Technology One Limited
ANNUAL REPORT 2 0 0 8 For personal use only use personal For TechnologyOne’s vision is to deliver comprehensive and deeply integrated enterprise software solutions that have a profound and positive affect on our customers’ experience. We achieve this by: • Providing exceptional customer service and taking total responsibility for each customer by developing, marketing, selling, implementing and supporting our solutions - the Power of One advantage • Targeting key vertical markets where we deliver fully integrated end-to-end enterprise software solutions • Delivering functionally rich solutions that work ‘out of Our Vision the box’ with inbuilt flexibility, that do not require code customisation • Evolving our solutions in real time with our customers, and providing them with long term security by delivering a seamless and straightforward upgrade path • Embracing new technologies as they become available, to significantly enhance the way our customers do business • Employing a team of people who are innovative and challenge conventional thinking, and who are empowered
to make a difference For personal use only use personal For TechnologyOne at a Glance 2
Financial Highlights 3
Letter to Shareholders 5
Evolving our Strategy 9
Our Business Model - The House of Products 11
Review of Operations - Operating Officers 12
Review of Operations - General Managers 21
Employer of Opportunity 27
Targeted Vertical Markets 29
Our Integrated Solution Suite 30
Contents Corporate Citizenship 31
Financial Statements 33
Shareholder Information 97
Corporate Directory 98
Financial Calendar 99 For personal use only use personal For
Notice of Annual General Meeting The Annual General Meetings of Technology One Limited for the transitional period of three months ending 30 September 2007, and for Financial Year 2008 will be held on Friday 6 February 2009 at 9.30am at the Stamford Plaza Brisbane, Corner Edward and Margaret Streets, Brisbane Qld 4000. The business to be presented is set out in the separate Notice of Meeting issued with a Proxy Form to shareholders with this report.
Technology One Limited 2008 Annual Report n TechnologyOne at a Glance
Our Main Activities Did You Know? TechnologyOne is a leading supplier of • TechnologyOne has doubled its powerful integrated enterprise software revenue, profits and employees solutions for the following markets: approximately every two and a half • Financial services years over the last 15 years. • Education • Large corporations, government departments, universities and statutory • Health, Community Services and authorities rely on TechnologyOne Not for Profit software to improve their business • Local Government performance. “TechnologyOne • Government • More than 15,000 people use • Utilities TechnologyOne Financials every day. Access, together • Managed Services, including • More than 50% of universities in Property, Construction, Media and Australia use TechnologyOne software with Webforms, Entertainment. solutions to meet their business needs. is helping us We develop, market, sell, implement and • More than 40% of Australian and New support our own world-class software Zealand rates notices are produced provide an solutions which are used by thousands using TechnologyOne software. of large organisations and corporations • We have the largest installed innovative, in Australia, New Zealand, Asia and the customer base of enterprise solutions United Kingdom. in Australian Federal Government technology- departments and agencies. Our Products • We are a major provider to the based service to TechnologyOne’s comprehensive suite of community services sector, asset our customers. business software products include: intensive industries and the health care • TechnologyOne Financials sector. ECM will be an • TechnologyOne Human Resource & • Our Connected Intelligence solution Payroll is a generation ahead of the functionality-centric ERP (Enterprise integral element • TechnologyOne Supply Chain Resource Planning) applications of our as we continue • TechnologyOne Business Intelligence competitors. • TechnologyOne Budgeting • TechnologyOne is the only enterprise to improve our • TechnologyOne Performance Planning software solution provider to customer service • TechnologyOne Property & Rating have successfully delivered a new generation enterprise platform to the • TechnologyOne Student Management levels and drive market and seamlessly migrated its • TechnologyOne Works & Assets customers across efficiencies • TechnologyOne Enterprise Content • More than 80% of customers have Management now successfully and easily migrated throughout the • TechnologyOne Customer Relationship across to our new Connected Management. Intelligence series of applications. organisation.” We also provide large scale custom software development services to build Pauline Webb bespoke systems. Customer Service Manager, Our Finances City of Canada Bay Council TechnologyOne has been continually profitable since 1992, returning compound annual growth of 31% per annum Net Profit Before Tax.
For personal use only use personal For Our Reach TechnologyOne operates throughout Australia, New Zealand, Asia, the Pacific region and the United Kingdom.
Our People We employ more than 670 staff throughout our offices.
n 2008 Annual Report Technology One Limited Financial Highlights
Revenue Full Year 2008 v 2007 2008 2007 Variance Increase RevenueRevenue $ (000) $ (000) $ (000) % $(000) 120,000 $(000) 120,000100,000 Revenue (Pre 3rd party costs)1 108,874 77,054 31,920 41% 100,00080,000
Expenses2 63,592 43,277 20,315 47% 80,00060,000
60,00040,000 EBITDAR3 45,282 33,777 11,505 34% 40,00020,000
20,0000 R&D4 21,154 13,837 7,317 53% 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 0 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 EBITDA5 24,128 19,940 4,188 21% 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 net profit after tax Net Profit After Tax Depreciation 1,861 1,375 486 35% net profit after tax $(000) 20,000 $(000) Amortisation of Intangibles 211 28 183 654% $(000) 20,000 15,000 FOREX 268 78 190 242% 15,000 10,000
6 EBIT 21,788 18,459 3,329 18% 10,000 5,000
Net Interest Income 1,341 1,313 28 2% 5,000 0 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 Net Profit Before Tax 23,129 19,772 3,357 17% 0 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008
Net Profit After Tax 17,229 14,781 2,448 17% $(000) $(000) Research & Development 25,000 $(000) 25,000 Earnings Per Share cents reported 5.77 4.97 0.80 16% 20,000
20,000 Dividend Per Share cents 4.12 3.75 0.37 10% 15,000
15,000 R&D 10,000 R&D Return on Equity (ROE) 36% 35% R&D 10,000 5,000 Cash and Cash Equivalents 23,684 28,809 (5,125) (18%) 5,000 0 Net Operating Cash Flows 11,782 17,715 (5,933) (33%) 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 0 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 Debt/Equity 4% 4% 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 dividend per share
Cents dividend per share EBITDA Margin (Total Revenue) 22% 26% Cents dividendDividend per Per sharSharee 5 Cents 5 45 Net Profit Before Tax Margin (Total Revenue) 21% 25% 4
4 3
For personal use only use personal For R&D as Percentage of Total Revenue 19% 18% 3 2
1. Excluding Interest 2 1 2. Excluding R&D, Depreciation, FOREX and Amortisation 1 0 3. Earnings Before Interest, Tax, Depreciation, Amortisation and R&D 2000 2001 2002 2003 2004 2005 2006 2007 2008 0 2000 2001 2002 2003 2004 2005 2006 2007 2008 4. Research and Development 2000 2001 2002 2003 2004 2005 2006 2007 2008 2000 2001 2002 2003 2004 2005 2006 2007 2008 5. Earnings Before Interest, Tax, Depreciation and Amortisation 6. Earnings Before Interest and Tax
Technology One Limited 2008 Annual Report n While the Department of Prime Minister and Cabinet leads the nation, it relies on another leader for its financial management - TechnologyOne. We have the largest installed customer base of enterprise solutions in Australian Federal Government departments
and agencies. For personal use only use personal For
n 2008 Annual Report Technology One Limited Letter to Shareholders
On behalf of Technology One Limited We continue to grow both the sales and Acquisitions (TechnologyOne) I am pleased to consulting team in the United Kingdom, A significant event during the year announce our fifth consecutive year of and remain confident of this becoming a was the acquisition of the Avand record revenues and profit. significant part of our overall business. ECM company, followed later in Revenue for the year has grown strongly, Of particular note is the significant the year with the acquisition of the increasing by 41% to take us to $110 growth in our new Business Intelligence Outcome Manager Performance million. Our Net Profit Before Tax (NPBT) and Works & Assets products, and the Planning business. In both cases we also increased by 17% to $23.13 million. successful rollout of these exciting new were acquiring strategically important products with no major issues. Our These results have been achieved over technologies that in the short term Financials, Supply Chain and Property a period of significant upheaval in the are not expected to contribute & Rating products also continued to be financial markets, and this is a good meaningfully to profit, but both have strong. Our Human Resource & Payroll indicator of the strength of our business significant potential to drive sales solution continued to gain traction, and and the importance placed by our growth in the medium term. We have we remain confident that it will be a prospective customers on their enterprise worked quickly to integrate these significant contributor to profit in coming software systems. businesses into our successful House of years. Products business model, and are now Analysis of Performance Our recently acquired Enterprise Content finalising the five year strategies for Management (ECM) business, Avand, as each product, which will focus them to Highlights of our results are as follows: a stand-alone business turned around become important contributors to our • Net Profit After Tax (NPAT) up 17% to from a loss of $700k at the half year, profit. $17.23 million to a profit of $499k. After accounting • Net Profit Before Tax (NPBT) up 17% for the notional cost of capital, this House of Products Business Transformation to $23.13 million area of the business broke even for the Over the last few years, the • Revenue up 41% to $110.2 million year, as we expected. We see significant opportunities to grow this business in company embarked on a significant • Licence fees up 23% to $22.6 million coming years. organisational restructure to implement • Consulting revenue up 59% to $35.8 Our Student Management product did what we now call our House of million not perform to expectations, as there Products business transformation. • Plus/Project Services revenue up 17% were no new licence fees compared to $6 The House of Products business to $10.5 million million new licence fees in the previous transformation was about ensuring we maximised our significant investment • R&D expenditure up 53% to $21.2 year. Given this fact, our results are in our increasing range of enterprise million, representing 19% of revenue, particularly strong and demonstrate the products, while at the same time fully expensed as incurred during the resilience of our business model having simplifying the management of our year multiple products and multiple regions. business. • Expenses excluding R&D up 47% to Our Project Services business This House of Products business $65.9 million. (TechnologyOne Plus) also experienced transformation has seen a long term All Australian regions performed well, continuing growth, building bespoke software for our customers. strategic plan developed for each of with exceptionally strong performance our products, with General Managers coming from the ACT, New South Wales, We also significantly expanded our senior appointed with deep product expertise Victoria, Queensland and Western management team in the year, adding and knowledge to ensure we deliver Australia. a number of new General Managers, an against these strategic plans. The The New Zealand results were flat, but Operating Officer Corporate Services and organisation has also been restructured the recently instigated changes, creating their support staff to complete our House around each of our products to ensure two operating units in New Zealand, one of Products business transformation. they can be driven into the market, based around Auckland and the other We also invested strongly in R&D, and deliver on both our promise of around Wellington, will create the focus up 53% ($7.3m) to $21.2 million, exceptional software and services. and accountability to drive growth in the representing 19% of revenue. This I am happy to announce we have now coming years. compares to our target of 18% of completed the House of Products The United Kingdom continued to gain revenue, which increased our expenditure business transformation. This business traction and experienced strong growth by $1 million over our target. transformation has simplified our year on year with a number of significant Our Balance Sheet remains strong with business, and now provides an excellent wins. A number of new contracts, for Cash and Cash Equivalents of $23.7 platform to manage the continuing which we are the preferred supplier, were million, and a conservative debt/equity strong growth we expect in future
For personal use only use personal For not able to be finalised by year end, but ratio of 4%. Our Return on Equity of 36% years. this positions us well for the new year. remains exceptionally strong. Operating Cash Flow improved substantially over the half year, now at $11.8 million (compared to $1.1 million at half year). Operating Cash Flow was impacted by significant billings in the months of August and September, which will not be collected until early in the new financial year. Staff numbers have increased 37% (180 staff) to more than 670 staff.
Technology One Limited 2008 Annual Report n Letter to Shareholders continued
Vertical Market Focus Intelligence platform. This investment It is clear that we now have an excellent will continue in the new year and will suite of enterprise products and services. position this product for future growth. But it is important for us moving forward Focus in the next few years will be to see our products as ‘building blocks’, on migrating our newly acquired to build totally integrated enterprise products, TechnologyOne ECM and solutions tailored for specific vertical TechnologyOne Performance Planning, markets, rather than a generic approach onto our Connected Intelligence Adrian Di Marco for all our vertical markets. By doing platform. Executive Chairman this, we will be able to provide a far Our new Connected Intelligence series superior experience to our customers in of applications continues to drive sales each vertical market and streamline our and over 80% of our customers have business significantly. now migrated onto this platform. All up, We have identified seven vertical 98% of customers have now committed markets for which we believe we have an to moving onto this exciting new outstanding value proposition, as follows: generation of our products. This positions us very well for future growth, as our Ron McLean • Local Government competitors have still not released a new Non-Executive Director • Government (State, Central and generation product and continue to face Federal Government) the considerable hurdle of attempting • Education to migrate their customers onto a new • Financial Services platform. This has the potential to create • Health, Community Services and significant opportunities for us in future Not for Profit years. • Utilities A new strategic initiative in the year John Mactaggart was the release of the TechnologyOne • Managed Services including Media, Non-Executive Director Mobile Framework, which will provide Board of Entertainment, Property and the platform to build a range of mobile Development. Directors solutions for field workers. This will see a Our intention is to now focus on these new range of exciting mobility solutions vertical markets. To achieve this we are delivered to the market over the next building vertical market expertise and few years. aligning our sales, marketing and R&D The company also invested in our new around these vertical markets. To help Customer Relationship Management us achieve these objectives we have Kevin Blinco (CRM) product, which will ship in the started to introduce Vertical Market Non-Executive Director next 6 months. This is an exciting new Solution Managers into our organisation, area for us, which we need to evolve with deep industry expertise. We believe carefully and slowly, as it has the this will provide a compelling value potential to have a profound impact on proposition to potential prospects in all our products and markets. these vertical markets, and will help drive sales and customer satisfaction. With the Connected Intelligence series delivered, our attention is now moving to building the platform for our next Richard Anstey Research & Development Non-Executive Director generation of products, code named R&D continues to be a major expenditure ‘NextGen’. This exciting new platform for the company, with $21.2 million will underpin future growth in the invested in the year, representing 19% medium term. of revenue; an increase of 53% over the previous year. New Systems and R&D has continued across all our Business Processes products, with a major focus on rounding Some two years ago, TechnologyOne out our product range and also building a Edward Chung embarked upon a major investment in pipeline of licensable product extensions, Executive Director new systems and business processes to which will add significant value for our For personal use only use personal For streamline our fast growing operations, customers and generate significant and to ensure we have the controls to revenue for us in future years. Detailed manage our future growth. In this period, Product Roadmaps have now been new systems were rolled out to cover finalised for each product for the next 5 Timesheet Billing, Project Management, years, which are aligned to our Product Profit Forecasting/Pipeline Management, Strategies. Customer Relationship Management We have also invested significant funds in (CRM), Enterprise Budgeting and Business completing the migration of our Student David Orchard Analysis, as well as a new Financial Company Secretary Management system onto the Connected Reporting system to support our House and CFO of Products business transformation.
n 2008 Annual Report Technology One Limited Letter to Shareholders continued
We have also increased the focus on We also expect to see continuing business model. our business disciplines, which has seen momentum in the United Kingdom. Our concentration on seven key vertical a significant investment in developing Our Asian operation has in recent years markets will now enable us to focus our 5 year ‘rolling’ strategic plans with been problematic, and we expect to sales, marketing, R&D and consulting supporting R&D Roadmaps, as well as Key resolve these issues over the next 12 teams to deliver an exceptional Performance Indicators (KPIs) to allow months. customer experience, with the aim of performance to be readily measured. We also see strong continuing growth in becoming one of the dominant suppliers We will continue to make significant licence fees from our large and expanding in our chosen vertical markets. investments in new systems and business customer base, as they continue Our plan is to continue to expand our processes over the next few years as to migrate to our new Connected product depth by building a substantial part of our Corporate Shared Services Intelligence series, and our customers pipeline of licensable product initiative, led by our new Operating now have the opportunity to buy extensions. Officer for Corporate Services. This additional licensable modules/extensions We are continuing to expand initiative provides shared corporate from us to further streamline their geographically, which is also creating services such as transaction processing, businesses. new opportunities for us. accounting, analysis, legal, administration, We are also well positioned in a number HR/Payroll etc to all our business units to We will also continue to use new of our chosen vertical markets: Local allow them to have world’s best practice technologies to get a competitive Government, Federal and Central in running their business. advantage over our competitors, as Government, Education and Managed we have already achieved with our Services. United Kingdom Connected Intelligence series, and we State Government remains problematic have now started research work on our We continued to gain traction in this very because of existing long term supply future ‘NextGen’ product series. large, exciting and competitive market. contracts that individual states have Licence fees were up strongly ($565k) to Lastly, we will continue to investigate entered into many years ago, that $651k, and a number of high profile deals acquisition opportunities that will effectively locking us out of doing were secured: either increase our geographical reach business with them. Having said that, or increase our suite of enterprise • Royal Liverpool Children’s Hospital we have a number of strategies that products. • Institute of Education, a college of could create significant opportunities As such, we remain confident of University of London for us in the medium term with State continuing growth in the long term. • Strathclyde Partnership for Transport. Government. We have now built a strong team in We see growing opportunities in Health, Dividend Increase Community Services and Not for Profit, the United Kingdom, and have a good The dividend for the year has been pipeline of opportunities for the coming Financial Services and Utilities over the next few years. once again increased by 10% to year. We have also now incorporated the 4.12 cents fully franked, making this United Kingdom sales reporting under our R&D will continue to be a major area of the eighth consecutive year of Operating Officer Sales and Marketing expenditure for us, as well as increasing increasing dividends. to better support the continuing strong our sales team to handle our expanding growth from this region in future years. product range. We will need to carefully Afterword manage our costs in line with revenue Outlook growth. Finally I would like to specifically thank you, our shareholders, for your Our sales pipeline remains strong as we Long Term Outlook continuing support during this period enter the new financial year. Historically, of turmoil and uncertainty in world during difficult economic times, TechnologyOne has built a suite of financial markets. organisations have looked to streamline enterprise products that putting us in I would also like to acknowledge the their operations to reduce costs and an elite group of software companies great work of our team of dedicated improve efficiencies, and in doing so globally that can provide a true professionals that build, market, sell, they look for integrated enterprise end-to-end enterprise solution to an implement and support our great solutions such as those provided by organisation. suite of enterprise products. Their TechnologyOne. As such, in the next The breadth of our enterprise suite today passion, creativity and commitment is 12 months we expect to see continuing encompasses Financials, Supply Chain, outstanding. growth. Works & Assets, Human Resource & All products are expected to continue Payroll, Enterprise Budgeting, Business
to grow strongly in 2009. In particular Intelligence, Performance Planning, For personal use only use personal For we expect Human Resource & Payroll to Property & Rating, Student Management, continue to improve, and we also expect Customer Relationship Management and licence fee growth this year from Student Enterprise Content Management. Adrian Di Marco Management and our new ECM product. TechnologyOne provides a compelling Executive Chairman All regions are also expected to continue proposition to our target customers to grow licence fees. In particular, we because of our advanced product see a significant improvement in New functionality, the deep integration across Zealand with the recent changes made. our enterprise suite, our advanced User Interface, our new Connected Intelligence platform, and our unique ‘Power of One’
Technology One Limited 2008 Annual Report n The Tasmanian Government chooses TechnologyOne software solutions to help it reach peak
performance. For personal use only use personal For
n 2008 Annual Report Technology One Limited Evolving our Strategy
Following more than 20 1. Delivering deeply integrated continue to invest strongly in R&D, and solutions for our target we continue to look for acquisitions years of operation during vertical markets that will enhance the depth and range which many software Our R&D, sales and marketing focus is of our product offering. vendors have disappeared, directed at seven key vertical markets, We have also developed significant TechnologyOne continues across which there is no other dominant new capabilities across our enterprise to not only survive but software vendor. These seven markets, for suite, including mobility solutions, which we provide a powerful solution fit, Customer Relationship Management, thrive as a leader in the for, are: Government, Local Government, and Grants and Funding Management, enterprise applications Financial Services, Education, Health, as well as taking advantage of market. Our success is due Community Services and Not for Profit, emerging opportunities in the area of to our ability to continually Utilities, and Managed Services. Ministerial and Secretariat information We are also in the unique position of management. evolve our products and being one of very few vendors to own the business model in line intellectual property of a core enterprise 3. Harnessing the opportunities suite, which incorporates our Financials, of our House of Products with market demands and business model changes in technology, Human Resource & Payroll, Supply Chain, Budgeting, Business Intelligence and Our commitment to our customers is as well as our capacity to Works & Assets software. to make each product in our enterprise respond with speed and This provides us with a unique platform solution suite best-in-class, so that agility to our customers’ on which to build market-specific organisations benefit from a single requirements. software solutions, where our customers enterprise-wide solution and do not get cost benefits and service levels need to compromise on quality in any product area. The business is now one of Australia’s that can only be attained with a single To achieve this end, each product is led largest and most successful publicly listed integrated enterprise solution that is by a General Manager, who possesses software companies. Our workforce has provided by one vendor. the focus, strategy, people, systems expanded to more than 670 staff; 2. Extending our product and culture to make their product a we now have 15 offices throughout breadth and depth market leader and to deliver on our Australia, New Zealand, Asia and best-in-class’ commitment. Each the United Kingdom. We have also Feedback tells us that our customers are General Manager drives an integrated continually expanded our solution suite continually looking for greater breadth R&D, marketing, sales, implementation to now offer eleven fully integrated in their enterprise solutions and that and support strategy for their product. enterprise software products covering they want the depth of benefits and All of our products are based on our seven vertical markets. efficiencies of partnering with a single software vendor. To ensure we continue Connected Intelligence platform and TechnologyOne’s winning formula to address our customers’ needs, we are are backed up by common business for continued growth comes from constantly looking for ways to increase systems, processes and our branding maintaining our focus on: the breadth and depth of our solutions strategy. Our products also leverage our 1. Delivering deeply integrated solutions suite. network of offices throughout Australia, for our target vertical markets New Zealand, Asia and the United With the recent acquisition of the Kingdom. 2. Extending our product breadth and DataWorks solution in October 2007, we depth now offer our customers TechnologyOne 3. Harnessing the opportunities of our 4. Expanding into new Enterprise Content Management. The vertical markets House of Products business model acquisition of the Outcome Manager 4. Expanding into new vertical markets technology in August 2008, which we The opportunity exists to expand into 5. Expanding into new geographies have been delivering as TechnologyOne new vertical markets in the future, which will create opportunities for 6. Our Connected Intelligence platform Performance Planning for the past three years, will enable us to rapidly extend the further growth. We are currently 7. Maintaining speed and agility in our investigating the Managed Services R&D efforts capabilities of the solution and cross-sell it into our existing customer base, as market, where we see additional 8. Our culture of innovation involving well as enter new markets. Additionally, opportunities in the areas of Media, a true partnership approach with our our latest R&D has seen a new product Entertainment, Property and customers emerge, TechnologyOne Customer Construction. 9. TechnologyOne Evolve, which offers Relationship Management (CRM), which
For personal use only use personal For a ground breaking, evolutionary way 5. Expanding into new has been specifically built to meet the forward for our customers geographies needs of the customers in our seven key 10. The power of our awesome software vertical markets, rather than being a TechnologyOne continues to achieve 11. The Power of One value proposition generic CRM solution. outstanding success in the Australian and New Zealand markets. Our 12. Our customer-centric approach All TechnologyOne products adhere to successful business model addresses 13. Recruiting and retaining remarkable our unwavering commitment to deliver regional differences and is now being people deeply integrated, functionally rich ‘out applied with success to our United 14. Using technology for competitive of the box’ solutions for our chosen Kingdom operation. advantage. vertical markets. We continue to develop and maintain alliance partnerships, we
Technology One Limited 2008 Annual Report n Evolving our Strategy continued
6. Our Connected 9. TechnologyOne Evolve, 11. The Power of One Intelligence platform which offers a ground value proposition Connected Intelligence is our latest breaking, evolutionary way Our unique value proposition, ‘The Power forward for our customers technology release that sets the standard of One’, is that we develop, market, for the future direction of enterprise TechnologyOne Evolve is our sell, implement and support our own software solutions. It is our new generation commitment to the ongoing world-class software solutions. platform that supports the latest in web improvement of our products by Customers benefit from a direct services technology to connect disparate providing our customers with regular, relationship with us every step of systems and enables swift deployment of incremental (and optional) releases every the way. We do not sell our products any TechnologyOne solution. six months that are easy to install and through resellers, nor do we use third provide new features, functions and TechnologyOne’s commitment to party organisations to implement our benefits. This is different to the approach continuous R&D provides reduced risk for solutions. Our remarkable people are generally adopted by our competitors, our customers. As we always provide the accountable from the beginning of a where new releases are provided every latest and best independent technology project to provide ongoing service and three years and are a major undertaking platform for our solutions, our customers support. Our commitment to R&D also for their customers in terms of both can remain confident that their solution means that customers directly influence effort and financial investment. It is our will never become redundant and their and benefit from a receptive R&D team. TechnologyOne Evolve commitment investment is future-proofed. This is in Our guarantee is that our customers get that has enabled our customers to contrast to our competitors who use their the best integrated solutions and services painlessly migrate from mainframe-based own proprietary technology platforms. on the market. computing to client/server, web and, We are also the first enterprise software most recently, our Connected Intelligence solution provider to successfully deliver a 12. Our customer-centric approach series of applications. TechnologyOne new generation enterprise system to the Quite simply, we will always endeavour is the only enterprise software solution market, and to date, more than 80% of our to exceed our customers’ expectations in provider vendor to have successfully customers have easily and cost-effectively the delivery of exceptional products and delivered a new generation enterprise moved across onto it. Our competitors are services. Our aim is always to be able, platform to the market and easily and still to deliver a new generation product to willing and flexible enough to evolve with cost-effectively migrated its customers the market and provider are still confronted our customers’ expectations. We believe to it. with the significant challenge of migrating that by listening to our customers, their customers onto it. We see significant we can continue to deliver exceptional 10. The power of our software and services. opportunities for us as our competitors’ awesome software customers become further disillusioned as time goes by. TechnologyOne is committed to creating 13. Recruiting and retaining awesome software that has a profoundly remarkable people 7. Maintaining speed and positive effect on our customers’ TechnologyOne continues to evolve agility in our R&D efforts businesses, as well as being easy to use as an organisation, largely due to our and functionally rich. We achieve this TechnologyOne is the only enterprise team of innovative people. Key to our by promoting ownership, innovation software solution provider to deliver ongoing success is the retention of our and commitment with our efficient an optional major release to customers positive work culture. We aim to provide and empowered R&D teams, who are every six months. By working closely and an environment where staff have the responsible for small subsets of each continually with our customers, who are courage to lead and are relentless in product, called domains. an endless source of knowledge, we ensure their pursuit of excellence. We strive that we continually evolve our software at At TechnologyOne we believe our to empower our people to make a a market-relevant pace. Our upgrades are customers are the best source of difference. With one of the lowest rates easy to install and provide new features. knowledge for the future direction of of staff turnover – at less than half the Best of all there are no additional licence our products and that we use their industry average – our people truly get fees. feedback to create a successful, to understand our customers and their innovative environment. By listening businesses. 8. Our culture of innovation to our customers, we can truly deliver involving a true partnership awesome software. 14. Using technology for approach with our customers competitive advantage Our proud history of innovation has TechnologyOne was founded on the always meant that our customers benefit premise of utilising new and emerging from an ingrained culture of continuous technologies within our products to improvement,only use personal For exceptional technology and provide our customers with a greater innovative business models, all of which competitive advantage. Our Connected combine to deliver the best service and Intelligence series is our latest technology software for all of our customers. release. In the next few years we will By listening to our customers’ needs be looking to repeat the success of our and understanding their priorities and Connected Intelligence series with the business processes, we are able to build development of a new generation of best practice into the development of our enterprise applications based on new solutions through a tight loop of feedback emerging technologies. We call this our and enhancement. ‘NextGen’ project.
