Interim Results

RNS Number : 3844Z

UniVision Engineering Ltd

14 December 2017

 

14 December 2017

RNS Announcement: The information communicated in this announcement contains inside information for the purposes of Article 7 of Regulation 596/2014.

UniVision Engineering Limited

("UniVision" or the "Company" or the "Group")

 Interim Results

For the Six Months Ended 30 September 2017

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 2017. 

Highlights:

·    Profit attributable to the equity holders increased 133% to HK$2.1m (H1 2016: HK$0.9m);

·    Revenue increased by 8.3% to HK$23.2m for continuing operations (H1 2016 HK$21.4m);

·    Major long term contract win with MTR Corporation Limited ("MTRC") announced in

May 2017 will transform the Group's revenue and profitability over the coming years;

·    Additional MTRC work has been won in the period and after the period end. 

Mr. Stephen Sin Mo KOO, Executive Chairman, commented:

"The winning of the MTR contract is transformational for the Group and as the invoicing start to flow through the Financial Statements we expect to be able to report significantly higher levels of profitability that are currently being reported.

The fact that this contract was won in the face of tough international competition, we believe positions the Group to be competitive for subsequent large-scale projects both inside and outside HK in the future"

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

UniVision Engineering Limited              Tel: [phone]
                                                                 www.uvel.com

Stephen Koo, Executive Chairman             

Chun Pan Wong, Chief Executive Officer

Danny Kwok Fai Yip, Finance Director

Nicholas Lyth, Non-Executive Director       Tel: [phone] 

SPARK Advisory Partners Limited        Tel: [phone] 

(Nominated Adviser)                                www.sparkadvisorypartners.com

Mark Brady/Neil Baldwin                     

CHAIRMAN'S STATEMENT

INTRODUCTION

The Group's turnover for continuing operations has increased by 8.3% in the first six months. This increase was mainly due to the 22.7% growth in construction contracts.

With the commencement of the major project for Replacement of CCTV Systems awarded from MTR Corporation Limited ("MTRC") in May 2017, the Board expects that the Company will achieve a substantial growth in the business in the coming years. The full benefits of this contract will not be visible until the next financial year, but we will see an increase in both turnover and profit in the second half as invoicing on this contract commences.

THE MAJOR CONTRACT WITH MTRC

As announced on 12 May 2017, the Company was awarded the major contract worth HK$389.4m (£38.1m) with MTRC through tendering ("the Project"). The contract provides for the replacement works of the Closed Circuit Television (CCTV) systems for numerous railway lines of MTRC in Hong Kong. Under the contract, the Company will replace the existing analogue CCTV system installed in the stations along the specified lines with a unified IP-based CCTV system. 

The Project commenced in mid-May 2017 and the completion date for the replacement works is anticipated to be in November 2023. Currently, the Company is working on the design stage and commencing the installation works.

The Company acts as the main contractor for the Project. According to the term, the Company is required to provide a performance bond equivalent to 3% of the contract sum, i.e. HK$11.7m. To release liquidity for the business development, the Board has provided the performance bond to MTRC that is guaranteed by a leading insurance company without collateral. The Surety bond facility is provided to the Company up to HK$30 million. The surplus amount of this facility can also be used to meet performance bond requirements for other potential projects if required.

The first billing to MTRC is expected in the first quarter of 2018. 

FINANCIAL REVIEW

'Continuing operations' represent the Group's Security and Surveillance Systems business undertaken by the Hong Kong operating entity. The business undertaken by T-Com, the Group's former Taiwan subsidiary is classified as discontinued operations following its sale in June 2016, which completed in October 2016.

The value of the assets and liabilities of T-Com, were HK$28.3m and HK$24m respectively which is included in the financial statements below as Assets/Liabilities of Disposal Group classified as held for sale as at 30 September 2016.

In the six month period under review, revenues for the Group's continuing operations increased by 8.3% to HK$23.2m (H1 2016: HK$21.4m). This increase was mainly due to a 22.7% growth in construction contracts. The growth of construction revenue was mainly due to income generated from the following contracts:-

MTRC Replacement of CCTV Systems (the Project)   

MTRC East Rail Line Platforms CCTV System Enhancement            

Modern Terminal Upgrade Project         

Hong Kong-Zhuhai-Macao Bridge Project    

Central Wanchai By Pass Project

Gross profit margin for the Group's continuing operations reduced to 31% (H1 2016: 34%). Gross profit margin in the maintenance business improved from 36% to 41%, compensating for a decrease in gross profit margin of 4% to 29% (2016: 33%) in the Group's construction business for the period. This decrease of gross profit in construction contracts was mainly due to the relative lower gross profit margin for the Project. In facing increased operating costs and long-term contract period, the Company imposes efficient control measures on human resources, material costs, logistics and sub-contracting charges to maintain the level of gross margin.  

