11th Apr 2007 10:13
11th April 2007 ServicePower Technologies plc ("ServicePower" or the "Company") Preliminary results for the year ending 31 December 2006
ServicePower Technologies plc provides hosting, outsourcing solutions and software to the mobile repair and installations industry.
Financial Highlights
Revenue increased by 41% to ‚£11.1 million (2005: ‚£7.9 million), representing significant year on year growth.
Gross profit of ‚£3.7 million (2005: ‚£3.2 million), an increase of 16%.
SaaS (Software as a Service) and Outsourcing revenue increased 47% to ‚£5.0 million (2005: ‚£3.3 million) - a key indicator of the success of the business development strategy.
EBITDA trading loss, from ongoing business, decreased to ‚£1.8 million (2005: ‚£ 1.9 million). See page 5
Total loss before tax ‚£4.1 million (2005: ‚£1.6 million).
Revenue visibility for 2007 currently stands at ‚£11.2 million, more than achieved in the whole of 2006.
Corporate Highlights
Enhanced business model, focussing on SaaS and Outsourcing, which allows scalability, a wider marketplace for our products and more consistent and visible revenue.
Contract delays on major software orders, two of which closed in January 2007.
Closure of cash draining EchoStar business enabling management to focus on SaaS and Outsourcing businesses and the securing of large software contracts.
FSS Product development taken in-house reducing future investment costs.
David Brisco, Chief Executive of ServicePower commented:
"2006 has been an important year for ServicePower. The business model has beenrefined and we now have an expected EBITDA profitable and scalable SaaS andOutsourcing business primed for growth. We are particularly encouraged by the43 new customers that have been signed during the course of 2006 bringing thetotal to more than 130. Added to the existing recurring revenue, which stemsfrom ongoing software maintenance contracts and the SaaS and Outsourcingcontracts, subject to volumes continuing as expected, we have visibility of ‚£11.2 million for 2007, this is more than achieved in the whole of 2006. We areencouraged by signing in January two contracts delayed from 2006 and areconfident the others will be signed soon."
For further information please contact:
ServicePower Technologies
David Brisco, Chief Executive Officer Tel: 0161 476
2277
Barry Welck, Non-executive Chairman Tel: 07831 396539 Evolution SecuritiesBobbie Hilliam Tel:020 7071 4300 ICIS Financial PRTom Moriarty Tel:020 7651 8688Laura Cocker CHAIRMAN'S STATEMENT During 2006 the Directors continued the implementation of their strategy ofdeveloping long term profitable revenue streams from Hosting, or as it in nowknown in the industry, Software as a Service (SaaS) and Outsourcing business. Akey part of this strategy is selling our scheduling software and other productsto the 86,000 independent servicers we use to complete jobs on our behalf inthe US and who partially depend on ServicePower for their work. I am pleased to report that the Company is today announcing an increase of 41%in revenues. A significant amount of this growth has come from the SaaS andOutsourcing business which, in addition, is expected to trade EBITDA profitablyfor the first quarter of 2007. The EBITDA trading loss for ongoing businesses was reduced to ‚£1.8 million(2005 ‚£1.9 million). The EchoStar business added ‚£0.9 million further loss toEBITDA in 2006 (2005: ‚£0.1 million) plus adverse exchange loss of ‚£0.9 million(2005: ‚£0.6 million exchange gain) and ‚£0.5 million depreciation andamortisation (2005: ‚£0.2). See page 5. Despite the Group's success in reducing the influence of software sales on cashflow forecasts there remains considerable difficulty in accurately forecastingthe timing and quantum of cash receipts from the sale of software licences.However, having reviewed current sales opportunities and expenditure forecasts,the Directors believe the Group has sufficient cash to meet its operationalrequirements. We have been successful in using the enterprise scheduling software solutionsto create additional revenue streams in the SaaS and Outsourcing business. Ourmobile technology comprising GPS and Navigation applications, initially sold totwo corporate clients for their combined fleet of over 2700 vehicles, is nowbeing used by small servicers. In addition our enterprise scheduling softwarehas now over 200 technicians scheduled on the SaaS solution. Successfulroll-out of these technologies to our whole servicer base could generatesignificant additional revenue in the future. I am also pleased with the progress that ServicePower is making with theappointment of partners and OEMs. In the last year the Company won two largecontracts through partners; both CCC Information Services Inc. and SolarvistaSoftware Ltd who have included our software within their products will go livewith their first customers in the first half of 2007. The Company remainscommitted to partnerships which provide access to a broader market, and lowercost incremental sales. ServicePower is in a good position within a growing and exciting market. Itsrange of products and services provide it with an opportunity to develop anEBITDA profitable, fast growing business. The short term aims of the managementare to run the SaaS and Outsourcing business and Software business on an EBITDAprofitable basis and to manage the cash position. The first is expected to beachieved in the first quarter and the Group is well positioned to generateEBITDA profits from the Software division. I believe this strong platform willallow the management to develop incremental growth opportunities.
