Last checked at 14 Dec 2017 11:58
14 December 2017
RNS Announcement: The information communicated in this announcement contains inside information for the purposes of Article 7 of Regulation 596/2014.
UniVision Engineering Limited
("UniVision" or the "Company" or the "Group")
Interim Results
For the Six Months Ended 30 September 2017
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, is pleased to announce its unaudited interim results for the six months ended 30 September 2017.
Highlights:
· Profit attributable to the equity holders increased 133% to HK$2.1m (H1 2016: HK$0.9m);
· Revenue increased by 8.3% to HK$23.2m for continuing operations (H1 2016 HK$21.4m);
· Major long term contract win with MTR Corporation Limited ("MTRC") announced in
May 2017 will transform the Group's revenue and profitability over the coming years;
· Additional MTRC work has been won in the period and after the period end.
Mr. Stephen Sin Mo KOO, Executive Chairman, commented:
"The winning of the MTR contract is transformational for the Group and as the invoicing start to flow through the Financial Statements we expect to be able to report significantly higher levels of profitability that are currently being reported.
The fact that this contract was won in the face of tough international competition, we believe positions the Group to be competitive for subsequent large-scale projects both inside and outside HK in the future"
For further information visit www.uvel.com or contact:
UniVision Engineering Limited Tel: +852 2389 3256 www.uvel.com
Stephen Koo, Executive Chairman
Chun Pan Wong, Chief Executive Officer
Danny Kwok Fai Yip, Finance Director
Nicholas Lyth, Non-Executive Director Tel: +44 (0) 7769 906686
SPARK Advisory Partners Limited Tel: +44 (0)20 3368 3551
(Nominated Adviser) www.sparkadvisorypartners.com
Mark Brady/Neil Baldwin
CHAIRMAN'S STATEMENT
INTRODUCTION
The Group's turnover for continuing operations has increased by 8.3% in the first six months. This increase was mainly due to the 22.7% growth in construction contracts.
With the commencement of the major project for Replacement of CCTV Systems awarded from MTR Corporation Limited ("MTRC") in May 2017, the Board expects that the Company will achieve a substantial growth in the business in the coming years. The full benefits of this contract will not be visible until the next financial year, but we will see an increase in both turnover and profit in the second half as invoicing on this contract commences.
THE MAJOR CONTRACT WITH MTRC
As announced on 12 May 2017, the Company was awarded the major contract worth HK$389.4m (£38.1m) with MTRC through tendering ("the Project"). The contract provides for the replacement works of the Closed Circuit Television (CCTV) systems for numerous railway lines of MTRC in Hong Kong. Under the contract, the Company will replace the existing analogue CCTV system installed in the stations along the specified lines with a unified IP-based CCTV system.
The Project commenced in mid-May 2017 and the completion date for the replacement works is anticipated to be in November 2023. Currently, the Company is working on the design stage and commencing the installation works.
The Company acts as the main contractor for the Project. According to the term, the Company is required to provide a performance bond equivalent to 3% of the contract sum, i.e. HK$11.7m. To release liquidity for the business development, the Board has provided the performance bond to MTRC that is guaranteed by a leading insurance company without collateral. The Surety bond facility is provided to the Company up to HK$30 million. The surplus amount of this facility can also be used to meet performance bond requirements for other potential projects if required.
The first billing to MTRC is expected in the first quarter of 2018.
FINANCIAL REVIEW
'Continuing operations' represent the Group's Security and Surveillance Systems business undertaken by the Hong Kong operating entity. The business undertaken by T-Com, the Group's former Taiwan subsidiary is classified as discontinued operations following its sale in June 2016, which completed in October 2016.
The value of the assets and liabilities of T-Com, were HK$28.3m and HK$24m respectively which is included in the financial statements below as Assets/Liabilities of Disposal Group classified as held for sale as at 30 September 2016.
