2017
ANNUAL
REPORT
Transforming business,
making life simple
T
e
c
h
n
o
l
o
g
y
O
n
e
L
i
m
i
t
e
d
2
0
1
7
A
n
n
u
a
l
R
e
p
o
r
t
WHAT’S INSIDE
At a glance
Financial highlights
Letter to shareholders
Enterprise Software as a Service
Our strategy
Our growth
Our operations
Employer of choice
TechnologyOne Foundation
Financial Statements
Directors’ report
Corporate governance statement
Financial statements
Directors’ declaration
Shareholder information
Corporate directory
Financial calendar
3
9
13
27
31
41
49
55
61
65
66
96
100
130
139
141
142
THE FUTURE OFENTERPRISE SOFTWARE, TODAY
FULL
YEAR
RESULTS
FY17
58M
FY17
120M
FY17
61.9M
FY17
64.3M
FY13 35.1M
FY14 40.2M
2017
UP13 %
Compound
FY15 46.5M
FY14
FY16 53.2M
NET PROFIT
Before Tax
FY13 72.8M
FY14 84.2M
UP13 %
Compound
FY15 95.3M
FY16 108.5M
ANNUAL LICENCE FEES
FY13 38M
FY14 42M
UP13 %
Compound
FY15 49.3M
FY16 56.2M
LICENCE FEES
FY13 47.5M
FY14 49.7M
UP8 %
Compound
FY15 55.4M
FY16 60M
CONSULTING
(excluding Plus)
Note: Compound growth calculated over five years as shown.
AT A
GLANCE
2
Technology One Limited 2017 Full Year Report
Transforming business, making life simple
3
Cloud Annual SubscriptionUP84%Revenue growthUP10%Record profits, licence fees & revenue8YEARS Our finances
Our people
18
UP 8%
UP 6%
1,200 EMPLOYEES
UP 9%
1992
UP10%
TechnologyOne College
delivers ongoing training to our people.
CCE
Compelling Customer Experience Program,
which supports our people in delivering outstanding
customer service.
Our difference
21%
UP 22%
UP11%
The only enterprise
vendor to offer a
true
enterprise
Software as
a Service
solution across the
entire enterprise.
8 key
A deep understanding
markets
The
power
of one
The only vendor to
We allow our customers
and engagement with
develop, sell, implement,
to embrace the digital
our markets enables us
to develop integrated,
support and run a
revolution and an
fully integrated suite
exciting new world of
preconfigured solutions.
of enterprise software
possibilities in a cloud
solutions.
first, mobile first world.
Research & Development
UP13%
59%
Continued R&D into new and emerging
technologies, including cloud-based
technologies and new innovations.
The largest
Australian-owned
commercial R&D centre.
R&D facilities
in Australia, Indonesia
and Vietnam.
4
Technology One Limited 2017 Full Year Report
Transforming business, making life simple
5
Consecutive years of record revenueDividend growthOperating Cash flowProfitable sinceNet Profit Before Tax growthLicence FeesPBT MarginUnderlying profitAnnual Licence FeesCash and cash equivalentsReturn on Equity (adjusted)More than Our markets
With a deep understanding of our eight key markets, TechnologyOne is the leading supplier of
enterprise software solutions for more than 1,200 organisations across:
Local government
Local councils
Education
Universities, TAFEs and schools
Asset intensive industries
Airports, energy sector, ports and water utilities
Project intensive industries
Engineering projects and property deveopment
Government
Federal and state government departments
Financial services
Banks, credit unions and superannuation funds
Health and community services
Not-for-profit, aged care and health services
Corporates
Membership and entertainment organisations
Our vision
Our reach
Transforming business, making life simple
TechnologyOne has 14 offices throughout Australia, New Zealand, Southeast Asia, the Pacific and the United Kingdom.
Our products
TechnologyOne’s comprehensive suite of enterprise software products includes:
• Financials
• Enterprise Budgeting
• Enterprise Cash Receipting
• Human Resource & Payroll
• Performance Planning
• Stakeholder Management
• Supply Chain
• Property & Rating
• Student Management
• Spatial
• Asset Management
• Business Process Management
• Business Intelligence
• Enterprise Content Management
Our solutions
We offer a range of industry-leading preconfigured enterprise solutions that provide proven
best practice, streamline implementations and reduce time, cost and risk. These include:
• OneCouncil
• OneGovernment
• OneBanking
• OneUniversity
• OneEducation
• OneCommunity
• OneHealth
• OneHousing
• OneAgedCare
• OneAirport
• OnePort
• OneWater
• OneEnergy
6
7
Transforming business, making life simpleTechnology One Limited 2017 Full Year Report FINANCIAL
HIGHLIGHTS
8
Technology One Limited 2017 Full Year Report
Transforming business, making life simple
9
ONE VISION. ONE VENDOR.
ONE CODE-LINE. ONE EXPERIENCE.
“It’s all about agility. We need to be able
to deliver at speed, and SaaS allows us to
do that.”
Andrei Clewett
Director ICT Solutions at
University of the Sunshine Coast
2017
GROWTH
ON LAST
YEAR
15 YEAR
COMPOUND
GROWTH
2016
2015
2014
2013
2012
2011
2010
2009
2008
Revenue
273,253
10%
13%
249,018
218,724
195,124
180,591
169,070
156,742
135,906
122,487
110,215
Licence Fees
61,693
10%
16%
56,165
49,294
41,986
37,073
35,447
30,729
26,766
24,333
22,588
Consulting
64,335
7%
11%
60,026
55,449
49,735
47,573
45,388
41,746
41,583
41,023
35,882
Annual Support
119,929
11%
18%
108,480
95,346
84,248
72,753
63,684
55,268
48,506
43,114
36,343
R&D Expense
49,856
8%
13%
46,009
41,038
37,873
35,595
33,524
31,796
26,963
24,908
21,154
Net Profit Before Tax
58,019
9%
13%
53,240
46,494
40,235
35,097
30,324
26,675
23,282
20,276
23,129
Net Profit After Tax
44,494
8%
14%
41,344
35,785
30,967
26,984
23,559
20,326
17,813
15,684
17,229
Earnings Per Share
14.18
7%
14%
13.26
11.57
10.06
8.78
7.73
6.71
5.93
5.24
5.77
Dividend (excl. special) -
Cents per share
Dividend Payout Ratio
(inc. special)
Return on Equity
Adjusted Return on
Equity*
8.20
10%
9%
7.45
6.78
6.16
5.60
5.09
4.62
4.20
3.75
4.12
72%
28%
59%
-
-
-
-
-
-
72%
76%
81%
64%
66%
91%
96%
72%
71%
31%
30%
30%
31%
32%
30%
28%
27%
34%
61%
63%
76%
83%
72%
62%
48%
43%
47%
Cash & Cash Equivalents
93,383
13%
12%
82,588
75,536
80,209
65,397
51,133
45,357
36,573
30,538
23,684
Net Assets
157,520
14%
11%
138,494
117,940
104,499
87,736
73,997
68,370
63,415
57,143
50,514
*Adjusted for net cash above required working capital, assumed at two months of staff costs
10
Technology One Limited 2017 Full Year Report
Transforming business, making life simple
11
LETTER TO
SHAREHOLDERS
12
Technology One Limited 2017 Full Year Report
Transforming business, making life simple
13
Letter to shareholders
On behalf of Technology One Limited
Looking forward to 2018 financial year
We have continued to invest heavily in
(TechnologyOne) we are pleased to
announce our 8th consecutive year of
record revenues, record licence fees and
record profits.
Our Cloud first, mobile first strategy is
driving our continuing strong results with
Net Profit Before Tax up 9%. Our Cloud
business continued to grow strongly with
Annual Cloud Subscription revenue up 84%.
Looking to the 2018 year, we do not expect
any further impact to our earnings from
these events. With these headwinds
removed, this sets us up for another very
strong performance in the 2018 financial
year.
Results summary
Highlights of our results include:
Our products continue to win against our
• Net Profit Before Tax of $58m, up 9%
large multinational competitors.
Underlying Profit up 22+%1
The strength and diversity of our underlying
• Underlying profit excluding significant
events of $65m, up 22%
• Revenue of $273m, up 10%
business has allowed us to continue to
• Total Expenses of $215m, up 10%
grow strongly. Adjusting our results to
exclude significant events, our underlying
profit growth this year was even stronger,
in excess of 22%.
This year TechnologyOne has had to
contend with two significant challenges
which we have previously reported upon
at the half year:
• Brisbane City Council (BCC) LGS Contract
($4.3m impact on profitability)
• Evolve User Conference
($3m impact on profitability)
• Total R&D Expenses of $49.9m, up 8%,
which is 18% of revenue
Our results by revenue stream are as
follows:
• Total Annual Subscription Revenue of
$139m, up 17%. This consists of:
• Annual Licence Fees of $120m, up 11%
• Annual Cloud Contract Value (ACV) of
$27.1m, up 69%2
•
Initial Licence Fees of $62m, up 10%
• Total Consulting Fees of $71m, in line to
last year
Research and Development, which was
$49.9m for the year, as follows:
• Ci, our existing very successful
enterprise software suite
• Ci Anywhere, our new generation
product which supports any and all
mobile devices
• TechnologyOne Cloud
We continue to take a conservative
approach, with all costs associated with
these investments being fully expensed
as incurred. We expect significant revenue
streams to emerge from these investments
in future years. These items are discussed
in more detail later in this letter.
Continued market focus
Our focus on specific markets once again
underpinned our success. We continue
to be very strong in local government,
higher education, health and community
services and federal government. We see
opportunities for substantial growth in
the coming years in state government,
asset and project intensive industries and
financial services. We see that we have
substantial room to continue to grow in
our chosen markets.
1 Underlying earnings is a non-IFRS measure which does not appear in the financial statements and is not audited. Refer to slide 7 of our Executive Chairman’s
Presentation released to the Australian Stock Exchange on 21 November 2017 for further information.
2 Note: Annual Cloud Revenue recognised this financial year was $19m, up 84%
Dividend up 8%
Dividend last five years
In light of our strong results and our
confidence in the coming year, the dividend
for the second half has been increased
to 5.60 cents per share, up 10% on the
prior year. The Board has also proposed
once again a special dividend of 2 cents
per share. This takes the total dividend,
including special dividend, for the year to
10.20 cents per share, an increase of 8%
on the prior year. This represents a payout
ratio of 72% for the full year.
2.00
2.00
2.00
2.00
COMPOUND
GROWTH
16%
UP 8%
5.60
6.16
6.78
7.45
8.20
2013
2014
2015
2016
2017
DPS (cps)
Special Dividend (cps)
Strategy for success
Our clarity and continuity of vision is the
key to our ongoing long-term success.
Our vision is based on our unique
‘power of one’ business model that sees
TechnologyOne as the only enterprise
vendor providing a totally integrated
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
strong growth in the coming years.
14 Technology One Limited 2017 Full Year Report
Transforming business, making life simple
15
Once again, we have found that all our large
contract wins this year, were based on the
TechnologyOne Cloud.
We expect this strong growth to continue
in the years to come. Our target is to once
again grow this business strongly with
Annual Contract Value to reach $42m in the
next 12 months, an increase of 55%.
Commentary
TechnologyOne Cloud continues to grow very strongly
The TechnologyOne Cloud continues to grow
As previously forecasted the TechnologyOne
architecture, which further builds on our
very strongly with Annual Contract Value
Cloud achieved a critical milestone this
new massively scalable, mass production
(ACV) now $27.1m, up 69%. We have added
year, contributing a profit of $2.5m this
architecture, will be key to achieving this
112 new customers to the TechnologyOne
year, versus a loss of $2.2m last year, as our
goal.
Total Expenses up 10%
Total Expenses were up 10%.
UP 10%
$215.2M
UP 14%
$195.8M
Cloud this year, taking the number of
single instance, mass production, Software
enterprise customers on the TechnologyOne
as a Service (SaaS) offering achieved critical
Cloud to over 270 customers.
mass. We remain confident that as we
continue to achieve greater scale in this
business, it will become a platform for the
generation of significantly more profits in
the coming years.
TechnologyOne Cloud has now been
independently audited and recommended
to be certified for the Federal Government
IRAP security standard, making us the first
enterprise SaaS vendor to achieve this high
level of security accreditation in Australia,
which gives us a significant competitive
$172.2M
$195.8M
$215.2M
2015
2016
2017
As we move forward our focus will now
advantage. We are now seeing a significant
move away from ‘top line’ revenue
increase in business in the federal
growth to achieving continuing growth
government arena.
in profitability. Our Cloud 8.0 and 9.0
UP 77%
($14.4M)
UP 55%
($14.9M)
Continued strong growth of Initial Licence Fees
Our Initial Licence Fees were up strongly
and our investment in Ci Anywhere, we are
We also secured strong sales in Australia’s
by 10%, making this our 14th consecutive
confident this momentum will continue in
federal government with the Department
$4M
$10.1M
$18.6M
$33M
$8M
$16M
$27.1M
$42M
FY15
FY16
FY17
FY18
Forecast
FY15
FY16
FY17
FY18
Forecast
Cloud Revenue Billed
Annual Contract Value Signed
SAP, Microsoft, Infor, etc. We continue to
We had continued strong sales in
increase market share against our large
local government with $40m of new
multinational competitors. With the release
contracts that included Moreton Bay
of TechnologyOne Software as a Service
Council, Shoalhaven Council and NSW
(SaaS), our continued investment in Ci,
amalgamations.
year of year-on-year growth in licence
future years.
fees. This year we added more than 50
major new corporate customers to our
expanding customer base. Of these new
customers, seven replaced our competitors’
systems including systems from Oracle,
What is particularly pleasing is our
continuing success in winning very high-
profile, large-scale enterprise customers
against our multinational competitors.
We also saw strong sales into education
of Industry, Innovation and Science (DIIS)
and the Treasury selecting us to provide
shared services to other departments using
TechnologyOne SaaS.
with wins that included Victoria University,
University of Sussex and Sydney Catholic
Schools.
Continued strong profit growth
over eight years
We have seen continuing strong growth in profit over
the last year, with Net Profit Before Tax up 9%. We
expect profit growth to move back to historical trends
in the near future, of approximately 14%. As previously
mentioned, this year’s results were impacted by a
number of significant events that will not be repeated
in the coming years; excluding these significant events,
underlying profit growth would have been 22+%1.
COMPOUND
GROWTH
14%
UP 9%
$58M
2017 - $58M
2016 - $53M
2015 - $46M
2014 - $40M
2013 - $35M
2012 - $30M
2011 - $27M
1 Refer above.
16
14%
17%
17%
5%
11%
23%
8%
10%
16%
$23M
$24M
$26M
$31M
$36M
$38M
$42M
$49M
$56M
$61.7M
FY08
FY09
FY10
FY11
FY12
FY13
FY14
FY15
FY16
FY17
COMPOUND
GROWTH
12%
UP 10%
$61.7M
17
Transforming business, making life simpleTechnology One Limited 2017 Full Year ReportUP 84% ($8.5M)UP 145% ($6M)UP 69% ($11.1M)UP100% ($8M) Commentary
Subscription Licences
continue to grow strongly
An important goal has been to move our
business away from perpetual licences,
and to move all new business to five-year
subscription licences, to create a strong,
long-term annuity business. This year we
achieved over 85% of all new business
being recurring subscription licences. Total
subscription licences were $31.7m, up 150%.
What is important to note is that once the
five-year subscription period comes to an
end, we expect customers to continue to
use and subscribe to the software on an
annual basis, which will create significant
future revenue streams as shown below.
Future Annual Subscription Licence
upon completion of existing five-year
Subscription Contracts
Continued strong growth of Annual Licence Fees
In keeping with our very high customer retention and satisfaction rates in excess of 99%,
our recurring Annual Licence Fees once again grew strongly by 11%. Our investment in
Ci Anywhere (the continued evolution of our Ci enterprise software) and the TechnologyOne
Cloud has been critical to our ongoing success in this area.
$3,651K
$6,193K
$12,540K
$36M
$43M
$48M
$55M
$64M
$73M
$84M
$95M
$108M
$119.9M
FY19
FY20
FY21
FY22
FY08
FY09
FY10
FY11
FY12
FY13
FY14
FY15
FY16
FY17
COMPOUND
GROWTH
14%
UP 11%
$119.9M
Consulting Services
Total Consulting Revenue was in line with
• The United Kingdom consulting practice
and processes to deliver excellence for
Research & Development
Research and Development (R&D) continues to be a significant
We remain committed to delivering Compound Annual Growth (CAG)
last year, but the proft contribution was
loss increased by $1.1m, which was
their respective areas of focus. Consulting
investment for TechnologyOne at $49.9m for the year, up 8% and
of 8% or less over the next five years to 2021 (compared to our
down 46% ($4.5m).
expected as we build this new practice.
New Customers will be project focused,
representing 18% of revenue, which still exceeds the average of
historical growth rate of 16%), which will save approximately $75m
our competitors of approximately 12%. R&D continues to be fully
over the five-year period.
expensed in the period it is incurred.
Our R&D program in the coming years continues to be at the
R&D continued across our entire Ci Enterprise Suite, as well our
leading edge of our industry as we embrace new technologies, new
next generation product Ci Anywhere and the TechnologyOne Cloud.
concepts and new paradigms. The level of innovation and creativity
is greater than at any time in our company’s 30-year history.
This division was impacted by a number of
Consulting business margins to
‘one off’ events, as follows:
improve substantially in the coming
• TechnologyOne Evolve customer
years
to deliver large and complex projects ‘on
time and to budget’. Consulting Existing
Customers will be account focused, with
a service culture driven by a dedicated
conference, which saw all our
We see significant upside in future years for
Service Delivery Manager, guaranteed
consultants attend the conference, and
our Consulting business as it substantially
service levels, a catalogue of services and
which impacted our utilisation and other
improves its profit margin from the current
premium support. We have appointed a
associated costs to an amount of $1.2m.
7% to a target of approximately 20%, as
new Operating Officer to implement this
• The Brisbane City Council (BCC) LGS
project, in which TechnologyOne was
frustrated by BCC to deliver against the
contract. This impacted the business
unit by $2m.
we implement a new strategy that will see
strategy, Ms Nancy Mattenberger, who has
this business separated into two separate
extensive experience leading the Infor
and focused business units, as follows:
consulting practice in the USA.
Consulting New Customers and Consulting
Existing Customers. These business units
will have different cultures, systems
$45.9M
$51.4M
$55M
$61.8M
$61.9M
$63.6M
$63.4M
$65.6M
$71.1M
$71.3M
FY08
FY09
FY10
FY11
FY12
FY13
FY14
FY15
FY16
FY17
2016
2017
2018
2019
2020
2021
HISTORIC
COMPOUND
GROWTH
16%
MODEL
COMPOUND
CROWTH
UP8%
$46M
$49M
$53M
$58M
$62M
$67M
$96.6M
$67.6M
$29M
Projected
From 2016
Historical
Growth Rate
19
COMPOUND
GROWTH
5%
IN LINE
$71.3M
18
Transforming business, making life simpleTechnology One Limited 2017 Full Year Report CI ANYWHERE.
ANY DEVICE.
ANY WHERE.
ANY TIME.
“When we work with TechnologyOne we know
we’re getting a world class solution”
Kaitlyn Wright,
Global Transformation Manager
Silver Chef
Ci Anywhere
TechnologyOne Cloud
Ci Anywhere is the continuation of
The TechnologyOne Cloud delivers
our very successful Ci product, and
the TechnologyOne Enterprise Suite
allows organisations to embrace smart
as a service through the cloud to
mobile devices including iPad, iPhone
our customers. TechnologyOne takes
and Android devices, as part of our
complete responsibility for providing
enterprise solution. We are the only
the processing power, software and
major enterprise software vendor
services, including backup, recovery,
committing to deliver our entire suite
upgrade and support services for our
of enterprise software and all our
cloud customers.
functionality on these mobile devices,
as we envision a world where all work
will be done on these devices in the
near future. We see our customers
flowing across smart mobile devices
throughout the course of their day.
Our software has been designed to be
incredibly simple to use, and to adapt
to the device, allowing customers to
continue their work seamlessly as they
flow across devices.
Ci Anywhere opens up a new world
of possibilities for our customers,
allowing them to access their data
from any device, anywhere in the
world, at any time. It is a new and
exciting generation of enterprise
software that is incredibly simple
to use. Ci Anywhere will enable our
customers to embrace the digital
revolution.
We continue to work aggressively to
complete our Ci Anywhere suite by late
2018.
TechnologyOne is one of only a few
companies globally delivering true
enterprise Software as a Service (SaaS),
offering a fully configurable solution,
based on a mass production line of
servers that run our software for all
of our customers in a single instance
of software, which provides massive
economies of scale to our customers.
TechnologyOne is uniquely placed
because we own our software. Unlike
hosting providers that simply host
someone else’s software in the cloud,
we own our software and are able to
make a substantial investment each
year in ongoing R&D, to continue to
improve our software to capitalise
on new technologies, concepts
and ideas. Because we run our
software for thousands of customers
simultaneously, we have optimised our
software and built the TechnologyOne
Cloud specifically to do this, and we
can achieve enormous economies
of scale that cannot be achieved by
hosting providers. The TechnologyOne
Cloud delivers a level of service,
security, reliability, scalability and
future proofing that hosting providers
cannot achieve.
As part of our SaaS offering we
automatically make new releases
of our software, with new features,
functions and concepts available to
our customers. Our customers do not
need to do anything to seamlessly get
these new releases into production.
TechnologyOne is at the very forefront
of delivering the benefits of mass
production to the enterprise software
industry. As we have seen in other
industries, the economies of scale of
mass production will change the face
of the software industry.
The TechnologyOne Cloud provides a
compelling value proposition to our
customers, giving them what is essentially
a very simple, cost-effective and highly
scalable model of computing.
We have now delivered our mass production
Software as a Service (SaaS) platform. This
provides a massively scalable platform with
significant economies of scale.
We have continued to build on our
mass production SaaS platform with the
release of TechnologyOne Cloud 7.0, which
continues to deliver further economies
of scale and enhanced security. We are
now working on the next generation of
our Cloud, 8.0. The pace at which we are
innovating is accelerating, and we are
seeing many opportunities to continue
to improve the features, speed, security,
availability and scalability of our cloud
for our customers.
We have now migrated all our early adopter
customers from our earlier versions of
the TechnologyOne Cloud 1.0 to 5.0, to the
Cloud 6.0 architecture.
We are excited by the opportunities the
TechnologyOne Cloud offers not only to our
customers, but to us as well. It will allow us
to streamline our operations, reduce our
costs, improve our customers’ experience,
as well as reduce the time to market for
new features and functions. It will allow us
to become more creative, more innovative
and work in real time with our customers.
All TechnologyOne Cloud costs are fully
expensed in the period they are incurred.
Connected Intelligence (Ci)
Ci is our existing highly successful
enterprise product suite. We continue to
invest in adding new features and functions
for our customers, and have committed to
the ongoing support of this product on an
indefinite basis.
An important part of our strategy is to allow
our existing Ci customers to progressively
and simply embrace the benefits of
our Ci Anywhere offering, as well as the
TechnologyOne Cloud when they wish to
do so.
20
21
Transforming business, making life simpleTechnology One Limited 2017 Full Year Report United Kingdom
We see the UK as a platform for
significant growth for TechnologyOne
in the coming years. Our ‘blue ocean’
strategy is gaining traction, which
is to provide a total ERP solution
for higher education and local
government sectors. Important to the
success of this strategy will be the
introduction of our Human Resources
& Payroll (HRP) product and Student
Management product to this market.
The regionalisation of these products
for the UK market is in progress, and
into the less crowded ‘blue ocean’
space, as we will be one of only a few
enterprise vendors in the UK market.
The challenge for us in the coming
years is now to build a large,
professional and very successful
consulting practice to implement and
support our products in the UK region.
This year we have once again increased
our footprint in the UK, adding six new
customers, taking us to a total of 43
enterprise customers in the region, which
now gives us critical mass.
we will work with early adopters in the
As previously foreshadowed, the
UK to establish these products.
challenge for us in the coming years
As we bring more products into the
UK market, this increases our product
offering, and also allows us to move
is to build a successful and profitable
consulting practice in the UK. This is not
an insignificant undertaking. Furthermore,
the regionalisation of our products for
the UK is much more significant and
challenging than originally expected, as we
deal with unknown requirements including
UCAS, UKVI, HESA and SLC. We expect the
regionalisation will be completed late 2018.
Given these facts, we have made the
decision to slow our rate of growth in the
UK for the next two years so we can address
these issues, and focus on our existing
customers to ensure that they are all strong
reference sites. As part of this strategy we
have appointed a new Operating Officer
for the UK, from one of our competitors, to
lead this next stage of the UK story, with a
strong focus on our customers’ success. We
expect to return to growth in the UK in the
2020 financial year.
Solution Showcases
Appointment of new CEO and Chief
Mr Di Marco continues to work with the
Following the success of our Evolve
customer conference which saw more
than 2,300 attendees, over three days,
with 11 concurrent streams by industry,
and a huge exhibition area, we have now
been running our Showcases throughout
Australia, New Zealand and the United
Kingdom. These Showcases demonstrate
Operating Officer
Recently TechnologyOne announced the
appointment of its long-serving and
highly successful Chief Operating Officer,
executive team and Board to focus on
strategy, innovation and creativity to ensure
the company continues to build future
platforms for strong growth.
Mr Edward Chung, to the new role of
These changes have been a long time in the
Chief Executive Officer, effective May 23.
planning and have been openly discussed
Mr Chung has been a TechnologyOne
for the last few years with shareholders and
executive for approximately 10 years.
staff. Over the last five years we have built a
our vision for a digital future, with a focus
on our Ci Anywhere enterprise suite and the
TechnologyOne Cloud. This event will create
significant sales momentum for us in the
coming years.
Mr Adrian Di Marco, TechnologyOne’s
founder and one of Australia’s longest
serving CEOs over a period of 30 years,
continues in the role of Executive
Chairman and Chief Innovation Officer.
very strong and talented executive team.
We have also appointed another senior
executive, Mr Stuart MacDonald, to the role
of Chief Operating Officer for the company,
to support Mr Chung in his new role.
22
23
Transforming business, making life simpleTechnology One Limited 2017 Full Year Report Balance sheet strength
NPAT versus Operating Cash Flows
Remuneration and Governance
Profits for TechnologyOne.
TechnologyOne continues to have a
strong balance sheet with cash and cash
equivalents of $93m. Our debt/equity ratio
remains conservative at less than 1% and
interest cover is over 1,192 times.
Operating cash flow was once again strong
at $46m for the full year, versus a Net Profit
After Tax of $44.5m, and exceeds our target
ratio of 1 times NPAT.
Our cloud business is generating
significant operating cash flow
An initial concern by investors was that
our cloud business would not allow us to
continue to generate significant free cash
flow. The mass production architecture
and significant economies of scale we have
been able to achieve has, as expected,
seen this business contribute an additional
$15.9m of additional free cash flow this
financial year.
Framework
Our Remuneration and Corporate
Governance has created substantial
shareholder wealth since we listed as a
public company in 1999.
It is also well recognised by our
shareholders that the quantum of
remuneration paid to TechnologyOne
executives is in the mid-range of our peers,
and not excessive. It is the effectiveness
of our Remuneration Framework, and its
alignment to the creation of shareholder
wealth, that has seen TechnologyOne
deliver long-term profitable growth and
substantial shareholder returns.
TechnologyOne continues to evolve our
Remuneration and Governance Framework,
based on input from our shareholders and
proxy advisors. Recent changes include:
• Long Term Incentives (LTI) based on
options now issued at market price
• Performance hurdles for Long Term
Incentives
• Performance hurdles are all ‘hard
targets’, generating significant
shareholder wealth
• Greater level of disclosure on all aspects
of remuneration
2016
41.3M
2017
44.5M
NPAT
OPERATING
CASH FLOWS
2016
43.7M
2017
46.4M
Executives had a significant portion of
challenging economic time.
their 2017 LTI (i.e. options) forfeited for
not meeting their hard targets in 2017,
even though it was another year of record
Revenues, record Licence Fees and record
Board Renewal
Our cloud first, mobile first strategy is
driving our continuing success. As a
result, TechnologyOne’s sales pipeline of
opportunities for 2018 is strong and this
positions us for continuing strong profit
growth this financial year.
TechnologyOne has a very experienced,
We do not expect a repeat this year of a
effective and successful Board.
number of significant events that happened
Notwithstanding this, and as part of an
in the prior year.
ongoing board renewal process we have
in recent times added our first female
independent director. We are in the process
Our Cloud business will continue to grow
strongly and profitably.
of adding a further two new independent
We also expect a return to profit growth for
directors in the next 12 months, taking
our Consulting business.
the Board to a size of eight. Our focus
will continue to be on gender diversity,
looking far and wide for the best possible
candidates to serve our business. Having
said this, we will always insist that the
appointment goes to the best candidate
irrespective of their gender.
This coming year we see the sales pipeline
weighted strongly to the second half. We
also have the additional challenge that in
the first half of 2016/2017 financial year we
had a number of significant deals close
earlier than normal, which means this year
we have an abnormally high hurdle to jump
Like always, TechnologyOne welcomes
over in the first half. As such, once again
feedback so we can continue to evolve our
this year, our first half results will not be
Remuneration and Governance Framework.
indicative of the full year results.
We seek continued support from all our
shareholders for our Remuneration and
Corporate Governance Framework.
Outlook for 2017/2018
As we have seen over the last few years,
the enterprise software market continues
to remain resilient, with our products
providing our customers the opportunity
to reduce their costs, streamline their
Having said this, the full year pipeline is
strong and supports continuing strong profit
growth over the full year.
We will provide further guidance at both the
Annual General Meeting and with the first
half results.
• Poll now taken at AGM for all resolutions
business and improve their efficiencies in a
Long-term outlook
We continue to be very excited about
the significant growth opportunities
over the next 10 years.
We see continuing strong growth in our
eight key vertical markets in Australia
and New Zealand. These markets
remain strong and resilient. The UK
operation has now moved from a loss
position to profit and given the size of
this market, this will provide us with
significant growth opportunities over
the coming years.
The TechnologyOne Cloud has now
moved from a loss position to profit,
and will continue to grow quickly and
profitably over the next five years, as
we prove the substantial benefits of
our ‘mass production architecture’.
Ci Anywhere is also gaining momentum,
as it enables our customers to embrace
the digital revolution. It will secure
our large existing customer base for
the future by providing a simple and
easy way forward using our powerful
Celebrating 30 years
Thirty years ago, TechnologyOne was
what today would be called a ‘start-up’,
beginning life at the front of a hides
processing plant in the outer Brisbane
suburb of Hemmant. TechnologyOne was
an original pioneer of innovation and
creativity in Australia. We were recently
acknowledged for our pioneering work in
the Australian Computer Society (ACS) book
called A Vision Splendid – The History of
Australian Computing.
Over this time, we have reinvented
ourselves on four occasions, and on
each of these occasions we have rebuilt
our products, capitalising on new ideas,
concepts and technology to create new
platforms for growth. Our current focus on
the TechnologyOne Cloud and Ci Anywhere
is the most current example of this.
TechnologyOne will continue to innovate
and embrace new technologies and ideas,
as it is our core strength. After 30 years,
we are today stronger, faster and better
than we have ever been, and we are excited
about what we will achieve in the coming
Ci platform. This will inevitably lead to
years.
our customers increasing the usage of
our software in their organisations and
will drive licence fee growth.
This would not have been possible without
the talented and committed people who
make up TechnologyOne, or the support of
Both these initiatives (TechnologyOne
our shareholders.
Adrian Di Marco
Executive Chairman
Edward Chung
Chief Executive Officer
Cloud and Ci Anywhere) further
increase our advantage against our
competitors.
We see continuing growth from
our existing customer base, as our
customers increase the usage of our
products and services. We also expect
our newer products, such as Enterprise
Content Management, Stakeholder
Management and Human Resource
& Payroll to continue to mature and
contribute substantially to profitability.
Our two offshore R&D centres are
allowing us to reduce our R&D
expenditure as a percentage of
revenue, without impacting on any
of our strategic initiatives, and at
the same time improving the level of
support our customers’ experience.
These initiatives will allow us to
continue to grow our revenue and
profit and substantially improve our
profit margin in the coming years.
24
25
Transforming business, making life simpleTechnology One Limited 2017 Full Year Report
ENTERPRISE
SOFTWARE AS
A SERVICE
26
Technology One Limited 2017 Full Year Report
27
Transforming business, making life simple TechnologyOne is the only vendor
offering an enterprise solution for
the complete enterprise, delivering
it for thousands of customers
simultaneously. The combination of
multi-tenanted infrastructure with
single-tenanted databases means our
customers can enjoy all the benefits of
Software as a Service (SaaS), with none
of the limitations. Our approach to
enterprise SaaS is unparalleled and is
key to our ongoing success.
