Technology One Limited (TNE) Earnings Call Transcript & Summary

Well, good morning, and welcome to the TechOne Annual General Meeting. Before we start the formal proceedings, I'd like to just play a small video to introduce some of our new shareholders to the company. So we'll just play this little video. [Presentation]

All right. Hopefully, that -- that's our new shareholders. Now a little bit about the company. All right. We're going to move into the formal part of the meeting. So from the information provided to me by the Company Secretary, I advise that we have a quorum present, and I declare the meeting officially open for business. Let me start by introducing my fellow directors to you. So firstly, we have Rick Anstey, who is the Chair of the Noms and Governance Committee; Mr. Ron McClean; Dr. Jane Andrews, who is the Chair of the Rem Committee; Ms. Sharon Doyle; Cliff Rosenberg; Mr. Peter Ball, who is the Chair of the Audit; and Pat O'Sullivan, who is our newest director, standing today for election. He is the Deputy Chair and our Lead Independent Director; and then myself, Adrian Di Marco, the Chairman and Founder of TechOne. Let me also introduce Mr. Edward Chung, our CEO, who's at the front here; Mr. Paul Jobbins, our CFO; and our Company Secretary, Stephen Kennedy. We have an apologies today. Unfortunately, John Mactaggart, one of our long-serving directors, and whose family were the initial investors in TechOne many years ago, can't be here today for medical reasons. But he would have been here if it would have been at all possible. So he passes on his apologies. We have our auditors here as well today, Ernst & Young, represented by Alison de Groot and Ms. Jen Barker. So if we have any questions for them, they're here to answer those questions. I also want to acknowledge all the TechOne staff that are here today. Thanks, guys, for helping out. And if you need anything, they're the ones with the T-shirts. So all right. Before we get to the formal part of today, what I'd like to do is just take you through a recap of the company's performance, and then I'm going to hand over to Ed to do a bit more of a deep dive. So let me start with that. All right. All right. So we had another great year, another year of record profits. Profit was close to $98 million, up 19%, which was the top end of guidance, and that's our 12th consecutive year of record profits. Since we listed in 1999, we pretty much had record profits every year except for maybe 1 or 2. So it has been a very strong performance once again by the company. Dividend is up 8%. And if you look at the growth over the last 10 years, it's been compounding at about 12%. So that's also been a good outcome for shareholders. All right. So what's driving the business? Our success is coming from our Global SaaS ERP system. So that is what is underpinning our success today. If you look at the numbers on the SaaS business, our SaaS ARR is today $192 million, and that is up 43%, and that's all organic growth. Now remember, we weren't a SaaS business. So if you go back, we were a traditional on-premise business selling perpetual licenses, and we've made that transition to build a very strong world-class leading SaaS business, which is just fueling our growth at the moment. We have 637 major enterprise customers. So these customers don't have 1 or 2 users using our system, they have hundreds, they have thousands, they have tens of thousands of users using our system. These are big enterprise customers, people like La Trobe University or Queensland TAFE (sic) [ Queensland TAFE ] or Moreton Bay Council or the Australian Bureau of Statistics. I mean, these are big organizations that bet their business, that run their business using our Global SaaS ERP solution with hundreds, thousands, tens of thousands of users from each of these organizations. So they're big systems, and these companies bet their business on our solution. So what is the TechnologyOne SaaS? I just want to spend a little bit of time on this because this is really the key to our success. And what it is, it's a single global instant of our enterprise software and it's run at massive scale for all of our customers. So in its most simplest form, we are bringing the concept of mass production, which has changed the face of every industry to the software industry. We run a production line of servers, just like any production line. And what it does, it does one thing only, which is it delivers our software, our enterprise software to our customers at massive scale, and it does it in real time. Every split second, a transaction comes in from any customer, we execute it, we deliver the result and then the production line continues going. And the production line scales up and scales down based on the amount of usage. So it is truly a revolutionary idea, this Global SaaS ERP solution. The benefit for our customers is that they don't need to worry anymore about the complexity of hardware, operating systems, databases, we make it all happen. It's just a service. We take on that responsibility. When we add a new feature, a new piece of functionality, when we improve the security, it just happens automatically. They all get it instantaneously. We make life incredibly simple for them. For us, we get massive economies of scale because we're running this at massive scale, and that's reflected in the margins that are continuing to improve in the business. So that's what our SaaS solution is. There are other SaaS companies out there. So why is our SaaS solution different to other SaaS companies? Well, if you look at the other SaaS companies out there today, they provide just part of a solution for what we call best-of-breed. So they might provide the HRP. They might provide the supply chain, the logistics. They might supply the financial accounting. They provide just part of the solution. What we do is we provide everything. We provide the total solution, it's called an ERP solution, and we do that as a SaaS offering. It's hard to provide a SaaS solution, very difficult. And when you provide a SaaS solution of the scale that we have, it's a really huge engineering feat. And only a few companies in the world have been actually able to achieve that phenomena. So to me, the best analogy is flying. Flying used to be only for the jet-setters. When Boeing introduced the 747, the jumbo jet, it revolutionized flying. And that's what we have built. We have built the equivalent of a jumbo jet. That's what we have. And we've given that flight, and that's what's driving our business, that people can actually come to one company to get a total solution to their business need and delivered as a SaaS offering. They don't need to go to multiple SaaS companies and then try to bring it together as a solution. We do that for them. So we have a suite of 15 products, each of these products are massive on their own. You put them all together, then it's huge what we've done. And so we can provide that total single enterprise solution to our customers. The other thing that we do is we focus on just a small number of markets. So we're very big, for example, in local government, in education or state and federal government. And we provide really deep functionality for those markets. So when we sell them our enterprise SaaS solution into local government, it does everything that a council needs. They don't need to worry about anything. It's a total, very deep solution for that council. So that also differentiates our SaaS solution. So our Global SaaS ERP solution is making life simple for our customers. That's the end point. They don't need to worry anymore about technology, features, functionality, upgrades, security. We do it all for them. The other part of the equation, and we've seen that through COVID, is that the world has moved to a mobile world, people no longer sit at a desk every day and work at a desk. They work sometimes in the office. They work sometimes at home. Sometimes they work in a cafe. We actually anticipated this 10 years ago. And so when we built our software, when we built our SaaS solution, we built it so that it would enable that level of mobility. We call that our CI Anywhere solution, any device, anywhere, anytime. You can run our SaaS software on an iPhone, Android phone, you can run it on an iPad, you can run it on a traditional laptop or computer. It runs on all devices, and you can move seamlessly from one device to the next. So I can start working on my iPhone. I can then move to an iPad, then I can move to a traditional desk. The software just moves with you through the course of the day. And you can pick a transaction up from the iPhone and complete it on the iPad or your desk. So again, very revolutionary ideas, well ahead of its time. All right. So if you look at the company, we started off as a traditional on-premise business. And that wasn't that long ago that we were selling traditional on-premises licenses. But today, we are a SaaS business. That SaaS business is growing exceptionally fast, and we've now told our customers that we will no longer support on-premise. That is coming to an end. So if you go back just a few years ago, our traditional perpetual licenses, our older business, was about $18 million a year worth of licenses we sold. In 2024, it will be 0. We will sell no more on-premise licenses. So this is truly a watershed date for our customers and for us. And we expect that all our customers, 99% of them, will move to the SaaS platform, and we're seeing that. We're seeing that huge move already. So we have made a commitment. And that commitment is that we expect our annual reoccurring revenue, because that's the key measure as a SaaS business, it's the subscription revenue that happens every year, we are saying that by FY '26, it will hit $500 million. That's not that far away. And it's already at $257 million. So in the next few years, it's going to double that annual reoccurring revenue. And we will hit that number. And I have a bit of a bet about how much we're going to exceed it by. So it's a very exciting time for the business. We have spectacular growth in the past, and we see that growth continuing for quite a number of years. So I just want to touch on one last thing. Our success comes because we have an absolute clarity of strategy, right? There is no confusion at TechOne what we do. And every decision we make is aligned to that clarity of strategy. And that strategy is very simple. We are an ERP software vendor. We provide a total solution to our customers. We are not a best-of-breed vendor. And every time we do an acquisition or we build something, it is how do we extend our ERP solution so it can do more for our customers. We provide the deepest functionality for the markets we serve. So if we do an acquisition or if we build something, how