Annual
Report
The future
of enterprise
software, today
U P
12%
F Y 1 6
$192.6M
F Y 1 7
$231.1M
F Y 1 8
$221M
F Y 1 9
$241.8M
F Y 2 0
$269.8M
U P
13%
F Y 1 6
$53.2M
F Y 1 7
$58.0M
F Y 1 8
$50.8M
F Y 1 9
$76.3M
F Y 2 0
$86.0M
U P
32%
F Y 1 6
$24.5M
F Y 1 7
$50.7M
F Y 1 8
$70.4M
F Y 1 9
$101.7M
F Y 2 0
$134.6M
29%
F Y 1 6
21%
F Y 1 7
21%
F Y 1 8
22%
F Y 1 9
27%
F Y 2 0
29%
These graphs should be read in conjunction with the Financial Highlights table on p8.
Revenue
from SaaS
& Continuing
Business
up 12%
Underlying
Profit
Before Tax2
up 13%
SaaS Annual
Recurring
Revenue
up 32%
Underlying
Profit Before
Tax Margin
is 29%
What’s
inside
At a glance
Financial highlights
Letter to shareholders
Global SaaS ERP solution
Enterprise
02
software,
06
incredibly
10
simple.
20
Our strategy
Our growth
Our operations
Our people
TechnologyOne Foundation
Financial statements
Directors’ report
Corporate governance statement
Voluntary Tax Transparency Report
Financial statements
Directors’ declaration
Auditor’s independence declaration
Auditor’s report
Shareholder information
Corporate directory
Corporate calendar
28
34
40
52
62
66
68
98
108
109
136
137
138
143
144
145
Transforming business, making life simple
1
01
01
At a
At a
glance
glance
2
3
2020 TechnologyOne Annual ReportTransforming business, making life simple Our
finances
$68.1M
R&D investment up 13%
(22% of revenue)
of record profit 11
Consecutive years
%
Continuing Business12UP
Revenue from SaaS &
%
8UP
Dividend
growth
%
Net assets33UP
%
32UP
SaaS Annual
Recurring Revenue
Profitable since
1992
29%
Underlying Profit
Before Tax Margin
UP
38 %
Consulting
Profit Before Tax
$125.2M 44 %
Cash and cash equivalents
Return on equity
%
13UP
Underlying Profit
Before Tax2
%
10UP
Total ARR
Breaks evenUK
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 a global presence
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.
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.
Providing a compelling customer
experience is fundamental to the way
TechnologyOne does business and
positions us well to attract customers
away from our competitors.
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
• Health and community services
• Asset and project intensive
industries
• Corporates and financial services
Our preconfigured
solutions
• OneCouncil
• OneEducation
• OneGovernment
• OneCare
• OneAsset
• OneCorporate
Our products
• Corporate Performance
Management
• Enterprise Content Management
• Human Resources & Payroll
• Spatial
• Supply Chain Management
• Strategic Asset Management
• Enterprise Cash Receipting
• Enterprise Asset Management
• Financials
• Property & Rating
• Student Management
• Business Analytics
• Enterprise Budgeting
• Performance Planning
Our research
and development
We continue to focus our research
and development (R&D) efforts on
new and emerging technologies,
including cloud-based technologies,
artificial intelligence, machine learning
and other innovations. Our Australian-
owned commercial R&D centre is
the largest of its kind, with offshoot
facilities in Indonesia and Vietnam.
New ideas,
new concepts
We are committed to a continuous cycle
of redeveloping our software platform.
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.
4
5
2020 TechnologyOne Annual ReportTransforming business, making life simple 02
02
Financial
Financial
highlights
highlights
6
7
2020 TechnologyOne Annual ReportTransforming business, making life simple 2020
2019
Growth on
last year
15-year
compound
growth
2018
2017
2016
2015
2014
2013
2012
2011
Comparable**
Reported
269,774
241,790
12%
-
221,046
231,151
192,657
175,279
140,024
128,226
117,567
110,348
299,018
286,164
4%
12%
254,491
273,253
249,018
218,724
195,124
180,591
169,070
156,742
Revenue -
SaaS and
Continuing
Business
Total
Revenue
One vision.
One vendor.
One code-line.
One experience.
SaaS ARR1
134,557
101,677
32%
221,908
202,480
10%
-
-
70,372
50,701
24,486
14,265
173,912
153,896
126,996
108,853
-
-
-
-
-
-
-
-
68,062
60,124
13%
13%
54,042
49,856
46,009
41,038
37,873
35,595
33,524
31,796
86,070
76,389
13%
13%
50,807
58,019
53,240
46,494
40,235
35,097
30,324
26,675
82,470
76,389
8%
12%
50,807
58,019
53,240
46,494
40,235
35,097
30,324
26,675
62,945
58,459
8%
13%
47,681
44,494
41,344
35,785
30,967
26,984
23,559
20,326
19.75
18.43
7%
12%
15.10
14.18
13.26
11.57
10.06
8.78
7.73
6.71
12.88
11.93
8%
10%
11.02
10.20
9.45
8.78
8.16
5.60
5.09
6.12
Annual
Recurring
Revenue
(ARR)1
R&D
Investment*
Underlying
Profit Before
Tax2
Net Profit
Before Tax
Net Profit
After Tax
Earnings
Per Share
(cents)
Total
Dividends
(cents per
share)
Dividend
Payout Ratio
65%
65%
Return on
Equity
44%
55%
-
-
-
-
73%
72%
72%
76%
81%
64%
66%
91%
46%
28%
31%
30%
30%
31%
32%
30%
Cash & Cash
Equivalents
125,244
105,046
19%
11%
104,322
93,383
82,588
75,536
80,209
65,397
51,133
45,357
Net Assets
142,168
106,857
33%
9%
103,480
157,520
138,494
117,940
104,499
87,736
73,997
68,370
The table above shows previously reported results to FY17. Results for those years have not been restated for AASB15.
*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 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 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.
2Underlying profit excludes impact of once-off increased provision for a civil employment matter of $3.6m.
8
Transforming business, making life simple
9
2020 TechnologyOne Annual Report 03
03
Letter to
Letter to
shareholders
shareholders
10
11
2020 TechnologyOne Annual ReportTransforming business, making life simple Letter to
shareholders
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.
On behalf of TechnologyOne
Limited (TechnologyOne) we
are pleased to announce our
11th consecutive year of record
profit, record revenues and
record SaaS fees.
Our global SaaS ERP solution is transforming our customers’
business and makes life simple for them.
When COVID-19 hit, our solution enabled our SaaS customers
to seamlessly shift to remote working. COVID-19 has reinforced
the significant value proposition of our global SaaS ERP
solution which provides mission critical systems and enables
our customers’ staff to work on any device, anywhere, any
time, seamlessly without interruptions. This has also resonated
strongly with the market, driving our continuing strong results.
Underlying Profit up 13%
Our Underlying Profit Before Tax was up 13% on the prior
year, which was at the top end of guidance and underpinned
by the continuing fast growth of the TechnologyOne global
SaaS ERP solution.
TechnologyOne SaaS
ARRi grows 32%
The TechnologyOne global SaaS ERP solution is growing very
fast with SaaS annual recurring revenue (ARR)i of $134.6m, up
32%. This is also discussed in more detail later.
Results summary
Key results were as follows:
• Underlying Profit Before Tax1 of $86.1m, up 13%
• Expenses of $216.5m, up 3%
• Revenue from our SaaS and Continuing Business of
• Cash Flow Generation4 of $66.4m, up 49%
$269.8m, up 12%
• SaaS Annual Recurring Revenue (ARR)2 of $134.6m,up 32%
• Reported Profit Before Tax of $82.5m, up 8%1
• Total Revenue3 of $299.0m, up 4%
• Cash and Cash Equivalents of $125.2m, up 19%
• Total Dividend of 12.88cps, up 8%
• R&D investment of $68.1m before capitalisation,
up 13%, which is 22% of revenue
1 For details on Profit Before Tax and Underlying Profit refer to the following pages
2 ARR represents future contracted annual revenue at year end. This is a non-IFRS financial measure and is unaudited
3 Includes other income of $0.7m
4 Cash Flow Generation is Cash flow from operating activities less capitalised development costs. This is a non-IFRS financial measure and is unaudited
12
13
2020 TechnologyOne Annual ReportTransforming business, making life simple Dividend up 8%
TechnologyOne SaaS ARRi grows 32%
In light of the company’s strong results, and our confidence going forward, the dividend for the full year has increased to 12.88 cents
per share, up 8% on the prior year.
Compound
growth 8%
UP 8%
UP 8%
UP 8%
2.00
UP 8%
2.00
UP 8%
2.00
UP
46%
2.00
UP 8%
2.00
UP 7%
1.50
DOWN
17%
UP
10%
1.50
4.20
4.62
5.09
5.60
6.16
6.78
7.45
8.20
9.02
11.93
12.88
FY10
FY11
FY12
FY13
FY14
FY15
FY16
FY17
FY18
FY19
FY20
Dividend
Special Dividend
Continuing strong performance
TechnologyOne has consistently delivered strong results since listing on the ASX in 1999. Our ability to deliver these results for 20+ years is due
to our clear vision, strategy, culture and our significant investment in R&D. This is discussed in more detail in the Our Strategy section on page 28.
We see continuing strong growth in the future, and like we have in the past 32 years, we expect to double in size again in the next five years.
Underlying
NPAT up 13%
10YR Compound Growth 14%
U P
13%
The TechnologyOne global SaaS ERP solution is growing very fast
with SaaS Annual Recurring Revenue (ARR)i of $134.6m, up 32%. This
growth is all organic and includes no acquisitions.
We added 104 enterprise customers this year to our global SaaS ERP
solution and we now have 539 large scale enterprise customers, with
hundreds of thousands of users; making it the largest single instance
SaaS ERP offering in Australia.
Our global SaaS ERP solution is delivering a compelling value
proposition for our customers, providing them any device, any time
access from anywhere around the globe, as well as a simple and cost-
effective way to run their enterprise. This is allowing our customers
to innovate and meet the challenges ahead with greater agility and
speed, without having to worry about underlying technologies. We
take care of all of this, making life simple for them. This is discussed in
more detail in the global SaaS ERP solution section on page 20.
This year we continued to win new, large enterprise customers from
our competitors. 30+ organisations replaced our competitors’ systems,
including systems from Oracle, SAP, Microsoft, and Infor.
TechnologyOne continued to dominate in the local government sector,
where we closed 40 major deals with $45+ million in total contract
value. We have more than 300 council customers.
In the Higher Education sector, we closed 10 major deals with $10m in
total contract value, cementing our position as the dominant provider
to the APAC Higher Education sector.
U P
32%
F Y 1 5
14.3M
F Y 1 6
24.5M
F Y 1 7
50.7M
F Y 1 8
70.4M
F Y 1 9
101.7M
F Y 2 0
134.6M
Recurring Revenue underpins quality of our business
As our SaaS business continues to grow quickly, the quality of this revenue stream is exceptionally high, given its recurring contractual nature,
combined with our very low churn rate of <1%.
Today our Total Annual Recurring Revenue (ARR)i has hit $222m and is set to exceed $500m in the coming years.
Our ARRi stands at 86% of Total Revenue1 which means the majority of our revenue is locked-in at the start of the financial year, which positions
us well to achieve strong continuing growth in the new year.
1 Excludes consulting revenue as it flows from business wins
$17.8m $20.3m
FY10
FY11
$23.6m $27.0m $31.0m $35.8m $41.3m $44.5m $51.0m $58.5m $65.4m
FY16
FY20
FY15
FY19
FY18
FY12
FY14
FY13
FY17
14
15
2020 TechnologyOne Annual ReportTransforming business, making life simple Revenue from our SaaS and Continuing Business, a key measure, up 12%
Investment in R&D up 13%
U P
12%
TechnologyOne invested $68.1 million in R&D this year, up 13%. This
was significantly higher than our normal benchmark for R&D growth
of 8%, as we took the opportunity this year to accelerate R&D into a
number of new and exciting areas.
We continue to invest in new exciting ideas and innovation including
our new Digital Experience Platform for Local Government, which we
will ship in 2021.
This year we achieved a significant milestone, becoming the first and
only global SaaS ERP solution to be assessed for IRAP PROTECTED.
We continue to invest millions of dollars and set the bar higher each
year as we deliver the most trusted SaaS solution to our customers.
It is not feasible for individual organisations to keep up with increasing
costs and complexity of cyber security unless they have adopted a
SaaS first strategy.
Our R&D is also focused on extending the functionality and
capabilities of our global SaaS ERP solution.
Our R&D program in the coming years continues to be at the leading
edge of our industry as we embrace new technologies, new concepts
and new paradigms.
We expect R&D growth next year to return back to the benchmark
growth of 8% or less.
20%
20%
20%
20%
19%
21%
20%
20%
21%
21%
UP 8%
UP 12%
UP 8%
U P
11%
$60.1m
22%
U P
13%
$68.1m
UP 17%
UP 5%
UP 6%
up 6%
UP 8%
$37.1m
$32.1m
$27.2m
FY10
$31.8m
FY11
$33.5m
FY12
$35.6m
FY13
$37.9m $41.0m
FY14
FY15
$46.0m
FY16
$49.9m
FY17
$54m
FY18
$28.0m
FY19
$30.9m
FY20
Expensed R&D
Capitalised Development
R&D Expenditure % of Total Revenue
Reported Profit up 8%
Reported Profit was impacted by a once-off increase in legal provisions, due to an unexpected judgement against TechnologyOne in a civil
employment case. The company has retained very experienced counsel to expediate an appeal to the Full Federal Court. Our notice of appeal
alleges 12 errors of law and fact. TechnologyOne has previously issued an ASX statement on this matter. As the matter remains before the Courts,
we are unable to comment further at this time.
Strong Balance Sheet and Cash Flows
TechnologyOne continues to have a strong balance sheet with net assets of $142m up 33% and cash and cash equivalents of $125.2 million
up 19%. Cash Flow Generationii was once again strong at $66.4m million for the full year, versus a Net Profit After Tax of $62.9m million.
TechnologyOne continues its long history of strong Cash Flow Generationii which will continue to grow in line with Net Profit After Tax.
Total Revenue was up 4%, but we believe this is not a true indication of
the growth of our business, as it includes our legacy Licence business,
which we are aggressively reducing, as we grow our
SaaS business.
As planned our legacy Licence business was down 34% ($14.7m), as
we continued to transition our customers to SaaS. If we remove the
legacy Licence business from both FY19 and FY20, our Revenue from
SaaS and Continuing Business, which is a key measure of the strength
of our business, has grown 12%.
The reason we are aggressively pursuing our SaaS strategy is
because of the significant benefits to both our customers and
TechnologyOne. We note that the recurring nature of SaaS revenue,
means it is a much higher quality revenue compared to legacy licence
fee revenue.
F Y 1 6
192.6M
F Y 1 7
231.1M
F Y 1 8
221M
F Y 1 9
241.8M
F Y 2 0
269.8M
UK breaks even
The UK regionalisation of our global SaaS ERP solution is nearing completion, and we have seen our UK business continue to grow,
with SaaS ARR of $7.5m, up 22%. We delivered a breakeven result and we see significant opportunities in the coming years.
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 global
SaaS 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.
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.
UP 13%
$9.7m
UP 10%
$7.7m
$76.4m
$86.1m
$78.3m
$86.0m
UP 103%
$1.9m
$0.1m
($1.9m)
Company
APAC
UK
FY19
FY20
Consulting Profit Before Tax of $13.7m, up 38%
Our Consulting division delivered Profit Before Tax of $13.7m, up 38%
through continued improvement in culture, systems and processes
and disciplined use of our solution implementation methodology. We
delivered all go lives and continue to support our customers remotely
during the COVID-19 restrictions. The turnaround of the UK Consulting
division continued during the year, profit improving $1.6m to deliver a
breakeven result. The total Consulting group Profit Before Tax Margin
has improved from 8% in 2017 to 22% in 2020. Our Application
Managed Services business for existing customers is moving to
recurring revenue with $14m now locked in as recurring revenue2.
2Not included in our Total ARR.
UP 38%
$3.8m
UP 19%
$2.2m
UP 97%
$1.6m
$9.9m
$13.7m
$11.5m
$13.7m
Company
APAC
UK
($1.6m)
($0.0m)
FY19
FY20
16
17
2020 TechnologyOne Annual ReportTransforming business, making life simple Outlook for FY 2021
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 2021 is strong and this positions us for continuing strong profit
growth in FY21.
Our SaaS business will continue to grow strongly and profitably.
We also expect to see continuing strong growth in the UK market.
The company will provide further guidance at both the Annual
General Meeting and with the FY21 first half 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.
Also, we must 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
Underlying Profit Before Tax
Margin Increases to 29%
Underlying Profit Before Tax Margin increased to 29%, compared
to 27% pcp. We see margins continuing to improve to 35%+ in the
coming years driven by the significant economies of scale from
our single instance multi-tenanted global SaaS ERP solution. We
are on track to double the size of our business once again in the
next five years.
18%
19%
21%
21%
21%
21% 22%
17%
29%
27%
FY11
FY12
FY13
FY14
FY15
FY16
FY17 FY18 FY19 FY20
Executive remuneration
This year we made further enhancements to our Remuneration
Report and continued to evolve it based on feedback from our
shareholders. We have also engaged external consultants to assist
us with these changes.
At a time when many businesses have struggled during the
pandemic, TechnologyOne has continued to perform strongly.
Given the exceptional results delivered during the COVID pandemic,
with Underlying Profit up 13%, SaaS ARRi growth of 32%, Consulting
Profit growth of 38%, Underlying Profit Before Tax Margin growth
to 29% and a breakeven result for the UK, the Board exercised
discretion in the achievement of LTI targets to ensure our executives
were appropriately rewarded and remained fully engaged with
our business going forward, which is discussed in detail in our
Remuneration Report.
There is clear alignment between the performance of the business
and executive remuneration. FY20 total executive remuneration
packages for continuing executives grew by 5%, after Board
discretion, while the company’s reported profit grew 8%, and
underlying profit grew by 13%.
Audit tender
TechnologyOne has taken advice from shareholders in relation to the
external audit of TechnologyOne given the long tenure of our existing
Auditors. During the year we have put the external audit services to
tender. A detailed and carefully considered process was undertaken.
As a result of this tender, EY has been successful in continuing with
our audit. Their significant experience in auditing SaaS companies in
both Australia and globally was an important consideration as well as
their exceptional references with other ASX companies.
Environment, Social, Governance
TechnologyOne is committed to its ESG obligations, beyond just
regulatory requirements. TechnologyOne is proud to go another step
forward in 2020 and is now Carbon Neutral for the 12 months ending
30 June 2020 and is applying for Climate Active certification.
While the TechnologyOne operations do not have a material impact
on the environment, we acknowledge that it is the changing attitude
of many that will have a material impact on reducing climate change.
Please refer to the Company’s website at: https://www.
technologyonecorp.com/company/investors/corporate-governance
for our Sustainability Report and Corporate Governance Statement.
Board renewal
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. We have made good
progress again this year with a new and highly experienced
independent director, Mr Peter Ball, previously a partner at KPMG.
We plan to add another independent director in the next 12 months
which will see our Board then have five new independent directors.
Kevin Blinco, a long serving director, will not seek re-election
at the AGM. We would like to take this opportunity to thank Kevin
Blinco for his significant contribution to TechnologyOne and the Board.
TechnologyOne Foundation
The TechnologyOne Foundation defines who we are as a company
and is an important driver of the culture and values of our company.
We are committed to making a difference to underprivileged and at-
risk youths, by empowering them to transform their lives and create
their own pathways of success. We believe that it is through youth that
we can have the greatest impact on the future. We have an ambitious
goal of helping 500,000 children and their families out of poverty,
which we are on track to achieve.
An important part of the TechnologyOne Foundation is supporting
great Australians, doing great work both locally and internationally,
which includes the Fred Hollows Foundation, School of St Jude,
Opportunity International and Solar Buddy.
The Foundation will continue to grow with TechnologyOne through
our commitment to the 1% pledge – 1% profit, 1% product and 1% time.
This represents a $2m + commitment each year. The Foundation will
continue to shape the DNA of our company and staff. This is discussed
in more detail in the TechnologyOne Foundation section on page 62.
Our people and culture
Our people solve incredibly complex business problems for our
customers and have delivered our massively broad and deep
global SaaS ERP. We compete and win against the world’s largest
multinational software companies who have R&D teams with tens of
thousands of staff.
We continue to invest in our people and culture initiatives including
our award-winning programs such as O-week, Graduate Program,
Buddy program, Hack days, Town Halls and Regional Days to highlight
a few. We also recognise those team members who live our values
and demonstrate the TechnologyOne way through our annual
MARVEL awards.
TechnologyOne conducts a continual eNPS survey to measure each
team and to build our strong and unique culture. All of these initiatives
have resulted in TechnologyOne being once again independently
recognized as an employer of choice. This is discussed in more detail
in the Our People section on page 52.
18
Transforming business, making life simple
19
iARR is not an IFRS measure and is unaudited, it represents future contracted annual
revenue at year end
iiCash Flow Generation is cash flow from operating activities less capitalised development
costs. This is not IFRS financial measure and is unaudited.
2020 TechnologyOne Annual Report 04
04
Global SaaS
Global SaaS
ERP solution
ERP solution
My Outstandings
My Outstandings
14 Awaiting Approval
14 Awaiting Approval
78 In Progress
78 In Progress
20
21
2020 TechnologyOne Annual ReportTransforming business, making life simpleReportingReporting “
COVID-19 has highlighted the
opportunity and benefits of providing
access for staff wherever they are
located. The pandemic and its impact,
have definitely helped confirm the
business case for moving to Software as
a Service and a web-based portal.
Helen Howard
Head of Finance
North Wales Fire & Rescue
”
TechnologyOne’s global SaaS ERP solution delivers the
full functionality of ERP on any device, without compromise.
Our Software as a Service (SaaS) runs one global code line,
allowing us to continuously deliver new innovations to our
customers, who benefit from the scale of our investment as
an enterprise vendor.
Our solution leads the market because we own, build and
support our own software. We take complete responsibility
for providing the processing power, software and services,
including backup, recovery, upgrade and support services
for our SaaS customers. Other ERP providers fail to deliver
the same economies of scale and cost efficiencies because
they use cloud hosting and 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, and a level of service,
security, reliability, scalability and future proofing that would not
be otherwise possible.
TechnologyOne makes a substantial investment each year
in ongoing R&D, to continue to improve our software and to
capitalise on new technologies, concepts and ideas. Our global
SaaS ERP solution provides a compelling value proposition to
our customers, giving them what is essentially a very simple,
cost effective and highly scalable model of computing.
Our customers gain access to two releases of software per
year that delivers new features, functionality and concepts, as
well as access to the TechnologyOne University for ‘just-in-
time’ training. This is all provided standard as part of our SaaS
solution, and we guarantee it will be future proof. Our customers
do not need to do anything to seamlessly get these new
releases into production.
With our configuration-driven software design, all our customers’
unique configuration information is stored in their own
dedicated and secure database. This is also the case for our
customers’ transactional data, allowing us deliver personalised
service at scale.
Our approach to SaaS ERP is a key part of TechnologyOne’s
ongoing success, with our subscription revenue now
representing 86 per cent of our total revenue. In FY20,
we gained 104 new SaaS customers, joining many of our
long-standing customers on the journey from on-premise
to cloud-based solutions.
Our SaaS ERP has received international recognition for
software innovation from the Australian Business Awards, the
UK Cloud Awards, the SaaS Awards and Amazon Web Services.
Our latest release of TechnologyOne SaaS, 2020B, continues to
deliver further economies of scale and enhanced security. We
are now working on the next generation of our SaaS solution,
2021A. 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.
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.
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,
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,
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, our SaaS ERP 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.
22 2020 TechnologyOne Annual Report
23
Transforming business, making life simple DXP (Digital Experience
Platform)
TechnologyOne’s Digital Experience Platform (DXP) is a
frictionless mobile app experience that harnesses new
technologies and leverages the power of enterprise software.
