Slide 1: The Banking Software Company
\é The Banking Software Company
Slide 2: Financial Results & Business Update
Financial Results & Business Update Quarter ended 31 March 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 | Andreas Andreades | CEO 3 Financial update | David Arnott | CFO 4 Acquisition Update | Max Chuard | Director, M&A and IR 5 Outlook and Summary | Andreas Andreades | CEO 6 Q&A 4
Slide 5: Strategy and Business update
Agenda 1 Introduction | Sarah Bowman | Investor Relations 2 Strategy and Business update | Andreas Andreades | CEO 3 Financial update | David Arnott | CFO 4 Acquisition Update | Max Chuard | Director, M&A and IR 5 Outlook and Summary | Andreas Andreades | CEO 6 Q&A 5
Slide 6: Business update highlights
Business update Highlights • Continuing to gain market share → Top of the IBS League table again for 2010 - confirms significant market share gains → Forrester also ranks Temenos as best selling vendor, one of two “power” vendors in the market • Continuing to broaden our partner sales and delivery n
Slide 7: Update on Q1 sales
Update on Q1 sales Growth drivers • Licence revenue → 6% Like for like licence growth, ahead of reported – V-bank contribution lower → Lower contribution from sales to MEA: 6% vs. 12% in Q1 2010 → Middle East tensions and Japan disaster slow down but do not stop decision making → Pipeline supports f
Slide 8: Update on product extensions
Update on product extensions Product extensions an integral part of our growth strategy 2007 2008 2009 2010 2011e % of licence <5% 5% 10% 15% 15-20% revenues ARC Biometrics ARC Mobile T-Risk Insight Risk Intelligence AML In the first quarter, the value of product STeP extensions grew over 40% vs Q1
Slide 9: Wipro partnership and ASP model
Wipro partnership and ASP model • Signed exclusive agreement with Wipro to deliver T24 on ASP model to small European banks → Initial reseller agreement projected to bring a minimum of USD 15m in licence revenues over the next 2 years → Significant increase to licence revenue visibility on committed
Slide 10: Services and partner update
Services and partner update • Transition to new business model → Partners continue to invest and take a greater load of service business → Refocusing services organisation towards offering high level product related services, training and governance → This meant we had to reduce our headcount, takin
Slide 11: Update on partners
Update on partners IBM – Major launch of new T24 component-based architecture on the z-series ‒ Addresses the requirements of the world’s largest banks ‒ Protects their investment in mainframe infrastructure ‒ Key to unlocking retail/Tier 1-2 verticals – ca. 60% of core banking market Oracle – Exada
Slide 12: Agenda
Agenda 1 Introduction | Sarah Bowman | Investor Relations 2 Strategy and Business update | Andreas Andreades | CEO 3 Financial update | David Arnott | CFO 4 Acquisition Update | Max Chuard | Director, M&A and IR 5 Outlook and Summary | Andreas Andreades | CEO 6 Q&A 12
Slide 13: Income statement highlights
Income statement highlights in USDm Q1 11 Q1 10 % Licence revenues 28.1 27.2 3% Total revenues 103.1 93.9 10% Adj. EBIT 5.0 12.5 (60)% Adjusted EPS* 0.05 0.17 (70)% * USD per share; see appendix for reconciliation 13
Slide 14: Financial statement highlights
Financial statement highlights in USDm Q1 11 Q1 10 LTM 11 LTM 10 Licences 28.1 27.2 3% 160.9 125.4 28% Maintenance 48.8 35.1 39% 168.5 124.4 36% Services 26.3 31.6 (17)% 127.7 133.3 (4)% Total Revenue 103.1 93.9 10% 457.2 383.1 19% Total operating costs (112.6) (92.1) 22% (394.8) (309.7) 27% Adj
