Half Yearly Report

17 September 2014

ServicePower Technologies plc

("ServicePower" or the "Company")

Interim Results

ServicePower (AIM: SVR), a market leader for outsourced service and field management, announces its unaudited interim results for the six months ended 30 June 2014.

Financial Highlights

· Revenue of £6.2 million (H1 2013: £7.3 million) reflecting impact of FX, timing of license sales and SaaS versus perpetual license deals

· Gross profit £2.7 million (H1 2013: £3.5 million)

· Loss before tax £0.9 million (H1 2013: profit before tax of £0.2 million reflecting accounting and FX gains in 2013 of £0.9m)

· Cash balance of £1.6 million as at 30 June 2014 (30 June 2013: £2.3 million and 31 December 2013: £2.7 million) reflecting timing of investments in client implementations, the product roadmap and the support renewal cycles

Operational Highlights

· Significant new contracts secured, expected to contribute to growth in H2 and beyond

o Contract with Electrolux Home Appliances

o Renewed contract with major American appliance manufacturer

o Three year contract with financial and professional services company, which will be rolled out globally

o Extended contract with an international beverage bottler

o Expanded contract to include a new product with the US' largest provider of home repair services

· Strong performance by ServiceOperations in Americas with both top-line growth and margin improvement

· Launch of M2M Connected Services offering with Bosch Software Innovations

Outlook

· Increased momentum on cloud and SaaS implementations

o 2014 contracted future SaaS revenue in excess of £5 million

· Good visibility of customer implementations and strong pipeline of opportunities, which has doubled in the last nine months

· Continued investment in technology and operations

· Profitable month on month since half year with cash balances anticipated to rise prior to year-end

· Confident in successful outcome for the year

Marne Martin, CEO of Service Power plc, commented: "ServicePower has made good progress in the first half of the year. We have executed on our stated strategy that continues into 2015, investing in technology and platform development whilst increasing the number of contracts signed and the pipeline of opportunities. Increasing brand recognition has supported growth in the number of contracts signed and has driven entrance into new markets and verticals. With good visibility of customer implementations and a doubling of our sales pipeline,we are confident in achieving strong growth and growing profitability in the second half of 2014 and beyond."

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About ServicePower

ServicePower, the acknowledged leader in OptimisationTechnology, provides an innovative global, fully mobilised field service management software platform used by field service organisations such as Assurant Solutions, Mitsubishi, Farmers Insurance, AIG Warranty and Pitney Bowes to improve productivity and efficiency, intelligently schedule appointments, SLA and complex jobs, as well as parts. Our platform focuses on solving fundamental field service problems with patented routing optimisation, M2M connected services, 3rd party dispatch and warranty claim payments, cutting edge mobile technology, robust business intelligence and asset tracking.

ServicePower is listed on the AIM market of the London Stock Exchange with the ticker SVR.L. For more information please visit www.servicepower.com

Joint statement of the Chairman and Chief Executive

H1 2014 Overview

The financial results for H1 2014 represent solid progress as ServicePower updates and internationalises its technology, expands into new verticals and builds its brand awareness in the enterprise software market. The Company is delivering results in-line with management expectations for the year as a whole, whilst executing on our stated strategic and operational objectives. Significant investment has been made in development of the connected services platform, marketing initiatives, brand awareness and overall strengthening of organisational structure, resulting in a doubling of the Company's sales pipeline over the last nine months and the beginning phases of expansion into new verticals and territories.

Due to the timing of contract signings, the transition of customers purchasing on a SaaS (more than £5 million secured in future revenue under contract over multiple years) rather than perpetual license basis paid up-front, and the negative impact of the strength of GBP versus USD, revenue decreased by 15% to £6.2 million (H1 2013: £7.3 million), including an foreign exchange loss of £0.3 million compared to the equivalent period in 2013. The operating loss of £0.7 million (H1 2013: profit of £0.4m) includes foreign exchange losses of £0.1 million (H1 2013: gain of £0.6 million) and £0.2 million of non-recurring/extraordinary expenses incurred during the period. In comparison, the same period in 2013 benefitted from significant foreign exchange gains and reversal of accounting accruals.

