2012 Full Year Results Presentation Ending September 30th 2012 - - PowerPoint PPT Presentation

Commercial in confidence *Final November 2012

2012 Full Year Results Presentation

Adrian Di Marco

Adrian_Dimarco@TechnologyOneCorp.com

Ending September 30th 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 and are also available on the company’s web site: www.TechnologyOneCorp.com.

TechnologyOne Overview

Formed in

1987

Employees

800+ 300+developers

in R&Dcentre

800+

corporations, government and statutory authorities

14 international offices in

Australia | New Zealand South Pacific | Asia United Kingdom Invest 20%

• f revenue back into

R&D

Continually

profitable

since 1992

Doubles in size

Every 4 years

One of Australia’s most successful software companies

Revenue

$170m

We believe in the freedom of choice

• ur solution is

modular by design

TechnologyOne Overview We are one of only a few Enterprise Vendors globally ...

The power of a single, integrated, enterprise system

ü Suite of 12 products ü Deeply integrated ü Common platform ü Consistent user interface

We focus on seven key markets ... TechnologyOne Overview

Market focus & commitment

We sell to asset and service intensive

• rganisations.

We do not service retail, distribution or manufacturing industries.

ü Deep understanding and engagement in our markets ü Deeply integrated pre configured solutions ü Proven practice ü Streamlined implementations ü Reduce time, cost and risk

We take complete responsibility for building, marketing, selling, implementing and supporting

• ur enterprise solution for each customer to

guarantee long term success.

We do not use implementation partners or resellers TechnologyOne Overview

The Power of One

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 under development § Diversity of revenue streams from…

§ Multiple geographies § 10 products § seven vertical markets

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 50

Agenda Ø Results § Significant Achievements § Outlook for Full Year § Long Term Outlook

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%

 

Profit

Profit After Tax** $23.6m $20.3m 16%

  Profit Before Tax

$30.3m $26.7m 14%

  Other ¡ ¡ ¡ ¡ ¡ ¡  

Operating Cash Flow $28.0m $23.2m 21%

 

Cash and Cash Equivalents $51.1m $45.4m 13% Profit Before Tax Margin 18% 17%

    * 20% of revenue v 20% last year ; fully expensed   ¡ ¡ ** R&D tax concession, positive impact on NPAT

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

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 solutions § R&D into Ci² - Next generation of our Ci suite § R&D into TechnologyOne cloud § United Kingdom § These investments will drive growth in future years – discussed later

Balance Sheet

Strong balance sheet

§ Cash & Cash Equivalents $51.1m (vs. $45.4m) § Net Cash*: 13.7c/s (vs.11.2c/s) § Debt/Equity: 10% (vs. 14%) § Net Assets: $74m (vs. $68m) § Interest Cover: 50 times *after debt per share

¡-­‑ ¡ ¡ ¡ ¡ ¡10 ¡ ¡ ¡20 ¡ ¡ ¡30 ¡ ¡ ¡40 ¡ ¡ ¡50 ¡ ¡ ¡60 ¡ ¡ 2008 ¡ 2009 ¡ 2010 ¡ 2011 ¡ 2012 ¡ $'m ¡ Cash ¡and ¡Equivalents ¡

Compound ¡Growth ¡21% ¡ Up ¡13%, ¡$5.8m ¡

Sep-12 Sep-11 Var % $'000 $'000 $'000 Cash & Available‑for‑sale financial assets 51,133 45,357 5,777 13% Trade and other receivables 26,208 18,303 7,905 43% Other current assets 5,324 5,908 (584) (10%) Current assets 82,665 69,568 13,098 19% Property, plant and equipment 15,490 18,733 (3,243) (17%) Intangible assets 16,191 16,461 (270) (2%) Other non‑current assets 5,590 6,443 (853) (13%) Non‑current assets 37,271 41,637 (4,366) (10%) Total Assets 119,936 111,205 8,731 8% Trade and other payables 16,110 11,620 4,490 39% Provisions 9,995 9,852 143 1% Unearned revenue 6,525 6,549 (24) (0%) Borrowings 7,344 9,611 (2,267) (24%) Other liabilities 5,965 5,203 762 15% Total Liabilities 45,939 42,835 3,104 7% Net Assets 73,997 68,370 5,628 8% Issues Capital and Reserves 39,610 41,931 (2,321) (6%) Retained earnings 34,387 26,439 7,948 30% Equity 73,997 68,370 5,627 8%

