Misys takes £14m charge on banking systems restructuring
21 June 2006 | 8066 views | 0
Misys says it will incur charges of £14 million following the widescale restructuring of its banking systems business, which includes a £3m write-off of capitalised development costs relating to its Risk Vision product.
Misys began restructuring its banking systems business in January following a 25% decline in first half operating profits at the division. The vendor expects the restructuring to yield £15 million in cost savings in 2007.
In a trading update for the full year ended 31 May, Misys says it continues to see attractive growth opportunities in its two core markets of banking and healthcare.
The group says total revenue at its banking division rose seven per cent to £260 million. Revenue from initial licence fees (ILF) rose 15%, while ILF order intake increased eight per cent. But operating margin declined from 16.8% to around 14%.
Professional services revenues fell by one per cent, although maintenance revenues were up three per cent.
Misys says the restructuring of the division is now complete, although it has declined to state the number of jobs cut at the unit. Finextra understands that up to 75 jobs were shed in the UK and a further 24 were lost in Luxembourg as part of a global cull.
Top end casualties of the shake-up are understood to include Clive Pedder who was previously CEO of wholesale banking at Misys but later became COO, core banking, Misys Banking Systems, Michel van Leeuwen, risk management CEO, Misys Banking Systems, and Armin Holst, worldwide sales director of Misys' banking division.
The group is also writing-off £3 million of capitalised development costs relating to it Risk Vision product. Misys says it is retaining the business, but that in future it will focus on serving existing clients rather than marketing the product to new customers.
In the retail markets, Misys' Sesame operation was dragged to a net loss by a further £16 million charge for "future estimated costs and redress payments associated with regulatory reviews and endowment complaints". The vendor recently shelved plans to sell the business, after failing to agree a price with potential buyers.
Misys shares were down six pence, or 2.70%, to 211.00 pence in lunchtime trading.