Interim Results - Six months ended 31 December 2007

On track to achieve performance objectives and confident of performance for the full year

Morse plc ("Morse" or "the Group"), the advisory & execution professional services company, announces its interim results for the six months ended 31 December 2007.

Financial Highlights

• Revenue from continuing operations of £123.8 million (2006: £131.6 million*)
• Operating profit from continuing operations up 10% to £6.9** million (2006: £6.3 million*)
• Operating margin percentage from continuing operations up 0.8% points to 5.6%** (2006: 4.8%*)
• Closing net cash balance of £11.4 million showing good cash conversion
• Basic adjusted earnings per share of 3.9p** (2006: 3.7p*)
• Interim dividend of 1.30p per share (2006: 1.25p per share)

Statutory

• Operating profit £6.4 million (2006: £3.9 million)
• Profit before tax £6.4 million (2006: £3.7 million)
• Basic earnings per share 3.5p (2006: 2.1p)

* 2006 figures exclude the results of Monitise which was demerged from the Group in June 2007 and before amortisation
**Before amortisation

Operational Highlights

• Good progress against our clearly defined medium term performance objectives to:
  • Double the operating profit margin to 7.2% (from 3.6% at 30 June 2006)
  • Deliver absolute operating profit of £20.0 million
• Kevin Loosemore announced as the Chairman of Morse plc (as announced separately today)
• Business has performed in-line with management’s expectations in all four of the Group’s sector verticals:
  • Strong performance in Financial Services vertical further strengthened by acquisition of Xayce and continuing into the second half
  • Significant progress in Public Sector vertical market with £23m Building Schools for the Future (BSF) project and a pipeline of BSF projects worth in excess of £200 million
  • New Media-Comms team established with specialist skills providing the foundation for significant growth
  • Increasing the number of advisory led consultancy projects in the Commercial sector and developing specialisation in retail
• Management Consulting - demonstrating good growth in revenues and profits
• Applications Consulting - positive progress from higher quality business across the division and new divisional manager appointed
• Infrastructure Consulting - demonstrating continued revenue stability, with both margins and profits ahead of management’s expectations
• Tight control of overhead costs and improved quality of revenues supporting margin growth
• Confident of the prospects for the current financial year

"Morse is now a fully integrated professional services business and is focused on implementing its strategy as a business and IT consultancy company offering specialist advisory and execution services. We are pleased with the progress and the Group remains confident in achieving its medium term performance targets of doubling operating profit margin to 7.2% (from 3.6% at 30 June 2006) and delivering absolute operating profit of £20.0 million. Morse has an excellent blue chip client base, is building a solid foundation in its chosen vertical sectors and specialist capabilities areas and is well positioned for growth. A strengthened management team is in place and I am proud to announce that I will be handing the chairmanship to Kevin Loosemore during this exciting period for the Morse business."

"It is pleasing to report good progress for the first half with growth in operating profits, in-line with management’s expectations. As we continue to build our vertical sector specialisation, it was encouraging to see continued positive performance in Financial Services in the first half and at the beginning of the second period, good progress in Media-Comms as well as our existing strong pipeline of potential BSF projects. Our continued focus on managing costs and improving the quality and mix of the business we undertake has helped build operating margins. The feeling of confidence within Morse that we saw at the beginning of the current financial year has remained and, while mindful of the general market uncertainties, we are confident of the Group’s prospects for the full year."

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