specialists inspiring business success
annual report 2007
morse plc morse plc annual report 2007
b
how do you recognise
specialists who inspire
business
every day morse consultants
work with many of the biggest
best and most innovative
organisations we help them 
to identify and capitalise on
business and technology
opportunities with morse’s
deep industry knowledge and
international resources we also
mobilise people skills alliances
and technologies where and
when they are needed –
together with requisite
processes and structures
we do all this to improve our
clients’ business performance
morse consultants are creative
experts dedicated professionals
whose diverse points of view
spark innovation and success
contents
wwwmorsecom
company overview
1 highlights
2 chairman’s statement
4 what we do
6 the year in review
8 ceo business review
business review
12 highlights
14 geographical and market review
16 executive management team
18 key performance indicators
19 business risk assessment
20 operating review
28 corporate social responsibility
30 financial review
governance
32 highlights
34 board of directors
36 directors’ report
39 statement of directors’ responsibilities
40 corporate governance statement
46 directors’ remuneration report
54 independent auditor’s report
financial statements
56 highlights
58 consolidated income statement
60 consolidated statement of
recognised income and expense
61 consolidated balance sheet
62 consolidated cash flow statement
63 notes to the financial statements
111 advisers and financial calendar
112 principal offices morse plc annual report 2007 1
company overview
highlights
financial
operational
� following the successful demerger of monitise in june 2007 
morse plc now operates as a single advisory and execution
professional services firm
� operating profit from continuing operations is up 16 to 
£122 million 2006 £106 million
� operating margins are up from 36 2006 to 48
� morse had a cash balance at 30 june 2007 of £153 million 
2006 £178 million
� we aim to double the percentage operating margin in the 
medium term from 30 june 2006
statutory
� operating profit £43 million 2006 £128 million
� profit before tax £38 million 2006 £60 million
� basic earnings per share 10p 2006 26p
 all these items have been restated due to the demerger of monitise and relate to 
continuing operations excluding all exceptional items
 definition can be found in the earnings per share section of the financial review on page 31
£122m
operating profit
2006 £106m
48
operating margin
2006 36
56p
pro forma adjusted 
basic eps
2006 50p morse plc annual report 2007 2
chairman’ s statement
this year the group became a fully integrated
international professional services firm operating under
one brand and delivering business and it consultancy
services across four chosen industry sectors following
the successful demerger of the mobile banking
applications business monitise in june 2007 morse 
is now totally focused as a pure professional services
business and over the past year we have made many
changes to our operating model to ensure we have the
right foundation to take the business forward morse now
has the ability and resources to pursue its own growth
strategy building on our outstanding blue chip client base
and leveraging our range of specialist capabilities
results
operating profit before interest taxation and exceptional
items from continuing operations was up 16 to £122
million 2006 £106 million the continuing business has
seen a significant increase in operating profit over the past
two years 2005 £76 million to 2007 £122 million
operating margin percentage from continuing operations
was up 12 points to 48 2006 36 the increase 
in operating margin reflects the continuing improvement in
the underlying quality and mix of our services business
we will aim to maintain solid earnings per share growth at
similar levels to that achieved in the year to 30 june 2007 
group revenue from continuing operations for the year to
30 june 2007 was £2565 million 2006 £2965 million
the decline in revenue was principally due to our
continued withdrawal from the it infrastructure product
fulfilment business and our desire to ensure product is
only ever delivered as part of a services engagement  
we now believe that our revenue is reaching a level of
support from which we can progress
a final dividend of 280p 2006 270p will be proposed for
shareholder approval at the annual general meeting to be
convened on 30 october 2007 and subject to shareholder
approval will be paid to shareholders on the register as 
at 12 october 2007 the dividend will be payable on 
5 november 2007
morse
morse’s advisory and execution services are focused on
three main areas management consulting applications
consulting and infrastructure consulting we will continue
to manage the business broadly along these lines in the
short term as we strengthen our existing vertical sector
capabilities in four key markets financial services 
media and communications commercial and public
sector we are already transitioning our relationships with
many strategic clients and over time will move to a full 
clientdriven vertical sector model  
by combining the strengths of our three business units
into a single portfolio of services we are now providing our
clients with specialist services in support of their business
strategies and operating models including business
processes it applications and it infrastructure we maintain
strong partnerships with the marketleading product and
solutions vendors we are also leveraging our specialist
expertise and deep industry domain knowledge to develop
longterm sustainable client relationships
morse operates under one brand with one culture
utilising a unified client franchise we have established
richard lapthorne
chairman morse plc annual report 2007 3
strong thought leadership in our chosen sectors and
emerging information technology and we aim to deliver
total solutions to clients we can deliver in a consistent
style and develop our people within a single coordinated
talent management process and we aim to attract and
retain the best talent available
morse is a top 15 consultancy player in the uk consulting
market with strong international reach and is gaining
market and client momentum as such the business is
now well placed to move towards the operating margins
that are consistent with other established advisory and
execution firms and we therefore aim to match or exceed
industry benchmarks and double the operating margin
percentage from 30 june 2006 over the medium term
following the demerger of monitise at the financial yearend
morse now has the strategic focus and financial strength
to fulfil its potential as a pure professional services firm
with the demerger of the monitise business from morse
kevin alcock was appointed chief executive officer of
morse plc having been chief executive of the morse
operating business since july 2006 duncan mcintyre
previously chief executive officer of morse plc has moved
to the role of deputy chairman management remains
focused on the strong financial management that has
been a hallmark of the morse story to date while pushing
forward with clearly stated performance objectives and
well defined actions to deliver shareholder value
richard lapthorne
chairman
4 september 2007
changes to 
group structure
over the last few years the group has been transforming itself
from a reseller to technology integrator to a business and
it consulting company we have undertaken this transformation 
in order to provide our substantial blue chip customer base with
the broader offerings they now require combining advisory and
execution consulting and delivery services with industry and
technology skills and capabilities we have managed this
transition by a combination of organic development and
acquisition the acquisitions together with the selective disposals 
we have made have enabled us to accelerate the transformation
process and our financial controls have allowed the group to
remain consistently cashgenerative at the operating profit level
we now have the framework in place for the remaining significant
activities and geographies to become important components of
morse a single international advisory and execution professional
services business
with the successful transformation of the morse business and
development of the monitise business it was recognised that both
businesses had increasingly distinct characteristics with different
funding requirements and growth strategies the morse board
decided a demerger of monitise from morse plc was the best way
forward as this would demonstrate the independent value of both
businesses allow each to focus on its core competencies pursue
its own investment strategies and provide shareholders in morse
plc with investment choice
company overview morse plc annual report 2007 4
what we do
one company
morse is an international consulting company offering our clients
specialist business and it advice and execution to maximise their
results we are a deliveryoriented company with focused industry
expertise our offering is a powerful combination of management
application and infrastructure consulting skills
we are a clientdriven organisation in which every relationship
matters in our efforts to deliver real value moreover our
commitment to clarity of thought and effective communications
helps to make the complex simple
morse experts provide our clients with a blend of international
industry and technical specialisation our people speak their clients’
language and understand their metrics so what we do we do right
– from the outset
management consulting
wwwmorsecommanagementconsulting
identifying and addressing business opportunities and enabling the
delivery of transformational change to improve business performance
applications consulting
wwwmorsecomapplicationsconsulting
putting in place the optimal business processes systems and
organisational design to improve business performance
infrastructure consulting
wwwmorsecominfrastructureconsulting
providing managing and operating technology to improve business
performance morse plc annual report 2007 5
company overview
advise
providing the specialist knowledge
experience and processes that ensure
development and implementation of
the strategies best suited for the
clients’ own business drivers
execute
supplying consultants and specialists
with the right mix of vertical market
and it skills to design implement and
manage successful business process
and technology change
finance
morse focuses on a number of areas within the
sector these include investment management
insurance capital markets and retail
our consultants have earned a reputation for
demonstrable value through their flexible and
collaborative working style and indepth industry
knowledge we have built an enviable thought
leadership position based on strong
relationships throughout the sector with asset
managers product providers service providers
software vendors and industry bodies and
forums as a result we can offer considered
advice on how financial services organisations
can best respond to the challenges within the
constantly changing marketplace
mediacomms
morse provides specialist technology expertise
and the skills to implement solutions to selected
areas within the sector these include traditional
operators virtual network operators internet
service providers equipment manufacturers and
media companies backing up this offering is our
excellent track record in delivering successful
media and communications projects through
consulting services and it and technology
integration capabilities
commercial
morse has over 15 years of experience in
providing business and it consulting and
implementation services to organisations within
the commercial sector our specialist knowledge
and experience in these industries have delivered
sustainable business benefits and competitive
advantage for our clients in several sector areas
such as food and beverage consumer products
retail engineering construction and operations
and process industries
public sector
morse provides focused technology expertise
and skills in solutions implementation to support
the uk central and local governments’
transformational programmes selected areas
include education and the ‘building schools for
the future’ initiative and content management
solutions for departments and authorities based
on delivering enterpriseclass ict solutions morse plc annual report 2007 6
the year in review
october 2006
to underpin morse as a professional services company
david mitchell joins as managing partner for human
capital a new and detailed talent management
programme is launched to ensure that morse attracts
develops and retains the best people in the market
november 2006
to strengthen and enhance the executive and support the
strategic goals of the business the morse partnership
group is formed to provide an extended and clientdriven
leadership team
august 2006
to support the transformation activity a new one morse
business framework is introduced this encompasses the
firm’s vision strategy and strategic goals and objectives
it also includes the architecture for our operating model
structure culture and communications and decisionmaking
as well as systems for effective management performance
and governance
july 2006
kevin alcock is appointed ceo of morse group limited 
to accelerate the transformation of the business into an
advisory and execution professional services firm 
the one morse programme is launched and ‘project
rainbow’ a change management initiative is established
to drive and coordinate morse’s strategic goals
morse’s operations in germany and austria are sold
because their focus as a reseller of technology does not 
fit the new profile of the firm
july 2006
illustrating morse’s objective to develop international
business reach through a process of skills acquisition 
a new management consulting operation opens in paris
2006
july 2006
november 2006 morse plc annual report 2007 7
so far in 2007
the extensive morse blue chip client base now benefits
from newly established one morse relationships ensuring
commercial advantage from the breadth and depth of
consultancy services and solutions capabilities provided
february 2007
morse culminates the success of the one morse
transformation programme with the launch of the new
morse brand and integrated morse website the well
received launch includes a comprehensive
communications portfolio directed to all stakeholders
june 2007
morse’s financial year closes with the successful demerger
of the monitise business allowing us to focus on
accelerating the firm’s development as a business and
it consulting company kevin alcock is appointed ceo 
of morse plc to lead the business and deliver our
strategic objectives
may 2007
the one morse transformation project project rainbow
successfully achieves its goals to support the transition
from ‘design phase’ to ‘execution phase’ morse launches
seven strategic groupwide objectives and key
performance indicators
company overview
2007
february 2007 june 2007 morse plc annual report 2007 8
chief executive officer’ s review
forward thinking
kevin alcock
chief executive officer
morse has transformed itself into a fully integrated
professional services company operating under one brand
and as a result has made significant progress in improving
the quality and mix of our business by combining the
strengths of our three business units into a single portfolio
of services we are now providing our clients with
specialist advisory and execution services in support of
their business strategies and operating models including
business processes it applications and it infrastructure
what differentiates us from other companies in the market
is our specialist knowledge our ability to respond quickly
to our clients’ business and it needs and our company
culture the new morse brand is developing an outstanding
reputation in the business and it services market in our
chosen sectors and we have the right strategy investment
capability and management skills in place to exploit our
key strengths and to build on the strong position we have
already established in our chosen markets
the morse transformation programme has focused on
improving the quality and shape of the business in terms
of client relationships mix of advisory and execution
services and balance between product services and
consultancyled engagements this strategy has provided
the foundation for the progress we are making towards 
our mediumterm strategic goals to
� double the operating margin to 72 
from 30 june 2006 by growing it between 05 
and 10 per annum 
� deliver absolute operating profit of £200 million
� improve gross margins to between 27 and 30
� enhance recurring revenue streams from 24 to 30
� increase chargeable headcount aligned to our revenue 
and profit targets
� develop the balance of one morse clients to greater 
than 50 of our core relationships
achievements in the year
having completed our transformation during the past year
we are now in the process of implementing our strategies
and delivering the tangible results we sought
� successful demerger of monitise with no further funding
obligations giving morse the strategic focus and 
financial strength to fulfil its potential as a professional 
services firm
� fully integrated business operating under a single morse
brand with strong differentiation in the business and it 
consulting services market
� we have enhanced and strengthened the senior 
management team and have implemented a structured 
and very active talent management programme
� progress against our clearly defined growth strategy and
medium term performance objectives
– operating profit from continuing operations before 
exceptional items up 16 to £122 million 
2006 £106 million having significantly improved 
in the last two years 2005 £76 million
– operating margin percentage from continuing 
operations before exceptional items up 12 points 
to 48 2006 36 morse plc annual report 2007 9
integrating the business
this is a major milestone for us and helps position morse as a
leading international consulting business differentiating us from
other companies in the market are morse’s specialist knowledge
our ability to respond quickly to our clients’ needs and our
company culture
our recent integration and rebranding
positions morse as a leading
international consulting business
one brand
one culture
one client franchise
one delivery style
one talent management 
process
by combining the strengths of our three business units into a
single portfolio of services we are now providing our clients with
specialist advice in management applications and infrastructure
consulting services
company overview morse plc annual report 2007 10
forward thinking
‘the morse business now represents a
balanced portfolio of business and it
consulting services and capabilities that
we will continue to enhance by focusing
on increasing client value and exceeding
industry standard benchmark metrics’
– recurring revenue enhanced from 22 to 24 over 
the last three years
– chargeable headcount has increased by 30 over 
the last three years
– one morse clients now represent 1015 of 
the business
� strong cash position of £153 million to support ongoing
investment in the business
strategic objectives
the morse business now represents a balanced portfolio
of business and it consulting services and capabilities that
we will continue to enhance by focusing on increasing
client value and exceeding industry standard benchmark
metrics to drive the business forward we are focusing 
on seven strategic objectives each with detailed key
performance indicators these are reviewed developed
and cascaded throughout the organisation
� making the most of the breadth and depth of morse 
resources and capabilities through a strategic client 
management programme designed to enhance our 
client relationships
� increasing our focused industry proposition capabilities 
through the development recruitment and acquisition of
specialist skills
� developing a culture and values framework that together
with a structured people development programme 
creates an inspiring environment for all stakeholders
� optimising our core business process management to 
maximise the quality of client engagement and align 
resources directly to providing client value
� growing the balance of our business profitably so that 
we can support our investment programme for 
enhancing our specialist consulting skills
� delivering in all aspects of the morse business the one
morse brand promise to offer better value to our clients
� enhancing our capabilities as an international consulting
business with selected investment in increasing local 
operational resources and skills base
shape of the business going forward 
there are three key dimensions to the morse business that
will shape the way that we develop and grow
� the range of our advisory and execution consultancy 
services
� the breadth and depth of our infrastructure applications
and management consulting capabilities
� the level of focused industry segment specialisation 
within the financial services media and 
communications commercial and public sector 
vertical markets
we plan to significantly increase the advisory services
within our applications and infrastructure consultancy
business units at the same time we will develop and
grow our execution services within our management
consulting business unit from the strong base of advisory
services that exist already
we will also drive a more comprehensive balance of
services across our business units as we develop morse’s
specialist capabilities and vertical market expertise morse plc annual report 2007 11
company overview
industry verticals – morse will continue to build on its
significant position within the financial services market
where we are a top five player and has revenues of 
£1161 million we are developing the specialist media 
and communications business with a wellarticulated client
focus and market offering including defined propositions
and solutions coverage that draws on a full range of
morse’s consulting capabilities and we continue to
develop clients across the large operators network
providers equipment manufacturers and media and
content companies media and communications now
represent £504 million of revenue we will also continue 
to develop the breadth and depth of our proposition in the
commercial sector which already delivers £731 million in
revenue with emphasis on the retail and consumer goods
segments in the public sector a relatively small segment
for morse with revenues of £169 million our focus will be
on opportunities arising from the government’s
transformation agenda and back office transformation 
in local government
plans are in place to move forward with all these areas
from within our own resources we continue to invest
organically and during the current year examples include
the development of our business in france and our focus
on the government’s building schools for the future bsf
initiative which is already yielding opportunities for which
we are short listed in addition the company will make
acquisitions where these offer the opportunity to add
specialist capabilities or accelerate the overall
development effort 
£122m
operating profit
2006 £106m
working with our clients
fc asset management
fc asset management
fc asset management fc is a leading investment specialist
managing over £101 billion in assets for a range of investors
including private investors financial advisors and institutional clients
towards the end of 2006 fc faced some operational challenges
with their front office applications managing multiple inherited
applications was leading to difficulties in providing new functionality
to their fund managers 
to overcome these challenges fc engaged our services to advise
and help them to redesign the front office architecture and to
improve their efficiency in delivering functionality to the fund managers
drawing on our extensive experience in the financial services sector
morse was in a position to meet the client’s business needs as well
as provide specialist industry expertise our ability to offer the full
spectrum of consultancy from operational advice through to
implementing the solution architected was central to our
engagement on this assignment morse consultants worked with the
client to understand how their existing systems were supporting their
business before designing a revised architecture and associated
delivery processes fc are now implementing their new applications
architecture and are confident that they are now well placed to
incorporate new developments in their front office as they arise
luc leclercq director of operations fc asset management says
“very pleased with timely and professional advice given by morse” 
outlook
we have made a good start to the current financial year
across all business units and remain on track to achieve
our performance targets of a 72 operating margin
producing an absolute operating profit of £200 million
over the medium term the business continues to identify
and execute on opportunities to accelerate our strategy
we are moving forward with increasing confidence 
kevin alcock
chief executive officer
4 september 2007 
 from continuing operations excluding all exceptional items morse plc annual report 2007 12
medium term 
objectives
£200m
deliver absolute
operating profit
72
double operating
margin
05  10 pa
enhance operating margin
wolseley
wolseley is the leading supplier of construction products
materials and services across europe and north america 
the company’s historical success and future growth
objectives has resulted in its continued investment in key
business improvement initiatives such as the management of
it service delivery across the business in support of this
morse was chosen to assist in delivering a common global
systems and service management solution founded on itil
best practice  
working in partnership with wolseley morse provided
independent advice and guidance in selecting the technology
developing the architecture and implementing the global 
endtoend solution morse delivered a single global service
desk instance and integrated systems management solution
the service desk is tightly integrated into a knowledge
management system presented through a selfservice portal
empowering the client’s enduser community and resulting in
a reduction of service desk support costs
working with our clients
wolseley morse plc annual report 2007 13
business review
business review
what we’re achieving through specialism
our brand is developing an
outstanding reputation in the
business and it services market in
finance media and communications
commercial and public sector 
we have the right strategy
investment capability and consulting
and management skills to boost 
morse profitability morse plc annual report 2007 14
geographical and market review
morse spain sl
barcelona spain
madrid spain
morse ltd
st helier jersey
united kingdom
and ireland
see inset
morse consulting pty ltd
cape town south africa
johannesburg south africa
morse
dublin ireland
cork ireland
morse plc
brentford uk hq
london uk
fleet uk
derby uk
leeds uk
edinburgh uk
morse
consulting inc
wayne usa revenue profile
morse plc annual report 2007 15
business review
£257m 
revenue
1500 
employees 
t op 300
working with over 
50 of europe’s 
top 300 companies
morse plc
luxembourg
morse management consulting sas
paris france
6 
revenue in public sector 
45 
financial 
20 
media
comms 
29 
commercial  
management 
consulting
uk
channel islands
france
luxembourg
south africa
australia
singapore
applications 
consulting
uk
spain
ireland
usa
apac
infrastructure 
consulting
uk
spain
ireland
morse consulting sdu bhd
kuala lumpur malaysia
morse pte ltd
singapore
morse consulting ltd
sydney australia
melbourne australia morse plc annual report 2007 16
executive management team
the morse plc management
team reviews operational
issues and progresses 
the development of 
strategic topics
kevin alcock
chief executive officer
kevin joined morse in 2004 as part of the acquisition 
of cstim limited which he had cofounded in 1998 
he was appointed to morse’s executive team later that
year to grow our management consultancy services 
he became chief executive officer in 2007 before
cstim kevin was head of the investment management
consultancy business at ernst  young
eric dodd
group finance director
eric is a chartered accountant with an mba from the
london business school prior to joining morse in 
autumn 2005 he held financial management positions 
in glaxosmithkline whitbread and marconi eric was
appointed to the morse board in september 2006
david mitchell
managing partner
david joined morse as managing partner for human capital
in november 2006 previously he worked at detica for 
15 years initially in a number of feeearning positions and
from 1998 as the group hr director
our values
morse is clientfocused and delivers maximum value by
working in true partnership with clients and suppliers as
well as internally to that end we focus on building strong
morse teams that span our own business and develop
longterm relationships with our clients
we aim to deliver our services in a way that is different and
refreshing although we relish addressing complexity we
keep our solutions and our communications as simple and
as practical as possible
we always act with integrity – in our words and actions
and with everyone we come into contact with
we combine deep specialist knowledge of industries
processes and technologies in order to provide thought
leadership deliver the best possible service to our clients
and provide interesting and challenging careers for
our people
we are passionate about what we do this passion
coupled with our knowledge and experience is the key to
our success and that of our clients
we believe that working to this set of values and using
