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Introductory Presentation_June 10

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									Introductory Presentation
June 2010
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-looking financial information provided
    by the company in this presentation represents the company’s estimates as of 1
    June 2010. We anticipate that subsequent events and developments will cause
    the company’s estimates to change. However, while the company may elect to
    update this forward-looking financial information at some point in the future, the
    company specifically disclaims any obligation to do so. This forward-looking
    information should not be relied upon as representing the company’s estimates
    of its future financial performance as of any date subsequent to 1 June 2010.




                                                                                     Slide 2
Agenda

Introduction to Temenos

Strategy and Business update

Financial update


Outlook and Summary

Q&A




                               Slide 3
Who we are


    A leading global banking software company

    A company with a firm foundation and strong financials
      •   Headquartered in Geneva, global presence through 3,500+
          employees in 56 offices
      •   Listed on the Swiss stock exchange
      •   USD370 million revenues
      •   56 Offices in 38 countries


    International Client Base
      •   1000+ clients
      •   120+ countries
      •   World’s most widely used banking system



                                                                    Slide 4
Our addressable market
                                                                                    Temenos current
                                                                                      addressable
                                                                                        market


                                                                DISTRIBUTION CHANNELS


                                                                       CRM
                     BUSINESS INTELLIGENCE




                                                   BANKING               INVESTMENT SERVICES          INSURANCE
 RISK & COMPLIANCE




                                             Retail/Universal


                                               Wholesale                  Asset management              Life


                                                 Private                 Treasury & Capital Markets   General



                                                                   GENERAL SUPPORT


                                                                     PAYMENTS



                                                                                                                  Slide 5
The core banking market
One the most attractive software markets in the World
        - Software penetration levels are low and growth is high


                          Market size today                      Addressable market*




                                USD
                                3.8bn
                                                                     USD23.5bn




*Source: Celent, Gartner, IDC, Temenos estimates; represents total bank spending on core banking systems (internal and
external)
                                                                                                               Slide 6
The competitive landscape

   Major players by segment

    Vendor                  Products                    Retail     Private   Wholesale   Universal

     TEMENOS               T24
                           TCB
     Oracle FS             Flexcube

     Misys                 Equation, Midas,
                           Bankmaster

     Infosys               Finacle

    Fidelity               Corebank, Systematics


    TATA Consulting        FNS

    SAP                    Corebanking

     Source: IBS Market Report; Companies announcements, Temenos




                                                                                                     Slide 7
  Why do banks choose Temenos?
     All USDm except             SAP                   INFOSYS    TCS      ORACLE      MISYS     TEMENOS
     employees




      Market*
    Capitalisation

                               77,232                  33,494    32,791      123,777     1,958     1,651



          LFY
        Revenue

                               14,884                   4,858     6,374      23,225      1,047      370




     Employees**



                               47,578                  104,850   143,761      86,000    5,411      3,144
*As at 9th March 2010
** Employees as at latest reported full year results
Credibility
                             Temenos T24 has the largest and most
                              geographically diverse installed base



                       Number of live customers by region for major core
                                       banking systems
          350

          300

          250

          200

          150

          100

              50

               0
                         Europe                 Americas                Asia Pacific              Africa
                           Temenos T24        i-flex Flexcube     Infosys Finacle      Misys Equation
                           Misys Midas        SAP TB              TCS BaNCS

                   Source: Capgemini Core Banking Systems Survey 2008




                                                                                                           Slide 9
Vendor viability is more important than ever
    According to Forrester Research, we are one of only two global power sellers


                                                                                                       2009 caused a major shakeup
                                                                                                       in the vendor landscape



                                                                                                        “Oracle and Temenos
                                                                                                        remain the Global Power
                                                                                                        Sellers. They defended
                                                                                                        their 2009 territories
                                                                                                        against the smallest
                                                                                                        group of Global
                                                                                                        Challengers ever”




Source: “Global Banking Platform Deals 2009: 2009 Was Not The Best of All Times”, Forrester Research


          “Temenos is again the most successful pure-play banking platform vendor.”