With a more focussed and robust strategy I look forward to updating the shareholders at the time of the Interim Results.
Barry WelckNon-executive Chairman 11th April 2007 CHIEF EXECUTIVE'S STATEMENT IntroductionIt has been another significant year for ServicePower with the managementcontinuing to focus its efforts on growing predictable recurring revenuestreams from SaaS and Outsourcing contracts. Our strategic investment in MobileResource Management has been rewarded with adoption by existing enterprisecustomers and the independent servicer market. This reinforces management'sstrategy of selling our award-winning enterprise scheduling technology into thehigh volume independent servicer market where we are well placed to growrapidly. The result is the SaaS and Outsourcing business is expected to tradeEBITDA profitably for the first quarter of 2007. As at March 2007, based on existing contracts, the Company has good visibilityof ‚£11.2 million revenue for 2007 (January 2006 order book: ‚£9.0 million), thisis more than we achieved in the whole of 2006. It is made up as follows: 2007 2006 ‚£'M ‚£'M Software licences 0.3 1.4 Software and maintenance services 1.8 2.0 SaaS and outsourcing services 9.0 4.5 GPS tracking 0.1 1.1 Total 11.2 9.0
It is significant that ‚£10.6 million revenue is from recurring sources which includes ‚£1.6 million of software maintenance revenue.
Financial ReviewThe change in strategy has transformed ServicePower from a company whichgenerated sales of just over ‚£2 million in 2003, to a business which deliveredrevenues of over ‚£11 million in 2006. For 2006, recurring revenue sources havecontributed 68% of total revenue. The Company grew revenue 41% from the sameperiod in 2005. This was achieved despite the adverse movement in the exchangerate between the US Dollar and Sterling during the year which reduced revenueagainst expectations by approximately ‚£0.4 million.
A summary of the total SaaS & outsourcing revenue is set out below:
2006 2005 ‚£M ‚£M SaaS 1.7 1.3 Outsourcing 3.3 2.0 EchoStar non-recurring 0.9 0.0 Mobile and GPS non recurring 0.6 0.3 Total outsourcing revenue 6.5 3.6 The SaaS revenue increased by 30% due to an increase in warranty claimsprocessed from new customer contracts. Outsourcing revenue, excluding EchoStaroperations which closed during the year, increased 65% due to growth in the UKfrom new customer contracts. Overall SaaS and Outsourcing contributed ‚£5.0million recurring revenue (2005: ‚£3.3 million) to overall turnover.
The newly released GPS tracking and Navigation products contributed ‚£1.2 million revenue in 2006 from both Software and Outsourcing businesses. This is encouraging given that essentially this is a first year start-up operation.
The software licence and consultancy revenue fell 13% due to delays in securingcontracts in the final months of 2006 and adverse exchange rate movements. Twoof these contracts have been signed in January of 2007 as previously announcedin the Trading Update on 25th January 2007.
