.
Foreign currency translation
The financial statements are presented in Australian dollars, which is DXN Limited's functional and presentation currency.
Foreign currency transactions
Foreign currency transactions are translated into the Company’s functional currency using the exchange rates prevailing at
the dates of the transactions. Foreign exchange gains and losses resulting from the settlement of such transactions and from
the translation at financial year-end exchange rates of monetary assets and liabilities denominated in foreign currencies are
recognised in profit or loss.
DXN Limited
Notes to the consolidated financial statements
30 June 2024
Note 2. Material accounting policy information (continued)
32
Foreign operations
The assets and liabilities of foreign operations are translated into Australian dollars using the exchange rates at the reporting
date. The revenues and expenses of foreign operations are translated into Australian dollars using the average exchange
rates, which approximate the rates at the dates of the transactions, for the period. All resulting foreign exchange differences
are recognised in other comprehensive income through the foreign currency reserve in equity.
The foreign currency reserve is recognised in profit or loss when the foreign operation or net investment is disposed of.
Revenue recognition
The Group recognises revenue as follows:
Revenue from contracts with customers
Revenue is recognised based on the transfer of control of goods or services to the customer, reflecting the consideration to
which the Group expects to be entitled. For each contract, the Group first identifies the contract and the performance
obligations within it. The transaction price is then determined, taking into account estimates of variable consideration and the
time value of money. This transaction price is allocated to each performance obligation based on their relative stand-alone
selling prices. Revenue is recognised when or as performance obligations are satisfied. For contracts where performance
obligations are satisfied over time, the Group uses the percentage-of-completion method. This method recognises revenue
based on the progress toward completing the performance obligations, measured using either input methods (such as costs
incurred) or output methods (such as milestones achieved), whichever method more accurately reflects the transfer of control
to the customer.
Variable consideration within the transaction price, if any, reflects concessions provided to the customer such as discounts,
rebates and refunds, any potential bonuses receivable from the customer and any other contingent events. Such estimates
are determined using either the 'expected value' or 'most likely amount' method. The measurement of variable consideration
is subject to a constraining principle whereby revenue will only be recognised to the extent that it is highly probable that a
significant reversal in the amount of cumulative revenue recognised will not occur. The measurement constraint continues
until the uncertainty associated with the variable consideration is subsequently resolved. Amounts received that are subject
to the constraining principle are recognised as a refund liability.
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 Group. Any upfront discounts provided to
customers are amortised over the contract term. This approach aligns with AASB 15, as revenue is deferred and recognised
over the duration of the contract with the customer. Since the performance obligation is fulfilled over time, the revenue is
recognised progressively over the contract period.
DXN module sales
The Group custom-builds turnkey data centre modules for customers. Revenue is recognised based on key milestones and
in proportion to the stage of completion of the work performed as of the reporting date. Revenue from these sales is determined
by the price stipulated in the contract, including any agreed-upon variations to the contract amount. Revenue is recognised
only to the extent that there is a high probability that a significant reversal of revenue will not occur. Since the performance
obligation is fulfilled over time, the revenue is recognised progressively over the duration of the project.
Incremental costs of obtaining a contract that are expected to be recovered are capitalised as a contract asset and amortised
over the term of the contract with the customer.
Interest
Interest revenue is recognised as it accrues using the effective interest method. This method calculates the amortised cost of
a financial asset and allocates interest income over the relevant period using the effective interest rate. The effective interest
rate is the rate that exactly discounts estimated future cash receipts over the expected life of the financial asset to the asset's
net carrying amount.
Other revenue
Other revenue is recognised when it is received or when the right to receive payment is established.
DXN Limited
Notes to the consolidated financial statements
30 June 2024
Note 2. Material accounting policy information (continued)
33
Research and development tax incentive claim
The Group recognises refundable R&D tax offset as a government grant under AASB120 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 Group. Accordingly, revenues from the receipt of refundable R&D tax offset
is recognised only at a point in time.
Income tax
The income tax expense or benefit for the period is the tax payable on that period's taxable income based on the applicable
income tax rate for each jurisdiction, adjusted by the changes in deferred tax assets and liabilities attributable to temporary
differences, unused tax losses and the adjustment recognised for prior periods, where applicable.
An income tax benefit will arise for the financial year where an income tax loss is incurred and, where permitted to do so, is
carried-back against a qualifying prior period’s tax payable to generate a refundable tax offset.
Deferred tax assets and liabilities are recognised for temporary differences at the tax rates expected to be applied when the
assets are recovered or liabilities are settled, based on those tax rates that are enacted or substantively enacted, except for:
●
when the deferred income tax asset or liability arises from the initial recognition of goodwill or an asset or liability in a
transaction that is not a business combination and that, at the time of the transaction, affects neither the accounting nor
taxable profits; or
●
when the taxable temporary difference is associated with interests in subsidiaries, associates or joint ventures, and the
timing of the reversal can be controlled and it is probable that the temporary difference will not reverse in the foreseeable
future.
Deferred tax assets are recognised for deductible temporary differences and unused tax losses only if it is probable that future
taxable amounts will be available to utilise those temporary differences and losses.
The carrying amount of recognised and unrecognised deferred tax assets are reviewed at each reporting date. Deferred tax
assets recognised are reduced to the extent that it is no longer probable that future taxable profits will be available for the
carrying amount to be recovered. Previously unrecognised deferred tax assets are recognised to the extent that it is probable
that there are future taxable profits available to recover the asset.
Deferred tax assets and liabilities are offset only where there is a legally enforceable right to offset current tax assets against
current tax liabilities and deferred tax assets against deferred tax liabilities; and they relate to the same taxable authority on
either the same taxable entity or different taxable entities which intend to settle simultaneously.
Current and non-current classification
Assets and liabilities are presented in the statement of financial position based on current and non-current classification.
An asset is classified as current when: it is either expected to be realised or intended to be sold or consumed in the Group's
normal operating cycle; it is held primarily for the purpose of trading; it is expected to be realised within 12 months after the
reporting period; or the asset is cash or cash equivalent unless restricted from being exchanged or used to settle a liability for
at least 12 months after the reporting period. All other assets are classified as non-current.
A liability is classified as current when: it is either expected to be settled in the Group's normal operating cycle; it is held
primarily for the purpose of trading; it is due to be settled within 12 months after the reporting period; or there is no unconditional
right to defer the settlement of the liability for at least 12 months after the reporting period. All other liabilities are classified as
non-current.
Deferred tax assets and liabilities are always classified as non-current.
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.
DXN Limited
Notes to the consolidated financial statements
30 June 2024
Note 2. Material accounting policy information (continued)
34
Trade and other receivables
Trade receivables are initially recognised at fair value and subsequently measured at amortised cost using the effective
interest method, less any allowance for expected credit losses. Trade receivables are generally due for settlement within 30
days.
The Group has applied the simplified approach to measuring expected credit losses, which uses a lifetime expected loss
allowance. To measure the expected credit losses, trade receivables have been grouped based on days overdue.
Other receivables are recognised at amortised cost, less any allowance for expected credit losses.
Inventories
Stock on hand is stated at the lower of cost and net realisable value. Cost comprises of purchase and delivery costs, net of
rebates and discounts received or receivable.
Net realisable value is the estimated selling price in the ordinary course of business less the estimated costs of completion
and the estimated costs necessary to make the sale.
Non-current assets or disposal groups classified as held for sale
Non-current assets and assets of disposal groups are classified as held for sale if their carrying amount will be recovered
principally through a sale transaction rather than through continued use. They are measured at the lower of their carrying
amount and fair value less costs of disposal. For non-current assets or assets of disposal groups to be classified as held for
sale, they must be available for immediate sale in their present condition and their sale must be highly probable.
An impairment loss is recognised for any initial or subsequent write down of the non-current assets and assets of disposal
groups to fair value less costs of disposal. A gain is recognised for any subsequent increases in fair value less costs of disposal
of a non-current assets and assets of disposal groups, but not in excess of any cumulative impairment loss previously
recognised.
Non-current assets are not depreciated or amortised while they are classified as held for sale. Interest and other expenses
attributable to the liabilities of assets held for sale continue to be recognised.
Non-current assets classified as held for sale and the assets of disposal groups classified as held for sale are presented
separately on the face of the statement of financial position, in current assets. The liabilities of disposal groups classified as
held for sale are presented separately on the face of the statement of financial position, in current liabilities.
Impairment of financial assets
The Group recognises a loss allowance for expected credit losses on financial assets which are either measured at amortised
cost or fair value through other comprehensive income. The measurement of the loss allowance depends upon the Group's
assessment at the end of each reporting period as to whether the financial instrument's credit risk has increased significantly
since initial recognition, based on reasonable and supportable information that is available, without undue cost or effort to
obtain.
Where there has not been a significant increase in exposure to credit risk since initial recognition, a 12-month expected credit
loss allowance is estimated. This represents a portion of the asset's lifetime expected credit losses that is attributable to a
default event that is possible within the next 12 months. Where a financial asset has become credit impaired or where it is
determined that credit risk has increased significantly, the loss allowance is based on the asset's lifetime expected credit
losses. The amount of expected credit loss recognised is measured on the basis of the probability weighted present value of
anticipated cash shortfalls over the life of the instrument discounted at the original effective interest rate.
Property, plant and equipment
Plant and equipment is stated at historical cost less accumulated depreciation and impairment. Historical cost includes
expenditure that is directly attributable to the acquisition of the items.
