Technology One delivers record profit
On behalf of the Technology One, I am please to today announce the company's results for the year ending June 30th 2005.
Demand for our products and services has increased, as shown by the addition of 83 new clients, and licence fees to new clients up 17% on the prior year.
Our profit before tax of $14.3 million, is an increase of 9% over the previous year.
We invested in our ongoing research and development (R&D) program, spending $10.2 million on R&D, an increase of 7%. This is a significant investment representing 18% of our revenue, and we have continued our approach of fully expensing all R&D as incurred.
Our operating cash flow was $11.1 million versus a Net Profit After Tax of $10.3 million.
A summary of our performance is as follows:
There have been a number of significant achievements this year as follows:
- Success of our new Finance One CI (Connected Intelligence) solution
- Continued significant R&D program
- Continued organisational changes
- Platform for continued geographical expansion
- Success of Our New Finance One CI Solution
A significant achievement this year has been the release of our new generation product, Finance One CI (Connected Intelligence) to the market and the substantial success it has achieved in a short period of time. This new and exciting product has now 'gone live' at 22 sites, with a further 33 sites in the process of implementing it. Technology One believes this release gives us a strong leadership position over our competitors, as our CI products will allow organisations to move to a more devolved and empowered business model that seamlessly connects clients, suppliers, staff, managers and disparate systems.
Continued Significant R&D Program
The company continued to significantly enhance its existing products with new releases of all our products as follows:
- Retail One, Sales One, Finance One, People One R11.1
- Student One (Student Administration) R3.2
- Proclaim One (Local Government Rating & Property) R9.06
Technology One also invested in developing CI versions for each of the above products, and is on track to release these products on our powerful CI platform progressively in the 2005 and 2006 year.
Another significant development was the introduction of a sophisticated and advanced Work and Project Management solution, Work One. This provides an exciting new market opportunity for us, which we will progressively explore over the next 12 months.
The company's breadth of solution is today large and extensive, encompassing: Financial Management and Accounting, Supply Chain and Procurement, Point Of Sale, Work and Asset Management, Human Resources and Payroll, Local Government Rating and Property Management, and Student Administration.
The company plans to further extend the breadth of its product as follows.
Firstly, after successfully establishing a new R&D centre in Western Australia to focus on enterprise reporting, we are extending this group to deliver us a unified Business Intelligence solution, "out of the box and ready to go", operating across all our products. We believe we will be able to offer this exciting new solution at a compelling price to our customers and this will help to further differentiate our product offerings. We are partnering with a local Australian software company to build this new and exciting solution.
We are also investigating a number of potentially new and exciting areas, including CRM (customer relationship management), Contract Management, Strategic Planning and Fleet Management to further extend the breath of our products over the coming years.
The company also further enhanced its 'world best practice" in R&D with the implementation of a number of significant initiatives including:
- The move to smaller more focused R&D teams called domain teams to improve product quality and increase innovation and speed.
- The implementation of a new formal Product Roll Out process to better manage the complexity, issues and risks associated with transitioning a new product into the market place.
Continued Organisational Changes
Technology One's business has continued to grow and increase dramatically in both complexity and persity. Today we are a world class provider of enterprise applications, competing with the world's largest software companies; with operations in 10 geographical territories and with seven R&D teams.
Technology One took the opportunity this year after the departure of two long serving executives to create a new and larger executive team, and also restructured our business to provide a platform for the next stage of growth. With an expanded executive team we now have greater bandwidth to undertake new opportunities, as well as better manage our existing persified business. Technology One's continuing strong results this year is a result of the successful transition to a new executive team and a new organisational structure.
Platform for Continued Geographical Expansion
This year Technology One finalised its plan to enter one of the largest markets in the world for enterprise applications – the United Kingdom. Our initial estimates place this market at over three times the size of the Australian market, and has the potential to provide significant growth to Technology One in the coming years. Technology One will open its first office in the UK in early 2006, and will subsequently open up other offices through the UK over a period of four years.
Technology One believes we are well positioned for success in the medium term in the UK market, once we have established our presence, because of our new generation products (our CI series) and our powerful and unique Power of One business model where we build, market, sell implement and support our range of products directly.
Technology One sees the UK as a stepping platform in the medium term into a number of other large markets.
The Board remains committed to the careful management of our capital base to ensure that capital, where appropriate, is returned to our shareholders, while still allowing us to grow our business. It is for this reason we have increased our pidend this year once again by 9% to 3.1 cents fully franked. Based on the share price as at 19 August 2005 of 61 cents, this represents a pidend yield (fully franked) of 5.08%.
Capital Buy Back
Technology One has always taken a very controlled approach to the issue of options, to minimise the dilutionary impact on existing shareholders. This year we have commenced a capital buy back program, which is aimed at managing the dilutionary effect that options have on existing shareholders, as they are exercised.
Adrian Di Marco