Servision PLC Regulatory News (SEV)

29 Sep 2006 07:02

SerVision plc29 September 2006 SERVISION PLC CHAIRMAN'S STATEMENT REPORT AND FINANCIAL STATEMENTS FOR THE SIX MONTHS ENDED 30 JUNE 2006 SerVision Plc ("SerVision" or "the Company") Unaudited Interim Results for Six Months to 30 June 2006 Highlights: •Turnover up 56% to US$1.56m (US$1.0 for same period 2005) •Gross profit up 106% to US$ 592,000 (US$ 287,000 for same period 2005) •Two major product launches •Product stability improved •Materials costs reduced Gidon Tahan, Chairman and CEO, commented:"I am pleased to announce our interim results with improvements in our turnoverand gross profit over the previous period and two new major product launches. "SerVision continues to make steady progress towards achieving its goals and wehope to announce encouraging contract news in the near future." Contact details: Servision plc +972 2535 0015Eitan Yanuv, Finance Director HB Corporate 020 7510 8598Jim McGeever Threadneedle Communications 020 7936 9605Graham Herring Chairman's Statement I am pleased to announce the Company's Interim results for the first six monthsof 2006. Turnover for the period was US$1.56 million compared to US$1.0 million for thesame period last year - and US$ 1.9 million for the whole of 2005. Gross profithas grown to US$ 592,000 (38% of revenues) compared with US$ 287,000 for thesame period last year and US$ 439,000 (23% of revenues) for the whole of 2005. This major improvement in gross margins was due largely to the improvedstability of products together with our successful efforts to reduce the bill ofmaterials. During the period we successfully completed development of the "IVG series", ourstate of the art awards winning mobile DVR. The first 300 units have alreadybeen sold, and additional units installed in many testing and demo sitesthroughout the world. I am confident that significant sales will be generatedfrom these sites. We also launched our advanced HVG product earlier in the year and made 140successful installations. The development of this professional cost effectiveproduct means that SerVision can now penetrate the wide market of smallbusinesses and retail customers. For the first time we also exhibited our three families of products in a tradeshow in Brazil. Local interest was high and we are expecting to sign adistribution agreement with a Brazilian company in the upcoming months. In addition to this show, our products were also exhibited by three major USdistributors at the recent ISC West security trade show in Las Vegas, and ourproducts were demonstrated by GE Security at the UK's IFSEC show in May 2006. Wehave since received initial purchase orders by GE Security and I stronglybelieve those orders will grow significantly in the upcoming years. SerVision continues to make steady progress towards achieving its goals and wehope to announce encouraging contract news in the near future. On a personalnote, I would like to thank all of our dedicated staff for their loyalty andhard work throughout the period. Gidon TahanChairman and Chief Executive Officer 29 September 2006 SERVISION PLC GROUP PROFIT AND LOSS ACCOUNT FOR THE SIX MONTHS ENDED 30 JUNE 2006 Six months to Six months to Year to 31 30 June 2006 30 June 2005 December 2005 Unaudited Unaudited Audited Note $'000 $'000 $'000 TURNOVER 1,2 1,559 1,000 1,882 Cost of sales (967) (713) (1,443) --------- --------- --------- GROSS PROFIT 592 287 439 Administrative expenses (1,956) (1,759) (3,026) --------- --------- --------- OPERATING LOSS (1,364) (1,472) (2,587) Net interest payable (48) (15) (18) --------- --------- --------- LOSS ON ORDINARY ACTIVITIES BEFORE TAXATION (1,412) (1,487) (2,605) Tax on loss on ordinary activities 3 - - - --------- --------- --------- RETAINED LOSS (1,412) (1,487) (2,605) ========= ========= ========= Loss per share Basic and diluted 7 (7.37c) (8.33c) (14.55c) ========= ========= ========= |GROUP STATEMENT OF TOTAL RECOGNISED GAINS AND LOSSES Six months to Six months to Year to 31 30 June 2006 30 June 2005 December 2005 Unaudited Unaudited Audited $'000 $'000 $'000 Loss for the financial period (1,412) (1,487) (2,605) Exchange rate movements 297 (225) (488) --------- --------- --------- Total recognised losses relating to the period (1,115) (1,712) (3,093) ========= ========= ========= SERVISION PLC GROUP BALANCE SHEET AT 30 JUNE 2006 Notes As at 30 June As at 30 June As at 31 2006 2005 December 2005 Unaudited Unaudited Audited $'000 $'000 $'000 FIXED ASSETS Tangible assets 4 169 199 181 --------- --------- --------- CURRENT ASSETS Stock 315 741 601 Debtors 714 443 269 Cash at bank 1,211 581 231 --------- --------- --------- 2,240 1,765 1,101 CREDITORS: amounts falling due within one year (1,504) (818) (1,446) --------- --------- --------- NET