TIDMUVEL
RNS Number : 8853K
UniVision Engineering Ltd
06 September 2021
This announcement contains inside information as stipulated
under the UK version of the Market Abuse Regulation No 596/2014
which is part of English Law by virtue of the European (Withdrawal)
Act 2018, as amended. On publication of this announcement via a
Regulatory Information Service, this information is considered to
be in the public domain
For immediate release
6 S eptember 2021
UniVision Engineering Limited
("UniVision" or "the Company" or "the Group")
Final Results for the year ended 31 March 2021
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, today announces its audited final
results for the financial year ended 31 March 2021.
The Annual General Meeting of the Company will be held at
UniVision Engineering Limited, Unit 201, 2/F., Sunbeam Centre, 27
Shing Yip Street, Kwun Tong, Kowloon, Hong Kong, on 30 September
2020 at 5:00 p.m.
The full Annual Report and Accounts together with the Notice of
AGM will shortly be posted to shareholders and be made available on
the Company's website, www.uvel.com .
Highlights:
-- Turnover increased to GBP10.9m (2020: GBP10.7m);
-- Profit before income tax increased t o GBP563K (2020 GBP452K);
-- Cash flow generated from operations GBP34K (2020: negative GBP111K);
-- Total Equity attributable to shareholders: GBP8.2m (2020: GBP8.7m);
-- Current ratio 1.6 (2020: 1.8);
-- Earnings per share 0.15p (2020: 0.12p); and
-- Proposed final dividend HK0.26 cents (approx. 0.0243 pence)
per share (2020: HK0.55 cents).
For further information visit www.uvel.com or contact :
UniVision Engineering Limited Tel: +852 2389 3256
Stephen Koo, Chairman www.uvel.com
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 3550
(Nominated Adviser)
Mark Brady / Neil Baldwin www. sparkadvisorypartners.com
SI Capital Limited Tel: +44 (0)1483 413500
(Broker) www.sicapital.co.uk
Nick Emerson
CHAIRMAN'S STATEMENT
I am pleased to report the Company's audited results for the financial year ended 31 March 2021.
Turnover for the year increased by 4.3 % (underlying rate) to
GBP 10.9m (2020: GBP 10.7m ). This in crement was mainly due to the
4% increase in construction contracts which came from the project
of Upgrading of CCTV System on Campus in City University of Hong
Kong and the project for replacement of system works for MTR C
orporation ("MTRC") of Hong Kong. The Coronavirus has hindered the
installation plans for a period, however it gradually returned to
normal in the second half of the current financial year.
Profit attributable to the equity shareholders for the year is
GBP563K (2020: GBP452K).
To reward and thank our shareholders for their support, the
Board recommends the payment of a final dividend of 0.26 HK cents
per share (2020: 0.55 HK cents).
The increasing concern for enhanced security and surveillance,
such as installation of additional cameras and also facial
recognition technology, is the main driver for the growth of video
s urveillance market. Therefore , I am optimistic about the
prospects of the Company.
In the remainder of this report, I shall go into further details
of our order book relating to the Major Contract , financial review
, business review, and end with prospect statement .
The Major Contract With MTRC
The contract with MTRC for the replacement works of the
Closed-Circuit Television (CCTV) systems for numerous MTRC railway
lines remains the major driver for the business of the Company
since it was awarded to UniVision in May 2017. The Company is
responsible for replacing t he existing analogue CCTV system
installed in the stations along the specified lines by a new
Internet Protocol-based, digital CCTV system. At inception, the
Major Contract's expected completion date was November 2023.
However, with further additional orders and supplementary
agreements added subsequently, the Board now expects that the work
on the Major Contract is unlikely to complete in full until July
2024.
The Major Contract allows for regular billing completed and
certified. The MTRC Contract also allows for variation of orders.
With further agreed add-ons since May 2017, the total current value
of this contract has increased to HK$489.7 million (approximately
GBP48.2 million at current exchange rates) spread over six year and
nine months period, with an expected completion date of July 2024.
Up to the financial year ended 31 M arch 2021, UniVision has
invoiced a total of approximately HK$172.7m, leaving a further
order book of HK$317m to be billed over the remaining period. The
gross valuation of certified works on the Major Contract was
HK$199.8m up to 31 March 2021.
To control the project cost, the Company is working with its
suppliers and sub-contractors to ensure that we get reliable supply
and competitive credit terms. With China Rail Group, the Company's
strategic partner, providing the subcontracting works for certain
lines of the Major Contract, it ensures the adequate supply of
skilled personnel and also more cost effective than local
sources.
