Slide 1: The software specialist for banking and finance
; ov % The software specialist for banking and finance Ec
Slide 2: Financial results & business update
Financial results & business update Quarter and year ended 31 December 2016 14 February 2017
Slide 3: Disclaimer
Disclaimer 3 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: Non-IFRS Information
Non-IFRS Information 4 Readers are cautioned that the supplemental non-IFRS information presented in this presentation is subject to inherent limitations. It is not based on any comprehensive set of accounting rules or principles and should not be considered as a substitute for IFRS measurements. Al
Slide 5: Agenda
Agenda 1. Business update David Arnott 2. Financial update and 2017 guidance Max Chuard 3. Summary David Arnott 4. Q&A
Slide 6: Business update
Business update David Arnott, CEO
Slide 7: Review of 2016: Another landmark year
Review of 2016 7 Outstanding performance across all KPIs Vendor of choice for top tier banks Total software licensing +21% Total revenues +16% EBIT margin +128bps to 29.4% Won all large deals Taking market share Traditional banking is facing its steepest challenge in over a generation. Sou
Slide 8: FY 2016 sales review
FY 2016 sales review 8 Unparalleled product offering Growth in all geographies Asia and Europe particularly strong Integrated suites, digital and analytics a key differentiator 52% of license revenues from Tier 1 and 2 clients 76 customer wins in FY 2016 vs. 72 in FY 2015 Taking market sha
Slide 9: U.S. update
U.S. update 9 Market credibility achieved Ally Financial go-live Commerce Bank win The Temenos solution will enable Differentiated product value proposition, global Commerce to bring innovative products expertise with local focus to market more quickly and efficiently. Strengthened sales a
Slide 10: 2016 operational overview
2016 operational overview 10 Taking a new client live every 4 days Maturing partner ecosystem Implementation go-lives 100 90 80 70 95 60 50 40 69 30 20 10 0 FY 2015 FY 2016 Strong operational performance
Slide 11: We are pulling ahead of the competition
We are pulling ahead of the competition 11 Top position #1 for the for 11th year last 4 years in a row #1 / #2 for Top Global Players last 17 years 178 Total number of go-lives The only Top Global Player for both new-name clients and new & repeated business in 2016
Slide 12: Proposed acquisition of Rubik – accelerating growth in Australia
Proposed acquisition of Rubik – accelerating growth in Australia 12 One of the largest financial services software houses in Australia Temenos’ partner in Australia for nearly a decade Exciting market Significant entry for Temenos into fast growing Australian market opportunity Gain sizeable
Slide 13: Overview of Rubik
Overview of Rubik 13 Extensive existing client base Target market of 80 Tier 2 banks and credit unions serviced by legacy vendors
Slide 14: Overview of the Australia financial software market
Overview of the Australia financial software market 14 8% CAGR in banking software spending forecast 2015-2019 4th largest investments market in the world due to superannuation system Advancement in Healthy banking sector driving IT spending technology and Aggregate RoE of 15% digitalisation
Slide 15: Looking forward to 2017
Looking forward to 2017 15 Digitalization and cost focus continue to drive strategic decision making and market growth Banks today are very well capitalised IT renovation is key to banks’ strategy, it is not discretionary spend Growth in recurring revenues and committed spend from progressiv
Slide 16: Financial update and 2017 guidance
Financial update and 2017 guidance Max Chuard, CFO, COO
Slide 17: Performance vs. revised 2016 guidance
Performance vs. revised 2016 guidance* 17 Initial guidance Revised guidance Achieved Non-IFRS +21.3% Total software licensing 10% to 15% 15% to 20% Non-IFRS Revenue growth of12.5% 7.5% to 11.0% 12.5%to to14.5% 14.5% +15.5% Total revenues Non-IFRS EBIT of USD 184m to USD 186m Revenue USD 180 to 185m
Slide 18: Non-IFRS income statement – operating
Non-IFRS income statement – operating 18 Y-o-Y Y-o-Y In USDm Q4 16 Q4 15 Y-o-Y c.c. FY 16 FY 15 Y-o-Y c.c. reported reported Software licensing 78.7 66.3 18.7% 22.1% 205.1 173.4 18.3% 20.3% SaaS and subscription 13.1 11.4 14.4% 15.5% 51.1 40.6 25.8% 25.5% Total software licensing 91.8 77.8 18.0% 21.