The TechnologyOne enterprise SaaS (eSaaS)
solution is a single instance of software,
delivered globally, with a mass production
line of servers running thousands of
customers’ organisations. It produces
massive economies of scale, which unleash
cost efficiencies that hosting providers
With the inevitable increase in the use
When we make an improvement to the
of smart mobiles in the workplace,
service, we roll that improvement out to all
Ci Anywhere allows organisations to
customers automatically.
embrace iPad, iPhone and Android
devices as part of their enterprise solution.
It is a testament to the collective skill of
our people and organisational structure
Ci Anywhere’s adaptive screen design
that we have achieved such a competitive
means that users get a great experience
advantage in the enterprise SaaS market,
regardless of the device they are using at
and it is a key differentiator for us in
the time. The user experience is tied to the
this space.
user, not the device, so a user can move
from one device to another throughout their
day, and seamlessly continue their work.
In 2017, we introduced Insights, our real-
time SaaS monitoring platform. Insights
provides us with unprecedented visibility
Ci Anywhere creates a new standard in
of the real-time performance and reliability
enterprise software that is incredibly
of our SaaS environments and software,
simple, and gives us a significant
enabling us to rapidly analyse, detect
competitive advantage. Through Ci
and respond to issues faster than ever
Anywhere, our customers are prepared for
before. Insights connects our development
the digital revolution.
teams directly with our customers, further
Digital transformation
strengthening the support process.
cannot come close to.
Our enterprise customers have begun to
Most trusted cloud
As part of our eSaaS solution, customers
gain access to two releases of software per
year, the TechnologyOne University for ‘just
in time’ training, and ‘defense in-depth’
security. This is all provided standard as
realise the benefits of what a cloud first,
We know that our customers take the
mobile first world brings to them, and to
privacy and security of their data very
their customers. It transforms the way
seriously, and we are committed to
organisations interact with their customers
building the world’s most trusted cloud for
and community, now and into the future.
enterprise software.
part of our SaaS solution, and we guarantee
We are increasingly hearing from customers
We have more than 24 years of continuous
it will be future-proof.
that the adoption of TechnologyOne eSaaS,
ISO 9001 accreditation. Our SaaS solution
More than 270 customers have chosen
TechnologyOne eSaaS to power their
organisations. This reflects an increase
of more than 50 per cent in customer
numbers over the last 12 months, and
we expect this rapid growth to continue
in 2018.
In 2017 alone, more than 60 per cent
of our implementation ‘go lives’ were
SaaS, which is another significant shift
away from on premise.
TechnologyOne University
TechnologyOne University connects
customers with simple and engaging
learning and training resources for our
software, providing self-paced learning
and comprehensive training on any device,
anywhere, at any time.
The TechnologyOne University replaces
outdated paper user documentation,
providing our customers with dynamic,
real-time information that is always up-to-
date and available to customers from within
the software.
We launched TechnologyOne University at
Evolve 2016, and it currently holds over 45
hours of high-quality video content. Our
Learning Development team is constantly
adding new content, which becomes
immediately available to all customers
through the power of eSaaS.
together with Ci Anywhere, is providing
also holds certification for the following
them with new capabilities and saving them
standards:
•
•
•
•
•
ISO 27001:2013
ISO9001
ISAE 3402 SOC 1 Type 1
ISAE 3402 SOC 1 Type 2
ISAE 3000 SOC 2 Type 1
This year, we were recommended for ASD
IRAP certification, further strengthening
our offer to Australian federal government
agencies. All customers receive the benefit
of these certifications as part of the service,
at no extra charge.
With our configuration-driven software
design, all of a customer’s unique
configuration information, together with
their transactional data, is stored in their
millions of dollars when compared to an
equivalent on premise deployment.
own dedicated and secure database,
The efficiencies that eSaaS and Ci Anywhere
delivering a personalised service at scale.
enable for customers is paramount as the
Our eSaaS solution is a clear market leader,
because we own, build and support our
software, unlike many other software
providers that use cloud hosting. These
providers handcraft each customer’s
environment with no shared benefits or
economies of scale.
TechnologyOne eSaaS is an award-
winning approach, having received global
recognition for software innovation
from the Australian Business Awards, UK
Cloud Awards, SaaS Awards and Amazon
Web Services.
Ci Anywhere - any device,
anywhere, any time
TechnologyOne is the only enterprise
vendor delivering 100 per cent of our
enterprise software on smart mobile
devices – with no carve outs and no
exceptions. This provides customers with
access to the full functionality of our
software on any device, anywhere,
at any time.
pace of business accelerates.
Economies of scale
We invested $49.9 million this year in
Research & Development to continually
improve our eSaaS offering, integrating new
technologies, concepts and ideas.
The economies of scale offered by eSaaS
means that when a customer signs up to
our service, they receive far more than what
they pay for. Each customer benefits from
the hundreds of millions of dollars that we
have invested to date and our commitment
to continued investment. We take care of
patching and upgrades, and offer two major
releases of software per year.
Our eSaaS offering is massively scalable,
resilient and fault tolerant. All our
customers run the same code-line globally,
and all processing resources are shared.
28
Transforming business, making life simple
29
Technology One Limited 2017 Full Year Report OUR
STRATEGY
30
Technology One Limited 2017 Full Year Report
Transforming business, making life simple
31
PRECONFIGURED ENTERPRISE
SOFTWARE SOLUTIONS
REDUCE TIME, COST AND RISK
Our vision
Transforming business,
making life simple
We are here to build and deliver truly
great products and services that transform
business and make life simple for our
customers.
This vision is underpinned by our beliefs,
our dedication to customer experience and
our leadership model.
Our five core beliefs are: an enterprise
vision, market focus and commitment, the
power of one, the power of evolution and
simplicity, not complexity.
At TechnologyOne, we know that without
our customers, we have no business. Their
experience defines our success. We also
believe in leadership, not management.
Our survival depends on our ability to set
ambitious goals, and to lead and inspire our
people to achieve great things.
As a large, successful company, we believe it
is important to give back to the community.
We have established the TechnologyOne
Foundation as a way to pay it forward, and
institutionalise giving for our company.
These initiatives come together to make
up The TechnologyOne Way, which was first
developed more than 30 years ago and
continues to define the way we do business.
For more than 30 years,
TechnologyOne’s continued success
has been a result of our clear vision,
our beliefs, our supporting initiatives
and our continuing growth.
“We have a great partnership with TechnologyOne
and we look forward to a long-lasting relationship.”
Scott Nichols
Director of Student
Administration,
University of Canberra
32
33
Transforming business, making life simpleTechnology One Limited 2017 Full Year Report THE POWER OF A
SINGLE, INTEGRATED
ENTERPRISE SOLUTION
Our core beliefs
An enterprise vision
Market focus and commitment
Deep industry knowledge
Our unique value proposition
The power of evolution
Simplicity, not complexity
We believe in the power of a single,
We consciously choose to participate in
integrated enterprise solution built on a
only eight key markets. We have a deep
Each of our preconfigured solutions is
developed by a team of specialists with
modern platform with a consistent look
understanding and engagement with these
an in-depth understanding of our key
and feel.
markets, which enables us to deliver to
markets. We work closely with our sectors
When organisations invest in a
We provide our customers a strong,
We embrace consumer concepts and
TechnologyOne solution, they benefit from
continuing competitive advantage through
expectations, which compels us to
a direct relationship with us every step
of the way. From the beginning, our
an enterprise solution that adapts and
continuously innovate and deliver solutions
evolves by embracing new technologies,
that are incredibly easy to use.
our customers integrated, preconfigured
to stay abreast of current requirements,
remarkable people take ownership of a
concepts and innovation.
Providing a best-in-class enterprise
solution
solutions that provide proven practice,
organisational and user challenges,
project and provide excellent ongoing
streamlined implementation and reduce
legislation and emerging trends, ensuring
service and support.
We have spent 30 years and hundreds of
time, cost and risk.
millions of dollars to deliver an enterprise
vision, so that today we can provide best-
of-breed products that come together from
a single vendor to provide a total enterprise
solution. Only through an enterprise
Eight key vertical markets
Our key vertical markets are: government,
local government, education, health and
community services, financial services,
our preconfigured solutions continue to
lead the market.
This commitment to industry knowledge
This makes us accountable to our
customers, whether the focus is on business
needs, underlying technology, on time and
and experience ensures we remain a market
on budget implementations or excellence in
leader.
support and customer service.
solution can organisations really embrace
asset intensive industries, project intensive
The power of one
One vision. One vendor. One code-line. One
experience. We do not use implementation
partners or value-added resellers. We
take complete responsibility for building,
marketing, selling, implementing,
supporting and running our enterprise
solution for each customer to guarantee
long-term success.
the future of Software as a Service (SaaS)
and smart mobile devices, and get the
efficiencies they need across their complete
organisation.
Our leading-edge platform
Our comprehensive suite of software
products is fully integrated and is designed
to deliver a superior user experience.
Our software solutions are underpinned by
our state-of-the-art Ci Anywhere platform,
which provides the core functionality,
security and a consistent user interface
for each of our products, and enables our
customers to access their information
anywhere, at any time and from any device.
This platform continues to evolve and
adapt, allowing our customers to move
forward easily.
industries and corporates. With a deep
understanding of these sectors and the
ongoing development of our preconfigured
solutions, we continue to succeed in these
markets.
Preconfigured solutions
TechnologyOne’s range of 14 integrated
products form the building blocks from
which our preconfigured solutions are
developed.
Developed in collaboration with hundreds
of customers within our key markets, the
solutions cover 80 per cent of each sector’s
requirements out of the box, leaving room
to configure the software to a customer’s
specific needs.
This approach is faster, cheaper, safer
and better than that adopted by our
competitors.
Unlike our competitors, we provide a single,
integrated consulting capability to enable
a safer, faster and more cost-effective time
to delivery of our industry solutions. This is
underpinned by the industry and product
experience of our 300 consultants and the
power of our Solutions Implementation
Methodology (SIM).
Using technology for competitive
advantage
Using new and emerging technologies to
provide a competitive advantage was one
of the founding principles when we began
in 1987, and continues to be a major focus
today.
For 30 years, we have successfully delivered
a continuous and smooth technology
transition that has seen TechnologyOne
migrate our customers across a number of
technology paradigms, from mainframe to
client-server computing to the internet, to
our Connected Intelligence (Ci) platform and
more recently, Ci Anywhere. Ci Anywhere is
built on beautiful design, and can be used
by any business consumer, anywhere, on
any device and at any time. It is powerful
and simple to use, allowing our customers
to realise the benefits of SaaS and smart
mobile devices.
The elegance of doing more, with less
Simplicity is a philosophy we continue
to embrace in everything we do for our
customers. Our focus is to become known
for software that is easy, simple and
intuitive to use, and removes needless
complexity. As a leader in the enterprise
software market, we have always focused
on transforming business. More importantly,
we also aim to remove complexity to make
our customers’ working lives simple.
By embracing the simplicity of a SaaS
model, we deliver our software in a high
performing and secure manner, with
highly available infrastructure that has
redundancy built in at every level. Our
customers no longer have to worry about
running or updating their software and
infrastructure. By removing the need to
manage their computing environment,
customers can focus on business, rather
than the supporting technology.
AN ENTERPRISE
VISION
MARKET FOCUS
AND COMMITMENT
THE POWER OF
ONE
SIMPLICITY,
NOT COMPLEXITY
THE POWER OF
EVOLUTION
34
35
Transforming business, making life simpleTechnology One Limited 2017 Full Year Report THE FUTURE OF
ENTERPRISE
SOFTWARE, TODAY
Our initiatives
Putting our customers first
platform for our future growth.
employees across the globe, using state-
Compelling Customer Experience
Our world-class R&D function
program
TechnologyOne has one of the largest
Providing a compelling customer
Australian-owned R&D centres for
experience is fundamental to the way
enterprise software, with a dedicated team
TechnologyOne does business and positions
of more than 400 developers. Each year
us well to attract customers away from our
approximately 20 per cent of our revenue is
competitors. To achieve this, we continue
invested into our substantial R&D program,
to recognise that our customers are our
which continues to produce leading-edge
compass for the decisions we make, the
technology and provides our customers
people we employ and the processes we
with a long-term, secure and valuable
create.
partnership.
Delivering a compelling customer
As well as our Australian R&D centres in
of-the-art audio visual equipment and
technology to connect all regional offices
for Town Halls, Hack Days, R&D Showcases
and other global company events.
With technology and design being at the
forefront of the concept, the Village Green
areas provide spaces in our offices to
showcase the ongoing accomplishments
and achievements of the company in an
environment that reflects our products and
values.
MARVELs
experience is our goal and we continue
Brisbane and Perth, we have offshore R&D
In 2017, we launched an annual awards
to invest in our Compelling Customer
centres in Indonesia and Vietnam. This
program to recognise and reward high-
Experience (CCE) program, which provides
allows us to extend our capability and
performing employees. The awards assist
our people with ongoing development and
support in delivering outstanding customer
better support our customers and existing
products.
in driving our high-performing culture, by
providing employees with a benchmark to
experiences.
Hack Days
Application Managed Services
In 2017, TechnologyOne continued its
Our Application Managed Services (AMS)
investment in innovation and culture,
drives productivity and cost efficiencies for
through company-wide Hack Days.
our customers through specialised services
TechnologyOne Hack Days encourage
that deliver continuous improvement and
innovation, creativity and fun, providing an
lower cost application management. The
opportunity for employees to break down
AMS team has many years’ experience
traditional silos and work on projects that
in running our software and a deep
are outside normal day-to-day work.
strive towards.
You can read more about our MARVELs
program in the ‘Employer of Opportunity’
section of this annual report.
Creating global opportunities
With a network of 14 offices across Australia,
New Zealand, Asia, the South Pacific and
the UK, we provide employees with unique
opportunities to further their careers both
understanding of our customers, enabling
them to deliver outstanding outcomes and
value.
Hack Days also enable us to showcase
domestically and globally. By offering
some of our emerging leaders, by giving
secondments and re-deployments across
our people the freedom to lead outside a
our offices, we are able to attract and
This year, we expanded our AMS services to
traditional organisational structure.
retain remarkable people, and foster career
ensure that all customers benefit from the
breadth of expertise our consulting team
offers.
A culture of innovation, creativity
and collaboration
We develop incredibly simple software
solutions that empower our customers. This
All parts of the business are encouraged
to participate in Hack Days, regardless of
which team or region they are in. Some of
the innovations that have come out of Hack
Days have truly transformed the way we
operate and have made our customers’ lives
simpler.
is where innovation and creativity in our
Collaborative facilities
R&D teams is key.
We create software that sets us apart from
the rest and our developers are leaders in
this regard. They challenge conventional
thinking and go beyond the traditional
realms of development methodology. Our
In 2017, we unveiled our exciting new
Hackspace as an extension of our HQ R&D
Centre. The new ‘project area’ provides
a collaborative workspace for aspiring
interns, graduates and our people to
innovate and develop leading, world-class
state-of-the-art R&D centre and initiatives
software.
are designed to foster collaboration,
creativity and innovation to provide the
Throughout the year, our Village Green
social areas continued to bring together our
development for our high performers.
Maintaining speed and agility
through our unique R&D model
We are committed to a continuous cycle
of redeveloping our software platform
from the ground up every seven years,
leaving no line of code untouched. This
opens our mind to new ideas, concepts
and technologies and ensures we are not
limited by the past.
Over 30 years, we have completely
redeveloped our software platform four
times. Since the introduction of SaaS and
smart mobile devices, the pace of change is
accelerating and our software will continue
to evolve at a market-leading pace.
36
TechnologyOne Limited 2017 Full Year Report
Transforming business making life simple
37
The power of best-in-class software
We ensure our software is easy to use
and offers a wide range of features and
functions. To achieve this, we promote
ownership, innovation and commitment
within our R&D teams, which results
in awesome software that has an
overwhelmingly positive effect on our
customers’ businesses.
Enterprise Software as a Service
Our eSaaS solution is unparalleled in
the market. We are the only vendor
delivering an enterprise solution for the
complete enterprise; it is a single instance
of software, delivered globally, running
thousands of customers’ organisations.
It produces massive economies of scale,
which unleash cost efficiencies that hosting
providers cannot come close to. Read more
in the Enterprise Software as a Service
section of this annual report (on pg 27).
TechnologyOne Foundation
The TechnologyOne Foundation and our
approach to charitable giving are key
defining factors behind who we are as a
company. Our aspirational goals for the
TechnologyOne Foundation set the tone
for our company culture and demonstrate
the values we are looking for in future
employees.
Opportunity International Australia
This year we signed a partnership with
Opportunity International Australia
(Opportunity), setting a goal to help 500,000
children and their families free themselves
from poverty over the next 15 years through
an innovative, entrepreneurial approach to
charitable giving.
The partnership with Opportunity will
provide small loans to enable families to
grow businesses, earn regular incomes and
create safety nets for the future. As 98 per
cent of these small loans are repaid and
then re-lent to other families, the impact
creates a ripple effect within communities.
Read more in the TechnologyOne
Foundation section of this annual report
(on pg 61).
Evolve user conference
nationally recognised as an award-winning
version of the Evolve user conference on the
In 2016, we delivered our Evolve user
conference on 18 – 21 October at the
initiative at the 2017 Australian Business
road to several capital cities in Australia.
Awards.
This was rolled out in 2017 and will continue
Brisbane Convention and Exhibition Centre.
Aside from driving positive customer
throughout 2018.
This brought together more than 2,300
attendees including customers, employees
and industry experts, and featured 122
sessions presented by 117 speakers across
12 streams.
Taking place at the beginning of a digital
revolution, the theme of Evolve 2016 was
to inform and prepare TechnologyOne
customers and prospects about how they
can take advantage of a cloud first, mobile
first world, transform their business and
gain a substantial competitive advantage by
leveraging leading technologies.
The 2016 event was our largest and
most successful Evolve to date, and was
and employee sentiment, Evolve also
The 2017 Showcase events offered
generated widespread media interest.
customers and prospects an opportunity
Evolve positioned TechnologyOne as a
to join industry leaders and peers to
leading technology and enterprise software
discover how TechnologyOne is transforming
company, shining a spotlight on the
business with the evolution of our
technology industry in Australia for the
enterprise Software as a Service.
duration of the event. The success of the
event, and of TechnologyOne, demonstrates
that it is possible for a successful
technology company to be headquartered in
Queensland and Australian owned.
Showcase
During the three events held throughout
the financial year, we showcased the latest
industry trends and insights, and unveiled
new software developments.
Showcase has proven highly successful,
engaging more than 700 unique
Capitalising on the success of Evolve,
customers and creating a pipeline of sales
TechnologyOne Showcase took a condensed
opportunities.
38
Transforming business making life simple
39
Technology One Limited 2017 Full Year Report OUR
GROWTH
40
Technology One Limited 2017 Full Year Report
Transforming business, making life simple
41
ENTERPRISE
SOFTWARE AS A SERVICE
“Having an enterprise solution has enabled
us to gain a broader and clearer picture
of how our organisation is performing.”
Steven Welsh
IT Officer
Corangamite Shire Council
Our Growth
Software as a Service
Expanding within our vertical
industry news and collaborate with other
We believe our ongoing investment in the
markets
TechnologyOne customers.
latest technologies has provided us with
a significant competitive advantage. Our
continuing success in recent years has been
underpinned by the incredible growth of
our Software as a Service (SaaS) business,
which has doubled every year since 2015.
In 2017, over 90 per cent of new customers
opted for SaaS.
We expect this trend to continue, with
SaaS to be a significant source of growth in
future years. Our enterprise SaaS solution
is a clear market leader, as we are the only
enterprise vendor to offer a true enterprise
SaaS solution across the entire enterprise.
We own, build and support our software,
unlike many other software providers
that use cloud hosting. These providers
handcraft each customer’s environment
with no shared benefits or economies of
scale.
Expanding within our geographies
We have 14 offices globally, located in each
state and territory of Australia, as well as
the United Kingdom, New Zealand, the
South Pacific and Asia.
Our success has been achieved because of
our ability to adapt the company to meet
the differing needs of customers in each
region. In particular, we adapt our sales
strategies within our regions as we identify
new and ongoing needs.
As we continue to build on our outstanding
success and consistent growth in Australia
and New Zealand, we are also capitalising
on the strong growth of our SaaS solution
in the United Kingdom. We are continuing
to increase our market share in the UK’s
local government and higher education
sectors, and we expect this will contribute
significantly to our growth in the years to
come.
We are also looking to expand into other
geographies in the future, as we have built
a global software platform that positions us
well for growth.
We operate within eight specific vertical
Our investment in strategic events including
markets that provide room to expand
regional Showcases and the Evolve user
our customer base and grow our solution
conference also ensures our customers
footprint, adding value to customers.
benefit from a strong community and
We have experienced continued success
and expansion within each of our markets.
Our preconfigured solution approach is
fundamental to the ongoing penetration
within these markets. We currently offer
more than 24 preconfigured solutions.
have the opportunity to collaborate with
experts and executives from all areas of the
business.
Expanding our product range and
depth
TechnologyOne currently boasts one of the
Through SaaS, we have been able to
most comprehensive enterprise software
penetrate our key vertical markets more
suites in the world. We are continuing to
deeply, by delivering services to customers
extend our product offering through the
we previously wouldn’t have targeted for
development of additional features and
an on premise solution. Organisations
that do not have the technical capability
or resources to roll out our software on
premise can now easily implement our
enterprise SaaS solution.
functions.
This year we integrated several pieces of
additional functionality we have acquired
in recent years, including Jeff Roorda &
Associates’ Strategic Asset Management
Adding value to existing customers
solution, Digital Mapping Solutions’ Spatial
software and ICON Software’s ePlanning
application and planning solution for local
government.
These acquisitions have exceeded our
expectations, enabling us to strengthen
our solutions and add value to existing
customers.
Thanks to our continued investment in
re-engineering all our products for Ci
Anywhere, customers can enjoy the same
functionality of our software regardless
of the device they are using. By making
enterprise software incredibly simple, Ci
Anywhere allows us to further expand our
footprint in our existing customer base.
We are working closely with our customers
to ensure we continue to meet their
ongoing business needs and provide an
increasing range of functions within our
enterprise solutions.
We support our customers with a dedicated
sales and marketing approach, which
keeps them informed about the latest
developments and referential experiences
from peer TechnologyOne customers.
Our customers benefit from our culture
of ongoing improvement, excellent
technology and innovative business
models. We listen to our customers and
make sure we understand their needs,
meet their priorities and enable ongoing
improvements in their business processes.
This ensures we are able to build proven
practice into our solutions and can provide
our customers with the best software and
services available.
Building on this partnership approach,
the TechnologyOne Customer Community
has transformed our support experience.
The Customer Community provides
a world-class support experience to
customers through a dynamic community
of TechnologyOne experts and customers.
It enables our customers to influence
product direction, keep up-to-date with
42
Technology One Limited 2017 Full Year Report
Transforming business, making life simple
43
TECHNOLOGYONE
30 YEARS AT
A GLANCE
Celebrating 30 years of success
This year, we celebrated 30 years since
TechnologyOne was founded by Adrian Di
Marco in the front of a hides processing
plant in the industrial suburb of Hemmant,
with the financial backing of J L Mactaggart
Industries.
More than three decades later,
TechnologyOne is now Australia’s largest
enterprise software company, sitting in the
top 150 listed companies on the ASX and
catering to a global customer base.
Since our founding in 1987, we’ve grown
from two employees to over 1,200. We’ve
gone through four generations of software,
from green screen to SaaS and smart mobile
devices. We’ve expanded to 14 offices
across Australia, New Zealand, South Pacific,
Asia and the United Kingdom. We’ve seen
our Evolve user conference grow from 30
participants to over 2,300 delegates.
Over the years, we’ve survived many
upheavals and have thrived through our
ability to embrace change, and evolve our
software and our business. We launched
onto the Australian IT scene in the dot-com
era with our remarkably successful listing
on the ASX, were unscathed by the dot-com
bust of the early 2000s, made it through
a global financial crisis and have stayed
ahead in an industry known for fast-paced,
never-ending change.
Officially joining the ranks of the ASX 200 in
2014, we have enjoyed record revenues for
the past 18 years, and reached $1.8 billion
market capitalisation in the last financial
year. We continue to double in size every
four to five years and are making strong
headway into global markets such as the
UK.
“I am proud of what we have achieved
over the last 30 years, but I am even
more excited about what we will create
in the next 30 years.” Adrian Di Marco,
TechnologyOne Executive Chairman
44
TechnologyOne Limited 2017 Full Year Report
Transforming business making life simple
45
1987
TechnologyOne founded in a demountable office at a hide processing plant in the Brisbane
suburb of Hemmant, with the backing of J L Mactaggart Industries. Becomes one of the
earliest developers in the world to use relational database technology.
1988
Moves to new offices in Benson St, Toowong.
1991
Releases first product, TechnologyOne Financials
(known at the time as FinanceOne).
1992
Holds first user conference. College Administration
System (CAP) for TAFE Queensland goes live. Signs
first government customers. Signs first New Zealand
customer.
1997
FinanceOne outrates all competing
products in survey conducted by Gartner
Group research division, Dataquest, for the
second consecutive year.
1998
Opens office in Melbourne.
Signs first Community Services customer.
Signs first Health customer.
1999
Lists on the Australian Securities Exchange (ASX). Signs
100th customer. Student Management (previously
called StudentOne) goes live at its first site. Showcases
Release 10 of FinanceOne at user conference.
2000
Moves to new purpose-built headquarters in High St,
Toowong. Auckland, New Zealand, Kuala Lumpur and
Malaysia offices open.
2001
Adrian Di Marco receives Entrepreneur of the Year award.
Receives the ESRI’s New International Business Partner of the Year award.
Develops infrastructure to support Business to Business (B2B) e-commerce.
2002
First sale of TechnologyOne Property and Rating (then called ProclaimOne). Launches TechnologyOne
Supply Chain. Canberra office opens. Participates in a government funded trade mission to the UK.
46
TechnologyOne Limited 2017 Full Year Report
Completes Connected Intelligence (Ci) platform, and releases first
new product on this platform, TechnologyOne Financials.
Releases TechnologyOne Works and Assets solution.
2005
2006
Opens first office in the United Kingdom.
Undertakes major sponsorship with Education
Queensland for the 2006 Education Queensland Showcase
Awards for the third consecutive year.
2010
Adrian Di Marco is awarded the highest honour by the
Australian Computer Society in recognition of
distinguished contribution in the field of ICT in Australia.
New international headquarters in Fortitude Valley.
2011
Launches OneBanking in partnership with
Police and Nurses Credit Society.
Partners with QUT to develop the Student
Management Application Event Module.
2012
Releases TechnologyOne Cloud.
Fourteen local government customers
switch to OneCouncil preconfigured
solution for local government.
2013
Launches OneFRS, an enterprise software
solution for the United Kingdom’s
emergency services market.
2014
Releases Ci Anywhere, which runs
across mobile devices, laptops and PCs.
Hits $1 billion market capitalisation and
enters S&P/ASX 200 Index.
2015
Adrian Di Marco is included in SmartCompany’s 2015 list of
top 10 most influential people in the Australian IT industry.
Adrian Di Marco is inducted into the Pearcey Hall of Fame.
Adrian Di Marco is named one of 2015’s top 10 CEOs by AFR Boss.
2016
Launches TechnologyOne Foundation to establish
charitable giving as a long-term company initiative.
Wins Cloud Innovation, Mobile Innovation and Employer of
Choice prizes at Australian Business Awards.
Adrian Di Marco announces he is stepping down from CEO role, but will
remain Chairman of TechnologyOne. Edward Chung is new CEO.
2017
Transforming business making life simple
47
OUR
OPERATIONS
48
Technology One Limited 2017 Full Year Report
49
Transforming business, making life simple ENTERPRISE SOFTWARE,
INCREDIBLY SIMPLE
Stuart MacDonald
Chief Operating Officer
Our unwavering strategy has been to invest
in our people and develop our products to
fully support our customers.
Achievements in FY2017
Building industry expertise
This year, we invested significant time
and effort in reorganising our structure
to vertically align it with our eight key
industries. This has increased our focus on
our core strengths and built our IP in each
of these industries.
Equipped with this enhanced market
expertise, we’re able to add more value
in conversations with our customers. It
has ensured our customers and prospects
derive greater benefits from us as long-term
strategic partners, as we provide solutions
to our customers’ problems, not just
software.
relationships with existing customers. It will
also enable us to build on our ‘OneSolution’
philosophy, and enhance the IP built into
our industry solutions.
This vertical alignment and close working
relationship with sales is allowing the
consulting business to build a stronger
foundation for profitability.
Marketing
During 2017, we leveraged our vertical
market strategy to launch several
international marketing campaigns, utilising
traditional and digital marketing tools such
as billboard advertising and geofencing
technology. These campaigns generated
heightened brand awareness and promoted
our capabilities in our core growth markets.
The marketing team also delivered a
number of key events, including our Evolve
user conference and regional Showcase
events, the former of which was recognised
by the Australian Business Awards as an
award-winning initiative that demonstrated
Alignment of sales and consulting
marketing excellence.
In keeping with our vertically-aligned
structure, the sales and consulting
operations have undergone some changes
to ensure they are structured under a
similar ‘industry-aligned’ model.
Both our sales and consulting teams
welcomed new leadership this year, with our
new Operating Officers bringing extensive
market experience from global ERP software
companies. These teams now report to the
Chief Operating Officer, allowing better
alignment between these two parts of the
business.
The United Kingdom’s Operating Officer
now reports to the Chief Operating Officer,
allowing us to better align the region with
the Australian business.
Strategy
In the 2018 financial year, our operational
focus will be on continuing to build on
our vertical approach, after establishing a
solid foundation this year. This will involve
developing expertise within our customer-
facing teams, and building IP into our
industry solutions.
We will also enhance the scalability
of our organisational structure and
generate greater operational efficiencies,
to capitalise on the success of our SaaS
solution and the rapid growth it has driven.
Our investment in these activities will
enable us to deliver on our Compelling
Customer Experience philosophy, and
maintain our strong 99 per cent customer
As we extend the partnership between sales
retention rate.
and consulting, we will also strengthen
50
Transforming business, making life simple
51
Technology One Limited 2017 Full Year Report Key strategic wins
This year was a milestone year for
TechnologyOne, a marked pivot point in the
transition from perpetual licences to SaaS.
Key wins throughout the year included:
• Department of Industry, Innovation and
Science (DIIS)
As well as signing a number of new
customers, we expanded our solution
footprint in our existing customer base.
Strategic approach for 2018
The year ahead is focused on accelerating
our growth and momentum and the ongoing
transformation of our sales organisation
• Statistics New Zealand
across a number of initiatives:
• Sydney Motorway Corporation
• Moreton Bay Regional Council
• Victoria University
• Australian Catholic University
• WA Tafe
• University of Sussex
• Deepening our industry market focus to
become more relevant to customers as a
long-term strategic partner and driving
customer-centric engagement.
• Optimising the sales coverage model and
utilising our modern sales platform to
increase demand generation, pipeline
We also signed a number of new local
build and deal velocity.
government customers resulting from
the NSW amalgamations, such as Inner
West Council and Mid Coast Council.
Our performance in the various NSW
amalgamation tenders was unprecedented,
dominating the market with success in
every tender we contested.
• Enhancing our programmatic approach
to helping existing and new customers;
assessing their readiness for moving to
the cloud and leveraging the significant
benefits of a SaaS environment.
We also worked with the leadership team
Legal
to set up parameters for cost management,
ensuring it is a devolved responsibility
across the entire business. This enables us
to maintain a scalable business model.
Audit and risk
In FY2017, we expanded our audit and risk
capability, to provide more rigour around
This financial year we streamlined our
contract processes and simplified our
standard agreements to make the contract
process more efficient. We also increased
our rigour around contract risk to ensure
we are delivering to commercially-prudent
terms.
our processes and proactively manage all
Strategic direction in FY2018
aspects of corporate governance.
We also appointed a Company Secretary,
whose sole focus is to support the business
of the Board, as we continue to climb the
ASX ranking lists.
IT
To support our global operations, we
improved internal communications and
global connectivity across our offices, and
the IT team was instrumental in delivering
this. By adopting cutting-edge technologies,
our IT function seamlessly connected all
offices during global events such as Hack
Days, Town Hall Meetings and the MARVEL
awards.
In the next 12 months, Corporate Services
will facilitate the overhaul of our systems
and processes for our consulting practice.
We will further intensify our cost discipline
and margin improvement. A key supporting
element of this will involve refining our
financial processes, enabling us to become
more efficient and automated.
Corporate Services will also provide
oversight of the growth of our Software as
a Service business, to ensure the continued
success of our cloud first, mobile first
vision.
We will continue to develop our processes
in line with business expansion, to ensure
our risk framework is always ahead.
John Ruthven
Operating Officer - Sales
We’ve seen an acceleration in the adoption
of Software as a Service (SaaS) solutions,
and this has been driven by our customers,
marking a clear validation for our SaaS and
industry strategy.
