Temenos Ag · SIX:TEMN
Temenos — Q2 2011 Earnings Presentation
30 slides from Temenos's earnings presentation, Jul 27, 2011
Slide 1: The Banking Software Company
\é The Banking Software Company
Slide 2: Financial Results & Business Update
Financial Results & Business Update Quarter ended 30 June 2011
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-looki
Slide 4: Agenda
Agenda 1 Introduction | Sarah Bowman | Investor Relations 2 Strategy and Business update | Guy Dubois | CEO 3 Financial update | David Arnott | CFO 4 Acquisition Update | Max Chuard | Director, M&A and IR 5 Outlook and Summary | Guy Dubois | CEO 6 Q&A 4
Slide 5: Agenda
Agenda 1 Introduction | Sarah Bowman | Investor Relations 2 Strategy and Business update | Guy Dubois | CEO 3 Financial update | David Arnott | CFO 4 Acquisition Update | Max Chuard | Director, M&A and IR 5 Outlook and Summary | Guy Dubois | CEO 6 Q&A 5
Slide 6: Q2 Summary
Q2 Summary 1. Pipeline robust and competitive environment unchanged 2. Weakness in Europe is likely temporary and reflected in new outlook 3. Core banking drivers intact, banks need technology to raise returns 4. Growth initiatives gaining momentum – T24/R11 propels Tier 1 value proposition and part
Slide 7: Q2 Financial Highlights
Q2 Financial Highlights • Licence revenue grew 14%; +41% excluding Europe • Services revenue up 10% y/y, 30% q/q; recovery on track • Adjusted EBIT margin +120bps y/y; strong cost control • One-off receivables write-down of USD28m to exit loss-making legacy projects …services turning corner, despite
Slide 8: Q2 Operating Highlights
Q2 Operating Highlights • 10 new banks signed including 2 Tier 1/2 in PWM and Retail • T24/R11 is the largest ever release: → First delivery of a T24 standalone component → T24 running natively on z-series • Highest ever attendance at Temenos Community Forum – over 1000 attendees • Partner programme
Slide 9: Core Replacement Drivers Remain Intact
Core Replacement Drivers Remain Intact • Growth drivers increase in intensity… → Unsustainable IT cost base → Stricter and more fragmented regulation → Increased competitive intensity → Rapid growth (especially in emerging markets) → Improving customer experience (and rebuilding of trust) → M&A inte
Slide 10: CEO Agenda
CEO Agenda • Seamless handover • Focusing on delivering 2011 outlook • Engaging with all stakeholders • Outside perception of company’s strengths confirmed • Investor day in autumn to communicate strategy and objectives …market potential confirmed, CEO agenda to ensure execution 10
Slide 11: Agenda
Agenda 1 Introduction | Sarah Bowman | Investor Relations 2 Strategy and Business update | Guy Dubois | CEO 3 Financial update | David Arnott | CFO 4 Acquisition Update | Max Chuard | Director, M&A and IR 5 Outlook and Summary | Guy Dubois | CEO 6 Q&A 11
Slide 12: Financial Highlights
Financial Highlights in USDm Q2 11 Q2 10 LTM 11 LTM 10 Licences 39.2 34.3 14% 165.9 132.3 25% Maintenance 49.0 34.9 40% 182.6 130.8 40% Services 34.2 31.0 10% 130.9 138.2 (5)% Total Revenue 122.4 100.2 22% 479.4 401.3 19% Adj. operating costs (98.7) (82.1) 20% (367.6) (302.8) 21% Adj. EBIT 23.7
Slide 13: Underlying Performance
Underlying Performance Like-for-like: total revenue +2% vs. costs -5%, EBIT +48%... * Q2 2010 adjusted for FX and acquisitions ** Includes pro-forma Odyssey costs, and excludes FX, restructuring and amortization of acquired intangibles …services recovery, along with strong cost control, lead to stro
Slide 14: Q2 Restructuring Costs Breakdown
Q2 Restructuring Costs Breakdown Total Cash * Non-cash Comment Previously disclosed: Acquisitions 3.7 3.7 0.0 Residual charges related to Viveo and Odyssey New charges: Restructuring 5.0 5.0 0.0 Relates chiefly to one-off cost reductions Receivables 27.6 0.0 27.6 Receivables related to legacy projec
