Temenos Ag · SIX:TEMN
Temenos — FY2002 Earnings Presentation
30 slides from Temenos's earnings presentation, Mar 11, 2003
Slide 1: Financial Results & Business Review, Year ended December 31, 2002
Financial Results & Business Review Year ended December 31, 2002
Slide 2: 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-looki
Slide 3: Presentation Overview
Presentation Overview Agenda Speaker Position Overview of 2002 George Koukis Chairman & CEO Financial results David Arnott CFO Q&A Executive Team
Slide 4: Overview of 2002
Overview of 2002 George Koukis Chairman & CEO
Slide 5: 2002 Overview
2002 Overview • During the last quarter of 2002 we absorbed the remaining impact of our weak sales performance during the earlier part of the year and the second half of 2001 • We also absorbed a significant amount of one off non cash charges against investments and other assets based on an outlook
Slide 6: 2002 Overview - Cont
2002 Overview - Cont • New deals signed during Q4 include: – Jih Sun-Taiwan – Dunfirmline Building Society- UK – Credit Suisse Italy – Saudi Hollandi-Saudi Arabia – Friesland Bank-Holland – Bank Leumi-Switzerland – IE Bank-Philippines – Credit Unions-Ireland • And since 1st of January 2003: – Fortis
Slide 7: Market share
Market share • TEMENOS Globus was ranked number two in the IBS sales league table, with respect to new clients signed Product Supplier 2002 2001 2000 Live sites 1 Flexcube I-flex Solutions 36 29 37 98 2 Globus Temenos 32 36 42 500+ 3 Quantum Sungard 19 6 - 55 4 Olympic ERI Bancaire 14 18 18 230+ 5 E
Slide 8: Financial Results
Financial Results David Arnott CFO
Slide 9: Q4 Highlights
Q4 Highlights • Revenue • Revenues at USD 34.6 million, up 11.3% compared to the same period last year • Licencing revenue at USD 19.4 million up 18.3% for the quarter compared to the same period last year • Services revenue at USD 15.3 million, up 3.5% compared to same period last year • Operating
Slide 10: 2002 Highlights
2002 Highlights • Revenue • Revenue at USD 113.3 million down 20% compared to prior year – Licencing revenues down by 30% compared to prior year – Services revenues down by 6% compared to prior year • Operating costs • Operating Costs at USD 157.7 million up 26% compared to prior year – Services mar
Slide 11: Profit & Loss
Profit & Loss USD million Quarter ended December 31 Twelve months ended December 31 % % 2002 2001 Growth 2002 2001 Growth Revenues Licensing 6.3 16.0 (61)% 55.9 79.7 (30)% Services 13.8 18.6 (26)% 57.5 61.2 (6)% Total Revenues 20.1 34.6 (42)% 113.4 140.9 (20)% Expenses Software development 9.9 5.4 8
Slide 12: Earnings per share
Earnings per share Quarter ended December 31 Twelve months ended December 31 2002 2001 2002 2001 2000 Net income (USD million) (33.4) (0.8) (49.5) 5.9 10.6 Shares outstanding (m) 53.9 51.8 53.0 45.7 53.1 Diluted shares outstanding (m) 59.1 56.9 58.1 48.6 56.8 Basic EPS (0.62) (0.02) (0.93) 0.13 0.20
Slide 13: EBIT
EBIT USD million Q4 2002 EBIT- As reported (26.9) (44.4) Restructuring charges / One Off charges (10.7) (17.8) (16.2) (17.8)
Slide 14: Research & Development
Research & Development USD million Q4 Q3 Q4 2001 R&D costs – As reported 9.9 11.0 5.4 Restructuring / One Off charges (0.0) (2.5) 0.0 9.9 8.5 5.4 Capitalised Development costs 0.1 0.7 2.1 Non Cash items (2.5) (2.5) (1.1) 7.5 6.7 6.4
Slide 15: Sales & Marketing
Sales & Marketing USD million Q4 Q3 Q4 2001 S & M costs – As reported 18.1 10.2 7.1 Restructuring/ One Off charges (9.8) (1.8) 0.0 8.3 8.4 7.1
Slide 16: General & Administrative
General & Administrative USD million Q4 Q3 Q4 2001 G &A costs – As reported 5.7 6.6 5.0 Restructuring / One Off charges (0.9) (1.7) 0.0 4.8 4.9 5.0
Slide 17: Quarterly Operating Cashflows
Quarterly Operating Cashflows Quarter Amount Quarter Amount USD Million USD Million Q1 2001 1.4 Q1 2002 (4.5) Q2 2001 2.2 Q2 2002 4.1 Q3 2001 (4.8) Q3 2002 (12.8) Q4 2001 0.9 Q4 2002 8.4 TOTAL (0.3) TOTAL (4.8) Marginal operating cash outflows on an annual basis High seasonality
Slide 18: Cash Flows
Cash Flows USD million Q4 2002 Operating Earnings (26.9) (44.4) Restructuring costs (7.0) 1.0 One Off charges 10.7 10.7 Working Capital changes 27.7 15.4 Depreciation & Amortisation 3.9 12.5 Operating Cash Flows 8.4 (4.8)
Slide 19: Balance Sheet
Balance Sheet USD million Dec.-02 Sep- 02 Dec- 01 DSOs (Days) 31 65 64 Receivables 20.5 34.4 33.5 Accrued revenue 20.3 37.3 30.7 Less Deferred revenue (22.2) (19.9) (16.6) Net 18.6 51.9 47.6 Cash 24.0 38.1 65.3 Unutilised facility 15.0 17.0 17.0 Less Debt (5.0) (30.0) (30.0) Available Cash 34.0 25.1
Slide 20: Cash Flow (USD m.)
