MISYS plc - STRATEGY ANNOUNCEMENT

CEO MIKE LAWRIE UNVEILS NEW STRATEGY AND AGREEMENT ON SALE OF SESAME

• To drive the business toward providing software solutions and expand along more of the available value chain
• To develop a focused strategy and a simplified integrated portfolio for each business - Treasury & Capital Markets, Core Banking, Healthcare and Services
• To grow the business by developing successful partnerships and collaborations
• To revitalise the organisation by engaging more proactively with customers and partners and establishing clear accountability for delivering results
• To ensure that the business is innovative and better captures emerging market opportunities; and
• To deliver improved financial performance

• Annual cost savings of £25m anticipated in FY08, rising to £40m per year from FY2009
• Total reinvestment of £70m of these cost savings from FY08 through to FY11, with reinvestment of £15m in FY08, £25m in FY09, £20m in FY10, and £10m in FY11

• One-off cash costs related to process integration, property and other costs expected in the region of £40-50m, with cash impact expected to be up to £15m in FY07, £25m in FY08, with the remainder arising in following years
• Non cash asset write down expected of £60-70m, relating principally to loss on sale of Sesame and the write down of goodwill and capitalised R&D

• 3-5 year turnaround programme
• Targeting annual Group revenue growth of 2-4% by the mid point of turnaround programme, with annual revenue growth of 4-6+% by the end of  turnaround programme
• Targeting Group operating margins of 15-18% by the mid point of turnaround programme, with margins of 18-20+% being targeted by the end of turnaround programme
• Improved productivity and a more efficient cost structure through the consolidation of real estate and development sites and, over time, the reallocation of some resources to priority areas such as services; together with the introduction of a global operating model involving back office process integration.

• Non-binding heads of agreement signed with Sesame management to purchase 60% of Sesame, subject to documentation and Financial Services Authority (FSA) and shareholder approval
• Misys to retain 40% shareholding
• £105m of cash and guarantee invested in the business
• Deferred benefits of up to £90m to arise from the release of existing regulatory capital guarantee provided to Sesame by Misys and the repayment of subordinated loan notes
• Deferred benefits expected to be paid over 8-10 years and dependent on future performance of Sesame
• No distributions may be paid in respect of equity shareholdings in Sesame until Misys receives the full amount of the deferred benefits
• Financial impact will be to reduce Misys Group annual revenues by approximately £350m and to reduce EPS by between 1 and 2 pence per share; sale will result in a loss on disposal of approximately £50m (principally goodwill)
• Misys to give minimal representations and warranties
• Upon completion, Sesame will be de-consolidated and Misys will not be subject to any additional capital injection requirements beyond existing regulatory capital guarantee
• Aim of transaction is to maintain the financial and operational stability of the Sesame business whilst enabling Misys to exit its investment in Sesame
• The finalisation of documentation with Sesame management will become binding subject to the approval of a change of control by the FSA and shareholders’ approval. This process may affect the terms of the transaction as outlined. Misys has already commenced discussions of the proposed transaction with the FSA.