does that go deeper for our customers in local government? How does it streamline their business? How does it add value? That is the question we ask, and that's the answer that we have to be able to answer. We are a SaaS business. Everything we do is built around the SaaS paradigm, which means it's one global code line, right? It's not a different code line for different countries or for different markets or for different states or regions. It is truly one global code line. That code line runs Australia, it runs New Zealand, Asia, the U.K. and will time, run in the U.S. And it runs that global code line across industries. It's the same code line in local government and higher ed. It's one global code line, that just happens to be additional features for each of those markets. That gives us huge economies of scale. Now the engineering to do that is massive, right? It's not a simple thing to do. That's why people don't do it, but we have done that. We've been able to engineer this huge ERP system and this one global code line. And we're seeing those economies of scale coming through on the margins of the business. Our margins have gone from about 24% a few years ago, and it must be over 30%. Is that right, Ed? Yes. The other part of our strategy is to support a truly mobile world, a hybrid world. You can use any device, you can use it anywhere at any time. Our software will run from an iPhone all the way to a desktop. And there's no carve-outs. Everything works on all devices all the time. The Power of One. We do not ever allow anyone else to interact with our customers but us. It is our customer, we take total sole responsibility. We call that the Power of One. We build it, we market, we sell, we implement, we support, we run it for them. If there's a problem, it is TechnologyOne's problem. We don't run, we don't hide. And that means we are accountable, which means we either get better or we go out of business. And to date, we've got better because we haven't gone out of business. And I think that's a really powerful differentiator in the market. If you look at our competitors, Workday, for example, they have a fraction of the ERP system we have, right? And it's a broker model. They don't implement their software. They use Accenture to implement it. Who's responsible? They will never be able to achieve the outcomes that we achieved because of that accountability-driven model we have, the Power of One. Underpinning the whole business is the subscription model, the reoccurring revenues. When our customers sign up with us, they pay an annual fee, and that fee they pay every year. And so that reoccurring revenue means that we are building on this growing base of income. And last but not least, we are an innovation-driven company. Innovation is the very core and the very soul of our business. We do big engineering jobs. We take huge technical risks. We innovate. We create amazing software. When we started this journey in the SaaS world 10 years ago, people said to us, is this really going to work? Is the university really going to run their university on your servers? They're going to put their data in your data centers? Is a council going to do that? We believe they would because of the compelling value proposition that it would deliver. And so we undertook a massive engineering exercise to build our SaaS platform. And today, that's now the standard. That's what people want. But that's the very core, the heart of the business, this investment in R&D, being an innovation-driven company. So we're positioned for good, strong continuing growth. We have a very clear strategy. We are in the blue ocean. Our biggest risk is always execution, not competition. It's our ability to execute to the high standards that we set. And so in the end, it comes back to our people, we have to have the best, the brightest people working for us. And then at the key to all that is obviously the executive team. And as shareholders, executive rem is a very important issue these days, and you want to know about that. So how have we gone with executive rem? Let's talk about that. Well, the results have been spectacular for the company, profit up 19%; SaaS business up 43%; consulting profit up 14%; the U.K. profit up 100%; our margins improved from 28% to 31%, we expect it to go to at least 40% over the next few years; dividend up 8%; and as you know, return on equity is a very important measure. It shows you how efficient we are with capital. And our return on equity figure is 60-plus percent, which is insanely good. So I think on all those fronts, the company has delivered. On the other side, what's the alignment with the executive team and their rem? Well, profit up 19%; executive rem up 12%, I think that's a good outcome; TSR for 3 years is 113% versus executive rem up 12%; TSR for FY '21 was 45% versus the ASX TSR of 30%. So clear alignment between executive and shareholders. Our executives are paid a very low base, so they are driven to achieve, okay? So they have to work very hard to get their STI and their LTI. And if you look at the executive rem compared with our peers, we are in the sort of mid-range. So they're not overpaid. So again, I think all those things are in alignment. Board renewal. We have gone through a process of renewing our Board, bringing on new directors to get ready for the next stage of growth. So we've appointed now 5 independent directors in recent years. And we really welcome the addition of these new directors. They have been just fantastic to work with over the last few years. We have appointed a Deputy Chair and Lead Independent Director, Mr. Pat O'Sullivan, I'll be talking a bit more about Pat later. And today, for the proxy advisers, we have a majority of independent directors, so -- but they are great directors. We've taken a long time to get there, but we've done it slowly, we've done it properly. So we're in a good position. All right. I just want to do a final word, if I can, and that is that this will be my last AGM. I am retiring from TechnologyOne. So I wanted to share it with you all today. It has been an amazing journey. It started 35 years ago in 1987 with funding from the Mactaggart's family who were very supportive of the business and have been fundamental to its continuing growth. We started the front of the hides plant, and we were one of the first start-ups here in Australia before there was even the word of a start-up. And we would be one of the first tech companies to list on the ASX in 1999, and we would usher in the dot-com boom. So we were at the very cutting edge of all those things. We had an amazing idea, which was to build true software products here in Australia, products that did not need to be customized, that could be configured and the configuration would sit outside the software. So everyone would run the same software. This is really the core concept that today is fueling our SaaS business. Everyone runs the same software. We invented that idea 35 years ago. Over 35 years, we have rebuilt our company and our products many times when relational database occurred, and we partnered with a company called STL to build our first products. STL became Oracle. When the PCs turned up, and we looked at it and we thought how can we use the PC as part of our enterprise software, and we partnered with a company called Microsoft to build one of the first client server applications. We were early adopters of the Internet working with Netscape. And then subsequently, we became very passionate and early adopters of the cloud, working with a fulfillment delivery company called Amazon, which today is one of the biggest cloud companies in the world. The company has had the courage and the conviction to rebuild its products and to reimagine its business at each of those stages. And very few companies have been able to do that. When I look at our competitors over the years, many of them have disappeared because they haven't done that. But today was inevitable, and it has been a very well-planned transition. It started with the appointment of Edward as Chief Operating Officer 10 years ago. Ed learned the company inside out. He was one of the smartest people I've ever worked with. And he was then appointed to the role of CEO 5 years ago. Five years ago, we started the renewal of the Board and we brought on some very passionate and very committed new directors who understand the business now today very, very well. And it's that courage and conviction that is so important that you have at the Board level. If you don't have that, then you won't reinvent the business. You won't take advantage of those opportunities. And I'm really confident that our new Board has that courage and that conviction to do what's required. And then more recently, the appointment of a Deputy Chair, Pat O'Sullivan, and Pat will be taking over the role of Chair from me. I just want to spend a few minutes to talk about Pat. Pat is a very important addition to the company. He has been an executive with very large companies such as Goodman Fielder, Optus and Nine Entertainment. It's so important to have directors with that real life operating experience. And then he also has a lot of experience running ASX companies. So he is currently the Chairman of carsales.com and SiteMinder, and he's also been a Non-Executive Director of quite a few other publicly listed companies, including Afterpay. So he brings enormous amount of ASX and executive experience and has built a very strong relationship with Ed over the last 12 months. So my plan is I will be handing over on June 30, just after the release of our half year results. Without a doubt, we are in a great position. I'm sure there'll be more challenges ahead, there's no doubt about it. They don't stop. But the company's DNA of continually evolving, changing, having the conviction, the courage to do the big things is what will keep this company in good stead. And having a Board that understands that and that has that conviction as well is also a very important. So I see strong continuing growth continuing for many years to come. So let me just finish off. We have a very experienced and a renewed Board. We have a proven executive team led by Edward Chung, who has done an amazing job over the last 5 years as CEO. And we have a very clear strategy we're executing against. Our Global SaaS ERP solution, our focus on specific markets, our expansion in the U.K. and then also building the next generation of our products, which we are starting now, which is called our digital experience product range, which I've worked quite hard with the team over the last 12 months. So I think we are positioned for very strong growth. All right. At this point, I'm going to hand over to Ed. And Ed is going to talk a little bit about our results in more detail.