them to influence our decisionmaking will deliver
maximum longterm benefit to our clients their 
success ensures the sustainability of our own
lr eric dodd kevin alcock and david mitchell morse plc annual report 2007 17
alex zaragoza
managing partner
alex is managing director of morse spain and joined
morse in 2001 through the acquisition of isasa a firm he
cofounded in 1991 alex’s earlier experience includes
principal consulting roles with ibm and philips computers
paul mccarthy
managing partner
paul joined morse in 2003 to lead the morse mobile
business and has developed the strategic focus within the
media and telecommunications sector he has also served
as divisional director for the client services division and
managing director for morse technology  integration
paul has a 17 year track record within it including heading
up group bull’s international finance systems division and
managing director at brokat
david beresford
managing partner
david joined morse in december 2002 before then 
he held senior management positions at andersen
consulting diagonal plc and sportbusiness group 
he was appointed to the morse board in august 2003
and became the managing director of diagonal in 2004
nick petheram
managing partner
nick joined morse in october 2002 as a client director
following 17 years in the financial services and it industries
nick was promoted to managing director of delphis in
2004 and in 2006 as a partner led the integration of
delphis with the infrastructure consulting business 
operational framework
lr nick petheram paul mccarthy alex zaragoza and david beresford
business review morse plc annual report 2007 18
key performance indicators
comments
revenue represents third party revenues generated from
morses four business segments the decline in turnover is
consistent with the transition of the group from a reseller to a
professional services firm decline in product sales mainly in
the uk is compensated for by growth in consulting services
across the group the 13 year on year decline in fy07 is
due to the decision to withdraw from the product fulfilment
market in the uk
revenue – continuing operations
£309m
fy05
£296m
fy06
£257m
fy07
the board and executive team have put in place a set of
focused strategic objectives and key performance
indicators kpis to underpin morse’s transition to a
business and it consulting company the kpis are
designed to allow the board executive and shareholders
to monitor operating performance and progress against
strategic goals as a peoplebased business going
forward morse will be collecting and evaluating a portfolio
of internal and external data points including client
satisfaction stakeholder returns employee satisfaction
skills utilisation attrition and headcount we are
developing a more comprehensive kpi analysis for our
management processes and fy08 reporting
comments
gross margin percentage gm represents gross profit as a
proportion of third party revenues gross profit is the difference
between turnover and cost of sales and excludes exceptional
items the improvement in gm is consistent with the
transformation of the business from a product reseller model to
a pure play consulting player the gm improvement is also a
reflection of the quality and mix of business the group’s
objective is to improve gross margin to between 27 and 30
in the medium term
gross margin  – continuing operations
219
fy05
218
fy06
237
fy07
comments
earnings per share eps is a ratio that shows how much of a
company’s aftertax profits each shareholder owns and is
stated in pence per share adjusted eps represents profit after
tax excluding exceptional items divided by the weighted
average number of shares in issue see earnings per share
section of the financial review on page 31 the improvement
in eps reflects the improved profit generation of the continuing
businesses over the period with little change in the number 
of issued shares
pro forma adjusted basic eps – 
continuing operations
42
fy05
50
fy06
56
fy07
comments
operating margin represents operating profit as a proportion
of third party revenues operating profit is the difference
between gross margin and overheads and excludes
exceptional items the improvement in the operating margin
reflects the improved quality and profit generation of the
continuing businesses over the period the groups objective
is to double the operating margin to 72 in the medium term
from june 2006 
operating margin  before exceptionals –
continuing operations
25
fy05
36
fy06
48
fy07 morse plc annual report 2007 19
business review
business risk assessment
the morse business is constantly evolving which brings
with it changes in the risks the company faces the
financial performance of our business could be affected by
any of these changes and associated risks whilst not all
risks are foreseeable and are difficult to plan for morse has
established a proactive and collaborative approach to risk
assessment and management utilising the expertise of its
own executive and management teams a decision
making and governance process an approvals matrix 
and the advice of its professional advisers
risk management process
senior management is aware of their responsibility 
for managing risk within their strategic business units
‘sbu’ each sbu head reports to the morse executive
committee which in turn reports to the board on the
status of these risks through management reporting
throughout the business risk is constantly being reviewed
to take account of the changing structures and issues
affecting the group  
the audit committee actively reviews business risk twice
annually and is reasonably satisfied that the group has
adequate tools and control mechanisms to mitigate risk
and ensure it is identified promptly and monitored
the board regularly reviews group risk to ensure that 
risk management is being implemented and 
monitored effectively
the board’s policy is to ensure the sbus are empowered
to manage their businesses effectively and appropriately
bearing in mind the requirements for timely decision
making and commercial reality
the company regularly reviews its commercial insurance
programme and maintains an appropriate and adequate
portfolio of insurance policies in line with the nature size
and complexity of the business
operationally an approvals matrix is utilised to ensure 
risk is identified and escalated to the relevant managerial
levels with a rigorous internal signoff process governing
risk decisions standard form contracts are provided for
business use and to assist the commercial function to
negotiate within an appropriate and approved safety zone
the legal department regularly provides update contract
seminars to ensure that processes are known being
adhered to and updated as necessary to meet the
changing needs of the business the legal department
further supports the drafting and implementation of the
risk and approvals process
through the management reports risks are highlighted
and monitored to identify potential business risk areas
and wherever possible to quantify and address the risk
with a contingencymitigation plan
general risks 
there are three specific areas of risk that morse has identified as being of core
importance to its business and hence merit specific focus
delivering against client contracts
with the transformation of morse into an advisory and execution professional
services firm the size complexity and duration of the contracts it delivers increases
as a business and it partner to our clients we are tasked with delivering solutions
that are business critical in nature the projects normally involve interdependencies
with our clients’ operational systems and indeed with other it suppliers and as such
there is a risk that our projects could be subject to delay this brings the risk that
cash flows are affected it also involves the appropriate management of major fixed
price implementation contracts
peoplebased business
our people their experience expertise skills and capabilities are our major asset
and represent a key means by which we are able to differentiate ourselves from our
competitors if morse loses key individuals with specialist skills it can prove difficult
and costly to replace them and the market for quality individuals with specialist
business industry and technology skills is highly competitive morse utilises a variety
of mechanisms to attract develop retain and incentivise staff in order to mitigate
this risk the management and development of people through our talent
management programme is a key objective
reputation with clients
in conjunction with the contract and peoplebased risks above we could fail to 
meet client expectations the clients’ operations could be adversely affected and
consequently our reputation for delivery damaged
principal risks 
� maintenance of sufficient liquidity to enable the group to continue to invest in new 
acquisitions to allow the business to refresh and grow talent for longterm future 
development
� the ongoing successful execution of the one morse change programme to ensure
integration continues synergies are maximised and the business prospers through
‘pullthrough’ deals encouraged by crossselling of services and product the 
sales environment will require education and possibly incentivisation to support the
crossselling philosophy resistance to change must be highlighted and properly 
dealt with by the group acquisitions could further impede the one morse 
integration strategy
� fluctuations in demand and project phasing for a consultancybased services 
business can result in nonrecoverable costs and poor utilisation of resource
� ensuring that bonus schemes across the group adequately incentivise and 
motivate the sales staff to exceed budgeted performance
� ensuring the group processes systems and structures are rationalised and ‘fit for 
purpose’ for a professional services business the group has undergone a full 
review of existing practices and processes in an attempt to streamline the 
business to improve the control environment and robustness of process the risk 
of not transitioning similar processes across the group could impact on the overall 
performance and integration of the one morse strategy
� ensuring that the quality of business and margin is maintained and enhanced
� dependency on quarterly resulting peaks which need to be transitioned to a 
monthly cycle which in turn would assist in providing greater predictability and 
faster identification of trends
the above principal risks are mitigated and managed through robust internal ‘checks
and balances’ with the involvement of all managing partners morse executive team
and the legal department as appropriate morse plc annual report 2007 20
operating review
management consulting
management consulting had an excellent year showing
continued growth and development the strategy of the
business remains unchanged to provide specialist
consultancy services to our key clients in the industry
verticals our strength today lies in the financial services
industry we have achieved growth in the current year by
broadening our service to clients through better integration
of our applications and infrastructure offerings alongside
our proven management consulting services we have
done this within the context of expanding our
management consulting business geographically
during the year the business developed a range of new
services for hedge fund managers and life  pension
companies we also developed specialist knowledge
regarding operating models and it applications to help
clients trade more complex instruments such as
derivatives these capabilities have enabled us to gain 
a deeper understanding of the capital markets industry
where we can start to exploit the overlap of services with
the investment industry
as a result revenue for the year increased to £178 million
2006 £141 million and operating profit before exceptional
items increased to £24 million 2006 £22 million 
since the acquisition of cstim in 2004 which provided
the foundation for our management consulting business
unit turnover has grown from £73 million to £178 million
£178m
revenue
across all geographic regions uk channel islands
france luxembourg south africa australia and
singapore our management consultancy business
experienced steady growth in revenues and profit  
in particular the development of our business in france
was pleasing in the first full year of operation we achieved
an operating margin of 6 we ended the year with a
chargeable headcount of 17 staff and became an
established consultancy in the region we have
experienced extremely strong demand for our services
throughout the year however the recruitment of suitably
skilled personnel has remained a particular challenge and
restricted our further growth
skillshub our specialist financial services resourcing and
contractor placement business became whollyowned by
the group during the year and it recorded strong growth
with profit increasing by 10 on the previous year
our transaction services practice which provides
consulting services to organisations undertaking merger 
or acquisition activities had excellent revenue growth
lifted by the buoyant private equity market morse plc annual report 2007 21
business review
£24m
operating profit
working with our clients
jpmorgan asset management
jpmorgan asset management
based in london and luxembourg jpmorgan asset management with circa 
us275 billion assets under management manages a number of single manager
hedge funds
in 2006 morse were engaged to review their administration and internal operating
model options for a range of luxembourg domiciled hedge funds with the aim of
ensuring that service provision would meet current requirements and future 
growth aspirations 
morse applied expertise and tools to review the options and relative costs available
including use of internal service provision existing and potential service providers and
prime brokers
� operating model review completed to capture current and future requirements
� review and evaluation of administration services provided by three tierone 
prime brokers
� review and evaluation of internal service provision
� rfp evaluation of leading hedge fund administrators benchmarked against
operational best practice 
morse sourcing strategy and advice has benefited jpmorgan asset management by
� enabling a material reduction in operating costs through the design of a simpler 
more integrated infrastructure which incorporates variable cost services
� putting jpmorgan asset management client servicing on a paneuropean footing
through the establishment of a fullpassported luxembourgbased administration hub
� brokering an innovative commercial structure that encourages service providers to
invest in service quality improvement and operational risk reduction
the full benefits of the proposed solution will be realised once the implementation phase
has been completed 
steve clifford project sponsor at jpmorgan asset management says “engaging the
morse team has quickly enabled us to move to a market leading operating solution for
our hedge fund business the skills and expertise that morse has brought to the table
has proven to be invaluable in realising our strategic goal in this space”
 from continuing operations excluding 
all exceptional items morse plc annual report 2007 22
relating to people processes and capabilities in certain
areas and a small number of challenging fixed price client
contracts in the sap division we have duly made changes
to the operational structure of the business rebalancing
the headcount and our approach to new business
opportunities with a focus on transforming our consulting
business from a generalist project organisation to one 
with a greater emphasis on specialist consulting we are
pleased to report good progress in the second half as a
result of the actions taken
we continue to be pleased with the development and
growth of the gss business this area has exceeded
expectations at both revenue and profit levels during
fy07 a significant proportion of this business’ revenues
are annuitybased and these have seen strong growth
over the year with revenues more than doubling
compared to the same period last year such performance
enables us to maintain a strong ongoing relationship with
clients to support their organisation’s internal change
programmes in consulting the it transformation
business had a strong year and is starting to leverage the
broader range of morse clients we expect another strong
performance in the current year 
our ecm business has continued to develop well 
the second half of the year has seen stronger revenues
and profits from delivery engagements involving software
products including stellent vignette autonomy and our
inhouse niche product wisdom which continues to build
a strong client base
applications consulting formerly referred to as ‘business
consulting’ consists of four main lines of business
� consulting delivers management it transformation 
and enterprisewide systems integration in support of 
technologies such as sap  oracle and microsoft
� global support services gss provides a 24x7 
managed service business process optimisation 
and offshore delivery and support
� enterprise content management ecm provides 
solution implementation skills in support of technologies 
such as stellent vignette autonomy and wisdom
� strand is an it placement business for contractor staff 
aligned to our applications consulting capabilities 
the business operates in three main territories the uk
asia and the usa
in the year ended 30 june 2007 sales were £749 million
2006 £849 million and operating profit before
exceptionals was £55 million 2006 £67 million  
the ecm it transformation and gss lines of business
have all performed strongly in the gss business in
particular we now have a global support model and are
seeing strong performance in the uk and a significantly
improved performance in asia and the usa 
although we have seen some extremely profitable and
exciting business throughout the year we undertook a
strategic review of the consulting business following the
difficulties relating to the trading in this area outlined in our
half year results through this review we identified issues
operating review
applications consulting
£749m
revenue morse plc annual report 2007 23
business review
marshall wilkins the permanent recruitment business 
was disposed of during the year as this did not fit with 
our ongoing business strategy  we continue to build and
develop strand our it resourcing and contractor
placement business
moving into the current financial year our focus will be 
on deepening the specialisation within our business and
generating a higher quality of revenue making changes
that allow us to further develop our existing client
relationships and build new relationships based upon 
the value we can deliver
operational excellence is critical to our success we have
made significant changes to the operating model of the
applications consulting business during the year the
changes were mainly in relation to the development of
specialist business and it skills the sales model staff
remuneration structures cost management processes 
and project governance we will look to further improve
and evolve these processes and procedures as the
business develops equally important we are a people
business and we have made great efforts to develop a
career development framework to provide opportunity 
and progression to all our staff on whom we rely to deliver
our strategies for success
working with our clients
emi
emi
emi is the worlds largest independent music company
employing over 6600 people emi music represents some of the
most famous international recording artists whilst emi music
publishing owns the largest catalogue of songs in the world
keen to improve the efficiency of its business emi decided to
implement an sap enterprise resource planning solution across
europe japan and north america recognising the need for
effective management of the large and sophisticated solution the
client did not want the expense of building and running its own
support organisation and enlisted morse’s expertise to help set
up a global competency centre 
morse is now seen as an integral part of the client’s organisation
providing seamless global 247 support in local languages
through morse offices worldwide additional functionality is
developed and deployed by morse based on the client’s evolving
business requirements the costeffective service provides the
client with access to sap expertise that it could not retain
inhouse locating support teams offsite and only charging the
client for the services it uses 
£55m
operating profit
 from continuing operations excluding all exceptional items morse plc annual report 2007 24
the year saw a good performance and we continued to
capitalise on our business transformation progress the
first half was particularly strong with profits of £35 million
before exceptional items in the second half the business
achieved operating profits before exceptional items of 
£21 million
we have continued to execute on our strategy to 
increase the level and range of services that we provide
our clientled approach has supported the successful
transformation to an infrastructure consulting business
this has resulted in significant growth in our services
business and a greater proportion of advisory and
consultancy work our business wins are now morse
proposition led this shift has enabled us to reduce the
risks associated with a vendorled business model and
enabled us to better protect operating margins instead
we now operate a strong sustainable and relationshipled
business that is much more under our control 
the morseled marketing plans developed in the last year
to 30 june 2007 have continued to evolve building on 
our reputation for technology expertise and handling
complex projects we have focused on positioning morse
as a thought leader in infrastructure technologies and
related business issues we now take four key technology
propositions to market technology services flexible
resourcing managed services and technology consulting
we will continue to further develop these propositions and
have the full support of our vendor partners in following
this approach 
in the year to 30 june 2007 we increased the services
capability of our uk technology  integration business to
create morse infrastructure consulting this has included
the development of our technology and consulting
services at advisory and implementation levels and has
resulted in a shift in focus to higher quality business for 
the technologies we provide with all infrastructure sales
now being services led we have also restructured the
organisation to increase operational efficiency balance
cost and resources and ensure concentration on key
clients vertical markets and promising propositions 
our drive to gain cost efficiencies through improvements
to our sales model and back office business processes is
an ongoing process
morse infrastructure consulting revenue for the year
decreased by 31 to £973 million 2006 £1407 million
with operating profit before exceptional items increasing to
£56 million 2006 £26 million this reflects our strategy
to focus on higher margin servicesled client engagements
and withdraw from pure product fulfilment business whilst
we were expecting a decline in revenues as a result of this
shift the dropoff in revenue has been sharper than
anticipated moving forward we will continue to focus on
growing our services business however product delivered
as part of the service remains a key part of the offering and
we believe that in this regard product revenues are now
reaching a level of support from which we can progress
operating review
infrastructure consulting
£973m
revenue morse plc annual report 2007 25
business review
significantly over the course of this year we have seen
incremental opportunity from the pullthrough of business
from the morse applications and management consulting
teams with very favourable reaction from clients to our
integrated consulting offering this has accelerated since
the launch of the new morse programme and our unified
brand as a result we have secured new client
engagements that combine management or application
consulting with our advisory and execution services at 
the technology infrastructure layer
working with our clients
orange
orange
‘we have worked with morse for many years and highly value
their advice and support most recently they architected and
implemented a bespoke solution to enhance our it reporting
capability previously our it staff could spend days manually
compiling basic reports about how our technology was
performing against the services that we provide to the business
this not only wasted valuable time but could still only provide a
limited amount of information morse tailored our new reporting
framework to enable us to create automatic reports which match
against key business services quickly and easily freeing up time
which can be used for more valuable tasks morse has also
helped us gain a greater insight into the services we are providing
so we can react faster to systems that are underperforming’ 
‘morse has also been instrumental in helping us to improve the
efficiency of our enterprise and systems management allowing us
to save in excess of £11 million over three years in both capital
and operational expenditure on one initiative alone morse’s
consultants have been involved in the architecting and design 
of our solution which has not only helped us improve the
management of our it environment but has reduced the cost of
managing it not only did morse help design the strategy but as
we introduce new applications and devices and our management
needs change morse is always on hand to help us ensure that
our management is effective and efficient morse’s experience
working with customers in the telecommunications sector their
indepth knowledge of our environment the solutions we use
and their company culture have proved crucial to the success of
our partnership morse’s consultants are not only experts but they
work as a seamless extension of our it team’
£56m
operating profit
 from continuing operations excluding all exceptional items morse plc annual report 2007 26
operating review
international
europe – spain and ireland
in the year ended 30 june 2007 sales were £665 million
2006 £568 million and operating profit before
exceptional items was £35 million 2006 £34 million
morse spain achieved yearonyear revenue growth of
21 with strong performance in consulting activities
morse ireland has experienced significant growth with
services and consultancy now accounting for 32 of
gross margin
both the spanish and irish businesses are well positioned
to continue their current success in infrastructure services
and grow their consulting capabilities 
international coverage
apart from spain and ireland which are managed as a
separate business segment morse has a significant
international presence which is reported within the
management applications and infrastructure consulting
business units
morse has an outstanding blue chip client base which 
we are now positioned to leverage more effectively  
a significant number of these clients operate
internationally and we are well placed to continue the
deployment of our core services and support capability
where and when required
although we operate internationally we are not aiming to
deliver the full range of morse’s capabilities in all regions
currently we have international offices to support our
management consulting business in the uk 
channel islands france luxemburg south africa
australia and singapore with over 85 consultants
providing specialist services to the investment and 
life  pensions industries we also have international
capabilities supporting our applications and infrastructure
consulting businesses in spain ireland usa and 
asia pacific apac morse’s international operations
continue to support and drive our revenue and operating
profit growth
working with our clients
ssl
ssl
ssl international is a global consumer healthcare company with
a portfolio including the global brands durex and scholl as well
as a diverse range of locally owned brands such as syndol
paramol and meltus in the uk and sauber and mister baby in
italy the company employs around 4500 people
ssl wanted to reduce business risk by replacing its large number
of disparate it systems with a single software platform and to
develop greater efficiency in business processes to support the
group as it moves forward ssl chose sap as its preferred
platform and morse as its implementation partner 
morse helped the client reduce business risk by implementing a
stateoftheart erp platform introducing standard processes and
establishing the basis for business intelligence the new platform
has given the client greater efficiency shorter lead times
increased responsiveness and the ability to benefit more quickly
from future business acquisitions valuable sap skills were
transferred to ssl employees during the project and daytoday
sap issues can now be handled inhouse  morse plc annual report 2007 27
business review
monitise which was demerged from morse plc in 
june 2007 has a well established position in the uk with 
its monilink service accessible to 35 of all current
account holders in the uk by autumn 2007 it is confident
that it will reach agreement to provide its services to
further uk banking groups over the coming months
monitise’s international presence is expanding rapidly 
it has a joint venture established in the us with metavante
corporation a presence in germany through tsystems
and strong interest for partnerships in the gulf states 
and australia
the mobile banking and payments market is rapidly
gaining momentum not dissimilar to the growth of 
internet banking in its early stages and monitise’s
technology has the massmarket characteristics required
for mobile banking to become a ubiquitous and valuable
banking channel
