REG - UniVision Eng Ltd - Interim Results for the 6m ended 30 Sept 2021
30/12/2021 07:25
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RNS Number : 0382X UniVision Engineering Ltd 30 December 2021
30 December 2021
The information contained within this announcement is deemed by the Company to
constitute inside information stipulated under the Market Abuse Regulation
(EU) No. 596/2014 (as in force in the United Kingdom pursuant to the European
Union (Withdrawal) Act 2018). Upon the publication of this announcement via
the Regulatory Information Service, this inside information is now considered
to be in the public domain.
UniVision Engineering Limited
("UniVision" or the "Company" or the "Group")
Interim Results
For the Six Months Ended 30 September 2021
UniVision (AIM: UVEL), 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 2021.
For further information visit www.uvel.com (http://www.uvel.com/) or contact:
UniVision Engineering Limited Tel: +852 2389 3256
Stephen Koo, www.uvel.com (http://www.uvel.com)
Chairman
Danny Kwok Fai Yip, Finance Director
Nicholas Lyth, Non-Executive Director
Ivor Shrago, Non-Executive Director Tel: +44 (0)7769 906686
Tel: +44 (0) 7900251 925
SPARK Advisory Partners Tel: +44 (0)20 3368 3551
Limited
(Nominated Adviser)
Mark Brady / Neil Baldwin www.sparkadvisorypartners.com (http://www.sparkadvisorypartners.com)
SI Capital Limited Tel: +44 (0)1483 413500
(Broker) www.sicapital.co.uk (http://www.sicapital.co.uk)
Nick Emerson
CHAIRMAN'S STATEMENT
INTRODUCTION
Though the Company is not engaged in an industry seriously affected by
COVID-19, the pandemic together with other factors described below have caused
delays to projects and held up billing to customers and respective
certifications. The Board remains cautious about the Group's business in the
second half of the financial year.
THE MAJOR CONTRACT WITH MTRC
The major contract with Mass Transit Railway Corporation ("MTRC") was awarded
May 2017 and had an initial value of HK$389.4m. Under the contract, the Group
provides replacement work on Closed-Circuit Television (CCTV) systems and
installs a unified IP-based, digital CCTV system for numerous railway lines in
Hong Kong. With further agreed orders of HK$100.2m since May 2017, the total
value of the Major Contract is now HK$489.7m. Following the additional orders
and supplementary agreements added, the Board anticipates that the expected
date for completion of contract works is July 2024.
The contract was in the installation stage during the current financial
period. Due to the persistence of the pandemic project progress has been
affected. During the period under review, one major sub-contractor who
performed the installation works for a railway line, has been in dispute with
the Company over the value of certain work. The Company believes the
sub-contractor has under-performed tasks, which has caused delays.
Since the key network equipment for the contract has now changed, the Company
is required to purchase a large amount of new equipment from a separate
supplier. Cash resources are required to purchase the new equipment, it also
requires time and manpower to check with MTRC for matching, replacement and
compatibility with the existing equipment. To cope with this challenge, the
Company has deployed resources for the outstanding work.
The Company has sourced additional subcontractors to perform the installation
works in place of the original installer. The installation work was relatively
more labour intensive than originally anticipated. For cost effectiveness, the
Company has agreed with MTRC that it can use its resources for the low margin
installation works. Nevertheless, the Company also intends to organise its own
workforce to perform the project.
As stated above, the dispute with the one major subcontractor and its
unsatisfactory performance has affected the progress of installation works.
Further, the change of key network equipment caused additional delays. These
factors adversely affected the process of certification and has led to slow
billing to MTRC. This is the primary reason for the significant increase in
Contract Assets.
The Company has invoiced, in total, HK$184.5m to MTRC up to 30 September 2021.
This leaves a further value of HK$305.2m over the remaining years of the
contract, assuming no further additions to the work. The gross valuation of
certified works on the Major Contract was HK$212m up to 30 June 2021.
The Hongkong and Shanghai Banking Corporation ("HSBC"), the Group's major
bank, has provided a trade finance facility and an invoice
discounting/factoring facility. These facilities are crucial to provide
additional working capital for delivery of the Major Contract and other
sizeable projects. The Board closely monitors the Company's status of working
capital.
FINANCIAL REVIEW
The profit attributable to the equity holders of the Company is approximately
£0.14m (H1 2020: £0.39m). In the six months period under review, revenue for
the Group increased by 34% to HK$53.5m (H1 2020: HK$39.9m). The increase in
revenue was mainly contributed from construction contract income which
increased of HK$21.6m to HK$50.5m (H1 2020: $28.9m).