Thanks, Adrian. Good morning, everyone. Welcome to the AGM. I'll get into that more detail now. By all accounts, FY '21 was a great year. You see there that we achieved a record profit, the 12 consecutive years of record profit, with $97.8 million in net profit before tax, up 19%, which was at the top end of the guidance that we set earlier that year. As Adrian said, SaaS drives our growth and will continue to drive our growth. SaaS ARR, all organically, grew up to $192.3 million, up 43% on the prior year. And it will continue to underpin our growth, and I'll talk more about the outlook in a few more slides. Now FY '21 was a very strong result, and that's even including the continuation of our planned wind-down of our traditional legacy license fee business. Our legacy license fees, we delivered $16.8 million, that was down 38%, down $10 million as planned, but that's an immediate hit to the P&L., that's immediate reduction of that $10.8 million. So to deliver 19% profit growth including that is quite an amazing feat from the team at TechOne. This slide here is showing our future state business. Our future state business is our SaaS and continuing business, and that will grow at 15-plus percent per annum when we wind down that legacy license fees. So you can see here on the slide, today, we've got 2 businesses. We've got that legacy license fee business in orange, and it's coming down quite dramatically as planned. And by the end of FY '24, there will be 0 license fees. But our SaaS and continuing business in that blue line is growing quite fast. Last year, we delivered 9% profit growth. And as that license fees comes right off, that will grow at 15%. That top line there, that black dotted line, is the total revenue of TechOne. And last year, or FY '21, it was $311 million. Again, that's got that planned reduction in license fees by $10 million. And that license fees that was traditionally sold as $10 million is now sold at SaaS or SaaS ARR. And that's very high-quality revenue but it comes over many years. It's not that one-off perpetual license fees that we used to get. So the message here is that as that license fees comes down to 0, it's planned, it comes with that end of on-premise. And as we continue to drive our SaaS and continuing business, you'll see top line revenue growth coalesce and grow at about 15-plus percent per annum. There's no doubt, Adrian gave a really good explanation of what makes our SaaS different. It's a hugely compelling proposition for our customers. It is that one global code line which allows us to continue to invest, invest in new features, new functions, highest level of security and make it faster for our customers. And so with our massive economies of scale, we can deliver this value proposition for our customers. We take care of all of it for them. They get 2 releases a year. They're on 8 active data centers. We're IRAP protected certified, which is the highest level of cybersecurity certification of any SaaS ERP provider on the planet. Our customers are always on the latest release, we do 2 releases a year, which I'll talk about, and they're always on the latest technology. When they're on SaaS, all the products are available for them and they can take up new products, new features, new functions to solve their business problems very quickly. And the icing on the cake for them is they save 30-plus percent per annum. And we released some research during the year. That 30-plus percent per annum was independently researched by IBRS and Insight Economics. That equates to a potential of $252 billion over the next 10 years that customers in our segments can invest in more nurses, more educators, better facilities in our local government. It's quite outstanding. Now as Adrian said, we've got about 640 customers on our SaaS platform at the end of FY '21. And there's another 400-plus customers to go. And so there's plenty of runway. There's about $145 million of additional SaaS ARR as those customers from on-premise move to our SaaS platform. Now if you look at SaaS, it's very high-quality recurring revenue, as Adrian said. And if you mix that and combine it with our very low churn rate, 1%, that's 1% of churn every year, or on the other side of the coin, 99-plus percent retention, and we've done that for 35 years. That's unheard of in our industry. And it's because of our continued investment in R&D to keep our customers on the latest technology. It's because of our compelling customer experience and the Power of One, we're 100% accountable, and we never lose a customer. It is almost a crime in TechOne to lose a customer. We'll do anything to make sure we give that customer a great experience and keep them happy and keep them forever. And so today, that recurring revenue, it's about 90% of our revenue. So we start a year knowing that we've got 90% revenue locked in, and that puts us in the driving seat for continuing strong growth every year after that. There's our target, $500 million by '26. So yes, Adrian, you're right, we do have a bet that we could deliver more than that and deliver it faster. So when you combine that compelling value proposition of SaaS, what it does for our customers, combine it with announcing the end of on-premise by FY '24, we are committed, we are confident we will deliver $500 million worth of ARR by FY '26. And Adrian said, I think you said 40%, Adrian. We delivered margin improvement that came from our -- from the massive economies of scale we're getting from the SaaS platform. So as we put more customers on it and continue to drive new technologies to reduce the cost for us, improve the security and improve the performance for our customers, we will continue to drive margin expansion. And you've seen that over the years. Last year, we went from 28% to 31%. We will deliver that 35% profit margin expansion. And when we get there, we just set the next target, we set it to 40%, we set it higher. And we drive our business and drive our team to continue to deliver not only faster software, high security software, but higher-margin Software as a Service for TechOne. And when you add that growth in ARR and the margin expansion, we expect to continue to double in size every 5 years, as we have for the last 35 years. Turning to our balance sheet. There's no doubt we have a strong balance sheet. We ended the year with cash and equivalents of $142.9 million, up 14%, and that's even after making the acquisition of Scientia, which was about $12 million. We have no debt, so we've got a very strong balance sheet. It also shows in our cash flow generation. Cash flow generation was $63.9 million there, up 12%. And that cash flow generation was 88% of net profit after tax, which beat our guidance of 80% of net profit after tax. And it comes from selling well, implementing well, keeping our customers happy, collecting well, all parts of the business are firing. And so therefore, it translates to happy customers and collecting cash flow. That's our strong and disciplined cash collection. Now just a reminder, at the half, we have this phenomenon, which will continue where most of our anniversary dates for our customer subscription is in the second half. So at the last half last year, we had negative cash flow generation of minus $3 million. But you can see from the results that there was big cash inflows for that annual subscription in the second half to end the year as we did. And that will continue in the years to come. Our R&D investment is for the future, and it's significant. You can see there that our R&D investment was $77 million, 24% of revenue, up 13%. Now that's significantly higher than our usual benchmark of 8% per annum, but we took the opportunity to invest in some exciting new technologies in our SaaS platform, features and functions for our customers and, of course, DXP, I'm going to talk about that next. And we're physically responsible. We manage that extra investment in R&D within the total expense sort of budget for TechOne, and we also delivered that margin improvement that you saw. Over the last years, we've invested $500 million in R&D, and we've invested to keep abreast of the latest technologies and to keep our customers abreast of those latest technologies, and we'll continue to do that, invest in new concepts, new R&Ds, new technologies for our customers. The R&D is focused on new features, new functions, things like DXP, new technologies, things like IRAP protected certification, all the investments to make it quicker, more secure for our customers and deliver new features and functions to run their business. Going forward, we expect to return to that 8% per annum growth in R&D investment. I want to spend a few moments on DXP and give you an update on it. It's very exciting, and it will change the game. TechOne will again make a pioneering move by delivering DXP. Before I get into the details, I just wanted to say it's not a short-term thing. It's not something we'll develop and sell straightaway. If you think back at the SaaS platform, it's taken us 10 years of hard work and investment to get to where we are today, and it's fueling our growth and continue to fuel our growth for many years to come. DXP is similar. So in the SaaS platform, we invested because we knew it was the right strategy, made plenty of losses for the first few years, and now it's powering our growth. It will be similar in DXP. We're going to make lots of investments. We'll make some mistakes, we'll learn a few lessons, we'll see what the market does, but it will fuel our growth going forward. Now what is DXP? To understand DXP, I'll just recap a little bit on that Global SaaS ERP that Adrian talked about. Our Global SaaS ERP today is focused on the power users or the back office users in an organization. So if you think about any organization, think about