NEXION : NNG Quarterly Activities Report and Appendix 4C Mar-22

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28 April 2022

Quarterly Activities Report

For the quarter ending March 31, 2022

NEXION delivers steady quarter. Launches new services and resumes plans for global expansion.

Highlights

• • Recurring revenue steady. One-time project revenue down slightly due to delivery delays deferring some revenue to Q4.

• • NEXION launched its Secure Satellite Solution using the game-changing Starlink system for remote-site communications

• • NEXION with Aryaka extended connectivity between Australia and China to provide direct secure, quick, and reliable SD-WAN connections.

• • NEXION added mission critical infrastructure monitoring to its portfolio, combining traditional IT monitoring and security to the physical edge by connecting IT departments and facilities management.

NEXION Group Ltd (ASX: NNG), the fast emerging, global Cloud service provider is pleased to announce a steady quarter despite the challenges of the borders re-opening in Western Australia. Recurring revenue growth remained positive and new sales continued to accumulate from new and existing blue-chip clients.

NEXION is seeing significant take-up of the Starlink satellite service by its customers and a subsequent uptick in managed services as NEXION integrates Starlink into the Customers' networks. NEXION customers purchased 30 Starlink services in the quarter and we anticipate this run-rate to increase as the Starlink service disrupts the satellite communications industry.

NEXION also launched its mission critical infrastructure monitoring suite of tools, providing a single source solution called SmartRooms that makes Avtech products simple to purchase via thewww.nexionsmartrooms.comwebsite.

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Revenue Impact of COVID

The border re-opening and introduction of COVID to the community in Western Australia was disruptive through March and some projects were subsequently delayed due primarily to staff shortages. Had these delays not occurred, booked revenue would most likely have continued on its trajectory through the previous three quarters.

Accelerated Global Expansion

The reopening of the borders has however made it easier to resume the company's global expansion plans and significant progress has been made on the East coast of Australia, New Zealand and the West coast of the America's.

Cost Management

The team focused on cost cutting throughout the quarter, eliminating $320,000 per quarter in overheads and expenses. The average cash consumed over Q2 and Q3 was $800,000 per quarter and given cost reductions plus margin from deferred sales, cash burn for Q4 should be approaching $200,000, trending toward zero early in FY23. Overall, the company is targeting cost control that ensures 5 quarters of cash is available at the end of Q4.

Starlink Satellite Services

The Starlink (a SpaceX company) constellation of Low Earth Orbit (LEO) satellites is now available in Australia and NEXION's customers ordered 30 units in the quarter. Integration projects associated with these deployments added $470,000 of total contract value to the NEXION order book and with interest in Starlink continuing to grow, NEXION expects revenue associated with LEO integration to accelerate in the coming quarters.

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Starlink is a unique and highly innovative solution that delivers network speeds at prices previously un-heard of in the satellite communications industry. Satellite communications is essential to much of the resources sector in Australia making Starlink a highly sought after solution because it offers a superior service at a much lower price than traditional satellite services.

SD-WAN Expansion to China

NEXION worked with Aryaka, our global SD-WAN partner to integrate the Australian network with China. This new focus on connectivity between Australia and China has resulted in a significant increase in enquiries to use Aryaka and NEXION to connect companies with operations in China.

Communications services across China's borders and throughout the region can be challenging. The internet infrastructure in China is characterized by several potential choke points that include data and application filtering that can lead to slow speeds, data loss and poor reliability. NEXION Networks and Aryaka now provide a solution to these challenges that presents a host of new opportunities.

NEXION and Aryaka now offer a service that optimises performance and ensures high reliability for our customers in China and the Sub-continent region.

Infrastructure Monitoring

During the quarter, NEXION launched its mission critical infrastructure monitoring solution and the self-service purchasing portalwww.nexionsmartrooms.com. NEXION SmartRooms is a key addition to the portfolio, offering a new, rapidly growing revenue stream from mission critical Industrial Internet of Things (IIoT) solutions.

NEXION's SmartRooms initiative is about bridging the gap between cyber security, network monitoring and environmental risks. Beginning with an Australia and New Zealand distributorship for AVTECH Software, NEXION is now providing a single source solution that automatically discovers devices across

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Use of proceeds under Prospectus	Funds allocated under Prospectus (A$000's)	Funds expended between admission and 31 March 2022 (A$000's)
Deployment of new OneCloud Nodes	3,300	378
Expenses of the offer	360	360
Administration costs	708	494
Working capital	3,882	2,424
Add: receipts from customers between admission and 31 March 2022	6,023
Less: Product manufacturing and operating costs between admission and 31 March 2022	4,568
Less: other costs between admission and 31 March 2022	4,045
Less: Funds expended in acquiring another entity	2,000
Add: Receipts from issue of shares	2,650
Net funds expended between admission and 31 March 2022	5,596

the network, logs and graphs sensor data, alerts users when environmental events occur or thresholds are passed, and allows reporting, auto response, and more. Automatic corrective actions resolve issues for a lights-out response, allowing 'Disaster Prevention' instead of 'Disaster Recovery'.

Thewww.nexionsmartrooms.comportal facilitates ease of purchase and accelerates order-to-cash, for this comprehensive range of products for monitoring work environment risk factors such as temperature, fluid levels, airflow, humidity, access/egress and more.

Conclusion

NEXION is focused on forging a unique position as a Global Business Service (GBS) provider and by adding these key solutions has further enhanced its ability to offer a comprehensive range of services to its customers on a global scale. NEXION prides itself on truly understanding a clients' unique requirements then providing excellent service via technology integration across a range of enterprise grade products.

NEXION has focused on providing cutting edge managed hybrid cloud, security, and networking solutions with global tier one vendors such as Netapp, Aryaka, Fortinet and IBM. This quarter we have added Starlink and Avtech to the mix.

About NEXION Group Ltd

NEXION is an information technology service provider that offers network, compute and data storage as-a-service that it integrates with Public Cloud services to form NEXION's hybrid cloud solution called

NEXION OneCloud. NEXION sells its OneCloud capacity and technology management services to enterprise customers on term contracts up to 60-months. The company's enterprise ICT managed services division offers Technology as a Service across the globe.

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A summary of expenditure since listing, and a comparison with the use of funds statement in the

Company's prospectus dated 30 November 2020, is set out below:

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Payments to Related Parties in Appendix 4C:

The ASX Appendix 4C for the quarter ended 31 March 2022 included payments to related parties in item 6.1. These payments relate to directors' fees for that quarter.

This announcement has been authorized by the Board of NEXION Group Ltd.

NEXION Group Ltd

Level 2, Building C, 355 Scarborough Beach Rd Osborne Park, WA, 6017, Australia

ABN:48 628 415 887

Should you wish to contact the company in relation to this announcement please contact: Paul Glass - Group Chief Executive Officer [e-mail]

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