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Customers

Solutions

Innovation

Partnerships

People

www.misys.com

Misys plc | Annual Report 2010 Search

Leading:

Misys plcOne Kingdom StreetPaddingtonLondon, W2 6BLT: +44 (0)203 320 5000

Misys p

lc Annual R

eport 2010

Overview

Performance highlights 01

At a glance 02

Business review

Chairman’s statement 04

Chief Executive’s review 06

Key performance indicators 08

Strategy 10

Leading: 12

Business review: Allscripts 20Business review: Banking 22Business review: Treasury & Capital Markets 24Business review: Open Source Solutions 26Business review: Global Services 28

People 30

Social and environmental responsibility 32

Financial review 36

Principal risks and uncertainties 44

Misys aspires to be the leading application software and services provider in the markets that we serve.

In the eyes of our Customers, leadership is about the added value that we provide with our award winning Solutions, developed and supported with leading Innovation, opening new market opportunities with our world class Partnerships and all made possible by the dedication and talent of our People.

We deliver mission-critical software solutions and services in the financial services sector and in US healthcare. In Financial Services, we support more than 1,200 customers, including every one of the world’s top 50 banks. In US healthcare, Allscripts* serves more than 160,000 physicians, 800 hospitals and nearly 8,000 post-acute and homecare organisations and the proposed merger of Allscripts and Eclipsys will establish a clear leader in end-to-end healthcare IT.

Misys has transformed its business over the last three years. We completed the first phase of our multi year turnaround ahead of schedule by making sure that our customers are at the heart of everything that we do. Despite mixed market conditions, we are now winning more in our chosen markets while building the foundations for long-term growth. By leading through innovation, we are establishing a high-performance organisation that creates exceptional value for customers and unlocks exceptional value for shareholders. Misys is now preparing to lead in the industries that we serve.

* Misys plc owns a controlling interest in Allscripts-Misys Healthcare Solutions, Inc. (Allscripts). On 9 June 2010, Misys announced plans to realise significant value for shareholders through the sale of the majority of its controlling stake. Find out more about Misys at www.misys.com/report2010

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/report2010

Designed and produced by The College www.thecollege.uk.com

Annual Report 2010 | Misys plc 01

Financial statements

Statement of Directors’ responsibilities 70

Audit opinion for the Misys plc Group 71

Consolidated income statement 72

Consolidated statement of comprehensive income 72

Consolidated statement of cash flows 73

Consolidated balance sheet 74

Consolidated statement of changes in equity 75

Accounting policies 76

Notes to the financial statements 83

Audit opinion for the Misys plc Company 109

Company balance sheet 110

Notes to the Company financial statements 111

Five year financial record 118

Corporate governance

Board of Directors 50

Directors’ report 52

Corporate governance report 55

Directors’ remuneration report 61

Investor information 119

> Strong results; revenue acceleration, cost control and strong profit growth – Revenue growth +13% (pro-forma constant currency +3%) – Adjusted operating profit +26% (pro-forma constant

currency +10%) – Adjusted basic earnings per share +34%

> Created leader with Allscripts in US physician office healthcare IT market

> Allscripts benefiting from US government stimulus for adoption of Electronic Health Records

> Allscripts divestiture on track

> Strong turnaround in Treasury & Capital Markets gaining 28 new name customers

> Growing demand from financial institutions to enhance risk management and electronic processing of trades

> Misys BankFusion adoption on plan and receiving positive reaction

> Continued investment in new solutions which are beginning to enter the financial services market including Misys BankFusion, Mobile, Trade & Payments and Business Intelligence

> Misys has the solutions and services that are highly relevant to banks’ needs as spending returns

> Misys is well-positioned for leadership in the financial services sector

Performance highlights

Revenue as reported

£782m

Adjusted basic earnings per share (pence)

See financial review for a reconciliation to as reported measures.

13.1pAdjusted operating profit

£148m

02 Misys plc | Annual Report 2010

Business reviewOverview

At a glance

BankingFor over 3 decades, we have been helping the world’s leading financial institutions deliver outstanding service to their customers. Today, our portfolio of award winning solutions supports a comprehensive range of banking business areas – including core banking for retail, universal, corporate and wholesale banks, trade services, mobile, internet and channel banking, business intelligence, messaging and payment processing.

With our integrated solutions, financial institutions world wide can react rapidly to market changes in real time and capitalise on them before their competitors can while at the same time reducing cost and enhancing risk management, transparency and compliance oversight. Our ground-breaking Misys BankFusion operating system provides a unique opportunity for the banking industry and is set to drive sustained future revenue growth for years to come.

Experience Solutions Results

Our diverse geographic footprint, breadth of solutions and services together with our strong recurring revenues – have helped drive growth during mixed market conditions. We have created pure play propositions in healthcare and financial services and are leading the way with the development of Open Source Solutions in healthcare and carbon markets.

Misys is entering a new and exciting phase of our turnaround – creating a world class industry leader in the markets that we serve. We are investing in developing, launching, implementing and expanding market-leading platforms, solutions and partnerships.

£162mRevenue as reported

Treasury & Capital Markets (TCM) We provide integrated solutions that help financial institutions to manage mission critical business activities in the areas of treasury, risk management, capital markets, syndicated and bi-lateral lending. Our solutions extend from front-office/trade capture through to back office processing and reconciliation for banks, asset services, government sponsored entities (GSEs), corporations and buy-side institutions. The size and geographic spread of our installed base, our ability to respond rapidly to customers’ changing needs and our cross asset class, front-to-back coverage make us a clear market leader. We have been able to meet strong customer demand for solutions that enhance risk management, efficiency and straight through processing, while also improving customer satisfaction through new product offerings.


Our markets: financial services


Corporate governance Financial statements

Allscripts*Allscripts is the clear leader in software, services, information and connectivity solutions that empower physicians and other healthcare providers to deliver best-in-class patient safety, clinical outcomes and financial results.

In the United States (US) more than 160,000 physicians, 800 hospitals and thousands of other healthcare providers in clinics, post-acute care facilities and homecare agencies utilise Allscripts solutions to automate and connect their clinical and business operations. Allscripts is transforming the ‘healthcare’ system into a connected system of ‘health’.

We are focused on delivering innovative, effective, easy-to-use solutions to stakeholders across the continuum of care.

* Allscripts is the brand name of Allscripts-Misys Healthcare Solutions, Inc.

Open Source SolutionsWe are leading the development of innovative open source projects, creating new ways to address challenges in the healthcare and carbon markets. We are seeing growing demand for solutions that operate seamlessly with others through open source technologies. This is helping to build momentum for open source and growing our potential addressable market. We are now starting to translate our lead into material benefits for Misys from revenues to cross-sell opportunities and shared technical innovation with core Misys businesses.

Revenue by business sector (as reported)1. Allscripts 56%2. Banking 21%3. Treasury & Capital Markets (TCM) 23%

Revenue by geography (as reported)1. UK 6%2. Rest of Europe 17%3. Asia Pacific 6%4. Americas 65%5. Other (Middle East and Africa) 6%


Our markets: healthcare


Overview

Chairman’s statement

Last year your Company generated Group revenue of £782m, an increase of 13% on the previous year. Group revenue on a pro-forma like-for-like basis was £786m, up 3%. Adjusted operating margin was 19%, up 2 percentage points. Adjusted operating profit on a pro-forma like-for-like basis was £151m, up 10%. This financial performance translated into adjusted basic earnings per share of 13.1p, up 3.3p. The Misys share price rose by 35% during the year (2 year period: 42%) compared to the FTSE250 Index which rose by 27% (2 year period: 4% decline).

Misys is investing in its future by retaining and reinvesting funds that might otherwise have been distributed as dividends. This is helping our businesses to grow as we emerge from tough trading conditions and move into a new market cycle. Your Board continues to keep our dividend policy under review, but we believe the current policy is the best way for Misys to create the most value for shareholders. Nonetheless, the proposed disposal of our shares in Allscripts creates the opportunity for a very substantial return of capital to shareholders.

On 9 June 2010, after the end of our financial year 2009/10 Allscripts announced plans to merge with Eclipsys, creating a clear leader across all sectors of the healthcare IT market. We announced that Misys intends to sell the majority of its 54.6% interest in Allscripts and return capital to Misys shareholders via a tender offer which will be open to all shareholders. We intend to retain a significant investment in the newly merged company, providing continued exposure to a market set for strong growth.

Good progressThe Company has continued to make good progress on its turnaround. In each of our markets, we are now fit, winning more and starting to focus on attaining or strengthening a leadership position.

The Treasury & Capital Markets business demonstrated the strength of its market position, increasing reported revenues by 11%. It has responded quickly to early signs of market recovery and new opportunities in the sector, notably growing demand for trading platforms, treasury and lending management systems.

Turnaround for value

Sir James CrosbyChairman

Business review




Strategy 10

Leading: 12


People 30


Financial review 36



Financial statementsCorporate governance

In Banking, everyone in the sector suffered in tough market conditions. Misys was no exception. Spending on IT remained subdued as financial institutions focused on retrenching their activities and strengthening their balance sheets. Never has it been more important for Misys to develop new products. This year, the successful launch of the groundbreaking Misys BankFusion platform has enhanced both our ability to service the needs of our existing customers and to win new customers. This innovation will be critical to the future success of Misys.

Allscripts is a clear leader in the US physician office IT market. The business generated an 8% increase in revenues on a pro-forma constant currency basis. Allscripts is crystallising the £1bn cross-sell opportunity identified in 2008 and starting to benefit from the US government’s $19bn stimulus package for adopting electronic health records.

I am also pleased to report that we continue to make strong progress in Open Source. By developing disruptive technologies, we are establishing a position in nascent markets while creating opportunities for our core businesses.

Board successionIt was a particular privilege to succeed Sir Dominic Cadbury as Chairman. On behalf of the Board, I would like to thank him for his remarkable stewardship of this Company. He provided clear leadership through turbulent times.

The last 12 months have seen further changes to the Board. In April 2010, Al-Noor Ramji stepped down from the Board to become Executive Vice President and General Manager of Banking. Having served as a non-executive Director since 2005, Al-Noor brings intimate knowledge of Misys and its strategy. We have gained a very experienced executive leader for Banking at a critical point in its development.

In August 2009, Tom Kilroy was appointed Executive Vice President General Counsel and Company Secretary of Misys plc. Tom brings substantial experience from GE and Amersham plc. He has already made a significant contribution to the Company.

Oversight and governanceThe Board takes its governance responsibilities very seriously. During the year, we carried out a detailed review of our governance framework, the way we define the roles of the Board, its Committees, its Chairman and Chief Executive. Our Audit Committee oversaw a thorough review of financial controls and related risks across the Group. In this Annual Report, you will also see that we are making progress in the important area of corporate social responsibility; both in terms of our own operations and the products we offer to customers. For the first time, we report KPIs against which shareholders can track our progress. Sustainability is a critical issue to Misys – and we will continue to enhance our actions and reporting in this area.

ColleaguesFinally, I would like to pay particular tribute to all my colleagues across Misys. Misys’ turnaround is very much their turnaround. There is a strong sense of urgency and ambition inside this Company. Nowhere is this more evident than in the rapid progress made on improving customer satisfaction, where each of our businesses made significant progress during the year. The creation of BankFusion, the development of Open Source Solutions and the speed at which our Treasury & Capital Markets and Healthcare businesses are successfully addressing new customer requirements confirm that innovation is also firmly at the heart of each of Misys’ businesses. Our colleagues’ commitment to customer service and innovation will be key to securing our leadership ambitions.

There can be no doubt that the pace of Misys turnaround is testament to the indomitable spirit and capability of our Chief Executive. Mike Lawrie has set a very clear direction for your business and is driving it forward at pace. Your Board also has a high level of confidence in the senior management team that Mike has assembled. There is still much to do before Misys can claim leadership in all of its chosen markets, but our momentum is good and even in uncertain economic times Misys is a business rich in opportunity. More importantly, your Board is confident that Misys has the leadership and the people to exploit these opportunities to the best advantage of our shareholders.

I look forward to reporting back on our progress in 12 months.

James CrosbyChairman

“�Even�in�uncertain�economic��times,�Misys�is�a�business��rich�in�opportunity.”�



Chief Executive’s review

Misys is winning more and preparing to lead

Strong results

34%Growth Basic adjusted earnings per share

Commitment to our customers has remained our priority; delivering new solutions and services and responding to their evolving needs.

We have been working hard over recent years to transform Misys. The Company started to execute against its five year turnaround plan in 2007. We have invested in developing and launching new leading-edge solutions and services to better meet the evolving needs of our customers. We have made significant progress in all our objectives: customer satisfaction continues to improve; our revenues have almost doubled; operating profit has significantly grown; and our net debt has been reduced to zero. These actions have now positioned us for leadership.

Leadership in US Healthcare IT In 2008, we merged our healthcare business with Allscripts. We created the leader in the US physician office healthcare IT market with one in three physicians using Allscripts solutions. The US stimulus package, which encourages physicians to adopt Electronic Health Records, presented us with a tremendous opportunity. We have seen strong demand for our EHR solutions with our customers seeking to improve the health of their patients and their bottom line.

The success of the merger has created an opportunity for Allscripts to continue its leadership role by merging Allscripts and Eclipsys. Allscripts is the clear leader in software for physicians’ practices and Eclipsys is a leader in hospitals. This merger will create a leader in end to end solutions across all healthcare settings and will be uniquely positioned to help clients benefit from the $30 billion in government funding for Electronic Health Records.

To enable Allscripts to exploit this opportunity and to crystallise the significant increase in the Allscripts share price, Misys will sell the majority of its controlling stake in Allscripts. Misys shareholders will, upon successful completion of a tender offer, receive an unprecedented return of capital, expected to be approximately $1 billion.

Leadership in financial servicesWe have the same opportunity now to create a leadership position in Financial Services.

Post financial crisis we are seeing fundamental changes in the financial services sector, with increased regulation, stricter transparency requirements and the need to bring financial products to the market more quickly. These changes require financial institutions to rethink their business models and how they respond to the markets that they serve.

At the same time, we have invested in new solutions and services, so that we are better positioned to help our customers meet these challenges and to become a trusted and valued partner.

Mike LawrieChief Executive



Capital markets are starting to improve and we are seeing early signs that this sector is moving back into growth. Last year, our Treasury & Capital Markets business saw improvements in demand particularly for solutions that enable financial institutions to enhance risk management and straight-through processing. We continued to invest in new solutions including Summit Invest, bilateral lending and our risk solutions. We attracted 28 new customer wins, displacing competitors as customers consolidate, and we increased our market share.

Our Banking business has been affected by subdued technology spending as banks rebuild their balance sheets. We have continued to invest in new solutions such as Misys Mobile, Business Intelligence Trade and Misys BankFusion. Our ground breaking BankFusion operating system will fundamentally change how banks use IT as our operating system allows banks to run operations and respond to customers in a more flexible and agile manner. The reaction to BankFusion has been extremely positive with 13 customers, including both existing and new customers, choosing to adopt BankFusion so far.

Our new solutions and services position us very well in order to capitalise on the opportunity when the Banking sector returns to growth once again.

Investing for the futureWe have invested in our people, solutions, processes and partnerships and we continue to innovate.

We have attracted world class leaders to our team to pursue our leadership position in Financial Services. We announced Al-Noor Ramji as the Head of our Banking business. He is a renowned technology leader and joined us from BT. Stephen Wilson joined us a year ago from IBM and has been appointed as Chief Financial Officer. We also welcomed Harry Keegan as Head of our Sales organisation and Robin Crewe as our new Chief Technology Officer.

We have developed world class processes which work across everything that we do, from the way we support our customers to the way we manage product development.

We have announced new partnerships and extended existing partnerships with industry leaders such as HCL, IBM and Microsoft to help us distribute, deliver and develop our solutions around the globe.

“�Misys�is�fit,�winning�more�and�ready�to�pursue�leadership.”�

Leader in InnovationOpen Source Solutions is a new business that we launched to help innovate within Misys and also to find new ways to address challenges in healthcare and carbon markets. This year, we are starting to see this innovation translate into material benefit for Misys both with initial revenues, shared technical innovation and thought leadership.

Future leadership We are fit, winning more and ready to pursue leadership. We have created a leader in US healthcare technology. Now we have an opportunity to participate in the fundamental re-engineering of the global financial services sector. Our future looks very exciting.

I want to thank our customers, investors, partners and employees for being part of our turnaround journey and for supporting the immense changes that we have introduced. Our strong results and actions will allow us to earn the trust of our customers, partners and shareholders.

Mike LawrieChief Executive



Key performance indicators

Measuring against targets

1. Group revenue

Reported Group revenues increased by 13% as Allscripts was included for only part of the prior year. On a pro-forma like-for-like basis, Group revenues rose by 3%, with growth in TCM and Allscripts partially offset by lower revenues in Banking.

£90mGrowth year-on-year 2009-10

782£m

692

492

2008 2009 2010

Outlook> Our target for revenue growth rates

for the Group excluding Allscripts is 5-8% (constant currency) for the two years to 31 May 2012.

> After the disposal of the majority of our stake in Allscripts, revenues will reflect the smaller business focused on financial services.

2. Adjusted operating margin

Adjusted operating margin from continuing operations increased from 17% to 19% driven by aggressive cost control improving margins across each of our businesses and sharply lower corporate costs.

+200bpsImprovement year-on-year 2009-10

19%%

17%16%

2008 2009 2010

Outlook> The adjusted operating margin

for the Group excluding Allscripts was 19%.

> Our target adjusted operating margin range for the Group excluding Allscripts is 17-20% for the two years to 31 May 2012.

3. Adjusted operating profit

Group adjusted operating profit increased by 26%, including a full year’s results from Allscripts. On a pro-forma like-for-like basis, adjusted operating profit increased by 10% reflecting growth in both Group revenues and Group operating margins.

£31mGrowth year-on-year 2009-10

148£m

117

81

2008 2009 2010

Outlook> Excluding Allscripts, adjusted

operating profit for the year was £64m.

> We are targeting growth in adjusted operating profit as a result of our revenue growth and margin targets.



4. Total order intake

Total reported order intake increased by 27%, reflecting strong underlying growth in TCM and Allscripts and the inclusion of Allscripts for a full year. On a pro-forma like-for-like basis, total order intake rose by 14%.

27%Growth year-on-year 2009-10

551£m

434

271

2008 2009 2010

Outlook> Our strong pipeline of sales

opportunities promises further growth in orders.

> The new solutions we have developed are expected to generate growing interest from new and existing customers.

5. Research and development

Misys is one of the leading players in research and development in the markets in which we operate. Misys has continued to increase investment during the year to support future growth.

4%Growth year-on-year 2009-10

104£m

100

72

2008 2009 2010

Outlook> Research and development spend

represents 13% of revenues.

> We will continue our commitment to invest in research and development bringing new solutions to market and upgrading products and solutions to meet the needs of our customers.

6. Adjusted operating profit per employee

The increase in adjusted operating profit per employee reflects Misys’ focus on driving productivity improvement during the year.

11%Increase year-on-year 2009-10

24,160£

21,715

17,901

2008 2009 2010

Outlook> Adjusted operating profit per

employee is a key indicator of our productivity.

> Our target is to grow adjusted operating profit per employee through higher revenues, continued cost control and an efficient workforce.



Strategy

Misys is winning more and building a long-term leadership position

Our strategic targetsThese are the measures we use to focus our decision-making and assess our progress against the Misys strategy, in addition to our key performance indicators.

Our turnaround started in March 2007 with an initial one-to-two year target under the heading ‘Get fit’. We achieved this ahead of schedule. As we moved in to the second phase, ‘Win more’, we updated our targets to create even more stretching objectives for the business (which are set out below). In 2008/09, despite tough economic, financial and commercial conditions, we made good progress on meeting or exceeding the ‘Win more’ targets.

This year, we have consolidated that progress and begun the transition to phase three of our turnaround – ‘Lead’. This evolution will be accelerated by the disposal of the majority of our stake in Allscripts. The sale creates a clear, compelling, pure play investment proposition in financial services, while enabling us to retain a stake in the future success of Allscripts-Eclipsys (subject to approvals).

We set out the ‘Lead’ targets (below) which we announced in 2008. They continue to provide a clear indication of the level of performance we aspire to, as we drive towards being the leading application software and services provider in our markets.

Win more – targets*

>> Group revenue growth target: 5-8%

>> Allscripts revenue growth target: 6-9%

>> Banking revenue growth target: 3-5%

>> Treasury & Capital Markets revenue growth target: 6-9%

>> Global Services revenue growth target: 10-12%

>> Adjusted operating margin target: 18-20%

>> Investment in developing great solutions and products

* Targets announced on 23 October 2008.

>> Continued revenue growth

>> Adjusted margin expansion to 20%+

>> Installed base growth

>> Post-turnaround financial model in place

>> Benefits of product investment visible – new solutions launched successfully – Service Oriented Architecture (SOA)

introduced in Banking – new Treasury & Capital Markets

products launched – new product offerings for connected

communities

Lead – targets

Strategy update:



Improve financial performance>> Continued growth despite difficult market conditions>> Revenue up by 3% in 2009*>> Total order intake as reported increased by 60% in 2009>> Adjusted operating profit increased by 14% in 2009*

Continuously innovate to capture market opportunities>> First commercial relationships now established>> Highlights included launch of Misys Quick Start solutions>> Open Source Solutions focused on carbon and healthcare markets with first wins in each target market

Build a solutions orientation>> First Misys BankFusion Universal Banking implementation completed successfully

>> Allscripts ASP order intake increased four-fold on a like-for-like basis

>> Highlights included addition of wealth management and compliance solutions

>> Revenue from Misys Academy Training doubled

Deliver a focused strategy and integrated portfolio for each of our business units

>> All product portfolios now focused on strong market areas>> Merger completed: Allscripts completed disposal of non-core businesses

Develop winning partnerships and collaborations>> Successful partnerships deepened and extended in key markets

>> Continued to integrate our solutions with best-in-class partners, including SAP, HCL and IBM

>> Development significantly enhanced through relationship with HCL

Revitalise the organisation>> Clear understanding of our plans and actions, internally and externally

>> Values Committee formed to lead further progress>> Extended pay-for-performance policies and culture deeper into company

* Financial performance measures reported on a like-for-like basis.

2009

Our strategic imperativesThese imperatives define the operational priorities and actions we are addressing as we drive performance improvements as measured by our key performance indicators and strategic targets. These imperatives have powered our turnaround since the beginning and they continue to help us become fitter, sharper and more customer-focused.

>> Revenue growth 13% (3% pro-forma constant currency) >> Total order intake up 27% (14% pro-forma constant currency)>> Adjusted operating profit up 26% (10% pro-forma constant currency)

>> Misys BankFusion increases addressable market>> Treasury & Capital Markets increasing value-adding capabilities within Beijing, Bangalore and Bucharest development centres

>> Open Source Solutions successfully transforming technical leadership into material benefits in fast-growing market sectors

>> Successful implementations of Misys BankFusion creating value for customers, accelerating roll out in the market place providing long-term revenue growth potential

>> Allscripts stimulus education initiative, advising physicians of financial benefits

>> Allscripts achieving strong orders and revenue growth across solutions portfolio

>> Banking new mobile and business intelligence solutions strengthened by marketing leading partners

>> Treasury & Capital Markets solutions meeting spectrum of needs, from risk, compliance and efficiency to trade processing

>> Open Source platforms for carbon trading and connecting healthcare communities now launched and operational

>> BankFusion strategy announced in March 2010 >> All product portfolios focused on growth areas within strong market sectors

>> Allscripts Upgrade Enablement Centers converting legacy customers to core solutions

>> Allscripts and Eclipsys merger announced creating clear leader in end to end healthcare IT

>> Successfully agreed new partnerships and extended existing partnerships across the businesses that open up new markets and provide our customers with complementary leading edge solutions

>> Deepening relationships with our strategic partners, HCL and IBM, and expanding their scope

>> Strengthened the Allscripts Distribution Network>> Levaraging our technology partners to help develop and enhance the BankFusion platform

>> Open Source increasing market presence and adding value through new partnerships with Carbon 2020 and The Climate Registry

>> Building organisational capability and strengthened leadership team as we enter the Lead phase of our turnaround

>> Better connected sales and operations through to delivery>> Driving values and behaviours through the Company. Linking values to performance reviews

2010


Business review

Leading:

Overview





Customers

Solutions

Innovation

Partnerships

People

We serve customers in Financial Services and the US Healthcare markets. In Financial Services we work with a very wide range from the leading Tier 1 international banking groups to smaller, local banks and financial organisations. In Healthcare we own a majority share in Allscripts who are focused on the ambulatory market in the US.

We have invested in developing market leading solutions and services. We have launched 12 major new solutions for the Financial Services market.

Innovation is the lifeblood of our organisation. We are passionate about applying the latest technology to help customers in banking and US healthcare.

Misys works with a range of leading partners including HCL, IBM, Microsoft, Apple and Green 2020 helping us distribute, deliver and develop our solutions around the globe.

Our 6,000+ employees have achieved extraordinary results through the turnaround. Despite tough market conditions and uncertainty, they have responded to change, embraced new opportunities and driven the Group’s improving financial performance.

find out more page 14 >





www.misys.com/report2010/customers

www.misys.com/report2010/solutions

www.misys.com/report2010/innovation

www.misys.com/report2010/partnerships

www.misys.com/report2010/people



Leading:

CustomersWe serve customers in Financial Services and the US Healthcare markets.

In Financial Services, we work with a very wide range from the leading Tier 1 international banking groups to smaller, local banks and financial organisations.

In Healthcare, we own a majority share in Allscripts who are focused on the ambulatory market in the US. One in every three physicians relies on Allscripts solutions to improve the health of both their patients and their bottom line.

Using our solutions, customers are driving greater efficiency and competitive performance through their IT systems and adding value for their customers. The quality and success of our customers provides us with a very strong foundation from which to invest in innovation and grow profitable relationships.

One in threeOne in three physicians in the US relies on Allscripts solutions.

120 countriesWe have the largest installed customer base of any financial services software provider, serving more than 1,200 customers in 120 countries.

Top 50Our Financial Services business provides platforms, solutions and services to every one of the world’s top 50 banks.



SolutionsWe have invested in developing market leading solutions and services. We have launched 12 major new solutions for the financial services market. Misys has started to implement truly ground-breaking new technologies and solutions across our core markets. Misys BankFusion is redefining standards in banking and offers huge opportunities across the entire financial services sector. In healthcare we have solutions that help connect physicians across healthcare communities. Our Open Source solutions are successfully transforming technical leadership into effective platforms and solutions that connect healthcare communities and enable organisations to measure, reduce and trade carbon emissions.

LeaderMisys mobile is a technology leader in the rapidly growing mobile banking sector.

Number 1 Research by Celent shows that Misys BankFusion, our innovative new BankFusion operating platform, has the highest score on depth of integration.

Misys Summit is Number 1Misys was named top vendor in the survey* of the world’s leading financial institutions that create and trade cutting edge financial products.

* Structured Products Magazine 2010 Technology Rankings.



Leading:

Innovation is the lifeblood of our organisation. We are passionate about applying the latest technology to help customers in banking and US healthcare. A responsibility that we have undertaken for over 30 years.

Over 2,400 talented software developers at our 6 research and development centres around the world, architect new value-added solutions for customers today and create market-leading innovations for the future.

Top 50Misys is one of the leading players in research and development in the markets in which we operate. The UK Department for Business Innovation & Skills ranked Misys in the Top 50 UK Companies for research and development.

Top 100Allscripts named one of Healthcare Informatics top 100 US Companies for six years in a row.

Innovation

Proven Technology Leader“ With Misys, we will be taking GCG emissions reporting to the next level. We are pleased to be tackling the challenge with such an accomplished and proven technology leader.”

The Climate Registry



Image to come

30 yearsMisys was founded in 1979 and has over 30 years experience in developing award winning solutions.



Leading:

PartnershipsMisys has continued to strengthen our partner network which now incorporates over 250 of the best companies in the business – globally. We have built a partner ecosystem and infrastructure that we leverage to deliver customer value and which enables us to execute with more speed, scope and scale – and ultimately gain more market share. 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. Our partner network provides us more ‘feet on the street’ that we need to expand our coverage, extend our scale in our delivery and support services and drive deeper customer relationships.

Relationships Working with leading partners such HCL, IBM, Microsoft, Apple and Green 2020, we continue to expand the scope of these relationships to become the leading vendor in the marketplace. At a global level we work with the leading Sis, Consultants, technology and solution providers to ensure we deliver the best value proposition for our customers. At a local level we have developed in-territory and in-country partners to ensure we have the requisite domain, support, language and cultural expertise to ensure we deliver for the customer. Our ability to partner with market leading point solutions, such as ClairMail to power Misys Mobile Banking, enables us to deliver market leading solutions to our customers, faster.

250Misys is proud to partner with over 250 of the best companies to deliver customer value.


Corporate governance

PeopleOur 6,000+ employees have achieved extraordinary results through the turnaround. Despite tough market conditions and uncertainty, they have responded to change, embraced new opportunities and driven the Group’s improving financial performance. Truly world-class people are the foundation for leadership and we are now adding more great leaders and investing in our people to build our successful teams around the world.

Financial statements

Our valuesOur values are CLEAR – they start with client focus and end with results:

> Client focus> Leadership> Excellence > Aspiration > Results

31 countriesMisys employs people in 31 countries.

We employ people with 81 different nationalities.

Skills courseOver 500 Misys managers are currently enhancing their skills on a demanding Essential Management Skills course.



Business review

Allscripts

Glen TullmanExecutive Vice President and CEO Allscripts

Business summary

>> Total revenue £443m up 8%>> Total order intake £356m up 16%>> Adjusted operating profit £88m up 3%>> Continued development in product development and implementation capacity to address anticipated demand in Electronic Health Records

>> ‘Meaningful Use’ qualification criteria give strong impetus to the market

>> Allscripts will merge with Eclipsys to create a leader in end to end, integrated solutions across all healthcare settings

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

“�We�are�at�the�beginning�of�the�fastest�transformation�of�an�industry�in�the��history�of�the�United�States.�Allscripts��is�very�well�positioned�to�capitalise�on��this�remarkable�opportunity�and�extend��its�leadership�position.”

Our businessAllscripts-Misys Healthcare Solutions, Inc. (Allscripts) was established in 2008 and is listed on NASDAQ (MDRX). Allscripts is the clear leader in the US physician office healthcare IT market, with a customer base of more than 160,000 physicians, 800 hospitals and 8,000 post-acute and homecare organisations using our information solutions.

Misys held a majority interest in Allscripts during the financial year 2009/10. On 9 June 2010, Allscripts announced that – subject to necessary approvals – Allscripts will merge with Eclipsys to create a clear leader in healthcare information technology, with the most comprehensive solution offering for healthcare organisations of every size and setting.

Misys announced it intends to sell its majority stake in Allscripts, while retaining a minority stake of Allscripts and Eclipsys shares, providing continued exposure to a market ready for strong growth.

Our clientsEighty per cent of all healthcare spending begins with physicians. We provide the solutions that speed critical information from physicians to practice managers to hospitals, connecting all points in between. Before our merger with Misys Healthcare, Allscripts was recognised as a leader in the Electronic Health Record (EHR) market and Misys Healthcare was the largest provider of practice management solutions to small and medium-size practices. In 2008, we estimated that up to 90% of these practices lacked an EHR. We are now successfully addressing this $1 billion cross-sell opportunity, while the US Government’s healthcare stimulus package is rapidly growing our total market.

Actions and progress We are well-positioned to maximise the stimulus opportunityThe stimulus package offers up to $44,000 per US physician to implement and use a certified EHR – provided that their usage meets the Meaningful Use requirements defined by the US Department of Health and Human Services (HHS). In January 2010, we announced the Allscripts Stimulus Program, which guarantees that our EHR solutions will meet the certification criteria and provides financial support for EHR adoption. In June, 2010, HHS issued its final rules on Meaningful Use and certification which will give strong impetus to the market to buy and implement.

