One Annual Report 2019 | Quarterlytics

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2019
Annual Report

2019
Full year
results

up 23%

up 16%

up 8%

up 7%

$35.8M

$41.3M

$44.5M

$47.7M

$58.5M

FY15

FY16

FY17

FY18
Comparable*

FY19

Net Profit After Tax

up 44%
$31.3m

up 39%
$19.7m

up 107%
$26.2m

up 72%
$10.2m

$14.3m

$24.5m

$50.7m

$70.4m

$101.7m

FY15

FY16

FY17

FY18

FY19

SaaS Annual Recurring Revenue

up 16%

up 13%

up 21%

up 17%

$108.8M

$126.9M

$153.8M

$173.9M

$202.4M

FY15

FY16

FY17

FY18

FY19

Total Annual Recurring Revenue

*Refer to page 8 for definition of Comparable.

What’s
inside

At a glance

Financial highlights

Letter to shareholders

Global SaaS
ERP solution

Our strategy

Our growth

Our operations

Our people

TechnologyOne Foundation

Financial Statements

Directors’ report

Corporate governance
statement

Financial statements

Directors’ declaration

Auditor’s independence
declaration

Auditor’s report

Shareholder information

Corporate directory

Corporate calendar

103

131

132

133

139

140

141

Transforming business, making life simple

Enterprise software,

incredibly simple.

$60m Dividend Growth8UP

R&D Investment

SaaS ARR44UP

Years of Record Profits10

13UP

Revenue

50UP

Profit Before Tax
(on Comparable basis)

At a
glance

2019 TechnologyOne Annual ReportTransforming business, making life simpleOur
finances

of record profit 10

Consecutive years

8UP

Dividend
growth

Net assets38UP

SaaS ARR44UP

50UP

Net Profit
Before Tax growth
(on 2018 Comparable)

Profitable since

1992

Margin27 %

PBT

11UP

R&D
spend

ARR16UP

Total

$105m

Cash
and cash
equivalents

55 %

Return on
Equity

Our vision
As the only company offering a true
global Software as a Service (SaaS) ERP
solution across the entire enterprise, we
are transforming business and
making life simple.

Our difference
We are the only vendor that develops,
sells, implements, supports and runs a fully
integrated suite of enterprise software
solutions. Our global SaaS ERP solutions
span the entire enterprise and allow our

customers to embrace the digital revolution
and an exciting new world of possibilities in
a cloud-first, mobile-first world.

Our reach
TechnologyOne has 14 offices throughout
Australia, New Zealand, Asia and the
United Kingdom.

Our culture
Our international team is made up of
more than 1,200 passionate individuals.
We believe in investing in our people, and
we do this with a wide range of initiatives
such as O-Week, R&D Showcases and
leadership courses.

To foster a customer-oriented culture,
we developed the Compelling Customer
Experience program. The program supports
and encourages our team members so
that they can deliver outstanding customer
service every day.

Our market-leading
solutions and products

As the leading supplier of enterprise
software solutions for more than 1,200
large-scale companies, and with more than
30 years’ success in the business, we have
developed a deep understanding of our
key markets.

We offer our customers a range of
industry-leading preconfigured enterprise
solutions. Our solutions are effective and
our implementations are streamlined, which
reduces time, cost and risk for customers.
We also offer a comprehensive suite of
enterprise software products.

Our markets

• Local Government

• Education

• Federal Government

Our products

• Financials

• Human Resource & Payroll

• Supply Chain Management

• Health and Community Services

• Property & Rating

• Asset and Project Intensive Industries

• Business Intelligence

• Corporates and Financial Services

• Enterprise Budgeting

• Performance Planning

• Student Management

• Enterprise Asset Management

• Enterprise Content Management

• Enterprise Cash Receipting

• Stakeholder Management

• Spatial

• Business Process Management

Our preconfigured solutions

• OneCouncil

• OneEducation

• OneGovernment

• OneCare

• OneProject

• OneAsset

• OneHealth

• OneBanking

• OneCorporate

Our Research and Development

We continue to focus our Research and

Our Australian-owned commercial R&D

Development (R&D) efforts on new and

centre is the largest of its kind, with

emerging technologies, including cloud-

offshoot facilities in Indonesia and Vietnam.

based technologies, artificial intelligence,

machine learning and other innovations.

4 2019 TechnologyOne Annual Report

Transforming business, making life simple

2019 TechnologyOne Annual ReportTransforming business, making life simple02

Financial
highlights

2019 TechnologyOne Annual ReportTransforming business, making life simpleGrowth
on last
year
Comparable

2019

15 year
compound
growth

2018

Comparable** 2017

2016

2015

2014

2013

2012

2011

2010

Reported

286,164

13%

12%

254,491

273,253

249,018

218,724

195,124

180,591

169,070

156,742

135,906

One vision.
One vendor.
One code-line.
One experience.

Total
Revenue

Annual
Recurring
Revenue
(ARR)1

202,480

16%

173,912

153,896

126,996

108,853

SaaS ARR1

101,677

44%

70,372

50,701

24,489

14,265

R&D
Investment*

Net Profit
Before Tax

Net Profit
After Tax

Earnings
Per Share
(cents)

Total
Dividends
(cents per
share)

Dividend
Payout Ratio

Return on
Equity

Cash & Cash
Equivalents

60,124

11%

13%

54,042

49,856

46,009

41,038

37,873

35,595

33,524

31,796

26,963

76,389

50%

12%

50,807

58,019

53,240

46,494

40,235

35,097

30,324

26,675

23,282

58,459

23%

13%

47,681

44,494

41,344

35,785

30,967

26,984

23,559

20,326

17,813

18.43

22%

12%

15.10

14.18

13.26

11.57

10.06

8.78

7.73

6.71

5.93

11.93

10%

11.02

10.20

9.45

8.78

8.16

5.60

5.09

6.12

5.70

65%

55%

73%

72%

76%

81%

64%

66%

91%

96%

46%

28%

31%

30%

31%

32%

30%

28%

105,046

10%

104,322

93,383

82,588

75,536

80,209

65,397

51,133

45,357

36,573

Net Assets

106,857

103,480

157,520

138,494

117,940

104,499

87,736

73,997

68,370

63,415

*Before capitalistion.

**2018 Comparable applies AASB15. It also assumes non-IFRS pro forma capitalisation of R&D costs (50%) for the FY18 year and is unaudited. As a SaaS company, R&D costs are capitalised from FY19 onwards, which is the common

practice by our SaaS peers. We measure our performance using the comparable method because it is a better reflection of the performance of our business, setting a higher bar for the prior comparable period (FY18) than the statutory

reporting. It allows for a ‘like for like’ comparison of the performance of the business, assuming R&D costs (50%) were capitalised in FY18. This is the basis used for all comparable reporting throughout this document.

1ARR is not an IFRS measure and is unaudited, it represents future contracted annual revenue at year end

Transforming business, making life simple

2019 TechnologyOne Annual Report03 Letter to

shareholders

2019 TechnologyOne Annual ReportTransforming business, making life simpleLetter to
shareholders

On behalf of Technology One
Limited (TechnologyOne) we
are pleased to announce our
10th consecutive year of record
profits and record Annual
Recurring Revenue (ARR)1.

Our global SaaS ERP solution is transforming our customers’
business and making life simple for them. This is resonating strongly
with the market, driving our continuing strong results.

This has been a challenging year, as we transition our business to
both a new accounting standard (AASB15)2 and to SaaS accounting.
We have now successfully achieved this without impacting our
profit growth. Our Profit Before Tax of $76.4m was at the top end of
guidance previously provided.

Our Profit Before Tax was up 208% on the prior year statutory profit
restated for AASB15, and up 50% on the prior year comparable
profit (refer below), underpinned by the continuing fast growth of
the TechnologyOne SaaS ERP solution.

The successful transition to SaaS accounting now positions us well
to continue our strong growth for many years to come. Key to our
ongoing success is the high quality, annual recurring SaaS revenue,
which is growing by 40+% per annum. This growth is all organic and
includes no acquisitions.

TechnologyOne is today a very successful SaaS company, with
435 major enterprise customers including Universities, Local
Government, Government departments, Hospitals, and other large
corporations using our global SaaS ERP solution to transform their
business and make their life simple.

We are on track for Total Annual Recurring Revenue to increase to
$500+m in FY24.

Given the momentum in our SaaS business, the outlook for the new
financial year will see continuing strong growth.

1ARR is not an IFRS measure and is unaudited, it represents future contracted annual revenue at year end

2AASB15 Revenue from contracts with customers

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.

12 2019 TechnologyOne Annual Report

Transforming business, making life simpleResults Summary
Key results on AASB15 statutory
basis1 were as follows:
• Profit Before Tax of $76.4m, up 208%

Key results on Comparable basis4
were as follows:
• Profit Before Tax of $76.4m, up 50% on comparable basis4

• SaaS Annual Recurring Revenuei of $102m, up 44%

• SaaS Annual Recurring Revenue i of $102m, up 44%

• Revenue of $286m2, up 13%

• Expenses of $210m, down 9%

• Revenue of $286m2, up 13%

• Expenses of $210m, up 3%

• Cashflow Generation3 of $45m, down 14%

• Cash and Cash Equivalents of $105m, up 1%

• Total Dividend of 11.93cps, up 8%

• R&D investment of $60m before capitalisation, up 11%, which is

21% of revenue

The profit before tax of $76.4m was up 15% on the prior year reported result before the introduction of AASB15 of $66.5m.

1 AASB15 statutory basis restates FY18 results applying the AASB15 standard.
R&D costs were not capitalised in FY18. As a SaaS company, R&D costs are capitalised from FY19 onwards, which is the common practice of our SaaS peers. AASB15
statutory basis sets a lower bar for the prior comparable period (FY18) and as such is not how we measure the performance of the business. Please refer to the table
above called ‘Key results on a Comparable basis’ which sets a higher bar for the prior comparable period (FY18) to measure the performance of our business.
2 Includes other income of $1.4m.
3 Cashflow Generation is Cashflow from operating activities less capitalised development costs. This is a non-IFRS financial measure.
4 Comparable method restates FY18 results applying AASB15. It also assumes non-IFRS proforma capitalisation of R&D costs (50%, $26m) for the FY18 year and is
unaudited. As a SaaS company, R&D costs are capitalised from FY19 onwards, which is the common practice of our SaaS peers. We measure our performance using
the comparable method because it is a better reflection of the performance of our business, setting a higher bar for the prior comparable period (FY18) than the
AASB15 statutory reporting. It allows for a ‘like for like’ comparison of the performance of the business, assuming R&D costs were capitalised in FY18. The AASB15
Statutory Profit for FY18 is $24.8m versus the Comparable Profit for FY18 of $50.8m

Dividend up 8%

up
52%

1.50

up 7%

1.50

down
17%

up
10%

up 8%

2.00

up 8%

2.00

up 8%

2.00

up 8%

2.00

up
46%

2.00

12%

Compound
growth

Up 8% 8.78 CPS

3.75

4.20

4.62

5.09

5.60

6.16

6.78

7.45

8.20

9.02

11.93

FY09

FY10

FY11

FY12

FY13

FY14

FY15

FY16

FY17

FY18

FY19

Dividend

Special Dividend

In light of our strong results and our confidence in the coming year,
the dividend for the second half has been increased to 8.78 cents
per share, up 43% on the prior year. The previous years’ special
dividend of 2.00 cents per share has now been included in the Final

Dividend. This takes the total dividend for the year to 11.93 cents
per share, an increase of 8% on the prior year. This represents a
payout ratio of 65% for the full year.

TechnologyOne SaaS ARRi grows 44%

TechnologyOne’s global SaaS ERP solution continues to grow
strongly with Annual Recurring Revenue (ARR) now $102m, up 44%.
This growth was all organic growth and included no acquisitions.
We added 88 enterprise customers this year to our global SaaS
platform, taking the total number of enterprise customers to 435.

Our Total Annual Recurring Revenuei has now hit $202m, and is set
to exceed $500m in FY24.

This year we continued to acquire new large enterprise customers
from our competitors. 18 organisations replaced competitors’
systems, from Oracle, SAP, Microsoft and Infor with our enterprise
solution.

TechnologyOne continued to dominate in the Local Government
sector, where we closed 14 new major deals totalling $63 million
in total contract value. We have more than 300 council customers
and are continuing to grow fast. In Education, we acquired five new
SaaS customers totalling $50m in total contract value, cementing
our position as the dominant SaaS provider to the APAC education
sector.

Our global SaaS ERP solution is driving our business growth.
We expect this strong growth to continue in the years to come.

TechnologyOne is a very successful SaaS company. We have
created a mass production platform to deliver our enterprise
software to hundreds of thousands of customers, providing huge
economies of scale which up until now was not possible. We have
created one single global code line, that delivers our enterprise
functionality to 435 customers 24/7. Our SaaS customers are always
on the latest release, with two releases every year at no additional
cost, providing new technologies, new features, new functionality
and new capabilities, with the latest ‘defence in depth’ security
protocols. It is a compelling value proposition for our customers.
Today, we have the market leading enterprise SaaS solution.

In the SaaS world we have seen the proliferation of ‘best of breed’
products. We are confident, just as we have seen in the past for
‘on-premise customers’, that we will see a move from ‘best of breed’
products to enterprise software solutions in the cloud given the
significant benefits it will provide: one vendor, one user interface,
one common technology architecture, and integration across all
products ‘out of the box’. As TechnologyOne is one of only a few
enterprise SaaS vendors globally, this positions us for continuing
strong growth.

up 44%
$31.3m

up 39%
$19.7m

Organic growth

$101.7m SaaS

ARRi

up 107%
$26.2m

up 72%
$10.2m

$14.3m

$24.5m

$50.7m

$70.4m

$101.7m

FY15

FY16

FY17

FY18

FY19

Deepest functionality for the markets we serve

Our focus on specific industries once again underpinned our
success. We continue to be very strong in Local Government,
Higher Education, Health & Community Services and Federal
Government. We see opportunities for substantial growth in the
coming years in State Government, Asset & Project Intensive
industries and Financial Services. We see that we have substantial
room to continue to grow in our chosen markets.

We continue to invest heavily in our global SaaS ERP solution, to
build in-depth market leading functionality for these markets. Our
goal is to provide as standard, the deepest possible functionality
out of the box for each of our target markets.

2019 TechnologyOne Annual ReportTransforming business, making life simple
We continue to double in
size every four to five years

We have seen continued strong growth in
profit over the last year, with reported Profit
After Tax up 15%. We are on track to double
the size of our business once again in the
next four to five years.

Note: This table shows previously reported NPAT
and has not been restated for AASB15.

APAC profit before tax
grows by 40% and UK loss
improves by 64%

The APAC region performed strongly with
profit before tax up 40%, underpinned by
strong SaaS ARRi growth and the significant
turnaround in our Consulting business. The
UK has improved considerably with losses
decreasing from $5.2 million to $1.9 million,
the UK is discussed in greater detail below.
We continued to remain excited about the
significant opportunities in the UK.

Total Expenses Up 3%,
margins improve to 27%

Total Expenses were once again carefully
managed, up 3%, below our revenue
growth of 13%. This has led to an
improvement in Profit Before Tax margin
to 27%, compared to 20% pcp. We see
margins continuing to improve to 35%+ in
the coming years.

Reported Profit After Tax up 15%

Consulting Services profit growth of 64%

14% Compound

growth

Up 15% $58.9m

$23.6m

$27m

$31m

$36m

$41m

$44.5m $51m

$59m

FY12

FY13

FY14

FY15

FY16

FY17

FY18

FY19

Net Profit After Tax

Regional
growth

Up 40% $22.3m
Up 64% $3.3m
UK

APAC

UK
Loss of $1.9m

FY18

FY19

$5.2m

$1.9m

$56m

$78.3m

FY18

FY19

APAC
Profit of $78.3m

Margin

20%

27%

FY18
Comparable

FY19

Total Consulting Group profit of $9.9 million, up 64% pcp.

We see upside in future years for our Consulting business as
it improves its profit margin from the current 16% to a target
of approximately 20%. In the APAC Consulting business, the

turnaround has occurred, delivering $11.5 million profit
(up 17% pcp); and the turnaround in the UK is underway in FY19.
The UK delivered a loss of $1.6 million, an improvement of $2.2
million (up 58% pcp).

Turnaround has
occurred in APAC

Turnaround is
underway in the UK

up 64%
$3.9m

up 17%
$1.7m

$6.0m

$9.9m

$9.8m

$11.5m

up 58%
$2.2m

($1.6m)

($3.8m)

Company

APAC

FY18

FY19

Research & Development (R&D)

R&D continues to be a significant investment for TechnologyOne at
$60 million for the year, up 11% and representing 21% of revenue, which
exceeds the average of our competitors of approximately 12%. R&D
expenditure growth will return to 8% going forward.

Our R&D focused on extending the functionality and capabilities of our
global SaaS ERP solution. We also invested in AI, Machine Learning

and our new Digital Experience Platform (DXP). We expect significant
revenue streams to emerge from these investments in future years.

Our R&D program in the coming years will continue to be at the
leading edge of our industry as we embrace new technologies, new
concepts and new paradigms.

20%

19%

21%

20%

21%

up 17%

up 5%

up 6%

up 8%

up 11%

$60.1m

up 12%

up 8%

$32.1m

$27.2m $31.8m

$33.5m $35.6m

$37.9m $41.0m $46.0m $49.9m $54m $28.0m

FY10

FY11

FY12

FY13

FY14

FY15

FY16

FY17

FY18

FY19

Expensed R&D

Capitalised Development

R&D Expenditure % of Total Revenue

2019 TechnologyOne Annual ReportTransforming business, making life simpleTechnologyOne Global
SaaS ERP solution
One global code line delivering
massive economies of scale

The TechnologyOne global SaaS ERP solution delivers the
TechnologyOne enterprise suite as a service through the
cloud to our customers. TechnologyOne takes complete
responsibility for providing the processing power, software
and services, including backup, recovery, upgrade and support
services for our SaaS customers.

TechnologyOne is one of only a few companies globally
delivering true enterprise Software as a Service (SaaS). We offer
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, one global code line, which provides massive
economies of scale to our customers.

TechnologyOne makes 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 SaaS Platform
specifically to do this, and we can achieve enormous economies of
scale. The TechnologyOne SaaS Platform delivers a level of service,
security, reliability, scalability and future proofing that would not be
otherwise possible.

As part of our SaaS offering we make new releases of our software,
with new features, functionality and concepts, available to our
customers who 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.

TechnologyOne SaaS 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 continued to build on our mass production SaaS ERP
solution with the release of TechnologyOne SaaS 2019B, which
delivers further economies of scale and enhanced security. We are
now working on the next generation of our SaaS solution, 2020A.
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 SaaS solution for
our customers.

We are excited by the opportunities the TechnologyOne SaaS ERP
solution offers not only to our customers, but to us as well. It will
allow us to streamline our operations, reduce our costs and 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.

Any device,
Anywhere, Any time
Our global SaaS ERP solution allows

organisations to embrace smart mobile

devices including iPad, iPhone and

Android devices, as part of our enterprise

solution. We are the only major enterprise

software vendor committed to delivering

our entire enterprise SaaS solution and

all our 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 and

so our software has been designed to

be incredibly simple to use and to adapt

to the device, allowing customers to

continue their work seamlessly.

This 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. This will enable

our customers to embrace the digital

revolution.

DXP (Digital
Experience Platform)
TechnologyOne has released to early

adopters the next stage of our Digital

Experience Platform (DXP). This will

enable our customers to simply and easily

embrace the digital revolution that is now

gaining momentum. It will digitally enable

each and every stakeholder throughout

their organisation - be it an employee,

customer, supplier, student or rate payer

- substantially streamlining their business

and improving their experience. Artificial

Intelligence (AI) and Machine Learning (ML)

is an integral part of our DXP.

18 2019 TechnologyOne Annual Report

Transforming business, making life simple

Long-term outlook
We continue to be very excited about the significant

growth opportunities over the next 10 years.

TechnologyOne’s global SaaS ERP solution will continue

to grow very fast in the coming years. It is providing

enormous economies of scale and will continue to

drive our growth and our profit margins which will in the

coming years exceed 35%.

We see it is inevitable that organisations will move

from ‘best of breed’ SaaS solutions to enterprise SaaS

solutions because of the significant benefits it will

provide: one vendor, one user interface, one common

technology architecture, and integration across all

products ‘out of the box’. We also see our existing ‘on

premise customers’ continuing to move to our global

SaaS ERP solution.

We see Total Annual Recurring Revenue increasing to

$500+m in FY24.

We see continuing strong growth in our six key vertical

markets in Australia and New Zealand. These markets

remain strong and resilient.

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 the
Higher Education and Local Government sectors. Important to
the success of this strategy was the introduction of our Human
Resources & Payroll (HRP) and Student Management products to
this market. The regionalisation of these products for the UK market
is nearing completion, and we will work with early adopters in the
UK to establish these products.

Corporate governance
Given TechnologyOne is such a significant R&D and innovation-led
business, coupled with our long track record of profitable growth,
we have taken a cautious and measured approach to the renewal
of our Board, to ensure a smooth transition. I am happy to report
we have made good progress again this year with two new and
highly experienced independent directors Ms Sharon Doyle and
Mr Cliff Rosenberg. We plan to add another independent director
in the next 12 months which will see our Board have four new
independent directors.

As we bring more products into the UK market, this increases our
product offering, and also allows us to move into the less crowded
‘blue ocean’ space, as we will be one of only a few enterprise
vendors in the UK market.

As previously foreshadowed, the challenge for us has been to
build a successful and profitable consulting practice in the UK.
This was not an insignificant undertaking.

We expect to deliver significant growth in the UK in the
coming years.

Balance sheet strength
TechnologyOne continues to have a strong balance sheet with net
assets of $106.9 million up 38% and cash and cash equivalents of
$105 million. Our debt/equity ratio remains conservative at less
than 1%.

Cashflow Generation was once again strong at $44.7 million for the
full year, versus a Net Profit After Tax of $58.5 million. A further $12
million was collected post year end above our standard October
collections. Cashflow Generation will grow inline with Net Profit
After Tax in FY20.

Up 38%

$29.4m

$77.5m

$106.9m

FY18

FY19

Net Assets

Executive remuneration
This year we made further enhancements to our Remuneration
Report to make it simple and clear, and to continue to evolve it
forward based on the feedback from our shareholders. We have
also engaged external consultants to assist us with these changes.

Our approach to remuneration has allowed us to continue to grow
our business. There is clear alignment between the performance of
the business and executive remuneration. This year, total executive
remuneration, for executives employed across both periods, grew
by 14% while the company’s profit grew 15%.

i ARR is not an IFRS measure and is unaudited.

Outlook for 2019/2020
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 business and improve their efficiencies in a challenging
economic time.

The TechnologyOne global SaaS ERP solution is driving our
continuing success. As a result, TechnologyOne’s sales pipeline
of opportunities for 2020 is strong and this positions us for
continuing strong profit growth in FY20.

Our SaaS business will continue to grow strongly and profitably.

We also expect continuing strong profit growth for our Consulting
business in the coming year.

We also expect to see continuing strong growth in the UK market.

We will provide further guidance at both the Annual General
Meeting and with the first half FY20 results.

Afterword
To continue to succeed we must continue to innovate, and focus
on building beautiful software that is incredibly simple and easy
for our customers to use. Our software must work on any device,
anywhere, at any time if we are to enable our customers to embrace
the exciting future that is possible with the digital revolution.

We must also continue to earn the right to be the enterprise
software partner for our customers. At every touchpoint we have
with our customers, we must strive to make things simpler for them
and give them a great experience.

A few years ago, we set an ambitious goal to transform business
and make life simple for our customers. We are now making this
a reality.

This would not be possible without the talented and committed
people who make up TechnologyOne.

I would also like to thank you, our shareholders, for your
continuing support.

Adrian Di Marco
Executive Director

Edward Chung
Chief Executive Officer

Transforming business, making life simple

21
21

Transforming business, making life simple2019 TechnologyOne Annual Report04 Global SaaS

ERP solution

2019 TechnologyOne Annual ReportTransforming business, making life simple“

Mobile working is a major part of our agenda
moving forward – we needed a powerful
enterprise solution that would allow our users to
access key systems and information across any
device, anywhere, any time. TechnologyOne’s
OneCouncil SaaS solution will deliver the
capability for our staff to work flexibly, while
offering the high level of support we require.

Bromsgrove
District Council
(cid:31)(cid:30)(cid:29)(cid:29)(cid:28)(cid:27)(cid:26)(cid:25) BOROUGH COUNCIL

Chris Forrester
Financial Services Manager,
Bromsgrove District and
Redditch Borough Councils

”

Digital transformation

Our enterprise customers are realising the financial and operational
benefits of a cloud-first, mobile-first model. SaaS transforms the
way organisations interact with their customers and communities,
which is why more and more of our on-premise customers are
transitioning to the cloud.

Our customers tell us that adopting SaaS gives them new
capabilities and saves them millions of dollars compared to
equivalent on-premise deployments.

As business becomes faster and more competitive, the efficiencies
TechnologyOne’s SaaS Platform offers becomes even more
essential to our customers.

Our commitment to innovation
In FY19, we invested $60 million in R&D to improve our
SaaS offering with new technologies, concepts and ideas.

The economies of scale offered by our global SaaS ERP solution
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 software releases per year.

Our SaaS offering is massively scalable, resilient and
fault-tolerant. All our customers run the same code-line
globally, and all processing resources are shared. When we
make an improvement to the service we automatically roll out
that improvement to all our customers.

It is a testament to the collective skill of our people and
organisational structure that we have achieved such a competitive
advantage and level of differentiation in the SaaS market.

Insights, our SaaS monitoring platform, gives us unprecedented
visibility of the real-time performance and reliability of our SaaS
environments and software. This enables us to analyse, detect and
respond to issues faster than ever before. Insights also strengthens
our support processes by connecting our development teams
directly with customers.

TechnologyOne’s global SaaS ERP solution is the perfect union of
infrastructure and software. The combination of our software built
using one global code-line and our multi-tenanted infrastructure
with single-tenanted databases, means our customers can enjoy
all the benefits of SaaS with none of the limitations. Our unique
approach to enterprise SaaS is key to our ongoing success.

Our solution leads the market because we own, build and support
our own software. Many other providers fail to deliver the same
economies of scale and cost efficiencies because they use cloud
hosting but handcraft each customer’s environment individually.

Our SaaS ERP solution is a single instance of software delivered
globally, with a mass production line of servers running thousands
of customers’ organisations. It produces substantial economies
of scale, creating cost efficiencies that hosting providers cannot
come close to. Our customers gain access to two releases of
software per year, as well as access to OneUniversity for ‘just-
in-time’ training. This is all provided standard as part of our SaaS
solution, and we guarantee it will be future proof. And with our
configuration-driven software design, all of our customers’ unique
configuration information is stored in their own dedicated and
secure database. So too is their transactional data, which lets us
deliver a personalised service at scale.

Our approach to enterprise SaaS plays a key part of our ongoing
success, with SaaS revenue now representing 28 per cent of our
total revenue. In FY19 we gained 88 new SaaS customers, including
Mid Ulster District Council – our first Northern Ireland client. They
join many of our long-standing customers on the journey from
on-premise to cloud-based solutions.

The TechnologyOne SaaS Platform has received international
recognition for software innovation from the Australian Business
Awards, the UK Cloud Awards, the SaaS Awards and Amazon
Web Services.

Any device, anywhere, at any time
TechnologyOne is the only enterprise vendor delivering 100 per
cent of its enterprise software on smart mobile devices – with
no carve outs or exceptions. Customers have access to the full
functionality of our software on any device, anywhere, at any time.

Organisations can embrace iPad, iPhone and Android devices as
part of their enterprise solution and our adaptive screen design
guarantees a great user experience regardless of the device.
Because the experience is tied to the user, not the device, an
employee can move seamlessly from one device to another
without interrupting their work. With its incredibly simple design,
it has created a new standard in enterprise software, giving us
a significant competitive advantage. For customers undertaking
digital transformations, this is the key to future success.

24 2019 TechnologyOne Annual Report

Transforming business, making life simpleMost trusted enterprise SaaS provider
We take the privacy and security of our customers’ data very
seriously, and weave this consideration into the fabric of everything
we do. We are committed to building the world’s most trusted
cloud for enterprise software and will continue to make significant
investments to that end. That’s why, since 2017, we have achieved
the highest level security accreditation of any enterprise SaaS
vendor operating in Australia.

The foundation of our global SaaS ERP solution is a class-leading
security and compliance program designed to give our customers
the strongest protection and privacy. As part of this program we
develop and maintain our security framework, which passes the
most stringent external verification, testing and scrutiny.

We have held ISO 9001 accreditation continuously for 25 years.
Our SaaS solution is accredited and certified for the following
international standards:

TechnologyOne University
TechnologyOne University is the learning and training hub for our
software. Through the power of SaaS, all of our customers can
receive self-paced learning and comprehensive training on any
device, anywhere, at any time. Our Learning and Development team
is constantly adding content to the University’s offering, which now
includes more than 65 hours of high-quality video material.

An innovative digital training solution, TechnologyOne University
gives our customers dynamic, real-time and up-to-date information.

Some 435 customers have chosen TechnologyOne SaaS to

power their organisations. This is an increase of more than 25

per cent in customer numbers over the past 12 months, and

we expect this rapid growth to continue in 2020.

•

ISO/IEC 27001

ISO/IEC 27017

ISO/IEC 27018

ISAE 3402 SOC 1

• SSAE 18 SOC 1 (USA)

• AT-C 205 SOC 2

• Cyber Essentials (UK)

• Health Insurance Portability and Accountability (HIPAA) (USA)

•

IRAP ‘Official’ (Recommended)

In the UK and European Union, we are certified with Cyber
Essentials and comply with the General Data Protection Regulation
(GDPR).

In FY19 we maintained our status as recommended for Australian
Signals Directorate IRAP certification (Unclassified DLM), further
strengthening our offering to Australian Federal Government
agencies.

As part of our service, customers receive the benefit of these
certifications, along with a continual flow of security and privacy
enhancements, at no extra charge.

“

The SaaS Platform provides scalability
and flexibility, giving us a more
commercially viable platform that
will take us into the future. By more
accurately managing and reporting
student information, we can now focus
on operational success.

Professor Richard
Constantine
Vice President of Engagement
and Resources
Victoria University

”

Transforming business, making life simple

2019 TechnologyOne Annual Report05 Our

strategy

2019 TechnologyOne Annual ReportTransforming business, making life simpleOur vision

Transforming business,
making life simple
Our vision is to build and deliver truly great products and
services that transform business and make life simple
for our customers.

At TechnologyOne, we know that our customers’
experiences define our success. We believe in leadership,
not management. We know that 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 also believe it is important to give back to the
community. To pay our success forward, we established the
TechnologyOne Foundation.

Our beliefs, our dedication to customer experience, our
leadership model and our charitable ethos have formed
our vision. This is the TechnologyOne Way, which we
developed more than 30 years ago and continues to
define the way we operate.

Over more than three decades, TechnologyOne’s clear
vision, our beliefs, our supporting initiatives and our
continuing growth have underpinned our success.

Preconfigured
enterprise software
solutions reduce
time, cost and risk

30 2019 TechnologyOne Annual Report

Transforming business, making life simple

Our
core beliefs

We believe in:

• Our enterprise solution

• Market focus and commitment

• The Power of One

• The power of evolution

• Simplicity, not complexity

Our enterprise solution
We believe in the power of a single, integrated enterprise solution
built on a modern platform with a consistent look and feel.

