Final Results > Servision Website

CONTENTS	Page

Chairman’s statement	1

Directors’ report	3
Auditors’ report	7

Consolidated income statement	8
Consolidated balance sheet	9
Parent company balance sheet	10

Consolidated cash flow statement	11

Parent company cash flow statement	12

Consolidated statement of changes in equity	13

Parent company statement of changes in equity	13

Notes to the report and financial statements	14

SERVISION PLC

CHAIRMAN'S STATEMENT

REPORT AND FINANCIAL STATEMENTS

FOR THE YEAR ENDED 31 DECEMBER 2007

I am pleased to announce the Company's results for the twelve months ending 31 December 2007. The period under review was one of steady organic growth for the Company, and we have been making good progress to realise our stated
strategy of expanding into international markets and providing our products to a variety of industries.

Financial Overview

* Turnover for the period increased by 17% to US$4.1m compared to US$3.5m for the same period last year

* Gross Profit for the year was US$1.9m compared to US$1.3m in the year ended 31 December 2006.

* Loss before taxation was reduced by 42% to US$1.5m (2006 loss: US$2.6m)

* Loss per share was reduced from US13.39cents to US6.21cents

Operating Review

The pleasing increase in turnover has resulted from an expansion of the Company's client base as well as excellent maintenance and retention of existing customers. We have recently received a first order from Siemens Brazil . Deutsche Post is currently evaluating our products and our systems are now being used by police forces in Singapore and the Netherlands, as well as school bus operators in the USA.

The Company has participated in the two largest international security exhibitions: ISC West in Las Vegas and IFSEC in Birmingham, UK. There was considerable interest in SerVision's product portfolio at these events. The activity in the American market has increased in a significant way. We signed a distribution agreement with Red Flex Inc and other potential customers are evaluating the product such as Freeto Lay Inc. We have recruited several sales associates representing SerVision on a commission-based arrangement, who have joined our sales managers in our efforts to increase our sales and market penetration. Part of the team is focusing on fleet management companies who represent a great potential for our new mobile product.

Several of our clients have exceeded their purchase commitments whereas other clients, such as in Mexico, have failed to meet expectations.

Our goal for the coming year is to increase income from standard sales and, in parallel, we hope to win several large orders with customers and integrators who are now in the process of evaluating our products and bidding in several tenders. I believe that the Company is heading in the right direction and that closing one significant agreement with an existing customer should be well within reach.

Research and development

Over the past year, SerVision has made significant investment in product development. This has enabled us to respond to the rapid growth and development of the mobile security market by developing and deploying the next generation of our Mobile Video Gateway solution (the "MVG") for cars, buses, trucks and trains. This product is revolutionary in that it offers multiple solutions, including live video transmission (of outstanding quality), GPS functionality and bi-directional audio, in one compact system. Thus it represents a dramatic improvement over the earlier generation IVG.

The MVG retails at around half the price of the Company's previous mobile model (the IVG), and thus represents a cost-effective solution for freight forwarding companies such as DHL couriers and fleet bus operators. The incentive for such companies that purchase our system is greatly increased as they can receive all the functionality and security benefits the MVG provides, for approximately the same price they might pay for a standard GPS system.

SERVISION PLC

CHAIRMAN'S STATEMENT (continued)

REPORT AND FINANCIAL STATEMENTS

FOR THE YEAR ENDED 31 DECEMBER 2007

Additionally, investment has been made in developing a new Internet Protocol ("IP") Camera. The IP Camera offers improved functionality over existing IP cameras in the market. SerVision's IP cameras are designed for the residential market and permit users to view video remotely from electronic devices including from a mobile phone. A further advantage is that video can be recorded onto the system itself, which is a feature that is not available on other IP cameras.

This product has the potential to appeal to the mass market as we believe that every security conscious household would benefit from installation of an IP Camera. In time we hope that this new product will form a substantial source of income for the Company. SerVision anticipates making this product available to the market within the next three months.

Financials

Turnover for the annual period increased 17% to US$4.1m compared to US$3.5m for the same period last year. Losses of US$1.5m (2006 loss: US$2.6m) were well below the same period in 2006 representing a reduction of 42%. Losses could have been further reduced had the Group not suffered the effects of the weakening dollar. As mentioned above, I firmly believe the Group is heading in the right direction.

The Group is tendering for more and larger contracts than in previous years and maintains a healthy indicative order book for 2008.

The Board is pleased that the Group continues to make steady progress towards achieving its goals and we look forward to the future with cautious optimism. On a personal note, I would like to thank all of our dedicated staff for their loyalty and hard work throughout the period that was essential for our significant progress and growth.

