Cost cuts help Misys in H1, but demand stays weak 01/14 06:13 AM
* H1 adjusted opg profit in line with analysts' view
* Targets full-year opg margins of 18-20 pct
* Confident of meeting its full-year expectations
* Shares down 1.8 percent
(Adds CEO comments, analysts reaction, shares)
By Paul Sandle
LONDON, Jan 14 (Reuters) - British IT firm Misys (MUSJF:$3.6700,$0.0000,0.00%) met market expectations for first-half profit on Thursday, helped by cost savings and growth in software maintenance, but said spending by its banking customers remained subdued.
The company, which supplies software to banks and U.S. doctors, posted adjusted operating profit of 62 million pounds ($101 million), 11 percent up on a year earlier, on revenue of 361 million pounds, down 1 percent in constant currency.
Chief Executive Mike Lawrie said the rise in profit for the six months to Nov. 30 was mainly down to tight financial discipline.
"Banking did not improve -- we continued to see a decline in revenue and order intake," he said in a conference call with reporters.
But he was beginning to see a shift. "Banks have been slow to return to significant spending, but they are beginning to focus more on fee-based services," he said.
Its core new banking platform, BankFusion, signed up two more customers in the period and had won two more since, taking the total to six. A deal with Actinver in Mexico marked Misys' (MUSJF:$3.6700,$0.0000,0.00%) first competitive win outside its installed base for over seven years, Lawrie said.
The platform would be made more widely available in late-February or early-March, he said, but the firm would probably limit new sign-ups to ensure there were no operational problems.
Its Treasury and Capital Markets division, which suffered in the financial crisis, increased order intake by 16 percent in the period. "This business looks to be on its way back," he said.
The group's U.S. healthcare business, Allscripts-Misys , which is nearly 55 percent owned by Misys (MUSJF:$3.6700,$0.0000,0.00%) , reported broadly in line second-quarter earnings on Monday, boosting the British company's shares by 3.0 percent [ID:nPnCG35119].
"Allscripts order intake grew 20 percent in the period, partly driven by the U.S. stimulus programme," Lawrie said.
U.S. government payments to incentivise doctors to move to electronic medical records begin in November 2010.
BANKING DISAPPOINTS
Shares in Misys (MUSJF:$3.6700,$0.0000,0.00%) fell as much as 3 percent, and were down 1.8 percent at 217 pence by 1037 GMT, underperforming a 1 percent stronger European technology index , buoyed by news of surging computer shipments in the fourth quarter of 2009. [ID:nN13229692]
Analysts at UBS said the aggregate results were a little light, with sales falling short of expectations of 369 million pounds, but operating profit in line.
They said, however, that the BankFusion orders were an important reference point for the platform's quality.
Numis, which has a "hold" rating on the stock, agreed BankFusion appeared to be gaining traction, but said banking overall was weak.
"Disentangling the moving parts indicates a very weak banking performance (particularly in Q2) which appears to be a result of 'old' product revenue slowing much faster than 'new' product revenue can build," they said.
Misys (MUSJF:$3.6700,$0.0000,0.00%) said continued cost savings would deliver operating margins in its target range of 18-20 percent for the full year, and it was therefore confident of meeting its profit expectations.
Analysts expect Misys (MUSJF:$3.6700,$0.0000,0.00%) to report revenue of 787.2 million pounds and operating profit of 142.0 million pounds for the full year, according to a Thomson Reuters I/B/E/S poll of 11 brokers. (Editing by Rhys Jones and Rupert Winchester) ($1=.6139 Pound)
