Technology One Ltd UBS Presentation

Transcription

1 _ Technology One Ltd UBS Presentation 4 April 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:

2 UBS Emerging Companies Conference Adrian Di Marco Final Commercial in confidence April 2012

3 Agenda Overview _ Revenue Model What makes Us Different Strategic Initiatives Future Growth Improved Margins Long Term Outlook

4 TechnologyOne is an enterprise software vendor _

5 TechnologyOne Overview Our enterprise solution consists of the following products: Financials _ Business Intelligence Budgeting & Forecasting Supply Chain Asset Management Human Resource & Payroll Corporate Performance Management Performance Planning Enterprise Content Management (ECM) Customer Relationship Management (CRM) Student Management Property & Rating Mobile Solutions

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

7 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

8 900+ High Profile Customers _

9 TechnologyOne Overview Offices in Australia, New Zealand, Asia and more recently, South Pacific _ and the United Kingdom (UK) houses _ One of Australia s largest software 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

10 TechnologyOne Overview Diversity of revenue streams from multiple: Geographies All states of Australia, New Zealand, Asia and more recently UK Products Vertical markets Financials, HR/Payroll, SupplyChain, Asset Management, Property, Students, CRM, CPM, ECM, Mobile etc.. Local Government, State/Federal Government, Higher Education, Financial Services, Health & Community Services, Utilities, Managed Services

11 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

12 Historical Performance Key metrics over last 15 years 70 _ 60 Even through the Dot-Com and GFC _ Revenue - 22% per annum compound 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 80 $'m Profit Before Tax Initial Licence Fees Annual Licence Fees Dividends Net Assets Doubling in size every 4 years for last 15 years

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

15 Revenue Model Initial Purchase Initial Licence Implementation Service Annual Licence Annual Licence Initial Annual Licence Licence _ -Specified: Products, Modules, No of Users Increase No of Users Buy Additional Modules Initial Licence Implementation Service Annual Licence Annual Licence Annual Licence Annual Licence Annual Licence... Buy New Product Initial Licence Implementation Service Annual Licence Annual Licence.

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

17 TechnologyOne Overview Strong, very loyal blue chip customer base We provide a mission critical solution sticky customer base Existing 66% 66% of our revenues generated from existing customers each year Annual licences, increase usage, new modules, new products, ongoing services etc.. ** Plus and Product Modification FY11 New Other Non-Recurring ** 9% New Licence 8% New ASM 2% New Consulting 15% 66% of our revenue comes every year from existing customers

19 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 approach - we build, market, sell, implement & Unique business model - Power of One support our products One Vision, One Vendor, One Experience We own the customer relationship

20 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

21 What Makes Us Different 14 Preconfigured Solutions One Government _ One Council One Housing One Health One Port One Not For Profit One Grant One Network One Water One Polytechnic One Banking One Care One Community One University

23 Strategic Initiatives _ New Offshore R&D Centre Compelling Customer Experience TechnologyOne Cloud

24 New Offshore R&D Centre R&D centre in Brisbane with 500+ staff R&D staff New offshore R&D centre to handle future growth To contain costs operating leverage of offshore 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

26 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

28 Today On Premise client _ N-tier Application _ Citrix Servers Servers _ Database Server Distributed Processors Installation Servers A complex computing model

29 The Future The Cloud client Off Premise Service Provider Internet connection _ A simpler computing model

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

31 TechnologyOne Cloud 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 A simple and easy experience A compelling solution

32 Cloud _

34 Newer Products, Increased Up take Enterprise Content Management HR/Payroll 4% <1% 4% _ Property Asset 6% CPM _ Management 31% 8% Student Management 16% _ Future Growth as newer products reach critical mass CRM 3% Financials & Supply Chain 28% Mobile Solutions CPM Financials & Supply Chain Student Management Asset Management Property Enterprise Content Management HR/Payroll 75% Licence Fees come from Financials, CPM and Student Management

35 Newer Vertical Markets, Increased Penetration _ Future Growth...as we increase our penetration in newer vertical markets 71% Licence Fees come from Local Gov, Education and Health/Community

36 Newer Geographies _ Future Growth as the UK moves thru the GFC UK has significant potential growth for us in future years

37 Cross Sell into Existing Customer Base existing customer base _ Cross sell more products into our large 900 customers On average our customers have 3 products (out of 10)

38 Future Growth Acquisitions Acquisitions not a high priority at this time Existing Products (10) _ Acquire New Customers - cross sell our existing products into Acquire New Products - cross to sell into our existing customers Existing Customers (900+) Acquired Products Acquired Customers

39 Future Growth ERP Replacement Cycle ERP Replacement Cycle of 10 to 15 years lose customers Our Power Of One business model Our Vertical Market Focus Name of the game is those that keep their customers versus those that will Well positioned because of... Our Compelling Customer Experience

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

42 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 over next five years

43 New Products Contribution to Profit New Products Increase Profits _ Property Asset Management 3% 1% _ Student Management Property & Rating 19% Asset Management ECM CPM 33% Opportunity to substantially grow the contribution to profit by these products over the next five years: HR & Payroll CRM Mobile Solutions Profit Contribution - Product - FY11 ECM, CRM, HR/Payroll, Mobile <1% Financials & Supply Chain 44% Financials & Supply Chain CPM Student Management Property Asset Management ECM, CRM, HR/Payroll, Mobile 96% Profit Contribution comes from Financials, CPM and Students

44 Control of R&D Costs Control of R&D costs Compound Growth 16% _ leveraging Offshore R&D to achieve substantial savings

45 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) _ Saving of $52m over 5 years _ R&D Expense Growth 70 _ 60 Compound Growth 16% 50 Compound Growth 8% In year 5 our R&D will be $47m vs $67m, saving of $20m in one year $'m $67m $47m saving of $20m per year in year 5 In year 5, R&D will be 18.5% of revenue (vs 20% now) Long term target for R&D is 15% of revenue

47 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 47

48 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 48

49 UBS Emerging Companies Conference Adrian Di Marco Commercial in confidence April 2012