DXN Limited
Notes to the consolidated financial statements
30 June 2024
Note 2. Material accounting policy information (continued)
35
Depreciation is calculated on a straight-line basis to write off the net cost of each item of property, plant and equipment over
their expected useful lives at the following rates:
Leasehold improvements
10%-67%
Plant and equipment
13%-73%
Motor vehicles
25%
Office equipment
20%-67%
DC modules
10%-73%
ICT hardware
40%-67%
The residual values, useful lives and depreciation methods are reviewed, and adjusted if appropriate, at each reporting date.
Leasehold improvements are depreciated over the unexpired period of the lease or the estimated useful life of the assets,
whichever is shorter.
An item of property, plant and equipment is derecognised upon disposal or when there is no future economic benefit to the
Group. Gains and losses between the carrying amount and the disposal proceeds are taken to profit or loss.
Right-of-use assets
A right-of-use asset is recognised at the commencement date of a lease. The right-of-use asset is measured at cost, which
comprises the initial amount of the lease liability, adjusted for, as applicable, any lease payments made at or before the
commencement date net of any lease incentives received, any initial direct costs incurred, and, except where included in the
cost of inventories, an estimate of costs expected to be incurred for dismantling and removing the underlying asset, and
restoring the site or asset.
Right-of-use assets are depreciated on a straight-line basis over the unexpired period of the lease or the estimated useful life
of the asset, whichever is the shorter. Where the Group expects to obtain ownership of the leased asset at the end of the
lease term, the depreciation is over its estimated useful life. Right-of use assets are subject to impairment or adjusted for any
remeasurement of lease liabilities.
The Group has elected not to recognise a right-of-use asset and corresponding lease liability for short term leases with terms
of 12 months or less and leases of low-value assets. Lease payments on these assets are expensed to profit or loss as
incurred.
Intangible assets
Intangible assets acquired as part of a business combination, other than goodwill, are initially measured at their fair value at
the date of the acquisition. Intangible assets acquired separately are initially recognised at cost. Indefinite life intangible assets
are not amortised and are subsequently measured at cost less any impairment. Finite life intangible assets are subsequently
measured at cost less amortisation and any impairment. The gains or losses recognised in profit or loss arising from the
derecognition of intangible assets are measured as the difference between net disposal proceeds and the carrying amount of
the intangible asset. The method and useful lives of finite life intangible assets are reviewed annually. Changes in the expected
pattern of consumption or useful life are accounted for prospectively by changing the amortisation method or period.
Goodwill
Goodwill arises on the acquisition of a business. Goodwill is not amortised. Instead, goodwill is tested annually for impairment,
or more frequently if events or changes in circumstances indicate that it might be impaired, and is carried at cost less
accumulated impairment losses. Impairment losses on goodwill are taken to profit or loss and are not subsequently reversed.
Research and development (Module development)
Research costs are expensed in the period in which they are incurred. Development costs are capitalised when it is probable
that the project will be a success considering its commercial and technical feasibility; the Group is able to use or sell the asset;
the Group has sufficient resources and intent to complete the development; and its costs can be measured reliably. Capitalised
development costs are amortised on a straight-line basis over the period of their expected benefit, being their finite life of 10
years.
Customer contracts
Customer contracts acquired in a business combination are amortised on a straight-line basis over the period of their expected
benefit, being finite life of 3 years for Tasmania and 10 years for Secure Data Centre.
DXN Limited
Notes to the consolidated financial statements
30 June 2024
Note 2. Material accounting policy information (continued)
36
Impairment of non-financial assets
Goodwill and other intangible assets that have an indefinite useful life are not subject to amortisation and are tested annually
for impairment, or more frequently if events or changes in circumstances indicate that they might be impaired. Other non-
financial assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount
may not be recoverable. An impairment loss is recognised for the amount by which the asset's carrying amount exceeds its
recoverable amount.
Recoverable amount is the higher of an asset's fair value less costs of disposal and value-in-use. The value-in-use is the
present value of the estimated future cash flows relating to the asset using a pre-tax discount rate specific to the asset or
cash-generating unit to which the asset belongs. Assets that do not have independent cash flows are grouped together to
form a cash-generating unit.
Trade and other payables
Trade and other payables represent liabilities for goods and services provided to the Group prior to the end of the financial
year and which are unpaid. Due to their short term nature they are measured at amortised cost and are not discounted. The
amounts are unsecured and are usually paid within 30 days of recognition.
Contract liabilities
Contract liabilities represent the Group's obligation to transfer goods or services to a customer and are recognised when a
customer pays consideration, or when the Group recognises a receivable to reflect its unconditional right to consideration
(whichever is earlier) before the Group has transferred the goods or services to the customer.
Borrowings
Loans and borrowings are initially recognised at the fair value of the consideration received, net of transaction costs. They are
subsequently measured at amortised cost using the effective interest method.
Lease liabilities
A lease liability is recognised at the commencement date of a lease. The lease liability is initially recognised at the present
value of the lease payments to be made over the term of the lease, discounted using the interest rate implicit in the lease or,
if that rate cannot be readily determined, the Group's incremental borrowing rate. Lease payments comprise of fixed payments
less any lease incentives receivable, variable lease payments that depend on an index or a rate, amounts expected to be paid
under residual value guarantees, exercise price of a purchase option when the exercise of the option is reasonably certain to
occur, and any anticipated termination penalties. The variable lease payments that do not depend on an index or a rate are
expensed in the period in which they are incurred.
Lease liabilities are measured at amortised cost using the effective interest method. The carrying amounts are remeasured if
there is a change in the following: future lease payments arising from a change in an index or a rate used; residual guarantee;
lease term; certainty of a purchase option and termination penalties. When a lease liability is remeasured, an adjustment is
made to the corresponding right-of use asset, or to profit or loss if the carrying amount of the right-of-use asset is fully written
down.
Finance costs
Finance costs attributable to qualifying assets are capitalised as part of the asset. All other finance costs are expensed in the
period in which they are incurred.
Warrants
Warrants issued by the Group in connection with borrowings are classified as either financial liabilities or as equity in
accordance with the substance of the contractual arrangement. The entire financial instrument (being the loan and warrants)
is accounted for as a compound financial instrument and for warrants that meet the definition of equity, the debt component
is fair valued on initial recognition, and the residual amount is allocated to the equity (warrant) component. There is no
subsequent remeasurement of the warrants after initial recognition. For warrants that meet the definition of a financial liability,
these are measured at fair value at initial recognition and are subsequently measured at fair value through profit or loss at the
end of each reporting period.
DXN Limited
Notes to the consolidated financial statements
30 June 2024
Note 2. Material accounting policy information (continued)
37
Employee benefits
Short term employee benefits
Liabilities for wages and salaries, including non-monetary benefits, annual leave and long service leave expected to be settled
wholly within 12 months of the reporting date are measured at the amounts expected to be paid when the liabilities are settled.
Other long term employee benefits
The liability for annual leave and long service leave not expected to be settled within 12 months of the reporting date are
measured at the present value of expected future payments to be made in respect of services provided by employees up to
the reporting date. Consideration is given to expected future wage and salary levels, experience of employee departures and
periods of service. Expected future payments are discounted using market yields at the reporting date on high quality corporate
bonds with terms to maturity and currency that match, as closely as possible, the estimated future cash outflows.
Defined contribution superannuation expense
Contributions to defined contribution superannuation plans are expensed in the period in which they are incurred.
Share-based payments
Equity-settled compensation benefits are provided to employees.
Equity-settled transactions are awards of shares, or options over shares, that are provided to employees in exchange for the
rendering of services. Cash-settled transactions are awards of cash for the exchange of services, where the amount of cash
is determined by reference to the share price.
The cost of equity-settled transactions are measured at fair value on grant date. Fair value is independently determined using
either the Binomial or Black-Scholes option pricing model that takes into account the exercise price, the term of the option,
the impact of dilution, the share price at grant date and expected price volatility of the underlying share, the expected dividend
yield and the risk free interest rate for the term of the option, together with non-vesting conditions that do not determine whether
the Group receives the services that entitle the employees to receive payment. No account is taken of any other vesting
conditions.
The cost of equity-settled transactions are recognised as an expense with a corresponding increase in equity over the vesting
period. The cumulative charge to profit or loss is calculated based on the grant date fair value of the award, the best estimate
of the number of awards that are likely to vest and the expired portion of the vesting period. The amount recognised in profit
or loss for the period is the cumulative amount calculated at each reporting date less amounts already recognised in previous
periods.
All changes in the liability are recognised in profit or loss. The ultimate cost of cash-settled transactions is the cash paid to
settle the liability.
Market conditions are taken into consideration in determining fair value. Therefore any awards subject to market conditions
are considered to vest irrespective of whether or not that market condition has been met, provided all other conditions are
satisfied.
If equity-settled awards are modified, as a minimum an expense is recognised as if the modification has not been made. An
additional expense is recognised, over the remaining vesting period, for any modification that increases the total fair value of
the share-based compensation benefit as at the date of modification.
If the non-vesting condition is within the control of the Group or employee, the failure to satisfy the condition is treated as a
cancellation. If the condition is not within the control of the Group or employee and is not satisfied during the vesting period,
any remaining expense for the award is recognised over the remaining vesting period, unless the award is forfeited.
If equity-settled awards are cancelled, it is treated as if it has vested on the date of cancellation, and any remaining expense
is recognised immediately. If a new replacement award is substituted for the cancelled award, the cancelled and new award
is treated as if they were a modification.