Cash Flow (USD m.) 1999 2000 2001 2002 Operating Cash Flow 6.9 10.0 (0.3) (4.8) Capital spending, incl. Acquisitions (3.6) (6.1) (25.7) (16.1) Other (including loan repayment) (2.7) 1.2 89.8 (20.3) Total Cash Flow 0.6 5.1 63.8 (41.2)
Slide 21: 2002 Investing Cash Flows
2002 Investing Cash Flows 2002 « Cash Flow from Investing » comprises: USD 5.2 million: Infrastructure. USD 6.5 million: Acquisitions and Investments (USD 1.8 million from prior year) USD 4.4 million: Capitalised Development USD 16.1 million Q1 2002 USD 7.6 million Q2 2002 USD 3.9 million Q3 2002 US
Slide 22: ILF Signings
ILF Signings • Q4 ILF signings USD 23.2 million vs USD 17.3 million for the same period last year • ILF signings have begun to convert into cash and will convert into earnings in 2003 under our revenue recognition policy ILF Signings 2002/2001 2002/2001 2002/2001 2002/2001 25 20 (USD m.) 15 10 5 12.
Slide 23: 2003 Budget
2003 Budget • Business on hand at start of year contributes 74% of the annual budget of USD 130m total revenues. Balance of budget consists from ILF and services from 1H 2003 targeted signings. • Conservative assumption for new business wins: USD 7.8m in Q1, USD 12.8m in Q2, zero for second half yea
Slide 24: Restructuring Now Complete
Restructuring Now Complete Key strategic restructuring decisions undertaken in 2002 include: Annualised Saving Development 11.1 MBO of Outsourcing business 3.2 jBase indirect go to market strategy 5.8 Marketing spending 1.8 Infrastructure 2.1 Reduced use of external consultants 8.9 Other redundancie
Slide 25: R&D Investment
R&D Investment 50000 40000 30000 Corebanking GLOBUS 20000 Cash R&D 10000 0 1999 2000 2001 2002 2003 % of revenues 15% 16% 21% 31% 23% Product investment remains high, cash cost declines following restructuring
Slide 26: 2003 Plan Build Up
2003 Plan Build Up Operating costs as a percentage of revenues 2002 to 2003 2003 2002 Impact of revenue reinvestment restructuring leverage & efficiencies and one off R&D 31% -6% -5% 3% 23% Services 49% -3% -7% -2% 37% Sales & Marketing 39% -12% -6% -5% 16% G&A 21% -1% -3% -1% 16% % of Revenues 140%
Slide 27: Financial Guidance
Financial Guidance • Maintain prior guidance • Backlog as of December 31, 2002 amounted to USD 33 million, driven by strong Q4 ILF signings representing over 85% of budgeted ILF for 2003 • Revenue guidance for Year Ending December 31, 2003 of approximately USD 130 million • Operating cost guidance f
Slide 28: Additional Slides
TEMENOS Additional Slides THE BANKING SOFTWARE STANDARD
Slide 29: Revenue Recognition - A Case Study
Revenue Recognition - A Case Study December 30th : Client signs USD 10m licence contract. USD 5m payable on January 30th, USD 5m payable on completion of project. Implementation will take place from March 1 to August 30 of year after signing – On signing: Backlog = USD 10m. No accounting entries – O
Slide 30: Revenue Recognition - A Case Study
Revenue Recognition - A Case Study Backlog Revenue Cash Deferred Accrued 10 0 0 0 0 On Signing On Upfront Pmnt 50% 10 0 5 5 0 Project: 20% complete 8 2 5 3 0 50% complete 5 5 5 0 0 90% complete 5 0 4 9 1 Live date 0 10 10 0 0