SVR.L Regulatory News (SVR)

25 Sep 2007 07:00

25th September 2007 SERVICEPOWER TECHNOLOGIES PLC ("ServicePower" or the "Company") Interim Results

ServicePower , the innovative supplier of outsourcing solutions and software to the mobile repair and installations industry, announces its unaudited Interim Results for the six months ended 30th June 2007.

KEY POINTS

Revenues of ‚£5.1M (June 2006: ‚£6.3M) due to contracts delayed into H2

Recurring revenue up 42% to ‚£4.4M (June 2006: ‚£3.1M) as a result of excellent performance from outsourcing and hosting division

Half-year loss increased to ‚£1,303k (June 2006: ‚£894k)

Cash balance at 30th June 2007 ‚£320k (December 2006: ‚£262k)

‚£1.1M new cash raised in May 2007

9 new contracts won in the first half, with 5 additional contracts signed since start of H2

‚£3.4M of new SERVICEPower contracts signed since start of H2, including the largest software contract in the Company's history

Existing contracted revenues for this year of ‚£13.3M as at September 2007

David Brisco, CEO, ServicePower, said, "The expected move into profitabilityfor the Software business and the cash generated since the half year end arepositive signs of the future potential of the Company. The Directors are makingsignificant progress in executing their adopted strategy of building a businessthat delivers revenue on a predictable basis. We are comfortable with the fullyear market forecasts and look forward to an increasingly profitable future

with confidence."ENQUIRIES:

David Brisco, Chief Executive Officer Tel: 0161 476 2277

ServicePower Technologies PLC

Tom Price, Bobbie Hilliam Tel: 020 7071 4300

Evolution Securities Limited

Tom Moriarty, Caroline Evans-Jones Tel: 020 7651 8688

/ 07769 937626ICIS LimitedCHAIRMAN'S STATEMENTIntroductionAs outlined previously it has been the strategy of the Company to build a moresolid and stable business via the generation of recurring revenues derived fromour outsourcing and hosted services divisions. I am therefore pleased toreport the Company has made progress in growing both these business areas.Accordingly, the Directors believe that ServicePower is well positioned to movetowards achieving long term stable profitable growth.

One reason for focusing on recurring revenues is due to the historically unpredictable nature of high value software licence sales. These results have been affected by this with only two small sales in the first six months resulting in a fall in total revenue to ‚£5.1M and an increased loss.

I am pleased to report that in the last two months the Company has signed 5 newcontracts worth ‚£4.1M in SERVICEPower software, outsourcing and SaaS. Thisbrings the amount of existing contracted revenues for this year to ‚£13.3M as atSeptember 2007, meaning the Company is on track to achieve market forecasts.

Giving the Board greater confidence for the future is that currently the Company has ‚£12.5M, on an annualised basis, of recurring revenues including software support revenues, SaaS and outsourcing.

The cash from the new sales will significantly strengthen the balance sheet and fund continued growth of the business.

Results and Dividend

As previously stated the results were adversely affected by the delay insecuring large software contracts, several of which have been subsequentlysigned and announced post the half year end. However, these results showencouraging growth in the underlying recurring revenue business which increasedby 42%. This includes outsourcing increasing 62% to ‚£2.6M, software supportincreasing 14% to ‚£0.8M and Software as a Service (SaaS) increasing 29% to

‚£1.0M. Divisional performance is set out below. H1 2007 H1 2006 ‚£'M ‚£'M Recurring revenue 4.4 3.1 Software licences and services 0.7 1.8 Mobility GPS hardware 0.0 1.1 EchoStar installations 0.0 0.3 Total Revenue 5.1 6.3 Mobility GPS hardware fell as two large sales of GPS tracking solutions weremade in H1 2006 whereas in 2007 a large sale to an insurance company has beenclosed in H2. The focus of GPS sales in 2007 has been to small independentservice companies where the price of the hardware has been included in themonthly fees.

Trade receivables reduced to ‚£2.4M (June 2006: ‚£4.1M) and debtor days decreased from 118 to 86 days.

The loss per share for the period was 1.39p (June 2006: 1.10p).

