ServicePower

Outsourced service and field management specialist ServicePower (SVR) has reported a 35% decline in sales amid what it called a 'transformational' period.

The Stockport-headquartered business reported pre-tax profits of £900,000 (2010: £700,000) on revenue of £6.5m (2010: £10m) for the six months to June. A cash position of £3.8m was also declared (2010: £3.4m.)

The plummeting in sales came about due to a shrinking in revenue in its service operations division, which saw sales fall from £7m to £1.7m due to what ServicePower said was the 'removal of low-margin business in the UK in the second half of the prior year'. However, its service-scheduling division, which helps businesses book and manage appointments and which includes a GPS system to help companies find their customers saw revenue climb from £3m to £4.8m.

In an interview with Growth Company Investor, chief executive officer Mark Duffin enthused that ServicePower was 'very lucky' as it provides 'products that save costs and allow our customers to reduce the number of people they employ'. He added that 'key wins' over the period included an agreement to provide home emergency specialist Homeserve with the software to dispatch jobs and take payment from claims for two years.

Analysts at house broker finnCap are forecasting pre-tax profits of £800,000 for the year to December 2011 (EPS: 0.4p) on sales of £12.3m. In 2012, profits of £1.2m (EPS: 0.6p) are penciled in.

Last recommended by Growth Company Investor this June at 9.75p the shares currently trade at 9.63p. A company that has experienced a considerable change in direction as it moves away from its service operations division, it has bolstered its forward order book with a number of contract wins. The shares look fairly valued at the current price with some moderate growth prospects. Hold.