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MISYS plc Interim Management Statement

MISYS plc Interim Management Statement

34% orders growth and 7% revenue growth as new solutions continue to gain momentum ¹

Misys plc (LSE: MSY), the global application software and services company, publishes its Interim Management Statement including results for the 2010/11 third quarter, ended 28 February 2011.

Financial information referred to in the statement is unaudited. All comparisons to the prior year are on a constant currency basis1, unless otherwise stated, and exclude Sophis

Operating Highlights (3rd quarter)

• Order Intake up 34% to £49m (year to date: up 13%), including ILF Order Intake up 23%
• Revenue up 7% to £85m (year to date: up 2%)
• Growth of orders and revenue in all segments: ILF and Services in both TCM and Banking
• BankFusion continues to gain momentum with 6 customers added
• New solutions in Banking and TCM, including BankFusion and other recently developed solutions, contributed 59% of ILF orders, compared with 33% in last year’s third quarter

Corporate Highlights

• Sophis acquisition completed on 28 February, creating the leading capital markets software platform - financial results will be consolidated into Misys for the final quarter of the financial year
• Sale of the final 6.5 million remaining Allscripts shares for £85m net of fees
• Return of £670m to shareholders, representing the return of proceeds from the disposal of Allscripts – the final £145m is being paid out during our final quarter
• Net cash of £21m at the end of the third quarter, after the acquisition of Sophis and before the fourth quarter’s £145m return of capital payout to shareholders

Misys Chief Executive Mike Lawrie comments,

‘We have seen good momentum in the third quarter, with order intake growth of 34% and revenue growth of 7%. Our new solutions continued to accelerate, contributing 59% of ILF orders in the third quarter, compared with 33% in last year’s third quarter.

I am encouraged by the progress we are making towards leadership in our markets. Treasury & Capital Markets continued to win new customers, with 8 new names in the period and 18 in the year to date. In Banking, we added 6 BankFusion customers in the period and have signed 19 in the year to date.

Completion of our Sophis acquisition represents a great step forward in our capital markets strategy, creating the leader in this marketplace. Integration between Misys and Sophis is on track, with back-office functions consolidated and sales collaboration already taking place.

We are on track to achieve our medium-term targets for the Group, including Sophis, that we last communicated in January 2011.’

Group Results and Financial Position

Misys performed strongly in the third quarter, in both order intake and revenue. Orders grew 34%, including 18% growth in ILF/ASP orders. Revenues grew 7%, in which growth in ILF/ASP revenue of 22% has been particularly encouraging. The revenue growth in the third quarter has resulted in revenue growth for the year to date.

The acquisition of Sophis was completed on 28 February. The combination of Misys and Sophis has created the leader in capital markets. Our integration process is well underway, with back-office functions immediately consolidated and sales collaboration between Sophis and the Misys Treasury & Capital Markets (‘TCM’) division already taking place. Sophis financial results will be consolidated into Misys for the final quarter of the financial year.

Misys shareholders are benefitting from the return of £670m of proceeds from the disposal of our Allscripts investment that was completed in August 2010. The return is in two stages. In December 2010, £525m was returned by way of a purchase of shares from shareholders through a Tender Offer. In March and April 2011, a further £145m is being returned in the form of a payment of 38p per share to all remaining shareholders together with a 7 for 8 share consolidation.

As the final stage of the disposal of Allscripts, the residual holding of 6.5 million Allscripts shares was sold in February in on-market trades. The proceeds after transaction fees were £85 million. The net cash balance at 28 February 2011 was £21 million (£788 million at 30 November 2010). The reduction was principally due to outflows from the Sophis acquisition consideration and the share purchase from Misys shareholders, partially offset by the sale of residual Allscripts shares and seasonally strong operating cash inflows. This is before the £145m return of capital payment to shareholders taking place in the fourth quarter.

Treasury & Capital Markets

Revenue growth in the third quarter was 11%, including growth in both ILF/ASP (up 34%) and Global Services (up 12%) as recent licence sales progressed through implementation.