As at 30th June 2007 the Company had a cash balance of ‚£320k (December 2006: ‚£ 262k).

The Company issued 7.9M shares in May raising ‚£1.1M new cash for GPS tracking and navigation product development.

The Directors do not recommend the payment of a dividend.

Operations ReviewRecurring revenue business

In the six months to June the revenue from outsourcing and SaaS businesses grew50% to ‚£3.6M (June 2006: ‚£2.4M), excluding the discontinued EchoStar revenue in2006. The revenue growth has come from increasing volumes from existingcontracts and new contract wins. The increased volumes in the outsourcingbusiness are expected to double in the second half of 2007 as contracts signedin the first half year begin to deliver revenue. In addition the SERVICEPowersoftware support revenue grew 14% to ‚£0.8M.

SaaS

The SaaS and outsourcing business was set up to provide IT solutions forcompanies using independent service engineers rather than their own employedengineers. In addition, due to the lower cost of delivery of our solution on aSaaS basis, gross margins are higher and typically greater than 70%. The market response to making our products available on a SaaS basis has beenpositive with 9 new contracts won this year. Having initially launched a SaaSversion of our job despatching and electronic invoicing solution we have nowadded optimisation, GPS tracking and our navigation products for which there isstrong demand.

In Europe the Directors have continued to build upon the work done in 2006 togrow the business. New contracts have been signed in the retail and insurancesectors since the start of the year. The Directors are particularly pleased to have been awarded an optimisation andGPS contract on a SaaS basis by one of the largest and most prestigiousconsumer electronics retailer in the US. This will be our first significantclient using our SaaS solution and is a strong validation of the quality of oursolution to be buying such a mission critical system on a SaaS basis.

Outsourcing Business

ServicePower offers an outsourcing service solution by taking responsibilityfor a service job and ensuring it is completed by one of the independentservice companies registered on our network. Outsourcing volumes have risen 32%and revenue is up 62% to ‚£2.6M (June 2006: ‚£1.6M). The recently announcedcontract award by an Asia-based manufacturer will significantly increaserevenue in H2.

SERVICEPower Software Business

The Company signed ‚£3.4M worth of contracts since the beginning of the secondhalf and we now expect that this business will operate profitably for the yearas a whole.

The contracts won and announced since July are summarised below:

Insurance company ‚£2.6M new SW licenceHomeserve ‚£0.3M new SW licenceUS Retailer ‚£0.5M recurring feesTotal contract values ‚£3.4M

The insurance industry continues to be our most profitable industry sector withthe award of a ‚£2.6M contract announced recently. This is the largest valueSERVICEPower optimisation software contract in the history of the Company.

We continue to receive an increasing number of good sales leads but the timing of signed contracts remains unpredictable.

Outlook

The expected move into profitability and the cash generated in recent monthsare positive signs of the future potential of the Company. The Directors aremaking significant progress in executing on their adopted strategy of buildinga business that delivers revenue on a predictable basis. We are comfortablewith the full year market forecasts and look forward to an increasinglyprofitable future with confidence.Barry WelckChairman25th September 2007 ServicePower Technologies plcConsolidated income statement for the six months ended 30 June 2007 Unaudited Unaudited Audited 6 months to 6 months to 12 months to 30 June 30 June 31 December 2007 2006 2006 Note ‚£'000 ‚£'000 ‚£'000

Revenue - software solutions 3 1,519

2,504 4,642 - outsourcing services 3,542 3,827 6,452 _________ _________ _________ Total revenue 5,061 6,331 11,094 Cost of sales (3,101) (3,859) (7,402) _________ _________ _________ Gross profit 1,960 2,472 3,692 _________ _________ _________ Administrative expenses (3,282) (3,383) (7,863) _________ _________ _________

(Loss)/profit from operations - software solutions (703) 474 (1,576) - outsourcing services (619) (1,385) (2,595) _________ _________ _________ Total loss from operations (1,322) (911) (4,171) Investment revenue 19 17 23 Finance costs - - (1) _________ _________ _________ Loss before taxation (1,303) (894) (4,149) Taxation 4 145 - 799 _________ _________ _________ Loss for the period/year (1,158) (894) (3,350) _________ _________ _________ Pence Pence PenceLoss per share Basic and diluted 5 (1.39p) (1.10p) (4.14p) _________ _________ _________

All amounts relate to continuing activities.

