Univision Regulatory News (UVEL)

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

Embargoed 07.00 a.m.

7 September 2020

UniVision Engineering Limited

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

Final Results for the year ended 31 March 2020

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, today announces its audited final results for the financial year ended 31 March 2020.

The Annual General Meeting of the Company will be held at UniVision Engineering Limited, Unit 201, 2/F., Sunbeam Centre, 27 Shing Yip Street, Kwun Tong, Kowloon, Hong Kong, on 30 September 2020 at 5:00 p.m.

The full Annual Report and Accounts together with the Notice of AGM will shortly be posted to shareholders and be made available on the Company's website, www.uvel.com.

Highlights:

· Turnover decreased by 27.5% to £10.7m (2019: £14.2m);

· Profit before income tax decreased to £452K (2019: £1.73m);

· Total Equity attributable to shareholders: £8.7m (2019: £7.92m);

· Current ratio 1.8 (2019: 2.4);

· Earnings per share 0.12p (2019: 0.45p); and

· Proposed final dividend HK0.55 cents (approx. 0.0573 pence) per share (2019: HK0.55 cents).

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

CHAIRMAN'S STATEMENT

I am pleased to report the Company's audited results for the financial year ended 31 March 2020.

Turnover for the year was decreased by 27.5% (underlying rate) to £10.7m (2019: £14.2m). This decrease was mainly due to the 32.3% drop in construction contracts which came largely from the Replacement of CCTV Systems Project ("the Major Contract") awarded by MTR Corporation ("MTRC") of Hong Kong in May 2017. The Group reported reduced revenues for the first half of its financial year in December 2019 due to the widely reported protests against the anti-extradition bill in Hong Kong since the mid of 2019, which hit our construction revenue. The Coronavirus has further hindered the installation plans which has slowed the Company's anticipated recovery in the second half of the year. As announced in early July 2020, the Directors expected the full year results still to be substantially lower than that of 31 March 2019.

The Company's total equity attributable to shareholders stood at £8.7m as at 31 March 2020 (As at 31 March 2019: £7.9m).

The Company in keeping with its dividend strategy, the Board has declared a final dividend of 0.55 HK cents per share, same as the financial year ended 31 March 2019.

The current protests against anti-extradition bill in Hong Kong may appear to be a cause for concern and affect current work in progress at certain locations in the past couple of months. However, the long term effects of these protests may result in more opportunity for the Company as our customers expected to make additional orders, or look to invest additional funds to provide enhanced security and surveillance, such as installation of additional cameras and also facial recognition technology, to help protect its premises, infrastructure and citizens respectively. Therefore, I am optimistic about future prospects of the Company.

In the remainder of this report, I shall go into further details of our order book relating to the Major Contract, financial review, business review, and end with prospect statement. 

THE MAJOR CONTRACT WITH MTRC

The contract with MTRC for the replacement works of the Closed-Circuit Television (CCTV) systems for numerous MTRC railway lines is the major drive for the business of the Company since it was awarded in May 2017. The Company is responsible for replacing the existing analogue CCTV system installed in the stations along the specified lines by a new Internet Protocol-based, digital CCTV system. The Major Contract's expected completion by November 2023. The Board expects that UniVision may receive additional orders in the next financial period and future.

The Major Contract allows for monthly billing on work completed and certified. The MTRC Contract also allows for variation of orders. With further agreed add-ons since May 2017, the total current value of this contract is now HK$462.2 million (approximately £44.6 million at current exchange rates) spread over a six year period, with an expected completion date of November 2023. Up to the financial year ended 31 March 2020, UniVision has invoiced a total of approximately HK$131.5m leaving a further order book of HK$295.2m to be billed over the remaining period. The gross valuation of certified works on the Major Contract was HK$156.3m up to 29 February 2020.

To lower the project cost, the Company is working with its suppliers and sub-contractors to ensure that we get favourable supply and credit terms. With China Rail Group providing the subcontracting works for the Major Contract, it ensures the supply of skilled personnel and also more cost effective than local sources.

The Board also closely monitors UniVision's working capital to be certain that we have adequate financial resources to drive the project to completion. The Company review its position all the time and seek for additional or more sources of funding.

FINANCIAL REVIEW

Highlights of Statement of Profit or Loss and Other Comprehensive Income are:

· As expected, revenue decreased by 27.5% to £10.7m in the reporting period (2019: £14.2m). This revenue slump mainly came from contributions of construction contracts that decreased by 32.3% as compared with last year. The majority of this decline came from the MTRC Replacement of CCTV Systems (the Major Contract).

· Other construction contracts, including the installation, relocation, modification and replacement works that provided by MTRC also contributed significant income.

· Contribution from maintenance contracts were up by 9.6%, compared to the year before. The increase in maintenance contracts was mainly due to the additional work orders for replacement of damaged CCTV equipment caused by vandalism from the protests which mitigated the effect of the lower demand for maintenance work on the MTRC's CCTV replacement project.

· The gross profit decreased by 37.5% to £2m in the reporting period (2019: £3.2m), however, our gross margin was 19.4% which was lower than that of last reporting period (2019: 22.5%). The main reason for the decrease in gross profit margin was due to more work on lower margin construction contracts, and increases in costs relating to subcontracting charges and additional network engineers and system designers working directly on construction contracts. The Company adopt measures to minimise these cost increases and is working closely with its suppliers and subcontractors to retain its competitive edge.

· Our operating expenses were mainly due to administration expenses. For the year, administrative expenses increased by 13.5% to £1.5m (2019: £1.3m), attributable to increase in staff costs. The number of staff has increased from 67 to 73 during the reporting period.

· As a result of lower gross profit and rising operating expenses our profit before tax decreased to £452K in the reporting period (2019: £1.73m).

· The Company has unused tax loss to offset the taxable profit for the year. I report that the profit attributable to the shareholders of the Company also decreased to £452K for the financial year ended 31 March 2020, compared to £1.73m for the last financial year.

· As a result of the slump in profit attributable to shareholders, basic earnings per share decreased to 0.12p for this reporting financial year (2019: 0.45p).

On the Statement of Financial Position, the highlights are:

· Contract assets increased to £6.2m as at 31 March 2020, from £3.6m as at 31 March 2019, mainly due to the longer time applying for billing, particularly for the Major Contract that due to more installation works performed in this current year that of last year which most billing for delivery of equipment. Also, the Work from home policy of government department and MTRC affected the time of approval procedure.

