28th Sep 2005 06:00
ServicePower Technologies PlcInterim report for the six months ended 30 June 2005_____________________________________________________________________________ KEY POINTSFinance:Total Revenue up 131% to ‚£3.4M (2004 ‚£1.5M)Field Service Solutions (FSS) revenue up 115% to ‚£1.5M (2004 ‚£0.7M)SERVICEPower software revenue up 145% to ‚£1.9M (2004 ‚£0.8M)Contracted and committed revenue for 2005 in excess of ‚£7.5 million, andsubject to current volumes being maintained, ‚£9 million revenue for 2006Recurring revenue increased from ‚£400k to more than ‚£1.1 million per quarter Half-year loss reduced to ‚£1,078k (June 2004 ‚£1,435k)Cash balance at 30th June ‚£699kField Service Solutions Business:7 new contracts and 2 pilots awarded in the USUSD TV will re-launch in NovemberFSS launched in Europe7 new contracts and 2 pilots awarded in EuropeLaunched Field Service in a Box mobile phone solution in the US with SprintNextelSERVICEPower Software Business:Software licence contract in excess of ‚£1.1 million signed in AprilInsurance reseller paying ‚£500,000 per annum for exclusivityPilot projects on track for full year enterprise licences2 resellers signed in Finland and Canada ENQUIRIES: Barry Welck, Chairman Tel: 07831 396539David Brisco, Chief Executive Officer Tel: 0161 476 2277ServicePower Technologies PLCMichael Brennan Tel: 020 7071 4300Evolution Securities LimitedCHAIRMAN'S STATEMENTIntroductionI am pleased to report in the first six months of 2005 the Directors have madegreat progress in our strategy to move the Company from being a softwareprovider to a provider of computer services. Our Field Service Solutions (FSS)outsourcing revenue in the US continues to grow rapidly which led us tointroduce our outsourcing solution into Europe in January 2005. In addition theDirectors are getting much improved visibility of future revenue as the Companyhas contracted and committed total revenue for 2005 in excess of ‚£7.5 millionand subject to current volumes being maintained, ‚£9 million revenue for 2006.The new "Field Service in a Box" mobile phone solution jointly launched withSprint Nextel in August has been well received by the industry and the recentlyannounced relaunch of the USD-TV High Definition TV broadcast service inNovember will continue to push revenue growth.The FSS Europe operation has been more successful than the directors expectedwith ‚£1.3 million contracted and committed for 2005 and subject to currentvolumes being maintained, a further ‚£2 million for 2006. Due to our strategicpartnership with Elesco Europe Ltd, our independent servicer network alreadycovers consumer goods in 18 European countries.In April the SERVICEPower software business signed a ‚£1.1 million softwarelicence with a Fortune 100 company which had been delayed from 2004. Thebusiness remains unpredictable but I am pleased to report the company has astrong sales pipeline with 2 sales at contract negotiation stage. The softwarebusiness is expected to breakeven in 2005.The directors continue to invest in the FSS business in order to achieve marketgrowth and as such the FSS business is not expected to move into profitabilityuntil 2006. The Company cash position will improve during the second six monthsas software licence sales in the first nine months begin to deliver cash. TheDirectors believe the Company has sufficient cash to sustain its currentoperations. Results and DividendThe Interim Report has been prepared under IFRS with adjustments reconciled inthe notes. The loss before and after taxation was ‚£1,078k (2004: loss of ‚£1,435).The gross margin for the Software business rose to 74% (2004 27%) due tosoftware licence revenue increasing to ‚£1,167k (2004 ‚£87k). The Directorscontinue to invest in the FSS business, resulting in FSS making a loss of ‚£746k, of which ‚£315k relates to setting up FSS Europe. The administration costshave risen to ‚£2,825k (2004 ‚£1,732k) because we have a full six months costsfor FSS in Europe and the US in 2005. The total loss of ‚£1,100k includes suchnon-cash items as intangible assets amortisation (‚£189k), share based paymentprovisions (‚£63k) and depreciation (‚£89k)The loss per share for the period was 1.54p (2004: loss per share of 2.16p). At30th June the Company had ‚£699k cash (2004 ‚£3.4M). The Directors do notrecommend the payment of a dividend.Field Service Solution BusinessThe FSS business was set up in February in the US in 2004 to exploit a gap inthe market for IT solutions for companies using independent service engineers.The solution includes a web-based job despatch and electronic invoicingsolution that can be accessed on a pay-as-you-go basis. AlternativelyServicePower will offer a total service solution by taking responsibility for aservice job and ensuring it is completed