                                                                                                                        Slide 10
Credibility & Choice
High R&D

  In 2008, as % of sales, we spent >2x more than our biggest competitors...


                                                            R&D spend as % of revenues
                 22%
                             20.9%                                                             20.8%                                      20.3%
                                                   20.1%                                                            19.9%
                 20%                                                     19.0%

                 18%

                 16%

                 14%

                 12%

                 10%                                                                                                        9.6%                  9.4%
                                                           8.6%                  8.8%                  8.9%
                                     8.5%
                   8%
                                 2003                  2004                  2005                  2006                  2007                  2008

                                                                       Temenos*          Peer Group**




* Cash R&D, adjusted for the difference between capitalisation and amortisation
** End of fiscal years: SAP, i-flex (ex-services), Misys (ex-Sesame); TCS (BaNCS). For i-flex in 2008, no data is available so we have assumed the same percentage as in 2007




                                                                                                                                                                                Slide 12
Business Model

Packaged software...




             Presentation Parameters

                Product Parameters




                                                       Regional platform
                Core Application Logic
     Core Application Logic              Local Logic
     Core Application Logic                 Java
     Version RnVersion Rn+1                  C#



                       Database          Local Data




                                                                           Slide 13
Business Model

 ...translating into very low cost of ownership...

                      IT spending as a % of costs
         16%
         14%
         12%
         10%
          8%                                         Average IT Spending

          6%
          4%
          2%
          0%




                                                                    Slide 14
Product

         Integrated solution gives single customer view over the whole bank


    Improved Risk Management


                                                    Able to see entire counterparty risk in less
                                                    than 30 mins




                                                    NPLs of 0.61% vs. 71% asset growth CAGR




 Source: Schroders case study, FCB annual reports
Product

      Integrated solution gives single customer view over the whole bank

Improved customer service and innovation



                      45,000                                                        8.0%
                      40,000                                                        7.0%
                      35,000                                                        6.0%
                      30,000
                                                                                    5.0%
          in VND bn




                      25,000
                                                                                    4.0%
                      20,000
                                                                                    3.0%
                      15,000
                      10,000                                                        2.0%

                       5,000                                                        1.0%

                          -                                                         0.0%
                               FY 04   FY 05          FY 06         FY 07   FY 08

                                               Deposits       NIM

Source: Techcombank annual reports
 Product

       Integrated and scalable solution gives leverage...




      35000        IT headcount and AUM rebased at 100 at1996 levels

      30000


      25000


      20000

                                                                                                             IT headcount
      15000
                                                                                                             Clients' AUMs in CHF bn

      10000


       5000


              0
                         1997

                                1998

                                       1999

                                              2000

                                                     2001




                                                                                 2005

                                                                                        2006

                                                                                               2007

                                                                                                      2008
                  1996




                                                            2002

                                                                   2003

                                                                          2004




Source: EFG
 The most profitable banks

        ...resulting in much lower relative costs


                                    Bank of Shanghai            Banking Industry


         IT Cost to Income                          2%                  9%



         IT Cost to Op. Cost                        5%                  14%



         IT Cost to Total Assets                    5bps                23bps



         IT Cost to FTE                             EUR 2,650           EUR 20,000




Source: BCG, Bank of Shanghai
Most profitable banks

   Better risk management + improved service and innovation + lower costs
                             = better profitability




                                                                      Slide 19
Agenda

Introduction to Temenos

Strategy and Business update

Financial update


Outlook and Summary

Q&A




                               Slide 20
Business update
Highlights:

  • Return to l-f-l revenue growth
    →   Like-for-like revenues up 3% in the quarter
    →   First quarter in six to show like-for-like growth

  • Larger deals sizes help to grow licences against tough comparative
    →   4 new tier 1 customers added in the quarter
    →   10 new customers (vs. 14 in PY)
    →   1% like-for-like licence growth against tough comparative

