Servision PLC Regulatory News (SEV)

30 Jun 2008 07:00



SERVISION PLC 

REPORT AND FINANCIAL STATEMENTS

YEAR ENDED 31 DECEMBER 2007

Company Number: 51433241

SERVISION PLC

REPORT AND FINANCIAL STATEMENTS

FOR THE YEAR ENDED 31 DECEMBER 2007

 

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:

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

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:

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
Intangible assets		8	3,456	3,236
Property, plant and equipment		9	96	131
			--------------	--------------
			3,552	3,367
			--------------	--------------
Current assets
Inventories		11	557	323
Trade and other receivables		12	1,010	989
Cash at bank		13	-	17
			--------------	--------------
			1,567	1,329
			--------------	--------------
			5,119	4,696
			=======	======
EQUITY
Capital and reserves attributable to the Company's
equity shareholders
Called up share capital		14	467	429
Share premium account			8,075	7,101
Merger reserve			1,979	1,979
Retained earnings and translation reserves			(8,566)	(7,520)
			--------------	-------------
TOTAL EQUITY			1,955	1,989
			=======	======
LIABILITIES
Non-current liabilities
Bank loans		16	415	279
Loan from the office of the chief scientist		1	865	917
Post employment benefits		1	256	148
			--------------	-------------
			1,536	1,344
			--------------	-------------
Current liabilities
Bank loans and overdrafts		16	433	256
Loan from the office of the chief scientist		1	104	-
Trade and other payables		15	1,091	1,107
			---------------	-------------
			1,628	1,363
			---------------	-------------
TOTAL LIABILITIES			3,164	2,707
			=======	=======
TOTAL EQUITY AND LIABILITIES			5,119	4,696
			=======	======

The financial statements were approved and authorised for issue by the Board of Directors on 27 June 2008 and were signed below on its behalf by:

G Tahan E T Yanuv

Chairman Chief Financial Officer

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

  SERVISION PLC

PARENT COMPANY BALANCE SHEET

AT 31 DECEMBER 2007

				2007	2006
			Notes	$'000	$'000
ASSETS
Non-current assets
Investments			10	231	231
Current assets
Cash at bank			13	-	17
				--------------	-------------
Total assets				231	248
				=======	======
EQUITY
Capital and reserves attributable to the Company's
equity shareholders
Called up share capital			14	467	429
Share premium account				8,075	7,101
Retained earnings and translation reserves				(8,360)	(7,335)
				--------------	-------------
TOTAL EQUITY				182	195
				=======	======
LIABILITIES
Current liabilities
Trade and other payables			15	49	53
				=======	=======
TOTAL EQUITY AND LIABILITIES				231	248
				=======	======

The financial statements were approved and authorised for issue by the Board of Directors on 27 June 2008 and were signed below on its behalf by:

G Tahan

Chairman

E T Yanuv

Chief Financial Officer

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

  SERVISION PLC

CONSOLIDATED CASH FLOW STATEMENT

FOR THE YEAR ENDED 31 DECEMBER 2007

		2007	2006 As restated
		$'000	$'000
Cash flows from operating activities
Loss before taxation		(1,479)	(2,620)
Adjustments for:
Net finance expense		129	75
Net interest paid		(129)	(75)
Depreciation and amortisation		1,327	1,367
Movement in trade and other receivables		(21)	(288)
Movement in inventories		(234)	278
Movement in grant from the office of the chief scientist		52	48
Movement in post retirement benefits		108	82
Movement in trade and other payables		(16)	315
		--------------	---------------
Net cash used in operating activities		(263)	(818)
Cash flow from investing activities
Purchase of property, plant and equipment and intangibles		(1,512)	(1,604)
		--------------	---------------
Net cash used in investing activities		(1,512)	(1,604)
		--------------	---------------
Cash flows from financing activities
Issue of shares		1,012	1,950
Net loans undertaken less repayments		166	-
		--------------	---------------
Cash generated from financing activities		1,178	1,950
		--------------	---------------
Cash and cash equivalents at beginning of period		77	(305)
Net cash used in from all activities		(597)	(472)
Non-cash movement arising on foreign currency translation		433	854
		--------------	---------------
Cash and cash equivalents at end of period		(87)	77
		======	======
Cash and cash equivalents comprise
Cash (excluding overdrafts) and cash equivalents		381	17
Overdrafts		(468)	(256)
		--------------	---------------
		(87)	(239)
		======	======

