Technology One Limited · ASX:TNE
Technology One — FY2012 Earnings Presentation
50 slides from Technology One's earnings presentation, Nov 26, 2012
Slide 1: 2012 Full Year Results Presentation
2012 Full Year Results Presentation Ending September 30th 2012 Adrian Di Marco [email protected] *Final November 2012 Commercial in confidence
Slide 2: Technology One Ltd Full Year Presentation - 26 Nov 2012
Technology One Ltd Full Year Presentation - 26 Nov 2012 Technology One Ltd (TNE) today conducted investor presentations pertaining to its 2012 Full Year results. The attached presentation was given by the company’s Executive Chairman, Mr Adrian Di Marco. These slides have been lodged with the ASX an
Slide 3: TechnologyOne Overview
TechnologyOne Overview 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 size of revenue back
Slide 4: TechnologyOne Overview: Enterprise Vendor
TechnologyOne Overview We are one of only a few Enterprise Vendors globally ... ü Suite of 12 products ü Deeply integrated We believe in the ü Common platform freedom of choice our solution is ü Consistent user interface modular by design The power of a single, integrated, enterprise system
Slide 5: We focus on seven key markets
TechnologyOne Overview We focus on seven key markets ... ü Deep understanding and engagement in our markets We sell to asset and ü Deeply integrated pre configured solutions service intensive ü Proven practice organisations. ü Streamlined implementations We do not service ü Reduce time, cost an
Slide 6: We do not use implementation partners or resellers
TechnologyOne Overview 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
Slide 7: TechnologyOne Overview
TechnologyOne Overview § One of Australia’s largest software houses, specialising in the research, development and commercialisation of software – invest $33+m in R&D per year § Connected Intelligence (Ci) is our current generation product suite § Next generation of our enterprise suite Ci² is un
Slide 8: Strong financial track record
TechnologyOne Overview 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% § Debt/Equity 10% § Interest Cover
Slide 9: Agenda
Agenda Ø Results § Significant Achievements § Outlook for Full Year § Long Term Outlook
Slide 10: Results Summary
Results Summary FY12 FY11 Variance % Revenue $169.1m $156.7m 8% Initial Licence Fees $35.4m $30.7m 15% Consulting Services Fees $45.4m $41.7m 9% Annual Licence Fees $63.7m $55.3m 15% Expenses $138.7m $130.0m 7% R&D Expenses * $33.5m $31.8m 5% Expenses excl R&D $105.2m $98.2m 7% Pro
Slide 11: Guidance
Guidance Full Year Guidance* - continuing profit growth of 10% to 15% ü Profit After Tax up 16% ü Profit Before Tax up 14% * at Half Year Results Presentation
Slide 12: Results Highlights
Results Highlights § Strong result given challenging and uncertain economic climate § Continued strong demand for our products: § 15% increase in Initial Licence fees § 15% increase in Annual Licence Fees § Continued significant investments in a number of key areas as follows: § Pre-Configured
Slide 13: Balance Sheet
Balance Sheet Strong balance sheet Sep-12 $'000 Sep-11 $'000 Var $'000 % § Cash & Cash Equivalents $51.1m (vs. $45.4m) Cash & Available‑for‑sale financial assets 51,133 45,357 5,777 13% Trade and other receivables 26,208 18,303 7,905 43% § Net Cash*: 13.7c/s (vs.11.2c/s) Other current assets 5,324
Slide 14: Cash Flow
Cash Flow Sep-12 Sep-11 Vary % Operating Cash Flow $28m, up 21% from $23.2m Sep11 $ '000 $ '000 $'000 § Operating Cash Flow $28m (vs NPAT of $23.6m) EBIT 29,453 25,686 3,767 15% Depreciation & Amortisation 5,643 5,156 488 9% Change in working Capital (Increase) / Decrease in Debtors** (7,287) (3,12
Slide 15: 2012 Full Year Results: Dividend
2012 Full Year Results Dividends for this year 6.00 Dividend Compound Growth 8% up 10% § Half 1 1.61 cps up 10% (paid) 5.00 Cents per share 4.00 Ø Half 2* 3.48 cps up 10% (85% franked) 3.00 2.00 § Sub Total 5.09 cps up 10% 1.00 0.00 Ø Special Dividend** nil 2003 2004 2005 2006 2007 2008 2009 201
Slide 16: 2012 Full Year Results
2012 Full Year Results 2012 2011 Variance Full Year 2012 v Full Year 2011 $'000 $'000 $'000 % Revenue excluding interest 167,624 155,252 12,372 8% Expenses (excluding R&D, Depn, Forex & amortisation) 98,969 92,522 6,447 7% EBITDAR 68,655 62,730 5,925 9% R&D Expenditure 33,524 31,796 1,728 5% EBITDA
Slide 17: 2012 Full Year Results – Key Metrics
