FINANCIAL PERFORMANCE
 

 

John Kiernan

T:         +44 (0) 207 368 2336

M:        +1 646 233 9954

Email: john.kiernan@misys.com    

 

Carl Gibson

T:         +44 (0) 207 368 2344

M:        +44 (0) 782 523 6473

Email: carl.gibson@misys.com

Misys plc (FTSE: MSY.L) provides integrated, comprehensive solutions that deliver significant results to organisations in the financial services and healthcare industries. We maximise value for our customers by combining deep knowledge of their business with our commitment to their success.

In Banking and Treasury & Capital Markets, Misys is a market leader, with over 1,200 customers, including all of the world’s top 50 banks. In Healthcare, Misys is a market leader, serving more than 110,000 physicians in 18,000 practice locations and 600 home care providers. Misys employs around 4,500 people who serve customers in more than 120 countries.

We aspire to be the world’s best application software and services company, delivering results for the most important industries in the world.

Misys: Experience, Solutions, Results

1 On a like for like basis, which is at constant exchange rates for continuing operations, excludes disposals and the incremental benefit of acquisitions.  

2 Excludes exceptional items, gains and losses on embedded derivatives, amortisation of acquired intangibles, translation exchange differences recycled from reserves and the impact of acquisitions and disposals and is stated at constant exchange rates.

3 Excludes the results from discontinued operations, exceptional items, gains and losses on embedded derivatives, amortisation of acquired intangibles and the impact of translation exchange differences recycled from reserves and is based on an average number of shares in issue of 483m.

4 Excludes exceptional items, gains and losses on embedded derivatives, amortisation of acquired intangibles and the impact of translation exchange differences recycled from reserves.

5 Total order intake is presented on a gross basis reflecting contracts signed during the fiscal year. Prior year amounts were previously reported on a net basis, however for comparative purposes 2007 has been restated to a gross basis.   

In March 2007 we set out the Misys strategy to turnaround and improve the financial and operating performance of the company. Our vision is to become the leading application software and services provider to the most important industries in the world, by providing customers integrated, comprehensive solutions.

I am pleased to report good progress executing the strategy. 

We have completed the sale and disposal of non-core operations, including Sesame and two healthcare businesses. We have repositioned our portfolio around high growth market areas.

We have taken costs out of the organisation through a range of productivity improvements, procurement savings, reorganisation and back office offshoring – which has helped move us from a net debt position to a positive cash position.

Since we announced the strategy we have built a new leadership team which is now well established and has shown its ability to execute against our strategy.

Misys is fitter, sharper and more competitive as a result of our actions and our key performance indicators underline this. We have improved margins by 3 percentage points and have delivered revenue growth of 6% which were ahead of plan and expectations.

Our customer satisfaction levels are improving across all areas of the business, and while there is still a lot more to do I am encouraged with the early indicators. We achieved these improvements despite a challenging macro-economic environment and tough competition in our markets. 

Over the last year, in Banking we saw the much anticipated launch of Misys BankFusion, a new Universal Banking platform which is able to host an array of new and exciting applications and services.   We started implementation of our first Misys BankFusion solution in Spring 2008 with our first customer Standard Bank of South Africa.

In Treasury & Capital Markets (TCM) all of our key applications are now available, or due for launch as hosted solutions and extended the asset classes they cover.

In Healthcare we launched Misys MyWay, which provides small physician practices with practice management, electronic medical records and claims management applications in one solution. We also announced our proposed merger with Allscripts. Combining Misys Healthcare’s strengths in Practice Management and Allscripts strengths in Electronic Health Records (EHR) we will create a true leader in the fast growing EHR market, which is forecast to be worth US$5 billion by 2015. The combined company will have an installed base of around 150,000 physicians. This merger will transform our healthcare business to a leadership position.

We launched a new Open Source division during the year to help drive innovation in the market place. Two market opportunities have been identified; carbon trading and connecting healthcare communities. Open Source is working towards launching the first revenue generating solution during 2008.

In Global Services the business has grown significantly by increasing the breadth and depth of support we provide and enabling customers to maximise their return of investment in solutions. Our training solution, Misys Academy, grew and we launched the innovative online training portal Misys Learning Suite.