DXP will digitally enable every stakeholder throughout their
organisation - be it an employee, customer, supplier, student
or ratepayer - substantially streamlining their business and
improving their experience. Artificial intelligence (AI) and
machine learning (ML) are integral parts of our DXP.
TechnologyOne has released to early adopters the next stage
of our DXP, and progressed the first two DXPs - DXP Meetings
and DXP Expenses - into general release. We continue to
invest in DXP, and our DXP for ratepayers and
local government will ship in 2021.
“The rollout of DXP Meetings has only
increased the appetite to modernise other
areas of the council and has certainly driven
us to explore other TechnologyOne solutions.”
Sarelle Sinclair
Senior Business Services Officer
Tablelands Regional Council
“We are always looking for opportunities
to improve business processes. Being an
early adopter allowed Council to ensure real
benefits could be realised immediately and
that the most efficient and sustainable solution
was delivered.”
Adele Taylor
Manager Business Information Solutions
Shellharbour City Council
Accelerating digital
transformation
COVID-19 has accelerated digital transformation
throughout the world and has validated our strategy
here at TechnologyOne. Our enterprise customers are
increasingly 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 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 the world pivots to operate in the ‘new normal’, with
remote working quickly becoming the norm, the efficiencies
TechnologyOne’s SaaS Platform offers have become even
more essential to our customers.
We have also accelerated digital engagement internally, finding
new virtual ways to engage, connect and achieve outcomes,
with our Consulting team continuing to deliver projects 100
per cent remotely, as well as our Sales and Support teams
continuing to remotely welcome new customers and support
existing customers so that their businesses could continue
to operate. We redefined the way we deliver events, both
internally and externally, for a virtual world, which culminated
in the creation of User Connect. You can read more about our
User Connect virtual event series on page 38.
Our commitment
to innovation
In FY20, we invested $68.1 million in R&D to improve our
SaaS offering with new technologies, concepts and ideas
enhancements and innovations.
Our Software as a Service runs one global code line, allowing
us to continuously deliver new innovations to our customers,
who benefit from the scale of our investment as an enterprise
vendor. With each new customer, our solution is enriched with
new IP that powers the evolution of our software.
The economies of scale offered by our global SaaS ERP
solution mean 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.
24
Most trusted
SaaS ERP
provider
2020 TechnologyOne Annual Report “
The transformation of our data
into a single source of truth for the
entire student journey will improve
the student experience and the
management of student pathways
from vocational education through to
higher education.
Naomi Dempsey
Acting Deputy Provost
Academic & Students
Victoria University
”
539 customers have chosen
TechnologyOne SaaS to power their
organisations. This is an increase of
more than 24 per cent in customer
numbers over the past 12 months,
and we expect this rapid growth to
continue in 2021.
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 90 hours
of high-quality video material.
An innovative digital learning solution, TechnologyOne
University gives our customers a dynamic, real-time and
up-to-date self-service support and education option that
empowers users at all levels.
Most trusted SaaS
ERP 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 SaaS 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 SaaS ERP 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 26
years. Our SaaS solution is accredited and certified for the
following international standards:
• 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 Plus (UK)
• Health Insurance Portability and Accountability Act (HIPAA)
(USA)
• IRAP ‘PROTECTED’
In the UK and European Union, we are certified with Cyber
Essentials and comply with the General Data Protection
Regulation (GDPR).
In FY20, we enhanced our offering by successfully completing
the Information Security Registered Assessors Program (IRAP)
assessment for PROTECTED classified data, providing our
SaaS customers with greater certainty in a constantly evolving
cyber security landscape.
As part of our service, customers receive the benefit of
these certifications, along with ongoing security and privacy
enhancements, at no extra charge.
26 2020 TechnologyOne Annual Report
27
Transforming business, making life simple 05
05
Our
Our
strategy
strategy
28
29
2020 TechnologyOne Annual ReportTransforming business, making life simple Our 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. Our core beliefs allow us to deliver on our vision.
Over more than three decades,
TechnologyOne’s clear vision, our
beliefs, our supporting initiatives
and our continuing growth have
underpinned our success.
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, dedication to customer experience, leadership
model and 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.
Our core
beliefs
We believe in:
• An enterprise solution
• Deepest functionality for the markets we serve
• The Power of One
• The power of evolution
• Simplicity, not complexity
Our enterprise solution
We believe in the power of a single, integrated ERP
solution built on a modern platform with a consistent
look and feel and user experience.
A best-in-class enterprise solution
Only through an enterprise solution can organisations
embrace the future of SaaS and smart mobile devices
and unlock the efficiencies they need across their
entire organisation. We have spent more than 30 years
and hundreds of millions of dollars to deliver on this
enterprise-wide vision. Today, we deliver best-in-class
products that come together as a total enterprise solution
from a single vendor.
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 preconfigured integration across all products. As
TechnologyOne is one of only a few enterprise SaaS vendors
globally, this positions us for continuing strong growth.
Our leading-edge platform
Our comprehensive suite of fully integrated software products
is 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.
Preconfigured
enterprise software
solutions reduce
time, cost and risk
30 2020 TechnologyOne Annual Report
31
Transforming business, making life simple The power of a
single, integrated
enterprise solution
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 more than 30 years’
experience and over 1,200 large-scale enterprise customers
we possess an expansive understanding of these sectors
and provide the deepest functionality for the markets we
serve. We continue to add more functionality to our products
and preconfigured solutions for these markets, to 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.
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. 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. We partner
with our customers to ensure that they can truly unlock the
value of their TechnologyOne investment. 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
Substantial investment into R&D each year allows us
to provide our customers a strong, continuing competitive
advantage through an enterprise solution that adapts
and evolves by embracing new technologies, concepts
and innovation.
In our 30+ years, being ahead of the technological curve has
been part of our DNA, because we’ve invested in technology,
processes and people, for our customers and the verticals we
serve. We’re always innovating, so our customers can too.
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 global SaaS ERP solution on their smart
mobile devices.
Simplicity, not complexity
As a leader in the ERP market, we have always focused on
transforming business. More importantly, we do this to remove
complexity and 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 an ERP solution 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
Transforming business, making life simple
33
2020 TechnologyOne Annual Report 06
06
Our
Our
growth
growth
34
35
2020 TechnologyOne Annual ReportTransforming business, making life simple Global SaaS ERP solution
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 five years.
We now have 539 customers on our global SaaS
ERP solution.
Our solution is a clear market leader because we are the only
enterprise vendor to offer a true SaaS ERP 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 global locations across Australia, 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.
Adding 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, Marketing and Customer Success teams keep
customers informed about recent developments and the
experiences of fellow TechnologyOne customers. This helps
customers further improve their technology systems, 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.
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.
By re-engineering all our products, customers can enjoy
the same software functionality across any device, anywhere,
any time. Through DXP, we are extending the reach of our
software from the back office power users such as the
accountants, payroll clerks, student administration and
customer service teams, to the front office end users such
as employees, ratepayers and students, making the power
of ERP available to everyone.
We have experienced continued success and expansion
within each of our vertical markets. The adoption of our global
SaaS ERP 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 easily
implement our SaaS solution.
36 2020 TechnologyOne Annual Report
37
Transforming business, making life simple A new way to stay connected
While we were unable to hold in-person events such as User Groups in 2020 due to COVID-19
restrictions, this disruption provided us with the opportunity to rethink and reimagine how we
engage with and educate our customers.
This led to the release of User Connect, our new virtual event series that connects customers
to industry insights, endless possibilities to drive business transformation and new product
innovations.
Launching in August 2020, we delivered more than 50 sessions across three separate tracks,
available both live and on-demand. With more than 1,000 customers tuning in for the inaugural
series, and over 3,000 sessions viewed, it was an overwhelming success.
We’ll continue to deliver our User Connect series twice-yearly, to ensure customers can stay
connected with the TechnologyOne community and our latest insights, best practices and
innovations. We’ll supplement with User Groups and Showcases once we’re able to resume
physical events, to provide customers and prospects with an opportunity to meet with
TechnologyOne experts and network with their peers in person.
Insights
Transformation
Innovation
38 2020 TechnologyOne Annual Report
Transforming business, making life simple
39
07
07
Our
Our
operations
operations
40
41
2020 TechnologyOne Annual ReportTransforming business, making life simple Stuart
MacDonald
Chief Operating Officer
We continued our SaaS evolution in FY20, this year finalising the
unification and transformation of all our departments into a SaaS
model. We realigned our organisational model to centralise the
development of our products and solutions, continue the transition
to SaaS and a high quality recurring revenue model, and empower
our teams to be far more agile.
We continued our customer-first mindset, expanding our Customer
Success team and delivering programs such as our Customer
Reference Program, to improve customer experience.
The changes saw us become even more relevant to our
customers and verticals, particularly during a challenging year
where our customers were looking for partnerships that could
help them navigate the uncertain path ahead. We continue to see
success in this partnership model, with these changes supporting
the growth of our SaaS customer base, new customers, and total
product footprint within our existing customer base in FY21.
Together as One
As the COVID-19 pandemic forced the world into lockdown,
we realised many of our customers needed practical assistance
during this uncertain time. In response, we launched our
Together as One initiative to help them navigate their COVID-
related challenges. This saw our Consulting, Product, SaaS
Platform, Support, Marketing and Sales teams come together
to offer access to our software, SaaS Platform, services and
shared knowledge.
This coordinated, multi-function response to support our
customers in a time of need was a great demonstration of
customer centricity and teamwork, and provided millions of
dollars’ worth of support to our customers, including:
• 60 uptakes of our free Analytics Workforce Continuity
dashboard
• 350 attendees for our free remote training on critical
business services
• 280 new members joining our Customer Community
to access shared knowledge from their peers
• Support to expedite transitions to SaaS for our on-premise
customers, to ensure their business continuity during
COVID-19 disruption
Continued growth in the UK
FY20 was a breakout year for TechnologyOne’s UK business,
which saw the region deliver a breakeven result through an
expanded portfolio of products in our key markets of local
government and education. This year we signed nine new
customers and completed 21 implementation projects, and
continued to expand our footprint in Northern Ireland, with
three new local councils added to our roster.
Strategic priorities for FY21
While FY20 brought with it some challenges, it also
validated our any time, any device, anywhere strategy.
For customers at the beginning, or not yet on their digital
transformation journey, the rapid changes brought on by
COVID-19 has accelerated their appetite to move to SaaS
and digitise their operations.
Our business model was positioned well to succeed and
support our customers during this time, because we have
spent years investing in the future and building strong
partnerships with our customers through our vertical
industry alignment.
As we move into FY21 we will continue to innovate to
ensure we, and our customers, are prepared for the future.
We will focus on driving the enhancement and success
of our industry solutions, with our customers seeing
the benefit of tighter alignment between our various
departments, as a result of this year’s organisational model
optimisation and continued customer focus.
42 2020 TechnologyOne Annual Report
Transforming business, making life simple
43
Paul
Jobbins
Chief Financial Officer and
Executive Vice President,
Corporate Services
Stuart
MacDonald
(Acting) Executive Vice President,
Sales
The Corporate Services team supports the company through
strategic business partnering by providing systems and
processes that drive efficiency, and by managing our capital and
cost base to ensure we optimise return on our investments.
In FY20, we focused on strengthening our resources, skills
and systems to ensure we can support the business to achieve
future growth and scalability, and are well structured to provide
detailed forecasts, planning and analysis to support sensible
business decisions and win new business.
After adopting AASB 15 and our transition to SaaS accounting
last year, we made further advancements this year, implementing
the AASB 16 Leases accounting standard.
Underpinning our business success
In FY20, we improved internal disciplines and worked closely with
our customers and suppliers to ensure we could carefully manage
our working capital and cashflow. This played a major role in
contributing to the company’s strong results, despite the difficult
economic environment.
The Corporate Services team also supported an increased focus
on the UK business, delivering additional finance and legal
business support to assist in achieving breakeven in FY20.
Other highlights throughout the year included further enhancing
our quality management and risk frameworks, achieving a carbon
neutral footprint and the adoption of our own new product, DXP
Expenses. By acting as ‘customer zero’, the Finance team was
able to test our product in real time and provide meaningful
insights back to our New Engineering team, leading to an
enhanced user experience for our customers.
Supporting our teams during COVID-19
Our IT team was instrumental in supporting the business in its
transition to remote working in response to COVID-19. As a
SaaS company, our business is underpinned by SaaS solutions,
ensuring our employees can work on any device, anywhere, any
time. As we didn’t need to worry about our systems, we instead
focused on our people, and ensuring they were supported
throughout the changes and able to be successful in their roles.
We invested significant effort last year in implementing a new
unified communications platform across the group. This proved
to be timely and ensured team members were already proficient
in our new communications technology as they transitioned to
remote working. This meant that our legal team, for example,
could continue to support sales in closing new customer deals,
regardless of where they were working from.
The Corporate Services team also worked with our landlords
to negotiate commercial outcomes while we weren’t using
our premises, which contributed to our cost controls during
the pandemic.
Strategic priorities for FY21
In FY21, the Corporate Services team will continue to support the
business to drive growth in sales to new and existing customers,
while driving improvements in internal systems and processes.
The implementation of a new revenue processing system will
further support our transition to a recurring revenue model.
By partnering with the business, we will assist in the transition of
customers to our SaaS platform as well as the adoption of more
TechnologyOne products by our customers, and support winning
new customers in the UK and APAC
In FY20 our main focus was to support our customers through the
challenges they faced this year, and partner with them to continue
driving their digital transformation agendas. This was spearheaded
by our Together as One initiative, which empowered our Sales
team to engage with customers and provide them with practical
assistance during the COVID-19 pandemic.
• Strategic deal with Australian Rail Track Corporation (Australia)
• Expansion within Toowoomba Regional Council (QLD)
• Allity Aged Care (QLD)
• Australian Research Council (Australia)
Despite the challenging year, we continued to grow in the
key areas of our business:
• Expansion within Central Queensland University (QLD)
• Tasmanian Government (TAS)
• SaaS transitions – we moved 104 customers to SaaS,
• The Hills Shire Council (NSW)
taking our total SaaS customers to 539
• New customer logos
• Product upsell
• UK expansion - we delivered a breakeven result, signing nine
new customers, including some key strategic deals in the local
government market.
Key wins for FY20
Our SaaS sales continued to grow in FY20, with the benefits of
SaaS amplified as many customers were forced to rapidly shift to a
remote working environment. Our successful expansion in federal
government continued, as did our strong foothold in the UK’s local
government sector. Our key wins included:
• Brisbane Airport Corporation SaaS transition (QLD)
Strategic priorities for FY21
In FY21, we will further invest in new tools and processes to drive
the accuracy and efficiency of our sales model. In the UK, we will
build on this year’s success by continuing to grow our customer
base, while in Australia and New Zealand, we will focus on
transitioning on-premise customers to SaaS and at the same
time, expanding their product footprint.
Acknowledging that the path ahead still looks uncertain for
many of our customers, we will continue to build on our strong
partnerships with customers to ensure we can help them navigate
through the challenges ahead and prepare for their new normal.
• Department of Agriculture (Australia)
• Hawkes Bay Regional Council (NZ)
• Mid & East Antrim Borough Council (UK)
• Expansion within Victoria University (VIC)
44
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2020 TechnologyOne Annual ReportTransforming business, making life simple Brock
Douglas
Executive Vice President,
Consulting
Anwen
Robinson
Executive Vice President,
United Kingdom
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
Application Managed Services (AMS) business.
In our AMS business we have been driving to create an ongoing
relationship with our customers through annual contracts. The
recurring revenue model for this Consulting stream enables
us to get closer to our customers, and better understand both
their business and customers. It also provides a stable cost
base, predictability in our revenue stream and minimises risk.
We plan to move more of our Consulting revenue to an Annual
Recurring Revenue model, to drive the same benefits for both
our customers and our business.
Driving compelling experiences and growth
Our commitment to delivering a compelling experience has
seen our customer satisfaction rate – measured through
post-engagement surveys – climb.
The AMS program business grew by 31 per cent, with the
recurring revenue from this stream contributing to 22 per cent
of this year’s total Consulting revenue.
Our AMS business continues to be critical to enhancing product
penetration among our customer base, with customers that
leverage AMS having five more products on average than a
customer without an AMS program. Customer satisfaction within
our AMS program sits at a phenomenal 97 per cent, which
speaks to a highly engaged customer group.
Supporting our customers
This year we delivered 235 go lives (213 in FY19), a 10 per cent
increase year-on-year, despite the challenges many customers
faced in response to COVID-19.
Given the dispersed nature of our customer base, our
Consulting team were already set up with the training,
processes, technology and methodology to successfully deliver
implementation projects remotely. The transition was seamless
for both our people and our customers, which resulted in seven
go lives in the first two weeks following our transition to remote
working. We saw an additional six new customers join public
training during the same timeframe.
The Consulting team also played a key role in the company’s
Together as One initiative, which was launched in response
to COVID-19 to support our customers through the challenges
they were facing. Consulting contributed to this program by
delivering critical business services, with over 600 customers
registering in the first week. Our customer satisfaction rating
with the training sessions was 95 per cent, demonstrating
we provided the support our customers needed, when they
needed it.
Empowering our people
Our team members participated in more than 3,300 days of
training in FY20, and we rolled out additional tools to support
our consultants’ success, including automation functions
and real-time visibility across the portfolio of projects. This
combination of tools and training is supporting our employees
to deliver more predictable, consistent and compelling
customer experiences.
We implemented a career framework for all our Consulting team
members in FY20, to assess the demonstrated capabilities
of our people and empower team members to create their
own development plans. Employee engagement climbed by a
further 18 points, demonstrating the continued success of our
transformation agenda.
Growth in the UK
We focused on growth of our UK operations in FY20, with 21
go lives delivered this year. We also appointed a UK Service
Delivery Manager to increase our AMS presence in this market,
foster new partnerships and deepen our relationships with
existing customers.
Strategic priorities for FY21
In FY21 we will continue to align our strategic priorities around
our three pillars:
• Customer - Improving customer satisfaction and evolving our
Solution Implementation Methodology
• People – Ensuring the wellbeing of our people, and
supporting achievement and career development
• Discipline - Improving systemised tools, portfolio governance
and project financial management
Despite the challenging year we faced in 2020, the UK business
delivered a breakeven result through an expanded product
portfolio in our key markets of local government and higher
education, as planned.
COVID-19 has acted as a catalyst for change as many
organisations struggled to quickly and securely accommodate
mandated remote working, being hamstrung by old legacy
technologies. The increasing cost of maintaining these systems
with ever reducing budgets has also galvanised action.
The UK Government see use of digital technology as key
to responding to ongoing business challenges and to
underpinning recovery. In support of this, TechnologyOne
this year signed on as the key partner of the UK Tech Cluster
Group, supporting the UK public and higher education sectors
to address issues impacting recovery in a post COVID-19 world.
The Recovery Roadmap Report has received UK Government
endorsement and support.
“Right now, our clear priority must be growth. Using tech
to power us out of the recession, to drive productivity
and create jobs in all parts of the industry, region by
region, and indeed all parts of our economy.”
Rt Hon Oliver Dowden CBE MP
Secretary of State for Digital, Culture,
Media, and Sport
Accelerating digital
In FY20, many existing customers accelerated their go lives and
were able to join an increasing number of UK customers fully
benefiting from SaaS ERP. Many endorsements supported the
ease of reverting operations to remote SaaS working.
London School of Economics & Political Science’s Director of
Finance, Mike Ferguson, for example, said moving to a SaaS
platform prior to the impact of COVID-19 allowed the university
to be more adaptable and resilient.
“We’ve been on a digital transformation journey for
some time. But over these last few weeks the ability to
get work done anywhere, any time - which only SaaS
can deliver - has changed from being something that
was just part of an overall strategy to a mission critical
requirement and without it we simply could not have
continued financial operations without significant risk.”
Mike Ferguson
Director of Finance, London School
of Economics & Political Science
Continuing growth momentum
From March 2020, our own TechnologyOne UK team also
reverted to 100% remote working. All departments adopted
new working practices with no impact on productivity, ensuring
our continued growth momentum. This will continue for the
foreseeable future.
In FY20, sales exceeded expectations, with nine new customers
signing contracts. These included five new councils - three
in Northern Ireland and four full OneCouncil ERP solutions
(including Financials and HR & Payroll), along with one new
university.
The key route for procurement was through the UK
Government’s G-Cloud framework, which contributed eight new
customers. TechnologyOne UK was also successful in being
appointed to the new G-Cloud 12 Government framework.
Strategic priorities for FY21
Our focus as we move into the next financial year will be on
finalising the regionalisation of our products in the UK.
As the uncertainty around the pandemic continues,
TechnologyOne UK will continue to support customers to
maintain business continuity, and focus on new sales into the
local government market and higher education market.
We will also continue to raise our brand profile with strong
positioning of the key benefits of our unique SaaS ERP solutions
to our focus markets, taking advantage of the increased
appetite for change.
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2020 TechnologyOne Annual ReportTransforming business, making life simple
Richard
Nicol
Executive Vice President,
Products
Jane
Humphreys
Executive Vice President,
People & Culture
This year we established our newly-formed Products division,
which incorporates the R&D and Product Success teams and
unites the various parts of the organisation responsible for the
successful delivery of our products.
As our SaaS solution empowers anywhere, any time, any device
access, our customers were also able to easily transition to
remote working and innovate to meet the challenges ahead,
without having to worry about the underlying technologies.
Strategic priorities for FY21
In FY21 the Product team is focused on three key
strategic priorities:
1. Deliver reliable, high-quality products that our customers
love and are easy to implement
2. Deliver enterprise consistency and seamless integration
between products
3. Deliver timely enhancements and features that improve
the overall user experience of our software
The Products team is committed to creating software that our
customers love using, and supporting the growth of our overall
product footprint within our customer base.
We leverage customer feedback to drive product roadmap and
strategy decisions, while keeping them informed about how
their feedback is shaping our software. Across our two major
software releases this year (2020A & 2020B), we successfully
delivered more than 735 enhancements, with 77 per cent of
these requested by our customers.
Adapting to a new normal
TechnologyOne lives by a vision of any device, anywhere, any
time. It has driven all our business decisions, including the
development of our global SaaS ERP, as well as our shift to use
only SaaS-based solutions to run our business.
During the COVID-19 pandemic, our product teams were
able to easily transition to remote working and support our
customers, while continuing to develop and deliver new product
enhancements and features.
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 FY20, we invested in building and maturing our People &
Culture offering, to ensure our continued success. To deliver our
ambitious goals, we focused on driving accountability, clarifying
roles and responsibilities and optimising our team structure to
enable us to continue People & Culture’s transformation from a
tactical, operational model to a strategic partnership model.
Keeping our people safe during COVID-19
When the COVID-19 situation escalated rapidly, our team
swiftly and seamlessly transitioned to remote working, to keep
ourselves, our families and our communities safe. Our people
were provided with appropriate support and resources to help
our customers navigate their business challenges.
TechnologyOne introduced our Mental Fitness program during
FY20, recognising the critical role our mental health plays in
engagement, productivity and broader wellbeing.
Career Framework
We successfully piloted our career framework in Consulting,
engaging team members at all levels of the business on their
career paths to ensure they are clear on what’s required to
progress, be it laterally, cross-functionally or through promotion.
Team member advocacy
Our eNPS survey measures team member advocacy and
loyalty. Our survey has been enhanced during FY20 to
include measures such as company confidence, enablement
and customer focus. TechnologyOne has made progressive
improvements in the company-wide score through targeted
action planning and responsiveness to the feedback acquired
through this tool.
Strategic priorities for FY21
Our people are our greatest competitive advantage.
Investment in their engagement, career paths and capability
underpins TechnologyOne’s success, success realised through
achievement of our growth strategies; transitioning more
customers to SaaS, increasing our product footprint within
existing customers, adding new customers and accelerating
growth of the UK.
