annual report 2009
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morse plc
annual report 2009
wwwmorsecom contents
morse plc annual report 2009 morse plc annual report 2009
company overview
page
1 highlights
business review
page
2 chairman’s statement
311 chief executive officer’s statement
governance
page
12 board
1317 directors’ report
1825 corporate governance statement
2636 directors’ remuneration report
37 statement of directors’ responsibilities
3839 independent auditors’ report
financial statements
page
40 consolidated income statement
41 consolidated statement of recognised income and expense
42 consolidated balance sheet
43 consolidated cash flow statement
4490 notes to the financial statements
91 company balance sheet
9299 notes to the company financial statements
100 advisers  1 morse plc annual report 2009
highlights
financial highlights
l  net cash at 30 june 2009 of £120 million 2008 £111 million
– cash at period end of £127 million 2008 £111 million of which £06 million held in assets held for resale
– customer specific financing of £07 million 2008 £nil
l  cash generated from operations of £68 million 2008 £73 million all of which was generated from continuing 
operations 2008 £36 million representing 89 of adjusted ebitda 2008 47
continuing operations
l  revenue £2119 million 2008 £2353 million
l  adjusted ebitda £76 million 2008 £78 million at a margin of 36 2008 33
 l  adjusted ebit £42 million 2008 £45 million at a margin of 20 2008 19
l  trading balance releases of £41 million 2008 £42 million
l  operating profit before exceptional items £83 million 2008 £87 million at a margin of 39 2008 37
l  profit before tax and exceptional items £78 million 2008 restated £82 million
l  net exceptional items of £816 million 2008 £1340 million
–  restructuring charges in the period of £864 million 2008 £nil cash costs of £59 million
–  dilapidation charges of £070 million 2008 £nil
–  credits of £118 million relating to forfeiture of share based payments and reversal of fair value adjustments 2008 £nil
–  impairment of goodwill and intangible assets £nil 2008 £134 million
l  adjusted basic earnings per share before exceptional items and trading balance releases and with a normalised tax 
charge 20p 2008 restated 22p
l  the distributable reserves position means that a final dividend cannot be declared 2008 13p per share the board has 
reviewed options to enable future dividend declarations and recommends a court approved capital reduction process
statutory results
continuing operations
l   revenue £2119 million 2008 £2353 million
l   operating profit £02 million 2008 operating loss £47 million
l  net exceptional charges of £816 million 2008 £134 million
l   loss before tax £04 million 2008 restated £52 million
l   tax credit for the year £17 million 2008 tax charge £13 million arising from resolution of prior year tax items
l  profit for the period £135 million 2008 restated loss £65 million
l  basic earnings per share 10p 2008 restated loss per share 51p
discontinued operations
l   sale of the uk and jersey investment management consulting “imc” business formerly known as cstim for cash 
consideration of £13 million
l   goodwill and intangibles impairment charge of £137 million
l   with the exception of france other geographic parts of imc business either closed down or now sold
l   sale of shareholding in france to management agreed subject to shareholder approval
l   imc classified as discontinued operations
l   net assets held for resale of £02 million
l   loss after tax £134 million 2008 restated profit after tax £18 million including exceptional items of £150 million 2008 
£nil
in assessing the performance of the business the directors use “adjusted ebit” and “adjusted ebitda” adjusted ebit is 
earnings before interest tax trading balance releases and exceptional items whilst adjusted ebitda is earnings before 
interest tax depreciation amortisation share based payments trading balance releases and exceptional items chairmans statement
2 morse plc annual report 2009 morse plc annual report 2009
this has been a year of significant change for morse and this has been undertaken against a backdrop of unprecedented 
economic turmoil at the beginning of the financial year the board concluded that the structure of the group needed to 
be simplified to allow the individual business units to concentrate on their core competencies and to improve the levels of 
profitability and operational management in the business morse’s continuing operations are four independent business units 
each reporting to the chief executive officer
l   infrastructure services  technology – uk
l   infrastructure services  technology – spain
l   infrastructure services  technology – ireland and
l   business applications services
each business unit prioritises activity in the markets in which it has specialist knowledge and capabilities cooperation 
between business units is encouraged where it adds value to the client engagement and to the business unit’s profitability
the group’s discontinued operations comprise investment management consulting during the year the largest part of this 
business unit was sold and since the year end we have announced the disposal of the remaining parts to management
in july 2008 the group commenced a significant restructuring process which has helped streamline the business operations 
and align the cost base with the anticipated revenues the benefit of this restructuring in each of the business units was 
demonstrated in the fourth quarter traditionally the group’s strongest financial quarter resulting in operating profit before 
exceptional items for the full year of £83 million 2008 £87 million once the impact of trading balance releases is removed 
the adjusted ebit was £42 million 2008 £45 million
a key focus during the year was the improvement of the cash position of the group at the end of the year the cash balance 
was £127 million 2008 £111 million and after taking account of customer specific financing the net cash balance was 
£120 million 2008 £111 million compared to the low point during the year at 30 september 2008 when the group had 
debt of £49 million and after taking account of customer specific financing net debt of £89 million the year end position is 
a creditable performance
as highlighted at the interim results the company is currently not in a position to declare dividends due to a lack of 
distributable reserves the board has reviewed the available options to allow dividends to be declared in future and has 
concluded that a court approved capital reduction scheme should be pursued this process will first need to be approved 
by shareholders and the appropriate information and resolutions will be proposed at the forthcoming annual general meeting 
on 22 october 2009 if approved by shareholders then it is anticipated that court approval will be obtained by the end of 
november and will enable the company to declare dividends out of future profits the board will then adopt an appropriate 
dividend policy
the group is now in an improved financial position and has achieved a creditable financial performance in difficult market 
conditions the board would like to thank all of our employees for their continued hard work and commitment
the board anticipates that the changes that have been made to morse’s operating model and focus together with its 
ongoing strong client relationships position the group to deliver improved underlying profitability and cash generation in 
future
kevin loosemore 
nonexecutive chairman
9 september 2009 morse plc annual report 2009 3 morse plc annual report 2009
chief executive officer’s statement
this has been a difficult year for morse and one of considerable change the restructuring of the business that has been 
undertaken was necessary in order to align the cost base of the business with the anticipated revenues the result is that the 
underlying quality of the earnings in the business has improved when compared to the year ended 30 june 2008
we exited the year with business units refocused to deliver improved cash generative profitability each of the business units 
now has a clearly defined set of propositions to offer to existing and future customers and is focused on delivering those 
propositions
trading performance for the business units prior to exceptional items for the year ended 30 june 2009 is shown below
  operating 
  profitloss before 
 revenue  exceptional items margin  
  year year year year year year 
 ended ended ended ended ended ended 
 june june june june june june 
 2009 2008 2009 2008 2009 2008 
 £m £m £m £m  
infrastructure services  technology 
• uk  1142 1314 72 64 63 49
• europe spain  ireland 574 578 02 29 03 50
 
business applications services  403 461 24 03 60 07
 
continuing operations  2119 2353 98 96 46 41
group and central costs    56 51  
adjusted ebit   42 45 20 19
trading balance releases    41 42  
 
continuing operations 2119 2353 83 87 39 37
discontinued operations       
• investment management consulting  104 180 01 24 01 133
total  2223 2533 84 111 38 44
the business unit revenues are derived from resale of third party hardware  software product and maintenance 
maintenance and support where the business units have ongoing obligations and includes sale of morse’s wisdom software 
application and services gross profit margins on revenues from continuing operations in the year ended 30 june 2009 
were 208 2008 221 gross profit margins in the second half of the year were slightly better than the first half of 
the year with the decline from 2008 being driven largely by the impact of the global economic slowdown and change in 
customer mix
as the management team is focused on delivering cash generative operating profit a key performance indicator is adjusted 
ebitda in the year ended 30 june 2009 group adjusted ebitda was £76 million 2008 £78 million
the group is committed to improving the operational efficiency of the business and has undertaken a restructuring 
programme during the year intended to reduce the overheads of the group without impacting upon sales and delivery 
capability the total cost of restructuring in the current financial year was £96 million of which £86 million was incurred 
on continuing operations as a result of this restructuring and the disposal of the uk and jersey investment management 
consulting “imc” business formerly known as cstim the total number of group employees reduced from 1420 at 30 
june 2008 to 1010 at 30 june 2009 of which 973 were employed in the continuing operations 2008 1304 
the adjusted ebit of £42 million 2008 £45 million reflects the strong performance of the group in the final quarter of the 
year as after the first nine months of the year the adjusted ebit was only £06 million 2008 £19 million infrastructure 
services  technology represented 81 of reported revenues from continuing operations 2008 80 and the delivery of 
these revenues is weighted towards the end of each calendar quarter this is in line with the revenue profile for the product 
partners for those business units traditionally our second and fourth financial quarters have a stronger financial performance  4 morse plc annual report 2009
chief executive officer’s statement continued
morse plc annual report 2009
than our first and third financial quarters this was reflected in the current year with adjusted losses before interest and 
tax being incurred in the first and third quarters whilst in the second and fourth quarters continuing operations delivered 
adjusted ebit as we progress in the new financial year a key performance indicator will be the trailing 12 month financial 
performance which will provide an indication of the improvement in operating performance of the business
the breakdown of the revenues of the continuing operations and a reconciliation of adjusted ebitda and adjusted ebit to 
operating profit before exceptional items is shown below
     2009 2008 
     £m £m
revenues from continuing operations
resale third party hardware software and maintenance     1051 1207
maintenance and support including wisdom     291 262
services     777 884
     2119 2353
 
adjusted ebitda     76 78
depreciation and amortisation     23 30
share based payments     11 03
adjusted ebit     42 45
trading balance releases     41 42
operating profit before exceptional items     83 87
 
group and central costs have increased to £56 million 2008 £51 million however the underlying cash costs have 
reduced significantly as the breakdown below shows
     2009 2008 
     £m £m
group and central costs
cash costs     29 36
depreciation and amortisation     13 19
share based payments     11 03
subtotal     53 58
forex lossgain     03 07
     56 51
operational and financial review
infrastructure services  technology – uk
this is the largest business unit in the group and generated revenues of £1142 million 2008 £1314 million and an 
operating profit before exceptional items of £72 million 2008 £64 million this improved operating margin percentage of 
63 2008 49 was achieved despite the impact of the bad debt provision of £05 million arising from lehman brothers 
filing for chapter 11 on 15 september 2008 and the £10 million of losses recognised on the south tyneside and gateshead 
“stag” building schools for the future “bsf” project the second half of the year saw an improved operating margin on 
revenues that were marginally down on the first half of the year
 infrastructure services  technology uk consists of three main lines of business
l   technology – helping our clients with the sourcing management and support of their it estates utilising a technology 
lifecycle management approach
l   infrastructure services – supporting our clients with technology transformation project implementation and operations  
resourcing services that help them optimise their data centres and
l    providing the ict expertise technology and infrastructure services for stag bsf morse plc annual report 2009 5 morse plc annual report 2009
the technology business had revenues of £783 million 2008 £878 million with the second half of the year maintained 
at the same level as the first half we have maintained our existing customer relationships whilst applying additional focus 
towards new customer acquisition and the development of higher value propositions we will continue to develop our 
operational processes and level of proposition focus during the current financial year
the infrastructure services business had revenues of £342 million 2008 £411 million reflecting the impact of a number 
of major programmes of work that came to completion in the second half of the year ended 30 june 2008 together with 
a tighter market for discretionary services spend and the impact of lehmans revenues in the second half of the year 
ended 30 june 2009 were in line with the first half of that year the operating structure of the services business is being re
evaluated to ensure continued flexibility and business agility we are further enhancing our technology transformation skills 
and higherend data centre capabilities aimed at helping our clients simplify and optimise their environments
the stag bsf project is all that remains from the morse in education business revenues in the year were £17 million 
2008 £25 million at the end of the first half of the year the board concluded that the significant time period over which 
the stag bsf contract will be implemented and the difficulty of winning further projects was not the best use of morse’s 
resources consequently in january 2009 the management and sales team of morse in education was made redundant and 
the stag bsf project is now being managed as a stand alone project following a review of the progress on the contract in 
the third quarter of the financial year operating profit of £05 million that had been taken in the year ended 30 june 2008 was 
reversed this contributed to the loss recognised on the contract during this year of £10 million good progress has been 
made on the contract since then and contract documentation has been signed for the next schools in the programme
in infrastructure services  technology we continue to have excellent ongoing partnerships with our key technology vendors 
– hp  ibm and sun as well as relationships with key software providers such as symantec and oracle
our focus for the business unit includes
l    maintaining our technology business based on the value of our technology lifecycle management approach
l   continuing to improve our systems and service delivery processes to offer a cost effective but superior level of client 
engagement and
l   developing and delivering data centre optimisation operations and resourcing services to provide our clients with the it 
simplification and projectbased return on investment they require
the market for infrastructure services and technology will remain very focused on business critical it projects where a high 
degree of flexibility and shorterterm success demonstrated by return on investment payback are essential we believe that 
our structural and cost changes over the year enables us to be well positioned to support this requirement for our existing 
customers as well as extending our customer and service reach in the future
infrastructure services  technology europe spain and ireland
for spain and ireland in the year ended 30 june 2009 revenue was £574 million 2008 £578 million with an operating 
profit before exceptional items of £02 million 2008 £29 million the operating profit before exceptional items for the full 
year reverses the losses that were suffered in the first nine months of the year this improvement in financial performance is 
predominantly due to improved performance in spain following the restructuring programme undertaken in january 2009 
the reported results benefited from the strengthening of the euro against sterling and under constant currency revenues 
declined by 145
both our spanish and irish businesses have been hit hard by the weakness in their respective economies
in spain following the difficult year ended 30 june 2008 action was taken to reduce costs in july 2008 during the first 
half of the current financial year the business maintained revenues but suffered margin decline due to a change in mix of 
customers consequently a further review of the structure of the business was undertaken in january 2009 and as a result 
the overhead cost base was reduced significantly as part of this restructuring the business reengaged with its key vendor 
partner ibm and the benefits of this relationship are starting to be seen
it is expected that the economic environment in spain will remain challenging in the current calendar year but with a leaner 
overhead base and a clearer gotomarket approach the business is well positioned to take advantage of any economic 
upturn 6 morse plc annual report 2009
chief executive officer’s statement continued
morse plc annual report 2009
in ireland morse is a leading it infrastructure services and technology company and holds the highest level of accreditation 
with all of the major infrastructure and software vendors together with executive level relationships in many of ireland’s blue 
chip companies it continues to build a reputation as the technology partner of choice and is consolidating this position by 
working with its key vendors in providing coordinated propositions to the market
in the year to 30 june 2009 the business has suffered from the economic difficulties in ireland and experienced 
significant revenue decline this made the business lossmaking in the first quarter of the year however swift action by 
the management team to restructure the business led to the business being marginally profitable for the full year the 
management team remains committed to delivering the optimal result in difficult times such as these
business applications services
business applications services is organised around three separate businesses
l   diagonal – sap implementation and support services
l   portals and collaboration including wisdom and
l   xayce – business change and transformation consultancy
diagonal operates in three main territories the uk asia pacific and the usa whilst the other businesses are uk based
a number of new key proposition areas have been identified and the business will be simplified to focus the business 
development and sales activities on our microsoft sap and business change  transformation capabilities in the uk usa 
and asia pacific
stronger governance processes and procedures for both sales and delivery management have been implemented across 
the business resulting in stronger sales qualification and improved project delivery a new resourcing framework has been 
implemented allowing better deployment and management of our skills and resources providing improved utilisation
in the year ended 30 june 2009 revenue was £403 million 2008 £461 million operating profit before exceptional items 
was £24 million 2008 £03 million revenues in the six months ended 30 june 2009 were lower than the six months to 31 
december 2008 but generated a higher operating margin this trend is anticipated to continue in the current financial year 
diagonal – sap implementation and support services
revenue for the year ended 30 june 2009 was £284 million 2008 £344 million this line of business has suffered 
historically from problems with a number of fixed price projects allied to poor planning and execution which have 
significantly impacted the profit performance of the business in the year ended june 2008 a provision of £07 million was 
made for these problem projects and a bad debt provision of £03 million was also made during the period to december 
2008 one of these problem projects was resolved and the bad debt provision was utilised in the second half of the year a 
second problem contract was resolved satisfactorily and outstanding amounts due on the third problem contract are fully 
provided
the issue on fixed price projects has led to a more robust project management process and an increased focus on contract 
profitability reviews
sap integration with sky mobility and blackberry enabled solid growth in the usa in the first half of the year but proved 
more difficult in the second half of the year in asia pacific a new client implementation was followed by an ongoing support 
contract
diagonal has developed strong propositions targeting the construction and facilities management industries in addition to 
strong experience in the chemicals and manufacturing industries and the ability to deliver application support using both 
onshore and offshore consultants is also proving to be of significant value to clients
portals and collaboration
the portals and collaboration business is focused on a set of core propositions information portals and information 
collaboration solutions based upon microsoft and vignette technology platforms electronic document and records 
management edrm solutions based upon our own software product wisdom and the associated services and annuity 
based support revenue that is an integral part of such propositions this business had revenues of £88 million in the period 
2008 £88 million  morse plc annual report 2009 7 morse plc annual report 2009
xayce – business change and transformation consultancy
xayce specialises in the financial services and local government markets and clients include leading banks insurance 
companies and several large local authorities xayce contributed £31 million in revenue in the year to 30 june 2009 2008 
£29 million from date of acquisition in september 2007
disposal of investment management consulting 
on 9 february 2009 the company announced the exchange of contracts on the disposal of the business and assets of the 
uk and jersey imc business formerly known as cstim to navigant consulting europe limited “navigant consulting”
in the year to 30 june 2008 the cstim business generated an operating profit of £16 million on revenue of £93 million 
the business has reduced in size considerably since then in the six months ended 31 december 2008 revenues were £32 
million and there was a small operating loss of £44000 
the initial consideration was £13 million which was paid in cash at completion the financial performance of the business 
in the year to 30 june 2009 meant that no deferred consideration was payable the gross assets transferred were £13000 
and the book value of net liabilities transferred was £042 million morse retained and was responsible for the collection of 
the outstanding trade receivables all of which were collected the proceeds of the sale were used for general corporate 
purposes
cstim formed the largest part of morse’s imc business unit small imc operations in south africa and luxembourg have 
been closed down and a flexible resourcing business in the uk called skillshub has been sold to management for a nominal 
sum the remaining parts of the imc business held at the year end were operated through majority owned subsidiary 
undertakings in france and australia on 4 september morse announced the sale of its stake in the australian business 
to management the sale proceeds were a 50000 and an intercompany loan and interest of a 280000 was repaid to 
morse terms have been agreed with the management of the french subsidiary to sell morse’s stake to them for e150000 
this is a related party transaction which requires shareholder approval and a circular will be sent to shareholders in due 
course consequently the entire imc business unit is considered to be discontinued for financial reporting purposes
as a result of the sale disposals and closure there is impairment to goodwill and intangibles on morse’s consolidated 
balance sheet relating to the imc business unit of £137 million
risks and risk management
following the changes in board membership over the past year risk management processes have been reassessed to 
ensure a framework of prudent and effective controls is in place to assess effectively and manage risk within the group the 
business units in the group have primary responsibility for managing risk on a daytoday basis and regular reporting to the 
board of risk registers and material contracts is now in place all identified risks are quantified prioritised and appropriate 
mitigations developed for each for the uk businesses we have established a separate management board morse 
executive board and risk is a standing item on the agenda for its meetings risk management of the spanish and irish 
businesses is reviewed at the monthly performance reviews for those businesses the board regularly reviews the cost and 
benefits of the risk and control activity undertaken and comprehensive business insurances are maintained the principal 
risks and uncertainties associated with the group’s activities are discussed below
strategic risks
the continuation of the current recession may further reduce demand for the group’s services and therefore reduce revenue 
and profits significant restructuring and cost reductions have been carried out during the year and while this action should 
benefit future profits further reductions in revenue may offset the cost reductions already achieved
certain parts of the group’s businesses rely on a small number of strategic customers for a significant part of their revenue 
and profits the businesses seek to increase the number of customers to reduce this reliance however the loss of a 
strategic customer would impact the profitability of the business in the short term
key partner relationships are required in order to undertake the sale of their products and services the loss of a key partner 
relationship would lead to a loss of revenue and profit the business units seek to maintain and improve their partner 
relationships in order to mitigate this risk 8 morse plc annual report 2009
chief executive officer’s statement continued
morse plc annual report 2009
the credit crisis has led to reduced availability of funding as well as tighter credit terms and this may lead to future reductions 
in credit available to run the group’s operations the group is not currently using its committed banking facilities of £75 
million and has increased focus on cash management in the last year to reduce the impact of this risk
increased competition in an already crowded market place may have a negative impact on the group’s position whilst 
efforts to improve the group’s delivery and range of services will help to mitigate this risk
operational risks
the group’s revenue and profit projections depend heavily upon the delivery of large contracts to customers in the 
past issues with delivery have led to significant project overruns and unbudgeted costs which have reduced the group’s 
profitability during the year management and internal processes have been strengthened in this area in order to minimise 
this risk for the future
the management of the group’s businesses and the delivery of its contracts rely heavily on staff and loss of key staff is a 
significant risk to the businesses remuneration and people management processes are in place to minimise attrition and 
the group’s rate of attrition is within industry averages
seasonality of the group’s revenue and profits does not change much from yeartoyear but profits tend to be weighted 
towards the end of each six month period and there is a greater weighting towards the second half of the financial year due 
to customer buying patterns
the group’s businesses are exposed to the risk to business continuity posed by a pandemic including the current influenza 
virus terrorist incident or other external event during the year our office in madrid was damaged due to a terrorist bomb 
although it was not the target whilst such events are outside of the group’s control measures are taken to mitigate these 
risks wherever possible the group has a detailed business continuity plan which was reviewed during the year to cover a 
wide range of risks such as it systems failure and possible pandemics
financial risks
in the current recession increased credit risk remains a potential issue and during the year lehman brothers a significant 
customer suffered financial failure the group’s increased focus on cash management in the year has helped to improve 
collection times from customers and this focus will continue
the main external factors affecting financial measures are discussed above and to these can be added changes in 
assumptions underlying the carrying value of certain group assets these assumptions are discussed in note 13 and include 
discount rates longterm growth rates and timing and quantum of future expenditure the revision of any of which could lead 
to an impairment in the carrying value of certain assets in the group which would reduce profits and distributable reserves
other financial items
dividends and capital reduction process
the carrying value of the investment in cstim limited the company acquired in april 2004 in the company balance sheet 
of morse plc as at 30 june 2008 was £16 million this was part of total fixed asset investments of £125 million held on the 
balance sheet of morse plc at that date
at the time of the interim results the board made a write down of £138 million in morse plc’s company balance sheet in 
respect of this investment as a consequence of this write down morse plc had negative distributable reserves and was 
unable to declare an interim dividend in light of this and the current economic environment the board has undertaken a 
review of the remaining fixed asset investments and the recoverability of inter company receivables owed to morse plc the 
impact of this review is to reduce the net book value of fixed assets investments to £717 million and results in negative 
distributable reserves on the morse plc company balance sheet of £479 million and net assets of £380 million
the board has reviewed the available options for the company in order to enable dividends to be declared out of future 
profits the board has concluded that subject to shareholders’ approval a court approved capital reduction process 
should be undertaken in order to use part of the share premium account standing at £708 million at 30 june 2009 to 
extinguish the negative distributable reserves the board believes that this is in the best interests of shareholders details 
of the capital reduction process will be included in the notice of annual general meeting scheduled for 22 october 2009  morse plc annual report 2009 9 morse plc annual report 2009
together with the resolutions to be proposed to shareholders if shareholders approve the resolution then it is anticipated that 
the court process will be completed in november 2009 and that the first dividend that could be declared out of future profits 
would be a final dividend for the year ending 30 june 2010 
consequently no final dividend will be paid for the last financial year 2008 130p per share giving a total dividend for the 
year of nil p per ordinary share 2008 26p per share
cash and banking facilities
morse has historically operated a policy of seeking to maximise the reported cash balance at financial reporting period ends 
to ensure an appropriate high level of focus on cash and a more conservative view on what is used to manage and report 
on the business the new executive management team publishes a chart showing the weekly balances as shown on bank 
statements for the period from 1 july 2006 this chart is published again today and is available at wwwmorsecom
since 30 september 2008 the relationship between cash on the balance sheet and cash per bank statements has reverted 
to a more normal position where the bank position shows a higher cash balance than the balance sheet position net cash
debt position is reduced further by the customer specific funding arrangements entered into by the group
the principal banking facilities of the group are with the royal bank of scotland plc these facilities consist of a committed 
multi currency revolving credit facility “rcf” and a multicurrency overdraft facility the rcf has covenants that relate to
l   gearing gross borrowings to shareholder funds
l   interest cover pbit to borrowing costs and
l   leverage gross borrowings to ebitda
we have now extended the period of the committed rcf from 28 march 2010 to 31 march 2011 and based on the 
improved cash position within the group and internal cash flow projections we have reduced the rcf to £65 million and the 
overdraft to £1 million the board believes that these facilities are sufficient for the group requirements for the foreseeable 
future
deferred consideration
xayce was acquired in september 2007 and had an earnout period to 30 june 2008 which was successfully completed 
as a result deferred consideration of £25 million was payable to be settled by the issue of new ordinary shares at an issue 
price of 9545 pence 711236 shares were issued in july 2008 which settled £678875 of deferred consideration morse 
and the vendors have negotiated settlement of the remaining deferred consideration at a value £125 million which will now 
be settled in cash over the period to 31 july 2011
trading balance releases
trading balances are a normal part of our business and have built up significantly over a period of time these relate to 
unallocated cash payments from customers credit notes issued and not claimed supplier credit balances that may not be 
enforced and goods received not yet invoiced the nature of the uncertainty surrounding them is that while they represent 
present obligations it is uncertain whether the counterparties will enforce settlement however the changing shape of the 
business particularly the reduced volume and level of infrastructure business a reduction of approximately £300 million per 
annum since its peak in 2002 means that trading balances are no longer being created at the same level as they are being 
released
trading balances are reviewed on a regular basis if not used in the ordinary course of trade consistent with established 
operating policies they are released in line with our accounting policy when a liability is judged to no longer exist
given the lower volumes and improved controls and processes implemented over the last three years the level of short term 
trading balances is reducing
at 30 june 2008 there were £102 million trading balance credits on the balance sheet during the year £41 million 
of trading balances were released to the income statement in line with the policy £17 million of the liability was either 
crystallised or settled with £44 million remaining on the balance sheet at 30 june 2009 reductions in the trading balance 
credits are driven by a number of factors and it is difficult to predict with certainty the levels of releases that will flow through 
the income statement in the years ahead however we currently anticipate that trading balance releases will continue at  10 morse plc annual report 2009
chief executive officer’s statement continued
morse plc annual report 2009
the following approximate levels in the years ending 30 june 2010 £09 million 2011 £08 million and 2012 £12 million 
with any increase in these levels being driven by action by the company the actual amounts will be disclosed in our future 
financial statements
exceptional items
during the year there was a net exceptional charge before tax on continuing operations of £816 million 2008 £1340 
million this total is analysed in more detail in note 3 the major items considered to be exceptional and included in this 
category are noted below
year ended 30 june 2009 restructuring costs dilapidation provision and exceptional credits
restructuring costs accounted for £864 million of the costs with dilapidation provisions adding a further £070 million 
offsetting these costs were exceptional credits of £118 million consisting of £062 million relating to the forfeiture of share 
based payments and £056 million of reversal of fair value adjustments
year ended 30 june 2008 goodwill and intangibles impairment
following the decline in profitability within the business applications services business unit and annual impairment review 
a goodwill impairment charge of £1226 million and intangibles impairment charge of £114 million were recognised in the 
2008 accounts
interest
net interest expense during the year was £05 million 2008 £04 million details of these costs are provided in note 8 to the 
accounts
taxation
for continuing operations there was a tax credit for the year of £17 million 2008 tax charge of £13 million consisting of a 
current tax charge of £15 million 2008 £25 million offset by adjustments to prior year tax provisions of £24 million 2008 
£05 million and deferred tax of £08 million 2008 £06 million
during the year a number of open hmrc enquiries on uk corporation tax years dating back to the year ending 30 june 
2005 were settled and the provisions for tax were adjusted in line with the agreed position further details appear in note 9
earningsloss per share
basic loss per share including discontinued operations declined from 37p last year to a loss of 93p in the year ended 30 
june 2009 details can be found in note 4
on continuing operations adjusted basic earnings per share before trading balance releases and exceptional items and with 
a normalised tax charge were 20p 2008 22p
cash flow
cash in the group at the year end amounted to £127 million compared to £111 million last year the principal outflows 
during the year were dividend payments of £17 million and tax payments of £37 million at the year end customer specific 
financing of £07 million 2008 £nil reduced the net cash number to £120 million 2008 £111 million of the total cash 
balance £06 million is held in assets held for resale as part of the discontinued operations
cash generated from operations for the year ended 30 june 2009 was £68 million 2008 £73 million all of which was 
generated from continuing operations 2008 £36 million this represented 89 of adjusted ebitda from continuing 
operations 2008 47 morse plc annual report 2009 11 morse plc annual report 2009
key performance indicators “kpis”
as noted in this statement the company uses several kpis to monitor the performance of the business a summary of the 
more important kpis that are used together with a description of how they are calculated follows
kpi metrics description
gross margin percentage 2009 208
2008 221
gross profit divided by revenue
adjusted ebitda 2009 £76 million
2008 £78 million
adjusted ebitda are earnings before interest tax 
depreciation amortisation share based payments 
trading balance releases and exceptional items
adjusted ebit 2009 £42 million
2008 £45 million
adjusted ebit are earnings before interest tax 
trading balance releases and exceptional items
 
