TechnologyOne grows 1H profit 29%

Software and services company TechnologyOne (ASX:TNE) is projecting a 10-15 per cent growth in full-year earnings, after reporting profit of $7.4m for the half-year ended in March

Enterprise software and services company, TechnologyOne (ASX:TNE), has reported a 28.9 per cent increase in net profit for the half-year ended in March.

The company earned a profit of $7.4 million, from 20.9 per cent higher revenue of $71.6 million. Pre-tax profit grew by $2.2 million to $9.1 million.

In its first-half results, the company said it achieved the growth despite a $6.8 million impact from investments in areas including its new Solutions group and its UK business.

Revenue from initial licenses sales grew 10 per cent to $15.6 million, with annual license fees increasing by 16 per cent to $21.8 million.

Consulting services revenue also grew five per cent to $19.6 million, while the contribution from the TechnologyOne Plus project services department increased 82 per cent to $10.3 million.

But total expenses rose 19 per cent to $62.5 million, with R&D expenses up 17 per cent to $14.9 million as a result of the opening of a new Brisbane R&D centre in the second half of FY10.

Total R&D spend represented 21 per cent of revenue - above the company's usual 18 per cent target.

TechnologyOne is nevertheless also exploring opening another R&D centre offshore. The company will conduct a six to 12 month trial program to test the offshore R&D centre concept.

TechnologyOne is now forecasting a 10-15 per cent increase in profit after tax for the full year, but said it expects expenses to be up by around 14 per cent on the prior year.

TNE shares grew 4.76 per cent in Monday's trading to $1.100.

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