Big is certainly beautiful from where Misys Plc is standing. The Salford Priors, Worcestershire company is now the largest all-British software and services company following its acquisition of ACT Group Plc, which was completed in April (CI No 2,602). Pre-tax profits rose 42% to ú26.3m and turnover soared 64% to ú153.4m. The group reorganised on June 1 into three divisions: banking, insurance, and information systems (CI No 2,686), after the task forces despatched to assess ACT assimilation reported to the board in May. Under its old guise, financial services provided the biggest boost to sales and profits, up 25% and 19% to ú34.3m and 13.0m respectively. Its electronically underwr itten insurance products, which the company said enable independent insurance brokers to compete with the direct sales insurance companies, look set to continue their success. An investment programme of around ú1.5m to develop electronic products for the general insurance market place is just over half way to completion. Misys writes off its development costs as incurred. The Countrywide business is the part that designs and produces the products for which financial systems provides the technology. The automation of its compliance and transaction processing will result in a short term lag in profits growth. Financial services will become part of the new insurance division. The computer services division, which does everything except banking and insurance, was led by the construction and contracting businesses. Computer services profits advanced by 42% and sales were up 51% to ú99.5m. Kapiti Ltd’s performance was described by chairman Kevin Lomax in John Major-speak as most satisfactory in his statement with the good first half being comfortably exceeded by the second. Kapiti is a predominantly exporting company and it is now looking to emerging markets in Central and South America for its Equation 3 banking product; the only banking bit in the division. The library and education markets are recovering and manufacturing remains strong, particularly in export businesses, according to Lomax. The declining third party maintenance business continues to wither away, but Lomax said it is of less and less importance to the group. And so to ACT.
Significantly more prudent
The assimilation process, including the adoption of Misys accounting procedures, which Lomax described as significantly more prudent than those of ACT, is well under way. ACT contributed ú1.0m pre-tax profits and ú19.6m from April 6 to May 31. It was predominantly a financial software and services company and has resulted in just over half of the enlarged Misys business coming from the new banking division. The old BIS (ACT International) has been combined with Kapiti to form Midas Kapiti International and ACT Banking Systems is now Kindle, based in Dublin. ACT’s investment management and stockbroking businesses are taking longer to bring up to Misys’ standards, but are expected to contribute positively in the year. The information systems division now includes Medisys and Sigmex, both ACT companies. The adjustments Misys has made to ACT includes an income recognition restatement of about ú30m; a property revaluation adjustment of ú21m and redundancy and reorganisation provisions of ú18m. The future looks particularly bright for the enlarged banking business and the others look set fair also. Lomax said that there is every reason to expect that the acquisition of ACT will fulfill the expectations he had of the company at the time of purchase. Misys pays a final dividend of 5.8 pence, making a total for the year of 9.27 pence per share, a 15% increase on last time. Misys shares were up 21 pence to 485 pence by lunchtime. As for the future and the current year, Lomax is a very ambitious man. When asked for a pr ediction for sales, rather more than ú300m was the reply.
