____ __ ____ _____ ____ ______ _____ _____ ____ _____ _____ _____ ____ _____ Technology One Ltd Half Year Presentation 21 May 2012 - Technology One Ltd (ASX:TNE) today conducted investor presentations pertaining to its 2012 Half Year results. The attached presentation was given at this meeting by the company’s Executive Chairman, Mr Adrian Di Marco. These slides have been lodged with the ASX and are also available on the company’s web site: www.TechnologyOneCorp.com.
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Technology One Ltd Half Year Presentation
21 May 2012 - Technology One Ltd (ASX:TNE) today conducted investor presentations pertaining to its 2012 Half Year results.
The attached presentation was given at this meeting by the company’s Executive Chairman, Mr Adrian Di Marco.
These slides have been lodged with the ASX and are also available on the company’s web site: www.TechnologyOneCorp.com.
Offices in Australia, New Zealand, Asia and, more recently, the United Kingdom
Growing business in the United Kingdom
Major supplier of enterprise applications in ANZ – 800+ major corporations, government departments and statutory authorities
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TechnologyOne Overview
Unique Business Model - ‘Power of One’ One Vision. One Vendor. One Experience.
Sell ‘best practice’ preconfigured solutions for our seven vertical markets to reduce time, cost & risk for our customers
Diversity of revenue streams from… Multiple geographies
10 products
seven vertical markets
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TechnologyOne Overview
One of Australia’s largest software houses, specialising in the research, development and commercialisation of software – invest $32+m in R&D per year
Connected Intelligence (Ci) is our current generation product suite
Next generation of our enterprise suite Ci² is under development
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Historical Performance
Strong financial track record …
Doubling in size approx every 4 years for 15 years
Continually profitable since 1992 (20 years)
Continually paid dividends since 1996 (16 years)
Cash and Equivalents $45.4m
Return on Equity 30+%
Debt/Equity 14%
Interest Cover 50
Revenue
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Key metrics over last 15 years …
Revenue - 22% per annum compound
Even through the Dot-Com and GFC
Initial Licence Fees - 22% per annum compound
Annual Licence Fees - 27% per annum compound
Profit Before Tax - 20% per annum compound
Dividends - 23% per annum compound
Net Assets - 28% per annum compound
Historical Performance
Doubling in size every 4 years for last 15 years
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Agenda
Results
Significant Achievements
Outlook for Full Year
Long Term Outlook
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Results Highlights
Positions us for strong growth in Profit in the full year
FY12 FY11 Variance %
Revenue $77.3m $71.6m 8%
Initial Licence Fees $18.4m $15.6m 18%
Consulting Services Fees $21.3m $19.6m 9%
Annual Licence Fees $25.4m $21.8m 16%
Expenses $68.0m $62.5m 9%
R&D Expenses * $16.6m $14.9m 11%
Expenses excl R&D $51.4m $47.6m 8%
Profit Before Tax*** $9.3m $9.1m 2%
Other
Operating Cash Flow ** $4.4m $7.5m (41%)
Cash and Cash Equivalents $33.4m $33.4m inline
* 21% of revenue v 21% last year ** v NPAT of $7.4m
R&D is fully expensed as incurred
***Market consensus was profit to be down between 5% and 10%
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Guidance
Half Year - challenging and not a good indicator of full year results Market consensus was profit to be down between 5% and 10%
Actual profit up 2%
Full Year - continuing profit growth Discussed later
Guidance at Annual General Meeting
5.0m
6.9m
9.1m up 33%
9.3m up 2%
0.0
2.0
4.0
6.0
8.0
10.0
FY09 FY10 FY11 FY12
$'m
Half 1 Profit Compound Growth 23% Over 4 years
Half 1 FY11
Abnormally high
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Results Highlights
Strong result given economic climate and the abnormally high previous half year
Continued strong demand for our products:
18% increase in Initial Licence fees
16% increase in Annual Licence Fees
Continued significant investments in a number of key areas as follows:
New solutions group (loss of $1.35m)
United Kingdom (loss of $789k)
R&D into Ci² - Next generation of our Ci suite
R&D into TechnologyOne cloud
These investments will drive growth in future years – discussed later
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Balance Sheet
Strong balance sheet
Cash & Cash Equivalents $33.4m (vs $33.4m)
• Net Cash*: 8.51c/s (vs 8.23c/s)
• Debt/Equity: 13.27% (vs 13.13%)
• Net Assets: $62.4m (vs $57.8m)
• Interest Cover 28 times
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5
10
15
20
25
30
35
40
Cash Cash equivalents Total
$'m
Other Financial Indicators
FY10
FY11
FY12
*after debt per share Intangibles consist of the acquisition of our ECM, Property products.
