Half-Yearly Report

RNS Number : 0866S

ServicePower Technologies PLC

03 September 2010

 

3 September 2010

ServicePower Technologies plc

("ServicePower" or the "Company")

Half-yearly report

 

ServicePower (AIM:SVR), a market leader for outsourced service and field management, announces its half-yearly report for the period ended 30 June 2010.

 

Financial Highlights

·; Revenues increased by 6% to £10.0 million (H1 2009: £9.4 million)

·; Gross profit reduced by 36% to £2.3 million (H1 2009: £3.6 million)

·; Profit before tax was £0.7 million (H1 2009: loss £2.0 million)

·; Adjusted loss before tax* £0.3 million (H1 2009: £0.6 million)

·; Cash balance at 30 June 2010 of £3.4 million (30 June 2009: £3.5 million and 31 December 2009: £3.5 million).

 

*Adjusted for foreign exchange gain of £1.0 million (2009: foreign exchange loss £1.3 million and one-off restructuring costs of £0.1 million).

 

Operational Highlights

 

·; Sales focused strategy resulted in new contract wins in the US including Pitney Bowes, South Jersey Gas, and Farmers Insurance and post half year, in the UK, a large independent warranty provider and a major insurance loss adjuster.

·; Established more new partnerships including CDC, Syclo and in South America, Rewar.

 

 

 

Mark Duffin, CEO, ServicePower said, "the first half of the year has seen steady progress, and the business is well placed for the second half of the year.

 

The business is seeing an increase in interest for its products and services, with a number of companies requiring ServicePower to quote for further development of their existing bespoke solutions.

 

ServicePower is the only independent global provider in the marketplace and our market position and expertise is becoming more widely known and we look forward to an exciting future."

 

For further information, please contact:

 

ServicePower Technologies PLC	finnCap
Tel: +1 410 571 6333	Tel: 020 7600 1658
Mark Duffin, Chief Executive Officer	Marc Young
	Charlotte Stranner

 

About ServicePower

ServicePower, publicly traded on the AIM market operated by the London Stock Exchange (AIM:SVR), allows companies to locate their employed field resources in the right geography, ensure they have the right mix of skills, and outside this geography create a network of independent, authorised service contractors whose costs are efficiently managed by our sophisticated warranty management software. The schedules and routes for both the employed field resources and the independent servicers are optimised by ServicePower's technology to ensure the right balance between the cost of operations and ensuring customers receive a superior service experience.

Joint Statement of the Chairman and Chief Executive

 

Introduction

 

ServicePower has made good progress in the first half of the year and the Company is working hard to achieve its goals for 2010. The changes made during the previous year are proving to be successful and having substantially reduced its overheads which are enabling the Company to be more competitive in quoting for new business, this has significantly reduced its losses.

 

Market conditions continue to be challenging, and some of ServicePower's prospective clients' decisions regarding product purchases have fallen into later quarters in the year but the Company's prospect list is the best in its history.

 

The strategy of the business remains, as it has been for the past three years, sales and marketing led, and this is being honed even more as the year progresses with a strong focus on our core business of a dual offering of a software solution or managed service for our clients.

 

The Company will retain its focus on increasing regular transactional business, thereby improving visibility of revenue and costs, and it has been able after the business changes in 2009, to be more flexible and competitive with its pricing model for the market.

 

Financial Review

 

The Company has two segments, Service Operations and Service Scheduling.

 

Total revenue for the 6 months increased by 6% to £10.0 million (H1 2009: £9.4 million). Within this, Service Operations revenue increased by 59% to £7.0 million (H1 2009: £4.4 million) whilst Service scheduling licence and consultancy revenue reduced by 40% to £3.0 million (H1 2009: £5.0 million).

 

A breakdown of revenue from the Service Operations segment is as follows:

 

	H1 2010	H1 2009
	£ million	£ million
Hosting / SaaS	1.3	1.5
Operations US	1.6	1.6
Operations UK	4.1	1.3
Total	7.0	4.4

A breakdown of revenue from the Service Scheduling segments is as follows:

 

	H1 2010	H1 2009
	£ million	£ million
Licences	0.3	1.7
Implementation / Support	2.5	2.9
Mobility	0.2	0.4
Total	3.0	5.0

 

The Company continued to invest in enhancement of functionalities across all of its product range, investing £0.4 million in H1 2010 (H1 2009: £0.6 million).

 

Gross profit for the period decreased to £2.3 million (H1 2009: £3.6 million) due to a change in product mix as shown in the table above.

 

The total profit before tax was £0.7 million compared to a loss of £2.0 million in H1 2009. This increase includes a reported gain on currency translation of £1.0 million (2009: loss of £1.3 million).

