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(Alliance News) - UniVision Engineering Ltd said on Thursday it had been faced with a costly dispute with a sub-contractor that has resulted in project delays and the company's half-year profit more than halving.
Shares in UniVision were down 11% at 0.76 pence on Thursday in London. The stock has fallen 40% since 2021 began.
For the six months that ended September 30, UniVision reported pretax profit dropped 64% to GBP142,000 from GB394,000.
The Hong Kong-based CCTV and surveillance system company blamed an ongoing dispute with a sub-contractor over the value of work related to its Mass Transit Railway Corp contract for the slash in profit.
MTRC is UniVision's largest customer. The company provides MTRC with replacement work on CCTV systems and installs CCTV systems for numerous railway lines in Hong Kong. The contract was won back in May 2017 for an initial value of HKD389.4 million.
UniVision commented that it believes that the sub-contractor performing installation works as part of the contract had under-performed tasks. This, the company noted, had resulted in major delays in the MTRC project and also increased costs, as Univision had to deploy its own resources to complete the outstanding work.
Further, a change of key network equipment caused additional delays to the contract. Combined, UniVision said these factors had hurt the process of certification and has led to slow billing to MTRC.
An impairment of GBP634,000 was recorded by UniVision related to billings to MTRC for a maintenance contract. The company took no such hit a year before.
Up to September 30, the company had invoiced MTRC HKD184.5 million - about GBP17.6 million - leaving HKD305.2 million remaining. Despite the recent issues, UniVision said it expects the completion of contracted works in July 2024 as originally intended.
Revenue rose 22% to GBP5.0 million from GBP4.1 million. The company cited increases in construction contract income for the rise which leaped 75% to HKD50.5 million from HKD28.9 million year-on-year.
Looking forward, UniVision said it remains cautious about its second half due to Covid-19 delaying projects. Nonetheless, the company noted new infrastructure projects including new railway lines and large scale CCTV systems in northern territories as it discussed future prospects.
By Heather Rydings; heatherrydings@alliancenews.com
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