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Misys cuts size of Allscripts sale

RESULTS: Banking side shows mixed fortunes as US healthcare sale proves tricky
July 27, 2010

Software group Misys saw decent full-year figures offset by news that it had cut the size of the proposed sale of its holding in US healthcare arm Allscripts, which has agreed a merger with Eclipsys.

IC TIP: Hold at 260.25p

Misys is planning a secondary offering of 25m shares in Allscripts, down from 36m, following a plunge in Allscripts' shares since the merger was announced last month (). Management claims Allscripts is undervalued at this level, yet cynics might see this as a lack of appetite from US investors for the shares, which are rated on more than 20 times earnings according to analyst Roger Philips at Evolution Securities.

In the year to May, Misys increased underlying revenues at constant currencies by 3 per cent to £786m, of which Allscripts accounted for £443m and generated 8 per cent growth. Pre-exceptional operating profits rose 10 per cent to £151m. The group's two financial services divisions were a mixed bag, with the Capital Markets division beating expectations while the Banking side reported sales down 14 per cent and profits 6 per cent lower.

Misys has paid down net debt of £129m since this time last year and Panmure Gordon estimates that it will have $1bn to return to shareholders, or 121p per share following the Allscripts payoff. The broker raised its 2011 adjusted EPS estimates by 8 per cent to 16.4p (13.1p for 2010).

MISYS (MSY)

ORD PRICE:260pMARKET VALUE:£1.4bn
TOUCH:260-260.4p12-MONTH HIGH:282p171p
DIVIDEND YIELD:NILPE RATIO:31
NET ASSET VALUE:92p*NET CASH:£0.9m

Year to 31 MayTurnover (£m)Pre-tax profit (£m)Earnings per share (p)Dividend per share (p)
200658338.55.27.18
20074704.03.17.53
200849248.923.57.91
200969294.216.0nil
2010782104.68.4nil
% change+13+11-48-

*Includes intangible assets of £540m, or 98p a share

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