Final Results

RNS Number : 9793Z

UniVision Engineering Ltd

30 September 2009

 



30 September 2009

UniVision Engineering Limited

('UniVision' or 'The Group')

Results for the Year Ended 31 March 2009

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 audited results for the year ended 31 March 2009.  

Highlights

• Turnover decreased by 37% to £9.2m (2008: £14.5m)

• Profit before Interest and Taxation decreased  by £1.5m to £0.4m (2008: £1.9m)

• Gross profit margin improved by 3.4% to 33.4% (2008: 30%)

• Loss after tax of £0.5m (2008: profit of £1.3m)

• Loss per share of 0.14p (2008: earnings per share of 0.36p)

Mr. Stephen Koo, Chairman, added: 

'The current financial year has been difficult and full of challenges for UniVision.  Unfavourable economic conditions from the global financial crisis seriously affected the progress in our larger projects. It is the first year the Group has recorded a loss after tax since listing on AIM.  Nevertheless, we have confidence that our performance in the coming year will improve. Our Security and Surveillance business is experiencing strong market demand and provides a stable income to the Group, while the Electrical and Mechanical operations should have a good year. 

'The Company is confident it will maintain a competitive advantage in its core CCTV and surveillance business, and achieve growth through the Electrical and Mechanical ('E&M') business.'

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

UniVision Engineering Limited                  [phone]

Stephen Koo, Chairman

Chun Hung Wong, CEO

Allenby Capital Limited                             [phone]   

Nick Athanas / James Reeve

CHAIRMAN'S STATEMENT

INTRODUCTION

I am pleased to report the Group's results for the financial year ended 31 March 2009.

Last year was a challenging year. Investment and projects are pending or have been delayed due to unfavourable market conditions. The turnover of the Security and Surveillance Systems business declined during the year. Efforts have been focussed on maintenance services, which have enabled constant cash flow for the operation of the Group. Given that infrastructure projects are to be implemented in the coming years in Hong Kong, as well as the expected growing demand for Security and Surveillance in the Greater China Region, we expect an improved trading performance in the short to medium term.  

Our Electrical and Mechanical ('E&M') business, which is operated through Leader Smart, a wholly owned subsidiary, based in Shanghai, is improving. We now have a successful operation in the Zhongshan shopping mall in the People's Republic of China (the 'PRC'). We have also secured a hotel project in Huangshan, a famous tourist destination in the PRC. Investment has slowed due to the financial crisis, and subsequently the progress of our E&M business has been delayed. We see market conditions improving and once additional funding is available, the above mentioned project will be implemented immediately. 

FINANCIAL REVIEW

During the period under review the relative strengthening in the HK$ against sterling has led to a 14.2% appreciation in the GBP reporting amount in the Income Statement and a 28.8% in the Balance Sheet. All figures in the Financial Statement need to be adjusted for comparative purposes. 

Turnover decreased by 37% to £9.2m (2008: £14.5m). This reduction was mainly due to the delayed progress of our E&M projects in the PRC. As a result of this and adjustments relating to the reversal of prior recognition of deferred tax assets on the Group's balance sheet and goodwill impairment in the Group's Taiwan subsidiary, the Company recorded an after tax loss of £0.5m for the year. Nevertheless, our Security and Surveillance business remained stable for which the major customers are public organisations and government departments. With the expected contribution from the E&M projects in the PRC in the coming year, I believe that the turnover decline and the reported loss in this year to improve in the current financial year. 

Gross profit margin improved to 33.4% (2008: 30%) due to the effective cost control on the resources of enterprise. The 'resources of enterprise' represent our human resources , i.e Project and Maintenance teams, sub-contractors, logistics, and inventory. 

Administration expenses increased by 6.2% from last year to £2m (2008: £1.9m). Finance costs increased 207% to £0.7m (2008: £0.2m) due to the provision for interest payable to our Holding Company for the US$6m loan. No significant capital investment occurred in the current year.

Earnings before Interest and Tax (EBIT) are £0.4m (2008: £1.9m). Net (loss)/profit before income tax is (£-0.3m) (2008: £1.7m).  

Basic earnings per share decreased from 0.36p to (0.14p) as the Company recorded a loss after income tax in this year. 

BUSINESS REVIEW

Markets

Although the financial crisis of the last year has slowed down the investment in technology and the growth of the economy, IMS Research's latest report, 'The world Market for CCTV and Video Surveillance Equipment - 2009 Edition' forecasts that the world market for video surveillance equipment will still have growth of 3% in 2009.

There is continuing strong demand for IP Video, such as Digital Video Servers (DVS), Network Video Recorders (NVRs) and Internet Protocol (IP) cameras.

