Vonex : December Quarterly Update & Appendix 4C

ASX Announcement

31 January 2022

December 2021 Quarterly Shareholder Update and Appendix 4C

Highlights:
only	• H1 FY22 sales revenue of $14.94 million, up 67% YoY, in line with expectations.
	• Total contract value (TCV) for retail sales of ~$2 million for the December quarter, an increase of more than
use	25% over the same period in FY21. Vonex's achievement of a record sales month in November (+50% YoY)
has set a strong base for continued revenue growth.
• In line with growth strategy, the Company acquired 100% of Voiteck Pty Ltd, an established provider of voice
and internet services to SME customers in South Australia.
• Wholesale division showed continued growth, with NBN and Mobile Voice sales up 26% and 31%
respectively over the previous calendar year. Wholesale Voice and PBX revenue increased 34% YoY,
contributing to the now more than 90,000 PBX extensions on the Vonex platform.

• Cash balance of $8.34 million as at 31 December 2021.

Telecommunications innovator Vonex Limited ("Vonex" or the "Company") (ASX: VN8) is pleased to provide an update on its activities for the quarter ended 31 December 2021.

FINANCIAL COMMENTARY

personal	• Unaudited sales revenue for the half year of $14.94 million, an increase of 67% on the prior corresponding
	period.
	• Annualised recurring revenue (ARR) of ~$34.5 million as at 31 December 2021, up more than 100% YoY.
	• $7.72 million in cash receipts earned during the quarter, a year-on-year increase of 78% driven by a rapidly
	growing customer base and continued expansion of market share.
For	• Cash on hand of $8.34 million as at 31 December 2021, ensuring surplus available liquidity for activities over
the coming quarters.

RETAIL BUSINESS GROWTH

ollowing the successful completion of Vonex's transformational acquisition of the Direct Business operations from MNF Group in August 2021, the Company has continued to deliver growth in both SME customer numbers as well as contracted revenue. The total contract value (TCV) of new customer sales added in the month of November 2021 exceeded $1 million, which was a record month of sales for the Company's Retail operations. This monthly result represents an increase of 50% compared to November 2020 and was achieved in the face of lockdown disruptions impacting normal trade in Melbourne and Sydney. Vonex achieved TCV of new customer sales during the December 2021 quarter of $2 million.

ASX Announcement

Vonex has now attracted approximately 90,000 registered active users to its PBX cloud-based phone service, up 114% year on year, a key indicator of the Company's business development progress.

The Company achieved ARR of ~$34.5 million as at 31 December 2021, up 103% year-on-year.

use only
The chart below shows Vonex's delivery of consistent long-term growth in ARR.
personal
For	* ARR at year-end CY21 includes Voiteck which completed on Jan 1 2022

DIRECT BUSINESS ACQUISITION

In January 2022, the Company completed its acquisition of Voiteck Pty Ltd ("Voiteck"). Voiteck is an established provider of voice and internet services to SME customers in South Australia.

Founded in 2009 by telecommunications industry veteran Declan O'Callaghan, Voiteck has grown to now service more than 10,000 hosted PBX phone system users through approximately 1,000 customers, spanning a range of end-markets including Aged Care and Community Clubs.

Voiteck's established presence across several niche verticals and its strong standing in the South Australian market

ASX Announcement

have launched Vonex into a new geographic region which presents exciting growth opportunities. The acquisition also provides Vonex for the first time with a much-needed branded physical presence in South Australia, through a

customer showroom located on King William Street in the Adelaide CBD. This showroom will allow Vonex to manage its South Australian channel partners more closely and accelerate growth in this market.

onlyc mplementary, high-quality ICT companies that add value to shareholders and customers. Vonex is looking forward

The acquisition significantly boosts Vonex's base of recurring customer revenue, with group ARR rising to more than $34.5 million post completion. Beyond ARR, the acquisition provides further scale benefits.

This acquisition is consistent with Vonex's deliberate strategy to pursue growth via organic and inorganic channels.

Across several transactions, Vonex has successfully demonstrated its ability to identify, acquire and integrate

to integrating Voiteck's operations with its established SME-focusedfull-service telecommunications platform, bringing Voiteck's customers better systems with more functionality all backed by Vonex's reliability guarantee.

Transaction Details

Vonex has paid total upfront consideration of approximately $2.75 million, comprising:

use	• $2.2 million in cash; and
• 4,983,246 ordinary shares at a deemed issue price of A$0.11 (being the volume-weighted average price of
	Vonex shares for the 10 trading days to 13 December 2021), which are escrowed for between 6 months and
	24 months post issue.

personalThe cash component of the upfront consideration has been paid utilising Vonex's existing cash reserves. Additional consideration of up to $2.75 million may be paid to the vendors subject to the realisation of certain synergies and

EBITDA growth delivered in FY22 and FY23.

The total upfront consideration represents a multiple of <4.5x LTM Sept 21 pro forma EBITDA, with the acquisition expected to be double-digit earnings accretive on a full year basis.

TCA Partners acted as financial advisor to Vonex on the acquisition.

