Interim Results

30 September 2015

ServicePower Technologies plc

("ServicePower" or the "Company")

Interim Results

ServicePower (AIM: SVR), a market leader for mobile workforce management software solutions, announces its unaudited interim results for the six months ended 30 June 2015.

Financial Highlights

Trading for the half-year is in line with management expectations and ahead of the same period last year.

· Total revenues up 13% to £6.94 million (H1 2014: £6.16 million)

o Recurring revenues accounted for 81.5%

o SaaS now deployed to 71% of our customers

· Gross profit up 26% to £3.4 million (H1 2014: £2.7 million)

· LBITDA reduced by 71% to £0.2 million, including £0.1 million in extraordinary expenses and £0.2 million in IT cloud transition costs (H1 2014 LBITDA: £0.7 million)

· Loss before tax reduced by 33% to £0.6 million (H1 2014: £0.9 million), including the accrued interest that was converted on 30 June 2015

· Net cash at 30 June 2015 was £0.7 million, prior to the receipt of the £0.75m short term loan (as announced on 30 June 2015) (30 June 2014 Net Cash: £0.6 million)

o The Company anticipates a significant improvement in the Company's cash position in H2 2015

· Strengthening of the balance sheet through the early negotiation of the conversion of the majority of the loan notes to equity

· Expected return to positive EBITDA in H2 2015

Operational Highlights 

· Following the momentum gained in 2014, 11 deals were signed during the period with new and existing customers, with a strong pipeline in place for H2 2015 and 2016

· The Company entered into a number of strategic partnerships in order to broaden its functional capabilities and cloud-based offerings

· Continued investment in product innovation

· The management remains confident in the strategy and outlook for the business

Post Period end

· Engaging in proofs of concepts with two large new scheduling prospects - over 4,000 technicians potential in each case - and one large new mobile prospect

· Filing of three new patent applications around the next generation optimisation algorithm quantum annealing related to scheduling workforces

· Launched a new state of the art mobile workforce management product NEXUS FStm

Marne Martin, CEO of ServicePower plc, commented: "I am delighted to be able to report that trading for the first half is in line with management expectations and ahead of the same period last year. ServicePower continues to focus on innovation and the development of our core products: optimised scheduling, mobile dispatch and third party contractor management. That focus, in addition to our growing strength in sales and execution, is to continue building on the momentum achieved in the first half of 2015."

For further information, please contact:

About ServicePower

ServicePower, the acknowledged leader in Optimisation Technology, 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 2015 Overview

The financial results for H1 2015 show solid progress for ServicePower as the Company continues to gain momentum with new and extended contracts, new product innovation and partner expansion. We have delivered results in line with management expectations, and ahead of the same period last year, while executing on our stated strategic and operational objectives and winning industry awards. Profitability likewise improved, despite the brand and product investment made to strengthen ServicePower's positioning in the industry.

The Company has worked to strengthen its balance sheet, having negotiated the early redemption and conversion of its convertible loan notes as announced on 30 June 2015. The Company are delighted that the noteholders have continued to demonstrate their support, both having increased their holdings through a majority equity conversion of the loan note.

ServicePower signed 11 contracts in H1 2015, across our entire product suite: ServiceScheduling, ServiceMobility and ServiceOperations. The contracts represent both new and extended contracts, either in term or product additions. The latest contracts improve our SaaS deployment metrics to 71% of the entire client base, demonstrating continued focus on moving more fully to a SaaS based business model.

ServicePower also continued to enhance our product suite with the latest innovations in workforce management technology, including:

· Launch of NEXUS FStm, single vendor field service management software unmatched by competitors, which provides functional full field service management, as well as mobile dispatch built upon the ServiceMobility platform, in the cloud, to any sized business. NEXUS creates a new sales channel for ServicePower, both in the small to medium sized business sector, as well as with partners, since it too has been designed to be white labelled and sold in conjunction with or separately from a full workforce management deployment.

· The filing of new patents for a newer algorithm for ServiceScheduling called Quantum Annealing, created in partnership with KTP which drives greater productivity enhancements and route efficiencies by making the optimisation more efficient for users. More importantly, the new algorithm is to be integrated with Optimization on Demandtm and NEXUS FStm so that users and partners reselling those new products can benefit from the latest optimization technology available on the market.

· Launch of the new Management Console that provides client managers with a single highly configurable user interface to view current field service operations in real time, and collaborate with field technicians, again, enhancing the overall customer experience.

· Launch of Optimization on Demandtm which enables any business to take advantage of the benefits of optimized routing, as a service. Optimization on Demandtm is particularly exciting as it provides the opportunity for our partner ecosystem to white label and resell our optimization algorithm unbundled from ServiceScheduling, eliminating barriers to sales in cases where prospects don't require a full, end-to-end workforce management software deployment.

· New features and configurable, intelligent forms were released earlier in H1 through ServiceMobility, providing a more features and completely configurable products, which enhances the customer experience through additional mobilisation of onsite process, as well as cost savings for clients that do not have to rely on IT resources to make the software code changes.

