Temenos Ag · SIX:TEMN
Temenos — Q1 2003 Earnings Presentation
25 slides from Temenos's earnings presentation, May 13, 2003
Slide 1: Financial Results & Business Review, Quarter ended March 31, 2003
Financial Results & Business Review Quarter ended March 31, 2003
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-look
Slide 3: Presentation Overview
Presentation Overview Agenda Speaker Position Overview of Q1 George Koukis Chairman & CEO 2003 David Arnott CFO Financial results Executive Team Q&A
Slide 4: Overview of the Quarter
Overview of the Quarter George Koukis Chairman & CEO
Slide 5: First Quarter 2003 Overview
First Quarter 2003 Overview • In the face of restricted software spending by banks, Temenos has performed in line with our expectations and remains cautiously optimistic for the balance of year. • We returned to profitability with EBIT of USD 1.1 million compared to USD 0.6 for the same period last
Slide 6: Financial Results
Financial Results David Arnott CFO
Slide 7: Q1 Financial Highlights
Q1 Financial Highlights Revenue Revenues at USD 32.9 million, up 5.7% compared to the same period last year – Licensing revenue at USD 17.6 million up 7.6% for the quarter compared to the same period last year driven by stronger backlog – Services revenue at USD 15.3 million, up 3.5% compared to sam
Slide 8: Q1 Financial Highlights - Cont
Q1 Financial Highlights - Cont Cash costs • Cash costs at USD 28.0 million compared to USD 28.2 million for prior year • Cash costs adjusted for foreign exchange since Q1 2002 at USD 28.0 million compared to USD 31.9 million, down 12.2% on prior year Operating profit • Operating profit for the quart
Slide 9: Profit & Loss
Profit & Loss USD million Quarter ended: Mar 31 Mar 31 Mar 31 Dec 31 % % 2003 2002 Growth 2003 2002 Growth Revenues Licensing 17.6 16.4 7.6% 17.6 6.3 178.7% Services 15.3 14.7 3.5% 15.3 13.8 10.8% Total Revenues 32.9 31.1 5.7% 32.9 20.1 63.7% Expenses Software development 8.1 6.6 23.0% 8.1 9.9 (17.5
Slide 10: Cash Cost
Cash Cost USD million Q1 2003 Q4 2002 Q1 2002 Total Cost- As reported 31.8 47.0 30.5 Restructuring charges / One-Off charges 0.0 (9.8) 0.0 Total Cost Adjusted 31.8 37.2 30.5 Depreciation & Amortisation 3.8 3.9 2.3 Total Cash Cost Adjusted 28.0 33.3 28.2 Foreign Exchange Impact * n/a 1.5 3.7 Total Ca
Slide 11: EBITDA
EBITDA USD million Q1 2003 Q4 2002 Q1 2002 EBIT- As reported 1.1 (26.9) 0.6 Restructuring charges / One-Off charges 0.0 (10.7) 0.0 EBIT Adjusted 1.1 (16.2) 0.6 Depreciation & Amortisation 3.8 3.9 2.3 EBITDA Adjusted 4.9 (12.3) 2.9 Foreign Exchange Adjustment * n/a (1.2) (1.8) EBITDA Adjusted for FX
Slide 12: Research & Development
Research & Development USD million Q1 2003 Q4 2002 Q1 2002 R&D costs – As reported 8.1 9.9 6.6 Capitalised Development costs 0.7 0.1 1.6 Non Cash items (2.6) (2.5) (1.4) 6.2 7.5 6.8 Cash R&D costs significantly reduced and in line with target
Slide 13: Client Services
Client Services USD million Q1 2003 Q1 2002 FY 2002 FY 2001 Revenues 15.3 14.7 57.5 61.2 Costs 11.6 12.4 53.1 53.5 Margin 3.7 2.3 4.4 7.7 Margin (%) 24.2% 15.6% 7.7% 12.6% • Service margin for quarter at historical high – Higher utilisation rate for Q1 of 81% (2002: 65%) – Better mix of external con