WHOLESALE BUSINESS GROWTH

Vonex's Wholesale division (2SG) showed continued growth into December, with Mobile Voice up 31% and NBN with 4G backup increasing by 26% over the previous calendar year. Vonex's flagship IP voice product has also delivered

significant ongoing growth, with wholesale voice revenues up 34% YoY, reflecting strong achievement of cross-selling.For

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The Company has rolled out 5G services to its customers, providing another significant value proposition to support sales. After having been selected by Optus as a key 5G partner, 2SG has now launched a brand new Service Qualification and an automated ordering system for partners and customers. With the 5G network rollout continuing to gather pace, the business expects the ongoing sales contribution of this product to accelerate.

onlyCORPORATE Cash Position

As at 31 December 2021, the Company had approximately $8.34 million of cash and $15.5 million drawn from a financing facility with Longreach Credit Investors. Vonex has $6.4 million of deferred cash consideration payable to MNF Group in monthly installments, which the Company intends to repay through a combination of cash at hand and future cashflows from the business. The Company retains sufficient funding to carry out its activities over the coming

usequarters.

Annual General Meeting

The Company's Annual General Meeting was held on 29 November 2021. All resolutions were passed by way of a Poll.

personalOUTLOOK

Vonex is well placed to capitalise on its increased market presence, lower marginal cost base and capacity to realise cross-selling opportunities. The acquisition of MNF Group's Direct Business in August 2021 and Voiteck in January 2022 were highly complementary to the Company's growth strategy and have transformed Vonex by delivering financial scale and market relevance. Through these two deals, Vonex is welcoming a highly experienced combined new team f 40 staff in Sydney, Melbourne and Adelaide, approximately 6,000 new SME customers and 180 new channel partners to its platform. Through completing these acquisitions and delivering organic growth, in CY21 the Company

doubled Vonex's base of annualised recurring revenue on a full year basis.

Vonex has identified and is pursuing opportunities to increase the value of the acquired and combined business by targeting growth in lead generation, brand awareness and average revenue per user (ARPU). In 2SG Wholesale, Vonex plans to deliver organic growth, accelerated by the recent acquisition by way of cross-selling opportunities, product range expansion and network cost efficiencies. The Company's focus continues to be on the recruitment of new Channel Partners across Australia to support the anticipated growth in Hosted PBX and Unified Communications in the region. National marketing programs in Australia's capital cities remain underway to gain traction with SME customers

Forand facilitate strong growth in registered PBX users.

In addition to organic growth initiatives, Vonex is pursuing a disciplined M&A growth strategy for FY22 and FY23, targeting profitable IT and telco businesses that offer potential for growth in revenue, profit and earnings per share through further product expansion, scale and cross-selling.

With the latest Communications Report from the Australian Communications and Media Authority forecasting the Australian telecommunications industry revenue to grow from $44 billion in 2018 to $47 billion by 2022, Vonex continues to see a positive outlook for growth in sales as the Company's customer base expands.

ASX Announcement

DISCLOSURE

Listing Rule 4.7C.1

The net operating cash inflow for the December 2021 quarter was $1.95 million from cash receipts of $7.72 million (September quarter: inflow of $0.4 million on $7.05 million in cash receipts). Quarterly expenditure was in line with internal budgets and was focused on the following areas:

only	•	Cost of goods relating to sales across the wholesale and retail divisions, including the Qantas Business Rewards
	partnership of $3.16 million
•	Transaction expenses associated with the acquisition of Voiteck of $0.08 million
•	Advertising and marketing including investments in cross-selling opportunities of $0.11 million
	•	Employment, customer support and contractor costs of $1.54 million
use	•	Channel Partner training and expansion of $0.08 million
•	Maintaining and continual improvements to the Company's systems and data security of $0.16 million

Note 6 to Appendix 4C

Payments to related parties of the entity and their associates during the quarter:

• Director fees and wages of approximately $161,854
• Legal fees of approximately $42,670
• Company secretarial and accounting fees of $9,000

personal
This announcement has been authorised for release by Matt Fahey, Managing Director of Vonex Ltd.
		ENDS
For more details, please contact:
Matthew Fahey	Nicholas Ong	Tim Dohrmann
Managing Director	Non-Executive Chairman	Investor and Media Enquiries
Vonex Ltd	Vonex Ltd	NWR Communications
E:[e-mail]	E:[e-mail]	E:[e-mail]
T: [phone]	T: [phone]	T: [phone]
For
ABOUT VONEX:

V nex is a full service, award-winning telecommunications service provider selling mobile, internet, traditional fixed lines, infrastructure solutions and hosted PBX and VoIP services - predominantly to small to medium enterprise ("SME") customers under the Vonex brand. Vonex also develops new technologies in the telecommunications industry, including a feature-richcloud-hosted PBX system.

The Company also provides wholesale customers, such as internet service providers, access to the core Vonex PBX, 5G mobile broadband and call termination services at wholesale rates via a white label model. Vonex is pursuing a disciplined M&A growth strategy, targeting profitable IT and telco businesses that offer potential for growth through further product expansion, scale and cross-selling.