Upgrade cycle now underway
​ServicePower provides complete end-to-end software for the scheduling and management of mobilised service professionals. This includes both employees and subcontractors within the repair, maintenance and installation sectors. Earnings upgrade cycles are like gold-dust for investors and we believe that after this morning's upbeat trading statement this process is now underway for ServicePower. There is clear evidence of all the previous hard work bearing fruit, as H1'15 sales and adjusted EBITDA came in at £7m (+13% vs £6.2m LY) and -£0.1 (vs -£0.7m LY) respectively. Net cash closed on 30th June at £0.7m after redeeming £0.2m of the £1.3m convertible debt and swapping the rest (£1.1m) into equity. Encouragingly, 81.5% of H1 revenues were described as "recurring in nature" (eg SaaS, support, operations, etc), thus providing excellent forward visibility and giving us confidence that the company will meet FY expectations. Consequently we have again nudged up our 2015 turnover estimate from £13.4m to £13.6m. ServicePower shares at 3.65p trade on a paltry 2015 EV/sales multiple of less than 0.6x which is materially less than its software peers. We raise our target share price to 11p from 10p, and that is excluding any potential upside in the event of corporate M&A.
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