7306 misys ar 2011-small-indexed

Overview

01 Highlights02 At the heart of financial services06 Global reach10 Relationships that matter14 Leading technology and innovation

Business review

18 Chairman’s statement20 Chief Executive’s review24 Key performance indicators26 Misys Sophis28 Treasury & Capital Markets30 Banking32 Open Source34 Global Services36 People38 Social and environmental responsibility40 Financial review

Corporate governance

48 Board of Directors50 Corporate governance report62 Directors’ remuneration report

Financial statements

74 Statement of Directors’ responsibilities75 Audit opinion for the Misys plc Group76 Consolidated income statement76 Consolidated statement of

comprehensive income77 Consolidated statement of cash flows78 Consolidated balance sheet79 Consolidated statement of changes

in equity80 Accounting policies87 Notes to the financial statements119 Audit opinion for the Misys plc

Parent Company only120 Company balance sheet121 Notes to the Company financial

statements

130 Five year financial record131 Investor information

Misys Leading technology and innovation

Performance highlights Revenue £370m – up 4% for the full year, accelerating to 8% in the 2nd half

Order intake £213m – up 3%

Adjusted operating profit £72m – up 12%

Adjusted basic EPS up 22% pro-forma for the share count reduction following return of capital to shareholders

Misys Sophis revenue for the 4th quarter, its first in the Group, up 32% on the prior year quarter. Sophis integration successful – cost and revenue synergies on track

Banking returned to growth with revenue of £167m – up 3% including a 10% increase in the 2nd half. BankFusion adoption accelerated with 27 sales in the period and 40 customers in total

Treasury & Capital Markets (TCM) revenue £185m – up 3%. TCM’s market position continued to strengthen with 25 new name wins

See financial review for a reconciliation to as reported measures

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revenue

pro-forma adjusted EPS growth

adjusted operating profit

BankFusion customers

new name wins in TCM

Overview

Annual Report 2011 01


50 of the top 50 banks rely on Misys

capital markets solutions provider

Overview


02 Annual Report 2011

With over 1,300 customers in 120 countries relying on our solutions, Misys is truly at the heart of the financial services industry. In capital markets, the acquisition of Sophis catapulted Misys to a leadership position with the broadest asset class coverage in the industry and over a third of the installed base in our market place. In banking, we are delivering much needed innovation in the core banking systems space with our BankFusion solutions, and are at the forefront of transaction banking with our portal solutions for payments, cash management and trade finance.

syndicated loan book runners use Misys

Overview



Financial services is changingThe financial services market is changing rapidly. Financial institutions of all shapes and sizes need to keep abreast of regulatory requirements, respond to changing customer expectations, manage risk and take advantage of opportunities in new growth areas. Subject to a higher level of scrutiny than ever before, they also need to ensure transparency across all areas of their business. Financial technology is playing a critical role by delivering the functionality and agility needed to keep up with the fast pace of change.

Misys is a pure play financial services provider, committed to innovation in financial services technology. We provide a broad range of solutions to help all types of financial institutions run their businesses more efficiently and cost-effectively. Our solutions help our customers to comply with industry regulations, meet the changing requirements of their customers and retain competitive advantage. Many financial institutions are using our solutions to help them to grow their business by expanding into new sectors and geographies.

Growth regionsMisys has over 1,300 customers in 120 countries around the globe. Financial institutions in the emerging markets of Latin America and Asia were less affected by the credit crisis and we are seeing continuing growth in demand from these regions. We are partnering with many clients to help them adopt best practice processes to get the most from their software solutions as well as building additional functionality to meet local regulations and business requirements.

Our global footprint and partner network means that we have the resources and expertise to service clients worldwide.

The importance of innovationGlobal institutions and those in the more mature markets of the USA and Western Europe are re-engineering their existing systems to be able to cope with these changes. In the growth markets of Asia, Latin America and the Middle East and Africa many banks and other financial institutions do not have complex legacy systems in place and can take more immediate advantage of packaged solutions.

We are engineering our solutions to make it as easy as possible for our clients to take advantage of the benefits that we offer. By championing the concept of ‘continuous migration’ with our BankFusion solutions, we are enabling banks to renovate their existing systems with new functionality while minimising the impact on their day-to-day operations.

We are integrating many of our solutions to provide end-to-end support for a broad range of financial activities, and to enable our clients to access the full range of functionality available across our different products.

For more information go to page 16

For more information go to page 12

Overview



Focus on leadershipLeading in capital marketsThe acquisition of Sophis has catapulted Misys into a leadership position in the capital markets sector. We now generate more than 60% of our revenue from our Capital Markets business units – Treasury & Capital Markets and Misys Sophis. Our capital markets solutions address requirements across four major areas of business: sell-side, buy-side, lending and risk management.

Leading in bankingTransaction banking is becoming more important as banks return to fee-earning activities after the credit crisis. In many cases their underlying systems are in need of modernisation. Misys is the leading provider in the transaction banking space and is the only organisation that can offer banks a fully integrated solution for payments, cash management and trade finance via our portal solutions. The ability to have a single view of cash

and trade transactions is leading many banks to look at how they can increase their efficiency by consolidating their systems in these areas.

Misys is leading the way in innovating core banking systems with the BankFusion platform. BankFusion is the newest core banking system available in the market – embracing the latest technology developments and offering a completely new approach to delivering, implementing and upgrading a core banking system. Misys provides a comprehensive suite of solutions to help financial institutions run their businesses more efficiently and cost effectively.

Customer Geography

Misys Solution Portfolio

– Opics– Summit– Loan IQ

– BankFusion Universal Banking

– BankFusion Equation

– BankFusion Midas

– RISQUE– LIFE– VALUE– iSophis

Core

– Payment Manager

– Online, Mobile & Portal

– Trade Innovation

TransactionMisys Sophis

Capital Markets Banking

TCM

RISK

Americas

250 customers19% of total

Europe


Middle East and Africa


Asia Pacific


Misys serves customers in over 120 countries

For more information go to www.misys.com

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Misys

Overview



Misys is a truly global organisation, providing software solutions to financial institutions across the world, from the recognised financial centres of London, New York, Hong Kong and Singapore to the growth regions of Africa, Latin America and Asia. We have aligned our resources to these geographical growth opportunities and are committed to providing the best software, services and support to our customers, regardless of their location. Our global footprint and diverse pools of talent in different locations enable us to meet these objectives.

Overview



staff in over 35 offices worldwide

Six Global Development Centres providing centres of excellence for R&D and 24/7 customer support

customers across 120 countries

Overview



Relocating leadership rolesMisys has viewed globalisation very pragmatically and moved ownership and accountability of work rather than just focusing on traditional labour arbitrage. Instead of centralising all leadership roles in the head office, we have multiple global leadership roles in our development locations based in emerging economies. This shows the strategic shift in our capacity planning and approach to global sourcing.

Building a globally distributed development modelAt Misys, our strategy has been to develop a globally distributed development model to minimise the risk of having all of our development expertise housed in a single location and to introduce different perspectives to our development process. It also provides us access to skills and resources around the world as and when required. Our goal is to have development capabilities for each product line in at least two locations. This strategy is on track following the successful migration of our development capacity to the East with four Global Development Centres based in Bangalore (India), Bucharest (Romania), Manila (the Philippines) and Beijing (China).

Each of these locations is a centre of excellence for different technical skills so that we can continue to support our existing solutions, while also developing new solutions based on the latest technical innovations.

As these locations are experiencing unprecedented growth, our challenge is to keep pace with the competition and attract and retain talent. We have devised many innovative ways to manage attrition and create a culture of high performance. We run very successful graduate programmes in these locations, attracting engineering students from some of the best universities.

During the year we also added Development Centres in Paris and Dublin with the acquisition of Sophis.

Bangalore

1,200 employees20% growth 265 people hired during the yearCentre of excellence for BankFusion

Bangalore is our primary Development Centre; a multi-function, multi-divisional hub covering every solution in the Misys portfolio (with the exception of Misys Sophis). 75% of staff are focused on development and together constitute our centre of excellence for Java and .Net solutions. Bangalore is also the global centre for innovations in Open Source solutions for Misys. We have doubled in size over the past four years, achieving the critical mass that we need to service our clients’ development requirements.

Bangalore is host to a huge ecosystem of domain expertise in both IT and financial services, providing us with access to leading talent with the right skills for our business. The competitive environment means that we need to stay sharp and provide our employees with exciting and technically challenging work. Misys has a strong reputation with the major universities and is able to attract top graduates to work in our organisation.

In addition to acting as a main R&D hub for Misys, Bangalore also hosts customer support and professional services teams; it is a global solutions centre (GSC) for customisations and a shared services centre for finance.

Distribution of Misys R&D professionals

Bangalore – 32%Manila – 19%Partners – 18%Western Europe – 10%Bucharest – 8%New York – 7%London – 6%

Overview



Misys has introduced an innovative programme called ‘excellence through education’ where selected employees are sponsored for higher education in software engineering in collaboration with a university. Flexible hours allow our staff to pursue advanced education and converge their academic learning with industry experience.

Beijing

Newly established Opics development teamDouble-byte expertise to support North AsiaGlobal Solutions Centre for customisations

The growth regions of Asia, and China in particular, are of increasing importance to Misys’ continued growth. To meet current and anticipated demand from the region, we are scaling Beijing as a strategic Development Centre to support North Asia, including the development of double-byte versions of our solutions. This year, we established an Opics development team in Beijing to assist with the large number of opportunities in China, and to accelerate the development of generic product functionality for Chinese clients. The team will deliver both strategic and funded developments for the region. We will add other product lines over time starting with Summit, and our intention is to have BankFusion development facilities in Beijing which will supplement the Bangalore and Manila Development Centres.

“ The main areas of focus across all our Global Development Centres are on quality and productivity. Our ultimate goal is for these centres to deliver end-to-end world-class software solutions.”

Manoj Kumar, Vice President, Solution Management and Development

Manila

650 employees115 people hired during the year24/7 global call centreCentre of excellence for Midas and Equation

Manila is the home of Misys’ global call centre which provides 24/7 level 1 and 2 support to clients across the globe. The language skills that Manila offers make it the perfect location to consolidate our customer support teams. We are actively rotating employees between support and services roles to encourage knowledge transfer and to provide our support staff with a 360° view of the customer. It is also our centre of excellence for our Midas and Equation banking solutions. We have recently started BankFusion shared application development in Manila alongside Bangalore.

Bucharest

235 employees83 people hired during the yearCentre of excellence for C++/Summit

Bucharest provides an excellent pool of good quality engineering skills accompanied by high levels of productivity and quality. Bucharest provides time zone and travel advantages for servicing the needs of our European clients. We are expanding the footprint in Bucharest from just being an R&D centre

to evolve into a resource pool of experts for delivering professional services to our European customers.

Misys Sophis Development Centres

148 employees 29 people hired during the yearCentre of excellence for C++ & C# and Quality Assurance

We have two further Development Centres in Paris and Dublin that support our Misys Sophis solutions. They provide a pool of highly skilled engineers including talented financial engineers skilled in developing and integrating cutting-edge mathematical models for pricing. We focus on maintaining the right balance of expertise between technical skills and business knowledge. As such, we are able to attract top-level graduates and experienced people to work on developing and maintaining our solutions. They are responsible for all buy-side and asset class functionality, quantitative models, and server and technical architecture-related developments.

These bases also provide Quality Assurance (QA), documentation and global IT second level support. They host the back-office development team focusing on operations and accounting as well as the team in charge of security finance developments. The QA team is in charge of testing and validating all Misys Sophis solutions, the Documentation team is responsible for the technical documentation that is delivered with our products and the Support team helps our consultants to solve technical issues for our clients.

Overview



percentage points year-on-year increase in customer satisfaction

Overview



By strengthening relationships between our customers, our partners and our people, Misys is able to grow its business, expand into new markets and gain market share.

We have built a global partner network of more than 100 partners that provide us with the scalability and expertise to expand our coverage, extend our scale and drive deeper customer relationships. Together, we create compelling solutions enabling our customers to differentiate themselves and drive a competitive edge. Fostering close relationships with our customers and partners provides valuable insight to Misys so that we can deliver the best solutions in an ever-growing and changing market.

partners

of new name business won in conjunction with partners

Overview



Evolving the partner modelWe work as ‘one team’ with our partners to be fully aligned in front of customers. In some regions we have implemented partner-led coverage strategies – localising our products, addressing local issues and resolutions and driving high value solutions while increasing customer satisfaction. Our ability to partner more effectively has enabled us to provide more comprehensive, cost-effective solutions that drive greater customer value.

Partnerships are essential in helping Misys to scale our business. We have built a Partner Value Net that enables us to execute with more speed, scope

and scale. In turn, our partners provide Misys with greater reach into the marketplace, greater scale to execute on customer requirements, and their complementary skills and solutions deliver greater depth of value to our customers.

We bring together the collective talent of the best information technology companies, systems integrators, consultancy practices and local partners – empowering an entire community to benefit from a strong collaboration of knowledge, relationships and skills. They offer a broad range of value added services around Misys solutions, working on design, implementation and delivery of them.

Partners are an extension of our sales force and delivery teams. In-country specialists are key to extending our reach and helping us cover new territories, enabling us to extend farther and faster than we could do on our own.

Teaming for customer value No one company can provide all the solutions to meet the diverse needs of financial institutions in today’s marketplace. Our Partner Value Net comprises global, regional and in-country partnerships across all our business lines and market segments. We align as one team to drive and support business opportunities that lead to incremental revenue. The depth and breadth of our network ensures better alignment to our customers’ demands for integrated, end-to-end solutions and provides the skills and services they require.

By tapping into our Partner Value Net we increase our market presence, learn about new opportunities and can fast track the sales cycle resulting in increased market penetration and higher revenues.

With regular governance and execution on our joint business plans, we consistently grow our revenues together. This year, we closed 35% of new name business in conjunction with our partners, and expect to increase this rate further over the coming 12 months.

Global partner footprint

Regional GTM Partners

Misys has more than 100 partners across the world including more than 40 solution and technology partners. Our strategic partners include everis, HCL Technologies, IBM and Microsoft.

Overview



Long-standing relationshipsOur customer base is one of our biggest assets. We have an impressive installed base worldwide and enjoy long-standing relationships with many of our customers. We are actively engaged in strengthening our customer-facing resources so that we can deepen these relationships further, helping our customers to address their pain points, expand their businesses and gain competitive advantage with our technology solutions.

Enabling our customers to competeWe are investing heavily in technology and innovation to deliver world-class solutions to our customers. In many financial institutions, the decision to invest in software and systems is based on cost and efficiency considerations, the need to meet changing customer and regulatory requirements, and the need to achieve (or retain) competitive advantage.

We are developing new solutions such as BankFusion, utilising portal technology to provide integrated transaction banking solutions and unlocking the value of our capital markets solutions to meet the evolving needs of our customers.

Creating bespoke solutionsPackaged software solutions are easier to upgrade and maintain and have a lower total cost of ownership. This being said, we appreciate that our customers have requirements specific to their business or the regions in which they operate. We work with our customers to understand their needs. Where appropriate, we incorporate bespoke developments into our product roadmaps so that all of our customers can take advantage of them. This symbiotic relationship is hugely beneficial to our customer base.

Improving customer satisfactionAchieving continuous improvements in customer satisfaction rates is a priority for all Misys employees, and is included as a key measure in each employee’s performance plan. Misys uses Net Promoter® from Satmetrix® to support its customer loyalty programme, effectively capturing customer feedback, identifying actions to improve and distributing relevant information to employees so they can follow up with customers.

Great relationships = shared successWe value all of our relationships and invest in them to ensure shared success. Our strong management team and values are geared towards client focus and delivering results.

Our strategic partners include:

HCL Technologies is a leading global IT Services company, focusing on ‘transformational outsourcing’, underlined by innovation and value creation. It offers an integrated portfolio of services including software-led IT solutions, remote infrastructure management services, engineering and R&D services and BPO. We work together with HCL for off-shore development, IT support, professional services, and global go-to-market coverage to open new markets. This extends our reach in fast growing economies to gain market share and is delivering growth and value for customers.

For a century, only IBM has created technology around the world to invent and integrate hardware, software and services to enable the Financial Services industry to work smarter. We partner with IBM at many levels, from hardware and middleware technology and services, to developing complete customer value propositions for our joint customers.

IBM is a registered trademark of International Business Machines Corporation.

everis is a multi-national consulting company offering business development and strategy, technological applications, maintenance and outsourcing solutions. everis has operations in Europe, Latin America and the US with more than 10,000 consultants. We work together with everis to increase our penetration in Europe, expand international markets, jointly collaborate to implement a range of services to existing and new clients and deliver local, customised solutions, presence and support.

Founded in 1975, Microsoft is the worldwide leader in software, services and Internet technologies for personal and business computing. Microsoft offers a wide range of innovative products and services designed to help individuals and organisations realise their full potential. We work with Microsoft to develop new delivery mechanisms for our banking solutions and differentiated performance for our capital markets solutions.

Improving customer satisfaction with Net Promoter® from Satmetrix®

Misys uses Satmetrix® to support its customer loyalty programme.

0%

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TCM Misys Banking

20112010200920082007

For more information on Technology and Innovation go to page 16

Overview



solutions are driving our business

Overview



Investment in technology and innovation has been at the heart of our turnaround strategy to deliver world class solutions to our customers.

We have shifted our R&D spend so that the majority is invested in the development of new solutions, which are now gaining significant traction with our customers. We are delivering innovation in all areas of our business from core banking to portal technology and componentisation projects that unlock the functionality within our different software solutions. Misys is also pioneering developments in the carbon and healthcare markets with our open source solutions.

new BankFusion customers this year

of R&D spend is on new solutions

Overview



Driving innovationThis year has been a turning point as many of our new solutions hit the marketplace and gained significant traction. We saw a big increase in licence orders from our new solutions which contributed 41% of our total licence revenues. We are pleased to see that our hard work and commitment to BankFusion is starting to pay off.

Our development teams are using the BankFusion architecture to unlock the depth and breadth of financial services functionality that we have embedded within our different products and make it available to all our customers. With BankFusion we can build a component or application once and re-use it many times – for example, enabling the treasury capabilities within our Opics solution to be made available within BankFusion Universal Banking. This makes our development processes more efficient and effective but, more importantly, it enables us to deliver more comprehensive, integrated solutions to our customers and accelerate time to market.

With clear development principles firmly in place, we have been able to construct the building blocks for our new solutions and foster innovation within the financial services technology sector.

Improving quality and service levelsThis year, we launched a major quality initiative to improve customer service levels and new code quality for all our new solutions. As part of the programme, we are introducing new, improved service level agreements to give customers greater certainty over when they can expect problems to be resolved. We are also committing resources to drive down customer defect backlogs thus ensuring that when customers raise problems, they are dealt with quickly. Finally, we are strengthening our testing practices to improve the quality of our new code releases. Specifically, we are increasing the coverage of our test cases, introducing continuous integration and automated testing. We are also using customer test cases in our own testing; this not only improves the coverage of our testing processes but it means that customers can shorten their own testing cycles.

Delivering the next generation of banking systemsWe are delivering much needed innovation in the core banking systems space with our BankFusion solutions, the foundation of which is the BankFusion Platform – a process-centric graphical development environment that enables business processes to be created or re-configured quickly and easily. We used the BankFusion Platform to build BankFusion Universal Banking (UB) – a completely new retail banking solution.

In addition, we are building out a set of shared applications starting with Teller, Loan Origination and Islamic Banking to extend the functionality of BankFusion UB, as well as other Misys and third party banking systems. We plan to make the BankFusion Platform available to banks to extend their own banking systems, utilising pre-configured common banking services and shared applications from Misys as well as in-house and third-party applications. This is a completely new approach that enables banks to maximise the value of their existing assets.

Maximising functionality, minimising disruptionMany banks need to add new capabilities to their core banking systems without the disruption of a major system replacement. BankFusion banking solutions meet this requirement by enabling clients to extend the life of their existing systems. Since its general release in September 2010, the rapid take-up of BankFusion Equation has demonstrated the demand for a new approach within our own client base. We will also extend this capability to non-Misys customers who can use BankFusion to incorporate new functionality into their in-house or legacy core banking systems.

For more information on our Banking business, please go to page 30

Overview



Harnessing the power of the portalOur customers are shifting from highly-geared lending to fee-earning activities. Misys is providing integrated transaction banking services to banks who seek to improve and expand these services for their corporate clients. Our portal technology means that banks can run trade finance and cash management applications on the same platform, benefit from more efficient systems management and reduced cost of ownership, and leverage a flexible platform to expand into new geographies and banking services.

Unlocking the value of our capital markets solutionsOur BankFusion service-oriented architecture (SOA) strategy is also being implemented across our capital markets solutions to make it easier for financial institutions to implement, consume and scale our solutions according to their specific business requirements. Our componentisation project will extend to the recently acquired Misys Sophis solutions to provide even greater cross-asset class coverage, portfolio management and risk management capabilities to both sell-side and buy-side clients.

Responding to market requirementsThe fast pace of change in the capital markets means that our solutions must be kept up-to-date with market and regulatory changes as well as local requirements. Our teams are constantly working with clients to ensure that we deliver the capabilities they need to run their businesses.

Risk managementWe have a wealth of risk management capabilities within our solutions that address the needs of the Capital Markets sector, even more so with the addition of Misys Sophis. Our intention is to consolidate the best of breed components from the Misys Sophis Risk Management Solution, Misys Eagleye, Misys Risk Vision and Misys Opics Risk Plus into a global enterprise risk management solution that will be available on a single platform.

Phase 1 of this project will create a comprehensive market risk solution so that clients can monitor and measure the full range of market risks, including VAR calculations (Value at Risk) and implement stress testing scenarios direct from their front office application. Phase 2 will extend the solution to include credit risk.

Technology trendsWhile much of our development effort is focused on delivering solutions that meet banks’ short-to-medium term requirements, we actively track trends to determine the future development of our solutions. We are seeing increased demand for our hosted services across many of our solutions and, in the longer term, we believe cloud computing represents a significant opportunity to deliver our solutions on a self-service, pay-as-you-go basis. We are working actively with Microsoft and other partners to ensure our solutions are ready for the cloud when customer demand emerges.

Pioneers in Open SourceMisys Open Source Solutions, dedicated to the development and distribution of open source solutions, is growing into a major player in the rapidly emerging carbon and healthcare markets. Our pioneering healthcare information exchanges and carbon registry systems have attracted the attention of government and voluntary agencies and major corporations worldwide.

Innovative ideas from our employees help to create new solutions that enable our customers to achieve competitive advantage and position Misys as an industry leader. Our inventors work tirelessly to ensure that their ideas will succeed. In 2010, we launched our Intellectual Property Programme to help encourage and protect the value of our innovation.

We filed our first patent application in the US for BankFusion in 2010. This was followed by two further applications in 2011, a second for BankFusion and another for mobile banking. We expect to file additional patent applications in the coming year relating to additional BankFusion features, new Misys Open Source offerings and new Trade Portal features.

“ Patents are core assets that uniquely secure company innovation and will play a key role in realising the long term business goals of Misys. We will continue to encourage our innovators and work to develop our Intellectual Property Programme even further.”

Robin Crewe, Chief Technology Officer

of orders came from new solutions

For more information on our Capital Markets business, please go to pages 26 to 29

Overview



TransformationThis has been a year of transformation for Misys. We completed three significant transactions; the sale of Allscripts, the capital return to shareholders and the acquisition of Sophis. Together, these repositioned Misys as a pure play financial services software company. More importantly, strong market positions and compelling products for both the capital markets and banking sectors mean that Misys is now well positioned for future growth.

Shareholder valueIn June 2010, we announced our plan to sell the majority of our stake in Allscripts and the intention to return the majority of the net proceeds to shareholders through a tender offer. With the overwhelming support of our shareholders, we sold the entire stake and completed the return of £670m to shareholders by way of a tender offer and B Share scheme.

The stake in Allscripts was acquired in late 2008 through a significant investment that involved purchasing shares in, and merging Misys’ US healthcare business with, Allscripts. In just two years this investment yielded a return of around 130%.

The divestiture of our stake in Allscripts and the capital return to shareholders were complex transactions and in many ways without precedent. They involved a complicated, three-way transatlantic set of transactions with many US and UK legal and regulatory requirements and the distribution of four shareholder circulars.

Robust performanceLast year, Misys delivered robust operating performance, with a good end to the financial year as revenue growth improved to 8% in the second half. Group revenue for the whole year was £370m, an increase of 4% on the previous year on a pro-forma, constant currency basis. Adjusted operating profit was up 12% with the adjusted operating margin 1.3 percentage points higher as management made further savings in the back-office whilst sustaining our investment in product development and customer-facing resources. Adjusted pro-forma basic earnings per share rose by 22% to 15.1p.

Strengthening our position in financial servicesAs a newly focused financial services software provider we see acquisitions in our chosen markets as a key way of reinforcing Misys’ prospects for future growth. In November, we announced the proposed acquisition of Sophis, a leading provider of portfolio and risk management solutions which are largely complementary to our existing offerings. We see Sophis as an exciting engine for growth, in particular through its leadership position in the buy-side; providing solutions to organisations ranging from global asset managers to start-up hedge funds.

The first post acquisition revenue contribution from the Misys Sophis division for the fourth quarter, included in our financial results, was encouraging, showing impressive growth of 32% on the previous year. We are very pleased with the energy and enthusiasm of the Misys Sophis employees.

Together, the Treasury and Capital Markets and Misys Sophis divisions occupy a leading position within the capital markets and Misys is now ideally placed to win more deals in this sector, as well as being able to take advantage of cross-selling opportunities and more immediate cost synergies.

In our Banking business we continued to invest in the development of our innovative BankFusion platform. This was rewarded both by sales success that exceeded our expectations and the emerging consensus amongst market commentators as to the special capabilities BankFusion can unlock for its customers.

Improving customer satisfactionNothing demonstrates the power of Mike Lawrie’s turnaround strategy for Misys more than the dramatic improvement in customer satisfaction achieved each year. Last year was no exception with significant improvements across the business, with the strongest scores recorded in product reliability and customer relationships.

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Rewarding the creation of shareholder value Last year, a series of major and complex corporate transactions challenged our remuneration committee to make changes to incentive arrangements that struck the right balance between fairly rewarding management for their achievements and securing value for money for shareholders. Throughout the year, we actively consulted shareholders on matters as diverse as recalibrating existing long-term incentives, resetting dilution limits and the creation of a new incentive arrangement for our Chief Executive. We were particularly grateful for shareholders’ consistent support, all the more so as our remuneration committee had to be innovative in its proposals.

Board successionI am pleased to welcome Stephen Wilson and Timothy Tuff to the Board as executive and independent non-executive Directors respectively. Together, they bring greater international and direct experience of our industry to the Board.

Confidence in our futureThe strength of Misys’ prospects for future growth recently prompted an approach with a potential bid for the Company. We will evaluate any and all such approaches thoroughly to ensure the best possible outcome for our employees, customers and shareholders.

Your Board believes that Mike Lawrie and the Misys team can justifiably be very proud of the Company’s transformation. Aside from creating significant shareholder value, they have undoubtedly made Misys a more attractive place to work and a better company to do business with. The Board has great confidence in Misys’ on-going strategy and its ability to continue to generate significant growth and value for shareholders.

It traditionally falls to the Chairman to record the Board’s thanks to the CEO and their entire team. Rarely can such thanks be more richly deserved than in respect of last year’s achievements by the Misys team. Throughout the year, their effort and persistence has been extraordinary. I would also like to thank our shareholders for their active interest and consistent support, without which this very critical year in Misys’ transformation simply wouldn’t have happened.

James CrosbyChairman

James Crosby Chairman

For more information on our approach to Corporate Governance please go to pages 50 to 61

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“ This has been a year of great progress with our strategy and corporate structure. We completed the acquisition of Sophis to create the leading capital markets platform and delivered significant value to shareholders from the divestment of Allscripts. We have great confidence in the future opportunities for Misys to continue its path to leadership in our industry.” Mike Lawrie Chief Executive Officer

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siness review



The year was one of significant progress in the ongoing transformation of Misys that began in 2007. We established Misys as a pure play financial services software company by divesting Allscripts and subsequently increased our exposure to the fast-growing capital markets sector by acquiring Sophis. We have continued to invest in innovation and technology, with the bulk of our investment going towards the development of new solutions. We are also investing to expand the skills base in the customer-facing parts of our organisation. The results of our investments began to be evident in increased revenues from Asia and other growth regions, a return to growth in our banking division, and rapid revenue growth from Misys Sophis.

These achievements have generated increased interest in Misys. The interest in our organisation is a great tribute to our ongoing strategy and the dedication of our staff to make our transformation a success.

Return of capital to shareholders and creation of pure play financial services software companyDuring the year, we returned £670m to Misys shareholders from the proceeds of our divestment of Allscripts. As a result of the Allscripts sale, we created a pure play financial services company, with an opportunity to be a leader in the financial services industry.

Increased exposure to high-growth capital marketsWe believe capital markets will be the faster-growing of the financial services markets that we operate in, and we substantially increased our presence with the acquisition of Sophis, a leader in portfolio and risk management solutions, which improves our asset class coverage and greatly accelerates our buy-side strategy. Its integration into the Misys group has been successful. Since acquisition, Misys Sophis has already demonstrated a high level of growth, with 32% revenue growth in its first quarter as part of the Group.

Substantial investment in product development now producing a pipeline of new solutionsWe have continued to invest heavily in research and development – 19% of revenue this year. Our significant product development spend is now producing a pipeline of new and innovative solutions. As a result, 41% of our orders in the year came from new solutions developed over the last two years, compared with 28% in the previous year.

Investment in people and skillsThis year, we made a record number of new hires – around 900 people. Our investments in people have been focused on the growth regions of Asia, Latin America, Africa and the Middle East, where we see exciting sales opportunities in the years ahead. 75% of our people are now outside the UK and US.

growth in revenues across Asia, Latin America, Africa and the Middle East

BankFusion customers

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We made significant investments in the customer-facing parts of our operations to upgrade our skills base and attract new talent into our organisation – sales, customer service and pre-sales solution consulting. Our training programmes have been expanded, including the successful launch of new graduate programmes in New York, India and London. We have extended existing partnerships and established new ones, with industry leaders such as HCL, everis, IBM and Microsoft.

Our independent customer survey this year has shown a significant rise in customer satisfaction to the highest level since the beginning of our turnaround. This makes us more relevant to our customers and gives us the permission to upgrade customers to our new solutions.

Growth from new regions and new solutions Our investments in Asia, Latin America, Africa and the Middle East have brought early signs of growth. Revenues across these regions grew 14%.

Our new solutions have brought back growth to our Banking business, with 12% order intake growth in the year, as a result of our new solutions. We have launched and established BankFusion as the newest and most modern core banking platform in the last decade, with 40 customers so far, just over a year after its general release. BankFusion is now recognised independently as one of the leading banking platforms in the marketplace. We have applied for two patents so far to protect the unique technology underpinning BankFusion, and are continuing to invest in the banking functionality available in the platform.

During this year, we made significant progress in the ongoing transformation of Misys. We have a strong leadership team in place that is ready to take the business to the next level. As a result, we are strongly positioned to create value for our customers and for our shareholders, making Misys an innovative workplace for our people. We are confident in the future of our business and our ongoing strategy to achieve and maintain a leadership position in all of our market segments.

Mike LawrieChief Executive Officer

Misys business segment reporting structure

Banking TCM Misys Sophis

of our people outside of UK and US

Misys

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Reported Group revenues rose by 8% including the first post-acquisition revenue contribution from Misys Sophis in Q4. On a pro-forma, constant currency basis, Group revenues increased by 4% with consistent growth across the Banking and TCM divisions and significant growth in Misys Sophis.

Adjusted operating margin expanded 0.8 percentage points (1.3 percentage points on a pro-forma, constant currency basis) resulting from reductions in general administration and infrastructure costs, whilst investment in product development, sales and solution implementation was sustained.

Group adjusted operating profit increased by 13% (12% on a pro-forma, constant currency basis) due to revenue growth and well executed cost disciplines.

Outlook Our medium term target for revenue growth (at constant currency and pro-forma for the Sophis acquisition) is 5-8%.

Outlook We expect to continue to improve margins through further productivity gains in the back office, Misys Sophis synergies and the benefits of revenue growth.

Outlook We are capable of growing adjusted operating profit in excess of revenue growth as we continue to realise further efficiencies in our business model.

Group revenue Adjusted operating margin Adjusted operating profit

Margin expansion (2007-2011)Compound annual growth (2007-2011) Compound annual growth (2007-2011)

£m

2007

2008

2009

2010

2011

274 30

2 344

342 37

0

2007

2008

2009

2010

2011

14.3

14.5

15.1 18

.6

19.4

%

2007

2008

2009

2010

2011

39

44

52

64

72

£m

All key performance indicators exclude Allscripts and include Misys Sophis for Q4 in 2011

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Order intake grew 9% to £213m, reflecting accelerated sales of our new Banking solutions and the first contribution from Misys Sophis. On a pro-forma, constant currency basis, order intake rose by 3%.

We sustained a high level of product development spend, increasing the development of key new solutions as spending on old solutions was reduced.

The increase in adjusted operating profit per employee reflects our focus on productivity improvements during the year. This year, we made good progress on cost savings across a range of administrative functions, whilst we increased implementation capacity in our Centres of Excellence located in Bangalore, Manila and Beijing. We also expanded our sales and solution consulting activities in all regions.

Outlook As our new solutions gain acceptance in the marketplace, our objective is to generate high levels of order intake growth from new customers, upgrades and associated implementations.

Outlook We aim to sustain research and development spending as a proportion of revenue. Development resource will be efficiently allocated between maintaining existing solutions and developing new solutions to meet the needs of our customers.

Outlook We aim to continue delivering higher productivity per employee through increased revenues, streamlining processes, and more efficient use of our development and implementation skills outside the US and UK.

Total order intake Research and development Adjusted operating profit per employee

Year on year growthCompound annual growth (2007-2011) Year on year growth

2007

2008

2009

2010

2011

111

156 168 19

5 213

£m

2007

2008

2009

2010

2011

58 61

69

64

69

£m

2007

2008

2009

2010

2011

14 15 15

17

19

£k

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How firms manage risk is changingAs regulation intensifies and cross-asset class strategies, as well as the use of derivatives, become more prevalent, fully integrated portfolio and risk management solutions are becoming increasingly important. The turmoil of the past three years has increased the need for firms to understand and assess their risk exposure.

In the buy-side, the use of derivatives and risk management are becoming an integral part of firms’ trading and compliance strategies to secure and improve performance. In the sell-side, liquidity shortages have led banks to review liquidity risk as well as their day-to-day cash at risk. New Basel regulations have also resulted in banks taking a much more analytical view of credit risk with the introduction of measures such as CVA (credit value adjustment) and IRC (incremental risk charge).

As a result, both buy-side and sell-side firms must combine trading and risk management practices in the way in which they manage their assets.

Demand for cross-asset portfolio and risk management solutions is on the riseFor many organisations, their current trading or portfolio management solutions are not geared up to deal with the complexity of today’s financial instruments and the associated market and credit risk implications. The last few years have seen many banks strengthening their securities finance business and increasing their use of instruments such as Portfolio Swaps and ETFs (Exchange Traded Funds) as they strive to improve market access and investment offerings for their client base. These changes are driving investment banks to strengthen their business processes and improve risk management procedures.

Interest in commodities has increased with investment banks creating more investment and hedging products to satisfy increased demand – pushed up by high volatility in the commodity markets. Last year, three Misys Sophis clients incorporated European and US gas and power commodities into their portfolios for the first time in order to leverage regulation changes.

As financial institutions expand the scope of their investment or trading strategies, they are looking for a solution that can handle multiple asset classes, as well as sophisticated risk calculations. We have kept pace with recent trends by strengthening our flow business processes, introducing new commodity, fund and synthetic products and investing in market, credit and liquidity enterprise risk management.

Pascal Xatart Executive Vice President and CEO Misys Sophis

Business summary

4th quarter revenue £17m up 32% 4th quarter total order intake up 1% at £11m4th quarter adjusted operating profit £6m up 155%4th quarter adjusted operating margin 33% up from 17%Key new buy-side customers added

4th quarter revenue

Financial performance measures reported on a like-for-like basis. See the financial review for reconciliation to as reported measures.

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Positioned for growthMisys Sophis’ heritage lies in the sell-side, where we developed a market leading trading and risk management solution, renowned for its handling of equities and equity derivatives. This expertise led us to develop a similar solution for the buy-side, which quickly surpassed the capabilities of other portfolio management solutions due to its ability to process complex products and derivatives, its integrated risk management capabilities and its ability to address the specific needs of hedge funds.

Our goal is to position Misys Sophis as the de facto provider of portfolio and risk management solutions, recognised as being able to handle every part of a financial institution’s needs, from both a functional and an asset class standpoint.

Today, we are recognised as the market leading solution for equities, equity derivatives and commodities on the sell-side and the leading cross-asset portfolio and risk management solution on the buy-side. With the full force of Misys behind us, we will be able to expand our solutions further, leveraging its development resources and geographical coverage to position ourselves to capture a larger share of, as well as actively expand, our addressable market.

A successful integration with MisysWe are very pleased to be part of the Misys team and the opportunities that this affords to our people and our business. Our sales teams have already advanced a number of cross-selling opportunities and we fully expect this activity to increase over the coming 12 months.

Misys Sophis VALUE will be positioned as Misys’ flagship solution for the buy-side and we feel confident that we will be able to win a larger percentage of the buy-side pipeline with this offering, further solidifying our leadership position in this segment.

Misys Sophis RISQUE, our solution for the sell-side is complementary to Misys Summit. By combining our research and development efforts, our clients will be able to benefit from additional functionality currently available in the Misys suite of products, as well as improved asset class coverage in the areas of Forex, fixed income and interest rate and credit derivatives. Equally, Summit clients will be able to benefit from RISQUE functionality in equities, equity derivatives and commodities.

Expanding our penetration of the buy-sideThe buy-side market for portfolio and risk management solutions is still at a relatively early stage of development. With more than 10,000 organisations worldwide that have a potential need for a system, this represents a massive opportunity, and as such will remain a firm focus for Misys Sophis. As our prospective customer base is widely dispersed across the globe, we will leverage Misys’ geographic footprint, especially outside of Europe and in the emerging markets of Asia Pacific and Latin America.

More flexibility for our clientsAt Misys Sophis, our philosophy has been to deliver our solutions in the way that our clients wish to use them, be these in-house implementations, hosted or leasing options, or Software-as-a-Service (SaaS) delivery. The software componentisation project currently underway at Misys will result in even more flexibility for our clients in the way in which they can select and consume our solutions and services.

Strategy update

Plan

Reinforce leadership in the buy-sideLeverage cross-selling opportunities Improve breadth and depth of system functionality Maximise integration with TCM productsGeographic expansion

A long standing client, Banca Aletti (the investment banking arm of Banco Popolare – an Italian cooperative bank) has been using Misys Sophis RISQUE since 2005. The bank initially implemented RISQUE to manage its equities and equity derivatives business and quickly extended the platform to cover all of its trading activities including fixed income, credit, inflation, forex and commodities. Today, a very relevant part of the bank’s portfolio is managed on the RISQUE platform which is its primary front-to-back office trading and risk management system.

A new risk reporting challengeThe new Basel 2.5 framework requires IRC (Incremental Risk Charge) reporting to be in place by 1 January 2012. Banco Popolare wanted to

have this in place as soon as possible for the whole Banco Popolare Group as part of its internal model for market risk and in order to be fully compliant with the Basel Accord and other regulatory requirements.

Leveraging Misys to deliver a rapid solutionThe Misys Sophis team leveraged the depth of functionality available in the broader Misys solution suite to provide a fast, proven solution to Banco Popolare. As Misys Opics Risk Plus (ORP) already has the ability to calculate IRC, a new module integrating ORP and RISQUE will be delivered so that Banco Popolare can take advantage of this functionality within Banca Aletti’s existing RISQUE system.

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Leading provider to the capital marketsTreasury & Capital Markets (TCM) is a global leader in its industry and provides a number of fully-integrated solutions and services to financial institutions, including: cross-asset, front-to-back portfolio and risk management systems, commercial loan trading and processing systems, and confirmation matching systems for the foreign exchange, derivatives and precious metals markets.

TCM predominantly sells and implements its solutions with sell-side firms, corporations, government-sponsored entities and asset servicers. Together with the newly acquired Misys Sophis division, we are the leading provider of software solutions to the capital markets with more than 20 years’ experience and over 500 customers globally, including 19 of the top 20 capital markets firms, and covering all segments of the market, including the TCM markets, asset managers, hedge funds and life insurance companies.

Our customers use our solutions to enable more effective and efficient trading performance and processing, improved monitoring and reporting, and risk management across all asset classes. During the past few years, financial institutions have remained focused on improving efficiency and generating cost savings across their IT platforms. Many have turned to integrated solutions such as ours that offer the benefits of automation via straight-through processing (STP) and are looking to reduce the number of systems that they need to support. This is especially true in light of industry consolidation, where organisations are less inclined to support multiple infrastructures across businesses that have merged or been acquired.

