29 December 2011

UniVision Engineering Limited

("UniVision" or the "Group")

Interim Results

For the Six Months Ended 30 September2011

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 today announce its unaudited interim results for the six months ended 30 September 2011. 

Highlights

·     Revenue increased by 24%to HK$47m (H1 2010: HK$38m)

·     Profit before interest and tax remained constant at HK$3.3m (H1 2010: HK$3.3m)

·     Significant progress in repayment of loan to Mayne Management Limited

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

"Our stable CCTV business provides an excellent platform from which to add shareholder value. We are particularly pleased to have been successful in the engaging for the 2012-2014 MTR maintenance contract in Hong Kong. We expect that Electrical & Maintenance will be a major driver in the growth of Univision in the future particularly following the establishment of a regional office in mainland China for this market."

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

Chairman's Statement

Business Review

Following the agreement entered into by UniVision with Mayne Management Limited ("Mayne Management") and the subsequent payment to them of HK$5m the Group has achieved a stable platform from which to move forward.

The Group has a right to a 51% interest in the Zhongshan shopping mall. It has received a payment of HK$6.16m from Guangzhou Jun Heng Electrical & Mechanical Equipment Company Limited ("Jun Heng") which may be classified as a down payment against the purchase of the said interest. Full details of the agreement with Mayne Management and the arrangements with Jun Heng are detailed in the announcements made by the Group on 16 December 2011 and 23 December 2011.

The 51% Zhonghshan interest was independently valued by Vigers Appraisal and Consulting Limited at market value of RMB 129.5m in its existing state as at 31 May 2011. Recent property tax law enacted in PRC means that it is unlikely that the interest in the shopping mall will be sold directly for cash. The Capital Gains Tax rate on such a transaction would be up to 60%. Whilst the directors of the Group are keen for UniVision to be able to realise value from the asset as soon as possible the Board does not consider it to be in the best interests of investors at the present time to sell the 51% interest directly as much of any profit would be lost in taxation.

The core CCTV business produced sales of HK$42.3m and profit before interest and tax of HK$3.3m. The Group suffered a reduction in Gross Margin of 10%. This was due to a number of factors. The most significant was the conclusion of the 3 year MTR contract. The final period of this contract saw increased levels of cost. Approximately 60% of the revenues relating to this MTR contract were non-CCTV and as such were a new product area for the Group. The Board expects to be able to leverage the experience gained on this new product area to generate cost savings in the subsequent MTR contract to offset any inflationary cost increases associated with the contract.

Newer technologies are beginning to enter the CCTV market such as IP and High Definition. The Group is continuing to work on a number of different solutions in these areas.

The Board regards the extension of its activities in "Electrical and Mechanical" as the next step in delivering shareholder value. E&M involves the fit out of not only the CCTV infrastructure but also certain other facilities such as lifts, escalators, fire control systems etc. The Board believes that significant shareholder value can be obtained by being able to position itself as prime contractor in the supply of E&M facilities in the future. The Group has recruited Mr Jack Hong to lead the development of this business in mainland China.

The Board of Directors have been disappointed by the share price performance recently and it hopes that the recent transactions with both Jun Heng and Mayne Management will provide clarity to investors as to the direction the company is taking.

Financial Review

During the six month period revenues for the Group increased by 24% to HK$47m (H1 2010: HK$38m). The increase in revenue was mainly due to the inclusion of turnover from the formerly deconsolidated subsidiary, Leader Smart Engineering (Shanghai) Limited  ("Leader Smart"), growth of 33% in the Group's E&M business in Hong Kong, a HK$1.7m increase in the Group's Hong Kong product sales and a HK$5m increase in the Group's Taiwanese E&M business.

Our maintenance contracts recorded 13% revenue growth for the Group as a whole, mainly contributed by the growth of 27% in the Taiwan business, which compensated for a 15% fall in revenue in the Group's Hong Kong construction business. However, the Group's maintenance business in Hong Kong is relatively stable which provide a steady cash flow for the Group's operations. The maintenance contract with MTR Corporation Limited has been renewed for a further three year period commencing on 1 January 2012 on terms similar to the original contract signed in October 2008 which had a fixed value of HK$28.9 million over a three year period. The Group'smajor customers in the Security and Surveillance Systems business are public organisations and sizeable private enterprises. 

