Temenos Ag · SIX:TEMN
Temenos — H1 2005 Earnings Presentation
34 slides from Temenos's earnings presentation, Aug 3, 2005
Slide 1: Financial Results & Business Update
Financial Results & Business Update Quarter and Half Year ended June 30th, 2005 1
Slide 2: Presentation Overview
PRESENTATION OVERVIEW Agenda Speaker Position Introduction Max Chuard Director Business Update Andreas Andreades CEO Financial Results David Arnott CFO 2
Slide 3: Disclaimer
DISCLAIMER – Any remarks that we may make about future expectations, plans and prospects for the company constitute forward-looking statements. Actual results may differ materially from those indicated by these forward-looking statements as a result of various factors. In particular, the forward-loo
Slide 4: Business Update
Business Update Andreas Andreades CEO 4
Slide 5: Our Vision
OUR VISION To become The leading global brand in financial services software 5
Slide 6: Temenos Today
TEMENOS TODAY A leading global banking software company A growing company with a firm foundation and strong financials Supporting two product lines for core processing: T24: Private, Universal, Wholesale, Retail banks TCB: Large scale Retail banks International Client Base 400+ institutions, 600+ li
Slide 7: Temenos Strategy
TEMENOS STRATEGY Create the leading international banking software company Become the provider of choice for the world’s leading banks Focus on four key banking segments - Retail - Universal - Wholesale - Private Growth through both controlled acquisitions and organic activities Strategic partnershi
Slide 8: H1 Results – Key Points
H1 RESULTS – KEY POINTS • Strong start to the year has continued - excellent sales performance across the Group – T24 ILF signings ahead of target at US$29 million, up 22% on 2004 – Major TCB deal with Global Tier 1 Bank in final contract stage • Business model on target: – Like for like T24 licensi
Slide 9: Sales Performance
SALES PERFORMANCE • T24 has reached a 12 month run rate of USD 56 million; higher than full year target of USD 55 million • H1 2005 comparatives unfavourable due to large TCB deal in H1 2004; deal volatility not controllable but not impacting fundamentals and performance • During the quarter we sign
Slide 10: Competition
COMPETITION • Industry consolidation continuing as per our industry forecasts, latest event being Oracle acquiring I-Flex, and will probably continue in the future as key industry players emerge • Pleased to see major software companies interested in our market segment confirming the opportunity in
Slide 11: Market Outlook
MARKET OUTLOOK • Robust growth in core spending for Retail and Universal banks on a global basis • Core system replacement today represents the number one or number two priority for CIO’s of major institutions • Key drivers are growth and strategic cost management – Customer retention (refer to arti
Slide 12: Outlook
OUTLOOK • T24 product established market leader, excellent pipeline in place – 12 months run rate at USD 56 million ahead of full year target, at 19% higher than year ago and approaching USD 60 million for the full year, up 28% – Full year target is at 10% growth compared to 2004 leaving room for up
Slide 13: Financial Results
Financial Results David Arnott CFO 13
Slide 14: H1 2005 Financial Highlights
H1 2005 FINANCIAL HIGHLIGHTS EBIT • Like for like EBIT at US$ 2.6 million for the first half compared to US$ 2.6 million for the same period last year • On a reported basis, EBIT at US$ 2.6 million for the first half compared to US$ 6.7 million for the same period last year, down 61.8% Revenue • Lik
Slide 15: Like for Like
LIKE FOR LIKE US$ millions H1 05 H1 04 % Signings 29 32 (9.4)% Revenue – as reported 72.1 78.0 (7.6)% T24 % of completion adjustment n/a (4.3) Currency impact n/a 0.9 Revenue Adjusted 72.1 74.6 (3.4)% Operating Expenses – as reported (69.5) (71.3) (2.5)% Currency impact n/a (0.7) Operating Expenses
Slide 16: Profit and Loss (Quarter)
PROFIT AND LOSS US$ million Quarter ended 30 June Quarter end 31 March 2005 2004 Growth 2005 Growth ILF Signings 17 16 8.1% 12 44.2% Revenues Licensing T24 unbundled 10.9 12.4 (12.1)% 8.7 25.3% T24 % completion 0.8 2.8 (71.4)% 0.9 (11.1)% Total T24 Licensing 11.7 15.2 (23.1)% 9.6 22.4% TCB - - - - T
Slide 17: Profit and Loss (H1)
PROFIT AND LOSS US$ million H1 05 H1 04 Growth ILF Signings 29 32 (9.1)% Revenues Licensing T24 unbundled 19.6 16.9 16.0% T24 % completion 1.7 6.0 (71.7)% Total T24 Licensing 21.3 22.9 (7.0)% TCB - 10.8 n/a Total Licensing Revenues 21.3 33.7 (36.8)% Maintenance 22.7 18.3 24.0% Services 28.2 26.0 8.3
Slide 18: Currency Movements (Q2)
CURRENCY MOVEMENTS US$ millions Q2 05 Q2 04 % Revenue – as reported 37.2 37.3 (0.0)% Currency impact n/a 0.3 Revenue Adjusted for FX 37.2 37.6 (1.1)% Operating Expenses – as reported (35.1) (34.5) 1.7% Currency impact n/a (0.5) Operating Expenses Adjusted for FX (35.1) (35.0) (0.0)% Operating profit
Slide 19: Currency Movements (H1)
CURRENCY MOVEMENTS US$ millions H1 05 H1 04 % Revenue – as reported 72.1 78.0 (7.6)% Currency impact n/a 0.9 Revenue Adjusted for FX 72.1 78.9 (8.6)% Operating Expenses – as reported (69.5) (71.3) (2.5)% Currency impact n/a (0.7) Operating Expenses Adjusted for FX (69.5) (72.0) (3.5)% Operating prof
Slide 20: ILF Signings vs License Revenues
ILF Signings vs License Revenues Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 In USD million 02 02 02 02 03 03 03 03 04 04 04 04 05 05 Total ILF Signings 12.1 11.5 11.2 23.2 8.2 14.0 6.8 22.0 15.7 16.2 11.1 19 12 17 200 Maintenance Carve Out 32 License Revenues 11.8 14.1 8.4 2.3 12.4 15.4 15.2 16.8 18.