2012 Full Year Results – Key Metrics Full Year 2012 v Full Year 2011 2012 2011 Variance % Full Year 2012 v Full Year 2011 2012 2011 Variance % EPS (cents) 7.73 6.71 15% Return on equity 32% 30% Dividends (cents) Balance Sheet ($‘000s) Standard 5.09 4.62 10% Net Assets 73,997 68,370 8% Special - 1.50
Slide 18: Historical Performance
Historical Performance 80 Key metrics over last 15 years … 70 ü Revenue - 20% per annum compound 60 § Even through the Dot-Com and GFC 50 $'m ü Initial Licence Fees - 18% per annum compound 40 30 ü Annual Licence Fees - 27% per annum compound 20 ü Profit Before Tax - 16% per annum compound 10 ü
Slide 19: Revenue Streams
Revenue Streams Continuing strong demand for our products: 15% Annual licence fees continue to grow strongly: up 15% increase in licence fees Ø Customer retention is important Ø New pre-configured solutions § Increasing market share Ø Our investment in Compelling Customer Experience program § C
Slide 20: Major New Customers
Major New Customers Aspire Benefits Management Pty Ltd APG Operations Pty Ltd Australian Red Cross UnitingCare West Ability Options Ltd South Burnett Regional Council City of Unley Attorney General of South Australia Warrnambool City Council Epworth Hospital Tuaropaki Trust Queensland Motorways Pty
Slide 21: Revenue Streams: Consulting and Plus
Revenue Streams 50 Consulting Up 9%, 25 Plus Down 17%, Compound Growth 14% $3.6m Compound Growth 4% $3.5m 40 20 30 15 $'m $'m 20 10 10 5 -‐ -‐ 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 Plus (non product consulting) revenue down 17% Product
Slide 22: Licence Fee by Product
Licence Fee by Product 12.0 $9.7m $9.4m Up 14% Inline 10.0 8.0 $5.1m $4.6m $'m 6.0 Up 91% Down 6% 4.0 $2.1m $1.9m FY10 $1.5m $1.2m Up 74% Up 8% FY11 Up 22% Up 20% 2.0 FY12 0.0 Financials & Asset HR/Payroll Property Enterprise CRM CPM Student Supply Chain Management Content Management Management Lice
Slide 23: Licence Fee Contribution - Vertical Market
Licence Fee Contribution - Vertical Market Licence Fee ContribuBon -‐ VerBcal Market Managed Services, $1.9m, 5% UBliBes, $3.1m, 9% EducaBon, $7.3m, 21% Financial Services, $2.4m, 7% Local Government, $10.9m, 31% Government, $4.6m, 13% Health & Community Services, $5.2m, 15%
Slide 24: Profit By Segment Analysis
Profit By Segment Analysis Profit Contribution $8.6m, Up 23% 10.0 Heads 278, Down 3% 9.0 $7.6m, Up 20% $7.9m, Up 15% Heads 232, Down 9% Heads 107, Up 9% 8.0 7.0 6.0 FY10 $4m, Up 27% $'m 5.0 Heads 133, Up 6% $2.2m, Down 34% FY11 4.0 Heads 75, Down 24% FY12 3.0 2.0 1.0 0.0 Sales ConsulBng PLUS R&D Cor
Slide 25: Agenda
Agenda ü Results Ø Significant Achievements § Outlook for Full Year § Long Term Outlook
Slide 26: Significant Achievements
Significant Achievements Significant Achievements Ø R&D § TechnologyOne Cloud § Marketing Transformation § Other Initiatives
Slide 27: R&D
R&D R&D $33.5m, 20% of revenue, fully expensed The most ambitious R&D plan in the company’s 25 year history § R&D continuing across all our Ci products § R&D into our new Ci² product suite § R&D into new innovations, ideas and concepts § R&D into the TechnologyOne Cloud § New Off Shore R&D cent
Slide 28: TechnologyOne Ci²
TechnologyOne Ci² Ci² is the next generation of our Ci enterprise suite... ü Embrace new technologies, innovations & concepts ü Focus is Simplicity, Not Complexity ü Browser based – no more software installs & pervasive ü Apps and Enterprise App Store ü Native support for the Cloud Ø Support s
Slide 29: Significant Achievements
Significant Achievements Significant Achievements ü R&D Ø TechnologyOne Cloud § Marketing Transformation § Other Initiatives
Slide 30: Today – On Premise
Today – On Premise The old way - Run your own hardware & systems On Premise Database Server N-tier Application Distributed Citrix Servers Servers Processors client A complex computing model Installation Servers
Slide 31: What is cloud
What is cloud The new way - sign onto a business service client Internet connection Off Premise Service Provider ü Cloud- a simpler computing model
Slide 32: The TechnologyOne Cloud
The TechnologyOne Cloud TechnologyOne Enterprise Suite in the cloud today, delivered in a browser. TechnologyOne takes care of everything A simple and easy experience
Slide 33: The TechnologyOne Cloud