The Board also closely monitors the Company's working capital to
be certain that we have adequate financial resources to drive the
Major Contract to completion. The Company reviews its financial
position all the time and seeks additional and/or more sources of
funding, as may be appropriate, including but not limited to
capital market and banking facilities.
Potential Claim
As previously announced, t he Company received a writ of summons
(Statement of Claim), Hong Kong High Court Action No. 2090 of 2020,
from the solicitors of Dimension Data China Hong Kong Limited
("Dimension Data"), the Plaintiff, on 14 December 2020 alleging
breach of contract, claiming against the Company for liquidated
damages for an amount of HK$10.95m plus pre-judgment and
post-judgment interest and legal costs. The Company has cross claim
against Dimension Data , inter alia, for breach of contract and/or
negligence and/or misrepresentation and accordingly to claim for
loss and damages for the same and legal costs.
The Board does not consider that the claim has any foundation
and believes that Dimension Data was in breach of protocol in the
manner which it has brought this claim. The Defence and
Counterclaim was filed to the High Court on 24 February 2021. The
solicitors of Dimension Data filed the Reply and Defence to
Counterclaim on 28 July 2021.
Based on legal opinion, the said Action has reached the stage of
close pleadings, whereas parties are expected to enter into
statutory mediation in due course. Whether the parties might reach
a settlement out of court would depend on the course of mediation
and other factors. Up to the date of this report, no mediation
between the Company and Dimension Data has been conducted.
Financial Review
Highlights of Statement of Profit or Loss and Other
Comprehensive Income are:
-- Revenue increased by 4.3 % to GBP1 0.9 m in the reporting
period (2020: GBP 10.7 m). This revenue increase came mainly from
contributions of construction contracts that increased by 4% as
compared with last year. The majority of this increment came from
the project to upgrade of CCTV System on Campus in City University
of Hong Kong.
-- Revenue from c onstruction contracts, the Group's largest
business segment, represented 82.7% of the total income (2020:
82.9% ) . Revenue from maintenance contracts represented 15 .1 % of
the total income (2020: 15.2% ) for the Company.
-- Other construction contracts besides the Major Contract,
including the installation, relocation, modification and
replacement works that provided by MTRC also contributed
significant income.
-- Contribution from maintenance contracts was up by 3.7%,
compared to the prior year. The increase in maintenance contracts
was mainly due to the additional repairs orders for damaged Public
Address System at certain stations of MTRC.
-- The gross profit remained stable at GBP 2 m in the reporting
period (2020: GBP 2 m), however, our gross margin was 17.9 % which
was lower than that of last reporting period (2020: 19.4 %) . The
main reason for the de crease in gross profit margin in the Group's
maintenance contracts by 9.6%. The increased subcontracting charges
and internal manpower pushed up costs, leading to an increase in
operating cost for the maintenance contracts with MTRC in the
current financial year. Moreover, the outbreak of COVID-19
decelerated the progress of existing projects, resulting in an
increase in overhead costs and subcontracting costs. On the other
hand, t he Company adopted measures to control the operating cost
with its suppliers and subcontractors.
-- The underlying profit for the current year was GBP170K (2020:
GBP452K ) which excluded other income from Hong Kong Government
Employment Support GBP386K for the month of June to November 2020,
GBP4.9K from Construction Industry Council "Anti-Epidemic Fund",
and GBP2K subsidy from Transport Department. Total amount for the
anti-epidemic relief from Hong Kong Government and public
organization was GBP393K.
-- Our operating expenses were mainly a dministration expenses.
For the year, administrative expenses increased by 14% to GBP 1.73m
(2020: GBP 1.52m). These were caused by the increased headcount and
associated personnel expenses (salaries, annual leave expenses,
provident fund), The number of staff has increased from 73 to 79
during the reporting period. In addition, rental expenses increased
due to renting one new office, increased repairs and maintenance
fees, electricity charges and legal fees.
-- Profit before tax increased to GBP563K in the reporting
period (2020: GBP452K) nevertheless experienced the lower gross
profit and rising operating expenses.
-- The Company has unused tax losses to offset the taxable
profit for the year. I can report that the profit attributable to
the shareholders of the Company also increased to GBP563K for the
financial year ended 31 March 2021, compared to GBP452K for the
last financial year.
