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7/30/2019 TNE 2013 Half Year Roadshow Presentation
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2013 Half Year Results Presentat
Adrian Di Marco
Ending March 31st 2013
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Technology One Ltd (ASX: TNE) today conducted presentationsits 2013 Half Year results.
The attached presentation was made by:
Mr Adrian Di Marco - Executive Chairman
Mr Edward Chung - Operating Officer Corporate Services and CFO
These slides have been lodged with the ASX and are also availacompanys web site: www.TechnologyOneCorp.com.
TechnologyOne Half Year
Technology One Ltd Half Year Presentation - 27 May
http://www.technologyonecorp.com/http://www.technologyonecorp.com/7/30/2019 TNE 2013 Half Year Roadshow Presentation
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TechnologyOne Overview
Formed in
1987Employees
800+300+developersinR&Dcentre
800+corporations, governmand statutory authoritie
14inteAustralia |
South Paci
United King
Invest20%of revenue back into
R&D
Continually
profitablesince 1992
Doublesin sizeEvery 4 years
One of Australias most successful software compan
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We believe i
freedom of chour solution
modular by d
TechnologyOneOverview
We are one of only a few Enterprise
Vendors globally ...
The power of a single, integrated,enterprise system
Suite of 12 products
Deeply integrated
Common platform
Consistent user interface
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We focus on seven key markets ...
TechnologyOneOverview
Market focus & commitment
We sell to
service i
organis
We do noretail, dist
manufaindus
Deep understanding and engagement in our markets
Deeply integrated pre configured solutions
Proven practice
Streamlined implementations Reduce time, cost and risk
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We take complete responsibility for building,marketing, selling, implementing and supporting
our enterprise solution for each customer toguarantee long term success.
We do not use implementationpartners or resellers
TechnologyOneOverview
The Power of One
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TechnologyOneOverview
One of Australias largest software houses,specialising in the research, development
and commercialisation of enterprise software invest $33+m in R&D per year
Connected Intelligence (Ci) is our currentgeneration product suite
Next generation of our enterprise suite Ci isunder development
Diversity of revenue streams from Multiple geographies
12 products
Seven vertical markets
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Agenda
Results
Significant Achievements
Outlook for Full Year
Long Term Outlook
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Results Summary
FY13 FY12 Variance %
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%
Profit
Profit After Tax $8.7m $7.4m 17%
Profit Before Tax $10.9m $9.3m 17%
Other
Operating Cash Flow $11.1m $4.4m 151%
Cash and Cash Equivalents $50.3m $33.4m 50%
Profit Before Tax Margin 14% 12%
* 22% of revenue v 21% last year
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Results Highlights
Good result given challenging and uncertain economic climate
Positions us to deliver continuing growth in both revenue and profit for th
Continued significant investments in a number of key areas as follows:
R&D into TechnologyOne Cloud
R&D into Ci - Next generation of our Ci suite
Pre-Configured solutions
United Kingdom
All costs associated with these investments fully expensed as incurred.