.

· Cash and cash equivalents stood at £679K as at 31 March 2020 (2019: £1.3m), representing a decrease of £633K.

· Total equity attributable to shareholders stood at £8.7m as at 31 March 2020 (As at 31 March 2019: £7.92m), or an increase of £788K.

· Deposit placed for a life insurance policy of £942K as at 31 March 2020 is the value of the keyman insurance plan placed as security for banking facilities provided by a banker to the Company.

· Bank borrowings of £682K as at 31 March 2020 is the loan provided by a banker for financing certain portion of the premium for the insurance policy as above mentioned.

On the Statement of Cash Flow, the highlights are:

· The Company generated negative cash flow from operations of £111K in the reporting period (2019: positive £812K).

· The Board attributes this to closer monitoring and effective control of working capital and more efficient use of our banking facilities.

· Deposit placed for a life insurance policy of £910K, The nature is stated as above.

· New bank loans of £660K. The objective is stated as above.

During the year under review, a relative strengthening in the HK$ at the year-end has led to a 6.4% appreciation in the GBP reporting amount in the Statement of Financial Position. It led to the significant non-cash other comprehensive gain of £549K (2019: gain £466K) on exchange differences arising on translation of foreign operations.

All figures in the above require to be adjusted for comparison purposes. All comparative percentages stated in the Chairman's Statement are adjusted to show the underlying change (net of translation effect on foreign exchange).

To consistent with the Company's dividend policy, the Board has proposed the payment of a final dividend of 0.55 HK cents (gross) per share for the financial year ended 31 March 2020 (2019: 0.55 HK cents). Dividend timetable is as follows:

Ex date: 17 September 2020

Record date: 18 September 2020

Payment date: 16 October 2020

Payment of the dividend is subject to the approval by the shareholders at the upcoming Annual General Meeting.

BUSINESS REVIEW

I will include the following topics in this section: our addressable market segments, business environment in which we operate, our customer base, new business and segment and the management strategy for the next reporting period.

Addressable Market Segments

According to the Market Research Report by Mordor Intelligence: Video Surveillance System Market-Growth, Trends, and Forecast (2019 - 2025), the global video surveillance system market was valued at USD 52.45 billion in 2019, and is expected to reach a value of USD 90.37 billion by 2025, recording a CAGR of 9.31% over the forecast period (2020 - 2025). Our addressable market segment will undergo a healthy growth period.

The use of video surveillance market in business is growing significantly for the increasing need for physical security, coupled with the use of cloud-based services for centralized data. The growth of this market is expected to be fuelled by the introduction of new IP-based digital technologies, which the Company sees happening around the region, and is currently gaining traction in the Hong Kong market. The digital cameras and computer vision software applications to help detect and prevent undesirable behaviour, such as shoplifting, thefts, fraudulent transactions, vandalism, and terror arracks.

Video surveillance systems are increasingly used for many applications, such as crime prevention, tracking consumer behaviour, monitoring industrial processes and traffic management. Globally, the drive to enhance safety and security across different industries is adding significantly to this potential growth. The commercial sector is expected to show the largest market share during the forecast period. Growing focus on infrastructure protection, public safety and increasing demand for high resolution imaging are other key factors driving the market.

The Board regards the increasing demand for networking and wireless infrastructure (such as IP, 4G and 5G) as the key growth driver for the market. The Major Contract, which entails replacement of analogue cameras with IP-based ones, is an example of this trend.

The technology of Video analytics, such as facial recognition, is being enhanced rapidly and UniVision is in a favourable position to participate effectively in this market. The contract for supply and installation of the video analytic monitoring system at Tai Tam Correctional Institution is a good example for it.

Under the Major Contract, the Company acts 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.

Business Environment

The protests against anti-extradition bill have seriously affected the business environment in Hong Kong in last year. It caused adverse effects on the Hong Kong economy, particularly in the retail and tourism sectors. Nevertheless, the protests provided business opportunity for the Company. Violence highlights the importance of public safety and security. The demand for upgrades the video surveillance system, such as facial recognition capabilities, is rising.

Additional work orders for replacement of damaged CCTV equipment caused by vandalism increased job orders and revenue from maintenance contracts for the Company.

Unlike the hotel, travel, catering, retailing sectors, COVID-19 has not seriously affected the Company's business. Nevertheless, as mentioned at the first part, it hindered the installation plans and affected the revenue. 

Customer base

MTRC remains the Company's largest customer this financial year, representing 82.1% of the Company's total revenue. In addition, Electrical and Mechanical Services Department ("EMSD") and other commercial clients are also parts of our customer base.

EMSD and other departments of Hong Kong Government are another core sources of the Company's customer base. The Company is on the list in the category of Approved Specialist Contractors for Public Works: Video Electronics Installation. It indicates that UniVision is a qualified public works provider who enables to comply with the financial, technical and management criteria for the retention on the list of specialist contractors.

To avoid the concentration of customers, the Company will diversify its customer base particularly to the private and domestic sectors, such as sizeable multinational private enterprises.

New business and segment

The Board always explore and capture the business opportunity in other business particularly in the Electrical and Mechanical ("E&M') business. Besides the Company will set up a new company for delivery some potential projects outside Hong Kong. The Board also considers to set up a branch or office in U.K. to expand its core business in the coming year. These indicate that the Company will not only expand the business geographically but also have solid plan to launch new business other than the video surveillance business.

Our Strategy

Given the above market, business opportunities, and customer base analysis, I see three key future objectives:

· Financial: To deliver the MTRC Contract and other potential large-scale projects efficiency and profitably, the Company engages suitable subcontracting partner(s) with financial strength to minimise the risks associated with working capital for such sizeable contracts. The Board considers this outreach both desirable and prudent for the Company's further growth in the market.

· Technology: The Company will continue to acquire skills and training in networking and wireless technology area and software skills for video analytics and facial recognition applications, to help providing customisation and localisation for our clients. We will also co-operate with the high qualified vendors and specialists in these technology areas to help us acquire new contracts.

· People: Human Resources is one of the most valuable resources in the Company. In facing the high demand for the Major Contract, the Company will continue to equip the project managers and officers with technical skills to deliver the contracts effectively and also strengthen our sales and marketing activities and actively in tendering new contracts.

PROSPECTS

Year 2019 marks the 40th anniversary of UniVision's incorporation in Hong Kong. It is a milestone that signifies the Company's longevity and good standing in the security and surveillance business. The Company's core competency relies on our UniVision's brand name; and its dedicated, experienced, and people.