During the year, we saw strong demand for our EHR solutions and other products from a new group – hospital and healthcare systems. These customers are seeking to improve healthcare by connecting all providers within their communities. They are enabling this by assisting their affiliated physicians with the purchase of EHRs. Our case study on North Shore-LIJ Health System provides one example of this community strategy. A number of these community customers purchased our entire suite of physician and hospital solutions in 2009/10.



We are preparing for rapid market growthNearly 70% of stimulus spending will occur between 2011 and 2014 We have introduced the READY rapid deployment program in order to prepare for the rapid growth we expect will come from the stimulus. READY streamlines and standardises the implementation process by applying proven automation and online training technologies from the enterprise IT sector to the healthcare environment – a first in our industry. By implementing this process, we have reduced implementation times by more than 50% which will enable us to effectively manage a significant increase in demand.

We are making strong progress on cross-sellingOur Upgrade Enablement Center (UEC) provides an accelerated migration path for Misys EMR clients. A 4 to 6 week process enables these organisations to upgrade to our Professional EHR and position themselves to earn stimulus incentives, while protecting their investment in software and information. More than 250 customers have signed up for UEC services and nearly 20 percent of them were live on a new EHR at financial year-end. We are now extending our UEC services so all Allscripts customers can upgrade to EHR systems that will enable them to be stimulus ready.

We are extending our leadership through partnershipsWe have continued to strengthen the Allscripts Distribution Network, which complements our experienced team of sales executives. We are working with partners such as Henry Schein and Cardinal Health, along with 80 other distribution partners for our EHR solutions. During the year, we entered into partnerships with Intuit, Medfusion and mPay that will deliver important new capabilities for our clients, including online and in-office bill payment services.

North Shore-LIJ Health System In September 2009, The North Shore-LIJ Health System, comprised of 14 hospitals across New York City and Long Island, announced it would subsidise up to 85% of the cost of implementing and operatingan EHR system for the more than 7,000 affiliated physicians in its community. This is a key component of their $400 million investment to strengthen the quality of care throughout the region by automating inpatient and outpatient records in all medical settings. “No comparably-sized hospital system in the country is providing this level of financial assistance to so many physicians to integrate an electronic health record,” said Robert Williams, MD, Director of Deloitte Healthcare Consulting. North Shore-LIJ is able to offer these incentives to its community of affiliated physicians because of recent exceptions made to the federal Stark Law, which previously prohibited hospitals from entering into financial arrangements with private physician practices.

Key factsSurvey underlines small practice market leadership

>> According to a MEDACorp survey of small and mid-sized physician practices in 2010, Allscripts is the leading electronic medical record (EMR) and electronic practice management (EPM) vendor, with the leading mindshare amongst small practices. An Allscripts product is being considered by about one-third of practices evaluating new EPM systems and one-third of practices seeking a new EMR system.

Our key solutionsFor physician practices:

>> Electronic Health Records>> Practice Management>> ePrescribing>> Revenue Cycle Management >> Document Imaging

For hospitals and post-acute care facilities:

>> Emergency Department Information Systems>> Care Management/Discharge Planning >> Post-acute Referral Management

Allscripts: a clear leader

>> Allscripts has 160,000 users of our solutions across the United States.

Two leaders become one>> Allscripts and Eclipsys are merging to form one company with the industry’s largest network of clients on the most advanced product platform resulting in a single patient record.

Win more: (1-2 years)

>> Target 6-9% revenue growth* (achieved)

>> Cross sell to Misys Practice Management base (achieved)

>> Build partner distribution network (achieved)

>> Ready solutions and processes to ensure Allscripts is Stimulus Ready (achieved)

* Growth target published in announcement on 23 October 2008 ‘Group Revenue Growth Reiterated’.

>> Create connectivity solutions across the entire healthcare community

>> Focus on clinical outcomes and quality

>> Be the market leader

Lead: (2-4 years)

Strategy update:



Business review

Business summary

>> Total revenue £162m down 14%>> Total order intake £83m down 15%>> Adjusted operating profit £32m down 6%>> Banking revenues were subdued as banks remain reluctant to commit to IT spending

>> We continue to invest in new solutions to ensure we are positioned to capitalise on anticipated return to growth in the sector

>> BankFusion momentum continues to build with the second implementation completed successfully and 13 customers signed up since launch. Key among these were a multi-region system for Investec and first new competitive customer win with Actinver in Mexico.

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

“�Misys�BankFusion�is�a�brand�new�operating�system�for�Banking.�This�innovation�will�revolutionise�Banking�and�transform��Misys�into�a�leadership�position.�We�are�moving�into�a�new�cycle,�with�our�ability��to�continuously�innovate�and�help�our�customers�succeed.”

Our businessMisys has a complete portfolio of solutions for the Banking market, incorporating the ability to meet country-specific regulatory and fiscal reporting requirements. For three decades, we have worked with hundreds of the world’s leading financial organisations, combining expert knowledge of banking markets with deep technical expertise to provide comprehensive, integrated solutions that address critical business needs. We have the largest installed customer base of any banking software provider and have a strong presence in all major established and developing geographies.

Our customersEvery day, in over 120 countries, tens of thousands of people use our solutions to support millions of customers. The world’s top 50 banks benefit from using our solutions. Over 1,200 Financial Services customers rely on our solutions to run their businesses every day including small regional banks and fast-growing customers in emerging markets. Our solutions are helping customers to achieve improvements in revenue, performance and efficiency across retail, corporate, wholesale and universal banking. Customers use our integrated solutions to streamline operations, launch new products, reduce costs, improve customer satisfaction, increase revenues and reduce risk.

Actions and progressWe have launched a ground-breaking operating systemThe Misys BankFusion operating system will transform the banking industry and help CIOs from where they are now to the new world. It enables Misys to compete in the operating system segment and the application market for the first time, with the 70% of banks who use UNIX systems now part of our addressable market. It provides us with new products to take to our market-leading installed base and creates a compelling cross-sell opportunity with the Misys Treasury & Capital Markets business. This is the first fundamentally new operating system for the banking market for a decade and it gives us true technology leadership in our industry.

We have already seen strong demand for Misys BankFusionWe expect to see around 250 adopters choose Misys BankFusion between 2010 and 2015. Since launching BankFusion, already 13 banks have seen the benefits it brings and have signed up. In the initial stages we will go slowly, ensuring that we get every implementation right and deliver 100% customer satisfaction. From there we will ramp up distribution.

Banking

Al-Noor RamjiExecutive Vice President and General Manager



We use open standards to add valueMisys BankFusion is built using open standards. This open, flexible and innovative approach is a first in our industry and delivers three fundamental benefits. First, it enables customers to upgrade to our operating system in a low-risk way and incrementally without having to abandon their existing systems. Second, it dramatically shrinks the cycle time for banks to launch services and solutions. Third, it enables a community of developers: Misys developers; customers; and partner developers to distribute specialist services across our platform – at low cost – which adds value for customers and ensures our solution remains dynamic and relevant for years to come.

We have partnerships to add scale and valueWe are working with a network of partners who can help us drive more value for customers and ramp up implementation of our solutions. The skills and services of HCL, IBM, Microsoft, Salesforce.com and our customers’ own developers will help us to grow our Banking business rapidly, from both existing and new customers.

We continue to innovate across our product portfolioWith the internet-based delivery channels, Misys Trade Portal and Misys Cash Portal already in place, 2009/10 saw us launch new solutions to add even more value for customers. In September 2009, we introduced Misys Payment Manager, which enables banks to centralise and streamline payment processes while enhancing customer service. Mobile and Banking are coming together and this market represents a growth opportunity. We launched our mobile banking solution, Misys Mobile during the year which enables us to provide a complete range of e-banking solutions. In January 2010, we increased the number of applications using our portal technology by launching Misys Personal Finance Portal, which delivers a secure, robust and scaleable online banking solution for consumers. We have implemented the first Misys Equation Islamic Banking and Branch Automation System for Albaraka Bank.


>> Target 3-5% revenue growth*

>> New technical solution for our core banking products based on BankFusion operating system (achieved)

>> Open platform Application Programming Interface to partners (achieved)


>> Grow Misys BankFusion developer community

>> Maintain add-on module pipeline for cross-sell

>> Leader in core banking operating system market

Lead: (2-4 years)

Strategy update:

CRDB Bank CRDB is the fastest growing bank in Tanzania and provides a wide range of corporate, business and retail services to customers through more than 60 branches. The bank plans to open 10 new branches each year, launch a fully automated and integrated ebanking service and add many innovative products to its portfolio including mobile banking. Having upgraded from Misys Bankmaster, Misys BankFusion Universal Banking is now at the heart of the bank’s expansion, with our operating system and solutions enabling CRDB Bank to improve customer service and bring new products to market faster and more efficiently. The upgrade process has been smooth. Data migration from Bankmaster to BankFusion was completed successfully, using an automated conversion tool to mitigate risks and accelerate the process. CRDB is now benefiting from the most advanced universal banking solution available and has interfaced Misys BankFusion with Misys TI Plus to enhance trade finance and Misys Opics Plus for full automation of treasury activities.

1. UK 11%2. Rest of Europe 40%3. Americas 9%4. Middle East 11%5. Asia Pacific 17%6. Africa 12%

Revenue mix by geography %

1

2

3

4

5

6



Business review

Business summary

>> Total revenue £180m up 9%>> Total order intake £112m up 41%>> Adjusted operating profit £42m up 26%>> Strong results from revenue growth and adjusted operating margin rise to 23% due to tight cost control and strong inflow of licence fees

>> Gained 28 new name customers across high-growth and established markets

>> Met strong demand for enhanced compliance and efficiency

>> Launched upgrades to Misys Opics Plus, Summit and Loan IQ

>> Extended scope and value of strategic partnerships Financial performance measures reported on a like-for-like basis. See the financial review for reconciliation to reported measures.

“�Market�conditions�remained�tough�but��we�strengthened�our�leadership�position��by�responding�quickly�to�our�customers’�need�for�greater�efficiency,�enhanced�risk�management�and�systems�consolidation.�We�have�driven�up�revenue�and�operating�margins�significantly�as�a�result.”

Our businessWe are the world’s leading provider of comprehensive integrated solutions and services to the treasury and capital markets sector. Our solutions enable financial institutions and corporate treasury departments to manage capital markets activities across multiple asset classes in a fast-evolving regulatory environment.

Our customersWe have the largest installed base in our market, with more than 1,200 customers across over 75 countries. Our customers’ margins are dependent on speed to market or volume, while their long-term success is increasingly dependent on meeting new compliance requirements. In response, we develop and deliver fast, agile and interoperable solutions that are innovative, scalable and flexible. The broad geographic spread of our customers and our ability to generate strong revenues from existing relationships provides us with a resilient foundation through the market’s cycle.

Actions and progressWe drove strong revenue growth by responding quicklyOverall IT spend in our sector continues to be affected by difficult economic conditions. Despite this, there is strong demand for solutions that enable financial institutions to enhance risk management, efficiency and straight-through processing (i.e. end-to-end electronic processing of trades). We moved quickly to address this demand, generating 25% revenue growth in initial licence fee and ASP/software-as-a-service offerings this year.

We extended the breadth and depth of our customer baseWe improved our market position this year, adding 28 new customers, significant customer wins included HSBC, Freddie Mac, Intesa and OeKB. We also won new customers in the growth regions of China, the Middle East and Africa. Across the world, Tier 1 and Tier 2 banks are consolidating solutions to generate efficiencies and we have succeeded in winning new customers as a result. We have also been quick to meet new customer needs. For example, Misys Opics Plus now supports Sharia-compliant operations and processing, enabling us to address the fast-growing Islamic banking market and support western banks as they integrate legacy and Islamic systems.

We enhanced our market-leading solutionsIn June 2009, we achieved a first customer go-live for Misys Opics Plus v3.0, the culmination of three years’ investment to convert a legacy client server application to a pure .NET Service Oriented Architecture. 5 customers went live on v3.0 and we are upgrading the rest of our client base. Union Bank of California has implemented the enhanced solution, which is now delivering improved efficiency

Treasury & Capital Markets

Ed HoExecutive Vice President and General Manager



and greater transparency for the bank. In November 2009, we introduced Misys Summit v5.4, which enhances the market limits capabilities of the solution. During the year, we also released Misys Loan IQ v7.0 with Java and double-byte characters to increase the solution’s appeal to the mid-tier Asia-Pacific markets.

We are extending our leadership position We have continued to invest in our development centres in Bucharest and Bangalore while opening a new centre in Beijing. We now have over 80 employees engaged in developing solutions and services for customers in China and intend to expand further. We also see excellent opportunities to improve our development processes and access new markets through partnerships.

We have developed partnerships to provide our customers with best-of-breed solutions. We extended our agreement with Numerix to enable financial and insurance institutions to create derivatives and structured products much more flexibly and across a broader range of asset classes. Our partnership with SmartStream improves trade lifecycle management and extends the breadth of processing capabilities in Misys Summit FT. The third partnership in this space is with Triple Point Technology, which extends the coverage of Misys Summit further into commodities.

We are investing to drive growthWe expect further strong demand for risk and compliance-related solutions as governments introduce stricter transparency requirements. Other likely drivers of growth include demand for hosted solutions that can reduce set-up time and cost for our customers and the return of demand in trade processing, as new regulations provide financial institutions with the confidence to increase activity. We are investing to maximise these opportunities. Geographically, we are increasing our activities in the promising Latin America region and we are enhancing our services to better support our core solutions and customer relationships.

Bank of NY-Mellon Misys Summit customer Bank of NY-Mellon chose to extend their capabilities and reduce system costs, maintenance and support by acquiring Summit FT in the first half of the year and then implementing the new equities module we have added to Summit. The bank intends to move its equities portfolio from a competitor’s system onto Summit – the first time this has happened in our market. This reflects the trend of customers looking for new ways to consolidate systems and reduce costs. It also underlines the quality and capability of our solution and our outstanding track record for go-lives.


>> Target 6-9% revenue growth* (achieved)

>> Boost services capability and capacity

>> Increase usage of partnerships Expand in growth geographies (achieved)


>> Extend product portfolio coverage and functionality

>> Boost service capability and capacity

>> Extend into higher value service offerings

>> Increase use of partnerships

Lead: (2-4 years)

Strategy update:

1. UK 17%2. Rest of Europe 37%3. Americas 28%4. Other (Middle East and Africa) 5%5. Asia Pacific 13%

Revenue mix by geography %

1

2

3

4

5



Business review

Business summary

>> Healthcare and carbon trading platforms launched

>> Stimulus package driving rapid growth in healthcare

>> Carbon emissions regulations creating new opportunities

>> Partnerships in place to commercialise technologies

>> Thought leadership initiatives positioning Misys as an industry leader

>> Business opportunity starting to generate revenue

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

“�We�are�starting�to�transform�our�pioneering�technical�lead�in�open�source�innovation�into�customer�wins�and�material�benefits��for�Misys.”

Our businessWe are pioneering open source development in two sectors – connecting healthcare communities and carbon trading. Our activities are starting to return benefits across the Misys business, from growing our addressable market to adding value for Misys customers and enhancing the efficiency and effectiveness of our core solutions.

Our marketsCustomer demand for open, agile and reliable solutions that operate seamlessly with others continues to grow.

In healthcare, the adoption of open source-based interoperability has the potential to drive down the cost and complexity of integration, removing a major barrier to the adoption of Electronic Health Records (EHRs) and modernisation of healthcare in the US. Misys will continue to own Misys Open Source Solutions following the merger of Allscripts and Eclipsys and will continue to provide options for healthcare buyers in the area of health information exchange.

In carbon trading, open source technologies are enabling organisations to measure and reduce emissions and trade credits, at a critical point in the world’s response to climate change.

Actions and progress – HealthcareWe are a pioneer in the fast-growing HIE marketWe built the first standards-based, open source health information exchange (HIE) in the world, a system that enables physicians and other medical organisations to exchange critical patient information between disparate healthcare sources via secure, standards-based protocols. This is a critical component for US providers to meet Meaningful Use and receive over $17 billion in incentive payments. The US government’s healthcare stimulus package is providing an investment of $564 million for HIE development and deployment and a further $598 million to create Regional Extension Centers that include HIEs. This $1bn-plus market opportunity is driven by a mandate that all US citizens must be covered by a HIE by 2014. Misys has estimated that less than 10% of US citizens are covered by an HIE today and expects dramatic growth between 2011 and 2013.

Misys Connect™ Exchange were validated at the industry’s Connectathon interoperability event in January 2010, where it passed all 185 individual tests – the most of any single company. With certification secured, we went live with platforms for Hartford HealthCare and have successfully met the requirements for eHealth Connecticut to meet its Department of Social Services (DSS) to build a HIE in Connecticut. We are now increasing the value of our customers’ investment by adding more third party services to the platform.

Open Source Solutions

Bob BarthelmesExecutive Vice President and General Manager



We are creating partnerships for growthThis year, we established a formal partnership with NextGate that will link the Misys Connect platform with MatchMetrix, providing customers with a single view of patient information at lower cost. We also agreed to distribute Authentidate Partners’ Inscrybe® Healthcare applications through Misys Connect™ Portal, while Healthcare Innovative Solutions will add clinical consulting to our customer offering. Additionally, we are actively broadening our distribution reach through large established systems integration companies that will be announced later this year.

Actions and progress – Carbon TradingWe have launched three new platformsDuring the year, we took a major step forward with the launch of three innovative online platforms that enable customers to measure, reduce and trade carbon emissions. The Misys Environmental Registry System provides comprehensive emissions reports, robust verification and support for mandatory and voluntary reporting. The Misys Energy Efficiency Platform brings together organisations offering financial incentives for energy efficiency projects with those seeking funding. The Misys Environmental Trading Platform helps organisations comply by providing data collection, carbon planning and liability calculation functionality. It can also be used to trade carbon in the open markets.

We are partnering to extend our reachDuring the year, we agreed a distribution partnership with Markit, who will provide the Misys Environmental Registry System and Misys Environmental Trading Platform as premium services on its environmental platform. We also agreed a technical partnership with The Climate Registry, the largest carbon registry in North America and a key standards-setting organisation for greenhouse gas emissions reporting. We also created a partnership with the consultancy Green 2020 to distribute the Misys Environmental Trading Platform to public sector customers in the UK.


>> Incorporate open source development into Misys development processes (achieved)

>> Launch carbon portal (achieved)

>> Develop a profitable Open Source business

>> Integrate third-party technologies into our platforms

>> Develop Connect strategy

>> Develop carbon trading platform application

Lead: (2-4 years)

Strategy update:

“�It�is�time�to�blow�up�what�we�are�doing.��We�can�look�at�almost�any�other�industry��and�see�examples�of�innovation�resulting�in�transformational�improvements�in�products,�delivery�of�service�and�business�models.��That�is�the�challenge�for�healthcare�IT.” Steve O’Neill Chief Information Officer Hartford Hospital

Connecting healthcare communities in ConnecticutLaunched during the year, Misys Connect™ Exchange is the world’s first total Open Source health information exchange (HIE) solution. It provides a standards-based platform that allows physicians, hospitals and other users to easily and securely connect, communicate and exchange data. In Connecticut, the platform is now in operational use by Hartford HealthCare and at E-Health Connecticut. The first services provide the ability to exchange documents, prescribe medications electronically and receive and route lab orders. The HIE infrastructure also provides developers with a platform on which they can invent and distribute new applications, so new features and benefits will appear over the next 12 months.

Open Source thought leadershipBob Barthelmes and Tim Elwell of Misys have contributed a chapter to Paper Kills 2.0, a book published by the Center for Health Transformation. In the book, Newt Gingrich, Tom Daschle and other US national industry leaders explore the leading information technologies that can transform our health system. During the year, Tim Elwell also sat on the Board of Commissioners for CCHIT – The Certification Commission for Health Information Technology – an independent organisation that certifies electronic health record technology. Misys took a lead position in the Open Health Tools community, taking responsibility for marketing and membership.

Misys was asked to travel to Washington to talk to the White House’s Chief Technology Officer about what Misys is doing in building health information exchanges as the Misys platform is viewed as a model for the rest of the industry. In December 2009, Bob Barthelmes and John Winn of Misys spoke at the United Nations Climate Change Summit in Copenhagen. Their presentations discussed global registries and standards and carbon as a commodity.



Business review

Business summary

>> Total revenue £122m down 5%>> Total order intake up 40%>> Services revenue impacted by cautious approach by Banking customers to spending on non-essential changes to their software systems

>> In healthcare, READY and Upgrade Enablement Centre services accelerated the implementation of Electronic Health Records

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

Our businessMisys Global Services teams work with customers to ensure seamless delivery of solutions with colleagues across Banking, Treasury & Capital Markets and Allscripts to leverage our expertise and resources, adding value for customers and revenue for the Company.

Our customersWe have deep technical and product expertise as well as domain knowledge across all of our businesses worldwide. We are able to provide business process management to help banks re-engineer and address critical business issues and increase their return on investment in our solutions. From cost reduction, operational efficiency, business growth and risk management and training; our consultants and partners apply innovative thinking and award-winning technology to achieve powerful results for customers.

Actions and progress – Financial ServicesWe competed hard in challenging market conditionsRevenue from professional services tends to lag software and solutions order intake and during the year we continued to see the effects of tough market conditions and reduced customer investment in both products and services. Conditions in Banking were particularly demanding. We took a proactive approach to supporting our customers and securing services revenue where available, making particularly good progress in the area of premium application services. The overall picture started to improve as we moved through the fourth quarter, with increased customer orders starting to translate into new professional services income opportunities.

We are positioned to grow with Misys BankFusionOur groundbreaking banking platform, Misys BankFusion, received its full commercial launch during the year and our professional services teams led key customer implementations. BankFusion has already generated strong demand and our teams are well positioned to support growing numbers of customers as they make the transition to our platform. We expect our services revenues in Banking to closely match order intake for the new platform and we are developing a repeatable service model to ensure we have the capacity to support a growing community of customers.

We continued to respond rapidly to customers’ changing needsThis year, we continued to help our customers address difficult market conditions and respond quickly to key challenges and opportunities. Our knowledge experts were in greater demand in Treasury & Capital Markets. Our ability to deliver enhanced support for risk, quality and compliance solutions enabled us to achieve modest growth in professional services revenue, with customers in Europe and the Americas providing the strongest demand.

Global Services



Across Financial Services, we increased the use of our cost-effective centres in Bangalore, Beijing, Budapest and Manila. Our aim is to locate at least 80% of our customer support operations in these centres.

Actions and progress – HealthcareServices responded to heightened market conditions by focusing directly on client needs for more efficient and faster time to production. With a new leadership team firmly in place, services across healthcare made significant investments in both people and processes with the hiring of experienced consultants, leveraging an extensive partner program and the launch and 4th quarter execution of the Ready�Program.

Ready represents the codification of a best in breed methodology that streamlines the process and delivers a faster implementation for our Clients. The first component of the Ready Program successfully transitioned Misys EMR clients to the current Professional EHR platform and reduced the time to go live by 75%. Supported by the same rapid deployment methodology, other services offerings, including Ready EHR and Ready Pro will follow early in 2011.

Allscripts AcademyAllscripts Academy is a world-class education service that improves organisational performance. It is designed to ensure our clients receive the maximum benefit and return on investment from their Allscripts products and solutions through comprehensive, structured, end-to-end training programs.

The Allscripts Academy training professionals have an average of 10 years of education and training experience with a thorough understanding of the healthcare industry. Our comprehensive range of education services help clients from implementing a new system to upgrading and optimising existing solutions.

Global Services speed up Misys BankFusion go-lives CRDB is one of the largest and fastest growing commercial banks in Tanzania. Misys is helping CRDB to achieve its growth plans using Misys BankFusion Universal Banking platform (see our CRDB case study). Global Services teams have been working closely with colleagues in our Banking business to help reduce implementation time and enhance functionality for the customer. During the year, a local Professional Services team from Misys worked with the customer’s team to define their requirements. The required functionality was then built into a working BankFusion system in our Global Solution Centre in Bangalore and delivered back to the customer site for installation, testing and go-live. Our teams also used a new suite of automated tools to accelerate the migration process from the bank’s legacy systems, providing our customer with faster access to the benefits of BankFusion.

Global Services focus areas: Consulting

>> Helping customers to ensure they achieve the best results from their technology investments, including solutions architecture expertise to achieve optimum technical fit.

Implementation>> Helping customers to integrate and consolidate systems – reducing cost, risk and downtime and improving performance and flexibility.

Funded development>> Helping customers to customise systems to meet market, regulatory and internal requirements through our worldwide development teams.

Premium application services>> Helping customers to mitigate IT operational risk, respond to demands from their business more effectively and improve the availability of their Misys and non-Misys applications.

Misys Academy>> Helping customers to derive maximum benefit and return on investment from our solutions through end-to-end, flexible training programmes.

>> Operational support services.>> Helping customers to reduce cost and focus internal resources through specialist outsourcing services, from implementation to support.

“�Misys�responds�to�customer�requirements�fast�and�has�a�professional�team�which�we�thought�was�supportive�…�their�helpdesk�has�always�been�available�to�us�and�this��is�what�has�helped�us�manage�our�growth�–�the�way�we�have�grown�and�satisfied��our�customers.”� Dr Charles Kimei Managing Director CRDB Bank

Win more: started (1-2 years)

>> Target 10-12% revenue growth*

>> Innovation along the value chain

>> Implement global/major accounts programme and planning process (achieved)

>> Build the offshore centre (achieved)


>> Extend product portfolio coverage and functionality

>> Extend into higher value service offerings

>> Increase use of partnerships

Lead: ongoing (2-4 years)

Delivery update:



Business review

Summary

>> Welcoming people the Misys Way>> Supporting our employees in times of need>> Developing the leaders of the future>> Our talent pipeline, a hands-on approach>> Growing on the key areas and geographies>> Equal Opportunities

It is the people of Misys who make the real difference – no other organisation can copy our people and it is our approach to people that helps us to be leaders in all segments in which we operate. Across Misys, we employ 6,130 people across 31 countries, of which Allscripts employs 2,412 people covering more than 15 US locations.

Our values and strategy are customer driven, so are our people. 50% of our workforce is dedicated to directly servicing and supporting the customer; while 40% is dedicated to developing and managing new and existing customer solutions.

Welcoming people the Misys WayOur ‘One Misys’ culture and our CLEAR values have set the stage for continuous improvement of our HR processes. Research shows that performance on the job is directly linked to employee engagement. Our globally consistent onboarding processes and guidance aim to give our new employees the best first impression of Misys whilst taking the first steps towards ensuring retention and creating positive, engaged employees.

Engagement is also linked to consistent communication. At Misys, our employees are regularly provided with a wide range of information concerning the performance and prospects of the business in which they are involved by means of ‘Town Hall’ meetings, global leadership conference calls and news bulletins by email or posted on the Company’s intranet.

Developing the leaders of the futureTo support our strategic focus on leading the industries that we serve, we are making substantial investments in the development of our management teams. During the year, we introduced an enhanced, action-orientated programme for the Company’s Top 100 leaders. We also enabled more than 500 of our managers to complete the first part of the Essential Management Skills course with a second part to be completed during the 2010/11 financial year.

In addition, our employee engagement survey continues to evolve enabling a detailed review of the results at manager level. The survey shows which managers are helping individuals and teams to thrive, while guiding us to address leadership issues and focus future training on the development of the leadership skills that support our values and our culture.

Our values Our values are CLEAR – they start with client focus and end in results:

Client focus>> We look from the outside in and think about our customers and markets at all times

Leadership>> We lead by example; we work with honesty and integrity and believe in plain talk, based on facts

Excellence>> We value excellence, quality and competence

Aspiration>> We believe that innovation is the lifeblood of our organisation

Results>> We are committed to success and have a passion for winning

People



Our talent pipeline, a hands-on approachAt Misys, we believe in integrity and plain talk, transparency on all our actions, especially around employee development and career opportunities. Through our intranet and weekly communication from the Recruitment team, all our employees have sight of current career opportunities in their current location and across the globe.

We also understand that being an ‘Employer of Choice’ and an industry leader happens only by hiring the most qualified talent. This year, we launched our Employee Referral Programme designed to reward employees for helping us hire talent to deliver results.

Growing in the key areas and geographiesMisys has long been an international business, but our growth into new regions and markets means we must continually adapt and optimise the way we organise our teams and resources. We are continuing to relocate certain activities into optimum cost/high quality locations to gain efficiency and the right balance of global controls with local presence in order to meet customers’ demands. During the year, we expanded our development centres in Beijing, Bangalore and Bucharest, while continuing to invest in building a Centre of Excellence for customer support in Manila. Our strategy is to ensure we have a network of global centres, regional offices and local offices able to provide world-class support to customers, wherever they operate.

Supporting our employees in times of needIn Misys, we are always looking at ways to safeguard and support our employees, our Business Continuity team developed a global security strategy, providing all employees worldwide with international medical, security & travel assistance 24/7, provided by International SOS, leader in the market. The development of a dedicated intranet page for physical security ‘Security update’ and global notification system are regularly used by employees who are travelling on behalf of the Company and was an important communication tool during the H1N1 outbreak and recently the Volcanic Ash incident in supplying ‘real-time’ updates to employees.

It is in times of need the Misys community becomes stronger. Last September, torrential rains from typhoon Ondoy caused severe flooding in Manila and nearby provinces. Over 400,000 people were displaced and emergency services and international aid agencies launched campaigns to help the flood victims. Our Business Continuity plans kicked in immediately to account for the safety of our employees and provide assistance relief. Temporary accommodation was provided to the affected families of employees and an internal global appeal programme was launched to help the victims.

Equal opportunities Misys recognises the diversity of the community within which it operates and values the individual contribution made by all employees and takes its legal and social responsibilities seriously. Misys is committed to promoting equality and all employees have a duty to contribute ensure that our CLEAR values are upheld and that the culture and working environment are free from harassment and discriminatory treatment. Any form of unlawful discrimination directly or indirectly on the grounds of sex, gender reassignment, pregnancy, colour, race, nationality, ethnic or national origins, sexual orientation, disability, age, religion or beliefs or because someone is married or is a civil partner is not tolerated.

Misys is conscious of the difficulties experienced by people with disabilities. Every effort is made to ensure ready access to our facilities and services. In addition, disabled people are assured of full and fair consideration for all vacancies for which they offer themselves as suitable candidates and efforts are made to meet their special needs, particularly in relation to access and mobility. Where possible, modifications to workplaces are made to provide access and therefore job opportunities for the disabled. Every effort is made to continue the employment of people who become disabled via the provision of additional facilities, job design and the provision of appropriate training.

1. UK 8%2. Rest of Europe 8%3. Asia Pacific 35%4. USA (incl. Allscripts) 47%5. Other (Middle East and Africa) 2%

Geographical distribution of our people %

12

3

4 5

1. Development (R&D) 40%2. Global Services 38%3. Sales/Marketing & Commercial Operations 12%4. Other 10%

People distribution across key functions %

1

2

3

4



Social and environmental responsibility

Misys is a values driven organisation and our aspiration is to be a leading force for good wherever we do business. We are growing and it is important that we manage our impact on our business, stakeholders and the wider world. This includes environmental performance, business ethics, supporting local communities and looking after our employees. Misys aims to become an innovative leader in its markets in terms of corporate responsibility. This reflects our overall business strategy and the aspirations of our Board, our employees, our partners, our customers and the communities we serve.

We are improving. We have made some significant steps towards a more collective approach to our corporate responsibility over the past year. We have established an Environment and Social Responsibility Committee on which all significant areas of the business are represented. This Committee reports directly into the General Counsel and Company Secretary. This group is responsible for designing a framework for our future CSR activity to ensure that activities across all these areas add value to the Company and our stakeholders.

