Despite another fairly hefty increase in profits, Misys Plc is remaining cautious due to little evidence of any real recovery in demand. For the year ending May 31, profits at the pre-tax level were up 62.1% at UKP9.1m, but turnover increased by a miserly 1.1% to UKP68m. The improvement in profitability was put down to reduced costs, better margins and tight control of working capital, together with limited contributions from acquisitions. Cash balances were also up again, by 43.5% at UKP9.9m this time, after a payment of UKP3m as consideration for acquired businesses. But demand was said to remain at depressed levels due to difficult trading conditions. Nonetheless, chairman, Kevin Lomax believes the decline in product sales to be slowing and the sale of new product releases to be encouraging. As anticipated, service revenues continued to grow, but at a slower rate. All companies within the group, with the exception of TIS Ltd, were profitable during the year, and even TIS Ltd did manage a return to profit in the second half. Two companies were even quoted as turning in record results. Misys Computer Maintenance achieved this despite demanding market conditions, while Misys Financial Systems again excelled itself by increasing its share of traditional markets. Although Financial Systems did not benefit from any recovery in demand or from the development of electronic trading, the group is hoping that the recently announced Countrywide acquisitions will accelerate progress in the latter area. TIS Maintenance saw good contributions from acquired businesses, Star being cited in particular. Likewise CP Business Solutions and its Innsite acquisition, which is now fully integrated into the group and is believed to have encouraging prospects. TIS Software found its new product range offering an increasing contribution, while the Computer Solutions division finished the year with a strong order book. Nevertheless Lomax, uncertain as to the timing and sustainability of anticipated UK economic recovery, is continuing to exercise caution in budgeting for the coming year. Although order books are felt to be reflecting improvement in some sectors of the economy, overheads are still to undergo tight controls. However, investment in product development is to see a rise from 8% of sales revenue to 15% and the policy of selective acquisiton-making is to be maintained, with a view to broadening the group’s interests and spreading the risk. The shares put on sevenpence at 298p.
