28th Sep 2007 07:05
SerVision plc28 September 2007 SerVision Plc ("SerVision" or "the Company") Unaudited Interim Results for Six Months to 30 June 2007 Highlights in the period: • Turnover up 60% to US$2.5 million (US$1.56 million for same period 2006)• Gross profit up 94% to US$1.165 million (US$600,000 for same period 2006)• Distribution agreements signed in the period to supply products in USA, France and Benelux• Contract wins in the period: - Turkey - to equip TEB Bank and Istanbul Water Authority - Brazil - to protect public buses across Rio de Janeiro - Mexico - to supply Unixa with entire range of SerVision products Since period end: • Letter of Intent signed with Orange Israel to provide its business customers with SerVision products• Exclusive distribution agreement with GIT to supply SerVision products in South Africa Gidon Tahan, Chairman and CEO, commented:"We have made significant achievements during this period, not only ingenerating good growth in our headline figures but also breaking into newterritories through contract wins and distribution agreements. In addition, wehave updated our product range, allowing us to enter the SME and retail marketsthrough a notable agreement with Orange Israel to offer our products to itsbusiness customers. "The Board is pleased that the Company continues to make steady progress towardsachieving its goals and we look forward to the future with confidence." For further information: Servision plc +972 2535 0015Gidon Tahan, Chairman and CEOEitan Yanuv, Finance Director HB Corporate 020 7510 8598Jim McGeever Threadneedle Communications 020 7936 9605Graham HerringAlex White CHAIRMAN'S STATEMENT REPORT AND FINANCIAL STATEMENTS FOR THE SIX MONTHS ENDED 30 JUNE 2007 I am pleased to announce the Company's Interim results for the first six monthsof 2007. Turnover for the year period increased to US$2.5 million compared to US$1.56Million for the same period last year. Gross profit improved to US$1.165 millioncompared with US$600,000 for the same period last year and US$1.3 million forthe whole year of 2006. As a result of cost cutting measures, gross profitmargins have increased to 45% compared with 37% for 2006. During the period and since my last chairman's statement three months ago wehave signed a distribution agreement in South Africa and our recently announcedcontracts are starting to bear fruit. The distribution agreements that we signedin the period are bedding down effectively and the Company is receiving ordersfrom all our new distributors that were signed during the first half of theyear. Our R&D team has continued to improve our HVG (Home Video Gateway) series. Thisenhanced professional cost effective product, will now have four video channelsand a new and exciting bidirectional audio feature. The fact that we havemanaged to develop this very professional product and sell it with a competitiveprice tag, has allowed us to enter the lucrative SME and retail markets througha distribution scheme with Orange Il and Hashmira group (G4S Israel). Our HVGsystems will be offered to all of Orange Israel business cellular customers. Anongoing training program for the Orange sales team is in progress and theCompany expects the first sales through this distribution channel to bedelivered in the near future. In addition to our increased geographical reach into South Africa France, Braziland Mexico, we are continuing to widen our presence in the USA. Exclusiveagreements with key distributors are enabling the Company to enter intoadditional territories on which we expect to update the market in greater detailin the upcoming weeks. The Board is pleased that the Company continues to make steady progress towardsachieving its goals and we look forward to the future with confidence. On apersonal note, I would like to thank all of our dedicated staff for theirloyalty and hard work throughout the period that was essential for oursignificant progress and growth. Gidon TahanChairman and Chief Executive Officer 28 September 2007 GROUP INCOME STATEMENT FOR THE SIX MONTHS ENDED 30 JUNE 2007 Six