Social responsibility and governanceAs detailed in the corporate governance report, we have published a new Code of Conduct to all staff. The Code is sponsored by the Chief Executive and sets out clearly the conduct and ethical behaviour expected throughout the organisation, towards each other, our customers, our agents and the communities within which we operate. We have also launched 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. You can find a copy of the Code on our website, www.misys.com

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

CO2 tonnes per employee

Business review

11%Improvement year-on-year

2.51

2.82

2008/09 2010/11



EnvironmentAs we move into the ‘Lead’ phase of our turnaround programme, we believe the Company is now in a better position to set itself higher standards of environmental performance. This aligns with our business strategy in our Open Source business which is working actively to help organisations prepare for Greenhouse House Gas emissions reduction and compliance, by allowing organisations to calculate their carbon footprint and create plans for reducing their emissions and tracking performance against voluntary and regulatory emissions reduction targets.

During the year, we have worked with our UK partner, Green 2020, to complete an analysis of our carbon emissions across the largest of our businesses. This is the first year that we have done this and we are pleased to report an improvement in our carbon efficiency of 11% year-on-year.

We have already taken significant steps to reduce our CO2

emissions. We have consolidated substantial parts of our corporate operations to more efficient and environment-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.

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 supported the ‘green meeting’ concept, thereby reducing the need for overseas travel. Over the course of 2010/11 we will be focusing on the environmental effects of our product development processes and devising new ways to improve their environmental performance.

This is the first step in fully understanding our impact on the wider environment. We will continue to record our emissions and will be implementing a carbon reduction strategy across the business. We are setting stretching environmental goals and will report back on our progress in the Misys 2011 Annual Report. We have also registered with, and will report through, The Climate Registry – an independent group that calculates, verifies and publicly reports on companies’ greenhouse gas emissions.

CommunityWe think about the communities and markets in which we operate at all times. Over the course of the coming year we will be consulting with our employees to see how we will be more active in the communities that we are located in and will be inviting employees to volunteer as local co-ordinators for our community support programs. Members of our staff across the Company continue to volunteer in the communities in which we operate.

Our Allscripts employees place great value on teamwork and working together for the benefit of all. The company is recognised as a valuable community supporter in terms of financial assistance and volunteering, helping to build healthier communities by working to support healthcare, education and basic needs. More than half of the workforce participates in Allscripts’ charitable schemes – an extraordinary figure. Some of the events that our staff have taken part in during the year are:

>> Employees at all locations spearheaded food drives to address the increasing demand for ‘basics’ during tough economic times.

>> More than 400 Allscripts employees partnered with teams from Habitat for Humanity to construct homes in a number of cities, including Burlington, Chicago, Raleigh, Richmond, Louisville and Austin.

>> Employees provided gifts valued at more than $20,000 for needy families during the holiday seasons. Employees help programs such as Toys for Tots, Polar Express and Rescue missions by donating clothing, ‘filled’ stockings and hundreds of toys.

>> Employees gave back ‘the gift of life’ during numerous blood drives, donating more than 600 pints of blood.



In India, we have established the Misys Caring Club. During the year, the Club has organised many events to help the local community including:

>> In conjunction with Rashtrotthana Blood Bank, a blood donation day at which over 144 members of staff donated blood. To date, our staff in India have donated more than 400 units of blood.

>> An eye donation registration day at which 28 club members registered themselves for eye donation.

>> Supported local NGOs who provide support to disabled orphans and children with special needs through sales of handmade products.

Community investmentWe continue to invest in the communities that we serve.

>> We provided $250,000 in corporate support for the Junior Diabetes Research Foundation in the US and our employees contributed more than $70,000 in employee contributions.

>> American Heart Association – We provided $75,000 in corporate support and $45,000 in employee contributions.

>> Disaster Relief for Manila and Haiti – We provided combined corporate and employee giving of more than $50,000.

Social and environmental responsibility

Scholarships granted by the Misys Charitable Foundation

Business review

471417

362

2008 2009 2010

Number



We also invest in the future. The Misys Foundation is a charitable trust set up to support IT education and extend the benefits of information and communications technology to the wider community. It was established in 1997 and Misys is its sole funder. Grants from the Foundation have made a material difference to individuals and organisations from across the UK and beyond. At the end of May 2010, the Foundation had committed a total of £1,788,128 for scholarships, school grants or other charitable donations. Such donations focus on the provision of IT systems in schools, mainly in the Primary Sector. In total, we have helped 387 students at UK universities with funding. In each case, financial need and proven academic ability are the requirements. A further 84 students at universities overseas have now received scholarships, making a total of 471 UK and overseas scholarships since the Foundation started.

This year, the Foundation distributed a total of £109,600:

>> £101,600 was granted for 50 new scholarships and two extension scholarships

>> £5,000 was granted to one primary school for IT equipment

>> £3,000 was granted to four charities including: –> £1,500 was granted to UCanDoIT to support its work

providing home IT education to disabled people.> –>>£500 was granted to Konnect 9 for its work refurbishing

computers for home use by disadvantaged families.

The Foundation is pleased to report that 18 students who had received a scholarship had achieved a first class degree and six had received two-ones.

The Misys Foundation was established in 1997 and has contributed a great deal towards the development of Information Technology to the wider community. We are now looking to move this approach to the next phase and will be reviewing our community support initiatives over the coming year with the view to developing a more inclusive program for the benefit of all the communities in which we operate.

FTSE4GoodMisys is a constituent member of the FTSE4Good Index. Companies in the FTSE4Good Index are doing more to manage their social, ethical and environmental impacts and are better positioned to capitalise on the benefits of responsible business.

“�I�cannot�stress�enough�how�grateful�I�am�to�the�Misys�Foundation�for�the�scholarship�received.�With�this�funding,�I�will�be�able�to�continue�my�studies�and�focus�on�working�towards�my�future�career�as�a�web�and�software�developer.” Katarzyna Zien M.Eng Computer Science student Bristol University

The Misys Foundation

£1.79mTotal grants



Financial review

We are pleased to report a strong financial performance in the year to 31 May 2010. Across all financial metrics, our business delivered impressive progress highlighted by the 34% growth in adjusted basic earnings per share.

Revenue of £785.5m was 3% above last year on a pro-forma constant currency basis, accelerating as expected to 7% growth in the second half after a 1% decline in the first half. The increased momentum was due to improved first half orders in Allscripts flowing into revenue and to strong licence deal flow in TCM, whilst revenues declined in Banking. Recurring revenues from maintenance, ASP subscriptions and transaction processing constituted 59% of revenues and contributed the greatest revenue increases.

Order intake (which excludes maintenance fees) was £551.1m, up 14% on a pro-forma constant currency basis on the prior year due to continuing customer wins in TCM and to rising adoption of Allscripts Electronic Health Records systems, offset by weak orders in Banking. Professional Services orders were particularly strong, reflecting implementation pipelines built up as a result of strong licence sales by Allscripts and TCM.

Adjusted operating profit was £148.1m. On a pro-forma constant currency basis, growth on last year was 10% and the adjusted operating margin was 1.3 percentage points higher as revenues rose and overheads continued to be tightly controlled. The Group continues to sustain high levels of investment in new products and system implementation capabilities for customers.

Group operating resultsThe information in this section is presented on an ‘adjusted’ basis, excluding exceptionals and other items. Comparisons to prior year are on a pro-forma constant currency basis (see definitions on page 43). These measures provide more comparable and representative information on the trading activities of the Group than the ‘as reported’ measures.

Financial review

Stephen WilsonExecutive Vice President and Chief Financial Officer

“�Across�all�financial�metrics,�our�business�delivered�impressive�progress�highlighted�by�the�34%�growth�in�adjusted�basic�earnings�per�share.”



Operating results for the year ended 31 May 2010 % £m 2009/10 2008/09 growth

Revenue

Allscripts 443 412 8

Treasury & Capital Markets 180 164 9Banking 162 188 (14)Open Source 1 – –

Financial Services 343 352 (3)

Revenue: pro-forma, at constant exchange rates 786 764 3

Retranslation at current exchange rates and pro-forma adjustment to acquired business (4) (72)

Revenue 782 692 13

Operating profit

Allscripts 88 85 3

Treasury & Capital Markets 42 33 26Banking 32 34 (6)Corporate & other (11) (14) 27

Financial Services 63 53 19

Adjusted operating profit: pro-forma, at constant exchange rates 151 138 10

Retranslation at current exchange rates and pro-forma adjustment to acquired business (3) (21)

Adjusted operating profit 148 117 26

Amortisation of acquired intangible assets, (losses) gains on embedded derivatives, translation exchange differences from reserves (17) (10)

Exceptional credits 5 69 Exceptional charges (22) (61)

Total exceptional items (17) 8

Operating profit 114 115 (1)

Group revenue profile 2009/10 2008/09Pro-forma at constant % % % exchange rates £m of total growth £m of total

Initial Licence Fees (ILF) 162 21 – 162 21Application Service Provision (ASP) 35 4 15 31 4Maintenance 318 40 6 299 39Transaction Processing 110 14 4 106 14Global Services 122 16 (5) 128 17Hardware/Other 39 5 1 38 5

786 100 3 764 100

Initial Licence Fees were flat for the year, recovering from a 10% decline in the first half to a 8% increase in the second half due to significant new business wins by Allscripts and TCM and a significant contract variation fee in Banking.

Application Service Provision fees increased significantly compared to last year as this method of delivery gained significant acceptance amongst our customers. 26% of our new software orders by value are on this basis.

Maintenance, our largest revenue stream, grew 6%, increasing in all three divisions.

Transaction Processing fees grew 4% as a result of increased adoption of the e-prescribing capabilities of Allscripts software systems.

Global Services revenues from professional services, consulting, education and training declined 5% as a result of the cautious approach of our Banking customers to non-essential changes to their software systems. However, there was some revenue growth in the second half. Global Services order intake in the Financial Services businesses rose 31% in the second half, reflecting new business projects in TCM and slightly more stable conditions in Banking.

Hardware, which is sold only by Allscripts as part of a bundled solution for smaller physicians’ offices, generated flat revenues compared with last year as a consequence of a higher proportion of revenues coming from larger practices, where hardware is procured separately from software.



Financial review

Order intake growth of 16% resulted from a consistently building pipeline of EHR orders, including a growing proportion from hospital groups seeking to equip and connect large communities of both affiliated and unaffiliated physicians in their catchment areas. Such ‘community’ deals included Long Island North Shore Jewish, Catholic Health Initiatives, West Penn Allegheny, Baptist Memorial Health Care, UMass Memorial Health Care and Community Memorial Health System. These large complex implementations have higher services content than orders in the prior year which included a greater proportion of channel partners’ orders for ASP delivered software.

Revenue growth of 8% to £443.5m for the year included an acceleration from 2% growth in the first half to 13% in the second half, as licence sales accelerated, associated implementation fees started to flow and maintenance fees started to build from licence sales and better contract management. Implementation speed improved through the year, enabling orders to be turned more readily into revenues.

Adjusted operating profit increased 3% to £87.6m, with the operating margin reducing to 20% from 21% last year due to investment in product development and implementation capacity to address anticipated demand.

Allscripts has agreed a merger with Eclipsys, announced on 9 June 2010, to capture the significant strategic opportunity for integrated healthcare IT solutions and a single patient record connecting hospitals, physicians and post-acute organisations. The merger will create an extended market position, particularly in Electronic Health Records. Eclipsys solutions for hospitals will be added to Allscripts physician practice offerings, creating new sales opportunities and cross-selling opportunities within the existing installed base. The merger will be facilitated by Misys disposing of the majority of its controlling stake in Allscripts.

Financial ServicesThe Financial Services business benefitted from the spread of its activities across Banking, Treasury & Capital Markets. A strong recovery in TCM offset the impact on the Banking division of weak market conditions and the transition to new products.

Orders grew 11% in the year, including 25% growth in the second half. Revenues were 3% lower than the prior year, but adjusted operating profit grew 21% as costs were tightly controlled.

Divisional reviewThe information in this section is presented on an adjusted basis, with comparisons to prior year on a pro-forma constant currency basis unless stated otherwise (see definitions on page 43).

AllscriptsAllscripts offers market-leading Electronic Health Records (EHRs) solutions for both new customers and existing customers in its large practice management and post-acute care installed base. US government incentive payments are directly available to physicians adopting and using EHRs and Allscripts is playing a leading role in raising physicians’ awareness of these incentives.

Adoption of EHRs accelerated through the year as ‘meaningful use’ qualification criteria for incentives became clearer and both physicians and hospitals increased their commitment to investing in connected healthcare IT. Hospital groups are being proactive in the marketplace by financially incenting the use of EHRs across physician communities.

As the market moves towards mass adoption, Allscripts’ broad range of products to suit different physician requirements and industry-leading distribution network strongly position Allscripts for rapid customer acquisition. % £m 2009/10 2008/09 change

Order intake ILF/ASP 140 138 1 Global Services 93 48 96 Transaction Processing 94 95 (1) Hardware 29 26 11

Total order intake 356 307 16

Revenue ILF/ASP 102 91 12 Maintenance 157 142 10 Transaction Processing 99 94 6 Global Services 46 47 1 Hardware/Other 39 38 –

Total revenue 443 412 8

Total costs (355) (327) (9)

Adjusted operating profit 88 85 3Adjusted operating margin 20% 21%



Treasury & Capital MarketsThe market for securities trading platforms, risk management and lending management systems is more stable now than a year ago. Against this background, TCM has strengthened its market position with 28 new customer wins. Particular demand strength has been evident in sell-side trading, interest rate derivatives and loan book operations. Product innovations have been directed at both extending the ‘straight through processing’ capability of TCM’s trading platforms and at adding specialist functionality for risk and lending management. New business has been captured in all these areas, with both new and existing customers increasingly seeking to consolidate multiple systems onto one Misys platform. The ASP mode of delivery continues to attract new adopters, reflected in 41% growth in ASP orders. % £m 2009/10 2008/09 change

Order intake ILF/ASP 64 44 46 Global Services 48 35 35

Total order intake 112 79 41

Revenue ILF/ASP 55 44 25 Maintenance 76 73 5 Transaction Processing 10 12 (12) Global Services 39 35 6

Total revenue 180 164 9

Total costs (138) (131) (5)

Adjusted operating profit 42 33 26Adjusted operating margin 23% 20%

Treasury & Capital Markets revenue at £179.5m was up 9% on the previous year, including 17% growth in the second half (albeit against a weaker prior year comparative than in the first half) as licence sales in particular accelerated. Significant customer wins included HSBC and Freddie Mac adopting the LoanIQ lending system, Federal Reserve Bank of New York adopting Opics for treasury management and Risk Vision for risk management and Bank of New York Mellon Asset Servicing moving its equities trading onto the Summit Invest platform.

The second half growth of 74% in initial licence orders and 58% in Global Services orders is an encouraging indication for the current 2010/11 year’s implementation revenues.

Adjusted operating profit grew 26%, resulting from the strong revenue growth including a significant inflow of licence fees and from tight cost control. The adjusted operating margin rose to 23% from last year’s 20%.

BankingIn Banking, IT spending remained subdued and the buying behaviour of our existing and prospective customers did not materially change between the first and second halves of the year. Concerns over European government debt that emerged in the final quarter of the year have not so far affected the decision-making of our prospective buyers.

Whilst opportunities for new sales of traditional core banking systems have been limited, BankFusion and other new and enhanced products such as Mobile Banking, Payments and Business Intelligence offer a radically new solution to banks’ need to be more efficient and competitive. New application functionality can be deployed progressively on the BankFusion platform in a very flexible way. From the licence and services fee streams that result, we expect to return the Banking business to growth. % £m 2009/10 2008/09 change

Order intake ILF/ASP 43 50 (15) Global Services 40 47 (14)

Total order intake 83 97 (15)

Revenue ILF 40 58 (30) Maintenance 85 84 1 Global Services 37 46 (21)

Total revenue 162 188 (14)

Total costs (130) (154) 16

Adjusted operating profit 32 34 (6)Adjusted operating margin 20% 18%

Banking revenues declined 14% to £161.7m. The rate of decline was consistent throughout the year despite a more challenging prior year comparison in the second half compared with the first half. Maintenance revenues grew by 1%. Orders declined 15%, with the second half decline of 8% not as marked as in the first half, as new products started to be sold.



BankFusion momentum continued to build with a further nine orders in the second half in addition to the two received in the first half. Key among these were the first new competitive customer win with Actinver in Mexico and a multi-region system for Investec as it renovates its existing Equation retail banking system. These orders have yet to feed through into material revenues, but BankFusion revenues are expected to begin to be significant in the second half of 2010/11. We expect BankFusion, Payments, Trade Services, Mobile Banking and Business Intelligence to lead a recovery of the business, starting in this 2010/11 year and building over time.

Adjusted operating profit declined 6% to £32.3m, with the revenue decline significantly offset by focussed reductions in variable compensation, overheads and administration costs. The adjusted operating margin increased by 2 percentage points to 20%.

Open Source SolutionsIn the open source market, we are opening up opportunities in healthcare information systems and in carbon trading. Our open source business is developing platforms and partnerships to build a service-based business around these opportunities. Misys Open Source Solutions (‘MOSS’) revenues, the first of which were generated during the year, come from services and support contracts as well as subscriptions to value-added software components.

During the year, MOSS installed its first healthcare information exchange, enabling sharing of health records across communities, for Hartford Hospital. A significant pipeline of other healthcare information exchange opportunities has also been developed.

Open Source is considered an operating segment and is included within the ‘Corporate & other’ category in the tables above as it is not a reportable segment as required to be disclosed under IFRS 8.

In its carbon trading business, MOSS is offering corporations software solutions to measure, reduce and trade their emissions. In partnership with The Climate Registry, MOSS has developed a system for emissions reporting and has a number of US states in its sales pipeline.

Global Services Our Global Services business is extending the services and support we offer to customers, through initiatives such as premium support, our Global Development Centre of Excellence in Bangalore, and the READY and Upgrade Enablement Centre services that accelerate the implementation of Electronic Health Records systems.

Global Services order intake (professional services, consulting, education and training) increased 40% in the year to £181.6m, led by strong increases in Allscripts. Orders in the Financial Services businesses rose 30% in the second half, reflecting new projects in TCM including some large trading platform extensions for existing customers. Demand for Global Services in Banking was less constrained during the second half, during which orders grew 4%.

Revenues grew 4% on prior year in the second half as orders picked up, particularly at Allscripts and TCM, but declined 5% for the year as a whole as a result of declines in Banking.

Global Services is considered as a horizontal function within each of the defined operating segments.

CorporateThe net charge (excluding exceptional items) for the period was £10.7m against £14.6m in the prior year principally due to the effectiveness of cost reduction measures and certain one-off credits.

Profit and lossUnless otherwise stated, the information in this section is presented on an ‘as reported’ basis.

Operating results for the year ended 31 May 2010 % £m 2009/10 2008/09 growth

Revenue 782 692 13

Operating profit before exceptional items 131 107 22

Exceptional credits 5 69 Exceptional charges (22) (61)

Total exceptional items (17) 8

Operating profit 114 115 (1) Net finance costs (10) (21)

Profit before taxation 104 94 Taxation (43) (4)

Profit after taxation 61 90 Minority interest (17) (8)

Profit after taxation attributable to Misys shareholders 44 82 (46)

Number of shares in issue (millions) 529.4 511.1

Earnings per share (basic): reported 8.4p 16.0p (48)

Earnings per share (basic): adjusted 13.1p 9.8p 34

Financial review



Reported Group and divisional operating results

Revenue Operating profit£m 2009/10 2008/09 2009/10 2008/09

Allscripts 440 348 61 94

Treasury & Capital Markets 180 161 42 33Banking 162 183 31 37Corporate & other 1 – (20) (49)

Financial Services 342 344 53 21

Group 782 692 114 115

Revenue increased by 13% due to a combination of underlying growth at Allscripts and TCM, exchange rate movements and the inclusion of Allscripts for only part of the period in the prior year ‘as reported’ results. Operating profit before exceptional items increased by 22% as a result of increased revenue, improved efficiency and cost control.

Exceptional charges of £21.7m (2008/09: £61.4m) include turnaround and restructuring programme charges, costs of the Misys Healthcare-Allscripts merger (both of which were sharply reduced from last year) and a new charge of £9.6m associated with the proposed Allscripts share sale. Exceptional credits of £5.2m arose from a VAT refund and the sale of a legal claim. Last year’s exceptional credit of £69.3m arose from the gain on the partial disposal of Misys Healthcare as part of the merger with Allscripts and is reported in the Allscripts line in the table above.

Profit before taxationProfit before taxation at £104.6m reflects improved operating profits and lower net finance charges. The net finance charge at £9.7m was £11.5m lower than last year. This reflects a significant paydown of debt and the renegotiation in May 2009 of the terms of the debt financing first established in connection with the Misys Healthcare-Allscripts merger and an exceptional credit of £1.4m (2008/09: £2.1m exceptional charge).

TaxationThe tax charge is £43.2m (including a credit on exceptional items and exceptional tax charge netting to a £6.2m charge) compared with a charge in the prior year of £4.6m (after tax on exceptional items and an exceptional tax credit netting to £24.4m). The underlying effective tax rate at 32% based on adjusted profit before taxation was 2% lower than last year’s rate, principally due to a lower tax rate at Allscripts. The Financial Services business had an effective tax rate of 25% which was lower than the Group tax rate due to the reduced impact of the relatively higher US taxation rates.

Earnings per share (EPS) Basic earnings per share (EPS) of 8.4p has decreased by 7.6p compared to the previous year. The prior year’s basic EPS of 16.0p included a profit on the sale of Misys Healthcare Systems as part of the Allscripts merger.

Adjusted EPS excludes exceptional items, gains and losses on embedded derivatives, amortisation of acquired intangible assets and translation exchange differences recycled from reserves. In the opinion of the Directors, adjusted basic EPS provides more comparable and representative information on the continuing trading activities of the Group. On an adjusted basis, basic earnings per share rose 34% to 13.1p due to underlying operating profit growth, lower financing costs and a reduced effective tax rate.

Balance sheet and cash flowCapital expenditure, research & development Operating expenditure on research & development of £103.9m increased by £3.5m in the period due principally to the Allscripts acquisition. As our product development has become more efficient, we are able to devote a higher proportion of expenditure to developing new products as opposed to maintaining existing products. Spending on development of key new products to address new market opportunities, principally BankFusion, MyWay (the Allscripts ASP EHR solution) and an ASP version of Summit (a key Treasury & Capital Markets solution) resulted in £31.8m of capitalised software development (2008/09: £28.4m). Amortisation of developed software in the period was £11.9m (2008/09: £5.9m).



2009/10 2008/09 Open Open£m Allscripts Banking TCM Source Total Allscripts Banking TCM Source Total

Research and development expenditure (including capitalised expenditure) 42 33 28 1 104 34 37 28 1 100

Capitalisation of developed software 13 12 7 – 32 11 11 6 – 28Amortisation of developed software (3) (5) (4) – (12) (1) (3) (2) – (6)

Net capitalisation 10 7 3 – 20 10 8 4 – 22

Financial review

Total capital expenditure and investment was £46.7m (2008/09: £57.8m), the balance after software development being £14.9m (2008/09: £29.4m), principally reflecting investments in our computer and systems infrastructure.

Cash flow and net debtNet cash flow generated from operations was substantially improved to £168.7m (2008/09: £100.4m).

Net debt was eliminated, with a net cash balance of £0.9m compared with net debt of £128.9m at the start of the year. The principal factors were net cash inflow from operations, offset by capital expenditure. The net debt position is made up of net cash of £97.1m in Allscripts and net debt of £96.2m in Financial Services. After completion of the proposed disposal of Misys shares in Allscripts, it is intended that £75m of the proceeds will be used to pay down Misys net debt.

Trade receivables increased by 24% since the start of the year to £177.5m, reflecting the acceleration of licence revenues in the final quarter of the year and exchange rate movements. Days’ sales outstanding increased to 93 days from 78 days at the end of last year principally due to increased trade receivables at Allscripts and seasonally higher accrued income in Financial Services. The Group continues to focus on cash collection in light of increased revenues.

Deferred income increased by 23% since the start of the year to £173.1m, driven principally by growth in maintenance fees and also by initial licence payments prior to software delivery.

Disposal of majority of controlling stake in AllscriptsOn 9 June 2010, Misys announced that it intended to dispose of the majority of its controlling stake in Allscripts and that Allscripts would merge with Eclipsys. The transactions involved a market placing by Misys of between 36 and 40 million Allscripts shares, a buyback by Allscripts of 24.4 million shares for an aggregate consideration of approximately US $577.4m which includes a premium of US $117.4m and a potential additional buyback of a further 5.3 million shares for an aggregate consideration of approximately US $101.6m contingent on successful completion of the Allscripts-Eclipsys merger. Total potential proceeds were illustrated in the announcement at US $1,354m at an average price of $19.99 per share, with a retained holding illustrated of 12.1 million shares.

To further optimise proceeds for shareholders from its holding in Allscripts, Misys agreed on 26 July that it would reduce the minimum size of the placing to 25 million shares following positive votes by Allscripts and Eclipsys shareholders on the merger. Illustrative potential proceeds at this minimum placing size and at the minimum placing price of US $16.50 per share would be US $1,077m at an average price of US $19.69 per share. The maximum retained holding in this instance would be 25.1 million shares. Shareholder votes to approve the transactions are expected to take place later in August 2010.

Misys also announced that upon successful completion of the disposal transaction it intends to return the majority of the proceeds to its shareholders through a tender offer, subject to shareholder approval. Up to £75m will be retained to reduce net debt in the Group. Based on advice received Misys expects the transactions to be tax free and it is seeking an Inland Revenue Service private letter ruling (PLR) to confirm this. The tender offer will not commence until this is confirmed. It is anticipated that the tender offer will be completed before the end of this calendar year.



To protect the proceeds of the transaction from fluctuations in the US $:£ exchange rate, foreign exchange option contracts were taken out giving the Company the ability to sell US dollars for sterling at an exchange rate of approximately £1=$1.50.

On completion of the transactions, the remaining investment in Allscripts will be accounted for as a financial asset and carried at fair value.

NotesAdjusted operating resultsAdjusted results are stated before exceptional items, gains and losses on embedded derivatives, amortisation of acquired intangible assets and translation exchange differences recycled from reserves.

Other non-exceptional items excluded from adjusted results are gains on embedded derivatives in Banking of £1.4m (2009: £4.2m gain) and in Treasury & Capital Markets of £0.1m (2009: £0.6m gain), amortisation of acquired intangible assets in Banking of £1.0m (2009: £1.1m) and in Allscripts of £15.8m (2009: £11.3m) and loss on translation exchange differences recycled from reserves in Corporate of £2.0m (2008: £3.3m).

Pro-forma constant currency resultsIn pro-forma constant currency results, current year revenues are adjusted by the addition of £3.2m in respect of deferred revenue balances written down upon acquisition of Allscripts Healthcare Solutions (2008/09: £4.7m) included within the overall pre-acquisition adjustment referred to above. Current and prior year operating profit are adjusted by the same amounts.

The prior year adjustment to revenues of £71.8m comprises £16.3m to retranslate revenues at average exchange rates for 2009/10 and £55.5m to add Allscripts Healthcare Solutions revenues for the prior year pre-acquisition period from 1 June 2008 to 10 October 2008. Since the Allscripts Healthcare Solutions financial year end differed from the Misys financial year end, pro-forma results from 1 June 2008 to 10 October 2008 are based on Allscripts Healthcare Solutions results for the quarter from July to September 2008, combined with previously reported results of Misys Healthcare Systems, adjusted to exclude significant businesses disposed of during the period. The retranslation adjustment comprises increases of £8.2m to Allscripts, £4.9m to Banking and £3.2m to Treasury & Capital Markets. The most significant impact is from the movement in the US dollar and the euro against sterling, where average exchange rates in 2009/10 were US $1.59 and €1.13 compared to US $1.65 and €1.18 in 2008/09. The pro-forma operating profit adjustment of £20.1m for 2008/09 comprises £17.5m relating to Allscripts Healthcare Solutions for the pre-acquisition period and £2.6m to retranslate at average exchange rates for 2009/10 (Allscripts: £1.9m increase; Banking: £1.2m decrease; TCM: £2.8m decrease; Corporate: £4.7m increase).



Principal risks and uncertainties

Effectively managing our risks is a key element in meeting our business objectives and our customers’ expectations.

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. Misys’ risk management programme therefore seeks to support the successful running of the business by identifying and managing risks to an acceptable level and delivering assurance.

The risk management process An overview of our risk management process is shown opposite. This process, which is continuous and systematic, involves identifying, prioritising and allocating ownership for risks and developing and implementing appropriate mitigation plans to address those risks. Providing assurance as to the implementation of risk mitigation plans and the ongoing monitoring of risks also represent critical elements of the Group’s risk management programme.

More detail of our processes for risk identification and management is shown in the Directors and governance reports.

We classify our risks into four areas:

>> strategic>> operational>> financial>> compliance

We provide a summary of the risks that we currently see as important to our business on the following pages.



Scope Business Objectives & Strategy

1

RiskIdentification

2

RiskAssessment: Prioritise risks, Ownership and Accountability

3

Reporting and Performance

7

Existing Controls New Mitigation & Action Plans

4

Monitoring and Assurance

6

Execute Action Plans

5

Scope, business objectives and

strategies

Riskidentification 1

Riskassessment: prioritise risks, ownership

Reporting and performance

Existing controls: new mitigation and action plans

Monitoring and assurance

Execute action plans

2

1

3

45

6

7




Business environment and market risksAs an international company, we operate across the globe and difficult or unexpected economic conditions in the markets we serve may affect the financial position of our customers and their willingness to commit expenditure. Other developments in the markets we serve may also impact the Group. The financial services sector is currently subject to regulatory review which could increase taxes on, or curtail, certain of the activities of our customers leading them to reduce expenditure. Our Healthcare business is benefiting from the Healthcare Stimulus programme in the US, however, we must ensure that we comply with the requirements for ‘meaningful use’ as defined by the US Department of Health and Human Services across our healthcare product portfolio. In addition, we operate in highly competitive markets that are characterised by changing technology, industry standards and customer needs and by commercial pressures from customers.

Allscripts-Misys proposed disposal risksWe have recently announced our intention to dispose of the majority of our stake in Allscripts-Misys and realise substantial value for our shareholders. Under this proposal we will exit our controlling interest in Allscripts-Misys and will retain a non-controlling stake in the newly merged Allscripts-Eclipsys entity. The proposed disposal will not proceed if specified conditions are not satisfied including shareholder and regulatory approval.

Business strategy risksThe continued roll out of our next generation BankFusion technology, the development of new solutions and the enhancement of existing solutions for our Banking and Treasury & Capital Markets businesses are critical to the leadership phase of our turnaround programme. The changes required to implement the final stage of this programme will, however, take time and will require high quality leadership.

Partnerships, collaborations, strategic alliances, acquisitions and disposalsThe Group will continue to seek opportunities to complement its existing product and services portfolio or streamline its operations. We could fail to identify appropriate partners and technology suppliers or fail to agree suitable commercial terms. Acquiring or disposing of companies also gives rise to execution risks in identifying, valuing and integrating or separating businesses.

People risksThe Group relies heavily on recruiting and retaining talented employees with a range of skills to meet its objectives. The market for technology, and related management and leadership skills, is very competitive and it remains a challenge to attract, retain and develop employees. In addition, as the Group expands its operations in emerging markets the supply of people with the required skills in specific geographic regions may be limited.

Product development risksProduct development requires effective management to identify customer and market requirements which will drive business growth. New and enhanced products and services need to be released within agreed timeframes, product lifecycles require effective management and product quality must be assured to provide for continuing customer satisfaction. The effectiveness of product development processes is particularly important to our Banking business where we are developing a new suite of products based on our innovative BankFusion technology.

Risk description

Strategic risks

Operational risks



Potential impact How we mitigate

Failure to adapt to economic and market conditions and/or to compete effectively in the markets in which we operate could lead to a deterioration in our financial results.

