REG - UniVision Eng Ltd - Half-year Report <Origin Href="QuoteRef">UVEL.L</Origin>

UniVision EngineeringAnnouncement

15/12/2016 10:05

RNS Number : 9535R
UniVision Engineering Ltd
15 December 2016
 15 December 2016
UniVision Engineering Limited
("UniVision" or the "Company" or the "Group")
Interim Results
For the Six Months Ended 30 September 2016
UniVision, the Hong Kong based Group whose principal activities are the supply, design, installation and maintenance of closed circuit television and surveillance systems, and the sale of security related products, is pleased to announce its unaudited interim results for the six months ended 30 September 2016. 
Highlights:
 Profit attributable to the equity holders of HK$0.9m (H12015: HK$0.45m);
 Revenue increased by 7% to HK$21.4m for continuing operations (H12015 HK$20m).
Mr. Stephen Sin Mo KOO, Executive Chairman, added: 
"The Company continues to grow despite facing market competition, low economic growth and the delay of major government infrastructure projects. The proposed large government projects and the new extension of MTR railway lines will provide the business opportunity to expand in the coming years."
For further information visit www.uvel.com or contact: 
UniVision Engineering Limited Tel: +852 2389 3256
Stephen Koo, Executive Chairman www.uvel.com
Chun Pan Wong, Chief Executive Officer
Danny Kwok Fai Yip, Finance Director
Nicholas Lyth, Non-Executive Director Tel: +44 (0) 7769 906686
ZAI Corporate Finance Limited
(Nominated Adviser and Broker) Tel: +44 (0)20 7060 2220
Dugald J. Carlean /Tim Cofman/ Luis Brine www.zaicf.com 
Chairman's Statement
INTRODUCTION
The Group's turnover for continuing operations has increased by 7% and gross margin percentage remained constant at 34% (H1 2015: 34%) for the reporting period despite market competition and the delay of major government infrastructure projects. The business is expected to continue to grow by the proposed infrastructure projects and line of extension in MTR in the coming years.
The Directors remain confident of the future of UniVision and is optimistic on the Group's prospects.
FINANCIAL REVIEW
'Continuing operations' represent the Group's Security and Surveillance Systems business undertaken by the Hong Kong subsidiary. The business undertaken by T-Com, the Group's Taiwan Subsidiary is classified as discontinued operations following its sale in June this year. The loss from these discontinued operations during the period was HK$415K (2015: HK$2.2m).
As announced on 28 June 2016, the Group entered into an agreement to sell its entire interest in its Taiwan subsidiary- T-Com Technology Company Limited ("the Subsidiary" or "T-Com") to Mr. Stephen Koo, the Executive Chairman of the Group. As announced on 19 October 2016, this sale completed on 18 October 2016.
The value of the assets and liabilities of T-Com, were HK$28.3m and HK$24m respectively which is included in the financial statements below as Assets/Liabilities of Disposal Group classified as held for sale. The net asset value was HK$4.3m as at 30 September 2016.
In the six month period revenues for the Group's continuing operations increased by 7% to HK$21.4m (H1 2015: HK$20m). This increase was mainly due to a 9% growth inconstruction contracts and a 8% growth in maintenance contracts, The growth of construction revenue in Hong Kong was derived from the Hong Kong-Zhuhai-Macao Bridge Project which generated income of HK$2.2m, The increased income from maintenance contracts was contributed mainly by the maintenance income from the Kai Tak Cruise Terminal Project.
Gross profit margin for the Group's continuing operations remained constant at 34% (2015: 34%). Gross profit margin in the Hong Kong maintenance business improved slightly from 33% to 36%, compensating for a decrease in gross profit margin of 3% to 33% (2015: 36%) in the Group's construction business for the period. The effective and efficient control of human resources, material costs, logistics and sub-contracting charges has assisted in maintaining this level of gross margin in facing increased operating costs and a keen competitive environment. The gross profit margin in product sales was 30%.
The profit from the continuing operations attributable to the equity holders of the Company is HK$1.1m (2015: 1.6m). Profit before interest and income tax from the continuing operations during the period at HK$1.1m (H1 2015: HK$1.6m) whilst the Group recorded a profit attributable to the equity holders of HK$0.9m (H12015: HK$0.45m).
The Group's Hong Kong operation was profitable despite a highly competitive environment and low economic growth. The Group's Taiwanese subsidiary which UniVision formerly had a 52.25% interest in recorded an operating loss during the six months ended 30 September 2016. The Group shared a loss of HK$217K for the period (H1 2015: HK$1.1m).
During the period under review, the relative strengthening of the HK$ against GBP has led to 10% appreciation in the GBP reporting amount in the Consolidated Statement of Comprehensive Income and Financial Position. It also the reason for the significant gain of 592K on exchange differences arising on the translation (H1 2015: loss 287K). All figures in GBP in the Financial Statements therefore needed to be adjusted for comparative purposes. The financial data is also presented in HK$ to provide a comparison with the comparative figures in 2015 that were unaffected by exchange rate fluctuations.
BUSINESS REVIEW
Markets
The increasing demand for wireless network infrastructure, the increase in concerns over security and the demand to replace analogue systems with Internet protocol based systems are the key growth drivers for the Security and Surveillance market. 
Both construction contracts and maintenance contracts grew in this financial period. The Hong Kong-Zhuhai-Macao Bridge Project was the largest contributor of revenue in construction contracts. The maintenance income from the Kai Tak Cruise Terminal Project contributed to the growth in maintenance contracts. The Board anticipates demand for Security and Surveillance Systems from local government infrastructure projects and the commercial sector will continue to increase in coming years. The Board will continue its efforts to maintain sustainable operations in Hong Kong. 
UniVision will continue to commit resources to accessing and developing new technologies and solutions so as to undertake opportunities in Internet Protocol and High Definition CCTV System technology.
Currently, the Company faces competition from both large surveillance systems providers and challenges from other similar sized companies. Facing increased competition, the Company will explore other market segments besides its core surveillance business, such as rolling stock business in railway, to strengthen the business.
Business
During the period under review, the outcome of the UK's Referendum to leave the European Union ("Brexit) led to uncertainty in the global economy and a sharp decline in the value of Sterling. As the functional currency for the continuing operation is Hong Kong Dollars, the effect from the decline in British pound to the operations is not material. On the other hand, the Company paid less in professional fees which settled in GBP.
During the period, the Company participated in a Pre-Qualification process for the CCTV Replacement project for Hong Kong MTR. The project is replacing the CCTV cameras from analogue-based equipment with IP-based units. The Company currently is the CCTV System maintainer for MTR Corporation Limited ("MTRC") therefore the board believes that the Company is well positioned for this process. We are actively tendering for this project but the board cannot be certain that the outcome will be favourable for the Company.
The disposal of UniVision's interest in T-Com, has enabled UniVision's Management to focus attention and resources on its local security and surveillance business in Hong Kong and optimise the Group's operational efficiency.
The Company's major customers are public organisations and sizeable private enterprises, such as the Electrical and Mechanical Services Department ("EMSD") of the Hong Kong Government and MTRC. The latter was the Company's largest customer in this financial period. The Company expects that a significant portion of its future revenue will depend on new orders and the renewal of service contracts with the major customers. To minimize the risk of over-reliance on a limited number of major customers, the Company is making every effort to diversify its customer base. 
PROSPECTS
The growing demand for its network and high definition security and surveillance products will assist the Group in continuing to prosper in these markets.
The Group will continue to enhance the management of its existing projects and to actively tender for new construction contract to facilitate growth while maintaining its stake in the maintenance sector of Security & Surveillance market.
Finally, on behalf of the Board, I would like to take this opportunity to thank the Group's shareholders, customers, suppliers and business partners for their continued support of UniVision. I would also like to express my gratitude to the management team and all staff members for their support, loyalty, hard work and dedication to the Group.
MR. STEPHEN SIN MO KOO
EXECUTIVE CHAIRMAN
15 December 2016
UniVision Engineering Limited
Consolidated Statements of Comprehensive Income (Un-audited)
For the six months ended 30 September 2016