The Board expects that high demand in security and surveillance market will provide the ground and opportunity for the Company to grow. Given our sizable order book, especially the Major Contract, the Company will derive significant revenue in the next few reporting periods, but need to manage and monitor costs to generate profits attributable to shareholders. 

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 acknowledge the hard work of the management and all our staff for their contribution.

MR. STEPHEN SIN MO KOO

EXECUTIVE CHAIRMAN

4 September 2020

UNIVISION ENGINEERING LIMITED

STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME

For the year ended 31 March 2020

UNIVISION ENGINEERING LIMITED

STATEMENT OF FINANCIAL POSITION

As at 31 March 2020

The financial statements were authorised for issue by the board of directors on 4 September 2020 and were signed on its behalf by:

UNIVISION ENGINEERING LIMITED

STATEMENT OF CHANGES IN EQUITY

For the year ended 31 March 2020

The currency translation from Hong Kong dollar to the presentation currency of Sterling Pound of these financial statements has no impact on the available distributable reserves of the Company as at 31 March 2020.

Notes:

1. Special capital reserve "A"

Pursuant to the Order of the High Court dated 20 November 2004, any future recoveries of the Company's accumulated provision for obsolete inventories and provision for bad debts amounting to HK$1,935,002 and HK$3,592,540 respectively will be credited to non-distributable special capital reserve "A" account.

2. Special capital reserve "B"

By a special resolution passed on 30 July 2004 and pursuant to the Order of the High Court dated 20 November 2004, the authorised and issued capital of the Company was reduced from HK$159,245,000 (divided into 31,849 ordinary shares of HK$5,000 each) to HK$16,405,000 (divided into 3,281 ordinary shares of HK$5,000 each). The reduction of capital was effected by cancellation of 28,568 ordinary shares of HK$5,000 each in the issued and paid up share capital of the Company. The Company established a non-distributable special capital reserve "B" account into which HK$2,071,307 was credited as a result of the capital reduction.

UNIVISION ENGINEERING LIMITED

STATEMENT OF CASH FLOWS

For the year ended 31 March 2020

1. GENERAL INFORMATION

UniVision Engineering Limited (the "Company") is incorporated in Hong Kong with limited liability and its shares are listed on the Alternative Investment Market of the London Stock Exchange ("AIM"). The address of the Company's registered office is Unit 201, 2/F., Sunbeam Centre, 27 Shing Yip Street, Kwun Tong, Kowloon, Hong Kong.

These financial statements are presented in Sterling Pound ("£"), which is the presentation currency of the Company.

The Company is mainly engaged in the supply, design, installation and maintenance of closed circuit television and surveillance systems and the sale of security system related products in Hong Kong.

2. BASIS OF PREPARATION

These financial statements have been prepared in accordance with International Financial Reporting Standards ("IFRSs") issued by the International Accounting Standards Board. The measurement basis used in the preparation of these financial statements is the historical cost basis.

The preparation of financial statements in conformity with IFRSs requires management to make judgements, estimates and assumptions that affect the application of policies and reported amounts of assets, liabilities, income and expenses. The estimates and associated assumptions are based on historical experience and various other factors that are believed to be reasonable under the circumstances, the results of which form the basis of making the judgements about carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates.

The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised if the revision affects only that period, or in the period of the revision and future periods if the revision affects both current and future periods. Judgements made by management in the application of IFRSs that have significant effect on the financial statements and key sources of estimation uncertainty are discussed in note 5 to the financial statements.

3. APPLICATION OF NEW AND REVISED IFRSs

(a) Initial application of IFRSs

In the current year, the Company initially applied the following IFRSs:

The Company had to change its accounting policies following the adoption of IFRS 16. For details, please refer to note 3(c) to the financial statements. The other amendments listed above did not have material impact on the Company's financial statements for the current or prior years.

(b) IFRSs in issue but not yet effective

The following IFRSs in issue at 31 March 2020 have not been applied in the preparation of these financial statements since they were not yet effective for the annual period beginning on 1 April 2019:

1 Effective for the Company's annual financial statements beginning on 1 April 2020

2 Effective for the Company's annual financial statements beginning on 1 April 2022

3 Effective for the annual periods beginning on or after a date to be determined

The Company is in the process of making an assessment of what the impact of these amendments, new standards and interpretations is expected to be in the period of initial application.

(c) Changes in accounting policies

This note explains the impact of the adoption of IFRS 16 on the Company's financial statements and also discloses the new accounting policies that have been applied from 1 April 2019, where they are different to those applied in prior periods.

IFRS 16 replaces IAS 17, Leases, and the related interpretations, IFRIC-Int 4, Determining whether an arrangement contains a lease, ISIC-Int 15, Operating leases - incentives, and ISIC-Int 27, Evaluating the substance of transactions involving the legal form of a lease. It introduces a single accounting model for lessees, which requires a lessee to recognise a right-of-use asset and a lease liability for all leases, except for leases that have a lease term of 12 months or less ("short-term leases") and leases of low-value assets. The lessor accounting requirements are brought forward from IAS 17 substantially unchanged.

IFRS 16 also introduces additional qualitative and quantitative disclosure requirements which aim to enable users of the financial statements to assess the effect that leases have on the financial position, financial performance and cash flows of an entity.

The Company has initially applied IFRS 16 on 1 April 2019. The Company has elected to use the modified retrospective approach and has therefore recognised the cumulative effect of initial application as an adjustment to the opening balances of right-of-use assets and lease liabilities at 1 April 2019. Comparative information has not been restated and continues to be reported under IAS 17.

Further details of the nature and effect of the changes to previous accounting policies and the transition options applied are set out below:

New definition of a lease

The change in the definition of a lease mainly relates to the concept of control. IFRS 16 defines a lease on the basis of whether a customer controls the use of an identified asset for a period of time, which may be determined by a defined amount of use. Control is conveyed where the customer has both the right to direct the use of the identified asset and to obtain substantially all of the economic benefits from that use.

The Company applies the new definition of a lease in IFRS 16 only to contracts that were entered into or changed on or after 1 April 2019. For contracts entered into before 1 April 2019, the Company has used the transitional practical expedient to grandfather the previous assessment of which existing arrangements are or contain leases. Accordingly, contracts that were previously assessed as leases under IAS 17 continue to be accounted for as leases under IFRS 16 and contracts previously assessed as non-lease service arrangements continue to be accounted for as executory contracts.

