Misys chairman Cadbury admits: Our products are not up to scratch

Sir Dominic Cadbury, the chairman and temporary chief executive of Misys, has told its investors that the company's software is not currently good enough to compete with leading edge products from its competitors in the banking and healthcare markets.

Speaking at the company's annual meeting, Sir Dominic said that product development has not kept pace with the changing competitive landscape and described the company's software as "not at the leading edge ... we have not had the most competitive products out there". He said that following the collapse of takeover talks last week, Misys will focus on developing the next generation of its software to more effectively compete with rival products.

Misys is on the verge of appointing a new chief executive after Kevin Lomax, the founder and chief executive, quit this week after his bid to take the company private fell through after months of negotiations.

Sir Dominic declined to comment on what the new chief executive is likely to do but told shareholders: "A change in leadership is bound to involve some change in direction."

Analysts have called for a break-up of the company that operates three distinct businesses and trades at a discount to its industry peers as a result of its conglomerate status. Paul Mumford, a senior fund manager at Cavendish Asset Management, said: "Life after Lomax could see a new and dynamic hand break up parts of the business, invigorate the product and potentially buy back shares to increase earnings potential."

Asked if the new chief executive will want to work with finance director Howard Evans, who was involved in Mr Lomax's management buyout plan, Sir Dominic said "I cannot second guess that."

Sir Dominic had to deflect criticism over the handling of the protracted bidding process. John Farmer, a shareholder in the company, described Mr Lomax's tactics as "Machiavellian" and the collapse of talks as a "thorough shambles" while expressing frustration at the operating performance of the company. Sir Dominic said: "I am not going to try to pretend that the record is anything but disappointing."

During the bid process three former executives proposed a plan to split the company's assets. Sir Dominic dismissed criticism that he had not asked them to apply for the chief executive job when the recruitment process began. He also described the claim that the ex-Misys men had support from 30 per cent of shareholders as "extraordinary".