Half Yearly Report

28 September 2012

PeerTV PLC

("PeerTV" or "the Company")

Interim Results, trading update and Directorate Change

PeerTV (AIM:PTV), a provider of technology solutions for the OTT (TV over the internet) market, and PCB (printed circuit board) production solutions, today announces its unaudited results for the six months ending 30 June 2012.

Key Developments

·; Successful launch and first order for Android based set top box. The launch at the IPTV show in London in March has resulted in discussion with multiple telecom and TV operators. In Q2 discussions were begun with Orange (France, Israel and Ivory Coast), Swisscom, Bouygues Telecom (France), Rostelecom (Russia), GMDS (E. Europe) and "R Cable" (Spain).

·; Integration of management of Digitek and PeerTV Ltd. on track.

·; Combination of Digitek and PeerTV Ltd business impacts the comparison with the results for H1 2011.

·; Revenue of $382,000 at PeerTV Ltd. reflects slower sales of current set top box in anticipation of Android switch as well as intermittent sales to its ethnic TV operator customers.

·; Revenues of $856,000 at Digitek reflect the refinancing issues at the beginning of the year and a switch to almost exclusively labour only contracts, reducing revenues but increasing margin.

·; Investment in R&D at PeerTV Ltd. of $393,000 (2011: $638,000), S&M and G&A of $74,000 and $706,000 respectively now include Digitek and PeerTV Ltd.

·; Board focused on cash management and funding until expected return to positive cash flow at both subsidiaries in Q1 2013. In order to achieve this, the Company will require a further placing prior to year end.

Post Period Highlights

·; Successful funding of £750,000 (before expenses) to strengthen working capital. The financing included certain conditions that will limit the use of the funds received to pay for long outstanding creditors of PeerTV Ltd. In particular, PeerTV Ltd. is in the process of renegotiating the terms of its long outstanding liabilities to ensure that the criteria are met.

·; Beginning of production of first Android boxes imminent. The current boxes will be delivered with the Android Set Top Box release 1.0. The PeerTV team is continuing to develop the Android software and releases 1.1 and 1.2 are expected by the end of Q4 2012 and end of Q1 2013, respectively. In order to achieve this schedule, additional software engineers will be required and that can only be achieved if the necessary funds are available.

·; Return of Digitek to normal operating mode after financial squeeze at beginning of the year.

·; Appointment of Avi Vermus, CEO of Digitek, to the board of PeerTV plc with immediate effect. Avi became CEO of Digitek in February 2012.

Chairman Leon Nahon Commented:

"At the same time we would like to welcome Avi to the board of the PeerTV. Avi has been central to the successful turn around and restructuring of the finances at Digitek. We look forward to having his operational insights and experience at the board level."

Additional Disclosures

In accordance with the AIM Rules, the following information required to be disclosed is set out below. Save for the information disclosed in this announcement there is no other information that would need to be disclosed under Schedule 2, paragraph (g) of the AIM Rules.

Full Name and age: Avi Vermus (51)

Further enquiries:

PeerTV Plc

Leon Nahon, Chairman +972 974 07315

Libertas Capital Corporate Finance Limited

Thilo Hoffmann/Andrew McLennan +44 (0) 20 7569 9650

Peterhouse Corporate Finance

Jon Levinson/Eran Zucker +44 (0) 20 7469 0932

Bishopsgate Communications

Nick Rome/Sam Allen +44 (0) 20 7562 3350

[email protected] 

Appendix

Chairman's Statement

Our interim results for the six months ended 30 June 2012 show consolidated turnover of $1,238,000 and total consolidated loss of $1,604,000.

Both of our businesses were in a rebuilding mode in the first half of the year.

Peer TV Ltdhas successfully reengineered it's Set Top Box (STB) software solution around the Android operating system and is about to commence manufacturing of its first order for the new Android-based product.

PeerTV is now seeing market interest from telecom operators who were in the past indifferent to its solutions. At the recent IBC in Amsterdam, the industry's largest trade show, the company experienced significant interest from large Pay TV operators as well as from smaller operators. The trade show generated more than seventy sales leads.

Over the past six months the company's product and market strategy has been refined and marketing efforts are focusing on the telecom operator market where PeerTV is leveraging it's pioneering Android based product line, while continuing to support its traditional ethnic market customer base.

Growing interest from telecoms operators in the PeerTV solution is a reassuring sign for the company and management believes that it will win a first operator deal within the next six months.

