Final Results

RNS Number : 7340E

UniVision Engineering Ltd

30 September 2008

 



UniVision Engineering Limited

('UniVision' or 'The Group')

Prelim Results

For the Year Ended 31 March 2008

UniVision Engineering Limited, 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, today announces its preliminary results for the year ended 31 March 2008  

Highlights

• Turnover increased by 63% to £14.5M (2007: £8.9m)

• Profit before taxation increased by 18.5% to £1.69M (2007: £1.43m)

• *Net adjusted profit grew 43% to £2.2m (2007: £1.5m)

• Gross profit margin was 30% (2007: 32%)

• Earning per share 0.36p (2007: 0.39p)

• *Adjusted Earning per share 0.57p (2007: 0.47p)

*after exceptional items

Mr. Stephen Koo, Chairman, added: 

'I am pleased to be able to report on a year where we have been able to grow both turnover and net profitability. Our Security and Surveillance business has had a stable performance whilst our Electrical and Mechanical operations have had a successful year.

'The Board intends to grow the business through the right mix of product development, organic growth and select M&A activity, and we view the future with confidence.'

The Annual Report and Accounts will be sent to Shareholders shortly and is currently available on the Company's website: www.uvel.com

For further information visit www.uvel.com or contact:

UniVision Engineering Limited                  [phone]

Stephen Koo, Chairman

Danny Yip, Finance Director

HB Corporate                                             [phone]   

Imran Ahmad/Rory Creedon

Threadneedle Communications                  [phone]

Graham Herring/Josh Royston

CHAIRMAN'S STATEMENT 

INTRODUCTION

I am pleased to report on the results of the Group for the financial year ended 31 March 2008, our third year as a public company, which has proved to be an exciting and successful period for UniVision.

Our business operates in two distinct areas, namely the provision of turn key Security and Surveillance Systems, and in the Electrical and Mechanical ('E&M') sector. The Security and Surveillance Systems business, which provides a one stop shop for our clients' needs and includes our subsidiary T-Com, has continued its growth in the Greater China Region. The performance of this business has been stable over the course of the year.  

Our E&M business, which is operated through Leader Smart, our wholly owned subsidiary based in Shanghai has had a successful year. We have expanded our presence and now have a successful operation in the Zhongshan shopping mall in China. We will continue to expand and develop our E&M business, although in the short term it is inevitable that its performance may be affected by the overall state of the commercial property market in China. 

As well as driving forward our organic growth, we will also look for further possible expansion in Security and Surveillance businesses through select M&A targets within the South East Asia region.

We are considering developing our own, unique products to cater for the growing demand in the surveillance and security industry, both domestically and abroad, such as video analysis devices and related applications. We remain confident in the Group's long-term growth potential.

FINANCIAL REVIEW

During the period under review, turnover increased by 63% to £14.5M (2007: £8.9m). This growth is attributable to the profitable E&M business in China through our 100% owned subsidiary, Leader Smart (Shanghai). Our Security and Surveillance businesses, including T-Com, remain stable. I am delighted that turnover for the period was significantly higher than our internal forecasts.

Gross profit margin was 30% (2007: 32%). Administration and other operating expenses were in line with the Group's increase in capital investment, marketing and office expansion, rising to £2.7M (2007: £1.5M). This increase is principally due to the additional administration costs of our subsidiaries T-Com and Leader Smart Shanghai, which include business tax on service income. Further, one off expenses were incurred in investigating the possibility of listing on a US market, and a full impairment loss of £0.34M was made against a receivable from the PRC.

Net growth in adjusted profit before tax after excluding all one-off expenses increased by 43% to £2.2 million.

Basic earnings per share decreased to 0.36p from 0.39p due to the impairment loss and the one-off expenses.  . 

MARKET REVIEW

The demand for surveillance products and systems in China has been growing at 25% - 35 % per 
annum due to growing security concerns and the Chinese government's pledge to improve public security. Industrial and 
economic growth in the Greater China region is leading to an increase in the construction of facilities, such as hotels, 
shopping centres, and convention and exhibition centres.