DXN Limited
Notes to the consolidated financial statements
30 June 2024
Note 2. Material accounting policy information (continued)
38
Fair value measurement
When an asset or liability, financial or non-financial, is measured at fair value for recognition or disclosure purposes, the fair
value is based on the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between
market participants at the measurement date; and assumes that the transaction will take place either: in the principal market;
or in the absence of a principal market, in the most advantageous market.
Fair value is measured using the assumptions that market participants would use when pricing the asset or liability, assuming
they act in their economic best interests. For non-financial assets, the fair value measurement is based on its highest and best
use. Valuation techniques used to measure fair value are those that are appropriate in the circumstances and which maximise
the use of relevant observable inputs and minimise the use of unobservable inputs.
Issued capital
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.
Earnings per share
Basic earnings per share
Basic earnings per share is calculated by dividing the profit attributable to the owners of DXN Limited, excluding any costs of
servicing equity other than ordinary shares, by the weighted average number of ordinary shares outstanding during the
financial year, adjusted for bonus elements in ordinary shares issued during the financial year.
Diluted earnings per share
Diluted earnings per share adjusts the figures used in the determination of basic earnings per share to take into account the
after income tax effect of interest and other financing costs associated with dilutive potential ordinary shares and the weighted
average number of additional ordinary shares that would have been outstanding assuming conversion of all dilutive potential
ordinary shares.
Goods and Services Tax ('GST') and other similar taxes
Revenues, expenses and assets are recognised net of the amount of associated GST, unless the GST incurred is not
recoverable from the tax authority. In this case it is recognised as part of the cost of the acquisition of the asset or as part of
the expense.
Receivables and payables are stated inclusive of the amount of GST receivable or payable. The net amount of GST
recoverable from, or payable to, the tax authority is included in other receivables or other payables in the statement of financial
position.
Cash flows are presented on a gross basis. The GST components of cash flows arising from investing or financing activities
which are recoverable from, or payable to the tax authority, are presented as operating cash flows.
Commitments and contingencies are disclosed net of the amount of GST recoverable from, or payable to, the tax authority.
New Accounting Standards and Interpretations not yet mandatory or early adopted
Australian Accounting Standards and Interpretations that have recently been issued or amended but are not yet mandatory,
have not been early adopted by the Group for the annual reporting period ended 30 June 2024. The Group has not yet
assessed the impact of these new or amended Accounting Standards and Interpretations.
DXN Limited
Notes to the consolidated financial statements
30 June 2024
39
Note 3. Critical accounting judgements, estimates and assumptions
The preparation of the financial statements requires management to make judgements, estimates and assumptions that affect
the reported amounts in the financial statements. Management continually evaluates its judgements and estimates in relation
to assets, liabilities, contingent liabilities, revenue and expenses. Management bases its judgements, estimates and
assumptions on historical experience and on other various factors, including expectations of future events, management
believes to be reasonable under the circumstances. The resulting accounting judgements and estimates will seldom equal the
related actual results. The judgements, estimates and assumptions that have a significant risk of causing a material adjustment
to the carrying amounts of assets and liabilities (refer to the respective notes) within the next financial year are discussed
below.
Share-based payment transactions
The Group measures the cost of equity-settled transactions with employees by reference to the fair value of the equity
instruments at the date at which they are granted. The fair value is determined by using the Binomial or Black-Scholes model
taking into account the terms and conditions upon which the instruments were granted. The accounting estimates and
assumptions relating to equity-settled share-based payments would have no impact on the carrying amounts of assets and
liabilities within the next annual reporting period but may impact profit or loss and equity.
Allowance for expected credit losses
The allowance for expected credit losses assessment requires a degree of estimation and judgement. It is based on the
lifetime expected credit loss, grouped based on days overdue, and makes assumptions to allocate an overall expected credit
loss rate for each group. These assumptions include recent sales experience and historical collection rates.
Estimation of useful lives of assets
The Group determines the estimated useful lives and related depreciation and amortisation charges for its property, plant and
equipment and finite life 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.
Goodwill and other indefinite life intangible assets
The Group tests annually, or more frequently if events or changes in circumstances indicate impairment, whether goodwill
and other indefinite life intangible assets have suffered any impairment, in accordance with the accounting policy stated in
note 2. The recoverable amounts of cash-generating units have been determined based on value-in-use calculations. These
calculations require the use of assumptions, including estimated discount rates based on the current cost of capital and growth
rates of the estimated future cash flows.
Impairment of non-financial assets other than goodwill and other indefinite life intangible assets
The Group assesses impairment of non-financial assets other than goodwill and other indefinite life intangible assets at each
reporting date by evaluating conditions specific to the Group and to the particular asset that may lead to impairment. If an
impairment trigger exists, the recoverable amount of the asset is determined. This involves fair value less costs of disposal or
value-in-use calculations, which incorporate a number of key estimates and assumptions. This involves assessing the value
of the asset at fair value less costs of disposal and using value-in-use models which incorporate a number of key estimates
and assumptions.
Income tax
The Group is subject to income taxes in the jurisdictions in which it operates. Significant judgement is required in determining
the provision for income tax. There are many transactions and calculations undertaken during the ordinary course of business
for which the ultimate tax determination is uncertain. The Group recognises liabilities for anticipated tax audit issues based on
the Group's current understanding of the tax law. Where the final tax outcome of these matters is different from the carrying
amounts, such differences will impact the current and deferred tax provisions in the period in which such determination is
made.
Recovery of deferred tax assets
Deferred tax assets are recognised for deductible temporary differences only if the Group considers it is probable that future
taxable amounts will be available to utilise those temporary differences and losses.
DXN Limited
Notes to the consolidated financial statements
30 June 2024
Note 3. Critical accounting judgements, estimates and assumptions (continued)
40
Employee benefits provision
As discussed in note 2, the liability for employee benefits expected to be settled more than 12 months from the reporting date
are recognised and measured at the present value of the estimated future cash flows to be made in respect of all employees
at the reporting date. In determining the present value of the liability, estimates of attrition rates and pay increases through
promotion and inflation have been taken into account.
Lease make good provision
A provision has been made for the present value of anticipated costs for future restoration of leased premises. The provision
includes future cost estimates associated with closure of the premises. The calculation of this provision requires assumptions
such as application of closure dates and cost estimates. The provision recognised for each site is periodically reviewed and
updated based on the facts and circumstances available at the time. Changes to the estimated future costs for sites are
recognised in the statement of financial position by adjusting the asset and the provision. Reductions in the provision that
exceed the carrying amount of the asset will be recognised in profit or loss. Make good provisions are recorded as part of the
Group’s lease liabilities.
Note 4. Operating segments
Identification of reportable operating segments
The Group is organised into two operating segments: Data centre manufacturing and Data centre operations. These operating
segments are based on the internal reports that are reviewed and used by the Chief Executive Officer ('CEO') and the Group's
Executive Leadership Team (who are identified as the Chief Operating Decision Makers ('CODM')) in assessing performance
and in determining the allocation of resources. There is no aggregation of operating segments.
The information reported to the CODM on a monthly basis is the segment profit that represents the profit earned by each
segment without allocation of the share of central administration costs including directors' salaries, finance income, non-
operating gains and losses in respect of financial instruments and finance costs, and income tax expense.
Major customers
The Group has a number of customers to which it provides services and products.
Data centre manufacturing
The Group supplies a number of customers, of which during the year ended 30 June 2024 one accounted for 17.6% of revenue
(2023: main customer was 49.8%). The next most significant contributed 16.8% (2023: 16.02%).
Data centre operations
The Group supplies a number of customers, of which during the year ended 30 June 2024 one accounted for 31.9% of revenue
(2023: main customer was 31.8%).
There were no intersegment sales during the reporting periods.
DXN Limited
Notes to the consolidated financial statements
30 June 2024
Note 4. Operating segments (continued)
41
Operating segment information
Data centre
manufacturing
Data centre
operations
Other
(Corporate)
Total
Consolidated - 2024
$
$
$
$
Revenue
Revenue from external customers
8,090,918
2,664,436
-
10,755,354
Other income
105,670
117,443
275,000
498,113
Total revenue
8,196,588
2,781,879
275,000
11,253,467
Results
Loss before income tax
1,981,051
(944,883)
(3,339,333)
(2,303,165)
Income tax
-
-
-
-
Loss after income tax
1,981,051
(944,883)
(3,339,333)
(2,303,165)
Assets
Segment assets
3,479,997
7,680,602
2,999,462
14,160,061
Total assets
14,160,061
Liabilities
Segment liabilities
9,875,064
3,050,313
1,646,957
14,572,334
Total liabilities
14,572,334
Data centre
manufacturing
Data centre
operations
Other
(Corporate)
Total
Consolidated - 2023
$
$
$
$
Revenue
Revenue from external customers
3,838,743
2,737,447
-
6,576,190
Other income
1,107,097
41,196
26,887
1,175,180
Total revenue
4,945,840
2,778,643
26,887
7,751,370
Results
Loss before income tax
(375,371)
(6,592,192)
(2,645,057)
(9,612,620)
Income tax
-
-
-
-
Loss after income tax
(375,371)
(6,592,192)
(2,645,057)
(9,612,620)
Assets
Segment assets
1,949,774
9,592,075
6,939,523
18,481,372
Total assets
18,481,372
Liabilities
Segment liabilities
2,724,339
10,038,917
5,893,260
18,656,516
Total liabilities
18,656,516
Assets used jointly by reportable segments are allocated on the basis of the revenues earned by the individual reportable
segments.