In the coming year, we will focus on building leadership
capability to enable our leaders to drive a culture of
accountability and achievement. We will continue to foster
team engagement with reward and recognition initiatives, and
focus on creating opportunities for spontaneous collisions and
collaborations, particularly following the extended period of
remote working.
During the next 12 months, we will cement our Talent and
Succession Framework. This framework seeks to identify our
critical talent and critical roles, develop our highest potential
team members and invest in our future leaders. Strong bench
depth will deliver TechnologyOne a resilient, high-flow talent
pipeline, positioning us well to deliver our growth objectives.
48
49
2020 TechnologyOne Annual ReportTransforming business, making life simple Daniel
Sultana
Executive Vice President,
SaaS Platform
Our SaaS business has continued to mature in size and capability.
In what has been an extraordinary year, the benefits of running
TechnologyOne software on our SaaS Platform has never been
more evident. In response to COVID-19, our users seamlessly
moved to remote working and experienced the full benefits of
the SaaS Platform. It proved to be the ultimate validation of our
technology, processes and people. We are proud that during this
unusual year, our customers were able to experience a stable,
consistent experience, while an additional 104 customers adopted
the platform in FY20.
Our strong investment and determination to be the most
trusted SaaS Platform has again ensured we are global leaders
in the areas of and compliance, cyber security performance
and reliability.
Our ability to ensure precise capacity planning allows us to
scale as required and provide high levels of stability to deliver
an outstanding customer experience.
Highlights in FY20
We were extremely proud to be the first ERP SaaS provider to
achieve a successful IRAP PROTECTED assessment, as part of
our ongoing commitment to enhancing the cyber security of
our platform. This means we can now process and store federal
government information rated up to PROTECTED. Further to this,
our decision to embed this directly into our service offering at no
additional cost to our customers is a demonstration of our ongoing
commitment to continuous improvement and to raising our
compliance and cyber security standards.
We also invested in new technologies such as a new high
performing storage solution for our customers and we see
margins continuing to improve in the coming years driven by
the significant economies of scale from our single instance,
multi-tenanted global SaaS ERP solution.
Our continued, ongoing investments in automation and innovation
is the reason we can provide faster, more efficient SaaS transitions
and ongoing services for our customers. This allowed us to
continue adding customers to the platform during the pandemic,
as well as speed up the availability of new features and functions.
Strategic priorities for FY21
We will continue to invest in new technology platforms, drive
efficiencies and innovate. This, coupled with an emphasis on
increasing the number of customers on our SaaS Platform will
drive higher Annual Recurring Revenue, increased margins and
profitability.
We will also focus on leveraging the IRAP PROTECTED posture
beyond our federal government customers to deliver the
enhanced cyber security benefits to our entire customer base. We
will continue to expand the security and compliance posture of our
platform to reaffirm our position as the most trusted SaaS provider.
This year we established our New Engineering division, which
is committed to delivering future products, capabilities and
architectural evolution for TechnologyOne and our customers.
By separating New Engineering from the ongoing development
of our existing products, we have built capacity for our team
members to focus on new product innovations, without
impacting or being inhibited by the day-to-day operational
requirements of our existing product roadmaps. This enables
the team to explore new innovations without commercial risk or
impact to the delivery and ongoing enhancement of our existing
product suite.
With all new products and functionalities delivered on our SaaS
Platform, New Engineering aims to provide further compelling
reasons for our existing on-premise customers to move to SaaS,
while expanding their product footprint.
New product innovations
This year we continued the development of our first generation
Digital Experience Platform (DXP) product, with DXP Expenses
and DXP Meetings progressing through our early adopter
program and into general release. This is an exciting milestone
for TechnologyOne, with DXP Expenses marking the company’s
first mass adoption product that leverages artificial intelligence.
We also developed enterprise data migration software, which
incorporates the unique IP we have developed from developing
and implementing our own products. It has allowed us to build
expertise around how we do data migrations for an enterprise
software implementation, and we have passed on the benefit of
that expertise to customers in this new capability.
Brett
Hooker
Executive Vice President,
New Engineering
Navigating COVID-19
Our team was well positioned to seamlessly pivot to remote
working when the COVID-19 pandemic hit, as our development
teams were already operating in a SaaS-based operating and
development environment. This meant the team could work
from wherever they were, without needing to install VPNs or set
up additional infrastructure. As a result, we were able to focus
our attention on the wellness of our people and ensuring that
they were comfortable and supported to navigate the changes
while still delivering our program of work.
Strategic priorities for FY21
Underpinned by our power of evolution philosophy, we will
continue to embrace the accelerating pace of change in our
industries and explore new innovations that will drive our
business forward.
Our key focus for FY21 will be the development of our next
generation DXP offering. The challenges faced by many
councils as a result of COVID-19 has acted as a catalyst to
accelerate the development of our Local Government DXP,
which aims to provide an engaging digital experience for
their communities.
50
51
2020 TechnologyOne Annual ReportTransforming business, making life simple 08
08
Our
Our
people
people
52
53
2020 TechnologyOne Annual ReportTransforming business, making life simple Employer of choice
Our people are a crucial source of our competitive advantage,
and we purposefully invest in initiatives that support the
recruitment, retention, development and progression 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 innovative, creative 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 Learning team continues
to support our commitment to developing our people and
growing their careers by delivering training in leadership,
technical and professional skills development.
We continue to evolve our orientation and onboarding
solution to be market leading, aligned to our new operating
model and provide our new starters the best possible start
to life at TechnologyOne.
Graduate program
Our graduate and intern programs form the foundation of
our talent pipeline into the future. Our graduate brand and
experience is highly regarded by our peers, competitors
and industry bodies alike. We received in excess of 3,000
applications, highlighting the competitive and highly sought-
after nature of our program.
FY20 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. Our newest graduates work across
TechnologyOne with the company’s most influential and
skilled leaders, who provide them with valuable learning
opportunities and experience.
TechnologyOne’s graduate program was recognised in 2020
as one of the top 50 leading graduate programs in Australia
by the Australian Association of Graduate Employers.
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 accelerate digital transformation, streamline
their business and improve their experience.
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.
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 learnt extensively from
how consumers use technology, and applied it to simplify our
enterprise software.
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.
With a focus on diversity and building exceptional female
talent pipelines, TechnologyOne partners with Women in
Technology and Women in Digital to continue to build our
brand recognition and employee value proposition to attract
rising female stars to TechnologyOne. We also partner with
the Australian Computer Society (ACS) Foundation to sponsor
the national BiG Day In™ series, which is designed to inspire
high school and university students to pursue careers in the
IT industry.
We are an
Employer
of Choice
54 2020 TechnologyOne Annual Report
55
Transforming business, making life simple 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 for discrimination and harassment of any kind.
Recruitment and promotion within TechnologyOne are
based only on the relevant skills, experience, qualifications,
aspirations, potential and aptitude of applicants.
Women make up 36 per cent of TechnologyOne’s workforce,
which is high compared to other technology and software
companies 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 leading role in
growing a more diverse pipeline of future candidates to work
in technical fields and at TechnologyOne.
Some key programs TechnologyOne supported this year
included the Tech Girls Movement and the Queensland
Women in Technology Awards.
Hack Days
In FY20, 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.
In a true demonstration of the innovative spirit of Hack Day,
our Hack Day team innovated to allow us to continue in 2020,
despite the shift to a more dispersed and remote workforce
following COVID-19. With many of our Hack Day initiatives
already delivered virtually to ensure that all regions and global
employees can participate, the shift to a more remote delivery
was swift and seamless.
Teams participating in Hack Day leveraged our virtual
communications platform to collaborate on their hacks and
engage with pitch coaches, with the pitches livestreamed
for all global employees at the conclusion of the event.
Employees working remotely were sent care packages that
included our traditional Hack Day T-shirt and other ‘innovation
starters’, so they could enjoy the Hack Day experience from
wherever they were working.
Rewards and recognition
To maintain our achievement- oriented culture, we think it
is important to recognise and reward top talent. The annual
TechnologyOne MARVEL awards celebrate team members
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 attract, retain and develop a loyal, achievement-oriented,
accountable workforce. This is critical to achieving our goal
of transforming our customers’ businesses and making their
working lives simple.
The TechnologyOne Learning 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.
Employee 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 are used to influence
ongoing enhancements to our initiatives and programs.
To ensure connection and communication across our global
employees, we conducted regular virtual Town Hall meetings
throughout the year. These enable our executive team to
share company updates with all employees simultaneously,
by connecting all people, regardless of where they are
working from.
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.
56 2020 TechnologyOne Annual Report
Transforming business, making life simple
57
Regional Days
In FY20, we continued our 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.
Wellness program
TechnologyOne has a wellness program aimed at encouraging
our team members to get active in the community. However,
due to social restrictions many community events were
cancelled, so we provided team members with creative
alternative options, such as yoga and strength building
sessions, so they could keep moving in the comfort of their
own home.
A wellness resource hub was also created during COVID-19
isolation, so team members could access weekly wellness
tips, support, videos and material aligned to our overall
wellness model – Healthy Minds, Healthy Bodies, Healthy
Spaces and Healthy Culture. We also delivered a number
of engagement activities to keep up social connectiveness,
including a cooking class, online bingo, competitions and
virtual drinks on a Friday.
Our annual wellness week pivoted to become entirely virtual,
offering daily prizes, virtual ergonomic assessments, financial
support services and EAP awareness sessions.
Collaborative facilities
and technology
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.
This year, the remote working conditions brought about by
COVID-19 provided us with the opportunity to reimagine
our traditional employee engagement events. Using a
combination of state-of-the-art audio visual equipment,
technology and collaboration tools, we connected our
employees digitally across all regions for virtual Town Hall
meetings, Hack Days, R&D Showcases and other global
company-wide events.
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.
In FY20, we also achieved Climate Active Carbon Neutral
certification. We offset our carbon footprint through the
acquisition of certified carbon credits, which have been
created through a wind power initiative in India that aims to
develop enough power to replace existing coal-fired power
plants. This makes TechnologyOne now one of only two
companies in the Australian technology sector to make this
investment and reach this achievement.
Our people are also encouraged to access and adhere to our
Environment Policy. It outlines our commitment to providing an
environmentally responsible workplace, and ways to engage
in sound workplace practices through reducing waste and
giving more consideration to the use of energy and resources.
For more information see our Corporate Sustainability Report
overview on page 60.
58 2020 TechnologyOne Annual Report
59
Transforming business, making life simple Corporate
Sustainability
overview
TechnologyOne’s
approach to
sustainability
Customer
People
Responsible
business
Our community
& environment
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
e
1% ti m
Our people
R&D
F
e
e
d
b
a
c
k
m
e
c
h
a
nis
m
s
Our community
& environment
Our products
and solutions
Implementation
& Support
Marketing/Sales
$
68.1 m
R&D investment for 2020
(22% of revenue)
• Ethics, values and transparency
•
Innovation
• Compliance
1
%
p
r
o
fi
t
Our customers
Profit
Revenue
PLEDGE
1%
• $2m global impact in FY20
• Community investment and education
• Environmental footprint
Our growth
For the full Sustainability Report visit our website TechnologyOneCorp.com
60
61
2020 TechnologyOne Annual ReportTransforming business, making life simple
Pledge 1%
The TechnologyOne Foundation is part of the Pledge 1%
corporate philanthropy movement, which is dedicated to
making the community a key stakeholder in every business.
In committing to the Pledge 1% movement, individuals and
companies donate 1% of their profit, product and employees’
time to their communities.
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. The Foundation was
established in 2016 to ensure that charitable giving would
become a long-term initiative for the business, and encourage
philanthropy to become part of the company culture.
TechnologyOne donates 1% of annual profit to our charity
partners. We partner with a number of key charities, including
Opportunity International Australia, The School of St Jude,
The Fred Hollows Foundation, SolarBuddy 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 Pledge 1% equated to a more than
$2 million commitment by the company in FY20.
The year in summary
In FY20, the TechnologyOne Foundation’s work was
recognised with two awards: Winner - The Australian
Business Awards - Community Contribution; and
Finalist - QCF Community Contribution Awards. We
donated approximately $770,000 to our charity partners
(Opportunity International Australia, The Salvation Army,
The School of St Jude, SolarBuddy, The Prince’s Trust UK,
The Fred Hollows Foundation, The Big Issue and The Smith
Family).
This year, we also:
• Finalised 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. The
Vietnamese Government will now fully fund the program
into the future.
• Raised funds for those affected by the devastating
bushfires that swept across the eastern states, with
employee contributions matched by the Foundation.
In total, $27,250 went to charity partner The Salvation
Army to help communities in the Scenic Rim impacted by
drought and then fire with ongoing physical and mental
recovery.
• Financially supported 34 disadvantaged students, all
who identify as Indigenous, through the Learning for Life
program with The Smith Family. Staff also packed 900
stationary kits to be distributed to students.
• Assisted more than 30 charities through our volunteering
hours and donations.
• Provided game-changing new software for the School of
St Jude, which was delivered entirely remotely
• Provided over $50,000 worth of product discounts to
not-for-profit customers as part of our 1% profit pledge.
• Through company-wide volunteering, supported 1,625
SolarBuddy lights being assembled and delivered to
children in Vanuatu living in energy poverty. With access
to these lights, students are studying 78% longer.
• Contributed 123 volunteer hours for The Big Issue, across
vendor breakfasts, a community street soccer program
and The Big Issue challenges.
• 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.
In addition to our major charity partners, the Foundation
supported a number of other worthy causes including: The
Prince’s Trust UK, Plan International, Drug ARM, Evolve
Housing, St Vincent de Paul and KemBali School
in Indonesia.
62 2020 TechnologyOne Annual Report
63
Transforming business, making life simple 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 over
the 15-year period.
As a result of this partnership, families in India can access
small loans to enable them to build businesses. This will also
help them to earn regular incomes to support themselves, as
well as feed, clothe and educate their children.
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
the 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,
people can begin to seek better infrastructure or educational
facilities from government, or bring local families together to
take on community projects.
Our goal is to
Our goal is to
help 500,000
help 500,000
children out of
children out of
poverty by 2032
poverty by 2032
64 2020 TechnologyOne Annual Report
64 2020 TechnologyOne Annual Report
© Michael Amendolia
65
Transforming business, making life simple 06
06
Financial
Financial
statements
statements
66
67
2020 TechnologyOne Annual ReportTransforming business, making life simple Directors’
report
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 35 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 member of the Australian Institute of Company Directors and 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 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.
Interests in shares and options
20,372,500 ordinary shares in Technology One Limited held beneficially through Masterbah
Pty Ltd. 6,000 ordinary shares in Technology One Limited held on behalf of family members.
In addition, a relationship deed exists between Masterbah Pty Ltd and JL Mactaggart
Holdings Pty Ltd (founding shareholders) – Masterbah Pty Ltd exercises voting rights only
in respect of 30,872,500 securities and an escrow arrangement applies to 14,000,000 of
those securities. There are no other beneficial rights incumbent on these shares other than
voting rights.
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, 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.
Special Responsibilities
Member of the Remuneration Committee (from 1 June 2020).
Interests in shares and options
69,737 ordinary shares in Technology One Limited held beneficially through RONMAC
Investments Pty Ltd.
Adrian
Di Marco
B Sc, MAICD, FACS
Appointed 8 December 1999
Ron McLean
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 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
30,872,500 ordinary shares in Technology One Limited held beneficially through JL Mactaggart
Holdings Pty Ltd. 30,000 ordinary shares in Technology One Limited held via the Jontra trust.
Experience and expertise
Mr Blinco is a former Director and Chair 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.
Special Responsibilities
Member of the Audit and Risk Committee.
Interests in shares and options
200,000 ordinary shares in Technology One Limited held beneficially through Autun Pty Ltd
ATF Blinco Accumulation Superannuation Fund.
John
Mactaggart
FAICD | Appointed 8 December 1999
Kevin Blinco
B Bus, FCA | Appointed 1 April 2004
68
69
2020 TechnologyOne Annual ReportTransforming business, making life simple Richard Anstey
FAICD, FAIM | Appointed 2 December 2005
Experience and expertise
Mr Anstey's career has spanned over 40 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 focused upon the technology, telecommunications and life sciences sectors.
Through iQFunds and personally, Richard has co-invested in more than 30 companies with
the support of Commonwealth and State Government programs, Venture Capital Funds
and both corporate and personal investors. Whilst being an active Non-Executive Director
of his investments, Richard adds value to his companies wherever appropriate to maximise
shareholder value and he 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 Queensland AI Hub and at the QUT Entrepreneurship
within the Queensland University of Technology, 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 iQ360 Pty Ltd.
Special Responsibilities
Chair of the Nomination and Governance Committee.
Interests in shares and options
25,500 ordinary shares in Technology One Limited held beneficially through the Anstey
super fund.
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.
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.
Special Responsibilities
Chair of the Remuneration Committee (from 1 June 2020), member of Audit and Risk Committee
and Nomination and Governance Committee.
Sharon Doyle
B Laws (Hons), B IT (Dist), G Dip Bus Admin,
GAICD | Appointed 28 February 2018
Jane Andrews
GAICD PhD | Appointed 22 February 2016
Interests in shares and options
30,600 ordinary shares held in Technology One Limited.
Clifford
Rosenberg
B.Bus Sc (Hons), M.Sc (Hons) | Appointed 27
February 2019
Experience and expertise
Ms Doyle is the Executive Chair 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 Auto & General. 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 qualified member of the Australian Institute of Company Directors.
Special Responsibilities
Member of the Audit and Risk Committee and Nomination and Governance Committee
(from 1 June 2020).
Interests in shares and options
18,280 ordinary shares in Technology One Limited.
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 Nearmap (ASX: NEA), A2B Australia Limited (ASX:A2B),
Bidcorp (JSE) and up until recently Afterpay Group (ASX: APT). Cliff 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.
Special Responsibilities
Member of Remuneration Committee
Interests in shares and options
27,533 ordinary shares held in Technology One Limited held beneficially through Clifro Pty Ltd
ATF Cliffro Trust.
70
71
2020 TechnologyOne Annual ReportTransforming business, making life simple Peter Ball
B Bus, CA | Appointed 2 March 2020
Experience and expertise
Mr Ball is a Chartered Accountant who has enjoyed a long career in the professional services
sector spanning nearly 40 years, initially in audit both nationally and internationally, with the
last 30 years in management consulting. Mr Ball has been a Partner with KPMG for some 25
years providing a range of professional services and advice to both public and private sector
organisations. He has also held senior roles with KPMG including the national leader of KPMG's
Strategic Planning and Economic Development service line and more recently as national
partner responsible for the finance and operations for KPMG's Government Advisory Practice.
Most of Mr Ball's work involves providing strategic, economic, commercial and business
improvement advice to enable organisations to make fully informed business decisions. During
his management consulting career Mr Ball has worked across a number of industries including
tourism and leisure, gaming and wagering, arts and sports, and state and local governments.
He has been a lead adviser to government with respect to major projects and events including
the Sydney 2000 and planned SEQ 2032 Olympics, Gold Coast Commonwealth Games, casino
projects in all states and territories including Queensland's proposed Global Tourism Hubs. Mr
Ball has also led international projects in the tourism and leisure sector.
Mr Ball has an entrepreneurial spirit and has been involved with a number of start-ups across
a range of sectors including property, education, gaming and the pharmaceutical sector.
He is also actively involved in the community/not-for-profit sector having been a Director of
Alzheimer's Queensland for the past 10 years.
Special Responsibilities
Chair of the Audit & Risk Committee.
Interests in shares and options
18,000 ordinary shares held in Technology One Limited held beneficially through the Noosa Hill
Super Fund.
Company
Secretaries
Stephen Kennedy
BBus, FGIA | Appointed 13 April 2017
Mr Kennedy was appointed Company Secretary on 13 April 2017
and has been employed with TechnologyOne since January 2017.
Paul Jobbins
BBus (ACA), CA, GDipAppFin, MAppFin, GAICD
Appointed 16 December 2019
Mr Jobbins is the TechnologyOne Chief Financial Officer and
was appointed as Company Secretary on 16 December 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
2020, 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
C Rosenberg
P Ball
10
10
10
9(10)
10
10
10
10
-
-
-
5
-
5
5
-
5(5)
2(2)
-
-
-
2(2)
3
3
1(1)
-
-
-
1(1)
-
2(2)
-
3
-
3
-
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:
• Technology One Enterprise Asset Management
• Technology One Financials
• Technology One Human Resource and Payroll
• Technology One Enterprise Budgeting
• Technology One Supply Chain
• Technology One Property and Rating
• Technology One Student Management
• Technology One Business Intelligence
• Technology One Enterprise Content Management
• Technology One Performance Planning
• Technology One Spatial
• Technology One Enterprise Cash Receipting
• Technology One Stakeholder Management
• Technology One Business Process Management
Dividends
Dividends paid to members during the financial year were
as follows:
Final dividend for the year ended 30 September 2019 of
8.78 Cents (2018 - 6.16 Cents) per fully paid share paid in
December 2019 (2018- December 2018)
60% franked (2018- 75%) based on tax paid at 30%
Special dividend for the year ended 30 September 2019 of
0.00 Cents (2018 - 2.00 Cents) per fully paid share (2018-
December 2018)
(2018- 75% franked) based on tax paid at 30%
Interim dividend for the year ended 30 September 2020 of
3.47 Cents (2019 - 3.15 Cents) per fully paid share paid in June
2020 (2019- June 2019)
60% franked (2019- 75%) based on tax paid at 30%
2020
$’000
2019
$’000
27,930
19,527
-
6,334
11,058
9,989
Total dividends paid
38,988
35,850
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 24 November 2020, the Directors of Technology One Limited
declared a final dividend on ordinary shares in respect of the 2020
financial year. The total amount of the dividend is $30,045,703 and is
60% franked.
On 2 October 2020, the Federal Court issued a judgement against
TechnologyOne in a civil employment case. As a result of the
judgement, the Group’s provision was increased to $5.2m (2019:
$1.6m) as at 30 September 2020. The company has retained very
experienced counsel for an appeal to the Full Federal Court which was
lodged on 27 October 2020.
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.
72
73
Transforming business, making life simple2020 TechnologyOne Annual Report Share options
Unissued shares
As at the date of this report, there were 5,562,106 unissued ordinary
shares under options (5,679,385 at the reporting date). Refer to note
31 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 1,458,949 fully paid ordinary shares in Technology One
Limited at a weighted average exercise price of $3.60. Refer to note 31
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
24 November 2020
Indemnification and insurance
of officers
Insurance and indemnity arrangements concerning officers of the
Company were renewed or continued during the year ended 30
September 2020.
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 2001.
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:
Ernst and Young:
2020
$
2019
$
Taxation advice and other advisory services
148,290
131,672
Total remuneration
148,290
131,672
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 137.
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
Based on the recommendations of the Taskforce on Climate Related
Financial Disclosures (TCFD), TechnologyOne has determined that
there are no material climate related risks or other environmental
risks likely to have a material impact on the Group. There are also no
particular or significant environmental regulations that apply to the
Group.
Remuneration Report (Audited)
Introduction from the Chair of the Remuneration Committee
Remuneration framework changes
in FY20
After consultation with proxy advisors, a review of our remuneration
framework resulted in the following changes for FY20:
• The EPS growth performance hurdle for share options issued
from the FY20 year onwards has been changed from an annually
tested metric to being tested at the end of the applicable three-
year performance period.
• In prior years, the Group disclosed targets for performance
hurdles for LTI grants retrospectively on vesting. To provide further
transparency, we now disclose targets for performance hurdles for
LTI grants once issued, as requested by proxy advisors.
• There was a change in the weighting of LTI performance metrics,
which were introduced in 2019. There was a shift in weighting
from 50% on EPS growth and 50% on relative TSR, to a weighting
of 75% on EPS growth and 25% on relative TSR.
Proposed changes to the
remuneration framework in FY21
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 will continue to have ongoing
dialogue with proxy advisors and our shareholders to evolve our
framework as well as its presentation in the remuneration report.