Mar-12 Mar-11 Var %
$'000 $'000 $'000
Cash & Available-for-sale f inancial
assets 33,410 33,396 14 0%
Trade and other receivables 27,944 17,761 10,183 57%
Other current assets 5,594 5,079 515 10%
Current assets 66,948 56,236 10,712 19%
Property, plant and equipment 17,587 19,791 (2,204) (11%)
Intangible assets 16,320 16,601 (281) (2%)
Other non-current assets 4,391 5,325 (934) (18%)
Non-current assets 38,298 41,716 (3,418) (8%)
Total Assets 105,246 97,952 7,294 7%
Trade and other payables 13,966 10,444 3,522 34%
Provisions 9,236 9,172 64 1%
Unearned revenue 6,726 7,263 (538) (7%)
Borrow ings 8,302 7,594 709 9%
Other liabilities 4,613 5,638 (1,026) (18%)
Total Liabilities 42,841 40,111 2,730 7%
Net Assets 62,403 57,841 4,562 8%
Issues Capital and Reserves 33,518 30,243 3,275 11%
Retained earnings 28,885 27,598 1,287 5%
Equity 62,403 57,841 4,562 8%
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Cash Flow
Operating Cash Flow $4.4m, down 41% from $7.5m Mar11
* Increase in Debtors ($5.2m) as a result of a number of large
deals signed late H1
* Operating Cash Flow $4.4m (vs NPAT $7.4m)
$7.3m $7.4m
$7.5m
$4.4m
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2011 2012
$'m
$'m
NPAT versus Operating Cash Flows
Operating Cash Flows
Mar-12 Mar-11 Var %
$ '000 $ '000 $'000
EBIT 8,887 8,624 263 3%
Depreciation & Amortisation 2,875 2,599 276 11%
Change in w orking Capital
(Increase) / Decrease in Debtors (5,521) (266) (5,255) (1979%)
Increase / (Decrease) in Creditors 738 (629) 1,367 217%
Increase / (Decrease) in Staff Entitlements (511) (567) 57 10%
Net Interest Paid 402 478 (76) (16%)
Income Taxes paid (3,860) (4,019) 160 4%
Other 1,403 1,287 116 9%
Operating Cash Flow 4,413 7,507 (3,094) (41%)
Capital Expenditure (1,683) (3,282) 1,599 49%
Proceeds from Sale of PP&E and Investments 0 199 (199) (100%)
Free Cash Flow 2,730 4,424 (1,694) (38%)
Dividends Paid (14,209) (13,243) (966) (7%)
Debt movement (1,131) 4,828 (5,959) (123%)
Proceeds from Shares issued 517 933 (416) (45%)
Increase in Cash & Cash equivalents (12,093) (3,058) (9,035) (295%)
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Dividends for this year
Half 1 1.61 cps up 10%* (declared)
Payout ratio of 67%
Notes • We have continuously paid a dividend since we listed in 1999 (through Dot-Com
and GFC).
• Full year compound growth in dividends over last 10 years has been 28% per annum.
• The Board will once again consider Capital Management initiatives at full year such as a Special Dividend, if cash reserves remain high, growth continues as is expected and there is no compelling alternative use for the cash reserves.
