Interim Results

This a replacement announcement for RNS announcement no.8112Z. The revenue figure in the highlights section now reads RM43.53 million, rather than RM3.53 million. There are no other changes to this release.

Fusionex International plc

("Fusionex" or "the Company" or "the Group")

Interim results for the six months ended 31 March 2016

Strong revenue growth in H1; launch of new GIANT product set for H2

Fusionex, an award-winning and market-leading international provider of software specialising in Analytics, Big Data and the Internet of Things, is pleased to announce its interim results for the six months ended 31 March 2016.

Highlights:

· Continued strong uptake of GIANT driving revenue growth, up 38% to RM 43.53 million (H1 2015: RM31.62 million)

o 32 new GIANT customers secured taking total to 68 (H1 2015: 9 GIANT wins, 21 in total)

· Gross profit increased 35% to RM33.74 million (H1 2015: RM24.95 million)

· EBITDA* of RM7.22 million (H1 2015: RM16.89 million)

o Reflects circa RM10 million of planned investment in H1

o Investment has resulted in a reduction in profit margins as expected

· Cash and cash equivalents of RM124.91 million, up from RM57.73 million FY 2015

o Includes the funds raised in October 2015 amounting to GBP13.98 million (RM91.85 million)

o Includes negative foreign exchange effect of RM14.07 million

o Cash collection improved significantly as anticipated - debtor days for the period ended 31 March 2016 stood at 84 days (FY 2015: 135)

· GIANT 2016 on track for launch in H2 - designed to target growing demand for Big Data Analytics, with scalable product set suitable for SME through to enterprise customers

· Well placed to take advantage of exciting opportunities to accelerate revenue growth

* EBITDA (MYR million) is derived from PBT (2016: 2.51; 2015: 14.29), plus amortisation of intangible assets (2016: 3.64; 2015: 1.65), plus depreciation of property, plant and equipment (2016: 1.24; 2015: 1.06), plus interest expenses (2016: 0.00; 2015: 0.03), minus interest income (2016: 0.17; 2015: 0.14).

Ivan Teh, Chief Executive of Fusionex, commented:

"The first half saw Fusionex make good progress with both our existing and new growth initiatives. I'm delighted that by the end of H1 2016 GIANT had secured an impressive 68 wins in total since its launch, underpinning continued revenue growth in a period of significant investment.

What's even more exciting to me is the impending launch of GIANT 2016. This will open up new addressable markets for us, substantially expanding the potential reach for our market-leading products, and represents a key milestone in our strategy to accelerate growth considerably over the next few years."

For further details:

Fusionex

Operational and Financial Review

Momentum in GIANT contract wins has supported the Group's continued progress despite this being a period of significant investment, as Fusionex prepares to launch its new Big Data Analytics product in the second half.

The first half has been focused on cementing and expanding the Big Data Analytics platform established since the launch of Fusionex's Big Data Analytics software GIANT in December 2013. The Group has secured 32 new GIANT contracts in the first half, bringing the total number of GIANT wins to 68 since launch and 36 at FY 2015. These contracts have come both via direct sales and its channel partnerships and the continued demand underpins the Group's revenue growth of 38% to RM43.53 million, with gross profit increasing 35% to RM33.74 million (H1 2015: RM24.95 million). This means that to date, the Group has successfully built a GIANT client base that includes significant multi-national and regional brands, which are using GIANT to understand and utilise the vast amounts of data available to them.

In order to build on the platform in place and, in view of the increasing scale of Big Data Analytics, the Group has also been developing its new version of GIANT for launch in 2016. In addition to providing excellent cross- and up-selling opportunities within the Group's existing Business Intelligence customer base, this new version, GIANT 2016, will considerably expand the addressable markets for Fusionex, offering Big Data insights with functionality tailored appropriately whatever the size of business. This will open up significant additional opportunities in sectors where Fusionex already has a strong presence at an enterprise level, such as retail and consumer, manufacturing, financial services and travel and hospitality. During the first half, the Group has invested circa RM10 million towards the marketing and promotion of GIANT.

The Group has also strengthened its balance sheet, with cash and cash equivalents of RM124.91 million, significantly up from RM57.73 million as at 30 September 2015. Cash balances include GBP13.98 million (RM91.85 million) following the fundraising completed in October 2015 to support the new product launch as well as reflecting a reduction of RM14.07 million due to a negative foreign exchange translation. The strong cash position also reflects the significant improvement in cash collection, which, as anticipated, has seen debtor days for the period ended 31 March 2016 improve to 84, down from the previous position of 135 during the year ended 30 September 2015 and trade receivables similarly reduce from RM28.52 million to RM19.91 million.