Jane Andrews
Chair, Remuneration Committee
Brisbane
24 November 2020
Dear Shareholders,
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 2020. 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 FY20
• Proposed changes to the remuneration framework in FY21
Summary of incentive outcomes
and alignment to Company
performance
This report demonstrates a clear alignment between executive
remuneration and shareholder value creation.
In what was a challenging year as a result of COVID-19, the company
delivered exceptional results with SaaS ARR growth of 32%, consulting
profit growth of 38%, a breakeven result for the UK, underlying profit
after tax growth of 13%, underlying profit before tax margin growth to
29% and reported net profit after tax growth of 8%.
In summary:
• Total Executive KMP remuneration for continuing executives
employed across both periods, based on total remuneration
packages offered, grew by 5%. This is below the Company’s 8%
growth in net profit before tax.
• Short Term Incentive (STI) outcomes across our Executive KMP
came in below target. This is consistent with our growth in
NPBT of 8%. STI outcomes are based on reported, rather than
underlying NPBT.
• Our Long Term Incentive (LTI) plan resulted in 98% of ‘at risk’ LTI
vesting for our Executive KMP. The Board set challenging LTI
targets, which we believe assist in incentivising our KMP to drive
superior performance and long-term shareholder wealth creation.
• It should be noted that the Board exercised discretion in the
achievement of LTI awards, given exceptional performance during
difficult circumstances, which is discussed in detail in section 3.2.
iARR is not an IFRS measure and is unaudited, it represents future contracted annual revenue at year end
iiCash Flow Generation is Cash flow from operating activities less capitalised development costs. This is a non IFRS financial measure and is unaudited.
74
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2020 TechnologyOne Annual ReportTransforming business, making life simple
Remuneration Report (Audited)
The remuneration report contains the following sections.
1. About this report
2. Key questions
Non-executive Directors
Dr Jane Andrews
Independent Director
3. Relationship between remuneration and Company performance
4. Executive remuneration at TechnologyOne
Sharon Doyle
Remuneration Committee Chair
Audit and Risk Committee
Nomination & Governance Committee
Independent Director
Audit and Risk Committee
Nomination & Governance Committee
Term
Full year
Full year
Full year
Clifford Rosenberg
Independent Director
Remuneration Committee
Peter Ball
Independent Director
Audit and Risk Committee Chair
Appointed 2
March 2020
Executive Director
Adrian Di Marco
Executive KMP
Board Chair
Chief Strategy and Innovation Officer
Edward Chung
Chief Executive Officer
Stuart MacDonald
Chief Operating Officer
Paul Jobbins
Chief Financial Officer
Full year
Full year
Full year
Full year
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 FY20
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
Remuneration Committee
John Mactaggart
Non-independent Director
Kevin Blinco
Richard Anstey
Independent Director
Audit and Risk Committee
Independent Director
Nomination & Governance Committee Chair
Term
Full year
Full year
Full year
Full year
76
2. 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, earnings per share (EPS) growth and relative total shareholder return (TSR) were introduced to replace historical LTI measures,
which included net profit after tax (NPAT) growth. The rationale for the selection of these two measures is as follows:
•
•
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.
In FY20, we adjusted the balance between these two measures so that there is a 75% weighting towards EPS growth and 25% weighting
on relative TSR.
The winning of new business, driving continued profit growth is the key to our long-term success. Having Executives focus solely on net
profit before tax (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 consulting services 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.
Is our STI plan sufficiently challenging with only
one performance measure?
Why did we introduce a deferred retention bonus? A deferred retention bonus was introduced in FY19 where 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.
This incentive is considered to be a Long-Term Incentive. Refer to section 5.3.2.
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 2016 to 30 September 2020.
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 %
Statutory accounting fair value remuneration growth % for continuing Executives2
Total remuneration package growth % for continuing Executives3
1Accounting for revenue for these periods remains under AASB 118. They were not restated in this table for AASB 15
20161
53,240
9.45
13.26
3.84
5.94
57%
16%
15%
15%
20171
58,019
10.18
14.20
5.94
5.02
(14%)
8%
-6%
-6%
20181
66,528
11.02
16.14
5.02
5.58
13%
15%
8%
8%
2019
76,389
11.93
18.43
5.58
7.18
31%
15%
14%
17%
2020
82,470
12.88
19.75
7.18
7.94
12%
8%
8%
5%
2 Based on statutory accounting fair value remuneration earned excluding any termination payments or partial periods for Executives employed for the full year across both 2019 and 2020. This allows for comparison on a like for
like basis. A deferred retention bonus was introduced in FY19. The total value of the award is retained and will only be realised at the conclusion of the two-year period following the end of the financial year, on the condition that
the Executive KMP remains employed for the entire deferral period. For accounting purposes, the expense in relation to this award is recognised over the total three-year deferral period. The value included for FY19 represents one
third of the FY19 award value. The value included for FY20 includes one third of the FY19 award value plus one third of the FY20 award value. The growth year on year does not represent growth in remuneration offered or realised.
3 Total Executive KMP remuneration for continuing executives employed across both periods, based on total remuneration packages offered, grew by 5%. This is below the Group’s 8% growth in reported profit before tax.
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2020 TechnologyOne Annual ReportTransforming business, making life simple
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 FY20. Note, figures for
2018 and prior years represent reported results 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% which is below the Company’s Net Profit Before Tax (NPBT) profit
growth of 12% over the last 5 years.
Average STI vs. NPBT
'
)
s
0
0
0
$
(
I
T
S
.
g
v
A
$700
$600
$500
$400
$300
$200
$90
$80
$70
$60
$50
$40
$30
$20
$10
$461k
$395k
$445k
$568k
$621k
FY16
FY17
FY18
FY19
FY20
Average STI
NPBT
'
)
s
M
$
(
T
B
P
N
Average STI has grown by 10% which is at a slower rate than the
12% 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 Technology One.
The second graph below shows that the average Executives’
remuneration has been growing at less than the Company’s NPBT
profit growth over the last 5 years.
Average REM vs. NPBT
'
)
s
0
0
0
$
(
M
E
R
.
g
v
A
$1,600
$1,400
$1,200
$1,000
$800
$600
$400
$200
$936k
$1M
$1.1M
$1.2M
$1.3M
FY16
FY17
FY18
FY19
FY20
Average REM
NPBT
$90
$80
$70
$60
$50
$40
$30
$20
$10
'
)
s
M
$
(
T
B
P
N
Average total Executive remuneration has grown by 10% which is
at a slower rate than 12% growth in reported NPBT over the last
5 years.
NPBT has grown faster than our Executives’ remuneration which
demonstrates how effective our remuneration structure is at driving
long-term shareholder wealth.
3.2
Board Discretion applied to LTIs
This section discusses the application of Board discretion under
exceptional circumstances.
3.2.1
FY20 NPAT and EPS growth LTI
The global pandemic which has occurred in FY20 has had an
enormous impact on the economy and businesses. Many businesses
have struggled.
LTI targets based on FY20 NPAT and EPS growth were set in FY18,
FY19 and FY20.
When the LTI targets for FY20 NPAT growth of 10% to 15% was set in
FY18, and FY20 EPS growth of 5% to 15% was set in FY19 and FY20,
there was no consideration possible for a global pandemic.
In what was a challenging year as a result of COVID-19, the company
delivered exceptional results with SaaS ARR growth of 32%, consulting
profit of 38%, a breakeven result for the UK, underlying profit before
tax of 13%, underlying profit before tax margin growth to 29% and
reported profit after tax of 8%.
The Board has carefully considered the exceptional results delivered
during the COVID-19 pandemic and applied Board discretion so that
the Executives achieve 100% of the NPAT and EPS growth LTIs for all
option tranches which include a FY20 annual test.
The executives positively effected by this are Mr Edward Chung, Mr
Stuart MacDonald and Mr Paul Jobbins. This discretion does not apply
to Mr Di Marco.
Please refer to section 3.3 and 3.4 below for details on the LTI Test
and where Board discretion has been applied.
3.2.2
FY19 and FY20 Perpetual licence fee growth LTI
When the LTI target for Perpetual Licence Fee growth of 8% to 15% for
FY19 and FY20 was set in FY18 there was no consideration given to
the strategic shift we subsequently pursued away from Licence Fees
to SaaS ARR growth.
In recent years, we have undertaken a strategic shift in focus to SaaS
ARR growth with a planned reduction in licence fees. This strategic
shift was after the LTI target for licence fees was set. It would be unfair
to penalise executives given the strategic shift from licence fees to
SaaS ARR growth, which we asked them to deliver, and which they did
deliver, with SaaS ARR growth of 32%.
In FY19, licence fees recognised were down 38%1 ($25m), and FY20
licence fees recognised were down 33% ($13m) as planned, as we
pursued SaaS ARR growth of 40% in FY19, and 30% in FY20. The
Board sees this strong growth in SaaS ARR as exceptionally strong
performance, and in keeping with what we asked our Executives to
deliver.
The Board has carefully considered the exceptional results delivered
in SaaS ARR growth in both FY19 and FY20 and applied Board
discretion so that Executives have achieved 100% of the Perpetual
Licence Fee Growth LTI for all options which include an FY19 and
FY20 annual test for this LTI.
The executive positively effected by this is Mr Stuart MacDonald. This
discretion does not apply to Mr Di Marco, Mr Edward Chung or Mr Paul
Jobbins.
Please refer to section 3.3 and 3.4 below for details on the LTI Test
and where Board discretion has been applied.
1 Licence fee growth used for the performance metric test was based on the FY18 annual report.
3.3
Options granted in FY18 which have no vested in FY20
During the year, Edward Chung and Stuart MacDonald completed a three-year performance period relating to the share options granted to them
in FY18, becoming eligible to exercise options which have vested over that period.
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
Grant year
Performance measure
Number of LTIs
available for
target
43,535
FY18
NPAT growth
43,535
Annual
43,535
FY18
NPBT margin growth
44,405
3 year
FY18
Operating cash flow /
NPAT ratio
13,931
Annual
13,931
13,931
14,802
FY18
Customer retention (APAC)
14,802
Annual
14,802
Testing
Testing year
Target
Performance
measure achieved
Board discretion
LTIs vested
FY18
FY19
FY20
FY20
FY18
FY19
>15%¹
>15%¹
>15%¹
100bp²
>100%³
>100%³
FY20
>100%³
FY18
FY19
FY20
>99%⁴
>99%⁴
>99%⁴
15%
15%
8%
200bp
102%
76%
101%
>99%
>99%
100%
43,535
43,535
Refer section 3.2.1
43,535
44,405
13,931
-
13,931
14,802
14,802
14,802
1Options vest linearly from the mid hurdle target of 10% growth, at which 50% of options vest, up to the stretch target of 15% growth, at which 100% of options vest.
2Options vest linearly from the mid hurdle target of 50 basis points growth, at which 50% of options vest, up to the stretch target of 100 basis points growth, at which 100% of options vest.
3Options vest linearly from the mid hurdle target of 95%, at which 50% of options vest, up to the stretch target of 100%, at which 100% of options vest.
4Represents target at which 100% of options vest. No options vest below the target of 99% customer retention.
Stuart MacDonald
Grant year
Performance measure
Number of LTIs
available for
target
37,183
FY18
Perpetual license fee
growth (APAC)
37,183
Annual
37,183
61,972
FY18
NPAT growth
61,972
Annual
FY18
Sales operating expense
growth
61,972
37,183
12,394
3 year
FY18
Customer retention (APAC)
12,394
Annual
12,394
Testing
Testing year
Target
Performance
measure achieved
Board discretion
LTIs vested
FY18
FY19
FY20
FY18
FY19
FY20
FY20
FY18
FY19
FY20
>15%¹
>15%¹
>15%¹
>15%²
>15%²
>15%²
<8%³
>99%⁴
>99%⁴
>99%⁴
15%
37,183
-38%
Refer section 3.2.2
37,183
-33%
Refer section 3.2.2
37,183
15%
15%
8%
5%
>99%
>99%
100%
61,972
61,972
Refer section 3.2.1
61,972
37,183
12,394
12,394
12,394
1Options vest linearly from the mid hurdle target of 8% growth, at which 50% of options vest, up to the stretch target of 15% growth, at which 100% of options vest.
2Options vest linearly from the mid hurdle target of 10% growth, at which 50% of options vest, up to the stretch target of 15% growth, at which 100% of options vest.
3Options vest linearly from the mid hurdle target of 9% expense growth, at which 50% of options vest, to the stretch target of 8% expense growth, at which 100% of options vest.
4Represents target at which 100% of options vest. No options vest below target of 99% customer retention.
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2020 TechnologyOne Annual ReportTransforming business, making life simple
3.4
Options/EPRs that have been granted in FY19 and FY20 and not yet vested
3.5
Fair value of options granted in FY20
Edward Chung
Grant year
Performance measure
Number of LTIs
available for
target
Testing
Testing year
Target
Performance
measure achieved
Board discretion LTIs due to vest
Relative TSR
87,532
3 year
FY19
EPS Growth
29,177
Annual
29,177
Annual
29,177
Annual
FY21
FY19
FY20
FY21
75% percentile
To be tested at the end of FY21
>15%
>15%
>15%
14.2%
27,718
8%
Refer section 3.2.1
29,177
To be tested at the end of FY21
2020
Name
Edward Chung
Stuart MacDonald
Paul Jobbins
Number of options
granted during the
period¹
Fair value per options
issued during the
period²
Vesting date
Exercise price
Expiry Date Fair value of grant
264,639
2.63
167,396
2.06
146,516
2.43
1/10/2022
1/10/2022
1/10/2022
7.39
7.39
7.39
1/10/2027
1/10/2027
1/10/2027
697,104
345,197
356,213
1LTIs are offered to Executive KMP as either options (with an exercise price) or EPRs (executive performance rights issued at market price
2The assessed fair value at grant date of options granted to the individuals is recognised 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.
Grant year
Performance measure
Number of LTIs
available for
target
Testing
Testing year
Target
Performance
measure achieved
Board discretion LTIs due to vest
The model inputs for options granted to Executives are as follows:
FY20
Relative TSR
EPS Growth
66,160
3 year
198,479
3 year
FY22
FY22
75% percentile
To be tested at the end of FY22
>15%
To be tested at the end of FY22
Stuart MacDonald
Grant year
Performance measure
Number of LTIs
available for
target
Testing
Testing year
Target
Performance
measure achieved
Board discretion LTIs due to vest
Relative TSR
23,443
3 year
FY19
EPS Growth
7,814
Annual
7,814
Annual
7,814
Annual
FY21
FY19
FY20
FY21
75% percentile
To be tested at the end of FY21
>15%
>15%
>15%
14.2%
7,423
8%
Refer section 3.2.1
7,814
To be tested at the end of FY21
Grant year
Performance measure
Number of LTIs
available for
target
Testing
Testing year
Target
Performance
measure achieved
Board discretion LTIs due to vest
FY20
Relative TSR
EPS Growth
41,849
3 year
125,547
3 year
FY22
FY22
75% percentile
To be tested at the end of FY22
>15%
To be tested at the end of FY22
Paul Jobbins
Grant year
Performance measure
Number of LTIs
available for
target
Testing
Testing year
Target
Performance
measure achieved
Board discretion LTIs due to vest
Relative TSR
107,728
3 year
FY19
EPS Growth
35,909
Annual
35,909
Annual
35,909
Annual
FY21
FY19
FY20
FY21
75% percentile
To be tested at the end of FY21
>15%
>15%
>15%
14.2%
34,114
8%
Refer section 3.2.1
35,909
To be tested at the end of FY21
Grant year
Performance measure
Number of LTIs
available for
target
Testing
Testing year
Target
Performance
measure achieved
Board discretion LTIs due to vest
FY20
Relative TSR
36,629
3 year
EPS Growth
109,887
3 year
FY22
FY22
75% percentile
To be tested at the end of FY22
>15%
To be tested at the end of FY22
Board discretion has been applied to result in full achievement of the current year portion of LTI tranches that are tied to net profit after tax and
EPS growth performance hurdles. Refer section 3.2.1.
(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 – 1.6%
(c) Expected volatility – 30%
(d) Risk-free interest rate – 0.66%-0.91%
(e) Price of shares on grant date – $8.33-$9.16
(f)
Fair value of options – $2.06-$2.63
Refer to section 10.1 for additional information on the outcome of equity plans.
The performance measures for LTI grants made in FY20 are presented below. The performance targets, set out below, are such that they are all
considered to be challenging targets that, if met, will drive significant shareholder wealth creation.
Performance targets1
Performance period
Testing
Weighting (all KMP)
EPS growth
Relative TSR2
3 years
3 years
3 years
3 years
75%
25%
1 The performance targets to be achieved by the Executives are set out below:
Performance Metric
Growth <5%
5%<= Growth > 15%
Growth >= 15%
EPS growth
0% vest
50% vest at 5% growth with
linear vesting (50% to 100%)
up to 15% growth
100% vest
Performance Metric
Percentile < 50% >=50% <75%
Percentile>= 75%
Relative TSR2
0% vest
50% vest at 50% relative TSR
with linear vesting (50% to
100%) up to 75% relative TSR
100% vest
2Relative TSR targets are determined with reference to our peer group. Our peer group is defined as those constituent companies making up the ASX All Technology Index (XTX).
Refer to section 10.1 for additional information on the outcome of equity plans.
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2020 TechnologyOne Annual ReportTransforming business, making life simple
4.
4.1
Executive remuneration at TechnologyOne
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.
Performance targets
N/A.
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.
Target 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 FY20.
Table 1. Target CEO remuneration mix
(start of contract target)
Table 2. CEO Remuneration mix FY20
33%
34%
32%
30%
33%
38%
Fixed
STI
LTI
Fixed
STI
LTI
The below represents the target contracted remuneration mix for other Executive KMP in FY20 and demonstrates how remuneration mix changes
over time (Table 4).
Table 3. Target Executive KMP remuneration mix
(start of contract target)
Table 4. Executive KMP remuneration mix FY20
33%
34%
30%
32%
33%
38%
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 Di Marco’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 FY20
33%
34%
33%
Fixed
STI
LTI
0%
33%
67%
Fixed
STI
LTI
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2020 TechnologyOne Annual ReportTransforming business, making life simple 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.
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 FY20.
5.2
Short-term incentive
Executives participate in an 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.
In transitioning to a SaaS company, the use of NPBT as the sole basis for calculating our STI becomes even more relevant to driving long term
shareholder wealth. This is because NPBT growth in a SaaS company translates to growth in annual recurring revenue (ARR)1 which results in
guaranteed returns for the business in the future. Therefore, although the KMP are rewarded in the short term for increases in profitability, the Company
and shareholders continue to reap the benefits of that increase in profitability for the foreseeable future.
Worked 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)
LTI component
STI target
$300,000 (or 33% of the package with adjustments in future years)
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/$40m (or 0.75% of profit)
Increase in profit
12% per annum
CPI
STI target as a % of NPAT
1%
15%
Year
1
2
3
Fixed
Profit target ($m)
Actual profit ($m)
300,000
303,000
306,030
40.00
44.80
50.18
38.96
43.63
48.87
STI target(STI % x profit
target ($))
Actual STI (STI% x actual
profit ($))
300,000
336,000
376,320
292,200
327,225
366,525
STI%
0.75%
0.75%
0.75%
Award vehicle
Cash
5.3
Long-term incentives (LTI)
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, 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 is 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.
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.
For LTI grants issued prior to the end of FY19, performance is measured over a three-year performance period with individual and Company
targets tested 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. For LTI grants issued during FY20 and onwards, performance is measured at the end of a three-year
performance period only (i.e. no annually tested LTI measures). This is consistent with best practice and further aligns our LTI plan with the creation
of long-term shareholder wealth.
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 with an annual target, 1/3 of the relevant tranche is tested in accordance with annual performance, however, the LTI will
not vest until the end of the overall three-year performance period.
For accounting purposes, the expense is recognised in according with AASB 2 Share Based Payments over the three year period.
84
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2020 TechnologyOne Annual ReportTransforming business, making life simple Feature
Description
Feature
Description
Performance measures for grants
issued for FY18 and prior years
Grants made prior to FY19 are tested against the targets set at the time of grant. Those measures are outlined below:
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.
Board discretion
In situations where the Vesting Conditions are not met due to factors beyond the control of the employee (eg global pandemic, trade restrictions,
war, large-scale natural disasters), the Board has discretion to increase or decrease the number of LTIs vesting
The Board retains sole discretion to determine the amount and form of any award that may vest (if any) to prevent any unintended outcomes, or in
the event of a corporate restructuring or capital event.
The Board has the discretion to apply an Individual Performance Factor (IPF) to “top up” the number of vesting LTIs where a performance hurdle
in a Vesting Condition has not been met for reasons outside of the employee’s control, or to take into consideration exceptional performance or
contribution by an employee. The Board has the authority to increase the number of options vesting by up to 100% of the LTIs in the original grant.
The total number of LTIs earned across all performance targets by an executive cannot exceed the total number of LTIs in a grant.
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.
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.
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.
Change of control
Cessation of employment
Expiry
Re-testing
Clawback
Margin loans
5.3.2 Deferred retention bonus
Feature
Opportunity
Award vehicle
Cap
Opportunity
We 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.
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.
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
3 years
3 years
3 years
3 years
3 years
3 years
Annual3
Annual3
Annual3
Annual3
Annual3
Annual3
3 years4
50%
-
-
-
17%
16%
17%
50%
30%
10%
10%
-
-
-
2The performance target has to be achieved for the Executive to meet their LTI target. These targets are set out below:
Performance metric
Performance target
NPAT growth
(i) If equal to or greater than 15%, 100% will vest
(ii) If between 10% and 15%, 50% will vest at 10% and in linear increments to 15%, up to 100%
vesting
(iii) If below 10% growth, no options vest
License fee growth – APAC
(i) If equal to or greater than 15% 100% will vest
(ii) If between 8% and 15%, 50% will vest in linear increments to 15%, up to 100% vesting
(iii) If below 8% growth then no options vest
Sales operating expense growth – APAC
(i) If equal to or lesser than 8% 100% will vest
(ii) If between 8% and 9%, 50% will vest in linear increments to 8%, up to 100% vesting
(iii) If greater than 9% growth then no options vest
Customer retention by ASM value - APAC
(i) If equal to or greater than 99%, 100% will vest
(ii) If less than 99%, 0% will vest
Customer retention by ASM value
(i) If equal to or greater than 99%, 100% will vest
(ii) If less than 99%, 0% will vest
Operating cashflow/NPAT
(i) If equal to or greater than 100%, 100% will vest
(ii) If between 95% and 100%, 50% will vest in linear increments to 100%, up to 100% vesting
(iii) If below 95% growth then no options vest
Company profit before tax margin growth
(i) If equal to or greater than 100BP, 100% will vest
(ii) If between 50BP and 100BP, 50% will vest at 10% and in linear increments to 100BP, up to 100%
vesting
(iii) If below 50% growth then no options vest
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 is a mid and stretch target. 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%
0%
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.
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2020 TechnologyOne Annual ReportTransforming business, making life simple 5.4
Detail of Executive remuneration and performance
Adrian Di Marco
Position
Executive Chairman and Chief Strategy and Innovation Officer
Remuneration mix
FY20 Actual
$507,556
FY20 Target
$507,556
$1,052,397
$1,119,695
Fixed
STI
LTI
FY19 Actual
FY19 Target
$502,531
$502,531
$973,648
$975,373
Edward Chung
Position
Chief Executive Officer
Remuneration mix
FY20 Actual
$533,068
FY20 Target
$533,068
$674,824
$716,713
$563,556
$563,556
Fixed
STI
LTI
FY19 Actual
FY19 Target
$527,790
$527,791
$623,229
$454,744
$632,143
$490,734
Fixed remuneration
Base salary
Directors’ fees
Superannuation
2020
$
2019
$ Notes
513,058
507,978
-
-
20,010
19,812
Fixed remuneration
Base salary
Chairman's fees
Superannuation
2020
$
2019
$ Notes
356,309
172,171 The base salary represents the amount earned for the role of Chief Strategy and Innovation Officer
310,548 The Chairman's fees for the current year has been benchmarked in line with the Group's peers
131,237
20,010
19,812
Total fixed remuneration
533,068
527,790 The CEO's fixed remuneration has increased by only 1%.
