Slide 1: 2017 Full Year Results
2017 Full Year Results ending 30 Sept 2017 Adrian Di Marco Edward Chung Tony Ristevski Executive Chairman Chief Executive Officer Chief Financial Officer 21 November 2017 Commercial in confidence FINAL Disclosure Statement Technology One Ltd Full Year Presentation – 21 November 2017 Technology One L
Slide 2: Agenda
Agenda ➢ Results • Significant Achievements • Strategic Initiatives • Outlook for New Year • Long Term Outlook Appendix • TechnologyOne Overview 8 consecutive years of: Record revenues Record licences Record profit Our cloud first, mobile first strategy is driving our strong results 2
Slide 3: Annual cloud subscription revenue up 84%
Annual cloud subscription revenue up 84% Our cloud business continues to grow strongly. 3
Slide 4: Underlying Profit Growth of 22+%
Underlying Profit Growth of 22+%5 Our underlying business has continued to grow very strongly Company Ex. Evolve FY17 Company Evolve BCC & BCC 1$1.2m 3 Revenue $273.2m $3.6m $278.0m 2($1.8m) 4 Expense $215.2m ($0.7m) $212.7m Profit $58.0m $3.0m $4.3m $65.3m Margin 21% 23% Company Ex. Evolve FY16 Com
Slide 5: Total Dividend Up 8%
Total Dividend Up 8% Dividend Last 5 Years UP 8% 12.00 Compound Growth 16% Dividends for the 2017 year: 10.00 Cents per share Special Half 1 2.60 cps up 10% (75% franked1) 8.00 Div (cps) Half 2 5.60 cps up 10% (75% franked1) 6.00 DPS (cps) Total 8.20 cps up 10% 4.00 Special 2.00 cps (declared, 75% f
Slide 6: TechnologyOne Cloud Growing Strongly
TechnologyOne Cloud Growing Strongly Profit of $2.5m vs a loss $2.2m in 2016 Annual Contract Value of $27.1m, up 69% Added 112 new cloud customers $42M UP 55%, ($14.9M) $33M 45.0 UP 77%, ($14.4M) Target ACV of 40.0 $27.1M 35.0 $18.6M UP 69%, ($11.1M) $42+m in 2018 UP 84%, ($8.5M) FY15 30.0 $16M #039;m
Slide 7: Significant investments
Significant investments R&D1 of $49.9m, up 8% fully expensed ▪ Ci - our existing very successful enterprise software ▪ Ci Anywhere - our new generation enterprise software for smart mobile devices ▪ TechnologyOne Software as a Service 1R&D was $46.0 in 2016 Profit By Segment Analysis $58m, Up 9% ($4
Slide 8: Net Profit Before Tax up 9%
Net Profit Before Tax up 9% Profit growth to move back to historical trends in the near future with the head winds removed 70 UP 9%, Compound Growth 14% $58M 60 We have seen continuing good growth 50 in profit. NPBT up 9%, is less than the historical average over the last 7 years 40 #039;m of 14%. Prof
Slide 9: Total R&D Expenses up 8%
Total Expenses Up 10% ($19.5m) 2%, $3.7M UP 10%, 220 $215.2M 6%, 215 1%, $10.9M 210 1%, $2.9M $2.0M 205 #039;m $195.8M 200 195 190 185 2016 Expenses Marketing Cloud Expense Payroll Expense Underlying Total Expenses Expense (1) (2) (3) Expenses (4) (1) Marketing: additional $2.9m in costs for the full y
Slide 10: Cash Flow Balance Sheet
Sep-17 Sep-16 Var % Cash Flow $ '000 $ '000 EBIT 58,019 53,240 4,779 9% Operating Cash Flow strong at $46.4m Depreciation & Amortisation Change in working Capital 4,237 3,924 313 8% • Exceeds Net Profit After Tax of $44.5m (exceeds our ratio 1:1) (Increase) / Decrease in Debtors 1 (10,222) (3,913) (
Slide 11: We are generating significant cash from the cloud
We are generating significant cash from the cloud From the Balance Sheet on previous page… Sep-17 Sep-16 • Earned & Unbilled Revenue (non current) 1 ($11.9m) ($4.0m) Driven by cloud - Revenue recognised & to be billed over more than 12 months – multi year contracted licences must include a ‘break fe
Slide 12: Full Year 2017 v Full Year 2016
FY17 FY16 Variance Full Year 2017 v Full Year 2016 % #039;000 #039;000 #039;000 Revenue excl interest 272,525 248,142 24,384 10% Expenses (excl R&D, interest, Depn & Amortisation) 161,094 145,768 15,326 11% EBITDAR 111,432 102,374 9,058 9% R&D Expenditure 49,856 46,009 3,847 8% EBITDA 61,576 56,365 5,211 9%
Slide 13: Initial Licence Fees Up 10%
Agenda ✓ Results • Significant Achievements • Strategic Initiatives • Outlook for New Year • Long Term Outlook Appendix • TechnologyOne Overview Initial Licence Fees Up 10% 14th consecutive year of strong L/Fee growth UP 10%, 70 $61.7M 60 Compound Growth 12% 50 14% 17% 40 #039;m 11% 30 17% 5% 16% 20 8%
Slide 14: New Customers for 2017 (50)
New Customers for 2017 (50) Adur & Worthing Borough Councils Horsham District Council Tasplan Pty Ltd Australian Institute of Family Studies Inner West Council Tasracing Pty Ltd Australian Naval Infrastructure Pty Ltd Irrigo Centre Limited Tilt Renewables Limited Best Friends Support Services Pty Lt
