Interim Results

RNS Number : 8000J
UniVision Engineering Ltd
07 December 2018
 

 

 

7 December 2018

 

The information contained within this announcement is deemed by the Company to constitute inside information stipulated under the Market Abuse Regulation (EU) No. 596/2014.  Upon the publication of this announcement via the Regulatory Information Service, this inside information is now considered to be in the public domain.

 

UniVision Engineering Limited

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

Interim Results

For the Six Months Ended 30 September 2018

 

 

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 2018. 

 

Highlights:

·    Profit attributable to the equity holders increased 391% to HK$10.6m (H1 2017: HK$2.1m);

·    Revenue increased by 187% to HK$66.8m for continuing operations (H1 2017: HK$23.2m);

·    Positive cash generated from operations HK$6m (H1 2017: -HK$6.4m). 

 

 

 

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

 

UniVision Engineering Limited

Tel: +852 2389 3256

Stephen Koo, Chairman                                                       

www.uvel.com

Chun Pan Wong, Chief Executive Officer 

 

Danny Kwok Fai Yip, Finance Director

 

Nicholas Lyth, Non-Executive Director

Ivor Shrago, Non-Executive Director

 

Tel: +44 (0)7769 906686

Tel: +44 (0) 7900251 925

 

SPARK Advisory Partners Limited                                       

(Nominated Adviser)                            

Tel: +44 (0)20 3368 3551  

Mark Brady / Neil Baldwin

www.sparkadvisorypartners.com

 

 

SI Capital Limited

(Broker)

Tel:  +44 (0)1483 413500

www.sicapital.co.uk

Nick Emerson

 

 

CHAIRMAN'S STATEMENT

 

 

INTRODUCTION

 

The Company has achieved a substantial growth both revenue and profit in the current reporting period. It had been predicted by the Board and had been highlighted in the year end trading update in Apr 2018, final results announcement and trading update in September 2018.

 

 

THE MAJOR CONTRACT WITH MTRC

 

This transformational contract was awarded to UniVision in May 2017. Over the six and half year life of the contract, the total value is £38.9m based on the master contract and currently announced add on contracts.

 

The master 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 contract has entered to the installation stage in the current financial period. This has led to sharply growth in revenue in the financial period. The Company expects regular billing on works completed and certified on a monthly basis throughout the remaining period of contract.          

 

The Company is the main contractor for the Project. The Company is required to provide a performance bond equivalent to 3% of the contract sum, i.e. HK$11.7m. The Company has a HK$30m surety bond facility guaranteed by a leading insurance company. The unutilised facility is HK$18.3m which can be utilised for other potential projects. The facility has been renewed in early November 2018 under the same terms as that of 2017. 

 

HSBC, the Group's major banker, has increased the trade facility to $13m of which including an overdraft limit of HK$4m after the annual review in late July 2018. The invoice discounting/factoring facility remains unchanged at HK$45m. These facilities provide additional working capital for the Company's operations and also ensure that the Major Contract can operate smoothly.

         

 

FINANCIAL REVIEW

 

The profit attributable to the equity holders of the Company is £1m (2017: £213K).

The improvement in results performance in the period is mainly attributable to:-


i)  264% growth in the income from construction contracts;
ii) Improved gross profit margin of 6% from maintenance contracts.
 

In the six month period under review, revenues for the Group increased by 187% to HK$66.8m (H1 2017: HK$23.2m). The sharply growth of construction revenue was mainly due to significant income HK$43m (H1 2017: $2.5m) was generated from the MTRC Replacement of CCTV Systems (the Project).            

 

Revenues for the Group's maintenance business increased by 18% to HK$7.25m (H1 2017: HK$6.1m). The three years' maintenance contract with MTRC has been renewed for another three years commencing from 1 January, 2018 to 31 December 2020. The Group provides maintenance services to MTRC's network of CCTV systems and public address systems on seven railway lines in Hong Kong. With one more railway line, the scope is larger than the prior one. The contract revenue for this contract increased 18% to HK$3.9m which represented over 50% in the segment for the period.