the local government, it can be the accountants doing the month-end processing, the payroll clerks running payrolls. It can be the town planners assessing pool applications or certifiers in a local government. That's the hundreds and thousands of users that Adrian talked about in our local government organization. Now what DXP is, is going further, is extending the reach of our Global SaaS ERP to you and me, the rate payers in an organization. I think about Moreton Bay because they're one of our early adopters of DXP. They've got 200,000 rate payers in their constituency. So we're not only servicing the thousands of employees in that organization, the potential is huge as we reach out to the hundreds of thousands of users in our local government. If I sort of now pivot to a university, again, there's thousands of users admitting students paying staff, doing month end, but 1 university can have 50,000 students, 100,000 students. So again, the DXP will reach further than the traditional DXP. It will set us apart again from Workday, SAP and Oracle, the traditionals. It will make us stickier in those organizations. And of course, we will deliver excellent service and a compelling service for that organization. Turning to the U.K. Now the U.K. is 3, maybe even 5x the size of the Australian market. So the addressable market is huge. When you think about our journey, it's been a long journey in the U.K., we're completing that customer remediation phase. So we're out of that now, and we're doubling down for growth. When you look at the achievements for FY '21, you can see there that the profit was $1.6 million, up quite a lot on a small breakeven the year before. And our ARR, we ended with $9 million. So the baseline is set, the beachhead has been made. We've broken even. In the year, we closed 8 new logos, all in -- mainly in local government, and we knew that heading into the year. The important note is that we closed 2 unitaries. So we found our sweet spot in local government, and they have been at the smaller end as we've got that beachhead and [ major role ] software [indiscernible]. Our business was scaled in the U.K., and we're moving up the value chain. And so those 2 new unitaries are probably double the size of the deals we've been doing. And we've got to do that carefully before we move up again, but they're quite nice wins for our organization. Looking forward, we've got a strong pipeline for FY '22. We have finished the R&D effort for U.K. student management. We're in the last phases of implementation for our first customer and student management. So we'll now be able to sell student management in a big way in the U.K. Our HRP regionalization is just around the corner with 5 customers going live in a matter of months. And we've appointed a new executive, our new executive, Leo Hanna, who is focused on growth. And I think Leo might be here in the room first time. And of course, we've acquired Scientia. So I'm going to talk about Scientia now. So as Adrian said, we've got our focus on vertical markets. This is higher education. And we've known Scientia for many years, we've known them for 20 years. They do mission-critical software for higher education. It's scheduling the rooms, the students, the teachers. It's quite a complex algorithm to get that right. And then you think there's many subjects, many degrees, many courses. It's quite complex in a university. And we've integrated it with them in many universities in Australia. So it was quite exciting when the opportunity came to acquire Scientia. Scientia expands our broad software even further with mission-critical software for the higher education markets here at home and, of course, in the U.K. No one else has our footprint, and we've just made it even broader, set us apart even more. The second exciting thing about it is, they've got 150 U.K. higher education customers that we can sell our student management into, our financials, our HR, payroll, they've got existing relationships. So it's quite an exciting acquisition, and it shows our commitment not only to the U.K., but to the higher education sector globally as well. Our people solve the most complex problems in the world. Adrian talked about it a number of times, the engineering feat of all the generational shifts we've done can't be done without smart intelligent people that have that grit and determination to keep working hard to solve those complex problems. We compete against SAP, Oracle, Workday, who have got hundreds of thousands of staff. TechOne has 1,200. They probably have tens of thousands, hundreds of thousands of developers. We've got 400, and we win. It's through their smarts, their creativity, innovation and their grit and determination. Now we all read about the market pressures with staff. And TechOne's had to respond like every other company, but we take a very holistic approach to our staff. Sure, we have to address remuneration, and we gave our leaders healthy budgets to address remuneration, but people joined TechOne for a career. So we're focused very highly on career plans, career paths for individuals. So you can start as a developer or start as a support consultant and move into presales in a different part of the organization, into R&D, into consulting. It's very focused. We also invest in our culture, and we invest in our people through our award-winning programs. You see them there, our buddy events, grads, hack days. We're fortunate enough to run a CKO, a company kickoff, in May last year. When sort of lockdowns sort of disappeared for a little bit, we brought as many staff, most staff, 800 staff here to Brisbane, here to the showgrounds to reconnect with each other, reconnect with our strategy, our vision, our purpose. So we invest heavily not only in remuneration, but in careers and culture. And that combined is our focus for people. Of course, we've got the TechnologyOne Foundation, which kicked off in about 2016, 2017. It's a really important driver of who we are as a company, and it's helping set our culture. And to be honest, it also helps attract new generation, attract the young generation. We focus on the youth in our foundation because we believe through the youth, we'll have the greatest impact on the future. And it wouldn't be the TechOne way if we didn't set an ambitious goal. And our ambitious goal is to lift 500,000 kids and their families out of poverty by 2032. That's a massive feat. We focus on great Australians doing great things. Up here on the slide is the key charities that we support. And underpinning this also is this thing called the 1% pledge, where we pledge 1% of our profit, 1% of our time and 1% of our product to the charities we serve and the communities we serve. When you add all that up, that's a big investment of $2 million plus per annum. And as TechOne continues to grow, that investment will also grow for our TechOne Foundation. So whichever way you look at it, TechOne had a great year in FY '21 by all metrics. I won't go through all of those, but we had record profit, record revenue and record SaaS ARR. I want to spend a few moments now on the outlook for next year. Looking forward, the markets we serve are highly resilient, think of them local government, higher education, government, they're highly resilient. We provide significant value through our SaaS ERP and its mission-critical software. The software is running a local government, it's running a university. It's resonating with them. And by our customers moving to our SaaS ERP, they then -- we take away all their pain, so they can focus on educating the next stars or looking after the infrastructure and our local governments. We've got a strong pipeline, and we see continuing growth for FY '22, and that's growth in ARR, SaaS ARR and in profit. Of course, we'll set more specific guidance at the half. Just spend a few moments on the long-term outlook now. So we're positioned well for growth. Our SaaS continues to grow very strongly. We've got substantial opportunity in our customer base. Our customers have about 5 of our 15 products on average. When they come to the SaaS platform, it's almost 7. So it's coming to SaaS and all the products available there. The product take-up is a lot higher in our existing customer base. We've got continuing growth here in APAC. And of course, 3 to 5x total addressable market in the U.K., which we're driving growth into, particularly in local government and higher education. And with our global SaaS ERP, we'll continue to focus on margins and getting significant margin expansion in our business. Our SaaS and continuing business will grow to 15-plus percent per annum and particularly when our license fees have come off totally as planned by FY '24. And I thought I'd now spend a few moments on our people. Adrian, speaking personally, I've known you for 15 years. It's been a fantastic journey. For the last 35 years, Adrian, you've been a great leader, a great teacher, a great mentor to all of us. We've learned many things, and we can tell lots and lots of stories, perhaps over beers, but for me, the most important lesson has been to make the impossible possible. And we'll always succeed, we'll never give up and we'll always succeed. Adrian, we wish you all the best for the future. We have a clear strategy. I believe I've got the strongest exec team in the history of TechOne. Many of them are here today, and we're confident of strong continuing results. This success of this business comes from the clear strategy and, of course, our people. We have amazing, talented, loyal, passionate people at TechOne. They're creative, they're innovative, they've got grit and determination and never say die attitude. And we have a lot of fun along the way as well. I'd like to leave you with a video reflecting on FY '21. Thank you. [Presentation]