A best-in-class enterprise solution
Only through an enterprise solution can organisations really
embrace the future of SaaS and smart mobile devices, and get
the efficiencies they need across their complete organisation. We
have spent more than 30 years and hundreds of millions of dollars
to deliver on such an enterprise-wide vision. Today we are unique
among enterprise software providers in delivering best-in-class
products that come together as a total enterprise solution from a
single vendor.

Our leading-edge platform
Our comprehensive suite of fully integrated software products
are designed to deliver the best possible experience for users.

Our software solutions are underpinned by our state-of-the-art
platform. The platform 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. We continue to evolve our platform, ensuring
our customers can easily adapt to changes in mobile devices,
computing and user preferences.

Deep functionality for the markets
we serve
We have chosen to focus on six key markets: Local Government,
Government, Education, Health and Community Services, Asset
and Project Intensive industries, and Corporates and Financial
Services. With over 30 years’ experience and over 1,200 large scale
enterprise customers we possess an expansive understanding
of these sectors and we provide the deepest functionality for the
markets we serve. We continue to add more and more functionality
to our products and preconfigured solutions for these markets
which streamline implementation and reduce customers’ time, cost
and risk.

Preconfigured solutions
TechnologyOne’s integrated products form the building blocks from
which our preconfigured, industry-specific solutions are developed.

Created in collaboration with hundreds of customers, the solutions
cover 80 per cent of each sector’s requirements ‘out of the box’.
This accelerates implementation while leaving room for the
software to be configured to customers’ specific needs.

This approach is faster, cheaper and safer than that adopted by our
competitors.

Deep industry engagement

Each of our preconfigured solutions is developed by a team of
specialists with an in-depth understanding of our key markets.
We work closely with our sectors to stay abreast of current
requirements, organisational and user challenges, legislation and
emerging trends. This deep industry engagement ensures our
preconfigured solutions continue to lead the market.

The Power of One
TechnologyOne’s hallmark is being one vendor with a single
vision, code-line and 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 solutions for each customer to guarantee
long-term success.

Our unique value proposition
We are accountable to our customers, whether the focus is on
business needs, underlying technology, delivering implementations
on time and within budget, or excellence in support and customer
service.

When organisations invest in our solutions they benefit from a
direct relationship with us every step of the way. Right from the
start, we take ownership of a project and provide outstanding
service and support.

Unlike our competitors, we provide a single, integrated consulting
capability to enable a safer, faster and more cost-effective time
to delivery for 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) 2.0.

The power of evolution
TechnologyOne’s enterprise solution adapts and evolves by
embracing new technologies and concepts to ensure our customers
can maintain their competitive edge through innovation.

Using technology for competitive advantage
One of our founding principles in 1987 was to use new and
emerging technologies to provide a competitive advantage for our
customers. It continues to be a major focus today.

For more than 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. Our SaaS platform 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 our
TechnologyOne SaaS Platform on their smart mobile devices.

The power of a
single, integrated
enterprise solution

Simplicity, not 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 life simple for our customers.

Simplicity is a philosophy we continue to embrace in everything we do for our
customers. We want to be known for software that is easy, simple and intuitive
to use, and that removes needless complexity.

By embracing the simplicity of a SaaS model, we deliver our software in a
high performing and secure manner. Our highly available infrastructure has
redundancy built in at every level and ensures our customers don’t have to
worry about running or updating their own software and infrastructure.

By removing the need to manage their computing environment, customers
can focus on business, rather than the supporting technology.

32 2019 TechnologyOne Annual Report

Transforming business, making life simple

The future
of enterprise
software, today

Our
initiatives

Compelling Customer Experience
We continue to recognise that our customers are our compass for
the decisions we make, the people we employ and the processes
we create. This is why we continue to invest in our Compelling
Customer Experience (CCE) program, which provides our people
with ongoing development and support in delivering outstanding
customer experiences.

Our world-class R&D
With a team of more than 400 developers, TechnologyOne runs
one of the largest Australian-owned R&D centres for enterprise
software. Each year about 20 per cent of our revenue is invested
into our R&D program, which continues to produce leading-edge
technology that will enable our customers to embrace the digital
revolution, streamline their business and improve their experience.

Providing a compelling customer experience is fundamental to the
way TechnologyOne does business and positions us well to attract
customers away from our competitors.

Application Managed Services
A specialised service provider that delivers continuous
improvement and lowers the cost of application management,
our Application Managed Services (AMS) group drives productivity
and cost efficiencies for our customers. The AMS team has
many years’ experience in running our software and a deep
understanding of our customers, enabling them to deliver
superior value and outcomes.

We continue to invest in our AMS services to ensure that all
customers benefit from our Consulting team’s breadth of expertise.

Cultivating a culture of innovation
The innovation and creativity of our team is key to our success.
Our developers are leaders in their field who challenge
conventional thinking and go beyond the traditional realms of
development methodology. Our state-of-the-art R&D centre and
initiatives are designed to foster collaboration, creativity and
innovations that provide the platform for our future growth. In recent
years, we have also learned extensively from how consumers use
technology to simplify our enterprise software.

New ideas, new concepts
We are committed to a continuous cycle of redeveloping our
software platform from the ground up every seven years. This
process leaves no line of code untouched and ensures that we are
free to embrace new ideas, concepts and technologies – rather
than needing to retain legacy systems.

Over the past 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 continues to evolve at a market-leading pace. This year,
we extended our research into several new technologies including
artificial intelligence (AI) and machine learning (ML).

In addition to our R&D centres in Brisbane and Perth, we have
offshore R&D centres in Indonesia and Vietnam. This allows us
to extend our capability and better support our customers and
existing products.

Hack Days
In FY19, TechnologyOne continued its investment in creating
an innovative culture through company-wide Hack Days. These
sessions encourage innovation, creativity and fun. They also give
employees an opportunity to break down silos and participate in
projects outside their normal day-to-day work.

Hack Days enable us to showcase some of our emerging leaders
by giving our people the freedom to lead outside a traditional
organisational structure. All parts of the business are encouraged to
participate, 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.

Collaborative facilities
Our ‘Hack Space’ is an extension of the R&D centre in our Brisbane
headquarters. The project area provides a collaborative workspace
for aspiring interns, graduates and employees to innovate and
develop world-class software.

With technology and design being at the forefront of the concept,
the Village Green social 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.

Throughout the year, we make a point of bringing together our
employees globally. This is achieved using state-of-the-art audio
visual equipment and technology to connect all regional offices for
Town Hall meetings, Hack Days, R&D Showcases and other global
company-wide events.

MARVELs
Our annual awards program recognises and rewards high-
performing employees. The awards assist in driving our high-
performing culture, by providing employees with a benchmark to
strive towards. You can read more about our MARVELs program in
the Our People section on page 55.

34 2019 TechnologyOne Annual Report

Transforming business, making life simpleTechnologyOne 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 team members.

The focus of the TechnologyOne Foundation is investment in
youth, because it is through the youth that we can have the
greatest impact on the future. In line with this, the TechnologyOne
Foundation has several charity partners including Opportunity
International Australia, The Fred Hollows Foundation, The School
of St Jude and The Salvation Army.

Opportunity International Australia
We partnered with Opportunity International Australia (Opportunity),
and set 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 page 63.

Showcase
Our Showcase events provide an opportunity to demonstrate
to customers and prospects how we are transforming the way
businesses operate through our SaaS solutions. They also provide
an invaluable opportunity for customers and industry leaders to
network with peers.

This financial year, we took the TechnologyOne Showcase to
several Australian capital cities. This gave us opportunities to
engage with hundreds of unique customers and prospects, and
strengthen our pipeline of sales opportunities. The events featured
discussions of the latest industry trends and insights, and were
used to unveil new software developments.

Regional Days
In FY19, we continued to roll out Regional Days for our Sales and
Consulting teams to discuss our strategy and goals, strengthen
relationships across regions, teams and projects, and to improve
engagement across the whole organisation.

36 2019 TechnologyOne Annual Report

Transforming business, making life simple

06 Our

growth

2019 TechnologyOne Annual ReportTransforming business, making life simpleAdding value to existing customers
We listen to our customers and make sure we understand their
needs, meet their priorities and enable ongoing improvements in
their business processes. Our goal is to build proven practices into
our solutions and deliver the best software and services available
for our customers.

Our Sales and Marketing teams keep customers informed about
recent developments and the experiences of fellow TechnologyOne
customers. This helps customers further improve their technology
systems and business processes and models.

Building on this partnership approach, the TechnologyOne
Customer Community has transformed our support experience.
As a dynamic group of TechnologyOne experts and customers, the
Customer Community provides a world-class support experience to
customers. It also enables them to influence product direction, keep
up-to-date with industry news and collaborate with other customers.

Expanding our product range and depth
We are working closely with our customers to ensure we meet
their ongoing business needs and provide an increasing range
of functions within our enterprise solutions. The result is that we
continue to extend our product offering by developing additional
features and functions – further building on what is already one of
the world’s most comprehensive enterprise software suites.

By re-engineering all our products, customers can enjoy the same
software functionality across any device, anywhere, any time.

Enterprise SaaS platform
Our ongoing success has been underpinned by the incredible
growth of our SaaS business, which doubles in size every
18 months. This is powering the growth of TechnologyOne
which continues to double in size every four to five years.

We now have 435 customers on our SaaS Platform.

Our solution is a clear market leader because we are the only
enterprise vendor to offer a true enterprise SaaS solution across
the entire enterprise.

Unlike many other software providers that use cloud hosting,
we own, build and support our software. Because other providers
handcraft each customer’s environment, they cannot offer similar
shared benefits or economies of scale.

Expanding within our geographies
We have 14 offices around the world. These are located in each
state and territory of Australia, as well as the United Kingdom (UK),
New Zealand, the South Pacific and Asia.

We have adapted our business to meet the differing needs of
customers in each of these regions. In particular, we adapt our
sales strategies for different regions as we identify new and
ongoing customer needs.

We will continue to build on our success and consistent growth
in Australia and New Zealand, while also capitalising on the strong
growth of our SaaS solution in the UK. We continue to grow our
market share in the UK’s Local Government and Higher Education
sectors, and expect this will contribute significantly to our growth
in the years to come.

Expanding within our vertical markets
We operate within six large vertical markets and deliver
preconfigured products to enable customers to quickly realise
value from our solutions. This lets us specialise, while providing
significant room to expand our customer base and grow our
solution footprint as we add value for customers.

We have experienced continued success and expansion within
each of our vertical markets. The adoption of our SaaS Platform
has also enabled us to penetrate our key vertical markets more
deeply, by making it easier to reach customers that may not have
been suitable for 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
SaaS solution.

40 2019 TechnologyOne Annual Report

Transforming business, making life simpleCustomer Showcase and User Group events
In 2019, we continued a targeted external events program for existing and new customers.
Globally, we hosted and ran 55 events including three successful Showcases and eight
User Group events. The response from our customers and prospects exceeded our
expectations, with representatives attending to engage, network and learn.

Our investment in regional Showcases ensures our customers benefit from a strong
community and have the opportunity to collaborate with experts and executives from all
areas of the business. At our User Group events, customers can hear from fellow users,
build local support networks and learn more about our products.

42 2019 TechnologyOne Annual Report

Transforming business, making life simple

07 Our

operations

2019 TechnologyOne Annual ReportTransforming business, making life simpleStuart MacDonald
Chief Operating Officer
In 2014, we set ourselves the ambitious goal of transforming
TechnologyOne into a global enterprise SaaS business. In FY19, we
can truly say we have achieved our goal. With rapid SaaS expansion
in the UK, a significant proportion of our on-premise customers
transitioning to the cloud and a host of new SaaS clients, FY19
was a year of strong growth. We are proud to be leading Local
Governments, Higher Education institutions and organisations in our
other key industries into the cloud-first, mobile-first future.

Key achievements in FY19
Building pipeline for our verticals
Our vertical marketing strategy has continued to generate new
customer pipeline and deeper penetration into our existing
customer base, by applying consistent, industry-aligned messaging
throughout our targeted activities. At the same time, our 2019
Intelligent Business Research Services (IBRS) research paper on
the current state of enterprise SaaS solutions positioned us as a
thought leader in the cloud space.

Disruption in our growth markets
FY19 delivered not only successful customer adoption and
outcomes but resulted in the market taking notice that we are
disrupting in our growth markets that have traditionally been owned
by the likes of Oracle and SAP.

Key examples included signing a 10-year deal with New Zealand
energy provider Unison Networks; selling our localised Research
Management product to the University of Exeter in the UK;
and closing a momentous Student Management deal with the
Department of Defence – our biggest of the year.

Expansion in the UK
FY19 was an exciting year for TechnologyOne’s UK operations.
With our existing customer base secure, we were able to focus on
growth. This year we saw a record number of new customers and
launches, with the London School of Economics, the University
of Exeter and several councils – including our first Northern Irish
customer, Mid Ulster District Council – among our key wins.

Strategy for FY20
We look forward to building on the success we enjoyed in FY19, and
will continue to guide our existing on-premise customers onto our SaaS
Platform, while adding new cloud-first, mobile-first customers to our
base. In FY20, we will continue to close new customer acquisitions in our
smaller markets, while remaining focused on expanding product takeup
within our existing customer base. Anticipating our further growth in the
UK market, we will allocate support and other key resources to the region.

46 2019 TechnologyOne Annual Report

Transforming business, making life simple

Paul Jobbins
Chief Financial Officer and
Operating Officer, Corporate Services

Stuart MacDonald
Operating Officer, Sales (Acting)

Brock Douglas
Operating Officer, Consulting

Anwen Robinson
Operating Officer, United Kingdom

The Corporate Services team develops and maintains the operating
platform from which the company will continue to grow. We support
the Group through strategic business partnering, by providing
leading systems and processes that drive efficiency, and by
managing our capital and cost base to ensure we optimise return
on our investments.

In FY19, we focused on strengthening our resources, skills and
systems to ensure we can support the business to achieve growth
and scalability, and we are now well structured to provide detailed
forecasts, planning and analysis to support sensible business
decisions and win new business.

FY19 has seen the company transition to SaaS accounting with
the adoption of AASB 15 Revenue from Contracts with Customers.
We completed work which commenced in the previous year to
establish the systems and processes to support this transition,
including revenue recognition processes, new contracts, and new
commission and incentive plans.

Information technology
We focused our IT efforts on establishing new systems and
processes for the adoption of AASB 15. We also assisted in
the testing and development of new TechnologyOne products
and modules.

The security of the company’s internal systems and networks has
been further enhanced, and a unified communications platform has
been adopted across the Group, allowing multiple legacy systems
to be retired.

Focus for FY20
In FY20, the Corporate Services team will continue to support the
business to drive growth in sales to new and existing customers
while driving efficiency in internal systems and processes. By
partnering with the business, we will assist in the transition of
customers to the company’s SaaS platform, assist the adoption
of more TechnologyOne products by our customers and support
winning new customers in the UK and APAC.

Our 2019 State of Enterprise Software report, produced with IBRS,
uncovered important findings about why organisations may stop
short of implementing enterprise SaaS. These insights empowered
our Sales team to engage in deeper conversations with our
customers, and to meet their questions and concerns head on.

Strategic wins for FY19
Our SaaS sales grew across all sectors in FY19. Our successful
expansion in Federal Government continued, and we secured a
strong foothold in the UK’s Local Government and Higher Education
markets. Our key wins included:

• The Department of Defence (Australia)

• Unison Networks (New Zealand)

• York St John University (UK)

• Expansion within TAFE (Qld)

• ACT Health (ACT)

• The Australian Electoral Commission (Australia)

• Taupo District Council (New Zealand)

Looking to the future
Focusing on our on-premise customers’ concerns about
security, scale and speed, we will continue to educate and
guide them towards our SaaS solution. This year, we are planning
campaigns to take on the considerable white space within our key
industries, which our analysis indicates is a breeding ground for
significant growth.

We are pleased with the results of our sales model and will continue
to invest in new tools and processes to drive its accuracy and
efficiency. In the UK, we will continue to build on this year’s success
by expanding our product penetration into key markets, with a
particular focus on our student solutions.

The TechnologyOne Consulting business has this year continued
to see results from our transformation agenda, with profit on an
upward trajectory and growth in our AMS business.

Stabilisation and improvement
Our commitment to stability and predictability has seen our
customer satisfaction rate – measured through post-project
surveys – climb, and our project load increase by 15 per cent.
As we perfected the balance of our resources with demand, our
portfolio quality surged. In line with our five-year strategic growth
plan, AMS grew by 17 per cent – a trend we expect to continue.

We were pleased with our run of go-lives, 213 in FY19, representing
an 8 per cent Year-on-Year increase — cementing our reputation as
a scalable Consulting business capable of achieving our ambitious
regional expansion goals.

Team engagement
Our success is partly due to a 20 per cent increase in staff training,
which allows our employees to deliver more predictable, consistent
and competitive customer experiences.

Employee engagement climbed by 24 points, with our graduate
cohort adding a splash of vitality to the Consulting team.
Additionally, we are seeing a trend in consultants who had left the
business rejoining the TechnologyOne team.

Continuous transformation
We look forward to expanding our UK operations in FY20, and with
our recent string of go-lives and a surge in sales growth generating
opportunities to increase our AMS presence in this market. We plan
to grow by fostering new partnerships and incentivising our Service
Delivery Management offerings to deepen our relationships with
existing customers.

After a two-year consolidation period, FY19 saw TechnologyOne’s
UK operations enter an exciting new growth period. With an
addressable market three times the size of our South Pacific and
Asia markets, the UK represents a major pillar of TechnologyOne’s
future growth platform, and a launch pad for our global distribution.
All new UK customers are SaaS users, so our
UK strategy aligns with our broader cloud-first, mobile-first vision.

Sustainable growth
Continuing to focus on Local Government and Higher Education
sectors, we acquired six new customers and implemented a
record number of go lives. The University of Dundee went live with
Financials as part of their wider OneEducation implementation as
did The London School of Economics. The University of Lincoln
also became our first Higher Education customer to go live with
TechnologyOne’s Student Management product, and we expect
other existing customers to follow suit.

New customers Bromsgrove District and Redditch Borough
Councils became the first councils to adopt our OneCouncil Human
Resources and Payroll product along with Financials, as part of
their OneCouncil shared service. And by partnering with Mid Ulster
District Council, we broke into the Northern Ireland market, where
we expect our footprint to grow.

Looking ahead
In FY20 we will see a major focus on new customer acquisitions.
Our strategic partner Amazon Web Services has identified
TechnologyOne UK as a strategic growth pillar, and our
collaborative partnership will aim to capitalise on this opportunity.
As part of our increased investment in marketing and raising our
brand profile, we look forward to holding our first UK Showcase
in FY20.

2019 TechnologyOne Annual ReportTransforming business, making life simpleRichard Nicol
Group Director, Support & Enhance

Jane Coe
Group Director, People & Culture

Daniel Sultana
Group Director, SaaS (Acting)

Brett Hooker
Director, Research & Development

Our Support & Enhance team is committed to providing a world-
class support experience, and are driven to ensure our solutions
are maintained and enhanced to enable our customers’ success.
To achieve this goal, we have built a culture of service excellence
with innovative support tools and processes.

Growth in Support
Our UK Support team doubled in size in FY19. Growth was
a common theme across the team: we also expanded in
Australia to support and enhance the experiences of an influx
of new customers, as well as existing customers with growing
product portfolios.

To support this growth and to streamline the customer
support experience, we implemented a state-of-the-art global
telecommunications and contact centre system. We also expanded
the functionality within our increasingly important Customer
Community, making it easier for members to collaborate with
other customers and to access the extensive knowledge base
of information supporting our solutions.

Planning for FY20
This year, we will continue our Customer Community’s evolution
by incorporating an enhanced customer recognition scheme and
additional reporting capabilities. We will take advantage of our new
telecommunications system’s ability to provide us with analytical
insights about the customer support experience. We will use this
data to further streamline our support process. This data-driven
decision making will become a key focus as we rely more and more
on accurate and reliable customer data to steer our path.

We also plan to unite customers on a common software delivery
method, to simplify the SaaS transition process. And we are
exploring the potential benefits of artificial intelligence as we
consider automating common support tasks.

At TechnologyOne, we value our human capital and constantly
explore ways to invest in and enable our people to be their
best. We know that as our team members’ capabilities grow, our
business, marketplace and shareholder success accelerates.

During FY19, we invested in building and maturing our People &
Culture offering, to ensure our business’s continued success. In
order to deliver our ambitious goals, we focused on clarifying the
roles and responsibilities of our People & Culture team members
and optimising our team structure to enable us to transform from a
tactical, operational model to a strategic partnership model.

Looking beyond People & Culture, we partnered with the business
in an effort to achieve greater structural consistency.

Graduate Program
FY19 saw our award-winning Graduate Program expand beyond
Research & Development (R&D), as we welcomed graduates from
broader streams including Sales, Support & Enhance and SaaS.
We received in excess of 3,000 applications, highlighting the
competitive and highly sought after nature of our program.

Career Framework
In continuing to reinforce team members joining TechnologyOne for
a career, rather than just a job, we successfully piloted our Career
Framework within Consulting. The Framework engages participants
on their career paths and ensures they are clear on what it takes to
progress, be it laterally, cross-functionally or through promotion.

Paid Parental Leave

TechnologyOne introduced a Paid Parental Leave scheme,
where eligible team members in all our global offices, can access
paid leave to support their growing families. This serves as a
critical retention strategy for our existing team members and will
strengthen our ability to attract top talent.

The year ahead
In the coming year, we will continue to foster team engagement
with initiatives including the Reward & Recognition Framework and
the Corporate Wellness & Mental Fitness program. In particular,
we will focus on embedding a culture of accountability where
behaviours align with expected results. We will continue to
identify opportunities to optimise our organisational structure and
implement consistent organisational design principles to achieve
greater efficiency and productivity.

Our SaaS business has continued to double in size every 18 months.
The ease and speed with which TechnologyOne guides our existing
customers’ transition from on-premise to SaaS has seen more than
100 customers adopt our SaaS platform in FY19.

Our focus
Our ongoing investment and continued innovation around
performance and security allow us to be trusted global leaders
in the compliance arena. This, combined with precise capacity
planning to deliver an outstanding customer experience remains
central to our mission of being the Most Trusted SaaS Platform. Our
ongoing investments in automation and innovation is the reason
we can provide a faster, more efficient SaaS transition and ongoing
services for our customers – and reduce the time it takes for our
software’s features and functions to reach them.

As we scale, we continue to identify new opportunities to optimise
our enterprise software. Each opportunity uncovers a route towards
sustainable profit increases, by helping us to deliver greater

economies of scale over time.

Highlights from the year
Last year we delivered a range of enhanced security and privacy
outcomes for our customers, across all the industries we serve.
At the same time, we accelerated the pace of our innovation and
improved the features, speed, security, availability and scalability
of our SaaS solution. The proportion of revenue coming from SaaS
sales increased considerably over FY19.

Strategy for FY20
We will continue to invest in R&D and new technology platforms, as
we expect our SaaS business to substantially drive the company’s
growth into the foreseeable future.

This year, we will focus on increasing our compliance posture,
particularly in the Government space. Security and scale will join
compliance as key considerations, which we expect will lead to
greater efficiencies through improved margins and enhanced
customer experiences overall.

This year, we announced our Digital Experience Platform (DXP),
setting the tone for the next generation of our software with tier-one
artificial intelligence. This new software is being adopted by our
customer innovation partners side-by-side with R&D to test and
prepare it for wider adoption across the marketplace.

We also acted on user feedback to expand our Human Resources
& Payroll product’s functional footprint. We delivered 21 major
software capabilities to support our Higher Education customers
across all regions, including strategic initiatives for spearheading
future revenue streams from our Student Management product
in the United Kingdom. Additionally, we placed resources and
investment into strengthening the capability of our next-generation
Property & Rating product.

Investing in the future
Our successful graduate program continues to go from strength to
strength. To attract and encourage tomorrow’s innovators, we put
on a range of events this year, including STEAM Labs — a concept
originating from a Hack Day idea — aimed at creating a love of
technology in our younger generation, and our annual Big Game
event between students from the University of Queensland and
Queensland University of Technology.

Our vision for FY20
We remain deeply engaged with our customers to ensure we have
delivered a best-in-class enterprise product.

In the coming year, DXP will allow us to move closer to our
customers’ customer – our Higher Education clients’ students and
our Local Government customers’ residents. We will continue to
expand the reach of our Student Management product in the UK
and our Property & Rating product in Australia and New Zealand.

2019 TechnologyOne Annual ReportTransforming business, making life simple08 Our

people

2019 TechnologyOne Annual ReportTransforming business, making life simpleWe are an
Employer
of Choice

Our people are a crucial source of our competitive advantage,
and we strategically invest in activities that support the recruitment,
retention and development of individual talent within our workforce.

As a nationally recognised Employer of Choice, TechnologyOne
is committed to providing an environment in which our talented
people can be innovate, create and realise their full potential.

This year, TechnologyOne received more than 13,000 recruitment
applications, processed 62 promotions and facilitated eight
international secondments, many of which were employee-initiated.

Extensive onboarding and training
TechnologyOne hires passionate, talented and innovative
people who are inspired to think about the future.

Our comprehensive onboarding program provides the best
possible start for our people in their careers at TechnologyOne. The
TechnologyOne College then continues to support our commitment
to developing our people and growing their careers by delivering
training in leadership, technical and professional skills development.

This year, we were proud to receive two awards at the Australian
Impact Learning Awards; Onboarding Solution of the Year,
and the Learning Innovation Award for our onboarding and
O-Week programs.

Graduate Program
Our Graduate and Intern Programs form the foundation of our talent
pipeline into the future. These programs will continue to expand,
and we have developed strategies for investing in and valuing our
high performers.

This year, we onboarded 51 new graduates across Australia.
These graduates work across our organisation very closely with
the company’s top engineers, who provide them with valuable skills
and experience.

TechnologyOne’s Graduate Program was recognised in 2019 as
one of the top 20 leading graduate programs in Australia by the
Australian Association of Graduate Employers.

Industry partnerships
We are committed to actively fostering a diverse and vibrant
information and communications technology (ICT) industry. We want
to create interest around this exciting time in Australia’s economy
and ensure we are engaging early with Australia’s youngest and
brightest minds in Science, Technology, Engineering and Maths
(STEM) subjects.

As part of this commitment, we sponsor the Queensland University
of Technology Dean’s Scholars Program and the University of
Queensland’s School of Information Technology and Electrical
Engineering (ITEE) ICT Excellence (Prentice) Scholars Program.
Many of these students are later channelled into our award-winning
internship program.

IT students from both universities take part in TechnologyOne’s
annual The Big Game event. This gaming tournament gives
students a look inside the company’s culture and innovative
workspaces.

We also partner with the Australian Computer Society (ACS)
Foundation to sponsor the national BiG Day In™ series. The series
is designed to inspire high school and university students to pursue
careers in the IT industry.

Equal opportunity

TechnologyOne takes diversity and inclusion seriously. We advocate
for equal opportunity for all, and are committed to addressing the
shortage of female technology workers in Australia. To help achieve
this, we provide equal pay opportunities for men and women and
have a zero-tolerance policy of discrimination and harassment of
any kind.

Recruitment and promotion within TechnologyOne is based only on
the relevant skills, experience, qualifications, aspirations, potential
and aptitude of applicants.

Women make up 36.7 per cent of TechnologyOne’s workforce,
which is high compared to other IT businesses globally. However,
we are committed to further increasing the representation of
women by working with strategic partners to encourage more
women to pursue STEM-based careers. In doing so, we play a lead
role in growing a more diverse pipeline of future candidates to work
in technical fields and at TechnologyOne.

Some of the key programs TechnologyOne supported this year
included the Tech Girls Movement and the Queensland Women in
Technology Awards.

Rewards and recognition
To maintain our high-performing culture, we think it is important
to recognise and reward top talent. The annual TechnologyOne
MARVEL awards celebrate employees who go above and beyond
and showcases 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

Winners of the MARVELs receive company-wide recognition, and
are inducted into TechnologyOne’s League of Extraordinary People.

Capability development
We remain focused on implementing innovative programs
to hire, retain and develop a high-performing workforce. This
is critical to achieving our goal of transforming our customers’
businesses and making their working lives simple.

The TechnologyOne Learning and Development team continues
to deliver training programs to ensure we are providing our
people with the right skills to further their careers and meet
customers’ needs.

54 2019 TechnologyOne Annual Report

Transforming business, making life simpleEmployee engagement
At TechnologyOne, we value our employees’ right to have their
say. This year, we conducted Employee Net Promoter Score (eNPS)
surveys, which provided a channel for our people to be heard. The
results of these will be used to influence ongoing enhancements to
our initiatives and programs.

To improve communication across our global offices, we
conducted regular Town Hall Meetings in FY19. These enable
our executive team to share company updates with all employees
simultaneously, by connecting all offices via our state-of-the-art
audiovisual equipment.

As highlighted in the ‘Our Initiatives’ section on page 37, we also
continued our investment in Hack Days to give employees the
opportunity to collaborate across functional teams and work on
projects that fall outside their normal day-to-day work. These Hack
Days are key to driving our culture of innovation and creativity.

Our Community Sports program
We support our people in sporting events to encourage health,
wellbeing and charitable fundraising. It has been one of the
biggest years for our TechnologyOne athletes who made more
than 70 requests for event registration over the course of the year.
A highlight event this year was the Corporate Games in Brisbane,
in which we had over 100 team members participate across more
than nine different teams and individual sporting events.

Regionally, our people competed in Wellington Round the Bays,
City2Surf, the Gold Coast Marathon, Gold Coast Cycle, Brissie to
the Bay, Bridge to Brisbane, the Great Brisbane Bike Ride and
Palace to Palace Cycle Ride (UK).

Our Corporate Sustainability scheme
TechnologyOne is committed to managing our business operations
in an environmentally responsible manner. Our headquarters in
Brisbane’s Fortitude Valley has a Six Green Star environmental
rating. The building includes numerous environmentally-rated
sustainable development features, including 50 per cent more fresh
air than standard commercial buildings, carbon dioxide 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.

Our people are also encouraged to access and adhere to our
Environment Policy. It outlines our commitment to providing an
environmentally responsible workplace, ways to engage in sound
workplace practices through reducing waste, and giving more
cosideration to the use of energy and resources.

For more information see our Corporate Sustainability Report
overview on page 58.

56 2019 TechnologyOne Annual Report

Transforming business, making life simple

Corporate
Sustainability
overview

TechnologyOne’s
approach to
sustainability

Customer

People

Customer retention99 %

• Customer satisfaction and retention

• Data privacy and security

36 %

Participation of women, placing us

among the best globally in the

IT industry.

• Talent attraction and retention

• Workplace diversity and inclusion

• Employee engagement and culture

• Employee training and development

• Employee health and wellbeing

Responsible
business

60 m

R&D investment for 2019

(21% of revenue)

• Ethics, values and transparency

•

Innovation

• Compliance

1% ti m

Our people

R&D

1% product

Our community
& environment

Our products
& solutions

Implementation
& Support

Marketing
/ Sales

ﬁ

Our customers

Proﬁt

Revenue

b
a
c
k
m
e
c
h
a
n
is
m
s

Community and
environment

PLEDGE

• $2m global impact in FY19

• Community investment and education

• Environmental footprint

Our growth

For the full Sustainablility Report visit our website TechnologyOneCorp.com

58 2019 TechnologyOne Annual Report

Transforming business, making life simple

ﬁ

Our goal is to
help 500,000
children out of
poverty by 2032

The 1% Pledge
Our Foundation is part of the Pledge 1% corporate philanthropy
movement, which is dedicated to making the community a key
stakeholder in every business. In aligning with the Pledge 1%
movement, individuals and companies donate 1% of their profit,
product and employee time to their communities.