The increase was largely due to numerous jobs completing and associated
project income being realised during the reporting period and the installation
works carried out for the Major Contract.
Income from the maintenance business fell 68% to HK$2.9m (H1 2020: $8.9m)
since the Company ceased to provide maintenance services for the network of
CCTV and public address systems on seven railway lines in Hong Kong to MTRC
from April 2021. Due to expected timely disputes with MTRC on the final
account of last maintenance contract ended 31 December 2020 and the three
months' extended contract ended 31 March 2021, an impairment loss for
provision for unbilled receivable was made. Total amount of HK$6.8m as
presented in the Statement of Comprehensive Income as other loss.
Gross profit margin in the construction business rose from 23% to 30.5%. This
was mainly due to numerous jobs completed and recognised project income during
the reporting period.
The change of key network equipment for the Major Contract, together with the
disputes with a subcontractor for installation works have caused delays in the
process of the project and led to slow billing to MTRC for certification.
These are the key reasons for significant increase of HK$40.6m on Contract
Assets to HK$107.8m (H1 2020: HK$67.2m).
Administration expenses for the period decreased by 7% to HK$7.6m (H1 2020:
HK$8.2m). This was mainly caused by effective cost control on rental expenses
and repairs and maintenance expenses.
To manage the execution of the Major Contract, the Company has employed
professional and technical staff, including a number of system design and
networks engineers. The number of staff was 76 as at 30 September 2021 (H1
2020: 78).
Finance costs increased to HK$827k (2020: HK$378k) as a result of increased
adoption of trade finance and creation of new term loans. During the reporting
period, the Company raised new term loans from HSBC with amount HK$23.9m of
which HK$10m is for financing the deposit placed for a life insurance policy
as additional security for the banking facility. The Company is required to
pay the principal and interest monthly. The interest payable for trade finance
and factoring were charged at the bank's Hong Kong Dollars Best Lending Rate,
currently 5% per annum.
The profit attributable to the equity holders of the Company for the period is
HK$1.5m (2020 underlying profit: HK$1.8m). Profit before interest and income
tax from operations during the period was HK$2.3m (H1 2020: HK$4.2m).
During the period under review, the relative strength of HK$ at the period-end
has led to a 2.1% appreciation in the GBP reporting amount in the Statement of
Financial Position. It is also the reason for the significant gain of £181k
(H1 2020: loss £329k) on exchange differences arising on the translation. All
figures in GBP in the Financial Statements have 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 2020 that were
unaffected by exchange rate fluctuations.
BUSINESS REVIEW
Markets
The CCTV surveillance market is growing rapidly with increasing demand for
digital and intelligent video products. The Company anticipates more business
opportunities in government infrastructure and public security projects. There
is also increasing demand for wireless system such as 5G network for video
surveillance to enhance public safety and security.
The Board believes that the Major Contract should allow UniVision to market
its brand to the customers of similar systems outside Hong Kong. The Group is
now exploring the opportunity of developing the overseas market by tendering
prospective projects.
The Company now actively participates in other market segments, such as
provision of UPS (Uninterrupted Power Supply), to strengthen business growth
in the Group.
Business
Under the Major Contract, the Company is a network service provider in the
application of CCTV systems. By acquiring skills and training in networking
and wireless technology area and software skills for video analytics and
facial recognition applications to customisation and localisation for our
clients.
The Company keeps moving forward in the CCTV segment and gradually towards the
safe city concept by introducing video-based analytics to big data AI
processing. The Board always explores and seeks to capture the business
opportunity in other business, particularly in the Electrical and Mechanical
("E&M') business.
Customers
MTR Corporation is the Company's largest customer in this financial period
with the implementation of the Major Contract. The Company is on the list of
Approved Specialist Contractors for Public Works under the category "Video
Electronics Installation". As such, Electrical and Mechanical Services
Department ("EMSD"), Hong Kong Police Force ("HKPF") and Correctional Services
Department ("CSD") of the Hong Kong Government also provided another source
for business income.
In particular, with our successful deployment of Video Analytic System for the
first Smart Prison in Hong Kong, the Company would anticipate more business
opportunities with "CSD" in other potential projects.
PROSPECTS
The Government has announced new infrastructure projects including the new
railway lines and urban development in northern territories. Those projects
will include large scale CCTV systems for safety protection. With our
technical expertise and project experience in the security industry, the
Company has a competitive advantage to tender these potential projects.
