Flow has been very disappointing, but the company still received the $2m fee + quarterly payments so still a worthwhile exercise even if just for 1 module.
Looking at the half year accounts there is an interesting change in the BS: Contract liabilities increased from $0.7m to $2.1m. This is work that DXN must complete having been already paid by the customer. The reason why this hasn't resulted is a bump in the cash receipts number is because the Receivable also increase by $2.3m (which is billed work where the company has not yet been paid by the customer)...so from a cashflow perspective its broadly neutral.
What's interesting that Contract Liabilities are accounted for as the cost of the future work (COGS) and don't include the profit margin on that work. The margin is about 30%, so about $600k of profit yet to be booked in the second half. Had it been booked in 1H2024, the underlying EBITDA would have been $1.4m. All just accounting stuff I know, but interesting.
The Sydney exit payments are still a burden, but I think the business turnaround is going better than people may release despite Flow being poor.
DXN Price at posting:
2.4¢ Sentiment: None Disclosure: Held
