NX Filtration N : NX Filtration - 2022 H1 Press Release

NX Filtration accelerates strategic expansion and reports strong revenue growth in H1 2022

Enschede, the Netherlands, 30 August 2022, 07:00 CET

ENSCHEDE, THE NETHERLANDS - NX Filtration N.V. (Euronext Amsterdam: NXFIL), the global provider of breakthrough direct nanofiltration (dNF) technology for pure and affordable water with strong sustainability benefits, today reports its condensed interim consolidated financial statements for the six months ended 30 June 2022.

Half year 2022 highlights

1. Total revenues1 of €3.7m, an increase of 188% compared to the first half year of 2021

1. Expanding global footprint; 63% of revenues from sale of goods outside Europe, and new

sales presence established in France, Germany, China, Japan and Indonesia

1. Successful conversions of pilots to full-scale projects, amongst others for Aquarius H2O

Dynamics (India), BI Pure Water (Canada), Cross Textile (Turkey), Delco Water (Canada), Ecoazur (Mexico), Ekopak (Belgium), Envirogen (UK), Practical Water Solutions (South Africa) and PT Bayu (Indonesia)

1. Accelerating on three key strategic fronts:
2. • Upsized design of our new megafactory: higher initial capacity and more space for future capacity additions
   • Pre-emptingthe expansion of our fleet of pilot systems, on-trackto exceed previous guidance of more than 140 systems by the end of 2022
   • Ahead-of-the-curveexpansion of our organization, with successful hires of strong industry leaders, amongst whom the former Chairman of Hydranautics, the former Head of Inge (DuPont Water Solutions) China, the former Commercial Director of LG Water

Solutions and the former Global Technology Leader Equipment & Systems of Suez

1. Strong ESG profile and impact underpinned by recently obtained Sustainalytics rating,

ranked best 13% of our global subindustry peer group

1. Reiteration of outlook on total revenues of €8m to €10m for full year 2022, driven by strong market demand, further roll-outof full-scaleprojects and our expanding global sales presence

Michiel Staatsen, CEO of NX Filtration, states:

"In the first half year of 2022 NX Filtration created strong impact on many fronts. We increased our revenues by 188%, successfully converted many pilot projects into full-scale projects,

1 Total revenues (defined as Gross income in the Semi-Annual Report) includes revenues from sale of goods in the Clean Municipal Water and Sustainable Industrial water business lines and other income

increasingly benefitted from repeat projects, attracted strong new talent to our company and, most importantly, realized real and measurable ESG impact through our mission of clean and affordable water for all. I am particularly proud that Recolab Sweden, to which we supplied our dNF technology, was awarded by Global Water Intelligence as wastewater project of the year 2022.

Encouraged by strong traction in the market and increasing market opportunities, we decided to accelerate our strategic expansion on three key fronts. We upsized the design of our new megafactory to create flexibility to deliver larger volumes ahead of schedule. We also pre-empted the expansion of our fleet of pilot systems to facilitate the strong and growing demand in the market. We are well on-track to exceed our previous guidance of more than 140 pilot systems by the end of 2022. These pilots are an important step in our commercial roll-out strategy and provide the basis for our anticipated strong revenue growth. Finally, we successfully strengthened our organization with various high-profile industry leaders in commercial and technical roles. Being able to attract such personnel is a great testimony to the breakthrough technology we provide, the impact we make with our products and the great place to work we offer to our employees."

Financial and segmental review

Total revenues increased by 188% to €3,692k in the first half year of 2022 compared to €1,280k in the first half year of 2021. Key drivers for this growth were an increasing number of full-scale projects that resulted from preceding pilot projects, as well as global sales force expansions and a growing number of OEM relationships, which are increasingly resulting in repeat projects.

In the Sustainable Industrial Water business line, revenues from the sale of goods were €2,073k in the first half year of 2022, a growth of 169% compared to €771k in the first half year of 2021. NX Filtration benefitted from the pilots it had initiated since mid-2020 and the relatively short lead-times from pilots to full-scale projects. We experienced strong traction with customers in, amongst others, the food & beverage and textile industries looking to reduce their water footprint and optimize their water systems in a sustainable way.

Key projects included a repeat full-scale project for Ecoazur in Mexico, for whom we also initiated various pilot projects that could lead to further potential repeat industrial and municipal projects. In addition, NX Filtration converted various pilot projects for wastewater reuse into full- scale projects, for example with Cross Textiles in Turkey and Practical Water Solutions in South Africa. For Envirogen, NX Filtration successfully expanded its previous ultrafiltration and microfiltration projects to a first dNF project for a UK based industrial client, an example of our strategy of cross-selling between our various membrane products.

In the Clean Municipal Water business line, revenues from the sale of goods in the first half year of 2022 were €1,180k, a growth of 272% compared to €317k in the first half year of 2021. This growth was primarily driven by full-scale projects in Asia and North America, whereas the focus in Europe remains on realising pilot projects with leading players, with visibility on future full- scale projects.

In North America, NX Filtration successfully sold its first full-scale municipal system with Delco Water to produce drinking water from lake water in Northern Alberta, Canada. Subsequently, NX Filtration worked with BI Pure Water on its largest municipal system till date in North America for a similar application. In Asia, we secured a large repeat order with PT Bayu for the production of drinking water in Indonesia.

Other income was €439k in the first half year of 2022, a growth of 129% compared to €192k in the first half year of 2021. Growth in other income was driven by rental income from a growing number of pilot projects and government grants for innovation projects.

Gross margin increased to 55.3% in the first half year of 2022 compared to 47.9% in the first half year of 2021, despite the fact that the gross margin in the first half year of 2022 was amongst others impacted by waste and inefficiencies related to the start-up of the second spinning line.