TechnologyOne donates 1% of annual profit to its charity partners,
supporting our vision of changing the future by empowering
underprivileged and at-risk youth to transform their lives. We
partner with a number of key charities, including Opportunity
International Australia, The School of St Jude, The Fred Hollows
Foundation and The Salvation Army. This strategic approach to
charitable giving enables us to make a bigger difference to the
causes we support.

Through the 1% product, our commitment is to donate 1%
of licence fee revenue each year. This makes it easier for
not-for-profit organisations to access our solutions and take
advantage of the efficiencies they provide, which in turn extends
the impact of their work.

All TechnologyOne team members can also take up to 2.5 days
leave each year to volunteer during work hours for charitable
organisations. This supports our 1% of time commitment. The 1%
Pledge equated to a $2 million commitment by the company
in FY2019.

The year in summary
In FY19 the work of the TechnologyOne Foundation was recognised
with two awards: Winner - The Australian Business Awards -
Community Contribution; and the 20 Best Workplaces to Give Back
in Australia in 2019, with $620,000 donated to our charity partners
(Opportunity International Australia, The Salvation Army, The School
of St Jude, SolarBuddy, Princes Trust, The Fred Hollows Foundation,
The Big Issue and The Smith Family). To date we have helped
100,106 children and families out of poverty. This year, we:

• Were honoured to be a Finalist of QCF Community Contribution

Award.

• Were also recognised as a Finalist in the AHRI Corporate Social

Responsibility Award.

• Won the ABA Community Contribution Award.

• Continued our commitment to a three-year partnership with
The Fred Hollows Foundation to support the Vietnam Child
Eye Care program, which aims to eradicate avoidable blindness
in school-aged children. We have assisted 58,430 children
through the Vietnam Child Eye Care program.

• Supported our not-for-profit customers further their services

through our 1% product pledge.

• Assisted over 30 charities through our volunteering hours

and donations.

• Supported World Vision’s work with children, families and

communities to overcome poverty and injustice.

• Through company-wide volunteering, we supported 1,000

Solar Buddy lights being assembled and delivered to children
in Cambodia and Papua New Guinea living in energy poverty.
With access to these lights students are studying 78% longer.

• Sent our IT waste to a local social enterprise initiative,

Substation 33, which assists disadvantaged youth to gain
confidence and skills for the transition to sustainable
employment through the recycling of electronic waste.
We donated 1,500kg of waste this year.

•

In addition to our major charity partners, the Foundation
supported a number of other worthy causes including: The
Princess Trust UK, Bond University Indigenous Program, World
Vision and various disaster relief programs.

Our work with Opportunity International Australia
• Through our donations to and partnership with the microfinance
group Opportunity International Australia we are transforming
communities and helping families. We aim to help 500,000
children and their families free themselves from poverty over the
next 15 years.

• As a result of this partnership, families in India will be able to

access small loans to enable them to build businesses. This will
also help them to earn regular incomes to support themselves
and plan for the future.

• With funds for initiatives such as starting a shop or buying

seeds for a vegetable farm, families can transform their lives
and their children’s futures. Further, because 98 per cent of
small loans are repaid and recycled, the impact creates a
positive ripple effect in their communities as more jobs are
created. Those jobs might include delivering goods or helping
with sewing and weaving orders.

Boosting local communities
With more income and therefore more money to spend on items
such as food and transport, families who used to live in poverty
become active participants in their local economies. This benefits
the providers of those products and services, who are themselves
often entrepreneurs.

This virtuous cycle ensures that microfinance provides a long-
term boost to economies and helps to develop self-sustaining
communities more so than one-time handouts.

Creating change
Micro-entrepreneurs are also able to use their influence to bring
about positive changes in their communities. With the confidence
that comes with having their own businesses, peeople can begin to
seek better infrastructure or educational facilities from government,
or bring local families together to take on 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 three-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 impairment.

This 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 who will be trained in primary

eye health and 12,027 teachers and school staff

members who will be trained in basic eye health

during the project cycle.

The TechnologyOne Foundation is dedicated

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 to success.

We established the TechnologyOne

Foundation in 2016 to ensure that charitable

giving would become a long-term initiative

for our business. It represents a multi-million-

dollar annual commitment and it reflects our

values, our culture and who we aspire to be.

62 2019 TechnologyOne Annual Report

Transforming business, making life simple09 Financial

Statements

2019 TechnologyOne Annual ReportTransforming business, making life simpleDirectors’
report

Adrian Di Marco
Executive Chairman
B Sc, MAICD, FACS | Appointed 8 December 1999

Experience and expertise
Mr Di Marco founded TechnologyOne in 1987, after extensive experience in the software
industry in the area of large scale fixed time and fixed price software development. Mr Di
Marco has over 40 years’ experience in the software industry. He has been responsible for
all operational aspects of TechnologyOne, as well as the strategic direction of the company.

Mr Di Marco has played a major role in promoting the Australian 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 Fellow of the Australian Computer Society. Mr Di Marco has received
extensive recognition for his contribution and pioneering work for the IT industry. He is
a major investor in SaaS companies both in Australia and internationally through his
Family Office.

He remains a major shareholder of TechnologyOne.

Mr Di Marco is the Executive Chairman of TechnologyOne and Chief Strategy and 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 Strategy and Innovation Officer.

John Mactaggart
Non-Executive Director
FAICD | Appointed 8 December 1999

Experience and expertise

Mr Mactaggart’s experience spans industries such as agriculture, agri-tech, manufacturing
and software. He is a co-founder of Brisbane Angels and is an active investor and mentor
in a large number of entrepreneurial ventures. Mr Mactaggart played an integral role in the
creation, funding, and development of TechnologyOne and remains a major shareholder. Mr
Mactaggart has been a Fellow of the Australian Institute of Company Directors since 1991.

Interests in shares and options
200,000 ordinary shares in Technology
One Limited held beneficially through
Autun Pty Ltd ATF Blinco Accumulation
Superannuation Fund.

Kevin Blinco
Non-Executive Director
B Bus, FCA | Appointed 1 April 2004

Experience and expertise

Mr Blinco is a former Director and Chairman of Business Advisory accounting firm Moore
Stephens Brisbane Ltd. He has over 30 years’ experience in the areas of business services
and planning, investment strategies, management and financial advice. Mr Blinco is
a director of a number of unlisted companies. His expertise is broadly respected and
acknowledged throughout the business community. He is a Fellow of the Institute of
Chartered Accountants and a Member of the Australian Institute of Company Directors.

Mr Blinco is chair of the Audit & Risk Committee and the Remuneration Committee
and a member of the Nomination & Governance Committee.

Jane Andrews
Non-Executive Director
GAICD PhD | Appointed 22 February 2016

Experience and expertise

Dr Jane Andrews joined the Board in 2016, bringing more than 15 years’ leadership
experience in research and innovation-based organisations.

As a founder and investor in numerous innovative companies, Dr Andrews has extensive
experience in corporate strategy, entrepreneurship, commercialisation, innovation, research
and development.

Interests in shares and options
30,600 ordinary shares held in Technology
One Limited held beneficially through the
Sarabande Zenith Jewel Trust.

Dr Andrews is a Graduate of the Australian Institute of Company Directors, holds a PhD
in Life Sciences, a Bachelor of Science (First Class Honours) and a Graduate Diploma in
Applied Finance and Investment.

Dr Andrews is a member of the Audit & Risk Committee, Remuneration Committee
and the Nomination & Governance Committee.

Interests in shares and options
27,372,500 ordinary shares in Technology
One Limited held beneficially through
Masterbah Pty Ltd. 6,000 ordinary
shares in Technology One Limited
held via family trust.

Interests in shares and options
38,872,500 ordinary shares in Technology
One Limited held beneficially through
JL Mactaggart Holdings Pty Ltd. 30,000
ordinary shares in Technology One Limited
held via family trust.

66 2019 TechnologyOne Annual Report
66

2019 TechnologyOne Annual ReportTransforming business, making life simpleSharon Doyle
Non-Executive Director
B Laws (Hons), B IT (Dist), G Dip Bus Admin, GAICD | Appointed 28 February 2018

Experience and expertise

Ms Doyle is the Managing Director and majority owner of corporate advisory firm,
InterFinancial Corporate Finance Limited. She has successfully navigated technology
companies through the challenges of steep global growth curves, with a strong
understanding of the dynamics in Software as a Service (SaaS).

Ms Doyle’s leadership of InterFinancial has seen her develop a core practice providing
strategic advice for technology and other IP-rich, high-growth companies. She also has
extensive international experience managing merger, acquisition and private equity
processes across the technology industry.

Ms Doyle was previously Vice President at Mincom, one of Australia’s most successful
enterprise software companies.

Ms Doyle is a Non-Executive Director at UnityWater. She holds a Bachelor of Laws
(Hons) and Bachelor of Information Technology (Dist.) from the Queensland University of
Technology, as well as a Graduate Diploma of Business Administration from the University
of Queensland. She is a member of Australian Venture Capital and Private Equity
Association and a qualified member of the Australian Institute of Company Directors.

Ms Doyle is a member of the Audit & Risk Committee.

Richard Anstey
Non-Executive Director
FAICD, FAIM | Appointed 2 December 2005

Experience and expertise

Mr Anstey’s career has spanned over 35 years. His first company, Tangent Group
Pty Ltd, established a strong reputation for the development of software products
and strategic management consultancy for the banking and finance sector.

With the sale of Tangent, he then co-founded lnQbator/iQFunds in 2000, an early
stage investment group focussed upon the technology, telecommunications and life
sciences sectors.

Through iQFunds and personally, Rick has co-invested in more than 30 companies with
the support of Commonwealth Government programs, Venture Capital Funds and both
corporate and personal investors. While being an active Non-Executive Director of his
investments, Rick has added value wherever appropriate to maximise shareholder value
and has also been actively involved in the trade sale of seven companies to organisations
in the US, Europe and Australia.

Mr Anstey is a Board member at the Australian Centre of Excellence for Entrepreneurship
(ACE) at Queensland University of Technology, a Board member of the Bond University
Business Accelerator Program, a Fellow of the Australian Institute of Company Directors and
a Fellow of the Australian Institute of Management. Mr Anstey now continues his career in
venture capital and corporate advisory roles through iQFunds.

Interests in shares and options
At 30 September 2019, Ms Doyle held
12,375 ordinary shares in Technology
One Limited.

Interests in shares and options
25,500 ordinary shares in Technology
One Limited.

Interests in shares and options
69,737 ordinary shares in Technology One
Limited held beneficially through RONMAC
Investments Pty Ltd. 41,263 ordinary shares
in Technology One held via a Pension fund.

Interests in shares and options
27,533 ordinary shares held in Technology
One Limited held beneficially through Clifro
Pty Ltd ATF Clifro Trust.

Ron McLean
Non-Executive Director
Appointed 8 December 1999

Experience and expertise

Mr McLean has more than 40 years’ experience in the enterprise software industry including
holding Senior Executive and Managing Director roles in several international and Australian
software companies. His involvement in the enterprise software industry has included
leading and managing software development, consulting and sales and marketing teams.

Mr McLean joined the Board as a Non-Executive Director in 1992 and was appointed
as the General Manager in 1994, Chief Operating Officer in 1999 and was promoted
to Chief Executive Officer of Operations in 2003.

Mr McLean retired from this role at TechnologyOne on 15 July 2004 and remains
a Non-Executive Director

Clifford Rosenberg
Non-Executive Director
B.Bus Sc (Hons), M.Sc (Hons) | Appointed 27 February 2019

Experience and expertise

Mr Rosenberg has more than 20 years’ experience leading change and innovation in
technology and media companies. As the former Managing Director of LinkedIn for
Australia, NZ and South-East Asia, Mr. Rosenberg started the Australian office in 2009 and
oversaw the expansion of LinkedIn in Australia from 1 million members in 2009 to more than
8 million members in 2017. Previously, he was Managing Director at Yahoo! Australia and
New Zealand, and prior to that role he was the founder and Managing Director of iTouch
Australia NZ where he grew the Australian office to one of the largest mobile content and
application providers in Australia.

Mr Rosenberg has more than seven years’ experience on the boards of publicly listed
companies. His directorships include Afterpay Touch Group (ASX: APT), Nearmap (ASX:
NEA), and A2B Australia Limited (ASX:A2B). Mr Rosenberg was also a Non-Executive
Director with Dimmi (online reservations company bought by Tripadvisor.com in May 2015).
He holds a Bachelor of Business Science (Hons) from the University of Cape Town and a
Masters of Science (Hons) from the Universitat Ben Gurion Ba-Negev.

Mr Rosenberg is a member of the Remuneration Committee.

Stephen Kennedy
Company Secretary
BBus, GDip (AppCorpGov), FGIA, FCIS | Appointed 13 April 2017

Experience and expertise

Mr Kennedy is the Group Company Secretary and Head of Compliance and Risk at
TechnologyOne. Mr Kennedy is a qualified Company Secretary through the Governance
Institute of Australia (GIA) where he was also a member of the Queensland Council.
He became a Fellow of the GIA and the Institute of Chartered Secretaries &
Administrators in 2014. Prior to joining TechnologyOne in 2017, Mr Kennedy was the
Assistant Company Secretary for Queensland Rail for two years following 12 years as
Assistant Company Secretary for Flight Centre Travel Group, where he had also performed
roles responsible for accounting, treasury, insurance and ESOP functions.
Mr Kennedy was appointed Company Secretary on 13 April 2017. He is also a registered
Justice of the Peace (JP (Qual)).

2019 TechnologyOne Annual ReportTransforming business, making life simpleShare options
Unissued shares

As at the date of this report, there were 5,679,385 unissued
ordinary shares under options (5,679,385 at the reporting date).
Refer to note 34 for further details of the options outstanding.

Option holders do not have any right, by virtue of the option, to
participate in any share issue of the company

Shares issued on the exercise of options

During the year, employees and Executives have exercised options
to acquire 1,006,279 fully paid ordinary shares in Technology One
Limited at a weighted average exercise price of $1.58. Refer to note
34 for further details of the options exercised during the year.

This report is made in accordance with a resolution of Directors.

Adrian Di Marco
Executive Chairman

Brisbane
19 November 2019

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 2019, 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

R Anstey

J Andrews

S Doyle

7(8)

C Rosenberg

4(4)

2(3)

3(3)

2(3)

1(1)

Where a Director did not attend all meetings of the Board or
relevant committee, the number of meetings for which the Director
was eligible to attend is shown in brackets. In sections where there
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 & Payroll

• TechnologyOne Enterprise Budgeting

• TechnologyOne Supply Chain

• TechnologyOne Property & 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
Dividends paid to members during the financial year were
as follows:

Final dividend for the year ended 30 September 2018 of 6.16
Cents (2017 - 5.6 Cents) per fully paid share paid in December
2018 (2017- December 2017)

75% franked (2017- 100%) based on tax paid at 30%

Special dividend for the year ended 30 September 2018 of
2.0 Cents (2017 - 2.00 Cents) per fully paid share paid in
December 2018 (2017- December 2017)

75% franked (2017- 100%) based on tax paid at 30%

Interim dividend for the year ended 30 September 2019 of
3.15 Cents (2018 - 2.86 Cents) per fully paid share paid in June
2019 (2018 - June 2018)

75% franked (2018 - 75%) based on tax paid at 30%

2019
$’000

2018
$’000

19,527

17,664

6,334

6,309

9,989

9,029

35,850

33,002

Review of operations
Please refer to Letter to Shareholders on page 10.

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 19 November, the Directors of Technology One Limited declared
a final dividend on ordinary shares in respect of the 2019 financial
year. The total amount of the dividend is $27,905,262 and is 60%
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
year concerning officers of the Company were renewed or
continued during the year ended 30 September 2019.

An indemnity agreement has been entered into between
TechnologyOne and each of the Directors of the Company named
earlier in this report and with each full-time Executive officer and
secretary of the Company. Under the agreement, the Company has
indemnified those officers against any claim or for any expenses
or costs which may arise as a result of work performed in their
respective capacities.

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
Non-audit services provided by the Company’s auditor, Ernst
& Young, in the current financial period and prior financial year
included taxation advice and other advisory services. 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.

During the year the following fees were paid or payable for non-
audit services provided by the auditor of the Company and its
related practices:

2019
$

2018
$

Ernst and Young:

Taxation advice and other advisory services

131,672

107,515

Total remuneration

131,672

107,515

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 72.

Rounding of amounts
The Company is of a kind referred to in Instrument 2016/191, 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.

Environmental regulation
The Company has determined that no particular or significant
environmental regulations apply to it.

2019 TechnologyOne Annual ReportTransforming business, making life simple
Remuneration Report (Audited)
Introduction from the Chair of the Remuneration Committee

Dear Shareholders,

• Directors fee pool – Following shareholder approval on 21

February 2019, the fee pool for Non-executive Directors was
increased from $1,000,000 to $1,500,000 per annum (including
applicable statutory superannuation guarantee contributions
and committee fees). Prior to this, the Non-executive Director
fee pool remained unchanged for three years and the increase
recognises that three additional Independent Directors have
been appointed to the Board in the past three years, with a
further director expected to be added in the short to medium
term. It is important to note that the increase is purely to
acknowledge the intended increase in Board size and will not
result in a significant increase in Non-executive Director fees,
which are only set to increase by CPI in FY20.

• The transition to a SaaS company coincides with the

implementation of AASB 15 Revenue from contracts with
customers in FY19. As a result, the Committee has reviewed
its remuneration policies, including performance measures,
to ensure that the change in accounting standard neither

advantages nor disadvantages Executive remuneration.

Proposed changes to the remuneration
framework in FY20
No significant changes to the remuneration framework have been
proposed in FY20.

TechnologyOne remains focused on delivering its growth promises
and we believe that our current remuneration structure positions
us well to continue providing our shareholders with strong returns,
both in the short and long-term, as well as ensuring alignment across
our Executive KMP. We are committed to ongoing dialogue with our
shareholders and we will always listen actively to their thoughts and
share any feedback where appropriate.

We thank you for loyalty and look forward to your continued
support.

Kevin Blinco
Chairman, Remuneration Committee

Brisbane
19 November 2019

On behalf of TechnologyOne’s Remuneration Committee
(the Committee), I am pleased to present to you our Remuneration
Report for the year ended 30 September 2019. The intention of
this report is to provide you with information around the linkage
between our strategic initiatives, remuneration principles and
remuneration framework to give transparency over how they
drive shareholder returns.

The primary objective of the Committee is to ensure that we
align Key Management Personnel (KMP) financial rewards with
shareholder interests and our business strategy, whilst ensuring
that we attract and retain exceptional Executives, Directors and
employees who are collectively responsible for delivering
long-term profitable growth and substantial shareholder returns.

Below provides a summary of:

•

Incentive outcomes and alignment to Company performance

• Remuneration framework changes during FY19

• Proposed changes to the remuneration framework in FY20

Summary of incentive outcomes and alignment to
Company performance
This report shares with you the remuneration outcomes for the year,
which the Committee and Board believes is commensurate with
Company performance. In summary:

• Total Executive KMP remuneration for executives employed

across both periods grew by 14%. This is below the Company’s
15% growth in reported profit before tax.

• STI outcomes across our Executive KMP were in line with target.

This is consistent with our growth in NPBT of 15%.

• Our LTI plan resulted in 72% of ‘at risk’ Share Purchase Options

vesting for our Executive KMP. The relatively low vesting
percentage is the result of our challenging LTI targets which
we believe assist in incentivising our KMP to drive superior
performance and long-term shareholder wealth creation.

Remuneration framework changes in FY19
A review of our remuneration framework has resulted in the
following changes in FY19:

• LTI plan – Awards from FY19 onwards are measured against
Relative Total Shareholder Return (TSR) and Earnings Per
Share (EPS) growth. This will ensure that our Executive
KMP remuneration is determined based on the Company’s
performance relative to our peers. Existing contracts will continue
to be honoured under the proposed plan.

• Deferred retention bonus – The Executive KMP LTI plan now
includes a deferred retention bonus element. The deferred
component is calculated at 25% of the STI earned in the year
under review and will only be released at the conclusion of a
two-year period, on the condition that the Executive KMP remains
employed with the Company for the entire deferral period.
This ensures the company retains high performing Executives
under an incentive scheme which drives long-term shareholder
wealth and allows the company further opportunity to claw back
amounts previously awarded to Executives in the unlikely event
that business outcomes differ materially from expected.

Remuneration Report (Audited)

Non-executive Directors

Kevin Blinco

Independent Director
Audit and Risk Committee Chair; Remuneration
Committee Chair; Nomination Committee

Full year

Richard Anstey

Independent Director

Nomination & Governance Committee Chair;
Audit and Risk Committee; Remuneration
Committee

Full year

Dr Jane Andrews

Independent Director

Audit and Risk Committee; Remuneration
Committee; Nomination & Governance
Committee

Sharon Doyle

Independent Director

Clifford Rosenberg

Audit and Risk Committee

Independent Director

Remuneration Committee

Executive Director

Adrian Di Marco

Board Chair

Chief Strategy and Innovation Officer

Executive KMP

Edward Chung

Chief Executive Officer

Stuart MacDonald

Chief Operating Officer

Paul Jobbins

Operating Officer - Corporate Services and
Chief Financial Officer

Full year

Part year -
Appointed 27
February 2019

Full year

Part year -
Appointed 30
October 2018

The remuneration report contains the following sections.

1. About this report

2. Key questions

3. Relationship between remuneration and Company

performance

4. Executive remuneration at TechnologyOne

5. How remuneration is structured

6. Remuneration governance

7. Non-executive director fees

8. Service agreements for the Executive KMP

9. Statutory remuneration table

10. Additional statutory disclosures

1. About this report

1.1 Basis for preparation of FY19

remuneration report

The information in this report has been prepared based on
the requirements of the Corporations Act 2001 and applicable
accounting standards.

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 Director (whether Executive or otherwise).

This report has been audited.

1.2 People covered by the remuneration Report
The Remuneration Report discloses the remuneration arrangements
and outcomes for those individuals who we have determined
to meet the definition of KMP under AASB 124 Related Party
Disclosures. The below table summarises each KMP, their position
and term as KMP.

The table below shows all the personnel covered by the
Remuneration Report:

Non-executive Directors

Ron McLean

Deputy Board Chair
Independent Director

John Mactaggart

Non-independent Director

Nomination & Governance Committee;
Remuneration Committee

Full year

2019 TechnologyOne Annual ReportTransforming business, making life simple2. Key questions
Key questions

TechnologyOne approach

Why does our remuneration framework have such
a high weighting towards variable remuneration?

Our Executive remuneration framework complies with common 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:

•

Relatively low fixed remuneration to enable a greater emphasis on performance

Relatively large at risk short-term incentive (STI) portion aligning Executives to current year performance

Long-term incentives (LTI) linked to long-term strategy, targets, and shareholder wealth creation

The winning of new business, driving continued profit growth in the current year is the key to our long-term success, and it is for this reason
our STI as a percentage of the total remuneration is significantly higher than our ASX-listed peers. At the same time, the fixed remuneration
for our Executives is comparatively low compared to our ASX-listed peers. The significant weighting towards the STI encourages our
Executives to drive new business and financial performance in the current year, which creates Annual Recurring Revenue (ARR)1 for future
years, and therefore long-term success and shareholder wealth.

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.

The talent pool in Australia for Executives with large scale enterprise software companies is highly competitive. Therefore, it is important to
ensure that our remuneration framework is appropriately structured for the enterprise software market. We believe that our remuneration
structure offers the necessary flexibility and incentive to ensure that we attract and retain talented Executives who understand the
industry and, in turn, drive shareholder value.

Why have we replaced our LTI measures for KMP
with EPS growth and Relative TSR?

In FY19, EPS growth and Relative TSR were introduced to replace historical LTI measures, which included NPAT growth. The rationale for the
selection of these two measures is as follows:

Is our STI plan sufficiently challenging with only
one performance measure?

•

EPS growth: Ensures that our Executives are remunerated in line with growth in shareholder wealth over the long term.

Relative TSR: Ensures that our Executives are remunerated in line with the Company’s performance relative to our peers over the
long term.

The introduction of these two new measures ensures we have LTI targets which are better aligned with our peers and are more directly
aligned with increase in shareholder wealth.

The winning of new business, driving continued profit growth is the key to our long-term success. Having Executives focus solely on
NPBT ensures there is clear line of sight for Executives and transparency for shareholders as to how STI awards are determined. The
simplification of our software also reduces the cost of implementations which in turn increases our consulting margins, thereby increasing
our NPBT and enhancing our competitive advantage.

Therefore, we consider the use of NPBT as the sole measure within our STI to be appropriate.

Why did we introduce a deferred retention bonus
in FY19?

In FY19, a deferred retention bonus was introduced. This means that an amount equal to 25% of the STI earned in the year under review is
retained for a period of two years and only paid out to the Executive if they remain in employment with the Company for the entire deferral
period. This ensures that we retain high performing Executive KMP and is intended to help further drive long-term shareholder wealth.

The introduction of the deferral component also allows the company further opportunity to claw back amounts previously awarded to
Executives, in the unlikely event that business outcomes differ materially from expected.

What impact has the adoption of AASB 15
Revenue from contracts with customers had on
our remuneration policies and measures?

As part of our transition to a SaaS company and the adoption of AASB 15, the committee has reviewed its remuneration policies to ensure
that the change in the accounting standard neither advantages nor disadvantages Executive remuneration.

Overall, the above changes in FY19 are not considered to have a significant impact on our KMP’s remuneration.

1ARR is not an IFRS measure and is unaudited, it represents future contracted annual revenue at year end

3. Relationship between remuneration and Company performance

3.1 TechnologyOne’s five-year performance
The below table sets out information showing the creation of shareholder wealth for the years ended 30 September 2015 to
30 September 2019.

Actual profit before tax reported ($’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

Reported profit after tax growth %

Average executive remuneration growth % for continuing Executives2

1Figures are as reported in previous financial years (i.e. not restated for AASB 15).

2015

46,494

8.78

11.58

3.18

3.84

24%

16%

15%

2016

53,240

9.45

13.26

3.84

5.94

57%

16%

15%

2017

58,019

10.18

14.20

5.94

5.02

(14%)

(6%)

20181

66,528

11.02

16.14

5.02

5.58

13%

15%

2019

76,389

11.93

18.43

5.58

7.18

31%

15%

14%

2This is the average annual full time package excluding any termination payments or partial periods for Executives employed across both 2018 and 2019. This allows for comparison on a like for like basis.

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.

As can be seen from the table above, the Executives’ remuneration
framework has successfully driven performance and the creation
of shareholder wealth over the longer term. In addition, it is evident
that the Executives’ remuneration has been in alignment with
overall Company performance.

The graphs below set out information regarding TechnologyOne’s
performance, earnings and movement in shareholder wealth over
the past five financial years up to and including FY19. Note, 2018
and prior years represent reported figures which have not been
restated for changes in accounting policy or accounting standard.

The first graph below shows our average Executives’ STI has grown
by 10% below the Company’s NPBT profit growth of 13% over the last
5 years.

Average STI vs. NPBT

Average REM vs. NPBT

$843k

$936k

FY15

FY16

$1M

FY17

$1.1M

$1.2M

FY18

FY19

Average REM

NPBT

Average total Executive remuneration has grown by 9% which is
at a much slower rate than 13% growth in reported NPBT over the
last 5 years.

In summary, profit has grown faster than our Executives’
remuneration which demonstrates how effective our remuneration
structure is at driving long-term shareholder wealth.

3.2 Outcome of equity plans

2019

Name

Number
of
options
exercised
during
the
period

Value of
options
issued
during
the
period

Number
of
options
yet to
vest

Number
of
options
vested
during
the
period

Number
of options
granted
during the
period1

Number
of
options
forfeited
during
the
period

Value of
options
forfeited

Expiry
date

$411k

$461k

$395k

$445k

$568k

FY15

FY16

FY17

FY18

FY19

Average STI

NPBT

E Chung

175,064

1.490

- 582,599

155,482

(2,188)

3,261 1/10/26

S MacDonald

1.490 (241,700) 580,554

237,051

- 1/10/26

Average STI has grown by 10% which is at a much slower rate
than the 13% growth in reported NPBT over the last 5 years

Our STI structure is working as it drives short- term performance,
which in turn creates a strong long-term recurring revenue base.
In the long- term, this creates continuing financial success and
substantial shareholder wealth for TechnologyOne.

The second graph shows that the average Executives’ remuneration
has been growing at less than the Company’s NPBT profit growth
over the last 5 years.

P Jobbins

215,456

1.490

- 212,763

(2,693)

4,013 1/10/26

2019

Name

Number
of EPRs
granted
during the
period1

Value
of EPRs
granted
during
the
period

Number
of EPRs
vested
during
the
period

Number
of EPRs
forfeited
during the
period

Number
of EPRs
yet to
vest

Value
of EPRs
forfeited

Expiry
date

S MacDonald

46,885

5.131

46,885

(586)

3,007

1/10/26

LTIs are offered to Executive KMP as either options (with an exercise price) or EPRs (executive performance

rights – shares issued at market price). Both have conditions/hurdles tied to them. The Executive is free to

choose either EPRs or options.

Refer to section 10.1 for additional information on the outcome of
equity plans.

2019 TechnologyOne Annual ReportTransforming business, making life simpleDuring the year, Edward Chung and Stuart MacDonald completed a three-year performance period, becoming eligible to exercise options
which have vested over that period.

4. Executive remuneration at TechnologyOne

A summary of the targets set, performance against each target and options which have vested and are available to be exercised has been
set out below:

Edward Chung:

NPAT growth

NPBT margin growth

Operating cash flow / NPAT ratio

Customer retention

Target1

>15%2

100bp3

>100%4

>99%5

Testing

Target met

Number of LTIs
available for
target

Percentage
earned

Individual
performance
factor

LTI’s vested and
available for
exercise

Annual

3 year

Annual

Partial

Full

Partial

Full

96,373

32,767

30,839

32,767

67%

100%

83%

100%

1.00

64,249

32,767

25,699

32,767

Represents target measures for FY17 grant. The target measures disclosed in section 5.3 of this report reflect measures applicable to the FY19 grants.
2

Represents stretch target at which 100% of options vest. Mid hurdle target, at which 50% of options vest linearly up to the stretch target, was between 10% and 15% growth.

Represents stretch target at which 100% of options vest. Mid hurdle target, at which 50% of options vest linearly up to the stretch target, was between 50 basis points and 100 bases points growth.

Represents stretch target at which 100% of options vest. Mid hurdle target, at which 50% of options vest linearly up to the stretch target, was between 95% and 100% growth.

Represents target at which 100% of options vest.

Stuart MacDonald:

Licence fee growth

NPAT growth

Sales operating expense growth

Customer retention (APAC)

Target1

Testing

Target met

Number of LTIs
available for
target

Percentage
earned

Individual
performance
factor

LTI’s vested and
available for
exercise

>15%2

>15%3

<8%4

>99%5

Annual

3 year

Annual

Partial

Full

97,609

162,682

32,536

76%

67%

100%

1.00

74,369

108,455

21,691

32,536

Represents target measures for FY17 grant. The target measures disclosed in section 5.3 of this report reflect measures applicable to the FY19 grants.
2

Represents stretch target at which 100% of options vest. Mid hurdle target, at which 50% of options vest linearly up to the stretch target, was between 8% and 15% growth.

