_____ _____ presentation at the UBS Emerging Companies conference. - - PowerPoint PPT Presentation

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_____ _____ presentation at the UBS Emerging Companies conference. - - PowerPoint PPT Presentation

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____ __ ____ _____ ____ ______ Technology One Ltd UBS Presentation _____ _____ ____ _____ 4 April 2012 - Technology One Ltd (ASX:TNE) today conducted a _____ _____ presentation at the UBS Emerging Companies conference. ____ _____ The attached

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Technology One Ltd UBS Presentation

4 April 2012 - Technology One Ltd (ASX:TNE) today conducted a presentation at the UBS Emerging Companies conference. 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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Adrian Di Marco

Adrian_Dimarco@TechnologyOneCorp.com

Commercial in confidence April 2012 Final

UBS Emerging Companies Conference

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Agenda

  • Overview
  • Revenue Model
  • What makes Us Different
  • Strategic Initiatives
  • Future Growth
  • Improved Margins
  • Long Term Outlook
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____ __ ____ _____ ____ ______ _____ _____ ____ _____ _____ _____ ____ _____ TechnologyOne is an enterprise software vendor

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TechnologyOne Overview

Our enterprise solution consists of the following products:

  • Financials
  • Supply Chain
  • Asset Management
  • Human Resource & Payroll
  • Corporate Performance Management
  • Business Intelligence
  • Budgeting & Forecasting
  • Performance Planning
  • Enterprise Content Management (ECM)
  • Customer Relationship Management (CRM)
  • Student Management
  • Property & Rating
  • Mobile Solutions
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The Competitive Landscape

CLIENT TURNOVER

Reckon MYOB ORACLE SAP/R3 Infor (Sun Systems)

$1,000m $30m TechnologyOne

Microsoft Business Solutions $100m Current market coverage New expanding market coverage SAP/Business One

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TechnologyOne Overview

TechnologyOne targets seven vertical markets:

  • Local Government
  • Government (State, Central and Federal)
  • Education
  • Financial Services
  • Health, Community Services and Not for Profit
  • Utilities
  • Managed Services

– Media/Entertainment – Property and Construction – Mining and Exploration

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900+ High Profile Customers

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TechnologyOne Overview

  • Offices in Australia, New Zealand,

Asia and more recently, South Pacific and the United Kingdom (UK)

  • One of Australia’s largest software

houses

  • Specialise in the research,

development and commercialisation of software – invest $32m+ in R&D each year

  • All R&D is fully expensed in the year it

is incurred

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Diversity of revenue streams from multiple:

  • Geographies

– All states of Australia, New Zealand, Asia and more recently UK

  • Products

– Financials, HR/Payroll, SupplyChain, Asset Management, Property, Students, CRM, CPM, ECM, Mobile etc..

  • Vertical markets

– Local Government, State/Federal Government, Higher Education, Financial Services, Health & Community Services, Utilities, Managed Services

TechnologyOne Overview

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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 dividend 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

  • 10

20 30 40 50 60 70 80

1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011

$'m Profit Before Tax Initial Licence Fees Annual Licence Fees Dividends Net Assets

Doubling in size every 4 years for last 15 years

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Agenda  Overview

  • Revenue Model
  • What makes Us Different
  • Strategic Initiatives
  • Future Growth
  • Improved Margins
  • Long Term Outlook
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Revenue Model

  • Initial Licence - based on usage
  • Matrix of licensable modules (approx 300 modules over 10 products), number of users
  • Once off
  • Implementation Services - fee for service
  • $1.20 Services : $1 Initial licence
  • Once off
  • Annual Licence Fee
  • 22.5% of Initial Licence
  • Re-occurring every year
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Revenue Model

Initial Licence Annual Licence Annual Licence Implementation Service

Initial Purchase

  • Specified: Products, Modules, No of Users

Annual Licence ….

Increase No of Users

Initial Licence Annual Licence Annual Licence Annual Licence ….

