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Tech sector boom continues with big profits, bigger prospects

Business

Brisbane’s emerging tech industry has found more success after two companies reported major financial deals with one forecasting it would double the size of its business in five years.

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Data centre developer NEXTDC has increased its debt raising by $350 million to $1.85 billion.

The company, which has grown from nothing when it was started by Bevan Slattery 10 years ago to have market capitalisation of $6 billion, said it had been overwhelmed by the response from what it said was a diverse set of new and existing lenders.

Financial close of the senior debt facilities would not occur before the redemption of an existing $800 million in unsecured notes on December 9.

That will mean the NEXTDC would have liquidity of $1.95 billion of which $893 million was cash. Undrawn debt would be $1.05 billion.

NEXTDC managing director Craig Scroggie said the level of support significantly exceeded expectations.

“The ability to upsize this transaction highlights the quality, maturity and resilience of the business NEXTDC has built over the last 10 years,” Scroggie said.

“NEXTDC now has an enhanced funding runway to continue to invest in our best-in-class facilities to support growth of our customers in key markets.”

Adrian Di Marco’s Technology One has also reported its 11th consecutive record profit. The company reported an underlying profit before tax of $86.1 million, a rise of 13 per cent, but a result that was impacted by a legal case that cost it $5.2 million over an unfair dismissal claim.

Technology One said it was now appealing the decision alleging 12 errors of law and fact.

The company said it forecast margin improvements of more than 35 per cent in coming years, driven by economies of scale.

“We are on track to double the size of our business in the next five years,” Technology One claimed.

Shareholders will receive a boost to total dividends of 8 per cent.

The company said its Software as a Service (SaaS) recurring revenue was $134 million, a rise of 32 per cent.

“We added 104 enterprise customers this year to out global SaaS ERP (enterprise resource planning) solution and we now have 539 large scale enterprise customers with hundreds of users making it the largest single instance SaaS ERP offering in Australia,” the company said.

The company said it when the COVID-19 restrictions hit its customers were able to shift easily to remote working.

“This is a very strong result as we continue to transition from our legacy licence business to SaaS,” the company said.

“Total revenue was up 4 per cent but we believe this is not a true indication of the growth of our business as it includes the legacy licence business which we are aggressively reducing as we grow our SaaS business.”

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