CURRENT ASSETS/(LIABILITIES) 736 947 (345) --------- --------- --------- TOTAL ASSETS LESS CURRENT LIABILITIES 905 1,146 (164) CREDITORS: amounts falling due within one year (292) - - --------- --------- --------- 613 1,146 (164) ========= ========= ========= CAPITAL AND RESERVES Called up share capital 5 426 337 339 Share premium account 6 7,046 5,172 5,241 Merger reserve 6 1,979 1,979 1,979 Profit and loss account 6 (8,838) (6,342) (7,723) --------- --------- --------- EQUITY SHAREHOLDERS' FUNDS 613 1,146 (164) ========= ========= ========= SERVISION PLC GROUP CASH FLOW STATEMENT FOR THE SIX MONTHS ENDED 30 JUNE 2006 Six months to Six months to Year to 31 30 June 2006 30 June 2005 December 2005 Unaudited Unaudited Audited $'000 $'000 $'000 Operating loss (1,364) (1,472) (2,587) Depreciation 60 28 64 (Increase)/decrease in debtors (445) 219 393 Decrease/(increase) in stock 286 (128) 12 Decrease in creditors (189) (174) (117) --------- --------- --------- CASH OUTFLOW FROM OPERATING ACTIVITIES (1,652) (1,527) (2,235) RETURN ON INVESTMENT AND SERVICING OF FINANCE Interest payable (48) (15) (18) CAPITAL EXPENDITURE AND FINANCIAL INVESTMENT Purchase of fixed assets (30) (38) (56) --------- --------- --------- CASH OUTFLOW BEFORE FINANCING (1,730) (1,580) (2,309) FINANCING Issue of shares in Servision Plc (net of issue costs) 1,892 - 71 Net loans received 521 - 302 --------- --------- --------- INCREASE/(DECREASE) IN CASH IN THE PERIOD 683 (1,580) (1,936) ========= ======== ========== SERVISION PLC RECONCILIATION OF NET CASH FLOW TO NET FUNDS/(DEBT) FOR THE SIX MONTHS ENDED 30 JUNE 2006 Six months to Six months to Year to 31 30 June 2006 30 June 2005 December 2005 Unaudited Unaudited Audited $'000 $'000 $'000 Increase/(decrease) in cash in the period 683 (1,580) (1,936) Exchange rate differences 297 (225) (488) Cash inflow from movement in debt (521) - (302) ------------- ------------- ------------- Movement in net debt in the period 459 (1,805) (2,726) Net (debt)/funds at beginning of period (407) 1,953 2,319 ------------- ------------- ------------- Net funds/(debt) at end of period 52 148 (407) ============= ============= ============= SERVISION PLC RECONCILIATION OF MOVEMENTS IN GROUP SHAREHOLDERS' FUNDS/(DEFICIT) FOR THE SIX MONTHS ENDED 30 JUNE 2006 Six months to Six months to Year ended 30 June 30 June 31 December 2006 2005 2005 Unaudited Unaudited Audited $'000 $'000 $'000 Loss for the financial period (1,412) (1,487) (2,605) New shares issued in Servision Plc (net of issue costs) 1,892 - 71 Exchange rate differences 297 (225) (488) --------------- --------------- --------------- Net movement in shareholders' funds/(deficit) 777 (1,712) (3,022) Opening shareholders' (deficit)/funds (164) 2,858 2,858 --------------- --------------- --------------- Closing shareholders' funds/(deficit) 613 1,146 (164) =============== =============== =============== SERVISION PLC NOTES TO THE REPORT AND FINANCIAL STATEMENTS FOR THE SIX MONTHS ENDED 30 JUNE 2006 1. ACCOUNTING POLICIES The accounting policies, applied on a consistent basis in the preparation of thefinancial information, are as follows: (a) Basis of PreparationThe financial information is prepared on the historical cost basis in accordancewith the applicable accounting standards. The financial information is preparedunder UK GAAP. The information set out in this interim report for the six months ended 30 June2006 does not comprise statutory accounts within the meaning of section 240 ofThe Companies Act 1985. (b) Basis of ConsolidationSubsidiary undertakings are accounted for from the effective date ofacquisition. The parent Company, Servision Plc was incorporated on 2 June 2005and acquired Servision Ltd (and its wholly owned subsidiary Servision Inc.) on20 July 2005 by way of a share for share exchange. Under Financial ReportingStandard 6, merger accounting has been adopted as the basis for consolidation. (c) TurnoverTurnover represents the value of goods and services supplied. (d) Tangible fixed assetsFixed assets are stated at cost less accumulated depreciation. Depreciation isprovided at rates calculated to write off the cost less estimated residual valueof each asset by equal monthly instalments over its expected useful life, asfollows:- Leasehold improvements 10% per annumMotor vehicles 15% per annumOffice furniture and equipment 6-15% per annumComputer equipment 20-33% per annum (e) StockStock is valued at the lower of cost and net realisable value. (f) Other incomeGrants receivable from the Israeli Government are recognised at the time theCompany is entitled to such grants. These revenue grants are shown as otherincome. (g) Reporting currencyThe majority of the Group's turnover is generated in US Dollars. For the purposeof reporting requirements, the financial