TIDMUVEL
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 or contact:
UniVision Engineering Limited Tel: +852 2389 3256
Stephen Koo, Chairman www.uvel.com
Danny Kwok Fai Yip, Finance Director
Nicholas Lyth, Non-Executive Director Tel: +44 (0)7769 906686
Ivor Shrago, Non-Executive Director Tel: +44 (0) 7900251
925
SPARK Advisory Partners Limited Tel: +44 (0)20 3368 3551
(Nominated Adviser)
Mark Brady / Neil Baldwin www.sparkadvisorypartners.com
SI Capital Limited Tel: +44 (0)1483 413500
(Broker) 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 GBP0.14m (H1 2020: GBP0.39m). 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 GBP181k (H1 2020: loss GBP329k)
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 GBP'000 GBP'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 GBP'000 GBP'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 GBP'000 GBP'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 GBP '000
Special Special
capital capital
Share Retained Reserve Reserve Translation Total
capital earnings "A" "B" reserve equity
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'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$'000
Special Special
capital capital
Share Retained Reserve Reserve
capital earnings "A" "B" Total equity
HK$'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 GBP'000 GBP'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 ) in accordance with Rule 26
of the AIM Rules for Companies.
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