  • Strong cash conversion
    →   Adjusted operating cash into adjusted EBITDA conversion of 133%


  • Strong Profit growth
    →   Adjusted EBIT grew by 16% in the quarter, adjusted EPS by 31%




                                                                          Slide 21
Business update
Highlights:

   • Pipeline growing strongly
     →   All regions, retail and corporate in particular
     →   Supports double-digit like-for-like licence growth outlook

   • Good traction with new AML and STP products
     →   Significant deals with Barclays and ANZ

   • Viveo Integration proceeding well
     →   First Vbank customer makes migration to T24

   • Licence and margin outlook raised
     →   We now expect 19% licence growth, 12% like-for-like (vs. 6% previously)
     →   We forecast adj EBIT margins of 25.3%, 30 bps higher than before




                                                                                   Slide 22
 Update on Q1 2010 Sales
  Seeing bigger banks come to market for core replacement


   T24 sales

   More tier 1 deals result in higher deal sizes...

         • 8 new T24 customers added in the quarter vs. 11 in prior year
         • 2 new tier 1 T24 customers
         • 2 large pure-play lending wins

         • IBS league table results confirm strong market share gains in 2009*




* IBS Intelligence publishes an annual league table of core banking deals. The results for 2009 were published after the Q4 results.
They showed 1/Temenos as the winner for the third consecutive year and 2/ clear market share gains for Temenos given the
contraction in deal volumes.
                                                                                                                    Slide 23
Update on Q1 2010 Sales
Insight continues to outperform
 ARC & Insight

 In Q1, we signed 9 Insight licences (36 for the LTM)...

     • Adding functionality for risk and private wealth management
     • Several sites now live and acting as references
     • Launched direct marketing campaign, which should see take-up rise further

 ...and 5 ARC customers (21 in the LTM)

    • Celent ranks ARC in top quadrant of ABCD vendor comparison*
    • Celent acknowledges that ARC has the largest customer base among peers*

  In total, ARC and Insight continue to contribute around 10% of licences



   *Celent: Branch Automation for Midsize Banks, April 2010

                                                                             Slide 24
Update on partners
 Partners

  Microsoft
    → Adoption of MS Platform continues to accelerate following formal partnership
    → Danske notable new taker in the quarter

  Cognizant
    → Number of trained resources increases to 255 in the quarter (all fully utilised on
      existing projects and client engagements)
    → Cognizant-related licence pipeline growing successfully, joint delivery of new T24
      projects already started

  Deloitte
    → Working together on two projects, several prospects

  CSC
    → Joins as local partner for Germany


                                                                             Slide 25
Agenda

Introduction to Temenos

Strategy and Business update

Financial update


Outlook and Summary

Q&A




                               Slide 26
Financial statement highlights
in USDm                 Q1 10    Q1 09           LTM 10    LTM 09               

Licences                27.2     27.8      (2%)   125.4     146.8            (15%)
Maintenance             35.1     27.8      26%    124.4     105.3                18%
Services                31.6     25.6      24%    133.3     147.7            (10%)
Total revenue           93.9     81.2     16%     383.1     399.8                (4%)


Total operating costs   (92.1)   (72.5)   27%     (309.8)   (333.6)              (7%)


Adj. EBIT               12.4     10.7     16%      93.1      75.4                23%
Margin                   13%      13%     0bps     24%       19%           540bps
Adj. EBITDA             18.8     15.5     21%     116.7      94.5                23%
Margin                   20%     19%      94bps    30%       24%            690bps


Adj. Op. Cashflow        25.0     7.5     229%    138.4      56.4            145%
% of Adj. EBITDA        133%     48%              119%       60%


                                                                      Slide 27
Q1 like-for-like revenues
 ►    Adjusting for FX, acquisitions and Metavante
            120
                                            Total revenue +3%
            100
     USDm




                                                                Acquisitions

            80                    Fx

                                                                 Services      +1%
                               Services
            60


            40               Maintenance                        Maintenance    +6%


            20
                               License                            License      +1%
             0
                               Q1 2009                           Q1 2010



