Final Results

UniVision Engineering Ltd 28 September 2007 UniVision Engineering Limited ('UniVision' or the 'Group') Annual Results for the year ended 31 March 2007 UniVision Engineering Limited, the Hong Kong based designer and installer of digital surveillance and integrated security systems, today announces its preliminary results for the year ended 31 March 2007. HIGHLIGHTS •Profit before tax up 304% to £1,432,423 (2006: £354,131) •Turnover up 130% to £8.94m (2006: £3.89m) •Earnings per share 0.39p (2006:0.18p) •Order book for the first quarter of financial year 2007 significantly ahead of the same period in financial year 2006 Mr. Stephen Koo, Chairman, added: 'The year under review was an exciting and successful one for the Group as it further strengthened its position in the Asia Pacific CCTV market.' 'The first few months of the current financial year have been very encouraging. In view of the strong demand for products from our existing customers, and the positive sentiment and exposure towards the digital surveillance market in general, we expect to make further significant progress in the current year. 'Our objectives are to further develop our expertise in producing high quality, reliable and innovative digital video solutions and to consolidate our sales network throughout the Greater China region. With the launch of the Group's new products in the third quarter of this year, the Board remains confident in the Group's long-term growth potential.' For further information visit www.uvel.com or contact: UniVision Engineering Limited +852 2389 3256 Stephen Koo, Chairman Danny Yip, Finance Director HB Corporate +44 (0) 207 510 8600 Jim McGeever/Rory Creedon Threadneedle Communications +44 (0) 207 936 9605 Graham Herring/Josh Royston About UniVision Engineering Limited: UniVision Engineering Limited, incorporated in Hong Kong in 1979, is well established in Hong Kong, Macau and China. The Company designs, sources and sells its own brand-name products and OEM products, including Microprocessor CCTV Control Systems, Video Distribution Amplifiers, Fibre Optic Transmission Systems and Smart Card Access Systems. INTRODUCTION I am pleased to report on the results of the Group for the financial year ended 31 March 2007, our second year as a public company, which has proved to be an exciting and successful period for UniVision. The Company's Admission to the AIM of the London Stock Exchange in December 2005 has given us the opportunity to access international capital markets and enhance our growing reputation in the commercial marketplace, particularly in Asia and Middle East, where we see significant growth opportunities to develop as an international Group and create greater value for our shareholders. We have been providing our customers with digital surveillance and integrated security systems in the Pacific region for a number of years and, as our product range and skills base have grown, we are increasingly able to expand our geographic reach. The recent acquisition of a majority shareholding in T-Com Tech. Co. Ltd and 100% shareholding in Leader Smart Engineering (Shanghai) Ltd has added momentum to our continued growth in the Greater China Region and enabled us to expand into the electrical and mechanical service sector. Our objectives are to further develop our expertise in producing high quality, reliable and innovative digital video solutions and to consolidate our sales network throughout the Greater China region. With growing demand in the surveillance and security industry, both domestically and internationally, and with the launch of a new product range in the third quarter of the current year, we remain confident in the Group's long-term growth potential. FINANCIAL REVIEW During the period under review, turnover increased by 130% to £8.93M (2006: £ 3.89m). This growth is attributable to additional sales from the acquisition of T-com and the existing clients and the improvement in market conditions and a heightened awareness in the areas on which we focus. The effect from our 100% owned subsidiaries Leader Smart (Shanghai) will be improve further our growth in the year of 2008. The development of new applications has generated additional revenue streams both from existing and new clients, which is particularly pleasing. I am delighted that turnover for the period was significantly higher than our internal forecasts. Gross