RECONCILIATION OF NET CASH FLOW TO NET DEBT

			2007
			$'000
Decrease in cash in the period			(597)
Exchange rate differences			433
Cash inflow from movement in debt			(166)
			--------------
Movement in net funds in the period			(330)
Net debt at beginning of period			(518)
			----------------
Net debt at end of period			(848)
			======

  SERVISION PLC

PARENT COMPANY CASH FLOW STATEMENT

FOR THE YEAR ENDED 31 DECEMBER 2007

		2007	2006
		$'000	$'000
Cash flows from operating activities
Loss before taxation		(1,458)	(6,791)
Adjustments for:
Net finance expense		(653)	-
Net interest paid		653	-
Movement in trade and other receivables		-	4,255
Movement in trade and other payables		(4)	(55)
		--------------	---------------
Net cash used in operating activities		(1,462)	(2,591)
		--------------	---------------
Cash flows from financing activities
Issue of shares		1,012	1,950
		--------------	---------------
Cash generated from financing activities		1,012	1,950
		--------------	---------------
Cash and cash equivalents at beginning of period		17	15
Exchange rate differences		433	643
Net cash used in all activities		(450)	(641)
		--------------	-------------
Cash and cash equivalents at end of period		-	17
		======	======
Cash and cash equivalents comprise
Cash (excluding overdrafts) and cash equivalents		-	17
		======	======

  SERVISION PLC

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

FOR THE YEAR ENDED 31 DECEMBER 2007

	Share	Share	Merger	Retained	Translation
	Capital	Premium	Reserve	Earnings	Reserve	Total
	$'000	$'000	$'000	$'000	$'000	$'000
At 1 January 2006 (as restated)	339	5,241	1,979	(5,054)	(489)	2,016
Total recognised income
and expenses (as restated)	-	-	-	(2,620)	-	(2,620)
Exchange rate differences	-	-	-	-	643	643
Issue of shares (net of costs)	90	1,860	-	-	-	1,950
	-----------	------------	-----------	---------	----------	------------
At 31 December 2006	429	7,101	1,979	(7,674)	154	1,989
Total recognised income
and expenses	-	-	-	(1,479)	-	(1,479)
Exchange rate differences	-	-	-	-	433	433
Issue of shares (net of costs)	38	974	-	-	-	1,012
	-----------	------------	-----------	------------	----------	--------------
At 31 December 2007	467	8,075	1,979	(9,153)	587	1,955
	=====	=====	=====	=====	=====	=====

PARENT COMPANY STATEMENT OF CHANGES IN EQUITY

		Share	Share	Retained	Translation
		Capital	Premium	Earnings	Reserve	Total
		$'000	$'000	$'000	$'000	$'000
At 1 January 2006 (as restated)		339	5,241	(698)	(489)	4,393
Total recognised income
and expenses (as restated)		-	-	(6,791)	-	(6,791)
Exchange rate differences		-	-	-	643	643
Issue of shares (net of costs)		90	1,860	-	-	1,950
		-----------	------------	---------	----------	------------
At 31 December 2006		429	7,101	(7,489)	154	195
Total recognised income
and expenses		-	-	(1,458)	-	(1,458)
Exchange rate differences		-	-	-	433	433
Issue of shares (net of costs)		38	974	-	-	1,012
		-----------	------------	------------	----------	--------------
At 31 December 2007		467	8,075	(8,947)	587	182
		-----------	------------	------------	----------	--------------

SERVISION PLC

NOTES TO THE REPORT AND FINANCIAL STATEMENTS 

FOR THE YEAR ENDED 31 DECEMBER 2007

1. ACCOUNTING POLICIES

Basis of Preparation

These financial statements have been prepared in accordance with IFRS 1, First-time Adoption of IFRS. These financial statements have been prepared in accordance with those IFRS standards and IFRIC interpretations issued and effective or issued and early adopted as at the time of preparing these statements (June 2008). The policies set out below have been consistently applied to all the years presented. 