All revenue is derived in Australia.
DXN Limited
Notes to the consolidated financial statements
30 June 2024
42
Note 5. Revenue
Consolidated
2024
2023
$
$
Revenue from contracts with customers
Sales to customers
10,755,354
6,576,190
100% of the Group's revenue from external customers is recognised over time.
All revenue is derived in Australia.
Note 6. Other income
Consolidated
2024
2023
$
$
Research and development tax incentive claim
-
1,029,786
Export marketing development grant
69,174
36,600
Government wage subsidies
6,540
30,967
Net foreign exchange gain
-
118
Lease liability reversed1
24,811
-
Other2
397,588
77,709
Other income
498,113
1,175,180
1 Liability adjustment for the Sydney data centre facility.
2 Includes sublease income $70,550 and change in fair value of warrant liability of $275,000.
DXN Limited
Notes to the consolidated financial statements
30 June 2024
43
Note 7. Expenses
Consolidated
2024
2023
$
$
Loss before income tax includes the following specific expenses:
Depreciation
Depreciation - property, plant and equipment
512,551
1,497,055
Depreciation - right-of-use assets
832,842
1,040,919
Total depreciation
1,345,393
2,537,974
Amortisation
Amortisation - intangibles
151,581
580,025
Total depreciation and amortisation
1,496,974
3,117,999
Impairment of non-financial assets
Plant and equipment
-
3,536,377
Intangibles
-
24,912
Total impairment
-
3,561,289
Finance costs
Interest and finance charges paid/payable on borrowings
982,093
710,793
Interest and finance charges paid/payable on lease liabilities
468,042
820,563
1,450,135
1,531,356
Net foreign exchange loss (included in administration expenses)
Net foreign exchange loss
20,353
-
Superannuation expense
Defined contribution superannuation expense
215,130
320,453
Employee benefits expense excluding superannuation
Employee benefits expense excluding superannuation
2,462,544
3,036,109
DXN Limited
Notes to the consolidated financial statements
30 June 2024
44
Note 8. Income tax
Consolidated
2024
2023
$
$
Income tax expense
Current tax
-
-
Deferred tax - origination and reversal of temporary differences
-
-
Aggregate income tax expense
-
-
Numerical reconciliation of income tax expense and tax at the statutory rate
Loss before income tax expense
(2,303,165)
(9,612,620)
Tax at the statutory tax rate of 25%
(575,791)
(2,403,155)
Tax effect amounts which are not deductible/(taxable) in calculating taxable income:
Non-deductible expenditure
26,673
60,441
Non-assessable income
-
(257,446)
Foreign tax withheld
103,676
-
(445,442)
(2,600,160)
Current year tax losses not recognised
623,539
1,382,374
Other deferred tax balances not recognised
(178,097)
1,217,786
Income tax expense
-
-
Consolidated
2024
2023
$
$
Deferred tax assets not recognised
Deferred tax assets not recognised comprises temporary differences attributable to:
Carried forward revenue losses
8,335,553
6,056,790
Leases
1,038,686
2,693,995
Plant and equipment
1,014,012
1,014,012
Capital raising costs
34,424
125,619
Provisions and accruals
65,735
52,970
Customer contracts
444,837
410,793
Borrowing costs
11,000
-
Income in advance
-
104,167
Total deferred tax assets not recognised
10,944,247
10,458,346
The above potential tax benefit, which excludes tax losses, for deductible temporary differences has not been recognised in
the statement of financial position as the recovery of this benefit is uncertain.
DXN Limited
Notes to the consolidated financial statements
30 June 2024
Note 8. Income tax (continued)
45
Consolidated
2024
2023
$
$
Deferred tax asset
Deferred tax asset comprises temporary differences attributable to:
Amounts recognised in profit or loss:
Carried forward revenue losses
880,986
2,536,210
Set-off of deferred tax liability
(880,986)
(2,536,210)
Deferred tax asset
-
-
Consolidated
2024
2023
$
$
Deferred tax liability
Deferred tax liability comprises temporary differences attributable to:
Amounts recognised in profit or loss:
Right-of-use assets
880,986
2,536,210
Set-off against deferred tax asset
(880,986)
(2,536,210)
Deferred tax liability
-
-
The tax benefits of the above deferred tax assets will only be obtained if:
(i)
the Group derives future assessable income of a nature and of an amount sufficient to enable the benefits to be utilised;
(ii)
the Group continues to comply with the conditions for deductibility imposed by law; and
(iii) no changes in income tax legislation adversely affect the Group in utilising the benefits.
Note 9. Earnings per share
Consolidated
2024
2023
$
$
Loss after income tax attributable to the owners of DXN Limited
(2,303,165)
(9,612,620)
Cents
Cents
Basic earnings per share
(1.55)
(8.52)
Diluted earnings per share
(1.55)
(8.52)
Number
Number
Weighted average number of ordinary shares used in calculating basic earnings per share
148,710,218
112,882,175
Weighted average number of ordinary shares used in calculating diluted earnings per share
148,710,218
112,882,175
At 30 June 2024 and 30 June 2023, options, warrants and performance rights over ordinary shares were excluded from the
calculation of the weighted average number of ordinary shares used in calculating diluted earnings per share due to being
anti-dilutive, as the Group reported a loss for the period.
The weighted average number of ordinary shares for 2023 has been restated for the effect of the consolidation of shares (1
for every 15 ordinary shares held) completed on 12 February 2024, in accordance with AASB 133 'Earnings per share'. Refer
to note 27.
DXN Limited
Notes to the consolidated financial statements
30 June 2024
Note 9. Earnings per share (continued)
46
Number
Weighted average number of ordinary shares used in calculating basic earnings per share (before
restatement)
1,693,232,645
Adjustment required by AASB 133 'Earnings per share'
(1,580,350,470)
Weighted average number of ordinary shares used in calculating basic earnings per share (after
restatement)
112,882,175
Note 10. Cash and cash equivalents
Consolidated
2024
2023
$
$
Current assets
Cash at bank and on hand
2,983,785
710,209
Reconciliation to cash and cash equivalents at the end of the financial year
The above figures are reconciled to cash and cash equivalents at the end of the financial year
as shown in the statement of cash flows as follows:
Balances as above
2,983,785
710,209
Cash and cash equivalents - classified as held for sale (note 18)
-
558,084
Balance as per statement of cash flows
2,983,785
1,268,293
Note 11. Trade and other receivables
Consolidated
2024
2023
$
$
Current assets
Trade receivables
1,274,197
239,627
Less: Allowance for expected credit losses
(40,485)
(18,311)
1,233,712
221,316
GST receivable
15,037
-
1,248,749
221,316
Allowance for expected credit losses
The Group has recognised a loss of $22,174 in the profit or loss in respect of the expected credit losses for the year ended
30 June 2024 (2023: $18,311).
DXN Limited
Notes to the consolidated financial statements
30 June 2024
Note 11. Trade and other receivables (continued)
47
The ageing of the receivables and allowance for expected credit losses provided for above are as follows:
Expected credit loss rate
Carrying amount
Allowance for expected
credit losses
2024
2023
2024
2023
2024
2023
Consolidated
%
%
$
$
$
$
0 to 30 days
-
7.922%
1,152,950
231,125
-
18,311
30 to 60 days
-
-
-
982
-
-
60 to 90 days
-
-
35,615
-
-
-
over 90 days
47.300%
-
85,632
7,520
40,485
-
1,274,197
239,627
40,485
18,311
Movements in the allowance for expected credit losses are as follows:
Consolidated
2024
2023
$
$
Opening balance
18,311
-
Additional provisions recognised
22,174
18,311
Closing balance
40,485
18,311
Note 12. Inventories/work in progress
Consolidated
2024
2023
$
$
Current assets
Materials and consumables
106,807
234,151
Work in progress - Customers (contract asset)1
265,780
141,554
372,587
375,705
1 Relates to external customers.
Note 13. Bank guarantees and deposits
Consolidated
2024
2023
$
$
Current assets
Module Guarantees1
118,000
-
Non-current assets
Module Guarantees1
674,227
-
5 Parkview Drive, Olympic Park, Sydney NSW2
-
231,385
3 Dampier Road, Welshpool, WA2
33,917
33,917
708,144
265,302
826,144
265,302
DXN Limited
Notes to the consolidated financial statements
30 June 2024
Note 13. Bank guarantees and deposits (continued)
48
1 Relates to deposits for various project guarantees held with Westpac and solicitor trust accounts at 30 June 2024 and are
classified as restricted cash.
2 Relates to deposits given to landlords' legal representatives at 30 June 2024 over leased premises. These deposits are
held in solicitor trust accounts and are classified as restricted cash.