 

The adjusted loss before tax* was £0.3 million, an improvement of £0.3 million on the adjusted loss of £0.6m in the same period last year. This resulted from a reduced cost base following the re-structuring programme which took place in H2 2009.

 

The basic and diluted earnings per share for the year was 0.36p (H1 2009: basic and diluted loss per share of 1.06p).

 

Cash balances were £3.4 million at 30 June 2010 comparable to the cash balances at 30 June 2009 of £3.5 million. Cash balances at 31 December 2009 were £3.5 million.

 

The directors do not recommend the payment of a dividend at this time.

 

* adjusted loss before tax refers to the profit/loss before tax adjusted for a foreign exchange translation profit of £1.0 million (2009: foreign exchange loss of £1.3 million and one-off restructuring costs of £0.1 million).

 

 

Operational Review

 

Partnerships and Customers

 

Existing partnerships are resulting in an increased level of lead generation and we are confident that it will provide the Company with a solid pipeline of opportunities in the second half and into the coming years. New partnerships signed in the period were with CDC, Syclo and in South America, Rewar.

 

ServicePower's sales and marketing focus continues to produce results. SERVICEScheduling contracts were signed with 2 new customers in the first half of 2010 (H1 2009: 5 new customers) Pitney Bowes and South Jersey Gas. Further software and consultancy services including client funded system enhancements were provided to existing clients such as E.ON, CCCIS and NCR.

 

Post period end, 2 new customers, a large independent warranty provider and a major insurance loss adjuster signed SERVICEOperations contracts.

 

A significant contract for SERVICEStats was signed in the first half of 2010 with Farmers Insurance, part of the Zurich group of companies, and this compelling offering is now being developed and offered to a number of other clients.

 

SERVICEOutsourcing began to generate revenue with the launch of its greenhouse installation proposition being established with a major tier one retailer via a partner in the US.

 

The contract wins were across ServicePower's entire product and solutions set, demonstrating the quality of the Company's portfolio of offerings.

 

 

Growth Strategy

 

The Company still maintains a constant and cost effective sales and marketing strategy in relation to existing products in its traditional consumer appliance sector. It is planned during the final quarter of 2010 that the products will be sold in a variety of other markets and as such ServicePower is now targeting additional markets where the opportunities are regarded to be the greatest.

 

Despite the reduction in the Company's headcount in 2009, the Company has increased business volumes in the first half of the year and the Board would like to sincerely thank staff at all levels for their efforts.

 

Outlook

 

ServicePower is confident about its strategy and its market position. It has a good foundation from which to grow and increased interest in the Company's products and services. If the current level of business enquiries become orders in the near future, it is anticipated there would be a significant positive effect on the Company's profitability.

 

 

Lindsay Bury, Chairman Mark Duffin, CEO 3 September 2010

 

 

ServicePowerTechnologies plc

 

		Unaudited	Unaudited	Audited
		6 months to	6 months to	12 months to
		30 June	30 June	31December
		2010	2009	2009
	Note	£'000	£'000	£'000
Revenue - Service Scheduling	3	2,977	5,033	7,793
- Service Operations	3	7,011	4,396	10,315
Total revenue		9,988	9,429	18,108
Cost of sales		(7,667)	(5,825)	(11,813)
Gross profit		2,321	3,604	6,295
Administrative expenses - other expenses		(2,499)	(4,230)	(7,219)
- restructuring costs		-	-	(900)
- impairment of
intangible assets		-	-	(822)
- foreign exchange
profit/(loss)		964	(1,293)	(1,196)
		(1,535)	(5,523)	(10,137)
Total profit/(loss) from operations		786	(1,919)	(3,842)
Investment revenue		2	1	2
Finance costs		(109)	(91)	(177)
Profit/(loss) before taxation		679	(2,009)	(4,017)
Taxation	4	-	-	(165)
Profit/(loss) for the period/year		679	(2,009)	(4,182)
		Pence	Pence	Pence
Earnings/(loss) per share
Basic	5	0.36p	(1.06p)	(2.2p)
Diluted	5	0.36p	(1.06p)	(2.2p)

 

All amounts relate to continuing activities.