Servision Plc's consolidated financial statements were prepared in accordance with UK Generally Accepted Accounting Principles (UK GAAP) until 31 December 2006.  UK GAAP differs in some areas from IFRS.  In preparing the consolidated financial statements, the directors have amended certain accounting methods applied in the UK GAAP financial statements to comply with IFRS.  Reconciliations and descriptions of the effect of the transition from UK GAAP to IFRS on the Group's equity and its net income and cash flows were provided in the interim report for the period ended 30 June 2007.  There were no differences between UK GAAP and IFRS in relation to the parent company.

The Group's transition date is 1 January 2006 and it prepared its opening IFRS balance sheet at that date. The Group's IFRS adoption date is 1 January 2007.

These consolidated financial statements have been prepared under the historical cost convention.

No separate profit and loss account is presented for the parent company as provided by Section 230, Companies Act 1985.

Basis of Consolidation

Group accounts consolidate the accounts of the Company and its subsidiary undertakings made up to 31 December 2007.

All intercompany balances and transactions have been eliminated in full. Subsidiary undertakings are accounted for from the effective date of acquisition until the effective date of disposal.

Segment reporting 

The Company has one business segment that of developing and selling video surveillance equipment. Segmental reporting is produced on a geographical basis by place of sale.

Revenue recognition

Revenue comprises the fair value of the sale of goods and services, net of value added tax, rebates and discounts.

Sale of systems

The subsidiary generates revenues mainly from sales of systems. The subsidiary sells its products directly through its distribution networks worldwide. 

Revenues from systems sales are recognised mostly upon delivery of the system or upon installation at the customer site, where applicable, the system fee is fixed or determinable and persuasive evidence of an arrangement exists.

For transactions of the "charged and held" type, for which delivery of inventory was postponed until after the balance sheet date, revenue is recorded upon completion of the system only upon the condition that the customer confirms in writing the terms of the postponed delivery.

SERVISION PLC

NOTES TO THE REPORT AND FINANCIAL STATEMENTS (continued)

FOR THE YEAR ENDED 31 DECEMBER 2007

1. ACCOUNTING POLICIES (continued)

Revenue recognition (continued)

Sale of products

Revenues from the sale of purchased products are recognised upon delivery of the products to the customers.

Warranty costs

The subsidiary generally offers a one year warranty for all its products. The subsidiary includes in its statements of operations an allowance for warranty claims totalling 2% of annual sales at the time revenues are recognised, for estimated material costs during the warranty period.

Property, plant and equipment

Property, plant and equipment are stated at cost less depreciation. Depreciation is calculated to write down the cost of all tangible fixed assets by equal monthly instalments over their estimated useful lives at the following rates:-

Leasehold improvements 10% per annum

Motor vehicles 15% per annum

Office furniture and equipment 6-15% per annum

Computer equipment 20-33% per annum

Foreign currencies

Transactions in foreign currencies are recorded at the rate ruling at the date of the transaction. Monetary assets and liabilities denominated in foreign currencies are retranslated at the rate of exchange ruling at the balance sheet date. The functional and presentational currency of the Group is the US Dollar.

The exchange rate used at 31 December 2007 was £1 = US$1.986.

Operating lease agreements

Rentals applicable to operating leases where substantially all of the benefits and risks of ownership remain with the lessor are charged to the income statement as incurred.