10 n 2008 Annual Report Technology One Limited Our Business Model - The House of Products
Our House of Products Twelve months on, our House of are based on our Connected Intelligence Products Business Model is proving highly platform, and are backed up by common Business Model has been successful, with two strategic acquisitions business systems, processes and our successfully implemented completed to complement our product branding strategy. Furthermore they to provide the focus, offering, and strong performance in all leverage our network of offices strategy, people, systems new licence revenue from both new and throughout Australia, New Zealand, Asia existing customers across our product and the United Kingdom, through which and culture to deliver on offering. they are sold and supported. our ‘best in class’ customer Each TechnologyOne product is led by a commitment for each of General Manager to drive our integrated our products, which in R&D, marketing, sales, implementation and support strategy. This innovative turn drives our market model ensures that all of our products leadership position. are deeply integrated, ‘out of the box’,
Customers
Corporate Network of Offices Australia New Zealand Asia UK
Target Vertical Markets Government Local Government Financial Services Education Health and Community Services Utilities Managed Services
n Financials Supply Chai Works & Assets Property & Rating Performance Planning Student Management Human Resource & Payroll Custom Software Development Enterprise Content Management
Budgeting & Business Intelligence For personal use only use personal For Customer Relationship Management
Connected Intelligence Platform
Corporate Shared Services Finance Human Resources Administration Legal Internal Systems
Technology One Limited 2008 Annual Report n 11 Review of Operations - Operating Officers
TechnologyOne’s Both the Institute of Education and the Royal Liverpool Children’s Hospital commitment to have successfully gone live with continuous improvement TechnologyOne Financials. They have in both our products also proved to be great reference sites and our services has for us, as has Hereford Fire & Rescue which completed its implementation enabled us to maintain earlier this year. strong growth this year. The United Kingdom business is building With the acquisition a strong and effective team. Until this of two businesses and year, all our United Kingdom personnel, their products, and apart from our Country Manager, had been transferred to the United Kingdom Richley Down the launch of our new from our Australian and New Zealand Operating Officer operations. This year has seen a number New Business Development Business Intelligence and Enterprise Budgeting of local consultants join the team and we have also appointed an experienced solutions, the organisation Consulting Manager to drive the growing has continued its strong consulting team. Additional business growth and evolution as a development managers have also been global enterprise solution appointed to focus on building the business from a strong pipeline of new provider. prospects. Mark Culverson Operating Officer Service Delivery With the addition to the executive team Acquisitions and Partnerships of a Corporate Services Operating Officer, TechnologyOne has a high profile in the our capacity for future growth has been Australian software industry and, as a expanded. The executive team is leading result, both partnership and acquisition the way, improving the way we work, as opportunities are brought to our well as developing new and innovative Operating attention on a continual basis. These business opportunities. Officers opportunities are only investigated if they offer significant strategic opportunities Roger Phare New Business Development in our key vertical markets as well Operating Officer Richley Down as providing us with a competitive Sales and Marketing New Business Development includes advantage in those markets. Our clear TechnologyOne’s initiatives in new preference is to partner with companies markets and with new products, as well first to get to know them and their as TechnologyOne Plus (formerly Project solutions, and only then to consider Services). an acquisition. In the current year, TechnologyOne has converted two of its United Kingdom existing partnerships into acquisitions. Since opening our United Kingdom Early in the financial year, TechnologyOne Peter Cameron office in March 2006, the team has Operating Officer acquired Avand Pty Ltd (Avand), Research & Development continued to build on its early successes which had developed and marketed an by winning new business in key vertical Enterprise Content Management system markets and implementing solutions that primarily for the local government have delivered great benefits for those market in Australia. TechnologyOne customers. had partnered with Avand in local With the focus initially on four of our government implementations on many seven key vertical markets – Education, occasions over the last five years and Health, Financial Services, and Local had achieved integration between the Edward Chung Government - our success this year with Avand product and our own solutions. Operating Officer the Institute of Education, and Royal We saw significant potential for the Corporate Services Liverpool Children’s Hospital (Health) Avand product for our customers, For personal use only use personal For is significant as it now provides us with particularly in local government but also a presence in three of our key vertical in our other key vertical markets. As a markets (we already have customers in result, the acquisition of Avand was a the Financial Services market). A contract natural conclusion to our partnership. win with the Strathclyde Partnership for We have now re-branded the product Transport also provides us with our first Technology One Enterprise Content Scottish customer. Management, and we are excited about the future opportunities it offers every TechnologyOne customer in today’s increasingly legislative and electronic environment.
12 n 2008 Annual Report Technology One Limited TechnologyOne has also had an original Research & Development is future-proofed by ensuring we equipment manufacturer relationship Peter Cameron can migrate them to new and exciting technologies as they become for a number of years with Outcome With more than 800 customers, we have commercially viable. The team has Manager, an Australian developer introduced targeted programs to promote been working on our NextGen project, of performance planning software. new products and modules to our to deliver the next generation of our TechnologyOne has been marketing existing customers. During the year these application framework. this software under the name of programs realised substantial growth in TechnologyOne Performance Planning, licence fees from our existing customers. The NextGen team’s research is to enable us to provide our customers As all new features and products are focused on the latest emerging web with a comprehensive corporate delivered in our latest releases, our teams technologies. There have been great performance management solution. have been focused on improving our advances in technology in recent In August this year, TechnologyOne software upgrade practices to ensure they years, including improved internet completed the acquisition of this are as simple and cost effective for our accessibility, such as mobile broadband, technology from Outcome Manager. customers as possible. the increasing maturity of Ajax and the This solution has significant potential in recent release of Silverlight, WPF and Within our Connected Intelligence all TechnologyOne’s key vertical markets, WCF by Microsoft. releases we concentrated on making especially in the Government, Health and upgrades both quick and easy, enabling A significant outcome of the New Education sectors. upgrades to be from any release, Technologies team is the creation of our new Mobile Application Framework, TechnologyOne Plus regardless of the previous release installed. We also dedicated resources which is targeted at mobile workers TechnologyOne Plus successfully to ensure that there is no mandatory who often have to complete work items focused on a number of large projects consulting required for upgrades by while offline and onsite. The framework during the year, including a significant ensuring all previous release functionality has been developed to provide a simple, redevelopment project and a large is fully supported in new releases, intuitive mobile experience using ultra education project. It also completed a minimising the cost and effort of mobile PC devices, and will function as range of smaller projects. During the upgrades. Our customers can then a ‘clipboard substitute’, enabling mobile year the group expanded the range choose when to implement new features workers to record data directly into a of services offered to customers and and functionality when they see direct system, even when disconnected from has restructured, appointed a new benefits for their businesses. a network. This will initially be targeted General Manager and expanded its sales at the local government sector for Our customer-centric approach in capability. The group is now poised to workers such as health inspectors and our R&D programs means that the generate future growth and profitability. will be expanded to other products in regular feedback we seek and receive is forthcoming years. Workers will also incorporated into new product releases be able to take advantage of mobile every six months, delivering new and computing features, such as cameras improved features and functions. All of and GPS, to improve the way they our product teams have shipped two work. new software releases in the last year, therefore completing a feedback loop that We continue to seek ways to improve delivers software our customers really the customer service that supports our want. products and during the year we rolled out our new Virtual Consultant service. Our House of Products business model This service enables our customers to provides each product R&D team with remotely access advice quickly and the framework to create best-in-class easily, either over the phone or via products. To ensure that our customers technologies such as ‘remote desktop’ receive the same experience across all control, without the expense of hiring of our products, as well as continuous a consultant for a whole day. The improvements to product quality and service is managed through our Support productivity enhancements, we have Centre and time can be booked in established a new Software Engineering 15 minute increments, ensuring our Practices team. This team ensures that customers only pay for the time they new ideas and innovation are shared need. Customer feedback so far has across all product teams, and that each been excellent and many customers are is working efficiently within defined taking advantage of the new service.
practices that guarantee the output of For personal use only use personal For high quality software. The New Technologies team has continued the research required to ensure that our customers’ investment
Technology One Limited 2008 Annual Report n 13 Review of Operations - Operating Officerscontinued
Sales and Marketing 3. Vertical market sales Roger Phare focus and alignment Following a period of consolidation and Over the past two years we have honed strengthening of the sales and marketing our focus on the seven key markets that functions in 2007, this year saw a realisation make up the majority of the asset and of that potential. The sales and marketing service intensive industries. We are now teams delivered on objectives across three positioned to effectively execute on this key areas throughout the year: consistent strategy with the introduction of a new regional performance, realising potential structure that will address the combined from our customer base, and ensuring requirements of market, product and vertical market sales focus and alignment. regional expertise. The year saw significant business sales 1. Consistent regional performance achievements as outlined below. The strengthening of our regional management model delivered improved Government performance across the majority of regions. In 2008, TechnologyOne achieved a “Works & The appointment of regional managers position as one of two dominant suppliers in NSW, the ACT and WA saw markedly of enterprise software solutions to the Assets has improved results in those regions. Australian Federal Government. We also The ACT was the standout region in terms further increased our coverage and reach improved of strategic and operational turnaround. in other central and State Governments A number of key customers were secured across a number of geographies. productivity during the year, which now places Collaborative development saw enhanced and led to an TechnologyOne as the dominant enterprise solutions in departmental/Crown solutions provider to the Australian Federal budgeting, as well as grants and funding improved level Government market. management. Throughout$(000) 2008 we also created two Major customer sales included: of information distinct8,000 regions in New Zealand. This was • Department of Innovation done with the recognition of the potential (Australian Government) 7,000 on the cost of growth and need for greater coverage in this • Department of Lands market.6,000 Wellington saw the addition of a (Papua New Guinea) maintaining new management structure to cater for the 5,000 • Department of Climate Change Government market in the nation’s capital. the council’s 4,000 • National Capital Authority 2. Realising potential from 3,000 • Australian Sports Commission assets.” our customer base incorporating the Australian One2,000 of the key strategies implemented Institute of Sport 2007 Peter Bennington throughout1,000 the year was to add value • Comcare to existing customers’ experience with 2008 Chief Technology 0 • Australian Sports Anti-Doping TechnologyOne, using the rollout of our Authority Officer (CTO), new ConnectedFinancials IntelligenceBusiness seriesProperty as the Works ECM Student Human & Supply Intelligence & Rating & Assets Management Resource Corporate Information platform toChain achieve this. This was done • Ministry of Justice& Payroll Services, City of Stirling through the provision of additional and (New Zealand). enhanced solutions and modules. This has been a spectacular success, with licence sales to existing customers increasing significantly.
Geographical - Licence Fees
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2008 0 Central North West Asia Pacific United Kingdom
14 n 2008 Annual Report Technology One Limited Review of Operations - Operating Officerscontinued
The City of Sydney, one of the world’s most iconic cities, has been using TechnologyOne software solutions to manage its operations for more than five years. More than 220 local government organisations in Australia and New Zealand use TechnologyOne enterprise
solutions. For personal use only use personal For
Technology One Limited 2008 Annual Report n 15 Review of Operations - Operating Officerscontinued
Local Government Education Utilities Our increasing dominance in the local A major focus during the year was to The major activity in the utilities area government market in both Australia obtain an increased market understanding reflects the topic of the times – water. and New Zealand has been further and coverage in the education sector. The Victorian sales team has had cemented with a significant number of This has positioned us well to articulate significant success during the year, wins throughout the year. Of particular an enterprise vision, with some good wins winning three new contracts with water note was the confidence that Queensland achieved late in the year. authorities. Our ability to not only customers demonstrated after significant Major customer sales included: satisfy the need for a robust financial council amalgamations had taken place; system, but also to be able to address • Manukau Institute of Technology two newly formed councils, Moreton the complex billing, contract and asset (New Zealand) Bay Regional Council and Fraser Coast management requirements, ensured Regional Council, placed significant • Institute of Education TechnologyOne was the vendor of orders with us. The major highlight, (United Kingdom) choice. Significant contracts were also however, was our success in winning a $2 • University of the Sunshine Coast. won with ports and airport authorities, million deal with the Northern Territory Of significant disappointment was that illustrating the flexibility and scalability local government and the subsequent no new Student Management contracts of our solutions. successful implementation across a were signed in the year, as contract Major customer sales included: number of its sites. decisions were delayed. • Grampians Wimmera Mallee Major customer sales included: Water Corporation Health, Community Services • Northern Territory local government • Townsville Port Authority and Not for Profit shires • North East Water Key developments in our product areas • Waikato District Council of purchasing, supply chain, and clinical • East Gippsland Water • Rural City of Wangaratta and operational reporting has positioned • Adelaide Airport. • City of Sydney TechnologyOne as a leading provider in Managed Services • City of Ryde this sector. Major projects in association with Healthscope and the Hawkes Bay The fast emerging services markets • Moreton Bay Regional Council Health Board demonstrate a commitment define those groups of organisations • Fraser Coast Regional Council to listen to and work with our customers. that manage people and/or projects. • City of Melbourne Major customer sales included: We call this the Managed Services markets. Key areas that we work in • Sunshine Coast Regional Council • Healthscope include media and entertainment • Townsville City Council • Hawkes Bay Health Board services, membership organisations, • City of Fremantle (New Zealand) technology providers, as well as • Penrith City Council • Western Australia Institute of property, construction and mining • Warringah Council. Medical Research organisations. • Frank Whiddon Masonic Homes Major customer sales included: Financial Services of NSW • Consolidated Travel TechnologyOne has continued to increase • Nelson Marlborough District • FKP Property Group its market presence in the financial Health Board (New Zealand). • Prime Television services sector despite the uncertain economic conditions. Organisations • Wotif.com. including banks, finance companies, insurance, and wealth management Future Directions institutions are all looking to gain We are expecting to realise significant increased performance and efficiencies opportunities in the future due from their back office operations, and to the success of our Connected TechnologyOne continues to deliver Intelligence platform. The ease and fit-for-purpose solutions. cost effectiveness of migrating to this Major customer sales included: new generation platform has placed TechnologyOne in a prime position • Rural Finance to make further inroads into its target • Ansvar Insurance markets. This is particularly due to
• The Bank of New York Mellon the company’s success in seamlessly For personal use only use personal For • Rural Finance Corporation of Victoria migrating organisations to this new platform, something our competitors • Employers Mutual. have been unable to achieve. The massive costs involved in upgrading our competitors’ solutions also makes TechnologyOne an attractive option, as upgrades are released every six months and are included in the yearly licence fee.
16 n 2008 Annual Report Technology One Limited When educating tomorrow’s leaders, Curtin University uses TechnologyOne software to streamline student enrolment, financial management and online
services. For personal use only use personal For
Technology One Limited 2008 Annual Report n 17 Review of Operations - Operating Officerscontinued
Service Delivery Project Management Office Increased Customer Contact Mark Culverson To continue to improve our During the last financial year, the There has been significant growth within communication with our customers Service Delivery team highlighted the Service Delivery team, driven by and the service levels we provide for the need for our consulting team to increased demand for our consulting and them, as well as minimise their risk have regular customer contact. This project management services around during implementations, the Project was successfully implemented and our suite of enterprise applications. This Management Office has expanded. We has continued throughout the year, has been due to the increasing number have increased the team numbers to with consulting managers seeking of new customers, as well as existing ensure that all project managers review, regular feedback from customers customers migrating to the Connected update and apply our implementation on our products and services. We Intelligence platform. methodologies and processes consistently are continuing to learn about our during the delivery of our solution customers’ needs and, where possible, Growth suite. As the complexity and size of our we are providing additional support The revenue contribution of the implementations expand, we increasingly and increasing services to meet their consulting services group in 2008 require capable project managers who use requirements. increased significantly compared to last up-to-date methodologies and systems year. This increase came from strong that support them to deliver on-time The Future of our Consulting Services growth in both new business and existing and on-budget implementations. The customer consulting. This is an excellent Project Management Office has taken The growth of TechnologyOne has seen result and reflects the management a lead role in developing and refining us evolve to become a major supplier team’s commitment to developing the methodologies, providing a specialist risk of business solutions to seven vertical Service Delivery group. The growth in committee to which project managers markets, and this growth has an obvious consulting revenue has posed some submit documents for review. This impact on the consulting services we challenges because of the requirement team also acts as a source of advice on provide. We are developing consulting to continually add new consultants to project issues and challenges, and has teams that have experience in each of the existing teams, and train these staff audited completed projects with our the vertical markets we service, and who in both our software applications and customers to gather feedback to improve are able to provide additional consulting our consulting methodologies. We have our processes. This team will continue services based on this knowledge. Our also continued to develop our existing to act as a central point of knowledge customers are benefiting from working consultants’ skills and application for our project managers as they deliver with consultants who have a deep knowledge, while at the same time implementations and minimise the risk to understanding of our products and how maintaining the focus on providing our customers. they are being used in specific vertical excellence in service delivery. market such as Federal Government National Consulting Teams and Higher Education. This trend will The National Education and Development continue as we work with both existing team has been focused on managing our Under our House of Products business and new customers to address their training collateral and coordinating the initiative, the continued development business needs. centralisation and cataloguing of all our of our highly specialised consulting application training manuals. They have teams for each product, which bring also worked closely with the national and product-specific skills and expertise regional consulting managers to develop to our customers, has proven to be training programs for new consultants. very successful. We are able to provide With the rapid growth in consulting team highly trained specialists based on the numbers, we have had to refine and specific requirements of each customer maximise the value of any training we assignment. While our consulting teams provide to new consultants. This process are regionally based, they are centrally will continue to be reviewed and will trained and managed, which ensures evolve to ensure we develop high calibre consistency in approach and a depth consultants that provide our customers of knowledge and support that can be
with excellent service. utilised as required. For personal use only use personal For
18 n 2008 Annual Report Technology One Limited Corporate Services During the course of the year we In the coming year we plan continuous Edward Chung refined and introduced a number of new improvement to our business processes systems. Key to our company’s success by refining the House of Products The past financial year saw the creation is the information that we provide our reporting model in order to benchmark of the new position Operating Officer business managers in order to make our businesses and control costs. We also Corporate Services, to bring together decisions quickly. In particular, the use aim to increase our margins by further under one umbrella the corporate of our Enterprise Budgeting solution has developing our KPIs and adding a vertical functions of TechnologyOne, including enabled us to reforecast our results every market dimension. finance, human resources, IT and two weeks to a very granular level. We administration. Centralising these Cost control is an important element of have also developed a suite of reports functions will provide world-class our 2009 operating plan, with particular and metrics enabled by the roll-out services to our business units, facilitate focus on our largest expense categories, of Business Intelligence dashboards fast integration of acquired businesses, wages and travel expenses. We will across the organisation, which have drive our significant investment in introduce tighter controls on wages been embraced by staff for the valuable new systems, and deliver continuous expense and will implement our new insights they provide. improvement to processes. Travel and Expense Management system Through the successful integration of to streamline and control our travel During the year the corporate services Avand and Outcome Manager into the expenses. group has worked closely with our business in extremely tight timeframes, business units to develop strategic plans we have shown that our corporate to continue our growth for the years to shared services model works. With the come. Our strategic planning process Human Resources team leading the helps us to think outside the square in way, both acquisitions involved people- order to achieve our ambitious goals, to based change management exercises align our actions, and to help us track our and the implementation of our business performance against these goals. disciplines and processes to recognise We have further refined and developed significant synergy benefits. our processes and systems to support our Underpinning TechnologyOne’s growth is product strategies and our broader House the investment in our greatest asset – our of Products market strategy, putting people. During the year we increased in place a number of control metrics our headcount by 37% to approximately and early warning systems in order to 670 people. This increase in staff levels effectively manage our growth. resulted in the amplification of our One of the reasons our new software corporate footprint, with the opening of products are so successfully embraced new office space in Brisbane’s Fortitude by the market is because we rigorously Valley. test and use our own software in- Further refinement and development house before it is ever offered to our of our human resources policies and customers. By using the software in a programs are taking us into our next real-world environment, our staff can phase of growth. We launched the Buddy provide input for the product’s direction Program, Service Recognition Awards and functionality, therefore ensuring and the Graduate Program, and we have the best possible product is delivered to been busy developing and piloting further customers. programs and policies to attract and retain staff, with a major focus on the
Employee Development Program. For personal use only use personal For
Technology One Limited 2008 Annual Report n 19 Healthscope places TechnologyOne software at the heart of its critical business
operations. For personal use only use personal For
20 n 2008 Annual Report Technology One Limited Review of Operations - General Managers
Financials Human Resource & Payroll Richley Down (acting) Iain Rouse TechnologyOne Financials has had a The last 12 months have seen continuing Richly Down strong year in meeting its objectives. improvements for the Human Resource Financials This included maximising opportunities & Payroll product as we solidified our Supply Chain (acting) in our existing customer base, building R&D focus, set medium and long term the platform for continued growth in the financial goals, further refined the way we United Kingdom, and continued focus on deliver services to our customers, and met our key vertical markets. numerous strategic objectives. In Australia and New Zealand, With 35 deals closed during the course of TechnologyOne Financials is uniquely the financial year, the volume of sales and placed. As a mature product that has average sale price of the Human Resource Iain Rouse Human Resource & Payroll been in the marketplace for 20 years, it & Payroll product continues to improve in has developed a large blue chip user base. line with expectations. The uniqueness stems from its maturity We remain committed to our strategic in terms of functionality and scalability, goal surrounding technology, and are and our R&D strategy, which delivers continuing to convert and enhance the a unique user experience through its solution on the Connected Intelligence underlying technology. This combination platform. This technology transition has is unparalleled and is a significant delivered substantial performance and Peter Gill competitive differentiator. Business Intelligence, quality improvements, and with 90% of Budgeting, and One of our major successes has been the product conversion to Connected Performance Planning our strength in selling into our existing Intelligence complete, Human Resource customer base. R&D has engaged heavily & Payroll will operate completely within with our customers with a focus on the Connected Intelligence environment the delivery of new, relevant modules. by the end of the next financial year. This focus, along with our sales team’s As the migration to this platform has strong engagement model, has seen a progressed, we have taken advantage much higher than expected growth in of customer feedback to improve General Michael Preedy licence revenue over the past 12 months. the usability of the solution. This has Managers Property & Rating This trend will continue with a strategic delivered significant improvements to focus on delivering functionality that the user interface around back office is both attractive and beneficial to our tasks and places the product in an customers. We aim to always make excellent position when compared to its this a mutually beneficial relationship competitors. with our customers, who are keen to With the product already compliant with further get the best possible return on Australian and Samoan Government Steve Tanzer their investment, as well as capitalise on conditions, a strategic goal was set to Student Management the efficiencies that are provided as we deliver a payroll product for the New improve and expand on our offerings. Zealand market. This goal has now The other significant achievement this been met and the Human Resource & year is our continued success in the Payroll product is ready for deployment United Kingdom market. With successful in the New Zealand market, with early sales and implementations in a number adopting customers having commenced of key vertical markets to organisations implementation. Robert Williams including the Institute of Education, the This provides significant opportunities in Works & Assets Royal Liverpool Children’s Hospital, and New Zealand in the forthcoming financial Strathclyde Partnership for Transport, we year as customers are now able to benefit are building a platform of experience and from a complete suite of integrated credibility from which we will continue enterprise software solutions. This will strong growth in the coming years. further enhance our ability to secure The previous year has seen significant new customers through best-in-class or development to support our United enterprise driven sales opportunities. Roger Manu Enterprise Content For personal use only use personal For Kingdom strategy, with a continued Service delivery to customers has focus on the delivery of country- Management improved steadily over the course of the specific product capability to ensure our financial year, with the consulting group continued penetration into this market. experiencing excellent growth across Our R&D teams have been working all regions. A number of initiatives have very closely with our staff in the United been delivered which have resulted in Kingdom to ensure the success of this significant customer benefit. endeavour. John Vickers Plus
Technology One Limited 2008 Annual Report n 21 Review of Operations - General Managers continued
We will continue to focus on customer services, workflow optimisation, education, combining structured public consolidation of purchase orders, and training courses with our ongoing optimisation of stock holdings. investment in user assistance: a The outcome of our growth strategies company-wide initiative involving the re- combined with the sharp focus of our architecture of the way we deliver online sales team has delivered significant help utilising business orientated topics growth in licence revenue from our with more intuitive visual categorisation. existing customer base throughout the Our support centre has new leadership past 12 months. We attribute this to and a renewed focus, which customer our customer focus and the continued feedback informs us is delivering an development of functionality that has enhanced customer experience. opened up and solidified opportunities A number of new modules will be in our key vertical markets. This is released in the course of next financial evident in the work that has been year and, with ongoing opportunities carried out to meet the needs of the in Australia and New Zealand, we Health, Community Services, and Not remain committed to delivering an for Profit market, which has resulted in integrated, best-in-class Human Resource a major success with Healthscope Ltd, Management System to ensure our who are rolling our solution across 47 customers continue to make better hospitals and within their corporate “The Financials people-related decisions. operations. solution We see Health, CommunityServices Supply Chain and Not for Profit as an exciting automates Richley Down (acting) growth area for Supply Chain that The previous financial year represented will lead our solutions with industry processes significant positive change for specific capability. This growth is TechnologyOne Supply Chain, with a coupled with our continued success in and enables significant refocus towards functionality targeting new geographical markets for our key vertical markets, including such as the United Kingdom, where we us to update a reassessment of its price structure. are successfully combining our Supply This has resulted in the development Chain offering with TechnologyOne information of a profitable business unit and a Financials. instantly and successful year overall. The demonstrable value There are strong opportunities for TechnologyOne Supply Chain provides accurately.” continued steady growth for Supply Chain and the continued execution of through expansion into the Australian our strategy will see this product and New Zealand markets. However, due continue to contribute strongly to Fred Pieterse to the degree of penetration the product TechnologyOne’s bottom line and potentially open up new opportunities Police Credit Union’s CFO already experiences in these markets, growth would be somewhat restricted in our key vertical markets. via this strategy alone. Significant Business Intelligence and growth opportunities for this product lie Budgeting in selling new modules into the existing Peter Gill TechnologyOne customer base, as well as TechnologyOne released its taking the product to new geographies. expanded Business Intelligence suite One of our major successes has been of products in 2007. Prior to this, in selling Supply Chain into our existing TechnologyOne had very successfully customer base. R&D has engaged heavily provided reporting and basic business with our customers and, as a result, there intelligence capabilities through its has been a great focus on the delivery of XLOne reporting solution. Market new, relevant modules. These modules research, however, indicated that have been focused on enabling true cost customers were looking for a more savings to our customers, as well as the comprehensive business intelligence
For personal use only use personal For requirements of our key vertical markets. ‘umbrella’ that would gather One of the key advantages we face when information from all of their systems selling the Supply Chain solution is the to provide an integrated view of their quantifiable cost savings it can generate. operational performance. By identifying relevant ‘cost pockets’ To meet this demand, we initially for each transaction in the Supply Chain released the Business Intelligence process, we can provide opportunities Dashboard, Business Intelligence to reduce costs, and therefore offer Analysis and Enterprise Budgeting customers a genuine return on their modules in September 2007. These investment. Cost reductions can be modules were developed to meet the achieved in areas such as B2B web measuring, monitoring, reporting,
