Misys set to delay Sesame flotation

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The planned flotation of Misys' network of independent financial advisers, called Sesame, next July could be delayed, the software company warned yesterday as it confirmed that trading remained tough.

Misys, which provides software to banks and the healthcare industry, said volatile equity markets and regulatory issues "may affect the timing" of the flotation of the Sesame business. Sesame is home to five IFA networks - countrywide, DBS, Financial Options, IFA Network and Kestrel.

Misys, which insisted yesterday it still intended to float the Sesame business, warned that its core software operation - selling systems to banks - remained difficult.

"We remain convinced that bank spending on IT in general, and on third party software in particular, will return to growth," it said, but warned that it was not planning for a return "to more buoyant conditions" this financial year. Shares in the company dropped 10.5 per cent, or 30.5p, to close at 260.25p a share.

In the year to 31 May, Misys' operating profits, stripping out exceptional items, were more or less flat at £130m, while turnover dropped slightly to £1bn.

Its banking division had a particularly torrid time - hurt by banking customers cutting their spending on IT. Profits at the division fell 12 per cent to £53m on revenues of £278m, a fall of 8 per cent from the year before. Its financial services arm, mainly the IFA business, fared little better. Revenues there dropped 3 per cent to £438m.

"The market was disappointed with management's expectation for further deterioration in the financial services division in the first half and for no recovery in the banking and securities division until the second half," analysts at Dresdner Kleinwort Wasserstein said.

Despite the tough market conditions, Misys' chairman, Kevin Lomax, said he expected the company to make further progress this year. But he warned that any improvement was not likely to materialise until the second half of the year.

The Dresdner analysts thought, however, that Misys was being overly cautious. "Many signs of a recovery in the banking and securities division are present, in our opinion," they said.

The one bright spot in Misys' figures was the performance of its healthcare unit, which sells systems to hospitals and doctors in the US, where revenues and profits grew 4 per cent and 2 per cent respectively.