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Update: Morse returns to profit

Paul Kunert

IT consultancy and systems integrator Morse's turnaround plan is slowly paying off as its 2009 accounts returned to the black.

Despite a near 10% fall in sales to £211.9m for the 12 months ended 30 June 2009, Morse made an operating profit of £200k profit compared to £4.7m lossa year earlier. Gross profits fell 15.4% to £44m.

Charges for exceptional items were £8.3m for the year compared to £13.4m in fiscal 2008. A £1.4m profit from continuing operations was overshadowed by a £13.5m loss from discontinued operations, taking the yearly loss to £12.1m.

"The year under review has seen significant improvements in Morse as a business and a strengthening of the senior management team," said chief executive Mike Phillips, acknowledging the appointment of group finance director Guy Millward.

It has been a year of change for Morse, having entered into a cost reduction programme, parted company with long-term board director Duncan McIntyre, restructured the business, and broken up its Investment Management Consultancy (IMC) arm.

The UK Infrastructure Services and Technology business saw sales fall to £114.2m from £131.4m, while the unit remained largely flat on last year in Europe. The Business Applications division saw sales drop to £40.3m from £46.1m.

"The revised operational structure makes the products and services we offer clear to our clients, suppliers, staff and shareholders. All our businesses have made significant progress in reducing their cost bases," Phillips said.

Financial changes

Morse has confirmed that it is to sell off the operations in France - the last part of its IMC arm - to the country management team, subject to shareholder approval.

The sale of shareholding in France for £131k marks yet another step in reshaping the organisation.

The firm was recently involved in acquisition talks with several interested parties, but revealed last month those discussions had been terminated.

Cost control

However, the private equity owner Gartmore is understood to be keen on a sale, with the market expected to be tough in the calendar year ahead for all in the channel.

"We expect the market for IT services and technology to remain difficult and we will have to continue to be vigilant on costs while keeping the businesses focused on their propositions," said Phillips.

A version of this story originally appeared on MicroScope.

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