SVR.L Regulatory News (SVR)

23 Nov 2006 12:00

23rd November 2006 SERVICEPOWER TECHNOLOGIES PLC ("SERVICEPOWER" OR THE "Company") Trading Update

ServicePower Technologies plc , the recognised leader in artificial intelligence based, field service scheduling solutions and computer services, provided the following trading update for the twelve months ended 31st December 2006.

Trading in our outsourcing and hosting businesses continues to grow and, with the software contracts already secured during the year, the Directors expect revenue will be in line with market expectations. However it is anticipated that losses for the year are going to be materially larger than previously expected. This is primarily due to the following two reasons.

Closure of the EchoStar operation

The EchoStar satellite dish installation project, which was established just over a year ago, has been closed. As anticipated, the project was loss making during the first half of 2006 due to investment in setting up the project. However during the second half of 2006 it became increasingly clear that there was insufficient volume which, combined with increasing direct costs, meant that the project was unlikely to trade profitably in the near future. The Board has therefore decided it is not in the best interests of the Company or its shareholders to pursue a business opportunity that, although it could ultimately become profitable, would require significant further investment. The ‚£800,000 costs associated with this business unit and its closure are all incurred in this financial year.

Extended timing in relation to enterprise software licence fees

Whilst the pipeline of software deals is the strongest it has ever been, the Directors are seeing delays in closing new software enterprise licence fees. Current discussions may produce enterprise licence sales but it is now more likely they will deliver revenue in 2007. Given that software licence revenue generates 100% gross margin this will have a disproportionate impact on reported losses.

Given these developments it is the Board's view that the Company should focus on the hosting and outsourcing businesses which are seeing significant growth both from existing and new contracts, and where the gross margins are rising. The business model is more stable and delivers more predictable revenue and the Directors expect these businesses to be trading profitably at EBITDA level on a month by month basis from the beginning of 2007. The Management have reviewed the cash position and because outsourcing and hosting businesses are turning cash positive the business has sufficient cash. Given the continued underlying strength of the business the directors have confidence in the future profitable growth of the company.

For further information please contact:

David Brisco, Chief Executive Officer Tel: 0161 476 2277

ServicePower Technologies PLC

Tom Price Tel: 020 7071 4300

Evolution Securities Limited

Tom Moriarty, Laura Cocker Tel: 020 7651 8688

ICIS Limited

About ServicePower

ServicePower offers tools that enable optimised service execution across the entire service chain. The company provides the most widely used artificial intelligence based field service scheduling application in the world. ServicePower solutions, offered throughout the U.S., Canada, the UK and Europe allow companies to locate their directly employed field resources in specific geographical areas and supplement their coverage with a network of independent, authorised servicers in other areas. The routes for both the company's field resources and the independent servicers are optimised by ServicePower's technology to ensure the right balance between service and cost. ServicePower also provides warranty chain management, call center services, and analytics for manufacturers, third-party administrators, and retailers. ServicePower's customers include innovative, world leading companies such as Argos, Avaya, GE, Hitachi, Sanyo, Sharp, and Siemens. For more information, visit www.servicepower.com