Tony Ristevski
Operating Officer - Corporate
Services
This year, we placed a continuing
emphasis on cost discipline and efficiency
improvements to streamline our end-to-end
finance processes. Having greater discipline
and enhanced frameworks has improved
our forecasting and budgeting processes.
52
for delivering our software and services
customers, so that they can participate in
to customers. New releases and upgrades
the software journey.
are included as part of this total solution,
guaranteeing it will be future proof.
This commitment to a ‘Power of One’ model
ensures we continue to deliver a compelling
Our consulting group is deeply engaged
customer experience to our customers, and
with our sales group, and are specifically
is key to our strong 99 per cent retention rate.
aligned to our eight vertical markets based
on their in-depth knowledge, customised
training and deep industry engagement.
Our consultants know how to configure
our software effectively and properly, not
just for now, but with an understanding of
where our R&D is headed in the next five
This approach saw the successful
completion of more than 100 customer go-
lives in 2017, including:
• Commonwealth Director of Public
Prosecutions
• Cumberland Council
years and beyond.
• Australian Rail Track Corporation
Delivering value to our customers
through our industry solutions
• West College Scotland
• New Zealand Racing Board
Our solutions are more than software
Strategic direction in FY2018
Nancy Mattenberger
Operating Officer - Consulting
The traditional model of having a separate
software vendor and third-party consulting
partner is a broken model. No one party is
accountable for the customer’s successful
outcomes, and third-party consulting firms
- they’re an end-to-end solution
encompassing infrastructure, security and
services to guarantee our customers’ long-
term success.
Our consulting team provide this holistic
service faster, better, quicker and cheaper
build their business around the amount of
than anyone else because they are
consulting fees they can charge customers.
deeply engaged with both our sales and
TechnologyOne provides a total solution
and is fully accountable and responsible
R&D teams, ensuring that customers
can influence the way our products are
developed. Our consultants partner with
We recognise that customers implementing
new products have different requirements
to those seeking consulting services to
optimise their existing solutions. As such,
our strategy for consulting has been to
set up two business units: one for new
customers and one for existing customers.
This separation has enabled each business
unit to excel in delivering outcomes for all
customers.
Building out our capability and capacity
To ensure we continue delivering a
to support current and future growth has
compelling customer experience to our
been a major focus in 2017. This involved
growing customer base, in 2018 we will
more than doubling the size of our UK-
focus on investing in our consulting
based cloud, support and consulting teams,
capability; this will enable us to scale the
and significantly investing in training and
business and support customers across the
onboarding our people.
region.
Key strategic sales successes in 2017
We experienced significant sales growth in
the education sector, after establishing a
strong pipeline in 2016. Throughout the year
we signed two new Student Management
sites and one new Financials customer in
the sector.
Delivering against the company’s cloud
first, mobile first vision, our focus over the
next 12 months will be to transition our on
premise customers to the TechnologyOne
Cloud. We expect the TechnologyOne UK
customer base to be 100 per cent cloud
delivered by early 2019.
Roger Phare
In another of our key markets, local
government, we secured three new
customers.
Operating Officer - United Kingdom
Future outlook
The United Kingdom operation continues
to grow, establishing a foundation for the
The UK operation has established a critical
mass with 50 customers in the region. We
expansion of our solution footprint in our
have become a key contender in our major
key vertical markets.
markets of local government and higher
education.
53
Transforming business, making life simpleTechnology One Limited 2017 Full Year Report EMPLOYER
OF CHOICE
54
Technology One Limited 2017 Full Year Report
Transforming business, making life simple
55
Extensive onboarding and training
Graduate program
Industry partnerships
Equal opportunity
TechnologyOne hires passionate, talented
Our expanding graduate and intern
As Australia’s leading Software as a Service
TechnologyOne takes diversity and
and innovative people who are inspired to
programs will continue as the foundation of
company, we are committed to actively
inclusion seriously, and we continue to
think about the future - their future, the
our talent pipeline into the future, and we
fostering a diverse and vibrant ICT industry.
review and enhance our offerings based on
As a nationally-recognised Employer of
company’s future and the future of our
have developed strategies for investing in
We want to create interest around this
best practice.
Choice, TechnologyOne is committed to
customers.
and valuing our high performers.
providing an environment in which our
talented people can be innovative, creative
and realise their full potential.
Our comprehensive onboarding program
This year, we onboarded 20 new Research
provides the best possible start for our
& Development (R&D) graduates across
people in their careers at TechnologyOne.
Australia. These graduates work very closely
Our people are a crucial source of our
competitive advantage, and we strategically
Delivering training in leadership, technical
and professional skills development,
with the company’s top engineers, providing
them with valuable skills and experience.
invest in activities that support the
the TechnologyOne College continues to
recruitment, retention and development of
support our commitment to developing our
individual talent within our workforce.
people and growing their careers.
This year, TechnologyOne received more
than 15,000 recruitment applications,
processed 33 promotions and facilitated 20
international secondments, many of which
were employee-initiated.
exciting time in Australia’s economy
and ensure we are engaging early with
Australia’s youngest and brightest minds in
Science, Technology, Enginering and Maths
(STEM).
As part of this commitment, we sponsor
We advocate equal opportunity for all, and
are committed to addressing the shortage
of female technology workers in Australia.
To achieve this, we provide equal pay
opportunities for men and women in our
workplace and have a zero-tolerance policy
the QUT Dean’s Scholars Program and the
of discrimination and harassment of any
UQ School of Information Technology and
kind.
Electrical Engineering (ITEE) ICT Excellence
(Prentice) Scholars Program, with many of
these students being channelled into our
award-winning internship program.
Recruitment and promotion within
TechnologyOne is based only on the
relevant skills, experience, qualifications,
aspirations, potential and aptitude of the
We also partner with the Australian
applicants.
Computer Society (ACS) Foundation to
sponsor the national BiG Day In™ series,
which is aimed at high school and university
students who are interested in careers in
technology. Our goal in sponsoring BiG Day
In™ is to inspire school-aged students to
pursue careers in the IT industry.
Our participation of women at
TechnologyOne is at 33 per cent, placing us
among the best globally in the IT industry.
However, we are committed to increasing
this further, through strategic partnerships
with industry bodies that encourage female
participation in STEM. In doing so, we play a
lead role in growing a more diverse pipeline
of future candidates to work in STEM and at
TechnologyOne.
Some of the key programs TechnologyOne
supported this year include the Tech Girls
Movement and the Queensland Women in
Technology Awards.
56
57
Transforming business, making life simpleTechnology One Limited 2017 Full Year Report Reward and recognition
We believe it is important to recognise and
reward top talent, in order to maintain
our high-performing culture. In 2017, we
initiated the TechnologyOne MARVEL awards
as a way to celebrate employees who go
above and beyond. The MARVELs showcase
ordinary people, doing extraordinary things.
MARVEL stands for Merit, Achievement,
Recognition, Values, Excellence and
Leadership. Categories for the MARVEL
awards are centred around our key
initiatives. These include:
• Leader of the Year
• Compelling Customer Experience
of the Year
• Hack of the Year
• Rookie of the Year
• TechnologyOne Superheroes
Hall Meetings in FY 2017. These enable our
executive team to share major company
updates with all employees at once,
connecting all offices by leveraging our
state-of-the-art facilities and leading
technology and audio visual equipment.
As highlighted in ‘Our Initiatives’, we
also continued our investment in Hack
Days, which provide employees with
the opportunity to collaborate across
functional teams and work on projects that
are outside their normal day-to-day work.
These Hack Days are key in driving our
culture of innovation and creativity.
Our Community Sports program
We support our people in sporting events
to encourage health, well-being and
charitable fundraising. It has been one of
the biggest years for our TechnologyOne
athletes, with 265 people competing
Winners of the MARVELs receive company-
in 12 different sports across 19 events.
wide recognition, and are inducted into
Our people competed in events such as
TechnologyOne’s League of Extraordinary
the Queensland Corporate Games, MS
People.
Capability development
Moonlight Walk, City 2 Surf, Round the Bays,
Oxfam Trailwalker and Melbourne Marathon.
As we continue to transform our customers’
Our Corporate Sustainability scheme
businesses and make their working lives
TechnologyOne has a strong commitment
simple, we remain focused on implementing
to managing our business operations in an
innovative people programs to hire, retain
environmentally responsible manner. Our
and develop a high-performing workforce.
headquarters in Brisbane’s Fortitude Valley
In the 2017 financial year, we ran 519 training
programs, with a total of 3,468 attendees.
The TechnologyOne College continues to
develop our training programs, to ensure
we are providing our people with avenues
to develop their skills and careers.
Employee engagement
At TechnologyOne, we value our employees’
right to have their say. This year, we
conducted an employee engagement
survey, which provided a channel for our
is a six-green-star environmentally-rated
building. The building includes numerous
environmentally-rated sustainable
development features, including 50 per cent
more fresh air than standard commercial
buildings, C02 monitoring, external views
to maximise daylight, energy efficient
lighting, dedicated exhausts in photocopier
areas, a gas powered generator and a large
rainwater collection area on the roof to
supply water for the toilets and garden
irrigation.
people to be heard. The results of the
Our people are also encouraged to access
survey will be used to influence ongoing
and adhere to our Environment Policy. It
enhancements to our initiatives and
outlines our commitment to providing an
programs.
To improve communication across our
global offices, we conducted regular Town
environmentally-responsible workplace,
ways to engage in sound workplace
practices through reducing waste, and the
considered use of energy and resources.
58
Technology One Limited 2017 Full Year Report
Transforming business, making life simple
59
60
Technology One Limited 2017 Full Year Report
Transforming business, making life simple
61
As a large, successful company we have
poverty behind. Our annual grant to
In 2017 we:
the capability and capacity to make a
Opportunity aims to help 500,000 children
difference. The TechnologyOne Foundation
and their families free themselves from
establishes charitable giving as a long-
poverty over the next 15 years through
term initiative, and defines who we are as
microfinance. The TechnologyOne
a company. It reflects our values, culture
partnership with Opportunity will provide
and who we aspire to be, and demonstrates
small loans to enable families in India to
the attributes we are looking for in future
grow businesses, earn regular incomes and
employees.
create safety nets for the future.
Representing a multi-million-dollar
annual commitment, the TechnologyOne
Foundation is committed to making a
difference to underprivileged and at-risk
youth in our communities, by empowering
them to transform their lives and create
their own pathways of success.
The 1% pledge
The driving initiative of our foundation is
the 1% pledge, committing us to donating
1% of time, 1% of profit and 1% of product.
This initiative is part of the Pledge 1%
corporate philanthropy movement,
dedicated to making the community a key
stakeholder in every business. Pledge 1%
encourages and challenges individuals and
companies to pledge 1% of profit, product
With a small loan to start a small shop or
purchase seeds to plant a vegetable farm,
for example, families are able to transform
their lives and their children’s futures.
Since 98 per cent of small loans are
The TechnologyOne Foundation is
underpinned by our partnership
with Opportunity International
Australia (Opportunity). Together with
Opportunity, we have set an ambitious
goal to help 500,000 children and their
families free themselves from poverty.
• Signed a partnership with Opportunity
International Australia to break the
poverty cycle for generations
• Made a substantial contribution to
The School of St Jude’s e-learning and
technical programs, enabling the school
to purchase three new servers, and
update a computer lab of 25 laptops
with the latest Windows and Microsoft
Office licensing
• Committed to a three-year partnership
with The Fred Hollows Foundation to
support the Vietnam Child Eye Care
children
• Continued support for 20 ongoing
disadvantaged youth programs through
The Salvation Army and Mission Australia
across Australia, New Zealand and the
United Kingdom
• Supported World Vision’s work with
children, families and communities to
overcome poverty and injustice
In addition to our major charity partners,
we supported a number of other worthy
charities and causes including:
and employee time for their communities.
How we make a difference
It’s a small commitment today that can
make a huge impact in our communities
tomorrow.
Employing others
As small businesses grow, some go on to
employ others in order to keep up with
• Yayasan Kemanusiaan Ibu Pertiwi (YKIP)
• Bond University Indigenous Program
As part of our 1% pledge initiative, 1% time
demand. As these jobs are created, other
• Mater Foundation
offers all employees up to 2.5 days leave
local families are given an opportunity to
per year to volunteer during work hours
leave poverty behind too – delivering goods
for selected charitable organisations.
door-to-door or helping with sewing or
• Substation33
• R U OK? Day
recycled, the impact creates a ripple effect
program, which aims to eradicate
within families and their communities.
avoidable blindness in all school-aged
Through the 1% product, our commitment
weaving orders.
is to donate 1% of licence fee revenue each
year, making it easier for not-for-profit
Boosting local communities
organisations to access our solutions and
With an increased income and therefore
take advantage of the efficiencies they
more money to spend on items such
bring, extending the impact of their services
as food and transport, families who
and the work they do in our communities.
used to live in poverty become active
The 1% profit component commits us to
donating 1% of annual profit to our charity
partners, supporting our vision of changing
the future by empowering underprivileged
and at-risk youth to transform their lives.
participants in their local economies,
benefiting the providers of those products
and services, who, positively, are often
microentrepreneurs themselves. By
boosting local economies, microfinance
impairment.
benefits developing communities beyond
We also partner with a number of
the aid of a one-time handout.
key charities including Opportunity
International Australia, The School of St
Jude, The Fred Hollows Foundation, Mission
Australia and The Salvation Army. This
strategic approach to charitable giving
enables us to make a bigger difference to
the causes we support.
Opportunity International Australia
Creating change
With the new sense of dignity and respect
that comes from having their own business,
microentrepreneurs are also able to use
their influence to bring about positive
changes in their communities – rallying
local government for improvements to
infrastructure or education and bringing
Through our partnership with
local families together to take on
Opportunity and its innovative approach
to microfinance, we are transforming
communities and helping families leave
community projects.
Together with The Fred Hollows
Foundation, the TechnologyOne
Foundation is restoring sight,
fighting for change and empowering
communities. Our joint commitment to
the two-year Vietnam Child Eye Care
program will improve eye health for
all Vietnamese primary and secondary
school children by encouraging healthy
eye care practices to prevent visual
Who will benefit?
• 210 primary schools, including 6,581
teachers and 146,326 students
• 150 secondary schools, which
includes 5,446 teachers and 102,614
students
• 200 eye care workers will be trained
in primary eye health and 12,027
teachers and school staff will be
trained in basic eye health during
the project cycle
62
Technology One Limited 2017 Full Year Report
63
Transforming business, making life simple FINANCIAL
STATEMENTS
64
65
Transforming business, making life simpleTechnology One Limited 2017 Full Year Report Directors’ report
Your Directors present their report on the consolidated entity
Directors
(referred to hereafter as the Company) consisting of Technology One
Limited and the entities it controlled at the end of, or during, the
year ended 30 September 2017.
The following persons were Directors of Technology One Limited
during the financial year and up to the date of this report:
Adrian Di Marco
B Sc, MAICD, FACS
Appointed 8 December 1999.
Experience and expertise
Ron McLean
Appointed 8 December 1999.
Experience and expertise
John Mactaggart
FAICD
Appointed 8 December 1999.
Experience and expertise
Kevin Blinco
B Bus, FCA
Appointed 1 April 2004.
Experience and expertise
Mr Di Marco founded TechnologyOne in 1987, after extensive
Mr McLean has more than 40 years’ experience in the enterprise
Mr Mactaggart’s experience spans industries such as agriculture,
Mr Blinco is a former director and chairman of business advisory
experience in the software industry in the area of large scale fixed
software industry including holding Senior Executive and Managing
agri-tech, manufacturing and software. He is a co-founder of
accounting firm Moore Stephens Brisbane Ltd. He has over 30
time and fixed price software development. Mr Di Marco has over 35
Director roles in several international and Australian software
Brisbane Angels, and an active investor and mentor in a large
years’ experience in the areas of business services and planning,
years’ experience in the software industry. He has been responsible
companies.
for all operational aspects of TechnologyOne, as well as the strategic
direction of the company.
His involvement in the enterprise software industry has included
leading and managing software development, consulting and sales
Mr Di Marco has played a major role in promoting the Australian
and marketing teams.
IT industry, and is a past director of the Australian Information
Industry Association, the industry’s peak body. He has been a
director of a number of IT companies. He has also been actively
involved in charitable organisations, and is a past director of the
Royal Children’s Hospital Foundation Board. He is a member of
Mr McLean joined the Board as a Non-Executive Director in 1992
was appointed as the General Manager in 1994, as Chief Operating
Officer in 1999 and was then promoted to Chief Executive Officer of
Operations in 2003.
the Australian Institute of Company Directors and a Fellow of the
Mr McLean retired from this role at TechnologyOne on 15 July 2004
Australian Computer Society. Mr Di Marco has received extensive
and remains a Non-Executive Director.
recognition for his contribution and pioneering work for the IT
industry. He remains a major shareholder of TechnologyOne.
Interests in shares and options
number of entrepreneurial ventures. Mr Mactaggart played
investment strategies, management and financial advice. Mr Blinco
an integral role in the creation, funding, and development of
is a director of a number of unlisted companies. His expertise is
TechnologyOne and remains a major shareholder. Mr Mactaggart
broadly respected and acknowledged throughout the business
has been a Fellow of the Australian Institute of Company Directors
community. He is a Fellow of the Institute of Chartered Accountants
since 1991.
and a Member of the Institute of Company Directors.
Interests in shares and options
Special responsibilities
42,872,500 ordinary shares in Technology One Limited held
Chairman of the Audit Committee and Remuneration Committee.
beneficially through JL Mactaggart Holdings Pty Ltd. 30,000 ordinary
shares in Technology One Limited held via family trust.
Interests in shares and options
260,000 ordinary shares in Technology One Limited held beneficially
through Autun Pty Ltd ATF Blinco Accumulation Superannuation
Fund.
101,000 ordinary shares in Technology One Limited held beneficially
through RONMAC Investments Pty Ltd. 40,000 ordinary shares in
TechnologyOne held via a pension fund.
Mr Di Marco is the Executive Chairman of TechnologyOne, and
Chief Innovation Officer for the company. He continues to work with
the executive team and Board. He continues to focus on strategy,
innovation and creativity to ensure the company continues to build
future platforms for strong growth.
Special responsibilities
Chairman of the Board, and Chief Innovation Officer.
Interests in shares and options
31,372,500 ordinary shares in Technology One Limited held
beneficially through Masterbah Pty Ltd. 6,000 ordinary shares in
Technology One Limited held via family trust.
66
67
Transforming business, making life simpleTechnology One Limited 2017 Full Year Report
Richard Anstey
FAICD, FAIM
Appointed 2 December 2005.
Experience and expertise
Jane Andrews
PhD, GAICD
Appointed 22 February 2016.
Experience and expertise
Mr Anstey has more than 35 years experience in IT and
Dr Jane Andrews joined the Board in 2016, bringing more than 15
telecommunications industries and in associated investment
years’ leadership experience in research and innovation-based
banking and funds management roles. Most of his career he has
organisations.
been building and managing his own companies. The first, being
Tangent Group Pty Ltd, established a strong reputation for software
and strategic advice for the banking and finance sector. After the
sale of Tangent, he co-founded inQbator which became iQfunds
as an early stage investment group focused upon the technology,
As a founder and investor in numerous innovative companies,
Dr Andrews has extensive experience in corporate strategy,
entrepreneurship, commercialisation, innovation, research and
development.
telecommunications and life sciences sector. iQFunds has managed
Dr Andrews is a Graduate of the Australian Institute of Company
three federal government backed seed funds, the last being iQFund
Directors, holds a PhD in Life Sciences, a Bachelor of Science (First
3, and has invested in over 30 companies over the past 15 years.
Class Honours) and a Graduate Diploma in Applied Finance and
Mr Anstey now continues his career in venture capital and corporate
Investment.
advisory roles through iQFunds. Mr Anstey is a Director and Non-
Interests in shares and options
26,000 ordinary shares held in Technology One Limited held
beneficially through the Sarabande Zenith Jewel Trust.
Executive Chairman of Veriluma Limited (ASX: VRI).
Special responsibilities
Chairman of the Nomination Committee.
Interests in shares and options
25,500 ordinary shares in Technology One Limited.
Stephen Kennedy
Company Secretary
BBus, FGIA
Appointed 13 April 2017.
Mr Kennedy was appointed Company Secretary on 13 April 2017 and
has been employed with TechnologyOne since January 2017.
Meetings of Directors
The numbers of meetings of the Company’s Board of Directors and
of each Board Committee held during the year ended 30 September
2017, and the numbers of meetings attended by each director were:
Full meetings
of Directors
(Board)
Meetings of committees
Audit
Nomination Remuneration
A Di Marco
R McLean
J Mactaggart
K Blinco
11
11
11
11
R Anstey
10(11)
J Andrews
10 (11)
-
4
-
4
4
4
-
-
-
-
3(4)
3(4)
4
4
4
4
4
4
Final dividend for the year ended 30
September 2016 of 5.09 cents (2015 - 4.63
cents) per fully paid share paid on December
2016 (2015 - December 2015)
2017
$’000
2016
$’000
15,947
14,390
Special dividend for the year ended 30
September 2016 of 2.0 cents (2015 - 2.00 cents)
per fully paid share paid on December 2016
6,265
6,213
Interim dividend for the year ended 30
September 2017 of 2.60 cents (2016 - 2.36
cents) per fully paid share paid on June 2017
(2016 - June 2016)
8,158
7,355
30,370
27,958
Review of operations
Please refer to Letter to Shareholders on page 11.
Where a director did not attend all meetings of the Board or
relevant committee, the number of meetings for which the director
Corporate structure
was eligible to attend is shown in brackets. In sections where there
The Technology One group of companies consists of the following:
is a dash, the director was not a member of that committee.
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 Enterprise Asset Management
• TechnologyOne Financials
• TechnologyOne Human Resource and Payroll
• TechnologyOne Enterprise Budgeting
• TechnologyOne Supply Chain
• TechnologyOne Property and Rating
• TechnologyOne Student Management
• TechnologyOne Business Intelligence
• TechnologyOne Enterprise Content Management
• TechnologyOne Performance Planning
• TechnologyOne Spatial
• TechnologyOne Enterprise Cash Receipting
• TechnologyOne Stakeholder Management
• TechnologyOne Business Process Management
Dividends - Technology One Limited
Dividends paid to members during the financial year were as
follows:
• Technology One Limited
• Technology One New Zealand Limited
• Technology One Corporate Sdn Bhd
• Technology One UK Limited
• Avand Pty Ltd
• Avand Pty Ltd (New Zealand) Pty Ltd
• Desktop Mapping Systems Pty Ltd
• Digital Mapping Solutions NZ Limited
• Boldridge Pty Ltd
•
•
Icon Solution Unit Trust
Jeff Roorda and Associates Pty Ltd
Significant changes in the state of affairs
There were no significant changes in the Company’s state of affairs
during the financial year.
Matters subsequent to the end of the financial year
On 21 November, the directors of Technology One Limited declared
a final dividend on ordinary shares in respect of the 2017 financial
year. The total amount of the dividend is $17,664,000 and is 75%
franked. There was also a special dividend declared for the 2017
financial year of $6,309,000 which is also 75% franked.
No other matter or circumstance has occurred subsequent to period
end that has significantly affected, or may significantly affect, the
operations of the Company, the results of those operations or the
state of affairs of the Company or economic entity in subsequent
financial years.
Likely developments
Refer to the Letter to Shareholders.
Indemnification and insurance of officers
Insurance and indemnity arrangements established in the previous
68
69
Transforming business, making life simpleTechnology One Limited 2017 Full Year Report year concerning officers of the Company were renewed or
guidance provided in APES 110 ‘Code of Ethics for Professional
continued during the year ended 30 September 2017.
Accountants’ as issued by the Accounting Professional
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
and Ethical Standards Board and EY’s own independence
requirements.
• The threats of self-interest and familiarity have been mitigated
as EY appointed a new Engagement Quality Review Partner.
has indemnified those officers against any claim or for any expenses
• The Board of Directors are of the view that Mr Tozer’s continued
or costs which may arise as a result of work performed in their
involvement with the Group as the Lead Audit Partner will not in
respective capacities. There is a limit of $25,000,000 for any one
any way diminish the audit quality provided to the Group.
Remuneration Report (Audited)
The remuneration report contains the following sections.
Our executive remuneration framework complies with common
1.
2.
3.
Introduction
About this report
practice for ASX200 companies, but has been adapted to meet the
demands of the enterprise software market. Relative to our ASX-
listed peers, our Executives receive:
Executive Remuneration Framework
• Relatively low fixed remuneration to enable a greater emphasis
4.
Relationship between remuneration and company performance
on performance;
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.
Non-audit services
Rounding of amounts
5.
Executive Statutory Remuneration
The Company is of a kind referred to in Instrument 2016/191,
6.
Equity Plans
issued by the Australian Securities and Investments Commission,
relating to the ‘rounding off’ of amounts in the directors’ report
and financial report. Amounts in the directors’ report and financial
report have been rounded off in accordance with that Class Order
to the nearest thousand dollars, or in certain cases, to the nearest
dollar.
7.
Remuneration governance
8. Non-executive director fees
9. Director shareholdings
10. Equity instruments held by Key Management Personnel
• Relatively large at risk short term incentive (STI) portion aligning
Executives to current year performance; and
• Long term incentives (LTI) linked to long term strategy, targets,
and shareholder wealth creation.
The reason for our emphasis on STIs is that short-term performance
is a key driver of TechnologyOne’s long-term success. This is
because over 65% of our revenues each year are recurring revenues
based on contract wins in prior years. If we drive short-term
performance through new licences and profit, this translates into
Non-audit services provided by the Company’s auditor, Ernst and
Environmental regulation
11. Loans to key management personnel
greater shareholder wealth over the longer term.
Young, in the current financial period and prior financial year
included taxation advice. 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.
The Company has determined that no particular or significant
12. Other transactions with key management personnel
In FY2016, we modified our Non-executive Director mandatory
environmental regulations apply to it.
Share options
Unissued shares
1. Introduction
TechnologyOne is pleased to present its Remuneration Report for
the 2017 financial year, which sets out the remuneration framework
shareholding policies to comply with best practice for companies
in the ASX100-200. In FY2015, we introduced significant changes to
our executive remuneration framework which has been enhanced in
FY2017 as we rolled out the new plan to a broader set of Executives.
During the year the following fees were paid or payable for non-
As at the date of this report, there were 4,199,817 unissued ordinary
for the Executive Chairman, our Executives and our Non-Executive
During the year TechnologyOne produced record revenues (up
audit services provided by the auditor of the Company and its
shares under options (4,199,817 at the reporting date). Refer to note
Directors.
related practices:
32 for further details of the options outstanding.
2017
$
2016
$
Option holders do not have any right, by virtue of the option, to
participate in any share issue of the company.
Ernst and Young:
Taxation advice
Shares issued on the exercise of options
134,550
31,690
During the year, employees and Executives have exercised options
Due diligence services Ernst and Young
-
5,555
to acquire 2,147,433 fully paid ordinary shares in Technology One
Limited at a weighted average exercise price of $1.07. Refer to note
Total remuneration
134,550
37,245
32 for further details of the options exercised during the year.
This report is made in accordance with a resolution of directors.
Adrian Di Marco
Brisbane
21 November 2017
Auditor’s independence declaration
A copy of the auditor’s independence declaration as required under
section 307C of the Corporations Act 2001 is set out on page 131.
On 15 August 2016 the Board approved the extension of the Lead
Audit Partner rotation period from five years to seven years in
accordance with section 324DAB of the Corporations Act 2001 and
the Corporations Legislation Amendment (Audit Enhancement) Act
2012.
The reasons why the Board approved the extension included:
• Mr Tozer, the Lead Audit Partner, has a detailed understanding
of the Group’s business and strategies, its systems and controls.
This knowledge is considered to be invaluable to the Board at
this point in time.
• The existing independence and service metrics in place with EY
and Mr Tozer, are sufficient to ensure that auditor independence
would not be diminished in any way by such an extension.
• Mr Tozer will continue to abide by the independence
TechnologyOne has attracted exceptional Executives, Directors and
employees, who collectively have been responsible for delivering
long term profitable growth and substantial shareholder returns.
In order to attract and retain such talent in a highly competitive
and fast moving environment, it is critical to have a remuneration
framework that enables TechnologyOne to compete for talent
against the world’s biggest enterprise software companies such as
Oracle and SAP, as well as other Australian software companies.
We continue to engage with our shareholders and advisors in the
ongoing refinement of our remuneration framework to ensure it
10%) and record profits (NPBT up 9%) (2016 16%) however this
result did not meet the hard targets set by the company. As a
consequence, total executive Short Term Incentives (STI) were
substantially below their negotiated amounts and the majority of
options available under the Long Term Incentive Scheme (LTI) were
forfeited, reflecting the continued commitment and effectiveness
of the TechnologyOne remuneration policies in driving increases in
shareholder return.
2. About this report
2.1 Basis for preparation
is fair and equitable, and continues to reward Key Management
The information in this report has been prepared based on the
Personnel (KMP) appropriately to drive performance for the
requirements of the Corporations Act 2001 and the applicable
Company and our shareholders.
accounting standards.
The principles of our remuneration framework are to:
• Attract, retain and motivate skilled directors and Executives in
leadership positions;
• Provide remuneration which is appropriate and competitive both
internally and against comparable companies (our peers);
• Align Executives’ financial rewards with shareholder interests
and our business strategy;
• Achieve outstanding shareholder wealth creation;
The Remuneration Report is designed to provide shareholders
with a clear and detailed understanding of TechnologyOne’s
remuneration framework, and the link between our remuneration
policies and Company performance.
The Remuneration Report details the remuneration framework for
TechnologyOne’s Key Management Personnel (KMP). For the purpose
of this report, KMP are defined as those persons having authority
and responsibility for planning, directing and controlling the major
activities of TechnologyOne, directly or indirectly, including any
• Articulate clearly to Executives the direct link between individual
director (whether executive or otherwise). TechnologyOne defines
and group performance, and individual financial reward;
its KMP as the Company’s Non-Executive Directors (NEDs) and
• Reward superior performance, while managing risks; and
Executives including the Executive Chairman.
• Provide flexibility to meet changing needs and emerging
This report has been audited.
competitive market practices.
70
71
Transforming business, making life simpleTechnology One Limited 2017 Full Year Report agreed to ensure they are aligned to creating long term shareholder
value.
2.2 TechnologyOne Non-Executive Directors
For the 2017 financial year, the Non-Executive Directors of
TechnologyOne are as follows:
• Ron McLean
•
John Mactaggart
• Kevin Blinco
• Richard Anstey
• Dr Jane Andrews
2.3 TechnologyOne Executives
Executive Directors
• Adrian Di Marco (Executive Chairman, Chief Innovation Officer)
Senior Executives
3. Executive Remuneration Framework
TechnologyOne has continued to refine the executive remuneration
framework which was introduced in the 2015 financial year. The LTI
scheme which now is based on options issued at market price and
no discount. KPIs relevant to the Executives area of influence are
value.
For 2017, the Board, following market consultation, believes that the
disclosure of targets for the LTI KPIs is commercially sensitive and
therefore have not been disclosed. As in 2016, for 2017 the LTI KPIs
are reviewed annually and set by the Board. The KPIs are primarily
yearly based measures to ensure a consistency year-on-year but
importantly over a 3 year window creates value for shareholders
which is when the options vest. Thus the executive will only benefit
• Edward Chung (Chief Executive Officer) – changed position on
if shareholder value is created. The targets are set at levels to
23 May 2017
• Stuart MacDonald (Chief Operating Officer) – changed position
on 23 May 2017
• Roger Phare (Operating Officer - United Kingdom)
• Martin Harwood (Operating Officer – Consulting Services) –
retired 15 April 2017
• Nancy Mattenberger (Operating Officer – Consulting Services) –
commenced 20 February 2017
• Tony Ristevski (Operating Officer – Corporate Services and CFO)
•
John Ruthven (Operating Officer – Sales) – commenced
1 September 2017
2.4 Key personnel changes during the financial year
During the financial year the following changes were made:
• Edward Chung moved from the position of Chief Operating
Officer – Asia Pacific to Chief Executive Officer on 23 May 2017
• Stuart MacDonald moved from the position of Operating Officer
ensure TechnologyOne continues to drive strong profit growth year-
on-year. Details of the plan and worked example are provided in
section 3.6. Executives only receive value if performance targets are
met that have been previously set for the LTI.
TechnologyOne will continue to honour existing contracts with its
Executives that predated the new framework, and which need to be
honoured both legally and morally, as well as ensuring the existing
momentum in the business is not lost.
This report is written with a focus on the new remuneration
framework, and where there exist older quarantined arrangements,
these will be highlighted as exceptions.
3.1 Changes to remuneration framework in 2017 financial
year
In the 2017 financial year, we have revised the remuneration
benchmarks for our Executives to include locally-based senior
Executives from global companies operating in the enterprise
software market, as well as KMP from our information technology
– Sales and Marketing to Chief Operating Officer effective 23 May
industry peers in the ASX200.