· ServiceOperations was enhanced with a variety of new customer functionality, including new credentialing integration, as well as crowd sourced ratings data, enabling our clients to more discreetly manage third party contractor labour sent to customer's homes or offices.

· Progress continues to be made in 2015 in creating a unified platform whereby ServicePower offers and thus has only to support a single, common technology stack and data model with schema-less design, delivered optionally on Amazon Web Services.

ServicePower continues to extend its partner ecosystem with partners whom add complementary features or functionality, or to those whom can open sales channels, in terms of verticals or geographies. In H1 2015, ServicePower improved its sales pipeline and execution abilities through signing strategic partnerships with:

· Concirrus, named as a top 10 PAAS (platform as a service) UK company by Cloudscape, a Cool Vendor in the Internet of Things 2015 by Gartner, and a leading Internet of Things (IoT) solution to provide an integrated SaaS IoT/M2M platform. Integrated to ServiceScheduling, and benefitting from the new Quantum Annealing algorithms, sectors such as insurance, in which both ServicePower and Concirrus have a strong foothold, can now deploy an end-to-end connected workforce management solution which takes advantage of IoT/M2M data in the cloud. This cloud based solution, only available from Concirrus and ServicePower, changes the way IoT/M2M data is consumed, opening up new SaaS channels.

· QTon Solutions, the metering industry's leading field service management software provider in the United Kingdom provides an entrance to the metering industry for ServicePower.

· Semit IT Solutions extends ServicePower's reach into the Latin American marketplace.

· Two new implementation partners, including Jolt Consulting and Group Seven Consulting provide extended implementation services enabling ServicePower to support additional simultaneous and global deployments.

ServicePower is recognized by the industry and our clients as a visionary of mobile workforce management technology. During the period, ServicePower was pleased to be awarded for ServiceMobility the "Best for Mobile Workforce Management Solutions" at the Corporate Visions Executive Awards 2015. The Company was previously named a Visionary in the Gartner 2014 Magic Quadrant for Field Service Management, the Excellence Award at the 2014 M2M Evolution IoT and honoured by Jones Lang LaSalle (JLL) with an EMEA IFM Supplier of Distinction Award, recognizing ServicePower's exceptional performance of and contribution to JLL's success.

Operational Review

ServiceScheduling

ServiceScheduling, the Company's flagship product, has continued product momentum in the first half of 2015 with very high retention rates and 83% growth in product sales. During the first half existing clients were upgraded to the latest version, while innovation efforts focused on Optimization on Demandtm, the new Quantum Annealing optimization algorithm, the Management Console, integration to partner products, as well as additional internationalization enhancements

The second half of the year will see continued investments in adding further internationalization, integration of Quantum Annealing to NEXUS FStm, additional product features, and cloud deployment via Amazon Web Services in support of new global client relationships. The Company has seen month-on-month growth in new business opportunities with increased partner and multinational interest.

The first M2M Connected Services engagements are underway and ServicePower is receiving a good level of interest from Scheduling clients and prospects in this area, driving our ability to demonstrate our unique approach to enabling a preventative business model with IoT data.

Key customer wins in the half include a leading global manufacturer of hot water solutions with operations in 70 countries worldwide, a leading UK loss adjusting and claims-management company,an extended contract with a market leader in the global fire protection and security solutions industry and the continuation of deployments by Electrolux Home Appliances, and Jones Lang LaSalle. ServicePower's strength in M2M technology, recognized by industry analysts, has driven the Company into new verticals such as the insurance sector with a unique SaaS offering. There are large potential opportunities with new and existing clients for conditional and highly sophisticated, next generation scheduling.

ServiceOperations

ServiceOperations has had an excellent first half with continued steady growth in revenue of 33% due to execution of contracts with a diverse range of clients:

· warranty solutions to manufacturers;

· distributors and retailers in the UK;

· a market leader of home appliance products in Europe;

· a renewed contract with a leading retail business in the UK;

· an international manufacturer of electrical heating, domestic appliances, cooling, ventilation, and renewable energy solutions;

· a new contract with Permaplate, manufacturer of vehicle appearance protection products in North America;

· a new contract with JVCKENWOOD Canada, operations in both the United States and Canada; and

· a new contract with a global leader in audio systems, docking stations, sound bars, headphones and connected audio in support of its multi-brand music lifestyle business.

Electrolux Home Appliances, Homeserve, General Electric Appliances, BSH, and AIG Warranty all continue to expand utilization of ServiceOperations, increasing volumes in H1 2015.

Further execution is expected in the second half of the year as pipeline activities continue to gain momentum ahead of end of year budgeting. Product innovations continue at a weekly release schedule, both delivering roadmap as well as client requested features, including new credentialing integration, self-service configurability, integration to NEXUS FStm infrastructure improvements and globalization.

