Interim Results

RNS Number : 8000J

UniVision Engineering Ltd

07 December 2018

 

7 December 2018

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.  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 2018

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 2018. 

Highlights:

·    Profit attributable to the equity holders increased 391% to HK$10.6m (H1 2017: HK$2.1m);

·    Revenue increased by 187% to HK$66.8m for continuing operations (H1 2017: HK$23.2m);

·    Positive cash generated from operations HK$6m (H1 2017: -HK$6.4m). 

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

UniVision Engineering Limited	Tel: [phone]
Stephen Koo, Chairman	www.uvel.com
Chun Pan Wong, Chief Executive Officer
Danny Kwok Fai Yip, Finance Director
Nicholas Lyth, Non-Executive Director Ivor Shrago, Non-Executive Director	Tel: [phone] Tel: [phone]
SPARK Advisory Partners Limited                                        (Nominated Adviser)	Tel: [phone]
Mark Brady / Neil Baldwin	www.sparkadvisorypartners.com
SI Capital Limited (Broker)	Tel:  [phone] www.sicapital.co.uk

Nick Emerson

CHAIRMAN'S STATEMENT

INTRODUCTION

The Company has achieved a substantial growth both revenue and profit in the current reporting period. It had been predicted by the Board and had been highlighted in the year end trading update in Apr 2018, final results announcement and trading update in September 2018.

THE MAJOR CONTRACT WITH MTRC

This transformational contract was awarded to UniVision in May 2017. Over the six and half year life of the contract, the total value is £38.9m based on the master contract and currently announced add on contracts.

The master 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 contract has entered to the installation stage in the current financial period. This has led to sharply growth in revenue in the financial period. The Company expects regular billing on works completed and certified on a monthly basis throughout the remaining period of contract.          

The Company is the main contractor for the Project. The Company is required to provide a performance bond equivalent to 3% of the contract sum, i.e. HK$11.7m. The Company has a HK$30m surety bond facility guaranteed by a leading insurance company. The unutilised facility is HK$18.3m which can be utilised for other potential projects. The facility has been renewed in early November 2018 under the same terms as that of 2017. 

HSBC, the Group's major banker, has increased the trade facility to $13m of which including an overdraft limit of HK$4m after the annual review in late July 2018. The invoice discounting/factoring facility remains unchanged at HK$45m. These facilities provide additional working capital for the Company's operations and also ensure that the Major Contract can operate smoothly.

FINANCIAL REVIEW

The profit attributable to the equity holders of the Company is £1m (2017: £213K).

The improvement in results performance in the period is mainly attributable to:-

i)  264% growth in the income from construction contracts;
ii) Improved gross profit margin of 6% from maintenance contracts.
 

In the six month period under review, revenues for the Group increased by 187% to HK$66.8m (H1 2017: HK$23.2m). The sharply growth of construction revenue was mainly due to significant income HK$43m (H1 2017: $2.5m) was generated from the MTRC Replacement of CCTV Systems (the Project).            

Revenues for the Group's maintenance business increased by 18% to HK$7.25m (H1 2017: HK$6.1m). The three years' maintenance contract with MTRC has been renewed for another three years commencing from 1 January, 2018 to 31 December 2020. The Group provides maintenance services to MTRC's network of CCTV systems and public address systems on seven railway lines in Hong Kong. With one more railway line, the scope is larger than the prior one. The contract revenue for this contract increased 18% to HK$3.9m which represented over 50% in the segment for the period.

Gross profit margin in the maintenance business improved from 41% to 47%. It was improved mainly due to the initial purchase cost for installation of equipment during the first three years' contract period. The gross margin of the Group's construction business was reduced by 5% to 24% (2017: 29%) for the period. 

Administration expenses for the period were increased by HK$1.5m to HK$6.2m (H1 2017: HK$4.7m). This was caused by the increased personnel expenses (salaries, directors' emoluments, bonus, provident fund contribution and recruitment fee), rental expenses, repairs and maintenance expenses and electricity charges.

To manage the execution of the Major Contract, the Company has recruited more professional and technical staff. The number of staff has increased to 65 as at 30 September 2018 (H1 2017: 54). Also, one more unit at the same building was rented for office use from January 2018. The Company now has two units for offices, one warehouse, one demo room and one workshop.            

Finance costs was increased to HK226K (2017: HK$0) since the Company commenced to use the HBSC banking facility from 1^st quarter of year 2018. The interest was charged at the bank's Hong Kong Dollars Best Lending Rate. 

The profit attributable to the equity holders of the Company is HK$10.6m (2017: 2.1m). Profit before interest and income tax from operations during the period at HK$10.8m (H1 2017: HK$2.1m).