Administration expenses for continuing operations were decreased by HK$743K to HK$4.7m (H1 2016: HK$5.4m). This was caused by the one-off, legal and professional fees regarding the disposal of the Group's Taiwan subsidiary and legal case, totally HK$629K that incurred in year 2016.

The profit from the continuing operations attributable to the equity holders of the Company is HK$2.1m (2016: 1.1m). Profit before interest and income tax from the continuing operations during the period at HK$2.1m (H1 2016: HK$1.1m) whilst the Group recorded a profit attributable to the equity holders of HK$2.1m (H1 2016: HK$0.9m). 

During the period under review, the relative weak of the HK$ against GBP has led to 7.9% depreciation in the GBP reporting amount in the Consolidated Statement of Comprehensive Income and Financial Position. It also the reason for the significant loss of £446K on exchange differences arising on the translation (H1 2016: gain £287K). All figures in GBP in the Financial Statements therefore needed to be adjusted for comparative purposes. The financial data is also presented in HK$ to provide a comparison with the comparative figures in 2016 that were unaffected by exchange rate fluctuations.

BUSINESS REVIEW

Markets

The increasing demand for wireless network infrastructure is the key growth driver for this market. The demand to replace analogue systems with Internet protocol based systems is also expected to boost the market. The new major contract with MTRC is a good example of that demand shift in our market.

The Board believes that the demand for the IP cameras remain strong. To capture the opportunities in Internet Protocol and High Definition CCTV System technology, UniVision will continue commit resources to develop new technologies and solutions.

While the Company has made efforts to maintain a high degree of sustainability in its operations in Hong Kong, the Board believes that winning the major contract from MTRC should allow UniVision to market its brand to purchasers of similar systems outside Hong Kong.

The Company intends to explore other market segments, such as rolling stock business on railways, to strengthen business growth in the Group.

Business

Under MTRC contract, the Company is providing the service for the replacement and provision of the CCTV systems for 84 MTR stations and 69 stops of Light Rail. Some additional and variation orders that are associated with the main contract may be exercised by MTRC. The first additional works of value HK$7m (£0.7m) for the provision of Optical Fibre Cables for Tseung Kwan O Line Tunnel Sections as announced on 21 June 2017 and the second additional works of value HK$10.9m (£1.05m) for Integration between NSL Station CCTV System and the Delivered System as announced on 1 November 2017 are good examples for these.

Under the major contract, the Company performs as network service provider in the application of CCTV systems. The Board considers the viability for the Company entering the new business as a provider of network service and information technology in the application in other fields. 

Customers

For security of trade receivables, the Company's major customers are public organisations and sizeable private enterprises, such as MTRC in Hong Kong which is the Company's largest customer in this financial period.

To avoid the concentration of customers, the Company has the intention to diversify the base of customers particularly to the private and domestic sectors.

PROSPECTS

The high demand for its network and high definition security and surveillance system provides the Group with an excellent opportunity for future growth in these markets.

The full benefits of the MTRC contract will not come through until next year, but we do expect to see some benefit to both revenue and profit during the second half of the year as we commence invoicing on the Project in the first quarter of 2018.  However, the Directors expect to see a significant increase in both revenue and profits in the second half and also for year ending 31 March 2018, when compared to the same period last year.

As there are some major infrastructure projects to be completed in Hong Kong in the coming years, such as High Speed Rail Hong Kong line and the Third Runway at Hong Kong Airport that the Company will be able to tender for, it will provide the opportunity for business growth.

Finally, on behalf of the Board, I would like to thank our customers, suppliers, sub-contractors 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

14 December 2017

 

UniVision Engineering Limited

Consolidated Statements of Comprehensive Income (Un-audited)

For the six months ended 30 September 2017

	For the six months ended 30 September
	2017	2016	2017	2016
	HK$'000	HK$'000	￡'000	￡'000
Continuing operations
Revenue	23,224	21,440	2,298	2,008
Cost of sales	(15,914)	(14,118)	(1,575)	(1,322)
Gross profit	7,310	7,322	723	686
Other income	206	6	20	-
Other loss	-	(48)	-	(4)
Selling and distribution expenses	(659)	(712)	(65)	(67)
Administrative expenses	(4,700)	(5,443)	(465)	(510)
Finance costs	-	(1)	-	-
Profit for the period from continuing operations	2,157	1,124	213	105
Discontinued operations
Loss for the period from discontinued operations	-	(415)	-	(39)
Profit for the period	2,157	709	213	66
Other comprehensive income / (loss) :
Exchange differences arising on translation of foreign	-	121	(446)	592
Total comprehensive income / (loss) for the period	2,157	830	(233)	658
Profit / (loss) attributable to:
Equity shareholders of the Company
Profit from continuing operations	2,157	1,124	213	105
Loss from discontinuing operations	-	(217)	-	(20)
Equity shareholders of the Company	2,157	907	213	85
Non-controlling interests	-	(198)	-	(19)
	2,157	709	213	66
Total comprehensive income / (loss) attributable
Equity shareholders of the Company	2,157	986	(233)	657
Non-controlling interests	-	(156)	-	1
	2,157	830	(233)	658
Earnings per share - Basic and Diluted	HK Cents	HK Cents	Pence	Pence
Continuing and discontinued operations	0.5621	0.2365	0.0556	0.0222
Continuing operations	0.5621	0.2931	0.0556	0.0274

