(SEV) Servision

17 November 2011

SerVision PLC

("SerVision" or the "Company")

Trading Statement

SerVision  (AIM: SEV), the AIM listed leading developer and manufacturer of an award winning range of digital security systems, is pleased to provide an update on the Company's current trading. 

On 27 September 2011 the Company reported in its interim results  revenues of $2.15m for the six months to 30 June 2011.  For the four months to 31 October 2011 the Company has recorded unaudited sales in the region of $2.80m and received further purchase orders valued at $1.25m, all of which are due to be fulfilled during the current financial year. This includes a purchase order valued at $450,000 received from a new distribution partner in India, further details of which are provided below. 

The Directors remain confident that the Company's revenue and net profit for the full year  will be in line with market expectations (after adjusting for the one off positive revaluation of $0.76m reported in the Company's interim results). Further to the announcement made by the Company at the time of its interim results, the Board acknowledges that the Company's out-turn for the year remains dependent on the receipt of a purchase order from one of its distribution partners, which is yet to be received.

New distribution agreements

On 11 November 2011 the Company entered into an exclusive distribution agreement with AGS Transit Technologies Ltd ("AGS") for the supply of SerVision's video gateway products for all ATM monitoring and other banking applications in India, including cash in transit vehicles and branch monitoring solutions (the "AGS Agreement"). AGS will have the exclusive rights for the distribution of these products in India and non-exclusive distribution rights for all other market applications in India.

Under the terms of the AGS Agreement, which is for an initial duration of 2 years, AGS have committed to purchasing a minimum of 1,500 products from SerVision.  An initial purchase order for 750 units, valued at $450,000, was received on 11 November 2011.  The Directors anticipate that this purchase order will be fulfilled by the Company before the year end.

On 14 November 2011 the Company entered into a separate distribution agreement with MESAN Electronics Industry Trade Inc. ("MESAN") for the exclusive distribution of SerVision's MVG and CVG-M video gateway products for mobile applications in Turkey and non-exclusive distribution rights to all other model gateway products for other market applications (the "MESAN Agreement"). Under the terms of the MESAN Agreement MESAN have committed to purchase a minimum of 1,000 products from SerVision prior to 31 December 2012.  An initial order for 109 units, valued at $90,000, has already been received.

The products being supplied to both AGS and MESAN by SerVision fall across its entire range of Video Gateway solutions, including fixed and mobile commercial systems (SVG, UVG and MVG), home security (HVG) and body worn camera systems (CVG and CVG-M).

The Company has also recently been chosen by Lensec USA for the supply of 1,200 MVG units to be used in public buses in Texas.  To date 296 units have been supplied, with a further 405 units expected to be delivered by the end of the year.  It is anticipated that the remainder will be delivered in early 2012.

For further information:

26 September 2011

SerVision PLC

("SerVision" or the "Company")

Interim Results

For the Six Months Ended 30 June 2011

SerVision  (AIM: SEV), the AIM listed leading developer and manufacturer of an award winning range of digital security systems, is pleased to announce its unaudited interim results for the six month period ended 30 June 2011. SerVision has developed and patented a video compression technology, which allows high quality, real-time CCTV transmissions to be streamed across mobile phone networks and is currently being used by bus, taxi and cash-in-transit fleets, ATM providers, vehicle tracking and remote location facilities.

HIGHLIGHTS:

·     Revenue reduced by 21% to $2.15m (H1 2010: $2.72m); due to one-off additional income booked in H1 2010 from sale of manufacturing rights to Rich Wonder into China

·     Operating profit was therefore lower at $576,000*, (H1 2010: $769,000)

·     Net profit for the period was therefore lower at $539,000* (H1 2010: $729,000)

·     Two significant new Distribution Agreements signed:

§ Cobra UK Limited - the European leader of stolen vehicle tracking systems

§ Cashfin - 4,000 units across SerVision's product range in Mexico

·     New Fleet Management Services:

§ SVControl Centre - allows monitoring of up to 5,000 vehicles/locations at one time 

§ Integrated alert systems for route-deviation, speeding, erratic driving and stability

·     Post period end: Significant $2m order with Graphic Image Technologies of South Africa

*Includes a one-off revaluation of £761,000 in the period on a loan owed to the Office of Chief Scientist

Gidon Tahan, Chairman and Chief Executive Officer of SerVision, commented, "SerVision continues to supply its market leading security video systems into new markets and sectors. We have integrated innovative features to our mobile systems such as speed and route deviation alerts, which are vital for fleet management companies. We have also launched our Android OS client app, which along with our existing iPhone application, penetrates over 80% of the smartphone market, allowing customers to view their sites and vehicles away from the office.

"Finally, we have launched our fleet management SVContol Centre, which enables the monitoring of a substantial number of vehicles and locations at one time.  The software-based solution opens new opportunities for SerVision as it enables the Company to compete for large projects that require monitoring of thousands of sites."

