| Tue 5 Nov 2002, 17:17 | | Global Technology Limited - Temenos Quartely Resul |
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Global Technology Limited ("the Company")
(Incorporated in the Republic of South Africa)
(Registration number 1996/009809/06)
Share code: GLT ISIN: ZAE000016820
TEMENOS ANNOUNCES THIRD QUARTER 2002 FINANCIAL RESULTS
Financial Highlights
- Initial licence fee signings of US$11.2 million
compared to US$1.9 million for Q3 2001
- Total revenues of US$ 26.5 million, down 26%
compared to Q3 2001
- Licence revenues of US$ 13.8 million, down 31%
compared to Q3 2001
- Service revenues of US$ 12.7million, down 19%
compared to Q3 2001
- Operating costs of US$ 44.7 million, up 34% compared
to Q3 2001
- Operating loss of US$ 18.2 million, compared to a
profit of US$ 2.4m for Q3 2001
- Fully diluted EPS of US$ (0.32), compared to US$
0.03 for Q3 2001
- Operating cash outflow of US$ 12.9 million, compared
to an outflow of US$ 5.9 million for Q3 2001
Business Review
Total revenues for Q3 2002 were US$26.5 million, down 26%
on the comparable period last year. The reduction in
total revenues is due to the lower level of ILF signings
during the first half of the year when compared to the
same period last year and a lower backlog of unrecognised
licences at the beginning of the quarter compared to one
year ago. This has affected both licensing and services
revenues.
Operating costs in Q3 2002 were US$44.7 million, compared
to US$33.4 million for Q3 2001, up 33%. Included in
operating costs is a charge of US$8.0 million
representing the cost of our restructuring during Q3.
When adjusted for restructuring charges, operating costs
for 2002 are 9.9 % up when compared with the same period
last year. Details of our restructuring activity are set
out below.
Services margins were adversely impacted by absorbing a
restructuring charge of US$2.5 million relating primarily
to the spin off of our outsourcing unit. When adjusted
for restructuring costs the margin in the quarter was
negative 10%. Available capacity driven by lower ILF
signings during the first six months of the year was the
primary reason for the negative margin.
Software development costs for Q3 2002 were 10% higher
than for the comparative period. Restructuring charges
included in Q3 operating costs amounted to US$2.0
million. When adjusted for restructuring costs, software
development costs were 10% down on prior year. This is
despite absorbing for the first time a full quarter of
amortisation charges amounting to US$1.25 million
relating to the acquisition of the Corebanking
Intellectual Property Rights which took place in October
2001. In addition, during the quarter we capitalised US$
0.7 million of costs compared to US$1.6 million for the
same period last year on completion of a number of
development projects during the Summer months. The lower
R&D cost base reflects the transfer of a significant part
of our development activities to India.
Sales and marketing costs amounted to US$10.2 million in
Q3 2002, 46% higher than in Q3 2001. Sales and marketing
costs during the 3rd quarter include restructuring costs
of US$ 1.8 million. The increase in cost is due to the
investment in our sales infrastructure during the first
six months of the year required to leverage our product
portfolio.
General and administrative costs amounted to US$6.6
million in Q3 2002, 39% higher than in Q3 2001. This
includes approximately US$1.7 million in restructuring
charges. When adjusted for this, costs in 2002 were 13%
higher than the same period last year. The increase in
G&A costs is attributed to the infrastructure required to
support Corebanking.
Operating loss for the quarter was US$ 18.2 million
compared to a profit of US$ 2.4 million for the same
period last year. When adjusted for restructuring costs
of US$8.0 million the operating loss for the quarter was
US$10.2 million.
Net loss for the quarter was US$ 16.6 million, compared
to a profit of US$1.8 million for the same period last
year - resulting in EPS of US$(0.32) on a fully diluted
basis, compared to US$0.03 for Q3 2001.
An operating cash outflow of US$12.9 million in Q3 2002
compares to an operating cash outflow of US$5.9 million
in Q3 2001. Total cash at the end of Q3 was US$38.1
million, US$15.8 million lower than at the end of the
prior quarter. Q3 is typically a cash outflow quarter
characterised by lower than average new Initial Licences
Fees and lower maintenance invoicing. A lower cash
outflow than operating losses was brought about by
careful management of working capital leading its
reduction from US$41.2 million to US$37.4 million during
the quarter.
Business Review
Initial Licence Fee signings, a key performance indicator
for our business, were US$11.2 million in Q3 2002,
compared to US$1.9 million in the same period last year.
This brings our September year to date signings of
Initial licence fees to US$34.8 million compared to US$
28.9 million for the same period last year. The growth is
due to increased activity during September especially in
Asia, CIS and the Middle East. New business related
primarily to retail and Universal banking deals. Our
year to date signings trend has turned positive for the
first time in the last 12 months.
During the quarter, we signed a major deal with a total
value of approximately US$20 million with Samsung
Capital, one of the largest financial institutions in
Asia. The deal was won against major players. The Bank
will use Temenos GLOBUS to support their consumer lending
operations in Korea.
Other client wins included the National Bank of
Uzbekistan which will migrate its entire operations on
Globus. The National Bank of Uzbekistan represents the
largest financial institution in the country.
Restructuring
During the quarter we reduced headcount by 13% across all
functions of the company. We also rationalised multiple
office locations to match the headcount reduction.
Specifically, we spun off our outsourcing operations to
its management team. Temenos has no direct or indirect
interest in the spun off business, which is already
operating on a stand alone basis.
Our jBASE operations were significantly rationalised
around a simpler and more cost effective structure.
Business Outlook
The reversal in the signings trend for the first nine
months of the year and the pipeline of projects scheduled
to close over the next few weeks, make us increasingly
more confident that we have been through the lowest point
in the cycle. However and in order to protect future
profitability and cash flow we continue to remain
cautious about the balance of 2002 and 2003 and we will
continue to operate under a headcount freeze and pursue
further cost opportunities during Q4.
About TEMENOS
TEMENOS Group AG is a global leader in providing
financial institutions with integrated banking systems to
support increased productivity and profitability and that
allow the institutions to respond quickly to changing
market conditions. 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
Exchange (TEMN).
Contact:
TEMENOS Group AG
David Arnott
CFO
darnott@temenos.com
+41 22 708 1417
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 of 5th November,
2002. 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 5th November,, 2002.
Date: 05/11/2002 05:00:17 PM Produced by the JSE SENS Department