ServicePower Technologies plc

 

		Unaudited	Unaudited	Audited
		30 June	30 June	31December
		2010	2009	2009
		£'000	£'000	£'000
Exchange differences on translation of foreign
operations		(632)	908	659
Net (loss)/income recognised directly in equity		(632)	908	659
Profit/(loss) for the period/year		679	(2,009)	(4,182)
Total comprehensive income for the
for the period/year		47	(1,101)	(3,523)

 

ServicePower Technologies plc

 

			Equity attributable to equity holders of the Company
		Share capital		Share premium account	Share scheme reserve	Exchange translation reserve			Equity reserve		Merger reserve		Retained reserves		Total
		£'000		£'000	£'000	£'000		£'000		£'000		£'000		£'000
Balance at 1 January 2010		9,926		18,626	558	(1,312)		13		(3,008)		(23,121)		1,682
Profit for the period		-		-	-	-		-		-		679		679
Other comprehensive income
for the period		-		-	-	(632)		-		-		-		(632)
Total comprehensive income
for the period		-		-	-	(632)		-		-		679		47
Credit to equity for equity-settled
share-based payments		-		-	38	-		-		-		-		38
Balance at 30 June 2010		9,926		18,626	596	(1,944)		13		(3,008)		(22,442)		1,767
Balance at 1 January 2009		9,926		18,626	478	(1,971)		13		(3,008)		(18,939)		5,125
Profit for the period		-		-	-	-		-		-		(2,009)		(2,009)
Other comprehensive income
for the period		-		-	-	908		-		-		-		908
Total comprehensive income
for the period		-		-	-	908		-		-		(2,009)		(1,101)
Credit to equity for equity-settled
share-based payments		-		-	39	-		-		-		-		39
Balance at 30 June 2009		9,926		18,626	517	(1,063)		13		(3,008)		(20,948)		4,063
Balance at 1 January 2009		9,926		18,626	478	(1,971)		13		(3,008)		(18,939)		5,125
Profit for the period		-		-	-	-		-		-		(4,182)		(4,182)
Other comprehensive income
for the period		-		-	-	659		-		-		-		659
Total comprehensive income
for the period		-		-	-	659		-		-		(4,182)		(3,523)
Credit to equity for equity-settled
share-based payments		-		-	80	-		-		-		-		80
Balance at 31 December 2009		9,926		18,626	558	(1,312)		13		(3,008)		(23,121)		1,682

 

ServicePower Technologies plc

 

		Unaudited	Unaudited	Audited
		30 June	30 June	31 December
		2010	2009	2009
Assets		£'000	£'000	£'000
Non-current assets
Intangible assets		245	1,397	409
Property, plant and equipment		359	227	369
		604	1,624	778
Current assets
Inventories		55	52	51
Trade and other receivables		3,188	2,958	4,005
Cash and cash equivalents		3,449	3,498	3,543
		6,692	6,508	7,599
Total assets		7,296	8,132	8,377
Current liabilities
Trade and other payables		(2,523)	(1,249)	(3,427)
Deferred revenue		(1,625)	(1,591)	(2,005)
Other creditors		(38)	(83)	(30)
Convertible loan note		(1,343)	(1,146)	(1,233)
Total liabilities		(5,529)	(4,069)	(6,695)
Net assets		1,767	4,063	1,682
Equity
Share capital		9,926	9,926	9,926
Share premium account		18,626	18,626	18,626
Share scheme reserve		596	517	558
Exchange translation reserve		(1,944)	(1,063)	(1,312)
Equity reserve		13	13	13
Merger reserve		(3,008)	(3,008)	(3,008)
Retained earnings		(22,442)	(20,948)	(23,121)
Total Equity		1,767	4,063	1,682

 

The half-yearly report was approved by the Board of Directors and authorised for issue on 3 September 2010.

They were signed on its behalf by:

M Duffin

Director

ServicePower Technologies plc

 

	Note	Unaudited	Unaudited	Audited
		6 months to	6 months to	12 months to
		30 June	30 June	31 December
		2010	2009	2009
		£’000	£’000	£’000
Net cash flows used in operating activities	6	(259)	(264)	(122)
Investing activities
Interest received		2	1	2
Purchases of property, plant and equipment		(74)	(69)	(244)
Expenditure on intangible assets		-	-	(62)
Net cash used in investing activities		(72)	(68)	(304)
Net decrease in cash and cash
equivalents		(331)	(332)	(426)
Cash and cash equivalents at beginning of
period/year		3,543	3,956	3,956
Effect of exchange rate changes		237	(126)	13
Cash and cash equivalents at end of period/year		3,449	3,498	3,543

 

 

ServicePowerTechnologies 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 2009. The financial information set out in this document does not constitute statutory financial statements within the meaning of section 435 of the Companies Act 2006. A copy of the 2009 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 auditors.

 

2. Accounting policies

 

The annual financial statements are prepared in accordance 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 2009 and published by the Group on 18 March 2010. 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.