There is growing demand of applying these network based solutions to protect valuable assets and provide a safe environment in transportation, city surveillance, schools and universities.

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 centred on intruder detection, loitering detection, left behind objects and trip wire.

The Board expects the network video market to show strong growth in the coming years and considers that the Company is well placed to reap the benefits of this growth.

The E&M business in the PRC has made a good start, where we have a successful shopping mall project in Zhongshan, the PRC and the coming project in Huangshan. However, progress will depend on the economic environment and the funding available.

Technologies, Solutions and Products

As technologies become more sophisticated and intelligent, and converge with IT industries, the capacity to provide total solutions, as well as integrated systems, becomes vital. 

On the products side, 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 are also currently working on some video analysis algorithms and a new application which we expect to launch in the coming year.

Acquisitions and Investments

The Group is not currently anticipating any imminent new acquisitions or investments. However, we are always assessing possible opportunities with a view to making further strategic investments.

Contract Wins

During the reporting period, we have entered into a contract with MTR Corporation Limited ('MTR'), the sole owner and operator of the mass transit railway in Hong Kong, to provide maintenance services to MTR's network of CCTV systems, public address systems and passenger information display systems on six railway lines as well as their related depots and ancillary buildings. The contract has a fixed value of approximately £2.15m over a three year period, commencing on 1 January 2009. Apart from that, we have entered into a contract for £4.8m with Huang Shan Shi Yi Xian Tian Chen Property Development Company Limited and Huang Shan Shi Xiangxigu Holiday Village Limited ('the Developers'), the property developer and hotel operator in the PRC for the hotel project - Huang Shan (Xidi) Xiangxigu Holiday Village in Huangshan, a famous travel city in the PRC.

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 substantial growth of the business. We have extended our maintenance services with MTR for another three years. In particular, our relationship with the MTR has proved to be positive. We will have good potential in other confirmed and planned railway line developments in the coming five years.

PROSPECTS

Our Security and Surveillance business remains stable, although it declined in the reporting period. As a result of the infrastructure projects to be implemented in the coming years here in Hong Kong, as well as the expected growing demand on Security and Surveillance in the Greater China Region, we are expecting good prospects in the coming years.

The E&M business in the PRC is still one of our growth targets. We are secured as we take property right as collateral to minimize the credit risk. We have a shopping mall project in Zhongshan, the PRC which is now in the final stage. Also, another hotel project in Huangshan, the PRC is underway. Additional funding is required for this project, as well as other potential projects. Our growth will depend on access to funds.

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 SIN MO KOO

EXECUTIVE CHAIRMAN

30 September 2009

UNIVISION ENGINEERING LIMITED

GROUP INCOME STATEMENT

For the year ended 31 March 2009

	2009		2008
	£		£
Revenue	9,228,523		14,523,529
Cost of sales	(6,143,040)		(10,160,841)
Gross profit	3,085,483		4,362,688
Other income	127,920		323,806
Selling and distribution expenses	(86,875)		(71,826)
Administrative expenses	(2,081,104)		(1,959,772)
Other operating expenses	(607,382)		(716,914)
Profit from operations	438,042		1,937,982
Finance costs	(735,955)		(239,952)
(Loss)/profit before income tax	(297,913)		1,698,030
Income tax expense	(226,951)		(435,712)
(Loss)/profit for the year	(524,864)		1,262,318
Attributable to equity holders of the parent	(554,580)		1,400,331
Attributable to minority interest	29,716		(138,013)
	(524,864)		1,262,318
Earnings per ordinary share
Basic	(0.14p)		0.36p
Diluted	N/A		N/A

  UNIVISION ENGINEERING LIMITED

GROUP BALANCE SHEET

As at 31 March 2009

	2009		2008
	£		£
ASSETS
Non-current assets
Goodwill	692,830		961,845
Plant and equipment	285,513		352,175
Total non-current assets	978,343		1,314,020
Current assets
Inventories	1,050,046		973,400
Trade and other receivables	18,923,799		11,861,304
Tax recoverable	8,933		-
Cash and bank balances	117,762		440,955
Total current assets	20,100,540		13,275,659
Total assets	21,078,883		14,589,679
LIABILITIES AND EQUITY
Current liabilities
Bank overdrafts	219,934		2,457
Interest-bearing borrowings	5,552,204		3,881,788
Trade and other payables	5,160,493		2,905,668
Tax payable	921,984		495,810
Obligation under finance lease	4,293		3,055
Total current liabilities	11,858,908		7,288,778
Non-current liabilities
Obligation under finance lease	9,659		9,929
Total liabilities	11,868,567		7,298,707
Capital and reserves
Capital and reserves	8,977,979		7,136,220
Minority interest	232,337		154,752
Total shareholders' equity	9,210,316		7,290,972
Total liabilities and equity	21,078,883		14,589,679

These financial statements were approved by the Board of Directors on 30 September 2009 and authorised for issue.