Order intake growth was 50%, including significant growth in ILF/ASP (up 26%) as orders that were delayed from the second quarter were closed. Eight new customers were added (making 18 in the year up to the third quarter) alongside some significant sales to existing customers. Global Services orders increased 86% as implementation projects were signed on these key sales.

Opics Plus, our trading, risk and treasury solution, added four new customers, including HaNa Bank in China and FirstMerit Bank in the US.

Summit, our cross-asset trading and risk management solution, added new customers - Bundesrepublik Deutschland Finanzagentur in Germany and Banque des Etats de l’Afrique Centrale in Cameroon. Significant solution extensions included Crédit Agricole consolidating its systems after recent mergers.

Loan IQ, our lending solution, attracted two large new customers in the quarter, including Bayerische Landesbank in Germany for bilateral lending. For these customers, Loan IQ is replacing in-house systems in order to handle greater volumes of lending activity.

Banking

Revenue returned to growth in the third quarter with a 2% increase on last year, including growth in both ILF/ASP and Global Services.

Order intake was up 17%, including growth in ILF/ASP orders as sales of new solutions continued to gain momentum, both in Core Banking with BankFusion, and in Transaction Banking with our solutions for Trade Services and Payments. Global Services orders were up 28%.

We added six BankFusion customers in the period, including our second BankFusion Midas conversion, with Nordea Bank in Finland. In addition, we sold the first extension of a BankFusion solution, for BBAC in Lebanon to deploy the system into new sites in Cyprus and Iraq. Many of the BankFusion sales in the period were combined with other new Banking and TCM solutions. Habib Bank, one of our largest bank customers, licensed BankFusion Equation, Opics Plus, Trade Portal and Payment Manager, whilst Seylan Bank licensed BankFusion Equation, Cash Portal and Misys Business Intelligence.

We attracted seven new customers for our new Trade Services solutions. Four of these customers were purchasing Misys solutions for the first time, including BLCbank in Lebanon with Trade Innovation Plus, FirstMerit Bank in the US with ASP versions of Trade Innovation Plus and Trade Portal, and Schneider Electric in France with an ASP version of Trade Portal.

66% of total ILF orders in Banking were for new solutions, compared with 40% in the 3rd quarter of the previous year, demonstrating further progress in our strategy of migrating customers to the new products that we have invested in.

Appendix: Divisional Analysis

Notes

1. Constant currency comparisons
   To adjust for movements in the US dollar, the Euro and other currencies, stated constant currency growth rates are based on prior year results retranslated at current period exchange rates. The average exchange rates against Sterling for the third quarter were US$1.58 and €1.18 compared to US$1.61 and €1.13 in the third quarter of 2009/10. For year to date comparisons, the exchange rates applied are US$1.56 and €1.19 compared to US$1.63 and €1.13 for the corresponding period in 2009/10.
2. Discontinued operations
   Following the disposal of Allscripts, Allscripts results are treated as discontinued operations and are not reported in this statement, which covers continuing operations only.

Conference Call

A conference call for analysts and investors will be held at 8.30am BST today. To access this call dial +44 (0) 1452 555 566. conference code: 55402513

The call will be available for replay from later today for 7 days on +44 (0) 1452 55 00 00 with access number: 55402513#

Inquiries

Phil Branston
T: +44 (0) 203 320 5503 M:+44 (0) 789 906 5115
phil.branston@misys.com
 

About Misys

Misys plc (FTSE: MSY.L), provides integrated, comprehensive solutions that deliver significant results to financial services organisations. We maximise value for our customers by combining our deep knowledge of their business with our commitment to their success.

Misys is a market leader in banking and treasury & capital markets, with over 1,300 customers, including all of the world’s top 50 banks. Misys employs around 4,000 people who serve customers in more than 120 countries.

We aspire to be the world’s best application software and services company, delivering results for the financial services industry throughout the world.