As announced on 16 March, the Group's financial strength has once again supported the payment of a dividend of approximately 2.15 pence per share, amounting to £1,016,950 in total, to shareholders on the register as at 29 March 2016. The payment was made on 19 April 2016.

Growth Strategy

As indicated above, Fusionex is now targeting two key markets for its Big Data products with the introduction of GIANT 2016, small and medium sized businesses ("SME") as well as large enterprise customers. In targeting SME, GIANT 2016 will open up a significant new addressable market and growth opportunity for the Group, providing SME with the ability to benefit for the first time from Fusionex's Big Data capabilities tailored to their requirements. In the first half, the Group has developed GIANT 2016 in readiness for its imminent launch and with significant interest in Big Data products from SME, management is focused on leveraging this demand to accelerate Fusionex's growth.

In Fusionex's established enterprise-level market, it was pleasing to see another strategic alliance formed in the first half, in March, with Cloudera, the global provider of the fastest and most secure Big Data Hadoop platform. The alliance will see Cloudera and Fusionex offer Big Data bundled offerings. These types of partnership will continue to represent an important route to market for Fusionex going forward for GIANT as they provide the Group with significantly enhanced reach on a cost-effective basis.

In addition to leveraging new and existing channel partnerships, Fusionex is also employing targeted digital marketing campaigns to support GIANT 2016 and enhanced use of industry events and conferences to drive enterprise sales. The marketing strategy has been carefully designed in order to provide the Group with an effective and flexible approach. This means that management can monitor returns on investment and adjust marketing initiatives accordingly, with this discretionary approach ensuring that Fusionex can control its costs carefully and appropriately. Management expects to make further investments in the second half, to support GIANT 2016's launch and subsequent sales pipeline.

The combination of the Group's marketing activities and channel partners supports a substantial new business pipeline, positioning the Group strongly to secure further contracts in the second half and beyond.

Market Backdrop

Fusionex's success in Big Data Analytics is supported by the ever-expanding scope and scale of data available to organisations. Fusionex is already working with a number of blue-chip multi-national organisations in order to help them benefit from such data, whether to achieve cost savings due to reduced downtime in the case of Intel or improved operational efficiencies and revenues such as with Starwood, Lotus, China Light & Power and Jones Lang La Salle. Thanks to these trends, spending on Big Data Analytics is expected to increase to over $187 billion by 2019 from $122 billion in 2015, according to the International Data Corporation ("IDC").

Furthermore, whilst large enterprises currently are the primary drivers of demand for Big Data Analytics, SME have considerable and growing potential. In response to the pent-up demand which the Group has experienced first-hand over the past several years, Fusionex, as outlined above, is seeking to address this sizeable market with the launch of GIANT 2016, which will also provide SME with an attractive combination of Big Data Analytics and IoT capabilities. In targeting these business segments with a more flexible, simple and attractive offering, the Group will open up significant additional growth opportunities, complementing its more established presence amongst enterprise customers.

Current Trading and Outlook

The first half saw the Group make good progress with both its existing and new growth initiatives and management expects to see this momentum continue in the second half.

Fusionex's enterprise customer product GIANT remains well placed to secure further new contracts, underpinned by the high demand for effective Big Data Analytics from global organisations across a wide range of sectors.

Moreover, the impending launch of GIANT 2016 looks set to open up a sizeable new market for the Group, providing all potential customers with a suitable Big Data Analytics proposition. Whilst this opportunity is still in its early stages, management believes that Fusionex's reputation and expertise, combined with highly targeted marketing initiatives, will position it to take advantage of this growing market.

 It is the intention of the Company to capitalise on the current opportunities for growth arising both from its established enterprise-level markets and the new SME market being opened up with the launch of GIANT 2016. As a result the Board remains confident that Fusionex is on track for continued strong growth.

FUSIONEX INTERNATIONAL PLC

CONDENSED CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME

For the six months period ended 31 March 2016

FUSIONEX INTERNATIONAL PLC

CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION

For the six month period ended 31 March 2016

FUSIONEX INTERNATIONAL PLC

CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

For the six months period ended 31 March 2016

FUSIONEX INTERNATIONAL PLC

CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

For the six months period ended 31 March 2016

FUSIONEX INTERNATIONAL PLC

CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS

For the six month period ended 31 March 2016

FUSIONEX INTERNATIONAL PLC

Notes to the Condensed Consolidated Interim Financial Statements

For the six months period ended 31 March 2016

1. Basis of preparation

The condensed consolidated interim financial statements ("Interim Financial Statements") have been prepared in accordance with International Financial Reporting Standards ("IFRS") as adopted by the European Union ("EU") issued by the International Accounting Standards Board ("IASB"), including related interpretations issued by the International Financial Reporting Interpretations Committee ("IFRIC").

