Morse boss brands 2008 results as disappointing

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Morse boss brands 2008 results as disappointing

Microscope contributor

Morse has branded its latest financial results as "disappointing" after posting a significant losses and revenues that declined marginally.

For the 12 months to 30 June 2008, the UK integrator made a loss before tax of £2.3m while turnover fell to £253.3m, down £4m compared to a year ago.

"This was a disappointing year for Morse," said Kevin Loosemore, chief executive at the integrator, "Growth in services was not achieved, leaving revenue broadly flat year on year and profit before exceptionals down 9%."

"This reduced profitability, poor underlying quality of earning and poor cash conversion resulted from inadequate operational performance and execution in a number of areas," he added.

The Business Service Applications division in particular recorded losses on a number of fixed price contracts, but gross margins fell across most of the business and Spain was highlighted as having a poor second half performance.

Morse said progress on meeting the medium term margin target of 7.2% was disappointing as it tries to heighten the focus on services.

But ironically while expected services growth was not achieved, technology sales grew 10% for the year, primarily from products shipments.

In July, Morse simplified the business into five divisions; Infrastructure Services and Technology in the UK, Spain and Ireland, and Business Application Services, and Investment Management Consulting.

In the same month, the firm also embarked on a cost reduction programme that will result in a charge of £4 to £4.5m to be recorded in the next financial year.

"While we expect the market for IT services and technology to remain difficult, we anticipate that changes to Morse's operating model and focus, together with its ongoing strong client relationships will deliver improved underlying profitability and cash generation in the current financial year," said Loosemore.

He added, "We continue to believe that once operational issues are fixed, strong execution of our current combination of business should be able to produce our target of 7.2% operating margin in the medium term."

Last month, Duncan McIntyre one time chief executive at Morse and latterly non-executive chairman left the business to focus on Monetise, the mobile banking and payments solutions arm that was spun out of Morse in July 2007.

 

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