Athens 28 June 2006 George Koukis Chairman TEMENOS

1
Athens 28 June 2006 George
KoukisChairmanTEMENOS
GLOBAL FINANCE
2
Brief Introduction to TEMENOSWorldwide
TrendsExperiences with VCs and
InvestorsGlobal Finance
Topics
3
Brief Introduction to TEMENOS
TEMENOS
4
19845 Citibankers decided to build  the best
banking system in the world 1988Deployed
First version of GLOBUS1991Sold the Company to
COS AG1993 November 16Sold Company to CTW 1st
VC Renamed TEMENOS
Genesis
5
History and development

• A vision transformed into the leading provider of
  banking software systems

1993
2006

• Listed on SWX in 2001
• Acquired TCB for Retail Banking in 2001
• Launched T24 in 2004

TEMENOS founded
Investment in RD 3000 man years (300 million
USD)

• 1993 Key Statistics
• 2 Offices
• 34 Employees
• 19 Banks
• USD 0.25m revenues

• 2006 June Key Statistics
• 39 Offices
• 1500 Employees
• 520 Banks in 112 countries
• USD 210m Revenues

6
Leading Providers of Core Banking System by
Number of Live Clients
Source Celent Communications 2006
7
Client Growth Credibility with Top Tier Banks
Number of Clients
68 New Client Additions in 2005 HSBCLehman
BrothersSumitomo Trust Companie Monégasque de
BanqueFinanciera Compartamos Royal Bank of
Trinidad and Tobago Caja Libertad Zenith
Bank The Bank of East Asia Arab Turkish
Bank Military Commercial Joint Stock Bank South
East Asia Bank Plus a number of other deals that
cannot be disclosed by name.
8
Global Reach

• TEMENOS operates from 39 offices in 31 countries

9
Business Model

• Initial Licence Fees we leverage a largely fixed
  cost infrastructure through licensing our
  products
• Recurring Maintenance we charge minimum 5 years
  committed maintenance at a standard rate of 21
  per cent. of ILF. This gives access to yearly
  updates to the latest versions and 24/7 helpdesk
  support
• Consultancy Services we support our client to
  implement our products. We target consultancy
  services to be between 30 and 35 of total
  revenues

Parameters and utilities
Professional Services
Client specific developments
Our initial commitment
Initial licence fee
Maintenance
Database
Our recurring commitment
10
Business Model

• Initial Licence Fees we leverage a largely fixed
  cost infrastructure through licensing our
  products
• Recurring Maintenance we charge minimum 5 years
  committed maintenance at a standard rate of 21
  per cent. of ILF. This gives access to yearly
  updates to the latest versions and 24/7 helpdesk
  support
• Consultancy Services we support our client to
  implement our products. We target consultancy
  services to be between 30 and 35 of total
  revenues

Parameters and utilities
Professional Services
Client specific developments
Our initial commitment
Initial licence fee
Maintenance
Database
Our recurring commitment
11
Business agility through fast time to market
Faster deployment of new products, services and
processes enables the modern financial
institution to react to and keep ahead of todays
competitive market

• 22,000 product design parameters
• End user, not IT
• Product innovations from over 100 countries
  incorporated in each annual release of the system
• Immediate deployment of new products subject to
  security and authority

• 8,000 users
• 391 branches
• 12.5 million accounts
• Released 163 new products 3 months after going
  live
• Slashed time-to-market for new services from 90
  days to 3

Temenos offers the best of both worlds
functional richness combined with the flexibility
of its data model and component-based
architecture. Sir Jai-Hoa, General Manager
12
Broad Functional Coverage
Temenos are the only supplier to cover a full
range of banking and investment support in a
single, integrated system
We needed a banking system that would enable us
to control the distribution and flow of data
within our bank. With T24 we have all our data
centralised which eliminates manual intervention
and actively assists compliance. This means a
decrease in operational costs and increased
efficiency. Tomas Arrieta Alberdi,Foreign
Branches Area Manager , Banco Sabadell
13
Broad Geographic Coverage
A supplier who understands global banking can
help its clients expand and can bring them
experience from around the world

• Temenos support systems running in 110 countries
  with 39 offices
• Temenos team of 48 nationalities speaking 64
  languages
• 18 clients operate Temenos systems in multiple
  countries
• T24 is the only system that can support 24/7
  global operations in a single, real-time instance

• 450 users
• Largest independent private bank in Switzerland
• Upgraded from 1 country to 10
• Single, efficient IT hub
• 12 years of system upgrades

Because we have had a reliable infrastructure
that provides advanced functionality since our
inception, we have devoted few resources to
fixing problems and have been able to focus on
serving our customers and growing our
business. Ian Cookson, Head of Technology, EFG
Bank Group
14
Cross Selling
It is four times more expensive to sell a product
to a new client than an existing one.