months to Six months to Year to 31 30 June 2007 30 June 2006 December 2006 Note $'000 $'000 $'000 TURNOVER 2 2,540 1,559 3,534 Cost of sales (1,375) (959) (2,236) ------------- ------------- ------------- GROSS PROFIT 1,165 600 1,298 Administrative expenses (1,664) (1,615) (3,843) ------------- ------------- ------------- OPERATING LOSS (499) (1,015) (2,545) Net finance expense (13) (29) (75) -------------- -------------- -------------LOSS ON ORDINARYACTIVITIES BEFORETAXATION (512) (1,044) (2,620) Tax on loss on ordinaryactivities 3 - - - ------------- ------------- ------------- RETAINED LOSS (512) (1,044) (2,620) ====== ====== ====== Loss per shareBasic and diluted 4 (2.23c) (5.45c) (13.39c) ====== ====== ====== GROUP BALANCE SHEET AT 30 JUNE 2007 Notes As at 30 June As at 30 June As at 31 2007 2006 December 2006 $'000 $'000 $'000 ASSETS Non-current assets Intangible assets 3,488 3,251 3,236 Property, plant andequipment 96 154 131 ------------- ------------- ------------ 3,584 3,405 3,367 Current assets Inventories 187 315 323 Trade and otherreceivables 1,400 714 989 Cash and cash equivalents 24 1,211 17 ------------- ------------- ------------ 1,611 2,240 1,329 ------------- ------------- ------------ Total assets 5,195 5,645 4,696 ====== ====== ====== EQUITY Capital and reservesattributable to theCompany's equityshareholders Called up share capital 5 429 426 429 Share premium account 5 7,101 7,046 7,101 Retained earnings andtranslation reserves 5 (7,901) (6,418) (7,520) Merger reserve 5 1,979 1,979 1,979 ------------- ------------- ------------ Total equity 1,608 3,033 1,989 ------------- ------------- ------------ LIABILITIES Current liabilities Short term credit frombanking institutions 464 653 256 Trade and other payables 1,713 670 1,107 ------------- ------------- ------------ 2,177 1,323 1,363 Non-current liabilities Long term loan from bankinstitution 266 292 279 Loan from Office of theChief Scientist 941 893 917 Post employment benefits 203 104 148 ------------- ------------- ------------ Total liabilities 3,587 2,612 2,707 -------------- --------------- ------------ Total equity andliabilities 5,195 5,645 4,696 ====== ======= ====== GROUP CASH FLOW STATEMENT FOR THE SIX MONTHS ENDED 30 JUNE 2007 Six months to Six months to Year to 31 30 June 2007 30 June 2006 December 2006 $'000 $'000 $'000 Cash flows from operatingactivities Loss before taxation (512) (1,044) (2,620) Adjustments for: Net finance expense 13 29 75 Net interest paid (13) (29) (75) Depreciation andamortisation 614 615 1,367 Movement in trade andother receivables (411) (13) (288) Movement in inventories 136 286 278 Movement in grant fromchief scientist 24 24 48 Movement in postretirement benefits 55 38 82 Movement in trade andother payables 606 (122) 315 -------------- -------------- --------------- Net cash inflow/(outflow)from operating activities 512 (216) (818) Cash flow from investingactivities Purchase of property,plant and equipment andintangibles (831) (890) (1,604) -------------- -------------- --------------- Net cash outflow frominvesting activities (831) (890) (1,604) Cash flows from financingactivitiesIssue of shares inServision Plc - 1,892 1,950 Net loans(repaid)/received (13) 13 - -------------- -------------- --------------- Cash inflow fromfinancing activities (13) 1,905 1,950 Cash and cash equivalentsat beginning of period (239) (621) (621) Net cash outflow from allactivities (332) 799 (472) Non-cash movement arisingon foreign currencytranslation 131 380 854 --------------- -------------- --------------- Cash and cash equivalentsat end of period (440) 558 (239) ======= ====== ====== Cash and cash equivalentscomprise Cash (excludingoverdrafts) and cashequivalents 24 1,211 17 Overdrafts (464) (653) (256) --------------- -------------- --------------- (440) 558 (239) ======= ====== ====== SERVISION PLC NOTES TO THE REPORT AND FINANCIAL STATEMENTS FOR THE SIX MONTHS ENDED 30 JUNE 2007 1. ACCOUNTING POLICIES The accounting policies, applied on a consistent basis in the preparation of thefinancial information, are as follows: (a) Basis