by one of the independent servicecompanies registered on our network. The total service solution currentlydelivers 75% of all our FSS revenue and the Directors expect this mix tocontinue. Our first target market is consumer goods, and I am pleased to reportwe have 13 of the major brand names using our applications. The Company recently announced that USD-TV has received its second roundfunding and is preparing to re-launch the HDTV broadcast services in November.USD-TV plans to be in 12 new metropolitan areas by the end of 2006 which willrequire ServicePower to install more than 7,000 set-top boxes per month. Thislaunch will increase our ongoing revenues in the last two months of the year,but the main benefit will come in 2006. The rapid growth rate in the US, and the requests from our internationalclients wishing to utilise the same technology in Europe, encouraged theDirectors to launch FSS Europe in January 2005. We already have a prestigiouslist of clients including GE Capital, Daewoo Electronics Sales, CenturionElectronics and others we are not permitted to name. The business is growingrapidly as ServicePower is seen to be the only supplier able to deliver aweb-based, multi-language pan-European solution to international companies.Growth based on the current contracted volumes suggests the FSS Europe revenueswill exceed the total SERVICEPower software revenue in 2006. In August the Directors launched the Field Service in a Box mobile phonesolution. The application enables engineers to receive job details, drivingdirections and GPS tracking via a mobile phone. Initially it will be targetedat the 60,000 independent servicers registered on our network. Sprint Nextel ismanaging all sales and marketing activities and has trained sales staff acrossthe U.S. In the future the application will be sold into new markets which alsouse independent service companies. The Directors estimate there to be more thantwo million independent technicians across the U.S. The Directors believe themarket potential represents a significant growth opportunity for the Company.The initial launch costs have been covered by a cash advance from a partner tobe repaid in royalties.I have previously reported that ServicePower has been running a pilot of thedespatch and scheduling solution at a Fortune 100 retailer. The Directors havebeen told the pilot is considered to be a success and are working closely withour client on the next steps. SERVICEPower Software BusinessWe continue to receive an increasing number of good sales leads but the timingof signed contracts remains unpredictable. It was pleasing to sign the softwarelicence contract in April following the delay from 2004. The contract worth inexcess of ‚£1.1 million includes global contracted pricing and the directors areconfident further sales within the group will follow.The sales team continue to work on several other good sales leads whilst theimplementation team is working on a pilot with a multi-national food andbeverage group.OutlookThe outlook for the company is very promising. The FSS business continues toexceed the Directors expectations and the Field Service in a Box solution hasthe potential to deliver a further step-change to the business. We have aunique, proven solution for major manufacturers and retailers and the Directorsexpect ServicePower to become the accepted standard for the consumer goodsservice industry in both Europe and the US. The Directors expect to build uponour strong position by moving to new markets thereby delivering significantgrowth in shareholder value in the future. Barry WelckChairman27th September 2005 ServicePower Technologies PlcConsolidated income statement for the six months ended 30 June 2005(unaudited) 6 months to 6 months to 12 months to 30 June 30 June 31 December 2005 2004 2004 Note IFRS Restated Restated ‚£'000 ‚£'000 ‚£'000 Revenue - existing business 3 1,914 780 2,055 - outsourcing services 1,530 710 2,059 _________ _________ _________ Total revenue 3,444 1,490 4,114 Cost of sales 1,719 1,233 2,788 _________ _________ _________ Gross profit 1,725 257 1,326 _________ _________ _________ Administrative expenses 2,825 1,715 5,136 _________ _________ _________ Loss from operations - existing business (349) (1,665) (2,605) - outsourcing services (751) 207 (1,205) _________ _________ _________ Total loss from operations (1,100) (1,458) (3,810) Investment income 22 23 67 _________ _________ _________ Loss before taxation (1,078) (1,435) (3,743) Taxation 4 - - - _________ _________ _________ Loss for the period from continued operations (1,078) (1,435) (3,743) _________ _________ _________ Pence Pence Pence Loss per share 5 Basic and diluted (1.54p) (2.16p) (5.34p) _________ _________ _________ All amounts relate to continuing activities.All