 

Gross profit margin in the maintenance business improved from 41% to 47%. It was improved mainly due to the initial purchase cost for installation of equipment during the first three years' contract period. The gross margin of the Group's construction business was reduced by 5% to 24% (2017: 29%) for the period. 

 

Administration expenses for the period were increased by HK$1.5m to HK$6.2m (H1 2017: HK$4.7m). This was caused by the increased personnel expenses (salaries, directors' emoluments, bonus, provident fund contribution and recruitment fee), rental expenses, repairs and maintenance expenses and electricity charges.

 

To manage the execution of the Major Contract, the Company has recruited more professional and technical staff. The number of staff has increased to 65 as at 30 September 2018 (H1 2017: 54). Also, one more unit at the same building was rented for office use from January 2018. The Company now has two units for offices, one warehouse, one demo room and one workshop.            

 

Finance costs was increased to HK226K (2017: HK$0) since the Company commenced to use the HBSC banking facility from 1st quarter of year 2018. The interest was charged at the bank's Hong Kong Dollars Best Lending Rate. 

 

The profit attributable to the equity holders of the Company is HK$10.6m (2017: 2.1m). Profit before interest and income tax from operations during the period at HK$10.8m (H1 2017: HK$2.1m).

 

During the period under review, the relative weak of the HK$ against GBP has led to 3.7% depreciation in the GBP reporting amount in the Consolidated Statement of Comprehensive Income. Also, a relative strengthening of HK$ at the period-end has led to a 7.6% appreciation in the GBP reporting amount in the Consolidated Statement of Financial Position. It also the reason for the significant gain of £509K on exchange differences arising on the translation (H1 2017: loss £446K). 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 2017 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 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 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. 

 

The Company keeps moving forward in CCTV segment and gradually to safe city concept by introducing video based analytics to big data AI processing. At the same time, the Company still keeps an eye on overseas projects of similar size.

 

 

Customers

 

MTR Corporation is the Company's largest customer in this financial period, particularly after awarded of the Major Contract.

 

To avoid the concentration of customers, the Company has diversified the base of customers particularly to the private and domestic sectors.

 

As a result of the significant amount in the Major Contract, the Company has been temporarily suspended from tendering for additional government contracts by the Hong Kong Government Works Branch under the management of Electrical and Mechanical Services Department ("EMSD") for six months from 27 July 2018 until the shortfall has rectified. The effect of this temporarily suspension is insignificant to the Group's business given the capacity of current workload. Nevertheless, the Group has submitted the updated financial documents for lifting the suspension.    

 

Acquisitions and Investments

 

The Group continues to assess possible opportunities of new investments with a view to making a further strategic move.

 

 

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.

 

Our existing business, coupled with the Major Contract, provides a solid base which the Group can develop over the next few years. With referring to the resources and capacity, the Company continues to tender for new contracts within its optimum value.

 

Finally, on behalf of the Board, I would like to thank our customers, suppliers, sub-contractors, bankers 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

 

7 December 2018

 

 

 

UniVision Engineering Limited

Statements of Comprehensive Income (Unaudited)

For the six months ended 30 September 2018

 

 

For the six months ended 30 September

 

 

 

 

 

 

2018

2017

2018

2017

 

HK$'000

HK$'000

'000

'000

 

 

 

 

 

Revenue

66,798

23,224

6,373

2,298

Cost of sales

(49,081)

(15,914)

(4,683)

(1,575)

Gross profit

17,717

7,310

1,690

723

Other income

21

206

2

20

Other loss

(56)

0

(5)

0

Selling and distribution expenses

(651)

(659)

(62)

(65)

Administrative expenses

(6,196)

(4,700)

(591)

(465)

Finance costs

(226)

0

(22)

0

 

 

 

 

 

Profit before income tax

10,609

2,157

1,012

213

Income tax

0

0

0

0

 

 

 

 

 

Profit for the period

10,609

2,157

1,012

213

 

 

 

 

 

Other comprehensive income/(loss):

 

 

 

 

Exchange differences arising on translation of foreign operations

0

0

509

(446)

Total comprehensive income/(loss) for the period

10,609

2,157

1,521

(233)