of PreparationThese half year 2007 interim consolidated financial statements of Servision Plcare for the six months ended 30 June 2007. The information included within thisdocument has been prepared on the basis of the recognition and measurementrequirements of IFRS standards, IAS standards and IFRIC interpretations in issuethat are endorsed by the European Commission and effective at 27 September 2007. In preparing these consolidated interim financial statements, management hasamended certain accounting and valuation methods applied in the 2006 report andfinancial statements to comply with IFRS. The Group accounting policies as set out in the 2006 report and financialstatements have been revised where applicable to conform to IFRS. The restatedaccounting policies as set out on pages 14 to 15 of this report, together withthe remaining Group accounting policies detailed in the 2006 report andfinancial statements, comprise the Group's complete accounting policies underIFRS. These policies have been consistently applied to all years presented. Theadopted IFRS that will be effective in the annual financial statements for theyear ended 31 December 2007 are still subject to the possibility of change andto additional interpretations. As a result of such changes the accountingpolicies cannot be determined with certainty and therefore may require updatingwhen the annual financial statements are prepared for the year ending 31December 2007. The comparative figures in respect of 2006 have been restated to reflect theseadjustments. Reconciliations and descriptions of the effect of the transition ofUK GAAP to IFRS are provided in note 7. 2. BUSINESS SEGMENT ANALYSIS Class of business The turnover, loss on ordinary activities before taxation and net assets of theGroup are attributable to one class of business, that of developing and sellingvideo surveillance equipment. Geographical areas Turnover by location of customer Six months to Six months to Year to 31 30 June 2007 30 June 2006 December 2006 $'000 $'000 $'000 UK and Continental Europe 1,163 841 1,569North America 277 233 325Latin America 625 112 867Asia and Middle East 225 339 694Africa 250 34 79 --------------- ------------ ---------------- 2,540 1,559 3,534 ======= ====== ======== 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 business activityin the UK such as might result in a Permanent Establishment for tax purposes andaccordingly has no liability to UK corporation tax. 4. LOSS PER SHARE The loss per share of 2.23c (31 December 2006: 13.39c; 30 June 2006: 5.45c) hasbeen calculated on the weighted average number of share in issue during the yearnamely 22,890,304 (31 December 2006: 19,568,894; 30 June 2006: 19,168,196) andlosses of US$512,202 (31 December 2006: US$2,620,785; 30 June 2006:US$1,044,566). Due to the immaterial number of options in issue there is no material differencebetween the diluted and basic loss per share. 5. RECONCILIATION Share Share Merger Retained Translation Total OF CLOSING Capital Premium Reserve earnings reserve EQUITY $'000 $'000 $'000 $'000 $'000 $'000 As at 31 339 5,241 1,979 (7,723) - (164) December 2005 IFRS - - - 2,592 (623) 1,969 transition adjustments ------------- ------------- ----------------- ---------------------- ---------------------- As at 1 339 5,241 1,979 (5,131) (623) 1,805 January 2006 Total - - - (1,044) 380 (664) recognised income and expense Share issued 87 1,805 - - - 1,892 in the period ------------- ------------- ----------------- ---------------------- ---------------------- As at 30 June 426 7,046 1,979 (6,175) (243) 3,033 2006 ====== ====== ======== ========= ========= ========= As at 31 429 7,101 1,979 (7,751) 231 1,989 December 2006 Total - - - (512) 131 (381) recognised income and expense ------------- ------------- ----------------- ---------------------- ---------------------- At 30 June 429 7,101 1,979 (8,263) 362 1,608 2007 ====== ====== ======== ========= ======== ========= 6. RELATIONSHIP TO STATUTORY ACCOUNTS AND AUDIT STATUS The financial information included in this document is unaudited and does notcomprise statutory accounts within the meaning of section 240 of the CompaniesAct 1985. The comparative figures for the financial year ended 31 December 2006are not the Group's statutory accounts for that financial year. Those accounts,which were produced under UK Generally Accepted Accounting Practices, have beenreported on by the Group's auditors and delivered to the Registrar of Companies.The report of the auditors was unqualified and did not contain statements undersection 237 (2) or (3) of the Companies Act 1985. 