Slide 15: Q1 like-for-like revenues
Q1 Like-for-like revenues Like-for-like total revenue -1%... 140 120 Acquisitions 100 FX licences licences 6% USDm 80 60 Maintenance 10% Maintenance 40 20 Services (22)% Services 0 Q1 2010 Q1 2011 15
Slide 16: Q1 like-for-like costs
Q1 like-for-like costs ...vs. like-for-like costs -4% 120 Adjustments* Adjustments* 100 USDm 80 60 Like-for-like Like-for-like costs ** costs** 40 20 0 Q1 2010 Q1 2011 LfL Costs expected to remain flat for the balance of the year, allowing us to deliver greater operating leverage * Includes FX, rest
Slide 17: Services margin
Services margin in USDm Q1 11 Q1 10 y-o-y LTM 11 LTM 10 y-o-y Revenues 26.3 31.6 (17)% 127.7 133.3 (4)% Adj direct costs (32.4) (29.9) 8% (118.0) (97.9) 21% Adj. gross (24)% 5% (29)ppts 8% 27% (19)ppts margin Adj. services (5.8) (3.3) 76% (16.8) (13.7) 23% overheads Adj. service (45)% (5)% (40)p
Slide 18: Margin development
Margin development Underlying product leverage remains primary driver Adj. Adj.Margin Margin Q1 2011 Q1 2010 FY 11e FY 10 Product 22% 23% 36% 35% Service (45)% (5)% 0% 3% Adj. EBIT 5% 13% 26-27% 25% • Product margin demonstrates significant leverage → Extracting economies of scale → Allows us to dig
Slide 19: Income statement
Income statement in USDm Q1 11 Q1 10 y-o-y LTM 11 LTM 10 y-o-y Adjusted EBIT 5.0 12.5 (60)% 106.2 92.7 15% Net finance charge (1.7) (2.2) 23% (12.5) (8.5) (47)% FX (loss)/gain 0.4 0.7 (41)% 0.7 (0.6) n/a Tax (0.2) (0.1) n/a (0.4) (0.5) n/a Adjusted Net 3.5 10.9 (68)% 94.1 83.1 13% Adjusted EPS*
Slide 20: Update on cash
Update on cash Adjusted EBITDA conversion EBITDA conversion 82% 124% 82% 119% USDm N/A N/A 133% 185% 20
Slide 21: Cash proof
Cash proof Comments USDm Q1 2011 Q1 2010 Cash collection 101.8 92.5 Cash opex (92.3) (82.9) Cash from Ops - 9.5 9.6 normalized Supplier payment timing; reverses in Movement in payables (14.4) 12.5 Q2 and FY 2011 Movement in deferred (15.0) (2.1) revenues Maintenance cash flow timing reverses in full
Slide 22: Balance sheet – debt and financing
Balance sheet – debt and financing Comments Q1 2011 (USDm) Credit facilities 216.7 USD 350m facility, due in 2014 Others 1.2 TOTAL DEBT 217.9 CASH 167.5 Held in ST deposits & treasury shares NET DEBT 50.4 Net Debt to LTM Adj. 0.4x EBITDA Very low leverage, despite recent acquisitions 22
Slide 23: Acquisition Update
Agenda 1 Introduction | Sarah Bowman | Investor Relations 2 Strategy and Business update | Andreas Andreades | CEO 3 Financial update | David Arnott | CFO 4 Acquisition Update | Max Chuard | Director, M&A and IR 5 Outlook and Summary | Andreas Andreades | CEO 6 Q&A 23
Slide 24: Odyssey - Private Wealth Management update
Odyssey - Private Wealth Management update • Odyssey integration progresses rapidly → New PWM division in place with own P&L structure → Full integration of sales force under PWM → Integration of G&A/IT/Finance complete; bringing significant cost synergies • Product development strategy on track → C
Slide 25: Acquisition update
Acquisition update • We continue to screen potential candidates → From a product perspective we are looking for candidates in adjacent markets → Geographically, we are actively looking at key, large markets • We maintain our strict adherence to acquisition criteria → Acquisitions must be accretive w
Slide 26: Outlook and Summary