All right. All right. Thanks, Ed, for that update. We will now move into the formal part of the meeting. All right. So the Notice of Meeting was issued to all registered members on the 17th of January. We'll take that notice as read. It will be the agenda for the items that will come next. Everyone present here today will have registered at the front desk. This includes shareholders, proxy holders and visitors. All the proxies that have been received have been inspected, and those that are validly being lodged have been registered. So we have about 246 million votes that have come in, which means we will have an indication -- we will know actually the results of all the items today. So the voting will be by poll, so that's fine. Shareholders and proxy holders intending to vote will have been given a yellow voting card on registration which they can use for voting as we go through the items. All right. We'll jump over some of the other housekeeping, and we'll just simply now go to the items. So the first item that we have is to receive and consider the financial statements and reports of directors and auditors for the year ending the 30th of September '21. The annual reports, including the financial statements, was distributed to the members and has been held by the members for the required statutory time. So this is not an item that has to be voted on, but it's a good time to ask questions to do with the company's financial performance and the annual report. So if you have any questions, if you could direct them to me and I will either answer or pass it on to the most appropriate person. If you could just raise your hand if you've got a question, and we'll bring a microphone to you. And if you could just identify yourself just for the record. So all right. So I'm just trying to find where I am here. Yes, so can we start with that item there? Any questions on the financial statements?