• Q1 09 is the last comparative quarter with Metavante
  revenues

• In Q1 2010, all revenue lines return to l-f-l growth – even
  licences against run of tough comparatives

                                                                                Slide 28
  Update on cash
  Continued strong cash generation
       • Adj. EBITDA into adj. operating cash conversion of 133% in Q1
       • LTM 2010 conversion at 119%


                                                   EBITDA into operating cash conversion


  160                                                            +119%                                                                  +124%
                                                                            140
  140

                                                                            120
  120
                                             +60%                           100                                   +59%
  100

       80                                                                    80
USDm




       60                                                                    60

       40
                            +133%                                            40                    +185%
            +48%                                                                  +48%
       20                                                                    20

       0                                                                      0
            Q1 2009          Q1 2010         LTM 2009            LTM 2010         Q1 2009            Q1 2010         LTM 2009           LTM 2010


               adj. EBITDA (USD m.)    adj. Operating cashf low (USD m.)                    EBITDA (USD m.)    Operating cashf low (USD m.)




                                                                                                                             Slide 29
Balance sheet – debt and financing
                                  Q1 2010                     Comments
                                    (USDm)

                                                 1.5% coupon, matures 2013 (converts at
Convertible bond                   131.7         CHF18.6)
                                   131.3         Consortium of 7 banks, repayment up to
Credit facilities
                                                 end of 2012
Other                                 1.2        Obligations under finance leases

TOTAL DEBT                         264.2

CASH                               155.1         Held in short-term deposits


NET CASH (excl. convert)             22.6        Treating convert as equity

NET DEBT (incl. convert)            109.1        Treating convert as debt


 Net debt of USD109m represents less than 1x projected 2010 EBITDA, leaving room
 for more leverage if required


                                                                               Slide 30
Agenda

Introduction to Temenos

Strategy and Business update

Financial update


Outlook and Summary

Q&A




                               Slide 31
2010 Outlook
 Outlook



    •   Revenue range of USD440-450m (giving like-for-like growth of 6% at the
        midpoint)

    •   Licence revenue of approximately USD150m (representing like-for-like
        growth of 12% vs. 6% previously, see appendix)

    •   Adjusted EBIT* range of USD110-115m (giving margin at midpoint of 25.3%)

    •   EBITDA into cash from operations conversion of 100%

    •   Tax rate of 0%




 *Adds back restructuring and amortisation of acquired intangibles. Amortisation of
 acquired intangibles expected to be USD14m in 2010


                                                                                      Slide 32
Summary

Bigger banks are starting to make strategic IT investment

 IT pivotal part of business plans to address:

 • Stricter and more fragmented regulation

 • Shoring up deposit base (in absence of government liquidity)

 • Profitable growth (especially in emerging markets)

 • Improving customer experience (and rebuilding of trust)

 • M&A integration

 • Unsustainable IT cost base




                                                                  Slide 33
Summary

We are seeing good momentum across all regions, bigger deals

  • Organic revenue trajectory improving

  • Increase in number of multi-site corporate and retail banks in pipeline

  • All regions showing higher pipelines, especially APAC, Europe and N.
    America ex-US

  • Better visibility plus larger pipeline give us greater confidence over
    balance of year
                                                  4%
                                                         Last 6 quarters – organic revenue growth
                                                  2%
                                                  0%
                                                  -2%
                                                  -4%
                                                  -6%
                                                  -8%
                                                 -10%
                                                 -12%
                                                 -14%
                                                 -16%
                                                        Q4 2008   Q1 2009   Q2 2009   Q3 2009   Q4 2009   Q1 2010


                                                                                                    Slide 34
Closing comments
• Operating profit growth trend firmly restored
• Resumption of revenue growth in quarter
• The business is poised to take advantage of better conditions


          LTM revenues and adj. operating profit since Q3 2005 (USDm)
    450                                                                                                 100
    400                                                                                                 90