Note 14. Other assets
Consolidated
2024
2023
$
$
Current assets
Prepayments
36,304
127,880
Other deposits
15,657
13,556
Other current assets
109,785
-
161,746
141,436
Non-current assets
Other non-current assets (Borrowing costs capitalised net of amortisation)
238,333
423,333
400,079
564,769
Note 15. Property, plant and equipment
Consolidated
2024
2023
$
$
Non-current assets
Leasehold improvements - at cost
756,984
2,384
Less: Accumulated depreciation
(207,056)
(2,384)
549,928
-
Plant and equipment - at cost
457,882
417,220
Less: Accumulated depreciation
(339,039)
(190,805)
118,843
226,415
Motor vehicles - at cost
26,016
26,016
Less: Accumulated depreciation
(26,016)
(15,302)
-
10,714
Office equipment - at cost
28,798
28,798
Less: Accumulated depreciation
(28,798)
(28,158)
-
640
DC modules - at cost
2,075,244
1,348,388
Less: Accumulated depreciation
(952,458)
(427,149)
1,122,786
921,239
ICT hardware - at cost
73,835
86,962
Less: Accumulated depreciation
(58,520)
(86,277)
15,315
685
1,806,872
1,159,693
DXN Limited
Notes to the consolidated financial statements
30 June 2024
Note 15. Property, plant and equipment (continued)
49
Reconciliations
Reconciliations of the written down values at the beginning and end of the current and previous financial year are set out
below:
Leasehold
improve-
Plant and
Motor
Office
DC
ICT
ments
equipment
vehicles
equipment
modules
hardware
Total
Consolidated
$
$
$
$
$
$
$
Balance at 1 July 2022
2,351,859
134,629
13,966
10,568
4,647,490
34,970
7,193,482
Additions
-
136,278
-
-
-
-
136,278
Classified as held for sale (note
18)
(626,422)
(6,933)
-
-
(485,902)
- (1,119,257)
Disposals
(14,917)
(843)
-
(90)
(1,528)
-
(17,378)
Impairment of assets
(1,658,208)
-
-
(2,732) (1,843,274)
(32,163) (3,536,377)
Depreciation expense
(52,312)
(36,716)
(3,252)
(7,106) (1,395,547)
(2,122) (1,497,055)
Balance at 30 June 2023
-
226,415
10,714
640
921,239
685
1,159,693
Additions
-
23,805
-
-
10,230
16,965
51,000
Cessation of held for sale (note
18)
626,422
6,933
-
-
485,902
-
1,119,257
Disposals
-
-
-
-
(10,527)
-
(10,527)
Depreciation expense
(76,494)
(138,310)
(10,714)
(640)
(284,058)
(2,335)
(512,551)
Balance at 30 June 2024
549,928
118,843
-
-
1,122,786
15,315
1,806,872
Note 16. Right-of-use assets
Consolidated
2024
2023
$
$
Non-current assets
Land and buildings - right-of-use
4,459,873
10,222,419
Less: Accumulated depreciation
(935,930)
(1,863,972)
3,523,943
8,358,447
Additions to the right-of-use assets during the ended 30 June 2024 and 30 June 2023 were $nil.
During the year ended 30 June 2024, the Group surrendered its lease on the Sydney property. The final lease payment is
scheduled to be made in December 2024.
Right-of-use assets related to leased property in Perth, Sydney, Hobart and Darwin.
The Group leases land and buildings under agreements of between three to fifteen years with, in some cases, options to
extend. The leases have various escalation clauses. On renewal, the terms of the leases are renegotiated.
For AASB 16 Lease disclosures refer to:
●
note 7 for depreciation on right-of-use assets and interest on lease liabilities;
●
note 22 for lease liabilities;
●
note 30 for undiscounted future lease commitments; and
●
consolidated statement of cash flows for repayment of lease liabilities.
DXN Limited
Notes to the consolidated financial statements
30 June 2024
50
Note 17. Intangibles
Consolidated
2024
2023
$
$
Non-current assets
Goodwill - at cost
1,986,421
25,541
Research & development - at cost
24,528
195,951
Software - at cost
112,729
112,729
Less: Accumulated amortisation
(112,729)
(97,279)
-
15,450
Customer contracts - at cost
2,703,418
1,342,104
Less: Accumulated amortisation
(1,716,465)
(1,342,104)
986,953
-
2,997,902
236,942
Reconciliations
Reconciliations of the written down values at the beginning and end of the current and previous financial year are set out
below:
Research &
Patents and
Customer
Goodwill
development
trademarks
Software
contracts
Total
Consolidated
$
$
$
$
$
$
Balance at 1 July 2022
1,986,421
38,970
28,090
90,724
1,652,654
3,796,859
Additions
-
195,951
-
1,835
-
197,786
Classified as held for sale (note
18)
(1,960,880)
-
-
(2,391)
(1,123,084)
(3,086,355)
Disposals
-
-
(27,441)
-
-
(27,441)
Impairment of assets
-
-
-
(24,912)
-
(24,912)
Transfers in/(out)
-
(38,970)
-
-
-
(38,970)
Amortisation expense
-
-
(649)
(49,806)
(529,570)
(580,025)
Balance at 30 June 2023
25,541
195,951
-
15,450
-
236,942
Additions
-
25,193
-
-
-
25,193
Cessation of held for sale (note
18)
1,960,880
-
-
2,391
1,123,084
3,086,355
Disposals
-
-
-
(2,391)
-
(2,391)
R&D offset against incentive
-
(196,616)
-
-
-
(196,616)
Amortisation expense
-
-
-
(15,450)
(136,131)
(151,581)
Balance at 30 June 2024
1,986,421
24,528
-
-
986,953
2,997,902
Goodwill
Goodwill on the acquisition of assets and revenue of Data Centre 3 Pty Ltd from TasmaNet
Pty Ltd, and acquisition of Secure Data Centre – Darwin during FY22.
Research & development
Relates to the development costs spent to date on module research/design for government
grants.
Patents and trademarks
Related to patents and was amortised over the estimated useful life of the patents.
Software
Related to acquired software.
Customer contracts
Relates to the minimum contracted revenues/EBITDA in relation to the acquisition of DC
module assets of Data Centre 3 Pty Ltd from TasmaNet Pty Ltd and customer contracts
acquired from the purchase of Secure Data Centre – Darwin during FY22.
DXN Limited
Notes to the consolidated financial statements
30 June 2024
Note 17. Intangibles (continued)
51
Impairment testing
The Group’s total goodwill balance predominantly relates to the Data Centre segment operations of Secure Data Centre,
Darwin (SDC). At 30 June 2023, SDC goodwill was classified as held for sale. Refer to note 18.
Consolidated
2024
2023
$
$
SDC
1,960,880
-
The carrying amount of the SDC goodwill has been tested for impairment as at 30 June 2024. The recoverable amount of the
above goodwill is based on a value-in-use calculation using the present value of cash flow projections over a 5-year period.
The following assumptions were used in the value-in-use calculations:
Assumption
How determined
Forecast revenue & expenses
Annual growth rate of 5%
Discount rate
Pre-tax discount rate of 11.69%
Sensitivity to changes in assumptions
The directors and management have considered and assessed reasonably possible changes for other key assumptions and
have not identified any instances that could cause the carrying amount of the SDC CGU to exceed its recoverable amount.
Note 18. Assets of disposal groups classified as held for sale
Consolidated
2024
2023
$
$
Current assets
Cash and cash equivalents
-
558,084
Trade and other receivables
-
38,897
Property, plant and equipment
-
1,119,257
Right-of-use assets
-
1,786,396
Intangibles
-
3,086,355
-
6,588,989
DXN’s Secure Data Centre in Darwin ('SDC') was classified in financial statements for the year ended 30 June 2023 as
'discontinued operations’ as the Board continued to consider all strategic options to sell its data centre operations.
Accordingly in the financial statements for the year ended 30 June 2023, the results of operations of SDS were classified
separately as discontinued operations in the profit or loss and the associated assets and liabilities were classified as held for
sale.
During the year ended 30 June 2024, following the Company's decision to put an end to planned sale and continue to focus
on growing the business:
(a) the results of operations of the SDC previously presented in discontinued operations are reclassified and included in
income from continuing operations for the year ended 30 June 2024 and 30 June 2023; and
(b) the assets and liabilities of disposal groups as at 30 June 2024 are no longer classified as held for sale.
The carrying amount before the asset (or disposal group) was classified as held for sale, adjusted for any depreciation,
amortisation or revaluations that would have been recognised had the asset (or disposal group) not been so classified is the
same as the recoverable amount at the date of the subsequent decision not to sell, therefore there is no adjustment required
to be recognised in profit or loss.
DXN Limited
Notes to the consolidated financial statements
30 June 2024
52
Note 19. Trade and other payables
Consolidated
2024
2023
$
$
Current liabilities
Trade payables1
783,104
450,374
GST payable
-
65,999
Payroll liabilities
54,334
81,481
Other payables and accruals2
711,361
378,300
1,548,799
976,154
Terms and conditions relating to the above financial instruments.
1 Trade payables are non-interest bearing and generally on 30 day terms.
2 Other payables are non-interest bearing have no fixed repayment terms.
Refer to note 30 for further information on financial instruments.
Note 20. Contract liabilities
Consolidated
2024
2023
$
$
Current liabilities
Contract liabilities1
3,484,648
698,271
1 Relates to amounts received in advance from external customers for the custom-built DXN data centre and cable landing
station modules.
Note 21. Borrowings
Consolidated
2024
2023
$
$
Current liabilities
Insurance premium funding
54,716
118,265
FlexiCommercial Pty Ltd1
42,888
42,888
Less: Unexpired charges
(12,756)
(17,309)
84,848
143,844
Non-current liabilities
FlexiCommercial Pty Ltd1
89,350
132,238
Pure Asset Management Pty Ltd2
4,000,000
4,000,000
Less: Unexpired charges
(8,965)
(18,788)
4,080,385
4,113,450
4,165,233
4,257,294
Refer to note 30 for further information on financial instruments.