profit margin remains at 32% (2006: 33%). Administration expenses, other operating expenses and non-operating expenses were in line with the Group's increase in capital investment, marketing and office expansion rising to £1,403,744 (2006: £481,470). This increase is principally due to the additional administration cost of new subsidiaries T-Com and Leader Smart Shanghai and the management cost for listing of UniVision's shares according to AIM requirement, which under the International Financial Reporting Standards ('IFRSs') could not be written off against the Share Premium Account. Net growth in profit before tax after excluding all one-off expenses relating to the Company's flotation increased by 304% to £1.43 million. Basic earnings per share increase to 0.39p from 0.18p even with a greater number of shares in issue. MARKET REVIEW According to A & S Asia Magazine, the total global demand for surveillance and monitoring systems is currently approximately US$4.5 billion. This is expected to grow to approximately US$ 11 billion by 2007. Industrial and economic growth in Hong Kong, China and Macau together with global events such as the Beijing Olympics 2008 and the Shanghai Expo 2010, all lead to increased construction of facilities, such as hotels, shopping centres, and convention and exhibition centres. There is a continuing strong demand for digital video products such as Digital Video Server (DVS), Network Video Recorders (NVRs) and Internet Protocol (IP) cameras. Specific examples of this include the upgrade of traffic surveillance in Hong Kong and the upgrade of Digital Video Server (DVS) for the Hong Kong Kowloon and Canton Railway, the Hong Kong MTRC and the Hong Kong Housing Authority, as well as the new Hong Kong Government Headquarters and the Western Kowloon development complex. BUSINESS REVIEW Markets IP Video is providing the CCTV industry with a unique set of tools, particularly for use in the demanding transportation industry which has used the analogue system for a decade. Hybrid IP analogue system is the most cost effective way to connect IP and analogue cameras with CCTV Matrix Controllers and DVS. Hybrid solutions provide large installed base analogue cameras with a gateway to transmit video streams from networks and the Internet. There are considerable opportunities in Greater China which is providing avenues for the Hybrid solutions. The Group is looking into many different solutions, including Video compression technology MPEG-4 and H.264, Digital Encoder and Decoder (CoDec) with built-in video analysis algorithms in the Homeland Security field such as intruder detection, loitering detection, left behind objects and trip wire will be the new area of interest. The Board believes that UniVision will be among the pioneers in providing the most effective solutions for businesses in the airport, rail and traffic surveillance industry and we hope to expand our sphere of business accordingly. Technologies, Solutions and Products On the solutions side, an ongoing product development programme is in place to cater for the needs of the Group's growing client base in the Asia Pacific region. The Group's newly developed Digital Video Server with PC and embedded base solutions came to market in July 2007 and has been used in several projects in Hong Kong. A new brand name for these products is expected to be announced in early 2008. A newly developed Video Amplifier with an on-screen display function was launched at the same time and the first order is due to be implemented into the CCTV System for the Hong Kong Island Area Traffic Control. We are currently working on H.264 CoDec with built in video analysis algorithms which we expect to launch early in the next financial year. Acquisitions and Investments The success of our investment in T-Com Tech. Co. Ltd and Leader Smart (Shanghai) Ltd has reinforced the Company's strategy of acquiring interests in companies with strategic value. To this end, the Group is currently assessing a number of companies in related fields with a view to making further strategic investments. Contract Wins During the reporting period, I am pleased to report that the Group was awarded a number of high profile projects including CCTV systems in the following locations; Shenzhen Western Corridor, Hong Kong General Post Office, the Lok Ma Chau Spur Line terminal, the Hong Kong Airport Baggage Handling