Lease accounting and transitional impact

IFRS 16 eliminates the requirement for a lessee to classify leases as either operating leases or finance leases, as was previously required by IAS 17. Instead, the Company is required to capitalise all leases when it is the lessee, including leases previously classified as operating leases under IAS 17, other than those short-term leases and leases of low-value assets which are exempt. As far as the Company is concerned, these newly capitalised leases are primarily in relation to right-of-use assets as disclosed in note 17 to the financial statements. For an explanation of how the Company applies lessee accounting, see note 4.10 to the financial statements.

At the date of transition to IFRS 16 (i.e. 1 April 2019), the Company determined the length of the remaining lease terms and measured the lease liabilities for the leases previously classified as operating leases at the present value of the remaining lease payments, discounted using the relevant incremental borrowing rates at 1 April 2019. The weighted average of the incremental borrowing rates used for determination of the present value of the remaining lease payments was 5.125%.

To ease the transition to IFRS 16, the Company applied the following recognition exemption and practical expedients at the date of initial application of IFRS 16:

(1) the Company elected not to apply the requirements of IFRS 16 in respect of the recognition of lease liabilities and right-of-use assets to leases for which the remaining lease term ends within 12 months from the date of initial application of IFRS 16, i.e. where the lease term ends on or before 31 March 2020; and

(2) when measuring the lease liabilities at the date of initial application of IFRS 16, the Company applied a single discount rate to a portfolio of leases with reasonably similar characteristics (such as leases with a similar remaining lease term for a similar class of underlying asset in a similar economic environment).

The following table reconciles the operating lease commitments as disclosed in note 31 to the financial statements to the opening balance for lease liabilities recognised as at 1 April 2019:

The right-of-use assets in relation to leases previously classified as operating leases have been recognised at an amount equal to the amount recognised for the remaining lease liabilities, adjusted by the amount of any prepaid or accrued lease payments relating to that lease recognised in the statement of financial position at 31 March 2019.

The following table summarises the impacts of the adoption of IFRS 16 on the Company's statement of financial position:

4. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

4.1 Segment reporting

An operating segment is a component of the Company that engages in business activities from which it may earn revenue and incurs expenses, including revenue and expenses that relate to transactions with other components of the Company. Operating segments are reported in a manner consistent with the internal reporting provided to the chief operating decision-maker.

4.2 Foreign currency

Functional and presentation currency

Items included in the financial statements of the Company are measured using the currency of the primary economic environment in which the Company operates (the "functional currency"), which is Hong Kong Dollar ("HK$"). These financial statements are presented in Sterling Pound ("£"), which is the Company's presentation currency. As the Company is listed on the AIM, the directors consider that this presentation is more useful for its current and potential investors.

Transactions and balances

Foreign currency transactions are translated into the functional currency using the exchange rates prevailing at the dates of the transactions or valuation where items are re-measured. Foreign exchange gains and losses resulting from the settlement of such transactions and from the translation at year-end exchange rates of monetary assets and liabilities denominated in foreign currencies are recognised in profit or loss, except when deferred in other comprehensive income as qualifying cash flow hedges and qualifying net investment hedges.

4.3 Plant and equipment

Plant and equipment are initially recognised at cost and subsequently carried at cost less accumulated depreciation and accumulated impairment loss. The cost of an asset comprises its purchase price and any directly attributable costs of bringing the asset to working condition for its intended use.

On disposal of an item of plant and equipment, the difference between the net disposal proceeds and its carrying amount is taken to profit or loss.

Depreciation is calculated using the straight-line method to allocate their depreciable amounts over the estimated useful lives as follows:

Fully depreciated plant and equipment are retained in the financial statements until the items are no longer in use.

The residual values, useful lives and depreciation method are reviewed at the end of each reporting period to ensure that the amount, method and period of depreciation are consistent with previous estimates and the expected pattern of consumption of the future economic benefits embodied in the items of plant and equipment. The effects of any revision are recognised in profit or loss when the changes arise.

Subsequent expenditure relating to plant and equipment that has already been recognised is added to the carrying amount of the asset only when it is probable that future economic benefits associated with the item will flow to the Company and the cost of the item can be measured reliably. All other repair and maintenance expenses are recognised in profit or loss when incurred.

4.4 Impairment of non-financial assets

The carrying amounts of non-current assets, including plant and equipment and right-of-use assets, are reviewed at the end of each reporting period to determine whether there is any indication of impairment. If any such indication exists, the recoverable amount is estimated.

Calculation of recoverable amount

The recoverable amount of an asset is the greater of its fair value less costs of disposal and value in use. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset. Where an asset does not generate cash inflows largely independent of those from other assets, the recoverable amount is determined for the smallest group of assets that generates cash inflows independently (i.e. a cash-generating unit).

Recognition of impairment losses

An impairment loss is recognised in profit or loss if the carrying amount of an asset, or the cash-generating unit to which it belongs, exceeds the recoverable amount. Impairment losses recognised in respect of cash-generating units are allocated first to reduce the carrying amount of any goodwill allocated to the cash-generating unit (or group of units) and then, to reduce the carrying amount of the other assets in the unit (or group of units) on a pro rata basis, except that the carrying value of an asset will not be reduced below its individual fair value less costs of disposal (if measurable) or value in use (if determinable).

Reversals of impairment losses

An impairment loss is reversed if there has been a favourable change in the estimates used to determine the recoverable amount. A reversal of an impairment loss is limited to the asset's carrying amount that would have been determined had no impairment loss been recognised in prior years. Reversals of impairment losses are credited to profit or loss in the year in which the reversals are recognised.

4.5 Inventories

Inventories are stated at the lower of cost and net realisable value. Cost is determined using the weighted average method and comprises design costs, raw materials, direct labour, other direct costs and other costs incurred in bringing the inventories to their present location and condition. Net realisable value is the estimated selling price in the ordinary course of business less the estimated costs of completion and the estimated costs necessary to make the sale.

4.6 Financial instruments

Financial assets and financial liabilities are recognised when the Company becomes a party to the contractual provisions of the instrument.

Financial assets and financial liabilities are initially measured at fair value except for trade receivables arising from contracts with customers which are initially measured in accordance with IFRS 15. Transaction costs that are directly attributable to the acquisition or issue of financial assets and financial liabilities are added to or deducted from the fair value of the financial assets or financial liabilities, as appropriate, on initial recognition.

