Ivan Martin has quit as CEO of the troubled banking arm of Misys Plc though the software company cheered investors with a trading update that suggested its problems are not as bad as expected.
First-half earnings per share, before exceptional items, are expected in the range of 6.0 to 6.5 pence per share ($0.106 to $0.1149), down on the 6.8 pence ($0.1202) achieved last year, but above the 5.7 pence ($0.1008) expected by analysts.
Misys chief executive Kevin Lomax said the lead indicators in its core businesses of banking and healthcare demonstrated encouraging progress and efforts to position the business for sustained growth are showing positive results. However, he said there is more to do in order to deliver increased value to shareholders.
The Evesham, UK-based company has been under a cloud since it warned in September that profit this year will be below expectations because it faced delay in recognizing the revenue from large banking contracts and has increased costs by taking on extra staff to deal with the work.
Lomax is to take the additional role of CEO of the banking division until a successor to Martin is named. Ironically, Misys prompted a shareholder revolt earlier this year with a plan to award Martin and Tom Skelton, head of its healthcare division, a bonus of 1.2m pounds ($2.2m) each to stay with the company amid fears that whoever failed to succeed Lomax for the top job would leave. The idea was withdrawn after protests.
Misys said it now expects revenue for the first half will rise 10%. In the banking division, it said total revenue division to be up 10%. While initial license fee revenues rose 35% against a relatively weak comparable period, professional services revenue fell by 2%, reflecting the impact of two contract deferrals. These deferrals will squeeze operating margins to around 12%, compared with 17% in the previous year.
In its US healthcare business, it expects revenue to rise 8%. Misys said professional services are becoming more significant in its sales mix as the shift in demand to clinical products continues. Professional services revenue increased 15% and maintenance revenue was up 7%. However, transaction processing revenue fell 2%, reflecting continued market pressure on pricing. It said it continues to look for new avenues of growth for this business.
Revenue at Sesame, its IT services business for independent financial advisers, is expected to rise 11%. Misys is seeking a buyer for this business.