I'm Paul Donohue, representing the Australian Shareholders' Association. I just want to start off saying congratulations on your clients, fantastic achievement you've had so far. My question is a bit more boring compared to that. But you mentioned 91% of customers are likely to move over to SaaS. What about that 9%, is there a plan to move them over somehow or we'll have to keep us supporting them in the future?

No, no. I mean, basically, if they don't move, then they'll be unsupported and they will go somewhere else. But we're pretty confident that it will be probably closer to 99% will move across. But you just always have to allow for some slippage, some people that will do something different. So -- but no, we will stop on-premise support totally, and it will only be the SaaS business and the SaaS customers we will support.

Any other questions? All right. We shall move on to the next part of the agenda. So as we said, we're going to be doing a poll, and these are the items that need to be voted on. So I declare the poll open. You may cast your votes at any time if you haven't already voted. If you need any assistance, just put up your hand. The results of the poll will be published later today on the ASX, but we'll be able to give you a very clear indication about what the outcomes will be. All right. So the first item we have. So the meeting now needs to consider the election of a new director and the reelection of 2 existing directors in accordance with Rule 16.1 of the constitution. It should be noted that under the rules of the constitution, all directors retain office until the end of the meeting. This is just an ordinary resolution, only requires 50% of the votes cast in favor by the members. Let me start by just acknowledging the substantial contribution by the Board to support the executive team. That said, it takes a huge amount of courage and conviction to run a business like TechOne. We invest a lot of money in R&D, we're making big bets, big calls, and you need the rights to the Board to assist you to do that. And we've had a great Board and the new directors we've added have added substantial value to the business. So it's wonderful to have them on board. So the very first resolution is the election of Pat O'Sullivan as a Director. So this is the resolution that Pat O'Sullivan, who having been appointed a director on the 2nd of March last year in accordance with Rule 13.2 of the company's constitution, be elected as a director of the company. So Pat has a very esteemed background, I touched on it earlier, having been an executive for a number of very large organizations such as Goodman Fielder, Optus and Nine Entertainment, and also is currently the chair of a number of large publicly listed companies such as carsales.com and SiteMinder, plus a lot of experience on other ASX boards in the past. So he brings a lot of experience into the table here. So are there any questions on that resolution? If there is, just please raise your hand, and we'll send a mic across. Yes?