The past year has witnessed a shift in economic sentiment which has brought with it a new and different set of challenges. Whilst we will continue to closely monitor the needs of our customers, demand for our solutions and service support has been largely unaffected, most notably in Africa, Asia, the Middle East, Russia and the CIS.  Within our established markets of North America and Western Europe, many customers are seeking solutions and service support to help address cost, compliance and risk issues. This inherent geographic strength of our business model, combined with over 58% of our revenues being recurring and our growing services business, means that not only can we take confidence in our ability to meet our expectations across the cycle, but also that the credit crisis to date has not changed our expectations for Misys. However, we have appropriate contingency plans in place.

Established winning partnerships in new high growth markets

We increased our presence and capabilities in the fastest growing geographic markets – including the Middle East, China, India and Eastern Europe. We launched strategic partnerships that further strengthen our offering and open up new markets. As an example our partnership with Digital China will open up a market of 30,000 small and medium sized banks in China.

We are establishing common systems and processes within Misys to drive performance, cost efficiency and productivity improvements. During the year we adopted and implemented world class business processes such as Salesforce.com, Supportforce.com, Cognos, Clarity and others, and these will help us achieve significant run-rate savings, enhanced development processes and faster response time for customers.

Misys has delivered ahead of schedule on the targets for phase one of the turnaround that we outlined in our March 2007 strategy presentation. We are now entering the second phase and in light of the progress we have made, we think it appropriate to update the strategic goals for this new phase of the turnaround.

For the next phase of the turnaround, which we expect will take around two years to execute, Misys is aiming to:

-         Grow revenue at around 5-8%, up from the 2-4% targets originally set out in 2007

-         Grow our Global Services business at around 15-18%, up from the 3-5% targets originally set

-         Over this same period we aim to grow revenue in TCM by 10-13%, up from the previous growth rates 

-         Build on the 16% we achieved for group margins in phase one and seek an additional 1-2% margin improvement in the second phase of the turnaround.

None of these targets reflect the expected positive impact of the Allscripts merger with Misys Healthcare.

Getting the company fit for the future was just the start. As we move into the next phase of our turnaround strategy, we are sharpening our focus on competing harder, winning more and increasing the long-term value we create for customers and shareholders. 

The final proposed dividend of 4.95p per share, if approved at the Annual General Meeting on 30 September 2008, will be paid on 6 October 2008 to shareholders appearing on the register at the close of business on 1 August 2008. The shares will become ex-dividend on 30 July 2008.

The information in this section is presented on an as reported basis

In the year ended 31 May 2008 Misys reported revenue from continuing operations of £492m, a 5% increase on the previous year (2007: £469m). Statutory operating profit was £52m (2007: £19m), adjusted operating profit⁴ is £81m (2007: £60m). Basic earnings per share from continuing operations were 7.3p (2007: 0.2p) and adjusted basic earnings per share from continuing operations³ were 12.6p (2007: 7.5p), an increase of 67%.  Net cash inflow generated from continuing operations was £26m (2007: £55m). The reduction was despite the increase in profitability between years and is a result of an increase in trade and other receivables balances due mainly to the pattern of sales in the year and deferred invoicing terms in our contracts.

The information in this section is presented on a like for like basis. The like for like results are stated before exceptional items, gains and losses on embedded derivatives, amortisation of acquired intangibles, translation exchange differences recycled from reserves and the impact of acquisitions and disposals in the current and prior year. All figures are quoted in sterling using average exchange rates for the year ended 31 May 2008.

Revenue for the year at £492m was 6% above that of the previous year. Banking revenue increased by 5%, Treasury & Capital Markets by 13% and Healthcare increased by 2%. Operating profit at £81m was 37% ahead of last year, with the operating margin flat in Banking and TCM, up nine percentage points in Healthcare and by three percentage points overall.

Misys serves all of the world’s top 50 banks. In Misys Banking we serve 1,200 banks and financial institutions in 120 countries. A number of new contracts were signed with regional banks, and we implemented approximately 155 solutions – referred to as “go-lives”.