For an organisation of its size, ServicePower has made significant progress in new business generation as a result of differentiation through technical advantage, securing new contracts in all business areas. These new contracts include global brand names across a number of new verticals, with the commensurate investments required in expanded infrastructure, IT security, product development, and implementation costs. The number of contracts secured towards the end of the first half, and currently in the pipeline for the second half of the year gives the Board confidence in a stronger second half of the year, supporting market expectations for the full year.

The focus of the management team is on the conversion of the high level of sales opportunities currently in the pipeline, and successful implementation of the contracts secured in the first half of the year. Discussions are also underway with a number of independent software vendors and consulting partners that would benefit 2015 activities. Improved engagement with trade analysts is also driving increased referrals of ServicePower in the marketplace.

Operational Review

ServiceScheduling

ServiceScheduling, the Company's flagship product, has had continued product momentum in the first half of 2014 and a retained customer renewal rate of 100%. During the first half existing clients were upgraded to the latest version while R&D efforts focused on building-out additional product features to support new verticals and global deployments, re-factoring the ServiceMobility code, and expanding the Smart Scheduling capabilities. The second half of the year will see continued investments in adding further language capabilities, additional product features, and the first release of a new management console. The focus will be on cloud deployments via Amazon Web Services going forward to support the global nature of many of the client relationships. The Company has seen month-on-month growth in new business opportunities with increasingly multinational interest.

Key customer wins in the half include Electrolux Home Appliances, a global financial and professional services firm, a UK social housing organisation (which represents an entrance to a new vertical) and a leading UK provider of home insurance coverage. ServicePower's strength in M2M technology has driven entrance into new verticals and a superior and differentiated offering from its peers. There are large potential opportunities with new and existing clients for conditional and highly sophisticated, next generation scheduling.

ServiceScheduling's positioning within the marketplace has been further strengthened during the period due to the acquisition of TOA by Oracle. ServicePower is benefitting from its independence and the ability to position its ServiceScheduling across CRM and ERP providers.

ServiceOperations

ServiceOperations has had an excellent first half with demand for claims and dispatch modules at an all-time high; further growth is expected in the second half of the year and in 2015 as full period revenues will be delivered. Further investments are currently underway in functionality, building enhanced client configurability, and infrastructure to capture the full scope of the business opportunity, with international expansion beyond the Americas and UK planned in 2015.

A particular highlight of the half-year period is that USD revenue for ServiceOperations in the United States was up more than 50% compared to the same period last year due to a high level of demand from the US appliance market. Key customer wins for ServiceOperations include an international engine manufacturer, contract extension with a global consumer products manufacturer and Electrolux Home Appliances. The UK ServiceOperations business remains margin constrained with constriction in the UK retailer segment. The Company is working to migrate UK and European service contracts to purely software contracts, the benefits of which are expected to be seen later this year and will improve profitability in the UK in 2015 onwards.

Strengthened Organisational Structure

ServicePower has invested in building its organisational structure since the start of the year upgrading talent throughout the various levels in the business

In June 2014, Tajinder Sandhu was appointed to the board as Chief Financial Officer following joining the Company in December 2013.

Also in June 2014, field service industry expert, Stewart Hill, joined ServicePower as Senior Vice President Corporate Development. With over twenty years' experience in the industry Stewart is an ideal appointment to help define and execute on the Company's growth strategy while driving internal efficiency improvements. In addition, existing account management teams have been strengthened, in order to build upon lasting customer relationships and to help develop additional pipeline opportunities.

