Technology One Limited · ASX:TNE

Technology One — H1 2013 Earnings Presentation

49 slides from Technology One's earnings presentation, May 27, 2013

1. Slide 1: Half Year Results Presentation ASX cover letter

   Commercial in Confidence For personal use only 27 May 2013 Company Announcements Officer Australian Securities Exchange Limited Exchange Centre, 20 Bridge Street, Sydney NSW 2000 BY ELECTRONIC LODGEMENT TECHNOLOGY ONE LIMITED – HALF YEAR RESULTS PRESENTATION Please find attached a copy of the Execut

2. Slide 2: 2013 Half Year Results Presentation

   For personal use only 2013 Half Year Results Presentation Ending March 31st 2013 Adrian Di Marco Adrian_Dimarco@TechnologyOneCorp.com Commercial in confidence

3. Slide 3: TechnologyOne Half Year

   TechnologyOne Half Year For personal use only Technology One Ltd Half Year Presentation - 27 May 2013 Technology One Ltd (ASX: TNE) today conducted presentations relating to its 2013 Half Year results. The attached presentation was made by: • Mr Adrian Di Marco - Executive Chairman • Mr Edward Chung

4. Slide 4: TechnologyOne Overview

   TechnologyOne Overview For personal use only 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

   TechnologyOne Overview For personal use only 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

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

9. Slide 9: Strong financial track record

   TechnologyOne Overview For personal use only 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%  Adjusted Return

10. Slide 10: Agenda

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

11. Slide 11: Results Summary

    Results Summary FY13 FY12 Variance % For personal use only Revenue $79.7m $77.3m 3% Initial Licence Fees $16.3m $18.4m (12%) Consulting Services Fees $22.2m $21.3m 4% Annual Licence Fees $29.9m $25.4m 18% Expenses $68.9m $68.0m 1% R&D Expenses * $17.2m $16.6m 4% Expenses excl R&D $51.7m $51.4m 1% Pr

12. Slide 12: Results Highlights

    Results Highlights For personal use only  Good result given challenging and uncertain economic climate  Positions us to deliver continuing growth in both revenue and profit for the full year  Continued significant investments in a number of key areas as follows:  R&D into TechnologyOne Cloud  R

13. Slide 13: Balance Sheet

    Balance Sheet Strong balance sheet For personal use only Mar-13 Mar-12 Var % #039;000 #039;000 #039;000  Cash & Cash Equivalents $50.3m (vs. $33.4m) Cash & Available-for-sale financial assets 50,251 33,410 16,841 50%  Net Cash*: 14.00c/s (vs.7.55c/s) Trade and other receivables 22,060 21,629 431 2% Other c

14. Slide 14: Cash Flow

    Cash Flow For personal use only Operating Cash Flow $11.1m, up 151% from $4.4m* Mar-13 Mar-12 Var % Operating Cash Flow $11.1m vs NPAT of $8.7m $ '000 $ '000 #039;000 * As at March 2012 EBIT 10,205 8,887 1,318 15% Depreciation & Amortisation 2,858 2,876 (18) (1%) Change in working Capital (Increase) /

15. Slide 15: Results Analysis

    For personal use only Results Analysis FY13 FY12 Variance Half Year 2013 v Half Year 2012 #039;000 #039;000 #039;000 % Revenue excl interest 78,869 76,545 2,324 3% Expenses (excl R&D, Interest, Depn & Amortisation) 48,598 48,201 397 1% EBITDAR 30,271 28,344 1,927 7% R&D Expenditure 17,207 16,581 626 4% EBITD

16. Slide 16: Results – Key Metrics

    For personal use only Results – Key Metrics Variance Half Year 2013 v Half Year 2012 FY13 FY12 Variance % Half Year 2013 v Half Year 2012 FY13 FY12 % EPS (cents) 2.84 2.44 16% ROE Return on equity* 12% 12% Dividends (cents) Adjusted return on equity** 23% 16% Standard 1.77 1.61 10% Special - - - Bal

17. Slide 17: Profit By Segment Analysis

    Profit By Segment Analysis Licence Fees down 12% $3.7m Up 43% Profit Contribution For personal use only 4.0 Heads 218, Down 15% 3.5 $2.7m Up 46% 3.0 Heads 292, Down 6% $2.4m Up 38% $1m Down 53% Heads 116, Down 17% 2.5 Heads 145, Up 10% #039;m 2.0 FY11 $1m Up 4% 1.5 FY12 Heads 66, Down 18% 1.0 FY13 0.5

18. Slide 18: Dividend

    Dividend Dividends for this half year For personal use only Dividend up 10% 2.00  Half 1 1.77 cps up 10%* (declared, 85% franked) 1.50 Compound Growth 19% Cents per share  Payout ratio of 63% 1.00 *Indicative of our confidence for the full year outlook 0.50 0.00 Notes 2009 2010 2011 2012 2013 • We

19. Slide 19: Revenue Streams

    For personal use only Revenue Streams Licence fees down 12% Annual licence fees continue to grow strongly: up 18%  Half year can not be extrapolated, as discussed at AGM  Compound growth over the last 10 years is 18%  Our pipeline this year is weighted towards the 2nd half year.  Customer retent

20. Slide 20: Revenue Streams

    For personal use only Revenue Streams Product Consulting revenue up 4% Plus (non product consulting) revenue down 10%  Consulting profit up $1.1m, 43% on prior year  Plus profit is up $0.04m, 4% on prior year  A new Operating Officer Consulting  Merged into our Consulting Business, with a new Ma

21. Slide 21: Licence Fee Contribution - Vertical Market

    For personal use only Licence Fee Contribution - Vertical Market Financial Services, $520k, 3% Licence Fee Contribution - Vertical Market Utilities, $2.3m, 14% Government, $1.7m, 11% Health & Community Services, $2.3m, 14% Local Government, $3.5m, 21% Managed Services, $664k, 4% Education, $5.3m, 33

