Systems integrator, Morse has warned the City that sales in the
fiscal second half of the year are likely to be lower than the
£114.4m reported in the
first half.
In an update on unaudited trading for the year ended June, the
integrator said that improved margins on revenues reflected cost
reduction programmes and the resolution of problems related to SAP
projects in the Business Application Services unit.
It said the Infrastructure, Services and Technology division in
Ireland and Spain was expected to be "marginally profitable"
despite recording a £600m loss in the first half of the year
Invoices related to the Building Schools for the Future
initiative with South Tyneside and Gateshead had been paid and
Morse has signed another deal with the next school in the area as
part of the Government backed scheme.
Morse expects the cost reduction programme initiated
last summer to result in restructuring charges of £10.2m to
£11.2m, up from the initial estimation of £8.5m. This was due to
"onerous lease and dilapidation provisions" related to
properties.
Earlier this year, Morse
sold off its Investment Management Consultancy arm to focus the
business on four main divisions.
The balance sheet has also recorded an exceptional charge of
£13.8m for the impairment of goodwill in this fiscal year.
"We knew this would be a difficult year for the group," said
Mike Phillips, Morse chief executive.
"With the significant restructuring and change programme near
completion, we have established Morse today as a niche provider of
IT services and technology," he added.
The business units had benefited from the cost reduction plan,
he said, and working capital was £12m, compared to a net debt of
£8.9m a year ago, giving the group "a much more stable, solid
position from which to face the current economic climate".
Morse was the subject of a
takeover as revealed yesterday but turned down the offer of 25
pence per share. The stock is currently valued at 23.5 pence giving
it a market capitalisation of £30.5m
This is a significant improvement on the 52 week low of 12.75
pence.
A version of this story orignally appeared on
Microsope.