The Digitek Grouphas undergone a successful internal reconstruction and partial refinancing and we are experiencing satisfactory level of new orders and enquiries from new customers. The business now has over 50 active accounts. Sales are 80% labour only and 20% turnkey. The working capital for turnkey sales is provided by a third party to reduce the capital intensity for the company. Significant operating cost reductions have been achieved.

The company is in the process of qualifying for AS9100 (Military and aerospace standards), in addition to its present industrial and medical approvals, which will enable the company to participate in larger longer term contracts.

Digitek is currently in negotiation with several strategic local and international companies with a view to transferring their entire production lines to the company.

Digitek expects to be cash positive from operations by the end of the year. However, repayment of non-current creditors will delay positive overall monthly cash flow until Q1 2013. The prospects for Q4 2012 and 2013 are looking solid.

The Peer TV Plc Group

We are satisfied with the progress of our subsidiaries during the first half of the year. The cash flow of the Group remains tight but we expect both subsidiaries to move to cash self sufficiency by Q1 2013. Until that time the parent company continues to provide financing to its subsidiaries raised from equity placings. The Company recently completed a placing of 9,090,909 Ordinary Shares at 8.25 pence per share and a similar number of three year warrants exercisable at 9.25 pence per share generating a total of £750,000 gross of expenses. The Company has effected closings in respect of £584,000 to date and the balance is expected to complete by the end of October 2012.

The Company anticipates that it will require a further placing very shortly.

Appendix: Condensed Group Financial Statements

PEERTV PLC

CONDENSED GROUP INCOME STATEMENT

FOR THE SIX MONTHS ENDED 30 JUNE 2012

PEERTV PLC

CONDENSED GROUP BALANCE SHEET

FOR THE SIX MONTHS ENDED 30 JUNE 2012

PEERTV PLC

CONDENSED GROUP STATEMENT OF CHANGES IN EQUITY

FOR THE SIX MONTHS ENDED 30 JUNE 2012

PEERTV PLC

CONDENSED GROUP CASH FLOW STATEMENT

FOR THE SIX MONTHS ENDED 30 JUNE 2012

PEERTV PLC

NOTES TO THE REPORT AND CONDENSED GROUP FINANCIAL STATEMENTS

FOR THE SIX MONTHS ENDED 30 JUNE 2012

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 2012 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 2012 and for the six months ended 30 June 2011 are unaudited.

The financial information for the year ended 31 December 2011 is an extract from the latest group accounts. Statutory financial statements for the year ended 31 December 2011, prepared in accordance with IFRS, on which the auditors gave an unqualified opinion but did include reference to matters to which the auditors drew attention by way of emphasis without qualifying their report.

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.

During the six month period ended 30 June 2012 the group incurred a loss of $1,614,000 and had net liabilities of $1,719,000 as at that date. The directors are in the process of raising additional funds to provide working capital as set out in the Chairman's Statement.

During the period the directors have created Digitek SMT Assemblies Ltd which serves as a marketing and financing company. The group has been reducing its liability to its principal bank and has replaced the bank with an investor financing facility. The directors believe they will fully repay the bank in Q4 2012. The group has also been successful in soliciting new customers and the directors believe they have a re-established entity.

The directors believe that due to the aforementioned restructuring and funds raised through private placing that took place in July 2012 and issue of loan notes in Digitek SMT Assemblies since the period end the group is a going concern. However, the future of the group is dependent on the directors being successful in their bid to secure finance and the group achieving its trading projections.

Subject to the group's ability to raise required funds, the directors consider that it is appropriate to prepare the financial statements on the going concern basis. If additional financing by whatever means is not secured in the next twelve months, then it is unlikely that the group be able to continue in its present form.

2. RAISING OF CAPITAL

During the period the company issued shares as follows

- 1,333,333 0.5p Ordinary shares at £0.15 each in February 2012

- 469,949 0.5p Ordinary shares at £0.12 each in March 2012 in lieu of fees due

- 570,828 0.5p Ordinary shares at £0.12 each in April 2012

- 626,267 0.5p Ordinary shares at £0.075 each and 970,528 0.5p Ordinary shares at £0.13 each in May 2012

PEERTV PLC

NOTES TO THE REPORT AND CONDENSED GROUP FINANCIAL STATEMENTS (continued)

FOR THE SIX MONTHS ENDED 30 JUNE 2012

3. BUSINESS SEGMENT ANALYSIS

Class of business

The turnover, loss on ordinary activities before taxation and net liabilities of the group are attributable to two classes of business.