These investments will drive growth in future years discussed later
High
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-
10
20
30
40
50
60
2009 2010 2011 2012 2013
$'m
Cash and Equivalents
Balance Sheet
Strong balance sheet
Cash & Cash Equivalents $50.3m (vs. $33.4m)
Net Cash*: 14.00c/s (vs.7.55c/s)
Debt/Equity: 8.77% (vs. 13.27%)
Net Assets: $72.4m (vs. $62.4m)
Interest Cover: 52 times
*after debt per share
Compound Growth 37%
Up 50%, $16.9m
Mar-13
$'000
Cash & Available-for-sale financial assets 50,251
Trade and other receivables22,060 Other current assets 7,496
Current assets 79,807
Property, plant and equipment 13,542
Intangible assets 16,064
Other non-current assets 4,831
Non-current assets 34,437
Total Assets 114,244
Trade and other payables 14,615
Provisions 9,684
Unearned revenue 7,317 Borrowings 6,355
Other liabilities 3,849
Total Liabilities 41,820
Net Assets 72,424
Issues Capital and Reserves 34,791
Retained earnings 37,633
Equity 72,424
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Mar-13
$ '000
EBIT 10,205 Depreciation & Amortisation 2,858
Change in working Capital
(Increase) / Decrease in Debtors 2,596
Increase / (Decrease) in Creditors (1,894)
Increase / (Decrease) in Staff Entitlements (190)
Net Interest Paid 523
Income Taxes paid (3,122)
Other 106
Operating Cash Flow 11,081
Capital Expenditure (855) Proceeds from Sale of PP&E and Investments 1,200
Free Cash Flow 11,427
Dividends Paid (10,670)
Repayment of finance lease (956)
Proceeds from leasing of PPE 0
Proceeds from Shares issued 462
Increase in Cash & Cash equivalents 262
Operating Cash Flow $11.1m, up 151% from $4.4m*
Operating Cash Flow $11.1m vs NPAT of $8.7m
* As at March 2012
Cash Flow
NPAT $7.4m
NPAT $8.7m
$4.4m
$11.1m
0
2
4
6
8
10
12
0
2
4
6
8
10
12
2012 2013
$'m
$'m
NPAT versus Operating Cash Flows
Operating Cash Flows
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Half Year 2013 v Half Year 2012FY13
$'000
FY12
$'000
Variance
$'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
EBITDA 13,064 11,763 1,301 11
Depreciation 2,731 2,735 (4) (0%
Amortisation of Intangibles 127 141 (14) (10%
EBIT 10,206 8,887 1,319 15
Net Interest Income 662 402 260 65
Profit Before Tax 10,868 9,289 1,579 17
Profit After Tax 8,673 7,426 1,247 17
Results Analysis
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Half Year 2013 v Half Year 2012 FY13 FY12 Variance %
EPS (cents) 2.84 2.44 16%
Dividends (cents)
Standard 1.77 1.61 10%
Special - - -
Dividend Payout Ratio 63% 67%
Key Margin Analysis
EBITDAR Margin 38% 37%
EBITDA Margin 17% 15%
Net Profit Before Tax Margin 14% 12%
Net Profit After Tax Margin 11% 10%
Results Key Metrics
* 2012 Full year ROE was 32%, which is expected to be similar for 2013 full year** 2012 Full year Adjusted ROE was 70+%, which is expected to be similar for 2013 full year
** Adjusted for net cash above required working capital, which was assumed at $10m
Half Year 2013 v Half Year 2012 FY
ROE
Return on equity* 12
Adjusted return on equity** 23
Balance Sheet ($000s)
Net Assets 72,
Cash & Cash Equivalents 50,
Operating cash flows 11,
Debt/Equity 9
R&D as % of Total Revenue 22
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$1m Down 53%
Heads 145, Up 10%
$3.7m Up 43%
Heads 218, Down 15%
$1m Up 4%
Heads 66, Down 18%
$2.7m Up 46%
Heads 292, Down 6% $2.4m
Heads 116
0.0
0.5
1.0
1.5
2.0
2.5
3.0
3.5
4.0
Sales Consulting PLUS R&D Corporate
$'m
Profit By Segment Analysis
Net Profit Before Tax $10.9m, up 17% (up $1.6m)
Sales $1m, down 53% (down $1.1m)
Consulting $3.7m, up 43% (up $1.1m)
PLUS $1m, up 4% (up $37k)
R&D $2.7m, up 46% (up $866k)
Corporate $2.4m, up 38% (up $656k)
Profit ContributionLicence Fees down 12%
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Dividend
Dividends for this half year
Half 1 1.77 cps up 10%* (declared, 85% franked)
Payout ratio of 63%
*Indicative of our confidence for the full year outlook
Notes We have continuously paid a dividend since 1996 (through Dot-Com and GFC)
As previously disclosed, an independent review of our R&D tax claim last year found a substantial aconcession. Though this is a positive outcome, this will impact the availability of franking credits. As dividend will now be partially franked.
Our R&D tax claim has now been extended to prior years, and is as yet unquantified, but our expectthe H2 dividend will be partially franked. The review of prior R&D tax claims is expected to be complnext 12 months.
We expect in future years to return to 100% franked dividends
Once we return to fully franked dividends the Board will again consider paying a Special Dividend
Board is considering other Capital Management initiatives
0.00
0.50
1.00
1.50
2.00
2009 2010 2011
Centspershare
Dividend
Compound Growth 19%
R St
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Revenue Streams
Licence fees down 12%
Half year can not be extrapolated, as discussed at AGM
Our pipeline this year is weighted towards the 2nd half year.
