(Alliance News) - UniVision Engineering Ltd on Friday said is expected second half recovery was slowed by the Covid-19 pandemic and while it has recovered from its troubled first half, annual results are still expect to be "substantially lower" then the year before.
Shares in Hong-Kong headquartered UniVision were up 22% at 1.40 pence in London in afternoon trading.
The company, which designs and maintains CCTV and surveillance systems, in December reported lower revenue and margin squeeze for the first half of its financial year. This was due to protests against the anti-extradition bill in Hong Kong that hurt construction revenue while increased subcontractor charges put pressure on margins.
At that time, UniVision was expecting an improvement in the second half of its financial year ended March 31 although some more protest disruption was expected.
While the pandemic has not seriously hurt UniVision's business, the outbreak and its effects in Hong Kong have "further hindered installation plans" and held back recovery.
Thus, while revenue and profit have recovered when compared against the first half, annual performance is likely to be "substantially lower" than in financial 2019.
So far in financial 2021, existing installation work is returning to expected levels and Covid-19 disruption has eased. More over, the cooperation framework agreement it signed with China Rail in January is already improving sub-contractor costs.
The major contract with MTR Corporation Ltd in Hong Kong is still the "major plank" of UniVision's workload and is now worth HKD426.7 million or around GBP43.9 million including add-ons.
As at March end, UniVision had invoices HKD131.5 million to MTR with another HKD295.2 million remaining. The gross valuation for certified works on the contract amounted to HKD156.3 million up to the end of February 2020.
"With revenues underpinned by the major contract and better sub-contractor cost visibility with China Rail as a partner, the directors are confident of a return to growth in the current financial year and look forward to reporting on progress with the final results," said UniVision.
Towards the end of the company's first quarter ended Tuesday this week, UniVision was awarded HKD27.9 million of contracts and it has obtained additional works confirmed by MTR under a supplementary agreement. This additional work is worth HKD16.9 million.
Other new contracts include one from City University of Hong Kong and two with the Electrical & Mechanical Services Department of the Hong Kong Government.
"The benefits from these contracts will come through during the next two financial years," said UniVision.
To help fund these and other potential contracts, UniVision has inked a revised facility agreement with HSBC, increasing the scope and credit limit of its banking facilities. This includes increasing the trade facility to HKD26 million and the overdraft limited to HKD8 million along with provision of a long-term straight line loan of HKD9 million.
"This facility has provided additional working capital to ensure that the MTRC contract and other projects can operate smoothly," said UniVision.
The company expects to post its annual results in early September.
By Anna Farley; annafarley@alliancenews.com
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Univision (UVEL)