Strategy update

The management will continue to focus its efforts on driving sales, converting the pipeline, successfully implementing the contracts secured in the first half of the year, and product innovation. The Company also continues to invest in talent throughout all levels of the business to strengthen its organisational structure.

Discussions are also underway to broaden the strategic partnership network with a number of independent software vendors and consulting partners that could benefit 2016 activities. Improved engagement with trade analysts is also driving increased referrals of ServicePower in the marketplace.

Through its growing partner ecosystem and two new products capable of being white labelled and sold as stand-alone features, ServicePower continues to expand its forward pipeline. Pipeline conversion is still impacted by Enterprise sales cycles that average 12 months. For ServiceScheduling, this is likely to continue, although NEXUS FSTM is expected to benefit from shorter sales cycles beginning in 2016. Recognition of revenue is also at times subject to delays, driven by customers and their internal implementation timetables.

Sales and Marketing

Investment in sales and marketing activities continued in the first half of the year and will help drive brand awareness and pipeline development in future periods. A new corporate website was launched and refreshed with improved branding, marketing automation, digital marketing activities and analyst awareness has supported increased interest in and demand for ServicePower products. The ServicePower brand is viewed online and by the analyst communities as a leading mobile workforce management software provider.

Financial Review

Total revenue in the half increased by 13% to £6.94 million (H1 2014: £6.16 million), of which 81.5% is recurring and 71% deployed on a SAAS basis. Within this, ServiceOperations revenue increased by 33% to £3.2 million (H1 2014: £2.4 million) whilst ServiceScheduling revenue remained the same as prior year at £3.8 million (H1 2014: £3.8 million) benefiting from an 83% growth in product sales, but a reduction in professional services billings as delays occurred in some of the larger global rollout timetables due to customer delays. A number of large new prospects/customers were signed as pilots in H1 2015 with larger expansion(s) expected in 2016.

ServiceOperations benefitted from increases in revenue in both the UK and US with the launch of additional new clients. ServiceOperations growth is expected to continue in the second half of the year due to the Electrolux and new wins in the UK.

ServiceScheduling continues to be impacted by the conversion of license sales in H1 2015 from a perpetual license to a SAAS model, new pipeline opportunities generated in late 2013 and 2014 are taking time to mature such that they would be contracted and/or implemented in H2 2015.

Total cost of sales in the six months remained the same as the prior year at £3.5 million (H1 2014: £3.5 million).

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 further in infrastructure, support, and other related functions, expensed R&D of £0.8 million in H1 2015 (H1 2014: £0.6 million).

Gross profit for the period increased to £3.4 million (H1 2014: £2.7 million) as a result of the increase in ServiceOperations revenue during the period. The Company generated an operating loss of £0.5 million (H1 2014: £0.9 million), given the timing of license deals in the ServiceScheduling segment as well as incurring an additional £0.2m of IT cloud transition costs during the period. ServicePower made a loss before tax of £0.6 million (H1 2014: £0.9m), which included the accrued interest that was converted from the convertible loan note, as of 30 June 2015, as announced on 30 June 2015.

The basic and diluted loss per share for the half year was 0.27p (H1 2014: loss per share of 0.47p).

Cash balances were £0.7 million at 30 June 2014 compared to the cash balances at 30 June 2014 of £1.6 million, and £2.7 million at 31 December 2014. The difference in cash from year end 2014 to mid-year 2015 is primarily due to the timing of accounts receivable and accounts payable balances. The Company anticipates significant improvement in the Company's cash position in H2 2015, through increased cash collection and the timing of support renewals.

The Directors do not recommend the payment of a dividend at this time (2014: nil).

Outlook

ServicePower has made good progress in the first half of the year in terms of sales execution and exciting product innovation. We have successfully 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 our expansion into new markets and verticals. Consequently, for the second half of the year, the directors anticipate a return to positive EBITDA. Furthermore, given the Company's working capital cycle and the redemption and conversions of the convertible loan notes, this will be accompanied by a significant improvement in the cash position. A strong pipeline from both organic sales efforts as well as from our newly extended partner ecosystem gives the Board confidence of achieving strong growth in the second half of 2015 and beyond.

Hugh Fitzwilliam-Lay, Chairman Marne Martin, CEO

30 September 2015

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 30 September 2015

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 2014. 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 2014 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 2014 and published by the Group on 29 June 2015. 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 2015 the Group had net assets of £2,752,000 including £660,000 of cash and cash equivalents (31 December 2014 - net assets of £2,418,000 including £2,702,000 of cash and cash equivalents and 30 June 2014 - net assets of £2,198,000 including £1,555,000 of cash and cash equivalents).

ServicePower Technologies plc

2. Accounting policies (continued)

Going concern (continued)

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:

ServicePower Technologies plc

3. Business segments (continued)

ServicePower Technologies plc

3. Business segments (continued)

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 2014.

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.

ServicePower Technologies plc

6. Note to the cash flow statement