    350                                                                                                 80
                                                                                                        70
    300
                                                                                                        60
    250
                                                                                                        50
    200
                                                                                                        40
    150
                                                                                                        30
    100                                                                                                 20
     50                                                                                                 10
     0                                                                                                  0
      Sep-05   Mar-06   Sep-06   Mar-07    Sep-07       Mar-08       Sep-08      Mar-09   Sep-09   Mar-10

                                          LTM Revenue            Adjusted EBIT


                                                                                                            Slide 35
Appendices
Income statement
                                     Q1 2010       Q1 2009   y-o-y   LTM 10   LTM 09      y-o-y
                                       (USDm)      (USDm)             (USDm)   (USDm)



EBIT                                      1.8       8.7      (79%)     73.4     66.1           11%
Net finance charge                      (2.2)       (1.4)    (57%)     (8.5)    (6.4)        (33%)
FX (loss)/gain                            0.7       (2.4)    (71%)     (0.6)    1.5                n/a
Tax                                     (0.1)       0.0       n/a      (0.5)    1.8                n/a
Net earnings                              0.2       5.0      (96%)     63.8     63.1               1%
Adjusted EPS*                            0.17       0.13      31%      1.26     1.14          11%




* USD per share; see appendix for reconciliation


                                                                                        Slide 37
Adjusted EPS reconciliation

                                Q1 2010   Q1 2009
                                 (USDm)    (USDm)

     Earnings                    0.3        5.1
     Amortisation of acquired
     intangible assets           3.6        2.3

     Bond interest               1.5        1.3
    Restructuring                 7.1       0.0

     Total adjusted earnings     12.5       8.6

    Number of diluted shares     72.7      66.2

     Adjusted EPS                0.17      0.13




                                                    Slide 38
2010 Outlook
  Reconciliation to revised outlook



    USDm                Previous             FX                   Disposals           Upgrade*** Revised
                        outlook**                                                                outlook
    Revenue             437-463              (7.3)****            (4.3)               6.6                  440-450

    Adjusted            109-116              0                    0.2                                      110-115
    EBIT*



 *Adds back restructuring and amortisation of acquired intangibles. Amortisation of acquired intangibles expected to be
 USD14m in 2010
 **These are the implied revenue ranges from the growth ranges given with Q409 results
 ***This is the upgrade to the midpoint of the outlook
 ****See appendix for reconciliation of budget to spot rates and USD7.3m movement




                                                                                                                 Slide 39
Reconciliation to 12% licence growth


 USDm                                 2009                        2010      % change
 Reported/ outlook                    125.9                       150.0     19%
 licences
 MV contribution                      (2.4)
 Viveo contribution*                                              (14.3)
 FX**                                 (2.2)
 Like-for-like licences               121.3                       135.7     12%




  *This is stated net of USD1.7m of non-core revenue disposed in the year
  **This restates the 2009 comparative at current spot rates




                                                                                   Slide 40
Reconciliation of FX effect on outlook



             Currency Budget   Spot    change   Effect on
             weighting rates   rates            2010
                                                revenues
                                                (USDm)
   EUR/USD   25%      1.414    1.33    (6%)         6.5
   GBP/USD   5%       1.602    1.540   (4%)         0.9
   CHF/USD   1%       0.92     0.93    1%          (0.1)
                                                    7.3




                                                          Slide 41
Like-for-like cost growth



          100                                   92.1
           90                                                  85.1
                   77.9
           80                     72.5                                            74.4
           70
           60
           50
           40
           30
           20
           10
            0
                   Q4 09         Q109         Q1 2010      Q1 2010 Pre-    Q1 2010 like-f or-
                                                           restructuring         like




  • Like-for-like costs in Q110 down on Q409 because of higher variable costs in Q4
  • Like-for-like costs in Q110 up year-on-year as we begin to make investments in strategic
    initiatives to drive growth (+2.6%)
  • Pre-restructuring services margin 1% vs. stated margin of (7%) and PY margin of 0.6%



