TechnologyOne exceeds market expectations with half year license fees up 18% and provides guidance of full year profit growth of 10 to 15%

TechnologyOne (ASX: TNE) today announced its results for the half year ending 31 March 2012, reporting continued growth and increased market share against multi-national competitors and placing it on track to deliver good full year results.

TechnologyOne Executive Chairman Adrian Di Marco said the half year results, which included an 18 per cent increase in Initial License Fees, showed the company continued to perform well despite challenging market conditions and were due to the strength of its business model and winning new contracts across all its vertical markets.

"The jump in Initial License Fees of 18 per cent is particularly pleasing compared to the single digit licence fee growth of our multi-national competitors SAP and Oracle," he said.

"We are continuing to steal market share in our vertical markets including health, education, government, utilities and financial services."

Earlier this year TechnologyOne announced it had secured 38 customers in deals worth more than $16m, since the launch of its pre-configured sector-specific "One" solutions in late 2010, replacing multi-nationals Oracle and Microsoft at a number of sites.

Recent wins include Townsville City Council, which TechnologyOne won against Oracle.

"This success is attributed to our investment in pre-configured solutions, which reduce cost, risk and time for customers, and our commitment to being totally accountable by developing, implementing and supporting our own software," Mr Di Marco said.

"We believe that the model used by other software vendors of relying on third party organisations, such as Accenture, to implement their software solutions is broken.  TechnologyOne customers benefit from a direct relationship with us every step of the way and we are therefore always accountable to them."

Revenue for the half year was up eight per cent on the prior half year period to $77.3m, Initial License Fees increased 18 per cent to $18.4m, Annual License Fees jumped 16 per cent to $25.4m and Consulting Services increased by nine per cent to $21.3m.

TechnologyOne's Net Profit Before Tax of $9.3m - a two per cent increase on the same period last year - exceeded analyst consensus and market expectations of a deterioration in the first half profit of five to 10 per cent, on the back of abnormally strong profit growth of 33 per cent in the previous corresponding period.

Adrian Di Marco said TechnologyOne's enterprise product business continued to be strong and resilient, making the company confident it would achieve continued growth in the full year with profit expected to be up between 10 and 15 per cent.

In light of these results, the TechnologyOne dividend for the half year increased to 1.61 cents per share, up 10 per cent on the prior year, representing a payout ratio of 67 per cent. The company has continuously paid a dividend since it listed in 1999 with compound growth in dividends over the last four years reaching 22 per cent per annum.