Slide 15: Annual Licence continues grow strongly: up 11%
Annual Licence continues grow strongly: up 11% Annual Support Fees UP 11%, 140 $119.9M 120 Compound Growth 14% 100 80 #039;m 60 40 20 0 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 • Compound growth over the last 10 years is 14% • Customer retention is important – remains at 99+% • Ci Anywhere and
Slide 16: 270 customers on TechnologyOne Cloud
270 customers on TechnologyOne Cloud versus 150 customers pcp Annual Cloud Subscription Fees engine for significant profit growth in the coming years As previously stated focus has moved from ACV growth to profitable growth in coming years Annual Contract Value - Compound Growth 69% per annum 160 $1
Slide 17: Ci Anywhere
Ci Anywhere Any device Any where Any time Absolutely essential in a digital world Enterprise software, incredibly simple Flow across many devices in the course of a day We are delivering our entire enterprise suite on mobile devices Enterprise Software intelligently adapts to the devices 17
Slide 18: Capitalising on Evolve
Ci Anywhere Enterprise software, incredibly simple Any device. Any where. Any time. ▪ 2016B & earlier releases progressively de- commissioned by mid 2017 ▪ 2017A progressively being rolled out ➢ 2018A under development – tentative release date half 1 2018 ➢ Deliver all remaining functionality late 2
Slide 19: Consulting
Consulting Significant upside in future years • Consulting profit $5.3m, down 46% ($4.5m) • Consulting has not kept up with growth of the business ➢ Initial focus: return to profit growth ✓ Medium term goal is profit margin to be approx. 20% ▪ E.g. 2017 revenue of $72m, profit of $14.4m vs $5.3m act
Slide 20: United Kingdom
United Kingdom ▪ Our ‘blue ocean’ strategy works in the UK • Provide a total ERP solution for higher education & local government • 6 new customers, all of which are on the TechnologyOne Cloud ▪ UK loss $1.1m - flow on effect from the broader consulting issues discussed earlier ➢ Next phase of the U
Slide 21: UK Customers (43)
UK Customers (43) Local Government (13) Higher Education (14) Adur & Worthing Borough Councils Carnegie College Aylesbury Vale District Council Ealing, Hammersmith and West London College Cambridge City Council Glasgow Clyde College Clackmannanshire Council New College Lanarkshire Horsham District C
Slide 22: Outlook for 2018 Year
Outlook for 2018 Year Assumptions • The events that impacted us is 2017 are not expected in 2018 • TechnologyOne Cloud First, Mobile First strategy is gaining strong traction • Cloud continues to grow strongly and profitably - Cloud profit of $5m expected vs $2.5m (2017) vs $2.2m loss (2016) • Consu
Slide 23: Our focus this financial year
Our focus this financial year ✓ Continue developing our Cloud Mass Production model & deliver $5m profit in 2018 ✓ Continue to grow our initial licence fees ✓ Focus is to grow our 5 year subscription licences • Creates recurring revenues after the 5 year period ends ✓ Implement Consulting Strategy &
Slide 24: Significant Appointments
Significant Appointments We continue to expand our executive team Greater depth, experience, and succession planning ▪ Adrian Di Marco – Executive Chairman ▪ Lead the Board and assist the Executive team through the transition ▪ Continued focus on Strategy, R&D and Innovation ▪ Edward Chung – Chief E
Slide 25: Long Term Outlook
Agenda ✓ Results ✓ Significant Achievements ✓ Outlook for New Year ✓ Strategic Initiatives • Long Term Outlook Appendix • TechnologyOne Overview Exclude BCC & Evolve, margin would have been 23% Long Term Outlook Net Profit Margin Before Tax Focus is to 35% 30% substantially improve 25% 27% 25% 26% 2
Slide 26: Future Annual Subscription licenses
Future Annual Subscription licenses ✓ Stop selling perpetual licences, both On Premise and On Cloud ✓ 5 year subscription licences with break fee ✓ After 5 years these subscription licences will move to yearly licences, creating a future annuity stream Future Annual Subscription Licences on completi
Slide 27: UK Licence Fee Growth to 2022
UK Licence Fee Growth to 2022 ‘Customers First’ Licence Fees & Total Revenue $41.3M, 45 UP 51% 40 Compound Growth 44% 1 35 $27.3M, 30 UP 45% $18.9M, 25 UP 43% $11.3M, Licence Fees 20 $9.2M, $11.1M, $13.2M, UP 50% $6.9M, UP 19% $7.5M, Total Revenue UP 33% UP 21% $3.8M, UP 83% UP 50% 15 $2.0M, $5.0M,