The Interim Financial Statements are unaudited and have been prepared in accordance with AIM Rules for Companies and IAS 34 'Interim Financial Reporting' as adopted by the EU and should be read in conjunction with the annual financial statements for the year ended 30 September 2015, which have been prepared in accordance with IFRS adopted by the European Union.

The individual financial information of each entity is measured and presented in the currency of the primary economic environment in which the entity operates (its functional currency). The Interim Financial Statements of the Group are presented in Ringgit Malaysia (RM), which is the presentation currency for the Interim Financial Statements. The functional currency of each of the individual entity is the local currency of each individual entity.

Going concern

As at 31 March 2016, the Group had net assets of RM197,335,998 (31 March 2015: RM110,513,862; 30 September 2015: RM128,672,183) as set out in the Interim Financial Statements above. Following the admission of the ordinary shares to trading on AIM, Fusionex International Plc has considerable financial resources. As a consequence, the Directors believe that Fusionex International Plc and the Group are well placed to manage its business risks successfully and the Directors have reasonable expectations that the Group have sufficient working capital available for its present requirements that is for the next 12 months from the date of this report. Accordingly, they continue to adopt the going concern basis in preparing the historical financial information.

2. Income tax expense

Tax expense is recognised based on management's best estimate of the weighted average annual tax rate expected for the full financial year applied to the pre-tax income of the interim period. The Group's consolidated effective tax rate in respect of continuing operations for the six months ended 31.3.2016 was lower than the Malaysian statutory tax rate of 24% (six months ended 30.3.2015: 25%) caused mainly by the following factors:-

i) effects of lower tax rates in certain tax jurisdictions; and

ii) effects of certain income not subject to tax.

3. Earnings per share

The calculation for earnings per share, based on the weighted average number of shares, is shown in the table below:

4. Property, plant and equipment

Acquisitions

During the six months ended 31.3.2016, the Group acquired additional assets amounting to approximately RM1,919,000 (31.3.2015: RM1,097,000; 30.9.2015: RM5,033,000).

5. Goodwill on consolidation

During the financial period, the Group assessed the recoverable amount of the goodwill and determined that no additional impairment is required.

6. Intangible assets

The intangible assets mainly relate to staff costs.

7. Share Capital

On 15 October 2015, the Company increased its issued ordinary shares from 43,000,000 to 47,300,000 by the placing of 4,300,000 new ordinary shares at 325 pence per share to raise a total of GBP13.975 million. The new ordinary shares represent approximately 10% of the existing share capital of the Company.

8. Merger reserve

The merger reserve arose from the difference between the carrying value of the investment and nominal value of the shares of subsidiaries upon consolidation under the merger accounting principles.

9. Foreign exchange translation reserve

The foreign exchange translation reserves arose from the translation of the financial statements of foreign subsidiaries and are not distributable by way of dividends.

10. Dividends

On 16 March 2016, the directors announced a final dividend for 2015 of 2.15 pence per ordinary share amounting to £1,016,950 (approximately RM5.9 million). The dividend was subsequently paid on 19 April 2015. 

On 13 March 2015, a dividend of 2.10 pence per ordinary share amounting to £903,000 (approximately RM4.9 million) was paid by the Company.

11. Related party disclosures

Details of related party transactions in respect of the year ended 30 September 2015 are contained in Note 27 to the consolidated financial statements of the Group's 2015 annual report. The Group continued to enter into transactions in the normal course of business with its associates and other related parties during the period. There were no material transactions with related parties in the first half of 2016 or changes to transactions with related parties disclosed in the 2015 consolidated financial statements that had a material effect on the financial position or the performance of the Group.

12. Capital commitment

Authorised capital expenditure contracted but not provided for in the Interim Financial Statements is analysed as follows:-

13. Cautionary statement

The 2015 group annual report and accounts describes the principal risks and uncertainties that could impact the group's performance. These remain unchanged since the annual report was published and accordingly are valid for these interim financial statements. The group operates a structured risk management process, which identifies and evaluates risks and uncertainties and reviews mitigation activity. 

14. Seasonality of operations

The business of the Group was not affected by any significant seasonal or cyclical factors for the period under review. 

15. Segment analysis

IFRS 8 requires operating segments to be identified on the basis of internal reports about components of the Group that are regularly reviewed by the chief operating decision maker as defined in IFRS 8, in order to allocate resources to the segment and to assess its performance.

Interest income and interest expense are not allocated to segments, as this type of activity is driven by the central treasury function, which manages the cash position of the Group.

Operating segments are prepared in a manner consistent with the internal reporting provided to the Executive Directors as its chief operating decision maker in order to allocate resources to segments and to assess their performance. For management purposes, the Group is organised into business units based on geographical locations.