A reconciliation of loss before taxation is:
2006 2005 ‚£'M ‚£'M SaaS and Outsourcing loss 0.8 1.6 Software loss 1.0 0.3 Total EBITDA trading loss 1.8 1.9 EchoStar - non-recurring 0.9 0.1 Exchange loss (profit) 0.9 (0.6) Depreciation and Amortisation 0.5 0.2 Total Loss before tax 4.1 1.6 The EBITDA trading loss, excluding the impact of the EchoStar business,decreased to ‚£1.8 million (2005: ‚£1.9 million). The EchoStar business added ‚£0.9 million further loss to EBITDA in 2006 and ‚£0.1 million in 2005. The totalloss before tax increased to ‚£4.1 million with adverse exchange loss of ‚£0.9million and ‚£0.5 million depreciation and amortisation. The SaaS andOutsourcing business is expected to operate profitably at EBITDA level for thefirst quarter of 2007. The Software business made a loss for the first quarteras only two of the delayed contracts from 2006 were closed but is in line withthe budget to achieve an EBITDA profit in 2007. The directors are confidentthat the remaining delayed contracts will be signed this year.
The gross margin for the business rose 19% to ‚£3.7 million (2005: ‚£3.2 million). The Company invested over ‚£1.3 million in the continuing enhancements of functionality within its product portfolio.
The administration expenses, excluding EchoStar operations, increased by ‚£2.5million due to the increase in exchange differences of ‚£1.5 million, increasein amortisation and depreciation of ‚£0.3 million, a planned increase in R&D of‚£0.3 million and a ‚£0.4 million increase in overheads to support the growingSaaS business.
The loss per share for the year was 4.14p (2005: loss per share of 2.14p). The directors do not recommend the payment of a dividend at this time.
Field Service Solution business (FSS)
The FSS division, responsible for our SaaS and Outsourcing revenue, has grownrecurring revenue to ‚£5.0 million, representing 45% of total revenues. In 2006,37 contracts were secured with companies such as Empire Commercial Ltd andAssurant Solutions, and other "brand" names in retail, manufacturing andinsurance industries. As these new contracts commenced during 2006, on averagethey only delivered half the annual revenue we can expect from these contractsin 2007. Due to the nature of this business they will continue to deliverrevenue year on year at predictable volumes on historical run-rates. Europe
In 2005 the FSS businesses were launched into Europe. The revenue has more than doubled to ‚£2.0 million from ‚£0.8 million in 2005. This follows contracts with 14 new clients within the retail, manufacturing and insurance industries.
USDuring the last 12 months 23 new clients have been won for warranty claimsprocessing, bringing the total number of customers to 58. The aim is to now tosell the full range of products to these clients, including our Mobility mobilephone solution, consisting of Electronic Dispatch, GPS tracking, Navigation andoptimisation. In the US, these products sets are known in the industry asMobile Resource Management solution; this is a sector that is seeing hugegrowth rates. Our customers will be charged monthly for this solution andrevenue is collected as part of a mobile phone package provided by SprintNextel, one of the largest mobile phone companies in the US. I am pleased toreport that our first two Mobility mobile phone solution customers went live inFebruary 2007. In particular ServicePower is focussing on selling Electronic Dispatch to USclients as well as encouraging them to outsource their overflow jobs toServicePower. Electronic dispatching allows Original Equipment Manufacturer's("OEMs") and SMEs to manage independent subcontractors more efficiently as theyhave visibility of the progress of each job. Electronic Dispatch has been successfully rolled out to the GE Consumer &Industrial (GEC&I) authorised service network across the US. Work is now beingdispatched to more than 10,000 GE service companies which employ more than24,000 technicians. In addition more and more outsourced jobs are beingprocessed through the Electronic Dispatch system to the 86,000 technicianscontained on our database. This gives ServicePower the largest reference sitein the world for Electronic Dispatch of jobs to independent service companies.Significantly we have won 6 new Electronic Dispatch customers since GE wentlive in November. This robust and scalable solution coupled with an increasing presence in the USmarket has also led to agreements with Third Party Administrators ("TPA"). TPAs are key in the US, as insurance companies will often outsource theadministration of processing warranty claims to these organisations. TPAshandle the claims processing for a wide range of goods which will also allowServicePower to move into many new verticals. So far we have signed contractswith two of the largest TPAs, the most recent being Assurant, a premierprovider of specialised insurance products and related services in NorthAmerica and selected international markets.