DXN Limited
Notes to the consolidated financial statements
30 June 2024
Note 21. Borrowings (continued)
53
1 This is a Chattel Mortgage Facility with FlexiCommercial Pty Ltd for a Pressbrake Machine in use in the Perth factory. The
interest rate on this facility is 9.996% and is repayable over 5 years (until July 2027) with no balloon payment.
2 $4,000,000 secured facility with Pure Asset Management Pty Ltd ('Pure') was to finance working capital and acquisitions.
The interest rate on this facility (including line fee) is 11.25% per annum. In addition, there was a 2.5% establishment fee.
This facility is due to mature on 14 October 2025 and is secured by a General Security Agreement over the assets of the
Group.
On 29 September 2023, Pure provided a Binding Term Sheet whereby the key covenant has been agreed as a minimum
cash balance of $750,000 until the term of the loan. Financial covenants were fully complied with at 30 June 2024.
Financing arrangements
Unrestricted access was available at the reporting date to the following lines of credit:
Consolidated
2024
2023
$
$
Total facilities
Insurance premium funding
54,716
118,265
FlexiCommercial Pty Ltd
132,238
162,180
Pure Asset Management Pty Ltd
4,000,000
4,000,000
4,186,954
4,280,445
Used at the reporting date
Insurance premium funding
54,716
118,265
FlexiCommercial Pty Ltd
132,238
162,180
Pure Asset Management Pty Ltd
4,000,000
4,000,000
4,186,954
4,280,445
Unused at the reporting date
Insurance premium funding
-
-
FlexiCommercial Pty Ltd
-
-
Pure Asset Management Pty Ltd
-
-
-
-
Note 22. Lease liabilities
Consolidated
2024
2023
$
$
Current liabilities
Lease liability
660,519
716,011
Non-current liabilities
Lease liability
3,494,225
8,190,144
4,154,744
8,906,155
Refer to note 30 for further information on financial instruments.
DXN Limited
Notes to the consolidated financial statements
30 June 2024
54
Note 23. Employee benefits
Consolidated
2024
2023
$
$
Current liabilities
Annual leave
201,113
148,343
Long service leave
24,861
-
225,974
148,343
Non-current liabilities
Long service leave
36,278
14,344
262,252
162,687
Amounts not expected to be settled within the next 12 months
The current provision for employee benefits includes all unconditional entitlements where employees have completed the
required period of service and also those where employees are entitled to pro-rata payments in certain circumstances. The
entire amount is presented as current, since the Group does not have an unconditional right to defer settlement. However,
based on past experience, the Group does not expect all employees to take the full amount of accrued leave or require
payment within the next 12 months.
The following amounts reflect leave that is not expected to be taken within the next 12 months:
Consolidated
2024
2023
$
$
Employee benefits obligation expected to be settled after 12 months
24,861
14,344
Note 24. Income in advance
Consolidated
2024
2023
$
$
Current liabilities
Income in advance
-
416,667
As per the Exclusive Global Distribution License Agreement (EGDLA) signed with Flow2Edge Holdings I Pte Ltd (‘Flow’), and
announced to the market on 28 November 2022, DXN received an upfront $2 million exclusivity fee for an initial 10-year
agreement for worldwide (excluding Australia) exclusivity for the marketing and distribution of DXN Modules. During the first
12 months of the EGDLA, commencing 180 days from the date of signing, FLOW2Edge must place orders with DXN for a
minimum of 10 DXN Modules. The first $1 million of this exclusivity fee has been immediately recognised upon receipt, whilst
the remaining $1 million is recognised during the year ended 30 June 2024. As announced to the Market on 7 June 2024, the
EGDLA is no longer exclusive pursuant the terms of the Distribution Agreement.
DXN Limited
Notes to the consolidated financial statements
30 June 2024
55
Note 25. Other financial liabilities
Consolidated
2024
2023
$
$
Current liabilities
Other financial liabilities1
300,000
910,315
Non-current liabilities
Other financial liabilities1 & 2
656,658
400,000
956,658
1,310,315
1 This amount was withheld from the purchase price of SDC to cover any warranty claims associated with the acquisition and
the Company has commenced monthly repayments.
2 200 million warrants were issued to Pure Asset Management Pty Ltd as part of the Debt Facility arrangement as announced
to the market on 9 September 2021. These warrants expire on 15 October 2025. As a result of the share consolidation,
there are 13,333,333 warrants on issue as at 30 June 2024.
Note 26. Liabilities directly associated with assets classified as held for sale
Consolidated
2024
2023
$
$
Current liabilities
Trade payables
-
12,168
Payroll liabilities
-
2,110
GST payable
-
13,307
Lease liability
-
1,869,826
Employee benefits
-
31,562
-
1,928,973
Refer to note 18 for further information.
Note 27. Issued capital
Consolidated
2024
2023
2024
2023
Shares
Shares
$
$
Ordinary shares - fully paid
184,889,354
1,721,314,836
47,395,502
45,424,949
DXN Limited
Notes to the consolidated financial statements
30 June 2024
Note 27. Issued capital (continued)
56
Movements in ordinary share capital
Details
Date
Shares
Issue price
$
Balance
1 July 2022
1,471,314,836
43,471,842
Issue of shares - placement
11 August 2022
250,000,000
$0.0085
2,125,000
Capital raising costs
-
(171,893)
Balance
30 June 2023
1,721,314,836
45,424,949
Issue of shares - share-based payments*
21 August 2023
2,025,000
$0.0030
6,075
Issue of shares - placement
4 December 2023
430,000,000
$0.0020
860,000
Capital raising costs
-
(54,600)
Issue of shares - placement
29 January 2024
545,000,000
$0.0020
1,090,000
Issue of shares - directors
29 January 2024
75,000,000
$0.0020
150,000
Capital raising costs
-
(80,922)
Cancellation of shares on consolidation**
12 February 2024
(2,588,450,482)
-
Balance
30 June 2024
184,889,354
47,395,502
*
Shares issued in lieu of payment to corporate advisor.
**
On 22 January 2024, the Company held a general meeting of shareholders where the shareholders approved a
consolidation of capital on the basis of every 15 ordinary shares being consolidated into 1 ordinary share in DXN. The
consolidation of share capital was completed on 12 February 2024.
Ordinary shares
Ordinary shares entitle the holder to participate in any dividends declared and any proceeds attributable to shareholders
should the Company be wound up in proportions that consider both the number of shares held and the extent to which those
shares are paid up. The fully paid ordinary shares have no par value and the Company does not have a limited amount of
authorised capital.
On a show of hands every member present at a meeting in person or by proxy shall have one vote and upon a poll each share
shall have one vote.
Share buy-back
There is no current on-market share buy-back.
Capital risk management
Management controls the capital of the Group to maintain a prudent debt to equity ratio, provide the shareholders with
adequate returns and ensure the Group can fund its operations and continue as a going concern.
The Group’s debt and capital includes ordinary share capital and financial liabilities supported by financial assets.
Management effectively manages the Group’s capital by assessing the Groups financial risks and adjusting its capital structure
in response to changes in these risks and in the market. These responses include the management of debt levels, distributions
to shareholders and share issues.
There are no externally imposed capital requirements other than as disclosed in note 21.
The capital risk management policy remains unchanged from the 2023 Annual Report.
DXN Limited
Notes to the consolidated financial statements
30 June 2024
57
Note 28. Reserves
Consolidated
2024
2023
$
$
Share-based payments reserve
18,486
1,118,264
Options reserve
387,303
310,302
405,789
1,428,566
Share-based payments reserve
The reserve is used to recognise the value of equity benefits provided to employees and directors as part of their remuneration.
Options reserve
The reserve is used to recognise the value of equity benefits provided to employees and directors as part of their remuneration.
Movements in reserves
Movements in each class of reserve during the current and previous financial year are set out below:
Share-based
payments
Options
Total
Consolidated
$
$
$
Balance at 1 July 2022
1,081,594
310,302
1,391,896
Share-based payments
36,670
-
36,670
Balance at 30 June 2023
1,118,264
310,302
1,428,566
Share-based payments
18,482
77,001
95,483
Transfer to accumulated losses
(1,118,260)
-
(1,118,260)
Balance at 30 June 2024
18,486
387,303
405,789
Note 29. Dividends
There were no dividends paid, recommended or declared during the current or previous financial year.
Note 30. Financial instruments
Financial risk management objectives
The Group's activities expose it to a variety of financial risks: market risk (including foreign currency risk, price risk and interest
rate risk), credit risk and liquidity risk. The Group's overall risk management program focuses on the unpredictability of financial
markets and seeks to minimise potential adverse effects on the financial performance of the Group.
Risk management is overseen by the Board of Directors ('the Board'). These policies include identification and analysis of the
risk exposure of the Group and appropriate procedures, controls and risk limits. The Group management identifies, evaluates
financial risks within the Group's operating units regularly.
DXN Limited
Notes to the consolidated financial statements
30 June 2024
Note 30. Financial instruments (continued)
58
The Group’s principal financial instruments comprise cash and cash equivalents and borrowings. The Group 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 Group’s policy not to trade in financial instruments.
