Morse sees profit jump as restructure pays off

Corporate VAR's turnover increases by 10 per cent as benefits of recent activity start to come to fruition

Pan-European integrator Morse has hailed its restructuring strategy a success after posting a 10 per cent increase in turnover in its yearly financials.

The firm reported a turnover of £429.5m for the 12 months ended 30 June 2005, compared with £390m in 2004. That figure included £44.2m from Diagonal, which the firm acquired last year. Profit increased by 29 per cent to £9.7m, compared with £7.5m in 2004.

Earlier this year, the firm made over 100 employees redundant in a shift towards a more services-focused business (CRN, 9 May) and revealed it was splitting its business into three separate divisions to complete its transformation to a technology services company (CRN, 1 August).

Duncan McIntyre, chief executive of Morse, told CRN: “We have had a transition strategy for a number of years and this has proved to be right. Our division into strategic business units is going very well and we are taking a different view of the market as a technology integrator.

“We have transformed Diagonal from a loss-making company into a profitable one and we’ve seen our services revenue double in the past year.”

McIntyre added the firm would not rule out future acquisitions. “We clearly are an acquisitive company and we will continue to be so if we find the right companies to invest in,” he said.

David Brockton, IT analyst at market watcher Investec, said: “We believe Morse is well positioned to compete in the business consultancy space, with its reseller expertise complementing that offering.

“It realised quite early on that the pure reseller model is dead and made the move towards a more diversified offering. This year has been a pivotal year for Morse and we are confident that the group has a strong foundation to enable the business to continue going forward.”

A source close to the firm added: “Morse has struggled with its hardware business, as have other players, but overall it has done very well and is growing its services business, which is the right way to go.”