RNS Number : 0832R
Morse PLC
24 April 2009
24 April 2009
Morse plc
Interim Management Statement
Morse plc ('the Group' or 'the Company'), the IT services and technology company, announces its interim management statement covering the period 1 January 2009 to the date of this announcement and includes unaudited management accounts information for the nine months ended 31 March 2009.
The continuing operations of the Group comprise four independent business units:
-
Infrastructure Services & Technology - UK
-
Infrastructure Services & Technology - Spain
-
Infrastructure Services & Technology - Ireland
-
Business Applications Services
Following the disposal of the UK and Jersey Investment Management Consultancy, this business is classified as discontinued.
Trading performance before exceptional items
In the three months to 31 March 2009 the Group's operating loss before trading balances releases from continuing operations was £0.4 m. The unaudited trading performance of the business units before exceptional items for the nine months ended 31 March 2009 based on unaudited management accounts information is set out below:
|
|
Revenue
|
Operating profit/(loss)
|
Margin %
|
|
|
Nine months ended
March 2009
|
Nine months ended
March 2008
|
Nine months ended
March 2009
|
Nine months ended
March 2008
|
Nine months ended
March 2009
|
Nine months ended
March 2008
|
|
|
£m
|
£m
|
£m
|
£m
|
|
|
|
Infrastructure Services and Technology:
|
|
|
|
|
|
|
|
• UK
|
83.9
|
96.4
|
4.4
|
3.1
|
5.2%
|
3.2%
|
|
• Europe (Spain & Ireland)
|
41.7
|
41.8
|
(0.6)
|
1.4
|
(1.4%)
|
3.3%
|
|
|
|
|
|
|
|
|
|
Business Applications Services
|
31.3
|
35.6
|
1.2
|
1.2
|
3.8%
|
3.4%
|
|
|
|
|
|
|
|
|
|
Continuing Operations
|
156.9
|
173.8
|
5.0
|
5.7
|
3.2%
|
3.3%
|
|
Group and Central Costs
|
|
|
(4.4)
|
(3.8)
|
|
|
|
Before Trading balance releases
|
|
|
0.6
|
1.9
|
|
|
|
Trading balance releases
|
|
|
2.2
|
4.1
|
|
|
|
Continuing Operations
|
156.9
|
173.8
|
2.8
|
6.0
|
1.8%
|
3.5%
|
|
Discontinued Operations
|
|
|
|
|
|
|
|
• Investment Management Consultancy
|
8.8
|
13.3
|
-
|
1.8
|
0.0%
|
13.5%
|
|
|
|
|
|
|
|
|
|
Total
|
165.7
|
187 1
|
2.8
|
7.8
|
1.7%
|
4.2%
|
Infrastructure Services & Technology - UK
The largest business unit in the Group continues to deliver an improved operating profit performance from lower revenues as a result of the improved focus on core propositions and the cost reduction exercise initiated in July 2008.
Following a review of the South Tyneside and Gateshead ('STaG') Building Schools for the Future ('BSF') project, £0.5 m of operating profit taken in the year ended 30 June 2008 has been reversed in the quarter.
Morse is now discussing a number of alleged performance issues with the client. Morse wholly refutes the allegations, but if they were to be upheld ultimately it could lead to termination of the contract. Morse remains committed and focused on the successful delivery of the STaG BSF contract.
Infrastructure Services & Technology - Europe
Ireland and Spain continue to be adversely effected by their respective local economies. Spain in particular has had a poor quarter. The restructuring programme announced at the interims is progressing well and it is anticipated that once completed this will position the business unit for the commencement of the new financial year. We anticipate continued marginal profitability for IS&T - Europe until there are improvements in the respective economies
Business Application Services
The business continues to trade in line with its revenue plan and is showing improved profitability over last year. Management have continued to focus on resolving the fixed price contract issues identified previously and on improving the operational metrics of the business. During the period to 31 March there has been a release of £0.2 m out of £0.7 m of the provision on problem contracts, offset by a charge of £0.2m on foreign exchange losses arising in overseas subsidiaries.
Group and Central Costs
Group and central costs comprise:
|
|
Nine months ended March 2009
|
Nine months ended March 2008
|
|
|
£m
|
£m
|
|
Group and Central Functions
|
2.3
|
2.8
|
|
Amortisation
|
0.9
|
0.8
|
|
Share Option costs
|
0.8
|
0.7
|
|
Sub-total
|
4.0
|
4.3
|
|
Foreign Exchange loss/(gain)
|
0.4
|
(0.5)
|
|
Central costs
|
4.4
|
3.8
|
Restructuring
Exceptional restructuring costs of £6.8 m have been provided for in the period to 31 March 2009 and the cash impact of the restructuring during the period was £5.3 m. As previously announced with the interim results in February, the full year charge will be between £8.0 m and £8.5 m as a result of further cost reduction opportunities.
Net cash position
At the end of March 2009 the Group had net cash balances of £0.8 m consisting of cash balances of £2.9 m less Customer Specific Financing of £2.1 m. The updated Working Capital Cycle of the Group is available at www.morse.com.
The Group is comfortably within the limit of the covenants under its banking arrangements.
Outlook
The trading environment for all our business units continues to be very challenging, compounded by the unprecedented global economic conditions. This is evidenced by longer sales cycles and deferral of contractual decisions. The operating profit outturn in the current financial year for our continuing operations is dependent upon the conversion of our sales pipeline. In our Infrastructure Services & Technology businesses these decisions will be weighted towards the end of the financial year. Management remains focused on driving operational efficiencies and executing on the defined strategy which we believe will, over time, deliver benefits to shareholders.
Contacts:
Morse plc Tel: 020 8380 8000
Kevin Loosemore, Executive Chairman
Mike Phillips, Chief Executive Officer
Financial Dynamics Tel: 020 7831 3113
Giles Sanderson
Haya Chelhot
Nicola Biles
This information is provided by RNS
The company news service from the London Stock Exchange
END
IMSMGGZDVFRGLZM