PeerTV Ltd is engaged in developing and providing hardware and software to enable the delivery of live broadcasts and video on demand over the internet to the television. The company develops, manufactures and supplies end-to-end technology systems for a new breed of TV operator that seeks to deliver rich, personalized and highly cost-effective internet TV services.

Through its wholly owned subsidiary SM Digitek (1993) Ltd, Digitek Holdings Ltd's principal activities are the assembly of electronic products and components and the associated sourcing and logistics for companies principally engaged in the hi-tech and telecommunications industries in Israel. It uses electronic and computerized equipment, which operates robotically and is geared to the accurate assembly of the electronic components on the circuit board in the least possible time.

4. LOSS PER SHARE

Basic loss per share is calculated by reference to the loss on ordinary activities after taxation of $1,614,000 (30 June 2011- loss of $1,892,000 and 31 December 2011 - loss of $11,628,000) and on the weighted average of 45,844,122 (30 June 2011 - 15,527,163 and 31 December 2011 - 21,833,624) shares in issue. The calculation of diluted earnings per share is based on the loss on ordinary activities after taxation and the diluted weighted average of 47,377,947 (30 June 2011 - 17,074,575 and 31 December 2011 - 23,367,449) shares calculated as follows:

Since 30 June 2012 the Company has completed a placing of 9,090,909 0.5p Ordinary shares at 8.25 pence per share and a similar number of three year warrants exercisable at 9.25 pence per share generating a total of £750,000 gross of expenses. The Company has effected closings in respect of £584,000 to date and the balance is expected to complete by the end of October 2012.

INDEPENDENT REVIEW REPORT TO PEERTV PLC

Introduction

We have been engaged by the company to review the condensed set of group financial statements in the interim report for the six months ended 30 June 2012 which comprises the Group Income Statement, the Group Balance Sheet, the Group Cash Flow Statement, the Group Statement of Changes in Equity and related explanatory notes 1 to 5.

We have read the other information contained in the interim report and considered whether it contains any apparent misstatements or material inconsistencies with the information in the condensed set of financial statements.

Directors' responsibilities

The interim report is the responsibility of and has been approved by the directors. The directors are responsible for preparing the interim report in accordance with the rules of the AIM rules. As disclosed in note 1, the annual financial statements of PeerTV Plc are prepared in accordance with IFRSs as adopted by the European Union. The condensed set of financial statements included in this interim report has been prepared in accordance with International Accounting Standard 34, "Interim Financial Reporting", as adopted by the European Union.

Our responsibility

Our responsibility is to express to the Group a conclusion on the condensed set of group financial statements in the interim report based on our review.

Our report has been prepared in accordance with the terms of our engagement to assist the company in meeting the requirements of the rules of the London Stock Exchange for companies trading securities on the Alternative Investment Market and for no other purpose. No person is entitled to rely on this report unless such a person is a person entitled to rely upon this report by virtue of and for the purpose of our terms of engagement or has been expressly authorised to do so by our prior written consent. Save as above, we do not accept responsibility for this report to any other person or for any other purpose and we hereby expressly disclaim any and all such liability.

Scope of review

We conducted our review in accordance with International Standard on Review Engagements (UK and Ireland) 2410, "Review of Interim Financial Information Performed by the Independent Auditor of the Entity", issued by the Auditing Practices Board for use in the United Kingdom. A review of interim financial information consists of making enquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with International Standards on Auditing (UK and Ireland) and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion.

Emphasis of matter - going concern

In forming our opinion, which is not qualified, we have considered the adequacy of the disclosures made within the accounting policies concerning the group's ability to continue as a going concern. The group incurred a net loss of $1,614,000 during the six months ended 30 June 2012. This, along with other matters explained within the accounting policies indicates the existence of a material uncertainty which may cast significant doubt about the group's ability to continue as a going concern. The financial statements do not include the adjustments that would result of the group was unable to continue as a going concern.

Conclusion

Based on our review, nothing has come to our attention that causes us to believe that the condensed set of group financial statements in the interim report for the six months ended 30 June 2012 is not prepared, in all material respects, in accordance with International Accounting Standard 34, as adopted by the European Union.

haysmacintyre Fairfax House

Chartered Accountants 15 Fulwood Place

Registered Auditors London

WC1V 6AY

28 September 2012