days sales outstanding dso 2009 57 days
2008 68 days
the number of days invoicing represented by the 
period trade receivables outstanding this provides 
an indication of how quickly our customers are 
paying their invoices
average weekly bank balance 2009 £58 million
2008 £40 million
an average of the weekly bank balance during the 
year as included in the chart published on the morse 
website
cash conversion 2009 89
2008 47
cash generated from continuing operations divided 
by adjusted ebitda
 
outlook
the board would like to thank all the group’s employees for their continued hard work and commitment throughout the 
period under review it has been a difficult time for the business compounded by the downturn in the economic environment 
we have and will continue to experience significant change but we believe that we will emerge a much stronger organisation 
with clear opportunities ahead
we have completed the execution of the revised business strategy for the morse business and implemented the changes to 
simplify the structure and focus on the four business units infrastructure services  technology in the uk spain and ireland 
and business applications services significant cost reductions have been achieved in addition we have started to establish 
a niche focus in each of these businesses
the improvement in adjusted ebit and adjusted ebitda on a trailing 12 month basis will be the key performance indicator 
of the improved financial performance of the business in the coming year adjusted ebit and adjusted ebitda in the current 
financial year are ahead of the same period last year
while we expect the market for it services and technology to remain difficult we believe that the changes to morse’s 
operating model together with its ongoing strong client relationships have delivered improved underlying profitability and 
cash generation in the year to 30 june 2009 and can continue to do so in future
mike phillips 
chief executive officer
9 september 2009 12 morse plc annual report 2009 morse plc annual report 2009
board
kevin loosemore
nonexecutive chairman
kevin joined morse as nonexecutive chairman on 
14 february 2008 for the period 8 july 2008 to 30 june 
2009 he became executive chairman and reverted to 
the role of nonexecutive chairman on 1 july 2009 he 
is currently nonexecutive chairman of micro focus 
international plc a nonexecutive director of nationwide 
building society and a director of farnham castle he 
has previously held positions as executive director and 
chief operating officer of cable  wireless plc president 
of motorola europe middle east and africa president of 
motorola professional services group chief executive 
of ibm uk and nonexecutive director of the big food 
group plc
kevin is chairman of the nomination committee and 
member of the audit committee and remuneration 
committee
richard atkins 
nonexecutive director and senior independent director
richard joined morse as a nonexecutive director on 
17 december 2008 richard is currently chairman of 
7city holdings limited and a nonexecutive director of 
aon limited global crossing uk finance plc and lantra 
awards ltd he has spent the majority of his career within 
the it industry most recently at ibm global services where 
he held a number of senior general management positions 
richard qualified as a chartered accountant with 
ernst  young
richard is chairman of the audit committee and member 
of the remuneration committee and nomination 
committee
paul shelton
nonexecutive director
paul joined morse as a nonexecutive director on 
30 october 2007 paul was managing partner of the rose 
partnership and a partner with pwc consulting where 
he held a number of roles including head of the financial 
services practice european board member responsible for 
people and knowledge and global head of the insurance 
practice previously he was with ibm where he was a 
senior executive in the business process outsourcing 
practice he is also chairman of bestoutcome ltd and 
a governor of birkbeck college paul is a fellow of the 
institute of chartered accountants in england and wales
paul is chairman of the remuneration committee 
and member of the audit committee and nomination 
committee
mike phillips
chief executive officer
mike joined morse as group finance director on 
9 september 2008 and was appointed chief executive 
officer on 11 february 2009  prior to joining morse mike 
was interim finance director at data explorers limited 
and from august 1998 to 28 february 2007 he was 
group finance director of microgen plc he qualified as a 
chartered accountant with kpmg and then specialised in 
corporate finance advisory work with smith  williamson 
and pricewaterhousecoopers 
guy millward
group finance director
guy joined morse on 1 july 2009 as group finance 
director  he was previously at kewill plc where he was the 
group finance director and prior to that at a division of 
ge where he was uk finance director he qualified as a 
chartered accountant with ernst  young and has spent 
the majority of his career within the it industry
suzanne chase
group company secretary and general counsel 
suzanne joined morse on 1 december 2008 as group 
company secretary and general counsel suzanne 
is a qualified solicitor with extensive quoted company 
experience whose previous roles include group company 
secretary and general counsel at the big food group plc 
and general counsel at wickes plc as well as compliance 
partner at king sturge llp  morse plc annual report 2009 13 morse plc annual report 2009
directors report for the year ended 30 june 2009
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 2009
principal activities
morse is an it services and technology company incorporated in the united kingdom with proven expertise in infrastructure 
services  technology and business applications services it operates principally in the uk spain ireland asia pacific and 
usa
business review 
the chairman’s statement and chief executive officer’s statement on pages 2 to 11 have been compiled as a business 
review the principal activities of the group during the year ended 30 june 2009 were and will continue to be the sale and 
provision of it products and services the group’s continuing operations operate principally in the uk spain and ireland 
with smaller branches in the usa and southeast asia analysis of the development and performance of the group during 
the financial year and its position at the end of the financial year including relevant key performance indicators principally 
adjusted ebit adjusted ebitda and cash together with the principal risk and uncertainties associated with the group’s 
activities are included in the chief executive officer’s statement the business review on pages 2 to 11 is deemed to be 
incorporated into this report
results and dividends
the results of the group are set out on page 40 as explained in the chairman’s statement no final dividend can be paid for 
the year giving a total dividend for the year of nil p per ordinary share 2008 final dividend 130p per ordinary share interim 
dividend of 130p per ordinary share and total dividend for the full year of 260p per ordinary share details of the proposed 
capital reduction to enable future dividends to be declared is included in the notice of annual general meeting
research and development
during the year the group spent £104000 2008 £257000 on research and development which was primarily in relation to 
its wisdom software application 
directors and their interests
the directors who held office during the year and to the date of this report were as follows
current directors
k loosemore  nonexecutive chairman – appointed 14 february 2008 executive chairman for the period 8 july 
2008 to 30 june 2009
m phillips chief executive officer – appointed 9 september 2008  
 group finance director 9 september 2008 to 10 february 2009
g millward group finance director – appointed 1 july 2009
p shelton  independent nonexecutive director – appointed 30 october 2007
r atkins independent nonexecutive director – appointed 17 december 2008
former directors
k alcock chief executive officer – stepped down 7 july 2008
d mcintyre executive deputy chairman  retired 8 august 2008
e dodd group finance director – resigned 9 september 2008
d nicholson independent nonexecutive director – retired 17  december 2008
n whitehead independent nonexecutive director – retired 28 october 2008
the hon m benson independent nonexecutive director – retired 11 february 2009
the beneficial interests of the directors and their families in the share capital including share options of the company are 
given in the table in the directors’ remuneration report on page 33 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 9 september 2009 
kevin alcock stepped down on 7 july 2008 duncan mcintyre retired from the board on 8 august 2008 and eric dodd 
resigned on 9 september 2008 nigel whitehead retired from the board on 28 october 2008 derrick nicholson retired from 
the board on 17 december 2008 the hon michael benson retired from the board on 11 february 2009 14 morse plc annual report 2009 morse plc annual report 2009
directors report for the year ended 30 june 2009 
continued
richard atkins and guy millward were appointed to the board on 17 december 2008 and 1 july 2009 respectively and will 
retire and offer themselves for election at the annual general meeting
directors’ indemnities
the directors are entitled to be indemnified by the company to the extent permitted by law and the company’s articles of 
association ‘‘articles’’ in respect of losses arising out of or in connection with the execution of their powers duties and 
responsibilities the company put in place directors’ and officers’ liability insurance for the year which has been renewed for 
20092010
employees
the group has a set of policies and procedures for fair and equal treatment of all employees the equal opportunities policy 
extends to people with disabilities it gives full consideration to applications from disabled persons disabled employees 
including where existing employees become disabled are eligible to participate in training career development and 
employment opportunities 
the group regularly keeps employees up to date by presentations use of the intranet newsletters email and update 
meetings that allow the free flow of information and feedback all employees are encouraged to participate in share plans 
during the year morse operated a save as you earn sharesave scheme that was open to all uk employees
corporate social responsibility
we acknowledge that morse has an influence on a number of stakeholders including our shareholders clients employees 
suppliers the community and the environment 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
values
morse is a client driven organisation our values underpin the behaviours required for success and ensure that we conduct 
our business to the highest standards we
l work in partnership
l are refreshing
l act with integrity
l are specialists and
l are passionate about our work
charity work
throughout the year morse has continued to support a range of charitable activities including cancer research uk make a 
wish foundation and the children’s liver disease foundation 
during the year the group made various charitable contributions totalling £4784 2008 £9414 
morse made a final contribution to the ‘girlchild’ in afrika project which we have supported since 2005 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 also support the charitable activities of our staff clients and partners participating in a range of events 
give as you earn gaye
we recognise that many morse employees wish to donate to charitable causes in the uk the company operates a gaye 
scheme enabling staff to donate to a charity of their choice via regular deductions from their salary 
environmental awareness
we acknowledge morse’s environmental responsibility and are committed to operating the business in an environmentally 
sensitive manner we have a morse group environmental policy which was reviewed during the year morse plc annual report 2009 15 morse plc annual report 2009
recycling
all morse uk offices are provided with paper and toner recycling facilities
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 recommended techniques include reducing power consumption improving equipment utilisation managing 
datacentres efficiently and changing employee behaviours
the group has chosen not to set environmental key performance indicators kpis due to its relative size but this is under 
review morse’s environmental policy is proactive in limiting its impact and includes internal infrastructure which is purchased 
in compliance with the restriction of hazardous substances directive and disposed of in compliance with the waste 
electrical and electronic equipment directive 
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 wherever possible morse 
work placements are positive challenging and relevant to participants’ current studies and their future job prospects during 
the year morse offered internships to students from the escp european school of management london
health and safety
morse recognises the importance of health and safety to all stakeholders in the company during the year it carried out 
a review of the morse health and safety policy and procedure manual and the terms of reference for the morse health 
and safety board which was conducted by a specialist external facilitator health and safety has positive benefits to the 
organization therefore our commitment to a high level of safety makes good business sense
as part of our health and safety compliance 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 and procedure manual 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
political donations
during the year the group made no political donations 2008 £nil 
post balance sheet events
events after the balance sheet date are set out in note 34 of the financial statements on page 90
creditor payment policy and practice
it is the group’s policy that payments to creditors are made in accordance with agreed terms and conditions on an individual 
basis provided all trading terms and conditions have been fulfilled 
the average number of creditor days for the group for the year was 59 2008 68 
essential contracts
morse has contractual arrangements with numerous third parties in support of its business activities more particulars are set 
out in the business review contained in the chief executive officer’s statement on pages 3 to 11 16 morse plc annual report 2009 morse plc annual report 2009
directors report for the year ended 30 june 2009 
continued
contracts of significance
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 the flexible resourcing business in the uk called skillshub and the majority owned subsidiary imc 
undertaking in australia were sold to management as set out in the chief executive officer’s statement on page 7 terms 
have been agreed for the sale of the majority owned subsidiary imc undertaking in france subject to shareholders approval 
a circular will be sent to shareholders in due course as set out in the chief executive officer’s statement on page 7
financial instruments
the financial risk management and policies of the group are set out in note 25 on pages 81 to 84 of the financial statements
substantial shareholdings
the company has been notified pursuant to the disclosure and transparency rule 5 of the financial services authority that 
the following shareholders held 3 or more of the company’s ordinary shares as at 9 september 2009
shareholder number of shares held  of the issued share capital
gartmore investment limited  35409511 2727
ubs global asset management traditional 14 288776 1100
aberforth partners llp 13192618 1016
standard life investments 6312760 490
axa sa 6304219 485
lion trust investment services 5911783 458
gam international management limited  4302125 331
cavendish asset management  3904458 300
please refer to the directors’ remuneration report for the table of directors’ shareholdings on page 33
interests in own shares
the company acquired 1250500 of its own shares through the employee benefit trusts during the year 2008 582999 
as at 30 june 2009 the company held a balance of 1116325 shares in its employee benefit trusts 2008 1799584
shares acquired through the company’s employment scheme rank pari passu with shares in issue and have no special 
rights the morse employee benefit trusts waives its right to vote and to dividends on the shares that it holds 
capital structure
under its articles the company has authority to issue 203748981 ordinary shares of 1227p at 9 september 2009 the 
company had allotted 129867538 2008 129867456 fully paid ordinary shares of 1227p which are listed on the london 
stock exchange save for 82 of these shares which are not listed 2008 82 there are no restrictions on the transfer of 
securities at the 2009 annual general meeting the directors will request via special resolution the authority to buy back 
shares pursuant to section 701 of the companies act 2006 
at the annual general meeting held in october 2008 the company was authorised by shareholders to purchase its own 
shares within certain limits and as permitted by the articles save as mentioned above and in interests in own shares in 
relation to the morse employee benefit trusts the company did not purchase any of its own shares in the year and no 
shares were acquired by forfeiture or surrender or made subject to a charge of lien
save as mentioned above and in interests in own shares in relation to the morse employee benefit trusts there are no 
restrictions on the voting rights attaching to the company’s ordinary shares or to the transfer of securities in the company 
no person holds securities in the company carrying special rights with regard to control of the company and the company 
is not aware of any arrangements between holders of securities that may result in restrictions in the transfer of securities or 
voting rights 
the company’s share schemes contain provisions relating to change of control on a change of control the awards granted 
to employees under the company’s share schemes may vest and become exercisable subject to satisfaction of any 
applicable performance conditions morse plc annual report 2009 17 morse plc annual report 2009
amendment to the articles
any amendment to the articles may be made in accordance with the provisions of the companies act 2006 by way of 
special resolution
appointment removal and powers of directors
directors shall not be less than two nor more than 12 in number the rules that the company has about the appointment 
replacement and power of the company’s directors where not already set out elsewhere in this report subject to relevant 
legislation are set out in the articles
annual general meeting
the annual general meeting of the company will be held on 22 october 2009 the notice of meeting accompanies 
this report together with notes explaining the business to be transacted at the meeting full details of the deadlines for 
exercising voting rights in respect of the resolutions to be considered at the annual general meeting are set out in the notice 
of meeting
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  see note 1 
of the financial statements on pages 4445
auditors
kpmg audit plc have indicated their willingness to continue in the office and 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
corporate governance
the company’s statement on corporate governance is included in the corporate governance statement on pages 18 to 25 
of these financial statements and should be read in conjunction with the directors’ report
approved by the board of directors on 9 september 2009 and signed on its behalf
suzanne chase 
group company secretary and general counsel  corporate governance statement
18 morse plc annual report 2009 morse plc annual report 2009
combined code on corporate governance compliance statement
the board is committed to creating and delivering sustainable shareholder value and believes that good corporate 
governance is essential the following statement sets out how the company complies with the provisions of the combined 
code on corporate governance june 2008 the code a copy of the code is publicly available at wwwfrcorg the board 
confirms that save as set out in this report it has complied with section 1 of the code during the year
the board of directors
board composition
on 30 june 2009 the board consisted of two executive directors being kevin loosemore executive chairman and mike 
phillips chief executive officer and two independent nonexecutive directors being richard atkins and paul shelton at 
all times during the year under review no less than half of the board excluding the chairman comprised independent non
executive directors and in line with the specific guidance for smaller companies ie those below the ftse 350 throughout 
the year immediately prior to the year under review the company had at least two independent nonexecutive directors on 
the board the company continues to comply with both of these best practice recommendations
all nonexecutive directors are considered by the board to be independent for the purposes of the code even though they 
are permitted to hold directorships with other companies 
since 14 february 2008 the board has been chaired by kevin loosemore for the period 8 july 2008 to 30 june 2009 the 
‘‘period’’ kevin loosemore was appointed executive chairman this appointment was in response to a strategic review of 
the business which concluded that revisions to the group structure were necessary and that kevin loosemore’s unique skill 
set was best placed to drive through the changes required following a successful execution of this strategic change kevin 
loosemore reverted to the role of nonexecutive chairman on 1 july 2009
on appointment kevin loosemore was considered to be independent the company considers that he remained 
independent until becoming executive chairman when the scope of his role expanded to include the executive 
responsibilities of running the company however since his tenure as executive chairman was intended to be for a 
short defined period no more than two years was originally anticipated and indeed was less than a year in practice 
the company continues to consider him to be an independent nonexecutive director for the purposes of committee 
membership as defined in the code furthermore the board’s assessment of his character is that he continues to 
demonstrate independence of thought and judgment 
the current board structure from 1 july 2009 comprises a nonexecutive chairman two executive directors and two 
independent nonexecutive directors 
details of current directors including membership of board committees is set out on page 22 and their biographies are set 
out on page 12
the balance between executive and nonexecutive directors continues to be the subject of ongoing review by the 
nominations committee and the board the appointment of new directors to the board follows a formal rigorous and 
transparent appointment procedure including using independent external recruitment consultants
richard atkins and guy millward were appointed to the board on 17 december 2008 and 1 july 2009 respectively 
shareholders have the opportunity to meet with all the directors at the annual general meeting
board changes during the year
as set out in the chairman’s statement on page 2 the year under review has seen significant change at morse the 
successful implementation of a simplified group structure that took place during the year has demanded increased 
operational effectiveness and this has been achieved through greater accountability being demanded of our senior team at 
the same time as making a number of changes to its personnel concurrently to ensure that the board has an appropriate 
balance and skills to deliver effective leadership of our revised group structure significant changes have also been made to 
the membership of the board in determining the appropriate board structure for future years and relevant personnel the 
need to establish a keener framework of effective controls and risk management was also a key factor  morse plc annual report 2009 19 morse plc annual report 2009
the changes made to the board during the year under review were as follows
l kevin alcock stepped down from the post of chief executive officer on 7 july 2008
l kevin loosemore was appointed executive chairman on 8 july 2008
l duncan mcintyre retired as executive deputy chairman on 8 august 2008 
l eric dodd resigned from the post of group finance director on 9 september 2008 with mike phillips then appointed 
group finance director on the same day
l on 28 october 2008 nigel whitehead retired from the board 
l derrick nicholson retired from the board on 17 december 2008 with richard atkins then appointed on the same day 
l on 11 february 2009 mike phillips was appointed chief executive officer when he ceased to be group finance director 
and
l the hon michael benson retired from the board on 11 february 2009 
since the end of the year under review on 1 july 2009 kevin loosemore was reappointed to the position of nonexecutive 
chairman and guy millward has been appointed group finance director
division of responsibility
as set out above the appointment of kevin loosemore from nonexecutive chairman to executive chairman on 8 july 2008 
took place as a result of a strategic review of the company’s operations that was undertaken during 2008 
the board was aware that the revised board structure did not meet the code’s recommendation that the roles of chief 
executive officer and chairman should be separated however given the factors detailed above and following discussions 
with some of the company’s major shareholders the board decided that it was in the best interests of the company to 
revise its structure until the board’s revised strategy has been successfully implemented the board kept its structure under 
review with the intention being to return to a best practice structure as soon as reasonably practicable following successful 
implementation of the simplified business structure as set out in the chairman’s statement and the disposal of the uk 
and jersey imc business the board promoted mike phillips from group finance director to chief executive officer on 11 
february 2009 both the board and nominations committee considered him to be the best placed candidate to take over 
executive responsibilities for running the company independent external recruitment consultants were retained to consider 
potential candidates for the role the period from 11 february 2009 to 30 june 2009 then marked a phased transition of full 
executive responsibilities to mike phillips with kevin loosemore reappointed to nonexecutive chairman from 1 july 2009 
on the same day guy millward was appointed to the board as group finance director which completed the transition to a 
market consistent board structure 
in recognition of the fact that the creation of the role of executive chairman without a chief executive officer reporting 
to it is uncommon and has potential risks associated with a concentration of power vested in one individual the board 
strengthened the role of senior independent director during the period the enhanced role of senior independent director 
was put in place to operate until such time as the board reverted to a nonexecutive chairman and was intended to ensure 
that a sound control environment remained in place and shareholders’ interests were protected 
in terms of the specific responsibilities that operated from 8 july 2008 these are summarised below
executive chairman
l chairmanship and management of the business of the board 
l leading the board in developing and executing the strategy of the business and ensuring this is effectively implemented 
by the management team 
l taking responsibility for day to day operations and managing the management team
l mentoring senior management and implementing the simplified group structure
l developing relationships with key stakeholders
l working with the senior independent director to ensure there is effective dialogue with investors in relation to group 
strategy and plans and
l working with the nomination committee to ensure the revised board structure and its personnel have relevant 
experience skills and facilitate a sound framework of effective controls and risk management 20 morse plc annual report 2009
corporate governance statement continued
morse plc annual report 2009
note the responsibilities marked with  were transitioned to the chief executive officer following his appointment to the role 
on 11 february 2009 
senior independent director
l chairmanship of the nomination committee
l ensuring the board includes a strong presence of nonexecutive directors
l ensuring that the nonexecutive directors met regularly at least twice per annum without the executive chairman 
present
l responsibility for signoff of the board agenda following discussions with the nonexecutive directors as appropriate 
with the agenda normally being proposed by the executive chairman
l joint approval of board minutes in conjunction with the executive chairman
l working with the executive chairman in conducting the annual appraisal process and additionally retaining responsibility 
for appraising the executive chairman’s performance and
l reporting to shareholders in a newly created senior independent director’s report in the annual report
the additional responsibilities of the senior independent director formed part of a revised formal job description and the 
senior independent director remained available to shareholders to discuss any relevant matters regarding the management 
of the company at any time 
during the year under review the position of senior independent director was held by derrick nicholson from 1 july 2008 
until 17 december 2008 the hon michael benson from 17 december 2008 to 11 february 2009 and richard atkins from 
11 february 2009 
the report of the senior independent director for the year under review is set out on page 25 the board believes these 
changes allied to a strong presence of nonexecutive directors on the board resulted in sufficient checks and balances 
operating during the period whilst the role of executive chairman was in place 
during the period the board was satisfied that kevin loosemore’s other commitments did not prevent him from devoting 
sufficient time to the role 
the board reviewed and approved a statement on the division of responsibility as between the nonexecutive chairman 
chief executive officer and the senior independent director which came into force on 1 july 2009 the nonexecutive 
chairman’s main responsibility going forward is to lead and manage the board ensuring its effectiveness the chief executive 
officer is responsible for recommending strategy to the board making and implementing operational decisions and leading 
the executive management the senior independent director is available to major shareholders who request a meeting or 
who have concerns which normal channels have failed to resolve 
board’s role and procedures
the board provides leadership for the company and focuses on operational and strategic matters ensuring that there is a 
sound basis for the company to fulfill its objectives the board takes decisions in the best interests of the company in good 
faith which would be most likely to promote the success of the company for the benefit of shareholders as a whole having 
regard to the other stakeholders 
the board regularly reviews its responsibilities and accountability the board is accountable for the performance and 
affairs of the company it is responsible for the adoption of strategic plans monitoring of operational performance and 
management and ensuring effective risk management strategies and compliance with 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 
there is a schedule of matters reserved for the board which was reviewed by the board during the year it is available to 
all staff on the morse intranet in reserving certain matters for its review and approval including an effective overall strategy 
prudent financial strategy and planning strategic aims risk management and human resources the board ensures that the 
company can meet its objectives during the year the board approved the morse operational governance manual which 
sets out the levels of responsibility and accountability throughout the company including a delegation structure from the  morse plc annual report 2009 21 morse plc annual report 2009
board to the chief executive officer to the management team it is available to all staff on the morse intranet in fulfilling its 
responsibilities the board is supported by the executive management who implement the plans and strategies approved by 
the board the board monitors management’s progress on an ongoing basis
the board meets at least six times during a year and holds other meetings as necessary all directors have access to the 
group company secretary and general counsel company secretary the chairman is responsible for leading the board 
and ensuring its effectiveness the chairman ensures that business is conducted in an atmosphere of openness with 
the nonexecutive directors robustly challenging executive management all directors receive accurate and appropriate 
information in a timely manner in advance of board meetings to enable it to discharge its duties there is a good information 
flow to and within the entire board and its committees and between the board and the executive management business 
unit managing directors frequently attend board meetings and present the performance of their business unit
the quality and supply of information is reviewed as part of the board performance evaluation exercise and refined as 
appropriate if there are occasions when directors are unable to attend board and committee meetings questions relating 
to the matters for discussion can be raised in their absence via the chairman or for the period the senior independent 
director was available to raise questions if this was felt more appropriate a copy of the relevant papers and agenda is 
provided in advance of the meeting the board is duly updated and made aware of any governance matters directors 
especially nonexecutive directors have access to independent professional advice at the company’s expense where they 
judge it necessary to discharge their duties
all directors have access to the advice and services of the company secretary she is responsible for ensuring that board 
procedures are followed and all governance matters the appointment and removal of the company secretary is the 
responsibility of the board 
the chairman facilitates the contribution of the nonexecutive directors and effective relations between them and the 
executive directors during the period the senior independent director had an enhanced role in this regard 
the company has directors’ and officers’ liability insurance cover in place covering all directors and officers
all new nonexecutive directors are appointed for specified terms directors are required to retire at least every three 
years directors appointed to the board 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 
all new appointed directors have a formal induction process which includes meetings with senior management
the company has a policy of ensuring that any nonexecutive director who holds office in excess of nine years will be 
subject to annual reelection 