Actions and progressWe continued to win new customersWe improved our market position again this year, adding 25 new customers; significant customers wins included a large tier 1 bank in the United States, Macquarie Bank in Australia, OSK in Malaysia, BEAC in the Cameroon, Hypo Real Estate in Germany and Mizrahi Bank in Israel. We continued to expand our presence in China with six new name banks, bringing our total Chinese customer base to 35. We also added three new name banks in Mexico, extending our position in this fast growing market. In general, mid-tier banks were less affected by the financial crisis and have been active with their IT spend; 21 out of our 25 new name wins were mid-tier banks, and 32 of our customers in this segment went live last fiscal year.

We enhanced our market-leading solutionsLast fiscal year, we released new versions of software for each of our three key solutions: Summit FT v5.5, Opics Plus v3.1, and Loan IQ v7.1.

Summit FT v5.5Added business intelligence, advanced reporting capabilities and functional improvements in FX options and equitiesAdded new back office and reconciliation capabilities through our partnership with SmartStreamCommenced a major technology refresh with the aim of componentising the system in a service-oriented architecture (SOA) over a three year period. This programme will leverage the BankFusion platform capabilities to enable interoperability of functionality across our TCM systems

Business summary

Total revenue £185m up 3%Total order intake £108m down 3% Adjusted operating profit £43m up 2% as a result of strong cost controls whilst maintaining investment in technology and feature upgrades Adjusted operating margin maintained at 23% 25 new name customers

Ed Ho Executive Vice President and General Manager


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Opics Plus v3.1We encountered some issues with early customers upgrading to Opics Plus v3.x software during the year. We have now largely worked through these issues but they did have a short term negative impact on Opics Plus’ revenue growth.

We now have: Added new blotters and double-byte capabilities (to meet requirements in countries such as China, where we have significant market share) 13 Opics Plus upgrades in the year – 15 customers are now live on an Opics Plus v3.x release We expect many more of our Opics customers to upgrade to version 3.x this coming fiscal year

Loan IQ v 7.1Released the Java version of the softwareEnhanced our bi-lateral lending capabilities for commercial lending, including significant performance and scalability enhancementsAdded double-byte capabilities for the Asia Pacific marketThree customers in early adopter status upgrading to this release

We have built new web-based portals across all three key solutions enabling our clients to interact directly with their customers, and giving them a competitive edge through online client access. We have successfully sold these portal solutions into the Summit, Opics Plus and Loan IQ customer bases.

We are helping our customers respond to tough conditionsRegulation and compliance are high on everyone’s agenda as many organisations are compelled to upgrade their systems to meet regulatory requirements. Laws and regulations are changing rapidly (many of which are still being discussed) and are becoming more stringent. We anticipate that this will drive the demand for new solutions and will continue to shape our product roadmaps. We are currently developing new functionality for Central Counterparty Clearing, with the input of some of our customers, with the first phase of delivery in September 2011. We also won our first standalone risk management deal in China with Shanghai Pudong Bank to assist them with their Basel compliance with Chinese regulators. We expect to leverage this solution and extend it to our other customers in China.

We are generating new revenue opportunitiesOne of our key goals for this year was to extend our presence in the buy-side market. This has been achieved with the acquisition and ongoing integration of the Misys Sophis business. Our divisions are

working closely together on cross-selling opportunities and we expect to be able to drive deeper into this market and leverage Misys Sophis’ leading position in the buy-side, equities and equity derivatives. We aim to achieve significant revenue synergies over the next three years across our existing customer base and prospects.

Maintaining leadershipOur priority in the coming year will be to maintain and build on our leadership position by strengthening our client and partner relationships, integrating the Misys Sophis skills and expertise with TCM, and continuing to invest in our people, our technology and the value propositions of our solutions. Regulation and compliance will drive the demand for our new solutions, and will continue to shape our product roadmaps. Performance and scalability, especially across vanilla asset classes, are becoming much more relevant as transaction volumes rise exponentially. Delivering further improvements in these areas will be of paramount importance to our continued success.

Strategy update

Lead: (2-4 years) Future

Extend product portfolio coverage and functionality Achieved with further developments planned

Target needs of mid-tier banks Expand footprint in emerging economies Continue with STP and system consolidation opportunities Continue technology upgrade programme across all solutions Improve breadth and depth of system functionality to support customer needs Generate revenue opportunities with Misys Sophis through cross-sale efforts

Boost services capability and capacity Achieved

Extend into higher value service offerings Achieved

Increase use of partnerships Achieved

“ Misys has been a key strategic vendor to our firm, with Summit, Misys Sophis RISQUE and Loan IQ as significant systems in our IT hub. The acquisition of Sophis further strengthens the interrelationships between our two companies, and we look forward to the further integration of the solutions and the stronger value propositions that Misys will provide for us.” Marnix van Stiphout ING Bank

new name customers

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Banks want to get the best out of new technologiesThis is where Misys comes in. We are developing some of the most innovative solutions available to meet banks’ requirements for their core banking and transaction banking businesses. BankFusion is the newest core banking solution to hit the streets in the past decade. Embracing the latest developments in service-oriented architecture and componentisation, our development teams have created a completely new approach to delivering, implementing and upgrading a banking system.

BankFusion shows strong demandThe traction that we have experienced with BankFusion over the year demonstrates that the banking community is ready to rethink its approach to systems and technology. Adoption rates have been strong, particularly within our existing client base, and by the end of the year we had 40 BankFusion customers.

The attraction of BankFusion is twofold. Firstly, it minimises the risk associated with a core system replacement – which has led many banks to maintain their legacy systems and customise them over time. Today, the cost of maintaining these systems and keeping them up-to-date with ever changing requirements is becoming untenable, in particular at a time when banks are keeping a sharp eye on their cost-to-income ratios.

BankFusion takes a continuous migration approach to system renovation, enabling banks to identify and prioritise key functions, upgrading or replacing each area over time while keeping the business running. In this way, system upgrades or replacements can be implemented with a minimum of disruption to a bank’s day-to-day business operations.

Secondly, a bank has the option to take BankFusion as a packaged system such as BankFusion Universal Banking which they can easily add to and maintain over time. Both options make it significantly easier for banks to upgrade or replace existing processes and add new functionality as and when required.

A banking system for todayToday, banks face a plethora of challenges which their legacy banking systems were simply not designed to meet. For example, a bank’s cost-to-income ratio can be adversely impacted by the high cost of maintaining older banking systems, largely due to the vast multitude of interfaces between them, and the inability to bring new products to market quickly or make them compatible with new distribution channels such as mobile banking, affecting its profitability.

The flexibility inherent within BankFusion means that it is better able to address these issues, equipping banks with the ability to innovate and bring new products to market within days, not weeks, incorporate new regulations and market changes within their ongoing business processes, and realise synergies from M&A activities more quickly. We are helping banks to reduce their cost-to-income ratio, making them best in class.

Business summary

Total revenue £167m up 3% including a 10% increase in the 2nd half Total order intake £93m up 12% Adjusted operating profit £36m up 17% as a result of higher revenues and continued cost discipline Adjusted operating margin increased to 21% BankFusion adoption accelerated with 27 sales in the period and 40 customers in total 26 new name customers of trade or payments solutions

Al-Noor RamjiExecutive Vice President and General Manager


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Leading the way in transaction bankingMisys has continued to consolidate its market-leading position in transaction banking solutions through a winning combination of solution innovation, new customer wins and highly successful implementations. We are uniquely placed, both in the breadth of our transaction banking solutions portfolio and our ability to integrate them for maximum operational efficiency.

This year, our trade finance solutions won the global award for best Trade Finance Tech-Vendor in Trade Finance Magazine’s Awards for Excellence. Sales order intake grew by over 50% this year, including 26 new customer wins, reinforcing Misys as the leader in trade services solutions. Misys Trade Portal has been updated with enhanced user-interface tools and improved navigation.

Misys Payment Manager has also established itself as a market leader, attracting significant customer wins and demonstrating highly successful implementations in less than six months.

Enabling new distribution channels for retail banking customersImpressive progress has been made by our online banking portfolio. The Misys personal finance solution for retail banking customers has enjoyed

exceptional sales growth, winning customers across our territories. Misys Mobile has won its first customers and is expanding into new areas including social media.

Making life easier for banks’ corporate clientsOnline, mobile and portal solutions are changing the way in which banks can offer services to their corporate clients. Banks are also taking advantage of the efficiency gains and new services that can be delivered by combining our portal solutions, such as cash management,

trade services, and money market/foreign exchange solutions. This ability to offer a consolidated view of cash and trade transactions is helping banks to win new business from corporate treasurers. At Misys we are using portal technology as well as making our solutions available on a single platform so that banks can provide new and competitive solutions to their customers. This unified vision for online banking solutions means that our clients are able to rationalise their banking infrastructure, reduce maintenance and management costs and automate previously manual processes.

National Bank of Oman (NBO), one of the largest banks in Oman and the first local bank in the Sultanate, has chosen the Misys trade finance solution as part of its plan to expand its trade finance business. The Misys solution will help the bank launch innovative trade products as well as increasing traditional trade volumes.

The integrated solution combines the power of the back-office processing system, Misys TI Plus, with the award-winning Misys Trade Portal, the e-business console. This will enable customers to connect seamlessly to NBO and conduct their international trade business at the same time as accessing a wide range of financial supply chain services.

“ We were very impressed by the fully integrated front-to-back trade finance solution offered by Misys. The corporate Service Level Agreement-driven workflow and business dashboard incorporated into the system were important differentiating factors. We are confident that Misys TI Plus and Trade Portal will help us to meet our growth targets for our traditional products as well as newer ones, such as factoring.” Humayun Kabir General Manager Wholesale Banking, National Bank of Oman

Strategy update


Grow Misys BankFusion developer community Not achieved

Grow Misys BankFusion developer communityPenetrate Tier 1 and Tier 2 banksHelp banks to launch new services by leveraging social networking channels

Maintain add-on module pipeline for cross-sell Achieved

Leader in core banking operating system market In progress – gaining traction with BankFusion

new Transaction Banking customers

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Misys Open Source Solutions (MOSS) is pioneering the development and adoption of open source solutions in two key sectors – healthcare in the creation of health information exchanges (HIEs) and the carbon market in the development of global environmental registries that enable organisations to measure, reduce and trade their carbon emissions. This year has seen significant progress in the development of our business. Our first healthcare clients are live on the Misys Connect™ Exchange and Misys Connect™ Portal and in partnership with The Climate Registry we have developed and deployed the largest cloud-based voluntary carbon registry system in the world.

Health Information Exchanges – a ripe market for open sourceThe US market for healthcare information technology is booming, thanks to the American Recovery and Reinvestment Act of 2009 that has set aside more than $US 40 billion in incentive dollars to providers – provided that they use the technology in a meaningful way. 2011 marks the first year when those payments began to flow as part of the Stage 1 meaningful use demonstrations. Stage 2 of the meaningful use payments is expected to be predicated on the use of HIEs. HIEs aim to promote interoperability by enabling the sharing of patient records between provider offices and hospitals, and tying together the related services required for end-to-end patient care.

In many cases, cost has been an impediment to the creation of community exchanges. MOSS led a number of worldwide open source development projects that resulted in the creation of core exchange components that make up the Misys Connect™ Exchange platform. Coupling the open source platform with the proprietary Misys Connect™ Portal provides users with cost effective, best-of-breed solutions that are open and standards-based. The Hartford Hospital exchange (in Connecticut) was the first exchange to go live with an initial patient load of over 2.5 million patient records. eHealthConnecticut was the second exchange to go live and is now fully operational and is transferring data between three hospitals and two Federally Qualified Health Centres.

With a proven, operational open source HIE in the market, we are gaining traction both inside the US, elsewhere in the Americas region, and in Europe and Australia. We are now focused on building out our distribution network to pursue these and other opportunities around portals and community data solutions.

Bob Barthelmes Executive Vice President and General Manager

Business summary

Deployed largest cloud-based voluntary carbon registry system in the world First clients live on the Misys Connect™ Exchange and Misys Connect™ Portal Over 2.5 million patient records on Hartford Hospital exchange Announced partnership with iCET and The Climate Registry to deploy an Energy & Climate Registry for China

Being an emergent segment, Open Source is reported within Corporate & Other in the financial statements.

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Leading in carbon registry systemsAs a result of our partnership with The Climate Registry, a non-profit organisation that provides meaningful information to reduce greenhouse gas emissions, we have developed and deployed the largest cloud-based voluntary registry system in the world. More than 8,000 facilities from 850 organisations are providing data to the registry making it one of the leading bodies involved in the monitoring, reporting and verification of emissions.

At the UN Climate Summit, held in Mexico in late 2010, it was announced that we are working in partnership with the Innovation Center for Energy & Transportation (iCET) and The Climate Registry to deploy an Energy & Climate Registry for China. We are in discussions with several other NGOs regarding the deployment of our registry platform in other regions.

Extending our footprintWe are starting to reap the rewards of our investment in open source solutions with live platforms now fully operational in both of our target sectors. Our focus for the coming year will be to extend our footprint in the US for healthcare, as well exploring opportunities in Europe and Australia which are growth regions for HIEs; and to continue working with NGOs to expand the roll out of our environmental registry platforms. We are also actively expanding our partner relationships to build our distribution network.

iCET announce China’s Energy and Climate Registry

iCET announced that it will join forces with the Beijing Environmental Exchange, Los Angeles-based The Climate Registry and New York-based software company MOSS to promote the Energy and Climate Registry as the predominant greenhouse gas reporting platform in China.

The goal of the Energy and Climate Registry (ECR) is to produce a reliable, consistent and verifiable information database and reporting tool for energy consumption and carbon emissions on the corporation and local municipality levels. By joining to the ECR, multinational and domestic corporations will be encouraged to voluntarily sign up to report input parameters to calculate energy consumptions and produce GHG emission inventories, which will be verified by a certified third party.

“ Costs are less than half of what we would have expected if we had gone with a commercial HIE product and it is certainly meeting the expectations I had from a cost standpoint from the very beginning.” Stephan D. O’Neill Vice President of information services, Hartford Hospital and board member, eHealthConnecticut

Strategy update


Develop a profitable Open Source business Achieved

Extend healthcare footprint in US Explore healthcare opportunities in Europe and Australia Continue working with NGOs to expand roll out of environmental registry platformsBuild partner distribution network

Integrate third-party technologies into our platforms Achieved

Develop Connect strategy Achieved

Develop carbon trading platform application Not achieved

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Revenue grew 10%Our teams engage with customers at each stage of their relationship with Misys; from solution consultancy at the outset of an implementation or upgrade through to implementation and integration services, product training and ongoing support and maintenance. We have streamlined the organisational structure to better meet customer-needs, concentrating non-customer-facing staff in our Global Service Centres in Bangalore, Beijing, Bucharest and Manila and retaining project specialists and consultants in customer-facing roles across our regions.

Building a high performance teamOperating as a high performance team is a strategic imperative for the success of our services business. Our value lies in our ability to unlock the full potential of our software efficiently and effectively so that our clients can benefit from their investment in Misys solutions and expand their use within their organisations. To deliver the levels of performance that we want to achieve across all areas of our services organisation, we are basing our services strategy around three key components:

Creating exceptional value for our customersEnsuring operational excellenceDeveloping unique skills and knowledge in our people

The main thrust over the course of the year has been on honing the Global Services teams to deliver operational excellence and achieving the right structure to focus on further developing our skills to meet customer needs.

Operational excellence – push on profitable growthWe are undertaking in-depth reviews of our projects to better measure and control their timeliness, resource optimisation and customer satisfaction. By establishing clear measurements that can be applied to each project and devolving accountability to project managers, we have started to see a positive impact on project metrics. Localising accountability at the project level promotes earlier engagement with sales and solutions consulting, resulting in a more effective execution by all project participants.

This is integrated into the company’s wider drive to devolve more decision-making into its regional operating units and down to client-facing staff. The next step is to ‘industrialise’ the services process to deliver projects faster with the ultimate goal of being able to offer competitive, fixed price projects for standard implementations. We are making good progress in this area by standardising methodologies and tools, developing best practices that can be re-used easily across different projects, and systematically identifying those project components that can be delivered off-shore.

Effective customer support71% of our support staff are now based in our Global Service Centres in Bangalore, Manila, Bucharest and Beijing. Our most seasoned support staff remain close to customer locations, working on-site with key customers to resolve issues.

Our support teams strive to ensure customer success. Successful customers engender loyalty, will buy more and are more likely to recommend Misys. This year, we launched the ‘Make it 10’

Carlos Lopez-Abadia Vice President Services & Support

Global Services provides:

System integration services for Misys solutionsImplementation & technical servicesTraining & education via the Misys AcademyCustom developmentPremium Support ServicesApplication Support

Business summary

Extended services and support offerings through initiatives such as premium supportTotal revenue grew by 10%Service orders grew by 11%

Global Services’ revenues are managed and included within business division results. Financial performance measures reported on a pro-forma, constant currency basis. See the financial review for reconciliation to as reported measures.

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initiative aimed at achieving 10 out of 10 in post support case surveys. As a result of this initiative, ratings of 9 and above jumped by 45%, giving an industry leading Net Promoter score for case satisfaction.

Investing in peopleWe have launched a number of initiatives to ready our workforce to meet the changing requirements of our client base. Initiatives such as these enable our people to develop their skills and progress whilst benefiting our clients via more highly trained, motivated teams that understand their business better:

Recruitment – we have stepped up our recruitment programmes to bring in new skills including more extensive project management capabilities that are required in the field. This includes enhanced graduate schemes that provide a true career path within Misys so that we can develop and nurture the leaders of tomorrow.

Skills rotation – we have embarked on a programme to rotate resources between our services and support teams to provide our staff with a 360° view of the customer. Commenced in Asia, this programme has already delivered more than 5,000 man days of services through our support staff and is now being rolled out globally.

Certification programmes – we are expanding our online-based training to provide self-service opportunities for staff to continually increase and update their product knowledge. In conjunction with this initiative, we are launching a 3-level certification programme to measure our skills progression to continuously challenge ourselves and grow our expertise.

Misys Managed Services Asian Banker award: Best Back Office Trading System

Misys Managed Services, in particular Premium Support Services continued to grow significantly over the year reflecting the growth potential highlighted in last year’s annual report. Revenues grew by 73% reflecting the pipeline generated over the year by the launch of this new service offering. Over 23% of our expanded customer base has now taken some form of Managed Services from Misys.

Misys won this award for the successful implementation of Misys Summit FT at Bank of Communications in Shanghai to support the front-to-back operations of the bank’s derivatives business. Speed of implementation, the benefit to the bank’s entire derivatives business and the skilled professional services team that supported the bank throughout the project were the key factors in Misys’ success.

The objective was to provide Bank of Communications with a real-time straight-through-processing solution for its derivative products that would be up and running within a six month timeframe.

Partner relationships complement our unique services and support offerings for Misys solutions. We partner with HCL and everis on a global level, where their business consulting expertise and project scoping skills add significant value to client engagements. We engage with many partners at a local level to help us win business and provide local expertise.

Next year will see us delivering the growth that we have lined the Global Services team up to achieve. We intend to leverage the potential for learning and training programmes and continue to drive profitable growth, faster implementations and superior support for our clients.

“ Client service is of utmost importance to us. We continually strive to improve our service in every way we can, to all our clients, whatever their size. This means we have to introduce the best technology on the market to improve systems, achieve optimal efficiency and keep costs and risks to a minimum. With increasing trading volumes and new financial instruments, we needed a system that could support our operations seamlessly from the front office to the back. Misys Summit FT is the very best of fully integrated solutions on the market and the Misys team worked with us tirelessly to achieve a smooth and timely transition.” Shen Shaozhen General Manager, Bank of Communications Operations Centre

Strategy update


Extend product portfolio coverage and functionality Ongoing process

Continued improvement to infrastructure, methodologies and processes Develop proprietary methodologies Drive quality and customer satisfaction Increase speed of delivery

Extend into higher value service offerings Achieved with Premium Support Services

Increase use of partnerships In progress

projects went live in 2011

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Our business depends on our people, and our people depend on a working environment and culture that empowers them to succeed, whatever their role in the organisation. We have reviewed our organisational design and streamlined our business to adjust to regional demands and new growth markets whilst maintaining close alignment with our customers.

We have hired approximately 900 new employees over the course of the year, 60% of which were for development and customer support roles, demonstrating our commitment to these areas of our business. Our core development and customer support activities are concentrated in our Global Development Centres in India, the Philippines, China, Romania, Ireland and France.

Overall headcount has increased by 6% excluding the impacts of the divestiture of Allscripts and acquisition of Sophis. Through our recruitment programme, we are bringing in new expertise from both within and outside of our industry, as well as having a renewed focus on graduate recruitment to support our future talent flow and drive a high performance culture. We are currently embarking on a global recruitment drive for our sales and pre-sales functions.

Developing talentIdentifying, nurturing and developing talent lies at the heart of our people strategy. We are continuing to invest in our employees to ensure that they have the skills needed to grow the Misys business and will be significantly expanding our people programmes and learning initiatives over the coming year.

Distinguished Engineer Programme – launched in 2010 to recognise the importance of technical leadership within Misys. This programme was designed to provide additional career opportunities and reward outstanding technical performance.

Leadership & management courses –ensure that we have consistent leadership skills across our global centres, regional hubs and local offices in order to provide world-class support to our customers. Over 400 managers have completed our ‘Essential Management Skills’ courses. Next year, we are launching a more advanced programme for senior managers to help them and their teams prepare for and navigate the next wave of growth to drive results.

Top 100 – our top performing employees are identified and prioritised for talent management, coaching and succession planning. We now have a strong management team in place which is positioned to take Misys to the next level.

The Top 100 underpins the Executive Team with their ability to communicate our company vision, demonstrate strategic agility, lead with integrity and by example, and inspire and develop others.

Our people programmes:

Online and classroom based learning Misys AcademyDistinguished Engineer ProgrammeGraduate traineesEmployee engagement

Employee engagement:

Improvements in overall engagement scoreEnthusiasm for delivering good customer service was higher than the norm (+10% above benchmark)Belief in the effectiveness of the Executive teamNearly 75% of the organisation responded to this survey (66% last year)Top down communications effective and easy to understandOverall strategy and goal alignment is positive – people understand how their work contributes to the objectives of the organisation

Frank Douglas Executive Vice President and Group HR Director

new employees

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Graduate programmes – focus on developing transferable skills that combine business knowledge with functional and product training. Our graduate recruits balance on the job learning with e-learning curriculums and class-based training.

We have a renewed focus on graduate recruitment and development in support of our talent mission: to improve business results and gain competitive advantage now and for the future by identifying and building talent across the organisation – growing talent from within. We currently have graduate programmes in some of our key sites, Manila, Bangalore, New York and a focus on sales in London. We will continue to strengthen our bench and our approach to an end-to-end leadership development framework to help us attract and retain the best talent in the market.

Safeguarding our staffOur people are our business and therefore we need to ensure that we have adequate safeguards in place to ensure their safety. We have a global security strategy that provides all employees with access to medical, security and travel assistance. A dedicated Business Continuity team keeps all employees up-to-date with the latest security announcements worldwide via the corporate intranet and utilises a global notification service for those travelling on business and in times of crisis. Our business continuity plans were put into action to deal with the Japanese tsunami and earthquake disaster, enabling us to provide immediate assistance to employees and their families.

Promoting equal opportunities and diversityMisys is committed to a workplace that is free from unlawful discrimination, harassment, victimisation and retaliation where everyone will receive equal treatment regardless of gender, colour, ethnic or national origin, disability, age, marital status, sexual orientation or religion. We promote equality and work to the principle that all employees are selected and treated on the basis of their abilities, merits and potential and do not take irrelevant factors into consideration. Misys recognises the diversity of the local population within which it operates and embraces diversity within the workplace to enhance the vibrancy of culture and experience and encourages fairness and justice.

It is our policy that people with disabilities should have full and fair consideration for all vacancies. Should an individual become disabled whilst employed at Misys we will endeavour to retain them in the workforce. We will actively retrain and adjust their working environment where possible to facilitate their needs and to allow them to maximise their potential.

We conduct an annual survey to review how our employees are feeling about the business, their role and our future. This feedback is essential in building business plans to ensure that we motivate staff and implement the changes necessary to achieve our next level of growth. The HR organisation is focused on streamlining processes, policies and management information to deliver consistent service and provide the information required to support decision-making.

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Misys remains a values driven organisation. We are present in many countries around the world and recognise the importance of managing our impact in a sustainable way in all regions within which we operate. This includes environmental performance, business ethics, supporting local communities and looking after our employees. During the past year, we have introduced several company-wide initiatives to drive forward this agenda. These initiatives reflect our overall business strategy and the aspirations of our Board, our employees, our partners, our customers and the communities we serve.

Last year, we reported that we had established an Environment and Social Responsibility Committee which reports directly into the General Counsel and Company Secretary. This committee has met bi-monthly through the year and is delivering on the responsibility agenda. At each meeting, the committee considers our environmental initiatives and the charitable giving and volunteering framework.

The Misys Charitable Foundation2010/11 was the final year of operation for the Misys Charitable Foundation as reported in last year’s annual report. The Foundation was set up in 1997 with the primary objective of furthering education in IT on both a domestic and international level.

The achievements of the Foundation have only been made possible by the tireless work of Nigel Talbot-Rice who retired this year as a director of the Foundation. During its final year, the Foundation awarded scholarships to 58 students worth approximately £95,000. A further £61,000 was donated to schools and other organisations for the provision of IT equipment. Since 1997, the Foundation has made grants of over £1.95m to its charitable causes.

The work of the Foundation has reaped rewards this year with 32 Misys scholars having graduated in the UK. Of these, 26 achieved first class degrees with the remaining 6 receiving a 2(1).

We have received many letters of thanks in recognition of the work of the Foundation and in particular Nigel Talbot-Rice. The Board of Misys plc would like to thank Nigel for his hard work and dedication to the Foundation over many years.

The Misys ClubWe have launched the Misys Club to harness and mobilise community and environment initiatives across the Group with support from management. We have site leaders in our four main offices that oversee and facilitate the organisation of local events under the Misys Club framework. Each site has selected two charities to support and Misys will match fund raising by staff for those charities up to £25,000 per site.

Tom Kilroy Executive Vice President General Counsel and Company Secretary

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We have also introduced a framework that allows each member of staff to spend a day volunteering in their local community. This can be done on an individual basis or as a team event. This should benefit not only the communities within which we operate but also our staff.

Charitable donationsPrior to the establishment of the Misys Club, we continued to make direct donations to charity throughout our regions totalling £18,877. We supported various causes from The Cystic Fibrosis Society to Big Brothers, Big Sisters, a mentoring organisation for children. In the future, all charitable donations will be made through the Misys Club.

Social responsibility and governanceBuilding on the work undertaken last year, we have strengthened our ethics culture further across the business. We have introduced a compulsory e-learning course on understanding the Code of Conduct. You can find a copy of the Code on our website, www.misys.com. We have also introduced compulsory training on bribery and corruption for those most likely to be exposed to unacceptable behaviour. Given the diverse markets within which we operate, we recognise the need to provide all our employees with the tools and knowledge to do business effectively and in an ethical manner to the benefit of all parties.

We operate a ‘raising concerns’ hotline and web reporting tool to ensure that all staff are able to report any concerns they have in respect of illegal or unethical behaviour, in confidence, and without fear of reprisal. The service is run by an external organisation to guarantee confidentiality. There is an established process for considering all matters reported through the hotline. A committee consisting of the General Counsel, the Head of HR, the Deputy Company Secretary and the Internal Audit Director review all matters reported on the line and if necessary escalate to the Audit Committee.

EnvironmentWe reported our carbon footprint for the first time last year. Our business has changed significantly during the year and we have rebased our footprint to better reflect the business we are now. We have taken on additional buildings during 2010/11 to accommodate the growth in the business and our growing workforce. When fitting new buildings or office locations, Misys promotes green construction practices through its vendors and internal standards that increase Misys’ productivity while reducing the negative environmental impacts of its locations.

On a rebased basis our carbon output per employee for 2010/11 was 2.96.

We continue to take steps to reduce our CO2 emissions. We have consolidated substantial parts of our corporate operations to more efficient and environmently-friendly offices. For example, in the UK we now occupy one site. Our headquarters at One Kingdom Street, Paddington, London has the highest possible BRE Environmental Assessment Method rating of ‘Excellent’. The building was constructed on re-used land close to a major public transport hub. It employs ground-source heat pumps, solar panels, specialist glazing and heat-recovery systems. We have taken on new premises in Bangalore and Beijing and we have ensured that the buildings are fitted out in an environmentally responsible way.

Across our business, we operate recycling schemes and always use materials that are renewable, recycled or re-usable where we can. We have invested in enhanced tele- and video-conferencing facilities and support the ‘green meeting’ concept, thereby reducing the need for overseas travel.

Our Board is committed to monitoring our approach to CSR and is kept up-to-date on progress by the General Counsel and Company Secretary.

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Information in this section is presented on an ‘adjusted’ basis, excluding exceptionals and other items. Results from Allscripts Healthcare Solutions, Inc. (‘Allscripts’) are excluded. These are reported in the accounts as the discontinued operation. Comparisons to prior year are on a pro-forma constant currency basis, including pre-acquisition results from Misys Sophis in the prior year’s fourth quarter comparatives (see notes on page 47). These measures provide more comparable and representative information on the trading activities of the Group than ‘as reported’ measures. Reconciliation to the ‘as reported’ measures is shown on page 41.

Group Operating ResultsThe corporate transactions that took place during the year position us well for future growth. The disposal of Allscripts transformed Misys into a pure play financial services software business. The refinancing and convertible bond issue in November 2010 equipped us well for future investment in the business. The acquisition of Sophis in February 2011 accelerated our capital markets strategy and as a result a majority of the Group’s revenues and profits are from the capital markets divisions.

Operational progress was strong, including a strong end to the financial year with an acceleration to approximately 8% revenue growth in the second half. Overall revenues for the year were £370m (2009/10: £355m), a growth of 4%. The revenues reflected a return to growth by the Banking division in the second half, consistent growth through the year in Treasury & Capital Markets (‘TCM’) and impressive growth in Misys Sophis in its first quarter as part of the Misys Group. Recurring revenues from maintenance, ASP subscriptions, software leasing and transaction processing constituted 49% of revenues.

Order intake (which excludes maintenance and transaction processing) grew 3% to £213m (2009/10: £206m).

Adjusted operating profit was £72m. Growth on last year was 12% and the adjusted operating margin was 1.3 percentage points higher as back-office savings were made whilst investment was sustained in product development and solution implementation.

Overall revenues for the year

Adjusted operating profit

Growth adjusted operating margin

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Group Operating ResultsOperating results from continuing operations for the year ended 31 May 2011

2009/10 2009/10

£m 2010/11As

reported%

growth

Pro-forma,constant currency

% growth

Revenue

Banking 167 162 4% 162 3%

Treasury & Capital Markets 185 179 3% 179 3%

Misys Sophis 17 – – 13 32%

Open Source 1 1 30% 1 35%

Revenue 370 342 8% 355 4%

Operating Profit

Banking 36 32 10% 31 15%

Treasury & Capital Markets 43 42 2% 42 2%

Misys Sophis 6 – – 2 155%

Corporate & Other (12) (10) (12%) (11) (10%)

Adjusted Operating Profit 72 64 13% 64 12%

before: Acquired intangible asset amortisation, embedded derivatives gains/(losses) and exchange differences transferred from reserves (15) (2)

Exceptional items (21) (8)

Operating Profit 36 54 (32%)

Group Revenue ProfileContinuing OperationsPro-forma, constant currency

2010/11 2009/10

£m%

of total%

growth £m%

of total

Initial Licence Fees 102 28 8% 95 27

Application Service Provision & Software Leasing 5 1 1% 5 1

Global Services 86 23 10% 78 22

Maintenance 166 45 (1%) 167 47

Transaction Processing 11 3 6% 10 3

TOTAL 370 100 4% 355 100

Initial Licence Fees grew 8%, a result of greater sales of new solutions by the Banking division and of new customer licences by Misys Sophis.

Application Service Provision and Software Leasing revenues were at similar levels to prior year.

Global Services revenues grew 10% as recently sold solutions progressed in their implementations and customers adopted more of our expanded range of support services.

Maintenance was 1% lower than last year, a result of a small number of contract reductions and cancellations in advance of recent new customers starting their maintenance contracts.

Transaction Processing fees grew 6% from new adoption of this service by a number of fund managers and hedge funds and from greater transaction volumes generated by our existing customers.

Stephen Wilson Chief Financial Officer

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Divisional ReviewThe information in this section is presented on an adjusted basis, with comparisons to prior year on a constant currency basis, pro-forma for the acquisition of Sophis and disposal of Allscripts, unless stated otherwise (see notes on page 47).

Misys SophisThe acquisition of Sophis was completed at the end of February 2011 and Misys Sophis results are consolidated into the Misys Group results from the beginning of the fourth quarter.

Misys Sophis has continued to strengthen its market position, particularly in the buy-side market with sales to asset managers and hedge funds. During calendar year 2010, 22 new buy-side customers were added, and so far in 2011 new customers have been added at a similar pace. New customers in the fourth quarter included specialist investment managers such as Aldersgate Investment Management in the UK. In addition, some key long-term buy-side customers such as ING Life extended their existing Sophis solutions.

During the fourth quarter, a new version of the buy-side solution, Value, was released. Improved risk features include pre-trade risk control, liquidity risk management and real-time risk calculations. New instruments covered include bond-linked contracts for difference and exchange-traded funds. Returns attribution has been incorporated into portfolio performance analysis.

Collaboration between Misys Sophis and TCM has resulted in the first cross-sell success. Banca Aletti in Italy, a sell-side Misys Sophis Risque customer, added an Opics Plus module to meet Basel regulatory requirements by calculating and reporting a weekly ‘Incremental Risk Charge’ on fixed income and credit derivatives positions.

Development work began during the year on a new generation of consolidated cross-asset risk management solutions drawing on the collective expertise and software functionality within both Misys Sophis and TCM. The market risk solution was demonstrated to potential customers during June 2011, and further solutions for credit and liquidity risk are intended to follow.

£m 2010/11 2009/10%

change

Order intake

ILF/ASP/Software Leasing 8 8 –

Global Services 3 3 3%

Total Order Intake 11 11 1%

Revenue

ILF/ASP/Software Leasing 8 5 73%

Maintenance 6 6 (1%)


Total Revenue 17 13 32%

Total costs (11) (11)

Adjusted Operating Profit 6 2 155%

Adjusted Operating Margin 33% 17%

Misys Sophis revenues for the fourth quarter were £16.8m (2009/10: £12.7m). 32% growth on last year’s fourth quarter was driven by strong ILF sales from new and extending buy-side customers of the Value solution, and by the roll-out of ILF and service revenues during implementation of sales from the previous year.

Order intake grew 1% as the pipeline started to build up after a strong end to the previous Sophis financial year.

Adjusted operating profit was £5.6m, a substantial increase on the previous year’s £2.2m, resulting from the higher revenues.

Treasury & Capital Markets (‘TCM’)TCM has continued to strengthen its market position. The volume of new name sales was consistent with the previous year at 25 and was spread across the key Summit, Opics Plus and Loan IQ solutions, with particular success in growth regions. In addition, some significant sales of solution extensions have reinforced TCM’s position with key customers.

Summit, our market-leading cross-asset solution for the sell-side, added new customers in both developed and growth regions, including Shanghai Pu Dong Development Bank for middle-office risk management and Misrahi Terahot in Israel for foreign exchange, money markets and inflation-linked investments. Many existing customers, such as Crédit Agricole, extended Summit systems to replace in-house and competitor systems. A new Summit upgrade during the year improved cross-asset functionality, pricing analytics and market data interfaces.

Opics Plus, our solution for the mid-market including growth regions, added 13 new customers, including HSBC in Mexico, Shinhan Bank in China and others in Thailand and Kenya. Existing customers such as Union Bank in the US and China Bohai Bank upgraded to new Opics Plus features such as the Opics Portal, middle-office risk alerts and localisation features for China.

Our Loan IQ lending solution was the fastest-growing TCM solution, continuing its expansion into commercial lending with some large new customers in the US, Australia and Germany such as Bayerische Landesbank. Some existing customers, including WestDeutsche Landesbank in Germany, significantly extended their Loan IQ systems. New commercial lending, loan origination and portal features were released during the year.

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£m 2010/11 2009/10%

change

Order intake

ILF/ASP/Software Leasing 56 64 (12%)


Total Order Intake 108 112 (3%)

Revenue

ILF`/ASP/Software Leasing 51 55 (7%)

Maintenance 76 76 –

Transaction processing 11 10 6%





Adjusted Operating Margin 23% 23% TCM revenues grew 3% to £184.9m. Services grew 22% as implementations progressed on recent new and upgrading customers, resulting in 87 go-lives during the year.

Order intake was 3% below the prior year, reflecting last year’s very strong finish. Services orders grew 9% and included implementations for large new Loan IQ customers as well as Opics Plus upgrades.

Adjusted operating profit grew 2%, resulting from revenue growth and cost control, whilst investment continued in technology and feature upgrades.

BankingIn Banking, our new solutions have started to generate significant revenues for the first time. New solutions, principally comprising BankFusion and Transaction Banking, contributed 45% of the banking division’s ILF order intake, up significantly from 22% in the previous year.

BankFusion was adopted by 27 customers in the period, bringing the total number of sales to 40. These BankFusion sales ranged across various aspects of the BankFusion strategy, including new name wins, replacements of legacy Misys systems with BankFusion Universal Banking, and conversions of legacy Misys solutions to BankFusion versions. In addition, during the second half of the year, existing BankFusion customers began to extend their BankFusion solutions by adding new application functionality such as Branch Teller modules (Habib Bank and Amsterdam Trade Bank), and by extending their BankFusion solutions into new territories and operations (Nordea and BBAC).

In Transaction Banking, there were 26 new sales of trade or payments solutions, many incorporating our unified portal technology. Trade Services sales included Pohjola Bank in Finland and Chinatrust Commercial Bank. Payments sales included Qatar International Islamic Bank and United Overseas Bank in Singapore, where Cash Portal was part of our biggest ever sale in Asia.

£m 2010/11 2009/10%

change

Order intake



Total Order Intake 93 83 12%

Revenue


Maintenance 84 85 (1%)

Global Services 35 37 (3%)




Adjusted Operating Margin 21% 19%

Order intake returned to growth during the year with a 12% increase on the prior year, including 30% growth in ILF orders in the second half, from accelerating sales of the new BankFusion and Transaction Banking solutions.

Revenues grew 3% to £167.5m, including 10% growth in the second half. The strong sales of new solutions in the second half brought ILF revenue growth of 40% for the second half and 19% for the full year.

Adjusted operating profit rose 15% to £35.7m as a result of higher revenues and continued cost discipline.

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Corporate & OtherThe net charge for the period was £11.9m compared with £10.8m in the prior year period, principally due to a rise in share-based payments expenses.

Open SourceOpen Source is considered an operating segment but is not a reportable segment required to be disclosed under IFRS 8. It is included in the ‘Corporate & Other’ category in the divisional results.

Misys Open Source Solutions (‘MOSS’), operating in the healthcare and carbon markets, gained momentum in sales of its interoperability solutions for the free exchange of data, based on a services, subscription and maintenance model.

In healthcare, MOSS Healthcare Information Exchange platforms generated revenues during the year from some key healthcare agencies such as Hartford Hospital and eHealthConnecticut. Over 2.5 million patient records have been loaded into the MOSS system in Connecticut. This early success has helped in building a strong pipeline of other healthcare opportunities, both inside the US, elsewhere in the Americas region and in Europe and Australia. Other healthcare information solutions opportunities for MOSS include portals and community data solutions. These will enable the adoption of Electronic Health Records and the co-ordination of care by Accountable Care Organizations under the US government’s healthcare IT stimulus programme.

In carbon, MOSS has developed solutions for measurement and reporting of carbon emissions by corporations, government agencies and voluntary organisations. For a large US utility, MOSS completed a project for identification and processing of energy saving incentives and rebates. With The Climate Registry MOSS went live with 8,000 facilities in North America on the world’s largest voluntary carbon reporting system. This project has generated interest from government agencies in China, Costa Rica, Israel and Brazil which has resulted in a large sales pipeline.

Global Services Global services revenues are reported separately under each of the principal divisions.

In addition to activity related to the implementation of software solutions (professional services, consulting, education and training), we have extended the services and support offered to customers through initiatives such as premium support.

Services orders grew 11% and revenues grew 10%. This was due partly to the progress in implementation and go-live of some large systems sold over this year and the previous year, particularly some of the large Loan IQ installations sold by TCM. These implementations include a growing proportion of recently-developed new solutions which are beginning to yield larger-scale installations than the old solutions which they replace.

The growth in services was also in part due to the adoption by customers of additional services such as premium support.

Profit and LossOperating profit is presented in this section on an ‘as reported’ basis, which includes amortisation of acquired intangibles, gains (losses) on embedded derivatives, exchange difference transferred from reserves (2009/10 only) and exceptional items. These items are excluded from adjusted operating profit.