Slide 21: Q2 2005 Cash Flow
Q2 2005 CASH FLOW US$ million Qtr ended June 30, 2005 2004 FY 2004 Net cash at beginning of period 19.3 26.2 26.7 Operating cash flow 2.4 0.3 15.9 Capital spending* (3.7) (1.5) (12.5) Net financing costs (0.5) 0.5 0.2 Other (FX impact, etc) (0.2) (0.2) 0.5 Net Cash at end of period 17.3 25.3 30.8 *
Slide 22: Outlook - 2005
OUTLOOK - 2005 • We continue to guide on 2005 Fully Diluted Earnings Per Share (EPS) to grow in the range of 20-25% compared to 2004 • We continue to target two to four TCB deals for the year • The outlook is based on: – ILF signings in the range of US$ 70-75 million – Tax rate of 16% 22
Slide 23: Outlook – 2005 Assumptions
OUTLOOK – 2005 Assumptions •We continue to see strong growth in maintenance and service revenues for the second half of the year, reaching total revenues of USD 165 – 170 million •We expect costs to be higher for the second half compared to the first half on higher variable costs that flex with sign
Slide 24: Repatriation of Group Intellectual Property to Switzerland
Repatriation of Group Intellectual Property to Switzerland •We have reached an agreement with the Federal and Cantonal Swiss tax authorities to transfer the group’s Intellectual Property from the Netherlands Antilles to Geneva. •This will take place during the second half of 2005 •The key benefits o
Slide 25: Appendix
@ TEMENOS* Appendix
Slide 26: Cash Cost (Quarter)
CASH COST US$ million Q2 2005 Q1 2005 Q2 2004 Total Cost- As reported 35.1 34.5 34.5 Capitalised development 2.1 1.6 1.2 Depreciation & Amortisation (3.2) (3.5) (3.5) Option Costs (0.8) (0.7) (0.7) Total Cash Cost 33.2 31.9 31.5 Foreign Exchange Impact* n/a (0.8) 0.5 Total Cash Cost Adjusted for FX
Slide 27: Cash Cost (H1)
CASH COST US$ million H1 2005 H1 2004 Total Cost- As reported 69.5 71.3 Capitalised development 3.8 1.9 Depreciation & Amortisation (6.7) (6.8) Option Costs (1.6) (1.4) Total Cash Cost 65.0 65.0 Foreign Exchange Impact* n/a 0.7 Total Cash Cost Adjusted for FX 65.0 65.7 * Adjusted to H1 2005 rate, in
Slide 28: Research & Development (Quarter)
RESEARCH & DEVELOPMENT US$ million Q2 2005 Q1 2005 Q2 2004 R&D costs – As reported 5.7 6.6 7.5 FX Adjustment* n/a - - Adjusted R&D costs 5.7 6.6 7.5 Capitalised Development costs 2.1 1.6 1.2 Non Cash items (2.6) (2.8) (2.2) Adjusted cash R&D costs 5.2 5.4 6.5 * Adjusted to Q2 2005 rate 28
Slide 29: Research & Development (H1)
RESEARCH & DEVELOPMENT US$ million H1 2005 H1 2004 R&D costs – As reported 12.3 15.9 FX Adjustment* n/a 0.1 Adjusted R&D costs 12.3 16.0 Capitalised Development costs 3.8 1.9 Non Cash items (5.4) (4.4) Adjusted cash R&D costs 10.7 13.5 * Adjusted to Q2 2005 rate 29
Slide 30: General & Administrative (Quarter)
General & Administrative USD million Q2 2005 Q1 2005 Q2 2004 G&A costs – As reported 6.9 6.3 7.0 FX Adjustment n/a (0.2) 0.1 6.9 6.1 7.1 • We have largely absorbed growth led investment initiatives within the existing cost base 30 30
Slide 31: General & Administrative (H1)
General & Administrative USD million H1 2005 H1 2004 G&A costs – As reported 13.2 14.8 FX Adjustment n/a 0.4 13.2 15.2 • We have largely absorbed growth led investment initiatives within the existing cost base 31 31
Slide 32: Balance Sheet
BALANCE SHEET US$ million June 2005 March 2005 June 2004 March 2004 Receivables 56.7 62.4 36.6 34.5 Accrued Revenues 23.0 19.7 36.7 35.8 Less Deferred revenue (26.5) (29.0) (27.9) (31.1) Net 53.3 53.1 45.4 39.2 Other net current liabilities (26.7) (27.9) (25.6) (24.9) Working Capital 26.6 25.2 19.8
Slide 33: Quarterly Operating Cashflows
QUARTERLY OPERATING CASHFLOWS 2005 US$m. 2004 US$m. 2003 US$m. Q1 (7.7) Q1 (1.4) Q1 (3.4) Q2 2.4 Q2 0.3 Q2 8.3 Q3 (5.6) Q3 (1.4) Q4 22.6 Q4 12.9 TOTAL TOTAL 15.9 TOTAL 16.4 33
Slide 34: Article
ARTICLE • Power of New Systems; IBK and Woori Bank Reduced the Time Taken to Develop New Product from 20 to 2-3 Days. • Date: 2005-04-19 B2 [Economics Section] Reporter: Hong-Soo Kim • In mid March, when the Korean public were heated about the Dok-do or Dok island issue in Japan, another heated race