Univision Regulatory News (UVEL)

This announcement contains inside information as stipulated under the UK version of the Market Abuse Regulation No 596/2014 which is part of English Law by virtue of the European (Withdrawal) Act 2018, as amended. On publication of this announcement via a Regulatory Information Service, this information is considered to be in the public domain.

For immediate release: 19 May 2023

UniVision Engineering Limited

("UniVision" or the "Company")

Final Results for the year ended 31 March 2022

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 2022.

The Annual General Meeting will be held at UniVision Engineering Limited, Unit 201, 2/F., Sunbeam Centre, 27 Shing Yip Street, Kwun Tong, Kowloon, Hong Kong, on 9 June 2023 at 5:00 p.m.

The full Annual Report and 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 64.2% to £3.9m (2021: £10.9m);

· Loss before income tax £10.27m (2021: profit £563K);

· Cash flow used in operations £518K (2021: generated £34K);

· Total Equity attributable to shareholders: negative £1.8m (2021: £8.2m);

· Current ratio 0.6 (2021: 1.6); and

· Loss per share 2.68p (2021: earning 0.15p)

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 2022.

Turnover for the year decreased by 64.2% (underlying rate) to £3.9m (2021: £10.9m). This decline was mainly due to the expiry of several maintenance contracts and the delay of several project delivery.

Loss for the year is £10.27m (2021: Profit £563K).

In the remainder of this report, I shall go into further details relating to the major contract with MTRC, winding up petitions and dismissal, other settlements, financial review, business review and end with prospect statement.

THE MAJOR CONTRACT WITH MTRC

As announced on 17 June 2022, the Company has received formal notice of termination of its contract with MTR Corporation Ltd ("MTRC"), for the replacement works of the CCTV systems for MTRC's railway lines, for alleged breach of contract. The Company contests this and continues to negotiate with MTRC to resolve the matter. 

This original MTRC contract was awarded to the Company five years ago, in May 2017, with an expected completion date of November 2023, but with subsequent contract add-ons this had been expected run until July 2024.

Over the period to date the Contract has represented a step-change to the Company's long-established business and termination of the contract would represent a significant loss of future revenue and profitability for the Company. However, the Company would be able to re-deploy resources from this contract to other projects to mitigate this reduction. The termination of the MTRC contract was effective from 20 June 2022. Whilst the termination of the MTRC contract occurred after the year end, the certification of work completed, invoicing and approval for work completed prior to the year end, which would normally take some months to finalise in the normal course of events, is taking longer given the termination of the contract and the need for both parties to agree a final position.

Up to the financial year ended 31 March 2022 and the date of termination, UniVision has invoiced a total amount of HK$207m. The gross valuation of certified works on the Major Contract was HK$226.5m as at 31 January 2022.

The Company has worked out and quantified the unbilled work done and equipment for final account with MTRC including equipment, work done, testing in progress, system development etc,. As per our meeting with the MTRC on 21 November 2022, it requires to be verified by joint inspection performed by both parties before the final account is concluded.

The Company has called for meetings with MTRC to (i) collect the retention amount around HK$19.5m, which was the 10% retention money kept by MTRC; and (ii) clarify and quantify the unbilled work done including equipment, work done, testing in progress, system development and etc,. The final position is to be verified by joint inspection performed by the Company and MTRC.WINDING UP PETITIONS AND DISMISSAL

As announced on 4 January 2022, our Company has received a petition that has been brought by one of its sub-contractors, namely, T&P Solutions Limited ("T&P"), formerly known as T&P Construction Company Limited, in the High Court in Hong Kong; alleging outstanding debts owed by the Company of HK$5,955,760 (approximately £565,280) in relation to contractual agreements between the Company and T&P. T&P has presented the petition ("the Petition") for the Company to be wound up pursuant to certain sections of the Companies (Winding Up and Miscellaneous Provisions) Ordinance in Hong Kong. The Company intends to defend and oppose the Petition. Further, the Company has a cross claim against T&P, inter alia, for breach of contract and non-performance and it intends to claim damages for the same. The first hearing has been conducted on 2 March 2022 that the Company defended and opposed the Petition. As announced on 11 May 2022, the Court hearing in respect of the Winding up petition was adjourned to be heard on 18 October 2022.