Failure to complete the proposed disposal may negatively impact on the credibility of the Group’s strategy and our relationship with shareholders and other key stakeholders.

Our market share, revenues and profits may be adversely impacted if we are not able to deploy our BankFusion technology and other new solutions and enhancements quickly enough or if they fail to receive market acceptance and achieve lower customer adoption levels than expected.

Failure to effectively conduct and manage these activities may mean that the related business objectives are not met which could adversely impact shareholder value and the Group’s reputation.

Failure to attract staff with the required technical, management and leadership skills, to retain key employees and/or to provide for effective succession planning for critical positions may materially and adversely affect the Group’s financial results.

If product development risks are not effectively managed we may miss out on market opportunities and/or lose our reputation with customers. This could adversely impact the Group’s financial position.

The Group has a large installed base and over 50% of Group revenues are recurring. We are geographically diversified with customers in 120 countries which reduces our reliance on the success of any one economy or location. We continue to monitor current and emerging market developments carefully. Allscripts currently has a number of programmes in place to ensure compliance with the ‘meaningful use’ requirements.

There is continual and ongoing dialogue with investors and other key stakeholders including employees and customers to explain the proposed transaction and the associated strategy. Initial market reaction to the proposed disposal is considered to be positive. We also have a number of leading advisors assisting us with the proposed transaction and their support has included advice regarding regulatory approvals, market risks and other relevant conditions. In addition, to achieve certainty on the tax treatment of the Allscripts divestiture we are seeking an IRS Private Letter Ruling.

Group strategy is reviewed and agreed with the Board and there is ongoing monitoring of the strategy to ensure that it remains relevant. Good progress is being made on the development and market acceptance of new solutions in each of the Misys businesses.

These activities are reviewed as part of the Group’s strategic planning process. A Deal Committee comprised of senior management with significant M&A experience has been established to review acquisition and disposal opportunities which are also subject to review by the Group’s Board of Directors. The Group has well defined M&A and partner processes which cover important areas such as effective due diligence and integration of M&A targets and management of relations with partners. We also have comprehensive contracts with our suppliers and contract management processes in place to ensure compliance with contractual terms and conditions.

We continuously assess our human resource requirements and talent management is a key priority for the Group. External benchmarking of compensation and benefits packages is conducted across markets to ensure that Misys remains competitive. Employees are provided with training and development and are appraised regularly. Regular succession planning is also in place across the Group.

We have regular dialogue with our customers through Customer Advisory Boards and Product / Regional User Groups and we monitor industry trends to identify emerging customer needs. Product development considerations form a key element of our strategic planning process and are carefully planned with roadmaps developed for our products. Well defined governance processes have been established to provide effective, portfolio based evaluations of product development opportunities and the product development function follows best practice. There is also significant and ongoing Executive and Senior Management focus on the development of the BankFusion technology and related products.




Contract implementation and service level risksThe process of introducing business critical systems, which may have long implementation schedules, can be disruptive to our customers in the short term and the implementation may be subject to project management by the client or by others, introducing an element of risk. This risk continues after the implementation period under our service level agreements with customers.

Business continuity risks As an international company we have operations around the globe and these are vulnerable to damage or interruption from floods, fires, power loss, telecommunications failures, flu pandemic, political or social instability and similar events. This risk is potentially increased due to the fact that many of our key sites are in emerging markets with, for example, key research and development and customer support operations being based in India and the Philippines.

IT risksWe rely on systems and networks in order to run our business operations. We must therefore maintain a sound IT infrastructure to support our business and to protect our information assets. A particular area of risk relates to attacks by IT viruses and we also need to ensure that our online trading activity is adequately protected.

Intellectual property risksWe own substantial intellectual property rights (IPR), which may be infringed through the sale of illegal or unauthorised copies of our software. There is also a risk that we could inadvertently infringe the IPR of a third party as there may be patents relevant to our product line that are unknown to us.

Foreign exchange & interest rate risksA substantial proportion of our revenue and profit is earned outside the UK. The principal exposure to foreign currency therefore lies in the translation of overseas profits into sterling and the fluctuation in the value of foreign currency denominated assets and liabilities. The biggest sensitivities in this area relate to exchange rate fluctuations involving the euro, dollar, rupee and peso. We are also subject to interest rate risk as we borrow at variable rates under our funding facilities.

Legal & regulatory risksWe are subject to the laws and regulations of a number of countries covering a wide variety of areas affecting our business including anti-corruption legislation and data protection requirements.

Risk description

Operational riskscontinued

Financial risks

Compliance risks



Potential impact How we mitigate

Unsuccessful customer implementation projects could result in claims from customers, harm to our reputation and a loss of future revenues.

A lack of effective business continuity procedures could adversely impact our operations and thereby reduce our revenue and profits. In addition, future revenues and profits could be harmed if customers believe that our operations are not appropriately managed from a business continuity standpoint.

Failure to manage our IT infrastructure effectively could result in critical business information becoming damaged or unavailable. A malicious attack on our systems or network could damage the data we hold. Misappropriation of customer data held may result in claims for damages and impair our reputation.

Infringement of our IPR could cause loss of revenue, adversely affect business operations and/or damage our trademarks. Claims against us for infringement of others IPR may mean we need to re-design the product, take a licence on the infringing IP or even cease to sell that product impacting our revenues.

The accounting profits of the Group and the book value of assets and liabilities are subject to fluctuation based on changes in foreign currency rates. Changes in interest rates impact the Group’s cost of borrowing.

Any failure to maintain compliance with relevant laws and regulations could have a material, adverse impact on our business including financial penalties, disbarment from business and damage to our reputation.

Our customers increasingly undertake modular project approaches to their IT environments which can reduce the risk. Our implementation and services teams consist of highly skilled and experienced staff and our projects are subject to ongoing risk management as a part of our project management methodology. In addition, we partner only with reputable and well regarded third parties in relation to implementation services and we provide relevant training and support for these third parties on our products and services.

Business continuity, disaster recovery and pandemic response plans are in place and these are overseen by a dedicated Business continuity team. These Plans are reviewed annually and an Incident Management Team has been appointed at each key location and each team is aware of their responsibilities with respect to Business continuity. Employees are kept informed of business continuity initiatives via a dedicated section of the Company’s intranet site. Further work will be conducted next year to increase the speed and testing of our self-recovery capability and reduce our dependency upon third-party providers.

We continue to review our systems, our security processes and our network infrastructure to ensure that any risks are kept to an acceptable level. Third-party provided systems and IT networks are subject to appropriate security, availability and performance capability reviews prior to use. As part of our continuous improvement initiatives in this area, further work will be conducted next year with the introduction of enhanced Information Security policies.

We generally protect our proprietary application software products and services by licensing rights to use the application (rather than selling or licensing the computer source code) and by copyright law. We have also established a cross functional IP Council and a number of related policies and procedures are in place to manage and control IP risks including those related to the secure storage of our source code throughout the Group.

The Group has treasury policies that are reviewed annually by the Board and more regularly by the Group’s Treasury Committee. These cover all the significant treasury areas including foreign exchange and interest rate matters. The treasury function is not a profit centre and enters into derivative contracts solely for the purpose of hedging the exposures that arise in the normal course of business. We continuously monitor our exposure to currency fluctuation risks based on balance sheet items and expected cash flows and we pursue a Group-wide foreign exchange risk management strategy. As part of this strategy we have hedged our potential currency exposure on the expected proceeds of our proposed disposal of Allscripts. Misys also monitors its potential exposure to interest rate movements and hedges the risk in the market as appropriate.

Our Legal and Company Secretarial function, working with leading advisors as required, monitors legal and regulatory requirements across the geographies and markets in which we operate to provide for the required compliance. We have a Code of Conduct which all employees must sign and we have established a whistleblower hotline to enable concerns to be raised. Specific work is also being conducted in preparation for the UK Bribery Act.



Board of Directors

Mike Lawrie4

Chief Executive (57)Mike joined the Board in November 2006. Mike was previously a general partner with ValueAct Capital. Prior to that, he was Chief Executive Officer of Siebel Systems Inc., the international software and solutions company, from 2004 to 2005. 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 (54)Sir James Crosby joined the Board as a non-executive Director in January 2009 and held that role until September 2009 when he was appointed Chairman. He was Chief Executive of HBOS plc from 2001 to 2006, and was the senior independent Director of ITV plc from 2003 to 2009. He is the senior independent Director of Compass Group plc, and a Trustee of Cancer Research UK.

John King123

Non-executive Director (71)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, most recently as President and Chief Executive of Legacy Health Systems until 1999. Prior to Legacy, John was President and Chief Executive Officer 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.



Jeff Ubben4

Non-executive Director (49)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 a number of other public and private companies.

John Ormerod123

Senior independent Director (61)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.

Philip Rowley123

Non-executive Director (57)Appointed a non-executive Director in November 2008. Philip Rowley was Chairman and Chief Executive of AOL Europe until February 2007. He is a qualified chartered accountant and was Group Finance Director of Kingfisher plc from 1998 to 2001. His previous roles included Executive Vice President and Chief Financial Officer of EMI Music Worldwide and Chief Operating Officer and Chief Financial Officer of Golden Books Family Entertainment, the largest children’s book publisher in the US. He was also the co-founder of Tribeca Technologies, a New York-based technology company, a former non-executive Director of Tradus plc (previously QXL Ricardo plc) until its de-listing in March 2008 and a former Chairman of Skinkers Limited. He is a non-executive Director of HMV Group plc, ARM Holdings Plc, and Promethean World Plc and is Chairman of Livestation Limited.

Notes1 Member of the Audit Committee2 Member of the Nomination Committee3 Member of the Remuneration Committee4 Member of the Executive Committee

Membership of Committees and ages are as at 26 July 2010.



Directors’ report

The Directors have pleasure in submitting their report, the audited consolidated financial statements of the Group and the audited financial statements of the Company for the year ended 31 May 2010.

This Annual Report has been prepared for, and only for, the members of the Company as a body 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 the control of the Company. The forward-looking statements reflect knowledge and information available at the date of preparation of this Annual Report and the Company undertakes no obligation to update these forward-looking statements. Nothing in this Annual Report should be construed as a profit forecast.

Principal activities The Group’s principal activities are the development, management and licensing of a variety of software products and solutions to customers in the financial services and healthcare industries. Misys also partners with world class companies to sell and distribute Misys products and solutions.

Disposals during the period are disclosed in the notes to the financial statements.

Business review 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 its likely future business developments, including a description of the principal risks and uncertainties, is provided in the Chairman’s statement, the Chief Executive’s review, the business review and the financial review of this Annual Report, all of which are incorporated into this report by reference.

Events after the balance sheet dateOn 9 June 2010, Misys announced its intention to dispose of its majority stake in Allscripts and return substantially all of the proceeds to Misys shareholders. For further information, refer to note 39.

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

DividendsThe Board continues to believe that shareholder interests are being 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 (2009: nil).

DirectorsDetails of the current Directors of the Company are given on the previous page.

During the year, Sir Dominic Cadbury, Chairman, retired as a Director on 30 September 2009 on which date James Crosby was appointed as Chairman. Al-Noor Ramji, non-executive Director, resigned as a Director on 31 March 2010 upon his appointment as EVP and Head of Banking.

In accordance with the Company’s current Articles of Association, Mike Lawrie and Jeff Ubben are retiring by rotation and, upon the recommendation of the Nomination Committee, will offer themselves for re-election at the 2010 Annual General Meeting (AGM).

Biographical details of all Directors, including those being proposed for re-election, are given on the previous page.

Details of executive Directors’ service agreements, non-executive Directors’ letters of appointment, emoluments and share interests can be found in the Directors’ remuneration report.

Significant contractsWith the exception of the service contracts and indemnities referred to below, during the year under review and up to the date of this report no Director (other than Jeff Ubben as mentioned below) has had any interest in any material contract with the Company.

ValueAct Capital Master Fund L.P. (ValueAct Capital) has a holding of approximately 25.7% 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 Capital and accordingly has an interest in all contracts between the Company and undertakings which are part of the ValueAct Group.



Indemnities and insuranceThe Company has granted indemnities to its Directors in their capacity as Directors of the Company and its subsidiaries. The Company has also granted indemnities to some of the Directors of its subsidiaries. Such indemnities remain in force and are qualifying third party indemnity provisions for the purposes of s.234 of the Companies Act 2006. For some years, the Company has purchased insurance to cover its Directors and Officers against 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. Neither the insurance nor the indemnity provide cover where the Director has acted fraudulently or deceitfully.

Appointment and replacement of DirectorsThe rules regarding the appointment, retirement and removal of Directors are contained in the Company’s Articles. The Company’s Articles may be amended by a special resolution of shareholders passed at a general meeting of the Company.

The 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 s/he was last elected or re-elected, shall retire and offer him/herself for election or re-election.

Powers of DirectorsThe Board is responsible for the management of the business of the Group and 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.

Further information on the duties of Directors and information with respect to internal control and risk management procedures is set out in the corporate governance report, which is incorporated into this report by reference.

Research and development In the markets in which the Group operates, effective research and development is vital to maintaining competitive advantage and securing future income streams. The extent of the Group’s commitment to research and development is detailed throughout the business review.

PeopleThe Group depends on the skills and commitment of its employees in order to achieve its goals. Information on employee engagement, equal opportunities (including policies relating to disabled persons) and training can be found in the People section of the business review.

Social and environmental responsibilityThe Group is committed to operating in an ethical and environmentally sustainable way. Details of the Group’s commitment to this approach and community involvement and charitable donations can be found in the section on social and environmental responsibility.

Political donationsIn line with its policy, the Group made no political donations in the year under review (2009: nil) and has no plans to do so.

Creditor payment policyIt is the Company’s policy to agree terms and conditions for its business transactions with its suppliers. The Company seeks to abide by the payment terms agreed with suppliers whenever it is satisfied that the supplier has abided by its contractual obligations. The trade creditors of the Group at 31 May 2010 represent 31 days (2009: 28 days) and of the Company represent nil days (2009: nil days) as a proportion of the total amount invoiced by suppliers during the year. The Company has delegated its trade to other Group subsidiaries.

Share capitalThe share capital of the Company comprises ordinary shares of 1p each, which are listed on the London Stock Exchange.

The authorised and 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 26 July 2010, the Company had 594,584,179 ordinary shares in issue, of which 46,413,777 were held in treasury.

The Companies Act 2006 abolishes the requirement for a company to have an authorised share capital and the new articles of association proposed for adoption at the 2010 AGM reflect this. Directors will still be limited as to the number of shares they can at any time allot (save in respect of employee share schemes) and, as in previous years, authority to allot will be sought at the 2010 AGM.

Purchase of own sharesThe Company may make market purchases of any of its own shares. An authority which was granted by shareholders at the 2009 AGM and which expires at the conclusion of the 2010 AGM to purchase a further 54,710,100 of its own shares (representing approximately 10% of its issued share capital as at 10 August 2009) remained in force at 31 May 2010.

Pursuant to this authority, in the financial year ended 31 May 2010 the Company has not purchased any ordinary shares of 1p each. During the year, 1,049,481 shares were transferred out of treasury to meet the Company’s obligations under its employee share plans and no shares were cancelled out of treasury.

Authority to allot sharesAlso included in the special business of the 2010 AGM are proposals to renew the Directors’ authority to allot shares for cash and to disapply statutory pre-emption rights, up to prescribed limits. Further details are given in the Notice of AGM.



Directors’ report

Substantial shareholdingsAs at 26 July 2010, the voting interests shown below in the ordinary share capital of the Company, disclosable under the Financial Services Authority’s Disclosure and Transparency Rules, had been notified to the Company. % issued No. of ordinary Nature of Holder share capital shares holding

ValueAct Capital Master Fund, L.P. 25.74% 140,764,642 DirectVA Partners I, LLC, ValueAct Capital Management, L.P., ValueAct Capital Management, LLC, ValueAct Holdings, L.P., ValueAct Holdings, L.P., and ValueAct Holdings GP, LLC1 25.74% 140,764,642 IndirectSchroders plc on behalf of Schroder Investment Management Ltd, Schroder Investment Management North America Ltd and Schroder & Co Ltd 5.33% 26,708,863 IndirectFMR LLC and its Group 5.14% 25,890,800 IndirectThreadneedle Asset Management Ltd. 5.06% 27,677,470 See below Threadneedle Asset Management Ltd. 4.81% 26,298,748 Indirect Threadneedle Asset Management Ltd. 0.14% 745,317 Direct Threadneedle Asset Management Ltd. 0.12% 633,405 CFDsHighside Capital Management L.P. 4.59% 25,269,730 IndirectLegal & General Group Plc and its subsidiaries 3.99% 21,868,430 DirectLloyds TSB Group plc 3.02% 16,492,181 Indirect 1 This notification has been reported on an aggregated basis and includes the 25.74 % holding of ValueAct Capital Master Fund, L.P. shown above.

Share Capital and rights attaching to shares The rights and obligations attaching to the Company’s ordinary shares, in addition to those conferred by law, are set out in the Articles.

The holders of ordinary shares are entitled to receive the Company’s report and accounts, to attend and speak at general meetings of the Company, to appoint proxies and to exercise voting rights. Further details regarding voting at the AGM and procedures for the appointment of a proxy can be found in the notes to the Notice of AGM and on the AGM proxy form itself.

There are no shares carrying special control rights with regard to control of the Company. Shares to be acquired through the Company’s employee share plans rank equally with the ordinary shares in issue and have no special rights. There are no known arrangements under which financial rights are held by a person other than the holder of the ordinary shares.

Details of certain restrictions on transfer or voting rights attaching to the Company’s ordinary shares are also included in the Articles. The Company is not aware of any agreements between shareholders that may result in restrictions on the transfer of ordinary shares or voting rights.

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 and its Chief Executive and certain senior employees which provide for compensation for loss of office or employment due to a takeover. Further information is provided in the Directors’ remuneration report.

Annual General MeetingThe 2010 AGM will take place at 12 noon on Wednesday 29 September 2010 at The Lincoln Centre, 18 Lincoln’s Inn Fields, London WC2A 3ED.

A separate circular accompanying this Annual Report contains the Notice of AGM and explains the business to be considered at the meeting. A copy of the Notice is also published on the Company’s website.

In line with other companies, we are asking shareholders to approve the adoption of new articles of association primarily to reflect the implementation of the Companies Shareholders’ Rights Regulations 2009 and the remaining provisions of the Companies Act 2006. We have also taken the opportunity to update language and style in line with best practice. An explanation of the main changes between the existing Articles and the new articles of association is set out in the Notice of AGM.

Going concern After making due enquiries, embracing the normal forecasting process, the Directors consider that the Group and the Company have adequate resources and committed borrowing facilities to continue in operational existence for the foreseeable future. Consequently, they have continued to adopt the going concern basis in preparing the financial statements.

AuditorsEach of the Company’s Directors in office as at the date of this report confirms that, so far as he is aware, there is no relevant audit information, that is, information needed by the Company’s auditors in connection with preparing their report, of which the Company’s auditors are unaware, and that s/he has taken all steps which s/he ought to have taken as a Director in order to make her/himself aware of any relevant audit information and to establish that the auditors are aware of that information.

PricewaterhouseCoopers LLP (PwC) have expressed their willingness to continue in office as auditors and a resolution to reappoint them and authorise the Directors to fix their remuneration will be proposed at the forthcoming AGM.

By Order of the Board

Tom KilroyEVP General Counsel & Company Secretary26 July 2010



The Board is committed to the highest standards of governance and believes that good governance is core to upholding the Misys values. Working with honesty and integrity are vital to building a sustainable business for all of our stakeholders.

The Company complied throughout the year ended 31 May 2010 with all the principles and provisions of the FRC 2008 Combined Code on Corporate Governance (the ‘Combined Code’) subject to the following explanation. The Combined Code provides that the Board should include a balance of executive and non-executive Directors (and in particular independent non-executive Directors) such that no individual or small group of individuals can dominate the Board’s decision making. During the year, there was only one executive Director on the Board, Mike Lawrie. The Board believes that the independent strengths of the non-executive Directors, the access they have to senior management across the Group and the Company’s open culture mean that no individual can dominate the Board’s decision process. They are therefore of the opinion that the balance of the Board remains compliant with the principles and spirit of the Combined Code.

Governance and the BoardComposition The Board continually keeps under review its composition in light of the ongoing requirements of the business. Following his appointment as EVP, Head of Banking, Al-Noor Ramji resigned as a non-executive Director on 31 March 2010. The Board collectively has a wide range of relevant business, financial and international experience, which is vital to the successful direction of a global company but expects to appoint a further non-executive Director in the near future.

At the date of this report, the Board comprises the non-executive Chairman, one executive Director and four non-executive Directors. Their biographies and details of their membership of Committees appear earlier in this report.

John Ormerod is the senior independent Director and provides an alternative to the Chairman as a contact for shareholders who feel their questions are not being addressed through the usual channels. He also chairs the Audit Committee and leads the annual performance review of the Chairman.

IndependenceThe 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. They bring to the Board’s deliberations considerable knowledge and experience from other areas of international business and public life. At least once a year, they meet formally as a group without any executive Directors being present and, in addition, the independent non-executive Directors meet informally as a group on a regular basis.

The Board do not consider Jeff Ubben to be an independent Director under provision A.3.1 of the Combined Code as a result of his interest in Value Act, a major shareholder in the Company. James Crosby was considered independent upon his appointment as Chairman in September 2009. He is also the senior independent Director of Compass Group plc and a Trustee of Cancer Research UK. Since the date of his appointment, he has resigned as senior independent Director of ITV plc. There have been no other significant changes to the Chairman’s commitments since the date of his appointment which could affect his ability to devote sufficient time to the Company’s affairs.

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.

All Directors are able, in appropriate circumstances, to take independent professional advice in respect of their duties, with any fees incurred being paid by the Company. In addition, all Directors may seek advice from the Company Secretary.

Board governance and oversightThe Board is responsible to the Company’s shareholders for the conduct and performance of the Company’s business. Having strong governance processes and oversight help drive the culture of the business so that it can better deliver on its responsibility to all of our stakeholders. During the year, governance oversight has been strengthened by:

>> The review of the governance structure and the adoption of a Board governance framework

>> A new Code of Conduct introduced to all staff in March 2010>> An externally supported helpline for raising concerns >> The appointment of a Head of Internal Audit and the bringing ‘in-house’ of the internal audit function

The Board has developed a Board governance framework which sets out the governance structure of the Board and its Committees. It brings together the matters reserved for the Board, the terms of reference and constitution of each of the Board Committees and the specific responsibilities allocated to the Chairman and the Chief Executive by the Board. It also prescribes the Board processes for the conduct of meetings, management of information, induction, development and performance reviews.

The Code of Conduct is predicated on our values and sets the foundation for consistent and strong ethical behaviour in all that we do. Any member of staff may raise a concern about suspected unethical or illegal behaviour via the helpline or via the internal process. The Code of Conduct is endorsed by the Chief Executive and its principles supported by the Board and the executive management team. A copy can be found on our website at www.misys.com.

The Chairman is responsible for the effective operation of the Board. The Board has an open style of communication, one which encourages an environment of constructive debate and healthy challenge between Board members. 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.

Corporate governance report




It is the responsibility of the Board to provide leadership and to set the strategic direction of the business whilst maintaining oversight of its operations and associated risks. The Chief Executive reports directly to the Board. He is supported in the management of the business and on the delivery of strategy by a team of senior executives, including the Chief Financial Officer, who together constitute Misys’ Executive Vice Presidents (EVPs). The EVPs report directly to the Chief Executive. The Chief Executive and the EVPs meet bi-weekly to review and discuss operational performance and other matters. Under the leadership of the Chief Executive, operational responsibility for the strategic development of the Group is shared between the Chief Executive and the EVPs, with input from other senior managers around the Group. The EVPs and other senior managers as appropriate report to the Board on their progress against the strategy as set by the Board, its businesses, product strategy, partnerships and new opportunities for the Group and any other matters of significance as relevant to the Board’s deliberations.

Non-executive Directors have unfettered access to all areas of the business and to key management personnel. Board members are also given the opportunity to meet other staff members and key senior executives at specific events arranged around Board meetings.

During the last 12 months, the Board:

>> reviewed its overarching governance processes in light of the changing governance environment

>> adopted a revised and updated Code of Conduct>> monitored performance against the turnaround strategy (including the continuing development and launch of the BankFusion product)

>> reviewed a number of specific opportunities to enhance shareholder value

>> reviewed talent and succession planning for senior management across the Group

>> improved its processes and oversight of the business through improved risk processes and reporting and the internal audit function

Immediately subsequent to the year end, we:

>> announced the proposed disposal of the majority of the Company’s holding in Allscripts and the return of capital to shareholders through a proposed Tender Offer

>> announced the appointment of Stephen Wilson as Chief Financial Officer

One of the responsibilities of the Chairman is to ensure effective communication around the Board. This is important to enable the Directors to discharge their duties effectively. The Board regularly reviews the quality and quantity of the information it receives and recommends adjustments as necessary or advisable. The Board has a forward looking rolling agenda that ensures that it is focused on and sets the right strategic priorities over the course of the year.

The Board meets at least eight times a year and aims to hold two of those meetings each year overseas. During the year, overseas Board meetings were held in New York and Raleigh (where the Allscripts business has its operations) in the United States. The March Board meeting is combined with a two-day in-depth review of Group strategy. This series of meetings also provides the Directors with an open forum within which to directly question the senior management team on their strategy and business areas and to challenge their thinking. In addition to the scheduled meetings, the Board held a number of ad-hoc meetings during the year as and when required, in particular to consider the proposed transaction described above. There is regular communication between Board members outside of the Board process including one on one calls and informal Board calls to ensure that the Board is kept appraised of matters between meetings.

Induction and ongoing developmentUpon appointment, all new Board members are provided with a comprehensive induction covering their duties as Directors of the Company, the business strategy and plans and recent business performance. As part of this process, they will meet with key leaders and senior managers across the business. Shareholders are also offered the opportunity to meet with new Directors should they wish to do so.

The Board is currently developing a programme of ongoing development comprising of a combination of technical and business updates and externally facilitated programs which the Directors are invited to attend at their discretion. These development sessions will be embedded within the Board rolling agenda.

Review of Board effectivenessIn April 2010, the Directors conducted a review of the effectiveness of the Board, its Committees and the respective chairmen, each of the Directors and the Chief Executive. The effectiveness review was facilitated by the Company Secretary and conducted by way of a detailed questionnaire and discussion with the Chairman and the senior independent Director, who led the review of the Chairman. The results of the effectiveness review were considered by the Board and each Committee respectively at the meetings held in May. The senior independent Director discussed the results of the review of the Chairman with the non-executive Directors without the Chairman present.

The review concluded that the adoption of the Board governance framework and the provision of more timely and better quality management information had enhanced its effectiveness. Risk oversight has improved and the Board is better informed about the risks facing the business. The Board and each Committee have identified areas for improvement and have adopted plans to monitor progress against the improvement needs identified.

As part of its effectiveness review, the Board has reviewed the availability of the non-executive Directors, including that of Jeff Ubben who is a non-executive Director and is due for re-election at the 2010 AGM, and the Board considers that he continues to be able to devote the necessary amount of time to the business of the Company.

During 2010/11, the Board intends to engage an external party in a review of its effectiveness. This will give the Board an independent perspective and enable it to benchmark its effectiveness against that of its peers.



Conflicts of interestThe Board has a formal system in place for the Directors to declare Situational Conflicts to be considered for authorisation by those Directors who have no interest in the matter being considered. In deciding whether to authorise a Situational Conflict, the non-conflicted Directors must act in the way they consider, in good faith, would be most likely to promote the success of the Company and they may impose limits or conditions when giving the authorisation, or subsequently, if they think this is appropriate. Any Situational Conflicts considered by the Board, and any authorisation given, are recorded in the Board minutes and in a register of conflicts which is reviewed annually by the Board. The Board has followed the prescribed procedures in deciding whether, and on what terms, to authorise Situational Conflicts and believes that the systems it has in place for reporting and considering Situational Conflicts continue to operate effectively.

Board committee frameworkAs part of the review of its governance structure, the Board reviewed and updated the structure of its committees and adopted updated terms of reference for each committee, copies of which are available on the Company’s website. There are four main Board committees: the Audit Committee; the Remuneration Committee; the Nomination Committee; and the Executive Committee. There is also a Treasury and Finance Committee (a management committee) that reports directly into the Board. The oversight role of the Committees and in particular that of the Audit Committee is complemented by the internal audit function. Further details on internal control are provided in the section below. Details of membership of the Board committees are set out earlier in this report.

During the year, as part of the Nomination Committee process the Board reviewed its own composition and that of its Board committees. It has agreed that following the resignation of Al-Noor Ramji from the Board it will re-examine the membership of the Board committees as and when any new appointments to the Board are made.

The Audit Committee is chaired by John Ormerod. Both the Committee chairman and Philip Rowley have recent and relevant financial experience. Following his appointment as EVP, Head of Banking, Al-Noor Ramji stepped down from the Committee with effect from 31 March 2010. The other member during the year was John King. The Committee met eight times during 2009/10, with the Chief Financial Officer, Group Financial Controller, the Head of Internal Audit and the external auditors, PricewaterhouseCoopers LLP (‘PwC’), also attending by invitation.

During the year, the Committee met in private session with PwC three times, with the Head of Internal Audit twice and with the Chief Financial Officer three times. In addition, the Committee Chairman also has regular meetings with each of PwC, the Head of Internal Audit and other senior management as and when required.

During the last 12 months, the Committee:

>> increased oversight of initiatives to strengthen financial controls>> appointed a new Head of Internal Audit and brought the function back within the business

>> updated its terms of reference strengthening further its oversight of the business and associated risks

>> reviewed and updated the ‘External Auditor Non-Audit Services’ and the ‘Raising Concerns’ (‘whistle blowing’) policies and established underlying processes and procedures for each including the appointment of an external third party host for the confidential raising concerns hotline and web reporting page

>> pre-approved all non-audit services to be performed by the Group’s external auditor over £50,000 in accordance with the policy

>> reviewed the treasury authority and control environment>> considered FRC and other relevant guidance throughout the year>> reviewed work undertaken in connection with the proposed Allscripts disposal and merger of Allscripts with Eclipsys

More generally, its duties include monitoring the financial reporting process including reviewing and where necessary challenging the integrity of all draft financial information prior to publication and reporting findings to the Board; to receive reports from the Group’s external and internal auditors; to monitor the Group’s risk management processes; to oversee and keep under review the relationship with the Group’s external auditor and to monitor their independence; to review the effectiveness and reliability of the Group’s system of internal control and the internal audit function; to review any changes to financial reporting requirements; and to consider matters arising from the annual Group audit. The Committee reports to the Board on its work at each scheduled Board meeting.

The Committee has a detailed rolling agenda that ensures that the Committee receives appropriate information far enough in advance to enable it to fulfil its responsibilities. This includes not only information from management but also detailed reports from the external auditor and from the Head of Internal Audit.

External auditorsThe Committee recognises that the independence of the Group’s external auditor is of paramount importance to shareholders and has established a policy and processes for monitoring and approving the nature and the level of related fees for non-audit services (e.g. accounting, tax or due diligence work) paid to the Group external auditors. If the external auditor is to be considered for the provision of non-audit services, their scope of work and fees must be approved in advance by the Chief Financial Officer and the Committee Secretary and, in the case of fees in excess of £50,000 for a single project, by the Committee (or if approval is required before the next meeting, by the Committee Chairman). This will generally involve a competitive tender process unless there are compelling commercial or timescale reasons to use the external auditor. At each meeting, the Committee is advised of any significant non-audit work awarded to the external auditor since the previous meeting and the related fees. At the July meeting, the Committee receives a full report of fees, both audit and non-audit, from the external auditor for the past financial year.