4.1 Our remuneration strategy and principles
At TechnologyOne, our remuneration strategy is aligned with our vision of “transforming business, making life simple”. The Board believes that
in order to deliver on our vision and build long-term shareholder growth, TechnologyOne must have a remuneration framework that allows it
to compete for talent both locally and globally in a highly competitive and fast-moving environment and against companies such as Oracle and
SAP, as well as other Australian software companies.

The remuneration principles that underpin our remuneration strategy and framework are:

• 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

• Articulate clearly to Executives the direct link between individual and group performance, and individual financial reward

• Reward superior performance, while managing risks

• Provide flexibility to meet changing needs and emerging competitive market practices

• Commitment to diversity, reflecting a fair and equitable remuneration framework

4.2 Overview of remuneration framework

Fixed remuneration

Short-term incentive (STI)

Long-term incentive (LTI)

Nature

Base salary plus superannuation.

Paid in cash monthly with 20% retention until
accounts are audited and finalised. Retention amount
paid in cash 3 months after year end.

Options and performance rights are subject to
meeting performance targets tested over three years.

A deferred retention bonus equal to 25% of the
annual STI earned in the year under review is
retained and paid at the conclusion of the two-year
period following the end of the financial year, only
if the Executive remains in employment with the
Company.

Purpose

To provide a competitive salary based on market
benchmarking from the Remuneration Committee.

Drives outstanding performance in the short-term
which in turn translates to long-term shareholder
wealth.

Creates a strong focus on long- term performance,
with a strong alignment to long-term shareholder
wealth creation.

Represents stretch target at which 100% of options vest. Mid hurdle target, at which 50% of options vest linearly up to the stretch target, was between 10% and 15% growth.

Performance targets

N/A.

Represents stretch target at which 100% of options vest. Mid hurdle target, at which 50% of options vest linearly up to the stretch target, was between 8% and 9% growth.

Represents target at which 100% of options vest.

Percentage of agreed Net Profit Before Tax (NPBT)
for the Group; or percentage of NPBT for the relevant
business segment for the Executive.

Blended approach of performance targets, including:

• Net Profit After Tax (NPAT) growth (for grants

prior to FY19)

•

Licence fee growth (for grants prior to FY19)

Sales operating expense growth (for grants prior
to FY19)

R&D expense growth (for grants prior to FY19)

Relative TSR (for grants FY19 onwards)

EPS growth (for grants FY19 onwards).

Performance period

N/A.

Annual.

Three years for options.

Deferred retention bonus is calculated on the annual
performance period and deferred for two years of
service. The employee must remain employed with
the company for the entire two-year deferral period.

2019 TechnologyOne Annual ReportTransforming business, making life simpleTarget remuneration mix
Target remuneration mix at the beginning of the contract for the CEO (Table 1), and other Executive KMP (Table 3) is represented below. Over
time, the remuneration mix is expected to change due to a larger increase in STI relative to other remuneration components. The below
represents the contracted remuneration mix for the CEO (Table 2) and demonstrates how remuneration mix has changed over time to FY19.

5. How executive remuneration is structured

5.1 Fixed remuneration
Fixed remuneration comprises base salary and superannuation. Following the end of the financial year, to ensure our fixed remuneration
remains competitive, we undertake benchmarking relative to our peers.

Table 1. Target CEO remuneration mix
(state of contract target)

Table 2. CEO Remuneration mix FY19

Our peer group comprises companies within similar industries which are ASX listed and are used as a basis for benchmarking ourselves
against internally. Based on the findings from the benchmarking, fixed remuneration was increased by 1% for FY19.

33%

34%

28%

33%

39%

Fixed

STI

LTI

Fixed

STI

LTI

The below represents the target contracted remuneration mix for other Executive KMP in FY19 and demonstrates how remuneration mix
changes over time (Table 4).

Table 3. Target Executive KMP remuneration mix
(state of contract target)

Table 4. Executive remuneration mix FY19

33%

34%

26%

35%

33%

39%

Fixed

STI

LTI

Fixed

STI

LTI

We have reported separately the remuneration mix for our Executive Chairman (Table 5). The Chairman was offered an LTI of $400,000 which
he declined as he has in previous years. The Remuneration Committee recognises that Mr DiMarco’s total remuneration is substantially
below that of comparable companies. The Remuneration Committee acknowledges that Mr Di Marco’s significant shareholding in
TechnologyOne provides the benefits that the LTI aims to achieve.

Table 5. Target Executive Chairman remuneration mix

Table 6. Executive Chairman remuneration mix FY19

33%

34%

33%

66%

Fixed

STI

LTI

Fixed

STI

LTI

5.2 Short-term incentive
Executives participate in a STI plan which is based on NPBT. Key features of the STI plan are detailed in the table below:

Feature

Opportunity

Description

The value of the STI is based on a percentage of Net Profit Before Tax (NPBT) for the Group or percentage of NPBT for the relevant business segment for
the Executive. The percentage of target NPBT is determined at the outset of the contract and remains fixed for the contract period for each Executive
KMP. As the STI awarded is a percentage of NPBT, it is uncapped to encourage over- achievement and drive performance in the current year and the
creation of long-term shareholder wealth. Given the expected growth in NPBT over time, the STI component of total remuneration typically grows in
greater proportion to the fixed and LTI components which typically only increase by CPI on an annual basis. An illustrative example of how this works
over time in practice has been presented below this table.

The STI is uncapped and has no floor applied, aligning Executives with shareholder expectations.

As part of our transition to a SaaS company and the adoption of AASB15, the committee has reviewed its remuneration policy to ensure that the
change in accounting standard neither advantages nor disadvantages Executive remuneration.

Award vehicle

Cash

Performance measures

The STI target is based on NPBT for the Group or NPBT for the relevant business segment for the Executive. This effectively aligns the target incentive
with shareholder return.

Timing

STI cap

Clawback

Termination

TechnologyOne’s use of STIs differs from most other organisations in that it utilises only one performance measure (percentage of NPBT) in determining
STI awards. This is to create focus and clarity for Executives whilst also providing transparency for shareholders as to how STI awards are determined.
The Board and Remuneration Committee continue to monitor STI performance measures so as to ensure that they best align with the Company’s
commitment to providing shareholder wealth.

Because the fixed remuneration of an Executive is very low compared to our ASX-listed peers (35% vs 65%), to assist the Executives in meeting their
short-term financial obligations, the STI is calculated and paid monthly with 20% retention.

20% retention of their 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 that business outcomes differ materially to what was expected, the Company can claw back any STI.

An important element of the success of our STI has been that it is uncapped so the greater the results in the current financial year, the greater the STI.
This not only encourages over performance in the current financial year for the company, 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 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 also uncapped on the downside. Given that the Executive’s fixed remuneration % is
significantly lower than our ASX-listed peers, under-performance has a significant, negative impact on their total remuneration.

The STI framework aligns performance with remuneration outcomes encouraging over performance and penalising under performance.

The ability to clawback STIs exists in the unlikely event that business outcomes differ materially from expected.

On termination, the Executive foregoes any further STI payments which would have otherwise been available for the remainder of the financial year
under their STI plan.

TechnologyOne Executives have an STI set at the start of their contract which is typically approximately 33% of their total targeted
remuneration.

The best way to consider the mechanics of the TechnologyOne STI is by way of the following example.

2019 TechnologyOne Annual ReportTransforming business, making life simpleWorked example

Consider a candidate who can command a remuneration package of $900,000 in the open market. The TechnologyOne method
is as follows:

Fixed remuneration

$300,000 (or 33% of the package with adjustments in future years)

STI target

Commences at 75% to 100% of fixed remuneration (as established during contract negotiations). $300,000 is used as the initial STI target. If we assume
that NPBT of the Group is to be used and the forecast NPBT is $40m (a 15% increase on the prior year) then contract STI will be $300,000/$40m (or
0.75% of profit)

Increase in profit

12% per annum

CPI

STI target as a % of NPAT

15%

Year

Fixed

Profit target ($m)

Actual profit ($m)

40.00

44.80

50.18

38.96

43.63

48.87

300,000

303,000

306,030

909,030

48%

STI%

0.75%

STI target(STI % x profit
target ($))

Actual STI (STI% x actual
profit ($))

300,000

336,000

376,320

292,200

327,225

366,525

985,950

52%

LTI is explained further in section 5.3. This number is provided for illustrative purposes only.

5.3 Long-term incentives (LTI)
LTI remuneration for TechnologyOne Executives is made up of a share-based remuneration element (5.3.1) and a deferred retention bonus
(5.3.2).

5.3.1 Share based remuneration
TechnologyOne Executives are eligible to participate in an LTI plan. The LTI plan is designed to provide participants with the incentive to
deliver substantial consistent growth in shareholder value:

Feature

Opportunity

Award vehicle

Performance period

Description

The value of the total number of LTIs issued each year (called a grant) to an Executive is typically set at 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.

Each LTI entitles the Executive the right to purchase one TechnologyOne share in the future at an agreed strike price, subject to meeting specified
performance targets.

Performance is measured over a three-year performance period with individual and Company targets assessed annually or at the conclusion of the
three-year performance period. The performance period commences at grant date and extends for three years to give a vesting date.

The number of options in the grant are split into tranches based on the weighting of each performance measure. For performance measures with
a three-year target, the relevant tranche vests at the end of the three-year period in accordance with the vesting schedule provided below. For
performance measures met with an annual target, 1/3 of the relevant tranche is assessed in accordance with below vesting schedule, however, will
not vest until the end of the overall three-year performance period.

Feature

Description

Performance measures

The performance measures for LTI grants made in FY19 are presented below. Note that specific performance targets are not disclosed as they are
commercially sensitive and provide our competitors with insights into the key areas of focus for our business. However, the performance targets
set are such that they are all considered to be ‘hard targets’ that, if met, will drive significant shareholder wealth creation.

Performance targets1

EPS growth

Relative TSR4

Performance
period

3 years

Testing

Annual2

3 years3

Weighting
(all KMP)

75%

25%

1The performance target has to be achieved for the Executive to meet their LTI target.

2The 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.

3The Company has chosen a three-year testing period where the average over a three-year performance period is used

4Relative TSR targets are determined with reference to our peer group.

It is noted that grants made prior to FY19 will continue to be honoured under the old LTI measures. These measures are outlined below:

LTI feature

Executive KMP and LTI weighting

Performance targets1,2

Performance
period

Testing

Edward
Chung

Stuart
MacDonald

NPAT growth

Licence fee growth – APAC

Sales operating expense growth - APAC

Customer Retention by ASM Value - APAC

Customer Retention by ASM Value

Operating Cash Flow / NPAT

Company profit before tax margin growth

1Performance targets exclude acquisitions.

3 years

Annual3

3 years4

50%

17%

16%

17%

50%

30%

10%

2The performance target has to be achieved for the Executive to meet their LTI target.

3The 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.

4The Company has chosen a three-year testing period where the average over a three-year performance period is used.

Under the prior LTI plan, it is acknowledged that the profit growth target, which made up 50% of each Executive’s LTI measure, was also the
primary target for STI. The rationale for including the measure for both STI and LTI assessment is that the growth of licence fee in the short-term
translates into long-term ARR growth. We further note that even though this LTI performance measure is tested annually over a three-year period, if
targets are achieved the options will only vest and become available for exercise at the conclusion of that three-year performance period (subject
to any Board discretion which may be applied, as noted below).

Vesting schedule

For each performance target there will be a mid and stretch hurdle (for the performance period) based on the Executive’s area of responsibility:
Mid hurdles have been calculated so that if they are achieved, this will create substantial shareholder wealth.

Performance achieved

Meets the stretch hurdle

Between stretch and mid hurdle

Meets mid hurdle

Less than the mid hurdle

Level of vesting

100% vesting

vest linearly

50%

The number of options that vest at the end of the relevant performance period is determined as follows:

• Number of LTIs earned per three-year performance target = Number of LTIs available for that target x percentage earned x individual

performance factor1

• Number of LTIs earned per yearly performance target = 1/3 x number of LTIs available for that target x percentage earned x individual

performance factor1

1 The individual performance factor is typically 100%. The Board however has the discretion in exceptional circumstances to increase the individual performance factor

above 100% to a maximum of 200% to take into consideration exceptional performance or contribution by an Executive.

Allocation methodology

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 average price (VWAP) over the 10 days prior to the grant date with no discount.

2019 TechnologyOne Annual ReportTransforming business, making life simpleFeature

Board discretion

Change of control

Description

Given the introduction of relative TSR as a performance measure with a three-yearly annual testing, we have provided an additional example
of how this would work in practice:

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. Board discretion has not been applied to any Executive KMP threshold
performance targets.

Worked example 2

The Board has discretion to determine the extent to which LTIs vest based on the period elapsed and performance at the time of any change of
control event.

Cessation of employment

Awards lapse unless the Board determines otherwise, in which case it considers performance of the individual over the relevant period up to the
date of cessation of employment.

Expiry

Re-testing

Clawback

Margin loans

At the end of the applicable performance period, any LTIs that have vested will expire 5 years after vesting.

We do not revise or re-test our LTIs over the relevant performance period.

Yes available

Directors and Executives are not permitted to use TechnologyOne securities as security for margin loans.

5.3.2 Deferred retention bonus

LTI measure for Relative TSR

Average Relative TSR stretch target of 75% over three years and average Relative TSR mid hurdle of 50% over three years

LTI opportunity

$300,000 (based on 10 working day Volume Weighted Average Price (VWAP) of $5 per option). Under the Black Scholes model, the value of each
option is $1.00. Individual performance factor of 100%

Number of options allocated

300,000

Vesting period

3 years (three-yearly testing)

Year

Relative TSR

Options
available

Options
earned Note

54%

46%

75%

58%

300,000

198,000

300,000

170,000

Feature

Opportunity

Award vehicle

Cap

Opportunity

As disclosed in our Chair’s letter, we have introduced a new deferred retention bonus in the FY19 year. An amount equal to 25% of the annual STI
earned in the year under review is retained and will only be released at the conclusion of the two year period following the end of financial year, on
the condition that the Executive KMP remains employed with the Company for the entire deferral period.

1Average of 58% Relative TSR achieved over 3 years - 50% vests at achievement of mid-hurdle with linear vesting between 50% and 75% gives 198,000 options vesting.

A three-year testing period for Relative TSR is considered most appropriate (as opposed to annual testing over three years) as the
performance measure is relative to how our peers are performing over that same period. This aligns with our strategy to create long-term
shareholder wealth.

Cash

For the same reasons outlined in section 5.2 for the STI, this deferred retention bonus is also uncapped.

Allocation methodology

The allocation of this LTI is based on linear recognition of the value over the performance period and service period.

Worked example 1

To further explain the rationale for a number of our LTI measures being tested annually (as opposed to over three years), we have provided
the below illustrative example which uses the below illustrative information:

LTI measure for EPS growth

Average annualised EPS growth stretch target of 15% over three years and average EPS growth mid hurdle of 10% over three years

LTI opportunity

$300,000 (based on 10 working day Volume Weighted Average Price (VWAP) of $5 per option). Under the Black Scholes model, the value of each
option is $1.00. Individual performance factor of 100%

Number of options allocated

300,000

Vesting period

3 years (annual testing in scenario 1)

3 years (three-yearly testing in scenario 2)

Note, in the example below, the EPS growth achieved, is the same under each scenario.

Annual testing

Three year testing

Year

EPS
growth

12%

20%

Options
available

Options
earned

Commentary

100,000

70,000

(50,000) + (2/5 X 50,000)

100,000

- Below the mid target

100,000

Exceeds the stretch target

Commentary

Options
available

Options
earned

300,000

170,000

Achieved 57% of 3 year stretch target

300,000

267,796

Achieved 89% of 3 year
stretch target

The above illustrates how evaluating our Executive KMP each year of a three year performance period (as opposed to assessing only at
the conclusion of the period) helps ensure they are incentivised to drive consistent year-on-year performance and growth, therefore driving
stronger shareholder returns over the long-term. It demonstrates how under performance in one year is reflected in an Executive’s overall LTI
award with annual testing. As is evident from the above, this may not be the case under a plan which has a three year testing period. It is also
noted that as the LTIs which vest are in the form of options, share price has to appreciate over the three year period for vesting options to be
of any benefit to our Executive KMP. This further aligns our current plan with long-term shareholder wealth.

2019 TechnologyOne Annual ReportTransforming business, making life simple19,616

Total fixed remuneration

527,790

522,565

623,229

537,114

5.4 Detail of Executive remuneration and performance

Adrian Di Marco

Position

Executive Chairman and Chief Strategy and Innovation Officer

Remuneration mix

FY19 Actual

FY19 Target

FY18 Actual

FY18 Target

Fixed remuneration

Base salary

Chairman's fees

Superannuation

$502,531

$497,555

2019
$

172,171

310,548

19,812

$973,648

$975,373

Fixed

STI

LTI

$848,150

$851,629

2018

$ Notes

360,797 The base salary represents the amount earned for the role of Chief Strategy and Innovation Officer

117,142 The Chairman's fees for the current year has been benchmarked in line with the Group's peers

Total fixed remuneration

502,531

497,555

STI

973,648

848,150 The STI relates to the role of Chief Strategy and Innovation Officer

LTI new scheme

Value of share options offered

Value of share options forfeited

Value of EPRs options offered

Value of EPRs forfeited

Deferred retention bonus

Value of LTI earned

LTI old scheme

Value of share options

Total remuneration

1,476,179

1,345,705

% growth on prior year excluding LTI
and termination benefits

% growth on prior year including LTI
and termination benefits

Post-employment

Post-employment benefits

Termination benefits

10%

Overall, the Executive Chairman’s fixed remuneration has increased by only 1%. The components making up the fixed remuneration were re-
aligned so that the Chairman’s fees are in line with peers. The base salary was reduced accordingly.

Edward Chung

Position

Chief Executive Officer

Remuneration mix

FY19 Actual

FY19 Target

$527,790

$527,791

$623,229

$632,143

$454,744

$490,734

Fixed

STI

LTI

FY18 Actual

$522,565

$537,114

$336,925

FY18 Target

$522,565

$546,436

$402,375

Fixed remuneration

Base salary

Director's fees

Superannuation

2019
$

2018

$ Notes

507,978

502,949

19,812

19,616

229,828

(3,261)

115,329

(11,316)

Deferred retention bonus introduced in the current year. This amount will only be released at
the conclusion of the two year period folowing the end of financial year, on the condition that
the Executive KMP remains employed with the Company for the entire deferral period.

STI

LTI new scheme

Value of share options offered

Value of share options forfeited

Value of EPRs options offered

Value of EPRs forfeited

Deferred retention bonus

51,936

Value of LTI earned

LTI old scheme

278,503

104,013

Value of share options

176,241

232,911

Total remuneration

1,605,763

1,396,603

% growth on prior year excluding LTI
and termination benefits

% growth on prior year including LTI
and termination benefits

Post-employment

15%

24%

22%

Post-employment benefits

2019 TechnologyOne Annual ReportTransforming business, making life simpleStuart MacDonald

Position

Chief Operating Officer

Remuneration mix

FY19 Actual

FY19 Target

FY18 Actual

FY18 Target

Fixed remuneration

Base salary

Director's fees

Superannuation

Total fixed remuneration

STI

LTI new scheme

$442,519

$438,138

$423,476

$429,533

$325,142

$384,689

Fixed

STI

LTI

$367,028

$204,735

$373,398

$254,520

2019
$

2018

$ Notes

422,707

418,522

19,812

19,616

442,519

423,476

438,138

367,028

Value of share options offered

234,421

234,718

Value of share options forfeited

(29,983)

Value of EPRs options offered

Value of EPRs forfeited

Deferred retention bonus

Value of LTI earned

LTI old scheme

58,438

(3,007)

35,290

325,142

204,735

Value of share options

Total remuneration

1,191,137

1,009,901

% growth on prior year excluding LTI
and termination benefits

% growth on prior year including LTI
and termination benefits

Post-employment

18%

12%

33%

Post-employment benefits

Paul Jobbins

Position

Chief Operating Officer

Remuneration mix

FY19 Actual

$206,250

FY19 Target

$206,250

$251,625

$259,341

$94,940

$96,519

Fixed

STI

LTI

FY18 Actual

FY18 Target

Fixed remuneration

Base salary

Director's fees

Superannuation

Total fixed remuneration

STI

LTI new scheme

Value of share options offered

Value of share options forfeited

Value of EPRs options offered

Value of EPRs forfeited

Deferred retention bonus

Value of LTI earned

LTI old scheme

Value of share options

Total remuneration

% growth on prior year excluding LTI
and termination benefits

% growth on prior year including LTI
and termination benefits

Post-employment

Post-employment benefits

2019
$

186,438

19,812

206,250

251,625

77,984

(4,013)

20,969

94,940

552,815

n/a

2018

$ Notes

n/a

2019 TechnologyOne Annual ReportTransforming business, making life simpleFY20 aggregate fee pool and Non-Executive
Director fees
It is proposed that the current fee pool remain unchanged for FY20,
capped at $1,500,000. Non-executive Director fees are set to
increase in line with CPI, as per Board policy.

Service agreements for the
Executive KMP

Remuneration and other terms and conditions of employment for
Executive KMP are formalised in service agreements which are
reviewed each year. All Executive KMP service agreements are
rolling contracts which cease following notice of termination by
either employee or employer.

The following table presents some of the key contractual
arrangements for the Executive KMP:

KMP

Contract term

Termination notice
by either party

Post-employment
restraint

Executive Chairman

CEO

Other Executive KMP

Ongoing

3 months

6 months

12 weeks

12 months

If an Executive KMP resigns, payment in lieu of notice that is not
worked is provided, in addition to any statutory entitlements. No
other additional termination or post employment benefits are
provided on termination of employment. Refer to sections 5.2 and
5.3 respectively for treatment of STIs and LTIs on termination of

Executive KMP.

The Executive Chairman’s fixed remuneration package is
established to compensate him for executing the role of Chairman
and also for that of Chief Strategy & Innovation Officer (as tabled
below).

In FY19, the Chairman’s fixed remuneration consists of:

Role

Chairman

Cheif Strategy and Innovation Officer

Total fixed remuneration

Fixed remuneration

310,245

192,286

502,531

The Executive Chairman also receives an STI component for his role
as Chief Strategy and Innovation Officer.

As the Chairman is also an Executive, the remuneration for
performing the Chairman role (exclusive of Directors’ fees) is not
included in the Non-Executive Director Fee Pool.

6. Remuneration governance
The Remuneration Committee is responsible for developing the
remuneration framework for TechnologyOne Executives and making
recommendations related to remuneration to the Board. The
Committee develops the remuneration philosophy and policies for
Board approval.

The responsibilities of the Committee are outlined in their Charter,
which is reviewed annually by the Board. The key responsibilities of
the Committee include:

• Advising the Board on TechnologyOne’s policy for Executive and

Director remuneration

• Making recommendations to the Board on the remuneration

arrangements for Executives and Directors to ensure they are
aligned with TechnologyOne’s vision and are set competitively to
the market

• Approving KMP terms of employment

In making recommendations to the Board, the Committee reviews
the appropriateness of the nature and amount of remuneration to
Executives and NEDs on an annual basis.

In carrying out its duties, the Committee can engage external
advisors who are independent of management. During the year the
committee engaged an external auditor in relation to the drafting of
this remuneration report.

7. Non-executive Director fees
Determination of Non-executive Director fees
In FY19, Board fees were set at $129,533 per Director, including
statutory superannuation contributions. This represents a 1%
increase on prior year and aligns with Board policy. No additional
fees are paid in respect of committee attendance.

Directors’ Fees are normally reviewed every three years by an
independent consultant and the setting of fees is to be consistent
with comparable companies by market capitalisation. Given the
last independent review was done for the financial year starting 1
October 2016, independent research of comparative companies’
Directors’ Fees for the 2019 Financial year has indicated that the
proposed increase in Directors’ Fees is in line with the median rate
for ASX 200 companies.

Aggregate fee pool
The total amount of Directors’ fees is capped at a maximum pool
that is approved by shareholders. The current fee pool is capped
at $1,500,000, which was approved by shareholders at the Annual
General Meeting on 21 February 2019. The increase in fee pool from
FY18 ($1,000,000) acknowledges the additional three Directors
added to the Board since the last review, and our intention to add a
further Director over the short to medium term.

Non-executive Directors receive fees to recognise their
contribution to the work of the Board and the associated
committees that they serve. Non-executive Directors do not
receive any performance-related remuneration.

9. Statutory remuneration
Total remuneration for Executives increased by 21% from FY18 below our company profit after tax growth of 208%. Directors’ fees increased by 1%
per Director on an annualised basis, in line with the agreed board policy.

Short-term employee benefits

Post
employment
benefits

Long-term incentives

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i
r

a
t
o
T

Name

Non-executive Directors

R McLean
(Non-executive Director)

J Mactaggart
(Non-executive Director)

K Blinco
(Non-executive Director)

R Anstey
(Non-executive Director)

Dr J Andrews
(Non-executive Director

S Doyle
(Non-executive Director)1

C Rosenberg (Non-
executive Director)2

Executives

A Di Marco
(Executive Chairman)3

E Chung
(Chief Executive Officer)2

S MacDonald
(Chief Operating Officer)3

P Jobbins (Chief
Financial Officer)4

T Ristevski (Operating
Officer – Corporate
Services)5

2019

2018

2019

2018

2019

2018

2019

2018

2019

2018

2019

2018

2019

2018

118,313

11,240

129,553

117,142

11,128

128,270

118,313

11,240

129,553

117,142

11,128

128,270

118,313

11,240

129,553

117,142

11,128

128,270

118,313

11,240

129,553

117,142

11,128

128,270

118,313

11,240

129,553

117,142

11,128

128,270

118,313

11,240

129,553

68,333

6,492

74,825

69,016

6,557

75,573

2019

172,171

310,548

19,812

502,531

973,648

2018

360,797

117,142

19,616

497,555

848,150

2019

507,978

2018

502,949

2019

422,707

2018

418,522

2019

2018

2019

186,438

2018

199,849

19,812

527,790

623,229

19,616

522,565

537,114

19,812

442,519

423,476

19,812

206,250

251,625

19,616

219,465

25,797

Total Senior Executives

2019

1,289,294

310,548

79,248

1,679,090

2,271,978

2018

1,482,117

117,142

78,464

1,677,723

1,778,089

Total KMP

2019

1,289,294

1,089,442

153,245

2,531,981

2,271,978

2018

1,482,117

771,185

140,596

2,393,898

1,778,089

Ms Doyle was appointed on 28 February 2018

51,936

402,808

336,925

129,553

128,270

129,553

128,270

129,553

128,270

129,553

128,270

129,553

128,270

129,553

73%

74,825

75,573

1,476,179

10%

1,345,705

1,605,763

15%

1,396,604

35,290

234,421

55,431

1,191,137

18%

20,969

73,971

(15,478)

1,009,901

552,815

n/a

229,784

n/a

108,195

711,200

55,431

4,825,894

14%

21%

526,182

3,981,994

108,195

711,200

55,431

5,678,785

15%

21%

526,182

4,698,169

19,616

438,138

367,028

204,735

Mr Rosenberg was appointed Company on 27 February 2019.
3Mr Di Marco was offered an LTI of $400K which he declined in the 2018/2019 year, as he has in previous years. The Remuneration Committee acknowledges that Mr Di Marco’s existing significant shareholding in TechnologyOne
provides the benefits that the LTI aims to achieve. Mr Di Marco’s STI is calculated as 1.26% of Group NPBT. Mr Di Marco’s remuneration grew by 10% on the prior year, due to his fixed remuneration being up 1% and his STI up 15% in

line with company profit.

Paul Jobbins commenced employment with the Company on 30 October 2018.

5Tony Ristevski resigned, effective 4 May 2018.

2019 TechnologyOne Annual ReportTransforming business, making life simple

10. Aditional statutory disclosures

10.1 Long-term incentive scheme
In 2016, TechnologyOne replaced its previous Executive Option Plan (EOP) with an LTI plan aligned to market, shareholder
and Executive requirements.

Options

2019

Name

Number
of options
granted
during the
period

Grant date

Exercise price

Value per
option

Value of
options at
grant date

Number of
options yet
to vest

Number of
options vested
during the
period

Number
of options
forfeited
during the
period

Value of
options
forfeited

Expiry date

Edward Chung

175,064

1/10/2018

5.4829

Stuart MacDonald

Paul Jobbins

215,456

30/10/2018

5.4829

1.490

260,845

582,599

155,482

(2,188)

3,261

1/10/2026

580,554

237,051

1/10/2026

321,029

212,763

(2,693)

4,013

1/10/2026

Executive Performance Rights

2019

Name

Number of
ERPs
granted
during the
period

Grant date

Exercise price

Value per
ERP

Value of ERPs
at grant date

Number of
ERPs yet
to vest

Number of
ERPs vested
during the
period

Number of
ERPs
forfeited
during the
period

Value of
ERPs
forfeited

Expiry date

Stuart MacDonald

46,885

1/10/2018

5.131

240,567

46,885

(586)

3,007

1/10/2026

For details of grants under the previous EOP plan, please refer to
sections 10.2 and 10.3.

* The assessed fair value at grant date of options granted to the
individuals is allocated equally over the period from grant date to
vesting date. The amount is included in the remuneration tables
above. As outlined in greater detail in note 1 (q) (iii) fair values at
grant date are determined using a Black-Scholes pricing model.

Options forfeited during the period, are due to non-achievement
of performance targets set by the Board for 2019. The Board
is focused on ensuring that management remuneration and
shareholder value are aligned by setting performance targets that
create long-term shareholder wealth.

The model inputs for options granted to Executives are as follows:

a. Options are granted for no consideration. Each tranche

vests at the end of the three-year period, subject to meeting
performance hurdles.

b. Dividend yield – 2.1%

c. Expected volatility – 30%

d. Risk-free interest rate – 1.98%

e. Price of shares on grant date – $6.13

Fair value of options – $1.49

The model inputs for EPRs granted to Executives are as follows:

a. EPRs are granted for no consideration. Each tranche vests
at the end of the three-year period, subject to meeting
performance hurdles.

b. Dividend yield – 2.1%

c. Risk-free interest rate – 1.98%

d. Price of shares on grant date – $6.13

e. Fair value of options – $1.49

10.2 Quarantined Executive Option Plan (EOP)
(now superseded)

These options were issued to existing Executives and
TechnologyOne is required to honour these pre-existing contracts.
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 2016 LTI plan going forward. All new
appointments of Executives to the Company will be under the 2016
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 34 to the financial
statements.

10.3 Historical incentive outcomes under the previous options plan
TechnologyOne previously issued options under a now obsolete Executive Option Plan (EOP). The EOP has now been quarantined and all
new Executives to the Company, as well as existing Executives when their existing contracts come to an end, are under the new LTI plan.

For those Executives that are under the older quarantined Option Plan:

• 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, Edward Chung is the only Executive KMP who participated in options

granted 14 July 2014

2019

Name

Balance at start of
the year

Granted as
compensation

Exercised

Forfeited

Balance at the end
of the year

Vested and
exercisable

Edward Chung

501,000

(167,000)

334,000

Unvested

334,000

10.4 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 short fall within a 12 month period. New Directors are allowed 36 months to meet this requirement.