• On-line cross selling propensity engine
• Integrated campaign management
• Product innovations from over 100 countries
  incorporated in each annual release of the system
• Immediate deployment of new products subject to
  security and authority

• 4th largest retail bank in Spain
• 3,800 branches
• 6.5 million customers
• Products per customer increased from 1.1 to 3.2
• Deposits increase 75

We are committed to keeping our members
institutions at the leading edge of banking
systems technology. Carlos Moradell, CEO, RSI
15
Reduced infrastructure through single, integrated
system
Temenos systems offer a broad functional coverage
that can replace a wide range of legacy systems
in a single, low cost and integrated environment

• 800 users
• Retail, Corporate, Treasury and Islamic Banking
• Rationalised applications from 107 to 7

With such a complex network of systems, we knew
that we needed a single 24/7 core application to
support our retail, corporate treasury and
Islamic banking needs. By implementing T24, we
can now offer products that comply with Islamic
law and have already exceeded our target for
carrying out securities trading four-fold. CEO,
Saudi Hollandi Bank
16
Proven implementation methodology
An methodology built upon over 400 successful
projects minimises implementation risk and
ensures projects that deliver their value as
early as possible
I am very proud of the level of professionalism
Temenos has shown during the implementation.
Armed with a solid implementation methodology and
supported by a team of skilled and enthusiastic
consultants, Temenos was able to fulfil its
commitments towards Finance House and implement
T24 on time and on budget, which is not a very
common practice in the market. Mohammad Wassim
Khayata, SVP strategic planning and
Development,Finance House
17
Stable supplier
Temenos is one of the most professionally managed
companies in Switzerland.
Novartis 99.1 Credit Suisse Group 96.0 Geberit 94.
1 Ciba Specialty Chemicals 90.2 TEMENOS Group 84.7

• N5 in Switzerland?Corporate Governance
  Quotient 84.7 Institutional Shareholder
  Services 2004
• TRANSPARENCY(1)?95 - 100 compliant with SWX
  Directive on Corporate Governance
• BEST PRACTICE(1)? Top 15 compliance with
  ethos. Corporate Rating 2004

(1) Study published by the ethos.Foundation on
the 100 largest Swiss companies
(www.ethosfund.ch November 2004)
18
Competition
Major players by segment
Vendor
Products
Retail
Private
Universal
Wholesale
TEMENOS
T24 TCB
I-Flex
Flexcube
Misys
Equation, Midas, Bankmaster
Infosys
Finacle
Corebank, Systematics
Fidelity
Corebanking
SAP
Source IBS Market Report Roland Berger
19
Position in the Market
IBS League Table

• For the last eight years, TEMENOS has been ranked
  either 1 or 2 in terms of new client wins per
  year by IBS
• TEMENOS market share for new licenses in its
  target markets was approximately 30 per cent
  (2004 23)

(1) Number of known wins Source International
Banking Systems, 2005 TEMENOS
20
Competition and Market Share

• In the last 4 quarters, we have been steadily
  improving our win ratios from an already high 80
  and winning consistently against competition
  including iflex, Misys, Fidelity and SAP
• TEMENOS has the richest product and broader
  distribution, as well as domain expertise to
  compete effectively against any combination of
  players
• Success demonstrated by 2005 IBS Report which
  ranked Temenos No1 in terms of new licenses by
  dollar value and No2 for number of new deals
• TEMENOS market share for new licenses in our
  target markets was approximately 30 in 2005
  (2004 23)

21
Worldwide Market Trends
22
Market Trends External IT Spending

• External IT spending now consumes 57 of total IT
  expenditure (199953)
• Global External spending growing at CAGR 7.9
  versus CAGR 4.5 for Global IT spending
• Budget shift towards further external IT spending
  driven by replacement of legacy systems
• Systems replacement or transformation necessary,
  as they hamper delivery of competitive value to
  customers as well as compliance with multiple
  regulatory mandates

