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July 25, 1990

UK PUTS DAMPER ON MISYS, BUT 92% PROFIT JUMP AND UKP3.5M IN CASH LEAVE IT WELL-PLACED

By CBR Staff Writer

Fast-growing Misys Plc has reported a dramatic 202% increase in turnover and 92% growth in pre-tax profit for the year ending March 31, although earnings per share rose only 3% to 23.5 pence. The UKP11m profit on UKP76.7m turnover partly reflects acquisitions made in June and July last year, but chairman Kevin Lomax says that reorganising the company’s open systems activities into one division has played a key role. Lomax has had reservations about the tag Unix software house, but it is not inappropriate since Unix-based operations constitute 50% of turnover and 60% of profit. Misys has 14 operations in the UK, and they are divided into Network Systems, Open Systems, Computer Solutions, and Financial Services. The last includes Misys Dataller, the original core business that was hinted as a possible disposal (CI No 1,373). Lomax acknowledges that it suffered from general economic conditions and a loss of direction, but he claims that the combination of Mike O’Leary’s return as managing director and a hard look at the company’s cost base should put Dataller back on an even keel. Lomax says that its Tripos proprietary operating system will probably evolve into the open systems arena, but there’s no rush since Unix isn’t always the most cost effective solution, and the functionality of Dataller’s software is possibly more important than connectivity. The general systems and maintenance arm of TIS performed very well, but TIS Aplications fell short of profit margins. This division sold software packages into four markets. Accountancy, field maintenance and catering performed reasonably well, but software targeted at housing asssociations experienced a major shortfall. Misys has since cut staffing levels by two thirds, and TIS Applications is now focusing on its remaining vertical markets and development work with BOS. Lomax says that BOS had a relatively disappointing year because of tight trading conditions in the accountancy software market and he does not expect to see any great improvement. However, BOS and Mentor are developing a new Unix-based accountancy package that will offer multi-user, multi-currency facilities. Misys has several orders for IBM’s RS/6000 box, and one major customer is taking 16 machines which the company hopes to ship by September. Lomax has previously expressed a wish to break into the US market, but he says that UK trading conditions are going to worsen over the next 12 months, and that will put a damper on growth – which he regards as a prerequisite to any activities in the US. Misys has been very quiet on the acquisition front over the past 10 months, and Lomax says it’s unlikely to bustle in the near future. Nonetheless, while a further downturn in the economy would affect Misys, the company has a healthy UKP3.5m in cash and no gearing. Lomax acknowledges that there are companies more likely to be affected by a recession, and he isn’t averse to a bargain. – Janice McGinn

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