Operating results

Continuing operations, £m 2010/11 2009/10%

growth

Revenue 370 342 8%


Adjustments (intangibles amortisation, embedded derivatives, exchange differences transferred from reserves) (15) (2)

Operating Profit before exceptional items 57 62 (8%)

Exceptional items (21) (8)

Operating Profit 36 54 (32%)

Net Finance (charge) (4) (9)

Profit before taxation 32 45

Taxation 2 (20)

Profit after taxation 34 25

Earnings Per Share

Weighted Average Number of shares in issue (millions) 443.5 529.4

Basic Earnings Per Share 7.7p 4.6p

Adjusted Basic Earnings Per Share 11.0p 7.6p 45%

Revenue rose by 8% due to revenue growth in the Banking and TCM divisions and additionally the first post-acquisition revenue contribution from Misys Sophis. Currency movements had in aggregate no material impact.

Operating profit before exceptional items fell by 8%. The principal positive impacts were adjusted operating profit growth from the Banking and TCM divisions and the first post-acquisition contribution from Misys Sophis. These were more than offset by exchange rate losses on embedded derivatives and by post-acquisition amortisation of acquired Sophis intangible assets.

Exceptional charges from continuing operations, before interest and tax, of £21.0m arose from advisory fees in relation to the Sophis acquisition, Misys Sophis integration costs and costs associated with the Misys turnaround and restructuring programme. Last year’s exceptional charge of £8.4m was due principally to advisory fees in relation to the Allscripts disposal and to property provisions established as part of the restructuring and turnaround programme.

An exceptional profit, before tax, from discontinued operations, of £606.2m resulted from the disposal of Allscripts shares.

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Divisional operating resultsRevenue Operating profit

Continuing operations, £m 2010/11 2009/10 2010/11 2009/10

Banking 167 162 30 32

Treasury & Capital Markets 185 179 37 42

Misys Sophis 17 – (8) –

Corporate & Other 1 1 (23) (20)

Group 370 342 36 54

TCM operating profit was impacted by exceptional costs of £4.5m (2009/10: no charge), principally severance from the rationalisation of product development as part of the restructuring and turnaround programme. Banking operating profit included a £3.8m loss on embedded derivatives (2009/10: £1.4m gain). In Misys Sophis, the operating loss was due to a £9.3m charge for amortisation of acquired intangibles and a £4.6m exceptional charge, largely for onerous lease costs on vacation of certain Misys Sophis properties. The Corporate & Other operating loss included £10.8m of exceptional charges for advisory fees, principally in connection with the disposal of Allscripts and acquisition of Sophis.

Profit before taxationThe decrease in profit before taxation to £32.2m (2009/10: £45.0m) resulted from the higher exceptional charges, acquired intangibles amortisation and embedded derivatives charges outlined above. These were partially offset by higher adjusted operating profits. The net finance charge was £4.1m (2009/10: £8.7m), including exceptional finance income of £4.8m associated with the Allscripts disposal and Sophis acquisition (2009/10: exceptional finance credit of £1.4m associated with a VAT refund).

TaxationThere was a tax credit for the year of £2.1m (2009/10: £20.5m charge). This includes an exceptional tax credit of £9.4m arising from a release of tax provisions following a favourable settlement of corporation tax liabilities for 2005/06 and earlier periods. In 2009/10 there was an exceptional charge of £10.8m relating to loss of future tax benefits in connection with the disposal of Allscripts.

The underlying effective tax rate of 23%, based on adjusted profit before taxation, was 2% lower than for the previous year, due principally to an increase in recognised tax losses in the US, UK and Ireland and the impact of the lower tax rate in Misys Sophis. In addition, following the favourable settlement mentioned above, the Group now has unrecognised tax benefits of £87.0m.

Divestment of AllscriptsDuring the year Misys completed the disposal of its majority shareholding in Allscripts. The disposal took place through share sales in August 2010, November 2010 and February 2011. Total disposal proceeds were £988.5m after underwriting fees. The disposal gave rise to an exceptional profit of £606.2m after advisory fees and other costs associated with the transaction.

Allscripts results in the period prior to the majority disposal are reported as discontinued operations. Revenues were £101.7m and operating profit before exceptionals was £12.5m.

Return of Capital to Misys shareholdersMisys shareholders benefitted from the return of £670m of proceeds from the Allscripts disposal. The return was in two stages. In December 2010, £525m was returned by way of a purchase of shares from shareholders through a Tender Offer. In March and April 2011, a further £145m was returned in the form of a payment of 38p per share to all remaining shareholders together with a 7 for 8 share consolidation. At 31 May 2011 the issued share count (excluding Treasury shares) stood at 338.8m.

The Misys Employee Share Trust received a return of capital income of £6.2m which was netted off in reserves against the return of capital expenses. Its shareholding was reduced by 2.0m in the share consolidation and at 31 May 2011 stood at 14.0m. Excluding the Misys Employee Share Trust and Employee Share Ownership Plan, the share count at 31 May 2011 was 324.7m and the weighted average issued share count for the year was 443.5m (2009/10: 529.4m).

Earnings Per Share (EPS) In the opinion of the Directors, adjusted basic EPS from continuing operations (excluding exceptional items, embedded derivatives gains or losses, and amortisation of acquired intangible assets) provides the most comparable and representative information on continuing trading activities of the Group. Adjusted basic EPS from continuing operations was 11.0p (2009/10: 7.6p), based on the weighted average shares in issue for the respective periods.

Pro-forma for the share count reduction from the return of capital, adjusted basic EPS was 15.1p (2009/10: 12.4p), showing 22% growth. We are pleased with this result, which was due to higher adjusted operating profits in the Banking and TCM divisions, the first post-acquisition contribution from Sophis, and the reduced effective tax rate. Balance Sheet and Cash FlowCapital expenditure, research & development Research and development expenditure in continuing operations including capitalised expenditure was £69.3m (2009/10: £64.4m). Over the last five years an increasing proportion of this expenditure has been devoted to developing new products as opposed to maintaining existing products. During the year, as spending on old solutions was reduced, there was a significant increase in development of key new solutions, principally BankFusion and Asian localisation features in Opics Plus, resulting in £21.4m of capitalised software development (2009/10: £18.3m).

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2010/11 2009/10

£m BankingMisys

Sophis TCMOpen

Source Total Banking TCMOpen

Source Total

Research & development expenditure (including capitalised expenditure) 37 2 30 1 69 34 29 1 64

Capitalisation of developed software 13 1 7 – 21 12 6 – 18

Amortisation of developed software (5) – (4) – (9) (5) (4) – (9)

Net Capitalisation 8 1 3 – 12 7 2 – 9

Total capital expenditure and investment was £27.0m (2009/10: £22.8m), the balance after software development being £5.8m (2009/10: £4.4m), principally investments in computer and systems infrastructure.

Acquisition of Sophis and FinancingThe acquisition of Sophis was completed on 28 February 2011, for an enterprise value of £380.9m (at £1:€1.171). The enterprise value included net debt of £145.4m and a payment of £2.6m to Sophis shareholders based on Sophis performance for the year ended 31 December 2010.

New credit facilities of £280m were agreed in November 2010, partly to finance the Sophis acquisition and partly for ongoing development of the business. The facilities comprise a £90m term loan and a £190m revolving credit facility, both expiring in August 2014. The new facilities replaced the previous £210m facility, which was due to expire in May 2012, and incorporate improved terms and lower margins over LIBOR, which will vary according to the Group’s net debt to EBITDA ratio.

In November 2010, Misys issued £100m of senior unsecured convertible bonds due in November 2015 and convertible into Misys shares at an initial conversion price of £3.69. As a result of the share consolidation in February the conversion price was adjusted to £3.75.

The overall level of debt taken on to fund the acquisition is considered prudent in view of the highly cash-generative nature of the enlarged Misys Group, which will enable net debt to be reduced rapidly. At the end of the year £190m of the new credit facilities remained unused.

DerivativesThe Group hedges exposures to foreign exchange rates and interest rates arising on future foreign currency cash flows and expected debt, using forward currency contracts and interest rate swaps. In addition, certain recurring licence fees priced in currencies other than the functional currencies of the Misys selling entity, or its customer, contain an embedded currency derivative. Including both types of derivative, the total market value of derivatives assets at 31 May 2011 was £3.0m (2009/10: £6.0m), and of derivatives liabilities was £3.9m (2009/10: £2.7m).

Cash Flow and Net Debt Trade receivables from continuing operations increased to £69.4m at the end of the year from £65.7m at the start of the financial year. The increase was a result of the consolidation of Misys Sophis trade receivables, offset by better cash collection improving underlying trade receivables. Accrued income increased to £53.8m at the end of the year from £36.6m at the start of the year, due to the consolidation of acquired Misys Sophis accrued income balances and also a result of strong fourth quarter revenues. Days’ sales outstanding (based on trade receivables and accrued income compared with trailing quarter revenues) was 86 days at the end of the year compared with 89 days at the start of the year.

Cash flow from operations was positively impacted by higher adjusted operating profit. After tax and interest, there was a net cash inflow from continuing operations of £79.5m (2009/10: £67.1m).

Net debt at the end of the period was £94.2m, compared with net debt at the start of the period of £96.1m (excluding Allscripts). Net cash inflow from continuing operations and Allscripts disposal proceeds were offset by the Sophis purchase consideration and the return of Allscripts disposal proceeds to shareholders. Of the convertible bond liability of £99.5m, net of issuance costs, at 31 May 2011, £83.4m is treated as debt and £16.1m is treated as equity in respect of the value of bondholders’ options to convert debt to equity.

Our strong balance sheet position provides ample flexibility for further investment in the transformation of Misys.

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NotesAdjusted operating resultsAdjusted results are stated before exceptional items, gains or losses on embedded derivatives and amortisation of acquired intangible assets. There are no adjustments for exchange differences transferred from reserves upon repayment of internal funding loans (2009/10: £2.0m in Corporate & Other), since these are no longer required in the income statement, except upon loss of control of a subsidiary, following a revision to International Accounting Standard 21.

The non-exceptional items excluded from adjusted results are losses on embedded derivatives in Banking of £3.8m (2009/10: gain of £1.4m) and in TCM of £0.2m (2009/10: gain of £0.1m), amortisation of acquired intangible assets in Banking of £0.8m (2009/10: £1.0m), TCM of £0.5m (2009/10: no charge) and in Misys Sophis of £9.3m (2009/10: no charge).

Constant currency resultsThe most significant currency impacts were from the movement in the US dollar and the Euro against Sterling, where average exchange rates during 2010/11 were US$1.58 and €1.17 compared to US$1.59 and €1.13 in 2009/10.

Prior year results are retranslated at 2010/11 exchange rates for comparative purposes. Retranslation of prior year revenues results in an increase of £0.4m (Banking £0.4m, TCM £0.1m and a decrease in Corporate & Other of £0.1m). Retranslation of prior year adjusted operating profits results in a decrease of £1.7m (Banking: £1.4m, TCM: £0.1m, Corporate: £0.2m).

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Mike Lawrie

John King

Philip Rowley Timothy Tuff Stephen Wilson

John Ormerod Jeff Ubben

Sir James Crosby

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Philip Rowley123

Non-executive Director (58)Appointed a non-executive Director in November 2008. Philip Rowley was Chairman and CEO of AOL Europe until February 2007. He is a qualified chartered accountant and was Group Finance Director of Kingfisher plc from 1998 to 2000. During 2000 and 2001 he was Deputy Chief Executive and Chief Financial Officer of Kingfisher’s General Merchandise Division. His previous roles included Executive Vice President and Chief Financial Officer of EMI Music Worldwide and Chief Operating Officer and CFO of Golden Books Family Entertainment, the largest children’s book publisher in the US. He is non-executive Chairman of HMV Group plc and a non-executive Director of ARM Holdings Plc and Promethean World plc. He is also Chairman of Livestation Limited and Pouncer Media Limited.

Timothy Tuff123

Non-executive Director (64)Appointed a non-executive Director in February 2011. Timothy Tuff was the Chairman, President and Chief Executive Officer of John H. Harland Company from 1998 to 2007. Harland was a leading supplier of printed and software products to the financial industry and, through its subsidiary Scantron, to the educational industry. Timothy joined Harland after five years as President and CEO of Boral Industries, where he managed the North American and European operations of Australia-based Boral, Ltd., a world leader in building and construction materials. He also serves as a Venture Partner for Ampersand Capital Partners, is a Director of Printpack Inc., and of KnowledgeWorks Foundation and serves on the Board of Councilors for the Carter Center.

Stephen Wilson5

Executive Director (51)Stephen was appointed to the Board as an executive Director in October 2010 following his appointment as Chief Financial Officer in June 2010. He joined Misys in May 2009 as Vice President, Group Finance, responsible for Investor Relations, Corporate Development, Tax, Treasury and Internal Audit. Prior to joining Misys Stephen worked at IBM for 25 years where he developed his financial career most recently as Vice President and Chief Financial Officer for IBM UK and Ireland. Stephen is a Fellow of the Chartered Institute of Management Accountants.

Mike Lawrie4

Chief Executive (58)Mike joined the Board in November 2006. Mike was previously a General Partner with ValueAct Capital. From 2004 to 2005 he was Chief Executive Officer of Siebel Systems Inc., the international software and solutions company. Prior to that, Mike spent 27 years with IBM where he rose to become Senior Vice President and Group Executive with responsibility for sales and distribution of all IBM products and services worldwide. Previously at IBM he had been the General Manager for all operations in Europe, the Middle East and Africa. He previously served on the US Advisory Board of NTT DoCoMo and as a Director of SSA Global, Inc., Symbol Technology, Inc., and Good Technology, Inc. Mike is the lead independent non-executive Director of Juniper Networks, Inc., and is also a Trustee of Drexel University, Philadelphia.

Sir James Crosby234

Chairman (55)James joined the Board as a non-executive Director in January 2009 and held that role until September 2009 when he was appointed Chairman. Thirty years in fund management, insurance and banking culminated in his time as Chief Executive of Halifax and HBOS (1999 to 2006). He is the Senior Independent Director of Compass Group plc and a Trustee and Treasurer of Cancer Research UK.

John King123

Non-executive Director (72)Appointed a non-executive Director in November 2005. John is Chairman of the remuneration committee. He has over 30 years’ experience of the US healthcare industry as President and CEO of Legacy Health Systems until 1999. Prior to Legacy, John was President and CEO of Evangelical Health Systems (now Advocate Health Systems). He is a member of the American Hospital Association and a Fellow in the American College of Healthcare Executives. John serves on the Boards of the Center for Healthcare Governance, Pacific University and AHA Services, Inc.

John Ormerod123

Senior Independent Director (62)Appointed a non-executive Director in October 2005 and Senior Independent Director in November 2005. John Ormerod is Chairman of the audit committee. He is a chartered accountant and has over 30 years’ experience in professional practice. He is a non-executive Director of Gemalto NV, Computacenter plc, ITV plc and Chairman of Tribal Group plc. John is also a Trustee of the Design Museum.

Jeff Ubben4

Non-executive Director (50)Appointed a non-executive Director in January 2007. Jeff Ubben is a co-founder, Chief Executive Officer and the Chief Investment Officer of ValueAct Capital, a San Francisco based investment partnership. Prior to that, he was a Managing Partner at BLUM Capital Partners, a private investment partnership and previously spent eight years at Fidelity Management and Research, where he managed the Fidelity Value Fund. Jeff is a Director of Sara Lee Corp., and Gartner Group, Inc., and previously served on the Boards of Per-Se Technologies, Inc., and of Catalina Marketing Corp. He is a former Chairman and Director of Martha Stewart Living Omnimedia, Inc., and has served on the boards of a number of other public and private companies.

Notes1 Member of the audit committee2 Member of the nomination committee3 Member of the remuneration committee4 Member of the executive committee5 Member of the treasury and finance committee

Membership of Committees and ages are as at 28 July 2011.

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ceMisys Leading technology and innovation


The past year has been one of significant change for the business during which we have built on our governance process review completed last year. We have also considered our Board composition and made two appointments to the Board to ensure it is aligned to meeting the changing requirements of the business.

One new executive Director and one new independent non-executive Director joined the Board. The appointment of Stephen Wilson has brought a stronger executive representation to the Board and we have also strengthened the industry and geographical representation with the appointment of Timothy Tuff. Their biographies are set out on page 49 and give more details on their respective backgrounds. We will continue to monitor Board composition, balance and overall diversity during the coming year.

Effective governance is vital to our business and our values. Our approach is to ensure that the governance structure enhances the business and supports it in achieving its strategic goals. We keep our governance framework under regular review and have made certain updates during the year to ensure that it remains relevant to both the external and internal governance environment.

As a Board, we keep our objectives under constant review and part of this process is to consider our responsibilities and delivery against our objectives. For the first time this year, we appointed an external advisor, Dr Tracy Long of Boardroom Review, to assess how the Board and its Committees are performing and to highlight any areas where we could improve. The review affirmed our belief that the Board was operating effectively and was responsive to the needs of the business. Where improvements have been suggested we are taking steps to implement them. The Board style continues to be one of openness and constructive debate between Directors and this was reflected in the findings of the review. This review also gave us an external assessment of individual Directors, including myself as Chairman.

We have considered the recommendations as set out in The UK Corporate Governance Code. We plan to comply with all new aspects of the code and in particular will be putting all our Directors up for re-election at the AGM.

I hope the following governance report will give you a fuller and deeper understanding of how we are governing our Company and engaging with our shareholders.

James CrosbyChairman28 July 2011

Sir James Crosby

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Who is on our Board?Our Board is led by James Crosby who is also Chairman of the nomination committee. Mike Lawrie is our CEO. Our Senior Independent Director is John Ormerod who is also Chairman of the audit committee and John King is Chairman of our remuneration committee. Other Board members are Stephen Wilson, Philip Rowley, Timothy Tuff and Jeff Ubben. Full details on all our Directors can be found on page 49.

We appointed Stephen Wilson, our CFO, to the Board on 1 October 2010 as an executive Director. Stephen brings with him a wealth of experience in the software sector and is a valuable addition to the overall balance of the Board.

Timothy Tuff was appointed as an independent non-executive Director on 23 February 2011. He was subsequently appointed as a member to each of the audit, remuneration and nomination committees. His strong background in financial services software and international business complements the existing skill set of the rest of the Board members. Our Directors bring UK and international experience of the software and financial services industries as well as the specialist skills needed to lead and participate in key Board committees such as audit and remuneration.

Currently our articles provide that Directors may be appointed by ordinary resolution of the shareholders or by resolution of the Board. At each AGM, any Director who has been appointed by the Board since the previous AGM, or for whom it is the third AGM following the AGM at which they were last elected or re-elected, shall retire and offer himself for election or re-election.

However, in line with The UK Corporate Governance Code, we have decided that all Directors will stand for election or re-election at the 2011 AGM.

Our non-executive Directors fulfil a vital role in corporate accountability by bringing their independent judgement to bear on issues brought before the Board and its Committees. Their knowledge and experience gained in other areas of international business and public life contributes greatly to the understanding and decision making process of the Board. Over half our Board is made up of non-executive Directors with exactly half of the Board being independent (not including the Chairman who was considered independent at the time of his appointment). During the year, there were no significant changes to the Chairman’s commitments and none which could affect his ability to devote sufficient time to the Company’s affairs.

We do not consider Jeff Ubben to be independent under Provision A.3.1 of the Combined Code as a result of his interest in ValueAct Capital, a major shareholder in the Company. Mike Lawrie is a non-executive Director of Juniper Networks, Inc., and a Trustee of Drexel University and does not hold any non-executive Directorships with any FTSE 100 company.

ChairmanExecutive DirectorsNon-independent non-executive DirectorsIndependent non-executive Directors

James Crosby – 2 year tenureJohn Ormerod – 5 year tenureJohn King – 5 year tenurePhilip Rowley – 2 year tenureTimothy Tuff – 3 month tenureJeff Ubben – 4 year tenureMike Lawrie – 4 year tenureStephen Wilson – 8 month tenure

How is our Board structured?

What is the tenure of the Board?

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Attendance of Directors at meetings of the Board and its Committees.

Director 2010 AGM Main BoardAudit

CommitteeRemuneration

CommitteeNominationCommittee

Sch Ad Hoc Sch Ad Hoc Sch Ad Hoc Sch

Sir James Crosby 1 (1) 8 (8) 9 (9) – – 7 (7) 4 (4) 1 (1)

M Lawrie 1 (1) 8 (8) 9 (9) – – – – –

S Wilson (app 1 Oct 2010) – 5 (5) 4 (4) – – – – –

J G King 1 (1) 8 (8) 8 (9) 7 (7) 1 (1) 7 (7) 4 (4) 1 (1)

J Ormerod 1 (1) 8 (8) 9 (9) 7 (7) 1 (1) 7 (7) 4 (4) 1 (1)

P Rowley 1 (1) 8 (8) 9 (9) 7 (7) 1 (1) 7 (7) 4 (4) 1 (1)

T Tuff (app 23 Feb 2011) – 2 (2) 1 (1) 2 (2) – 2 (2) – –

J Ubben 1 (1) 8 (8) 9 (9) – – – – –

Typically the Board meets around 8 times a year and the Committees up to 5 times a year. However, this year, due to increased corporate activity, the Board met 17 times. The Board aims to hold two of its meetings at Misys’ overseas operations. This year, the Board held meetings in New York and an in-depth two day strategy session in Bangalore.

Bangalore is our fastest growing site housing much of our development operations as well as customer support, services and finance teams and has over 1,200 employees. Whilst in Bangalore, the Board had the opportunity to meet many of the local leaders, see the local teams in action and review plans to further develop an increasingly important centre for Misys’s various businesses.

What has the Board done during the year?

Our employees

Delivery on our strategy

Leadership

Effectiveness

Our customers

• Consulted openly and collaboratively during the disposal of Allscripts

• Returned £670m to our shareholders• Active consultation on recalibration of existing

incentive arrangements to reflect major corporate activity

• Appointed two Board members using an external search agency for the non-executive Director

• Undertook a detailed review of succession planning and talent across the organisation

• Addressed the total reward framework throughout the organisation

• Reviewed and consulted with shareholders on a new long-term incentive arrangement for the CEO

• Introducted a new engagement survey to enable staff to feedback how they really feel achieving a 74% response rate

• Launched the ‘Misys Club’, a framework for employee giving and volunteering

• Refreshed and enhanced our product portfolio delivering new products to market in each division

• Listened to customer feedback and improved on our Satmetrix score for the 4th year in a row

• Made significant strides with our new suite of banking products – in particular BankFusion

• Continued investment in our quality programmes

• Engaged an external consultant to facilitate the effectiveness review of the Board and performance review of Directors

• Delivered a full induction process for new Directors

• Continued to enhance our risk management processes with new, more focused, reports to the Board

• On target to deliver on internal business plans

• Disposal of Allscripts and creation of a pure play financial services business

• Acquisition of Sophis resulting in a leading position within the capital markets industry

• Banking returned to growth through sales of new solutions

Commitment to our shareholders

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Misys plc Board

Remuneration Committee

Executive Committee

Treasury and Finance Committee Management Processes

Nomination CommitteeAudit Committee

The Board’s role is to provide leadership, set the strategic direction of the business and continuously monitor performance against strategic objectives through oversight and the effective monitoring of risk. Critical to this role is the Board’s oversight of succession planning, particularly for the CEO and other senior executives, and the management of risk. Both have been an area of focus for the Board’s attention in 2011. The Directors may exercise all the powers of the Company subject to the provisions of relevant law, the Company’s Articles and any special resolution of the Company in the furtherance of their role.

How do we approach Governance?We believe that strong governance processes and oversight sit at the heart of our culture, not only in the Boardroom but across the whole of the business, enabling it to better deliver on its responsibilities to all of our partners and other stakeholders.

Our Code of Conduct sets out how we expect our Board, employees, partners, suppliers and others to live by our values and demonstrate strong ethical behaviour.

We are also committed to operating in an environmentally sustainable way and to promoting community involvement. This year we launched the Misys Club, an initiative to support employee giving and volunteering, and further details can be found in the Social and Environmental section of the business review.

Our policy is not to make political donations and we have not done so in this period (2010: nil).

The Chairman is responsible for the effective operation of the Board and for influencing the culture around the Board table and between Directors. The Misys Board has an open style of communication, one which encourages an environment of constructive debate and healthy challenge between Board members, both inside and outside the Boardroom. Regular updates between meetings ensure that Directors are always able to contribute to and have oversight of a fast moving executive agenda.

How did we comply with the Combined Code?Compliance with the Combined Code (which applies to Misys for the year ended 31 May 2011) is an important step in achieving good and transparent corporate governance. To that end we have complied with the principles and provisions of the 2008 Combined Code during this year. In previous years we had highlighted that we only had one executive Director on the Board but the Directors considered the balance of the Board was compliant with the code due to the independent strengths of the non-executive DIrectors. The appointment of Stephen Wilson as an executive Director has further strengthened the Board.

How do we manage conflicts?In order to make strong, good quality decisions, it is important that no-one involved in the decision making process is conflicted in such a way that could impair their decision making. However, we recognise that from time to time conflicts may arise and accordingly we have a formal system in place for the Directors to declare any situational conflict they may have. Such conflicts may be authorised by the other Directors that are not interested in the matter and they may impose limits or conditions when giving the authorisation, or subsequently, as they see fit. We maintain a register of conflicts and keep this under review on an annual basis. In particular, the Board is mindful of the position of Jeff Ubben who is also an executive with ValueAct Capital, our largest shareholder. The process for managing and monitoring conflicts continues to operate effectively.

How is our governance framework structured?Our governance framework provides the formal governance structure within which the Board and its Committees operate. The framework details the terms of reference for each of the Committees and sets out the matters that are specifically reserved to the Board. It also clearly defines the roles of the Chairman, the Chief Executive and the Senior Independent Director. The Board process itself, including the timely and relevant provision of information, conduct at meetings and the reporting of the each of the Committees up to the Board is also covered. We deliver our Board papers through an electronic portal that enables Directors to access Board papers wherever they may be in the world.

Arrangements for the induction of Directors, ongoing development and monitoring our effectiveness are clearly defined in the framework.

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This year we have further enhanced our governance framework taking into consideration the FRC Report on the Effectiveness of Boards and the ICSA best practice guidance notes on Committee Terms of Reference.

We introduced a role description for the Senior Independent Director and updated and improved our Committee terms of reference where we felt it would improve the effectiveness, performance and oversight of the relevant Committee.

We also believe that in order for a Director to contribute at their most effective, an extensive and tailored induction should be provided to all new Directors. Furthermore, following the initial induction, ongoing development for all Directors is important. Our Committee composition is such that we have common membership across our Committees, thereby ensuring that there are no gaps in the remit or the matters considered by each Committee nor unnecessary duplication.

Each of the Committees has detailed terms of reference and reports to the Board on its activities at each Board meeting.

EffectivenessHow do we ensure effectiveness?Our open and collaborative culture is supported by well organised internal processes which support the Board in maximising their decision making process. The Board and its Committees operate forward looking rolling agendas which are aligned to both the strategic aims of the Group and the Group’s risk processes. Meetings and discussions outside the Boardroom are also facilitated as part of this process, particularly during the overseas site visits where the Board takes full advantage of a forum that provides for detailed discussion, consultation and debate.

Induction processWe have appointed new Directors during the year and provided each with a comprehensive personalised induction. Stephen Wilson had been the Vice President Group Finance and CFO prior to his Board appointment and during that tenure had developed a good understanding of the business. Upon his appointment as a Director, he was provided with a detailed review of his additional responsibilities and the obligations placed upon him as a Director. Timothy Tuff was new to the business and his induction was more comprehensive and included a detailed overview of the Company including its Governance practices, constitutional make-up and culture. He also met with key personnel across the business to help build his understanding of the business, its strategy, our shareholder expectations and the strategic priorities in each area. He has visited various sites including Bangalore, London and New York. He also met with one of our strategic partners, HCL, and finally with our external advisors.

The governance structure is designed to deliver an effective two way flow of information from the business up to the Board and from the Board back to the business. The CEO reports directly to the Board and provides a regular update to the Directors on business performance and opportunities. He is supported in the management of the business and on the delivery of strategy by a management team made up of the senior business leaders and the CFO. The CEO meets with the management team on a bi-weekly basis to review and discuss operational performance and other matters. The management team, and other senior managers as appropriate, are provided with opportunities to report directly to the Board on their progress. Through the CEO updates, the Board monitors what management is doing within the framework of delivering on the strategy and probes their thinking to ensure they are on the right path.

On an ongoing basis the non-executive Directors are provided with targeted development sessions which are built into the rolling agenda. These sessions are developed to address the needs of the Directors as they arise or in response to particular requests. During the year we covered updates in respect of the UK Corporate Governance Code, recent and prospective changes to accounting practices, the impact of the Bribery Act and aspects of crisis management.

How do we measure our effectiveness?Despite all of the above, it is important that we monitor how we are performing. During January 2011 Dr Tracy Long of Boardroom Review carried out a full assessment of the effectiveness of the Board and its Committees, the performance of each individual Director and in particular the Chairman. Boardroom Review has substantial experience of such reviews in the UK so were able to test the Board’s effectiveness in a comparative context.

During her review Dr Long highlighted the strengths of the Board as including a flexible approach to strategic shifts and challenges, a continually improving risk management and control environment, an open relationship between Board members and the CEO and finally, strong Board dynamics. This endorsed the feeling that already existed among the individual Board members.

Critically, she also identified ways in which the Board could improve its effectiveness. For example, it was felt that the Board collectively should discuss updates on the competitive context in each of our businesses more frequently. Whilst this had always been considered as part of our strategy away day, more regular updates will now be provided. Whilst the non-executive Directors receive opportunities to meet with our advisors and key management on a regular basis, it was recommended that they could benefit from more regular invitations to attend relevant industry conferences and customer advisory groups.

Summary of responsibilities of our Board and CommitteesBoard

Responsible for setting the strategic direction of the Company and monitoring performance against the strategic plan in a manner that is most likely to promote the long-term success of the business.

Audit Committee Remuneration Committee Nomination Committee

Supports the Board in reviewing the integrity of the financial statements and the effectiveness of the system of internal control. Keeps under review the relationship and performance of the external auditors.

Determines the framework and broad remuneration strategy and policy for executive Directors and other senior employees. In doing so keeps under review the alignment of our remuneration strategy to the wider environment.

Reviews the composition of the Board and makes recommendations for Board appointments. Monitors ongoing succession planning for Directors and senior executives.

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Highlights of what our Committees have achieved during the year?Audit Committee Remuneration Committee Nomination Committee

Reviewed and received reports from the auditors on the annual financial statements and other published financial information.

Monitored the work of internal audit. Reviewed the Group’s approach to risk and oversaw improvements in the Enterprise Risk Management System and linkages to the Board’s risk appetite.

Oversaw the audit and disclosure process during the disposal of Allscripts and the subsequent return of capital to shareholders.

Reviewed foreign currency hedging and accounting policies.

Maintained financial oversight during the acquisition of Sophis.

Closely monitored the external auditors’ independence and non-audit fees during the year.

Engaged with investors on the impact of the disposal of Allscripts on the Company’s share plans.

Agreed retention incentive arrangements with the CEO having consulted with our largest shareholders.

Oversaw the re-alignment of our share plan targets for the Omnibus Share Scheme arising due to the capital return and acquisition of Sophis.

Engaged an external search agency on the non-executive Director search resulting in the appointment of Timothy Tuff.

Reviewed the succession planning of the Company’s leadership team.

Kept under review the composition of the Board.

Accountability – Board CommitteesAudit CommitteeOur audit committee is chaired by John Ormerod and both he and Philip Rowley have recent and relevant financial experience. Following his appointment to the Board, Timothy Tuff was appointed to the Committee on 23 March 2011. John King is also a member of the Committee. An environment of open communication and dialogue is vital to the Committee’s effectiveness and as such the CFO, the Group Financial Controller, the Head of Internal Audit and the external auditors have a standing invitation to attend meetings.

To ensure integrity is maintained and to allow individuals to highlight any specific matters to the members of the audit committee, they met in private with the CFO three times, the Head of Internal Audit twice and the external auditors, PwC, twice during the year. There is also an open line of communication between the Committee Chairman and all senior management as and when required. The Committee receives detailed reports from the external auditor and from the Head of Internal Audit regularly.

The audit committee has detailed terms of reference which facilitate its oversight of the financial reporting process, the Group’s risk management processes, the external auditor, the Group’s system of internal control, the internal audit function, changes in financial reporting requirements and matters arising from the annual audit. In addition to the Committee highlights set out above, the Committee met its obligations under its terms of reference during the year.

We operate an independent confidential ‘raising concerns’ line. All matters reported via the line are considered by a committee comprised of the EVP General Counsel, the EVP Group HR Director, the Head of Internal Audit and the Deputy Company Secretary. Matters are investigated and where necessary escalated to the audit committee. The Committee reviews annually the number of matters reported and the outcome of any investigations.

The External AuditorThe effectiveness and independence of the external auditor is vital to ensuring that the Committee has confidence in the Group’s published financial information as well as providing insight on risks and controls. We judge the external auditor not only on their understanding of the Company’s business and the quality of the relationship across Misys but on the quality of their audit findings, the degree of challenge and management’s response and, finally, their independence. As part of this process, the Committee seeks feedback from management, the business areas the external auditor has visited and reviews reports of the Audit Inspection Unit.

Before the commencement of each audit the Committee discusses and approves the audit plan. PwC explain the programme of work they plan to undertake to address the risks they have identified to ensure that these risks do not lead to a material mis-statement in the financial statements. The Committee receives updates on the audit as it progresses and discusses any risks identified during the audit.

The Committee monitors closely the auditors’ independence. We have reviewed in the year the policy which limits the scope of non-audit assignments for which the auditors may be engaged and the policy for recruitment of staff from the audit firm. This policy prohibits using the auditors for example to implement financial reporting systems or undertake asset valuations. Where the auditors are considered for non-audit assignments, in the absence of overriding reasons to use our audit firm, competitive proposals are obtained. The Committee closely monitors the amount the Company spends with PwC on non-audit fees. We have a detailed policy in place that requires that any permitted non-audit work must have the scope of work and fees approved in advance by the CFO and the Committee Secretary if less than £50,000 and, if over this amount, pre-approval must be sought from the Committee itself. Rotation of the audit partner and the audit team is also important and a new lead audit partner was appointed during 2009 and a new audit senior manager in 2010 thus providing a fresh approach to the audit and to the level of challenge.

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Having completed the review of the external auditor we are satisfied that they have carried out their obligations in an effective and appropriate manner and continue to remain independent. On that basis we will be recommending their re-appointment at the 2011 AGM. We are conscious that PwC have been auditors to the Company for 12 years and whilst we are content with their performance and the degree of rigour they bring to the audit process the Committee feels it would be appropriate to conduct a market appraisal during the course of the next year.

The internal audit function has continued to develop during the year. The detailed audit plan is developed as part of the risk management process that is overseen by the Head of Internal Audit and which the Board approves. The programme of audits provide objective assurance over the processes and controls. Actions are agreed in response to recommendations made and these are followed up by the internal audit function to ensure that the required actions are implemented.

Nomination CommitteeOur nomination committee is chaired by James Crosby and all other independent Directors are members.

The Committee leads deliberations around Board succession and the procedure for the appointment of Directors to the Board. Timothy Tuff was appointed to the Board following a comprehensive search conducted by an independent external search agency and a rigorous interview process. The agency was provided with a detailed brief that included consideration of the existing Directors’ mix of skills and the overall diversity of the Board. We have also increased the executive representation with the appointment of Stephen Wilson, our CFO, to the Board.

We review our Board succession on a continual basis and will continue to make recommendations to the Board as and when appropriate.

Remuneration CommitteeThe remuneration committee is chaired by John King. Details of the how the Committee operates, its membership, and our remuneration policies are set out in the remuneration report on pages 63 to 65.

The Executive Committee Our executive committee is made up of three or more Directors including the CEO and the Chairman. Mike Lawrie is the Committee Chairman. The aim of the Committee is to facilitate the CEO in making decisions on how best to progress the strategy or objectives set by the Board of Directors between meetings of the Board. It focuses in particular, but not exclusively, on business development opportunities which enhance value for shareholders. However, it has no authority to change strategy or objectives set by the Board.

Treasury and Finance CommitteeOur treasury and finance committee is chaired by the CFO and is a management Committee that reports directly into the Board. This Committee maintains oversight of the treasury policy and operations, monitors pension plan funding and, reviews and approves the insurance arrangements for the Group with the exception of the Directors’ and Officers’ Insurance which is approved by the Board.

Risk ManagementHow do we monitor our risks?The Board is ultimately accountable for ensuring that we have a robust approach to risk management and have appropriate internal controls in place. The Board is also responsible for monitoring the effectiveness of the agreed approach.

Taking risks is an inherent part of entrepreneurial activity and the assessment of risk is part of our culture. Specifically, we give careful consideration to the key risks in our business and how we can best mitigate those risks to meet our business objectives.

Over the last year we have continued to improve risk management throughout the Group embedding a process which aligns strategy and risk management, actively considers high impact but low likelihood risks and maintains the Board focus on the key risks facing the Group.

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Risk Management ProcessThe risk management process includes a review by the Board of the Group’s risk profile on a semi-annual basis, facilitated by internal audit. The effectiveness of the risk management process is monitored by the audit committee. The process involves identifying, prioritising and allocating ownership for risks and developing and implementing appropriate mitigation plans to address those risks. Each key risk identified through the process is owned by a member of the executive team.

We review our risks in terms of potential likelihood and impact. Our analysis also includes both ‘gross’ and ‘net’ risk assessments so that we can identify the extent to which management has addressed the key risks through appropriate controls and mitigation activity. The Group Internal Audit Plan is based on the results of the risk management process and therefore tests the effectiveness of the most important controls of the Group.

Risk management at Misys is dynamic and ongoing. For example, a key risk included in last year’s annual report related to the disposal of our US healthcare business, Allscripts. This disposal was successfully managed in the first half of this financial year and, therefore, the risk has been removed from the analysis. Meanwhile, a new risk related to the effective integration of our recent Sophis acquisition has been added to the analysis.

A summary of the risks that we currently see as important to our business, together with associated key mitigation activities, is shown overleaf. This summary also shows the alignment of the risks with the key strategic imperatives of the Group.

Risk assessment, prioritise risk

and ownership

Risk identification

Existing controls, new mitigation and

action plans

Executeaction plans

Reporting and

performance

Monitoring and assurance

Board evaluation of risk with a particular focus

on significant risks

Management actions with Board oversight

Management actions

Misys Risk Management Process

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Develop a focused strategy and integrated portfolio for each of the business unitsBusiness strategy, market and product development risks Mitigation

to regulatory review and concerns related to economic factors (e.g. Eurozone sovereign indebtedness). This could lead customers to reduce expenditures.

diversified with customers in 120 countries; it has a wide range of products across the capital markets and banking sectors and it has a large installed base with approximately 50% of revenues recurring.

revenue and cost synergy projections which may not be captured.

detailed synergy targets and regular executive/Board reviews.

collaboration.

products based on our new BankFusion technology, need to be developed in line with product roadmaps and need to succeed in the market.

processes.

and product/regional user groups) to support market acceptance of products.

Build a solution orientationContract implementation and service level risks Mitigation

solutions at customer sites requires effective management to deliver value on time and to budget.

be met.

Continuously innovate to capture market opportunitiesIntellectual property (IP) risks Mitigation

of our IP rights and/or the inadvertent infringement by us of third party IP rights.

BankFusion technology.

Develop winning partnerships and collaborationsPartnerships, acquisitions and disposals risks Mitigation

product/services portfolio, build a partner ecosystem and/or streamline operations may not be identified and captured.

Revitalise the organisationPeople risks Mitigation

emerging markets may mean that the supply of people with the required skills is limited.

in competitive markets.

programmes in key emerging markets.

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What Internal Controls do we have in place?Our system of internal control is designed to support the achievement of the Group’s objectives and to manage the related risks. We recognise that the system is designed to manage, rather than eliminate, the risk of failure to achieve business objectives and can only provide reasonable, and not absolute, assurance against misstatement or loss.

As mentioned elsewhere in the governance report, the Board had a two day strategy meeting in March 2011 at which the Directors challenged and questioned the senior management around their strategic priorities and performance. A detailed financial and operational budget is produced which is reviewed and approved by the Board in April, in advance of the new financial year. In November 2010 the Board completed a detailed review of the management team and the associated succession planning. Together, these provide the overall framework for business planning and the resources required to deliver on the Group’s plans.

We operate a control framework which provides a comprehensive system of delegated authorities from the Board and its Committees to the business units of the organisation. All major development projects, contractual and other commitments relating to revenue and capital expenditure require appropriate approvals. Authority levels under the framework are reviewed periodically and are updated as necessary.

We also have a system of policies and procedures that underpin our internal control and cover areas such as financial reporting and planning, capital expenditure, business continuity, IT controls, treasury and cash management.