During the period under review, the relative weak of the HK$ against GBP has led to 3.7% depreciation in the GBP reporting amount in the Consolidated Statement of Comprehensive Income. Also, a relative strengthening of HK$ at the period-end has led to a 7.6% appreciation in the GBP reporting amount in the Consolidated Statement of Financial Position. It also the reason for the significant gain of £509K on exchange differences arising on the translation (H1 2017: loss £446K). 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 2017 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 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 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. 

The Company keeps moving forward in CCTV segment and gradually to safe city concept by introducing video based analytics to big data AI processing. At the same time, the Company still keeps an eye on overseas projects of similar size.

Customers

MTR Corporation is the Company's largest customer in this financial period, particularly after awarded of the Major Contract.

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

As a result of the significant amount in the Major Contract, the Company has been temporarily suspended from tendering for additional government contracts by the Hong Kong Government Works Branch under the management of Electrical and Mechanical Services Department ("EMSD") for six months from 27 July 2018 until the shortfall has rectified. The effect of this temporarily suspension is insignificant to the Group's business given the capacity of current workload. Nevertheless, the Group has submitted the updated financial documents for lifting the suspension.    

Acquisitions and Investments

The Group continues to assess possible opportunities of new investments with a view to making a further strategic move.

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.

Our existing business, coupled with the Major Contract, provides a solid base which the Group can develop over the next few years. With referring to the resources and capacity, the Company continues to tender for new contracts within its optimum value.

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

7 December 2018

UniVision Engineering Limited

Statements of Comprehensive Income (Unaudited)

For the six months ended 30 September 2018

	For the six months ended 30 September
	2018	2017	2018	2017
	HK$'000	HK$'000	￡'000	￡'000
Revenue	66,798	23,224	6,373	2,298
Cost of sales	(49,081)	(15,914)	(4,683)	(1,575)
Gross profit	17,717	7,310	1,690	723
Other income	21	206	2	20
Other loss	(56)	0	(5)	0
Selling and distribution expenses	(651)	(659)	(62)	(65)
Administrative expenses	(6,196)	(4,700)	(591)	(465)
Finance costs	(226)	0	(22)	0
Profit before income tax	10,609	2,157	1,012	213
Income tax	0	0	0	0
Profit for the period	10,609	2,157	1,012	213
Other comprehensive income/(loss):
Exchange differences arising on translation of foreign operations	0	0	509	(446)
Total comprehensive income/(loss) for the period	10,609	2,157	1,521	(233)
Profit attributable to:
Equity shareholders of the Company	10,609	2,157	1,012	213
	10,609	2,157	1,012	213
Total comprehensive income / (loss) attributable
Equity shareholders of the Company	10,609	2,157	1,521	(233)
	10,609	2,157	1,521	(233)
Earnings per share - Basic and Diluted	HK Cents	HK Cents	Pence	Pence
Basic	2.7651	0.5621	0.2638	0.0556
Diluted	N/A	N/A	N/A	N/A

UniVision Engineering Limited

Statements of Financial Position (Unaudited)

As at 30 September 2018

	For the six months ended 30 September
	2018	2017	2018	2017
	HK$'000	HK$'000	￡'000	￡'000
ASSETS
Non-current assets
Plant and equipment	1,496	696	146	66
Amount due from related companies	33,983	35,037	3,330	3,350
Total non-current assets	35,479	35,733	3,476	3,416
Current assets
Inventories	8,382	10,680	821	1,021
Trade receivables	12,538	7,264	1,229	694
Amount due from customers for contracts-in-progress	26,600	17,925	2,607	1,714
Deposits, prepayments and other receivables	21,759	16,217	2,132	1,550
Cash and bank balances	10,953	4,744	1,073	454
Total current assets	80,232	56,830	7,862	5,433
Total assets	115,711	92,563	11,338	8,849
LIABILITIES AND EQUITY
Current liabilities
Trade and other payables	27,277	14,058	2,672	1,344
Amounts due to customers for contracts-in-progress	13,281	17,788	1,301	1,700
Total current liabilities	40,558	31,846	3,973	3,044
Non-current liability
Amount due to a related company	1,200	1,200	118	115
Total liabilities	41,758	33,046	4,091	3,159
Equity
Share capital	55,034	55,034	3,891	3,891
Special capital reserve	4,188	4,188	299	299
Retained earnings	14,731	295	1,497	116
Translation reserve	0	0	1,560	1,384
Total equity	73,953	59,517	7,247	5,690
Total liabilities and equity	115,711	92,563	11,338	8,849