In the six month period under review, revenues for the Group's continuing operations increased by 8.3% to HK$23.2m (H1 2016: HK$21.4m). This increase was mainly due to a 22.7% growth in construction contracts. The growth of construction revenue was mainly due to income generated from the following contracts:-
MTRC Replacement of CCTV Systems (the Project)
MTRC East Rail Line Platforms CCTV System Enhancement
Modern Terminal Upgrade Project
Hong Kong-Zhuhai-Macao Bridge Project
Central Wanchai By Pass Project
Gross profit margin for the Group's continuing operations reduced to 31% (H1 2016: 34%). Gross profit margin in the maintenance business improved from 36% to 41%, compensating for a decrease in gross profit margin of 4% to 29% (2016: 33%) in the Group's construction business for the period. This decrease of gross profit in construction contracts was mainly due to the relative lower gross profit margin for the Project. In facing increased operating costs and long-term contract period, the Company imposes efficient control measures on human resources, material costs, logistics and sub-contracting charges to maintain the level of gross margin.
Administration expenses for continuing operations were decreased by HK$743K to HK$4.7m (H1 2016: HK$5.4m). This was caused by the one-off, legal and professional fees regarding the disposal of the Group's Taiwan subsidiary and legal case, totally HK$629K that incurred in year 2016.
The profit from the continuing operations attributable to the equity holders of the Company is HK$2.1m (2016: 1.1m). Profit before interest and income tax from the continuing operations during the period at HK$2.1m (H1 2016: HK$1.1m) whilst the Group recorded a profit attributable to the equity holders of HK$2.1m (H1 2016: HK$0.9m).
During the period under review, the relative weak of the HK$ against GBP has led to 7.9% depreciation in the GBP reporting amount in the Consolidated Statement of Comprehensive Income and Financial Position. It also the reason for the significant loss of £446K on exchange differences arising on the translation (H1 2016: gain £287K). All figures in GBP in the Financial Statements therefore needed to be adjusted for comparative purposes. The financial data is also presented in HK$ to provide a comparison with the comparative figures in 2016 that were unaffected by exchange rate fluctuations.
BUSINESS REVIEW
Markets
The increasing demand for wireless network infrastructure is the key growth driver for this market. The demand to replace analogue systems with Internet protocol based systems is also expected to boost the market. The new major contract with MTRC is a good example of that demand shift in our market.
The Board believes that the demand for the IP cameras remain strong. To capture the opportunities in Internet Protocol and High Definition CCTV System technology, UniVision will continue commit resources to develop new technologies and solutions.
While the Company has made efforts to maintain a high degree of sustainability in its operations in Hong Kong, the Board believes that winning the major contract from MTRC should allow UniVision to market its brand to purchasers of similar systems outside Hong Kong.
The Company intends to explore other market segments, such as rolling stock business on railways, to strengthen business growth in the Group.
Business
Under MTRC contract, the Company is providing the service for the replacement and provision of the CCTV systems for 84 MTR stations and 69 stops of Light Rail. Some additional and variation orders that are associated with the main contract may be exercised by MTRC. The first additional works of value HK$7m (£0.7m) for the provision of Optical Fibre Cables for Tseung Kwan O Line Tunnel Sections as announced on 21 June 2017 and the second additional works of value HK$10.9m (£1.05m) for Integration between NSL Station CCTV System and the Delivered System as announced on 1 November 2017 are good examples for these.
Under the major contract, the Company performs 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.
Customers
For security of trade receivables, the Company's major customers are public organisations and sizeable private enterprises, such as MTRC in Hong Kong which is the Company's largest customer in this financial period.
To avoid the concentration of customers, the Company has the intention to diversify the base of customers particularly to the private and domestic sectors.
PROSPECTS
The high demand for its network and high definition security and surveillance system provides the Group with an excellent opportunity for future growth in these markets.
The full benefits of the MTRC contract will not come through until next year, but we do expect to see some benefit to both revenue and profit during the second half of the year as we commence invoicing on the Project in the first quarter of 2018. However, the Directors expect to see a significant increase in both revenue and profits in the second half and also for year ending 31 March 2018, when compared to the same period last year.
As there are some major infrastructure projects to be completed in Hong Kong in the coming years, such as High Speed Rail Hong Kong line and the Third Runway at Hong Kong Airport that the Company will be able to tender for, it will provide the opportunity for business growth.
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 express my gratitude to the management team and all staff for their continued support, contribution and dedication to the Group.