 

Going concern

As disclosed in the Joint Statement of the Chairman and Chief Executive, 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. In 2009 the Group successfully completed a wide-ranging cost cutting programme and in 2010 the Group continues to monitor costs closely in order to conserve cash.

 

At 30 June 2010 the Group had net assets of £1,767,000 including £3,449,000 of cash and cash equivalents (31 December 2009 - net assets of £1,682,000 including £3,543,000 of cash and cash equivalents). 

 

2. Accounting policies (continued)

 

Based on cashflow forecasts which take into account current sales orders and 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 software licences which provide 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:

 

Unaudited six months ended	Service	Service	Group
30 June 2010	Scheduling	Operations	Total
	2010	2010	2010
	£'000	£'000	£'000
Revenue from external sales	2,977	7,011	9,988
Segment profit	1,370	571	1,941
Central administration costs - other			(2,119)
Foreign exchange gain on
translation			964
Total central administration costs			(1,155)
Investment income			2
Finance costs			(109)
Profit before tax			679
Taxation			-
Profit after tax			679

 

 

 

  

3. Business segments (continued)

 

 

 

Unaudited six months ended
30 June 2009	Service	Service	Group
	Scheduling	Operations	Total
	2009	2009	2009
	£'000	£'000	£'000
Revenue from external sales	5,033	4,396	9,429
Segment profit	1,801	406	2,207
Central administration costs - other			(2,833)
Foreign exchange loss			(1,293)
Total central administration costs			(4,126)
Investment income			1
Finance costs			(91)
Loss before tax			(2,009)
Taxation			-
Loss after tax			(2,009)

 

Audited twelve months ended
31 December 2009	Service	Service	Group
	Scheduling	Operations	Total
	2009	2009	2009
	£'000	£'000	£'000
Revenue from external sales	7,793	10,315	18,108
Segment profit before impairment	2,974	1,106	4,080
Impairment loss	-	(822)	(822)
Segment profit after impairment	2,974	284	3,258
Central administration costs - other			(5,004)
Foreign change loss			(1,196)
Restructuring costs			(900)
Total central administration costs			(7,100)
Investment income			2
Finance costs			(177)
Loss before tax			(4,017)
Taxation			(165)
Loss after tax			(4,182)

 

  

3. Business segments (continued)

 

Segment assets

 

	Unaudited	Unaudited	Audited
	6 months to	6 months to	12 months to
	30 June	30 June	31 December
	2010	2009	2009
	£'000	£'000	£'000
Service Scheduling	1,629	2,154	1,730
Service Operations	2,198	2,459	3,090
Total segment assets	3,827	4,613	4,820
Unallocated assets	3,469	3,519	3,557
Total consolidated assets	7,296	8,132	8,377

 

 

 

4. Taxation on loss from ordinary activities

 

No tax charge arises in the current period due to the tax losses available. Tax charges of £nil and £165,000 arose in the periods ended 30 June 2009 and 31 December 2009 respectively; the latter relating to adjustments to research and development tax credit claims.

 

5. Earnings per share

 

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

Earnings

	Unaudited	Unaudited	Audited
	6 months to	6 months to	12 months to
	30 June	30 June	31 December
	2010	2009	2009
	£'000	£'000	£'000
Earnings/(loss) for the purpose of basic earnings/(loss) per
share	679	(2,009)	(4,182)
	Number	Number	Number
Weighted average number of ordinary shares for the
purpose of basic earnings/(loss) per share	189,526,299	189,264,299	189,526,299
Earnings/(loss) per share
Basic earnings/(loss) per share	0.36p	(1.06p)	(2.2)p
Diluted earnings/(loss) per share	0.36p	(1.06p)	(2.2)p

 

 

6. Notes to the cash flow statement

	Unaudited	Unaudited	Audited
	6 months to	6 months to	12 months to
	30 June	30 June	31December
	2010	2009	2009
	£'000	£'000	£'000
Profit/(loss) from continuing operations	786	(1,919)	(3,842)
Adjustments for:
Amortisation of intangible assets	194	222	423
Depreciation of property plant and equipment	110	74	144
Impairment losses on intangible assets	-	-	822
Bad debt expense	-	-	83
Loss on disposal of property, plant and equipment	-	-	24
Share-based payments provision	38	39	80
Operating cash flows before movement in working
capital	1,128	(1,584)	(2,266)
Decrease in inventories	1	6	7
Decrease in receivables	758	1,485	55
(Decrease)/increase in payables	(2,146)	(171)	1,932
Cash used by operations	(259)	(264)	(272)
Income taxes received	-	-	150
Net cash used in operating activities	(259)	(264)	(122)

 

 

 

 

 

 

This information is provided by RNS

The company news service from the London Stock Exchange