The Board in total holds 66,688,008 shares representing 21% of the total shareholding of the Company.

10.5 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 compensation.

2019

Name

Directors of TechnologyOne Limited

A Di Marco

R McLean

J Mactaggart

K Blinco

R Anstey

Dr J Andrews

S Doyle

C Rosenberg

2019

Name

Senior Executive of the Group

E Chung

S MacDonald

P Jobbins

Balance at start of the year

Purchased during the year

Sale during the year

Balance at the end of the year

31,378,500

141,000

42,902,500

260,000

25,500

30,600

Balance at start of the year

399,000

12,375

27,533

Received during
the year on the
exercise options

167,000

241,700

(4,000,000)

(30,000)

(4,000,000)

(60,000)

27,378,500

111,000

38,902,500

200,000

25,500

30,600

12,375

27,533

Sale during the year

Balance at the end of the year

(241,700)

566,000

2019 TechnologyOne Annual ReportTransforming business, making life simple2018

Name

Directors of TechnologyOne Limited

A Di Marco

R McLean

J Mactaggart

K Blinco

R Anstey

Dr J Andrews

S Doyle

C Rosenberg

2018

Name

Balance at start of the year

Purchased during the year

Sale during the year

Balance at the end of the year

31,378,500

141,000

42,902,500

260,000

19,000

24,300

6,500

6,300

31,378,500

141,000

42,902,500

260,000

25,500

30,600

Balance at start of the year

Received during
the year on the
exercise options

Sale during the year

Balance at the end of the year

Senior Executive of the Group

E Chung

S MacDonald

432,000

167,000

(200,000)

399,000

10.6 Loans to Key Management Personnel
There have been no loans to Directors or Executives during the financial year (2018 - nil).

10.7 Other transactions with Key Management Personnel
During the year there were no transactions with the Key Management Personnel. This report is made in accordance with a resolution
of Directors.

Corporate Governance Statement

The Board of Directors of the Company is responsible for its
corporate governance. The Board guides and monitors the
business and affairs of the Company on behalf of the shareholders
by whom they are elected and to whom they are accountable.

• Selecting, appointing and reviewing the performance of the

Managing Director and Chief Executive Officer.

• Setting the highest business standards and code of ethical

behaviour.

The Directors have established guidelines for the operation of the
Board and its Committees. Set out below are the Company’s main
corporate governance practices.

• Overseeing the establishment and implementation of the risk
management system, and annually reviewing its effectiveness.

• Decisions relating to the appointment or removal of the

The TechnologyOne Board routinely consider industry governance
initiatives in consideration of their benefit to the Company and its
many stakeholders. An example of this is the recent publication of
the ASX Corporate Governance Principles & Recommendations
(Principles) 4th Edition. The Board has considered the benefits of
the amended Principles and is proud to say that Technology One
Limited is an early adopter of the 4th Edition of the Principles.

The Corporate Governance Statement, as well as supporting
documents are available on the Company’s internet site:
www.TechnologyOneCorp.com under the Shareholders area.

Board of Directors
The Board of the Company currently comprises seven Directors and
includes

Name

Position

Appointed

Adrian Di Marco

Executive Chairman - major shareholder

08/12/1999

Ronald McLean

Non-Executive Director – independent

08/12/1999

John Mactaggart

Non-Executive Director - major shareholder

08/12/1999

Kevin Blinco

Non-Executive Director - independent

01/04/2004

Company Secretary.

• To review and evaluate the performance of the Board as

a whole, each Committee, key Executives and each Director
on an annual basis.

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 a number of
committees as follows:

• Nomination & Governance Committee

• Audit & Risk Committee

• Remuneration Committee

Board papers are prepared for the Directors, containing detailed
operational reports from each region and department in the
Company, highlighting:

• Operational performance.

•

Initiatives undertaken/completed.

Identified problems/risks and proposed solutions.

The Managing Director and Chief Executive Officer also prepare a
summary report that highlights:

Richard Anstey

Non-Executive Director – independent

02/12/2005

• Financial performance year to date, and forecast for the full year.

Jane Andrews

Non-Executive Director – independent

22/02/2016

Sharon Doyle

Non-Executive Director - Independent

Cliff Rosenberg

Non-Executive Director - Independent

28/02/2018

27/02/2019

The following information is provided in the Corporate Governance
section of the Company’s Annual Report:

• Details of names, qualifications, skills, experience and dates

of appointment of each Board member.

• The number of meetings of the Board and the names

of attendees.

• Explanation of any departures from the ASX Corporate

Governance Principles and Recommendations.

The role of the Board is as follows:

• Setting objectives, goals and strategic direction for management,

with a view to maximising shareholder value.

•

Input into and ratifying any significant changes to the Company.

• Adopting an annual budget and monitoring financial

performance.

• Ensuring adequate internal controls exist and are appropriately

monitored for compliance.

• Ensuring significant business risks are identified and

appropriately managed.

• Significant issues.

• Significant changes proposed.

• Proposed strategic initiatives.

On a regular basis, members of the Executive/Management Team
are invited to present to the Board directly and to answer questions
the Board may have.

The strategy of the Company, as well as matters reserved to the

Board, are reviewed annually by the Board.

Matters reserved to the Board
Matters that are reserved to the Board are as follows:

• Communications with shareholders and the market in general,
including ASX announcements, through the Chairman of the
Board.

•

Input into and subsequent approval of corporate strategy and
performance objectives.

• Reviewing and ratifying systems of risk management, internal

compliance and control, codes of conduct and legal compliance
(ASX, ASIC, and ATO).

•

Input into and subsequent approval of significant organisational
structure/restructure.

• Review of the Managing Director, Chief Executive Officer and

Company Secretary to the relevant Code of Conduct established
by the Board.

2019 TechnologyOne Annual ReportTransforming business, making life simple• Appointing and removing the Managing Director and Chief

Executive Officer and monitoring their performance respectively.

believes for its current size, a smaller Board allows it to be more
effective and to react quickly to opportunities and threats.

•

Input into and subsequent approval of the budget including
Operating Expenditure and Capital Expenditure, and any
significant variations.

• Oversight of the Company, including its control and

accountability systems.

•

Input into and subsequent approval of changes to internal
systems and controls.

• Review, and accept/reject recommendations from sub-

committees such as Audit & Risk, Remuneration and Nomination
& Governance committees.

•

Input into and ratifying any acquisitions and divestitures.

• Oversee the establishment and implementation of a risk

management system, and review regularly the effectiveness of
the Company’s implementation of that system.

All other matters are referred to management.

Board Skills
As a collective, the Board has extensive commercial skills and
experience which provide a solid base for the governance of
the Company. The Board has a combination of experience in the
following core areas:

•

IT and Communications Industry

• Corporate Finance and Accounting

• Software and Product Development

• Executive Management and Leadership

• Early Stage Investments and Start-ups

• Listed Entities

• Strategic & Commercial Acumen

The Board as a whole benefits from the combination of the
Director’s individual skills, experience and expertise in particular
areas, as well as the varying perspectives that arise from the
interaction arising from the Board’s diverse backgrounds.

The Board believes that its current membership provides a
suitable level of skills to properly guide the Company and deliver
the Company’s strategic objectives and provide a solid base for
governance.

The Board assesses its level of skills annually and will address any
requirements for additional skills that it feels would be in the best
interest of the Company in response to wider market factors and
the growth of the Company.

The Board has determined the core skills for its governance of the
Company.

Director Principles
The Directors operate in accordance with the following broad
principles:

• The Board should comprise of at least three members, but

no more than 10. The current Board membership is eight. The
Board may increase the number of Directors where it is felt that
additional expertise in specific areas is required. The Company

• The Board should be comprised of Directors with an appropriate
mix of skills, qualifications, expertise, experience and diversity.
The skills, experience and expertise which the Board considers
to be particularly relevant include those in the area of finance,
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 information to participate in an informed discussion
of agenda items.

• The Directors are entitled to be paid expenses incurred in

connection with the execution of their duties as Directors. Each
Director is therefore able to seek independent professional
advice at the Company’s expense, where it is in connection
with their duties and responsibilities as Director. The Company
policy is that a Director wishing to seek independent legal advice
should advise the Chairman at least 48 hours before doing so.

• The Directors and Officers will not engage in short term

trading 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
below, section: Trading in Company Securities.

• Directors have a clear understanding of the corporate and

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, as
well as Indemnity and Insurance cover provided.

• Newly appointed Directors undertake an induction course

covering the Company’s strategy, products and operations. They
are also provided a copy of the Company’s constitution, charters
and key policies.

• Directors are required to disclose Directors’ interests and any
matters that affect the Director’s independence. This includes
disclosure of conflicts of interest, which may include transactions
with family members or related entities.

•

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 Directors
concerned will not be allowed to attend the meeting or receive
the relevant Board papers.

Director Independence
The Board comprises a majority of independent Non-Executive
Directors who have broad commercial experience and bring
independence, accountability and judgement in discharging the
Board’s responsibilities to ensure optimal returns to shareholders
and the ongoing provision of benefits to the Company’s employees.

The Board is required to disclose any new information that could,
or would be reasonably perceived, to influence, or reasonably
be perceived to influence, in a material respect their capacity to
bring an independent judgement to bear on the issues before
the Board and to act in the best interests of the Company and its
shareholders.

The independence of the Directors is assessed annually in
accordance with the ASX Corporate Governance Principles and
Recommendations.

The number of directors is eight. The Board has identified six 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 to the Board and
provides a continuing vision for the Company’s success.

While the ASX Corporate Governance Principles and
Recommendations and proxy advisors consider the tenure of a
Director as affecting independence, the Board believes that this
is not a material consideration due to the way TechnologyOne
facilitates interactions between Directors and Senior Executives
and the benefits that tenure brings with established, deeper
levels of company specific knowledge. TechnologyOne does not
have causal, ad-hoc informal relationships between the Directors
and Senior Executives and provides only formal interaction
between the Board and Senior Executives in order to maintain
the independence of each Director. All interactions are formal in
nature and documented. TechnologyOne believes that by doing
this, it maintains the independence of the Directors and nullifies
the impact on tenure on independence. These formal interactions
include presentations to the Board throughout the year on their
business unit strategies and outcomes. Any other interaction by a
Board Member and a Senior Executive is only under prior approval
by the Chairman.

TechnologyOne will only enter into an agreement for the provision
of consultancy or similar services by a Director or senior executive
or by a related party of theirs if: TechnologyOne has independent
advice that the services being provided are outside the ordinary
scope of their duties as a Director or senior executive; the
agreement is on arm’s length terms; and, the remuneration payable
under it is reasonable and with full disclosure of the material terms
to securityholders.

The independence of Mr Ron Mclean has been debated by some
corporate advisory groups because he was a past employee of
TechnologyOne, ceasing to be an executive in 2004. The Board is
of the opinion that, due to the period of time that has lapsed since
Mr Mclean’s employment with the company 14 years ago, Mr Mclean
is considered as being independent. Mr McLean’s appointment also

took place in 1992, prior to the introduction of the ASX’s 1st edition
of the Principles of Good Corporate Governance in March 2003.

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.”

The company has set the objective to increase the Board size,
with the aim of adding additional independent directors, with
Jane Andrews’ appointment in the 2016 financial year, Sharon
Doyle’s appointment in the 2018 Financial Year, Cliff Rosenberg’s
appointment in the 2019 Financial Year and further additional
directors being considered in the coming years, resulting in an
indisputable majority of independent directors.

TechnologyOne is also progressing with a Committee composition
strategy which continues to comply with the ASX Corporate
Governance Principle recommendations while transitioning newly
appointed Directors into the appropriate Committees once they
have had sufficient time to develop a comprehensive understanding
of TechnologyOne’s operations.

Lead Independent Director
The Company will appoint a Lead Independent Director in the next
12 months once the new independent non-executive Directors
have been appointed and established in their roles. The Lead
Independent Director will represent the interests of shareholders
where the Executive Chairman is unable to do so due to a conflict
of interest.

The role of Lead Independent Director will include:

• Representing the independent Directors as the most senior

independent Director;

• Acting as principle liaison between the independent Directors

and the Chairman; and

• Advising the Board with reference to the other independent
Directors on the matters where there is a conflict of interest.

The roles of Deputy Chairman and Lead Independent Director will
be separated to further strengthen the overall independence of the
Board and to allow greater flexibility in responding to governance
issues and in supporting the interests of the shareholders.

Director Appointments
All Directors, both Executive and Non-Executive, receive written
notifications of their appointment and a new Director induction
pack which details the terms and conditions of their appointment,
remuneration (including superannuation contributions), continuous
disclosure requirements (including interests in the Company),
ongoing confidentiality obligations, Company policies on when to

2019 TechnologyOne Annual ReportTransforming business, making life simpleseek independent professional advice, the Company’s indemnity
and insurance measures.

Prior to appointment, appropriate checks are undertaken on the
candidates and relevant information provided to shareholders to
consider when voting on the election of the Director. Relevant
information is also provided for shareholders to consider when
voting to re-elect existing Directors upon rotation. Executive
Directors and senior management of the Company also have
formal written employment agreements which set out the terms
of their employment, roles and responsibilities, reporting lines,
remuneration, confidentiality and termination provisions.

All Directors and senior management are required to comply with
key corporate policies of the Company which include, but are not
limited to, share trading policy, insider trading policy, privacy policy,
anti-discrimination and workplace gender equality policies.

All new Directors and senior management participate in the
Company’s formal on-boarding program which includes an
induction program which incorporates meetings with key senior
executives.

Company Secretary
The Company has a Company Secretary that is appointed by the
board by resolution.

The Company Secretary is accountable directly to the Board,
through the Chairman.

The role of the Company Secretary is as follows:

• Advising the Board and Committees on governance matters.

• Monitoring adherence of Board and Committees to policies and

procedures.

• Coordinating timely completion and despatch of Board and

Committee papers.

• Ensuring business at Board and Committee meeting is accurately

captured in the minutes.

• Ensure that systems of internal control are functioning

effectively and economically and that these systems and
practices contribute to their achievement of the Company’s
corporate objectives.

• Ensure required declarations from the Company’s CFO and Chief

Executive are received for each reporting period.

• Monitor compliance with the requirements of the Corporations
Act, Listing Rules, Australian and Foreign Taxation Offices and
other related legal obligations.

• 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.

• TechnologyOne requires the rotation of the external audit partner
every five years. The Audit & Risk Committee includes members
who are financially literate; and at least one member who has
financial expertise, preferably a qualified accountant.

Remuneration Committee
The Board has established a Remuneration Committee.

The committee is comprised of:

Name

Position

Kevin Blinco (Chair)

Independent Non-Executive Director

Cliff Rosenberg

Jane Andrews

Independent Non-Executive Director

• Direct follow-up action where considered necessary.

The role of the committee is:

• Relate any matters of concern to the Board.

• To advise the Board with regard to the Company’s broad policy

• Ensure the Internal Audit Function maintains a high standard of

for Executive and Director remuneration.

performance

• To determine, on behalf of the Board, the individual remuneration

• Oversight of the process to ensure the independence and

packages for Executives and Directors.

competence of the Company’s external auditors.

• Review the performance of the external auditor on an

annual basis.

• Recommend the selection and the appointment of the external

Auditors, based on specified criteria.

• Monitor compliance with the requirements of the Corporations

Act, Listing Rules, Australian & foreign taxation offices and other
related legal obligations.

• 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
and compliance.

• Make recommendations to the Board on key risk management

• To give the Company’s Executives encouragement to enhance
the Company’s performance and to ensure that they are fairly,
but responsibly, rewarded for their individual contribution.

The number of meetings held during the years and the attendance
of the members is provided in the Annual Report.

The Remuneration Committee Charter is available on the
Company’s website.

Non-Executive Directors’ remuneration is determined by the Board
within the aggregate amount per annum which may be paid in

Directors’ fees.

Principles of the Remuneration Committee
The committee operates in accordance with the following
broad principles:

• The committee should provide the packages needed to attract,
retain and motivate Executives, but avoid paying more than is
necessary.

• The committee should judge where to position the Company

relative to other companies. Be aware of comparable
companies’ pay, but exercise caution.

• The committee should be sensitive to the wider scene, especially

with regard to salary increases.

Jane Andrews

Independent Non-Executive Director

The role of the Committee is as follows:

• Assessment of the necessary and desirable competencies and

experience for Board membership.

• Evaluation of the membership of the Board, Audit & Risk and

Remuneration committees, and their membership.

• 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.

• Review of Board succession plans.

• Recommendation for changes to committees.

• Recommendation of, and undertaking the appropriate checks,

before for the appointment of new Directors.

• Recommendation of, and undertaking the appropriate checks, for

the endorsement or non-endorsement of existing Directors.

• Ensuring that an effective induction process is in place for new

Board members.

• Review and oversight of the Company’s Corporate Governance

Statement and governance related policies.

The number of meetings held during the years and the attendance
of the members is provided in the Annual Report.

The Nomination & Governance Committee Charter is available on

the Company’s website.

Principles of the Nomination &
Governance Committee
The committee operates in accordance with the following
broad principles:

• The Nomination & Governance Committee is entitled to seek

the advice of an external consultant.

• The Nomination & Governance Committee will make

recommendations to the Board. The Board is responsible
to appoint the most suitable candidate, after receiving
recommendations from the Nomination & Governance
Committee. The nominated appointee upon acceptance will
hold office until the next Annual General Meeting, where the
appointee must retire and is entitled to stand for re-election.

• Helping to organise and facilitate induction and professional

performance indicators and levels of risk appetite.

development of Directors.

Audit & Risk Committee
The Board has established an Audit & Risk Committee. The
committee is comprised of:

The number of meetings held during the years and the attendance
of the members is provided in the Annual Report.

The Audit & Risk Committee Charter is available on the
Company’s website.

Name

Position

Principles of the Audit & Risk Committee

Kevin Blinco (Chairman)

Independent Non-Executive Director

Jane Andrews

Sharon Doyle

Independent Non-Executive Director

The role of the committee is to:

• Ensure the integrity in financial reporting (refer section below –

Safeguard Integrity in Financial Reporting).

• Receive and review reports from the external Auditor.

• Review for accuracy financial statements for each reporting

period prior to approval by the Board, and publishing.

The committee operates in accordance with the following
broad principles:

• Advise and assist the Board in fulfilling its responsibilities relating
to financial management, risk oversight and reporting functions
and in safeguarding the Company's assets;

• Provide a means of easy access to the Board for the external
auditors in order to assist them in performing their functions;

• Assign the Secretary of the Committee such duties and

responsibilities as the Committee may deem appropriate.

• Do other things and take other actions as are necessary or

prudent to fulfil the responsibilities of the Committee, provided
that no action will be taken without prior approval of the Board.

• Performance related elements should form a significant

proportion of the package; should align interests with those of

shareholders; and should provide keen incentives.

• The Board is responsible to either recommend/not

recommend the endorsement of a Director at the next
Annual General Meeting.

Nomination & Governance Committee
The Board has established a Nomination & Governance Committee.
The Committee is comprised of:

Name

Position

Richard Anstey (Chair)

Independent Non-Executive Director

Kevin Blinco

Independent Non-Executive Director

• The name of all candidates submitted for election as Director

is accompanied with necessary information required by
shareholders to make an informed decision including
biographical details, competencies, qualifications, details
of relationships between the Company, the candidate and
Directors; other directorships held, particulars of other positions
held which involve significant time commitments, and any other
particulars required by law or good corporate governance. For
existing Directors standing for re-election, the number of years as

2019 TechnologyOne Annual ReportTransforming business, making life simple

a Director of TechnologyOne will also be provided.

• Chief Financial Officer

• Directors (with the exception of the Managing Director who is

• Executives

appointed by the Board) must stand for re-election every three
years in accordance with the Company’s Constitution. One
third of the Directors retire from office at each Annual General
Meeting.

• A structured process has been established to review and

evaluate the performance of the Board and its Committees.
This process also identifies ways to improve their performance,
interaction with management, and quality of information

provided.

Assessment of Director Independence
The Board has determined that an independent Director will meet
all of the following criteria:

•

Is not an Executive Director (i.e. not a member of the
management)

Is not a substantial shareholder of the Company, as defined by
Section 9 of the Corporations Act, or an officer of a company that
is a substantial shareholder.

Is not directly associated with a substantial shareholder of the
Company.

• Within the last three years, has not been employed in an

Executive capacity by the Company or another group member,
or been appointed a Director within three years after ceasing to
hold such employment, insofar as the Director was not appointed
prior to the introduction of the ASX Principles of Good Corporate
Governance in March 2003.

• Within the last three years, has not been a principal of a material
professional adviser or a material consultant to the Company or
another group member, or an employee materially associated
with the service provider.

•

Is not a material supplier or customer of the Company or other
group member, or an officer of or otherwise associated, either
directly or indirectly, with a material supplier or customer. This
includes family members being in these categories.

• Has no material contractual relationship with the Company or

another group member other than as a Director of the Company.

•

Is free from any interest and any business or other relationship
which could, or could reasonably be perceived to, materially
interfere with the Director’s ability to act in the best interest of
the Company.

Corporate Governance Principles &
Recommendations

Ethical Standards and Code of Conduct
All Directors, managers and employees are expected to act with
the utmost integrity and objectivity, observe the highest standards
of behaviour and business ethics, and strive at all times to enhance
the reputation and performance of the Company.

A Code of Conduct has been established for each of the following:

• Directors

• Chief Executive Officer

• Employees

Each of the Codes of Conduct has been approved by the Board,
and given their full support.

The codes address:

• Responsibilities to shareholders, and clients.

• “The TechnologyOne Way”, which refers to the success of the
company coming from our shared values, our entrepreneurial
spirit and innovation.

• Employment practices (anti-discrimination, occupational health

and safety, etc.).

• Responsibilities to the community.

• Responsibilities to the individual.

• Compliance with the codes.

In addition, the Directors, Executive Chairman, Chief Executive
Officer, Chief Financial Officer, Executives and all employees have
employment agreements, which include job descriptions. These job
descriptions describe their duties, rights and responsibilities.

In conjunction with the Code of Conduct, TechnologyOne has
developed a Whistleblower Policy and Bribery & Corruption Policy.
The Whistleblower Policy encourages employees to come forward
with concerns that the entity is not acting lawfully, ethically or in
a socially responsible manner and provides suitable protections
if they do. The Board will be informed of any material concerns
raised that call into question the culture of TechnologyOne or have
been raised under the Bribery & Corruption Policy.

The Board is informed of any material breaches of the Code of
Conduct by a Director or Senior Executive and of any other material
breaches of the code that call into question the culture of the
organisation.

Diversity Policy
TechnologyOne has an inclusive diversity policy which covers the
broader dimension of diversity covering aspects of gender, age,
disability, ethnicity, marital or family status, religious or cultural
background, sexual orientation and gender orientation within the
total organisation, including the Board, and senior management.
In conjunction with this policy, the Company has measurable
objectives which are assessed and reported in the annual report.

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
workplace.

A summary of the Diversity Policy is following:

• Diversity is one of TechnologyOne’s strengths. TechnologyOne
values this diversity and recognises the individual contribution
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
dignity of every individual, fosters trust, and allows every person
the opportunity to realise their full potential.

• TechnologyOne is committed to providing an inclusive workplace
and our commitment to diversity extends to our interactions with
customer and suppliers.

The Board established measurable objectives for 2019 and the
objectives are:

• Ensuring compliance with the published diversity policy.

• Not less than 30% of the Board to be of each gender by 2022 (to

allow for the Board transition)

• 30% of all vacant Senior Management roles are to have at least

one female candidate shortlisted.

Continuous Disclosure
The Company Secretary working closely with the Executive
Chairman, have been delegated responsibility for the continuous
disclosure of information to the market, to ensure:

• All investors have equal and timely access to material information

concerning the Company, including its financial position,
performance, ownership and governance.

• Company announcements are factual and presented in clear and
a balanced way, requiring the disclosure of both positive and
negative information.

• Diversity target – setting targets for the number of women in

• When analysts are briefed on aspects of the Company’s

senior roles in the organisation.

• 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
consultation.

• Maintain existing educational programs that support diversity

including but not limited to induction, on boarding and leadership
programs delivered through the TechnologyOne College.

The Company’s 2019 Workplace Gender Equality Agency report can
be found on the ‘Shareholders’ section of the Company’s website.

Safeguard Integrity in Financial Reporting
The Company has established a structure of reviews and
authorisations designed to ensure the truthful and factual
presentation of the Company’s financial position. This includes:

• The establishment of an Audit & Risk Committee, and the

review and consideration of the accounts by the Audit & Risk
Committee.

• Process to ensure the independence and competence of the

Company’s external auditors.

• Requirement that the Chief Executive Officer and Chief Financial
Officer state in writing to the Board that the Company’s financial
reports present a true and fair view in all material respects of
the Company’s financial condition; operational results are in
accordance with the relevant accounting standards and the
Company’s Risk Management and Internal Compliance and
Control System is operating efficiently and effectively in all
material respects.

• Ensuring that the Company’s external Auditor’s attend the

Company’s Annual General Meeting each year

• Verification of statements and data supplied in the annual
directors’ report and other corporate reports to ensure
that the releases to the market are accurate, balanced and
understandable and provide investors with appropriate
information to make informed investment decisions.

The Company plans to put the external audit services to tender in
2020 following the implementation of the AASB15- Revenue from
contracts with customer reporting, which is another example of how
the Company expresses its dedication to ensuring integrity of the
financial reporting is maintained.

operations, the market is forewarned, and the materials used in
such presentations are also released to the ASX and posted on
the Company’s website.

• Any information that a reasonable person would expect to have
a material effect on the price or value of the Company’s share
price (as per Listing Rule 3.1) is immediately notified to the ASX.

The Company has established a documented procedure to handle
continuous disclosure requirements. Directors are provided with
copies of all announcements made under listing rule 3.1 promptly
once made.

Risk Assessment Management
The Company has adopted an active approach to risk management
and the Board recognises that the Company’s participation in
commercial and operational activities require a certain level of risk.
As such, the Board has delegated the risk management function to
the management of the Company with oversight by the Audit & Risk
Committee.

The Board has received assurance from the Chief Executive Officer
and CFO that the declaration provided in accordance with section
295A of the Corporations Act is founded on a sound system of risk
management and internal control and that the system is operating
effectively in all material aspects in relation to the financial reporting
risks.

The risk appetite of the Company takes into account the level of risk
and risk combinations that the Board is prepared to take to achieve
strategic objectives together with the level of risk shock that the
Company is able to withstand.

The Board has expanded the role of the Audit Committee to
include oversight of risk management and compliance functions
and as such is now referred to as the Audit & Risk Committee. The
Committee has performed an annual risk review and have identified
a number of key risk categories for the business.

Material Risks

Human Risk
The company has identified that it has a material risk in relation
to the human element of the business. The company manages
human risk by undertaking half yearly performance assessment and
reviews, performance management (where necessary), succession
planning, key talent retention strategies, having human resources
business partners assigned to each operating stream of the
company to work with the business on any concerns raised, and by
conducting half yearly surveys of managers to identify any known

2019 TechnologyOne Annual ReportTransforming business, making life simple
issues. The Board is provided with a summary of these issues as
part of the Group Director – People & Culture’s report tabled at

each board meeting.

Key Risks
The company’s focus on risk management is primarily conducted
through the Audit & Risk Committee, with a number of identified
areas of specific risks as follows:

Contract Risk
The company has established a Risk Management Committee that
reviews all proposed new contracts with non-standard terms prior to
signing to ensure the contracts can be fulfilled, the risks are known
and can be managed, and that the contract can be completed
profitably without exposing the company to ongoing liabilities.

Financial Risk
The company has an Executive Committee that reviews the
company’s financial exposure with a particular focus in the area of
Outstanding Debtors.

Data Security & Privacy Risks
The Company has a robust data security and privacy program
developed in accordance with Australia’s Privacy Amendments
(Notifiable Data Breaches) Act 2017 and the UK General Data
Protection Regulation requirements. This program ensures security
is considered throughout the day to day operations of the company
and is backed by an independently verified process for dealing
promptly with matters should they arise. The company also is
certified to the standards required in ISO27000, ISO9001, SOC1,
SOC2 and SOC3.

Software Risk
The company has an executive R&D Committee that reviews
Software Release management, including resourcing and
development issues.

Insurance Risk
The Board of TechnologyOne, on an annual basis, reviews the
company’s insurance requirements and compares this to the level
of cover provided to ensure it is adequately covered.

Project Risk
The Board requires the Chief Executive Officer to report on any
project that may be at significant risk of either incurring substantial
penalties or incurring substantial over-runs. In addition, the
company has established a Project Risk Committee that reviews
current projects and consulting activities to provide an early
detection mechanism to ensure that any risks that pose a significant
risk to the company are identified and resolved before exposing the

company to potential liabilities.

Sustainability Risk
The Company believes that it does not have material exposure
to specific economic, environmental or social sustainability risks.
However, the Company recognises the importance of these to

its stakeholders and has developed a Sustainability Report to
outline the Company’s position and initiatives across a number
of sustainability risks. The Sustainability Report provides the
company’s initiatives and targets on items including:

• Diversity,

• Customer Satisfaction

• Employee Satisfaction

• Corporate Culture

• Ethical Business Practices

• Community Support

• Environmental Sustainability Practices

The Sustainability Report is available on the Company’s website.

Accounting Standards and Company
Policies
Adhering to Accounting Standards and Company Policies,
and the appropriate interpretation of such policies/standards, is
seen as critical to managing the financial risk of TechnologyOne.
Accounting Standards and Company policies are reviewed on a
regular basis by the Audit & Risk Committee working in conjunction
with the Auditors, and recommendations for adoption/change are
made to the Board. Compliance to Accounting Standards
and Company policies are included as part of the Auditors

annual review.

Internal Controls and Compliance
The Company has an internal control framework that consists of:

• Written policies and procedures.

• Division of responsibilities to ensure appropriate segregation

of duties.

• Careful selection of high calibre well qualified staff.

TechnologyOne undertakes Internal Audits in accordance with
the Internal Audit schedule as approved by the Audit & Risk
Committee. These audits are undertaken by the Governance, Risk
& Compliance Team and reported through to the Audit & Risk
Committee. The company’s auditors or another suitable external
independent organisation are engaged yearly to review the
company’s internal controls and compliance and to provide a report
to the Board.

The Audit & Risk Committee also oversee the Company’s
compliance program with relevant international standards (including
ISO 9000, 27000 series, SOC 1, 2 & 3).

Remuneration Principles
TechnologyOne believes in the full disclosure of remuneration of its
Directors and Executives to the market, on at least an annual basis
and as they occur in the case of new employment agreements.
Disclosure will cover all monetary and non-monetary components
including salary, fees, non-cash benefits, bonuses accruing each
year irrespective of payment, profit share accruing each year
irrespective of payment, superannuation contributions, payments
entitled to termination or retirement, value of shares or options
issued, sign-on payments etc.

As a matter of principle, TechnologyOne has adopted the following
guidelines to motivate Directors and Executives to pursue long-term
growth, and ensure their interests and those of the shareholders
are closely aligned:

• Remuneration packages should be set in the context of what is

reasonable and fair, taking into account the Company’s legal and
industrial obligations, labour market conditions, the scale of the
business and competitive forces.

• Non-Executive Directors should be remunerated solely on the
basis of a cash payment, plus superannuation contributions as
required by law. Non-Executive Directors should not be provided
with bonuses, options, shares, loans or any other non-cash
component. They should not participate in schemes designed for
the remuneration of Executives. The Company does not provide
a Director’s Retirement Plan.