information has been reported in USDollars. The period end rate used was £1 to $1.81595 (December 2005: £1 to$1.72080, June 2005: £1 to $1.91589) (h) Research and developmentAll expenditure relating to research and development expenditure is expenseddirectly to the profit and loss account. (i) Foreign currencyThe results of the parent company are translated into US Dollars at the averagerate of exchange for the period. The assets and liabilities of the parentcompany are translated into US Dollars at the rate of exchange ruling at theperiod end. Currency translation adjustments on exchange are included in theprofit and loss account. (j) Share based paymentsThe Group is required to adopt FRS 20 "Share Based Payments" for the first timefor accounting periods commencing on or after 1 January 2006. FRS 20 requiresthe Group to recognise an expense in respect of the granting over shares toemployees and directors. This expense, which is calculated by reference to thefair value of the options granted, is recognised on a straight line basis overthe vesting period based on the Group's estimate of options that will eventuallyvest. The Directors have used the Black Scholes model to estimate the value ofoptions granted in the current and prior periods. SERVISION PLC NOTES TO THE REPORT AND FINANCIAL STATEMENTS (continued) FOR THE SIX MONTHS ENDED 30 JUNE 2006 2. BUSINESS SEGMENT ANALYSIS The turnover, loss on ordinary activities before taxation and net assets of theGroup are attributable to one activity, that of developing and selling videosurveillance equipment. 3. TAXATIONThe Company is controlled and managed by its Board in Israel. Accordingly, theinteraction of UK domestic tax rules and the taxation agreement entered intobetween the U.K. and Israel operate so as to treat the Company as solelyresident for tax purposes in Israel. The Company undertakes no business activityin the UK such as might result in a Permanent Establishment for tax purposes andaccordingly has no liability to UK corporation tax. 4. TANGIBLE FIXED Leasehold Other tangible ASSETS premises fixed assets Total $'000 $'000 $'000 Cost or valuation At 1 January 2006 42 248 290 Additions - 30 30 ------------- ------------ ---------------- At 30 June 2006 42 278 320 ------------- ------------ -------------- Depreciation At 1 January 2006 6 85 91 Charge for the period 2 58 60 ------------- ------------ -------------- At 30 June 2006 8 143 151 ------------- ------------ -------------- Net Book Value At 30 June 2006 34 135 169 ============= ============ ============== At 31 December 2005 35 146 181 ============= ============ ============== At 30 June 2005 36 163 199 ============= ============ ============= 5. CALLED UP SHARE CAPITAL Authorised: The authorised share capital consists of 30,000,000 ordinary shares of £0.01 each and 1,000,000 deferred ordinary shares of £0.001 each. 30 June 2006 Allotted, called up and fully paid: US$'000 22,781,663 (31 December 2005: 17,846,990) ordinary shares of £0.01 each 425 384,615 deferred ordinary shares of £0.001 each 1 --------------- 426 =============== The company has granted options over 30,000 £0.01 ordinary shares to Mr Eitan Yanuv, the financial director. 20,000 options have vested with the final 10,000 vesting in December 2006, all at an exercise price of £0.15 per share. During the period, the company issued 4,934,673 ordinary shares of £0.01 each at a premium of £0.2037. Of these 635,795 shares were subscribed for by Mr Gideon Tahan and 127,159 were subscribed for by Mr Chaim Levy, both of whom are directors of the company. SERVISION PLC NOTES TO THE REPORT AND FINANCIAL STATEMENTS (continued) FOR THE SIX MONTHS ENDED 30 JUNE 2006 6. RESERVES Share Merger Profit and Premium Reserve loss account Total $'000 $'000 $'000 $'000 As at 1 January 2006 5,241 1,979 (7,723) (503) Retained loss for the period - - (1,412) (1,412) Issue of shares in the period (net of costs) 1,805 - - 1,805 Exchange differences - - 297 297 --------- ------------- -------------- ---------- At 30 June 2006 7,046 1,979 (8,838) 187 ========= ============= ============== ========== 7. LOSS PER SHARE The loss per share of 7.37c (31 December 2005: 14.55c; 30 June 2005: 8.33c) hasbeen calculated on the weighted average number of share in issue during the yearnamely 19,168,196 (31 December 2005: 17,909,727; 30 June 2005: 17,846,990) andlosses of US$1,412,191 (31 December 2005: US$2,605,231; 30 June 2005:US$1,487,098).FRS 22 does not require the calculation of diluted earnings per share, where thefigure would be similar to basic earnings per share. 8. POST BALANCE SHEET EVENTS Since 30 June 2006, the company issued 50,000 ordinary £0.01 shares at a premiumof £0.2037. This information is provided by RNS The company news service from the London Stock Exchange