-- As a result of increase in profit attributable to
shareholders, basic earnings per share in creased to 0.15 p for
this reporting financial year (2020: 0.12 p).
On the Statement of Financial Position , the highlights are:
-- Contract assets in creased to GBP8.4m as at 31 March 20 21 ,
from GBP6.2m as at 31 March 2020, mainly due to the longer time
applying for billing, particularly for the Major Contract that due
to more installation works performed in this current year that of
last year which most billing for delivery of equipment. Also, the
"Work from home" policy of government departments and MTRC due to
outbreak of t he COVID-19 pandemic has caused delays in the process
of certification and led to slow billing to MTRC and the Hong Kong
Government.
-- Cash and cash equivalents stood at GBP284 K as at 31 March 20
21 (2020: GBP679K), representing a de crease of GBP 395K.
-- Total equity attributable to shareholders stood at GBP 8.2 m
as at 31 March 20 21 (As at 31 March 2020: GBP8.7m), or a decrease
of GBP546 K, mainly due to the loss of GBP902 K on exchange
differences on translation of financial statements from HK$ to GBP,
the reporting currency .
-- Deposit placed for a life insurance policy of GBP862 K as at
31 March 20 21, which is the value of the keyman insurance plan
placed as security for banking facilities provided by a banker to
the Company.
-- Bank borrowings of GBP562 K as at 31 March 20 21 (2020:
GBP682K) represents the loan provided by a banker for financing a
certain portion of the premium for the insurance policy as above
mentioned.
On the Statement of Cash Flow s , the highlights are:
-- The Company generated positive cash flow from operations of
GBP34 K in the reporting period (2020: negative GBP111K ).
-- The Board attributes this improvement to closer monitoring
and effective control of working capital, together with more
efficient use of our banking facilities.
-- Repayment of bank loans of GBP54 K.
During the year under review, a relative strengthening in the
HK$ at the year-end has led to a 11.3% appreciation in the GBP
reporting amount in the Statement of Financial Position . It led to
the significant non-cash other comprehensive loss of GBP902 K
(2020: gain GBP549 K ) on exchange differences arising on
translation of foreign operations.
All figures in the above require to be adjusted for comparison
purposes. All comparative percentages stated in the Chairman's
Statement are adjusted to show the underlying change (net of
translation effect on foreign exchange).
To consistent with the Company's dividend policy, the Board has
proposed the payment of a final dividend of 0.26 HK cents (gross)
per share for the financial year ended 31 March 2021 (2020: 0.55 HK
cents). Dividend timetable is as follows:
Ex date: 16 September 2021
Record date: 17 September 2021
Payment date: 15 October 2021
Payment of the dividend is subject to the approval by the
shareholders at the upcoming Annual General Meeting.
Business Review
I will include the following topics in this section: our
addressable market segments, business environment in which we
operate, our customer base, new business and segment and the
management strategy for the next reporting period.
Addressable Market Segments
According to the M arket Research Report by Mordor Intelligence
: Video Surveillance System Market-Growth, Trends, COVID-19 Impact
and Forecast (2021 - 2026), the video surveillance systems market
is expected to grow at a CAGR of 9.31% over the forecast period
2021 to 2016 though the economic consequence of t he COVID-19
pandemic will undoubtedly hit the professional video surveillance
market to a certain extent. On the other hand, Asia Pacific Region
is regarded as the fast growing market. This market has gro wn
significantly due to its increasing use in the field of security
and law enforcement, to reduce the crime rate in their countries.
The Board believes that our addressable market segment will undergo
a steady growth period
The use of video s urveillance in business is growing
significantly due to the increasing need for physical security, the
growth in adoption of AI, coupled with the use of cloud-based
services for centralized data. The growth of the video s
urveillance market is expected to be fuelled by the introduction of
new IP-based digital technologies, to detect and prevent
undesirable behaviour, such as shoplifting, thefts, vandalism, and
terror arracks.
Video s urveillance systems are increasingly used for many
applications, such as crime prevention, tracking consumer
behaviour, monitoring industrial processes and traffic management.
The commercial sector is expected to be the largest market share
during the forecast period. Growing focus on infrastructure
protection, public security and increasing demand for high
resolution imaging are other key factors driving the market.
The Board can see growing demand for wireless monitoring
networking and wireless infrastructure (such as IP and 5G) as the
key growth driver for the market. There is growing demand for
wireless monitoring solution particularly the remote s urveillance
with 5G mobile technology. The advantage of 5G technology for CCTV
to overcome the latency issue that people may have encounter in the
past. Moreover, such new solutions can provide better video quality
and efficiency for remote monitoring . The Board expects to see
more potential projects for deployment of 5G CCTV solutions.