the company’s policy on executive directors’ notice periods is that they are set at six months or less however in relation 
to the recent executive contracts of kevin loosemore mike phillips and guy millward these were all structured with an initial 
company notice period of 12 months reverting to six months one month in the case of kevin loosemore as executive 
chairman over a period of time full details are set out on pages 3132 of the directors’ remuneration report 
during the year the board carried out a formal performance evaluation of the board its committees and its members the 
results of the evaluation were reviewed by the board an action plan was agreed which will be implemented this year the 
nonexecutive directors led by the senior independent director were responsible for the performance evaluation of the 
executive chairman having sought the views of the other directors  22 morse plc annual report 2009
corporate governance statement continued
morse plc annual report 2009
board structure and attendance between 1 july 2008 and 30 june 2009
  audit  nomination remuneration board audit nomination remuneration
  committee committee committee meetings committee committee committee
 status  member member member attended attended attended attended
no of meetings held     15 4 5 5
current directors
k loosemore non executive
1
 yes
2
 yes
3
 yes
4
 15   
m phillips
5
 executive no no no 11   
p shelton nonexecutive yes yes yes
6
 12 4 5 5
r atkins
7
 nonexecutive yes
8
 yes
9
 yes
10
 6 3 2 3
former directors
d mcintyre
11
 executive no no no 1   
k alcock
12
 executive no no no    
e dodd
13
  executive no no no 4   
n whitehead
14
  nonexecutive yes
15
 yes
16
 no 5 1 1 1
d nicholson
17
 nonexecutive yes
18
 yes
19
 yes
20
 6 2 3 3
m benson
21
 nonexecutive yes
22
 yes
23
 yes
24
 7 3 3 3
1  k loosemore was appointed to the board as nonexecutive chairman on 14 february 2008 he became executive chairman on 8 july 2008 following 
k alcock’s departure as chief executive officer and was reappointed to nonexecutive chairman on 1 july 2009 following the appointment of 
g millward as group finance director
2  4 k loosemore joined the audit committee on 1 july 2009 was chairman of the nomination committee and a member of the remuneration committee 
from 1 july 2008 to 7 july 2008 and was reappointed as chairman of the nominations committee on 1 july 2009 and rejoined the remuneration 
committee on 1 july 2009
5  m phillips joined the company as group finance director on 9 september 2008 and was appointed chief executive officer on 11 february 2009
6 p shelton was elected chairman of the remuneration committee from 17 december 2008
7 r atkins was appointed to the board as nonexecutive director on 17 december 2008 he became senior independent director on 11 february 
2009
8  10 r atkins was appointed chairman of the audit committee joined the nomination committee of which he became chairman from 11 february 2009 
to 1 july 2009 and joined the remuneration committee on 17 december 2008
11 d mcintyre retired as a director on 8 august 2008
12 k alcock stepped down from the post of chief executive officer on 7 july 2008
13 e dodd resigned from the post of group finance director on 9 september 2008
14  16 n whitehead retired from the company the audit committee and from his role as chairman of the remuneration committee on 28 october 2008
17  20 d nicholson retired from the company his roles as chairman of the audit committee and chairman of the nomination committee a position he had 
held from 8 july 2008 and from the remuneration committee on 17 december 2008
21  24 the hon m benson retired from his position of senior independent director the audit committee his role as chairman of the nomination committee 
and from the remuneration committee of which he had been chairman from 28 october to 17 december 2008 on 11 february 2009 
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 on four occasions to fulfill its duties a record of individual attendance is listed in the table 
above the executive chairman chief executive officer group finance director and external auditors were invited to attend 
these 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 and at 
wwwmorsecom  morse plc annual report 2009 23 morse plc annual report 2009
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 are not appointed to undertake management consultancy work 
during the year the members of the audit committee all of whom are nonexecutive directors were derrick nicholson 
chairman until 17 december 2008 when he retired richard atkins joined the committee and was appointed chairman on 
17 december 2008 nigel whitehead retired 28 october 2008 the hon michael benson retired 11 february 2009 and 
paul shelton as set out on the table on page 22 kevin loosemore was appointed as member of the committee on 1 july 
2009 the board is satisfied that both derrick nicholson and richard atkins who chaired the audit committee during the 
year had 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 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 
remuneration committee
the committee determines on behalf of the board the overall remuneration package of the executive directors and 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 incentive schemes and the grant of incentives 
remuneration of nonexecutive directors 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 and at 
wwwmorsecom 
during the year the committee met on five occasions and the members of the remuneration committee all of whom were 
nonexecutive directors were nigel whitehead chairman until 28 october 2008 when he retired derrick nicholson until 
retired on 17 december 2008 the hon michael benson member 1 july 2008 until retired 11 february 2009 and chairman 
for the period 28 october 2008 to 17 december 2008 paul shelton chairman from 17 december 2008 richard atkins 
joined 17 december 2008 and kevin loosemore 1 july 2008 to 7 july 2008 as set out on the table on page 22 kevin 
loosemore was reappointed as member of the committee on 1 july 2009
nomination 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 independent external recruitment consultants were retained in relation to the  24 morse plc annual report 2009
corporate governance statement continued
morse plc annual report 2009
appointments during the year for mike phillips richard atkins and guy millward the committee considered the scope of 
roles and skills required having regard to the new operating model and the challenges facing the company
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 fulfill 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 are disclosed to the board before appointment major shareholders are given the opportunity to meet new non
executive directors at the annual general meeting 
the board requires its members to make it aware of any changes in commitments that 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 
during the year the committee met on five occasions and the members of the nomination committee were the kevin 
loosemore chairman 1 july 2008 to 7 july 2008 derrick nicholson chairman 8 july 2008 until he retired on 17 december 
2008 the hon michael benson chairman from 17 december 2008 until he retired on 11 february 2009 richard atkins 
joined 17 december 2008 and chairman from 11 february 2009 to 1 july 2009 and paul shelton as set out on the table on 
page 22 kevin loosemore was reappointed as chairman of the committee on 1 july 2009
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 available for public inspection at the company’s registered office and at  
wwwmorsecom
investor relations
the company is committed to 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 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 nomination committees are also available to answer shareholders’ questions 
notice of the 2009 annual general meeting will be dispatched 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 
the senior independent director 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
management structure
the business is divided into four independent business units and a small central group function the morse executive board 
uk meets once a month under terms of reference approved by the board to review all group matters each business unit 
has its own executive board which meets once a month in addition each business unit together with the chief executive 
officer group finance director and company secretary holds a monthly performance review
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  morse plc annual report 2009 25 morse plc annual report 2009
health and safety record during the year the board revised and approved terms of reference for the morse heath and 
safety board which is now chaired by the chief executive office formerly by the executive chairman the board also 
reviewed the morse health and safety policy and procedure manual further information is set out in the directors’ report 
on page 15
internal control systems
the board has overall responsibility for the group’s system of internal controls 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
l an annual budget is prepared to facilitate the monitoring of the group’s business and financial activities and is formally 
adopted by the board
l board meetings are held on a regular basis to consider performance against budget the management accounts and the 
forecast for the coming months
l within each business unit the relevant managing director meets with senior executives of businesses within that business 
unit to discuss issues particular to that business
l the audit committee meets at least three times 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 and
l business processes and internal control procedures are maintained through the bsi certified bs en iso 9001 2000 
business process documentation 
risk management
there are processes to ensure that business risk is considered assessed and monitored as an integral part of the business 
during the year the board enhanced the existing framework by approving the morse risk management policy there is an 
ongoing process for identifying evaluating and managing the group’s significant risks that is regularly reviewed by the board 
senior independent director’s report
i can confirm that in relation to the time that kevin loosemore was executive chairman based on my experience at morse 
that the enhanced role of the senior independent director described on pages 19 and 20 operated effectively set out 
below is a summary of the additional duties that were undertaken during the year by the senior independent director along 
with details of other practical policies agreed by the board to ensure sufficient checks and balances existed during kevin 
loosemore’s appointment as executive chairman 
l the senior independent director was chairman of the nominations committee
l the executive chairman was not a member of any of the subcommittees of the board although he was invited to 
attend 
l the nonexecutive directors met twice without the executive chairman present
l the senior independent director signed off the board agenda prior to meetings and jointly approved the board minutes
l the senior independent director took a full part in the board appraisal process and
l the nonexecutive directors who already have unfettered access to senior managers in the business were provided with 
formal channels of communication with business unit managing directors to ensure they could gain relevant information 
in relation to each divisional business unit’s performance
on 1 july 2009 kevin loosemore reverted to his original role as nonexecutive chairman and the board adopted the new 
statement of division of responsibility as set out on page 20
richard atkins 
senior independent director 
9 september 2009 directors remuneration report
26 morse plc annual report 2009 morse plc annual report 2009
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 22 october 2009 and has been produced in accordance with the provisions of the companies act 2006 and 
schedule 8 of the large and medium sized companies and groups accounts and reports regulations 2008 
the information in the following section of the report is not subject to audit
remuneration committee
the committee reviews and determines on behalf of the board the overall remuneration package of the executive directors 
and the chairman the committee’s terms of reference are available for public inspection at the company’s registered office 
and at wwwmorsecom 
as detailed in the corporate governance statement a number of changes to the company’s board took place during the 
year under review to strengthen the operational and strategic leadership of the company
set out below is a summary of the current and former members of the committee relating to the year under review
current members
l paul shelton chairman from 17 december 2008
l richard atkins appointed 17 december 2008 and
l kevin loosemore member from 1 july 2008 to 7 july 2008 until appointed executive chairman and member from 1 july 
2009 following his reverting to the position of nonexecutive chairman
former members
l nigel whitehead chairman until 28 october 2008 when he retired 
l derrick nicholson retired on 17 december 2008 and
l the hon michael benson chairman 28 october 2008 to 17 december 2008 retired on 11 february 2009
the company considers the current members of the committee to be independent nonexecutive directors as set out in 
the corporate governance statement  as set out in the corporate governance statement on page 18 kevin loosemore’s 
temporary role as executive chairman is not considered to have impacted his independence since it was for a limited period 
of time only no individual is involved in deciding his own remuneration 
the committee has received advice during the year from hewitt new bridge street “hnbs” which was appointed by the 
committee in relation to current market trends and best practice with regard to directors’ remuneration and governance no 
other services are provided by hnbs to the company save for technical advice relating to the operation of the company’s 
share incentive arrangements in addition the company secretary provided services to the committee
remuneration policy for executive directors
the company’s remuneration policy is based on the following broad principles
l to provide executive directors with rewards that are competitive
l to align remuneration with delivery of strategy
l to take into account pay levels across the group when setting executive directors’ pay and
l to align the interests of executive directors with shareholders 
remuneration policy is reviewed regularly and the committee is satisfied that the current policy does not encourage undue 
risktaking 
in light of the challenging economic conditions and recognising pay reviews more generally across the workforce the 
committee’s policy was not to award any salary increases to executive directors during the year under review however in 
light of the promotion of the group finance director to the position of chief executive officer his salary was increased to 
reflect the broader responsibilities of the role morse plc annual report 2009 27 morse plc annual report 2009
incentive policy was also reviewed both at the start of the year under review and again following the appointment of a 
new chief executive officer to determine i appropriate quantum and ii targets in light of the economic environment and 
business performance of the company   
the remuneration packages comprise one or more of the following 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 with account taken of competitive levels for similar roles in comparably sized companies 
which the company believes is vital for creating shareholder value strong emphasis is then placed on the variable 
performancerelated aspects of the overall package with a significant proportion of pay linked to short andor long term 
corporate performance targets 
subject to board approval the company’s policy is normally to allow executive directors to accept outside appointments 
provided these are not considered to interfere with their ability to fulfill their duties to the company whether a director may 
retain any related fees will be considered on a casebycase basis after giving due consideration to the time commitments 
associated with the proposed roles 
the current elements of the remuneration packages are summarised below
base salary
directors’ salaries are usually reviewed in september by the committee in accordance with the terms above when 
reviewing base salary levels the committee normally takes into account group results for the previous trading year individual 
performance internal relativities market rates and in particular the current circumstances faced by the company as stated 
above however the committee’s policy for the year under review was not to award any base salary increases furthermore 
in light of the continued challenging economic environment the committee does not currently intend to award any salary 
increases for the current financial year this policy will be reviewed at the start of the 201011 financial year in light of 
business performance at that time 
in terms of the annual salary level of the current executive directors these are as follows
l mike phillips chief executive officer £275000 increased from £200000 on promotion from group finance director 
and
l guy millward group finance director £180000
the salary level of kevin loosemore as executive chairman was £350000 from 8 july 2008 until his appointment as non
executive chairman from 1 july 2009 when his fee was set at £120000
benefits
the company’s policy is to provide executive directors’ save for kevin loosemore’s time as an executive chairman when 
he was not eligible to receive these benefits with a car allowance private medical insurance life insurance four times basic 
salary and personal accident and travel insurance 
annual performancerelated bonus
bonus payments have historically been based on actual performance against a sliding scalerange of challenging group 
performance objectives set at the start of the financial year the maximum bonus opportunity detailed in last year’s directors’ 
remuneration report for the year ending 30 june 2009 was 75 of salary for executive directors bonus payments are 
nonpensionable and are payable after the group’s statutory accounts have been audited in respect of the year ended 
30 june 2009 mike phillips was the sole executive director eligible to participate in the company’s annual bonus plan as 
he was appointed part way through the year under review during which the company was implementing a revised group 
structure the committee measured his performance against a range of group financial performance metrics strategic 
milestones and personal objectives the bonus earned at £100000 reflected his performance as both group finance 
director and chief executive officer and the wider economic environment  28 morse plc annual report 2009
directors remuneration report continued
morse plc annual report 2009
kevin loosemore was not eligible to receive any annual bonus for the time spent in his temporary role as executive 
chairman with his interests instead aligned with shareholders through the share award and related coinvestment which is 
described more fully below 
for the financial year ending 30 june 2010 the maximum bonus potential will be capped at 75 of salary for all executive 
directors the bonus metrics to apply are currently under review but it is the committee’s intention to set targets based on 
a challenging sliding scale of group financial targets in tandem with defined strategic objectives full details of the revised 
bonus structure will be set out in next year’s directors’ remuneration report
in line with the association of british insurers’ guidelines on responsible investment disclosure the committee will ensure 
that the incentive structure for executive directors and senior management will not raise environmental social or governance 
”esg” risks by inadvertently motivating irresponsible behaviour more generally with regard to the overall remuneration 
structure there is no restriction on the committee which prevents it from taking into account esg matters 
pensions
the company’s policy on executive directors’ pensions is to provide access to a defined contribution scheme money 
purchase which is also available to wider employees the company contribution rate is set at a fixed amount for each of the 
executive directors except for kevin loosemore’s time as executive chairman when he was not eligible to receive a pension 
benefit for the year under review mike phillips’s company pension contribution was set at £20000 from 9 september 
2008 and will remain at this rate for the current financial year
the annual company pension contributions of other executive directors serving during the year under review were as 
follows
l duncan mcintyre’s rate was set at £35000
l kevin alcock’s rate was set at £42000 and
l eric dodd’s rate was set at £20000 
guy millward on joining the company on 1 july 2009 has a company pension contribution of £10000 from 1 july 2009 
executive share incentive schemes 
executive share incentives are considered to be a key part of management retention and motivation company policy is to 
incentivise executive directors to perform at high levels and to align their interests with those of shareholders 
the 2004 morse long term incentive plan “the ltip” operates as the company’s primary longterm incentive arrangement 
at the time of introducing the ltip  flexibility was retained to make further awards under the executive share option schemes 
2000 at the committee’s discretion albeit with the committee’s intention being to operate the ltip as the sole type of long
term incentive plan in future years 
during the year under review an award was made to the chief executive officer under the ltip  a summary of the main 
features of the ltip is set out below with details of all historic share awards made to executive directors in service during the 
year under review set out in the relevant tables
prior to making the award to the chief executive officer the committee undertook a review of the targets that had applied in 
prior years to ensure that they remained appropriate in light of the revised strategy of the company and the wider economic 
environment as set out on the next page the committee felt it appropriate to apply a new target with the chief executive 
officer’s award based solely on delivering significant growth in earnings per share “eps” which is fully aligned with the 
company’s longterm objectives 
in addition as set out in last year’s directors’ remuneration report as part of individual agreements reached with kevin 
loosemore to facilitate his appointment as executive chairman and with mike phillips to facilitate his appointment as group 
finance director the committee considered it necessary to grant special share awards to these individuals under the 
provisions of paragraph 942 2 of the listing rules summary details of these awards are set out in this report morse plc annual report 2009 29 morse plc annual report 2009
the ltip
the maximum award that may be made in any financial year save in exceptional circumstances is restricted to shares with a 
market value on grant of 150 of annual basic salary
in determining the award levels to be made in 200809 due consideration was given to i investors’ best practice 
expectations of scaling awards back where the company’s share price has fallen in response to the difficult trading 
conditions ii the business performance of the company and iii the need to recruit retain and incentivise our key executive 
talent reflecting the above the award made during the year was set at a fixed number of shares valued at 50 of salary 
which is significantly lower than the maximum award limit up to which awards have been granted in prior years
awards 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 
historically awards have been subject to a mix of eps growth and relative total shareholder return tsr details of which are 
set out on page 30 
in relation to the sole award made to an executive director under the ltip during the year under review the chief executive 
officer as noted on the previous page the committee determined that the performance condition should be solely based 
on a challenging range of eps growth targets the range of targets set is the same as that used in prior years but was 
considered to be appropriately challenging in light of prevailing economic conditions and current trading prospects at the 
time of granting the award the range of targets and associated vesting schedule is set out below 
 average annual compound growth
 in adjusted basic eps percentage vesting
 below rpi  4 0
 rpi  4  25
 rpi  13 100
 between rpi  4 and rpi  13 25 – 100 on a straightline basis
the committee believes the performance condition for the award is fully aligned with the strategy of the business namely 
generating significant returns for our shareholders 
while continued use of relative tsr was considered recent market volatility particularly in the ftse allshare software and 
computer services sector resulted in the committee concluding that it was not appropriate to subject part of the above 
award to a relative tsr performance condition this position will be kept under review in future years 
the extent to which the performance conditions are satisfied will be determined by the committee having taken 
independent advice where necessary
the committee will regularly review the operation of the company’s incentive arrangements to ensure they take due account 
of marketbest practice and reflect the company’s particular circumstances and strategic goals
the base eps figure used for awards made in the financial year ending 30 june 2009 is based on the adjusted basic 
earnings per share method detailed on page 10 
there is no provision for retesting the condition
prior to the committee making an award under the ltip  it may require a prospective participant to buy and retain ordinary 
shares in the company worth up to one third of the value of the shares over which the proposed award would be made 
guy millward award
as part of the terms of guy millward’s appointment the committee agreed to grant guy millward an award under the ltip 
of 700000 shares at the first available opportunity since his appointment on 1 july 2009 it has not been possible to grant 
the award as the company has been in a close period the award will be granted as soon as is practicable following the 
company’s return to trading in an open period the performance conditions applying to the award will be the eps condition 
set out above but the base year from which performance is measured will be the year ending 30 june 2009 guy millward  30 morse plc annual report 2009
directors remuneration report continued
morse plc annual report 2009
will also be eligible to receive a further award during the current year if the committee considers it appropriate to do so in line 
with the terms of the ltip 
recruitment awards
as reported in last year’s directors’ remuneration report two separate recruitment awards granted during the year under 
review were as follows
kevin loosemore
a nil cost option award over 1050000 shares was made which was to ordinarily vest on the second anniversary of his 
appointment as executive chairman vesting was contingent on the purchase and retention of 619500 shares which was 
the net of tax number of shares comprising the award and this shareholding was achieved in full on 10 july 2008 
in relation to the change of his role to nonexecutive chairman on 1 july 2009 and the successful implementation of the 
new operating structure in accordance with the contractual terms of kevin loosemore’s service agreement the committee 
determined that the shares should be released and vest in full on 11 february 2009
mike phillips 
to facilitate his recruitment as group finance director a nil cost option was granted over shares with a market value at grant 
of £300000 the award will vest dependent upon the satisfaction of two separate challenging targets eps growth and 
relative tsr and continued employment save in certain good leaver or a change of control situation the eps growth target 
that applies to half the award is as set out above for the ltip award made during the year the relative tsr performance 
target that applies to the other half of the award also measured over three years is set out below
 rank of the company’s tsr against ftse percentage of the tsr part of the award
 allshare software and computer that vests
 services sector
 below median 0
 median 25
 upper quartile 100
 between median and upper quartile 25 – 100 on a straightline basis
if a corporate event eg a takeover was to take place on or before the second anniversary of the award the award would 
vest in full provided that a share price of 4635p was achieved over the week immediately preceding the corporate event 
dilution
as a result of the reduction in the company’s share capital that was effected as a result of the demerger of monitise 
shareholder approval was received at the 2007 agm to operate the ltip and morse’s other share plans within a 125 in 
ten years dilution limit
it remains the committee’s intention to return to operating within a 10 in ten years dilution limit as soon as it is considered 
practicable to do so for information the current dilution position as at 30 june 2009 was 839 of the then current issued 
share capital of the company and at the date of this report the dilution position was 808 of the current issued share 
capital of the company
total shareholder return
the following graph shows the value of £100 invested in morse plc on 30 june 2004 compared with the value of £100 
invested in the ftse allshare software and computer services index which the committee believes is the most 
appropriate index to use for this purpose as i the company has been a constituent of this index and ii it is the group of 
companies historically used in the ltip for comparitive tsr purposes  morse plc annual report 2009 31 morse plc annual report 2009
0
20
40
60
80
100
120
140
30 jun04
total shareholder return
source thomson reuters
30 jun05 30 jun06 30 jun07 30 jun08 30 jun09
this graph looks at the value by 30 june 2009 of £100 invested in morse plc on 30 june 2004 compared with the value of £100 invested
in the ftseallshare software  computer services index the other points plotted are the values at intervening financial year ends
value £
morse plc ftse allshare software  computer services index
employee share schemes 
the company operates a number of allemployee share schemes including an hmrc approved saye scheme 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
service agreements
from 8 july 2008 to 30 june 2009 kevin loosemore’s role as executive chairman was governed by a letter of appointment 
for a two year period during the first year under this engagement the company had a requirement to serve 12 months’ 
notice upon him and he had a requirement to give six months’ notice on the company during the second year of this 
engagement the notice period for the company had to reduce by one month for each further month of service beyond the 
first anniversary such that after 23 months from the commencement date the minimum period of notice the company would 
have been obliged to give to terminate his appointment shall be one month the notice required from kevin loosemore 
would have continued at six months until 18 months from the commencement date when it would have reduced by one 
month for each month of service until also at one month 
on the 1 july 2009 kevin loosemore reverted to the role of nonexecutive chairman on the same terms as his original letter 
of appointment for the remainder of the three years from the 14 february 2008 and a notice period of six months save for 
his fee which was increased to £120000 per annum
mike phillips has a notice period on the part of the company of 12 months during the first year of his appointment which 
reduces by one month each month post his first anniversary of appointment until 18 months of employment at which point 
the notice period is and remains at six months his notice period to the company is six months at all times
guy millward has a notice period on the part of the company to give 12 months’ written notice until 1 april 2010 which 
after this period will reduce linearly over a further six month period such that after 1 october 2010 the notice period is and  32 morse plc annual report 2009
directors remuneration report continued
morse plc annual report 2009
remains at six months his notice period to the company is six months at all times as an additional term agreed to facilitate 
his appointment the committee felt it appropriate to agree that if whist he was serving his notice period at his previous 
employer there should be a change of control at the company such that he could not take up the role of group finance 
director on 1 july 2009 he would be entitled to a sum of £180000 being one year’s basic salary less sums due from his 
former employer subject to an obligation on guy millward to mitigate his loss this provision lapsed on 1 july 2009 when 
guy millward joined the company
the service agreements of duncan mcintyre during the post as executive deputy chairman kevin alcock and eric dodd 
had notice periods of six months both to and from the company
the 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 
nonexecutive director appointments contain notice provisions from one month to six months there are no compensation 
provisions for early termination of nonexecutive director appointments
directors during the year
director contractletter of appointment start date
current directors
k loosemore  14 february 2008 superseded on 8 july 2008 superseded on 1 july 2009
m phillips 
1
 9 september 2008
g millward 
2
 1 july 2009
p shelton  30 october 2007
r atkins 
1
 17 december 2008 
former directors
k alcock 
3
 1 september 2007
d mcintyre 
3
 1 july 2007
e dodd 
3
  7 december 2006
d nicholson 
3
 5 december 2005
n whitehead 
3
 14 december 2004
m benson 
3
  24 april 2007
1 m phillips was appointed to the board on 9 september 2008 and r atkins was appointed by the board on 17 december 2008
2 g millward was appointed to the board on 1 july 2009
3 these directors ceased to be directors of the company by the date of this report k alcock d mcintyre e dodd n whitehead d nicholson and the 
hon m benson retired from the board on 7 july 2008 8 august 2008 9 september 2008 28 october 2008 17 december 2008 and 11 february 
2009 respectively morse plc annual report 2009 33 morse plc annual report 2009
the following sections of the directors’ remuneration report have been subject to audit 
directors’ shareholdings 
the directors’ and their families’ beneficial interests in the share capital of the company at 30 june 2009 are shown below 
 30 june 2009 30 june 2008
 beneficial share options beneficial share options 
 ordinary  ordinary ordinary ordinary 
 shares of  shares of shares of shares of 
 1227p 1227p 1227p 1227p
current directors
k loosemore 2750000  400000 
m phillips
1
 550000 2022249  
p shelton 49372  9372 
r atkins 295000   
former directors    
d mcintyre
23
 4938945 12808 4938945 1900117
k alcock
45
 1238324  1238324 1449567
e dodd
6
 30487  30487 375191
m benson
7
 40749  40749 
d nicholson
8
 1569  1569 
n whitehead
9
    