22 n 2008 Annual Report Technology One Limited analysis, and planning requirements The added benefit of this approach is that gains through roles and workplaces of the ‘Business Intelligence Cycle’. in selling our Business Intelligence suite and the various customer self-service Our initial target market has been the as a stand-alone solution, we are creating facilities it provides. TechnologyOne Financials customer base, a new pipeline of customers that in turn During the past year we have released due to the distinct advantages around represent opportunities for the rest of our two new versions of the Property & integration and data awareness we House of Products. Rating solution, which provides a raft already possess within this group. of new functionality, including the This has proved to be a sound strategy, Property & Rating continued migration of key ‘classic’ and we have successfully sold Business Michael Preedy functionality to the Connected Intelligence to more than 70 sites and It has once again been another very Intelligence environment; this process produced a strong pipeline for the next successful year for the Property & Rating is scheduled for completion in the financial year. Of these sales, 64 were for solution. We continued to dominate next release. We have also released the Enterprise Budgeting module, which the local government market, especially the first phase of the new Water has been the most successful of the new within the medium to large councils and Management functionality, support offerings in the past 12 months. While successfully progressed our move into the for Office 2007 and Vista, enhanced the majority of sales have been to our water authority sector. integration capabilities with third party Financials customers, this trend is moving Our sales have exceeded projections, products including GIS and increased towards combined sales over our entire increasing new business sales for the regulatory functionality, with a focus solution suite, as well as opportunities Property & Rating solution by more than on key eBusiness areas. Enhancements with our existing customers over their 50%. This includes the addition of new to support new mailing discounts third party solutions. local government sites in the Northern offered by New Zealand Post and to This deliberate deployment strategy, Territory, the Shire of Busselton, address the changes to the electoral along with an aggressive R&D strategy Townsville City Council, the City of Ryde, roll for Victorian councils has also been to deliver on our current functionality the City of Fremantle, Wangaratta Rural undertaken. roadmap, will produce a best-in-class, City Council, and a major contract with With the migration to Connected stand-alone business intelligence solution the Papua New Guinea Department of Intelligence almost complete, we within a two year timeframe. Lands. We have also added new water are now focused on providing new The impressive success of the Enterprise authorities to our portfolio, including functionality to the Property & Rating Budgeting module shows our research Grampians Wimmera and Mallee Water, solution. We are working closely with into the points of pain that organisations and Southern Rural Water. our customers to achieve this, and have experience around the budgeting The Property & Rating consulting team formed working groups to help provide process were more pronounced than has grown by 30% over the last financial direction for the new functionality. This originally thought. Budgeting was an year to accommodate the needs of our process is underway for new modules area that we had identified as a point growing customer base. The team’s that will be delivered as a part of of concern for most organisations and, utilisation rates are extremely high and the next release, including: Mobility with the implementation of this solution, they have successfully implemented the Solutions, ePlanning Enhancements, organisations can devolve the budgeting solution for seven new organisations over Developer Levies and Water process and link business drivers to the past year. Management. financial implications, rather than the All new customers use our Connected Throughout the past year we have other way around. This is a massive Intelligence platform, which provides engaged more with our customers point of difference for this product when our customers with seamless integration and strengthened our relationships compared to the competition. across their enterprise solution suite. with users. To do this we have held By combining our Performance Planning Connected Intelligence also provides our local government executive briefings, software with our Budgeting and Business customers with significant efficiency Solutions Showcases, and sponsorship Intelligence products, TechnologyOne of user groups and industry conferences. is now able to deliver a more complete strategy-to-execution offering in the business intelligence marketplace, which Product Analysis - Licence Fees completes our Corporate Performance Management (CPM) capabilities. $(000) This strategy provides us with both a 8,000 strong short and long term revenue 7,000 stream. The short term strategy of selling
our Business Intelligence solutions into 6,000 For personal use only use personal For our customer base across our existing 5,000 product suite has been very successful. 4,000 We expect this revenue stream to continue to generate strong returns for 3,000 at least the next two years. The long 2,000 term strategy is to develop expanded 2007 capabilities that will be attractive to our 1,000 2008 existing customer base, but which will 0 also open up significant best-in-class Financials Business Property Works ECM Student Human opportunities for organisations that are & Supply Intelligence & Rating & Assets Management Resource not currently TechnologyOne customers. Chain & Payroll Technology One Limited 2008 Annual Report n 23
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2008 0 Central North West Asia Pacific United Kingdom TechnologyOne: helping the National Heart Foundation build healthier communities through best-in-class enterprise
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24 n 2008 Annual Report Technology One Limited Review of Operations - General Managers continued
Performance Planning Student Management Our customer engagement model has Peter Gill Steve Tanzer also been reviewed to ensure we develop TechnologyOne has been delivering the This has been a very busy year for the deeper and broader relationships with Performance Planning solution for almost Student Management solution, with our customer base. Planning has also three years. In this period, the solution James Cook University going live with begun for future developments of the has gained traction in the market place TechnologyOne Student Management Student Management solution, which as a quality corporate performance and a number of new institutions will incorporate curriculum management, management tool. implementing the new Connected special consideration and appeals management, and reporting for the In August 2008, TechnologyOne acquired Intelligence version of this solution, vocational education and training sector. Outcome Manager and its software of the including the University of Melbourne, same name, which TechnologyOne had Queensland University of Technology, Works & Assets been delivering as Performance Planning and La Trobe University. Robert Williams (via an original equipment manufacturer The migration of the Student relationship), and which is how it will Management solution to our latest The past year has been a year of growth continue to be branded. technology release, Connected and development for the Works & Assets solution. In September 2008 we We are really excited about the Intelligence, has been substantially achieved a milestone of 100 Works & opportunities this product presents and completed this year. This means that of Assets customers with existing customer, work is already underway to expand the the four Student Management systems Environmental Bay of Plenty in New development team to rapidly extend commonly marketed in Australia, Zealand, purchasing the solution. This the capabilities of the solution. When TechnologyOne is the only enterprise totals 40 new Works & Assets sales to implemented in combination with software solutions provider offering a new existing and new customers in the last 12 TechnologyOne’s Budgeting and Business technology platform. This is a significant months. Total product revenue increased Intelligence solutions, Performance and positive competitive differentiator substantially on last year with very strong Planning enables us to deliver a complete for us in new market opportunities. licence revenues growth. strategy-to-execution corporate Our education sector customers are performance management offering to the all enthusiastic about the Connected This year has also seen the Works & marketplace. Intelligence platform, especially around its Assets solution successfully positioned capability to deliver proactive information into an expanded number of markets. There are a number of immediate and ease of use. With sales to organisations in the opportunities to cross-sell the Performance property development, construction, Planning solution to existing customers TechnologyOne Student Management has mining, Federal Government, facilities at a Local, State and Federal Government been selected as the preferred solution management, and education sectors, the level. A focus will be to develop this into in five of the last seven competitive solution is being implemented beyond the an end-to-end risk and sustainability evaluation and selection processes by traditional Local Government market. The management solution to aid compliance the Australian Higher Education sector, Local Government market did however with environmentally sustainable business which is a positive gauge of our market continue to be a significant customer requirements, as well as to view the acceptance. for the Works & Assets solution, with 18 ongoing management and visibility of risk To better service our recent growth sales into this sector. in major projects. and existing customers, the Student A combination of product maturity and With compliance and measurement Management team has doubled its R&D increased staffing levels has seen greater emerging as a major focus for Government, and support teams, and the consulting utilisation of the capability available this software will be used as a key driver to team has been expanded by more than within the Works & Assets solution. help manage and track the performance of 200%. With both new and current customers organisations in this sector. The Student Management solutions team utilising the project costing and project has delivered two new releases over the Our longer term strategy will be to target management aspects of the solution, the past 12 months. These releases are the other existing TechnologyOne markets, product is gaining market acceptance as result of collaborative developments including higher education, corporations, more than just an asset management in partnership with the University of healthcare, aged care and community care solution. The development of the Melbourne and Queensland University organisations. Operating in an increasingly Contract Management module further of Technology, and have delivered regulated environment, this solution enhances this capability, enabling all benefits for all our customers. These is positioned to appeal to a number types of contracts to be managed. of organisations within these sectors include Rewards, Scholarships and Prizes Consultation with our customers from because of the need to develop strategies (a comprehensive method of managing, many sectors has provided invaluable for establishing, tracking, managing and administering and bestowing rewards, input into product enhancements. The For personal use only use personal For measuring organisational activity. prizes, scholarships, gifts and bursaries), eApplication, (a web-based interface to R&D team has delivered a number of Because of the close partnership we enable prospective and current students key product enhancements, including had with Outcome Manager, the to apply for study), and Student Online purchasing contracts, claim processing, Performance Planning solution already Request Forms (interactive online period-based project budgeting, assets as operates in our Connected Intelligence forms that can be used for surveys, a resource, and the creation of additional environment. We are targeting a rapid questionnaires, applications, and leave of public components to assist in integration conversion of all aspects of the software to absence requests). with third party applications. Connected Intelligence and all our further development will be on this platform, allowing us to provide a truly integrated solution to our customers. Technology One Limited 2008 Annual Report n 25 Review of Operations - General Managers continued
In line with our vision to provide a customers are growing as a result of the Plus best-in-class asset maintenance solution, increasing awareness of the new solution John Vickers set. As part of the strategy to move the R&D team has also delivered The TechnologyOne Plus group, into the State and Federal Government additional functionality in the Asset formerly called Project Services, sectors, we undertook an assessment of Maintenance modules, which will develops and supports customised our ECM solution against the Australian continue to evolve over subsequent software to meet customer-specific and International Standard for Record releases and further enhance the requirements where a product will not Keeping (AS/ISO 15489). This review product’s relevance to our target markets. satisfy their needs. The consulting team has expanded, confirmed that ECM provides all the tools that organisations need to operate a As a growing part of the driven by the increase in demand TechnologyOne business, we are for implementation services as more record keeping program to comply with this standard. particularly excited about the long term customers purchase and make better opportunities for this group. To drive We have also completed an assessment utilisation of the Works & Assets product. this growth we have appointed a new against the National Archives, new This year saw the appointment of a General Manager with strong leadership metadata standard and high degree National Works Consulting Manager and skills and extensive experience in of compliance was confirmed. a substantial increase in consulting staff. business development, particularly Compliance with these standards ensures During the year, 14 customers went live within the government sector which is a TechnologyOne is a serious contender with the Works & Assets solution. key, and proven, target market for Plus. for both State and Federal Government The activities undertaken this year in Throughout the year, Plus has won R&D, consulting and marketing position business in the enterprise content management space. a number of key deals, including a the Works & Assets team well to redevelopment project for Queensland In view of this move into the Government continue its growth in existing customer Sugar Limited, a long term contract with sector, significant work has been bases and new markets throughout the the Department of Natural Resources conducted to provide an eMinisterials forthcoming financial year. and Water in Queensland, and brought solution for the market. ECM plans to the ATLAS grants management project be the defacto standard for Ministerial Enterprise Content Management for Victoria Legal Aid and New South correspondence and the work completed Roger Manu Wales Legal Aid Commission to its final to date strongly places us in a position to In November 2007 TechnologyOne stage of testing. achieve this goal. acquired Avand and its enterprise content The Plus team is planning for significant An independent assessment of our management solution, DataWorks. growth over the next five years, Minutes Manager module has confirmed The transition of the business into employing a strategy of increased that it is significantly ahead of the TechnologyOne is in its final stages focus on developing new business competition in this space, and that it and this has accelerated with the opportunities, as well as an improved provides significant opportunities to appointment of a new General Manager focus on sales. in May 2008. Rebranding of the solution position the ECM solution into market The group will extend its service offering from Avand Pty Ltd’s DataWorks to sectors that have not been previously to include a consulting capability, which TechnologyOne Enterprise Content exploited. will enable it to substantially increase its Management (TechnologyOne ECM) in As well as complementing target market and develop deeper and alignment with the House of Products TechnologyOne’s House of Products more mutually beneficial relationships model will be completed in 2008. The offering, the ECM solution has strong with customers, as well as further TechnologyOne ECM team has relocated functional capabilities and this is establish itself as a serious competitor to new offices and there is a new and what presented itself as a significant to the other major vendors in this space. revitalised management team. opportunity for TechnologyOne. Work The Plus team will continue to leverage This year, customer focus has been is currently underway to integrate the its strong track record of building lasting the number one priority. Through the ECM product with the TechnologyOne and effective partnerships with its rapid adoption of company policy and solution suite to take advantage of the customers by maintaining its disciplined procedure we have seen service delivery benefits of the Connected Intelligence focus on exceptional execution and and support improve significantly, with technology. Our next release will be service delivery capability. Plus will customer satisfaction levels increasing delivered during the first quarter of 2009, continue to emphasise its superb in the last part of the financial year. and will capitalise on the benefits of reputation for service execution, Resolution rates also began a steady rise Connected Intelligence, which will provide dependability and consistency in from 31% in March 2008 to more than a significantly improved user experience. completing its assignments on time, 70% in June 2008. There has been a 15% In summary, the transition has occurred on cost, and to client satisfaction. reduction in the overall request numbers according to our expectations and we For personal use only use personal For Plus will remain contemporary and throughout the year. expect the coming financial year to be competitive by ensuring that its services highly successful with sales into new Of equal importance are sales and remain at the forefront of development market sectors. increasing our customer footprint. The techniques and methodologies. TechnologyOne ECM solution is a natural fit into the House of Products model and cross-selling opportunities to existing
26 n 2008 Annual Report Technology One Limited Employer of Opportunity
Our People Our Staff Programs Our continued success is attributable to In our efforts to nurture the next the numerous talented people that are generation of leaders, our graduate employed at TechnologyOne. Our people recruitment program continues to give have always been our most important graduates the opportunity to create and and valuable asset, and this be involved in the delivery of world-class will continue into the future. It is their software solutions. skills, commitment and hard work that We are one of only a few business has enabled the organisation to software developers in Australia continue to meet the challenges that creating solutions from the ground up, rapid growth brings. giving graduates much sought-after “We chose With the demand for IT professionals opportunities to work in a contextualised increasing world wide, our recruitment and relevant workplace. TechnologyOne strategies are addressing this issue. With the introduction of our Club Grad The HR team has increased and we program last year, we have successfully Financials have broadened our skill-set in order created a welcoming and fun atmosphere to drive recruitment initiatives at an for the graduates. This has proven (previously international level. to be a great introduction to both With a strong focus on retaining and TechnologyOne and its culture, while at called employing our excellent staff, we the same time ensuring the graduates are continue to see the rewards of these provided with networking opportunities FinanceOne) efforts through a lower than industry and a platform for the exchange of average staff turnover rate, and 110 valuable ideas. over alternative new staff employed this year. We In 2008 TechnologyOne introduced a products on the plan to recruit further new staff in the ‘Buddy’ program for all new, promoted or forthcoming financial year. transferred employees, as well as those market because The successful integration of staff from who have been placed on assignment. the newly acquired companies, Avand This ensures new employees are able to we felt the and Outcome Manager, has been a key connect with existing employees, helping achievement for the organisation. them to settle into the organisation more TechnologyOne As an employer of opportunity we quickly and learn about TechnologyOne’s continue to recruit and retain our culture in a friendly manner. The program solution was remarkable people by: also enhances TechnologyOne’s current induction program and generates high- more cost- • Recruiting and promoting from within level support and guidance, ensuring new the organisation employees’ first experiences with the effective • Providing a strong career path and company are positive. growth opportunities and because We have also implemented a program of • Being a market leader and having a Service Recognition Awards to recognise TechnologyOne brand associated with success longevity of staff service. Approximately • Empowering staff to make a difference one third of employees have been with offered us great • Fostering a culture of teamwork and TechnologyOne for more than five years, innovation and in 2007 more than 160 staff were local support.” recognised for their service of either 5, • Standing strong on our corporate 10, 15 or 20 years. commitment to world’s best practice Mr Nick Pruden The year ahead will see the launch of • Offering high financial rewards a number of new programs, including General Manager – Finance, • Providing ongoing training and support Women at TechnologyOne, a networking Bond University • Expanding our recruitment strategy to forum for our female staff that will offer international employment markets support and guidance to enable them to
further advance their career. For personal use only use personal For
Technology One Limited 2008 Annual Report n 27 The Murray- Darling Basin Commission uses TechnologyOne software to make sure business information
continues to flow. For personal use only use personal For
28 n 2008 Annual Report Technology One Limited Targeted Vertical Markets
Government Health, Community Services TechnologyOne has a proven track and Not for Profit record of providing effective and efficient TechnologyOne presents hospitals, health product functionality and service delivery care, community care, aged care, child for all levels of Government. Our care, and privatised medical facilities, Government solutions offering continues charities and not-for-profit providers to respond to the key concerns of this with an integrated enterprise solution market, maintaining our position as suite that allows them to control costs, one of the very few business software manage facilities and operational activity organisations capable of providing and provide key stakeholders with solutions to emerging or post-conflict accurate financial information. organisations throughout the Asia Pacific region. Utilities Ports and airports, water, gas and “With Local Government electricity authorities have sophisticated TechnologyOne is one of the largest project accounting and asset TechnologyOne providers of enterprise solutions for Local management requirements that are Government, with more than 40% of precisely met with TechnologyOne’s Financials we Australian and New Zealand rates integrated Financials and Works & Assets notices produced using our software. solutions. Our proven ability to deploy a have been able Our integrated Property & Rating solution flexible and comprehensive solution suite is the foundation to our offering and that integrates with specialised systems to reduce the enables the management of property, further supports our market position. land, people and address information time it takes within one central location. Integration Managed Services with other key TechnologyOne to collate and TechnologyOne has recognised the solutions provides organisation-wide fast growing services sector, which produce budgeting, financial management, has expanded as a result of workforce asset management, human resource shortage and need for effective people month-end and payroll, content management and and project management capabilities. performance management solutions. We define this area as the Managed reports from Services sector, and recognise that Financial Services these organisations require powerful between 12 TechnologyOne is a leading provider financial, operational and analytical of back office software solutions to business solutions to effectively run and 14 days to organisations in the financial services their businesses. Organisations in this market, including insurance companies, sector, such as property and construction, less than eight fund managers, building societies, banks media and entertainment, mining and and finance companies. Our integrated engineering, memberships, ICT and days.” solution suite provides financial services corporate services will benefit from organisations with the ability to TechnologyOne’s fully integrated Mr Walter Pratt efficiently and effectively manage and solution suite. Systems Accounting report on core financial, regulatory and Program Analyst for the operational information. Salvation Army Australia Education Eastern Territory More than 50% of universities in Australia count on TechnologyOne to deliver their leading edge software solutions. As a provider of Student Management solutions and a suite of fully integrated enterprise solutions, TechnologyOne delivers unparalleled efficiencies to
For personal use only use personal For institutions in Australia and New Zealand. Our speed to the market in response to legislative changes ensures the breadth and depth of our Education solution suite are key factors behind our success in this market.
Technology One Limited 2008 Annual Report n 29 Our Integrated Solution Suite
TechnologyOne Financials TechnologyOne TechnologyOne Enterprise TechnologyOne Financials delivers Property & Rating Content Management organisation-wide control and integration TechnologyOne Property & Rating is TechnologyOne Enterprise Content of financial information essential to an expansive, functionally rich solution Management tracks, links and creates strategic decision making and improving that covers all aspects of property workflows for both electronic and the bottom line. With rich functionality, management, revenue (rating and water) paper-based content throughout an powerful online enquiries and versatile management, customer management organisation. As a record and document reporting, its unique architecture enables and a wide range of regulatory repository that manages version control creation of an unlimited number of applications. Its unique design provides with predefined access rights, it can ledgers for any range of items, enabling the agility to anticipate and meet the enhance customer service and enforce both macro and micro control and rapidly changing needs of the new process control, whilst improving analysis. self-service, customer-centric business communications management at every model. level of an organisation. TechnologyOne Human Resource & Payroll TechnologyOne TechnologyOne Customer TechnologyOne Human Resource & Performance Planning Relationship Management Payroll is a complete human resource TechnologyOne Performance Planning is a TechnologyOne Customer Relationship management system that empowers total corporate performance management Management allows organisations to organisations to make better solution that enables organisations to manage critical relationships with all people-related decisions. It delivers define strategic goals, outcomes and stakeholders. Offering all the features true integration with other outputs, and measure and manage you would expect from a best-in-class organisational systems, business process performance against them. It delivers a CRM solution, it differentiates itself with automation and career planning and set of integrated, iterative management the ability to cater to the specific needs self-service capabilities. and analytical processes that align the of Local, State and Federal Government, philosophies of quadruple bottom line community service organisations, TechnologyOne Supply Chain reporting to promote improved planning, as well as sales and service focused TechnologyOne Supply Chain automates reporting and organisational performance. organisations. and optimises each stage or ‘cost pocket’ of the purchasing process to deliver TechnologyOne Student TechnologyOne Adapt significant cost savings. Simple to use for Management TechnologyOne Adapt develops even the most distributed organisation, it TechnologyOne Student Management industry specific software extensions delivers advanced workflow to efficiently empowers all stakeholders in an to TechnologyOne’s solution suite. and effectively requisition, order, receive, education institution by providing Based on the team’s innovative and distribute and pay for your organisation’s online, real-time access to user-specific creative efforts to date, Adapt can resources. information in order to self-serve or make also supply a number of modules that effective business decisions. It provides can be customised to meet specific TechnologyOne Business a total education solution that enables requirements, delivering a balance Intelligence students, academics, administrators and between the cost efficiencies of an ‘out of the box’ solution with the TechnologyOne Business Intelligence organisational partners to all connect configurability of a custom built comes data-aware for TechnologyOne through one intuitive application. solution. software to deliver immediate business benefits. From a user-friendly dashboard, TechnologyOne Works & Assets monitor, visualise and take action across TechnologyOne Works & Assets delivers TechnologyOne Plus software system boundaries with an unprecedented integration between TechnologyOne Plus develops custom integrated, real-time, organisation-wide human, physical and financial resources software solutions and services to meet view of key strategic and operational from a single flexible project, asset and customer-specific needs where an ‘out metrics. contract management solution. It delivers of the box’ product will not satisfy their a complete 360 degree view of asset and requirements. Offering a broad range of TechnologyOne Budgeting project management activities through a consulting and project based services, Plus’s expertise spans the system TechnologyOne Budgeting has been totally integrated project management, development lifecycle. In addition, Plus’ designed from the ground up to link work order, asset maintenance, asset managed application service will deliver business drivers to financial implications capitalisation, contract management, billing, timesheet and reporting solution. the appropriate resources to enable - ratheronly use personal For than the other way around. dependable and consistent management Enabling the budgeting process to be of new and legacy applications. devolved throughout the organisation, it meaningfully connects both the business and financial people by being intuitive to use, linking operations with budgeting and forecasting functions.
30 n 2008 Annual Report Technology One Limited Corporate Citizenship
Our continued investment The Showcase Awards for Excellence Other Donations in Schools again received support TechnologyOne endeavours to in the wider community from TechnologyOne this year, with encourage and support the charitable the sponsorship of the Excellence in ensures that our ongoing choices of its employees and, as such, Community or Industry Partnerships success has far-reaching the organisation has matched the funds category. Organised by the Queensland benefits and delivers raised by staff members throughout Department of Education, Training and the year for the following charitable sustainable prosperity the Arts, these awards provide students, organisations: for all. teachers and schools with access to grants. They recognise, celebrate and • Movember Foundation’s beneficiaries Prostate Cancer Foundation of By fostering a strong set of values that reward excellent practice in state schools, Australia and BeyondBlue underpin the way in which we work, our foster a learning culture that supports relationships with our customers, and the sharing excellent practices and create • UNICEF Australia’s Myanmar way in which we engage with our staff professional development opportunities Emergency Appeal and stakeholders, TechnologyOne will for all involved. • RSPCA’s Cupcake Day continue to thrive. • Multiple Sclerosis Australia through Throughout the year this commitment Women in the Community MS Brissie to the Bay Bike Ride has seen TechnologyOne engage in Throughout the year, TechnologyOne • Wilson HTM Brisbane to the Gold numerous activities and events that have has worked to increase the presence of Coast Cycle Challenge benefited the wider community. women in IT and improve opportunities • Youngcare through support of the available to them in the wider Bridge to Brisbane Fun Run Education in the Community community. • Diabetes Australia through The Salvation Army used a donation TechnologyOne sponsored the Queensland Corporate Games from TechnologyOne to assist homeless Postgraduate Students - Information and (soccer) but motivated young people between Communication Technology category at the ages of 12 and 18 to return to the this year’s Smart Women, Smart State • Endeavour Foundation’s Annual education system to complete their Awards. These awards are designed to Rally. studies through the Youth Outreach recognise the achievements of women in TechnologyOne has made additional Service. the science, engineering, and information donations to YMCA Victoria, Cavendish TechnologyOne’s donation was and communication technology fields. Road State High School’s Special distributed through the Brisbane, Sydney, In order to recognise women in the wider Education Unit, PCYC’s Blue Light, as Perth, Adelaide and Melbourne chapters community, TechnologyOne sponsored well as sponsoring eight children in third of the organisation and went towards: the Shine Ball, which was held in support world countries through World Vision Australia and Plan Australia. • Education scholarships – five grants of The Salvation Army’s Pindari Women’s offered to students to fund their Service. This service provides short term education crisis accommodation, counselling, legal Caring for the Environment and medical support, and other services • Lunchtime program for all students TechnologyOne is committed to like employment and housing assistance. – providing perhaps the only meal managing its business operations in an these teenagers enjoy each day environmentally responsible manner. All staff are encouraged to access and • Field trips during the school holidays to adhere to our Environment Policy, – these trips provide productive which is available on our intranet. It entertainment for the students, outlines our commitment to providing replacing less constructive activities an environmentally responsible • Graduation service – to celebrate the workplace, ways to engage in sound students’ successful completion of work practices through reducing waste, their education at the end of the year. and the considered use of energy and In order to stimulate young people’s resources. interest in and knowledge of new technologies, TechnologyOne has continued to sponsor initiatives that will help develop the next generation of IT
professionals. For personal use only use personal For
Technology One Limited 2008 Annual Report n 31 “By bringing in Business Intelligence, it means managers have information on their desktops and can see exactly where they are on a day to day basis.”
Janice Smith Finance Manager, Far North District Council,
New Zealand For personal use only use personal For
Catherine Bartlett Human Resources Manager
32 n 2008 Annual Report Technology One Limited Technology One Limited and Controlled Entities for the Year Ended 30 September 2008.
Directors’ Report 34
Corporate Governance Statement 44
Income Statement for the year ended 30 September 2008 46
Balance Sheet as at 30 September 2008 47
Statement of Cash Flows for the year ended 30 September 2008 48
Statement of Changes in Equity for the year ended 30 September 2008 49
Financial Statements Notes to the Financial Statements 52
Directors’ Declaration 92
Auditor Independence Declaration 93
Independent Audit Report 94 For personal use only use personal For
Catherine Bartlett Human Resources Manager
Technology One Limited 2008 Annual Report n 33 Directors’ Report
The Board of Directors of Technology One Limited (TechnologyOne) (ABN 84 010 487 180) has pleasure in submitting its report in respect of the financial year ended 30 September 2008. Directors The names and details of the Directors in office during or since the end of the financial period are:
Names and Qualifications Experience and Special Responsibilities
Adrian Di Marco Mr Di Marco founded TechnologyOne in 1987, after extensive experience in the software industry in the area BSc, FAICD of large scale fixed time and fixed price software development projects to meet client specific requirements. (Executive Chairman) Mr Di Marco has over 25 years experience in the software industry. He has been responsible for all operational (appointed 8 December 1999) aspects of TechnologyOne, as well as the strategic direction of the Company.
