Morse posts mixed results

Corporate VAR posts profit up, but revenue down

Corporate VAR Morse has posted a mixed set of six monthly interim financial results, for the period ended 31 December 2005.

The group witnessed a pre-tax profit of £6.1m, an increase of 61 per cent compared to the same period last year. However, group turnover fell 13 per cent to £187.5m.

Richard Lapthorne, chairman of Morse, said in a statement: "We have made good progress in the first half and have continued with the successful transition of the group away from pure reselling towards the provision of services in consultancy, technology and support.”

The figures also revealed that Morse now generates 52 per cent of its turnover and 64 per cent of its gross profit from services, marking increases of nine and seven per cent from last year respectively.

Duncan McIntyre, chief executive of Morse, added: "The substantial growth in services revenue and in operating profit for the group are pleasing achievements for the half. We also continue to enhance the quality of our future revenue streams as we increase the proportion of revenues achieved from services."

In Europe Morse witnessed a turnover increase of 7.4 per cent to £62.5m, while its operating profit, before exceptional items, decreased by £1m to £1.7m. The group attributed this to the "disappointing performance" of its German business where turnover for the six months decreased by 7.3 per cent £34.3m.

Morse's net exception credit at the end of the period stood at £1.6m, which is comprised of a £7.1m charge for the disposal of its French business in 2005, as well as restructuring, property and people costs of £4.5m.

Heather Brice, an analyst at Ovum Holway, said: "It's a slightly mixed bag of results, but it is in a transition period. Over the next six to 12 months it will start to see more benefits of the changes it has implemented recently."

In April the pan-European integrator was forced to admit that its infrastructure business was flagging after revealing flat turnover for its third quarter trading update (CRN 18 July) and in August divided its business into three specific units in order to smooth its transition into a services company (CRN 1 August).