It is hoped these high profile contracts, added to the GE volumes, will be crucial in getting ServicePower's Mobile Resource Management solution accepted as the industry standard.
In addition to ED, the GPS and turn by turn Navigation products have been wellreceived both by the independent service companies and our corporate clients.Sales were made to GEC&I and Avaya in 2006 covering 2,700 vehicles worth ‚£1.2million. The directors believe we have a strong product offering and I ampleased to report that last year this was recognised by three awards beinggiven to ServicePower in the USA. These awards were won in partnership withPanasonic, Intel and GE Consumer and Industrial. This is a significant growtharea in the US, with many companies offering standalone solutions. Whilst we donot envisage competing in the broad US GPS marketplace, the integration of thisinto the SERVICEPower optimisation and mobile product provides a uniquesolution in the service marketplace. It is anticipated that the addedfunctionality will also increase the value of our future Software sales whilstproviding incremental income from existing customers. Scheduling Software business The delays to large software contracts have been unfortunate and the timingsassociated with securing these contracts can have a significant impact onrevenue. However for 2006, software licenses represented only 16% of totalrevenues (2005: 31%) and due to the rapidly increasing revenue from FSS thispercentage is expected to continue to fall, thereby ensuring that the impact ofsuch delays will in time be diminished. It should be noted that the softwarebusiness produced ‚£4.6 million of 2006 revenue; it is capable of generatingsignificant margins and we continue to invest in this area. The objective ofthe management is to continue growing the FSS profits and to increase sales ofour enterprise scheduling technology into the FSS business; this will give us acompetitive advantage. In time we expect all overheads of the business will becovered by recurring revenues. Our expanded portfolio addressing the enterpriseMobile Resource Management market gives our sales teams more entry points intoprospect accounts and we are expecting the scheduling software business to growalongside our FSS business. CustomersAlthough software sales have been disappointing, with only 6 new customers, Iam pleased to report that two contracts, worth in total ‚£300k, delayed from2006 were signed in January 2007. Delays of this nature have not had an impacton the fundamentals of the business, and we expect this business to be EBITDAprofitable in 2007. In 2006 five clients went live, which will increase therecurring maintenance revenue by 18% in 2007. The SERVICEPower product is nowestablished in the market with many Fortune 500 companies using the solution. Progress has also been made in the insurance market with another large USinsurance company purchasing a licence to optimise the work of its lossadjusters. We now have four large US insurance companies as clients, plus onein Canada. In addition to this two companies in the US are currently runningpilots. PartnershipsIn order to address the broader marketplace the management is now developingrelationships with various partners to increase its market presence. In 2005we announced an exclusive deal with CCC Information Services Inc. (CCCIS) whichis selling a hosted SERVICEPower solution to smaller US insurance companies.The first customer will go live in the second quarter of this year and CCCIS isconfident of dominating the insurance scheduling market as it has done in claimform processing. Recently a partnership agreement was signed with a large USmobile phone company, a top-5 consultancy practice and further partnershipswill be announced in due course.
EchoStar satellite installation business
The EchoStar business was closed during the year. The loss before tax was ‚£900k in 2006 and there will be no negative impact on the business in 2007.
Product Development
FSS product development was completed in 2006 and went live with GEC&I in November. In total approximately ‚£2.1 million was spent on the development, the costs of which were capitalised and will be amortised over a 5-year period.