4.6.1 Financial assets

Classification and subsequent measurement of financial assets

Financial assets that meet the following conditions are subsequently measured at amortised cost:

- the financial asset is held within a business model whose objective is to collect contractual cash flows; and

- the contractual terms give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding.

All other financial assets are subsequently measured at fair value through profit or loss.

Impairment of financial assets

The Company recognises a loss allowance for ECL on financial assets and other assets which are subject to impairment under IFRS 9. The amount of ECL is updated at each reporting date to reflect changes in credit risk since initial recognition.

Lifetime ECL represents the ECL that will result from all possible default events over the expected life of the relevant instrument. In contrast, 12-month ECL represents the portion of lifetime ECL that is expected to result from default events that are possible within 12 months after the reporting date. Assessments are done based on the Company's historical credit loss experience, adjusted for factors that are specific to the debtors, general economic conditions and an assessment of both the current conditions at the reporting date as well as the forecast of future conditions.

The Company always recognises lifetime ECL for trade receivables and contract assets. The ECL on these assets is assessed individually for debtors with significant balances and/or collectively using a provision matrix with appropriate groupings. For all other instruments, the Company measures the loss allowance equals to 12-month ECL, unless when there has been a significant increase in credit risk since initial recognition, the Company recognises lifetime ECL. The assessment of whether lifetime ECL should be recognised is based on significant increases in the likelihood or risk of a default occurring since initial recognition.

In assessing whether the credit risk of a financial instrument has increased significantly since initial recognition, the Company compares the risk of default occurring on the financial instrument assessed at the reporting date with that assessed at the date of initial recognition. In making this reassessment, the Company considers that a default event occurs when (i) the borrower is unlikely to pay its credit obligations to the Company in full, without recourse by the Company to actions such as realising security (if any is held); or (ii) the financial asset is 90 days past due. The Company considers both quantitative and qualitative information that is reasonable and supportable, including historical experience and forward-looking information that is available without undue cost or effort.

In particular, the following information is taken into account when assessing whether credit risk has increased significantly since initial recognition:

- failure to make payments of principal or interest on their contractually due dates;

- an actual or expected significant deterioration in a financial instrument's external or internal credit rating (if available);

- an actual or expected significant deterioration in the operating results of the debtor; and

- existing or forecast changes in the technological, market, economic or legal environment that have a significant adverse effect on the debtor's ability to meet it obligation to the Company.

Depending on the nature of the financial instruments, the assessment of a significant increase in credit risk is performed on either an individual basis or a collective basis. When the assessment is performed on a collective basis, the financial instruments are grouped based on shared credit risk characteristics, such as past due status and credit risk ratings.

ECLs are re-measured at each reporting date to reflect changes in the financial instrument's credit risk since initial recognition. Any change in the ECL amount is recognised as an impairment gain or loss in profit or loss. The Company recognises an impairment gain or loss for all financial instruments with a corresponding adjustment to their carrying amount through a loss allowance account, except for investments in debts securities that are measured at fair value through other comprehensive income (recycling), for which the loss allowances are recognised in other comprehensive income and accumulated in the fair value reserve (recycling).

Interest income is calculated based on the gross carrying amount of the financial asset unless the financial asset is credit-impaired, in which case interest income is calculated based on the amortised cost (i.e. the gross carrying amount less loss allowance) of the financial asset.

At each reporting date, the Company assesses whether a financial asset is credit-impaired. A financial asset is credit-impaired when one or more events that have a detrimental impact on the estimated future cash flows of the financial asset have occurred. Evidence that a financial asset is credit-impaired includes the following observable events:

- significant financial difficulties of the debtor;

- a breach of contract, such as a default or delinquency in interest or principal payments;

- it becoming probable that the borrower will enter into bankruptcy or other financial reorganisation;

- significant changes in the technological, market, economic or legal environment that have an adverse effect on the debtor; or

- the disappearance of an active market for a security because of financial difficulties of the issuer.

The gross carrying amount of a financial asset or contract asset is written off (either partially or in full) to the extent that there is no realistic prospect of recovery. This is generally the case when the Company determines that the debtor does not have assets or sources of income that could generate sufficient cash flows to repay the amounts subject to the write-off.

Subsequent recoveries of an asset that was previously written off are recognised as a reversal of impairment in profit or loss in the period in which the recovery occurs.

4.6.2 Financial liabilities and equity instruments

Debt and equity instruments issued by the Company are classified as either financial liabilities or as equity in accordance with the substance of the contractual arrangements and the definitions of a financial liability and an equity instrument.

Equity instrument

An equity instrument is any contract that evidences a residual interest in the assets of an entity after deducting all of its liabilities. Equity instruments issued by the Company are recognised at the proceeds received, net of direct issue costs.

Financial liabilities

Financial liabilities are subsequently measured at amortised cost, using the effective interest method.

Effective interest method

The effective interest method is a method of calculating the amortised cost of a financial liability and of allocating interest expense over the relevant period. The effective interest rate is the rate that exactly discounts estimated future cash payments (including all fees paid or received that form an integral part of the effective interest rate, transaction costs and other premiums or discounts) through the expected life of the financial liability or, where appropriate, a shorter period, to the net carrying amount on initial recognition. Interest expense is recognised on an effective interest basis.

4.6.3 Derecognition

The Company derecognises a financial asset only when the contractual rights to the cash flows from the asset expire, or when it transfers the financial asset and substantially all the risks and rewards of ownership of the asset to another entity.

On derecognition of a financial asset in its entirety, the difference between the asset's carrying amount and the sum of the consideration received and receivable and the cumulative gain or loss that had been recognised in other comprehensive income and accumulated in equity is recognised in profit or loss.

The Company derecognises financial liabilities when, and only when, the Company's obligations are discharged, cancelled or expire. The difference between the carrying amount of the financial liability derecognised and the consideration paid and payable is recognised in profit or loss.

4.6.4 Offsetting financial instruments

Financial assets and liabilities are offset and the net amount reported in the statement of financial position when there is a legally enforceable right to offset the recognised amounts and there is an intention to settle on a net basis or realise the asset and settle the liability simultaneously.

4.7 Cash and cash equivalents

Cash and cash equivalents comprise cash at bank and in hand, demand deposits with banks and other financial institutions, and short-term, highly liquid investments that are readily convertible into known amounts of cash and which are subject to an insignificant risk of changes in value, having been within three months of maturity at acquisition.