Whilst the credit crunch and liquidity issues have affected a significant number of banks, many of the banks and institutions’ requirements have been unaffected. In the high-growth markets of the Middle East, Africa, Russia and the Commonwealth of Independent States (CIS), our customers’ priority has been to build capacity and to bring new products to market quickly to meet the needs of their customers. Meanwhile, in the established markets of North America and Western Europe, many customers are seeking solutions to help address cost through implementing global processing hubs, and to expand into high growth regions around the world.

Total revenue at £160m was up 5% on the prior year. Total order intake was £83m, an increase of 8% on the prior year. Initial Licence Fees (ILF) order intake at £46m was 5% above the prior year. ILF revenue decreased by 1%. Maintenance revenue at £76m, grew by 3% demonstrating strong customer loyalty. Global services revenue showed strong growth of 19% at £41m. Operating profit at £19m was 2% ahead of last year. Operating margin was 12% for the full year (2007: 12%).

Our product and services strategy is progressing to plan and has been well received by our customers.

We started implementation of our first Misys BankFusion Universal Banking solution in Spring 2008 and it will be live before the year end in the first site. BankFusion’s agility enables customers to respond faster, capitalising on emerging opportunities while at the same time reducing costs. The successful start to the implementation of Misys BankFusion is a major milestone in our transformation into a provider of high-value integrated platforms, solutions and services.

We launched a number of key partnerships this year, each with a specific set of intended benefits for customers and for Misys.We are now working with SAP to develop, launch and market an integrated universal banking solution based on the Misys BankFusion and SAP platforms. We believe this will enable more customers to streamline their applications and services, reducing the complexity and increasing the efficiency of their systems. We are already extending this approach by integrating Misys Trade Portal, Misys TI Plus 2.0 and Misys Opics Plus into the SAP for Banking solution.

We have had great success this year with our award-winning Misys Trade Portal, a hosted service that enables banks and their customers to process, review and manage trades through one secure web-based portal. Our online corporate banking offering has been further strengthened by the launch of Misys Cash Portal, which allows banks to accelerate the speed to market for new online cash management services, improve on customer service and grow their transactional banking business.  We are already seeing strong demand for this solution.

We have now created five customer advisory boards – independent groups of customers who meet with us to share their experiences, their views of using our solutions and their increasing knowledge of the markets they operate in. This dialogue has proved enormously helpful, and demand from our customers shows that they are finding the advisory boards extremely useful as well. We are integrating customers’ suggestions into our solutions development and building clear customer satisfaction metrics into our internal performance and compensation programmes.

In response to feedback from customers, we have opened a new Upgrade Solution Centre in Bangalore, India. This will provide customers with a streamlined upgrade and maintenance path and faster response times.

We continue to win industry accolades. In October we were awarded Best Islamic Core Banking Solutions provider by World Finance magazine.

We serve over 1,000 customers in banking, financial institutions and corporate treasury departments in 85 countries. We serve over 50% of Fortune’s global top 50 corporations, the top 5 banks in China and 70% of the world’s top 50 banks. Our market leading TCM products enabled us to win 20 new name customers during the year in a strong global market. 

We have been conscious of the change to the macro economic climate with the credit crunch and liquidity issues affecting banks and other financial institutions in Western Europe and North America. However, many banks and institutions in high-growth markets remain unaffected by wider issues and we have benefited from strong demand for our solutions. We have identified immediate opportunities to help address concerns around market and credit risk by enhancing compliance, regulation and internal control functionality in our solutions. And we continue to benefit from strong demand for ongoing maintenance support.

Total revenue at £141m was a 13% increase on the prior year. Total order intake was £73m up 16% on the prior year. ILF order intake was up 4% compared to last year at £42m, ILF revenue increasing by 12% to £45m. Maintenance revenue at £56m, grew by 7%. Global services revenue showed strong growth of 41% to £28m. Operating profit at £32m was 10% ahead of last year. Operating margin for the year was 23% (2007: 23%).

This year we made significant investments in our direct sales and distribution capability, and we extended our reach even further through a series of new technology, software development and customer service partnerships.

All of our key applications are now available, or due for launch, as hosted solutions, or ‘software as a service’. This means customers can benefit from faster time to market, improved operating efficiencies, rapid scalability, and reduced risk when launching new services. Hosted solutions also help simplify the transition from old to new standards, as we demonstrated this year when we enabled 800 customers to adjust seamlessly to new SWIFT message formats.