Buy Additional Modules

Initial Licence Annual Licence Annual Licence …. Implementation Service

Buy New Product

Initial Licence Annual Licence Annual Licence …. Implementation Service

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On average our customers have 3 products (out of a product range of 10)

Revenue Model

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Strong, very loyal blue chip customer base

  • We provide a mission

critical solution – ‘sticky customer base’

  • 66% of our revenues

generated from existing customers each year

– Annual licences, increase usage, new modules, new products,

  • ngoing services etc..

TechnologyOne Overview

66% of our revenue comes every year from existing customers

New Other Non-Recurring ** 9% New Licence 8% New ASM 2% New Consulting 15% Existing 66%

FY11 ** Plus and Product Modification

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Agenda  Overview  Revenue Model

  • What makes Us Different
  • Strategic Initiatives
  • Future Growth
  • Improved Margins
  • Long Term Outlook
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What Makes Us Different  Enterprise Suite

  • One of a few companies globally with an enterprise solution
  • Own the IP to our software, which allows us to control our

future

 Unique business model - Power of One

  • Unique approach - we build, market, sell, implement &

support our products

  • One Vision, One Vendor, One Experience
  • We ‘own’ the customer relationship
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What Makes Us Different

 Our focus on seven key vertical markets

  • Deep understanding of our target seven markets
  • Understand their value drivers
  • Know the universe of opportunities in each of our market
  • Preconfigured solutions for each of our markets - Reduce time, effort, cost and risk
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  • One Government
  • One Council
  • One Housing
  • One Health
  • One Port
  • One Banking
  • One Community
  • One Not For Profit
  • One Grant
  • One Network
  • One Water
  • One Polytechnic
  • One Care
  • One University

14 Preconfigured Solutions …

What Makes Us Different

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Agenda  Overview  Revenue Model  What makes Us Different

  • Strategic Initiatives
  • Future Growth
  • Improved Margins
  • Long Term Outlook
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Strategic Initiatives

  • New Offshore R&D Centre
  • Compelling Customer Experience
  • TechnologyOne Cloud
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New Offshore R&D Centre R&D centre in Brisbane with 500+ staff New offshore R&D centre to handle future growth  To contain costs – operating leverage of offshore R&D staff  To tap into a new pool of R&D talent outside of Australia  To improve support levels to our customers  Allow R&D in Brisbane to focus on new projects

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Strategic Initiatives  New Offshore R&D Centre

  • Compelling Customer Experience
  • TechnologyOne Cloud
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Compelling Customer Experience (CCE)

Customer retention is critical to our future success

  • Future of ERP is all about customer retention
  • Our focus is to give our customers a compelling

customer experience

  • Compelling customer service - you will never

hear SAP, Oracle and Microsoft talk about this

  • Developed our own Compelling Customer

Experience (CCE) program

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Strategic Initiatives  New Offshore R&D Centre  Compelling Customer Experience

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

A complex computing model

Today – On Premise

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Off Premise Service Provider

client

Internet connection

 A simpler computing model

The Future – The Cloud

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TechnologyOne Cloud

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

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TechnologyOne takes care of everything for a Yearly Subscription Fee…

 Hardware, Operating Software, Middle ware etc..  Backup Services  Replication Services & Disaster Recovery  Upgrades  IT staff  Capital expenditure TechnologyOne Cloud

A simple and easy experience A compelling solution

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____ __ ____ _____ ____ ______ _____ _____ ____ _____ _____ _____ ____ _____ Cloud

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Agenda  Overview  Revenue Model  What makes Us Different  Strategic Initiatives

  • Future Growth
  • Improved Margins
  • Long Term Outlook
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CPM 31% Financials & Supply Chain 28% Student Management 16% Asset Management 8% Property 6% Enterprise Content Management 4% HR/Payroll 4% CRM 3% Mobile Solutions <1% CPM Financials & Supply Chain Student Management Asset Management Property Enterprise Content Management HR/Payroll

75% Licence Fees come from Financials, CPM and Student Management

Newer Products, Increased Up take

Future Growth … as newer products reach critical mass

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Newer Vertical Markets, Increased Penetration