The petition has been dismissed by the High Court in Hong Kong on 18 October 2022. Costs have been awarded to UniVision on an indemnity basis.

As announced on 13 December 2022, our Company has received another petition that has been brought by one of its equipment suppliers for the contract with MTR Corporation, namely, Synnex Technology International (HK) Limited ("Synnex"), in the High Court in Hong Kong. The Petition alleges outstanding debts owed by the Company of HK$12,945,834 (approximately £1.358 million) to Synnex in respect of equipment supplied to the Company. Synnex has presented the Petition for the Company to be wound up pursuant to the provisions of the Companies (Winding Up and Miscellaneous Provisions) Ordinance (Cap.32) in Hong Kong. The date of the Court hearing was set for 8 February 2023.

The Company has reached a settlement agreement with Synnex. As announced on 16 February 2023, the petition has been dismissed by the High Court in Hong Kong on 13 February 2023.

OTHER SETTLEMENTS

The Company has reached a settlement agreement with General Resources Company (HK) Limited on the repayment of sub-contracting fee amounting to approximately HK$1,163,000 by instalments in March 2023.

In addition, the Company has received a demand for indemnity of HK$11,68l,430.27 by Berkshire Hathaway Specialty Insurance Company ("Berkshire Insurance") in terms of a surety bond facility granted in 2017. The Company is in the final stage of the negotiation with Berkshire Insurance to settle this amount by stage payment.

KML Engineering Limited, one of the Company's subcontractors, claims a total amount of HK$4,114,658.81 together with interest and legal costs in these proceedings. The Company has filed a partial admission in the amount of HK$2,096,530.70 which has been accepted by KML Engineering Limited in satisfaction of its whole claim. As a result, Judgment has been entered on 6 March 2023 against the Company respecting the amount of HK$2,096,530.70 in 3 monthly instalments payable on the 1st day of each calendar month starting from 1 April 2023 with fixed costs at HK$11,045.00.

OTHER SETTLEMENTS

On 24 April 2023 upon application of E-Star Engineering Company, one of the Company's subcontractors, the Court has made an Order for E-Star Engineering Company to enter summary judgment against the Company as the Defendant in these proceedings regarding the principal sum of HK$1,503,276.50 with interest (whereas interest accrued as of 24 April 2023 is in the sum of HK$302,870.04) against part of the claims with legal costs in respect of such application to be paid by the Company to E-Star Engineering Company summarily assessed at HK$90,673. By the same Order, the Company has been granted unconditional leave to defend against E-Star Engineering Company residual claim of HK$213,360.00 (the "Residual Claim"). These proceedings are now pending the filing of E-Star Engineering Company's Amended Statement of Claim as regards the Residual Claim. Before close of pleadings, it is uncertain as to the probable outcome in respect of the Residual Claim. Similarly, it may be improbable to give an estimate of the ultimate liability or amount to be realised as to the Residual Claim at this stage.

Hang Cheong Engineering Limited, one of the Company's subcontractors, claims a total amount of HK$806,400.00 together with interest pursuant to ss.49 and 50 of the District Court Ordinance (Cap.336) and legal costs. The Company has filed an admission on the full amount of HK$806,400.00 as claimed by Hang Cheong Engineering Limited. The sum of HK$806,400.00 together with interest thereon at the rate of (i) 8% per annum from 28 December 2022 to 31 December 2022 and (ii) 8.169% per annum from 1 January 2023 to the date of the Judgment and thereafter at judgment rate until payment and fixed costs at HK$7,130.00.

DISPUTE WITH DIMENSION DATA

As previously announced, the Company received a writ of summons (Statement of Claim), Hong Kong High Court Action No. 2090 of 2020, from the solicitors of Dimension Data China Hong Kong Limited ("Dimension Data"), the Plaintiff, on 14 December 2020 alleging breach of contract, claiming against the Company for liquidated damages for an amount of HK$10.95m plus pre-judgment and post-judgment interest and legal costs. The Company, on the other hand, regards the claim by alleging wrongful breach and thus repudiation of the said sub-contract by Dimension Data. The Company believes it has a counterclaim against Dimension Data, inter alia, for breach of contract and/or negligence and/or misrepresentation and accordingly to claim for loss and damages for the same and legal costs.