Dividend
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0.40
0.60
0.80
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1.20
1.40
1.60
1.80
2009 2010 2011 2012
Ce
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pe
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are
H1 Dividend up 10%
22% per annum
*Indicative of the confidence for the full year outlook
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2012 Half 1 Results
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60
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90
2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
$'m
Revenue
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2
4
6
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10
2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
$'m
Net Profit Before Tax
Half Year 2012 v Half Year 2011 2012 $'000
2011 $'000
Variance $'000
%
Revenue excl interest 76,863 71,093 5,770 8%
Expenses (excl R&D, Depn, Forex &
Amortisation) 48,520 45,008 3,513 8%
EBITDAR 28,343 26,085 2,258 9%
R&D Expenditure 16,581 14,911 1,670 11%
EBITDA 11,762 11,174 588 5%
Depreciation 2,735 2,458 277 11%
Amortisation of Intangibles 141 141 0 0%
Forex Expense 1 (47) 48 (101%)
EBIT 8,886 8,623 263 3%
Net Interest Income 402 478 (76) (16%)
Profit Before Tax 9,288 9,102 187 2%
Profit After Tax 7,426 7,356 70 1%
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2012 Half 1 Results
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0.50
1.00
1.50
2.00
2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
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pe
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are
Dividend (cps)
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70
2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
$'m
Net Assets
Half Year 2012 v Half Year 2011 2012 $'000
2011 $'000
Variance $'000
%
EPS cents Reported 2.44 2.43 0.01 0%
DPS cents - standard 1.61 1.46 0.15 10%
Dividend Payout Ratio 67% 60%
EBITDAR Margin 37% 37%
EBITDA Margin 15% 16%
Net Profit Before Tax Margin 12% 13%
Net Profit After Tax Margin 10% 10%
R&D as Percentage of Total Revenue 21% 21%
Net Assets 62,403 57,841 4,562 8%
Cash & Cash Equivalents 33,408 33,396 12 0%
Net operating cash flows 4,406 7,507 (3,101) (41%)
Debt/Equity 13% 13%
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10 Year History – Half 1
Average compound growth in Half 1 over the last 10 years
Revenue 14% per annum
Licence Fees 16% per annum
Consulting 13% per annum
Annual support 17% per annum
NPAT 10% per annum
NPBT 8% per annum
R&D expense 15% per annum
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10
15
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25
30
2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
$'m
ASM Consulting Licence Fees R&D Expense
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Revenue Streams
Revenue $77.3m, up 8% (up $5.7m)
Initial licence fees $18.4m, up 18% (up $2.8m)
Annual licence fees $25.4m, up 16% (up $3.6m)
Consulting services fees $21.3m, up 9% (up $1.7m)
Plus* $8.5m, down 16% (down $1.6m)
Other revenue $3.7m, down 18% (down $780k)
This includes Product Modifications of $1.3m, down 48% (down $1.2m)
$18.4m Up 18%
$25.4m Up 16%
$21.3m Up 9%
$8.5m Down 16%,$1.6m
$3.7m Down 18%,$1.2m
0.0
5.0
10.0
15.0
20.0
25.0
30.0
Initial licence fees Annual licence fees Consulting services fees Plus Other revenue
$'m
FY10 FY11FY12
*Plus – non enterprise product revenue
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Revenue Streams
Continuing strong demand for our products: 18% increase in licence fees
Increasing market share
Continuing success of our Ci product suite
New pre-configured solutions also driving growth in licence fees
Compound growth over the last 10 years has been 16%
Annual licence fees continue to grow strongly: up 16%
Compound growth over the last 10 years is 17%
Customer retention is important
Our investment in Compelling Customer Experience program and Ci²
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2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
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Licence Fees
Compound Growth 16%
up 18%, $2.8m
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25
30
2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
$'m
ASM
Compound Growth 17%
up 16%, $3.6m
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Major New Customers
South Burnett Regional Council
QSuper
Indigenous Business Australia
Collection House
Civil Aviation Safety Authority
Country Health (SA)
Torres Strait Regional Council
South Australian Govt Financing Authority
City of Unley
St Andrews Hospital
Aoraki Polytechnic (NZ)
Police & Community Youth Club (NSW)
Royal New Zealand Plunket Society
Townsville City Council*
Catholic Education
National Bank of Vanuatu
Australian Power and Gas
Ability Options
SGE Credit Union
Holiday Coast Credit Union
Museum of New Zealand
Tuaropaki Trust (NZ)
Office of Parliamentary Council (ACT)
Marubeni Coal
Fisher & Paykel Finance
Transaction Solutions
Attorney General (SA)
Dickinson Dees (UK)
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Revenue Streams
Return to growth for our Product Consulting: up 9%
Consulting profit is down $404k
Appointed a new Operating Officer Consulting
Commenced a review of this business unit to ensure continuing strong growth
Compound growth over the last 10 years is 13%
Plus (non product consulting) revenue : down 16%
Plus profit is down $1m
Market conditions for non Ci product services is challenging
Challenging conditions will continue over the full year
Strategy to move this business to ‘value added’ services around our Ci products