Finally, on behalf of the Board, I would like to thank our customers,
suppliers, sub-contractors, bankers and shareholders for their continued
support of UniVision. I would also like to express my gratitude to the
management team and all staff for their continued support, contribution and
dedication to the Group.
MR. STEPHEN SIN MO KOO
EXECUTIVE CHAIRMAN
29 December 2021
UniVision Engineering Limited
Statements of Comprehensive Income (Unaudited)
For the six months ended 30 September 2021
For the six months ended 30 September
2021 2020 2021 2020
HK$'000 HK$'000 £'000 £'000
Revenue 53,551 39,944 4,979 4,061
Cost of sales (36,956) (29,668) (3,436) (3,016)
Gross profit 16,595 10,276 1,543 1,045
Other income 251 2,225 23 226
Other gains and losses, net (6,825) - (634) -
Selling and distribution expenses (19) (21) (2) (2)
Administrative expenses (7,645) (8,222) (711) (837)
Finance costs (827) (378) (77) (38)
Profit before income tax 1,530 3,880 142 394
Income tax - - - -
Profit for the period 1,530 3,880 142 394
Other comprehensive income/(loss):
Exchange differences arising on translation of foreign operations - - 181 (329)
Total comprehensive income for the period 1,530 3,880 323 65
Profit attributable to:
Equity shareholders of the Company 1,530 3,880 142 394
1,530 3,880 142 394
Total comprehensive income attributable
Equity shareholders of the Company 1,530 3,880 323 65
1,530 3,880 323 65
Earnings per share - Basic and Diluted HK Cents HK Cents Pence Pence
Basic 0.3987 1.0112 0.0371 0.1028
Diluted 0.3987 1.0112 0.0371 0.1028
UniVision Engineering Limited
Statements of Financial Position (Unaudited)
As at 30 September 2021
For the six months ended 30 September
2021 2020 2021 2020
HK$'000 HK$'000 £'000 £'000
ASSETS
Non-current assets
Plant and equipment 1,169 1,253 112 126
Right-of use assets 3,711 1,003 355 100
Deposit paid for life insurance policy 19,422 9,171 1,857 919
Amounts due from related companies 30,205 30,385 2,888 3,046
Prepayments 420 626 40 63
Total non-current assets 54,927 42,438 5,252 4,254
Current assets
Inventories 33,956 10,911 3,247 1,094
Trade and other receivables 14,225 19,832 1,360 1,988
Contract assets 107,851 67,181 10,313 6,735
Restricted bank deposits 170 - 16 -
Cash and bank balances (4,253) 2,967 (406) 297
Total current assets 151,949 100,891 14,530 10,114
Total assets 206,876 143,329 19,782 14,368
LIABILITIES AND EQUITY
Current liabilities
Trade and other payables 65,897 34,045 6,299 3,413
Bank loans 28,556 6,552 2,731 657
Contract liabilities 16,738 12,122 1,600 1,215
Lease liabilities 3,564 922 341 92
Total current liabilities 114,755 53,641 10,971 5,377
Non-current liability
Lease liabilities 200 140 19 14
Amount due to a related company 4,200 4,200 402 421
Total non-current liabilities 4,400 4,340 421 435
Total liabilities 119,155 57,981 11,392 5,812
2021 2020 2021 2020
HK$'000 HK$'000 £'000 £'000
Capital and reserves
Share capital 55,034 55,034 3,890 3,890
Reserves 32,687 30,314 4,500 4,666
Total equity 87,721 85,348 8,390 8,556
Total liabilities and equity 206,876 143,329 19,782 14,368
UniVision Engineering Limited
Statements of Changes in Equity (Unaudited)
in £'000
Share capital Retained earnings Special capital Reserve "A" Special capital Reserve "B" Translation reserve Total equity
£'000 £'000 £'000 £'000 £'000 £'000
Balance at 1 Apr 2020 3,891 2,451 156 143 2,065 8,706
Profit for the year - 563 - - - 563
Other comprehensive income
Exchange difference arising on translation of financial statements
- - - - (901) (901)
Total comprehensive income - 563 - - (901) (338)
Dividend paid - (208) - - - (208)
Balance at 31 Mar 2021 3,891 2,806 156 143 1,164 8,160
Profit for the six months ended 30 Sep 2021 - 142 - - - 142
Other comprehensive income
Exchange difference arising on translation of foreign operations - - - - 181 181
Total comprehensive income - 142 - - 181 323
Dividend declared - (93) - - - (93)
Balance at 30 Sep 2021 3,891 2,855 156 143 1,345 8,390
UniVision Engineering Limited
Statements of Changes in Equity (Un-audited)
