Half Yearly Report

11 September 2013

ServicePower Technologies plc

("ServicePower" or the "Company")

Interim Results

ServicePower (AIM: SVR), a market leader for outsourced service and field management, announces its half-yearly report for the period ended 30 June 2013.

Financial Highlights

· Revenue of £7.3 million (H1 2012: £5.6 million)

· Gross profit £3.5 million (H1 2012: £2.4 million)

· Profit before tax £0.2 million (H1 2012: loss of £0.6 million)

· Cash balance of £2.3 million as at 30 June 2013 (30 June 2012: £4.1 million and 31 December 2012: £4.5 million) due to extraordinary expenses/advisory fees, delay in debtor collections, and normal timing fluctuation of deferred revenue/maintenance renewals

Operational Highlights

· Acquisition and launch of enhanced Mobility offering

· Several significant contracts secured:

o Landmark global contract for ServiceScheduling

o Various contracts with blue chip organisations for the Company's recently enhanced Mobility offering

o ServiceMarket contract with Assurant Solutions and launch of Servicers.com

o Numerous new ServiceOperation contracts

o Extension of ServiceOperations contracts with an iconic British department store

o A number of new ServiceScheduling relationships established

· Post period end, appointment of Marne Martin as CEO, from interim CEO

Marne Martin, CEO, ServicePower said,"It is clear that ServicePower has extremely valuable assets in its people, its customer base and its unique global field management platform. The first half of the year has seen demonstrable sales success resulting in a growing, prestigious customer base. The Board believes the market is set for long-term growth and a systematic approach to ensuring ServicePower's success and delivering increased shareholder value is now in place. ServicePower is innovating field service."

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About ServicePower

ServicePower Technologies Plc is the only company that can provide a complete, global field management platform that controls all elements of the service lifecycle from offering an appointment, assigning resource and dispatching work through to tracking resources, processing claims and providing business intelligence and analytical reports. With advanced intelligence-based scheduling, dispatch and open market auction software, as well as access to a global network of 86,000 repair and installation technicians, we enable companies to control and schedule work using a mixed resource pool of employees and independent contractors. ServicePower provides solutions that cross all industries. Selected current customers include Assurant Solutions, Mitsubishi, Farmers Insurance and Pitney Bowes.

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

Introduction

The half year was one of continued development for ServicePower, growing both the product offering and customer base. Highlights included the acquisition of key strategic mobile capabilities, which have been efficiently integrated into the product offering, launched and the first new mobile customers secured, the winning of international contracts for the ServiceScheduling platform, and a number of new ServiceOperations customers in both the USA and the UK.

These successes resulted in an improved financial position for the business. Revenue increased by 31% to £7.34 m (H1 2012: £5.59m), delivering a modest operating profit of £0.40m (H1 2012: loss of £0.41m) benefitting from a positive exchange rate gain of £0.57m (H1 2012: loss of £0.17m) which offset the £0.61m in non-recurring/extraordinary expenses incurred in the period.

A key focus of the management team moving forward will be on delivering improved operating margins, providing a strong financial footing for the business.

Financial Review

Total revenue as reported for the 6 months increased by 31% to £7.34m (H1 2012: £5.59m). Within this, ServiceOperations revenue increased by 5% to £2.1 million (H1 2012: £2.0 million) whilst ServiceScheduling revenue increased by 44% to £5.2 million (H1 2012: £3.6 million).

Total cost of sales in the 6 months increased to £3.8 million (H1 2012: £3.2 million) in line with increased 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 £0.5 million in H1 2013 (H1 2012: £0.4 million).

Gross profit for the period increased to £3.5 million (H1 2012:£3.2 million). Operating profit increased to £0.40 million (H1 2012: operating loss of £0.41 million) as a result of the increase in revenues, one-off or extraordinary expenses of £0.61 million expensed, and the benefit of a foreign exchange gain of £0.57 million (H1 2012: foreign exchange loss of £0.17 million). Profit before tax increased to £0.22 million versus a loss in the first half of the prior year of £0.57 million.

The basic and diluted gain/(loss) per share for the half year was 0.1 p (H2 2012: (0.3)p).

Cash balances were £2.3 million at 30 June 2013 compared to the cash balances at 30 June 2012 of £4.1 million. Cash balances at 31 December 2012 were £4.5 million. The difference in cash from year end 2012 to mid-year 2013 is primarily due to the £0.6m of extraordinary/non-recurring expenses, £0.8m related to overdue invoices, which have subsequently been collected post period end, and the normal decline in half year cash related to the timing of maintenance contract renewals of £0.7m.