22. Slide 22: Agenda

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

23. Slide 23: Significant Achievements

    For personal use only Significant Achievements Significant Achievements  R&D  TechnologyOne Cloud  TechnologyOne’s Journey to the Cloud  Marketing Transformation  Other Initiatives

24. Slide 24: R&D

    R&D R&D $17.2m, 22% of revenue For personal use only  R&D fully expensed as incurred  R&D is an important driver for future growth The most ambitious R&D plan in the company’s 25 year history  R&D continued across all our Ci products  R&D into new innovations, ideas and concepts  R&D into the c

25. Slide 25: TechnologyOne Ci²

    For personal use only TechnologyOne Ci²  Continuing evolution of Ci  R&D into new technologies, innovations, ideas and concepts  Simple, easy way forward for our Ci customers  Browser based – no more software installs & pervasive  Incredibly simple to use, Consumer type software  Support smart

26. Slide 26: TechnologyOne Ci²

    For personal use only TechnologyOne Ci² Strategy being developed for roll out of Ci²  Early adopters to be identified  Generally available early/late 2014  Minimise the risks associated with such a large and ambitious project  Maximise the revenue potential at the same time

27. Slide 27: Significant Achievements

    For personal use only Significant Achievements Significant Achievements  R&D  TechnologyOne Cloud  TechnologyOne’s Journey to the Cloud  Marketing Transformation  Other Initiatives

28. Slide 28: Today – On Premise

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

29. Slide 29: What is cloud

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

30. Slide 30: The TechnologyOne Cloud

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

31. Slide 31: The TechnologyOne Cloud

    The TechnologyOne Cloud  Partnerships with a global Infrastructure As a Services (IAS) providers For personal use only  2 Data centres commissioned in Sydney in “active/active’ configuration  TechnologyOne Enterprise suite now optimised for the TechOne Cloud  TechnologyOne Corporate now running

32. Slide 32: Cloud

    Cloud For personal use only TechOne Cloud - a number of years before a meaningful contribution to our profit

33. Slide 33: Significant Achievements

    For personal use only Significant Achievements Significant Achievements  R&D  TechnologyOne Cloud  TechnologyOne’s Journey to the Cloud  Marketing Transformation  Other Initiatives

34. Slide 34: TechnologyOne's Journey to The Cloud

    TechnologyOne’s Journey to The Cloud TechnologyOne’s Journey to the Cloud ... For personal use only  Email done  Corporate Accounting done  R&D in the Cloud done  Demonstrations in the Cloud Dec 2013  Documents & Files in the Cloud Dec 2013  Consulting in the Cloud Dec 2013 Significant cost sa

35. Slide 35: Significant Achievements

    For personal use only Significant Achievements Significant Achievements  R&D  TechnologyOne Cloud  TechnologyOne’s Journey to the Cloud  Marketing Transformation  Other Initiatives

36. Slide 36: Marketing Transformation

    For personal use only Marketing Transformation  Better position our solutions & products in a competitive, fast changing landscape  World class marketing capability  Well advanced in the transformation of our Marketing group • Appointed a new Director of Marketing • New Marketing Strategy • Verti

37. Slide 37: Significant Achievements

    For personal use only Significant Achievements Significant Achievements  R&D  TechnologyOne Cloud  TechnologyOne’s Journey to the Cloud  Marketing Transformation  Other Initiatives

38. Slide 38: Other Initiatives

    For personal use only Other Initiatives  Transformation of Consulting Business  TechnologyOne Leadership  TechnologyOne Solutions  Compelling Customer Experience  TechnologyOne College  United Kingdom • New strategy being implemented • No new contract wins this half • Significant improvement w

39. Slide 39: Agenda

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

40. Slide 40: Outlook for Full Year

    For personal use only Outlook for Full Year  Economic environment remains challenging and uncertain  Strong committed annual licence fees in the second half  TechnologyOne enterprise business remains resilient  Good pipeline of opportunities in second half  We expect profit growth of 10% to 15%

41. Slide 41: Assumptions

    Assumptions  Economic climate does not deteriorate any further and that the current pipeline remains strong For personal use only  Total expense growth of 3% for the full year • Reduces risk for the business  R&D expense growth of 4% for the full year • TechnologyOne continuing evolution of Ci (C

42. Slide 42: Agenda

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

43. Slide 43: Improved Margins

    Improved Margins Net Profit Margin Before Tax Profit margin has contracted over the For personal use only 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

44. Slide 44: Control R&D Costs

    For personal use only Control R&D Costs Compound Growth 16% 2002 – 2011 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

45. Slide 45: R&D Growth Projections

    R&D Growth Projections Target for R&D growth of 8% per annum compound, over 5 years set in 2011 For personal use only • In 2012 year we demonstrated this was achievable with R&D growth of 5% • Continues to be a very aggressive R&D program • Operating leverage & economy of scale • Assumes no Acquisit

46. Slide 46: Platform for Continuing Growth

    Platform for Continuing Growth  Ci – continues to be successful For personal use only  Ci² - continuing evolution of Ci (next generation) • Enterprise software incredibly simple • New technologies, new innovations, new concepts R&D • Early adopters expected late 2013/early 2014 TechOne Growth of 8

47. Slide 47: 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 of One – unique approach to build, market, sell, implement and support our products  Vertical markets focus – focus on seven key markets

48. Slide 48: Long Term Outlook

    Long Term Outlook  Geographical expansion – United Kingdom has significant longer term growth For personal use only  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

49. Slide 49: Transforming business, making life simple

    Ef techrolosyene Transforming business, making life simple

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