Area, the Hong Kong MTRC Wheel Chair Platform, the Macau Crown Hotel Casino and the New Grand Lisboa Hotel Casino. We have also been awarded contracts for E & M & ELV Systems for the Beijing Bestride Recreation Club, an E & M System for the Shanghai NVIDIA Office, and CCTV and Access Controls System for the Formosa Plastic Factories in Taiwan. Macau Casinos As well as growing our business by winning public sector mandates our reputation has grown in the entertainment and leisure industry and several significant projects were undertaken in Macau. The Board sees the leisure industry becoming an area of substantial opportunity over the coming years and the strategy that was put in place to capitalise on these developments is bearing fruit, as evidenced by the key projects at the Crown Hotel Casino and the New Grand Lisboa Hotel Casino. MTR & Maintenance Our maintenance contracts are particularly important to the business by providing strong visibility in our revenue and I am delighted that we have continued to develop this side of the business. In particular, our relationship with the Mass Transit Railway has proved to be significant with a further 3-year maintenance contract for the CCTV, Public Address and Passenger Information Display System (PIDS). This was also extended during the period to include the important Disneyland Line. There are several renovation contracts anticipated for MTR in the fourth quarter 2007. In July 2007, UniVision entered into a 5-year maintenance contract for the CCTV System with the Hong Kong Island Traffic Control and a 5-year maintenance contract for CCTV System for Tsing Ma Traffic Control (Highway System for Hong Kong Airport). PROSPECTS The Company's performance domestically has been strong with new revenue streams from both the public and private sector in the Greater China Region. We are working with partners in Australia, Thailand, and Dubai in securing product distribution channels. We continue to enhance our product and application development programmes. The first few months of the current financial year have been very encouraging. In view of the strong demand for products from our existing customers, and the positive sentiment and exposure towards the digital surveillance products in general, the Board is confident of making further significant progress in the current year. Finally, on behalf of the Board, I would like to thank our customers, suppliers and shareholders for their continued support of UniVision. I would also like to acknowledge the hard work of the management and all the staff for their contribution and dedication to the Group. MR. STEPHEN KOO EXECUTIVE CHAIRMAN 27 September 2007 UNIVISION ENGINEERING LIMITED GROUP INCOME STATEMENT For the year ended 31 March 2007 As restated 2007 2006 ------ ------ £ £ Revenue 8,935,778 3,886,780 Cost of sales (6,053,721) (2,607,317) --------- --------- Gross profit 2,882,057 1,279,463 Other income 139,284 244,487 Distribution costs (63,345) (94,133) Administrative expenses (1,403,744) (481,470) Other operating expenses (77,353) (201,836) --------- --------- Profit from operations before tax and finance costs 1,476,899 746,511 Non-operating expenses - (392,380) Finance costs (44,476) - --------- --------- Profit before taxation 1,432,423 354,131 Income tax expense (30,659) - --------- --------- Profit for the year 1,401,764 354,131 ========= ========= Attributable to minority interest 120,575 - Profit for attributable to equity holders of the parent 1,281,189 354,131 --------- --------- 1,401,764 354,131 ========= ========= Earnings per share Basic 0.39p 0.13p ========= ========= Diluted N/A N/A ========= ========= UNIVISION ENGINEERING LIMITED GROUP BALANCE SHEET At 31 March 2007 As restated 2007 2006 ------ ------ £ £ ASSETS Non-current assets Goodwill 961,845 - Plant and equipment 340,560 13,665 --------- --------- 1,302,405 13,665 --------- --------- Current assets Inventories 1,007,434 192,213 Due from construction contract customers 1,849,509 934,195 Trade and other receivables 3,259,346 2,202,605 Cash and cash equivalents 1,603,932 1,414,313 --------- --------- 7,720,221 4,743,326 --------- --------- Total assets 9,022,626 4,756,991 ========= ========= EQUITY Capital and reserves 5,875,457 3,613,139 --------- --------- Total equity 5,875,457 3,613,139 ========= ========= LIABILITIES Current liabilities Bank loan, secured 1,241,905 - Bills payable 