Morse spins off French subsidiary

Morse has sold off its French subsidiary to a management buyout team on the same day it released its preliminary year-end results.

The sale of Morse France was to Yen Bay Partners, an entity owned by the current management team of Morse France – Daniel Berloiz and Cyril Ferrieu. The deal is for €150,000 (£131,000), but is subject to shareholder approval.

Separately, under its statutory results for the year ended 30 June 2009, Morse posted a turnover of £211.9m, compared with £235.3m in 2008. Operating profit stood at £2m, compared with a loss of £4.7m in 2008.

The integrator’s cash position strengthened in 2009, with net cash standing at £12m, compared with £11.1m in 2008.

Mike Phillips, chief executive of Morse, said: “The year under review has seen significant improvements in Morse as a business and a strengthening of the senior management team. 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, the benefits of which were seen in the fourth quarter, resulting in a creditable financial performance for the year in difficult market conditions.”

He added that he expects the market to remain difficult.

“We will have to continue to be vigilant on costs while keeping the businesses focused on their propositions,” he said. “We believe that changes to Morse's operating model and focus, together with its continuing strong client relationships, have delivered improved underlying profitability and cash generation in the current year and position the group to continue such delivery in future."

Morse is divided into four separate businesses: Infrastructure Services & Technology UK; Infrastructure Services & Technology Spain; Infrastructure Services & Technology Ireland; and Business Applications Services. Earlier this year the firm was forced to reveal that it had turned down two offers for the business which "significantly undervalued" the company.

Its UK business put in a strong performance for the year, generating turnover of £114.2m, compared with £131.4m in 2008. Operating profit increased to £7.2m compared with £6.4m in 2008. The statement said an improved operating margin percentage of 6.3 per cent (compared with 4.9 per cent in 2008) was achieved despite the impact of the bad debt provision of £500,000 arising from Lehman Brothers filing for Chapter 11 and the £1m hit taken from its decision to withdraw from future Building Schools for the Future bids.

Phillips also praised the integrator’s staff.

“The board would like to thank all the group's employees for their continued hard work and commitment throughout the period under review," he said. "It has been a difficult time for the business compounded by the downturn in the economic environment.

“We have and will continue to experience significant change, but [we believe that we] will emerge a much stronger organisation with clear opportunities ahead.”