Preliminary results

Fusionex International plc

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

Preliminary results for the year ended 30 September 2014

Fusionex, an award-winning and market leading international software provider specialising in Business Intelligence, Analytics and Big Data, is pleased to announce its full year results for the year ended 30 September 2014.

Financial Highlights:

· Strong results ahead of market expectations

· YoY Revenue growth of circa +30% (RM57.1 million)

· YoY Gross Profit growth of circa +30% (RM44.3 million)

· Record EBITDA* and Net Profit** at RM25.8 million and RM19.5 million respectively

· Operating cash flow at RM24.5 million, representing a YoY growth of more than 23%

· The Board intends to recommend a dividend for the financial year 2015

*EBITDA of RM25.8 million is derived from PBT (RM22.8million) + amortisation of intangible assets (RM2.6 million) + depreciation of property, plant and equipment (RM1.4 million) + interest expenses (RM0.4million) - gain on disposal of fixed assets (RM1.4 million)

**Net Profit of RM19.5 million includes the gain from the disposal of an office unit amounting to RM1.3 million.

Operational Highlights:

· Successful launch of GIANT, the Company's Big Data Analytics software solution, in Q1 of FY2014, with 12 new customer accounts secured, ahead of the initial target of 10 for FY2014.

· Continued investment in R&D, including enriched functionality for GIANT, underpinning sales momentum

· 3 new strategic partnerships signed with leading Big Data providers, Revolution Analytics, EMC and AvNet, ahead of FY14 target

· Client renewal rate in excess of 95% with continued demand for the Company's offerings

· Growth strategy and geographic expansion through partner networks driving solid results, particularly in the Asia Pacific region

· MOU signed with the Malaysian Multimedia Development Corporation in an effort to set up a Fusionex Big Data Centre of Excellence, with its primary objective to generate high-impact Big Data Analytics projects

· Increased focus on initiatives combining Big Data and the Internet of Things ("IoT"), with the aim to be an early mover in the worldwide Big Data Analytics and IoT market.

Ivan Teh, Chief Executive of Fusionex commented:

"We are delighted to announce yet another year of robust growth, coupled with a set of financial results that is ahead of market expectations. This marks a new record for the Company. Not only have we demonstrated excellent levels of growth but we have also proven for the second year since our IPO that we are growing the business in a consistent and sustainable manner. Our Big Data Analytics product, GIANT, is gaining significant traction with current and new clients as well as being recognised internationally for its industry leading technology.

We are very excited about the accelerating momentum that we are seeing in GIANT's market. To that end, we look towards capitalising on the increasing market opportunities and growing our market share."

For further details:

Fusionex

Operational Review

Introduction

It is pleasing to report that Fusionex has achieved another year of robust growth, underpinned by the early success of GIANT, Fusionex's Big Data Analytics product, which was launched in Q1 of FY2014. The Group has a clear growth strategy focused on ongoing product development in a specialised Big Data Analytics field, building its channels to market via additional strategic partnerships and targeting geographic expansion. During the year under review, the Group has made good progress on all these fronts and is well placed to deliver continuing growth in the new financial year and beyond.

Revenue during the period was RM57.1 million, while the Group's Gross Profit increased to RM44.3 million. EBITDA grew to RM25.8 million, exceeding market expectations, and profit after tax rose to RM19.5 million, which includes the disposal of an office unit bringing about a one-off gain of RM1.3 million. As a result, the Company ended the year with strong and increased cash balances of RM64.0 million.

The Board intends to recommend a dividend for the year ending 30 September 2015.

Operational Review

Fusionex has continued to see exciting momentum during the year under review, as it focuses on addressing the significant opportunities in Big Data. Following the launch of GIANT in Q1, the product has achieved early traction, with 12 new customer accounts secured ahead of the target of 10. Cross-selling the new Big Data offerings continues to represent an important organic growth opportunity, underpinned by the Group's strong relationships with existing clients.

A key focus for the 2014 financial year was to broaden the Group's channels to market by establishing new strategic partnerships with leading technology providers. Having set a target of securing one to two new partners in the year, it was pleasing to sign three new partners, Revolution Analytics (since then acquired by Microsoft), EMC and AvNet, in addition to the existing relationships with Cloudera and Hortonworks. These partnerships, all with blue chip service providers, have already started to deliver results, opening up a sizeable number of new business leads. The acquisition by Microsoft of Revolution Analytics is viewed as a positive move given the strong and strategic partnerships that Fusionex has with both companies, thus opening the doors to an increased pipeline after the two parties integrate their product, methodologies and business models.

