28th Sep 2005 13:11
SerVision plc28 September 2005 SERVISION PLC REPORT AND FINANCIAL STATEMENTS FOR THE SIX MONTHS ENDED 30 JUNE 2005 SERVISION PLC REPORT AND FINANCIAL STATEMENTS FOR THE SIX MONTHS ENDED 30 JUNE 2005 CONTENTS Page Chairman's statement 1 Group profit and loss account 2 Group balance sheet 3 Group cash flow statement 4 Reconciliation of net cash flow to net funds 5 Reconciliation of movements in Group shareholders' funds 6 Notes to the financial statements 7 - 9 Independent review report 10 SERVISION PLC CHAIRMAN'S STATEMENT REPORT AND FINANCIAL STATEMENTS FOR THE SIX MONTHS ENDED 30 JUNE 2005 I am pleased to report the achievement of significant commercial and corporateprogress during the first half of the year. Since launching of SerVision's firstsecurity communication product, the SVG 400 in 2004, the R&D team has stabilisedthe product and added additional features at clients requests. Your company hasreceived a good response from its customers on the SVG series and expects toparticipate in several tenders with its distributors and integrators during thecoming months. As mentioned in my previous statement your company made significant progress indeveloping its mobile and next generation products the IVG and TVG. The companyis planning the IVG's Official launch towards the end of this year, its demoversions having won three awards in security shows this year and havinggenerated interest in the industry with several pilot trials having started inEurope. Revenues for the first half of the year increased significantly almost reachingthe level for the whole of 2004 at US$1,000K (Six months to June 2004: US$446K). Your company received initial orders and revenues from the OEM agreement which Imentioned in my previous chairman's statement. Your company expects to seesignificant orders, resulting from this agreement, towards the end of the yearand throughout 2006. The company has continued to invest heavily in product development and businessinfrastructure to increase the functions of the SVG series, and developedfurther products capable of supporting an increased number of cameras. Thecompany made significant progress in developing both the IVG and TVG lines. Gidon TahanChairman 27 September 2005 SERVISION PLC GROUP PROFIT AND LOSS ACCOUNT FOR THE SIX MONTHS ENDED 30 JUNE 2005 Six months to Six months to Year to 31 30 June 2005 30 June 2004 December 2004 Unaudited Unaudited Audited Note $'000 $'000 $'000 TURNOVER 1,2 1,000 446 1,041 Cost of sales (713) (360) (815) ------------- ------------- ------------- GROSS PROFIT 287 86 226 Administrative expenses (1,759) (1,067) (3,085) Other income - 195 242 ------------- ------------- ------------- OPERATING LOSS (1,472) (786) (2,617) Net interest payable (15) (94) (179) -------------- -------------- ------------- LOSS ON ORDINARY ACTIVITIES BEFORE TAXATION (1,487) (880) (2,796) Tax on loss on ordinary activities 3 - - - ------------- ------------- ------------- RETAINED LOSS (1,487) (880) (2,796) ====== ====== ====== Loss per share Basic and diluted 7 (8.33c) (7.12c) (20.05c) GROUP STATEMENT OF TOTAL RECOGNISED GAINS AND LOSSES Six months to Six months to Year to 31 30 June 2005 30 June 2004 December 2004 Unaudited Unaudited Audited $'000 $'000 $'000 Loss for the financial period (1,487) (880) (2,796) Exchange rate movements (225) - (112) ------------- ------------- ------------- Total recognised losses relating to the year (1,712) (880) (2,908) ====== ====== ====== SERVISION PLC GROUP BALANCE SHEET AT 30 JUNE 2005 Notes As at 30 June As at 30 June As at 31 2005 2004 December 2004 Unaudited Unaudited Audited $'000 $'000 $'000FIXED ASSETS Tangible assets 4 199 127 189 ------------- ------------- ------------CURRENT ASSETS Stock 741 147 613Debtors 443 697 662Cash at bank 581 30 2,386 ------------- ------------- ------------ 1,765 874 3,661CREDITORS: amounts falling due within one year (818) (1,392) (992) ------------- ------------- ------------NET CURRENT ASSETS/(LIABILITIES) 947 (518) 2,669 -------------- -------------- ------------ TOTAL ASSETS LESSCURRENT LIABILITIES 1,146 (391) 2,858 CREDITORS: amounts falling due within one year - (1) - ------------- ------------- ------------ 1,146 (392) 2,858 ====== ====== ====== CAPITAL AND RESERVES Called up share capital 5 337 231 337Share premium account 6 5,172 - 5,172Merger reserve 6 1,979 1,979 1,979Profit and loss account 6 (6,342) (2,602) (4,630) ------------- ------------- ------------ EQUITY SHAREHOLDERS' FUNDS 1,146 (392) 2,858 ====== ====== ====== SERVISION PLC GROUP CASH FLOW STATEMENT FOR THE SIX MONTHS ENDED 30 JUNE 2005 Six months to Six months to Year to 31 30 June 2005 30 June 2004 December 2004 Unaudited Unaudited Audited $'000 $'000 $'000 Operating loss (1,472) (786) (2,617)Depreciation 28 16 40Decrease/(increase) in debtors 219 (458) (323)Increase in stock (128) (69) (536)(Decrease)/increase in creditors (174) 263 667 -------------- -------------- ---------------CASH