7. COMPARATIVE DATA RESTATED IN ACCORDANCE WITH THE TRANSITION TO IFRS From 1 January 2007, the Group has been reporting its results in accordance withInternational Financial Reporting Standards ("IFRS"). To comply with the requirements of reporting the first set of interim resultsfollowing transition to IFRS, a reconciliation of the loss under UK GAAP for thesix months to June 2006 to the expenses under IFRS for the six months to 30 June2006 is set out on pages 7 to 8. A detailed analysis of these adjustments and asummary of the differences between UK GAAP and IFRS that led to the adjustmentsare given on pages 7 to 8 of this report. A reconciliation is also required between the loss under UK GAAP for the yearended 31 December 2006 to the profit under IFRS for the year ended 31 December2006. This is shown on pages 11 to 12 of this report. IFRS also requires a reconciliation of equity under UK GAAP at 30 June 2006 toequity under IFRS at 30 June 2006. This is set out on page 9 of this report. A reconciliation is also required between the equity at 1 January 2006 under UKGAAP to 1 January 2006 under IFRS, which is shown above and a reconciliationbetween the equity at 31 December 2006 under UK GAAP to 31 December 2006 underIFRS, which is shown on page 13 of this report. SERVISION PLC NOTES TO THE REPORT AND FINANCIAL STATEMENTS (continued) FOR THE SIX MONTHS ENDED 30 JUNE 2007 7. COMPARATIVE DATA RESTATED IN ACCORDANCE WITH THE TRANSITION TO IFRS (continued) Group income statement for the first half 2006 UK GAAP IFRS Six months to Total IFRS Six months to 30 June 2006 Adjustments 30 June 2006 $'000 $'000 $'000 TURNOVER 1,559 - 1,559 Cost of sales (967) 8 (959) ------------- ------------- ----------- GROSS PROFIT 592 8 600 Administrative expenses (1,956) 341 (1,615) ------------- ------------- ----------- OPERATING LOSS (1,364) 349 (1,015) Net finance expense (48) 19 (29) -------------- -------------- ----------LOSS ON ORDINARY (1,412) 368 (1,044) ACTIVITIES BEFORETAXATION Tax on loss on ordinary - - -activities ------------- ------------- ---------- RETAINED LOSS (1,412) 368 (1,044) ====== ====== ====== Loss per shareBasic and diluted 7 (7.37c) (1.92c) (5.45c) ====== ====== ====== A summary of the principal differences between UK GAAP and IFRS as applicable toServision Plc is as follows:- a) Employee benefitsUnder UK GAAP, liabilities for severance pay for employees employed in the Stateof Israel were accounted for under FRS 12 "Provisions, contingent liabilitiesand assets". Under IFRS, the Group is required to account for such liabilitiesusing an actuarial valuation in accordance with IAS 19 "Employee benefits". b) Development costsUnder UK GAAP, development costs incurred by the group were written off to theprofit and loss account as allowed by SSAP 13 "Accounting for research anddevelopment costs". Under IFRS, the Group is required to capitalise suchexpenditure and amortise the costs over the useful economic life in accordancewith IAS 38 "Intangible Assets". c) GrantsUnder UK GAAP, grants from the Office of the Chief Scientist in Israel wereaccounting for under FRS 12 "Provisions, contingent liabilities and assets".Under IFRS, the Group is required to account for the full liability of suchgrants, as and when they are received in accordance with IAS 19, "Accounting forGovernment Grants and Disclosure of Government Assistance". d) SoftwareUnder UK GAAP, software was capitalised as a tangible fixed assets in accordancewith FRS 15 "Tangible fixed assets". Under IFRS, the Group is required toaccount for such