Temenos Ag · SIX:TEMN
Temenos — Q3 2005 Earnings Presentation
37 slides from Temenos's earnings presentation, Oct 26, 2005
Slide 1: Financial Results & Business Update
Financial Results & Business Update Quarter ended September 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: Q3 Results – Highlights
Q3 Results – Highlights • Record quarter with ILF signings of USD 34 million more than trebled on last year’s (2004: USD 11 million); Highest in any quarter bringing year to date ILF Signings to USD 63 million up 47% from last year (2004: USD 43 million) and ahead of 2004 full year signings of USD 6
Slide 9: Sales Performance
Sales Performance • ILF signings 12 month run rate at USD 82 million (up 26% y-o-y and 39% q-o-q) • T24 ILF signings 12 month run rate growing at 10% to 15% compared to prior 12 months • TCB ILF signings 12 month run rate growing at c. 100% compared to prior 12 months • Retail and Universal Banking
Slide 10: ILF Signings – Trailing 12 months
ILF Signings – Trailing 12 months ILF Signing – Trailing 12 months Average Deal Size – Trailing 12 months CAGR: 26% CAGR: 25% 90 82 3.5 3.1 80 3.0 70 65 2.5 2.3 60 52 2.0 50 2.0 40 1.5 30 20 1.0 10 0.5 0 2003 2004 2005 0.0 2003 2004 2005 • Highest quarter ever in ILF Signings – Trailing 12 months –
Slide 11: Business Update – Trailing 12 months
Business Update – Trailing 12 months Signings per Segment – 2005 Signings per Segment – 2004 Signings per Segment – 2003 Others Others 19% 23% Retail/ Universal 41% Others 59% Retail/ Retail/ Universal Universal 77% 81% Signings per Tier – 2005 Signings per Tier – 2004 Signings per Tier – 2003 Tier
Slide 12: Business Update (Cont.) – Trailing 12 months
Business Update (Cont.) – Trailing 12 months ILF Signings by Type – 2005 ILF Signings by Type – 2004 ILF Signings by Type – 2003 Existing Existing Existing Clients Clients Clients 20% 14% 21% New New New Business Business Business 80% 79% 86% ILF Signings per Region – 2005 ILF Signings per Region –
Slide 13: HSBC
HSBC • HSBC has chosen Java TCB to replace its legacy Core Banking system in 63 countries • Market defining licence agreement which signals an approaching Tier 1 replacement cycle • TEMENOS has 3-5 years product time to market advantage compared to competition on high end of retail market – This adv
Slide 14: US Strategy
US Strategy • Focus on top end of Retail Market with TCB – Top 100 Banks • Focus on Private Banking & Securities Processing predominantly in east and west Coast – 300 Banks • Go to market with key system integrators and strategic partners 14
Slide 15: Competition
Competition • Industry consolidation continuing as per our industry forecasts: – Oracle acquiring i-flex – Fidelity National merging with Certegy and listing in the US – Tata Consulting Services acquiring FNS in Australia • Consolidation is a healthy process for the industry – Faster Tier 1 conversi
Slide 16: Market Outlook
Market Outlook • Robust growth in core spending for Retail and Universal banks on a global basis • Today, Core System replacement represents the number one or two priority for CIO’s of major institutions • Key drivers are growth and strategic cost management – Customer retention – Introduction of ne
Slide 17: Outlook
Outlook • Total ILF signings at USD 80 to 85 million can be achieved without growth on Q4 2004: – T24 product established market leader, excellent pipeline in place, continues to grow at high double digits, already approaching USD 60 million 12 month running rate which is higher than our full year o
Slide 18: Financial Results
Financial Results David Arnott CFO 18
Slide 19: 9 months to September 2005 Financial Highlights
9 months to September 2005 Financial Highlights EBIT • Like for like EBIT at USD 7.2 million for the nine months compared to USD (0.9) million for the same period last year • On a reported basis, EBIT at USD 7.2 million for the nine months compared to USD 7.1 million for the same period last year, u
Slide 20: Comparable EPS
Comparable EPS USD millions YTD 05 YTD 04 Growth % Q3 05 Q3 04 Growth % Signings 62 43 44% 34 11 209% Revenue – as reported 110.6 113.0 (2.1)% 38.5 36.0 6.9% T24 % of completion adjustment n/a (6.2) n/a (1.2) Currency impact n/a 1.5 n/a 0.1 Revenue Adjusted 110.6 108.3 2.1% 38.5 34.9 10.3% Operating
Slide 21: Profit and Loss