 

 

 

 

 

Profit attributable to:

 

 

 

 

 

 

 

 

 

  Equity shareholders of the Company

10,609

2,157

1,012

213

 

10,609

2,157

1,012

213

 

 

 

 

 

Total comprehensive income / (loss) attributable

 

 

 

 

  Equity shareholders of the Company

10,609

2,157

1,521

(233)

 

10,609

2,157

1,521

(233)

 

 

 

 

 

 

 

 

 

 

Earnings per share - Basic and Diluted

HK Cents

HK Cents

Pence

Pence

  Basic

2.7651

0.5621

0.2638

0.0556

  Diluted

N/A

N/A

N/A

N/A

 

 

 

UniVision Engineering Limited

Statements of Financial Position (Unaudited)

As at 30 September 2018

 

 

For the six months ended 30 September

 

 

 

 

 

 

2018

2017

2018

2017

 

HK$'000

HK$'000

'000

'000

ASSETS

 

 

 

 

Non-current assets

 

 

 

 

Plant and equipment

1,496

696

146

66

Amount due from related companies

33,983

35,037

3,330

3,350

Total non-current assets

35,479

35,733

3,476

3,416

 

 

 

 

 

Current assets

 

 

 

 

Inventories

8,382

10,680

821

1,021

Trade receivables

12,538

7,264

1,229

694

Amount due from customers for contracts-in-progress

26,600

17,925

2,607

1,714

Deposits, prepayments and other receivables

21,759

16,217

2,132

1,550

Cash and bank balances

10,953

4,744

1,073

454

Total current assets

80,232

56,830

7,862

5,433

Total assets

115,711

92,563

11,338

8,849

 

 

 

 

 

LIABILITIES AND EQUITY

 

 

 

 

Current liabilities

 

 

 

 

Trade and other payables

27,277

14,058

2,672

1,344

Amounts due to customers for contracts-in-progress

13,281

17,788

1,301

1,700

Total current liabilities

40,558

31,846

3,973

3,044

 

 

 

 

 

Non-current liability

 

 

 

 

Amount due to a related company

1,200

1,200

118

115

Total liabilities

41,758

33,046

4,091

3,159

 

 

 

 

 

Equity

 

 

 

 

Share capital

55,034

55,034

3,891

3,891

Special capital reserve

4,188

4,188

299

299

Retained earnings

14,731

295

1,497

116

Translation reserve

0

0

1,560

1,384

Total equity

73,953

59,517

7,247

5,690

Total liabilities and equity

115,711

92,563

11,338

8,849

 

 

 

UniVision Engineering Limited

Statements of Changes in Equity (Unaudited)

in '000

 

 

Share capital

Retained earnings

Special capital Reserve "A"

Special capital Reserve "B"

Translation reserve

Total equity

 

'000

'000

'000

'000

'000

'000

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance at 1 Apr 2017

3,891

58

156

143

1,830

6,078

Profit for the year

0

735

0

0

0

735

 

 

 

 

 

 

 

Other comprehensive income

 

 

 

 

 

 

Exchange difference arising on translation of foreign operations

0

0

0

0

(779)

(779)

Total comprehensive income

0

735

0

0

(779)

(44)

Dividend paid

0

(151)

0

0

0

(151)

Balance at 31 Mar 2018

3,891

642

156

143

1,051

5,883

 

 

 

 

 

 

 

Profit for the six months ended 30 Sep 2018

0

1,012

0

0

0

1,012

Other comprehensive income

 

 

 

 

 

 

Exchange difference arising on translation of foreign operations

0

0

0

0

509

509

Total comprehensive income

0

1,012

0

0

509

1,521

Dividend declared

0

(157)

0

0

0

(157)

Balance at 30 Sep 2018

3,891

1,497

156

143

1,560

7,247

 

 

 

UniVision Engineering Limited

Statements of Changes in Equity (Un-audited)

in HK$'000

 

 

Share capital

Retained earnings

Special capital Reserve "A"

Special capital Reserve "B"

Total equity

 

HK$'000

HK$'000

HK$'000

HK$'000

HK$'000

 

