Misys preparing to tighten belt as customers dither

Misys's customers in Western Europe are dithering over purchasing decisions but the financial software provider is winning plenty of orders from other regions.

In its interim results statement the company's Chief Executive Officer Mike Lawrie said the firm was leaving its medium-term financial targets for the two years to May 31st, 2013, unchanged but, in view of continuing difficult times for its core target market, Misys has put in place contingency plans to squeeze out another £6m to £8m of operational cost savings over the second half of this financial year.

Order intake in the six months to the end of November totalled £109m, up 33.8% from £81m at the interim stage last year, but this figure was flattered by the impact of the Sophis acquisition. On a pro-forma constant currency (PFCC) basis order intake was up 3.0%.

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The group said that 68% of new customers during the period were from the growth regions of Asia, Middle East, Africa

& Eastern Europe.

Revenue rose 1.4% on a PFCC basis to £197m from £194m the year before. That was £5m below the forecast by broker Panmure Gordon.

Underlying operating profit fell 9.4% on a PFCC basis to £30m, as investment in new solutions increased. Product development spend accounted for 20% of revenue at the interim stage. Panmure Gordon had pencilled in a figure of £35.1m for underlying operating profit.

Reported loss before tax was £3.6m, versus a profit the year before at £18.8m.

The company does not pay dividends.

Divisional break-down

Treasury & Capital Market (TCM) orders were up 10% year-on-year with 16 new customers, while revenue was up 7% to £89m. Adjusted operating profit fell to £11.0m from £15.6m the year before, due to a higher proportion of revenues from services and to increased product development spending.

The recently acquired Misys Sophis business's order intake eased to £22.8m from £24.3m at the half-way point the year before, but strengthened markedly in the second quarter, with orders up 34% year-on-year. Revenues dipped to £32.1m from £32.7m the year before.

Adjusted operating profit increased 13.2% on the prior year period, largely as a result of administrative efficiencies as part of the integration into Misys. The operating margin increased to 33% (2010/11 first half: 29%).

In the Banking division, order intake rose 3% to £42.8m from £41.5m the year before. Revenues retreated to £75.6m from £77.6m the prior year.

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