Final Results
March 27 2003 - 1:01AM
UK Regulatory
RNS Number:2597J
ServicePower Technologies PLC
27 March 2003
ServicePower Technologies PLC
("ServicePower" or the "Company")
Preliminary results for the year ended 31 December 2002
ServicePower Technologies plc, the established market leader in artificial
intelligence based field service scheduling applications, today announces its
preliminary results for the 12 months ended 31st December 2002.
Highlights
Revenue up 42% to #4.5M (2001 #3.2M)
Loss reduced to #0.6M (2001 #2.7M)
Traded profitably in second six months
Gross margin increased to 75% (2002 65%)
Costs reduced by #1 million, annualised
Significant #1.7 million contract signed with a US insurance company
Contract signed with Siemens Energy Services in UK which replaces our major
competitor
Partner program delivers first major success
Go live at GE Consumer Products (GECP) in US
Go live at Installs with contractor-scheduling model
Second contractor-scheduling contract signed
Partnership agreement signed with GECP to develop contractor scheduling model
5% warrant granted to GECP
DTI SMART grant awarded January 2003
Massively scaleable Version 5 SERVICEPower released to support Web based
deployment
New products delivering additional revenue
Enquiries:
ServicePower Technologies PLC
Barry Welck, Chairman Tel: 07831 396539
David Brisco, Chief Executive Officer Tel: 0161 476 2277
Evolution Beeson Gregory Limited
Tom Price Tel: 0207 488 4040
Chairman's Statement
Introduction
I am pleased to report a successful outcome to trading in 2002. Revenue has
increased by 42% to #4.5 million and the company has reduced its losses to #0.6
million. Contracts awarded in the last quarter have allowed us to report a
profit in the second half year and significantly strengthened the balanced sheet
with large injections of cash. This is a major achievement in what has been a
difficult year for all enterprise software vendors.
We have continued to develop our contractor-scheduling model, and the recently
announced partnership with GE Consumer Products (GECP), formerly GE Appliances,
will help to develop the concept. I see 2003 as the year in which we define this
market, further develop the technology and establish the business case for
delivering corporate systems and processes to the small service company and
independent contractor. In addition the transaction-pricing model and the
relationships we have developed with our partners will continue the process of
de-risking the traditional business model of the company.
Results and Dividend
The revenue increased 42% to #4.5 million (2001 #3.2 million). The loss before
taxation was #0.6 million (2001: loss of #2.7 million). The gross margin has
increased from 65% to 75%. The Company has again received a significant cash
refund since the year-end from the Inland Revenue R&D tax credit scheme. The
operating cost base has been reduced by #1 million (annualised), principally as
a result of the cost cutting exercise initiated in June in response to continued
difficult trading conditions in the US. The loss per share for the period was
0.64p (2001: loss per share of 4.9p). The Directors are not recommending the
payment of a dividend.
Operational Review
The US is our major market accounting for 77% (2001 81%) of our total revenue.
Revenue from US operations increased 35% in 2002 and will remain our primary
focus for future growth. Gross margin has increased significantly to 75% (2001
65%) due to an increase in software licences and recurring revenues, the latter
amounting to #1 million in 2002 having risen more than 40% from the previous
year. The software licence contract signed in December with a US insurance
company was won after a proof of concept that demonstrated the quality of our
solution in a new vertical market. We actively encourage our prospects to
perform benchmark testing before deciding on a technology platform, since we are
very confident of being able to out perform any competitors and demonstrate a
compelling return on investment. The increased revenues in the UK have primarily
come from a contract signed in April with Siemens Energy Services (see below)
and this contract will continue to deliver revenue in 2003.
The focus of the Company in 2002 was in four key areas:
* Reaching a profitable and cash positive situation;
* Developing the "contractor scheduling" concept with industry peers;
* Developing partnerships with mid-sized CRM vendors;
* Educating the market on the return on investment that ServicePower can
deliver.
It is clear that in the current economic conditions the company must trade cash
positively. To this end we again reduced the cost base to a little over #5
million, annualised. Whilst the Company lost #0.6 million for the year as whole,
the second six months produced a profit of #0.8 million and was cash positive.
The directors believe the costs are in line with the future anticipated revenue
in 2003.
We have signed two new agreements with partners that allow them to distribute
our product to the lower end of the market, i.e. companies with 100 to 500
technicians. The first was with Astea International, a company listed on the
NASDAQ index in the US. Astea is a well-established enterprise software vendor
with more than 400 sites world-wide. The second is with FieldCentrix, a
quickly-growing US private company with more than 100 sites. We had our first
success with Pacific Design Sciences Corporation (PDSC); a partner signed in
October 2001. The contract which PDSC won was announced in October 2002 and is
worth more than $1 million. The directors believe that ServicePower will prime
contract the first implementations won by each of our partners, thereby taking
the majority of the revenue. In Europe, Square BV an international supplier of
field service software to the office equipment market has chosen our scheduling
application to replace our major competitor's solution for add on capability to
their existing customer base. Their efforts have been rewarded with Danka BV
deploying ServicePower initially in Holland and with further opportunities in
the rest of the organisation. Further sales will be delivered directly by our
partners as SERVICEPower becomes more closely integrated with their enterprise
software products.