monitise has strong momentum an excellent competitive
position and compelling prospects it believes the current
year will show substantial progress
operating review
monitise
highlights
monitise
� strong progress in uk business
– three major uk banking groups and seven uk mobile 
operators now using the monitise platform including hsbc 
first direct alliance  leicester royal bank of scotland 
natwest vodafone orange o2 tmobile and hutchison 3g
– by autumn 2007 monilink services will be accessible to 
35 of all current account card holders in the uk
– confident of further uk bank signings in the coming months
� international roll out gaining traction
– joint venture with the banking and payment specialists
metavante corporation in the us giving access to a market 
of over 8600 financial services firms
– agreement in place with tsystems providing exclusivity to
negotiate the rights to the monitise platform in germany
– new agreement with bt global services providing
exclusivity to negotiate the rights to the monitise platform 
for selected gulf states
– new agreement with gfc group providing exclusivity to
negotiate the rights to the monitise platform in australia
� demerged from morse plc and raised £202m after expenses 
of the issue via placing in june 2007 to meet working 
capital requirements
� investment phase continues
– developing opportunities in key territories
– signing new banks and the roll out of existing mobile
banking and payments services including balance enquiries
ministatements and mobile topups
– implementing new services to include interaccount
transfers second factor authentication and remittances
� revenue stream continuing to build
� board confident monitise has established an excellent 
competitive position and has compelling prospects morse plc annual report 2007 28
corporate social responsibility
at morse we recognise that our community responsibilities
reach beyond our clients shareholders employees and
suppliers our high ethical standards extend to everything
we do including meeting all relevant legislative
requirements on environmental issues and minimising the
environmental impact of morse’s operations 
we also support a wide range of charities and encourage
members of staff to become involved in local projects and
initiatives and support their efforts we are proud of our
membership of the ftse4good index series which
measures the performance of companies that meet
globally recognised corporate standards 
values
morse is a client driven organisation our values underpin
the behaviours required for success and to ensure we
conduct our business to the highest standards we
� work in partnership
� are refreshing
� act with integrity
� are specialists
� are passionate about our work 
charity work
morse’s charity policy focuses on supporting the charitable
activities of our staff and where possible our clients and
partners over the course of fy07 morse has supported
over 40 separate charity requests from employees
participating in a range of activities these included the
flora london marathon the british heart foundation’s
london to brighton bike ride and the florida ironman
challenge in addition the company has donated surplus
computers to charitable organisations
morse recognises the importance of company initiatives
and so leads a number of such activities including the 
annual charity christmas card and participation in the
‘girlchild in afrika’ project founded by st cyprian’s
school in cape town to help to break the cycle of poverty
and lack of education that is the plight of many in 
south africa it provides financial assistance to girls 
who would otherwise not be able to afford the quality of
education offered by the school we have supported the
charity since 2005
give as you earn gaye
we recognise that many morse employees wish to donate
to charitable causes parts of the company operate a
gaye scheme enabling staff to donate to a charity of their
choice via regular deductions from their salary we plan to
extend the scheme throughout the group in the near
future
environmental awareness
we acknowledge morse’s environmental responsibility and
so are committed to operating the business in an
environmentally sensitive manner
recycling
all morse uk offices are provided with paper and toner
recycling facilities and a system will shortly be rolled out
across the business for recycling glass plastic and
cardboard
the morse sponsored ‘girlchild in afrika’ with her headmistress 
at st cyprian’s school in cape town morse plc annual report 2007 29
business review
asset recycling
morse operates an asset retirement programme internally
and offers this as a service to its clients it donates surplus
computers to charitable organisations
reducing the carbon footprint
we aim to reduce morse’s carbon footprint wherever
possible we also advise our clients on methods to limit
their carbon emissions while trimming their costs as well
recommended techniques include reducing power
consumption improving equipment utilisation 
managing the datacentre efficiently and changing
employee behaviours
the group has chosen not to set environmental key
performance indicators kpis due to its relative size and
limited impact which it has on the environment morse’s
environmental policy is proactive in limiting its impact and
includes internal infrastructure which is purchased in
compliance with the rohs directive and disposed of in
compliance with the weee directive compliance with
these directives has had no material impact on the group
supporting students
in order to build strong links between the group schools
and colleges as well as the local and regional economic
communities in which we operate morse offers work
experience and placements to students in doing so 
we strive to make morse work placements positive
challenging and relevant to participants’ current studies
and their future job prospects
we also present lectures and seminars on career options
in the business and it consulting space to university
students to help them decide on their future career
health and safety
morse recognises that health and safety is a business
function and must therefore continually progress and
adapt to changes health and safety has positive benefits
to the organisation therefore our commitment to a high
level of safety makes good business sense 
we fully comply with the health and safety at work act
1974 as part of this process we ensure allocation of
appropriate levels of resources to health and safety issues
and activities within the organisation and work to
encourage a positive culture within this context our
overall approach to health and safety is soundly based 
on the identification and control of risks
by reviewing our health and safety policy annually we 
are able to track any changes in legislation or in our own
operations and act accordingly we have in place effective
procedures for communication and consultation between
all levels of staff on matters of health safety and welfare
employees
morse provides employees with regular information about
the business through newsletters email and update
meetings that allow the free flow of information and ideas
between management and employees
the group recognise the importance of nondiscriminatory
employment practice and has an equal opportunities
policy that includes the employment of people with
disabilities it gives full consideration to applications from
disabled persons when the requirements for the job can
be fulfilled and this applies equally where existing
employees become disabled morse plc annual report 2007 30
financial review
changes in group operations
there have been two major changes in the group’s
operating entities compared to the prior period
morse germany
the disposal of morse germany was completed on 
24 july 2006 there was no profit or loss on disposal this
year as a consequence of goodwill being impaired by 
£16 million in the accounts for the year to 30 june 2006
monitise
on 28 june 2007 monitise was demerged from 
morse and listed on the aim independently raising 
£202 million of funds from the placing of shares the loss
of £73 million incurred by the business for the year to 
30 june 2007 has been included in discontinued operations
with prior year comparatives restated accordingly
revenue and profit
group revenue from continuing operations fell by 
13 yearonyear to £2565 million the revenue
performance reflects our strategy to focus on 
servicesled client engagements and withdraw 
from product fulfilment business
operating profit before exceptional items for the continuing
operations was £122 million up 16 on last year
revenue and operating profit from continuing operations
and before exceptional items by business segment is
shown in the table below
exceptional items
the net exceptional items before tax amounted to 
£14 million this amount is analysed in more detail in 
note 3 the major items included in this category are
noted on the next page
eric dodd
group finance director
revenue and operating profit before all exceptional items from continuing operations by business segment
fy07 fy06
operating operating 
£’m revenue profit revenue profit
management consulting 178 24 141 22
applications consulting 749 55 849 67
infrastructure consulting 973 56 1407 26
europe 665 35 568 34
group 48 43
2565 122 2965 106 morse plc annual report 2007 31
business review
business disposal
the expense associated with the monitise demerger 
was £25 million which was recognised in 
discontinued operations
property provisions
there was a net reduction of £27 million in the property
provision this year  following a review of ongoing
requirements the group exited properties in chineham
manchester hanwell and brentford during the year  
the settlements paid on the exit were below the provisions
held in the accounts resulting in a release of £21 million
during the year operations in brentford were consolidated
resulting in a provision of £10 million being set up
interest
net interest income fell by 50 yearonyear to £03 million
this is a result of a lower average cash balance during the
year following the disposal of morse germany and
continued investment in the monitise business
taxation
the tax expense of £20 million represents an effective
rate of 53 which compares to a rate of 30 for the year
to 30 june 2006 the high underlying tax rate was due to
nonallowable costs relating to the demerger of monitise
the company expects the rate to revert to 30 for the
foreseeable future
earnings per share
basic earnings per share including discontinued
operations decreased from 26p last year to 10p in the
year to 30 june 2007 details can be found in note 4
pro forma adjusted basic earnings per share increased
from 50p last year to 56p in the current year the 
pro forma earnings per share figure is based on profit
before tax from continuing operations before exceptional
items 2007 £125 million 2006 £110 million less tax at
a normalised effective group rate of 30 for both years 
the calculated profit after tax is then divided by the
weighted average number of shares 2007 154573000
2006 151827000
dividend
a final dividend of 280p per share an increase of 37
over last year will be subject to approval at the agm and
be paid on 5 november 2007 to all shareholders on the
register at the close of business on 12 october 2007
this gives a total dividend for the year of 405p an
increase of 38 on last year
cash flow
cash and cash equivalents at the yearend amounted 
to £153 million compared to £273 million last year the
principal outflows during the year were dividend payments
of £61 million monitise investment including jv of 
£72 million and disposal of morse germany £32 million
funding
during the year morse has put in place a committed
facility of £100 million through a revolving advance
facility with its bankers this facility together with
overdraft facilities and cash balances provides an
adequate headroom position for the group to fund
investment opportunities into 200708
eric dodd
group finance director
4 september 2007 morse plc annual report 2007 32
£1161m
financial services
£504m
media and
communications
£731m
commercial
£169m
public sector
vertical markets
yell
as a result of its strong vendor relationships yet independent
stance morse has been able to implement a supplier
framework agreement which delivers considerable cost
savings to yell
morse has demonstrated quarter on quarter improvement
against the criteria set by yell as part of their strategic
supplier programme these are based on service levels
communication flexibility value and relationship
morse’s specialist sales team has demonstrated an indepth
understanding of yell’s business and their requirements
allowing morse to create innovative and unique solutions to
meet yell’s needs the breadth and depth of morse’s
knowledge and expertise has enabled morse to implement
appropriate and effective solutions on time and on budget 
the strength of this relationship has allowed yell to take
advantage of morse’s capabilities to advise and execute
across a range of enterprise level technologies and issues
including servers storage software asset lifecycle
management and resourcing
working with our clients
yell morse plc annual report 2007 33
governance
governance
shaping the future
we now have the strategic focus
and financial strength to fulfil our
potential as a pure professional
services firm morse have clearly
stated performance objectives
and welldefined actions to
deliver shareholder value morse plc annual report 2007 34
board of directors
what the board does
the board is accountable for the performance and affairs
of morse plc it is responsible for the adoption of strategic
plans monitoring of operational performance and
management and ensuring effective risk management
strategies and compliance with applicable legislation
it meets its objectives by reviewing and guiding corporate
strategy approving key policies and objectives
understanding key risks and ensuring operating processes
are in place to mitigate them
working with the executive management
in fulfilling its responsibilities the board is supported 
by the executive management which is required to
implement the plans and strategies approved by the
board the board monitors management’s progress 
on an ongoing basis
richard lapthorne
chairman
richard joined morse in 1998 and was vice chairman of
bae until 1999 he is chairman of cable  wireless and
new look
duncan mcintyre
executive deputy chairman
duncan joined morse as finance director in 1994 was
then appointed commercial director and was the group’s
chief executive officer from 1997 to 2007 in 2007 he
became the group’s executive deputy chairman he is 
a qualified accountant and worked at price waterhouse
for ten years before joining morse he is chairman of
monitise plc chairman of acclimatise and a 
nonexecutive director of profero limited
kevin alcock
chief executive officer
kevin joined morse in 2004 as part of the acquisition 
of cstim limited which he had cofounded in 1998 
he was appointed to morse’s executive team later that
year to grow our management consultancy services 
he became chief executive officer in 2007 before 
cstim kevin was head of the investment management
consultancy business at ernst  young
lr duncan mcintyre richard lapthorne and kevin alcock morse plc annual report 2007 35
governance
eric dodd
group finance director
eric joined morse in 2005 and became group finance
director in 2006 he is a chartered accountant with 
an mba from the london business school prior to
joining morse in autumn 2005 he held financial
management positions in glaxosmithkline whitbread
and marconi eric was appointed to the morse board 
in september 2006
derrick nicholson
nonexecutive director
derrick joined morse in 2005 before his appointment to
the board in december 2005 derrick was an executive
director and cfo of the avecia group he previously
worked for astra zeneca and ici and held a number of
senior financial positions he became senior independent
director in 2006
the hon michael benson
nonexecutive director
michael joined morse in 2007 he is the nonexecutive
chairman of ashmore group plc a nonexecutive
director of invesco japan discovery trust plc and a
director of border asset management limited badanloch
estates limited and community foundation network 
he was formerly a vicechairman of amvescap plc and
has held various roles within invesco
nigel whitehead
nonexecutive director
nigel joined morse in 2004 he is group managing
director of air systems a division within bae systems
and brings with him over 20 years’ management
experience from varying roles within the aerospace and
defence industry
nicholas sandison
company secretary
nicholas joined morse in 2004 he is a solicitor and 
legal counsel in the legal department advising on legal
and compliance matters across the morse group of
companies he was appointed company secretary
in 2007
lr nigel whitehead michael benson and derrick nicholson nicholas sandison left and eric dodd morse plc annual report 2007 36
directors’ report
for the year ended 30 june 2007
the directors present their annual report and the audited financial statements of morse plc and its subsidiary companies
‘the group’ for the year ended 30 june 2007
principal activity
this year the group has completed its progress in the transition of its core business from it reseller and technology
integrator to a group delivering business and it consulting and delivery services the group is now a single unified advisory
and execution professional services business operating under a single morse brand
results
the results of the group are set out on page 58
review of the group
to meet the requirements of the enhanced business review the directors have presented the necessary information on
pages 18 to 27 of the business review
dividends
the directors propose the payment of a final dividend of 280p per ordinary share 2006 270p which in addition to the
interim dividend of 125p per ordinary share 2006 120p amounts to a total dividend for the full year of 405p per ordinary
share 2006 390p
research and development
during the year the group spent £2477000 2006 £1322000 on research and development which was primarily
attributed to its mobileatm and wisdom applications
directors and their interests
the directors who held office during the year and to the date of this report were as follows
r lapthorne nonexecutive chairman
k alcock chief executive officer – appointed 28 june 2007
d mcintyre executive deputy chairman former chief executive officer until 28 june 2007
e dodd group finance director – appointed 28 september 2006
d nicholson senior independent nonexecutive director
w passmore independent nonexecutive director – retired 9 november 2006
c tucker independent nonexecutive director – resigned 28 june 2007
n whitehead independent nonexecutive director
the hon m benson independent nonexecutive director – appointed 24 april 2007
d beresford executive director – resigned 28 september 2006
p coll executive director – resigned 2 january 2007
directors’ beneficial interests in the share capital including share options of the company are given in the directors’
remuneration report on page 50 there has been no change in the directors’ interests in shares of the company and its
subsidiaries between the end of the financial year and 4 september 2007 the register of directors’ interests which is open
to shareholders’ inspection contains full details of directors’ shareholdings
richard lapthorne whose profile is given on page 34 has been chairman of the company for nine years he has
announced his intention to retire soon after the 2007 annual general meeting but has agreed to retain the role until a suitable morse plc annual report 2007 37
governance
replacement has been recruited to ensure continuity of cover especially considering the recent changes to the executive
directors of the company in line with the combined code he will retire and offer himself for reelection
kevin alcock eric dodd and the hon michael benson were appointed to the board on 28 june 2007 28 september 2006
and 24 april 2007 respectively and will retire and offer themselves for reelection at the annual general meeting
political and charitable contributions
during the year the group made various charitable contributions totalling £23003 2006 £14588 the group made no
political donations 2006 £nil
supplier payment policy and practice
it is the group’s policy that payments to suppliers are made in accordance with agreed terms and conditions on an individual
basis provided all trading terms and conditions have been complied with
the average number of creditor days for the group for the year was 76 2006 73
substantial shareholdings
the company has been notified that the following shareholders held 3 or more of the company’s ordinary shares as at
4 september 2007
shareholder number of shares held  of the issued share capital
3i investments 24767399 1578
harris associates lp 22960900 1463
ubs global asset management 16206513 1033
standard life investments 9997136 637
liontrust asset management 9465044 603
legal  general investment management 5952516 379
gam 5765000 367
see directors’ remuneration report for the table of directors’ shareholdings on page 50
interests in own shares
the company did not make any acquisitions of its own shares during the year the company held a balance of 1693620
shares in respect of shares held in its ebts 2006 1132345 shares
capital structure
under its articles of association the company has authority to issue 250000000 ordinary 10p shares at 4 september 2007
the company had allotted 156927780 fully paid ordinary shares of these shares 100 have no voting rights and the
remainder have full voting rights there are no restrictions on the transfer of securities at the 2007 annual general meeting
the directors will request via special resolution the authority to buy back shares pursuant to section 166 of the 
companies act
annual general meeting
the annual general meeting of the company will be held on 30 october 2007 morse plc annual report 2007 38
directors’ report
for the year ended 30 june 2007
going concern
the directors are satisfied that the company and the group have adequate resources to continue to operate for the
foreseeable future for this reason they continue to adopt the ‘going concern’ basis for preparing the accounts
auditors
a resolution to reappoint kpmg audit plc will be proposed at the annual general meeting
disclosure of information to auditors
the directors who held office at the date of approval of this directors’ report confirm that so far as they are each aware
there is no relevant audit information of which the group’s auditors are unaware each director has taken all steps that he
ought to have taken as a director to make himself aware of any relevant audit information and to establish that the group’s
auditors are aware of that information
approved by the board of directors on 4 september 2007 and signed on its behalf
nicholas sandison
company secretary morse plc annual report 2007 39
governance
the directors are responsible for preparing the report and the group and parent company financial statements 
in accordance with applicable law and regulations
company law requires the directors to prepare group and parent company financial statements for each financial year
under that law they are required to prepare the group financial statements in accordance with ifrss as adopted by the eu
and applicable law and have elected to prepare the parent company financial statements in accordance with uk
accounting standards and applicable law uk generally accepted accounting practice
the group financial statements are required by law and ifrss as adopted by the eu to present fairly the financial position
and the performance of the group the companies act 1985 provides in relation to such financial statements that references
in the relevant part of that act to financial statements giving a true and fair view are references to their achieving a fair
presentation
the parent company financial statements are required by law to give a true and fair view of the state of affairs of the 
parent company
in preparing each of the group and parent company financial statements the directors are required to
� select suitable accounting policies and then apply them consistently
� make judgments and estimates that are reasonable and prudent
� for the group financial statements state whether they have been prepared in accordance with ifrss as adopted by
the eu
� for the parent company financial statements state whether applicable uk accounting standards have been followed
subject to any material departures disclosed and explained in the parent company financial statements and
� prepare the financial statements on the ‘going concern’ basis unless it is inappropriate to presume that the group and the
parent company will continue in business
the directors are responsible for keeping proper accounting records that disclose with reasonable accuracy at any time the
financial position of the parent company and enable them to ensure that its financial statements comply with the companies
act 1985 they have general responsibility for taking such steps as are reasonably open to them to safeguard the assets of
the group and to prevent and detect fraud and other irregularities
under applicable law and regulation the directors are also responsible for preparing a directors’ report directors’
remuneration report and corporate governance statement that comply with that law and those regulations
the directors are responsible for the maintenance and integrity of the corporate and financial information included in the
company’s website legislation in the uk governing the preparation and dissemination of financial statements may differ
from the legislation in other jurisdictions
statement of directors’ responsibilities in respect of
the report and the financial statements morse plc annual report 2007 40
corporate governance statement
combined code on corporate governance compliance statement
the board is committed to the main provisions of the july 2003 combined code on corporate governance the ‘code’ and
endeavours to comply with the code in all respects
this report highlights the way in which the board believes it has been compliant with the provisions of the code during the
year other than as set out below within this report
the board of directors
the board collectively embraces its responsibilities and accountability in reserving certain matters for its review and approval
including an effective overall strategy prudent financial strategy and planning strategic aims human resources to ensure the
company can meet its objectives material acquisitions and disposals investments and capital projects
the board believes it makes its decisions in the best interests of the company ensuring that its obligations to shareholders
and others are effectively met
the board currently consists of three executive directors and three nonexecutive directors excluding the chairman
all nonexecutive directors excluding the chairman are considered by the board to be independent for the purposes of the
code even though they are permitted to hold other directorships with other companies the chairman is also considered by
the board to be independent as announced last year in the annual report and accounts bill passmore retired from the
board on 9 november 2006 after the annual general meeting whilst he had been a nonexecutive director of the 
company for more than nine years he was considered by the board to be independent for the purposes of the code 
richard lapthorne has been chairman of the company for more than nine years richard lapthorne’s range of other
directorships and wide previous experience has allowed him to bring distinct and challenging views to board discussions
and it was felt important to continue to retain his ongoing commitment during the recent transition of the company
especially through the demerger of monitise he has announced his intention to retire soon after the 2007 annual general
meeting but has agreed to retain the role until a suitable replacement has been recruited to ensure continuity of cover
the balance between executive and nonexecutive directors has been reviewed by the nominations committee and
the board
the posts of chairman and chief executive officer are held by different directors and their differing responsibilities defined
the chairman leads the board in determining strategy achievement of objectives and organising the business of the board
but has no involvement in the daytoday business of the group the chief executive officer is responsible for formulating
the group’s strategy and for the group’s daytoday business and is accountable to the board for the financial and
operational performance of the group
the board believes its style of involvement with the senior executives through the chief executive officer and the executive
directors is the most effective way to provide confidence in the control environment of the company through openness and
discussion the board endeavours to understand and provide leadership as to the willingness of the company to take
appropriate risks in the interests of the shareholders the board focuses almost exclusively on operational and strategic
matters and thereby lays the foundation for an understanding of the business which facilitates effective governance morse plc annual report 2007 41
governance
the board meets at least six times during the year and holds other meetings as necessary all directors have access to the
company secretary who under the direction of the chairman is responsible for ensuring board procedures are followed
the chairman is responsible for ensuring all directors receive accurate and appropriate information in a timely manner in
advance of board meetings the board is provided with comprehensive information to enable it to discharge its duties