Profit before interest and tax during the period remained constant at HK$3.3m (H1 2010: HK$3.3m), whilst the Group recorded a loss attributable to the equity holders of HK$0.7m (H1 2010: HK$0.6m). However, following the end of the half year period, the Group entered into an agreement with Mayne Management which meant that approximately HK$3.5m of interest charged in the period would no longer be payable.

The Group has re-consolidated the accounts of Leader Smart, the PRC Subsidiary,into it's annual accounts for the year ended 31 March 2011after regaining the control over Leader Smart. Since we were not in a position to re-consolidate the accounts of Leader Smart into last year's interim results ended 30 September 2010 the assets, liabilities, turnover and the operating results of the subsidiary are not included in the comparative figures of 2010 year due to its de-consolidation from the Group's accounts at that time.

During the period under review, the relative weak in the HK$ against GBP has led to a 6.5% depreciation in the GBP reporting amount in the consolidated income statement, while a relative strengthening closing rate at the period ended in the HK$ against GBP led to a 0.9% appreciation in the consolidated balance sheet. All figures in GBP in the financial statements need to be adjusted for comparative purposes. The financial data is also presented in HK$ to provide a comparison with the comparative figures in 2010that were unaffected by exchange rate fluctuations.

Prospects

With a stable Security & Surveillance business providing a platform for growth in Electrical & Mechanical sectors the Board are confident in being able to generate significant shareholder value over the coming years.

The recent progress in resolving monies outstanding to Mayne Management and the injection of funding by Jun Heng provides a much clearer path forward in relation to the Zhongshan shopping mall.

The E&M business in the PRC is our growth target market. We continue to assess potential opportunities of obtaining funding to allow the Group to expand in the E&M marketplace in the PRC.

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 SIN MO KOO

EXECUTIVE CHAIRMAN

29 December 2011

All revenues are from continuing operations.

Notes to the Interim financial statements for the six months ended 30 September 2011

1.     Basis of preparation

The unaudited interim financial statements for the six months ended 30 September 2011 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 2011. The interim financial statements, together with the comparative information contained in this report for the six months ended 30 September 2011, does not constitute the statutory accounts of the Company. 

2.     Loss per share

The calculation of basic loss per ordinary share is based on the loss attributable to equity holders of the Group for the six months ended 30 September 2011 of HK$0.7m (H1 2010: HK$0.6m), and the weighted average of 383,677,323 (H1 2010: 383,677,323) ordinary shares in issue during the period.

There were no potential dilutive instruments at either financial period end.

3.     Post balance sheet event

The Company signed an agreement with Mayne Management Limited ("Mayne"), its former major shareholder, on 15 December 2011 for the variation of the terms of its current loan facility. The outstanding principal on the loan facility with Mayne was, on 15 December 2011, approximately US$5.615 million along with total accrued interest payable of US$2.865 million. Further details of the loan were originally announced on 8 January 2008 and the term of the loan facility was extended to 31 March 2012 (the "Supplementary Agreement IV"), as announced by the Company on 17 February 2011. The loan was made exclusively to finance the Company's shopping mall project in Zhongshan, China.

The Supplementary Agreement IV has been varied such that Mayne has agreed to waive the requirement for UniVision to repay, on 31 March 2012, the accrued interest totalling US$2.865 million and US$1.0 million of the outstanding principal (which represents interest which had been previously capitalised). In addition the terms of the loan have been varied such that the loan will become interest-free with immediate effect (the loan previously attracted an interest rate of 15% per annum).

The variations to the Supplementary Agreement IV were conditional upon the Company repaying a minimum of HK$5.0 million (equivalent to c.US$642,000) of the outstanding principal to Mayne by no later than 22 December 2011. As announced by UniVision on 23 December 2011 this payment was made to Mayne on 22 December 2011. The remainder of the principal is repayable to Mayne by 31 March 2012 and amounts to approximately US$3.97 million..

4.     Interim report

Copies of the interim report will be available for inspection at the registered office of the Company, 8/F Lever Tech Centre, 69-71 King 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.