The Board does not consider that the claim has any foundation and believes that Dimension Data was in breach of protocol in the manner which it has brought this claim.

Both parties had engaged a mediator for the statutory mediation on 17 August 2022. No agreement nor settlement was made in the mediation. As out-of-court settlement between the parties is not forthcoming, our solicitors has prepared the factual witness statements filing to the Court. Both parties have exchanged the witness statements to each other. These proceedings have entered the stage of case management towards trial

MATERIAL UNCERTAINTY RELATED TO GOING CONCERN

The Company reported a loss of £10,265,495 for the year ended 31 March 2022. As at 31 March 2022, the Company's equity attributable to the owners of the Company amounted to a deficit of £1,808,945 and its current liabilities exceeded its current assets by £4,030,769. The Company's bank borrowings were collateralised by its deposits placed for life insurance policies of £1,865,308. The Company had total unrestricted cash and bank balances of £2,750. These conditions indicate that a material uncertainty exists that may cast a significant doubt on the Company's ability to continue as a going concern.

The Company is considering and negotiating a number of financing measures to improve the Company's liquidity and financial position, including, but not limited to, the following:

· In October 2022, the Company obtained a loan facility of HK$12 million from a third party for short-term financing purpose;

· A potential investor has agreed to provide financial support to the Company to maintain its normal operation. In addition, the potential investor has provided a standby unconditional facility of HK$20 million to the Company of which the Company will be able to drawdown the facility to fulfil its financial needs;

· The Company has been actively negotiating with the bank on its banking facilities;

· The winding-up petitions against the Company were dismissed subsequently in year 2023;

· The Company is taking measures to tighten controls over various costs; and

· With the financial assistance from the potential investor, the Company has resumed a part of its business. The Company will continue to actively enhance its market position by expanding its customer base with the aim to attain profitable and positive cash flow operations in the coming financial year.

The board of the Company have reviewed the Company's cash flow projections prepared by management, which cover a period of not less than twelve months from the date of this report. The board is of the opinion that, taking into account the abovementioned plans and measures, the Company will have sufficient working capital to finance its operations and to meet its financial obligations as and when they fall due within the next twelve months. Accordingly, the board is satisfied that it is appropriate to prepare the financial statements on a going concern basis.

FINANCIAL REVIEW 

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

· Revenue decreased by 64.2% to £3.9m in the reporting period (2021: £10.9m). This revenue decrease came mainly from the expiry of several maintenance contracts and the delay of several project delivery.

· The revenue from construction contracts is the Company's largest business segment, represented 87% of the total income (2021: 82.7%) Revenue from maintenance contracts represented 12% of the total income (2021: 15%) for the Company.

· Contribution from maintenance contracts decreased by 71%, compared to the prior year. The reduction in maintenance contracts was mainly due to the maintenance contracts with MTRC was ended on 31 March 2021.

· The gross loss was at £2.9m in the reporting year (2021: gross profit of £2m). The main reason for changing from gross profit to gross loss was because of the early termination of the MTRC contract and resulting the unbilled work done and equipment with MTRC.

· Significant impairment loss and provision for this financial year included the following items: 

1. Impairment loss on contract assets of £0.54m (HK$5.8m)

2. Impairment loss on amount due from related companies of £2m (HK$21.3m)

3. Allowances of obsolete inventories of £2.2m (HK$23.4m)

4. Provision for indemnity claimed from Berkshire Insurance of £1.1m (HK$11.7m)

· Administrative expenses decreased to £1.4m (2021: £1.73m). The decrease was caused mainly by reduction in number of staff.

· Loss before tax £10.27m in the reporting period (2021: profit: £563K) was resulted from the significant impairment loss and provision as stated above.

· The loss attributable to the shareholders of the Company also increased to £10.27m for the financial year ended 31 March 2022, compared to profit £563K for the last financial year.

· As a result of loss attributable to shareholders, basic loss per share was 2.68p for this reporting financial year (2021: earning 0.15p).

On the Statement of Financial Position, the highlights are:

· Contract assets decreased to £2.9m as at 31 March 2022, from £8.4m as at 31 March 2021, mainly due to the early termination of the Major Contract with MTRC.