UniVision Engineering Limited

Consolidated Statements of Financial Position (Un-audited)

As at 30 September 2017

	2017	2016	2017	2016
	HK$'000	HK$'000	￡'000	￡'000
ASSETS
Non-current assets
Plant and equipment	696	492	66	49
Trade and other receivables	35,037	34,172	3,350	3,402
Total non-current assets	35,733	34,664	3,416	3,451
Current assets
Inventories	10,680	8,323	1,021	829
Trade receivables	7,264	8,979	694	894
Amount due from customers for contract-in-progress	17,925	11,741	1,714	1,169
Deposits, prepayments and other receivables	16,217	11,342	1,550	1,128
Cash and bank balances	4,744	9,398	454	936
Total current assets	56,830	49,783	5,433	4,956
Assets of disposal group classified as held for sale	-	28,278	-	2,815
Total assets	92,563	112,725	8,849	11,222
LIABILITIES AND EQUITY
Current liabilities
Trade and other payables	14,058	14,349	1,344	1,429
Amounts due to customers for contract-in-progress	17,788	15,853	1,700	1,578
Total current liabilities	31,846	30,202	3,044	3,007
Long Term Liability
Long term liability-loan from Shareholder	1,200	-	115	-
Liabilities of disposal group classified as held for sale	-	24,012	-	2,390
Total liabilities	33,046	54,214	3,159	5,397
Equity
Share capital	55,034	23,980	3,891	1,698
Share premium	-	31,054	-	2,193
Special capital reserve	4,188	4,188	299	299
Statutory surplus reserve	-	219	-	19
Retained earnings /(accumulated losses)	295	(2,698)	116	(236)
Translation reserve	-	206	1,384	1,697
	59,517	56,949	5,690	5,670
Non-controlling interest	-	1,562	-	155
Total equity	59,517	58,511	5,690	5,825
Total liabilities and equity	92,563	112,725	8,849	11,222

UniVision Engineering Limited

Consolidated Statements of Changes in Equity (Un-audited)

in ￡'000

	Share capital		Share premium		Retained earnings		Special capital Reserve "A"		Special capital Reserve "B"		Translation  reserve	Statutory Surplus reserve		Sub -total		Non- controlling interest		Total equity
	￡'000		￡'000		￡'000		￡'000		￡'000		￡'000	￡'000		￡'000		￡'000		￡'000
Balance at 1 April 2016	1,698	2,193		(174)		156		143		1,125		19	5,160		154		5,314
Profit for the year	-	-		430		-		-		-		-	430		(19)		411
Exchange difference arising on translation of foreign operations	-	-		-		-		-		718		-	718		49		767
Total comprehensive income	-	-		430		-		-		718		-	1,148		30		1,178
Disposal of a subsidiary	-	-		(44)		-		-		(13)		(19)	(76)		(184)		(260)
Dividend paid	-	-		(154)		-		-		-		-	(154)		-		(154)
Transfer from share premium	2,193	(2,193)		-		-		-		-		-	-		-		-
Balance at 31 Mar 2017	3,891	-		58		156		143		1,830		-	6,078		-		6,078
Profit for the six months ended 30 Sep 2017	-	-		213		-		-		-		-	213		-		213
Exchange difference arising on translation of foreign operations	-	-		-		-		-		(446)		-	(446)		-		(446)
Total comprehensive income	-	-		213		-		-		(446)		-	(233)		-		(233)
Dividend declared	-	-		(155)		-		-		-		-	(155)		-		(155)
Balance at 30 Sep 2017	3,891	-		116		156		143		1,384		-	5,690		-		5,690