Ron McLean Mr McLean has over 30 years experience in the software industry, having held senior positions in companies in (appointed 8 December 1999) Australia and overseas, including the multi national computer manufacturer NCR Corporation. Mr McLean joined the Board as a Non-Executive Director in 1992, was appointed as a General Manager in 1994, Chief Operating Officer in 1999 and Chief Executive Officer of Operations in 2003. Mr McLean resigned as Chief Executive Officer of Operations on 15 July 2004, and remains a Non-Executive Director.
John Mactaggart Mr Mactaggart has extensive experience across many industries, including export of animal products, food FAICD processing, industrial fasteners, manufacturing of building equipment and computer hardware and software. (Chairman of Executive Mr Mactaggart is a Director of a number of companies. Mr Mactaggart, through JL Mactaggart Holdings Pty Ltd, Remuneration Committee) is a founding shareholder of TechnologyOne. He has been a Fellow of the Australian Institute of Company (appointed 8 December 1999) Directors since 1991.
Kevin Blinco Mr Blinco is a former Chairman and a Director of accounting firm Moore Stephens. His expertise is broadly BBus, FCA respected and acknowledged throughout the business community. He is a Fellow of the Institute of Chartered (Chairman of Audit Committee) Accountants. (appointed 1 April 2004)
Richard Anstey Mr Anstey has over 30 years experience in the information technology and telecommunications industry and AICD, FAIM in associated investment banking roles. For the past 22 years he has been building and managing his own (appointed 2 December 2005) companies. The first, Tangent Group Pty Ltd, established a strong reputation for the development of software and strategic management consultancy for the banking and finance sector. After the sale of Tangent, he co-founded InQbator in 2000, an early stage investment group focused upon the technology, telecommunications and life sciences sector. InQbator manages a federal government backed seed fund and a portfolio of some 14 active companies across Australia. In 2006, Mr Anstey continued his career in venture capital by co-founding iQ Capital Management Pty Ltd, which manages iQ Fund 2. Mr Anstey is a member of the Australian Institute of Company Directors, a Fellow of the Australian Institute of Management, and a member of the Australian Venture Capital
Association. For personal use only use personal For Edward Chung Mr Chung is a Chartered Accountant, Fellow of the Tax Institute of Australia and an Associate Member of the BCom, MCom, CA, FTIA, AICD Australian Institute of Company Directors. Prior to joining TechnologyOne as Operating Officer – Corporate (appointed 14 May 2008) Services, Mr Chung was Chief Financial Officer of Queensland Rail, leading a finance team of approximately 300 staff where he was responsible for the areas of accounting, tax and treasury functions, as well as strategy and merger and acquisition activity. Mr Chung’s experience spans corporate law, audit, senior finance and commercial roles in both the public and private sector.
34 n 2008 Annual Report Technology One Limited Company Secretary Experience and Special Responsibilities
David Orchard Mr Orchard joined TechnologyOne in 1994 as Financial Controller. This position was re-assessed to Chief Financial BCom, CA, ACIS Officer on the Company’s Australian Securities Exchange listing in 1999. He became Company Secretary in 1995. (Company Secretary and Chief Unless indicated otherwise, all Directors held their position as a Director throughout the entire financial period and Financial Officer) up to the date of this report.
Directors’ Interests Relevant interests of the Directors in the shares of the Company, as at date of this report are:
Ordinary Shares
A Di Marco (Masterbah Pty Ltd) 55,378,500 R McLean (RONMAC Investments Pty Ltd) 500,000 J Mactaggart (JL Mactaggart Holdings Pty Ltd) 66,902,500 K Blinco (Assembly Road Pty Ltd) 201,285 R Anstey 15,000 E Chung —
Refer to Note 20 for further information concerning Directors’ interests. For personal use only use personal For
Technology One Limited 2008 Annual Report n 35 Directors’ Report continued
Directors’ Meetings The number of meetings of the Board of Directors and of Board Committees during the year were:
Board or Committee Number of Meetings
Full Board 9 Audit 4 Executive Remuneration — Nomination 1
The attendance of Directors at meetings of the Board and its Committees were:
Executive Full Board Audit Remuneration* Nomination
A Di Marco 9 — 1 R McLean 9 — 1 J Mactaggart 9 4 — 1 K Blinco 9 4 — R Anstey 8(9) 4 E Chung 4(4)
Where a Director did not attend all meetings of the Board or relevant Committee, the number of meetings for which the Director was eligible to attend is shown in brackets.
As at the date of this report, the Company had an Audit Committee of the Board of Directors, which met five times during the year. The details of the functions and memberships of the other Committees of the Board are presented in the Corporate Governance Statement.
* The Executive Remuneration Committee did not meet during the financial year ended 30 September 2008. This was because the Committee met during the Company’s 3 month transitional period ending 30 September 2007, which set the Directors’ and Executives’ remuneration for the period
ending 30 September 2008. The committee met on 7 November 2008. For personal use only use personal For
36 n 2008 Annual Report Technology One Limited Corporate Structure
Technology One Limited Group of Companies As at 30 September 2008
Technology One Limited
100% 100% 100% 100%
Technology One Technology One Technology One Avand New Zealand Ltd Corporation SDN BHD UK Limited Pty Ltd
Principal Activities
The principal activity of Technology One Limited (the Company) during the financial year was the development, marketing, sales, implementation and support of fully integrated enterprise business software solutions, including:
TechnologyOne Financials TechnologyOne Human Resource & Payroll TechnologyOne Supply Chain TechnologyOne Business Intelligence TechnologyOne Budgeting TechnologyOne Property & Rating TechnologyOne Student Management TechnologyOne Works & Assets TechnologyOne Enterprise Content Management TechnologyOne Performance Planning TechnologyOne Customer Relationship Management
The Company also provides custom software development services for large scale, purpose built applications.
Results
The profit of the consolidated entity for the financial year was $17,229,000 after income tax. Dividends
The following dividends of the Company have been paid, declared or recommended since the end of the preceding financial year: On Ordinary Shares $000
Interim dividend (franked to 100%) for 2008 paid 20 June 2008 4,991
Final dividend (franked to 100%) for 2008 as recommended by the Directors 7,322 For personal use only use personal For
Technology One Limited 2008 Annual Report n 37 Directors’ Report continued
Review of Operations
On behalf of Technology One Limited (TechnologyOne) we are pleased to announce the Company’s fifth consecutive year of record revenues and profit.
Revenue for the year has grown strongly, increasing by 41% to take us to $110 million. Our Net Profit Before Tax (NPBT) also increased by 17% to $23.13 million.
These results have been achieved over a period of significant upheaval in the financial markets, and this is a good indicator of the strength of our business and the importance placed by our prospective customers on their enterprise software systems.
Analysis of Performance
Highlights of our results are as follows:
• Net Profit After Tax (NPAT) up 17% to $17.23 million • Net Profit Before Tax (NPBT) up 17% to $23.13 million • Revenue up 41% to $110.2 million • Licence fees up 23% to $22.6 million • Consulting revenue up 59% to $35.8 million • Plus/Project Services revenue up 17% to $10.5 million • R&D expenditure up 53% to $21.2 million, representing 19% of revenue, fully expensed as incurred during the year • Expenses excluding R&D up 47% to $65.9 million.
For more detailed information, please see the Letter to Shareholders, Review of Operations - Operating Officers and Review of Operations - General Managers.
Significant Changes in the State of Affairs
Refer to Acquisitions above in the Review of Operations.
Significant Events after Year End
The Company will pay a fully franked final dividend on 19 December 2008 of $7,322,308.
Shares and Options
Details of shares and options held by directors are set out in Note 20 of the Financial Statements and form part of this report. Details of options issued to employees are set out in Note 14 of the Financial Statements and form part of this report.
Remuneration Report (Audited)
This Remuneration Report outlines the director and executive remuneration arrangements of the Company in accordance with the requirements of the Corporations Act 2001 and its Regulations. For the purposed of this report Key Management Personnel (KMP) of the Company are defined as those persons having authority and responsibility for planning, directing and controlling the major activities of the Company, directly or indirectly, including any Director (whether executive or otherwise) of the Parent Company, and includes the five executives in the Parent and the Company receiving the highest remuneration.
For the purposes of this, the term ‘executive’ encompasses the Executive Chairman, senior executives, operating officers and secretaries of the Parent and
the Company. For personal use only use personal For
38 n 2008 Annual Report Technology One Limited Remuneration Report Details of remuneration provided to Directors and to the Key Management Personnel are as follows: Long Term Emoluments Performance Share Base Directors’ Related Super- Retirement Options Financial Salary Fee Bonus** annuation Benefits Granted* Total Year $ $ $ $ $ $ $
Directors A Di Marco 1/10/07-30/9/08 377,531 33,748 374,554 33,020 — — 818,853 (Executive) 1/7/06-30/6/07 361,990 30,680 337,141 28,833 — — 758,644 1/7/07-30/9/071 91,985 7,670 23,881 7,450 — — 130,986
R McLean 1/10/07-30/9/08 — 33,748 — — — — 33,748 (Non-Executive) 1/7/06-30/6/07 — 30,680 — — — — 30,680 1/7/07-30/9/071 — 7,670 — — — — 7,670
J Mactaggart 1/10/07-30/9/08 — 33,748 — — — — 33,748 (Non-Executive) 1/7/06-30/6/07 — 30,680 — — — — 30,680 1/7/07-30/9/071 — 7,670 — — — — 7,670
K Blinco 1/10/07-30/9/08 — 33,748 — — — — 33,748 (Non-Executive) 1/7/06-30/6/07 — 30,680 — — — — 30,680 1/7/07-30/9/071 — 7,670 — — — — 7,670
R Anstey 1/10/07-30/9/08 — 33,748 — — — — 33,748 (Non-Executive) 1/7/06-30/6/07 — 30,680 — — — — 30,680 1/7/07-30/9/071 — 7,670 — — — — 7,670
S Larwill 1/10/07-30/9/08 — — — — — — — (Non-Executive) 1/7/06-30/6/07 — 10,590 — — — — 10,590 (Retired 3/11/06) 1/7/07-30/9/071 — — — — — — —
E Chung (i) 1/10/07-30/9/08 190,766 12,655 87,103 17,169 — 27,532 335,225 (Executive) 1/7/06-30/6/07 — — — — — — — (Appointed 14/05/08) 1/7/07-30/9/071 — — — — — — —
Total Directors, 1/10/07-30/9/08 568,297 181,395 461,657 50,189 — 27,532 1,289,071 Remuneration 1/7/06-30/6/07 361,990 163,990 337,141 28,833 — — 891,954 1/7/07-30/9/071 91,985 38,350 23,881 7,450 — — 161,666
1 We are required to provide the 3 months ending 30 September 2007 because of the transition to a September Year End. We do not believe the 3 months
ending September 2007 to be meaningful and it cannot be extrapolated to provide a 12 month equivalent figure. For personal use only use personal For
Technology One Limited 2008 Annual Report n 39 Directors’ Report continued
Remuneration Report Details of remuneration provided to Directors and to the Key Management Personnel are as follows: Long Term Emoluments Performance Share Base Directors’ Related Super- Retirement Options Financial Salary Fee Bonus** annuation Benefits Granted* Total Year $ $ $ $ $ $ $
Key Management Personnel R Down 1/10/07-30/9/08 194,191 — 245,171 17,478 — 88,562 545,402 (Operating Officer, 1/7/06-30/6/07 186,124 — 313,225 16,792 — 68,257 584,398 New Business 1/7/07-30/9/071 47,303 — — 4,314 — 24,966 76,583 Development)
M Culverson 1/10/07-30/9/08 163,728 — 329,544 15,964 — 76,985 586,221 (Operating Officer, 1/7/06-30/6/07 157,691 — 193,196 14,192 — 52,962 418,041 Consulting Services) 1/7/07-30/9/071 39,883 — — 3,637 — 19,381 62,901
R Phare 1/10/07-30/9/08 163,728 — 329,544 15,964 — 47,352 556,588 (Operating Officer, 1/7/06-30/6/07 156,926 — 193,196 14,124 — 32,109 396,355 Sales and Marketing) 1/7/07-30/9/071 39,883 — — 3,637 — 11,714 55,234
P Cameron 1/10/07-30/9/08 183,574 — 91,545 16,522 — 54,414 346,055 (Operating Officer, 1/7/06-30/6/07 175,947 — 78,118 15,836 — 38,040 307,941 Research & 1/7/07-30/9/071 44,717 — — 4,078 — 13,883 62,678 Development)
D Orchard 1/10/07-30/9/08 145,641 — — 13,109 — 13,548 172,298 (Chief Financial 1/7/06-30/6/07 127,522 — — 11,478 — 6,911 145,911 Officer and Company 1/7/07-30/9/071 33,257 — — 2,993 — 2,993 39,243 Secretary)
Total Remuneration: 1/10/07-30/9/08 850,862 — 995,804 79,037 — 280,861 2,206,564 Key Management 1/7/06-30/6/07 804,210 — 777,735 72,422 — 198,279 1,852,646 Personnel 1/7/07-30/9/071 205,043 — — 18,659 — 72,937 296,6396
1 We are required to provide the 3 months ending 30 September 2007 because of the transition to a September Year End. We do not believe the 3 months ending September 2007 to be meaningful and it cannot be extrapolated to provide a 12 month equivalent figure.
(i) E Chung joined TechnologyOne on 5 November 2007 as Operating Officer – Corporate Services and was appointed a Director on 14 May 2008. The remuneration presented is from 5 November 2007.
The percentage of remuneration comprising options and performance related bonus was: E Chung 34.1%, R Down 61.1%, M Culverson 69.3%, R Phare 67.7%, P Cameron 42.1% and D Orchard 7.9%. All Directors and Key Management Personnel who were entitled to a performance related bonus received their full entitlement. * The values of options granted as part of remuneration are estimates only. The estimates are based on the degree of probability of future performance hurdles being met, combined with the use of the binomial option pricing model.
** The objective of the Bonus program is to link the achievement of the Company’s profit target with the remuneration received by the executives charged with meeting those targets in the current financial year. On this basis all incentives are short term. The incentive is based on the relevant
divisions, for each executive, Net Profit Before Tax (NPBT) figure. NPBT has been chosen as it is the key indicator of performance. It is calculated in For personal use only use personal For accordance with statutory reporting requirements. In accordance with the disclosure requirements of Section 300A (a) (c) of the Corporations Act 2001, the above key management personnel are the five relevant group executives who received the highest remuneration for the period.
40 n 2008 Annual Report Technology One Limited Remuneration Practices The Executive Remuneration Committee of the Board of Directors of the Company is responsible for determining and reviewing compensation arrangements for the Executive Chairman (EC) and the Key Management Personnel (executives). The remuneration of the Directors is approved at an Annual General Meeting of the shareholders. The Company’s constitution and the ASX listing rules specify that the aggregate remuneration of non-executive directors shall be determined from time to time by a general meeting. An amount not exceeding the amount determined is then divided between the Directors as agreed. The latest determination was in 1999 at the time of the Company’s ASX listing, when shareholders approved an aggregate remuneration of $300,000 per year. In the 2008 year, Directors’ fees of $181,395 were paid. No additional fees are paid for each Board Committee on which a Director sits. In considering the remuneration to be paid to executives, the following principles are applied: • The Company should provide the packages needed to attract, retain and motivate highly talented and experienced executives. • The Company should judge where to position itself relative to other companies. This involves being aware of comparable companies’ pay, but to exercise caution. • The Company should be sensitive to the wider scene, especially with regard to salary increases. • Performance related elements should form a significant proportion of the package, should align interests with those of shareholders and should provide keen incentives. • The performance of the Company depends upon the quality of its Directors and executives. To prosper, the Company must attract, motivate and retain highly skilled Directors and executives. • Lastly, the Company must take in specific and unique conditions that may apply in individual circumstances in order to attract and retain the right executive team in the long term. The Company aims to reward executives with a level and mix of remuneration commensurate with their position and responsibilities within the Company and so as to: • Reward executives for Company, business unit and individual performance against targets • Align the interests of executives with those of shareholders • Link reward with the strategic goals and performance of the Company • Ensure total remuneration is competitive by market standards. Remuneration consists of the following key elements: • Fixed remuneration • Incentive component (performance related bonus) • Long term incentive component (options).
Fixed Remuneration The level of fixed remuneration is set so as to provide a base level of remuneration which is both appropriate to the position and is competitive in the market. Executives are given the opportunity to receive their fixed (primary) remuneration in a variety of forms including cash and fringe benefits such as motor vehicles.
Incentive Component The objective of the incentive program is to link the achievement of the Company’s profit target with the remuneration received by the executives charged with meeting those targets. The target incentive component of the executives’ remuneration ranges between 8% and 70% of their total remuneration. This relatively large component is evidence of the Company’s requirement for executives to perform well in order to attain their target remuneration. For each executive, the incentive is based on the relevant division’s, NPBT figure. NPBT has been chosen as it is the key indicator of performance. It is calculated in accordance with statutory reporting requirements.
Long Term Incentives The objective of having long term incentives for executives is to reward executives in a manner which aligns this element of remuneration with the Company’s interests. By having an equity interest in the Company, it aligns the executives’ actions with the interests of shareholders. The executives must meet continued service conditions in order to exercise these options. The options became exercisable over five separate tranches, commencing in July 2007. Share options are granted to executives at the discretion of the Executive Chairman based on the option plan approved by the Board. The exercise price of the options is set based on future expected share price movements. The options vest if and when the executive satisfies the period of service contained in each option grant. The contractual life of each option varies between two and five years. There are no cash settlement alternatives. The Executive Chairman has the discretion to increase the price of the options.
For personal use only use personal For The Company does not have a policy governing employee risk management for personal exposures on equity instruments such as options.
Technology One Limited 2008 Annual Report n 41 Directors’ Report continued
Company Performance The graph below shows the performance of the Company (as measured by the Company’s NPBT) and the comparison of the Company’s NPBT with its earnings per share (EPS) and dividends per share (DPS) over the last five years.
Technology One Limited - EPS, DPS and NPBT
7.00 25,000
6.00 20,000
5.00
15,000 4.00
EPS 3.00 10,000 DPS NPBT ($000) Cents per share 2.00 NPBT
5,000 1.00
0 0 2004 2005 2006 2007 2008
* Note: 2007 information presented above relates to 30 June 2007 and 2008 relates to 30 September 2008.
June 2005 June 2006 June 2007 Sept 2007 Sept 2008
Share price at year end $0.52 $0.68 $1.22 $1.10 $0.90
Employment Contracts The Executive Chairman, Mr Di Marco, is employed under contract. The current employment contract commenced on 1 December 1999 and continues until terminated in accordance with the agreement. Under the terms of the present contract: • Mr Di Marco may resign from his position and thus terminate this contract by giving not less than three months’ written notice. • The Company may terminate this employment agreement by either providing three months’ written notice or by paying the appropriate proportion of the termination remuneration package in lieu thereof. All other executives are employed on a continuing basis. Apart from termination benefits which accrue under statute, or mentioned above (such as unpaid annual leave, long service leave), there are no retirement benefits for Executive Directors and Executives.
Compensation Options: Granted and Vested During the Year Fair Value Per Exercise Number Option at Price Per First Last Vested No. Grant Grant Option Expiry Exercise Exercise During Granted Date Date ($) ($) Date Date Date the Year %
30 September 2008
Directors E Chung 1,000,000 5/5/08 $0.37 to $0.41 Nov 2019 Nov 2010 Nov 2014 — — $0.39 30 September 2007 Nil
Options Granted as Part of Remuneration – 30 September 2008 Valuation of For personal use only use personal For Value of Value of Options Remuneration Value of Options Options Granted Consisting of Options Granted Exercised Lapsed Exercised and Options During the Year During the Year During the Year Lapsed During the Year $ $ $ $ %
Directors E Chung 382,465 — — 382,465 8.2
The value of options shown above will be recognised across the vesting period of the options issued. There were no shares issued to Directors or Key Management Personnel on exercise of compensation options during the year.
42 n 2008 Annual Report Technology One Limited Indemnification of Officers Insurance and indemnity arrangements established in the previous year concerning officers of the Company were renewed or continued during the year ended 30 September 2008. An indemnity agreement has been entered into between TechnologyOne and each of the Directors of the Company named earlier in this report and with each full-time executive officer and Secretary of the Company. Under the agreement, the Company has indemnified those officers against any claim or for any expenses or costs which may arise as a result of work performed in their respective capacities. There is a limit of $20,000,000 for any one claim. TechnologyOne paid an insurance premium in respect of a contract insuring each of the Directors of the Company named earlier in this report and each full-time executive officer and Secretary of the Company, against all liabilities and expenses arising as a result of work performed in their respective capacities, to the extent permitted by law.
Rounding of Amounts The Company is a company of the kind specified in Australian Securities and Investment Commission Class Order 98/0100. In accordance with that class order, amounts in the Financial Statements and the Directors’ Report have been rounded to the nearest thousand dollars unless specifically stated to be otherwise.
Auditor’s Independence Declaration to the Directors The Directors received a declaration from the Company’s auditor, Ernst & Young. It is included at the end of the Financial Statements.
Non-Audit Services Non-audit services provided by the Company’s auditor, Ernst & Young, in the current financial period and prior financial year included taxation and statutory compliance assistance in Australia, New Zealand and Malaysia. The directors are satisfied that the provision of non-audit services is compatible with the general standard of independence for auditors imposed by the Corporations Act 2001. Fees for these services were:
Consolidated Parent 12 Months 3 Months1 12 Months 3 Months1 Ended 30 12 Months Ended 30 Ended 30 12 Months Ended 30 September Ended 30 September September Ended 30 September 2008 June 2007 2007 2008 June 2007 2007 $ $ $ $ $ $
Due Diligence 41,410 — — 41,410 — — Taxation Advice 27,977 6,187 53,055 5,350 — 32,303 Compliance Services – taxation and statutory 31,495 9,871 54,821 31,495 2,000 — Total 100,882 16,058 107,876 78,255 2,000 32,303
1 We are required to provide the 3 months ending 30 September 2007 because of the transition to a September Year End. We do not believe the 3 months ending September 2007 to be meaningful and it cannot be extrapolated to provide a 12 month equivalent figure.
This report has been made in accordance with a resolution of directors.
Adrian Di Marco Executive Chairman Brisbane
17 November 2008 For personal use only use personal For
Technology One Limited 2008 Annual Report n 43 Corporate Governance Statement
The Board of Directors of the Company is responsible for its corporate governance. The Board guides and monitors the business and affairs of the Company on behalf of the shareholders by whom they are elected and to whom they are accountable.
The Directors have the authority to delegate any of their powers to committees consisting of such Directors and external consultants, as the Directors think fit. The Board has established an Audit Committee, an Executive Remuneration Committee and a Nominations Committee.
The format of the Corporate Governance Statement is in accordance with the Australian Securities Exchange Corporate Governance Council’s ‘Principles of Good Corporate Governance and Best Practice Recommendations’. In accordance with the Council’s recommendations, the Corporate Governance Statement must now contain certain specific information and must disclose the extent to which the Company has followed the guidelines during the period.
TechnologyOne’s corporate governance practices were in place throughout the year ended 30 September 2008. As noted below, there are some recommendations with which the Company has not complied. These are at the end of the statement. Apart from these, the Company has complied with all of the principles.
The Directors have established guidelines for the operation of the Board. Set out below are the Company’s main corporate governance practices.
Unless otherwise stated, these practices were in place throughout the financial period.
The Corporate Governance Statement is available on the Company’s internet site: www.TechnologyOneCorp.com under the ‘Investor Relations’ area.
Board of Directors and its Committees
Board of Directors
The Directors are: Adrian Di Marco Executive Chairman (and Chief Executive Officer) – major shareholder John Dugald Mactaggart Non-executive Director – major shareholder Ronald McLean Non-executive Director – independent Kevin Phillip Blinco Non-executive Director – independent Richard Charles Anstey Non-executive Director – independent Edward James Chung Executive Director
The Board of Directors operates in accordance with the following broad principles:
• The Board should comprise at least three members, but no more than 10. The current Board membership is six. The Board may increase the number of Directors where it is felt that additional expertise in specific areas is required. The Company believes for its current size, a smaller Board allows it to be more effective and to react quickly to opportunities and threats.
• The Board should be comprised of Directors with an appropriate range of qualifications, expertise and experience.
• The Board shall meet regularly as required and have available all necessary information to participate in an informed discussion of agenda items.
• The Directors are entitled to be paid expenses incurred in connection with the execution of their duties as Directors. Each Director is therefore able to seek independent professional advice at the Company’s expense, where it is in connection with their duties and responsibilities as Directors. The Company policy is that a Director wishing to seek independent legal advice should advise the Board, or if this is not possible the Chairman, at least 48 hours before doing so.
Appointment of Directors
If a vacancy exists, or where the Board considers it will benefit from the appointment of a new Director with particular skills, the Board will interview the candidates. Potential candidates will be identified by the Board, although the Board will be entitled to seek the advice of an external consultant. The Board will then appoint the most suitable candidate who, upon acceptance, will hold office until the next Annual General Meeting, where the appointee must
retire and is entitled to stand for re-election. For personal use only use personal For
44 n 2008 Annual Report Technology One Limited Audit Committee
The Board has established an Audit Committee. The Committee is comprised of:
K Blinco BBus, FCAJ, (Chairman) J Mactaggart FAICD R Anstey AICD, FAIM R McLean (appointed 8 August 2008).
The role of the Committee is to:
• Receive and review reports from the external auditor • Ensure that systems of internal control are functioning effectively and economically and that these systems and practices contribute to their achievement of the Company’s corporate objectives • Direct follow-up action where considered necessary • Relate any matters of concern to the accountable authority • The Committee reviews the performance of the external auditor on an annual basis.
Executive Remuneration Committee
The Board has established an Executive Remuneration Committee. The Committee meets annually.
The Committee is comprised of:
J Mactaggart (Chairman to 8 August 2008) R McLean (Chairman – appointed 8 August 2008) A Di Marco K Blinco R Anstey (appointed 8 August 2008).
The terms of reference of the Committee are to:
• Advise the Board with regard to the Company’s broad policy for executive remuneration
• Determine, on behalf of the Board, the individual remuneration packages for each Executive
• Give the Executives encouragement to enhance the Company’s performance and to ensure that they are fairly, but responsibly, rewarded for their individual contribution.
Non-executive Directors’ remuneration is determined by the Board within the aggregate amount per annum which may be paid in Directors’ fees.