Cash Flow

Operating Cash Flow $28m, up 21% from $23.2m Sep11 § Operating Cash Flow $28m (vs NPAT of $23.6m)

$20.3m ¡ $23.6m ¡ $23m ¡ $28m ¡

0 ¡ 5 ¡ 10 ¡ 15 ¡ 20 ¡ 25 ¡ 30 ¡ 0 ¡ 5 ¡ 10 ¡ 15 ¡ 20 ¡ 25 ¡ 30 ¡

2011 ¡ 2012 ¡

$'m ¡ $'m ¡

NPAT ¡versus ¡OperaBng ¡Cash ¡Flows ¡

Opera>ng ¡Cash ¡Flows ¡

** increase in debtors as a result of significant number of deals closed in Aug & Sept

Sep-12 Sep-11 Vary % $ '000 $ '000 $'000 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) (3,121) (4,166) 133% Increase / (Decrease) in Creditors 3,473 1,491 1,983 133% Increase / (Decrease) in Staff Entitlements 279 213 65 31% Net Interest Paid 872 989 (118) 12% Income Taxes paid (4,706) (7,848) 3,142 40% Other 271 642 (372) 58% Operating Cash Flow 27,997 23,208 4,789 21% Capital Expenditure (1,868) (4,715) 2,847 60% Proceeds from Sale of PP&E and Investments 2,051 (2,051) (100%) Free Cash Flow 26,129 20,544 5,585 27% Dividends Paid (19,118) (17,669) (1,449) (8%) Repayment of finance lease (2,090) (1,990) (100) (5%) Proceeds from leasing of PPE 8,877 (8,877) 100% Proceeds from Shares issued 678 1,017 (339) 33% Increase in Cash & Cash equivalents 5,599 10,779 (5,181) 48%

2012 Full Year Results Dividends for this year

§ Half 1 1.61 cps up 10% (paid) Ø Half 2* 3.48 cps up 10% (85% franked) § Sub Total 5.09 cps up 10% Ø Special Dividend** nil

Notes

• We have continuously paid a dividend since 1996 (through Dot-Com and GFC)
• * A recent independent review of our R&D tax claims has found a substantial additional tax concession. Though

this is a positive outcome, this will now unexpectedly impact the availability of franking credits. As such, our normal H2 dividend will now be 85% franked.

• We expect in future years to return to 100% franked dividends
• ** As previously advised, the Board considers the payment of a Special Dividend each year. As a result of the

independent review of our R&D tax claim, and the additional tax concessions we have now received, there are no remaining franking credits, and as such the Special Dividend will not be paid this year.

• Board will consider Capital Management initiatives once again in 2013 financial year

0.00 ¡ ¡ 1.00 ¡ ¡ 2.00 ¡ ¡ 3.00 ¡ ¡ 4.00 ¡ ¡ 5.00 ¡ ¡ 6.00 ¡ ¡

2003 ¡ 2004 ¡ 2005 ¡ 2006 ¡ 2007 ¡ 2008 ¡ 2009 ¡ 2010 ¡ 2011 ¡ 2012 ¡

Cents ¡per ¡share ¡

Dividend ¡

Compound ¡Growth ¡8% ¡ up ¡10% ¡

2012 Full Year Results

¡ ¡ Full ¡Year ¡2012 ¡v ¡Full ¡Year ¡2011 ¡

2012 ¡ $'000 ¡ 2011 ¡ $'000 ¡ Variance ¡ $'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 35,131 30,934 4,197 14% Depreciation 5,373 4,874 499 10% Amortisation of Intangibles 270 281 (12) (4%) Forex Expense 24 82 (58) (71%) EBIT 29,464 25,697 3,767 15% Net Interest Income 861 978 (117) (12%) Profit Before Tax 30,325 26,675 3,650 14% Profit After Tax 23,559 20,326 3,233 16%

