Misys Plc has rolled out mainly favourable interim results, although proprietary systems and elements of the UK market suffered. The firm, which deals primarily in financial systems and the educational market, reported net profits up 21% to UKP5.5m (pre-tax up 18.6% to UKP8m), on turnover up by a more modest 2.3% to UKP42.1m. The firm was happiest with its software sales which, though offset by decreasing hardware business, still boosted gross margins. Kevin Lomax, chairman of the firm, praised more powerful software development techniques, which enable the group to prototype products more quickly. Software development for the firm’s UKP6m contract with Australian universities (CI No 2,220) is being carried out using Cognos Inc products, and should result in products for 1995. The group’s Computer Solutions Division is expecting payments of UKP2m from the Australians this year. Even so, the division didn’t do well this year in the UK, where Lomax says the green shoots of recovery are withering slightly. He also believes that the group’s proprietary business is suffering, as users become more attracted to open systems and start to question their loyalty to the likes of IBM Corp and Digital Equipment Corp. For this reason, Misys Plc’s Open Systems Division did well, continuing a strong recovery which started in the second half of last year. Lomax also says that the Computer Services Division has been successful, with the maintenance operations carving out a specialist niche.
Financial Services
Within the Financial Services Division, research and development expenditure has increased by 40% to 50% over the past year, (normally the average is roughly 30% but there have been some large projects to contend with), and now accounts for 12% of the annual turnover of the group. Overall, the Financial Services division has grown the most as part of the group, although all divisions are still profitable. This division grew by 16% while the Open Systems Division grew by 14%. The Computer Services and Computer Solutions divisions did the reverse, shrinking in profit by 2.8% and a stinging 19.5% respectively. The group’s small acquisitions of services firm Supreme Computer Services Ltd and hotel software company Champs last year didn’t affect its cash deposits much, as they were for small amounts; the Supreme deal is worth UKP920,000 but some payment is deferred and so it only cost the group UKP500,000 this interim. In fact, Misys’ cash decreased by only $1.2m to UKP19.8m net since last time, largely due to the transfer of over UKP3m to a term deposit. Lomax defends the large cash balance, which is reaping lower interest rates this year, saying that it increases flexiblity. Any large purchases, he says, will be paid for with paper. There have been no large acquisitions in the past 12 months, though, despite the New York office that the Salford Priors, Worcestershire company set up to investigate US acquisition opportunities last year. Lomax is still looking. In the meantime his interest in international expansion is such that he is investigating the possibility of moving into the Far East. For now, Misys Plc has surpassed its turnover, profits, dividend and earnings per share interim records since 1989-90. The dividend is 3p, up 15% from 2.61p last time, and shareholders will be offered a scrip option.