MR. STEPHEN SIN MO KOO
EXECUTIVE CHAIRMAN
14 December 2017
UniVision Engineering Limited
Consolidated Statements of Comprehensive Income (Un-audited)
For the six months ended 30 September 2017
| For the six months ended 30 September | |||
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| 2017 | 2016 | 2017 | 2016 |
| HK$'000 | HK$'000 | ￡'000 | ￡'000 |
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Continuing operations |
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Revenue | 23,224 | 21,440 | 2,298 | 2,008 |
Cost of sales | (15,914) | (14,118) | (1,575) | (1,322) |
Gross profit | 7,310 | 7,322 | 723 | 686 |
Other income | 206 | 6 | 20 | - |
Other loss | - | (48) | - | (4) |
Selling and distribution expenses | (659) | (712) | (65) | (67) |
Administrative expenses | (4,700) | (5,443) | (465) | (510) |
Finance costs | - | (1) | - | - |
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Profit for the period from continuing operations | 2,157 | 1,124 | 213 | 105 |
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Discontinued operations |
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Loss for the period from discontinued operations | - | (415) | - | (39) |
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Profit for the period | 2,157 | 709 | 213 | 66 |
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Other comprehensive income / (loss) : |
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Exchange differences arising on translation of foreign | - | 121 | (446) | 592 |
Total comprehensive income / (loss) for the period | 2,157 | 830 | (233) | 658 |
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Profit / (loss) attributable to: |
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Equity shareholders of the Company |
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Profit from continuing operations | 2,157 | 1,124 | 213 | 105 |
Loss from discontinuing operations | - | (217) | - | (20) |
Equity shareholders of the Company | 2,157 | 907 | 213 | 85 |
Non-controlling interests | - | (198) | - | (19) |
| 2,157 | 709 | 213 | 66 |
Total comprehensive income / (loss) attributable |
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Equity shareholders of the Company | 2,157 | 986 | (233) | 657 |
Non-controlling interests | - | (156) | - | 1 |
| 2,157 | 830 | (233) | 658 |
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Earnings per share - Basic and Diluted | HK Cents | HK Cents | Pence | Pence |
Continuing and discontinued operations | 0.5621 | 0.2365 | 0.0556 | 0.0222 |
Continuing operations | 0.5621 | 0.2931 | 0.0556 | 0.0274 |
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UniVision Engineering Limited
Consolidated Statements of Financial Position (Un-audited)
As at 30 September 2017
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| 2017 | 2016 | 2017 | 2016 |
| HK$'000 | HK$'000 | ￡'000 | ￡'000 |
ASSETS |
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Non-current assets |
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Plant and equipment | 696 | 492 | 66 | 49 |
Trade and other receivables | 35,037 | 34,172 | 3,350 | 3,402 |
Total non-current assets | 35,733 | 34,664 | 3,416 | 3,451 |
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Current assets |
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Inventories | 10,680 | 8,323 | 1,021 | 829 |
Trade receivables | 7,264 | 8,979 | 694 | 894 |
Amount due from customers for contract-in-progress | 17,925 | 11,741 | 1,714 | 1,169 |
Deposits, prepayments and other receivables | 16,217 | 11,342 | 1,550 | 1,128 |
Cash and bank balances | 4,744 | 9,398 | 454 | 936 |
Total current assets | 56,830 | 49,783 | 5,433 | 4,956 |
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Assets of disposal group classified as held for sale | - | 28,278 | - | 2,815 |
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Total assets | 92,563 | 112,725 | 8,849 | 11,222 |
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LIABILITIES AND EQUITY |
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Current liabilities |
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Trade and other payables | 14,058 | 14,349 | 1,344 | 1,429 |
Amounts due to customers for contract-in-progress | 17,788 | 15,853 | 1,700 | 1,578 |
Total current liabilities | 31,846 | 30,202 | 3,044 | 3,007 |
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Long Term Liability |
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Long term liability-loan from Shareholder | 1,200 | - | 115 | - |
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Liabilities of disposal group classified as held for sale | - | 24,012 | - | 2,390 |
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Total liabilities | 33,046 | 54,214 | 3,159 | 5,397 |
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Equity |
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Share capital | 55,034 | 23,980 | 3,891 | 1,698 |
