Update re Suspension

The information contained within this announcement is deemed by the Group to constitute inside information as stipulated under the Market Abuse Regulations (EU) No. 596/2014 ("MAR").

13 March 2018

SerVision plc

("SerVision" or the "Company")

Update re Suspension

Proposed re-financing and potential administration of SerVision Limited

Introduction and update re. suspension

On 20 February 2018, SerVision plc (AIM: SEV), the AIM quoted developer and manufacturer of digital video security systems, requested that trading be suspended in its ordinary shares on AIM, pending clarification of the Company's financial position. This request followed the Company entering into default on at least one of its loans and the directors concluding that there was no immediate prospect of the Company raising any new capital.

Prior to 20 February 2018, SerVision had been in discussions with a potential investor about providing funding to the Company. Although these discussions have continued, the focus of these has shifted to a re-financing of SerVision Limited, the Company's principal trading operation in Israel. The Company is the largest creditor of SerVision Limited which also owns 100% of the issued share capital of SerVision Inc., the Company's US operating subsidiary.

Proposed re-financing and potential administration of SerVision Limited

In order to allow the discussions regarding the re-financing of SerVision Limited to continue, Gidon Tahan, the sole director of SerVision Limited, with the support of the employees of SerVision Limited, appointed a lawyer on 12 March 2018 to seek from the Israeli Court (the "Court") protection for SerVision Limited from its creditors. Part of the petition is expected to include a commitment from Cascade VP, LLC, a substantial shareholder in the Company owning 10.0% of the issued share capital of the Company, and Ronnie Cohen (together the "Investors") to provide around US$0.5m of interim funding in the form of debt and/or equity to enable SerVision Limited to continue to operate during the period of creditor protection. It is further expected that the necessary documentation will be lodged with the Court within the next few days at which point the Board of the Company expects to be in a position to update shareholders further.

The period of creditor protection can last up to 60 days, during which the Court will determine the best outcome for SerVision Limited and its creditors, which could include the sale of the business to a third party. Although the Company is the largest creditor of SerVision Limited, it is an unsecured creditor and ranks behind other secured creditors, including the employees. At this stage, the Directors of the Company have not received any written proposal from the Investors and do not anticipate that much value, if any, will be returned from its debts and shareholding in SerVision Limited.

Under the Court process in Israel the Court would take effective control of SerVision Limited and the expected outcome is likely to be the transfer of SerVision Limited to a third party, which would be equivalent to a fundamental disposal under Rule 15 of the AIM Rules for Companies. The Company's sole remaining asset would be its 100% ownership of SerVision UK Limited, the Company's UK operating subsidiary, to which the Board ascribes little value without ownership of the main operating subsidiary.

If the petition were not to be successful there would be no interim financing for SerVision Limited and it is deemed highly likely by the Board that SerVision Limited would be placed into liquidation.

Thus, whatever the outcome, it is likely that ultimately the Company's operating subsidiaries, being SerVision Limited and SerVision UK Limited, will be divested from the Company which would, as a result, become an "AIM Rule 15 Cash Shell" under Rule 15 of the AIM Rules for Companies. As an AIM Rule 15 Cash Shell, the Company would need to raise sufficient funds to continue operating and to complete an acquisition or acquisitions which constitute a reverse takeover under AIM Rule 14 within 6 months of becoming an AIM Rule 15 Cash Shell. In the event that the Company does not complete a reverse takeover under AIM Rule 14 within six months of becoming an AIM Rule 15 Cash Shell, the Exchange would suspend trading in the Company's shares pursuant to AIM Rule 40.

Possible re-financing of the Company

The Directors are also currently in discussions with potential investors to invest new equity funds into the Company by way of a placing. Such an equity fundraising would require the approval of shareholders in a general meeting and would be conditional, inter alia, on: (i) SerVision Limited being divested; and; (ii) an acceptable arrangement with the Company's creditors (which currently total circa US$2.2 million). If no such discussions can be successfully concluded, then it is likely that the Company will need to be placed into the appropriate insolvency process.

At this stage the Board continues to seek to clarify the Company's financial position and seek a solution for the benefit of creditors and shareholders and the Company is working closely with its advisers (including an insolvency practitioner) in this regard.

The Company's ordinary shares remain suspended from trading on AIM.

Further updates will be provided by the Company at the appropriate time.

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