For the six months ended 30 September






 2016
 2015
 2016
 2015

 HK$'000
 HK$'000
 '000
 '000





Continuing operations




Revenue
21,440 
20,027 
2,008 
1,683 
Cost of Sales
(14,118)
(13,268)
(1,322)
(1,115)
Gross profit
7,322 
6,759 
686 
568 
Other income
6 
245 
0 
21 
Other loss
(48)
(14)
(4)
(1)
Selling and distribution expenses
(712)
(777)
(67)
(65)
Administrative expenses
(5,443)
(4,627)
(510)
(389)
Finance costs
(1)
(7)
-
(1)





Profit for the period from continuing operations
1,124 
1,579 
105 
133 





Discontinued operations




Loss for the period from discontinued operations
(415)
(2,162)
(39)
(182)





Profit/(loss) for the period
709 
(583)
66 
(49)










Other comprehensive income / (loss) :




Exchange differences arising on translation of foreign
121 
(482)
592 
(287)
Total comprehensive income / (loss) for the period
830 
(1,065)
658 
(336)





Profit / (loss) attributable to:




 Equity shareholders of the Company




 Profit from continuing operations
1,124 
1,579 
105 
133 
 Loss from discontinuing operations
(217)
(1,130)
(20)
(95)
 Equity shareholders of the Company
907 
449 
85 
38 
 Non-controlling interests
(198)
(1,032)
(19)
(87)

709 
(583)
66 
(49)





