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| Share Name | Share Symbol | Market | Type | Share ISIN | Share Description |
|---|---|---|---|---|---|
| Servision | LSE:SEV | London | Ordinary Share | GB00B0586C20 | ORD 1P |
| Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
|---|---|---|---|---|---|---|---|---|---|---|
| 0.00 | 0.00% | 0.85 | 0.70 | 1.00 | 0.00 | 01:00:00 |
| Industry Sector | Turnover | Profit | EPS - Basic | PE Ratio | Market Cap |
|---|---|---|---|---|---|
| 0 | 0 | N/A | 0 |
From Apr 2019 to Apr 2024
TIDMSEV
RNS Number : 2718L
SerVision plc
30 September 2016
30 September 2016
SerVision PLC
("SerVision" or the "Company")
Interim Results
For the Six Months Ended 30 June 2016
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 2016.
For further information:
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SerVision plc +972 2535 0000
Gidon Tahan, Chairman and CEO
Allenby Capital Limited (Nominated +44 (0)20 3328
Adviser and Joint Broker) 5656
Nick Athanas / James Reeve
Beaufort Securities Limited (Joint
Broker)
+44 (0)20 7382
Elliot Hance 8300
Cadogan Leander (Financial PR)
+44 (0)7795 168
Christian Taylor-Wilkinson 157
Notes to Editors
SerVision is a pioneer in the field of security communications technology and a leading developer and manufacturer of fully integrated video recording and transmission systems for homeland security and transportation applications. The Company's core technology is proprietary video compression which is optimised for streaming real-time video over any type of cellular or narrowband network.
CHAIRMAN'S STATEMENT
The Board today announces SerVision's consolidated group interim results for the six months ended 30 June 2016. Revenue for this period was $1,288,000 and our net loss was $1,013,000 compared with a revenue of $1,242,000 and a net loss of $1,445,000 for the corresponding period ending 30 June 2015. The Group's turnover during this period was marginally higher than H2 of 2015. This year's H1 results include new recurring revenue streams generated from our UK office, which I am confident will continue to grow as more customers subscribe to our solutions and services. I also expect further growth in the near future as we conclude a number of successful pilots with our new IP-based, High Definition mobile video gateway, the IVG400-N, and as a result of our recent integration with Mobileye's world renowned advanced collision avoidance technology.
Sales and Marketing
In March 2016, SerVision UK reported that it had commenced commercial operations with a number of significant new customers including, but not limited to; Manchester Airport, Maple Fleet Services, Stobart Rail and Up Front Car Holdings. The Company's relationship with DHL is continuing to progress well, with the UK office carrying out installations for over 100 DHL vehicles during this period.
Beyond the sales from hardware and installation services, recurring revenue from data plans and UK support/maintenance contracts currently stands at $18,000 per month and the Directors believe this sum will continue to increase as existing projects grow and new opportunities arise. We are currently in a new round of discussions with DHL regarding the expand of monthly service contracts for DHL vehicles equipped with SerVision's mobile video solutions.
The decision last year to open an office in the UK and commence direct selling to customers has proved successful, with the UK office now providing around 50% of the Company's revenues.
Outside of the UK market, and as announced in January 2016, the Group signed a binding agreement with Convoy Technologies LLC ("Convoy"), an established US-based company that manufactures visual tools for heavy duty vehicles to improve fleet safety, security and productivity. Convoy will act as the non-exclusive distributor of SerVision's MVG Video Gateway products in the US, Canada, Central and South America. Convoy has been making regular orders and are on track to meet expectations for the year.
Research and Development
SerVision's R&D team has spent much of the year-to-date fine-tuning the performance of the Group's IVG and our new SVCentral monitoring software, as well as adding new features and functions to both platforms, and integrating SerVision's software with Mobileye's collision avoidance technology. Many of these new features and functions have been in response to client requests; for example, the IVG is now UVID compatible, enabling SerVision to install its solutions into existing camera installations. We have also been focused on developing an entirely new software solution called SVDownloader that enables automated cloud backup of video. The SVDownloader software can be run as an add-on in our new SVCentral, or it can easily be integrated into third party fleet management software applications.
The next major task on our roadmap is to develop a new server solution that will facilitate alarm management among SVCentral applications running in a multi-user environment. In parallel to this, our R&D team is researching ways to modify our SDK in order to streamline development of new client applications. Once the SDK has been modified, we will begin development of a cross-platform web client. We also intend to launch brand new mobile apps for iOS and Android.