1  included in m phillips’ beneficial shares are 550000 ordinary shares held by his wife
2 included in d mcintyre’s beneficial shares are 574138 2008 574138 ordinary shares held in trust for his minor children as of 8th august 2008
3 d mcintyre’s shareholding represents 380 2008 380 of the total issued share capital as at 8 august 2008
4 included in k alcock’s beneficial shares are 1145399 ordinary shares held jointly with his wife 
5 k alcock’s beneficial shares as of 7th july 2008
6 e dodd’s beneficial shares as of 9th september 2008
7 the hon m benson’s beneficial shares as of 11th february 2009
8 d nicholson’s beneficial shares as of 17th december 2008
9 n whitehead’s beneficial shares as of 28th october 2008 34 morse plc annual report 2009
directors remuneration report continued
morse plc annual report 2009
from 30 june 2009 to 9 september 2009 there was no change in the directors’ interests in the company
nonexecutive directors’ fees
the executive directors make recommendations for board approval concerning the level of nonexecutive directors’ fees 
the fees are set at a level to be competitive when compared to similar companies in the it 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
directors’ emoluments comprised
 base   benefits compensation 2009 2009 2008 2008 
 salary annual and for loss of total exc pension total exc pension 
 fees bonus allowances office pension cont pensions cont 
summary £ £ £ £ £ £ £ £
current directors        
k loosemore
111
 345192    345192 0 37948 
m phillips
2
 191827 100000 8422  300249 16110  
p shelton 33936    33936  20230 
r atkins
3
 23048    23048   
        
former directors        
k alcock
4
 159231  8497 66960 234688 25696 311205 40348
e dodd
5
 50481  3258 2000 55739 5140 183333 18566
d nicholson
6
 15000    15000  30000 
n whitehead
7
 10000    10000  30000 
m benson
8
 20923    20923  30000 
d mcintyre
9
 80577    80577 11848 170750 35181
r lapthorne
10
       62179 
 930215 100000 20177 68960 1119352 58794 875645 94095
1 k loosemore’s salary was £100000 per annum from 1 july to 7 july 2008 increasing to £350000 per annum from 7 july 2008 to 30 june 2009 whilst 
executive chairman 
2 m phillips was appointed to the board on 9 september 2008
3 r atkins was appointed to the board on 17 december 2008
4 k alcock stepped down from the board 7
 
july 2008 base salary includes payments made during period of notice to 12 january 2009 compensation 
for loss of office of £66960 was paid in relation to his departure
5 e dodd resigned from the board 9 september 2008
6 d nicholson retired from the board on 17 december 2008
7 n whitehead retired from the board on 28 october 2008
8 the hon m benson retired from the board on 11 february 2009
9 d mcintyre retired from the board on 8 august 2008
10 r lapthorne retired from the board on 14 february 2008
11 during the period 8 july 2008 to 30 june 2009 kevin loosemore was nonexecutive chairman of micro  focus international plc and a nonexecutive 
director of nationwide building society and farnham castle his total retained fees for the period are micro focus international plc £146000 and 
nationwide building society £22000 morse plc annual report 2009 35 morse plc annual report 2009
interest in share options
 options options options options options 
 held at granted exercised cancelled held at earliest 
 1 july during during during 30 june date of expiry 
name 2008 the year the year the year 2009 exercise date
kevin loosemore
morse plc recruitment award  1050000
2
 1050000   feb 2009 aug 2009
mike phillips
morse plc recruitment award
10
  647249
2
   647249 sep 2011 sep 2012
morse plc long term 
 incentive plan
10
  1375000
2
   1375000 feb 2012 feb 2013
kevin alcock
morse plc long term 
 incentive plan
10
 50000
2
   50000  sep 2008 sep 2009
sharesave option scheme 7 12808
3
   12808  feb 2009 aug 2009
morse plc long term 
 incentive plan
10
 70093
2
   70093  mar 2009 mar 2010
morse plc long term 
 incentive plan
10
 900000
2
   900000  oct 2009 oct 2010
morse plc long term 
 incentive plan
10
 416666
2
   416666  nov 2010 nov 2011
eric dodd
sharesave option scheme 7 12808
3
   12808  feb 2009 aug 2009
approved  unapproved 
 executive share option 
 2000
11
 37383
4
   37383  jul 2009 mar 2016
morse plc long term 
 incentive plan
10
 225000
2
   225000  sep 2009 sep 2010
morse plc long term 
 incentive plan
10
 100000
2
   100000  nov 2010 nov 2011
duncan mcintyre
unapproved executive 
 share option scheme
12
 98000
1
   98000  mar 2005 mar 2009
sharesave option scheme 7 12808
3
    12808 feb 2009 aug 2009
morse plc long term 
 incentive plan
10
 444444
2
   444444  mar 2009 mar 2010
approved  unapproved 
 executive share option 
 2000
11
 864865
5
   864865  jul 2009 mar 2016
morse plc long term 
 incentive plan
10
 480000
2
   480000  sep 2009 sep 2010
  options options options options options 
  held at granted exercised cancelled held at 
  1 july during during during 30 june 
name  2008 the year the year the year 2009
kevin loosemore   1050000 1050000
6
  
mike phillips   2022249   2022249
kevin alcock  1449567   1449567
7
 
eric dodd  375191   375191
8
 
duncan mcintyre   1900117   1887309
9
 12808
9
total  3724875 3072249 1050000 3712067 2035057
1 exercise price £250
2 exercise price £nil
3 exercise price £073
4 exercise price £107 36 morse plc annual report 2009
directors remuneration report continued
morse plc annual report 2009
5 exercise price £111
6 in relation to the successful implementation of the new operating structure in accordance with the contractual terms of kevin loosemore’s service 
agreement the committee determined that the shares should be released and vest in full on 11 february 2009
7 the committee exercised its discretion under the rules of the ltip and designated kevin alcock as a good leaver the awards were tested but did not 
meet the required performance condition and lapsed
8 eric dodd’s awards lapsed upon his resignation
9 the committee exercised its discretion under the rules of the ltip and designated duncan mcintyre as a good leaver the awards were tested but did 
not meet the required performance condition and lapsed the share options held as at 30 june 2009 relate to saye
10 the performance targets applying to mike phillips’ recruitment award are set out on page 30 the performance targets applying to the morse plc long 
term incentive plan award made during the year under review are set out on page 29 the performance targets applying to the morse plc long term 
incentive plan awards made in the financial year ending 30 june 2008 were half based on tsr and half based on eps as was kevin alcock’s award 
granted in october 2006 prior to him joining the plc board which was eligible to vest in october 2009 the range of tsr targets were as for mike 
phillips’ recruitment award made in the year under review as set out on page 30 and the range of eps targets were as per the targets applying to the 
morse plc longterm incentive plan award made during the year under review as set out on page 29 vesting of awards made under the morse plc 
longterm incentive plan prior to the 1 july 2007 with the exception of kevin alcock’s award granted in october 2006 is determined based on tsr 
with the same range of performance targets as for mike phillip’s recruitment award as set out on page 30 and the awards also had a requirement for 
eps to increase in real terms over the performance period for any vesting to take place unless the committee believed it to be inappropriate to apply 
the underpin
11 awards granted under the approved  unapproved executive share option 2000 were subject to a performance condition that required there to be an 
annual average increase in adjusted eps of at least 5 over rpi over a three year performance period with no retesting
12 awards granted under the unapproved executive share option were subject to a performance condition that required there to be an annual average 
increase in adjusted eps of at least 5 over rpi over a three year performance period with an opportunity to retest in year 4
the market price of the company’s shares at the end of the year was £01475 2008 £051
during the year the market price ranged between £0047 and £051
no other directors have been granted awards in the shares of the company or other group entities
signed on behalf of the board
paul shelton 
chairman of the remuneration committee 
9 september 2009 morse plc annual report 2009 37 morse plc annual report 2009
statement of directors’ responsibilities in respect 
of the annual report and the financial statements
the directors are responsible for preparing the annual 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 
under company law the directors must not approve the financial statements unless they are satisfied that they give a true 
and fair view of the state of affairs of the group and parent company and of their profit or loss for that period in preparing 
each of the group and parent company financial statements the directors are required to
l select suitable accounting policies and then apply them consistently
l make judgments and estimates that are reasonable and prudent
l  for the group financial statements state whether they have been prepared in accordance with ifrss as adopted by the 
eu
l  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
l  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 adequate accounting records that are sufficient to show and explain the parent 
company’s transactions and 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 2006 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 regulations the directors are also responsible for preparing a directors’ report directors’ 
remuneration report and corporate governance statement that complies 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
we confirm that to the best of our knowledge
l   the financial statements prepared in accordance with the applicable set of accounting standards give a true and fair 
view of the assets liabilities financial position and profit or loss of the company and the undertakings included in the 
consolidation taken as a whole and
l  the directors’ report includes a fair review of the development and performance of the business and the position of the 
issuer and the undertakings included in the consolidation taken as a whole together with a description of the principal 
risks and uncertainties that they face
by order of the board
suzanne chase 
group company secretary and general counsel
9 september 2009 38 morse plc annual report 2009 morse plc annual report 2009
report of the independent auditors to the 
members of morse plc
we have audited the group and parent company financial statements the ‘‘financial statements’’ of morse plc for the year 
ended 30 june 2009 the financial reporting framework that has been applied in the preparation of the group financial 
statements is applicable law and international financial reporting standards ifrss as adopted by the eu the financial 
reporting framework that has been applied in the preparation of the parent company financial statements is applicable law 
and uk accounting standards uk generally accepted accounting practice
this report is made solely to the companys members as a body in accordance with sections 495 496 and 497 of the 
companies act 2006 our audit work has been undertaken so that we might state to the companys members those 
matters we are required to state to them in an auditors 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 companys members as a body 
for our audit work for this report or for the opinions we have formed
respective responsibilities of directors and auditors 
as explained more fully in the directors responsibilities statement set out on page 37 the directors are responsible for the 
preparation of the financial statements and for being satisfied that they give a true and fair view our responsibility is to audit 
the financial statements in accordance with applicable law and international standards on auditing uk and ireland those 
standards require us to comply with the auditing practices boards apbs ethical standards for auditors
scope of the audit of the financial statements
a description of the scope of an audit of financial statements is provided on the apbs website at 
wwwfrcorgukapbscopeukp
opinion
in our opinion
l  the financial statements give a true and fair view of the state of the groups and of the parent companys affairs as at 30 
june 2009 and of the groups and the parent company’s loss for the year then ended
l  the group financial statements have been properly prepared in accordance with ifrss as adopted by the eu
l  the parent company financial statements have been properly prepared in accordance with uk generally accepted 
accounting practice and
l  the financial statements have been prepared in accordance with the requirements of the companies act and as regards 
the group financial statements article 4 of the ias regulation
opinion on other matters prescribed by the companies act 2006
in our opinion
l  the part of the directors remuneration report to be audited has been properly prepared in accordance with the 
companies act 2006 and
l  the information given in the directors report for the financial year for which the financial statements are prepared is 
consistent with the financial statements
matters on which we are required to report by exception
we have nothing to report in respect of the following
under the companies act 2006 we are required to report to you if in our opinion
l  adequate accounting records have not been kept by the parent company or returns adequate for our audit have not been 
received from branches not visited by us or
l  the parent company financial statements and the part of the directors remuneration report to be audited are not in 
agreement with the accounting records and returns or
l  certain disclosures of directors remuneration specified by law are not made or morse plc annual report 2009 39 morse plc annual report 2009
l  we have not received all the information and explanations we require for our audit
under the listing rules we are required to review
l  the directors statement set out on page 17 in relation to going concern and
l  the part of the corporate governance statement relating to the companys compliance with the nine provisions of the 
june 2008 combined code specified for our review
 
tudor aw
for and on behalf of kpmg audit plc statutory auditor chartered accountants
kpmg audit plc 
chartered accountants 
registered auditor 
8 salisbury square 
london 
ec4y 8bb
9 september 2009   
40 morse plc annual report 2009 morse plc annual report 2009
   year ended 
   30 june 
  year ended 2008 
  30 june restated 
  2009 note 1 
continuing operations note £’000 £’000
group revenue 2 211910 235258
cost of sales  167882 183286
gross profit  44028 51972
distribution expenses  15903 21767
administrative expenses  27953 34948
operating profitloss 2 172 4743
analysed as
operating profit before amortisation share based payments 
trading balance releases and exceptional items 26 6736 6783
amortisation of intangible assets  1443 1954
share based payments  1100 346
operating profit before trading balance releases and exceptional items  4193 4483
trading balance releases 7 4139 4174
operating profit before exceptional items  8332 8657
exceptional items 3 8160 13400
  172 4743
financial income 8 195 572
financial expenses 8 741 1013
net financing expense  546 441
loss before taxation  374 5184
taxation 9 1725 1320
profitloss for the period from continuing operations 2 1351 6504
discontinued operations
loss profit for the period from discontinued operations 10 13442 1833
loss for the period 2 12091 4671
attributable to
equity holders of the parent  12098 4795
minority interests  7 124
loss for the period  12091 4671
dividends 11 1665 6091
basic loss per share 4 93p 37p
diluted loss per share 4 93p 37p
continuing operations
basic earningsloss per share 4 10p 51p
diluted earningsloss per share 4 10p 51p
consolidated income statement 
for the year ended 30 june 2009  morse plc annual report 2009 41 morse plc annual report 2009
 
consolidated statement of recognised income 
and expense for the year ended 30 june 2009
  year ended year ended 
  30 june 30 june 
  2009 2008 
   restated 
   note 1 
    note £’000 £’000
foreign exchange translation differences  27 1632 1472
net income recognised directly in equity 27 1632 1472
loss for the period  12091 4671
total recognised income and expense  10459 3199
prior year adjustment  1736
total recognised income and expense for the period is attributable to 
equity holders of the parent  10466 3323
minority interest  7 124
total recognised income and expense  10459 3199
the prior year adjustment affects retained earnings for further details see note 1  
42 morse plc annual report 2009 morse plc annual report 2009
   30 june 30 jun 
  2009 2008 
   restated 
   note 1 
 note £’000 £’000
assets
non–current assets
property plant and equipment  12 982 2203
goodwill 13 28603 43530
other intangibles 13 3229 4788
deferred tax assets 14 1119 1005
other receivables 15 2415 1937
total non–current assets  36348 53463
current assets
inventories 16 2575 1396
trade and other receivables  17 53661 77907
cash and cash equivalents 18 12140 11078
  68376 90381
assets classified as held for sale 10 1931 
total current assets  70307 90381
total assets  106655 143844
liabilities
current liabilities
borrowings  19 455 122
trade and other payables 20 39255 61724
tax payable   3182 8084
deferred consideration 21 524 
interest creditor 22 1978 1736
deferred income 23 13025 13736
provisions 24 2475 1025
  60894 86427
liabilities classified as held for sale 10 1752 
total current liabilities  62646 86427
non–current liabilities
borrowings  19 293 
deferred consideration 21 484 
deferred tax liability 14  347
deferred income 23 2643 2424
provisions 24 384 412
total non–current liabilities  3804 3183
net assets  40205 54234
capital and reserves
called up share capital  2627 15935 15825
share capital to be issued 27  3022
share premium account  27 70790 70790
other reserves  27 2817 33424
own shares 27 984 
retained earnings  27 48649 69106
total equity attributable to equity shareholders   39909 53955
minority interest 27 296 279
total equity  40205 54234
the group consolidated financial statements on pages 40 to 90 were approved by the board of directors on 9 september 2009 and were 
signed on its behalf by
 
guy millward  mike phillips 
group finance director  chief executive officer
9 september 2009
consolidated balance sheet  
as at 30 june 2009 morse plc annual report 2009 43 morse plc annual report 2009
 