OUTFLOW FROM OPERATING ACTIVITIES (1,527) (1,034) (2,769) Return on investment and servicing of finance Interest payable (15) (94) (179) Capital expenditure and financial investmentPurchase of fixed assets (38) (29) (118)Proceeds from the sale of fixed assets - - 4 -------------- -------------- ---------------CASH OUTFLOW BEFORE FINANCING (1,580) (1,157) (3,062) FINANCINGIssue of shares in Servision Plc (net of issue costs) - - 5,278Issue of shares in Servision Limited - 161 161Net loans received - 607 (186) --------------- --------------- ---------------(DECREASE)/INCREASE IN CASH IN THE PERIOD (1,580) (389) 2,197 ======= ====== ====== SERVISION PLC RECONCILIATION OF NET CASH FLOW TO NET DEBT FOR THE SIX MONTHS ENDED 30 JUNE 2005 Six months to Six months to Year to 31 30 June 2005 30 June 2004 December 2004 Unaudited Unaudited Audited $'000 $'000 $'000 (Decrease)/increase in cash in the period (1,580) (389) 2,197Exchange rate differences (225) - (112)Cash inflow/(outflow) from movement in debt - 607 (186) ------------- ------------- -------------Movement in net debt in the period (1,805) 218 1,899 Net funds at beginning of period 1,953 54 54 ------------- ------------- -------------Net funds at end of period 148 272 1,953 ====== ====== ====== SERVISION PLC RECONCILIATION OF MOVEMENTS IN GROUP SHAREHOLDERS' FUNDS/(DEFICIT) FOR THE SIX MONTHS ENDED 30 JUNE 2005 Six months to Six months to Year ended 30 June 30 June 31 December 2005 2004 2004 Unaudited Unaudited Audited $'000 $'000 $'000 Loss for the financial period (1,487) (880) (2,796) --------------- --------------- --------------- (1,487) (880) (2,796) New shares issued in Servision Plc (net of issue - - 5,278costs)New shares in Servision Limited (net of issue costs) - 161 161Exchange rate differences (225) - (112) --------------- --------------- ---------------Net movement in shareholders' (deficit)/funds (1,712) (719) 2,531 Opening shareholders' funds 2,858 327 327 --------------- --------------- ---------------Closing shareholders' funds/(deficit) 1,146 (392) 2,858 ======= ======= ======= SERVISION PLC NOTES TO THE REPORT AND FINANCIAL STATEMENTS FOR THE SIX MONTHS ENDED 30 JUNE 2005 1. ACCOUNTING POLICIES The accounting policies, applied on a consistent basis in thepreparation of the financial information, are as follows: (a) Basis of Preparation The financial statements are prepared on the historical costbasis in accordance with the applicable accounting standards. The financialstatements are prepared under UK GAAP. (b) Basis of Consolidation Subsidiary undertakings are accounted for from the effectivedate of acquisition. The parent Company, Servision PLC was incorporated on 2June 2004 and acquired Servision Ltd (and its wholly owned subsidiary ServisionInc.) on 20 July 2004 by way of a share for share exchange. Under FinancialReporting Standard 6, merger accounting has been adopted as the basis forconsolidation. (c) Turnover Turnover represents the value of goods and services supplied.All turnover prior to December 2003 relates to providing a consultancy service,whereas turnover after this date relates to unit sales and the sale of ancillaryproducts. (d) Tangible fixed assets Fixed 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 annum Motor vehicles 15% per annum Office furniture and equipment 6-15% per annum Computer equipment 20-33% per annum (e) Stock Stock is valued at the lower of cost and net realisable value. (f) Other income Grants 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 currency The majority of the Group's turnover is generated in US Dollars.For the purpose of reporting requirements, the financial information has beenreported in US Dollars. The year end rate used was £1 to $1.91589. (h) Research and development All expenditure relating to research and development expenditure is expenseddirectly to the profit and loss account. (i) Foreign Currency The results of the parent company are translated into US Dollarsat the average rate of exchange for the year. The assets and liabilities of theparent company are translated into US Dollars at the rate of exchange ruling atthe year end. Currency translation adjustments on exchange are included in theprofit and loss account. 2. BUSINESS SEGMENT ANALYSIS The turnover, loss on ordinary activities before taxation andnet assets of the Group are attributable to one activity, that of developing andselling video surveillance equipment. 