Tony welcome to FNN. Objective Corporation is a vendor to the enterprise content management sector of the software industry, for those not familiar with this, what are you selling? And who are your clients?
Tony Walls: Thanks Clive. Essentially what we sell is to the public sector primarily, and it really is about efficiency and compliance. So the solutions that we sell are really about giving organizations efficiency through business process at the same time as being compliant with public legislation. And I guess underpinning all that is really a strong element of document and records management that’s become really the main stay of what people do these days is output in a textual form and we are really all about managing the control of that information.
Clive Tompkins: Ok so what’s your revenue split between government and private enterprise?
Tony Walls: Probably across the three levels of government. So in Australia; federal, state and local, and then internationally between central and local governments, that probably makes up roughly 90 per cent of our revenue.
Clive Tompkins: And is this expected to change given the pressure on state and federal governments?
Tony Walls: No I don’t really think so Clive, because what happens is in these times really people are still looking for efficiency, there is no doubt that the government is going to be looking for efficiency at the same time as stimulating what’s happening in the general economy. I think because of what we offer, whether times are good or times are lean, I think we’ve got a demonstrable return on investment and a value proposition for our customers. So I really don’t see too much of that changing. You know we might change certain aspects of our offer to the market place but essentially I see that what we have to offer is going to continue to be in demand from that sector.
Clive Tompkins: Looking at your most recent financials to the 31st of December, profit rose to half a million on revenue of $16.9 million. Can you explain the result?
Tony Walls: I think if you go back and look at our results from a couple of years ago, we had a period where we our investment in innovation. That investment has continued on and whilst we have improved in terms of profitability on a year on year basis, we’ve maintained and continued to invest in R&D innovation. And so we were pleased to be back in the black for the first half of the year, revenues were up and I think overall you know it was a good result given the general economy.
Clive Tompkins: You have a legacy holding in NAB income securities which lost over $600,000 for the half. Are you looking at selling the stake and using the money elsewhere?
Tony Walls: At this point in time we don’t have any plans to liquidate our holding on the return on that investment is paid on the face value of $100, clearly that’s off by roughly 30 per cent at the moment but the coupon is based on that $100. So our return on that investment is still ok compared to what it might otherwise be if we were holding it in cash. We’ve traditionally held a lot of cash, and it was a way of sort of maximizing the return on that cash.
Clive Tompkins: Objective recently acquired U.K. based limehouse software for $6.5 million, how will they compliment your offering?
Tony Walls: limehouse addresses the public sector market predominantly. They’ve got a leadership position within the U.K. local government sector, that is a sector that we are interested in. We’ve been in the U.K. for quite a period of time now and what limehouse does is really provide an ability to collaborate on strategic document creation and then consult with the general community. And I think as has been seen by recent engagements, even in Australia from ministers within state and federal government, that community consultation, that engagement with the community in an electronic age is something that governments, in particular in western countries, are interested in doing. So limehouse fits that model for us. Only having owned the business for the last few weeks we’ve already seen a very active demand for the solution even in Australia, so I think our purchase of limehouse has been very timely.
Clive Tompkins: Last question Tony. Where do you see the company this time next year – both in terms of what you do and financially?
Tony Walls: What we really are about is better government services at a lower cost to the community. I think we’ve been doing that for many years now. So the solutions that we offer to all tiers of government as well as our corporate customers, they really come back to the efficiency angle and the compliance angle. And having said that in this environment people are looking for efficiency at the same time as wanting to fulfill either compliance obligations or compliance desires. So we see a continuing increase in demand very clearly, despite the economic conditions we see great demand for our products and services, we’ve got a great engagement with our extended client base. We have extended our customer base in the U.K. obviously through the acquisition of limehouse and picking up another 250 customers there. So I think we’re in relatively good shape provided we remain focused on what our customers needs are. In terms of financially, we’ve got the accretion of the limehouse business coming through, we would think that our core business will improve year on year, between 08/09 and then 09/10. So I think that people can look forward to a good set of financial results from us in the next financial year.