This development was outsourced to an offshore development company in Indiawith ServicePower keeping all Intellectual Property Rights. Enhancements to theproduct will continue but this will now be completed by our own development andsupport staff reducing future investment costs. Investment continues in the SERVICEPower optimiser, with a significantinvestment being made in 2006. In order to return the greatest possible ROI toclients the product needs to be at the leading edge of technology. Newfunctionality developed in 2006 includes the ability to schedule linked jobs -jobs that are dependent upon one or more other activities. This givesServicePower the opportunity to move into new more-complex business areas suchas medical and utilities. Our mobility portfolio has been developed in partnership with specialistmiddleware providers which has enabled ServicePower to rapidly developfunctionally rich applications. The Company holds the IPR on the applicationsdeveloped. It is the Company's strategy to use, wherever possible, industry andpartner technology to bring integrated functionally-rich products to market. Strategy for growthGrowing the FSS business will be a key component of the strategy for growth.This can be achieved through the acquisition of new clients and also throughcross selling opportunities with existing clients. FSS will also see growthcoming from partnerships with TPAs which provide a huge opportunity for theCompany. We have already laid the foundations with two of the largest in theindustry and will initially process consumer goods jobs; this work represents atiny proportion of the business processed by these giants. There is also scopefor further partnerships with additional TPAs in Europe. In Europe the Insurance industry is a key target and through the partnershipwith Elesco we will target global manufacturers with the ServicePower SaaSsolution. This will drive large volumes of transactions at high gross marginsaccelerating profitable growth.
The software business will continue to sell directly to large corporates, and with increasing support from partners it is expected that 2007 will see improved revenue and a move back into profit for this business.
Outlook
2006 has been a significant year for ServicePower. The business model has beenrefined and we now have an expected EBITDA profitable and scalable businessmodel for FSS and are beginning to sell our enterprise software into FSS. Weare particularly encouraged by the 43 new customers that have been won duringthe course of 2006 bringing the total to more than 130. When we add theexisting recurring revenue - which stems from ongoing software maintenancecontracts and the SaaS and Outsourcing contracts subject to volumes continuingas expected - we now have visibility of ‚£11.2 million for 2007. This is morethan was achieved in the whole of 2006. We are also encouraged by signing inJanuary two contracts delayed from 2006 and are confident the others will besigned soon. David BriscoChief Executive Officer11th April 2007
Servicepower Technologies Plc
Consolidated income statement for the year ended 31 December 2006
Note 2006 2005 ‚£'000 ‚£'000 Revenue - software solutions 4,642 4,296 - outsourcing services 6,452 3,641 _________ _________ Total revenue 11,094 7,937 Cost of sales (7,402) (4,756) _________ _________ Gross profit 3,692 3,181 _________ _________ Administrative expenses (7,863) (4,827) _________ _________ (Loss)/profit from operations - software (1,576) 67solutions - outsourcing services (2,595) (1,713) _________ _________ Total loss from operations (4,171) (1,646) Investment revenue 23 36 Finance costs (1) (1) _________ _________ Loss before taxation (4,149) (1,611) Taxation 799 - _________ _________ Loss for the year (3,350) (1,611) _________ _________ Loss per share Basic and diluted 4 (4.14p) (2.14p) _________ _________
All amounts relate to continuing activities.