Slide 15: Cash Flow Conversion
Cash Flow Conversion EBITDA conversion into operating cash flow - Q2 & LTM 2010/11 120 90% 115% 100 80 USDm 60 40 N/A N/A 20 0 Q2 2010 Q2 2011 LTM 2010 LTM 2011 -20 EBITDA (USD m.) Operating cashflow (USD m.) …cash flow conversion remains strong on LTM basis 15
Slide 16: Agenda
Agenda 1 Introduction | Sarah Bowman | Investor Relations 2 Strategy and Business update | Guy Dubois | CEO 3 Financial update | David Arnott | CFO 4 Acquisition Update | Max Chuard | Director, M&A and IR 5 Outlook and Summary | Guy Dubois | CEO 6 Q&A 16
Slide 17: Acquisition of Primisyn
Acquisition of Primisyn • Business Intelligence remains a key focus of growth • Acquisition of key complimentary applications and client base • Rapid integration will allow leverage via our global sales force • Target USD12m incremental, cumulative EBIT over next 4 years …enhances BI solution to add
Slide 18: Balance Sheet – Debt and Financing
Balance Sheet – Debt and Financing Q2 2011 (USDm) Comments Credit facilities 267.1 USD 350m facility, due in 2014 Others 1.2 Total debt 268.3 Cash 184.4 Held in ST deposits & treasury shares Net debt 83.8 Net Debt to LTM 1.1x EBITDA …low leverage; capacity for further acquisitions 18
Slide 19: Agenda
Agenda 1 Introduction | Sarah Bowman | Investor Relations 2 Strategy and Business update | Guy Dubois | CEO 3 Financial update | David Arnott | CFO 4 Acquisition Update | Max Chuard | Director, M&A and IR 5 Outlook and Summary | Guy Dubois | CEO 6 Q&A 19
Slide 20: FY 2011 Outlook
FY 2011 Outlook Key Performance Indicators Outlook Implied Range* Licence Revenue Growth 5%-10%** 176-184 Total Revenue Growth 13.5%-17.5% 508-526 Adj. EBIT Margin 24.5%-25.5% EBITDA Conversion 100% Tax Rate 10%-12% *Reported, in USDm, based on H1 at 2011 rates and forecast at 2010 rates, see slide
Slide 21: Q2 Summary
Q2 Summary 1. Pipeline robust and competitive environment unchanged 2. Weakness in Europe is likely temporary and reflected in new outlook 3. Temenos market fundamentals intact, banks need technology to raise returns 4. Growth initiatives gaining momentum – T24/R11 propels Tier 1 value proposition a
Slide 22: Agenda
Agenda 1 Introduction | Sarah Bowman | Investor Relations 2 Strategy and Business update | Guy Dubois | CEO 3 Financial update | David Arnott | CFO 4 Acquisition Update | Max Chuard | Director, M&A and IR 5 Outlook and Summary | Guy Dubois | CEO 6 Q&A 22
Slide 23: Appendices
Appendices ‘e TEMENOS 23 The Banking Software Company
Slide 24: Adjusted EPS Reconciliation
Adjusted EPS Reconciliation Q2 2011 Q2 2010 (USDm) (USDm) Net Earnings (21.8) 7.8 Amortization of acquired 4.6 3.3 intangible assets Bond interest - 1.4 Restructuring 36.3 4.0 Earnings for adjusted EPS 19.1 16.5 Number of Dilutive Shares 70.8 72.5 Adjusted EPS 0.27 0.23 24
Slide 25: Calculating Like-for-Like Revenue
Calculating Like-for-Like Revenue USDm 2010 Pro LfL growth Implied Outlook FY 2010 forma* outlook Licence Revenues 160.1 164.6 5-10% 176-184 * Includes 9.5 months of Odyssey revenue (USD 11.1m) , USD 1.4m FX and excludes Viveo discontinued revenue (USD 8m) Currency 2010 Average Rate CHF/USD 1.0598 E
Slide 26: Non-Operating Items
Non-Operating Items in USDm Q2 11 Q2 10 y-o-y LTM 11 LTM 10 y-o-y Adjusted EBIT 23.7 18.1 31% 111.8 98.5 14% Net finance charge (2.0) (2.4) 17% (12.1) (8.7) (39)% FX loss (1.8) (0.6) n/m (0.4) (0.4) n/m Tax (0.8) (0.1) n/m (1.2) (0.4) n/m Bond Interest - 1.4 n/m 3.1 5.6 (46%) Adjusted Net 19.1 1
Slide 27: DSOs Trend
DSOs Trend Days sales outstanding Days 27
Slide 28: Geographical Breakdown of Licence Revenue
Geographical Breakdown of Licence Revenue 28
Slide 29: Breakdown of Licence Revenue by Customer Tier
Breakdown of Licence Revenue by Customer Tier 29
Slide 30: Thank You
c hh Thank You