In June our new product that schedules the work of contractors, rather than
employed technicians, went live at Installs Inc., a domestic satellite TV
installer in the US. Whilst rollout has initially been slow, as we necessarily
work with Installs and the contractors to fully develop the software
infrastructure, the directors are very confident that the project will be a
success. Installs have already seen both efficiency improvements in the field
and 40% improvement in the throughput of calls in the call centre. In September
Installs raised a further $35 million to underpin their business plan, and as
soon as the software infrastructure is firmly established additional contractors
will be brought onto the system quickly. There are currently 200 contractors on
the system and the directors anticipate this will increase substantially during
2003. I am pleased to announce that we have recently started work with a third
company to develop and implement a contractor scheduling system. At this time,
due to commercial considerations, I am only able to say that it is with one of
the largest electrical retailers in the US. I expect to update shareholders in
due course.
A significant development, announced in February 2003, is the agreement with
GECP. This agreement involves GECP working closely with the company to develop
the product infrastructure and commercial model to deliver corporate systems and
processes to the small service company and independent contractor. GECP uses
many thousands of independent companies across the US to deliver extended
warranty services to GECP customers. The directors view the active involvement
of one of the world's leading service companies with ServicePower, its
technology and contractor scheduling vision as being very beneficial to the
future growth of the business.
In recognition of this partnership the company allotted warrants over 5% of the
ordinary shares of the company in favour of GECP on 5th February 2003. The
warrants were granted at an exercise price of 10p. The warrant was approved by
shareholders at the AGM held in May 2002.
The contract with Siemens Energy Services Limited (SESL) in the UK in April has
been a great success. In addition to extending the use of SERVICEPower to new
parts of the SESL operation, we are prime contractor for the development of a
customer specific service management system to replace the existing systems used
to manage the business of electricity meter operations for the East Midlands and
Eastern regions. This demonstrated our project management capability and will
act as reference for us in other opportunities when the client wants an
integrated solution with one prime contractor. We were particularly pleased that
this included the replacement of a competitive scheduling supplier. The systems
were delivered on time and went live in Q1 2003. We anticipate this contract
will deliver incremental revenue in 2003 as Siemens' rapid expansion in the
meter operations business continues.
Products
In 2002 we released Version 5 SERVICEPower, incorporating a massively scaleable
architecture. This architecture will form the basis of all future product
functionality releases. The new architecture is a huge step-increase in
performance, moving us from the ability to handle 70,000 service calls per week
to more than 120,000 per hour. Several existing customers are currently
upgrading to Version 5, but it is in underpinning the web-based contractor
scheduling commercial model that its true value will be seen, where transaction
volumes are not limited by call centre staffing levels. We have recently been
awarded a prestigious SMART Grant by the UK government amounting to #150,000 to
help develop the contractor scheduling product. This grant will offset some of
our development costs over the next 18 months.
We have broadened the core product with new modules launched in 2002, and now
have the SP/Analytics reporting tool and the SP/Mobility mobile communications
solution. The directors have high hopes for the SP/Mobility product as the
recent emergence of industry standards is allowing us to provide a low cost
solution that offers future proof technology in contrast to the high prices
being asked by the specialist suppliers. The ability to pass real-time status
updates from the field builds directly onto SERVICEPower's capability to
re-optimise in real-time throughout the day. SP/Analytics provides detailed
analysis of the day's performance, providing management with visibility and the
opportunity to control future service delivery performance. In addition, we now
have SP/Planner, a unique map-based visual planning tool developed in
co-operation with GECP. This is a revolutionary approach to planning and uses
variables such as the real road network, jobs, skills etc to plan future
workloads and the best locations for technician recruitment. Each of the modules
is individually priced and several customers have already made purchases
delivering incremental revenue to us.
Outlook
We currently have #1.7 million contracted revenue for 2003, plus a growing
revenue stream from the new contractor business model. We continue to deliver
additional revenue from existing customers, projects that were delayed in 2002
are now receiving capital expenditure authorisation and the company is well
placed in several new sales campaigns. Our partnership with GECP is a
significant step forward in establishing the credibility of our contractor
scheduling business model and the directors are very focussed on turning this
opportunity into a profitable and cash generative business during 2003.
The Company has sufficient cash to fund our current activities, particularly as
the directors are confident the Company can move into profit and be cash
positive during 2003. The service industry now sees optimised scheduling as
essential, and we are recognised by the industry analysts as one of the market
leaders in this sector due to our particularly impressive client list amongst US
Blue chip companies. This gives the Board confidence for the future growth of
the Company.