Deferred taxation

Deferred tax is provided in full, using the liability method, on temporary differences arising between the tax bases of assets and liabilities and their carrying values in the financial statements. The deferred tax is not accounted for if it arises from initial recognition of an asset or liability in a transaction, other than a business combination, that at the time of the transaction affects neither accounting nor taxable profit or loss. Deferred tax is determined using tax rates (and laws) that have been enacted or substantially enacted by the balance sheet date and are expected to apply when the related deferred tax asset is realised or the deferred tax liability is settled.

Deferred tax assets are recognised to the extent that it is probable that future taxable profit will be available against which temporary differences can be utilised.

  SERVISION PLC

NOTES TO THE REPORT AND FINANCIAL STATEMENTS (continued)

FOR THE YEAR ENDED 31 DECEMBER 2007

1. ACCOUNTING POLICIES (continued)

Trade and other receivables

Trade and other receivables are recognised and carried at original invoice value less an allowance for any uncollectible amounts. An estimate for doubtful debts is made when collection of the full amount is no longer probable. Bad debts are written off when identified.

Investments

Investments in subsidiary undertakings are stated at cost less provisions for impairment.

Cash and cash equivalents

Cash and cash equivalents includes cash in hand, deposit held at call with banks, other short-term highly liquid investments with original maturities of three months or less, and bank overdrafts. Bank overdrafts are shown within borrowings in current liabilities on the balance sheet.

Inventories

Inventories represent work in progress and goods for resale and stated at the lower of cost and net realisable value.

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 Company, are capitalised and presented as an asset in the balance sheets 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 lives once the related technology is available for use.

Software

Intangible assets purchased separately, such as software licenses that do not form an integral part of related hardware, are capitalised at cost and amortised over their useful economic life.

Impairment of tangible and intangible assets

At each balance sheet date, the Group reviews the carrying amounts of its tangible and intangible assets to determine whether there is any indication that those assets have suffered an impairment loss. If any such indication exists, the recoverable amount of the asset is estimated in order to determine the extent of the impairment loss (if any). Where the asset does not generate cash flows that are independent from other assets, the Group estimates the recoverable amount of the cash generating unit to which the asset belongs.

Recoverable amount is the higher of fair value less costs to sell and value in use. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset for which the estimates of future cash flows have been adjusted.

SERVISION PLC

NOTES TO THE REPORT AND FINANCIAL STATEMENTS (continued)

FOR THE YEAR ENDED 31 DECEMBER 2007

1. ACCOUNTING POLICIES (continued)

Post retirement benefits

The subsidiary operates defined benefit plans for the payment of severance pay in accordance with the Severance Pay Law of Israel at the termination of employment of employee services for the subsidiary. According to the law in Israel employees are entitled to receive severance pay in the event that they are fired or if they retire. The severance is calculated according to the last month's salary of the employee at the termination period of services multiplied by the number of years of service at the subsidiary.

The subsidiary deposits funds for its obligations towards severance pay for a part of its employees in an ongoing manner to pension funds and insurance companies and to a general fund deposited in a banking institution (hereafter the "Plan Assets").

The calculation of the liabilities, prepared by an authorised actuary, was established by the use of techniques of an actuarial estimate which includes established assumptions which include among other items the capitalisation rate, the expected rate of return on plan assets, the rate of increase to salaries, and the rate of employee turnover. There exist material uncertainties for these estimates since the plan is long-term.

Liabilities for post employment benefits recorded in the balance sheets represent the present value of the defined benefit plans according to the fair value of plan assets. Assets derived from this calculation are limited to the prior cost of services provided in addition to the present value of available funds and less future amounts to be deposited to the plans.

Changes in the post employment liabilities were attributed, according to the actuarial report, to salaries and interest expenses in the profit and loss statement and to actuarial gains or losses in a separate statement of recognised income and expenses.

Grants from the Office of the Chief Scientist

Prior grants received from the Office of the Chief Scientist ("OCS") to finance research and development costs of the subsidiary were presented as a long-term loan at the date of receipt. The loan is repaid by the payment of royalties to the Chief Scientist and is calculated as a percentage of sales of the subsidiary.