Consolidated
2024
2023
$
$
Financial assets
Cash and cash equivalents
2,983,785
710,209
Trade and other receivables
1,248,749
221,316
Bank guarantees
826,144
265,302
5,058,678
1,196,827
Financial liabilities
At amortised cost:
Trade and other payables
1,548,799
976,154
Borrowings
4,165,233
4,257,294
Lease liabilities
4,154,744
8,906,155
Other financial liabilities
956,658
1,310,315
10,825,434
15,449,918
Market risk
Foreign currency risk
The Group undertakes certain transactions denominated in foreign currency and is exposed to foreign currency risk through
foreign exchange rate fluctuations.
Foreign exchange risk arises from future commercial transactions and recognised financial assets and financial liabilities
denominated in a currency that is not the entity's functional currency. The risk is measured using sensitivity analysis and cash
flow forecasting. Management has determined that this risk is not significant.
The Group has not entered into forward foreign exchange contracts during the current financial year.
Price risk
The Group is not exposed to any significant price risk.
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. At 30 June 2024 and 30 June 2023, the Group’s cash/cash equivalents (note 10) and borrowings
(note 21) are fixed interest rate instruments. Therefore, they are not subject to interest rate risk.
Credit risk
Credit risk refers to the risk that a counterparty will default on its contractual obligations resulting in financial loss to the Group.
The Group 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 Group only transacts with entities that are
rated the equivalent of investment grade and above.
The Group’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 Group does not have any significant credit risk exposure.
DXN Limited
Notes to the consolidated financial statements
30 June 2024
Note 30. Financial instruments (continued)
59
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 Group’s short, medium and long-term funding and liquidity
management requirements. The Group 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.
Remaining contractual maturities
The following tables detail the Group's remaining contractual maturity for its financial instrument liabilities. The tables have
been drawn up based on the undiscounted cash flows of financial liabilities based on the earliest date on which the financial
liabilities are required to be paid. The tables include both interest and principal cash flows disclosed as remaining contractual
maturities and therefore these totals may differ from their carrying amount in the statement of financial position.
Weighted
average
interest rate
1 year or less
Between 1
and 2 years
Between 2
and 5 years
Over 5 years
Remaining
contractual
maturities
Consolidated - 2024
%
$
$
$
$
$
Non-derivatives
Non-interest bearing
Trade and other payables
-
1,548,799
-
-
-
1,548,799
Other financial liabilities
-
300,000
425,000
231,658
-
956,658
Interest-bearing - variable
Lease liability
-
951,813
580,936
1,692,216
2,513,151
5,738,116
Interest-bearing - fixed rate
Borrowings:
Pure
11.25%
450,000
4,300,000
-
-
4,750,000
Insurance premium funding
3.83%
57,648
-
-
-
57,648
FlexiCommercial Pty Ltd
10.00%
52,711
94,653
3,662
-
151,026
Total non-derivatives
3,360,971
5,400,589
1,927,536
2,513,151
13,202,247
Weighted
average
interest rate
1 year or less
Between 1
and 2 years
Between 2
and 5 years
Over 5 years
Remaining
contractual
maturities
Consolidated - 2023
%
$
$
$
$
$
Non-derivatives
Non-interest bearing
Trade and other payables
-
976,154
-
-
-
976,154
Other financial liabilities
-
910,315
-
400,000
-
1,310,315
Interest-bearing - variable
Lease liability
-
1,383,158
1,383,158
4,149,473
5,537,506
12,453,295
Interest-bearing - fixed rate
Borrowings:
Pure
11.25%
427,295
337,808
4,125,753
-
4,890,856
Insurance premium funding
3.83%
122,627
-
-
-
122,627
FlexiCommercial Pty Ltd
10.00%
55,835
101,972
49,055
-
206,862
Total non-derivatives
3,875,384
1,822,938
8,724,281
5,537,506
19,960,109
The cash flows in the maturity analysis above are not expected to occur significantly earlier than contractually disclosed above.
Fair value of financial instruments
Unless otherwise stated, the carrying amounts of financial instruments reflect their fair value.
DXN Limited
Notes to the consolidated financial statements
30 June 2024
60
Note 31. Fair value measurement
The carrying amounts of trade and other receivables and trade and other payables are assumed to approximate their fair
values due to their short term nature.
Note 32. Key management personnel disclosures
Compensation
The aggregate compensation made to directors and other members of key management personnel of the Group is set out
below:
Consolidated
2024
2023
$
$
Short term employee benefits
507,624
693,854
Commission payments
172,670
59,776
Post-employment benefits
34,005
57,889
Termination benefits
28,086
-
Share-based payments
140,000
36,670
882,385
848,189
Note 33. Remuneration of auditors
For services provided for the financial year the following fees were paid or payable for services provided by Moore Australia
Audit (WA), the auditor of the Company, and its network firms:
Consolidated
2024
2023
$
$
Audit services - Moore Australia Audit (WA)
Audit or review of the financial statements
64,000
74,000
Other services - network firms
Tax compliance
7,000
10,000
Consulting
12,000
13,500
19,000
23,500
Note 34. Contingent liabilities
There were no contingent liabilities as at 30 June 2024 and 30 June 2023.
Note 35. Commitments
There were no capital commitments as at 30 June 2024 and 30 June 2023.
Note 36. Related party transactions
Parent entity
DXN Limited is the parent entity.
Subsidiaries
Interests in subsidiaries are set out in note 38.
DXN Limited
Notes to the consolidated financial statements
30 June 2024
Note 36. Related party transactions (continued)
61
Key management personnel
Disclosures relating to key management personnel are set out in note 32 and the remuneration report included in the directors'
report.
Transactions with related parties
There were no transactions with related parties during the current and previous financial year.
Receivable from and payable to related parties
There were no trade receivables from or trade payables to related parties at the current and previous reporting date.
Loans to/from related parties
There were no loans to or from related parties at the current and previous reporting date.
Note 37. Parent entity information
Set out below is the supplementary information about the parent entity.
Statement of profit or loss and other comprehensive income
Parent
2024
2023
$
$
Loss after income tax
(2,658,418)
(9,674,275)
Other comprehensive income for the year, net of tax
-
-
Total comprehensive loss
(2,658,418)
(9,674,275)
Statement of financial position
Parent
2024
2023
$
$
Total current assets
4,479,729
1,287,203
Total non-current assets
6,416,307
14,585,354
Total assets
10,896,036
15,872,557
Total current liabilities
6,071,587
3,806,759
Total non-current liabilities
5,619,051
12,268,018
Total liabilities
11,690,638
16,074,777
Net liabilities
(794,602)
(202,220)
Equity
Issued capital
47,395,502
45,424,949
Reserves
405,789
1,428,566
Accumulated losses
(48,595,893)
(47,055,735)
Total deficiency in equity
(794,602)
(202,220)
DXN Limited
Notes to the consolidated financial statements
30 June 2024
Note 37. Parent entity information (continued)
62
Guarantees entered into by the parent entity in relation to the debts of its subsidiaries
The parent entity had no guarantees in relation to the debts of its subsidiaries as at 30 June 2024 and 30 June 2023.
Contingent liabilities
Apart from the deposits disclosed at note 34, the parent entity had no contingent liabilities as at 30 June 2024 and 30 June
2023.
Capital commitments - Property, plant and equipment
The parent entity had no capital commitments for property, plant and equipment as at 30 June 2024 and 30 June 2023.
Note 38. Interests in subsidiaries
The consolidated financial statements incorporate the assets, liabilities and results of the following subsidiaries in accordance
with the accounting policy described in note 2:
Ownership interest
Principal place of business /
2024
2023
Name
Country of incorporation
%
%
Tas01 Pty Ltd
Tasmania, Australia
100%
100%
Secure Data Centre Pty Ltd
Northern Territory, Australia
100%
100%
SDC Trust
Northern Territory, Australia
100%
100%
Note 39. Cash flow information
Reconciliation of loss after income tax to net cash from/(used in) operating activities
Consolidated
2024
2023
$
$
Loss after income tax expense for the year
(2,303,165)
(9,612,620)
Adjustments for:
Depreciation and amortisation
1,496,974
3,117,999
Impairment of non-current assets
-
4,173,664
Write off of current assets
71,472
-
Share-based payments
101,561
36,670
Finance costs
(574,535)
522,253
Borrowing costs
185,000
185,000
Change in fair value of warrants
(275,000)
-
Change in operating assets and liabilities:
(Increase)/decrease in trade and other receivables
(1,017,847)
371,148
Decrease in inventories/work in progress
448,580
377,915
Decrease/(increase) in prepayments
91,576
(6,976)
Increase/(decrease) in trade and other payables
545,060
(1,499,471)
Increase in contract liabilities
2,786,377
365,764
Increase in employee benefits
31,725
21,468
(Decrease)/increase in income in advance
(416,667)
416,667
Net cash from/(used in) operating activities
1,171,111
(1,530,519)
DXN Limited
Notes to the consolidated financial statements
30 June 2024
Note 39. Cash flow information (continued)
63
Non-cash investing and financing activities
Consolidated
2024
2023
$
$
Shares issued - conversion of capitalised interest (Pure)
325,000
-
Changes in liabilities arising from financing activities
Insurance
premiums
FlexiCommercial
Lease
Pure
funding
Pty Ltd
liability
Total
Consolidated
$
$
$
$
$
Balance at 1 July 2022
4,000,000
58,971
-
11,504,660
15,563,631
Net cash (used in) financing activities
-
-
-
(728,679)
(728,679)
Finance facility drawn down
-
337,479
214,441
-
551,920
Repayment of finance facility
-
(278,185)
(39,315)
-
(317,500)
Classified as held for sale (note 18)
-
-
-
(1,869,826)
(1,869,826)
Balance at 30 June 2023
4,000,000
118,265
175,126
8,906,155
13,199,546
Net cash (used in) financing activities
-
-
-
(869,084)
(869,084)
Finance facility drawn down
-
250,086
-
-
250,086
Repayment of finance facility
-
(316,568)
(61,676)
-
(378,244)
Cessation of assets held for sale (note 26)
-
-
-
1,869,826
1,869,826
Lease surrender
-
-
-
(6,498,670)
(6,498,670)
Other changes
-
-
-
746,517
746,517
Balance at 30 June 2024
4,000,000
51,783
113,450
4,154,744
8,319,977
Note 40. Share-based payments
Options
Set out below are summaries of options:
2024
Balance at
Adjustment
Expired/
Balance at
Exercise
the start of
on capital
exercised/
the end of
Grant date
Expiry date
price1
the year
Granted
consolidation
forfeited
the year
22/10/2021
22/10/2024
$0.2100
10,888,857
-
(10,162,933)
-
725,924
23/01/2024
22/01/2028
$0.0300
-
70,000,000
(65,333,334)
-
4,666,666
10,888,857
70,000,000
(75,496,267)
-
5,392,590
1
Adjusted on share consolidation
Weighted average exercise price
$0.0140
$0.0300
$0.0540
$0.0000
$0.0540
DXN Limited
Notes to the consolidated financial statements
30 June 2024
Note 40. Share-based payments (continued)
64
2023
Adjustment
Balance at
on capital
Expired/
Balance at
Exercise
the start of
consolidation
exercised/
the end of
Grant date
Expiry date
price
the year
Granted
forfeited
the year
15/04/2021
30/04/2023
$0.0300
22,000,000
-
-
(22,000,000)
-
18/05/2020
18/05/2023
$0.0200 641,936,886
-
- (641,936,886)
-
07/01/2020
31/12/2022
$0.1000
7,500,000
-
-
(7,500,000)
-
22/10/2021
22/10/2024
$0.0140
10,888,857
-
-
-
10,888,857
682,325,743
-
- (671,436,886)
10,888,857
Weighted average exercise price
$0.0210
$0.0000
$0.0000
$0.0212
$0.0140
In the table above 641,936,886 represent quoted options and 10,888,857 options were granted in relation to a corporate
mandate.