  year ended year ended 
  30 june 30 june 
  2009 2008 
   restated 
   note 1 
 note £’000 £’000
cash generated from operations 28 6761 7307
interest received  237 615
interest paid  280 594
tax paid  3719 2445
net cash generated from operating activities  2999 4883
cash flows from investing activities
acquisition of property plant and equipment 12 466 571
proceeds from sale of property plant and equipment   8
acquisition of intangibles software and development 13 119 183
acquisitions of subsidiary in the period net of cash acquired 31  1733
purchase of own shares for the ebt  494 435
disposal of businesses net of disposal costs 10 652 
net cash from investing activities  427 2914
cash flow from financing activities
proceeds from issue of shares 27  10
repayment of loan notes on previous acquisitions  122 144
proceeds from customer specific financing  4532 
repayment of customer specific financing  3784 –
payment of dividend to minority interest   109
dividends paid 11 1665 6091
net cash from financing activities  1039 6334
net increasedecrease in cash and cash equivalents  1533 4365
opening cash and cash equivalents 18 11078 15345
effect of exchange rate fluctuations on cash held  143 98
closing cash and cash equivalents  12754 11078
cash and cash equivalents attributable to continuing operations 18 12140 11078
cash and cash equivalents attributable to discontinued operations 10 614 
closing cash and cash equivalents  12754 11078
consolidated cash flow statement  
for the year ended 30 june 2009 44 morse plc annual report 2009 morse plc annual report 2009
notes to the financial statements 
for the year ended 30 june 2009
1 group accounting policies 
general information
morse plc is a public limited company listed on the london stock exchange and is incorporated and domiciled in the uk 
the address of its registered office is profile west 950 great west road brentford middlesex tw8 9ee
basis of preparation
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” ifric interpretations and the companies act 2006 as 
applicable to companies reporting under ifrs
the company has elected to prepare its parent company financial statements in accordance with uk gaap these are 
presented on pages 91 to 99
the accounting policies set out below have unless otherwise stated been applied consistently to all periods presented 
in these group financial statements these financial statements are presented in pounds sterling rounded to the nearest 
thousand
going concern
the group’s business activities together with the factors likely to affect its future development performance and position 
are set out in the chief executive officer’s statement the financial position of the group its cash flows liquidity position 
and borrowing facilities are described in note 25 of the financial statements which also includes the group’s processes for 
managing its capital its financial risk and its exposure to credit and liquidity risk
the directors are currently of the opinion that the group’s forecast and projections taking account of reasonably possible 
changes in trading performance show that the group should be able to operate within its renewed borrowing facilities 
and comply with its banking covenants forward covenant tests show that none of the covenants are breached for the 
foreseeable future 
a breach of one or more of the covenants could result in the group’s debt becoming immediately repayable should a 
covenant breach become likely there are several mitigating actions that the group could take including seeking cost 
reductions remitting surplus funds from international operations generating cash through disposal of business units and 
entering into negotiations with debt providers which could result in higher financing costs the group has not been required 
to seek any commitment from its banks to waive or amend any existing covenants and is not aware of any reason why its 
banking group would refuse to support such a request subject to acceptable terms were one to be made 
the group is subject to a number of risks and uncertainties which arise as a result of the current economic environment 
in determining that the group is a going concern these risks the most significant of which are listed below have been 
considered by the directors who have determined that currently they do not represent a significant threat to the group 
l  whilst the downside scenarios modelled by the company reflect reasonable changes in market conditions and 
competitive pressures in the current environment a further significant downturn could impact group revenues and 
margins to a greater extent than currently envisaged 
l  liquidity risks are greater because of the difficulties within the banking sector however the group currently 
has adequate facilities with sufficient headroom for the foreseeable future even under a worst case downside which 
assumes almost nil cash generation in the next 12 months and 
l  credit risk is heightened as a result of difficulties that might be faced by some of the group’s customers in the current 
climate and also because of credit risks associated with other counterparties such as banks with which the group has 
dealings  morse plc annual report 2009 45 morse plc annual report 2009
1 group accounting policies continued
going concern continued
the directors have reviewed the group’s future cash forecasts and revenue projections which they believe are based 
on prudent market data and past experience and have formed a judgement that at the time of approving these financial 
statements based on those forecasts and projections there is a reasonable expectation that the group has adequate 
resources to continue in operational existence for the foreseeable future
the directors are satisfied that the group has adequate resources to continue to operate for the foreseeable future for this 
reason the going concern basis is adopted in preparing these accounts 
measurement convention
the financial statements are prepared on the historical cost basis noncurrent assets and disposal groups held for sale are 
stated at the lower of previous carrying amount and fair value less costs to sell
accounting estimates and judgements
the preparation of financial statements requires the use of certain critical accounting estimates it also requires management 
to exercise its judgment in the process of applying the group’s accounting policies details of significant accounting 
estimates and judgments have been disclosed under the relevant note or accounting policy for each area where disclosure is 
required the judgements and key sources of estimation uncertainty that have a significant effect on the amounts recognised 
in the financial statements are discussed below
share based payments 
the determination of share based payments is reliant on certain assumptions which include expected life of the options and 
expected volatility as detailed in note 5
revenue recognition in relation to fixed price contracts
for fixed price contracts revenue is recognised on a percentage completion basis as delivery is over an extended period 
judgement is required to estimate the total costs likely to be incurred over the life of the contract 
goodwill impairment 
the group is required to assess whether goodwill has suffered any impairment loss based on the recoverable amount of 
its cash generating units “cgus” the recoverable amounts of the cgus have been determined based on value in use 
calculations and these calculations require the use of estimates in relation to future cash flows and suitable discount rates as 
disclosed in note 13 
provisions
provisions have been made for onerous leases dilapidations and restructuring these provisions are estimates and the 
actual costs and timing of future cash flows are dependent on future events any difference between expectations and the 
actual future liability will be accounted for in the period when such determination is made details of the group’s provisions 
are set out in note 24
income tax liabilities and assets
the group recognises expected liabilities for tax based on an estimation of the likely taxes due which requires significant 
judgement as to the ultimate tax determination of certain items where the actual liability arising from these issues differs 
from these estimates such differences will have an impact on income tax and deferred tax provisions in the period 
when such determination is made details of the tax creditcharge and deferred tax asset are set out in notes 9 and 14 
respectively
prior year adjustment
the directors have reviewed the tax provisions relating to open tax enquiries from hmrc some of these enquiries go back 
as far as the year ended 30 june 2002 and therefore have been the subject of lengthy correspondence with hmrc the tax 
provisions have stayed relatively constant for the past two years since the level of probability on settling each of these cases 
has not changed in prior periods the tax provisions did not include any interest for overdue payments notes to the financial statements 
for the year ended 30 june 2009 continued
46 morse plc annual report 2009 morse plc annual report 2009
1 group accounting policies continued
prior year adjustment  continued
however in january 2009 an outline agreement was reached with hmrc in respect of open tax enquiries for periods ending 
after 30 june 2004 which gave rise to interest on overdue tax of £08 million which had not been previously provided for at 
the half year based on this review the directors considered it appropriate to also record the interest on the remaining open 
enquiries within this provision which amounted to a further £11 million being provided at 31 december 2008 updated for 
movements in the second half of the year the interest creditor provision at 30 june 2009 is £20 million 
in light of the materiality of the amounts involved the directors are of the opinion that it is appropriate to adjust the 
comparatives for the year ended 30 june 2008 retrospectively and therefore the effect has been treated as a prior year 
adjustment the directors believe this will ensure that the results for the current period are not distorted and that the prior 
periods have the correct amount of interest included 
impact on comparatives
the effect on prior year comparatives is as follows
    as impact of 
    previously prior year as 
    reported adjustment restated 
    £’000 £’000 £’000
year ended 30 june 2008
income statement
financial expenses    594 421 1015
taxation    2121 126 1995
loss for the year    4376 295 4671
balance sheet
deferred tax asset    484 521 1005
interest creditor     1736 1736
retained earnings brought forward    57024 920 57944
earnings per share
eps – basic pence    35 02 37
the effect of this adjustment is to increase the loss after tax by £03 million for the year ended 30 june 2008 and reduce net 
assets by £12 million as at that date including a £09 million reduction to retained earnings brought forward at 1 july 2007
the impact on basic and diluted eps of this adjustment is to increase the loss per share by 02p from 35p per share to 
37p per share for the year ended 30 june 2008
at 1 july 2007 the comparative for deferred tax asset previously reported at £420000 has been adjusted by £395000 and 
restated at £815000 to reflect the deferred tax impact of the hmrc interest 
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 intra
group transactions are eliminated in preparing the consolidated financial statements
an associate is an undertaking in which the group has a long term interest usually between 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 long term 
interest and over which it exercises joint control investments in associates and joint ventures are accounted for using the 
equity method of accounting and are initially recognised at cost the group’s investment in associated and joint ventures 
includes goodwill identified on acquisition net of any accumulated impairment loss morse plc annual report 2009 47 morse plc annual report 2009
1 group accounting policies continued
basis of consolidation continued
the group’s share of the post acquisition profits less losses of associates and of joint ventures are included in the 
consolidated income statement and its interest in their net assets is included in investments in the consolidated balance 
sheet 
revenue and cost of sales
revenue represents the fair value of the consideration received or receivable for the sale of goods and services provided 
within the group’s ordinary activities net of value added tax returns discounts 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 risks and rewards have been transferred 
the fee is determinable and collectability is probable 
hardware and installation
hardware sales are recognised on dispatch 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
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 
consulting services
revenues include sales of services that are delivered over extended periods of time and recognised on a percentage of 
completion basis over the period that the service is delivered revenue and 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 costs are 
fully accrued for estimated losses on all contracts in the year in which they are first foreseen revenue on time and material 
contracts typically from delivering consulting services is recognised at the contractual rates with the stage of completion 
measured on the basis of hours delivered as a percentage of total hours to be delivered 
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
maintenance  support
revenues from maintenance and support services delivered by the group 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 property plant and equipment 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
an asset’s carrying amount is written down immediately to its recoverable amount if the carrying amount is greater than the 
estimated recoverable amount  notes to the financial statements 
for the year ended 30 june 2009 continued
48 morse plc annual report 2009 morse plc annual report 2009
1 group accounting policies continued
business combinations goodwill and intangible assets
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 plus 
directly attributable costs in respect of the acquisition over the fair value to the group of the net identifiable assets and any 
contingent liabilities 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 cgu 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 
if the cost of acquisition is less than the fair value of the net identifiable assets and contingent liabilities acquired the 
difference is recognised directly in the income statement
intangible assets
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 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 assessed on an estimate of the present value of future 
cash flows projected to arise from the use of the intangible assets less amounts writtenoff representing impairments in value 
and accumulated amortisation 
amortisation is charged to administrative expenses on a straightline basis over the estimated useful lives of the intangible 
assets unless such lives are indefinite 
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
development three years
software three years
intellectual property seven years
database three years
impairment
the carrying amounts of the group’s intangible assets which are not subject to amortisation 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 impairment tests on the carrying value of assets subject to amortisation are undertaken if events or changes in 
circumstance indicate that the carrying value may not be recoverable 
for goodwill 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 morse plc annual report 2009 49 morse plc annual report 2009
1 group accounting policies continued
impairment continued 
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 posttax 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
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 the results of discontinued operations are 
presented separately in the income statement including the comparative period and more detail is provided in note 10
financial instruments
the group’s financial instruments comprise bank borrowings cash and cash equivalents and financial instruments the 
group’s financial assets and liabilities other than derivative financial instruments are initially recognised at fair value and 
subsequently measured at amortised cost 
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 notes to the financial statements 
for the year ended 30 june 2009 continued
50 morse plc annual report 2009 morse plc annual report 2009
1 group accounting policies continued
financial instruments continued
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 non 
monetary 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
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 deferred tax is recognised on a undiscounted basis
leases
leases in which a significant proportion of the risks and rewards of ownership are retained with the lessor are classified 
as operating 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 income statement as it accrues using the effective interest method 
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  morse plc annual report 2009 51 morse plc annual report 2009
1 group accounting policies continued
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 options granted under the group’s share option schemes are equity settled the expense 
arising on a grant by the parent company of options over its equity instruments to the employees of subsidiary undertakings 
in the group are recharged to business units
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 market and nonmarket based options granted is measured using a blackscholes model 
taking into account the terms and conditions upon which the options were granted charges to the income statement 
are reviewed each year to take account of service and nonmarket conditions the amount recognised as an expense is 
adjusted to reflect the actual number of share options that vest
interest in own shares 
the assets and liabilities of the group employee share oprtion schemes “esos” 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 esos 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 
a 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 a provision is recognised for a contract that is onerous ie one in which the unavoidable 
costs of meeting the obligations under the contract exceed the benefits to be derived 
a provision for dilapidations is recognised when it is probable that there will be an outflow of economic benefit in respect 
of obligations with the related lease arrangement during the year management made a change in estimate with their 
dilapidation accounting policy the policy is now based on receiving estimates from an independent surveyor consequently 
an exceptional charge of £07 million has been recognised in the profit and loss account in the year ended 30 june 2009 
the provision is based on the potential costs at 30 june 2009 that the business is likely to incur to bring all properties to the 
same state as at the beginning of the lease going forward the provision will continue to be reviewed each year with use of 
independent surveyors where appropriate and adjusted as required to reflect the liability existing at that point in time
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  notes to the financial statements 
for the year ended 30 june 2009 continued
52 morse plc annual report 2009 morse plc annual report 2009
1 group accounting policies continued
trade receivables
trade and other receivables are initially stated at their fair value and thereafter at amortised cost provisions against bad 
debt are made on a monthly basis for any doubtful debts where the cost can be reasonably estimated or is known 
at the beginning of the financial year the policy in place for bad debts was to provide as follows 100 for any specific 
uncollectable debt 15 for debt overdue between 90 and 120 days and 100 for debt overdue 120 days or more
given the global economic crisis during the year management made a change in estimate with their bad debt policy the 
policy is now to provide 100 for any specific uncollectable debt 50 for debt overdue between 90 and 120 days and 
100 for debt overdue 120 days or more
we believe this is a more appropriate policy at this time to manage the group’s receivables exposure
trade payables
trade and other payables are initially stated at their fair value and thereafter at amortised cost
dividends
dividend income is 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
exceptional items
items that are exceptional in size or nature are presented as exceptional items within the consolidated income statement 
the separate reporting of exceptional items helps provide a better indication of the group’s underlying business 
performance events which may give rise to the classification of items as exceptional include gains or losses arising on the 
restructuring of businesses and asset impairments
presentational items 
the group discloses certain items separately on the face of the income statement in order to assist users of the financial 
statements these would include items which are material and of a oneoff or noncash nature such as intangibles 
amortisation share based payments and trading balance releases these items are not exceptional items
trading balance releases
in the ordinary course of trading liabilities are recognised in relation to customers and suppliers which ultimately may 
not crystallise these are referred to as trading balances given the lower volumes and improved controls and processes 
implemented over the last three years the level of build up of short term trading balances is reducing there is an established 
operating policy for releasing these balances as soon as it is evident that the liability has been extinguished in the ordinary 
course of trading 
trading balances have built up significantly over a period of time these relate to unallocated cash payments from 
customers credit notes issued and not claimed supplier credit balances that may not be enforced and goods received not 
yet invoiced the nature of the uncertainty surrounding them is that while they represent present obligations it is uncertain 
whether the counterparties will enforce settlement 
trading balances are reviewed on a regular basis if not used in the ordinary course of trade consistent with established 
operating policies they are released in line with our accounting policy when a liability is judged to no longer exist the policy 
in relation to long term older than one year trading balances is to credit to the income statement all balances greater 
than six years old if no trading activity has taken place with the counterparty in the previous twelve months or where the 
counterparty confirms that the group has no further liabilities the overriding principle is that the time passed and the fact 
that there is no trading relationship with the counterparty provides clear evidence that the liability does not exist shortterm 
trading balances are reviewed regularly cleared down and where appropriate credit notes issued morse plc annual report 2009 53 morse plc annual report 2009
1 group accounting policies continued
related party transactions
the group has taken advantage of the exemption under ias 24 – ‘related party disclosures’ not to disclose transactions 
between group companies
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 area geographical segment which is subject to 
risks and rewards that are different from those of other segments
the group’s primary reporting format is business segments and reflects the group’s management and internal reporting 
structure segment results assets and liabilities include items directly attributable to a segment as well as those that can be 
allocated on a reasonable basis 
application of recently issued international financial reporting standards
certain new standards amendments and interpretations to existing standards have been published that are mandatory for 
the group’s accounting periods beginning on or after 1july 2008 or later periods but which the group has not early adopted 
a standards amendments and interpretations effective in 20082009 with no impact on the group 
 l ifric12 “service concession arrangements” effective from 1 january 2008 
 l ifric13 “customer loyalty programmes” effective from 1 july 2008
 l  ifric14 “ias 19 – the limit of a defined benefit asset minimum funding requirements and their interaction” effective 
from 1 january 2008
b  new standards and interpretations to existing standards that are not yet effective and have not been early adopted by 
the group the impact on the group’s operations is currently being assessed 
 l  ifrs 1 amendment ‘first time adoption of ifrs’ and ias 27 ‘consolidated and separate financial statements’ 
effective from 1 january 2009 
 l ifrs 2 amendment ‘share based payments’ effective from 1 january 2009 
 l ifrs 3 revised ‘business combinations revised’ effective from 1 july 2009 
 l  ifrs 5 amendment ‘noncurrent assets heldforsale and discontinued operations’ and consequential 
amendment to ifrs 1 ‘first time adoption’ effective from 1 july 2009 
 l  ifrs 8 ‘operating segments’ this standard is effective for annual periods beginning on or after 1 january 2009 
ifrs 8 replaces ias 14 ‘segmental reporting’ and requires a ‘management approach’ under which segmental 
information is presented on the same basis as that used for internal reporting purposes and therefore will have little 
impact on the group’s consolidated financial statements except to split out ist europe into ist spain and ist 
ireland
 l ias 1 revised ‘presentation of financial statements’ effective from 1 january 2009 
 l ias 19 amendment ‘employee benefits’ effective from 1 january 2009 
 l ias 23 amendment ‘borrowing costs’ effective from 1 january 2009 
 l ias 27 revised ‘consolidated and separate financial statements’ effective from 1 july 2009 
 l  ias 31 amendment ‘interests in joint ventures’ and consequential amendments to ias 32 and ifrs 7 effective 
from 1 january 2009  notes to the financial statements 
for the year ended 30 june 2009 continued
54 morse plc annual report 2009 morse plc annual report 2009
1 group accounting policies continued
application of recently issued international financial reporting standards continued
 l  ias 36 amendment ‘impairment of assets’ effective from 1 january 2009 
 l  ias 38 amendment ‘intangible assets’ effective from 1 january 2009 
c  interpretations to existing standards that are not yet effective and are not anticipated to be relevant for the group’s 
operations 
 l  ifric 15 ‘agreements for construction of real estates’ effective from 1 january 2009
 l  ifric 16 amendment ‘hedges of a net investment in a foreign operation’ effective from 1 october 2008 
 l  ifric 17 ’distributions of noncash assets to owners’ effective from 1 july 2009 – not yet endorsed by the eu
 l  ifric 18 ‘transfers of assets from customers’ effective from 1 july 2009 – not yet endorsed by the eu
 l  ias 16 amendment ‘property plant and equipment’ and consequential amendment to ias 7 ‘statement of cash 
flows’ effective from 1 january 2009 
 l  ias 20 amendment ‘accounting for government grants and disclosure of government assistance’ effective from  
1 january 2009 
 l  ias 28 amendment ‘investments in associates’ and consequential amendment to ias 32 ‘financial instruments 
presentation’ and ifrs 7 “financial instruments disclosure” effective from 1 january 2009 
 l  ias 29 amendment ‘financial reporting in hyperinflationary economies’ effective from 1 january 2009 
 l  ias 32 amendment ‘financial instruments presentation’ and ias 1 amendment ‘presentation of financial 
statements’ – ‘puttable financial instruments and obligations arising on liquidation’ effective from 1 january 2009 
 l  ias 39 financial instruments ‘recognition and measurement − amendments for eligible hedged items’ 1 july 2009 
– not yet endorsed by the eu
 l  ias 40 amendment “investment property” and consequential amendments to ias 16 effective from 1 january 
2009 
 l  ias 41 amendment “agriculture” effective from 1 january 2009  morse plc annual report 2009 55 morse plc annual report 2009
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 2009 and 2008 these are determined by the source of the sales
year ended 30 june 2009
      discontinued 
 infrastructure infrastructure    operations 
 services  services  business   investment 
 technology technology applications  total management 
 uk europe services central continuing consulting total 
 £’000 £’000 £’000 £’000 £’000 £’000 £’000
revenue
sales to external customers 114239 57399 40272  211910 10417 222327
intersegment sales 1559 10 508  2077 927 3004
segmental revenue 115798 57409 40780  213987 11344 225331
operating profit before amortisation  
share based payments trading  
balance releases and exceptional  
items 7205 229 2637 3335 6736 61 6797
amortisation of intangible assets  39 240 1164 1443  1443
share based payments    1100 1100  1100
operating profit before trading  
balance releases and  
exceptional items 7205 190 2397 5599 4193 61 4254
trading balance releases    4139 4139  4139
operating profit before  
exceptional items 7205 190 2397 1460 8332 61 8393
exceptional items 2320 1785 2843 1212 8160 14962 23122
operating profitloss  4885 1595 446 2672 172 14901 14729
net financing expenseincome     546 29 517
exceptional profit on disposal of  
discontinued operations      652 652
taxation     1725 778 2503
profitloss for the period     1351 13442 12091 notes to the financial statements 
for the year ended 30 june 2009 continued
56 morse plc annual report 2009 morse plc annual report 2009
2 segmental reporting continued
year ended 30 june 2009
     discontinued 
 infrastructure infrastructure   operations 
 services  services  business  investment 
 technology technology applications total management 
 uk  central  europe services continuing consulting total 
 £’000 £’000 £’000 £’000 £’000 £’000
assets and liabilities
segment assets 45327 25416 32923 103666 1870 105536
segment liabilities 37556 15993 7600 61149 2119 63268
other segmental information
capital expenditure
plant property and equipment 100 282 13 395 71 466
intangible fixed assets  66 53 119  119
non cash costs
depreciation 273 242 520 1035 233 1268
amortisation 1164 39 309 1512  1512
of the total depreciation charge for continuing businesses £877000 has been charged through operating profit before 
exceptional items and £158000 to exceptional items of the total amortisation charge for continuing businesses 
£1443000 has been charged through operating profit before exceptional items and £69000 to exceptional items morse plc annual report 2009 57 morse plc annual report 2009
2 segmental reporting continued
year ended 30 june 2008 restated
      discontinued 
 infrastructure infrastructure    operations 
 services  services  business   investment 
 technology technology applications  total management 
 uk europe services central continuing consulting total 
 £’000 £’000 £’000 £’000 £’000 £’000 £’000
revenue
sales to external customers 131358 57778 46122  235258 18001 253259
intersegment sales 647 15 1361  2023 187 2210
segmental revenue 132005 57793 47483  237281 18188 255469
operating profit before  
amortisation share based  
payments trading balance  
releases and exceptional items 6407 2945 542 3111 6783 2467 9250
amortisation of intangible assets  28 285 1641 1954  1954
share based payments    346 346  346
operating profit before  
trading balance releases  
and exceptional items 6407 2917 257 5098 4483 2467 6950
trading balance releases    4174 4174  4174
operating profit before  
exceptional items  6407 2917 257 924 8657 2467 11124
exceptional items   13400  13400  13400
operating profitloss 6407 2917 13143 924 4743 2467 2276
net financing expenseincome     441 41 400
taxation     1320 675 1995
lossprofit for the period     6504 1833 4671
year ended 30 june 2008 restated
     discontinued 
 infrastructure infrastructure   operations 
 services  services  business  investment 
 technology technology applications total management 
 uk  central europe services continuing consulting total 
 £’000 £’000 £’000 £’000 £’000 £’000
assets and liabilities
segment assets 55374 30082 39056 124512 18327 142839
segment liabilities 52011 18507 6917 77435 3744 81179
other segmental information      
capital expenditure      
plant property and equipment 370 230 15 615 35 650
intangible fixed assets  75 108 183  183
non cash costs      
depreciation 357 216 423 996 130 1126
amortisation 1641 28 285 1954  1954 notes to the financial statements 
for the year ended 30 june 2009 continued
58 morse plc annual report 2009 morse plc annual report 2009
2 segmental reporting continued
business segments
morse operates under four key business segments – infrastructure services  technology uk infrastructure services  
technology europe business applications services and investment management consulting for reasons of commercial 
sensitivity the results of ist ireland and ist spain are combined as ist europe for external reporting purposes
the results of the investment management consulting business segment have been reported as discontinued for the year 
ended 30 june 2009 following a decision by the board on 17 december 2008 to exit this business segment the results 
of the investment management consulting segment have been reclassified for the prior period to be also shown under 
discontinued operations
the infrastructure services  technology uk segment provides technology and integration solutions for clients and operates 
mainly in the uk 
the infrastructure services  technology europe segment provides technology and integration solutions for clients and 
operates in ireland and spain 
the business applications services segment has three key lines of business sap consulting sap implementation and 
support services portals and collaborations enterprise content management and xayce business change consultancy 
the business operates in three main territories uk asia and the usa
the investment management consulting segment provides specialist investment management consulting to the financial 
services industry it operates in the following territories uk channel islands france luxembourg south africa australia 
and singapore
the assets and liabilities of central and infrastructure services  technology uk are managed collectively for example cash 
is managed on this basis and are therefore not capable of any meaningful separation
all intersegment sales are on an arms length basis morse plc annual report 2009 59 morse plc annual report 2009
2 segmental reporting continued
geographic segments
the following tables present revenue and asset information for the geographical segments for the years ended 30 june 2009 
and 2008
year ended 30 june 2009   rest of total discontinued 
 uk europe world continuing operations total 
 £’000 £’000 £’000 £’000 £’000 £’000
revenue
sales to external customers 147903 57399 6608 211910 10417 222327
intersegment sales 2067 10  2077 927 3004
total 149970 57409 6608 213987 11344 225331
year ended 30 june 2008
revenue
sales to external customers 171649 57778 5831 235258 18001 253259
intersegment sales 2008 15  2023 187 2210
total 173657 57793 5831 237281 18188 255469
revenue for discontinued operations relating to the investment management consulting division is derived mainly in the uk
as at 30 june 2009
segment assets 75801 25416 2449 103666 1870 105536
other segmental information
capital expenditure
property plant and equipment 113 282  395 71 466
intangible fixed assets 53 66  119  119
depreciation 711 242 82 1035 233 1268
amortisation 1473 39  1512  1512
as at 30 june 2008
segment assets 90738 30082 3692 124512 18327 142839
other segmental information      
capital expenditure
property plant and equipment 384 230 1 615 35 650
intangible fixed assets 108 75  183  183
depreciation 672 216 108 996 130 1126
amortisation 1926 28  1954  1954 notes to the financial statements 
for the year ended 30 june 2009 continued
60 morse plc annual report 2009 morse plc annual report 2009
3 exceptional items
 year  year year year year year 
 ended ended ended ended ended ended 
 30 june 30 june 30 june 30 june 30 june 30 june 
 2009 2009 2009 2008 2008 2008 
 £’000 £’000 £’000 £’000 £’000 £’000 
 continuing discontinued total continuing discontinued total
dilapidation provision 700 8 708   
provision for loss on disposal of businesses  254 254   
director’s share options charge write back 615  615   
reversal of fair value adjustments 565  565   
restructuring costs      
–  headcount 5221 758 5979   
–  property and it 1776 191 1967   
–  legal and professional 1027 30 1057   
–  share options 616  616   
 8640 979 9619   
impairment of goodwill and intangibles  13721 13721 13400  13400
total 8160 14962 23122 13400  13400
all of the items above are recognised within administrative expenses for both years
2009 items
the dilapidations provision charge reflects a liability at 30 june 2009 for potential costs that the businesses are likely to incur 
to bring all properties to the same state as required by the lease contract the change in estimate during the year explained 
in note 1 has led to a charge of £07 million being recognised in 2009
the provision for loss on disposal of businesses relates to the australian and french business units of the investment 
management consulting division discontinued operations the majority stake held in the australian business was sold to 
management on 3 september 2009 terms have been agreed for the sale of the majority stake held in the french business 
subject to shareholder approval to the management of that business a circular will be sent to shareholders in due course 
relating to the french business which is classified as a related party transaction the provision is for the proceeds receivable 
versus the carrying value of the net assets 
the lapsing of share options relating to a former director of the group has resulted in a write back of previously incurred 
share options charges the forfeiture has resulted in a credit of £06 million in the year ended 30 june 2009
the reversal of fair value adjustments of £06 million primarily relates to the crystallising of fair value adjustments for mainly 
bad debt provisions and accruals from previous acquisitions
restructuring costs in the year ended 30 june 2009 amount to £96 million and relate to the cost reduction programme 
announced on 25th july 2008 as part of restructuring a £06 million share options charge was reflected representing 
accelerated charges resulting from employees who left the company as part of the restructuring 
the goodwill and intangibles impairment charge in the year ended 30 june 2009 relates to the impairment of goodwill 
£136 million and intangible assets £01 million in the investment management consulting division discontinued 
operations the carrying value of goodwill and intangible relating to this division is nil at 30 june 2009
2008 items
in the year ended 30 june 2008 the carrying value of goodwill and intangibles in the diagonal business part of the 
business applications services division was reviewed consequently impairment of goodwill £123 million and intangibles 
£11 million was recognised in this period
tax effect
the tax effect of the exceptional items in the year ended 30 june 2009 is a credit of £24 million 2008 nil morse plc annual report 2009 61 morse plc annual report 2009
4 earnings per share
basic earnings per share is calculated by dividing the earnings attributable to ordinary shareholders by the weighted average 
number of ordinary shares in issue during the period
as there was a loss in the period there is no dilution and so the basic and diluted eps figures are the same
reconciliation of the earnings and weighted average number of shares used in the calculation are set out below
 year ended year ended 
 30 june 2009 30 june 2008 
  restated note 1
  weighted   weighted 
  average per  average per 
  number share  number share 
 earnings of shares amount earnings of shares amount 
 £’000 thousands pence £’000 thousands pence
basic and diluted eps
loss attributable to
ordinary shareholders 12098 129829 93 4795 128742 37
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 the directors consider this is helpful in assisting the reader to understand the underlying performance of the 
group
 year ended year ended 
 30 june 2009 30 june 2008 
  restated note 1
  weighted   weighted 
  average per  average per 
  number share  number share 
 earnings of shares amount earnings of shares amount 
 £’000 thousands pence £’000 thousands pence
basic and diluted eps 12098 129829 93 4795 128742 37
effect of trading credit balances net of tax 2980  23 2943  23
effect of exceptional items net of tax
–  impairment charge 13721  106 13400  104
–  dilapidations 510  04   
–  restructuring costs 5814  44   
–  other exceptional items 1180  09   
normalisation of tax charge 630  05 1132  09
adjusted basic and diluted eps 3157 129829 24 4530 128742 35
the tax charge used for the adjusted eps calculations has been adjusted to reflect a full tax charge on the adjusted profit 
before tax thus removing the effect of the significant tax adjustments in any one year that relate to prior periods
continuing operations
basic and diluted earnings per share of 10p 2008 loss of 51p for continuing operations is calculated from the net profit 
attributable to equity holders of the parent from continuing operations of £1351000 2008 loss of £6504000 divided by 
the weighted average number of ordinary shares in issue during the period notes to the financial statements 
for the year ended 30 june 2009 continued
62 morse plc annual report 2009 morse plc annual report 2009
4 earnings per share continued
discontinued operations
basic loss per share of 104p 2008 earnings of 13p for discontinued operations is calculated from the net loss attributable 
to equity holders of the parent from discontinued operations of £13450000 2008 profit of £1709000 divided by the 
weighted average number of ordinary shares in issue during the period
to provide a comparable measure of performance per share from the continuing 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 the directors consider this is helpful in assisting the reader to understand the underlying 
performance of the group
continuing operations
 year ended year ended 
 30 june 2009 30 june 2008 
  restated note 1
  weighted   weighted 
  average per  average per 
  number share  number share 
 earnings of shares amount earnings of shares amount 
 £’000 thousands pence £’000 thousands pence
basic eps
profitloss attributable to ordinary shareholders 1351 129829 10 6504 128742 51
effect of deferred consideration to be issued  
within one year  733    
diluted eps 1351 130562 10 6504 128742 51
continuing operations
 year ended year ended 
 30 june 2009 30 june 2008 
  restated note 1
  weighted   weighted 
  average per  average per 
  number share  number share 
 earnings of shares amount earnings of shares amount 
 £’000 thousands pence £’000 thousands pence
basic eps 1351 129829 10 6504 128742 51
effect of trading credit balances net of tax 2980  23 2943  23
effect of exceptional items net of tax
–  impairment charge    13400  104
–  dilapidations 504  04   
–  restructuring costs 5286  41   
–  other exceptional items 1180  09   
normalisation of tax charge 355  03 1104  08
adjusted basic eps 2626 129829 20 2849 128742 22
diluted eps 1351 130562 10 6504 128742 51
effect of trading credit balances net of tax 2980  23 2943  23
effect of exceptional items net of tax
–  impairment charge    13400  104
–  dilapidations 504  04   
–  restructuring costs 5286  41   
–  other exceptional items 1180  09   
normalisation of tax charge 355  03 1104  08
adjusted diluted eps 2626 130562 20 2849 128742 22 morse plc annual report 2009 63 morse plc annual report 2009
5 information regarding employees directors and their interests
a employees
average monthly number of persons employed including directors by the group during the year
     2009 2008 
     number number
management and administration     182 219
sales and technical staff     1002 1169
     1184 1388
b staff costs including directors
     2009 2008 
     £’000 £’000
wages and salaries     61936 74915
social security costs     7939 8927
other pension costs     1596 1683
share based payments     1100 346
redundancy payments     2786 –
     75357 85871
pension costs represent the amount of contributions payable to the pension schemes in respect of the relevant accounting 
period as part of the building schools for the future stag contract the company has assumed a defined benefit liability 
within this contract in the year ended 30 june 2009 the potential liability is considered to be immaterial as only 4 employees 
were transferred at year end and transfers are made on a fully funded basis the company will review this treatment as more 
members are transferred and as the amounts become material will be recognised in the group financial statements 
c employee share schemes
 options   options 
 outstanding   outstanding 
 over 1227p   over 1227p 
 ordinary   ordinary  
 shares at exercise period during which shares at 
 30 june 2008 price options exercisable 30 june 2009
employee option scheme 240458 £250 apr 2000mar 2009 
unapproved executive option scheme 166000 £250 mar 2002mar 2009 
unapproved executive option scheme 56088 £2275 sep 2002sep 2009 45407
delphis ebt share option scheme 16592 £nil may 2001sep 2008 
unapproved and approved executive  
share option scheme 2000 19133 £196 apr 2005apr 2012 19133
unapproved and approved executive  
share option scheme 2000 196667 £089 jul 2008apr 2015 20000
morse ltip scheme 162500 £nil sep 2008sep 2009 
morse ltip scheme 50000 £nil sep 2008sep 2009 
morse ltip scheme 50000 £nil sep 2008sep 2009 
unapproved and approved executive  
share option scheme 2000 150000 £093 jul 2009mar 2016 
sharesave option scheme 7 417784 £073 feb 2009jul 2009 240525
unapproved and approved executive  
share option scheme 2000 19000 £109 jul 2009mar 2016 19000
morse ltip scheme 444444 £nil mar 2009mar 2010 
morse ltip scheme 182243 £nil mar 2009mar 2010 
unapproved and approved executive  
share option scheme 2000 84110 £107 jul 2009mar 2016 28036 notes to the financial statements 
for the year ended 30 june 2009 continued
64 morse plc annual report 2009 morse plc annual report 2009
5 information regarding employees directors and their interests continued
c employee share schemes continued
 options   options 
 outstanding   outstanding 
 over 1227p   over 1227p 
 ordinary   ordinary  
 shares at exercise period during which shares at 
 30 june 2008 price options exercisable 30 june 2009
unapproved and approved executive  
share option scheme 2000 864865 £111 jul 2009sep 2016 
morse ltip scheme 705000  £nil sep 2009sep 2010 
morse ltip scheme 3115000  £nil oct 2009oct 2010 1000000
sharesave option scheme 8 576906  £078 feb 2010jul 2010 129385
unapproved and approved executive  
share option scheme 2000 400000  £095 jul 2010mar 2017 195000
morse ltip scheme 10000  £nil apr 2010apr 2011 10000
unapproved and approved executive  
share option scheme 2000 21797  £094 jul 2010apr 2017 21797
approved and unapproved executive  
option scheme 61666  £108 jul 2010nov 2017 61666
morse plc long term investment plan 1194437 £nil nov 2009nov 2010 294441
sharesave option scheme 9  266720 £084  feb 2011jul 2011 35651
morse plc long term investment plan 491803 £nil mar 2010mar 2011 491803
morse plc long term investment plan 200000 £nil jun 2010mar 2011 200000
morse plc long term investment plan  £nil sep 2011sep 2012 647249
morse plc long term investment plan  £nil oct 2011oct 2012 715000
sharesave option scheme 10   £0195 feb 2012jul 2012 2015076
morse plc long term investment plan  £nil dec 2011dec 2012 822368
morse plc long term investment plan  £nil feb 2012dec 2013 2755000
diagonal options
diagonal long term incentive plan 26378 £nil mar 2007mar 2014 26378
diagonal employee share option scheme 57701 £126 mar 2007mar 2014 27912
diagonal sharesave option scheme 5 years 74655 £088 may 2008oct 2008 
summary of share options
    2009  2008 
   2009 weighted 2008 weighted  
   number average number average  
   of exercise of exercise  
   options price options price  
   ‘000 pence ‘000 pence
outstanding 1 july   10322 4022 11479 4845
granted during the year – other   2030 1950 372 8065
granted during the year – nil price   5990 000 1942 9400
exercised during the year   1050 000 90 000
expiredlapsed during the year   7471 4458 3221 5050
outstanding at 30 june   9821 1238 10482 5782
exercisable at 30 june   426 9852 1049 5782
the average share price during 2009 was 2024 pence 2008 7845 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 morse plc annual report 2009 65 morse plc annual report 2009
5 information regarding employees directors and their interests continued
c employee share schemes continued
the morse group operates its share schemes in conjunction with employee benefit trusts at the year end the morse 
employee benefit trust held 751440 shares 2008 1435104 in the company of which 751440 2008 1126516 have 
share options held over them the delphis employee benefit trust holds 297885 shares 2008 297885 in the company 
of which none 2008 16592 have share options held over them the diagonal employee benefit trusts hold 67000 shares 
2008 67000 in the company of which 54290 2008 66595 have share options held over them
as at year ended 30 june 2009 the morse employee benefit trust held 1185104 monitise plc shares 2008 1185104 
which were received as part of the demerger of monitise plc in june 2007 these shares have nil 2008 nil share options 
held over them the diagonal employee benefit trusts hold 22661 monitise plc shares 2008 22661 none of which have 
share options held over them
d 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 the blackscholes model
the following table gives the assumptions made during the year ended 30 june 2009
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 4 4 4 4 4 4
vesting conditions shareholder shareholder shareholder shareholder shareholder shareholde 
 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 notes to the financial statements 
for the year ended 30 june 2009 continued
66 morse plc annual report 2009 morse plc annual report 2009
5 information regarding employees directors and their interests continued
d share based payments continued
share options granted to ltip schemes continued
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 september october december april november march 
 2006 2006 2006 2007 2007 2008
number of instruments granted 990000 3765000 450000 10000 1249992 491803
exercise price £nil £nil £nil £nil £nil £nil
share price at date of grant £113 £097 £095 £093 £106 £061
contractual life years 4 4 4 4 4 4
vesting conditions shareholder shareholder shareholder shareholder shareholder shareholde 
 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 456 440 440 440 430 460
expected option life at grant years 3 3 3 25 3 3
risk free interest rate  471 493 500 541 501 381
dividend yield 345 402 411 420 387 672
fair value per granted instrument determined  
at grant date £098 £082 £080 £078 £090 £046
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 june july september october december february 
 2008 2008 2008 2008 2008 2009
number of instruments granted 200000 1050000 647249 715000 822368 2755000
exercise price £nil £nil £nil £nil £nil £nil
share price at date of grant £050 £046 £038 £022 £007 £007
contractual life years 4 25 4 4 4 4
vesting conditions shareholder shareholder shareholder shareholder shareholder shareholde 
 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 460 510 500 563 606 648
expected option life at grant years 3 2 3 3 3 3
risk free interest rate  496 487 440 344 252 187
dividend yield 820 571 689 1209 3982 3714
fair value per granted instrument  
determined at grant date £050 £041 £031 £013 £001 £001 morse plc annual report 2009 67 morse plc annual report 2009
5 information regarding employees directors and their interests continued
d 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 grant of 
  share share share share share 
  options options options options options
date of grant  september october march april november 
  2006 2006 2007 2007 2007
number of instruments granted  864865 200000 470000 21797 61666
exercise price  £111 £099 £095 £094 £108
share price at date of grant  £113 £099 £095 £093 £106
contractual life years  585 6 585 6 6
vesting conditions  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 
  plus 5 plus 5 plus 5 plus 5 plus 5
expected volatility  421 423 440 440 430
expected option life at grant years  6 6 6 6 6
risk free interest rate   471 469 508 513 501
dividend yield  345 394 411 420 387
fair value per granted instrument determined at  
grant date  £038 £032 £031 £030 £035 notes to the financial statements 
for the year ended 30 june 2009 continued
68 morse plc annual report 2009 morse plc annual report 2009
5 information regarding employees directors and their interests continued
d share based payments continued
save as you earn 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 november december december november november november 
 2003 2004 2005 2006 2007 2008
number of instruments granted 164626 841078 1050473 1071919 310145 2030238
exercise price £103 £091 £073 £078 £084 £020
share price at date of grant £121 £099 £095 £095 £068 £010
contractual life years 35 35 35 35 35 35
vesting conditions 3 years 3 years 3 years 3 years 3 years 3 years 
 service service service service service service 
expected volatility 612 536 453 450 430 585
expected option life at grant years 35 35 35 35 35 35
risk free interest rate  484 448 442 492 451 252
dividend yield 260 343 395 393 393 2737
fair value per granted instrument  
determined at grant date £056 £036 £035 £037 £019 £003
 