Total fixed remuneration
507,556
502,531 The Executive Chairman’s fixed remuneration has increased by only 1%.
STI
1,052,397
973,648 The STI relates to the role of Chief Strategy and Innovation Officer.
LTI new scheme
Fair value of share options
recognised
Fair value of share options forfeited
Fair value of EPRs recognised
Fair value of EPRs forfeited
Fair value of deferred retention
bonus recognised (refer section
5.3.2)
Fair value of LTI recognised
-
-
-
-
-
-
-
-
-
-
-
-
Total remuneration
1,559,953
1,476,179
% 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
6%
6%
-
-
10%
10% Total remuneration has grown by 6%, less than reported net profit after tax growth of 8%.
-
-
STI
LTI new scheme
Fair value of share options
recognised
Fair value of share options forfeited
Fair value of EPRs recognised
Fair value of EPRs forfeited
Fair value of deferred retention
bonus recognised (refer section
5.3.2)
674,824
623,229
339,328
229,828
-
-
-
(3,261)
-
-
108,171
51,936
FY19 amount includes one third of the FY19 award value. FY20 amount includes one third of
the FY19 award plus one third of the FY20 award value.
The growth shown does not represent growth in remuneration awarded or realised.
Fair value of LTI recognised
447,499
278,503
LTI old scheme
Fair value of share options
recognised
116,057
176,241
Total remuneration
1,771,448
1,605,763
% growth on prior year excluding LTI
and termination benefits
% growth on prior year including LTI
and termination benefits
5%
10%
9%
Total remuneration, excluding LTI and termination benefits, has grown by 5%, less than
reported net profit after tax growth of 8%.
15%
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2020 TechnologyOne Annual ReportTransforming business, making life simple
Stuart MacDonald
Position
Chief Operating Officer
Remuneration mix
FY20 Actual
$446,944
FY20 Target
$446,944
$461,130
$489,754
$378,629
$378,629
Fixed
STI
LTI
FY19 Actual
FY19 Target
$442,519
$442,519
$423,476
$325,142
$429,533
$384,689
Fixed remuneration
Base salary
Director's fees
Superannuation
2020
$
2019
$ Notes
426,934
422,707
-
-
20,010
19,812
Total fixed remuneration
446,944
442,519 The COO's fixed remuneration has increased by only 1%.
STI
LTI new scheme
Fair value of share options
recognised
Fair value of share options forfeited
Fair value of EPRs recognised
Fair value of EPRs forfeited
Fair value of deferred retention
bonus recognised (refer section
5.3.2)
461,130
423,476
235,508
234,421
-
69,404
-
-
58,438
(3,007)
73,717
35,290
Fair value of LTI recognised
378,629
325,142
Total remuneration
1,286,703
1,191,137
FY19 amount includes one third of the FY19 award value. FY20 amount includes one third of
the FY19 award plus one third of the FY20 award value.
The growth shown does not represent growth in remuneration awarded or realised.
% growth on prior year excluding LTI
and termination benefits
% growth on prior year including LTI
and termination benefits
5%
8%
8%
Total remuneration, excluding LTI and termination benefits, has grown by 5%, less than
reported net profit after tax growth of 8%.
18%
Paul Jobbins
Position
Chief Financial Officer
Remuneration mix
FY20 Actual
FY20 Target
$247,250
$247,250
$296,750
$310,167
$220,185
$220,185
Fixed
STI
LTI
FY19 Actual
$206,250
$251,625
$94,940
FY19 Target
$206,250
$259,341
$96,519
Fixed remuneration
Base salary
Director's fees
Superannuation
2020
$
2019
$ Notes
227,240
186,438
-
-
20,010
19,812
Total fixed remuneration
247,250
206,250
The increase from FY19 to FY20 reflects that FY19 was not a full year and that the CFO’s fixed
remuneration was increased by 10% for FY20.
STI
LTI new scheme
Fair value of share options
recognised
Fair value of share options forfeited
Fair value of EPRs recognised
Fair value of EPRs forfeited
Fair value of deferred retention
bonus recognised (refer section
5.3.2)
296,750
251,625
174,487
-
-
-
77,984
(4,013)
-
-
45,698
20,969
FY19 amount includes one third of the FY19 award value. FY20 amount includes one third of
the FY19 award plus one third of the FY20 award value.
The growth shown does not represent growth in remuneration awarded or realised.
Fair value of LTI recognised
220,185
94,940
Total remuneration
764,185
552,815
% growth on prior year excluding LTI
and termination benefits
19%
partial year
Prior year figures are not reflective of a full year. Mr Jobbins commenced employment on 30
October 2018.
% growth on prior year including LTI
and termination benefits
38%
partial year
Prior year figures are not reflective of a full year. Mr Jobbins commenced employment on 30
October 2018.
If Mr Jobbins had commenced employment on 1 October 2018, the FY20 growth on prior year, excluding LTI and termination benefits would have
been 9% compared to reported net profit after tax growth of 8%. The CFO’s fixed remuneration was increased by 10% for FY20.
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2020 TechnologyOne Annual ReportTransforming business, making life simple
FY21 aggregate fee pool and Non-Executive Director fees
It is proposed that the current fee pool remain unchanged for FY21,
capped at $1,500,000. Non-executive Director fees are set to increase
in line with CPI, as per Board policy.
8.
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
Ongoing
Ongoing
3 months
6 months
12 weeks
12 months
12 months
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 and Innovation Officer (as tabled below).
In FY20, the Chairman’s fixed remuneration consists of:
Role
Chairman
Cheif Strategy and Innovation Officer
Total fixed remuneration
Fixed remuneration
131,237
376,319
507,556
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 advisor in relation to the drafting of
this remuneration report.
7. Non-executive Director fees
Determination of Non-executive Director fees
In FY20, Board fees were set at $141,000 per Director, including
statutory superannuation contributions. This represents a 9%
increase on prior year and is in line with independent consultation.
The increase reflects a fee at the 50th percentile of comparable
companies by market capitalisation and further provides alignment
with market rates and previous statements to shareholders. 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. Fee increases
between independent reviews are capped at CPI.
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 26 February 2019. The increase in fee pool from
FY18 ($1,000,000) acknowledges additional Directors added to the
Board since the last review.
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.
Statutory remuneration
9.
The information in the table below is based on the statutory accounting fair value of remuneration earned for each KMP and does not represent
the value offered or realised.
The deferred retention bonus was introduced in FY19. The total value of the award is retained and will only be realised at the conclusion of the
two-year period following the end of the financial year, on the condition that the Executive KMP remains employed for the entire deferral period.
For accounting purposes, the expense in relation to this award is recognised over the total three-year deferral period. The value included in the
table below for FY19 represents one third of the FY19 award value. The value included for FY20 includes one third of the FY19 award value plus
one third of the FY20 award value. The growth seen in the table below does not represent growth in remuneration offered or realised.
Total statutory accounting fair value remuneration for Executives increased by 14% from FY19 as Chief Financial Officer, Paul Jobbins, was included
for only part of FY19. Total remuneration packages offered for continuing executives employed across both periods grew by 5%, below net profit
after tax growth of 8%.
Directors’ fees increased by 9% per Director on an annualised basis, in line with the agreed board policy.
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-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
141,000
9%
9%
129,553
141,000
9%
9%
129,553
141,000
9%
9%
129,553
141,000
9%
9%
129,553
141,000
9%
9%
129,553
141,000
9%
9%
129,553
141,000
87%
87%
75,573
82,250
N/A
N/A
-
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)
C Rosenberg (Non-
executive Director)1
P Ball (Non-Executive
Director)2
2020
2019
2020
2019
2020
2019
2020
2019
2020
2019
2020
2019
2020
2019
2020
2019
92
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2020 TechnologyOne Annual ReportTransforming business, making life simple
s
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Short-term employee benefits
n
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m
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$ T
i
$
Name
Executives
A Di Marco
(Executive Chairman)3
E Chung
(Chief Executive Officer)
S MacDonald
(Chief Operating Officer)
P Jobbins (Chief
Financial Officer)4
2020
356,309
131,237
20,010
507,556
1,052,397
2019
172,171
310,548
19,812
502,531
973,648
2020
513,058
2019
507,978
2020
426,934
2019
422,707
2020
227,240
2019
186,438
-
-
-
-
-
-
20,010
533,068
674,824
19,812
527,790
623,229
20,010
446,944
461,130
19,812
442,519
423,476
20,010
247,250
296,750
19,812
206,250
251,625
Total KMP
2020
1,523,541
131,237
80,040
1,734,818
2,485,101
2019
1,289,294
310,548
79,248
1,679,090
2,271,978
Total Senior Executives
2020
1,523,541
1,107,721
172,806
2,804,068
2,485,101
2019
1,289,294
1,089,442
153,245
2,531,981
2,271,978
1Mr Rosenberg was appointed on 27 February 2019.
2Mr Ball was appointed on 2 March 2020.
Long-term incentives
s
u
n
o
b
n
o
i
t
n
e
t
e
r
d
e
r
r
e
f
e
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$
-
-
s
n
o
i
t
p
o
e
r
a
h
s
f
o
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u
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l
e
c
n
a
m
r
o
f
r
e
p
f
o
e
u
a
$ V
l
-
-
108,171
455,385
51,936
402,808
r
a
e
y
r
o
i
r
p
n
o
h
t
w
o
r
g
$ %
I
T
L
l
c
x
e
r
a
e
y
r
o
i
r
p
n
o
h
t
w
o
r
g
$ %
I
T
L
l
c
n
i
$
s
t
h
g
i
r
$
l
a
t
o
T
-
-
-
-
1,559,953
6%
6%
1,476,179
1,771,448
5%
10%
1,605,763
73,717
235,508
69,404
1,286,703
5%
8%
35,290
234,421
55,431
1,191,137
45,698
174,487
20,969
73,971
-
-
764,185
19%
38%
552,815
227,586
865,380
69,404
5,382,289
7%
12%
108,195
711,200
55,431
4,825,894
227,586
865,380
69,404
6,451,539
10%
14%
108,195
711,200
55,431
5,678,785
-
-
-
-
-
-
-
-
-
-
-
-
3Mr Di Marco was offered an LTI of $400K which he declined in the 2019/2020 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 6% on the prior year, due to his fixed remuneration being up 1% and his STI up 8% in
line with company profit.
4Mr Jobbins commenced employment on 30 October 2018.
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 and EPRs issued under the new plan are outlined in the tables below.
Options
2020
Name
Edward Chung
Stuart MacDonald
Paul Jobbins
Opening balance of
share options
Number of options
granted during the
period
Number of options
exercised during the
period
Number of options
forfeited during the
period*
Closing balance of
share options
Vested and
exercisable
591,753
697,197
215,456
264,639
167,396
146,516
-
(271,137)
-
(13,931)
(54,227)
-
842,461
539,229
361,972
402,758
371,833
-
Executive Performance Rights
2020
Name
Edward Chung
Stuart MacDonald
Paul Jobbins
Opening balance of
EPRs
Number of EPRs
granted during the
period
Number of EPRs
exercised during the
period
Number of EPRs
forfeited during the
period*
Closing balance
of EPRs
Vested and
exercisable
-
46,885
-
-
-
-
-
-
-
-
-
-
-
46,885
-
-
-
-
Unvested
439,703
167,396
361,972
Unvested
-
46,885
-
*Options and EPRs forfeited during the period, are due to non-achievement of performance targets set by the Board for 2020. The Board is
focused on ensuring that management remuneration and shareholder value are aligned by setting performance targets that create long-term
shareholder wealth.
For details of grants under the previous EOP plan, please refer to sections 10.2 and 10.3.
10.2
Quarantined Executive Option Plan (EOP) (now
superseded)
Share options were granted to Executives by the Board based on the
option plan approved by the Board.
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.
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 31 to the
financial statements.
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2020 TechnologyOne Annual ReportTransforming business, making life simple
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 offered LTIs under the new LTI plan.
The numbers of options over ordinary shares issued under the quarantined plan and held during the year is set out below.
2019
Name
Directors of TechnologyOne Limited
Balance at start of the year
Purchased during the year
Sale during the year
Balance at the end of the year
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
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
-
-
10.6
Loans to Key Management Personnel
There have been no loans to Directors or Executives during the financial year (2019 - 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.
Edward Chung is the only current Executive KMP with LTIs issued under this plan.
2020
Name
Balance at start of
the year
Granted as
compensation
Exercised
Forfeited
Balance at the end
of the year
Vested and
exercisable
Edward Chung
334,000
-
(167,000)
-
167,000
-
Unvested
167,000
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 51,670,650 shares representing 16% 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.
2020
Name
Directors of TechnologyOne Limited
A Di Marco
R McLean
J Mactaggart
K Blinco
R Anstey
Dr J Andrews
S Doyle
C Rosenberg
P Ball
2020
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
27,378,500
111,000
38,902,500
200,000
25,500
30,600
12,375
27,533
9,000
-
-
-
-
-
-
5,905
-
9,000
(7,000,000)
(41,263)
(8,000,000)
-
-
-
-
-
20,378,500
69,737
30,902,500
200,000
25,500
30,600
18,280
27,533
18,000
Balance at start of the year
566,000
-
-
Received during
the year on the
exercise options
167,000
271,137
-
Sale during the year
Balance at the end of the year
-
(271,137)
-
733,000
-
-
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2020 TechnologyOne Annual ReportTransforming business, making life simple
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.
• Setting the highest business standards and code of ethical
behaviour.
• Overseeing the establishment and implementation of the risk
management system, and annually reviewing its effectiveness.
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.
The Technology One Board routinely considers industry governance
initiatives in consideration of their benefit to the Company and its
many stakeholders. The Board has adopted the 4th Edition of the ASX
Corporate Governance Principles and Recommendations.
The Corporate Governance Statement, as well as supporting
documents are available on the Company’s internet site: www.
technologyonecorp.com/company/investors/corporate-governance.
Board of Directors
The Board of the Company currently comprises nine Directors and
includes
Name
Position
Appointed
Adrian Di Marco
Executive Chairman - major shareholder
08/12/1999
• Decisions relating to the appointment or removal of the 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 and Governance Committee
• Audit and Risk Committee
• Remuneration Committee
Board papers are prepared for the Directors, containing detailed
operational reports from each region and department in the Company,
highlighting:
Ronald McLean
Non-Executive Director – independent
08/12/1999
John Mactaggart
Non-Executive Director - major shareholder
08/12/1999
• Operational performance.
• Initiatives undertaken/completed.
Kevin Blinco
Non-Executive Director - independent
01/04/20041
• Identified problems/risks and proposed solutions.
Richard Anstey
Non-Executive Director – independent
02/12/2005
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
Peter Ball
Non-Executive Director - independent
02/03/2020
1Kevin Blinco will not seek re-election at the upcoming AGM (ceasing to be a Director, 23 February 2021).
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.
The Managing Director and Chief Executive Officer also prepare a
summary report that highlights:
• Financial performance year to date and forecast for the full year.
• 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.
• Input into and ratifying any significant changes to the Company.
• Adopting an annual budget and monitoring financial performance.
• Reviewing and ratifying systems of risk management, internal
compliance and control, codes of conduct and legal compliance
(ASX, ASIC, and ATO).
• Ensuring adequate internal controls exist and are appropriately
• Input into and subsequent approval of significant organisational
monitored for compliance.
structure/restructure.
• Ensuring significant business risks are identified and appropriately
• Review of the Managing Director, Chief Executive Officer and
managed.
• Selecting, appointing and reviewing the performance of the
Managing Director and Chief Executive Officer.
Company Secretary to the relevant Code of Conduct established
by the Board.
• Appointing and removing the Managing Director and Chief
Executive Officer and monitoring their performance respectively.
• 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 and Risk, Remuneration and Nomination and
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:
• Strategic and Commercial Acumen
• Finance and Taxation
• Risk and Compliance
• IT and Communications Industry
• Software and Product Development
• Start-ups and Early Stage Investments
• Corporate Governance
• Sales and Marketing
• People, Culture and Conduct
• Executive Management and Leadership
• Listed Entities
• International Business
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 nine. The
Board may increase the number of Directors where it is felt that
additional expertise in specific areas is required. The Company
believes for its current size, a smaller Board allows it to be more
effective and to react quickly to opportunities and threats.
• The Board should be comprised of Directors with an appropriate
mix of skills, qualifications, expertise, experience and diversity.
The skills, experience and expertise which the Board considers
to be particularly relevant include those listed above. 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.
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2020 TechnologyOne Annual ReportTransforming business, making life simple 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 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 Peter Ball appointed in the 2020 Financial Year,
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.
The independence of the Directors is assessed annually in
accordance with the ASX Corporate Governance Principles and
Recommendations.
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 casual, 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.”
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 seek
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 will 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 which include, but are not limited to, Share Trading
Policy, Insider Trading Policy, Privacy Policy, Diversity Policy and Code
of Conduct.
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.
• 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.
• Oversee the ongoing development by management of an
enterprise-wide risk management framework for management of
material risks.
• Monitoring adherence of Board and Committees to policies and
• Periodically review the adequacy and effectiveness of the
procedures.
• Coordinating timely completion and despatch of Board and
Committee papers.
• Ensuring business at Board and Committee meeting is accurately
Company’s policies and procedures relating to risk management
and compliance.
• Make recommendations to the Board on key risk management
performance indicators and levels of risk appetite.
captured in the minutes.
• Oversight and development of the Company’s group taxation
• Helping to organise and facilitate induction and professional
matters.
development of Directors.
• Review of taxation governance processes, policies, control
Audit & Risk Committee
The Board has established an Audit & Risk Committee. The committee
is comprised of:
framework and reporting.
The number of meetings held during the years and the attendance of
the members is provided in the Annual Report.
The Audit and Risk Committee Charter is available on the Company’s
Name
Peter Ball (Chair)
Jane Andrews
Sharon Doyle
Kevin Blinco
Position
website.
Independent Non-Executive Director
Independent Non-Executive Director
Independent Non-Executive Director
Principles of the Audit
& Risk Committee
The committee operates in accordance with the following broad
Independent Non-Executive Director1
principles:
1Kevin Blinco will not seek re-election at the upcoming AGM (ceasing to be a Director, 23 February 2021).
The role of the committee is to:
• 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;
• Ensure the integrity in financial reporting (refer section below –
Safeguard Integrity in Financial Reporting).
• Provide a means of easy access to the Board for the external
auditors in order to assist them in performing their functions;
• 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.
• 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.
• Directly follow-up action where considered necessary.
• Relate any matters of concern to the Board.
• 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.
• TechnologyOne requires the rotation of the external audit partner
every five years. The Audit and 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
Jane Andrews (Chair)
Independent Non-Executive Director
Cliff Rosenberg
Ron McLean
Independent Non-Executive Director
Independent Non-Executive Director
• Ensure the Internal Audit Function maintains a high standard of
The role of the committee is:
performance
• To advise the Board with regard to the Company’s broad policy for
• Oversight of the process to ensure the independence and
Executive and Director remuneration.
competence of the Company’s external auditors.
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2020 TechnologyOne Annual ReportTransforming business, making life simple • To determine, on behalf of the Board, the individual remuneration
• Recommendation of, and undertaking the appropriate checks,
packages for Executives and Directors.
before for the appointment of new Directors.
• To give the Company’s Executives encouragement to enhance
• Recommendation of, and undertaking the appropriate checks, for
• 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.
the endorsement or non-endorsement of existing Directors.
• Is not directly associated with a substantial shareholder of the
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.
• 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.
• Oversight of ESG strategy and Sustainability Reporting.
• Oversee compliance with Modern Slavery Regulations.
The number of meetings held during the years and the attendance of
the members is provided in the Annual Report.
The Nomination and 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 committee should judge where to position the Company
• The Nomination and Governance Committee is entitled to seek
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.
• Performance related elements should form a significant proportion
of the package; should align interests with those of shareholders;
and should provide keen incentives.
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
Sharon Doyle
Jane Andrews
Independent Non-Executive Director
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 and 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.
the advice of an external consultant.
• The Nomination and Governance Committee will make
recommendations to the Board. The Board is responsible
to appoint the most suitable candidate, after receiving
recommendations from the Nomination and 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.
• The Board is responsible to either recommend/not recommend
the endorsement of a Director at the next Annual General
Meeting.
• 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 a
Director of TechnologyOne will also be provided.
• Directors (with the exception of the Managing Director who is
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)
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
• Chief Financial Officer
• Executives
• 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, Technology One has
developed a Whistle-blower Policy and Bribery and Corruption Policy.
The Whistle-blower 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 Technology One or have been raised
under the Bribery and 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 2020 and the
objectives are:
• Ensuring compliance with the published diversity policy
• Not less than 30% of the Board to be of each gender by 2025 (to
allow for the Board transition)
• 30% of all vacant Senior Management roles are to have at least
one female candidate shortlisted
• Diversity target – setting targets for the number of women in
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
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2020 TechnologyOne Annual ReportTransforming business, making life simple • Maintain existing educational programs that support diversity
including but not limited to induction, on boarding and leadership
programs delivered through the TechnologyOne Learning team
The Company’s 2020 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 and Risk Committee, and the
review and consideration of the accounts by the Audit and 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
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 and Risk
Committee. Management provides risk reporting to the Audit and Risk
Committee at each meeting.
The Board has received assurance from the CEO 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 expanded the role of the Audit Committee in 2017 to
include oversight of risk management and compliance functions and
as such is now referred to as the Audit and Risk Committee. The
Committee has performed an annual risk review and have identified a
number of key risk categories for the business.
Material Risks
• Ensuring that the Company’s external Auditor’s attend the
Human Risk
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
• Disclosure of the annual tax transparency statement
The Company has put the external audit services to tender in
2020, which is another example of how the Company expresses its
dedication to ensuring integrity of the financial reporting is maintained.
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
• When analysts are briefed on aspects of the Company’s
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.
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 steam of the company to work
with the business on any concerns raised, and by conducting half
yearly surveys of managers to identify any known issues. The Board is
provided with a summary of these issues as part of the Group Director
– People and Culture’s report tabled at each board meeting.
Key Risks
The company’s focus on risk management is primarily conducted
through the Audit and 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 and Privacy Risks
TechnologyOne has successfully completed the Information Security
Registered Assessors Program (IRAP) assessment for Protected
classified data for Federal Government SaaS customers. Systems
implemented to achieve IRAP accreditation benefit all our SaaS
customers with an increased cyber security posture and greater
certainty in a constantly evolving cyber security landscape. This
was achieved by leveraging the strong compliance and security
foundations established over recent years and is a testament
to TechnologyOne’s mature security practices, accountability
mechanisms and belief in continuous assessment and improvement.
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 Research and Development
Committee that reviews Software Release management, including
resourcing and development issues.
Insurance Risk
The Board of Technology One, 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 Technology One. Accounting
Standards and Company policies are reviewed on a regular basis
by the Audit and 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.
Technology One undertakes Internal Audits in accordance with the
Internal Audit schedule as approved by the Audit and Risk Committee.
These audits are undertaken by the Governance, Risk and Compliance
Team and reported directly through to the Audit and 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 and Risk Committee also oversee the Company’s
compliance program with relevant international standards (including
ISO 9000, 27000 series, SOC 1, 2 and 3).
Remuneration Principles
Technology One 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, Technology One 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.
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2020 TechnologyOne Annual ReportTransforming business, making life simple 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”. 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.
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.
On 23 May 2017, Mr Edward Chung was appointed as Chief Executive
Officer.
Mr Di Marco is not deemed 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.
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.
The following areas were considered by the Board in its 2020 annual
review:
• 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.
• 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 and 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.
