Decimal Software : Quarterly Report and Appendix 4C - 31 December 2016

Version4: 310117

Decimal Quarterly Report and Update

Highlights

• Decimal secures cornerstone backing of 6.5 per cent from IFM Investors

• Average quarterly billings increased by 26 per cent while recurring revenue increased at half year to 42 per

• A total of $2.29 million new capital successfully raised

• New commercial agreement signed with superannuation enterprise

• Global compliance firm Promontory invited to conduct compliance audit

• Renowned technology industry professionals appointed

• Finalist in Fintech Business Awards 2017

• Year on Year growth recorded at 31 per cent while expenses remained flat

Decimal Software Limited (ASX: DSX; "Decimal" or "the Company") is pleased to report on performance for the quarter ended 31 December 2016.

Operational Update

During the quarter, Decimal achieved major sales and marketing successes and secured backing from a major global investment fund.

IFM Investors, one of the superannuation industry's leading influencers, bought a 6.5 per cent stake in Decimal. The purchase is a significant endorsement of Decimal's software and compliance capabilities. IFM's cornerstone investment was part of Decimal's successful $2.29 million capital raising, completed in January, which will used to fund the company's distribution plan.

Year on Year (YoY) growth was recorded at 31 per cent with revenue streams also strengthened during the period. The average quarterly billings increased by 26 per cent, while recurring revenue was up at half year to 42 per cent. Expenditure remained flat during the period.

Decimal's sales focus also resulted in a new commercial agreement with an undisclosed superannuation enterprise in November. The Company retains a strong sales pipeline for the year ahead.

Global regulatory compliance firm, Promontory Australasia (Sydney) Pty Ltd was invited to conduct an in-depth review of Decimal's platform, as part of Decimal's strategy of building trust and transparency within the digital advice market. Promontory's full report is due to be published during the next quarter.

Decimal appointed two highly distinguished technology professionals to bolster its sales and marketing capabilities and to strengthen its ability to tailor its digital advice platform.

The Company has been shortlisted for a national compliance award as part of the Fintech Business Awards 2017.

IFM INVESTORS TAKES 6.5 PER CENT SHARE IN DECIMAL

In January 2017 Decimal secured major funding from IFM Investors as part of a wider capital raising. IFM Investors, a global fund manager owned by 28 major superannuation funds, now holds 6.5 per cent stake in Decimal.

IFM Investors is one the superannuation industry's leading influencers, and the partnership is a key endorsement of Decimal's software and compliance capabilities.

$2.29 MILLION SUCCESSFULLY RAISED

Decimal successfully completed a $2.29 million capital raising through the issue of 57,374,631 ordinary shares at a price of $0.04 cents per share in January 2017. The amount raised includes the investment by IFM Investors.

Funds will be used to accelerate Decimal's sales and marketing activity, and the raising positions the company on a strong path for sustained national expansion.

NEW COMMERCIAL AGREEMENT SIGNED WITH SUPERANNUATION ENTERPRISE

In November 2016, Decimal signed an agreement with an undisclosed superannuation enterprise to provide access to its digital platform as part of a paid test and learn exercise. The scope involved implementing a white-labelled solution for the enterprise's customers to explore superannuation topics and receive advice.

The deal highlighted the continued emergence of digital financial advice sector and its adoption by enterprise to enhance member experience and engagement.

GLOBAL FIRM INVITED TO CONDUCT COMPLIANCE AUDIT

Decimal appointed global regulatory compliance firm Promontory to conduct a review of its enterprise digital advice platform. The review, which commenced in November 2016, was conducted as part of Decimal's drive to improve the transparency and understanding of digital financial advice, in an effort to set an industry benchmark and grow market confidence in the technology.

The engagement of Promontory by Decimal is unusual in that Promontory typically investigates compliance issues after an incident, not before. The full and final report is expected to be published in February 2017.

RENOWNED TECHNOLOGY INDUSTRY PROFESSIONALS APPOINTED

Two highly experienced technology experts joined Decimal in January 2017 as part of the company's growth strategy.

Ms Sue Landers has more than 25 years' experience in technology and financial services, and was appointed to the executive team as Key Accounts Director. She has previously worked in senior sales and management roles, servicing clients including NAB and Westpac. Ms Landers will be based in Sydney and her primary responsibility will be to strengthen the company's existing client partnerships.

Mr Mitchell Ison was appointed as Lead Solutions Consultant, and will work with enterprise customers to create tailored solutions to meet their growing digital advice needs. Mr Ison previously worked in London where he held roles in digital wealth and retail product development for Commonwealth Bank and Colonial First State.

FINALIST IN FINTECH BUSINESS AWARDS 2017

Decimal has been shortlisted for a national award which recognises excellence in compliance software. The FinTech Business Awards recognises outstanding innovation and entrepreneurship in the Australian financial technology sector.

FINANCIAL SERVICES RESOURCE FOR ENTERPRISE DIGITAL ADVICE

In November 2016, Decimal received a $1.5 million cash payment from the Australian Tax Office for the annual Research and Development (R&D) rebate relating to the FY2015/16. The payment provides additional funding for the company's ongoing sales and marketing program for Eqilize, as well as enabling further development of its platform offerings for major banks.

ASFA

As part of the Company's sales and marketing program, Decimal co-hosted a stand at the ASFA Annual Conference in November 2016 with Accenture. Decimal also undertook a significant media relations program and secured coverage in numerous industry publications.

CASH POSITION

At 31 December Decimal had consolidated cash reserves of A$1.67 million. The R&D rebate for the year ended 30 June 2016 is nearly $1.5 million and was received in November. Revenue was strengthened with average quarterly billings increasing by 26 per cent, while recurring revenue also improved at half year to 42 per cent. Expenditure remained flat during the period.

Appendix 4C Quarterly report for entities subject to Listing Rule 4.7B

Appendix 4C

+Rule 4.7B

Quarterly report for entities subject to Listing Rule 4.7B

Introduced 31/03/00 Amended 30/09/01, 24/10/05, 17/12/10, 01/09/16

Name of entity

DECIMAL SOFTWARE LIMITED

ABN Quarter ended ("current quarter")

31 009 235 956

31 DECEMBER 2016

Consolidated statement of cash flows		Current quarter $A'000	Year to date (6 months) $A'000
1. 1.1 1.2 1.3 1.4 1.5 1.6 1.7 1.8 1.9	Cash flows from operating activities Receipts from customers Payments for research and development product manufacturing and operating costs advertising and marketing leased assets staff costs administration and corporate costs Dividends received (see note 3) Interest received Interest and other costs of finance paid Income taxes paid Government grants and tax incentives Other (provide details if material) Net cash from / (used in) operating activities	395	698
		-	-
		-	-
		(137)	(261)
		-	-
		(880)	(1,689)
		(360)	(746)
		-	-
		7	20
		-	-
		1,499	1,499
		-	-
		-	-
		524	(479)

1. Cash flows from investing activities

2. Payments to acquire:

3. property, plant and equipment - -

4. businesses (see item 10) - -

5. investments - -

6. + See chapter 19 for defined terms

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