Share premium | - | 31,054 | - | 2,193 |
Special capital reserve | 4,188 | 4,188 | 299 | 299 |
Statutory surplus reserve | - | 219 | - | 19 |
Retained earnings /(accumulated losses) | 295 | (2,698) | 116 | (236) |
Translation reserve | - | 206 | 1,384 | 1,697 |
| 59,517 | 56,949 | 5,690 | 5,670 |
Non-controlling interest | - | 1,562 | - | 155 |
Total equity | 59,517 | 58,511 | 5,690 | 5,825 |
Total liabilities and equity | 92,563 | 112,725 | 8,849 | 11,222 |
UniVision Engineering Limited
Consolidated Statements of Changes in Equity (Un-audited)
in ￡'000
| Share capital | Share premium | Retained earnings | Special capital Reserve "A" | Special capital Reserve "B" | Translation reserve | Statutory Surplus reserve | Sub -total | Non- controlling interest | Total equity | |||||||||
| ￡'000 | ￡'000 | ￡'000 | ￡'000 | ￡'000 | ￡'000 | ￡'000 | ￡'000 | ￡'000 | ￡'000 | |||||||||
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Balance at 1 April 2016 | 1,698 | 2,193 | (174) | 156 | 143 | 1,125 | 19 | 5,160 | 154 | 5,314 |
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Profit for the year | - | - | 430 | - | - | - | - | 430 | (19) | 411 |
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Exchange difference arising on translation of foreign operations | - | - | - | - | - | 718 | - | 718 | 49 | 767 |
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Total comprehensive income | - | - | 430 | - | - | 718 | - | 1,148 | 30 | 1,178 |
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Disposal of a subsidiary | - | - | (44) | - | - | (13) | (19) | (76) | (184) | (260) |
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Dividend paid | - | - | (154) | - | - | - | - | (154) | - | (154) |
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Transfer from share premium | 2,193 | (2,193) | - | - | - | - | - | - |
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Balance at 31 Mar 2017 | 3,891 | - | 58 | 156 | 143 | 1,830 | - | 6,078 | - | 6,078 |
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Profit for the six months ended 30 Sep 2017 | - | - | 213 | - | - | - | - | 213 | - | 213 |
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Exchange difference arising on translation of foreign operations | - | - | - | - | - | (446) | - | (446) | - | (446) |
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Total comprehensive income | - | - | 213 | - | - | (446) | - | (233) | - | (233) |
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Dividend declared | - | - | (155) | - | - | - | - | (155) | - | (155) |
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Balance at 30 Sep 2017 | 3,891 | - | 116 | 156 | 143 | 1,384 | - | 5,690 | - | 5,690 |
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UniVision Engineering Limited
Consolidated Statements of Changes in Equity (Un-audited)
in HK$'000
| Share capital | Share premium | Retained earnings | Special capital Reserve "A" | Special capital Reserve "B" | Translation reserve | Statutory Surplus reserve | Sub -total | Non- controlling interest | Total equity |
| HK$'000 | HK$'000 | HK$'000 | HK$'000 | HK$'000 | HK$'000 | HK$'000 | HK$'000 | HK$'000 | HK$'000 |
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Balance at 1 April 2016 | 23,980 | 31,054 | (2,033) | 2,117 | 2,071 | 126 | 220 | 57,535 | 1,718 | 59,253 |
Profit for the year | - | - | 4,388 | - | - | - | - | 4,388 | (198) | 4,190 |
Total comprehensive income | - | - | 4,388 | - | - | - | - | 4,388 | (198) | 4,190 |
Disposal of a subsidiary | - | - | (1,071) | - | - | (126) | (220) | (1,417) | (1,520) | (2,937) |
Dividend paid | - | - | (1,573) | - | - | - | - | (1,573) | - | (1,573) |
Transfer from share premium | 31,054 | (31,054) | - | - | - | - | - | - | - | - |
Balance at 31 Mar 2017 | 55,034 | - | (289) | 2,117 | 2,071 | - | - | 58,933 | - | 58,933 |
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Profit for the six months ended 30 Sep 2017 | - | - | 2,157 | - | - | - | - | 2,157 | - | 2,157 |
Total comprehensive income | - | - | 2,157 | - | - | - | - | 2,157 | - | 2,157 |
Dividend declared | - | - | (1,573) | - | - | - | - | (1,573) | - | (1,573) |
Balance at 30 Sep 2017 | 55,034 | - | 295 | 2,117 | 2,071 | - | - | 59,517 | - | 59,517 |
UniVision Engineering Limited
Consolidated Statements of Cash Flows (Un-audited)
For the six months ended 30 September 2017
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| For the six months ended 30 September |
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| 2017 | 2016 | 2017 | 2016 |
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| HK$'000 | HK$'000 | ￡'000 | ￡'000 |
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CASH FLOW FROM OPERATING ACTIVITIES |
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| Profit before income tax for the period | 2,157 | 1,124 | 213 | 105 |
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| Depreciation of plant and equipment | 145 | 109 | 14 | 10 |