Strategy update

The Company has made significant progress with its strategy for growth. With newly established implementation and sales methodologies, ServicePower has doubled its pipeline over the past nine months, with a dramatic improvement in its pipeline of potential global deployments, although Enterprise sales cycles do remain on average a 12 month process for ServiceScheduling. Whilst ServiceOperations has performed extremely well in the US, the major opportunity for ServicePower in the medium term is to add new clients for its ServiceScheduling and ServiceMobility software which accounts for 80% of the current pipeline. The Company will continue to drive sales through cross-selling, direct sales and channel relationships.

Investment in sales and marketing activities continued in the first half of the year and will drive brand awareness and pipeline development in future periods. A new corporate website was launched and refreshed branding has supported an increased interest in and demand for ServicePower products. For the first time, ServicePower is in the global market rankings as one of the top ten in field service management products, and according to Capterra (an online directory of business software and vendors) is ranked number two by total users.

ServicePower is making strides with technological integration and development, with frequent new code releases. Progress will continue to be made leading into 2015 creating a unified platform whereby ServicePower has a common technology stack and data model with schemaless design able to be delivered on Amazon Web Services if so desired by the client. In addition, progress is being made on a modern, new management/configuration console for ServiceScheduling that will also be enabled across the entire connected services platform by the end of 2015. These investments will significantly enhance the current offering and strengthen our ability to leverage our position within existing clients and cross sell products.

The first Connected Service/M2M engagements are underway and ServicePower is receiving a good level of interest from clients in this area. M2M capabilities will also drive our offering to the forefront within the industry and provide potential cross sell opportunities.

Financial Review

Total revenue in the half decreased by 15% to £6.2 million (H1 2013: £7.3 million). Within this, ServiceOperations revenue increased by 14% to £2.4 million (H1 2013: £2.1 million) whilst ServiceScheduling revenue decreased by 27% to £3.8 million (H1 2013: £5.2 million).

ServiceOperations benefitted from the increase in revenue from the Best Buy relationship via AIG and the launch of additional new clients. ServiceOperations growth is expected to accelerate in the second half of the year due to the upcoming launch of Electrolux on the ServiceOps platform.

ServiceScheduling was impacted by the conversion of license sales in H1 2014 from perpetual license to a SAAS model, new pipeline opportunities generated in late 2013 and early 2014 taking time to mature such that they would be contracted and/or implemented in H2 2014, and the efforts to re-factor the multi-tenant ServiceMobilty code and deploy it on Amazon Web Services. Since the half year end, ServiceScheduling license sales have increased and a number of pipeline deals are scheduled to close before year end.

Total cost of sales in the six months decreased 8% to £3.5 million (H1 2013: £3.8 million) in-line with decreased revenue.

A breakdown of revenue as reported from the ServiceScheduling segment is as follows:

A breakdown of revenue as reported from the ServiceOperations segment is as follows:

The Company continued to invest across its product range, investing £0.6 million in H1 2014 (H1 2013: £0.5 million). The actual level of investment increased further when infrastructure, support, and other related functions are also taken into account.

Gross profit for the period decreased to £2.7 million (H1 2013: £3.5 million) given the timing of the license deals in the ServiceScheduling segment and the implementation, product and infrastructure investments in H1 2014. The Company generated an operating loss of £0.7 million (H1 2013: operating profit of £0.50 million) as a result of the decrease in revenues, one-off extraordinary expenses of £0.2 million, and a foreign exchange loss of £0.1 million (H1 2013: foreign exchange profit of £0.6 million), against a comparative gain resulting from a reversal of accruals and greater gross profit in H1 2013. ServicePower made a loss before tax of £0.9 million for the period versus a profit in the first half of the prior year of £0.22 million. H1 2013 benefitted from a foreign exchange gain of £0.6 million and reversal of accruals of £0.3 million.

The basic and diluted loss per share for the half year was 0.47p (H1 2013: profit per share of 0.11p).

Cash balances were £1.6 million at 30 June 2014 compared to the cash balances at 30 June 2013 of £2.3 million, and £2.7 million at 31 December 2013. The difference in cash from year end 2013 to mid-year 2014 is primarily due to the timing of maintenance contract renewals and £0.2 million of extraordinary/non-recurring expenses.