Also in the 2012 half year there was an unusually largecontract with a million+ dollar licence fee that was booked
Pipeline for second half is good
Continued growth in Licences expected in full year
Annual licence fees continue to gr
Compound growth over the last
Customer retention is important
Our investment in Compelling Cprogram and Ci is critical for the
R St
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Revenue Streams
Product Consulting revenue up 4%
Consulting profit up $1.1m, 43% on prior year
A new Operating Officer Consulting
Transformation of this business unit to ensureworld best practice & continuing strong growth
Compound growth over the last 10 years is 15%
Plus (non product consulting) reve
Plus profit is up $0.04m, 4% on p
Merged into our ConsultinManager
Strategy to move this busservices around our Ci pr
Market conditions for non Ci prod
Li F C t ib ti V ti l M k t
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Licence Fee Contribution - Vertical Market
Utilities, $2.3m, 14%
Health & Commu
$2.3m, 1
Managed Serv
Education, $5.3m, 33%
Local Government, $3.5m,
21%
Government, $1.7m, 11%
Financial Services, $520k, 3%Licence Fee Contribution - Vertical Market
Agenda
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Agenda
Results
Significant Achievements
Outlook for Full Year
Long Term Outlook
Significant Achievements
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Significant Achievements
Significant Achievements
R&D
TechnologyOne Cloud
TechnologyOnes Journey to the Clo
Marketing Transformation
Other Initiatives
R&D
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R&D
R&D $17.2m, 22% of revenue
R&D fully expensed as incurred
R&D is an important driver for future growth
The most ambitious R&D plan in the companys 25 year hi
R&D continued across all our Ci products
R&D into new innovations, ideas and concepts
R&D into the continuing evolution of Ci (code name Ci)
R&D into the TechnologyOne Cloud
New Off Shore R&D centre
Target for full year is growth of 4%, below our long term target of
TechnologyOne Ci
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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 mobile devices iPhone, iPad, Android etc..
Instant familiarisation
High performing and very scalable
On Premise and Cloud
No more major upgrades - Apps and Enterprise App Store
Significant platform for future growth in coming ye
TechnologyOne Ci
Enterpris
incredib
Any device, an
TechnologyOne Ci
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Strategy being developed for roll out ofCi
Early adopters to be identified
Generally available early/late 2014
Minimise the risks associated with such a large andambitious project
Maximise the revenue potential at the same time
TechnologyOne Ci
Significant Achievements
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Significant Achievements
Significant Achievements
R&D
TechnologyOne Cloud
TechnologyOnes Journey to the Clo
Marketing Transformation
Other Initiatives
T d O P i
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client
Citrix Servers
Database Server
Installation Servers
DP
N-tier ApplicationServers
A complex computing model
Today On Premise
The old way- Run your own hardware & systems On Premise
What is cloud
http://www-132.ibm.com/webapp/wcs/stores/servlet/CategoryDisplay?catalogId=-840&storeId=1&categoryId=2286443&langId=-1&dualCurrId=737/30/2019 TNE 2013 Half Year Roadshow Presentation
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client
Internet connection
Cloud- a simpler computing model
The new way- sign onto a business service
What is cloud
Off Premise Servic
The TechnologyOne Cloud
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TechnologyOne Enterprise Suite in the cloud todaydelivered in a browser.
TechnologyOne takes care of everything
The TechnologyOne Cloud
A simple andeasy experience
Enterprise SoftwareAs a Service
Th T h l O Cl d
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Partnerships with a global Infrastructure As a Services (IAS) provi
2 Data centres commissioned in Sydney in active/active configur
TechnologyOne Enterprise suite now optimised for the TechOne C
TechnologyOne Corporate now running on TechOne Cloud for 9+
4 Early adopters now being implemented Pepper UK, WA Tourism, WA Small Business Development Council, MTC Works
All TechOne Cloud costs are being fully expensed as incurred
Good pipeline of opportunities emerging
Significant platform for future growth in coming years
The TechnologyOne Cloud
Cloud
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Cloud
TechOne Cloud - a number of years before a meaningful contribution to ou
Significant Achievements
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Significant Achievements
Significant Achievements
R&D
TechnologyOne Cloud
TechnologyOnes Journey to the Clo
Marketing Transformation
Other Initiatives
TechnologyOnes Journey to The Cloud
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gy y
TechnologyOnes Journey to the Cloud ...