During the year we also launched a double-byte version of our commercial lending solution Misys Loan IQ for Asian markets. We added equity derivatives and structured bonds functionality to our trading and risk management solution Misys Summit FT. In addition we extended coverage of asset classes and risk management in our trading solution Misys Opics Plus.

We are adding value to customers through enhanced services and support. Our services teams are helping customers to achieve better results and faster execution. We grew our services revenues by 41%, increased services headcount and will increase investment in this area over the next 12 months.

We have increased our development capability significantly. We have increased our headcount within our development teams in New York, US; Bangalore, India; and Bucharest, Romania, helping us to respond to our customers’ needs better, faster and at lower cost. We are focused on developing new “software as a service” solutions and improving interoperability.

Partnering enables us to meet high levels of demand faster and provides us with access to both specialist expertise and proven commercial relationships in regional markets. Partnerships will generate a substantial proportion of our revenue over the next 12 months.

We continue to win industry accolades for our innovative products and solutions. In November we were awarded both the Best Trade Processing Solution, for Misys Treasury Plus by the European Banking Technology Readers' Choice Awards and Technology Provider of The Year, by the Structured Products Europe Awards. In December we were named the number one solution provider for trading in rates and IAS 39 compliance in the 2007 Risk Magazine rankings.

Misys is a market leader in healthcare IT in North America, with a particular focus on the high growth ambulatory sector of the market. Misys offers a comprehensive suite of healthcare IT solutions and services that help healthcare providers reduce costs while improving quality. We serve more than 110,000 physicians in 18,000 practice locations and 600 home care providers in the United States. 

During the year we converted around 250 customers each month to Misys Payerpath our web-based transactions solution. We also grew order intake in our Homecare business by 12%, adding 65 new accounts and enhancing our services offerings for customers. 

Issues with the cost and quality of healthcare continue to rank as a primary concern among the American public. We anticipate this will add significant momentum to customer demand for better healthcare IT solutions and services, including enhanced Electronic Medical Records (EMR) solutions.

Revenue for the year at £191m was up 2% on the prior year. Total order intake was £103m up 2% on the prior year. ILF revenue was down 2% at £24m. ILF order intake was up slightly at £26m including Application Service Provider (ASP) order intake of £5m. MyWay customers represent a shift from on-site to hosted software solutions.

Maintenance revenue showed good growth at £71m, 6% ahead of last year, demonstrating strong customer loyalty. We have continued to see the benefits of the Payerpath acquisition with transaction processing revenue growing by 4% at £72m.

Operating profit at £39m was 85% ahead of last year, reflecting an improvement in the operating margin from 11% to 20%. This improvement was due in part to the timing of certain expenses and cost efficiencies related to the turnaround programme and improved operating procedure.

We stabilised, reorganised and repositioned the business for growth.

We successfully sold our acute care oriented businesses, refocused the organisation and started the work required to become a leader in the ambulatory market. With a more focused approach, we have been able to concentrate investment on solutions for the ambulatory market.

We filled a major portfolio gap with the launch of Misys MyWay. Misys MyWay is an integrated solution, including practice management, EMR and claims management components. Launched in October 2007, the solution has proved very attractive and at year end we had sold nearly 800 initial licenses.

We are addressing slow market uptake of EMR. More than 90% of American physician practices use some type of practice management application, and Misys enjoys a strong share position in the category. However, while customers recognise the enormous potential benefits of EMR, total adoption rates across the US healthcare industry are slow. One major barrier to adoption is the proprietary nature of current solutions, which severely limits opportunities to connect the EMR systems of different vendors. User consolidation around a few major solutions is unlikely given that this is a fragmented market with around 350 vendors. Cost and complexity of many available solutions further complicate the purchase process. Misys is offering creative solutions to address these issues, such as Misys Connect, an open source application which allows records stored in competing EMR systems to be viewed across platforms. Misys MyWay also addresses these barriers, offering a simple, affordable solution.

We announced our intention to merge with Allscripts. Our proposed merger with Allscripts is intended to rapidly transform our Healthcare business from a fast re-emerging player to a market leader able to maximise the benefits of growth in EMR adoption. But we are also looking beyond the initial growth curve in EMR to the new market opportunities greater connectivity will introduce, such as demand for more sophisticated, high-value clinical and financial healthcare solutions.

