DXN : Quarterly Activities & Cashflow Report

29 April 2022

ASX Announcement

Quarterly Report

The Board of pre-fabricated modular Data Centre specialist, DXN Limited (ASX:DXN) ("DXN" or "the Company") is pleased to provide its quarterly report and Appendix 4C for the three months ended 31 March 2022 ("Q3FY22").

Highlights

•  Cash receipts - A$3.86m for Q3, up 159% on the previous corresponding period ("pcp") (prior year Q3 cash receipts of A$1.49m) and A$11.76m for YTD FY22, up 160% on pcp FY21 (prior year YTD cash receipts of A$4.52m)

•  Second consecutive quarterly positive operating cash flow

•  New contracts signed in the period ~A$4.88m (prior year Q3 new contracts of A$1.0m)

•  Stable cash position - A$2.87m at 31 March 2022

•  New cloud product being introduced to data centres

Operating Update

Modular Manufacturing

The Company secured its largest single contract in its' history during the quarter - the Multiplex modular data centre and communications modules contract with a total contract value of A$3.5m.

Net cash generated from operating activities for the quarter was A$98k, which is the second consecutive quarter of positive net cash flow.

During the quarter, DXN also successfully completed delivery of the following projects:

•  Multiplex - Centre of National Resilience (Perth) - Main Data Centre

•  2 Edge Data Centres for Covalent Lithium

•  Cosmos Capital Design Delivery

New contracts awarded during the quarter totalled ~A$4.88m (~A$3.88m more than the same period last year) and included:

•  Multiplex Modular data centre and communication modules contract of A$3.5m (as announced to the market on 25 January 2022);

•  A further Sub.Co contract of ~A$1.2m (as announced to the market 21 March 2022); and

•  Variations to existing customer contracts including the Cosmos Capital & Covalent Lithium contract of ~A$183k.

DXN Limited

Data Centre Operations

Our data centres continued to operate in line with expectations, with revenues for the quarter of A$634k (pcp A$274k), noting Darwin was not owned during Q3 FY21.

Staff Costs

As announced on 18 January 2022, Mr. Matthew Madden resigned as Managing Director of the Company. The amount of A$1,446k for 'staff costs' in the current quarter's Appendix 4C includes entitlements paid to Mr. Madden and other outgoing staff, and payment of deferred payroll tax for NSW.

Summary of expenditure

During the quarter, the company's expenditure totalled A$4,914,00, split as follows:

•  Product manufacturing and operating costs of A$2,196,000

•  Other operating overhead costs of A$1,798,000

•  Depreciation and Amortisation costs of A$889,000

•  Research and development costs of A$24,000

•  Advertising and marketing costs of A$7,000

It should be noted that 'Other operating overhead costs' included staff costs of A$1,044,000 and Darwin operating expenses of A$261,000.

Cash Position

As of 31 March 2022, DXN had a cash balance of A$2.87m.

Company Update

Post the quarter end, the Company's Unmarketable Parcel Sale facility closed on 22 April 2022. The number of shares acquired under this facility is 24,113,336 representing 905 shareholders. As announced to the market on 9 March 2022, the estimated date of payment to these shareholders will be as soon as practicable after 20 May 2022.

Related Party Payments

The aggregate amount of payments to related parties and their associates included in the current quarter totalled A$50k. These payments consisted of Director's fees, salaries, and superannuation for non-executive directors. All payments were on normal commercial terms.

DXN Limited

Outlook

At the end of the March 2022 quarter, DXN's Modular Division sales bookings for YTD FY22 was at ~A$13.8m. DXN has achieved consistent new bookings in the first 3 quarters of this financial year as follows:

•  Q1-FY22 - ~A$5.7m

•  Q2-FY22 - ~A$3.2m

•  Q3-FY22 - ~A$4.9m

Sales opportunities for the modular data centre division for the rest of the financial year remain strong as we continue to focus on our key market segments of Subsea Cables, Resources, Telecommunications, Satellite and Edge data centres across the APAC region.

