Slide 1: Technology One Ltd Presentation
For personal use only ____ __ ____Technology _____One ____ ______ Ltd Presentation _____ _____ 25____ _____ July 2012 - Technology One Ltd (ASX:TNE) today conducted a mid year presentation with Merrill Lynch Australia. _____ _____ The attached presentation was given by the company’s Executive Chairm
Slide 2: 2012 Mid Year Presentation
For personal use only 2012 Mid Year Presentation Adrian Di Marco Adrian_Dimarco@TechnologyOneCorp.com Final Commercial in confidence July 2012
Slide 3: Agenda
Agenda Overview For personal use only ____ __makes What ____ _____ ____ ______ Us Different _____ _____ Strategic Initiatives ____ Full_____ Year Guidance _____ _____ ____ _____ Appendix Half Year Results Long Term Outlook
Slide 4: TechnologyOne is an enterprise software vendor
For personal use only ____ __ ____ _____ ____ ______ _____ _____ ____ _____ TechnologyOne is an enterprise software vendor _____ _____ ____ _____
Slide 5: TechnologyOne Overview
TechnologyOne Overview Our enterprise solution consists of the following products: For personal use only Financials ____ __ ____ Supply Chain _____ ____ ______ _____ _____ Asset Management ____ _____& Payroll Human Resource Corporate Performance Management _____ _____ • Business Intelligence
Slide 6: Overview: seven vertical markets
For personal use only Overview TechnologyOne specifically targets seven vertical ____ __ ____ _____ ____ ______ markets: _____ • Local _____ Government • Government (State, Central & Federal) ____ _____ • Education _____ _____ • Financial Services ____ _____ • Health, Community Services and Not for
Slide 7: TechnologyOne Overview
For personal use only TechnologyOne Overview One of Australia’s ____ __ ____largest_____ software ____ houses, ______ specialising in the research, development _____ and _____ of software – invest commercialisation ____in _____ $32+m R&D per year _____ _____ Connected Intelligence (Ci) is our cu
Slide 8: TechnologyOne Overview
TechnologyOne Overview Offices in Australia, New Zealand, For personal use only Asia and, more recently, the United ____ __ ____ _____ ____ ______ Kingdom _____ _____ Growing business in the United ____ _____ Kingdom _____ Major _____ supplier of enterprise ____ _____ applications in ANZ – 900
Slide 9: Historical Performance
Historical Performance Strong financial track record … For personal use only Doubling in size approx every 4 years for 15 years ____ __ ____ _____ ____ ______ Continually profitable since 1992 (20 years) _____ _____ Continually paid dividends since 1996 (16 years) Revenue ____ _____ Cash and
Slide 10: Historical Performance
Historical Performance Key metrics over last 15 years … For personal use only ____ __ ____ _____ ____ ______ Revenue - 22% per annum compound Even through the Dot-Com and GFC _____ _____ Initial Licence Fees - 22% per annum compound ____ _____ Annual Licence Fees - 27% per annum compound ___
Slide 11: Agenda
Agenda Overview For personal use only ____ __ makes What ____Us_____ Different ____ ______ _____ _____ Strategic Initiatives ____ _____ Full Year Guidance _____ _____ ____ _____ Appendix Half Year Results Long Term Outlook
Slide 12: What Makes Us Different
For personal use only What Makes Us Different Enterprise Solution ____ __ ____ _____ ____ ______ One of a few companies globally with an enterprise solution _____ Own the_____ IP to our software, which allows us to control our ____ future_____ _____ _____ model - Power of One Unique business
Slide 13: What Makes Us Different
For personal use only What Makes Us Different Our focus on seven key vertical markets ____ • Deep__ ____ of _____ understanding ____ our target seven ______ markets _____ _____ • Understand their value drivers • Know the universe of opportunities in each of our market ____ _____ 14 Preconfigured
Slide 14: Revenue Model
For personal use only Revenue Model Robust Revenue Model ____ • Initial__ Licence____- based_____ ____of users on usage (number ______ ) – Matrix of licensable products & modules (approx 300 modules over 10 products) _____– Once_____ off ____ _____Services - fee for service • Implementation – $1.2
Slide 15: Revenue Model
Revenue Model Initial Implementation Annual Annual Annual For personal use only Initial Licence Service Licence Licence Licence …. ____ __ ____ Purchase _____ ____ ______ _____ _____ -Specified: Products, Modules, No of Users ____ _____ Initial Annual Annual Annual Increase Licence Licence Licence L
Slide 16: Revenue Model