2012 Full Year Results – Key Metrics

Full ¡Year ¡2012 ¡v ¡Full ¡Year ¡2011 ¡

2012 ¡ 2011 ¡ Variance ¡% ¡

EPS (cents) 7.73 6.71 15% Dividends (cents) Standard 5.09 4.62 10% Special

• 1.50

(100%) Dividend Payout Ratio 66% 91% Key Margin Analysis EBITDAR Margin 41% 40% EBITDA Margin 21% 20% Net Profit Before Tax Margin 18% 17% Net Profit After Tax Margin 14% 13%

Full ¡Year ¡2012 ¡v ¡Full ¡Year ¡2011 ¡

2012 ¡ 2011 ¡ Variance ¡% ¡

Return on equity 32% 30% Balance Sheet ($‘000s) Net Assets 73,997 68,370 8% Cash & Cash Equivalents 51,133 45,357 13% Operating cash flows 27,997 23,208 21% Debt/Equity 10% 14% R&D as % of Total Revenue 20% 20%

Key metrics over last 15 years …

ü Revenue - 20% per annum compound § Even through the Dot-Com and GFC ü Initial Licence Fees - 18% per annum compound ü Annual Licence Fees - 27% per annum compound ü Profit Before Tax - 16% per annum compound ü Dividends - 19+% per annum compound ü Net Assets - 23% per annum compound

Historical Performance

Doubling in size every 4 years for last 15 years

• 10

20 30 40 50 60 70 80

1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012

$'m

Profit Before Tax Annual Liccence Fees Net Assets Initial Licence Fees Dividends

Revenue Streams

Continuing strong demand for our products: 15% increase in licence fees Ø New pre-configured solutions § Increasing market share § Continuing success of our Ci product suite § Compound growth over the last 10 years is 18% Annual licence fees continue to grow strongly: up 15% Ø Customer retention is important Ø Our investment in Compelling Customer Experience program § Compound growth over the last 10 years is 20%

Major New Customers

Australian Red Cross South Burnett Regional Council Warrnambool City Council Queensland Motorways Pty Ltd QSuper Civil Aviation Safety Authority Indigenous Business Australia Collections House Torres Strait Island Regional Council Country Health SA Local Health Network Access Housing Association (WA) South Australian Government Financing Marubeni Coal Pty Ltd Tertiary Education Quality & Standards National Rail Safety Regulator Teachers Savings and Loan Society Aspire Benefits Management Pty Ltd UnitingCare West City of Unley Epworth Hospital The Cancer Council St Andrew's Hospital Toowoomba Aoraki Polytechnic Police & Community Youth Club NSW Royal New Zealand Plunket Society Catholic Education Office National Bank Vanuatu Office of Parliamentary Council SGE Credit Union Transaction Solutions Holiday Coast Credit Union Ltd Energy Safe Victoria APG Operations Pty Ltd Ability Options Ltd Attorney General of South Australia Tuaropaki Trust Museum of New Zealand Dickinson Dees (UK) Pepper Europe (UK) Limited Strathclyde Fire & Rescue (UK) Australian Recruiting Workforce Airlines of Papua New Guinea Central Institute of Technology Fisher & Paykel Finance Ltd Plenary Group Pty Ltd Eastern Institute of Technology Pengana Holdings Pty Ltd

Revenue Streams

Product Consulting revenue up 9% Ø Consulting profit up $1.3m, 20% on prior year § Appointed a new Operating Officer Consulting § Transformation of this business unit to ensure world best practice & continuing strong growth § Compound growth over the last 10 years is 14% Plus (non product consulting) revenue down 17% § Plus profit is down $1.1m, 34% on prior year § Market conditions for non Ci product services challenging § Not being complacent – new strategy Ø Strategy to move this business to ‘value added’ services around our Ci products Ø Merged into our Consulting Business, with a new Manager

¡-­‑ ¡ ¡ ¡ ¡ ¡10 ¡ ¡ ¡20 ¡ ¡ ¡30 ¡ ¡ ¡40 ¡ ¡ ¡50 ¡ ¡ 2003 ¡ 2004 ¡ 2005 ¡ 2006 ¡ 2007 ¡ 2008 ¡ 2009 ¡ 2010 ¡ 2011 ¡ 2012 ¡ $'m ¡

Consulting

Compound ¡Growth ¡14% ¡ Up ¡9%, ¡ $3.6m ¡

¡-­‑ ¡ ¡ ¡ ¡ ¡5 ¡ ¡ ¡10 ¡ ¡ ¡15 ¡ ¡ ¡20 ¡ ¡ ¡25 ¡ ¡ 2003 ¡ 2004 ¡ 2005 ¡ 2006 ¡ 2007 ¡ 2008 ¡ 2009 ¡ 2010 ¡ 2011 ¡ 2012 ¡ $'m ¡