The new channel partners will also support the Group's geographic expansion. Fusionex has already established a strong brand awareness in Asia Pacific and maintained its status as a leading technology provider in the region during the year.

Fusionex products have gained strong traction in a number of sectors, including travel and leisure, retail, media, utilities and financial services. The Group has added new customers across most of these sectors during the year. As the global economy continues to recover, these sectors will underpin ongoing growth, particularly in the travel, hospitality and retail sectors.

In the 2014 financial year, Fusionex has invested further in research and development, infrastructure and marketing. Ensuring the product offering remains at the forefront of Big Data technology is a key aspect of the Group's growth strategy. Further upgrades to GIANT such as enriched content and enhanced usability were launched following the year end and have been well received in the industry. Fusionex continues to win industry recognition for its "best in class" offering, receiving a number of awards during 2014, including a prestigious Microsoft Partner of the Year award for a third consecutive year and also receiving the Microsoft Best Business Analytics Award. This latter award recognised the success of Fusionex expansion into Hong Kong, where the office (which opened in 2013) is acting as a gateway into the Greater China market, a new territory for the Company and is already servicing new clients.

The Group has invested in additional marketing to support its expansion plans and new products. The sales team will be focused on customer generation in both existing markets as well as developing new client opportunities in new markets and will further help support the Group as it moves into new geographies and scales up sales channels for its offerings.

Market Overview

The market opportunity for Big Data solutions remains significant and is growing strongly. Gartner predicts that enterprise data is set to increase by 650% in the next five years and in its recent survey on Big Data technologies, 73% of respondents said that they were investing or planning to invest in Big Data products. Gartner also anticipates that Business Intelligence and Analytics will remain a top focus for CIOs through to 2017.

Fusionex solutions offer a compelling proposition, as they are designed to address the top business priorities identified by Gartner: increasing enterprise growth, delivering operational results, reducing enterprise costs and attracting and retaining new customers. As a result, Fusionex continued to outperform the market in the year ended 30 September 2014, achieving circa 30% growth in the year.

Growth Strategy

The Group growth strategy is focused on the areas which management believes offer the most exciting potential for Fusionex, including significant investment in product development and new product launches, expanding into new and existing geographies, targeting cross-selling and up-selling opportunities, and continuing to build channels to market, both direct and indirect.

During the 2014 financial year, progress in all of these areas has continued apace and will position Fusionex for further success in the new financial year. The Group is already seeing the benefits of its recently established channel partners and will seek to leverage these to accelerate the existing pipeline of new opportunities.

As outlined above, the market opportunity remains significant and the Board is focused on delivering the growth strategy to position Fusionex as a global leader in Big Data technology.

Current Trading and Outlook

The operational and financial progress achieved during FY 2014 positions the Group for future growth. The launch of GIANT and ongoing product development underpins the significant pipeline of new opportunities and active discussions are ongoing with both new and existing customers. The compelling proposition is supported by increasingly strong channels to market, both through the in-house sales team and the strategic partnerships in place with leading technology providers.

As a result, the Board remains confident that Fusionex will deliver further value for shareholders in the current financial year and the years ahead.

Financial Review

The Group has once again achieved strong, double digit growth in revenue and profits for the financial year ended 30 September 2014, ahead of market expectations.

Revenue

Group revenue increased from 2013's figure of RM44.4 million to RM57.1 million, of which 84% of the Group's total revenue arose from sale of products.

The Asia Pacific region was once again the main contributor to the Group's revenue and its contribution amounted to 74% of the total revenue.

Gross Profit

Gross profit of the Group increased from RM34.3 million in 2013 to RM44.3 million. Over the year, the Group has continued to invest in research and development to enhance its existing and new products for release into the market. For the financial year of 2014, the Group capitalised RM11.1 million in the period. Investment in human resources has also been a high priority.

EBITDA and profitability

EBITDA for the period was RM25.8 million (2013 : RM22.5 million). Depreciation expenses for the year increased due to higher costs incurred by the purchase of computer equipment and amortisation expenses increased for commercialisation of the product enhancements. The Group's profit before tax increased to RM22.8 million.

Net profit (profit after tax) for the year has increased to a record RM19.5 million. This was achieved despite ongoing and significantly increased investment in the business for FY2014.