 

 

 

 

 

 

 

 

 

 

 

Balance at 1 April 2017

55,034

(289)

2,117

2,071

58,933

Profit for the year

0

7,634

0

0

7,634

Total comprehensive income

0

7,634

0

0

7,634

Dividend paid

0

(1,573)

0

0

(1,573)

Balance at 31 Mar 2018

55,034

5,772

2,117

2,071

64,994

 

 

 

 

 

 

Profit for the six months ended 30 Sep 2018

0

10,609

0

0

10,609

Total comprehensive income

0

10,609

0

0

10,609

Dividend declared

0

(1,650)

0

0

(1,650)

Balance at 30 Sep 2018

55,034

14,731

2,117

2,071

73,953

 

 

 

 

UniVision Engineering Limited

Statements of Cash Flows (Un-audited)

For the six months ended 30 September 2018

 

 

 

For the six months ended 30 September

 

 

2018

2017

2018

2017

 

 

HK$'000

HK$'000

'000

'000

 

 

 

 

 

 

CASH FLOW FROM OPERATING ACTIVITIES

 

 

 

 

Profit before income tax for the period

10,609

2,157

1,012

213

 

Adjustments for:

 

 

 

 

 

Depreciation of plant and equipment

248

145

23

14

 

Interest income

(19)

(18)

(2)

(2)

 

Finance costs paid

226

0

22

0

 

Gain on disposal of plant and equipment

0

(15)

0

(1)

 

 

11,064

2,269

1,055

224

 

Changes in operating assets and liabilities:

 

 

 

 

Decrease / (Increase) inventories

2,342

(15)

223

(1)

 

Increase in trade receivables

(6,336)

(2,171)

(604)

(215)

 

Increase in amounts due from customers for contracts-in-progress

(893)

(3,529)

(85)

(349)

 

Increase in deposits, prepayments and other receivables

(1,361)

(2,593)

(130)

(257)

 

(Decrease) /Increase in amounts due to customers for contracts-in-progress

(2,508)

514

(239)

51

 

Increase / (Decrease) in trade and other payables

3,738

(929)

357

(92)

 

 

 

 

 

 

 

Cash generated from / (used in) operations

6,046

(6,454)

577

(639)

 

Income tax paid

0

0

0

0

 

Net cash generated from / (used in) operating activities

6,046

(6,454)

577

(639)

 

 

 

 

 

 

CASH FLOWS FROM INVESTING ACTIVITIES

 

 

 

 

Purchase of plant and equipment

(1,149)

(355)

(110)

(35)

 

Interest received

19

18

2

2

 

Decrease in pledged deposits

470

0

45

0

 

Proceeds from disposal of plant and equipment

0

15

0

2

 

Net cash used in investing activities

(660)

(322)

(63)

(31)

 

 

 

 

 

 

CASH FLOWS FROM FINANCING ACTIVITIES

 

 

 

 

Finance costs paid

(226)

0

(22)

0

 

Net cash used in financing activities

(226)

0

(22)

0

 

 

 

For the six months ended 30 September

 

 

2018

2017

2018

2017

 

 

HK$'000

HK$'000

'000

'000

 

 

 

 

 

 

 

 

 

 

 

 

NET INCREASE / (DECREASE) IN CASH AND CASH EQUIVALENTS

5,160

(6,776)

492

(670)

 

 

 

 

 

 

EFFECT OF CHANGE IN EXCHANGES RATES

0

0

57

(64)

 

 

 

 

 

 

CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD

5,793

11,520

524

1,188

 

 

 

 

 

 

CASH AND CASH EQUIVALENTS AT END OF PERIOD

10,953

4,744

1,073

454

 

 

 

Notes to the Interim financial statements for the six months ended 30 September 2018

 

1.     Basis of preparation

 

The unaudited interim financial statements for the six months ended 30 September 2018 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 2018. The interim financial statements, together with the comparative information contained in this report for the six months ended 30 September 2017, 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 2018 of HK$10.6m (H1 2017: HK$2.1m), and the weighted average of 383,677,323 (H1 2017: 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.

 


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