Morse dismantles Investment Management Consultancy


Morse dismantles Investment Management Consultancy

Paul Kunert

Morse has sold its loss-making UK and Jersey-based management services practise to Navigant Consulting Ltd for up to £1.3m, the first and largest element of its Investment Management Consultancy (IMC) business to be sold or closed.

The unit formerly known as CSTIM, which provides specialist investment management consulting and advises on Business and Operational strategy made an operating loss of £44,000 in the year to 30 June 2008 on the back of sales worth £3.2m.

It also made two rounds of redundancies in November and December at a cost of around £250,000.

Due to worsening performance of the business Morse said it had only two options available - to close the business at a cost of £750,000 or to sell the division on terms agreed with Navigant.

No other parties joined the negotiation table and talks began in the summer before the credit crunch took hold.

"Navigant Consulting have confirmed to Morse that they would not proceed on the agreed terms if there was a delay to obtain shareholder approval," said Morse in a statement.

As a consequence, there is no prospect of shareholder approval prior to the sale and the UK Listing Authority has agreed to waive the technical requirements for shareholder approval to avoid closing the business and the resulting costs to Morse.

Under TUPE regulations, a two week consultation period has commenced for the management and employees of the CSTIM business.

The price of the cash deal starts at £1.3m, payable on completion but with a £400,000 deferred consideration, which hinges upon the operating profit performance of CSTIM.

Morse said CSTIM accounted for the largest part of its IMC business and the remaining elements in South Africa and Luxemburg were being closed, while the operations in France, Skillshub in the UK and Australia were being considered.

"As a result of the sale there will be an impairment of goodwill on Morse's consolidated balance sheet, relating to the IMC business units, of £14m arising from the sale and there will also be a write down of the same amount in the carrying value of the investment in Morse plc's company balance sheet," said Morse.

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