Global Services provides Misys customers in Banking, Treasury & Capital Markets and Healthcare better results from their Misys solutions. We provide the expertise and resources they need – direct or with best practice partners. We also help teams within Misys to grow their customer base and increase the value they deliver to customers.

Our Global Services business is growing rapidly and profitably while generating growth opportunities for the entire Misys business. We create value from the company’s deep domain expertise, substantial development and support resources and large installed base in Banking, Treasury & Capital Markets and Healthcare.

Global services revenue showed strong growth up 19% on the prior year with strong growth in Treasury & Capital Markets offset by a reduction in Healthcare.

We are increasing the scale of our training through Misys Academy.

Misys Academy is a revenue-generating education service that helps customers maximise the benefits of our solutions. This year we launched a Learning Suite that enables customer employees to learn, train and communicate with us through a web-based portal.

Through Misys Academy we continued to develop the multi-level certification programme we introduced last year for providers and users of Misys solutions. Overall, we are seeing strong demand for training and training-related services and achieved training revenues of over £1m this year.

We are creating more effective and cost efficient customer support. We are enhancing the quality of the support we provide by developing centres in high quality/low cost locations. Our goal is to locate 80% of our customer support expertise in these locations by 2009. This year our new Global Healthcare Support Centre in Manila went live, and this Centre also has the capability to support a number of Banking and Treasury & Capital Markets solutions as and when required. We have also recruited an additional 100 experts to our Service Centre in Bangalore and expect to grow this facility further in 2009.

We are making upgrades easier and more valuable for customers. We have launched an Upgrade Service as a capability of our Global Solutions Centre (GSC) – our scalable, offshore and near shore delivery team.  This will help customers migrate to the latest versions of the Misys software.  Customers now have a streamlined upgrade path that is faster, more predictable, more cost efficient and better able to help them deliver tangible business results.  The GSC has teams in Bangalore, Beijing and Bucharest and is made up of both employee and partner resources.  The GSC is currently staffed with 40 employees and 11 resources via our partnership with HCL Technologies.  This team will add additional staff as needed to support our customers needs for scalable near shore, and off shore delivery needs.

We have established a successful approach to developing partnerships. Successful partnerships enable us to achieve higher revenue and profit, increased productivity, greater customer satisfaction, and greater partner satisfaction and loyalty. Our strategy is to select and reward partners who will invest in our software solutions and provide excellent customer value. This year we worked with the Misys businesses to identify and launch a range of valuable strategic partnerships.

We are transforming the way Misys operates. We have continued to find significant potential cost savings within the company by implementing common systems and processes. As well as taking costs out, we are also making many profound long-term improvements. For example, we have transformed our sales management processes this year and we expect to see substantial benefits from this over the next 12 months. Our latest Customer Satisfaction Survey results indicate our actions are already making a tangible difference for customers.

Misys Open Source Solutions was established in July 2007 to drive innovation in the market place and move toward open standards using open source. 

We are using and developing open source technologies to increase the value we deliver for customers and to enhance the efficiency and effectiveness of our own operations. Within the organisation, we are integrating third-party technologies into our platforms and incorporating open source development into our development processes. At the same time, we are growing the addressable market for Misys solutions and services by working closely with potential customers, partners, and the open source community.

This year we focused on two key market areas – connecting healthcare communities and carbon trading. From sharing clinical healthcare information to making and settling carbon trades, we believe there is growing demand for open, agile and reliable solutions that operate seamlessly with others. In the future, along with revenues from enhanced Misys solutions, we expect to see strong demand for our services – from integration and connectivity, to expertise, maintenance and support. We are targeting customers from community hospitals and Regional Health Information Organisations for our healthcare initiative and small to Fortune 1000 corporations and government entities for the carbon trading space.

Misys supports the transformation of Healthcare in America

We are using an open source approach to encourage adoption of EMR. Healthcare organisations recognise the benefits of EMR and greater connectivity between all venues of care. However, many of these organisations are reluctant to invest in a proprietary EMR system until it can operate seamlessly with other systems.

We believe taking an open source approach to interoperability will drive down the cost and reduce complexity of integration which has been a barrier to EMR adoption.