With specific regard to preparing consolidated accounts, we operate rigorous controls including detailed policies and formal processes for business units, finance functions, Group consolidation reviews and analyses of material variances, technical reviews and other controls. These controls are monitored and assessed during the year by internal audit.

We have strengthened our system of internal controls by continuing to centralise our transaction processing in Bangalore. We have also developed our Group analysis and reporting function and continue to review and enhance our processes around working capital, cash management and compliance. The new requirements such as the Bribery Act and the Senior Accounting Officer Certification are also being addressed We have introduced a suite of new policies and processes to underpin our anti-bribery programme and strengthen our bribery controls. We have introduced a new tax reporting tool during the year.

The Board reviews the effectiveness of the Company’s system of internal controls. This is principally carried out through the work of the audit committee. This Committee reviews the effectiveness of internal controls principally through discussions with management on significant risks, the review of both the internal and external audit plans and subsequent findings and other relevant reports. If any significant failings or weaknesses are identified that need to be addressed these are highlighted to the Board who ensure that appropriate action is taken.

Other key imperativesIT and business continuity risks Mitigation

support our geographically distributed business and to protect our information assets.

and network infrastructure reviews across key sites.

social instability needs to be effectively managed. This is particularly important given the location of many of our key sites in emerging markets with, for example, key development sites and customer support sites located in India and the Philippines.

by a dedicated business continuity team.

and to reduce our dependence on third-party providers.

Legal and regulatory risks Mitigation

the UK Bribery Act needs to be maintained.

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ShareholdersHow do we engage with our shareholders?We strongly believe in regular engagement with our shareholders and schedule a quarterly pattern of presentations and conference calls with our investors. We also engage with them on an ad hoc basis in order to respond to any specific questions that they may have at any time between scheduled events.

In addition, in reporting to shareholders on the corporate transactions that we undertook during the year, we provided a high degree of transparency on the financial details of the transactions, on the underlying strategic rationales and on the impact of these transactions upon the financial targets and financial statements of the Group. During all stages of the transactions we clearly stated our expectations for progress towards their completion.

About the 2011 Annual General MeetingThis year the AGM will be held on 28 September 2011 at The Lincoln Centre, Lincoln Inn Fields, London at midday. The Notice of AGM accompanies this annual report and explains the business to be considered at the meeting. Both this annual report and the Notice of AGM are available on our website www.misys.com.

Share capitalOur share capital comprises ordinary shares of 11/7 pence each which are listed on the London Stock Exchange.

The issued share capital of the Company, together with details of the movements in the Company’s issued share capital during the year, are shown in the notes to the financial statements. At close of business on 28 July 2011, the Company held 362,505,513 ordinary shares in issue of which 23,225,756 were held in treasury.

We completed a tender offer on 16 December 2010 under which we bought back and cancelled 169,354,057 ordinary shares of one pence each. On 14 February 2011 we completed a share capital consolidation of 7 new ordinary shares of 11/7 pence in the Company for every 8 ordinary shares held on 11 February 2011. Further details on the impact of these

We actively seek the views of our major shareholders, not only in respect of our financial results and strategic progress, but also in a consultative manner. Accordingly, we consulted with our major shareholders on several occasions during the year on specific matters arising as a result of the disposal of Allscripts and the subsequent return of capital. We also consulted with major shareholders during the year on directors’ remuneration.

We engage with our other shareholders through the AGM, other general meetings and our website www.misys.com.

Who are our substantial shareholders?The voting interests in the ordinary share capital of the Company of our substantial shareholders as have been notified to the Company as at 28 July 2011 are shown below

changes on our share capital is given in Note 31 on page 113 of the financial statements. Shares held in treasury were consolidated in the same way as all other shares. During the year, 6,415,383 shares were transferred out of treasury to meet the Company’s obligations under its employee share plans.

The rights and obligations of our shareholders are contained in our articles. Shareholders are entitled to receive the annual report, to attend and speak at general meetings, to appoint proxies and exercise voting rights. No shares carry any special control or financial rights.

In accordance with the authority granted at a general meeting held on 11 February 2011, the Company may make market purchases of up to 33,563,163 of its own shares (representing approximately 10% of its issued share capital). This authority expires at the conclusion of the 2011 AGM and remained in force at 31 May 2011.

Other disclosures that we are required to makePrincipal activities and business reviewOur principal activities are the development, management and licensing of a variety of software products and solutions to customers in the financial services industry. We also partner with other world class companies to sell and distribute Misys products and solutions.

Holder % issued share capital No. of ordinary shares Nature of holding

ValueAct Capital Master Fund, L.P. 20.21 77,500,319 Total

VA Partners I, LLC, ValueAct Capital Management, L.P.,

ValueAct Capital Management, LLC, ValueAct Holdings, L.P., 20.21 77,500,319 Indirect

ValueAct Holdings, L.P. and ValueAct Holdings GP, LLC1

Schroders plc 11.94 51,417,864 Direct

45,783,197 Indirect

Crédit Agricole Cheureux International Limited 5.19 17,603,724 Direct

FMR LLC and its Group 5.14 25,890,800 Indirect

Threadneedle Asset Management Ltd 5.06 27,677,470 Total

Comprising: Thereadneedle Asset Management Ltd 0.14 745,317 Direct

4.81 26,298,748 Indirect

0.12 633,405 CFD’s

Standard Life Investment Ltd 4.99 19,140,585 Total

Comprising: Vidacos Nominees Limited 2.81 10,784,422 Direct

2.18 8,356,163 Indirect

Lloyds TSB Group plc on behalf of various nominees 3.02 16,492,181 Indirect

1 This notification has been reported on an aggregated basis and includes the 20.21 % holding of ValueAct Capital Master Fund, L.P. shown above.

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The Companies Act 2006 requires us to present a fair review of the business performance and development of the Group. A review of the activities of the Group, its financial performance and likely future business developments is provided in the Chairman’s statement, the Chief Executive’s review, the business review, the financial review on pages 18 to 47, all of which are incorporated into this report by reference. A description of the principal risks and uncertainties is included in this report.

Going concernIn adopting the going concern basis for preparing the financial statements, the Directors have considered the business activities as set out on pages 26 to 35 as well as the Group’s principle risks and uncertainties as set out on pages 56 to 59. After making due enquiries and embracing the normal forecasting process, the Directors consider that the Group and the Company have adequate resources and committed borrowing facilities to continue in operation for the foreseeable future and accordingly have continued to adopt the going concern basis in preparing the financial statements.

Events after the balance sheet dateOn 21 June 2011 the Board announced that it had received a preliminary approval that may or may not lead to an offer being made for the Company

On 23 June 2011 Fidelity National Information Services, Inc. confirmed that it had made a preliminary approach regarding a possible cash offer for Misys plc.

Financial instrumentsInformation on financial instruments is disclosed in the notes to the financial statements.

DividendsThe Board continues to believe that shareholder interests are being best served by re-investing cash flow into the development and future growth of each of the Group’s businesses. The Directors do not therefore propose to recommend payment of a final dividend for the year (2010: nil).

PeopleWe are dependent on the skills and commitment of all our employees in order to achieve our organisational goals. Further information on our approach to employee engagement, equal opportunities and training and development can be found in the People section of the business review on pages 36 and 37.

Research and developmentIn the markets in which we operate, effective research and development is vital to maintaining competitive advantage and securing future business and income streams. Our approach to research and development is detailed throughout the business review.

Significant agreements and change of controlThere are a number of agreements that take effect, alter or terminate upon a change of control of the Company following a takeover bid, such as commercial contracts, bank loan agreements, property lease arrangements and employee share plans. With the exception of the bank loan agreements noted above, there is no individual contractual arrangement that is considered to be essential to the continuing operation of the Group.

In addition, there exist agreements between the Company, its Chief Executive, its Chief Financial Officer and certain other senior employees which provide for compensation of loss of

office or employment due to a takeover. Further information can be found in the remuneration report.

Significant contractsValueAct Capital Master Fund L.P. (ValueAct Capital) has a holding of approximately 20.21% in the Company on an aggregated basis. Jeff Ubben who is a non-executive Director of the Company, is Chief Executive Officer, Chief Investment Officer and a principal investor in ValueAct Captial and accordingly has an interest in all contracts between the Company and undertakings which are part of the ValueAct Group.

During the year and up to the date of this report, no other Director has had any interest in any material contract with the Company.

Creditor payment policyIt is our policy to agree terms and conditions with our suppliers in advance of conducting business. We seek to abide by the payment terms that we agree with our suppliers whenever we are happy that the contractual obligations have been met.

The trade creditors of the Group at 31 May 2011 represent 34 days (2010: 31 days) and of the Company represent nil days (2010: nil days) as a proportion of the total amount invoiced by suppliers during the year. The Company had delegated its trade to other Group subsidiaries.

ArticlesThe articles of the Company may be amended by a special resolution of shareholders passed at a general meeting of the Company.

Indemnities and insuranceWe provide our Directors and officers with insurance cover to cover their costs in defending themselves in civil legal proceedings taken against them in that capacity and in respect of damages resulting from the unsuccessful defence of any proceedings. We have also granted qualifying third party indemnities (for the purposes of s.234 of the Companies Act 2006) to our Directors in their capacity as Directors of the Company and its subsidiaries. Neither the insurance nor the indemnity provide cover where the Director has acted fraudulently or deceitfully.

Provision of information to the auditorsEach Director that holds office as at the date of this report confirms that, so far as he is aware, there is no relevant audit information of which the Company’s auditors are unaware and that he has taken all steps which he ought to have taken as a Director to make himself aware of any relevant audit information and to establish that the auditors are aware of that information.

This annual report has been prepared for, and only for, the members of the Company and no other persons. By their nature, the statements concerning the risks and uncertainties facing the Group in this annual report are affected by future events and circumstances which can cause results and developments to differ materially from those anticipated and which are beyond our control. The forward-looking statements reflect knowledge and information available at the date of preparation and we have no obligation to update these forward-looking statements. Nothing in this annual report should be construed as a profit forecast.

Tom KilroyCompany Secretary28 July 2011

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Misys has experienced significant change in the past year with the disposal of Allscripts and the subsequent return of capital, followed soon thereafter by the acquisition of Sophis in early 2011. Individually, these transactions were so significant in relation to Misys’ capital base that in each case the Committee was required to review very carefully their implications for share based rewards. In doing so the Committee had to ensure that achievements were fairly rewarded and that for the future, incentive arrangements were adjusted so as to be no more or less stretching than before.

The Committee reviewed our reward strategy to ensure that it reflects our growing needs to attract and retain talent in Asia and other emerging markets and that it remained aligned to a key principle: that management should be focused on delivering value to our shareholders.

Throughout the year we actively consulted with and secured the support of our largest shareholders; most specifically on recalibrating our EPS based incentives, re-setting dilution limits and establishing a new bespoke incentive for our CEO. Shareholders overwhelmingly approved specific proposals put to them at the general meeting held in August 2010 to approve the Allscripts sale and capital return.

Accordingly, for the years impacted by the changes to the capital structure of the Company, the base EPS used to calculate performance measures in the Omnibus Plan was increased. This ensured that our Omnibus Plan EPS performance measures continued to be stretching and fulfilled a commitment made to shareholders when the Allscripts transaction was approved.

Shareholders also approved new dilution targets under our share plans to take account of the reduction in our issued share capital through the Tender Offer and Share Capital Consolidation. If we had taken no action in this regard we would have immediately breached our existing limits and severely impacted our ability to attract and retain talent within the organisation.

The Board believes that Mike Lawrie continues to provide exceptional leadership to the Company. Therefore, in recognition of the importance of the CEO to ensuring a continued focus on performance, we approved the CEO Incentive Plan, a bespoke arrangement that is designed to secure the tenure of the CEO beyond the expiry of the Transformation Incentive Plan on 1 November 2011.

Finally we looked at ways to further improve the effectiveness of the Committee. We reviewed and enhanced our rolling agenda to better align it to the business and to provide the Committee with a clear structure to its work during the year.

I hope that you will agree with our approach to the various challenges that have faced us during the year and I am confident that we have taken the right steps to secure and reward the management team in a way that will allow the business to move to the next stage of its journey. The remuneration report has been prepared by the remuneration committee and approved by the Board for submission to shareholders at the 2011 AGM.

John KingChairman, remuneration committee28 July 2011

John King

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Who is on our Committee?Committee Members

John King (Chairman) Independent Director

James CrosbyIndependent on appointment to the Board

John Ormerod Independent Director

Timothy Tuff (appointed to the Committee on 23 March) Independent Director

Philip Rowley Independent Director

Deloitte LLP were retained to provide independent advice to the Committee. Deloitte LLP and Hewitt New Bridge Street Ltd also advised the Committee on the performance monitoring of the Group’s share plans. In addition, Pinsent Masons LLP provided legal advice to both the Company and the Committee on share plans, other general employment matters and certain commercial matters. Towers Watson advises the Company on its UK pension arrangements.

The Committee also received support from an independent consultant, Paul Williams, on various matters including a review of the Company’s approach to pay and benefits.

The Committee also consults with the EVP of HR, the EVP General Counsel and Company Secretary, the CEO and the CFO on a regular basis. No member of the Committee, nor any party from whom advice was sought, participated in discussions relating to their own remuneration.

The Committee met 11 times during 2010/11 with Committee members attending 100% of meetings. Full details of the attendance at meetings is shown in the corporate governance report on page 52.

What responsibilities does the Committee have?The Committee is responsible for agreeing the framework and broad remuneration strategy and policy for the executive Directors and other senior executives, both of which are designed to support the business growth agenda and attract, retain and motivate talented leaders. In doing so we determine the individual remuneration and benefits packages for the executive Directors and EVP’s and other direct reports to the CEO, ensuring that they are structured to reward performance and not failure.

The Committee also reviews and determines the fees of the Chairman of the Board, although the Chairman is not present during any discussion in relation to his remuneration.

The Committee approves the design and targets for all incentive schemes, including annual bonus plans and share incentive plans that include the executive Directors and the EVPs. The totality of all awards and option grants made under each of the Company’s share incentive plans is considered and approved by the Committee having due regard for the Company’s dilution limits. Vesting under many of the awards made is subject to achievement against performance targets which are monitored by the Committee.

The Committee keeps under review the appropriateness of the remuneration strategy as aligned to business strategy and against business performance with respect to its peers in order to ensure that the overall objective of attracting leading talent is achieved.

We have prepared this report in accordance with the Combined Code on Corporate Governance, Schedule 8 of the Large and Medium-Sized Companies and Group (Accounts and Reports) Regulations 2008 and the UK Listing Authority Listing Rules. We will be asking you to approve an advisory resolution on the report at the 2011 AGM, which we hope you will support.

The auditors are required to report on the Directors’ emoluments table and the tables of share options and awards along with all associated footnotes. Accordingly, these tables and footnotes form the audited section of this report.

How does the Committee ensure it delivers on its responsibilities?The Committee reviewed and amended the annual rolling calendar of business in order to improve the effectiveness of the Committee. It now flows from a review of remuneration strategy at the start of the year, through consideration of specific policy matters leading finally to approvals. It is designed to deliver a complete and holistic review by the Committee on all aspects of remuneration. In addition, at each meeting the Committee receives any relevant industry updates and reviews the share dilution limit schedule to ensure it remains fully informed on all matters that may impact its decision making.

The annual rolling calendar is set out below:

Date Purpose Matters considered

January Strategic outlookTrends in reward and governanceReward issues

MarchCommittee effectiveness

Past performanceFuture objectives/goals

April Policy settingReview of reward principlesBenchmarking review

July Approval

Salary reviewsBonus reviewsShare awardsDirectors’ remuneration report

September AGMInvestor engagementCEO scorecard

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What has the Committee done during the year?The matters considered by the Committee in 2010/11 in addition to those as set out in the annual rolling calendar are shown in the chart below:

General reward principles For executive Directors

to support the development of Misys as a global employer of choice

a significant proportion of total compensation is performance-related

that total remuneration opportunity is targeted at market-competitive levels

performance-linked incentive awards are designed to encourage executive Directors to create long-term shareholder value and align their personal interests with those of the Company

reward is based on performance business performance measures are based on targets that are relevant to the business and aligned with shareholders’ interests

employees have the opportunity to participate in ownership of Misys shares

executive Directors are expected to build and maintain a meaningful shareholding in the Company to provide further alignment of their interests with those of shareholders

employees are eligible to participate in employee benefits which are a portion of total reward

business performance measures are established and executive Directors are paid for performance

Our remuneration philosophyThe remuneration philosophy is designed to align with the business and its growth strategy. It recognises that in order to deliver on the growth strategy the Company needs to be able to attract, and keep, the best available global talent in the markets within which it operates. This means offering competitive remuneration that is delivered through performance-driven compensation. Exceptional remuneration will only be awarded for exceptional performance.

Engaged with shareholders

Secured CEO retention

Reviewed performance measures following the disposal of Allscripts

Benchmarked against our peers

• We engaged with our shareholders over the impact on the Company’s share plans resulting from the disposal of Allscripts, the return of capital and the acquisition of Sophis. Due to the reduction of our issued share capital, we renewed our Dilution Limits under our plans to 10% in 10 years and introduced a new 2% per annum flow rate. The EPS performance measure was re-based to remove the volatility caused following the disposal of Allscripts and the acquisition of Sophis. This ensured that management was rewarded for performance but that the targets in future years remained stretching.

• We reviewed the ongoing mechanism in place for the CEO having due regard to the Board’s view that his continued service of the Company is vital to achieving its objectives.

• The CEO Incentive Plan is a one-off 3 year incentive plan subject to stretching performance measures that align his interests to those of shareholders.

• Completed a benchmarking review against our peers for executive Directors and senior management.

Completed a full review of the Committee’s remit and effectiveness

• Engaged Boardroom Review to complete an external effectiveness review of the Committee.

• Updated its annual rolling calendar.

• Improved the interface with management and information provided to the Committee.

• Ensured retention of key staff by rewarding them for delivering value to our shareholders under the return of capital following the Allscripts disposal.

• Made certain other adjustments to the baseline EPS to reflect the changed capital structure of the Company including the impact of the convertible on EPS.

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In applying its remuneration principles during the year, the Committee considered data on recent changes in pay and conditions for other senior executives throughout the Group. The Company’s policy is to pay an appropriate market rate for each employee’s function and location. EVPs are also expected to build and maintain a meaningful shareholding in the Company over time. The Committee was satisfied that Directors’ pay and conditions have, on average, not improved more than those of other employees in the financial year.

How is our remuneration policy structured?The table below summarises the Company’s policies in respect of each of the key elements of executive Directors’ and EVPs’ remuneration.

What do our Directors receive?In each year, a significant portion of each executive Director’s total remuneration is performance based and is dependent upon the achievement of stretching annual and longer term targets. The chart below shows the proportion of fixed and variable pay for the Chief Executive, the CFO and an average for the EVP population.

Element Policy Details

Base salary Provides the fixed element of the remuneration package

Reviewed annually and normally set for the 12 months commencing 1 August

Annual bonus Incentivises the achievement of specific goals in the short term

Targets based on Group operating profit and specific operational and individual objectives

Element of deferral aids retention and provides alignment with shareholders

50% of bonus is normally deferred into shares

Medium and long-term incentives Incentivises executives to achieve medium and long-term financial performance improvement

Aligns the interests of executives and shareholders

Provides for the retention of key individuals

The Misys Omnibus Plan is designed to deliver a combination of matching shares, performance shares and share options

Pension and benefits Provides post-retirement benefits for participants in a cost-efficient manner

Pension contributions are on a defined contribution basis

Shareholding guidelines Executive Directors to build up a holding equivalent to 100% of base salary

Supports alignment with shareholders’ interests

0 10 20 30 40 50 60 70 80 90 100

CEO

CFO

30% 40% 30%

35% 35% 30%

35% 35% 30%

Salary Bonus Long-term incentives

EVPs

The above pay mix chart has been calculated on the basis of fixed remuneration delivered to the executive Directors’ through salary. Annual bonuses have been valued at target, and long-term incentives have been calculated on an expected value basis. (An expected value calculation provides a single valuation for a long-term incentive award, based upon the probability of achieving the performance conditions associated with the award).

How does Misys compensation compare?We commissioned Deloitte LLP to perform an in-depth benchmarking exercise in respect of our executive Directors and EVPs against global practices of global companies of a similar size and complexity in both the UK and US markets. The benchmarking results were considered by the Committee when considering the total reward packages for the executive Directors and other senior management at the level immediately below the Board.

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Executive Directors’ remunerationSalaryThe Committee reviews the salaries of executive Directors on an annual basis. When considering the fixed element of the remuneration packages, full regard is given to the total remuneration package including variable and deferred pay.

The Chief Executive is domiciled in the United States and his annual base salary is paid in US dollars.

Base salary is the only element of remuneration which is pensionable for executive Directors.

Annual bonusThe Misys Senior Executive Bonus Plan (MSEBP) provides incentives in both the short and medium-term for executive Directors based on stretching financial, operational and personal objectives. At least half of any annual award will normally be deferred into shares for a period of one year.

The targets for the annual bonus are established by the Committee at the commencement of each financial year. For 2010/11, the overall annual bonus potential for the executive Directors is dependent upon their meeting or exceeding a threshold Group operating profit target with the actual level of payment then dependent upon the extent to which targets are met in respect of Group operating profit, revenue, cost savings, customer satisfaction scores and personal objectives.

The potential bonus achievements for the executive Directors are as follows:

On target annual bonus Maximum bonus

Mike Lawrie 100% – 120% of base salary200% of base salary

Stephen Wilson 100% of base salary150% of base salary

For the year just ended, the Committee determined the annual bonus payment for the executive Directors by reference to specific targets set at the beginning of the year:

Group financial targets are met or exceeded customer satisfaction levels are met or exceeded personal performance targets are met or exceeded

Taking into account the extent to which performance objectives were met, the Committee approved an annual bonus payment of 190% of base salary for the Chief Executive and 147% for the CFO, half of which will be satisfied in cash and half of which will be deferred into shares for a period of one year.

BenefitsThe Chief Executive is eligible to receive certain benefits including private health insurance, life assurance cover, UK accommodation and expatriate tax advice. The CFO receives a car cash allowance and private medical insurance for himself and his family. The executive Directors are also eligible to participate in the savings-related SAYE share option plan operated in the UK on the same terms as other employees.

PensionsThe Company’s pension policy is to provide defined contributions to executive Directors, either through the Company’s defined contribution pension plan or as an allowance for use in their personal pension plans. The CFO participates in the Company’s defined contribution pension plan. The Chief Executive receives a contribution equivalent to 20% of his base salary to a deferred compensation plan established in the US. For UK purposes this plan is treated as an employer financed retirement benefit scheme.

Non-executive Directors’ remunerationChairman and non-executive DirectorsThe Chairman and non-executive Directors all have letters of appointment for a three-year term, which may be extended by mutual agreement.

The Board considered the level of fees paid to non-executive Directors (unchanged since 2007). Taking advice from Deloitte LLP and considering other independent market data, the Board felt that the fees for non-executive Directors should be adjusted in order to bring them in line with market levels. Accordingly, with effect from 1 March 2011, the base fee for a non-executive Director was increased from £40,000 to £45,000. The fee for acting as the senior independent Director was reduced from £20,000 to £15,000 per annum. All other fees remained unchanged.

The current fee levels for the non-executive Directors are as set out below:

£m Fees

Chairman1 £180,000

Basic fee £45,000

Additional fee for the Senior Independent Director £15,000

Additional fee for chairing the audit committee £8,000

Additional fee for chairing the remuneration committee £8,000

Additional fee for chairing the nomination committee £5,000

1 The Chairman does not receive any additional fees in respect of his appointment to any of the committees.

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Medium and Long-Term Share IncentivesShare awardsOur share plans provide medium and long-term incentives for executive Directors and other key members of staff and are designed to achieve medium and long-term growth. A description of each of the plans and the performance conditions for each are set out below.

The Misys Omnibus Share Plan (the Omnibus Plan)The Omnibus Plan is the primary plan operated by the Company and is designed to deliver maximum flexibility for the award of share incentives.

Three types of award, all of which are subject to performance conditions, may be granted under the Omnibus Plan:

performance shares – awards to acquire shares for no cost;

share options – traditional market value share options; and matching shares – awards to acquire shares at no cost to the participant and which are linked to the award of deferred shares under the MSEBP.

All of these awards are subject to performance conditions as set out below.

Shares awarded as performance shares or share options must meet the following targets in order to be satisfied.

Compound annual growth rate (CAGR)of Misys adjusted EPS over performance period

Percentage of total award shares that will vest

Less than 10% nil

From 10% to 12.5%From 25% to 100% on a straight-line basis

12.5% or more 100%

During the year, the Committee implemented adjustments to the EPS performance targets for performance shares and share options on the basis of the principles approved by shareholders at the general meeting held in August 2010. The adjustments were designed to recognise the value returned to shareholders on the disposal of Allscripts and to align the interests of shareholders and award holders. In summary:

There was no adjustment to the number of shares in outstanding awards and no acceleration of vesting; and

The performance targets for a proportion of awards (50%) have been treated as satisfied in full.

The remaining portion of awards have been treated as follows:

The original EPS performance targets for Misys (including Allscripts) were measured to the end of 2009/10 to determine vesting for a time pro-rated element (17% of awards for 2009/10; 33% for 2008/09 awards); and

Performance targets have been increased for the remaining proportion of awards based on the performance of the remaining Misys businesses (excluding Allscripts) ensuring that they are no less stretching than before.

The performance targets for these remaining portions are as follows:

2008/09 awards – the performance target requires growth in operating profits of the Banking and TCM divisions over the 3 year period 2008/09 to 2010/11. The target is measured from a base figure of £42.4 million and requires a CAGR of 11.4% for any vesting and 12.5% CAGR for full vesting.

2009/10 awards – the performance target requires EPS growth of between 10% CAGR and 12.5% CAGR in 2010/11 and 2011/12. The EPS base figure for 2009/10 has been raised from 10.3 pence to 15.1 pence to reflect the Company’s altered capital structure following the return of capital.

2010/11 awards – none of the awards made in 2010/11 were adjusted. The performance targets for the whole of these awards requires EPS growth of between 10% CAGR and 12.5% CAGR. The EPS base figure is 15.1 pence.

Vesting is further subject to the Committee being satisfied regarding the overall results of the Company over the performance period, taking into account such factors it determines appropriate including the Company’s business and shareholder value performance.

Shares awarded as matching shares in respect of the bonus deferral arrangements of the MSEBP are subject to further performance conditions that utilise a matrix of operating profit and revenue targets as shown in the following table. If specific revenue and operating profit targets are met, up to 50% of the award shares may vest one year after grant. The remaining 50% of the award will be tested against the second year’s targets.

Ad

just

ed O

per

atin

g P

rofit

120% of target

37.5% 56.25% 75% 87.5% 100%

110% of target

25% 43.75% 62.5% 75% 87.5%

100% of target

12.5% 31.25% 50% 62.5% 75%

90% of target

0% 0% 31.25% 43.75% 56.25%

80% of target

0% 0% 12.5% 25% 37.5%

80% of target

90% of target

100% of target

110% of target

120% of target

Revenue

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The Transformation Incentive Plan (TIP)The TIP was established in 2006, at the start of the turn-around programme and is a one time plan specifically designed to drive execution of the turnaround strategy by the leadership team at the time. As a condition of receiving an award, participants were required to make a personal investment in the business equal to the value of one quarter of the award received. The performance targets applied to this award are based on share price growth over a five year period as set out in the following table, measuring share price as an average over 20 dealing days with straight line vesting between each point. In addition the Misys share price on the vesting date must also be higher than the price on the grant date for any portion of the award to vest.

Vesting opportunities are on the third, fourth and fifth anniversaries of the grant. The second testing date for this award was 1 November 2010, as a result of which 19% of the award vested. The final vesting opportunity will be in November 2011.

Share price % of award that vests

<£2.25 0%

£2.25 12.5%

£2.50 25%

£3.00 50%

£3.50 75%

£4.00 100%

No further awards will be made under this plan.

As was disclosed to shareholders in the circular relating to the disposal of Allscripts and the proposed Tender Offer, the Committee considered the impact of these events on the performance conditions for the TIP. The Committee concluded that it would:

not adjust the originally specified share price targets nor accelerate vesting of awards;

treat the Tender Offer price as a measurement share price for the TIP; and

regard the underpin performance condition relating to the initial share price as satisfied in relation to shares that vested on the basis of measuring the performance target using the Tender Offer price.

CEO Incentive PlanWith the imminent expiry of the TIP and in recognition of the importance of the CEO in ensuring a continued focus on performance, the Committee introduced the CEO Incentive Plan. The CEO Incentive Plan is a one-off 3 year incentive arrangement designed solely for Mike Lawrie, which was entered into on 28 February 2011 following discussions with major shareholders. The Plan is bespoke and therefore a relatively unusual plan but the Committee and the Board is of the opinion that it is a natural continuation of the TIP plan which expires later this year.

The plan has been designed to incentivise the CEO to remain with the Company to extract further value for shareholders and directly aligns his interests with shareholders as any award under this scheme requires a significant increase in shareholder value. In addition, and in order to receive benefits under the plan, he is also required to maintain a minimum shareholding in the Company of 6 times salary and to not reduce his shareholding from its February 2011 level.

The Committee believes that this plan offers a very significant incentive for Mike to remain with Misys and to continue to deliver on the strategy for the benefit of all of the Company’s shareholders. The Board also believes that the scale and duration of the financial commitment that Mike is prepared to make for the 3 year life of the Plan should be of great reassurance to shareholders.

All shares awarded under the plan are subject to stretching performance targets measured over a three year period. Only 8.3% of the award shares will vest upon achievement of the lowest threshold with 100% vesting for maximum performance. Vesting between each point will be measured by calculating, on a straight line basis, performance between each target point. The maximum number of share awards under the plan is 1,600,000. Performance targets are measured over a period of any 60 consecutive trading days in the performance period, and will vest according to the schedule below:

Share price threshold achieved in the performance period

Maximum number of shares which will vest

£3.75 133,333

£4.00 426,667

£4.25 720,000

£4.50 1,013,333

£4.75 1,306,667

£5.00 1,600,000

In addition no award shares will vest unless the Committee is satisfied regarding the Company’s underlying financial performance in the performance period.

In the event of a change of control of Misys, or if he leaves in circumstances of death or ill health, awards only vest to the extent performance conditions were achieved. If he left Misys for any other reason (other than dismissal for misconduct), Mike could keep performance vested award shares subject to time pro-rated reductions and the delayed release of such shares until the original three year vesting date and provided that the personal shareholding requirements are maintained until vesting.

The plan will be available for inspection for 15 minutes before and until the close of the 2011 AGM since it has not been approved by shareholders. Awards under the plan will be satisfied using shares held in the Employee Benefit Trust. Benefits under the plan are not pensionable.

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1998 Unapproved PlanThe 1998 Unapproved Plan is an unapproved share option scheme. Whilst there are awards outstanding under the plan, there is no intention to use the plan in the future. Mike Lawrie has one award outstanding under the Plan which was granted in August 2007, the details of which are set out in the share option table on page 72.

The performance targets applied to this award are based on compound annual growth in adjusted EPS over a fixed three year period in excess of growth in the UK Retail Price Index (RPI) as follows:

Annual compound growth rate in adjusted EPS % of salary that vests

RPI + 3% p.a. Up to 50%

RPI + 3% to 6% p.a. 51% to 100%

RPI + 6% to 9% p.a. 100% to 200%

Sharesave (SAYE)The Company operates a savings related SAYE share option plan which all employees are eligible to participate in, including executive Directors. Participants make monthly savings (up to a maximum of £250 per month) over a three year period. At the end of the savings period, the funds are used to purchase shares under option. Shares awarded under this scheme are not subject to the satisfaction of performance targets.

Dilution limitsAs a result of the return of capital made to our shareholders during the year, the number of shares in issue was significantly reduced. This required us to review our dilution limits under our share plans in order that we could continue to incentivise executives and employees to continue delivering returns to our shareholders in the future.

Accordingly, at the General Meeting held on 15 August 2010, shareholders approved the amendment of the Company’s share plans to adopt a new share plans dilution limit of 10% of the Company’s issued share capital over 10 years. This limit applies only to new awards made after the Tender Offer. In line with the Company’s previous grant policy, an additional formal limit was added within the rules such that in any one year awards over new issue or treasury shares would not exceed more than 2% of issued share capital. The Committee receives regular updates on the dilution position under the Company’s share plans and carefully considers the impact on dilution of any awards made.

The Company sources shares for share awards through a mixture of newly issued shares, shares held in treasury and shares acquired and held in the Company’s employee share trust.

Shareholding guidelinesExecutive Directors are required to build and maintain over time a shareholding in the Company equivalent to at least 100% of base salary. The Chief Executive maintains a shareholding well in excess of this target.

Executive Directors’ service contractsMike Lawrie’s contract provides that he may terminate his employment with the Company by giving three months’ written notice and the Company may terminate his employment by giving 12 months’ written notice. On termination, Misys has a contractual obligation to pay in lieu of at least six months of the notice period other than in the case of summary dismissal. In the event of a change of control, if the contract is terminated either directly or indirectly as a result within the following 12 month period, he will be entitled to receive a sum equal to 12 months’ salary, on-target bonus, pension contribution and health insurance. Change of control would also bring forward the vesting date for the Chief Executive’s Transformation Incentive Plan at which point performance conditions would be applied to the outstanding award with no time pro-rating.

Stephen Wilson’s contract provides that he may terminate his employment by giving six months’ written notice and the Company may terminate his employment by giving six months’ written notice. On termination, Misys has an absolute discretion to make a payment in lieu of notice for the six month notice period other than in the case of summary dismissal. In the event of a change of control, if the contract is terminated either directly or indirectly as a result within the following 12 month period, he will be entitled to receive a sum equal to 12 months’ salary and on target bonus.

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Directors’ contractsThe contractual arrangements with each executive and non- executive Director who served in the year are summarised below. Stephen Wilson and Timothy Tuff who were appointed during the year will be put forward for election at the 2011 AGM. In order to align ourselves with The UK Corporate Governance Code and best practice in this area all other Directors will put themselves forward for re-election at the 2011 AGM.

Date of current contract/letter of appointment Notice period

M Lawrie 13 October 2006 12 months – re-elected at 2010 AGM

S Wilson 16 July 2010 6 months – to be elected at the 2011 AGM

Sir James Crosby 30 January 2009 1 month – elected at the 2009 AGM

J Ormerod 21 September 2005 1 month – re-elected at the 2009 AGM

J King 2 November 2005 1 month – re-elected at the 2009 AGM

P Rowley 5 November 2008 1 month – elected at the 2009 AGM

T Tuff 23 February 2011 1 month – to be elected at the 2011 AGM

J Ubben 16 January 2007 1 month – re-elected at the 2010 AGM

Performance graphThe following graph measures the Company’s Total Shareholder Return (TSR) performance over a five year period as required by the Companies Act 2006. This is compared against the TSR performance of the FTSE TechMark All-Share Index. The Directors do not believe that this is the ideal group of comparator companies. It is however the most appropriate broad equity market index available against which TSR can be measured as it is made up of companies in similar markets and geographic locations to Misys.

This graph shows the value at 31 May 2011 of £100 invested in Misys plc on 31 May 2006 compared with the value of £100 invested in the FTSE TechMark All-Share Index plotted over the five year period.

180

160

140

120

100

80

60 May 06 May 07 May 08 May 09 May 10 May 11

Valu

e (£

)

MisysFTSE TechMark All-Share Index

External directorshipsThe Company recognises that executive Directors may broaden their experience by serving as non-executive Directors of other companies and they are permitted to accept such appointments by prior agreement with the Board. It is normal practice for executive Directors to retain fees received for non-executive appointments. During the year, Mike Lawrie served as a non-executive Director of Juniper Networks, Inc., for which he received a fee of US $65,000. In addition, he also participates in its share option plan under which he holds 78,764 share options. He also sits on the Board of Trustees of Drexel University, for which he does not receive any compensation. Stephen Wilson does not hold any external directorships.

Directors’ interests in sharesThe interests of Directors in the ordinary shares of the Company are set out below. All interests are beneficial and have been adjusted to account for the 7 for 8 consolidation completed on 14 February 2011.

Number of shares

At 1 June 2010 (or date of

appointment if later)

1 June 2010 (adjusted for 7 for

8 consolidation)

At 31 May 2011 (or date ceased to be a Director

if earlier)

M Lawrie1,3 1,303,411 1,140,485 1,160,628

S Wilson 35,000 30,625 30,625

Sir James Crosby 53,912 47,173 47,173

J Ormerod 50,000 43,750 43,750

J King3 150,000 131,250 131,250

P Rowley 27,305 23,891 23,891

T Tuff – – 18,000

J Ubben1,2 146,756,217 128,411,690 70,744,050

1 Mike Lawrie and Jeff Ubben are investors in ValueAct Capital Partners, L.P., which has an interest in ValueAct Capital Master Fund L.P. and as such have an interest in respectively 97,757 and 2,889,122 ordinary shares, being their proportionate interest in the total number of ordinary shares held by ValueAct Capital Master Fund L.P. These ordinary shares are shown in their interests in the table above.

2 67,812,779 shares are owned directly by ValueAct Capital Master Fund, L.P. and may be deemed to be beneficially owned by (i) VA Partners I, LLC as General Partner of ValueAct Capital Master Fund, L.P., (ii) ValueAct Capital Management, L.P. as the manager of ValueAct Capital Master Fund, L.P., (iii) ValueAct Capital Management, LLC as General Partner of ValueAct Capital Management, L.P., (iv) ValueAct Holdings, L.P. as the sole owner of the limited partnership interests of ValueAct Capital Management, L.P. and the membership interests of ValueAct Capital Management, LLC, and as the majority owner of the membership interests of VA Partners I, LLC and (v) ValueAct Holdings GP, LLC as General Partner of ValueAct Holdings, L.P. Jeff Ubben disclaims beneficial ownership of the reported stock except to the extent of his pecuniary interest therein.

3 Mike Lawrie resigned as a Director of Allscripts on 20 August 2010 and John King resigned on 17 November 2010. At their dates of resignation, they both held an interest in 70,000 and 10,000 shares of common stock in Allscripts respectively.

There have been no changes in Directors’ interests in shares of the Company between 31 May 2011 and 28 July 2011.

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Directors’ emolumentsAudited informationThe amounts payable by the Company to each Director in respect of qualifying services for the financial year 2010/11 are set out below. These figures exclude share benefits, which are shown separately. No Director has waived any emoluments other than in respect of serving on the Allscripts Board for part of the year.

Basesalary/fee Bonus1

Benefitsin kind2

Carallowances

Otherpayments

Total 2011 (or from date of

appointment)Total2010

Pension contributions

20113 2010

Executive Directors

M Lawrie4 $1,088,700 $2,068,530 $61,988 – – $3,219,218 $3,336,089 $217,740 $217,740

S Wilson6 £216,667 £318,500 £967 £7,333 – £543,467 – £26,000 –

Non-executive Directors

James Crosby £180,000 – – – – £180,000 £153,316 – –

J Ormerod £68,000 – – – – £68,000 £68,000 – –

J King5 £71,901 – – – – £71,901 £98,160 – –

P Rowley £41,250 – – – – £41,250 £40,000 – –

T Tuff6 £11,942 – – – – £11,942 – – –

J Ubben £41,250 – – – – £41,250 £40,000 – –

1 Half of the bonus payment was deferred into shares. 2 Benefits in kind include those benefits that are normally taxable in the UK. For Mike Lawrie, this includes accommodation whilst working in the UK. This amount

has been converted to US dollars at an exchange rate of 1.58 dollars to the UK pound, being the average rate for the financial year 2010/11. The amount for Mike Lawrie also includes his US-based private medical and dental insurance with a value of US $13,989.

3 The amount contributed for Mike Lawrie is paid into a deferred compensation plan in the US. 4 Mike Lawrie’s contractual salary is denominated in sterling and paid in US dollars at a fixed exchange rate of 1.91 dollars to the pound (being the exchange rate at

the time he was appointed in 2006) giving a dollar salary of US $1,088,700. 5 The fee figure for John King includes £41,250 for sitting on the Misys Board, £8,000 for his Chairmanship of the Remuneration Committee and US $35,790 for

the period to 17 November for sitting on the Board of Directors of Allscripts (of which US $16,393 was paid to him by Allscripts). He resigned from the Allscripts Board on 17 November 2010. The US dollar amounts are converted at an exchange rate of 1.58 dollar to the UK pound being the average rate for the financial year 2010/11.