Gidon Tahan

Chairman and Chief Executive Officer

27 June 2008

SERVISION PLC

DIRECTORS' REPORT

FOR THE YEAR ENDED 31 DECEMBER 2007

The directors present the annual report together with the financial statements and auditors report for the year ended 31 December 2007.

The Company was incorporated in the UK but its principal place of business is in Israel.

PRINCIPAL ACTIVITIES AND REVIEW OF BUSINESS

The group's principal activity is the development and sale of video surveillance equipment. The results for the Group can be found on page 7.

ACCOUNTS PRODUCTION

The financial statements for the year ended 31 December 2007 have been prepared in accordance with International Financial Reporting Standards.

DIVIDENDS

The directors do not propose a final dividend (2006: £nil).

DIRECTORS AND THEIR INTERESTS

The directors who served during the year are:-


G Tahan
C Levy
E T Yanuv

SHARE OPTIONS

	Options at	Option	New	Options at
	1 January 2007	Exercised	Options	31 December 2007

E T Yanuv	30,000	-	-	30,000

The options are fully vested and are exercisable at a price of £0.15 per share.

CHARITABLE AND POLITICAL DONATIONS

The Group made $nil (2006 $7,201) of charitable donations to various religious organisations in Jerusalem in lieu of G Tahan's salary.

CHARITABLE AND POLITICAL DONATIONS

The Group did not make any charitable or political contributions during the year.

DIRECTORS' INTERESTS IN CONTRACTS

No director was, or is, materially interested in any contract existing during, or at the end of the financial year which was significant in relation to the business of the Group.

COMPLIANCE

As an AIM listed company, the Combined Code is not mandatory and the Company has therefore not produced a separate Corporate Governance or Directors' Remuneration Report.

SERVISION PLC

DIRECTORS' REPORT (continued)

FOR THE YEAR ENDED 31 DECEMBER 2007

DIRECTORS' RESPONSIBILITIES

The directors are responsible for preparing the Group and parent Company financial statements in accordance with applicable law and regulations.

Company law requires the directors to prepare Group and parent Company financial statements for each financial year. Under that law the directors are required to prepare the Group financial statements in accordance with International Financial Reporting Standards ("IFRSs") as adopted by the EU and have elected to prepare the parent company financial statements in accordance with United Kingdom Accounting Standards.

The Group financial statements are required by law and IFRSs as adopted by the EU to present fairly the financial position and performance of the Group; the Companies Act 1985 provides in relation to such financial statements that references in the relevant part of that Act to financial statements giving a true and fair view are references to their achieving a fair presentation.

The parent Company financial statements are required by law to give a true and fair view of the state of affairs of the parent company.

In preparing each of the Group and parent Company financial statements the directors are required to:

select suitable accounting policies and then apply them consistently;
make judgements and estimates that are reasonable and prudent;
for the Group financial statements, state whether they have been prepared in accordance with IFRSs as adopted by the EU;
for the parent Company financial statements, state whether applicable UK Accounting Standards have been followed, subject to any material departures disclosed and explained in the parent company financial statements; and
prepare the financial statements on the going concern basis unless it is inappropriate to presume that the Group and the parent Company will continue in business.

The directors are responsible for keeping proper accounting records which disclose with reasonable accuracy at any time the financial position of the parent company and to enable them to ensure that the financial statements comply with the Companies Act 1985. They have general responsibility for taking such steps as are reasonably open to safeguard the assets of the Group and to prevent and detect fraud and other irregularities.

Under applicable law and regulations, the Directors are also responsible for preparing a directors' report to comply with that law and those regulations.

In determining how amounts are presented within terms in the profit and loss account and balance sheet, the Directors have had regard to the substance of the reported transaction or arrangement, in accordance with generally accepted accounting principles or practice.

So far as each of the directors is aware at the time the report is approved:

there is no relevant audit information of which the company's auditors are unaware; and
the directors have taken all steps that they ought to have taken to make themselves aware of any relevant audit information and to establish that the auditors are aware of that information.

GOING CONCERN

After making enquiries, the Directors have a reasonable expectation that the Company has 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.

SERVISION PLC

DIRECTORS' REPORT (continued)

FOR THE YEAR ENDED 31 DECEMBER 2007

RISKS

Foreign exchange risks

Most of the group's sales and income are in US dollars and the US dollar is the currency which the company reports in. The expenses however are divided between the US dollar and the Israeli Shekel. The cost of goods (components) are paid in dollars and part of the operational costs such as rent and other service providers quote their fees in dollars. Labour costs however are paid in Israeli Shekels. The company has therefore a partial currency risk in the event the Israeli shekel is strengthened Vs the US dollar, that could influence the bottom line of the company's financial results.