We shared our code and initiated open source partnerships. We contributed components of Misys Connect™ source code to the open source community. In addition, we helped to form a new community of developers, vendors and policy makers, to tackle the problem of interoperability.

We are working toward launching our first revenue-generating solution during 2008.  

The net charge for the year was £9m representing a 6% reduction on prior year.

Central Services costs represent the cost of services provided by corporate functions to the Company and its subsidiaries. These include costs relating to certain treasury and cash management services, company secretarial services, corporate development, marketing, legal and other shared services.

OTHER FINANCIAL INFORMATION

Unless otherwise stated, the information in this section is presented on an as reported basis.

We incurred exceptional charges of £24m as a result of actions taken to deliver the turnaround programme. These costs primarily relate to consultancy and the costs arising from the rationalisation of office premises and establishing a single new office in London.

In addition there was a further exceptional charge of £1m arising on an adjustment to goodwill following changes to deferred tax assets recognised on businesses acquired in prior periods.

The net finance costs charge for continuing operations at £3m was £12m lower than last year. This was due mainly to the repayment of all loans during the year. Interest cover, including results from discontinued operations and before exceptional items, gains and losses on embedded derivatives, amortisation of acquired intangibles and translation exchanged differences recycled from reserves was over 26 times.

Statutory profit before taxation at £49m, was £45m higher than last year reflecting the improvements in operating profit and by lower exceptional costs. The tax charge on continuing ordinary activities at £14m is above last year primarily as a result of higher profits. The underlying effective tax rate, based on the adjusted profit before taxation of continuing and discontinued operations, at 22% was above last year, largely due to lower credits for temporary differences on which no deferred tax was recognised. Adjusted profit before taxation excludes exceptional items, gains and losses on embedded derivatives, amortisation of acquired intangibles and translation exchange differences recycled from reserves.

In June 2007 the Group completed the disposal of the Sesame business. In September 2007 the Group completed the disposal of the CPR business and in October 2007 the disposal of the Diagnostics business. All of these businesses are reported under discontinued operations. In the current year these businesses generated profit after tax of £78m comprising profit on disposal before tax of £74m which has been included within Exceptional items, an operating profit of £9m and a tax charge of £5m.

Current assets have increased by £35m in the year as a result of increases in trade and other receivables (£23m), cash and cash equivalents (£11m) and other (£1m). The increase in trade and other receivables includes an increase in net trade receivables (£6m), other receivables (£1m), prepayments (£8m), accrued income (£14m) and a reduction in contract work in progress (£6m). Included in the prior year figures were balances relating to Hospital Systems of net trade receivables (£17m), other receivables (£1m), prepayments (£2m) and contract work in progress (£7m).

The increase in net trade receivables is principally due to the pattern of sales in the year. The increase in prepayments includes £5m of costs associated with the proposed Allscripts transaction. Accrued income, has increased as a result of the pattern of sales in the year and deferred invoicing terms in our contracts.

Current trade and payables balances have reduced by £5m in the year. Included in the prior year however were balances in respect of Hospital Systems of £10m; Hospital Systems was sold in the year.

Additions to property, plant and equipment in the year were £11m, split between leasehold improvements to our principal office locations, including the new head office in Paddington, London and strategic investments in our computer and systems infrastructure.

Expenditure on Research and Development in continuing operations at £72m increased by £2m in the year. Of this amount £14m met the criteria to be capitalised as developed software (2007: £15m).  Amortisation of developed software reduced in the year to £3m (2007: £5m).

Net cash flow generated from continuing operations was £26m (2007: £55m). The reduction was despite the increase in profitability between years and was principally as a result of the increases in trade and other receivables balances noted above.

The net cash flow from discontinued operations was £8m, a reduction from the previous year of £23m which included the CPR, Diagnostics and Sesame businesses. Cash payments in respect of interest of £4m was lower than the previous year due to repayment of loans during the year. The cash payments in respect of taxation at £24m was £7m higher than the prior year. As a result net cash flow from operating activities of £6m was £50m below last year.

Net cash inflow from investing activities of £143m compared to the previous year’s outflow of £27m, the former benefiting from the disposal of the CPR, Diagnostics and Sesame businesses. Capitalised expenditure on developed software was at a similar level to the prior year. Other capital expenditure and financial investment at £20m was £12m higher than the prior year. Accordingly the net cash flow generated by operating activities after capitalised development costs and other capital expenditure was an outflow of £29m compared with an inflow of £32m last year.