The TechnologyOne Cloud ü Partnerships with global Infrastructure As a Services (IAS) providers ü Data centres being commissioned in Sydney ü TechnologyOne Enterprise suite being optimised for the Cloud ü Trials in progress ü TechnologyOne Corporate now running on TechOne Cloud ü Early adopter
Slide 34: Cloud
technologyone Internet TV NFC Payment expectations. In-Memory Database Management Systems O Gesture Recognition Machine-to-Machine Communication Services Processing and Management yt ‘ by Mobile Application Stores Video Analytics for Customer Service Biometric Authentication Methods Idea Management
Slide 35: Significant Achievements
Significant Achievements Significant Achievements ü R&D ü TechnologyOne Cloud Ø Marketing Transformation § Other Initiatives
Slide 36: Marketing Transformation
Marketing Transformation § Better position our solutions & products in a competitive, fast changing landscape § Strategy & structure to build a world class marketing function • Appoint a new Director of Marketing • Vertical Market driven • Simplify ‘Buyers Journey’ , Pro-Active, ‘Just In Time’ §
Slide 37: Significant Achievements
Significant Achievements Significant Achievements ü R&D ü TechnologyOne Cloud ü Marketing Transformation Ø Other Initiatives
Slide 38: Other Initiatives
Other Initiatives ü Transformation of Consulting Business – One Consulting • World class services business • New OO appointed and all consulting now reports into here • Consistent practices with professional career path for our people ü TechnologyOne Leadership • Leadership Model developed to impr
Slide 39: Other Initiatives
Other Initiatives ü Compelling Customer Experience • Deliver a great customer services experience • CCE Stage 2 in progress • Critical to continuing strong customer retention ü TechnologyOne College • Up and running – courses to be expanded ü United Kingdom • New strategy being implemented • 3 ne
Slide 40: Agenda
Agenda ü Results ü Significant Achievements Ø Outlook for Full Year § Long Term Outlook
Slide 41: Outlook for Full Year
Outlook for Full Year Economic Environment § The global economic climate remains uncertain, and challenging. § The enterprise software markets has been one of the most resilient sectors of the IT industry in recent years. § In particular TechnologyOne markets have remained robust: government and
Slide 42: Outlook for Half Year
Outlook for Half Year 2013 Full Year - Profit growth to continue § We expect to see continuing growth in licence fees and revenue § We will need to carefully monitor and manage the sale cycle for potential contract delays given the economic climate § As in previous year’s we note that the half ye
Slide 43: Outlook for Full Year: Our focus
Outlook for Full Year Our focus next financial year is ... §Leverage our broadened & fast maturing product portfolio §Focus on our seven vertical markets – resilient & strong §Cross sell into our large existing customer base §Contain R&D costs
Slide 44: Agenda
Agenda ü Results ü Significant Achievements ü Outlook for Full Year Ø Long Term Outlook
Slide 45: Improved Margins
Improved Margins Net Profit Margin Before Tax Profit margin has contracted over the 35% last 10 years 30% 26% 26% § Expanded our product range investment 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%
Slide 46: Control R&D Costs
Control R&D Costs This year achieved Compound Growth 16% 2002 – 2011 R&D growth of 5% 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
Slide 47: R&D Growth Projections
R&D Growth Projections Target for R&D growth of 8% per annum compound, over 5 years set in 2011 • This year we demonstrated this is 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 2011
Slide 48: Long Term Outlook
Long Term Outlook Long Term Outlook is Strong ..... ü Enterprise Suite – one of a few companies globally with an enterprise solution ü Power of One – unique approach to build, market, sell, implement and support our products ü Vertical markets focus – focus on seven key markets and our deep indus
Slide 49: Long Term Outlook
Long Term Outlook ü Geographical expansion – United Kingdom has significant longer term growth ü Acquisitions – expand our product range and our customer base ü TechnologyOne Cloud – platform for further growth in coming years ü Ci² - Next generation of our enterprise suite under development ü
Slide 50: Transforming business, making life simple
Bl techrolosyone Transforming business, making life simple