Decimal Software : Financial and Operational Results and Appendix 4E

Thursday 31 August 2017

Decimal Software Limited 2017 Financial and Operational Results

HIGHLIGHTS

• 76% increase in Annual Recurring Revenue YoY

• 47% Revenue Growth YoY*, expenses reduced 13% YoY

• New customer wins with AMP and a major bank

• New Eqilize customer Mercer live, Statewide Super and Energy Super go lives pending

• IFM joins Decimal as strategic investor

• Former ASFA CEO Pauline Vamos appointed to Decimal Board

• R&D Tax Rebate, estimated at $1.2m, boosts cash position

*Excludes one-off consultancy payment

Decimal Software Limited (ASX:DSX; "Decimal" or "the Company") is pleased to provide this update on its financial and operational performance for the year ended 30 June 2017.

1. OPERATIONAL UPDATE

   Decimal continues to focus on its core markets in the Australian superannuation and banking sectors, and is currently delivering several key projects including new implementations with AMP Limited's direct advice business and other major banking clients.

   Eqilize is now live at Mercer and will shortly be live at Statewide Super in South Australia and Energy Super in Queensland.

   The Company continues to grow revenue and importantly to build its Annual Recurring Revenue (ARR) streams, with further growth during the quarter increasing the year-on-year (YoY) revenue by 47% and the ARR by 76 per cent.

   Expenditure continued to reduce during the fiscal year and a plan is in place for further reductions in the FY2017/18 as up-front research and development (R&D) expenditures decrease with the growing maturity of the platform.

   The R&D Tax Rebate has been estimated at $1.2 million and will further boost the cash position for the company.

   Decimal was pleased to welcome new Non-Executive Director Pauline Vamos to its Board, with the former CEO of the Association of Superannuation Funds of Australia (ASFA) adding further significant industry strength to the team. In July, Ms Vamos was also appointed to the Board of Mercer Superannuation (Australia) Limited.

2. Significant growth in revenue and ARR

   Decimal recorded revenue growth of 31 per cent for the quarter with a total of $338,703. In addition, ARR continued to grow with an increase of 76 per cent YoY to $646,160 for FY2017, compared to

   $366,809 YoY in FY2016. This excludes contracted pilots currently in delivery.

   The continued growth and move of revenue to ARR was a goal for the company in FY2016, and will continue to be a focus into FY2017.

   Decimal Annual Recurring Revenue (ARR)

   1,000,000

   900,000

   800,000

   700,000

   600,000

   500,000

   400,000

   300,000

   200,000

   100,000

   -

   Q3 - Mar-16 Q4 - Jun-16 Q1 - Sep-16 Q2 - Dec-16 Q3 - Mar-17 Q4 - Jun-17

   ARR Contracted Pilots

3. AMP enters primary implementation

In April, Decimal signed a pilot contract to trial its software in AMP Limited's direct advice business.

The scope involves the automatic generation of compliant Statement of Advice (SOA) documents for the direct advice team. The engagement is a pilot implementation under standard commercial terms. AMP revenue will not be counted in ARR until the pilot period is completed.

1. Mercer live, Statewide Super and Energy Super due to go live

   Decimal's cornerstone Eqilize customers, Energy Super and Statewide Super are due to go live with the fully configurable digital advice delivery technology.

   Statewide Super is South Australia's largest superannuation fund, while Energy Super is Queensland's third largest industry super fund, receiving a Platinum rating for Best Value for Money fund by Superratings for the past eight years.

   Mercer has gone live with Eqilize across its Mercer Super Trust (MST) and with offerings to its Mercer administration clients.

2. IFM join Decimal as strategic investor

   In January 2017, Decimal announced a cornerstone investment from global fund manager IFM Investors, following a successful A$2.295 million capital raising with the issue of 57,374,631 ordinary shares at $0.04 per share.

   IFM Investors is a global fund manager established more than 20 years ago and owned by 28 major superannuation funds with over A$72 billion in Assets Under Management. It now has an overall 6.5 per cent stake in the Company following the capital raising that was led by Bell Potter Securities Limited.

3. Former ASFA CEO Pauline Vamos joins Board

   The company announced in May that distinguished financial services expert and former CEO of ASFA, Pauline Vamos was appointed as a Non-Executive Director to the Company's Board.

   Ms Vamos is highly regarded globally as an executive leader and ambassador in financial services, complemented by her extensive superannuation knowledge and expertise.

   She was CEO of ASFA for nine years and previously was Director, Financial Services Regulation - Licensing and Business Operations with ASIC.

4. R&D TAX Rebate estimated at $1.2m boosts cash position

Decimal expects an R&D Tax Rebate of $1.2 million to be paid in early November. The R&D rebate, along with continued revenue and ARR growth, and reduced expenditure, will provide the Company with adequate cash reserves to execute on the planned growth for FY2017.

Decimal Software Limited Appendix 4E

Unaudited Preliminary Final Report 30 June 2017