ServicePower Technologies plcConsolidated statement of recognised income and expense for the six months ended 30 June 2007 Note Unaudited Unaudited Audited 30 June 30 June 31 December 2007 2006 2006 ‚£'000 ‚£'000 ‚£'000

Exchange differences on translation of foreign

operations 7 123 104 525 _________ _________ ________

Net gain recognised directly in equity 123 104

525 Loss for the period/year (1,158) (894) (3,350) _________ _________ ________

Total recognised income and expense for the

for the period/year (1,035) (790) (2,825) _________ _________ ________ ServicePower Technologies plcConsolidated balance sheet at 30 June 2007 Unaudited Unaudited Audited 30 June 30 June 31 December 2007 2006 2006 Assets ‚£'000 ‚£'000 ‚£'000 Non current assets Intangible assets 1,599 1,827 1,659 Property, plant and equipment 116 237 158 _________ _________ _________ 1,715 2,064 1,817 Current assets Inventories 19 - 13 Trade and other receivables 2,381 4,113 2,909 Cash and cash equivalents 320 459 262 _________ _________ _________ 2,720 4,572 3,184 _________ _________ _________ Total assets 4,435 6,636 5,001 _________ _________ _________ Current liabilities Trade and other payables (3,000) (3,404) (3,684) _________ _________ _________ Total liabilities (3,000) (3,404) (3,684) _________ _________ _________ Net assets 1,435 3,232 1,317 _________ _________ _________ Equity Share capital 8,912 8,095 8,108 Share premium account 15,206 14,855 14,857 Share scheme reserve 308 203 308 Exchange translation reserve 500 (44) 377 Other reserve (3,008) (3,008) (3,008) Retained earnings (20,483) (16,869) (19,325) _________ _________ _________ Total Equity 1,435 3,232 1,317 _________ _________ _________

The interim statements were approved by the Board of Directors and authorised for issue on 25th September 2007.

They were signed on its behalf by:

D BriscoDirector ServicePower Technologies plcConsolidated cash flow statement for the six months ended 30 June 2007 Unaudited Unaudited Audited 6 months to 6 months to 12 months to 30 June 30 June 31 December 2007 2006 2006 ‚£'000 ‚£'000 ‚£'000

Net cash flows used in operating activities (1,003) (1,281)

(1,588) Investing activities Interest received 19 17 23 Purchases of property, plant and equipment (6) (31)

(53)

Expenditure on intangible assets (120) (197) (295) _________ _________ _________

Net cash used in investing activities (107) (211)

(325) _________ _________ _________ Financing activities Proceeds on issue of shares 1,142 21 15 Capital element of lease paid - - (20) _________ ________ _________

Net cash inflow/(outflow) from financing 1,142 21

(5)activities __________ _________ _________

Net increase/(decrease) in cash and cash 32 (1,471)

(1,918)equivalents

Cash and cash equivalents at beginning of period 262 1,943

1,943

Effect of exchange rate changes 26 (13)

237 _________ _________ _________

Cash and cash equivalents at end of period 320 459

262 _________ _________ _________ ServicePower Technologies plcNotes to the interim financial statements

1. Basis of preparation

The interim report has been prepared on the basis of the accounting policiesset out in the group's financial statements for the year ended 31 December2006. The financial information set out in this document does not constitutestatutory financial statements within the meaning of section 240 of theCompanies Act 1985. A copy of the statutory accounts for that year has beendelivered to the Registrar of Companies. The auditors' report on those accountswas not qualified and did not contain statements under section 237(2) or (3) ofthe Companies Act 1985.2. Accounting policies

The same accounting policies and methods of computation are followed in the interim financial report as applied in the group's financial statements for the year ended 31 December 2006 and published by the Group on 23 April 2007.