· Cash and bank balances stood at £323K as at 31 March 2022 (2021: £284K).

· Trade and other payables increased to £6.6m as at 31 March 2022, from £5.2m as at 31 March 2021, mainly caused by slow settlement to suppliers.

· Deposits placed for two life insurance policies of £1.87m as at 31 March 2022, which are the value of the keyman insurance plans placed as security for banking facilities provided by a banker to the Company.

· Bank borrowings of £2.1m as at 31 March 2022 (2021: £562K) represented the loan provided by a banker and pledged by the insurance policy as above mentioned and other term loans.

On the Statement of Cash Flows, the highlights are:

· The Company had negative cash flows from operations of £198K in the reporting year (2021: positive £34K).

· The Company raised the new borrowings from the bank of £2.47m for financing the new keyman insurance of £939K and business operations.

· Repayment of bank loans of £964K.

During the year under review, a relative strengthening in the HK$ at the year-end has led to a 3.7% depreciation in the GBP reporting amount in the Statement of Financial Position. It led to the non-cash other comprehensive loss of £5K (2021: £902K) 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).

BUSINESS REVIEW

I will include the following topics in this section: our addressable market segments, business environment in which we operate, our market segment, business environment, customer base, and potential investors.

Addressable Market Segments

According to the Market Research Report by ReportLinker: Global Surveillance Camera Market: Analysis By System Type, By Technology By Region Size and Trends with Impact of COVID-19 and Forecast up to 2027, the video surveillance systems market is expected to grow at a CAGR of 8.38% over the forecast period 2022 to 2027.

The main drivers for the growth are the rise in urban population, increasing crime threats, growth in traffic management, technological improvement and rising numbers of ATMs. Asia Pacific Region held the major share of above 40% in the market. This market has grown significantly due to its increasing use of security and law enforcement, to reduce the crime rate in their countries. The Board believes that our addressable market segment will undergo a steady growth period

The use of video surveillance in business is growing significantly due to the increasing need for physical security, the growth in adoption of AI, coupled with the use of cloud-based services for centralized data. The growth of the video surveillance market is expected to be fuelled by the introduction of new IP-based digital technologies, to detect and prevent undesirable behaviour, such as shoplifting, thefts, vandalism, and terror attacks. Alarm notification is the best way that the security cameras can function in prevention and reduction of crime.

The Board regard the CCTV surveillance market is growing with the increasing demand for digital and intelligent video products. The Company anticipates more business opportunities in government infrastructure and public security projects. There is also growing demand for wireless system such as 5G network for video surveillance to enhance public safety. The CCTV industry is further enhanced with an integration of Video Analysis and Cloud Technology for large database storage. 

The new trends in this market, such as integration of artificial intelligence systems in surveillance camera, adoption of IoT based surveillance systems, emergence of video surveillance as a service (VSaaS), etc. IoT systems are deployed in various sectors. The growing adoption of IoT based surveillance systems provides the growth opportunity to the surveillance camera market.

For the effect of COVID-19 pandemic, a wide range of surveillance cameras are used to be an effective way to serve the purpose of social distancing and keeping a check on COVID-19 patients. Thermal surveillance is initiated to check the temperature to avoid the spread of COVID-19 infections. 

Business Environment

COVID-19 has affected the business environment in Hong Kong in last year. It caused adverse effects on the Hong Kong economy. Nevertheless, the effect of COVID-19 pandemic, a wide range of surveillance cameras are used to be an effective way to serve the purpose of social distancing and keeping a check on COVID-19 patients. Thermal surveillance is initiated to check the temperature to avoid the spread of COVID-19 infections. 

Even though the Major Contract with MTRC was terminated, other job contracts and orders are still in progress. With the competitive advantage of our project experience in CCTV and network systems, the Company will expect more new projects from MTRC.

The technology of video analytics, such as facial recognition, is being enhanced rapidly and UniVision has actively participated in this market. The Company got the experience in the contract for supply and installation of the video analytic monitoring system at prisons. The video analytic solution of Smart Prisons is designed to enhance the effectiveness of movement detection in confined areas.

Customer base

MTRC remains the Company's largest customer this financial year. In addition, Electrical and Mechanical Services Department ("EMSD"), Hong Kong Police Force ("HKPC") and Correctional Services Department ("CSD") of the Hong Kong Government are other sources of the Company's customer base.

