Technology One Limited · ASX:TNE

Technology One — FY2012 Earnings Presentation

51 slides from Technology One's earnings presentation, Nov 26, 2012

1. Slide 1: Full Year Results Presentation lodgement letter

   Commercial in Confidence For personal use only 26 November 2012 Company Announcements Officer Australian Securities Exchange Limited Exchange Centre, 20 Bridge Street, Sydney NSW 2000 BY ELECTRONIC LODGEMENT TECHNOLOGY ONE LIMITED – FULL YEAR RESULTS PRESENTATION Please find attached a copy of the E

2. Slide 2: 2012 Full Year Results Presentation

   For personal use only 2012 Full Year Results Presentation Ending September 30th 2012 Adrian Di Marco Adrian_Dimarco@TechnologyOneCorp.com *Final November 2012 Commercial in confidence

3. Slide 3: Technology One Ltd Full Year Presentation

   For personal use only Technology One Ltd Full Year Presentation - 26 Nov 2012 Technology One Ltd (TNE) today conducted investor presentations pertaining to its 2012 Full Year results. The attached presentation was given by the company’s Executive Chairman, Mr Adrian Di Marco. These slides have been

4. Slide 4: TechnologyOne Overview

   For personal use only TechnologyOne Overview Formed in Employees 300+ developers 800+ Revenue 1987 800+ R&D in centre corporations, government and statutory authorities $170m One of Australia’s most successful software companies Continually Doubles Invest20% 14 international offices in profitable in

5. Slide 5: TechnologyOne Overview: enterprise vendor

   For personal use only TechnologyOne Overview We are one of only a few Enterprise Vendors globally ...  Suite of 12 products  Deeply integrated We believe in the  Common platform freedom of choice our solution is  Consistent user interface modular by design The power of a single, integrated, ente

6. Slide 6: We focus on seven key markets

   For personal use only TechnologyOne Overview We focus on seven key markets ...  Deep understanding and engagement in our markets We sell to asset and  Deeply integrated pre configured solutions service intensive  Proven practice organisations.  Streamlined implementations We do not service  Red

7. Slide 7: We do not use implementation partners or resellers

   For personal use only TechnologyOne Overview We do not use implementation partners or resellers We take complete responsibility for building, marketing, selling, implementing and supporting our enterprise solution for each customer to guarantee long term success. The Power of One

8. Slide 8: TechnologyOne Overview

   For personal use only TechnologyOne Overview  One of Australia’s largest software houses, specialising in the research, development and commercialisation of software – invest $33+m in R&D per year  Connected Intelligence (Ci) is our current generation product suite  Next generation of our enterpr

9. Slide 9: Strong financial track record

   For personal use only TechnologyOne Overview Strong financial track record …  Doubling in size approx. every 4 yrs (last 15 yrs)  Continually profitable since 1992 (20 years)  Continually paid dividends since 1996 (16 years)  Cash and Equivalents $51.1m  Return on Equity 32%  Debt/Equity 10% 

10. Slide 10: Agenda

    For personal use only Agenda  Results  Significant Achievements  Outlook for Full Year  Long Term Outlook

11. Slide 11: Results Summary

    For personal use only Results Summary FY12 FY11 Variance % Revenue $169.1m $156.7m 8% Initial Licence Fees $35.4m $30.7m 15% Consulting Services Fees $45.4m $41.7m 9% Annual Licence Fees $63.7m $55.3m 15% Expenses $138.7m $130.0m 7% R&D Expenses * $33.5m $31.8m 5% Expenses excl R&D $105.2m $98.2m 7%

12. Slide 12: Guidance

    For personal use only Guidance Full Year Guidance* - continuing profit growth of 10% to 15%  Profit After Tax up 16%  Profit Before Tax up 14% * at Half Year Results Presentation