the company secretary under the direction of the chairman is also responsible for ensuring that there is good information
flow to and within the board and its committees the role also involves ensuring that the flow of information between the
board and the senior executives within the business is maintained and that the board is duly updated and made aware of
any governance matters the appointment and removal of the company secretary is the responsibility of the entire board
the chairman ensures the effective contribution of the nonexecutive directors and ensures the maintenance of good and
constructive relations by them with the executive directors
the company has directors’ and officers’ liability insurance cover in place covering all directors and officers
a procedure exists for all directors to be entitled to take independent professional advice if necessary at the company’s
expense where they need to ensure they are discharging their responsibilities as directors
directors are required to retire at least every three years directors appointed to the board during and after the period are
required to seek election at the first annual general meeting following their appointment any reelection of a nonexecutive
director which would take them over a sixyear appointment is subject to rigorous review taking into account the need for
progression of the board
the performance of the executive directors excluding the chief executive officer is evaluated by the chairman in
consultation with the other nonexecutive directors and the chief executive officer the nonexecutive directors led by the
senior independent director are responsible for the performance evaluation of the chairman and the chief executive officer
after having sought the input of all other directors the results of these evaluations are used when considering the reelection
of board members the results will also be used by the chairman and senior independent director to ensure the strengths
and weaknesses of the board are recognised and that there is planned and progressive refreshing of the board
in compliance with code provision a6 the company continues to review and consider whether appropriate methods and
processes for establishing a more formal annual evaluation of all directors is required the company is therefore not currently
compliant with code provision a61 in that the performance evaluation methods are not formalised the current informal
evaluation covers individual contribution and commitment
the chairman and the board believe that the board and each committee of the board are operating appropriately and
effectively they focus on operational issues and are carried out in an atmosphere of openness papers are usually produced
in advance to support agenda items the executive directors as managers always seek to provide appropriate answers to
all questions asked by the nonexecutive directors morse plc annual report 2007 42
corporate governance statement continued
the directors’ details along with their membership of each board committee and attendance record is set out in the table
below other members may attend at the invitation of the committee
board structure and attendance between 1 july 2006 and 30 june 2007
audit nominations remuneration board audit nominations remuneration
committee committee committee meetings committee committee committee
status member member member attended attended attended attended
no of meetings held 12 223
r lapthorne nonexecutive no yes 
13
no 12 – 2 –
d mcintyre 
1
executive no no no 12 – – –
k alcock 
2 15
executive no no no – – – –
e dodd 
3
executive no no no 9 – – –
d beresford 
4
executive no no no 3 – – –
p coll 
5
executive no no no 4 – – –
d nicholson 
6
nonexecutive yes 
12
yes yes 9 212
n whitehead nonexecutive yes yes yes 
14
11 223
the hon
m benson 
7
nonexecutive yes yes yes 3 – – –
c tucker 
8
nonexecutive yes yes yes 9 1 2 2
w passmore 
9
nonexecutive yes yes no 4 1 – –
l cameron 
10
company 
secretary no no no 10 – – –
n sandison 
11
company 
secretary no no no 1 – – –
1 d mcintyre was ceo until the appointment of k alcock to the board as ceo on 28 june 2007 whereupon he assumed the role of executive deputy chairman
2 k alcock was appointed ceo of morse group limited in july 2006 and was appointed to the board as the company ceo on 28 june 2007
3 e dodd was appointed to the board as group finance director on 28 september 2006
4 d beresford resigned from the board on 28 september 2006
5 p coll resigned from the board on 2 january 2007
6 d nicholson is the senior independent director
7 the hon m benson was appointed to the board as nonexecutive director on 24 april 2007
8 c tucker resigned from the board on 28 june 2007
9 w passmore retired from the board on 9 november 2006
10 l cameron resigned from the board as company secretary on 28 june 2007
11 n sandison was appointed to the board as company secretary on 28 june 2007
12 d nicholson is chairman of the audit committee
13 r lapthorne is chairman of the nominations committee
14 n whitehead is chairman of the remuneration committee
15 k alcock was present for eight board meetings
during the year there are occasions when directors are unable to attend board and committee meetings in those
circumstances the absent director is provided with a copy of the board papers and the resultant minutes and has the
opportunity to raise questions at a subsequent meeting
all new nonexecutive directors are to be appointed for specified terms
notice periods for all directors are set at six months or less morse plc annual report 2007 43
governance
the committees of the board
the following committees have been established to assist the board in fulfilling its responsibilities
audit committee
during the year the committee met twice to fulfil its duties a record of individual attendance is listed in the table above 
the chairman chief executive officer group finance director and external auditors were invited to attend both meetings
this committee is responsible for overseeing the involvement of the group’s auditors in the planning and review of the
group’s financial statements and any other formal announcements relating to the group’s financial performance for
recommending the appointment and fees of its auditors and for discussing with the auditors the findings of the audit and
issues arising from the audit the committee considers the independence and objectivity of the auditors with regard to the
way in which it conducts its audit duties it reviews the group’s compliance with accounting legal and listing requirements
it is also responsible along with the board for reviewing the effectiveness of the systems of internal control
the committee’s terms of reference are available for public inspection at the company’s registered office
in the normal course the company will expect its auditors to provide audit and tax services subject to auditor objectivity
independence regarding audit duties review and retendering every four years the audit committee has discretion to 
vary this review period depending on satisfaction with the audit process a review was conducted this year and the audit
committee’s recommendation is that kpmg audit plc be reappointed as the company’s auditors an appropriate resolution
will be put before the shareholders at this year’s annual general meeting
all other nonaudittax advisory eg due diligence services will always be benchmarked by management to ensure value for
money auditor objectivity and independence of advice management may exercise its discretion to retain the auditors for
such services subject to a de minimis of £50000 per individual transaction or for a series of smaller transactions fees
aggregating 50 of the annual combined audit and tax fee as projected in each year’s initial auditors’ review transactions
involving higher fees or where the independence of the auditors may be called into question may be agreed by the audit
committee chairman who will at his discretion refer the matter for approval by the full audit committee in material cases
the auditors do not receive management consultancy work
the members of the audit committee all of whom are nonexecutive directors are derrick nicholson who chairs the
committee nigel whitehead and the honmichael benson
the board is satisfied that derrick nicholson the chairman of the audit committee has recent and relevant financial experience
the role of the audit committee is to monitor all financial statements of the company review internal financial controls
consider the need for an internal audit function and report to the board on its findings if it considers action or improvement
is required
the board reviews the company’s requirement for an internal audit function on an annual basis it has determined that 
the group is not sufficiently complex in overall size or structure to warrant a dedicated internal audit function the audit
committee considers they have adequate structures in place to monitor financial statements and review financial controls
without the requirement for a permanent internal audit function this position will be kept under annual review and should 
an internal audit function become necessary or desirable in the future measures will be taken to ensure the company
establishes an internal audit function without delay
the company has a formal ‘whistleblowing’ policy made available to all employees of the company and all subsidiary
companies in compliance with code provision c34
remuneration committee
the committee considers and approves specific remuneration packages for each executive director following consultation
with the chairman in accordance with guidelines set by the board it determines the group’s policy on remuneration of
senior executives and controls the operation of share option schemes and the grant of options morse plc annual report 2007 44
corporate governance statement continued
remuneration of nonexecutive directors and the chairman is set by a committee of the board consisting of at least two
executive directors
the committee’s terms of reference are available for public inspection at the company’s registered office
the members of the remuneration committee all of whom are nonexecutive directors are nigel whitehead who chairs
the committee derrick nicholson and the hon michael benson the remuneration report appears on pages 46 to 53
nominations committee
the committee meets as required to initiate the selection process of and make recommendations to the board with regard
to the appointment of new directors
the board has established a formal procedure for appointment of new board directors based upon merit and objective
criteria ensuring the appointee has sufficient time to devote to the role the board is satisfied with the plans for assessment
of directors updating of skills and knowledge regarding the company to fulfil their functions and orderly succession ensuring
that an appropriate core level of skill and experience is maintained within the company and on the board any significant
commitments which might conflict with the effectiveness of new appointees is disclosed to the board before appointment
major shareholders are given the opportunity to meet new nonexecutive directors at the annual general meeting
the board requires its members to make it aware of any changes in commitments which might give concern regarding the
effectiveness of that member
the board does not allow any executive director to take on more than one nonexecutive directorship in a ftse 100
company or the chairmanship of such company
the members of the nominations committee are the chairman and the three nonexecutive directors the committee is
chaired by richard lapthorne
the employment contracts for the nonexecutive directors are made available for public inspection at the company’s
registered office
the committee’s terms of reference are also available for public inspection at the company’s registered office
kevin alcock eric dodd and the hon michael benson were appointed to the board on 28 july 2007 28 september 2006
and 24 april 2007 respectively in compliance with code provision a51 they were given a full formal and tailored induction
on joining the board shareholders have the opportunity to meet with all the directors at the annual general meeting
relations with shareholders
the company and board recognise the importance of developing and maintaining good relationships with its shareholders
there are regular dialogues with shareholders to ensure that issues and concerns are raised including presentations
following the company’s interim and preliminary announcements the company also uses the annual general meeting as an
opportunity to communicate with its shareholders all directors are required to attend the annual general meeting and the
chairmen of the audit remuneration and nominations committees are also available to answer shareholders’ questions
notice of the 2007 annual general meeting will be despatched to shareholders not less than 20 business days before the
meeting at the annual general meeting details of all proxy votes will be made available in accordance with the provisions of
the code separate resolutions on each substantially separate issue in particular any proposal relating to the annual report
and accounts will be made at the annual general meeting
derrick nicholson is the independent director appointed as the senior nonexecutive director he is available to
shareholders if they have concerns which have not been resolved following contact through normal channels – being the
chairman the chief executive officer or group finance director
information is made available to shareholders on the group’s website which can be found at wwwmorsecom morse plc annual report 2007 45
governance
management structure
the executive directors meet regularly as part of the executive committee which comprises the executive directors
strategic business unit heads and senior executives to discuss strategic and operational matters executive directors also
attend subsidiary board meetings where necessary and appropriate
health and safety
the company recognises the importance of health and safety and understands the high standards required to ensure the
health safety and welfare of its employees at work its customers and the general public the company has an exemplary
health and safety record
internal control systems
the board has overall responsibility for the group’s system of internal control and for reviewing its effectiveness on an annual
basis however such a system is designed to manage rather than eliminate the risk of failure to achieve business objectives
and can only provide reasonable and not absolute assurance against material misstatement or loss
elements of the system of material controls in line with the turnbull guidance which includes financial operational and
compliance controls are
� an annual budget is prepared to facilitate the monitoring of the group’s business and financial activities and is formally
adopted by the board
� board meetings are held on a regular basis to consider performance against budget the management accounts and the
forecast for the coming months
� within each strategic business unit the relevant strategic business unit head meets with senior executives of businesses
within that strategic business unit to discuss issues particular to that business
� the audit committee meets at least twice a year to consider the plans and the results of the audit performed by the
external auditors the external auditors have direct access to the audit committee and vice versa
� business processes and internal control procedures are maintained through the bsi certified bs en iso 9001 2000
business process documentation
risk management
during the year there were processes to ensure that business risk is considered assessed and monitored as an integral part
of the business the directors are of the view that from 1 july 2006 and up to the date of approval of the annual report and
accounts there is an ongoing process for identifying evaluating and managing the group’s significant risks that is regularly
reviewed by the board
statement from independent directors
the nonexecutive directors have been asked to provide their views on the effectiveness of the corporate governance
processes within the company to ensure compliance with the code these views have been determined by the 
nonexecutive directors and shared with the full board in open session
‘we have addressed the quality of the relationship between the chairman and chief executive officer the openness of the
chief executive officer with the board the visibility of checks and balances between the executive directors and whether 
all questions asked by the nonexecutive directors in board and committee meetings have been appropriately addressed 
the nonexecutive directors have concluded that issues are fully debated at board and committee meetings and subjected
to rigorous scrutiny without detracting from any openness in board relationships at all levels – particularly as between the
chief executive officer and the chairman and between the executive and nonexecutive directors’  morse plc annual report 2007 46
introduction
the board presents its report on remuneration which sets out the policy and disclosures in relation to directors’
remuneration this report will be submitted to shareholders for their approval at the annual general meeting of the 
company to be held on 30 october 2007 and has been produced in accordance with the directors’ remuneration report
regulations 2002
the remuneration committee section remuneration policy section total shareholder return performance graph and service
contracts section below are not subject to audit
remuneration committee
the remuneration committee reviews and determines on behalf of the board the overall remuneration package of the
executive directors and the chairman the chief executive officer recommends and monitors the remuneration of all other
senior executives with appropriate oversight from the committee the committee’s terms of reference are available for
public inspection 
its members all independent nonexecutive directors are nigel whitehead chairman derrick nicholson and the 
hon michael benson the chairman and chief executive officer may upon the committee’s invitation also attend the
meetings of the committee the chief executive officer does not attend where his own remuneration is being considered
during the year advice has been sought from new bridge street consultants llp who have been appointed by the
committee in relation to current market trends and best practice with regard to directors’ remuneration no other services
are offered by new bridge street consultants llp to the company save for technical advice relating to the operation of the
company’s share incentive arrangements
remuneration policy for executive directors
the company’s remuneration policy is designed to ensure that executive directors’ rewards are competitive when 
compared to similar companies to recognise the plans for the group and align the interests of directors and shareholders
the remuneration packages comprise base salary benefits performancerelated bonuses defined contribution pensions
and longterm incentive awards base salaries are set to ensure the company can recruit and retain the most capable talent
which the company believes is vital for driving shareholder value strong emphasis is then placed on the variable
performancerelated aspects of the overall package to ensure performance both during a single fiscal year and over longer
periods can be appropriately rewarded base salaries are normally set with due reference given to the median market level
with variable incentives annual bonus and share incentive arrangements offering upper quartile earnings for upper quartile
performance in a normal market environment 
when setting the remuneration levels of the directors account is taken of pay levels elsewhere in the group
there were no contracts of significance subsisting during or at the end of the year in which a director of the company is 
or was materially interested
executive directors may accept outside appointments provided these do not interfere with their duties to the company
whether a director may retain any related fees will be considered on a casebycase basis duncan mcintyre is a 
nonexecutive director of profero limited but this position does not attract any remuneration
the current elements of the remuneration packages can be summarised as follows
base salary
the company has decided to alter the review date of directors’ salaries to bring them in line with all other salary reviews
directors’ salaries will therefore be reviewed in august by the remuneration committee in accordance with the terms above
the group results for the previous trading year individual performance and as stated above market rates are considered  
duncan mcintyre’s salary will reduce from £320000 per annum for his role as chief executive officer to £170000 for his role
as executive deputy chairman effective from 1 july 2007  
directors’ remuneration report morse plc annual report 2007 47
governance
kevin alcock assumed the role of chief executive officer on 28 june 2007  and was therefore only in the role for two days –
until 30 june 2007 – during the year his salary effective 1 september 2007 is currently £300000
eric dodd assumed the role of group finance director on 28 september 2006 – before then he was acting group finance
director his salary effective 1 september 2007 is currently £175000
benefits
benefits include the provision of a car allowance private medical insurance life insurance and personal accident and 
travel insurance 
annual performancerelated bonus
the annual bonus plan has a maximum threshold of 100 of base salary in 2007 target bonuses for individual directors
were set in a range of 25 to 66 of base salaries these bonuses are triggered by achieving agreed challenging
performance objectives of the group bonus payments are nonpensionable and are payable after the group’s statutory
accounts have been audited in respect of the year ended 30 june 2007 £175550 of bonuses were awarded to the
executive directors of the company 2006 £148334 this represents 41 of the possible maximum bonuses available to
executive directors for the year ending 30 june 2008 any bonus payable will be based on achieving challenging group
financial targets and meeting personal objectives 
pensions
the company operates a defined contribution scheme money purchase which is operated for executive directors and
employees the company contribution rate is set at a fixed amount for each of the executive directors for the relevant year
duncan mcintyre’s rate was set at £35000 kevin alcock’s rate was set at £20000 and eric dodd’s rate was set at
£10000 making an average contribution of 915 this is below the previous recommendation of 14 from the
remuneration committee in august 2007 the decision was taken to move pension contributions for executive directors
towards median levels pension contributions for kevin alcock and eric dodd are £42000 and £20000 respectively
effective 1 september 2007
executive share incentive schemes
executive share incentives are considered to be a key part of management retention and motivation the policy of the
company is to incentivise directors to perform at high levels and to align their interests with those of shareholders 
prior to the annual general meeting held on 1 november 2004 the company operated an optionsbased longterm
incentive policy under the unapproved and approved versions of the executive share option schemes 2000 all option
grants were subject to a performance condition that ‘there be an average annual increase in adjusted earnings per share of
at least 5 more than the average annual percentage increase in the retail price index in the threeyear performance
period’ options granted under the morse unapproved executive share option scheme preceding the 2000 scheme
contained the same 5 provision but in addition allowed retesting in a fourth consecutive financial year 
further details of the executive share option schemes and the directors interests are given below 
at the november 2004 annual general meeting the longterm incentive plan ‘plan’ was adopted which the committee
intends be operated as the primary longterm incentive for senior executives of the company save in exceptional
circumstances no individual may receive awards under the plan in any financial year over shares having a market value on
grant in excess of 150 of his or her annual rate of base salary prior to the committee making an award under the plan 
it may require a prospective participant to buy and retain ordinary shares in the company worth up to onethird of the value
of the shares over which the proposed award would be made
awards will normally vest following the third anniversary of grant once the committee has determined the extent to which the
applicable performance conditions have been satisfied and provided the participant is still employed in the group  morse plc annual report 2007 48
directors’ remuneration report continued
the performance condition attached to awards granted under the plan to executive directors thus far have related to the
company’s relative total shareholder return ‘tsr’ performance against the ftse allshare software and computer 
services sector  
the percentage of shares subject to such awards that may vest is as follows
rank of the company’s tsr against  
ftse allshare software and computer services sector percentage of award that vests
below median 0
median 25
upper quartile 100
between median and upper quartile 25 – 100 on a straightline basis
the performance period is a single threeyear period for awards made in the period 1 july to 31 december in the year the
baseline year is the year immediately prior to the grant for awards made in the period 1 january to 30 june in the year the
baseline year is the year immediately following the grant there is no provision for retesting in addition irrespective of the
company’s tsr performance no awards  vest unless the committee is satisfied that the company’s earnings per share
grows in real terms over the threeyear performance period unless the committee believes that it would be inappropriate 
to apply this underpin
the committee chose this performance condition as it believed it appropriate for directors to be encouraged to generate
returns to shareholders greater than the company’s sector peers albeit also taking account of the company’s underlying
financial performance the extent to which the performance conditions are satisfied will be determined by the committee
the notice of annual general meeting accompanying this document contains details of changes that it is proposed be made
to the operation of the company’s share incentive arrangements with the relevant sections of the notice of annual general
meeting deemed incorporated into this report indeed the committee will regularly review the operation of the company’s
share incentive arrangements to ensure they continue to take appropriate account of marketbest practice and the
company’s changing circumstances
the following graph shows the value of £100 invested in morse plc on 30 june 2002 compared with the value of £100
invested in the ftse allshare software and computer services index which the committee now believes is the most
appropriate index to use for this purpose as i the company has been a constituent of this index throughout the relevant
period and ii it is the group of companies used in the long term incentive plan for these purposes morse plc annual report 2007 49
governance
employee share schemes
the company operates a number of allemployee share schemes in which the executive directors are also entitled to
participate details of the awards granted and outstanding under each of the schemes are given in note 5 to the 
financial statements
employee share option scheme
shortly prior to listing all employees of the company apart from directors who had commenced employment with the
group prior to 17 february 1999 were granted options under this scheme the value of most of the options granted was
based on both basic salary and length of service no further options have been granted under this scheme since listing
unapproved executive share option scheme
a number of directors and members of senior management have been granted options under this scheme with the intention
of motivating and retaining such key personnel no options have been granted under this scheme since april 2000 and it has
since been replaced by the unapproved executive share option scheme 2000
unapproved executive share option scheme 2000 and approved executive share option scheme 2000
these schemes were designed to provide the flexibility required in a competitive market and were adopted by the company
at the annual general meeting in november 2000 details of the options granted under these schemes are given in note 5 to
the financial statements
sharesave share option schemes
the company has established an inland revenueapproved sharesave scheme and an international save as you earn
scheme sharesave options will be exercisable on completion of an associated savings contract the sharesave options
may be granted at a discount of up to 20 to the market price of the company’s shares on the day prior to the day of
invitation as permitted by the relevant legislation 
diagonal option schemes
at the time of the acquisition of diagonal plc diagonal employees who held options over diagonal shares under the 
diagonal plc discretionary award of share options scheme the diagonal plc longterm incentive plan and the 
diagonal plc 1997 savingsrelated share option scheme exchanged their options for equivalent options over the
company’s shares there are options over the company’s shares which remain outstanding under these schemes but 
no further options will be granted under these schemes
service contracts
with the exception of duncan mcintyre who was on a 12 month notice period both to and from the company this changed