For personal use only use personal For
Technology One Limited 2008 Annual Report n 45 Income Statement for the Year ended 30 September 2008
Consolidated Parent 12 Months 12 Months 3 Months1 12 Months 12 Months 3 Months1 Ended 30 Ended 30 Ended 30 Ended 30 Ended 30 Ended 30 Sept 2008 June 2007 Sept 2007 Sept 2008 June 2007 Sept 2007 Notes $000 $000 $000 $000 $000 $000
Sales Revenue 2 108,491 76,823 16,790 95,729 68,782 15,511 Other Revenue 2 1,724 1,544 342 5,288 4,944 674
Total operating revenue 110,215 78,367 17,132 101,017 73,726 16,185 Sales and marketing expense (11,880) (9,058) (1,884) (10,179) (7,355) (1,614) Occupancy expense (2,897) (1,544) (382) (2,279) (1,270) (306) Administration expense (19,489) (13,635) (4,748) (16,197) (13,631) (4,748) Product distribution and servicing expense (28,804) (18,947) (4,763) (25,950) (17,032) (4,336) Other expense (2,323) (1,194) (533) (1,859) (1,060) (500) Finance expense (180) (94) (36) (173) (94) (36) Equity based compensation expense (359) (286) (77) (359) (286) (77)
Profit from continuing activities before Research & Development expense 44,283 33,609 4,709 44,021 32,998 4,568
Research & Development expense (21,154) (13,837) (4,068) (19,758) (13,830) (4,022)
Profit from continuing activities before income tax expense 23,129 19,772 641 24,263 19,168 546 Income tax expense attributable to continuing activities 3 (5,900) (4,991) (153) (6,219) (4,823) (126)
NET PROFIT 17,229 14,781 488 18,044 14,345 420
Basic earnings per share (cents per share) 18 5.77 4.97 0.16 Diluted earnings per share (cents per share) 18 5.68 4.88 0.16 Dividend per share (cents per share) 4.12 3.75 —
The accompanying notes form an integral part of this Income Statement.
1 We are required to provide the 3 months ending 30 September 2007 because of the transition to a September Year End. We do not believe the 3 months
ending September 2007 to be meaningful and it cannot be extrapolated to provide a 12 month equivalent figure. For personal use only use personal For
46 n 2008 Annual Report Technology One Limited Balance Sheet as at 30 September 2008
Consolidated Parent As at As at As at1 As at As at As at1 30 Sept 30 June 30 Sept 30 Sept 30 June 30 Sept 2008 2007 2007 2008 2007 2007 Notes $000 $000 $000 $000 $000 $000
CURRENT ASSETS Cash assets 5 18,422 25,878 21,426 9,727 22,371 16,845 Investment available for sale 24 (ii) 5,262 2,931 4,175 5,262 2,931 4,175 Receivables 6 19,923 16,911 10,441 17,961 15,165 9,468 Earned and unbilled revenue 3,730 4,671 2,734 3,142 3,742 2,083 Receivables from controlled entities 7 — — — 6,109 2,097 2,887 Other 7 941 805 869 875 1,006 1,091
Total current assets 48,278 51,196 39,645 43,076 47,312 36,549
NON-CURRENT ASSETS Property, plant and equipment 8 5,512 3,519 4,260 5,360 3,401 4,157 Intangible assets and goodwill 9 17,268 9,599 9,592 10,564 9,599 9,592 Deferred income tax asset 3 2,364 772 1,431 2,381 997 1,633 Investments in subsidiaries 25 — — — 9,082 — — Receivables from controlled entities 7 — — — 1,385 950 1,006
Total non-current assets 25,144 13,890 15,283 28,772 14,497 16,388
TOTAL ASSETS 73,422 65,086 54,928 71,848 62,259 52,937
CURRENT LIABILITIES Payables 10 6,736 6,068 3,856 6,206 5,391 3,645 Provisions 11 5,615 3,800 4,239 5,435 3,646 4,123 Income tax payable 2,291 2,161 1,886 2,271 2,043 1,790 Unearned Revenue 4,725 5,944 4,274 4,667 5,918 4,233 Interest-bearing liabilities 12 846 706 649 846 706 649
Total Current Liabilities 20,213 18,679 14,904 19,425 17,704 14,440
NON-CURRENT LIABILITIES Provisions 13 799 883 829 799 883 829 Interest-bearing liabilities 12 1,063 1,212 1,089 1,063 1,212 1,089 Other 833 — — 833 — —
Total non-current liabilities 2,695 2,095 1,918 2,695 2,095 1,918
TOTAL LIABILITIES 22,908 20,774 16,822 22,120 19,799 16,358
NET ASSETS 50,514 44,312 38,106 49,728 42,460 36,579
EQUITY Contributed equity 14 23,863 23,341 23,556 23,863 23,341 23,556 Reserves 15 6,978 6,690 (207) 7,716 7,109 605 Retained earnings 19,673 14,281 14,757 18,149 12,010 12,418
TOTAL EQUITY 50,514 44,312 38,106 49,728 42,460 36,579 For personal use only use personal For
1 We are required to provide the 3 months ending 30 September 2007 because of the transition to a September Year End. We do not believe the 3 months ending September 2007 to be meaningful and it cannot be extrapolated to provide a 12 month equivalent figure.
The accompanying notes form an integral part of this Balance Sheet.
Technology One Limited 2008 Annual Report n 47 Statement of Cash Flows for the Year ended 30 September 2008
Consolidated Parent 12 Months 12 Months 3 Months1 12 Months 12 Months 3 Months1 Ended 30 Ended 30 Ended 30 Ended 30 Ended 30 Ended 30 Sept 2008 June 2007 Sept 2007 Sept 2008 June 2007 Sept 2007 Notes $000 $000 $000 $000 $000 $000
Cash flows from operating activities Receipts from customers 104,086 78,272 23,095 91,261 69,851 21,057 Payments to suppliers and employees (87,106) (58,675) (17,839) (74,855) (51,858) (16,934) Interest received 1,223 1,308 337 990 1,228 323 Income taxes paid (6,268) (3,061) (1,087) (6,485) (3,110) (1,014) Other revenue 209 71 — 88 144 — Interest and other costs of finance paid (180) (94) (36) (173) (94) (36) GST paid on plant and equipment acquisitions (182) (106) (108) (182) (101) (108)
Net operating cash flows 5 (b) 11,782 17,715 4,362 10,644 16,060 3,288
Cash flows from investing activities Payments for plant and equipment (2,005) (1,054) (1,190) (1,998) (1,006) (1,190) Purchase of financial assets – listed securities (2,538) — (1,200) (2,538) — (1,200) Acquisition of subsidiary – net of cash acquired 28 (a) (5,847) — — (8,830) — — Costs incurred on acquisition of subsidiary 28 (a) (82) — — (82) — — Acquisition of business 28 (b) (500) — — (500) — — Proceeds from sale of financial assets – listed securities 1,040 — — 1,040 — — Proceeds from sale of plant and equipment — 7 11 — 5 11
Net investing cash flows (9,932) (1,047) (2,379) (12,908) (1,001) (2,379)
Cash flows from financing activities Proceeds from conversion of share options 137 360 215 137 360 215 Dividends paid (4,991) (10,486) (6,650) (4,991) (10,486) (6,650)
Net Financing cash flows (4,854) (10,126) (6,435) (4,854) (10,126) (6,435)
Net (decrease)/increase in cash held (3,004) 6,542 (4,452) (7,118) 4,933 (5,526) Cash at the beginning of financial period 21,426 19,336 25,878 16,845 17,438 22,371
Cash at end of the financial year 5 (a) 18,422 25,878 21,426 9,727 22,371 16,845
1 We are required to provide the 3 months ending 30 September 2007 because of the transition to a September Year End. We do not believe the 3 months ending September 2007 to be meaningful and it cannot be extrapolated to provide a 12 month equivalent figure.
The accompanying notes form an integral part of this Statement of Cash Flows. For personal use only use personal For
48 n 2008 Annual Report Technology One Limited Statement of Changes in Equity for the Year ended 30 September 2008
reserves Share Retained Share Investment Capital Earnings Dividend FOREX Option Revaluation Total $000 $000 $000 $000 $000 $000 $000
CONSOLIDATED At 1 October 2007 23,556 14,757 — (812) 508 97 38,106 Net gains/(losses) on available-for-sale financial assets — — — — — (570) (570) Currency translation differences — — — 74 — — 74 Total income and expense for the year recognised directly in equity — — — 74 — (570) (496) Net profit for the year — 17,229 — — — — 17,229 Total income/(expense) for the year — 17,229 — 74 — (570) 16,733 Dividend paid — — (4,991) — — — (4,991) Transfer to dividend reserve — (12,313) 12,313 — — — — Exercise of share options 137 — — — — — 137 Shares issued 170 — — — — — 170 Cost of equity-based compensation — — — — 359 — 359 At 30 September 2008 23,863 19,673 7,322 (738) 867 (473) 50,514
PARENT At 1 October 2007 23,556 12,418 — — 508 97 36,579 Net gains on available-for-sale financial assets — — — — — (570) (570) Total income and expense for the year recognised directly in equity — — — — — (570) (570) Net profit for the year — 18,044 — — — — 18,044 Total income/(expense)for the year — 18,044 — — — (570) 17,474 Dividend paid — — (4,991) — — — (4,991) Transfer to dividend reserve — (12,313) 12,313 — — — — Exercise of share options 137 — — — — — 137 Shares issued 170 — — — — — 170 Cost of equity-based compensation — — — — 359 — 359 At 30 September 2008 23,863 18,149 7,322 — 867 (473) 49,728
The accompanying notes form an integral part of this Statement of Changes in Equity. For personal use only use personal For
Technology One Limited 2008 Annual Report n 49 Statement of Changes in Equity for the Year ended 30 June 2007
reserves Share Retained Share Investment Capital Earnings Dividend FOREX Option Revaluation Total $000 $000 $000 $000 $000 $000 $000
CONSOLIDATED At 1 July 2006 22,981 10,661 5,963 (547) 132 66 39,256 Net gains/(losses) on available-for-sale financial assets — — — — — (13) (13) Currency translation differences — — — 128 — — 128 Total income and expense for the year recognised directly in equity — — — 128 — (13) 115 Net profit for the year — 14,781 — — — — 14,781 Total income/(expense) for the year — 14,781 — 128 — (13) 14,896 Transfer to dividend reserve — (11,161) 11,161 — — — — Dividend paid — — (10,486) — — — (10,486) Exercise of share options 360 — — — — — 360 Cost of equity-based compensation — — — — 286 — 286 At 30 June 2007 23,341 14,281 6,638 (419) 418 53 44,312
PARENT At 1 July 2006 22,981 8,826 5,963 — 132 66 37,968 Net gains on available-for-sale financial assets — — — — — (13) (13) Total income and expense for the year recognised directly in equity — — — — — (13) (13) Net profit for the year — 14,345 — — — — 14,345 Total income/(expense)for the year — 14,345 — — — (13) 14,332 Transfer to dividend reserve — (11,161) 11,161 — — — — Dividend paid — — (10,486) — — — (10,486) Exercise of share options 360 — — — — — 360 Cost of equity-based compensation — — — — 286 — 286 At 30 June 2007 23,341 12,010 6,638 — 418 53 42,460
The accompanying notes form an integral part of this Statement of Changes in Equity. For personal use only use personal For
50 n 2008 Annual Report Technology One Limited Statement of Changes in Equity for the 3 months ended 30 September 2007
reserves Share Retained Share Investment Capital Earnings Dividend FOREX Option Revaluation Total $000 $000 $000 $000 $000 $000 $000
CONSOLIDATED As at 1 July 2007 23,341 14,281 6,638 (419) 418 53 44,312 Net gains on available-for-sale financial assets — — — — — 44 44 Currency translation differences — — — (393) — — (393) Total income and expense for the period recognised directly in equity — — — (393) — 44 (349) Net profit for the period — 488 — — — — 488 Total income/(expense) for the period — 488 — (393) — 44 139 Transfer to dividend reserve — (12) 12 — — — — Dividend paid — — (6,650) — — — (6,650) Exercise of share options 215 — — — — — 215 Cost of equity-based compensation — — — — 90 — 90 At 30 September 2007 23,556 14,757 — (812) 508 97 38,106
PARENT At 1 July 2007 23,341 12,010 6,638 — 418 53 42,460 Net gains on available-for-sale financial assets — — — — — 44 44 Total income and expense for the period recognised directly in equity — — — — — 44 44 Net profit for the period — 420 — — — — 420 Total income/(expense) for the period — 420 — — — 44 464 Transfer to dividend reserve — (12) 12 — — — — Dividend paid — — (6,650) — — — (6,650) Exercise of share options 215 — — — — — 215 Cost of equity-based compensation — — — — 90 — 90 At 30 September 2007 23,556 12,418 — — 508 97 36,579
The accompanying notes form an integral part of this Statement of Changes in Equity. For personal use only use personal For
Technology One Limited 2008 Annual Report n 51 Notes to the Financial Statements
Note 1. Statement of Significant Accounting Policies
a) Basis of Preparation
The financial report is a general purpose financial report which has been prepared in accordance with the requirements of the Corporations Act 2001 and Australian Accounting Standards.
The financial report of Technology One Limited (the Company) for the year ended 30 September 2008 was authorised for issue in accordance with a resolution of the Directors on 17 November 2008.
The financial report has been prepared on the basis of historic costs, except for available-for-sale investments, which have been measured at fair value.
The financial report is presented in Australian dollars and all values are rounded to the nearest thousand dollars ($000) unless otherwise stated under the option available to the Company under Class Order 98/0100. The Company is an entity to which the class order applies.
b) Statement of Compliance
Australian Accounting Standards and Interpretations that have recently been issued or amended but are not yet effective have not been adopted by the Company for the reporting year ending 30 September 2008. These are outlined in the table below:
Reference Title Summary Application Impact on Company Application Date of Standard* Financial Report Date for Company
AASB Hedges of a Net This interpretation 1 January 2009 The interpretation is unlikely 1 October 2009 Int 16 Investment in a proposes that the hedged to have any impact on the Foreign Operation risk in a hedge of a net Company since it does not investment in a foreign significantly restrict the hedged operation is the foreign risk or where the hedging currency risk arising instrument can be held. between the functional currency of the net investment and the functional currency of any parent entity. This also applies to foreign operations in the form of joint ventures, associates or branches.
AASB 8 Operating Segments New standard replacing 1 January 2009 AASB 8 is a disclosure standard 1 October 2009 and AASB and consequential AASB 114 Segment so will have no direct impact 2007-3 amendments to other Reporting, which adopts on the amounts included Australian Accounting a management reporting in the Company’s financial Standards approach to segment statements, although it may reporting. indirectly impact the level at which goodwill is tested for impairment. In addition, the amendments may have an impact on the Company’s segment disclosures.
AASB 123 Borrowing Costs The amendments to 1 January 2009 These amendments to AASB 1 October 2009 (Revised) and consequential AASB 123 require that all 123 require that all borrowing and AASB amendments to other borrowing costs associated costs associated with a 2007-6 Australian Accounting with a qualifying asset be qualifying asset be capitalised. Standards capitalised. The Company has no borrowing costs associated with qualifying
For personal use only use personal For assets and as such the amendments are not expected to have any impact on the Company’s financial report.
* Designates the beginning of the applicable annual reporting period unless otherwise stated
52 n 2008 Annual Report Technology One Limited Reference Title Summary Application Impact on Company Application Date of Standard* Financial Report Date for Company
AASB 101 Presentation of Introduces a statement of 1 January 2009 These amendments are 1 October 2009 (Revised) Financial Statements comprehensive income. only expected to affect the and AASB and consequential Other revisions presentation of the Company’s 2007-8 amendments to other include impacts on the financial report and will not Australian Accounting presentation of items have a direct impact on the Standards in the statement of measurement and recognition of changes in equity, new amounts disclosed in the financial presentation requirements report. The Company has not for restatements or determined at this stage whether reclassifications of items in to present a single statement of the financial statements, comprehensive income or two changes in the presentation separate statements. requirements for dividends and changes to the titles of the financial statements.
AASB Amendments to The amendments clarify 1 January 2009 The Company has share-based 1 October 2009 2008-1 Australian Accounting the definition of ‘vesting payment arrangements that Standard – Share- conditions’, introducing may be affected by these based Payments: the term ‘non-vesting amendments. However, the Vesting Conditions and conditions’ for conditions Company has not yet determined Cancellations other than vesting the extent of the impact, if any. conditions as specifically defined and prescribe the accounting treatment of an award that is effectively cancelled because a non- vesting condition is not satisfied.
AASB 3 Business Combinations The revised standard 1 July 2009 The Company may enter into 1 October 2009 (Revised) introduces a number of some business combinations changes to the accounting during the next financial year for business combinations, and may therefore consider the most significant of early adopting the revised which allows entities a standard. The Company has choice for each business not yet assessed the impact of combination entered early adoption, including which into – to measure a accounting policy to adopt. non-controlling interest (formerly a minority interest) in the acquiree either at its fair value or at its proportionate interest in the acquiree’s net assets. This choice will effectively result in recognising goodwill relating to 100% of the business (applying the fair value option) or recognising goodwill relating to the percentage interest acquired. The changes apply prospectively.
AASB 127 Consolidated and Under the revised standard, 1 July 2009 If the Company changes its 1 October 2009 For personal use only use personal For (Revised) Separate Financial a change in the ownership ownership interest in existing Statements interest of a subsidiary subsidiaries in the future, the (that does not result in change will be accounted for as loss of control) will be an equity transaction. This will accounted for as an equity have no impact on goodwill, transaction. nor will it give rise to a gain or a loss in the Company’s income statement.
* Designates the beginning of the applicable annual reporting period unless otherwise stated
Technology One Limited 2008 Annual Report n 53 Notes to the Financial Statements continued
Note 1. Statement of Significant Accounting Policies continued
Reference Title Summary Application Impact on Company Application Date of Standard* Financial Report Date for Company
AASB Amendments to Amending standard issued 1 July 2009 Refer to AASB 3 (Revised) and 1 October 2009 2008-3 Australian Accounting as a consequence of AASB 127 (Revised) above. Standards arising revisions to AASB 3 and from AASB 3 and AASB 127. AASB 127
AASB Amendments to The main amendments 1 January 2009 Recognising all dividends 1 October 2009 2008-7 Australian Accounting of relevance to Australian received from subsidiaries, Standards – Cost of entities are those made to jointly controlled entities and an Investment in a AASB 127 deleting the ‘cost associates as income will likely Subsidiary, Jointly method’ and requiring all give rise to greater income Controlled Entity or dividends from a subsidiary, being recognised by the parent Associate jointly controlled entity or entity after adoption of these associate to be recognised amendments. in profit or loss in an entity’s separate financial In addition, if the Company statements (that is, parent enters into any Company company accounts). The reorganisation establishing new distinction between pre- parent entities, an assessment and post-acquisition profits will need to be made to is no longer required. determine if the reorganisation However, the payment of meets the conditions imposed such dividends requires the to be effectively accounted for entity to consider whether on a ‘carry-over basis’ rather there is an indicator of than at fair value. impairment.
AASB 127 has also been amended to effectively allow the cost of an investment in a subsidiary, in limited reorganisations, to be based on the previous carrying amount of the subsidiary (that is, share of equity) rather than its fair value.
AASB Amendments to The amendment to AASB 1 July 2009 The Company has not yet 1 October 2009 2008-8 Australian Accounting 139 clarifies how the determined the extent of the Standards – Eligible principles underlying impact of the amendments, Hedged Items hedge accounting should if any. be applied when (i) a one-sided risk in a hedged item and (ii) inflation in a financial hedged item existed or was likely to exist.
* Designates the beginning of the applicable annual reporting period unless otherwise stated For personal use only use personal For
54 n 2008 Annual Report Technology One Limited The financial report complies with Australian Accounting Standards, as issued by the Australian Accounting Standards Board and International Financial Reporting Standards (IFRS), as issued by the International Accounting Standards Board.
c) Comparative Information
Where applicable, certain comparative numbers have been restated in order to comply with the current period presentation of the financial report.
d) Summary of Significant Accounting Policies
Revenue Recognition
Software Licence Fee Revenue
Revenue from licence fees due to software sales is recognised on the transferring of significant risks and rewards of ownership of the licensed software under an agreement between the Company and the customer.
Implementation and Consulting Services Revenue for Licensed Software
Revenue from implementation and consulting services attributable to licensed software is recognised in proportion to the stage of completion.
Post Sales Customer Support Revenue for Licensed Software
Post sales customer support (PSCS) revenue for licensed software comprises fees for ongoing upgrades, minor software revisions and helpline support. PSCS revenue is allocated between annual fees for helpline support and fees for rights of access to ongoing upgrades and minor software patches. At each reporting date the unearned portion of help line support fees is assessed and deferred to be recognised over the period of service. Fees for rights of access to ongoing upgrades and minor software revisions are recognised at the commencement of the period to which they relate on the basis that the company has no ongoing obligations or required expenditure related to this revenue.
Project Services Revenue
Revenue from project services agreements is recognised in proportion to their stage of completion, typically in accordance with the achievement of contract milestones and/or hours expended.
Unearned Services Revenue
Amounts received from customers in advance of provision of services are accounted for as a liability called Unearned Revenue.
Earned and Unbilled Revenue
Amounts recorded as Earned and Unbilled Revenue represent revenues recorded on Software Licence fees and PSCS fees not yet invoiced to customers. These amounts have met the revenue recognition criteria of the Company, but have not reached the payment milestones contracted with customers.
Principles of Consolidation
The consolidated Financial Statements include the Financial Statements of the parent entity, Technology One Limited and its controlled entities, referred to collectively throughout these Financial Statements as the Company. All inter-entity balances and transactions have been eliminated. Where an entity either began or ceased to be controlled during the period, the results are included only from the date control commenced or up to the date control ceased. Financial statements of foreign controlled entities are prepared in accordance with overseas accounting principles and are, for consolidation purposes, adjusted to comply with group policy and Australian Accounting Standards as issued by the Australian Accounting Standards Board.
Research & Development Costs
Research and Development expenses include payroll, employee benefits and other employee-related costs associated with product development. Technological feasibility for software products is reached shortly before the products are released for commercial sale to customers. Costs incurred after
technological feasibility is established are not material and, accordingly, all research and development costs are expensed when incurred. For personal use only use personal For
Technology One Limited 2008 Annual Report n 55 Notes to the Financial Statements continued
Note 1. Statement of Significant Accounting Policies continued
Property, Plant and Equipment
Property, plant and equipment are measured at cost less accumulated depreciation and any impairment in value. Depreciation is calculated on a straight-line basis over the estimated useful economic lives of the assets as follows: Life Method
Office furniture and equipment 3-11 years Straight line Computer software 3-4 years Straight line Motor vehicles 4-5 years Straight line
Impairment
The carrying values of property, plant and equipment are reviewed for impairment when events or changes in circumstances indicate that the carrying value may not be recoverable. For an asset that does not generate largely independent cash inflows, the recoverable amount is determined for the cash-generating unit to which the asset belongs. If any such indication exists and where the carrying values exceed the estimated recoverable amounts, the assets or cash-generating units are written down to their recoverable amounts. The recoverable amount of property, plant and equipment is the greater of fair value less costs to sell and value in use. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessment of the time value of money and the risks specific to the asset.
Foreign Currency Transactions
Both the functional and presentation currency of Technology One Limited is Australian Dollars (AUD).
Transactions in foreign currencies are initially recorded in the functional currency at the exchange rates ruling at the date of the transaction. Monetary assets and liabilities denominated in foreign currencies are translated at the rate of exchange ruling at the Balance Sheet date. All exchange differences in the consolidated financial report are taken to the Income Statement.
The functional currency of the overseas subsidiaries, Technology One New Zealand Ltd is New Zealand Dollars (NZD), Technology One Corporation SDN BHD is Malaysian Ringitt (RM) and Technology One UK Limited is Great British Pounds (GBP).
As at the reporting date, the assets and liabilities of these overseas subsidiaries are translated into the presentation currency of Technology One Limited at the rate of exchange ruling at the Balance Sheet date and the Income Statements are translated at the weighted average exchange rates for the period.
The exchange differences arising on the translation are taken directly to a separate component of equity. On disposal of a foreign entity, the deferred cumulative amount recognised in equity relating to that particular foreign operation is recognised in the Income Statement.
Receivables
Trade receivables, loans, and other receivables that have fixed or determinable payments that are not quoted in an active market are classified as ‘loans and receivables’. Loans and receivables are measured at amortised cost using the effective interest method less impairment. Interest is recognised by applying the effective interest rate.
Receivables from related parties are recognised and carried at the nominal amount due. Interest is taken up as income on an accrual basis.
Goodwill
Goodwill on acquisition is initially measured at cost being the excess of the cost of the business combination over the acquirer’s interest in the net fair value of the identifiable assets, liabilities and contingent liabilities.
Following initial recognition, goodwill is measured at cost less any accumulated impairment losses.
Goodwill is not amortised. Goodwill is reviewed for impairment annually or more frequently if events or changes in circumstances indicate that the carrying value may be impaired.
As at the acquisition date, any goodwill acquired is allocated to each of the cash-generating units expected to benefit from the combination’s synergies. For personal use only use personal For
Impairment is determined by assessing the recoverable amount of the cash-generating unit to which the goodwill relates.
Where the recoverable amount of the cash-generating unit is less than the carrying amount, an impairment loss is recognised.
56 n 2008 Annual Report Technology One Limited Income Tax
Deferred income tax is provided on all temporary differences at the Balance Sheet date between the tax bases of assets and liabilities and their carrying amounts for financial reporting purposes.
Deferred income tax liabilities are recognised for all taxable temporary differences:
• except where the deferred income tax liability arises from the initial recognition of an asset or liability in a transaction that is not a business combination and, at the time of the transaction, affects neither the accounting profit nor taxable profit or loss; and
• in respect of taxable temporary differences associated with investments in subsidiaries, except where the timing of the reversal of the temporary differences can be controlled and it is probable that the temporary differences will not reverse in the foreseeable future.
Deferred income tax assets are recognised for all deductible temporary differences, carry-forward of unused tax assets and unused tax losses, to the extent that it is probable that taxable profit will be available against which the deductible temporary differences and the carry-forward of unused tax assets and unused tax losses can be utilised:
• except where the deferred income tax asset relating to the deductible temporary difference arises from the initial recognition of an asset or liability in a transaction that is not a business combination and, at the time of the transaction, affects neither the accounting profit nor taxable profit or loss; and
• in respect of deductible temporary differences associated with investments in subsidiaries, deferred tax assets are only recognised to the extent that it is probable that the temporary differences will reverse in the foreseeable future and taxable profit will be available against which the temporary differences can be utilised.
The carrying amount of deferred income tax assets is reviewed at each Balance Sheet date and reduced to the extent that it is no longer probable that sufficient taxable profit will be available to allow all or part of the deferred income tax asset to be utilised.
Deferred income tax assets and liabilities are measured at the tax rates that are expected to apply to the year when the asset is realised or the liability is settled, based on tax rates (and tax laws) that have been enacted or substantively enacted at the Balance Sheet date.
Income taxes relating to items recognised directly in equity are recognised in equity and not in the Income Statement.
Provision for Employee Benefits
Provision has been made in the Financial Statements for benefits accruing to employees in relation to annual leave and long service leave. No provision is made for non-vesting sick leave.
All on-costs, including payroll tax, workers’ compensation premiums and superannuation are included in the determination of provisions. Annual leave and the current portion of the long service leave provision are measured at their nominal amounts.
The non-current portion of long service leave is measured at the present value of estimated future cash flows, discounted by 5.40%, the interest rate applicable to 10 year Commonwealth Government bonds.
Employee superannuation funds exist to provide benefits for the employees and their dependants on retirement, death or disability. The contributions made to these funds by the Company are expensed in the year to which they relate as all contributions are made to defined contribution funds.
Recoverable Amounts of Non-Current Assets
At each reporting date, the Company assesses whether there is any indication that an asset may be impaired. Where an indicator of impairment exists, the Company makes a formal estimate of the recoverable amount. Where the carrying amount of an asset exceeds its recoverable amount, the asset is considered impaired and is written down to its recoverable amount.