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 3 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
 
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 morse plc annual report 2009 69 morse plc annual report 2009
6 operating profit
     year ended year ended 
     30 june 30 june 
     2009 2008 
      restated 
      note 1 
     £’000 £’000
operating profit is stated after chargingcrediting
auditors’ remuneration
–  audit of these financial statements     91 151
–  audit of subsidiaries’ financial statements     119 76
–  other services relating to taxation     169 189
–  other services     12 
net foreign currency differences     380 885
operating lease rentals 
–  plant and machinery     272 246
–  other     2124 2402
research and development     104 257
impairment of goodwill      12264
impairment of intangibles      1136
 depreciation of property plant and equipment – all owned    1035 996
amortisation of intangible assets     1512 1954
loss on disposal of property plant and equipment     570 89
the other services provided by the auditors of £12000 relate to advisory services with respect to the capital reduction 
exercise the auditors do not provide management consultancy services to the group
the loss on disposal of property plant and equipment in the year ended 30 june 2009 reflects asset writedowns as a result 
of property rationalisations through the year 
7 trading balance releases
during the year total trading balance releases of £4139000 2008 £4174000 were credited to the income statement 
within ‘administrative expenses’
at 30 june 2008 there were £102 million of trading balance credits on the balance sheet during the year £41 million 
of trading balances were released to the income statement in line with the policy £17 million of the liability was either 
crystallised or settled with £44 million remaining in the balance sheet at 30 june 2009
of the £44 million closing balance £36 million 2008 £87 million is included within trade and other payables and 
£08 million 2008 £15 million within deferred income
as reductions in the trading balance credits are driven by a number of factors it is difficult to predict with certainty the levels 
of releases that will flow through the income statement in the years ahead however we anticipate trading balance releases 
will continue at the following approximate levels fy10 £09 million fy11 £08 million fy12 £12 million with any increase 
in these levels being driven by action by the company  notes to the financial statements 
for the year ended 30 june 2009 continued
70 morse plc annual report 2009 morse plc annual report 2009
8 finance income and expense
     year ended year ended 
     30 june 30 june 
     2009 2008 
      restated 
      note 1 
     £’000 £’000
bank interest income     144 504
other interest income     51 68
financial income     195 572
bank loans and overdrafts interest expense     210 500
other loans interest expense      79 43
unwinding of discount on provisions note 24     210 49
interest on overdue tax     242 421
financial expenses     741 1013
included within other interest receivable is interest earned from cash invested in open ended investment companies further 
details provided in note 25
9 tax on ordinary activities
corporation tax
     year ended year ended 
     30 june 30 june 
     2009  2008 
      restated 
      note 1 
     £’000  £’000
united kingdom corporation tax charge at 28 2008 295    1371 2018
adjustment to corporation tax provision from prior years     2371 549
overseas tax charge on profit for the year      108 409
current tax credit     892 1878
deferred tax credit note 14     833 558
tax creditcharge from continuing operations     1725 1320
tax creditcharge from discontinued operations     778 675
total tax creditcharge     2503 1995
the effective tax rate in the year ended 30 june 2009 differs from the uk tax rate of 28 mainly due to the effect of the prior 
year tax credit and the loss making position of the group the adjustment to the corporation tax provision from prior years 
is higher than in previous years and reflects the finalisation of corporation tax liabilities for 2007 and 2008 and settlement 
of a number of open hmrc enquiries dating back to the year ended 30 june 2005 which has resulted in the reversal of 
previously provided amounts
for the year ended 30 june 2008 the tax charge was higher than the uk rate of 295 because of nondeductible costs 
primarily the goodwill and intangibles impairment charge
deferred tax of £250000 2008 £171000 was credited directly to the retained earnings morse plc annual report 2009 71 morse plc annual report 2009
9 tax on ordinary activities continued
reconciliation of the group’s current tax charge to the united kingdom statutory rate
     year ended year ended 
     30 june 30 june 
     2009 2008 
      restated 
      note 1 
     £’000 £’000
loss before tax     14594 2676
tax on loss before tax at 28 2007 295     4086 789
effects of
expenses not deductible for tax purposes including amortisation of intangible assets and  
impairment charge     5116 3698
income not taxable     327 44
losses of overseas subsidiaries not available for relief     87 
difference between uk and overseas standard tax rates     35 274
adjustments to tax charge in respect of previous periods     3258 596
total tax creditcharge     2503 1995
10 discontinued operations and assets of disposal group classified as held for sale
on 20 february 2009 the company completed the disposal of the business and assets of the uk and jersey investment 
management consultancy business formerly known as cstim “cstim” to navigant consulting europe limited 
“navigant consulting” and on 2 april the sale of cstim’s jersey business was also completed and on 3 april the sale of 
skillshub completed
cstim formed the largest part of morse’s imc business unit the remaining parts of imc were operated through majority 
owned subsidiary undertakings in france and australia small operations in south africa and luxembourg and a flexible 
resourcing business in the uk called skillshub the south african and luxembourg businesses have been closed down the 
skillshub business has been sold and the majority stake held in the australian business was disposed post year end terms 
have been agreed subject to shareholder approval for the sale of the majority stake held in the french business a circular 
seeking shareholder approval will be sent in due course
consequently the results of the imc business unit have been reported as discontinued for the year ended 30 june 2009 
as a result of the sale there was an impairment to goodwill and other intangible assets on morse’s consolidated balance 
sheet relating to the imc business units of £137 million arising from the sale and there was also a write down of the 
carrying value of the investment in morse plc’s company balance sheet
results of discontinued operations
     2009 2008 
     £’000 £’000
revenue     10417 18001
expenses     25289 15493
net gain on sale of discontinued operations     652 
lossprofit before tax of discontinued operations     14220 2508
tax     778 675
lossprofit after tax of discontinued operations     13442 1833
the expenses disclosed above for the year ended 30 june 2009 include the goodwill impairment charge of £137 million 
and exceptional restructuring costs of £10 million see note 3  notes to the financial statements 
for the year ended 30 june 2009 continued
72 morse plc annual report 2009
10 discontinued operations and assets of disposal group classified as held for sale continued
cash flows fromused in discontinued operations
     2009 2008 
     £’000 £’000
operating cash flows     20 3676
investing cash flows     587 35
financing cash flows      109
total cash flows in discontinued operations     567 3532
assets of discontinued operations classified as held for sale
      2009 
      £’000
property plant and equipment      56
other current assets      1261
cash and cash equivalents      614
total      1931
liabilities of discontinued operations classified as held for sale
      2009 
      £’000
trade and other payables      1498
provisions      254
total      1752
assets classified as held for sale include cash and cash equivalents which will be retained by the purchasers of the australian 
and french businesses
net gain on sale of discontinued operations
      £’000
net assetsliabilities on disposal      
costs of disposal      648
sale proceeds received      1300
profit on disposal of businesses      652
earnings per share see note 4
basic loss per share of 104p 2008 earnings of 13p for discontinued operations is calculated from the net loss attributable 
to equity holders of the parent from discontinued operations of £13450000 2008 profit of £1709000 divided by the 
weighted average number of ordinary shares in issue during the period
11 dividends paid and proposed
     2009 2008
     £’000 £’000
declared and paid during the year
equity dividend on ordinary shares
final dividend for 2008 130p 2007 280p     1665 4429
interim dividend for 2009 nil 2008 130p      1662
     1665 6091
no dividend proposed for approval at agm
equity dividend on ordinary shares
final dividend for 2009 nil 2008 130p      1676 73 morse plc annual report 2009
12 property plant and equipment
  leasehold office fixtures motor
  improvements equipment and fittings vehicles total
  £’000 £’000 £’000 £’000 £’000
cost
at 1 july 2007  323 4423 3784 137 8667
additions  5 586 38 21 650
acquisition of subsidiary   4 22  26
disposals  33 475 61 17 586
exchange differences  55 182 129 19 385
transfers to intangibles note 13   934   934
at 1 july 2008  350 3786 3912 160 8208
additions  48 267 128 23 466
disposals   575 1198  1773
writeoff of fully depreciated assets   332 8  340
exchange differences  37 135 110 10 292
adjustments  193 3117 88 32 3190
transfers to disposal group classified as held for sale 240 46 103  389
at 30 june 2009  388 6352 2753 161 9654
depreciation
at 1 july 2007  177 3466 2240 84 5967
disposals  28 399 33 9 469
charge for the year  92 753 265 16 1126
exchange differences  40 137 44 10 231
transfers to intangibles note 13   850   850
at 1 july 2008  281 3107 2516 101 6005
charge for the year  180 503 564 21 1268
disposals   278 925  1203
writeoff of fully depreciated assets   332 8  340
exchange differences  22 7 50 6 85
adjustments  91 2998 131 30 3190
transfers to disposal group classified as held for sale 226 26 81  333
at 30 june 2009  348 5979 2247 98 8672
net book value
at 30 june 2009  40 373 506 63 982
at 30 june 2008  69 679 1396 59 2203
at 1 july 2007  146 957 1544 53 2700
the group has reviewed its fixed asset cost and accumulated depreciation and noted inconsistencies in classification 
although the total net book value is correctly stated accordingly adjustments have been made to both cost and 
accumulated depreciation to reflect values which are in line with the fixed asset register  74 morse plc annual report 2009
notes to the financial statements 
for the year ended 30 june 2009 continued
morse plc annual report 2009
13 goodwill and other intangible fixed assets
   customer
 consulting customer relationship maintenance followon trade   total 
 database relationships backlog contracts consulting names software intangibles goodwill
 £’000 £’000 £’000 £’000 £’000 £’000 £’000 £’000 £’000
cost         
at 1 july 2007   376 399 6110 1847 498 9230 51622
transfers note 12 128   22 474  934 610 247
additions  1431  406   183 2020 3925
at 1 july 2008 128 1431 376 827 5636 1847 1615 11860 55794
additions       119 119 
disposals       60 60 
revaluations       14 14 
changes in contingent  
consideration note 21         1326
at 30 june 2009 128 1431 376 827 5636 1847 1688 11933 54468
amortisation
at 1 july 2007   376 188 1954 526 88 3132 
charge for the year 43 215  494 704 185 313 1954 
impairment note 3      1136  1136 12264
transfers note 12       850 850 
at 1 july 2008 43 215 376 682 2658 1847 1251 7072 12264
charge for the year 42 286  134 704  346 1512 
impairment note 3 43    77   120 13601
at 30 june 2009 128 501 376 816 3439 1847 1597 8704 25865
net book value         
at 30 june 2009  930  11 2197  91 3229 28603
at 30 june 2008 85 1216  145 2978  364 4788 43530
at 1 july 2007    211 4156 1321 410 6098 51622
in the year ended 30 june 2008 adjustments were made to the opening cost of intangibles and goodwill to reclassify 
software assets previously reflected in property plant and equipment and to adjust for provisional management valuations of 
intangibles and goodwill made in the year ended 30 june 2007 the provisional valuations were in respect of the acquisitions 
of skillshub limited and cstim france in that year external valuations replaced the provisional estimates made by 
management resulting in an adjustment in the year ended 30 june 2008  morse plc annual report 2009 75 morse plc annual report 2009
13 goodwill and other intangible fixed assets continued
the goodwill and intangibles impairment charge in the year ended 30 june 2009 relates to the impairment of goodwill 
£136 million and intangible assets £01 million in the investment management consulting division discontinued 
operations which occurred because the goodwill could not be recouped on the sale of the businesses because of the 
depressed state of the consulting market and the likelihood of continuing trading losses on the basis of fair value less costs 
to sell the carrying value of goodwill and intangibles relating to this division is nil at 30 june 2009
other intangible assets total £3229000 2008 £4788000 other intangible assets acquired in the year ended 30 june 
2009 totalled £119000 2008 £183000 and represent amounts arising on purchase of software in the year ended 30 
june 2008 the intangible assets acquired represented mainly amounts arising on the acquisition of xayce plc customer 
relationship and maintenance contracts
impairment testing of goodwill
goodwill acquired through business combinations has been allocated to the cash generating units of infrastructure services 
 technology uk ist spain ist ireland business applications services and imc for impairment testing these are the 
lowest level of cgu that can be reliably and separately identified and which management use to measure the business 
during the year ended 30 june 2009 the carrying value of goodwill relating to the investment management consulting 
division has been impaired in full because it has been classified as discontinued operations and has been partly closed and 
partly sold
the recoverable amounts of these cash generating units have been determined based on a value in use calculation 
the group has based these calculations on estimated cashflows in line with current market expectations over ten years 
excluding a value in perpetuity rather than five years plus a value to perpetuity as the current economic environment makes 
visibility of cash flows very problematic into perpetuity the growth rates are based on management estimates of the industry 
growth rates for the activities being undertaken by each company represented by the investment averaging 225 per 
annum for the ist businesses and 4 for business application services the discount rate applied to cash flow projections 
is based on management assessment of the weighted average cost of capital posttax of 936 13 pretax 2008 
13 pretax and uses data from external sources management estimates the discount rate reflects the current market 
assessment of the time value of money and risks specific to the business
based on the above all the cgu’s generate value in excess of the carrying value of goodwill attributed to them giving them 
significant headroom accordingly there is no impairment in any of the cgu’s within the continuing operations in the year 
ended 30 june 2009 
the base case impairment tests are then subjected to a sensitivity analysis varying the growth rates the wacc and 
cashflows including reducing growth rates to zero increasing wacc to 14 post tax and reducing cashflows by up to 
25
the business applications services goodwill would have been impaired by £20 million if the cash flows were reduced by 
15 and no growth was assumed for the entire 10 year period
for continuing operations future performance would have to deteriorate markedly for the value in use to fall below the 
carrying value
the following cgus have significant carrying amounts of goodwill
     2009 2008
     £’000 £’000
business applications services     20165 21058
infrastructure services  technology uk     5717 5717
infrastructure services  technology ireland     2169 2169
infrastructure services  technology spain     552 552
investment management consulting      14034
     28603 43530 76 morse plc annual report 2009
notes to the financial statements 
for the year ended 30 june 2009 continued
morse plc annual report 2009
13 goodwill and other intangible fixed assets continued
impairment testing of goodwill continued
the change in the carrying amounts of goodwill from 2008 to 2009 for the business applications services business unit is 
due to the movement in deferred consideration during the year relating to the acquisition of xayce plc
the change in the carrying amounts of goodwill from 2008 to 2009 for the investment management consulting business 
unit is due to the impairment during the year and the movement in deferred consideration during the year relating to the 
acquisition of skillshub limited and dc financial consultants limited 
the remaining amortisation periods of the intangible assets held as at 30 june 2009 are as follows
maintenance contracts one month
follow on consulting three years one month
software  three years
customer relationships three years three months
amortisation is charged to administrative expenses
14 deferred tax
    depreciation 
   holiday in excess of hmrc credit   
 provision share pay capital interest  tax losses   
 for losses options accrual allowances creditor in spain other total 
 £’000 £’000 £’000 £’000 £’000 £’000 £’000 £’000
assets        
at 1 july 2007 as  
previously reported 176 481 348 641    1646
prior year adjustment  
see note 1     395   395
restated as at  
1 july 2007 176 481 348 641 395   2041
chargecredit for  
the year note 9 50  107 34 126  23 126
credit to pl reserve  171      171
foreign exchange   8 5   2 5
at 1 july 2008 226 310 249 670 521  25 2001
chargecredit for  
the year note 9 213  117 149 184 610 21 266
credit to the pl reserve  250      250
foreign exchange   2     2
at 30 june 2009 13 60 134 819 337 610 46 2019
  consulting  customer maintenance follow on trade   
  database relationships  contracts  consulting names other total 
  £’000 £’000 £’000 £’000 £’000 £’000 £’000
liabilities
at 1 july 2007    48 861 317 200 1426
additions  28 313 94 109   326
creditcredit for the year note 9 9 34 102 94 317 111 445
foreign exchange       36 36
at 1 july 2008  19 279 40 658  347 1343
chargecredit for the year note 9 19 45 15 161  229 469
foreign exchange       26 26
at 30 june 2009   234 25 497  144 900 morse plc annual report 2009 77 morse plc annual report 2009
14 deferred tax continued
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 £nil 2008 £347000 other deferred tax balances are reflected on the balance sheet as an asset of 
£1119000 2008 £1005000 the net deferred tax asset is £1119000 2008 £658000
the group anticipates sufficient profits to be made in the relevant geographic locations in order to utilise the deferred tax 
assets
the total group deferred tax profit and loss credit for the year is £735000 and is split £833000 credit for continuing 
businesses and £103000 charge for discontinued operations 
15 other receivables
other receivables represent deferred maintenance costs which are deferred for more than one year the group defers 
maintenance revenue and the associated maintenance costs and recognises them over the period the service is provided
16 inventories
     2009 2008 
     £’000 £’000
finished goods and goods for resale     2575 1396
cost of goods sold during the year amount to £82829000 2008 £93005000
writedowns of inventories during the year amount to £229000 2008 £103000
17 trade and other receivables
     2009 2008 
     £’000 £’000
gross trade receivables      40714 61201
other receivables     35 1294
gross trade and other receivables     40749 62495
bad debt provision     1087 858
net trade and other receivables     39662 61637
tax and social security recoverable     164 4
prepayments and accrued income     13835 16266
     53661 77907
trade receivables includes £04 million jun 08 £nil relating to receivable balances falling due after more than one year 
included within prepayments and accrued income are deferred maintenance costs of £78 million jun 08 £100 million 
which is recognisable within one year the group defers maintenance revenue and the associated maintenance costs and 
recognises them over the period the service is provided
an ageing analysis of trade and other debtors and provision for bad debts is presented below
  2009 2008 
  trade and other  bad debt trade and other bad debt 
  receivables provision receivables provision 
  £’000 £’000  £’000 £’000
not yet due  35193  50028 203
overdue 30 days or less  1929  6986 3
overdue 31 to 60 days  1119 5 2001 60
overdue 61 to 90 days  1314 1 1581 
overdue 91 to 120 days  175 80 413 224
overdue 121 days or more  1019 1001 1486 368
  40749 1087 62495 858 78 morse plc annual report 2009
notes to the financial statements 
for the year ended 30 june 2009 continued
morse plc annual report 2009
17 trade and other receivables continued
provisions for bad debt are made on a monthly basis for any doubtful debts where the cost can be reasonably estimated or 
is known the management reviews on a monthly basis the level of old debts and receivables which are in dispute based on 
those reviews actions are taken to ensure collection of debt in a timely manner and appropriate provision is set up
during the period management made a change in estimate with their bad debt policy across all divisions which provides 
100 for any specific uncollectable debt 50 for debt overdue between 90 and 120 days and 100 for debt overdue 120 
days or more see note 1
customer risk procedures include such activities as credit checks payment history analysis and credit approval limits based 
on these procedures management assess the credit quality of those customers before engaging in transactions
an analysis of the trade receivables provisions for bad debts for the periods is as follows
     2009 2008
     £’000 £’000
at 1 july     858 1288
bad debts written off     463 125
decreaseincrease in allowance     909 300
exchange difference     35 5
transferred to disposal group classified as held for sale     182 
at 30 june     1087 858
of the £09 million increase in the allowance for the year £06 million relates to provisions taken against customer specific 
balances including lehman’s £05 million and £03 million is due to the change in estimate of the bad debt policy of which 
£02 million related to discontinued operations
18 cash and cash equivalents
     2009 2008
     £’000 £’000
 continuing cash and cash equivalents disclosed as such on the balance sheet   12140 11078
 continuing cash and cash equivalents per cash flow statement    12140 11078
19 borrowings
     2009 2008
     £’000 £’000
debt factoring       748  
loan notes      122
     748 122
during the year ended 30 june 2009 the spanish business entered into a debt factoring arrangement to fund extended 
credit terms offered to a customer under the terms of the arrangement funds were advanced to the company by the factor 
and are repayable in line with the customer contract payment terms at 30 june 2009 the group had liabilities of £748000 
under this debtor factoring arrangement of which £455000 is payable within one year and £293000 is payable in more than 
one year
at 30 june 2008 borrowings were represented by loan notes which were paid down in full in the year ended 30 june 2009 morse plc annual report 2009 79 morse plc annual report 2009
20 trade and other payables
     year ended year ended
     30 june 30 june
     2009 2008
     £’000 £’000
trade payables     28286 40932
accruals     7578 11927
tax and social security payable     2974 7475
other payables     417 1390
     39255 61724
employer pension contributions payable to the pension scheme of £86000 2008 £117000 are included within other 
payables
21 deferred consideration
the deferred consideration payable relates to the amounts due to vendors of xayce plc acquired by morse in september 
2007 where the amount payable is now to be settled in cash rather than shares the amount of the deferred consideration 
at 30 june 2009 is £1008000 of which £524000 is payable within one year and £484000 is payable after more than one 
year
22 interest creditor
the interest creditor represents potential amounts payable to hmrc in respect of open tax enquiries as outlined in note 1
23 deferred income
deferred income represents deferred maintenance income and other deferred revenues the group defers maintenance 
revenue and the associated maintenance costs and recognises them over the period the service is provided the table 
below shows the timing of future releases of deferred income 
  advance   advance 
 maintenance billings total maintenance billings total 
 2009 2009 2009 2008 2008 2008 
 £’000 £’000 £’000 £’000 £’000 £’000
within one year 8049 4976 13025 10344 3392 13736
over one year 2643  2643 2424  2424
 10692 4976 15668 12768 3392 16160 80 morse plc annual report 2009
notes to the financial statements 
for the year ended 30 june 2009 continued
morse plc annual report 2009
24 provisions 
  property restructuring contract losses other total
  £’000 £’000 £’000 £’000 £’000
balance at 1 july 2008  737  700  1437
provisions made during the year  1781 757 200 254 2992
provisions used during the year  576  550  1126
unwinding of a discount  210    210
released in the period  400    400
transferred to disposal group classified as held for sale    254 254
balance at 30 june 2009  1752 757 350  2859
current 2009  1368 757 350  2475
noncurrent 2009  384    384
balance at 30 june 2009  1752 757 350  2859
current 2008  325  700  1025
noncurrent 2008  412    412
balance at 30 june 2008  737  700  1437
the property provision brought forward relates to properties previously vacated in the uk in prior periods during the year 
ended 30 june 2009 further properties in the uk and spain were vacated as part of the restructuring programme see 
above the provision is being utilised over the length of the leases the property provision includes a dilapidations provision 
which has been increased in the year ended 30 june 2009 see note 1 and is expected to be utilised as and when the 
various property leases expire
the release of property provisions in the year reflects the remaining amounts no longer required for two properties
i one property where the business has moved back into the property in july 2009 previously an onerous lease provision 
was set up some years ago when the property was vacated and 
ii a second property which was vacated in the first half of the year and an onerous lease provision set up however in july 
2009 has been reoccupied
the restructuring provision relates to the group initiative announced on 25 july 2008 which is mostly complete at 30 june 
2009 the provision relates mainly to redundancy costs payable at 30 june 2009 the provision is expected to be utilised 
within one year
contract losses relate to current lossmaking contracts the provision is expected to be utilised within one year
other relates to a provision against loss on disposal of the group’s stakes in its businesses in australia and france the 
provision has been transferred to liabilities held for sale in the balance sheet
provisions have been discounted at a pre tax rate of 13 2008 13 morse plc annual report 2009 81 morse plc annual report 2009
25 financial instruments
the group’s financial instruments comprise cash and liquid resources borrowings trade debtors trade creditors and 
provisions and are categorised as loans and receivables or cash and cash equivalents no speculative trading of financial 
instruments is carried out
the fair values of the financial assets and liabilities approximate to their book values
financial assets
the group’s financial assets at the year end are analysed as follows
     2009 2008
     £’000 £’000
cash and cash equivalents     12140 11078
gross trade and other receivables     40749 62495
     52889 73573
the group’s cash deposits at the year end attract interest at a floating rate they are denominated in the following 
currencies
     2009 2008
     £’000 £’000
sterling     3979 6336
euros     6415 3487
us dollars     1629 544
south african rand      258
australian dollars      165
malaysian ringitts     51 250
singapore dollars     33 38
hong kong dollars     33 
cash     12140 11078
the group’s trade and other receivables are denominated in the following currencies
     2009 2008
     £’000 £’000
sterling     17664 34223
euros     21141 25633
us dollars     1708 1742
south african rand      187
australian dollars      238
malaysian ringitts     173 460
singapore dollars     1 12
hong kong dollars     62 –
gross trade receivables     40749 62495
ageing of the group’s trade and other receivables is shown in note 17
the majority of cash has been invested during the year in a number of open ended investment companies’ funds operated 
by our bankers 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 rates of interest earned during the year have been in the range 048 to 542
on 1 july 2009 to get better rates of return the group invested £4576458 2008 £473925 of their surplus funds in open 
ended investment companies the group has same day access to these funds 82 morse plc annual report 2009
notes to the financial statements 
for the year ended 30 june 2009 continued
morse plc annual report 2009
25 financial instruments continued
financial liabilities
the group’s financial liabilities and analysis of ageing are as follows
   2009 2009 2009 2008
   £’000 £’000 £’000 £’000
   in one  between  in one
   year or  one and  year or
   on demand two years total on demand
borrowings   455 293 748 122
trade and other payables   39255  39255 61724
deferred consideration   524 484 1008 
liabilities classified as held for sale   1752  1752 
    41986 777 42763 61846
the figures in this table are based on undiscounted contractual obligations
loan notes of £122000 that were outstanding at 30 june 2008 were all repaid during the year loan notes are disclosed 
within borrowings above
borrowings reflect debt factoring in the ist spain business unit to finance extended credit terms offered to a customer the 
group’s banking facilities are discussed below 
financial instruments and risk management
the principal risks arising from the group’s financial instruments are capital risk liquidity risk counterparty credit risk interest 
rate risk and foreign currency exchange rate risk the management of these risks is discussed below
capital risk management
the group’s approach to capital management is to ensure that it has a strong capital base to support the development 
of the business whilst aiming to maximise shareholder value as part of this approach the group endeavours to maintain 
a gross debt to ebitda ratio well within its banking covenants and monitors net cashdebt and borrowings closely the 
group’s capital base is primarily utilised to finance its fixed assets and working capital requirements each business manages 
working capital in line with group policies and the group sets targets for the number of days targeted for trade receivables 
collection to ensure efficient capital usage
liquidity risk
liquidity risk is the risk that the group will not be able to meet its financial obligations as they fall due the group finances 
its operations through a mixture of retained profits new equity cash and the availability of a borrowing facility the group 
centrally manages its liquidity risk by focusing on the cash within the business and maintaining access to banking facilities 
the objective is to provide efficient cash and tax management and cost effective core funding to operating businesses our 
cash balance is managed through the daily reporting of all group cash balances to senior finance personnel and through 
shortterm cash flow forecasts focussing on the next 3 months receipts and payments the group does not trade in financial 
instruments
the group has a committed multicurrency revolving credit facility ‘‘rcf’’ with royal bank of scotland plc rbs which was 
used during the year but was not in use at 30 june 2009 and 30 june 2008 a nonutilisation fee of 100 of the available 
facility is payable for any facility not used and interest is charged at libor plus 250 the revolving credit facility has 
covenants that relate to it as follows
l gearing gross borrowings to shareholder funds
l interest cover pbit to borrowing costs and
l leverage gross borrowings to ebitda
in december 2008 the company renegotiated the covenant calculations to take account of a maximum of £6 million of cash 
restructuring costs during the year ended 30 june 2009 and a reduction in shareholders funds  morse plc annual report 2009 83 morse plc annual report 2009
25 financial instruments continued
liquidity risk continued
the group also has a multicurrency overdraft within a group pooling arrangement with rbs interest is charged at base rate 
plus 200 
during the year the group had a euro overdraft within a group pooling arrangement with barclays which has been 
terminated post year end the maximum overdraft limit for the pooling is a2500000 2008 a2500000 interest is charged 
at euribor plus 075 the group has replaced this with a net nil euro facility within a group pooling arrangement with 
rbs no interest is receivable or payable on this facility 
the rbs multicurrency rcf and multicurrency overdraft facility come up for renewal in march 2010 the company has 
concluded discussions with the royal bank of scotland plc for the extension of the facilities based on financial projections 
these projections show that due to the improved cash position within the group and the continued focus on cash collection 
the group only has need for smaller facilities in the coming twelve months consequently the board has extended the rcf 
to 31 march 2011 and this is a committed £65 million previously £10 million multi currency rcf and a £1 million multi 
currency overdraft facility previously £25 million repayable upon demand 
the ist spain business has an overdraft facility of a500000 2008 nil interest is charged at euribor  200 with 
a minimum rate of 425 the spanish business also has access to customer specific funding through debt factoring 
arrangements with a number of financing institutions ist spain receives funds from the financing institutions which are then 
repaid as cash is received from the customer under these arrangements the limits on borrowing are a16m with recourse 
agreement and a35m without recourse agreement at 30 june 2009 the outstanding borrowings balance through the 
with recourse debt factoring agreement was £748000 2008 nil there was no borrowing on the without recourse debt 
factoring agreement
counterparty credit risk
this is the risk that a counterparty will be unable to pay amounts in full when due credit risks are associated with deposits 
with banks and receivables from customers the credit risk on trade receivables is heightened by the fact that the group has 
a number of large customers from whom it receives significant proportions of its revenue although this represents a high 
level of customer concentration these customers are large blue chip companies who have developed a good relationship 
with morse over the years and generally pay in line with agreed payment terms the standing of these customers as with 
all customers is reviewed through credit checks analysis of payment history and credit approval levels one such large 
customer lehmans did suffer financial failure during the year see note 17 for further credit risk disclosures
the maximum credit risk exposure relating to financial assets is represented by the carrying value as at the balance sheet 
date
the credit risk on cash and cash equivalents is mitigated as the group places its cash with banks with high credit ratings 
assigned by international credit rating agencies 
the table below shows the rating and the cash balances held by our major counterparties at 30 june 2009
counterparty     rating 2009
      £’000
bank a     a  4725
bank b     aa  1701
bank c     a 2236
bank d     a 1671
bank e      a  1401
other      406
      12140
the above ratings are based on standard and poor’s rating indices 84 morse plc annual report 2009
notes to the financial statements 
for the year ended 30 june 2009 continued
morse plc annual report 2009
25 financial instruments continued
interest rate risk
the group’s cash and deposits are at floating interest rates borrowings and 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 risk profile is appropriate for the group at 30 june 2009 there were £748000 2008 nil of outstanding 
borrowings at fixed rates of interest and are associated with the customer specific funding in infrastructure services and 
technology in spain the interest incurred on the debt factoring arrangement of 767 is charged to the customer 
financial liabilities accrue interest on the following basis
 fixed  floating 2009 fixed floating 2008
 rate  rate total rate rate total
 £’000 £’000 £’000 £000 £’000 £’000
currency      
sterling     122 122
euro 748  748   
 748  748  122 122
currency and exchange rate risk management
the group’s principal exposure to exchange rate fluctuations arises on the translation of overseas net assets and results 
into sterling for accounting purposes the overseas investments are not hedged by foreign currency borrowing although 
the exposure created is regularly monitored but is very difficult to hedge because of the lack of crossborder cash flows 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 2009
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 group’s net foreign currency monetary assetsliabilities
major operations 30 june 2009  30 june 2008
 sterling euro us dollar sterling euro us dollar
 £’000 £’000 £’000 £’000 £’000 £’000
sterling  2886 1213  6198 496
euro 10  121 73  405
us dollars      
malaysian ringitts 4     
sensitivity analysis
in managing interest rate and currency risks the group aims to reduce the impact of short term fluctuations on the group’s 
earnings over the long term however permanent changes in foreign exchange and interest rates would have an impact on 
the consolidated results
a decreaseincrease of 1 in interest rates would not have a significant impact on the results for the period similarly a 
decreaseincrease of 10 in the currencies that the group has exposure to would not have a significant impact on the 
results for the period the main currency impact arises from the translation of the results of the infrastructure services and 
technology businesses in ireland and spain that are denominated in euro’s based on a 10 decreaseincrease in the euro 
exchange rate versus £ sterling the reported profit before tax of £14 million 2008 loss of £65 million would have changed 
by £130000 2008 £241000  morse plc annual report 2009 85 morse plc annual report 2009
26 called up share capital
   2009 2009 2008 2008
   number £’000 number £’000
authorised
1227p  10p ordinary shares   203748981 25000 203748981 25000
allotted and fully paid
1227p  10p ordinary shares   129867538 15935 128975745 15825
following the demerger of monitise in 2007 a share consolidation was approved by shareholders on 30 october 2007 at the 
agm and took effect at close of business that day every 1227 old morse shares that shareholders owned were replaced 
by 1000 new shares
the effect of the consolidation was to decrease the number of morse plc ordinary shares in issue by 227
see note 27 for the movements in allocated and fully paid share capital  86 morse plc annual report 2009
notes to the financial statements 
for the year ended 30 june 2009 continued
morse plc annual report 2009
27 statement of changes in equity
      foreign
  share share capital  currency  total    
 share capital to premium redemption  translation merger other retained own minority 
 capital be issued account reserve other reserve reserve reserves earnings shares interest total
 £’000 £’000 £’000 £’000 £’000 £’000 £’000 £’000 £’000 £’000 £’000 £’000
group            
at 1 july 2007 as  
previously reported 15692 348 70767 168 209 413 30904 30868 57024  229 60880
prior year adjustment  
see note 1         920   920
restated as at  
1 july 2007 15692 348 70767 168 209 413 30904 30868 57944  229 59960
loss for the year         4795   4795
purchase of own shares         435   435
issue of shares on  
acquisition of subsidiaries 130 2674     1119 1119    3923
exercise of share options 3  23      16   10
deferred tax on share option  
charge         171   171
gain on translation of  
foreign subsidiaries      1437  1437   35 1472
share options charge         346   346
dividends paid         6091   6091
dividend paid to minority  
interest           109 109
share of profit of minority  
interest           124 124
reported as at  
1 july 2008 15825 3022 70790 168 209 1024 32023 33424 69106  279 54234
loss for the year         12098   12098
purchase of own shares         490 984  494
issue of shares on  
acquisition of subsidiaries 110 446     336 336    
shares to be issued for  
deferred consideration  
now to be settled in cash  1250          1250
revaluation of contingent  
consideration  1326          1326
deferred tax on share option  
charge         250   250
gain on translation of foreign  
subsidiaries      1625  1625   7 1632
share option charge         1412   1412
dividends paid         1665   1665
share of profit of minority  
interest           10 10
release of merger reserve  
and other reserve     209  32359 32568 32568   
at 30 june 2009 15935  70790 168  2649  2817 48649 984 296 40205 morse plc annual report 2009 87 morse plc annual report 2009
27 statement of changes in equity continued
the share capital issued at nominal value in the year relates to payment of contingent consideration totalling £01 million 
891711 shares relating to previous acquisitions of xayce plc skillshub limited and dc financial consultants ltd
share capital to be issued
in the year ended 30 june 2009 share capital to be issued decreased by £30 million which is made up as follows
l   £25 million arising from the acquisition of xayce in september 2007 £035 million of shares issued in settlement of 
consideration due £125 million now to be payable in cash and £09 million as a reduction in the value of contingent 
consideration
l   £04 million revaluation of the remaining deferred consideration payable for the acquisition of skillshub limited and dc 
financial consultants ltd and
l   £01 million in relation to payment of deferred consideration relating to previous acquisitions skillshub limited and dc 
financial consultants ltd
the premium arising on the exercise of share options was £nil 2008 £23000 on the exercise of share options £nil 2008 
£10000 was received from employees
other reserves
the capital redemption reserve is used to maintain the company’s capital following the purchase and cancellation of its own 
shares
the other reserve related to share options and was set up in 1997 prior to the listing of the company this reserve is no 
longer required and has been transferred to retained earnings
the foreign currency translation reserve is used to record exchange differences arising from the translation of financial 
statements of foreign subsidiaries
the merger reserve has arisen on the various acquisitions made by the company over several years during the year the 
disposal of the investment management consulting business and the impairment of the parent company’s investment in 
its subsidiaries see note iv has triggered the transfer to the profit and loss reserve of a realised profit per section 944 of 
tech 108 following the transfer the merger reserve has been fully utilised and the balance at 30 june 2009 is nil
during the year shares held by the various employee benefit trusts as shown in note 5 have been consolidated into the 
results of the company these are classified as own shares in the statement of equity own shares were previously held 
within retained earnings but have been classified separately in the current year resulting in the movement between reserves 88 morse plc annual report 2009
notes to the financial statements 
for the year ended 30 june 2009 continued
morse plc annual report 2009
28 cash generated from operations
     year ended  year ended
     30 june  30 june
     2009 2008 
      restated
      note 1
    note £’000 £’000
cash flows from operating activities
loss for the period after tax     12091 4671
adjustments for
depreciation     1268 1126
amortisation      1512 1954
financial income     237 615
financial expenses     754 1015
profit on sale of discontinued operations    10 652 
impairment of goodwill and intangibles    3 13721 13400
loss on sale of property plant and equipment     629 89
share based payments     1100 346
taxation     2503 1995
 operating profit before changes in working capital and provisions    3501 14639
increasedecrease in inventories     1145 2899
decreaseincrease in trade and other receivables     23266 1051
decrease in trade and other payables     20536 9196
increase in provisions     1675 16
cash generated from operations     6761 7307
the depreciation charge for the year includes £877000 2008 £996000 reflected within continuing businesses and 
charged to operating profit before exceptional items
the amortisation charge for the year includes £1443000 2008 £1954000 reflected within continuing businesses and 
charged to operating profit before exceptional items
29 capital commitments
the group did not have any capital commitments or contingent liabilities as at 30 june 2009 and 30 june 2008 
30 operating lease commitments
   land and   land and 
   buildings other buildings other
   2009 2009 2008 2008
   £’000 £’000 £’000 £’000
annual noncancellable commitments
for operating leases which expire
within one year   2077 246 1302 263
between 2 and 5 years   1601 452 2660 206
after 5 years   1424  1788 
   5102 698 5750 469 morse plc annual report 2009 89 morse plc annual report 2009
31 acquisitions
there were no acquisitions in the year ended 30 june 2009
during the year 711236 shares were issued which settled £678875 of the deferred consideration in respect of the 
acquisition of xayce plc a company acquired in september 2007 morse and the vendors of xayce plc have negotiated 
settlement of the remaining deferred consideration at a value £125 million which will now be settled in cash over the period 
to 31 july 2011 see note 21
in the year ended 30 june 2008
in september 2007 the group acquired 100 of the issued share capital of xayce plc a business change and 
transformation company the transaction was to be satisfied by a net consideration of £6400000 over a period of three 
years part of which was deferred consideration of £25 million settled by the issue of new ordinary shares
      xayce fair 
      value 
      £’000
property plant and equipment      24
current assets      1725
current liabilities      481
net assets      1268
net assets acquired 100      1268
goodwill      3697
deferred tax liability      402
intangibles      1837
consideration      6400
consideration satisfied by
cash      2350
share capital issued      1298
share capital to be issued      2500
cost of acquisition      252
      6400
the value of the assets and liabilities has been taken from the management accounts of xayce plc as at 31 august 2007 
intangibles and the associated deferred tax liability represent fair value adjustments on acquisition there are no further fair 
value adjustments made to the value of net assets acquired the cash balance acquired was £617000
xayce plc contributed net profit of £608000 to the consolidated net profit for the year if the acquisition had occurred on  
1 july 2007 group revenue and net profit would not have changed materially
the group also acquired dc financial consultants ltd in april 2008 an investment management consulting company for a 
total consideration of £237000 90 morse plc annual report 2009
notes to the financial statements 
for the year ended 30 june 2009 continued
morse plc annual report 2009
32 related party transactions
during the year the group had a 51 shareholding in cstim australia and a 60 shareholding in cstim france all 
transactions with these companies and other group companies are in the normal course of trading and include recharges of 
centrally negotiated costs like insurance financing etc see note 34
morse group limited has borne the costs of the directors of morse plc during the year ended 30 june 2009 and 30 june 
2008
compensation of key management personnel is as follows
     2009 2008
     £’000 £’000
short term employee benefits      1767 1482
postemployment benefits      46 94
termination benefits      81 
share based payments     729 285
     2623 1861
key management personnel are executive board directors and members of the morse executive team the number of 
employees classified as key management personnel was 9 in the year 2008 7 employees
33 analysis of changes in net funds
  at 1 july  exchange rate at 30 june
  2008 cash flows fluctuations 2009
  £’000 £’000 £’000 £’000
cash at bank  11078 1533 143 12754
loan notes  122 122  
factoring finance   748  748
net funds  10956 907 143 12006
34 post balance sheet events
in september 2009 the group disposed of its majority stakes in investment management consulting businesses in australia 
and france to the respective management teams
the majority stake held in the australian business was sold to management on 3 september 2009 the majority stake held in 
the french business has been sold subject to shareholder approval to the management of that business a circular will be 
sent to shareholders in due course relating to the french business which is classified as a related party transaction morse plc annual report 2009 91 morse plc annual report 2009
company balance sheet 
as at 30 june 2009
     company company 
     2009 2008
    note £’000 £’000
fixed assets
investments    iv 71712 125029
     71712 125029
current assets
debtors
    v 168 20409
cash at bank and in hand      126
total current assets     168 20535
current liabilities
interest bearing loans and other borrowings    vi 1916 122
creditors – amounts falling due within on year    vii 30700 15548
deferred consideration    xi 524 
provisions    xii 230 
total current liabilities     33370 15670
net current assetsliabilities     33202 4865
noncurrent liabilities
deferred consideration    xi 484 
   
