Year end trading update

RNS Number : 9692L

UniVision Engineering Ltd

24 April 2018

 

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

For immediate release: 24 April 2018

UniVision Engineering Limited

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

Year end trading update 

UniVision (AIM: UVEL), the Hong Kong based group whose principal activities are the supply, design, installation and maintenance of closed circuit television (CCTV) and surveillance systems, and the sale of security related products, announces the following trading update for the year ended 31 March 2018. 

Performance in the year

The year ended 31 March 2018, has been a transformational year for the Group and we expect both revenue and profits for the year to be ahead of 2017.   

As we have announced previously, in May 2017, the Company won a major contract with MTR Corporation ("MTRC"), the Hong Kong railway company.  With further agreed add-ons since May 2017, the total current value of this contract is HK$407.3 million (approximately £36.4 million at current exchange rates) spread over a six year period, with an expected completion date of November 2023.  

The first revenue on this contract was invoiced in January 2018 and we expect regular billing, on work completed and certified on a monthly basis, from now until the end of the contract period; the first payment from MTRC was received in mid-March 2018. In the year ended 31 March 2018, the Group invoiced HK$5.1 million to MTRC, leaving a further HK$402.2 million over the remaining five and a half years of the contract. This back-loading of the billings is due to the fact that we spent a number of months on design and testing prior to commencing installation work as planned.  We expect the first full year of installations in the current financial year, with a consequent significant increase in the Group's revenue.

To assist with funding of this significant expansion of the business, during the period, the Company entered into a new facility agreement with HSBC, to provide banking facilities, including an invoice discounting/factoring facility of HK$45m, which is being used exclusively for the trade receivables from MTRC.  Also, HSBC agreed to provide a trade facility of HK$8m. This facility has provided additional working capital to ensure that the MTRC contract can operate smoothly alongside the rest of the Group's operations.

Other business

With the award of the major contract, MTRC is now the Group's largest customer. During the financial year ended 31 March 2018, the following non-MTRC contracts generated significant revenue in construction (installation) business:-

·    Hong Kong-Zhuhai-Macao Bridge Project ("the Bridge Project");

·    Central Wanchai By Pass Project;

·    Liantang Traffic Control and Surveillance System Project; and

·    Modern Terminal CCTV System Upgrade Project ("the MTL Project").

The first three are the infrastructure projects of Hong Kong Government where the main contractors are the sizeable private enterprises. The Group is the sub-contractor for these projects. The customer for the MTL Project is in the private sector; the Company is the main contractor for this project.    

As completion of main construction works for the Bridge Project in February 2018, the Board  expects more billing will be issued in the financial year ending 31 March 2019.   

Outlook

As we announced at the end of January 2018, the Board expects the MTRC contract will lead to a step-change in both revenue and profitability of the Group in the short to medium term.  Whilst we have seen some benefit in the last three months of the year ended 31 March 2018, it is the current financial year which should be the first to see the full effect, and we look forward to updating shareholders as the year progresses.  

The Directors believe that our existing business, coupled with the long term MTRC installation contract, provides a solid base from which the Group can develop over the next few years; and one which is significantly better than in previous years.  We are looking forward to reporting a full year's contribution from the MTRC contract in the current financial year, and we will update on our progress with MTRC with our final results and again at our Annual General Meeting. 

Announcement of final results

We anticipate being able to announce our final results, for the year ended 31 March 2018, towards the end of July 2018.

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	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

 

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