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January 25, 2011 8:01 pm
Misys is beginning to see signs of a return to growth in the banking sector and intends to hand the remaining £145m ($229m) proceeds from the sale of the Allscripts healthcare business back to shareholders.
The financial software provider has already returned £525m of the £670m proceeds from last summer’s sale of its stake in Allscripts to investors through a tender offer.
Mike Lawrie, chief executive, said the group remained focused on integrating its recent £370m acquisition of Dublin-based rival Sophis and delivering top-line growth. He said the group would also consider other, smaller bolt-on acquisitions if they were earnings accretive.
During the six months to the end of November, 13 customers signed up to the group’s new BankFusion product, taking the total to 26 and putting the company on course to meet its full-year target of 30.
But orders in the capital markets division were down as contract signing slipped into the second half of the year. Mr Lawrie said that while customers were “actively talking” about ways of upgrading their technology, some were displaying caution when it came to investing.
That caution was reflected in the group’s targets. Misys maintained its annual revenue growth targets of 5-8 per cent and adjusted operating margins of 20-23 per cent, which includes the Sophis purchase. For its first half, pre-tax profits were £18.8m, up from £15.3m, on sales of £160.9m (£158.4m), in line with the guidance given in December.
Milan Radia, analyst at Jefferies, said the Sophis deal would “catapult” Misys ahead of its nearest rivals in capital markets software and the performance from the banking unit showed clients were responding favourably to the new range of products.
Shares fell 9.8p to 322.6p.
● FT Comment
Mr Lawrie has done a good job of turning round Misys over the past few years. His strategy of simplifying Misys by shedding its stake in Allscripts and focusing on banking, treasury and capital markets is starting to pay off. Misys shares have risen almost 50 per cent during the past year and trade at about 17 times prospective earnings for 2012, a slight discount to Swiss rival Temenos. Investors will now be looking for Mr Lawrie to prove that the full price paid for Sophis was worth it and that he can really accelerate growth.
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