to six months effective 1 july 2007 to reflect his revised role executive directors are employed on a rolling contract and
have a six month notice period both to and from the company these contracts contain no provisions for termination
payments other than those that may arise under notice provisions which the company believes reflects market and best
practice with the exception of richard lapthorne who is on a six month notice period nonexecutive director
appointments contain a one month notice provision and are for a 12 month duration there are no compensation 
provisions for early termination of nonexecutive director appointments morse plc annual report 2007 50
directors during the year
director date of contract
r lapthorne january 1999
k alcock 
1
january 2007
e dodd 
1
december 2006
d mcintyre july 2004
d nicholson december 2005
n whitehead december 2004
m benson 
1
april 2007
d beresford 
2
july 2004
p coll 
2
july 2004
c tucker 
2
march 2000
w passmore 
2
february 1999
1 these directors were appointed to the board during the year
2 these directors ceased to be directors of the company during the year
directors’ shareholdings
the directors’ and their families’ beneficial interests in the share capital of the company at 30 june 2007 are shown below
30 june 2007 30 june 2006
beneficial share options beneficial share options
ordinary ordinary ordinary ordinary
shares of 10p shares of 10p shares of 10p shares of 10p
r lapthorne 300000 – 300000 –
d mcintyre 
12
6060087 2150117 6060087 805252
k alcock 
3
1301960 1032901 1301960
4
1032901
4
e dodd 22500 275191 3000
5
275191
5
m benson 50000 – ––
d nicholson 1926 – 1926 –
n whitehead –– ––
d beresford 
67
67960 567115 43181 270000
p coll 
7
206627 589577 106271 589577
1 included in d mcintyre’s beneficial shares are 704468 2006 704468 ordinary shares held in trust for his minor children
2 d mcintyre’s shareholding represents 386 2006 395 of the total issued share capital as at 4 september 2007
3 included in k alcock’s beneficial shares are 1187941 ordinary shares held jointly with his wife
4 k alcock’s share and share option holdings are at the date of his appointment as a director
5 e dodd’s share and share option holdings are at the date of his appointment as a director
6 included in d beresford’s beneficial shares are 27350 held in his wife’s name and 24779 held jointly with his wife
7 d beresford and p coll ceased to be directors during the year
from 30 june 2007 to 4 september 2007 there have been no changes in the directors’ interests
nonexecutive directors’ fees
the nonexecutive directors are not involved in decisions determining their own remuneration with their fees being set by a
committee comprising at least two executive directors save for the fees of the chairman which are set by the committee 
directors’ remuneration report continued morse plc annual report 2007 51
governance
the company’s policy on nonexecutive directors’ remuneration is to ensure that nonexecutive director fees are
competitive when compared to similar companies in the it and it services consultancy field and the market generally are
aligned with the interests of shareholders and reflect the time commitment and responsibilities of the role 
there is no policy of paying nonexecutive directors’ remuneration in shares and share incentive awards will not be granted
to them nonexecutive directors do not receive any bonuses or pension contributions
the following sections of the directors’ remuneration report have been subject to audit
directors’ emoluments comprised
2007 2006
summary base benefits
salary annual and total exc pension total exc pension
fees bonus allowances pensions cont pensions cont
£££££ ££
r lapthorne 100000 – – 100000 – 100000 –
d mcintyre 320000 138000 14750 472750 35000 390114 19845
k alcock 
1
1846 – 91 1937 163 ––
e dodd 
2
113942 37500 8155 159597 7543 ––
p coll 
3
92500 – 5375 97875 12500 223727 12799
d beresford 
4
45222 – 2628 47850 6111 216614 13062
m benson 
5
5577 – – 5577 – ––
w passmore 
6
10750 – – 10750 – 30000 –
c tucker 
7
30000 – – 30000 – 30000 –
n whitehead 30000 – – 30000 – 30000 –
d nicholson 30000 – – 30000 – 16731 –
total 779837 175500 30999 986336 61317 1037186 45706
1 k alcock was appointed to the board as the company ceo on 28 june 2007 and the emoluments are listed from that point onwards
2 e dodd was appointed to the board on 28 september 2006 and the emoluments are listed from that point onwards
3 p coll ceased to be a director on 2 january 2007
4 d beresford ceased to be a director on 28 september 2006
5 m benson joined the board on 24 april 2007 his fees are set at the same level as for other nonexecutive directors
6 w passmore retired from the board on 9 november 2006
7 c tucker retired from the board on 28 june 2007
the aggregate compensation paid by the company to its collective senior management for services for the year ended 
30 june 2007 is set out below
2007
£
base salaryfees 729802
annual bonus 208252
benefits and allowances 35239
pension contribution 47958
total 1021251 morse plc annual report 2007 52
interest in share options
options options options options 
options granted exercised cancelled held at earliest 
held at during during during 30 june date of
name 1 july 2006 the year the year the year 2007 exercise expiry date
kevin alcock 
9
morse plc long term incentive plan 50000 
2
– – – 50000 sep 2008 sep 2009
sharesave option scheme 7 12808 
3
– – – 12808 feb 2009 aug 2009
morse plc long term incentive plan 70093 
2
– – – 70093 mar 2009 mar 2010
morse plc long term incentive plan – 900000 
2
– – 900000 oct 2009 oct 2010
eric dodd 
9
sharesave option scheme 7 12808 
3
– – – 12808 feb 2009 aug 2009
approved  unapproved executive 
share option 2000 37383 
4
– – – 37383 jul 2009 mar 2016
morse plc long term incentive plan – 225000 
2
– – 225000 sep 2009 sep 2010
duncan mcintyre
unapproved executive 
share option scheme 98000 
1
– – – 98000 mar 2005 mar 2009
morse plc long term incentive plan 250000 
2
– – – 250000 dec 2007 dec 2008
sharesave option scheme 7 12808 
3
– – – 12808 feb 2009 aug 2009
morse plc long term incentive plan 444444 
2
– – – 444444 mar 2009 mar 2010
approved  unapproved executive 
share option 2000 – 864865 
5
– – 864865 jul 2009 mar 2016
morse plc long term incentive plan – 480000 
2
– – 480000 sep 2009 sep 2010
david beresford
morse plc long term incentive plan 150000 
2
– – – 150000 dec 2007 dec 2008
morse plc long term incentive plan 120000 
2
– – – 120000 sep 2008 sep 2009
morse plc long term incentive plan – 285000 
2
– – 285000 sep 2009 sep 2010
sharesave option scheme 8 – 12115 
6
– – 12115 feb 2010 aug 2010
phil coll
unapproved executive 
share option scheme 2000 56000 
1
– – – 56000 mar 2002 mar 2009
unapproved executive 
share option scheme 2000 30769 
7
– – – 30769 sep 2005 sep 2009
approved  unapproved executive 
share option 2000 120000 
8
– – – 120000 jul 2007 apr 2014
morse plc long term incentive plan 250000 
2
– – – 250000 dec 2007 dec 2008
morse plc long term incentive plan 120000 
2
– – – 120000 sep 2008 sep 2009
sharesave option scheme 8 12808 
3
– – – 12808 feb 2009 aug 2009
directors’ remuneration report continued morse plc annual report 2007 53
governance
summary of executive directors’ options
options options options options
options granted exercised cancelled held at
held at during during during 30 june 
1 july 2006 the year the year the year 2007
kevin alcock 132901 900000 – – 1032901
eric dodd 50191 225000 – – 275191
duncan mcintyre 805252 1344865 – – 2150117
david beresford 270000 297115 – – 567115
phil coll 589577––– 589577
total 1847921 2766980 – – 4614901
1 exercise price of £2500 6 exercise price of £078
2 exercise price of £nil 7 exercise price of £2275
3 exercise price of £073 8 exercise price of £1375
4 exercise price of £107 9 kevin alcock and eric dodd’s share option holdings are as at the date of their appointment as directors
5 exercise price of £110
the market price of the company’s shares at the end of the year was £095 2006 £0785
during the year the market price ranged between £075 and £119
no other directors have been granted awards in the shares of the company or other group entities
signed on behalf of the board
nigel whitehead
chairman of the remuneration committee
4 september 2007 morse plc annual report 2007 54
we have audited the group and parent company financial statements the ‘financial statements’ of morse plc for the year
ended 30 june 2007 which comprise the consolidated income statement the consolidated and company balance sheets
the consolidated cash flow statement the consolidated statement of recognised income and expense and the related notes
these financial statements have been prepared under the accounting policies set out therein we have also audited the
information in the directors’ remuneration report that is described as having been audited
this report is made solely to the company’s members as a body in accordance with section 235 of the companies act
1985 our audit work has been undertaken so that we might state to the company’s members those matters we are
required to state to them in an auditor’s report and for no other purpose to the fullest extent permitted by law we do not
accept or assume responsibility to anyone other than the company and the company’s members as a body for our audit
work for this report or for the opinions we have formed
respective responsibilities of directors and auditors
the directors’ responsibilities for preparing the report and the group financial statements in accordance with applicable law
and international financial reporting standards ifrss as adopted by the eu and for preparing the parent company
financial statements and the directors’ remuneration report in accordance with applicable law and uk accounting
standards uk generally accepted accounting practice are set out in the statement of directors’ responsibilities on 
page 39
our responsibility is to audit the financial statements and the part of the directors’ remuneration report to be audited in
accordance with relevant legal and regulatory requirements and international standards on auditing uk and ireland
we report to you our opinion as to whether the financial statements give a true and fair view and whether the financial
statements and the part of the directors’ remuneration report to be audited have been properly prepared in accordance
with the companies act 1985 and as regards the group financial statements article 4 of the ias regulation we also report
to you whether in our opinion the information given in the directors’ report is consistent with the financial statements the
information given in the directors’ report includes that specific information presented in the business review section that is
crossreferred from the review of the group section of the directors’ report
in addition we report to you if in our opinion the company has not kept proper accounting records if we have not received
all the information and explanations we require for our audit or if information specified by law regarding directors’
remuneration and other transactions is not disclosed
we review whether the corporate governance statement reflects the company’s compliance with the nine provisions of the
2003 combined code specified for our review by the listing rules of the financial services authority and we report if it
does not we are not required to consider whether the board’s statements on internal control cover all risks and controls 
or form an opinion on the effectiveness of the group’s corporate governance procedures or its risks and control procedures
we read the other information in the report and accounts and consider whether it is consistent with the audited financial
statements we consider the implications for our report if we become aware of any apparent misstatements or material
inconsistencies with the financial statements our responsibilities do not extend to any other information
report of the independent auditors to the members
of morse plc morse plc annual report 2007 55
governance
basis of audit opinion
we conducted our audit in accordance with international standards on auditing uk and ireland issued by the auditing
practices board an audit includes examination on a test basis of evidence relevant to the amounts and disclosures in the
financial statements and the part of the directors’ remuneration report to be audited it also includes an assessment of the
significant estimates and judgments made by the directors in the preparation of the financial statements and of whether the
accounting policies are appropriate to the group’s and company’s circumstances consistently applied and adequately
disclosed
we planned and performed our audit so as to obtain all the information and explanations which we considered necessary in
order to provide us with sufficient evidence to give reasonable assurance that the financial statements and the part of the
directors’ remuneration report to be audited are free from material misstatement whether caused by fraud or other
irregularity or error in forming our opinion we also evaluated the overall adequacy of the presentation of information in the
financial statements and the part of the directors’ remuneration report to be audited
opinion
in our opinion
� the group financial statements give a true and fair view in accordance with ifrss as adopted by the eu of the state of
the group’s affairs as at 30 june 2007 and of its profit for the year then ended
� the group financial statements have been properly prepared in accordance with the companies act 1985 and article 4 of
the ias regulation
� the parent company financial statements give a true and fair view in accordance with uk generally accepted accounting 
practice of the state of the parent company’s affairs as at 30 june 2007
� the financial statements have been properly prepared in accordance with the companies act 1985
� the information given in the directors’ report is consistent with the financial statements
kpmg audit plc
chartered accountants
registered auditor
8 salisbury square
london
ec4y 8bb
4 september 2007 morse plc annual report 2007 56
summary
£122m
operating profit
2006 £106m
48
operating margin
2006 36
56p
pro forma adjusted 
basic eps
2006 50p
£2565m
revenue
2006 £2965m
£125m
profit before tax 
and exceptionals
2006 £110m
£153m
cash position
2006 £178m
 all these items have been restated due to the demerger of monitise and relate to 
continuing operations excluding all exceptional items
 definition can be found in the earnings per share section of the financial review on page 31 morse plc annual report 2007 57
financial statements
financial statements
strong financial management
we remain focused on the strong
financial management that has
been the hallmark of the morse
story to date morse plc annual report 2007 58
2007 2006
continuingdiscontinued total total
note £’000 £’000 £’000 £000
group revenue 2 256510 815 257325 367120
cost of sales 195807 657 196464 290911
exceptional trading balance release 3   8831
total cost of sales 195807 657 196464 282080
gross profit 60703 158 60861 85040
distribution expenses 19436 912 20348 38501
administrative expenses before exceptional restructuring 
costs exceptional trading balance release impairment 
and demerger costs 29046 5833 34879 31181
exceptional trading balance release 3   4300
demerger costs 3  2455 2455 
exceptional restructuring incomecosts and impairment 3 1084  1084 6821
administrative expenses 27962 8288 36250 33702
operating profitloss before exceptional restructuring 
costs exceptional trading balance releases impairment 
and demerger costs 12221 6587 5634 6527
exceptional trading balance releases 3   13131
demerger costs 3  2455 2455 
exceptional restructuring incomecosts and impairment 3 1084  1084 6821
operating profitloss 2 6 13305 9042 4263 12837
financial income 7 696  696 971
financial expenses 7 404  404 353
net financing income 292  292 618
share of loss of jointly controlled entities and associates 
which are accounted for under the equity method  709 709 401
exceptional loss on sale of discontinued operations 3   7058
profitloss before taxation 13597 9751 3846 5996
uk taxation 3484 2376 1108 974
overseas taxation 936  936 851
taxation 8 4420 2376 2044 1825
profitloss for the year 2 9177 7375 1802 4171
attributable to
equity holders of the parent 8980 7375 1605 3982
minority interests 197  197 189
profitloss for the year 2 9177 7375 1802 4171
dividends 9 6085 5754
basic earningsloss per share 4 58p 48p 10p 26p
diluted earningsloss per share 4 56p 46p 10p 26p
 refer to page 59 for the 2006 prior year analysis of continuing and discontinued activities
consolidated income statement
for the year ended 30 june 2007 2006
continuing discontinued total
note £000 £000 £000
group revenue 2 296476 70644 367120
cost of sales 231752 59159 290911
exceptional trading balance release 3 8831  8831
total cost of sales 222921 59159 282080
gross profit 73555 11485 85040
distribution expenses 25244 13257 38501
administrative expenses before exceptional restructuring 
costs exceptional trading balance release and impairment 28926 2255 31181
exceptional trading balance release 3 4300  4300
exceptional restructuring costs and impairment 3 3936 2885 6821
administrative expenses 28562 5140 33702
operating profitloss before exceptional restructuring 
costs exceptional trading balance releases and impairment 10554 4027 6527
exceptional trading balance releases 3 13131  13131
exceptional restructuring costs and impairment 3 3936 2885 6821
operating profitloss 2 6 19749 6912 12837
financial income 7 697 274 971
financial expenses 7 300 53 353
net financing income 397 221 618
share of loss of jointly controlled entities and associates 
which are accounted for under the equity method  401 401
exceptional loss on sale of discontinued operations 3  7058 7058
profitloss before taxation 20146 14150 5996
uk taxation 1871 897 974
overseas taxation 1022 171 851
taxation 8 2893 1068 1825
profitloss for the year 2 17253 13082 4171
attributable to
equity holders of the parent 17064 13082 3982
minority interests 189  189
profitloss for the year 2 17253 13082 4171
dividends 9 5754
basic earningsloss per share 4 112p 86p 26p
diluted earningsloss per share 4 112p 86p 26p
morse plc annual report 2007 59
financial statements
consolidated income statement
for the year ended 30 june 2006 morse plc annual report 2007 60
consolidated statement of 
recognised income and expense
for the year ended 30 june 2007
year ended year ended
30 june 30 june 
2007 2006
note £’000 £’000
foreign exchange translation differences 22 449 267
net income and expense recognised directly in equity 22 449 267
profit for the year 1802 4171
total recognised income and expense 1353 4438
total recognised income and expense for the period 
is attributable to
equity holders of the parent 1156 4249
minority interest 197 189
total recognised income and expense 1353 4438 morse plc annual report 2007 61
financial statements
consolidated balance sheet
as at 30 june 2007
30 june 30 june 
2007 2006       
note £’000 £’000
assets
noncurrent assets
property plant and equipment 11 2700 3615
goodwill 10 51622 51168
other intangibles 10 6098 6484
investments 12 51 255
other financial assets 13  119
deferred tax assets 14 420 50
total noncurrent assets 60891 61691
current assets
inventories 15 4287 7123
assets classified as held for sale 26  34400
trade and other receivables 16 77353 83584
cash and cash equivalents 17 15345 17800
total current assets 96985 142907
total assets 157876 204598
liabilities 
current liabilities
interest bearing loans and borrowings 20  350
trade and other payables 18 87579 98621
tax payable 7796 7832
financial liabilities 20  206
liabilities classified as held for sale 26  28176
provisions 19 472 1621
total current liabilities 95847 136806
noncurrent liabilities
interest bearing loans and borrowings 20  625
deferred tax liability 14 200 57
provisions 19 949 2652
total noncurrent liabilities 1149 3334
net assets 60880 64458
capital and reserves
called up share capital 21 22 15692 15338
share capital to be issued 22 348 3803
share premium account 22 70767 70385
other reserves 22 30868 27563
retained earnings 22 57024 52776
total equity attributable to equity shareholders 60651 64313
minority interest 22 229 145
total equity 60880  64458
the financial statements were approved by the board of directors on 4 september 2007 and signed on its behalf by
e dodd                                                       
director         morse plc annual report 2007 62
consolidated cash flow statement
for the year ended 30 june 2007
year ended year ended
30 june 30 june
2007 2006
note £’000 £’000
cash flows from operating activities
profit before tax 3846 5996
adjustments for
depreciation and amortisation 2523 3769
financial income 696 971
financial expenses 404 353
share of loss of jointly controlled entities and associates 12 709 401
loss on sale of property plant and equipment 6 630 239
impairment of goodwill 10  2293
loss on sale of discontinued operations  7058
operating profit before changes in working capital and provisions 7416 19138
decrease in inventories 2824 673
decreaseincrease in trade and other receivables 3854 2821
decrease in trade and other payables 10105 15015
decrease in provisions 2852 154
cash generated from operations 1137 1821
interest received 696 971
interest paid 404 353
tax paid 1110 3518
net cash inflowoutflow from operating activities 319 1079
cash flows from investing activities
acquisition of property plant and equipment 11 1142 2157
proceeds from sale of property plant and equipment 27 66
acquisition of intangibles software and rd 936 
acquisitions of subsidiary in the period net of cash acquired 28 303 
payment of deferred consideration on acquisitions  51
investment in joint venture 12 656 700
disposal of subsidiary net of cash disposed 27 3239 1099
net cash from investing activities 6249 3941
cash flow from financing activities
proceeds from issue of shares 22 166 407
repayment of loan notes on previous acquisitions 114 61
proceeds from other loans 119 62
payment of dividend to minority interest 27 60
dividends paid 9 6085 5754
net cash from financing activities 5941 5406
net decrease in cash and cash equivalents 11871 10426
opening cash and cash equivalents 17 27263 37646
effect of exchange rate fluctuations on cash held 47 43
closing cash and cash equivalents 17 15345 27263 morse plc annual report 2007 63
financial statements
notes to the financial statements
for the year ended 30 june 2007
1 accounting policies
basis of preparation
morse plc is a company incorporated in the uk 
the group financial statements consolidate those of the company and its subsidiaries together referred to as the ‘group’
and equity account the group’s interest in associates and jointly controlled entities the parent company financial statements
present information about the company as a separate entity and not about its group
the group financial statements have been prepared and approved by the directors in accordance with international financial
reporting standards as adopted by the eu ‘adopted ifrss’ the company has elected to prepare its parent company
financial statements in accordance with uk gaap these are presented on pages 102 to 109
the accounting policies set out below have unless otherwise stated been applied consistently to all periods presented in
these group financial statements 
judgements made by the directors in the application of these accounting policies that have significant effect on the
financial statements and estimates with a significant risk of material adjustment in the next year are discussed in note 30
application of recently issued international financial reporting standards
the group has considered the following amendments to ifrs in these financial statements
new interpretations effective at 1 july 2006 adopted by the group that did not have a material impact are
as follows
ifric 4 ‘determining whether an arrangement contains a lease’ ifric 5 ‘rights to interests arising from decommissioning
restoration and environmental rehabilitation funds’ ifric 6 ‘liabilities arising from participation in a specific market –
waste electrical and electronic equipment’ ifric 7 ‘applying the restatement approach under ias 29 financial reporting
in hyperinflationary economies’
new interpretations effective for the group from 1 july 2007 that will not have a material impact are as
follows
ifric 8 ‘scope of ifrs 2’ ifric 9 ‘reassessment of embedded derivatives’ ifric 10 ‘interim financial reporting and
impairment’ ifric11 ‘ifrs 2 – group and treasury share transactions’ ifrs 7 ‘financial instruments disclosure’ 
measurement convention
the financial statements are prepared on the historical cost basis except that the following assets and liabilities are stated 
at their fair value derivative financial instruments and financial instruments classified as fair value through the profit or loss
noncurrent assets and disposal groups held for sale are stated at the lower of previous carrying amount and fair value less
costs to sell
basis of consolidation 
subsidiaries are those entities controlled by the company control exists when the company has the power directly or
indirectly to govern the financial and operating policies of an entity so as to obtain benefits from its activities in assessing
control potential voting rights that presently are exercisable or convertible are taken into account the financial statements 
of subsidiaries are included in the consolidated financial statements from the date control commences until the date that
control ceases intragroup balances and any unrealised gains and losses or income and expenditure arising from 
intragroup transactions are eliminated in preparing the consolidated financial statements
an associate is an undertaking in which the group has a longterm interest usually from 20 to 50 of the equity voting
rights and over which it exercises significant influence a joint venture is an undertaking in which the group has a longterm
interest and over which it exercises joint control the group’s share of the profits less losses of associates and of joint
ventures are included in the consolidated profit and loss account and its interest in their net assets is included in
investments in the consolidated balance sheet  morse plc annual report 2007 64
notes to the financial statements
for the year ended 30 june 2007 continued
1 accounting policies continued
revenue
revenue represents the values of goods delivered and services provided within the group’s ordinary activities net of value
added tax and excluding intragroup sales revenue comprises sales of hardware software consulting services and
maintenancesupport services
revenue recognition occurs when persuasive evidence of an arrangement exists despatch has occurred the fee is
determinable and collectability is probable  
hardware and installation
hardware sales are recognised on delivery unless significant installation work is required or customer specific conditions
must be met in which case revenues are recognised on installation or acceptance by the customer
consulting services
revenues include sales of services that are delivered over extended periods of time and recognised on a percentage
completion basis over the period that the service is delivered profits on fixed price contracts are taken in proportion to the
cost of work performed on each contract relative to the estimated total cost of completing the contract revenues derived
from variations on contracts are recognised only when they have been agreed by the customer full provision is made for
estimated losses on all contracts in the year in which they are first foreseen
the gross amount due from customers for contract work is included within trade and other receivables and the gross
amount due to suppliers is included within trade and other payables
sales of software
revenue from the sale of software product licences at the time the software licence is granted is recognised in accordance
with the contract typically at the time of supply of the software product to the customer  
maintenance and support
revenues from maintenance and support services are recognised over the period that the services are provided payments
in advance of services are recorded in the balance sheet as deferred income 
property plant and equipment
the cost of the tangible fixed assets net of estimated residual value and impairment is depreciated in equal annual
instalments over the estimated useful lives of the assets the residual values of assets or group of like assets and the useful
economic lives of assets are reviewed annually
the rates of depreciation are as follows
leasehold improvements shorter of ten years and the unexpired expected term of the lease 
fixtures and fittings four years
motor vehicles four years
office equipment four years except for computer equipment which is depreciated by 40 in the year of 
acquisition and thereafter in equal annual instalments over the next two years morse plc annual report 2007 65
financial statements
1 accounting policies continued
intangible assets and goodwill
all business combinations are accounted for by applying the purchase method goodwill arising on the acquisition of
subsidiaries associates and jointly controlled entities represents the excess of the fair value of consideration given in respect
of the acquisition over the fair value to the group of the net assets and any contingent liabilities acquired  
in respect of business combinations prior to 1 july 2004 goodwill represents the difference between the cost of the
acquisition and the fair value of the net identifiable assets acquired identifiable intangibles are those which can be sold
separately or which arise from legal rights regardless of whether those rights are separable
in respect of acquisitions prior to 1 july 2004 goodwill is included on the basis of deemed cost which represents the
