Misys (LSE: MSY), the global application software and services company, publishes its interim management statement for the third quarter of its 2009/10 financial year, ended 28 February 2010.
Financial information referred to in the statement is unaudited. All comparisons to the prior year are on a pro-forma constant currency basis (1) unless otherwise stated.
Financial and operational highlights (3rd quarter)
* Order intake (2) up 8% (year to date: 9%)
* Revenue up 7% (year to date: 1%)
* Adjusted operating profit (3) up 18% (year to date: 13%)
* Recurring revenue was up 7% and represented 60% of total revenue
* Net debt reduced to £59 million from £120 million at the start of the quarter due to strong cash conversion
* Four new orders in the period from bank customers for our next-generation BankFusion solutions
* Further adoption of Electronic Health Records by large physician groups, notably Catholic Health Initiatives
Expectations for the second half re-affirmed: 5%-8% revenue growth on a constant currency basis and 19%-21% adjusted operating profit margin.
Mike Lawrie, Chief Executive at Misys, comments: “As expected, we have seen improving revenue momentum in the third quarter, with accelerated growth in Allscripts and TCM. Our strong, reliable business model and effective financial discipline are enabling us to continue to increase profit significantly, with 18% growth in adjusted operating profit for the third quarter, and 13% for the year to date. We have continued to introduce new solutions and I am pleased with the progress we are making towards leadership in our markets.
Orders across the group have increased by 9% in the year so far, with particular strength at Allscripts as physicians in the US adopt Electronic Health Records. Allscripts revenue grew 16% for the third quarter as we continued to win large community-based deals and we successfully implemented orders won in previous quarters.
Treasury & Capital Markets continued its recovery with growth led by maintenance and services, while it continued to win new name customers for its solutions.
In banking, the market remains difficult for new business, but our recurring revenue base continues to grow. We see significant improvements in sales pipelines, most notably in BankFusion, for which we signed four new customers in the period.
We are pleased with our performance in the third quarter and believe that our year-to-date results position us to meet the full year targets that we communicated in January 2010.”
Notes
(1) Pro-forma constant currency comparisons
Results for this period have been affected by the movement in exchange rates. The most significant impact is from the movement in the US dollar and the Euro, where the average exchange rates against Sterling for the third quarter were US$1.61 and EUR1.13 compared to US$1.47 and EUR1.11 in the third quarter of 2008/09. For year to date comparisons, the exchange rates applied are US$1.63 and EUR1.13 compared to US$1.71 and EUR1.21 for the corresponding period in 2008/09.
Results are also impacted by the merger of Misys Healthcare with Allscripts Healthcare. ('Allscripts') in October 2008.
Pro-forma, constant currency financial information (i) is translated at constant exchange rates; (ii) assumes Misys Healthcare and Allscripts had been combined by the start of the prior 2008/09 financial year, and (iii) is adjusted by the addition of revenue in respect of deferred revenue balances written down upon acquisition of Allscripts. For the third quarter, those deferred revenues were £0.3m (third quarter 2008/9: £1.9m); for the year to date, they were £2.8m (2008/09: £3.2m).
(2) Order intake
Orders are reported on a gross basis reflecting contracts signed and includes Initial Licence Fees, Global Services, Application Service Provider fees and, in Allscripts, Transaction Processing and Hardware.
(3) Adjusted operating profit
Results are stated before exceptional items, gains and losses on embedded derivatives, amortisation of acquired intangible assets and translation exchange differences recycled from reserves.
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