Future Growth ...as we increase

  • ur penetration

in newer vertical markets 71% Licence Fees come from Local Gov, Education and Health/Community

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UK has significant potential growth for us in future years

Newer Geographies

Future Growth …as the UK moves thru the GFC

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Cross Sell into Existing Customer Base Cross sell more products into our large existing customer base

  • 900 customers
  • On average our customers have 3 products

(out of 10)

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Future Growth – Acquisitions Acquisitions – not a high priority at this time  Acquire New Customers - cross sell our existing products into  Acquire New Products - cross to sell into our existing customers

Existing Customers (900+) Acquired Customers

Existing Products (10) Acquired Products

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ERP Replacement Cycle of 10 to 15 years

  • Name of the game is those that keep their customers versus those that will

lose customers

  • Well positioned because of...

 Our Power Of One business model  Our Vertical Market Focus  Our Compelling Customer Experience

Future Growth – ERP Replacement Cycle

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Future Growth Timeline ...  Cross selling into our large customer base now  Newer products – increased uptake now  Newer vertical markets – increased penetration now  ERP Replacement Cycle now  Newer geographies – UK years 3+  Acquisitions years 3+  TechnologyOne Cloud years 3+ We estimate our market share in ANZ is approx. 10%

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Agenda  Overview  Revenue Model  What makes Us Different  Strategic Initiatives  Future Growth

  • Improved Margins
  • Long Term Outlook
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Improved Margins Profit margin has contracted over the last 10 years

  • Expanded our product range investment
  • Profit margin now stabilised
  • Focus is to substantially improve margins
  • ver next five years
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Financials & Supply Chain 44% CPM 33% Student Management 19% Property 3% Asset Management 1% ECM, CRM, HR/Payroll, Mobile <1%

Profit Contribution - Product - FY11

Financials & Supply Chain CPM Student Management Property Asset Management ECM, CRM, HR/Payroll, Mobile

New Products Contribution to Profit

New Products Increase Profits

  • Opportunity to substantially grow the

contribution to profit by these products over the next five years:

  • Property & Rating
  • Asset Management
  • ECM
  • HR & Payroll
  • CRM
  • Mobile Solutions

96% Profit Contribution comes from Financials, CPM and Students

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Control of R&D Costs

Control of R&D costs …

Compound Growth 16%

leveraging Offshore R&D to achieve substantial savings

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  • 10

20 30 40 50 60 70 $'m

R&D Expense Growth

Compound Growth 8%

$67m $47m

R&D Growth Projections Model R&D growth over the next 5 years at 8% per annum

  • R&D currently projected to be $67m in year 5 (compared to $33.5m now)
  • In year 5 our R&D will be $47m vs $67m, saving of $20m in one year
  • Saving of $52m over 5 years

saving of $20m per year in year 5

Compound Growth 16%

In year 5, R&D will be 18.5% of revenue (vs 20% now) Long term target for R&D is 15% of revenue

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Agenda  Overview  Revenue Model  What makes Us Different  Strategic Initiatives  Future Growth  Improved Margins

  • Long Term Outlook
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Long Term Outlook

Long Term Outlook is Strong .....  Enterprise Suite – one of a few companies globally with an enterprise solution  Power of One – unique approach to build, market, sell, implement and support our products  Vertical markets focus – focus on seven key markets and our deep industry knowledge  Preconfigured Solutions – reduce time, effort, risk and increase penetration in our markets  Our large customer base – opportunities to cross sell our expanding product range  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

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Long Term Outlook

 Geographical expansion – United Kingdom has significant longer term growth  Our Compelling Customer Experience program – retain our customers  New offshore R&D centre – provide access to additional talent and operating leverage  Acquisitions – expand our product range and our customer base  TechnologyOne Cloud – position us as a continuing leader in innovation and technology

  • Improving Profit Margin
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Adrian Di Marco

Adrian_Dimarco@TechnologyOneCorp.com

Commercial in confidence April 2012

UBS Emerging Companies Conference