• Non-Executive Directors will not be provided termination or
retirement payments other than statutory superannuation.

• Company Executives (including Executive Directors) should be

provided with a significant component of their expected salary on
“an at-risk basis”, tied to the Company’s profit target. Shares or
Options may also be provided as part of the “at risk component”,
but these must be tied to performance hurdles. The performance
hurdles are to be reasonable, objective and measurable.

• Termination payments should be agreed in writing and in

advance if any are to be provided.

Performance Evaluation

Board
The Board meets annually for the purpose of reviewing and
evaluating the performance of the Board as a whole, each
Committee, key Executives and each Director individually in
meeting key responsibilities and achieving its objectives.

supplied by an independent consultant and reported to the
Remuneration Committee. The relative risk, time, effort, complexity
of the underlying business, competency of the management
team, financial performance and track record, clarity of strategy
as well as the number of Board meeting required to oversee the
business are used as benchmarks to determine the appropriate
level of Director’s fees. For years where a formal assessment of
remuneration is not conducted, the Director’s fees are increased by
the Australian Consumer Price Index (CPI).

Senior Executives
The performance of Senior Executives is reviewed and evaluated
annually by a combination of the Company’s internal performance
management program managed by the Company’s human
resources department and as part of the formal remuneration

review that is conducted annually by the Remuneration Committee.

Trading in Company Securities
The Directors have resolved to adopt the following policy in relation
to trading by Directors and Officers in the Company’s shares.

• The Directors and Officers will not engage in short term trading

of the Company’s shares.

• 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.

The Directors and Officers are not permitted to use the Company’s
shares as security for Margin Loans. To assist Directors and officers
in abiding by these principles the following rules have been
established, relating to when Directors and Officers can buy and
sell the Company’s shares:

The following areas were considered by the Board in its 2019
annual review:

• For 50 days from the day following the release of the following

information to the market:

• Performance evaluation of Directors and Senior Executives.

• Review of skills and experience of the Board for current

operations of the Company and identification of any shortfalls.

–

• Director succession planning.

the half yearly financial statement

the annual financial statement

other reports relating to the financial performance or
financial status of the Company.

• Review of current legislation in relation to any age restrictions.

• Review of independence of each Director.

• Review of skills matrix to ensure relevance of required skills.

To assist the Board in maximising its effectiveness, the Board
and Nomination & Governance Committee have a skills matrix to
provide objective information about each Director and the Board as
a whole during the past year.

Each Director is encouraged to discuss any issue concerning Board
performance with the Chairman at any time.

Directors are encouraged to maintain and improve their knowledge,
skills and expertise through briefings, seminars and going
professional development programs.

At all times, the Director/Officer must notify the Board (as a
minimum the Chairman) in advance of any intended transactions
involving the Company’s shares. It is recognised that there may
be circumstances where it may not be appropriate for Directors
and Officers to buy and sell within the above 50-day window in
the event the Company is involved in strategic initiatives (such as
acquisitions), which could materially affect the market price of the
Company’s shares.

The Directors and officers must advise the Company Secretary
of any completed trades immediately of each transaction and
definitely no later than one day after each transaction. This will
allow the Company Secretary sufficient time so that the ASX can be
notified of the change in shareholding within the required period.

Remuneration of the Board is assessed every three (3) years
against comparative data for Australian publicly listed IT companies

A register of Director’s holdings is made available for inspection at
every Board meeting.

100

101

2019 TechnologyOne Annual ReportTransforming business, making life simpleThis policy applies to Directors and Officers (including their
nominee companies) and the entities which they control.

For the purpose of this Policy, Officer is deemed to include the
following parties:

a. persons named by the Board from time to time who may be

involved in strategic issues

b. Executive officers of the Company as defined in section 9 of
the Corporations Act being: ‘any person by whatever name
called who is concerned or takes part in the management’

any member of the Company’s Executive committee.

In addition to the policy for Directors and Officers, all employees are
reminded of the Insider Trading provisions of the Corporations Act.
Staff are reminded of their obligations during the Trading Windows.

Shareholders’ Rights and
Communication
The Board of Directors aim to ensure that shareholders are
informed of all major developments affecting the Company’s state
of affairs. The information is communicated to shareholders, and
forms part of the company’s two-way investor relations program:

• By ensuring that all shareholders can elect to receive information
and communications from the Company’s share registry either
physically or electronically and can update their preferences
through the share registry.

• By the Annual Report being distributed to all shareholders.
The Board 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.

• By publishing its Notice of Meetings and Explanatory

Memorandum for each Annual General Meeting or other such
meetings as required from time to time;

• By encouraging shareholders to attend and participate in the

Company’s Annual General Meeting;

• By encouraging shareholders to participate in proxy voting

should they be unable to attend the Company’s Annual General
Meeting;

• By enabling shareholders to pose questions to the Company in

the lead up to the Annual General Meeting for responding during
the meeting;

• By facilitating polls for each resolution voted during an AGM;

• By the Half Year results released to the market;

Non-Compliance with ASX Corporate
Governance Principles and
Recommendations 4th Edition
The Board of Technology One believes in working to the highest
standards of Corporate Governance. Notwithstanding this, the
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
consider the size of the Company, the industry it operates within,
the corporate history and the Company’s inherent strengths.

The ASX Corporate Governance Council has recognised this fact
and has allowed companies to explain where they do not comply
with the Corporate Governance Principles and Recommendations
4th Edition.

The Company has complied with the majority of recommendations,
with the exception of the following. 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 inherent
strengths.

This section highlights those areas of non-compliance and explains
why it is appropriate.

Independent Chairman (Refer ASX Corporate
Guidelines – Recommendation 2.5)
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
on the ASX in 1999.

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
Di Marco should remain as Executive 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 or as the senior independant director”. 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.

• By disclosures forwarded to the ASX under the Company’s

continuous disclosure obligations;

• Through the Company’s web site, under a special area called

The Company will appoint a Lead Independent Director in the next
12 months once the new independent non-executive Directors have
been appointed and established in their roles.

Shareholders;

• By the Company’s participation in scheduled briefings with

institutional shareholders and security analysts;

• By the participation of the Company’s Auditors and Solicitors at

the Annual General Meeting.

All information communicated by the Company is in accordance
with its continuous disclosure requirements under ASX Listing
Rule 3.1.

On 23 May 2017, Ed 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.

Financial Statements
Consolidated income statement

For the year ended 30 September 2019

Revenue from contracts with customers

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

Other income

Profit before income tax

Income tax expense

Profit for the year

Basic earnings per share

Diluted earnings per share

Notes

5(a)

1Refer to note 1(a)(ii) for details regarding the restatements for changes in accounting policies on adoption of AASB 15.

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 2019

Profit for the year

Other comprehensive income

Items that may be reclassified to profit or loss
Exchange differences on translation of foreign operations

Other comprehensive income for the year, net of tax

Total comprehensive income for the year

2019
$’000

284,994

(22,011)

(16,965)

(38,976)

(10,808)

(17,285)

(6,127)

(10,744)

(6,252)

(117,817)

(2,018)

(24)

(171,075)

1,446

76,389

(17,930)

58,459

Cents

18.43

18.30

2019
$’000

58,459

1,199

59,658

Restated1
2018
$’000

252,989

(24,512)

(11,884)

(36,396)

(9,588)

(18,951)

(5,102)

(10,339)

(4,068)

(143,240)

(1,595)

(395)

(193,278)

1,502

24,817

(3,126)

21,691

Cents

6.87

6.85

Restated1
2018
$’000

21,691

1,379

23,070

1Refer to note 1(a)(ii) for details regarding the restatements for changes in accounting policies on adoption of AASB 15.

The above consolidated statement of comprehensive income should be read in conjunction with the accompanying notes.

102

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2019 TechnologyOne Annual ReportTransforming business, making life simple

Consolidated statement of financial position

as at 30 September 2019

Consolidated statement of changes in equity

For the year ended 30 September 2019

ASSETS

Current assets

Cash and cash equivalents

Prepayments

Trade and other receivables

Contract assets

Other current assets

Current tax assets

Contract acquisition costs

Total current assets

Non-current assets

Property, plant and equipment

Intangible assets

Capitalised development

Contract assets

Deferred tax assets

Contract acquisition costs

Total non-current assets

Total assets

LIABILITIES

Current liabilities

Trade and other payables

Provisions

Prepaid subscription revenue

Borrowings

Total current liabilities

Non-current liabilities

Provisions

Other non-current liabilities

Total non-current liabilities

Total liabilities

Net assets

EQUITY

Contributed equity

Other reserves

Retained earnings

Total equity

Notes

2019
$’000

105,046

12,810

49,032

24,607

463

6,783

2,104

Restated1
2018
$’000

104,322

10,852

59,554

1,879

959

1,574

1,357

200,845

180,497

10,900

37,521

31,590

32,153

5,415

117,579

318,424

47,290

12,261

147,558

207,114

3,616

837

4,453

211,567

106,857

35,302

55,477

16,078

106,857

12,280

45,011

245

42,278

4,000

103,814

284,311

52,617

13,257

136,557

202,436

3,144

1,241

4,385

206,821

77,490

33,171

31,561

12,758

77,490

Notes

Contributed
equity
$’000

Retained
earnings1
$’000

Dividend reserve
$’000

FOREX
reserve
$’000

Share option
reserve
$’000

Balance at 1 October 2018

33,171

12,758

8,616

Exchange differences on translation of foreign
operations

Profit for the period

Total comprehensive income for the period

Transfer to dividend reserve

Dividends paid

Exercise of share options

Share based payments

Tax impact of share trust

Balance at 30 September 2019

Balance at 1 October 2017

Change in accounting policy (AASB 15)1

Restated Equity balance as at 1 October 20171

Exchange differences on translation of foreign
operations

Profit for the period

Total comprehensive income for the period

Transfer to dividend reserve

Dividends paid

Exercise of share options

Share-based payments

Tax impact of share trust

Balance at 30 September 2018

2,131

35,302

32,152

1,019

33,171

58,459

(55,139)

16,078

90,681

(73,771)

16,910

21,691

(25,843)

12,758

55,139

(35,850)

19,289

27,905

15,775

25,843

(33,002)

(7,159)

8,616

Total
equity
$’000

77,490

1,199

58,459

59,658

(35,850)

2,131

1,947

1,481

(30,291)

651

1,199

22,294

1,947

1,481

3,428

1,850

25,722

106,857

(728)

1,379

19,640

1,595

1,059

2,654

651

22,294

157,520

(73,771)

83,749

1,379

21,691

23,070

(33,002)

1,019

1,595

1,059

(29,329)

77,490

1Refer to note 1(a)(ii) for details regarding the restatements for changes in accounting policies on adoption of AASB 15.

The above consolidated statement of changes in equity should be read in conjunction with the accompanying notes.

1Refer to note 1(a)(ii) for details regarding the restatements for changes in accounting policies on adoption of AASB 15.

The above consolidated statement of financial position should be read in conjunction with the accompanying notes

104

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2019 TechnologyOne Annual ReportTransforming business, making life simple

Consolidated statement of cash flows

For the year ended 30 September 2019

Notes

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

Interest paid

Net cash inflow / (outflow) from operating activities

Cash flows from investing activities

Payments of contingent consideration

Payments for property, plant and equipment

Payments for intangible assets

Proceeds from sale of property, plant and equipment

Net cash inflow / (outflow) from investing activities

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

2019
$’000

310,883

(1,957)

(221,167)

634

(11,534)

(24)

76,835

(4,059)

(2,350)

(35,927)

(42,336)

2,075

(35,850)

(33,775)

724

104,322

105,046

Restated1
2018
$’000

300,058

(2,632)

(234,709)

735

(11,187)

(395)

51,870

(2,721)

(3,388)

(3,274)

440

(8,943)

1,019

(5)

(33,002)

(31,988)

10,939

93,383

104,322

1Refer to note 1(a)(ii) for details regarding the restatements for changes in accounting policies on adoption of AASB 15.

The above consolidated statement of cash flows should be read in conjunction with the accompanying notes.

Notes to the consolidated financial statements

The Group has adopted AASB 15 using the full retrospective
method of adoption. In applying this method of adoption, the
Group has applied the practical expedients in paragraph C5
of AASB 15, under which the Group does not disclose the
transaction price allocated to the remaining performance
obligations and an explanation of when the entity expects to
recognise that amount as revenue for all reporting periods
presented before the date of initial application. The transaction
price allocated to performance obligations that are partially
satisfied will be recognised over the remaining term of the
individual contracts as the Group continues to satisfy the
performance obligations.

The adoption of AASB 15 has resulted in the following key
revenue categories for the Group:

SaaS Fees

2. On Premises Initial Licence Fees

3. On Premises Annual Licence fees

4. Consulting Services

The accounting policies for each of these categories has been
set out below in section (d). The impact of the restatement on the
consolidated income statement as reported for the year ended 30
September 2018 is as follows:

Statement of
comprehensive income
increase/(decrease)

Revenue from contracts with
customers

Variable costs

Depreciation & amortisation

Profit before tax

Income tax expense

Profit after tax

Basic earnings per share

Diluted earnings per share

30 September
2018
AASB 118 reported
($000s)

Remeasurements
($000s)

30 September
2018
AASB 15 restated
($000s)

297,148

(44,159)

252,989

(39,670)

(4,276)

66,528

(15,548)

50,980

16.14

16.10

3,274

(826)

(41,711)

12,422

(29,289)

(9.27)

(9.25)

(36,396)

(5,102)

24,817

(3,126)

21,691

6.87

6.85

1. Consolidated income statement
The financial report of Technology One Limited (the Company) for
the year ended 30 September 2019 was authorised for issue in
accordance with a resolution of Directors on 19 November 2019.

Technology One Limited (the Company) is a company limited by
shares incorporated in Australia whose shares are publicly traded
on the Australian Securities 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 except where a change has been required
due to the implementation of a new accounting standard.

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

AASB 15 – Revenue from Contracts with Customers

The Group adopted AASB 15 – Revenue from Contracts
with Customers from 1 October 2018. The adoption of
this accounting standard resulted in the restatement of
comparative balances.

AASB 15 supersedes AASB 111 Construction Contracts (which is
not relevant to the Group) and AASB 118 Revenue and related
interpretations. AASB 15 establishes a five-step model to
account for revenue arising from contracts with customers and
requires that revenue be recognised at an amount that reflects
the consideration to which an entity expects to be entitled in
exchange for transferring goods or services to a customer.

AASB 15 requires entities to exercise judgement, taking into
consideration all of the relevant facts and circumstances
when applying each step of the model to contracts with their
customers. The standard also specifies the accounting for the
incremental costs of obtaining a contract and the costs directly
related to fulfilling a contract.

106

107

2019 TechnologyOne Annual ReportTransforming business, making life simpleThe variable costs include amounts related to capitalised
commissions and other incentives. The impact of the restatement
on the consolidated statement of financial position as at 30
September 2018 is as follows:

30 September
2018
AASB 118 reported
($000s)

Remeasurements
($000s)

30 September
2018
AASB 15 restated
($000s)

For a financial instrument to be measured at amortised cost or
FVOCI it must pass both the business model test and the SPPI test:

• Business model test

The objective of the entity’s business model must be to hold the
assets solely to collect cash flows (amortised cost), or to collect
cash flows and to sell (FVOCI).

• SPPI test

1,357

In addition to satisfying the above test, the contractual payments
must give rise on specified dates to cash flows that are solely
payments of principal and interest on the amount outstanding.

4,000

If these tests are not satisfied, then the financial asset will be
measured at FVPL.

Statement of financial
position increase/
(decrease)

Assets

Contract acquisition costs
- current

Contract acquisition costs -
non-current

Contract assets - current

19,758

(17,879)

Contract assets - non-
current

26,374

(26,129)

1,879

245

Deferred tax assets

404

41,874

42,278

Liabilities

Prepaid subscription
revenue

Equity

31,305

105,252

136,557

179,519

(102,029)

77,490

Opening transition adjustment as of 1 October 2017 is $73.8m which
is disclosed in the consolidated statement of changes in equity.

AASB 9 – Financial Instruments

AASB 9 supersedes AASB 139 Financial Instruments:
Recognition and Measurement. The adoption of the
accounting standard from 1 October 2018 resulted in changes
in accounting policies and adjustments to the amounts
recognised in the financial statements. The new accounting
policies have been set out in (j) below. In accordance with the
transitional provisions in AASB 9 (7.2.15) comparative figures
have not been restated.

The standard provides guidance on recognition, classification,
measurement and impairment for all financial instruments as
well as guidance for hedge accounting.

Other than disclosure impacts driven by AASB 7 Financial
Instruments: Disclosures, the adoption of AASB 9 has not had
a significant impact on the financial statements of the Group.

Financial liabilities
AASB 9 has not substantially changed the accounting for financial
liabilities. In general, financial liabilities will be classified and
measured at amortised cost unless they meet the criteria to be
classified and measured at FVPL.

Impairment of financial assets
AASB 9 introduces a new model for the recognition and
measurement of impairment of financial assets - the expected
credit loss model. The impairment model will only be applicable for
those assets that are not classified and measured at FVPL. Based
on an assessment of the Group’s existing financial assets, the new
impairment methodology has been applied to trade receivables and
AASB 15 contract assets.

While cash and cash equivalents are also subject to the impairment
requirements of AASB 9, the identified impairment loss was
immaterial.

There were no changes in the measurement of the Group’s financial
instruments. The following has been identified as the Group’s
financial assets and liabilities at the date of initial application:

Financial Instrument

Measurement category

Original measurement
category - AASB 139

Classification and
measurement - AASB 9

Financial Assets

Classification and subsequent measurement

Trade and other payables

Amortised cost

Financial liabilities

Financial assets
There are three categories of classification and measurement under
AASB 9:

1. Fair value through profit and loss (FVPL)

2. Amortised cost

3. Fair value through other comprehensive income (FVOCI)

Borrowings

Amortised cost

Contingent consideration

FVPL

Comparative balances have not been restated on the adoption of
AASB 9 as the impact was deemed to be immaterial. Refer to note 2
for the carrying amount of the Group’s financial instruments.

Certain new accounting standards and interpretations that have
been published but are not effective for the 30 September 2019
year end reporting period are outlined below.

(iii) Issued but not yet effective.

AASB 16-Leases

AASB 16 Leases was issued in February 2016 and replaces
AASB 117 Leases and is effective for the Group for the financial
year commencing 1 October 2019. It introduces a single lessee
accounting model and requires a lessee 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
classification of leases as either operating or finance leases for the
lessee and effectively treats all leases as finance leases. Under the
standard, a right of use (ROU) asset is recognised, representing the
lessee’s right to use the underlying leased asset. A corresponding
liability is recognised, representing the obligation to make lease
payments. The lease liability is measured as the present value
of future lease payments discounted at the lessees incremental
borrowing rate, if the rate implicit in the lease cannot be readily
determined. The profile of the lease related expense will change
from being included in occupancy expenses to comprising
depreciation on the ROU asset and interest on the lease liability.

AASB 16 will also affect the classification of lease expenses in the
statement of cash flows. Under prior accounting standards the full
value of the lease payment was classified in operating cash flows in
the statement of cash flows. Under AASB 16, the lease payment is
split between the principal repayment and the interest element. The
repayment of the principal is presented as cash flows from financing
activities and the payment of interest must be presented within
cash flows from operating activities.

The Group intends to adopt the new standard using the modified
retrospective approach. This method means that comparative
amounts do not need to be restated for the year prior to the year
of adoption. While the assessment of the impact of AASB 16 is
significantly progressed at this point, there are several items that
remain under consideration that may have a material impact on the
final approach adopted and the calculations (such as discount rates
and the assessments in relation to lease extension options) before
the quantitative impact of this standard can be disclosed.

The Group will fully report and quantify the impacts of adoption of
AASB 16 for the half year ending 31 March 2020.

AASB Interpretation 23 will be effective for the financial year
commencing 1 October 2019. The interpretation clarifies how to
recognise and measure deferred and current income tax assets
and liabilities where there is uncertainty over a tax treatment. In
particular, it discusses:

• how to determine the appropriate unit of account, and that

each uncertain tax treatment should be considered separately
or together as a group, depending on which approach better
predicts the resolution of the uncertainty

•

that the entity should assume a tax authority will examine the
uncertain tax treatments and have full knowledge of all related
information, ie that detection risk should be ignored

that the entity should reflect the effect of the uncertainty in
its income tax accounting when it is not probable that the tax
authorities will accept the treatment

•

that the impact of the uncertainty should be measured using

either the most likely amount or the expected value method,
depending on which method better predicts the resolution of the
uncertainty, and

•

that the judgements and estimates made must be reassessed
whenever circumstances have changed or there is new
information that affects the judgements.

The Group is currently assessing the impact of the Interpretation
on its Consolidated Financial Statements but does not anticipate a
material impact upon adoption.

(iv) Critical accounting estimates

The preparation of financial statements requires the use of certain
critical accounting estimates. It also requires management to
exercise its judgement in the process of applying the Group's
accounting policies. The areas involving a higher degree of
judgement or complexity, or areas where assumptions and
estimates are significant to the financial statements, are disclosed
in note 3.

(b) Principles of consolidation

(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 2019 and the results of all
subsidiaries for the year then ended. Technology One Limited and
its subsidiaries together are referred to in this financial report as the
'Group' or the 'Consolidated entity'.

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 Group.

(ii) Employee Share Trust

The Group has formed a trust to administer the Group's employee
share scheme. This trust is consolidated, as the substance of
the relationship is that the trust is controlled by the Group. At 30
September 2019, the Group had 116,630 treasury shares (2018:
399,126).

Treasury shares are shares in the Group that are held by the
Employee Share Trust for the purpose of issuing shares under the
Technology One employee share scheme.

(i) Functional and presentation currency

Items included in the financial statements of each of the Group'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.

(ii) Transactions and balances

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

Cash and cash equivalents

Amortised cost

AASB Interpretation 23

Trade and other receivables

Amortised cost

108

109

2019 TechnologyOne Annual ReportTransforming business, making life simpleexchange rates of monetary assets and liabilities denominated in
foreign currencies are recognised in the income statement.

(iii) Group companies

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

•

Income and expenses for each income statement and statement
of comprehensive income are translated at average exchange
rates (unless this is not a reasonable 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)

• All resulting exchange differences are recognised in other

comprehensive income

(d) Revenue recognition
As noted above, the adoption of AASB 15 has resulted in the
following key revenue categories for the Group:

SaaS Fees

2. On Premises Inital Licence fees

3. On Premises Annual Licence fees

4. Consulting Services

The accounting policies for each of these categories has been set
out below:

Revenue categories

1. SaaS Fees
Revenue from term SaaS contracts are recognised on a daily
basis over the term of the contract. The Group considers that
such contracts represent a right to access the Group’s licenced
intellectual property and as such the performance obligation is
fulfilled over the contract term.

Payment terms in respect of SaaS Fees are typically annual
within 14 to 30 days of invoice. Invoiced amounts are reflected
in trade receivables.

Unsatisfied performance obligations in respect of SaaS Fees are
disclosed as prepaid subscription revenue in the consolidated
statement of financial position. Unearned revenue represents
a contract liability which is recognised on the customer being
invoiced and unwound as revenue is earned.

2. On premise initial license fees
On Premise Initial Licence Fees are recognised on provision of the
software. The Group considers that such contracts represent a right
to use the Group’s licenced intellectual property and as such the
performance obligation is fulfilled at the point in time at which the

customer receives the licence key.

Payment terms in respect of On Premise Initial Licence Fees are
typically within 14 to 30 days of invoice. Invoiced amounts are
reflected in trade receivables.

As the performance obligation is satisfied at a point in time (i.e.
at contract commencement), there are generally no unsatisfied
performance obligations in respect of On Premise Licence Fees.

3. On premise annual licence fees
On Premise Annual Licence Fees are recognised on a daily
basis over the term of the contract. The Group considers that the
performance obligation in respect of these services is satisfied
over time.

Payment terms in respect of On Premise Annual Licence Fees are
typically annual within 14 to 30 days of invoice. Invoiced amounts
are reflected in trade receivables.

Unsatisfied performance obligations in respect of On Premise
Annual Licence fees are disclosed as prepaid subscription
revenue in the consolidated statement of financial position.
Prepaid subscription revenue represents a contract liability which
is recognised on the customer being invoiced and unwound as
revenue is earned.

4. Consulting Services
Consulting services includes implementation services for licenced
software and project services revenue.

Revenue from these services is recognised as services are
rendered, typically in accordance with the achievement of contract
milestones and/or hours expended.

Directly related contract costs
Costs incurred in obtaining the customer contract are expensed,
unless they are incremental to obtaining the contract and the
Group expects to recover those costs. Costs that meet the criteria
for capitalisation will be amortised over the life of the contract that
they relate to. The Group has identified certain commission costs
as meeting the criteria of directly related contract costs. These
costs are capitalised in the month in which they are incurred and
amortised over an average contract term of 5 years. The movement
in the year and the closing balance of this asset is disclosed within
note 13 as ‘contract acquisition costs’. This balance is presented as
‘contract acquisition costs’ in the statement of financial position.

Allocation of transaction price to performance
obligations
With regards to SaaS licences hosted on the Group’s SaaS
environment (cloud environment), the consideration is allocated
to the performance obligation based on the relative stand-alone
selling price which is generally the fee charged to the customer for
the single performance obligation. This fee is net of any discounts
which are generally applied evenly across the performance
obligations.

Consideration in respect of On Premise contracts is allocated to
separate performance obligations based on their relative stand-
alone selling prices.

Fees charged are net of any discounts which are allocated as
appropriate to each performance obligation. Given the relatively
short term between billing and cash receipt, the Group has
determined that there is not a significant financing component
inherent in the transaction price.

Contract balances
The timing of revenue recognition under AASB 15, customer
invoicing and cash collections results in trade receivables, contract
asset and prepaid subscription revenue (contract liability) on the
Group’s Consolidated statement of financial position.

Current assets and current liabilities
At 30 September 2019, the statement of financial position shows
a net current asset deficiency of $6.3m (30 September 2018
(restated): $21.9m) which is attributable to the prepaid subscription
revenue balance in current liabilities. As prepaid subscription
revenue represents payments received or receivable in advance
from customers for SaaS Fees and On Premise Annual Licence
Fees which will be recognised as revenue in future periods, and
not a cash outflow, the net current asset deficiency does not impact
the Group’s ability to meet its short-term obligations as and when
they fall due.

The operating costs to deliver the services in respect of prepaid
subscription revenue are not considered significant relative to the
revenue to be earned.

(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 Group'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 related
deferred income tax asset is realised or the deferred income tax
liability is settled.

Deferred tax assets are recognised for deductible temporary
differences and unused tax losses only if it is probable that future
taxable amounts will be available to utilise those temporary
differences and losses.

Deferred tax liabilities and assets are not recognised for temporary
differences between the carrying amount and tax bases of
investments in foreign operations where the Group is able to
control the timing of the reversal of the temporary differences
and it is probable that the differences will not reverse in the
foreseeable future.

Deferred tax assets and liabilities are offset when there is a
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
entity has a legally enforceable right to offset and intends either to
settle on a net basis, or to realise the asset and settle the liability
simultaneously.

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 Group 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 Group 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 Group 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 difference between
the actual market value and what was recorded as a deferred tax
asset is recognised to equity.

(f) Segment reporting
An operating segment is a component of an entity that engages
in business activities from which it may earn revenues and incur
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
maker to make decisions about resources to be allocated to
the segment and assess its performance and for which discrete
financial information is available.

Operating segments have been identified based on the information
provided to the chief operating decision maker - being the Chief
Executive Officer.

110

111

2019 TechnologyOne Annual ReportTransforming business, making life simpleOperating segments that meet the quantitative criteria as
prescribed by AASB 8 are reported separately. However, an
operating 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.

Information about other business activities and operating segments
that are below the quantitative criteria are combined and disclosed
in a separate category for 'all other segments'.

(g) Leases
Leases of property, plant and equipment where the Group, as
lessee, has substantially all the risks and rewards of ownership are
classified as finance leases (note 12). Finance leases are capitalised
at the lease's inception at the fair value of the leased property 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
payment is allocated between the liability and finance cost. The
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 life
and the lease term if there is no reasonable certainty that the Group
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 Group as lessee are classified
as operating leases (note 28). 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) Variable costs
Variable expenses include costs associated with annual support and
license fee upgrades. These costs are expensed as incurred. Sales
commissions that are incremental to obtaining a revenue contract
are capitalised with the remainder being expensed as incurred in
line with AASB 15- Revenue from contracts with customers.

(i) Impairment of assets
Goodwill and intangible assets that have an indefinite useful life are
not subject to amortisation and are tested annually for impairment,
or more frequently if events or changes in circumstances indicate
that they might be impaired. Other assets are tested for impairment
whenever events or changes in circumstances indicate that the
carrying amount may not be recoverable. An impairment loss is
recognised for the amount by which the asset's carrying amount
exceeds its recoverable amount. The recoverable amount is the
higher of an asset's fair value less costs to sell and value-in-use.
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 reviewed for possible reversal of the impairment at the end of
each reporting period.

(j) Financial assets and liabilities
Financial instruments recognised in the statement of financial
position include; cash and cash equivalents, trade receivables,
contract assets, trade payables and contingent consideration.

(i) Classification

From 1 October 2018 the Group classifies its financial assets and
financial liabilities into the following measurement categories;

•

those to be measured at amortised cost (using the effective
interest method) and;

those to be measured at fair value with changes through the
profit or loss (FVPL).

Classification into these categories is based on an assessment of
the Groups’ business model for managing its financial instruments
and the contractual terms of the cash flows.

(ii) Measurement

Amortised cost

Under this method the financial instrument is measured at the
amount recognized at initial recognition minus principal repayments.
Further adjustments to the carrying value of the financial instrument
will arise if there is a modification to the contractual cash flows
creating a gain/loss in the measurement or if there is no longer a
reasonable expectation of recovery of a financial asset resulting in
a write off.

FVPL
The financial instrument is measured at fair value. Changes in fair
value are recognized in profit and loss as they arise.

(iii) Impairment

The Group recognises impairment losses on its financial assets
using an expected credit losses (ECL) model in line with AASB 9.
The ECL model essentially aims to calculate the assets credit risk.
It involves consideration of scenarios that would lead to default,
calculating the shortfall between what is contractually due and what
would be received under each scenario and then multiplying the
shortfall/loss by the probability of the default situation occurring.

The Group has elected to apply the AASB 9 simplified approach to
measuring expected credit losses which uses a lifetime expected
credit loss allowance for all trade receivables and contract assets.
The Group has also made use of the practical expedient available
for calculating expected losses for short term receivables. This
practical expedient involves using a “provision matrix” to calculate
the loss allowance. This matrix is based on historical default rates
over the expected life of the trade receivables and it is adjusted for
forward-looking estimates.

A four-year historical default rate is applied to the trade receivables
balance to calculate the expected credit loss. This appears as a
provision against the trade receivables balance. Movements in
this provision are recognised as an expense in the consolidated
income statement. If a receivable balance is identified as being
unrecoverable it is written off against the allowance for expected
credit losses.

(k) Cash and cash equivalents
For the purpose of presentation in the statement of cash flows, cash
and cash equivalents includes cash on hand, deposits held at call
with financial institutions, other short-term, highly liquid investments
with original maturities of three months or less that are readily
convertible to known amounts of cash and which are subject to an
insignificant risk of changes in value, and bank overdrafts. Cash and
cash equivalents are presented in the consolidated statement of
cash flows, net of outstanding bank overdrafts.