2017
• Martin Harwood, Operating Officer – Consulting Services stepped
down from the role of Operating Officer – Consulting Services
effective 20 February 2017. Mr Harwood retired and left the
company effective 15 April 2017
• Nancy Mattenberger was appointed to the role of Operating
Officer – Consulting Services effective 20 February 2017
Every third year the committee reviews and compares the Non-
Executive Director fees to market. This year as part of the process
of adding a Non-Executive director to the Board, we engaged
an independent third party to review our director’s fees and
benchmark them against our peers to ensure we can continue to
attract and retain quality directors. This has resulted in an increase
in Directors’ fees to $127,000, including statutory superannuation
•
John Ruthven was appointed to the role of Operating Officer –
contributions. Directors’ fees have been set at the 75th percentile
Sales effective 1 September 2017
of ASX 101 – ASX 200 companies with CPI increases until the next
2.5 Board Committee changes during the financial year
There were no Board Committee changes during the financial year.
The Board believes that its existing Directors contribute valuable
knowledge, skills and experience. In order to ensure that the Board
review in three years time.
The minimum mandatory shareholding for Directors has also been
increased to the equivalent of one year’s before-tax remuneration,
with directors having two years to achieve this target.
and its committees clearly have a majority of independent directors,
3.2 Our remuneration benchmarks
the Board is considering appointing an additional independent
Director at an appropriate time.
The talent pool in Australia for Executives with large scale
enterprise software experience and a proven track record is
extremely small and is hotly contested with start-up companies
at the lower end, and large multinationals at the other end of
the spectrum. In such a ferociously competitive and relatively
small market, our experience has shown that to attract and retain
organisation needs this level of management expertise to keep the
talented Executives who understand large-scale enterprise software,
growth momentum experienced over the past 10 years continuing
requires a remuneration framework that is appropriately structured
into the future.
for the enterprise software market. The changes made to our LTI
framework have been influenced by like organisations and ensuring
we provide a flexible incentive structure whilst driving shareholder
We have benchmarked our Executives’ remuneration against
Australian-based KMP from our competitors in the enterprise
software industry: Oracle, Microsoft, SAP, Workday and NetSuite. Our
The remuneration arrangements of our Executives are made
up of both fixed and at risk remuneration. The remuneration
arrangements are comprised of the following three components:
• Fixed remuneration;
• Short Term Incentive (STI) which is at risk and represents a share
of profit (performance based); and
executive remuneration is also calibrated against other listed IT
• Long Term Incentive (LTI) which is at risk and performance based.
companies on the ASX such as Seek Limited, Wisetech Limited and
Aconex Limited.
3.3 Executive remuneration structure and principles
The TechnologyOne Operating Officers are the leaders of the
organisation. It is their role to inspire, develop and lead over 1,200
talented professionals to perform at exceptional levels to produce
outstanding returns for our shareholders.
When it is necessary to appoint a new candidate to these roles,
Our remuneration structure differs from our ASX-listed peers, to
encourage over performance, with a substantially lower proportion
of fixed remuneration of 33% vs 65% for our peers; and an over
weighting to the STI of 33% vs 15% for our peers. Over time, the
fixed remuneration proportion becomes even lower compared to
our peers due to increases in the STI component. This difference
from our ASX-listed peers is justified by the fact that improvements
in our short-term performance are based on factors such as new
licence fees, which drive TechnologyOne’s recurring revenues and
only the best that the market can offer will be considered. They will
shareholder returns.
have a proven track record and will therefore be able to command
significant remuneration packages in their own right. These
packages are significant (often 6 to 7 figures) but we believe that the
We have benchmarked our Executives’ remuneration against
Australian-based KMP from our competitors in the enterprise
Fixed remuneration
Short term incentive (STI)
Long term incentive (LTI)
Nature
Base salary plus superannuation.
Includes any salary sacrifice items.
Paid monthly with 20% retention
by TechnologyOne until accounts
are audited and finalised. Paid 3
months after year end.
From 2016, Executives will be allocated
options which provide the right to purchase
one TechnologyOne share, subject to
meeting performance targets.
Percentage of total remuneration
at contract start date
Typically, 33% of total remuneration
at start of contract, decreasing over
time due to increase of STI.
Typically, 33% of total remuneration
at start of contract.
Typically, 33% of total remuneration at start
of contract, decreasing over time due to
increase of STI.
Changes in percentage of total
remuneration over time
Typically increases by CPI each year
but decreases as a percentage of
total remuneration based on larger
increases in STI component.
Typically increases over time in
line with increases in Company (or
business segment) profitability (see
section 3.5 for more information).
Typically decreases as a percentage of total
remuneration based on larger increases in
STI component.
Performance targets
N/A
Performance period
Clawback available
Cap
Floor
N/A
No
N/A
N/A
Percentage of agreed executive
Net Profit Before Tax (NPBT) for
the Group; or percentage of Net
Profit Before Tax (NPBT) for the
relevant business segment for the
Executive (see section 4.3 for more
information).
The LTI scheme has a blended approach of
performance targets1 such as:
•
•
•
•
NPAT growth
Licence fee growth
Sales operating expense growth
R&D expense growth
Annual
Three years
Yes, if business outcomes differ
from expected
Yes
No
No
Yes, attainment of 100% of target if stretch
goal is reached
Yes 0% vesting if actual performance is less
than mid hurdle
1 LTI targets will be reviewed each year as Executives join the LTI scheme in the coming years.
The targets have been excluded as they are commercially sensitive. The targets will be disclosed at the completion of the performance period. The targets set
are hard targets. Annually targets will be set and reviewed by the Board. Additional detail on each of these components is included later in this report.
72
73
Transforming business, making life simpleTechnology One Limited 2017 Full Year Report 3.4 Fixed remuneration
outcomes differ materially to what was expected, the Company
Our unique approach to STI drives outstanding performance and
Up to 20% retention of their STI is paid three months after
Key attributes of the fixed remuneration component include:
can claw back any STI;
long term shareholder wealth.
strong short term performance creates a strong recurring revenue
base on the long term, driving outstanding performance and
shareholder wealth.
Key attributes of the short term incentives (STI) are as follows:
Fixed remuneration package of approximately $300,000 or 33% of
the package with minimal future adjustments, akin to CPI, in future
wealth.
years.
In simple terms, the STI is structured to drive short term
The LTI is typically 33% of the package compared to industry norms
performance, which in turn creates a strong long term recurring
• The Board determines an appropriate level of fixed remuneration
for Executives with recommendations based on market
benchmarking from the Remuneration Committee at the start of
their contract;
• The STI is uncapped to encourage over-achievement, driving
performance in current year and long term shareholder wealth;
and
• There is no floor on the STI, aligning Executives with shareholder
• Fixed remuneration is made up of base remuneration and
expectations.
superannuation. Fixed remuneration includes cash salary and
Change in STI over time
any salary sacrifice items;
TechnologyOne Executives have an STI set at the start of their
• Fixed remuneration grows at a rate similar to CPI; there are no
contract which is typically approximately 33% of their total targeted
guaranteed fixed remuneration pay increases for Executives; and
• The Executives fixed remuneration is reviewed annually,
following the end of the performance period (30 September). For
the 2017 financial year, the average fixed remuneration increases
remuneration compared to only 15% for our ASX-listed peers.
Over future years with strong continuing performance by the
Executive, the STI increases to approximately 50% of their targeted
remuneration compared to 15% for our ASX-listed peers.
for the Executive Chairman and Executives was 1%.
The best way to consider the mechanics of the TechnologyOne
3.5 Short term incentives (STI)
Overview
salary packaging arrangements is by way of the following example.
Consider a candidate who can command a remuneration package
of $900,000 in the open market. The TechnologyOne method is as
Our STI differs from that of many other ASX200 companies because
follows:
• TechnologyOne Executives have a cash-based STI set at the start
of 15% to 20%
of their contract which is typically approximately 33% of their
total remuneration and which increases to approximately 50% of
their remuneration over time;
• The STI target is based on a percentage of Net Profit Before
Tax (NPBT) for the Group or percentage of Net Profit Before Tax
(NPBT) for the relevant business segment for the Executive. This
effectively aligns the target incentive with shareholder return.
The STI targets are not renegotiated during the course of the
Executive’s employment to provide certainty to the Executive,
that if they build their business, they will share in the upside;
• The STI is calculated and paid monthly with up to 20% retention
to assist the Executives in meeting their short term financial
The STI target typically commences at 75% to 100% of the fixed
remuneration value established during contract negotiations. Our
expectation is at the start of an Executives contract the STI will
be similar to their fixed remuneration. In this example $300,000 is
used as the initial STI target. If we assume that Net Profit Before Tax
(NPBT) of the Group is to be used and the forecast NPBT is $40M
(a 15% increase on the prior year) then the contract STI will be
$300,000/$40M, or 0.75% of profit.
To explain the growth of the STI over time compared to the fixed
remuneration consider the following using the above example over
a three-year period with:
obligations. This is appropriate because Executives’ fixed
• Profit increasing by 12% p.a.
remuneration is very low compared to our ASX-listed peers (33%
vs 65%). Up to 20% retention of STI is paid three months after
TechnologyOne’s year end to ensure that the STI paid are based
on audited and finalised accounts. In the unlikely event business
• CPI at 3%; and
• STI target of 15% NPBT.
Fixed
Profit target
(M)
Actual profit
(M)
STI %
STI target (STI
% x
profit target)
Actual STI (STI
% x actual profit)
LTI
(assuming
$300,000
each year)
Total
Year
1
2
3
% of total rem
36%
41%
22%
1 LTI is explained further in section 3.6. This number is provided for illustrative purposes only. The LTI of $70,000 is based on the KPI of NPAT growth >10% with
50% of LTI earned and 100% earned if growth >15%. Growth between 10% and 15% will be calculated on a linear basis, as the example has NPAT growth of 12%,
this equates to 70% of the LTI as being earned, ie 70% of $100,000
TechnologyOne’s year end to ensure that the STI paid is based on
audited and finalised accounts. In the unlikely event that business
outcomes differ materially to what was expected, the Company can
TechnologyOne is a growth company, with strong compound
growth over many years (approximately 11% per annum
claw back any STI.
profit growth over the last 10 years). Our strong long term
performance is directly linked to the success of our STI
framework.
Approximately 65% of our revenues each year are recurring revenue,
which directly flow from contract wins in prior years.
TechnologyOne does not defer the STI any longer than three months
because:
• Executives have low fixed remuneration relative to their ASX-
listed peers and so payment of STI in a fair and reasonable time
frame is important. TechnologyOne packages are structured
Continuing to win new business, driving licence fee and profit
so that our Executives fixed remuneration and 70% of their STI
growth in the current year is the key to our long term success, and it
target is the equivalent of our competitors fixed remuneration.
is for this reason our STI as a percentage of the total remuneration
is significantly higher than our ASX-listed peers (33% vs 15% for our
• TechnologyOne carries minimal risk associated with revenue and
as such the long term deferral of STI greater than three months
ASX-listed peers). While at the same time the fixed remuneration
does not serve any purpose.
for our Executives is comparatively low compared to our ASX-
listed peers (33% vs 65% for our ASX-listed peers). The significant
weighting towards the STI, with the low fixed remuneration,
encourages our Executives to drive new business and financial
performance in the current year, which creates recurring revenue
for future years, and therefore long term success and shareholder
• TechnologyOne Executives are already exposed to the long-term
outcomes of the business through a larger long term incentive
(LTI) component than our ASX-listed peers (33% vs 20% for our
peers). It is important to note that our LTI being 33% of our
Executives’ remuneration is similar to the STI and LTI of our ASX-
listed peers (15% and 20%).
3.6 Long term incentives (LTI)
TechnologyOne Executives have a long term incentive (LTI) typically
set at the start of their contract, at 33% of their total targeted
remuneration compared to only 20% for our ASX-listed peers. This
creates a strong focus on long term performance, with a strong
revenue base, which in the long term creates continuing financial
success and substantial shareholder wealth for TechnologyOne.
Uncapped STI drives performance in current year and long term
alignment to long term shareholder wealth creation. It also acts as
shareholder wealth.
a powerful inducement for Executives to stay with TechnologyOne
An important element of the success of our STI has been that it is
over the long term.
uncapped so the greater the results in the current financial year,
TechnologyOne’s long term incentive (LTI) plan provides for the
the greater the STI. This not only encourages over performance in
grant of options as follows:
the current financial year, it has a dramatic flow on effect in future
years through the greater recurring revenues for the Company.
The uncapped STI also helps retain Executives over the long term
because the more they succeed, the more financial incentive
there is to stay with us as they become dependent on the STI and
continue to work hard to achieve it each year, and the greater
benefit to our shareholders through an ever increasing recurring
revenue base.
Likewise, if an Executive under performs in a year, there is a
significant financial impact to them as their STI forms a significant
portion of their total remuneration. Just as the STI is uncapped on
the upside, it is uncapped on the downside. Because the Executive’s
fixed remuneration is significantly lower than our ASX-listed peers, if
there is under performance this has a significant negative impact on
their total remuneration.
• The LTI plan is designed to provide participants with the
incentive to deliver substantial consistent growth in shareholder
value;
• Performance is measured over a three-year performance period
with individual and Company targets assessed annually or at the
conclusion of the performance period;
•
In the event an executive does not meet an annual target
one year, then the options for that year will be forfeited. The
executive can still earn their options in following years if they hit
their targets;
• Executives only receive value if performance targets are met at
the end of the three-year performance period. The option vests
if the performance targets have been met (this includes annual
and 3 yearly tested targets);
• Performance targets are all ‘hard targets’ that if met, will drive
significant shareholder wealth creation;
• Executives have the option to purchase one TechnologyOne
Timing of STI payment
share at an agreed strike price;
Because the fixed remuneration of an Executive is very low
• No dividends are paid while the LTI awards are unvested; and
compared to our ASX-listed peers (33% vs 65%), to assist the
Executives in meeting their short term financial obligations, the STI
is calculated and paid monthly with up to 20% retention.
• The Board has the discretion to adjust the number of LTIs
awarded or vested in the event of any unintended consequences.
$300,000
$40.000
$38.957
$309,000
$44.800
$43.631
$318,270
$50.176
$48.867
0.75
0.75
0.75
$336,000
$327,234
$140,000
$776,234
$376,317
$366,502
$210,000
$894,772
$300,000
$292,174
$70,0001
$662,174
The STI framework aligns performance with remuneration outcomes
encouraging over performance and penalising under performance.
74
75
Transforming business, making life simpleTechnology One Limited 2017 Full Year Report LTIs are measured against both individual and Company targets.
competitors insights into the key focus areas of our business. The
The LTI awards granted may deliver value to Executives subject to
targets are set such that they align to continue driving year-on-year
meeting performance targets over a three-year period. Targets are
strong profit growth.
designed to reward Executives for outcomes that deliver substantial
shareholder value. Targets are not disclosed as they provide our
The following table provides the key features of the LTI award:
Feature
Vesting
Feature
LTI
Description
Each LTI entitles the Executive to receive the right to purchase one TechnologyOne share in the future at the agreed strike price,
subject to meeting specified performance targets. Performance targets have a combination of annual and three yearly testing
windows. A number of LTIs are issued to Executives each year referred to as a grant. The grant quantum is calculated according
to the formula described below. It is important to note that the LTI for a grant will vest at a future date - three years (or earlier if
agreed) from their issue date called the vesting date. If performance targets set for the grant have been met, the number of LTIs
in a grant that vest will be assessed each year for KPIs with annual targets to have the quantity locked in but not accessible until
the end of the three year vesting date. KPIs with three yearly testing will not be known until the end of the performance period
(i.e. the vesting date).
Number of LTI issued each
year in a tranche
The value of the total number of LTIs issued each year (called a grant) to an Executive is typically 75% to 100% of fixed
remuneration and is determined during contract negotiation when an Executive is hired, but will ultimately depend on
negotiations and the overall package components negotiated. The contracted LTI % may be changed where appropriate by the
Board, such as if there is a change in the Executives responsibilities.
The LTI increases by approximately CPI each year, in line with the increase in fixed remuneration.
The LTI is allocated based on the cost of the option which is accounted under AASB 2 Share Based Payments using the Black-
Scholes model with a strike price being the volume weighted
Performance period and
vesting date
The performance period commences at grant date and extends for three years to give a vesting date. This may be less where an
Executive commences part way through a financial year.
For example, for the annual grant of LTIs issued during the 2017 financial year (called the 2017 grant), the performance period
would start on 1 October 2016 and end three years later on 30 September 2019 with 30 September 2019 being the vesting date.
Based on meeting the targets over the performance period, up to 100% of the LTIs in that grant may vest, allowing the Executive
to exercise options available in the trading window following the end of the performance period.
Performance targets
Each grant of LTIs is subject to performance targets being met for the relevant performance period. The targets are set at levels
to ensure they drive strong profit growth year-on-year. The targets are set at levels to ensure they drive strong profit growth
year-on-year.
If there is more than one performance target, then a portion of LTIs in a grant are allocated to each specific performance target,
called a tranche.
To illustrate how LTIs are allocated across performance targets, we have assumed an executive’s agreed LTI value is $200,000.
For 2017, under the LTI plan rules where the 10 working day VWAP is $5, using the Black Scholes model the cost of each option is
$0.64. The executive will be allocated 312,500 options.
Following the above example, the 312,500 options would be allocated into two tranches as follows:
•
•
156,250 options to profit after tax growth target; and
156,250 options to licence fee growth target.
The actual number of LTIs allocated to each target is determined by the Company at the start of the performance period. The
number of LTIs allocated across all targets cannot exceed the total number of LTIs offered in the grant.
For each performance target there will be a mid and stretch hurdle (for the performance period) based on the executive’s area
of responsibility:
•
•
•
•
if performance meets the stretch hurdle, 100% vesting of LTIs for that target will be achieved
If performance meets mid hurdle, then 50% of the number of LTIs will vest
if performance is between stretch and mid hurdle, the number of LTIs for that target will vest linearly
if performance is less than the mid hurdle, 0% of the number of LTIs allocated to that target will vest.
Mid hurdles have been calculated so that if they are achieved, this will create substantial shareholder wealth. Targets will be
based on factors such as Company profit after tax, licence fee growth, consulting revenue growth, R&D expense growth and,
customer retention rates. It is based on the average result achieved for that target over the performance period.
Description
The LTI for a grant will not vest until the end of the performance period (the vesting date) and the number to vest will be
calculated using the performance achieved over the performance period as measured against the performance targets.
Performance targets are set before the performance period as either yearly targets or three year targets.
If the performance target is a three-year target, it is tested at the end of the three-year performance period. For example, R&D
expense growth of less than 8% over three years.
Number of LTIs earned per three-year performance target is equal to number of LTIs available for that target x percentage
earned x individual performance factor.
As an example, a three-year performance target based on R&D expense growth might be as follows, based on the annual growth
targets set:
•
•
R&D expense growth of < 8% - 100% earned
R&D expense growth > 8% - nil % earned
The individual performance factor (IPR) is typically 100%.
The total number of LTIs earned across all performance targets by an Executive cannot exceed the total number of LTI in a grant.
The number of LTIs earned per yearly performance target is equal to 1/3 x number of LTIs available for that target x percentage
earned x individual performance factor.
As an example a yearly performance target based on profit growth might be as follows, based on the growth for that one-year
period:
•
•
•
Profit growth of 15% - 100% earned
Profit growth of 10% - 50% earned, and apportioned linearly for performance between 10% and 15%
Profit growth of less than 10% - nil % earned. The individual performance factor (IPR) is typically 100%.
It is important to note that though the LTIs are earned, they do not vest until the end of the performance period - typically three
years.
Refer to section 4.4 for LTIs offered during the year.
The Board has the discretion in exceptional circumstances to increase the IPR above 100% to a maximum of 200% to take into
consideration exceptional individual performance or contribution by an Executive.
The total number of LTIs earned across all performance targets by an Executive cannot exceed the total number of LTIs in a
grant.
The committee has a preference for a three-year performance window with annual targets to drive the optimum result.
Board discretion
The Board also retains sole discretion to determine the amount and form of any award that may vest (if any) to prevent any
unintended outcomes, or in the event of a corporate restructuring or capital event.
The Board may also renegotiate the annual grant of LTIs based on exceptional circumstances such as the change of responsible
area for an Executive, a restructuring of the company, an acquisition etc. In the event of a change of control, and to the extent
that the LTIs have not already lapsed, the Board has the discretion to determine whether the LTIs vest or otherwise.
Upon termination of an Executive for poor performance, LTIs will not vest.
Upon redundancy of an Executive, or for other reasons such as resignation due to ill health, the Board has the discretion to
negotiate a settlement which includes the vesting of a portion of LTIs granted.
Expiry
At the end of the applicable performance period, any LTIs that have vested will expire five years after vesting.
76
77
Transforming business, making life simpleTechnology One Limited 2017 Full Year Report 2017 performance targets
Quarantined Executive Option Plan (EOP) (now
The LTI performance targets that have been identified for our
superseded)
Executives are both Company targets such as Net Profit After Tax
(NPAT) and individual business unit targets for the Executives
business unit such as licence fee growth or R&D expense growth.
The Board has considered the following list of key performance
targets that will ensure the Executives will focus on creating
long term shareholder wealth. Typically, there is a blended
approach of LTI performance targets, incentivising our Executives
to work for the benefit of the Company as a whole as well as
driving their individual business unit. The Board equally has a
strong focus on sustainable profit growth thus each executive
will have as a minimum 50% of their LTI value aligned to profit
growth as a measure. The Board acknowledges that this target
is also the primary target for STI, however the rationale is that
the growth of license income translates into long term annuity
income growth. The LTI targets other than NPAT growth are
aligned to ensuring that the license income is supported by a
focus on customer satisfaction to encourage further license
sales, and the simplification of our software to reduce the cost of
implementations which in turn increases our consulting margins,
thereby increasing our competitive advantage.
The performance targets for the 2017 year are as follows:
Performance period
Testing
Performance
targets 1,2
NPAT growth
NPAT margin growth
Licence fee growth – APAC
Sales operating expense
growth
Customer Retention by ASM
Value - APAC
Consulting Margin Growth
Consulting Revenue Growth
Licence fee growth – UK
Operating Cash Flow / NPAT
R&D Expense growth
Annual 3
Annual
Annual 3
Annual 3
Annual 3
Annual 3
3 years
3 years
3 years
3 years
3 years
3 years
3 years
3 years
3 years
These options were issued to existing Executives and
TechnologyOne is required to honour. These pre-existing contracts
utilise the previous LTI plan based on options. The variation to the
2016 LTI plan allows for options with the condition that there is no
discount to the strike price at grant date. The performance criteria
still apply as per the 2015 LTI plan. These pre-existing contracts
have been quarantined and as existing Executive Contracts come
to an end, they will be renegotiated so that the LTI is based on the
new LTI plan going forward. All new appointments of Executives
to the Company will be under the new LTI plan. For the sake of
disclosure, details of the now obsolete and quarantined EOP are
provided below.
Under the EOP, options were issued with typically between 0% and
50% discount on the volume weighted average price for the 10
days prior to the grant date. The discount could be forfeited prior
to vesting at the Board’s discretion based on the performance of
the Executive. The option could also be withheld by the Executive
Chairman for unsatisfactory performance.
Share options were granted to Executives by the Board based on
the option plan approved by the Board.
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.
Options granted under this plan carry no dividend or voting rights.
When exercisable, each option is convertible into one ordinary
TechnologyOne share. Further information is set out in note 32 to
4. Relationship between remuneration
and company performance
4.1 TechnologyOne’s five-year performance
The 2017 financial year saw Net Profit After Tax increase 8%.
Executives’ remuneration excluding LTI and termination benefits
Annual 3
increased at a rate below Net Profit After Tax, which is the
3 years 4
Remuneration Committees goal.
The below table sets out information showing the creation of
shareholder wealth for the years ended 30 September 2013 to
30 September 2017.
1 Performance targets exclude acquisitions.
2 These performance targets do not have a minimum target. The
performance target has to be achieved for the Executive to meet their
LTI target.
3 The Company has chosen annual testing in circumstances, where long
term consistent year-on-year growth will drive greater shareholder returns.
The performance targets are assessed on an annual basis with no LTIs
vesting until the end of the three-year performance period. This ensures
that the annually tested KPIs generate value for shareholders over time.
4 The Company has chosen a three year testing where the average over a
three-year performance period average is more appropriate in driving long
term shareholder wealth.
3 years 4
the financial statements.
3 years
Annual 3
Average STI vs. NPBT
$390K
$409K
$411K
$461K
$395K
2013
2014
2015
2016
2017
Average REM vs. NPBT
$737K
$750K
$843K
$936K
2013
2014
2015
2016
$1M
2017
The relationship between Executive contract terms and performance
outcomes are outlined for each of TechnologyOne’s Executives in
the following section. It is important to note that outcomes reported
in this section will differ from those reported in section 5 due to
timing differences given the accounting methodology employed in
the statutory treatment.
4.2 Summary of Executive remuneration and
performance for FY2017
The remuneration package for Executives, including the Executive
Chairman, for FY2017 comprises the amounts outlined in the
following tables. It is worth noting that employment contract terms
presented for the CEO and other Executives do not have a fixed
duration period (i.e., they are ongoing rolling contracts that cease
following notice of termination by either employee or employer).
2013
2014
2015
2016
2017
35,097
40,235
46,494
53,240
58,019
5.60
8.16
8.78
9.45
10.20
8.80
10.06
11.58
13.26
14.18
1.37
2.05
3.18
3.84
5.94
2.05
3.18
3.84
5.94
5.02
54%
59%
24%
57%
(14%)
15%
15%
16%
16%
8%
15%
7%
15%
15%
(6)%
Actual profit
before tax ($’000)
Total dividend
including special
(cps)
Earnings per
share (basic)
Share price at
start of period
Share price at end
of period
Total Shareholder
Return
Profit after tax
growth %
Average
Executives
growth1 %
1 This is the average annual full time package excluding any termination
payments.
As can be seen from this information, the Executives’ remuneration
framework has successfully driven performance and the creation
of shareholder wealth over the longer term, while at the same time
Executives’ remuneration has been clearly in alignment with overall
company performance.
The graph below shows EPS growth over the last five years:
EPS
HISTORIC
COMPOUND
GROWTH
13%
UP 7%
8.8
10
2013
2014
11.6
2015
13.3
2016
14.2
2017
The first graph shows that average Executives’ STI growth is less
than the Company’s NPBT growth rate.
The second graph shows that the average Executives’ remuneration
has been growing in line with the Company’s NPBT
78
79
Transforming business, making life simpleTechnology One Limited 2017 Full Year Report Adrian Di Marco
Edward Chung
Position
Executive Chairman and Chief Innovation Officer
Position
Chief Executive Officer
Fixed remuneration
Fixed remuneration
2017
$
358,574
2016
$ Notes
472,202 Mr Di Marco’s base salary decreased due to the appointment of Edward
Chung to the role of CEO and Mr Di Marco volunteering to have his base
salary reduced.
Directors’ fees
127,000
75,132 Inclusive of superannuation. Increase in director fees is covered in section
Chairman’s fee
Superannuation
8.
-
-
7,055
10,478 Compulsory superannuation guarantee contributions up to the maximum
contribution base.
Fixed remuneration
Fixed remuneration
2017
$
367,567
2016
$ Notes
303,661 The increase in Mr Chung’s base is due to promotion to CEO effective 23 May
2017. His remuneration is in line with the details published on the ASX on his
appointment. The negotiated fixed remuneration for the full year is $517,319.
Had Mr Chung not been promoted, his base increase would have been in
line with CPI.
Directors’ fees
Superannuation
-
-
12,841
10,588 Compulsory superannuation guarantee contributions up to the maximum
contribution base.
Total fixed remuneration
380,408
314,249 Fixed remuneration increased due to his promotion
Total fixed remuneration
492,629
557,812
% growth on prior year
excluding LTI and termination
benefits
% growth on prior year
including LTI and termination
benefits
Performance based remuneration
(16%)
(16%)
9%
9%
1. STI
740,547
913,200 Mr Di Marco, in line with the change in base salary, volunteered to reduce
his STI payment from 1.68% to 1.26% based on Group Net Profit Before Tax
as an incentive. 10% of this is retained for three months after the reporting
period.
2. LTI new scheme
Nil
Nil Mr Di Marco, as in previous years has again agreed to forgo his LTI
entitlement of $400,000. The Remuneration Committee recognises that Mr
Di Marco’s total remuneration is substantially below that of comparable
companies. The Remuneration Committee acknowledges that Mr Di Marco’s
existing 12+% shareholding in TechnologyOne provides the benefits that the
LTI aims to achieve.
Value of share options offered
3. LTI old scheme
Value of share options
4. Post-employment
Post-employment benefits
Post-employment restraint
Termination notice
by either party
Termination benefits
Nil
Nil
Nil
Nil
Nil
12 months
3 months
Nil
% growth on prior year
excluding LTI and termination
benefits
% growth on prior year
including LTI and termination
benefits
Performance based remuneration
29%
8%
16%
15%
1. STI
471,105
346,980 Mr Chung‘s STI was increased from 0.625% to 0.78% of executive Net Profit
Before Tax as an incentive. This is in line with his remuneration package
published on the ASX due to his promotion to CEO. 20% of this is retained
for three months after the reporting period. STI is up 49% The negotiated
STI for a full year is $502,403. Had Mr Chung not been promoted, his STI
increase would have been in line with NPBT growth
- Mr Chung was issued with 192,746 options in May 2017. Mr Chung did not
meet all KPIs for the year. The negotiated LTI for the full year is $57,097.
Please refer to section 4.4 for further information.
2. LTI new scheme
Value of share options offered
18,842
3. LTI old scheme
Value of share options
277,090
326,207 Mr Chung was issued with 1,000,000 options in July 2014. No further options
will be issued under this plan as it has been quarantined. 167,000 options
vested during FY2017. All future LTI will be based on the new LTI scheme.
4. Post-employment
Post-employment benefits
Post-employment restraint
Termination notice by either
party
Termination benefits
Nil
12 months
12 weeks
Nil
80
81
Transforming business, making life simpleTechnology One Limited 2017 Full Year Report Roger Phare
Martin Harwood
Position
Operating Officer – United Kingdom
Position
Operating Officer – Consulting Services
Fixed remuneration
Fixed remuneration
Superannuation
2017
$
2016
$
Notes
Fixed remuneration
2017
$
2016
$
Notes
276,214
230,550 Mr Phare is paid in GBP. His base increased during the year due to an
Fixed remuneration
96,783
213,161 Mr Harwood ceased being a KMP on 20 February 2017.
adjustment in cost of living.
Nil
Nil No compulsory superannuation guarantee contributions payable as
Superannuation
1,168
9,658
currently employed by Technology One UK Limited.
Compulsory superannuation guarantee contributions up to the maximum
contribution base. Mr Harwood reached the maximum contribution base
during October 2016.
Total fixed remuneration
276,214
230,550
Total fixed remuneration
97,951
222,819
% growth on prior year
excluding LTI and termination
benefits
% growth on prior year
including LTI and termination
benefits
Performance based remuneration
(26%)
(1%)
(27%)
(4%)
% growth on prior year
excluding LTI and termination
benefits
% growth on prior year
including LTI and termination
benefits
Performance based remuneration
(88%)
10%
(79%)
18%
1. STI
204,175
419,420 Mr Phare is paid 7% of UK Net Profit Before Tax inclusive of a $4.0m
1. STI
2. LTI new scheme
company capital contribution. 20% of this is retained for three months
after the reporting period. STI is down 39% in line with a reduction of UK
Net Profit Before Tax and allowance for company capital contribution. The
negotiated STI for a full year is $491,457.
2. LTI new scheme
Value of share options offered
-
-
566,272 Mr Harwood is paid 1.02% of executive Net Profit Before Tax. 20% of this is
retained for three months after the reporting period. STI reduced as a result
of Mr Harwood retiring and leaving the business during the year.
-
Value of share options offered
-
- Mr Phare was issued with 268,056 options in October 2016. Mr Phare did
3. LTI old scheme
3. LTI old scheme
Value of share options
40,400
not meet all KPIs for the year. The negotiated LTI for the full year is $46,902.
Please refer to section 4.4 for further information.
61,604 Mr Phare was issued with 1,000,000 options in July 2012. No further options
will be issued under this plan as it has been quarantined. 200,000 options
vested during FY2017. All future LTI will be based on the new LTI scheme.
4. Post-employment
Post-employment benefits
Post-employment restraint
Termination notice by either
party
Termination benefits
Nil
12 months
12 weeks
Nil
Value of share options
137,591
331,693 Mr Harwood was issued with 1,000,000 options in October 2014. No further
options will be issued under this plan as it has been quarantined. 200,000
options vested during FY2017.
