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Tech One announces Strong Final Year End Results

  • 27 August, 2004 09:00

<p>Technology One Limited today announced the company’s financial results for the period ended 30th June 2004, which showed a Net Profit Before Tax of $13.11 million, up 30% on the previous year. Demand for the company’s products and services increased, with the addition of 70 new clients.</p>
<p>Highlights of the announcement are as follows:
· Net Operating Cash Flows of $12.3 million, up 29%
· EBITDAR* of $23.22 million, up 15 percent
· Revenue** of $50.55 million, up 7 percent
· R&amp;D Expenditure (fully expensed) of $9.55 million, up 3% and representing 19% of Revenue**
· Net Profit Before Tax of $13.11 million, up 30 percent
· Net Profit After Tax of $9.48 million, up 35 percent
· Earnings Per Share of 3.17 cents, up 38 percent
· Dividend Per Share of 2.85 cents, up 14 percent
*Earnings before interest, tax, depreciation, amortisation and R&amp;D
** Revenue excluding interest</p>
<p>Executive Chairman, Mr Adrian Di Marco, said the financial results for the year ended 30 June 2004 were a strong result given the current market conditions in the IT industry, and the company’s continuing substantial investment program.</p>
<p>“We invested $9.55 million in our ongoing Research and Development (R&amp;D) program, an increase of 3%,” Mr Di Marco said.</p>
<p>“This is a significant investment representing 19% of our Revenue, and we have continued our conservative approach of fully expensing all R&amp;D as incurred, rather than the more aggressive approach more commonly adopted in Australia of capitalising R&amp;D.”</p>
<p>Operating Cash Flow increased 29% to $12.3 million dollars.</p>
Mr Di Marco said the Board remains committed to the careful management of its capital base to ensure that capital, where appropriate, is returned to shareholders, while still allowing the company to grow its business.</p>
<p>“It is for this reason we have increased our Dividend this year once again by 14% to 2.85 cents fully franked. Based on the share price as at 30 June 2004 of 56 cents, this represents a fully franked dividend of 5.1%,” he said.</p>
Technology One had a number of significant achievements in the 2004 financial year. These changes included:</p>
<p>· Continued Substantial R&amp;D Program
· Release of Finance One CI
· Continued Organisational Changes
· Research Into New Markets</p>
<p>Continued Substantial R&amp;D Program</p>
<p>The company continued to enhance its existing products, with new releases of all its products, as follows:
· Retail One, Finance One, People One R10.3 and R11.0
· Student One R2.4, R2.5 and R2.6
· Proclaim One R9.3</p>
<p>An exciting advent was the start of development on the newest product, Work One, which will allow Technology One to offer an advanced project and works management solution to its customers.</p>
<p>Release of Finance One CI</p>
<p>The company also accelerated the development of its next generation of software products, the Connected Intelligence (CI) series. The first of these new products, called Finance One CI has now been completed, and is now available to early adopter sites, with general distribution planned for early 2005.</p>
<p>The CI series of products have been specifically designed to raise the bar in the Enterprise Applications market, to give Technology One a product leadership position over its competitors. The 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.</p>
<p>Technology One will progressively undertake the development and release of other CI products over the next few years as follows:</p>
<p>People One CI – available mid/late 2005
Retail One CI – available mid/late 2005
Proclaim One CI – available late 2005
Student One CI – available 2006</p>
<p>Continued Organisational Changes</p>
<p>Technology One operates in a highly competitive and rapidly changing industry. Coupled with this, the company has been growing very quickly over a number of years with compound annual growth of 33% Net Profit After Tax over the last 12 years.</p>
<p>Mr Di Marco said key to the company’s success has been its ability to continue to adapt and evolve as an organisation.</p>
<p>“In late 2003, we commenced planning for an enhanced organisational structure to better allow the Company to execute against its strategy,” he said.</p>
<p>This was formally announced in July 2004 with the introduction of a new and expanded Executive Team to manage the business into four major operating areas:</p>
<p>· North West Region - encompassing Queensland, Tasmania, South Australia, Northern Territory and Western Australia</p>
<p>· Central Region – encompassing New South Wales, Victoria and the Australian Capital Territory</p>
<p>· International Region – encompassing New Zealand, Malaysia and other proposed international territories</p>
<p>· Project Services Division – custom software development throughout Australia.</p>
<p>An executive has been assigned to each of these regions.</p>
<p>“This enhanced organisational structure will allow us to achieve greater synergies across a number of states or international territories, and to develop a regional approach to resourcing, sales, training and marketing,” Mr Di Marco continued.</p>
<p>“It will allow the states or international territories in each region to work together more effectively and to better support each other. As part of this new structure we expect to see regionally-based expertise established, as distinct to local expertise,” he said.</p>
<p>“For example, sales and consulting teams will be structured across regions for certain verticals such as Local Government, Retail and Payroll/Human Resources. We also expect to see Sales, Account Management and Marketing strategies developed on a regional basis.</p>
<p>“In the end these changes will allow our executives to spend more time and effort to ensure the execution of our strategy is done to an exceptionally high standard.”</p>
<p>Research Into New Markets</p>
<p>Given the progress Technology One has made in its existing international operations, it was considered an appropriate time to investigate other potential countries for the company to expand into. A number of possibilities are being explored in the 2004 year including South Africa, United Kingdom and the Republic of China.</p>
<p>Technology One is in the process of developing its plans for continued international expansion, and will make more detail announcements in the near future once they are finalised.</p>
<p>OUTLOOK FOR 2005</p>
<p>In 2005 there will be a number of significant factors that will need to be carefully managed, as follows:</p>
<p>- Establishment of a new and expanded Executive Team and improved Organisational Structure.
- Establishment of the first Connected Intelligence products, Finance One CI, in the market.
- Continued strong investment in R&amp;D, committing approximately 19% of Revenue, for the development of the remaining CI products for Retail One, People One, Proclaim One and Student One.
Potential further geographic expansion.</p>
<p>Mr Di Marco said given the strong profit growth in the 2004 year, and therefore the high base Technology One is now working from this year, coupled with the factors outlined above, we expect 2005 to be a more challenging year for the company.</p>
<p>Mr Di Marco said looking past the 2005 financial year, future growth over the next five years will come from a number of areas. These include:</p>
<p>- Continuing improvement in the IT industry, caused by the natural sales cycle and an increased demand for software products.
- Fear, uncertainty and doubt over the viability of a number of our competitors as they are acquired and their R&amp;D direction becomes less clear.
- Improved sales success rate as our CI series gains acceptance in the market.
- Increased traction for our newer products such as People One, Retail One and Student One.
- Speculative initiatives such as Biz One which will potentially open up the small to medium enterprise market.
- New verticals through partnership.
- Continued overseas expansion.</p>
<p>Contact Details
Stephanie Wilson, Public Relations Consultant, Technology One
Phone (07) 3377 7518, Mobile 0405 133 871</p>

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