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| Interest income | (18) | (5) | (2) | (1) |
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| Finance costs paid | - | 233 | - | 22 |
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| Gain on disposal of plant and equipment | (15) | - | (1) | - |
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| 2,269 | 1,461 | 224 | 136 |
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| Changes in operating assets and liabilities: |
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| (Increase)/decrease in inventories | (15) | 28 | (1) | 3 |
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| (Increase)/decrease in trade receivables | (2,171) | 1,256 | (215) | 118 |
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| Increase in amounts due from customers for contract-in-progress | (3,529) | (541) | (349) | (51) |
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| Increase in deposits, prepayments and other receivables | (2,593) | (360) | (257) | (33) |
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| Increase in amounts due to customers for contract-in-progress | 514 | 1,733 | 51 | 162 |
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| Decrease in trade and other payables | (929) | (1,045) | (92) | (97) |
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| Cash (used in)/generated from operations | (6,454) | 2,532 | (639) | 238 |
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| Net cash used in disposal group | - | (3,255) | - | (305) |
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| Net cash used in operating activities | (6,454) | (723) | (639) | (67) |
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CASH FLOWS FROM INVESTING ACTIVITIES |
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| Purchase of plant and equipment | (355) | (126) | (35) | (12) |
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| Interest received | 18 | 5 | 2 | 1 |
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| Decrease in pledged deposits | - | 18 | - | 2 |
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| Net cash used in disposal group | - | (18) | - | (2) |
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| Proceeds on disposal of plant and equipment | 15 | - | 2 | - |
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| Net cash used in investing activities | (322) | (121) | (31) | (11) |
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CASH FLOWS FROM FINANCING ACTIVITIES |
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| Finance costs paid | - | (233) | - | (22) |
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| Repayment of obligation under finance lease | - | (7) | - | (1) |
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| Net cash generated from disposal group | - | 2,790 | - | 261 |
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| Net cash generated from financing activities | - | 2,550 | - | 238 |
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NET (DECREASE)/INCREASE IN CASH AND CASH EQUIVALENTS | (6,776) | 1,706 | (670) | 160 |
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Less: cash and cash equivalents from disposal group | - | (2,954) | - | (265) |
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EFFECT OF CHANGE IN EXCHANGES RATES | - | - | (64) | 86 |
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CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD | 11,520 | 10,646 | 1,188 | 955 |
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CASH AND CASH EQUIVALENTS AT END OF PERIOD | 4,744 | 9,398 | 454 | 936 |
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Notes to the Interim financial statements for the six months ended 30 September 2017
1. Basis of preparation
The unaudited interim financial statements for the six months ended 30 September 2017 have been prepared in accordance with International Financial Reporting Standards ("IFRSs") using the policies consistent with those applied to the annual financial statements for the year ended 31 March 2017. The interim financial statements, together with the comparative information contained in this report for the six months ended 30 September 2016, does not constitute the statutory accounts of the Company.
2. Profit per share
The calculation of basic profit per ordinary share is based on the profit attributable to equity holders of the Group for the six months ended 30 September 2017 of HK$2.1m (H1 2016: HK$0.9m), and the weighted average of 383,677,323 (H1 2016: 383,677,323) ordinary shares in issue during the period.
There were no potential dilutive instruments at either financial period end.
3. Interim report
Copies of the interim report will be available for inspection at the registered office of the Company, Unit 01A, 2/F., Sunbeam Centre, 27 Shing Yip Street, Kwun Tong, Hong Kong and available on the Company's website (www.uvel.com) in accordance with Rule 26 of the AIM Rules for Companies.