April 6, 2011 5:43 pm

Misys benefits from Asia rebound

Misys, the financial software provider, said that a rebound in capital markets, particularly in Asia, had helped to fuel orders in the third quarter of its financial year.

Mike Lawrie, chief executive, said Misys had seen good momentum in the three months to the end of February, and indicated that the group’s investment in new products, such as BankFusion for financial services companies, was bearing fruit.

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Mr Lawrie said he expected the recent £375m acquisition of rival Sophis to drive growth in the treasury and capital markets (TCM) division.

Group revenues for the third quarter jumped 7 per cent against the same period last year to £85m. Orders rose 34 per cent to £49m, however, that included some orders that had slipped in the previous quarter.

Management stuck to its midterm guidance of revenue growth of about 5-8 per cent and adjusted operating margins of 20-23 per cent.

Ian Spence, analyst at market intelligence service Megabuyte, said that the company’s move to shed its Allscripts healthcare arm last summer and focus on financial software was beginning to pay off.

Misys’ TCM unit continued to perform well – revenue grew by 11 per cent and orders rose 50 per cent. Results from Sophis will be consolidated in the final quarter.

Revenues in the banking unit rose 2 per cent.

“In terms of what you want from a software company, today’s results strike many chords. But this isn’t the end game. Misys still hasn’t got global scale and in the short term it has Sophis to work through,” said George O’Connor, analyst at Panmure Gordon.

Misys has been returning £670m of the proceeds of its Allscripts divestment to shareholders. It said the final £145m would be paid out during the fourth quarter.

The shares closed up 3.2 per cent at 336½p.

FT Comment

Mr Lawrie’s is finally delivering on his plan to get Misys fit. The shares are trading on about 15 times forecast earnings for 2012. That looks about right for a company that still has a little way to go. As a pure play, financial services software group with a raft of new products, Mr Lawrie has put Misys in a good position to grab market share, particularly in TCM. The focus now will be on how efficiently Misys can integrate Sophis and what Mr Lawrie does with the ailing banking unit.

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