10/10/2005
The six-month figures from ServicePower dashed hopes of a move into profit this year. But they did so for all the right reasons. ServicePower has been investing heavily in setting up its Field Service Solutions outsourcing business in Europe and that has resulted in an overall loss within FSS of £746,000. It looks to have been worthwhile, with £1.3 million of business already contracted for 2005 and a further £2 million for next year.
The FSS business provides two solutions for companies that use independent service engineers out in the field. They can either use ServicePower's field scheduling software – which involves web-based job despatch and electronic invoicing – or hand the whole thing over to FSS, which will take responsibility for the service job itself. FSS grew out of the software business that ServicePower was already offering to companies with big home servicing requirements.
In the half year, FSS more than doubled its turnover to £1.5 million. Together with software sales, ServicePower now has contracted and committed revenue for this year of over £7.5 million. The tally for next year tops £9 million. With revenue due this half on software sales made in the first half, ServicePower says it will be cashflow positive in the second half. With nearly £700,000 cash in the bank, it will be not need to come back to the market again for more cash.
FSS is expanding fast. Seven new contracts and two pilots were won in the first half of the year in the US, and a like number in Europe. In the States, USDTV has received funding to relaunch its DDTV broadcast service from November, bringing in installation work on 7,000 set-top boxes a month. A mobile phone version of the FSS service has also been launched and well received. The company believes it could deliver a step-change in the business.
With so much going on, ServicePower is set to move into profit in 2006. Meanwhile, the longer-term potential of FSS is quite breath-taking. It could literally dominate the maintenance and installation markets in the US and Europe. None of that potential is yet recognised in a market capitalisation of £27 million at the current 37p. Tipped here twice in 2003 at 10p and 38p, the shares have been treading water for the past year. They should now start to move ahead again.
| Market cap: | £27.2m |
| PE Forecast: | n/a |
| Share price: | 37p |
| AIM | £6.16m |
3.25p
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-0.50p
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