There is a continuing strong demand for IP Video such as Digital Video Server (DVS), Network Video Recorders (NVRs) and Internet Protocol (IP) cameras. Specific examples of this include the upgrade of traffic surveillance in Hong Kong and the upgrade of Digital Video Server (DVS) for the Hong Kong Kowloon and Canton Railway, the Hong Kong MTRC and the Hong Kong Housing Authority, as well as the new Hong Kong Government Headquarters and the Western Kowloon development complex.

BUSINESS REVIEW

Markets

IP Video is providing the CCTV industry with a unique set of tools, particularly for use in the demanding transportation industry which has used the analogue system for a decade.

The use of a Hybrid IP analogue system is the most cost effective way to connect IP and analogue cameras with CCTV Matrix Controllers and DVS. Hybrid solutions provide large installed base analogue cameras with a gateway to transmit video streams from networks and the Internet. 

There are considerable opportunities in Greater China which is providing avenues for the Hybrid solutions. The Group is looking into several different solutions, including Video compression technology MPEG-4 and H.264, Digital Encoder and Decoder (Codec) with built-in video analysis algorithms.  These systems are particularly prevalent in the Homeland Security field, where new areas of focus will be centered on intruder detection, loitering detection, left behind objects and trip wire will be the new area of interest.

We expect that the market will go towards more sophisticated and integrated systems as well as high-tech products. The Board believes that UniVision will be among the pioneers in providing the most effective solutions for businesses involved in airport, rail and traffic surveillance industry and we hope to expand our sphere of business accordingly. By focusing on our core strength, we remain cautiously optimistic in our future growth prospects.

Technologies, Solutions and Products

On the solutions side, an ongoing product development programme is in place to cater for the needs of the Group's growing client base in the Asia Pacific region.

The embedded DVR, which is sold under the Univision brand, has been used in several projects in Hong Kong. The newly developed Video Amplifier with an on-screen display function has also been used in one of our projects. We have received several other enquiries and excited by its potential. We are also working on video analysis algorithms as well as some applications which we expect to launch in the coming year.

Acquisitions and Investments

The success of our investments in T-Com Tech. Co. Ltd and Leader Smart (Shanghai) Ltd has reinforced the Company's strategy of acquiring interests in companies with strategic value. Turnover at T-Com has increased and its overall performance is improving. As for Leader Smart, it has enabled us to obtain WOFE (Wholly Owned Foreign Enterprise) status within China and provides a platform to explore and expand further the business in China.  To this end, the Group is currently assessing a number of companies in related fields with a view to making further strategic investments. 

Contract Wins

During the reporting period, I am pleased to report that the Group was awarded a number of high profile projects including CCTV systems in the following locations; there are numbers of projects in the Hong Kong Airport for its expansion and renovation. They are: the upgrade of BHS and Terminal 1 Camera, the On-Board CCTV for Terminal 1 APM' Skypier CCTV system and East Hall modification work. The others include the DVRS in East Rail Stations, the expansion for Lok Ma Chau Spur Line terminal and redundant H.264 Digital Video Codec system for Olympic Games. We have also been awarded a contract for an E & M System for the Ming Xuan Square Mall in Zhongshan, China.  A similar project in Huangshan is under negotiation and will hopefully commence soon.

Macau Casinos

The business is declining due to the tightened control measure of the China Government policy. Projects for building new hotel and casino are being delayed or withheld. We are expecting the business will continue reducing. 

MTR & Maintenance

Our maintenance contracts are particularly important to the business by providing strong visibility in our revenue and I am delighted that we have continued to develop this side of the business. In particular, our relationship with the Mass Transit Railway ('MTR') has proved to be positive. A further extension of a 3-year maintenance contract for the CCTV, Public Address and Passenger Information Display System (PIDS) is expected in the coming year. There are also several renovation contracts anticipated for MTR in the fourth quarter of 2008. We have also extended our services to cover the CCTV system in Ngong Ping 360, a subsidiary of MTR, as well as ELV systems for some MTR managed properties

PROSPECTS

Our Security and Surveillance business remains stable, although competition remains high. The Company is exploring new revenue streams from both the public and private sector in the Greater China Region. We are working with partners in other areas to secure product distribution channels. We continue to enhance our product and application development programmes. 