The directors cannot recommend the payment of a dividend at this time (2012: same).

Operational Review

Customers

ServicePower generated momentum in the period, adding a number of new contracts in each key product category; scheduling, operations and mobility. The global capabilities of the platform were underlined in January when one of the world's leading providers of unified communication solutions signed a landmark global contract for ServiceScheduling, with initial roll out of the software to its operations in EMEA, North and South America. The attraction of the newly launched web-based marketplace ServiceMarket, was demonstrated when Assurant Solutions extended an existing contract to the site on which pre-approved servicers can 'bid' for service jobs advertised by retailers. 

A number of new ServiceOperations contracts were secured, in both the US and UK, including with a number of international retailers and an iconic British department store. There was demand for the Company's recently enhanced Mobility offering from existing clients as well as new clients, demonstrated by new contracts in the period with several blue chip companies.These contracts add to the strong levels of recurring revenues generated by the business, which is complemented by the strengthening pipeline and general economic outlook.

Platform development

The ServicePower suite of offerings has been enhanced such that it is now a complete, field service platform, providing businesses in multiple industry verticals with the capability to improve customer service and increase efficiencies through the ability to access and manage field service technicians wherever they may be located, and whether they be employees or independents.

In addition to the acquisition of the new mobility product, enhancements to the existing product portfolio included the launch of version 9.0 of ServiceScheduling and the launch of version 2.0 of ServiceBroker. ServiceBroker provides a common user interface that enables customers to integrate their CRM at one point and thereby access the entire range of ServicePower products vis a vis a field service platform that can then route work to employed engineers, the independent servicer network or put work out to bid via ServiceMarket. Furthermore, the Company introduced upgrades to the SaaS products of Field Force Express, S2 Suite and Servicers.com.

Strategy

ServicePower has a clear strategy for growth, focused on three key areas.

Firstly, building an improved brand position as the leading provider of field services software solutions to retailers, manufacturers, insurance providers and conglomerates. This includes increased interaction with current customers to ensure we are working with them and addressing their needs. From a product perspective, this will see the full integration of all the new product areas, S2, Mobile & ServiceMarket, into the platform and subsequent refinement of the platform to enable clarity in our marketing efforts and the simplification of the adoption of these services by existing clients.  

The second area of focus will be on the cross sale of this coherent platform across our customer base. Only 21% of our customers have more than one of our core products, presenting a solid organic growth opportunity for ServicePower. We believe various market drivers support this initiative, such as the move to reduce owned field service workforces and the need to supplement with third parties and the need for mobile solutions.

The third area of focus will be on the sales team which will be re-focused into two clear operations: Client Services, whose responsibility will be on the care and interaction with existing customers, and Global sales, who will be tasked with seeking new Scheduling, Operations and Mobility opportunities.

Board Changes

On 26 July 2013, the Company announced that following the service of notice, unless an earlier date was agreed with the CEO at the time, Mark Duffin, his employment would come to an end on the expiry of his notice entitlement of 12 months and that he remained an employee of the Company until such time. Effective 10 September 2013, Mark Duffin resigned from the Board. Marne Martin, previously CFO, was named interim CEO on 26 July 2013, and CEO on 11 September 2013.

Marne Martin joined the Board of ServicePower on 7 January 2013, working alongside Sally Gillings, the outgoing CFO in a handover period until taking over the CFO role on 28 February 2013. Discussions are underway regarding naming a Finance Director. In the interim, the Company benefits from a solid finance function including a CPA in the USA and a CIMA qualified Accountant in the UK.

Outlook

It is clear that ServicePower has extremely valuable assets in its people, its customer base and its unique global field management platform. The first half of the year has seen demonstrable sales success resulting in a growing, prestigious customer base. The Board believes the market is set for long-term growth and a systematic approach to ensuring ServicePower's success and delivering increased shareholder value is now in place.

Lindsay Bury, Chairman Marne Martin, CEO 11 September 2013

ServicePower Technologies plc

All amounts relate to continuing activities.

ServicePower Technologies plc

ServicePower Technologies plc

ServicePower Technologies plc

The half-yearly report was approved by the Board of Directors and authorised for issue on 11 September 2013

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 2012. 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 2012 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 2012 and published by the Group on 21 March 2013. 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 2013 the Group had net assets of £2,235,000 including £2,326,000 of cash and cash equivalents (31 December 2012 - net assets of £1,787,000 including £4,524,000 of cash and cash equivalents and 30 June 2012 - net assets of £2,724,000 including £4,134,000 of cash and cash equivalents).

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 2012 and nil was payable at 31 December 2012.

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