To avoid the concentration of customers, the Company aims to diversify its customer base particularly to the commercial and private sector, such as sizeable multinational private enterprises.

Potential Investors

As announced on 29 September 2022, the Company is in negotiations with potential investors who are looking to make a substantial investment in the Company. Our Board regards that with the support of the potential investors, the Company will strength its financial and technical position to meet the challenge.

PROSPECTS

The Government has announced new infrastructure projects including the new railway lines and urban development in northern territories. These projects will include large CCTV system for safety protection. With the technical expertise and project experience in surveillance industry, the Company has the competitive advantage to tender for these projects.

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 support in the critical period.

MR. STEPHEN SIN MO KOO

EXECUTIVE CHAIRMAN

19 May 2023

STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME

For the year ended 31 March 2022

STATEMENT OF FINANCIAL POSITION

As at 31 March 2022

STATEMENT OF CHANGES IN EQUITY

For the year ended 31 March 2022

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 2022 and 2021.

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.

STATEMENT OF CASH FLOWS

For the year ended 31 March 2022

1. GENERAL INFORMATION

UniVision Engineering Limited (the "Company") is incorporated in Hong Kong with limited liability and its shares are listed on the AIM of the London Stock Exchange. 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

Compliance with International Financial Reporting Standards

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.

Adoption of going concern basis

The Company reported a loss of £10,265,495 for the year ended 31 March 2022. As at 31 March 2022, the Company's equity attributable to the owners of the Company amounted to a deficit of £1,808,945 and its current liabilities exceeded its current assets by £4,030,769. The Company's bank borrowings were collateralised by its deposits placed for life insurance policies of £1,865,308 and accounts receivable of £381,812. The Company had total unrestricted cash and bank balances of £2,750.

As disclosed in note 33 to the financial statements, the Company was in breach of certain covenants in connection with its banking facilities. Furthermore, as disclosed in note 34 to the financial statements, the Company was the defendant of several litigations during the year and subsequent to 31 March 2022. In June 2022, as described in note 36 to the financial statements, the Company received a formal notice of termination of its contract with MTR Corporation Ltd ("MTRC") for the replacement works of the CCTV System for MTRC's railway lines in Hong Kong, for alleged breach of contract. The termination of MTRC contract represented a significant loss of future revenue and profitability of the Company.

The above conditions indicate the existence of material uncertainties which cast significant doubt regarding the Company's ability to continue as a going concern. In view of such circumstances, management of the Company has given careful consideration to the future liquidity and performance of the Company and its available sources of financing in assessing whether the Company will have sufficient financial resources to continue as a going concern. Certain plans and measures have been or will be taken by management to mitigate the Company's liquidity pressure and to improve its cashflows which include, but are not limited to, the following:

· In October 2022, the Company obtained a loan of HK$12 million from a third party for short-term financing purpose;

· A potential investor has agreed to provide financial support to the Company to maintain its normal operation. In addition, the potential investor has provided a standby unconditional facility of HK$20 million to the Company of which the Company will be able to drawdown the facility to fulfil its financial needs;

· The Company has been actively negotiating with the bank on its banking facilities;

· The winding-up petitions against the Company (Note 34) were dismissed subsequently in year 2023;

· The Company is taking measures to tighten controls over various costs; and

· With the financial assistance from the potential investor, the Company has resumed a part of its business. The Company will continue to actively enhance its market position by expanding its customer base with the aim to attain profitable and positive cash flow operations in the coming financial year.

The directors of the Company have reviewed the Company's cash flow projections prepared by management, which cover a period of not less than twelve months from the date of this report. The directors are of the opinion that, taking into account the abovementioned plans and measures, the Company will have sufficient working capital to finance its operations and to meet its financial obligations as and when they fall due within the next twelve months. Accordingly, the directors are satisfied that it is appropriate to prepare the financial statements on a going concern basis.

Should the Company fail to achieve the abovementioned plans and measures, it might not be able to continue to operate as a going concern, and adjustments would have to be made to write down the carrying value of the Company's assets to their recoverable amounts, to provide for any further liabilities which might arise, and to reclassify non-current assets and non-current liabilities as current assets and current liabilities, respectively. The effects of these adjustments have not been reflected in these financial statements.