Slide 19: Significant improvement in services margin
Significant improvement in services margin 19 Non-IFRS services operating margin and full go-lives Go-lives 39 48 69 95 9.1% 8.5% 5.1% -3.7% 2013 2014 2015 2016
Slide 20: Like-for-like revenue and costs
Like-for-like revenue and costs 20 Q4 16 LFL non-IFRS revenues up 14% Q4 16 LFL non-IFRS costs up 11% FY 16 LFL non-IFRS revenues up 14% FY 16 LFL non-IFRS costs up 12% Maintenance Total software licensing Services USDm USDm 450 650 400 550 +18% 350 +12% 450 300 250 350 +18% 200 250 150 +4%
Slide 21: Non-IFRS income statement – non-operating
Non-IFRS income statement – non-operating 21 In USDm, except EPS Q4 16 Q4 15 Y-o-Y FY 16 FY 15 Y-o-Y EBIT 74.8 65.2 15% 186.5 157.0 19% Net finance charge -3.9 -4.7 -17% -16.9 -17.5 -4% FX gain / (loss) 0.8 -0.7 N.A. -0.3 -1.2 N.A. Tax -8.3 -7.9 5% -20.3 -16.8 21% Net profit 63.4 51.9 22% 149.1 121.
Slide 22: IFRS cash conversion
IFRS cash conversion 22 USDm 300 133% 114% 250 200 150 100 50 0 FY 2015 FY 2016 EBITDA Operating cashflow Cash conversion remains significantly above target of 100%
Slide 23: Stable group liquidity
Stable group liquidity 23 Cash on Cash on balance Change in balance USDm sheet Operating Dividends Share debt & sheet (31/12/15) cash Tax Capex paid M&A buyback interest (31/12/16) Borrowings Net debt 500 10 400 56 32 1 1 258 62 300 93 200 100 193 194 0 372 178 -100 -200 -300 Leverage down to 0.8x v
Slide 24: 2017 non-IFRS guidance
2017 non-IFRS guidance 24 Non-IFRS total software licensing growth at constant currencies of 10% to 15% (implying non-IFRS total software licensing revenue of USD 276m to USD 288m) Non-IFRS revenue growth at constant currencies of 7.5% to 11.0% (implying non-IFRS revenue of USD 667m to USD 689m)
Slide 25: Medium term targets
Medium term targets 25 Metric 2013-2016 2016 actual (c.c.) Medium term targets (Non-IFRS) performance Total software 22% CAGR 21% 15% CAGR licensing Total revenue 11% CAGR 16% 10% CAGR EBIT 176 bps p.a. 128bps 100-150 bps p.a. EPS 19% CAGR 20% 15% CAGR DSO reduction 24 days p.a. 27 days 5-10 days re
Slide 26: Rubik proposed acquisition transaction summary
Rubik proposed acquisition transaction summary 26 Offer price of AUD 0.1667 per share, equivalent to equity value of USD 50m (AUD68m) 2.2x FY 2016 recurring revenues Funded through cash and existing debt facilities Rubik announced FY 2016 results in June: Revenues of USD 31.6m (AUD 43.3m)
Slide 27: Summary
David Arnott, CEO eS} TEMENOS
Slide 28: Temenos Capital Markets Day: London, February 2017
Temenos Capital Markets Day: London, 15 February 2017 28 10.00 - 10.45 Strategy and vision David Arnott, CEO 10.45 - 11.30 The US opportunity David Roller, CIO, Commerce Bank 11.30 - 11.45 Coffee 11.45 - 12.30 Product leadership Mark Winterburn, Group Product Director 12.30 - 12.50 Creating sharehol
Slide 29: Conclusion: Strong momentum for 2017
Conclusion 29 2016 was another record year for Temenos on back of landmark 2015 Digitalization and cost focus continue to drive strategic decision making and market growth Sales execution remains strong across the board, all client tiers and segments Tier 1 wins demonstrate leadership positi
Slide 30: Appendices
Appendices TEMENOS
Slide 31: FX assumptions underlying 2017 guidance
FX assumptions underlying 2017 guidance 31 In preparing the 2017 guidance, the Company has assumed the following FX rates: USD to Euro exchange rate of 0.955 USD to GBP exchange rate of 0.811; and USD to CHF exchange rate of 1.025
Slide 32: FX exposure
FX exposure 32 % of total USD EUR GBP CHF Other Total software licensing 55% 35% 2% 4% 4% Maintenance 65% 22% 6% 6% 0% Services 41% 34% 5% 5% 15% Revenues 56% 30% 4% 5% 5% Non-IFRS costs 26% 18% 18% 8% 32% Non-IFRS EBIT 128% 58% -24% -2% -60% NB. All % are approximations based on 2016 actuals Mitiga
Slide 33: 2016 income statement restated for currency
2016 income statement restated for currency 33 2016 non-IFRS income statement Restated at 2017 currency 2016 actual guidance Software licensing 205.1 201.0 SaaS and subscriptions 51.1 50.0 Total software licensing 256.2 250.6 Maintenance 250.4 244.9 Services 128.5 125.0 Total revenues 635.1 620.7 Co