Barry Welck
Chairman
27th March 2003
CONSOLIDATED PROFIT AND LOSS ACCOUNT FOR THE YEAR ENDED
31 DECEMBER 2002
2002 2001
Note #'000 #'000
As restated
Turnover 4,483 3,150
Cost of sales 1,114 1,091
________ ________
Gross profit 3,369 2,059
________ ________
Administrative expenses
- excluding exceptional items 4,023 4,696
Administrative expenses
- exceptional items 3 (98) 150
________ ________
3,925 4,846
________ ________
Operating loss (556) (2,787)
Interest receivable 7 87
Interest payable and similar charges (6) -
________ ________
Loss on ordinary activities before (555) (2,700)
taxation
Taxation on loss from ordinary activities (228) (200)
________ ________
Loss on ordinary activities after taxation (327) (2,500)
and retained deficit for the year
________ ________
Loss per share 2
Basic and diluted (0.64) p (4.90) p
Basic - adjusted for exceptional items (0.83) p (4.60) p
________ ________
All amounts relate to continuing activities.
All recognised gains and losses are included in the profit and loss account,
apart from exchange translation differences of #5,000 (2001: #1,000).
CONSOLIDATED BALANCE SHEET AS AT 31 DECEMBER 2002
2002 2001
#'000 #'000 #'000 #'000
Fixed assets
Tangible assets 42 119
Investments 250 250
________ ________
292 369
Current assets
Debtors 1,126 1,210
Cash at bank and in hand 1,749 1,030
________ ________
2,875 2,240
Creditors: amounts falling due 2,294 1,306
within one year
________ ________
Net current assets 581 934
________ ________
Total assets less current 873 1,303
liabilities
________ ________
Capital and reserves
Called up share capital 5,107 5,107
Share premium account 8,076 8,076
Share scheme reserve 17 115
Merger reserve (3,008) (3,008)
Profit and loss account (9,319) (8,987)
________ ________
Shareholders' funds - equity 873 1,303
________ ________
CONSOLIDATED CASH FLOW STATEMENT FOR THE YEAR ENDED
31 DECEMBER 2002
2002 2001
Note #'000 #'000 #'000 #'000
Net cash inflow (outflow) 5 288 (2,207)
from operating activities
Returns on investments and
servicing of finance
Interest received 7 87
Interest paid (6) -
________ ________
Net cash inflow from returns on 1 87
investment and servicing of
finance
Taxation
UK Corporation tax refund 259 -
Capital expenditure and financial
investment
Purchase of tangible fixed assets (4) (18)
Sale of tangible fixed assets 1 1
Purchase of fixed asset - (250)
investments
_______ ________
Net cash outflow from capital (3) (267)
expenditure and financial
investment
________ ________
Cash inflow/ (outflow) before use 545 (2,387)
of liquid resources and financing
Management of liquid resources
Decrease in short term deposits 300 2,800
Financing
Issue costs - (20)
______ ______
Cash outflow from financing - (20)
_______ ________
Increase in cash in the year 845 393
________ ________
NOTES
1. Financial information
The financial information in this statement does not constitute statutory
accounts within the meaning of Section 240 of the Companies Act 1985. The
statutory accounts for 2001 have been filed with the Registrar of Companies and
received an unqualified auditors report. The 2002 accounts also received an
unqualified audit report, and will be sent to shareholders and the Registrar of
Companies shortly. Copies will be available from The Company Secretary,
ServicePower Technologies plc, Petersgate House, St. Petersgate, Stockport SK1
1HE.
2. Loss per share
Basic and diluted loss per ordinary share was calculated by dividing the loss by
the weighted average number of shares in issue during the relevant financial
periods.
The adjusted loss per share is based on the earnings used for the basic
calculation as adjusted for the exceptional items.
There are no dilutive potential ordinary shares in issue.
2002 2001
Number Number
Basic number of shares 51,070,852 51,070,852
_________ _________
#'000 #'000
Loss (327) (2,500)
Exceptional item (98) 150
_________ _________
Adjusted loss (425) (2,350)
_________ _________
3. Exceptional items
2002 2001
#'000 #'000
The exceptional items relate to
the following:
Redundancy costs - 150
Reduction in fair value provision (98) -
on share options waived in year
________ ________
4. Restatement of results
Implementation services are now charged to cost of sales according to actual
time spent by implementation consultants working on clients projects, the
remainder of their time being charged to overheads. This represents a change
from prior years whereby all implementation consultants' costs were allocated to
cost of sales and the directors believe this more accurately reflects the true
cost of implementation. This resulted in a reallocation of costs from cost of
sales to administration expenses for the year amounting to #221,000. 2001
results have been restated on a consistent basis, reallocating #403,000 from
cost of sales to administration expenses with no effect on operating loss.
5. Reconciliation of operating loss to net cash outflow from operating
activities
2002 2001
#'000 #'000
Operating loss (556) (2,787)
Depreciation 74 139
Profit on disposal of 1 (1)
tangible assets
Decrease in debtors 53 370
Increase in creditors 814 72
Share scheme reserve (98) -
_______ _______
Net cash inflow (outflow) 288 (2,207)
from operating activities
_______ _______
6. Dividends
The directors do not recommend the payment of a final dividend (2001: nil)
This information is provided by RNS
The company news service from the London Stock Exchange
END
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