The technology of v ideo analytics, such as facial recognition ,
is being enhanced rapidly and UniVision has actively participated
in this market, such as t he contract for supply and installation
of the video analytic monitoring system at Tai Tam Correctional
Institution. The video analytic solution of Smart Prisons is
designed to enhance the effectiveness of movement detection in
confined areas. In the case of abrupt massive movement or the
unusual stillness of people, it can automatically detect and
identify abnormal incidents at any time. This effective detection
tool facilitates early intervention and prevents any potentially
dangerous acts which can save people from injury. The Company won a
Silver Medal for its "Smart Prison -Video Analytic Monitoring
System" Invention at the 2021 Geneva International Exhibition of
Invention.
Under the Major Contract, the Company acts as network service
provider in the application of CCTV systems. It has provided the
channel for the Company entering the business as a provider of
network service and information technology in the application in
other fields.
Business Environment
COVID-19 has seriously affected the business environment in Hong
Kong in last year. It caused adverse effects on the Hong Kong
economy, particularly in the retail and tourism sectors.
Nevertheless, the demand for upgrades the video s urveillance
system, such as facial recognition capabilities, is rising.
Unlike the hotel, travel, catering, retailing sectors, COVID-19
has not seriously affected the Company's business. Nevertheless, as
mentioned at the first part, for a period ot time, it hindered the
installation plans and affected the revenue.
Additional work orders for replacement of damaged CCTV equipment
caused by vandalism increased job orders and revenue from
maintenance contracts for the Company. We anticipate that the
Company will see more business opportunities with MTRC for new
projects. MTRC has announced its new railway development including
the following new railway lines and extensions: -
-- South Island Line (West)
-- Northern Link
-- Tung Chung Line Extension
-- Tuen Mun South Extension
-- North Island Line
-- East Kowloon Line
-- Hung Shui Kiu Station
Customer base
MTRC remains the Company's largest customer this financial year,
representing 78.7% of the Company's total revenue. In addition,
Electrical and Mechanical Services Department ("EMSD") and other
commercial clients are also parts of our customer base.
EMSD and other departments of Hong Kong Government are other
sources of the Company's customer base. The Company is on the list
in the category of Approved Specialist Contractors for Public
Works: Video Electronics Installation. It indicates that UniVision
is a qualified public works provider who enables to comply with the
financial, technical and management criteria for the retention on
the list of specialist contractors.
To avoid the concentration of customers, the Company aims to
diversify its customer base particularly to the private sector,
such as sizeable multinational private enterprises.
New business
The Board always explores other potential business opportunities
particularly in the Electrical and Mechanical ("E&M") business.
Indeed, the Company has set up a new company called Vision Key
International Limited in September 2020 for tendering potential
projects outside Hong Kong. The Board is also actively considering
setting up a branch or office in U.K. to expand its core business
in the coming year.
Our Strategy
Given the above market, business opportunities, and customer
base analysis, I see three key future objectives:
-- Financial: To deliver the MTRC Contract and other potential
large-scale projects efficiently and profitably, the Company
engages committed subcontracting partners with technical and
financial strength to minimise the risks associated with working
capital for sizeable contract. The Board considers this outreach to
be both desirable and prudent for the Company's further growth in
the market.
-- Technology: The Company will continue to acquire skills in
networking and wireless technology area and software skills for
video analytics and facial recognition applications, to help
provides customisation and localisation for our clients. Additional
network engineers will be recruited to achieve the above
objectives. We will also co-operate with the high qualified
vendors, research institutes and market-leading specialists in
these technology areas to help us acquire new contracts.
-- People: Human Resources is one of the most valuable resources
in the Company. In facing the high demand for the Major Contract,
the Company will continue to equip the project managers and
officers, together with the experienced engineers and system
designers with technical skills to deliver the contract effectively
and actively in tendering new contracts.
Prospects
UniVision has been incorporated in Hong Kong for over 41 years.
It is a milestone that signifies the Company's longevity and good
standing in the security and surveillance business. The Company's
core competency relies on UniVision's brand name; and its
dedicated, experienced people.
The Board expect s that high demand in security and surveillance
market will provide the ground and opportunity for the Company to
grow. Given our sizable order book, especially with the Major
Contract , the Company will derive constant revenue for the next
few reporting periods. The Board will continuously monitor c osts
to generate profits attributable to shareholders .