6 Stephen Wilson and Timothy Tuff were appointed to the Board on 1 October 2010 and 23 February 2011 respectively.

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At 1 June 2010

Awarded during the

year

Vested/Released

during the year

Exercised during the

year

Lapsed during the

year

At 31 May

2011

Market price

at date of allocation

Market price

at date of release

Weighted average exercise

priceVesting

dateExpiry

date

M Lawrie CEO

TIP

Share option contract2 1,013,069 – 192,483 – – 1,013,069 – – 208.00

03 Nov 2009

03 Nov 2016

TIP Share award contract5 753,724 – 192,483 192,483 – 561,241 – 286.00 –

01 Nov 2011

01 Nov 2011

Misys Omnibus Share Plan

Share Options 696,538 – – – – 696,538 – – 122.7502 Oct

201102 Oct 2018

Share Options 464,673 – – – – 464,673 – – 184.0013 Aug

201213 Aug

2019

Share Options – 318,554 – – – 318,554 268.40 – 268.4018 Aug

201318 Aug

2020

Performance Shares 348,269 – – – – 348,269 – – –

02 Oct 2011

02 Oct 2011


13 Aug 2012

13 Aug 2012

Performance Shares – 159,227 – – – 159,277 266.00 – –

18 Aug 2013

18 Aug 2013

Matching Shares5 309,782 – – 68,880 86,011 154,891 – – –

13 Aug 2011

13 Aug 2011

Matching Shares – 212,369 – – – 212,369 266.00 – –

18 Aug 2011

18 Aug 2012

MSEBP5 309,782 – – 309,782 – 0 – 256.40 –13 Aug

201013 Aug

2010

MSEBP – 212,369 – – – 212,369 266.00 – –18 Aug

201118 Aug

2012

LTIP4 242,725 – – – 242,725 0 – – –10 Aug

201010 Aug

2010

1998 Unapproved Plan3 485,451 – 485,451 – – 485,451 – – 241.00

10 Aug 2010

10 Aug 2017

SAYE – 20075 989 – 989 989 – 0 – – 191.0001 Oct

201001 Apr 2011

2008 1,372 – – – – 1,372 – – 137.0001 Oct

201101 Apr

2012

2009 1,269 – – – – 1,269 – – 143.0001 Oct

201201 Apr

2013

2010 – 882 – – – 882 271.70 – 204.0001 Oct

201301 Apr 2014

CEO Incentive Plan – 1,600,000 – – – 1,600,000 328.60 – –

28 Feb 2014

28 Feb 2014

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At 1 June 2010 (or

date of appointment)

Awarded during the

year

Vested/Released

during the year

Exercised during the

year

Lapsed during the

yearAt 31 May

2011

Market price at date of allocation

Market price

at date of release

Weighted average exercise

priceVesting

dateExpiry

date

S Wilson CFO

Misys Omnibus Share Plan

Share Options 64,412 – 16,103 – – 64,412 – – 155.00

11 May 2010, 12 May

2019

Share Options – 90,815 – – – 90,815 268.40 – 268.4018 Aug

201318 Aug

2020


20 Aug 2012

20 Aug 2019


11 May 2012

13 Oct 2019


20 Nov 2012

20 Nov 2019

Performance Shares – 90,815 – – – 90,815 266.00 – –

18 Aug 2013

18 Aug 2020

SAYE – 822 – – – 882 271.70 – 204.0001 Oct

201301 April

2014

1 The closing share price on 31 May 2011 was 361.8 pence. The highest and lowest closing prices during the year were 368.9 pence and 227.01 pence respectively. No amounts were paid in respect of the awards of any share options.

2 The value of the award is equal to £2m based on the Misys share price at the time of grant.3 Granted on 10 August 2007 at a value of 200% of base salary. 4 Awards made to Mike Lawrie under the Misys Long Term Incentive Plan on 10 August 2007 were in the form of contingent share awards. 5 Aggregate gains on exercise of options and awards were £615,101 (2010: £672,089).

Approved by the Board

John KingChairman, Remuneration Committee28 July 2011

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The Directors are responsible for preparing the Annual Report, the Directors’ remuneration report and the financial statements in accordance with applicable law and regulations.

Company law requires the Directors to prepare financial statements for each financial year. Under that law, the Directors have prepared the Group financial statements in accordance with International Financial Reporting Standards (IFRSs) as adopted by the European Union and the Parent Company financial statements in accordance with United Kingdom Generally Accepted Accounting Practice (United Kingdom Accounting Standards and applicable law). Under company law, the Directors must not approve the financial statements unless they are satisfied that they give a true and fair view of the state of affairs of the Group and the Company and of the profit or loss of the Group for that period. In preparing those financial statements, the Directors are required to:

select suitable accounting policies and then apply them consistently;

make judgements and accounting estimates that are reasonable and prudent;

state whether IFRSs as adopted by the European Union and applicable United Kingdom Accounting Standards have been followed, subject to any material departures disclosed and explained in the Group and Parent Company financial statements respectively; and

prepare the financial statements on the going concern basis unless it is inappropriate to presume that the Group will continue in business.

The Directors are responsible for keeping adequate accounting records that are sufficient to show and explain the Company’s transactions and disclose with reasonable accuracy at any time the financial position of the Company and the Group and to enable them to ensure that the financial statements and the Directors’ remuneration report comply with the Companies Act 2006 and, as regards the Group financial statements, Article 4 of the IAS Regulation. They are also responsible for safeguarding the assets of the Company and the Group and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.

The Directors are responsible for the maintenance and integrity of the Company’s website. Legislation in the United Kingdom governing the preparation and dissemination of financial statements may differ from legislation in other jurisdictions.

Each of the Directors, whose names and functions are listed in Board of Directors section, confirm that, to the best of their knowledge:

the Group financial statements, which have been prepared in accordance with IFRSs as adopted by the EU, give a true and fair view of the assets, liabilities, financial position and profit of the Group;

the Financial Review and Principal Risks and Uncertainties sections include a fair review of the development and performance of the business and the position of the Group, together with a description of the principal risks and uncertainties that it faces;

so far as the Directors are aware, there is no relevant audit information of which the Company’s auditors are unaware; and

they have taken all the steps that they ought to have taken as Directors in order to make themselves aware of any relevant audit information and to establish that the Company’s auditors are aware of that information.

Fin

ancial statem

ents



Independent auditors’ report to the members of Misys plc

Introduction We have audited the Group financial statements of Misys plc for the year ended 31 May 2011 which comprise the consolidated income statement, the consolidated statement of comprehensive income, the consolidated statement of cash flows, the consolidated balance sheet, the consolidated statement of changes in equity, the accounting policies and the related notes. The financial reporting framework that has been applied in their preparation is applicable law and International Financial Reporting Standards (IFRSs) as adopted by the European Union.

Respective responsibilities of Directors and auditors As explained more fully in the Directors’ Responsibilities Statement set out on page 74, the Directors are responsible for the preparation of the Group financial statements and for being satisfied that they give a true and fair view. Our responsibility is to audit and express an opinion on the Group financial statements in accordance with applicable law and International Standards on Auditing (UK and Ireland). Those standards require us to comply with the Auditing Practices Board’s Ethical Standards for Auditors.

This report, including the opinions, has been prepared for and only for the Company’s members as a body in accordance with Chapter 3 of Part 16 of the Companies Act 2006 and for no other purpose. We do not, in giving these opinions, accept or assume responsibility for any other purpose or to any other person to whom this report is shown or into whose hands it may come save where expressly agreed by our prior consent in writing.

Scope of the audit of the financial statementsAn audit involves obtaining evidence about the amounts and disclosures in the financial statements sufficient to give reasonable assurance that the financial statements are free from material misstatement, whether caused by fraud or error. This includes an assessment of: whether the accounting policies are appropriate to the Group’s circumstances and have been consistently applied and adequately disclosed; the reasonableness of significant accounting estimates made by the Directors; and the overall presentation of the financial statements. In addition, we read all the financial and non-financial information in the annual report to identify material inconsistencies with the audited financial statements. If we become aware of any apparent material misstatements or inconsistencies, we consider the implications for our report.

Opinion on financial statements In our opinion, the Group financial statements:

give a true and fair view of the state of the Group’s affairs as at 31 May 2011 and of its profit and cash flows for the year then ended;

have been properly prepared in accordance with IFRSs as adopted by the European Union; and

have been prepared in accordance with the requirements of the Companies Act 2006 and Article 4 of the lAS Regulation.

Opinion on other matter prescribed by the Companies Act 2006 In our opinion, the information given in the Directors’ Report for the financial year for which the Group financial statements are prepared is consistent with the Group financial statements.

Matters on which we are required to report by exceptionWe have nothing to report in respect of the following:

Under the Companies Act 2006, we are required to report to you if, in our opinion:

certain disclosures of Directors’ remuneration specified by law are not made; or

we have not received all the information and explanations we require for our audit.

Under the Listing Rules, we are required to review:

the Directors’ statement, set out on page 74, in relation to going concern;

the part of the Corporate Governance Statement relating to the Company’s compliance with the nine provisions of the June 2008 Combined Code specified for our review; and

certain elements of the report to shareholders by the Board on Directors’ remuneration.

Other matterWe have reported separately on the parent Company financial statements of Misys plc for the year ended 31 May 2011 and on the information in the Directors’ Remuneration Report that is described as having been audited.

Giles Hannam (Senior Statutory Auditor)for and on behalf of PricewaterhouseCoopers LLPChartered Accountants and Statutory AuditorsLondon28 July 2011

Fin

ancial statem

ents



All figures in £ millions Note 2011 2010

Continuing operations

Revenue 1 370.0 341.9

Adjusted operating profit before: 1 71.9 63.6

– Amortisation of acquired intangibles 1 (10.6) (1.0)

– (Losses) gains on embedded derivatives 1 (4.0) 1.5

– Translation exchange differences recycled from reserves 1 – (2.0)

Operating profit before exceptional items 57.3 62.1

Exceptional gains – 5.2

Exceptional losses (21.0) (13.6)

Net exceptional items 2 (21.0) (8.4)

Operating profit 1 36.3 53.7

Finance costs (10.5) (10.4)

Exceptional finance income 2 4.8 1.4

Finance income 1.6 0.3

Net finance costs 7 (4.1) (8.7)

Profit before taxation 32.2 45.0

Taxation before exceptional items 8 (11.5) (12.5)

Taxation on exceptional items and exceptional finance income 2 4.2 2.8

Exceptional tax credit (charge) 2 9.4 (10.8)

Taxation 8 2.1 (20.5)

Profit after taxation from continuing operations 34.3 24.5

Discontinued operation

Profit after taxation and before exceptional items 7.8 43.2

Exceptional items after taxation 2 606.9 (6.3)

Profit after taxation from discontinued operation 3 614.7 36.9

Profit for the year 649.0 61.4

Profit for the year – attributable to equity holders of Misys plc 649.0 44.3

Profit for the year – attributable to non controlling interest – 17.1

Pence Pence

Basic earnings per share 9 146.3 8.4

Diluted earnings per share 9 143.2 8.2


Profit for the year 649.0 61.4

Other comprehensive income:

– Exchange difference on the translation of foreign operations (7.3) 62.4

– Actuarial losses recognised 27 (0.9) (1.3)

– Tax (charge) credit on items taken directly to equity (4.3) 0.3

Other comprehensive income for the period (net of tax) (12.5) 61.4

Total comprehensive income for the year 636.5 122.8

Total comprehensive income attributable to:

– Equity holders of Misys plc 645.9 82.1

– Non controlling interest (9.4) 40.7

Total income recognised in the year 636.5 122.8

Fin

ancial statem

ents




Operating activities

Net cash flow generated from operations 79.1 168.7

Net interest paid 10 (3.9) (10.6)

Net taxation paid (7.3) (6.3)

Net cash flow from operating activities 67.9 151.8

Investing activities

Acquisitions and disposals of businesses 11 464.5 (2.9)

Expenditure on developed software (28.0) (31.8)

Other capital expenditure and financial investment 12 215.1 (10.9)

Net cash flow from (used in) investing activities 651.6 (45.6)

Net cash flow used in financing activities 13 (771.5) (66.2)

(Decrease) increase in cash and cash equivalents in the year (52.0) 40.0

Net cash and cash equivalents at the start of the year 114.9 63.1

Differences on exchange (6.1) 11.8

Net cash and cash equivalents at the end of the year 15 56.8 114.9

All figures in £ millions 2011 2010

Continuing operations

Profit after taxation 34.3 24.6

Net finance costs 4.1 8.7

Taxation (credit) charge (2.1) 20.5

Amortisation of other intangible assets 22.3 11.8

Depreciation and impairment charge of property, plant and equipment 6.5 4.5

Share-based payment charges 7.4 6.3

Differences between pension charge and cash contributions 1.4 1.2

Increase in trade and other receivables (6.0) (12.8)

Decrease in trade and other payables and provisions (3.0) (5.9)

Increase in deferred income 9.1 10.6

Movement in derivative receivables and payables 4.1 (1.6)

Other non-cash movements 1.4 (0.8)

Net cash flow generated from continuing operations 79.5 67.1


Profit after taxation 614.7 36.8

Net finance costs 0.1 1.0

Taxation charge 3.9 22.8


Depreciation and impairment charge of property, plant and equipment 1.1 4.8

Share-based payment charges 2.3 12.0

Net profit on disposal of businesses (603.8) –

Loss on disposal of available for sale asset 1.3 –

Profit on disposal of available for sale asset (11.6) –

Increase (decrease) in inventories 0.1 (0.3)

Decrease (increase) in trade and other receivables 2.7 (25.9)

(Decrease) increase in trade and other payables and provisions (4.5) 18.9

(Decrease) increase in deferred income (11.7) 11.3

Other non-cash movements – 0.6

Net cash flow (used in) generated from discontinued operation (0.4) 101.6

Net cash flow generated from operations 79.1 168.7

Fin

ancial statem

ents




Non current assets

Goodwill 16 231.1 315.5

Other intangible assets 17 275.9 224.4

Property, plant and equipment 18 14.5 30.8

Investments 19 5.5 7.1

Trade and other receivables 20 8.7 1.6

Derivative financial instruments 23 2.0 4.9

Deferred tax assets 25 35.6 19.5

573.3 603.8

Current assets

Inventories – 2.1

Trade and other receivables 20 134.4 285.7

Derivative financial instruments 23 1.0 1.1

Current tax asset – 5.0

Cash and cash equivalents 15 56.8 120.3

192.2 414.2

Current liabilities

Trade and other payables 21 (88.8) (142.9)

Loans and overdrafts 22 (17.9) (46.3)

Derivative financial instruments 23 (1.6) (0.7)

Current tax liabilities (24.3) (31.2)

Provisions 24 (8.0) (7.7)

Deferred income 26 (105.3) (166.5)

(245.9) (395.3)

Net current (liabilities) assets (53.7) 18.9

Total assets less current liabilities 519.6 622.7

Non current liabilities

Trade and other payables 21 (3.9) (5.9)

Loans and overdrafts 22 (133.1) (73.1)

Derivative financial instruments 23 (2.3) (2.0)

Deferred tax liabilities 25 (27.6) (11.1)

Provisions 24 (11.3) (18.0)

Deferred income 26 (5.2) (6.6)

Retirement benefit obligations 27 (6.2) (4.3)

(189.6) (121.0)

Net assets 330.0 501.7

Equity

Share capital 4.3 5.9

Share premium account 12.7 151.9

Capital redemption reserve 147.7 0.3

Other reserves 32 165.3 193.8

Shareholders' funds 330.0 351.9

Non controlling interest – 149.8

Total equity 330.0 501.7


Mike Lawrie28 July 2011

Fin

ancial statem

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All figures in £ millionsShare

capitalShare

premium

Capital redemption

reserveOther

reserves

Attributableto the

owners ofthe parent

Non controlling

interestTotal

equity

At 1 June 2010 5.9 151.9 0.3 193.8 351.9 149.8 501.7

Total comprehensive income for the year – – – 645.9 645.9 (9.4) 636.5

Shares issued in the year to purchase Sophis 0.1 5.5 – – 5.6 – 5.6

Transactions with owners

Share options settled from own shares – 1.0 – 6.1 7.1 – 7.1

Business disposed – – – (39.9) (39.9) (140.4) (180.3)

Convertible debt – equity component – – – 16.1 16.1 – 16.1

Shares repurchased for cancellation (1.7) 1.7 (525.0) (525.0) – (525.0)

B share scheme – shares issued 145.7 (145.7) – – – – –

B share scheme – redemption of B shares (111.8) – 111.8 (105.6) (105.6) – (105.6)

B share scheme – dividends paid (33.9) 33.9 (33.9) (33.9) (33.9)

Expenses incurred on transactions with owners – – – (5.5) (5.5) – (5.5)

Share-based payments – – – 9.7 9.7 – 9.7

Deferred tax on share-based payments – – – 3.6 3.6 – 3.6

At 31 May 2011 4.3 12.7 147.7 165.3 330.0 – 330.0

No ordinary shares were purchased by the Misys Employee Share Trust during the current or preceding year.

for the year ended 31 May 2010


capitalShare

premium

Capital redemption

reserveOther

reserves

Attributableto the

owners ofthe parent

Non controlling

interestTotal

equity

At 1 June 2009 5.9 151.9 0.3 85.2 243.3 92.5 335.8

Total comprehensive income for the year – – – 82.1 82.1 40.7 122.8

Transactions with owners

Shares options settled from own shares – – – 2.9 2.9 – 2.9

Exercise of Allscripts share options – – – – – 0.8 0.8

Conversion of Allscripts 3.5% senior convertible debentures – – – 3.5 3.5 5.7 9.2

Share-based payments – – – 12.9 12.9 5.4 18.3

Deferred tax on share-based payments – – – 7.2 7.2 4.7 11.9

At 31 May 2010 5.9 151.9 0.3 193.8 351.9 149.8 501.7

Fin

ancial statem

ents



The consolidated financial statements have been prepared in accordance with International Financial Reporting Standards (IFRSs) and International Financial Reporting Interpretations Committee (IFRIC) interpretations as adopted by the European Union (EU) and with those parts of the Companies Act 2006 that are applicable to companies reporting under IFRS. The Group, in addition to complying with its legal obligation to apply IFRSs as adopted by the European Union, has also applied IFRSs as issued by the International Accounting Standards Board.

Going concernAs a result of the funding activities undertaken the Group has improved both its short-term and medium-term liquidity position and diversified its funding sources through the issuance of a convertible bond. Interest cover and debt to EBITDA ratios are comfortably within the targets set by the Board and banking covenants. The Group’s forecasts and projections, taking account of reasonable potential variations in trading performance, show that the Group should be able to operate within the level of its current financing for the foreseeable future.

After making enquiries, the Directors have a reasonable expectation that the Group has adequate resources to continue in operational existence for the foreseeable future. The Group therefore continues to adopt the going concern basis in preparing its consolidated financial statements.

Changes in accounting policy and disclosuresThe Group has adopted the following new and amended IASs and IFRSs as of 1 June 2010:

– IFRS 3 (revised), ‘Business combinations’, and consequential amendments to IAS 27, ‘Consolidated and separate financial statements’, IAS 28, ‘Investments in associates’, and IAS 31, ‘Interests in joint ventures’, are effective prospectively to business combinations for which the acquisition date is on or after the beginning of the first annual reporting period beginning on or after 1 July 2009.

The revised standard continues to apply the acquisition method to business combinations but with some significant changes compared with IFRS 3. For example, all payments to purchase a business are recorded at fair value at the acquisition date, with contingent payments classified as debt subsequently re-measured through the income statement. There is a choice on an acquisition-by-acquisition basis to measure the non-controlling interest in the acquiree either at fair value or at the non-controlling interest’s proportionate share of the acquiree’s net assets. All acquisition-related costs are expensed.

The revised standard was applied to the acquisition of the controlling interest in Sophis Management GP (Luxembourg) Sarl and Sophis Holding GP (Luxembourg) Sarl (together ‘Sophis’) on 28 February 2011. Acquisition-related costs of £7.7m have been expensed in the consolidated income statement, which previously would have been included in the consideration for the business combination. See note 16 for further details of the business combination that occurred in 2011.

– IAS 27 (revised) requires the effects of all transactions with non-controlling interests to be recorded in equity if there is no change in control and these transactions will no longer result in goodwill or gains and losses. The standard also specifies the accounting when control is lost. Any remaining interest in the entity is re-measured to fair value and a gain or loss is recognised in profit or loss.

The following IFRSs and IFRIC interpretations and amendments have been adopted by the Group but none had any material impact on the Group results or financial position:

– Annual improvements to IFRSs (2009) and (2010) – As required by the amendments to IAS 21 ‘The effects of changes in foreign exchange rates’ the Group has opted to recycle cumulative translation reserves, arising from differences on quasi-equity long-term intra-group loans, on loss of control of subsidiaries

– Amendment to IAS 32 ‘Classification of right issues’– Amendment to IAS 36 ‘Impairment of assets’– Amendment to IAS 39, ‘Financial instruments: Recognition

and measurement’, on eligible hedged items – Amendment to IFRS 2, ‘Share based payments –

Group cash-settled share-based payment transactions’ (effective 1 January 2010)

– IFRIC 17 ‘Distribution of non-cash assets to owners’

The following new standards, interpretations and amendments to existing standards have been published and are mandatory for the Group’s accounting periods beginning on or after 1 January 2011 or later periods but the Group has not early adopted them:

– IFRS 9 ‘Financial instruments’ (not yet endorsed by the EU) – IFRS 10 ‘Consolidated financial statements’ (not yet

endorsed by the EU)– IFRS 11 ‘Joint arrangements’ (not yet endorsed by the EU)– IFRS 12 ‘Disclosure of involvement with other entities’

(not yet endorsed by the EU)– IFRS 13 ‘Fair value measurement’ (not yet endorsed by

the EU)– IAS 24 (revised) ‘Related party disclosures’– IAS 27 (further revision) ‘Separate financial statements’

(not yet endorsed by the EU)– IAS 28 (further revision) ‘Investment in associates and joint

ventures (not yet endorsed by the EU)– IFRIC 14 ‘Prepayments of a minimum funding requirement’– IFRIC 19 ‘Extinguishing financial liabilities with equity

instruments’

The Group has undertaken an initial review of the impact of these new standards, interpretations and amendments and has concluded that they are unlikely to be material.

Fin

ancial statem

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A summary of the Group’s accounting policies is given below.

Accounting conventionThe consolidated financial information has been prepared under the historical cost convention, except for certain items which are measured at fair value, as disclosed in the accounting policies below. These accounting policies have been consistently applied to all the years presented, unless otherwise stated.

Basis of consolidationThe Group’s financial statements consolidate the financial statements of Misys plc (the ‘Company’) and its subsidiary undertakings. On acquisition, the assets, liabilities and contingent liabilities of a subsidiary are measured at their fair value at the date of acquisition.

The Group uses the acquisition method of accounting to account for business combinations. The consideration transferred for the acquisition of a subsidiary is the fair value of the assets transferred, the liabilities incurred and the equity interests issued by the Group. The consideration transferred includes the fair value of any asset or liability resulting from a contingent consideration arrangement. Acquisition-related costs are expensed as incurred. Identifiable assets acquired and liabilities and contingent liabilities assumed in a business combination are measured initially at their fair values at the acquisition date. On an acquisition-by-acquisition basis, the Group recognises any non-controlling interest in the acquiree either at fair value or at the non-controlling interest’s proportionate share of the acquiree’s net assets.

The excess of the consideration transferred, the amount of any non-controlling interest in the acquiree and the acquisition date fair value of any previous equity interest in the acquiree over the fair value of the Group’s share of the identifiable net assets acquired is recorded as goodwill. If this is less than the fair value of the net assets of the subsidiary acquired in the case of a bargain purchase, the difference is recognised directly in the statement of comprehensive income. Prior to the adoption of IFRS, goodwill arising on acquisition was taken to reserves in accordance with UK GAAP.

Subsidiary undertakings acquired during the period are included in the financial statements from the date of acquisition. Subsidiary undertakings disposed of are included in the financial statements up to the date of disposal. Accordingly, the consolidated income statement, the consolidated statement of comprehensive income and the consolidated statement of cash flow include the results and cash flows for the period of ownership.

Subsidiaries are all entities over which the Group has the power to govern the financial and operating policies generally accompanying a shareholding of more than one half of the voting rights. The existence and effect of potential voting rights that are currently exercisable or convertible are considered when assessing whether the Group controls another entity.

Inter-company transactions, balances and unrealised gains on transactions between Group companies are eliminated. Unrealised losses are also eliminated but considered as an impairment indicator of the asset transferred. Accounting policies of subsidiaries have been changed where necessary to ensure consistency with the policies adopted by the Group.

Critical accounting estimates and judgementsEstimates and judgements are continually evaluated and are based on historical experience and other factors, including expectation of future events that are believed to be reasonable under the circumstances. Due to inherent uncertainty involved in making estimates and assumptions, actual outcomes could differ from those assumptions and estimates. The critical judgements that have been made in arriving at the amounts recognised in the Group’s financial statements and the key sources of estimation uncertainty that have a significant risk of causing a material adjustment to the carrying values of assets and liabilities within the next financial year are discussed below.

Revenue recognitionThe recognition of Initial Licence Fees is dependent upon there being no significant vendor obligations outstanding. Management exercises judgement in assessing whether such obligations are significant and if necessary the value of the revenue to be deferred.

The revenue and profit of fixed price global services contracts is recognised on a percentage of completion basis when the outcome of a contract can be estimated reliably. Management exercises judgement in determining whether a contract’s outcome can be estimated reliably. Management also makes some estimates in the calculation of future contract costs, fair values of contracts, the value of discounts given, the value of upgrade clauses in contracts which are used in determining the value of amounts recoverable on contracts and timing of revenue recognition. Estimates are continually revised based on changes in the facts relating to each contract.

Impairment of goodwill and intangible assets Goodwill is reviewed annually for impairment and other intangible assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. An impairment review requires an estimate to be made of the ‘value in use’ or the ‘fair value less costs to sell’ as appropriate. The value in use calculation includes estimates about the future financial performance of the cash generating units, including management’s estimates of long-term operating margins and long-term growth rates.

Capitalisation of development costsExpenditure on developed software is capitalised when the Group is able to demonstrate all of the following: the technical feasibility of the resulting asset; the ability (and intention) to complete the development and use or sell it; how the asset will generate probable future economic benefits; and the ability to measure reliably the expenditure attributable to the asset during its development. Management estimates the future sales and long-term operating margins of the asset.

Fin

ancial statem

ents



Onerous property contractsProperty provisions require an estimate to be made of the net present value of the future costs of vacant and sublet properties. The calculation includes estimates of future cost involved, including management’s estimates of the long-term letting potential of the properties.

TaxationThe Group is subject to income taxes in numerous jurisdictions. Management is required to exercise significant judgement in determining the worldwide provision for income taxes. Certain transactions require the use of estimates and judgements to determine the financial effect where the ultimate tax determination is uncertain. When the final outcome of such matters is different, or expected to be different, from previous estimates, such differences will impact income tax in the period in which the determination is made.

The Group recognises deferred tax assets on temporary differences where it is probable that future profits will be available against which the deferred tax asset can be utilised. Where the future results differ from expectations, such differences will impact the deferred tax asset recognised in the period in which the determination is made.

Segmental reportingThe Group’s segmental analysis is by business sector which reflects the basis on which operations are reported to the Chief Operating Decision Maker. The business sectors are defined by distinctly separate product offerings or markets. Segment results, assets and liabilities include items directly attributable to a segment as well as those that can be allocated on a reasonable basis.

Revenue recognitionRevenue represents the fair value of consideration received or receivable from clients for goods and services provided by the Group, net of discounts and sales taxes. Revenue is recognised when a valid contract exists, delivery to a customer has occurred with no significant vendor obligations remaining and where the collection of the resulting receivable is considered probable.

Where these circumstances exist but no invoice to the customer has been raised, under the terms of the contracts revenue is recognised as normal but the corresponding receivable is shown as accrued income on the balance sheet.

Initial licence fees (‘ILF’) are the revenue generated when Misys sells the right to use a software product, including significant upgrades, and when a fee is payable for a significant variation of an existing product. ILF from sales of standard, unmodified software are recognised when a valid contract exists, delivery to a customer has occurred with no significant vendor obligations remaining and where the collection of the resulting receivable is considered probable. In instances where a significant vendor obligation exists, revenue recognition is delayed until the obligation has been satisfied. No revenue is recognised for multiple deliveries or multiple element products if an element of the contract remains undelivered and is essential to the functionality of the elements already delivered.

Licence and installation fees from sales of standard software sold on an Application Service Provider (ASP) model are recognised over the expected life of the contract.

Revenue from global services, such as implementation, training and consultancy, is recognised as the services are performed. In certain circumstances, the percentage of completion method is used to determine the degree of completion of a contract. This involves a comparison of the costs incurred on the contract to date with the total expected costs of the contract. Losses on contracts are recognised as soon as a loss is foreseen by reference to the estimated costs of completion.

Initial licence fees on sales of bespoke or heavily customised software, together with revenue from the associated professional services contract, are recognised on a percentage of completion basis over the period from the commencement of performance on the contract to customer acceptance.

Maintenance fees are recognised rateably over the period of the contract. Revenue from Electronic Data Interchange (EDI) and remote processing services (transaction processing) is recognised as the services are performed.

Share incentive schemesThe Group operates several equity-settled, share-based compensation plans. The fair value of the employee services received in exchange for the grant of the options is recognised as an expense.

The total amount to be expensed over the vesting period is determined by reference to the fair value of the options granted, excluding the impact of any non-market vesting conditions (for example, profitability and sales growth targets). Non-market vesting conditions are included in assumptions about the number of options that are expected to become exercisable.

At each balance sheet date, a revised estimate is made of the number of options that are expected to become exercisable. If the revised estimate differs from the original estimate, the charge to the income statement is adjusted over the remaining vesting period of the options.

The social security contributions payable in connection with the grant of the share options is considered an integral part of the grant itself and the charge will be treated as a cash-settled transaction.

PensionsThe Group operates a number of defined contribution pension schemes covering the majority of its employees. The costs of these pension schemes are charged to the income statement as incurred. In addition, the Group has a closed funded defined benefit pension scheme in the UK, as well as a number of other smaller defined benefit arrangements outside the UK.

The remaining active members of the closed UK defined benefit scheme now contribute to a defined contribution section of the scheme and do not accrue further benefits under the defined benefit scheme. Full independent actuarial valuations are carried out on a regular basis and updated to each balance sheet date. The assets of the schemes are held separately from those of the Group.

Pension scheme assets are measured using bid market values.

Fin

ancial statem

ents



Pension scheme liabilities are measured using a projected unit method and discounted at the current rate of return on a high quality corporate bond of equivalent term and currency to the liability. The pension scheme surplus (to the extent that it is recoverable) or deficit is recognised in full on the balance sheet. Any current or past service cost is recognised in the income statement. The net of the expected increase in the present value of the schemes’ liabilities, and the Group’s long-term expected return on its schemes’ assets, are included in the income statement.

Any difference arising from experience or assumption changes and differences between the expected return on assets and those actually achieved are charged or credited to the statement of comprehensive income and expense as they arise.

LeasesLeases are classified as finance leases whenever the terms of the lease transfer substantially all the risks and rewards of ownership to the lessee. All other leases are classified as operating leases.

Property, plant and equipment held under finance leases is capitalised in the balance sheet at the lower of cost or present value of the minimum lease payments and is depreciated over its useful life. The capital elements of future obligations under leases are included as liabilities in the balance sheet.

Lease payments are apportioned between finance charges and reduction of the lease obligation so as to achieve a constant rate of return on the remaining balance of the liability.

Rentals paid under operating leases are charged to income on a straight line basis over the lease term.

TaxationTaxation comprises the amount chargeable on the profits for the period, together with deferred taxation. Deferred taxation is recognised, using the liability method, in respect of all temporary differences that have originated but not reversed at the balance sheet date where transactions or events have occurred at that date that may result in an obligation to pay more, or a right to pay less, tax in the future.

Deferred tax assets are recognised only to the extent that it is probable that there will be sufficient taxable profits from which the underlying temporary differences can be deducted or where there are deferred tax liabilities against which the assets can be recovered.

Deferred tax is measured on an undiscounted basis at the tax rates that are expected to apply in the periods in which the related deferred tax asset is realised or the deferred tax liability is settled based on tax rates and laws enacted or substantively enacted at the balance sheet date.

The carrying amount of deferred tax assets is reviewed at each balance sheet date and are reduced to the extent that it is no longer probable that sufficient profits will be available. Unrecognised deferred tax assets are reassessed at each balance sheet date and are recognised to the extent that it is probable that future profits will allow the deferred tax asset to be recovered.

Current and deferred tax is recognised in the income statement except when the tax relates to items charged or credited directly to equity, in which case the tax is also recognised in equity.

Foreign currenciesItems included in the financial statements of Group companies are measured using the currency of the primary economic environment in which each entity operates (their functional currency). The consolidated financial statements are presented in sterling.

Each subsidiary translates foreign currency transactions into its own functional currency at rates ruling at the date of each transaction. Foreign currency monetary assets and liabilities are retranslated at rates ruling at the balance sheet date and currency translation differences are recognised in the income statement.

On consolidation, the results of overseas operations are translated to sterling at the average exchange rate for the period. Assets and liabilities of overseas operations are translated at exchange rates prevailing on the balance sheet date. The currency translation differences arising on both elements are recognised in the translation reserve.

Exchange gains and losses on foreign currency borrowings used to finance an equity investment in an overseas operation are offset in reserves against the exchange differences arising on the retranslation of the net investment, up to the level of the investment. The exchange differences on any ineffective portion are recognised in the income statement. Cumulative translation reserves are recycled to the income statement on loss of control of subsidiaries.

Goodwill and fair value adjustments arising on the acquisition of a foreign entity are treated as assets and liabilities of the foreign entity and translated at the closing rate.

When a foreign operation is disposed of, the cumulative translation differences that relate to it, including changes to any long-term intra-Group borrowing, are removed from equity and recognised in the income statement as part of the gain or loss on disposal.

The Group hedges its exposure to certain foreign exchange risks using derivatives and foreign currency borrowings.

Details of the accounting policies in respect of these items are given in the derivative financial instruments and hedge accounting section.

Business combinationsGoodwill represents the excess of the cost of an acquisition over the fair value of the Group’s share of the net identifiable assets of the acquired subsidiary at the date of acquisition.

Goodwill is recognised as an intangible asset. It is not amortised but is reviewed for impairment annually and whenever there is a potential indicator of impairment. Any impairment is recognised immediately in the income statement and is not subsequently reversed.

Fin

ancial statem

ents



On acquisition, specific intangible assets are identified and recognised separately from goodwill and then amortised over their estimated useful lives. These include such items as brand names, customer relationships and complete technology, to which value is first attributed at the time of acquisition. The capitalisation of these assets and related amortisation charges are based on judgments about the value and economic life of such items. These economic lives for intangible assets are estimated at between four and fifteen years for acquisition intangibles.

On the disposal of a previously acquired subsidiary, the attributable amount of goodwill is included in the determination of the gain or loss on disposal.

Transaction costsAcquisition-related costs are expensed as incurred.

Contingent considerationWhere part or the entire amount of purchase consideration is contingent on future events, it is classified as debt and recognised at fair value at acquisition date. This is subsequently re-measured through the income statement.

Discontinued operations and assets held for saleWhere the Group expects to recover the carrying amount of a group of assets through a sale transaction rather than through continuing use and a sale is considered highly probable at the balance sheet date, the assets are classified as held for sale and measured at lower of cost and fair value less costs to sell. No depreciation or amortisation is charged in respect of non current assets classified as held for sale.

If the group of assets constitutes a separate major line of business, it is classified as a discontinued operation.

Other intangible assets and research and development expenditureResearch expenditure, including the cost of in-house software research, is expensed in the period in which it is incurred.

Expenditure on developed software is capitalised when the Group is able to demonstrate all of the following: the technical feasibility of the resulting asset; the ability (and intention) to complete the development and use or sell it; how the asset will generate probable future economic benefits; and the ability to measure reliably the expenditure attributable to the asset during its development.

Development costs which do not meet these criteria are recognised in the income statement as incurred and are not subsequently capitalised.

Capitalised expenditure on developed software is amortised over its useful economic life in line with expected future economic benefits, once the related software product is available for use.

Intangible assets purchased separately, such as software licences that do not form an integral part of related hardware, are capitalised at cost and amortised over their useful economic lives. Intangible assets acquired through a business combination are initially measured at fair value and amortised on a systematic basis that reflects the pattern of benefits expected over their useful economic lives. If the pattern of future benefits cannot be determined reliably, the intangible assets are amortised on a straight line basis. The amortisation period is reviewed annually.

Estimated useful lives by major class of assets are as follows:Acquired intangibles 4-15 years

Developed software 3-7 years

Third party software 3-7 years

Property, plant and equipmentProperty, plant and equipment is stated at cost less accumulated depreciation. Cost includes the original purchase price of the asset and the cost attributable to bringing the asset to its working condition for its intended use. Depreciation is calculated on a straight line basis so as to write off the cost, less estimated residual value of each asset, over its expected useful life.

The residual values and useful economic lives of property, plant and equipment are reviewed annually. The useful lives by major class of asset applied from the date of purchase are:

Leasehold improvements 5-15 years or the period of

the lease if shorter

Computer and other equipment 4-10 years

Impairment of assetsAssets that are subject to depreciation or amortisation are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable and at each reporting date.

Goodwill and developed software not yet brought into use are reviewed for impairment annually. An impairment loss is recognised for the amount by which the asset’s carrying amount exceeds its recoverable amount. The recoverable amount is the higher of an asset’s fair value less costs to sell and its value in use.

For the purposes of assessing impairment, assets are grouped at the lowest levels for which there are separately identifiable cash flows (cash generating units).

An asset is derecognised upon disposal or when no future economic benefits are expected from its future use or disposal.

Any gain or loss arising on derecognition of the asset is included in the income statement in the year the asset is derecognised.

Fin

ancial statem

ents



Financial assetsFinancial assets are classified in the following categories: ‘at fair value through profit or loss’, ‘loans and receivables’ and ‘available for sale’.

‘Financial assets at fair value through profit or loss’ are financial assets held for trading. Derivatives are also classified as held for trading unless they are designated as hedges. Gains and losses arising from changes in fair value of ‘financial assets at fair value through profit or loss’ are included in the income statement in the period in which they arise. Financial assets at fair value through profit or loss are subsequently held at fair value.

‘Loans and receivables’ are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market and are carried at amortised cost.

‘Available for sale’ financial assets are measured at fair value. Unrealised gains and losses are recognised in equity except for impairment losses, interest and dividends arising from those assets which are recognised in the consolidated income statement.

Trade and other receivablesTrade receivables are recognised initially at fair value and subsequently measured at amortised cost using the effective interest method, less provision for impairment.

Where there is objective evidence that there is an impairment loss, the amount of loss is measured as the difference between the carrying amount and the present value of the estimated future cash flows discounted at the effective interest rate. The amount of loss is recognised in the income statement within administrative and other operating charges. The carrying amount of a receivable is reduced by appropriate allowances for estimated irrecoverable amounts through the use of an allowance account for trade receivables. Amounts charged to the allowance account are written off when there is no expectation of further recovery. Subsequent recoveries of amounts previously written off are credited against administrative and other operating charges in the income statement.

InvestmentsEquity instruments that do not have a quoted market price in an active market and whose fair value cannot be reliably measured are stated at cost, subject to review for impairment. Financial liabilities and equityFinancial liabilities and equity instruments are classified according to the substance of the contractual arrangements entered into. An equity instrument is any contract that evidences a residual interest in the assets of the Group after deducting all of its liabilities.

Trade payablesTrade payables are recognised initially at fair value and subsequently measured at amortised cost using the effective interest method.

Bank loans and overdraftsBank loans and overdrafts are initially recognised at fair value less directly attributable transaction costs and are subsequently measured at amortised cost using the effective interest rate method. The difference between the proceeds (net of transaction costs) and the redemption value is recognised in the income statement, within finance costs, over the period of the borrowings. Borrowings are classified as current liabilities unless the Group has an unconditional right to defer settlement of the liability for at least 12 months after the balance sheet date.

Equity instrumentsOrdinary shares are classified as equity. Incremental costs directly attributable to the issue of new shares or options are shown in equity as a deduction, net of tax, from the proceeds.

Where any Group company purchases the Company’s equity share capital (treasury shares), the consideration paid including any directly attributable costs (net of income taxes) is deducted from equity attributable to the Company’s equity holders until the shares are cancelled or re-issued.

Derivative financial instruments and hedge accountingDerivative financial instruments are initially recognised at fair value on the date a derivative is entered into and are subsequently remeasured at fair value. The method of recognising the resulting gain or loss depends on whether the derivative is designated as a hedging instrument and, if so, the nature of the item being hedged. Changes in the fair value of derivative financial instruments, where they are not designated as hedging instruments, are recognised in the income statement as operating costs.

Certain financial assets and liabilities, which are denominated in currencies other than those of the functional currencies of the entities concerned, are hedged using forward currency contracts. Gains and losses on these contracts are recorded in operating costs together with offsetting gains and losses on the underlying items.

Expected future non-sterling cash flows of the Group are also hedged with forward currency contracts. Hedge accounting is not applied and the gains and losses are recorded in the income statement under finance income/cost.

Hedge accountingThe business activities of the Group expose it to financial risks that arise from changes in both foreign exchange rates and interest rates. The Group uses forward currency contracts and interest rate swaps to hedge these exposures. In accordance with its treasury policy, the Group does not enter into derivatives for speculative purposes.