13. Slide 13: Results Highlights

    For personal use only Results Highlights  Strong result given challenging and uncertain economic climate  Continued strong demand for our products:  15% increase in Initial Licence fees  15% increase in Annual Licence Fees  Continued significant investments in a number of key areas as follows:

14. Slide 14: Balance Sheet

    For personal use only Balance Sheet Strong balance sheet Sep-12 #039;000 Sep-11 #039;000 Var #039;000 %  Cash & Cash Equivalents $51.1m (vs. $45.4m) Cash & Available-for-sale financial assets 51,133 45,357 5,777 13% Trade and other receivables 26,208 18,303 7,905 43%  Net Cash*: 13.7c/s (vs.11.2c/s) Other

15. Slide 15: Cash Flow

    For personal use only Cash Flow Sep-12 Sep-11 Vary % Operating Cash Flow $28m, up 21% from $23.2m Sep11 $ '000 $ '000 #039;000  Operating Cash Flow $28m (vs NPAT of $23.6m) EBIT 29,453 25,686 3,767 15% Depreciation & Amortisation 5,643 5,156 488 9% Change in working Capital (Increase) / Decrease in De

16. Slide 16: 2012 Full Year Results: Dividends

    For personal use only 2012 Full Year Results Dividends for this year 6.00 Dividend Compound Growth 8% up 10%  Half 1 1.61 cps up 10% (paid) 5.00 4.00 Cents per share  Half 2* 3.48 cps up 10% (85% franked) 3.00 2.00  Sub Total 5.09 cps up 10% 1.00 0.00  Special Dividend** nil 2003 2004 2005 2006

17. Slide 17: 2012 Full Year Results

    For personal use only 2012 Full Year Results 2012 2011 Variance Full Year 2012 v Full Year 2011 #039;000 #039;000 #039;000 % Revenue excluding interest 167,624 155,252 12,372 8% Expenses (excluding R&D, Depn, Forex & amortisation) 98,969 92,522 6,447 7% EBITDAR 68,655 62,730 5,925 9% R&D Expenditure 33,524 3

18. Slide 18: 2012 Full Year Results – Key Metrics

    For personal use only 2012 Full Year Results – Key Metrics Full Year 2012 v Full Year 2011 2012 2011 Variance % Full Year 2012 v Full Year 2011 2012 2011 Variance % EPS (cents) 7.73 6.71 15% Return on equity 32% 30% Dividends (cents) Balance Sheet ($‘000s) Standard 5.09 4.62 10% Net Assets 73,997 68

19. Slide 19: Historical Performance

    For personal use only Historical Performance 80 Key metrics over last 15 years … 70  Revenue - 20% per annum compound 60  Even through the Dot-Com and GFC 50 #039;m  Initial Licence Fees - 18% per annum compound 40 30  Annual Licence Fees - 27% per annum compound 20  Profit Before Tax - 16% per an

20. Slide 20: Revenue Streams

    For personal use only Revenue Streams Continuing strong demand for our products: 15% Annual licence fees continue to grow strongly: up 15% increase in licence fees  Customer retention is important  New pre-configured solutions  Increasing market share  Our investment in Compelling Customer Exper

21. Slide 21: Major New Customers

    For personal use only Major New Customers Aspire Benefits Management Pty Ltd APG Operations Pty Ltd Australian Red Cross UnitingCare West Ability Options Ltd South Burnett Regional Council City of Unley Attorney General of South Australia Warrnambool City Council Epworth Hospital Tuaropaki Trust Que

22. Slide 22: Revenue Streams: Consulting and Plus

    For personal use only Revenue Streams 50 Consulting 25 Plus Up 9%, Down 17%, Compound Growth 14% $3.6m Compound Growth 4% $3.5m 40 20 30 15 #039;m #039;m 20 10 10 5 ‐ ‐ 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 Plus (non product consulting) revenue