The group is subscribed to a weekly circular from the two Israeli main banks regarding the main financial institutions expectations for foreign currency changes. The management reviews them carefully and will consider with the board weather it should purchase financial instruments sold by local banks, to protect itself from this foreign exchange risk.

Interest Rate Risks

The company is exposed to interest risks as it uses credit lines and loans from its banks. Changes in the effective "Prime" interest rate published monthly by the bank of Israel can influence the Financing costs of the company. The company diversified its credit lines in order to minimize its exposures to interest rates fluctuations by dividing its financing instruments into three categories:

Variable interest rate facilities (has interest rate fluctuations exposure)
Fixed rate facilities (does not have interest rate fluctuations exposure)
Shekel-dollar facilities (does not have interest rate fluctuations exposure)

Credit Risk

The group is exposed to credit risks if its customers fail to pay for goods supplied by the group. In order to minimize this risk the company has a policy of:

Selling only to respectable integrators and distributors and not to the end customer.
Orders from customers in certain regions or not big enough are shipped only after an approved by the groups bank LC is opened.
New customers have to fully pay in advance.(including Siemens Brazil)
On going customers must pay 50% before shipping.
Only high rated customers receive credit from the group(GE, ADI, G4S Israel)

Capital Risk management

The group manages its cash carefully. In order to reduce its risk, the group may take measurements to reduce its fixed costs (labor) if performance is below the group's expectations. The group may conduct placing for new shares of the company to raise additional capital as required when monitoring its performance, to continue its operations

SUPPLIER PAYMENT POLICY

It is the Group's policy to settle the terms of payment with suppliers when agreeing the terms of the transaction, to ensure that suppliers are aware of these terms and to abide by them. Trade creditors at the year end amount to 93 days (2006: 81 days) of average supplies for the year.

CREST

The Company's ordinary shares are eligible for settlement through CREST, the system for securities to be held and transferred in electronic form rather than in paper. Shareholders are not obliged to use CREST and can continue to hold and transfer shares in paper without loss of rights.

SERVISION PLC

DIRECTORS' REPORT (continued)

FOR THE YEAR ENDED 31 DECEMBER 2007

AUDITORS

A resolution reappointing haysmacintyre will be proposed at the AGM in accordance with S385(2) of the Companies Act 1985.

ELECTRONIC COMMUNICATIONS

The Company may deliver shareholder information including Annual and Interim Reports, Forms of Proxy and Notices of General Meetings in an electronic format to shareholders.

If you would like to receive shareholder information in electronic format, please register your request on the Company's Registrar's electronic database at www.capitaregistrars.com. You will initially need your unique 'investor code' which you will find at the top of your share certificate. There is no charge for this service. If you wish to subsequently change your mind, you may do so by contacting the Company's Registrars by post or through their website.

If you elect to receive shareholder information electronically, please note that it is the shareholder's responsibility to notify the Company of any change to their name, address, email address or other contact details. Shareholders should also note that, with electronic communication, the Company's obligations will be satisfied when it transmits the notification of availability of information or such other document as may be involved to the electronic address it has on file. The Company cannot be held responsible for any failure in transmission beyond its control any more than it can for postal failure. In the event of the Company becoming aware that an electronic notification is not successfully transmitted, a further two attempts will be made. In the event that the transmission is still unsuccessful a hard copy of the notification will be mailed to the shareholder. In the event that specific software is required to access information placed on the Company's website it will be available via the website without charge. Before electing for electronic communications shareholders should ensure that they have the appropriate equipment and computer capabilities sufficient for the purpose. The Company takes all reasonable precautions to ensure no viruses are present in any communication it sends out but cannot accept responsibility for loss or damage arising from the opening or use of any email or attachments from the Company and recommends that shareholders subject all messages to virus checking procedures prior to use. Any electronic communication received by the Company that is found to contain any virus will not be accepted.

Shareholders wishing to receive shareholder information in the conventional printed form will continue to do so and need take no further action.

Should you have any further questions on this, please contact the Company's Registrars, Capita Registrars on 0870 162 1313.