In fiscal year 2009/10, non-audit and audit related fees paid to the external auditor amounted to £4.6m: the bulk of these fees (£3.0m) related to services in connection with the proposed transaction. On several occasions during the period, the Committee has considered in detail the nature and level of non-audit services provided by the external auditor and the related fees. The Committee challenged and in some instances refused proposals in respect of non-audit work to be performed by the external auditor but in general accepted management’s requests to use the external auditor for most of the relevant work on the proposed transaction for a variety of reasons, including their knowledge of the Group, the audit related nature of the work and the need to maintain confidentiality.

The Committee has a policy prohibiting the hiring of former employees of the external auditor associated with the Company’s audit into certain roles within the Group within two years following their association with the audit, unless the Chairman of the Audit Committee gives prior consent. Annually, the Committee is advised of any new hires caught by this policy. No such circumstances arose in the year ended 31 May 2010.

The Committee monitors on an ongoing basis the relationship with the external auditor to ensure its continuing independence, objectivity and effectiveness. By reference to the external auditor’s litigation record, financial assets, structure of the firm and the level of its professional indemnity insurance cover, the Committee determines the external auditor’s financial stability and assesses the likelihood of its being able to meet any liabilities arising from the audit engagement.

It is considered that the external auditor has carried out its obligations in an effective and appropriate manner and on that basis a proposal will be made for its re-appointment at the AGM.

The Committee also interacts with the Remuneration Committee in respect of compensation policies, risks and practices for senior executives of the Company. The Committee is satisfied that the current policies and practices are appropriate and consistent with good governance and the long-term objectives of the Company.

As a result of its work during the year, the Committee has concluded that it has acted in accordance with its terms of reference and has ensured (as far as practically possible) the independence of the external auditor. The Chairman of the Committee intends to be available at the AGM to answer any questions on the work of the Committee.

The Nomination Committee is chaired by James Crosby. It consists of all the independent non-executive Directors and the Chairman. The Chief Executive is consulted on all matters of Board succession and has a standing invitation to attend. The Committee met twice during 2009/10. It leads the procedure for the appointment of new Directors to the Board and considers the ongoing succession of the Board and its Committees making recommendations to the Board for appointments as appropriate.

The Committees’ terms of reference are to oversee the search and selection process for new Directors having due regard to the current composition of the Board, ongoing succession and existing skills of Directors.

During the last 12 months, the Committee:

>> exercised oversight of executive succession through the full Board at its meeting in November

>> updated its terms of reference>> agreed the recommendation for the re-appointment of certain Directors at the 2009 AGM

>> considered Board succession plans following the appointment of Al-Noor Ramji as an executive to the Company, taking into account the current mix of skills and experience on the Board

>> considered the appointment of an executive Director to the Board>> reviewed its effectiveness

All non-executive Directors have letters of appointment that allow for an initial appointment period of three years. Once a Director has been in office for a period of six years, s/he will be subject to a rigorous review by the Nomination Committee before being recommended for re-appointment.

Directors retire from office and are nominated for election or re-election at the AGM in accordance with the Articles of Association rotation provisions. Consequently, Mike Lawrie and Jeff Ubben will both retire at the 2010 AGM and seek re-election.

The Remuneration Committee is chaired by John King. Details of the Committee’s main functions, Directors’ remuneration and the Group’s remuneration policies are set out in the remuneration report.

The Executive Committee is chaired by Mike Lawrie. It is comprised of three or more Directors including the Chief Executive and the Chairman. It facilitates and assists the Chief Executive in making decisions on how best to progress the strategy or objectives set by the Board of Directors between meetings of the Board. The Committee focuses in particular, but not exclusively, on business development opportunities which enhance value for shareholders. The Committee may only operate within the authorities (general and specific) delegated by the Board to the Chief Executive and has no authority to change strategy or objectives set by the Board.

Treasury and Finance CommitteeThe Treasury and Finance Committee is chaired by the Chief Financial Officer. It was formed during the year as part of the review of the governance structure and is comprised of the previous Treasury Committee and the General Purposes Committee. It is a management committee that reports into the Board. Its duties among other things include oversight of treasury policy and arrangements, monitoring of pension plan funding and to review and approve the insurance arrangements for the Group with the exception of the D&O Insurance arrangements which are approved by the Board.



The attendance record of Directors at Board and Committee meetings held during the year is as follows:

Audit Remuneration Nomination Director Board Committee Committee Committee

Sir James Crosby 14 (14) – 5 (6) 1 (2)Sir Dominic Cadbury (retired 30 Sept 2009) 4 (4) – 3 (3) 1(1)M Lawrie 14 (14) – – –J G King 14 (14) 8 (8) 6 (6) 2 (2)J Ormerod 13 (14) 8 (8) 6 (6) 2 (2)A Ramji (resigned 31 March 2010) 12 (12) 4 (7) 3 (5) 1 (1)J Ubben 14 (14) – – –P Rowley 14 (14) 8 (8) 6 (6) 2 (2) Figures in brackets indicate the maximum possible number of meetings each Director could have attended during the period. Al-Noor Ramji did not attend Board Committee meetings whilst he was in discussions to join the Company as EVP, Head of Banking.

All the Directors then in office attended the 2009 AGM with the exception of Jeff Ubben who was unable to attend due to other pressing business matters.

Relations with shareholdersThe Company strongly believes in the importance of building a strong relationship with its investors. The Chief Executive and the Chief Financial Officer hold briefing meetings with financial analysts and institutional shareholders, including presentations following the interim and final results announcements, and their views are communicated to the Board.

Periodically, business and market briefings are held to ensure that the analysts and investing community receive a broader view of the Group’s operations and the issues faced by the business. For example, in March 2010 we launched our BankFusion product to investors and analysts and a series of investor presentations were held when we announced the proposed Allscripts transaction. The Chairman, the senior independent Director and the non-executive Directors are also available to meet with shareholders on request.

We also engage fully with our private investors through the Company’s website (www.misys.com), the Annual Report and financial statements, the interim report, the interim management statements and the AGM.

All the Directors aim to attend the AGM, which provides shareholders with the opportunity to question the Chairman and the Board. The Company responds as necessary to enquiries from individual shareholders on a wide range of issues.

All of our communications with shareholders are conducted in line with our environmental approach. We hold the majority of our events via webcast and conference calls and we encourage all of our private investors to receive communications via e-communications. Please visit our website to view previous presentations, webcasts and documents. Further details are contained in the Investor information section at the back of this Annual Report.

Internal controlThe Board is responsible for the Group’s system of internal control, which covers all aspects of the business, and for reviewing its effectiveness. In recognition of this responsibility, the Board sets policies and seeks assurance that the system of internal control is operating effectively. The system of internal control, which covers strategic, operational, financial and compliance areas, is designed to support the achievement of the Group’s objectives and strategies and to identify, evaluate and manage the related risks.

The Group’s system of internal control, and the review of its effectiveness, are in accordance with the Turnbull guidance.

During the year, the Audit Committee has reviewed the effectiveness of the system of internal control on behalf of the Board, to which it regularly reports. It carried out this review principally by means of discussions with management on significant risks; a specific review of plans for, and the results of, internal and external audit work; and other relevant reports. The Board considers the findings of the Audit Committee and determines where there are any significant internal control failings or weaknesses that need to be addressed ensures that appropriate action is taken.

The following section summarises the Group’s system of internal control, which comprises a number of distinct individual processes and procedures that, when taken together, provide reasonable, but not absolute, assurance against material misstatement or loss.

Risk managementA risk management process has been developed by the Group which identifies, evaluates and manages the key strategic, operational, financial and compliance risks that are considered important to the Group. This process involves a formal semi-annual exercise facilitated by Internal Audit to review and update the key risks facing the Group. The results of this exercise are presented to the Board for review and consideration. As part of this process, a separate risk assessment is also performed for the Allscripts business and is incorporated into the overall Group risk assessment.

The business risks and controls are evaluated by executive management who determine which risks, in their opinion, are the most significant to the Group overall. Relevant senior executives are given responsibility to deal with any items requiring action and decisions are then taken as to the most appropriate method of managing the risks. The Audit Committee also considers any significant control matters raised in reports from management and the internal and the external auditors and reports its findings to the Board. Where weaknesses are identified, the Audit Committee requires appropriate action to be taken by management and may request that Internal Audit perform a specific review into the areas of weakness as required.

Strategic planning and succession planning Annually, the Board participates in a strategic planning review prepared by executive management and they also undertake a review of the strength of the senior management team and the associated succession planning in place. The strategic review considers the economic climate, the market and other factors affecting the ongoing performance and plans for the Group. This review provides the overall framework for business planning and, together with the annual review of talent, which takes place in November each year, considers the resources needed to deliver the Group’s plans.




Financial monitoring and reportingThe Board approves an annual operating budget. The Group operates a system of regular forecasts of expected performance against the budget and these are reviewed by executive management and the Board. The actual results, including key performance indicators, are reported on a monthly basis and the monthly and cumulative results are compared with the budget, the latest forecast and with the prior year results.

During the year, the Group strengthened its internal financial controls through a number of initiatives, including restructuring our global finance organisation. This involved, for example, increased off-shoring of financial transaction processing to Shared Service Centres in Bangalore and Manila and the development of a single Group Analysis & Reporting Function. A semi-annual management self assessment and certification process against the requirements of the Group’s Accounting and Controls Manual was introduced on a quarterly basis. All units report any items which may have a significant impact on the results of the business or where the accounting treatment may be subjective or an alternative accounting treatment may exist. These items are reviewed by the central finance team and the external auditors and are reported to the Audit Committee. This process has enhanced the visibility of large and/or unusual items in the accounts and ensured that the accounting treatments are properly reviewed and agreed. Further improvements were made in working capital and cash management monitoring and reporting procedures. In addition, the Group strengthened its procedures for monitoring exposures and reviewing its foreign currency hedging strategy to mitigate risk. The Treasury Committee was disbanded and a new Finance and Treasury Committee was formed during the year to review and approve relevant treasury and financing issues. Other improvements in financial controls were also introduced as a result of the work of a Controls Improvement Steering Group which was established during the year. In addition to the above, the Internal Audit function was brought back within the business and refocused on financial control matters.

Delegated authoritiesA clearly defined management and organisational structure has been established with defined responsibilities retained by the Board. Furthermore, there are established limits of authority delegated to management at both Group and business unit level for the approval of major development projects and contractual and other commitments relating to revenue and capital expenditure. Authority levels are reviewed periodically and are approved by the Board, executive management and/or the business units as appropriate

Investment appraisalsPotential capital investment or acquisition opportunities are reviewed rigorously against the Group’s requirement for investment return, growth potential and normal terms and conditions prior to contractual commitment.

System of operating unit control proceduresBusiness unit performance and internal control are monitored by regular business unit management meetings. Financial controls and procedures are detailed in a Group Finance Manual which has been updated during the year. Central and regional finance functions perform an oversight monitoring role and this has been strengthened in the year to focus on high risk areas such as treasury and cash management.

Compliance certificates are completed by each business unit’s general manager and the Chief Financial Officer who are required to certify in writing compliance (or identify cases of non-compliance) with the Group’s policies and procedures, including the internal financial control and raising concerns policies. Local finance managers are required to certify that accounts are prepared in accordance with International Financial Reporting Standards (IFRS) and Group policies.

The Group’s principal subsidiary, Allscripts, is listed on NASDAQ, requiring it to comply with a number of financial reporting responsibilities to its shareholders governed by the US Securities Exchange Act 1934. These additional responsibilities include publicly reporting that the controls existing within Allscripts over external financial reporting have been documented and tested in accordance with the requirements of s.404 of the US Sarbanes-Oxley Act 2002. The Misys Chief Executive chairs the Allscripts Board and he is joined on that Board by one of Misys’s independent non-executive Directors and the Misys Chief Financial Officer. They are able to assess the quality of the internal controls based on discussion with Allscripts executives and the information and reports received. Regular meetings also take place between the Misys Chief Executive and Chief Financial Officer and the Allscripts leadership team to consider strategy, operational matters and financial performance.

Internal auditThe Internal Audit function was previously outsourced to KPMG but in October 2009 the Group appointed a Head of Internal Audit. The Head of Internal Audit facilitates the Group’s risk management process. This is approved by the Audit Committee and forms the basis of the risk-based internal audit plan.

The reviews performed by Internal Audit, as part of its annual plan, provide objective assurance over the processes and controls in place to manage selected key risks, making recommendations for business and control improvements as required. Actions are agreed in response to its recommendations and these are followed up by the Internal Audit function and reviewed with the Audit Committee to ensure that the required actions are implemented and that satisfactory control is maintained. Meetings are held periodically between the Audit Committee and the Head of Internal Audit at which executive management is not present. On an annual basis, the Audit Committee reviews the remit and effectiveness of the Internal Audit function.

Summary and conclusionThe process and systems described above have been in place during the financial year ended 31 May 2010 or were adopted during the year in response to changes in the risk profile and remained in place up to the date of the approval of the Annual Report and Accounts.

On behalf of the Board

Tom KilroyCompany Secretary26 July 2010



Directors’ remuneration report

Dear Shareholder

I am pleased to present the report by the Remuneration Committee on Directors’ remuneration for the year to 31 May 2010.

This past year has been one of progress for Misys: developing new solutions and services; growing revenue; and significantly improving profit. Misys continues to execute well against the multiyear turnaround plan.

The economic climate has been one of the most difficult in modern history. Our challenge has been to attract and retain talented people to help us execute our turnaround plan and to meet the aspiration of being leaders in the markets that we serve. This ambition is closely aligned with the interests of shareholders and guides our remuneration strategy.

We implemented changes to our remuneration strategy in 2008/09 which have served us well and provide a robust framework for executive remuneration, enabling us to continue to attract and retain the best people despite the challenging business environment. As well as considering current practices the Remuneration Committee continues to monitor how well incentive awards made in previous years align with the Company’s performance. The Committee is confident that there has been and remains a strong link between performance and reward.

In 2009/10 there were no changes to our remuneration policies or incentive schemes. Awards made to senior management were consistent with those made in the previous year.

In line with the majority of our employees, the Chief Executive and Executive Vice Presidents (EVPs) did not receive an increase in basic salary, reflecting the current economic climate. The Remuneration Committee considers that there is an appropriate balance between fixed and variable compensation.

The remuneration strategy agreed in 2008/09 provides share awards linked to the delivery of stretching medium-term revenue and operating profit goals, which complement the longer term earnings per share growth targets in the long-term share incentive plans. The Remuneration Committee believes that aligning rewards with performance builds shareholder value.

I hope that you are able to support the policies set out in this Report at the AGM on 29 September 2010.

John KingChairman, Remuneration Committee 26 July 2010




The remuneration report has been prepared by the Remuneration Committee and approved by the Board for submission to shareholders at the 2010 AGM.

This report has been prepared 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. Shareholders will be asked to approve an advisory resolution on the report at the 2010 AGM.

The auditors are required to report on the Directors’ Emoluments table and the tables of Share Options and Long Term Incentive Plans along with all associated footnotes. Accordingly, these tables and footnotes form the audited section of this report.

The Remuneration CommitteeThe members of the Remuneration Committee during the year were:

>> John King (Committee Chairman)>> Sir Dominic Cadbury (retired 30 September 2009)>> James Crosby>> John Ormerod >> Al-Noor Ramji (resigned 31 March 2010)>> Philip Rowley

Each of the non-executive Directors on the Committee is regarded by the Board to be independent. James Crosby was considered to be independent at the time of his appointment to the Board.

In September 2009 and following a formal selection process, the Committee engaged Deloitte LLP to provide independent advice to the Committee in relation to market practice and remuneration and incentive strategy and design. 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 and general employment matters. Towers Watson advises the Company on its UK pension arrangements.

The Committee also consults with the EVP General Counsel & Company Secretary, the Chief Executive, the Chief Financial Officer and the Head of Human Resources. No member of the Committee, nor any party from whom advice was sought, participated in discussions relating to their own remuneration.

The Committee met six times during 2009/10 with Committee members attending over 90% of meetings. Full details of the attendance at meetings is shown in the corporate governance report.

The Committee is responsible for agreeing the framework and broad remuneration strategy and policy for the executive Directors and other senior executives. The policy is designed to support the business growth agenda and attract, retain and motivate talented leaders. The Committee determines the individual remuneration and benefits packages for the executive Directors and EVPs ensuring that they are structured to reward performance and not failure. The Committee is also responsible for reviewing and setting the fees of the Chairman, although the Chairman is not present during any discussion relating 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, and all awards and option grants made under each of the Company’s share incentive plans. Achievement against performance targets is monitored by the Committee.

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

During the last 12 months, the Committee has:

>> considered remuneration issues arising under the proposed transaction

>> in recognition of the difficult global economic backdrop frozen executive Director and the majority of staff salaries for the year 2009/10

>> appointed new advisors, Deloitte, in recognition of the international scope of remuneration advice required

>> set challenging business performance targets for annual bonuses designed to ensure that executives are paid for performance

>> reviewed and updated its terms of reference

The Company is transitioning from phase two of its turnaround programme, ‘win more’, to the final phase of its transformation agenda, ‘lead’, and has focused the remuneration philosophy to align with the business growth strategy. It recognises that in order to deliver the growth strategy the Company needs to be able to attract the best available global talent in all 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.

Remuneration principlesThe Committee has set forth the following general reward principles for the Company:

>> reward policies are designed to support the development of Misys as a global employer of choice

>> total remuneration opportunity is targeted at market-competitive levels

>> rewards are based on performance >> employees have the opportunity to participate in ownership of Misys shares

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

The Committee seeks to provide total remuneration packages for executive Directors and other senior executives that are appropriate to the needs of Misys as a global applications software and services company and that are competitive. The following reward principles apply to the remuneration of executive Directors:

>> a significant proportion of total compensation is performance-related >> performance-linked incentive awards are designed to encourage executive Directors to create long-term shareholder value and to align their personal interests with the challenges that the Company faces

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

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

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



In applying its remuneration principles in 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.

Remuneration policy for executive Directors and EVPsThe table below summarises the Company’s policies in respect of each of the key elements of executive Directors’ and EVPs remuneration.

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 and offered at no more than median market practice

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

>> Supports alignment with shareholders’ interests

In each year, a significant portion of the Chief Executive’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 and an average for the EVP population.

During the year, an in depth benchmarking exercise was completed in respect of executive Directors and EVPs against global practices of companies of similar size and complexity. The benchmarking took into consideration both the UK and US markets in recognition of the significant presence and the need to retain and attract staff in both jurisdictions. The benchmarking results were considered by the Committee when considering the total reward packages for the Chief Executive and other EVPs at the level immediately below the Board.

0 10 20 30 40 50 60 70 80 90 100

CEO 30% 40% 30%

35% 35% 30%

Salary Bonus Long-term incentives

EVPs




Components of the remuneration package

SalaryBase salaries are reviewed on an annual basis. When considering the fixed element of remuneration, full regard is given to the total remuneration package including variable and deferred pay. In line with the majority of staff, the Chief Executive and EVPs did not receive a pay increase in the fiscal year 2009/2010.

The Chief Executive is domiciled in the United States so his annual base salary is paid to him in US dollars. During the year and after annual review with effect from 1 August 2010, it was as shown in the table below: 2008/09 2009/10

M Lawrie US $1,088,7001 US $1,088,7001

1 As noted in last year’s report, Mike Lawrie’s salary is disclosed in US$ in the unaudited

section of this report to facilitate year on year comparisons.

Base salary is the only element of the remuneration package which is pensionable.

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 2009/10 the overall annual bonus potential for the Chief Executive is dependent upon his 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 on-target annual bonus achievable for the Chief Executive is 100% to 120% of salary, with a maximum bonus award of 200% of salary.

For the year just ended, the Remuneration Committee determined the annual bonus payment for the Chief Executive 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

As a result, taking into account the extent to which performance objectives were met, the Remuneration Committee approved an annual bonus payment of 200% of base salary for the Chief Executive, half of which will be satisfied in cash and half of which will be deferred into shares for a period of one year.

Medium and Long-Term Share IncentivesIn 2009/10, the Chief Executive received awards of Misys Omnibus Plan share options and performance shares of 75% of salary in performance shares and 150% of salary in share options as disclosed in the Share Options and Share Award tables.

Vesting of the awards will be subject to growth in adjusted EPS over the performance period as shown in the table below:

Compound annual growth rate Percentage of total award of Misys EPS over performance period shares that will vest

Less than 10% nilFrom 10% to 12.5% From 25% to 100% on a straight-line basis12.5% or more 100%

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

As part of his annual bonus arrangements, the Chief Executive also received an award of shares under the bonus deferral arrangements which were matched 1:1. The matching shares 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.

Op

erat

ing

pro

fit

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

Dilution limitsThe Company operates within the dilution limits set out in its share plans, which restrict dilution to 10% of issued share capital over 10 years. 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.



Pensions The Company’s pension policy is to provide a defined contribution to executive Directors, either through the Company’s defined contribution pension plan or as an allowance for use in their personal pension plans. 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.

Other benefitsThe Chief Executive is eligible to receive certain benefits including private health insurance and life assurance cover, UK accommodation and expatriate tax advice. He is also eligible to participate in the savings-related share option schemes operated in the UK on the same terms as other employees.

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.

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

During the year, the level of fees was independently reviewed by Deloitte and it was agreed that fees should not be increased. Accordingly, the fee levels for the non-executive Directors for the current year are as set out below: Fees

Chairman (all inclusive fee)1 £180,000

Basic fee £40,000Additional fee for the senior independent Director £20,000Additional fee for chairing the Audit Committee £8,000Additional fee for chairing the Remuneration Committee £8,000Additional fee for chairing the Nomination Committee £5,000Additional fee for sitting on the Allscripts Board2 (USD) $40,000 1 The Chairman does not receive any additional fees in respect of his appointment

to any of the Committees. James Crosby also receives re-imbursement for a proportion of his secretarial support costs. While he was Chairman, Sir Dominic Cadbury had secretarial support provided by Misys.

2 During the year, Sir Dominic Cadbury, Mike Lawrie and John King all served on the Allscripts Board. However, Sir Dominic Cadbury and Mike Lawrie did not receive any fee. In addition to the US dollar fee paid by Misys to John King stated above, Allscripts pays him a Board fee of US $40,000.

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.

Directors’ contractsThe contractual arrangements with each executive and non-executive Director who served in the year are summarised below:

Date of current contract/ Notice period/unexpired letter of appointment term of appointment

M Lawrie 13 October 2006 12 months; elected at the 2007 AGM and to be put forward for re-election at the 2010 AGM

Sir Dominic Cadbury 13 March 2000 Retired from the Board on 30 September 2009

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

A Ramji 25 January 2005 Resigned on 31 March 2010

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

J Ubben 16 January 2007 1 month; elected at the 2007 AGM and to be put forward for re-election at the 2010 AGM




Directors’ interests in sharesThe interests of Directors in the ordinary shares of the Company are set out below. All interests are beneficial.

At 1 June 2009 At 31 May 2010 (or date of (or date ceased appointment to be a Director Number of shares if later) if earlier)

M Lawrie1,3 630,535 1,303,411Sir Dominic Cadbury3,4 705,000 705,000Sir James Crosby nil 53,912J Ormerod 50,000 50,000J King3 150,000 150,000A Ramji4 24,536 24,536P Rowley 27,305 27,305J Ubben1,2 140,764,642 146,756,217 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 219,370 and 5,991,575 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.

2 140,764,642 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 and John King are investors in Allscripts and as such have an interest in 70,000 and 10,000 shares of common stock in Allscripts respectively. As at the date that Sir Dominic Cadbury ceased to be a Director, he held 10,000 shares of common stock in Allscripts.

4 Sir Dominic Cadbury retired as a Director on 30 September 2009 and Al-Noor Ramji resigned as a Director on 31 March 2010.

There have been no changes in Directors’ interests in shares of the Company between 31 May 2010 and 26 July 2010.

Performance graph The 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 2010 of £100 invested in Misys plc on 31 May 2005 compared with the value of £100 invested in the FTSE TechMark All-Share Index plotted over the five year period.

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 79,558 share options. He also sits on the Board of Trustees of Drexel University, for which he does not receive any compensation.

180

160

140

120

100

80

60 May 05 May 06 May 07 May 08 May 09 May 10

Valu

e (£

)

MisysFTSE TechMark All-Share Index



Directors’ emolumentsThe amounts payable by the Company to each Director in respect of qualifying services for the financial year 2009/10 are set out below. These figures exclude share benefits, which are shown separately. No Director has waived any emoluments other than as explained earlier in this remuneration report with regard to serving on the Allscripts Board.

Total 2010 (or from Base Benefits Car Other date of salary/fee Bonus1 in kind2 allowances payments appointment) Total Pension contributions

2010 2009 20103 2009

Executive Directors M Lawrie4 $1,088,700 $2,177,400 $69,989 – – $3,336,089 $3,354,197 $217,740 $217,740

Non-executive Directors Sir Dominic Cadbury £60,000 – – – – £60,000 £180,000 – –James Crosby5 £137,167 – – – £16,149 £153,316 £17,500 – –J Ormerod £68,000 – – – – £68,000 £68,000 – –J King6 £98,160 – – – – £98,160 £74,801 – –A Ramji7 £33,333 – – – – £33,333 £40,000 – –P Rowley £40,000 – – – – £40,000 £23,333 – –J Ubben £40,000 – – – – £40,000 £40,000 – – 1 Half of the bonus is payable in cash and half is normally deferred into cash or shares. For the 2009/10 bonus payment half was deferred into shares. The performance conditions for

the 2009/10 Annual Bonus Plan for Mike Lawrie were based on a range of Group operating profit targets and specific operational and individual objectives set at the beginning of the financial year.

2 Benefits in kind include those benefits that are normally taxable in the UK. For M Lawrie, this includes accommodation whilst working in the UK. This amount has been converted to US dollar at an exchange rate of 0.6270 UK pounds to the dollar, being the average rate for the financial year 2009/10. The amount for Mike Lawrie also includes his US-based private medical and dental insurance with a value of US $14,041.

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 Sir Dominic Cadbury retired as Chairman immediately following the AGM on 30 September 2009 and Sir James Crosby was appointed Chairman. The amount shown in other benefits for Sir James Crosby is in respect of the reimbursement of a proportion of his secretarial support costs and associated taxes. Sir Dominic Cadbury was provided with secretarial support by Misys.

6 The fee figure for John King includes £40,000 for sitting on the Misys Board, £8,000 for his Chairmanship of the Remuneration Committee and US $80,000 for sitting on the Board of Directors for Allscripts (of which US $40,000 is paid to him by Allscripts). The US dollar amounts are converted at an exchange rate of 0.6270 UK pounds to the dollar being the average rate for the financial year 2009/10.

7 Al-Noor Ramji resigned as a Director on 31 March 2010.




Share options At 1 June At 31 May Weighted 2009 or Granted Exercised 2010 or average Earliest date of during during date of exercise date of Expiry appointment the year the year resignation price exercise date

M Lawrie Transformation Incentive Plan – option award2 1,013,069 – – 1,013,069 208.00 03 Nov 2009 03 Nov 2016Savings-related3 2,361 – – 2,361 159.62 01 Oct 2010 01 Apr 2012Savings-related – 1,269 – 1,269 143.00 01 Oct 2012 01 Apr 20131998 Unapproved T14 485,451 – – 485,451 241.00 10 Aug 2010 10 Aug 2017Misys Omnibus Share Plan5 696,538 – – 696,538 123.00 02 Oct 2011 02 Oct 2018Misys Omnibus Share Plan – 464,673 – 464,673 184.00 13 Aug 2012 13 Aug 2019

The Company’s practice for all its share plans is to test EPS from continuing operations in the award period. Accordingly, the Remuneration Committee determined the base year EPS to be 7.5p, published in the 2008 Annual Report.

5 The Misys Omnibus Share Plan awards made in 2008 and 2009 will vest subject to growth in adjusted EPS over the performance period as shown in the table below:

Compound annual growth rate of Misys EPS over performance period % of award that vests

Less than 10% nilFrom 10% to 12.5% From 25% to 100% on a straight-line basis12.5% or more 100%

The base year EPS for the 2008 award, taking into account the impact of the Allscripts transaction, is 10.3p. The Remuneration Committee must also be satisfied regarding the overall results of the Company over the performance period.

1 The closing share price on 28 May 2010 was 225.10p. This was the nearest dealing day to the Company’s year end of 31 May 2010. The highest and lowest closing prices during the year were 260.10 p and 158.75p. No amounts were paid in respect of the awards of any share options.

2 Grant to Mike Lawrie under the Transformation Incentive Plan on 3 November 2006. The value of the award is equal to £2m based on the Misys share price at the time of grant and is equal to four times the amount of personal investment he was required to make in the business as a condition of receiving the award. The performance targets applied to this award are based on share price growth over a five year period set out in the following table, measuring share price as an average over 20 dealing days with straight-line vesting between each point. Vesting opportunities are on the third, fourth and fifth anniversaries of the grant. 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. The first testing date for this award was 1 November 2009, as a result of which 25.6% of the award vested.

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% 3 Executive Directors are eligible to participate in the Company’s SAYE scheme on the

same terms as other employees. 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 a performance target.

4 Grant to Mike Lawrie under the 1998 Unapproved Plan – TI made on 10 August 2007 at a value of 200% of base salary. 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%



Long Term Incentive Plans At 1 June Allocations Released At 31 May Market price Market price 2009 or date during during 2010 or date at date of at date of Final of appointment the year the year of resignation allocation release vesting date

M Lawrie Transformation Incentive Plan1 1,013,069 – 259,345 753,724 – 208.30 03 Nov 2011LTIP2 242,725 – – 242,725 – – 10 Aug 2010Misys Omnibus Share Plan – Performance Shares3 348,269 – – 348,269 129.00 – 02 Oct 2011Misys Omnibus Share Plan – Performance Shares – 232,336 – 232,336 184.10 – 13 Aug 2012Misys Omnibus Share Plan – Matching Shares – 309,782 – 309,782 184.10 – 13 Aug 2011MSEBP 136,622 – 136,622 – – 189.50 10 Aug 2009MSEBP 296,531 – 296,531 – 176.25 183.81 12 Aug 2009MSEBP4 – 309,782 – 309,782 184.10 – 13 Aug 2010 1 See footnote 2 under the Share Options table for details on performance conditions

for this award.

2 Awards made to Mike Lawrie under the Misys Long Term Incentive Plan on 10 August 2007 were in the form of contingent share awards and the performance targets applied are based on the Company’s TSR over a three year period as set out in the following table. The comparator group is the Top 30 TechMark companies ranked by market capitalisation at the date of award. Awards will only vest if the Committee is satisfied that Company’s TSR growth is an accurate reflection of the Company’s underlying financial performance.

TSR performance ranking % of award that vests

Below median 0%From median to top quartile Pro rata from 30% to 100%Top quartile 100% 3 See footnote 5 of the Share Options table for details on performance conditions for

this award.

4 The award made to Mike Lawrie in August 2009 under the Misys Senior Executive Bonus Plan is a deferral of half his annual bonus disclosed in the 2009 remuneration report. The awards released to Mike Lawrie in August 2009 were awards made in 2007 and 2008 under the Misys Senior Executive Bonus Plan that had vested.

Approved by the Board

John KingChairman, Remuneration Committee26 July 2010



Statement of Directors’ responsibilities

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 to 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 Company financial statements, which have been prepared in accordance with United Kingdom Accounting Standards give a true and fair view of the assets, liabilities, financial position and loss of the Company; and

>> 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.



Audit opinion for the Misys plc Group

Opinion on other matters prescribed by the Companies Act 2006In 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 70, in relation to going concern; and

>> 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.

Other mattersWe have reported separately on the Company financial statements of Misys plc for the year ended 31 May 2010 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 AuditorsLondon26 July 2010

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 2010 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 auditorsAs explained more fully in the Directors’ responsibilities statement set out on page 70, 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 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 statements An 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.

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 2010 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.