As a result of these various cash flows net debt at 31 May 2008 was a net cash position of £26m, compared to a net debt position last year of £159m, excluding cash balances within Sesame of £68m.

Earnings per share (EPS) and proposed dividend

Basic EPS at 23.5p is 20.4p better than last year.  Adjusted basic EPS (adjusted to exclude exceptional items, gains and losses on embedded derivatives, amortisation of acquired intangibles and translation exchange differences recycled from reserves) at 14.0p (2007: 14.6p) was 4% below last year. Adjusted basic EPS from continuing operations at 12.6p (2007: 7.5p) showed a significant increase on prior year. In the opinion of the Directors the adjusted basic EPS provides more comparable and representative information on continuing and established trading activities of the Group. The Board is recommending a final dividend of 4.95p per share. This will raise the full year dividend to 7.91p, an increase of 5% over last year.

Operating results for the year ended 31 May 2008

	Revenue		Operating profit			Margin
	2008 £m	2007 £m	2008 £m	2007 £m		2008 %	2007 %
Banking	160	151	19	19		12	12
Treasury & Capital Markets	141	125	32	29		23	23
Healthcare	191	188	39	21		20	11
Central Services	-	-	(9)	(10)
Like for like results	492	464	81	59		16	13
Changes in exchange rates	-	5	-	1
Adjusted results	492	469	81	60
Exceptional items	-	-	(25)	(37)
Other	-	-	(4)	(4)
Statutory operating results from continuing operations	492	469	52	19

i.    The statutory operating profit from continuing operations is analysed by business into Banking £10.4m (2007: £5.5m), Treasury & Capital Markets £31.5m (2007: £28.4m), Healthcare £30.5m (2007: £7.9m) and Central Services £20.0m loss (2007: £23.0m loss).

ii.  Restating the results for 2007 using the average exchange rates for 2008 has decreased 2007 revenues by £5.2m (Banking: £3.1m increase, Treasury & Capital Markets: no significant effect, Healthcare: £8.3m decrease) and operating profit £0.9m (Banking: £0.8m decrease, Treasury & Capital Markets: £1.0m increase, Healthcare: £1.0m decrease and Central Services: £0.1m decrease).   The most significant impact is from the movement in the US dollar and the euro, where the average exchange rates in 2008 were US$2.00:£1 and €1.38:£1 compared to US$1.92:£1 and €1.48:£1 in 2007.

iii. All businesses disposed of in the current year were classified as discontinued operations. The business disposed of in the prior year related solely to Banking and contributed revenue of £0.2m and adjusted operating profit of £nil in the prior year.

iv. No businesses were acquired in the current year. The businesses acquired in the prior year provide services to the rest of the Group and as such do not generate incremental third party revenues.

v.  Exceptional items in the current year consist of: turnaround programme £24.1m (Banking: £7.4m; Treasury & Capital Markets: £0.6m, Healthcare: £5.2m and Central Services £10.9m); and a decrease in goodwill arising from adjustments to deferred tax assets recognised on businesses acquired in prior periods £1.3m.

vi. Other items include losses on embedded derivatives in Banking £0.6m (2007: £0.3m) and Treasury & Capital Markets £0.1m (2007: £0.1m gain), amortisation of acquired intangibles in Banking £1.4m (2007: £2.8m) and Healthcare £1.2m (2007: £1.3m) and translation exchange differences recycled from reserves in Central Services, £0.1m loss (2007: £nil).

To assist the reader, the table above shows the results for all businesses owned throughout both periods on a ‘like for like’ basis. It also reconciles these to the figures for revenue and operating profit on an adjusted basis and as reported in the income statement.

During the year we completed the sale of Sesame and also disposed of the CPR and Diagnostic businesses. The results for all of these are excluded from revenue and operating profit in continuing operations, and are included at the foot of the income statement, above attributable profits. Accordingly, they do not appear in the reconciliation above.

Adjusted results are stated before exceptional items, gains and losses on embedded derivatives, amortisation of acquired intangibles and the impact of translation exchange differences recycled from reserves.