expenditure as a Intangible Assets in order to comply with IAS38 "Intangible Assets". SERVISION PLC NOTES TO THE REPORT AND FINANCIAL STATEMENTS (continued) FOR THE SIX MONTHS ENDED 30 JUNE 2007 Analysis of IFRS adjustments to the Group income statement for the first half of 2006 Employee Capitalisation of development Amortisation of development Total IFRS benefits costs costs Grants Adjustments $'000 $'000 $'000 $'000 $'000 TURNOVER - - - - - Cost of 8 - - - 8sales ------------- ------------- ------------- ------------- ------------- GROSS PROFIT 8 - - - 8 Administrativeexpenses 68 842 (555) (14) 341 ------------- ------------- ------------- ------------- ------------- OPERATING LOSS 76 842 (555) (14) 349 Net financeexpense - 19 - - 19 ------------- ------------- -------------- -------------- -------------LOSS ONORDINARY 76 861 (555) (14) 368ACTIVITIESBEFORETAXATION Tax on loss on - - - - -ordinaryactivities ------------- ------------- ------------- ------------- ------------- RETAINED LOSS 76 861 (555) (14) 368 ====== ====== ====== ====== ====== 7. COMPARATIVE DATA RESTATED IN ACCORDANCE WITH THE TRANSITION TO IFRS (continued) Group balance sheet as at 30 June 2006 Under UK GAAP Under IFRS As at 30 June Total IFRS As at 30 June 2006 adjustments 2006 $'000 $'000 $'000 ASSETS Non-current assets Intangible assets - 3,251 3,251 Property, plant andequipment 169 (15) 154 ------------- ------------- ------------ 169 3,236 3,405 Current assets Inventories 315 - 315 Trade and otherreceivables 714 - 714 Cash and cash equivalents 1,211 - 1,211 ------------- ------------- ------------ 2,240 - 2,240 ------------- ------------- ------------ Total assets 2,409 3,236 5,645 ====== ====== ====== EQUITY Capital and reservesattributable to the Company'sequity shareholders Called up share capital 426 - 426 Share premium account 7,046 - 7,046 Retained earnings andtranslation reserves (8,838) 2,420 (6,418) Merger reserve 1,979 - 1,979 ------------- ------------- ------------ Total equity 613 2,420 3,033 ------------- ------------- ------------ LIABILITIES Current liabilities Trade and other payables 1,504 (181) 1,323 Non-current liabilities Other creditors 292 997 1,289 ------------- ------------- ------------ Total liabilities 1,796 816 2,612 -------------- --------------- ------------ 2,409 3,236 5,645 ====== ======= ====== 7. COMPARATIVE DATA RESTATED IN ACCORDANCE WITH THE TRANSITION TO IFRS (continued) Analysis of IFRS adjustments to the Group Balance Sheet as at 30 June 2006 Capitalisation Amortisation of of Employee development development benefits costs costs Grants Reclassification Total $'000 $'000 $'000 $'000 $'000 $'000 ASSETS Non-currentassets Intangibleassets - 3,791 (555) - 15 3,251 Property,plant andequipment - - - - (15) (15) ------------- ------------- ------------- ------------- ------------- ------------ - - - - - 3,236 Currentassets Inventories - - - - - - Trade and - - - - - -otherreceivables Cash and cash - - - - - -equivalents ------------- ------------- ------------- ------------- ------------- ------------ - - - - - - ------------- ------------- ------------- ------------- ------------- ------------ Total assets - 3,791 (555) - - 3,236 ====== ====== ====== ====== ====== ====== EQUITY Capital andreservesattributableto theCompany'sequityshareholders Called up - - - - - -sharecapital Share premium - - - - - -account Retainedearnings andtranslationreserves 76 3,791 (555) (893) 1 2,420 Merger - - - - - -reserve ------------- ------------- ------------ ------------- ------------- ------------ Total equity 76 3,791 (555) (893) 1 2,420 ------------- ------------- ------------ ------------- ------------- ------------ LIABILITIES Currentliabilities Trade andother payables (76) - - - (105) (181) Non-currentliabilities Othercreditors - - - 893 104 997 ------------- ------------- ------------ ------------- ------------- ------------ Totalliabilities (76) - - 893 (1) 816 ------------- ------------- ------------ -------------- --------------- ------------ Total equityandliabilities - 3,791 (555) - - 3,236 ====== ====== ====== ====== ======= ====== 