Consolidated income statement for the year ended 31 May 2010

All figures in £ millions Note 2010 2009

Continuing operations Revenue 1 782.3 692.4

Adjusted operating profit before: 1 148.1 117.5– Amortisation of acquired intangibles 1 (16.8) (12.4)– Gains on embedded derivatives 1 1.5 5.7– Translation exchange differences recycled from reserves 1 (2.0) (3.3)

Operating profit before exceptional items 130.8 107.5 Exceptional gains 5.2 69.3Exceptional losses (21.7) (61.4)

Net exceptional items 2 (16.5) 7.9

Operating profit 1 114.3 115.4 Finance costs (11.7) (20.6)Exceptional finance income (costs) 2 1.4 (2.1)Finance income 0.6 1.5

Net finance costs 6 (9.7) (21.2)

Profit before taxation 104.6 94.2Taxation before exceptional items 7 (37.0) (29.0)Taxation on exceptional items and exceptional finance income (costs) 4.6 17.1Exceptional tax (charge) credit 2 (10.8) 7.3

Taxation 7 (43.2) (4.6)

Profit for the year 61.4 89.6

Profit for the year – attributable to equity holders of Misys plc 44.3 82.0

Profit for the year – attributable to minority interest 17.1 7.6

Pence Pence

Basic earnings per share 9 8.4 16.0Diluted earnings per share 9 8.2 15.8

The accompanying notes form part of the consolidated financial statements.

Consolidated statement of comprehensive income for the year ended 31 May 2010 All figures in £ millions Note 2010 2009

Profit for the year 61.4 89.6Other comprehensive income: – Exchange difference on the translation of foreign operations 62.4 7.5– Actuarial (losses) gains recognised 27 (1.3) 1.3– Tax credit on items taken directly to equity 0.3 8.4

Other comprehensive income for the period (net of tax) 61.4 17.2Total comprehensive income for the year 122.8 106.8

Total comprehensive income attributable to: – Equity holders of Misys plc 82.1 94.5– Minority interest 40.7 12.3

Total income recognised in the year 122.8 106.8




Operating activities Net cash flow generated from operations 168.7 100.4Net interest paid 10 (10.6) (9.8)Net taxation paid (6.3) (10.0)

Net cash flow from operating activities 151.8 80.6

Investing activities Acquisitions and disposals of businesses 11 (2.9) (150.5)Expenditure on developed software (31.8) (28.4)Other capital expenditure and financial investment 12 (10.9) (22.2)

Net cash flow from investing activities (45.6) (201.1) Net cash flow from financing activities 13 (66.2) 167.4

Increase in cash and cash equivalents in the year 40.0 46.9Net cash and cash equivalents at the start of the year 63.1 27.1Differences on exchange 11.8 (10.9)

Net cash and cash equivalents at the end of the year 15 114.9 63.1

All figures in £ millions 2010 2009

Continuing operations Profit after taxation 61.4 89.6Net finance costs 9.7 21.2Taxation charge 43.2 4.6Amortisation and impairment charge of other intangible assets 31.4 34.2Depreciation and impairment charge of property, plant and equipment 9.3 8.7Share-based payment charge 18.3 11.9Differences between pension charge and cash contributions 1.2 1.0Net profit on disposal of businesses – (68.2)(Increase) decrease in inventories (0.3) 0.2Increase in trade and other receivables (38.7) (0.3)Increase (decrease) in payables and provisions 13.0 (18.9)Increase in deferred income 21.9 15.2Other non-cash movements (1.7) 1.2

Net cash flow generated from continuing operations 168.7 100.4

Consolidated statement of cash flows for the year ended 31 May 2010



Consolidated balance sheet as at 31 May 2010

All figures in £ millions Note 2010 2009*

Non-current assets Goodwill* 16 315.5 289.8Other intangible assets 17 224.4 202.1Property, plant and equipment 18 30.8 29.0Investments 19 7.1 6.1Trade and other receivables 20 1.6 5.8Derivative financial instruments 23 4.9 3.8Deferred tax assets 25 19.5 28.5

603.8 565.1

Current assets Inventories 2.1 1.6Trade and other receivables 20 285.7 222.1Derivative financial instruments 23 1.1 1.7Current tax asset 5.0 6.5Cash and cash equivalents 15 120.3 63.1

414.2 295.0

Current liabilities Trade and other payables* 21 (142.9) (129.7)Loans and overdrafts 22 (46.3) (2.4)Derivative financial instruments 23 (0.7) (1.4)Current tax liabilities* (31.2) (22.3)Provisions 24 (7.7) (6.7)Deferred income 26 (166.5) (138.6)

(395.3) (301.1)

Net current assets (liabilities) 18.9 (6.1)

Total assets less current liabilities 622.7 559.0

Non-current liabilities Trade and other payables 21 (5.9) (3.7)Loans and overdrafts 22 (73.1) (189.3)Derivative financial instruments 23 (2.0) (2.1)Deferred tax liabilities* 25 (11.1) (4.9)Provisions 24 (18.0) (19.1)Deferred income 26 (6.6) (2.4)Retirement benefit obligations 27 (4.3) (1.7)

(121.0) (223.2)

Net assets 501.7 335.8

Equity Share capital 5.9 5.9Share premium account 151.9 151.9Capital redemption reserve 0.3 0.3Other reserves 32 193.8 85.2

Equity shareholders’ funds 351.9 243.3Minority interest* 149.8 92.5

Total equity 501.7 335.8

* As required under IFRS 3, Misys has reassessed and finalised the provisional allocation of the Allscripts purchase price within the allowed 12 month period since the acquisition date and has restated the opening balances accordingly (see note 16).


Mike Lawrie26 July 2010



Consolidated statement of changes in equity for the year ended 31 May 2010

Capital Attributable to Share Share redemption Other the owners Minority Total All figures in £ millions capital premium reserve reserves of the parent interest equity

At 1 June 2009 5.9 151.9 0.3 85.2 243.3 92.5 335.8Total comprehensive income for the year – – – 82.1 82.1 40.7 122.8 Transactions with owners Share options settled from own shares – – – 2.9 2.9 – 2.9Exercise of Allscripts share options – – – – – 0.8 0.8Conversion of Allscripts 3.5% senior convertible debentures – – – 3.5 3.5 5.7 9.2Share-based payments – – – 12.9 12.9 5.4 18.3Deferred 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

for the year ended 31 May 2009 Capital Attributable to Share Share redemption Other the owners Minority Total All figures in £ millions capital premium reserve reserves of the parent interest* equity*

At 1 June 2008 5.5 67.3 0.3 5.2 78.3 – 78.3Total comprehensive income for the year – – – 94.5 94.5 12.3 106.8 Transactions with owners Shares issued in the year (net of expenses) 0.4 84.6 – – 85.0 – 85.0Dividends paid – – – (23.9) (23.9) – (23.9)Exercise of Allscripts share options – – – – – 3.8 3.8Buyback of Allscripts shares – – – – – (15.2) (15.2)Acquisitions1 – – – – – 90.3 90.3Share-based payments – – – 9.9 9.9 2.3 12.2Deferred tax on share-based payments – – – (0.5) (0.5) (1.0) (1.5)

At 31 May 2009* 5.9 151.9 0.3 85.2 243.3 92.5 335.8

1 Minority interest related acquisitions reserves include £67.9m for Allscripts and £22.4m for Misys Healthcare Systems.

On 18 March 2008, Misys launched a conditional placing of 42,857,143 new ordinary shares, with a nominal value of 1 penny per share (the Placing Shares) at a price of 175 pence per Placing Share. During the year ended 31 May 2009, all of the Placing Shares were acquired by ValueAct Capital (acting through its general partner VA Partners I, LLC) pursuant to the underwriting commitment provided by it at the time of the placing. Proceeds of the issue generated share premium of £84.6m net of issue expenses of £3.0m.




Accounting policies

Basis of preparation 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.

The Group has adopted the following new and amended IASs and IFRSs as of 1 June 2009:

Amendment to IFRS 7 ‘Financial instruments – disclosures’ has been applied by the Group from 1 June 2009. The amendment requires enhanced disclosures about fair value measurement and liquidity risk. In particular, the amendment requires disclosure of fair value measurements by level of a fair value measurement hierarchy. The amendment does not have a material impact on the Group’s results or financial position.

IAS 1 (revised) ‘Presentation of financial statements’ – effective 1 January 2009. The revised standard prohibits the presentation of items of income and expenses (that is, ‘non-owner changes in equity’) in the statement of changes in equity, requiring ‘non-owner changes in equity’ to be presented separately from owner changes in equity in a statement of comprehensive income. As a result, the Group presents in the consolidated statement of changes in equity all owner changes in equity, whereas all non-owner changes in equity are presented in the consolidated statement of comprehensive income. As the change in accounting policy only impacts presentation aspects, there is no impact on earnings per share.

IFRS 8 ‘Operating segments’ which replaced IAS 14 has been adopted by the Group from 1 June 2009. IFRS 8 adopts a ‘management approach’ under which segmental information is presented on the same basis as that used for internal reporting purposes. Accordingly, the segmental information presented in note 1 has been prepared in accordance with the requirements of IFRS 8.

Amendment to IAS 36 ‘Impairment of assets’ has been adopted by the Group from 1 June 2009. Where fair value less costs to sell is calculated on the basis of discounted cash flows, disclosures equivalent to those for a value-in-use calculation should be made. The Group has applied the amendment and provided the required disclosure where applicable.

Amendment to IAS 38 ‘Intangible assets’ has been adopted by the Group from 1 June 2009. The amendment clarifies guidance in measuring the fair value of an intangible asset acquired in a business combination and it permits the grouping of intangible assets as a single asset if each asset has similar useful economic lives. The amendment has not resulted in a material impact on the Group’s financial statements.

Amendment to IFRS 2 ‘Share-based payment’ (effective 1 January 2009) deals with vesting conditions and cancellations. It clarifies that vesting conditions are service conditions and performance conditions only. Other features of a share-based payment are not vesting conditions.

These features would need to be included in the grant date fair value for transactions with employees and others providing similar services; they would not impact the number of awards expected to vest or valuation thereof subsequent to grant date. All cancellations, whether by the entity or by other parties, should receive the same accounting treatment. The Group has adopted IFRS 2 (amendment) from 1 June 2009. The amendment does not have a material impact on the Group or Company’s financial statements.

Amendment to IAS 23 ‘Borrowing costs’ applies to borrowing costs relating to qualifying assets for which the commencement date is on or after 1 January 2009.

IFRS 5 (amendment) ‘Non-current assets held for sale and discontinued operations’ is effective from 1 June 2009. The amendment provides clarification that IFRS 5 specifies the disclosures required in respect of non-current assets (or disposal groups) classified as held for sale or discontinued operations. It also clarifies that the general requirements of IAS 1 still apply, particularly paragraph 15 (to achieve a fair presentation) and paragraph 125 (sources of estimation uncertainty) of IAS 1. It is expected to have a material impact on the Group and Company’s financial statements next year if the proposed disposal of Allscripts is completed.

IAS 1 (amendment) ‘Presentation of financial statements’ has been applied by the Group from 1 June 2009. The amendment provides clarification that the potential settlement of a liability by the issue of equity is not relevant to its classification as current or non-current. By amending the definition of current liability, the amendment permits a liability to be classified as non-current (provided that the entity has an unconditional right to defer settlement by transfer of cash or other assets for at least 12 months after the accounting period) notwithstanding the fact that the entity could be required by the counterparty to settle in shares at any time. It is not expected to have a material impact on the Group or Company’s financial statements.

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:

>> Amendments to IFRS 2 ‘Share-based payments’>> Amendment to IAS 23 ‘Borrowing costs’>> Amendment to IAS 28 ‘Investments in associates’ (and consequential amendment to IAS 32 ‘Financial instruments: presentation’)

>> Amendments to IAS 32 and IAS 1 ‘Puttable financial instruments and obligations arising on liquidation’

>> Amendments to IAS 39 and IFRS 7 ‘Reclassification of financial instruments’

>> Improvements to IFRSs (May 2008)>> IFRIC 15 ‘Agreements for the construction of real estate’>> IFRIC 16 ‘Hedges of a net investment in foreign operations’>> IFRIC 18 ‘Transfer of assets to customers’>> Amendment to IAS 19 ‘Employee benefits’ was issued in May 2008>> Amendment to IAS 39 ‘Financial instruments: recognition and measurement’ was issued in May 2008

>> Amendment to IFRS 7 ‘Improving disclosure about financial instruments’

>> Amendment to IFRIC 9 and IAS 39 ‘Embedded derivatives’>> IFRIC 13 ‘Customer loyalty programmes’



The financial effect of IFRS 3 revised, IAS 27 revised, IFRS 5 (amended), IAS 28 (amended) and IAS 36 (amended) will be dependent on the circumstances surrounding the future transactions to which they will apply that are at present unknown.

The following interpretations and amendments to existing standards have been published and are mandatory for the Group’s accounting periods beginning on or after 1 January 2010 or later periods but the Group has not early adopted them:

IFRS 3 ‘Business combinations (revised)’ is required to be implemented prospectively to business combinations on or after 1 June 2010.

Annual improvements to IFRSs (2009) (most amendments effective 1 January 2010) and (2010)

IFRS 9, ‘Financial instruments’ (not yet endorsed by the EU)

IFRIC 19, ‘Extinguishing financial liabilities with equity instruments’.

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.

Any excess of the cost of acquisition over the fair values of the identifiable net assets acquired is recognised as goodwill. Prior to the adoption of IFRS, goodwill arising on acquisition was taken to reserves in accordance with UK GAAP. Any deficiency of the cost of acquisition below the fair values of identifiable net assets acquired (i.e. discount on acquisition) is credited to income in the period of acquisition.

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 cash flow statement 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.

The purchase method of accounting is used to account for the acquisition of subsidiaries by the Group.

The cost of an acquisition is measured as the fair value of the assets given, equity instruments issued and liabilities incurred or assumed at the date of exchange. Identifiable assets acquired and liabilities and contingent liabilities assumed in a business combination are measured initially at their fair values at the acquisition date, irrespective of the extent of any minority interest.

Inter-company transactions, balances and unrealised gains on transactions between Group companies are eliminated. Unrealised losses are also eliminated but considered an impairment indicator of the asset transferred.

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 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.



Accounting policies

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.

Onerous property contractsThe property 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.

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 the lower of carrying value or fair value less costs to sell.

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 signed 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 contract, revenue is recognised as normal but the corresponding receivable is shown as ‘accrued income’ on the balance sheet.

Initial licence fees (‘ILF’) comprise 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 signed 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 global 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. Hardware revenue is recognised when the risks and rewards of ownership have transferred upon delivery to the customer.



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.

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. 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 market values.

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 total recognised 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.

The interest elements of the lease obligations are charged to income on an actuarial basis over the period of the lease.

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

TaxationCurrent tax for the current and prior periods is provided at the amount expected to be paid (or recovered) using the tax rates and tax laws that have been enacted or substantively enacted by the balance sheet date.

Deferred tax is provided in full on timing differences which result in an obligation at the balance sheet date to pay more tax, or the right to pay less tax, at a future date, at tax rates expected to apply when the timing differences reverse based on tax rates and tax laws that have been enacted or substantively enacted by the balance sheet 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 it is regarded as more likely than not that they will be recovered. Deferred tax assets and liabilities are not discounted.

Resultant 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 at the balance sheet date.

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 their 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.



Accounting policies

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.

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 arising on consolidation represents the consideration, including acquisition costs, less the Group’s interest in the fair value of the identifiable assets and liabilities acquired.

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.

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 judgements about the value and economic life of such items. These economic lives for intangible assets are estimated at between four and twenty 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 costs incurred in respect of acquisition of subsidiaries are included in the cost of investment. Where the disposal of a subsidiary is not considered highly probable at the balance sheet date, related disposal costs are recognised in the income statement as incurred. This will change prospectively with the introduction of IFRS 3 revised.

Contingent considerationWhere part or the entire amount of purchase consideration is contingent on future events, the cost of acquisition initially recorded is a reasonable estimate of the fair value of amounts expected to be payable in the future.

The cost of acquisition is adjusted when revised estimates are made, with corresponding adjustments continuing to be made to goodwill until the ultimate outcome is known. These liabilities are reported under provisions in the balance sheet.

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 normally amortised on a straight line basis over the useful economic life, 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 on a straight line basis. Intangible assets acquired through a business combination are initially measured at fair value and amortised over their useful economic lives.

Estimated useful lives by major class of assets are as follows, with amortisation made on a straight line basis:

Acquired intangibles 4 – 20 years

Developed software 3 – 5 years

Third party software 3 – 7 years

It is proposed that future strategic developments such as BankFusion will be amortised in line with their expected future benefits.



Property, plant and equipmentProperty, plant and equipment is stated at cost less accumulated depreciation. 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:

Long leasehold property 50 years (or lease term if shorter)

Short leasehold property over lease term 1 – 13 years

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.

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.

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. Impairment losses recognised in the income statement on equity instruments are not subsequently reversed through the income statement.

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.

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.

Trade payablesTrade payables are recognised initially at fair value and subsequently measured at amortised cost using the effective interest method.

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.



Accounting policies

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.

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.

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) other than those of the functional currencies of the entities entering into the contracts. 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. 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.

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.

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.

InventoriesInventories are stated at the lower of cost and net realisable value. Cost includes expenditure incurred in acquiring inventories and bringing them to their existing location and condition.



Notes to the financial statements

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 resources 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 Allscripts, Banking, Treasury & Capital Markets (TCM) and Open Source. The ‘Corporate & others’ category includes Open Source and corporate costs as these operations are not reportable segments as required to be disclosed under IFRS 8. Corporate was previously known as Central Services. Global Services is considered as a horizontal function with performance assessed by the CODM in each of the defined operating segments.

Certain costs within the ‘Corporate & others’ segment are allocated to the other reportable segments based on revenue. Costs allocated to Allscripts are based on a shared service agreement between the Group and Allscripts.

Revenue, operating profit (loss) by business Corporate 2010All figures in £ millions Banking TCM Allscripts & others Total

Revenue 161.7 179.5 440.4 0.7 782.3 Adjusted operating profit 32.3 42.0 84.5 (10.7) 148.1Amortisation of acquired intangibles (1.0) – (15.8) – (16.8)Gains on embedded derivatives 1.4 0.1 – – 1.5Translation exchange differences recycled from reserves – – – (2.0) (2.0)

Operating profit (loss) before exceptional items 32.7 42.1 68.7 (12.7) 130.8Exceptional items (1.4) – (8.1) (7.0) (16.5)

Operating profit 31.3 42.1 60.6 (19.7) 114.3Exceptional finance income 1.4Net finance costs (11.1)

Profit before taxation 104.6 Taxation before exceptional items (37.0)Taxation on exceptional items and exceptional finance income 4.6Exceptional tax charge (10.8)

Taxation (43.2)

Profit for the year 61.4

Corporate 2009All figures in £ millions Banking TCM Allscripts* & others Total

Revenue 183.0 161.1 348.3 – 692.4

Adjusted operating profit 35.4 35.9 65.4 (19.2) 117.5Amortisation of acquired intangibles (1.1) – (11.3) – (12.4)Gains on embedded derivatives 4.2 0.6 – 0.9 5.7Translation exchange differences recycled from reserves – – – (3.3) (3.3)

Operating profit (loss) before exceptional items 38.5 36.5 54.1 (21.6) 107.5Exceptional items (1.6) (3.3) 40.4 (27.6) 7.9

Operating profit 36.9 33.2 94.5 (49.2) 115.4Exceptional finance costs (2.1)Net finance costs (19.1)

Profit before taxation 94.2 Taxation before exceptional items (29.0)Taxation on exceptional items and exceptional finance cost 17.1Exceptional tax credit 7.3

Taxation (4.6)

Profit for the year 89.6

* Allscripts comparatives include results for Allscripts Healthcare Solutions since acquisition on 10 October 2008.




1 Segmental analysis continuedAll revenue is derived from external customers. Revenue from no individual customer exceeded 10% of total Group revenue in the current or prior year.

The Corporate & others charge has decreased from £21.6m to £12.7m due principally to procurement and efficiency savings introduced during 2009. In addition, costs in relation to translation exchange differences recycled from reserves have decreased by £1.3m.

RevenueThe table below gives a list of the revenue streams by segment.

Corporate 2010 2009All figures in £ millions Banking TCM Allscripts & others Total Banking TCM Allscripts Total

Initial licence fees 40.3 51.3 69.6 – 161.2 57.4 40.2 45.5 143.1ASP revenue 0.2 3.5 31.6 – 35.3 0.1 3.3 19.1 22.5Maintenance 84.7 76.3 156.2 – 317.2 81.4 71.1 123.2 275.7Transaction processing – 10.2 99.4 – 109.6 – 11.3 88.3 99.6Global services 36.5 38.2 44.8 0.7 120.2 44.1 35.2 32.6 111.9Hardware – – 27.8 – 27.8 – – 20.0 20.0Other revenue – – 11.0 – 11.0 – – 19.6 19.6

161.7 179.5 440.4 0.7 782.3 183.0 161.1 348.3 692.4

There was no revenue for Corporate & others in 2009. For further details of the products and services, refer to the accounting policies and financial review sections.

During the year, Misys signed a contract with a customer to vary the terms of an existing contract and to grant the customer flexibility over the future use of its software. The consideration included a variation fee of £6.0m which has been classified as ILF revenue. As this is a variation fee, there will be no incremental maintenance fees chargeable going forward.

Other segmental information Corporate 2010All figures in £ millions Banking TCM Allscripts & others Total

Net assets (liabilities) Assets 118.1 137.3 711.3 51.3 1,018.0Liabilities (103.0) (87.3) (156.9) (169.1) (516.3)

15.1 50.0 554.4 (117.8) 501.7

Capital investment Goodwill & acquired intangibles – – – – –Developed software 11.6 6.5 13.4 0.3 31.8Other 1.7 1.1 10.5 1.6 14.9

13.3 7.6 23.9 1.9 46.7

Depreciation, amortisation, impairment and de-recognitionAcquired intangibles 1.0 – 14.8 – 15.8Developed software 5.0 3.9 3.0 – 11.9Other 3.2 2.6 7.0 0.8 13.6

9.2 6.5 24.8 0.8 41.3

Share based payment charge 1.0 1.0 13.7 4.0 19.7Employees (average number) 1,525 1,029 2,412 1,164 6,130



1 Segmental analysis continued Corporate 2009All figures in £ millions Banking TCM Allscripts & others Total

Net assets (liabilities) Assets* 115.0 99.9 573.6 71.6 860.1Liabilities* (88.7) (74.7) (147.3) (213.6) (524.3)

26.3 25.2 426.3 (142.0) 335.8

Capital investment Goodwill & acquired intangibles – – 343.6 – 343.6Developed software 10.9 6.7 10.8 – 28.4Other 1.7 1.6 24.1 13.8 41.2

12.6 8.3 378.5 13.8 413.2

Depreciation, amortisation, impairment and de-recognition Acquired intangibles 1.1 – 10.7 – 11.8Developed software 2.9 2.2 8.5 – 13.6Other 1.9 1.3 11.7 9.4 24.3

5.9 3.5 30.9 9.4 49.7

Share based payment charge 1.2 1.1 6.0 3.3 11.6Employees (average number) 1,375 1,044 2,021 971 5,411

Amortisation of other intangibles for 2010 within Allscripts includes £1.0m of amortisation relating to the acquisition of a perpetual licence for healthcare software which is being amortised over seven years and which is part of the adjusting item ‘amortisation of acquired intangibles’.

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 & others as these are managed centrally. Allscripts’ assets include all of the above items, including cash and taxation assets, as it is a separate listed entity.

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. Allscripts’ liabilities include all of the above items including overdrafts, taxation liabilities and retirement benefit obligations as it is a separate listed entity.

No impairment charge has been recognised in the current financial year. In 2009, an impairment charge of £6.4m was recognised in relation to an investment in iMedica Corp being surrendered. The £6.4m impairment was attributable to the Allscripts operating segment.

Misys 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 original headings below.

United Rest of Asia United States Middle East 2010All figures in £ millions Kingdom Europe Pacific of America and Africa Other Total

Revenue by destination 47.7 131.8 50.1 500.0 46.5 6.2 782.3Assets by location of operations 90.5 63.2 28.1 804.1 24.3 7.8 1,018.0Non-current assets by location of operations 36.5 39.2 1.7 499.4 0.4 2.2 579.4Capital investment by location of operations 7.2 6.5 0.6 31.4 – 1.0 46.7Employees by location of operations (average number) 402 543 2,077 2,902 111 95 6,130

United Rest of Asia United States Middle East 2009All figures in £ millions Kingdom Europe Pacific of America and Africa Other Total

Revenue by destination 39.3 131.9 49.5 409.3 51.1 11.3 692.4Assets by location of operations* 95.0 69.1 26.8 642.0 22.2 5.0 860.1Non-current assets by location of operations 35.3 38.0 1.8 453.4 1.3 3.0 532.8Capital investment by location of operations 17.3 7.5 0.6 386.7 – 1.1 413.2Employees by location of operations (average number) 485 532 1,718 2,468 98 110 5,411





2 Exceptional items All figures in £ millions 2010 2009

Restructuring activities and turnaround programme (A) (8.7) (27.5)Merger of Misys Healthcare Systems with Allscripts Healthcare Solutions (B) (3.1) (26.9)Costs on proposed disposal of Allscripts (C) (9.6) –Receipt from sale of legal claim (D) 3.9 –Exceptional refund of VAT (E) 1.3 –Currency swap – (4.7)Impairment of investment – (1.2)Loss on disposal of Medication Services Group (0.3) (1.1)Profit on disposal of businesses – 69.3

Exceptional items (16.5) 7.9Exceptional finance income (costs) (F) 1.4 (2.1)Tax credit on exceptional items and exceptional finance income (costs) 4.6 17.1Exceptional tax (charge) credit (G) (10.8) 7.3

Total exceptional items after taxation (21.3) 30.2

(A) Restructuring activities and turnaround programmeA total charge of £8.7m (2009: £27.5m) 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:

>> property costs £5.3m (2009: £13.7m) being a provision for onerous leases where in the current economic climate it has proved difficult to sublet vacant office space and costs associated with the closure of offices. This charge includes a £2.3m gain on the surrender of a property lease;

>> severance costs £3.4m (2009: £5.8m);>> the derecognition of intangible assets £nil (2009: £5.8m); and>> the creation of a customer support service centre £nil (2009: £1.9m).

These costs are analysed by business as follows:


Banking 1.4 1.6TCM – 3.3Allscripts – 0.2Corporate 7.3 22.4

8.7 27.5

There was a related cash outflow of £4.6m in the current year (2009: £15.4m).

(B) Merger of Misys Healthcare Systems with Allscripts Healthcare SolutionsA charge of £3.1m (2009: £26.9m) has been recognised in relation to costs incurred in the merger of the Misys Healthcare Systems business with Allscripts Healthcare Solutions to create Allscripts-Misys Healthcare Solutions, Inc. (“Allscripts”) on 10 October 2008.

These costs include a write-down in Allscripts of investments and intangible assets relating to that part of the business addressing smaller physician practices £nil (2009: £16.0m), integration costs £3.1m (2009: £8.6m) (including severance and consultancy costs) and onerous property costs £nil (2009: £2.3m). There is a related cash outflow of £3.3m (2009: £7.5m).

(C) Costs on proposed disposal of AllscriptsOn 9 June 2010, it was announced that the Group would dispose of its majority holding in Allscripts. Costs incurred up to 31 May 2010 totalled £9.6m relating to consultancy, legal and tax fees (Corporate £4.9m and Allscripts £4.7m). Further details of the transaction are given in note 39 (cash outflow: £3.8m).

(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 received in June 2010.

(F) Exceptional finance costsA credit of £1.4m has arisen as a result of supplemental interest on the refund of VAT (see E above). Last year £2.1m was charged being the unamortised balance of the transaction costs relating to the original $340m revolving credit and bridge facilities in connection with the acquisition of Allscripts.

(G) TaxationThe exceptional tax charge of £10.8m (2009: credit £7.3m) relates to the loss of future tax benefits following the restructuring of the US operations in anticipation of the proposed disposal of the Group’s stake in Allscripts, recognised as a £2.7m charge (2009: credit £2.6m) within current taxation and a £8.1m charge (2009: credit £4.7m) within deferred taxation.



3 Operating costs All figures in £ millions 2010 2009

Cost of sales 426.2 390.6Sales and marketing costs 79.1 69.1Administrative and other operating charges 146.2 125.2Exceptional items (note 2) 16.5 (7.9)

668.0 577.0

Included within operating costs are the following items by nature: All figures in £ millions 2010 2009

Research and development expenditure 103.9 100.4Capitalisation of developed software (31.8) (28.3)

72.1 72.1Amortisation of developed software 11.9 5.9Amortisation of other intangible assets 19.5 13.9Impairment and derecognition of intangible assets – 14.4Impairment and depreciation of property, plant and equipment 9.3 8.7Gain on disposal of property, plant and equipment – (0.1)Foreign exchange differences 1.9 (2.0)Cost of inventory recognised as an expense 27.0 17.8Operating lease costs – land and buildings 20.4 20.4 – plant and equipment 0.9 0.4

Details of employee costs are provided in note 5.

During the year, the Group obtained the following services from the Company’s auditor and its associates:


Fees payable to PwC LLP for the audit of the consolidated financial statements 0.6 0.9Statutory audit fees payable to associate members of PwC LLP 0.9 1.2Other fees in respect of assurance services required by legislation and regulation 1.6 1.9

3.1 4.0Tax services 2.4 0.6Other services 0.6 0.7

6.1 5.3

Tax fees include £1.7m relating to the proposed disposal of Allscripts (note 39).

The statutory audit fees for 2010 includes £0.2m additional fees in relation to the 2009 financial year.

4 Share-based paymentsIn the previous financial year, Misys acquired the Allscripts business (see note 16). Allscripts is listed on NASDAQ. Prior to acquisition, Allscripts had its own share options and awards schemes which continued to run post acquisition. This note summarises the IFRS 2 ‘Share based payment’ disclosure requirements for both Misys plc share option schemes and Allscripts-Misys Healthcare Solutions, Inc. share option schemes. During the year, the share-based payment charge was £19.7m (2009: £11.6m) of which the Allscripts charge was £13.7m (2009: £6.0m).

Misys plc share-based paymentsDuring the year ended 31 May 2010, the following material share-based payment arrangements existed:

No. of No. of options options Fair value Fair value granted in granted in per share of per share of Contractual 2010 2009 2010 grant 2009 grant lifeType of arrangement ‘000 ‘000 £ £ Years

Long-Term Incentive Plan – – – – 8Misys 1998 Unapproved Share Option Plan (Type 1) – – – – 10Misys Share Award Plan 15 90 1.84 1.65 10Misys Senior Executive Bonus Plan 1,766 1,321 0.67 1.76 5Sharesave (UK) 312 285 0.791 0.661 3Sharesave (non UK) 413 403 1.111 0.581 3Transformation Incentive Plan:– TIP (nil cost) – 2,111 – 0.29 10– TIP (market value) – – – – 10Restricted Stock Units Contract – – – – 2Omnibus Share Plan 6,464 8,114 1.661 0.951 10

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), the Misys 1998 Unapproved Share Option Plan (Type 1) and the Transformation Incentive Plan (TIP) are shown in the Directors’ remuneration report.




4 Share-based payments continuedIn the years ended 31 May 2008, 2009 and 2010, 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) and restricted stock units contract;>> 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.