Chief Financial Officer, Misys plc

Forward-Looking Statements

all figures in £ millions	Note		2008		2007
Continuing operations
Revenue	1		492.3		469.7
Operating profit before exceptional items			77.8		55.8
Exceptional items	2		(25.4)		(37.0)
Operating profit	1		52.4		18.8
Finance costs			(5.0)		(15.2)
Finance income			1.5		0.4
Net finance costs	5		(3.5)		(14.8)
Profit before taxation			48.9		4.0
Taxation	6		(13.8)		(3.1)
Profit after taxation from continuing operations			35.1		0.9
Discontinued operations
Profit after taxation and before exceptional items			6.9		34.0
Exceptional items	2		71.3		(19.9)
Profit after taxation from discontinued operations	4		78.2		14.1
Profit for the year and attributable to shareholders			113.3		15.0
			pence		pence
Basic earnings per share	8		23.5		3.1
Diluted earnings per share	8		23.3		3.1

Consolidated statement of recognised income and expense

all figures in £ millions			2008		2007
Exchange differences on translation of foreign operations			1.4		(0.8)
Actuarial losses on defined benefit pension schemes			(0.6)		(1.1)
Taxation credit on items taken directly to or transferred from equity			-		0.2
Net income (expense) recognised directly in equity			0.8		(1.7)
Profit for the year			113.3		15.0
Total income recognised in the year			114.1		13.3

Consolidated cash flow statement

all figures in £ millions	Note		2008		2007
Operating activities
Net cash flow generated from operations			33.7		85.5
Net interest paid			(3.5)		(12.6)
Taxation paid			(24.3)		(17.1)
Net cash flow from operating activities			5.9		55.8
Investing activities
Acquisitions and disposals of businesses			177.1		(3.8)
Capitalised expenditure on developed software			(14.2)		(15.6)
Other capital expenditure and financial investment	9		(20.4)		(8.0)
Net cash flow from investing activities			142.5		(27.4)
Net cash flow from financing activities	10		(210.1)		(46.6)
Net cash flow from operating, investing and financing activities			(61.7)		(18.2)
Differences on exchange			1.5		(2.2)
Decrease in cash and cash equivalents in the year			(60.2)		(20.4)
Net cash and cash equivalents at the start of the year			87.3		107.7
Net cash and cash equivalents at the end of the year	11		27.1		87.3

all figures in £ millions		2008		2007
Continuing operations
Profit after taxation		35.1		0.9
Net finance costs		3.5		14.8
Taxation charge		13.8		3.1
Amortisation and impairment net of (profit) loss on disposal of intangible assets		9.0		30.8
Adjustment to goodwill recognised in prior years		1.3		-
Depreciation and impairment charge net of (profit) loss on disposal of property, plant and equipment		5.4		5.3
Share-based payment charge		5.1		4.2
Difference between pension charge and cash contributions		0.6		(0.2)
Net profit on disposal of businesses		-		(1.0)
(Increase) decrease in inventories		(0.4)		0.3
Increase in trade and other receivables		(48.4)		(14.2)
Increase in payables and provisions		1.7		8.2
(Decrease) increase in deferred income		(2.2)		2.0
Other non-cash movements		1.2		0.6
Net cash flow generated from continuing operations		25.7		54.8
Discontinued operations
Profit after taxation		78.2		14.1
Net finance income		-		(3.4)
Taxation charge		4.6		4.7
Amortisation and impairment net of (profit) loss on disposal of intangible assets		0.1		21.0
Depreciation charge net of (profit) loss on disposal of property, plant and equipment		0.3		1.9
Share-based payment charge		0.2		0.7
Net profit on disposal of businesses		(73.6)		-
Decrease in trade and other receivables		3.0		23.1
Decrease in payables and provisions		(2.8)		(38.1)
(Decrease) increase in deferred income		(1.8)		6.6
Other non-cash movements		(0.2)		0.1
Net cash flow generated from discontinued operations		8.0		30.7
Net cash flow generated from operations		33.7		85.5

Consolidated balance sheet

all figures in £ millions	Note		2008		2007
Non current assets
Goodwill			64.9		198.2
Other intangible assets	12		42.6		30.4
Property, plant and equipment			17.6