4. Post-employment
Post-employment benefits
Post-employment restraint
Termination notice by either
party
Termination benefits
Nil
12 months
12 weeks
Nil
82
83
Transforming business, making life simpleTechnology One Limited 2017 Full Year Report Stuart MacDonald
Tony Ristevski
Position
Chief Operating Officer
Position
Operating Officer – Corporate Services and CFO
Fixed remuneration
Fixed remuneration
2017
$
381,255
2016
$
Notes
Fixed remuneration
2017
$
2016
$
Notes
150,883 Mr MacDonald was promoted May 2017 to the role of COO. Mr MacDonald
commenced 11 April 2016 as OO – Sales and Marketing with the company
therefore the 2016 base only represents part year base salary. The
negotiated fixed remuneration for the full year is $433,800. Had Mr
MacDonald not been promoted, his base increase would have been in line
with CPI.
Fixed remuneration
256,923
51,954 Mr Ristevski commenced with the company 4 July 2016.
Superannuation
15,121
4,296 Compulsory superannuation guarantee contributions up to the
maximum contribution base.
Total fixed remuneration
272,044
56,250
FY2016 was the prorated fixed remuneration for Mr Ristevski from 4 July
2016.
Superannuation
17,989
14,334 Compulsory superannuation guarantee contributions up to the maximum
contribution base.
Total fixed remuneration
399,244
165,217
FY2016 was the prorated fixed remuneration for Mr MacDonald from
11 April.
% growth on prior year
excluding LTI and termination
benefits
% growth on prior year
including LTI and termination
benefits
Performance based remuneration
94%
100%
82%
100%
1. STI
322,653
206,754 Mr MacDonald’s STI increased from 0.455% to 0.533% executive Net Profit
Before Tax upon his promotion to COO. 20% of this is retained for three
months after the reporting period. The negotiated STI for a full year is
$343,309.
2. LTI new scheme
Value of share options offered
38,478
46,667 Mr MacDonald was issued with 317,211 options during FY2016.
Mr MacDonald was issued with 325,364 options during FY2017. Mr MacDonald
did not meet all KPIs for the year. The negotiated LTI for the full year is
$123,533.
Please refer to section 4.4 for further information.
3. LTI old scheme
Value of share options
Nil
Nil
4. Post-employment
Post-employment benefits
Post-employment restraint
Termination notice by either
party
Termination benefits
Nil
12 months
12 weeks
Nil
% growth on prior year
excluding LTI and termination
benefits
% growth on prior year
including LTI and termination
benefits
Performance based remuneration
136%
100%
142%
100%
1. STI
303,982
188,055 Mr Ristevski is paid 0.499% of executive Net Profit Before Tax. 20% of this is
retained for three months after the reporting period. The negotiated STI for
a full year is $321,409.
2. LTI new scheme
Value of share options offered
15,478
Nil Mr Ristevski was issued with 268,057 options in October 2016. Mr Ristevski
did not meet all KPIs for the year. The negotiated LTI for the full year is
$46,902. Please refer to section 4.4 for further information.
3. LTI old scheme
Value of share options
Nil
Nil
4. Post-employment
Post-employment benefits
Post-employment restraint
Termination notice by either
party
Termination benefits
Nil
12 months
12 weeks
Nil
84
85
Transforming business, making life simpleTechnology One Limited 2017 Full Year Report Nancy Mattenberger
John Ruthven
Position
Operating Officer – Consulting Services
Position
Operating Officer – Sales
Fixed remuneration
Fixed remuneration
Superannuation
2017
$
157,534
14,966
Total fixed remuneration
172,500
% growth on prior year
excluding LTI and termination
benefits
% growth on prior year
including LTI and termination
benefits
Performance based remuneration
100%
100%
-
-
NA
NA
2016
$
Notes
- Ms Mattenberger commenced with the company 20 February 2017.
Compulsory superannuation guarantee contributions up to the
maximum contribution base.
Fixed remuneration
Fixed remuneration
Superannuation
2017
$
11,647
1,106
2016
$
Notes
- Mr Ruthven commenced 1 September 2017.
- Compulsory superannuation guarantee contributions up to the
maximum contribution base.
This is the prorated fixed remuneration for Ms Mattenberger from 20
February. The negotiated fixed remuneration for a full year is $300,000.
Total fixed remuneration
12,753
-
This is the prorated fixed remuneration for Mr Ruthven from 1 September.
The negotiated fixed remuneration for a full year is $320,000
% growth on prior year
excluding LTI and termination
benefits
% growth on prior year
including LTI and termination
benefits
Performance based remuneration
100%
100%
NA
NA
1. STI
214,504
- Ms Mattenberger is paid 0.026% of executive net profit. Ms Mattenberger
1. STI
23,333
- Mr Ruthven is paid 0.40% of executive Net Profit Before Tax. 20% of this is
is paid 2.68% of Consulting Net Profit Before Tax. 20% of this is retained for
three months after the reporting period. The negotiated STI for a full year
is $300,000. For FY17 it was agreed that Ms Mattenberger be paid a pro-
rated amount of her negotiated STI to allow her to rebuild the consultancy
practice.
2. LTI new scheme
Value of share options offered
18,922
- Ms Mattenberger was issued 151,863 options in February 2017. Ms
Mattenberger did not meet all KPIs for the year. The negotiated LTI for the
full year is $28,383.
Please refer to section 4.4 for further information.
3. LTI old scheme
Value of share options
Nil
Nil
4. Post-employment
Post-employment benefits
Post-employment restraint
Termination notice by either
party
Termination benefits
Nil
12 months
12 weeks
Nil
retained for three months after the reporting period. The negotiated STI for
a full year is $280,000.
2. LTI new scheme
Value of share options offered
3. LTI old scheme
Value of share options
4. Post-employment
Post-employment benefits
Post-employment restraint
Termination notice by either
party
Termination benefits
-
Nil
-
Nil
Nil
12 months
12 weeks
Nil
86
87
Transforming business, making life simpleTechnology One Limited 2017 Full Year Report 4.3 Calculation of Executive STI performance for the year
270,737 options were granted to Stuart MacDonald effective 1
2017 LTI grant for Tony Ristevski
There is no maximum or minimum STI for Executives as the
Company wants to ensure a strong focus on performance in the
current year. Please refer section 3.5 for a detailed explanation.
Up to 20% of the STI is deferred for a period of three months.
Calculation of STI:
The respective terms of each Executives STI entitlement is
summarised in section 4.2 and 4.3. The key measures in which the
STI is applied against is as follows for FY17:
UK Net Profit Before Tax and allowance for company capital
contribution1 of $2,916,791. Executive Net Profit Before Tax2 of
$60,918,181.
CEO Net Profit Before Tax3 of $58,773,549
1 UK Net Profit Before Tax for incentives is calculated based on the UK
company profit before tax plus corporate contribution of $4.0m. The corporate
contribution is based on an agreed amount with the executive and aligned to
drive shareholder value.
2 Executive Net Profit Before Tax is calculated based on company profit before
tax before the Executive STI is calculated.
October 2016 based on a volume weighted average price of $5.7474.
The value of this issue is $203,018 and the first vesting window will
be 1 October 2017 for the year 1 period.
The performance targets that have been set for the 2017 LTI grant for
Stuart MacDonald are as follows:
Performance target
NPAT growth
Licence Fee growth – APAC
Sales operating expense
growth - APAC
Customer Retention by ASM
value - APAC
% of
Options
granted
Performance
period
Testing 1
50%
30%
10%
10%
3 years
Yearly
3 years
Yearly
3 years
3 years
3 years
Yearly
The targets have been excluded as they are commercially sensitive.
The targets will be disclosed at the completion of the performance
period. Annually STI targets will be set and reviewed by the Board.
3 The CEO Net Profit Before Tax is calculated after we have calculated the
2017 LTI grant for Roger Phare
268,057 options were granted to Tony Ristevski effective 1 October
2016 based on a volume weighted average price of $5.7474. The value
of this issue is $201,008 and the first vesting window will be
1 October 2017 for the year 1 period.
The performance targets that have been set for the 2017 LTI grant for
Tony Ristevski are as follows:
Performance target
Company profit after tax
growth
Company Profit before Tax
Margin Growth
R&D expense growth
Operating Cashflow/NPAT
Ratio
% of
Options
granted
Performance
period
Testing 1
50%
17%
17%
16%
3 years
Yearly
3 years
Yearly
3 years
3 years
3 years
Yearly
The targets have been excluded as they are commercially sensitive.
The targets will be disclosed at the completion of the performance
period. Annually STI targets will be set and reviewed by the Board.
Executives STI. Once calculated it is used to calculate the CEO STI.
268,056 options were granted to Roger Phare effective 1 October
2017 LTI grant for Nancy Mattenberger
4.4 Summary of LTI issued during the year 2017
2016 based on a volume weighted average price of $5.7474. The value
of this issue is $201,007 and the first vesting window will be
2017 LTI grant for Edward Chung
1 October 2017 for the year 1 period.
151,863 options were granted to Nancy Mattenberger effective 20
February 2017 based on a volume weighted average price of $5.1064.
The value of this issue is $121,641 and the first vesting window will
192,746 options were granted to Edward Chung effective 23 May 2017
The performance targets that have been set for the 2017 LTI grant for
be 1 October 2017 for the year 1 period.
being his start date of the position of Chief Executive Officer based
Roger Phare are as follows:
Performance target
NPAT growth
UK licence fee growth
% of
Options
granted
50%
50%
Performance
period
Testing 1
3 years
Yearly
3 years
Yearly
The targets have been excluded as they are commercially sensitive.
The targets will be disclosed at the completion of the performance
period. Annually STI targets will be set and reviewed by the Board.
on a volume weighted average price of $5.6046. The value of this
issue is $244,700 and the first vesting window will be 1 October 2017
for the year 1 period.
Performance target
NPAT growth
NPBT margin growth
Customer Retention by ASM
value
Operating Cashflow/NPAT
% of
Options
granted
Performance
period
Testing 1
50%
17%
17%
16%
3 years
Yearly
3 years
Yearly
3 years
Yearly
3 years
Yearly
The targets have been excluded as they are commercially sensitive.
The targets will be disclosed at the completion of the performance
period. Annually STI targets will be set and reviewed by the Board.
2017 LTI grant for Stuart MacDonald
54,627 options were granted to Stuart MacDonald effective 23 May
2017 being his start date of the position of Chief Operating Officer
based on a volume weighted average price of $5.6046. The value of
this issue is $69,352 and the first vesting window will be 1 October
2017 for the year 1 period.
The performance targets that have been set for the 2017 LTI grant for
Nancy Mattenberger are as follows:
Performance target
Company profit after tax
growth
Consulting revenue growth
Consulting profit margin
% of
Options
granted
50%
30%
20%
Performance
period
Testing 1
3 years
Yearly
3 years
Yearly
3 years
Yearly
The targets have been excluded as they are commercially sensitive.
The targets will be disclosed at the completion of the performance
period. Annually STI targets will be set and reviewed by the Board.
1 Each target is over a three-year period. The Executive will only receive these
LTIs at the end of the three- year performance period.
88
89
Transforming business, making life simpleTechnology One Limited 2017 Full Year Report
5. Executive Statutory Remuneration
Short-term employee benefits
Post-employment benefits
LTI Equity
remuneration
Name
Fixed
remuneration
$
Directors’
fees
$
Total fixed
remuneration
$
Shortterm
Incentive
$
Superannuation
$
Termination
benefits
$
Value
of
share
options
$
Value of
performance
rights
offered
$
% growth on
prior year
excl LTI and
termination
benefits
%
% growth
on prior
year incl
LTI and
termination
benefits
%
Total
$
1 Mr Di Marco volunteered to have his remuneration reduced effective 1 October 2016 including again the forfeiting of an award of $400,000 of options in
the 2016/2017 year for his LTI component of his remuneration. The Remuneration Committee acknowledges that Mr Di Marco’s existing 12+% shareholding in
TechnologyOne provides the benefits that the LTI aims to achieve.
2 Mr Phare is paid in Great British Pounds and these amounts have been converted into Australian dollars at an average rate over the year.
3 Mr Harwood stepped down from the role of Operating Officer-Consulting Services effective 20 February 2017. Mr Harwood retired and left the company effective
15 April 2017.
4 Mr MacDonald commenced with the Company on 11 April 2016 and changed position to Chief Operating Officer on 23 May 2017.
5 Mr Ristevski commenced with the Company on 4 July 2016.
6 Ms Mattenberger commenced with the Company on 20 February 2017.
7 Mr Ruthven commenced with the Company on 1 September 2017.
A Di Marco (Executive Chairman)
2017
2016
358,574
127,000
485,574
740,547
472,202
75,132
547,334
913,200
E Chung (Chief Executive Officer)
2017
2016
367,567
303,661
-
-
367,567
471,105
303,661
346,980
R Phare (Operating Officer – United Kingdom)2
2017
2016
276,214
230,550
-
-
276,214
204,175
230,550
419,420
M Harwood (Operating Officer – Sales and Marketing)3
2017
2016
96,783
213,161
-
-
96,783
-
213,161
566,272
P Rogers (Operating Officer - Consulting Services)
7,055
10,478
12,841
10,588
-
-
1,168
9,658
2017
2016
-
276,471
-
-
-
-
-
276,471
92,278
12,455
65,500
S MacDonald (Operating Officer – Sales and Marketing)4
2017
2016
381,255
150,883
-
-
381,255
322,653
150,883
206,754
T Ristevski (Operating Officer – Corporate Services and CFO)5
2017
2016
256,923
51,954
-
-
256,923
303,982
51,954
188,055
N Mattenberger (Operating Officer – Corporate Services)6
17,989
14,334
15,121
4,296
2017
2016
157,534
-
-
-
157,534
214,504
14,966
-
-
-
J Ruthven (Operating Officer – Sales and Marketing)7
2017
2016
11,647
-
-
-
11,647
23,333
-
-
1,106
-
Total Senior Executives
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-1
295,932
326,207
40,400
61,604
137,591
331,693
-
-
38,478
46,667
15,478
-
18,922
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
1,233,176
(16%)
(16%)
1,471,012
6. Equity Plans
6.1 Long term incentive scheme
1,147,445
29%
16%
year implemented an LTI plan aligned to market, shareholder and executive requirements. The LTIs are described in further detail in section
As discussed previously in this report, TechnologyOne no longer uses the previous Executive Option Plan (EOP), but has in the 2016 financial
987,436
3.6 of this report.
520,789
(26%)
(27%)
711,574
235,542
(88%)
(79%)
1,120,784
-
(100%)
(100%)
446,704
2017
Name
E Chung
R Phare
M Harwood
S MacDonald
T Ristevski
N Mattenberger
Number of options
granted during the
period
Value of options at
grant date *
Number of
options issued
during the period
Number of
options still to
be issued
Number of options
vested during the
period
Number
of options
(forfeited) during
the period
Value at lapse
date
192,746
268,056
-
325,364
268,057
151,863
$244,700
$201,007
-
$272,370
$201,008
$121,641
-
-
-
-
-
-
-
-
-
-
-
-
167,000
(43,047)
38,255
200,000
(89,352)
46,902
200,000
(200,000)
317,240
-
-
-
(171,535)
(59,866)
(50,621)
85,075
31,424
28,383
760,375
94%
82%
* The assessed fair value at grant date of options granted to the
Options Plan
For details of these grants please refer to section 3.6
6.2 Historical performance outcomes under the previous
418,638
591,504
136%
142%
244,305
individuals is allocated equally over the period from grant date to
TechnologyOne previously issued options under a now obsolete
vesting date. The amount is included in the remuneration tables
Executive Option Plan (EOP), which was described in section 3.6.
above. As outlined in greater detail in note 1 (q) (iii) fair values at
The EOP has now been quarantined and all new Executives to
grant date are determined using a Black-Scholes pricing model.
the Company, as well as existing Executives when their existing
Options forfeited during the period, with the exception of Mr
contracts come to an end, are under the new LTI plan.
Harwood’s due to his retirement, are due to non-achievement of
For those Executives that are under the older quarantined Option
performance targets set by the board for 2017. The board is focused
Plan:
405,926
100%
100%
on ensuring that management remuneration and shareholder value
are aligned by setting performance targets that create long term
-
shareholder wealth.
• The value actually received by individuals differs from the
remuneration outlined in the previous table (which is based on
accounting values). For the 2016 financial year, 16% ($436,816)
The model inputs for options granted to Executives are as follows:
of the performance related bonus as previously accrued in that
36,087
100%
100%
(a) Options are granted for no consideration. Each tranche vests at
-
the end of the three-year period.
(b) Dividend yield – between 1.6% and 1.9%
(c) Expected volatility – between 20.2% and 33.6%
(d) Risk-free interest rate – between 1.5% and 2.0%
(e) Price of shares on grant date – between $4.97 - $5.94
period became payable in cash to Executives (based on audited
results) and was paid during the 2017 financial year. There were
no forfeitures.
• The numbers of options over ordinary shares in the Group
held during the financial year by each Executive of the Group,
including their personally related parties, are set out below:
• The KMP have historically received the following share options:
• M Harwood participated in options granted 1 October 2014,
1,906,497
127,000
2,033,497
2,280,299
70,246
-
546,801
- 4,930,844
(10%)
(13%)
1,841,469
75,132
1,916,601
2,792,218
71,842
65,500
777,577
50,411
5,674,148
1,906,497
762,000
2,668,498
2,280,299
70,246
-
546,801
- 5,565,844
(5%)
(8%)
(f ) Fair value of options - between $0.68 - $1.27
• E Chung who participated in options granted 14 July 2014, and
1,841,469
427,532
2,269,001
2,792,218
71,842
65,500
777,577
50,411 6,026,549
• R Phare who participated in options granted 1 July 2012.
91
2017
2016
Total KMP
2017
2016
90
Transforming business, making life simpleTechnology One Limited 2017 Full Year Report 2017
Name
Balance at start
of year
Granted as
compensation
Exercised
Forfeited
Balance at the end of
the year
Vested and
exercisable
Unvested
Senior Executives of the Group
E Chung
R Phare
M Harwood
S MacDonald
T Ristevski
N Mattenberger
835,000
400,000
600,000
317,211
-
-
192,746
(167,000)
(43,047)
268,056
(200,000)
(89,352)
-
(400,000)
(200,000)
270,737
268,057
151,863
-
-
-
(171,535)
(59,866)
(50,621)
817,699
378,704
-
416,413
208,191
101,242
-
-
-
-
-
-
817,699
378,704
-
416,413
208,191
101,242
6.3 Shares provided on exercise of remuneration options
Details of ordinary shares in the Group provided as a result of the exercise of remuneration options to each director of Technology One
Limited and Senior Executives of the group are set out below.
Name
E Chung
R Phare
M Harwood
Date of exercise of options
Number of ordinary shares issued on exercise of options
during the period
Total paid at exercise
11/7/2017
3/7/2017
15/8/2017
167,000
200,000
400,000
223,580
113,720
634,460
No amounts are unpaid on any shares issued on the exercise of options.
6.4 Value of LTI grants yet to vest
For the new option plan, they vest three years after the grant date providing that the vesting conditions are met. For the old EOP, they vest
after two years.
The maximum value of options yet to vest has been determined as the amount of the grant date fair value that could be expensed.
The number of options granted during the year is disclosed below:
LTI (Options)
Name
E Chung
R Phare
S MacDonald
T Ristevski
N Mattenberger
Name
E Chung
R Phare
Year granted
Vested %
Forfeited %
Financial years in which rights
may vest
Maximum total value of grant yet
to vest $
2017
2017
2017
2017
2017
-
-
-
-
-
22%
33%
27%
22%
33%
LTI (Quarantined Options)
2019
2019
2019
2019
2019
176,420
200,000
252,000
200,000
200,000
Year granted
Vested %
Forfeited %
Financial years in which
options may vest
Maximum total value of grant yet
to vest $
2014
2012
33%
80%
-
-
2017 - 2021
2017 - 2018
992,243
80,266
7. Remuneration governance
Non-Executive Directors receive fees to recognise their contribution
to the work of the Board and the associated committees that they
The Remuneration Committee (the Committee) is responsible
serve. Non-Executive Directors do not receive any performance-
for developing the remuneration framework for TechnologyOne
related remuneration.
Executives, and making recommendations related to remuneration
to the Board. The Committee develops the remuneration philosophy
and policies for Board approval.
The Remuneration Committee has the responsibility for determining
the appropriate remuneration for Non-Executive Directors. Every
third year the committee reviews and compares the Non-executive
As at 30 September 2017, the Committee is made up of a majority of
Director fees to market. This year as part of the process of adding
independent Directors and is chaired by an independent director;
a Non-Executive director to the Board, we engaged an independent
and consists of the following members:
• Kevin Blinco (Chairman)
• Rick Anstey
•
John Mactaggart
• Dr Jane Andrews
The responsibilities of the Committee are outlined in their Charter,
which is reviewed annually by the Board.
8. Non-Executive Director fees
The total amount of Directors’ fees is capped at a maximum pool
that is approved by shareholders. The current fee pool is $1,000,000,
which was approved by shareholders at the Annual General Meeting
on 17 February 2016.
third party to review our director’s fees and benchmark them
against our peers to ensure we can continue to attract and retain
quality directors.
The committee agreed that the Directors’ fees be set at the 75th
percentile of ASX 101 – ASX 200 companies with CPI increases until
the next review in three years time.
This has resulted in an increase in Directors’ fees to $127,000,
including statutory superannuation contributions. The table below
shows the relationship between Directors’ fees and our market
capitalisation; Directors’ fees continue to grow at a slower rate than
our market capitalisation.
Market Capitalisation v Directors’ Fees
$127K
DIRECTORS’
FEES
COMPOUND
GROWTH
27%
$71K
$71K
$71K
$48K
$629M
$891M
$1.18B
$1.85B
$1.6B
FY13
FY14
FY15
FY16
FY17
MARKET
CAPITALISATION
COMPOUND
GROWTH
26%
92
93
Transforming business, making life simpleTechnology One Limited 2017 Full Year Report Non-Executive Director Fees for 2017 and 2016
Short-term employee benefits
Post- employment benefits
Equity remuneration
2017
Directors of Technology One
Name
Fixed
remuneration
$
Directors’
fees
$
Total fixed
remuneration
$
R McLean (Non-Executive Director)
2017
2016
-
-
127,000
127,000
75,132
75,132
J Mactaggart (Non-Executive Director)
2017
2016
-
-
127,000
127,000
75,132
75,132
K Blinco (Non-Executive Director)
2017
2016
-
-
127,000
127,000
75,132
75,132
R Anstey (Non-Executive Director)
2017
2016
-
-
127,000
127,000
75,132
75,132
Dr J Andrews (Non-Executive Director – appointed 22/2/16)
2017
2016
-
-
127,000
127,000
51,872
51,872
Total Non- Executive Directors
2017
2016
-
-
635,000
635,000
352,400
352,400
Short-
term
Incentive
$
Superannuation
$
Termination
benefits
$
Value of
share
options
$
Value of
performance
rights
$
% growth
on prior
year excl
LTI
Total
$
%
growth
on prior
year incl
LTI
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
127,000
69%
69%
75,132
127,000
69%
69%
75,132
127,000
69%
69%
75,132
127,000
69%
69%
75,132
635,000
80%
80%
352,400
9. Director shareholdings
Directors are required to hold a minimum shareholding of one
year’s (pre-tax) Directors’ fees in TechnologyOne shares. Directors
are required to rectify any shortfall within a 24 month period. New
Directors are allowed 24 months to meet this requirement.
The Board in total holds 74,725,300 shares representing 24% of the
10. Equity instruments held by Key
Management Personnel
The number of shares in the Group held during the financial year
by each Director and Senior Executive of Technology One Limited,
including their personally related parties, are set out below.
There were no shares granted during the reporting period as
total shareholding of the Company.
compensation.
127,000
145%
145%
2016
51,872
Directors of Technology One
31,378,500
141,000
42,902,500
260,000
19,000
24,300
Balance at the
end of the year
432,000
-
-
-
-
-
-
Limited
A Di Marco
R McLean
J Mactaggart
K Blinco
R Anstey
J Andrews
Limited
A Di Marco
R McLean
J Mactaggart
K Blinco
R Anstey
J Andrews
Balance at
the start of year
Purchased
during the year
Sales
during the year
Net change other
Balance at the
end of the year
34,378,500
141,000
45,902,500
250,000
15,000
8,325
-
-
-
10,000
4,000
15,975
(3,000,000)
-
(3,000,000)
-
-
-
-
-
-
-
-
-
Senior Executives of the Group
Balance at
the start of year
Recived during
the year on the
exercise of options
E Chung
R Phare
M Harwood
S MacDonald
T Ristevski
N Mattenberger
J Ruthven
265,000
-
1,000,000
-
-
-
-
167,000
200,000
400,000
-
-
-
-
Sales
during the year
Net change other
-
(200,000)
-
-
(1,200,000)
(200,000)
-
-
-
-
-
-
-
-
Balance at
the start of year
Purchased
during the year
Sales
during the year
Net change other
Balance at the
end of the year
37,378,500
141,000
48,902,500
250,000
7,500
-
-
-
-
-
7,500
8,325
(3,000,000)
-
(3,000,000)
-
-
-
-
-
-
-
-
-
34,378,500
141,000
45,902,500
250,000
15,000
8,325
Senior Executives of the Group
Balance at
the start of year
Recived during
the year on the exercise
of options
Sales
during the year
Net change other
Balance at the
end of the year
E Chung
R Phare
M Harwood
P Rogers
S MacDonald
T Ristevski
350,000
-
400,000
-
-
-
165,000
200,000
600,000
200,000
-
-
(250,000)
(200,000)
-
(200,000)
-
-
-
-
-
-
-
-
265,000
-
1,000,000
-
-
-
11. Loans to key management
personnel
12. Other transactions with key
management personnel
There have been no loans to directors or Executives during the
During the year there were no transactions with the key
financial year (2016 - nil).
management personnel. This report is made in accordance with a
resolution of directors.
94
95
Transforming business, making life simpleTechnology One Limited 2017 Full Year Report Corporate governance statement
The Board of Directors of the Company is responsible for its
• The Board should be comprised of Directors with an appropriate
•
Input into and ratifying any significant changes to the company.
Audit and Risk Committee
corporate governance. The Board guides and monitors the business
mix of skills, qualifications, expertise, experience and diversity.
• Adopting an annual budget and monitoring financial
The Board has established an Audit and Risk Committee. The
and affairs of the Company on behalf of the shareholders by whom
The skills, experience and expertise which the Board considers
performance.
Committee meets at least four times per year. The Committee is
they are elected and to whom they are accountable.
to be particularly relevant include those in the area of finance,
• Ensuring adequate internal controls exist and are appropriately
comprised of:
The Board has 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 and
Risk Committee, a Remuneration Committee and a Nomination
Committee.
The format of the Corporate Governance Statement is in accordance
with the Australian Securities Exchange Corporate Governance
Council’s Corporate Governance Principles and Recommendations
(3rd Edition). In accordance with the Council’s recommendations,
the Corporate Governance Statement must contain specific
information and disclose the extent to which the Company has
followed the guidelines during the period.
information technology, and Australian and International
Business. In respect of diversity, the Board recognises that
diversity relates to, but is not limited to gender, age, ethnicity
and cultural background. The Board values diversity and
recognises the individual contribution that people can make and
the opportunity for innovation that diversity brings.
• The Board shall meet on both a planned basis and an unplanned
basis when required, and have available all necessary
monitored for compliance.
• Ensuring significant business risks are identified and
appropriately managed.
• Selecting, appointing and reviewing the performance of the
Managing Director.
• Setting the highest business standards and code of ethical
behaviour.
• K Blinco (Chairman)
• R Anstey
• R McLean
•
J Andrews
The role of the Committee is as follows:
• Ensure the integrity in financial reporting
information to participate in an informed discussion of agenda
• Overseeing the establishment and implementation of the risk
• Receive and review reports from the external auditor
items.
management system, and annually reviewing its effectiveness.
• Review for accuracy financial statements for each reporting
• The Directors are entitled to be paid expenses incurred in
• Decisions relating to the appointment or removal of the
period prior to approval by the Board, and publishing
connection with the execution of their duties as Directors. Each
Company Secretary.
• Monitor compliance with the requirements of the Corporations
• The Directors and Officers will not engage in short term trading
the performance of Directors on an annual basis. This is undertaken
TechnologyOne’s corporate governance practices were in place
advice at the Company’s expense, where it is in connection
throughout the year ended 30 September 2017. As noted below
with their duties and responsibilities as Director. The Company
there are some recommendations with which the Company has
policy is that a Director wishing to seek independent legal advice
not complied to which the Company explains why at the end of the
should advise the Chairman at least 48 hours before doing so.
Director is therefore able to seek independent professional
statement. Apart from these the Company has complied with all the
principles’ recommendations.
The Directors have established guidelines for the operation of the
Board. Set out below are the Company’s main corporate governance
practices.
The Company’s complete Corporate Governance Statement is
available on the Company’s internet site technologyonecorp.com in
the ‘Shareholders’ area.
of the Company’s shares. Furthermore, the Directors and
officers will not buy or sell shares at a time when they possess
information which, if disclosed publicly, would be likely to
materially affect the market price of the Company’s shares.
Information is not considered to be generally available until a
reasonable time has elapsed to allow the market to absorb these
announcements. A detailed policy exists on this matter - refer to
Share Trading Policy on the Company’s website.
Board of Directors and its Committees
• Directors have a clear understanding of the corporate and
Board of Directors
The Directors are as follows:
Name
Position
regulatory expectations of them. To this end formal letters of
appointment are made for each Director setting out the key
terms and conditions, any special duties or arrangements,
remunerations and expenses, their rights and entitlements,
confidentiality and rights of access to corporate information,
Adrian Di Marco
Executive Chairman – Major Shareholder
as well as indemnity and insurance cover provided.
John Mactaggart
Non-Executive Director - Major shareholder
• Newly appointed Directors undertake an induction course
Ronald McLean
Non-Executive Director - Independent
covering the Company’s strategy, products and operations. They
are also provided a copy of the Company’s constitution.
A code of conduct has been established for the Board.
Act, Listing Rules, Australian and Foreign Taxation Offices and
The Board has established a diversity policy, which is discussed
other related legal obligations
below.
The Company has established a policy requiring the evaluation of
by the Nomination Committee.
Appointment of Directors
• Ensure that the financial statements for each reporting period
comply with appropriate accounting standards
• Regularly review Accounting Standards and Company Policies
in conjunction with the Auditors, and recommend adoption/
changes to the Board
• Ensure the Internal Audit Function maintains a high standard of
If a vacancy exists, or where the Board considers it will benefit from
performance
the appointment of a new Director with particular skills, the Board
will interview the candidates. Potential candidates will be identified
• Monitor compliance with the requirements of the Corporations
Act, Listing Rules, Australian and foreign taxation offices and
by the Nomination Committee, with the Board entitled to seek the
other related legal obligations
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.
Majority of Independent Directors
• Oversee the ongoing development by management of an
enterprise-wide risk management framework for management of
material risks
• Periodically review the adequacy and effectiveness of the
Company’s policies and procedures relating to risk management
Four of the six Directors are independent. To be classified as
and compliance
independent, these Directors are Non-Executive Directors of the
• Make recommendations to the Board on key risk management
Company and not allied with the interests of management, a
performance indicators and levels of risk appetite
substantial security holder or other relevant stakeholder and can
and will bring an independent judgement to bear on issues before
the Board. Ron McLean was previously an Executive of the Company
Remuneration Committee
The Board has established a Remuneration Committee. The
Committee meets at least four times per year.
Kevin Blinco
Non-Executive Director - Independent
• Directors are required to disclose Directors’ interests and any
until 2004. Notwithstanding this, TechnologyOne classify him as
Richard Anstey
Non-Executive Director - Independent
matters that affect the Director’s independence. This includes
disclosure of conflicts of interest, which may include transactions
an independent Non-Executive Director as a result of the lapse of
The Committee is comprised of a majority of independent Directors,
time (13 years) since holding the position, and the changes in senior
and is chaired by an independent Director. The Committee is
Jane Andrews
Non-Executive Director - Independent
with family members or related entities.
management at TechnologyOne since then.
comprised of:
The Company Secretary is Stephen Kennedy.
The Board of Directors operates in accordance with the following
broad principles:
•
If there is a potential conflict of interest, conflicted Directors
must immediately inform the Board and abstain from
deliberations on such matters. Such Directors are not permitted
to exercise any influence over other Board members. If the Board
believes the conflict of interest is material or significant the
• The Board should comprise of at least three members, but no
Directors concerned will not be allowed to attend the meeting or
more than 10. The current Board membership is six. The Board
receive the relevant Board papers.
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 Role of the Board is as follows:
• Setting objectives, goals and strategic direction for management,
with a view to maximising shareholder value.
Having said this, some advisors have not considered Mr McLean
• K Blinco (Chairman)
as being independent. As a result, the Board may not be seen as
majority independent. Because of this, the Board appointed Dr
Jane Andrews to the Board in 2016 as an independent Director and
is looking to appoint two additional independent Directors in the
•
J Mactaggart
• R Anstey
•
J Andrews
coming year.