(l) Trade receivables
Trade receivables are recognised initially at transaction price and
subsequently measured at amortised cost using the effective
interest method, less expected loss provision. Trade receivables are
generally due for settlement within 14 to 30 days.

The Group uses the simplified approach to measuring expected
credit losses. The amount of the expected credit loss is recognised
in the income statement within corporate expenses.

(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

Computer software

Motor vehicles

3-11 years

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
proceeds with carrying amount. These are included in the
income statement.

(n) Intangible assets

(i) Goodwill

Goodwill represents the excess of the cost of an acquisition over
the fair value of the Group'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. Instead, goodwill is tested for
impairment annually, or more frequently if events or changes in
circumstances indicate that 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-
generating units or groups of cash-generating units that are
expected to benefit from the business combination in which the
goodwill arose, identified according to operating segments (note 4).

(ii) Intellectual property/source code

Intangible assets acquired separately are capitalised at cost, and
if acquired as a result of a business combination, capitalised at fair
value as at the date of acquisition. Following initial recognition,
the cost model is applied to all classes of intangible assets. The
useful lives of the intangible assets are assessed to be either finite
or indefinite. Where amortisation is charged on intangible assets
with finite lives, 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/Source Code 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.

(iii) Software development

In previous financial years, all research and development costs
were expensed as incurred. Development was only to be
capitalised if the recognition requirements had been fulfilled and a
benefit of more than 12 months was expected.

On transition to a SaaS company, which results in providing access
to our products via a SaaS platform over a prolonged term, the
technical feasibility of our products can be established at an earlier
phase through pre-defined project roadmaps. Costs that are
directly associated with the development of this software (largely
CiAnywhere products) are recognised as an intangible asset where
the following criteria are met:

a. The technical feasibility of completing the intangible asset so

that it will be available for use or sale;

Intention to complete the intangible asset and use or sell it;

c. Ability to use or sell the intangible asset;

d. How the intangible asset will generate probable economic

benefits. Among other things, the entity can demonstrate the
existence of a market for the output of the intangible asset or
the intangible asset itself or, if it is to be used internally, the
usefulness of the intangible asset;

e. The availability of adequate technical, financial and other

resources to complete the development and to use or sell the
intangible asset;

Ability to measure reliably the expenditure attributable to the
intangible asset during its development.

These costs include personnel and other directly attributable costs
incurred in the development of software. Capitalised software
development costs are recognised as an intangible asset and
amortised over their estimated useful lives, which is considered
to be from three to seven years. Software development costs are
capitalised as “under development” until the products to which the
costs relate become available for use. At the point in which the

112

113

2019 TechnologyOne Annual ReportTransforming business, making life simpleproducts become available for use, the costs are transferred from
“under development” to “in use” and amortised from that point
(refer to categorisation in note 13). Research costs are expensed
as incurred and are largely made up of employee labour which is
included in employee costs in the consolidated income statement.
Development costs previously recognised as expenses are not
recognised as assets in a subsequent period.

Impairment considerations in respect of software development
expenditure are consistent with those applied to finite intangible
assets, as disclosed in the previous financial year. Expenditure
capitalised as software development in the current year was $32.1m
and is included in intangible assets.

(o) Trade and other payables
These amounts represent liabilities for goods and services
provided to the Group 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
Provisions are recognised when the Group 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
and the amount has been reliably estimated. Provisions are not
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.

(q) Employee benefits

(i) Short-term obligations

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 are measured at the amounts expected
to be paid when the liabilities are settled. Liabilities for sick leave,
which are non-vesting, are recognised when the leave is taken and
measured at the rates paid or payable.

(ii) Long service leave

The liability for long service leave is recognised in the provision
for employee benefits and is measured as the present value of
expected future payments to be made in respect of services
provided by employees up to the reporting period. Consideration
is given to expected future wage and salary levels, experience
of employee departures and periods of service. Expected future
payments are discounted using market yields at the end of the
reporting period on national corporate bonds with terms to maturity
and currency that match, as closely as possible, the estimated
future cash outflows.

(iii) Share-based payments

The Group 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 34.

The cost of share-based payments is recognised, together with
a corresponding increase in equity, over the period in which the
performance and/or service conditions are fulfilled, ending on the
date on which the relevant employees become fully entitled to the
award (the vesting period). In the case that the rights over shares do
not vest at the end of the performance period, the corresponding
expense in relation to those rights will be reversed. No expense is
recognised for awards that do not ultimately vest.

(r) Contributed equity
Ordinary shares are classified as equity.

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
the share proceeds received.

(s) Earnings per share

(i) Basic earnings share

Basic earnings per share is calculated by dividing:

• The profit attributable to owners of the Group, excluding any

costs of servicing equity other than ordinary 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 account:

• The after income tax effect of interest and other financing costs

associated with dilutive potential ordinary shares

• The weighted average number of additional ordinary shares that
would have been outstanding assuming the conversion of all
dilutive potential ordinary shares

(t) Dividends
Provision is made for the amount of any dividend declared,
being appropriately authorised and no longer at the discretion
of the entity, on or before the end of the reporting period but not
distributed at the end of the reporting period.

(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
presented as operating cash flows.

2. Financial risk management
Financial instruments recognised in the statement of financial
position include; cash and cash equivalents, trade receivables,
trade payables and contingent consideration.

It is, and has been throughout the period under review, the Group’s
policy that no trading in financial instruments shall be undertaken.
The main risks arising from the Group’s financial assets and
liabilities are interest rate risk, foreign currency risk and credit risk.
The Board reviews and agrees policies for managing each of these
risks and they are summarised below.

Details of the significant accounting policies and methods adopted,
including the criteria for recognition, the basis of measurement
and the basis on which income and expenses are recognised, in
respect of each class of financial asset, financial liability and equity
instrument are disclosed in Note 1 to the Financial Statements.

There are no changes in the financial risks faced by the Group in
the period.

The Group holds the following financial instruments:

Financial assets

Cash and cash equivalents

Trade and other receivables

Financial liabilities

Trade and other payables

Borrowings

Contingent consideration

2019
$’000

2018
$’000

105,046

104,322

49,032

59,554

154,078

163,876

47,067

40,807

223

11,810

47,295

52,622

2019
USD
$’000

2019
PGK
$’000

2018
USD
$’000

2018
PGK
$’000

Trade Receivables

112

592

1,044

The Group trades only with recognised, creditworthy third parties. It
is the Group'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 Group's exposure to bad debts is not significant.

Information on credit risk exposures is contained in Note 9.

(d) Liquidity risk

Liquidity risk arises from the financial liabilities of the Group and the
Group’s subsequent ability to meet their obligations to repay their
financial liabilities as and when they fall due.

Less than
12 months
$’000

Between
1 and 5
years
$’000

Over 5
years
$’000

Total
contractual
cash
flows
$’000

At 30 September 2019

Financial assets

Cash and cash equivalents

Trade and other receivables

Total

Financial liabilities

105,046

49,032

154,078

Trade and other payables

47,067

Borrowings

Contingent consideration

Total

Net inflow / (outflow)

223

47,295

106,783

105,046

49,032

154,078

47,067

223

47,295

106,783

(a) Interest rate risk

The Group’s cash and investment assets are exposed to
movements in deposit and variable interest rates. The Group does
not hedge this exposure. Interest rate risk on cash is not considered
to be material.

(b) Foreign currency risk

As a result of operations in New Zealand, Malaysia, Papua New
Guinea and the United Kingdom and sales contracts denominated in
United States dollars, the Group's statement of financial position can
be affected by movements in the exchange rates applicable to these
geographical locations and currencies.

The Group does not hedge this risk. The Group’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:

Less than
12 months
$’000

Between
1 and 5
years
$’000

Over 5
years
$’000

Total
contractual
cash
flows
$’000

104,322

59,554

163,876

40,807

11,810

52,622

111,254

104,322

59,554

163,876

40,807

11,810

52,622

111,254

At 30 September 2018

Financial assets

Cash and cash equivalents

Trade and other receivables

Total

Financial liabilities

Trade and other payables

Borrowings

Contingent consideration

Total

Net inflow / (outflow)

114

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2019 TechnologyOne Annual ReportTransforming business, making life simple

(e) Fair value measurements

Contingent consideration as set out in note 30 is classified as
Level 3. The valuation techniques and fair value of consideration
is outlined in note 30. The balance of contingent consideration
is recognised within the trade and other payables line in the
Consolidated Statement of Financial Position. The release of the
contingent consideration that does not represent payment is
recognised within the other income line of the consolidated income
and expense statement.

Contingent Consideration

Opening balance at 1 October 2018

Payments (DMS and JRA)

Reduction in contingent consideration (JRA)

Closing balance at 30 September 2019

Contingent Consideration

Opening balance at 1 October 2017

Payments (ICON)

Reduction in contingent consideration (ICON)

(Gains)/losses recognised in the income statement

Closing balance at 30 September 2019

2019
$’000

11,810

(4,059)

(7,528)

223

2018
$’000

16,467

(2,721)

(2,177)

241

11,810

The carrying value of trade receivables, accrued revenue and
trade payables are assumed to approximate their fair value due to
their short-term nature or the effect of discounting on non-current
financial assets not being significant. The fair value of non- current
borrowings materially approximates their carrying amount, as the
impact of discounting is not significant.

(f) Capital risk management

The Group manages its capital to ensure that entities in the Group
will be able to continue as a going concern while maximising the
return to stakeholders through the optimisation of the debt and
equity balance.

The current risk management structure of the Group 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 Group 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.

3. Critical accounting estimates and

judgements

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 Group 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

The Group tests annually whether goodwill has suffered any
impairment, in accordance with the accounting 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 13 for
details of these assumptions and the potential impact of changes to
the assumptions.

All other assets are reviewed for indicators or object evidence
of impairment. If indicators or objective evidence exists, the
recoverable amount is reviewed.

(ii) Share-based payments

The Group 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 34.

The cost of share-based payments is recognised, together with
a corresponding increase in equity, over the period in which the
performance and/or service conditions are fulfilled, ending on
the date on which the relevant employees become fully entitled
to the award (the vesting period). In the event that the rights over
shares do not vest at the end of the performance period, the
expense relating to the unvested rights is reversed. No expense is
recognised for awards that do not ultimately vest.

(iii) 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.

(iv) Contingent consideration

A provision has been made for the present value of anticipated
costs for future contingent earn out considerations resulting from
the acquisitions made by the Group. 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 30.

(v) Multiple element contracts

SaaS contracts entered into by the Group require judgement in the
identification and separation of the contract components related
to software licence fees, post sales support and cloud services.
The Group assesses each customer contract individually into
its components and considers if 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.

116

(vi) Capitalisation of development costs

The Group capitalises costs related to software development.
Software development costs are recognised upon meeting the
criteria set out in note 1(n)(iii). The carrying value of these costs are
regularly reviewed for impairment. Software development costs are
amortised over a period of three to seven years.

4. Segment information
(a) Description of segments
The Group’s chief operating decision maker, being the Chief
Executive Officer, makes financial decisions and allocates
resources based on the information they receive from the internal
management system. Sales are attributed to an operating segment
based on the type of product or service provided to the customer.

Segment information is prepared in conformity with the accounting
policies of the Group as discussed in note 1 and the Accounting
Standard AASB 8 Operating Segments. During FY19, as a result of the
transition into a SaaS business, the Group has consolidated the way
it reports to the chief operating decision maker. This has resulted
in a change in the Group’s reportable segments with the change
being applied retrospectively.

The Group’s new reportable segments are:

• Software – consolidates Sales and Marketing, R&D, SaaS

platform (Cloud).

• Consulting – responsible for the implementation of our software

and remains unchanged from prior years.

• Corporate – includes all corporate functions and remains

unchanged from prior years.

The table presented below illustrates how the new segments relate
to the segments reported in the prior year financial statements:

New segment as reported above

Old segment as reported in the
prior year financial statements

Software

Consulting

Corporate

R&D

Cloud

Sales and Marketing

Consulting

Corporate

(b) Segment information provided to the chief
operating decision maker

Software
$'000

Consulting
$’000

Corporate
$’000

Total
$’000

2019

Revenue from contracts with
customers

SaaS fees*

On premise initial licence fees**

On premise annual licence fees*

Consulting services*

Other income

Net royalty

Total revenue

Expenses

81,466

40,622

101,307

61,599

543

903

(34)

81,466

40,622

101,307

61,599

1,446

(50,747)

(6,578)

57,325

171,792

56,454

58,194

286,440

Intersegment revenue

(1,399)

1,433

Total external expenses

(120,581)

(46,562)

(42,908)

(210,051)

Profit before tax

Income tax expense

Profit for the year

Total assets

Total liabilities

Total depreciation and amortisation

*Recognised over time / as services are rendered

**Recognised at a point in time

51,211

9,892

15,286

76,389

(17,930)

58,459

318,424

211,567

(6,127)

Restated
2018

Software
$'000

Consulting
$’000

Corporate
$’000

Total
$’000

Revenue from contracts with
customers

SaaS fees*

On premise initial licence fees**

58,110

28,660

On premise annual licence fees*

103,022

Consulting services*

63,197

58,110

28,660

103,022

63,197

Other income

483

1,019

1,502

(46,984)

(6,765)

53,749

141,702

58,102

54,687

254,491

Intersegment revenues/expenses are where one operating
segment has been charged for the use of another's expertise.

Intersegment revenue

(1,589)

1,670

(81)

Royalties are a mechanism whereby each segment pays or
receives funding for their contribution to the ongoing success of
TechnologyOne. For example, Software pays Corporate for the use
of corporate services.

Net royalty

Total revenue

Expenses

The chief operating decision maker views each segment’s
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.

Total external expenses

(128,479)

(52,083)

(49,112)

(229,674)

Profit before tax

Income tax expense

Profit for the year

Total assets

Total liabilities

Total depreciation and amortisation

*Recognised over time / as services are rendered

**Recognised at a point in time

13,223

6,019

5,575

24,817

(3,126)

21,691

284,311

206,821

(5,102)

117

2019 TechnologyOne Annual ReportTransforming business, making life simple
(c) Other segment information

(i) Segment revenue

5.(a) Other income

Australia

New Zealand & Asia Pacific*

APAC total

United Kingdom

2019
$'000

Restated
2018
$'000

239,134

218,300

35,416

26,802

Other income

Foreign exchange gains / (losses)

Interest received

274,550

245,102

Other*

10,444

7,887

Total other income

Restated
2018
$’000

2019
$’000

(2)

634

814

(16)

735

783

1,446

1,502

Total segment revenues from sales to external customers

284,994

252,989

*Other income includes a gain of $7.5m recognised on reduction of contingent consideration provision relating

to the acquisition of JRA (refer to note 30 for further details) and an impairment of $7.3m recognised in relation to

Intangible assets obtained through the acquisition of JRA (refer to note 13 for further details).

(ii) Segment assets

Australia

New Zealand & Asia Pacific*

APAC total

United Kingdom

Total segment assets

2019
$'000

2018
$'000

254,550

206,947

21,128

24,250

6. Expenses

Profit before income tax includes the
following specific expenses:

271,561

231,197

Depreciation

10,593

10,835

286,271

242,032

Plant and equipment

Total depreciation

Amortisation

Leased office furniture and equipment

Intangible assets

Total amortisation

Total depreciation and amortisation

2019
$’000

Restated
2018
$’000

3,710

3,896

3,710

3,896

2,417

6,127

1,188

1,206

5,102

All significant non-current assets are located in Australia. Segment
assets are presented net of deferred tax.

*Asia Pacific includes Malaysia and South Pacific

(iii) Major customers

The Group has a number of customers to which it provides both
products and services, none of which contribute greater than 10% of
external revenue

Wages and salaries

92,711

114,690

Expenditure not allowable for income tax purposes

150

369

5. Revenue

Revenue from contracts with customers

SaaS fees*

On premise initial licence fees**

On premise annual licence fees*

Consulting services*

Defined contribution plan expense

Payroll tax

Provision for employee benefits

Share-based payments

Other

Provision for doubtful debts

Rental expenses on operating leases

(Gain) / Loss on property, plant & equipment

Restated
2018
$’000

2019
$’000

81,466

58,110

40,622

28,660

101,307

103,022

61,599

63,197

7,330

5,740

745

2,018

9,154

7,030

2,357

1,595

11,291

10,009

119,835

144,835

942

377

7,030

6,020

(3)

(16)

Total revenue from contracts with customers

284,994

252,989

*Recognised over time / as services are rendered

**Recognised at a point in time

In addition to the employee benefits expense disclosed above,
‘Variable costs’ in the consolidated income statement includes
$19.2m (2018: $23.1m) relating to employee costs, ‘Contract
acquisition costs’ in the consolidated statement of financial position
includes $3.78m (2018: $3.3m) and ‘Software under development’
in the consolidated statement of financial position includes
$29.0m (2018:$0) relating to employee costs.

Income tax expense

17,930

3,126

2019
$’000

Restated
2018
$’000

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

(1,481)

(1,059)

8. Current assets - Cash and

equivalents

Cash and cash equivalents

2019
$’000

2018
$’000

105,046

104,322

The Group has a secured $2 million interchangeable facility which
is transferable between an Overdraft, Fixed Rate Commercial Bill
and Variable Rate Commercial Bill to assist with working capital
requirements. The facility is unused at 30 September 2019.

Cash at bank earns interest at floating rates based on daily bank
deposit rates.

Income tax expenses

7.
(a) Income tax expense

Current tax

Money market accounts at call are made for varying periods of
between one day and three months, depending on immediate cash
requirements of the Group, and earn interest at the respective
money market deposit rates. Given the short-term nature of these
accounts the fair value of cash assets at 30 September are their

carrying values.

2019
$’000

Restated
2018
$’000

8,010

16,090

Relating to origination and reversal of temporary differences

10,534

(12,256)

9. Current assets - Trade and other

Adjustments for current tax of prior periods

(614)

17,930

(708)

3,126

receivables

Deferred income tax expense / (revenue) included in income
tax expense comprises:

Trade receivables (i) (ii)

(Increase) / decrease in deferred tax assets

(2,796)

(7,999)

Allowance for expected credit losses

Increase / (decrease) in deferred tax liabilities

13,387

(4,436)

Sundry receivables

Adjustment for deferred taxes of prior periods

(57)

179

2019
$’000

2018
$’000

50,053

59,809

(1,135)

(902)

114

647

49,032

59,554

(b) Numerical reconciliation of income tax expense to prima
facie tax payable

10,534

(12,256)

2019
$’000

Restated
2018
$’000

Profit from continuing operations before income tax expense

76,389

24,817

Tax at the Australian tax rate of 30% (2018 - 30%)

Adjustments for current tax of prior periods

22,917

(614)

7,445

(708)

Research and development tax concession

(4,523)

(3,980)

(i) Trade receivables are non-interest bearing and are on 14 to
30 day terms. No interest is charged on trade receivables.

(ii) Included in the trade receivable balance are debtors with a
carrying amount of $9,298,888 (2018 - $14,377,317) which are
past due at the reporting date for which the consolidated entity
has not provided as there has not been a significant change
in credit quality and the consolidated entity believes that the
amounts are still considered recoverable. The consolidated
entity does not hold any collateral over these balances, apart
from the withdrawal of future support and software licence use
rights.

(a) Allowance for expected credit losses

Movements in the provision for impairment of receivables are
as follows:

Opening balance - 1 October 2018 (adjusted for AASB 9)

Increase/(decrease) in expected credit loss allowance
recognised in profit and loss during the year

Unused amounts reversed

Closing balance - 30 September 2019

2019
$’000

2018
$’000

902

1,135

(902)

1,135

525

839

(462)

902

In determining the recoverability of a trade receivable the Group
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 expected
credit loss allowance.

118

119

2019 TechnologyOne Annual ReportTransforming business, making life simple

10. Contract asset

12. Non-current assets - property, plant

13. Non-current assets - Intangible assets

Contract assets1

Allowance for expected credit losses

Impaired contract assets

2019
$’000

Restated
2018
$’000

24,722

2,124

(115)

24,607

2,124

Movements in the provision for impairment of contract assets are as
follows:

Opening balance - 1 October 2018 (adjusted for AASB 9)

Increase/(decrease) in expected credit loss allowance
recognised in profit and loss during the year

Unused amounts reversed

Closing balance - 30 September 2019

2019
$’000

2018
$’000

115

12018 is split between a current portion $1.9m and non-current portion $0.2m.

11. Current assets - Other current

assets

Deposits receivable

2019
$’000

463

2018
$’000

959

Year ended 30 September 2019

Opening net book amount

Additions

Amortisation charge

Impairment

Exchange difference

Intellectual
property/
Source code
$’000

Customer
contracts
$’000

Contract
acquisition
costs1
$’000

Software under
development
$’000

Goodwill
$’000

Software in use
$’000

Total
$’000

40,003

(6,753)

4,185

(187)

(500)

823

(55)

5,357

3,782

(1,620)

23,825

8,320

(555)

50,368

35,927

(2,417)

(7,253)

Closing net book amount

33,250

3,503

768

7,519

23,825

7,765

76,630

At 30 September 2019

Cost

Accumulated amortisation

Accumulated impairment

Net book amount

Year ended 30 September 2018

40,003

(6,753)

33,250

40,003

10,363

(4,183)

(2,677)

3,503

6,668

(306)

(2,177)

4,185

10,358

(3,996)

(2,177)

4,185

1,100

(322)

768

878

(55)

823

1,100

(277)

823

10,518

(2,999)

23,825

8,320

(555)

94,129

(8,069)

(9,430)

7,519

23,825

7,765

76,630

2,909

3,274

(826)

5,357

6,736

(1,379)

5,357

Closing net book amount

40,003

At 30 September 2018

Cost

Accumulation amortisation

Accumulation impairment

Net book amount

40,003

and equipment

Office
furniture
and
equipment
$’000

Leased
office
furniture and
equipment
$’000

Computer
software
$’000

Motor
vehicles
$’000

Total
$’000

(13)

239

(48)

12,280

(4)

2,703

(359)

(12)

(3,709)

(29)

10,659

212

10,900

Year ended 30
September 2019

Opening net book
amount

Additions

Disposals

12,201

2,464

(355)

Depreciation charge

(3,636)

Make good
movement

Excange difference

Closing net book
amount

At 30 September
2019

Year ended 30
September 2018

Opening net book
amount

Additions

Disposals

13,427

3,358

(680)

Depreciation charge

(3,860)

Make good
movement

Excange difference

Closing net book
amount

At 30 September
2018

(29)

(5)

(39)

(13)

(19)

13,525

3,388

(680)

(17)

(3,909)

(5)

(39)

Cost

41,167

1,240

2,976

282

45,665

Accumulated
depreciation

(28,966)

(1,204)

(2,955)

(260)

(33,385)

Net book amount

12,201

12,280

Cost

43,335

1,240

3,215

278

48,068

Opening net book amount

Accumulated
depreciation

(32,676)

(1,217)

(3,003)

(272)

(37,168)

Net book amount

10,659

212

10,900

Additions

Amortisation charge

Impairment

1Balance of contract acquisition costs is split between current portion of $2.1m and non-current portion of $5.4m (2018 restated: current $1.4m; non-current $4.0m).

12,201

12,280

(a) Impairment tests for goodwill

Goodwill and indefinite life intangibles are allocated to the
Group's cash generating units (CGUs) identified according to each
reportable segment for impairment testing purposes.

2019

Goodwill

Software1
$’000

Consulting2
$’000

Corporate
$’000

23,643

9,608

As a result of changes to in the JRA business, the Company has
reviewed the carrying value of the acquired assets, including
testing for goodwill as part of its annual impairment assessment.
As a result, the acquired source code was impaired by $0.5m and
the goodwill was impaired by $6.8m. The reduction in goodwill
is reflected in the revised allocations by segment below and is
allocated between Software ($3.4m) and Consulting ($3.3m).

A segment-level summary of the goodwill and indefinite life
intangible assets allocation is presented below.

Indefinite life intangibles

1,362

660

25,005

10,268

2018

Goodwill

Software1
$’000

Consulting2
$’000

Corporate
$’000

Total
$’000

27,056

12,947

Indefinite life intangibles

1,362

660

28,418

13,607

1Included within this segment is the CGU of Software – DMS with a goodwill balance of $6.0m and Software –

Proclaim and ICON with a goodwill balance of $11.3m.

2Included within this segment is the CGU of Consulting – Proclaim and ICON with a goodwill balance of $5.6m.

50,458

3,274

(1,187)

(2,177)

50,368

58,197

(5,652)

(2,177)

50,368

Total
$’000

33,251

2,022

35,273

40,003

2,022

42,025

120

121

2019 TechnologyOne Annual ReportTransforming business, making life simple

15. Current liabilities - Trade and other

(a) Movements in provisions

22. Contributed equity

payables

Trade payables

Contingent consideration

Sundry creditors

Directors fees

2019
$’000

2018
$’000

38,778

32,319

223

11,810

7,826

8,084

463

404

47,290

52,617

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 Group has financial risk management
policies in place to ensure that all payables are paid within the
credit timeframe.

16. Current liabilities - Provisions

Make good provision

Other provisions

Annual leave

Long service leave

2019
$’000

2018
$’000

100

218

157

731

6,639

6,672

5,304

5,697

12,261

13,257

Please refer to note 19 for details.

17. Current liabilities - Prepaid

subscription revenue

Carrying amount at 1 October 2018

Billings received

2019
$’000

2018
$’000

136,557

112,366

234,724

185,323

The recoverable amounts have been determined based on a value
in use calculation using cash flow projections based on financial
budgets approved by senior management covering a five year
period, 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 (2018 - 15%).

The key assumptions used for all CGUs in value in use calculations
for 30 September 2019 and 2018 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

• Terminal growth rates - these have been set at 3% (2018 - 3%)

14. Non-current assets - Deferred tax

assets

The balance comprises temporary differences attributable to:

Employee benefits

Provisions - other

Accrued expenses

Intangibles

Lease liability (net)

Employee share trust

Prepaid subscription revenue

Other

Set-off of deferred tax liabilities pursuant
to set-off provisions (note 21)

Net deferred tax assets

Deferred tax assets expected to be
recovered within 12 months

Deferred tax assets expected to be
recovered after more than 12 months

Movements:

2019
$’000

Restated
2018
$’000

4,338

4,452

1,513

1,826

753

240

2,193

1,376

1,202

258

2,699

2,223

36,604

32,974

109

142

48,085

44,823

(15,932)

(2,545)

32,153

42,278

15,488

20,285

16,665

21,993

32,153

42,278

Opening balance at 1 October

44,823

36,933

Total secured current borrowings

Credited / (charged) to the
consolidated income statement

Credited / (charged) to equity

Offset from deferred tax liabilities

Closing balance at 30 September

122

2,796

7,999

19. Non-current liabilities - Provisions

466

(109)

(15,932)

(2,545)

32,153

42,278

Long service leave

Make good provision

Total secured current borrowings

2019
$’000

2018
$’000

2,921

2,588

695

566

3,616

3,144

Movements in each class of provision during the financial year,
other than employee benefits, are set out below:

Share capital

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.

Annual
Leave
$’000

Long
service
leave
$’000

Make
Good
$’000

Service Level
Commitment
$’000

Total
$’000

2019
Shares

2018
Shares

2019
$’000

2018
$’000

Ordinary shares

Fully paid

317,827,581

316,691,676

35,302

33,171

Movements in ordinary share capital

2019

Carrying amount at 1
October 2018

Additional provisions
recognised

Charged / (credited)
to the P&L or loss -
unwinding of discount

Carrying amount at
30 September 2019

6,672

8,285

713

731

16,401

Date

Details

Number of shares

$’000

3,577

1,853

(3,610)

(1,913)

5,533

(543)

(6,057)

6,639

8,225

795

218

15,877

1 Oct 2018

Opening balance

Exercise of options

316,691,676

1,135,905

33,171

2,131

30 Sep 2019

Closing balance

317,827,581

35,302

1 Oct 2017

Opening balance

315,442,363

32,152

Exercise of options

1,249,313

1,019

30 Sep 2018

Closing balance

316,691,676

33,171

20. Non-current liabilities - Other

(a) Employee Share Option Plan

Other non-current liabilities

2019
$’000

2018
$’000

837

1,241

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 34.

Other non-current liabilities consists of lease incentives. The lease
incentive relates to leases entered into by the Group whereby
the Group 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.

23. Reserves
(a) Other reserves

21. Non-current liabilities - Deferred

tax liabilities

Share-based payments

Foreign currency translation

Dividend reserve

2019
$’000

2018
$’000

25,722

22,294

1,850

651

27,905

8,616

55,477

31,561

2019
$’000

2018
$’000

(4,237)

(1,114)

(26)

(9,477)

154

(26)

(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.

(2,256)

(1,559)

(ii) Foreign currency translation

Total deferred tax liabilities

(15,932)

(2,545)

Set-off of deferred tax liabilities pursuant to set-off provisions

15,932

2,545

Net deferred tax liabilities (note 14)

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.

Movements:

Opening balance at 1 October

(2,545)

(1,891)

(iii) Dividend reserve

Charged / (credited) to the consolidated income statement

(13,387)

4,436

Offset to deferred tax assets

Closing balance at 30 September

15,932

(2,545)

The reserve records retained earnings set aside for the payment of
future dividends.

123

Transfer to revenue from contracts with customers

(223,723)

(161,132)

Contract assets

Carrying amount at 30 September 2019

147,558

136,557

Accelerated depreciation for tax purposes

The balance comprises temporary differences attributable to:

18. Current liabilities - Borrowings

Prepayments

Capatalised development

Commission contract asset

Secured

Lease liabilities

2019
$’000

2018
$’000

2019 TechnologyOne Annual ReportTransforming business, making life simple

24. Dividends
Ordinary shares

Final dividend for the year ended 30 September 2018 of 6.16
Cents (2017 - 5.6 Cents) per fully paid share paid in December
2018 (2017- December 2017)

75% franked (2017- 100%) based on tax paid at 30%

Special dividend for the year ended 30 September 2018 of 2.0
Cents (2017 - 2.00 Cents) per fully paid share paid in December
2018 (2017- December 2017)

75% franked (2017- 100%) based on tax paid at 30%

Interim dividend for the year ended 30 September 2019 of 3.15
Cents (2018 - 2.86 Cents) per fully paid share paid in June 2019
(2018 - June 2018)

75% franked (2018- 75%) based on tax paid at 30%

The above amounts represent the balance of the franking account
as at the end of the reporting period, adjusted for:

(a) franking credits that will arise from the payment of the
amount of the provision for income tax

(b) franking debits that will arise from the payment of dividends
recognised as a liability at the reporting date

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 in
the franking account of $7,175,639 (2018 - $8,306,307).

2019
$’000

2018
$’000

19,527

17,664

6,334

6,309

25. Key management personnel

9,989

9,029

disclosures

(a) Key management personnel disclosures

Total dividends provided for or paid

35,850

33,002

(a) Dividends policy

The Board will continue to consider paying a special dividend
in future years if cash reserves remain high, franking credits
are available, growth continues as is expected and there is no
compelling alternative use for the cash reserves.