Recoverable amount is the greater of fair value less costs to sell and value in use. It is determined for an individual asset, unless the asset’s value in use cannot be estimated to be close to its fair value less costs to sell and it does not generate cash inflows that are largely independent of those from other assets or groups of assets, in which case, the recoverable amount is determined for the cash-generating unit to which the asset belongs.
In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market
For personal use only use personal For assessments of the time value of money and the risks specific to the asset.
Technology One Limited 2008 Annual Report n 57 Notes to the Financial Statements continued
Note 1. Statement of Significant Accounting Policies continued
Leased Assets
Leases are classified at their inception as either operating or finance leases based on the economic substance of the agreement so as to reflect the risks and benefits incidental to ownership.
Operating
Operating leases under which the lessor effectively retains substantially all the risks and benefits of ownership of the leased items are classified as operating leases. Operating lease payments are included in the determination of the operating profit in equal instalments over the lease term.
Financing
Leases which effectively transfer substantially all the risks and benefits incidental to ownership of the leased item to the Company are capitalised at the present value of the minimum lease payments and disclosed as property, plant and equipment under lease. A lease liability of equal value is also recognised.
Capitalised leased assets are amortised over the shorter of the estimated useful life of the assets and the lease term. Minimum lease payments are allocated between interest expense and reduction of the lease liability with the interest expense calculated using the interest rate implicit in the lease and charged directly to the Income Statement.
Share-Based Payment Transactions
The Company provides benefits to certain employees in the form of share-based payment transactions, whereby employees render services in exchange for rights over shares. The cost of share-based payment transactions with employees is measured by reference to the fair value of the equity instruments at the date at which they are granted. Refer to Note 14.
The cost of share-based payments is recognised, together with a corresponding increase in equity, over the period in which the performance and/or service conditions are fulfilled, ending on the date on which the relevant employees become fully entitled to the award (the vesting period). No expense is recognised for awards that do not ultimately vest.
Payables
Liabilities for trade creditors and other amounts are carried at cost which is the fair value of the consideration to be paid in the future for goods and services received, whether or not billed to the Company.
Payables to related parties are carried at the principal amount.
Provisions
Provisions are recognised when the Company has a present obligation (legal or constructive) as a result of a past event. It is probable that an outflow of resources embodying economic benefits will be required to settle the obligation and a reliable estimate can be made of the amount of the obligation.
Intangible Assets
Intangible assets acquired separately are capitalised at cost, and if acquired as a result of a business combination, capitalised at fair value as at the date of acquisition. Following initial recognition, the cost model is applied to all classes of intangible assets. The useful lives of the intangible assets are assessed to be either finite or infinite. Where amortisation is charged on intangible assets with finite lives, this expense is taken to the income statement through the ‘depreciation and amortisation expense’ line item. Intangible assets with finite lives are tested for impairment where an indicator of impairment exists. Useful lives are examined on an annual basis and adjustments, where applicable, are made on a prospective basis.
Gains or losses arising from the de-recognition of an intangible asset are measured as the difference between the net disposal proceeds and the carrying amount of the asset and are recognised in the income statement when the intangible asset is de-recognised.
Purchase cost of the intellectual property known as Enterprise Content Management (TechnologyOne Enterprise Content Management), has been capitalised and is being amortised over a period of eight years and now has a written down value of $1,447,000.
For personal use only use personal For Purchase cost of the intellectual property known as Outcome Manager (TechnologyOne Performance Planning), has been provisionally classified as an intangible – Intellectual Property/Source code, with a written down value of $1,000,000.
58 n 2008 Annual Report Technology One Limited Cash and Cash Equivalents
Cash and short term deposits in the Balance Sheet comprise cash at bank and in hand and short term deposits with an original maturity of three months or less.
For the purposes of the Statement of Cash Flows, cash and cash equivalents consist of cash and cash equivalents as defined above, net of outstanding bank overdrafts.
Available for sale Financial Assets - Investments
All investments are initially recognised at cost, being the fair value of the consideration given and including acquisition charges associated with the investment.
Investments held which are classified as available for sale are measured at fair value where such investments comprise tradeable securities. Fair value is determined by reference to quoted market prices in an active, liquid and observable market.
Gains or losses on available-for-sale investments are recognised as a separate component of equity until the investment is sold, collected or otherwise disposed of, or until the investment is determined to be impaired, at which time the cumulative gain or loss previously reported in equity is included in the Income Statement.
Financial Instruments included in Equity
Ordinary share capital bears no special terms or conditions affecting income or capital entitlements of the shareholders.
Financial Instruments included in Liabilities
Financial liabilities are initially measured at fair value, net of transaction costs. Subsequent measurement is at amortised cost using the effective interest method, with interest expense recognised on an effective yield basis.
Financial Instruments included in Assets
Trade debtors are initially recorded at the amount of contracted sales proceeds.
Provision for doubtful debts is recognised to the extent that recovery of the outstanding receivable balance is considered less than likely. Any provision established is based on a review of all outstanding amounts at balance date.
Bank deposits are carried at cost. Interest revenue is recognised on an effective yield basis.
Goods and Services Tax
Revenues, expenses and assets are recognised net of the amount of goods and services tax (GST), except where the amount of GST incurred is not recoverable from the Australian Tax Office (ATO). In these circumstances, the GST is recognised as part of the cost of acquisition of the asset or as part of the item of expense. Receivables and payables are stated with the amount of GST included. The net amount of GST recoverable from, or payable to, the ATO is included as a current asset or liability in the Balance Sheet. Cash flows are included in the Statement of Cash Flows on a gross basis. The GST component of cash flows arising from investing and financing activities which are recoverable from, or payable to, the ATO are classified as operating cash flows.
Share Buy-Back
The price paid for the repurchase of contributed equity is taken as a direct charge to equity. The price paid is measured at the fair value of consideration given. Any costs associated with the buy-back are taken as a direct charge to equity.
For personal use only use personal For
Technology One Limited 2008 Annual Report n 59 Notes to the Financial Statements continued
Note 1. Statement of Significant Accounting Policies continued Tax Consolidations
From the date of acquisition on 31 October 2007, for the purposes of income taxation, Technology One Limited and its 100% owned subsidiary, Avand Pty Ltd, have formed a consolidated tax group. These companies have entered into a tax sharing arrangement in order to allocate income tax expense on a pro-rata basis.
Segment Reporting
A business segment is a distinguishable component of the Company that is engaged in providing products or services that are subject to risks and returns that are different to those of other operating business segments. Management has assessed the reportable business segments under AASB 114 Segment Reporting and have determined that on adoption of AASB 8 Segment Reporting (applicable from 1 January 2009), additional operating segments will most likely be reported. A geographical segment is a distinguishable component of the entity that is engaged in providing products or services within a particular economic environment and is subject to risks and returns from are different than those of segments operating in other economic environments.
e) Significant Accounting Judgements, Estimates and Assumptions
In the process of applying the Company’s accounting policies, management has made the following judgements, apart from those involving estimations, which have the most significant effect on the amounts recognised in the Financial Statements.
Significant accounting estimates and assumptions
The carrying amounts of certain assets and liabilities are often determined based on estimates and assumptions. The key estimates and assumptions that have a significant risk of causing a material adjustment to the carrying amounts of certain assets and liabilities within the next annual reporting period are:
Impairment of Goodwill
The Company determines whether goodwill is impaired at least on an annual basis. This requires an estimation of the recoverable amount of the cash- generating units to which the goodwill is allocated. The assumptions used in this estimation of recoverable amount and the carrying amount of goodwill are discussed in Note 9.
Long service leave
A liability for long service is recognised and measured at the present value of the estimated future cash flows to be made in respect of all employees at balance date. In determining the present value of the liability, attrition rates and pay increases through promotion and inflation have been taken into
account. For personal use only use personal For
60 n 2008 Annual Report Technology One Limited Consolidated Parent 12 Months 12 Months 3 Months1 12 Months 12 Months 3 Months1 Ended 30 Ended 30 Ended 30 Ended 30 Ended 30 Ended 30 Sept 2008 June 2007 Sept 2007 Sept 2008 June 2007 Sept 2007 $000 $000 $000 $000 $000 $000
Note 2. Revenue and Expenses Revenue and expenses from continuing operations Sales Revenue Software licence fees 22,588 18,354 1,855 19,664 15,980 1,667 Implementation and consulting services 35,882 22,498 5,733 31,402 19,741 4,940 Post sales customer support 36,343 25,594 6,170 31,092 22,703 5,891 Project services 10,539 9,003 2,708 10,539 9,003 2,708 Product modifications 3,139 1,374 324 3,032 1,355 305 Total sales revenue 108,491 76,823 16,790 95,729 68,782 15,511
Other Revenue Interest received – cash 1,223 1,129 341 1,108 1,049 327 Interest received – available-for-sale investments 118 184 — — 184 — Royalty received – from related parties — — — — 2,658 — Management fees received – from related parties — — — 3,977 820 346 Grants received 232 — — — — — Other 151 231 1 203 233 1 Total other revenue 1,724 1,544 342 5,288 4,944 674
Total revenue 110,215 78,367 17,132 101,017 73,726 16,185
Depreciation of: - Office furniture and equipment 634 584 138 588 536 129 - Computer software 55 56 13 55 56 13 - Motor vehicles 5 10 1 5 10 1 694 650 152 648 602 143
Amortisation of: - Leased office furniture and equipment 1,042 632 235 1,042 632 235 - Leased computer software 125 93 33 125 93 33 - Intellectual property 28 28 7 28 28 7 - Data model 183 — — — — — 1,378 753 275 1,195 753 275
Employee benefit expenses: Wages and salaries 50,922 33,471 9,573 44,580 31,186 9,034 Defined contribution plan expense 4,035 2,828 816 3,899 2,756 794 Payroll tax 2,728 1,887 554 2,633 1,887 554 Provision for annual leave 333 472 263 174 427 291 Provision for long service leave 399 400 132 395 400 132 Equity based compensation 359 286 90 359 286 90 Other 3,560 1,853 719 3,171 1,322 592 62,336 41,197 12,147 55,211 38,264 11,487
Other expense items:
Provision for doubtful debts 165 53 751 165 30 751 For personal use only use personal For Foreign exchange loss 268 78 — 249 78 — Rental expenses on operating leases 2,623 1,411 383 2,085 1,190 322 Loss on sale of fixed assets 2 23 7 2 23 7 Management and marketing fees — — — 352 1,313 172
1 We are required to provide the 3 months ending 30 September 2007 because of the transition to a September Year End. We do not believe the 3 months ending September 2007 to be meaningful and it cannot be extrapolated to provide a 12 month equivalent figure.
Technology One Limited 2008 Annual Report n 61 Notes to the Financial Statements continued
Consolidated Parent 12 Months 12 Months 3 Months1 12 Months 12 Months 3 Months1 Ended 30 Ended 30 Ended 30 Ended 30 Ended 30 Ended 30 Sept 2008 June 2007 Sept 2007 Sept 2008 June 2007 Sept 2007 $000 $000 $000 $000 $000 $000
Note 3. Income Tax The major components of income tax expense are: Income Statement Current income tax 6,979 5,504 746 7,103 5,269 694 Adjustments in respect of current income tax of previous years (146) (48) 67 (136) (50) 67
Deferred income tax relating to origination and reversal of temporary differences (933) (465) (660) (748) (396) (635) Income tax expense reported in the Income Statement 5,900 4,991 153 6,219 4,823 126
A reconciliation between tax expense and the product of accounting profit before income tax multiplied by the company’s applicable income tax rate is as follows:
Accounting profit before income tax 23,129 19,772 641 24,263 19,168 546 At the Company’s statutory income tax rate of 30% (2007:30%) 6,939 5,932 192 7,279 5,750 165 Adjustment in respect of current income tax of previous years (146) (48) 67 (136) (50) 67 Research and development tax concession (1,028) (948) (133) (1,028) (948) (133) Recognition of previously unrecognised tax asset (84) (64) (15) (84) (64) (15) Non-deductible foreign loss (24) (36) — — — — Non-assessable foreign income (49) — — (49) — — Expenditure not allowable for income tax purposes 292 155 42 237 135 42
Income tax reported in the Income Statement 5,900 4,991 153 6,219 4,823 126
Future income tax benefit – deductible temporary differences not recorded 918 1,017 1,002 918 1,017 1,002
1 We are required to provide the 3 months ending 30 September 2007 because of the transition to a September Year End. We do not believe the 3 months
ending September 2007 to be meaningful and it cannot be extrapolated to provide a 12 month equivalent figure. For personal use only use personal For
62 n 2008 Annual Report Technology One Limited Balance Sheet Income Statement
Consolidated Parent As at As at As at1 12 Months 12 Months 3 Months1 30 Sept 30 June 30 Sept Ended 30 Ended 30 Ended 30 2008 2007 2007 Sept 2008 June 2007 Sept 2007 $000 $000 $000 $000 $000 $000
Note 3. Income Tax continued Deferred income tax relates to the following: CONSOLIDATED Deferred tax liabilities Unearned revenue (1,097) (1,389) (833) 264 (105) (556) Intellectual property (30) — — 30 — — Accelerated depreciation for tax purposes (170) 16 (52) 118 (93) 68 Other (136) (182) (134) 2 84 (49) (1,433) (1,555) (1,019) CONSOLIDATED Deferred tax assets Employee provisions 1,919 1,408 1,521 (398) (273) (113) Provisions - other 748 370 458 (290) (130) (88) Accrued expenses 134 145 79 (55) 55 66 Copyright - software 416 318 318 (98) — — Lease liability (net) 260 56 67 (193) 26 (11) Other 320 30 7 (313) (30) 23 3,797 2,327 2,450 Deferred tax expense (933) (465) (660) Net deferred tax asset 2,364 772 1,431
PARENT Deferred tax liabilities Unearned revenue (944) (1,099) (624) 320 (93) (475) Intellectual property (30) — — 30 — — Accelerated depreciation for tax purposes (167) 20 (49) 118 (97) 69 Other (115) (150) (90) 25 83 (60) (1,256) (1,229) (763) PARENT Deferred tax assets Employee provisions 1,870 1,359 1,485 (385) (248) (126) Provisions - other 735 348 447 (288) (122) (98) Accrued expenses 134 145 79 (55) 55 66 Copyright - software 416 318 318 (98) — — Lease liability (net) 260 56 67 (193) 26 (11) Other 222 — — (222) — — 3,637 2,226 2,396 Deferred tax expense (748) (396) (635) Net deferred tax asset 2,381 997 1,633
1 We are required to provide the 3 months ending 30 September 2007 because of the transition to a September Year End. We do not believe the 3 months ending September 2007 to be meaningful and it cannot be extrapolated to provide a 12 month equivalent figure.
Tax Consolidation
For personal use only use personal For The tax consolidation group comprises Technology One Limited and Avand Pty Ltd, from date of acquisition 31 October 2007.
Technology One Limited 2008 Annual Report n 63 Notes to the Financial Statements continued
Consolidated Parent As at As at As at1 As at As at As at1 30 Sept 30 June 30 Sept 30 Sept 30 June 30 Sept 2008 2007 2007 2008 2007 2007 $000 $000 $000 $000 $000 $000
Note 4. Dividends Paid and Proposed (a) Dividends paid Final dividend Sept 2007 nil (June 2007: 2.23 cents) – fully franked — 5,967 6,650 — 5,967 6,650 Interim dividend 2008 1.67 cents (Sept 2007: nil) – fully franked 4,991 4,519 — 4,991 4,519 — 4,991 10,486 6,650 4,991 10,486 6,650
(b) Dividends proposed On 17 November 2008 the Directors resolved to pay a final dividend for the 2008 financial year of 2.45 cents per share, fully franked.
(c) Franking credit balance The amount of franking credits available for the subsequent financial period are:
Franking account balance as at the end of the financial year 3,260 2,119 284 2,962 2,119 284 Franking credits that will arise from the payment of income tax payable as at the end of the financial period 1,529 2,109 1,792 1,529 2,109 1,792 Franking account balance 4,789 4,228 2,076 4,491 4,228 2,076
The tax rate at which paid dividends have been franked is 30% (2007: 30%). Dividends proposed will be franked at the rate of 30% (2007: 30%).
1 We are required to provide the 3 months ending 30 September 2007 because of the transition to a September Year End. We do not believe the 3 months
ending September 2007 to be meaningful and it cannot be extrapolated to provide a 12 month equivalent figure. For personal use only use personal For
64 n 2008 Annual Report Technology One Limited Consolidated Parent As at As at As at1 As at As at As at1 30 Sept 30 June 30 Sept 30 Sept 30 June 30 Sept 2008 2007 2007 2008 2007 2007 $000 $000 $000 $000 $000 $000
Note 5. Cash Assets
(a) Cash is defined to include the following: Cash at bank 16,336 14,562 10,028 9,727 12,479 6,799 Money market accounts at call 2,086 11,316 11,398 — 9,892 10,046 18,422 25,878 21,426 9,727 22,371 16,845
Cash at bank earns interest at floating rates based on daily bank deposit rates. Money market accounts at call are made for varying periods of between one day and three months, depending on immediate cash requirements of the Company, and earn interest at the respective money market deposit rates. The fair value of cash assets at 30 September 2008 and 2007 and 30 June 2007 are their carrying values.
Consolidated Parent 12 Months 12 Months 3 Months1 12 Months 12 Months 3 Months1 Ended 30 Ended 30 Ended 30 Ended 30 Ended 30 Ended 30 Sept 2008 June 2007 Sept 2007 Sept 2008 June 2007 Sept 2007 $000 $000 $000 $000 $000 $000
(b) Reconciliation of net operating cash flows to net profit Net profit 17,229 14,781 488 18,044 14,345 420
Adjustments for: Depreciation and amortisation 2,072 1,403 427 1,843 1,355 418 Loss on sale of assets 2 23 7 2 23 7 Profit on sale of listed securities (40) — — (40) — — Equity based remuneration expense 359 286 90 359 286 90 Interest income classified as investing cash flow (118) — — (118) — — Write-off of non-current assets 260 — — — — — Transfers to/(from) provisions: Employee entitlements 545 882 385 1,283 828 423 Doubtful debts (709) (385) (104) (564) 13 (44) Movement in provision for: Income tax payable (338) 2,396 (275) 482 2,108 (253) Deferred income tax 414 (114) (535) 493 (107) (466)
Changes in assets and liabilities (Increase)/decrease in assets: Trade debtors (6,915) (4,912) 6,403 (7,011) (4,737) 5,532 Sundry debtors (612) (137) (49) (564) (132) (49) Prepayments 73 (158) 7 3 (158) 2 Earned and unbilled revenue (2,464) 216 1,938 (1,134) 232 1,660 Other (418) (430) (123) (1,168) (1,605) (131) (Decrease)/increase in liabilities: Trade payables 1,499 771 (983) 2,280 728 (886) Other (913) 735 (1,644) (3,655) 519 (2,136) Unearned revenue 1,856 2,358 (1,670) 109 2,362 (1,299)
Net operating cash flows 11,782 17,715 4,362 10,644 16,060 3,288 For personal use only use personal For 1 We are required to provide the 3 months ending 30 September 2007 because of the transition to a September Year End. We do not believe the 3 months ending September 2007 to be meaningful and it cannot be extrapolated to provide a 12 month equivalent figure.
(c) Controlled entities acquired Avand Pty Ltd was acquired during the financial year (Note 28 (a)).
(d) Non-cash financing and investing activities During the financial period the Company acquired equipment and software with an aggregate fair value of $1,032,588 (2007: $1,207,168), by means of finance leases. During the year ended 30 September 2008 controlled entities were acquired by the issuance of $170,000 of shares in Technology One Limited.
Technology One Limited 2008 Annual Report n 65 Notes to the Financial Statements continued
Consolidated Parent As at As at As at1 As at As at As at1 30 Sept 30 June 30 Sept 30 Sept 30 June 30 Sept 2008 2007 2007 2008 2007 2007 $000 $000 $000 $000 $000 $000
Note 6. Receivables (Current) Trade debtors (i) (ii) 19,299 16,841 11,014 17,374 15,103 10,146 Provision for doubtful debts (ii) (411) (274) (920) (323) (180) (887) Sundry debtors 1,035 344 347 910 242 209 19,923 16,911 10,441 17,961 15,165 9,468
(i) Trade debtors are non-interest bearing and are on 30 day terms. No interest is charged on trade debtors. A specific analysis of debts that may be uncollectible is made at each reporting date by an internal credit committee and provisions made where appropriate. Provisions recorded are based on estimated irrecoverable amounts from the sale of goods and services, determined by reference to the circumstances of the specific customer.
Included in the Consolidated trade receivable balance are debtors with a carrying amount of $4,057,000 (2007: $2,400,000) which are past due at the reporting date for which the consolidated entity has not provided as there has not been a significant change in credit quality and the consolidated entity believes that the amounts are still considered recoverable. The consolidated entity does not hold any collateral over these balances apart from the withdrawal of future support and software licence use rights. The average age of these receivables is 35 days (2007: 45 days).
Included in the Parent’s trade receivable balance are debtors with a carrying amount of $3,564,000 (2007: $2,164,000) which are past due at the reporting date for which the Parent has not provided as there has not been a significant change in credit quality and the Parent believes that the amounts are still considered recoverable. The Parent does not hold any collateral over these balances, apart from the withdrawal of future support and software licence use rights. The average age of these receivables is 38 days (2007: 45 days).
(ii) Included in trade debtors are amounts billed but not yet collected for post implementation customer support to commence post 30 September and 30 June at each balance date. An equal and offsetting amount is included in unearned income. The amounts at each balance date are as follows:
Consolidated Parent
As at As at As at1 As at As at As at1 30 Sept 30 June 30 Sept 30 Sept 30 June 30 Sept 2008 2007 2007 2008 2007 2007 $000 $000 $000 $000 $000 $000
Invoices rendered for unprovided services 1,813 2,848 1,923 1,757 2,824 1,881
Consolidated Parent As at As at As at As at As at As at 30 Sept 30 June 30 Sept 30 Sept 30 June 30 Sept 2008 2007 2007 2008 2007 2007 $000 $000 $000 $000 $000 $000
(iii) Movement in Doubtful debts provision Balance at beginning of the period 920 659 274 887 167 180 Acquisition of subsidiary 199 — — — — — Amounts written off in the period (889) (438) (10) (729) (17) — Amounts recovered in the period 16 — (95) — — (44) Amounts provided in the period 165 53 751 165 30 751 Balance at the end of the period 411 274 920 323 180 887
In determining the recoverability of a trade receivable, the Company considers any change in the credit quality of the trade receivable from the date credit was initially granted up to the reporting date. The concentration of credit risk is limited due to the customer base being large and unrelated. Accordingly, For personal use only use personal For the directors believe that there is no further credit provision required in excess of the allowance for doubtful debts.
1 We are required to provide the 3 months ending 30 September 2007 because of the transition to a September Year End. We do not believe the 3 months ending September 2007 to be meaningful and it cannot be extrapolated to provide a 12 month equivalent figure.
66 n 2008 Annual Report Technology One Limited Consolidated Parent As at As at As at1 As at As at As at1 30 Sept 30 June 30 Sept 30 Sept 30 June 30 Sept 2008 2007 2007 2008 2007 2007 $000 $000 $000 $000 $000 $000
Note 7. Other Assets
Current Prepayments 509 514 512 509 514 512 Amounts owing from controlled entities (i) — — — 6,109 2,097 2,887 Deposits owing 260 96 142 221 57 105 Other 172 195 215 145 435 474 941 805 869 6,984 3,103 3,978
Non Current Amounts owing from controlled entities (i) — — — 1,385 950 1,006
1 We are required to provide the 3 months ending 30 September 2007 because of the transition to a September Year End. We do not believe the 3 months ending September 2007 to be meaningful and it cannot be extrapolated to provide a 12 month equivalent figure. The fair value of other assets approximate the carrying value of the assets recorded above.
(i) The amounts owing are all short term in nature and relate to normal trading.
Consolidated Parent As at As at As at1 As at As at As at1 30 Sept 30 June 30 Sept 30 Sept 30 June 30 Sept 2008 2007 2007 2008 2007 2007 $000 $000 $000 $000 $000 $000
Note 8. Property, Plant and Equipment
Office Furniture and Equipment: Cost Opening balance 5,295 3,368 4,181 5,080 3,193 3,960 Additions 1,919 1,043 1,190 1,892 997 1,190 Acquisition of subsidiary (Note 28) 333 — — — — — Disposals (332) (230) (76) (67) (230) (70) Closing balance 7,215 4,181 5,295 6,905 3,960 5,080
Accumulated depreciation Opening balance 2,238 1,784 2,150 2,126 1,729 2,047 Depreciation for the period/year 634 584 138 588 536 129 Disposals (25) (218) (50) (25) (218) (50) Closing balance 2,847 2,150 2,238 2,689 2,047 2,126 Net book value 4,368 2,031 3,057 4,216 1,913 2,954
Leased Office Furniture and Equipment Cost Opening balance 2,937 2,091 2,988 2,937 2,091 2,988 Additions 937 1,044 — 937 1,044 — Disposals (53) (147) (51) (53) (147) (51)
For personal use only use personal For Closing balance 3,821 2,988 2,937 3,821 2,988 2,937
Accumulated amortisation Opening balance 1,960 1,273 1,773 1,960 1,273 1,773 Amortisation for the period/year 1,042 632 235 1,042 632 235 Disposals (82) (132) (48) (82) (132) (48) Closing balance 2,920 1,773 1,960 2,920 1,773 1,960 Net book value 901 1,215 977 901 1,215 977
1 We are required to provide the 3 months ending 30 September 2007 because of the transition to a September Year End. We do not believe the 3 months ending September 2007 to be meaningful and it cannot be extrapolated to provide a 12 month equivalent figure. Technology One Limited 2008 Annual Report n 67 Notes to the Financial Statements continued
Consolidated Parent As at As at As at1 As at As at As at1 30 Sept 30 June 30 Sept 30 Sept 30 June 30 Sept 2008 2007 2007 2008 2007 2007 $000 $000 $000 $000 $000 $000
Note 8. Property, Plant and Equipment continued
Computer Software: Cost Opening balance 685 679 685 685 679 685 Additions 86 6 — 106 6 — Acquisition of subsidiary (Note 28) 20 — — — — — Closing balance 791 685 685 791 685 685
Accumulated depreciation Opening balance 650 581 637 650 581 637 Depreciation for the period/year 55 56 13 55 56 13 Disposals — — — — — — Closing balance 705 637 650 705 637 650 Net book value 86 48 35 86 48 35
Leased Computer Software: Cost Opening balance 940 777 940 940 777 940 Additions 96 163 — 96 163 — Closing balance 1,036 940 940 1,036 940 940
Accumulated amortisation Opening balance 774 648 741 774 648 741 Amortisation for the period/year 125 93 33 125 93 33 Closing balance 899 741 774 899 741 774 Net book value 137 199 166 137 199 166
Motor Vehicles: Cost Opening balance 38 70 38 38 70 38 Additions — — — — — — Disposals — (32) — — (32) — Closing balance 38 38 38 38 38 38
Accumulated depreciation Opening balance 13 13 12 13 13 12 Depreciation for the period/year 5 10 1 5 10 1 Disposals — (11) — — (11) — Closing balance 18 12 13 18 12 13 Net book value 20 26 25 20 26 25
Total property, plant and equipment, at cost 12,901 8,832 9,895 12,591 8,611 9,680
Total property, plant and equipment, net 5,512 3,519 4,260 5,360 3,401 4,157 For personal use only use personal For 1 We are required to provide the 3 months ending 30 September 2007 because of the transition to a September Year End. We do not believe the 3 months ending September 2007 to be meaningful and it cannot be extrapolated to provide a 12 month equivalent figure.