recognised gains and losses are included in the income statement.ServicePower Technologies PlcConsolidated statement of changes in equity(unaudited) Attributable to equity holders of the Company ________________________________________________ Share Other Merger Retained Total Capital Reserves Reserve Reserves Equity ‚£'000 ‚£'000 ‚£'000 ‚£'000 ‚£'000 Balance at 1 January 2004 as previously reported under UK GAAP 5,669 8,353 (3,008) (10,743) 271 Share-based payment adjustment (17) Restated balance under IFRS 5,669 8,353 (3,008) (10,760) 254 Increase in share capital 1,660 Increase in share premium 5,027 Share-based payment adjustment to reserves (38) Loss for the year (1,398) _________ _________ _________ _________ _________ Balance at 30 June 2004 7,329 13,380 (3,008) (12,196) 5,505 Balance at 1 July 2004 7,329 13,380 (3,008) (12,196) 5,505 Increase in share capital 84 Increase in share premium 355 Exchange translation difference 13 Share-based payment adjustment to reserves (37) Loss for the year (2,270) _________ _________ _________ _________ _________ Balance at 31 December 2004 7,413 13,748 (3,008) (14,503) 3,650 Balance at 1 January 2005 7,413 13,748 (3,008) (14,503) 3,650 Increase in share capital 17 Increase in share premium 2 Exchange translation difference (113) Share-based payment adjustment to reserves (63) Loss for the year (1,015) _________ _________ _________ _________ _________ Balance at 30 June 2005 7,430 13, 637 (3,008) (15,581) 2,478 _________ _________ _________ _________ _________ Other reserves comprises share premium account, share scheme reserve andexchange translation difference.ServicePower Technologies PlcConsolidated balance sheet at 30 June 2005(unaudited) 30 June 30 June 31 December 2005 2004 2004 IFRS Restated Restated Assets ‚£'000 ‚£'000 ‚£'000 Non current assets Property, plant and equipment 269 267 285 Intangible assets 1,637 879 1,247 Investments 250 250 250 _________ _________ _________ 2,156 1,396 1,782 Current assets Trade and other receivables 2,865 2,664 1,253 Cash and cash equivalents 699 3,914 2,788 _________ _________ _________ 3,564 6,578 4,041 _________ _________ _________ Total assets 5,720 7,974 5,823 _________ _________ _________ Current liabilities Trade and other payables 3,190 2,469 2,101 _________ _________ _________ Non current liabilities Long term provisions 52 - 72 _________ _________ _________ Net assets 2,478 5,505 3,650 _________ _________ _________ Equity Share capital 7,430 7,329 7,413 Share premium account 13,707 13,352 13,602 Share scheme reserve 30 28 133 Exchange translation reserve (100) - 13 Merger reserve (3,008) (3,008) (3,008) Retained earnings (15,581) (12,196) (14,503) _________ _________ _________ Total Equity 2,478 5,505 3,650 _________ _________ _________ The board approved the interim report on 27th September 2005.D BriscoDirectorServicePower Technologies Plc Consolidated cash flow statement for the six months ended 30 June 2005(unaudited) 6 months 6 months 12 months to to to 30 June 30 June 31 December 2005 2004 2004 IFRS Restated Restated ‚£'000 ‚£'000 ‚£'000 Cash flows from operating activities (1,771) (2,017) (2,825) Cash flows from investing activities Interest received 22 23 67 Proceeds on disposal of property, plant and - - 11equipment Purchases of property, plant and equipment (19) (308) (239) Expenditure on intangible assets (348) - (624) Cash acquired with KPI - - 168 _________ _________ _________ Net cash used in investing activities (345) (285) (617) _________ _________ _________ Financing activities Share issue 19 6,525 6,599 Issue costs - (606) (630) Capital element of lease repaid (20) - (36) _________ ________ _________ Net cash (used in)from financing activities (1) 5,919 5,933 __________ _________ _________ Net (decrease)/increase in cash and cash (2,117) 3,617 2,491equivalents Cash and cash equivalents at beginning of period 2,788 297 297 Effect of exchange rate changes 28 - - __________ __________ _________ Cash and cash equivalents at end of period 699 3,914 2,788 _________ _________ _________ ServicePower Technologies PlcNotes to the interim financial statements 1 General informationServicepower Technologies plc is a company incorporated in the United Kingdomunder the Companies Act 1985. The address of the registered office is given onpage x. Servicepower Technologies plc and its subsidiaries sell schedulingsoftware and computer services in the United Kingdom, Europe and the UnitedStates. These financial statements are presented in pounds sterling. Foreign operationsare included in accordance with the policies set out below.2 Summary of significant accounting policiesBasis of preparationThese interim financial statements have been prepared in accordance withInternational Financial Reporting Standards (IFRSs) for the