The role of the Committee is as follows:
TechnologyOne is also keen to retain Mr McLean on the Board
• To advise the Board with regard to the Company’s remuneration
because of his deep industry knowledge and his extensive
framework for Executives.
experience and successful track record in enterprise software,
which is uncommon in Australia, which adds significant value to the
• To determine the individual remuneration framework for
Executives and Directors.
TechnologyOne Board.
96
97
Transforming business, making life simpleTechnology One Limited 2017 Full Year Report • To give the Company’s Executives encouragement to enhance the
• Disclosures forwarded to the Australian Securities Exchange
for 2018, TechnologyOne will continue to progress objectives one
the opinion that, due to the period of time that has lapsed since Mr
Company’s performance and to ensure that they are fairly, but
under the Company’s continuous disclosure obligations.
through to four.
McLean’s employment with the company, Mr McLean is considered
responsibly, rewarded for their individual contribution.
• Company’s web site, under a special area called Shareholders.
TechnologyOne’s Australian workplace profile as at 30 September
as being independent.
• Make recommendations to the Board, based on the items above.
All information communicated by the Company is in accordance
2017 is detailed below:
Non-Executive Directors’ remuneration is determined by the Board
with its continuous disclosure requirements under ASX Listing
within the aggregate amount per annum which may be paid in
Rule 3.1.
directors’ fees.
Nomination Committee
Risk Management
The Board has received reports from management on the risk
The Board has established a Nomination Committee. The Committee
management strategies, their effectiveness, and any current
meets as required during the year. The Committee is comprised of a
risk items. Management is responsible for the design and
majority of independent directors, and is chaired by an independent
implementation of control systems, which are reviewed and
director. The Committee is comprised of:
approved by the Board. The whole area of risk management is
• R Anstey (Chairman)
•
J Mactaggart
• K Blinco
•
J Andrews
outlined in the Corporate Governance Statement (on the company’s
website) and is constantly reviewed. Risk management reporting is
included in each Board and Audit and Risk Committee meeting. The
Board required the CEO and CFO to sign the attestation statements
in line with Corporations Act requirements.
The role of the Committee is as follows:
Diversity at Technology One
• Assessment of the necessary and desirable competencies and
experience for board membership.
• Assessment of the independence of each Director.
The diversity of TechnologyOne remains fundamental to our
ongoing success. TechnologyOne has established a Diversity Policy
which reflects the company’s commitment to providing an inclusive
• Evaluation of the membership of the Board, Audit and Risk and
workplace.
Remuneration committees, and their membership.
A summary of the Diversity Policy is following:
• Evaluation initially and on an on-going basis of Non-Executive
Director’s professional development, commitments, and their
ability to commit the necessary time required to fulfil their
duties to a high standard.
• Adherence by Directors to the Director’s Code of Conduct and to
good corporate governance.
our people can make and the opportunity for innovation such
diversity brings.
• TechnologyOne believes that we will achieve greater success
by providing our people with an environment that respects the
• Review of Board succession plans, changes to committees and
dignity of every individual, fosters trust, and allows every person
appointment of new Directors.
the opportunity to realise their full potential.
• Recommendation of, and undertaking the appropriate checks, for
• TechnologyOne is committed to providing an inclusive workplace
the endorsement or non-endorsement of existing Directors.
and our commitment to diversity extends to our interactions with
• Make recommendations to the Board, based on the items above.
customer and suppliers.
• Diversity is one of TechnologyOne’s strengths. TechnologyOne
consider the size of the Company, the industry it operates within,
values this diversity and recognises the individual contribution
the corporate history and the Company’s inherent strengths.
Ethical Standards
All directors, managers and employees are expected to act with the
utmost integrity and objectivity, observe the highest standards of
The Board established measurable objectives for 2017 and the
inherent strengths.
objectives are:
• Ensuring compliance with the published diversity policy.
the reasons why.
This section highlights those areas of non-compliance and provides
behaviour and business ethics, and strive at all times to enhance
• Diversity target - setting targets for the number of women in
the reputation and performance of the Company.
senior roles in the organisation.
Shareholders’ Rights
The Board of Directors aims to ensure that shareholders are
informed of all major developments affecting the Company’s state
of affairs. The information is communicated to shareholders by the:
• Maintain reporting measures that are in compliance with both
the ASX guidelines and Workplace Gender Equality Agency.
• Continue to identify employee feedback mechanisms through the
review of existing forums and information provided as well as
the identification of appropriate new mechanisms for employee
• Annual Report being distributed to all shareholders. The Board
consultation.
ensures the Annual Report contains all relevant information
about the operations of the Company during the financial
year, together with details of future developments and other
disclosures required under the Corporations Act 2001.
• Company’s Annual General Meeting.
• Half Year Results Report distributed to all shareholders.
• Maintain existing educational programs that support diversity
including but not limited to induction, on boarding and
leadership programs delivered through the TechnologyOne
College.
Majority of Independent Directors (Refer ASX Corporate
Guidelines - Recommendation 2.4)
The number of Directors is six. The Board has identified four of
these Directors are independent, and two as not independent
because they are major shareholders.
The Board is of the opinion that it should bring independent
judgment in making all decisions and believes strongly that having
two major shareholders (both who have been founders of the
Company) has added to the significant strength of the Board, and
provides a continuing vision for the Company’s success.
The independence of Mr Ron McLean has been debated by some
These objectives have been met, however TechnologyOne recognises
corporate advisory groups because he was a past employee of
further progress and improvement is possible and for this reason,
TechnologyOne, ceasing to be an executive in 2004. The Board is of
Male
%
Female
%
Total
Board and
Executive Directors
Executive
Managers
5
6
83%
86%
96
73%
Employees
539
63%
646
65
1
1
35
311
348
17%
14%
27%
37%
34
6
7
131
850
994
The Board is aiming to add up to an additional two Directors to the
Board this coming year. This provides the Company with an exciting
opportunity to increase the diversity on the Board as well as
increasing the number of independent Directors.
Non-Compliance with ASX Corporate Governance
Principles and Recommendations
The ASX guidelines commentary provides the following guidelines
note which supports this position: “The mere fact that a director
has served on a board for a substantial period does not mean that
he or she has become too close to management to be considered
independent. However, the board should regularly assess whether
that might be the case for any director who has served in that
position for more than 10 years.”
The ASX guidelines also states that it “recognises that the interests
of a listed entity and its security holders are likely to be well served
by having a mix of directors, some with a longer tenure with a
deep understanding of the entity and its business and some with a
shorter tenure with fresh ideas and perspective.”
Having said this, the TechnologyOne Board has committed to a
Board renewal process. Because of this, the Board appointed Dr
Jane Andrews to the Board in 2016 as an independent director, and
is looking to appoint two additional independent directors in the
coming year.
The Board of Technology One believes in working to the highest
Independent Chairman (Refer to ASX Corporate
standards of Corporate Governance. Notwithstanding this, the
Guidelines – Recommendation 2.5)
Board believes it is important to recognise there is not a ‘one size
fits all’ to good Corporate Governance, and that it is important to
The ASX Corporate Governance Council has recognised this fact, and
has allowed companies to explain where they do not comply with
on the ASX in 1999.
the Corporate Governance Principles and Recommendations 3rd
Edition.
The Company has complied with the majority of recommendations,
with the exception of but a few. The Board believes the areas of
non-conformance shown below will not impact the Company’s
ability to meet the highest standards of Corporate Governance,
and will at the same time allow the Company to capitalise on its
The Board is of the opinion it should maximise the vision, skills
and deep industry knowledge of the Company’s founder and major
shareholder, Mr Di Marco, to continue to lead the Company forward.
He has a long and proven track record of creating significant
shareholder wealth for the Company as its Chairman, since listing
The Board believes Mr Di Marco continues to be the best candidate
to clearly communicate the Company’s vision, strategy and to set
market expectations. To this end it is seen as appropriate that Mr
Adrian Di Marco should remain as Chairman of the Company.
There is no empirical evidence to support the preference of an
Independent Chairman.
The ASX Corporate Governance Principles and Recommendations
propose that “if the Chair is not an independent Director, a listed
entity should consider the appointment of an independent director
as the Deputy Chair”. Mr McLean was appointed Deputy Chair at the
Board meeting held 15 August 2017. Mr McLean is deemed to be an
independent non-executive director in the Board’s opinion.
On 23 May 2017, Edward Chung was appointed as Chief Executive
Officer. Mr Di Marco will not be deemed as independent under the
ASX guidelines due to him being a substantial shareholder. This
however, aligns Mr Di Marco with the interests of the Company’s
shareholders.
98
99
Transforming business, making life simpleTechnology One Limited 2017 Full Year Report Financial Statements
Consolidated income statement
For the year ended 30 September 2017
Revenue
Variable costs
Variable customer cloud costs
Total variable costs
Occupancy costs
Corporate costs
Depreciation and amortisation
Computer and communication costs
Marketing costs
Employee costs
Share-based payments
Finance expense
Total operating costs
Profit before income tax
Income tax expense
Profit for the year from continuing operations
Basic earnings per share
Diluted earnings per share
Notes
5
6
7
7
31
31
The above consolidated income statement should be read in conjunction with the accompanying notes.
Consolidated statement of comprehensive income
For the year ended 30 September 2017
Profit for the year from continuing operations
Other comprehensive income
Items that may be reclassified to profit or loss in subsequent periods
Exchange differences on translation of foreign operations
Other comprehensive income for the year, net of tax
Total comprehensive income for the year
2017
$’000
273,253
(24,766)
(9,611)
(34,377)
(7,750)
(16,421)
(4,237)
(10,599)
(5,624)
2016
$’000
249,018
(23,965)
(7,575)
(31,540)
(9,033)
(13,665)
(3,924)
(9,262)
(2,751)
(134,602)
(124,006)
(1,576)
(48)
(1,496)
(101)
(180,857)
(164,238)
58,019
(13,525)
44,494
Cents
14.18
14.10
2017
$’000
44,494
(167)
(167)
44,327
53,240
(11,896)
41,344
Cents
13.26
13.11
2016
$’000
41,344
(345)
(345)
40,999
The above consolidated statement of comprehensive income should be read in conjunction with the accompanying notes.
100
Consolidated statement of financial position
as at 30 September 2017
ASSETS
Current assets
Cash and cash equivalents
Prepayments
Trade and other receivables
Earned and unbilled revenue
Other current assets
Total current assets
Non-current assets
Property, plant and equipment
Intangible assets
Earned and unbilled revenue
Deferred tax assets
Total non-current assets
Total assets
LIABILITIES
Current liabilities
Trade and other payables
Provisions
Current tax liabilities
Unearned revenue
Borrowings
Total current liabilities
Non-Current liabilities
Trade and other payables
Provisions
Current non-current liabilities
Total non-current liabilities
Total liabilities
Net assets
EQUITY
Contributed equity
Other reserves
Retained earnings
Total equity
Notes
8
9
10
11
12
13
14
15
16
28
17
18
20
21
2017
$’000
93,383
8,220
53,262
14,305
798
169,968
13,525
47,549
11,914
5,482
78,470
2016
$’000
82,588
5,817
41,642
16,421
793
147,261
11,681
48,088
3,980
7,512
71,261
248,438
218,522
38,253
11,270
392
27,862
10
77,787
8,370
3,338
1,423
13,131
90,918
157,520
32,152
34,687
90,681
157,520
24,587
11,194
1,085
20,885
29
57,780
16,068
4,555
1,625
22,248
80,028
138,494
29,984
38,350
70,160
138,494
101
The above consolidated statement of financial position should be read in conjunction with the accompanying notes.
Transforming business, making life simpleTechnology One Limited 2017 Full Year Report
Consolidated statement of changes in equity
For the year ended 30 September 2017
Notes
Contributed
equity
$’000
Retained
earnings
$’000
Dividend
reserve
$’000
FOREX
reserve
$’000
Share option
reserve
$’000
Total
equity
$’000
Balance at 1 October 2017
29,984
70,160
22,172
Exchange differences on translation of foreign
operations
Profit for the period
Total comprehensive income for the period
Dividends paid
Transfer to dividend reserve
Exercise of share options
Share based payments
Tax impact of share trust
22
20
32
-
-
-
-
-
2,168
-
-
-
44,494
44,494
-
-
-
-
(30,370)
(23,973)
23,973
Balance at 30 September 2017
32,152
90,681
2,168
(23,973)
(561)
(167)
-
(167)
-
-
-
-
-
-
16,739
138,494
-
-
-
-
-
-
1,576
1,325
2,901
(167)
44,494
44,327
(30,370)
-
2,168
1,576
1,325
(25,301)
Notes
Consolidated statement of cash flows
For the year ended 30 September 2017
Cash flows from operating activities
Receipts from customers (inclusive of GST)
Unused prepayments to suppliers
Payments to suppliers and employees (inclusive of GST)
Interest received
Income taxes paid
Other revenue
Interest paid
Net cash inflow / (outflow) from operating activities
30
Cash flows from investing activities
Payments for acquisition of subsidiary (net of cash acquired)
(728)
19,640
157,520
Payments for property, plant and equipment
Proceeds from sale of property, plant and equipment
Balance at 1 October 2016
28,459
58,384
20,562
(216)
10,751
117,940
Net cash inflow / (outflow) from investing activities
Exchange differences on translation of foreign
operations
Profit for the period
Total comprehensive income for the period
Dividends paid
Transfer to dividend reserve
Exercise of share options
Share-based payments
Tax impact of share trust
22
20
32
-
-
-
-
-
1,525
-
-
-
41,344
41,344
-
-
-
-
(27,958)
(29,568)
29,568
Balance at 30 September 2016
29,984
70,160
1,525
(29,568)
(345)
-
(345)
-
-
-
-
-
-
-
-
-
-
-
-
1,496
4,492
5,988
(345)
41,344
40,999
(27,958)
-
1,525
1,496
4,492
(20,445)
Cash flows from financing activities
Proceeds from exercise of share options
Repayment of finance lease
Dividends paid to Company's shareholders
Net cash inflow / (outflow) from financing activities
Net increase / (decrease) in cash and cash equivalents
Cash and cash equivalents at the beginning of the financial year
Cash and cash equivalents at end of year
22
8
(561)
16,739
138,494
The above consolidated statement of cash flows should be read in conjunction with the accompanying notes.
-
-
-
-
-
-
-
-
-
(6,397)
15,775
-
-
-
1,610
22,172
2017
$’000
296,419
(2,417)
(238,006)
728
(10,507)
273
(48)
46,442
(1,322)
(6,109)
3
(7,428)
2,168
(17)
(30,370)
(28,219)
10,795
82,588
93,383
2016
$’000
266,492
(3,996)
(210,508)
1,035
(10,711)
1,530
(101)
43,741
(3,017)
(4,889)
13
(7,893)
1,525
(2,363)
(27,958)
(28,796)
7,052
75,536
82,588
The above consolidated statement of changes in equity should be read in conjunction with the accompanying notes.
102
103
Transforming business, making life simpleTechnology One Limited 2017 Full Year Report
Notes to the consolidated financial statements
1 Summary of significant accounting policies
revenue arising from contracts, unless the contracts are in the
(b) Principles of consolidation
The financial report of Technology One Limited (the Company)
for the year ended 30 September 2017 was authorised for issue in
accordance with a resolution of Directors on 21 November 2017.
Technology One Limited (the Company) is a company limited by
shares incorporated in Australia whose shares are publicly traded
on the Australian Stock Exchange.
The principal accounting policies adopted in the preparation of
these financial statements are set out below. These policies have
been consistently applied to all the periods presented, unless
otherwise stated. The financial statements are for the consolidated
entity consisting of Technology One Limited and its subsidiaries. The
nature of the operations and principal activities of the Group are
described in the Directors’ report.
(a) Basis of preparation
The financial report is a general purpose financial report prepared
by a for profit entity, which has been prepared in accordance
with the requirements of the Corporations Act 2001, Australian
Accounting Standards and other authoritative pronouncements of
the Australian Accounting Standards Board.
The financial report is presented in Australian dollars and all
values are rounded to the nearest thousand dollars ($000) unless
otherwise stated.
The accounting policies adopted are consistent with those of the
previous financial year.
(i) Compliance with IFRS
This financial report also complies with International
Financial Reporting Standards (IFRS) as issued by the
International Accounting Standards Board.
(ii) Newly adopted standards
scope of other standards (e.g. leases). The effective date of
this standard is financial years beginning on or after 1 January
2018, with early adoption permitted. This will apply to the
Company initially in the financial report for the financial year
ended 30 September 2019. No decision on whether to adopt a
retrospective approach has been made.
The contracting arrangements of the Company are complex
and involve a number of performance obligations which in
some cases may be interdependent. The Company has not
yet finalised its position on the impact of AASB15 across all
revenue streams, however to date some differences in the
timing of revenue recognition (based on current contract
terms) have been noted. Our impact assessment is on-going
and still requires additional analysis to confirm if ultimately
differences exist. The Company is also working with its
existing customers on the terms of current agreements and
agreements with new customers, as our product offerings
evolve, which may vary contract terms and influence the
impact of adoption, or cause there to be no ongoing impact.
As a result of this, an overall impact assessment on reported
results going forward has not been determined. The Company
notes this will not impact cash flows.
AASB 16 Leases was issued in February 2016. The standard
introduces a single lessee accounting model and requires
lessees to recognise assets and liabilities for all leases with
a term of more than 12 months, unless the underlying asset
is of low value. The standard removes the clarification of
leases as either operating or finance leases for the lessee
and effectively treats all leases as finance leases. There are
also changes in the accounting over the life of the lease.
AASB 16 substantially carries forward the lessor accounting
requirements in AASB 117. Accordingly, lessor accounting will
remain similar to current practice. The new standard will be
New or amended standards that became applicable for the
effective for annual periods beginning on or after 1 January
(ii) Transactions and balances
first time for the 30 September 2017 year end did not result
2019. Early application is permitted, provided the new revenue
in a change to the Company’s accounting policies or require
standard, AASB 15 Revenue from Contracts with Customers,
retrospective adjustments. Certain new accounting standards
has been applied, or is applied at the same date as AASB 16.
and interpretations have been published that are not
The Company has not yet assessed how it will be affected by
effective for the 30 September 2017 year end reporting period
the new standard and has not yet decided when to adopt it.
are outlined below.
(iii) Issued but not yet effective
(v) Historical cost convention
These financial statements have been prepared under the
Foreign currency transactions are translated into the
functional currency using the exchange rates prevailing at
the dates of the transactions. Foreign exchange gains and
losses resulting from the settlement of such transactions and
from the translation at year end exchange rates of monetary
assets and liabilities denominated in foreign currencies are
recognised in the income statement.
AASB 9 Financial Instruments includes requirements for the
historical cost convention, as modified by the revaluation
(iii) Group companies
classification and measurement of financial assets. It was
of available-for-sale financial assets, financial assets and
further amended by AASB 2010 - 7 to reflect amendments to
liabilities (including derivative instruments) at fair value
the accounting for financial liabilities. The effective date of
through the income statement.
this standard is 1 January 2018, however it is available for
early adoption. The Company has not yet assessed how it
(vi) Critical accounting estimates
will be affected by the new standard and has not yet decided
The preparation of financial statements requires the use
when to adopt it.
(iv) Issued but not yet effective
of certain critical accounting estimates. It also requires
management to exercise its judgement in the process of
applying the Company’s accounting policies. The areas
AASB 15 Revenue from Contracts with Customers was issued
involving a higher degree of judgement or complexity, or
by AASB in January 2015 and replaces all revenue recognition
areas where assumptions and estimates are significant to the
requirements, including those as set out in AASB 118 Revenue.
financial statements, are disclosed in note 3.
The standard contains a single model that applies to all
The results and financial position of foreign operations
(none of which has the currency of a hyperinflationary
economy) that have a functional currency different from the
presentation currency are translated into the presentation
currency as follows:
• Assets and liabilities for each statement of financial
position presented are translated at the closing rate at the
date of that statement of financial position, and
•
Income and expenses for each income statement and
statement of comprehensive income are translated at
average exchange rates (unless this is not a reasonable
(i) Subsidiaries
The consolidated financial statements incorporate the assets
and liabilities of all subsidiaries of Technology One Limited
(‘Company’ or ‘parent entity’) as at 30 September 2017 and the
results of all subsidiaries for the year then ended. Technology
approximation of the cumulative effect of the rates
prevailing on the transaction dates, in which case
income and expenses are translated at the dates of the
transactions), and
• All resulting exchange differences are recognised in other
comprehensive income.
One Limited and its subsidiaries together are referred to in
(d) Revenue recognition
this financial report as the ‘Company’ or the ‘Consolidated
Revenue is measured at the fair value of the consideration received
entity’.
or receivable.
Intercompany transactions, balances and unrealised gains on
transactions between companies are eliminated. Unrealised
losses are also eliminated unless the transaction provides
evidence of the impairment of the asset transferred.
Accounting policies of subsidiaries have been changed where
necessary to ensure consistency with the policies adopted by
The Company recognises revenue when the amount of revenue can
be reliably measured, it is probable that future economic benefits
will flow to the entity and specific criteria have been met for each
of the Company’s activities as described below. The Company bases
its estimates on historical results, taking into consideration the
type of customer, the type of transaction and the specifics of each
the Company.
(ii) Employee Share Trust
The Company has formed a trust to administer the Company’s
employee share scheme. This trust is consolidated as the
substance of the relationship is that the trust is controlled by
the Company. At 30 September 2017, the Company had 500,656
(2016 - 954,679) Treasury Shares.
(c) Foreign currency translation
(i) Functional and presentation currency
Items included in the financial statements of each of the
Company’s operations are measured using the currency of the
primary economic environment in which the entity operates
(‘the functional currency’). The consolidated financial
statements are presented in Australian dollars, which is
Technology One Limited’s functional and presentation
currency.
arrangement.
The Company sells its licenced software under a perpetual licence
contract with associated services, or as part of a “Software as a
Service (SaaS)” solution which allows customers access to licensed
software for a defined period, along with associated services.
Revenue is recognised for the major business activities as follows:
(i) 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.
(ii) Implementation and Consulting Services Revenue for
Licenced Software
Revenue from implementation and consulting services
attributable to licensed software is recognised in proportion
to the stage of completion, typically in accordance with the
achievement of contract milestones and/or hours expended.
(iii) 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.
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.
(iv) 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.
104
105
Transforming business, making life simpleTechnology One Limited 2017 Full Year Report (v) Cloud Services
Deferred tax liabilities and assets are not recognised for temporary
maker to make decisions about resources to be allocated to the
exceeds its recoverable amount. The recoverable amount is the
differences between the carrying amount and tax bases of
segment and assess its performance and for which discrete financial
higher of an asset’s fair value less costs to sell and value-in-use.
Revenue from cloud services is recognised as the services are
performed.
(vi) Unearned Services Revenue
investments in foreign operations where the Company is able to
information is available.
control the timing of the reversal of the temporary differences and
it is probable that the differences will not reverse in the foreseeable
Amounts received from customers in advance of provision
future.
of services are accounted for as a liability called Unearned
Deferred tax assets and liabilities are offset when there is a
Revenue.
(vii) Earned and Unbilled Revenue
legally enforceable right to offset current tax assets and liabilities
and when the deferred tax balances relate to the same taxation
authority. Current tax assets and tax liabilities are offset where the
Amounts recorded as earned and unbilled revenue represent
entity has a legally enforceable right to offset and intends either to
revenues recorded on software licence fees and PSCS fees
settle on a net basis, or to realise the asset and settle the liability
not yet invoiced to customers. These amounts have met the
simultaneously.
revenue recognition criteria of the Company, but have not
reached the payment milestones contracted with customers.
(viii) SaaS Revenue
Software as a Service (SaaS) revenue is separable into each
of its components of software licence fees, post sales
customer support and cloud services. At each reporting
date, the unearned portion is assessed and deferred to be
recognised over the period of service.
(e) Income tax
The income tax expense or benefit for the period is the tax payable
on the current period’s taxable income based on the applicable
income tax rate for each jurisdiction adjusted by changes in
deferred tax assets and liabilities attributable to temporary
differences and to unused tax losses.
The current income tax charge is calculated on the basis of the tax
laws enacted or substantively enacted at the end of the reporting
period in the countries where the Company’s subsidiaries operate
and generate taxable income.
Management periodically evaluates positions taken in tax returns
with respect to situations in which applicable tax regulation
is subject to interpretation. It establishes provisions where
appropriate on the basis of amounts expected to be paid to the tax
authorities.
Deferred income tax is provided in full, using the liability method,
on temporary differences arising between the tax bases of assets
and liabilities and their carrying amounts in the consolidated
financial statements. However, the deferred income tax is not
accounted for if it arises from initial recognition of an asset or
liability in a transaction other than a business combination that at
the time of the transaction affects neither accounting nor taxable
profit or loss. Deferred income tax is determined using tax rates
(and laws) that have been enacted or substantially enacted by the
end of the reporting period and are expected to apply when the
The carrying amount of deferred income tax assets is reviewed at
each reporting 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 reporting
date.
Technology One Limited and its wholly-owned Australian controlled
entities have implemented the tax consolidation legislation. As a
consequence, these entities are taxed as a single entity and the
deferred tax assets and liabilities of these entities are set off in the
consolidated financial statements.
The head entity, Technology One Limited, and the controlled entities
in the tax consolidated group account for their own current and
deferred tax amounts. These tax amounts are measured as if each
entity in the tax consolidated group continues to be a stand-alone
taxpayer in its own right.
The Company has applied the Group allocation approach in
determining the appropriate amount of current taxes and deferred
taxes to allocate to members of the tax consolidated group. The
current and deferred tax amounts are measured in a systematic
manner that is consistent with the broad principles in AASB 112.
The Company created an Employee Share Trust during 2009 which
allows an employee on the exercise of an option to hold the share
in the Trust. As per AASB 112, on granting the option, the Company
now records a deferred tax asset on the expected value of the
share. If the amount of the tax deduction (or estimated future
tax deduction) exceeds the amount of the related cumulative
remuneration expense, the difference is recognised directly in
equity. When the employee exercises the option, the tax effect
Operating segments have been identified based on the information
provided to the chief operating decision maker - being the Executive
Chairman.
For the purposes of assessing impairment, assets are grouped at
the lowest levels for which there are separately identifiable cash
inflows which are largely independent of the cash inflows from
other assets or groups of assets (cash-generating units). Non-
financial assets other than goodwill that suffered an impairment are
Operating segments that meet the quantitative criteria as
reviewed for possible reversal of the impairment at the end of each
prescribed by AASB 8 are reported separately. However, an operating
reporting period.
segment that does not meet the quantitative criteria is still reported
separately where information about the segment would be useful to
users of the financial statements.
Included in intangible assets is a software data model. This asset
has an indefinite useful life. The asset is constantly refreshed and
updated with all such costs being recorded in the profit and loss in
Information about other business activities and operating segments
the period when incurred.
that are below the quantitative criteria are combined and disclosed
in a separate category for ‘all other segments’.
(j) Cash and cash equivalents
(g) Leases
For the purpose of presentation in the statement of cash flows,
cash and cash equivalents includes cash on hand, deposits held
Leases of property, plant and equipment where the Company, as
at call with financial institutions, other short-term, highly liquid
lessee, has substantially all the risks and rewards of ownership are
investments with original maturities of three months or less that are
classified as finance leases (note 11). Finance leases are capitalised
at the lease’s inception at the fair value of the leased property
readily convertible to known amounts of cash and which are subject
to an insignificant risk of changes in value, and bank overdrafts.
or, if lower, the present value of the minimum lease payments.
The corresponding rental obligations, net of finance charges, are
included in other short-term and long-term payables. Each lease
For purposes of the statement of cash flows, cash includes cash and
cash equivalents, net of outstanding bank overdrafts.
payment is allocated between the liability and finance cost. The
(k) Trade receivables
finance cost is charged to the Income Statement over the lease
period so as to produce a constant periodic rate of interest on the
remaining balance of the liability for each period. The property,
plant and equipment acquired under finance leases is depreciated
over the asset’s useful life or over the shorter of the asset’s useful
Trade receivables are recognised initially at fair value and
subsequently measured at amortised cost using the effective
interest method, less provision for impairment. Trade receivables
are generally due for settlement within 30 days.
life and the lease term if there is no reasonable certainty that the
Collectability of trade receivables is reviewed on an ongoing
Company will obtain ownership at the end of the lease term.
Leases in which a significant portion of the risks and rewards
of ownership are not transferred to the Company as lessee are
classified as operating leases (note 26). Payments made under
operating leases (net of any incentives received from the lessor)
are charged to the income statement on a straight-line basis over
the period of the lease.
(h) Research and Development costs
basis. Debts which are known to be uncollectible are written off
by reducing the carrying amount directly. An allowance account
(provision for impairment of trade receivables) is used when there
is objective evidence that the Company will not be able to collect
all amounts due according to the original terms of the receivables.
Significant financial difficulties of the debtor, probability that the
debtor will enter bankruptcy or financial reorganisation, and default
or delinquency in payments (more than 60 days overdue) are
considered indicators that the trade receivable is impaired.
Research and development expenses include payroll, employee
The amount of the impairment loss is recognised in the income
benefits and other employee-related costs associated with product
statement within corporate expenses. When a trade receivable for
development. Technological feasibility for software products is
which an impairment allowance had been recognised becomes
reached shortly before products are released for commercial
uncollectible in a subsequent period, it is written off against the
sale to customers. Costs incurred after technological feasibility is
allowance account. Subsequent recoveries of amounts previously
established are not significant, and accordingly, all research and
written off are credited against corporate expenses in the income
development costs are expensed when incurred.
statement.
difference between the actual market value and what was recorded
(i) Impairment of assets
(l) Investments and other financial assets
related deferred income tax asset is realised or the deferred income
as a deferred tax asset is recognised to equity.
tax liability is settled.
(f ) Segment reporting
Deferred tax assets are recognised for deductible temporary
differences and unused tax losses only if it is probable that future
An operating segment is a component of an entity that engages
in business activities from which it may earn revenues and incur
taxable amounts will be available to utilise those temporary
differences and losses.
expenses (including revenues and expenses relating to transactions
with other components of the same entity), whose operating results
are regularly reviewed by the entity’s chief operating decision
Goodwill and intangible assets that have an indefinite useful life are
The Company classifies its investments in the following categories:
not subject to amortisation and are tested annually for impairment,
financial assets at fair value through the Income Statement,
or more frequently if events or changes in circumstances indicate
that they might be impaired. Other assets are tested for impairment
loans and receivables and available-for-sale financial assets. The
classification depends on the purpose for which the investments
whenever events or changes in circumstances indicate that the
were acquired. Management determines the classification of its
carrying amount may not be recoverable. An impairment loss is
investments at initial recognition.
recognised for the amount by which the asset’s carrying amount
106
107
Transforming business, making life simpleTechnology One Limited 2017 Full Year Report generating units or groups of cash-generating units that
are expected to benefit from the business combination in
liabilities are settled. Liabilities for sick leave, which are non-
• The after income tax effect of interest and other financing
vesting, are recognised when the leave is taken and measured
costs associated with dilutive potential ordinary shares,
which the goodwill arose, identified according to operating
at the rates paid or payable.
and
segments (note 4).
(ii) Intellectual Property/Source Code
Intangible assets acquired separately are capitalised at
(ii) Long service leave
The liability for long service leave is recognised in the
provision for employee benefits and is measured as the
• The weighted average number of additional ordinary
shares that would have been outstanding assuming the
conversion of all dilutive potential ordinary shares.
cost, and if acquired as a result of a business combination,
present value of expected future payments to be made in
(t) Dividends
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 indefinite. Where
respect of services provided by employees up to the reporting
Provision is made for the amount of any dividend declared,
period. Consideration is given to expected future wage and
being appropriately authorised and no longer at the discretion of
salary levels, experience of employee departures and periods
the entity, on or before the end of the reporting period but not
of service. Expected future payments are discounted using
distributed at the end of the reporting period.
amortisation is charged on intangible assets with finite lives,
market yields at the end of the reporting period on national
(i) Available-for-sale financial assets
Available-for-sale financial assets, comprising principally
marketable equity securities, are non-derivatives that are either
designated in this category or not classified in any of the other
categories. Investments are designated as available-for-sale if they
do not have fixed maturities and fixed or determinable payments
and management intends to hold them for the medium to long-
term.
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 statement of
comprehensive income.
(m) 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:
Office furniture and equipment
3 - 11 years
Computer software
Motor vehicles
3 - 4 years
4 - 5 years
The assets’ residual values and useful lives are reviewed, and
adjusted if appropriate, at the end of each reporting period.
An asset’s carrying amount is written down immediately to its
recoverable amount if the asset’s carrying amount is greater than its
estimated recoverable amount (note 1(i)).
Gains and losses on disposals are determined by comparing
this expense is taken to the Income Statement through the
‘depreciation & 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.