During the final quarter of FY22, DXN plans to soft-launch the DXN Cloud product into our data centre portfolio. A pilot customer program is currently underway to ensure a smooth introduction.

Taking into consideration the new modular manufacturing contracts already signed and data centre revenue expected in FY22, DXN is on track to outperform the previous year's revenue.

-ends-

About DXN Limited

DXN is Asia Pacific's only vertically integrated manufacturer and operator of modular data centres. DXN's core business is designing, engineering, manufacturing, maintaining and operating data centres.

The Company has two core divisions that provide a complete symbiotic relationship that better captures what we do, how we do it and why we do it.

These divisions are:

• 1. Modular Division - designs, engineers, manufactures, and deploys EDGE facilities and critical DC infrastructure; and

• 2. Data Centre Operations - operates, maintains and markets data centres and critical infrastructure for our own DXN data centres as well as our modular customers. For morehttps://dxn.solutions.

-ends-

For more information please contact:

Shalini Lagrutta, CEO

T [phone]

E:[e-mail] ASX Release authorised by the Board

DXN Limited

Rule 4.7B

Appendix 4C

Quarterly cash flow report for entities subject to Listing Rule 4.7B

Name of entity

DXN Limited

ABN

46 620 888 548

Quarter ended ("current quarter")

31 March 2022

1.	Cash flows from operating activities
1.1	Receipts from customers	3,856	11,756
1.2	Payments for
(a) research and development	(24)	(37)
(b) product manufacturing and operating	(1,070)	(5,387)
costs
(c) advertising and marketing	(1)	(3)
(d) leased assets	(507)	(1,348)
(e) staff costs	(1,446)	(3,975)
(f) administration and corporate costs	(710)	(1,610)
1.3	Dividends received (see note 3)	-	-
1.4	Interest received	-	-
1.5	Interest and other costs of finance paid	-	(16)
1.6	Income taxes paid	-	-
1.7	Government grants and tax incentives	-	874
1.8	Other (provide details if material)	-
1.9	Net cash from / (used in) operating	98	254
activities
2.	Cash flows from investing activities
2.1	Payments to acquire or for:
(188)	(4,014)
-	-
(13)	(20)
-	-
(19)	(26)
-	-
Page 1

• (a) entities

• (b) businesses

• (c) property, plant and equipment

• (d) investments

• (e) intellectual property

(f)other non-current assets

Appendix 4C

Quarterly cash flow report for entities subject to Listing Rule 4.7B

Consolidated statement of cash flowsCurrent quarter

$A'000

Year to date (9 months)

$A'000

2.2

Proceeds from disposal of:

-	-
-	-
-	-
-	-
-	-
-	-
2.3	Cash flows from loans to other entities	-	-
2.4	Dividends received (see note 3)	-	-
2.5	Other (provide details if material)	-	197
2.6	Net cash from / (used in) investing	(220)	(3,863)
activities
3.	Cash flows from financing activities
3.1	Proceeds from issues of equity securities
(excluding convertible debt securities)	-	3,144
3.2	Proceeds from issue of convertible debt	-	-
securities
3.3	Proceeds from exercise of options	-	-
3.4	Transaction costs related to issues of	-	(202)
equity securities or convertible debt
securities
3.5	Proceeds from borrowings	-	4,000
3.6	Repayment of borrowings	-	(1,626)
3.7	Transaction costs related to loans and	(110)	(480)
borrowings
3.8	Dividends paid	-	-
3.9	Other (provide details if material)	-	-
3.10	Net cash from / (used in) financing	(110)	4,836
activities
4.	Net increase / (decrease) in cash and
cash equivalents for the period
4.1	Cash and cash equivalents at beginning of
period	3,109	1,664
4.2	Net cash from / (used in) operating	98	254
activities (item 1.9 above)
4.3	Net cash from / (used in) investing activities	(220)	(3,863)
(item 2.6 above)
Page 2

• (a) entities

• (b) businesses

• (c) property, plant and equipment

• (d) investments

• (e) intellectual property

(f)other non-current assets