Total comprehensive income / (loss) attributable




 Equity shareholders of the Company
986 
162 
657 
(223)
 Non-controlling interests
(156)
(1,227)
1 
(113)

830 
(1,065)
658 
(336)










Earnings per share - Basic and Diluted
 HK Cents
 HK Cents
 Pence
 Pence
 Continuing and discontinued operations
 0.2365 
 0.1173 
 0.0222 
 0.0099 
 Continuing operations
 0.2931 
 0.4117 
 0.0274 
 0.0346 











UniVision Engineering Limited
Consolidated Statements of Financial Position (Un-audited)
As at 30 September 2016

As at 30 September






 2016
 2015
 2016
 2015

 HK$'000
 HK$'000
 '000
 '000
ASSETS




Non-current assets




Plant and equipment
492 
708 
49 
60 
Goodwill
-
399 
-
26 
Trade and other receivables
34,172 
34,152 
3,402 
2,908 
Total non-current assets
34,664 
35,259 
3,451 
2,994 





Current assets




Inventories
8,323 
12,770 
829 
1,088 
Trade receivables
8,979 
9,517 
894 
810 
Amount due from customers for contract-in-progress
11,741 
21,697 
1,169 
1,847 
Deposits, prepayments and other receivables
11,342 
17,825 
1,128 
1,517 
Cash and bank balances
9,398 
10,129 
936 
862 
Total current assets
49,783 
71,938 
4,956 
6,124 




Assets of disposal group classified as held for sale
28,278 
-
2,815 
-





Total assets
112,725 
107,197 
11,222 
9,118 





LIABILITIES AND EQUITY




Current liabilities




Trade and other payables
14,349 
19,587 
1,429 
1,667 
Amounts due to customers for contract-in-progress
15,853 
11,773 
1,578 
1,003 
Current tax liability
-
373 
-
32 
Interest-bearing borrowings
-
13,288 
-
1,131 
Obligation under finance lease
-
52 
-
4 
Total current liabilities
30,202 
45,073 
3,007 
3,837 





Liabilities of disposal group classified as held for sale
24,012 
-
2,390 
-





Total liabilities
54,214 
45,073 
5,397 
3,837 





Equity




Share capital
23,980 
23,980 
1,698 
1,698 
Share premium
31,054 
31,054 
2,193 
2,193 
Special capital reserve
4,188 
4,188 
299 
299 
Statutory surplus reserve
219 
221 
19 
18 
(Accumulated losses) /retained earnings
(2,698)
(278)
(236)
159 
Translation reserve
206 
(115)
1,697 
652 

56,949 
59,050 
5,670 
5,019 
Non-controlling interest
1,562 
3,074 
155 
262 
Total equity
58,511 
62,124 
5,825 
5,281 
Total liabilities and equity
112,725 
107,197 
11,222 
9,118 

UniVision Engineering Limited
Consolidated Statements of Changes in Equity (Un-audited)
in '000

Share capital
Share premium
Retained earnings
Special capital Reserve "A"
Special capital Reserve "B"
Translation
reserve
Statutory Surplus reserve
Sub
-total
Non-
controlling interest
Total equity

'000
'000
'000
'000
'000
'000
'000
'000
'000
'000











Balance at 1 April 2015
1,698 
2,193 
71 
156 
143 
966 
22 
5,249 
392 
5,641 
Profit for the period


(112)




(112)
(228)
(340)
Transfer to statutory surplus reserves


(4)



4 



Exchange difference arising on translation of foreign operations
152 
152 
(10)
142 
Total comprehensive income


(116)


152 
4 
40 
(238)
(198)
Dividend paid


(129)




 (129)

(129)
Reversal of translation effect on demerger
7 
(7)
Balance at 31 Mar 2016
1,698 
2,193 
(174)
156 
143 
1,125 
19 
5,160 
154 
5,314 











Profit/(loss) for the six months ended 30 Sep 2016


85 




85 
(19)
66 
Exchange difference arising on translation of foreign operations
572 
572 
20 
592 
Total comprehensive income


85 


572 

657 
1 
658 
Dividend declared
(147)
(147)
(147)
Balance at 30 Sep 2016
1,698 
2,193 
(236)
156 
143 
1,697 
19 
5,670 
155 
5,825 

UniVision Engineering Limited
Consolidated Statements of Changes in Equity (Un-audited)
in HK$'000

Share capital
Share premium
Retained earnings
Special capital Reserve "A"
Special capital Reserve "B"
Translation
reserve
Statutory Surplus reserve
Sub
-total
Non-
controlling interest
Total equity

HK$'000
HK$'000
HK$'000
HK$'000
HK$'000
HK$'000
HK$'000
HK$'000
HK$'000
HK$'000











Balance at 1 April 2015
23,980 
31,054 
817 
2,117 
2,071 
94 
251 
60,384 
4,507 
64,891 
Profit for the year


