Scheduling and operations management software provider ServicePower Technologies says trading has been strong in the first four months of 2011.
In 2010, ServicePower made its first underlying profit for 14 years and new contracts are helping it to do much better in 2011. A large contract has been won with Assurant Solutions, which provides insurance services. The business model involves ServicePower getting 50% of the 50 cents plus charge for each claim handled. Assurant handles 6m claims a year and also offers ServicePower a way of gaining business with a number of retailers. The AGM statement suggests that progress is being made towards additional business gains.
Tesco is also trialling the software.
Revenues were relatively flat at £18.3m in 2010 and the underlying profit was £11,000. Low margin business has been shed. The release of a restructuring provision and a foreign exchange gain meant that the reported profit was £577,000, compared with a loss of £4.02m the year before. Staff numbers were reduced by one-third and overheads cut back.
There was £3.67m of cash in the bank at the end of 2010 and a convertible loan note of £1.45m where interest is being rolled up. The loan is convertible at 5p a share.
Revenues are expected to slump to £12.5m in 2011 but pre-tax profit should hit £400,000 with around £200,000 of the improvement likely to come from a lower amortisation charge as the intangibles are written off.
At 8.88p a share, ServicePower is valued at £16.8m.
Download the May 2011 edition of AIM Journal at http://www.hubinvest.com/AIMPDFMay2011_20.pdf
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