3. APPLICATION OF NEW AND REVISED IFRSs

(a) Initial application of new and revised IFRSs

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

The initial application of these amendments does not necessitate material changes in the Company's accounting policies and retrospective adjustments of the comparatives presented in these financial statements.

(b) IFRSs in issue but not yet effective

The following IFRSs in issue at 31 March 2022 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 2021:

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

2 Effective for the Company's annual financial statements beginning on 1 April 2023

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.

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 Interest in an associate

Associate is an entity in which the Company has significant influence, but not control or joint control, over its management, including participation in the financial and operating policy decisions.

The results and assets and liabilities of the associate are incorporated in these financial statements using the equity method of accounting. Under the equity method, interest in an associate is initially recorded at cost, adjusted for any excess of the Company's share of the acquisition-date fair values of the investee's identifiable net assets over the cost of the investment. The cost of the investment includes purchase price, other costs directly attributable to the acquisition of the investment, and any direct investment into the associate that forms part of the Company's equity investment. Thereafter, the investment is adjusted for post-acquisition changes in the Company's share of e investee's net assets and any impairment loss relating to the investment. When the Company's share of losses of the associates equals or exceeds its interest in that associate (which includes any long-term interests that, in substance, form part of the Company's net investments in the associates), the Company discontinues recognising its share of further losses. An additional share of losses is provided for and a liability is recognised only to the extent that the Company has incurred legal or constructive obligations or made payments on behalf of that associate.

Unrealised profits and losses resulting from transactions between the Company and its associates are eliminated to the extent of the Company's interest in the investee, except where unrealised losses provide evidence of an impairment of the asset transferred, in which case they are recognised immediately in profit or loss.

4.5 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.

4.6 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.

4.7 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.

4.7.1 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.

4.7.2 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.

4.7.3 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.

4.7.4 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.

4.8 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.

4.9 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.

4.10 Revenue recognition

Revenue from contracts with customers

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.

4.11 Leases

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.

4.12 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.

4.13 Government grants

Government grants are recognised at their fair value where there is reasonable assurance that the grant will be received and all attaching conditions will be complied with. When the grant related to an expense item, it is recognised as income on a systematic basis over the periods that the costs, which it is intended to compensate, are expensed.

Where the grant relates to an asset, the fair value is credited to a deferred income account and is released to profit or loss over the expected useful life of the relevant asset by equal annual instalments or deducted from the carrying amount of the asset and released to profit or loss by way of a reduced depreciation charge.

4.14 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.

4.15 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.

4.16 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.

4.17 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.

Going concern consideration

In the process of applying the Company's accounting policies, apart from those involving estimations, management has prepared the financial statements on the assumption that the Company will be able to operate as a going concern in the coming year, which is a critical judgement that has the most significant effect on the amounts recognised in the financial statements. The assessment of the going concern assumption involves making a judgement by the Directors, at a particular point of time, about the future outcome of events or conditions which are inherently uncertain. The Directors consider that the Company has the capability to continue as a going concern and the major events or conditions, which may give rise to business risks, that individually or collectively may cast significant doubt upon the going concern assumption are set out in Note 2 to the financial statements.

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 2022, the Company has unused tax losses of approximately £6,074,000 (2021: £1,452,000) 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

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% (2021: 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% (2021: 5%) change in foreign currency rates. "+" represents an increase and "-" represents a decrease in the amount.

Interest rate risk

The Company is exposed to fair value interest rate risk in relation to its deposits placed for life insurance policies. 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 27 and 33 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 2021.

For the year ended 31 March 2022, if interest rates had been 25 basis points higher/lower with all other variables held constant, the Company's post-tax loss (2021: profit) for the year would increase/decrease (2021: decrease/increase) by approximately £6,400 (2021: £4,600).

(ii) Credit risk

At 31 March 2022, 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 21 and 22 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 deposits placed for life insurance policies 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 and potential investor to meet its liquidity requirements in the short and longer term. At 31 March 2022, the Company's banking facilities amounted to £4,440,541 (2021: £3,837,155) and the unused facilities were £1,873,458 (2021: £2,003,387).

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.