23. Slide 23: Licence Fee by Product

    For personal use only Licence Fee by Product 12.0 $9.7m $9.4m Up 14% Inline 10.0 8.0 $5.1m $4.6m #039;m 6.0 Up 91% Down 6% 4.0 $2.1m $1.9m FY10 $1.5m $1.2m Up 74% Up 8% FY11 Up 22% Up 20% 2.0 FY12 0.0 Financials & Asset HR/Payroll Property Enterprise CRM CPM Student Supply Chain Management Content Mana

24. Slide 24: Licence Fee Contribution - Vertical Market

    For personal use only Licence Fee Contribution - Vertical Market Licence Fee Contribution ‐ Vertical Market Managed Services, $1.9m, 5% Utilities, $3.1m, 9% Education, $7.3m, 21% Financial Services, $2.4m, 7% Local Government, $10.9m, 31% Government, $4.6m, 13% Health & Community Services, $5.2m, 15

25. Slide 25: Profit By Segment Analysis

    For personal use only Profit By Segment Analysis Profit Contribution $8.6m, Up 23% 10.0 Heads 278, Down 3% 9.0 $7.6m, Up 20% $7.9m, Up 15% 8.0 Heads 232, Down 9% Heads 107, Up 9% 7.0 6.0 FY10 $4m, Up 27% #039;m 5.0 Heads 133, Up 6% FY11 $2.2m, Down 34% 4.0 Heads 75, Down 24% FY12 3.0 2.0 1.0 0.0 Sales

26. Slide 26: Agenda

    For personal use only Agenda  Results  Significant Achievements  Outlook for Full Year  Long Term Outlook

27. Slide 27: Significant Achievements

    For personal use only Significant Achievements Significant Achievements  R&D  TechnologyOne Cloud  Marketing Transformation  Other Initiatives

28. Slide 28: R&D

    For personal use only R&D R&D $33.5m, 20% of revenue, fully expensed The most ambitious R&D plan in the company’s 25 year history  R&D continuing across all our Ci products  R&D into our new Ci² product suite  R&D into new innovations, ideas and concepts  R&D into the TechnologyOne Cloud  New O

29. Slide 29: TechnologyOne Ci²

    For personal use only TechnologyOne Ci² Ci² is the next generation of our Ci enterprise suite...  Embrace new technologies, innovations & concepts  Focus is Simplicity, Not Complexity  Browser based – no more software installs & pervasive  Apps and Enterprise App Store  Native support for the C

30. Slide 30: Significant Achievements

    For personal use only Significant Achievements Significant Achievements  R&D  TechnologyOne Cloud  Marketing Transformation  Other Initiatives

31. Slide 31: Today – On Premise

    For personal use only Today – On Premise The old way - Run your own hardware & systems On Premise Database Server N-tier Application Distributed Citrix Servers Servers Processors client A complex computing model Installation Servers

32. Slide 32: What is cloud

    For personal use only What is cloud The new way - sign onto a business service client Internet connection Off Premise Service Provider  Cloud- a simpler computing model

33. Slide 33: The TechnologyOne Cloud

    For personal use only The TechnologyOne Cloud TechnologyOne Enterprise Suite in the cloud today, delivered in a browser. TechnologyOne takes care of everything A simple and easy experience

34. Slide 34: The TechnologyOne Cloud

    For personal use only The TechnologyOne Cloud  Partnerships with global Infrastructure As a Services (IAS) providers  Data centres being commissioned in Sydney  TechnologyOne Enterprise suite being optimised for the Cloud  Trials in progress  TechnologyOne Corporate now running on TechOne Cloud

35. Slide 35: Technology hype cycle

    technologyene expectations internet TV pe Activity Streams, NFC Payment Wireless Power: Private Cloud Computing Social Analytics gmented Reality Group Buying G mification 3D Printing Image Recognition Context-Enriched Services \n-Memory Database Management Systems O Gesture Recognition ‘1 imemnet of

36. Slide 36: Significant Achievements

    For personal use only Significant Achievements Significant Achievements  R&D  TechnologyOne Cloud  Marketing Transformation  Other Initiatives

