15 December 2016

UniVision Engineering Limited

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

 Interim Results

For the Six Months Ended 30 September 2016

UniVision, 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 2016. 

Highlights:

·    Profit attributable to the equity holders of HK$0.9m (H1 2015: HK$0.45m);

·    Revenue increased by 7% to HK$21.4m for continuing operations (H1 2015 HK$20m).

Mr. Stephen Sin Mo KOO, Executive Chairman, added:

"The Company continues to grow despite facing market competition, low economic growth and the delay of major government infrastructure projects. The proposed large government projects and the new extension of MTR railway lines will provide the business opportunity to expand in the coming years."

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

UniVision Engineering Limited            Tel: +852 2389 3256

Stephen Koo, Executive Chairman           www.uvel.com      

Chun Pan Wong, Chief Executive Officer

Danny Kwok Fai Yip, Finance Director

Nicholas Lyth, Non-Executive Director       Tel: +44 (0) 7769 906686 

ZAI Corporate Finance Limited

(Nominated Adviser and Broker)           Tel: +44 (0)20 7060 2220  

Dugald J. Carlean /Tim Cofman/ Luis Brine             www.zaicf.com           

Chairman's Statement

INTRODUCTION

The Group's turnover for continuing operations has increased by 7% and gross margin percentage remained constant at 34% (H1 2015: 34%) for the reporting period despite market competition and the delay of major government infrastructure projects. The business is expected to continue to grow by the proposed infrastructure projects and line of extension in MTR in the coming years.

The Directors remain confident of the future of UniVision and is optimistic on the Group's prospects.

FINANCIAL REVIEW

'Continuing operations' represent the Group's Security and Surveillance Systems business undertaken by the Hong Kong subsidiary. The business undertaken by T-Com, the Group's Taiwan Subsidiary is classified as discontinued operations following its sale in June this year. The loss from these discontinued operations during the period was HK$415K (2015: HK$2.2m).

As announced on 28 June 2016, the Group entered into an agreement to sell its entire interest in its Taiwan subsidiary- T-Com Technology Company Limited ("the Subsidiary" or "T-Com") to Mr. Stephen Koo, the Executive Chairman of the Group. As announced on 19 October 2016, this sale completed on 18 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. The net asset value was HK$4.3m as at 30 September 2016.

In the six month period revenues for the Group's continuing operations increased by 7% to HK$21.4m (H1 2015: HK$20m). This increase was mainly due to a 9% growth in construction contracts and a 8% growth in maintenance contracts, The growth of construction revenue in Hong Kong was derived from the Hong Kong-Zhuhai-Macao Bridge Project which generated income of HK$2.2m, The increased income from maintenance contracts was contributed mainly by the maintenance income from the Kai Tak Cruise Terminal Project. 

Gross profit margin for the Group's continuing operations remained constant at 34% (2015: 34%). Gross profit margin in the Hong Kong maintenance business improved slightly from 33% to 36%, compensating for a decrease in gross profit margin of 3% to 33% (2015: 36%) in the Group's construction business for the period. The effective and efficient control of human resources, material costs, logistics and sub-contracting charges has assisted in maintaining this level of gross margin in facing increased operating costs and a keen competitive environment. The gross profit margin in product sales was 30%.

The profit from the continuing operations attributable to the equity holders of the Company is HK$1.1m (2015: 1.6m). Profit before interest and income tax from the continuing operations during the period at HK$1.1m (H1 2015: HK$1.6m) whilst the Group recorded a profit attributable to the equity holders of HK$0.9m (H1 2015: HK$0.45m). 

The Group's Hong Kong operation was profitable despite a highly competitive environment and low economic growth. The Group's Taiwanese subsidiary which UniVision formerly had a  52.25% interest in  recorded an operating loss during the six months ended 30 September 2016. The Group shared a loss of HK$217K for the period (H1 2015: HK$1.1m).

During the period under review, the relative strengthening of the HK$ against GBP has led to 10% appreciation in the GBP reporting amount in the Consolidated Statement of Comprehensive Income and Financial Position. It also the reason for the significant gain of £592K on exchange differences arising on the translation (H1 2015: loss £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 2015 that were unaffected by exchange rate fluctuations.

BUSINESS REVIEW

Markets

The increasing demand for wireless network infrastructure, the increase in concerns over security and the demand to replace analogue systems with Internet protocol based systems are the key growth drivers for the Security and Surveillance market.

Both construction contracts and maintenance contracts grew in this financial period. The Hong Kong-Zhuhai-Macao Bridge Project was the largest contributor of revenue in construction contracts. The maintenance income from the Kai Tak Cruise Terminal Project contributed to the growth in maintenance contracts. The Board anticipates demand for Security and Surveillance Systems from local government infrastructure projects and the commercial sector will continue to increase in coming years. The Board will continue its efforts to maintain sustainable operations in Hong Kong.  

UniVision will continue to commit resources to accessing and developing new technologies and solutions so as to undertake opportunities in Internet Protocol and High Definition CCTV System technology.

Currently, the Company faces competition from both large surveillance systems providers and challenges from other similar sized companies. Facing increased competition, the Company will explore other market segments besides its core surveillance business, such as rolling stock business in railway, to strengthen the business.

Business

During the period under review, the outcome of the UK's Referendum to leave the European Union ("Brexit) led to uncertainty in the global economy and a sharp decline in the value of Sterling. As the functional currency for the continuing operation is Hong Kong Dollars, the effect from the decline in British pound to the operations is not material. On the other hand, the Company paid less in professional fees which settled in GBP.

During the period, the Company participated in a Pre-Qualification process for the CCTV Replacement project for Hong Kong MTR. The project is replacing the CCTV cameras from analogue-based equipment with IP-based units. The Company currently is the CCTV System maintainer for MTR Corporation Limited ("MTRC") therefore the board believes that the Company is well positioned for this process. We are actively tendering for this project but the board cannot be certain that the outcome will be favourable for the Company.

The disposal of UniVision's interest in T-Com, has enabled UniVision's Management to focus attention and resources on its local security and surveillance business in Hong Kong and optimise the Group's operational efficiency.

The Company's major customers are public organisations and sizeable private enterprises, such as the Electrical and Mechanical Services Department ("EMSD") of the Hong Kong Government and MTRC. The latter was the Company's largest customer in this financial period. The Company expects that a significant portion of its future revenue will depend on new orders and the renewal of service contracts with the major customers. To minimize the risk of over-reliance on a limited number of major customers, the Company is making every effort to diversify its customer base.       

PROSPECTS

The growing demand for its network and high definition security and surveillance products will assist the Group in continuing to prosper in these markets.

The Group will continue to enhance the management of its existing projects and to actively tender for new construction contract to facilitate growth while maintaining its stake in the maintenance sector of Security & Surveillance market.

Finally, on behalf of the Board, I would like to take this opportunity to thank the Group's shareholders, customers, suppliers and business partners for their continued support of UniVision. I would also like to express my gratitude to the management team and all staff members for their support, loyalty, hard work and dedication to the Group.

MR. STEPHEN SIN MO KOO

EXECUTIVE CHAIRMAN

15 December 2016

UniVision Engineering Limited

Consolidated Statements of Comprehensive Income (Un-audited)

For the six months ended 30 September 2016