Servicepower Technologies Plc Consolidated statement of recognised income and expense for the year ended 31December 2006 2006 2005 ‚£'000 ‚£'000
Exchange differences on translation of foreign operations 525 (161)
Net profit/(loss) recognised directly in equity 525 (161) Loss for the year (3,350) (1,611) Total recognised income and expense for the year (2,825) (1,772)
Servicepower Technologies Plc
Consolidated balance sheet at 31 December 2006
2006 2005 Assets ‚£'000 ‚£'000 Non-current assets Intangible assets 1,659 1,896
Property, plant and equipment 158 261
_________ _________ 1,817 2,157 Current assets Inventories 13 -
Trade and other receivables 2,909 3,639
Cash and cash equivalents 262 1,943 _________ _________ 3,184 5,582 _________ _________ Total assets 5,001 7,739 _________ _________ Current liabilities Trade and other payables (3,684) (3,739) _________ _________ Net assets 1,317 4,000 _________ _________ Equity Share capital 8,108 8,073 Share premium account 14,857 14,855 Share scheme reserve 308 203
Exchange translation reserve 377 (148)
Other reserve (3,008) (3,008) Retained earnings (19,325) (15,975) _________ _________ Total equity 1,317 4,000 _________ _________
Servicepower Technologies Plc
Consolidated cash flow statement for the year ended 31 December 2006
Note 2006 2005 ‚£'000 ‚£'000 Net cash flows from operating activities 5 (1,588) (2,312) Investing activities Interest received 23 36
Purchases of property, plant and equipment (53)
(63)
Proceeds of sale of available-for-sale investments -
250
Expenditure on intangible assets (295)
(632) _________ _________ Net cash used in investing activities (325) (409) _________ _________ Financing activities
Proceeds on issue of shares 15
1,974 Issue costs - (60) Capital element of lease paid (20) (79) ________ _________ Net cash (outflow)/inflow from financing activities (5) 1,835 _________ _________ Net decrease in cash and cash equivalents (1,918) (886) Cash and cash equivalents at beginning of year 1,943 2,788 Effect of exchange rate changes 237 41 __________ _________ Cash and cash equivalents at end of year 262 1,943 _________ _________ Servicepower Technologies Plc
Notes to the consolidated financial statements for the year ended 31 December 2006
______________________________________________________________________________
1 Basis of accounting The financial statements of the Group have been prepared in accordance withInternational Financial Reporting Standards (IFRS) as adopted for use in theEuropean Union. In addition to complying with its legal obligation to complywith IFRS as adopted for use in the European Union, the Group has also compliedwith IFRS as issued by the International Accounting Standards Board. Whilst the financial information included in this preliminary announcement hasbeen computed in accordance with International Financial Reporting Standards(IFRSs), this announcement does not itself contain sufficient information tocomply with IFRSs. The Company expect to publish full financial statements thatcomply with IFRSs in April 2007. 2 Going Concern During the year ended 31 December 2006 the group incurred a loss before tax of‚£4.1m and a net cash outflow of ‚£1.9m and at 31 December 2006 the group'scurrent liabilities exceeded its current assets by ‚£0.5m. The group's directorshave prepared projected cash flow information for the period ending 12 monthsfrom the date of approval of these accounts. During the year, the Group has continued to expand its FSS business whichprovides a regular revenue stream and cash funding to the Group. However, thereremains considerable difficulty in accurately forecasting the timing andquantum of cash receipts from the sale of software licences and this indicatesthe existence of a material uncertainty which may cast significant doubt aboutthe Group's ability to continue as a going concern and therefore it may beunable to realise its assets and discharge its liabilities in the normal courseof business. The directors have reviewed the current sales orders andopportunities and expenditure forecasts, together with other means of managingthe cash outflows including identifying possible cost savings. It is on thisbasis that the directors consider it appropriate to prepare the group'saccounts on the going concern basis.
The accounts do not include any adjustments which may be necessary if the group was unable to continue to operate.
3 Business and geographical segments For management purposes, the Group is currently organised into two operatingdivisions - software licence sales and outsourcing services. These divisionsare the basis on which the Group reports its primary segment information.
Principal activities are as follows:
Software licence salesOutsourcing services
Segment information about these businesses is presented below.