The business model of E&M business with the property rights held as collateral as within Leader Smart (Shanghai) this year has proven to be successful and profitable. At the Shopping Mall in Zhongshan, we secured a contract that includes cash for engineering services and property rights. This model is, we believe, unique. The management believes, in addition to diversifying our operations, it will enable us to hedge the credit risk in doing business in China. This will also increase our related Security and Surveillance business. WOFE status of Leader Smart (Shanghai) is an advantage to attract foreign capital to invest in China. The Board is confident of making further significant progress in the current year.

Finally, on behalf of the Board, I would like to thank our customers, suppliers and shareholders for their continued support of UniVision. I would also like to acknowledge the hard work of the management and all the staff for their contribution and dedication to the Group.

MR. STEPHEN KOO

EXECUTIVE CHAIRMAN

30 September 2008

  UNIVISION ENGINEERING LIMITED

GROUP INCOME STATEMENT

For the year ended 31 March 2008

	Note	2008		2007
		£		£
Revenue	7	14,523,529		8,935,778
Cost of sales		(10,160,841)		(6,053,721)
Gross profit		4,362,688		2,882,057
Other income	8	323,806		139,284
Distribution costs		(71,826)		(63,345)
Administrative expenses		(1,959,772)		(1,403,744)
Other operating expenses		(716,914)		(77,353)
Profit from operations		1,937,982		1,476,899
Finance costs	10	(239,952)		(44,476)
Profit before taxation	9	1,698,030		1,432,423
Income tax	13	(435,712)		(30,659)
Profit for the year		1,262,318		1,401,764
Profit attributable to equity holders of the parent		1,400,331		1,281,189
Attributable to minority interest		(138,013)		120,575
		1,262,318		1,401,764
Earnings per share
Basic	14	0.36p		0.39p
Diluted	14	N/A		N/A

The notes numbered 1 to 31 form an integral part of these financial statements.

  UNIVISION ENGINEERING LIMITED

GROUP BALANCE SHEET

At 31 March 2008

	Note	2008		2007
		£		£
ASSETS
Non-current assets
Goodwill	16	961,845		961,845
Plant and equipment	17	352,175		340,560
		1,314,020		1,302,405
Current assets
Inventories	19	973,400		1,007,434
Trade and other receivables	21	11,861,304		5,108,855
Cash and cash equivalents	22	440,955		1,603,932
		13,275,659		7,720,221
Total assets		14,589,679		9,022,626
EQUITY
Capital and reserves		7,136,220		5,589,816
Minority interest		154,752		285,641
Total equity		7,290,972		5,875,457
LIABILITIES
Current liabilities
Bank overdrafts	22	2,457		-
Trade and other payables	24	2,905,668		1,875,779
Interest-bearing borrowings	23	3,881,788		1,241,905
Tax payable	25	495,810		29,485
Obligation under finance lease	26	3,055		-
		7,288,778		3,147,169
Non-current liabilities Obligation under finance lease	26	9,929		-
Total liabilities		7,298,707		3,147,169
Total equity and liabilities		14,589,679		9,022,626

These financial statements were approved by the Board on Directors on 30 September 2008 and authorised for issue.

On behalf of the Board of Directors 

Stephen Sin Mo KOO    Chun Hung WONG

Director    Director

The notes numbered 1 to 31 form an integral part of these financial statements.