The subsidiary is required to pay to the OCS under the subsidiary's research and development agreements with the OCS and pursuant to applicable laws royalties at the rate of 3-5% of sales for products developed with funds provided by the OCS, up to an amount equal to 100% of the OCS research and development grants received plus interest based on the 12-month LIBOR rate applicable to dollar deposits.

The subsidiary is obligated to repay the Israeli Government for the grants received only to the extent that there are sales for the funded products.

  SERVISION PLC

NOTES TO THE REPORT AND FINANCIAL STATEMENTS (continued)

FOR THE YEAR ENDED 31 DECEMBER 2007

2. BUSINESS SEGMENT ANALYSIS

		UK	Europe	Middle East	North America	Rest of the world	Total
Year ended 31 December 2006:		$’000	$’000	$’000	$’000	$’000	$’000
	Revenue
	External sales	-	1,554	394	343	1,243	3,534
		=====	=====	=====	=====	=====	=====
	Loss
	Segment operating loss	(131)	(663)	(1,075)	(146)	(530)	(2,545)
	Net finance costs						(75)
							-------------
	Loss before taxation						(2,620)
							=====
	At 31 December 2006:
	Assets and liabilities
	Segment assets	17	319	3,910	30	420	4,696
	Segment liabilities	(53)	(32)	(2,568)	(26)	(28)	(2,707)
		----------	-------------	-------------	-------------	-------------	-------------
	Net (liabilities)/assets	(36)	287	1,342	4	392	1,989
		=====	=====	=====	=====	=====	=====
	Year ended 31 December 2007:
	Revenue
	External sales	-	2,037	359	509	1,192	4,097
		=====	=====	=====	=====	=====	=====
	Loss
	Segment operating loss	(130)	(458)	(389)	(112)	(261)	(1,350)
	Net finance costs						(129)
							-------------
	Loss before taxation						(1,479)
							=====
	At 31 December 2007:
	Assets and liabilities
	Segment assets	-	18	4,332	262	507	5,119
	Segment liabilities	(49)	(1)	(3,069)	(23)	(22)	(3,164)
		----------	-------------	-------------	-------------	-------------	-------------
	Net (liabilities)/assets	(49)	17	1,263	239	485	1,955
		=====	=====	=====	=====	=====	=====

 

 

3.	COST OF SALES		2007	2006
			$'000	$'000
	Materials and parts		1,606	1,831
	Employee benefit expense		339	189
	Sub contractors		56	48
	Other costs		181	168
			-----------	-----------
			2,182	2,236
			=====	=====

  SERVISION PLC

NOTES TO THE REPORT AND FINANCIAL STATEMENTS (continued)

FOR THE YEAR ENDED 31 DECEMBER 2007

4.		EXPENSES BY NATURE					2007		2006
							$'000		$'000
		Employee benefit expense (see below)					1,644		1,917
		Exchange rate differences					117		217
		Depreciation and amortisation					1,327		1,367
		Operating lease rentals					76		76
		Auditors' remuneration
		- statutory audit services					15		10
		- audit-related regulatory reporting					5		4
							======		======
		Employee benefit expense (including directors)
		The staff costs for the year ending 31 December 2007, totalled US$1,644,500 (2006: US$1,916,000). There were no pension expenses for the company for the year ending 31 December 2007 (2006: $nil).
							No.		No.
		The average number of persons (including directors)
		employed by the group during the period was as follows:					39		40
							======		======
5.		FINANCE EXPENDITURE
							$'000		$'000
		Interest receivable					(22)		(22)
		Interest payable and similar charges on bank loans and overdrafts					151		97
							-------------		-------------
							129		75
							======		======
6.		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.
(a)		The taxation charge comprises:
		Current corporation tax for the period					-		-
							======		======
(b)	Factors affecting tax charge for the period
	The tax assessed for the period is different than the standard rate of corporation tax. The differences are explained below:
	Loss on ordinary activities before taxation					(1,479)		(2,620)
						=======		======
	Multiplied by the standard rate of corporation tax of 30% (2006: 30%)					(444)		(786)
	Effects of:
	Utilisation of tax losses brought forward					444		786
						-----------------		------------------
	Current year tax charge					-		-
						========		========
(c)		Factors affecting future tax charges
		The directors believe that the future tax charge will be reduced by the use of tax losses carried forward which can be used against the profits made from the trading activity in the Israeli subsidiary. Tax losses carried forward in the Group at 31 December 2007 are $9,300,000 (2006: $7,800,000).