For personal use only Revenue Model ____ __ ____ _____ ____ ______ _____ _____ ____ _____ On average _____ _____our customers have 3 products (out of ____ a product range of 10) _____
Slide 17: Agenda
Agenda Overview For personal use only ____ __ What____ makes Us _____ Different____ ______ _____ _____ Strategic Initiatives ____ _____ Full Year Guidance _____ _____ ____ _____ Appendix Half Year Results Long Term Outlook
Slide 18: Strategic Initiatives
For personal use only Strategic Initiatives ____ __ ____ _____ ____ ______ R&D _____ _____ ____ United_____ Kingdom _____ _____Cloud TechnologyOne ____ _____ Improved Margins
Slide 19: R&D
R&D $33m, R&D Expense Growth 35 20% Revenue For personal use only 30 Target for full year is R&D growth of only 4% pcp ____ __ ____ _____ ____ ______ 25 Compound Growth 15% vs15% over last 10 year _____ _____ 20 #039;m 15 ____ _____ 10 _____ _____ 5 - ____ _____ 2003 2004 2005 2006 2007 2008 2009 2010
Slide 20: New Offshore R&D Centre
For personal use only New Offshore R&D Centre New offshore R&D centre in Indonesia to handle ____ __ ____ _____ ____ ______ future growth _____ _____ To contain costs – operating leverage of offshore R&D staff ____ To tap into_____ a new pool of R&D talent outside of Australia _____ _____ To i
Slide 21: TechnologyOne Ci²
TechnologyOne Ci² Ci² is the next generation of our Ci enterprise suite... For personal use only Embrace new technologies, innovations & concepts ____ __ ____ _____ Focus is Simplicity, Not Complexity ____ ______ _____ Browser_____ based – no more software installs & pervasive ____ _____ App
Slide 22: Strategic Initiatives
For personal use only Strategic Initiatives ____ __ ____ _____ ____ ______ R&D _____ _____ ____ United_____ Kingdom _____ _____Cloud TechnologyOne ____ _____ Improved Margins
Slide 23: United Kingdom
United Kingdom United Kingdom For personal use only ____ __market Emerging ____ for us_____ ____ ______ _____ Significant_____ impact caused by the GFC ____ _____ Substantially less business Highly competitive _____ _____ New strategy being implemented ____ _____ Fine tuning our products
Slide 24: Strategic Initiatives
For personal use only Strategic Initiatives ____ __ ____ _____ ____ ______ R&D _____ _____ ____ United_____ Kingdom _____ _____Cloud TechnologyOne ____ _____ Improved Margins
Slide 25: Today – On Premise
For personal use only Today – On Premise Database Server ____ __ ____ _____ ____ ______ _____ _____ Citrix Servers N-tier Application Servers Distributed Processors ____ _____ client _____ _____ ____ _____ Installation Servers A complex computing model
Slide 26: The Future – The Cloud
The Future – The Cloud For personal use only Off Premise ____ __ ____ _____ ____Service ______Provider _____ _____ ____ _____ client Internet connection _____ _____ ____ _____ A simpler computing model
Slide 27: TechnologyOne Cloud
For personal use only ____ __ TechnologyOne Cloud ____ _____ ____ ______ _____ _____ ____ _____ _____ _____ TechnologyOne Enterprise Suite in the ____ _____ cloud today, delivered via the browser... TechnologyOne takes care of everything
Slide 28: TechnologyOne Cloud
TechnologyOne Cloud For personal use only TechnologyOne takes care of everything for a Yearly Subscription Fee… ____ __ ____ _____ ____ ______ Hardware, Operating Software, Middleware etc.. _____ _____ Backup ____ Services _____ _____ _____ Replication Services & Disaster Recovery ____ _____
Slide 29: Cloud
Cloud For personal use only ____ __ ____ _____ ____ ______ _____ _____ ____ _____ _____ _____ ____ _____
Slide 30: Strategic Initiatives
For personal use only Strategic Initiatives ____ __ ____ _____ ____ ______ R&D _____ _____ ____ United_____ Kingdom _____ _____Cloud TechnologyOne ____ _____ Improved Margins
Slide 31: Improved Margins
For personal use only Improved Margins Profit margin has contracted over the last ____ 10 years__ ____ _____ ____ ______ _____ _____ Expanded our product range to become an enterprise ____ _____ vendor _____ R&D _____ expenditure increased by 16% per annum ____over last 10 years _____ Profit m
Slide 32: Control of R&D Costs
Control of R&D Costs R&D expense growth to For personal use only decelerate in coming ____ __ ____ _____ ____ ______years… Compound Growth 16% _____ _____ ____ _____ _____ _____ ____ _____ R&D expense growth to decelerate in coming years because: • Initial build of the enterprise suite is complete •
Slide 33: R&D Growth Projections