total net assets     38026 129894
    
capital and reserves
called up share capital    viii 15935 15825
share capital to be issued    x  3022
share premium account     x 70790 70790
other reserves    x 168 32391
own shares    x 984 
profit and loss account    x 47883 7866
total equity shareholders’ funds    ix 38026 129894
the parent company financial statements on pages 91 to 99 were approved by the board of directors on 9 september 2009 
and were signed on its behalf by
guy millward 
group finance director 
mike phillips 
chief executive officer
9 september 2009 92 morse plc annual report 2009
i accounting policies
accounting convention
the financial statements are prepared under the historical cost convention and in accordance with applicable uk accounting 
standards the company has elected to prepare its parent company financial statements in accordance with uk gaap  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 £88110000 2008 profit of £3940000
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 impairment charges are recorded if events or changes in 
circumstances indicate that the carrying value may not be recoverable and are charged to the income statement
impairment
the group has carried out an impairment review of the value of investments held in the company 
the recoverable amount of investments is the greater of their net realisable value and value in use in assessing value in use 
the estimated future cash flows are discounted to their present value using a posttax discount rate that reflects current 
market assessments of the time value of money and the risks specific to the cash generating units 
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 long 
term 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 esos 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 esos 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 profit for the year and takes into account taxation deferred because of timing 
differences between the treatment of certain items for taxation and accounting purposes
notes to the company financial statements 
for the year ended 30 june 2009
morse plc annual report 2009 93 morse plc annual report 2009
i accounting policies continued
financial instruments
the company has taken advantage of the exemption in paragraph 2db of frs 29 financial instruments disclosure and 
has not disclosed information required by that standard as the group’s consolidated financial statements in which the 
company is included provide equivalent disclosures for the group under ifrs 7 financial instruments disclosures
share based compensation
the share option programme allows group employees to acquire shares of the ultimate parent company these awards are 
granted by the ultimate parent options granted under the group’s share option schemes are equity settled the expense 
arising on a grant by the parent company of options over its equity instruments to the employees of subsidiary undertakings 
in the group is treated as an expense of the company 
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 market and nonmarket based options granted is measured using a blackscholes model 
taking into account the terms and conditions upon which the options were granted charges to the income statement 
are reviewed each year to take account of service and nonmarket conditions the amount recognised as an expense is 
adjusted to reflect the actual number of share options that vest
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
see note 11 of the consolidated financial statements 
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
     2009 2008 
     number number
average monthly number of persons employed including directors by the company  
during the year
management and administration     6 7
information regarding directors is included in note 5
morse plc annual report 2009 94 morse plc annual report 2009 morse plc annual report 2009
iii information regarding employees directors and their interests continued
c staff costs including directors
     2009 2008 
     £’000 £’000
wages and salaries      
all staff costs during the year have been borne by morse group limited the company has no pension costs information 
regarding directors is included in note 5 information on share options is included in note 5 d of the consolidated financial 
statements
iv fixed asset investments
cost and net book amount
interests in subsidiary undertakings
      £’000
cost at 1 july 2007      147021
additions       6637
at 30 june 2008      153658
additions in the year      49310
share based payments      617
reduction in investment cost      3050
cost at 30 june 2009      200535
provision at 1 july 2007      
impairment      28629
at 30 june 2008      28629
provision against additions in the year      4783
impairment of investments in the year      95411
provision at 30 june 2009      128823
total net book value of investments at 30 june 2009     71712
total net book value of investments at 30 june 2008      125029
the additions in the year ended 30 june 2009 represent the investment in morse overseas holdings ltd of £49308000 
and the investment in dc financial consultants ltd of £2000 the investment in morse overseas holdings ltd resulted 
from the conversion of the intercompany balance at 30 june 2009 into investments the intercompany balance converted 
was made up of a gross amount of £49308000 and a provision of £4783000 accordingly when the investment was 
recognised in the accounts of the company a provision of £4783000 was also booked 
share based payments reflect the costs of share based payments which have been charged to the business units the cost 
is allocated on the basis of the business unit which gets the benefit of the services of the employee for which share costs are 
incurred by the company
the reductions to investment cost reflect the repayment of capital of £2000000 from asmmc limited formerly cstim 
limited which has been treated as a deduction in the cost of the investment  £888000 due to changes in deferred 
consideration on the acquisition of xayce limited formerly xayce plc and £172000 due to changes in the deferred 
consideration in dc financial consulting limited
a detailed impairment review was carried out at the end of the year to assess the carrying value of the investments held 
by the company in the year ended 30 june 2009 the provision for impairment increased by £100194000 and represents 
the write down of the investment in the infrastructure services  technology uk business unit infrastructure services  
technology europe business units business applications services business unit investment management consulting 
business unit and the capital contributions made during the year
notes to the company financial statements 
for the year ended 30 june 2009 continued 95 morse plc annual report 2009 morse plc annual report 2009
iv fixed asset investments continued
in the year ended 30 june 2008 the additions in investments represent the investment in xayce plc of £6400000 and the 
investment in dc financial consultants ltd of £237000
in the year ended 30 june 2008 the impairment charge of £28629000 represented the write down of the investment in the 
business applications services and infrastructure services  technology uk business units
impairment testing of investment carrying values
in the light of the global economic situation the decision to cease the operations of the investment management consulting 
division and the initiation of a capital reduction process the group has carried out an impairment review on the value of 
investments held in the company at 30 june 2009 the recoverable amounts of these investments have been determined 
by using a value in use valuation the value in use calculations are done on a similar basis to that used in the impairment of 
goodwill calculation and are therefore subject to the same estimates by management
the group has based these calculations on estimated cashflows over 10 years rather than 5 years plus a value to perpetuity 
as the current economic environment makes visibility of cash flows very problematic into perpetuity the growth rates 
are based on management estimates of the industry growth rates for the activities being undertaken by each company 
represented by the investment averaging 225 per annum for the ist businesses and 4 for business application 
services the discount rate applied to cash flow projections is based on management assessment of the weighted average 
cost of capital posttax of 936 13 pretax and uses data from external sources management estimates the discount 
rate reflects the current market assessment of the time value of money and risks specific to the business
based on the above assumptions an impairment of £831 million in addition to the impairment of the imc business is 
generated 
the carrying value of the investment in the investment management consulting business which is classified under 
discontinued is derived from the net asset balance which at the balance sheet date will remain within morse and will not be 
included in the assets disposed the impairment charge in the year in respect of the investment management consulting 
business unit is £123 million 
after the impairment the carrying value of investments in the company’s balance sheet is £717 million the carrying value 
of goodwill in the group balance sheet is £286 million note 13 provides a summary of the carrying amount of goodwill 
by cash generating unit the majority of this goodwill arose on the acquisitions of diagonal plc now part of the business 
applications services business unit and cstim ltd part of the investment management consulting business unit 
the infrastructure services and technology ist businesses did not have a large goodwill value relative to investment value 
as a large part of the original business was not acquired a part of ist uk was the original business morse started up had 
amortised goodwill prior to the introduction of ifrs in 2006 part of ist uk ist spain and ist ireland or has had inter
company loans capitalised ist spain and ist ireland into investment values on the company’s balance sheet that do not 
impact goodwill 96 morse plc annual report 2009
notes to the company financial statements 
for the year ended 30 june 2009 continued
morse plc annual report 2009
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
asmmc limited formally 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 consulting inc sale of it solutions and 
 professional services 100 usa
morse consulting sdn bhd sale of it solutions and 
 professional services 100 malaysia
xayce limited formerly xayce plc sale of it solutions and 
 professional services 100 england and wales
strand it recruitment limited it recruitment agency 100 england and wales
morse limited sale of it solutions and 
 professional services 100 hong kong
morse overseas holdings limited investment holding 100 england and wales
mft computer holdings limited investment holding 100 england and wales
diagonal limited investment holding 100 england and wales
 indirectly held through subsidiary companies
v debtors
     2009 2008 
     £’000 £’000
amounts due from group undertakings     97 20395
other receivables     2 14
corporation tax     69 
     168 20409 97 morse plc annual report 2009 morse plc annual report 2009
vi interest bearing loans and borrowings
     2009 2008 
     £’000 £’000
bank overdraft     1916 
loan notes      122
     1916 122
at 30 june 2009 the company had a credit balance of £19m in its bank accounts this balance forms part of the group 
pooling balances with royal bank of scotland and so is netted off other uk cash balances held in other group entities so no 
interest is payable
at 30 june 2008 the company had loan notes outstanding totalling £122000 these were paid in full in the year ended 30 
june 2009
vii creditors amounts falling due within one year
     2009 2008 
     £’000 £’000
trade payables     7 20
amounts due to group undertakings     30675 15275
corporation tax      187
accruals and deferred income     18 66
     30700 15548
viii called up share capital
   2009 2009 2008 2008 
   number £’000 number 2008
authorised
1227p  10p ordinary shares   203748981 25000 203748981 25000
allotted and fully paid
1227p  10p ordinary shares   129867538 15935 128975745 15825
following the demerger of monitise in 2007 a share consolidation was approved by shareholders on 30 october 2007 at the 
agm and took effect at close of business that day every 1227 old morse shares that shareholders owned were replaced 
by 1000 new shares
the effect of the consolidation was to decrease the number of morse plc ordinary shares in issue by 227
see note ix for the movements in allocated and fully paid share capital 98 morse plc annual report 2009
notes to the company financial statements 
for the year ended 30 june 2009 continued
ix reconciliation of movements in equity shareholders’ funds
     2009 2008 
     £’000 £’000
lossprofit for the year     88110 3940
impairment charge utilised against the merger reserve     32359 
transfer of other reserve     200 
dividends     1665 6091
share based payment     1412 347
transfer of ebt shares to own shares reserve     55 
retained loss for the year     55749 1804
issue of share capital      446 1275
movement in share capital to be issued     3022 2674
movement in merger reserve and other reserve     32559 
movement in own shares reserve     984 
net reductionincrease to equity shareholders’ funds     91868 2145
opening equity shareholders’ funds      129894 127749
closing equity shareholders’ funds     38026 129894
x statement of changes in equity
  share 
  capital share capital   total  
 share to be premium redemption  merger other retained own 
 capital issued account reserve other reserve reserves earnings shares total 
 £’000  £’000 £’000 £’000 £’000 £’000 £’000 £’000 £’000 £’000
company
at 1 july 2007 15692 348 70767 168 200 30904 31272 9670  127749
profit for the year        3940  3940
exercise of share options 3  23       26
share options charge        347  347
issue of shares on  
acquisition of subsidiaries 130 2674    1119 1119   3923
dividends paid        6091  6091
at 1 july 2008 15825 3022 70790 168 200 32023 32391 7866  129894
loss for the year        88110  88110
purchase of own shares        55 984 929
share options charge        1412  1412
issue of shares relating  
to acquisition of  
subsidiaries 110 446    336 336   
shares to be issued for  
deferred consideration  
now to be settled in cash  1250        1250
revaluation of contingent  
consideration  1326        1326
dividends paid        1665  1665
release of merger and  
other reserve     200 32359 32559 32559  
at 30 june 2009 15935  70790 168   168 47883 984 38026
the share capital issued at nominal value in the year of £01 million 891711 shares relates to payment of contingent 
consideration relating to the previous acquisitions of xayce plc skillshub limited and dc financial consultants ltd
morse plc annual report 2009 99 morse plc annual report 2009
x statement of changes in equity continued
in the year ended 30 june 2009 share capital to be issued decreased by £30 million which is made up as follows
l   £25 million arising from the acquisition of xayce in september 2007 £035 million of shares issued in settlement of 
consideration due £125 million now to be payable in cash and £09 million as a reduction in the value of contingent 
consideration‘
l   £04 million revaluation of the remaining deferred consideration payable for the acquisition of skillshub limited and dc 
financial consultants ltd and
l   £01 million in relation to payment of deferred consideration relating to previous acquisitions of skillshub limited and 
dc financial consultants ltd
in the year ended 30 june 2008 the share capital issued at nominal value in the year relates to the exercise of share options 
35535 shares £3000 and to the acquisition of xayce plc 1309586 shares £130000 share capital to be issued 
increased by £2674000 due to the deferred consideration on the acquisition of xayce plc of £2500000 and dc financial 
consultants ltd of £174000 share capital to be issued of £348000 362760 shares as at 1 july 2007 related to the 
deferred consideration on the acquisition of skillshub limited
the premium arising on the exercise of share options was £nil 2008 £23000 on the exercise of share options £nil 2008 
£10000 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
the other reserve related to share options and was set up in 1997 prior to the listing of the company this reserve is no 
longer required and has been transferred to retained earnings
during the year the carrying value of investments held in the company’s balance sheet was substantially impaired see note 
iv part of the impairment was transferred from the profit and loss account to the merger reserve a reserve which has arisen 
on the acquisitions made by the company over the years following the allocation the merger reserve has been fully utilised 
and the balance at 30 june 2009 is nil
the increase in the merger reserve in the year ended 30 june 2008 of £1119000 was the share premium arising on the 
1309586 shares issued as consideration on acquisition of xayce plc which has been recognised in accordance with s131 
of companies act 1985 
during the year shares held by the various employee benefit trusts as shown in note 5 have been consolidated into the 
results of the company these are classified as own shares in the statement of equity own shares were previously held 
within retained earnings but have been classified separately in the current year resulting in the movement between reserves
xi deferred consideration
see note 21 of the consolidated financial statements
xii provisions
the provisions balance represents legal and professional costs relating to restructuring and the capital reduction process
morse plc annual report 2009 100
printed on 100 recycled paper
© morse plc 2009 morse and the morse logo are trademarks all other trademarks acknowledged
financial advisers and stockbrokers
investec investment banking
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independent auditors
kpmg audit plc
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principal bankers
royal bank of scotland plc
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morse plc
annual report 2009
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Summary:
 morse plc annual report 2009 3 morse plc annual report 2009
chief executive officer’s statement
this has been a difficult year for morse and one of considerable change the restructuring of the business that has been 
undertaken was necessary in order to align the cost base of the business with the anticipated revenues the result is that the 
underlying quality of the earnings in the business has improved when compared to the year ended 30 june 2008
we exited the year with business units refocused to deliver improved cash generative profitability each of the business units 
now has a clearly defined set of propositions to offer to existing and future customers and is focused on delivering those 
propositions
trading performance for the business units prior to exceptional items for the year ended 30 june 2009 is shown below
  operating 
  profitloss before 
 revenue  exceptional items margin  
  year year year year year year 
 ended ended ended ended ended ended 
 june june june june june june 
 2009 2008 2009 2008 2009 2008 
 £m £m £m £m  
infrastructure services  technology 
• uk  1142 1314 72 64 63 49
• europe spain  ireland 574 578 02 29 03 50
 
