Misys to strip £8 million from costs as sales slow in Europe

Misys to strip £8 million from costs as sales slow in Europe

Banking software house Misys is to cut £8 million from its operating costs over the next year after a 'challenging' first six months trading which saw a slowdown in sales in Western Europe.

Revenue across the group for the six-months ending 30 November 2011 was up 22% to £197m including the Sophis acquisition, but just one per cent on a pro-forma, constant currency basis. Adjusted operating profit grew by 33% to £30m but was down nine per cent on a pro-forma, constant currency basis.

After tax and other exceptional items, the company reported a net loss of £2.7 million, against a £14.9 million profit in the same period last year.

Revenue in the treasury and capital markets business - the engine of growth for Misys oover the past few years - was up seven per cent to £89 million. However operating profits dipped by 29% as the vendor invested in an R&D programme designed to 'componentise' the product set.

In banking, cost control measures pushed the operating profit up 21% to £14 million, even as revenues dropped by two per cent to £76 million.

Across the group as a whole 68% of new customers were from the growth regions of Asia, Middle East, Africa & Eastern Europe, as conditions continued to deteriorate in Western Europe.

Chief executive Mike Lawrie says: "During the period, our customers took longer over their purchase decisions as financial market conditions deteriorated. However, with many customers there are new opportunities as they seek to consolidate their systems with fewer vendors and to upgrade their systems to meet regulatory requirements."

Medium-term financial targets for the two years to 31 May 2013 are unchanged, he says, with annual revenue growth of 5-8% targetted and adjusted operating margins of 20-23% for the Misys Group including Sophis.

The group is nonetheless adopting a cautious approach, says Lawrie. "Given the continuing uncertainty among our customers, we have put in place contingency plans to eliminate £6-8m of operating costs to support our financial results over the rest of this financial year without impacting our product development, investments or sales capacity.'

The reassurances failed to move City traders, who knocked eight per cent off the share price, which fell 26 pence to 299 pence per share.

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