UniVision Engineering Limited

Statements of Changes in Equity (Unaudited)

in ￡'000

	Share capital	Retained earnings	Special capital Reserve "A"	Special capital Reserve "B"	Translation reserve	Total equity
	￡'000	￡'000	￡'000	￡'000	￡'000	￡'000
Balance at 1 Apr 2017	3,891	58	156	143	1,830	6,078
Profit for the year	0	735	0	0	0	735
Other comprehensive income
Exchange difference arising on translation of foreign operations	0	0	0	0	(779)	(779)
Total comprehensive income	0	735	0	0	(779)	(44)
Dividend paid	0	(151)	0	0	0	(151)
Balance at 31 Mar 2018	3,891	642	156	143	1,051	5,883
Profit for the six months ended 30 Sep 2018	0	1,012	0	0	0	1,012
Other comprehensive income
Exchange difference arising on translation of foreign operations	0	0	0	0	509	509
Total comprehensive income	0	1,012	0	0	509	1,521
Dividend declared	0	(157)	0	0	0	(157)
Balance at 30 Sep 2018	3,891	1,497	156	143	1,560	7,247

UniVision Engineering Limited

Statements of Changes in Equity (Un-audited)

in HK$'000

	Share capital	Retained earnings	Special capital Reserve "A"	Special capital Reserve "B"	Total equity
	HK$'000	HK$'000	HK$'000	HK$'000	HK$'000
Balance at 1 April 2017	55,034	(289)	2,117	2,071	58,933
Profit for the year	0	7,634	0	0	7,634
Total comprehensive income	0	7,634	0	0	7,634
Dividend paid	0	(1,573)	0	0	(1,573)
Balance at 31 Mar 2018	55,034	5,772	2,117	2,071	64,994
Profit for the six months ended 30 Sep 2018	0	10,609	0	0	10,609
Total comprehensive income	0	10,609	0	0	10,609
Dividend declared	0	(1,650)	0	0	(1,650)
Balance at 30 Sep 2018	55,034	14,731	2,117	2,071	73,953

UniVision Engineering Limited

Statements of Cash Flows (Un-audited)

For the six months ended 30 September 2018

		For the six months ended 30 September
		2018	2017	2018	2017
		HK$'000	HK$'000	￡'000	￡'000
CASH FLOW FROM OPERATING ACTIVITIES
	Profit before income tax for the period	10,609	2,157	1,012	213
	Adjustments for:
	Depreciation of plant and equipment	248	145	23	14
	Interest income	(19)	(18)	(2)	(2)
	Finance costs paid	226	0	22	0
	Gain on disposal of plant and equipment	0	(15)	0	(1)
		11,064	2,269	1,055	224
	Changes in operating assets and liabilities:
	Decrease / (Increase) inventories	2,342	(15)	223	(1)
	Increase in trade receivables	(6,336)	(2,171)	(604)	(215)
	Increase in amounts due from customers for contracts-in-progress	(893)	(3,529)	(85)	(349)
	Increase in deposits, prepayments and other receivables	(1,361)	(2,593)	(130)	(257)
	(Decrease) /Increase in amounts due to customers for contracts-in-progress	(2,508)	514	(239)	51
	Increase / (Decrease) in trade and other payables	3,738	(929)	357	(92)
	Cash generated from / (used in) operations	6,046	(6,454)	577	(639)
	Income tax paid	0	0	0	0
	Net cash generated from / (used in) operating activities	6,046	(6,454)	577	(639)
CASH FLOWS FROM INVESTING ACTIVITIES
	Purchase of plant and equipment	(1,149)	(355)	(110)	(35)
	Interest received	19	18	2	2
	Decrease in pledged deposits	470	0	45	0
	Proceeds from disposal of plant and equipment	0	15	0	2
	Net cash used in investing activities	(660)	(322)	(63)	(31)
CASH FLOWS FROM FINANCING ACTIVITIES
	Finance costs paid	(226)	0	(22)	0
	Net cash used in financing activities	(226)	0	(22)	0

		For the six months ended 30 September
		2018	2017	2018	2017
		HK$'000	HK$'000	￡'000	￡'000
NET INCREASE / (DECREASE) IN CASH AND CASH EQUIVALENTS		5,160	(6,776)	492	(670)
EFFECT OF CHANGE IN EXCHANGES RATES		0	0	57	(64)
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD		5,793	11,520	524	1,188
CASH AND CASH EQUIVALENTS AT END OF PERIOD		10,953	4,744	1,073	454

Notes to the Interim financial statements for the six months ended 30 September 2018

1.     Basis of preparation

The unaudited interim financial statements for the six months ended 30 September 2018 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 2018. The interim financial statements, together with the comparative information contained in this report for the six months ended 30 September 2017, 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 2018 of HK$10.6m (H1 2017: HK$2.1m), and the weighted average of 383,677,323 (H1 2017: 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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