   UNIVISION ENGINEERING LIMITED

GROUP STATEMENT OF CHANGES IN EQUITY

For the year ended 31 March 2008

	Note		Share capital		Share Premium		Retained earnings		Special capital reserve “A”		Special capital reserve “B”		Exchange Reserve		Sub-total		Minority interest		Total Equity
			£		£		£		£		£		£		£		£		£
Balance at 31 March 2006			1,451,085		1,278,981		488,735		155,876		143,439		95,023		3,613,139		-		3,613,139
Issue of shares for acquisition of a subsidiary undertaking	18b, 27		22,991		217,039		-		-		-		-		240,030		165,066		405,096
Issue of shares upon placing	27		223,541		811,257		-		-		-		-		1,034,798		-		1,034,798
Share issue cost	27		-		(114,637)		-		-		-		-		(114,637)		-		(114,637)
Net profit for the year			-		-		1,281,189		-		-		-		1,281,189		120,575		1,401,764
Effect on translation			-		-		-		-		-		(464,703)		(464,703)		-		(464,703)
Balance at 31 March 2007			1,697,617		2,192,640		1,769,924		155,876		143,439		(369,680)		5,589,816		285,641		5,875,457
Net profit for the year			-		-		1,400,331		-		-		-		1,400,331		(138,013)		1,262,318
Effect on translation			-		-		-		-		-		146,073		146,073		7,124		153,197
Balance at 31 March 2008			1,697,617		2,192,640		3,170,255		155,876		143,439		(223,607)		7,136,220		154,752		7,290,972

The currency translation from Hong Kong dollars to the presentational currency of pound sterling used in these financial statements has no impact on the available distributable reserves of the Company which at 31 March 2008 were £1,876,996 (2007: £1,675,594).

 

Nature of purposes of the reserves

 

                   i)       Share premium

 

                            The Company may by resolution reduce the share premium account in any manner authorised and subject to any conditions prescribed by law.

 

                   ii)       Special capital reserve “A”

 

                            Pursuant to the Order of the High Court dated 20 November 2004, any future recoveries of the Company’s accumulated provision for obsolete inventories and provision for bad debts amounting to HK$1,935,002 and HK$3,592,540 respectively will be credited to non-distributable special capital reserve “A” account.

 

                   iii)      Special capital reserve “B”

 

                            By a special resolution passed on 30 July 2004 and Order of the High Court dated 20 November 2004, the authorised and issued capital of the company was reduced from HK$159,245,000 divided into 31,849 ordinary shares of HK$5,000 each to HK$16,405,000 divided into 3,281 ordinary shares of HK$5,000 each. The reduction of capital was effected by cancellation of 28,568 ordinary shares of HK$5,000 each in the issued and paid up share capital of the company. The company established a non-distributable special capital reserve “B” account into which HK$2,071,307 was credited as a result of the capital reduction.

 

 

 

The notes numbered 1 to 31 form an integral part of these financial statements.

 UNIVISION ENGINEERING LIMITED

  GROUP CASH FLOW STATEMENT

For the year ended 31 March 2008

	Note		2008		2007
			£		£
CASH FLOWS FROM OPERATING ACTIVITIES
Profit before taxation			1,698,030		1,432,423
Adjustments for:
Depreciation			172,193		115,412
Gain on disposal of investment securities			-		(30,105)
Write down of /(recovery of) obsolete inventories, net			11,978		(205,064)
Written back on trade and other payables			(30,848)		(51,730)
Unrealised loss on investment account carried at fair value			7,480		14,747
Impairment losses on trade and other receivables			523,163		46,700
(Gain)/ loss on disposal of plant and equipment			(681)		739
Interest income			(21,172)		(19,966)
Interest expenses			239,952		44,476
Operating profit before working capital changes			2,600,095		1,347,632
(Increase)/decrease in inventories			22,056		(48,130)
Increase in trade and other receivables			(6,791,047)		(477,002)
Increase/(decrease) in trade and other payables			766,872		(439,630)
Net cash (used in)/generated from operations			(3,402,024)		382,870
Income tax paid - PRC			(711)		-
Net cash (used in)/generated from operating activities			(3,402,735)		382,870
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of plant and equipment			(146,392)		(52,098)
Net cash outflow from acquisition of subsidiary undertakings		18	-		(793,122)
(Increase)/decrease in pledged bank deposits			(340,754)		37,402
Proceeds from disposal of plant and equipment			1,880		46
Proceeds from disposal of investment securities			-		876,784
Purchase of investment securities			-		(846,679)
Interest received			21,172		19,966
Net cash used in investing activities			(464,094)		(757,701)

  UNIVISION ENGINEERING LIMITED

GROUP CASH FLOW STATEMENT (Continued)