Short-term employee benefits

4,803,959

4,171,986

Guarantees

2019
$

2018
$

Deferred retention bonus

Share-based payments

108,195

766,631

526,182

5,678,785

4,698,168

(b) Dividends not recognised at the end of the reporting
period

(b) Equity instrument disclosures relating to key
management personnel

Final

In addition to the above dividends, since year end the directors
have recommended the payment of a final dividend of 8.78
cents per fully paid ordinary share (2018 - 6.16 cents) 60%
franked (2018 - 75%) based on tax paid at 30% (2018 - 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

2019
$’000

2018
$’000

Details of options provided as remuneration to KMP and shares
issued on the exercise of such, together with terms and conditions
can be found in the remuneration report.

27,905

19,509

26. Remuneration of auditors
During the year, the following fees were paid or payable for services
provided by the auditor of the consolidated entity:

Ernst & Young

The directors have not recommended the payment of a special
dividend for the 30 September 2019 financial year (2018 - 2.00
cents)

6,334

Audit and other assurance services

27,905

25,843

Audit and review of financial statements

Other assurance services

2019
$

2018
$

527,609

622,200

168,600

216,948

27. Contingencies
TechnologyOne is a global business and from time to time in the
ordinary course of business it receives enquiries from various
regulators and government bodies. TechnologyOne cooperates
fully with all enquiries and these enquiries do not require disclosure
in their initial state, however should the Group become aware that
an enquiry is developing further or if any regulator or government
action is taken against the group, appropriate disclosure is made in
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 material contingent assets or liabilities other than the following:

At 30 September 2019, the Group had $6,155,631 (2018 - $4,474,910)
in outstanding performance guarantees. The total available
guarantee facility is $7,000,000 (2018 - $7,000,000). The Group
also had unused foreign currency dealing limits of $1,256,319
(2018 - $1,040,040).

The parent entity, Technology One Limited, continues to support its
subsidiaries in their operations, by way of financial support.

28. Commitments
(a) 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.

2019
$’000

2018
$’000

Commitments for minimum lease payments in relation to
non-cancellable operating leases are payable as follows:

Within one year

7,163

6,760

Later than one year but not later than five years

24,806

22,603

The franked portions of the final dividends recommended after 30
September 2019 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 2020.

Total remuneration for audit and other assurance services

696,209

839,148

Later than five years

Other services

Taxation advice and other advisory services

131,672

107,515

Franking account balance as at the end of the financial year at
30% (2018: 30%)

Franking credits that will arise from the payments of income tax
payable as at the end of the financial year

2019
$’000

2018
$’000

(1,202)

(1,118)

2,728

3,073

1,526

1,955

Total remuneration of Ernst & Young

827,881

946,663

(b) Finance lease commitments

The relative ratio of other services to audit and assurance services
was 19%.

Commitments in relation to finance leases are payable
as follows:

Within one year

Representing lease liabilities:

Current

9,679

11,906

41,648

41,269

2019
$’000

2018
$’000

The ultimate controlling entity of the consolidated entity is
Technology One Limited, a company incorporated in Australia.

29. Related party transactions
(a) Utimate 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

• Marketing support and management fees were charged to

wholly owned controlled entities

These transactions were undertaken on commercial terms and
conditions. No allowance for expected credit loss has been
recognized for amounts due to and receivable from related parties.

The ownership interest in related parties in the wholly owned group
is set out in note 31.

30. Business combination
There were no business combinations in the 2019 year.

During the year, the DMS earn out was finalised. DMS achieved
the earn out target set as part of the acquisition agreement and,
as a result, the Group has paid the full contingent consideration of
$3.3m in FY19.

During the year, the JRA earn-out was finalised which resulted in
accounting for the reduction of the contingent consideration. As
part of the JRA acquisition, an earn out target was established. JRA
partially achieved the earn out target and, as a result, the Company
has reduced the contingent consideration by $7.5m. The final
contingent consideration amount was $0.9m, of which $0.2m
remains payable at 30 September 2019.

A review of the acquisition and the events and circumstances that
have occurred recently has led to a reduction in cash forecasts for
the JRA business. As a result, an impairment amount of $7.3m was
also recognised. See note 13 for further details.

Reconciliation of Level 3 contingent consideration is set out below.

Balance at 30 September 2018

Payments (DMS and JRA)

Reduction in contingent consideration (JRA)

Current

Non Current

Total

$’000

11,810

(4,059)

(7,528)

223

Total
$’000

223

JRA
$’000

223

124

125

2019 TechnologyOne Annual ReportTransforming business, making life simple

31. Controlled entities
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):

32. Reconciliation of profit after

income tax to net cash inflow from
operating activities

33. Earnings per share
(a) Basic earnings per share

Country of
Incorporation

Class of shares

2019%

2018%

Equity holding

Malaysia

Ordinary

100

Profit for the year

Depreciation and amortisation

New Zealand

Ordinary

100

Non-cash employee benefits expense - share-based payments

England

Ordinary

Avand Pty Ltd

Australia

Ordinary

New Zealand

Ordinary

100

Impairment of intangibles

Reduction in contingent consideration (JRA)

Transfers to / (from) provisions:

Employee entitlements

Doubtful debts

Australia

Ordinary

100

Net (gain) / loss on sale of non-current assets

Australia

Ordinary

100

Movements in provision for:

Name of entity

Technology One
Corporation Sdn Bhd

Technology One New
Zealand Ltd

Technology One UK
Limited

Avand (New Zealand)
Pty Ltd

Technology One
Employee Share Trust

Desktop Mapping
Systems Pty Ltd (DMS)

2019
$’000

Restated
2018
$’000

58,459

21,691

6,127

1,947

7,253

(7,528)

(93)

348

359

5,102

1,595

2,177

1,793

377

(16)

Digital Mapping Solutions
NZ Limited (DMS)

New Zealand

Ordinary

Boldridge Pty Ltd

Australia

Ordinary

Australia

Ordinary

100

Icon Solution Unit Trust
(ICON)

Jeff Roorda & Associates
Pty Ltd (JRA)

Australia

Ordinary

100

The parent entity is Technology One Limited, a public company,
limited by shares and is domiciled in Brisbane, Australia and whose
shares are traded on the Australian Securities Exchange. All entities
operate in the software industry in their geographical locations. The
Registered office is located at:

TechnologyOne HQ
Level 11,
540 Wickham Street,
Fortitude Valley, Qld, 4006

Income tax payable

Deferred income tax

Change in operating assets and liabilities:

Decrease / (increase) in trade debtors and contract asset

(12,206)

(7,781)

Increase/ (decrease) in prepaid subscription revenue

11,001

24,746

Decrease / (increase) in sundry debtors

Decrease / (increase) in prepayments

Decrease / (increase) in other assets

Increase / (decrease) in trade creditors

Increase / (decrease) in other liabilities

Increase / (decrease) in lease liability

136

1,112

(1,958)

(2,632)

(161)

7,526

10,421

(835)

(182)

(5)

Net cash inflow / (outflow) from operating activities

76,835

51,870

(5,209)

(1,966)

11,508

(4,401)

Weighted average number of ordinary and potential
ordinary shares used as the denominator in
calculating diluted earnings per share

319,500,313

316,693,206

2019
Cents

18.43

18.30

Restated
2018
Cents

6.87

6.85

Basic earnings per share (cents per share)

Diluted earnings per share (cents per share)

Profit used for calculating basic and diluted earnings per share
($'000)

58,459

21,691

(b) Weighted average number of shares used as
denominator

2019
Number

2018
Number

Weighted average number of ordinary shares used as
the denominator in calculating basic earnings per share

317,215,635

315,802,661

Adjustments for calculation of diluted earnings per share:

Options

2,284,678

890,545

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
financial statements.

34. Share-based payments
(a) Employee option plan

Options are granted to employees at the discretion of the Board
based on the option plan approved by the Board.

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
Executive Chairman for unsatisfactory performance for as long as it
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

• Satisfactory performance on non-financial indicators as

determined by the Executive Chairman

The period available between vesting date and expiry date of each
option is five years. There are no cash settlement alternatives.

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.

126

127

2019 TechnologyOne Annual ReportTransforming business, making life simple

Set out below are summaries of options granted under the plan:

Issue date

Expiry date

Exercise price

Balance at start of the
period
Number

Issued during the
year
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

2019

1/10/2018

1/10/2026

1/10/2018

1/10/2026

1/10/2018

1/07/2026

1/10/2018

1/07/2026

1/10/2018

1/10/2025

1/10/2018

1/07/2025

1/10/2018

1/10/2025

1/10/2018

1/07/2025

1/10/2018

1/07/2025

1/10/2018

1/07/2025

1/10/2018

1/07/2025

1/10/2017

1/10/2025

1/10/2017

1/10/2024

1/10/2017

1/10/2025

1/07/2018

1/07/2026

1/07/2018

1/07/2025

1/07/2018

1/10/2026

1/07/2017

1/07/2024

1/07/2017

2/07/2024

1/07/2017

1/07/2024

1/07/2017

1/07/2024

1/07/2017

1/07/2024

1/07/2017

1/07/2024

23/05/2017

1/10/2024

7/04/2017

30/09/2024

10/03/2017

1/10/2024

20/02/2017

1/10/2024

14/02/2017

1/10/2024

7/02/2017

1/10/2024

1/10/2016

1/10/2024

1/10/2016

1/10/2024

1/07/2016

1/07/2023

4.1122

5.4829

1.5862

1.8914

4.1166

1.0313

4.9952

0.8633

1.1634

1.5862

1.8914

5.1456

5.7474

1.3388

4.1122

1.8914

1.5862

1.3388

1.1634

1.0313

0.8633

5.6046

5.6027

5.1064

5.0688

5.2334

5.7474

0.5302

1,210,593

390,520

12,500

50,000

313,582

176,667

100,101

250,250

2,343,304

50,000

11,177

167,000

22,799

50,000

12,500

167,000

16,650

225,667

249,950

189,759

978

22,516

101,242

16,750

12,500

50,000

57,614

50,000

900,666

10,000

(50,000)

(12,500)

(167,000)

(16,650)

(151,667)

(200,800)

50,000

(50,000)

(207,025)

1,003,568

(16,750)

390,520

12,500

50,000

313,582

176,667

100,101

250,250

12,500

50,000

(750,191)

1,593,113

(74,000)

(101,242)

(137,929)

50,000

11,177

167,000

22,853

29,150

247,373

978

22,516

50,000

762,737

10,000

29,150

978

Issue date

Expiry date

Exercise price

Balance at start of the
period
Number

Issued during the
year
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

2019

1/07/2016

1/07/2023

1/07/2016

1/07/2023

1/07/2016

2/07/2023

11/04/2016

1/10/2023

1/07/2015

1/07/2022

25/08/2009

25/08/2022

25/08/2010

25/08/2023

25/08/2011

25/08/2024

1/05/2009

1/07/2021

0.8633

1.0313

1.5862

4.7969

0.8633

0.3450

0.3600

54,150

74,000

12,500

221,673

41,650

30,000

55,000

(25,000)

(74,000)

(12,500)

(146,162)

(25,000)

(55,000)

(75,511)

29,150

16,650

30,000

16,650

30,000

Weighted average exercise price

$1.92

$3.74

$1.58

$4.75

$4.27

$0.58

5,407,181

2,641,131

(1,006,279)

(1,362,648)

5,679,385

165,928

34. Share-based payments (continued)
At September 2019 a total of 5,679,358 options (2018 –
5,407,181) were offered 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.

The weighted average share price at the date of exercise of options
exercised during the year ended 30 September 2019 was $1.58
(2018 - $0.83).

The weighted average remaining contractual life of share
options outstanding at the end of the period was 6.0 years
(2018 - 6.4 years).

(a) Employee option plan

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
$1.49 and $2.23 (2018 - $0.69 - $0.83).

The model inputs for options granted during the year ended
30 September 2019 included:

(i) Dividend yield of 2.1% (2018 – 2%)

(ii) Expected volatility 30% (2018: 19.8% and 27.8%)

(iii) Risk-free interest rate between 1.98% and 2.1%
(2018 2.0 – 2.2%)

(iv) Expected life of option 3.3 years (2018 – 3.3 years)

(v) Option exercise price between $4.11 and $5.48 (2018 -
$0.00 - $5.15)

(vi) Weighted average share price at grant date was $6.13 (2018
- $5.00 - $5.15)

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.

(b) Executive performance rights

After further market consultation, the Group made the decision
to return to issuing options or EPRs. The view is that the use of
options under an LTI scheme for a growth company best aligns
shareholder and Executive interests. Please refer to section 3 of the
remuneration report for further information.

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

Total share-based payment expense

2019
$’000

2018
$’000

2,243

(296)

1,634

(39)

1,947

1,595

128

129

2019 TechnologyOne Annual ReportTransforming business, making life simple36. Events after the reporting period
(a) Dividends

On 19 November, the Directors of Technology One Limited
declared a final dividend on ordinary shares in respect of the 2019
financial year. The total amount of the dividend is $27,905,262
and is 60% franked.

No other matter or circumstance has occurred subsequent to
period end that has significantly affected, or may significantly
affect, the operations of the Group, the results of those operations
or the state of affairs of the Group or economic entity in
subsequent financial years.

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 103 to 130 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 2019 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 Group 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 2019.

On behalf of the Board of Directors

Adrian Di Marco
Director
Brisbane
19 November 2019

35. Parent entity financial information
(a) Summary financial information
The individual financial statements for the parent entity show the
following aggregate amounts:

Balance sheet

Current assets

Non-current assets

Total assets

Current liabilities

Non-current liabilities

Total liabilities

Shareholders' equity

Contributed equity

Dividend reserve

Share option reserve

Retained earnings

Profit or loss before tax for the year

Total comprehensive income

2019
$’000

Restated
2018
$’000

161,626

158,208

150,331

155,285

311,957

313,493

170,139

199,108

170,139

199,108

35,302

33,171

27,905

8,616

25,722

22,294

49,309

50,303

138,238

114,384

74,075

31,302

74,075

31,302

The reserves balance is higher than Group due to the foreign
currency translation reserve losses of $820,000 (2018 - loss of
$380,000).

(b) Guarantees entered into by the parent entity

At 30 September 2018, the parent entity had $6,155,631 (2018
- $4,474,910) in outstanding performance guarantees. The total
available guarantee facility is $7,000,000 (2018 - $7,000,000).
The parent entity also had unused foreign currency dealing limits
of $1,256,230 (2018 - $1,040,040).

The parent entity, Technology One Limited, continues to support its
subsidiaries in their operations, by way of financial support.

At 30 September 2019, the Parent had no contingent liabilities.

130

131

2019 TechnologyOne Annual ReportTransforming business, making life simpleErnst & 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

Auditor’s Independence Declaration to the Directors of Technology One
Limited

As lead auditor for the audit of the financial report of Technology One Limited for the financial year
ended 30 September 2019, I declare to the best of my knowledge and belief, there have been:

a) no contraventions of the auditor independence requirements of the Corporations Act 2001 in

relation to the audit; and

b) no contraventions of any applicable code of professional conduct in relation to the audit.

This declaration is in respect of Technology One Limited and the entities it controlled during the
financial year.

Ernst & Young

Alison de Groot
Partner
19 November 2019

Independent Auditor's Report to the Members of Technology One
Limited

Report on the Audit of the Financial Report

Opinion

We have audited the financial report of Technology One Limited (the Company) and its subsidiaries
(collectively the Group), which comprises the consolidated statement of financial position as at 30
September 2019, the consolidated income statement, consolidated statement of comprehensive income,
consolidated statement of changes in equity and consolidated statement of cash flows for the year then
ended, notes to the financial statements, including a summary of significant accounting policies, and the
directors' declaration.

In our opinion, the accompanying financial report of the Group is in accordance with the Corporations Act
2001, including:

giving a true and fair view of the consolidated financial position of the Group as at 30 September
2019 and of its consolidated financial performance for the year ended on that date; and

complying with Australian Accounting Standards and the Corporations Regulations 2001.

Basis for Opinion

We conducted our audit in accordance with Australian Auditing Standards. Our responsibilities under
those standards are further described in the Auditor’s Responsibilities for the Audit of the Financial
Report section of our report. We are independent of the Group in accordance with the auditor
independence requirements of the Corporations Act 2001 and the ethical requirements of the
Accounting Professional and Ethical Standards Board’s APES 110 Code of Ethics for Professional
Accountants (the Code) that are relevant to our audit of the financial report in Australia. We have also
fulfilled our other ethical responsibilities in accordance with the Code.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for
our opinion.

Key Audit Matters

Key audit matters are those matters that, in our professional judgment, were of most significance in our
audit of the financial report of the current year. These matters were addressed in the context of our audit
of the financial report as a whole, and in forming our opinion thereon, but we do not provide a separate
opinion on these matters. For each matter below, our description of how our audit addressed the matter
is provided in that context.

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132

133

2019 TechnologyOne Annual ReportTransforming business, making life simpleWe have fulfilled the responsibilities described in the Auditor’s Responsibilities for the Audit of the
Financial Report section of our report, including in relation to these matters. Accordingly, our audit
included the performance of procedures designed to respond to our assessment of the risks of
material misstatement of the financial report. The results of our audit procedures, including the
procedures performed to address the matters below, provide the basis for our audit opinion on the
accompanying financial report.

1. Measurement and recognition of revenue and associated assets and liabilities

Why significant

How our audit addressed the key audit matter

The Group has the following revenue
streams:

► SaaS fees;
► On premise initial licence fees;
► On premise annual licence fees;

and

► Consulting services

The Group contracts with its customers
using written contracts which often
encompass a number of activities
(separately identifiable components).
Note 1(d) to the financial statements
details the Group’s revenue streams and
the associated accounting policies.
Revenue is disclosed in Note 5,
associated assets in Note 9 and Note 10
and associated liabilities in Note 17.

Revenue recognition was significantly
impacted by the application of the new
Accounting Standard AASB 15 Revenue
from Contracts with Customers from 1
October 2018. Accordingly, we consider
revenue a key audit matter. Note 1(a)(ii) to
the financial statements discloses the
impact of the new Accounting Standard.

Our audit procedures included the following:

► Assessed management’s application of AASB 15 to each revenue

stream and the impact of adoption from 1 October 2018.

► For a sample of customer contracts, obtained the supporting
documentation and assessed management’s judgement on
whether the revenue recognition criteria had been met. The
testing included the assessment of stand-alone price and the
allocation of the transaction price against the revenue streams.
As part of this we also tested the associated timing of recognition.

► For a sample of consulting service contracts, (time and materials)

assessed the Group’s controls associated with the recording of
consulting days delivered and the application of contracted fee
rates to these days.

► For a sample of consulting agreements, assessed the Group’s

controls associated with the recognition of revenue including the
assessment of achievement of contract milestones or hours and its
application to the agreed fee. For fixed rate project agreements,
we also considered the Group’s identification and measurement of
onerous contracts.

► For prepaid subscription revenue (contract liabilities) and contract

assets, we tested both from a sample of client contracts and from a
sample of these balances that the amounts agreed with contract
terms, delivery of performance obligations and other supporting
documentation.

► Assessed the adequacy of the financial report disclosures included

in the financial statements.

2. Capitalisation of software development costs

Why significant

How our audit addressed the key audit matter

As set out in Note 13 to the financial
statements the Group capitalises costs
related to the development of software
products in accordance with AASB 138
Intangible Assets. Capitalised software
development costs are amortised over the
economic life of the asset which is
considered to be from three to seven years
as disclosed in Note 1 (n)(iii).

Given the significant level of capitalised
expenditure during the year and the
judgement required when determining
whether costs should be capitalised, the
useful lives and recoverability of
capitalised software development costs,
this was considered to be a key audit
matter.

Our audit procedures included the following:

► Assessed the Group’s policy of capitalisation of software

development costs for compliance with Australian Accounting
Standards.

► For a sample of capitalised software development costs,

determined whether the costs were appropriately supported
and attributed to development activities.

► Considered the appropriateness of the amortisation period
attributable to capitalised software development costs.

► Assessed the recoverability of capitalised software

development costs.

► Assessed the adequacy of the disclosures in Note 13 to the
financial report relating to capitalised software development
costs.

3. Impairment testing of indefinite life intangible assets

Why significant

How our audit addressed the key audit matter

Note 13 to the financial statements
discloses the goodwill and other intangible
assets allocated to each of the Group’s
individually significant cash generating
units (CGUs) and the relevant assumptions
used in the impairment testing and cash
flow forecasts.

The annual impairment assessment of the
intangible assets performed by the Group
was a key audit matter due to the carrying
amount of the intangible assets, the
impairment recorded in the current year
and the degree of estimation and
assumptions involved in the assessment,
specifically concerning the revenue growth
and margin assumptions inherent in the
future discounted cash flows.

We considered whether the Group’s impairment testing satisfied the
requirements of Australian Accounting Standards.

This included considering the identification of CGU’s to which goodwill
and other assets were allocated.

The assumptions used in the impairment testing by the Group and in
the cash flow forecasts upon which it was based are summarised in
Note 13 to the financial statements. We evaluated these assumptions
and forecasts as follows:

► Assessed the mathematical accuracy of the impairment

models.

► Considered the historical reliability of the Group’s cash flow

forecasts.

► Assessed the Group’s determination of the carrying value of

each of the CGUs.

► Assessed whether the forecasts were consistent with our
knowledge of the business, Board approved budgets and
corroborated our work with external information where
possible.

► Assessed the sensitivities of the impairment models to

reasonably possible changes in assumptions.

We assessed the relevant disclosures in Note 13 to the Financial
Statements which includes the disclosure of the impairment charge.

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118

134

135

2019 TechnologyOne Annual ReportTransforming business, making life simpleInformation Other than the Financial Report and Auditor’s Report Thereon

The directors are responsible for the other information. The other information comprises the information
included in the Company’s 2019 Annual Report, but does not include the financial report and our
auditor’s report thereon.

Our opinion on the financial report does not cover the other information and we do not and will not
express any form of assurance conclusion thereon, with the exception of the Remuneration Report and
our related assurance opinion.

In connection with our audit of the financial report, our responsibility is to read the other information and,
in doing so, consider whether the other information is materially inconsistent with the financial report or
our knowledge obtained in the audit or otherwise appears to be materially misstated.

If, based on the work we have performed, we conclude that there is a material misstatement of this other
information, we are required to report that fact. We have nothing to report in this regard.

Responsibilities of the Directors for the Financial Report

The directors of the Company are responsible for the preparation of the financial report that gives a true
and fair view in accordance with Australian Accounting Standards and the Corporations Act 2001 and for
such internal control as the directors determine is necessary to enable the preparation of the financial
report that gives a true and fair view and is free from material misstatement, whether due to fraud or
error.

In preparing the financial report, the directors are responsible for assessing the Group’s ability to
continue as a going concern, disclosing, as applicable, matters relating to going concern and using the
going concern basis of accounting unless the directors either intend to liquidate the Group or to cease
operations, or have no realistic alternative but to do so.

Auditor's Responsibilities for the Audit of the Financial Report

Our objectives are to obtain reasonable assurance about whether the financial report as a whole is free
from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes
our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit
conducted in accordance with the Australian Auditing Standards will always detect a material
misstatement when it exists. Misstatements can arise from fraud or error and are considered material if,
individually or in the aggregate, they could reasonably be expected to influence the economic decisions
of users taken on the basis of this financial report.

As part of an audit in accordance with the Australian Auditing Standards, we exercise professional
judgment and maintain professional scepticism throughout the audit. We also:

Identify and assess the risks of material misstatement of the financial report, whether due to fraud
or error, design and perform audit procedures responsive to those risks, and obtain audit evidence
that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a
material misstatement resulting from fraud is higher than for one resulting from error, as fraud may
involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal
control.

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119

Obtain an understanding of internal control relevant to the audit in order to design audit
procedures that are appropriate in the circumstances, but not for the purpose of expressing an
opinion on the effectiveness of the Group’s internal control.

Evaluate the appropriateness of accounting policies used and the reasonableness of accounting
estimates and related disclosures made by the directors.

Conclude on the appropriateness of the directors’ use of the going concern basis of accounting
and, based on the audit evidence obtained, whether a material uncertainty exists related to events
or conditions that may cast significant doubt on the Group’s ability to continue as a going concern.
If we conclude that a material uncertainty exists, we are required to draw attention in our auditor’s
report to the related disclosures in the financial report or, if such disclosures are inadequate, to
modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our
auditor’s report. However, future events or conditions may cause the Group to cease to continue as
a going concern.

Evaluate the overall presentation, structure and content of the financial report, including the
disclosures, and whether the financial report represents the underlying transactions and events in a
manner that achieves fair presentation.

Obtain sufficient appropriate audit evidence regarding the financial information of the entities or
business activities within the Group to express an opinion on the financial report. We are
responsible for the direction, supervision and performance of the Group audit. We remain solely
responsible for our audit opinion.

We communicate with the directors regarding, among other matters, the planned scope and timing of the
audit and significant audit findings, including any significant deficiencies in internal control that we identify
during our audit.

We also provide the directors with a statement that we have complied with relevant ethical
requirements regarding independence, and to communicate with them all relationships and other
matters that may reasonably be thought to bear on our independence, and where applicable, related
safeguards.

From the matters communicated to the directors, we determine those matters that were of most
significance in the audit of the financial report of the current year and are therefore the key audit matters.
We describe these matters in our auditor’s report unless law or regulation precludes public disclosure
about the matter or when, in extremely rare circumstances, we determine that a matter should not be
communicated in our report because the adverse consequences of doing so would reasonably be
expected to outweigh the public interest benefits of such communication.

A member firm of Ernst & Young Global Limited
Liability limited by a scheme approved under Professional Standards Legislation

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2019 TechnologyOne Annual ReportTransforming business, making life simpleReport on the Audit of the Remuneration Report

Opinion on the Remuneration Report

We have audited the Remuneration Report included in the directors' report for the year ended 30
September 2019.

In our opinion, the Remuneration Report of Technology One Limited for the year ended 30 September
2019, complies with section 300A of the Corporations Act 2001.

Responsibilities

The directors of the Company are responsible for the preparation and presentation of the Remuneration
Report in accordance with section 300A of the Corporations Act 2001. Our responsibility is to express an
opinion on the Remuneration Report, based on our audit conducted in accordance with Australian
Auditing Standards.

Ernst & Young

Alison de Groot
Partner
Brisbane
19 November 2019

A member firm of Ernst & Young Global Limited
Liability limited by a scheme approved under Professional Standards Legislation

121

Shareholder information

The shareholder information set out below was applicable as at 10 December 2019.

(a) Distribution of equity securities

Number of shares

100,001 and Over

10,001 to 100,000

5,001 to 10,000

1,001 to 5,000

1 to 1,000

Number of shareholders

1,183

1,235

4,080

3,199

There were 107 holders of less than a marketable parcel of ordinary shares.

(b) Equity security holders

Twenty largest quoted equity security holders

Name

JL MACTAGGART HOLDINGS PTY LTD1

MASTERBAH PTY LTD1

FIRST STATE SUPER

SMITHSON INVESTMENT TRUST

INVESCO ASSET MANAGEMENT - US

HYPERION ASSET MANAGEMENT

BLACKROCK INVESTMENT MANAGEMENT - US

Number held

%IC

34,902,500

10.97%

23,378,500

7.34%

17,405,882

8,778,137

7,854,226

6,884,643

6,833,901

5.47%

2.76%

2.47%

2.16%

2.15%

COLONIAL FIRST STATE - AUSTRALIAN EQUITIES SMALL CAPS

6,372,956

2.00%

ARGO INVESTMENTS

PENDAL GROUP

CBUS SUPER

VINVA INVESTMENT MANAGEMENT

VANGUARD INVESTMENTS - US

AMP CAPITAL INVESTORS - AUSTRALIA

DFA - US

SUNSUPER SUPERANNUATION FUND

INVESTORS MUTUAL

RIVER CAPITAL

WASATCH FUNDS

VICTORIAN FUNDS MANAGEMENT CORPORATION

5,964,564

5,776,379

4,703,016

4,686,446

4,297,619

3,879,331

3,822,163

3,689,448

3,364,867

1.87%

1.81%

1.48%

1.47%

1.35%

1.22%

1.20%

1.16%

1.06%

3,129,660

0.98%

2,942,373

0.92%

2,927,537

0.92%

161,594,148

50.77%

1Substantial holder (including associate holdings) in Technology One Limited.

In their capacity as an investment manager, the following have lodged Form 604 notices as a Substantial Shareholder under section 608 of the Corporations Act: Hyperion Asset Management

Limited (7.90% as at 07/12/19) and Pinnacle Investment Management Group Limited (9.04% as at 24/06/19)

(c) Voting rights
All ordinary shares issued by Technology One Limited carry one vote per share without restriction. Options and
Performance Rights have no voting rights.

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2019 TechnologyOne Annual ReportTransforming business, making life simpleCorporate directory - TechnologyOne Limited
Branch Offices
Board of Directors

Lawyer

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)

Adrian Di Marco

Ron McLean

John Mactaggart

Kevin Blinco

Richard Anstey

Jane Andrews

Sharon Doyle

Cliff Rosenberg

Company Secretary

Stephen Kennedy

Brisbane

Sydney

Melbourne

Canberra

Adelaide

Perth

Hobart

Auckland

Wellington

Kuala Lumpur

Australian Business Number

Maidenhead

84 010 487 180

Glasgow

Registered Office

Technology One Limited

Auditor

Ernst & Young

Level 11, TechnologyOne HQ

Level 51, 111 Eagle Street

540 Wickham Street

Brisbane QLD 4000

Fortitude Valley QLD 4006

www.ey.com/au

Australia

www.TechnologyOneCorp.com

P. 1800 671 978

International: +617 3167 7300

Corporate calendar

The following calendar shows the planned dates for significant shareholder events for the 2020 year.

These dates are subject to change. The declaration of dividends is subject to board approval.

2020 (Year Ending 30 September 2020)

Annual General Meeting1

Announcement of half year results for 2020

Media Interviews

Presentations to Institutions – Sydney (tentative)

Presentations to Institutions – Melbourne (tentative)

Ex-Dividend for 2020 Interim Dividend2

Record date for interim dividend3

Payment date for interim dividend4

Announcement of Full Year Results for 2020

Media Interviews

Presentations to Institutions – Sydney (tentative)

Presentations to Institutions – Melbourne (tentative)

Ex-Dividend for 2020 Final Dividend2

Record date for 2020 dividend3

Payment date for 2020 final dividend4

Distribute 2020 Annual Report (tentative)

Annual General Meeting (2021 tentative)5

Notes:

1Closing date for the receipt of director nominations is 6 January 2020 in accordance with ASX Listing Rule 14.3

2The Ex-dividend date occurs one business day before TechnologyOne’s Record Date.

3The Record Date is 5.00pm on the date TechnologyOne closes its share register to determine which shareholders are entitled to receive the current dividend.

4The 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.

5Closing date for the receipt of director nominations is 5 January 2021 in accordance with ASX Listing Rule 14.3

25 February 2020

19 May 2020

20 May 2020

22 May 2020

28 May 2020

29 May 2020

12 June 2020

24 November 2020

25 November 2020

27 November 2020

3 December 2020

4 December 2020

18 December 2020

18 January 2021

23 February 2021

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2019 TechnologyOne Annual ReportTransforming business, making life simpleTechnologyOne (ASX: TNE) is Australia’s largest enterprise
software company and one of Australia’s top 150 ASX-listed
companies, with offices across six countries. We provide a
global SaaS ERP solution that transforms business and makes
life simple for our customers. Our deeply integrated enterprise
SaaS solution is available on Any device, Anywhere and
Anytime and is incredibly easy to use. Over 1,200 leading
corporations, government agencies, local councils and
universities are powered by our software.

For more than 32 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.

TechnologyOneCorp.com