Technology One Limited · ASX:TNE

Technology One — Investor Presentation (July 2013)

52 slides from Technology One's investor presentation, Jul 23, 2013

  1. Slide 1: Technology One Ltd Mid Year Presentation - 23 July 2013

    Technology One Ltd Mid Year Presentation - 23 July 2013 Technology One Ltd (ASX:TNE) today conducted presentations with Merrill Lynch Australia in Sydney. Attached is the presentation by the company’s Executive Chairman, Mr Adrian Di Marco. These slides have been lodged with the ASX and are also ava

  2. Slide 2: 2013 Mid Year Presentation

    2013 Mid Year Presentation July 2013 Adrian Di Marco [email protected] Final Jul 2013 Commercial in confidence

  3. Slide 3: Agenda

    Agenda  Company Overview  2013 Half Year Results Highlight  Company Update  Outlook for Full Year  Long Term Outlook Appendix  2013 Half Year Results Detail

  4. Slide 4: TechnologyOne Overview

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

  5. Slide 5: 800+ high profile customers

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  6. Slide 6: Financially very strong

    TechnologyOne Overview Financially very strong*…  Continually paid dividends since 1996 (16 years)  Cash and Equivalents $51.1m  Return on Equity 32%  Adjusted Return on Equity** 70+%  Debt/Equity 10%  Interest Cover 50 * as at 30th Sept 2012 ** Less surplus cash of $44m

  7. Slide 7: The Competitive Landscape

    The Competitive Landscape New expanding market coverage ORACLE SAP/R3 $1,000m Current market coverage TechnologyOne Microsoft Business Solutions $100m SAP/Business One Infor (Sun Systems) $30m Reckon CLIENT TURNOVER MYOB

  8. Slide 8: What Makes Us Different: single integrated enterprise vendor

    What Makes Us Different 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, enterprise system

  9. Slide 9: We focus on seven key markets

    What Makes Us Different 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  Reduce time, cost and ri

  10. Slide 10: We do not use implementation partners or resellers

    What Makes Us Different 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

  11. Slide 11: Robust Revenue Model

    Robust Revenue Model Robust Revenue Model ...  Initial Licence - based on usage (number of users ) • Matrix of licensable products & modules (approx 300 modules over 12 products) • Once off fee – invoiced on contract signing  Implementation Services - fee for service • $1 Services : $1 Initial lic

  12. Slide 12: Robust Revenue Model: customer buying pattern

    Robust Revenue Model Initial Implementation Annual Annual Annual Licence Service Licence Licence Licence …. Initial Buy -Based on: No of Users, Products & Modules Initial Annual Annual Annual Buy Addn Users Licence Licence Licence Licence …. - Additional Fee Buy Addn Modules Initial Implementation A

  13. Slide 13: Diversity of revenue streams

    TechnologyOne Overview Diversity of revenue streams from multiple: • Products (12) • Vertical markets (7) • 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’

  14. Slide 14: Key metrics over last 15 years

    TechnologyOne Overview Key metrics over last 15 years … 80 70  Revenue - 20% per annum compound 60  Even through the Dot-Com and GFC 50 $'m  Initial Licence Fees - 18% per annum compound 40 30  Annual Licence Fees - 27% per annum compound 20  Profit Before Tax - 16% per annum compound 10  Divi

  15. Slide 15: Agenda

    Agenda  Company Overview  2013 Half Year Results Highlight  Company Update  Outlook for Full Year  Long Term Outlook Appendix  2013 Half Year Results Detail

  16. Slide 16: Results Summary

    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

  17. Slide 17: Results Highlights

    Results Highlights  Good result given challenging and uncertain economic climate  Positions us to deliver continuing growth in both revenue and profit for the full year  Pipeline for new licences weighted to the second half this year  Continued significant investments in a number of key areas as

  18. Slide 18: Agenda

    Agenda  Company Overview  2013 Half Year Results Highlight  Company Update  Outlook for Full Year  Long Term Outlook Appendix  2013 Half Year Results Detail

  19. Slide 19: Significant Achievements

    Company Update Significant Achievements  R&D  TechnologyOne Ci²  TechnologyOne Cloud  Other Initiatives

  20. Slide 20: R&D

    R&D 2012 R&D was $33.5m, approx 20% 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 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 continu

  21. Slide 21: Significant Achievements

    Company Update Significant Achievements  R&D  TechnologyOne Ci²  TechnologyOne Cloud  Other Initiatives

  22. Slide 22: Ci² - next generation of our Ci product range

    TechnologyOne Ci²  Ci² - next generation of our Ci product range  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 mo

