The company's stock fell 6.4% on Monday following the allegations, which were published in the Australian Financial Review on Monday, closing at $8.18. It has forecast a rise in after-tax profit ranging from 8% to 12% after returning a 6% increase in profit to $19.1 million for the six months to 31 March.
In an announcement to the ASX on Monday, the Brisbane-based TechnologyOne said GMT Research had only spent half an hour with its personnel.
In the report, GMT accused TechnologyOne of inflating its pre-tax profit by 200%. Apart from alleging that the tech firm had changed contract renewal dates to hide a drop in revenue and profits, GMT also claimed that TechnologyOne had upped the rate of capitalisation on software development costs last year.
"TechnologyOne confirms that the claims made in the AFR by GMT Research are false and misleading. TechnologyOne unreservedly stands 100% behind our audited accounts as being a true and accurate reflection of our business over the last 21 years.
"TechnologyOne will refer this matter to [the] Australian Securities and Investment Commission. TechnologyOne has provided Guidance for the full year and remains committed to this guidance."
The AFR quoted Morningstar analyst Gareth James as claiming the move to increase capitalisation was common knowledge and analysts, including himself, had already quizzed TechnologyOne about it.
James said he had been surprised when TechnologyOne changed its policy. "[When the accounting standards changed] I said to Ed Chung 'why are you bothering offsetting the difference with the capitalisation?' The requirement they had to change revenue recognition is irrelevant, because it doesn't change cash in the door. Any serious investor would say they didn't care."