4.8 Dividend distributions

Dividend distributions to the Company's shareholders are recognised as liabilities in the financial statements in the period in which the dividends are approved by the shareholders or directors, where appropriate.

4.9 Revenue recognition

Revenue from contracts with customers

Under IFRS 15, the Company recognises revenue when (or as) a performance obligation is satisfied, i.e. when "control" of the goods or services underlying the particular performance obligation is transferred to the customer.

A performance obligation represents a good or service (or a bundle of goods or services) that is distinct or a series of distinct goods or services that are substantially the same.

Control is transferred over time and revenue is recognised over time by reference to the progress towards complete satisfaction of the relevant performance obligation if one of the following criteria is met:

- the customer simultaneously receives and consumes the benefits provided by the Company's performance as the Company performs;

- the Company's performance creates or enhances an asset that the customer controls as the Company performs; or

- the Company's performance does not create an asset with an alternative use to the Company and the Company has an enforceable right to payment for performance completed to date.

Otherwise, revenue is recognised at a point in time when the customer obtains control of the distinct good or service.

A contract asset represents the Company's right to consideration in exchange for goods or services that the Company has transferred to a customer that is not yet unconditional. It is assessed for impairment in accordance with IFRS 9. In contrast, a receivable represents the Company's unconditional right to consideration, i.e. only the passage of time is required before payment of that consideration is due.

A contract liability represents the Company's obligation to transfer goods or services to a customer for which the Company has received consideration (or an amount of consideration is due) from the customer.

A contract asset and a contract liability relating to the same contract are accounted for and presented on a net basis.

Contracts with multiple performance obligations (including allocation of transaction price)

For contracts that contain more than one performance obligations (provision of design and installation services and sales of goods), the Company allocates the transaction price to each performance obligation on a relative stand-alone selling price basis.

The stand-alone selling price of the distinct good or service underlying each performance obligation is determined at contract inception. It represents the price at which the Company would sell a promised good or service separately to a customer. If a stand-alone selling price is not directly observable, the Company estimates it using appropriate techniques such that the transaction price ultimately allocated to any performance obligation reflects the amount of consideration to which the Company expects to be entitled in exchange for transferring the promised goods or services to the customer.

Over time revenue recognition: measurement of progress towards complete satisfaction of a performance obligation

The progress towards complete satisfaction of a performance obligation is measured based on input method, which is to recognise revenue on the basis of the Company's efforts or inputs to the satisfaction of a performance obligation relative to the total expected inputs to the satisfaction of that performance obligation, that best depicts the Company's performance in transferring control of goods or services.

Service revenue from supply, design and installation of closed circuit television and surveillance systems is recognised over time by reference to the progress towards complete satisfaction of the relevant performance obligation using input method as the Company's performance does not create an asset with an alternative use to the Company and the Company has an enforceable right to payment for performance completed to date.

Service revenue from maintenance contracts is recognised over time as the customer simultaneously receives and consumes the benefits provided by the Company. Revenue is recognised on a straight-line basis because the Company's inputs are expended evenly throughout the performance period.

Trading income is recognised at a point in time when the customer obtains control of the distinct good.

4.10 Leases

After application of IFRS 16 on 1 April 2019

At inception of a contract, the Company assesses whether the contract is, or contains, a lease. A contract is, or contains, a lease if the contract conveys the right to control the use of an identified asset for a period of time in exchange for consideration. Control is conveyed where the customer has both the right to direct the use of the identified asset and to obtain substantially all of the economic benefits from that use.

As a lessee

Where the contract contains lease component(s) and non-lease component(s), the Company has elected not to separate non-lease components and accounts for each lease component and any associated non-lease components as a single lease component for all leases.

At the lease commencement date, the Company recognises a right-of-use asset and a lease liability, except for short-term leases that have a lease term of 12 months or less and leases of low-value assets. When the Company enters into a lease in respect of a low-value asset, the Company decides whether to capitalise the lease on a lease-by-lease basis. The lease payments associated with those leases which are not capitalised are recognised as an expense on a systematic basis over the lease term.

Where the lease is capitalised, the lease liability is initially recognised at the present value of the lease payments payable over the lease term, discounted using the interest rate implicit in the lease or, if that rate cannot be readily determined, using a relevant incremental borrowing rate. After initial recognition, the lease liability is measured at amortised cost and interest expense is calculated using the effective interest method. Variable lease payments that do not depend on an index or rate are not included in the measurement of the lease liability and hence are charged to profit or loss in the accounting period in which they are incurred.

The right-of-use asset recognised when a lease is capitalised is initially measured at cost, which comprises the initial amount of the lease liability plus any lease payments made at or before the commencement date, and any initial direct costs incurred. Where applicable, the cost of the right-of-use assets also includes an estimate of costs to dismantle and remove the underlying asset or to restore the underlying asset or the site on which it is located, discounted to their present value, less any lease incentives received. The right-of-use asset is subsequently stated at cost less accumulated depreciation (Note 17) and impairment losses.

The lease liability is remeasured when there is a change in future lease payments arising from a change in an index or rate, or there is a change in the Company's estimate of the amount expected to be payable under a residual value guarantee, or there is a change arising from the reassessment of whether the Company will be reasonably certain to exercise a purchase, extension or termination option. When the lease liability is remeasured in this way, a corresponding adjustment is made to the carrying amount of the right-of-use asset, or is recorded in profit or loss if the carrying amount of the right-of-use asset has been reduced to zero.

The Company presents right-of-use assets and lease liabilities separately in the statement of financial position.

Before application of IFRS 16 on 1 April 2019

Leases are classified as finance leases whenever the terms of the lease transfer substantially all the risks and rewards of ownership to the lessee. All other leases are classified as operating leases.

Operating lease payments are recognised as an expense on a straight-line basis over the lease term. In the event that lease incentives are received to enter into operating leases, such incentives are recognised as a liability. The aggregate benefit of incentives is recognised as a reduction of rental expense on a straight-line basis.

4.11 Employee benefits

Employee benefits comprise short-term employee benefits and contributions to defined contribution retirement plans.

Short-term employee benefits, including salaries, annual bonuses, paid annual leave and leave passage, contributions to defined contribution retirement plans and the cost of non-monetary benefits are accrued in the year in which the associated services are rendered by employees. Where payment or settlement is deferred and the effect would be material, these amounts are stated at their present values.

Contributions to the defined contribution scheme are charged to profit or loss when incurred.