Paul Donohue, Shareholders' Association again. So Patrick, your resume is very impressive and your skills and experience aren't in question. But my question is about your workload. Given that you are serving on other Boards as a chair, now with Adrian's news that he'll be handing over at some point, is it -- so to juggle, how do you plan to do that?

Yes, go ahead.

Thanks for the question, Paul. [indiscernible] and I don't [indiscernible], mate. So in terms of the work I do, [indiscernible] young, full of energy [indiscernible]. Big shoes to fill [indiscernible] share of companies. But in terms of workload, you've got nothing to worry about, I will give my full commitment to this Board as I do to the other Boards I'm involved with.

Any other questions on this resolution? All right. So I'll ask those of you that haven't voted to complete your voting card on how you intend to vote. The proxies that we have received, can we bring them up? So as we can see, this resolution will clearly pass. All right. The next resolution is the reelection of Rick Anstey as a director, that Rick who retires in accordance with Rule 16.1 of the company constitution and being eligible to be reelected in accordance with Rule 16.2. Rick has a career that spans over 40 years. His first company was Tangent Group, established a strong reputation for the development of software products and strategic management consulting for the banking and finance sector. With the sale of Tangent, he then cofounded the InQbator and the iQFunds in 2000, which was an early-stage investment group focused on the technology, telecoms and life science sectors. So one of the early incubators here before they became prominent, helping start-ups to realize their vision. Through iQFunds and personally, Richard has co-invested in more than 30 companies with support of Commonwealth government programs, debenture capital funds in both corporate and personal investors. While being an active nonexecutive director of his investments, Rick has added value wherever appropriate to maximize shareholder value and has been actively involved in trade sales of many companies to organizations in the U.S., Europe and Australia. He has a lot of other credentials, but let me say that Rick understands the whole start-up ecosystem and brings a very interesting and valuable insight to us about what is happening in that ecosystem. So it's great to have him on board as a director. If there are any questions on this resolution, please raise your hand, and we'll send a mic across.

Rick, my question is about your independence. So obviously, you've got great skills and experience and you working in a start-up sector is very relevant. But you're listed as an independent director. You've been there for 16 years. Obviously, length of tenure doesn't automatically lead to a loss of independence. But just interested, what are you doing to maintain that independence?

Can everyone hear me? Yes. Well, it's a common question. It just happens that the year is made up. And suddenly, you feel you've been here a long time, which is outside of the normal guidelines. But I've been Chair of Governance and Nominations for, I don't know, 10 years or so. But we started our refresh 5 years ago. And when we started the refresh, I still felt I was the new boy and I still feel a bit like that, no. And I accept the fact that I'm on this Board, and I've been on there a long time. But I can't see the relationship between being here a long time and being not independent. So I have a whole number of other interests, very synergistic with what we do here. And I quite strongly believe I'm independent, and I certainly state what I believe and I'm a very small shareholder, but that's my only dependence on the company, my only conflict.

