Misys rallies as trading defies expectations

Misys rallies as trading defies expectations

Shares in banking systems vendor Misys have jumped by 21 per cent after the company unexpectedly reported "high activity levels" in sales to commercial and wholesale banking customers.

Trading for the majority of the banking and securities division's operations remains on track to meet expectations, Misys chairman Kevin Lomax told the annual general meeting. Despite signs of caution in the timing of large orders, several big contracts have been signed since the beginning of the financial year and order intake across the division is at similar levels to last year, he reports.

"Trading with investment banking customers in the area of securities trading systems and asset management - which represented less than 20% of the division's total revenues last year - is looking weaker," says Lomax.

However, recurring licence fees and professional services, which make up over 60% of revenues in this division, are currently running ahead of last year.

On Monday, the company announced plans to rebrand its disparate banking services operations - Midas-Kapiti International, MKI Risk, MKI Frustum and the Credo Group - under the Misys International Banking Systems banner.

Misys stock had trailed badly in the run-up to today's AGM. Analysts expected the company to report a further deterioration in trading, compounding the effects of an earlier profit warning in July.

Concerns grew after US rival SunGard warned investors that its third quarter results would be badly hit by the terrorist attacks on the World trade Centre.

Lomax reported continuing disruption to the company's operations in Manhattan, but says the financial impact on overall trading is likely to be minimal. The problems centre around the Summit division and the delivery of professional services to software licensees. "We believe the disruption should be mainly limited to the first half of the financial year and the associated loss of profits is not likely to exceed £3m," reports Lomax.

While it is still too early to assess the knock-on effects of the 11 September attacks on business confidence, Lomax says he is "cautiously optimistic" about trading for the second half of the year.

In the financial services division, which is a leading distributor of savings and protection products, Lomax comments: "The DBS acquisition has gone well, and we have already integrated the m-link and Assureweb portals and crystallised the expected savings in R & D spend going forward. We continue to make steady progress in our financial services business, and current trading remains in line with expectations."

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