68 n 2008 Annual Report Technology One Limited Consolidated Parent As at As at As at1 As at As at As at1 30 Sept 30 June 30 Sept 30 Sept 30 June 30 Sept 2008 2007 2007 2008 2007 2007 $000 $000 $000 $000 $000 $000
Note 9. Intangible Assets and Goodwill
Intellectual Property/Source Code: Cost Opening balance 480 480 480 480 480 480 Additions 2,630 — — 1,000 — — Closing balance 3,110 480 480 1,480 480 480
Accumulated amortisation Opening balance 352 317 345 352 317 345 Amortisation for the period/year 211 28 7 28 28 7 Closing balance 563 345 352 380 345 352 Net book value 2,547 135 128 1,100 135 128
Purchased Goodwill: Cost Opening balance 9,464 9,464 9,464 9,464 9,464 9,464 Additions 5,257 — — — — — Closing balance 14,721 9,464 9,464 9,464 9,464 9,464 Net book value 14,721 9,464 9,464 9,464 9,464 9,464 Total intangible assets, at cost 17,831 9,944 9,944 10,944 9,944 9,944 Total intangible assets, net 17,268 9,599 9,592 10,564 9,599 9,592
1 We are required to provide the 3 months ending 30 September 2007 because of the transition to a September Year End. We do not believe the 3 months ending September 2007 to be meaningful and it cannot be extrapolated to provide a 12 month equivalent figure.
Impairment Testing of Goodwill
Goodwill acquired through business combinations has been allocated to the software engineering cash-generating unit. This cash-generating unit is a reportable segment.
The recoverable amount of the software engineering unit has been determined based on a value-in-use calculation using cash flow projections based on financial budgets approved by senior management covering a five year period.
The discount rate applied to cash flow projections is 16.22% pre-tax (2007: 16.16%).
The key assumptions used in value-in-use calculations for 30 September 2008 and 2007 and 30 June 2007 are:
• Budgeted margins – the basis used to determine the value assigned to budgeted margin is the average margin achieved in the year immediately before the budgeted year.
• Bond rates – the yield on a five year government bond rate at the beginning of the budgeted year is used. For personal use only use personal For
Technology One Limited 2008 Annual Report n 69 Notes to the Financial Statements continued
Consolidated Parent As at As at As at1 As at As at As at1 30 Sept 30 June 30 Sept 30 Sept 30 June 30 Sept 2008 2007 2007 2008 2007 2007 $000 $000 $000 $000 $000 $000
Note 10. Payables Trade payables (i) 5,978 4,316 3,398 5,570 4,034 3,232 Directors’ fees 54 89 54 54 89 54 Sundry creditors (i) 704 1,663 404 582 1,268 359 6,736 6,068 3,856 6,206 5,391 3,645
1 We are required to provide the 3 months ending 30 September 2007 because of the transition to a September Year End. We do not believe the 3 months ending September 2007 to be meaningful and it cannot be extrapolated to provide a 12 month equivalent figure.
(i) Trade payables and sundry creditors are non-interest bearing and are normally settled on 30 day terms. No interest is payable on outstanding balances. The Company has financial risk management policies in place to ensure that all payables are paid within the credit timeframe.
Consolidated Parent As at As at As at1 As at As at As at1 30 Sept 30 June 30 Sept 30 Sept 30 June 30 Sept 2008 2007 2007 2008 2007 2007 $000 $000 $000 $000 $000 $000
Note 11. Provisions (Current) Annual leave 3,517 2,608 2,861 3,337 2,454 2,745 Long service leave 2,098 1,192 1,378 2,098 1,192 1,378 5,615 3,800 4,239 5,435 3,646 4,123
Note 12. Interest Bearing Liabilities Current Lease liability (Note 16) – secured at amortised cost 846 706 649 846 706 649
Non-current Lease liability (Note 16) – secured at amortised cost 1,063 1,212 1,089 1,063 1,212 1,089
Note 13. Provisions (Non-current) Long service leave 799 883 829 799 883 829
1 We are required to provide the 3 months ending 30 September 2007 because of the transition to a September Year End. We do not believe the 3 months
ending September 2007 to be meaningful and it cannot be extrapolated to provide a 12 month equivalent figure. For personal use only use personal For
70 n 2008 Annual Report Technology One Limited Consolidated Parent As at As at As at1 As at As at As at1 30 Sept 30 June 30 Sept 30 Sept 30 June 30 Sept 2008 2007 2007 2008 2007 2007 $000 $000 $000 $000 $000 $000
Note 14. Contributed Equity Ordinary shares 23,863 23,341 23,556 23,863 23,341 23,556
Movements in Contributed Equity for the Year: Number of Ordinary Shares ’000
As at As at As at1 As at As at As at1 30 Sept 30 June 30 Sept 30 Sept 30 June 30 Sept 2008 2007 2007 2008 2007 2007
Opening number of shares 298,353 296,659 297,659 298,353 296,659 297,659 Shares issued 154 — — 154 — — Options exercised – refer below 363 1,000 694 363 1,000 694 Closing number of shares 298,870 297,659 298,353 298,870 297,659 298,353
A reconciliation of movements in the dollar value of contributed equity is included in the Statement of Changes in Equity.
1 We are required to provide the 3 months ending 30 September 2007 because of the transition to a September Year End. We do not believe the 3 months ending September 2007 to be meaningful and it cannot be extrapolated to provide a 12 month equivalent figure.
Employee Share Option Plan
Share options are granted to employees at the discretion of the Executive Chairman. The exercise price of the options is set based on future expected share price movements. The options vest if and when the employees satisfies the period of service contained in each option grant. The contractual life of each option varies between two and five years. There are no cash settlement alternatives.
The following table lists the average inputs into the model used to value options. No options were issued in the period 1 July 2007 to 30 September 2007.
Consolidated 1 October 2007 to 1 July 2006 to 30 September 2008 30 June 2007
Dividend yield (%) 4.3% 4.4% Expected volatility (%) 30.5% 22.7% Risk free interest rate (%) 6.5% 5.9% Expected life of option (years) 5.00 4.00 Option exercise price ($) 0.41 0.35
Weighted average share price at grant date ($) 0.82 0.77 For personal use only use personal For
Technology One Limited 2008 Annual Report n 71 Notes to the Financial Statements continued
Note 14. Contributed Equity continued
Employee Options Over Ordinary Shares in Technology One Limited (a): 30 September 2008
5 May 25 August 1 July 31 October 24 September Issue Date 2008 2006 2004 2002 2002
Number of options
On issue at beginning of the period — 1,860,000 4,825,000 43,750 362,500
Issued during the period 1,000,000 — — — —
Exercised during the period — — — — (362,500)
Cancelled and expired during the period — — — — —
Outstanding at date of Directors’ Report 1,000,000 1,860,000 4,825,000 43,750 —
Number of recipients 1 10 4 2 33 Exercise price (b) $0.41 $0.35 $0.33 $0.31 $0.36
Exercise period (commencement) Nov 2010 Aug 2008 Jul 2007 Oct 2004 Jan 2003 to Nov 2014 to Aug 2014 to Jul 2011 to Oct 2007 to Nov 2006
Expiration date Nov 2015 Aug 2018 Jun 2012 Oct 2006 Jan 2005 to Nov 2019 to Aug 2024 to Jun 2016 to Oct 2009 to Nov 2008
Fair value of option at issue date (c) $0.37 $0.33 $0.15 to $0.39 to $0.40 to $0.19 $0.12 $0.11
30 June 2007
25 August 1 July 31 October 24 September 12 September Issue Date 2006 2004 2002 2002 2002
Number of options
On issue at beginning of the year — 5,500,000 106,250 1,030,000 420,000
Issued during the year 1,860,000 — — — —
Exercised during the year — — (62,500) (592,500) (345,000)
Cancelled and expired during the year — — — (56,250) (75,000)
Outstanding at date of Directors’ Report 1,860,000 5,500,000 43,750 381,250 —
Number of recipients 10 4 2 33 3 Exercise price (b) $0.35 $0.33 $0.31 $0.36 $0.36
Exercise period (commencement) Aug 2008 Jul 2007 Oct 2004 Jan 2003 Apr 2003 For personal use only use personal For to Aug 2014 to Jul 2011 to Oct 2007 to Nov 2006 to May 2007
Expiration date Aug 2018 Jun 2012 Oct 2006 Jan 2005 Apr 2005 to Aug 2024 to Jun 2016 to Oct 2009 to Nov 2008 to May 2009
Fair value of option at issue date (c) $0.33 $0.15 to $0.40 to $0.19 $0.12 $0.11 $0.13
72 n 2008 Annual Report Technology One Limited Note 14. Contributed Equity continued
(a) Each option entitles the holder to purchase one share.
(b) The Executive Chairman has the discretion to increase the option exercise price.
(c) Fair values of options granted as part of remuneration are based on values determined using the binomial option pricing model. Options issued 1 July 2004 have had their fair value increased in line with modifications to the exercise price of such options approved on 25 August 2006.
30 September 20071
25 August 1 July 31 October 24 September Issue Date 2006 2004 2002 2002
Number of options
On issue at beginning of the period 1,860,000 5,500,000 43,750 381,250
Issued during the period — — — —
Exercised during the period — (675,000) — (18,750)
Cancelled and expired during the period — — — —
Outstanding at date of Directors’ Report 1,860,000 4,825,000 43,750 362,500
Number of recipients 10 4 2 33 Exercise price (b) $0.35 $0.33 $0.31 $0.36 Exercise period (commencement) Aug 2008 Jul 2007 Oct 2004 Jan 2003 to Aug 2014 to Jul 2011 to Oct 2007 to Nov 2006
Expiration date Aug 2018 Jun 2012 Oct 2006 Jan 2005 to Aug 2024 to Jun 2016 to Oct 2009 to Nov 2008 Fair value of option at issue date (c) $0.33 $0.15 to $0.40 to $0.19 $0.12 $0.11
Consolidated Parent
As at As at As at1 As at As at As at1 30 Sept 30 June 30 Sept 30 Sept 30 June 30 Sept 2008 2007 2007 2008 2007 2007 $000 $000 $000 $000 $000 $000
Note 15. Reserves
Dividend reserve 7,322 6,638 — 7,322 6,638 — Share option reserve 867 418 508 867 418 508 Foreign exchange reserve (738) (419) (812) — — — Investment revaluation reserve (473) 53 97 (473) 53 97 6,978 6,690 (207) 7,716 7,109 605
1 We are required to provide the 3 months ending 30 September 2007 because of the transition to a September Year End. We do not believe the 3 months
ending September 2007 to be meaningful and it cannot be extrapolated to provide a 12 month equivalent figure. For personal use only use personal For
Technology One Limited 2008 Annual Report n 73 Notes to the Financial Statements continued
Note 15. Reserves Continued
Dividend Reserve
The reserve records retained earnings set aside for the payment of future dividends.
Share Option Reserve
The reserve is used to record the value of equity benefits provided to employees, through share-based payment transactions.
Foreign Exchange Reserve
The reserve is used to record exchange differences arising from the translation of the Financial Statements of foreign subsidiaries.
Investment Revaluation Reserve
The reserve is used to record changes in fair values of available-for-sale investments
Consolidated Parent As at As at As at1 As at As at As at1 30 Sept 30 June 30 Sept 30 Sept 30 June 30 Sept 2008 2007 2007 2008 2007 2007 $000 $000 $000 $000 $000 $000
Note 16. Leasing Commitments Operating Lease Commitments: Non-cancellable operating leases contracted but not capitalised in the accounts are due as follows:
Not later than one year 3,095 1,442 1,776 2,889 1,243 1,776 Later than one year and not later than five years 8,621 1,653 2,257 8,530 1,645 2,257 11,716 3,095 4,033 11,419 2,888 4,033
Operating leases are entered into as a means of acquiring access to office property. Rental payments are generally fixed, but with inflation escalation clauses on which contingent rentals are determined. No renewal or purchase options exist in relation to operating leases and no operating leases contain restrictions on financing or other leasing activities.
Finance Lease Commitments: Non-cancellable finance leases capitalised in the accounts are due as follows:
Not later than one year 963 835 766 963 835 766 Later than one year and not later than five years 1,149 1,320 1,173 1,149 1,320 1,173 Total minimum lease payments 2,112 2,155 1,939 2,112 2,155 1,939 Future finance charges (203) (237) (201) (203) (237) (201) Lease liability 1,909 1,918 1,738 1,909 1,918 1,738
Current liability 846 706 649 846 706 649 Non-current liability 1,063 1,212 1,089 1,063 1,212 1,089 1,909 1,918 1,738 1,909 1,918 1,738
The finance lease liabilities above are secured by a Registered Mortgage Debenture given by the Company in favour of ANZ Banking Group Limited for the assets under lease. The Company has available leasing facilities of $3,750,000 of which $1,841,000 remain un-drawn at 30 September 2008. The borrowings carry a fixed rate of 9.12% (2007:8.72%) and have an average term of 3 years.
1 We are required to provide the 3 months ending 30 September 2007 because of the transition to a September Year End. We do not believe the 3 months
ending September 2007 to be meaningful and it cannot be extrapolated to provide a 12 month equivalent figure. For personal use only use personal For
74 n 2008 Annual Report Technology One Limited Consolidated Parent As at As at As at1 As at As at As at1 30 Sept 30 June 30 Sept 30 Sept 30 June 30 Sept 2008 2007 2007 2008 2007 2007 $000 $000 $000 $000 $000 $000
Note 17. Remuneration of Auditor Amounts received, or due and receivable, for the audit and review of the financial reports of the parent entity and any other entity in the consolidated group by:
Ernst & Young 230,000 197,500 75,000 180,500 180,000 75,000
Amounts received, or due and receivable, for other services in relation to all entities in the consolidated group by:
Ernst & Young 100,882 107,876 16,058 78,255 32,303 2,000
Other services provided by Ernst & Young in the current financial period and prior financial year were:
Due diligence 41,410 — — 41,410 — — Compliance services – taxation and statutory 27,977 53,055 9,871 5,350 32,303 2,000 Taxation advice 31,495 54,821 6,187 31,495 — — 100,882 107,876 16,058 78,255 32,303 2,000
1 We are required to provide the 3 months ending 30 September 2007 because of the transition to a September Year End. We do not believe the 3 months ending September 2007 to be meaningful and it cannot be extrapolated to provide a 12 month equivalent figure.
Consolidated As at As at As at1 30 September 30 June 30 September 2008 2007 2007 Note 18. Earnings Per Share Earnings used for calculating basic and diluted earnings per share ($000) 17,229 14,781 488
Basic earnings per share (cents per share) 5.77 4.97 0.16
Diluted earnings per share (cents per share) 5.68 4.88 0.16
Weighted average number of ordinary shares used in the calculation of basic earnings per share
298,674,404 297,121,074 297,879,572
Weighted average number of ordinary shares and potential ordinary shares used in the calculation of diluted earnings per share
303,444,710 302,773,663 302,627,866
There are no potentially dilutive share instruments not included in the calculation of diluted earnings per share.
1 We are required to provide the 3 months ending 30 September 2007 because of the transition to a September Year End. We do not believe the 3 months
ending September 2007 to be meaningful and it cannot be extrapolated to provide a 12 month equivalent figure. For personal use only use personal For
Technology One Limited 2008 Annual Report n 75 Notes to the Financial Statements continued
Note 19. Segment Reporting
Primary Segments – Business Units Service Software Delivery Engineering Unallocated Consolidated $000 $000 $000 $000
Twelve Months Ended 30 September 2008
Revenue External sales 90,838 13,785 3,868 108,491 Other revenue 75 104 1,545 1,724 Inter-segment sales — 23,629 — 23,629 90,913 37,518 5,413 133,844 Inter-segment elimination (23,629) Total consolidated revenue 110,215
Result Segment result (before tax) 28,508 8,560 (13,939) 23,129 Income tax expense (5,900) Net profit 17,229
Assets and Liabilities Total segment assets 22,297 15,680 35,445 73,422 Total segment liabilities 10,937 6,202 5,769 22,908
Other Segment Information Capital expenditure 703 756 546 2,005 Depreciation and amortisation 650 734 688 2,072 Total non-cash expenses 423 285 380 1,088
Cash Flow Information Net cash flow from operating activities 19,521 6,995 (14,734) 11,782 Net cash flow from investing activities (768) (2,239) (6,926) (9,932) Net cash flow from financing activities — — (4,854) (4,854)
For personal use only use personal For
76 n 2008 Annual Report Technology One Limited Note 19. Segment Reporting continued
Primary Segments – Business Units Service Software Delivery Engineering Unallocated Consolidated $000 $000 $000 $000
Twelve Months Ended 30 June 2007
Revenue External sales 65,239 10,505 1,079 76,823 Other revenue 1 2 1,541 1,544 Inter-segment sales — 17,304 — 17,304 65,240 27,811 2,620 95,671 Inter-segment elimination (17,304) Total consolidated revenue 78,367
Result Segment result (before tax) 21,182 7,801 (9,211) 19,772 Income tax expense (4,991) Net profit 14,781
Assets and Liabilities Total segment assets 17,042 16,942 31,102 65,086 Total segment liabilities 10,991 3,926 5,857 20,774
Other Segment Information Capital expenditure 854 946 456 2,256 Depreciation and amortisation 619 518 266 1,403 Total non-cash expenses 331 479 195 1,005
Cash Flow Information Net cash flow from operating activities 17,828 4,685 (4,798) 17,715 Net cash flow from investing activities (494) (307) (247) (1,048)
Net cash flow from financing activities — — (10,126) (10,126) For personal use only use personal For
Technology One Limited 2008 Annual Report n 77 Notes to the Financial Statements continued
Note 19. Segment Reporting continued
Primary Segments – Business Units Service Software Delivery Engineering Unallocated Consolidated $000 $000 $000 $000
Three Months Ended 30 September 20071
Revenue External sales 12,272 2,938 1,580 16,790 Other revenue — — 342 342 Inter-segment sales — 2,978 — 2,978 12,272 5,916 1,922 20,110 Inter-segment elimination (2,978) Total consolidated revenue 17,132
Result Segment result (before tax) 2,591 850 (2,800) 641 Income tax expense (153) Net profit 488
Assets and Liabilities Total segment assets 12,050 14,093 28,795 54,928 Total segment liabilities 7,053 4,795 4,974 16,822
Other Segment Information Capital expenditure 460 508 222 1,190 Depreciation and amortisation 187 153 87 427 Total non-cash expenses 125 167 754 1,046
Cash Flow Information Net cash flow from operating activities 5,119 5,675 (6,432) 4,362 Net cash flow from investing activities (509) (566) (1,304) (2,379) Net cash flow from financing activities — — (6,435) (6,435)
Segments are comprised of:
Service delivery: The marketing, sale and implementation of core software products; and
Software engineering: The development of purpose built software to meet the needs of specific customers, plus the continuing research and development and support of core products.
Unallocated items mainly comprise other revenue and corporate expenses.
Segment results, assets and liabilities include items directly attributable to a segment as well as those that can be allocated on a reasonable basis. Segment capital expenditure is the total cost incurred during the year to acquire segment assets that are expected to be used for more than one year.
Secondary Segments – Geographical Australia New Zealand International Total $000 $000 $000 $000
30 September 2008 Total consolidated revenue 100,738 7,452 2,025 110,215 Total segment assets 64,003 7,510 1,909 73,422
30 June 2007
For personal use only use personal For Total consolidated revenue 69,226 7,312 1,829 78,367 Total segment assets 61,410 2,456 1,220 65,086
30 September 20071 Total consolidated revenue 15,947 968 217 17,132 Total segment assets 53,375 1,076 477 54,928
1 We are required to provide the 3 months ending 30 September 2007 because of the transition to a September Year End. We do not believe the 3 months ending September 2007 to be meaningful and it cannot be extrapolated to provide a 12 month equivalent figure.
78 n 2008 Annual Report Technology One Limited Note 20. Directors and Key Management Personnel Disclosures
(a) Details of Directors and Key Management Personnel
The following persons held the position of director or key management personnel of Technology One Limited during all of the past financial period, unless otherwise stated:
(i) Directors A Di Marco Executive Chairman R McLean Director (Non-Executive) J Mactaggart Director (Non-Executive) K Blinco Director (Non-Executive) R Anstey Director (Non-Executive) E Chung Director (Executive) (appointed 14 May 2008)
(ii) Key Management Personnel R Down Operating Officer – New Business Development M Culverson Operating Officer – Consulting Services R Phare Operating Officer – Sales and Marketing P Cameron Operating Officer – Research & Development D Orchard Chief Financial Officer and Company Secretary
(b) Remuneration of Directors and Key Management Personnel
(i) Remuneration Practices The Executive Remuneration Committee of the Board of Directors of the company is responsible for determining and reviewing compensation arrangements for the Executive Chairman (EC) and the Key Management Personnel (executives). The remuneration of the Directors is approved at an Annual General Meeting of the shareholders. In considering the remuneration to be paid to executives, the following principles are applied: • The Company should provide the packages needed to attract, retain and motivate highly talented and experienced executives. • The Company should judge where to position itself relative to other companies. This involves being aware of comparable companies’ pay, but to exercise caution. • The Company should be sensitive to the wider scene, especially with regard to salary increases. • Performance related elements should form a significant proportion of the package, should align interests with those of shareholders and should provide keen incentives. • The performance of the Company depends upon the quality of its directors and executives. To prosper, the Company must attract, motivate and retain highly skilled directors and executives. • Lastly, the Company must take in specific and unique conditions that may apply in individual circumstances in order to attract and retain the right executive team in the long term. The Company aims to reward executives with a level and mix of remuneration commensurate with their position and responsibilities within the Company and so as to: • Reward executives for Company, business unit and individual performance against targets • Align the interests of executives with those of shareholders • Link reward with the strategic goals and performance of the Company • Ensure total remuneration is competitive by market standards. Remuneration consists of the following key elements: • Fixed remuneration
• Incentive component (performance related bonus) For personal use only use personal For • Long term incentive component (share options).
Technology One Limited 2008 Annual Report n 79 Notes to the Financial Statements continued
Note 20. Directors and Key Management Personnel Disclosures continued
Fixed Remuneration
The level of fixed remuneration is set so as to provide a base level of remuneration which is both appropriate to the position and is competitive in the market. Executives are given the opportunity to receive their fixed (primary) remuneration in a variety of forms including cash and fringe benefits such as motor vehicles.
Incentive Component
The objective of the incentive program is to link the achievement of the Company’s profit target with the remuneration received by the executives charged with meeting those targets. For each executive, the incentive is based on the relevant divisions, net profit before tax (NPBT) figure. NPBT has been chosen as it is the key indicator of performance. It is calculated in accordance with statutory reporting requirements.
Long Term Incentives
The objective of having long term incentives for executives is to reward executives in a manner which aligns this element of remuneration with the Company’s interests. By having an equity interest in the Company, it aligns the executives’ actions with the interests of shareholders. The executives must meet continued service conditions in order to exercise these options.
The Company does not have a policy governing employee risk management for personal exposures on equity instruments such as options.
Employment Contracts
The Executive Chairman, Mr Di Marco, is employed under contract. The current employment contract commenced on 1 December 1999 and continues until terminated in accordance with the agreement. Under the terms of the present contract:
• Mr Di Marco may resign from his position and thus terminate this contract by giving not less than three months written notice
• The Company may terminate this employment agreement by either providing three months written notice or by paying the appropriate proportion of the termination remuneration package in lieu thereof.
All other executives are employed on a continuing basis.
Apart from termination benefits which accrue under statute, or mentioned above (such as unpaid annual leave, long service leave), there are no retirement
benefits for executive directors and executives. For personal use only use personal For
80 n 2008 Annual Report Technology One Limited Note 20. Directors and Key Management Personnel Disclosures continued
(ii) Remuneration of Directors and Key Management Personnel
Details of remuneration provided to Directors and to the Key Management Personnel are as follows: Long Term Emoluments Performance Share Base Directors’ Related Super- Retirement Options Financial Salary Fee Bonus** annuation Benefits Granted* Total Year $ $ $ $ $ $ $
Directors A Di Marco 1/10/07-30/9/08 377,531 33,748 374,554 33,020 — — 818,853 (Executive) 1/7/06-30/6/07 361,990 30,680 337,141 28,833 — — 758,644 1/7/07-30/9/071 91,985 7,670 23,881 7,450 — — 130,986
R McLean 1/10/07-30/9/08 — 33,748 — — — — 33,748 (Non-Executive) 1/7/06-30/6/07 — 30,680 — — — — 30,680 1/7/07-30/9/071 — 7,670 — — — — 7,670
J Mactaggart 1/10/07-30/9/08 — 33,748 — — — — 33,748 (Non-Executive) 1/7/06-30/6/07 — 30,680 — — — — 30,680 1/7/07-30/9/071 — 7,670 — — — — 7,670
K Blinco 1/10/07-30/9/08 — 33,748 — — — — 33,748 (Non-Executive) 1/7/06-30/6/07 — 30,680 — — — — 30,680 1/7/07-30/9/071 — 7,670 — — — — 7,670
R Anstey 1/10/07-30/9/08 — 33,748 — — — — 33,748 (Non-Executive) 1/7/06-30/6/07 — 30,680 — — — — 30,680 1/7/07-30/9/071 — 7,670 — — — — 7,670
S Larwill 1/10/07-30/9/08 — — — — — — — (Non-Executive) 1/7/06-30/6/07 — 10,590 — — — — 10,590 (Retired 3/11/06) 1/7/07-30/9/071 — — — — — — —
E Chung (i) 1/10/07-30/9/08 190,766 12,655 87,103 17,169 — 27,532 335,225 (Executive) 1/7/06-30/6/07 — — — — — — — (Appointed 14/05/08) 1/7/07-30/9/071 — — — — — — —
Total Directors, 1/10/07-30/9/08 568,297 181,395 461,657 50,189 — 27,532 1,289,071 Remuneration 1/7/06-30/6/07 361,990 163,990 337,141 28,833 — — 891,954 1/7/07-30/9/071 91,985 38,350 23,881 7,450 — — 161,666
1 We are required to provide the 3 months ending 30 September 2007 because of the transition to a September Year End. We do not believe the 3 months
ending September 2007 to be meaningful and it cannot be extrapolated to provide a 12 month equivalent figure. For personal use only use personal For
Technology One Limited 2008 Annual Report n 81 Notes to the Financial Statements continued
Note 20. Directors and Key Management Personnel Disclosures continued Long Term Emoluments Performance Share Base Directors’ Related Super- Retirement Options Financial Salary Fee Bonus** annuation Benefits Granted* Total Year $ $ $ $ $ $ $
Key Management Personnel R Down 1/10/07-30/9/08 194,191 — 245,171 17,478 — 88,562 545,402 (Operating Officer, 1/7/06-30/6/07 186,124 — 313,225 16,792 — 68,257 584,398 New Business 1/7/07-30/9/071 47,303 — — 4,314 — 24,966 76,583 Development)
M Culverson 1/10/07-30/9/08 163,728 — 329,544 15,964 — 76,985 586,221 (Operating Officer, 1/7/06-30/6/07 157,691 — 193,196 14,192 — 52,962 418,041 Consulting Services) 1/7/07-30/9/071 39,883 — — 3,637 — 19,381 62,901
R Phare 1/10/07-30/9/08 163,728 — 329,544 15,964 — 47,352 556,588 (Operating Officer, 1/7/06-30/6/07 156,926 — 193,196 14,124 — 32,109 396,355 Sales and Marketing) 1/7/07-30/9/071 39,883 — — 3,637 — 11,714 55,234
P Cameron 1/10/07-30/9/08 183,574 — 91,545 16,522 — 54,414 346,055 (Operating Officer, 1/7/06-30/6/07 175,947 — 78,118 15,836 — 38,040 307,941 Research & 1/7/07-30/9/071 44,717 — — 4,078 — 13,883 62,678 Development)
D Orchard 1/10/07-30/9/08 145,641 — — 13,109 — 13,548 172,298 (Chief Financial 1/7/06-30/6/07 127,522 — — 11,478 — 6,911 145,911 Officer and Company 1/7/07-30/9/071 33,257 — — 2,993 — 2,993 39,243 Secretary)
Total Remuneration: 1/10/07-30/9/08 850,862 — 995,804 79,037 — 280,861 2,206,564 Key Management 1/7/06-30/6/07 804,210 — 777,735 72,422 — 198,279 1,852,646 Personnel 1/7/07-30/9/071 205,043 — — 18,659 — 72,937 296,6396
1 We are required to provide the 3 months ending 30 September 2007 because of the transition to a September Year End. We do not believe the 3 months
ending September 2007 to be meaningful and it cannot be extrapolated to provide a 12 month equivalent figure. For personal use only use personal For
82 n 2008 Annual Report Technology One Limited Note 20. Directors and Key Management Personnel Disclosures continued
(i) E Chung joined TechnologyOne on 5 November 2007 as an Operating Officer – Corporate Services and was appointed a Director on 14 May 2008. The remuneration presented is from 5 November 2007.
The percentage of remuneration comprising options and performance related bonus was: E Chung 34.1%, R Down 61.1%, M Culverson 69.3%, R Phare 67.7%, P Cameron 42.1% and D Orchard 7.9%. All Directors and Key Management Personnel who were entitled to a performance related bonus received their full entitlement.
* Options granted as part of remuneration are estimates only. The estimates are based on the degree of probability of future performance hurdles being met, combined with the use of the binomial option pricing model.
** The objective of the Bonus program is to link the achievement of the Company’s profit target with the remuneration received by the executives charged with meeting those targets. The incentive is based on the Company’s NPBT figure. NPBT has been chosen as it is the key indicator of performance. It is calculated in accordance with statutory reporting requirements.
In accordance with the disclosure requirements of Section 300A(a)(c) of the Corporations Act 2001, the above key management personnel are the five relevant group executives who received the highest remuneration for the period.
(c) Share Options: Granted and Vested During the Financial Period
1,000,000 options were issued during the financial year to one director. (Sept 2007: No options were issued).
(d) Option Holdings of Directors and Key Management Personnel
Balance at Beginning Balance at Vested at of Year Granted as Options Net Change End of Year 30 Sept 2008 1 Oct 2007 Remuneration Exercised Other 30 Sept 2008 Exercisable
Directors E Chung — 1,000,000 — — 1,000,000 —
Key Management Personnel R Down 1,500,000 — — — 1,500,000 300,000 M Culverson 1,350,000 — — — 1,350,000 275,000 R Phare 875,000 — — — 875,000 175,000 P Cameron 1,100,000 — — — 1,100,000 400,000 D Orchard 300,000 — — — 300,000 30,000
5,125,000 1,000,000 — — 6,125,000 1,180,000
Balance at Beginning Balance at Vested at of Year Granted as Options Net Change End of Year 30 June 2007 1 July 2006 Remuneration Exercised Other 30 June 2007 Exercisable
Key Management Personnel R Down 1,800,000 — — — 1,800,000 — M Culverson 1,600,000 — — — 1,600,000 — R Phare 1,055,000 — (55,000) — 1,000,000 — P Cameron 1,100,000 — — — 1,100,000 — D Orchard — 300,000 — — 300,000 —
5,555,000 300,000 (55,000) — 5,800,000 — For personal use only use personal For
Technology One Limited 2008 Annual Report n 83 Notes to the Financial Statements continued
Note 20. Directors and Key Management Personnel Disclosures continued
Balance at Beginning Balance at Vested at of Period Granted as Options Net Change End of Period 30 Sept 2007 1 July 2007 Remuneration Exercised Other 30 Sept 2007 Exercisable
Key Management Personnel R Down 1,800,000 — (300,000) — 1,500,000 — M Culverson 1,600,000 — (250,000) — 1,350,000 — R Phare 1,000,000 — (125,000) — 875,000 — P Cameron 1,100,000 — — — 1,100,000 200,000 D Orchard 300,000 — — — 300,000 —
5,800,000 — (675,000) — 5,125,000 200,000
All of the Key Management Personnel participated in the share options granted on 1 July 2004, except D Orchard who participates in options granted on 25 August 2006. E Chung was the only Director to participate in the share options granted on 5 May 2008.
(e) Shareholdings of Directors and Key Management Personnel (Number of Shares)
Balance Balance Granted as On Exercise Purchases/ 30 Sept 1 Oct 2007 Remuneration of Options (Sales) 2008
Directors A Di Marco 55,378,500 — — — 55,378,500 R McLean 500,000 — — — 500,000 J Mactaggart 69,902,500 — — (3,000,000) 66,902,500 K Blinco 201,285 — — — 201,285 R Anstey 15,000 — — — 15,000 E Chung — — — — —
Key Management Personnel R Down 320,000 — — (290,000) 30,000 M Culverson 305,000 — — (275,000) 30,000 R Phare 195,000 — — (85,000) 110,000 P Cameron 15,000 — — — 15,000 D Orchard 224,351 — — — 224,351
127,056,636 — — (3,650,000) 123,406,636
Balance Balance Granted as On Exercise Purchases/ 30 June 1 July 2006 Remuneration of Options (Sales) 2007
Directors A Di Marco 70,378,500 — — (9,000,000) 61,378,500 R McLean 500,000 — — — 500,000 J Mactaggart 75,902,500 — — (6,000,000) 69,902,500 K Blinco 201,285 — — — 201,285 R Anstey 15,000 — — — 15,000
Key Management Personnel
R Down 300,000 — — (280,000) 20,000 For personal use only use personal For M Culverson 110,000 — — (55,000) 55,000 R Phare 45,000 — 55,000 (30,000) 70,000 P Cameron 50,000 — — (35,000) 15,000 D Orchard 224,351 — — — 224,351
147,726,636 — 55,000 (15,400,000) 132,381,636
84 n 2008 Annual Report Technology One Limited Note 20. Directors and Key Management Personnel Disclosures continued Balance Balance Granted as On Exercise Purchases/ 30 Sept 1 July 2007 Remuneration of Options (Sales) 2007
Directors A Di Marco 61,378,500 — — (6,000,000) 55,378,500 R McLean 500,000 — — — 500,000 J Mactaggart 69,902,500 — — — 69,902,500 K Blinco 201,285 — — — 201,285 R Anstey 15,000 — — — 15,000
Key Management Personnel R Down 20,000 — 300,000 — 320,000 M Culverson 55,000 — 250,000 — 305,000 R Phare 70,000 — 125,000 — 195,000 P Cameron 15,000 — — — 15,000 D Orchard 224,351 — — — 224,351
132,381,636 — 675,000 (6,000,000) 127,056,636
All equity transactions with Directors and Key Management Personnel other than those arising from the exercise of remuneration options have been entered into under terms and conditions no more favourable than those the entity would have adopted if dealing at arm’s length.
(f) Other Transactions and Balances with Directors and Key Management Personnel
During the financial year the Royal Children’s Hospital Foundation Qld (RCHF) purchased consulting services of $18,028 and post sales customer support of $14,761 from TechnologyOne. The sale was on normal business terms and conditions. Mr Di Marco is a Director of Technology One Limited and RCHF.
(Sept 2007: Mr Di Marco is a Director of Technology One Limited, and the Royal Children’s Hospital Foundation Qld (RCHF) and RCHF purchased implementation services of $13,425 from TechnologyOne. The sale was on normal business terms and conditions.)
Note 21. Related Party Disclosures
(a) Ultimate Controlling Entity
The ultimate controlling entity of the consolidated entity is Technology One Limited, a company incorporated in Australia.
(b) Transactions with Related Parties in the Wholly-Owned Group
The parent entity entered into the following transactions during the year with related parties in the wholly-owned group:
• Loans were advanced and repayments received on short term intercompany accounts.
• Marketing support and management fees were charged to wholly-owned controlled entities.
These transactions were undertaken on commercial terms and conditions. Amounts due to and receivable from related parties in the wholly-owned group are set out in the respective notes to the Financial Statements.
The ownership interest in related parties in the wholly-owned group is set out in Note 25. For personal use only use personal For
Technology One Limited 2008 Annual Report n 85 Notes to the Financial Statements continued
Note 22. Employee Benefits
Consolidated Parent As at As at As at1 As at As at As at1 30 Sept 30 June 30 Sept 30 Sept 30 June 30 Sept 2008 2007 2007 2008 2007 2007 $000 $000 $000 $000 $000 $000
The number of full-time equivalents employed at period end 677 444 490 635 415 460
Note 23. Foreign Currency Exposure Consolidated As at As at As at1 30 September 30 June 30 September 2008 2007 2007 Current Assets Australian Dollar equivalents of amounts receivable in foreign currency which are not effectively hedged: Malaysian Ringgit 80 34 70 New Zealand Dollars 1,547 1,633 479 United States Dollars 1,024 1,046 1,000 Great British Pounds 276 71 318
Current Liabilities Australian Dollar equivalents amounts payable in foreign currency which are not effectively hedged: Malaysian Ringgit 2 4 — New Zealand Dollars 37 75 50 Great British Pounds 138 34 38
1 We are required to provide the 3 months ending 30 September 2007 because of the transition to a September Year End. We do not believe the 3 months ending September 2007 to be meaningful and it cannot be extrapolated to provide a 12 month equivalent figure.
Note 24. Financial instruments
(i) Interest Rate and Maturity Risk
The Company is exposed to interest rate risk through financial assets and liabilities. The following table summarises interest rate risk, together with effective interest rates as at balance date and the maturity.
Fixed Interest Rate Maturing In Floating Over Non- Interest 1 Year 1 to 5 More than Interest Average Interest Rate (a) or Less Years 5 Years Bearing Total Rate 30 September 2008 $000 $000 $000 $000 $000 $000 Floating Fixed
Financial Assets Cash 18,422 — — — — 18,422 7.40% 5.52% - Listed securities 5,262 — — — — 5,262 9.92% Trade debtors — — — — 19,299 19,299 Sundry debtors — — — — 1,034 1,034 23,684 — — — 19,950 44,017
Financial Liabilities For personal use only use personal For Trade creditors — — — — 2,079 2,079 Lease liability (b) — 846 1,063 — — 1,909 9.12% — 846 1,063 — 2,079 3,988
86 n 2008 Annual Report Technology One Limited Note 24. Financial Instruments continued
Fixed Interest Rate Maturing In Floating Over Non- Interest 1 Year 1 to 5 More than Interest Average Interest Rate (a) or Less Years 5 Years Bearing Total Rate 30 June 2007 $000 $000 $000 $000 $000 $000 Floating Fixed
Financial Assets Cash 25,878 — — — — 25,878 6.42% 7.057% - Listed securities 2,931 — — — — 2,931 9.09% Trade debtors — — — — 16,841 16,841 Sundry debtors — — — — 344 344 28,809 — — — 17,185 45,994
Financial Liabilities
Trade creditors — — — — 4,316 4,316 Lease liability — 706 1,212 — — 1,918 8.02% — 706 1,212 — 4,316 6,234
(a) Floating interest rates represent the most recently determined rate applicable to the instrument at balance date.
(b) The lease liability maturity risk profile is spread evenly in the bands noted above.
Note: The carrying amounts of finance instruments shown above approximate their fair value. At 30 September 2008 the Company had no debt other than finance lease liabilities as disclosed in Note 16.
Fixed Interest Rate Maturing In Floating Over Non- Interest 1 Year 1 to 5 More than Interest Average Interest Rate (a) or Less Years 5 Years Bearing Total Rate 30 September 20071 $000 $000 $000 $000 $000 $000 Floating Fixed
Financial Assets Cash 21,426 — — — — 21,426 6.6% 7.07% - Listed securities 4,175 — — — — 4,175 9.12% Trade debtors — — — — 10,094 10,094 Sundry debtors — — — — 347 347 25,601 — — — 10,441 36,042
Financial Liabilities
Trade creditors — — — — 1,304 1,304 Lease liability (b) — 649 1,089 — — 1,738 8.72% — 649 1,089 — 1,304 3,042
1 We are required to provide the 3 months ending 30 September 2007 because of the transition to a September Year End. We do not believe the 3 months ending September 2007 to be meaningful and it cannot be extrapolated to provide a 12 month equivalent figure.
(ii) Available for Sale Investments
At 30 September 2008 and 2007, and 30 June 2007, the Company held investments in available-for-sale instruments. These instruments represented reset preference shares traded on the Australian Securities Exchange paying interest as opposed to dividends. The exposure on these instruments is principally
interest related. At each reporting date the fair value of these shares is determined as the close bid price published by the Australian Securities Exchange. For personal use only use personal For Any movements in the fair value of these instruments are included in an equity reserve. Fixed returns are recorded as interest as received.
The designation of available-for-sale investments is made on acquisition. Where the intent is not to acquire an instrument for short term profit, taking the instrument is classified as available for sale.
Technology One Limited 2008 Annual Report n 87 Notes to the Financial Statements continued
Note 25. Controlled Entities
The consolidated Financial Statements at 30 September 2008 include the following controlled entities. The financial years of all controlled entities are the same as that for the parent entity. Place of % of Shares Held % of Shares Held % of Shares Held Name of Controlled Entity Incorporation 30 Sept 2008 30 June 2007 30 Sept 2007
Technology One Corporation SDN BHD Malaysia 100 100 100
Technology One New Zealand Ltd New Zealand 100 100 100
Technology One UK Limited England 100 100 100
Avand Pty Ltd Australia 100 — —
Avand (New Zealand) Ltd New Zealand 100 — —
The parent entity is Technology One Limited, a public company, limited by shares and is domiciled in Brisbane, Australia and whose shares are traded on the Australian Securities Exchange. All entities operate in the software industry in their geographical locations.
The Registered office is located at:
Ground Floor 67 High Street Toowong QLD 4066 Note 26. Contingent Liabilities and Financing Facilities
Guarantees and Security Pledges
At period end the Company had $4,223,378 (2007: $2,723,789) in outstanding performance guarantees. The total available guarantee facility is $4,300,000 (2007: $3,600,000). The Company also has unused foreign currency dealing limits of $1,100,000.
Parent Company Support
The parent entity, Technology One Limited, continues to support its subsidiaries in their operations, by way of financial support.
Note 27. Financial Risk Management
(i) Capital Risk Management
The Company manages its capital to ensure that entities in the group will be able to continue as a going concern while maximising the return to stakeholders through the optimisation of the debt and equity balance.
The current risk management structure of the Company is to use all equity funding except for funding required to purchase core information technology assets which is funded by a leasing facility.
The equity funded position of the Company is managed by the Board through dividends, new shares and share buy backs as well as the issue of new
equity where considered appropriate to fund business acquisitions. For personal use only use personal For
88 n 2008 Annual Report Technology One Limited Note 27. Financial Risk Management continued
(ii) Financial Instruments and Risk Management
The Company’s principal financial instruments are finance leases, cash and short term deposits and assets available-for-sale.
The Company has various other financial assets and liabilities such as trade receivables and trade payables, which arise directly from its operations.
It is, and has been throughout the period under review, the Company’s policy that no trading in financial instruments shall be undertaken. The main risks arising from the Company’s financial assets and liabilities are interest rate risk, foreign currency risk and credit risk. The Board reviews and agrees policies for managing each of these risks and they are summarised below.
Details of the significant accounting policies and methods adopted, including the criteria for recognition, the basis of measurement and the basis on which income and expenses are recognised, in respect of each class of financial asset, financial liability and equity instrument are disclosed in Note 1 to the Financial Statements.
There are no changes in the financial risks faced by the Company in the period.
(iii) Foreign Currency Risk
As a result of investments operations in New Zealand, Malaysia and the United Kingdom and sales contracts denominated in United States Dollars, the Company’s Balance Sheet can be affected by movements in the exchange rates applicable to these geographical locations and currencies.
The Company does not hedge this risk. Foreign currency exposure is shown in Note 23 in terms of monetary assets and liabilities at balance date. Foreign currency sensitivity is shown below.
(iv) Credit Risk
The Company trades only with recognised, credit-worthy third parties. It is the Company’s policy that all customers who wish to trade on credit terms are subject to credit verification procedures. In addition, receivable balances are monitored on an ongoing basis with the result that the Company’s exposure to bad debts is not significant.
Information on credit risk exposures is contained in Note 6.
(v) Interest Rate Risk
The Company’s cash and investment assets are exposed to movements in deposit and fixed interest rates. The Company does not hedge this exposure. Interest rate risk on leasing instruments is managed by taking out fixed interest leases. No variable interest risk exposures exist apart from trade creditors which are managed within terms. Interest rate risk on available-for-sale instruments and cash is not considered to be material.
(vi) Sensitivity to Foreign Exchange Movements
The Company is exposed to the following foreign exchange sensitivities:
• United States Dollars through contracts of sale held by the parent entity • New Zealand Dollars through the operations of Technology One New Zealand Ltd • Malaysian Ringitt through the operations of Technology One Corporation SDN BHD • Great British Pounds through the operation of Technology One UK Limited.
The following table details the Company’s sensitivity to a 10% change in the Australian Dollar against the respective foreign currencies: Consolidated Parent Sept June Sept1 Sept June Sept1 2008 2007 2007 2008 2007 2007 $000 $000 $000 $000 $000 $000
New Zealand Dollar Net profit 58 115 6 — — —
For personal use only use personal For Equity 58 115 6 — — —
United States Dollar Net profit 300 35 22 300 35 22 Equity 300 35 22 300 35 22
1 We are required to provide the 3 months ending 30 September 2007 because of the transition to a September Year End. We do not believe the 3 months ending September 2007 to be meaningful and it cannot be extrapolated to provide a 12 month equivalent figure.
The sensitivity for both the Malaysian Ringitt and the Great British Pound is not material to TechnologyOne.
Technology One Limited 2008 Annual Report n 89 Notes to the Financial Statements continued
Note 28. Business Combinations
(a) Acquisition of Avand Pty Ltd
On 31 October 2007 TechnologyOne acquired all (100%) of the issued capital of Avand Pty Ltd. Avand Pty Ltd is a Brisbane based developer and retailer of information management software.
The total cost of the combination was $9,082,000 and comprised an issue of equity instruments and the payment of cash. The Company issued 154,196 ordinary shares with a fair value of $1.10 each, based on the quoted price of the shares of Technology One Limited on 31 October 2007.
The fair value of the identifiable assets and liabilities of Avand Pty Ltd as at the date of acquisition were:
$000
Assets Cash 2,983 Receivables 1,315 Prepayments 70 Deferred tax asset 903 Property, plant and equipment 353 Intangible 1,630 Other 6 7,260
Liabilities Payables 852 Provisions 1,450 Income tax payable 743 Unearned revenue 262 Interest bearing liabilities 128 3,435
Net Assets (Assets less liabilities) 3,825
Fair value of identifiable net assets 3,825 Goodwill arising on acquisition (Note 9) 5,257 9,082 Cost of the combination: Cash consideration 8,830 154,196 Shares in Technology One Limited at $1.10 per share 170 Costs associated with the purchase 82 Total cost of the combination 9,082
The cash outflow on acquisition is as follows: Net cash acquired with the subsidiary 2,983 Cash paid (8,830)
Net consolidated cash outflow (5,847) For personal use only use personal For
90 n 2008 Annual Report Technology One Limited Note 28. Business Combinations continued
All assets and liabilities acquired reflect their book value except for intangibles which were recognised on acquisition.
From the date of acquisition, Avand Pty Ltd has contributed $499,000 to the profit before tax of the Company. After taking into account the notional cost of capital of this acquisition there was no overall effect on the Company’s profit before tax for the year.
If the combination had taken place at the beginning of the year, the profit from continuing operations for the Company would have been $544,000 and revenue from continuing operations would have been $9,944,000.
Included in the $5,257,000 of goodwill recognised above is a customer list, which is not recognised separately. Because the list is subject to a confidentiality agreement, it is not separable and therefore does not meet the criteria for recognition as an intangible asset. The other key factors contributing to the $5,257,000 of goodwill relate to the synergies existing within the acquired business and also synergies expected to be achieved as a result of combining Avand Pty Ltd with the rest of the Company.
(b) Outcome Manager
On 31 August 2008 TechnologyOne purchased the business of Outcome Manager Pty Ltd for a cost of $500,000 with a further $500,000 contingent consideration to be paid based on the performance of the product. The contribution of Outcome Manager to the 30 September 2008 reported revenue
and net profit was not material. All purchase consideration has been provisionally allocated to an intangible asset – intellectual property/data model. For personal use only use personal For
Technology One Limited 2008 Annual Report n 91 Directors’ Declaration
Note 28. Business Combinations
In the opinion of the Directors:
a) the Financial Statements and associated notes and the remuneration report of the Company and of the consolidated entity comply with the Corporations Act 2001;
b) the Financial Statements and notes give a true and fair view of the financial position of the Company and of the consolidated entity as at 30 September 2008 and of their performance for the year then ended;
c) there are reasonable grounds to believe that the Company will be able to pay its debts as and when they become due and payable; and
d) the Financial Statements and notes are in accordance with Accounting Standards and Corporations Regulations 2001.
This declaration has been made after receiving the declarations required to be made to the Directors in accordance with Section 295A of the Corporations Act 2001 for the financial year ended 30 September 2008.
Made in accordance with a resolution of the Directors.
Adrian Di Marco (Executive Chairman)
Brisbane
17 November 2008 For personal use only use personal For
92 n 2008 Annual Report Technology One Limited
Auditor Independence Declaration For personal use only use personal For
Technology One Limited 2008 Annual Report n 93
Independent Audit Report For personal use only use personal For
94 n 2008 Annual Report Technology One Limited For personal use only use personal For
Technology One Limited 2008 Annual Report n 95 TechnologyOne helps the Royal Flying Doctor Service keep track of the 21 million kilometres it
flies each year. For personal use only use personal For
96 n 2008 Annual Report Technology One Limited Shareholder Information
Substantial Shareholders as at 28 November 2008
Name Number Of Ordinary Shares
JL Mactaggart Holdings Pty Ltd 59,872,500 Masterbah Pty Ltd 55,372,500 National Nominees Limited 25,844,035 J P Morgan Nominees Australia 23,665,570 HSBC Cusstody Nominees (Australia) Limited 17,405,324
Distribution of shareholdings as at 28 November 2008
Size of Holding Ordinary Shareholders
1 to 1,000 401 1,001 to 5,000 1,389 5,001 to 10,000 1,088 10,001 to 100,000 1,412 100,001 and over 95 Total shareholders 4,385
Number of ordinary Shareholders with a less than marketable parcel 151
Voting Rights
All ordinary shares issued by Technology One Limited carry one vote per share without restriction.
Twenty Largest Shareholders as at 28 November 2008
Shareholder Name Ordinary Share Numbers %
JL Mactaggart Holdings Pty Ltd 59,872,500 20.03% Masterbah Pty Ltd 55,372,500 18.53% National Nominees Limited 25,844,035 8.65% J P Morgan Nominees Australia 23,665,570 7.92% HSBC Cusstody Nominees (Australia) Limited 17,405,324 5.82% Cogent Nominees Pty Limited 8,947,897 2.99% ANZ Nominees Limited
Superluminal Pty Ltd 500,000 0.17% For personal use only use personal For
Technology One Limited 2008 Annual Report n 97 Board of Directors Adrian Di Marco Ron McLean John Mactaggart Kevin Blinco Richard Anstey Edward Chung
Company Secretary David Orchard
Australian Business Number 84 010 487 180
Registered Office Technology One Limited TechnologyOne R&D Centre Ground Floor 67 High Street Toowong Queensland 4066 Australia www.TechnologyOneCorp.com Phone: 1800 671 978 International: +617 3377 7300
Branch Offices Brisbane Perth Darwin Hobart Corporate Sydney Kuala Lumpur Melbourne Auckland Directory Canberra Wellington Adelaide London
Auditor Ernst & Young Waterfront Place 1 Eagle Street Brisbane Queensland 4000 www.ey.com.au
Lawyer McCullough Robertson Level 12, 66 Eagle Street Brisbane Queensland 4000 www.mccullough.com.au
Share Registry Link Market Services Limited Locked Bag A14 Sydney NSW 1235 Phone: 02 8280 7454 For personal use only use personal For Fax: 02 9287 0303 www.linkmarketservices.com.au
Stock Exchange Listing Australian Securities Exchange (ASX:TNE)
Michael Preedy General Manager - Property & Rating
98 n 2008 Annual Report Technology One Limited 2009 (Year Ending 30 September 2009)
Announcement of half year results for 2009 25 May 2009
Media Interviews 25 May 2009
Presentations to Institutions - Brisbane 25 May 2009
Presentations to Institutions - Sydney 27-28 May 2009
Presentations to Institutions - Melbourne 3 June 2009
Shares quotes ex-dividend for interim dividend 1 June 2009
Record date for interim dividend 5 June 2009
Payment date for interim dividend 19 June 2009
Distribute 2009 Half Year Results 19 June 2009 Financial Calendar Announcement of Full Year Results for 2009 23 November 2009
Media Interviews 23 November 2009
Presentations to Institutions - Brisbane 23 November 2009
Presentations to Institutions - Sydney 25-26 November 2009
Presentations to Institutions - Melbourne 2 December 2009
Share quotes ex-dividend for final dividend 30 November 2009
Record date for 2009 final dividend 4 December 2009
Distribute 2009 Annual Report 18 December 2009 For personal use only use personal For
Payment date for 2009 final dividend 18 December 2009
Annual General Meeting 5 February 2010
Technology One Limited 2008 Annual Report n 99
Notes For personal use only use personal For
100 n 2008 Annual Report Technology One Limited For personal use only The TechnologyOne Difference is defined by our Power of One value proposition, in that we take total responsibility for the success of every customer’s investment in our world-class fully integrated enterprise business software solutions. From technology through to services and support, we partner directly with our customers to ensure their ongoing success. We pride ourselves on delivering innovative enterprise business software solutions that set the standard for others to follow. We work relentlessly to build awesome software that has a profound effect on the user experience by engaging, empowering and exciting users. TechnologyOne invests approximately 20% of its revenue each year into research and development, which allows us to respond with speed The TechnologyOne and agility to market changes and our customers’ changing business Difference requirements. We lead the market in the delivery of new technology that significantly enhances the way our customers do business. Our customers rely on us to deliver a best-in-class suite of products, but also on our significant experience and value-added services. We build best practice into our world-class software solutions by listening to their needs and learning from their experience. TechnologyOne employs a team of people who are innovative and challenge conventional thinking. They stand out from the crowd because they are empowered to make a difference. We encourage leadership and the belief that together we can achieve anything. The TechnologyOne difference is that in partnership with our customers,
anything is possible. For personal use only use personal For