in HK$'000
Share capital Retained earnings Special capital Reserve "A" Special capital Reserve "B" Total equity
HK$'000 HK$'000 HK$'000 HK$'000 HK$'000
Balance at 1 April 2020 55,034 24,356 2,181 2,007 83,578
Profit for the year - 5,720 - - 5,720
Total comprehensive income - 5,720 - - 5,720
Dividend paid - (2,110) - - (2,110)
Balance at 31 Mar 2021 55,034 27,966 2,181 2,007 87,188
Profit for the six months ended 30 Sep 2021 - 1,530 - - 1,530
Total comprehensive income - 1,530 - - 1,530
Dividend declared - (997) - - (997)
Balance at 30 Sep 2021 55,034 28,499 2,181 2,007 87,721
UniVision Engineering Limited
Statements of Cash Flows (Un-audited)
For the six months ended 30 September 2021
For the six months ended 30 September
2021 2020 2021 2020
HK$'000 HK$'000 £'000 £'000
CASH FLOW FROM OPERATING ACTIVITIES
Profit before income tax 1,530 3,880 142 394
Adjustments for:
Interest income (249) (1) (23) -
Depreciation of plant and equipment 284 288 26 29
Depreciation of right-of use assets 719 1,059 67 108
Interest expense on bills payable and factoring 464 255 43 26
Interest expense on bank borrowings 297 81 28 8
Interest on lease liabilities 67 42 6 4
Impairment loss recognised on other receivables 6,819 - 634 -
Operating cash flows before working capital changes 9,931 5,604 923 569
Changes in operating assets and liabilities:
Inventories (17,030) (982) (1,583) (59)
Other deposit received 1,000 - 93 -
Trade and other receivables 928 2,260 86 315
Contract assets (24,493) (7,246) (2,277) (492)
Amount due from related companies 1,323 (70) 91 (7)
Contract liabilities (62) (516) (6) (101)
Trade and other payables 10,442 (3,665) 971 (486)
Net cash used in operating activities (17,961) (4,615) (1,702) (261)
CASH FLOWS FROM INVESTING ACTIVITIES
Interest received 249 1 23 -
Purchase of plant and equipment (395) (244) (37) (20)
Decrease in pledged deposits - 2,890 - 301
Deposit placed for a life insurance policy (10,206) (130) (949) (13)
Net cash (used in)/generated from investing activities (10,352) 2,517 (963) 268
CASH FLOWS FROM FINANCING ACTIVITIES
Interest expense on bills payable and factoring (464) (255) (43) (26)
Interest expense on bank borrowings (297) (81) (28) (8)
New bank loans raised 23,912 - 2,224 -
Repayment of bank loans (1,355) - (126) -
Capital element of lease liabilities paid (707) (1,077) (66) (109)
Interest element of lease liabilities paid (67) (42) (6) (4)
Net cash generated from/(used in) financing activities 21,022 (1,455) 1,955 (147)
NET DECREASE IN CASH AND CASH EQUIVALENTS (7,291) (3,553) (710) (140)
EFFECT OF FOREIGN EXCHANGES RATE CHANGES, NET - - 19 (242)
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD 3,038 6,520 284 679
CASH AND CASH EQUIVALENTS AT END OF PERIOD (4,253) 2,967 (407) 297
Notes to the Interim financial statements for the six months ended 30
September 2021
1. Basis of preparation
The unaudited interim financial statements for the six months ended 30
September 2021 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 2021, except
for the adoption of the new and revised IFRSs (which include all IFRSs,
International Accounting Standards ("IASs") and Interpretations) that are
initially adopted for the current period financial statements. The interim
financial statements, together with the comparative information contained in
this report for the six months ended 30 September 2020, do not constitute the
statutory accounts of the Company.
2. Earnings per share
The calculation of basic earnings per ordinary share is based on the profit
attributable to equity holders of the Group for the six months ended 30
September 2021 of HK$1.5m (H1 2020: HK$3.8m), and the weighted average of
383,677,323 (H1 2020: 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 201, 2/F., Sunbeam Centre, 27 Shing Yip
Street, Kwun Tong, Hong Kong and available on the Company's website
(www.uvel.com (http://www.uvel.com/) ) in accordance with Rule 26 of the AIM
Rules for Companies.
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