3. TAXATION The 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 businessactivity in the UK such as might result in a Permanent Establishment for taxpurposes and accordingly has no liability to UK corporation tax. SERVISION PLC NOTES TO THE REPORT AND FINANCIAL STATEMENTS (continued) FOR THE SIX MONTHS ENDED 30 JUNE 2005 4. TANGIBLE FIXED ASSETS Leasehold Other tangible premises fixed assets Total $'000 $'000 $'000 Cost or valuation At 1st January 2005 26 226 252 Additions 16 22 38 --------------- ------------ ---------------- At 30th June 2005 42 248 290 Depreciation At 1st January 2005 3 60 63 Charge for the year 3 25 28 -------------- ------------ -------------- At 30th June 2005 6 85 91 -------------- ------------ -------------- Net Book Value At 30th June 2005 36 163 199 ======= ===== ======= At 31st December 2004 23 166 189 ======= ===== ====== At 30th June 2004 4 123 127 ======= ===== ======= 5. CALLED UP SHARE CAPITAL Authorised: The authorised share capital consists of 30,000,000 ordinary shares of £0.01 each and 1,000,000 deferred ordinary shares of £0.001 each. 30 June 2005 Allotted, called up and fully paid: US$'000 17,846,990 ordinary shares of £0.01 each 336 384,615 deferred ordinary shares of £0.001 each 1 ------- 337 ======= In December 2004 the company granted options over 30,000 £0.01 ordinary shares to Mr Eitan Yanuv, the financial director. The options are vested in 3 tranches of 10,000 ordinary shares, the first in December 2004, the second in December 2005, and the third in December 2006, all exercisable at a price of £0.15 per share. SERVISION PLC NOTES TO THE REPORT AND FINANCIAL STATEMENTS (continued) FOR THE SIX MONTHS ENDED 30 JUNE 2005 6. RESERVES Share Merger Profit and Premium Reserve loss account Total $'000 $'000 $'000 $'000 As at 1 January 2005 5,172 1,979 (4,630) 2,521 Retained loss for six months - - (1,487) (1,487) Exchange differences - - (225) (225) ------------- ----------------- ------------------ -------------- At 30 June 2005 5,172 1,979 (6,342) 809 ====== ======== ========= ======== 7. LOSS PER SHARE The loss per share of 8.33c (31 December 2004: 20.05c; 30 June 2004:7.12c) has been calculated on the weighted average number of share in issueduring the year namely 17,846,990 (31 December 2004: 13,945,545; 30 June 2004:12,360,771) and losses of US$1,487,098 (31 December 2004: US$2,796,046; 30 June2004: US$880,146). FRS 14 requires presentation of diluted EPS when a company could becalled upon to issue shares that would decrease net profit or increase net lossper share. For a loss making company with outstanding share options, net lossper share would only be increased by the exercise of out-of-the-money options.Since it is inappropriate to assume that option holders would act irrationally,no adjustment is made to diluted EPS for out-of-the-money share options. INDEPENDENT REVIEW REPORT TO SERVISION PLC We have been instructed by the company to review the financial information forthe six months ended 30 June 2005, which comprise the Consolidated Profit andLoss Account, the consolidated statement of total recognised gains and losses,the Consolidated Balance Sheet, the Consolidated Cash Flow statement and therelated notes. We have read the other information contained in the interimreport and considered whether it contains any apparent misstatements or materialinconsistencies with the financial information. This report is made solely to the company in accordance with guidance containedin Bulletin 1999/4 'Review of interim financial information' issued by theAuditing Practices Board. To the fullest extent permitted by law, we do notaccept or assume responsibility to anyone other than the company, for our work,for this report, or for the conclusions we have formed. Respective responsibilities of directors The interim report, including the financial statements contained therein, is theresponsibility of, and has been approved by the directors. The directors areresponsible for preparing the interim report in accordance with the AIM Rules ofthe London Stock Exchange which require that the accounting policies andpresentation applied to the interim figures should be consistent with thoseapplied in preparing the preceding annual accounts except where any changes, andthe reasons for them are disclosed. Review work performed We conducted our review in accordance with guidance contained in Bulletin 1999/4issued by the Auditing Practices Board. A review consists principally of makingenquiries of management and applying analytical procedures to the financialinformation and underlying financial data and based thereon, assessing whetherthe accounting policies and presentation have been consistently applied andadequately disclosed. A review excludes audit procedures such as tests ofcontrols and verification of assets, liabilities and transactions. It issubstantially less in scope than an audit performed in accordance with AuditingStandards and therefore provides a lower level of assurance than an audit.Accordingly we do not express an audit opinion on the financial information. Review conclusion On the basis of our review we are not aware of any material modifications thatshould be made to the financial information as presented for the six monthsended 30 June 2005. haysmacintyre Fairfax HouseChartered Accountants 15 Fulwood PlaceRegistered Auditors London WC1V 6AY 27 September 2005 This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
Servision PLC