                                                                                           Slide 42
Geographical breakdown of licence revenue


             LTM 2010                        LTM 2009



                    Americas 6%

                                              MEA     Americas
                                              31%       13%
          MEA 25%
                           APAC 22%

                                                         APAC
                                                          17%
            Europe 47%                       Europe
                                              40%




  Excludes any contribution from Metavante


                                                                 Slide 43
DSOs trend


                                       DSOs – last 9 quarters



                    176

          171                                               171
  Days




                                        168       168
                              167
                                                                      165
                                                                                164



                                                                                          156




         Q1 2008   Q2 2008   Q3 2008   Q4 2008   Q1 2009   Q2 2009   Q3 2009   Q4 2009   Q1 2010




                                                                                           Slide 44
T24 Overview – Functional Architecture
                                      Indirect Channels                     Direct Channels



Tech. Admin   System Admin         Branch     Call Centre        Internet   Mobile            IVR       3rd systems        BPEL



                                                                                          Bank Middleware (optional)
                              T24 Browser

                                    Open Financial Service (Web Services, API, Messaging)

                                                 Security Management System




                                                                                     Brokerage,
                                                                                Wealth Management,
  Corporate                                 Customer and CRM                      Private Banking                      Treasury
     and                                                                                                                  &
  Wholesale          Retail                                                                                             Capital
   Banking                                                                                                             Markets



                                                               General Support



                                                            Persistence


                                                                                                                        Slide 45
               T24 Overview – Functional Architecture
                                                                     Indirect Channels                            Direct Channels



                      Tech. Admin        System Admin             Branch        Call Centre          Internet     Mobile              IVR               3rd systems         BPEL



                                                                                                                                     Bank Middleware (optional)
                                                          T24 Browser

                                                                   Open Financial Service (Web Services, API, Messaging)

                                                                                       Security Management System


                         Trade Finance             Advices           Branch Resilience              Teller           Order Book                 Modelling         Capital Markets

                          Guarantees             Statements                Analytics           X-Selling            Asset Mgmt.               Performance                 FRA

                        Commercial Loans       Sweeps/DD/SO             Contact log           Product Catalogue       Custody                  Brokerage                 Forex
Application Objects




                       Cash Management             Savings                 360˚ View          Case Management     Corporate Actions            Settlement             Money Market

                            Leasing           Card Management              Customer              Campaigns         Margin Trading           Fiduciary Deposits           Swaps

                        Syndicated Loans       Deposits/Savings              Euro             Document Mgmt.           IAS39                   Market Risk        Futures/Options

                              Bills               Accounts                 Past Due                Image           Multi Time Zone               Basel II                Repos

                         Discount Loans           Mortgages           Funds Transfer           Confo Matching      Multi Company              Dev Tool Kit

                            Cheques            Consumer Loans               SWIFT               Nostro Recs        Multi Language           Database Mgmt.        Data Warehouse

                        Standing Orders         Direct Debits         MI/Profitability         General Ledger          Limits                   Collateral



                                                                                              Persistence


                                                                                                                                                                       Slide 46
One annual release




                    Upgrade is annual and simple
                    • Client gets annual enhancements
                  • No services input for client or Temenos
             •   Temenos maintains all clients on latest versions




        High maintenance and high margin on
                   maintenance


                                                                    Slide 47
Our products are open and scalable




                                                                    XML
      Built using industry standards, such as SOA/SOAP
      Have the framework to be run on any platform, any database
      More servers can be added to cope with increasing volume


                                                                          Slide 48
Leading the IBS League Table


                  First place in
                  the 2009 IBS
                  Sales League
                  Table




    Corebanking Positions

     Position      Product           Company       Deals

         1            T24           TEMENOS         40
         2         Flexcube         Oracle FSS      33
         3        TCS Bancs        TCS Financial    17
                                     Solutions

     •       Top two positions in the IBS Sales League
             Table for 11 out of the last 12 years

                                                           Slide 49
Thank You

								
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