Misys shares slide 17pc on warning
MISYS shares plunged 17pc yesterday after the software company issued a profits warning, just days after it dropped controversial £1.2m retention bonuses for two directors.
Executive chairman Kevin Lomax denied the bonuses were withdrawn last Friday because of the impending profit warning.
He admitted “ it would have been touch and go” if the vote on the bonus plan had proceeded. Institutional shareholders had opposed the bonus plan, which was aimed at retaining directors Tom Skelton and Ivan Martin.
“If you don’t have big shareholder support you don’t want to be doing it and scraping through,” he said.
The shares plunged 41 ½ to 197¼p as analysts downgraded profits forecasts, with Dresdner Kleinwort Wasserstein cutting its share price target from 225p to 215p.
Misys said fi rst-half profits would be “ significantly below last year” because of a large investment in its banking software arm and because it was receiving revenues slower than expected.
“Earnings per share in the fi rst half are likely to be significantly below last year and it is not clear that any profit shortfall in the fi rst half will be fully recovered in the second,” the company said in a statement.
Misys has been developing its banking arm in a bid to take on larger contracts but the signing of these is less predictable, according to the company.
Mr Lomax told the annual meeting that the underlying business of the banking arm was strong. He said: “The statement . . . has been about timing and revenue recognition, not about the order intake. When we look at our prospect list it is extremely strong.”
One private shareholder asked whether, given the sharp share price fall, the company had adequately explained its strategy to the City.
“We have largely got the strategy across to people,” said Mr Lomax. “There is evidence of execution but I think the City needs to see more than it’s seen.”
One shareholder questioned whether Mr Lomax had spent too much time on his work as a non-executive director of Marks & Spencer.
“I am a major shareholder in Misys and believe me I am very clear about where my priorities lie,” said Mr Lomax.
Misys plans to look at alternative ways to provide a retention bonus to the two directors. It fears they might leave if either or both of them do not become chief executive when Mr Lomax relinquishes the role by 2008.