7. COMPARATIVE DATA RESTATED IN ACCORDANCE WITH THE TRANSITION TO IFRS (continued) Group income statement for the year ended 31 December 2006 UK GAAP IFRS Year to Year to 31 December 2006 Total IFRS 31 December 2006 adjustments $'000 $'000 $'000 TURNOVER 3,534 - 3,534 Cost of sales (2,240) 4 (2,236) ------------- ------------- ------------- GROSS PROFIT 1,294 4 1,298 Administrativeexpenses (4,019) 176 (3,843) ------------- ------------- ------------- OPERATING LOSS (2,725) 180 (2,545) Net financeexpense (77) 2 (75) -------------- -------------- -------------LOSS ON ORDINARY ACTIVITIES BEFORETAXATION (2,802) 182 (2,620) Tax on loss on ordinary - - -activities ------------- ------------- ------------- RETAINED LOSS (2,802) 182 (2,620) ====== ====== ====== Loss per shareBasic and diluted 7 (14.32c) (0.93c) (13.39c) ====== ====== ====== Analysis of IFRS adjustments to the Group income statement for the year ended 31 December 2006 Employee Capitalisation of development Amortisation of development Total IFRS benefits costs costs Grants Adjustments $'000 $'000 $'000 $'000 $'000 TURNOVER - - - - - Cost of 4 - - - 4sales ------------- ------------- ------------- ------------- ------------- GROSS PROFIT 4 - - - 4 Administrativeexpenses 55 1,581 (1,309) (151) 176 ------------- ------------- ------------- ------------- ------------- OPERATING LOSS 59 1,581 (1,309) (151) 180 Net financeexpense - 2 - - 2 ------------- ------------- -------------- -------------- -------------LOSS ONORDINARY 59 1,583 (1,309) (151) 182ACTIVITIESBEFORETAXATION Tax on loss on - - - - -ordinaryactivities ------------- ------------- ------------- ------------- ------------- RETAINED LOSS 59 1,583 (1,309) (151) 182 ====== ====== ====== ====== ====== 7. COMPARATIVE DATA RESTATED IN ACCORDANCE WITH THE TRANSITION TO IFRS (continued) Group balance sheet as at 31 December 2006 Under UK GAAP Under IFRS As at 31 December Total IFRS As at 31 December 2006 adjustments 2006 $'000 $'000 $'000 ASSETS Non-current assets Intangible assets - 3,236 3,236 Property, plant andequipment 147 (16) 131 ------------- ------------- ------------ 147 3,220 3,367 Current assets Inventories 323 - 323 Trade and otherreceivables 989 - 989 Cash and cashequivalents 371 (354) 17 ------------- ------------- ------------ 1,683 (354) 1,329 ------------- ------------- ------------ Total assets 1,830 2,866 4,696 ====== ====== ====== EQUITY Capital and reservesattributable to theCompany's equityshareholders Called up sharecapital 429 - 429 Share premium account 7,101 - 7,101 Retained earnings andtranslation reserves (9,882) 2,362 (7,520) Merger reserve 1,979 - 1,979 ------------- ------------- ------------ Total equity (373) 2,362 1,989 ------------- ------------- ------------ LIABILITIES Current liabilities Trade and otherpayables 1,924 (561) 1,363 Non-current liabilities Other creditors 279 1,065 1,344 ------------- ------------- ------------ Total liabilities 2,203 504 2,707 -------------- --------------- ------------ Total equity andliabilities 1,830 2,866 4,696 ====== ======= ====== 7. COMPARATIVE DATA RESTATED IN ACCORDANCE WITH THE TRANSITION TO IFRS (continued) Analysis of IFRS adjustments to the Group Balance Sheet as at 31 December 2006 Capitalisation Amortisation of of Employee development development benefits costs costs Grants Reclassification Total $'000 $'000 $'000 $'000 $'000 $'000 ASSETS Non-current assets Intangible assets - 4,529 (1,309) - 16 3,236 Property, plant and equipment - - - - (16) (16) ------------- ------------- ------------- ------------- ------------- ------------ - 4,529 (1,309) - - 3,220 Current assets Inventories - - - - - - Trade and - - - - - - other receivables Cash and cash equivalents - - - - (354) (354) ------------- ------------- ------------- ------------- ------------- ------------ - - - - (354) - ------------- ------------- ------------- ------------- ------------- ------------ Total assets - 4,529 (1,309) - (354) 2,866 ====== ====== ====== ====== ====== ====== EQUITY Capital and reserves attributable to the Company's equity shareholders