The statement that follows is in line with our policy of issuing regular updates on trading, for the previous six months, shortly after the end of the first half and the full year. The figures in this statement are unaudited. As usual, the Group will comment on the trading outlook when the full year results are announced on 17 July 2003. Within this statement all comments relating to operating results are pre goodwill amortisation and the exceptional items reported last year.

The trading performance of the Group since the announcement of the interim results in January 2003 has been in line with our expectations and consistent with the guidance that we gave then.

The good performance across the Group reflects the strength of our individual businesses, and the diversity and quality of our portfolio. We have been able to exploit leading positions in our markets to maintain Group profitability, despite challenging market conditions.

In the Banking and Securities Division, market conditions continued to be difficult, as banks of all kinds made further reductions in their IT budgets – particularly in the first half. In light of these adverse market conditions, we took prompt and effective action in the middle of the year to reduce the level of overheads in the business in order to maintain profitability. In doing this we were also able to continue the process of shifting development and support resources to lower cost locations around the world.

Misys Healthcare Systems continued to perform well in all areas, as demand in the markets it serves remained good. However, reported results have been held back by adverse movements in the US dollar/sterling exchange rate.

In the Financial Services Division, the Life and Pensions business – recently renamed Sesame – suffered a decline in revenues. The total number of individuals in our registered network has fallen as the adverse conditions in the UK long term savings and investment market have continued, a situation which has been exacerbated by prolonged uncertainty surrounding changes to the regulatory structure of the market.

Overall operating margins were slightly ahead of last year and, once again, we achieved a strong operating cash performance.

Total divisional revenues for the year were down 8% on last year reflecting the weak market conditions which have prevailed over the past two years.
Information on revenues and order intake for the financial year is as follows.

Initial licence fee (ILF) order intake at £74m (H1 £32m, H2 £42m) was 15% below the same period last year. However, the decline in the second half was markedly less than in the first half. The ILF order book at £26m, whilst lower than at the end of May 2002, was slightly up on November 2002. Although ILF revenue is broadly in line with last year, the lower level of ILF revenues over the last two years has again slowed the growth in maintenance revenues. More significantly, the level of professional services has fallen further, partly as the delayed result of the earlier decline in ILF order intake, but also as the result of continued pressures on banks to reduce costs in this area.

In response to the further reduction in banks’ IT spend (and particularly in the area of professional services), we took action around the middle of the year to reduce our costs. As a result a total of £7m will be charged against full year operating profits in respect of redundancy costs.

Operating profit, before the redundancy costs of £7m noted above, is expected to be broadly in line with last year's operating profit in the full year of £63m (which was stated before exceptional costs of £10m).

Results in Misys Healthcare Systems benefited from the inclusion of Hospital Systems (formerly Sunquest) for the full year compared with ten months last year.

Demand remained good across all product areas. ILF order intake rose by 6% on a comparable basis (at constant exchange rates and excluding the benefit of the extra two months’ contribution from Hospital Systems). This was lower than the increase in ILF order intake in the first half due to the inclusion of the Los Angeles County (LACO) contract (Hospital Systems’ largest ever order with ILF of £4m) in the second half of last year. Revenue growth for the division, again on a comparable basis, was 8%. Movements in exchange rates since the equivalent period last year have adversely affected reported revenue and profits by approximately £24m and £4m respectively in the full year.

Information on revenues and order intake for the financial year is set out below.

As noted above, overall reported revenues for Misys Healthcare Systems for the year were 4% above the previous year. Operating profit is expected to be only marginally ahead of last year due to the significant adverse effect of the movements in exchange rates referred to earlier.

Revenues in the Financial Services Division were 5% below last year despite the effect of including for the first time a full year of DBS. On a comparable basis revenues in the Life and Pensions businesses were 17% lower than last year. This reduction is mostly due to the average number of Registered Individuals (RIs) in our regulated network this year being 13% below last year. In the current investment climate, member firms, who have traditionally recruited new RIs, have not been doing so and have additionally been removing poor performers. At the same time the uncertainty surrounding the changes in the regulatory regime, together with the more stringent regulation in force since N2 in December 2001, have increased the number of leavers and retirees. The effect of this reduction on revenues has been partially offset by the growth in some new, higher margin revenue streams and other changes which have had the effect of improving margins in the core business. The General Insurance business has delivered another good performance. Overall, margins within the Financial Services Division for the full year are expected to be slightly ahead of those achieved in the first half.

Group costs in the second half are expected to be lower than those incurred in the first half of this year. As a result of reduced average net debt this year compared to last and the favourable resolution of certain tax contingencies during the second half, the aggregate charge for interest and taxation this year is expected to be broadly in line with the aggregate charge last year.

As explained at the Interim Results presentation in January 2003 we intend to show certain costs previously included within Group expenses as charges against the relevant divisional results when presenting the full year results in July 2003. We intend to restate the comparatives on a consistent basis. The full text of the slide presented at the Interim Results including the restatement of the historical figures is attached as an appendix to this trading update. This reclassification has no impact on total operating profit. All of the comments made above are equally applicable to the results as stated either before or after this reallocation of Group costs.

Group expenses include the cost of activities (e.g. Internal Audit, Treasury, Tax etc.) that are centralised functions but who also provide operational support as a matter of overall cost efficiency. Group expenses also include the cost of various projects/strategic and development initiatives that, whilst often commissioned at a corporate level, nevertheless are business or divisional specific in their nature. The incidence of these charges being borne at the centre has increased over the last few years and it is intended in future to show these as a charge against the relevant business/divisional results rather than continue to classify them as a Group cost. This will also present a more appropriate picture of the 'stand-alone' Financial Services Division ahead of the planned IPO of the Life & Pensions businesses.

Divisional results for the six months to November 2002 and November 2001 and full year to May 2002, adjusted for the costs previously included within Group overheads, are shown below. Divisional figures on a pre goodwill amortisation/operating exceptional items basis are also shown. In the Group's full year accounts (and preliminary announcement to be made in July 2003), divisional results for the full year to 31 May 2003 (with comparatives) will be shown after deducting these costs.

Lisa J Newman
Head of Communications
Misys plc
Tel: +44 (0)207 368 2315

Andrew Farmer
Head of Investor Relations
Misys plc
Tel: +44 (0)207 368 2307