Morse sells off German and Austrian operations
24 July 2006 | 1454 views | 0
Morse plc (the Company or the Group), the consulting, technology and support group, is pleased to announce that it has completed the sale of its reselling operations in Germany and Austria.
Morse GmbH and Morse IT Solutions Austria GmbH (Morse Germany) have been sold to The becom Group for a maximum consideration of €9.5m. An initial consideration of €7.1m is payable in cash with €2.4m of deferred consideration payable in cash in 90 days, subject to the collection of Morse Germany's receivables. The consideration, net of the cash staying inside Morse Germany, is €1.0m.
At completion, Morse Germany's cash balance stood at €8.5m and, with a net asset position of €7.3m at 30 June 2006, it was expected to report an operating loss of approximately €1.2m for the second half of FY06. This transaction will result in a non-cash exceptional charge of £2.7m for the Group which will be charged in the period to 30 June 2006.
Morse's strategy has, for a number of years, been focused on transitioning the Group from a pure reseller to a consulting, technology and support company centred around advice and execution. This transaction is an important step forward for the Group in this transition.
Given that Morse's German and Austrian operations had remained predominately focused on reselling and infrastructure services and that significant further financial and management investment would have been required to transform it into a higher value-added business, this business was no longer considered core to the Group.
Commenting on the sale, Duncan McIntyre, Chief Executive of Morse plc, said:
"The majority of activity in Germany and Austria was based around reselling and infrastructure services and this factor, taken together with the infrastructure trading environment in Germany, led us to the decision to dispose of this business.
The mix of activity of our operations in Spain and Ireland is more consistent with the remainder of the Group, with a significantly higher proportion of revenues derived from services than was the case in Germany and Austria.
Our decision to dispose of our German and Austrian operations enables us to focus on completing the transition of the Group and on developing other opportunities which we believe will provide greater shareholder value.
We continue to be satisfied with the progress of the rest of the Group."