Called up - - - - - - share capital Share premium - - - - - - account Retained earnings and translation reserves 59 4,529 (1,309) (917) - 2,362 Merger - - - - - - reserve ------------- ------------- ------------ ------------- ------------- ------------ Total equity 4,529 (1,309) (917) - 2,362 ------------- ------------- ------------ ------------- ------------- ------------ LIABILITIES Current liabilities Trade and other payables (59) - - - (502) (561) Non-current liabilities Other creditors - - - 917 148 1,065 ------------- ------------- ------------ ------------- ------------- ------------ Total liabilities (59) - - 917 (354) 504 ------------- ------------- ------------ -------------- --------------- ------------ Total equity and liabilities - 4,529 (1,309) - (354) 2,866 ====== ====== ====== ====== ======= ====== 8. IFRS RESTATED ACCOUNTING POLICIES These half year 2007 interim consolidated financial statements of Servision Plc are for the six months ended 30 June 2007. The information included within this document has been prepared on the basis of the recognition and measurement requirements of IFRS standards, IAS standards and IFRIC interpretations in issue that are endorsed by the European Commission and effective at 27 September 2007. The adopted IFRS that will be effective in the annual financial statements for the year ended 31 December 2007 are still subject to the possibility of change and to additional interpretations. As a result of such changes the accounting policies cannot be determined with certainty and therefore may require updating then the annual financial statements are prepared for the year ending 31 December 2007. The following paragraphs describes the main accounting policies that have been revised on transition to IFRS and hence supersede the previous accounting policy detailed in the 2006 report and financial statements. Employee benefits The group accounts for pensions and similar benefits under IAS 19 (revised) "Employee Benefits". The Group's net obligation in respect of the defined benefit plans is calculated by independent, qualified actuaries and updated at least annually. Additional updates are performed when one-time events or market fluctuations indicate that the benefit obligation and pension assets differ significantly from the most recent valuation. Obligations are measured at discount present value whilst plan assets are recorded at fair value. The operating and financing costs of such plans are recognised separately in the income statement; service costs are spread systematically over the lives of the employees and financing costs are recognised in the period in which they arise. 8. IFRS RESTATED ACCOUNTING POLICIES (continued) Employee benefits (continued) Actuarial gains and losses are recognised in full in the period in which they occur and presented in the statement of recognised income and expense. Research and development Research expenditure is charged to income in the year in which it is incurred. Development expenditure is charged to income in the year in which it is incurred unless it meets the recognition criteria of IAS 38 "Intangible Assets". Regulatory and other uncertainties generally mean that such criteria are not met. Such intangible assets, if capitalised are amortised on a straight line basis over the period of the expected benefit and reviewed for impairment at each balance sheet. INDEPENDENT REVIEW REPORT TO SERVISION PLC We have been instructed by the company to review the financial information forthe six months ended 30 June 2007, which comprise the Group Income Statement,the Group Balance Sheet, the Group Cash Flow statement and the related notes. Wehave read the other information contained in the interim report and consideredwhether it contains any apparent misstatements or material inconsistencies withthe 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 2007. haysmacintyre Fairfax HouseChartered Accountants 15 Fulwood PlaceRegistered Auditors LondonWC1V 6AY28 September 2007 This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
Servision PLC