2006 Software Outsourcing Group Licences Services Total 2006 2006 2006 ‚£'000 ‚£'000 ‚£'000 Revenue from external sales 4,642 6,452 11,094 _________ _________ ________ Loss from operations (1,576) (2,595)* (4,171) Investment income 23 Finance costs (1) ________ Loss before tax (4,149) ________ 2005 Software Outsourcing Group Licences Services Total 2005 2005 2005 ‚£'000 ‚£'000 ‚£'000 Revenue from external sales 4,296 3,641 7,937 _________ _________ ________ Profit/(loss) from operations 67 (1,713)* (1,646) Investment income 36 Finance costs (1) ________ Loss before tax (1,611) ________
* Includes a loss on the Echostar business of ‚£900,000 (2005: ‚£100,000)
2006 Software Outsourcing Group Licences Services Other information 2006 2006 2006 ‚£'000 ‚£'000 ‚£'000 Capital additions 29 319 348 Depreciation and amortisation (50) (394) (444) Balance sheet Assets Segment assets 2,135 2,826 4,961 Unallocated corporate assets 40 Consolidated assets 5,001 Liabilities Segment liabilities 2,074 1,590 3,664 Unallocated corporate liabilities 20 Consolidated total liabilities 3,684 2005 Software Outsourcing Group Licences Services 2005 2005 2005 Other information ‚£'000 ‚£'000 ‚£'000 Capital additions 18 677 695 Depreciation and amortisation (46) (178) (224) Balance sheet Assets Segment assets 4,307 3,424 7,731 Unallocated corporate assets 8 Consolidated assets 7,739 Liabilities Segment liabilities 2,092 1,620 3,712 Unallocated corporate liabilities 27 Consolidated total liabilities 3,739 Geographical segments The Group's operations are located in the United States of America, the UnitedKingdom and Europe. The Group's activities are located in all three countries.The following table provides an analysis of the Group's sales by geographicalmarket, irrespective of the origin of the services: Sales revenue by geographical market 2006 2005 ‚£'000 ‚£'000 United States of America 7,961 6,193 United Kingdom 3,084 1,444 Rest of Europe 49 300 11,094 7,937 The following is an analysis of the carrying amount of segment net assets, andadditions to property, plant and equipment and intangible assets, analysed bythe geographical area in which the assets are located: Carrying Additions to property, amount of plant and equipment and segment net assets intangible assets 2006 2005 2006 2005 ‚£'000 ‚£'000 ‚£'000 ‚£'000 United States of America (805) (453) 328 681 United Kingdom 2,287 4,569 20 14 Rest of Europe (165) (116) - - 1,317 4,000 348 695 4 Loss per share The calculation of the basic and diluted earnings per share is based on thefollowing data:Earnings 2006 2005 ‚£'000 ‚£'000
Loss for the purpose of basic
and diluted loss per share 3,350
1,611 _________ _________ Number of shares 2006 2005 Number Number Weighted average number of ordinary shares for the purpose of basic and diluted loss per share 80,964,778 75,117,779 _________ _________ Loss per share 2006 2005 pence pence Basic and diluted loss per share 4.14p 2.14p _________ _________ IAS 33 requires presentation of diluted EPS when the Company could be calledupon to issue shares that would decrease net profit or increase net loss pershare. For a loss making company with outstanding share options, net loss pershare would only be increased by the exercise of out-of-the money options.Since it is inappropriate to assume that option holders would act irrationally,no adjustment is made for out-of-money share options. 5 Notes to the cash flow statement 2006 2005 ‚£'000 ‚£'000 Operating loss from continuing operations (4,171) (1,646) Adjustments for: Depreciation of property, plant and equipment 123 114 Amortisation of intangible assets 321 110 Loss on disposal of property, plant and equipment 12 - Share-based payments provision 105 117
Operating cash flows before movements in working capital (3,610) (1,305) Increase in inventories (13) - Decrease/(increase) in receivables 1,423 (2,334) Increase in payables 612 1,327 Net cash outflow from operating activities (1,588) (2,312) 6 Non statutory information note The financial information set out above does not constitute the company'sstatutory accounts for the years ended 31 December 2006 or 2005, but is derivedfrom those accounts. Statutory accounts for 2005 have been delivered to theRegistrar of Companies. The auditors reported on those accounts; their reportwas unqualified and did not contain a statement under s237 (2) or (3) CompaniesAct 1985. The statutory accounts for the year ended 31 December 2006 will be deliveredfollowing the company's annual general meeting. The auditors are yet to signtheir report on the statutory accounts for the year ended 31 December 2006, buthave indicated that their auditor's report will be modified by the inclusion ofan added emphasis paragraph which highlights the existence of a materialuncertainty that casts significant doubt on the company's and group's abilityto continue as a going concern. Further information is disclosed in note 2.
SERVICEPOWER TECHNOLOGIES PLCRelated Shares:
SVR.L