first time. EU lawrequires that the annual consolidated financial statements for the year ended31 December 2005 be prepared in accordance with IFRS adopted by the EU.Consequently financial information has been prepared on the basis ofrecognition and measurement requirements of IFRS in issue that are expected tobe endorsed and effective at 31 December 2005, the company's first annualreporting date at which it is required to use adopted IFRS.In addition, the adopted IFRS's that will be effective in the annual financialstatements for the year ended 31 December 2005 are still subject to change andto the issue of additional interpretations and therefore cannot be determinedwith certainty. Accordingly, the accounting policies for the annual period thatare relevant to this interim financial information will be determined only whenthe financial statements are prepared for the year ended 31 December 2005.The policies set out below have been consistently applied to all yearspresented except for those relating to the classification and measurement offinancial instruments.The Company has made use of the exemption available under IFRS 1 to only applyIAS 32 and 39 from 1 January 2005 and has also elected to apply the share-basedpayment exemption. It applied IFRS 2 from January 1 2004 to those options thatwere issued after 7 November 2002 but that have not vested by 1 January 2005.However the Company has chosen not to comply with IAS 34 Interim FinancialReporting, as is permitted. Consequently the interim statements do not includeall information required for full annual statements, and therefore the Companyis not in full compliance with IFRS.The financial information set out in the following pages is unaudited. Thestatutory accounts for the year ended 31 December 2004, prepared in UK GAAP, onwhich the auditors have issued an unqualified report and did not containstatements under section 237(2) or (3) of the Companies Act 1985 has beendelivered to the Registrar of Companies. The disclosures required by IFRS 1concerning the transition from UK GAAP to IFRS are given in note 7.The financial statements have been prepared on the historical cost basis,except for the revaluation of certain assets at fair value.The principal accounting policies adopted are set out below. Going concern During the period ended 30 June 2005 the group incurred a loss of ‚£1.08 millionand at 30 June 2005 had net current assets of ‚£0.4 million. Due to the inherent nature of the software license industry, the group hasalways found it difficult to predict with certainty the amount or timing offuture licence income. The company has recently entered into severalsignificant new sales contracts where income is transaction-based. As well asproviding confidence in future income, the transaction-based nature of incomewill give greater predictability of this element of future income. In the eventthat the anticipated level of revenue is not achieved, the Board is committedto make necessary reductions in running costs and expenses to conserve cashresources.Having reviewed current sales opportunities and expenditure forecasts, theBoard considers it appropriate to continue to prepare the financial statementson a going concern basis. Basis of consolidationThe consolidated financial statements incorporate the results of ServicePowerTechnologies plc and all of its subsidiary undertakings as at 31 December 2004.On acquisition, assets and liabilities of a subsidiary are measured at theirfair values at the date of acquisition. Any excess of the cost of acquisitionover the fair values of the net assets acquired is recognised as goodwill. Anydeficiency of the cost of acquisition below the fair values of the net assetsacquired is credited to the profit and loss in the period of acquisition.The results of subsidiaries acquired in the year are included in theconsolidated income statement from the effective date of acquisition.Where necessary, adjustments are made to the financial statements of thesubsidiaries to bring accounting policies used into line with those used by thegroup.All intra-group transactions, balances, income and expenses are eliminated onconsolidation.Revenue recognitionRevenue represents sales to outside customers at invoiced amounts less VAT andother sales-related taxes. It is recognised when and to the extent that thegroup has earned the right to consideration for services provided.Software licence sales are recognised during the period from delivery of thesoftware to final implementation and acceptance by the customer, based on thespecific terms and requirements of the contract.Software support is invoiced annually and taken to revenue rateably over theperiod covered. Implementation and other consultancy work is invoiced andrecognised as income as the work is