Plus

Compound ¡Growth ¡4% ¡ Down ¡17%, ¡ $3.5m ¡

¡$9.7m ¡ Up ¡14% ¡ ¡ ¡$5.1m ¡ Up ¡91% ¡ ¡ ¡$2.1m ¡ Up ¡74% ¡ ¡ ¡$1.9m ¡ Up ¡8% ¡ ¡ ¡$1.5m ¡ Up ¡22% ¡ ¡ ¡$1.2m ¡ Up ¡20% ¡ ¡ ¡$9.4m ¡ Inline ¡ ¡ ¡$4.6m ¡ Down ¡6% ¡ ¡ 0.0 ¡ ¡ 2.0 ¡ ¡ 4.0 ¡ ¡ 6.0 ¡ ¡ 8.0 ¡ ¡ 10.0 ¡ ¡ 12.0 ¡ ¡ Financials ¡& ¡ Supply ¡Chain ¡ Asset ¡ Management ¡ HR/Payroll ¡ Property ¡ Enterprise ¡ Content ¡ Management ¡ CRM ¡ CPM ¡ Student ¡ Management ¡ $'m ¡ FY10 ¡ FY11 ¡ FY12 ¡

Licence Fee by Product

§ Financials & Supply Chain licence fees $9.7m, up 14% (up $1.2m) § Asset Management licence fees $5.1m, up 91% (up $2.4m) § HR/Payroll licence fees $2.1m, up 74% (up $874k) § Property licence fees $1.9m, up 8% (up $142k) § Enterprise Content Management licence fees $1.5m, up 22% (up $272k) § CRM licence fees $1.2m, up 20% (up $196k) § CPM licence fees $9.4m, inline (inline) § Student Management licence fees $4.6m, down 6% (down $296k)

Licence fees $35.4m, up 15% (up $4.7m)

Licence Fee Contribution - Vertical Market

¡EducaBon, ¡$7.3m, ¡21% ¡ ¡ ¡Financial ¡Services, ¡ $2.4m, ¡7% ¡ ¡ ¡Government, ¡$4.6m, ¡13% ¡ ¡ ¡Health ¡& ¡Community ¡ Services, ¡$5.2m, ¡15% ¡ ¡ ¡Local ¡Government, ¡ $10.9m, ¡31% ¡ ¡ ¡Managed ¡Services, ¡$1.9m, ¡ 5% ¡ ¡ ¡UBliBes, ¡$3.1m, ¡9% ¡ ¡

Licence ¡Fee ¡ContribuBon ¡-­‑ ¡VerBcal ¡Market ¡

¡$4m, ¡Up ¡27% ¡ Heads ¡133, ¡Up ¡6% ¡ ¡ ¡$7.6m, ¡Up ¡20% ¡ Heads ¡232, ¡Down ¡9% ¡ ¡ ¡$2.2m, ¡Down ¡34% ¡ Heads ¡75, ¡Down ¡24% ¡ ¡ ¡$8.6m, ¡Up ¡23% ¡ Heads ¡278, ¡Down ¡3% ¡ ¡ ¡$7.9m, ¡Up ¡15% ¡ Heads ¡107, ¡Up ¡9% ¡ ¡ 0.0 ¡ ¡ 1.0 ¡ ¡ 2.0 ¡ ¡ 3.0 ¡ ¡ 4.0 ¡ ¡ 5.0 ¡ ¡ 6.0 ¡ ¡ 7.0 ¡ ¡ 8.0 ¡ ¡ 9.0 ¡ ¡ 10.0 ¡ ¡ Sales ¡ ConsulBng ¡ ¡ ¡ PLUS ¡ R&D ¡ Corporate ¡ $'m ¡ ¡FY10 ¡ ¡ ¡FY11 ¡ ¡ FY12 ¡

Profit By Segment Analysis

§ Net Profit Before Tax $30.3m, up 14% (up $3.6m) § Sales $4m, up 27% (up $864k) § Consulting $7.6m, up 20% (up $1.3m) § PLUS $2.2m, down 34% (down $1.1m) § R&D $8.6m, up 23% (up $1.6m) § Corporate $7.9m, up 15% (up $1m) Profit Contribution

New Strategy for Plus : Focus on Ci value add services Merged into Consulting Business

Agenda ü Results Ø Significant Achievements § Outlook for Full Year § Long Term Outlook

Significant Achievements Significant Achievements Ø R&D § TechnologyOne Cloud § Marketing Transformation § Other Initiatives

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 centre § Significant future revenue streams and platform for continuing growth in the coming years

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 smart mobile devices iPhone, iPad, Android etc..