Taxation

The Group operates in certain geographies in which the income generated has been exempted from taxation or subject to tax allowances. The effective tax rate for the Group was 14.6% (2013: 7.3%).

Table - Key Performance Indicators

Cash flow

The Group generates strong cash flows from its operations with the second half traditionally being the stronger half in terms of cash receipts. The momentum achieved this year helped cash generated from operations for the year improve to RM64.0 million for the financial year of 30 September 2014 (2013: RM62.4 million).

The principal movements in the net cash were as follows:-

Borrowings and Bank Facilities

Total borrowings of the Group have reduced to RM21 million (2013: RM27 million). The net decrease was contributed principally from the repayment of the mortgage loan of the divested office unit amounting to RM3.2 million and repayment of the term loan facilities for the acquisition of the Group's new head office.

Equity

The equity of the Group was strong for the year and the equity balance stands at RM101.4 million (2013: RM86.5 million). Earnings per share (EPS) of the Group has been maintained at RM0.45 (2013: RM0.45).

Consolidated Statement of Financial Position

as at 30 September 2014

Consolidated Statement of Comprehensive Income

for the year ended 30 September 2014

Consolidated Statement of Changes in Equity

as at 30 September 2014

Consolidated Statement of Cash Flows

as at 30 September 2014

Notes to the Financial Information

for the year ended 30 September 2014

1. Basis of preparation

The financial information set out in this preliminary announcement is abridged and does not constitute the Company's statutory financial statements for the year ended 30 September 2014. The financial information has been extracted from the financial statements for the year ended 30 September 2014, which were approved by the Board on 5 February 2015 and on which the auditors have reported without qualification. The 2014 Annual Report will be distributed to shareholders and made available on the Company's website at http://www.fusionex-international.com. It will also be filed with the Companies Registered Office.

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

The accounting policies adopted by the Group are consistent with those of the previous financial year except in the current financial year, the Group has adopted all the new and revised standards and Interpretations of IFRS that are effective for annual periods beginning on or after 1 October 2013. The adoption of these standards and interpretations did not have any effect on the financial performance or position of the Group and the Company.

The directors propose a single payment of an interim dividend and do not propose a final dividend in respect of the year ended 30 September 2014 (2013: nil).

The Board of Directors approved this announcement on 5 February 2015.

2. Property, plant and equipment

During the year ended 30 September 2014, the Group acquired assets amounting to RM7,886,920 (2013: RM28,559,175).

3. Goodwill on consolidation

During the financial year, the Group assessed the recoverable amount of the goodwill and determined that no additional impairment is required. This assessment of goodwill was done by comparing the gross profit to the value of goodwill for the entity whose acquisition gave rise to the goodwill.

4. Intangible assets

The intangible assets mainly consist of staff costs.

5. Asset classified as held for sale

At 30 September 2014, asset classified as held for sale included property of RM3,133,832. The liabilities associated with asset held for sale are RM2,533,052. This related principally to the Group's office premise in L19-03-08, PHX-HM Shah Tower, No. 16A, Persiaran Barat, 46050 Petaling Jaya, Selangor Darul Ehsan, and the sale is expected to complete by end of February 2015. No impairment loss was recognised on reclassification of the office building as held for sale nor as at 30 September 2014 as the Directors expect that the fair value less costs to sell is higher than the carrying amount.

6. Stated capital

Issued, called up and fully paid

The Company has an unlimited authorised share capital of Ordinary Shares of no par value.

7. Income tax expense

Tax expense is recognised based on an annual tax rate for the full financial year applied to the pre-tax income of the year.

8. Earnings per share

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

9. Dividends

10. Capital commitment

Authorised capital expenditure contracted but not provided for in the consolidated financial statements is analysed as follows:

11. 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.

All other segments primarily comprise income and expenses relating to the Group's administrative functions. 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. Accordingly, this information is not separately reported to the Board for each reportable segment.

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.

Geographical location

# Segment assets comprise total current and non‑current assets less unallocated assets.* Segment liabilities comprise total current liabilities and non‑current liabilities less unallocated liabilities.^ Mainly related to Asia Pacific intercompany sales.

Other segmental reporting

Geographical location

# Segment assets comprise total current and non‑current assets less unallocated assets.

* Segment liabilities comprise total current liabilities and non‑current liabilities less unallocated liabilities.

^ Mainly related to Asia Pacific intercompany sales.

Other segmental reporting

Business segments