UniVision Engineering Limited

Consolidated Statements of Changes in Equity (Un-audited)

in HK$'000

	Share capital	Share premium	Retained earnings	Special capital Reserve "A"	Special capital Reserve "B"	Translation  reserve	Statutory Surplus reserve	Sub -total	Non- controlling interest	Total equity
	HK$'000	HK$'000	HK$'000	HK$'000	HK$'000	HK$'000	HK$'000	HK$'000	HK$'000	HK$'000
Balance at 1 April 2016	23,980	31,054	(2,033)	2,117	2,071	126	220	57,535	1,718	59,253
Profit for the year	-	-	4,388	-	-	-	-	4,388	(198)	4,190
Total comprehensive income	-	-	4,388	-	-	-	-	4,388	(198)	4,190
Disposal of a subsidiary	-	-	(1,071)	-	-	(126)	(220)	(1,417)	(1,520)	(2,937)
Dividend paid	-	-	(1,573)	-	-	-	-	(1,573)	-	(1,573)
Transfer from share premium	31,054	(31,054)	-	-	-	-	-	-	-	-
Balance at 31 Mar 2017	55,034	-	(289)	2,117	2,071	-	-	58,933	-	58,933
Profit for the six months ended 30 Sep 2017	-	-	2,157	-	-	-	-	2,157	-	2,157
Total comprehensive income	-	-	2,157	-	-	-	-	2,157	-	2,157
Dividend declared	-	-	(1,573)	-	-	-	-	(1,573)	-	(1,573)
Balance at 30 Sep 2017	55,034	-	295	2,117	2,071	-	-	59,517	-	59,517

UniVision Engineering Limited

Consolidated Statements of Cash Flows (Un-audited)

For the six months ended 30 September 2017

		For the six months ended 30 September
		2017	2016	2017	2016
		HK$'000	HK$'000	￡'000	￡'000
CASH FLOW FROM OPERATING ACTIVITIES
	Profit before income tax for the period	2,157	1,124	213	105
	Adjustments for:
	Depreciation of plant and equipment	145	109	14	10
	Interest income	(18)	(5)	(2)	(1)
	Finance costs paid	-	233	-	22
	Gain on disposal of plant and equipment	(15)	-	(1)	-
		2,269	1,461	224	136
	Changes in operating assets and liabilities:
	(Increase)/decrease in inventories	(15)	28	(1)	3
	(Increase)/decrease in trade receivables	(2,171)	1,256	(215)	118
	Increase in amounts due from customers for contract-in-progress	(3,529)	(541)	(349)	(51)
	Increase in deposits, prepayments and other receivables	(2,593)	(360)	(257)	(33)
	Increase in amounts due to customers for contract-in-progress	514	1,733	51	162
	Decrease in trade and other payables	(929)	(1,045)	(92)	(97)
	Cash (used in)/generated from operations	(6,454)	2,532	(639)	238
	Net cash used in disposal group	-	(3,255)	-	(305)
	Net cash used in operating activities	(6,454)	(723)	(639)	(67)
CASH FLOWS FROM INVESTING ACTIVITIES
	Purchase of plant and equipment	(355)	(126)	(35)	(12)
	Interest received	18	5	2	1
	Decrease in pledged deposits	-	18	-	2
	Net cash used in disposal group	-	(18)	-	(2)
	Proceeds on disposal of plant and equipment	15	-	2	-
	Net cash used in investing activities	(322)	(121)	(31)	(11)
CASH FLOWS FROM FINANCING ACTIVITIES
	Finance costs paid	-	(233)	-	(22)
	Repayment of obligation under finance lease	-	(7)	-	(1)
	Net cash generated from disposal group	-	2,790	-	261
	Net cash generated from financing activities	-	2,550	-	238
NET (DECREASE)/INCREASE IN CASH AND CASH EQUIVALENTS		(6,776)	1,706	(670)	160
Less: cash and cash equivalents from disposal group		-	(2,954)	-	(265)
EFFECT OF CHANGE IN EXCHANGES RATES		-	-	(64)	86
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD		11,520	10,646	1,188	955
CASH AND CASH EQUIVALENTS AT END OF PERIOD		4,744	9,398	454	936

Notes to the Interim financial statements for the six months ended 30 September 2017

1.     Basis of preparation

The unaudited interim financial statements for the six months ended 30 September 2017 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 2017. The interim financial statements, together with the comparative information contained in this report for the six months ended 30 September 2016, does not constitute the statutory accounts of the Company. 

2.     Profit per share

The calculation of basic profit per ordinary share is based on the profit attributable to equity holders of the Group for the six months ended 30 September 2017 of HK$2.1m (H1 2016: HK$0.9m), and the weighted average of 383,677,323 (H1 2016: 383,677,323) ordinary shares in issue during the period.

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

3.     Interim report

Copies of the interim report will be available for inspection at the registered office of the Company, Unit 01A, 2/F., Sunbeam Centre, 27 Shing Yip Street, Kwun Tong, Hong Kong and available on the Company's website (www.uvel.com) in accordance with Rule 26 of the AIM Rules for Companies.

 

END

 

 

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