The Group designates certain derivatives as either:

(a) hedges of the fair value of recognised assets or liabilities or a firm commitment (fair value hedges);

(b) hedges of a particular risk associated with a recognised asset or liability or a highly probable forecast transaction (cash flow hedge); or

(c) hedges of a net investment in a foreign operation.

Fin

ancial statem

ents



Changes in the fair value of derivative financial instruments that are designated and effective as hedges of future cash flows are recognised directly in equity and any ineffective portion is recognised immediately in the income statement.

If the item being hedged is a non-financial asset or liability, the gains or losses on the associated derivative that had previously been recognised in equity are included in the measurement of the asset or liability at the time it is recognised.

Conversely, if the item being hedged is a financial asset or liability, any amounts arising from changes in fair value that are deferred in equity are subsequently recognised in the income statement in the same accounting period in which the hedged item affects net income.

Hedge accounting of a transaction is discontinued when the hedging instrument is sold, terminated or exercised or when the hedging instrument no longer qualifies for hedge accounting.

Under these circumstances, any cumulative gain or loss on the hedging instrument, which has already been recognised in equity, is retained in equity until the transaction occurs. However, if a hedged transaction is no longer expected to occur, any net cumulative gain or loss that has already been recognised in equity is immediately transferred to the income statement.

Embedded derivativesCertain long-term software licensing contracts are priced in currencies (usually US dollars, sterling or euros) which are not the functional currencies of the entities entering into the contracts. Under IAS 39, such contracts are considered to contain an embedded foreign currency derivative which must be extracted from the host contract and measured separately at each balance sheet date except where the currency of the contract is recognised as a common means of exchange in the country concerned. Gains or losses on these derivatives are charged or credited to the income statement. The contracts are generally of up to 10 years’ duration and this is therefore the period over which the assets and liabilities recognised in the balance sheet are expected to crystallise.

Quasi-equity loansIntercompany loans which are considered to be part of the long-term capital structure of subsidiary undertakings are deemed to be quasi-equity loans. As allowed by IAS 21, foreign exchange gains and losses on these loans are taken to reserves. If the subsidiary undertaking is subsequently sold, cumulative gains or losses taken to reserves are recycled to the income statement as part of the profit or loss on disposal.

Research and development tax creditsResearch and development tax credits are claimed against qualifying development spend in certain territories. These are recognised on an accruals basis in line with the related development costs. As permissible under IAS 20, the income statement impact of the credits is offset against development costs.

ProvisionsProvisions are recognised when the Group has a present legal or constructive obligation as a result of past events and it is probable that an outflow of resources will be required to settle the obligation and if this amount is capable of being reliably estimated. If such an obligation is not capable of being reliably estimated, no provision is recognised and the item is disclosed as a contingent liability where material.

Onerous property contractsProvision for onerous lease commitments on property contracts is based on an estimate of the net unavoidable lease and other payments in respect of these properties including dilapidation costs. These comprise rental and other property costs payable, plus any termination costs, less any income expected to be derived from the properties being sublet. The provisions are discounted at an appropriate rate to take into account the effect of the time value of money.

Exceptional itemsWhere certain expense or revenue items recorded in a period are material by their nature, size or incidence, these are disclosed as exceptional within a separate line on the income statement. Examples of items classified as ‘exceptional’ include:

a) profit or loss on the disposal of a business;b) restructuring costs including those associated with the

turnaround programme;c) acquisition integration costs; andd) transaction costs relating to business combinations

or disposals.

Cash and cash equivalentsCash and cash equivalents include cash held at bank and in hand together with short-term highly liquid investments with an original maturity of less than three months that are readily convertible to known amounts of cash and subject to an insignificant change in value.

Fin

ancial statem

ents



1. Segmental analysisOperating segments are reported in a manner consistent with the internal reporting to the Chief Operating Decision Maker (‘CODM’). The CODM has been identified as the Misys Operations Team, comprising the Group Chief Executive, Chief Financial Officer and all Executive Vice Presidents. The Misys Operations Team is responsible for resource allocation and assessing the performance of the operating segments. The operating segments are defined by distinctly separate product offerings or markets. The operating segments consist of Banking, Treasury & Capital Markets (TCM), Misys Sophis and Open Source. The Corporate & Other category includes Open Source and corporate costs as these operations are not reportable segments as required to be disclosed under IFRS 8. Global Services is considered as a horizontal function with performance assessed by the CODM in each of the defined operating segments.

Allscripts was previously reported as an operating segment but was disposed of in the year and hence is now reported under discontinued operation. Similarly, Misys Sophis has been reported as a new segment after its acquisition from 1 March 2011.

Certain costs within the Corporate & Other segment are allocated to the other reportable segments based on revenue.

Revenue, operating profit (loss) by business

All figures in £ millions Banking TCMMisys

SophisCorporate

& Other2011Total

Revenue 167.4 184.9 16.8 0.9 370.0

Adjusted operating profit 35.6 42.6 5.6 (11.9) 71.9

Amortisation of acquired intangibles (0.8) (0.5) (9.3) – (10.6)

Losses on embedded derivatives (3.8) (0.2) – – (4.0)

Operating profit (loss) before exceptional items 31.0 41.9 (3.7) (11.9) 57.3

Exceptional items (1.1) (4.5) (4.6) (10.8) (21.0)

Operating profit (loss) 29.9 37.4 (8.3) (22.7) 36.3

Exceptional finance income 4.8

Net finance costs (8.9)

Profit before taxation 32.2

Taxation before exceptional items (11.5)

Taxation on exceptional items and exceptional finance income 4.2

Exceptional tax credit 9.4

Taxation 2.1

Profit for the period from continuing operations 34.3

Profit for the period from discontinued operation 614.7

Profit for the year 649.0

Fin

ancial statem

ents



1. Segmental analysis continued


SophisCorporate

& Other2010Total

Revenue 161.7 179.5 – 0.7 341.9

Adjusted operating profit 32.3 42.0 – (10.7) 63.6

Amortisation of acquired intangibles (1.0) – – – (1.0)

Gains on embedded derivatives 1.4 0.1 – – 1.5

Translation exchange differences recycled from reserves – – – (2.0) (2.0)

Operating profit (loss) before exceptional items 32.7 42.1 – (12.7) 62.1

Exceptional items (1.4) – – (7.0) (8.4)

Operating profit (loss) 31.3 42.1 – (19.7) 53.7

Exceptional finance income 1.4

Net finance costs (10.1)

Profit before taxation 45.0

Taxation before exceptional items (12.5)

Taxation on exceptional items and exceptional finance cost 2.8

Exceptional tax charge (10.8)

Taxation (20.5)

Profit for the year from continuing operations 24.5

Profit for the year from discontinued operation 36.9

Profit for the year 61.4

Excluded from the above are the following items relating to the discontinued operation (Allscripts): revenue £101.7m (2010: £440.4m); operating profit before exceptional items £12.5m (2010: £68.7m) and profit before tax £618.6m (2010: £59.7m).

All revenue is derived from external customers. No individual customer contributed more than 10% of total Group revenue in the current or prior year.

RevenueThe table below gives a list of the revenue streams by segment.

All figures in £ millions Banking TCM

MisysSophis

Corporate & Other

2011Total Banking TCM

Corporate & Other

2010Total

Initial licence fees 48.0 48.1 6.0 – 102.1 40.3 51.3 – 91.6

ASP subscriptions revenue 0.1 3.0 2.2 0.1 5.4 0.2 3.5 – 3.7

Maintenance 83.8 76.3 5.7 0.2 166.0 84.7 76.3 – 161.0

Transaction processing – 10.8 – – 10.8 – 10.2 – 10.2

Global services 35.5 46.7 2.9 0.6 85.7 36.5 38.2 0.7 75.4

167.4 184.9 16.8 0.9 370.0 161.7 179.5 0.7 341.9

Sophis was acquired on 28 February 2011 and so contributed no revenue in the preceding year.

Fin

ancial statem

ents



Other segmental information


SophisCorporate

& OtherContinuing operations


2011Total

Net assets (liabilities)

Assets 129.0 121.0 415.2 100.3 765.5 – 765.5

Liabilities (100.1) (98.6) (24.1) (212.7) (435.5) – (435.5)

28.9 22.4 391.1 (112.4) 330.0 – 330.0

Capital investment

Goodwill and acquired intangibles 0.5 2.0 389.7 (0.9) 391.3 – 391.3

Developed software 13.4 7.2 1.1 (0.3) 21.4 6.6 28.0

Other 2.2 3.0 0.2 0.4 5.8 1.9 7.7

16.1 12.2 391.0 (0.8) 418.5 8.5 427.0

Depreciation, amortisation, impairment and derecognition

Acquired intangibles 0.8 0.5 9.3 – 10.6 3.5 14.1

Developed software 5.5 3.6 0.5 0.1 9.7 1.1 10.8

Other 3.4 2.7 0.5 1.9 8.5 1.5 10.0

9.7 6.8 10.3 2.0 28.8 6.1 34.9

Share-based payment charge 3.2 1.9 0.1 4.6 9.8 2.3 12.1

Employees (average number) 2,075 1,285 100 307 3,767 640 4,407


SophisCorporate

& OtherContinuing operations


2010Total

Net assets (liabilities)

Assets 118.1 137.3 – 51.3 306.7 711.3 1,018.0

Liabilities (103.0) (87.3) – (169.1) (359.4) (156.9) (516.3)

15.1 50.0 – (117.8) (52.7) 554.4 501.7

Capital investment

Developed software 11.6 6.5 – 0.3 18.4 13.4 31.8

Other 1.7 1.1 – 1.6 4.4 10.5 14.9

13.3 7.6 – 1.9 22.8 23.9 46.7

Depreciation, amortisation, impairment and derecognition

Acquired intangibles 1.0 – – – 1.0 14.8 15.8

Developed software 5.0 3.9 – – 8.9 3.0 11.9

Other 3.2 2.6 – 0.8 6.6 7.0 13.6

9.2 6.5 – 0.8 16.5 24.8 41.3

Share-based payment charge 1.0 1.0 – 4.0 6.0 13.7 19.7

Employees (average number) 1,525 1,029 – 1,164 3,718 2,412 6,130

Capital investment comprises expenditure on investments, goodwill, other intangible assets and property, plant and equipment.

Banking and TCM assets consist primarily of goodwill, other intangible assets, property, plant and equipment and trade and other receivables and exclude cash balances, corporation tax recoverable and deferred tax assets which are included within Corporate as these are managed centrally. Misys Sophis assets include all of the above items, including cash and taxation assets.

Banking and TCM liabilities consist primarily of trade and other payables and provisions and exclude bank overdrafts, loans, corporation tax payable, deferred tax liabilities and retirement benefit obligations, which are included within Corporate as these are managed centrally. Misys Sophis liabilities include all of the above items including taxation liabilities.

Fin

ancial statem

ents



1. Segmental analysis continuedMisys plc is domiciled in the UK. The total revenue from external customers in the UK and United States of America is included in the table below. The total revenue from external customers from other countries is shown under the regional headings below.

All figures in £ millionsUnited

KingdomRest of Europe Asia Pacific

United States of America

Middle East and Africa Other

2011Total

Revenue by destination 40.6 141.8 62.9 67.7 47.5 9.5 370.0

Assets by location of operations 112.6 497.4 26.2 94.5 26.3 8.5 765.5

Non-current assets by location of operations 32.0 443.3 – 54.9 3.5 2.0 535.7

Capital investment by location of operations 4.6 397.3 – 13.4 2.3 0.9 418.5

Employees by location of operations (average number) 535 537 2,130 454 111 – 3,767

All figures in £ millionsUnited

KingdomRest of Europe Asia Pacific

United States of America

Middle East and Africa Other

2010Total

Revenue by destination 47.7 131.8 50.1 59.6 46.5 6.2 341.9

Assets by location of operations 90.5 63.2 28.1 92.8 24.3 7.8 306.7

Non-current assets by location of operations 36.5 39.2 1.7 57.6 0.4 2.2 137.6

Capital investment by location of operations 7.2 6.5 0.6 7.5 – 1.0 22.8

Employees by location of operations (average number) 402 543 2,077 490 111 95 3,718

Excluded from the above are the following items relating to the discounted operation (Allscripts) all of which relate to the United States of America: revenue £101.7m (2010: £440.4m): assets nil (2010: £711.3m); non-current assets nil (2010: £441.8m); capital investment £8.5m (2010: £23.4m); and average number of employees 640 (2010: 2,412).

2. Exceptional itemsAll figures in £ millions 2011 2010

Restructuring activities and turnaround programme (A) (4.4) (8.7)

Advisory and professional fees related to corporate activities (B) (8.9) (4.9)

Integration costs (C) (7.7) –

Receipt from sale of legal claim (D) – 3.9

Exceptional refund of VAT (E) – 1.3

Exceptional items within continuing operations (21.0) (8.4)

Exceptional finance income within continuing operations (F) 4.8 1.4

Taxation credit on exceptional items within continuing operations 4.2 2.8

Exceptional tax credit (charge) (G) 9.4 (10.8)

Exceptional items after taxation within continuing operations (2.6) (15.0)

Loss on disposal of Medication Services Group – (0.3)

Profit on disposal of businesses (H) 603.8 –

Advisory and professional fees (7.9) (7.8)

Net profit on disposal of available for sale asset (I) 10.3 –

Exceptional items within discontinued operation 606.2 (8.1)

Taxation credit on exceptional items within discontinued operation 0.7 1.8

Exceptional items after taxation within discontinued operation 606.9 (6.3)

Exceptional items after taxation 604.3 (21.3)

Fin

ancial statem

ents



(A) Restructuring activities and turnaround programmeA total charge of £4.4m (2010: £8.7m) has been recognised as an exceptional item in relation to costs incurred in the Group-wide restructuring and turnaround programme. In the current year, these costs primarily relate to:

severance costs £5.9m (2010: £3.4m) in relation to the relocation of development activities for the USA and Western Europe and other restructuring programmes; and

net property credit of £1.5m (2010: cost of £5.3m) being a provision release in respect of vacant properties which have been sublet of £3.8m (2010: cost of £7.6m) offset by a charge of £2.3m (2010: credit of £2.3m) on the surrender of a property lease.

These costs are analysed by business as follows:


Banking 1.2 1.4

TCM 4.4 –

Corporate & Other (1.2) 7.3

4.4 8.7

There was a related cash outflow of £6.0m in the current year (2010: £4.6m).

(B) Advisory and professional fees relating to corporate activitiesIncluded within the current year costs are £7.7m (2010: £nil) regarding the acquisition of Sophis, comprised of consultancy, legal and tax fees regarding the acquisition. Costs incurred for other corporate activities are £1.2m (2010: £4.9m).

(C) Integration costsThe current year costs comprise £3.1m relating to a write-off of software held by Misys which is no longer required following the merger with Sophis, £3.0m being provision for onerous lease costs created on the exit of Sophis properties, £0.4m being write-off of fixtures and fittings in these properties and £1.2m (2010: £nil) provision for management retention bonuses agreed as part of the acquisition.

(D) Receipt from sale of legal claimOn 27 May 2010, an offer of $6m from a third party was accepted to sell an outstanding claim against Lehman Brothers arising from its administration in 2009. The original claim by Misys arose as a result of the failure to complete funding for the Allscripts acquisition. This cash was received before 31 May 2010.

(E) Exceptional refund of VATAgreement was reached with HMRC relating to the repayment of VAT incurred between years 1988 to 1995 relating to acquisition costs. A total of £2.7m including interest (see F) was credited in 2010.

(F) Exceptional finance incomeA net credit of £4.8m has arisen as a result of exceptional items in relation to the disposal of Allscripts and acquisition of Sophis (see note 7). Last year, a credit of £1.4m had arisen as a result of supplemental interest on the refund of VAT (see E above).

(G) TaxationThe exceptional current tax credit of £9.4m included within UK prior year items relates to the successful settlement of historical UK tax issues arising in 2002 to 2006 resulting in the release of the related provisions. In 2010, the exceptional tax charge of £10.8m relates to the loss of future tax benefits in continuing operations following the restructuring of the US group due to the disposal of Allscripts recognised as a £2.7m charge within current taxation and a £8.1m charge within deferred taxation.

(H) Profit on disposal of businessA profit of £603.8m has been realised as a result of the sale of the Group’s majority stake in Allscripts in August 2010. The profit on disposal is exempt from tax in the relevant taxing jurisdiction. In addition, Allscripts incurred £7.9m of exceptional costs in the period to the date of disposal relating to the separation from Misys and merger with Eclipsys.

(I) Net profit on available for sale assetsFollowing the disposal of Allscripts (note H above) in August 2010, there was a further disposal of 12.5m shares of the residual shareholding in November 2010. Misys received proceeds of £139.4m which gave rise to a loss of £1.3m compared to the carrying value calculated as at August 2010. In February 2011, there was a further disposal of 6.5m shares of the residual shareholding. Misys received proceeds of £84.9m which gave rise to a profit of £11.6m compared to the carrying value calculated as at November 2010. This profit from disposal is also exempt from tax.

3. Discontinued operationThe results of the Group’s discontinued operation (Allscripts), which have been included in the consolidated income statement, were as follows:


Revenue 101.7 440.4

Operating costs (89.2) (371.7)

Operating profit for the period 12.5 68.7

Exceptional items (note 2) 606.2 (8.1)

Net finance costs (0.1) (1.0)

Profit before tax from discontinued operation 618.6 59.6

Taxation (note 8) (3.9) (22.7)

Profit after tax from discontinued operation 614.7 36.9

Employees costs related to Allscripts include:


Wages and salaries 34.4 133.9

Social security costs – 10.4

Share-based payment benefits 2.4 13.8

36.8 158.1


Net cash flows from operating activities (1.4) 93.9

Net cash flows from investing activities (8.5) (20.8)

Net cash flows from financing activities – (26.9)

(9.9) 46.2

Fin

ancial statem

ents



3. Discontinued operation continuedA profit of £603.8m arose on disposal of Allscripts, being the proceeds of disposal less the carrying amount of the Allscripts net assets and attributable goodwill.

All figures in £ millions

Proceeds on disposal, net of underwriting expenses 764.2

Fair value of investment retained 214.1

Net assets at disposal less non-controlling interest (137.3)

Goodwill disposed (note 16) (240.0)

Disposal costs (9.4)

Foreign exchange recycling from reserves 12.2

Profit on disposal 603.8

After the disposal in August 2010, Misys retained a 10.3% interest in Allscripts. This holding was reduced to 3.5% as a result of a further disposal in November 2010 with the final disposal of Allscripts stock taking place in February 2011. In addition, Allscripts incurred £7.9m of exceptional costs in the period from 1 June 2010 to disposal in August 2010.


Advisory and professional fees (7.9) (7.8)

Loss on disposal of Medication Services Group – (0.3)

Net profit on disposal of available for sale asset 10.3 –

2.4 (8.1)

4. Operating costsAll figures in £ millions 2011 2010

Cost of sales 194.2 178.9

Sales and marketing costs 41.2 37.8

Administrative and other operating charges 77.3 63.1

Exceptional items (note 2) 21.0 8.4

333.7 288.2

Included within operating costs are the following items:


Research and development expenditure 69.3 64.4

Capitalisation of developed software (21.4) (18.4)

47.9 46.0

Amortisation of developed software 9.7 8.9


Impairment and depreciation of property, plant and equipment 6.5 4.5

Foreign exchange differences 0.8 1.9

Operating lease costs

– and buildings 13.8 15.3

– plant and equipment 0.2 0.3

Amortisation of other intangible assets includes £9.8m (2010: £nil) in respect of intangible assets acquired with Sophis.

Details of employee costs are provided in note 6.

During the year, the Group obtained the following services from the Company’s auditor and its associates:


Fees payable to PricewaterhouseCoopers LLP for the audit of the consolidated financial statements 0.6 0.6

Statutory audit fees payable to associate members of PricewaterhouseCoopers LLP 0.4 0.9

Other fees in respect of assurance services required by legislation and regulation 0.8 1.6

1.8 3.1

Tax services 0.7 2.4

Other services 0.2 0.6

2.7 6.1

Tax fees in 2010 include £1.7m relating to the disposal of Allscripts.

Fin

ancial statem

ents



5. Share-based paymentsThis note summarises IFRS 2 ‘Share-based payment’ disclosure requirements for Misys plc share option schemes. During the year, the share-based payment charge including accrued social security expense was £9.8m (2010: £6.0m) related to continuing operations and £2.3m (2010: £13.7m) related to the discontinued operation. Excluding social security expense, the share-based payment charge was £7.4m (2010: £6.3m) related to continuing operations and £2.3m (2010: £12.0m) related to the discontinued operation.

The following material share-based payment arrangements existed at the end of the year:

Type of arrangement

No. of options

granted in 2011‘000

No. of options

granted in 2010‘000

Fair value per share of 2011 grant1

£

Fair value per share of

2010 grant1

£

Contractual life

years

Long-Term Incentive Plan – – – – 8

Misys 1998 Unapproved Share Option Plan (Type 1) – – – – 10

Misys Share Award Plan 15 15 2.71 1.84 10

Misys Senior Executive Bonus Plan 1,112 1,766 1.11 0.67 5

Sharesave (UK) 178 312 1.20 0.79 3

Sharesave (non UK) 122 413 1.17 1.11 3

Transformation Incentive Plan:

– TIP (nil cost) – – – – 10

– TIP (market value) – – – – 10

Restricted stock units contract – – – – 2

Trustee Share Award 441 – 2.85 – 10

CEO Incentive Plan 1,600 – 1.96 – 3

Omnibus Share Plan 4,915 6,464 2.09 1.66 3

1 Where several grants were made in the year, the weighted average fair value has been provided.

Details of the Long-Term Incentive Plan (LTIP), the Misys Senior Executive Bonus Plan (MSEBP) and the Transformation Incentive Plan (TIP) are shown in the Directors’ remuneration report.

In the years ended 31 May 2009, 2010 and 2011, grants under the Misys Share Award Plan (MSAP) were made to senior managers at nil cost.

The Sharesave Schemes provide for a yearly award of options at a discount to the market price and are available to all Group employees. In the tables below, similar share-based payment arrangements have been aggregated as follows:

Share option schemes – nil cost: includes LTIP, MSAP, MSEBP, TIP (nil cost) CEO Incentive Plan and Trustee Share Award; Share option schemes – market value: includes Type 1, TIP (market value) and Omnibus Share Plan; and Savings-related share option schemes: includes the Sharesave (UK) and Sharesave (non UK) schemes.

Modification of share option schemesThe non-market performance conditions of certain share option schemes were modified during the year to reflect the impact of the return of cash to shareholders following the disposal of Allscripts via a tender offer and B share scheme. This modification has not resulted in a change to the fair value of the schemes and no additional charge has been expensed during the year as a result of the modification. The schemes modified were the Omnibus Share Plan, Transformation Incentive Plan, MSEBP, Share Options, MSAP and Sharesave.

Fin

ancial statem

ents



5. Share-based payments continuedShare-based payment chargesShare-based payment charges are calculated by spreading the fair value of an option over the vesting period having taken into account any performance conditions when estimating the number of options expected to vest. The vesting period is typically three years from date of grant or the beginning of the bonus year in respect of grants under the MSEBP.

All options are valued using the Black-Scholes option pricing model except grants under the LTIP and TIP which use the Monte Carlo option pricing model as they have market performance conditions which are included in the fair value calculation.

The following assumptions have been used in the option pricing models:

Type of arrangement 2011 2010 2009

Risk-free interest rate % 0.6-1.99 0.6-2.2 0.5-5.0

Dividend yield % nil nil nil

Volatility1 of Misys plc ordinary shares %

– Share option schemes – nil cost 32-47 41-57 39-65

– Share option schemes – market value 39-47 42-46 41-61

– Savings-related share option schemes 44-46 45-46 38-46

Expected lives (years) of options granted under:

– Share option schemes – nil cost 1-6.5 1.0-6.5 0.4-6.5

– Share option schemes – market value 6.5-6.5 3.0-6.5 3.0-6.5

– Savings-related share option schemes 3.1-3.3 3.1-3.3 3.1-3.3

1 Expected volatility was calculated using the share price history for the period equivalent to the expected life.

The following additional assumptions have been used for the Monte Carlo option pricing models:

LTIP – Total Shareholder Return 2011 2010* 2009

Volatility of the top 30 TechMark companies % – – 42

Volatility1 of Misys plc ordinary shares % 45 – –

Correlation coefficient – – 0.30

* There were no options granted during the year that required use of the Monte Carlo option pricing model.

All models incorporate the share price at the date of grant. The weighted average share price of options granted during the year was £2.86 (2010: £1.87; 2009: £1.27).

Fin

ancial statem

ents



Options outstandingAt 31 May 2011, options and awards outstanding and a reconciliation of movements between balance sheet dates are shown in respect of the Company’s ordinary shares of 1p each under the following schemes:

Share option schemes – nil cost

Share option schemes – market value

Savings-related share option schemes

Number‘000

Weighted fair value

£Number

‘000

Weighted exercise

price£

Weighted fair value

£Number

‘000

Weighted exercise

price£

Weighted fair value

£

At 1 June 2008 10,018 – 18,156 2.79 – 1,060 1.81 –

Options granted 8,871 1.05 2,765 1.23 0.51 688 1.13 0.61

Options exercised (1,259) – – – – – – –

Options lapsed or expired (3,134) – (6,149) 2.65 – (512) 1.84 –

At 31 May 2009 14,496 14,772 2.55 1,236 1.42

Options granted 7,062 1.76 1,183 1.84 0.64 725 1.44 0.97

Options exercised (2,895) – (838) 1.97 – (75) 1.90 –

Options lapsed or expired (3,921) – (4,310) 2.50 – (269) 1.57 –

At 31 May 2010 14,742 10,807 2.55 1,617 1.38

Options granted 5,909 2.35 2,174 3.02 1.29 300 2.34 1.18

Options exercised (4,277) (3,034) 2.23 (213) 1.87

Options lapsed or expired (4,340) (2,322) 3.85 (185) 1.39

At 31 May 2011 12,034 7,625 2.40 1,519 1.50

Range of exercise prices – £1.23-£3.43 £0.94-£2.78

Weighted average remaining life 4.16 Years 4.65 Years 1.92 Years

The average share price during the year ended 31 May 2011 was £2.99 (2010: £2.08).

Weighted average exercise information is excluded for nil cost schemes.

Options outstanding at 31 May 2011 are further analysed as follows:




Number‘000

Latestexercise

dateNumber

‘000

Weighted exercise

price£

Latestexercise

dateNumber

‘000

Weighted exercise

price£

Latestexercise

date

2002 – – 725 3.40 14/11/2011 – – –

2003 – – 173 2.04 25/07/2011 – – –

2004 – – 480 2.53 08/03/2012 – – –

2005 – – 511 2.04 09/05/2015 – – –

2006 10 28/07/2015 – – – – – –

2007 797 17/05/2017 1,403 2.18 17/05/2017 – – –

2008 245 19/03/2018 485 2.41 10/08/2017 126 1.32 01/01/2012

2009 1,541 28/10/2018 1,010 1.25 12/05/2019 503 1.12 31/12/2012

2010 3,959 10/02/2020 759 1.84 13/08/2019 600 1.46 01/01/2014

2011 5,482 02/09/2020 2,079 3.03 18/08/2020 290 2.35 31/12/2014

12,034 7,625 2.40 1,519 1.50

Options exerciseableAt the balance sheet date, the following options and awards had vested:




Number‘000

Number‘000

Weighted exercise price

£Number

‘000

Weighted exercise price

£

2009 305 8,812 3.01 24 1.89

2010 4,204 8,249 2.80 – –

2011 1,182 3,842 2.45 1 1.91

Fin

ancial statem

ents



6. Directors and employeesDirectors’ remunerationDetails of the Directors’ remuneration are given in the Directors’ remuneration report.

Employee costsAll figures in £ millions 2011 2010

Wages and salaries 166.1 162.0

Social security costs 16.0 15.2

Pension costs 5.3 5.1

Share-based payment benefits 9.8 6.0

197.2 188.3

The above analysis represents information regarding continuing operations only. Information regarding the discontinued operation is given in note 3.

7. Net finance costsAll figures in £ millions 2011 2010

Bank loans and overdraft interest payable (4.2) (6.7)

Interest payable on convertible bond (2.9) –

Amortisation of financing facility costs (1.3) (2.0)

Expected return on pension scheme assets (note 27) 2.4 2.4

Interest cost on pension scheme liabilities (note 27) (2.6) (2.4)

Realised loss on forward currency exchange contracts (0.9) (0.4)

Unwinding of discount on provisions (note 24) (1.0) (1.3)

Finance costs (10.5) (10.4)

Exceptional finance income 4.8 1.4

Interest receivable 1.6 0.3

Net finance costs (4.1) (8.7)

An element of the Group’s derivatives is ineligible for hedge accounting under IFRS. Gains or losses on these derivatives arising from market movements are credited or charged to financing fair value re-measurements within finance income and finance expense in the Group income statement. These gains or losses are not regarded as part of operating profit as they relate to financing activities of the Group.

Details of exceptional finance income are given below:

All figures in £ millions 2011

Foreign exchange gains and net profits on options and forward contracts taken out to hedge the proceeds received from the sale of the Allscripts stake 11.3

Fair value loss on currency forward contracts and options taken out to hedge the costs of the proposed Sophis acquisition (2.5)

Arrangement fees written off relating to term loans repaid in the period (note 22) (2.7)

Unconditional arrangement fees for new credit facilities to fund Sophis acquisition incurred prior to shareholder approval (note 22) (1.3)

Total exceptional finance income 4.8

In the prior year, a credit of £1.4m arose as a result of supplemental interest on the refund of a VAT claim (see note 2) which was treated as exceptional.

8. TaxationTaxation on ordinary activities


Current taxation

UK corporation tax (4.9) (0.2)

UK prior year items (note 2G) 10.7 (0.3)

Overseas taxation (13.3) (10.4)

Overseas prior year items 1.1 3.6

Irrecoverable withholding taxes (2.2) (2.1)

Current taxation (including tax relating to continuing operations' exceptional items) (8.6) (9.4)

Deferred taxation (note 25) 10.7 (11.1)

Tax credit (charge) – continuing operations 2.1 (20.5)

The taxation charge before exceptional items was £11.5m (2010: £12.5m).

Fin

ancial statem

ents



Included within current taxation are credits of £5.7m (2010: £2.8m) in respect of tax on exceptional items, a charge of £1.5m (2010: £0.4m) in respect of tax on exceptional interest and a credit of £9.4m (2010: charge of £10.8m) in respect of exceptional tax items (see note 2).

The taxation charge for the current year based on profit before taxation is lower (2010: higher) than the standard rate of UK corporation tax for the following reasons:


Profit on ordinary activities before taxation 32.2 45.0

Tax on profit on ordinary activities at the standard rate of UK tax of 27.8% (2010: 28%) (8.9) (12.6)

Effects of:

Permanent differences (5.6) (11.7)

Profits arising overseas which are subject to rates of tax other than the UK standard rate (4.4) 3.5

Impact of changes in tax rates (1.5) 0.6

Adjustments to UK taxation charge in respect of prior periods (note 2G) 10.7 (0.3)

Adjustments to overseas taxationcharge in respect of prior periods 1.1 3.6

Effects of deferred tax recognition in respect of temporary differences 15.4 (2.1)

Deferred tax effect of prior periods (2.5) 0.5

Irrecoverable withholding tax (2.2) (2.0)

Total tax credit (charge) 2.1 (20.5)


Total tax credit (charge)

Continuing operations 2.1 (20.5)

Discontinued operation (3.9) (22.7)

(1.8) (43.2)

The total tax charge for the year includes UK prior year adjustments of £10.7m credit (2010: £0.3m charge) which comprises an exceptional tax credit for £9.4m (2010: £nil) (see note 2G) and a non exceptional credit of £1.3m (2010: £0.3m). The charge also includes a credit for the first time recognition of deferred tax assets of £15.4m (2010: £2.1m charge). This covers a numbers of countries where deferred tax assets are now considered likely to be utilised against future profits arising in the corresponding tax jurisdiction.

A number of changes to the UK Corporation tax system were announced in the March 2011 UK Budget Statement. Legislation to reduce the main rate of corporation tax from 26% to 25% from 1 April 2012 is expected to be included in the Finance Act 2011. Further reductions to the main rate are proposed to reduce the rate by 1% per annum to 23% by 1 April 2014. These further changes had not been substantively enacted at the balance sheet date and are not therefore included in these financial statements.

The effect of the changes expected to be enacted in the Finance Act 2011 would be to reduce the deferred tax asset provided at the balance sheet date by £1.0m. This £1.0m decrease in the deferred tax asset would decrease profit by £0.9m and decrease other comprehensive income by £0.1m. This decrease in the deferred tax asset is due to the reduction in the corporation tax rate from 26 per cent to 25 per cent with effect from 1 April 2012.

The proposed reductions of the main rate of corporation tax by 1% per year to 23% by 1 April 2014 are expected to be enacted separately each year. The overall effect of the further changes from 25% to 23%, if applied to the deferred tax balance at the balance sheet date, would be to further reduce the deferred tax asset by an additional £1.9m (being £0.9m decrease in profit and £0.1m decrease in other comprehensive income in 2013 and a further £0.9m decrease in profit in 2014).

Fin

ancial statem

ents



9. Earnings per share Earnings per share (‘EPS’) have been calculated by dividing profit attributable to shareholders by the weighted average number of shares in issue during the period. Diluted EPS includes the dilutive effect of outstanding share options.

Adjusted basic and adjusted diluted EPS are presented to provide more comparable and representative information. Accordingly, the adjusted basic and adjusted diluted EPS figures exclude exceptional items, gains and losses on embedded derivatives, amortisation of acquired intangibles and translation exchange differences recycled from reserves.

All figures in £ millionsContinuingoperations

Discontinuedoperation 2011

Continuingoperations

Discontinuedoperation 2010

Profit for the period after tax 34.3 614.7 649.0 24.5 36.9 61.4

Non controlling interest – – – – (17.1) (17.1)

Profit attributable to shareholders 34.3 614.7 649.0 24.5 19.8 44.3

Add back:

Exceptional items after taxation (note 2) 2.6 (606.9) (604.3) 15.0 6.3 21.3

(Losses) gains on embedded derivatives (after tax) 3.0 – 3.0 (1.0) – (1.0)

Amortisation of acquired intangibles (after tax) 9.0 3.5 12.5 1.0 9.7 10.7

Translation exchange differences recycled from reserves (after tax) – – – 0.7 – 0.7

Adjusted profit items attributable to non controlling interest – (5.1) (5.1) – (6.8) (6.8)

Adjusted profit attributable to shareholders 48.9 6.2 55.1 40.2 29.0 69.2

Pence Pence Pence Pence Pence Pence

Basic earnings per share 7.7 138.6 146.3 4.6 3.8 8.4

Diluted earnings per share 7.6 135.7 143.2 4.6 3.6 8.2

Adjusted basic earnings per share 11.0 1.4 12.4 7.6 5.5 13.1

Adjusted diluted earnings per share 10.8 1.4 12.2 7.5 5.3 12.8

The weighted average numbers of basic and diluted shares in issue during the year were 443.5m and 453.1m respectively (2010: 529.4m and 537.4m).

10. Net interest paidAll figures in £ millions 2011 2010

Interest received 1.7 0.4

Bank loans and overdraft interest paid (5.6) (11.0)

Net cash flow from interest paid (3.9) (10.6)

Net interest paid and recognised within the discontinued operation during the period included in the above was £0.2m (2010: £1.2m).

11. Acquisitions and disposals of businessesAll figures in £ millions 2011 2010

Cash consideration paid in respect of current year acquisitions (211.9) –

Cash consideration paid in respect of prior year acquisitions – (2.4)

Cash consideration received in respect of current year disposals (net of expenses) 676.4 –

Cash consideration paid in respect of prior year disposals – (0.5)

Net cash flow from acquisitions and disposals 464.5 (2.9)

Net cash outflow on current year acquisitions represents the cash consideration paid for the equity interest on the acquisition of Sophis of £229.9m offset by cash acquired of £18.0m (see note 16).

Cash consideration received in respect of current year disposals represents proceeds on disposal of Allscripts of £764.2m net of cash held by Allscripts at the time of disposal of £78.4m and disposal costs of £9.4m (see note 3).

Fin

ancial statem

ents



12. Other capital expenditure and financial investmentAll figures in £ millions 2011 2010

Purchase of third party software (2.7) (3.8)

Purchase of acquired intangibles (0.5) –

Purchase of property, plant and equipment (5.0) (8.2)

Purchase of investments (1.4) (1.3)

Sale of property, plant and equipment 0.4 0.4

Proceeds on sale of investments 224.3 2.0

Net cash flow from other capital expenditure and financial investment 215.1 (10.9)

Other capital expenditure and financial investment recognised within the discontinued operation during the period included in the above was an outflow of £1.9m (2010: £7.4m).

Sale of investment relates to the disposal of the remaining stakes in Allscripts in November 2010 and February 2011.

13. Financing activitiesAll figures in £ millions 2011 2010

(Decrease) increase in bank borrowings (note 14) (212.2) (68.9)

Capital element of finance leases (0.2) (0.9)

Share options exercised 7.1 3.6

Convertible debt (net of costs) 81.8 –

Convertible debt – equity component 16.1 –

Premium paid for foreign exchange options regarding Sophis acquisition (6.5) –

Sale of hedge option 11.7 –

Foreign exchange gains on settled transactions 2.0 –

Arrangement fees for new facility (1.3) –

B share scheme – redemption of B shares (105.6) –

B share scheme – dividends paid (33.9) –

Return of cash to shareholders (525.0) –

Advisory costs and stamp duty on tender offer and B share scheme (5.5) –

Net cash flow from financing activities (771.5) (66.2)

14. Movement in bank borrowingsAll figures in £ millions 2011 2010

Repayment of bank loans (250.0) (99.8)

Repayment of Sophis bank loans post acquisition (163.4) –

Draw-down of bank facilities 204.0 58.1

Capitalised fees in respect of bank facilities (2.8) (0.2)

Receipt of other loans – 0.1

Repayment of other loans – (27.1)

Decrease in bank borrowings (212.2) (68.9)

Fin

ancial statem

ents



15. Analysis of net funds (debt)

All figures in £ millionsAt

1 June 2010 Cash flow Acquisition DisposalsNon cash

movementsDifferences

on exchangeAt

31 May 2011

Cash 120.3 3.0 18.0 (78.4) – (6.1) 56.8

Bank overdraft (5.4) 5.4 – – – – –

114.9 8.4 18.0 (78.4) – (6.1) 56.8

Bank loans (note 22) (112.3) 212.2 (163.4) – (4.1) – (67.6)

Convertible bond (note 22) – (97.9) – – 14.5 – (83.4)

Finance leases (1.7) 0.2 – 1.4 – 0.1 –

Net funds (debt) 0.9 122.9 (145.4) (77.0) 10.4 (6.0) (94.2)

Included in the above amounts are cash balances of £33.9m (2010: £4.3m) not available for the general use of the Group which include £27.4m (US$ 45.0m) cash collateral for a guarantee relating to potential tax liabilities. This guarantee was put in place as part of the Allscripts disposal. Prior year balances also include £98.7m related to the discontinued operation which were not available for general use of the Group due to the sizeable non-controlling interest in Allscripts.

16. GoodwillAll figures in £ millions 2011 2010

Opening cost and net book value 315.5 289.8

Differences on exchange (16.0) 29.1

Acquisition of Sophis 171.6 –

Disposal of Allscripts (note 3) (240.0) –

Adjustment to goodwill – (3.4)

Cost and net book value at 31 May 231.1 315.5

Included within the cost and net book value at 31 May 2010 is £256.6m related to the discontinued operation.

Cash generating unitsGoodwill relating to the Banking £20.3m (2010: £19.9m), TCM £35.2m (2010: £39.0m) and Misys Sophis £175.6m (2010: £nil) groups of cash generating units (CGUs) are considered significant in comparison to the total carrying amount of goodwill assets at 31 May 2011. The recoverable amounts of the Banking, TCM and Misys Sophis CGUs were determined based on value-in-use calculations and no impairment was identified during the year. Misys Sophis was acquired on 28 February 2011. Management has reviewed post acquisition trading which was in line with expectation.

Where the recoverable amount of a CGU is determined based on value-in-use calculations, these calculations use pre-tax cash flows for each CGU based on approved budgets and management forecasts which are consistent with the recent financial performance of the relevant CGU. For Banking and TCM value-in-use calculations, it was not necessary to look at cash flows beyond five years as cash flows within this time horizon were significantly in excess of the carrying amounts of the CGUs and hence no terminal value was assigned. The value-in-use calculation for Misys Sophis includes long term cash flow growth of 2%.

Direct and indirect costs and corporate overheads have been calculated using the same percentage of revenue as for the recent budget and incorporates planned margin improvement. Management determined budgeted operating margin based on past performance and its expectations of market development as outlined in the business review section.

Sensitivity analyses have been performed around the base case assumptions with the conclusion that no reasonably possible changes in key assumptions would cause the recoverable amount to be less than the carrying amount.