Financials
-- Revenues for this period increased to $1,288,000 compared to $1,242,000 for the same period in 2015.
-- Operating loss for the period was reduced by 31 per cent. to $989,000, compared to an operating loss of $1,436,000 for the same period in 2015.
-- Net loss for the period was reduced by 30 per cent. to $1,013,000 compared to a loss of $1,445,000 for the same period in 2015.
On 8 July 2016 SerVision announced that it had entered into a deed of amendment with YA II PN Ltd whereby the parties agreed to amend the terms of their existing loan agreement (the "Loan Agreement") and the Standby Equity Distribution Agreement ("SEDA"). The variation to the Loan Agreement has, inter alia, resulted in an increase in the maximum amount that can be advanced by YA to the Company from GBP1,000,000 to a total of GBP3,000,000.
Immediately following the entering into of the Deed of Amendment, SerVision requested a drawdown of a principal amount of $786,500 under the Loan Agreement. The repayment schedule for the principal drawn down is 11 equal monthly instalments of $40,200 of the principal together with accrued interest, with the remaining balance payable on 6 July 2017. As at today's date the amount outstanding in relation to the Loan Agreement remains at $786,500 and current repayment schedule envisages the balance being paid in full by July 2017.
The Directors wish to bring to shareholders' attention the following matter raised in Note 2 and the independent review report.
Emphasis of matter - going concern
In their independent review report, which is not qualified, the group's auditor has considered the adequacy of the disclosures made concerning the Group's ability to continue as a going concern. The Group incurred a net loss of $1,013,000 during the six months ended 30 June 2016 and had net current liabilities of $930,000 at that date. This, along with other matters disclosed in note 2, may indicate the existence of a material uncertainty which may cast significant doubt about the Group's ability to continue as a going concern. However having completed their review of sales forecasts, budgets and cash flow projections 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. The interim financial statements do not include the adjustments that would result if the Group was unable to continue as a going concern.
Current Trading and Future Prospects
At the time of our Final Results in June, we reported that a number of trials for the new IVG product were underway. I am pleased to report that we recently supplied a first order of 28 IVGs for a new project in China and a new order earlier this month for seventy IVGs that will be deployed on police vehicles in Tegucigalpa, Honduras. To date, none of the trials have been abandoned and with IVG pilots ongoing in Israel, the UK, Holland, Botswana, Mexico and Chile, among other countries, the Board is confident of further orders to come in the second half.
Looking further ahead, to next year and beyond; we have recently begun IVG pilots with a number of bus companies, both in the UK and around the world. The directors believe that the global bus market present a good opportunity and SerVision will be exhibiting at the EURO Bus Expo in November 2016.
As previously announced, our new integration with Mobileye has enabled SerVision to move beyond the transport security market and to offer an outstanding solution for smart transportation and road safety applications. We are now pursuing a number of commercial opportunities with Mobileye channel partners, both in Israel and abroad. Based on initial feedback from the market, Mobileye customers are very keen to have access to a remote monitoring platform that can log driving behaviour, capture and store video clips of Mobileye alerts, and provide fleet managers with real time notifications when large numbers of driving infractions occur, which SerVision's products achieve.
We are also working closely with a partner in Turkey to establish a new framework of cooperation with Vodafone, and we are doing the same in Israel with Partner, the country's second largest mobile operator.
Conclusion
While revenues from the six months ended 30 June 2016 are similar to the comparative figures from the equivalent period last year, there has been a substantial reduction in operating loss. Trading for the third quarter has been consistent with the first half and the Directors are cautiously optimistic of an improved result for the year when compared to 2015 and while it will take a little longer for us to realise profits from newly set up business in the UK, our recurring revenue model there is growing regularly. We have a large number of trials ongoing, some of which are of a significant size, and our focus now is to convert these to orders.
As always, I am grateful to our shareholders for their continued support, and to our staff for their hard work and contribution to our success.