220,858 - Due to construction contract customers 599,462 452,536 Trade payables and accruals 1,084,944 691,316 --------- --------- Total liabilities 3,147,169 1,143,852 ========= ========= Total equity and liabilities 9,022,626 4,756,991 ========= ========= Minority interest 285,641 - ========= ========= UNIVISION ENGINEERING LIMITED PARENT COMPANY BALANCE SHEET At 31 March 2007 As Restated 2007 2006 ------ ------ £ £ ASSETS Non-current assets Investment in subsidiary undertakings 2,054,081 - Plant and equipment 15,075 13,665 --------- --------- 2,069,156 13,665 --------- --------- Current assets Inventories 818,140 192,213 Due from construction contract customers 763,951 934,195 Trade and other receivables 1,592,211 2,205,605 Cash and cash equivalents 1,488,295 1,414,313 --------- --------- 4,662,597 4,743,326 --------- --------- Total assets 6,731,753 4,756,991 ========= ========= EQUITY Capital and reserves 5,469,484 3,613,139 --------- --------- Total equity 5,469,484 3,613,139 ========= ========= LIABILITIES Current liabilities Due to construction contract customers 583,962 452,536 Trade payables and accruals 678,307 691,316 --------- --------- Total liabilities 1,262,269 1,143,852 ========= ========= Total equity and liabilities 6,731,753 4,756,991 ========= ========= UNIVISION ENGINEERING LIMITED GROUP STATEMENT OF CHANGES IN EQUITY For the year ended 31 March 2007 Special Special Share Share Retained capital capital Exchange Minority Total capital premium earnings reserve 'A' reserve 'B' differences Sub-total interest equity £ £ £ £ £ £ £ £ £ Balance at 31 March 2005 883,903 - 381,803 - 143,439 18,430 1,427,575 - 1,427,575 Presentational currency adjustment 284,078 - (247,199) - - (36,879) - - - Balance at 31 March 2005 - restated 1,167,981 - 134,604 - 143,439 (18,449) 1,427,575 - 1,427,575 Issue of shares upon listing 235,015 1,279,985 - - - - 1,515,000 - 1,515,000 Issue of shares upon placing 48,089 261,911 - - - - 310,000 - 310,000 Share issue costs - (262,915) - - - - (262,915) - (262,915) Net profit for the year - - 510,007 - - - 510,007 - 510,007 Effect of translation - - - - - 113,472 113,472 - 113,472 Balance at 31 March 2006- previously reported 1,451,085 1,278,981 644,611 - 143,439 95,023 3,613,139 - 3,613,139 Recovery of provision for bad debts - - (13,124) 13,124 - - - - - Recovery of provision for obsolete inventories - - (142,752) 142,752 - - 142,752 - 142,752 Provision for obsolete inventories - - - - - - (142,752) - (142,752) Balance at 31 March 2006 - restated 1,451,085 1,278,981 488,735 155,876 143,439 95,023 3,613,139 - 3,613,139 Issue of shares for acquisition of a subsidiary undertaking 22,991 217,039 - - - - 240,030 165,066 405,096 Issue of shares upon placing 223,541 811,257 - - - - 1,034,798 - 1,034,798 Share issue cost - (114,637) - - - - (114,637) - (114,637) Net profit for the year - - 1,281,189 - - - 1,281,189 120,575 1,401,764 Effect of translation - - - - - (464,703) (464,703) - (464,703) Balance at 31 March 2007 1,697,617 2,192,640 1,769,924 155,876 143,439 (369,680) 5,589,816 285,641 5,875,457 The currency translation from Hong Kong dollars to the presentational currency of £Sterling used in these financial statements has no impact on the available distributable reserves of the Company which at 31 March 2007 were HK$24,885,054 (2006: HK$7,403,922). 1 The adjustment was made to reflect the recovery of the provision of bad debts and obsolete inventories that should be credited to the non-distributable Special Capital reserve instead of income statement in year ended 31 March 2006 pursuant to the order of the High Court dated 20 dated 20 November 2004. 2 The adjustment was made to reflect the significant under provision of obsolete inventories amounting to 142,752 in year ended 31 March 2006. UNIVISION ENGINEERING LIMITED PARENT COMPANY STATEMENT OF CHANGES IN EQUITY For the year ended 31 March 2007 Special Special Share Share Retained capital capital Exchange Total capital premium earnings reserve 'A' reserve 'B' differences equity £ £ £ £ £ £ £ Balance at 31 March 2005 883,903 - 381,803 - 143,439 18,430 1,427,575 Presentational currency adjustment 284,078 - (247,199) - - (36,879) - Balance at 31 March 2005 - restated 1,167,981 - 134,604 - 143,439 (18,449) 1,427,575 Issue of shares upon listing 235,015 1,279,985 - - - - 1,515,000 Issue of shares upon placing 48,089 261,911 - - - - 310,000 Share issue