| Thu 25 Jul 2002, 0:00 | | Global Technology Limited - Temenos Announces Stro |
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GLOBAL TECHNOLOGY LIMITED - TEMENOS ANNOUNCES STRONG Q2, BUT IS CAUTIOUS FOR
BALANCE OF YEAR
GLOBAL TECHNOLOGY LIMITED
TEMENOS (SWX: TEMN), a global vendor of integrated banking software that
supports international banking, announced today a strong second quarter (Q2)
performance, with good revenue growth, and strong cash flows.
FINANCIAL HIGHLIGHTS
The key financial metrics for Q2 are provided below. Full details will be
provided with our Q2 results presentation. Total revenues for Q2 approximately
15% higher than Quarter 1 (Q1); Initial Licence Fee ("ILF") revenues
approximately 35% higher than Q1; Total licence revenue approximately 18% higher
than Q1; Service margin maintained at Q1 level; breakeven EBIT; Fully diluted
earnings per share of 2 cents compared to a loss of 2 cents per share in Q1;
Operating cash in-flow for the quarter in excess of USD 6 million, bringing the
total operating cash inflow for the first half year to between a USD 2.5 to 3.0
million; Closing cash of USD 53.8 million, USD 700,000 higher than at March
31st; ILF backlog at June 30th marginally below March 31st position.
BUSINESS REVIEW
Licence and service revenues for the quarter grew strongly compared to Q1 as a
result of our high ILF signings since November 2001. We continued to take market
share from competitors, despite the difficult trading environment. We have
continued to invest in our infrastructure, as well as our sales capability, to
allow us to leverage our product investment over recent years. The operational
improvements undertaken over the last twelve months have resulted in significant
positive operating cash flows for the quarter and half year. This cashflow
improvement follows the rationalisation of our cost base, the better management
of our services business, and higher deferred revenues.
BUSINESS OUTLOOK
During our second quarter, we signed a number of significant deals in Europe,
Asia, and the Middle East, including Bank Thai, a top Tier Asian bank and our
first GLOBUS win on the IBM S390, and First Arab Gulf Bank, a large high profile
bank in the Middle East which is being monitored carefully by many significant
local financial institutions. These deals were won against strong competition
from major industry players including Misys and iFlex, and our success in
winning these deals was a reflection of our product superiority, as well as of
our local support infrastructure. In addition, we have won deals for more users
and additional sites from our existing customer base. As announced, we also
signed our first Corebanking deal in Asia, in partnership with IBM. Equally
importantly, we continued to develop our pipeline, which is now at the highest
level ever, and contains a number of major deals, a number of which are of a
similar size to our recent client win at ING. Our strong revenue growth in the
second quarter is almost unique in a sector that has, almost without exception,
been announcing revenue declines to a better or worse degree over recent weeks.
However, in the last weeks of the quarter, we did not see the anticipated return
to growth that industry spending experts had been predicting on the back of a
wider increase in uncertainty amongst economists, investors and politicians in
general. Confidence in a second half upturn evaporated, with a knock-on effect
for financial institutions, which embarked on a second wave of restructuring. As
a result, we did not close a number of deals that continue to be at the final
stages of completion. We have not lost any of these deals to competitors despite
aggressive competitive pricing. Institutions have simply delayed decisions until
later in the year or early 2003. Unlike the majority of our competitors, who
continue to experience signings declines, we continued to see a flat signings
trend, and continue to increase market share. In these uncertain times, we
continue to manage the cost side of our business extremely closely, targeting
our investment at areas identified as strategic. We believe we will benefit from
our key operating policies: to maintain a focus on cash flow; to monitor our
investment in new geographies and product initiatives; to take advantage of
investment opportunities during the downturn; to deliver operating efficiencies
without compromising our long-term strategy; to remain focused on our long-term
business model based on generating quality recurring revenue streams and a clear
single product strategy. "Our ILF growth is a testament to the strength of our
product and business model. We are convinced that we have the right product, the
right business model and the right local support structure to serve our clients.
We are very clear and committed to make key decisions that contribute to our
long term success. When corporate events in the USA undermine trust and
confidence on a global basis, it is prudent for TEMENOS to modify its original
projections for 2002 and approach the remainder of 2002 with a degree of
conservatism. Our belief in TEMENOS future potential is unwavering," commented
George Koukis, Chairman and CEO.
For 2002, we currently expect revenues of USD147-153 million, a positive
operating cash flow, and operating margins at 2001 levels. We will be hosting a
conference call at 11am CET today for a Q&A session with management. The dial in
number is +41 916 10 4111. The company also continued its geographic expansion,
signing new clients in Russia, Vietnam and Australia, while opening new offices
in Moscow. Average deal size continues to increase, and there appears to be
limited pricing pressure.
ABOUT TEMENOS
TEMENOS Group AG is a global leader in providing financial institutions with
integrated banking systems that support increased productivity and profitability
and that allow institutions to respond quickly to changing market conditions.
TEMENOS customers include Deutsche Bank (GER: DBK), Barclays Bank (LONDON: BARC)
and Merrill Lynch (NYSE: MER). TEMENOS has 33 offices in 20 countries and has
installed over 500 systems since being founded in 1993. In June 2001, TEMENOS
became a public company, listed on the main segment of the SWX Swiss Stock
Exchange (TEMN).
* Note to editors: TEMENOS GLOBUS is a trademark of TEMENOS. 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 such
forward-looking statements as a result of various factors. In addition, the
forward-looking statements included in this press release represent the
company`s estimates as of July 24, 2002. The company anticipates that subsequent
events and developments will cause the company`s estimates to change. However,
while the company may elect to update these forward-looking statements 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 or views as of any date subsequent to July 24, 2002.
FOR FURTHER INFORMATION, CONTACT:
David Arnott, CFO, TEMENOS
darnott@temenos.com
+41 22 7081417 OR +44 208 751 9500
Date: 25/07/2002 03:10:03 PM Produced by the JSE SENS Department