Set out below are the options exercisable at the end of the financial year:
2024
2023
Grant date
Expiry date
Number
Number
22/10/2021
22/10/2024
725,924
10,888,857
23/01/2024
22/01/2028
4,666,666
-
5,392,590
10,888,857
The weighted average remaining contractual life of options outstanding at the end of the financial year was 3.13 years (2023:
1.32 years).
Performance rights
Set out below are summaries of performance rights:
2024
Balance at
Adjustment
Expired/
Balance at
Exercise
the start of
on capital
exercised/
the end of
Grant date
Expiry date
price
the year
Granted
consolidation
forfeited
the year
22/07/2021
14/07/2024
$0.0000
8,300,000
-
(7,746,667)
-
553,333
8,300,000
-
(7,746,667)
-
553,333
2023
Balance at
Adjustment
Expired/
Balance at
Exercise
the start of
on capital
exercised/
the end of
Grant date
Expiry date
price
the year
Granted
consolidation
forfeited
the year
22/07/2021
14/07/2024
$0.0000
8,300,000
-
-
-
8,300,000
8,300,000
-
-
-
8,300,000
Set out below are the performance rights exercisable at the end of the financial year:
2024
2023
Grant date
Expiry date
Number
Number
22/07/2021
14/07/2024
553,333
8,300,000
553,333
8,300,000
DXN Limited
Notes to the consolidated financial statements
30 June 2024
Note 40. Share-based payments (continued)
65
The weighted average remaining contractual life of performance rights outstanding at the end of the financial year was 0.04
years (2023: 1.04 years).
For the options granted during the current financial year, the valuation model inputs used to determine the fair value at the
grant date, are as follows:
Share price
Exercise
Expected
Dividend
Risk-free
Fair value
Grant date
Expiry date
at grant date
price
volatility
yield
interest rate
at grant date
23/10/2024
22/01/2028
$0.0225
$0.0300
176%
-
4.35%
$0.022
Recognised employee share-based payment expenses
The expense recognised for outgoing directors services received during the period are as follows:
Consolidated
2024
2023
Performance rights and options
101,561
36,670
Note 41. Events after the reporting period
No matter or circumstance has arisen since 30 June 2024 that has significantly affected, or may significantly affect the Group's
operations, the results of those operations, or the Group's state of affairs in future financial years.
DXN Limited
Consolidated entity disclosure statement
As at 30 June 2024
66
Place formed /
Ownership
interest
Entity name
Entity type
Country of incorporation
%
Tax residency
DXN Limited
Body Corporate
New South Wales, Australia
100%
Australian
Tas01 Pty Ltd
Body Corporate
Tasmania, Australia
100%
Australian
Secure Data Centre Pty Ltd
Body Corporate
Northern Territory, Australia
100%
Australian
SDC Trust
Trust
Northern Territory, Australia
100%
Australian
DXN Limited
Directors' declaration
30 June 2024
67
In the directors' opinion:
●
the attached financial statements and notes comply with the Corporations Act 2001, the Accounting Standards, the
Corporations Regulations 2001 and other mandatory professional reporting requirements;
●
the attached financial statements and notes comply with International Financial Reporting Standards as issued by the
International Accounting Standards Board as described in note 2 to the financial statements;
●
the attached financial statements and notes give a true and fair view of the Group's financial position as at 30 June 2024
and of its performance for the financial year ended on that date;
●
there are reasonable grounds to believe that the Company will be able to pay its debts as and when they become due
and payable; and
●
the information disclosed in the attached consolidated entity disclosure statement is true and correct.
The directors have been given the declarations required by section 295A of the Corporations Act 2001.
Signed in accordance with a resolution of directors made pursuant to section 295(5)(a) of the Corporations Act 2001.
On behalf of the directors
___________________________
Abigail Cheadle
Non-Executive Chair
30 August 2024
DXN Limited
Independent auditor's report to the members of DXN Limited
68
DXN Limited
Independent auditor's report to the members of DXN Limited
69
DXN Limited
Independent auditor's report to the members of DXN Limited
70
DXN Limited
Independent auditor's report to the members of DXN Limited
71
DXN Limited
Shareholder information
30 June 2024
72
The shareholder information set out below was applicable as at 27 August 2024.
Distribution of equitable securities
Analysis of number of equitable security holders by size of holding:
Ordinary shares
Quoted options over
ordinary shares
% of total
% of total
Number
shares
Number
shares
of holders
issued
of holders
issued
1 to 1,000
53
0.01
-
-
1,001 to 5,000
166
0.30
-
-
5,001 to 10,000
399
1.53
-
-
10,001 to 100,000
625
10.98
-
-
100,001 and over
182
87.18
3
100.00
1,425
100.00
3
100.00
Holding less than a marketable parcel
522
1.36
-
-
Equity security holders
Twenty largest quoted equity security holders
The names of the twenty largest security holders of quoted equity securities are listed below:
Ordinary shares
% of total
shares
Number held
issued
J P MORGAN NOMINEES AUSTRALIA PTY LIMITED
29,132,849
15.59
THE ONE MATRIX VENTURES PTE LTD
28,333,333
15.16
DC ALLIANCE PTE LTD
9,259,259
4.95
MR ANDREW WALSH
8,653,254
4.63
NORFOLK ENCHANTS PTY LTD TROJAN
6,328,326
3.39
MR BRENDAN ERIN JOSEPH POWER
6,044,444
3.23
BNP PARIBAS NOMS PTY LTD
3,940,250
2.11
SEALEX PTY LTD
3,474,684
1.86
MR HARRY CHESHER WHITING
3,020,971
1.62
MR CAMERON ROSS BARBER
2,846,067
1.52
PUNTERO PTY LTD
2,519,375
1.35
BNP PARIBAS NOMINEES PTY LTD
2,200,000
1.18
MR MICHAEL ANDREW WHITING & MRS TRACEY ANNE WHITING
2,162,028
1.16
HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED
1,996,805
1.07
CITICORP NOMINEES PTY LIMITED
1,913,383
1.02
BNP PARIBAS NOMINEES PTY LTD
1,784,092
0.95
CHELSEREF PTY LTD
1,666,667
0.89
MR THIAM HUAT LOW
1,465,000
0.78
SAILORS OF SAMUI PTY LTD
1,342,841
0.72
PROACTIVE SOLUTIONS PTY LTD
1,111,111
0.59
119,194,739
63.77
DXN Limited
Shareholder information
30 June 2024
73
Unquoted equity securities
Number
Number
on issue
of holders
Options over ordinary shares
5,392,590
3
Performance rights
533,333
1
Warrants - held by Pure Asset Management Pty Ltd (The Income and Growth Fund)
13,333,333
1
Substantial shareholders
Substantial shareholders in the Company are set out below:
Ordinary shares
% of total
shares
Number held
issued
J P MORGAN NOMINEES AUSTRALIA PTY LIMITED
29,132,849
15.59
THE ONE MATRIX VENTURES PTE LTD
28,333,333
15.16
Voting rights
The voting rights attached to ordinary shares are set out below:
Ordinary shares
On a show of hands every member present at a meeting in person or by proxy shall have one vote and upon a poll each share
shall have one vote.
There are no other classes of equity securities.