23
MARKET TRENDS- IT SPENDING MIX
Market Trends IT Spending Mix
24
When do you think your company will start a
major renewal initiative regarding your core
applications (e.g. banking platforms)?(1)
Market Trends Application Renewal
Do you think your company needs a major
application renewal?(2)
(1) Base 33 European financial services firms
that are not currently executing a major renewal
initiative regarding core applications
(percentages may not total 100 because of
rounding) (2) Base 62 European financial
services firms Source Forrester Research 2005
25
Market Growth TEMENOS Forecast

• Industry analysts are assessing our market to be
  growing at around 6 to 8
• TEMENOS is increasingly confident it can continue
  to outpace the market. We grew like for like
  license revenues by 38 for the last 12 months.
• Analysts expect that 68 of European Financial
  Services firms will start a major renewal
  initiative of their core applications by 2010
  (source Forester Research), faster growth is
  expected in APAC and emerging markets. We expect
  that this pace of change will result in faster
  market growth than we have seen in the past few
  years.
• TEMENOS is in an excellent position to take
  advantage of this faster growing market, with
  excellent product, domain expertise and
  distribution.
• As we are revising our three year revenue plans
  consistent with the above we will also be
  investing for further growth in key strategic
  product initiatives and sales coverage.
• We will be announcing a number of key strategic
  product initiatives in our Temenos Client Forum
  on June 13th, 2006 that are intended to
  significantly broaden our addressable market in
  our core space.

26
Acquisitions

• Organic growth model on track, EPS growth 46
  (2005/2004)
• Majority of banks are expected to replace their
  Core Banking systems in the next 5 years. Vendor
  growth over the next 3-5 years will determine
  long term leadership in our market. TEMENOS
  intends to take advantage of the opportunity to
  complement an accelerating organic growth model
  with acquisitions in order to achieve this
  leadership.
• TEMENOS has a significant pipeline of potential
  acquisitions in its core business areas
• Enhance product
• Acquire client base
• Strengthen delivery capability and distribution
• Management continues to maintain a disciplined
  approach in conducting acquisitions and will
  remain focused on delivering shareholder value.
• Acquisitions will be funded either through cash
  or equity. Company raised CHF 132.5 million or
  equivalent of approx. USD 100 million in March
  through a convertible bond offering.

27
Conflicts in Building a Business
28
VALUE PROPOSITION - Institutions
29
VALUE PROPOSITION - Customers
30
Balancing Act
Clients
Functionality Technology Local Support Expert
Staff Lowest Cost per transaction
Investors Markets Analysts
Competitors Economy/Politics Regulators
Highest Return Efficient Allocation of
Resources Sustainable Growth
New Products Recession, Wars Basel II, and
III.IX
31
Conflicts Short and Long Term
Clients Competitors Economy Regulators Dreams
Investment
Profit
Investors Markets Analysts
32
Experiences with VCs and Investors
33
Life is like a Marriage - Before
34
Life is like a Marriage - After
35
Life is like a Marriage - Divorce
36
1988IAVM, FSSL, GENSEC, COMMERCIAL
CAPITALJune 2000Global Finance
VCs and Investors in TEMENOS
37
Beginning
I Have A DreamG. Koukis (1988)
38
Beginning - COS AG in Zurichwas looking for a
buyer for GLOBUS
39
The Business Plan
The CTW Business Plan
Easy to Read Comprehensible
40
Beginning Need for Capital
41
The Experts endorsed the plan.
I want to be in control I want to. Conquer The
World
42
The Experts endorsed the plan.
Let me read to you my business plan In the
beginning.
Was that Conquer The World or Conjure The World ?
I hate competitors.. Ive bin working hard,
yet Hes bin landing clients!!
43
Hands up those that think I m crazy..
44
Competition
We Know how to smoke them out
45
We will Build a Team
Winners
46
I.P.O.
47
Make Money
48
We are willing to learn but not copy others
49
We tried our own ways
50
Painful Lessons
51
June 2000 Global Finance
VCs and Investors in TEMENOS
52
We wanted to be the best
Patek Phillippe
Bordeaux
Rolls Royce
Mozart
53
To be Different
54
To be One of the Few
55
Sustainable Growth
Temenos are one of top few suppliers of
international banking and financial service
systems. We believe this market will further
consolidate with only a few competitive suppliers
remaining.
As demand grows, the competitive landscape will
become extremely fierce with a few strong vendors
leading the way Celent research, 2006 figures
Octavio Marenzi CEO
Source Celent Communications, 2005 TEMENOS
56
Global Finance
57
Athens 28 June 2006 George
KoukisChairmanTEMENOS
GLOBAL FINANCE