performed.Where the group enters into contracts involving a combination of one or more ofthe above activities, revenue is recognised for each component separately inaccordance with the relevant policy above.Revenue relating to outsourcing contracts and the supply of computer servicesis recognised as income as the work is performed.Depreciation and amortisationDepreciation is charged so as to write off the cost of assets over theirestimated use, using the straight line method, on the following basis: Short leasehold - over length of lease Fixtures, fittings and equipment - 16.6% to 33.3% per annum Intangible assets - over length of revenue generating productAssets held under finance leases are depreciated over their expected usefullives on the same basis as owned assets or, where shorter, over the term of therelevant lease.Software development costsExpenditure on pure and applied research is charged to the income statement inthe year which it is incurred.Development costs are also charged to the income statement in the year ofexpenditure, unless individual projects satisfy all of the following criteria:The project is clearly defined and related expenditure is separatelyidentifiable;The project is technically feasible and commercially viable;Current and future costs are expected to be exceeded by future sales; andAdequate resources exist for the project to be completed.In such circumstances the costs are carried forward and amortised over a periodnot exceeding 5 years commencing in the year the group starts to benefit fromthe expenditure.GoodwillGoodwill represents the excess of the cost of acquisition over the fair valueof the identifiable net assets of an acquisition at the date of acquisition.Goodwill is recognised as an asset and reviewed for impairment at leastannually. Any impairment is recognised immediately and is not subsequentlyreversed.Deferred taxationDeferred tax is provided using the balance sheet liability method, providingfor temporary differences between the carrying amounts of assets andliabilities for financial reporting purposes and the amount used for taxationpurposes. The following temporary differences are not provided for; goodwillnot deductible for tax purposes, the initial recognition of assets orliabilities that affect neither accounting nor taxable profit, and thedifferences relating to investments in subsidiaries to the extent that theywill probably not reverse in the foreseeable future. The amount of deferredtax provided is based on the expected manner of realisation or settlement ofthe carrying amount of assets and liabilities, using tax rates enacted orsubstantively enacted at the balance sheet date.A deferred tax asset is recognised only to the extent that it is probable thatfuture taxable profits will be available against which the asset can beutilised. Deferred tax assets are reduced to the extent that it is no longerprobable that the related tax benefit will be realised.Grant incomeGrants receivable in respect of specific research and development projects arecredited to the income statement in the period in which they are receivableagainst costs also incurred on those projects in the same accounting period.Foreign currenciesForeign currency transactions of individual companies are translated at therates ruling when they occurred. Foreign currency monetary assets andliabilities are translated at the rates ruling at the balance sheet dates. Anydifferences are taken to the profit and loss account.The results of overseas operations are translated at the average rates ofexchange during the year and their balance sheets translated into sterling atthe rates of exchange ruling on the balance sheet date. Exchange differenceswhich arise from translation of the opening net assets and results of foreignsubsidiary undertakings are taken to a separate component of equity.Valuation of investmentsInvestments held as fixed assets are stated at cost less any provision for anypermanent diminution in value.Leased assetsWhere assets are financed by leasing agreements that give rights approximatingto ownership (finance leases), the assets are treated as if they had beenpurchased outright. The amount capitalised is the present value of the minimumlease payments payable over the term of the lease. The corresponding leasingcommitments are shown as amounts payable to the lessor. Depreciation on therelevant assets is charged to the income statement.Lease payments are analysed between capital and interest components. Theinterest element of the payment is charged to the income statement over theperiod of the lease and is calculated so that it represents a constantproportion of the balances of capital repayments outstanding. The capitalelement reduces the amounts payable to the lessor.All other leases are treated