costs - (262,915) - - - - (262,915) Net profit for the year - - 510,007 - - - 510,007 Effect of translation - - - - - 113,472 113,472 Balance at 31 March 2006 as previously reported 1,451,085 1,278,981 644,611 - 143,439 95,023 3,613,139 Recovery of provision for bad debts - - (13,124) 13,124 - - - Recovery of provision for obsolete inventories - - - 142,752 - - 142,752 Provision for obsolete inventories - - (142,752) - - - (142,752) Balance at 31 March 2006 - restated 1,451,085 1,278,981 488,735 155,876 143,439 95,023 3,613,139 Issue of shares for acquisition of a subsidiary undertaking 22,991 217,039 - - - - 240,030 Issue of shares upon placing 223,541 811,257 - - - - 1,034,798 Share issue cost - (114,637) - - - - (114,637) Net profit for the year - - 1,186,859 - - - 1,186,859 Effect of translation - - - - - (490,705) (490,705) Balance at 31 March 2007 1,697,617 2,192,640 1,675,594 155,876 143,439 (395,682) 5,469,484 1 The adjustment was made to reflect the recovery of the provision of bad debts and obsolete inventories that should be credited to the non-distributable Special Capital reserve instead of income statement in year ended 31 March 2006 pursuant to the order of the High Court dated 20 dated 20 November 2004. 2 The adjustment was made to reflect the significant under provision of obsolete inventories amounting to 142,752 in year ended 31 March 2006. UNIVISION ENGINEERING LIMITED CONSOLIDATED CASH FLOW STATEMENT For the year ended 31 March 2007 As restated 2007 2006 ------ ------ £ £ CASH FLOWS FROM OPERATING ACTIVITIES Profit before taxation 1,432,423 354,131 Adjustments for: Depreciation 115,412 5,833 Admission to AIM costs - 392,380 Disposal of investment securities (30,105) - (Reversal)/provision for obsolete inventories, net (205,064) 201,836 Written back on trade payables and accruals (51,730) (77,136) Unrealised loss on investment account 14,747 - Impairment losses on deposits, prepayments and other receivables 46,700 - Loss on disposal of plant and equipment 739 - Interest income (19,966) (15,929) Interest expenses 44,476 - --------- --------- Operating profit before working capital changes 1,347,632 861,115 (Increase)/decrease in inventories (48,130) 404,631 Increase in trade and other receivables (257,938) (705,301) Increase in amounts due from construction contract customers (219,064) (520,553) Increase in amounts due to construction contract customers 108,673 175,351 Increase in trade payables and accruals (497,863) (56,660) Decrease in bills payables (50,440) - --------- --------- Net cash generated from operations 382,870 158,583 --------- --------- CASH FLOWS FROM INVESTING ACTIVITIES Purchases of plant and equipment (52,098) (9,207) Receipts from settlement of short term loan - 176,465 Net cash outflow from acquisition of subsidiary undertakings (793,122) - Advance of short term loan receivable - (360,428) Decrease/(increase) in pledged deposits 37,402 (122,655) Proceeds from disposal of plant and equipment 46 - Proceeds from disposal of investment securities 876,784 - Purchases of investment securities (846,679) - Interest received 19,966 15,929 --------- --------- Net cash used in investing activities (757,701) (299,896) --------- --------- UNIVISION ENGINEERING LIMITED GROUP CASH FLOW STATEMENT (Continued) For the year ended 31 March 2007 As restated 2007 2006 ------ ------ £ £ CASH FLOWS FROM FINANCING ACTIVITIES Interest paid (44,476) - Proceeds from issue of shares 1,034,798 1,810,000 Payment for issue of shares and admission to AIM (114,637) (653,220) Bank loan borrowings, secured 171,511 - --------- --------- Net cash generated from financing activities 1,047,196 1,156,780 --------- --------- NET INCREASE IN CASH AND CASH EQUIVALENTS 672,365 1,015,467 EFFECT OF CHANGES IN FOREIGN EXCHANGE (482,746) 17,031 CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR 1,414,313 381,815 --------- --------- CASH AND CASH EQUIVALENTS AT END OF YEAR 1,603,932 1,414,313 ========= ========= Major non-cash transaction On 10 October 2006, 5,363,990 new ordinary shares of HK$0.0625 were issued as partial consideration for the acquisition of Leader Smart Engineering Limited and were valued at £240,030 of which £217,039 was credited to the Share Premium Account, before expenses. On 14 March 2007, 52,500,000 new ordinary shares of HK$0.0625 were placed at a price of 2 pence per share by HB Corporate. At the same time, 2,500,000 