amount recorded under uk gaap  which was broadly comparable save that only separable intangibles were recognised
and goodwill was amortised
in accordance with ifrs 3 goodwill has been frozen at its net book value at 1 july 2004 is allocated to cashgenerating
units and is not amortised but instead is subject to annual impairment reviews goodwill is stated at cost or deemed cost
less accumulated impairment losses any impairment losses are recognised immediately in the income statement negative
goodwill arising on an acquisition is recognised in the income statement
expenditure on research activities is recognised as an expense in the period in which it is incurred expenditure on
development activities is capitalised if the product or process is technically and commercially feasible and the group has
sufficient resources to complete development the expenditure capitalised includes the cost of materials direct labour and
an appropriate proportion of overheads other development expenditure is recognised in the income statement as an
expense as incurred capitalised development expenditure is stated at cost less accumulated amortisation and impairment
losses where no internally generated intangible asset can be recognised development expenditure is recognised as an
expense in the period to which it relates
other intangible assets acquired by the group are stated at cost less accumulated amortisation software is capitalised as
part of other intangibles and amortised over three years
amortisation is charged to distribution expenses on a straightline basis over the estimated useful lives of the intangible
assets unless such lives are indefinite software is capitalised as part of other intangibles and amortised over three years
other intangible assets are amortised from the date they are available for use or acquired the estimated useful lives are 
as follows
trade names ten years
customer relationship backlog one year
maintenance contracts six years
follow on consulting eight years
research and development three years
software three years
intellectual property seven years morse plc annual report 2007 66
notes to the financial statements
for the year ended 30 june 2007 continued
1 accounting policies continued
subsequent expenditure
subsequent expenditure on capitalised tangible and intangible assets is capitalised only when it increases the future
economic benefits embodied in the specific asset to which it relates all other expenditure is expensed as incurred
impairment
the carrying amounts of the group’s assets other than deferred tax assets are reviewed at each year end to determine
whether there is any indication of impairment if any such indication exists the asset’s recoverable amount is estimated  
for goodwill and intangible assets that are not yet available for use the recoverable amount is estimated at each balance
sheet date an impairment loss is recognised whenever the carrying amount of an asset or its cashgenerating unit exceeds
its recoverable amount impairment losses are recognised in the income statement
impairment losses recognised in respect of cashgenerating units are allocated first to reduce the carrying amount of any
goodwill allocated to cashgenerating units and then to reduce the carrying amount of the other assets in the unit on a 
pro rata basis a cashgenerating unit is the smallest identifiable group of assets that generates cash inflows and that are
largely independent of the cash inflows from other assets or groups of assets
calculation of recoverable amount
the recoverable amount of the group’s receivables carried at amortised cost is calculated as the present value of estimated
future cash flows discounted at the original effective interest rate ie the effective interest rate computed on initial
recognition of these financial assets receivables with a short duration are not discounted
the recoverable amount of other assets is the greater of their net selling price and value in use in assessing value in use 
the estimated future cash flows are discounted to their present value using a pretax discount rate that reflects current
market assessments of the time value of money and the risks specific to the asset for an asset that does not generate
largely independent cash inflows the recoverable amount is determined for the cashgenerating unit to which the 
asset belongs 
reversal of impairment
an impairment loss in respect of receivables carried at amortised cost is reversed if the subsequent increase in recoverable
amount can be related objectively to an event occurring after an impairment loss was recognised
an impairment loss in respect of goodwill is not reversed  
in respect of other assets an impairment loss is reversed if there has been a change in the estimates used to determine the
recoverable amount
an impairment loss is reversed only to the extent that the asset’s carrying amount does not exceed the carrying amount that
would have been determined net of depreciation or amortisation if no impairment loss had been recognised morse plc annual report 2007 67
financial statements
1 accounting policies continued
noncurrent assets held for sale and discontinued operations
on initial classification as held for sale noncurrent assets and disposal groups are measured at the lower of the previous
carrying amount and the fair value less costs to sell with any adjustments taken to profit or loss the same applies to gains
and losses on subsequent remeasurement  
noncurrent assets and disposal groups are classified as held for sale if their carrying amount will be principally recovered
through a sale transaction rather than through continuing use this condition is regarded as met only when the sale is 
highly probable within one year and the asset or disposal group is available for immediate sale in its present condition
management must be committed to the sale which should be expected to qualify for recognition as a completed sale 
within one year from the date of classification  
a discontinued operation is a component of the group’s business that represents a separate major line of business or
geographical area of operations or is a subsidiary acquired exclusively with a view to resale that has been disposed of has
been abandoned or that meets the criteria to be classified as held for sale discontinued operations are presented on the
income statement including the comparative period as a column analysing the post tax profit or loss of the discontinued
operation and the post tax gain or loss recognised on the remeasurement to fair value less costs to sell or on disposal of the
assetsdisposal groups constituting discontinued operations
derivatives and other financial instruments
the group’s financial instruments comprise debtors creditors other borrowings and bank borrowings 
the group uses a limited number of derivative financial instruments to manage its exposure to fluctuations in foreign
exchange rates the group does not hold or issue derivative instruments for speculative purposes
the group uses foreign exchange forward contracts to manage the financial risks of changes in foreign currency exchange
rates the group does not apply hedge accounting and changes in the value of derivative financial instruments are
recognised in the income statement as they arise derivative financial instruments are recognised at fair value the fair value
of forward exchange contracts is their quoted market price at the balance sheet date
foreign currencies
transactions in foreign currencies are translated at the foreign exchange rate ruling at the date of the transaction monetary
assets and liabilities denominated in foreign currencies at the balance sheet date are translated at the foreign exchange 
rate ruling at that date foreign exchange differences arising on translation are recognised in the income statement  
nonmonetary assets and liabilities that are measured in terms of historical cost in a foreign currency are translated using the
exchange rate at the date of the transaction nonmonetary assets and liabilities denominated in foreign currencies that are
stated at fair value are translated at foreign exchange rates ruling at the dates the fair value was determined
the assets and liabilities of foreign operations including goodwill and fair value adjustments arising on consolidation are
translated at foreign exchange rates ruling at the balance sheet date the revenues and expenses of foreign operations are
translated at an average rate for the period where this rate approximates to the foreign exchange rates ruling at the dates of
the transactions exchange differences arising from this translation of foreign operations are taken directly to the translation
reserve they are released into the income statement upon disposal morse plc annual report 2007 68
notes to the financial statements
for the year ended 30 june 2007 continued
1 accounting policies continued
taxation
the tax charge for the periods presented comprises current and deferred tax taxation is recognised in the income
statement except to the extent that it relates to items recognised directly in equity in which case it is recognised in equity
current tax is the expected tax payable on the taxable income for the period using tax rates enacted or substantively
enacted at the balance sheet date and any adjustment to tax payable in respect of prior periods
deferred tax is provided using the balance sheet liability method providing for temporary differences between the carrying
amount for financial reporting purposes and those for taxation purposes the following temporary differences are not
provided for goodwill not deductible for tax purposes initial recognition of assets or liabilities that affect neither accounting
nor taxable profit other than in a business combination and differences relating to investments in subsidiaries to the extent
that they will probably not reverse in the foreseeable future 
the amount of deferred tax provided is based on the expected manner of realisation or settlement of the carrying amount 
of assets and liabilities using tax rates enacted or substantively enacted at the balance sheet date a deferred tax asset 
is recognised only to the extent that it is probable that future taxable profits will be available against which the asset can 
be utilised
leases
operating leases and rentals paid under operating leases are charged to the income statement on a straightline basis over
the period of the lease lease incentives received are recognised in the income statement as an integral part of the total
lease expense
net financing costs
interest income and interest payable is recognised in the profit or loss as it accrues using the effective interest method
dividend income is recognised in the income statement on the date the entity’s right to receive the payment is established
pension costs
payments made to defined contribution schemes are charged to the income statement as they accrue assets of the
schemes are not included within the financial statements of the group
sharebased compensation
the share option programme allows group employees to acquire shares of the ultimate parent company these awards are
granted by the ultimate parent share options have been granted to monitise ltd employees under the monitise share option
plan options granted under the group’s share option schemes are equity settled  
the fair value of options granted is recognised as an employee expense with a corresponding increase in equity the fair
value is measured at grant date and spread over the period during which the employees become unconditionally entitled to
the options the fair value of the options granted is measured using a blackscholes model taking into account the terms
and conditions upon which the options were granted true ups are made only for service and nonmarket conditions 
the amount recognised as an expense is adjusted to reflect the actual number of share options that vest in fy08 the
company is considering moving to the monte carlo simulation model to value share options
during the year the group introduced a share matching scheme where senior management forgo part of their bonus
entitlement for shares in the group the group matches the bonus forgone on a 21 basis and if the employee is still with the
group after two years then the shares will vest morse plc annual report 2007 69
financial statements
1 accounting policies continued
interest in own shares 
the assets and liabilities of the group esop trusts are recognised in the financial statements where there is de facto control
of those assets and liabilities the company’s own shares held in the esop trust are deducted from shareholders’ funds until
they are transferred to employees
cash and cash equivalents
the group manages its shortterm liquidity through holding of cash and highly liquid interest bearing deposits for the
purpose of the cash flow statement only deposits with an original maturity period of three months or less are shown as cash
and cash equivalents bank overdrafts that are repayable on demand are shown as cash and cash equivalents
provisions 
provision is made where the group has a present legal or contractual obligation as a result of past events and it is probable
that an outflow of economic benefit will be required to settle the obligation
a provision for restructuring is recognised when the group has a detailed formal plan for the restructuring that has been
communicated to affected parties
interestbearing borrowings
interestbearing borrowings are recognised initially at fair value less associated transaction costs subsequent to initial
recognition interestbearing borrowings are stated at amortised cost with any difference between cost and redemption value
being recognised in the income statement over the period of the borrowings on an effective interest basis
inventories 
inventories are stated at the lower of cost and net realisable value cost is determined on a weighted average basis and
includes expenditure incurred in bringing the inventories to their present location and condition net realisable value is 
the amount that can be realised from the sale of inventories in the normal course of business after allowing for the costs 
of realisation 
trade receivables
trade and other receivables are initially stated at their fair value and thereafter at amortised cost
trade payables
trade and other payables are initially stated at their fair value and thereafter at amortised cost
dividends
dividends receivable are recognised when the group’s right to receive payment is established dividends payable to the
company’s shareholders are recognised as a liability and deducted from shareholders’ equity in the period in which the
shareholders’ right to receive payment is established
segmental information
a segment is a distinguishable component of the group that is engaged either in providing products or services business
segment or in providing products or services within a particular economic geographical segment which is subject to risks
and rewards that are different from those of other segments
segment results assets and liabilities include items directly attributable to a segment as well as those that can be allocated
on a reasonable basis   morse plc annual report 2007 70
notes to the financial statements
for the year ended 30 june 2007 continued
2 segmental reporting
segmental analysis
the group’s primary reporting format is business segments and its secondary format is geographical segments 
the business segment reporting format reflects the group’s management and internal reporting structure
business segments
the following tables present revenue expenditure and certain asset information regarding the group’s business segments 
for the years ended 30 june 2007 and 2006
year ended 30 june 2007
discontinued
infrastructure applications management total operations
consulting consulting consulting europe central continuing software total
£’000 £’000 £’000 £’000 £’000 £’000 £’000 £’000
revenue
sales to external 
customers 97296 74876 17844 66494  256510 815 257325
intersegment sales 4313 4543    8856  8856
segmental revenue 101609 79419 17844 66494  265366 815 266181
operating profitloss 
before exceptional items 5556 5494 2371 3455 4655 12221 6587 5634
demerger costs       2455 2455
exceptional restructuring 
costs and impairment 1084     1084  1084
operating profitloss 6640 5494 2371 3455 4655 13305 9042 4263
net finance income 292  292
share of loss of jointly 
controlled entities 
and associates  709 709
taxation 4420 2376 2044
profit for the year 9177 7375 1802
infrastructure discontinued
applications management consulting  total operations
consulting consulting europe central continuing software total
£’000 £’000 £’000 £’000 £’000 £’000 £’000
assets and liabilities
segment assets 60077 20987 25522 51239 157825  157825
investment in a joint venture 51    51  51
total assets 60128 20987 25522 51239 157876  157876
segment liabilities 15589 4052 19218 58137 96996  96996
total liabilities 15589 4052 19218 58137 96996  96996
other segment information
capital expenditure
property plant and equipment 143 74 464 442 1123 138 1261
intangible fixed assets 498 589   1087 438 1525
noncash costs
depreciation 627 112 189 427 1355 26 1381
amortisation 1028    1028 114 1142 morse plc annual report 2007 71
financial statements
2 segmental reporting continued
business segments continued
year ended 30 june 2006
discontinued
operations
infrastructure applications management total europe 
consulting consulting consulting europe central continuing software total
£’000 £’000 £’000 £’000 £’000 £’000 £’000 £’000
revenue
sales to external 
customers 140744 84854 14092 56786  296476 70644 367120
intersegment sales 4175 3194  14  7383  7383
segmental revenue 144919 88048 14092 56800  303859 70644 374503
operating profitloss 
before exceptional items 2558 6689 2187 3386 4266 10554 4027 6527
exceptional trading balance 
releases 13131     13131  13131
exceptional restructuring 
costs and impairment 3626 310    3936 2885 6821
operating profitloss 12063 6379 2187 3386 4266 19749 6912 12837
net finance income 397 221 618
share of loss of jointly 
controlled entities and 
associates  401 401
exceptional loss on sale 
of discontinued activities  7058 7058
taxation 2893 1068 1825
profit for the year 17253 13082 4171
discontinued
infrastructure operations
applications management consulting  total europe 
consulting consulting europe central continuing software total
£’000 £’000 £’000 £’000 £’000 £’000 £’000
assets and liabilities
segment assets 61115 18439 28845 60763 169162 35181 204343
investment in a joint venture    255 255  255
total assets 61115 18439 28845 61018 169417 35181 204598
segment liabilities 13197 3113 17319 78675 112304 27836 140140
total liabilities 13197 3113 17319 78675 112304 27836 140140
other segment information
capital expenditure
property plant and equipment 1501 63 196 282 2042 115 2157
noncash costs
depreciation 799 157 306 854 2116 648 2764
amortisation 1005    1005  1005 morse plc annual report 2007 72
notes to the financial statements
for the year ended 30 june 2007 continued
2 segmental reporting continued
business segments continued
morse operates under four key segments – infrastructure consulting applications consulting management consulting 
and europe 
in the year ended 30 june 2006 a separate segment called software included the results of diagonal solutions and monitise
in the year ended 30 june 2007 diagonal solutions became a part of applications consulting and monitise was demerged
on 28 june 2007 and is included in discontinued operations for the year ended 30 june 2007
discontinued operations for the year ended 30 june 2006 comprised monitise which included share of mobile atm joint
venture morse germany and morse austria morse germany and morse austria were part of the europe business until their
disposal on 24 july 2006 the assets and liabilities of these operations have been classified on the 2006 balance sheet as
being held for sale
the infrastructure consulting segment comprises morse group limited
the applications consulting segment has four main lines of business diagonal consulting global covering our oracle 
sap  enterprise service management and information management capability delphis which specialises in providing
resources at the infrastructure layer mainly to the banking sector marshallwilkins an it recruitment business 
diagonal solutions wisdom™
the management consulting segment comprises four businesses cstim morse si skillshub and morse transaction services
the european segment comprises the operations in spain and ireland the business activities in spain and ireland are
predominantly infrastructure consulting related europe is treated as a distinct business segment as its operations are
managed separately in the geographical segment europe comprises the businesses in spain and ireland and france
management consulting
in the geographical segments the rest of the world relates to operations in south africa and australia management
consulting and malaysia and usa applications consulting
the assets and liabilities of infrastructure consulting and of central are managed collectively for example cash is managed
on this basis and are therefore not capable of any meaningful separation morse plc annual report 2007 73
financial statements
2 segmental reporting continued
geographic segments
the following tables present revenue and asset information for the geographical segments for the years ended 30 june 2007
and 2006
year ended 30 june 2007 discontinued
operations
rest of total europe 
uk europe world continuing software total
£’000 £’000 £’000 £’000 £’000 £’000
revenue
sales to external customers 179875 68637 7998 256510 815 257325
intersegment sales 8856   8856  8856
total 188731 68637 7998 265366 815 266181
year ended 30 june 2006
revenue
sales to external customers 229042 57752 9682 296476 70644 367120
intersegment sales 7369 14  7383  7383
total 236411 57766 9682 303859 70644 374503
as at 30 june 2007
segment assets 124272 27095 6458 157825  157825
investment in a joint venture 51   51  51
total assets 124323 27095 6458 157876  157876
other segmental information
capital expenditure
property plant and equipment 547 509 67 1123 138 1261
intangible fixed assets 1087   1087 438 1525
depreciation 1009 197 149 1355 26 1381
amortisation 1028   1028 114 1142
as at 30 june 2006
segment assets 140317 26270 2575 169162 35181 204343
investment in a joint venture 255   255  255
total assets 140572 26270 2575 169417 35181 204598
other segmental information
capital expenditure
property plant and equipment 1846 196  2042 115 2157
depreciation 1810 306  2116 648 2764
amortisation 1005   1005  1005 morse plc annual report 2007 74
notes to the financial statements
for the year ended 30 june 2007 continued
2 segmental reporting continued
geographic segments continued
in the year ending 30 june 2007 total revenue comprised £92710000 2006 £167720000 of goods revenue and
£164615000 2006 £199400000 of services revenue in the year ending 30 june 2007 revenue of continuing 
operations comprised £92710000 2006 £126300000 of goods revenue and £163800000 2006 £170176000 
of services revenue   
3 exceptional items
2007 2006
£’000 £’000
demerger costs 2455 
trading balance releases  13131
impairment of goodwill  2293
restructuring incomecosts 1084 4528
loss on sale of discontinued operation  7058
1371 748
demerger costs comprise legal and professional fees incurred as a result of the demerger of monitise
restructuring income in the year ended 30 june 2007 of £1084000 relates to a release of a vacant property provision in
2007 the group made provisions of £1048000 and released in the same period provisions of £2132000 restructuring
costs of £4528000 for the year ended 30 june 2006 related mainly to headcount reductions and property costs in the
united kingdom and germany and were incurred as part of the restructuring of those businesses
the trading balance credit of £13131000 arose in the year ended 30 june 2006 from the normal business review of these
balances this was highlighted because of the magnitude of the release in that period 
the goodwill impairment charge of £2293000 related to the sale of morse gmbh on 24 july 2006  
the loss on sale of discontinued operation in 2006 relates to the disposal of the business in france morse sas 
on 12 july 2005 
the tax effect of the exceptional items is a charge of £325000 2006 charge of £2825000
4 earnings per share
basic earnings per share eps is calculated by dividing the earnings attributable to ordinary shareholders by the weighted
average number of ordinary shares in issue during the year excluding those held in the employee benefit trusts note 5
which are treated as cancelled
for diluted earnings per share the weighted average number of ordinary shares in issue is adjusted to assume conversion of
all dilutive potential ordinary shares morse plc annual report 2007 75
financial statements
4 earnings per share continued
reconciliations of the earnings and weighted average number of shares used in the calculation are set out below
2007 2006 
weighted 2007 weighted 2006
2007 average number per share 2006 average number per share 
earnings of shares amount earnings of shares amount
£’000 thousands pence £’000 thousands pence 
basic eps
profit attributable to ordinary shareholders 1605 154573 10 3982 151827 26
effect of dilutive securities options  5684   2128 
effect of deferred consideration to be issued  1081   1745 
diluted eps 1605 161338 10 3982 155700 26
the number of potentially dilutive options that are currently non diluting are 7887269 2006 4328991
continuing operations
basic earnings per share of 58p 2006 112p for continuing operations is calculated from the net profit attributable to
equity holders of the parent from continuing operations of £8980000 2006 £17064000 divided by the weighted average
number of shares diluted earnings per share is calculated by dividing the profit of £8980000 2006 £17064000 by the
diluted number of shares per the table above
discontinued operations
basic loss per share of 48p 2006 loss per share 86p for discontinued operations is calculated from the net loss
attributable to equity holders of the parent from discontinuing operations of £7375000 2006 loss £13082000 divided by
the weighted average number of shares diluted loss per share is calculated by dividing the loss of £7375000 2006 loss
£13082000 by the diluted number of shares per the table above 
to provide a comparable measure of performance per share from the normal operations of the business a supplementary
eps has been calculated in addition to the disclosure required by ias 33 with the following adjustments to the basic and
diluted eps
2007 2006 
weighted 2007 weighted 2006
2007 average number per share 2006 average number per share 
earnings of shares amount earnings of shares amount
£’000 thousands pence £’000 thousands pence 
basic eps 1605 154573 10 3982 151827 26
exceptional items 1371  09 748  05
tax on exceptional items 325  02 2825  19
adjusted basic eps 3301 154573 21 7555 151827 50
diluted eps 1605 161338 10 3982 155700 26
exceptional items 1371  08 748  05
tax on exceptional items 325  02 2825  18
adjusted diluted eps 3301 161338 20 7555 155700 49 morse plc annual report 2007 76
notes to the financial statements
for the year ended 30 june 2007 continued
5 information regarding employees directors and their interests
a directors’ remuneration
2007 2006
£’000 £’000
aggregate emoluments 947 1533
group contributions to defined contribution schemes 61 54
1008 1587
in 2007 five directors 2006 five had benefits accruing to them under defined contribution schemes
more detailed disclosures of directors’ remuneration are made in the remuneration committee report on page 46
b employees
2007 2006
number number
average monthly number of persons employed 
including directors by the group during the year
management and administration 234 290
sales and technical staff 1007 1330
1241 1620
c staff costs including directors
2007 2006
£’000 £’000
wages and salaries 73057 84895
social security costs 8975 10257
other pension costs 1191 1336
83223 96488
d employee share schemes
options 
options outstanding
outstanding over over 10p
10p ordinary ordinary
shares at period during which options shares at
30 june 2006 exercise price exercisable 30 june 2007
employee option scheme 544778 £250 apr 2000mar 2009 386270
unapproved executive option scheme 182000 £250 mar 2002mar 2009 166000
unapproved executive option scheme 135571 £2275 sep 2002sep 2009 90374
delphis ebt share option scheme 409623 £nil may 2001sep 2008 138792
unapproved and approved executive 
share option scheme 2000 19133 £196 apr 2005apr 2012 19133
sharesave option scheme 4 87570 £090 jan 2006jun 2006 
international sharesave option scheme 4 17044 £090 jan 2006jun 2006 
sharesave option scheme 5 55628 £1028 jan 2007jun 2007 29249 morse plc annual report 2007 77
financial statements
5 information regarding employees directors and their interests continued
d employee share schemes continued
options 
options outstanding
outstanding over over 10p
10p ordinary ordinary
shares at period during which options shares at
30 june 2006 exercise price exercisable 30 june 2007
unapproved and approved executive 
share option scheme 2000 231667 £1375 jul 2007apr 2014 231667
sharesave option scheme 6 437484 £091 feb 2008jul 2008 250497
morse plc long term incentive plan 875000 £nil dec 2007dec 2008 775000
unapproved and approved executive 
share option scheme 2000 461667 £089 jul 2008apr 2015 346667
morse ltip scheme 282500 £nil sep 2008sep 2009 282500
morse ltip scheme 75000 £nil sep 2008sep 2009 50000
morse ltip scheme 50000 £nil sep 2008sep 2009 50000
unapproved and approved executive 
share option scheme 2000 200000 £093 jul 2009mar 2016 150000
sharesave option scheme 7 1000524 £073 feb 2009jul 2009 616046
unapproved and approved executive 