For the value-in-use calculations, the first three years’ cash flows were based on budget and management forecasts and thereafter growth rates based on current and expected future performance as reflected in the table below.

The following assumptions have been used in order to determine recoverable amounts based on value-in-use calculations:

CGU

Growth ratesfor cash flows

years 1-3

Growth rates for cash flows

years 4-5

Pre-tax discount rate

2011

Pre-tax discount rate

2010

Banking 8% 3% 10% 10%

TCM 10% 9% 12% 12%

Misys Sophis 15% 13% 13% –

Fin

ancial statem

ents



Acquisition of SophisOn 28 February 2011, the Group acquired 100% of the issued share capital of Sophis for consideration of £235.5m. As a result of this acquisition, the Group has established its position as the number one application software and services provider in capital markets as Misys Sophis’ buy-side solutions are complementary to the Group’s sell-side strengths.

An analysis of the net assets acquired is shown below:

All figures in £ millions Book value

Provisional fair value

adjustments

Provisional fair value at 28 Feb 2011

Intangible assets – 212.2 212.2

Property, plant and equipment 1.2 – 1.2

Deferred tax assets (liabilities) 8.0 (26.5) (18.5)

Cash 18.0 – 18.0

Other assets 29.5 (1.0) 28.5

External debt (161.8) (1.6) (163.4)

Other liabilities (10.7) (3.4) (14.1)

Net assets acquired (115.8) 179.7 63.9

Goodwill 171.6

Total consideration 235.5

An analysis of the enterprise value of Sophis is shown below:


Consideration paid in cash 208.6

Consideration held in escrow 21.3

External debt net of cash acquired 145.4

Net cash outflow on acquisition of subsidiaries 375.3

Equity consideration – shares issued 5.6

Enterprise value of Sophis 380.9

The goodwill arising on the acquisition of Sophis is principally attributable to the anticipated profitability achieved through perceived cost and revenue synergies. The fair value adjustments are based on an independent valuation at the time of acquisition and primarily relate to identified intangible assets (technology, customer relationships and brand name) and related deferred tax and other taxation.

Acquisition costs of £7.7m have been recognised as an exceptional expense in the current year.

Included in the profit for the year is an £8.6m loss attributable to the additional business generated by the Sophis Group. Had this business combination been effected at 1 June 2010, the results of the combined Group from continuing operations would have been revenue of £417.3m, operating profit of £22.2m, adjusted operating profit of £84.4m and profit after tax of £11.0m. The directors consider these ‘pro-forma’ numbers to represent an approximate measure of the performance of the combined Group on an annualised basis and to provide a reference point for comparison in future periods.

In determining the ‘pro-forma’ revenue and profit of the Group had Sophis been acquired at the beginning of the current reporting period, the directors have:

calculated depreciation of plant and equipment and intangibles acquired on the basis of the fair values arising in the initial accounting for the business combination rather than the carrying amounts recognised in the pre-acquisition financial statements;

calculated borrowing costs based on the funding levels, credit ratings and debt/equity position of the Group after the business combination; and

calculated the effect of alignment of accounting policies from 1 June 2010.

Fin

ancial statem

ents



17. Other intangible assets

All figures in £ millionsComplete

technologyCustomer

relationshipsTrade names

and brands

Total acquired

intangiblesDeveloped

softwareThird party

software Total

Cost

At 1 June 2010 79.1 73.7 36.2 189.0 95.9 32.6 317.5

Differences on exchange 0.1 (3.8) (1.9) (5.6) (4.2) (1.5) (11.3)

On disposal of Allscripts (58.1) (67.6) (33.9) (159.6) (29.0) (16.8) (205.4)

On acquisition of Sophis 157.0 35.7 19.5 212.2 5.7 0.1 218.0

Transfers 2.6 – – 2.6 – (2.6) –

Disposals – – – – (3.0) (0.4) (3.4)

Additions 0.5 – – 0.5 28.0 2.7 31.2

At 31 May 2011 181.2 38.0 19.9 239.1 93.4 14.1 346.6

Accumulated amortisation and impairment

At 1 June 2010 (31.1) (13.3) (3.3) (47.7) (28.4) (17.0) (93.1)

Differences on exchange 0.6 0.9 0.2 1.7 1.6 0.8 4.1

Charge for the year (10.5) (2.9) (0.7) (14.1) (10.8) (2.4) (27.3)

Transfers (1.2) – – (1.2) – 1.2 –

On disposal of Allscripts 16.1 13.0 3.5 32.6 4.5 8.2 45.3

Disposals – – – – 0.1 0.2 0.3

At 31 May 2011 (26.1) (2.3) (0.3) (28.7) (33.0) (9.0) (70.7)

Net book value

At 31 May 2011 155.1 35.7 19.6 210.4 60.4 5.1 275.9


technologyCustomer


and brands

Total acquired


softwareThird party

software Total

Cost

At 1 June 2009 73.3 66.4 32.5 172.2 76.1 27.6 275.9

Differences on exchange 5.8 7.3 3.7 16.8 5.5 2.0 24.3

Derecognised – – – – (17.5) – (17.5)

Disposals – – – – – (0.8) (0.8)

Additions – – – – 31.8 3.8 35.6

At 31 May 2010 79.1 73.7 36.2 189.0 95.9 32.6 317.5

Accumulated amortisation and impairment

At 1 June 2009 (22.3) (5.8) (1.3) (29.4) (31.4) (13.0) (73.8)

Differences on exchange (1.0) (1.2) (0.3) (2.5) (2.6) (1.0) (6.1)

Charge for the year (7.8) (6.3) (1.7) (15.8) (11.9) (3.7) (31.4)

Derecognised – – – – 17.5 – 17.5

Disposals – – – – – 0.7 0.7

At 31 May 2010 (31.1) (13.3) (3.3) (47.7) (28.4) (17.0) (93.1)

Net book value

At 31 May 2010 48.0 60.4 32.9 141.3 67.5 15.6 224.4

Fin

ancial statem

ents



The following prior year balances relate to the discontinued operation:


technologyCustomer


and brands

Total acquired


softwareThird party

software Total

At 31 May 2010

Cost 62.1 72.2 36.2 170.5 24.2 17.9 212.6

Accumulated amortisation (15.5) (12.4) (3.4) (31.3) (3.6) (8.5) (43.4)

Net book value 46.6 59.8 32.8 139.2 20.6 9.4 169.2

Derecognition of £17.5m developed software in the prior year relates to software which has been assessed as having no further commercial value.

Trade names and brands relate principally to the Sophis brand which is being amortised over 15 years from the date of acquisition on 28 February 2011. Complete technology relates principally to the core technology underlying the Sophis portfolio of products and is being amortised over a period of 8 years from the date of acquisition. The fair value of the intangible assets acquired during the year is based on an independent valuation at the time of acquisition.

18. Property, plant and equipment


Leasehold property

improvements

Computer and other

equipment Total

Cost

At 1 June 2010 18.2 55.9 74.1

Differences on exchange (0.9) (3.5) (4.4)

On acquisition of Sophis – 1.2 1.2

On disposal of Allscripts (3.9) (25.3) (29.2)

Additions 0.9 4.1 5.0

Disposals (0.5) (2.2) (2.7)

At 31 May 2011 13.8 30.2 44.0

Accumulated depreciation

At 1 June 2010 (6.7) (36.6) (43.3)

Differences on exchange 0.4 2.3 2.7

Charge for the period (1.1) (4.5) (5.6)

On disposal of Allscripts 2.0 14.4 16.4

Impairment (1.6) (0.4) (2.0)

Disposals 0.5 1.8 2.3

At 31 May 2011 (6.5) (23.0) (29.5)

Net book value

At 31 May 2011 7.3 7.2 14.5

Fin

ancial statem

ents



18. Property, plant and equipment continued

All figures in £ millionsFreehold

properties

Leasehold property

improvements

Computer and other

equipment Total

Cost

At 1 June 2009 1.5 16.9 47.8 66.2

Differences on exchange – 1.1 4.9 6.0

Additions – 0.6 9.2 9.8

Disposals (1.5) (0.4) (6.0) (7.9)

At 31 May 2010 – 18.2 55.9 74.1

Accumulated depreciation

At 1 June 2009 (0.8) (5.0) (31.4) (37.2)

Differences on exchange – (0.6) (3.4) (4.0)

Charge for the year – (1.5) (7.8) (9.3)

Disposals 0.8 0.4 6.0 7.2

At 31 May 2010 – (6.7) (36.6) (43.3)

Net book value

At 31 May 2010 – 11.5 19.3 30.8



Leasehold property

improvements

Computer and other

equipment Total

At 31 May 2010

Cost 4.1 25.5 29.6

Accumulated depreciation (2.1) (14.3) (16.4)

Net book value 2.0 11.2 13.2

Included in the above analysis is plant and equipment acquired under finance leases with a net book value of £nil (2010: £1.6m) after accumulated depreciation of £0.2m (2010: £3.8m). Prior year balances include net book value of £1.5m after accumulated depreciation of £3.7m related to the discontinued operation. The net book value of leasehold properties comprised of short leasehold amounting to £6.5m (2010: £11.5m).

Fin

ancial statem

ents



19. InvestmentsAll figures in £ millions 2011 2010

At 1 June 7.1 6.1

Differences on exchange – 0.2

Additions 1.4 1.3

Disposal – (0.7)

Impairment and other fair value movements (0.8) 0.2

On disposal of business (2.2) –

Transfer from subsidiary investment 214.1 –

Fair value movements in Allscripts investment (0.1) –

Disposal of Allscripts investment (214.0) –

At 31 May 5.5 7.1

Included within investments at 31 May 2010 is £2.2m related to the discontinued operation.

The Group’s investments comprise investments in US and European Technology Funds and marketable securities, which are classified as ‘fair value through profit or loss’. Fair value gains and losses are recognised within operating costs. The investments are denominated in US dollars and Euros and are non interest bearing.

Transfer from subsidiary investment relates to the remaining investment in Allscripts after the disposal in August 2010 (see note 3).

20. Trade and other receivablesAll figures in £ millions 2011 2010

Trade receivables 69.4 177.5

Less: provision for impairment of receivables (4.6) (8.0)

64.8 169.5

Other receivables 10.7 20.4

Prepayments 8.7 27.6

Accrued income 50.2 68.2

Current trade and other receivables 134.4 285.7

Other receivables 5.1 0.8

Prepayments – 0.6

Accrued income 3.6 0.2

Non current trade and other receivables 8.7 1.6

Total trade and other receivables 143.1 287.3



Trade receivables 111.8

Less: provision for impairment of receivables (5.9)

105.9

Other receivables 7.9

Prepayments 19.6

Accrued income 31.8

165.2

The quality of trade receivables can be assessed by reference to the historical default rate of £1.3m (2010: £5.0m) for the preceding 365 days at 0.8% of the opening net trade receivables balance (2010: 3.7%).

The carrying value of trade receivables that would otherwise be past due or impaired but whose terms were renegotiated were £0.2m (2010: £nil).

The amount of provision against receivables as at 31 May 2011 was £4.6m (2010: £8.0m). The individually impaired receivables relate to receivables over 365 days, customers in financial difficulty, customer acceptance issues and cancelled contracts.

As at 31 May 2011, trade receivables of £31.2m (2010: £91.0m) were past due but not impaired. In the table below, these are the receivables over 30 days. These relate to a number of independent customers for whom there is no recent history of default. The ageing analysis of net trade receivables is as follows:


0-30 days 33.6 78.5

30-60 days 8.0 26.7

60-90 days 8.3 16.2

90-120 days 3.6 16.2

Over 120 days 11.3 31.9

64.8 169.5

The maximum exposure to credit risk at the reporting date is the fair value of each class of receivable mentioned above. The Group does not hold any collateral as security.

Movements in the Group’s provision for impairment of trade receivables are as follows:


At 1 June (8.0) (7.4)

Provision for impairment of receivables (2.7) (7.2)

Receivables written off during the year as uncollectible 1.3 5.0

Unused amounts reversed 1.8 2.2

On acquisition of business (2.2) –

On disposal of business 5.2 –

Foreign exchange and other – (0.6)

At 31 May (4.6) (8.0)

Fin

ancial statem

ents



21. Trade and other payablesAll figures in £ millions 2011 2010

Trade payables 13.4 28.5

Other taxation and social security 8.6 12.7

Other payables 5.4 5.4

Accruals 61.4 96.3

Current trade and other payables 88.8 142.9

Other payables 0.1 1.2

Accruals 3.8 4.7

Non current trade and other payables 3.9 5.9

Total trade and other payables 92.7 148.8

Accruals comprise:


Cost of sales (excluding staff related costs) 15.4 48.8

Staff related costs (including sales commissions and bonuses) 35.9 48.4

Other 13.9 3.8

Total accruals 65.2 101.0

Other accruals include £10.1m (2010: £nil) payable to Allscripts for historical tax matters relating to US Banking and TCM tax liabilities.

The following prior year balances relate to discontinued operation:


Trade payables 21.1

Other taxation and social security 4.5

Other payables 1.0

Accruals 45.8

72.4

22. Loans and overdraftsAll figures in £ millions 2011 2010

Bank overdrafts – 5.4

Bank loans 17.9 40.0

Finance leases – 0.9

Current loans and overdrafts 17.9 46.3


Convertible bond 83.4 –

Finance leases – 0.8

Non current loans and overdrafts 133.1 73.1

Total loans and overdrafts 151.0 119.4

Included within total loans and overdrafts at 31 May 2010 is £1.6m related to the discontinued operation.

Bank overdraftsThis relates to GBP and Euro overdraft facilities.

Bank loansIn November 2010, a new credit facility was agreed comprising a £90m term loan and a £190m multicurrency credit facility. The term loan is repayable in installments between May 2011 and August 2014. The revolving facility expires in August 2014. Initial arrangement fees relating to this facility of £1.3m have been expensed as an exceptional item being unconditional arrangement fees for new credit facilities to fund the Sophis acquisition. The remaining arrangement fees of £2.8m paid on drawdown are carried on the balance sheet. These costs are being amortised over the expected term of the facility. At 31 May 2011, £20m of the term loan had been repaid and none of the revolving credit facility was being used.

At 31 May 2010, the Group had a £210m credit facility comprised of an £80m term loan and £130m revolving credit facility. Both of these were fully repaid by November 2010. Fees of £2.7m relating to the expired credit facility have been expensed as an exceptional item as the facility no longer exists (note 7).

The Group is subject to certain financial covenants under the term loan and revolving credit facility agreement. These include a minimum ratio of operating profit before depreciation, amortisation and exceptional items to net interest charged and a maximum ratio of net borrowings to operating profit, before depreciation, amortisation and exceptional items. These covenants have not been breached during the year nor are they forecast to be breached in the foreseeable future.

Convertible bondsThe Company issued 1,000 2.5% convertible bonds at a par value of £100m on 22 November 2010. The bonds mature five years from the issue date at their nominal value of £100m or can be converted into shares at the holder’s option from 4 January 2011 until 15 November 2015 at the prevailing conversion price.

If not previously converted or redeemed, the bonds will be redeemed at par five years from the settlement date. The Company will have the option to call all outstanding bonds at any time on or after 7 December 2013 if the parity value on each of at least 20 dealing days in any period of 30 consecutive dealing days on the London Stock Exchange exceeds 127% of the principal amount.

The values of the liability component and the equity conversion component were determined at issuance of the bond. The fair value of the liability component, included in non-current borrowings, was calculated using a market interest rate for an equivalent non-convertible bond. The residual amount, representing the value of the equity conversion option, is included in shareholders’ equity in other reserves.

Fin

ancial statem

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The amounts charged in the accounts relating to the convertible bonds can be reconciled as follows:


Cash received from issue of bonds 100.0

Less: Cost of issue (2.1)

Proceeds received (note 13) 97.9

Interest accrued on convertible bonds 2.9

Coupon payment made in May 2011 (1.3)

99.5

Disclosed as:

Debt 83.4

Equity 16.1

99.5

23. Derivative financial instrumentsAll derivative financial instruments are measured at their fair value and are calculated by reference to the net present value of future cash flows, based on exchange rates and interest rates quoted on international financial markets, at the balance sheet date.

2011 2010

All figures in £ millions Assets Liabilities Assets Liabilities

Forward foreign currency contracts 0.6 (0.8) 0.2 (0.3)

Embedded derivatives 2.4 (3.1) 5.8 (2.4)

3.0 (3.9) 6.0 (2.7)

Analysed as follows:

Current 1.0 (1.6) 1.1 (0.7)

Non current 2.0 (2.3) 4.9 (2.0)

3.0 (3.9) 6.0 (2.7)

Forward currency contracts used to economically hedge fair value and cash flow risksCertain financial assets and liabilities, which are denominated in currencies other than those of the functional currencies of the entities concerned, are hedged using forward currency contracts. Gains and losses on these contracts are recorded as operating costs in the income statement together with offsetting gains and losses on the underlying items.

Expected future non-sterling cash flows of the Group are also hedged with forward currency contracts. Hedge accounting is not applied and the gains and losses are recorded in the income statement under finance income/cost.

Embedded derivativesCertain long-term software licensing contracts are priced in currencies (usually US dollars, sterling or euros) other than those of the functional currencies of the customer and IPR holder entering into the contracts or the commonly used functional currency of that market. Under IAS 39, such contracts may contain an embedded foreign currency derivative which must be extracted from the host contract and measured separately at each balance sheet date. Gains or losses on these derivatives are charged or credited to the income statement in operating costs. The contracts are generally of up to 10 years’ duration and this is therefore the period over which the assets and liabilities recognised in the balance sheet are expected to crystallise.

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24. Provisions

All figures in £ millions PropertyContingent

consideration Other Total

At 1 June 2010 22.0 0.2 3.5 25.7

Net provisions (credited) charged to the income statement (1.1) (0.2) 2.1 0.8

Business disposed (0.8) – – (0.8)

Unwinding of discount 1.0 – – 1.0

Utilisation of provisions (4.6) – (2.8) (7.4)

Foreign exchange movements 0.3 – (0.3) –

At 31 May 2011 16.8 – 2.5 19.3

Analysis of total provision:

Current 5.5 – 2.5 8.0

Non current 11.3 – – 11.3

16.8 – 2.5 19.3

Included within the property provision at 31 May 2010 is £0.8m related to the discontinued operation.

The property provisions comprise the net present value of the estimated future costs of vacant and sublet properties and the excess rent over market value for occupied properties of subsidiaries acquired in previous years after taking into account dilapidations. The provision relating to vacant and sublet properties is expected to be utilised on average over the next five years and the excess over market value provision over the next one year. During the year, the discount rate applicable to all new property provisions was 2.75% representing the five year corporate bond rate (2010: 2.75%).

Included in contingent consideration are amounts relating to various acquisitions. Included in other provisions are amounts principally in respect of professional fees, maintenance costs and restructuring costs for the current year and non property related onerous contracts.

25. Deferred taxation

All figures in £ millions Losses

Other deductible temporary

differences Total

At 1 June 2010 36.3 (27.9) 8.4

Credited to the income statement – continuing operations (note 8) 10.2 2.0 12.2

Impact of change in tax rates taken to the income statement (note 8) (1.3) (0.2) (1.5)

On disposal of business (23.1) 33.4 10.3

Charged to equity in respect of share-based payments 0.7 2.9 3.6

Credit to equity in respect of IAS 21 movement – (4.7) (4.7)

Deferred tax arising on pension – 0.4 0.4

Arising on acquisition of business 4.6 (23.1) (18.5)

Currency translation differences 0.2 (2.4) (2.2)

At 31 May 2011 27.6 (19.6) 8.0

Fin

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All figures in £ millions Losses

Other deductible temporary

differences Total

At 1 June 2009 49.1 (25.5) 23.6

Charged to the income statement (17.0) (11.9) (28.9)

Impact of change in tax rates taken to the income statement (0.3) 0.9 0.6

Charged to equity in respect of share-based payments – 11.9 11.9

Credit to equity in respect of IAS 21 movement – (0.1) (0.1)

Currency translation differences 4.5 (3.2) 1.3

At 31 May 2010 36.3 (27.9) 8.4

Certain deferred tax assets and liabilities have been offset. The following is an analysis of the deferred tax balances (after offset) for financial reporting purposes:

2011 2010

Losses

Other deductible temporary differences Total Losses

Other deductible temporary differences Total

Deferred tax assets 26.2 9.4 35.6 15.7 3.8 19.5

Deferred tax liabilities 1.4 (29.0) (27.6) 20.6 (31.7) (11.1)

As shown above 27.6 (19.6) 8.0 36.3 (27.9) 8.4

Included within deferred tax liabilities at 31 May 2010 is £10.3m related to the discontinued operation.

Deferred tax assets of £27.6m (2010: £36.3m) have been recognised in respect of carried forward tax losses where latest forecasts show that these are expected to be recovered against future profit streams. Deferred tax liabilities of £29.0m (2010: £31.7m) offset by deferred tax assets of £9.4m (2010: £3.8m) have been recognised in respect of other taxable temporary differences, including £0.1m (2010: £nil) in respect of unremitted earnings of subsidiaries of the UK and £26.5m (2010: £0.6m) relating to intangibles arising on the acquisition of Sophis.

Deferred tax assets recoverable within one year are £7.4m (2010: £1.0m).

Deferred tax assets of £86.8m (2010: £43.2m) relating to tax losses and £0.2m (2010: £6.6m) relating to other deductible temporary differences have not been recognised on the basis that they are unlikely to be recovered against future profit streams. In addition, £250.0m (2010: £494.0m) of UK capital losses have been agreed with the UK tax authorities but have not been recognised as these can only be utilised against specific types of future gains.

Fin

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26. Deferred incomeAll figures in £ millions 2011 2010

Current

Maintenance fees 87.2 115.2

Other income 18.1 51.3

105.3 166.5

Non current

Maintenance fees 2.2 2.2

Other income 3.0 4.4

5.2 6.6

Included within deferred income at 31 May 2010 is £71.6m related to the discontinued operation.

Deferred maintenance fees represent amounts invoiced in advance for contracts which provide technical support and trouble-shooting assistance (helpdesk, etc.) in addition to upgrades and enhancements to the Group’s software products and hardware maintenance.

Maintenance fees are recognised as revenue rateably as the services are provided over the period of the contract. Other deferred income represents amounts invoiced, including deposits, primarily in respect of initial licence fees for software products and professional services for which the revenue recognition criteria have yet to be satisfied.

27. Retirement benefit obligationsDefined contribution schemesThe Group operates a number of defined contribution pension schemes covering the majority of its employees. The cost of these pension schemes including £0.5m relating to Sophis was £4.7m (2010: £4.7m) and was charged to the income statement as incurred. There were no outstanding or prepaid contributions at either the beginning or the end of the financial year.

Defined benefit schemesIn 2003/04, the active members of the UK final salary scheme ceased to accrue benefits on the basis of their final salary during the year. Thereafter the benefits of the active members accrue on a money purchase (defined contribution) basis.

In addition, the Group operates a number of other smaller defined benefit arrangements.

The latest full actuarial valuation of the UK scheme was carried out as at 31 May 2008; the assumptions of which have been updated to 31 May 2011 by qualified independent actuaries. The last full actuarial valuations of the other Group schemes were carried out on a number of different dates; these assumptions have been updated to 31 May 2011 by qualified independent actuaries. A new full actuarial valuation of the UK scheme is in progress.

The principal assumptions used in the valuations of the UK scheme only are:

2011%

2010%

Rate of increase in salaries n/a n/a

Rate of increase in pensions in payment:

Fixed 3% 3.0 3.0

Fixed 3.5% 3.5 3.5

RPI max 5% min 3% 3.8 3.9

RPI max 5% min 3.5% 4.1 4.1

Post 1988 Guaranteed minimum pension 2.2 2.6

Discount rate 5.4 5.5

Inflation assumption 3.6 3.7

Mortality rates (age) Years Years

Current pensioner – male 87 89

Current pensioner – female 89 91

Future retiree – male 89 91

Future retiree – female 91 92

The Group employs a building block approach in determining the long-term rate of return on pension plan assets. Historical markets are studied and assets with higher volatility are assumed to generate higher returns consistent with widely accepted capital market principles. The overall expected rate of return on assets is then derived by aggregating the expected return for each asset class over the actual asset allocation for the Plan at 31 May 2011.

Mortality assumptions are based on 100% of standard S1PxA year of use tables with allowance for future improvements to be in line with CMI_2010 Core Projections assuming a long term rate of future improvement of 1.25% per annum for both males and females. Mortality assumptions in the prior year were based on the PxA00 year of use tables. We believe that the underlying population of the S1PxA tables better reflect the membership of the UK scheme.

The year-end assets and liabilities in the schemes were:


Equities 9.6 5.1

Government bonds 23.0 23.0

Corporate bonds 16.3 17.4

Insurance policies 0.2 0.2

Other 0.1 0.3

Market value of assets 49.2 46.0

Adjustment for unrecoverable surplus (3.5) –

Total market value of assets 45.7 46.0

Actuarial value of liabilities (51.9) (50.3)

Deficit in the schemes (6.2) (4.3)

Related deferred tax asset 1.6 1.2

Net pension liability (4.6) (3.1)

Fin

ancial statem

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Movement in the plan assets and obligations during the year:


Plan assets:

Fair value at 1 June 46.0 39.3

Expected return on plan assets (note 7) 2.4 2.4

Actuarial gain (loss) (1.1) 4.9

Contributions paid by employer 0.6 0.5

Net benefits paid out (2.0) (1.3)

Foreign exchange (0.2) 0.2

Fair value at 31 May 45.7 46.0

Benefit obligations:

Present value at 1 June (50.3) (41.0)

Current service cost (2.0) (1.7)

Interest cost (note 7) (2.6) (2.4)

Actuarial gain (loss) 0.2 (6.2)

Net benefits paid out 2.0 1.3

Business disposals 0.2 –

Gains arising from curtailments or settlements 0.2 –

Foreign exchange 0.4 (0.3)

Present value at 31 May (51.9) (50.3)

Net liability (6.2) (4.3)

An asset of £3.5m (2010: £nil) in respect of the UK final salary scheme has not been recognised as the Group would not be able to derive future economic benefit from it.

The amounts recognised in the statement of comprehensive income are as follows:


Current service cost (included in employee costs) (0.6) (0.4)

Deferred pension costs (included in investments) (1.4) (1.3)

Interest cost on pension scheme liabilities (2.6) (2.4)

Expected return on plan assets 2.4 2.4

Included in finance income (0.2) –

Gains arising from curtailments or settlements 0.2 –

Total income statement expense (0.6) (0.4)

The long term expected rate of return on the UK scheme assets is 5.1% (2010: 5.1%) and on overseas scheme assets 7.8% (2010: 8.3%).

The actual return on the schemes’ assets was a gain of £4.7m (2010: £4.9m).



Total actuarial gains/(losses) 2.6 (3.7)

Change in irrecoverable surplus (3.5) 2.4

Total loss (0.9) (1.3)

Cumulative amount of actuarial losses recognised (2.2) (1.3)

Fin

ancial statem

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27. Retirement benefit obligations continuedHistory of experience gains and losses in the UK scheme:

2011 2010 2009 2008 2007

Experience gains (losses) on schemes’ assets

Amounts (£m) 2.3 2.5 (2.2) (4.5) 3.2

Percentage of schemes’ assets 4.9% 5.7% 5.5% 10.9% 8.3%

Experience (losses) gains on schemes’ liabilities

Amounts (£m) (0.3) (0.1) 1.6 (2.3) –

Percentage of schemes’ liabilities 0.7% 0.2% 4.3% 5.6% –

History of asset values, benefit obligation and deficit in schemes:

All figures in £ millions 2011 2010 2009 2008 2007

Fair value of plan assets 45.7 46.0 39.3 42.3 38.2

Defined benefit obligation (51.9) (50.3) (41.0) (43.8) (39.3)

Deficit in scheme (6.2) (4.3) (1.7) (1.5) (1.1)

The expected contributions to defined benefit schemes for the next financial year beginning 1st June 2011 are £0.5m (2010: £0.5m).

28. Contingent liabilitiesContingent liabilities that are quantifiable arise from property rental guarantees that have been issued in the normal course of business, from letters of credit and also from bonds that have been issued in support of tenders submitted to prospective customers. These amount to £3.2m (2010: £19.7m). Included within contingent liabilities at 31 May 2010 is £17.0m related to the discontinued operation.

The Group’s subsidiaries and the Company can be parties to legal actions and claims arising in the ordinary course of business. Whilst the outcome of current outstanding actions and claims remains uncertain, it is expected that they will be resolved without a material impact to the Group’s financial position.

At year-end, there was a $45m guarantee in place relating to potential tax liabilities arising as a result of the disposal of Allscripts, which Misys would be responsible for covering if they were to become payable.

29. CommitmentsCommitments of the Group under non cancellable operating leases at 31 May:

2011 2010

All figures in £ millionsLand and buildings

Plant and equipment

Land and buildings

Plant and equipment

Rental payments due within one year 15.6 0.1 19.7 0.8

Rental payments due between one and five years 48.8 – 64.5 0.9

Rental payments due after five years 33.5 – 55.6 –

Total 97.9 0.1 139.8 1.7

Included within commitments at 31 May 2010 is £30.5m for land and buildings and £1.1m for plant and equipment related to the discontinued operation.

Capital expenditure on property, plant and equipment committed by the Group at 31 May 2011 was £0.4m (2010: £0.2m).

Fin

ancial statem

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30. Related party transactionsTransactions between Misys plc and its subsidiaries, which are related parties, have been eliminated on consolidation and are not disclosed in this note.

Remuneration of key management personnelThe key management personnel of the Group comprise the Company Directors and other senior management. Their remuneration is set out below in aggregate.


Short-term employment benefits 6.8 8.3

Post employment benefits 0.2 0.2

Termination benefits 0.2 –

Share-based payments benefits 6.6 9.0

Included with in the above disclosure at 31 May 2010 is £1.5m in short-term employment benefits and £4.3m in share-based payments benefits related to the discontinued operation.

ValueAct Capital has a holding of 67,812,779 shares representing 20.21% (2010: 25.7%) in the Company on an aggregated basis, which reduced as result of the tender offer on 15 December 2010. Jeff Ubben, who is a non-executive Director of the Company, is Chief Executive Officer and Chief Investment Officer of ValueAct Capital. The Company has also considered whether Mike Lawrie is a related party to ValueAct Capital through his equity shareholding interest, as disclosed in the Directors’ remuneration report. As he does not hold a management position within ValueAct Capital nor does his equity shareholding give the right to significant influence over ValueAct Capital, it has been concluded that he is not a related party to ValueAct Capital as defined by IAS 24 “Related Party Disclosure”.

31. Called up share capitalThe table below reconciles the allotted and fully paid share capital to those shares not held by the Company.

Number of Shares

Allotted, fully paid share

capital Treasury MEST ESOP Net

At 1 June 2010 594,584,179 (46,477,433) (17,133,515) (103,272) 530,869,959

Shares cancelled during the year (182,150,609) 12,796,552 – – (169,354,057)

Share consolidation (51,554,197) 3,606,820 2,012,467 12,909 (45,922,001)

Sophis consideration stock 1,626,140 – – – 1,626,140

Share options exercised – 6,415,383 1,108,687 – 7,524,070

At 31 May 2011 362,505,513 (23,658,678) (14,012,361) (90,363) 324,744,111

Par value of each share is 1.14 pence. During the year, 6,415,383 (2010: 1,049,481) treasury shares, with a cost of £6.8m (2010: £0.8m), were utilised to satisfy share awards.

Shareholders approved the return of capital via a Tender Offer of the proceeds of disposal of Allscripts on 13 August 2010. On 16 December 2010, 169,354,057 ordinary shares were tendered and were repurchased for cancellation at a strike price of 310 pence per ordinary share, for a total cost of £525 million.

To enable the Company to return the balance of the proceeds from the Allscripts disposal shareholders approved a £146 million return of share capital, by way of a B share scheme, at the Company’s General Meeting on 11 February 2011. 383,579,014 B shares were issued on 14 February 2011. Shareholders owning 89,266,979 B shares elected to receive the initial dividend payment of 38 pence each and these shares were subsequently converted to deferred shares. The remaining shares were redeemed at a later date for 38 pence each. The final redemption date for B shares was 7 April 2011 and all transactions relating to the B share scheme have now been completed.

The share consolidation, approved as part of the B share scheme, took place on 14 February 2011, when shareholders exchanged 8 existing ordinary shares of 1p each for 7 new ordinary shares of 11/7 pence each (1.14p).

The Misys Employee Share Trust (MEST) purchases shares in the market using funds contributed by the respective Group employing companies. These shares are used to satisfy awards made under the Group’s share incentive arrangements. At 31 May 2011, the MEST held 14,012,361 (2010: 17,133,515) shares purchased for a cost of £37.9m (2010: £40.6m) and with a market value of £50.7m (2010: £38.6m). During the year, it utilised shares with a cost of £2.6m (2010: £6.6m) to satisfy share awards.

The Employee Share Ownership Plan (ESOP) purchases shares in the market using funds loaned by the Company. Share purchases are timed to ensure that the ESOP has sufficient shares to satisfy its requirements as and when its obligations fall due. The Trustees of the ESOP have waived its rights to dividends. At 31 May 2011, the ESOP held 90,363 (2010: 103,272) shares, purchased for a cost of £0.2m (2010: £0.2m) and with a market value of £0.3m (2010: £0.2m).

Fin

ancial statem

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32. Other reserves

All figures in £ millionsRetained earnings

Convertible bond reserve

Treasury shares Own shares

Translation reserve Total

At 1 June 2010 285.1 – (94.1) (40.7) 43.5 193.8

Total comprehensive income for the period 643.8 – – – 2.1 645.9

Transactions with owners:

Share options settled from own shares (10.1) – 13.5 2.7 – 6.1

Convertible bond – equity component – 16.1 – – – 16.1

Business disposed – – – – (39.9) (39.9)

Shares repurchased for cancellation (525.0) – – – – (525.0)

B share scheme – dividends paid (33.9) – – – – (33.9)

B share scheme – redemption of B shares (105.6) – – – – (105.6)

Expenses incurred on transactions with owners (5.5) – – – – (5.5)

Share-based payments 9.7 – – – – 9.7

Deferred tax on share-based payments 3.6 – – – – 3.6

At 31 May 2011 262.1 16.1 (80.6) (38.0) 5.7 165.3



Treasury shares Own shares

Translation reserve Total

At 1 June 2009 224.1 – (96.3) (47.3) 4.7 85.2

Total comprehensive income for the period 43.3 – – – 38.8 82.1

Share options settled from own shares (5.9) – 2.2 6.6 – 2.9

Conversion of Allscripts 3.5% senior convertible debentures 3.5 – – – – 3.5

Share-based payments 12.9 – – – – 12.9

Deferred tax on share-based payments 7.2 – – – – 7.2

At 31 May 2010 285.1 – (94.1) (40.7) 43.5 193.8

Own shares reserve relates to Misys Employee Share Trust and Employee Share Ownership Plan (see note 31).

The Misys Employee Share Trust was a beneficiary of the B share scheme and received funds of £6.2m. This income in MEST has been netted against the redemption of B shares expense within retained earnings.

Fin

ancial statem

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33. Financial instruments: risk managementMisys operates a centralised treasury function which is responsible for managing the liquidity, interest and foreign currency risks associated with the Group’s activities under policies approved by the Board of Directors. As part of its strategy for the management of these risks, the Group uses derivative financial instruments. In accordance with the Group’s treasury policy, derivative instruments are not entered into for speculative purposes. Treasury policy is reviewed and approved by the Board and specifies the parameters within which treasury operations must be conducted, including authorised counterparties, instrument types, transaction limits and principles governing the management of liquidity, interest and foreign currency risks.

The Group’s principal financial instruments, other than derivatives, are cash, short term deposits, bank loans, overdrafts, trade and other receivables and trade and other payables. The main purpose of these financial instruments is to raise finance for the Group’s operations.

Foreign exchange risk The Group operates internationally and is exposed to foreign exchange risk arising from various currency exposures. Foreign exchange risk arises from future commercial transactions, recognised assets and liabilities and net investment in foreign operations.

Management has established a policy requiring Group companies to manage their foreign exchange risk against their functional currency. Group companies are required to hedge on a monthly basis. Group Treasury nets and consolidates the global prescribed hedges in the market with external forward contracts. Additionally, Group Treasury reviews the actual non-sterling exposure cushion of the Group and hedges those exceeding the levels set by the Group foreign exchange policy with external forward contracts.

The Group’s net exposure to foreign currency risk is illustrated by the sensitivity analysis in note 37.

Interest rate riskThe Group is exposed to cash flow interest rate risk on floating rate bank loans, overdrafts and cash held on deposit. The Group’s borrowings are primarily at variable interest rates set for periods of six months or less. Based on the various scenarios, the Group manages its cash flow interest rate risk by using interest rate hedging instruments such as caps or swaps which are used to protect the Group against significant increases in interest rates. Under the interest rate swap, the Group agrees with other parties to exchange, at specified intervals, the difference between the specified swap rate and floating rate interest amounts calculated by reference to the agreed notional amounts.

The Group’s cash balances are kept in interest bearing current accounts and on short-term deposit to maximise the level of return while maintaining an adequate level of liquidity. The Group does not generally invest surplus funds in long-term fixed interest securities and therefore its exposure to fair value interest rate risk is not generally significant.

The Group’s net exposure to interest rate risk is illustrated by the sensitivity analysis in note 37.

Credit risk Credit risk arises from cash and cash equivalents, derivative financial instruments and deposits with banks and financial institutions but primarily from outstanding trade receivables and committed transactions. The Group has policies in place to ensure that sales are made to customers with an appropriate credit history.

Derivative and cash transactions are limited to high-quality financial institutions. The Group has policies that limit the amount of credit exposure to any financial institution. For customer contracts, the Group and each reporting subsidiary have specified risk control and authorisation procedures in place to assess the credit quality of a customer. Where there is no independent risk rating for a customer, such an assessment takes into account financial position, past experience and other factors.

The Group has no significant concentrations of credit risk, with exposures spread over a large number of customers and counterparties.

Liquidity riskThe Group manages its cash and borrowing requirements centrally to minimise net interest expense within risk parameters set by the Board, whilst ensuring that the Group has sufficient liquid resources to meet the operating needs of the business. The long-term forecast cash and borrowings profile of the Group is monitored to ensure that adequate headroom remains under current and projected committed borrowing facilities.

Fin

ancial statem

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33. Financial instruments: risk management continuedThe table below shows the maturity analysis of the undiscounted remaining contractual cash flows of the Group’s non-derivative financial liabilities.

All figures in £ millionsLess thanone year 1 to 2 years 2 to 5 years Over 5 years

2011Total

Bank loans and overdrafts 23.3 22.9 32.9 – 79.1

Convertible bond 2.5 2.5 106.2 – 111.2

Trade and other payables 74.8 0.4 1.1 2.4 78.7

Other liabilities 4.2 – – 0.3 4.5

Total cash flows 104.8 25.8 140.2 2.7 273.5


2010Total

Bank loans and overdrafts 49.4 78.5 – – 127.9

Trade and other payables 124.9 0.6 1.3 2.7 129.5

Finance lease liabilities 0.9 0.4 0.4 – 1.7

Other liabilities 4.7 1.2 – – 5.9

Total cash flows 179.9 80.7 1.7 2.7 265.0

The table below analyses the Group’s outflow and inflow from derivative financial instruments into relevant maturity groupings based on the remaining contractual maturity period at the balance sheet date. The amounts disclosed in the table are the contractual undiscounted cash flows.


2011Total

Derivative financial instruments (gross settled)

– inflows (1.0) (1.0) (1.0) – (3.0)

– outflows 1.6 1.6 0.7 – 3.9

Total cash flows 0.6 0.6 (0.3) – 0.9


2010Total

Derivative financial instruments (gross settled)

– inflows (1.1) (1.1) (3.8) – (6.0)

– outflows 0.7 0.6 1.4 – 2.7

Total cash flows (0.4) (0.5) (2.4) – (3.3)

Capital risk The capital structure of the Group consists of debt and equity attributable to equity holders of the Company, comprising issued capital, reserves and retained earnings as shown in the consolidated statement of changes in equity and note 32. The Group manages its capital with the objective that all entities within the Group continue as a going concern while maintaining an efficient structure to minimise the cost of capital.

In order to maintain or adjust the capital structure, the Group may adjust the amount of dividends paid to shareholders, return capital to shareholders, issue new shares or sell assets to reduce debt. During the year a return of capital was made to shareholders as described in note 31.

The Group is subject to certain financial covenants on its funding facility and monitors capital largely on this basis. This includes a maximum ratio of net borrowings to operating profit before depreciation, amortisation and exceptionals (EBITDA) of 3 times and a minimum ratio of EBITDA to net interest of 5.0 times. At 31 May 2011, the net borrowings to adjusted EBITDA ratio was 1.3 (2010: 1.2) times and EBITDA to net interest payable ratio (as defined in the loan agreement) was 15.4 (2010: 9.6). The covenants were met throughout the year.