Intellectual Property is amortised on a straight line basis over
8 years.
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 statement of comprehensive
income when the intangible asset is derecognised.
(o) Trade and other payables
These amounts represent liabilities for goods and services provided
to the Company prior to the end of financial year which are unpaid.
The amounts are unsecured and are usually paid within 30 days of
recognition.
(p) Provisions
corporate bonds with terms to maturity and currency that
match, as closely as possible, the estimated future cash
outflows.
(iii) Share-based payments
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 costs of share-based payment transactions with
employees are measured by reference to the fair value of
the equity instruments at the date at which they are granted.
Refer to note 32.
(u) Goods and Services Tax (GST)
Revenues, expenses and assets are recognised net of the amount of
associated GST, unless the GST incurred is not recoverable from the
taxation authority. In this case it is recognised as part of the cost of
acquisition of the asset or as part of the expense.
Receivables and payables are stated inclusive of the amount of GST
receivable or payable. The net amount of GST recoverable from, or
payable to, the taxation authority is included with other receivables
or payables in the statement of financial position.
Cash flows are presented on a gross basis. The GST components
of cash flows arising from investing or financing activities which
are recoverable from, or payable to the taxation authority, are
The cost of share-based payments is recognised, together
with a corresponding increase in equity, over the period in
presented as operating cash flows.
which the performance and/or service conditions are fulfilled,
2 Financial risk management
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.
(r) Contributed equity
Ordinary shares are classified as equity.
the share proceeds received.
(s) Earnings per share
(i) Basic earnings per share
Basic earnings per share is calculated by dividing:
• The profit attributable to owners of the Company,
The Company’s principal financial instruments are finance leases,
cash and short-term deposits and assets available-for-sale,
contingent consideration and borrowings.
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,
liquidity 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
excluding any costs of servicing equity other than ordinary
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.
shares
• By the weighted average number of ordinary shares
outstanding during the year, adjusted for bonus elements
in ordinary shares issued during the year and excluding
treasury shares.
(ii) Diluted earnings per share
Diluted earnings per share adjusts the figures used in the
determination of basic earnings per share to take into
Provisions are recognised when the Company has a present legal
or constructive obligation as a result of past events, it is probable
that an outflow of resources will be required to settle the obligation
Issued and paid up capital is recognised at the fair value of the
consideration received. Any transaction costs arising on the issue of
ordinary shares are recognised directly in equity as a reduction of
proceeds with carrying amount. These are included in the income
and the amount has been reliably estimated. Provisions are not
statement.
(n) Intangible assets
(i) Goodwill
Goodwill represents the excess of the cost of an acquisition
over the fair value of the Company’s share of the net
identifiable assets of the acquired subsidiary/associate at the
date of acquisition. Goodwill on acquisitions of subsidiaries
is included in intangible assets. Goodwill is not amortised.
recognised for future operating losses.
Provisions are measured at the present value of management’s
best estimate of the expenditure required to settle the present
obligation at the end of the reporting period. The discount rate
used to determine the present value is a pre-tax rate that reflects
current market assessments of the time value of money and the
risks specific to the liability. The increase in the provision due to the
passage of time is recognised as interest expense.
Instead, goodwill is tested for impairment annually, or more
(q) Employee benefits
frequently if events or changes in circumstances indicate that
(i) Short-term obligations
it might be impaired, and is carried at cost less accumulated
impairment losses. Gains and losses on the disposal of an
entity include the carrying amount of goodwill relating to the
entity sold.
Goodwill is allocated to cash-generating units for the purpose
of impairment testing. The allocation is made to those cash-
Liabilities for wages and salaries, including non-monetary
benefits and annual leave expected to be settled within 12
months after the end of the period in which the employees
render the related service are recognised in respect of
employees’ services up to the end of the reporting period and
account:
are measured at the amounts expected to be paid when the
108
109
Transforming business, making life simpleTechnology One Limited 2017 Full Year Report There are no changes in the financial risks faced by the Company in
(d) Liquidity risk
(d) Liquidity risk (continued)
the period. The Company holds the following financial instruments:
2017
$’000
2016
$’000
Liquidity risk arises from the financial liabilities of the Group and
Groups subsequent ability to meet their obligations to repay their
financial liabilities as and when they fall due.
Financial assets
(e) Fair value measurements
Cash and cash equivalents
93,383
82,588
At 30 September 2017 the Company did not hold any assets or
Trade and other receivables
53,262
41,642
liabilities at fair value through the profit and loss.
Earned and unbilled revenue
26,219
20,401
Contingent consideration as set out in note 28 is classified as Level
3 (2016 - $17,399,000). The valuation techniques and fair value of
172,864
144,631
consideration is outlined in note 28.
Financial liabilities
Trade and other payables
30,156
24,587
Borrowings
10
29
Opening balance at 1 October 2016
Contingent consideration
16,467
17,399
Payments
46,633
42,015
(Gains)/losses recognised in the income statement
Contingent
Consideration
$’000
17,399
(1,322)
390
16,467
(a) Interest rate risk
The Company’s cash and investment assets are exposed to
movements in deposit and variable interest rates. The Company
does not hedge this exposure. Interest rate risk on cash is not
considered to be material.
(b) Foreign currency risk
Closing balance at 30 September 2017
The carrying value of trade receivables, accrued revenue and
trade payables are assumed to approximate their fair value due to
their short term nature. The fair value of non-current borrowings
materially approximates their carrying amount, as the impact of
discounting is not significant.
As a result of operations in New Zealand, Malaysia, Papua New
(f ) Capital risk management
Guinea and the United Kingdom and sales contracts denominated in
United States dollars, the Company’s statement of financial position
can be affected by movements in the exchange rates applicable to
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
these geographical locations and currencies.
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.
The Company does not hedge this risk. The Company’s exposure to
foreign currency changes is not significant.
At balance date, the Group had the following exposures in
Australian dollar equivalents of amounts to foreign currencies which
are not effectively hedged:
2017
USD
$’000
2017
PGK
$’000
2016
USD
$’000
2016
PGK
$’000
Trade Receivables
628
770
539
988
(c) Credit risk
The Company trades only with recognised, creditworthy 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 9.
At 30 September 2017
Less than 6 months
$’000
6 - 12 months
$’000
Between
1 and 5 years
$’000
Over 5 years
$’000
Total contractual
cash flows
$’000
Financial assets
Cash and cash equivalents
Trade and other receivables
Earned and unbilled
Total
Financial liabilities
Trade and other payables
Borrowings
Contingent consideration
Total
93,383
53,262
14,305
160,950
30,156
5
8,097
38,258
-
-
-
-
-
5
-
5
Net inflow / (outflow)
122,692
(5)
-
-
11,914
11,914
-
-
8,370
8,370
3,544
-
-
-
-
-
-
-
-
-
93,383
53,262
26,219
172,864
30,156
10
16,467
46,633
126,231
At 30 September 2016
Less than 6 months
$’000
6 - 12 months
$’000
Between
1 and 5 years
$’000
Over 5 years
$’000
Total contractual
cash flows
$’000
Financial assets
Cash and cash equivalents
Trade and other receivables
Earned and unbilled
Total
Financial liabilities
Trade and other payables
Borrowings
Contingent consideration
Total
Net inflow / (outflow)
82,588
41,642
16,421
140,651
24,587
5
1,331
25,923
114,728
-
-
-
-
-
19
-
19
(19)
-
-
3,980
3,980
-
5
16,068
16,073
(12,093)
-
-
-
-
-
-
-
-
-
82,588
41,642
20,401
144,631
24,587
29
17,399
42,015
102,616
110
111
Transforming business, making life simpleTechnology One Limited 2017 Full Year Report
3 Critical accounting estimates and judgements
(v) Contingent consideration
(b) Segment information provided to the strategic steering committee
SaaS contracts entered into by the Group require judgement
in the identification and separation of contract components
related to software licence fees, post sales customer support
• Research & Development (R&D) - the research, development and
Other disclosures: Capital expenditure
support of our products.
• Cloud - the delivery of cloud hosting services to our customers
Estimates and judgements are continually evaluated and are based
on historical experience and other factors, including expectations
of future events that may have a financial impact on the entity and
that are believed to be reasonable under the circumstances.
The Company makes estimates and assumptions concerning the
future. The resulting accounting estimates will, by definition, seldom
equal the related actual results. The estimates and assumptions
that have a significant risk of causing a material adjustment to the
carrying amounts of assets and liabilities within the next financial
year are discussed below.
(i) Impairment of goodwill and other assets
A provision has been made for the present value
of anticipated costs for future contingent earn out
considerations resulting from the acquisitions made during
the year. In estimating the liability, it was assumed that the
maximum earn out amount will be payable based on current
operating projections. Further details are available at note 28.
4 Segment information
(a) Description of segments
The Group’s chief operating decision maker makes financial
decisions and allocates resources based on the information they
receive from its internal management system. Sales are attributed
The Company tests annually whether goodwill has suffered
to an operating segment based on the type of product or service
any impairment, in accordance with the accounting
provided to the customer.
policy stated in note 1(n)(i). The recoverable amounts of
cash-generating units have been determined based on
value-in-use calculations. These calculations require the
use of assumptions. Refer to note 12 for details of these
Segment information is prepared in conformity with the accounting
policies of the group as discussed in note 1 and Accounting
Standard AASB 8.
assumptions and the potential impact of changes to the
TechnologyOne’s reportable segments are:
assumptions.
• Sales and Marketing - sales of licence fees and customer support
All other assets are reviewed for indicators or object evidence
to our customers.
of impairment. If indicators or objective evidence exists, the
recoverable amount is reviewed.
(ii) Multiple Element Contracts
• Consulting - implementation, consulting services and custom
software development services for large scale, purpose built
applications.
and cloud services. The Group assesses each customer
• Corporate - the aggregation of the corporate services functions
contract individually into its components and considers if
costs and revenue, and corporately-funded projects.
Intersegment revenues/expenses are where one operating segment
has been charged for the use of another’s expertise.
Royalties are a mechanism whereby each segment pays or
receives funding for their contribution to the ongoing success of
TechnologyOne, the royalty calculation is a percentage of Revenue,
which varies (between 10% and 65%) according to the nature
of the revenue recognised in each segment. For example, Sales
& Marketing pays R&D for the development and support of the
products that they have sold, as well as Corporate for the use of
corporate services.
Our chief operating decision maker views each segments
performance based on revenue post royalties and profit before tax.
No reporting or reviews are made of segment assets, liabilities and
cash flows and as such this is not measured or reported by segment.
any components should be aggregated where they cannot
be separately determined. Revenue is assigned to each
component based upon the stand alone fair value of the
component relevant to the total contract value.
(iii) Share-based payments
The costs of equity-settled transactions are measured by
reference to the fair value of the equity instruments at
the date at which they are granted. The fair value of rights
over shares is determined using a Black-Scholes model,
further details of which are given in note 32. The accounting
estimates and assumptions relating to equity-settled share-
based payments would have no impact on the carrying
amounts of assets and liabilities with the next annual
reporting period but may impact expenses and equity.
(iv) 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.
112
2017
Revenue
External revenue
Intersegment revenue
Net royalty
Total revenue
Expenses
Sales &
Marketing
$’000
181,621
77
(118,631)
63,067
Consulting
$’000
R&D
$’000
Cloud
$’000
Corporate
$’000
Total
$’000
71,349
(208)
(7,423)
63,718
121
87
18,636
(101)
1,526
145
74,447
(1,951)
53,558
273,253
-
-
74,655
16,584
55,229
273,253
Total external expenses
52,085
58,455
49,856
14,077
40,761
215,234
10,982
5,263
24,799
2,507
14,468
58,019
R&D expenses (external) as a % of total external revenue
18%
Total assets
Total liabilities
Depreciation and amortisation
Sales &
Marketing
$’000
Consulting
$’000
R&D
$’000
Cloud
$’000
Corporate
$’000
Total
$’000
164,874
216
71,243
(280)
(107,576)
(7,653)
57,514
63,310
62
26
67,482
67,570
10,111
(41)
2,728
249,018
79
(1,051)
48,798
9,019
51,605
249,018
-
-
Total external expenses
48,938
53,561
46,009
11,255
36,015
195,778
8,576
9,749
21,561
(2,236)
15,590
53,240
R&D expenses (external) as a % of total external revenue
18%
Total assets
Total liabilities
Depreciation and amortisation
Other disclosures: Capital expenditure
Profit before tax
Income tax expense
Profit for the year
2016
Revenue
External revenue
Intersegment revenue
Net royalty
Total revenue
Expenses
Profit before tax
Income tax expense
Profit for the year
(13,525)
44,494
242,956
90,918
(4,237)
5,834
(11,896)
41,344
211,010
80,028
(3,924)
5,638
113
Transforming business, making life simpleTechnology One Limited 2017 Full Year Report 6 Expenses
(b) Numerical reconciliation of income tax expense to prima
(i) Trade receivables are non-interest bearing and are on 30 day
Profit before income tax includes the
following specific expenses:
2017
$’000
2016
$’000
facie tax payable
(c) Other segment information
(i) Segment revenue
Australia
New Zealand
International *
2017
$’000
2016
$’000
Depreciation
241,355
220,448
Plant and equipment
3,688
3,188
21,679
20,845
Amortisation
10,219
7,725
Leased office furniture and equipment
Total depreciation and amortisation
4,237
3,924
Wages and salaries
110,923
101,339
Defined contribution plan expense
9,320
8,641
Segment revenues from sales to external customers
273,253
249,018
Intangible assets
* International segments include United Kingdom, South Pacific and
Total amortisation
Malaysia.
(ii) Segment assets
Australia
New Zealand
International *
Segment assets
2017
$’000
2016
$’000
212,068
207,116
20,023
5,603
10,865
5,803
242,956
218,522
Payroll tax
Provision for employee benefits
Share-based payments
Other
* International segments include United Kingdom, South Pacific and
Malaysia.
All significant non-current assets are located in Australia.
Provision for doubtful debts
Foreign exchange gain
10
539
549
206
530
736
6,800
6,304
158
1,399
1,576
1,496
7,032
5,639
135,809
124,818
(3)
99
(202)
816
(iii) Major customers
The Company has a number of customers to which it provides
both products and services, none of which contribute greater
than 10% of external revenue.
(Gain) / Loss on sale of fixed assets
176
(12)
7 Income tax expense
(a) Income tax expense
5 Revenue
Sales revenue
2017
$’000
2016
$’000
Current tax
Software licence fees
61,693
56,165
Relating to origination and reversal of temporary
differences
2017
$’000
2016
$’000
13,958
14,124
854
(398)
Implementation and consulting services
64,335
60,026
Adjustments for current tax of prior periods
(1,287)
(1,830)
Post sales customer support
119,929
108,480
13,525
11,896
Deferred income tax (revenue) / expense included
in income tax expense comprises:
(Increase) / decrease in deferred tax assets
161
(847)
Increase / (decrease) in deferred tax liabilities
Adjustment for deferred taxes of prior periods
(215)
(800)
(854)
728
517
398
7,013
11,102
18,636
10,111
271,606
245,884
273
728
646
1,530
876
728
1,647
3,134
273,253
249,018
Project services
Cloud service fees
Total sales revenue
Other income
Rents and sub-lease rentals
Interest received - cash
Other
Total other income
Total revenue
114
2017
$’000
2016
$’000
terms. No interest is charged on trade receivables. 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
Profit from continuing operations before income
tax expense
58,019
53,240
estimated irrecoverable amounts from the sale of goods and
services, determined by reference to the circumstances of the
Tax at the Australian tax rate of 30% (2016 - 30%)
17,406
15,972
specific customer.
Adjustments for current tax of prior periods
(1,287)
(1,830)
Included in the trade receivable balance are debtors with a
Research and development tax concession
(3,368)
(3,154)
carrying amount of $14,795,838 (2016 - $9,720,605) which are
Other non-deductible items
774
908
past due at the reporting date for which the consolidated entity
has not provided as there has not been a significant change
(3,881)
(4,076)
in credit quality and the consolidated entity believes that the
Income tax expense
13,525
11,896
(c) Amounts recognised directly in equity
Aggregate current and defered tax arising in the
reporting period and not recognised in net profit
or loss or other comprehensive income but directly
debited or credited to equity:
Net deferred tax
- debited (credited) directly to equity
2017
$’000
2016
$’000
1,325
4,492
8 Current assets - Cash and cash equivalents
amounts are still considered recoverable. Subsequent to 30
September 2017, as at 31 October 2017, trade receivable balances
past due has reduced to $12,428,326. 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 45 days (2016 - 39 days).
(ii) Included in trade receivables are amounts billed but not
yet collected for post implementation customer support to
commence post 30 September at each balance date. An equal
and offsetting amount is included in unearned income. The
balance at 30 September 2017 is $20,810,000 (2016 - $14,780,000).
2017
$’000
2016
$’000
93,383
82,588
(a) Impaired trade receivables
Movements in the provision for impairment of
receivables are as follows:
2017
$’000
2016
$’000
The Company has a secured $2 million interchangeable facility
At 1 October
which is transferable between an Overdraft, Fixed Rate Commercial
Bill and Variable Rate Commercial Bill to assist with working capital
requirements.
Cash at bank earns interest at floating rates based on daily bank
deposit rates.
Provision for impairment recognised
during the year
Unused amounts reversed
At 30 September
528
281
745
248
(284)
(465)
525
528
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 are their carrying values.
9 Current assets - Trade and other receivables
Trade receivables (i) (ii)
2017
$’000
2016
$’000
52,028
41,725
Provision for impairment of receivables
(525)
(528)
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, the directors believe
that there is no further credit provision required in excess of the
allowance for doubtful debts.
10 Current assets - Other current assets
Sundry receivables
1,759
445
53,262
41,642
Deposits receivable
Income tax receivable
2017
$’000
2016
$’000
407
391
798
302
491
793
115
Rental expenses on operating leases
5,796
6,388
Cash and cash equivalents
Transforming business, making life simpleTechnology One Limited 2017 Full Year Report
11 Non-current assets - Property, plant and equipment
12 Non-current assets - Intangible assets
Year ended 30 September 2017
Opening net book amount
Additions
Disposals
Depreciation charge
Make good movement
Closing net book amount
At 30 September 2017
Cost
Accumulated depreciation
Net book amount
Year ended 30 September 2016
Opening net book amount
Additions
Disposals
Depreciation charge
Exchange differences
Make good movement
Transfer
Closing net book amount
At 30 September 2016
Cost
Accumulated depreciation
Net book amount
Office furniture
and equipment
$’000
Leased office
furniture and
equipment
$’000
Computer
software
$’000
Motor vehicles
$’000
Leased
computer
software
$’000
11,507
5,834
(367)
(3,625)
78
13,427
38,804
(25,377)
13,427
7,630
5,630
(426)
62
-
-
(10)
(3)
49
1,240
(1,191)
49
2,020
-
-
48
-
-
(38)
-
10
2,946
(2,936)
10
226
7
-
(2,961)
(206)
(184)
1
(118)
1,751
11,507
34,953
(23,446)
11,507
(1)
-
(1,751)
62
1,240
(1,178)
62
(1)
-
-
48
2,946
(2,898)
48
64
-
-
(25)
-
39
282
(243)
39
136
-
(29)
(43)
-
-
-
64
282
(218)
64
-
-
-
-
-
-
248
(248)
-
-
-
-
-
-
-
-
-
248
(248)
-
Total
$’000
11,681
5,834
(367)
(3,698)
75
13,525
43,520
(29,995)
13,525
10,012
5,637
(455)
(3,394)
(1)
(118)
-
11,681
39,669
(27,988)
11,681
116
Year ended 30 September 2017
Opening net book amount
Amortisation charge
Closing net book amount
At 30 September 2017
Cost
Accumulated amortisation
Net book amount
Year ended 30 September 2016
Opening net book amount
Additions
Amortisation charge
Closing net book amount
At 30 September 2016
Cost
Accumulation amortisation
Net book amount
Goodwill
$’000
Intellectual property/
Source code
$’000
Customer contracts
$’000
40,003
-
40,003
40,003
-
40,003
31,230
8,773
-
40,003
40,003
-
40,003
7,152
(484)
6,668
10,358
(3,690)
6,668
5,019
2,600
(467)
7,152
10,358
(3,206)
7,152
933
(55)
878
1,100
(222)
878
996
-
(63)
933
1,100
(167)
933
Total
$’000
48,088
(539)
47,549
51,461
(3,912)
47,549
37,245
11,373
(530)
48,088
51,461
(3,373)
48,088
Included in Intellectual property/ Source code is $4.2m of source
(a) Impairment tests for goodwill and indefinite life intangibles
code that has an indefinite useful life, and is tested annually for
impairment.
Goodwill is allocated to the Company’s cash generating units (CGUs)
identified according to each reportable segment for impairment
These assets have an indefinite life due to the nature of the asset
being the core architecture of software. These assets are maintained
each year and the costs of maintenance expensed as incurred.
testing purposes.
A segment-level summary of the goodwill allocation is presented
below.
2017
Goodwill
Indefinite life intangibles
2016
Goodwill
Indefinite life intangibles
Sales & Marketing
$’000
Consulting
$’000
Research &Development
$’000
13,378
1,428
14,806
13,378
1,428
14,806
12,947
1,386
14,333
12,947
1,386
14,333
13,678
1,386
15,064
13,678
1,386
15,064
Total
$’000
40,003
4,200
44,203
40,003
4,200
44,203
117
Transforming business, making life simpleTechnology One Limited 2017 Full Year Report
The recoverable amounts have been determined based on a value
13 Non-current assets - Deferred tax assets
15 Current liabilities - Provisions
The balance comprises temporary differences attributable to:
Make good provision
2017
$’000
2016
$’000
The key assumptions used for all CGUs in value in use calculations
Accrued expenses
in use calculation using cash flow projections based on financial
budgets approved by senior management covering a five year
period, as there is no active market against which to compare the
fair value of the unit.
The discount rate applied to cash flow projections is 15% pre-tax
(2016 - 15%).
for 30 September 2017 and 2016 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.
• Growth rates - based on long term historical trends for each
segment in line with industry growth rates.
• Terminal growth rates - these have been set at 3% (2016 - 3%).
A reasonable possible change in the assumptions would have no
significant impact on the impairment of these assets.
Employee benefits
Provisions - other
Intangibles
Copyright - software
Lease liability (net)
Other
Employee share trust
3,821
4,005
1,911
2,258
748
696
1,271
1,289
277
9
354
295
9
-
2,333
4,417
10,724
12,969
Other provisions
Annual leave
Onerous contracts
Long service leave
(a) Movements in provisions
Please refer to note 17 for details
16 Current liabilities - Borrowings
Set-off of deferred tax liabilities pursuant
to set-off provisions(note 19)
(5,242)
(5,457)
Secured
Lease liabilities (note 26)
Net deferred tax assets
5,482
7,512
Total secured current borrowings
Deferred tax assets expected to be
recovered within 12 months
Deferred tax assets expected to be
recovered after more than 12 months
Movements:
2,630
3,604
2,852
3,908
5,482
7,512
Opening balance at 1 October
12,970
12,044
Credited / (charged) to the
consolidated income statement
(161)
(847)
Credited / (charged) to equity
(2,085)
1,184
17 Non-current liabilities - Provisions
Long service leave
Make good provision
Onerous contracts
2017
$’000
2016
$’000
90
720
47
796
5,727
5,702
-
249
4,733
4,400
11,270
11,194
2017
$’000
2016
$’000
10
10
29
29
2017
$’000
2016
$’000
2,648
3,314
690
1,018
The non-current provisions have been discounted using a pre-tax
rate that reflects current market assessments of the time value of
money and the risks specific to the liability.
18 Non-current liabilities - Other non-current liabilities
Other non-current liabilities
2017
$’000
2016
$’000
1,423
1,625
Other non current liabilities consists of lease incentives.
The lease incentive relates to leases entered into by the Company
whereby the Company has obtained an incentive to enter into a
lease of office premises. The incentive is written back to the income
statement on a straight line basis over the life of the lease.
19 Non-current liabilities - Deferred tax liabilities
2017
$’000
2016
$’000
The balance comprises temporary differences attributable to:
Accrued receivables
(5,212)
(5,090)
Accelerated depreciation for tax purposes
-
(587)
Prepayments
Other
(30)
-
(34)
254
Total deferred tax liabilities
(5,242)
(5,457)
Set-off of deferred tax liabilities pursuant to set-off
provisions(note 13)
5,242
5,457
-
223
Net deferred tax liabilities
-
-
3,338
4,555
(a) Movements in provisions
Movements:
Movements in each class of provision during the financial year,
Opening balance at 1 October
(5,457)
(4,730)
Acquisition of subsidiary
-
588
other than employee benefits, are set out below:
Charged / (credited) to the income statement
215
(727)
Offset from deferred tax liabilities
(5,242)
(5,457)
Closing balance at 30 September
5,482
7,512
14 Current liabilities - Trade and other payables
Trade payables
2017
$’000
2016
$’000
22,543
16,583
Contingent consideration (note 28)
8,097
1,331
Sundry Creditors
Directors’ fees
7,270
6,454
343
219
38,253
24,587
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.
2017
Carrying
amount at
start of year
Additional
provisions
recognised
Charged/
(credited)
to the profit
or loss –
unwinding of
discount
Carrying
amount at end
of period
Annual
Leave
$’000
Long
service
leave
$’000
Onerous
contracts
$’000
Make
good
provision
$’000
Other
$’000
Total
$’000
Offset to deferred tax assets
Closing balance at 30 September
5,242
5,457
-
-
5,702
7,714
472
1,065
796
15,749
20 Contributed equity
(a) Share capital
(3,475)
(1,762)
(472)
(431)
(1,582)
(7,722)
2017
Shares
2016
Shares
2017
$’000
2016
$’000
Ordinary shares
Fully paid
315,442,363
313,294,930
32,152
29,984
3,500
1,429
5,727
7,381
-
-
146
1,506
6,581
780
720
14,608
118
119
Transforming business, making life simpleTechnology One Limited 2017 Full Year Report
20 Contributed equity (continued)
(b) Movements in ordinary share capital
22 Dividends
Ordinary shares
Date Details
Number of shares
$’000
1 Oct 2016 Opening balance
313,294,930
29,984
Exercise of options
2,147,433
2,168
30 Sep 2017 Closing balance
315,442,363
32,152
1 Oct 2015 Opening balance
310,634,422
28,459
Exercise of options
2,660,508
1,525
30 Sep 2016 Closing balance
313,294,930
29,984
(c) Employee Share Option Plan
Information relating to the TechnologyOne Employee Share Option
Plan, including details of options issued, exercised and lapsed
during the financial year and options outstanding at the end of the
financial year, is set out in note 32.
Final dividend for the year ended 30 September
2016 of 5.09 cents (2015 - 4.63 cents) per fully paid
share paid on December 2016 (2015 - December
2015). 100% franked (2015 - 100%) based on tax paid
at 30%
Special dividend for the year ended 30 September
2016 of 2.0 cents (2015 - 2.00 cents) per fully paid
share paid on December 2016. 100% franked (2015 -
100%) based on tax paid at 30%
Interim dividend for the year ended 30 September
2017 of 2.60 cents (2016 - 2.36 cents) per fully paid
share paid in June 2017 (2016 - June 2016) 100%
franked (2016 - 100%) based on tax paid at 30%
21 Reserves
(a) Other reserves
Share-based payments
Foreign currency translation
Dividend reserve
2017
$’000
2016
$’000
19,640
16,739
(728)
(561)
15,775
22,172
34,687
38,350
Final
(b) Nature and purpose of other reserves
(i) Share-based payments
The reserve is used to record the value of equity benefits
provided to employees, through share-based payment
transactions and associated tax benefits.
(ii) Foreign currency translation
Exchange differences arising on translation of the foreign
controlled entity are recognised in other comprehensive
income as described in note 1(c) and accumulated in a
separate reserve within equity. The cumulative amount is
reclassified to the income statement when the net investment
is disposed of.
(iii) Dividend reserve
In addition to the above dividends, since year end
the directors have recommended the payment of a
final dividend of 5.60 cents per fully paid ordinary
share, (2016 - 5.09 cents) 75% franked based on tax
paid at 30% (2016 - 30%). The aggregate amount
of proposed dividend expected to be paid out of
retained earnings, but not recognised as a liability
at year end
Special
In addition to the above dividends, since year end
the directors have recommended that payment
of a special dividend of 2.00 cents per fully paid
ordinary share (2016 - 2.00 cents) 75% franked
based on a tax paid at 30%. The aggregate amount
and the proposed dividend expected to be paid
in December 2017 out of retained earnings at 30
September 2017, but not recognised as a liability at
the end of the year
The reserve records retained earnings set aside for the
payment of future dividends.
(c) Franked dividends
2017
$’000
2016
$’000
15,947
14,390
Final
2017
$’000
2016
$’000
Ernst & Young
2017
$
2016
$
Franking account balance as at the end of the
financial year at 30% (2016: 30%)
(876)
678
Audit and other assurance services
Audit and review of financial statements
306,208
307,135
Franking credits that will arise from the payments
of income tax
3,868
4,601
Other assurance services
2,992
5,279
Compliance services1
Due diligence services
593,130
146,353
-
5,555
6,265
6,213
The above amounts represent the balance of the franking account
as at the end of the reporting period, adjusted for:
Total remuneration for audit and other assurance
services
899,338
459,043
8,158
7,355
(A) franking credits that will arise from the payment of the
amount of the provision for income tax, and
(B) franking debits that will arise from the payment of dividends
Other services
Taxation advice
134,550
31,690
Total dividends provided for or paid
30,370
27,958
(a) Dividend Policy
The Board will continue to consider paying a special dividend
in future years if cash reserves remain high, available franking
credits, growth continues as is expected and there is no compelling
alternative use for the cash reserves.
recognised as a liability at the reporting date.
Total remuneration of Ernst & Young
1,033,888
490,733
The impact on the franking account of the dividend recommended
by the Directors since the end of the reporting date, but not
recognised as a liability at the reporting date, will be a reduction
1 Compliance services relate to assurance of cloud software and
hosting provided to customers of the Group.
in the franking account of $7,705,607 (2016 - $9,519,690). Additional
25 Contingencies
franking credits to partially frank dividends at 30 September 2017
will be generated by income tax payments up to 30 September 2018.
(b) Dividends not recognised at the end of the reporting period
23 Key management personnel disclosures
2017
$’000
2016
$’000
(a) Key management personnel compensation
2017
$
2016
$
Short-term employee benefits
4,948,797
5,061,219
Post-employment benefits
70,246
71,842
The Company had contingencies at 30 September 2017
in respect of:
Guarantees
At 30 September 2017, the Company had $6,478,061 (2016 -
$6,801,304) in outstanding performance guarantees. The total
available guarantee facility is $7,000,000 (2016 - $7,000,000). The
Company also had unused foreign currency dealing limits of
$950,576 (2016 - $1,253,365).
The parent entity, Technology One Limited, continues to support its
17,664
15,947
Termination benefits
Share-based payments
-
65,500
subsidiaries in their operations, by way of financial support.
546,801
827,988
Earn Out
5,565,844 6,026,549
At 30 September 2017, the Company had $16,467,362 (2016 -
(b) Equity instrument disclosures relating to key management
personnel
Details of options provided as remuneration to KMP and shares
$17,399,462) in earn out contingencies relating to the acquisitions
during the 2016 year. This included $9,564,301 of earn out payments
and $6,903,061 of contingent considerations. The valuation
techniques and fair value of the consideration and the recording of
6,309
6,266
issued on the exercise of such, together with terms and conditions
the liability is outlined in note 28.
can be found in the remuneration report.
24 Remuneration of auditors
Brisbane City Council
During the period ended 30 September 2017, TechnologyOne
During the year, the following fees were paid or payable for services
received a claim for damages from Brisbane City Council (BCC) for
23,973
22,213
provided by the auditor of the consolidated entity:
The franked portions of the final dividends recommended after
30 September 2017 will be franked out of existing franking credits or
out of franking credits arising from the payment of income tax in
the year ended 30 September 2018.
AUD $50million. TechnologyOne has been open and transparent to
the market from the outset and has made numerous disclosures on
the ASX throughout the process. These disclosures were made on;
25 January 2017, 30 January 2017, 28 April 2017, 3 May 2017, 23
May 2017, 28 June 2017, 4 July 2017, 24 July 2017 and 28 July 2017.
To reiterate, TechnologyOne has stated previously that BCC has
wrongfully terminated the agreement and will pursue the matter
and seek legal compensation.
TechnologyOne has engaged legal counsel in relation to the matter
and made appropriate representations to its insurers, as it is
required to do for any and all matters regardless of prospects.
120
121
Transforming business, making life simpleTechnology One Limited 2017 Full Year Report
The matter is now being dealt with via the contract process.
TechnologyOne remains confident of its legal and commercial
position under the contract.