Share-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 one year (2009: one year) 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:

2010 2009 2008

Risk-free interest rate % 0.6 – 2.2 0.5 – 5.0 3.8 – 5.8Dividend yield % nil nil 0 – 3.3Volatility1 of Misys plc ordinary shares % – Share option schemes – nil cost 41 – 57 39 – 65 23 – 40 – Share option schemes – market value 42 – 46 41 – 61 40 – 51 – Savings-related share option schemes 45 – 46 38 – 46 32 – 36Expected lives (years) of options granted under: – Share option schemes – nil cost 1 – 6.5 0.4 – 6.5 0.6 – 3.2 – Share option schemes – market value 3.0 – 6.5 3.0 – 6.5 4.3 – 6.5 – Savings-related share option schemes 3.1 – 3.3 3.1 – 3.3 3.1 – 3.4

The following additional assumptions have been used for the Monte Carlo option pricing models:

LTIP – Total Shareholder Return 2010* 2009 2008

Volatility1 of the top 30 TechMark companies % – 42 33Correlation coefficient – 0.30 0.16

1 Expected volatility was calculated using the share price history for the period equivalent to the expected life.

* 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 £1.87 (2009: £1.27; 2008: £2.12).



4 Share-based payments continuedOptions outstandingAt 31 May 2010, 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 Share option schemes Savings-related share – nil cost – market value option schemes

Weighted Weighted Weighted exercise Weighted exercise Weighted Number fair value Number price fair value Number price fair value ‘000 £ ‘000 £ £ ‘000 £ £

At 1 June 2007 8,533 – 24,078 2.84 – 1,885 1.76 –Options granted 4,799 1.46 1,208 2.41 0.84 401 1.65 0.58Options exercised (1,390) – (1,002) 1.92 – (653) 1.52 –Options lapsed or expired (1,924) – (6,128) 3.04 – (573) 1.85 –

At 31 May 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 0.61Options 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 0.97Options 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

Range of exercise prices – £1.23 – £6.94 £0.94 – £1.95Weighted average remaining life 3.96 years 2.29 years 2.39 years

The average share price during the year ended 31 May 2010 was £2.08 (2009: £1.32).

Weighted average exercise information is excluded for nil cost schemes.

Options outstanding at 31 May 2010 are further analysed as follows:


Weighted Weighted Latest exercise Latest exercise Latest Number exercise Number price exercise Number price exercise ‘000 date ‘000 £ date ‘000 £ date

2001 – – 809 6.58 09/10/2010 – – –2002 – – 1306 3.41 14/11/2011 – – –2003 – – 483 2.02 03/02/2010 – – –2004 – – 1788 2.55 09/03/2011 – – –2005 – – 1335 1.98 09/05/2015 – – –2006 10 28/07/2015 – – – – – –2007 1,765 17/05/2017 1989 2.24 17/05/2017 82 1.95 01/03/20112008 1,690 19/03/2018 485 2.41 10/08/2017 272 1.60 01/01/20122009 4,945 28/10/2018 1686 1.26 12/05/2019 581 1.12 31/12/20122010 6,332 10/02/2020 926 1.84 13/08/2012 682 1.46 01/01/2014

14,742 10,807 2.54 1,617 1.38




4 Share-based payments continuedOptions exerciseable At the balance sheet date, the following options and awards had vested:


Weighted Weighted exercise exercise Number Number price Number price ‘000 ‘000 £ ‘000 £

2008 25 13,195 2.96 1 1.402009 305 8,812 3.01 24 1.892010 4,204 8,249 2.80 – –

Allscripts share-based paymentsSince the date of the merger transaction with Allscripts, the following material share-based payment arrangements existed directly in Allscripts: No. of No. of Fair value Fair value RSUs RSUs per share per share granted in granted in of 2010 of 2009 Contractual 2010 2009 grant1 grant1 lifeType of arrangement ‘000 ‘000 $ $ Years

Allscripts Stock Plan: – Restricted Stock Awards and Units –

Amended and Restated 1993 Stock Incentive Plan 1,502 3,110 17.35 8.65 4

1 Where several grants were made in the year, the weighted average fair value has been provided.

In the tables below, similar share-based payment arrangements have been aggregated as follows;

>> Allscripts stock options – These are nil cost and include ‘Restricted Stock Awards and Units’;>> Share option schemes – These have an exercise price and include ‘Stock Options’; and>> Allscripts Employee Stock Purchase Plan.

Share-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 and/or awards expected to vest. The vesting period is typically four years from date of grant.

All options are valued using the Black-Scholes options pricing model. All stock awards grants are fair-valued using the closing share price on the day of the grant.

The weighted average share price of awards granted during the year was $17.35 (2009: $8.65).

Options outstandingAt 31 May 2010, options and awards outstanding in respect of Allscripts’ ordinary shares of $0.01 each are shown below:

Restricted Stock Awards Stock options schemes – and Units – nil cost exercise price

Weighted Weighted Weighted Number fair value Number exercise price fair value ‘000 $ ‘000 $ $

At 31 May 2009 3,168 8.65 4,239 5.17 5.17Options granted 1,502 17.35 – 5.41 5.41Options exercised (925) 19.88 (749) 7.79 7.79Options lapsed or expired (244) 12.04 (220) 18.25 18.25

At 31 May 2010 3,501 3,270

Range of exercise prices 0.96 13.47 Weighted average remaining life (in years) 3.16

The average share price during the year ended 31 May 2010 was $18.41 (2009: $8.99).



4 Share-based payments continuedOptions outstanding at 31 May 2010 are further analysed as follows: Restricted Stock Awards Share option schemes – and Units – nil cost market value

Weighted exercise Grant Number Number priceYear ended 31 May ‘000 ‘000 $

2000 – 143 6.992001 – 621 2.812002 – 186 1.362003 – 856 1.662004 – 1,354 4.762005 – 1 7.402006 – – –2007 – – –2008 20 109 2.842009 2,041 – –2010 1,440 – –

At 31 May 2010 3,501 3,270 3.42

Options exercisable At the balance sheet date, the following options and awards had vested: Restricted Stock Awards Share option schemes – and Units – nil cost market value

Weighted exercise Number Number priceAt 31 May ‘000 ‘000 $

2009 nil 4,239 5.22010 nil 3,270 3.4

5 Directors and employees Directors’ remuneration Details of the Directors’ remuneration are given in the Directors’ remuneration report.

Employee costs All figures in £ millions 2010 2009

Wages and salaries 295.9 279.1Social security costs 25.6 24.1Pension costs 5.1 7.9Share-based payment benefits 19.7 11.6

346.3 322.7




6 Net finance costs All figures in £ millions 2010 2009

Bank loans and overdraft interest payable (6.7) (11.9)Amortisation of financing facility costs (2.0) (6.3)Other interest payable (1.3) (1.8)Expected return on pension scheme assets (note 27) 2.4 2.7Interest cost on pension scheme liabilities (note 27) (2.4) (2.6)Financing fair value re-measurement loss on forward currency exchange contracts (0.4) –Unwinding of discount on provisions (note 24) (1.3) (0.7)

Finance costs (11.7) (20.6)Exceptional finance income (cost) (note 2) 1.4 (2.1)Interest receivable 0.6 1.5

Net finance costs (9.7) (21.2)

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.

In the prior year, bank loans and overdraft interest payable included £7.4m payable on the loan from the majority shareholder, ValueAct. Though not a bank, the interest was reported in this category to maintain comparability year on year, since ValueAct provided interim financing for the merger with Allscripts Healthcare Solutions following the onset of Lehman Brothers’ administration shortly before the date of that transaction.

A credit of £1.4m has arisen as a result of supplemental interest on the refund of a VAT claim (see note 2). Last year, the amortisation of issue costs included an amount of £2.1m being the write-off of the balance of the transaction costs of the original $340m revolving credit and bridge facilities at the date of re-financing in May 2009. These items have been treated as exceptional.

7 Taxation


Current taxation UK corporation tax at 28% (2009: 28%) 0.2 0.8UK prior year items 0.3 (3.9)Overseas taxation 18.3 1.5Overseas prior year items (6.0) 1.0Irrecoverable withholding taxes 2.1 3.6

Current taxation (including tax relating to exceptional items) 14.9 3.0Deferred taxation (note 25) 28.3 1.6

Tax expense 43.2 4.6

Included within current taxation are credits of £5.0m (2009: £16.5m) in respect of tax on exceptional items, a charge of £0.4m (2009: credit £0.6m) in respect of tax on exceptional interest and a charge of £10.8m (2009: credit £7.3m) in respect of exceptional tax items.

The taxation charge for the current year based on profit before taxation is higher (2009: lower) than the standard rate of UK corporation tax for the following reasons:


Profit on ordinary activities before taxation 104.6 94.2

Tax on profit on ordinary activities at the standard rate of UK tax of 28% (2009: 28%) 29.3 26.4Effects of: Permanent differences (primarily exemption on disposal of businesses in the prior year) 5.0 (19.0)Profits arising overseas which are subject to rates of tax other than the UK standard rate 11.6 (1.1)Effects of temporary differences on which deferred tax is not recognised 2.1 5.5Adjustments to UK taxation charge in respect of prior periods 0.3 (3.9)Impact of changes in tax rates (0.7) (1.9)Adjustments to overseas taxation charge in respect of prior periods (6.0) 1.0Irrecoverable withholding tax 2.1 3.6Deferred tax effect of prior periods (0.5) (6.0)

Total tax charge 43.2 4.6

As a UK reporting entity, Misys plc is UK tax resident and therefore the applicable rate for the reconciliation is considered to be the weighted standard rate of UK corporation tax applying over the year ended 31 May 2010 of 28% (2009: 28%).

There is no income tax expense or tax credit in the income statement relating to the components of other comprehensive income.



8 Equity dividends


Amounts recognised as distributions to equity holders in the period Final dividend for the year ended 31 May 2008 of 4.95p per share – 23.9

– 23.9

Following the acquisition of Allscripts Healthcare Solutions, Inc. the Group’s dividend policy was amended. The Group will retain funds that would otherwise have been issued as dividends to shareholders and reinvest these funds in the Group.

9 Earnings per shareBasic earnings per share (EPS) have been calculated by dividing profit attributable to equity shareholders by the weighted average number of shares in issue during the year, excluding shares purchased by the Group and held as MEST, ESOP or treasury shares.

Adjusted basic and adjusted diluted EPS are presented to provide more comparable and representative information on continuing operations. 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.


Profit for the year 61.4 89.6Minority interest (17.1) (7.6)

Profit attributable to shareholders 44.3 82.0Exceptional items after taxation (note 2) 21.3 (30.2)Gains on embedded derivatives (after tax) (1.0) (5.7)Amortisation of acquired intangibles (after tax) 10.7 7.7Translation exchange differences recycled from reserves (after tax) 0.7 3.3Adjusted profit items attributable to minority interest (6.8) (7.0)

Adjusted profit attributable to shareholders 69.2 50.1

pence pence

Basic earnings per share 8.4 16.0Diluted earnings per share 8.2 15.8Adjusted basic earnings per share 13.1 9.8Adjusted diluted earnings per share 12.8 9.7

The weighted average number of basic and diluted shares in issue during the period were 529.4m and 537.4m respectively (2009: 511.1m and 514.7m). Diluted EPS includes the dilutive effect of outstanding share options.

10 Net interest paid


Interest received 0.4 1.4Bank loans and overdraft interest paid (11.0) (11.2)

Net cash flow from interest paid (10.6) (9.8)

11 Acquisitions and disposals of businesses


Cash consideration paid in respect of current year acquisitions (including expenses) – (198.9)Cash consideration paid in respect of prior year acquisitions (2.4) (0.4)Cash consideration received in respect of current year disposals (net of expenses) – 3.4Cash consideration paid in respect of prior year disposals (0.5) –Cash at bank and in hand acquired – 45.4

Net cash flow from acquisitions and disposals (2.9) (150.5)

12 Other capital expenditure and financial investment All figures in £ millions 2010 2009

Purchase of third party software (3.8) (15.0)Purchase of property, plant and equipment (8.2) (11.8)Purchase of investments (1.3) (2.4)Sale of property, plant and equipment 0.4 5.0Sale of investments 2.0 2.0

Net cash flow from other capital expenditure and financial investment (10.9) (22.2)

13 Financing activities All figures in £ millions 2010 2009

Dividends paid – (23.9)(Decrease) increase in borrowings (note 14) (68.9) 118.2Capital element of finance leases (0.9) (0.5)Payments for the purchase of own shares1 – (15.2)Share options exercised 3.6 3.8Shares issued – 85.0

Net cash flow from financing activities (66.2) 167.4

1 2009 includes Allscripts buyback of own shares.

14 Movement in borrowings


Repayment of bank loans (99.8) (201.7)Receipt of bank loans 58.1 350.0Capitalised fees in respect of bank loans (0.2) (7.8)Receipt of other loans 0.1 112.0Repayment of other loans (27.1) (129.1)Capitalised fees in respect of other loans – (5.2)

(Decrease) increase in borrowings (68.9) 118.2




15 Analysis of net funds (debt)

At 1 June Cash Non cash Differences At 31 MayAll figures in £ millions 2009 flow movements on exchange 2010

Cash 63.1 45.4 – 11.8 120.3Bank overdraft – (5.4) – – (5.4)

63.1 40.0 – 11.8 114.9Bank loans (note 22) (178.5) 68.7 (2.0) (0.5) (112.3)Debentures (note 22) (12.2) – 12.2 – –Interest bearing considerations (0.3) 0.3 – – –Finance leases (1.0) 0.9 (1.5) (0.1) (1.7)

Net (debt) funds (128.9) 109.9 8.7 11.2 0.9

Included in the above amounts are Allscripts cash balances of £98.7m (2009: £44.0m) and other cash balances of £4.3m (2009: £0.3m) not available for the general use of the Group. The Allscripts cash balances are restricted due to the sizeable minority interest.

16 Goodwill

All figures in £ millions 2010 2009*

Adjusted opening cost and net book value 289.8 64.9Differences on exchange 29.1 21.9Acquisitions – 204.7Adjustment to goodwill1 (3.4) (1.7)

Cost and net book value at 31 May 315.5 289.8

1 Goodwill was adjusted by £3.4m in 2010 to reflect the conversion of Allscripts’ 3.5% Senior convertible debentures to equity (see note 22). The adjustment in 2009 relates to finalising the purchase price allocation under IFRS 3.

Significant cash generating unitsGoodwill relating to the Banking £19.9m (2009: £22.6m), TCM £39.0m (2009: £33.3m), and Allscripts £260.0m (2009: £235.6m) groups of cash generating units (CGUs) are considered significant in comparison to the total carrying amount of goodwill assets at 31 May 2010. The recoverable amounts of the Banking and TCM CGUs were determined based on value-in-use calculations and no impairment was identified during the year. The recoverable amount of Allscripts CGU was determined using a “fair value less costs to sell” calculation and no impairment was identified during the year.

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 all of the 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.

Direct and indirect costs and corporate overheads have been calculated using the same percentage of revenue as for the recent budget which incorporates planned margin improvement. Management determined budgeted operating margins 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 Banking value-in-use calculations, the first three years’ cash flows were based on budget and management forecasts and thereafter growth rates as reflected in the table below were used. For TCM value-in-use calculations, the first three years 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:

Growth Growth rates for rates for Pre-tax cash flows cash flows discountCGU years 1 –3 years 4 –5 rate

Banking 0 – 12% 3% 10.4%TCM 7 – 10% 8% – 10% 12.1%

The Allscripts impairment review compared the Misys share of the market capitalisation of Allscripts as at 31 May 2010 less estimated disposal costs against the net book value of the CGU. No reasonable movement in the share price would result in an impairment of goodwill. The proposed disposal of Allscripts is described in more detail in note 39.



16 Goodwill continuedAcquisition of Allscripts Healthcare Solutions, Inc.*On 10 October 2008, the Group acquired 56.8% of the issued share capital of Allscripts-Misys Healthcare Solutions, Inc. for a cash consideration, including expenses, both paid and accrued, of £200.8m ($330m plus related expenses). As part of the acquisition, 100% ownership of Misys Healthcare Systems was transferred to Allscripts.

An analysis of the net assets acquired is shown below: Final fair Provisional value fair value Book Fair value at 31 May at 31 May All figures in £ millions value adjustment 2010 2009*

Intangible assets 70.3 69.2 139.5 139.5Property, plant and equipment 13.0 (1.8) 11.2 11.2Deferred tax liabilities 23.4 (24.9) (1.5) (3.0)Cash 45.4 – 45.4 45.4Other assets 68.9 (0.3) 68.6 68.6Other liabilities (113.6) 7.6 (106.0) (107.5)

Net assets acquired 107.4 49.8 157.2 154.2Minority interest (67.9) (66.6)

Misys shareholders’ interest 89.3 87.6Goodwill 202.9 204.7

Total consideration 292.2 292.3

Total consideration of £292.2m includes the cash consideration of £200.8m (including directly attributable expenses of £7.1m) and the fair value attributed to the 43.2% net disposal of Misys Healthcare of £91.4m. The original fair value adjustments contained provisional amounts which have now been finalised.

The goodwill arising on the acquisition of Allscripts Healthcare Solutions 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, relationships and brand name), deferred revenue and related deferred tax.

* In accordance with IFRS 3, the fair value of the identifiable assets, liabilities and contingent liabilities was determined provisionally as at 10 October 2008. Given the complexity of the acquisition, additional information was obtained as part of the process of finalising the purchase price allocation during the 12 month period allowed under IFRS 3. This resulted in certain aspects of the purchase price allocation being revisited to reflect finalisation of the allocation process. The table above shows the fair values for the prior periods at the reported amounts. These have been restated in the relevant balance sheets.

17 Other intangible assets Total Complete Customer Trade names acquired Developed Third partyAll figures in £ millions technology relationships and brands intangibles software software Total

Cost At 1 June 2009 73.3 66.4 32.5 172.2 76.1 27.6 275.9Differences on exchange 5.8 7.3 3.7 16.8 5.5 2.0 24.3De-recognised – – – – (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

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)De-recognised – – – – 17.5 – 17.5Disposals – – – – – 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

£17.5m developed software de-recognised in the year relates to software which has been assessed as having no further commercial value. This asset was fully written down.




17 Other intangible assets continued Total Complete Customer Trade names acquired Developed Third partyAll figures in £ millions technology relationships and brands intangibles software software Total

Cost At 1 June 2008 20.1 4.0 0.3 24.4 49.1 16.0 89.5Differences on exchange 5.3 3.9 1.7 10.9 6.3 1.8 19.0On acquisition of subsidiary undertakings 49.9 58.5 30.5 138.9 – 0.6 139.5De-recognised – – – – – (5.8) (5.8)Disposals (2.0) – – (2.0) (7.7) – (9.7)Additions – – – – 28.4 15.0 43.4

At 31 May 2009 73.3 66.4 32.5 172.2 76.1 27.6 275.9

Amortisation and impairment At 1 June 2008 (14.9) (1.3) (0.2) (16.4) (21.9) (8.6) (46.9)Differences on exchange (1.5) – 0.1 (1.4) (3.5) (1.4) (6.3)Charge for the year (6.1) (4.5) (1.2) (11.8) (5.9) (2.1) (19.8)Disposals 0.2 – – 0.2 7.6 – 7.8Impairment – – – – (7.7) (0.9) (8.6)

At 31 May 2009 (22.3) (5.8) (1.3) (29.4) (31.4) (13.0) (73.8)

Net book value At 31 May 2009 51.0 60.6 31.2 142.8 44.7 14.6 202.1

Trade names and brands relate principally to the ‘Allscripts’ brand which is being amortised over 20 years from the date of acquisition on 10 October 2008. The fair value of the intangible assets acquired during last year was based on an independent valuation at the time of acquisition.

18 Property, plant and equipment Computer Freehold Leasehold and otherAll figures in £ millions properties properties equipment Total

Cost At 1 June 2009 1.5 16.9 47.8 66.2Differences on exchange – 1.1 4.9 6.0Additions – 0.6 9.2 9.8Disposals (1.5) (0.4) (6.0) (7.9)

At 31 May 2010 – 18.2 55.9 74.1

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 period – (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



18 Property, plant and equipment continued Computer Freehold Leasehold and otherAll figures in £ millions properties properties equipment Total

CostAt 1 June 2008 1.7 11.3 36.9 49.9Differences on exchange 0.1 1.5 5.4 7.0On acquisition of subsidiary undertakings 4.3 0.5 6.4 11.2Additions – 4.3 7.4 11.7Disposals (4.6) (0.7) (8.3) (13.6)

At 31 May 2009 1.5 16.9 47.8 66.2

Depreciation At 1 June 2008 (0.5) (3.5) (28.3) (32.3)Differences on exchange – (0.4) (3.9) (4.3)Charge for the year (0.4) (1.6) (6.7) (8.7)Disposals 0.1 0.5 7.5 8.1

At 31 May 2009 (0.8) (5.0) (31.4) (37.2)

Net book value At 31 May 2009 0.7 11.9 16.4 29.0

Included in the above analysis is plant and equipment acquired under finance leases with a net book value of £1.6m (2009: £0.9m) after accumulated depreciation of £3.8m (2009: £2.7m). The net book value of leasehold properties comprises long leasehold £nil (2009: £nil) and short leasehold £11.5m (2009: £11.9m).

19 Investments


At 1 June 6.1 7.1Differences on exchange 0.2 1.5Additions 1.3 2.7Disposal (0.7) (1.9)Impairment and other fair value movements 0.2 (6.8)On acquisition of subsidiary undertakings – 3.5

At 31 May 7.1 6.1

The Group’s investments primarily comprise investments in US and European Technology Funds, which are classified as ‘fair value through the 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.

In the prior year, the acquisition of subsidiary undertakings of £3.5m relates to investments acquired as part of the Allscripts transaction.




20 Trade and other receivables All figures in £ millions 2010 2009

Trade receivables 177.5 142.9Less: provision for impairment of receivables (8.0) (7.4)

169.5 135.5Other receivables 20.4 13.1Prepayments 27.6 20.2Accrued income 68.2 53.3

Current trade and other receivables 285.7 222.1 Other receivables 0.8 2.3Prepayments 0.6 1.7Accrued income 0.2 1.8

Non-current trade and other receivables 1.6 5.8

Total trade and other receivables 287.3 227.9

The quality of trade receivables can be assessed by reference to the historical default rate of £5.0m (2009: £6.2m) for the preceding 365 days at 3.7% of the opening net trade receivables balance (2009: 7.5%).

The carrying value of trade receivables that would otherwise be past due or impaired but whose terms were renegotiated were £nil (2009: £0.2m).

The amount of provision against receivables as at 31 May 2010 was £8.0m (2009: £7.4m). The individually impaired receivables relate to receivables over 365 days, customers in financial difficulty, customer acceptance issues and cancelled contracts.

As at 31 May 2010, trade receivables of £91.0m (2009: £67.6m) were past due but not impaired. In the table below, these comprise the debtors over 30 days, which 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 78.5 67.930-60 days 26.7 22.460-90 days 16.2 14.890-120 days 16.2 7.1Over 120 days 31.9 23.3

169.5 135.5

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 (7.4) (8.3)Provision for impairment of receivables (7.2) (6.8)Receivables written off during the year as uncollectible 5.0 7.9Unused amounts reversed 2.2 3.4Foreign exchange and other (0.6) (3.6)

At 31 May (8.0) (7.4)

21 Trade and other payables


Trade payables* 28.5 21.1Other taxation and social security 12.7 10.8Other payables 5.4 5.5Accruals 96.3 92.3

Current trade and other payables 142.9 129.7 Other payables 1.2 1.1Accruals 4.7 2.6

Non-current trade and other payables 5.9 3.7

Total trade and other payables 148.8 133.4

Accruals comprise: All figures in £ millions 2010 2009

Cost of sales (excluding staff related costs) 48.8 38.0Staff related costs (including sales commissions and bonuses) 48.4 46.9Other 3.8 10.0

101.0 94.9

* As required under IFRS 3, Misys has reassessed and finalised the provisional allocation of the Allscripts purchase price within the allowed 12 month period since the acquisition date and has restated the opening balances accordingly. The fair value of trade payables acquired as part of the Allscripts transaction was reduced by £0.2m from the value reported at 31 May 2009.

22 Loans and overdrafts


Bank overdrafts 5.4 –Bank loans 40.0 1.8Finance leases 0.9 0.6

Current loans and overdrafts 46.3 2.4 Bank loans 72.3 176.73.5% senior convertible debentures – 12.2Finance leases 0.8 0.4

Non-current loans and overdrafts 73.1 189.3

Total loans and overdrafts 119.4 191.7

Bank overdraftsThis relates to sterling, euro and US dollar overdraft facilities.

Bank loansGroup credit facilityIn May 2009, the Group entered into a £210m credit facility with a syndicate of banks comprising an £80m term loan and a £130m multicurrency revolving credit facility. £40m of the term loan matures in May 2011 and the remaining £40m matures in May 2012. The revolving credit facility expires in May 2012. At 31 May 2010, the term loan was fully drawn and £36m (2009: £75m) had been drawn against the multicurrency revolving credit facility. Interest on these borrowings is payable at LIBOR plus a variable margin (based on a covenant ratio), currently 2.75% (2009: 3.25%).



22 Loans and overdrafts continuedBank loans continuedGroup credit facility continuedArrangement fees in respect of this facility are included in the carrying value of the loan. These costs are amortised over the expected term of the facility. The amount of unamortised facility transaction fees at 31 May 2010 was £3.4m (2009: £5.5m). The facility is guaranteed by certain companies within the Group.

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 period.

Allscripts loansAllscripts has a credit facility which provides for a total unsecured commitment of $150m and which matures on 15 August 2012. The facility is available in the form of letters of credit in an aggregate amount up to $10m and revolving loans.

The credit facility contains certain financial covenants including, but not limited to, leverage and coverage ratios to be calculated on a quarterly basis. None of the facility was drawn down at the year-end and there is no default under the credit facility.

3.5% Senior convertible debenturesDuring July 2009, Allscripts exercised its call on the remaining $19.7m (£12.2m) of 3.5% senior convertible debentures due 2024 for redemption, which was made in August 2009.

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.

2010 2009All figures in £ millions Assets Liabilities Assets Liabilities

Forward foreign currency contracts 0.2 (0.3) 0.7 (0.8)Embedded derivatives 5.8 (2.4) 4.8 (2.7)

6.0 (2.7) 5.5 (3.5)Analysed as follows: Current 1.1 (0.7) 1.7 (1.4) Non-current 4.9 (2.0) 3.8 (2.1)

6.0 (2.7) 5.5 (3.5)

Forward currency contracts used to economically hedge fair value and cash flow risksCertain financial assets, liabilities and future cash flows, which are denominated in currencies other than those of the functional currencies of the entities concerned, are economically hedged using forward currency contracts, however, hedge accounting is not applied. Gains and losses on these contracts are recorded in the income statement together with offsetting gains and losses on the underlying items.

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 entities entering into the contracts. 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. 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.

24 Provisions for liabilities and charges

Contingent All figures in £ millions Property consideration Other Total

At 1 June 2009 23.5 0.5 1.8 25.8Additional provisions charged to income statement 9.1 – 2.7 11.8Provision released (2.0) – – (2.0)Unwinding of discount 1.3 – – 1.3Utilisation of provisions (9.7) (0.3) (1.1) (11.1)Foreign exchange movements (0.2) – 0.1 (0.1)

At 31 May 2010 22.0 0.2 3.5 25.7

Analysis of total provision: Current 4.0 0.2 3.5 7.7 Non-current 18.0 – – 18.0

22.0 0.2 3.5 25.7

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 year. During the year, the discount rate applicable to all new property provisions was 2.75% representing the five year corporate bond rate.

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 Other deductible temporary All figures in £ millions Losses differences Total

At 1 June 2009 49.1 (25.5) 23.6Charged to the income statement (note 7) (17.0) (11.9) (28.9)Charged to equity in respect of share-based payments – 11.9 11.9Credit to equity in respect of IAS 21 movements – (0.1) (0.1)Impact of change in tax rates on deferred tax assets (0.3) 0.9 0.6Currency translation differences 4.5 (3.2) 1.3

At 31 May 2010 36.3 (27.9) 8.4

Other deductible temporary All figures in £ millions Losses differences* Total

At 1 June 2008 9.2 12.0 21.2Charged to the income statement (note 7) 5.2 (6.8) (1.6)Charged to equity in respect of share-based payments – (1.5) (1.5)Credit to equity in respect of IAS 21 movements – 8.4 8.4Deferred tax arising on acquisition* 36.6 (38.1) (1.5)Currency translation differences (1.9) 0.5 (1.4)

At 31 May 2009 49.1 (25.5) 23.6

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: 2010 2009* Other Other deductible deductible temporary temporaryAll figures in £ millions Losses differences Total Losses differences* Total

Deferred tax assets 15.7 3.8 19.5 49.1 (20.6) 28.5Deferred tax liabilities* 20.6 (31.7) (11.1) – (4.9) (4.9)

As shown above 36.3 (27.9) 8.4 49.1 (25.5) 23.6

Deferred tax assets recoverable within one year are £25.0m (2009: £2.7m).

Deferred tax assets of £36.3m (2009: £49.1m) have been recognised in respect of carried forward losses and latest forecasts show that these are expected to be recovered against future profit streams.

Deferred tax assets of £43.2m (2009: £40.1m) have not been recognised in respect of other losses on the basis that latest forecasts show that these differences are unlikely to be recoverable against future profit streams in the foreseeable future.

Deferred tax liabilities of £27.9m (2009: £25.5m) have been recognised in respect of other taxable temporary differences.

Deferred tax assets of £6.6m (2009: £13.7m) have not been recognised in respect of other deductible temporary differences on the basis that latest forecasts show that these differences are unlikely to be recoverable.

There is an unrecognised deductible temporary difference of £494.0m (gross) (2009: £514.0m) in respect of capital losses in the UK. These losses can only be utilised against specific types of future capital gains.

There would be no additional cost of repatriation of unremitted earnings of subsidiaries to the UK, as these would be exempt from tax.

* As required under IFRS 3, Misys has reassessed and finalised the provisional allocation of the Allscripts purchase price within the allowed 12 month period since the acquisition date and has restated the opening balances accordingly. The fair value of deferred tax liabilities acquired as part of the Allscripts transaction was reduced by £1.5m from the value reported at 31 May 2009.

26 Deferred income


Current Maintenance fees 115.2 100.8Other income 51.3 37.8

166.5 138.6Non-current Maintenance fees 2.2 0.5Other income 4.4 1.9

6.6 2.4

Deferred maintenance fees represent amounts invoiced in advance for contracts which provide technical support and trouble shooting assistance 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 was £4.7m (2009: £7.0m) 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.



27 Retirement benefit obligations continuedThe 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 2010 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 2010 by qualified independent actuaries.

The principal assumptions used in the valuations of the UK scheme only are: 2010 2009 % %

Rate of increase in salaries n/a n/aRate of increase in pensions in payment 3.5 3.5Discount rate 5.5 6.4Inflation assumption 3.7 3.9

Mortality rates (age) Years Years

Current pensioner – male 89 88Current pensioner – female 91 91Future retiree – male 91 91Future retiree – female 92 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 2010.

Mortality assumptions are based on the PxA00 year of use tables with long cohort projections and future improvements in mortality subject to an annual underpin of 1.0% per annum for males and 0.5% per annum for females.