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 savings expected in 2013/2014 year
Significant Achievements
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g
Significant Achievements
R&D
TechnologyOne Cloud
TechnologyOnes Journey to the Clo
Marketing Transformation
Other Initiatives
Marketing Transformation
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g
Better position our solutions & products in a competitive, fast chan
World class marketing capability
Well advanced in the transformation of our Marketing group
Appointed a new Director of Marketing
New Marketing Strategy Vertical Market driven
Messaging - simple, clear and powerful messages consistent through out the year
Simplify Buyers Journey , Pro-Active, Just In Time
Pro-active rolling calendar of events to support Buyers Journey around our markets
Events smaller, higher quality, quicker & easier to manufacture through out the year
Measure the effectiveness of events to allow us to tailor them
Continually evolving, adapting & responsive events based on the metrics & feedback
Significant Achievements
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g
Significant Achievements
R&D
TechnologyOne Cloud
TechnologyOnes Journey to the Clo
Marketing Transformation
Other Initiatives
Other Initiatives
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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 will require UK conditions to improve
Agenda
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Results
Significant Achievements
Outlook for Full Year
Long Term Outlook
Outlook for Full Year
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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% for the full year
Assumptions
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p
Economic climate does not deteriorate any further and that the current pipeline remains s
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 (Ci)
TechnologyOne Cloud
New Offshore R&D centre
Round off existing products ECM, HR & Payroll, Asset Management
Plus revenue will be line ball to last year
United Kingdom market remains challenging, but expect to continue to reduce losses
UK full year loss of $800k (vs $1.3m loss last year)
Agenda
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Results
Significant Achievements
Outlook for Full Year
Long Term Outlook
Improved Margins
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Profit margin has contracted over thelast 10 years
Expanded our product range investment
Profit margin now started to improve, aspredicted
Focus is to substantially improve marginsover next five years
21%
26% 26% 25% 25%
21%
1
0%
5%
10%
15%
20%
25%
30%
35%
2003 2004 2005 2006 2007 2008 2
Net Profit Margin B
Control R&D Costs
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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
Compound Growth 16%
2002 2011
R&D Growth Projections
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10
20
30
40
50
60
70
2007 2008 2009 2010 2011 2012 2013 2014 2015 2016
$'m
2011 Model for R&D Expense Growth
Actual
Projected from
2011
Model Compound
Growth 8%
$67m
$47m
Historical Compound
Growth 16%
Target for R&D growth of 8% per annum compound, over 5 years s 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 Acquisitions in next 5 years, and continuing growth in revenue
In year 5, Rof revenue
In year 10, 15% of reve
Still well abAverage of
2011 Model$20m/year
2012 year growth was 5%
This year growth target is 4%
Platform for Continuing Growth
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Ci continues to be successful
Ci - continuing evolution of Ci (next generation)
Enterprise software incredibly simple New technologies, new innovations, new concepts
Early adopters expected late 2013/early 2014
Generally available mid/late 2014
TechnologyOne Cloud
Enterprise software as a service
Early adopters now on board
Generally available mid/late 2014
R&D growth of 8% per annum (vs historical average of 16%)
Save $20m in year 5 alone
Ci
Ci
Tec
Clou
Long Term Outlook
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46
Long Term Outlook is Strong .....
Enterprise Suite one of a few companies globally with an enterprise solut
Power of One unique approach to build, market, sell, implement and supp
Vertical markets focus focus on seven key markets and our deep industry
Preconfigured Solutions reduce time, effort, risk and increase penetration
Our large customer base opportunities to cross sell our expanding produc
Pipeline of products at various stages of maturity, which we will continue years, as immature products move from loss making to profitability
Long Term Outlook
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47
Geographical expansion United Kingdom has significant longer term gro
Acquisitions expand our product range and our customer base
TechnologyOne Cloud platform for further growth in coming years
Ci - Next generation of our enterprise suite under development
Our Compelling Customer Experience program retain our customers
New offshore R&D centre provide access to additional talent and opera
Improving Profit Margin
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