www.nexiongroup.io
28 July 2022
For personal use only
Quarterly Activities Report
For the quarter ending June 30, 2022
NEXION delivers robust organic revenue growth and higher gross margins
NEXION Group Ltd (Nexion or Company) (ASX: NNG), the fast emerging, global Cloud service provider is pleased to announce a strong quarter with further improvements to margin and reduced operating costs.
Highlights
- Annual revenue up 207% YoY.
- Underlying organic growth up 76% YoY.
- Operating business in Australia approaching cash positive.
- New Zealand office open for business in Auckland.
- Acquisitions underway represent consolidated Group pro-forma $18.4M FY22 revenue.
NEXION listed in February 2021 with the intention of growing organically at 35% and with acquisitions, reach $15M pro-forma revenue for FY22. Organic growth of the original NEXION Networks business was an impressive 76% and with the addition of the Blue Sky Telecom Pty Ltd acquisition, Group revenue came in at $6.69M, up 207% for the year. With the completion of binding term sheets (announced on 25th July 2022) to acquire two business in New Zealand, the Group has a retrospective pro-forma FY22 revenue of $18.4M. On completion of these acquisitions and organic growth in the entities, it is anticipated that the group will deliver positive EBITDA in FY23.
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NEXION Group Ltd - ABN: 48 628 415 887
'Building C' Level 2, 355 Scarborough Beach Road, Osborne Park WA 6017
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Despite the residual headwinds of COVID increasing sick-leave and making engineering skills scarce commodities, we delivered a solid underlying revenue increase. The pipeline of new business remains strong, and we anticipate this upward revenue trend to continue.
The quarterly revenue chart represents revenue recognised in each quarter following audit adjustments for the relevant revenue recognition period made at year end.
NEXION Pacific
During the quarter we opened our Auckland office, appointed our lead technical architect, and began to bring some new clients on-board.
Our expansion strategy is to establish our Hybrid Cloud capability in a new region, appoint a regional lead technical architect then acquire local businesses whose technical resources we can leverage to deliver services to our blue-chip, global customers. This approach enables us to reach scale faster and by increasing utilisation of the resources in our acquired businesses, also improves their revenue and profitability.
After many months of work we identified, negotiated, and executed binding term sheets to acquire Aiscorp Limited (Aiscorp) and Silicon Systems Limited (Silicon). The combined un-audited revenue of Aiscorp and Silicon to the end of the NZ financial year 2022 (March 31st, 2022) was AUD $11.71 million and EBITDA was AUD $1.12 million assuming an NZD/AUD exchange rate of 0.90.
NEXION Pacific includes the East coast of Australia and extends to the West coast of the USA. The region will be managed from New Zealand and provides a base in an effective time-zone to support our next step into Canada.
Cost Management
The underlying profitability of the NEXION Networks operating business in Australia remains a focus and we
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NEXION Group Ltd ABN 48 628 415 887
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For personal use only
anticipate generating a profit from this business early in FY23 as we shed the remaining overheads from earlier acquisitions including consolidation of two office leases into one, exit some low-yielding initiatives and continue to increase gross profit through higher utilisation of our Hybrid Cloud assets.
The overall cost of running the corporate office of the public company is stable and as we continue to scale the operating business through FY23 and deliver higher profits, the overall Group EBITDA path turns positive.
Conclusion
NEXION has shown strong organic revenue growth, operational cost management and the capability to execute our global acquisition strategy. Our FY23 goal, stated in the prospectus was to reach $30M revenue and we are confident in our ability to exceed this goal. We have proven our capability to acquire and grow complimentary businesses and will continue to pursue our objective to deploy Hybrid Cloud and SD-WAN services in eight global regions.
About NEXION Group Ltd
NEXION is an information technology service provider that offers global network, compute, security and data storage solutions, 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.
www.nexiongroup.io
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NEXION Group Ltd ABN 48 628 415 887
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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:
For personal use only
Use of proceeds under Prospectus | Funds allocated under Prospectus | Funds expended between |
(A$000's) | admission and 30 June 2022 | |
(A$000's) | ||
Deployment of new OneCloud Nodes | 3,300 | 435 |
Expenses of the offer | 360 | 360 |
Administration costs | 708 | 579 |
Working capital | 3,882 | 3,003 |
Add: receipts from customers between admission and 30 June 2022 | 7,829 | |
Less: Product manufacturing and operating costs between admission and 30 June 2022 | 5,816 | |
Less: other costs between admission and 30 June 2022 | 5,196 | |
Less: Funds expended in acquiring another entity | 2,000 | |
Add: Receipts from issue of shares | 2,457 | |
Net funds expended between admission and 30 June 2022 | 7,102 |
Payments to Related Parties in Appendix 4C:
The ASX Appendix 4C for the quarter ended 30 June 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 at paul.glass@nexiongroup.io
NEXION Group Ltd ABN 48 628 415 887
For personal use only
Appendix 4C
Quarterly cash flow report for entities subject to Listing Rule 4.7B
Appendix 4C
Quarterly cash flow report for entities subject to Listing Rule 4.7B
Name of entity
Nexion Group Ltd | |
ABN | Quarter ended ("current quarter") |
48 628 415 887 | 30 June 2022 |
Consolidated statement of cash flows | Current quarter | Year to date | ||
$A'000 | (12 months) | |||
$A'000 | ||||
1. | Cash flows from operating activities | |||
1.1 | Receipts from customers | 1,806 | 6,681 | |
1.2 | Payments for | |||
(a) | research and development | |||
(b) product manufacturing and operating | (1,226) | (5,123) | ||
costs | ||||
(c) | advertising and marketing | (56) | (248) | |
(d) | leased assets | (126) | (400) | |
(e) | staff costs | (697) | (2,469) | |
(f) administration and corporate costs | (663) | (2,191) | ||
1.3 | Dividends received (see note 3) | |||
1.4 | Interest received | 1 | 1 | |
1.5 | Interest and other costs of finance paid | (1) | (3) | |
1.6 | Income taxes paid | |||
1.7 | Government grants and tax incentives | |||
1.8 | Other | |||
1.9 | Net cash from / (used in) operating | (961) | (3,753) | |
activities | ||||
2. | Cash flows from investing activities | |||
2.1 | Payments to acquire or for: | |||
(a) | entities | - | (2,000) | |
(b) | businesses | |||
(c) property, plant and equipment | (3) | (12) | ||
(d) | investments | |||
(e) | intellectual property | |||
(f) other non-current assets | ||||
ASX Listing Rules Appendix 4C (24/01/22) | Page 1 | |||
+ See chapter 19 of the ASX Listing Rules for defined terms. |
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NEXION Group Ltd. published this content on 27 July 2022 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 27 July 2022 22:17:01 UTC.