General Contingencies
Commitments in relation to finance leases are
payable as follows:
TechnologyOne is a global business and from time to time in the
Within one year
ordinary course of business it receives enquiries from various
regulators and government bodies. TechnologyOne cooperates fully
Later than one year but not later than five years
with all enquiries and these enquiries do not require disclosure in
Minimum lease payments
their initial state, however should the company become aware that
an enquiry is developing further or if any regulator or government
Future finance charges
action is taken against the group, appropriate disclosure is made in
Total lease liabilities
2017
$’000
2016
$’000
10
-
10
-
10
25
5
30
(1)
29
accordance with the relevant accounting standards.
As a global business, from time to time TechnologyOne is also
subject to various claims and litigation from third parties during
the ordinary course of its business. The directors of TechnologyOne
have given consideration to such matters which are or may be
subject to claims or litigation at year end and, unless specific
provisions have been made, are of the opinion that no material
contingent liability for such claims of litigation exists. The group had
no other material contingent assets or liabilities
26
(a)
Commitments
Operating lease commitments
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.
There is a sublease which completed in 2017. The current year
revenue is $245,181 (2016 - $1,529,512) and this has not been included
in the numbers below.
Representing lease liabilities:
Current (note 16)
27 Related party transactions
(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
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, and
• Marketing support and management fees were charged to wholly
owned controlled entities.
These transactions were undertaken on commercial terms and
conditions. No provision for doubtful debts has been raised on
amounts due to and receivable from related parties.
The ownership interest in related parties in the wholly owned group
2017
$’000
2016
$’000
is set out in note 29.
28 Business combination
The fair value of the estimate of the DMS contingent consideration
29 Controlled entities
of $3,123,158 was calculated based on the assumption that a
maximum $3,000,000 earn out tranche and $150,000 DMS NZ
tranches may be payable three calendar years after acquisition and
a discount rate of 1.54% based on relevant government bonds with
terms to maturity. The contingent consideration is classified as Level 3.
The consolidated financial statements incorporate the assets,
liabilities and results of the following subsidiaries in accordance
with the accounting policy described in note 1(b):
The fair value of the estimate of the JRA contingent consideration of
Name of entity
$8,369,970 was calculated based on the assumption that a maximum
$8,500,000 ($2,500,000 for earn out tranche, $1,000,000 for bonus
tranche and $5,000,000 for the North American tranche) may be
payable three calendar years after acquisition and a discount rate of
1.54% based on relevant government bonds with terms to maturity.
The contingent consideration is classified as Level 3.
Technology One
Corporation Sdn Bhd
Technology One New
Zealand Ltd
Technology One UK
Limited
Country of
Incorporation
Class of
shares
Equity holding
2017 %
2016 %
Malaysia
Ordinary
100
100
New Zealand
Ordinary
100
100
England
Ordinary
100
100
under the Agreement is between $nil and $2,500,000 and is based
on the earn out tranche Net Profit Before Tax (NPBT) divided by the
earn-out tranche Target NPBT of $6,300,000 multiplied by $5,000,000
less $2,500,000.
The earn-out tranche is payable 3 years after the completion of the
acquisition.
TechnologyOne has agreed to pay the selling shareholders an
additional bonus tranche based on JRA’s 3 year cumulative actual
NPBT Bonus Tranche divided by the Target NPBT of $6,300,000
Avand Pty Ltd
Australia
Ordinary
100
100
Avand (New Zealand)
Pty Ltd
Technology One
Employee Share Trust
Desktop Mapping
Systems Pty Ltd
Digital Mapping
Solutions NZ Limited
New Zealand
Ordinary
100
100
Australia
Ordinary
100
100
Australia
Ordinary
100
100
New Zealand
Ordinary
100
100
multiplied by 33% of any amount above the Bonus tranche figure to
Boldridge Pty Ltd
Australia
Ordinary
100
100
a maximum of $1,000,000. The additional bonus tranche is payable 3
years after the completion of the acquisition.
TechnologyOne has agreed to pay the selling shareholders an
additional North American tranche based on JRA’s 3 year cumulative
actual NPBT Bonus Tranche divided by the North American Target
Icon Solution Unit
Trust
Jeff Roorda &
Associates Pty Ltd
Australia
Ordinary
100
100
Australia
Ordinary
100
100
NPBT of $3,500,000, multiplied by $5,000,000 to a maximum of
The parent entity is Technology One Limited, a public company,
$5,000,000. The additional North American tranche is payable 3
limited by shares and is domiciled in Brisbane, Australia and whose
years after the completion of the acquisition.
shares are traded on the Australian Securities Exchange. All entities
Reconciliation of Level 3 contingent consideration is set out below.
operate in the software industry in their geographical locations.
10
29
The potential undiscounted earn-out tranche amount payable
Commitments for minimum lease payments in
relation to non-cancellable operating leases are
payable as follows:
There were no business combinations in the 2017 year. Contingent
consideration relating to the business combinations of ICON, DMS or
Balance at 30 September 2016
Within one year
7,144
8,175
JRA as set out in the prior year is classified as Level 3 (2017: $16.5m).
The impact on the income statement during the period represents
Later than one year but not later than five years
17,245
22,645
the unwinding of the contingent consideration. The inputs and
(Gains) / Losses recognised in income statement
Payments
(1,322)
Fortitude Valley QLD 4006
$’000
17,399
The Registered office is located at:
Level 11, TechnologyOne HQ
540 Wickham Street
390
16,467
Later than five years
64
319
valuation techniques are consistent with those in the prior year
and as such, the amounts payable under the respective acquisition
24,453
31,139
agreements have been discounted to present value.
(b) Finance lease commitments
The primary finance lease liabilities 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 a
separate available leasing facilities of $nil (2016 - $439,370 ) of which
$nil remains un-drawn at 30 September 2017 (2016 - $409,370). The
borrowings carry a rate between 1.72% and 1.94% (2016 - 1.81%) and
have an average term of 12 months.
The fair value of the estimate of the ICON contingent consideration
of $4,974,233 was calculated based on the assumption that a
maximum $5,000,000 earn out tranche may be payable three
calendar years after acquisition and a discount rate of 1.54%
based on relevant government bonds with terms to maturity. The
contingent consideration is classified as Level 3.
Current
Non Current
Total
ICON
$’000
DMS
$’000
JRA
$’000
Total
$’000
4,974
3,123
-
8,097
-
-
8,370
8,370
4,974
3,123
8,370
16,467
122
123
Transforming business, making life simpleTechnology One Limited 2017 Full Year Report
30 Reconciliation of profit after income tax to net cash
(b) Weighted average number of shares used as denominator
inflow from operating activities
Profit for the period
2017
$’000
2016
$’000
44,494
41,344
Weighted average number of ordinary
shares used as the denominator in
calculating basic earnings per share
2017
Number
2016
Number
313,865,453
311,780,703
Depreciation and amortisation
4,237
3,924
Non-cash employee benefits expense - share-based
payments
1,576
1,496
Provision for onerous contract
-
842
Adjustments for calculation of diluted
earnings per share: Options
1,637,750
3,595,835
Weighted average number of ordinary
and potential ordinary shares used as
the denominator in calculating diluted
earnings per share
315,503,203
315,376,538
Transfers to / (from) provisions:
Employee entitlements
Doubtful debts
Net (gain) / loss on sale of non-current assets
Movements in provision for:
Income tax payable
Deferred income tax
Change in operating assets and liabilities:
(319)
1,139
(3)
179
(216)
1
There are no potentially dilutive share instruments not included in
the calculation of diluted earnings per share.
There have been no transactions involving ordinary shares or
potential ordinary shares that would significantly change the
number of ordinary shares or potential ordinary shares outstanding
between the reporting date and the date of completion of these
(361)
(294)
financial statements.
3,379
1,479
32 Share-based payments
(a) Employee Option Plan
Decrease / (increase) in trade debtors
(10,461)
(3,270)
Options are granted to employees at the discretion of the Board
Decrease / (increase) in sundry debtors
(1,440)
159
based on the option plan approved by the Board.
Decrease / (increase) in prepayments
(2,470)
(3,996)
Decrease / (increase) in earned and unbilled
revenue
(5,818)
(7,656)
TechnologyOne issues options with typically between 0% and 50%
discount on the volume weighted average price for the 10 days prior
to the grant date. The discount can be reduced or removed prior to
vesting at the Board’s discretion. The option can be withheld by the
Decrease / (increase) in other assets
600
(283)
Executive Chairman for unsatisfactory performance for as long as it
Increase / (decrease) in trade creditors
Increase / (decrease) in other liabilities
Increase / (decrease) in unearned revenue
Increase / (decrease) in lease liability
5,932
286
6,900
(269)
833
816
7,512
(89)
Net cash inflow / (outflow) from operating activities
46,442
43,741
31 Earnings per share
(a) Basic earnings per share
takes for the employee to rectify the performance matter.
The options typically vest if and when the employees satisfy the
following conditions:
• The employee must be in the same or higher position at the time
of exercise;
• A successor must be in place before the last tranche of options
can be exercised; and
• Satisfactory performance on non-financial indicators as
determined by the Executive Chairman.
2017
Cents
2016
Cents
The period available between vesting date and expiry date of each
option is five years. There are no cash settlement alternatives.
Basic earnings per share (cents per share)
14.18
13.26
Diluted earnings per share (cents per share)
14.10
13.11
Each option entitles the holder to purchase one share. Fair values
of options granted as part of remuneration are based on values
determined using the Black-Scholes option pricing model.
Profit used for calculating basic and diluted
earnings per share ($’000)
44,494
41,344
Set out below are summaries of options granted under the plan:
124
Issue date
Expiry date
Exercise
price
$
Balance at start of
the period
Number
Issued during
the period
Number
Exercised
during the
period
Number
Forfeited
during the
period
Number
Balance at
the end of the
period
Number
Vested and
exercisable
at end of the
period
Number
2017
23-May-17
Oct-24
10-Mar-17
Oct-24
20-Feb-17
Oct-24
14-Feb-17
Oct-24
07-Feb-17
Oct-24
18-Oct-16
Oct-24
01-Oct-16
Oct-24
01-Jul-16
01-Jul-16
01-Jul-16
01-Jul-16
01-Jul-16
01-Jul-16
01-Jul-16
01-Jul-16
01-Jul-16
01-Jul-16
01-Jul-16
Jul-23
Jul-23
Jul-23
Jul-23
Jul-23
Jul-23
Jul-23
Jul-23
Jul-23
Jul-23
Jul-23
11-Apr-16
Oct-23
10-Oct-15
Oct-23
01-Oct-15
Jul-22
01-Oct-15
Jul-22
01-Jul-15
01-Jul-15
01-Jul-15
01-Jul-15
01-Jul-15
01-Jul-15
01-Jul-15
01-Jul-15
01-Jul-15
Jul-22
Jul-22
Jul-22
Jul-22
Jul-22
Jul-22
Jul-22
Jul-22
Jul-22
01-Oct-14
Jul-21
14-Jul-14
14-Jul-14
Jul-22
Jul-23
5.60
5.60
5.11
5.07
5.23
5.87
5.75
0.57
1.59
0.68
0.48
1.89
1.03
1.16
0.53
0.86
4.10
1.59
4.80
3.78
3.03
1.89
0.57
1.59
0.68
0.48
1.03
1.16
0.53
0.86
1.59
1.59
1.34
1.34
-
-
-
-
-
-
-
200,000
200,000
200,000
60,000
50,000
200,666
16,650
150,000
249,950
100,000
12,500
317,211
50,262
100,000
50,000
200,000
200,000
200,000
50,000
200,666
16,650
150,000
249,950
12,500
200,000
167,000
167,000
247,373
22,516
151,863
50,000
50,000
195,804
-
-
-
-
-
-
(57,614)
189,759
-
22,516
(50,621)
101,242
-
-
(195,804)
50,000
50,000
-
1,725,828
(22,650)
(221,415)
1,481,763
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
200,000
(200,000)
-
-
-
-
-
-
200,000
60,000
50,000
200,666
16,650
(50,000)
100,000
-
249,950
(100,000)
-
-
12,500
(84,590)
232,621
(50,262)
(50,000)
(50,000)
(50,000)
(200,000)
(200,000)
(200,000)
(50,000)
(200,666)
(16,650)
-
-
-
-
-
-
-
(50,000)
(50,000)
(208,300)
(12,500)
(200,000)
(167,000)
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
50,000
41,650
-
-
-
167,000
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
41,650
-
-
-
-
125
Transforming business, making life simpleTechnology One Limited 2017 Full Year Report Issue date
Expiry date
Exercise
price
$
Balance at start of
the period
Number
Issued during
the period
Number
Exercised
during the
period
Number
Forfeited
during the
period
Number
Balance at
the end of the
period
Number
Vested and
exercisable
at end of the
period
Number
Issue date
Expiry date
Exercise
price
$
Balance at start of
the period
Number
Issued during
the period
Number
Exercised
during the
period
Number
Forfeited
during the
period
Number
Balance at
the end of the
period
Number
Vested and
exercisable
at end of the
period
Number
14-Jul-14
14-Jul-14
14-Jul-14
12-Jul-14
01-Jul-14
01-Jul-14
Jul-24
Jul-25
Jul-26
Jul-21
Jul-21
Jul-21
12-Aug-13
Jul-20
01-Jul-13
Jul-22
01-May-09
Jul-22
10-Oct-08
Jul-20
25-Aug-06
Aug-24
1.34
1.34
1.34
0.40
1.03
0.86
1.03
0.86
0.36
0.41
0.35
167,000
167,000
167,000
60,000
74,000
124,950
4,000
71,717
55,000
210,000
142,500
-
-
-
-
-
-
-
-
-
-
-
-
-
-
(60,000)
(74,000)
(99,950)
(4,000)
(71,717)
-
(210,000)
-
-
-
-
-
-
-
-
-
-
-
-
167,000
167,000
167,000
-
-
-
-
-
-
-
25,000
25,000
-
-
-
-
55,000
55,000
-
-
142,500
142,500
Weighted average exercise price
$1.35
$5.68
$1.07
$4.08
$3.28
$0.48
5,014,172
2,443,384
(2,147,433)
(1,110,306)
4,199,817
264,150
Issue date
Expiry date
Exercise
price
$
Balance at start of
the period
Number
Issued during
the period
Number
Exercised
during the
period
Number
Forfeited
during the
period
Number
Balance at
the end of the
period
Number
Vested and
exercisable
at end of the
period
Number
2016
01-Oct-16
Jul-22
01-Oct-16
Jul-22
21-Sep-16
04-Aug-16
01-Jul-16
01-Jul-16
01-Jul-16
01-Jul-16
01-Jul-16
01-Jul-16
01-Jul-16
01-Jul-16
01-Jul-16
01-Jul-16
01-Jul-16
NA
NA
Jul-23
Jul-23
Jul-23
Jul-23
Jul-23
Jul-23
Jul-23
Jul-23
Jul-23
Jul-23
Jul-23
11-Apr-16
Oct-23
10-Oct-15
Oct-23
3.03
1.89
-
-
0.57
1.59
0.68
0.48
1.89
1.03
1.16
0.53
0.86
4.10
1.59
4.80
3.78
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
100,000
50,000
4,479
4,479
200,000
200,000
200,000
60,000
50,000
200,666
16,650
150,000
249,950
100,000
12,500
317,211
50,262
-
-
(4,479)
(4,479)
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
100,000
50,000
-
-
200,000
200,000
200,000
60,000
50,000
200,666
16,650
150,000
249,950
100,000
12,500
317,211
50,262
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
01-Jul-15
01-Jul-15
01-Jul-15
01-Jul-15
01-Jul-15
01-Jul-15
01-Jul-15
01-Jul-15
01-Jul-15
01-Oct-14
01-Oct-14
14-Jul-14
14-Jul-14
14-Jul-14
14-Jul-14
14-Jul-14
14-Jul-14
12-Jul-14
01-Jul-14
01-Jul-14
01-Jul-14
01-Jul-14
01-Jul-14
01-Jul-14
01-Jul-14
Jul-22
Jul-22
Jul-22
Jul-22
Jul-22
Jul-22
Jul-22
Jul-22
Jul-22
Jul-21
Jul-21
Jul-21
Jul-22
Jul-23
Jul-24
Jul-25
Jul-26
Jul-21
Jul-21
Jul-21
Jul-21
Jul-21
Jul-21
Jul-21
Jul-21
20-Dec-13
Jul-20
12-Aug-13
Jul-20
12-Jul-13
Jul-20
01-Oct-12
01-Oct-12
12-Jul-12
Jul-19
Jul-19
Jul-19
12-Jul-11
Aug-18
26-Nov-10
Jul-24
01-May-09
Jul-22
10-Oct-08
Jul-20
0.57
1.59
0.68
0.48
1.03
1.16
0.53
0.86
1.59
1.59
1.59
1.34
1.34
1.34
1.34
1.34
1.34
0.40
0.57
0.68
0.48
1.03
1.16
0.53
0.86
1.16
1.03
0.40
0.86
0.68
0.40
0.40
0.36
0.36
0.41
200,000
225,000
400,000
50,000
227,316
16,650
150,000
249,950
12,500
235,000
12,500
165,000
167,000
167,000
167,000
167,000
167,000
60,000
200,000
400,000
50,000
157,317
16,650
150,000
249,950
16,650
4,000
60,000
108,300
100,000
60,000
60,000
135,000
1,090,000
210,000
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
(12,500)
(165,000)
-
-
-
-
-
-
(200,000)
(400,000)
(50,000)
-
200,000
(25,000)
200,000
(200,000)
200,000
-
50,000
(26,650)
200,666
-
-
-
-
16,650
150,000
249,950
12,500
-
-
-
-
-
-
-
-
-
(35,000)
200,000
200,000
-
-
-
-
-
-
-
-
-
-
-
-
-
167,000
167,000
167,000
167,000
167,000
-
-
-
-
-
-
-
60,000
60,000
-
-
-
-
-
-
(66,667)
(16,650)
74,000
74,000
(16,650)
(150,000)
(125,000)
(16,650)
-
(60,000)
(36,583)
(100,000)
(60,000)
(60,000)
(135,000)
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
124,950
124,950
-
-
4,000
4,000
-
-
71,717
71,717
-
-
-
-
-
-
-
-
(975,000)
(60,000)
55,000
55,000
-
-
210,000
210,000
126
127
Transforming business, making life simpleTechnology One Limited 2017 Full Year Report Issue date
Expiry date
Exercise
price
$
Balance at start of
the period
Number
Issued during
the period
Number
25-Aug-06
Aug-24
0.35
165,000
Exercised
during the
period
Number
(22,500)
Forfeited
during the
period
Number
Balance at
the end of the
period
Number
Vested and
exercisable
at end of the
period
Number
142,500
142,500
Weighted average exercise price
$0.78
$1.91
$0.57
$0.80
$1.35
$0.79
6,071,783
1,966,197
(2,660,508)
(363,300)
5,014,172
942,167
At 30 September 2017 a total of 3,411,144 options (2016 - 3,178,068)
(b) Executive Performance Rights
33 Parent entity financial information
(b) Guarantees entered into by the parent entity
(a) Summary financial information
The individual financial statements for the parent entity show the
following aggregate amounts:
At 30 September 2017, the parent entity had $6,628,690 (2016 -
$6,801,304) in outstanding performance guarantees. The total
available guarantee facility is $7,000,000 (2016 - $7,000,000). The
parent entity also had unused foreign currency dealing limits of
Balance sheet
Current assets
Non-current assets
2017
$’000
2016
$’000
$1,051,343 (2016 - $1,253,356).
The parent entity, Technology One Limited, continues to support its
subsidiaries in their operations, by way of financial support.
146,573
138,102
63,206
61,214
(c) Contingent liabilities of the parent entity
At 30 September 2017, the Parent had $16,316,608 (2016 - $17,161,479)
were on offer to employees. The amount of options offered is in
excess of options granted as certain options while offered will only
be granted in a future period at the discretion of the Executive
Chairman.
After further market consultation, the company made the decision
Total assets
209,779
199,316
in earn out contingencies relating to the acquisitions during the
to return to issuing options instead of EPRs. The view is that the use
of options under an LTI scheme for a growth company best aligns
year. This included $9,413,547 of earn out payments and $6,903,061
of contingent considerations. The valuation techniques and fair
shareholder and executive interests. Please refer to section 3 of the
Current liabilities
52,466
55,970
value of the consideration is outlined in note 28.
The weighted average share price at the date of exercise of options
remuneration report for further information.
(c) Expenses arising from share-based payment transactions
Total expenses arising from share-based payment transactions
recognised during the year as part of employee benefit expense
were as follows:
Options issued under employee option plan:
Vested
Forfeited
2017
$’000
2016
$’000
1,993
1,591
(417)
(95)
Total share-based payment expense
1,576
1,496
exercised during the year ended 30 September 2017 was $1.07 (2016
- $0.57).
The weighted average remaining contractual life of share options
outstanding at the end of the period was 6.56 years (2016 - 6.27
years).
Fair value of options granted
The fair value of the equity-settled options is measured at the
reporting date using the Black-Scholes option pricing model taking
into account the terms and conditions upon which the instruments
were granted.
The fair value of options granted during the year was between $0.68
- $1.27 (2016 – between $0.60 - $1.68). The model inputs for options
granted during the year ended 30 September 2017 included:
(I) Dividend yield between 1.6% and 1.9% (2016 - between 1.7% -
2.3%)
(II) Expected volatility between 20.2% and 33.6% (2016 – between
11.3% - 20.2%)
(III) Risk free interest rate between 1.5% and 2.0% (2016 –between
1.7% - 2.4%)
(IV) Expected life of option 3.3 years (2016 - 6 years)
(V) Option exercise price between $5.07 and $5.75
(VI) Weighted average share price at grant date between $5.07
and $5.75 (2016 – between $3.89 - $5.13)
The expected volatility reflects the assumption that the historical
volatility of a basket of similar companies over a period similar to
the life of the options is indicative of future trends, which may also
not necessarily be the actual outcome.
Non-current liabilities
Total liabilities
Shareholders' equity
Contributed equity
Dividend reserve
Share option reserve
Retained earnings
6,384
18,732
Please refer to note 25 in regards to the BCC contingent liability.
58,850
74,702
34 Events occurring after the reporting period
32,152
29,983
15,775
22,170
19,668
16,739
83,334
55,722
150,929
124,614
(a) Dividends
On 21 November, the directors of Technology One Limited declared
a final dividend on ordinary shares in respect of the 2017 financial
year. The total amount of the dividend is $17,664,000 and is 75%
franked. There was also a special dividend declared for the 2017
financial year of $6,309,000 and this is also 75% franked.
No other matter or circumstance has occurred subsequent to period
end that has significantly affected, or may significantly affect, the
operations of the Company, the results of those operations or the
state of affairs of the Company or economic entity in subsequent
financial years.
Profit or loss before tax for the year
55,525
50,613
Total comprehensive income
54,798
50,268
The reserves balance is higher than Group due to the foreign
currency translation reserve losses of $167,000 (2016 - loss of
$345,000).
128
129
Transforming business, making life simpleTechnology One Limited 2017 Full Year Report
Ernst & Young
111 Eagle Street
Brisbane QLD 4000 Australia
GPO Box 7878 Brisbane QLD 4001
Tel: + 61 7 3011 3333
Fax: +61 7 3011 3100
ey.com/au
Directors’ declaration
In accordance with a resolution of the directors of Technology One Limited, I state that:
In the opinion of the directors:
(a) the financial statements and notes set out on pages 60 to 107 are in accordance with the Corporations Act 2001, including:
(i) giving a true and fair view of the consolidated entity’s financial position as at 30 September 2017 and of its performance for the
year ended on that date; and
(ii) complying with Australian Accounting Standards (including the Australian Accounting Interpretations) and the Corporations
Regulations 2001;
(b) the financial statements and notes also comply with International Financial Reporting Standards as disclosed in note 1(a); and
(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) 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 reporting year ended 30 September 2017.
On behalf of the Board of Directors
Adrian Di Marco
Director
Brisbane
21 November 2017
130
131
A member firm of Ernst & Young Global Limited
Liability limited by a scheme approved under Professional Standards Legislation
Transforming business, making life simpleTechnology One Limited 2017 Full Year Report Ernst & Young
111 Eagle Street
Brisbane QLD 4000 Australia
GPO Box 7878 Brisbane QLD 4001
Tel: + 61 7 3011 3333
Fax: +61 7 3011 3100
ey.com/au
Ernst & Young
111 Eagle Street
Brisbane QLD 4000 Australia
GPO Box 7878 Brisbane QLD 4001
Tel: + 61 7 3011 3333
Fax: +61 7 3011 3100
ey.com/au
A member firm of Ernst & Young Global Limited
Liability limited by a scheme approved under Professional Standards Legislation
A member firm of Ernst & Young Global Limited
Liability limited by a scheme approved under Professional Standards Legislation
132
133
Transforming business, making life simpleTechnology One Limited 2017 Full Year Report Ernst & Young
111 Eagle Street
Brisbane QLD 4000 Australia
GPO Box 7878 Brisbane QLD 4001
Tel: + 61 7 3011 3333
Fax: +61 7 3011 3100
ey.com/au
Ernst & Young
111 Eagle Street
Brisbane QLD 4000 Australia
GPO Box 7878 Brisbane QLD 4001
Tel: + 61 7 3011 3333
Fax: +61 7 3011 3100
ey.com/au
A member firm of Ernst & Young Global Limited
Liability limited by a scheme approved under Professional Standards Legislation
A member firm of Ernst & Young Global Limited
Liability limited by a scheme approved under Professional Standards Legislation
134
135
Transforming business, making life simpleTechnology One Limited 2017 Full Year Report Ernst & Young
Ernst & Young
111 Eagle Street
111 Eagle Street
Brisbane QLD 4000 Australia
Brisbane QLD 4000 Australia
GPO Box 7878 Brisbane QLD 4001
GPO Box 7878 Brisbane QLD 4001
Tel: + 61 7 3011 3333
Tel: + 61 7 3011 3333
Fax: +61 7 3011 3100
Fax: +61 7 3011 3100
ey.com/au
ey.com/au
Ernst & Young
111 Eagle Street
Brisbane QLD 4000 Australia
GPO Box 7878 Brisbane QLD 4001
Tel: + 61 7 3011 3333
Fax: +61 7 3011 3100
ey.com/au
A member firm of Ernst & Young Global Limited
A member firm of Ernst & Young Global Limited
Liability limited by a scheme approved under Professional Standards Legislation
Liability limited by a scheme approved under Professional Standards Legislation
A member firm of Ernst & Young Global Limited
Liability limited by a scheme approved under Professional Standards Legislation
136
137
Transforming business, making life simpleTechnology One Limited 2017 Full Year Report SHAREHOLDER
INFORMATION
138 Technology One Limited 2017 Full Year Report
Transforming business making life simple
139
Corporate directory
Board of Directors
Branch Offices
Lawyer
Adrian Di Marco
Ron McLean
John Mactaggart
Kevin Blinco
Richard Anstey
Jane Andrews
Company Secretary
Stephen Kennedy
Australian Business Number
84 010 487 180
Registered Office
Technology One Limited
Level 11, TechnologyOne HQ
540 Wickham Street
Fortitude Valley QLD 4006
Brisbane
Sydney
Melbourne
Canberra
Adelaide
Perth
Hobart
Auckland
Wellington
Kuala Lumpur
Maidenhead
Glasgow
Port Moresby
Auditor
Ernst & Young
Australia
Level 51, 111 Eagle Street
www.TechnologyOneCorp.com
Brisbane QLD 4000
P. 1800 671 978
www.ey.com/au
International: +617 3167 7300
McCullough Robertson
Level 11, 66 Eagle Street
Brisbane QLD 4000
www.mccullough.com.au
Share Registry
Link Market Services Limited
Locked Bag A14
Sydney NSW 1235
Phone: 02 8280 7454
Fax: 02 9287 0303
www.linkmarketservices.com.au
Stock Exchange Listing
Australian Securities Exchange
(ASX: TNE)
Shareholder information
Substantial shareholders as at 4 December 2017
Shareholder Name
JL Mactaggart Holdings Pty Ltd
Hyperion Asset Management Limited
Masterbah Pty Ltd
FSS Trustee Corporation
Distribution of shareholdings as at 4 December 2017
Size of Holding
100,001 and Over
10,001 to 100,000
5,001 to 10,000
1,001 to 5,000
1 to 1,000
Total
Unmarketable Parcels
Voting rights
Number of Issued
Shares Held
Percentage of
Issued Shares
Held
42,902,500
40,942,844
13.69%
13.07%
31,372,500
10.01%
15,835.969
5.02%
Ordinary Shareholders
73
1,130
1,153
2,773
1,851
6,980
111
All ordinary shares issued by Technology One Limited carry one vote per share without restriction.
Twenty largest shareholders as at 4 December 2017
Name
HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED
J P MORGAN NOMINEES AUSTRALIA LIMITED
30 Nov 2017
%IC
88,267,682
32.51
28,779,208
10.60
CITICORP NOMINEES PTY LIMITED
JL MACTAGGART HOLDINGS PTY LTD
BNP PARIBAS NOMINEES PTY LTD
MASTERBAH PTY LTD
NATIONAL NOMINEES LIMITED
BNP PARIBAS NOMS PTY LTD
J L MACTAGGART HOLDINGS PTY LTD
ARGO INVESTMENTS LIMITED
UBS NOMINEES PTY LTD
CITICORP NOMINEES PTY LIMITED
MR NICHOLAS BARRY DEBENHAM
HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED - A/C 2
WARBONT NOMINEES PTY LTD
CS FOURTH NOMINEES PTY LIMITED
MRS JUDITH BARBARA MACTAGGART
ECAPITAL NOMINEES PTY LIMITED
CLAHSEN ENTERPRISES PTY LTD
POWERWRAP LIMITED
18,868,493
13,872,500
10,148,909
9,372,500
9,006,964
7,001,195
7,000,000
5,964,564
4,342,164
3,487,788
1,392,465
1,149,405
885,729
769,682
655,000
557,537
480,000
463,230
6.95
5.11
3.74
3.45
3.32
2.58
2.58
2.20
1.60
1.28
0.51
0.42
0.33
0.28
0.24
0.21
0.18
0.17
140
141
Transforming business, making life simpleTechnology One Limited 2017 Full Year Report Financial calendar
The following calendar shows the planned dates for significant shareholder events for the 2018 year. These dates are subject to change and
declaration of dividends, which should be checked before taking any action by referring to the company’s website: TechnologyOneCorp.com,
under the heading Shareholders.
2018 (Year Ending 30 September 2018)
Announcement of half year results for 2018
Media interviews
Presentations to institutions – Brisbane (tentative)
Presentations to institutions – Sydney (tentative)
Presentations to institutions – Melbourne (tentative)
Record date for interim dividend
Distribute 2018 Half Year Results Report
Payment date for interim dividend
Announcement of Full Year Results for 2018
Media interviews
Presentations to institutions – Sydney (tentative)
Presentations to institutions – Melbourne
Record date for 2018 dividend
Payment date for 2018 final dividend
Distribute 2019 Annual Report
Annual General Meeting (tentative)
22 May 2018
22 May 2018
22 – 23 May 2018
30 May 2018
1 June 2018
15 June 2018
15 June 2018
20 November 2018
20 November 2018
20 - 21 November 2018
28 November 2018
30 November 2018
14 December 2018
21 January 2019
TBC
The Record Date is 5.00pm on the date TechnologyOne closes its share register to determine which shareholders are entitled to receive the
current dividend. It is the date where all changes to registration details must be finalised. The Record Date must be at least seven business
days after the announcement of the results (and record date being published).
The ex-dividend date occurs one business day before TechnologyOne’s Record Date. To be entitled to a dividend a shareholder must have
purchased the shares before the ex-dividend date. If you purchase shares on or after that date, the previous owner of the shares (and not
you) is entitled to the dividend.
The Payment Date is the date on which TechnologyOne’s dividend is paid to shareholders. The payment date is to be 10 business days after
the Record Date.
142
143
Transforming business, making life simpleTechnology One Limited 2017 Full Year Report TechnologyOne (ASX:TNE) is Australia’s largest enterprise software company and one of Australia’s
top 200 ASX-listed companies, with offices across six countries. We create solutions that transform
business and make life simple for our customers. We do this by providing powerful, deeply
integrated enterprise software that is incredibly easy to use. Over 1,200 leading corporations,
government departments and statutory authorities are powered by our software.
We participate in only eight key markets: government, local government, financial services,
education, health and community services, asset intensive, project intensive and corporate. For
these markets we develop, market, sell, implement, support and run our preconfigured solutions,
which reduce time, cost and risk for our customers.
For 30 years, we have been providing our customers enterprise software that evolves and adapts
to new and emerging technologies, allowing them to focus on their business and not technology.
Today, our software is available on the TechnologyOne Cloud and across smart mobile devices.
TechnologyOneCorp.com
Australia | New Zealand | South Pacific | Asia | United Kingdom
Freecall 1800 671 978 (within Australia) | +617 3167 7300 (outside Australia)