(1,307)




(1,307)
(2,659)
(3,966)
Transfer to statutory surplus reserves


(47)



47 



Exchange difference arising on translation of foreign operations
(46)
(46)
(130)
(176)
Total comprehensive income


(1,354)


(46)
47 
(1,353)
(2,789)
(4,142)
Dividend paid


(1,496)




(1,496)

(1,496)
Reversal of translation effect on demerger
78 
(78)
Balance at 31 Mar 2016
23,980 
31,054 
(2,033)
2,117 
2,071 
126 
220 
57,535 
1,718 
59,253 











Profit/(loss) for the six months ended 30 Sep 2016


907 




907 
(198)
709 
Exchange difference arising on translation of foreign operations
80 
 (1)
79 
42 
121 
Total comprehensive income


907 


80
 (1)
986 
(156)
830 
Dividend declared
(1,572)
(1,572)
(1,572)
Balance at 30 Sep 2016
23,980 
31,054 
(2,698)
2,117 
2,071 
206 
219 
56,949 
1,562 
58,511 

UniVision Engineering Limited
Consolidated Statements of Cash Flows (Un-audited)
For the six months ended 30 September 2016


For the six months ended 30 September








2016
2015
2016
2015


HK$'000
HK$'000
'000
'000






CASH FLOW FROM OPERATING ACTIVITIES





Profit before income tax for the period
1,124 
1,579 
105 
133 

Adjustments for:





Depreciation of plant and equipment
109 
89 
10 
7 

Interest income
(5)
- 
(1)
- 

Finance costs paid
233 
212 
22 
18 


1,461 
1,880 
136 
158 

Changes in operating assets and liabilities:





Decrease in inventories
28 
652 
3 
55 

Decrease/(Increase) in trade receivables
1,256 
(165)
118 
(14)

Increase in amounts due from customers for contract-in-progress
(541)
(1,739)
(51)
(146)

Increase in deposits, prepayments and other receivables
(360)
(60)
(33)
(5)

Increase/(decrease) in amounts due to customers for contract-in-progress
1,733 
(1,404)
162 
(118)

Decrease in trade and other payables 
(1,045)
(2,139)
(97)
(180)













Cash generated from (used in) operations
2,532 
(2,975)
238 
(250)







Net cash (used in) generated from disposal group
(3,255)
1,556 
(305)
130 

Net cash used in operating activities
(723)
(1,419)
(67)
(120)






CASH FLOWS FROM INVESTING ACTIVITIES





Purchase of plant and equipment
(126)
(287)
(12)
(24)

Interest received
5 
- 
1 
-

Decrease/(increase) in pledged deposits
18 
(2,000)
2 
(168)

Net cash used in disposal group
(18)
(36)
(2)
(3)

Net cash used in investing activities
(121)
(2,323)
(11)
(195)






CASH FLOWS FROM FINANCING ACTIVITIES





Finance costs paid
(233)
(212)
(22)
(18)

Repayment of obligation under finance lease
(7)
(44)
(1)
(4)

Net cash generated from disposal group
2,790 
402 
261 
34 

Net cash generated from financing activities
2,550 
146 
238 
12 






NET DECREASE IN CASH AND CASH EQUIVALENTS
1,706 
(3,596)
160 
(303)






Less: cash and cash equivalents from disposal group
(2,954)
-
(265)
-
EFFECT OF CHANGE IN EXCHANGES RATES
-
(306)
86 
(56)






CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD
10,646 
14,031 
955 
1,221 






CASH AND CASH EQUIVALENTS AT END OF PERIOD
9,398 
10,129 
936 
862 
Notes to the Interim financial statements for the six months ended 30 September 2016
1. Basis of preparation
The unaudited interim financial statements for the six months ended 30 September 2016 have been prepared in accordance with International Financial Reporting Standards ("IFRSs") using the policies consistent with those applied to the annual financial statements for the year ended 31 March 2016. The interim financial statements, together with the comparative information contained in this report for the six months ended 30 September 2015, does not constitute the statutory accounts of the Company. 
2. Profit per share
The calculation of basic profit per ordinary share is based on the profit attributable to equity holders of the Group for the six months ended 30 September 2016of HK$0.9m (H1 2015: HK$0.45m), and the weighted average of 383,677,323 (H1 2015: 383,677,323) ordinary shares in issue during the period. 
There were no potential dilutive instruments at either financial period end.
3. Interim report
Copies of the interim report will be available for inspection at the registered office of the Company, Unit 01A, 2/F., Sunbeam Centre, 27 Shing Yip Street, Kwun Tong, Hong Kong and available on the Company's website (www.uvel.com) in accordance with rule 26 of the AIM Rules for Companies.

This information is provided by RNS
The company news service from the London Stock Exchange
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