Remuneration of the Board is assessed every three (3) years against
comparative data for Australian publicly listed companies 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:
• 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;
• For 50 days from the day following the release of the following
• By encouraging shareholders to attend and participate in the
information to the market:
- the half yearly financial statement
- the annual financial statement
- other reports relating to the financial performance or financial
status of the Company.
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 Executives 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 Executives must advise the Company Secretary of
any completed trades immediately and definitely no later than one
day after each transaction. This will allow the Company Secretary
sufficient time to notify the ASX of the change in shareholding within
the required period.
A register of Director’s holdings is made available for inspection at
every Board meeting.
This policy applies to Directors and Executives (including their
nominee companies) and the entities which they control.
For the purpose of this Policy, Executive 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’
c) any member of the Company’s Executive committee.
In addition to the policy for Directors and Executives, 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.
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;
• By disclosures forwarded to the ASX under the Company’s
continuous disclosure obligations;
• Through the Company’s website, under a special area called
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.
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.
106
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2020 TechnologyOne Annual ReportTransforming business, making life simple Voluntary Tax Transparency Report
Financial Statements
Consolidated income statement
For the year ended 30 September 2020
TechnologyOne has a strong commitment to transparency and
compliance. TechnologyOne supports the objectives of the
Government and the Board of Taxation to provide stakeholders with
additional information and confidence that a company is compliant
with their statutory obligations.
The information provided complies with the standard of disclosure
expected of ‘large businesses’ under the Voluntary Tax Transparency
Code.
The requirements of the Code are broken into Part A, which forms part
of the tax notes as referenced below and Part B as disclosed below.
The make-up of the respective parts is as follows:
(i) Part A:
• Effective company tax rates for our Australian and global
operations (Note 7). The effective tax rate of the Australian
Group for FY20 is 24.9%
• A reconciliation of accounting profit to tax expense and to income
tax payable (Note 7)
• Identification of material temporary and non-temporary differences
(Note 7)
(ii) Part B
• Tax policy, tax strategy and governance
• Information about international related party dealings
• A tax contribution summary of income tax paid.
Information in relation to the year ended 30 September 2020 is set
out below.
Our Approach to Tax
TechnologyOne has a tax governance framework which has been
approved by the Board. Tax falls under the oversight of the Audit
and Risk Committee.
Tax is one of a broad range of commercial factors taken into account
when assessing and undertaking investment activities.
TechnologyOne is conservative in its approach to tax risk.
TechnologyOne aims to achieve full compliance with tax obligations
in each tax jurisdiction in which it operates. In accordance with its
commitment to best practice corporate governance and a culture of
excellence, TechnologyOne will not enter into any arrangements that
may be regarded as tax evasion.
The Tax Risk Governance Policy includes a framework for the internal
escalation process for referring matters to the CFO. The CFO must
report any material tax issues to the Board. TechnologyOne will not
pursue aggressive tax positions or strategies or adopt positions that
are not able to be supported or defended in a court of law. Where the
tax law is unclear or subject to interpretation, advice is obtained and
when necessary the Australian Taxation Office (ATO) (or other relevant
tax authority) is consulted to ensure certainty.
TechnologyOne has a strong history of compliance and an open
engagement with relevant tax authorities. We seek to be co-operative
and transparent and to maintain collaborative relationships.
International related party dealings
TechnologyOne seeks to ensure all intercompany transactions are
undertaken in accordance with the arm’s length principle.
TechnologyOne has entered an Advanced Pricing Arrangements
(APA) with the Australian Taxation Office.
As an Australian headquartered company, we have created and
maintained significant intellectual property in Australia which has
been successfully utilised in our overseas operations. Our
engagement with the ATO through the APA process, seeks to
ensure Australia receives a commercial return for the use of
intellectual property by our overseas businesses. These returns
are taxable in Australia.
In addition, loans are made to and received from foreign controlled
entities for short term, medium term and long-term funding
requirements. As a large global group, these transactions assist with
managing cash flow and funding requirements.
Tax Contribution Summary
Below is a summary of the taxes paid, collected and remitted by
TechnologyOne to the relevant revenue authorities during the financial
year ended 30 September 2020.
Year ended 30 September 2020
Corporate income taxes
Fringe benefits taxes
Payroll taxes
Net GST/VAT tax
Employee taxes remitted
TOTAL
Consolidated Global
Group AUD
13,307,721.93
1,033,387.80
4,160,765.35
28,271,317.77
48,910,243.24
95,683,436.09
Revenue - SaaS and continuing business
Revenue - Legacy licence business
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
6
6
6
6
5(a)
7
30
30
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 2020
Profit for the year (from above)
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
2020
$’000
269,774
28,493
298,267
(19,130)
(19,479)
(38,609)
(3,259)
(18,312)
(18,638)
(8,019)
(5,296)
(119,615)
(3,305)
(1,495)
(177,939)
751
82,470
(19,525)
62,945
2019
$’000
241,790
43,204
284,994
(19,708)
(16,965)
(36,673)
(10,808)
(17,285)
(6,127)
(9,024)
(6,252)
(121,840)
(2,018)
(24)
(173,378)
1,446
76,389
(17,930)
58,459
Cents
Cents
19.75
18.43
19.61
18.30
2020
$’000
62,945
286
286
63,231
2019
$’000
58,459
1,199
1,199
59,658
108
109
The above consolidated statement of comprehensive income should be read in conjunction with the accompanying notes.
2020 TechnologyOne Annual ReportTransforming business, making life simple
Consolidated statement of financial position
as at 30 September 2020
Consolidated statement of changes in equity
For the year ended 30 September 2020
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
Right-of-use assets
Intangible assets
Capitalised development
Deferred tax assets
Contract acquisition costs
Total non-current assets
Total assets
LIABILITIES
Current liabilities
Trade and other payables
Provisions
Prepaid subscription revenue
Lease liability
Borrowings
Total current liabilities
Non-current liabilities
Provisions
Other non-current liabilities
Lease liability
Total non-current liabilities
Total liabilities
Net assets
EQUITY
Contributed equity
Other reserves
Retained earnings
Total equity
Notes
8
9
10
11
13
12
19
13
13
14
13
15
17
16
19
18
19
21
22
2020
$’000
125,244
10,851
37,396
22,051
397
8,077
2,956
2019
$’000
105,046
12,810
49,032
24,607
463
6,783
2,104
206,972
200,845
8,969
23,786
37,986
62,556
28,605
7,035
168,937
375,909
37,123
20,548
144,148
2,148
-
10,900
-
37,521
31,590
32,153
5,415
117,579
318,424
45,690
13,861
147,558
-
5
203,967
207,114
2,430
147
27,197
29,774
233,741
142,168
40,551
63,524
38,093
142,168
3,616
837
-
4,453
211,567
106,857
35,302
55,477
16,078
106,857
Notes
1(a)
23
21
31
Balance at 1 October 2019
AASB 16 opening adjustment
Adjusted opening balance
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 2020
Contributed
equity
$’000
Retained
earnings1
$’000
Dividend reserve
$’000
FOREX
reserve
$’000
Share option
reserve
$’000
Total
equity
$’000
35,302
-
35,302
-
-
-
-
-
5,249
-
-
5,249
40,551
16,078
199
16,277
-
62,945
62,945
(41,129)
-
-
-
-
27,905
-
27,905
-
-
-
41,129
(38,988)
-
-
-
(41,129)
38,093
2,141
30,046
1,850
-
1,850
286
-
286
-
-
-
-
-
-
25,722
106,857
-
199
25,722
107,056
-
-
-
-
-
-
3,305
2,315
5,620
286
62,945
63,231
-
(38,988)
5,249
3,305
2,315
(28,119)
142,168
2,136
31,342
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 2018
-
-
-
-
-
2,131
-
-
2,131
35,302
-
58,459
58,459
(55,139)
-
-
-
-
-
-
-
55,139
(35,850)
-
-
-
(55,139)
16,078
19,289
27,905
23
21
31
651
1,199
-
1,199
-
-
-
-
-
-
22,294
77,490
-
-
-
-
-
-
1,947
1,481
3,428
1,199
58,459
59,658
-
(35,850)
2,131
1,947
1,481
(30,291)
1,850
25,722
106,857
1Refer to note 1(a) for details regarding the application of the new accounting policy AASB 16 Leases.
The above consolidated statement of changes in equity should be read in conjunction with the accompanying notes.
The above consolidated statement of financial position should be read in conjunction with the accompanying notes.
110
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2020 TechnologyOne Annual ReportTransforming business, making life simple
Consolidated statement of cash flows
For the year ended 30 September 2020
Cash flows from operating activities
Receipts from customers (inclusive of GST)
Payments to suppliers and employees (inclusive of GST)
Interest received
Income taxes paid
Interest paid1
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
Net cash inflow / (outflow) from investing activities
Cash flows from financing activities
Proceeds from exercise of share options
Payments for principal repayments of lease liabilities1
Dividends paid to 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
1Refer to note 1(a) for details regarding the application of the new accounting policy AASB 16 Leases.
Notes
19
29
19
23
8
2020
$’000
340,405
(222,036)
353
(13,716)
(1,495)
103,511
(223)
(1,979)
(42,859)
(45,061)
5,248
(4,512)
(38,988)
(38,252)
20,198
105,046
125,244
2019
$’000
310,883
(223,124)
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
Notes to the consolidated financial statements
1.
Summary of significant
accounting policies
The financial report of Technology One Limited (the Company) for
the year ended 30 September 2020 was authorised for issue in
accordance with a resolution of Directors on 24 November 2020.
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.
Certain comparative items have been reclassified in the financial
statements to align with the 30 September 2020 year end disclosures.
i.
Compliance with IFRS
This financial report also complies with International Financial
Reporting Standards (IFRS) as issued by the International
Accounting Standards Board.
as at 1 October 2019. The weighted average incremental borrowing
rate applied was 4.78%. The right of use asset has been measured
either retrospectively as if the new standard has always been in place
or at an amount equal to the lease liability on transition, adjusted by
the amount of any prepaid or accrued lease payments relating to that
lease recognised in the balance sheet as at 30 September 2019.
The profile of the lease related expense has changed from being
included within the occupancy costs line of the consolidated income
statement as a rent expense to being made up of a depreciation
expense on the right-of-use asset and an interest expense on the
lease liability. Due to the transition option selected by the Group, the
occupancy costs line in the consolidated income statement is lower
than the prior corresponding period and the depreciation and finance
expense lines are higher than the prior corresponding period.
(i) Practical expedients applied
In applying AASB 16 for the first time, the Group has used the following
practical expedients permitted by the standard:
• relying on previous assessments on whether leases are onerous
applying AASB 137 as an alternative to performing an impairment
review – there were no onerous contracts as at 1 October 2019
• accounting for leases with a remaining lease term of less than 12
months as at 1 October 2019 as short-term leases
• making use of the recognition exemption for leases for which the
underlying asset is of low value
• excluding initial direct costs for the measurement of the right-of-
use asset at the date of initial application, and
• using hindsight in determining the lease term where the contract
contains options to extend or terminate the lease.
• The Group has also elected not to reassess whether a contract
is, or contains a lease at the date of initial application. Instead, for
contracts entered into before the transition date the Group relied
on its assessment made applying AASB 117 and Interpretation
4 determining whether an arrangement contains a Lease. The
types of leases relevant to the Group are property and equipment
leases.
ii. New accounting standards and interpretations
(ii) Measurement of lease liabilities
The above consolidated statement of cash flows should be read in conjunction with the accompanying notes.
AASB 16 Leases – Impact of adoption
AASB 16 Leases replaces AASB 117 Leases and is effective for the
Group for the current financial year beginning 1 October 2019. The
Group has adopted AASB 16 under the modified retrospective
approach and therefore comparatives of the 2020 reporting period
have not been restated. Accordingly, there is an adjustment to
opening retained earnings at 1 October 2019.
The standard 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 new standard a lease liability has been recognised,
representing the Group’s obligation to make lease payments and a
corresponding right of use asset has been recognised, representing
the lessee’s right to use the underlying leased asset.
The below is a reconciliation between the operating lease
commitment disclosed in the Group financial statements for the year
ended 30 September 2019 to the opening lease liability balance
recognised at 1 October 2019.
Operating lease commitment at 30 September 2019 as disclosed in
the Group's consolidated financial statements
Discounted using the weighted average incremental borrowing rate at
1 October 2019
Reconciling items
(Less) short-term leases recognised on a straight-line basis as an
expense
Add/(less) adjustment as a result of a different treatment of extension
and termination options
112
The lease liability has been measured as the present value of future
lease payments discounted at the lessees incremental borrowing rate
Lease Liabilities recognised as at 1 October 2019
1 October 2019
$'000
41,648
35,708
(156)
(2,735)
32,817
113
2020 TechnologyOne Annual ReportTransforming business, making life simple
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.
• All resulting exchange differences are recognised in other
comprehensive income
Revenue from these services is recognised as services are rendered,
typically in accordance with the achievement of contract milestones
and/or hours expended.
Of which are:
Current lease liabilities
Non-current lease liabilities
5,688
27,129
(iii) Measurement of right-of-use assets
On transition the associated right-of-use assets were measured
either retrospectively as if the new rules had always been applied, as
was done for the Group’s largest lease (HQ), or at an amount equal
to the lease liability on transition, adjusted by the amount of any
prepaid or accrued lease payments relating to that lease recognised
in the balance sheet as at 30 September 2019. This choice in the
measurement of the right of use asset on transition to AASB 16 is
allowable within the standard on a lease by lease basis under the
modified retrospective approach.
(iv) Adjustments recognised in the statement of financial
position at 1 October 2019
The change in accounting policy affected the following balance sheet
items as at 1 October 2019:
Statement of financial
position increase/
(decrease)
Assets
30 September
2019
AASB 117 reported
($000s)
Opening balance
adjustment
($000s)
1 October 2019
AASB 16 restated
($000s)
Right-of-use assets
-
28,686
12,810
32,153
-
-
47,290
837
(610)
1,239
5,688
27,129
(3,041)
(660)
28,686
12,200
33,392
5,688
27,129
44,249
177
Prepayments
Deferred tax (net)
Liabilities
Lease liability- current
Lease liability- non current
Trade and other payables
Other non-current liabilities
Equity
Equity
(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 2020 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 2020, the Group had 61,173 treasury shares (2019: 116,630).
Treasury shares are shares in the Group that are held by the
Employee Share Trust for the purpose of issuing shares under the
TechnologyOne employee share scheme.
(c) Foreign currency translation
(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.
106,857
199
107,056
(ii) Transactions and balances
(v) New Group accounting policy - AASB 16 Leases
The accounting policy for leases has been set out below in section
(g).
Interpretation 23 – Uncertainty over Income Tax Treatments
AASB Interpretation 23 Uncertainty over Income Tax Treatments
also became effective for the group from 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. This has not had a material impact on the Group.
(vi) Issued but not yet effective
No new standards have been issued that are not in effect for the
Group.
(vii) 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
Foreign currency transactions are translated into the functional
currency using the exchange rates prevailing at the dates of the
transactions. Foreign exchange gains and losses resulting from the
settlement of such transactions and from the translation at year end
exchange rates of monetary assets and liabilities denominated in
foreign currencies are recognised in the income statement.
(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)
(d) Revenue recognition
The Group has the following key revenue categories:
4. Initial license fees
1. SaaS Fees
2. Annual Licence fees
3. Consulting Services
4. Initial Licence Fees
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. Included within this category is revenue
from contracts for annual SaaS licences as well as Platform services
associated with initial licence fees. The Group considers that SaaS
licence 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 received
or receivable are recognised as prepaid subscription revenue in
the consolidated statement of financial position. Refer to note 16 for
details of prepaid subscription revenue.
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.
2. Annual license fees
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 Annual Licence Fees are typically annual
within 14 to 30 days of invoice. Invoiced amounts are reflected in trade
receivables until paid.
Unsatisfied performance obligations in respect of Annual Licence fees
are disclosed as prepaid subscription revenue in the consolidated
statement of financial position. Refer to note 16 for details of prepaid
subscription revenue.
3. Consulting services
Consulting services includes services for licenced software and
project services revenue.
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 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 delivery), there are no unsatisfied performance obligations in
respect of Initial Licence Fees.
The Group considers the effects of variable consideration, reviews
the contracts to identify if a significant financing component exists
and considers the standalone pricing of the initial licence fees when
allocating the transaction price of the contract to the performance
obligation.
Associated contract balances
Under AASB 15, the timing of revenue recognition, customer invoicing
and cash collections results in the recognition of trade receivables,
contract asset and prepaid subscription revenue (contract liability)
on the Group’s Consolidated statement of financial position. At 30
September 2020, the statement of financial position shows a current
liability balance of $204m (30 September 2019: $207m) 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
Annual Licence Fees which will be recognised in future periods, and
not a future cash outflow, this balance does not impact the Group’s
ability to meet its short-term obligations as and when they fall due.
Revenue Groups disclosed in the consolidated income
statement
The Group has the following revenue groups:
1. Revenue – SaaS and continuing business
The Group defines continuing business as those revenue streams that
form part of our growth strategy. Namely this includes SaaS, annual
licence fees and consulting services.
2. Revenue – Legacy licence business
The legacy licence fee business encompasses the sale of initial
licences which will continue to decline as our customers transition to
SaaS, growing the SaaS and continuing business revenue. Included
within this revenue group is annual licence fees recognised from the
date the associated initial licence is delivered until the end of the first
financial year post signing.
(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.
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2020 TechnologyOne Annual ReportTransforming business, making life simple
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
(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
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
recognised 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.
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 in equity.
Uncertain tax positions addressed by IFRS Interpretation 23
Uncertainty over Income Tax Treatment are disclosed in Note 1(a)(v).
(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.
Operating 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.
The lease payments above are discounted using the interest rate
implicit in the lease if that rate is readily determinable. This is not
the case for the Group’s current leases. When the interest rate
implicit in the lease is not readily determinable AASB 16 requires the
use of the incremental borrowing rate to calculate the present value
of the lease payments. This rate is the rate of interest that a lessee
would have to pay to borrow the funds necessary to purchase the
right of use asset, over a similar term and with a similar security, in
similar economic environment.
The most appropriate rate to use as a starting point in determining
the incremental borrowing rate would be the interest rate incurred
on existing borrowings. However, the Group does not have any
existing borrowings. In the absence of this the Group uses the
swap curve with a corresponding rating as the starting point
in determining the incremental borrowing rate. In line with the
accounting standard the Group adjusts the swap curve rate for the
term of the leases, the value of the leases and the creditworthiness
of the Group.
Once the lease liability has been recognised on the balance sheet
the periodic lease repayments are allocated between an interest
and a principal element. The interest is charged to profit or loss
over the lease period so as to produce a constant periodic rate
of interest on the remaining balance of the liability. Variable lease
payments that do not depend on an index or a rate are recognised
as expenses in the period in which the event or condition that
triggers the payment occurs.
(g) Leases
Right-of-use asset
AASB 16 supersedes AASB 117 Leases and IFRIC 4 determining
whether an arrangement contains a Lease. The standard sets out
the principles for the recognition, measurement, presentation and
disclosure of leases and requires lessees to recognise most leases
on the balance sheet.
The Group’s lease portfolio primarily consists of property leases.
Lease terms are negotiated on an individual basis and contain a
range of different terms and conditions.
Lease contracts may contain both lease and non-lease components.
The Group allocates the consideration in the contract to the lease
and non-lease components based on their relative stand-alone
prices.
Lease liability
The lease liability is initially measured at the present value of
outstanding lease payments (including those to be made under
reasonably certain extension options). The payments used in this
calculation include the following:
• fixed payments (including in-substance fixed payments), less any
lease incentives receivable
• variable lease payment that are based on an index or a rate,
initially measured using the index or rate as at the commencement
date
• amounts expected to be payable by the group under residual
value guarantees
• the exercise price of a purchase option if the group is reasonably
certain to exercise that option and
• payments of penalties for terminating the lease, if the lease term
reflects the group exercisingthat option.
The right-of-use asset is initially calculated as being equal to the
lease liability and then adjusted for the following:
• Lease payments made on or before the commencement date less
any incentives received
• Any initial direct costs, and
• An estimate of restoration costs.
This right-of-use asset is then depreciated on a straight-line basis
over the calculated lease term.
Right-of-use assets are also subject to impairment testing under
AASB 136 Impairment of assets.
Short term and low value assets
FVPL
The Group applies the short-term lease recognition exemption to
its short-term leases (i.e., those leases that have a lease term of 12
months or less from the commencement date and do not contain a
purchase option). Payments associated with short-term leases and all
leases of low-value assets are recognised on a straight-line basis as
an expense in profit or loss.
(h) Variable costs
The components to variable costs are made up of:
- Costs incurred in obtaining a licence fee contract. These are
expensed as incurred.
- Costs incurred in fulfilling the contract with a customer are
capitalised if the requirements in AASB 15 are fulfilled and are then
expensed in line with the satisfaction of the related performance
obligation.
The financial instrument is measured at fair value. Changes in fair
value are recognised 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 Financial
Instruments. 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 credit losses for short term receivables.
116
117
2020 TechnologyOne Annual ReportTransforming business, making life simple 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 6-month 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 to the extent that the related revenue has been recognised
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. Trade receivables are generally due for settlement within 14
to 30 days.
The Group uses the simplified approach to measuring expected credit
losses. The movement in 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 (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 and amortisation expense' line item. Intangible
assets with finite lives are tested for impairment where an indicator
of impairment exists. Useful lives are examined on an annual basis
and adjustments, where applicable, are made on a prospective basis.
Intellectual Property/Source Code is amortised on a straight line
basis over 3-8 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
Development is only to be capitalised if the recognition requirements
have been fulfilled and a benefit of more than 12 months is 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;
become available for use. At the point in which the products 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.
(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.
b) Intention to complete the intangible asset and use or sell it;
(ii) Long service leave
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;
f) 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
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 31.
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 per 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) and equivalent
overseas value added taxes
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.
118
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2020 TechnologyOne Annual ReportTransforming business, making life simple (c) Credit risk
(e) Fair value measurements
(i) Impairment of goodwill and other assets
Financial risk management
2.
Financial instruments recognised in the statement of financial position
include; cash and cash equivalents, trade receivables, lease liabilities
and trade payables.
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.
The Group holds the following financial instruments:
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 expected credit loss 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.
The below table represents the financial assets under note 2(c) and
the liquidity risk of financial liabilities referred to in note 2(d).
Less than
12 months
$’000
Between
1 and 5
years
$’000
Over 5
years
$’000
Total
contractual
cash
flows
$’000
2020
$’000
2019
$’000
At 30 September 2020
Financial assets
Cash and cash equivalents
125,244
105,046
Trade and other receivables
37,396
49,032
Total
162,640
154,078
Financial liabilities
Trade and other payables
37,123
37,123
45,467
Borrowings
Contingent consideration
-
-
29,345
5
223
-
Lease liabilities
2,341
28,508
3,566
Total
39,464
28,508
3,566
66,468
45,695
Net inflow / (outflow)
123,176
(28,508)
(3,566)
Financial assets
Cash and cash equivalents
Trade and other receivables
Financial liabilities
Trade and other payables
Borrowings
Contingent consideration
Lease liability
(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:
2020
USD
$’000
2020
PGK
$’000
2019
USD
$’000
2019
PGK
$’000
Trade Receivables
-
1,650
112
592
At 30 September 2019
Financial assets
Cash and cash equivalents
Trade and other receivables
Total
Financial liabilities
Trade and other payables
45,467
Borrowings
Contingent consideration
Total
Net inflow / (outflow)
5
223
45,695
108,383
125,244
37,396
162,640
-
-
105,046
49,032
154,078
-
-
-
-
-
-
-
-
-
-
-
-
125,244
37,396
162,640
37,123
-
-
34,415
71,538
91,102
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
105,046
49,032
154,078
45,467
5
223
45,695
108,383
Less than
12 months
$’000
Between
1 and 5
years
$’000
Over 5
years
$’000
Total
contractual
cash
flows
$’000
Contingent consideration is classified as Level 3. 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.