For the year ended 31 March 2008

		2008		2007
	Note	£		£
CASH FLOWS FROM FINANCING ACTIVITIES
Interest paid		(73,839)		(44,476)
Proceeds from issue of shares		-		1,034,798
Payment for issue of shares		-		(114,637)
Capital element of finance lease rentals paid		(764)		-
Interest element of finance lease rentals paid		(148)		-
Proceeds from new interest-bearing borrowings		2,639,883		171,511
Net cash generated from financing activities		2,565,132		1,047,196
NET (DECREASE)/INCREASE IN CASH AND CASH EQUIVALENTS		(1,301,697)		672,365
EFFECT OF CHANGES IN FOREIGN EXCHANGE RATE		136,263		(482,746)
CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR		1,603,932		1,414,313
CASH AND CASH EQUIVALENTS AT END OF YEAR	22	438,498		1,603,932

Major non-cash transactions

There were no major non-cash transactions within 2008

On 10 October 2006, 5,363,990 new ordinary shares of HK$0.0625 were issued as partial consideration for the acquisition of Leader Smart Engineering Limited ('Leader Smart') and its subsidiary namely Leader Smart Engineering (Shanghai) Limited (together 'Leader Smart Group') and were valued at £240,030 of which £22,991 and £217,039 was credited to the Share Capital Account and Share Premium Account respectively, before expenses.  

On 14 March 2007, 52,500,000 new ordinary shares of HK$0.0625 were placed at a price of 2 pence per share by HB Corporate. At the same time, 2,500,000 ordinary shares of HK$0.0625 were allotted and issued at 2 pence per share to HB Corporate in satisfaction of their placing fee. £223,541 and £811,257 was credited to the Share Capital Account and the Share Premium Account in respect of this placing respectively, before expenses.

The notes numbered 1 to 31 form an integral part of these financial statements.

NOTES TO THE FINANCIAL STATEMENTS

For the year ended 31 March 2008

1.      GENERAL INFORMATION

 

         UniVision Engineering Limited (the “Company”) is incorporated in Hong Kong as a limited company. The address of its registered office is 8/F Lever Tech Centre, 69-71 King Yip Street, Kwun Tong, Kowloon, Hong Kong.

 

         The Company has its primary public listing on the Alternative Investment Market of the London Stock Exchange (“AIM”).

 

         The Company is engaged in the supply, design, installation and maintenance of closed circuit television and surveillance systems, the sale of security system related products and provision for electronical and mechanical services. The principal activities of the subsidiaries are set out in note 18 to the financial statements.

 

2.       BASIS OF PREPARATION OF FINANCIAL STATEMENTS
 

         The financial statements have been prepared in accordance with International Financial Reporting Standards (IFRS), IFRIC interpretations and in accordance with the rules of the International Accounting Standards Board (IASB). The financial statements have also been prepared under the historical cost convention except that available-for –sale financial assets are stated at fair value.

 

The preparation of financial statements in conformity with IFRS requires the use of certain critical accounting estimates. It also requires management to exercise its judgement in the process of applying the accounting policies of the Company and its subsidiary undertakings (the “Group”). The areas involving a higher degree of judgement or complexity, or areas where assumptions and estimates are significantare disclosed in note 6.

 

3.      SEGMENT INFORMATION

Segment information is presented by way of two segment formats: (a) by business segment as a primary segment reporting basis; and (b) by geographical segment as a secondary segment reporting basis.

(a) Business segments

The Group is organised into the following business segments:

-Construction contracts

- Maintenance contracts

- Product sales

- Solution sales

 

Results by business segment for the year ended 31 March 2008 are as follows:

			Construction contracts		Maintenance contracts		Product sales		Solution sales		Total
			£		£		£		£		£
Income statement information:
Revenue			11,208,860		997,459		1,611,025		706,185		14,523,529
Profit from operations			1,441,595		114,570		146,712		235,105		1,937,982
Balance sheet information:
Assets			11,206,297		1,018,136		1,644,422		720,824		14,589,679
Liabilities			5,662,132		492,483		795,422		348,670		7,298,707
Other segment  information:
Depreciation			132,894		11,826		19,100		8,373		172,193
Capital expenditure			109,843		10,998		17,764		7,787		146,392

