Preliminary results for the year ended 30 June 2009

Morse plc ("Morse", "the Group" or "the Company" - LSE: MOR.L), the IT services and technology company, announces its preliminary results for the year ended 30 June 2009.

Morse is structured as four independent business units:

Infrastructure Services & Technology - UK;
Infrastructure Services & Technology - Spain;
Infrastructure Services & Technology - Ireland; and
Business Applications Services.

Financial Highlights

Net cash at 30 June 2009 of £12.0 million (2008: £11.1 million)
- Cash at period end of £12.7 million (2008: £11.1 million) of which £0.6 million held in Assets held for resale
- Customer specific financing of £0.7 million (2008: £nil)
Cash generated from operations of £6.8 million (2008: £7.3 million) all of which was generated from continuing operations (2008: £3.6 million) representing 89% of Adjusted EBITDA (2008: 47%).

Continuing operations

Revenue £211.9 million (2008: £235.3 million)
Adjusted EBITDA* £7.6 million (2008: £7.8 million) at a margin of 3.6% (2008: 3.3%)
Adjusted EBIT* £4.2 million (2008: £4.5 million) at a margin of 2.0% (2008: 1.9%)
Trading balance releases of £4.1 million (2008: £4.2 million)
Operating profit before exceptional items £8.3 million (2008: £8.7 million) at a margin of 3.9% (2008: 3.7%)
Profit before tax and exceptional items £7.8 million (2008 restated: £8.2 million)
Net exceptional items of £8.16 million (2008: £13.40 million)
- restructuring charges in the period of £8.64 million (2008: £nil), cash costs of £5.9 million
- dilapidation charges of £0.70 million (2008: £nil)
- credits of £1.18 million relating to forfeiture of share based payments and reversal of fair value adjustments (2008: £nil)
- Impairment of Goodwill and Intangible assets £nil (2008: £13.4 million)
Adjusted basic earnings per share (before exceptional items and trading balance releases and with a normalised tax charge) 2.0p (2008 restated: 2.2p)
The distributable reserves position means that a final dividend cannot be declared (2008: 1.3p per share). The Board has reviewed options to enable future dividend declarations and recommends a Court Approved Capital Reduction process.

Statutory results
Continuing operations

Revenue £211.9 million (2008: £235.3 million)
Operating profit £0.2 million (2008: operating loss £4.7 million)
Net exceptional charges of £8.16 million (2008: £13.4 million).
Loss before tax £0.4 million (2008 restated: £5.2 million)
Tax credit for the year £1.7 million (2008: Tax charge £1.3 million) arising from resolution of prior year tax items
Profit for the period £1.35 million (2008 restated: Loss £6.5 million)
Basic earnings per share 1.0p (2008 restated: loss per share 5.1p)

Discontinued operations

Sale of the UK and Jersey Investment Management Consulting ("IMC") business, formerly known as CSTIM for cash consideration of £1.3 million
Goodwill and Intangibles Impairment charge of £13.7 million
With the exception of France, other Geographic parts of IMC business either closed down or now sold
Sale of shareholding in France to management agreed subject to shareholder approval
IMC classified as discontinued operations
Net assets held for resale of £0.2 million
Loss after tax £13.4 million (2008 restated: profit after tax £1.8 million) including exceptional items of £15.0 million (2008: £nil)

*In assessing the performance of the business the Directors use "Adjusted EBIT" and "Adjusted EBITDA". Adjusted EBIT is Earnings Before Interest, Tax, Trading Balance Releases and Exceptional Items whilst Adjusted EBITDA is Earnings Before Interest, Tax, Depreciation, Amortisation, Share Based Payments, Trading Balance Releases and Exceptional Items.

Commenting on the results, Mike Phillips, Chief Executive Officer of Morse plc, 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.

We expect the market for IT services and technology to remain difficult and we will have to continue to be vigilant on costs whilst keeping the businesses focused on their propositions. 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."

Contacts:

Morse plc Tel: 020 8380 8000
Mike Phillips, Chief Executive Officer
Guy Millward, Group Finance Director

Financial Dynamics Tel: 020 7831 3113
Giles Sanderson/Haya Herbert-Burns/Nicola Biles