Misys stems decline in banking and securities

Misys stems decline in banking and securities

Misys says it has slowed the pace of decline in its banking and securities division and expects to turn in operating profits before costs of £63 million, broadly in line with the divisional return last year.

In an interim statement, the company says total divisional revenues for the year were down eight per cent on last year as banks of all kinds made further reductions in their IT budgets, particularly in the first half.

Initial licence fee (ILF) order intake at £74m (H1 £32m, H2 £42m) was 15% below the same period last year. However, the decline in the second half was markedly less than in the first. The ILF order book at £26m, whilst lower than at the end of May 2002, was slightly up on November 2002.

Although ILF revenue is broadly in line with last year, the lower level of ILF revenues over the last two years has again slowed the growth in maintenance revenues. More significantly, the level of professional services has fallen further, partly as the delayed result of the earlier decline in ILF order intake, but also as the result of continued pressures on banks to reduce costs in this area.

Misys axed 350 jobs from the division in the first half and moved to outsource software development to offshore centres in an effort to cut costs.

In the financial services division, the life and pensions business - recently
renamed Sesame in anticipation of a planned flotation - suffered a 17% decline in revenues from continuing operations. The company blames poor market conditions and regulatory uncertainty for the decline.

Misys' shares were trading up 4.8% on an overnight close of 239 pence immediately post-announcement at 250.5 pence.

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