Data Exchange Network Released Operations And Strategy Update- The Share Price Tumbled By 44%

Data Exchange Network Released Operations And Strategy Update- The Share Price Tumbled By 44%

The Data Exchange Network Ltd (ASX: DXN) is a company which belongs to the information technology industrial sector and is into the business of the construction of data centre modules and sale to third-party data centre owners. The company announced that the detailed review of operations is completed. It has adjusted its 2019 strategies so as to look after the increased cash outflow due to delays in the completion of the data centres and the extra investment in capital equipment and strategic investment in experienced personnel. The company stated that their long-term objectives remain unchanged. However, its short-term and medium-term priorities are now realigned to accommodate the current cash position.

At present, the key focus of the company is to complete its Sydney data centre. Till then, they will postpone the delivery of the Melbourne data centre.

There is an increase in the latest construction cost estimates for a 0.5MW Data centre by 12%. Earlier, the estimate of the data centre was $4.34 million. However, with an increase in the cost estimate, the data centre’s new cost estimate is $4.9 million. There was an increase in the cost by $0.55 million per data centre.  As a result of upgradation of the data centre from 0.5MW to 1.0MW (core supporting infrastructure), there was an additional cost of $2.1 million per data centre. The additional contingencies included an additional $0.53 million. Hence, the total estimated construction cost per 1.0MW data centre was $7.5 million.

The company expects that they will be able to complete the Sydney data centre by the end of July 2019, which depends on the management of the cash position as well as the final development approval for the Sydney site.

The company states that there is a good progress at the DXN-SYD01 data centre. This data centre has all key facility modules that are required for the commissioning of the 400KW of capacity on site and in place.

The company also provided its operating expenditure review. The company stated that its operating cash outflows got impacted due to accelerated investment in seasoned personnel, additional operating expenses due to delay in the project, delays in development approvals and delays in connecting multiple megawatts of power in Melbourne. There was also a delay in the infrastructure sales with lower than expected margin.

Besides, Mr. Peter Christie resigned from the position of Chief Executive Officer and the Managing director due to his personal reasons. The Board appointed Mr. Richard Whiting and Mr. Simon Forth as the interim CEOs which was effective immediately.

The company highlighted that it raised $225,000 through Mr. Peter Christie and Mr. Terry Smart who participated in the placement. They have issued shares at $0.155 per share. On 21 January 2019, after the approval of the shareholders in their general meeting, they expected to receive the funds by the end of the week. The share purchase plan remains open till 8 February 2019.

The shares of Data Exchange Network were placed on a trading halt before the market was opened on 29 January 2019, pending a market update. The temporary trading suspension was lifted today with the company releasing its market update. By the end of the trading session, the closing price of DXN was A$0.070 which was down by 44%.


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