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Morson Anticipating Lower Profits In 2010

Morson Anticipating Lower Profits In 2010

Morson Group plc Has Issued A Pre-Close Trading update & Notice of General Meeting

Morson, the UK's leading provider of technical engineering personnel and project design solutions, supplying over 9,000 highly skilled white collar personnel to the aerospace and defence, nuclear and power, rail and other technical industries provides the following trading update prior to entering its closed period ahead of the publication of its preliminary results for the year ended 31 December 2009. The Group plans to announce its preliminary results during the week commencing 22 March 2010.

In our interim results announcement in September we outlined that trading conditions were challenging and had worsened in the second quarter. This trend continued into the second half of 2009 and the unprecedented economic environment has affected our client base including both government backed contracts and the wider funding of large infrastructure contracts.

However, Morson is confident that the business model that has served us well will continue to do so as it provides greater visibility of revenues than the recruitment sector generally. We are therefore pleased to report that the results for the year are anticipated to be within analyst forecasts albeit at the bottom end of expectations and below consensus market forecasts.

Effective cash management and lower working capital requirements have had a positive impact on Morson's net debt which at the year end stood at 11m which was significantly better than Directors previous estimates.

New clients and contracts do continue to be won and the Board believes that the Group's position in terms of market share has been enhanced through this recent stage of the economic cycle. Opportunities, particularly in the nuclear sector, are likely to present themselves in the medium to long term and the outlook over this timeframe remains positive.

However, in the short term, whilst the level of market activity overall appears to have stabilised, no significant upturn is yet apparent and margin pressures remain.

Accordingly, whilst Morson is able to generate a core stable level of trading from its key clients and framework agreements the Board anticipates that profits in 2010 will be below those achieved in 2009.

The Board has reduced overheads in 2009 and remains focused on managing resources and capability to ensure the business is well positioned to take advantage of any upturn in the market. As part of this process the operating business has moved into a new head office which is expected to improve efficiency.

Details of the General Meeting
The Company also announces that it has today posted a circular to shareholders setting out the details of resolutions to be proposed at General Meeting to seek authority to allow the Company, if the Board are satisfied that circumstances are appropriate to do so, to purchase its own ordinary shares in the market for subsequent cancellation or to be held in treasury.
The resolutions proposed would allow Morson to consider aggregate purchases of up to 10 per cent. of the Company's issued share capital equating to up to 4,534,375 Ordinary Shares (the "Share Purchases").
Given the aggregate percentage of Gerrard Godfrey Mason's ("Gerry Mason") and Gerard Anthony Mason's ("Ged Mason"), Non Executive Chairman and Group Chief Executive respectively (together the "Concert Party"), beneficial shareholding in the Company, any Share Purchase(s) would require them to make an offer under the Code to acquire the balance of the Company's ordinary shares not owned by them. The Share Purchase(s) are therefore subject to a waiver under Rule 9 of the Takeover Code being granted by the Takeover Panel together with approval by independent shareholders at the General Meeting (the "Whitewash Resolution").

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