26 January 2012
You've announced half-year results today, can you give me a highlight of the numbers?
Yes, I think we've announced very solid results today, particularly when you consider the backdrop of some of the uncertainty that we have from a macroeconomic standpoint. You know, on a reported basis, our operating profit was up 33%, our revenue grew 22%. And if you look underneath that, on a constant currency basis our revenue was up over 1%, and our orders were up over 3%. So we saw a very solid performance, and we are pleased that we are now well positioned as we go into the second half of the year.
You mentioned the idea of a tough economic background, so what's underpinned these results in that context?
Well I think we've continued to make investments in product development. The whole success of Misys the last several years has been the introduction of a new generation of solutions for our clients. We've continued with that investment, and the results in the first half show it, over 61% of our new orders now come from solutions that did not exist two years ago.
And those solutions have a very strong value proposition for our clients, it’s helping our clients improve their operating performance and productivity and stay up to speed with the regulatory changes. So the real story here is about our continued investment and it's about our people, our people continuing to be very persuasive and very persistent in working with clients and making sure they understand the value proposition of our new solutions.
So are you confident that these new solutions are properly aligned with what financial institutions are looking for?
Yes I do. As I mentioned financial institutions certainly are facing very uncertain times. And because of those uncertain times they want to be able to reduce their operating expenses and drive productivity. That is leading to things like consolidation of systems. And that very much favours Misys because many of our solutions are highly scalable and cover a broad functional area that gives them that end-to-end coverage.
In addition, there are many changes in the regulatory environment. And Misys is working very closely with our clients to help them update their systems to be compliant with that new regulatory environment. So when you add that all together you see a value proposition that is very compelling for our clients going forward.
And if we look at the geographic exposures that you have in your customer base, how is that evolving? Is it moving away from developed Western economies?
It's not moving away. We saw a very good performance for example in Asia in the first half, a very strong performance in the Middle East and Africa, a good performance in Eastern Europe, and even the United States showed reasonable growth in the first half. We certainly saw some delays in decision-making.
We've seen an elongated sales process in many cases, and most specifically around Western European financial institutions, which you would expect given what occurred in the latter part of 2011.
But I think the important thing is the ‘resiliency’ of Misys and the ‘resiliency’ of the solutions that we are now taking to market. That ‘resiliency’ showed up with a great performance in terms of order intake, and it's showing up in very strong results in many of the growth areas, globally, that we have invested in the last couple of years.
Just a week or so ago, we launched our new China centre of excellence, which will be the development hub for many of our capital market products. And you may know we now have over 40 banks in China that are clients of Misys. And long term, we'll also develop other products geared to the Chinese market. So this is another example of where we are investing. Not only in new product but we are localising those investments, so that they can be tailored to the unique requirements of markets that we think will grow in the coming months and years.
Given how tough it is out there in the market place, what is the outlook for Misys?
Well I think the outlook for Misys is very good. I think we've demonstrated our ‘resiliency’ here in the first half, I think we'll continue to demonstrate that ‘resiliency’ as we go through the second half. However, there is no question that there is a fair amount of economic uncertainty. All you have to do is read the papers. We are very mindful of that.
And we are putting in place contingency plans so that we can maintain our performance as we go forward. And what I mean by contingency plans is we are going to take some very aggressive cost and expense actions so that we can not only preserve our profitability, should the economic environment deteriorate any more, but also allow us by cutting those expenses and costs, to continue to invest in our product development and continue to invest in our people, particularly our customer-facing people because we think that is a winning equation. New products, new solutions and then the talented people that take those solutions to market and are with our customers day in and day out.
So, how are you tracking against that goal of leading the sectors that you operate in, in your chosen markets?
Well today we are also announcing the launch of BankFusion 2.0, which is the second generation of BankFusion. We had a fantastic first half with BankFusion. We now have over 40 customers that have ordered the solution from us. We have taken another seven clients live in the first half so we now have 11 customers that are live. So today we are launching BankFusion 2.0 which will be available sometime this summer, which will give us the best of breed, world-class functionality as well as an improved platform that supports those applications.
So it is another example of where we are continuing to make an investment in new solutions and new products so that we can continue to deliver value to our customers. And we think that value is what will sustain us through uncertain economic times.
So, yes, I think we are extremely well positioned to lead the financial services application software and services market. We've made great progress with our Capital Market products, and of course the acquisition of Sophis, which is now completely integrated. We've launched many new products there and are gaining share, and have been recognised with many awards for our industry-leading solutions. And now with what we are doing with BankFusion 2.0 as well as our Transaction Banking systems, we are on a path for continued solid performance, in the second half of this year and beyond, and leadership in our industry.