G Tahan
Chairman
30 September 2016
CONDENSED GROUP COMPREHENSIVE INCOME STATEMENT
FOR THE SIX MONTHSED 30 JUNE 2016
Six months Six months Year to
to to 31
30 June 30 June December
2016 2015 2015
Note $'000 $'000 $'000
Unaudited Unaudited Audited
REVENUE 3 1,288 1,242 2,154
Cost of sales (901) (752) (1,260)
GROSS PROFIT 387 490 894
Administrative expenses (1,376) (1,926) (3,310)
OPERATING LOSS (989) (1,436) (2,416)
Net finance expense (31) (22) (154)
LOSS ON ORDINARY
ACTIVITIES BEFORE
TAXATION (1,020) (1,458) (2,570)
Tax on loss on ordinary
activities 4 7 13 (2)
NET LOSS FOR THE PERIOD (1,013) (1,445) (2,572)
Translation difference
arising from
translating into
presentation currency (155) (99) (329)
TOTAL COMPREHENSIVE
LOSS FOR THE PERIOD (1,168) (1,544) (2,901)
Loss per share
BASIC 5 (0.92)c (1.75)c ( 3.18)c
DILUTED (0.92)c (1.75)c ( 3.18)c
CONDENSED GROUP BALANCE SHEET
AT 30 JUNE 2016
As at As at As at 31
30 June 30 June
2016 2015 December
2015
$'000 $'000 $'000
Unaudited Unaudited Audited
ASSETS
Non-current assets
Intangible assets 4,826 4,749 4,818
Investment 118 - 118
Deferred tax asset 88 96 80
Property, plant and
equipment 48 63 56
5,080 4,908 5,072
Current assets
Inventories 582 670 702
Trade and other receivables 651 1,341 982
Cash and cash equivalents 14 24 78
1,247 2,035 1,762
Total assets 6,327 6,943 6,834
EQUITY
Capital and reserves
attributable to the
Company's equity shareholders
Called up share capital 2,090 1,498 2,090
Share premium account 16,127 14,671 16,127
Merger reserve 1,979 1,979 1,979
Other reserve 66 66 66
Retained earnings and
translation reserves (17,197) (14,672) (16,029)
Total equity 3,065 3,542 4,233
LIABILITIES
Current liabilities
Short term credit from
banking institutions 796 873 1,039
Loan from the office
of the chief scientist 173 161 173
Trade and other payables 1,208 1,635 855
2,177 2,669 2,067
Non-current liabilities
Long term loan from
bank institution
without current maturity 58 434 255
Loan from others 748 11 --
Post employment benefits 279 287 279
1,085 732 534
Total liabilities 3,262 3,401 2,601
Total equity and liabilities 6,327 6,943 6,834
CONDENSED GROUP STATEMENT OF CHANGES IN EQUITY
FOR THE SIX MONTHSED 30 JUNE 2016
Share Share Merger Other Retained Translation
Capital Premium Reserve Reserve Earnings Reserve Total
$'000 $'000 $'000 $'000 $'000 $'000 $'000
As at 1
January
2015 1,224 13,588 1,979 66 (13,290) 162 3,729
Total
recognised
expense - - - - (1,445) (99) (1,544)
Issue of
shares 274 1,083 - - - - 1,357
At 30 June
2015 1,498 14,671 1,979 66 (14,735) 63 3,542
Total
recognised
expense - - - - (1,127) (230) (1,357)
Issue of
shares 592 1,456 - - - - 2,048
As at 31
December
2015 2,090 16,127 1,979 66 (15,862) (167) 4,233
Issue of - - - - - - -
shares
Total
recognised
expense - - - - (1,168) - (1,168)
At 30 June
2016 2,090 16,127 1,979 66 (17,030) (167) 3,065
CONDENSED GROUP CASH FLOW STATEMENT
FOR THE SIX MONTHSED 30 JUNE 2016
Six months Six months Year to
to to 31
30 June 30 June December
2016 2015 2015
$'000 $'000 $'000
Unaudited Unaudited Audited
Cash flows from operating
activities
Loss before taxation (1,020) (1,458) (2,570)
Adjustments for:
Net finance expense 31 22 154
Doubtful debts - 462 531
Depreciation and amortisation 337 333 668
Movement in trade and other
receivables 331 73 340
Movement in tax assets - (13) -
Movement in inventories 120 (74) (105)
Movement in post retirement
benefits - (1) (8)
Movement in trade and other
payables 353 (86) (866)
Net cash outflow from operating
activities 152 (742) (1,856)
Cash flow from investing
activities
Purchase of property, plant
and equipment and intangibles (345) (384) (781)
Investment in available for
sale assets - - (118)
Deposit for leasing vehicles - (35) -
Net cash outflow from investing
activities (345) (419) (899)
Cash flows from financing
activities
Issue of shares - 1,357 3,405
Net finance costs (31) (22) (154)
Net loans undertaken less
repayments 299 (251) (658)
Cash inflow from financing
activities 268 1,084 2,593
Cash and cash equivalents
at beginning of period (61) 101 101
Net cash inflow/ (outflow)
from all activities 75 (77) (162)
Cash and cash equivalents
at end of period 14 24 (61)
Cash and cash equivalents
comprise
Cash (excluding overdrafts)
and cash equivalents 14 24 78
Overdrafts - - (139)
14 24 (61)
NOTES TO THE REPORT AND CONDENSED GROUP FINANCIAL STATEMENTS
FOR THE SIX MONTHSED 30 JUNE 2016
1. BASIS OF PREPARATION
These consolidated interim 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 2016 annual financial statements.