Results by business segment for the year ended 31 March 2007 are as follows:

			Construction contracts		Maintenance contracts		Product sales		Solution sales		Total
			£		£		£		£		£
Income statement information:
Revenue			5,425,499		994,508		1,817,599		698,172		8,935,778
Profit from operation			686,513		188,836		332,120		269,430		1,476,899
Balance sheet information:
Assets			5,477,934		1,004,119		1,835,165		704,919		9,022,137
Unallocated			-		-		-		-		489
											9,022,626
Liabilities			1,910,853		350,265		640,156		245,895		3,147,169
Other segment  information:
Depreciation			70,070		12,844		23,474		9,024		115,412
Capital expenditure			31,630		5,798		10,597		4,073		52,098

 (b) Geographical segments

In determining the Group’s geographical segments, revenues are attributed to the segments based on the location of the customers and assets are attributed to the segments based on the location of the assets.

 

No further geographical segment information is presented as the Group’s revenue is materially derived from customers based in one geographic segment comprising Hong Kong, Macau, Taiwan and the People’s Republic of China (“PRC”), and all of the Group’s assets are located in the same geographic segment.

 

4.       EARNINGS PER SHARE

 

         The calculation of basic earnings per share is based on the profit attributable to equity holders of the parent for the year of £1,400,331 (2007: £1,281,189), and the weighted average of 383,677,323 (2007: 327,814,621) ordinary shares in issue during the year.

 

         There were no potential dilutive instruments at either financial year end.

 

5.       DIVIDEND

No dividend has been declared or paid in the year ended 31 March 2008 (2007: £Nil).

6.      SHARE CAPITAL

		2008		2007
		£		£
Authorised :
800,000,000 oridinary shares of HK$0.0625 each		3,669,470		3,669,470
Issued and fully paid:
383,677,323 shares (2007: 383,677,323 shares) of HK$0.0625 each		1,697,617		1,697,617

The Company has one class of ordinary shares.

7.      RELATED PARTY TRANSACTIONS

Compensation of key management personnel

The remuneration of the key management of the Group during the year was as follows:-

	2008		2007
	£		£
Salaries, bonus and allowances	247,181		256,525

The remuneration of key management personnel comprise the remuneration of executive directors and key executives.

Executive directors include the executive chairman, the chief executive officer and the technical director of the Company. The remuneration of the executive directors is determined by the Remuneration Committee having regard to the performance of individuals, the overall performance of the Group and market trends.  Further information about the remuneration committee and the directors' remuneration is provided in the Remuneration Report and the Report of Corporate Governance to the Annual Report and note 11 to the financial statements.

Key executives include the sales manager, the operations manager and the financial controller of the Company.  The remuneration of the key executives is determined by the executive directors annually having regard to the performance of individuals and market trends. 

Biographical information on key management personnel is disclosed in the Directors' and Senior Management's Biographies section of the Annual Report.

Transactions with related companies

(a) A loan of US$5 million was provided on 31 December 2007 by Mayne Management

Limited , the holding company of UniVision Holdings Limited which has a 47.9% equity interest in the Company. The loan includes interest amounting to US$1 million which is payable on the maturity date of the loan on 30 September 2008. The loan is still outstanding at the date of the approval of the Financial Statements (refer to note 31)

 

(b) At 31 March 2008, there is a receivable balance of £6,095 (2007: £5,423) in respect of legal fees which were paid by the Group on behalf of UT Vision PTE, a company of which Stephen Koo is a director.   

8.      EVENTS AFTER THE BALANCE SHEET DATE

The loan of US$5 million provided by Mayne Management Limited, the holding company of UniVison Holdings Limited which has a 47.9% equity interest in the Company, has been renewed, with the accrued interest payable of US$1 million for a further twelve months to 30 September 2009. The accrued interest has been added to the initial loan amount and the new principal amount for repayment is US$6 million. The loan carries interest at 15% pa which is repayable in full on or before 1 October 2009.

 

9      NON STATUTORY INFORMATION
        The full annual report will be posted to shareholders shortly and is currently available on the Company website 
        www.uvel.com

 

END

 

 

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