Fin

ancial statem

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34. Financial instrumentsThe Group uses derivative instruments in order to manage foreign currency exchange risk arising from future commercial transactions, recognised assets and liabilities. The Group is also exposed to cash flow interest rate risk from floating rate bank loans, overdrafts and cash held on deposit.

Forward foreign exchange contracts The fair value of foreign exchange derivatives at 31 May 2011 was a net liability of £0.2m (2010: £0.1m).

35. Financial instruments: categories

All figures in £ millionsFair value hierarchy1

Fair value through P&L

Loans & receivables

Amortisedcost

Not afinancial

instrument2 Current Non-current

At 31 May 2011

Financial assets

Investments Level 1 3.9 – – – – 3.9


Derivative financial instruments Level 2 3.0 – – – 1.0 2.0

Trade and other receivables – 134.4 – 8.7 134.4 8.7

Cash and cash equivalents – 56.8 – – 56.8 –

8.5 191.2 – 8.7 192.2 16.2

Financial liabilities

Derivative financial instruments Level 2 (3.9) – – – (1.6) (2.3)

Borrowings – – (151.0) – (17.9) (133.1)

Trade and other payables – – (83.1) (9.6) (88.8) (3.9)

(3.9) – (234.1) (9.6) (108.3) (139.3)

All figures in £ millionsFair value hierarchy1

Fair value through P&L

Loans & receivables

Amortisedcost

Not afinancial

instrument2 Current Non-current

At 31 May 2010

Financial assets



Derivative financial instruments Level 2 6.0 – – – 1.1 4.9

Trade and other receivables – 259.0 – 28.3 285.7 1.6

Cash and cash equivalents – 120.3 – – 120.3 –

13.1 379.3 – 28.3 407.1 13.6

Financial liabilities

Derivative financial instruments Level 2 (2.7) – – – (0.7) (2.0)

Borrowings – – (119.4) – (46.3) (73.1)

Trade and other payables – – (135.5) (13.3) (142.9) (5.9)

(2.7) – (254.9) (13.3) (189.9) (81.0)

1 Fair value hierarchy shows the fair value measurement categories as described below.2 Assets that do not qualify as a financial instrument include prepayments of £8.7m (2010: £28.3m). Liabilities that do not qualify as financial instruments are

tax and other social security payments of £9.6m (2010: £13.3m).

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35. Financial instruments: categories continuedFair value measurement hierarchyFair value measurements of financial instruments (where relevant) are classified using the following fair value hierarchy which reflects the significance of the inputs used in making the measurements:

Level 1 – quoted prices (unadjusted) in active markets for identical assets or liabilities;Level 2 – input other than quoted prices included within Level 1 that are observable for the asset or liability, either directly (i.e. as prices) or indirectly (i.e. derived from prices); andLevel 3 – inputs for the asset or liability that are not based on observable market data (unobservable inputs).

The fair value of financial instruments traded in active markets is based on quoted market prices at the close of business on the balance sheet date. A market is regarded as active if quoted prices are readily and regularly available from an exchange, dealer, broker, industry group, pricing service or regulatory agency and those prices represent actual and regularly occurring market transactions on an arm’s length basis. The quoted market price used for financial assets held by the Group is the current bid price. These instruments are included in Level 1 and comprise investments in quoted marketable securities.

The fair value of financial instruments that are not traded in an active market (for example, over-the-counter derivatives) is determined by using valuation techniques. The valuation techniques maximise the use of observable market data where it is available and rely as little as possible on entity specific estimates. If all significant inputs required to fair value an instrument are observable, the instrument is included in Level 2.

Specific valuation techniques used to value financial instruments include:– Quoted market prices;– Forward exchange rates; and– External consultants’ valuations.

Financial assetsCash and cash equivalents primarily comprise cash deposits and investments. Cash which bears interest at nominal rates comprises £13.5m (2010: £6.1m) denominated in sterling, £32.4m (2010: £103.8m) in US dollars, £1.8m (2010: £16.0m) in euros and £9.1m (2010: £6.8m) in other currencies.

36. Financial instruments: fair valuesThe fair values of each category of the Group’s financial instruments approximate to their carrying values in the Group’s balance sheet.

37. Financial instruments: sensitivity analysisForeign currency sensitivity analysis The Group’s principal foreign currency exposures are to the US Dollar and the Euro. The table below illustrates the hypothetical sensitivity of the Group’s reported profit and equity to a 10% increase and decrease in the US Dollar/Sterling and Euro/Sterling exchange rates at the year-end date, assuming all other variables remain unchanged. The sensitivity rate of 10% represents the Directors’ assessment of a reasonably possible change for the foreseeable future.

Income statement


Sterling strengthens by 10%

US Dollar (2.8) 0.4

Euro 2.5 (2.0)

Sterling weakens by 10%

US Dollar 2.8 (0.4)

Euro (2.5) 2.0

Year-end exchange rates applied in the above analysis are US Dollar 1.64 (2010: 1.45) and Euro 1.14 (2010: 1.18).

Interest rate sensitivity analysis The table below illustrates the hypothetical sensitivity of the Group’s reported profit to a 0.5% increase or decrease in interest rates, assuming all other variables were unchanged. The sensitivity rate of 0.5% represents the Directors’ assessment of a reasonably possible change for the foreseeable future.

Income statement


Interest rate increase of 0.5% (0.3) (0.6)

Interest rate decrease of 0.5% 0.3 0.6

38. Principal subsidiary undertakingsInformation on the principal subsidiary undertakings included in the consolidated accounts at 31 May 2011 is provided in note E of the Company accounts.

39. Events after the reporting periodOn 21 June 2011, the Board announced that it had received a preliminary approach that may or may not lead to an offer being made for the Company.

On 23 June 2011, Fidelity National Information Services, Inc. confirmed that it had made a preliminary approach regarding a possible cash offer for Misys plc.

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Independent auditors’ report to the members of Misys plc

IntroductionWe have audited the Company financial statements of Misys plc for the year ended 31 May 2011 which comprise the Company balance sheet and the related notes. The financial reporting framework that has been applied in their preparation is applicable law and United Kingdom Accounting Standards (United Kingdom Generally Accepted Accounting Practice).

Respective responsibilities of Directors and auditors As explained more fully in the Directors’ Responsibilities Statement set out on page 74, the Directors are responsible for the preparation of the Company financial statements and for being satisfied that they give a true and fair view. Our responsibility is to audit and express an opinion on the Company financial statements in accordance with applicable law and International Standards on Auditing (UK and Ireland). Those standards require us to comply with the Auditing Practices Board’s Ethical Standards for Auditors.

This report, including the opinions, has been prepared for and only for the Company’s members as a body in accordance with Chapter 3 of Part 16 of the Companies Act 2006 and for no other purpose. We do not, in giving these opinions, accept or assume responsibility for any other purpose or to any other person to whom this report is shown or into whose hands it may come save where expressly agreed by our prior consent in writing.

Scope of the audit of the financial statementsAn audit involves obtaining evidence about the amounts and disclosures in the financial statements sufficient to give reasonable assurance that the financial statements are free from material misstatement, whether caused by fraud or error. This includes an assessment of: whether the accounting policies are appropriate to the Company’s circumstances and have been consistently applied and adequately disclosed; the reasonableness of significant accounting estimates made by the Directors; and the overall presentation of the financial statements. In addition, we read all the financial and non-financial information in the annual report to identify material inconsistencies with the audited financial statements. If we become aware of any apparent material misstatements or inconsistencies we consider the implications for our report.

Opinion on financial statements In our opinion, the Parent Company financial statements: give a true and fair view of the state of the Company’s affairs as at 31 May 2011; have been properly prepared in accordance with United Kingdom Generally Accepted Accounting Practice; and have been prepared in accordance with the requirements of the Companies Act 2006.

Opinion on other matters prescribed by the Companies Act 2006In our opinion:

the part of the Directors’ remuneration report to be audited has been properly prepared in accordance with the Companies Act 2006; and the information given in the Directors’ Report for the financial year for which the Company financial statements are prepared is consistent with the Company financial statements.

Matters on which we are required to report by exception We have nothing to report in respect of the following matters where the Companies Act 2006 requires us to report to you if, in our opinion:

adequate accounting records have not been kept by the Company, or returns adequate for our audit have not been received from branches not visited by us; or the Company financial statements and the part of the Directors’ remuneration report to be audited are not in agreement with the accounting records and returns; or certain disclosures of Directors’ remuneration specified by law are not made; or we have not received all the information and explanations we require for our audit.

Other matterWe have reported separately on the Group financial statements of Misys plc for the year ended 31 May 2011.

Giles Hannam (Senior Statutory Auditor)for and on behalf of PricewaterhouseCoopers LLPChartered Accountants and Registered AuditorsLondon28 July 2011

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Non current assets

Tangible fixed assets D 4.7 6.5

Investments in subsidiary undertakings E 460.0 89.2

Amounts due from subsidiary undertakings 750.8 758.7

Deferred tax asset F 5.9 –

1,221.4 854.4

Current assets

Debtors G 50.2 67.3

Derivative financial instruments H 0.9 0.4

Cash at bank and in hand 39.6 12.6

90.7 80.3

Creditors falling due within one year

Loans and overdrafts I (17.9) (45.4)

Derivative financial instruments H (1.1) (0.4)

Other creditors J (99.0) (62.2)

Provisions for liabilities and charges K (0.7) (1.2)

(118.7) (109.2)

Net current liabilities (28.0) (28.9)

Total assets less current liabilities 1,193.4 825.5

Creditors falling due after more than one year

Bank loans I (133.1) (72.3)

Amounts due to subsidiary undertakings (812.0) (450.4)

Accruals (3.6) (4.1)

Provisions for liabilities and charges K (0.8) (3.0)

Retirement benefit obligations M – (0.2)

Net assets 243.9 295.5

Equity

Called up share capital O 4.3 5.9

Share premium account O 12.7 151.9

Capital redemption reserve O 147.7 0.3

Other reserves P 79.2 137.4

Equity shareholders' funds 243.9 295.5


Mike Lawrie28 July 2011

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A. Accounting convention and policiesAccounting conventionThe financial statements have been prepared on a going concern basis which the Directors believe to be appropriate. The Company is in a net asset position and has net current assets after excluding intercompany balances. The financial position and resources of the Misys Group are sufficient to support the going concern basis for the Company.

The financial statements have been prepared under the historical cost convention, except as described under the headings share incentive schemes and derivative financial instruments and hedge accounting, and in accordance with the applicable UK Accounting Standards, the Companies Act 2006 and the accounting policies set out below.

Share incentive schemesThe Group operates several equity settled, share-based compensation plans. The fair value of the employee services received in exchange for the grant of the options is recognised as an expense.

The total amount to be expensed over the vesting period is determined by reference to the fair value of the options granted, excluding the impact of any non-market vesting conditions (for example, profitability and sales growth targets). Non-market vesting conditions are included in assumptions about the number of options that are expected to become exercisable.

At each balance sheet date, a revised estimate is made of the number of options that are expected to become exercisable. If the revised estimate differs from the original estimate, the charge to the income statement is adjusted over the remaining vesting period of the options.

The social security contributions payable in connection with the grant of the share options is considered an integral part of the grant itself, and the charge will be treated as a cash-settled transaction.

The share-based payment charge is recharged as an expense to the relevant employing subsidiary. Full details of the share incentive schemes are disclosed in the Directors’ remuneration report and note 5 of the Group accounts.

LeasesRentals paid under operating leases are charged to income on a straight line basis over the lease term.

TaxationTaxation that is chargeable on the profits for the period, together with deferred taxation using tax rates enacted or substantively enacted at the balance sheet date. Deferred taxation is provided in full on timing differences which result in obligation at the balance sheet date to pay more tax or the right to pay less tax at a future date. Timing differences arise from the inclusion of items of income and expenditure in taxation computations in periods different from those in which they are included in the financial statements. Deferred tax assets are recognised to the extent that they are likely to be recovered. Deferred tax assets and liabilities are not discounted.

Fixed assetsFixed assets are stated at cost less accumulated depreciation. Cost includes the original purchase price of the asset and the cost attributable to bringing the asset to its working condition for its intended use. Depreciation is calculated on a straight line basis so as to write off the cost, less estimated residual value of each asset, over its expected useful life. The residual values and useful economic lives of fixed assets are reviewed annually. Freehold land is not depreciated. The useful lives by major class of asset applied from the date of purchase are:

5-15 years or the period Leasehold improvements of the lease if shorterComputer and other equipment 4-10 years

InvestmentsInvestments are shown at cost less any provision considered necessary for impairment. The need for any impairment write-down is assessed by comparison of the carrying value of the asset against the higher of net realisable value or value in use. The value in use is determined from estimated discounted future cash flows. Discount rates used are based on the cost of capital of the Company.

Bank loans and overdraftsBank loans and overdrafts are initially recognised at fair value less directly attributable transaction costs and are subsequently measured at amortised cost using the effective interest method. The difference between the proceeds (net of transaction costs) and the redemption value is recognised in the profit and loss account over the period of the borrowings.

Foreign currenciesThe Company translates foreign currency transactions into its own functional currency at rates ruling at the date of each transaction. Foreign currency monetary assets and liabilities are retranslated at rates ruling at the balance sheet date and currency translation differences are recognised in the income statement.

Derivative financial instruments and hedge accountingDerivatives are initially recognised at fair value on the date a derivative contract is entered into and are subsequently remeasured at fair value. The method of recognising the resulting gain or loss depends on whether the derivative is designated as a hedging instrument and, if so, the nature of the item being hedged. Changes in the fair value of derivative financial instruments, where they are not designated as hedging instruments, are recognised in the profit and loss account.

PensionsThe Company has a closed funded defined benefit pension scheme in the UK, as well as a number of other smaller defined benefit arrangements outside the UK.

The remaining active members of the closed UK defined benefit scheme now contribute to a defined contribution section of the scheme and do not accrue further benefits under the defined benefit scheme. Full independent actuarial valuations are carried out on a regular basis and updated to each balance sheet date. The assets of the schemes are held separately from those of the Company.

Pension scheme assets are measured using bid market values.

Fin

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A. Accounting convention and policies continuedPension scheme liabilities are measured using a projected unit method and discounted at the current rate of return on a high quality corporate bond of equivalent term and currency to the liability. The pension scheme surplus (to the extent that it is recoverable) or deficit is recognised in full on the balance sheet. Any current or past service cost is recognised in the income statement. The net of the expected increase in the present value of the schemes’ liabilities, and the Company’s long-term expected return on its schemes’ assets, are included in the income statement.

Hedge accountingThe business activities of the Group expose it to financial risks that arise from changes in both foreign exchange rates and interest rates. The Company, on behalf of the Group, uses forward currency contracts and interest rate swaps to hedge these exposures. In accordance with its treasury policy, the Group does not enter into derivatives for speculative purposes. The Group designates certain derivatives as either:

a) hedges of the fair value of recognised assets or liabilities or a firm commitment (fair value hedges); or

b) hedges of a particular risk associated with a recognised asset or liability or a highly probable forecast transaction (cash flow hedge).

Changes in the fair value of derivative financial instruments that are designated and effective as hedges of future cash flows are recognised directly in equity and any ineffective portion is recognised immediately in the profit and loss account.

Conversely, if the item being hedged is a financial asset or liability, any amounts arising from changes in fair value that are deferred in equity are subsequently recognised in the profit and loss account in the same accounting period in which the hedged item affects net income.

Changes in the fair value of derivative financial instruments, where they are not designated as effective hedges of future cash flows, are recognised in the profit and loss account. Any changes in the fair value of the underlying transaction are also recognised in the profit and loss account. Where a financial instrument does not qualify for hedge accounting, any changes in the fair value are recognised in the profit and loss account as it arises.

Under these circumstances, any cumulative gain or loss on the hedging instrument, which has already been recognised in equity, is retained in equity until the transaction occurs. However, if a hedged transaction is no longer expected to occur, any net cumulative gain or loss that has already been recognised in equity is immediately transferred to the profit and loss account.

ProvisionsProvisions are recognised when the Company has a present legal or constructive obligation as a result of past events and it is probable that an outflow of resources will be required to settle the obligation and if this amount is capable of being reliably estimated. If such an obligation is not capable of being reliably estimated, no provision is recognised and the item is disclosed as a contingent liability where material.

Onerous property contractsProvision for onerous lease commitments on property contracts is based on an estimate of the net unavoidable lease and other payments in respect of these properties including dilapidation costs. These comprise rental and other property costs payable, plus any termination costs, less any income expected to be derived from the properties being sublet. The provisions are discounted at an appropriate rate to take into account the effect of the time value of money.

Cash flow disclosureThe Company is included within the consolidated financial statements of Misys plc, which are publicly available. Consequently, the Company has taken advantage of the exemption from preparing a cash flow statement under the terms of FRS 1 (revised 1996) ‘Cash flow statements’.

B. Profit for the yearAs permitted by section 408 of the Companies Act 2006, the profit and loss account of the Company is not presented as part of these financial statements. The profit attributable to shareholders for the year is £582.9m (2010: £19.3m loss), which includes auditors’ remuneration of £0.2m (2009: £0.1m). Included within the current year gain is £607.0m of dividends received from Group companies as part of the corporate restructuring programme.

C. CommitmentsCommitments of the Company under non cancellable operating leases at 31 May:


Annual payments expiring after 5 years 4.1 4.1

All operating lease commitments relate to land and buildings. The Company has no capital commitments at 31 May 2011 (2010: £nil).

D. Tangible fixed assetsAll figures in £ millions 2011 2010

Cost

At 1 June 7.5 8.8

Additions 0.1 0.2

Disposals (0.3) (1.5)

At 31 May 7.3 7.5

Depreciation and impairment

At 1 June (1.0) (1.3)

Charge for the year (1.9) (0.5)

Disposals 0.3 0.8

At 31 May (2.6) (1.0)

Net book value

At 31 May 4.7 6.5

Included in the above analysis are disposals of £nil (2010: £1.5m) relating to freehold land and properties; costs of £6.3m (2010: £6.3m), additions of £0.1m (2010: £0.2m) and accumulated depreciation of £2.4m (2010: £0.8m) relating to leasehold improvements; and cost of £1.0m (2010: £1.2m), disposals of £0.3m (2010: £nil) and accumulated depreciation of £0.2m (2010: £0.2m) relating to fixtures and fittings.

Fin

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E. Tangible fixed assetsAll figures in £ millions 2011 2010

Cost

At 1 June 93.4 93.8

Additions 376.3 0.1

Disposals (5.5) –

Transfer to other Group company – (0.5)

At 31 May 464.2 93.4

Provisions for impairment

At 1 June and 31 May (4.2) (4.2)

Net book value

At 31 May 460.0 89.2

Principal subsidiary undertakingsThe Company is the beneficial owner of and has 100% of the nominal value and voting rights over all the equity share capital, through subsidiary undertakings, of the following principal operating subsidiary undertakings within Banking, TCM and Misys Sophis. These develop and licence application software products to customers in well defined vertical markets together with undertaking transaction processing, professional services and e-commerce activities:

Company nameCountry of incorporation and operation Markets served

Banking and TCM

Misys International Banking Systems GmbH Germany Global products and services

Misys International Banking Systems Inc USA in the following areas:

Misys International Banking Systems Limited England and Wales Retail and international branch banking

Misys International Banking Systems Limited Republic of Ireland Transaction banking

Misys International Banking Systems Limited Hong Kong Treasury and capital markets

Misys International Financial Systems Pte Limited Singapore Enterprise-wide market and credit risk management

Misys International Banking Systems SA France Software integration technology

Misys International Banking Systems SA Luxembourg

Misys Software Solutions (India) Private Limited India

Summit Systems SA France

Summit Systems Inc USA

Summit Systems International Limited England and Wales

Kapiti Limited England and Wales

Misys IQ Limited England and Wales

Misys Philippines Inc Philippines

Sophis

Sophis Technology (Ireland) Limited Republic of Ireland Portfolio and risk management services in the following areas:

Investment banks

Treasury and capital markets

Hedge funds

Asset managers

Pension funds

In addition to the companies shown above, the Group also holds investments in a number of other subsidiary undertakings, which in the Directors’ opinion do not significantly affect the figures in the consolidated financial statements. Details of all Group companies will be annexed to the Company’s next annual return in compliance with section 409 and 410 and Parts I and II of Schedule 4 of the Companies Act 2006.

Fin

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F. Deferred tax assetsIn the current year, there is a deferred tax asset of £5.9m (2010: £nil) relating to tax losses (£4.9m) and other timing differences (£1.0m). The amount of £5.9m was credited to the profit and loss account. Deferred tax assets have been recognised in respect of carried forward tax losses where latest forecasts show that these are expected to be recovered against future profit streams.

G. Debtors falling due within one yearAll figures in £ millions 2011 2010

Amounts due from subsidiary undertakings 48.7 56.2

Other debtors 0.3 3.4

Corporation tax – 7.3

Prepayments 1.2 0.4

Total 50.2 67.3

H. Derivative financial instruments

all figures in £ millions Assets2011

Liabilities Assets2010

Liabilities

Forward foreign currency contracts 0.9 (1.1) 0.4 (0.4)

I. Loans and overdraftsAll figures in £ millions 2011 2010


Total falling due within one year 17.9 45.4

Bank loans payable within two to five years 49.7 72.3

Convertible bond 83.4 –

Total falling due after more than one year 133.1 72.3

Total 151.0 117.7

Bank loansIn November 2010, a new credit facility was agreed comprising a £90m term loan and a £190m multicurrency credit facility. The term loan is repayable in installments between May 2011 and August 2014. The revolving facility expires in August 2014. Initial arrangement fees relating to this facility of £1.3m have been expensed as an exceptional item being unconditional arrangement fees for new credit facilities to fund the Sophis acquisition. The remaining arrangement fees of £2.8m paid on drawdown are carried on the balance sheet. These costs are being amortised over the expected term of the facility. At 31 May 2011, £20m of the term loan had been repaid and none of the revolving credit facility was being used.

At 31 May 2010, the Group had a £210m credit facility comprised of an £80m term loan and £130m revolving credit facility. Both of these were fully repaid by November 2010. Fees of £2.7m relating to the expired credit facility have been expensed as an exceptional item as the facility no longer exists.

Convertible bondsThe Company issued 1,000 2.5% convertible bonds at a par value of £100m on 22 November 2010. The bonds mature five years from the issue date at their nominal value of £100m or can be converted into shares at the holder’s option from 4 January 2011 until 15 November 2015 at the prevailing conversion price.

If not previously converted or redeemed, the bonds will be redeemed at par five years from the settlement date. The Company will have the option to call all outstanding bonds at any time on or after 7 December 2013 if the parity value on each of at least 20 dealing days in any period of 30 consecutive dealing days on the London Stock Exchange exceeds 127% of the principal amount.

The values of the liability component and the equity conversion component were determined at issuance of the bond. The fair value of the liability component, included in non-current borrowings, was calculated using a market interest rate for an equivalent non-convertible bond. The residual amount, representing the value of the equity conversion option, is included in shareholders’ equity in other reserves.

J. Other creditors falling due within one yearAll figures in £ millions 2011 2010

Amounts due to subsidiary undertakings 84.9 58.4

Other creditors 0.2 0.2

Accruals 13.9 3.6

Total 99.0 62.2

K. Provisions for liabilities and charges

All figures in £ millions2011

Property2010

Property

At 1 June 4.2 7.9

Net provisions (credited) charged to the income statement (1.2) 2.2

Unwinding of discount – 0.3

Utilisation of provisions (1.5) (6.2)

At 31 May 1.5 4.2

Analysis of total provision:

Current 0.7 1.2

Non current 0.8 3.0

Total 1.5 4.2

The property provisions comprise the net present value of the estimated future costs of vacant and sublet properties and the excess rent over market value for occupied properties after taking into account dilapidations.

Fin

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L. Contingent liabilitiesContingent liabilities that are quantifiable arise from property rental guarantees that have been issued in the normal course of business and also from bonds that have been issued in support of tenders submitted to prospective customers. These amount to £0.3m (2010: £0.3m).

There are contingent liabilities that arise in the normal course of business in respect of guarantees in relation to subsidiaries. These are not expected to result in a material gain or loss to the Company.

At year-end, there was a $45m guarantee in place relating to potential tax liabilities arising as a result of the disposal of Allscripts, which Misys would be responsible for covering if they were to become payable.

M. Retirement benefit obligationsDefined benefit schemeIn 2003/04, the active members of the UK final salary scheme ceased to accrue benefits on the basis of their final salary during the year. Thereafter, the benefits of the active members accrue on a money purchase (defined contribution) basis.

The latest full actuarial valuation of the UK scheme was carried out as at 31 May 2008; the assumptions of which have been updated to 31 May 2011 by qualified independent actuaries. A new full actuarial valuation of the UK scheme is in progress.

The principal assumptions used in the valuation of the UK scheme only are:

2011%

2010%

Rate of increase in salaries n/a n/a

Rate of increase in pensions in payment:

Fixed 3% 3.0 3.0

Fixed 3.5% 3.5 3.5

RPI max 5% min 3% 3.8 3.9

RPI max 5% min 3.5% 4.1 4.1

Post 1988 Guaranteed Minimum Pension 2.2 2.6

Discount rate 5.4 5.5

Inflation assumption 3.6 3.7

Mortality rates (age) Years Years

Current pensioner – male 87 89

Current pensioner – female 89 91

Future retiree – male 89 91

Future retiree – female 91 92

The Company employs a building block approach in determining the long-term rate of return on pension plan assets. Historical markets are studied and assets with higher volatility are assumed to generate higher returns consistent with widely accepted capital market principles. The overall expected rate of return on assets is then derived by aggregating the expected return for each asset class over the actual asset allocation for the Plan at 31 May 2011.

Mortality assumptions are based on 100% of standard S1PxA year of use tables with allowance for future improvements to be in line with CMI_2010 Core Projections assuming a long term rate of future improvement of 1.25% per annum for both males and females. Mortality assumptions in the prior year were based on the PxA00 year of use tables. We believe that the underlying population of the S1PxA tables better reflect the membership of the UK scheme.

The year-end assets in the schemes were:


Equities 9.4 4.9

Government bonds 21.2 21.3

Corporate bonds 16.2 17.3

Other – 0.2

Market value of assets 46.8 43.7

Adjustment for unrecoverable surplus (3.5) –

Total market value of assets 43.3 43.7

Actuarial value of liabilities (43.3) (43.9)

Deficit in the schemes – (0.2)

Net pension liability – (0.2)

Movement in deficit during the year:


Plan assets:

Fair value at 1 June 43.7 37.3


Actuarial gain 2.3 4.9

Contributions paid by employer 0.5 0.5

Net benefits paid out (1.9) (1.2)

Fair value at 31 May 46.8 43.7

Benefit obligations:

Present value at 1 June (43.9) (37.3)

Current service cost – –

Interest cost (2.4) (2.3)

Actuarial gain (loss) 1.1 (5.5)

Net benefits paid out 1.9 1.2

Present value at 31 May (43.3) (43.9)

Net Asset (liability) 3.5 (0.2)

An asset of £3.5m (2010: £nil) in respect of the UK final salary scheme has not been recognised as the Company would not be able to derive future economic benefit from it.

Fin

ancial statem

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M. Retirement benefit obligations continuedThe amounts recognised in the income statement are as follows:


Current service cost (included in employee costs) – –

Interest cost on pension scheme liabilities (2.4) (2.3)


Included in finance cost (0.2) (0.1)

Total income statement expense (0.2) (0.1)

The long term expected rate of return on the UK scheme assets is 5.1% (2010: 5.1%).

The actual return on the schemes’ assets was a gain of £4.5m (2010: £4.7m).



Total actuarial gains (losses) 3.4 (3.0)

Change in irrecoverable surplus, effect of limit in para 58(b) (3.5) 2.4

Total losses (0.1) (0.6)

Cumulative amount of actuarial losses recognised (1.9) (1.8)

History of experience gains and losses in the UK scheme:

2011 2010 2009 2008 2007

Experience gains (losses) on schemes’ assets

Amounts (£m) 2.3 2.5 (2.2) (4.5) 3.2

Percentage of schemes’ assets 4.9% 5.7% 5.5% 10.9% 8.3%

Experience (losses) gains on schemes’ liabilities

Amounts (£m) (0.3) (0.1) 1.6 (2.3) –

Percentage of schemes’ liabilities 0.7% 0.2% 4.3% 5.6% –

History of asset values, benefit obligation and deficit in schemes:


Fair value of plan assets 46.8 43.7 39.7 41.2 44.3

Defined benefit obligation (43.3) (43.9) (37.3) (41.1) (37.3)

Surplus (deficit) in scheme 3.5 (0.2) 2.4 0.1 7.0

The expected contributions to the defined benefit scheme for the next financial year beginning 1 June 2011 are £0.5m (2010: £0.5m).

Fin

ancial statem

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N. Called up share capital

Number of shares

Allotted, fully paid

share capital Treasury MEST ESOP Net

At 1 June 2010 594,584,179 (46,477,433) (17,133,515) (103,272) 530,869,959

Shares cancelled during the year (182,150,609) 12,796,552 – – (169,354,057)

Share consolidation (51,554,197) 3,606,820 2,012,467 12,909 (45,922,001)

Sophis consideration stock 1,626,140 – – – 1,626,140

Share options exercised – 6,415,383 1,108,687 – 7,524,070

At 31 May 2011 362,505,513 (23,658,678) (14,012,361) (90,363) 324,744,111

Par value of each share is 1.14 pence. During the year, 6,415,383 (2010: 1,049,481) treasury shares, with a cost of £6.8m (2010: £0.8m), were utilised to satisfy share awards.

Shareholders approved the return of capital via a Tender Offer of the proceeds of disposal of Allscripts on 13 August 2010. On 16 December 2010, 169,354,057 ordinary shares were tendered and were repurchased for cancellation at a strike price of 310 pence per ordinary share, for a total cost of £525 million.

To enable the Company to return the balance of the proceeds from the Allscripts disposal shareholders approved a £146 million return of share capital, by way of a B share scheme, at the Company’s General Meeting on 11 February 2011. 383,579,014 B shares were issued on 14 February 2011. Shareholders owning 89,266,979 B shares elected to receive the initial dividend payment of 38 pence each and these shares were subsequently converted to deferred shares. The remaining shares were redeemed at a later date for 38 pence each. The final redemption date for B shares was 7 April 2011 and all transactions relating to the B share scheme have now been completed.

The share consolidation, approved as part of the B share scheme, took place on 14 February 2011, when shareholders exchanged 8 existing ordinary shares of 1p each for 7 new ordinary shares of 11/7 pence each (1.14p).

The Misys Employee Share Trust (MEST) purchases shares in the market using funds contributed by the respective Group employing companies. These shares are used to satisfy awards made under the Group’s share incentive arrangements. At 31 May 2011, the MEST held 14,012,361 (2010: 17,133,515) shares purchased for a cost of £37.9m (2010: £40.6m) and with a market value of £50.7m (2010: £38.6m). During the year, it utilised shares with a cost of £2.6m (2010: £6.6m) to satisfy share awards.

The Employee Share Ownership Plan (ESOP) purchases shares in the market using funds loaned by the Company. Share purchases are timed to ensure that the ESOP has sufficient shares to satisfy its requirements as and when its obligations fall due. The Trustees of the ESOP have waived its rights to dividends. At 31 May 2011, the ESOP held 90,363 (2010: 103,272) shares, purchased for a cost of £0.2m (2010: £0.2m) and with a market value of £0.3m (2010: £0.2m).

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O. Share capital and reserves


capital

Sharepremiumaccount

Capitalredemption

reserveOther

reserves

At 1 June 2010 5.9 151.9 0.3 137.4

Profit retained for the year – – – 582.9

Shares issued 0.1 5.5 – –

Shares repurchased for cancellation (1.7) – 1.7 (525.0)

Convertible bond – equity component – – – 16.1

B share scheme – shares issued 145.7 (145.7) – –

B share scheme – redemption of shares (111.8) – 111.8 (105.6)

B share scheme – dividends paid (33.9) – 33.9 (33.9)

Expenses incurred on transactions with owners – – – (5.5)

Actuarial loss – – – (0.1)

Share options exercised – 1.0 – 5.5

Share-based payments – – – 7.4

At 31 May 2011 4.3 12.7 147.7 79.2


capital

Sharepremiumaccount

Capitalredemption

reserveOther

reserves

At 1 June 2009 5.9 151.9 0.3 149.1

Loss retained for the year – – – (19.3)

Actuarial loss – – – (0.6)

Share options exercised – – – 1.8

Share-based payments – – – 6.4

At 31 May 2010 5.9 151.9 0.3 137.4

P. Other reserves



Treasuryshares

Ownshares Total

At 1 June 2010 272.2 – (94.1) (40.7) 137.4

Total recognised income and expense for the period 582.9 – – – 582.9

Purchase of and other movement in own shares (525.0) – – – (525.0)

Convertible bond – equity component – 16.1 – – 16.1

B shares – redemption of shares (105.6) – – – (105.6)

B share scheme – dividends paid (33.9) – – – (33.9)

Expenses incurred on transactions with owners (5.5) – – – (5.5)

Actuarial loss (0.1) – – – (0.1)

Share options settled from own shares (10.7) – 13.5 2.7 5.5

Share-based payments 7.4 – – – 7.4

At 31 May 2011 181.7 16.1 (80.6) (38.0) 79.2



Treasuryshares

Ownshares Total

At 1 June 2009 292.7 – (96.3) (47.3) 149.1

Total recognised income and expense for the period (19.3) – – – (19.3)

Actuarial loss (0.6) – – – (0.6)

Share options settled from own shares (7.0) – 2.2 6.6 1.8

Share-based payments 6.4 – – – 6.4

At 31 May 2010 272.2 – (94.1) (40.7) 137.4

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Q. Events after the reporting periodOn 21 June 2011, the Board announced that it had received a preliminary approach that may or may not lead to an offer being made for the Company.

On 23 June 2011, Fidelity National Information Services, Inc. confirmed that it had made a preliminary approach regarding a possible cash offer for Misys plc.

R. Related party transactionsThe company is exempt under the terms of FRS 8 from disclosing related party transactions with other 100% owned subsidiaries of Misys plc Group.

ValueAct Capital has a holding of 67,812,779 shares representing 20.21% (2010: 25.7%) in the Company on an aggregated basis, which reduced as result of the tender offer on 15 December 2010. Jeff Ubben, who is a non-executive Director of the Company, is Chief Executive Officer and Chief Investment Officer of ValueAct Capital.

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Revenue

Banking 167.4 161.7 183.0 159.8 148.6

TCM 184.9 179.5 161.1 141.7 125.1

Misys Sophis 16.8 – – – –

Corporate & Other 0.9 0.7 – – –

Continuing operations 370.0 341.9 344.1 301.5 273.7

Operating profit (loss)

Banking 31.0 32.7 38.5 17.2 16.3

TCM 41.9 42.1 36.5 32.1 28.4

Misys Sophis (3.7) – – – –

Corporate & Other (11.9) (12.7) (21.6) (11.0) (9.5)

Continuing operations excluding exceptional items 57.3 62.1 53.4 38.3 35.2

Exceptional items (21.0) (8.4) 31.1 (14.6) (24.3)

36.3 53.7 84.5 23.7 10.9

Interest and other finance costs (4.1) (8.7) (14.0) (3.4) (13.9)

Profit (loss) before taxation 32.2 45.0 70.5 20.3 (3.0)

Taxation 2.1 (20.5) 3.0 (11.4) (1.9)

Profit (loss) after taxation from continuing operations 34.3 24.5 73.5 8.9 (4.9)

Profit after taxation from the discontinued operation 614.7 36.9 16.1 104.4 19.9

Profit for the year – attributable to non-controlling interest – (17.1) (7.6) – –

Profit for the year – attributable to equity holders of Misys plc 649.0 44.3 82.0 113.3 15.0

Net funds (debt) (94.2) 0.9 (128.9) 25.5 (91.1)

Pence Pence Pence Pence Pence

Adjusted basic earnings per share 12.4 13.1 9.8 14.0 14.6

Adjusted diluted earnings per share 12.2 12.8 9.7 14.0 14.5

Dividends per share – – – 7.91 7.53

Number Number Number Number Number

Average number of employees

Banking 2,075 1,525 1,375 1,788 1,790

TCM 1,285 1,029 1,044 1,066 892

Misys Sophis 100 – – – –

Corporate & Other 307 1,164 971 81 70

Continuing operations 3,767 3,718 3,390 2,935 2,752

Discontinued operation 640 2,412 2,021 1,601 1,597

4,407 6,130 5,411 4,536 4,349

Adjusted earnings per share includes continuing and discontinued operations.

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Financial Calendar

Annual General Meeting 28 September 2011

Announcement of 2011 interim results (provisional)

January 2012

Preliminary announcement of 2012 results (provisional) July 2012

Annual General MeetingThe AGM will take place at 12 noon on Wednesday 28 September 2011 at The Lincoln Centre, 18 Lincoln’s Inn Fields, London WC2A 3ED. The Notice of AGM accompanies this Report and will also be displayed on the Company’s website.

Electronic CommunicationsChanges in legislation have provided companies with greater flexibility when communicating with their shareholders. By using electronic communication Misys is able to distribute messages to all its shareholders instantaneously, reduce costs and its environmental impact. Only those shareholders who have elected to receive shareholder documents in hard copy will receive documents in this form. If in future you would like to receive the annual report electronically rather than by post, please register online at www.misys.com

Shareholders who have not elected to receive documents in hard copy will receive a notification at the time of their publication advising that they are available electronically and how to access them.

Company WebsiteWhether you are looking for information about our activities, financial information, social, environmental and ethical responsibilities, our approach to governance, latest press releases, this report and further information about the Company is available on our corporate website at www.misys.com.

Misys Share PriceThe Misys share price is quoted in most UK daily national newspapers under ‘Software & Computer Services’, ‘Support Services’ or ‘Information Technology’ sections.

Company Secretary and Registered OfficeTom Kilroy, Misys plc, One Kingdom Street, Paddington, London W2 6BL Tel: +44 (0) 20 3320 5000. The Company is registered and domiciled in England No. 1360027.

RegistrarOur registrar is Equiniti, Aspect House, Spencer Road, Lancing, West Sussex, BN99 6DA Telephone: (from UK) *0871 384 2070; (from outside UK) +44 (0) 121 415 7047 www.shareview.co.uk. Please direct any enquiries about holdings of Misys plc shares to the registrar.

*Calls to 0871 numbers are charged at 8p per minute from a BT landline. Charges from other telephony providers may vary. Lines are open from 8.30am to 5.30pm Monday to Friday, excluding bank holidays.

Share Register Fraud: Protecting your investmentShareholders are advised to be wary of any unsolicited advice, offers to buy shares at a discount, or offers of free reports about the Company. If you receive any unsolicited advice make sure you get the correct name of the person and organisation and check that they are appropriately authorised by the FSA by visiting www.fsa.gov.uk/pages/register. More information can be found at www.moneyadviceservice.org.uk.

Tips on protecting your shares Keep any documentation that contains your shareholder reference number in a safe place and destroy any documentation which you no longer need by shredding it.

Inform Equiniti promptly when you change your address. Consider holding your shares electronically in a CREST account via a nominee.

Sharedealing servicesShareholders can make use of the Equiniti share dealing facilities either by telephoning Equiniti on 08456 037 037 (UK only) or by logging on to www.shareview.co.uk/dealing.

SharegiftThe Orr Mackintosh Foundation operates a purely voluntary charity share donation scheme for shareholders who wish to dispose of small numbers of shares when the dealing costs or minimum fee makes it uneconomical to sell them. Details of the scheme are available from ShareGift at www.sharegift.org or can be obtained from Equiniti.

Combined CodeA copy of the Combined Code can be found at www.fsa.gov.uk

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BankersThe Royal Bank of Scotland plc 135 Bishopsgate London EC2M 3UR, UK

Legal AdvisersAllen & Overy LLP One Bishops Square London, E1 6AD, UK

Allen & Overy LLP1221 Avenue of the Americas New York, NY 10020, USA

Joint Corporate BrokersJPMorgan Cazenove Limited 20 Moorgate London EC2R 6DA, UK

Deutsche Bank AG 1 Great Winchester Street London EC2N 2DB, UK

AuditorPricewaterhouseCoopers LLPOne Embankment PlaceLondonWC2N 6RH, UK

Fin

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Misys would like to thank all those who participated in producing this report, particularly the members of staff for their contributions.

This document has been printed on Heaven 42, which is produced using virgin wood fibre from fully sustainable forests. All pulps used are Elemental Chlorine Free (ECF) and manufactured at a mill that has been awarded the ISO 14001 and EMAS certificates for environmental management. The use of the FSC logo identifies products which contain wood from well-managed forests certified in accordance with the rules of the Forest Stewardship Council. The paper is also completely bio-degradable and recyclable.

If you have finished reading this report and no longer wish to retain it, please pass it on to other interested readers or dispose of it in your recycled paper waste.

An online version of this report is available on our website at www.misys.com/report2011

Designed and produced by The College www.thecollege.uk.com

7306 misys ar 2011-small-indexed

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