This statement does not comprise statutory accounts as defined in Section 434 of the Companies Act 2006. The results for the six months ended 30 June 2016 and for the six months ended 30 June 2015 are unaudited.
The financial information for the year ended 31 December 2015 is an extract from the latest group financial statements. The statutory group financial statements for the year ended 31 December 2015, prepared in accordance with IFRS, on which the auditors gave an unqualified opinion, have been filed with the Registrar of Companies. The audit report contained an emphasis of matter paragraph drawing the attention of the reader to material uncertainty regarding the group's ability to continue as a going concern.
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, budgets and cash flow projections 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 for at least twelve months from the date on which these interim financial statements were approved.
As disclosed in the Chairman's statement, while revenue from the six months period ended 30 June 2016 is comparable with the six month period ended 30 June 2015, there is a significant improvement when compared to the six month period to 31 December 2015, and the directors remain confident that this trend will continue. While it will take a little longer for the Group to realize profits from newly acquired business in the UK, the Group recurring revenue model there is growing regularly and, as mentioned above, the directors look forward to entering new vertical markets with the Mobileye integration, and to seizing much larger commercial opportunities with the rollout of the new generation IVG solution.
As disclosed in note 7 and the Chairman's statement, the group has raised further funding subsequent to the period end. The directors have included the proceeds of this fund raising round into their cash flow forecasts and consider it to be sufficient for the group's immediate working capital needs. Should circumstances change or trading results fail to meet targets, the directors, may, as in previous periods, seek additional equity investment and debt finance from a variety of sources. If the directors are unsuccessful when seeking any necessary additional investment and finance the group may cease to be a going concern.
However having completed their review of sales forecasts, budgets and cash flow projections 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 financial statements. There can, however, be no certainty that future sales forecasts will be met and therefore there is still a material uncertainty that could cast doubt on the Group's ability to continue as a going concern and discharge its liabilities as they fall due. These financial statements do not contain any adjustments that would be required if the Company could not continue as a going concern.
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.
Turnover by location
of customer
-----------------------------------
Geographical areas Six months Six months Year to
to to 31
30 June 30 June December
2016 2015 2015
$'000 $'000 $'000
Unaudited Unaudited Audited
UK and Continental
Europe 804 226 604
North America 215 383 702
Asia and Middle East 71 563 736
Rest of the world 198 70 112
1,288 1,242 2,154
4. TAXATION
The Company is controlled and managed by its Board in Israel. Accordingly, the interaction of UK domestic tax rules and the taxation agreement entered into between the U.K. and Israel operate so as to treat the Company as solely resident for tax purposes in Israel. The Company undertakes no business activity in the UK such as might result in a Permanent Establishment for tax purposes and accordingly has no liability to UK corporation tax.
5. LOSS PER SHARE
The loss per share of (0.92c) (31 December 2015: (loss) (3.18c); 30 June 2015: (loss) (1.75c)) has been calculated on the weighted average number of shares in issue during the period namely 126,801,751 (31 December 2015: 91,233,375; 30 June 2015: 88,130,461) and loss of US$ 1,168,000 (31 December 2015: loss US$2,901,000; 30 June 2015: loss US$ 1,544,000).
Due to the immaterial number of options in issue there is no material difference between the diluted and basic loss per share.
