Temenos reports Q4 and full year results - figures well ahead of management outlook and consensus estimates and company raises outlook

27 February 2008

Geneva, Switzerland, February 27, 2008 – Temenos Group AG (SWX: TEMN), a market leading provider of mission-critical core banking software systems, today announced its financial results for the fourth quarter and full year 2007.

Read the full Temenos Q4 2007 Results

Download the Temenos Q4 2007 and Full Year Results Presentation

Financial Highlights

USDm	2007	2006	% Change	Consensus	% Diff
Licence revenue	148.8	97.9	52%	138.8	7%
Total revenue	329.9	216.3	53%	313	5%
EBIT	62.5	33.3	88%	59.4	5%
Adjusted EPS	1.03	0.58	78%	0.93	11%

Q4 Operating Highlights

- 19 new core banking clients signed in the quarter (49 for the full year), including:

• two T24 deals in Germany (our plan assumed no deals in 2007), demonstrating Temenos’ much improved presence and execution following the acquisition of Actis.BSP earlier in the year.
• endorsement of Temenos’ Islamic banking offering through the deal with Bank Islam in Malaysia and a large Islamic Bank in Saudi Arabia.
• Mauritius Commercial Bank, the leading bank in Mauritius and a high-profile win against Infosys.
• Banco Popular de Costa Rica, a top three retail bank in Costa Rica - a new market for Temenos - and a win against Fiserv.

- An acceleration in the take-up of ARC, Temenos’ front-office CRM solution, with 10 new clients added in the quarter bringing the total to 28.

- Going live in 8 months at Volkswagen Bank in China, demonstrating T24’s richness of functionality and adaptability to new market segments

- Winning Banking Technology’s “Best Core Banking Product” award 2007

Commenting on the results, CEO Andreas Andreades said, “I am pleased to be able to report another set of outstanding results. Both our businesses, T24 and TCB, have had their best year ever and we have exceeded the markets expectations for revenues, earnings and cash. Although we are alive to the changes in a challenging macroeconomic environment, these results demonstrate that, to date, we have not experienced any slowdown as a result of the credit crunch affecting financial institutions. Indeed, based on our robust pipeline of future deals (which stretches out for more than 12 months), we are happy to be raising guidance again – the ninth consecutive quarter we have done so. We are confident that the factors driving core banking system replacement (competitive pressures for growth and customer service, cost-cutting, regulation) are too compelling to ignore and believe that Temenos is very well placed to continue to capitalise on the opportunities in this growing market.”

Revenue
Revenue for the fourth quarter was USD125.3m, up from USD78.8m in the same period last year, representing growth of 59%. For the full year, revenue reached USD329.9m, 53% above the 2006 figure, with all revenue lines experiencing strong growth. Q4 and full year revenues were 16% and 5% above consensus estimates, respectively.
 
Operating profit
Operating profit for the quarter was USD43.7m, compared with USD26.9m in the same period last year, an increase of 62%. Operating profit for the year was USD62.5, compared to USD33.3m in 2006, representing a rise of 88%. Operating profit was 5% and 8% above consensus for the year and the quarter, respectively.   Margin for the year at 19% was 350 basis points above the prior year, reflecting a favourable change in the sales mix, good cost control and continued improvement in services margins, which reached 7.4% (versus -2.4% in 2006).

Net income and Earnings Per Share (EPS)
Net income was USD44.3m in the quarter (73% higher than in 2006) and USD64.7m for the full year (88% higher than in 2006). Adjusted EPS, which excludes amortisation of acquisition-related intangibles, was USD0.66 in the quarter, a 61% increase over 2006 (USD0.41), and USD1.03 in the full year – a 78% increase over 2006 (USD0.58). Adjusted EPS was 11% ahead of consensus estimates for the year and 17% of consensus estimates for the quarter, reflecting the operating profit outperformance, but also a larger than expected foreign exchange gain.

Cash
Temenos also enjoyed strong cash conversion across both our businesses, T24 and TCB. Cashflow from operations was USD64.8m for the year, 18% ahead of management guidance of USD55m, representing an EBITDA conversion of 83% and an increase of 136% over the prior year.
 
Outlook 
The company’s outlook for 2008 assumes a zero tax rate, a USD/EUR rate of USD0.68, a USD/CHF rate of USD1.09 and a USD/GBP rate of USD0.50.

The 2008 outlook is for licences sales of USD173m, 16% up on 2007 levels; total revenue of USD400m, 21% above 2007; EBIT of USD85, 36% above 2007 levels and a margin of 21.3%; and adjusted EPS of USD1.33, 30% above the 2007 figure.

At 13.30 GMT/ 14.30 CET/ 9.30 EDT, today, February 27, Andreas Andreades, CEO, David Arnott, CFO, and Max Chuard, Head of M&A and IR, will host a conference call to present results and offer an update on business outlook. Listeners can access the conference call using the following dial in numbers:

+41 (0) 91 610 56 00     (Europe)
+1 (1) 866 291 4166      (USA)
+44 (0) 207 107 0611    (UK)

A playback will also be available for up to 48 hours after the call, using the following numbers:

+41 91 612 4330 (Europe)
+1 (1) 866 4162558 (USA)
+44 207 108 6233 (UK)
          
Pin: ID 14405 #

Presentation slides for the call can be accessed using the following link
http://www.temenos.com/Investor-Relations/New-Presentations/ 

Read the full Temenos Q4 2007 Results

Download the Temenos Q4 2007 and Full Year Results Presentation

-ENDS-

About Temenos

Founded in 1993 and listed on the Swiss Stock Exchange (SWX: TEMN), Temenos Group AG is a global provider of banking software systems in the Retail, Corporate & Correspondent, Universal, Private, Islamic and Microfinance & Community banking markets. Headquartered in Geneva with 44 offices worldwide, Temenos serves over 600 customers in more than 120 countries.  

Temenos’ software products provide advanced technology and rich functionality, incorporating best practice processes that leverage Temenos’ experience in over 600 implementations around the globe.  

Temenos’ advanced and automated implementation approach, provided by its strong Client Services organisation, ensures efficient and low-risk core banking platform migrations. Temenos annually invests around 20% in R&D, significantly more than its peers, into a single fully packaged upgradeable software release, which ensures all Temenos customers benefit from modern technology and support indefinitely. For more information please visit www.temenos.com

For more information, contact:

Investor/Analyst queries

Max Chuard
Temenos Director
Corporate Finance & IR
Member of the Executive Board
Tel: +41 (0) 22 708 1157
Email: mchuard@temenos.com

Ben Robinson
Temenos Investor Relations Manager
Tel: +44 (0) 207 290 3012
Email: brobinson@temenos.com

Press queries

Peter McKenna
Temenos Marketing Director
Tel: +44 (0) 207 423 3842
Email: pmckenna@temenos.com

James White
Hudson Sandler
Tel: +44 (0) 20 7710 8910
Email: james.white@hudsonsandler.com

Any statements in this press release about future expectations, plans and prospects for the company and statements containing the words “believes”, anticipates”, “plans”, “expects”, “will” and similar expressions, 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 press release represents the company’s estimates as today’s date. 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. These forward-looking statements should not be relied upon as representing the company’s estimates of its future financial performance as of any date subsequent to today’s date.