4.12 Income tax

Income tax expense for the year comprises current and deferred tax. Tax is recognised in the statement of profit or loss and other comprehensive income, except to the extent that it relates to items recognised in other comprehensive income or directly in equity. In this case, the tax is also recognised in other comprehensive income or directly in equity, respectively.

The current income tax charge is calculated on the basis of the tax laws enacted or substantively enacted at the end of the reporting period in the countries where the Company operates and generates taxable income. Management periodically evaluates positions taken in tax returns with respect to situations in which applicable tax regulation is subject to interpretation. It establishes provisions where appropriate on the basis of amounts expected to be paid to the tax authorities.

Deferred income tax is recognised, using the liability method, on temporary differences arising between the tax bases of assets and liabilities and their carrying amounts in the financial statements. However, deferred tax liabilities are not recognised if they arise from the initial recognition of goodwill; deferred income tax is not accounted for if it arises from initial recognition of an asset or a liability in a transaction other than a business combination that at the time of the transaction affects neither accounting nor taxable profit or loss. Deferred income tax is determined using tax rates (and laws) that have been enacted or substantially enacted by the end of the reporting period and are expected to apply when the related deferred income tax asset is realised or the deferred income tax liability is settled.

Deferred income tax assets are recognised only to the extent that it is probable that future taxable profit will be available against which the temporary differences can be utilised.

Deferred income tax assets and liabilities are offset when there is a legally enforceable right to offset current tax assets against current tax liabilities and when the deferred income taxes assets and liabilities relate to income taxes levied by the same taxation authority on either the same taxable entity or different taxable entities where there is an intention to settle the balances on a net basis.

4.13 Provisions and contingent liabilities

Provisions are recognised for other liabilities of uncertain timing or amount when the Company has a legal or constructive obligation arising as a result of a past event, it is probable that an outflow of economic benefits will be required to settle the obligation and a reliable estimate can be made. Where the time value of money is material, provisions are stated at the present value of the expenditure expected to settle the obligation.

Where it is not probable that an outflow of economic benefits will be required, or the amount cannot be estimated reliably, the obligation is disclosed as a contingent liability, unless the probability of outflow is remote. Possible obligations, whose existence will only be confirmed by the occurrence or non-occurrence of one or more future events are also disclosed as contingent liabilities unless the probability of outflow is remote.

4.14 Events after the reporting period

Events after the reporting period that provide additional information about the Company at the end of the reporting period or those that indicate the going concern assumption is not appropriate are adjusting events and are reflected in the financial statements. Events after the reporting period that are not adjusting events are disclosed in the notes to the financial statements when material.

4.15 Related parties

A person or a close member of that person's family is related to the Company if that person:

(i) has control or joint control over the Company;

(ii) has significant influence over the Company; or

(iii) is a member of the key management personnel of the Company or the Company's parent.

An entity is related to the Company if any of the following conditions applies:

(i) The entity and the Company are members of the same group (which means that each parent, subsidiary and fellow subsidiary is related to the others).

(ii) One entity is an associate or joint venture of the other entity (or an associate or joint venture of a member of a group of which the other entity is a member).

(iii) Both entities are joint ventures of the same third party.

(iv) One entity is a joint venture of a third entity and the other entity is an associate of the third entity.

(v) The entity is a post-employment benefit plan for the benefit of employees of either the Company or an entity related to the Company.

(vi) The entity is controlled or jointly controlled by a person identified in the above paragraph.

(vii) A person identified in (i) of the above paragraph has significant influence over the entity or is a member of the key management personnel of the entity (or of a parent of the entity).

(viii) The entity, or any member of a group of which it is a part, provides key management personnel services to the Company or to the Company's parent.

Close members of the family of a person are those family members who may be expected to influence, or be influenced by, that person in their dealings with the entity.

5. KEY SOURCES OF ESTIMATION UNCERTAINTY

The following are the key assumptions concerning the future and other key sources of estimation uncertainty at the end of the reporting period that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year.

Revenue recognition on service contracts

The Company recognises revenue on service contracts from supply, design and installation of closed circuit television and surveillance systems by reference to the progress towards complete satisfaction of the relevant performance obligation using the input method, measured based on the proportion of contract costs incurred for work performed to date relative to the estimated total contract costs. The management regularly discusses with the project team in order to review and revise the estimates of the total contract costs and stage of completion of the work performed to date with reference to the performance and status of corresponding service contract work. Accordingly, revenue recognition on service contracts involves a significant degree of management estimates and judgment, with estimates being made to assess the total contract costs and contract costs incurred for work performed to date.

The management reviews and revises the estimates of total contract costs and contract costs incurred for work performed to date as the contract progresses, the actual outcome of the contract in terms of its total costs may be higher or lower than the estimates and this will affect the revenue and profit recognised.

Estimated provision of ECL for receivables measured at amortised cost and contract assets

The management of the Company estimates the amount of impairment loss for ECL on receivables measured at amortised cost and contract assets based on the credit risk of these assets. The amount of the impairment loss based on ECL model is measured as the difference between all contractual cash flows that are due to the Company in accordance with the contract and all the cash flows that the Company expects to receive, discounted at the effective interest rate determined at initial recognition. Where the future cash flows are less than expected, or being revised downward due to changes in facts and circumstances, a material impairment loss may arise.

The provision of ECL is sensitive to changes in estimates.

Income taxes

The Company is subject to profits tax in Hong Kong. Significant estimates are required in determining the provision for income taxes. There are many transactions and calculations for which the ultimate tax determination is uncertain during the ordinary course of business. Where the final tax outcome of these matters is different from the amounts that were initially recorded, such differences will impact the income tax and deferred tax provisions in the period in which such determination is made.

As at 31 March 2020, the Company has unused tax losses of approximately £1,838,000 (2019: £2,179,000) available for offset against future profits and no deferred tax asset has been recognised thereon. In cases where there are future profits generated to utilise the tax losses, a material deferred tax asset may arise, which would be recognised in the statement of profit or loss and other comprehensive income for the period in which such a recognition takes place.

6. FINANCIAL INSTRUMENTS

(a) Categories of financial instruments

(b) Financial risk management objectives and policies

Details of the Company's major financial instruments are disclosed in the respective notes. The risks associated with these financial instruments include currency risk, interest rate risk, credit risk and liquidity risk. The policies on how these risks are mitigated are set out below. The Company's management manages and monitors these exposures to ensure appropriate measures are implemented in a timely and effective manner.