R&D Growth Projections Model R&D growth over the next 5 years at 8% per annum For personal use only • R&D currently projected to be $67m in year 5 (compared to $33.5m now) ____ __ ____ _____ ____ ______ • In year 5 our R&D will be $47m vs $67m, saving $20m in one year _____ _____ • Saving $52m over
Slide 34: Strategic Initiatives
For personal use only Strategic Initiatives ____ __ ____ _____ ____ ______ R&D _____ _____ ____ United_____ Kingdom _____ _____Cloud TechnologyOne ____ _____ Improved Margins
Slide 35: Agenda
Agenda Overview For personal use only What ____ __makes ____ Us Different _____ ____ ______ _____ _____ Strategic Initiatives ____ Full_____ Year Guidance _____ _____ ____Appendix _____ Half Year Results Long Term Outlook
Slide 36: Full Year Guidance
For personal use only Full Year Guidance Economic environment remains challenging and uncertain ____ __ ____ _____ ____ ______ TechnologyOne enterprise business remains strong and resilient _____ _____ Continuing growth in Licence Fees in enterprise business ____ _____ • Good pipeline of oppor
Slide 37: Full Year Guidance
Full Year Guidance Assumptions For personal use only Economic climate does not deteriorate any further ____ __ ____ _____ ____ ______ Continuing contract momentum is maintained _____ _____ Total expense growth of 7% in 2012 year ____ _____ _____ _____ R&D expense growth to be 4% • Technology
Slide 38: Agenda
Agenda Overview For personal use only What ____ __makes ____ Us Different _____ ____ ______ _____ _____ Strategic Initiatives ____ Full_____ Year Guidance _____ _____ ____Appendix _____ Half Year Results Long Term Outlook
Slide 39: Results Highlights
Results Highlights FY12 FY11 Variance % For personal use only Revenue $77.3m $71.6m 8% ____ __ ____ _____ ____ ______ Initial Licence Fees $18.4m $15.6m 18% Consulting Services Fees $21.3m $19.6m 9% _____ _____Annual Licence Fees $25.4m $21.8m 16% ____ _____ Expenses R&D Expenses * $68.0m $62.5m $16
Slide 40: Guidance
For personal use only Guidance Guidance at Annual General Meeting ____ __ ____ _____ ____ ______ Half Year _____ _____ - challenging and not a good indicator of full year results Market consensus was profit to be down between 5% and 10% ____ Actual_____ profit up 2% Half 1 FY11 Abnormally high
Slide 41: Dividend
Dividend H1 Dividend up 10% For personal use only 1.80 Dividends for this year 1.60 22% per annum ____ __ ____ _____ ____ ______ 1.40 Half 1 1.61 cps up 10%* (declared) Cents per share 1.20 1.00 _____ Payout ratio _____ 0.80 of 67% 0.60 ____ _____ 0.40 0.20 0.00 _____ _____ *Indicative of the co
Slide 42: Balance Sheet
Balance Sheet Mar-12 Mar-11 Var % Strong balance sheet #039;000 #039;000 #039;000 For personal use only Cash & Cash Equivalents $33.4m (vs $33.4m) Cash & Available-for-sale financial • Net Cash*: 8.51c/s (vs 8.23c/s) assets ____ __ ____ 13.27% _____ ____ ______ 33,410 33,396 14 0% Trade and other receivabl
Slide 43: Cash Flow
Cash Flow Operating Cash Flow $4.4m, down 41% from $7.5m Mar11 Var % Mar-12 Mar-11 * Increase in Debtors ($5.2m) as a result of a number of large For personal use only $ '000 $ '000 #039;000 deals signed late H1 ____ __ ____ _____ ____ ______ EBIT 8,887 8,624 263 3% * Operating Cash Flow $4.4m (vs NPAT
Slide 44: Half Year History
10 Year History – Half 1 Average compound growth in Half 1 over the last 10 years For personal use only 30 ____ __ ____ _____ ____ ______ Revenue 14% per annum 25 _____ _____ Licence Fees 16% per annum Consulting 13% per annum 20 ____ _____ Annual support 17% per annum _____ _____ #039;m 15 N
Slide 45: Agenda
Agenda Overview For personal use only What ____ __makes ____ Us Different _____ ____ ______ _____ _____ Strategic Initiatives ____ Full_____ Year Guidance _____ _____ ____Appendix _____ Half Year Results Long Term Outlook
Slide 46: Long Term Outlook
Long Term Outlook Long Term Outlook is Strong ..... For personal use only Enterprise Suite – one of a few companies globally with an enterprise solution ____ Power __– unique of One ____ _____ approach ____ to build, market,______ sell, implement and support our products _____ Vertical _____ m
Slide 47: Long Term Outlook
For personal use only Long Term Outlook Geographical expansion – United Kingdom has significant longer term growth ____ Our __Customer Compelling ____ Experience _____program ____– ______ retain our customers _____ New _____ offshore R&D centre – provide access to additional talent and operati
Slide 48: 2012 Mid Year Presentation
For personal use only 2012 Mid Year Presentation Adrian Di Marco Adrian_Dimarco@TechnologyOneCorp.com Final Commercial in confidence July 2012