Agenda 1 Introduction | Sarah Bowman | Investor Relations 2 Strategy and Business update | Andreas Andreades | CEO 3 Financial update | David Arnott | CFO 4 Acquisition Update | Max Chuard | Director, M&A and IR 5 Outlook and Summary | Andreas Andreades | CEO 6 Q&A 26
Slide 27: Our market
Our market 2010 was the first year of the recovery… → Stable deal volume and few megadeals in the overall market → Equates to relatively slow growth – we estimate around 5% → IBS results confirm significant market share gains for Temenos … and all indicators point to acceleration in demand in 2011…
Slide 28: Summary and value proposition
Summary and value proposition • Q1 is a seasonally small quarter → 6% like for like growth below trend does not invalidate full year assumptions → Small, regional variations on an absolute basis caused by Middle East tensions and Japanese natural catastrophe are more significant in such a quarter •
Slide 29: FY 2011 Outlook
FY 2011 Outlook Key Perfomance Indicators Outlook Implied Range* Like for Like Licence Revenue 19-24%** 197-205 Total revenue 22-26% 546-564 Adj. EBIT Margin 26-27% Ebit Margin 20-21% EBITDA Conversion into CF 100% from Ops Tax Rate 8-10% *USDm, based on Q1 at 2011 rates and forecast at 2010 rates,
Slide 30: Closing comments
Closing comments LTM revenues and adj. EBIT since Q1 2006 (USDm) Adjusted EBIT CAGR of 35% LTM Revenue Adjusted EBIT 30
Slide 31: Q&A
Agenda 1 Introduction | Sarah Bowman | Investor Relations 2 Strategy and Business update | Andreas Andreades | CEO 3 Financial update | David Arnott | CFO 4 Acquisition Update | Max Chuard | Director, M&A and IR 5 Outlook and Summary | Andreas Andreades | CEO 6 Q&A 31
Slide 32: Appendices
Appendices ‘e TEMENOS 32 The Banking Software Company
Slide 33: Adjusted EPS reconciliation
Adjusted EPS reconciliation Q1 2011 Q1 2010 (USDm) (USDm) Net Earnings (10.9) 0.3 Amortization of acquired intangible assets 4.4 3.6 Bond interest - 1.5 Restructuring 10.1 7.1 Earnings for adjusted EPS 3.5 12.5 Number of Dilutive Shares 72.7 72.7 Adjusted EPS 0.05 0.17 33
Slide 34: Calculating Like-for-Like revenue
Calculating Like-for-Like revenue USDm 2010 Pro LfL growth Implied Outlook FY 2010 forma* outlook Licence Revenues 160.1 163.2 19-24% 197-205 pro forma * Includes USD 9.5 months of Odyssey revenue (USD 11.1m) and excluding Viveo discontinued revenues (USD 8m) Currency 2010 Average Rate CHF/USD 1.059
Slide 35: DSOs trend
DSOs trend 180 168 170 160 156 150 140 135 Days 130 120 110 100 Q1 2009 Q1 2010 Q1 2011 35
Slide 36: Geographical breakdown of licence revenue
Geographical breakdown of licence revenue 36
Slide 37: Breakdown of number of deals by customer tier
Breakdown of number of deals by customer tier 37
Slide 38: Development of services revenues
Development of services revenues USDm 45% 50.0 40% 45.0 35% 40.0 30% 35.0 30.0 25% 25.0 20% 20.0 15% 15.0 10% 10.0 5% 5.0 0% 0.0 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 08 08 08 08 09 09 09 09 10 10 10 10 11 Service Revenues % of Total Revenues 38
Slide 39: Competitive positioning
Competitive positioning Temenos is a “Global Power Seller…since Forrester introduced the global vendor pyramid in 2006”* * Source: Forrester, Global Banking Platform Deals, 2010 Latest Forrester ranking demonstrates that the strength of our product and partner programme enables us to maintain our do
Slide 40: T24 continues to win accolades
T24 continues to win accolades Position Product Company Deals 1 T24 TEMENOS 38 2 Flexcube Oracle FSS 32 3 TCS Bancs TCS Financial 13 Solutions • Top two positions in the IBS Sales League Table for 12 out of the last 13 years 40
Slide 41: Thank You
c hh Thank You