6. SIGNIFICANT ACCOUNTING POLICIES
Inventories:
Inventories represent raw materials, work in progress and goods for resale and stated at the lower of cost and net realisable value.
Revenue recognition:
Sale of systems
The subsidiaries generate revenues mainly from sales of systems. The subsidiaries sell their products directly through the group's distribution networks worldwide.
Revenues from systems sales are recognised upon delivery of the system or upon installation at the customer site, where applicable, provided that the system fee is fixed or determinable and persuasive evidence of an arrangement exists.
Sale of products
Revenues from the sale of purchased products are recognised upon delivery of the products to the customers.
Research and development
Expenditure for research activities are recognised as an expense in the period in which it is incurred.
Expenditure for the development activities of technology used in the production of systems sold by the Group are capitalised and presented as an intangible asset in the balance sheet only if all of the following conditions are met:
-- Development costs of the technology are identifiable and separable.
-- It is probable that the developed technology will generate future economic benefits.
-- The development costs of the technology can be measured reliably.
Development costs meeting these criteria are capitalised and amortised on a straight-line basis over their useful economic lives (currently six years) once the related technology is available for use.
Investments
The available for sale financial asset represents the Group's investment in a company in China. It is carried at fair value with changes in fair value recognised in other comprehensive income and the available for sale reserve. Where there is a significant or prolonged decline in the fair value of an available for sale asset which constitutes evidence of impairment, the full amount of the impairment including any amount previously recognised in other comprehensive income is recognised in profit or loss.
7. POST BALANCE SHEET DATE EVENTS
In July 2016 SerVision entered into a deed of amendment with YA II PN Ltd whereby the parties agreed to amend the terms of their existing loan agreement (the "Loan Agreement") and the Standby Equity Distribution Agreement ("SEDA"). The variation to the Loan Agreement has, inter alia, resulted in an increase in the maximum amount that can be advanced by YA to the Company from GBP1,000,000 to a total of GBP3,000,000.
On 7 July 2016, immediately following the entering into of the Deed of Amendment, SerVision requested a drawdown of a principal amount of $786,500 under the Loan Agreement.
8. RELATED PARTY TRANSACTIONS
During the year the Company entered into an agreement with Gabriel Sassoon, an existing shareholder in the Company, to provide the Company with an unsecured working capital loan facility of US$1.0 million. As at the 30 June 2016 the balance outstanding was $853,000.
The loan is unsecured, repayable on 15 February 2019 and attracts interest at a rate of 6%.
To the extent that the loan is unpaid at 15 February 2019 the company is obliged to issue new Ordinary shares to the shareholder to extinguish the liability. The issue price of the shares would be calculated on the basis of the average closing mid-market price of the company's ordinary shares for the calendar month prior to the Repayment Date, subject to the issue price of the shares being no less than 3.5 pence per share
Included in current liabilities are loans of $74,000 due to G Tahan, a director.
INDEPENT REVIEW REPORT TO SERVISION 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 2016 which comprises the Group Comprehensive Income Statement, the Group Balance Sheet, the Group Cash Flow Statement, the Group Statement of Changes in Equity and related explanatory notes 1 to 8. 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, including the financial information contained therein, 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 London Stock Exchange for companies trading securities on the Alternative Investment Market. As disclosed in note 1, the annual financial statements of Servision 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.
This report is made solely to the company in accordance with the terms of our engagement 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.
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 2016 is not prepared, in all material respects, in accordance with International Accounting Standard 34, as adopted by the European Union.
Emphasis of matter - going concern
In forming our conclusion, which is not qualified, we have considered the adequacy of the disclosures made concerning the Group's ability to continue as a going concern. The Group incurred a net loss of $1,013,000 during the six months ended 30 June 2016 and had net current liabilities of $930,000 at that date. This, along with other matters disclosed in note 2, may indicate the existence of a material uncertainty which may cast significant doubt about the Group's ability to continue as a going concern. The interim financial statements do not include the adjustments that would result if the Group was unable to continue as a going concern.
haysmacintyre 26 Red Lion Square
Chartered Accountants London
Registered Auditors WC1R 4AG
30 September 2016
This information is provided by RNS
The company news service from the London Stock Exchange
END
IR PGUQGBUPQPUB
(END) Dow Jones Newswires
September 30, 2016 02:01 ET (06:01 GMT)
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