TechnologyOne half year results continued strong growth

TechnologyOne Ltd (ASX:TNE), a leading Australian provider of enterprise software solutions, has announced its results for the half year ending 31 March 2008 showing continuing strong growth with Revenue up 30% to $49.5 million and Profit After Tax (PAT) up 15% to $6.97 million.

The results exceed previous market commentary provided, that TechnologyOne results would be lower than the corresponding period last year “because of expectations that a number of large contracts would be secured in the second half of the year.”

Highlights of the results* are as follows:
  • Total Revenue increased by 30% to $49.5 m
  • Profit Before Tax (PBT) increased by 12.3% to $8.95m
  • Profit After Tax (PAT) increased by 15% to $6.97m
  • Total licence fees increased by 21% to $12.1 million
  • Consulting revenue increased by 37% to $15.1million
  • Annual Licence & Support fees increased by 23% to $14.3 million
  • Project Services revenue increased by 28% to $5 million
  • Research & Development (R&D) increased 45% to $9.8m, representing 20% of revenue
  • Expenses excluding R&D increased 31% to $30.7m

Executive Chairman Adrian Di Marco said he was particularly pleased that the Results from Existing Operations (prior to Avand Acquisition) were much stronger than originally expected, with Profit Before Tax (PBT) at $9.7 million which is 22% above the same period last year.

“The unplanned acquisition of the Avand business that occurred in the first half, has contributed a loss of approximately $700k to our results,” he said.

“As announced to the market at the time of the acquisition, our plan is that this business will be earnings neutral for the consolidated group by year end, as we integrate and re-align the business to our highly successful ‘House of Products’ business model.”

Mr Di Marco said the company’s continued strong performance is a direct result of its various strategic initiatives which have included the new generation Connected Intelligence (CI) series of products, the new House of Products business model, as well as the substantial broadening of our enterprise suite of products.

TechnologyOne Financials, Supply Chain, Business Intelligence and Works &Assets products were strong contributors in the first half, and these products are expected to continue to deliver a strong performance for the second half.

TechnologyOne Human Resources & Payroll continued to improve with licence fees increasing, and the company is confident this product will in future years generate significant profits for the company. TechnologyOne Plus (Project Services) also performed well in the first half with revenue up significantly.

Both Central region (New South Wales, Victoria and the Australian Capital Territory) and North West region (Queensland, South Australia, Western Australia and Tasmania) performed exceptionally strong.

The United Kingdom (UK) has continued to perform to expectations, with the signing of two new and strategically important contracts, Royal Liverpool Children’s Hospital (RLCH) and the Institute of Education (IOE), a college of the federal University of London. The company plans for its UK operations to achieve close to break even this year, which will be sooner than originally expected.

Mr Di Marco said the company is also looking for acquisition opportunities.

“TechnologyOne will continue to look for further acquisitions that extend our enterprise product suite, that have potential value to our existing customers and that also extend our existing customer base.”

TechnologyOne has increased the interim dividend by 10% to 1.67 cents per share.

TechnologyOne remains on track to deliver growth of between 15% and 20% above the 2006/2007 financial year.