as operating leases. Their annual rentals arecharged to the income statement on a straight line basis over the term of thelease.Pension costsThe company contributes to a number of money purchase pension schemes as wellas stakeholder pension schemes. The contributions are charged to the incomestatement in the period in which they become payable.Share based employee remunerationThe Company has applied the requirements of IFRS 2 Share-based Payments. Inaccordance with the transitional provisions, IFRS 2 has been applied to allgrants of instruments after 7 November 2002 that were unvested as of 1 January2005.The Company issues equity-settled share-based payments to employees. These aremeasured at fair value at the date of grant. The fair value determined at thegrant date is expensed on a straight line basis over the vesting period, basedupon a Company's estimate that will eventually vest.Fair value is measured by use of a binomial model and Monte Carlo simulation.The expected life used in the model has been adjusted based on management'sbest estimate, for the effects of non-transferability, exercise restrictions,and behavioural considerations.National Insurance on Share OptionsTo the extent that the share price at the balance sheet date is greater thanthe exercise price on options granted after 19 May 2002, provision for anyNational Insurance contribution has been made based on the prevailing rate ofNational Insurance. The provision is accrued over the performance periodattaching to the award.For options granted between 6 April 1999 and 19 May 2002 the company has madean election to the Inland Revenue to fix the National Insurance liability andpayment date based on the market price of the company's shares as at 7 November2002. As the amount and timing of this liability is known it is not regardedas a provision, rather included within creditors. 3 Business segmentsPrincipal activities are as followsSoftware licence salesConsultancy and support servicesOutsourcing services Segment information about these businesses is presented below Six months unaudited ended Software Consultancy Outsourcing Group30 June 2005 licences and support services 2005 2005 2005 2005 ‚£'000 ‚£'000 ‚£'000 ‚£'000 Revenue from external sales 1,167 747 1,530 3,444 _________ _________ _________ _________ Loss from operations (1,100) Investment income 22 _________ Loss before and after tax (1,078) _________ Six months unaudited ended Software Consultancy Outsourcing Group30 June 2004 Licences and support services 2004 2004 2004 2004 ‚£'000 ‚£'000 ‚£'000 ‚£'000 Revenue from external sales 87 693 710 1,490 _________ _________ _________ _________ Loss from operations (1,458) Investment income 23 _________ Loss before and after tax (1,435) _________ Unaudited Unaudited AuditedGeographical segments 6 months to 6 months to 12 months to 30 June 30 June 31 December 2005 2004 2004 ‚£'000 ‚£'000 ‚£'000 Revenue origin United States of America 1,370 1,099 2,059 United Kingdom 2,074 391 2,055 _________ _________ _________ 3,444 1,490 4,114 _________ _________ _________ Revenue destination United States of America 2,979 1,099 3,170 United Kingdom 465 383 902 Rest of Europe - 8 42 _________ _________ _________ 3,444 1,490 4,114 _________ _________ _________ 4 Taxation on loss from ordinary activities No tax charge arises during the period due to the utilisation of taxablelosses. 5 Loss per share Basic and diluted loss per ordinary share was calculated by dividing the losson ordinary activities after taxation by the weighted average number of sharesin issue during the relevant financial periods. There are no potential ordinary shares which are dilutive. Unaudited Unaudited Unaudited 6 months to 6 months to 12 months to 30 June 30 June 31 December IFRS Restated Restated 2005 2004 2004 Number Number Number Bas Weighted average number of shares 70,181,557 66,326,806 70,127,447 ____________ ____________ ____________ ‚£'000 ‚£'000 ‚£'000 Loss (1,078) (1,435) (3,743) ____________ ____________ ____________ 6 Notes to the cash flow statement Unaudited Unaudited Unaudited 6 months to 6 months to 12 months to 30 June 30 June 31 December 2005 2004 2004 ‚£'000 ‚£'000 ‚£'000 Profit from operations (1,100) (1,458) (3,810) Adjustments for Amortisation of intangible assets - - 62 Depreciation of property plant and equipment 89 23 85 (Profit) on disposal of tangible assets - - (5) (Increase) in fair value of acquired assets - (189) (189) Increase in share option pricing provision 63 38 75 ____________ ____________ ____________ Operating cash flows before movement in 152 (128) 28working capital (Increase) in receivables (1,703) (843) 566 Increase in payables 880 412 391 ____________ ____________ ____________ Cash generated by operations (823) (431) 957 ____________ ____________ ____________ Net cash from operating activities (1,771) (2,017) (2,825) ____________ ____________ ____________ 7 Reconciliation of GAAP to IFRSThe following reconciliations provide a quantification of the effect of thetransition to IFRS. Reconciliation of equity at 1 January 2004 Reported Effect of Restated Under Transition Under UKGAAP to IFRS IFRS (IFRS format) ASSETS ‚£'000 ‚£'000 ‚£'000 Non-current assets Property, plant & equipment 27 27 Goodwill - - Intangible assets 250 250 277 277 Current Assets Trade and other receivables 1,414 1,414 Cash and cash equivalents 297 297 1,711 1,711 Total assets 1,988 1,988 EQUITY Capital and reserves attributable to equity holders Share capital 5,669 5,669 Fair value and other reserves 8,353 8,353 Retained earnings and other reserves - see note A (13,751) (17) (13,768) Total equity 271 254 LIABILITIES Current liabilities Trade and other payables - see note A 1,717 17 1,734 Total liabilities 1,717 1,734 Total equity and liabilities 1,988 1,988 Reconciliation of equity at 30 June 2004 Reported Effect of Restated Under transition Under UKGAAP to IFRS IFRS (IFRS format) ASSETS ‚£'000 ‚£'000 ‚£'000 Non-current assets Property, plant & equipment 267 267 Goodwill - Intangible assets - see note B 690 189 879 Investments 250 250 1,207 189 1,396 Current Assets Trade and other receivables 2,664 2,664 Cash and cash equivalents 3,914 3,914 6,578 6,578 Total assets 7,785 189 7,974 EQUITY Capital and reserves attributable to equity holders Share capital 7,329 7,329 Fair value and other reserves 13,380 13,380 Retained earnings and other reserves (15,338) 134 (15,204) Total equity 5,371 134 5,505 LIABILITIES Current liabilities Trade and other payables - see note A 2,414 55 2,469 Total liabilities 2,414 55 2,469 Total equity and liabilities 7,785 7,974 Reconciliation of equity at 31 December 2004 Reported Effect of Restated under Transition Under UKGAAP to IFRS IFRS (IFRS format) ASSETS ‚£'000 ‚£'000 ‚£'000 Non-current assets Property, plant & equipment 285 285 Goodwill - Intangible assets - see note B 1,058 189 1,247 Investments 250 250 1,593 189 1,782 Current Assets Trade and other receivables 1,253 1,253 Cash and cash equivalents 2,788 2,788 4,041 4,041 Total assets 5,634 189 5,823 EQUITY Capital and reserves attributable to equity holders Share capital 7,413 7,413 Fair value and other reserves 13,735 13,735 Retained earnings and other reserves (17,595) 97 (17,498) Total equity 3,553 3,650 LIABILITIES Current liabilities Trade and other payables - see note A 2,081 92 2,173 Total liabilities 2,081 92 2,173 Total equity and Liabilities 5,634 5,823 Reconciliation of net income at 30 June 2004 Reported Effect of Restated under transition Under UKGAAP to IFRS IFRS (IFRS format) ‚£'000 ‚£'000 ‚£'000 Sales 1,490 1,490 Cost of sales 1,233 1,233 Gross profit 257 257 Other operating income 23 23 Administrative expenses -see note A and B 1,866 (134) 1,732 Operating loss (1,586) (134) (1,452) Finance costs - - Loss before tax (1,586) (134) (1,452) Income tax expense - - Loss from ordinary activities after tax (1,586) (134) (1,452) Loss for the period (1,586) (134) (1,452) Reconciliation of net income at 31 December 2004 Reported Effect of Restated Under Transition Under UKGAAP to IFRS IFRS (IFRS format) ‚£'000 ‚£'000 ‚£'000 Sales 2,055 2,055 Cost of sales 1,199 1,199 Gross profit 856 856 Other operating income 67 67 Administrative expenses - see note A and B 3,386 (97) 3,289 Operating loss (2,463) (97) (2,366) Finance costs - - Loss before tax (2,463) (97) (2,366) Income tax expense - - - Loss from ordinary activities after tax (2,463) (97) (2,366) Loss for the period (2,463) (97) (2,366) Explanation of the effect of the transition to IFRS.The following explains the material adjustments to the balance sheet and incomestatement.Note A - share-based paymentsIFRS 2 requires that the expense incurred for equity instruments granted isrecognized in the financial statements at their fair value measured at the dateof grant and that the expense is recognized over the vesting period of theinstrument. The Company has a number of employee option share schemes and haselected not to apply IFRS 2 options granted before 7th November 2002 and notvested at 1 January 2005.Note B - intangible assetsIFRS 3 requires that goodwill is not amortised but instead is subject to anappropriate impairment review.As part of the acquisition of KPI Inc in March 2004, certain intangible assetswere acquired. After an independent review the directors have re-evaluatedtheir fair values at the date of acquisition under IAS valuation. Under IFRS 3the accounting has been amended on the balance sheet and income statement. ServicePower Technologies PlcInterim ReportSix months ended 30 June 2005 ENDSERVICEPOWER TECHNOLOGIES PLCRelated Shares:
SVR.L