business applications services  403 461 24 03 60 07
 
continuing operations  2119 2353 98 96 46 41
group and central costs    56 51  
adjusted ebit   42 45 20 19
trading balance releases    41 42  
 
continuing operations 2119 2353 83 87 39 37
discontinued operations       
• investment management consulting  104 180 01 24 01 133
total  2223 2533 84 111 38 44
the business unit revenues are derived from resale of third party hardware  software product and maintenance 
maintenance and support where the business units have ongoing obligations and includes sale of morse’s wisdom software 
application and services gross profit margins on revenues from continuing operations in the year ended 30 june 2009 
were 208 2008 221 gross profit margins in the second half of the year were slightly better than the first half of 
the year with the decline from 2008 being driven largely by the impact of the global economic slowdown and change in 
customer mix
as the management team is focused on delivering cash generative operating profit a key performance indicator is adjusted 
ebitda in the year ended 30 june 2009 group adjusted ebitda was £76 million 2008 £78 million
the group is committed to improving the operational efficiency of the business and has undertaken a restructuring 
programme during the year intended to reduce the overheads of the group without impacting upon sales and delivery 
capability the total cost of restructuring in the current financial year was £96 million of which £86 million was incurred 
on continuing operations as a result of this restructuring and the disposal of the uk and jersey investment management 
consulting “imc” business formerly known as cstim the total number of group employees reduced from 1420 at 30 
june 2008 to 1010 at 30 june 2009 of which 973 were employed in the continuing operations 2008 1304 
the adjusted ebit of £42 million 2008 £45 million reflects the strong performance of the group in the final quarter of the 
year as after the first nine months of the year the adjusted ebit was only £06 million 2008 £19 million infrastructure 
services  technology represented 81 of reported revenues from continuing operations 2008 80 and the delivery of 
these revenues is weighted towards the end of each calendar quarter this is in line with the revenue profile for the product 
partners for those business units traditionally our second and fourth financial quarters have a stronger financial performance  4 morse plc annual report 2009
chief executive officer’s statement continued
morse plc annual report 2009
than our first and third financial quarters this was reflected in the current year with adjusted losses before interest and 
tax being incurred in the first and third quarters whilst in the second and fourth quarters continuing operations delivered 
adjusted ebit as we progress in the new financial year a key performance indicator will be the trailing 12 month financial 
performance which will provide an indication of the improvement in operating performance of the business
the breakdown of the revenues of the continuing operations and a reconciliation of adjusted ebitda and adjusted ebit to 
operating profit before exceptional items is shown below
     2009 2008 
     £m £m
revenues from continuing operations
resale third party hardware software and maintenance     1051 1207
maintenance and support including wisdom     291 262
services     777 884
     2119 2353
 
adjusted ebitda     76 78
depreciation and amortisation     23 30
share based payments     11 03
adjusted ebit     42 45
trading balance releases     41 42
operating profit before exceptional items     83 87
 
group and central costs have increased to £56 million 2008 £51 million however the underlying cash costs have 
reduced significantly as the breakdown below shows
     2009 2008 
     £m £m
group and central costs
cash costs     29 36
depreciation and amortisation     13 19
share based payments     11 03
subtotal     53 58
forex lossgain     03 07
     56 51
operational and financial review
infrastructure services  technology – uk
this is the largest business unit in the group and generated revenues of £1142 million 2008 £1314 million and an 
operating profit before exceptional items of £72 million 2008 £64 million this improved operating margin percentage of 
63 2008 49 was achieved despite the impact of the bad debt provision of £05 million arising from lehman brothers 
filing for chapter 11 on 15 september 2008 and the £10 million of losses recognised on the south tyneside and gateshead 
“stag” building schools for the future “bsf” project the second half of the year saw an improved operating margin on 
revenues that were marginally down on the first half of the year
 infrastructure services  technology uk consists of three main lines of business
l   technology – helping our clients with the sourcing management and support of their it estates utilising a technology 
lifecycle management approach
l   infrastructure services – supporting our clients with technology transformation project implementation and operations  
resourcing services that help them optimise their data centres and
l    providing the ict expertise technology and infrastructure services for stag bsf morse plc annual report 2009 5 morse plc annual report 2009
the technology business had revenues of £783 million 2008 £878 million with the second half of the year maintained 
at the same level as the first half we have maintained our existing customer relationships whilst applying additional focus 
towards new customer acquisition and the development of higher value propositions we will continue to develop our 
operational processes and level of proposition focus during the current financial year
the infrastructure services business had revenues of £342 million 2008 £411 million reflecting the impact of a number 
of major programmes of work that came to completion in the second half of the year ended 30 june 2008 together with 
a tighter market for discretionary services spend and the impact of lehmans revenues in the second half of the year 
ended 30 june 2009 were in line with the first half of that year the operating structure of the services business is being re
evaluated to ensure continued flexibility and business agility we are further enhancing our technology transformation skills 
and higherend data centre capabilities aimed at helping our clients simplify and optimise their environments
the stag bsf project is all that remains from the morse in education business revenues in the year were £17 million 
2008 £25 million at the end of the first half of the year the board concluded that the significant time period over which 
the stag bsf contract will be implemented and the difficulty of winning further projects was not the best use of morse’s 
resources consequently in january 2009 the management and sales team of morse in education was made redundant and 
the stag bsf project is now being managed as a stand alone project following a review of the progress on the contract in 
the third quarter of the financial year operating profit of £05 million that had been taken in the year ended 30 june 2008 was 
reversed this contributed to the loss recognised on the contract during this year of £10 million good progress has been 
made on the contract since then and contract documentation has been signed for the next schools in the programme
in infrastructure services  technology we continue to have excellent ongoing partnerships with our key technology vendors 
– hp  ibm and sun as well as relationships with key software providers such as symantec and oracle
our focus for the business unit includes
l    maintaining our technology business based on the value of our technology lifecycle management approach
l   continuing to improve our systems and service delivery processes to offer a cost effective but superior level of client 
engagement and
l   developing and delivering data centre optimisation operations and resourcing services to provide our clients with the it 
simplification and projectbased return on investment they require
the market for infrastructure services and technology will remain very focused on business critical it projects where a high 
degree of flexibility and shorterterm success demonstrated by return on investment payback are essential we believe that 
our structural and cost changes over the year enables us to be well positioned to support this requirement for our existing 
customers as well as extending our customer and service reach in the future
infrastructure services  technology europe spain and ireland
for spain and ireland in the year ended 30 june 2009 revenue was £574 million 2008 £578 million with an operating 
profit before exceptional items of £02 million 2008 £29 million the operating profit before exceptional items for the full 
year reverses the losses that were suffered in the first nine months of the year this improvement in financial performance is 
predominantly due to improved performance in spain following the restructuring programme undertaken in january 2009 
the reported results benefited from the strengthening of the euro against sterling and under constant currency revenues 
declined by 145
both our spanish and irish businesses have been hit hard by the weakness in their respective economies
in spain following the difficult year ended 30 june 2008 action was taken to reduce costs in july 2008 during the first 
half of the current financial year the business maintained revenues but suffered margin decline due to a change in mix of 
customers consequently a further review of the structure of the business was undertaken in january 2009 and as a result 
the overhead cost base was reduced significantly as part of this restructuring the business reengaged with its key vendor 
partner ibm and the benefits of this relationship are starting to be seen
it is expected that the economic environment in spain will remain challenging in the current calendar year but with a leaner 
overhead base and a clearer gotomarket approach the business is well positioned to take advantage of any economic 
upturn 6 morse plc annual report 2009
chief executive officer’s statement continued
morse plc annual report 2009
in ireland morse is a leading it infrastructure services and technology company and holds the highest level of accreditation 
with all of the major infrastructure and software vendors together with executive level relationships in many of ireland’s blue 
chip companies it continues to build a reputation as the technology partner of choice and is consolidating this position by 
working with its key vendors in providing coordinated propositions to the market
in the year to 30 june 2009 the business has suffered from the economic difficulties in ireland and experienced 
significant revenue decline this made the business lossmaking in the first quarter of the year however swift action by 
the management team to restructure the business led to the business being marginally profitable for the full year the 
management team remains committed to delivering the optimal result in difficult times such as these
business applications services
business applications services is organised around three separate businesses
l   diagonal – sap implementation and support services
l   portals and collaboration including wisdom and
l   xayce – business change and transformation consultancy
diagonal operates in three main territories the uk asia pacific and the usa whilst the other businesses are uk based
a number of new key proposition areas have been identified and the business will be simplified to focus the business 
development and sales activities on our microsoft sap and business change  transformation capabilities in the uk usa 
and asia pacific
stronger governance processes and procedures for both sales and delivery management have been implemented across 
the business resulting in stronger sales qualification and improved project delivery a new resourcing framework has been 
implemented allowing better deployment and management of our skills and resources providing improved utilisation
in the year ended 30 june 2009 revenue was £403 million 2008 £461 million operating profit before exceptional items 
was £24 million 2008 £03 million revenues in the six months ended 30 june 2009 were lower than the six months to 31 
december 2008 but generated a higher operating margin this trend is anticipated to continue in the current financial year 
diagonal – sap implementation and support services
revenue for the year ended 30 june 2009 was £284 million 2008 £344 million this line of business has suffered 
historically from problems with a number of fixed price projects allied to poor planning and execution which have 
significantly impacted the profit performance of the business in the year ended june 2008 a provision of £07 million was 
made for these problem projects and a bad debt provision of £03 million was also made during the period to december 
2008 one of these problem projects was resolved and the bad debt provision was utilised in the second half of the year a 
second problem contract was resolved satisfactorily and outstanding amounts due on the third problem contract are fully 
provided
the issue on fixed price projects has led to a more robust project management process and an increased focus on contract 
profitability reviews
sap integration with sky mobility and blackberry enabled solid growth in the usa in the first half of the year but proved 
more difficult in the second half of the year in asia pacific a new client implementation was followed by an ongoing support 
contract
diagonal has developed strong propositions targeting the construction and facilities management industries in addition to 
strong experience in the chemicals and manufacturing industries and the ability to deliver application support using both 
onshore and offshore consultants is also proving to be of significant value to clients
portals and collaboration
the portals and collaboration business is focused on a set of core propositions information portals and information 
collaboration solutions based upon microsoft and vignette technology platforms electronic document and records 
management edrm solutions based upon our own software product wisdom and the associated services and annuity 
based support revenue that is an integral part of such propositions this business had revenues of £88 million in the period 
2008 £88 million  morse plc annual report 2009 7 morse plc annual report 2009
xayce – business change and transformation consultancy
xayce specialises in the financial services and local government markets and clients include leading banks insurance 
companies and several large local authorities xayce contributed £31 million in revenue in the year to 30 june 2009 2008 
£29 million from date of acquisition in september 2007
disposal of investment management consulting 
on 9 february 2009 the company announced the exchange of contracts on the disposal of the business and assets of the 
uk and jersey imc business formerly known as cstim to navigant consulting europe limited “navigant consulting”
in the year to 30 june 2008 the cstim business generated an operating profit of £16 million on revenue of £93 million 
the business has reduced in size considerably since then in the six months ended 31 december 2008 revenues were £32 
million and there was a small operating loss of £44000 
the initial consideration was £13 million which was paid in cash at completion the financial performance of the business 
in the year to 30 june 2009 meant that no deferred consideration was payable the gross assets transferred were £13000 
and the book value of net liabilities transferred was £042 million morse retained and was responsible for the collection of 
the outstanding trade receivables all of which were collected the proceeds of the sale were used for general corporate 
purposes
cstim formed the largest part of morse’s imc business unit small imc operations in south africa and luxembourg have 
been closed down and a flexible resourcing business in the uk called skillshub has been sold to management for a nominal 
sum the remaining parts of the imc business held at the year end were operated through majority owned subsidiary 
undertakings in france and australia on 4 september morse announced the sale of its stake in the australian business 
to management the sale proceeds were a 50000 and an intercompany loan and interest of a 280000 was repaid to 
morse terms have been agreed with the management of the french subsidiary to sell morse’s stake to them for e150000 
this is a related party transaction which requires shareholder approval and a circular will be sent to shareholders in due 
course consequently the entire imc business unit is considered to be discontinued for financial reporting purposes
as a result of the sale disposals and closure there is impairment to goodwill and intangibles on morse’s consolidated 
balance sheet relating to the imc business unit of £137 million
risks and risk management
following the changes in board membership over the past year risk management processes have been reassessed to 
ensure a framework of prudent and effective controls is in place to assess effectively and manage risk within the group the 
business units in the group have primary responsibility for managing risk on a daytoday basis and regular reporting to the 
board of risk registers and material contracts is now in place all identified risks are quantified prioritised and appropriate 
mitigations developed for each for the uk businesses we have established a separate management board morse 
executive board and risk is a standing item on the agenda for its meetings risk management of the spanish and irish 
businesses is reviewed at the monthly performance reviews for those businesses the board regularly reviews the cost and 
benefits of the risk and control activity undertaken and comprehensive business insurances are maintained the principal 
risks and uncertainties associated with the group’s activities are discussed below
strategic risks
the continuation of the current recession may further reduce demand for the group’s services and therefore reduce revenue 
and profits significant restructuring and cost reductions have been carried out during the year and while this action should 
benefit future profits further reductions in revenue may offset the cost reductions already achieved
certain parts of the group’s businesses rely on a small number of strategic customers for a significant part of their revenue 
and profits the businesses seek to increase the number of customers to reduce this reliance however the loss of a 
strategic customer would impact the profitability of the business in the short term
key partner relationships are required in order to undertake the sale of their products and services the loss of a key partner 
relationship would lead to a loss of revenue and profit the business units seek to maintain and improve their partner 
relationships in order to mitigate this risk 8 morse plc annual report 2009
chief executive officer’s statement continued
morse plc annual report 2009
the credit crisis has led to reduced availability of funding as well as tighter credit terms and this may lead to future reductions 
in credit available to run the group’s operations the group is not currently using its committed banking facilities of £75 
million and has increased focus on cash management in the last year to reduce the impact of this risk
increased competition in an already crowded market place may have a negative impact on the group’s position whilst 
efforts to improve the group’s delivery and range of services will help to mitigate this risk
operational risks
the group’s revenue and profit projections depend heavily upon the delivery of large contracts to customers in the 
past issues with delivery have led to significant project overruns and unbudgeted costs which have reduced the group’s 
profitability during the year management and internal processes have been strengthened in this area in order to minimise 
this risk for the future
the management of the group’s businesses and the delivery of its contracts rely heavily on staff and loss of key staff is a 
significant risk to the businesses remuneration and people management processes are in place to minimise attrition and 
the group’s rate of attrition is within industry averages
seasonality of the group’s revenue and profits does not change much from yeartoyear but profits tend to be weighted 
towards the end of each six month period and there is a greater weighting towards the second half of the financial year due 
to customer buying patterns
the group’s businesses are exposed to the risk to business continuity posed by a pandemic including the current influenza 
virus terrorist incident or other external event during the year our office in madrid was damaged due to a terrorist bomb 
although it was not the target whilst such events are outside of the group’s control measures are taken to mitigate these 
risks wherever possible the group has a detailed business continuity plan which was reviewed during the year to cover a 
wide range of risks such as it systems failure and possible pandemics
financial risks
in the current recession increased credit risk remains a potential issue and during the year lehman brothers a significant 
customer suffered financial failure the group’s increased focus on cash management in the year has helped to improve 
collection times from customers and this focus will continue
the main external factors affecting financial measures are discussed above and to these can be added changes in 
assumptions underlying the carrying value of certain group assets these assumptions are discussed in note 13 and include 
discount rates longterm growth rates and timing and quantum of future expenditure the revision of any of which could lead 
to an impairment in the carrying value of certain assets in the group which would reduce profits and distributable reserves
other financial items
dividends and capital reduction process
the carrying value of the investment in cstim limited the company acquired in april 2004 in the company balance sheet 
of morse plc as at 30 june 2008 was £16 million this was part of total fixed asset investments of £125 million held on the 
balance sheet of morse plc at that date
at the time of the interim results the board made a write down of £138 million in morse plc’s company balance sheet in 
respect of this investment as a consequence of this write down morse plc had negative distributable reserves and was 
unable to declare an interim dividend in light of this and the current economic environment the board has undertaken a 
review of the remaining fixed asset investments and the recoverability of inter company receivables owed to morse plc the 
impact of this review is to reduce the net book value of fixed assets investments to £717 million and results in negative 
distributable reserves on the morse plc company balance sheet of £479 million and net assets of £380 million
the board has reviewed the available options for the company in order to enable dividends to be declared out of future 
profits the board has concluded that subject to shareholders’ approval a court approved capital reduction process 
should be undertaken in order to use part of the share premium account standing at £708 million at 30 june 2009 to 
extinguish the negative distributable reserves the board believes that this is in the best interests of shareholders details 
of the capital reduction process will be included in the notice of annual general meeting scheduled for 22 october 2009  morse plc annual report 2009 9 morse plc annual report 2009
together with the resolutions to be proposed to shareholders if shareholders approve the resolution then it is anticipated that 
the court process will be completed in november 2009 and that the first dividend that could be declared out of future profits 
would be a final dividend for the year ending 30 june 2010 
consequently no final dividend will be paid for the last financial year 2008 130p per share giving a total dividend for the 
year of nil p per ordinary share 2008 26p per share
cash and banking facilities
morse has historically operated a policy of seeking to maximise the reported cash balance at financial reporting period ends 
to ensure an appropriate high level of focus on cash and a more conservative view on what is used to manage and report 
on the business the new executive management team publishes a chart showing the weekly balances as shown on bank 
statements for the period from 1 july 2006 this chart is published again today and is available at wwwmorsecom
since 30 september 2008 the relationship between cash on the balance sheet and cash per bank statements has reverted 
to a more normal position where the bank position shows a higher cash balance than the balance sheet position net cash
debt position is reduced further by the customer specific funding arrangements entered into by the group
the principal banking facilities of the group are with the royal bank of scotland plc these facilities consist of a committed 
multi currency revolving credit facility “rcf” and a multicurrency overdraft facility the rcf has covenants that relate to
l   gearing gross borrowings to shareholder funds
l   interest cover pbit to borrowing costs and
l   leverage gross borrowings to ebitda
we have now extended the period of the committed rcf from 28 march 2010 to 31 march 2011 and based on the 
improved cash position within the group and internal cash flow projections we have reduced the rcf to £65 million and the 
overdraft to £1 million the board believes that these facilities are sufficient for the group requirements for the foreseeable 
future
deferred consideration
xayce was acquired in september 2007 and had an earnout period to 30 june 2008 which was successfully completed 
as a result deferred consideration of £25 million was payable to be settled by the issue of new ordinary shares at an issue 
price of 9545 pence 711236 shares were issued in july 2008 which settled £678875 of deferred consideration morse 
and the vendors have negotiated settlement of the remaining deferred consideration at a value £125 million which will now 
be settled in cash over the period to 31 july 2011
trading balance releases
trading balances are a normal part of our business and have built up significantly over a period of time these relate to 
unallocated cash payments from customers credit notes issued and not claimed supplier credit balances that may not be 
enforced and goods received not yet invoiced the nature of the uncertainty surrounding them is that while they represent 
present obligations it is uncertain whether the counterparties will enforce settlement however the changing shape of the 
business particularly the reduced volume and level of infrastructure business a reduction of approximately £300 million per 
annum since its peak in 2002 means that trading balances are no longer being created at the same level as they are being 
released
trading balances are reviewed on a regular basis if not used in the ordinary course of trade consistent with established 
operating policies they are released in line with our accounting policy when a liability is judged to no longer exist
given the lower volumes and improved controls and processes implemented over the last three years the level of short term 
trading balances is reducing
at 30 june 2008 there were £102 million trading balance credits on the balance sheet during the year £41 million 
of trading balances were released to the income statement in line with the policy £17 million of the liability was either 
crystallised or settled with £44 million remaining on the balance sheet at 30 june 2009 reductions in the trading balance 
credits are driven by a number of factors and it is difficult to predict with certainty the levels of releases that will flow through 
the income statement in the years ahead however we currently anticipate that trading balance releases will continue at  10 morse plc annual report 2009
chief executive officer’s statement continued
morse plc annual report 2009
the following approximate levels in the years ending 30 june 2010 £09 million 2011 £08 million and 2012 £12 million 
with any increase in these levels being driven by action by the company the actual amounts will be disclosed in our future 
financial statements
exceptional items
during the year there was a net exceptional charge before tax on continuing operations of £816 million 2008 £1340 
million this total is analysed in more detail in note 3 the major items considered to be exceptional and included in this 
category are noted below
year ended 30 june 2009 restructuring costs dilapidation provision and exceptional credits
restructuring costs accounted for £864 million of the costs with dilapidation provisions adding a further £070 million 
offsetting these costs were exceptional credits of £118 million consisting of £062 million relating to the forfeiture of share 
based payments and £056 million of reversal of fair value adjustments
year ended 30 june 2008 goodwill and intangibles impairment
following the decline in profitability within the business applications services business unit and annual impairment review 
a goodwill impairment charge of £1226 million and intangibles impairment charge of £114 million were recognised in the 
2008 accounts
interest
net interest expense during the year was £05 million 2008 £04 million details of these costs are provided in note 8 to the 
accounts
taxation
for continuing operations there was a tax credit for the year of £17 million 2008 tax charge of £13 million consisting of a 
current tax charge of £15 million 2008 £25 million offset by adjustments to prior year tax provisions of £24 million 2008 
£05 million and deferred tax of £08 million 2008 £06 million
during the year a number of open hmrc enquiries on uk corporation tax years dating back to the year ending 30 june 
2005 were settled and the provisions for tax were adjusted in line with the agreed position further details appear in note 9
earningsloss per share
basic loss per share including discontinued operations declined from 37p last year to a loss of 93p in the year ended 30 
june 2009 details can be found in note 4
on continuing operations adjusted basic earnings per share before trading balance releases and exceptional items and with 
a normalised tax charge were 20p 2008 22p
cash flow
cash in the group at the year end amounted to £127 million compared to £111 million last year the principal outflows 
during the year were dividend payments of £17 million and tax payments of £37 million at the year end customer specific 
financing of £07 million 2008 £nil reduced the net cash number to £120 million 2008 £111 million of the total cash 
balance £06 million is held in assets held for resale as part of the discontinued operations
cash generated from operations for the year ended 30 june 2009 was £68 million 2008 £73 million all of which was 
generated from continuing operations 2008 £36 million this represented 89 of adjusted ebitda from continuing 
operations 2008 47 morse plc annual report 2009 11 morse plc annual report 2009
key performance indicators “kpis”
as noted in this statement the company uses several kpis to monitor the performance of the business a summary of the 
more important kpis that are used together with a description of how they are calculated follows
kpi metrics description
gross margin percentage 2009 208
2008 221
gross profit divided by revenue
adjusted ebitda 2009 £76 million
2008 £78 million
adjusted ebitda are earnings before interest tax 
depreciation amortisation share based payments 
trading balance releases and exceptional items
adjusted ebit 2009 £42 million
2008 £45 million
adjusted ebit are earnings before interest tax 
trading balance releases and exceptional items
 
days sales outstanding dso 2009 57 days
2008 68 days
the number of days invoicing represented by the 
period trade receivables outstanding this provides 
an indication of how quickly our customers are 
paying their invoices
average weekly bank balance 2009 £58 million
2008 £40 million
an average of the weekly bank balance during the 
year as included in the chart published on the morse 
website
cash conversion 2009 89
2008 47
cash generated from continuing operations divided 
by adjusted ebitda
 
outlook
the board would like to thank all the group’s employees for their continued hard work and commitment throughout the 
period under review it has been a difficult time for the business compounded by the downturn in the economic environment 
we have and will continue to experience significant change but we believe that we will emerge a much stronger organisation 
with clear opportunities ahead
we have completed the execution of the revised business strategy for the morse business and implemented the changes to 
simplify the structure and focus on the four business units infrastructure services  technology in the uk spain and ireland 
and business applications services significant cost reductions have been achieved in addition we have started to establish 
a niche focus in each of these businesses
the improvement in adjusted ebit and adjusted ebitda on a trailing 12 month basis will be the key performance indicator 
of the improved financial performance of the business in the coming year adjusted ebit and adjusted ebitda in the current 
financial year are ahead of the same period last year
while we expect the market for it services and technology to remain difficult we believe that the changes to morse’s 
operating model together with its ongoing strong client relationships have delivered improved underlying profitability and 
cash generation in the year to 30 june 2009 and can continue to do so in future
mike phillips 
chief executive officer
9 september 2009