The Directors do not recommend the payment of a dividend at this time (2013: nil).

Outlook

ServicePower has made good progress in the first half of the year. We have executed on our stated strategy, investing in organisational and platform development whilst increasing the number of contracts signed and the pipeline of opportunities. Our increasing brand recognition has supported growth in the number of contracts signed and has driven entrance into new markets and verticals. With good visibility of customer implementations and a doubling of our sales pipeline,we are confident in achieving strong growth in the second half of 2014 and beyond.

Hugh Fitzwilliam-Lay, Chairman Marne Martin, CEO 17 September 2014

ServicePower Technologies plc

All amounts relate to continuing activities.

ServicePower Technologies plc

ServicePower Technologies plc

The 30 June 2013 Equity has been restated in respect of the convertible loan note (see 2013 audited statements)ServicePower Technologies plc

The 30 June 2013 balance sheet has been restated in respect of the convertible loan note (see 2013 audited statements)

The half-yearly report was approved by the Board of Directors and authorised for issue on 16 September 2014

and was signed on its behalf by:

M Martin

Director

ServicePower Technologies plc

ServicePower Technologies plc

1. General information

The half-yearly report has been prepared on the basis of the accounting policies set out in the Group's financial statements for the year ended 31 December 2013. The annual figures set out in this document do not constitute statutory financial statements within the meaning of section 434 of the Companies Act 2006. A copy of the 2013 statutory accounts has been delivered to the Registrar of Companies. The report was unqualified and did not contain statements under section 498(2) or (3) of the Companies Act 2006, or include a reference to any matter to which the auditors drew attention by way of emphasis of matter without qualifying their report.

 The half-yearly report has not been audited or reviewed by the Company's auditor pursuant to the Auditing Practices Board guidance on "Review of Interim Financial Information."

2. Accounting policies

The condensed set of financial statements has been prepared using policies consistent with IFRS as adopted by the European Union. The same accounting policies and methods of computation are followed in the condensed set of financial statements as applied in the Group's latest audited financial statements for the year ended 31 December 2013 and published by the Group on 10 May 2014. While the financial figures in the half-yearly report have been computed in accordance with IFRSs applicable to interim periods, this half-yearly report does not contain sufficient information to constitute an interim financial report as that term is defined in IAS 34.

The Group recognises that a significant portion of cash receipts comes from the sale of large software licences. The signing of contracts by large corporate customers can be difficult to predict due to long procurement cycles and therefore there is uncertainty in forecasting the timing and quantum of cash receipts from these customers.

During the period, the Group has continued its Service Operations business, which provides a regular revenue stream and cash funding to the Group and the Group continues to monitor costs closely in order to conserve cash.

At 30 June 2014 the Group had net assets of £2,198,000 including £1,555,000 of cash and cash equivalents (31 December 2013 - net assets of £3,172,000 including £2,672,000 of cash and cash equivalents and 30 June 2013 - net assets of £3,251,000 including £2,326,000 of cash and cash equivalents).

Going concern

Based on cash flow forecasts which take into account current sales orders and expected conversion of opportunities, expenditure forecasts and the Group's current cash balance, the directors consider it appropriate to prepare the Group's half-yearly report on the going concern basis.

3. Business segments

Segment information reported externally is analysed on the basis of the Group's business streams, namely Service Scheduling, which provides scheduling solutions and Service Operations, which provides claims and despatch processing in the consumer electronics market. This method of segment analysis is also used to report to the Board and the Chief Executive.

Segment information about these businesses is presented below:

Segment assets

4. Taxation on loss from ordinary activities

No tax charge arises in the current period due to the tax losses available. A tax charge of £nil arose in the periods ended 30 June 2014 and nil was payable at 31 December 2013.

5. (Loss)/earnings per share

The calculation of the basic and diluted earnings per share is based on the following data:

(Loss)/earnings

The dilutive effect in those periods was not material.

6. Note to the cash flow statement