Morse hit by Lehman charge

Morse hit by Lehman charge

UK IT services group Morse says it will record a £500,000 charge in the third quarter relating to the collapse of US investment bank Lehman Brothers.

In an interim management statement, the vendor says its UK infrastructure service and technology unit (IS&T UK) booked the charge. This will cut the division's operating profit to £700,000, but this is still up on the £300,000 profit it made at the unit in the same period last year.

But overall Morse says the trading environment for all units "continues to be very challenging, compounded by the unprecedented global economic conditions".

Group revenue for the third quarter was flat at £55.8 million - compared to £55.2 million in Q3 2007. The vendor expects to report widening operating losses of £500,000 for the quarter, compared to £200,000 for Q3 in 2007.

The IS&T - Europe division made an operating loss of £800,000, compared to £600,000 in 2007. There was better news at the vendor's business applications services division, which saw operating profits rise from £100,000 in Q3 2007 to £300,000 this year.

But the investment management consulting unit had a "disappointing operating performance in the period resulting from the continued difficult trading environment". Operating profit fell from £500,000 in Q3 2007 to zero this year.

Morse says the Lehman related loss, combined with year on year declines in gross margin in some business units, has offset money saved through a restructuring programme it outlined in July.

Furthermore, restructuring costs for the year are expected to rise to between £5 million and £6 million - up on the £4 million to £4.5 million predicted in July.

Shares in Morse were down 1.5 pence, or 6.2%, to 22.5 pence in mid-morning trading.

Comments: (0)