Tony - I think the answer to your question lies in Accounting...

Tony - I think the answer to your question lies in Accounting rules and standards.

Intra-group revenue can be where one of the companies pays the other company to help out on projects.

For example C10 charges Client A $100k for a project. The client pays. However, C10 used DWX on the project and paid them $20k. On a per entity basis C10 earned $100k and had a cost of $20k for DWX and DWX earned $20k.

On a consolidated or group revenue basis - Client A only ever paid $100k for the project, not $120k.

As for the rest of the presentation its quite good. It suffers a bit from the underlying periods used to report the numbers. For example:

• On p6 - the net revenue and profit figures are as at 30/6/19
• On p9 - it says "revenue growth of 37% in 2019 compared to 2018" - is that Calendar year or financial year?
• On p9 - it says "Target to deliver 40% growth in FY20" - is that an Aus FY or VOR's FY (April 2019 to Mar 2020)
• On p11 - it says "expected to deliver $4.7m revenue in 2019" - ie. calendar year
• On p12 - under TSI e-surveillance it mentions the half year ending Sept 2019 (which is correct)

So due to the nature of the investments VOR has and the timing of acquisitions and the Indian FY by which we currently adhere to, it makes it a bit difficult to cleanly assess.

Then add in the discrepancies between Sales Revenue (the timing of when revenue is recognised and/or recorded) and Cash receipts (via the 4C), both of which can be distorted by large seasonal factors and it too can make it harder to assess.

Then you have the intra-group revenue to adjust for. Forecasting for December shows DWX expects $1,534,000 & C10 $1,655,000 (on an entity basis totalling $3,189,000) yet the Group forecast is $3,107,000, so you need to strip out $82,000.

That doesn't mean it can't be assessed and when I look through the numbers and presentation I see the following.

The uplift in DWX's numbers might be due to a combination of factors:

• it's now been under Jeff's leadership for two full years and has settled
• it looks like it has had some growth in head count
• it looks like it has benefited from C10 coming on board.
• it clearly states on p9 "Increasing focus on the Government sector leveraging of the experience and network of C10".

As for C10 perhaps its slightly below expectations, but as you point out there is upside within reach.

In defence of C10 I'd currently say:

• they have only been under the TSN/VOR banner for 10 months
• during that time they have expanded into Brisbane, Melbourne & London
• they have relocated office in Sydney
• one of the main partners has relocated to the UK to head the UK expansion
• despite this they have still grown revenue from $3.8m to $4.7m
• it would appear they have helped DWX to grow their business (and thus contributed to Group revenue)

With an eye to the future for C10 I'd say:

• they have just co-launched their first R&D project (the protected data centre in conjunction with f5)
• they could be granted AWS premier consulting partner competency
• The pipeline of work sounds plausible and they are well placed to participate in it

Overall I'd take some heart that DWX is growing well and C10 has plenty of upside for Jeff to squeeze out of them.

From June until October the SP was building nicely and I remember thinking at 1.3c I wish I'd bought more earlier. The recent run up to 1.6c could well be attributed to the underwriting of the options, so perhaps the SP got a bit ahead of itself. However, I can understand why LT holders would be frustrated by the sell off, but now it appears to have been oversold.

I've been buying this week as I think the optics look alright moving into next year (now next month) and its near a price that R&B got in at, and below the recent exercised option price.

I'm not too fussed now whether or not Jeff converts later this month. His $500-550k loan was pivotal when it mattered most. If he converts great, it should send a strong message. If not fair enough - he has strengthened the register and got two businesses primed for growth and appears to have convinced Gary that TSI is non core. He can still exercise options by September 2020 and then have a lot more skin in the game than most of us.

If they can create more products via R&D and add complimentary acquistion(s) without diluting us to the max, then I'd say its been a decent pivot from this time approximately two years ago.

That's not to say things are perfect. The SP does need to get a move on, Jeff has to continue to grow into the role, the dilution needs to ease and they need to reach a conclusion on TSI. TSI needs a sale value on it, whereby Gary can be clearly judged. Ideally TSI should be sold before any acquisition, but it may not work that way.

Imho - as it stands today ... the recent sentiment has been overdone, today the SP sucks (but may present an opportunity for some), but next year it should look better.

(Although by the time I've finished this post it looks like the sentiment is still on the nose!).

cheers