share option scheme 2000 19000 £109 jul 2009mar 2016 19000
morse ltip scheme 444444 £nil mar 2009mar 2010 444444
morse ltip scheme 214953 £nil mar 2009mar 2010 182243
unapproved and approved executive 
share option scheme 2000 102800 £107 jul 2009mar 2016 93455
unapproved and approved executive 
share option scheme 2000  £111 jul 2009sep 2016 864865
morse ltip scheme  £nil sep 2009sep 2010 990000
morse ltip scheme  £nil oct 2009oct 2010 3515000
sharesave option scheme 8  £078 feb 2010jul 2010 928480
morse ltip scheme  £nil dec 2009dec 2010 150000
unapproved and approved executive 
share option scheme 2000  £095 jul 2010mar 2017 470000
morse ltip scheme  £nil apr 2010apr 2011 10000
unapproved and approved executive 
share option scheme 2000  £094 jul 2010apr 2017 21797
diagonal options
diagonal long term incentive plan 194563 £nil mar 2007mar 2014 26378
diagonal employee share option scheme 234807 £126 mar 2007mar 2014 60544
claritas share option scheme 6563 £167 oct 2002oct 2009 
diagonal sharesave option scheme 5 years 675 £500 may 2006oct 2006 
diagonal sharesave option scheme 5 years 10266 £187 may 2007oct 2007 8850
diagonal sharesave option scheme 3 years 63352 £088 may 2006oct 2006  morse plc annual report 2007 78
notes to the financial statements
for the year ended 30 june 2007 continued
5 information regarding employees directors and their interests continued
d employee share schemes continued
options 
options outstanding
outstanding over over 10p
10p ordinary ordinary
shares at period during which options shares at
30 june 2006 exercise price exercisable 30 june 2007
diagonal international sharesave 
option scheme 3 years 47250 £088 may 2006oct 2006 
diagonal sharesave option scheme 5 years 100784 £088 may 2008oct 2008 74655
diagonal sharesave option scheme 3 years 73840 £090 may 2007oct 2007 25968
diagonal sharesave option scheme 5 years 10900 £090 may 2009oct 2009 10900
summary of share options
2007 2006
2007 weighted 2006 weighted
number of  average number of average
options exercise price options exercise price
’000 pence ’000 pence
outstanding 1 july 6589 7710 8875 10341
granted during the year – other 2629 9363 1372 7896
granted during the year – nil price 5440  1194 
exercised during the year 679 1805 760 4995
expiredlapsed during the year 2500 7428 4092 11731
outstanding at 30 june 11479 4845 6589 7710
exercisable at 30 june 1519 15745 1524 15670
the average share price during 2007 was 9868 pence 2006 9641 pence
diagonal plc option schemes relate to option plans in place in diagonal plc at the time of acquisition by morse plc 
the schemes have retained the same terms and conditions as before but are now options for morse plc shares
the morse group operates its share schemes in conjunction with employee benefit trusts at the year end the morse
employee benefit trust held 1195521 shares 2006 268165 in the company of which 982102 2006 nil have share
options held over them the delphis employee benefit trust holds 475936 shares 2006 712656 in the company of which
138792 2006 409623 have share options held over them the diagonal employee benefit trust holds 81713 shares
2006 151524 in the company all of which have share options held over them
after the demerger of monitise as at the year end the morse employee benefit trust held 1195521 monitise shares 
2006 nil of which nil 2006 nil have share options held over them the delphis employee benefit trust holds 475936
monitise shares 2006 nil of which nil 2006 nil have share options held over them the diagonal employee benefit trust
holds 81713 shares 2006 nil shares all of which have share options held over them morse plc annual report 2007 79
financial statements
5 information regarding employees directors and their interests continued
e share based payments
the fair value of the share option scheme and the performance related share option scheme plans are estimated as at the
date of grant using a blackscholes model
the following table gives the assumptions made during the year ended 30 june 2007
share options granted to ltip schemes
nature of the arrangement grant of grant of grant of grant of grant of grant of
share share share share share share
options options options options options options
date of grant december september september september march march
2004 2005 2005 2005 2006 2006
number of instruments granted 1125000 410000 75000 50000 444444 214953
exercise price £nil £nil £nil £nil £nil £nil
share price at date of grant £096 £099 £098 £086 £109 £107
contractual life years 444444
vesting conditions shareholder shareholder shareholder shareholder shareholder shareholder 
return and return and return and return and return and return and 
eps growth eps growth eps growth eps growth eps growth eps growth 
in real terms in real terms in real terms in real terms in real terms in real terms
expected volatility 479 453 453 453 439 438
expected option life at grant years 35 35 35 35 35 35
risk free interest rate 447 421 421 421 444 473
dividend yield 354 379 383 436 349 355
fair value per granted instrument 
determined at grant date £084 £086 £084 £073 £096 £095
nature of the arrangement grant of grant of grant of grant of 
share share share share
options options options options
date of grant september october december april
2006 2006 2006 2007
number of instruments granted 990000 3765000 450000 10000
exercise price £nil £nil £nil £nil
share price at date of grant £113 £097 £095 £093
contractual life years 4444
vesting conditions shareholder shareholder shareholder shareholder
return and return and return and return and
eps growth eps growth eps growth eps growth
in real terms in real terms in real terms in real terms
expected volatility 456 44 44 44
expected option life at grant years 3 3 3 25
risk free interest rate 471 493 5 541
dividend yield 345 402 411 42
fair value per granted instrument 
determined at grant date £098 £082 £080 £078 morse plc annual report 2007 80
notes to the financial statements
for the year ended 30 june 2007 continued
5 information regarding employees directors and their interests continued
e share based payments continued
employee share scheme 2000
nature of the arrangement grant of grant of grant of grant of grant of grant of grant of
share share share share share share share
options options options options options options options
date of grant april december april april september march march
2003 2003 2004 2005 2005 2006 2006
number of instruments granted 1519428 287184 231667 511667 200000 19000 102800
exercise price £104 £136 £138 £089 £093 £109 £107
share price at date of grant £104 £136 £138 £089 £087 £109 £107
contractual life years 10 105 1025 10 10 10 10
vesting conditions growth in growth in growth in growth in growth in growth in growth in  
eps of rpi eps of rpi eps of rpi eps of rpi eps of rpi eps of rpi eps of rpi 
plus 5 plus 5 plus 5 plus 5 plus 5 plus 5 plus 5
expected volatility 632 601 586 555 574 542 542
expected option life at grant years 6 6 6 6 6 6 6
risk free interest rate 418 473 493 451 425 440 439
dividend yield 303 232 233 393 431 349 355
fair value per granted instrument 
determined at grant date £050 £067 £067 £036 £034 £045 £044
nature of the arrangement grant of grant of grant of grant of 
share share share share
options options options options
date of grant september october march april 
2006 2006 2007 2007
number of instruments granted 864865 200000 470000 21797
exercise price £111 £099 £095 £094
share price at date of grant £113 £099 £095 £093
contractual life years 585 6 585 6
vesting conditions growth in growth in growth in growth in
eps of rpi eps of rpi eps of rpi eps of rpi
plus 5 plus 5 plus 5 plus 5
expected volatility 421 423 44 44
expected option life at grant years 6 6 6 6
risk free interest rate 471 469 508 513
dividend yield 345 394 411 420
fair value per granted instrument 
determined at grant date £038 £032 £031 £030 morse plc annual report 2007 81
financial statements
5 information regarding employees directors and their interests continued
e share based payments continued
save as you earn schemes
nature of the arrangement grant of grant of grant of grant of 
share share share share
options options options options
date of grant november december december november 
2003 2004 2005 2006
number of instruments granted 164626 841078 1050473 1071919
exercise price £103 £091 £073 £078
share price at date of grant £121 £099 £095 £095
contractual life years 35 35 35 35
vesting conditions 3 years 3 years 3 years 3 years 
service service service service
expected volatility 612 5360 4530 45
expected option life at grant years 35 35 35 35
risk free interest rate 484 448 442 492
dividend yield 260 343 395 393
fair value per granted instrument 
determined at grant date £056 £036 £035 £037
diagonal schemes
nature of the arrangement grant of grant of grant of grant of grant of grant of
share share share share share share
options options options options options options
date of grant march march march march march march
2004 2004 2003 2003 2004 2004
number of instruments granted 333680 284333 100784 444252 115723 36332
exercise price £nil £126 £088 £088 £090 £090
share price at date of grant £122 £122 £110 £110 £113 £113
contractual life years 10 10 55 35 35 55
vesting conditions 3 years 3 years 3 years 3 years 3 years 5 years
service service service service service service
expected volatility 589 589 635 672 584 589
expected option life at grant years 6 6 55 35 35 55
risk free interest rate 467 467 406 381 458 466
dividend yield 262 262 286 286 283 283
fair value per granted instrument 
determined at grant date £104 £057 £057 £054 £051 £057 morse plc annual report 2007 82
notes to the financial statements
for the year ended 30 june 2007 continued
5 information regarding employees directors and their interests continued
e share based payments continued
in accordance with ifrs 2 the 45000 monitise share options granted on 1 november 2005 and the 10000 monitise share
options granted on 18 april 2006 per note 5d have not been fair valued
the expected life of the options is based on historical data and is not necessarily indicative of exercise patterns that may
occur in future
the expected volatility reflects the assumption that the recent historical volatility is indicative of future trends which may also
not necessarily be the actual outcome
no other features of the options granted were incorporated into the measurement of fair value
the directors consider that the value of diagonal shares can be calculated on the same basis as the morse plc shares as the
nature of diagonal shares are consistent with those of morse plc
6 operating profitloss
2007 2006
£’000 £’000
operating profitloss is stated after charging
auditors’ remuneration
– audit of these financial statements 153 236     
– audit of subsidiaries’ financial statements 128 157     
– other services relating to taxation 447 201
– other services 170 
net foreign currency differences 249 121
operating lease rentals 
– plant and machinery 463 1296
– other 2054 3334
research and development 2477 1332
depreciation of property plant and equipment 1381 2764
amortisation of intangible assets 1142 1005
loss on disposal of tangible fixed assets 630 239
nonaudit fees paid to auditors relate to transaction costs associated with the demerger of monitise the auditors do not
provide management consultancy services to the group amounts paid to the company’s auditor in respect of services to
the company other than the audit of the company’s financial statements have not been disclosed as the information is
required instead to be disclosed on a consolidated basis morse plc annual report 2007 83
financial statements
7 finance income and expense
2007 2006
£’000 £’000
bank interest income 424 351
other interest income 272 614
interest from associate  6
financial income 696 971
bank loans and overdrafts interest expense 206 154
other loans interest expense 22 99
unwinding of discount on provisions note 19 176 100
financial expenses 404 353                            
included within other interest receivable is interest earned from cash invested in open ended investment companies further
details provided in note 20
8 tax on ordinary activities
corporation tax
2007 2006
£’000 £’000
united kingdom corporation tax at 30 2006 30 1070 3978
adjustment to corporation tax provision from prior years 137 2927
overseas tax on profit for the year 936 895
current tax 2143 1946
deferred tax note 14 76 121
deferred tax restatement at 28 note 14 23 
total tax charge 2044 1825
in 2007 the tax charge is higher than the uk rate of 30 because of nondeductible costs primarily the amortisation of
goodwill and certain demerger costs
similarly in 2006 the tax charge was higher than the uk rate of 30 because of nondeductible costs primarily the
amortisation of goodwill and certain exceptional costs offset by the benefit of credits resulting from the resolution of prior
year tax positions morse plc annual report 2007 84
notes to the financial statements
for the year ended 30 june 2007 continued
8 tax on ordinary activities continued
corporation tax continued
reconciliation of the group’s current tax charge to the uk statutory rate
2007 2006
£’000 £’000
profit before tax 3846 5996
tax on profit before tax at 30 2006 30 1155 1800
effects of
expenses not deductible for tax purposes including 
amortisation of intangible assets demerger costs 
and exceptional costs 797 1135
loss of joint venture 213 
loss not deductible on sale of france  2117
profit and loss items not taxable  524
losses of overseas undertakings not available for relief  462
losses of overseas undertakings utilised in the period  45
difference between uk and overseas standard tax rates 257 193
adjustments to tax charge in respect of previous periods 136 2927
total tax charge 2044 1825
9 dividends paid and proposed
2007 2006
£’000 £’000
declared and paid during the year
equity dividend on ordinary shares
final dividend for 2006 27p 2005 26p 4130 3921
interim dividend for 2007 125p 2006 12p 1955 1833
6085 5754
proposed for approval at agm
not recognised as a liability as at 30 june
equity dividend on ordinary shares
final dividend for 2007 28p 2006 27p 4393 4130 morse plc annual report 2007 85
financial statements
10 goodwill and other intangible fixed assets
research customer maint
intellectual andrelationshipenancefollowontrade
property development backlog contracts consulting names software intangibles goodwill
£’000 £000 £’000 £’000 £’000 £’000 £’000 £’000 £’000
cost
at 1 july 2005   376 399 5521 1847  8143 55018
reclassified to assets 
held for sale         3850   
acquisitions 445       445 
at 1 july 2006 445  376 399 5521 1847  8588 51168
demerger note 25 445 438      883 
additions  438   589  498 1525 454
at 30 june 2007   376 399 6110 1847 498 9230 51622
amortisation
at 1 july 2005   313 57 574 155  1099 
charge for the year   63 66 690 186  1005 2293
impairment charge         2293
at 1 july 2006   376 123 1264 341  2104 
charge for the year 48 66  65 690 185 88 1142 
demerger note 25 48 66      114 
at 30 june 2007   376 188 1954 526 88 3132 
net book value
at 30 june 2007    211 4156 1321 410 6098 51622
at 30 june 2006 445   276 4257 1506  6484 51168
at 1 july 2005   63 342 4947 1692  7044 55018
other intangible assets total £6908000 2006 £6484000 other intangible assets acquired in the year ended 30 june 2007
totalled £1525000 2006 £445000
additions to goodwill and follow on consultancy represent amounts arising on acquisition of skillshub and cstim france 
as required by ifrs 3 management have made a provisional estimate of the allocation between intangible assets and
goodwill acquired allocating £589000 to follow on consultancy the estimate is based on an assessment of the ongoing
value added to the group morse plc annual report 2007 86
notes to the financial statements
for the year ended 30 june 2007 continued
10 goodwill and other intangible fixed assets continued
impairment testing of indefinite lived goodwill
goodwill acquired through business combinations has been allocated to the cashgenerating units of morse spain morse
ireland infrastructure consulting applications consulting and management consulting for impairment testing these are the
lowest level of cashgenerating units cgu that can be reliably and separately identified
the recoverable amounts of these cashgenerating units have been determined based on a value in use calculation senior
management have based these calculations on current approved budgeted cashflows in perpetuity the growth rates are
based on management estimates of the industry growth rates for the activities being undertake by each cgu the discount
rate applied to cash flow projections is a pretax rate of 13 2006 13 the pretax discount rate is based on
management assessment of the weighted average cost of capital posttax of 10 management estimates the discount rate
reflecting current market assessment of the time value of money and risks specific to the business
no impairment is required in the year ended 30 june 2007 the impairment charge of £2293000 for the year ended 
30 june 2006 related to morse gmbh which was sold on 24 july 2006
the following segments have significant carrying amounts of goodwill
2007 2006
£’000 £’000
applications consulting 29625 29625
management consulting 13559 13105
infrastructure consulting 5717 5717
morse ireland 2169 2169
morse spain 552 552
51622 51168
the remaining amortisation periods of the intangible assets held as at 30 june 2007 are as follows
maintenance contracts three years two months
follow on consulting five years two months
trade names seven years two months
intellectual property six years
software three years
goodwill is not being amortised
amortisation is charged to distribution expenses morse plc annual report 2007 87
financial statements
11 property plant and equipment
leasehold office fixtures motor
improvements equipment and fittings vehicles total
£’000 £’000 £’000 £’000 £’000
cost
at 1 july 2005 2276 11559 7774 276 21885
additions 1 1134 1189 22 2346
exchange differences 14 83 23  120
reclassified to assets held for sale  2004 723 9 2736
disposals 363 1187 3054 134 4738
at 1 july 2006 1928 9585 5209 155 16877
additions 17 847 349 48 1261
writeoff of fully depreciated fixed assets 117 380 32  529
disposals 1496 5442 1705 64 8707
exchange differences 9 56 37 2 104
demerger of monitise note 25  131   131
at 30 june 2007 323 4423 3784 137 8667
depreciation
at 1 july 2005 1548 8937 6780 229 17494
disposals 332 1109 2871 121 4433
charge for the year 201 2120 405 38 2764
exchange differences 11 70 16  97
reclassified to assets held for sale  2004 647 9 2660
at 1 july 2006 1428 8014 3683 137 13262
disposals 1211 5115 1658 66 8050
writeoff of fully depreciated fixed assets 117 380 32  529
charge for the year 82 1016 267 16 1381
exchange differences 5 43 20 3 71
demerger of monitise note 25  26   26
at 30 june 2007 177 3466 2240 84 5967
net book value
at 30 june 2007 146 957 1545 52 2700
at 30 june 2006 500 1571 1526 18 3615
at 1 july 2005 728 2622 994 47 4391
in relation to the year ended 30 june 2007 the difference between the additions above of £1261000 and capital
expenditure per the cash flow statement of £1142000 is capital accruals of £119000                    morse plc annual report 2007 88
notes to the financial statements
for the year ended 30 june 2007 continued
12 investments
£’000
interests in joint ventures
cost at 1 july 2005 401
share of retained loss 401
additions in the year 700
reclassification of investment to intellectual property 445
cost at 1 july 2006 255
share of retained loss 709
additions in the year 1000
tax relief transfer from jv 791
demerger 296
net book value at 30 june 2007 51
investment in associates
cost at 1 july 2005 113
interest on loan 6
disposal in the year 119
cost at 1 july 2006 
interest on loan 
disposal in the year 
net book value at 30 june 2007 
total net book value of investments at 30 june 2007 51
total net book value of investments at 30 june 2006 255
total net book value of investments at 1 july 2005 514
a list of principal group companies can be found in note iv of the company financial statements
the movements during the year ended 30 june 2007 are in relation to mobile atm ltd which was disposed of as part of the
demerger of monitise note 25
the £1000000 of additions in the year represents cash payments of £656000 and the writeoff of balances due from the
joint ventures of £344000
13 other financial assets
2007 2006
£’000 £’000
noncurrent
loan at fair value  119
the financial asset in the year ending 30 june 2006 of £119000 relates to an outstanding loan to a third party
the loan was repaid in the year ended 30 june 2007 morse plc annual report 2007 89
financial statements
14 deferred tax
depreciation
provision in excess of
for shareholiday pay capital
losses options accrual allowances total
£’000 £’000 £’000 £’000 £’000
assets
at 1 july 2005 75 31 327 947 1380
chargecredit for the year note 8 75 96  118 97
at 1 july 2006  127 327 829 1283
chargecredit for the year note 8 176 98 21 133 162
restatement at 28 note 8  8  55 63
credit to pl reserve  264   264
at 30 june 2007 176 481 348 641 1646
customer maintenance follow on trade   
backlog contracts consulting names other total
£’000 £’000 £’000 £’000 £’000 £’000
liabilities
at 1 july 2005 18 76 1005 409  1508
credit for the year note 8 18 14 140 46  218
at 1 july 2006  62 865 363  1290
additions   136   136
chargecredit for the year note 8  10 82 22 200 86
restatement at 28 note 8  4 58 24  86
at 30 june 2007  48 861 317 200 1426
deferred tax that relates to the same jurisdictions can be offset and has been presented on the balance sheet as a deferred
tax liability of £200000 2006 £57000 other deferred tax balances are reflected on the balance sheet as an asset of
£420000 2006 £50000 the net deferred tax liability is £220000 2006 £7000
there is an unrecognised deferred tax asset of £nil 2006 £4260000 in respect of trading losses as at 30 june 2007 
the group has an unrecognised deferred tax liability of £nil 2006 £1123000 in relation to unremitted overseas profits
the group anticipates sufficient profits to be made in the relevant geographic locations in order to utilise the deferred 
tax assets morse plc annual report 2007 90
notes to the financial statements
for the year ended 30 june 2007 continued
15 inventories
2007 2006
£’000 £’000
finished goods and goods for resale 4287 7123
cost of goods sold during the year amount to £94387000 2006 £157830000
16 trade and other receivables
2007 2006
£’000 £’000
trade receivables 57665 58911
other receivables and prepayments 19688 24673
77353 83584
17 cash and cash equivalents
2007 2006
£’000 £’000
cash and cash equivalents disclosed as such on the balance sheet 15345 17800
cash and cash equivalents included within assets and liabilities classified as held for sale note 26  9463
cash and cash equivalents per cash flow statement 15345 27263
18 trade and other payables
2007 2006
£’000 £’000
trade payables due to associates  7
trade payables 43035 47402
other payables 44544 51212
87579 98621
employer pension contributions payable to the pension scheme of £115550 2006 £76285 are included within 
other payables morse plc annual report 2007 91
financial statements
19 provisions 
other property total
£’000 £’000 £’000
balance at 1 july 2006 216 4057 4273
provisions made during the year  1048 1048
provisions used during the year 182 1762 1944
unwinding of a discount  176 176
released in the period  2132 2132
balance at 30 june 2007 34 1387 1421
current 2007 34 438 472
noncurrent 2007  949 949
balance at 30 june 2007 34 1387 1421
current 2006 167 1454 1621
noncurrent 2006 49 2603 2652
balance at 30 june 2006 216 4057 4273
the property provision brought forward relates to the properties previously vacated in the uk in prior periods the provision
is being utilised over the length of the lease the property provision charged in the year relates to properties vacated in the
uk the property provision is based on discounting future cash flows over the remaining term of the lease there is a minimal
degree of uncertainty in the projections given the fixed term nature of the leases
provisions have been discounted at a pretax rate of 13 2006 13
other provisions relate to headcount reductions in the uk
20 financial risk management
the group has a committed borrowing facility of £10000000 2006 £10000000 which had not been used at the year end
the group does not trade in financial instruments
interest rate risk
the group finances its operations through a mixture of retained profits cash and the availability of a borrowing facility the
group’s cash other facilities and deposits are at floating rates management manage the interest rate risk on borrowing by
using a combination of fixed and floating rates other current and noncurrent loans incur interest at a fixed rate while other
loan notes incur interest on a floating rate basis no interest rate derivative contracts have been entered into management
will continue to monitor this position to ensure that the interest rate profile is appropriate for the group
credit risk
there are no significant concentrations of credit risk within the group the maximum credit risk exposure relating to financial
assets is represented by carrying value as at the balance sheet date morse plc annual report 2007 92
notes to the financial statements
for the year ended 30 june 2007 continued
20 financial risk management continued
sensitivity analysis
in managing interest rate and currency risks the group aims to reduce the impact of shortterm fluctuations on the group’s
earnings over the longterm however permanent changes in foreign exchange and interest rates would have an impact on
the consolidated results
a decrease of 1 in the currencies that the group has exposure to would not have a significant impact on the results for 
the period
net financial assets
the summarised net financial asset position of the group is shown below
2007 2006
£’000 £’000
other current loans  350
other noncurrent loans  625
loan notes 266 380
trade creditors 43035 47402
trade debtors 57665 58911
other financial liabilities  206
14364 9948
cash note 17 15345 27263
net financial assets 29709 37211
the loan notes are all denominated in sterling and represent part of the consideration arising as a result of the acquisition of
relational concepts limited hughes rae limited and delphis holdings limited the loan notes bear interest based on
libor these amounts are repayable over a fixed term to coincide with receipt from customers and are secured on these
receipts loan notes are disclosed with other payables
the other loans as at 30 june 2006 represented amounts borrowed against sales made on extended credit terms 
other financial liabilities represent the fair valued amount of any outstanding forward contracts in place as at 30 june 2006
financial liabilities
the group’s financial liabilities and analysis of ageing are as follows
2007 2006
£’000 £’000
in one year or on demand 43301 48338
between one and two years  275
between two and five years  350
43301 48963
the book value of financial liabilities is not significantly different from the fair value considering the current terms of repayment morse plc annual report 2007 93
financial statements
20 financial risk management continued
interest rate profile
the effective interest rate of cash balances and loans and their maturity periods are as follows
effective
interest total 01 year 12 years
rate £’000 £’000 £’000
for the year ended 30 june 2007
cash and cash equivalents 510 15345 15345 
borrowings
loan notes 445 266 266 
interest rate management
financial liabilities accrue interest on the following basis
fixed floating 2007 fixed floating 2006
rate rate total rate rate total
£’000 £’000 £’000 £’000 £’000 £’000
currency
sterling  266 266  380 380
euros  975  975
 266 266 975 380 1355
fair values of financial assets and financial liabilities
2007 2007 2006 2006
book value fair value book value fair value
£’000 £’000 £’000 £’000
financial asset
trade debtors 57665 57665 58911 58911
cash and cash equivalents 15345 15345 27263 27263
73010 73010 86174 86174
financial liabilities
loan notes 266 266 380 380
trade creditors 43035 43035 47402 47402
other loans  975 975
43301 43301 48757 48757
derivatives
foreign exchange contracts  206 206 morse plc annual report 2007 94
notes to the financial statements
for the year ended 30 june 2007 continued
20 financial risk management continued
cash and cash equivalents
the carrying value approximates to fair value because of the short maturity of the instruments
loan notes and other loans
the fair value is based on estimated likely cash payments
derivatives
foreign exchange in 2006 contracts were valued at the spot rate of exchange on 30 june 2006 there were no foreign
exchange contracts as at 30 june 2007
fixed asset investments
the net book value of the group’s fixed asset investments per note 12 approximates their fair value
financial liabilities
the net book value of financial liabilities is not significantly different from the fair value considering the current terms 
of repayment
financial assets
the group’s cash deposits at the year end attract interest at a floating rate they are denominated in the following currencies
2007 2006
£’000 £’000
sterling 5260 10028
us dollars 377 2631
euros 8721 13060
south african rand 440 310
australian dollars 363 282
malaysian ringitts 114 92
singapore dollars 70 860
cash 15345 27263
the majority of cash has been invested during the year in a number of open ended investment companies’ funds which
usually offer rates of return in excess of those that can be earned on the money market but which are considered by the
group to have a sound credit rating and therefore constitute a low risk the remaining cash earns interest at market 
interest rates
on 1 july 2007 the group invested £667291170 of their surplus funds in open ended investment companies the group
has same day access to these funds
currency and exchange rate risk management