  SERVISION PLC

NOTES TO THE REPORT AND FINANCIAL STATEMENTS (continued)

FOR THE YEAR ENDED 31 DECEMBER 2007

7. LOSS FOR THE FINANCIAL YEAR

The parent Company has taken advantage of section 230 of the Companies Act 1985 and has not included its own profit and loss account in these financial statements. The Group loss for the year includes a loss after taxation of US$1,458,000 (2006: loss US$6,791,000) which is dealt with in the financial statements of the Company.

8.	INTANGIBLE FIXED ASSETS
	GROUP						Software	Development expenditure		Tota1
							$'000	$'000		$'000
	Cost or valuation
	At 1 January 2006 (as restated)						16	2,948		2,964
	Additions						-	1,581		1,581
							-------------------	-----------------		-------------------
	At 31 December 2006						16	4,529		4,545
	Additions						-	1,500		1,500
							-------------------	-----------------		-------------------
	At 31 December 2007						16	6,029		6,045
							-------------------	-----------------		-------------------
	Amortisation
	At 1 January 2006						-	-		-
	Charge in the year						-	1,309		1,309
							-------------------	-----------------		-------------------
	At 31 December 2006						-	1,309		1,309
	Charge in the year						9	1,271		1,280
							-------------------	-----------------		-------------------
	At 31 December 2007						9	2,580		2,589
							-------------------	-----------------		-------------------
	Net Book Value
	At 31 December 2007						7	3,449		3,456
							==========	==========		=========
	At 31 December 2006						16	3,220		3,236
							==========	==========		=========

9.	TANGIBLE FIXED ASSETS
	Group	Leasehold	Office furniture	Motor
		improvements	and equipment	Vehicles		Total
		$'000	$'000	$'000		$'000
	Cost
	At 1 January 2006 (as restated)	41	206	45		292
	Additions	6	24	-		30
		------------	--------------	-----------		-------------
	At 31 December 2006	47	230	45		322
		-------------	--------------	-----------		------------
	Additions	-	12	-		12
	Disposals	(6)	(51)	-		(57)
		------------	--------------	-----------		-------------
	At 31 December 2007	41	191	45		277
		-------------	--------------	-----------		------------
	Depreciation
	At 1 January 2006 (as restated)	6	104	17		127
	Charge in the year	4	47	7		58
		------------	--------------	-----------		-------------
	At 31 December 2006	10	151	24		185
		-------------	--------------	-----------		------------
	Charge in the year	4	36	7		47
	Eliminated on disposal	-	(51)	-		(51)
		------------	--------------	-----------		-------------
	At 31 December 2007	14	136	31		181
		-------------	--------------	-----------		------------
	Net book value
	At 31 December 2007	27	55	14		96
		======	======	======		======
	At 31 December 2006	37	73	21		131
		======	======	======		======

SERVISION PLC

NOTES TO THE REPORT AND FINANCIAL STATEMENTS (continued)

FOR THE YEAR ENDED 31 DECEMBER 2007

10.	INVESTMENTS				$'000
	Company
	At 31 December 2006 and 31 December 2007				231
					=======

At 31 December 2007 the group held 20% or more of a class of the allotted share capital of the following:

				Proportion	Proportion
		Country of incorporation	Class of share capital	held by Servision Plc	held by group	Nature of Business
	Servision Limited	Israel	Ordinary	100%	100%	Video survelliance equipment
	Servision Inc.	USA	Ordinary	100%	100%	Video survelliance equipment

