Morse, Europe's biggest Sun and HP reseller, claimed a "solid performance in a challenging marketplace" for it's last financial year (ended June 30). But it is downbeat about current trading conditions.

"On a comparable basis, activity levels in the opening months of the new year have remained subdued," the company said in a statement today. "The Group will continue to respond to these market conditions and is well-placed to deliver increasing value for shareholders in the future." What does this mean - more job cuts?

Morse full-year sales climbed 16 per cent to £586.1 million (2000: £506.3 million)for the year to June 30, 2001. But it was a game of two halves. In the first half of the year, sales were up 52 per cent on 2000, but in the second half, turnover fell 8 per cent on the same period last year. Morse blames the "progressive slowdown in economic activity" for this.

France and Germany now account for 25 per cent of group revenues and 10 per cent of operating profits . The country operations are still in what Morse describes as in their development stage - and the reseller is confident that it can move margins up to UK levels.

Encouragingly for shareholder, the company's professional services jumped 58 per cent to £87.7m to £81.6m (2000: #55.6 million. Organic growth was 47 per cent. The company declared a Pre tax profit - before exceptional item and amortisation of goodwill - of £35.8m, up 12 per cent (2000: #32.1 million). Take away the restructuring charge of £2.2m - announced in May, and the goodwill charge of £, and Morse's PBT falls to £20.7m.

The company remains cash generative recording a net inflow of £40.5m for the year. It ended the year.
with a cash balance of £41.8m (2000: £35.5m).®