  23. Slide 23: Strategy being developed for roll out of Ci²

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

  24. Slide 24: Significant Achievements

    Company Update Significant Achievements  R&D  TechnologyOne Ci²  TechnologyOne Cloud  Other Initiatives

  25. Slide 25: Today – On Premise

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

  26. Slide 26: What is cloud: In the Cloud

    What is cloud In the Cloud The new way ..Not your problem - sign onto a business service client Internet connection  A simple computing model

  27. Slide 27: The TechnologyOne Cloud

    The TechnologyOne Cloud TechnologyOne Enterprise Suite in the cloud today, delivered in a browser. Power of One TechnologyOne takes We build, market, sell, Implement, support care of everything and now run it all for you  Running of hardware & software  Capital expenditure  Backup & Disaster Reco

  28. Slide 28: The TechnologyOne Cloud: progress

    The TechnologyOne Cloud  Partnerships with a global Infrastructure As a Services (IAS) providers  2 Data centres commissioned in Sydney in “active/active” configuration  TechnologyOne Enterprise suite now optimised for the TechOne Cloud  TechnologyOne Corporate now running on TechOne Cloud for 9

  29. Slide 29: Cloud

    Cloud TechOne Cloud - a number of years before a meaningful contribution to our profit

  30. Slide 30: Significant Achievements

    Company Update Significant Achievements  R&D  TechnologyOne Ci²  TechnologyOne Cloud  Other Initiatives

  31. Slide 31: TechnologyOne's Journey to the Cloud

    TechnologyOne’s Journey to The Cloud TechnologyOne’s 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

  32. Slide 32: Marketing Transformation

    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 • Vertical Market driven • Me

  33. Slide 33: Other Initiatives

    Other Initiatives  Transformation of Consulting Business – One Consulting  Transformation of R&D Business – One R&D  Pre Configured Solutions  TechnologyOne Leadership program  Compelling Customer Experience program  TechnologyOne College  United Kingdom • New strategy being implemented • No

  34. Slide 34: Agenda

    Agenda  Company Overview  2013 Half Year Results Highlight  Company Update  Outlook for Full Year  Long Term Outlook Appendix  2013 Half Year Results Detail

  35. Slide 35: Outlook for Full Year

    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% for the full year

  36. Slide 36: Assumptions

    Assumptions  Economic climate does not deteriorate any further and that the current pipeline remains strong  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 (Ci²) • TechnologyOne Cl

  37. Slide 37: Agenda

    Agenda  Company Overview  2013 Half Year Results Highlight  Company Update  Outlook for Full Year  Long Term Outlook Appendix  2013 Half Year Results Detail

  38. Slide 38: Improved Margins

    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 improve margins 10% o

  39. Slide 39: Control R&D Costs

    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

  40. Slide 40: R&D Growth Projections

    R&D Growth Projections Target for R&D growth of 8% per annum compound, over 5 years set in 2011 • 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,

  41. Slide 41: Platform for Continuing Growth

    Platform for Continuing Growth  Ci – large and loyal customer base • On average our customers have 3.5 out of 12 products • On average 10% to 20% penetration in each market  Ci² - next generation of our Ci product range • Enterprise software incredibly simple R&D • Enterprise software Any Device,

  42. Slide 42: Agenda

    Agenda  Overview  2013 Half Year Results Highlight  Company Update  Outlook for Full Year  Long Term Outlook Appendix  2013 Half Year Results Detail

  43. Slide 43: Results Summary

    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

  44. Slide 44: Results Highlights

    Results Highlights  Good result given challenging and uncertain economic climate  Positions us to deliver continuing growth in both revenue and profit for the full year  Pipeline for new licences weighted to the second half this year  Continued significant investments in a number of key areas as

  45. Slide 45: Balance Sheet

    Balance Sheet Strong balance sheet Mar-13 Mar-12 Var % $'000 $'000 $'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 current assets 7,496 11

  46. Slide 46: Cash Flow

    Cash Flow 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 $'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) / Decrease in Debtors 2,

  47. Slide 47: Dividend

    Dividend Dividends for this half year 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 have continuously pai

  48. Slide 48: Profit By Segment Analysis

    Profit By Segment Analysis Licence Fees down 12% $3.7m Up 43% Profit Contribution 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% $'m 2.0 FY11 $1m Up 4% 1.5 FY12 Heads 66, Down 18% 1.0 FY13 0.5 0.0 Sales Consulting P

  49. Slide 49: Revenue Streams

    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 retention is important  Als

  50. Slide 50: Revenue Streams: Consulting

    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 Manager  Transformation

  51. Slide 51: Licence Fee Contribution - Vertical Market

    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%

  52. Slide 52: Transforming business, making life simple

    Ef techrolosyone Transforming business, making life simple

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