11.	INVENTORIES					2007	2006
						$'000	$'000
	Group
	Raw materials					173	260
	Work in progress					70	35
	Finished goods					314	28
						---------------	---------------
						557	323
						=======	=======
12.	TRADE AND OTHER RECEIVABLES
	Group
	Trade receivables				916			918
	Other receivables				92			66
	Prepayments and accrued income				2			5
					--------------			---------------
					1,010			989
					=======			=======

13.	CASH AND CASH EQUIVILENTS	2007	2007	2006	2006
		Group	Company	Group	Company
		$'000	$'000	$'000	$'000
	Cash and cash equivalents	-	-	17	17
		=======	=======	=======	=======

  SERVISION PLC

NOTES TO THE REPORT AND FINANCIAL STATEMENTS (continued)

FOR THE YEAR ENDED 31 DECEMBER 2007

14.	CALLED UP SHARE CAPITAL			2007	2006
				$'000	$'000
	Authorised:
	The authorised share capital consists of 300,000,000 ordinary shares of £0.01 each and 2,000,000 deferred shares of £0.001 each.
	Allotted, called up and fully paid:
	24,773,637 (2006: 22,890,304) ordinary shares of £0.01 each			1,461	879
	384,615 deferred shares of £0.001 each			2	2
				---------------	--------------
				1,463	881
				=======	=======

In July 2007, the company issued 1,883,333 ordinary shares of £0.01 each for a total consideration of £515,000.

15.	TRADE AND OTHER PAYABLES	2007		2006
		Group	Company	Group	Company
		$'000	$'000	$'000	$'000
	Trade payables	490	-	713	-
	Other taxes and social security	369	-	207	-
	Other payables	144	-	91	-
	Accruals and deferred income	88	49	96	53
		---------------	---------------	---------------	---------------
		1,091	49	1,107	53
		=======	=======	=======	=======

16.	BANK LOANS AND OVERDRAFTS			2007	2006
				$'000	$'000
	Group
	Bank overdraft			468	294
	Bank loans: amounts due within one year			346	316
				---------------	---------------
				814	610
	Cash and deposits in banking institutions			(381)	(354)
				---------------	---------------
	Current liability			433	256
	Bank loans: amounts due within two to five years			415	279
				---------------	---------------
	Total bank loans and overdrafts			848	535
				=======	=======

The Group has two loans. The first loan is with Bank Leumi for $500,000 and it repayable in monthly instalments until August 2008. The second loan is with Bank Otzar for NIS 537,500 and is repayable in monthly instalments until November 2011.

  SERVISION PLC

NOTES TO THE REPORT AND FINANCIAL STATEMENTS (continued)

FOR THE YEAR ENDED 31 DECEMBER 2007

17. OPERATING LEASES

The Group leases business premises in Israel under operating lease agreements. The lease expenditure charged to the income statement during the year is disclosed in note 4.

				2007	2006
				$'000	$'000
	The future aggregate minimum lease payments under operating leases are as follows:-
	No later than 1 year			76	76
				=======	=======

18. FINANCIAL RISK MANAGEMENT

The Group's activities give rise to a number of financial risks: market risk, credit risk and liquidity risk. Market risk includes foreign exchange risk and cash flow and fair value interest rate risk. The Group has in place risk management policies that seek to limit the adverse effects on the financial performance.

Foreign exchange risk

Most of the Group's sales and income are in US dollars, however the expenses 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 against 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.

Financial instruments

The Group does not use derivative financial instruments but has bank loans. The Company finances its operations simply using bank balances and overdraft, plus debtors and creditors. The cash flow is regularly monitored and the overdraft is occasionally extended to meet requirements as they arise.

Capital risk management

The Group manages its cash carefully. In order to reduce its risk, the group may take measurements to reduce its labour costs 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.