ON BEHALF OF THE BOARD

G TAHAN 4th Floor

70 Gray's Inn Road

Chairman London

Executive Director WC1X 8BT

27 June 2008 INDEPENDENT AUDITORS' REPORT TO THE MEMBERS OF

SERVISION PLC

We have audited the group and parent company financial statements of Servision Plc for the year ended 31 December 2007, which comprise the consolidated income statement, the consolidated balance sheet, the consolidated cash flow statement, the parent company balance sheet, the parent company cash flow statement, consolidated statement of changes in equity, parent company statement of changes in equity and the related notes. These financial statements have been prepared under the accounting policies set out therein.

This report is made solely to the company's members, as a body, in accordance with Section 235 of the Companies Act 1985. Our audit work has been undertaken so that we might state to the company's members those matters we are required to state to them in an auditor's report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the company and the company's members as a body, for our audit work, for this report, or for the opinions we have formed.

Respective responsibilities of directors and auditors

The directors' responsibilities for preparing the Annual Report and the financial statements in accordance with applicable law and International Financial Reporting Standards (IFRSs) as adopted for use in the European Union are set out in the Statement of Directors Responsibilities.

Our responsibility is to audit the financial statements in accordance with relevant legal and regulatory requirements and International Standards on Auditing (UK and Ireland).

We report to you our opinion as to whether the financial statements give a true and fair view and whether the financial statements have been properly prepared in accordance with the Companies Act 1985 and Article 4 of the IAS Regulation. We also report to you if, in our opinion, the Directors' Report is not consistent with the financial statements, if the company has not kept proper accounting records, if we have not received all the information and explanations we require for our audit, or if information specified by law regarding directors' remuneration and other transactions is not disclosed.

We read other information contained in the Annual Report, and consider whether it is consistent with the audited financial statements. This other information comprises only the Directors' Report and the Chairman's statement. We consider the implications for our report if we become aware of any apparent misstatements or material inconsistencies with the financial statements. Our responsibilities do not extend to any other information.

Basis of audit opinion

We conducted our audit in accordance with International Standards on Auditing (UK and Ireland) issued by the Auditing Practices Board. An audit includes examination, on a test basis, of evidence relevant to the amounts and disclosures in the financial statements to be audited. It also includes an assessment of the significant estimates and judgements made by the directors in the preparation of the financial statements, and of whether the accounting policies are appropriate to the group's and company's circumstances, consistently applied and adequately disclosed.

We planned and performed our audit so as to obtain all the information and explanations which we considered necessary in order to provide us with sufficient evidence to give reasonable assurance that the financial statements to be audited are free from material misstatement, whether caused by fraud or other irregularity or error. In forming our opinion we also evaluated the overall adequacy of the presentation of information in the financial statements to be audited.

Opinion

In our opinion:

the group financial statements give a true and fair view, in accordance with IFRSs as adopted for use in the European Union, of the state of the group's affairs as at 31 December 2007 and of its loss for the year then ended;
the parent company financial statements give a true and fair view, in accordance with IFRSs as adopted for use in the European Union as applied in accordance with the provisions of the Companies Act 1985, of the state of the parent company's affairs as at 31 December 2007;
the group financial statements have been properly prepared in accordance with the Companies Act 1985 and Article 4 of the IAS Regulations; and
the information given in the Directors' report is consistent with the financial statements.

haysmacintyre Fairfax House

Chartered Accountants 15 Fulwood Place

Registered Auditors London

WC1V 6AY

27 June 2008

SERVISION PLC

CONSOLIDATED INCOME STATEMENT

FOR THE YEAR ENDED 31 DECEMBER 2007

		2007	2006 As restated
	Notes	$'000	$'000

REVENUE	1,2	4,097	3,534

Cost of sales	3	(2,182)	(2,236)
		-------------	-------------
GROSS PROFIT		1,915	1,298

Administrative expenses		(1,821)	(2,259)
Depreciation and amortisation		(1,327)	(1,367)
Exchange rate differences		(117)	(217)
		-------------	-------------
OPERATING LOSS	4	(1,350)	(2,545)

Net finance expenditure	5	(129)	(75)
		-------------	-------------
LOSS ON ORDINARY
ACTIVITIES BEFORE TAXATION		(1,479)	(2,620)

Tax on ordinary activities	6	-	-
		-------------	-------------
LOSS FOR THE PERIOD		(1,479)	(2,620)
		======	======

LOSS PER SHARE

Basic and diluted	19	(6.21c)	(13.39c)
		======	======

All activities arose from continuing activities.

The notes on pages 14 to 25 are an integral part of these consolidated financial statements

SERVISION PLC

CONSOLIDATED BALANCE SHEET

AT 31 DECEMBER 2007

		2007	2006 As restated
	Notes	$'000	$'000
ASSETS
Non-current assets