##{"id":60967,"date":"2012-11-27T12:58:31","date_gmt":"2012-11-27T01:58:31","guid":{"rendered":"http:\/\/www.fnarena.com\/index.php\/2012\/11\/27\/solid-performance-for-technology-one\/"},"modified":"2012-11-27T12:58:31","modified_gmt":"2012-11-27T01:58:31","slug":"solid-performance-for-technology-one","status":"publish","type":"post","link":"https:\/\/staging.fnarena.com\/index.php\/2012\/11\/27\/solid-performance-for-technology-one\/","title":{"rendered":"Solid Performance For Technology One"},"content":{"rendered":"

\n\t – Technology One delivers solid full year profit
\n\t – Margin progression a positive in tough market
\n\t – Capital management still expected
\n\t <\/strong><\/p>\n

\n\tBy Chris Shaw<\/p>\n

\n\tTechnology One ((TNE<\/span>)) delivered a full year net profit after tax of $23.6 million, an improvement of almost 16% relative to FY11<\/span> and slightly better than guidance from management for an increase of 10-15%.<\/p>\n

\n\tThe result was helped by a lower tax rate, but UBS suggests the fact operational results were only slightly lower than had been forecast was a solid performance given the current tough economic environment.<\/p>\n

\n\tOne disappointment was the lack of any special dividend, UBS attributing this to an additional tax concession applied to research and development. This had the effect of reducing Technology One's franking balance, so making a special dividend less attractive. <\/p>\n

\n\tGiven a strong balance sheet BA Merrill Lynch expects some capital management initiatives in the future. Without any special dividend in FY13<\/span><\/span>, Technology One is still forecast by UBS to offer a yield of nearly 6%, 100% franked.<\/p>\n

\n\tFor BA-ML, a key positive in the Technology One result was clear progression in margins, this as research and development as a percentage of sales fell during FY12<\/span>. This supports a solid earnings outlook in BA-ML's view, especially given the company has a relatively strong pipeline of work going forward. <\/p>\n

\n\tUBS agrees Technology One has made progress both on margins and its cost base, but remains cautious with respect to the medium-term outlook given the potential for contract delays in what remains an uncertain environment in terms of business capex<\/span>.<\/p>\n

\n\tTo account for this UBS has trimmed earnings estimates in coming years, this as lower initial licensing fee growth and higher distribution and market costs are allowed for in the broker's model. On the plus side, UBS continues to expect Technology One will grow at above market rates given increased market share, growth in new modules and improved profit metrics as R&D falls.<\/p>\n

\n\tUBS's revised earnings per share (EPS) forecasts for Technology One stand at 8c<\/span> in FY13<\/span> and 9c<\/span> in FY14<\/span>, while BA-ML expects outcomes of 8.1c and 9.4c respectively. Consensus EPS forecasts according to the four brokers in the FNArena<\/span> database covering the stock stand at 8.3c and 9.4c.<\/p>\n

\n\tRevisions to its numbers have seen BA-ML lift its price target for Technology One to $1.59 from $1.57, while UBS has made a more significant increase and moved its target to $1.50 from $1.30. The consensus price target according to the FNArena<\/span> database has risen to $1.37 from $1.32 previously.<\/p>\n

\n\tThe database shows three Buy ratings and one Hold for Technology One. Both BA-ML and UBS see enough value to maintain their positive views, this as operating leverage begins to come through and as the company is still expected to deliver better than market growth. <\/p>\n

\n\tShares in Technology One today are slightly higher in a stronger overall market and as at 12.45pm were up 2c<\/span> at $1.41. Over the past year the stock has traded in a range of $0.93 to $1.425, the current share price implying modest downside relative to the consensus price target in the database. <\/p>\n

\n\t <\/p>\n

\n\tFind out why FNArena<\/span> subscribers like the service so much: "Your Feedback (Thank You)<\/a>" – Warning this story contains unashamedly positive feedback on the service provided.<\/em><\/p>\n","protected":false},"excerpt":{"rendered":"