For further information:

CHAIRMAN'S STATEMENT

I am pleased to announce SerVision's consolidated group interim report for the six months ended 30 June, 2011.  Our sales revenue during this period was $2.2m and our net profit was $0.5m,  both lower than the comparable period in 2010, due to the additional income booked from the sale of manufacturing rights in China during H1 2010.

Sales and Marketing

SerVision announced two significant distribution agreements in the UK and the Republic of Mexico in July 2011. Cobra UK Limited, part of Cobra Automotive Technologies S.p.A. and a leading supplier of security and telematics solutions for the automotive industry, signed an OEM agreement with SerVision where SerVision's MVG and CVG-M will be white labeled and sold under the Global Live brand name.  This strategic partnership will enhance SerVision's presence in the UK, where its MVG solutions are already in wide use by UK-based Cash-in-Transit companies including G4S and Loomis.  Cashfin Sa De CV, based in Mexico, will be distributing SerVision's entire product range and has already placed a first order for 500 products valued at $300,000. The total contract with Cashfin is for 4,000 units over a period of two years.

Subsequent to announcing the two agreements mentioned above, SerVision signed a two year Distribution Agreement, on 29 July 2011, with Graphic Image Technologies (Pty) Ltd, a leading distributor of CCTV solutions in South Africa.  The agreement will generate $2m of revenue for the Company with orders of $1m due before June 2012. SerVision has already received and supplied an initial order valued at $150,000.

During the period under review, SerVision received orders for a number of ongoing and new projects around the globe.  Notably, the Company supplied products for three bus companies in Brazil, school buses in San Antonio, Texas, remotely located construction sites in Holland, and ATM machines in India. SerVision is also supplying solutions for new police projects in both Argentina and Singapore, and it recently began an important pilot for tobacco transport in the UK which, if successful, could extend throughout all of Europe.

In May 2010 the Company announced a manufacturing rights agreement with Rich Wonder Technology Limited to manufacture all of SerVision's narrow band-width video gateway products to be sold in China and other authorised territories. As previously detailed $1.4m of the consideration payable was to be settled through the supply of 3,730 of Servision's MVG 400 units. A production line has successfully been established in China and SerVision received, during the period under review, 293 MVG 400 units with a value of $0.14 million.  A further 300 units have been delivered since the period end.

 
Research and Development

SerVision's newly launched Control Center application (SVControl Center) designed for enterprise-level projects was released to market this summer and has already been deployed for a bus project in Brazil.  The new control center solution enables the monitoring of a significant number of vehicles and locations at one time.  It supports connectivity with up to 5,000 SerVision gateways, and it offers a suite of advanced features designed to help operators group and sort gateways by customer, manage alarms, monitor real-time video, audio and GPS data, and wirelessly back up video.  The software-based solution opens new opportunities for SerVision as it enables the Company to compete for large projects that require monitoring of thousands of sites.

In addition to the new Control Center Product, SerVision launched a new client app for Android OS that can be installed on any smart phone using the Android platform.  We are also developing an update to the iPhone app that will expand functionality, including event playback and audio support. 

SerVision's R&D teams are working on a new sensor box adapter which will facilitate the Company's further penetration of the fleet management market.  This sensor box can interface with a vehicle's CAN bus and will use the MVG or CVG-M to transmit vital vehicle information along with live video, audio and GPS coordinates to the Control Center.  Other features recently added to SerVision's line of mobile gateways (the MVG and CVG-M), including integrated G-Force, geo-fencing/route-deviation and speed alerts, are also helping us make inroads in the fleet management market.

Financials

·    Revenues decreased by 21% to $2,152,000 for this period compared to $2,727,000 for the same period in 2010.  Revenues for the period ending June 30, 2010, included income from the sale of manufacturing rights to a company in China in exchange for $1.4 million , therefore, excluding this  item  comparable revenue from sales of products increased by  62% ($2,152,000 for this period compared to $1,327,000 for the same period in 2010).

·    Operating profit for the period was $576,000 compared to an operating profit of $769,000 for the same period in 2010.

·    Net profit for the period was $539,000 compared to a profit of $729,000 for the same period in 2010.

The net profit for the period under review includes a one-off positive revaluation of £0.76 million on a liability owed to the Office of Chief Scientist. This is due to a re-evaluation of expected royalties due to the Office of Chief Scientist between now and December 2013.

Conclusion

We remain more optimistic about the second half of this year.  Our pipeline for the remainder of 2011 and into next year is significant, and I am confident that the Company will continue to expand and grow. The Board is confident that its results for the full year will be in line with market expectations, although acknowledges that this will be dependent on the receipt of a purchase order from one of its distribution partners that is expected in the coming weeks.

As always, I want to thank our shareholders for their continued support and I'd like to express my gratitude to all SerVision personnel for their contribution to the Company's ongoing success.