The year end assets and liabilities in the schemes were:


Equities 5.1 4.9Government bonds 23.0 21.6Corporate bonds 17.4 14.7Deposit instruments – 0.4Insurance policies 0.2 0.2Other 0.3 (0.1)

Market value of assets 46.0 41.7Adjustment for unrecoverable surplus – (2.4)

Total market value of assets 46.0 39.3Actuarial value of liabilities (50.3) (41.0)

Deficit in the schemes (4.3) (1.7)

Related deferred tax asset 1.2 0.4

Movement in the plan assets and obligations during the year:


Plan assets: Fair value at 1 June 39.3 42.3Expected return on plan assets (note 6) 2.4 2.7Actuarial gain (loss) 4.9 (4.4)Contributions paid by employer 0.5 0.5Net benefits paid out (1.3) (1.9)Foreign exchange 0.2 0.1

Fair value at 31 May 46.0 39.3

Benefit obligations: Present value at 1 June (41.0) (43.8)Current service cost (1.7) (1.8)Interest cost (note 6) (2.4) (2.6)Actuarial (loss) gain (6.2) 5.7Net benefits paid out 1.3 1.9Foreign exchange (0.3) (0.4)

Present value at 31 May (50.3) (41.0)

Net liability (4.3) (1.7)

An asset of £nil (2009: £2.4m) 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 income statement are as follows:


Current service cost (included in employee costs) (0.4) (1.1)Deferred pension costs (included in investments) (1.3) (0.7)

Interest cost on pension scheme liabilities (2.4) (2.6)Expected return on plan assets 2.4 2.7

Included in finance income – 0.1

Total income statement expense (0.4) (1.0)

The long term expected rate of return on the UK scheme assets is 5.1% (2009: 5.6%) and on overseas scheme assets is 8.3% (2009: 8.5%).

The actual return on the schemes’ assets was a gain of £4.9m (2009: £0.6m). The total loss recognised in the consolidated statement of comprehensive income was £1.3m (2009: £1.3m gain). The cumulative amount of loss recognised in the consolidated statement of comprehensive income was £1.3m (2009: £nil).




27 Retirement benefit obligations continuedHistory of experience gains and losses in the UK scheme: 2010 2009 2008 2007 2006

Experience gains (losses) on schemes’ assets Amounts (£m) 2.5 (2.2) (4.5) 3.2 3.0Percentage of schemes’ assets 5.7% 5.5% 10.9% 8.3% 7.5%

Experience (losses) gains on schemes’ liabilities Amounts (£m) (0.1) 1.6 (2.3) – 4.1Percentage of schemes’ liabilities 0.2% 4.3% 5.6% – 10.1%

History of asset values, benefit obligation and deficit in schemes:

All figures in £ millions 2010 2009 2008 2007 2006

Fair value of plan assets 46.0 39.3 42.3 38.2 39.9Defined benefit obligation (50.3) (41.0) (43.8) (39.3) (40.6)

Deficit in scheme (4.3) (1.7) (1.5) (1.1) (0.7)

The expected contributions to defined benefit schemes for the next financial year beginning 1st June 2010 are £0.5m (2009: £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 £19.7m (2009: £18.4m).

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.

29 CommitmentsCommitments of the Group under non cancellable operating leases at 31 May: 2010 2009 Land and Plant and Land and Plant andAll figures in £ millions buildings equipment buildings equipment

Rental payments due within one year 19.7 0.8 20.6 0.3Rental payments due between one and five years 64.5 0.9 66.5 0.3Rental payments due after five years 55.6 – 64.0 –

Total 139.8 1.7 151.1 0.6

Capital expenditure on property, plant and equipment committed by the Group at 31 May 2010 was £1.5m (2009: £0.2m).



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 Executive Vice Presidents. Their remuneration is set out below in aggregate.


Short-term employment benefits 8.3 11.9Post employment benefits 0.2 0.3Other long-term benefits – –Termination benefits – 0.2Share-based payments benefits 9.0 6.9

ValueAct Capital has a holding of approximately 25.7% (2009: 25.7%) in the Company on an aggregated basis. Mr. 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’.

There were no related party transactions with ValueAct during the period.

Last year, a placing and underwriting agreement was entered into on 17 March 2008 between the Company, ValueAct Capital Master Fund, L.P. acting through its general partner, VA Partners I, LLC (‘ValueAct’) and JP Morgan Cazenove Limited. On 10 October 2008 in connection with the Allscripts merger, ValueAct Capital Master Fund L.P. (acting through “ValueAct”) acquired all of the Placing Shares pursuant to the underwriting commitment provided by it at the time of the Placing. Upon acquisition of the Placing Shares, the percentage of the issued voting share capital of the Company controlled by affiliates within ValueAct’s group increased to approximately 25.7 per cent.

On 29 September 2008, the Company entered into a US $190.0m bridge facility with a subsidiary of ValueAct Capital. This facility was refinanced with the term loan and multicurrency revolving credit facility in May 2009 (see note 22).

31 Called up share capitalThe table below reconciles the allotted and fully paid share capital to those shares not held by the Company.

Allotted, fully paid share capital Treasury MEST ESOP Net

At 1 June 2009 594,584,179 (47,526,914) (19,901,733) (103,272) 527,052,260Share options exercised – 1,049,481 2,768,218 – 3,817,699

At 31 May 2010 594,584,179 (46,477,433) (17,133,515) (103,272) 530,869,959

During the year 1,049,481 (2009: 700,540) treasury shares, with a cost of £0.8m (2009: £1.4m), were utilised to satisfy share awards.

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 2010, the MEST held 17,133,515 (2009: 19,901,733) shares purchased for a cost of £40.6m (2009: £47.1m) and with a market value of £38.6m (2009: £33.1m). During the year, it utilised shares with a cost of £6.6m (2009: £1.3m) 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 2010, the ESOP held 103,272 (2009: 103,272) shares, purchased for a cost of £0.2m (2009: £0.2m) and with a market value of £0.2m (2009: £0.2m).




32 Other reserves

Retained Treasury Own Translation TotalAll figures in £ millions earnings shares shares reserve equity

At 1 June 2009 224.1 (96.3) (47.3) 4.7 85.2Total comprehensive income for the period 43.3 – – 38.8 82.1Share options settled from own shares (5.9) 2.2 6.6 – 2.9Conversion of Allscripts 3.5% senior convertible debentures 3.5 – – – 3.5Share-based payments 12.9 – – – 12.9Deferred tax on share-based payments 7.2 – – – 7.2

At 31 May 2010 285.1 (94.1) (40.7) 43.5 193.8

Retained Treasury Own Translation TotalAll figures in £ millions earnings shares shares reserve equity

At 1 June 2008 149.6 (97.7) (48.6) 1.9 5.2Total comprehensive income for the period 91.7 – – 2.8 94.5Dividends paid (23.9) – – – (23.9)Share options settled from own shares (2.7) 1.4 1.3 – (0.0)Share-based payments 9.9 – – – 9.9Deferred tax on share-based payments (0.5) – – – (0.5)

At 31 May 2009 224.1 (96.3) (47.3) 4.7 85.2

Own shares reserve relates to Misys Employee Share Trust and Employee Share Ownership Plan (see note 31).

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. The Group companies must manage their exposure to exchange differences both recognised and anticipated. Group companies are required to hedge any significant transactions which create foreign exchange exposures with Group treasury when a transaction becomes a contractual commitment to pay or receive funds at a future date. Group treasury reviews these exposures on a regular basis. To manage their foreign exchange risk arising from future commercial transactions and recognised assets and liabilities, the entities in the Group use forward currency contracts transacted with Group treasury. Foreign exchange risk arises when future commercial transactions or recognised assets or liabilities are denominated in a currency that is not the entity’s functional currency.

External foreign exchange contracts are used to economically hedge foreign exchange risk on specific assets, liabilities or future transactions on a gross basis. The consolidated foreign exchange exposure of Group treasury activities will be economically hedged by Group treasury within limits agreed in the Group treasury policy.

The Group’s net exposure to foreign currency risk is illustrated by the sensitivity analysis in note 37.



33 Financial instruments: risk management continuedInterest 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.

The table below shows the maturity analysis of the undiscounted remaining contractual cash flows of the Group’s non-derivative financial liabilities. Less than Over 2010All figures in £ millions 1 year 1 to 2 years 2 to 5 years 5 years Total

Bank loans and overdrafts 49.4 78.5 – – 127.9Trade and other payables 124.9 0.6 1.3 2.7 129.5Finance lease liabilities 0.9 0.4 0.4 – 1.7Other liabilities 4.7 1.2 – – 5.9

Total cash flows 179.9 80.7 1.7 2.7 265.0

Less than Over 2009All figures in £ millions 1 year* 1 to 2 years 2 to 5 years 5 years Total*

Bank loans and overdrafts 7.9 46.0 119.5 – 173.4Other loans 1.0 1.1 28.6 – 30.73.5% Senior convertible debentures 0.1 – 12.2 – 12.3Trade and other payables* 113.4 2.1 0.3 0.2 116.0Finance lease liabilities 0.2 0.4 – – 0.6Other liabilities 5.5 1.1 – – 6.6

Total cash flows 128.1 50.7 160.6 0.2 339.6




33 Financial instruments: risk management continuedThe 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.

Less than Over 2010All figures in £ millions 1 year 1 to 2 years 2 to 5 years 5 years Total

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)

Less than Over 2009All figures in £ millions 1 year* 1 to 2 years 2 to 5 years 5 years Total*

Derivative financial instruments (gross settled) – inflows (1.7) (0.6) (3.2) – (5.5)– outflows 1.4 0.6 1.5 – 3.5

Total cash flows (0.3) – (1.7) – (2.0)


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.

The Group, excluding Allscripts, 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 2.5 times and a minimum ratio of EBITDA to net interest of 5.0 times. At 31 May 2010, the net borrowings to adjusted EBITDA ratio was 1.2 (2009: 1.6) times and EBITDA to net interest payable ratio (as defined in the loan agreement) was 9.6 (2009: 10.6). The covenants were met during and at the end of the year.

34 Financial instruments and hedging activitiesThe Group uses derivative instruments in order to manage foreign currency exchange risk arising from future commercial transactions, recognised assets and liabilities and net investment in foreign operations. 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 2010 was a net liability of £0.1m (2009: £0.1m).

Hedge of a net investment in a foreign operation During the prior year, the Group’s US dollar denominated borrowing was designated as a hedge of the net investment in the Group’s US subsidiaries. However, before last year end the US dollar loan was repaid in full.

There was no ineffectiveness to be recorded from net investment in foreign entity hedges in the prior year.



35 Financial instruments: categories Not a Fair value Fair value Loans & Amortised financialAll figures in £ millions hierarchy1 through P&L receivables cost instrument2 Current Non-current

At 31 May 2010 Financial assets Investments Level 1 3.8 – – – – 3.8Investments Level 3 3.3 – – – – 3.3Derivative financial instruments Level 2 6.0 – – – 1.1 4.9Trade and other receivables – 259.0 – 28.3 285.7 1.6Cash 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) – (129.6) (5.9)

(2.7) – (254.9) – (176.6) (81.0)

Not a Fair value Fair value Loans & Amortised financialAll figures in £ millions hierarchy1 through P&L receivables cost* instrument2 Current* Non-current

At 31 May 2009 Financial assets Investments Level 1 2.6 – – – – 2.6Investments Level 3 3.5 – – – – 3.5Derivative financial instruments Level 2 5.5 – – – 1.7 3.8Trade and other receivables – 205.9 – 21.9 222.1 5.7Cash and cash equivalents – 63.1 – – 63.1 –

11.6 269.0 – 21.9 286.9 15.6

Financial liabilities Derivative financial instruments Level 2 (3.5) – – – (1.4) (2.1)Borrowings – – (191.7) – (2.4) (189.3)Trade and other payables* – – (122.2) – (118.5) (3.7)

(3.5) – (313.9) – (122.3) (195.1)

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 £28.2m (2009: £21.9m).


Fair 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); and

Level 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.




35 Financial instruments: categories continuedThe 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.

If one or more of the significant inputs is not based on observable market data, the instrument is included in level 3. Some of the Group’s investments are categorised as level 3. The fair value of level 3 financial instruments is determined using external consultants’ valuations.

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 £6.1m (2009: £2.8m) denominated in sterling, £103.8m (2009: £49.1m) in US dollars, £16.0m (2009: £4.2m) in euros and £6.8m (2009: £7.0m) in other currencies.

36 Financial instruments: fair valuesThe fair values of each category of the Group’s financial instruments approximate 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.

Positive figures represent an increase in operating profit.

Income statementAll figures in £ millions 2010 2009

Sterling strengthens by 10% US dollar 0.4 (1.0)Euro (2.0) 1.1 Sterling weakens by 10% US dollar (0.4) 1.0Euro 2.0 (1.1)

Year end exchange rates applied in the above analysis are US dollar 1.45 (2009:1.62) and euro 1.18 (2009:1.15).

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.

Income statementAll figures in £ millions 2010 2009

Interest rate increase of 0.5% (0.6) (0.6)Interest rate decrease of 0.5% 0.6 0.6

38 Principal subsidiary undertakingsInformation on the principal subsidiary undertakings included in the consolidated accounts at 31 May 2010 is provided in note D of the Company accounts.

39 Events after the reporting periodProposed disposal of AllscriptsOn 9 June 2010, Misys announced its intention to dispose of its majority stake in Allscripts and to return substantially all of the proceeds to Misys shareholders subject to shareholder approval. Misys will realise value through the placing of shares and the buyback of shares by Allscripts. On 26 July 2010, Misys agreed that it would reduce the minimum size of the placing from 36 million to 25 million shares following positive votes by Allscripts and Eclipsys shareholders on the merger. Illustrative proceeds at this minimum placing size and at the minimum placing price of US $16.50 per share would be US $1,077m. The maximum retained holding in this instance would be 25.1 million shares. The proceeds from the sale of Allscripts shares, after transaction fees and debt pay-down, will be returned to Misys shareholders through a proposed tender offer for these shares. The transaction is currently forecast to complete before December 2010. The proposed disposal is conditional amongst other things upon the approval of a simple majority of shareholders and a minimum price for the placing of shares of US $16.50. A circular will be published shortly to provide details of the background and reasons for the proposed disposal.

IFRS 5 requires that a disposal transaction which has not completed but which is highly probable at the balance sheet date should be disclosed as an asset held for sale and presented as a discontinued operation if the business sold is significant. At 31 May, the overall transaction was in the process of negotiations between the parties and the Directors do not believe that the sale met the conditions to be classified as held for sale under IFRS 5 at that date. Misys has thus treated Allscripts as a continuing operation and has taken all transaction costs incurred to 31 May 2010 to the exceptional item line of the consolidated income statement.

Purchase of US $ put optionAs a consequence of the proposed disposal of Allscripts (described above) a foreign exchange option contract was taken out in June 2010 to protect the proceeds from fluctuations in the US $:£ exchange rate. The foreign exchange option gives Misys the ability to sell US dollars for sterling at an option price of approximately £1 to US $1.50.

UK corporation tax rate changeA number of changes to the UK corporation tax system were announced in the June 2010 Budget Statement. The Finance (No 2) Act 2010 was enacted in July 2010 and reduces the main rate of corporation tax from 28% to 27% from 1 April 2011. Further reductions are proposed to be enacted separately each year with the aim of reducing the rate by 1% per annum to 24% by 1 April 2014. The changes have not be substantively enacted at the balance sheet date and, therefore, are not included in these financial statements. We estimate that the reduction in the corporation tax rate from 28% to 27% will not have a material impact on the Group’s results.



Audit opinion for the Misys plc Company

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 2010 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 auditorsAs explained more fully in the Directors’ responsibilities statement set out on page 70, 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 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.

Opinion on financial statementsIn our opinion, the Company financial statements:

>> give a true and fair view of the state of the Company’s affairs as at 31 May 2010;

>> 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 exceptionWe 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 2010.

Giles Hannam (Senior Statutory Auditor)for and on behalf of PricewaterhouseCoopers LLPChartered Accountants and Statutory AuditorsLondon26 July 2010



Company balance sheet as at 31 May 2010


Non-current assets Tangible assets D 6.5 7.5Investments in subsidiary undertakings E 89.2 89.6Amounts due from subsidiary undertakings 758.7 653.6

854.4 750.7

Current assets Debtors F 67.3 74.6Derivative financial instruments G 0.4 1.4Cash at bank and in hand 12.6 2.3

80.3 78.3

Creditors falling due within one year Loans and overdrafts H (45.4) –Derivative financial instruments G (0.4) (1.4)Other creditors I (62.2) (116.7)Provisions for liabilities and charges J (1.2) (1.5)

(109.2) (119.6)

Net current liabilities (28.9) (41.3)

Total assets less current liabilities 825.5 709.4

Creditors falling due after more than one year Bank loans H (72.3) (149.5)Amounts due to subsidiary undertakings (454.5) (246.3)Provisions for liabilities and charges J (3.0) (6.4)Retirement benefit obligations L (0.2) –

Net assets 295.5 307.2

Equity Called up share capital N 5.9 5.9Share premium account N 151.9 151.9Capital redemption reserve N 0.3 0.3Profit and loss account O 137.4 149.1

Equity shareholders’ funds 295.5 307.2


Mike Lawrie26 July 2010



Notes to the Company financial statements

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’ in accordance with the applicable UK Accounting Standards, the Companies Act 2006 and the accounting policies set out below.

Share incentive schemes The 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 profit and loss account is adjusted over the remaining vesting period of the options.

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.

TaxationCurrent tax for the current and prior periods is provided at the amount expected to be paid (or recovered) using the tax rates and tax laws that have been enacted or substantively enacted by the balance sheet date.

Deferred tax is provided in full on timing differences which result in an obligation at the balance sheet date to pay more tax, or the right to pay less tax, at a future date, at tax rates expected to apply when the timing differences reverse based on tax rates and tax laws that have been enacted or substantively enacted by the balance sheet 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 it is regarded as more likely than not that they will be recovered. Deferred tax assets and liabilities are not discounted.

Fixed assetsFixed assets are stated at cost less accumulated depreciation. 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. The useful lives by major class of asset applied from the date of purchase are:

Long leasehold property 50 years

Short leasehold property over lease term 1 to 13 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.

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.




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 caps 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); and

c) hedges of a net investment in a foreign operation.

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.

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 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 loss attributable to shareholders for the year is £19.3m (2009: £29.8m loss), which includes auditors’ remuneration of £0.1m (2009: £0.1m).

C. CommitmentsCommitments of the Company under non cancellable operating leases at 31 May:


Annual payments expiring within one year – –Annual payments expiring between one and five years – –Annual payments expiring after five years 4.1 5.5

All operating lease commitments relate to land and buildings. The Company has no capital commitments at 31 May 2010 (2009: £nil).

D. Tangible assets


Cost At 1 June 8.8 4.5Additions 0.2 4.3Disposals (1.5) –

At 31 May 7.5 8.8

Depreciation and impairment At 1 June (1.3) (0.5)Charge for the year (0.5) (0.8)Disposals 0.8 –

At 31 May (1.0) (1.3)

Net book value At 31 May 6.5 7.5

Included in the above analysis is £nil cost (2009: £1.5m), £1.5m disposals (2009: £nil) and £nil accumulated depreciation (2009: £0.8m) relating to freehold land and properties; cost of £6.3m (2009: £6.1m), additions of £0.2m (2009: £3.1m) and accumulated depreciation of £0.8m (2009: £0.4m) relating to leasehold improvements and cost of £1.2m (2009: £1.2m), additions of £nil (2009: £1.2m) and accumulated depreciation of £0.2m (2009: £0.1m) relating to fixtures and fittings.



E. Investments in subsidiary undertakings


Cost At 1 June 93.8 93.4Additions 0.1 0.4Transfer to other Group company (0.5) –

At 31 May 93.4 93.8

Provisions for impairment At 1 June (4.2) (4.2)Charge for the year – –

At 31 May (4.2) (4.2)

Net book value At 31 May 89.2 89.6

Principal subsidiary undertakingsThe Company is the beneficial owner of and has 100% (2009: 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 and TCM and 54.5% (2009: 56.8%) of the Allscripts-Misys Healthcare Solutions, Inc. nominal value and voting rights over the equity share capital. These companies develop and licence application software products to customers in well defined vertical markets together with undertaking transaction processing, professional services and e-commerce activities:

Country of incorporation Company name and operation Markets served

Banking and TCM Misys International Banking Systems GmbH Germany Global products and services in the Misys International Banking Systems inc USA following areas:Misys International Banking Systems Limited England and Wales > Wholesale international bankingMisys International Banking Systems Limited Republic of Ireland > Retail and universal bankingMisys International Banking Systems Limited Hong Kong > Enterprise risk managementMisys International Banking Systems Pte Limited Singapore > Treasury and capital marketsMisys International Banking Systems SA France > Integration technologyMisys International Banking Systems SA Luxembourg > Enterprise-wide compliance managementMisys 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

Allscripts Allscripts-Misys Healthcare Solutions, Inc. (54.5%) USA US products and services in the following areas: > Practice management systems for physicians > Electronic medical records > Mobile applications > Clinical laboratory management > Radiology > Pharmacy > Clinical alerting > Patient scheduling > Transaction services > Homecare

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.




F. Debtors falling due within one year All figures in £ millions 2010 2009

Amounts due from subsidiary undertakings 56.2 73.2 Other debtors 3.4 0.3 Corporation tax 7.3 0.5 Prepayments 0.4 0.6

Total 67.3 74.6

G. Derivative financial instruments 2010 2009All figures in £ millions Assets Liabilities Assets Liabilities

Forward foreign currency contracts 0.4 (0.4) 1.4 (1.4)

H. Loans and overdrafts


Bank loans and overdrafts 45.4 –

Total falling due within one year 45.4 –

Bank loans payable within two to five years 72.3 149.5

Total falling due after more than one year 72.3 149.5

Total 117.7 149.5

I. Other creditors falling due within one year


Amounts due to subsidiary undertakings 58.4 105.0 Other creditors 0.2 0.2 Accruals 3.6 11.5

Total 62.2 116.7

J. Provisions for liabilities and charges 2010 2009All figures in £ millions Property Property

At 1 June 7.9 6.3Additional provisions charged to profit and loss 4.3 3.4Provision released (2.1) (1.2)Unwinding of discount 0.3 –Utilisation of provisions (6.2) (0.6)

At 31 May 4.2 7.9

Analysis of total provision: Current 1.2 1.5Non-current 3.0 6.4

Total 4.2 7.9

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.

K. 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 £19.7m (2009: £18.4m).

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.

L. Retirement benefit obligationsDefined benefit schemeIn previous years, the pension scheme in the UK was held in another Group company. The scheme was transferred to the Company during the year. Prior year comparatives have been included within the Company financial statements for reference.

In 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 2010 by qualified independent actuaries.

The principal assumptions used in the valuations of the UK scheme only are: 2010 2009 % %

Rate of increase in salaries n/a n/aRate of increase in pensions in payment 3.5 3.5Discount rate 5.5 6.4Inflation assumption 3.7 3.9

Mortality rates (age) Years Years

Current pensioner – male 89 88Current pensioner – female 91 91Future retiree – male 91 91Future retiree – female 92 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 at 31 May 2010.

Mortality assumptions are based on the PxA00 year of use tables with long cohort projections and future improvements in mortality subject to an annual underpin of 1.0% per annum for males and 0.5% per annum for females.



L. Retirement benefit obligations continuedThe year end assets in the scheme were:


Equities 4.9 4.7Government bonds 21.3 20.4Corporate bonds 17.3 14.7Other 0.2 (0.1)

Market value of assets 43.7 39.7Adjustment for unrecoverable surplus – (2.4)

Total market value of assets 43.7 37.3Actuarial value of liabilities (43.9) (37.3)

Deficit in the scheme (0.2) –

Net pension liability (0.2) –

Movement in deficit during the year:


Plan assets: Fair value at 1 June 37.3 41.1Expected return on plan assets 2.2 2.5Actuarial gain (loss) 4.9 (4.5)Contributions paid by employer 0.5 –Net benefits paid out (1.2) (1.8)

Fair value at 31 May 43.7 37.3

Benefit obligations: Present value at 1 June (37.3) (41.1)Interest cost (2.3) (2.4)Actuarial (loss) gain (5.5) 4.4Net benefits paid out 1.2 1.8

Present value at 31 May (43.9) (37.3)

Net liability (0.2) –

An asset of £nil (2009: £2.4m) 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.

The amounts recognised in the profit and loss are as follows:


Interest cost on pension scheme liabilities (2.3) (2.4)Expected return on plan assets 2.2 2.5

Included in finance income (0.1) 0.1

Total profit and loss expense (0.1) 0.1

The long term expected rate of return on the UK scheme’s assets is 5.1% (2009: 5.6%).

The actual return on the scheme’s assets was a gain of £4.7m (2009: £0.3m). The total loss recognised directly in reserves was £0.6m (2009: £0.1m).

History of experience gains and losses in the UK scheme:

2010 2009 2008 2007 2006

Experience (losses) gains on scheme’s assetsAmounts (£m) 2.5 (2.2) (4.5) 3.2 3.0Percentage of scheme’s assets 5.7% 5.5% 10.9% 8.3% 7.5%

Experience gains (losses) on scheme’s liabilitiesAmounts (£m) (0.1) 1.6 (2.3) – 4.1Percentage of scheme’s liabilities 0.2% 4.3% 5.6% – 10.1%

History of asset values, benefit obligation and deficit in scheme:


Fair value of plan assets 43.7 39.7 41.2 44.3 39.3Defined benefit obligation (43.9) (37.3) (41.1) (37.3) (39.2)

Deficit in scheme (0.2) 2.4 0.1 7.0 0.1

The expected contributions to the defined benefit scheme for the next financial year beginning 1 June 2010 are £0.5m (2009: £0.5m).




M. Called up share capital

The table below reconciles the allotted and fully paid share capital to those shares not held by the Company.

Allotted, fully paidAll figures in £ millions share capital Treasury MEST ESOP Net

At 1 June 2009 594,584,179 (47,526,914) (19,901,733) (103,272) 527,052,260 Share options exercised – 1,049,481 2,768,218 – 3,817,699

At 31 May 2010 594,584,179 (46,477,433) (17,133,515) (103,272) 530,869,959

Further information is provided in note 31 of the Group financial statements.

N. Share capital and reserves Share Capital Profit and Share premium redemption lossAll figures in £ millions capital account reserve account

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

Share Capital Profit and Share premium redemption lossAll figures in £ millions capital account reserve account

At 1 June 2008 5.5 67.3 0.3 196.2Loss retained for the year – – – (29.8)Dividends paid – – – (23.9)Shares issued during the year (net of expenses) 0.4 84.6 – – Share-based payments – – – 6.6

At 31 May 2009 5.9 151.9 0.3 149.1

O. Profit and loss account Retained Treasury OwnAll figures in £ millions earnings shares shares 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

Retained Treasury OwnAll figures in £ millions earnings shares shares Total

At 1 June 2008 342.5 (97.7) (48.6) 196.2 Total recognised income and expense for the period (29.8) – – (29.8)Dividends paid (23.9) – – (23.9)Share options settled from own shares (2.7) 1.4 1.3 – Share-based payments 6.6 – – 6.6

At 31 May 2009 292.7 (96.3) (47.3) 149.1



P. Events after the reporting periodOn 9 June 2010, Misys announced its intention to dispose of its majority stake in Allscripts and return substantially all of the proceeds to Misys shareholders.

On 22 June 2010, it was announced in the emergency budget that the rate of UK corporation tax will reduce by 1% each year for the next four years.

For further details see note 39 of the Group financial statements.

Q. Related party transactionsThe Company is exempt under the terms of FRS 8 from disclosing related party transactions with other 100% owned subsidiaries of the Group.

ValueAct Capital has a holding of approximately 25.7% (2009: 25.7%) in the Company on an aggregated basis. Mr. Ubben, who is a non-executive Director of the Company, is Chief Executive Officer and Chief Investment Officer of ValueAct Capital.

Further information of related party transactions is provided in note 30 to the Group financial statements.



Five year financial record


Revenue Banking 161.7 183.0 159.8 148.6 266.6 TCM 179.5 161.1 141.7 125.1 – Allscripts 440.4 348.3 190.8 196.0 213.8 Central Services 0.7 – – – –

Continuing operations 782.3 692.4 492.3 469.7 480.4

Operating profit Banking 32.7 38.5 17.2 16.3 36.2 TCM 42.1 36.5 32.1 28.4 – Allscripts 68.7 54.1 37.6 20.6 32.6 Central Services (12.7) (21.6) (9.1) (9.5) (8.6)

Continuing operations excluding exceptional items 130.8 107.5 77.8 55.8 60.2 Exceptional items (16.5) 7.9 (25.4) (37.0) (17.3)

114.3 115.4 52.4 18.8 42.9 Interest and other finance costs (9.7) (21.2) (3.5) (14.8) (19.2)

Profit on ordinary activities before taxation 104.6 94.2 48.9 4.0 23.7 Tax on profit on ordinary activities (43.2) (4.6) (13.8) (3.1) (7.9)

Profit on ordinary activities after taxation 61.4 89.6 35.1 0.9 15.8 Profit attributable to discontinued operations – – 78.2 14.1 197.3 Equity minority interests (17.1) (7.6) – – –

Profit attributable to shareholders 44.3 82.0 113.3 15.0 213.1

Net funds (debt) 0.9 (128.9) 25.5 (91.1) (94.7)

Pence Pence Pence Pence Pence

Adjusted basic earnings per share 13.1 9.8 14.0 14.6 14.3 Adjusted diluted earnings per share 12.8 9.7 14.0 14.5 14.2 Dividends per share – – 7.91 7.53 7.18

Number Number Number Number Number

Average number of employees Banking 1,525 1,375 1,788 1,790 2,537 TCM 1,029 1,044 1,066 892 – Allscripts 2,412 2,021 1,601 1,597 1,567 Central services 1,164 971 81 70 54

Continuing operations 6,130 5,411 4,536 4,349 4,158


Corporate governance Financial statements

Investor information

Financial calendarAnnual General Meeting 29 September 2010Announcement of 2010 interim results (provisional) January 2011Preliminary announcement of 2010 results (provisional) July 2011

Annual General MeetingThe AGM will take place at 12 noon on Wednesday 29 September 2010 at The Lincoln Centre, 18 Lincoln’s Inn Fields, London WC2A 3ED. The Notice of AGM accompanies this Annual Report and will also be displayed on the Company’s website.

Electronic communicationsIn accordance with the authorities granted under the Companies Act 2006, shareholder documents are only sent in hard copy to those shareholders who have made an election to receive documents in this form. This allows the Company to reduce costs and its impact on the environment. 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 websiteThis report and more information about the Company’s activities and financial information is available on our 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 dealing servicesThis service has been established with JPMorgan Cazenove Limited, and is designed to provide shareholders with a simple way of buying and selling Misys shares by post. Further information can be obtained from JPMorgan Cazenove Limited at the address below.

Alternatively, shareholders 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.

BankersThe Royal Bank of Scotland plc135 BishopsgateLondon EC2M 3URUK

Legal advisersAllen & Overy LLPOne Bishops SquareLondon E1 6ADUK

Allen & Overy LLP1221 Avenue of the AmericasNew York, NY 10020, USA

Joint corporate brokersJPMorgan Cazenove Limited 20 MoorgateLondon EC2R 6DAUK

Deutsche Bank AG 1 Great Winchester StreetLondon EC2N 2DBUK



Notes

Overview

Performance highlights 01

At a glance 02

Business review




Strategy 10

Leading: 12


People 30


Financial review 36




We deliver mission-critical software solutions and services in the financial services sector and in US healthcare. In Financial Services, we support more than 1,200 customers, including every one of the world’s top 50 banks. In US healthcare, Allscripts* serves more than 160,000 physicians, 800 hospitals and nearly 8,000 post-acute and homecare organisations and the proposed merger of Allscripts and Eclipsys will establish a clear leader in end-to-end healthcare IT.

Misys has transformed its business over the last three years. We completed the first phase of our multi year turnaround ahead of schedule by making sure that our customers are at the heart of everything that we do. Despite mixed market conditions, we are now winning more in our chosen markets while building the foundations for long-term growth. By leading through innovation, we are establishing a high-performance organisation that creates exceptional value for customers and unlocks exceptional value for shareholders. Misys is now preparing to lead in the industries that we serve.

* Misys plc owns a controlling interest in Allscripts-Misys Healthcare Solutions, Inc. (Allscripts). On 9 June 2010, Misys announced plans to realise significant value for shareholders through the sale of the majority of its controlling stake. Find out more about Misys at www.misys.com/report2010

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/report2010

Designed and produced by The College www.thecollege.uk.com

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