UK software firm Misys is predicting a 10% drop in group revenues to £1013.5m for the year ending 31 May 2004 following "challenging" conditions at its banking and securities and financial services divisions.
In a trading update, Misys says continued weak market conditions led to a reduction in revenues at both businesses.
Total revenues for the full year at the banking and securities division are expected to be down by 14% to £278m on last year, with revenue from initial licence fees falling 18% to £78.6m.
In a statement, Misys says: "While there is evidence that some banks' IT budgets are starting to grow again, banks remain cautious in initiating larger IT projects."
Revenues at the division were also negatively affected by the sale of the UK back office products business of Misys Asset Management Systems and certain equities trading products from Misys Securities Trading Systems. From 1 June 2003 up to the date of their respective disposal, these businesses operated at break even, recording revenue of £13m, down from £44m for the equivalent period 2003.
At the group's financial services division, revenues from the vendor's IFA network business, Sesame, are expected to be 18% below last year at £407m. However Misys says the general insurance unit in the division reported increased level of operating profit.
In contrast, Misys' healthcare performed better although the further strengthening of sterling against the US dollar means that reported revenues will be slightly below those in the prior year.
Overall the company says operating margins for the first half were down two percentage points and expects margins for the full year to show about the same level of reduction.
Misys' shares continued to drop following the announcement, falling 18.25p (8.50%) to 195.75p by mid-morning.