3. Business segments

Principal activities are as follows

Software solutionsOutsourcing services

Segment information about these businesses is presented below

Unaudited six months ended Software Outsourcing Group30 June 2007 solutions services total 2007 2007 2007 ‚£'000 ‚£'000 ‚£'000 Revenue from external sales 1,519 3,542 5,061 _________ _________ _________ Loss from operations (703) (619) (1,322) Investment income 19 _________ Loss before tax (1,303) Tax 145 _________ Loss after tax (1,158) _________ Unaudited six months ended Software Outsourcing Group30 June 2006 solutions services Total 2006 2006 2006 ‚£'000 ‚£'000 ‚£'000 Revenue from external sales 2,504 3,827 6,331 _________ _________ _________ Profit/(loss) from operations 474 (1,385) (911) Investment income 17 _________ Loss before and after tax (894) _________ Audited twelve months ended Software Outsourcing Group31 December 2006 solutions services total 2006 2006 2006 ‚£'000 ‚£'000 ‚£'000 Revenue from external sales 4,642 6,452 11,094 _________ _________ _________ Loss from operations (1,576) (2,595)* (4,171) Investment income 23 Finance costs (1) _________ Loss before tax (4,149) Tax 799 _________ Loss after tax (3,350) _________

* Includes a loss on the Echostar business of ‚£900,000 (2005: ‚£100,000)

4. Taxation on loss from ordinary activities

The tax credit of ‚£145,000 (2006: Nil) relates to a provision for an R & D refund for the 6 months to 30 June 2007.

5. Loss per share

The calculation of the basic and diluted earnings per share is based on thefollowing data:Earnings Unaudited Unaudited Audited 6 months 6 months 12 months to to to 30 June 30 June 31 December 2007 2006 2006 ‚£'000 ‚£'000 ‚£'000

Loss for the purpose of basic and diluted loss per 1,158 894

3,350share _________ _________ _________ Number of shares Number Number Number

Weighted average number of ordinary shares for the purpose of basic and diluted loss per share 83,165,371 80,936,166 80,964,778 _________ _________ _________ Loss per share Pence Pence Pence

Basic and diluted loss per share 1.39p 1.10p

4.14p _________ _________ _________

6. Notes to the cash flow statement

Unaudited Unaudited Audited 6 months to 6 months to 12 months to 30 June 30 June 31 December 2007 2006 2006 ‚£'000 ‚£'000 ‚£'000

Loss from continuing operations (1,322) (911)

(4,171) Adjustments for:

Amortisation of intangible assets 147 162

321

Depreciation of property plant and equipment 45 42

123

Loss on disposal of property, plant and - -

12equipment

Increase in share-based payments provision - -

105 ____________ ____________ ____________

Operating cash flows before movement in working

capital 192 204 561 Increase in inventories (6) - (13)

Decrease/(increase) in receivables 667 (525)

1,423

(Decrease)/increase in payables (534) (49)

612 ____________ ____________ ____________ Cash consumed by operations 127 (574) 2,022 ____________ ____________ ____________

Net cash used in operating activities (1,003) (1,281)

(1,588) ____________ ____________ ____________

Cash and cash equivalents (which are presented as a single class of assets on the face of the balance sheet) comprise cash at bank and other short-term highly liquid investments with a maturity date of three months or less.

7. Analysis of consolidated equity

Unaudited Unaudited Audited 6 months to 6 months to 12 months to 30 June 30 June 31 December 2007 2006 2006 ‚£'000 ‚£'000 ‚£'000 Called-up share capital At beginning of period/year 8,108 8,073 8,073

Shares issued during the period/year 804 22

35 ____________ ____________ ____________ At end of period/year 8,912 8,095 8,108 ____________ ____________ ____________ Share premium account At beginning of period/year 14,857 14,855 14,855

Shares issued during the period/year 349 -

2 ____________ ____________ ___________ At end of period/year 15,206 14,855 14,857 ____________ ____________ ___________ Exchange translation reserve At beginning of period/year 377 (148) (148)

Exchange differences on translation of

overseas operations in the period/year 123 104 525 ___________ ____________ ___________ At end of period/year 500 (44) 377 ___________ ____________ ___________