Slide 34: Total software licensing revenue breakdown by geography
Total software licensing revenue breakdown by geography 34 Q4 2015 Q4 2016 APAC APAC 8% 11% 11% 19% Europe Europe 14% Americas 14% Americas MEA MEA 59% 64% FY 2015 FY 2016 APAC APAC 12% 15% 10% Europe 19% Europe 17% Americas 17% Americas MEA MEA 56% 54%
Slide 35: Total software licensing revenue breakdown by customer tier
Total software licensing revenue breakdown by customer tier 35 Q4 2015 Q4 2016 1 and 2 1 and 2 61% 39% 3, 4 and 5 3, 4 and 5 48% 52% FY 2015 FY 2016 1 and 2 1 and 2 3, 4 and 5 3, 4 and 5 53% 47% 48% 52%
Slide 36: Software licensing revenue by competitive deals / add-ons
36 Software licensing revenue breakdown by competitive deals / add-ons to installed base Q4 2015 Q4 2016 Competitive Competitive deals deals 32% Add-ons to 28% Add-ons to 68% 72% installed base installed base FY 2015 FY 2016 Competitive Competitive deals deals Add-ons to Add-ons to 59% 41% installed
Slide 37: DSOs continue to decline
DSOs continue to decline 37 240 226 220 198 200 181 180 160 154 140 127 120 100 Dec 12 Dec 13 Dec 14 Dec 15 Dec 16
Slide 38: Balance sheet – debt and leverage
Balance sheet – debt and leverage 38 Net debt and leverage ratios* USDm 500 2.4x 450 2.3x 2.1x 400 350 300 1.3x 1.3x 1.3x 1.2x 250 200 0.8x 150 100 50 0 Q1 2015 Q2 2015 Q3 2015 Q4 2015 Q1 2016 Q2 2016 Q3 2016 Q4 2016 * proforma non-IFRS EBITDA Strong deleveraging profile
Slide 39: Capitalization of development costs
Capitalization of development costs 39 USDm Q1 14 Q2 14 Q3 14 Q4 14 FY 14 Cap’ dev’ costs -9.7 -9.8 -9.7 -13.9 -43.1 Amortisation 8.3 8.3 8.3 8.5 33.4 Net cap’ dev’ -1.3 -1.5 -1.4 -5.5 -9.8 USDm Q1 15 Q2 15 Q3 15 Q4 15 FY 15 Cap’ dev’ costs -10.3 -11.2 -10.8 -13.0 -45.3 Amortisation 8.8 8.8 8.7 8.7
Slide 40: Reconciliation from IFRS to non-IFRS
Reconciliation from IFRS to non-IFRS 40 IFRS revenue measure + Deferred revenue write-down = Non-IFRS revenue measure IFRS profit measure +/- Deferred revenue writedown +/- Discontinued activities +/- Acquisition related charges +/- Amortisation of acquired intangibles +/- Restructuring +/- Taxation
Slide 41: Accounting elements not included in non-IFRS guidance
Accounting elements not included in non-IFRS guidance 41 Below are the accounting elements not included in the 2017 non-IFRS guidance: FY 2017 estimated amortisation of acquired intangibles of USD 32m FY 2017 estimated restructuring costs of USD 5m Restructuring costs include realising R&D, oper
Slide 42: Reconciliation from IFRS to non-IFRS
Reconciliation from IFRS to non-IFRS 42 3 Months Ending 31 December Change 2016 2016 2015 2015 In USDm, except EPS IFRS Adj. Non-IFRS IFRS Adj. Non-IFRS IFRS Non-IFRS Total Software Licensing 91.5 0.3 91.8 73.3 4.5 77.8 25% 18% Maintenance 65.1 65.1 61.8 0.4 62.2 5% 5% Services 34.1 34.1 33.3 0.1 33
Slide 43: Net earnings reconciliation
Net earnings reconciliation 43 In USDm, except EPS Q4 16 Q4 15 FY 16 FY 15 IFRS net earnings 55.9 38.3 115.8 66.3 Deferred revenue write-down 0.3 5.0 1.1 16.5 Amortisation of acquired intangibles 7.8 8.9 31.7 29.3 Restructuring 0.3 1.1 4.5 9.5 Acquisition related costs - - - 5.0 Taxation -0.8 -1.5 -
Slide 44: Reconciliation from IFRS to non-IFRS for EBIT and EBITDA
Reconciliation from IFRS to non-IFRS for EBIT and EBITDA 44 USDm Q4 2016 EBIT Q4 2016 EBITDA FY 2016 EBIT FY 2016 EBITDA IFRS 66.5 85.1 149.2 225.3 Deferred revenue write-down 0.3 0.3 1.1 1.1 Amortisation of acquired 7.8 - 31.7 - intangibles Restructuring 0.3 0.3 4.5 4.5 Acquisition-related charges
Slide 45: Definitions
Definitions 45 Non-IFRS adjustments Other Deferred revenue write-down Constant currencies Adjustments made resulting from acquisitions Prior year results adjusted for currency movement Discontinued activities Like-for-like (LFL) Discontinued operations at Temenos that do not qualify as such under Ad
Slide 46: Thank you
Thank you TEMENOS The software specialist for banking and finance www.temenos.com ‘in| iy | Fi Oo ic)