ordinary shares of HK$0.0625 were allotted and issued at 2 pence per share to HB Corporate in satisfaction of their placing fee. £811,257 was credited to the Share Premium Account in respect of this placing, before expenses. NOTES TO THE FINANCIAL STATEMENTS For the year ended 31 March 2007 1. GENERAL INFORMATION The Company is incorporated in Hong Kong as a limited company. The address of its registered office is 8/F Lever Tech Centre, 69-71 King Yip Street, Kwun Tong, Kowloon, Hong Kong. The Company has its primary public listing on the Alternative Investment Market of the London Stock Exchange ('AIM'). The Group is engaged in the supply, design, installation and maintenance of closed circuit television and surveillance systems, the sale of security system related products and provision for electronical and mechanical services. The principal activities of the subsidiaries are set out in note 19 to the financial statements. 2. BASIS OF PREPARATION OF FINANCIAL STATEMENTS The financial statements have been prepared in accordance with International Financial Reporting Standards (IFRS), IFRIC interpretations and in accordance with the rules of the International Accounting Standards Board (IASB). The Financial Statements have also been prepared under the historical cost convention. The preparation of financial statements in conformity with IFRS requires the use of certain critical accounting estimates. It also requires management to exercise its judgement in the process of applying the Group's Accounting Policies. The areas involving a higher degree of judgement or complexity, or areas where assumptions and estimates are significant are disclosed in Note 6. Standards and Interpretations in issue but not yet effective or not yet relevant IFRS 7 'Financial Instruments: Disclosures', and the complementary amendments to IAS 1 'Presentation of Financial Statements', require new disclosures relating to financial instruments. This standard is effective for the year ending 31 December 2007 but will not have an impact on the classification or valuation of the Group's financial instruments. IFRS 8 'Operating Segments' requires companies to adopt a management approach to reporting on their operating segments. This standard is effective for the year ending 31 December 2009 but is not expected to have an impact on the Group's reporting segments. IFRIC 8 'Scope of IFRS 2' addresses whether IFRS 2 'Share-based Payment' applies to transactions in which the entity cannot identify specifically some or all of the goods or services received in return for issuing equity instruments. The interpretation is effective for the year ending 31 December 2007. The interpretation is not expected to have a major impact on the Group's results or equity. IFRIC 9 'Reassessment of Embedded Derivatives' is effective for the year ending 31 December 2007. As none of the terms of the Group's contracts have changed, IFRIC 9 is not relevant to the Group. IFRIC 10 'Interim Financial Reporting and Impairment' prohibits companies from reversing impairment losses recognised in an interim period on goodwill and investments in equity instruments and in financial assets carried at cost, where a loss would not have been recognised at a subsequent balance sheet date. The interpretation is effective for the year ending 31 December 2007. The interpretation is not expected to have a major impact on the Group's results or equity. IFRIC 11 IFRS 2 - 'Group and Treasury Share Transactions' considers how certain grants of equity instruments should be treated under IFRS 2 'Share-based Payment'. The interpretation is effective for the year ending 31 December 2008. The interpretation is not expected to have a major impact on the Group's results or equity. IFRIC 12 'Service Concession Arrangements' is effective for the year ending 31 December 2008. As none of the Group entities is involved in public-to-private service concession arrangements, IFRIC 12 is not relevant to the Group. The company will be adopting IFRIC 10 'Interim Financial Reporting and Impairment' 3. PROFIT FROM OPERATIONS BEFORE TAX AND FINANCE COSTS Profit from operations before tax and finance costs is stated after charging / (crediting) the following: As restated 2007 2006 ------ ------ £ £ Cost of inventories recognised as expenses 3,947,819* 1,457,844 Unrealised loss on investment account carried at fair value 14,747 - Impairment