News Column

ServicePower Hit By Sterling Strength, Expects Loss In First Half

August 5, 2014

Sam Unsted

LONDON (Alliance News) - ServicePower Technologies PLC said Tuesday that first-half revenue and gross profit will be down on the year, partly because the strength of the pound is weighing on revenue earned in the US, but it is hoping that contracts it signed in the second quarter will give its second half results a boost.

The field management software company said first-half trading was in line with management expectations, even though revenue for the six months to June 30 is expected to be GBP6.2 million, down from the GBP7.3 million it reported in the year earlier period. Gross profit is expected to be GBP2.7 million, down from GBP3.5 million.

Only some of this can be explained by the hit from the strength of sterling, which the company said knocked GBP0.3 million off revenue.

ServicePower Technologies also said it expects to report a loss before interest, tax, depreciation and amortisation of GBP0.5 million, excluding GBP0.2 million in extraordinary expenses, and a net loss of GBP0.2 million, compared with the GBP219,000 profit it reported in the first half of 2013. It said exchange rate movements knocked GBP0.1 million off net profit this year.

Its cash balance at the end of June stood at GBP1.6 million, down from the GBP2.3 million it reported a year earlier, as sterling's strength also hit the translation of dollar bank balances. The cash situation had improved to over GBP2 million in mid-July, it added.

It said it had made necessary investment in products, staff, infrastructure, and customer implementations, but that had helped boost dollar revenue from its Americas service operations business by more than 50% on the year.

"A number of significant contracts were signed in the second quarter and therefore had minimal contribution to first-half revenues. However, these contracts will have a greater impact in the second half of the year. ServicePower has good visibility of customer implementations and a strong pipeline of opportunities, both of which support achieving market expectations," the company said in its trading update.?

ServicePower shares were down 1.6% to 7.50 pence on Tuesday.

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Source: Alliance News

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