The economic downturn has hit Morse Plc with a vengeance, the service provider's full year figures show today.

In what the firm admitted was a “disappointing year”, revenues slipped 1.25 per cent to £253.3m in the year ending June 30. However, after last year’s pre-tax profit of £3.8m, the firm sank to a £2.3m loss in the latest period.

Morse CEO Kevin Loosemore said it had not achieved the growth in services it had been banking on, leading to reduced profitability. He cited “inadequate performance and execution in a number of areas” including losses on a number of fixed price Business Apps Services contracts, reduced gross margins across most of the business, and continued poor performance at its Spanish operations.

The company underwent a restructure in July, creating five independent business units reporting direct to Loosemore; now we can see what prompted the change.

Loosemore said the market for IT services and technology would remain difficult, but the changes and its “strong client relationships” would mean improved underlying profitability and cash generation.

“We continue to believe that once operational issues are fixed, strong execution of our current combination of business should be able to produce our target of 7.2 per cent operating margin in the medium term,” he concluded.

As recently as February, like other providers, Morse was shrugging off the impact of the turmoil roiling financial markets. But, it seems, they always cop for it in the end. ®