(i) Market risk

Currency risk

The Company has foreign currency transactions and foreign currency denominated financial assets and liabilities, which expose the Company to foreign currency risk.

The carrying amounts of the Company's foreign currency denominated financial assets and liabilities at the end of each reporting period are as follows:

The Company currently does not have any policy on hedges of foreign currency risk. However, the management monitors the foreign currency risk exposure and will consider hedging significant foreign currency risk should the need arise.

The following table details the Company's sensitivity to a 5% increase and decrease in Sterling Pound against the relevant foreign currencies with all other variables held constant. 5% (2019: 5%) is the sensitivity rate used when reporting foreign currency risk internally to key management personnel and represents management's assessment of the reasonably possible change in foreign exchange rates. The sensitivity analysis includes only outstanding foreign currency denominated financial instruments and adjusts their translation at the end of the reporting period for a 5% (2019: 5%) change in foreign currency rates.

Interest rate risk

The Company is exposed to fair value interest rate risk in relation to its bank deposits. The Company is exposed to cash flow interest rate risk due to fluctuation of the prevailing market interest rate on bank borrowings which carry interest at prevailing market interest rates as shown in notes 26 and 32 to the financial statements.

The Company currently does not have an interest rate hedging policy. However, the management monitors interest rate exposure and will consider hedging significant interest rate exposure should the need arises.

The Company's exposure to interest rates on financial liabilities is detailed in the liquidity risk management section of this note.

The sensitivity analysis below has been determined based on the change in interest rates and the exposure to interest rates for the non-derivative financial liabilities at the end of the reporting period and on the assumption that the amount outstanding at the end of the reporting period was outstanding for the whole year and held constant throughout the financial year. The 25 basis points increase or decrease represents the management's assessment of a reasonably possible change in interest rates over the period until the next fiscal year. The analysis is performed on the same basis for 2019.

For the year ended 31 March 2020, if interest rates had been 25 basis points higher/lower with all other variables held constant, the Company's post-tax profit for the year would increase/decrease by approximately £4,081 (2019: £2,736).

(ii) Credit risk

At 31 March 2020, the Company's maximum exposure to credit risk in the event of the counterparties' failure to perform their obligations in relation to each class of recognised financial assets is the carrying amount of those assets as stated in the statement of financial position.

In order to minimise credit risk, the management has a credit policy in place and the exposure to these credit risks is monitored on an ongoing basis. Credit evaluations of the counterparties' financial position and conditions are performed on each and every major debtor periodically.

The Company measures ECLs for trade and other receivables and contract assets at an amount calculated using a provision matrix, details of which are set out in notes 20 and 21 to the financial statements. At the end of the reporting period, the Company had concentrations of credit risk where trade and other receivables balance of the Company's largest external customer exceeds 10% of the total trade and other receivables at the end of the reporting period.

The credit risk on deposit placed for a life insurance policy and liquid funds is limited because the counterparties are banks/financial institutions with high credit ratings assigned by international credit rating agencies.

The Company's exposure credit risk is considered limited.

(iii) Liquidity risk

The Company is responsible for its own cash management, including the raising of loans to cover the expected cash demands. In managing liquidity risk, the Company's policy is to regularly monitor current and expected liquidity requirements and its compliance with lending covenants, to ensure that it maintains sufficient reserves of cash and adequate committed funding lines from the financial institutions to meet its liquidity requirements in the short and longer term. At 31 March 2020, the Company's banking facilities amounted to £7,858,538 (2019: £5,655,778) and the unused facilities were £5,903,189 (2019: £4,553,605).

The following table details the contractual maturities of the Company's non-derivative financial liabilities at the end of each reporting period, which is based on the undiscounted cash flows and the earliest date on which the Company can be required to pay. The table includes both interest and principal cash flows.

(c) Fair value

The directors of the Company consider that the carrying amounts of financial assets and financial liabilities recorded at amortised cost in these financial statements approximate their fair values at the end of the reporting period.

(d) Capital risk management

The primary objectives when managing capital are to safeguard the Company's ability to continue as a going concern, so that it can continue to provide returns for shareholders and benefits for other stakeholders and to maintain an optimal capital structure to reduce the cost of capital.

The Company actively and regularly reviews and manages the capital structure to maintain a balance between the higher shareholder returns that might be possible with a higher level of borrowings and the advantages and security afforded by a sound capital position, and makes adjustments to the capital structure in light of changes in economic conditions.

The Company monitors its capital structure on the basis of a net debt-to-adjusted capital ratio. For this purpose, net debt is defined as total debt less bank deposits and cash and cash equivalents. Adjusted capital comprises all components of equity less proposed dividends but not yet accrued.

The strategy during 2020, which is unchanged from 2019, is to maintain the net debt-to-adjusted capital ratio as low as feasible. In order to maintain or adjust the ratio, the Company may adjust the amount of dividends paid to shareholders, return capital to shareholders, issue new shares or sell assets to reduce debt.

The net debt-to-adjusted capital ratio of the Company at the end of the reporting period is as follows:

7. SEGMENT INFORMATION

Management has determined the operating segments based on the reports reviewed by the chief operating decision maker, being the chief executive officer, that are used to make strategic decisions.

Information reported to the chief operating decision maker for the purpose of resource allocation and assessment of segment performance focuses on types of goods or services delivered or provided. The Company has a single reportable operating segment in security and surveillance business for the year ended 31 March 2020.

(a) Segment revenues and results

The following is an analysis of the Company's revenue and results by operating segment:

(b) Information about major customers

Revenue of approximately £8,812,800 (2019: £11,995,000) is derived from one external customer (2019: one customer), who contributed to 10% or more of the Company's revenue in 2020 and 2019.

8. OTHER INCOME

9. OTHER GAINS AND LOSSES, NET

10. EXPENSES BY NATURE

11. DIRECTORS' REMUNERATION

Directors' remuneration for the year is as follows:

Messrs. Mike Chiu Wah CHAN and Chun Pun WONG resigned as the Company's directors on 31 October 2019 and 26 December 2019 respectively.

12. FINANCE COSTS

13. INCOME TAX

(a) Income tax in the statement of profit or loss and other comprehensive income

No provision for Hong Kong profits tax has been accrued for in these financial statements as the Company has unused tax losses brought forward to offset against its taxable profit for the year.

Reconciliation between income tax and profit before income tax is as follows: