2019 Annual Report up 23% up 7% up 8% 2019 up 16% What’s Full year inside At a glance 02 $35.8M $41.3M $44.5M $47.7M $58.5M results FY15 FY16 FY17 FY18 FY19 Financial highlights Comparable* 06 Net Profit After Tax Letter to shareholders 10 Global SaaS ERP solution 22 Our strategy up 44% 28 $31.3m Our growth up 39% 38 $19.7m Our operations up 107% 44 $26.2m Our people 52 up 72% $10.2m TechnologyOne Foundation 60 Financial Statements 64 $14.3m $24.5m $50.7m $70.4m $101.7m FY15 FY16 FY17 FY18 FY19 Directors’ report 66 SaaS Annual Recurring Revenue Corporate governance statement 94 Financial statements 103 Directors’ declaration 131 up 16% up 13% Auditor’s independence up 21% declaration 132 up 17% Auditor’s report 133 Shareholder information 139 $108.8M $126.9M $153.8M $173.9M $202.4M Corporate directory 140 FY15 FY16 FY17 FY18 FY19 Corporate calendar 141 Total Annual Recurring Revenue Enterprise software, *Refer to page 8 for definition of Comparable. incredibly simple. Transforming business, making life simple 1 % % % % UP UP UP UP $60R&D Investmentm Dividend8 Growth 44SaaS ARR Years10 of Record Profits 13Revenue Profit50 Before Tax (on Comparable basis) At a 01 glance 2 2019 TechnologyOne Annual Report Transforming business, making life simple 3 Our finances Our vision Our difference As the only company offering a true We are the only vendor that develops, customers to embrace the digital revolution global Software as a Service (SaaS) ERP sells, implements, supports and runs a fully and an exciting new world of possibilities in solution across the entire enterprise, we integrated suite of enterprise software a cloud-first, mobile-first world. are transforming business and solutions. Our global SaaS ERP solutions % making life simple. span the entire enterprise and allow our UP Our reach Our culture 10Consecutive years Dividend8 TechnologyOne has 14 offices throughout Our international team is made up of To foster a customer-oriented culture, of record profit growth Australia, New Zealand, Asia and the more than 1,200 passionate individuals. we developed the Compelling Customer United Kingdom. We believe in investing in our people, and Experience program. The program supports we do this with a wide range of initiatives and encourages our team members so such as O-Week, R&D Showcases and that they can deliver outstanding customer leadership courses. service every day. Our market-leading Our markets Our products % % % solutions and products • Local Government • Financials As the leading supplier of enterprise • Education • Human Resource & Payroll UP UP UP software solutions for more than 1,200 • Federal Government • Supply Chain Management large-scale companies, and with more than • Health and Community Services • Property & Rating 38Net assets 44SaaS ARR 50Net Profit 30 years’ success in the business, we have Before Tax growth • Asset and Project Intensive Industries • Business Intelligence (on 2018 Comparable) developed a deep understanding of our key markets. • Corporates and Financial Services • Enterprise Budgeting We offer our customers a range of • Performance Planning industry-leading preconfigured enterprise Our preconfigured solutions • Student Management solutions. Our solutions are effective and • Enterprise Asset Management our implementations are streamlined, which • OneCouncil • Enterprise Content Management reduces time, cost and risk for customers. • OneEducation • Enterprise Cash Receipting We also offer a comprehensive suite of • OneGovernment enterprise software products. • Stakeholder Management • OneCare Profitable since • Spatial • OneProject % % • Business Process Management % • OneAsset PBT R&D Total 1992 Margin UP spend UP ARR • OneHealth 27 11 16 • OneBanking • OneCorporate Our Research and Development We continue to focus our Research and Our Australian-owned commercial R&D Development (R&D) efforts on new and centre is the largest of its kind, with emerging technologies, including cloud- offshoot facilities in Indonesia and Vietnam. Cash % and cash Return on based technologies, artificial intelligence, $105m equivalents 55 Equity machine learning and other innovations. 4 2019 TechnologyOne TechnologyOne Annual Annual Report Report TransformingTransforming business, business, making making life life simple simple 5 Financial 02 highlights 6 2019 TechnologyOne Annual Report Transforming business, making life simple 7 One vision. One vendor. Growth on last 15 year year compound 2018 One code-line. 2017 2016 2015 2014 2013 2012 2011 2010 2019 Comparable growth Comparable** Reported One experience. Total 286,164 13% 12% 254,491 273,253 249,018 218,724 195,124 180,591 169,070 156,742 135,906 Revenue Annual Recurring 202,480 16% 173,912 153,896 126,996 108,853 - - - - - Revenue (ARR)1 SaaS ARR1 101,677 44% 70,372 50,701 24,489 14,265 - - - - - R&D 60,124 11% 13% 54,042 49,856 46,009 41,038 37,873 35,595 33,524 31,796 26,963 Investment* Net Profit 76,389 50% 12% 50,807 58,019 53,240 46,494 40,235 35,097 30,324 26,675 23,282 Before Tax Net Profit 58,459 23% 13% 47,681 44,494 41,344 35,785 30,967 26,984 23,559 20,326 17,813 After Tax Earnings Per Share 18.43 22% 12% 15.10 14.18 13.26 11.57 10.06 8.78 7.73 6.71 5.93 (cents) Total Dividends 11.93 8% 10% 11.02 10.20 9.45 8.78 8.16 5.60 5.09 6.12 5.70 (cents per share) Dividend 65% - - 73% 72% 72% 76% 81% 64% 66% 91% 96% Payout Ratio Return on 55% - - 46% 28% 31% 30% 30% 31% 32% 30% 28% Equity Cash & Cash 105,046 1% 10% 104,322 93,383 82,588 75,536 80,209 65,397 51,133 45,357 36,573 Equivalents Net Assets 106,857 3% 7% 103,480 157,520 138,494 117,940 104,499 87,736 73,997 68,370 63,415 *Before capitalistion. **2018 Comparable applies AASB15. It also assumes non-IFRS pro forma capitalisation of R&D costs (50%) for the FY18 year and is unaudited. As a SaaS company, R&D costs are capitalised from FY19 onwards, which is the common practice by our SaaS peers. We measure our performance using the comparable method because it is a better reflection of the performance of our business, setting a higher bar for the prior comparable period (FY18) than the statutory reporting. It allows for a ‘like for like’ comparison of the performance of the business, assuming R&D costs (50%) were capitalised in FY18. This is the basis used for all comparable reporting throughout this document. 1ARR is not an IFRS measure and is unaudited, it represents future contracted annual revenue at year end 8 2019 TechnologyOne Annual Report Transforming business, making life simple 9 Letter to 03 shareholders 10 2019 TechnologyOne Annual Report Transforming business, making life simple 11 Letter to shareholders On behalf of Technology One Limited (TechnologyOne) we are pleased to announce our 10th consecutive year of record profits and record Annual Recurring Revenue (ARR)1. Our global SaaS ERP solution is transforming our customers’ business and making life simple for them. This is resonating strongly with the market, driving our continuing strong results. This has been a challenging year, as we transition our business to both a new accounting standard (AASB15)2 and to SaaS accounting. We have now successfully achieved this without impacting our profit growth. Our Profit Before Tax of $76.4m was at the top end of guidance previously provided. Our Profit Before Tax was up 208% on the prior year statutory profit restated for AASB15, and up 50% on the prior year comparable profit (refer below), underpinned by the continuing fast growth of the TechnologyOne SaaS ERP solution. The successful transition to SaaS accounting now positions us well to continue our strong growth for many years to come. Key to our ongoing success is the high quality, annual recurring SaaS revenue, which is growing by 40+% per annum. This growth is all organic and includes no acquisitions. TechnologyOne is today a very successful SaaS company, with 435 major enterprise customers including Universities, Local Government, Government departments, Hospitals, and other large corporations using our global SaaS ERP solution to transform their Our clarity and continuity of vision is the business and make their life simple. key to our ongoing long-term success. We are on track for Total Annual Recurring Revenue to increase to Our vision is based on our unique $500+m in FY24. ‘Power of One’ business model that sees TechnologyOne as the only enterprise Given the momentum in our SaaS business, the outlook for the new vendor providing a totally integrated financial year will see continuing strong growth. experience to customers, in which we build, market, sell, implement, support and run our world-class enterprise software. The strength of our product offerings, our enterprise vision, vertical market focus and the resilient nature of the enterprise software market are the foundation for our continuing success. When coupled with our innovation, creativity and substantial ongoing investment into new and emerging technologies, we are well positioned for 1ARR is not an IFRS measure and is unaudited, it represents future contracted annual revenue at year end strong growth in the coming years. 2AASB15 Revenue from contracts with customers 12 2019 TechnologyOne Annual Report Transforming business, making life simple 13 Results Summary TechnologyOne SaaS ARRi grows 44% 4 Key results on AASB15 statutory Key results on Comparable basis TechnologyOne’s global SaaS ERP solution continues to grow TechnologyOne is a very successful SaaS company. We have 1 basis were as follows: were as follows: strongly with Annual Recurring Revenue (ARR) now $102m, up 44%. created a mass production platform to deliver our enterprise • Profit Before Tax of $76.4m, up 208% • Profit Before Tax of $76.4m, up 50% on comparable basis4 This growth was all organic growth and included no acquisitions.