Shift into software lifts Misys

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A FURTHER switch in sales from low-margin computer hardware to high-margin software helped Misys to increase pre-tax profits 23 per cent to pounds 18.6m in the year to 31 May. Turnover rose 5 per cent to pounds 93.4m, writes Diane Coyle.

The acquisition of Kapiti, a specialist in banking software, in April contributed pounds 481,000 in profits. It has also taken Misys into international markets. The share of turnover overseas has climbed from 3 to 25 per cent.

Kevin Lomax, chairman, said it would increase that proportion as Misys needed access to bigger markets and was looking at opportunities in North America.

The company said it would bring forward development of new software for the insurance market, where it has a strong presence, by spending an extra pounds 1m- pounds 2m on development during the current year.

Misys ended the year with no debt and pounds 33m in cash. Firm contractual and recurring revenues made up 35 per cent of total turnover. Sue Cox, an analyst at S G Warburg, said: 'There is some risk in expanding overseas, but it is a necessary one at this stage. The UK market is not big enough.' Warburg forecast profits of pounds 25.5m for the current year.

Earnings per share were 19p higher at 31.9p and the dividend increased from 7.01p to 8.06p. The shares rose 7p to 448p.