Half Yearly Report

SerVision PLC

("SerVision" or the "Company")

Interim Results

For the Six Months Ended 30 June 2014

The Board of SerVision (AIM: SEV), the AIM quoted leading developer and manufacturer of digital security systems, announces its unaudited results for the six months ended 30 June 2014.

For further information:

CHAIRMAN'S STATEMENT

CONDENSED GROUP FINANCIAL STATEMENTS

FOR THE SIX MONTHS ENDED 30 JUNE 2014

The Board today announces SerVision's consolidated group interim results for the six months ended 30 June 2014. I am pleased to report that the Company has witnessed a solid rebound from H1 2013, ending this year's first six month period with a 45% increase in sales. Total revenue from this period was $1,842,000 (H1 2013: $1,260,000) and the net loss was $892,000 (H1 2013: net loss of $1,040,000). I remain optimistic about SerVision's continued recovery as the Company remains on course for growth in H2.

Sales and Marketing

SerVision's performance during the first half of 2014 was bolstered by new distribution agreements in the US and China, with purchase orders valued at $4m and $2.5m respectively. In addition to these new partnerships, SerVision's MVG400 was selected for a large cash-in-transit project in South Africa, and we've received advance notification that our technology will be used for a sizeable police project in Kenya. The project is for the supply of up to 10,000 CVG-M-based body-worn kits and the rollout is expected to begin before the close of the current year. Other noteworthy developments include a successful trial on police vehicles in Panama which we are confident will result in new business in Central America, and equally successful bus pilots in Kazakhstan and Brazil. New strategic partnerships with the companies who managed these trials are expected later this year, while we are in discussions on new distribution agreements with companies from Indonesia, Europe and Africa. SerVision is also expected to move forward with an Alstom train project in Jerusalem to retrofit LRTs that were installed with an alternative DVR solution in the near future. This project has opened new doors to SerVision in the global railway market.

Apart from the successes noted above, SerVision spent considerable time during H1 laying the groundwork for a new revenue-share business model. Under this framework, SerVision intends to partner with select system integrators and other solution providers to bid directly on projects. All profits will be shared between SerVision and the partnering company and, as a result of this more direct level of cooperation, SerVision is aiming for a more consistent revenue stream that will be spread out on a monthly basis for a period of up to 36 months. SerVision, on average, expects to be earning between $60 to $100 per unit per month and under this model the Company would recover its costs within the first four to six months of the lease. The first project of this sort is a joint initiative between SerVision and GreenRoad, a leading US-based company that offers solutions for safe driving practices. The integrated SerVision-GreenRoad package is currently being piloted by the Ryder Truck Rental Company, and a number of joint pilots with similar commercial terms are also in place. In cooperation with GreenRoad and other partner companies like UK-based Vision Techniques, SerVision expects to begin leases for projects with fleet sizes of between five and ten thousand vehicles prior to the end of this year.

And finally, I am pleased to announce that SerVision has opened a new office for sales and marketing in New York in order to spearhead leased-based sales operations in the United States.

Research and Development

SerVision has, over the course of this year, invested considerable resources in the ongoing development of the next generation of mobile DVRs which will have support for IP cameras and HD recording. A prototype has already been installed on an Alstom train for the Jerusalem Light Rail Train project and we intend to have more units ready for demo installations by the end of this year. The feature set for the new line of DVRs is still being implemented as is the system configuration interface, and completing both of these tasks is the company's highest priority going forward. The Company has recently brought on two new senior developers and expanded its QA team to handle the additional workload. Another high priority item on the Company's roadmap entails transitioning to a web-based software platform that will further expand the remote monitoring capabilities of SerVision's DVRs by professional command and control centers. While the Company has begun tackling these new initiatives, veteran R&D members have been working to fine-tune and expand the capabilities of the currently available range of DVRs and our existing enterprise-level SVControlCenter solution.

Financials

· Revenues for this period were $1,842,000 compared to $1,260,000 for the same period in 2013. 

· Operating loss for the period was $814,000 compared to an operating loss of $1,002,000 for the same period in 2013.

· Net loss for the period was $892,000 compared to a loss of $1,040,000 for the same period in 2013.

· Cash and cash equivalents at 30 June 2014 of $173,000 (at 30 June 2013: $13,000)

Conclusion

After a disappointing 2013, I firmly believe the company is back on course for a solid rebound and successful conclusion to 2014.

As always I would like to express my sincere gratitude to our shareholders for their continued support and to thank SerVision's business partners and staff for their commitment and outstanding work.

Gideon Tahan

Chairman and CEO

30 September 2014

 CONDENSED GROUP COMPREHENSIVE INCOME STATEMENT

FOR THE SIX MONTHS ENDED 30 JUNE 2014

CONDENSED GROUP BALANCE SHEET

AT 30 JUNE 2014

CONDENSED GROUP STATEMENT OF CHANGES IN EQUITY

FOR THE SIX MONTHS ENDED 30 JUNE 2014

CONDENSED GROUP CASH FLOW STATEMENT

FOR THE SIX MONTHS ENDED 30 JUNE 2014

NOTES TO THE REPORT AND CONDENSED GROUP FINANCIAL STATEMENTS

FOR THE SIX MONTHS ENDED 30 JUNE 2014

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 2013 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 2014 and for the six months ended 30 June 2013 are unaudited.

The financial information for the year ended 31 December 2013 is an extract from the latest group accounts.

Statutory financial statements for the year ended 31 December 2013, prepared in accordance with IFRS, on which the auditors gave an unqualified opinion, have been filed with the Registrar of Companies.

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

2. GOING CONCERN

The directors have prepared and reviewed sales forecasts and budgets for the next twelve months and having considered these cash flows and the availability of other financing sources, have concluded that the group will remain a going concern. In particular the group continues to work closely with customers to agree payment plans where necessary and agree other arrangements in order to secure cash flows and reduce the outstanding trade receivables balances. Additionally if and when necessary, the Directors may seek additional equity investment and debt finance from a variety of sources.

Having completed these processes and having made further relevant enquiries, the Directors have a reasonable expectation that the Group and the Company have adequate resources to continue in operational existence for the foreseeable future. For this reason, they continue to adopt the going concern basis in preparing the accounts.

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. LOSS PER SHARE

The loss per share of (1.61c) (31 December 2013: (loss) (5.06c); 30 June 2013: (loss) (2.03c)) has been calculated on the weighted average number of shares in issue during the year namely 56,616,482 (31 December 2013: 56,616,482; 30 June 2013: 51,573,217) and loss of US$ 910,273 (31 December 2013: loss US$ 2,862,000; 30 June 2013: loss US$ 1,048,061).

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

6. ADVANCE SUBSCRIPTION ACCOUNT

Prior to the period end the group received subscription receipts from investors in advance of the formal completion of the share issues. As the receipts were in exchange for the issue of shares post period, the balance has been recognised as a reserve within equity. Subsequent to the period, upon completion of the share issue, the balance has been transferred to Called up share capital and Share premium.