ü Simple, easy way forward for our Ci customers Smart mobile devices become just ‘appliances’ that simply plug into Ci² Enterprise Software, incredibly simple

Significant Achievements Significant Achievements ü R&D Ø TechnologyOne Cloud § Marketing Transformation § Other Initiatives

client Citrix Servers Database Server Installation Servers Distributed Processors N-tier Application Servers

A complex computing model

Today – On Premise

The old way

• Run your own hardware & systems On Premise

client

Internet connection

ü Cloud- a simpler computing model

The new way

• sign onto a business service

What is cloud

Off Premise Service Provider

TechnologyOne Enterprise Suite in the cloud today, delivered in a browser. TechnologyOne takes care of everything

The TechnologyOne Cloud

A simple and easy experience

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 adopters planned for 2013 ü All TechnologyOne Cloud costs are being fully expensed as incurred The TechnologyOne Cloud

Cloud

Significant Achievements Significant Achievements ü R&D ü TechnologyOne Cloud Ø Marketing Transformation § Other Initiatives

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’

§ Operation - pipeline development & events

• Well organized campaigns & events to support ‘buyers journey’

§ Messaging - simple, clear and powerful messages

• Message development
• Branding
• PR & major events

Significant Achievements Significant Achievements ü R&D ü TechnologyOne Cloud ü Marketing Transformation Ø 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 improve execution
• Education rollout has now started

ü TechnologyOne Solutions

• 14 pre-configured solutions now available
• Driving strong growth of our licence fees

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 new contract wins
• Significant improvement will require UK conditions to improve

Agenda ü Results ü Significant Achievements Ø Outlook for Full Year § Long Term Outlook

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

• f the IT industry in recent years.

§ In particular TechnologyOne markets have remained robust: government and government related businesses. Ø The Pipeline for 2013 remains good to support continuing growth

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 year results may not be indicative

• f the full year results, depending on timing of when new contracts close

§ We will provide further guidance at both the Annual General Meeting and with the first half results

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

Agenda ü Results ü Significant Achievements ü Outlook for Full Year Ø Long Term Outlook

Improved Margins Profit margin has contracted over the last 10 years § Expanded our product range investment § Profit margin now started to improve, as predicted § Focus is to substantially improve margins

• ver next five years

21% ¡ 26% ¡ 26% ¡ 25% ¡ 25% ¡ 21% ¡ 17% ¡ 17% ¡ 17% ¡ 18% ¡ 0% ¡ 5% ¡ 10% ¡ 15% ¡ 20% ¡ 25% ¡ 30% ¡ 35% ¡

2003 ¡ 2004 ¡ 2005 ¡ 2006 ¡ 2007 ¡ 2008 ¡ 2009 ¡ 2010 ¡ 2011 ¡ 2012 ¡

Net ¡Profit ¡Margin ¡Before ¡Tax ¡

Control R&D Costs

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

This year achieved R&D growth of 5%

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

In year 5, R&D will be 18.5% of revenue (vs 20% now) In year 10, target for R&D is 15% of revenue Still well above Industry Average of 10% to 12%

¡-­‑ ¡ ¡ ¡ ¡ ¡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% ¡

2011 Model, shows savings

• f $20m/year in year 5

This year growth was 5%

48

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 industry knowledge ü Preconfigured Solutions – reduce time, effort, risk and increase penetration in our markets ü Our large customer base – opportunities to cross sell our expanding product range ü Pipeline of products – at various stages of maturity, which we will continue to harvest in future years, as immature products move from loss making to profitability

49

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 Our Compelling Customer Experience program – retain our customers ü New offshore R&D centre – provide access to additional talent and operating leverage ü Improving Profit Margin