Significant accounting policies

Details of the significant accounting policies and methods adopted, including the criteria for recognition, the basis of measurement and the basis on which income and expenses are recognised, in respect of each class of financial asset, financial liability and equity instrument are disclosed in note 1 to the financial statements.

Accounting policies for financial instruments are applied on the following Balance Sheet items:

All of the Group's liabilities have been classified as other financial liabilities. The Group does not have liabilities which are classified as 'Liabilities at Fair value through profit and loss'.

  SERVISION PLC

NOTES TO THE REPORT AND FINANCIAL STATEMENTS (continued)

FOR THE YEAR ENDED 31 DECEMBER 2007

18. FINANCIAL RISK MANAGEMENT (continued)

Fair value of financial instruments

The fair values of financial assets and financial liabilities with standard terms and conditions and traded on active liquid markets is determined with reference to quoted market price;

the fair value of financial assets and financial liabilities with standard terms and conditions and traded on active liquid markets is determined with reference to quoted market price;

the fair value of other financial assets and financial liabilities (excluding derivative instruments) is determined in accordance with generally accepted pricing models based on discounted cash flow analysis using prices from observable current market transactions and dealer quotes for similar instruments;

The Group applied the following methods and assumptions during the estimation of fair value of financial instruments:

Receivables and deposits at banks

For assets which mature within 3 months, carrying value is similar to fair value due to shortness of these instruments. For longer-term assets, contracted interest rates do not significantly defer from current market interest rates, and due to that their fair value is similar to its carrying value.

Loan liabilities

Fair value of short term liabilities is similar to its carrying value due to shortness of these instruments, for long term liabilities, contracted interest rates do not significantly defer from current market interest rates, and due to that their fair value is similar to its carrying value.

Other financial instruments

Financial instruments of the Group which are not valuated at fair value are trade accounts receivable, other receivables, trade accounts payable and other payables. Historic carrying value of assets and liabilities, including the provisions, which are in accordance with the usual business conditions, is similar to its fair value.

Financial risk management objectives

The Group's management monitors and manages the financial risks relating to the operations of the Group through internal risk reports which analyse exposures by degree and magnitude of risks. These risks include market risk (including currency risk, fair value interest rate risk and price risk), credit risk, liquidity risk and cash flow interest rate risk.

(a)  Liquidity risk

At 31 December 2007 the consolidated cash position an overdrawn amount of $87,000 and there is currently no procedure to centralise and manage cash by a treasury manager. 

The Group manages its liquid resources so as to obtain the best available rates of return on cash investments, whilst retaining access to those resources. Cash that is not needed for short term requirements is deposited for periods of one month (or more), based on the Directors' assessment of prevailing interest rate trends, the interest rates available and the liquid resource requirements of the Group. In addition, cash is placed on instant access deposit with the Group's bankers, which is available for shorter-term requirements. 

  SERVISION PLC

NOTES TO THE REPORT AND FINANCIAL STATEMENTS (continued)

FOR THE YEAR ENDED 31 DECEMBER 2007

18. FINANCIAL RISK MANAGEMENT (continued)

(b) Interest rate risk

The Company, nor any of its subsidiaries, has any debt subject to rate indexation. Hence there is no major impact on our finances from potential rate variations. The only impact could be on the cost of the invoice discounting facilities but this would be marginal unless there would be an increase of the several points on the Bank of England or LIBOR rates.

(c) Currency risk

The Company has not implemented a specific policy to protect against currency fluctuations. The fact that the Group is trading in the three main international currencies could have a negative impact.

(d) Credit risk management

The Group is exposed to credit risks if its customers fail to pay for goods supplied by the Group. In order to minimise 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)

19. LOSS PER SHARE

The loss per share of 6.21c (2006: loss 13.39c) has been calculated on the weighted average number of shares in issue during the year namely 23,831,197 (2006: 19,568,894) and losses of US$1,478,953 (2006: US$2,620,785).

20. ULTIMATE CONTROLLING PARTY

The Directors do not believe there to be an ultimate controlling party.

ENDFR DDGDLIBDGGIC