a proportion of the group’s revenues and costs are denominated in currencies other than sterling principally in euros and
us dollars in order to reduce the exposure to foreign currency exchange rate fluctuations the group will try to purchase
both goods and services in foreign currency to match the projected revenues in that trading currency the group also enters
into forward contracts up to four months forward to reduce the exposure that arises on sales and purchases denominated in
foreign currency there are no forward contracts as at 30 june 2007 morse plc annual report 2007 95
financial statements
20 financial risk management continued
the table below shows the group’s principal currency exposures that give rise to the net currency gains and losses
recognised in the profit and loss account such exposures comprise the monetary assets and monetary liabilities of the
group that are not denominated in the operating currency of the operating company involved
these exposures were as follows
functional currency of net foreign currency monetary assetsliabilities
group’s major operations 30 june 2007 30 june 2006
sterling euro us dollar sterling euro us dollar
£’000 £’000 £’000 £’000 £’000 £’000
sterling  468 2185  3689 2450
euro 45  89 1
us dollars 2   
singapore dollars   13 
malaysian ringitts   481 
south african rand 23   
21 called up share capital
2007 2007 2006 2006
number £’000 number £’000
authorised
10p ordinary shares 175000000 17500 175000000 17500
allotted and fully paid
10p ordinary shares 156914167 15692 153380176 15338
see note 22 for the movements in allocated and fully paid share capital morse plc annual report 2007 96
notes to the financial statements
for the year ended 30 june 2007 continued
22 capital and reserves
foreign
share share capital currency total
share capital to premium redemption translation merger other retained minority
capital be issued account reserve other reserve reserve reserves earnings interest total
£’000 £’000 £’000 £’000 £’000 £’000 £’000 £’000 £’000 £’000 £’000
group
at 1 july 2005 15106 6229 69786 168 209 85 24796 25088 51750 16 64475
profit for the year         3982  3982
premium on issue 
of shares   599        599
issue of shares 
on acquisition 
of subsidiaries 167 2426     2208 2208   51
exercise of share 
options 65        82  17
loss on translation of 
foreign subsidiaries      267  267   267
share options charge         828  828
dividends paid         5754  5754
dividend paid to 
minority interest          60 60
share of profit of 
minority interest          189 189
at 1 july 2006 15338 3803 70385 168 209 182 27004 27563 52776 145 64458
profit for the year         1605  1605
issue of shares on 
acquisition of 
subsidiaries 313 3455     3900 3900   758
exercise of share 
options 41  382      257  166
deferred tax on 
share options         264  264
demerger         708  708
profit on translation 
of foreign subsidiaries      595  595 137 9 449
share options charge         796  796
dividends paid         6085  6085
dividend paid to 
minority interest          27 27
share of profit of 
minority interest          102 102
at 30 june 
2007 15692 348 70767 168 209 413 30904 30868 57024 229 60880 morse plc annual report 2007 97
financial statements
22 capital and reserves continued
the share capital issued at nominal value in the year relates to the exercise of share options 401132 shares £41000 
and to previously deferred consideration on the acquisition of cstim limited 2863716 shares £286000 and of 
skillshub limited 269143 shares £27000  
in the year ended 30 june 2007 share capital to be issued decreased by £3803000 due to the issue of 2863716 
shares for the acquisition of cstim limited during the same period share capital to be issued increased by £625000 
585096 shares in relation to deferred consideration on the acquisition of skillshub limited of which £277000 
269143 shares were issued by the year end share capital to be issued of £348000 362760 shares as at june 2007
relates to the deferred consideration on the acquisition of skillshub limited and is based on the business acquired achieving
certain financial targets £174000 of the total share capital is to be issued within one year the relevant targets having been
settled and £174000 is to be issued after one year up to june 2009 
the premium arising on the exercise of share options was £382000 2006 £599000 on the exercise of share options
£166000 2006 £407000 was received from employees
the capital redemption reserve is used to maintain the company’s capital following the purchase and cancellation of its 
own shares
when share options are exercised using the morse employee benefit trust the difference between the market value of the
shares and the exercise price of the options is charged to profit and loss account reserve simultaneously a transfer from
other reserves to the profit and loss account reserve is made for the related charge recorded when the options were granted
under the morse group company share option plan or the diagonal employee share plans
the foreign currency translation reserve is used to record exchange difference arising from the translation of financial
statements of foreign subsidiaries
the increase in the merger reserve of £3900000 is the share premium arising on the 3130000 shares issued as
consideration on acquisitions which has been recognised in accordance with s131 of companies act 1985 £3650000 of
the share premium on 2863716 shares relates to the prior year acquisition of cstim limited and £250000 share premium
on the 269143 shares relates to the current year acquisition of skillshub limited
the share of profit of minority interest of £102000 consists of a share of a current year profit of £197000 offset by £95000
which represents the decrease in minority interest resulting from the acquisition of the remaining 49 of skillshub limited  
23 capital commitments
the group does not have any capital commitments as at 30 june 2007 morse group limited a subsidiary entity had a
capital commitment of £200000 as at 30 june 2006 morse plc annual report 2007 98
24 operating lease commitments
land and land and 
buildings other buildings other
2007 2007 2006 2006
£’000 £’000 £’000 £’000
annual noncancellable commitments
for operating leases which expire
within one year 2080 448 3512 1384
between two and five years 4276 407 8040 1018
after five years 1574  2484 
7930 855 14036 2402
25 demerger of a subsidiary
on 28 june 2007 monitise group demerged from morse plc the demerger was effected by morse declaring a special
dividend equal to the book value of its shareholding in monitise group at that time this was satisfied by the issue by
monitise of demerger shares credited as fully paid to qualifying shareholders in consideration for the transfer by morse to
monitise of the entire issued share capital of monitise group 
the aggregate of all debts owed by monitise group to morse plc prior to the demerger was £9200000 all intercompany
debts were settled by the issue of one additional ordinary share in monitise group in consideration for an undertaking to pay
£9200000 to monitise group in respect of the share 
the demerger costs amount to £2455000 and represent legal and professional fees in carrying out the demerger
transaction net assets demerged are as follows 
£’000
investments 296
intangibles 768
property plant and equipment 105
trade receivables 226
other receivables and prepayments 939
cash and cash equivalents 1
trade payables 186
other payables 849
net assets on demerger 708
costs of demerger 2455
notes to the financial statements
for the year ended 30 june 2007 continued morse plc annual report 2007 99
financial statements
26 assets and liabilities held for sale
on 24 july 2006 morse plc announced the disposal of its business in germany and austria morse gmbh and 
morse it solutions austria gmbh note 27 as such the following assets and liabilities were classified as held for sale in 
the balance sheet as at 30 june 2007
2007 2006
£’000 £’000
goodwill  1557
property plant and equipment  76
inventories  505
trade receivables  14102
other receivables and prepayments  8697
cash and cash equivalents  9463
assets held for sale  34400
trade payables  14935
other payables  13148
cash and cash equivalents  
tax payable  93
liabilities held for sale  28176
net assets held for sale  6224
27 disposal of a subsidiary
on 24 july 2006 morse plc announced the disposal of its business in germany and austria morse gmbh and 
morse it solutions austria gmbh were sold for a consideration of €9500000 £6552000 as such the results of these
operations have been classified as discontinued in the income statements for the year ended 30 june 2006 and its assets
and liabilities classified as held for sale on the balance sheet as at 30 june 2006 morse plc annual report 2007 100
27 disposal of a subsidiary continued
assets £’000
goodwill 1557
property plant and equipment 76
inventories 505
trade receivables 14102
other receivables and prepayments 8697
cash and cash equivalents 9463
trade payables 14935
other payables 13148
tax payable 93
net assets on disposal 6224
costs of disposal 328
sale proceeds received 6552
profit on disposal of germany and austria 
the disposal of subsidiary net of cash disposed of £3239000 per the consolidated cash flow statement for the year ended
30 june 2007 comprises prior costs of disposal of £328000 cash and cash equivalents of £9463000 offset by
consideration received of £6552000 
28 acquisitions
in january 2007 the group acquired the outstanding 49 of the issued share capital not already owned by morse of
skillshub limited a resource placement business which serves the financial services sector the transaction is to be
satisfied by a net consideration of £823838 over a period of three years the group acquired cstim france in 
december 2006 a startup consulting company for a total consideration of £178000
skillshub cstim france total
fair value fair value fair value 
£’000 £’000 £’000
property plant and equipment 2  2
current assets 867  867
current liabilities 676  676
net assets 193  193
net assets acquired 49100 94  94
goodwill 365 89 454
intangibles 364 89 453
consideration 823 178 1001
consideration satisfied by
cash 180 123 303
share capital issued 118 55 173
share capital to be issued 521  521
cost of acquisition 4 4
823 178 1001
notes to the financial statements
for the year ended 30 june 2007 continued morse plc annual report 2007 101
financial statements
28 acquisitions continued
the book value of the assets and liabilities has been taken from the management accounts of skillshub limited as of 
31 january 2007 
there are no fair value adjustments made to the book value of acquired businesses
29 related party transactions
during the year ended 30 june 2007 the group made sales of £nil 2006 £93062 to its associate companies and made
purchases of £nil 2006 £28344 from them as at 30 june 2007 this had resulted in outstanding trade debtor and trade
creditor balances of £nil 2006 £69899 and £nil 2006 £6956 respectively an interest charge of £nil £2006 £6000 
was charged in the year to 30 june 2007
during the year ended 30 june 2007 the group made sales of £nil 2006 £923000 to its joint ventures as at 30 june 2007
this had resulted in an outstanding trade debtor of £nil 2006 £127000
morse group limited has borne the costs of the directors of morse plc during the year
compensation of key management personnel is as follows
2007 2006
£’000 £’000
short term employee benefits 1460 2939
share based payment  174
1460 3113
30 accounting estimates and judgements
details of significant accounting estimates and judgements have been disclosed under the relevant note or accounting policy
for each area where disclosure is required principally these are the valuation of share based payments note 5 acquired
intangible assets note 10 goodwill impairment testing note 10 and provisions note 19
31 analysis of changes in net funds
exchange
at 1 july rate other at 30 june
2006 cash flows fluctuations movements 2007
£’000 £’000 £’000 £’000 £’000
cash at bank 27263 11871 47  15345
other loans 975   975 
loan notes 380 114   266
other financial liabilities 206   206 
net funds 25702 11757 47 1181 15079 morse plc annual report 2007 102
company company 
2007 2006
note £’000 £’000
fixed assets
investments iv 147021 147021
147021 147021
current assets
debtors v 19617 25218
cash at bank and in hand 263 
total current assets 19880 25218
creditors – 
amounts falling due within one year vi 39152 42229
net current liabilities 19272 17011
total net assets 127749 130010
capital and reserves
called up share capital vii 15692 15338
share capital to be issued ix 348 3803
share premium account ix 70767 70385
other reserves ix 31272 27372
profit and loss account ix 9670 13112
total equity shareholders’ funds viii 127749 130010
the financial statements were approved by the board of directors on 4 september 2007 and signed on its behalf by
e dodd
director
company balance sheet
as at 30 june 2007 morse plc annual report 2007 103
financial statements
i accounting policies
accounting convention
the financial statements are prepared under the historical cost convention where appropriate and in accordance with the
companies act 1985 and applicable accounting standards using the following principal accounting policies which have
been consistently applied the accounting policies below cover items which are considered material in relation to the
company’s financial statements
as permitted by section 230 of the companies act 1985 the profit and loss account of the company is not presented as
part of these financial statements the loss after taxation attributable to morse plc for the year and dealt with in the financial
statements of the company was £3656000 2006 profit of £3011000
investments
investments in subsidiary undertakings are stated at cost less provision for any impairment in value trade investments are
held at cost less provision for any impairment in value
associates and joint ventures
an associate is an undertaking in which the company has a longterm interest usually from 20 to 50 of the equity 
voting rights and over which it exercises significant influence a joint venture is an undertaking in which the company has 
a longterm interest and over which it exercises joint control 
cash flow statement
the cash flows of the company are included within the consolidated group cash flow statement of morse plc
borrowings
borrowings are recognised initially at fair value and subsequently at amortised cost
interests in own shares
interests in own shares are accounted for in accordance with uitf abstract 38 ‘accounting for esop trusts’ which requires
the assets and liabilities of the group’s esop trust to be recognised in the financial statements where there is defacto control
of those assets and liabilities the company’s own shares held in the esop trust are deducted from shareholders’ funds until
they are transferred to employees 
deferred taxation
deferred tax is recognised in respect of all timing differences that have originated but not reversed at the balance sheet date
where transactions or events that result in an obligation to pay more tax in future or a right to pay less tax in future have
occurred at the balance sheet date except as otherwise required by frs 19 a net deferred tax asset is regarded as
recoverable and therefore recognised only when on the basis of all available evidence it can be regarded as more likely than
not that there will be suitable taxable profits from which the future reversal of the underlying timing differences can be deducted
taxation
the charge for taxation is based on the profitloss for the year and takes into account taxation deferred because of timing
differences between the treatment of certain items for taxation and accounting purposes
differed tax is recognised without discounting in respect of all timing differences between the treatment of certain items for
taxation and accounting purposes which have arisen but not reversed by the balance sheet date except as otherwise
required by frs 19 
notes to the financial statements
for the year ended 30 june 2007 continued morse plc annual report 2007 104
i accounting policies continued
dividends
dividends receivable are recognised when the group’s right to receive payment is established dividends payable to the
company’s shareholders are recognised as a liability and deducted from shareholders’ equity in the period in which the
shareholders’ right to receive payment is established
foreign exchange
transactions denominated in foreign currencies are translated to sterling at the actual exchange rate at the time of the
transaction or where forward foreign currency contracts have been taken out at contracted rates monetary assets and
liabilities denominated in foreign currencies at the balance sheet date are translated at the rates ruling at that date 
cash
cash comprises cash in hand and deposits repayable on demand less overdrafts payable on demand
ii dividends paid and proposed
2007 2006
£’000 £’000
declared and paid during the year
equity dividend on ordinary shares
final dividend for 2006 27p 2005 26p 4130 3921
interim dividend for 2007 125p 2006 12p 1955 1833
6085 5754
proposed for approval at agm
not recognised as a liability as at 30 june
equity dividend on ordinary shares
final dividend for 2007 28p 2006 27p 4393 4130
iii information regarding employees directors and their interests
a directors’ remuneration
details of directors’ emoluments are given in note 5 to the consolidated financial statements
b employees
2007 2006
number number
average monthly number of persons employed including directors 
by the company during the year
management and administration 12
information regarding directors is included in note 5
notes to the financial statements
for the year ended 30 june 2007 continued morse plc annual report 2007 105
financial statements
iii information regarding employees directors and their interests continued
c staff costs including directors
2007 2006
£’000 £’000
wages and salaries 10 54
the company has no pension costs information regarding directors is included in note 5 information on share options is
included in note 5d of the consolidated financial statements
iv fixed asset investments
cost and net book amount £’000
interests in subsidiary undertakings
cost at 30 june 2005 and 1 july 2006 147021
additions 9200
demerger 9200
cost at 30 june 2007 147021
total net book value of investments at 30 june 2007 147021
total net book value of investments at 30 june 2006 147021
the aggregate of all debts owed by monitise group of £9200000 increased the value of investment in monitise prior to the
demerger the decrease of £9200000 represents the writeoff of the above investment post the demerger note ix  morse plc annual report 2007 106
iv fixed asset investments continued
the company’s principal undertakings are as follows
percentage of
ordinary shares country of 
and voting rights registration and
subsidiary undertakings principal activity held incorporation 
morse group limited sale of it solutions and 
professional services 100 england and wales
morse spain sl  sale of it solutions and 
professional services 100 spain
morse computer group limited  sale of it solutions and 
professional services 100 ireland
morse engineering limited  sale of it solutions and 
professional services 100 ireland
morse solutions limited  sale of it solutions and 
professional services 100 ireland
appliance technology limited  sale of it solutions and 
professional services 100 ireland
cstim limited provision of advisory services to companies 
engaged in investment management 100 england and wales
diagonal consulting limited sale of it solutions and 
professional services 100 england and wales
diagonal solutions limited sale of it solutions and 
professional services 100 england and wales
morse service holdings limited sale of it solutions and 
professional services 100 england and wales
morse consulting inc sale of it solutions and 
professional services 100 usa
morse consulting sdu bhd sale of it solutions and 
professional services 100 malaysia
skillshub limited placement of external consultants in the 
financial services industry 100 england and wales
morse consultancy pty limited supply of management 
consultancy services 100 south africa
 indirectly held through subsidiary companies
 previously known as cstim management consultancy pty limited
v debtors
2007 2006
£’000 £’000
amounts due from group undertakings 19564 25173
other debtors 53 45
19617 25218
notes to the financial statements
for the year ended 30 june 2007 continued morse plc annual report 2007 107
financial statements
vi creditors amounts falling due within one year
2007 2006
£’000 £’000
loan notes 266 380
trade creditors 137 
amounts due to group undertakings 36922 41234
other creditors 24 471
corporation tax  100
accruals and deferred income 1803 44
39152 42229
vii called up share capital
2007 2007 2006 2006
number £’000 number £’000
authorised
10p ordinary shares 175000000 17500 175000000 17500
allotted and fully paid
10p ordinary shares 156914167 15692 153380176 15338
see note ix for the movements in allocated and fully paid share capital
viii reconciliation of movements in equity shareholders’ funds
2007 2006
£’000 £’000
profitloss for the year 3656 3011
dividends 8915 5754
dividend in specie 9200 
share option charge 499 
retained loss for the year 3442 2743
issue of share capital 4636 3039
movement in share capital to be issued 3455 2426
net reductionincrease to equity shareholders’ funds 2261 2130
opening equity shareholders’ funds 130010 132140
closing equity shareholders’ funds 127749 130010 morse plc annual report 2007 108
ix capital and reserves
foreign
share share capital currency total
share capital to premium redemption translation merger other retained
capital be issued account reserve other reserve reserve reserves earnings total
£’000 £’000 £’000 £’000£’000 £’000 £’000 £’000 £’000 £’000
company
at 1 july 2006 15338 3803 70385 168 200  27004 27372 13112 130010
profitloss for 
the year         3656 3656
dividends received         15000 15000
exercise of share 
options 41  382       423
dividend in specie         9200 9200
share options charge         499 499
dividends paid         6085 6085
issue of shares on 
acquisition of 
subsidiaries 313 3455     3900 3900  758
at 30 june 
2007 15692 348 70767 168 200  30904 31272 9670 127749
the share capital issued at nominal value in the year relates to the exercise of share options 401132 shares £41000 and
to previously deferred consideration on the acquisition of cstim limited 2863716 shares £286000 and of skillshub
limited 269143 shares £27000  
in the year ended 30 june 2007 share capital to be issued decreased by £3803000 due to the issue of 2863716 shares
for the acquisition of cstim limited during the same period share capital to be issued increased by £625000 585096
shares in relation to deferred consideration on the acquisition of skillshub limited of which £277000 269143 shares
were issued by the year end share capital to be issued of £348000 362760 shares as at june 2007 relates to the
deferred consideration on the acquisition of skillshub limited and is based on the business acquired achieving certain
financial targets £174000 of the total share capital is to be issued within one year the relevant targets having been settled
and £174000 is to be issued after one year up to june 2009 
the premium arising on the exercise of share options was £382000 2006 £599000 on the exercise of share options
£166000 2006 £407000 was received from employees
the capital redemption reserve is used to maintain the company’s capital following the purchase and cancellation of its 
own shares
when share options are exercised using the morse employee benefit trust the difference between the market value of the
shares and the exercise price of the options is charged to profit and loss account reserve simultaneously a transfer from
other reserves to the profit and loss account reserve is made for the related charge recorded when the options were granted
under the morse group company share option plan or the diagonal employee share plans
the foreign currency translation reserve is used to record exchange differences arising from the translation of financial
statements of foreign subsidiaries
notes to the financial statements
for the year ended 30 june 2007 continued morse plc annual report 2007 109
financial statements
ix capital and reserves continued
the increase in the merger reserve of £3900000 is the share premium arising on the 3130000 shares issued as
consideration on acquisitions which has been recognised in accordance with s131 of companies act 1985 £3650000 of
the share premium on 2863716 shares relates to the prior year acquisition of cstim limited and £250000 share premium
on the 269143 shares relates to the current year acquisition of skillshub limited
the decrease of £9200000 in retained profits represents an investment in monitise group ltd which was written off on the
demerger note 25 the directors have been advised that at the time of the dividend of monitise plc shares which was
made on 28 june 2007 following a shareholder resolution passed at the company’s extraordinary general meeting on 
25 june 2007 although the management account of the company showed that the company had sufficient distributable
reserves to make this dividend the company did not show sufficient distributable reserves in a set of ‘relevant accounts’ for
companies act 1985 purposes as a technical matter it was necessary to show that the company had sufficient
distributable reserves in ‘interim accounts’ this procedural step was not taken at the 2007 agm a resolution will be
proposed rectifying the position and approving the release of shareholders from any liability to compensate the company in
respect of such dividend morse plc annual report 2007 110
prepared under uk gaap prepared under ifrs
2003 2004 2005 2006 2007
£’000 £’000 £’000 £’000 £’000
turnover 351343 390008 429531 367120 257325
gross profit 69568 75481 87925 85040 60861
adjusted operating profit  9165 7470 8263 6527 5634
operating profitloss 17413 14471 2191 12837 4263
net assets 57745 47694 64475 64458 60880
 before goodwill amortisation and exceptional items under uk gaap
 before exceptional restructuring costs impairment exceptional trading balance releases and demerger costs under ifrs 
five year summary
year ended 30 june 2007 morse plc annual report 2007 111
advisers and financial calendar
morse plc
registered in england no 3108179
registered office
profile west
950 great west road
brentford
middlesex 
tw8 9ee
advisers
financial advisers and stockbrokers
investec investment banking
2 gresham street
london
ec2v 7qp
independent auditors
kpmg audit plc
8 salisbury square
london
ec4y 8bb
principal bankers
royal bank of scotland
po box 2153
14 berkeley square
london
w1a 1sn
registrars
lloyds tsb registrars
the causeway
worthing
west sussex
bn99 6da
financial calendar
exdividend date 10 october 2007
record date 12 october 2007
annual general meeting 30 october 2007
dividend payment date 5 november 2007 morse plc annual report 2007 112
morse plc head office
profile west
950 great west road
brentford 
middlesex 
tw8 9ee
t 44 020 8380 8000
f 44 020 8560 7700
e enquirymorsecom
wwwmorsecom
worldwide head offices
principal offices
level 21 darling park
tower 2
201 sussex street
sydney nsw 2000
australia
t 61 02 9006 1262
6 rue de téhéran
75008 paris
france
t 33 01 56 43 42 62
heather road
sandyford industrial estate 
dublin 18
ireland
t 353 01 295 8966
1st floor no 1 west’s centre
st helier
jersey
je2 4st
t 44 0 1534 519 086
2 parc d’activité syrdall
l5365 munsbach
luxembourg
t  352 26 70 24 1
level 63 tower 2
petronas twin towers
kuala lumpur city centre
50088 kuala lumpur
malaysia
t 603 2178 7878
690 lee road
suite 320
wayne
pa 19087
usa
t 1 484 329 2080
1004 commerce point
3 phillip street
singapore
048693
t 65 6438 2633
ground floor 
old warehouse building
black river park
fir street observatory 7925
cape town
south africa
t 27 21 447 1108
avda diagonal 569
2a planta edificio lilla diagonal 
08029 barcelona
spain
t 34 0933 632 590 executive management team photography by giles barnard tel 020 8764 6276 or wwwgilesbarnardcom
board directors’ photography by chris close tel 0131 662 9999 or wwwchrisclosecouk          
design and layout by emperor design tel 020 7729 9090 or wwwemperordesigncouk and morse
printed by turners mps tel 01256 359252 or wwwturnersmpscouk
this report is printed on advocate smooth xtreme white which contains woodpulps from well managed
forests certified in accordance with the rules of the forest stewardship council
© morse plc 2007 morse and the morse logo are trademarks 
all other trademarks acknowledged please visit
wwwmorsecom
morse head office
profile west  950 great west road
brentford  middlesex  tw8 9ee
t 44 020 8380 8000
f 44 020 8560 7700
e enquirymorsecom
wwwmorsecom


Summary:
 morse plc annual report 2007 1
company overview
highlights
financial
operational
� following the successful demerger of monitise in june 2007 
morse plc now operates as a single advisory and execution
professional services firm
� operating profit from continuing operations is up 16 to 
£122 million 2006 £106 million
� operating margins are up from 36 2006 to 48
� morse had a cash balance at 30 june 2007 of £153 million 
2006 £178 million
� we aim to double the percentage operating margin in the 
medium term from 30 june 2006
statutory
� operating profit £43 million 2006 £128 million
� profit before tax £38 million 2006 £60 million
� basic earnings per share 10p 2006 26p
 all these items have been restated due to the demerger of monitise and relate to 
continuing operations excluding all exceptional items
 definition can be found in the earnings per share section of the financial review on page 31
£122m
operating profit
2006 £106m
48
operating margin
2006 36
56p
pro forma adjusted 
basic eps
2006 50p