Gidon Tahan

Chairman and Chief Executive Officer

SERVISION PLC

CONDENSED GROUP COMPREHENSIVE INCOME

FOR THE SIX MONTHS ENDED 30 JUNE 2011

SERVISION PLC

CONDENSED GROUP BALANCE SHEET

AT 30 JUNE 2011

SERVISION PLC

CONDENSED GROUP STATEMENT OF CHANGES IN EQUITY

FOR THE SIX MONTHS ENDED 30 JUNE 2011

SERVISION PLC

CONDENSED GROUP CASH FLOW STATEMENT

FOR THE SIX MONTHS ENDED 30 JUNE 2011

SERVISION PLC

NOTES TO THE REPORT AND CONDENSED GROUP FINANCIAL STATEMENTS

FOR THE SIX MONTHS ENDED 30 JUNE 2011

1.         BASIS OF PREPARATION

The condensed group financial statements have been prepared using accounting policies consistent with International Financial Reporting Standards (IFRS) as endorsed for use by Companies listed on an EU regulated market and in accordance with IAS34 - "Interim Financial Reporting".  The same accounting policies, presentation and methods of computation have been followed in the preparation of these results as were applied in the Group's latest annual audited financial statements.  It is not expected that there will be any changes or additions to these in the 2011 annual financial statements. 

This statement does not comprise statutory accounts as defined in Section 434 of the Companies Act 2006 and the results for the six months ended 30 June 2011 and for the six months ended 30 June 2010 are unaudited.

The financial information for the year ended 31 December 2010 is an extract from the latest group accounts.  Statutory financial statements for the year ended 31 December 2010, prepared in accordance with IFRS, on which the auditors gave an unqualified opinion, , have been filed with the Registrar of Companies.

The condensed group financial statements are presented in US Dollars and all values are rounded to the nearest thousand dollars ($'000) except when otherwise indicated.

2.         RAISING OF CAPITAL

            During February 2011, the Company issued 9 million new ordinary shares at a price of 8 pence per share in exchange for 725,000 GBP. The net proceeds have been used for additional working capital for the subsidiary.

3.         BUSINESS SEGMENT ANALYSIS

                Class of business

                The turnover, loss on ordinary activities before taxation and net assets of the Group are attributable to one class of business, that of developing and selling video surveillance equipment.

                Geographical areas

4.        TAXATION

The Company is controlled and managed by its Board in Israel. Accordingly, the interaction of UK domestic tax rules and the taxation agreement entered into between the U.K. and Israel operate so as to treat the Company as solely resident for tax purposes in Israel.  The Company undertakes no business activity in the UK such as might result in a Permanent Establishment for tax purposes and accordingly has no liability to UK corporation tax.

5.         PROFIT PER SHARE

        The profit per share of 1.13c (31 December 2010 1.53c; 30 June 2010: 1.74c) has been calculated on the weighted average number of share in issue during the year namely 48,167,769 (31 December 2010:  41,897,768; 30 June 2010: 41,669,435) and profit of US$ 545,690 (31 December 2010: US$ 641,000; 30 June 2010: US$ 724,853).

        Due to the immaterial number of options in issue there is no material difference between the diluted and basic loss per share.

6.         CHANGE IN ACCOUNTING ESTIMATE

During 2002 - 2005 the subsidiary  Company received grants totaling $864,000 from the Office of the Chief Scientist which financed a portion of the research and development expenses of the SVG system ("the System") previously developed by the subsidiary  Company.

Repayment of the grants is dependent on sales of the System and is carried out through the payment of royalties to the Chief Scientist, based on a percentage of the sales of the System.

Through December 31, 2010, subsidiary Company Management considered that it would market the System for a number of years and accordingly recorded the liability to the Chief Scientist, including interest at the LIBOR rate, of $936,000.

Following development of new systems with more advanced technology and in light of the significant reduction in demand for the System, during the current period, thesubsidiary Company Management decided to market the System only until the end of 2013 ("the Change in Estimate") and accordingly the remainder of the royalties which the subsidiary Company will have to pay, including the expected sales through to and including 2013, amounts to $175,000.

As a result of the Change in Estimate, as of June 30, 2011 the subsidiaryCompany reduced the balance of the liability to the Chief Scientist by an amount of $761,000, presented as other income in the Statement of Comprehensive Income.

As a result of the Change in Estimate the subsidiary Company's net profit during the reporting period increased by an amount of $761,000.

7.         REVENUES

Revenues for the period ending June 30, 2010, include income from the sale of manufacturing rights to a company in China ("the Chinese Company") in exchange for $1.4 million, to be paid by the production of 3,750 systems by the Chinese Company for the Company at no consideration.

During the reporting period the subsidiary Company received 293 systems with a value of $140,000 from the Chinese Company, with the remainder of the systems to be supplied at the subsidiary Company's request and in coordination with the Chinese Company.

8.         AVAILABILITY OF INTERIM ACCOUNTS

             The interim financial statement will be, in accordance with AIM Rule 26 of the AIM Rules for Companies, available shortly on SerVision's website (www.servision.net ).

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