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.
Contingent Consideration
Opening balance at 1 October 2019
Payments (JRA)
Reduction in contingent consideration (JRA)
Closing balance at 30 September 2020
Contingent Consideration
Opening balance at 1 October 2018
Payments (DMS and JRA)
Reduction in contingent consideration (JRA)
Closing balance at 30 September 2019
2020
$’000
223
(223)
-
-
2019
$’000
11,810
(4,059)
(7,528)
223
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.
(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.
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 31.
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 due to not meeting the non-market conditions or
service conditions.
(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) Revenue contracts
Initial licence fee contracts entered into by the Group require
judgement in the identification and separation of the contract
components related to software licence fees, annual licence fees
and platform services. The Group assesses each customer contract
individually and revenue is assigned to each component based upon
the stand alone fair value of the component relevant to the total
contract value.
(v) 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.
(vii) AASB 16 Leases
The Group is required to determine the measurement of lease
liabilities based on the present value of the remaining lease payments,
discounted using the interest rate implicit in the lease, if readily
available. Where the implicit interest rate is not readily available the
Group is required to use the Group’s incremental borrowing rate.
Judgement is required to determine the appropriate discount rate to
apply. The discount rate must reflect the rate of interest that a lessee
would have to pay to borrow the funds necessary to purchase the
right-of-use asset, over a similar term and with a similar security, in a
similar economic environment.
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2020 TechnologyOne Annual ReportTransforming business, making life simple
Intersegment revenue
(2,038)
2,208
Software
$'000
Consulting
$’000
Corporate
$’000
384
-
367
(170)
(53,819)
(6,642)
60,461
Total
$’000
751
-
-
180,312
58,048
60,658
299,018
2020
Other income
Net royalty
Total revenue
Expenses
Total external expenses
(127,681)
(44,393)
(44,474)
(216,548)
Profit before tax
52,631
13,655
16,184
82,470
(c) Other segment information
(i) Segment revenue
5.(a) Other income
Australia
New Zealand & Asia Pacific*
APAC total
United Kingdom
2020
$'000
2019
$'000
Other income
250,586
240,580
Foreign exchange gains / (losses)
36,533
35,416
Interest received
287,119
275,996
Other*
11,899
10,444
Total other income
Total segment revenues from sales to external customers
299,018
286,440
2020
$’000
2019
$’000
(3)
353
401
751
(2)
634
814
1,446
(19,525)
62,945
375,909
233,741
(18,638)
(ii) Segment assets
Australia
New Zealand & Asia Pacific*
APAC total
United Kingdom
Total Revenue
299,018
286,440
*Other income for 2019 includes a gain of $7.5m recognised on reduction of contingent consideration provision
relating to the acquisition of JRA and an impairment of $7.3m recognised in relation to Intangible assets
obtained through the acquisition of JRA.
6.
Expenses
Profit before income tax includes the
following specific expenses:
2020
$’000
2019
$’000
2020
$'000
2019
$'000
319,750
254,550
19,834
21,128
339,584
275,678
7,720
10,593
Depreciation
• Corporate – includes all corporate functions.
Intersegment revenue
(1,399)
1,433
171,792
56,454
58,194
286,440
Revenue from contracts with customers
Total external expenses
(120,581)
(46,562)
(42,908)
(210,051)
SaaS fees*
Annual licence fees**
Consulting services*
2020
$’000
2019
$’000
Wages and salaries
Defined contribution plan expense
106,171
81,466
Payroll tax
101,121
98,725
Provision for employee benefits
62,482
61,599
Other
Software
$'000
Consulting
$’000
Corporate
$’000
Total
$’000
81,466
101,307
-
-
-
61,599
40,622
543
-
-
-
-
-
-
903
(34)
81,466
101,307
61,599
40,622
1,446
-
-
(50,747)
(6,578)
57,325
51,211
9,892
15,286
76,389
(17,930)
58,459
318,424
211,567
(6,127)
Total segment assets
347,304
286,271
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
5. Revenue
Plant and equipment
Total depreciation
Amortisation
Other intangible amortisation
Contract acquisition costs amortisation
Capitalised development amortisation
Amortisation of right-of-use assets
Total amortisation
Total depreciation and amortisation
Revenue - SaaS and continuing business
269,774
241,790
Total employee costs
Initial licence fees**
27,342
40,622
Share-based payments
Annual licence fees associated with licence fees*1
1,151
2,582
Revenue - Legacy licence business
28,493
43,204
Occupancy costs1
Finance expense1
Total revenue from contracts with customers
298,267
284,994
Profit and loss movement in expected credit loss
*Recognised over time / as services are rendered
**Recognised at a point in time
1 This represents revenue on annual licence fees recognised from the date the associated initial licence is
delivered until the end of that first financial year post delivery.
Foreign exchange (gain) / loss
(Gain) / Loss on sale of property, plant and equipment
3,905
3,710
3,905
3,710
346
242
2,493
1,620
6,103
5,791
14,733
18,638
555
-
2,417
6,127
91,622
96,734
9,919
6,366
1,701
7,330
5,740
745
10,007
11,291
119,615
121,840
3,305
2,018
3,259
10,808
1,495
34
509
(38)
24
942
(294)
(3)
Another AASB 16 area that requires judgement relates to the
assessment of the likelihood of the Group exercising, or not
exercising any extension or termination options available within
a lease. In performing these reasonably certain assessments
management considers all facts and circumstances that create an
economic incentive to either exercise, or not exercise an extension
or termination option.
(viii) COVID-19
Management have considered the potential impact of COVID-19 in
performing the Group’s impairment assessments and in establishing
the expected credit loss on financial assets. No adjustments
were made to the Group’s assets as a result of these additional
assessments. At a time when many businesses have struggled
during the pandemic, TechnologyOne has continued to perform
strongly. There has been no impact to the Group’s balance sheet.
TechnologyOne has not received any JobKeeper government support.
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 received from the Group’s 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.
The Group’s reportable segments are:
• Software – consists of Sales and Marketing, R&D, SaaS platform.
• Consulting – responsible for services in relation to our software.
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
2019
Revenue from contracts with
customers
SaaS fees*
Annual licence fees*
Consulting services*
Initial licence fees**
Other income
Intersegment revenues/expenses are where one operating segment
has been charged for the use of another's expertise.
Royalties are a mechanism whereby each segment pays or
receives funding for their contribution to the ongoing success of
TechnologyOne. For example, Software pays Corporate for the use of
corporate services.
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.
(b) Segment information provided to the strategic
steering committee
Net royalty
Total revenue
Expenses
Profit before tax
Income tax expense
Profit for the year
Total assets
Total liabilities
Software
$'000
Consulting
$’000
Corporate
$’000
Total
$’000
Total depreciation and amortisation
*Recognised over time / as services are rendered
**Recognised at a point in time
2020
Revenue from contracts with
customers
SaaS fees*
Annual licence fees*
Consulting services*
106,171
102,272
-
-
-
62,482
-
-
-
-
106,171
102,272
62,482
27,342
Initial licence fees**
27,342
-
122
1 Due to the adoption of AASB 16 Leases in the current year the profile of the lease related expense has
changed from being included within the occupancy costs line of the consolidated income statement as a rent
expense to being made up of a depreciation expense on the right-of-use asset and a finance expense on the
lease liability.
In addition to the employee benefits expense disclosed above,
‘Variable costs’ in the consolidated income statement includes $18.6m
(2019: $19.2m) relating to employee costs, ‘Contract acquisition costs’
in the consolidated statement of financial position includes $4.9m
(2019: $3.8m) and ‘Capitalised development’ in the consolidated
statement of financial position includes $32.3m (2019: $29.0m)
relating to employee costs.
123
2020 TechnologyOne Annual ReportTransforming business, making life simple
7.
Income tax expenses
(a) Income tax expense
Current tax
2020
$’000
2019
$’000
12,045
8,010
Relating to origination and reversal of temporary differences
8,680
10,534
Adjustments for current tax of prior periods
(1,200)
(614)
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.
9. Current assets - Trade and
other receivables
Deferred income tax expense / (revenue) included in income
tax expense comprises:
19,525
17,930
Trade receivables
Allowance for expected credit losses
(Increase) / decrease in deferred tax assets
(6,575)
(2,796)
Sundry receivables
2020
$’000
2019
$’000
40,320
50,053
(2,885)
(1,135)
(39)
114
37,396
49,032
Adjustments for current tax of prior periods
(1,200)
(614)
(a) Allowance for expected credit losses
Increase / (decrease) in deferred tax liabilities
10,960
13,387
Adjustment for deferred taxes of prior periods
4,295
(57)
8,680
10,534
(b) Numerical reconciliation of income tax expense to prima
facie tax payable
Profit from continuing operations before income tax expense
82,470
76,389
Tax at the Australian tax rate of 30% (2019 - 30%)
24,741
22,917
2020
$’000
2019
$’000
Research and development tax concession
(4,131)
(4,523)
Expenditure not allowable for income tax purposes
115
150
Income tax expense
19,525
17,930
(c) Amounts recognised directly in equity
Aggregate current and defered tax arising in the reporting
period and not recognised in net profit or loss or other
comprehensive income but directly debited or credited to
equity:
Net deferred tax - debited (credited) directly to equity
(2,315)
(1,481)
8. Current assets - Cash and
equivalents
Cash and cash equivalents
2020
$’000
2019
$’000
125,244
105,046
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 2020.
Cash at bank earns interest at floating rates based on daily bank
deposit rates.
(i) Trade receivables are non-interest bearing and are on 14 to 30 day
terms. No interest is charged on trade receivables.
Included in the trade receivable balance are debtors with a carrying
amount of $7.6m (2019 - $9.3m) which are past due at the reporting
date for which the consolidated entity has not specifically 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.
Movements in the provision for impairment of receivables are
as follows:
Opening balance - 1 October
Increase/(decrease) in expected credit loss allowance
2020
$’000
2019
$’000
Unused amounts reversed
Closing balance - 30 September 2019
2020
$’000
1,135
2,885
(1,135)
2,885
2019
$’000
902
1,135
(902)
1,135
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.
Age
Trade Debtors
Expected
credit loss
Trade Debtors
Expected
credit loss
2020
$’000
30,051
5,915
715
3,369
2020
$’000
(456)
(90)
(11)
(2,328)
2019
$’000
39,804
4,081
2,237
3,931
2019
$’000
(903)
(93)
(51)
(89)
40,050
(2,885)
50,053
(1,136)
0 – 30 days
31 – 60 days
61 – 90 days
91+ days
Total
10. Contract asset
Contract assets
2020
$’000
2019
$’000
22,283
24,722
12. Non-current assets - property,
plant and equipment
Allowance for expected credit losses
(232)
(115)
Year ended 30 September 2020
22,051
24,607
Opening net book amount
The above contract asset balance represents revenue recognised for
contracts with customers which has not been invoiced at the end of
the financial year, in line with customer contracts.
Additions
Disposals
Expected credit loss for contract assets
Movements in the provision for impairment of contract assets are as
follows:
Depreciation charge
Make good movement
Excange difference
Office furniture
& equipment
$’000
Other
$’000
10,659
2,008
(51)
(3,788)
(14)
9
241
22
-
(117)
-
-
Total
$’000
10,900
2,030
(51)
(3,905)
(14)
9
Closing net book amount
8,823
146
8,969
2020
$’000
2019
$’000
At 30 September 2020
Opening balance - 1 October
Increase/(decrease) in expected credit loss allowance
recognised in profit and loss during the year
Unused amounts reversed
Closing balance - 30 September
115
117
-
232
-
115
-
115
11. Current assets - Other current
assets
Deposits receivable
2020
$’000
397
397
2019
$’000
463
463
Cost
41,510
4,769
Accumulated depreciation
(32,687)
(4,623)
Net book amount
8,823
146
Year ended 30 September 2019
Opening net book amount
Additions
Disposals
Depreciation charge
Make good movement
Excange difference
12,201
2,464
(355)
(3,636)
(29)
14
79
239
(4)
(73)
-
-
46,279
(37,310)
8,969
12,280
2,703
(359)
(3,709)
(29)
14
Closing net book amount
10,659
241
10,900
At 30 September 2019
Cost
43,335
4,733
Accumulated depreciation
(32,676)
(4,492)
Net book amount
10,659
241
48,068
(37,168)
10,900
124
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2020 TechnologyOne Annual ReportTransforming business, making life simple
13. Non-current assets - Intangible assets
Intellectual
property/
source code
$’000
Customer
contracts
$’000
Contract
acquisition
costs1
$’000
Software under
development
$’000
Goodwill
$’000
Software in use
$’000
Total
$’000
Year ended 30 September 2020
Opening net book amount
33,250
3,503
Additions
Transfers to software - in use
Amortisation charge
Impairment
Exchange difference
-
-
-
-
-
819
-
(291)
-
(8)
768
-
-
7,519
4,972
-
(55)
(2,493)
-
-
-
(7)
23,825
37,069
(33,911)
-
-
-
7,765
-
33,911
(6,103)
-
-
76,630
42,860
-
(8,942)
-
(15)
Closing net book amount
33,250
4,023
713
9,991
26,983
35,573
110,533
At 30 September 2020
Cost
Accumulated amortisation
Accumulated impairment
Net book amount
Year ended 30 September 2019
40,003
-
(6,753)
33,250
11,174
(4,474)
(2,677)
4,023
1,100
(387)
-
713
15,483
(5,492)
-
26,983
-
-
42,231
(6,658)
136,974
(170,011)
-
(9,430)
9,991
26,983
35,573
110,533
Opening net book amount
40,003
4,185
823
Additions
Transfers to software - in use
Amortisation charge
Impairment
Exchange difference
-
-
-
(6,753)
-
-
-
(187)
(500)
5
5,357
3,782
-
-
-
(55)
(1,620)
-
-
-
-
-
32,145
(8,320)
-
-
-
-
-
8,320
(555)
-
-
50,368
35,927
-
(2,417)
(7,253)
5
Closing net book amount
33,250
3,503
768
7,519
23,825
7,765
76,630
At 30 September 2019
Cost
Accumulation amortisation
Accumulation impairment
Net book amount
40,003
-
(6,753)
33,250
10,363
(4,183)
(2,677)
3,503
1,100
(332)
-
768
10,518
(2,999)
-
23,825
-
-
8,320
(555)
-
94,129
(8,069)
(9,430)
7,519
23,825
7,765
76,630
1 Balance of contract acquisition costs is split between current portion of $2.9m and non-current portion of $7.0m (2019: current $2.1m; non-current $5.4m).
(a) Impairment tests for goodwill
Goodwill and indefinite life intangibles are allocated to the Group's
Software and Consulting cash generating units (CGUs) which are also
operating and reportable segments for impairment testing purposes.
A segment-level summary of the goodwill and indefinite life intangible
assets allocation is presented to the right.
2020
Goodwill
2019
Goodwill
Software
$’000
Consulting
$’000
Corporate
$’000
23,643
9,608
Software
$’000
Consulting
$’000
Corporate
$’000
23,643
9,608
Total
$’000
33,251
2,022
35,273
Total
$’000
33,251
2,022
35,273
-
-
-
-
-
-
Indefinite life intangibles
1,362
660
25,005
10,268
Indefinite life intangibles
1,362
660
25,005
10,268
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 key assumptions used for all CGUs in value in use calculations for
30 September 2020 and 2019 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
• Growth rates - based on long-term historical trends for each
segment
• The discount rate applied to cash flow projections is 15% pre-tax
(2019 - 15%)
• Terminal growth rates - these have been set at 2% (2019 - 3%)
14. Non-current assets - Deferred
tax assets
15. Current liabilities - Trade and
other payables
Trade payables
Contingent consideration
Sundry creditors
Directors fees
2020
$’000
2019
$’000
29,315
37,178
-
223
7,249
7,826
559
463
37,123
45,690
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.
2020
$’000
2019
$’000
16. Current liabilities - Prepaid
subscription revenue
Carrying amount at 1 October
Carrying amount at 30 September
2020
$’000
2019
$’000
147,558
136,557
144,148
147,558
Revenue recognised from the opening balance
145,359
135,361
Prepaid subscription revenue represents payments received or
receivable in advance from customers for SaaS Fees and Annual
Licence Fees which will be recognised as revenue in future periods,
generally over the next 12 months. These amounts are a contract
liability under AASB15. These amounts are enforceable, generally
non-refundable when paid in accordance with the contract and do
not result in a future cash outflow. The operating costs to deliver the
services are not significant.
17. Current liabilities - Provisions
The balance comprises temporary differences attributable to:
Employee benefits
Provisions - other
Accrued expenses
Intangibles
Copyright - software
Lease liability (net)
Employee share trust
Prepaid subscription revenue
Other
Set-off of deferred tax liabilities pursuant
to set-off provisions (note 20)
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:
4,958
4,338
1,089
2,204
753
245
1,718
1,513
1,826
753
240
3
3,536
2,699
40,762 36,604
232
110
55,497
48,086
(26,892)
(15,933)
28,605
32,153
13,779
15,488
Make good provision
Other provisions1
14,826
16,665
Annual leave
28,605
32,153
Long service leave
2020
$’000
569
5,416
2019
$’000
100
1,818
8,030
6,639
6,533
5,304
20,548
13,861
Opening balance at 1 October
48,085
44,823
Credited / (charged) to the
consolidated income statement
Credited / (charged) to equity
Offset from deferred tax liabilities
Closing balance at 30 September
6,575
2,796
837
466
(26,892)
(15,932)
28,605
32,153
1 On 2 October 2020, the Federal Court issued a judgement against TechnologyOne in a civil employment case.
As a result of the judgement, the Group’s provision was increased to $5.2m (2019: $1.6m) as at 30 September
2020. The company has retained very experienced counsel for an appeal to the Full Federal Court which was
lodged on 27 October 2020.
126
127
2020 TechnologyOne Annual ReportTransforming business, making life simple
18. Non-current liabilities -
Provisions
Long service leave
Make good provision
2020
$’000
2019
$’000
2,285
2,921
145
695
2,430
3,616
(a) Movements in provisions
Movements in each class of provision during the financial year, other
than employee benefits, are set out below:
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.
Lease liability
1 October 2019
Opening liability
New leases entered into during the year
Modifications during the year
Payments
Interest expense
Exchange difference
Closing liability
Property
$'000
Equipment
$'000
32,709
108
1,351
(324)
-
-
Total
$’000
32,817
1,351
(324)
21. Contributed Equity
Share capital
Ordinary shares
Fully paid
2020
Shares
2019
Shares
2020
$’000
2019
$’000
319,295,458
317,827,581
40,551
35,302
(5,916)
(49)
(5,965)
Movements in ordinary share capital
1,452
12
29,284
2
-
61
1,454
12
29,345
(a) Employee Share Option Plan
Date
Details
Number of shares
$’000
1 Oct 2019
Opening balance
317,827,581
35,302
The following are amounts recognised in profit or loss under
Exercise of options
1,467,877
5,249
23. Dividends
Ordinary shares
Final dividend for the year ended 30 September 2019 of 8.78
Cents (2018 - 6.16 Cents) per fully paid share paid in December
2019 (2018- December 2018)
60% franked (2018- 75%) based on tax paid at 30%
Special dividend for the year ended 30 September 2019 of
0.00 Cents (2018 - 2.00 Cents) per fully paid share (2018-
December 2018)
(2018- 75% franked) based on tax paid at 30%
Interim dividend for the year ended 30 September 2020 of
3.47 Cents (2019 - 3.15 Cents) per fully paid share paid in June
2020 (2019- June 2019)
60% franked (2019- 75%) based on tax paid at 30%
2020
$’000
2019
$’000
27,930
19,527
-
6,334
11,058
9,989
Annual
Leave
$’000
Long
service
leave
$’000
Make
Good
$’000
Service Level
Commitment
$’000
Legal
provision
$'000
Total
$’000
6,639
8,225
795
218
1,600
17,477
AASB 16:
Amortisation on right-of-use assets
Interest expense on lease liabilities
4,436
2,555
8
49
3,600
10,648
Expense related to short-term leases (included in occupancy
costs)
(3,045)
(1,963)
(89)
(50)
-
(5,147)
Total amount recognised in profit or loss
8,030
8,817
714
217
5,200
22,978
Cashflow from leases
2020
Carrying amount at
1 October 2019
Additional provisions
recognised
Amount used during
the year
Carrying amount
at 30 September
2020
19. Leases
Right-of-use-assets
Total cash outflow as a lessee
2020
$’000
5,791
1,454
599
7,844
2019
$’000
-
-
-
-
2020
$’000
2019
$’000
6,564
7,398
6,564
7,398
Year ended 30 September 2020
Property
$'000
Equipment
$'000
Total
$’000
Opening net book amount
28,578
108
28,686
Additions
Modifications during the year
Disposals
Depreciation charge
Exchange difference
Closing net book amount
At 30 September 2020
Cost
Accumulated depreciation
Net book amount
1,206
(324)
-
(5,746)
9
23,723
29,469
(5,746)
23,723
-
-
-
(45)
-
63
108
(45)
63
1,206
(324)
-
(5,791)
9
23,786
29,577
(5,791)
23,786
20. Non-current liabilities –
Deferred tax liabilities
The balance comprises temporary
differences attributable to:
Contract assets
Accelerated depreciation for tax purposes
Prepayments
Capitalised development
Contract acquisition costs
Total deferred tax liabilities
2020
$’000
2019
$’000
(4,269)
(4,237)
(1,323)
(28)
64
(26)
(18,767)
(9,477)
(2,505)
(2,256)
(26,892)
(15,932)
Set-off of deferred tax liabilities pursuant to set-off provisions
26,892
15,932
Net deferred tax liabilities (note 14)
-
-
Movements:
Opening balance at 1 October
(15,932)
(2,545)
Charged/(credited) to the Consolidated income statement
(10,960)
(13,387)
Offset to deferred tax assets
Closing balance at 30 September
26,892
15,932
-
-
30 Sep 2020
Closing balance
319,295,458
40,551
Total dividends paid
38,988
35,850
1 Oct 2018
Opening balance
Exercise of options
316,691,676
1,135,905
33,171
2,131
(a) Dividends policy
30 Sep 2019
Closing balance
317,827,581
35,302
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 31.
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.
(b) Dividends not recognised at the end of the reporting
period
22. Reserves
(a) Other reserves
Share-based payments
Foreign currency translation
Dividend reserve
2020
$’000
2019
$’000
31,342
25,722
2,136
1,850
30,046
27,905
63,524
55,477
Final
In addition to the above dividends, since year end the directors
have recommended the payment of a final dividend of 9.41
cents per fully paid ordinary share (2019 - 8.78 cents) 60%
franked (2019 - 60%) based on tax paid at 30% (2019 - 30%).
The aggregate amount of proposed dividend expected to be
paid out of retained earnings, but not recognised as a liability
at year end
2020
$’000
2019
$’000
30,046
27,905
30,046
27,905
(b) Nature and purpose of other reserves
(i) Share-based payments
The reserve is used to record the value of equity benefits provided
to employees, through share-based payment transactions and
associated tax benefits.
(ii) Foreign currency translation
Exchange differences arising on translation of the foreign controlled
entity are recognised in other comprehensive income as described
in note 1(c) and accumulated in a separate reserve within equity. The
cumulative amount is reclassified to the income statement when the
net investment is disposed of.
(iii) Dividend reserve
(c) Franked Dividends
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.
Franking account balance as at the end of the financial year at
30% (2019: 30%)
Franking credits that will arise from the payments of income tax
payable as at the end of the financial year
2020
$’000
2019
$’000
3,044
(1,202)
519
2,728
3,563
1,526
The reserve records retained earnings set aside for the payment of
future dividends.
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
128
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2020 TechnologyOne Annual ReportTransforming business, making life simple
(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 $7,730,209 (2019 - $7,175,639).
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.