Slide 14: Sales & Marketing
Sales & Marketing USD million Q1 2003 Q4 2002 Q1 2002 S & M costs – As reported 6.2 18.1 6.5 Restructuring/ One-Off charges 0.0 (9.8) (0.0) 6.2 8.3 6.5 Better management of marketing spending
Slide 15: General & Administrative
General & Administrative USD million Q1 2003 Q4 2002 Q1 2002 G&A costs – As reported 5.7 6.1 5.0 Restructuring / One-Off charges 0.0 (0.9) (0.0) 5.7 5.2 5.0 G&A has been negatively impacted by foreign exchange movement
Slide 16: Balance Sheet
Balance Sheet USD million March 2003 March 2002 December 2002 Receivables 37.9 33.2 20.5 Accrued revenue 22.0 34.1 20.3 Less Deferred revenue (33.3) (16.2) (22.2) Net 26.6 51.1 18.6 Cash 17.5 53.1 24.0 Unutilised facility 15.0 24.8 15.0 Less Debt (7.5) (30.0) (5.0) Available Cash 25.0 47.9 34.0 Impr
Slide 17: Quarterly Operating Cashflows
Quarterly Operating Cashflows Quarter Amount Quarter Amount Quarter Amount Q1 2002 (4.5) Q1 2001 1.7 Q1 2003 (3.4) Q2 2002 4.1 Q2 2001 2.2 Q3 2002 (12.8) Q3 2001 (5.9) Q4 2002 7.8 Q4 2001 1.6 TOTAL (5.4) TOTAL (0.3) • Q1 outflows in line with expectations • Q1/Q3 expected to be outflows, Q2/Q4 inflo
Slide 18: Operating Cash Flows
Operating Cash Flows USD million Q1 2003 Q1 2002 Q4 2002 Operating Earnings 1.1 0.6 (26.9) Restructuring costs 0.0 0.0 (7.0) One -Off charges 0.0 0.0 10.7 Working Capital changes (8.2) (7.4) 27.7 Depreciation & Amortisation 3.8 2.3 3.9 Operating Cash Flows (3.3) (4.5) 8.4
Slide 19: Q1 2003 Cash flow
Q1 2003 Cash flow US$ million Qtr ended March 31, 2003 2002 Cash at beginning of period 24.0 65.3 Operating cash flow (3.3) (4.5) Capital spending, including deferred (2.9) (7.6) consideration for 2002 transaction Financing (0.3) (0.1) Cash at end of period 17.5 53.1 Q1 2003 is in line with our expe
Slide 20: Q1 2003 ILF Backlog
Q1 2003 ILF Backlog US$ million Qtr ended March 31, 2003 Backlog at the start of the Quarter 32.9 ILF revenue booked (10.7) Signings (ILF value) 6.9 Backlog movement – more than 12 month (1.9) Foreign Exchange effect 0.3 Closing Backlog 27.5 ILF 12 months Backlog in line with plan
Slide 21: Corporate Activities
Corporate Activities • Alphametrics Resale – In March 2001 Temenos purchased Treasury Front Office functionality from Alphametrics – We have incorporated this functionality within our own product and have no further use for the IPR’s. – In March 2003 we agreed on a management buy back of the IPR’s –
Slide 22: Financial Guidance
Financial Guidance • Pipeline remains strong, and we remain cautiously optimistic. 83% visibility from business closed to date of our targeted 2003 revenues • We are confident of achieving our Q2 ILF signings target of US$$12.8 million • Impact of SARS on 2003 signings is still uncertain. • Maintain
Slide 23: Additional Slides
% TEMENOS Additional Slides THE BANKING SOFTWARE STANDARD
Slide 24: 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 25: Revenue Recognition - A Case Study
Revenue Recognition - A Case Study Backlog Revenue Cash Deferred Accrued On Signing 10 0 0 0 0 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