TechnologyOne has decided not to increase the pay packets of its executives and directors this year on the back of its 2009 results released today.
Adrian Di Marco
"It is noted that the 2009 base salaries increased by 5-6 per cent because they were approved prior to the global financial crisis," the company's preliminary annual report for the year to 30 September said. "To compensate for this, at the remuneration committee meeting held on 6 November 2009, it was resolved to freeze the base salaries for executives on the back of the 2009 profit result."
Di Marco's pay currently sits at $831,101, of which $395,527 is base salary. His performance related bonus dropped 9 per cent in line with the company's profit reduction.
The company increased its sales revenue by 11 per cent to $120.7 million, a smaller number than it had hoped, as forewarned by founder and executive chairman Adrian Di Marco in September. Net profit fell by 9 per cent to $15.7 million.
One factor which lead to the profit fall was rising costs. Last year, costs rose 47 per cent up year-on-year on the back of growth. This year, TechnologyOne has managed to cut down the cost growth to only 17 per cent. Other factors in the lower profit included a delay in a multimillion-dollar contract, as mentioned by Di Marco in September, and the poor state of the market in the UK.
"[The UK market] has made operating conditions for a new entrant such as TechnologyOne much more challenging than originally anticipated," the results said. The company has now carried out a review of its sales operation and was making changes in Australia and the UK.
Yet Di Marco was not cowed by the company's numbers. "In a time of significant economic uncertainty and global financial crisis, when our competitors have reported dramatically reduced revenues and licence fees, TechnologyOne has posted our sixth consecutive year of record revenues and licence fees," he said in a statement.
In Australia and New Zealand, the company had won new deals with the New Zealand Stock Exchange, Beyond Blue, Lifeline Australia, the City of Melbourne, Arab Bank, SunSuper, the University of Tasmania, Seqwater and the Children's Medical Research Institute, he said.
Another strong point, according to Di Marco, was the $24.9 million research and development (R&D) spend, 20 per cent up on the last year.
"In such a challenging economic period some would argue that we should have made substantial cuts to our R&D programs," Di Marco said. "Without a doubt R&D has underpinned our long-term success in the market, and to this end TechnologyOne has taken a long-term strategic view that has seen all our R&D projects continue, with no staff reductions."
The company also announced that it would open a new "state-of-the-art" R&D centre in early 2010 to consolidate all of its R&D staff in one location. The cost of the centre was not stated, with the company only saying it would be a "significant" investment. TechnologyOne had, however, implemented a headcount freeze in its R&D division to control costs.
Di Marco was sure that the increased revenues were due to the R&D spend. As one example of where the spending is heading, next year will see the company create pre-configured enterprise systems which is slated to reduce implementation times and therefore risk.
"Since we launched our first preconfigured solution in September 2008, OneFMA, for federal government agencies, which we designed in response to feedback from customers needing to streamline their financial reporting, we have seen more than $3 million worth of new business," said Di Marco.