Profit and Loss USD million Quarter ended 30 Sept. Quarter end 30 June 2005 2004 Growth 2005 Growth ILF Signings 34 11 209% 17 100.0% Revenues Total Licensing Revenues 13.8 13.5 2.2% 11.7 17.8% Maintenance 11.9 10.6 12.1% 11.4 4.7% Services 12.7 11.9 7.2% 14.1 (9.6)% Total Revenues 38.5 36.0 6.7% 37
Slide 22: Profit and Loss
Profit and Loss USD million YTD 05 YTD 04 Growth ILF Signings 62 43 44.2% Revenues Licensing Revenues 35.1 46.2 (24.0)% Maintenance 34.6 28.9 19.6% Services 40.9 37.9 7.9% Total Revenues 110.6 113.0 (2.1)% Total Expenses 103.4 106.9* (3.3)% Other Operating Income 1.0 EBIT 7.2 7.1 1.3% EBITDA 16.1 17
Slide 23: ILF Signings vs License Revenues
ILF Signings vs License Revenues Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 In USD million 02 02 02 02 03 03 03 03 04 04 04 04 05 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 34 234 Maintenance Carve Out 34 License Revenues 11.8 14.1 8.4 2.3 12.4 15.4 15.2
Slide 24: Q3 2005 Cash Flow
Q3 2005 Cash Flow USD million Qtr ended Sept. 30, 2005 2004 FY 2004 Net cash at beginning of period 17.3 25.3 26.7 Operating cash flow (2.9) (5.6) 15.9 Capital spending (3.4) (2.7) (12.5) Net financing costs 0.4 (-) 0.2 Other (FX impact, etc) (0.1) 0.1 0.5 Net Cash at end of period 11.3 17.1 30.8 24
Slide 25: 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 • The outlook is based on ILF signings in the range of USD 80-85 million • We continue to target one additional TCB deal for the year 25
Slide 26: Outlook – 2006
Outlook – 2006 • We guide on fully diluted Earnings Per Share (EPS) growth for 2006 of more than 30% compared to 2005 • The growth acceleration is based on: – Locked-in maintenance revenues (more than 85%) – More than USD 20 million of accumulated ILF backlog – Good cost control – No more legacy of
Slide 27: Diluted EPS Growth
Diluted EPS Growth 40.0% 36.8% 35.0% 30.0% + 30.0% 25.0% 22.5% 20.0% 15.0% 10.0% 5.0% 0.0% 2004/2003 2005/2004 2006/2005 Actual Mid Point Guidance Guidance 27
Slide 28: Appendix
@ TEMENOS* Appendix
Slide 29: Repatriation of Group Intellectual Property to Switzerland
Repatriation of Group Intellectual Property to Switzerland • We have reached an agreement with Swiss Federal and Cantonal 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 30: Cash Cost
CASH COST USD million Q3 2005 Q2 2005 Q3 2004 Total Cost- As reported 33.8 35.1 35.7 Capitalised development 2.9 2.1 1.3 Depreciation & Amortisation (2.2) (3.2) (3.6) Other non-cash items 0.7 (0.8) (0.7) Total Cash Cost 35.2 33.2 32.7 Foreign Exchange Impact* - (0.3) 0.2 Total Cash Cost Adjusted for
Slide 31: Cash Cost
CASH COST USD million YTD 2005 YTD 2004 Total Cost- As reported 103.4 106.9 Capitalised development 6.6 3.1 Depreciation & Amortisation (8.9) (10.4) Other non-cash items (0.8) (2.1) Total Cash Cost 100.3 97.5 Foreign Exchange Impact* - 2.3 Total Cash Cost Adjusted for FX 100.3 99.8 * Adjusted to ytd
Slide 32: Research & Development
RESEARCH & DEVELOPMENT USD million Q3 2005 Q2 2005 Q3 2004 R&D costs – As reported 5.4 5.7 7.5 FX Adjustment* - - - Adjusted R&D costs 5.4 5.7 7.5 Capitalised Development costs 2.9 2.1 1.3 Non Cash items (1.5) (2.6) (2.5) Adjusted cash R&D costs 6.8 5.2 6.3 * Adjusted to Q3 2005 rate 32
Slide 33: Research & Development
RESEARCH & DEVELOPMENT USD million YTD 2005 YTD 2004 R&D costs – As reported 17.7 23.3 FX Adjustment* - 0.2 Adjusted R&D costs 17.7 23.5 Capitalised Development costs 6.6 3.1 Non Cash items (6.9) (7.4) Adjusted cash R&D costs 17.4 19.2 * Adjusted to ytd 2005 rate 33
Slide 34: Balance Sheet
BALANCE SHEET USD million Sept. 2005 June 2005 Sept. 2004 June 2004 Receivables 63.4 56.7 44.4 36.6 Accrued Revenues 21.6 23.0 36.3 36.7 Less Deferred revenue (24.5) (26.5) (27.9) (27.9) Net 60.5 53.3 52.8 45.4 Other net current liabilities (27.6) (26.7) (27.6) (25.6) Working Capital 32.9 26.6 25.2
Slide 35: Quarterly Operating Cashflows
QUARTERLY OPERATING CASHFLOWS 2005 USDm 2004 USDm 2003 USDm Q1 (7.7) Q1 (1.4) Q1 (3.4) Q2 2.8 Q2 0.3 Q2 8.3 Q3 (2.9) Q3 (5.6) Q3 (1.4) Q4 Q4 22.6 Q4 12.9 TOTAL TOTAL 15.9 TOTAL 16.4 35
Slide 36: HSBC Press Release
HSBC PRESS RELEASE HSBC partners with TEMENOS for international banking solution GENEVA, Switzerland – August 25, 2005, TEMENOS Group AG (SWX:TEMN), a provider of integrated core banking software, today announced that HSBC has selected TEMENOS as its partner to co-develop its next generation of inte
Slide 37: Article: Power of New Systems
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