Banking and healthcare to bolster Misys

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Misys, the struggling UK-based software group, on Wednesday provided a little comfort to investors, as an expected decline in full-year earnings looked set to meet analysts’ forecasts helped by an increased focus on its core banking and healthcare businesses.

In a trading statement ahead of full-year results, the company said earnings per share would come in within a range of 14.1p to 14.6p - compared with 14.8p last year - with like-for-like banking and healthcare revenues growing 7 and 3 per cent respectively.

“Response to our investment [in banking and healthcare] has been positive, demonstrated by significant demand for a number of our key products and by new-name customer wins, but we know there is more to be done to maximise future growth,” said Kevin Lomax, chief executive.

Mr Lomax gave no further information on the management buy-out overtures which the company revealed earlier this month. Mr Lomax, a co-founder of the company, is thought to be the most likely candidate to lead an MBO.

The company is in the throes of restructuring after it reported a larger than expected fall in interim profits in January close on the heels of a shock profit warning last September.

It is in the process of selling off non-core businesses and focusing on providing software for the banking and healthcare industries, but in March cancelled a sale of its financial support services arm after it failed to secure a high enough price.

Analysts said the results were largely in line, although warned of declining initial license fee (ILF) revenues and new orders at Misys’ healthcare unit, which both fell 4 per cent.

“Headline numbers appear to be in line with market expectations, which should be taken as some relief. However there are cracks in the make up with weakness in Healthcare ILF and ILF order books were down,” said investment bank Investec in a note.

Misys said that it had had “considerable success” at winning new customers but follow-up sales to existing users were below the previous year.

The banking division is predicted to fare better with ILF revenues rising 15 per cent and ILF order intake up 8 per cent, although the operating margin is expected to be 14 per cent compared with 16.8 per cent last year factoring in restructuring costs.

Revenues at Sesame, a business which provides software support to financial advisers, is expected to show an 18 per cent rise thanks to a strong take-up of new products.

Misys shares slipped 1.15 per cent to 214½p in morning trade.

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