Guarantees
24. Key management personnel
disclosures
(a) Key management personnel disclosures
At 30 September 2020, the Group had $3,397,831 (2019 - $6,155,631)
in outstanding performance guarantees. The total available guarantee
facility is $6,650,000 (2019 - $7,000,000). The Group also had unused
foreign currency dealing limits of $1,606,393 (2019 - $1,256,319).
2020
$
2019
$
The parent entity, Technology One Limited, continues to support its
subsidiaries in their operations, by way of financial support.
Short-term employee benefits
5,289,169
4,803,959
27. Related party transactions
Deferred retention bonus
Share-based payments
227,586
108,195
934,784
766,631
6,451,539
5,678,785
(a) Ultimate controlling entity
The ultimate controlling entity of the consolidated entity is Technology
One Limited, a company incorporated in Australia.
(b) Equity instrument disclosures relating to key
management personnel
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.
25. Remuneration of auditors
During the year, the following fees were paid or payable for services
provided by the auditor of the consolidated entity:
(a) Ernst & Young (Australia)
2020
$
2019
$
Fees to Ernst and Young (Australia)
Fees for auditing the statutory financial report of the parent
covering the group and auditing the statutory financial reports
of any controlled entities
801,795
527,609
Fees for assurance services that are required by legislation
-
-
Fees for other assurance and agreed-upon-procedure services
174,440
168,600
Fees for other services
148,290
131,672
(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.
• Dividends were paid from Technology One New Zealand Limited
to the parent entity during the year.
These transactions were undertaken on commercial terms and
conditions. No allowance for expected credit loss has been
recognised 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 28.
28. 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):
Country of
Incorporation
Class of shares
2020%
2019%
Equity holding
Total remuneration of Ernst & Young Australia
1,124,525
827,881
Name of entity
The relative ratio of other services to audit and assurance services
was 13% (2019 19%).
26. 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
Technology One
Corporation Sdn Bhd
Technology One New
Zealand Ltd
Technology One UK
Limited
England
Ordinary
Avand Pty Ltd
Australia
Ordinary
Desktop Mapping
Systems Pty Ltd (DMS)
Digital Mapping Solutions
NZ Limited (DMS)
Australia
Ordinary
New Zealand
Ordinary
Boldridge Pty Ltd
Australia
Ordinary
Icon Solution Unit Trust
(ICON)
Australia
Ordinary
Malaysia
Ordinary
100
100
Increase / (decrease) in prepaid subscription revenue
(3,410)
11,001
New Zealand
Ordinary
100
100
Net cash inflow / (outflow) from operating activities
103,511
76,835
100
100
100
100
100
100
100
100
100
100
100
100
30. Earnings per share
(a) Basic earnings per share
Basic earnings per share (cents per share)
Diluted earnings per share (cents per share)
2020
Cents
19.75
19.61
2019
Cents
18.43
18.30
Profit used for calculating basic and diluted earnings per share
($'000)
62,945
58,459
Country of
Incorporation
Class of shares
2020%
2019%
Equity holding
Australia
Ordinary
100
100
(b) Weighted average number of shares used
as denominator
2020
Number
2019
Number
Australia
Ordinary
100
100
Weighted average number of ordinary shares used as
the denominator in calculating basic earnings per share
318,659,285
317,215,635
Name of entity
Icon Strategic Solutions
Pty Ltd
Jeff Roorda & Associates
Pty Ltd (JRA)
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:
Technology One HQ
Level 11,
540 Wickham Street,
Fortitude Valley, Qld, 4006
29. Reconciliation of profit after
income tax to net cash inflow
from operating activities
Profit for the year
Depreciation and amortisation
Non-cash employee benefits expense - share-based payments
Finance costs
Impairment of intangibles
Reduction in contingent consideration (JRA)
Net (gain) / loss on sale of non-current assets
Movement in ECL through profit or loss
2020
$’000
2019
$’000
62,945
58,459
18,638
3,305
1,495
-
-
(38)
34
6,127
1,947
-
7,253
(7,528)
359
348
(increase)/decrease in trade debtors and contract assets
14,192
(12,070)
(increase)/decrease in prepayments and other current assets
1,959
(1,958)
Adjustments for calculation of diluted earnings per share:
Options
2,295,131
2,284,678
Weighted average number of ordinary and potential
ordinary shares used as the denominator in
calculating diluted earnings per share
320,954,416
319,500,313
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.
31. 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 up to 25% discount on the
volume weighted average price for the 10 days prior to the grant
date.
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
(increase)/decrease in deferred tax assets and liabilities
3,548
6,299
Increase / (decrease) in trade creditors
(3,967)
7,526
The period available between vesting date and expiry date of each
option is five years. There are no cash settlement alternatives.
Increase / (decrease) in employee entitlements
Increase / (decrease) in other provisions
1,983
2,827
(93)
(835)
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.
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2020 TechnologyOne Annual ReportTransforming business, making life simple
Set out below are summaries of options granted under the plan:
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
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
Issue date
Expiry date
Exercise price
2020
1/10/2019
1/10/2027
-
1/10/2019
1/10/2027
7.3854
1/10/2019
1/10/2027
5.5391
1/10/2018
1/10/2026
4.1122
1/10/2018
1/10/2026
5.4829
1/10/2018
1/07/2026
1.5862
1/10/2018
1/07/2026
1.8914
1/10/2018
1/10/2025
4.1166
1/10/2018
1/07/2025
1.0313
1/10/2018
1/10/2025
4.9952
1/10/2018
1/07/2025
0.8633
1/10/2018
1/07/2025
1.5862
1/10/2018
1/07/2025
1.8914
1/10/2017
1/10/2025
5.1456
1/10/2017
1/10/2024
5.1456
1/10/2017
1/10/2025
5.7474
1/07/2018
1/07/2026
1.3388
1/07/2018
1/07/2025
1.3388
1/07/2018
1/10/2026
4.1122
1/07/2017
1/07/2024
0.8633
23/05/2017
1/10/2024
5.6046
7/04/2017
30/09/2024
-
10/03/2017
1/10/2024
5.6027
14/02/2017
1/10/2024
5.0688
7/02/2017
1/10/2024
5.2334
1/10/2016
1/10/2024
5.7474
1/10/2016
1/10/2024
-
1/07/2016
1/07/2023
0.8633
1/07/2015
1/07/2022
0.8633
25/08/2009
25/08/2022
0.3450
25/08/2010
25/08/2023
0.3450
25/08/2011
25/08/2024
0.3450
-
-
-
1,003,568
390,520
12,500
50,000
313,582
176,667
100,101
250,250
12,500
50,000
1,593,113
50,000
11,177
167,000
167,000
22,853
29,150
247,373
978
22,516
50,000
50,000
762,737
10,000
29,150
16,650
30,000
30,000
30,000
-
-
-
-
-
-
-
-
-
-
29,250
12,500
50,000
-
-
-
-
-
-
16,650
155,482
-
1,691
578,551
913,938
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
(50,000)
-
-
-
-
(15,243)
-
-
-
-
(151,667)
(25,000)
1,691
578,551
913,938
988,325
390,520
12,500
-
313,582
-
100,101
29,250
12,500
50,000
(27,943)
1,565,170
-
-
-
-
-
-
50,000
11,177
167,000
-
22,853
16,650
(46,375)
155,482
-
-
-
-
-
-
-
-
-
(221,000)
-
-
-
-
-
-
(167,000)
-
(12,500)
(45,516)
(978)
-
(50,000)
(50,000)
10,000
(657,788)
(97,949)
-
-
-
-
-
-
(10,000)
(12,500)
-
(30,000)
-
-
-
-
-
-
-
-
-
22,516
22,516
-
-
17,000
-
16,650
16,650
-
30,000
30,000
-
-
17,000
-
16,650
16,650
-
30,000
30,000
Total
5,679,385
1,554,180
(1,458,949)
(212,510)
5,562,106
396,698
Weighted average exercise price
$4.27
$6.10
$3.60
$4.97
$4.93
$3.27
Issue date
Expiry date
Exercise price
2019
1/10/2018
1/10/2026
4.1122
1/10/2018
1/10/2026
5.4829
1/10/2018
1/07/2026
1.5862
1/10/2018
1/07/2026
1.8914
1/10/2018
1/10/2025
4.1166
1/10/2018
1/07/2025
1.0313
1/10/2018
1/10/2025
4.9952
1/10/2018
1/07/2025
0.8633
1/10/2018
1/07/2025
1.1634
1/10/2018
1/07/2025
1.5862
1/10/2018
1/07/2025
1.8914
-
-
-
-
-
-
-
-
-
-
-
1/10/2017
1/10/2025
5.1456
2,343,304
1/10/2017
1/10/2024
5.1456
1/10/2017
1/10/2025
5.7474
1/07/2018
1/07/2026
1.3388
1/07/2018
1/07/2025
1.3388
1/07/2018
1/10/2026
4.1122
1/07/2017
1/07/2024
1.8914
1/07/2017
2/07/2024
1.5862
1/07/2017
1/07/2024
1.3388
1/07/2017
1/07/2024
1.1634
1/07/2017
1/07/2024
1.0313
1/07/2017
1/07/2024
0.8633
23/05/2017
1/10/2024
5.6046
7/04/2017
30/09/2024
-
10/03/2017
1/10/2024
5.6027
20/02/2017
1/10/2024
5.1064
14/02/2017
1/10/2024
5.0688
7/02/2017
1/10/2024
5.2334
50,000
11,177
167,000
167,000
22,799
50,000
12,500
167,000
16,650
225,667
249,950
189,759
978
22,516
101,242
50,000
50,000
1/10/2016
1/10/2024
5.7474
900,666
1/10/2016
1/10/2024
-
1/07/2016
1/07/2023
0.5302
1/07/2016
1/07/2023
0.8633
1/07/2016
1/07/2023
1.0313
1/07/2016
2/07/2023
1.5862
11/04/2016
1/10/2023
4.7969
1/07/2015
1/07/2022
0.8633
25/08/2009
25/08/2022
0.3450
10,000
50,000
54,150
74,000
12,500
221,673
41,650
30,000
1,210,593
390,520
12,500
50,000
313,582
176,667
100,101
250,250
16,750
12,500
50,000
-
-
-
-
-
54
-
-
-
-
-
-
57,614
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
(50,000)
(12,500)
(167,000)
(16,650)
(151,667)
(220,800)
-
-
-
-
-
-
-
-
(50,000)
(25,000)
(74,000)
(12,500)
(146,162)
(25,000)
-
(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)
-
-
-
-
-
(75,511)
-
-
50,000
11,177
167,000
167,000
22,853
-
-
-
-
-
29,150
247,373
978
22,516
-
50,000
50,000
762,737
10,000
-
29,150
-
-
-
16,650
30,000
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
29,150
-
978
-
-
-
-
-
-
-
29,150
-
-
-
16,650
30,000
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2020 TechnologyOne Annual ReportTransforming business, making life simple
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
25/08/2010
25/08/2023
0.3450
25/08/2011
25/08/2024
0.3450
1/05/2009
1/07/2021
0.3600
30,000
30,000
55,000
-
-
-
-
-
(55,000)
-
-
-
30,000
30,000
-
30,000
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
31. Share-based payments
(continued)
At September 2020 a total of 5,562,106 options (2019 – 5,679,358)
were offered to employees.
The weighted average share price at the date of exercise of options
exercised during the year ended 30 September 2020 was $3.60
(2019 - $1.58).
The weighted average remaining contractual life of share options
outstanding at the end of the period was 6 years (2019 - 6.0 years).
Fair value of options granted
The fair value of the equity-settled options is measured at the
reporting date using the Black-Scholes option pricing model taking
into account the terms and conditions upon which the instruments
were granted.
(b) Executive performance rights
After further market consultation, the Group made the decision to
return to issuing options or EPRs. Please refer to section 3 of the
remuneration report for further information.
(c) Expenses arising from share-based payment transactions
Total expenses arising from share-based payment transactions
recognised during the year as part of employee benefit expense were
as follows:
Options issued under employee option plan:
Vested
Forfeited
2020
$’000
2019
$’000
3,355
2,243
(50)
(296)
3,305
1,947
The fair value of options granted during the year was between $1.93
and $3.39 (2019 - $1.49 - $2.23).
Total share-based payment expense
The model inputs for options granted during the year ended 30
September 2020 included:
(I) Dividend yield of 1.6% (2019 – 2.1%)
(II) Expected volatility 29.5% (2019: 30%)
(III) Risk-free interest rate 0.62-1.89% (2019 1.98 – 2.1%)
(IV) Expected life of option 3.3 years (2019 – 3.3 years)
(V) Option exercise price between $7.39 and $5.54 (2019 - $4.11 -
$5.48)
(VI) Weighted average share price at grant date was $7.39 (2019
- $6.13)
The expected volatility reflects the assumption that the historical
volatility of the Group’s share price over a period similar to the life of
the options is indicative of future trends, which may not necessarily be
the actual outcome.
32. Parent entity financial
information
33. Events after the reporting
period
(a) Summary financial information
(a) Dividends
On 19 November 2020, the Directors of Technology One Limited
declared a final dividend on ordinary shares in respect of the 2020
financial year. The total amount of the dividend is $30,045,703 and is
60% franked.
On 2 October 2020, the Federal Court issued a judgement against
TechnologyOne in a civil employment case. As a result of the
judgement, the Group’s provision was increased to $5.2m (2019:
$1.6m) as at 30 September 2020 (refer to note 17). The company has
retained very experienced counsel for an appeal to the Full Federal
Court which was lodged on 27 October 2020.
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.
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
2020
$’000
2019
$’000
181,777
161,626
197,068
150,331
378,845
311,957
178,175
170,139
37,086
-
215,261
170,139
40,551
35,302
30,046
27,905
31,342
25,722
62,278
49,309
164,217
138,238
75,787
74,075
75,787
74,075
At 30 September 2020, the statement of financial position shows a
current liability balance of $178m (30 September 2019: $170m) 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
Annual Licence Fees which will be recognised in future periods, and
not a future cash outflow, this balance does not impact the Group’s
ability to meet its short-term obligations as and when they fall due.
(b) Guarantees entered into by the parent entity
At 30 September 2020, the Group had $3,397,831 (2019 - $6,155,631)
in outstanding performance guarantees. The total available guarantee
facility is $6,650,000 (2019 - $7,000,000). The Group also had unused
foreign currency dealing limits of $1,606,393 (2019 - $1,256,319).
The parent entity, Technology One Limited, continues to support its
subsidiaries in their operations, by way of financial support.
(c) Contingent liabilities of the parent entity
At 30 September 2020, the Parent had no contingent liabilities.
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2020 TechnologyOne Annual ReportTransforming business, making life simple
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 109 to 135 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 2020 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 2020.
On behalf of the Board of Directors
Adrian Di Marco
Director
Brisbane
24 November 2020
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 TechnologyOne
Limited
As lead auditor for the audit of the financial report of TechnologyOne Limited for the financial year ended
30 September 2020, 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 TechnologyOne Limited and the entities it controlled during the
financial year
Ernst & Young
Alison de Groot
Partner
24 November 2020
A member firm of Ernst & Young Global Limited
Liability limited by a scheme approved under Professional Standards Legislation
136
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2020 TechnologyOne Annual ReportTransforming business, making life simple 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
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 2020, the consolidated income statement, the 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:
a. Giving a true and fair view of the consolidated financial position of the Group as at 30 September
2020 and of its consolidated financial performance for the year ended on that date; and
b. 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 (including
Independence Standards) (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.
We 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.
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:
Our audit procedures included the following:
► SaaS fees;
► Annual licence fees;
► Initial licence fees; and
► Consulting services
The Group contracts with its customers using written
contracts which often include a number of products
and services (separately identifiable components).
Revenue recognition for these contracts was
considered to be a key audit matter due to the
complexity of contracts and the judgement required to
allocate revenue amongst the respective performance
obligations.
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 16.
► For a sample of signed customer contracts, we
obtained the supporting documentation and
assessed management’s judgement on whether
the revenue recognition criteria had been met.
The assessment included whether there were
contract modifications or delayed payment
terms.
► The testing of the customer contracts included:
The determination of stand-alone price
for separately identifiable components;
The allocation of the transaction price
to identified performance obligations,
separated into the different revenue
streams, and;
The timing of revenue recognition
based on the satisfaction of
performance obligations.
► For a sample of consulting service contracts,
(time and materials) we assessed the Group’s
controls associated with the recording of
consulting days delivered and the application of
contracted fee rates to these days.
► For prepaid subscription revenue (contract
liabilities) and contract assets, we tested a
sample of balances at year end that included:
Agreeing the amounts recorded to
invoice and payment;
Reperforming the recognition of
revenue based on the satisfaction of
performance obligations; and
Recalculating the amount of the
contract asset or contract liability
balance at year end.
► Assessed the adequacy of the financial report
disclosures included in the financial statements.
A member firm of Ernst & Young Global Limited
Liability limited by a scheme approved under Professional Standards Legislation
A member firm of Ernst & Young Global Limited
Liability limited by a scheme approved under Professional Standards Legislation
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2020 TechnologyOne Annual ReportTransforming business, making life simple 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. Software development is core to
the Company’s operations and requires judgement as
to whether it meets the capitalisation criteria of AASB
138 Intangible Assets. The carrying value of the
capitalised assets totalled $62.6m as disclosed in Note
13.
The capitalisation of software development costs was
a key audit matter due to the significant management
judgements, including:
► Whether the costs incurred relate to research
costs, which are required to be expensed or
development costs that are eligible for
capitalisation;
► The assessment of the useful life of the asset
and the timing of amortisation;
► The assessment of future economic benefits
and recoverability of the capitalised software
development costs.
We performed the following procedures in respect of
the development expenditure capitalised:
► Assessed the Group’s policy of capitalisation of
software development costs for compliance with
Australian Accounting Standards.
► Held inquiries with Project Directors, to
understand development activities assessment
and the feasibility of completion.
► For a sample of capitalised software
development costs, we tested whether additions
were appropriately supported to payroll records
or third party documentation and attributed to
development activities.
► Considered the appropriateness of the
amortisation period for the capitalised software
development costs.
► Assessed the recoverability of capitalised
software development costs.
► Assessed the adequacy of the financial report
disclosures included in the financial statements.
Information 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 2020 annual report other than the financial report and our auditor’s report
thereon. We obtained the directors’ report that is to be included in the annual report, prior to the date of
this auditor’s report, and we expect to obtain the remaining sections of the annual report after the date
of this auditor’s report.
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 on the other information obtained prior to the date of this
auditor’s report, 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.
► 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.
A member firm of Ernst & Young Global Limited
Liability limited by a scheme approved under Professional Standards Legislation
A member firm of Ernst & Young Global Limited
Liability limited by a scheme approved under Professional Standards Legislation
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2020 TechnologyOne Annual ReportTransforming business, making life simple 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, actions taken to eliminate
threats or safeguards applied.
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.
Report on the audit of the Remuneration Report
Opinion on the Remuneration Report
We have audited the Remuneration Report included within the Directors’ Report for the year ended 30
September 2020.
In our opinion, the Remuneration Report of Technology One Limited for the year ended 30 September
2020, 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
24 November 2020
Jennifer Barker
Partner
Brisbane
24 November 2020
A member firm of Ernst & Young Global Limited
Liability limited by a scheme approved under Professional Standards Legislation
Shareholder information
The shareholder information set out below was applicable as at 07 December 2020.
(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
69
1,186
1,225
4,371
3,986
There were 183 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
HYPERION ASSET MANAGEMENT
SELECTOR FUNDS MANAGEMENT
FUNDSMITH
MODRIAN INVESTMENT PARTNERS
INVESCO (OPPENHEIMER FUNDS)
WASATCH GLOBAL INVESTORS
FIRST SENTIER INVESTORS
ACADIAN ASSET MANAGEMENT
VANGUARD INVESTMENTS AUSTRALIA
DIMENSIONAL FUND ADVISORS
VINVA INVESTMENT MANAGEMENT
ARGO INVESTMENTS
STATE STREET GLOBAL ADVISORS
BLACKROCK INVESTMENT MANAGEMENT (SAN FRANSISCO)
BLACKROCK INVESTMENT MANAGEMENT (SYDNEY)
PENDAL GROUP
COLUMBIA WANGER ASSET MANAGEMENT
VANGUARD GROUP
Number held
%IC
30,902,500
9.62%
20,378,500
6.35%
14,166,960
13,571,847
12,376,995
11,111,305
4.41%
4.23%
3.97%
3.46%
10,580,024
3.29%
8,225,822
2.56%
8,076,881
2.52%
7,894,053
2.46%
7,042,164
6,167,228
6,144,894
5,964,564
5,682,082
5,108,450
4,651,993
4,592,538
4,428,628
4,200,217
2.19%
1.92%
1.91%
1.86%
1.77%
1.59%
1.45%
1.43%
1.38%
1.31%
191,627,645
59.68%
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 (5.59% as at 02/11/20) and Pinnacle Investment Management Group Limited (5.05% as at 22/11/20)
(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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2020 TechnologyOne Annual ReportTransforming business, making life simple Corporate directory - Technology One Limited
Corporate calendar
Board of Directors
Branch Locations
Lawyer
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.
Brisbane
Sydney
Melbourne
Canberra
Adelaide
Perth
Hobart
Auckland
Wellington
Kuala Lumpur
Maidenhead
Auditor
Ernst & Young
Level 51, 111 Eagle Street
Brisbane QLD 4000
www.ey.com/au
Adrian Di Marco
Ron McLean
John Mactaggart
Kevin Blinco
Richard Anstey
Jane Andrews
Sharon Doyle
Cliff Rosenberg
Peter Ball
Company Secretary
Stephen Kennedy
Paul Jobbins
Australian Business Number
84 010 487 180
Registered Office
Technology One Limited
Level 11, TechnologyOne HQ
540 Wickham Street
Fortitude Valley QLD 4006
Australia
www.TechnologyOneCorp.com
P. 1800 671 978
International: +617 3167 7300
McCullough Robertson
Level 11, 66 Eagle Street
Brisbane QLD 4000
www.mccullough.com.au
Share Registry
Link Market Services Limited
Locked Bag A14
Sydney NSW 1235
Phone: 02 8280 7454
Fax: 02 9287 0303
www.linkmarketservices.com.au
Stock Exchange Listing
Australian Securities Exchange
(ASX: TNE)
2021 (Year Ending 30 September 2021)
Annual General Meeting1
Announcement of Half Year results for 2021
Media Interviews
Presentations to Institutions – Sydney (tentative)
Presentations to Institutions – Melbourne (tentative)
Ex-Dividend for 2021 Interim Dividend2
Record date for 2021 interim dividend3
Payment date for 2021 interim dividend4
Announcement of Full Year Results for 2021
Media Interviews
Presentations to Institutions – Sydney (tentative)
Presentations to Institutions – Melbourne (tentative)
Ex-Dividend for 2021 Final Dividend2
Record date for 2021 dividend3
Payment date for 2021 final dividend4
Distribute 2021 Annual Report (tentative)
Annual General Meeting (2021 tentative)5
Notes:
23 February 2021
25 May 2021
25 May 2021
26 & 27 May 2021
28 May 2021
3 Jun 2021
4 Jun 2021
18 June 2021
23 November 2021
23 November 2021
24 & 25 November 2021
26 November 2021
2 December 2021
3 December 2021
17 December 2021
17 January 2022
22 February 2022
1Closing date for the receipt of director nominations is 4 January 2021 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 approximately 10 business days after the Record Date.
5Closing date for the receipt of director nominations is 3 January 2022 in accordance with ASX Listing Rule 14.3 (35 business days prior to AGM)
144
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2020 TechnologyOne Annual ReportTransforming business, making life simple Enterprise
software,
incredibly
simple.
TechnologyOne (ASX: TNE) is Australia’s largest enterprise
software company and one of Australia’s top 150 ASX-listed
companies, with locations 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 any time 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
33 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.
ABN: 84 010 487 180
TechnologyOneCorp.com
Australia | New Zealand | South Pacific | Asia | United Kingdom
Freecall 1800 671 978 (within Australia) | +617 3167 7300 (outside Australia)