37. Slide 37: Marketing Transformation

    For personal use only Marketing Transformation  Better position our solutions & products in a competitive, fast changing landscape  Strategy & structure to build a world class marketing function • Appoint a new Director of Marketing • Vertical Market driven • Simplify ‘Buyers Journey’ , Pro-Active

38. Slide 38: Significant Achievements

    For personal use only Significant Achievements Significant Achievements  R&D  TechnologyOne Cloud  Marketing Transformation  Other Initiatives

39. Slide 39: Other Initiatives

    For personal use only Other Initiatives  Transformation of Consulting Business – One Consulting • World class services business • New OO appointed and all consulting now reports into here • Consistent practices with professional career path for our people  TechnologyOne Leadership • Leadership Mod

40. Slide 40: Other Initiatives

    For personal use only Other Initiatives  Compelling Customer Experience • Deliver a great customer services experience • CCE Stage 2 in progress • Critical to continuing strong customer retention  TechnologyOne College • Up and running – courses to be expanded  United Kingdom • New strategy being

41. Slide 41: Agenda

    For personal use only Agenda  Results  Significant Achievements  Outlook for Full Year  Long Term Outlook

42. Slide 42: Outlook for Full Year: Economic Environment

    For personal use only Outlook for Full Year Economic Environment  The global economic climate remains uncertain, and challenging.  The enterprise software markets has been one of the most resilient sectors of the IT industry in recent years.  In particular TechnologyOne markets have remained robu

43. Slide 43: Outlook for Half Year

    For personal use only Outlook for Half Year 2013 Full Year - Profit growth to continue  We expect to see continuing growth in licence fees and revenue  We will need to carefully monitor and manage the sale cycle for potential contract delays given the economic climate  As in previous year’s we no

44. Slide 44: Outlook for Full Year

    For personal use only Outlook for Full Year Our focus next financial year is ...  Leverage our broadened & fast maturing product portfolio  Focus on our seven vertical markets – resilient & strong  Cross sell into our large existing customer base  Contain R&D costs

45. Slide 45: Agenda

    For personal use only Agenda  Results  Significant Achievements  Outlook for Full Year  Long Term Outlook

46. Slide 46: Improved Margins

    For personal use only Improved Margins Net Profit Margin Before Tax Profit margin has contracted over the 35% last 10 years 30%  Expanded our product range investment 26% 26% 25% 25% 25% 21% 21%  Profit margin now started to improve, as 20% 17% 17% 17% 18% predicted 15%  Focus is to substantially

47. Slide 47: Control R&D Costs

    For personal use only Control R&D Costs This year achieved Compound Growth 16% 2002 – 2011 R&D growth of 5% Control R&D costs...  Leveraging our new Offshore R&D centre  Economies of scale  World Class R&D Practices  Maintaining an ambitious R&D agenda

48. Slide 48: R&D Growth Projections

    For personal use only R&D Growth Projections Target for R&D growth of 8% per annum compound, over 5 years set in 2011 • This year we demonstrated this is achievable with R&D growth of 5% • Continues to be a very aggressive R&D program • Operating leverage & economy of scale • Assumes no Acquisitions

49. Slide 49: Long Term Outlook

    For personal use only Long Term Outlook Long Term Outlook is Strong .....  Enterprise Suite – one of a few companies globally with an enterprise solution  Power of One – unique approach to build, market, sell, implement and support our products  Vertical markets focus – focus on seven key markets

50. Slide 50: Long Term Outlook

    For personal use only Long Term Outlook  Geographical expansion – United Kingdom has significant longer term growth  Acquisitions – expand our product range and our customer base  TechnologyOne Cloud – platform for further growth in coming years  Ci² - Next generation of our enterprise suite und

51. Slide 51: Transforming business, making life simple

    Ef echnelcayone Transforming business, making life simple

Technology One — FY2012 Earnings Presentation on 6ix