Management missed their sales targets by a mile. And its not like they forecast this 12 months ago, they forecast this on the 28th of February when they were raising capital again. That was only 4 and half months back. Look at the statements in this release there is no consistency at all with the recent announcement which has been spun out to sound better than it actually was. Thats why there was an impairment. This is looking more and more like they put forward very unrealistic sales projections before the capital raise.
Business Outlook:
DXN seeks to re-iterate management targets provided to the market on the 12th February 2020 with the capital raise presentation:
Colocation
• Unweighted pipeline value steady at $13m. Weighted pipeline value steady at $3m • An additional four channel partners targeted before the end of March quarter • Targeting colocation revenue of $300k for the June quarter
Modular
• FY20 Work in Hand remains steady at $7m – 400% above FY19 • Additional contracts expected during Q3FY20 >$2m • Unweighted pipeline value remains steady at $470m • Targeting modular sales of $12m for FY20, which equates to a sales conversion rate from unweighted pipeline of 2.5% to 5.0% per annum
1 - How could they have $7m work in hand if they never had those contracts in the first place? 2 - Additional contracts worth over $2M were forecast, so they are saying they had $7M in contracts in Feb when they obviously did not. 3 - They forecast $12m in module sales and did less than half that. 4 - What colo business have they actually won that did not include the Tasmanet deal? There have been no announcements at all, and they did announce colo contracts previously. So they missed this target by miles too.
I think that they are out of money again. They never got anywhere near the revenue targets they forecasted and chances are cash receipts are way off where they needed to be or they expected them to be when they issued the last prospectus.
DXN Price at posting:
2.2¢ Sentiment: Sell Disclosure: Held