Thank you, Rick. Let me make an observation, if I can. And I am a little bit controversial, so apologies for that. But let me just say, there is another way to look at it. If you're a new director, you're not going to rock the boat. If you're an old director, you know where all the bodies are buried, and you call b******* when you see it. So I really have a problem with just time being used as a way to dictate whether someone is independent or not. It has nothing to do with time in the least. And there's more than enough research. So for example, [ David Swann ] from the University of New South Wales has shown, unequivocally, as research ever says, the companies which have actually directors that are executive directors outperform those that don't. So there needs to be a fundamental rethink on this whole idea of what is independents and who should be on Boards. We work very hard to rebuild the Board, and we put a lot of time and effort to build a very strong Board. But it doesn't come down to something as simple as length of tenure or whether you have been an executive of a company or not. I think it really is time for a major rethink on this because we really are leaving some very talented people out of the equation. We have some great talented ex-executives who would be wonderful on our Board, but we can't bring them on. And it's such a waste that those people because they know where the bodies are buried. They know where the mistakes are, and they call b*******. So I think there's time for a rethink on this whole thing. By anyway, that's my 2-bob worth on it. Any other questions? All right. So we'll now vote on this resolution. So those who haven't voted, if you could complete your voting card. But we have substantial proxies, so we'll bring it up, and I think we'll see that this will clearly pass this reelection of Rick. All right. The next resolution is the reelection of Sharon Doyle as a director. So that Sharon who retires in accordance to Rule 16.1 of the company's constitution and being eligible be reelected in accordance with Rule 16.2 of the company's constitution. Okay, Sharon. Sharon brings a lot to the table, just like all our directors. She is a pleasure to work with, and she can ask some very difficult questions. So Sharon is the Executive Chair and majority owner of the corporate advisory firm, InterFinancials (sic) [ InterFinancial ], which is a very well-regarded firm here in Queensland. She has successfully navigated technology companies through the challenges of steep global growth curves with a strong understanding of Software as a Service. And I think that's an understatement. They have just a tremendous reputation. Sharon's leadership of InterFinancials (sic) [ InterFinancial ] has seen her develop a core practice providing strategic advice for technology and other IP-rich, high-growth companies. She has extensive international experience managing merger acquisitions and private equity. Sharon has a very interesting background before that because she was actually Vice President at Mincom, which is one of Australia's really early, great software companies. So she brings a lot of experience from Mincom, the things they did well and the things maybe they didn't do so well. She has a lot of other credentials, which I won't go through and read, but just say it's a very impressive background, and she is a very strong contributor to our Board. Are there any questions on this resolution? Please put up your hand if there is. That's not fair. How come she gets a free ride? This is just not right. All right. So we will now ask you to complete the voting card if you haven't voted. But from the proxies, if we can bring them up, I think it's pretty clear that this will now pass. All right. So we come to the rem report. So this resolution is to consider, and if thought fit, to pass the following resolution that the rem report as contained in the annual report be adopted. Okay. So after consultation with the rem consultants, proxy advisers and shareholders during the year, the company's rem framework was again enhanced to make it simple as possible and to continue to align it with best practice. They have become so complex rem reports, I don't know how people make heads or tail. I look at our rem report, and I struggle. I look at other people's rem reports, they are so complicated. The company obviously has had strong results. We've gone through that. I'm not going to reread those numbers for people. But let me say that there is a strong correlation between the executive rem and the performance and creation of shareholder wealth. So the most important metric to me is that the executive rem grew by 12%, while the company's profit grew by 19%. And I think that's a nice way to have it where the executive rem is growing less than the company's profit. Last year, we did have a first strike, which was very disappointing for the company. Simply, I'd like to say that the Board executed discretion. It did the right thing last year. The company had a fantastic result, another record year through the midst of COVID. The executive team worked very hard to achieve that result, and they would have lost their LTI because of targets that are being set, number one, pre-COVID, so they were not valid targets. And secondly, we changed strategy to stop selling perpetuals and to go SaaS and that impacted their ability to meet that target and they would have lost the LTI. We had the courage and the conviction to exercise Board discretion. So we did the right thing via the executives, and we were penalized for doing that with a strike. Very disappointing situation. The message that is being sent to Boards is don't execute Board discretion even when it's valid. And the only reason why is because it's the policy. It's a policy that proxy advisers have. They don't want Board discretion under any circumstance, which is very disheartening really. So -- but anyway, we got the first strike, and we've had to live with that. But it does go to the core issue here, which is you elect the Board to run a business, to make the hard decisions. And you want Boards to have the courage and conviction to do what is right. And then you have a situation like this, which is nothing more than just a strike policy. We don't want discretion under any circumstance being foisted upon us. And so our executives are key to us. We want to do the right thing. That's not as if they were overpaid. So hopefully, that courage and conviction I talked to you guys earlier is something we will continue to have as a company. All right. So we have this resolution to vote upon. So let me just read that. Ladies and gentlemen, Section 250R (sic) [ Section 250R(2) ] of the Corporation Act (sic) [ Corporations Act ] requires that the company members vote on whether or not the rem should be adopted. This vote is advisory only, and the outcomes will not be binding on the Board. Please note that directors and executives are excluded from voting on this resolution. I can confirm that any proxy votes submitted by directors and executives have been excluded. So this is a good point to ask any questions on rem.

So Adrian, your views on the first strike are clear. But has there been a dialogue with those dissenters? And has anything positive come from that?

No, nothing's positive come from it. To be frankly honest, it still continues. You saw a statement that they issued basically saying that we actually even issued discretion this year, which we didn't, which was clearly wrong. We issued an ASX statement to clarify that misstatement. It's just a very difficult situation. There are a set of benchmark policies. And if you don't comply with those benchmark policies, then you get pinged. It's as simple as that. And it makes it hard when you've got to make the tough decisions. Boards have to be empowered. And I can understand it. If, for example, we hadn't performed strongly last year. I understand that, okay? But when the company delivered record revenues, record results and the executive team pay is within the mid-range of our peers and was well below the TSR of the company, and we did the right thing because of change of strategy, I mean, that's what I struggle to understand, how that happens in the first place. I think that the solution to this problem is very simple, and I don't know why it hasn't been fixed, which is if the rem resolution had a 50% threshold, like every other resolution, then it would be truly representative of the majority of our shareholders. And I think then we would get a more balanced outcome, a more balanced dialogue. At 25%, unfortunately, it is not representative of the majority of shareholders. So that's the problem. I'm sure tomorrow I'm going to get pinged in the Financial Review. But anyway, that's it. So any other questions on rem? All right. So this is a resolution that I will ask you to complete your voting card, if you haven't already voted. But we have the proxies through, and it's pretty clear that this resolution will pass. So that's great. And so there's no need for resolution 5, which is the contingent resolution to spill the Board. Okay. From a housekeeping point of view, we'll collect any voting cards. We'll be publishing the final results on the ASX later today. We will retain all the proxies and stuff for 6 months. But I'd just like to finish off and I just want to finish off by saying, it's been amazing 35 years. I've been very fortunate to work with such a talented bunch of people, very innovative, very creative, very passionate. And it's been a pleasure to lead the company over that period of time. I do want to acknowledge, again, our Board. It's a great Board, very hard-working and very courageous and committed people. And I think it's -- the company is in great hands. And then obviously, with Ed and the executive team, great executive team. They just keep overcoming the challenges. I mean COVID was a good example where we just absolutely pivoted on the dime to go from working on-premise to working remotely and having to sell remotely. And these are big difficult enterprise deals, and we still achieved our numbers. I mean that's a credit to his exec team. So thank you to Ed and to the Board. I want to also thank our shareholders for the support over many, many years. Let me now formally close the meeting, and I look forward to catching up with you guys over tea and coffee later. Thank you.