Personnel costs increased by 154% to €3,797k compared to €1,497k in the first half year of 2021, reflecting ahead-of-the-curve investments in personnel, with total FTEs increasing from 43 at 30 June 2021 (69 at 31 December 2021) to 104 at 30 June 2022.

Other operating costs increased by 463% to €2,376k compared to €422k in the first half year of 2021 (excluding costs related to the IPO), caused by increased marketing and sales activities, travel, increased energy consumption and growth in personnel related cost due to the growth of the organization.

EBITDA loss was €3,936k in the first half year of 2022 compared to a loss of €1,206k in the first half-year of 2021 (excluding costs related to the IPO).

Net loss amounted to €3,989k compared to a net loss of €1,407k in the first half year of 2021 (excluding costs related to the IPO and corresponding tax effect).

Capex amounted to €8,060k as compared to €2,443k in the first half year of 2021. Capex included investments in the ongoing capacity expansion at the existing locations, the purchase of land and development cost for the new megafactory and additions to NX Filtration's fleet of pilot systems. Additionally, NX Filtration capitalized €428k of development costs which demonstrates our continued efforts to invest in innovations for the future.

Net cash position at 30 June 2022 amounted to €116,589k compared to a net cash position of €133,433k at 31 December 2021.

Working capital2 increased to €5,434k as per 30 June 2022 versus €1,062k at 31 December 2021, as a result of increased operational and commercial activities to support further growth of the business.

Operating cash flow was €8,438k negative in the first half year of 2022, compared to €1,294k negative in the first half year of 2021 (excluding IPO related cost).

Sustainability and ESG impact

Sustainability and a clear Environmental, Social and Governance (ESG) agenda are at the heart of NX Filtration's business. We passionately believe we have a responsibility to contribute positively to society and the environment.

In the first half year of 2022 we further build on our externally certified dark green-labelled IPO, by obtaining a Sustainalytics rating, in which we rank amongst the 13% best performers in our global subindustry peer group. We also joined the United Nations Global Compact initiative. This is a voluntary leadership platform for the development, implementation and disclosure of responsible business practices - as part of our commitment to be a responsible company.

We continue to use our targeted ESG framework to address and monitor our impact along three pillars:

1. Clean water for all: Our membrane sales in the first half year of 2022 could enable the production of 160 billion liter of clean water3. In the first half year of 2022, NX Filtration enabled access to clean water across 22 countries.
2. Avoiding emissions at our customers: With our membrane module sales in the first half year of 2022, we enabled 1,467 ton CO2e savings during the deployment lifetime of our membrane modules, by avoiding the use of 2.7 million kg of chemicals and saving 33 GWh energy compared to conventional technologies4.
3. Our internal initiatives: We have implemented various sustainability measures and initiatives around ESG related themes in our own operations, for our employees and our partners.

1. Working capital defined as Inventories plus trade and other receivables minus trade and other payables
2. Based on NX Filtration's sales of approximately 1,350 membrane modules (dNF and UF only) in the first half year of 2022, multiplied by the expected capacity and lifetime of such modules. See Sustainability Chapter in the Annual Report 2021 for details, assumptions and methodologies
3. See Sustainability Chapter in the Annual Report 2021 for details, assumptions and methodologies

Accelerating on three key strategic fronts

In the first half year of 2022, NX Filtration has accelerated its progress and ambition on three key strategic fronts: we upsized the design of our new megafactory, pre-empted our pilot roll-out and strengthened our organization ahead-of-the-curve.

Upsized design of our new megafactory

During the first half year of 2022, NX Filtration started to benefit from its expanded capacity in its existing facilities. The commissioning of its second spinning line resulted in a combined total capacity of approximately 10,000 membrane modules per year5 (compared to the capacity of approximately 2,500 membrane modules per year in 20216).

In parallel, further progress has been made with the development of a new large-scale manufacturing facility, which is expected to be commissioned at the end of 2023. NX Filtration decided to upsize the design of this megafactory with a higher initial capacity and allowing more space for future capacity additions. Improvements and lessons learned from our recently commissioned second spinning line have resulted in higher capacity estimates per spinning line. In addition, to create optimal flexibility for the future, we have decided to build a larger (approx. 32,500 m2 floor space) facility from the outset. These two factors allow us to start-up with a higher initial capacity (approximately 50k7 membrane modules based on 4 spinning lines), whilst leaving space for further capacity additions within the same facility (total targeted annual capacity of >120k8 membrane modules). Total expected capex is higher than foreseen at our IPO, as a result of the larger plant design and current views on cost inflation, but estimated capex per module capacity remains in line with previous estimates.

We are on track to start the construction of our new megafactory in H2 2022. Parallel teams are working on the building, utilities and equipment. Commissioning of the new factory is expected at the end of 2023.

Pre-empting expansion of our fleet of pilot systems

Pilot projects play an important role in NX Filtration's commercial roll-out strategy. In the first half year of 2022, NX Filtration initiated 81 pilot projects compared to 32 in the first half year of 2021. Responding to strong market demand, NX Filtration is accelerating the expansion of its fleet of pilot systems. On 30 June 2022, NX Filtration had 113 pilot systems in its fleet (up from 31 at 30 June 2021 and 85 at the end of 2021). Including outstanding purchase orders for

1. Estimation, based on 5-shift production and depending on product mix
2. Theoretical capacity (as this spinning line was incurring downtime with changes in products being produced and because this spinning line is also used for R&D activities), estimation based on 3-shift production and depending on product mix
3. Estimation, based on 5-shift production and depending on product mix
4. Estimation, based on 5-shift production and depending on product mix