losses on prepayments, deposits and other receivables 46,700 - (Reversal)/provision for obsolete inventories (205,064) 201,836 Auditors' remuneration 102,511 28,834 Depreciation Owned plant and equipment 115,412 5,833 Directors' remuneration (note 12) 189,786 89,494 Net exchange gains (72,395) (26,189) Research and development costs 65,666 25,585 Operating leases - land and buildings 47,079 28,079 Staff costs (excluding directors' remuneration) 870,074 522,289 Written back on trade payables and accruals (51,730) (77,136) Loss on disposal of plant and equipment 739 - ========= ========= *Cost of inventories recognised as expenses includes reversal of provision of obsolete inventories of £205,064 (2006: provision for obsolete inventories of £ 201,836) and written back on trade payables and accruals of £51,730 (2006: £Nil) 4. NON-OPERATING EXPENSES As restated 2007 2006 ------ ------ £ £ Total share issue and admission to AIM costs 114,637 668,220 ========= ========= Charged to equity: Share placing costs 114,637 15,500 Share issue costs upon admission to AIM - 247,415 --------- --------- 114,637 266,915 Charged to income statement: Admission to AIM costs - 392,380 Exchange differences - 12,925 --------- --------- Total share issue and admission to AIM costs 114,637 668,220 ========= ========= On 14 March 2007, 52,500,000 new ordinary shares of HK$0.0625 were placed at a price of 2 pence per share by HB Corporate and have raised £987,762 thereon ('the Placing') A portion of the share issue costs that relates to the issuing of new shares amounting to £114,637 have been changed to equity. 5. FINANCE COSTS As restated 2007 2006 ------ ------ £ £ Bank loan interests 44,476 - ======== ======== 6. TAXATION (a) No provision for Hong Kong profits tax has been made in the financial statements since the Company has sufficient tax losses brought forward to set off against current year's assessable profit. (b) Subsidiary taxes are calculated by the rates applicable in the local jurisdiction. (c) The taxation on the Group's profit before taxation differs from the theoretical amount that would arise using applicable tax rate as follows: As restated 2007 2006 ------ ------ £ £ Profit before taxation 1,432,423 354,131 ========= ========= Notional tax on profit before taxation, calculated at the tax rates applicable of profits in the respective countries 267,254 61,973 Tax effect of income that is not taxable in determining taxable profit (11,336) (4,583) Tax effect of expenses that are not deductible in determining taxable profit 7,842 103,416 Tax effect of temporary differences not recognised 10,305 (654) Tax effect of utilisation of tax losses not previously recognised (243,406) (160,152) --------- --------- Tax expense 30,659 - ========= ========= At the balance sheet date, the Company has unused tax losses of £4,461,050 (As restated 2006: £6,322,994) that are available for offset against future taxable profits of the company. No deferred tax asset has been recognised due to the unpredictability of the future profit streams. Tax losses may be carried forward indefinitely. No provision for deferred tax liabilities has been made in the financial statements as the tax effect of temporary differences is immaterial to the Group. 7. EARNINGS PER SHARE The calculation of basic earnings per share is based on the profit attributable to equityholders of the parent for the year of £1,281,189 (As restated 2006: £ 354,131), and the weighted average of 327,814,621 (2006: 279,155,799) ordinary shares in issue during the year. No diluted loss per share has been disclosed as there was no potential dilutive ordinary share outstanding during the year (2006: £Nil). 8. EVENTS AFTER THE BALANCE SHEET DATE There have been no discloseable events since the balance sheet date. Annual Report The annual report for the year ended 31 March 2007 will be sent to shareholders and will be available, free of charge, from the offices of the Company's nominated adviser, HB Corporate, a division of Hoodless Brennan plc., at 40 Marsh Wall, London, E14 9TP and the Company's registrar, Computershare Investor Services (Channel Islands) Limited at PO Box 83, Ordnance House, 31 Pier Road, St Helier, Jersey JE4 8PW, Channel Island from 10 October 2007. This information is provided by RNS The company news service from the London Stock Exchange

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