UNIVISION ENGINEERING LIMITED

GROUP STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY

For the year ended 31 March 2009

		Share capital		Share premium		Retained earnings		Special capital reserve 'A'		Special capital reserve 'B'		Exchange reserve		Sub-total		Minority interest		Total  equity
		£		£		£		£		£		£		£		£		£
		(Note 26)
Balance at 1 April 2007		1,697,617		2,192,640		1,769,924		155,876		143,439		(369,680)		5,589,816		285,641		5,875,457
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
Loss for the year		-		-		(554,580)		-		-		-		(554,580)		29,716		(524,864)
Effect on translation		-		-		-		-		-		2,396,339		2,396,339		47,869		2,444,208
Balance at 31 March 2009		1,697,617		2,192,640		2,615,675		155,876		143,439		2,172,732		8,977,979		232,337		9,210,316

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 at 31 March 2009. 

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.

UNIVISION ENGINEERING LIMITED

GROUP CASH FLOW STATEMENT

For the year ended 31 March 2009

		2009				2008
	£				£
Cash flows from operating activities
(Loss)/profit before income tax from continuing operations	(297,913)				1,698,030
Adjustments for:
Interest income	(8,521)				(21,172)
Interest expense	735,955				239,952
Depreciation	191,933				172,193
Write down of obsolete inventories	89,435				11,978
Written back on trade and other payables	(85,660)				(30,848)
Unrealised loss on investment account carried at fair value	-				7,480
Impairment losses on trade receivables	290,801				165,228
Impairment losses on other receivables	23,632				357,935
Impairment loss on goodwill	309,325				-
Loss/(gain) on disposal of plant and equipment	398				(681)
Operating cash generated before working capital changes	1,249,385				2,600,095
Decrease in inventories	215,513				22,056
Increase in tradeand other receivables	(2,642,094)				(6,791,047)
Increase in tax recoverable	(53,416)				-
Increase in trade and other payables	1,099,440				766,872
Increase in tax payable	1,505				-
Net cash used in operations	(129,667)				(3,402,024)
Income tax paid – The PRC	-				(711)
Income tax paid – Taiwan	(18,669)				-
Net cash used in operating activities	(148,336)				(3,402,735)
Cash flows from investing activities
Interest received	8,521				21,172
Purchase of plant and equipment		(46,865)				(146,392)
Increasein pledged bank deposits	(7,168)				(340,754)
Proceeds from disposal of plant and equipment	735				1,880
Net cash used ininvesting activities	(44,777)				(464,094)

UNIVISION ENGINEERING LIMITED

GROUP CASH FLOW STATEMENT (Continued)

For the year ended 31 March 2009

	2009		2008
	£		£
Cash flows from financing activities
Interest paid	(87,391)		(73,839)
Capital element of finance lease rentals paid	(4,293)		(764)
Interest element of finance lease rentals paid	(691)		(148)
(Repayment of)/proceeds from interest-bearing borrowings	(608,862)		2,639,883
Net cash (used in)/generated from financing activities	(701,237)		2,565,132
Net decrease in cash and cash equivalents	(894,350)		(1,301,697)
Effect of change in foreign exchange rates	353,680		136,263
Cash and cash equivalents at beginning of year	438,498		1,603,932
Cash and cash equivalents at end of year	(102,172)		438,498

NOTES TO THE FINANCIAL STATEMENTS

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 electronic and mechanical services. The principal activities of the subsidiaries are set out in note 17 to the financial statements.

2.    BASIS OF PREPARATION 

The financial statements of the Company have been prepared in accordance with International Financial Reporting Standards ('IFRSs').  The financial statements have been prepared under the historical cost convention as modified for certain financial assets and liabilities (including derivative instruments) are measured at fair value through profit and loss.

The Company's operations are principally conducted in Hong Kong. The financial statements of the Company and the Group have been presented in Sterling Pound ('£') which is the Company's presentation currency as the directors consider this presentation to be more useful for its current and potential investors.

The preparation of financial statements in conformity with IFRSs requires the use of certain critical accounting estimates. It also requires management to access its judgment in the access of applying the Group's accounting policies. The areas involving a higher degree of judgement or complexity or areas where assumptions and estimates are significant to the financial statements, are disclosed in note 5.

