Misys profits slump

Misys profits slump

UK software house Misys, which is currently in the midst of a takeover battle, is reporting a sharp fall in pre-tax profit for the year to 31 May 2006, but says the business is in "transition" to higher growth markets.

The banking-to-healthcare software firm saw full year pre-tax profits fall to £39m from £61m a year earlier. But group revenue rose to £953m from £855m.

Full year operating profit at the group's core banking division fell 10% to £37m, mainly due to contract delays.

Misys began restructuring its banking systems business in January following a 25% decline in first half operating profit. The restructuring is expected to yield £15m in cost savings in 2007, but Misys has incurred charges of £14m, which includes a £3m write-off of capitalised development costs relating to its Risk Vision product.

However the vendor remains positive about trading conditions in the banking software market and says total revenue at its banking division rose seven per cent to £265m, while revenue from initial licence fees (ILF) rose 15% and ILF order intake increased eight per cent.

Commenting on the results, Misys chief executive Kevin Lomax, says: "Our businesses are in transition to higher growth market areas. We are encouraged by the initial progress we have made but recognise that there is more to do."

Misys said earlier this week that it was opening its books after receiving approaches for all or part of the business from a number of parties, including senior management.

The group first said in June that some members of its senior management were exploring the possibility of making an offer for the company. Since then speculation has been mounting about possible other interested parties which are thought to include private equity companies, former management and market rivals such as SunGard.

Last week three former directors of Misys - Ross Graham, John Sussens and Mike O'Leary - proposed a "management walk-in" and are seeking to take control of the company in a bid to prevent shareholders selling the business on the cheap.

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