Slide 28: Product Maturity
Product Maturity Tipping point when Profit exceeds Licence fees 5 Years 20 Contribute $16+m of additional Profit per year in 5+ years time #039;m 15 10 5 0 (5) CPM Financials & Student Asset Management Enterprise Content HR/Payroll Property Stakeholder Spatial Supply Chain Management Management Managem
Slide 29: Positioned well for the future
Positioned well for the future… Agenda ✓ Results ✓ Significant Achievements ✓ Strategic Initiatives ✓ Outlook for New Year ✓ Long Term Outlook Appendix • TechnologyOne Overview 29
Slide 30: Australia's largest enterprise software company
Australia’s largest enterprise software company Continually profitable Invest $50m For over 25 years R&D Back into Profit Formed in $58m Largest 1987 R&D centre Revenue 1000+ in Australia $273m employees 300+ developers Cash $93m Market Capitalisation 1200+ Corporate, government $1.8b and statutory
Slide 31: Historical Performance
Financially Very Strong • Cash and Equivalents $93.4m • Return on Equity 28+% • Adjusted Return on Equity1 59% • Debt/Equity 0.01% • Interest Cover 1,192 • Continually paid dividends since 1996 (22 years) • Continually profitable since 1992 (26 years) As at 30th Sept 2017 1Adjusted for net cash abov
Slide 32: Our enterprise vision
Our enterprise vision The power of a single integrated enterprise solution What makes us unique Our enterprise vision We are one of only a few global enterprise vendors Asset Financials HR & Enterprise Supply Property Student Management Payroll Budgeting Chain & Rating Management Business Enterprise
Slide 33: Our enterprise vision
Our enterprise vision ▪ We are one of only a few global enterprise vendors • Suite of 14 products • Deeply integrated • Best of breed functionality • Common platform • Consistent user interface The power of a single, integrated, enterprise solution to streamline your business, reduce costs and embra
Slide 34: The power of one
The power of one We do not use implementation partners or resellers We take complete responsibility for building, marketing, selling, implementing, supporting and running our enterprise solution for each customer to guarantee long-term success. Compelling Customer Experience One vision. One vendor.
Slide 35: Preconfigured solutions
Preconfigured solutions Proven practice preconfigured solutions designed to meet the needs of each sector • Tailored configuration • Proven practice • Streamlined implementation • Reduced time, cost and risk The power of evolution An enterprise solution that adapts and evolves What makes us unique 3
Slide 36: The power of evolution
The power of evolution Substantial investment into R&D each year • New releases encompass new technologies, concepts and innovations • Configuration and not customisation GREEN SCREEN CLIENT SERVER WEB BASED CLOUD COMPUTING 99% retention rate of customers who have continued with us throughout our ev
Slide 37: TechnologyOne SaaS
TechnologyOne SaaS • We run our own enterprise software through the cloud • We take responsibility to provide a simple, cost effective and highly elastic model of computing • Unique mass production model delivers economies of scale and strategic benefits to our customers • Focus on your business, no
Slide 38: Ci Anywhere
✓ Economy of scale TechnologyOne SaaS - Massively scalable, Highly efficient , Cost effective ✓ Highly resilient & fault tolerant Mass Production ✓ Elastic - add capacity dynamically ✓ Significant cost savings Future proof - We invest millions annually to make our production line and software better
Slide 39: TechnologyOne SaaS Growth To 2022
Flow across many devices in the course of a day We are delivering our entire enterprise suite on mobile devices Enterprise Software intelligently adapts to the devices TechnologyOne SaaS Growth To 2022 $143m / year (recurring) in 2022 new revenue stream and does not cannibalise existing revenue stre
Slide 40: Other Facts
Other Facts Diversity of revenue streams from multiple: • Products 14 • Vertical markets 8 • Geographies 12 - All states of Australia, New Zealand, South Pacific, Asia and UK Strong, very loyal blue chip customer base • We provide a mission critical solution – ‘sticky customer base’ • 60%+ of our re
Slide 41: Delivering a Cloud first, Mobile first world
Delivering a Cloud first, Mobile first world 41