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

- Management fee

Results by business segment for the year ended 31 March 2009 are as follows:

		Construction contracts		Maintenance contracts		Product sales		Solution sales		Management fee		Total
		£		£		£		£		£		£
Income statement information:
External sales		6,417,135		2,073,129		382,837		351,259		4,163		9,228,523
Inter-segment sales		-		-		139,507		-		-		139,507
Less: elimination		-		-		(139,507)		-		-		(139,507)
Revenue		6,417,135		2,073,129		382,837		351,259		4,163		9,228,523
Profit/(loss) from operations		279,563		109,464		(1,444)		49,868		591		438,042
Balance sheet information:
Assets		14,657,389		4,735,237		874,438		802,311		9,508		21,078,883
Liabilities		8,252,914		2,666,199		492,356		451,745		5,353		11,868,567
Other segment information:
Depreciation		133,463		43,117		7,962		7,305		86		191,933
Capital expenditure		39,684		12,821		2,367		2,172		26		57,070

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

(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 PRC, and all of the Group's assets are located in the same geographic segment.

4.    EARNINGS PER ORDINARY SHARE

The calculation of basic earnings per ordinary share is based on the (loss)/profit attributable to equity holders of the parent for the year of (£554,580) (2008: £1,400,331), and the weighted average of 383,677,323 (2008: 383,677,323) 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 for the year ended 31 March 2009 (2008: £Nil).

6.    SHARE CAPITAL

		2009		2008
		£		£
Authorised :
800,000,000 ordinary shares of HK$0.0625 each		3,669,470		3,669,470
Issued and fully paid:
383,677,323 ordinary shares (2008: 383,677,323 ordinary 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:-

	2009		2008
	£		£
Salaries, bonus and allowances	251,272		247,181

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

Executive directors include the executive chairman, the chief executive officer and the technical director and the finance 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 on Corporate Governance to the Annual Report and note 10 to the financial statements.

Compensation of key management personnel 

Key executives include the director of operations and director of sales and marketing 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 parties

(a)    A loan of US$5,000,000 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. Effective from 1 October 2008, the principal amount was revised to US$6,000,000 (including the accrued interest of US$1,000,000) and renewed with maturity date due on 31 March 2010. 

(b)    At 31 March 2009, there is a receivable balance of £6,629 (2008: £6,095) in respect of legal fees which were paid by the Group on behalf of UT Vision PTE, a company of which Mr. Stephen Sin Mo KOO is a director.

(c)    For the year ended 31 March 2009, the Chairman of the Company, Mr. Stephen Sin Mo KOO, purchased an additional 7,657,700 ordinary shares of 1p each in UniVision at a price of 0.55p per share.

8.    ANNUAL GENERAL MEETING

The 2009 Annual General Meeting of UniVision Engineering Limited will be held at UniVision Engineering Limited, 8/F Lever Tech Centre, 69-71 King Yip Street, Kwun Tong, Kowloon, Hong Kong, on 28 October 2009 at 5:00P.M.. The following businesses will be transacted then:

1.    To receive and adopt the Company's audited financial statements for the financial year ended 31 March 2009 together with the Directors' report and the Independent Auditor's report;

      2.    To re-elect Mr. Chun Pan WONG who retired by rotation, as a Director of the Company;

3.    To re-elect Mr. Andrew Ping Sum TANG who retired by rotation, as a Non-executive Director of the Company;

4.    To reappoint auditor ZYCPA Company Limited, Certified Public Accountants as auditors of the Company, to hold office from the conclusion of the meeting to the conclusion of the next meeting, during which accounts will be laid before the Company and to authorize the Directors to adjust their remuneration packages;

5.    To consider and, if considered appropriate, pass the following resolution as an ordinary resolution that the directors of the Company be and are hereby generally and unconditionally authorized to exercise all powers of the Company to allot ordinary shares of HK$0.0625 each in the capital of the Company (the 'Ordinary Shares'). Such authority (unless and to the extent previously revoked, varied or renewed by the Company during the general meeting) to expire 15 months after the date of the passing of such resolution or on the conclusion of the Company's next Annual General Meeting to be held, following the date of passing such resolution, whichever occurs first, save that the Company may before such expiry make any offer or agreement which would or might require Ordinary Shares to be allotted after such expiry, and that the Directors may allot Ordinary Shares in pursuance of such an offer or an agreement as if such authority had not expired. This authority substitutes all subsisting authorities to the extent unused.

The full annual report has been posted to shareholders and is currently available on the Company's website www.uvel.com.

 

END

 

 

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