The COVID -19 pandemic has caused an unprecedented challenge
across the world which has dampened economic activity. Facing
uncertainties, the Company hope the development of COVID -19
vaccines and recent mass vaccination can control the pandemic and
facilitate the economy recovery.
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 acknowledge
the hard work of the management and all our staff for their
contribution .
MR. STEPHEN SIN MO KOO
EXECUTIVE CHAIRMAN
6 September 20 21
UNIVISION ENGINEERING LIMITED
STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME
For the year ended 31 March 202 1
Note
s 202 1 20 20
GBP GBP
Revenue 7(a) 10,945,287 10,728,544
(8,986,
Cost of revenue 10 278 ) (8,647,222)
----------- -----------
1,959,
Gross profit 009 2,081,322
422,5 6
Other income 8 0 36,905
Other gains and losses, net 9 (33,476) (11,049)
Selling and d istribution expenses 10 (4,570) (30,503)
Administrative expenses 10 (1,706,160) (1,529,749)
(74,0 09
Finance cost s 12 ) (95,243)
----------- -----------
Profit before income tax 563,3 54 451,683
Income tax 13 - -
----------- -----------
Profit for the year 563,3 54 451,683
=========== ===========
Other comprehensive (loss)/income,
net of tax
Item that may be reclassified subsequently
to profit or loss:
Exchange differences on translat ion
of financial statements (901,758) 548,560
----------- -----------
Total comprehensive (loss)/ income
for the year (338,404) 1,000,243
=========== ===========
1
Earnings per share - Basic and Diluted 4 0.15p 0.12p
=========== ===========
UNIVISION ENGINEERING LIMITED
STATEMENT OF FINANCIAL POSITION
As at 31 March 2021
Note 2021 2020
s
GBP GBP
ASSETS
Non-current assets
Plant and equipment 16 99,014 135,121
Right-of-use assets 17 61,092 276,119
Interest in an associate 18 5 -
Amounts due from related companies 30 2,842,805 3,157,799
Deposit placed for a life insurance
policy 19 862,476 941,772
Prepayments 48,981 76,017
---------- ----------
Total non-current assets 3,914,373 4,586,828
---------- ----------
Current assets
Inventories 20 1,584,096 1,034,289
Trade and other receivable s 21 1,708,489 2,406,863
Contract assets 22 8,439,488 6,243,276
Cash and bank balances 23 284,354 980,238
---------- ----------
Total current assets 12,016,427 10,664,666
---------- ----------
Total assets 15,930,800 15,251,494
========== ==========
LIABILITIES AND EQUITY
Current liabilities
Trade and other payable s 24 5,179,172 3,824,759
Contract liabilities 25 1,572,245 1,316,446
Bank borrowings 27 561,535 682,486
Lease liabilities 26 42,959 213,288
---------- ----------
Total current liabilities 7,355,911 6,036,979
---------- ----------
Non-current liabilities
Amount due to a related company 24 393,074 437,500
Lease liabilities 26 21,924 70,877
---------- ----------
Total non-current liabilities 414,998 508,377
---------- ----------
Total liabilities 7,770,909 6,545,356
---------- ----------
Capital and reserves
Share capital 28 3,890,257 3,890,257
Reserves 4,269,634 4,815,881
---------- ----------
Total equity 8,159,891 8,706,138
---------- ----------
Total liabilities and equity 15,930,800 15,251,494
========== ==========
The financial statements contained in the Annual Report &
Accounts were authorised for issue by the board of directors on 6
September 2021 and were signed on its behalf by:
Stephen Sin Mo KOO, Director Yip Tak CHAN, Director
UNIVISION ENGINEERING LIMITED
STATEMENT OF CHANGES IN EQUITY
For the year ended 31 March 202 1
Special Special
capital capital
Share Retained reserve reserve Translation
capital earnings "A" "B" reserve Total
GBP GBP GBP GBP GBP GBP
(Note (Note
1) 2)
Balance at 1 April
201
9 3,890,257 2,211,100 155,876 143,439 1,517,670 7,918,342
--------- --------- -------- -------- ----------- -----------------------------
Profit for the year - 451,683 - - - 451,683
Other comprehensive
income,
net of tax
Exchange
difference
arising
on translation of
financial
statements - - - - 548,560 548,560
--------- --------- -------- -------- ----------- -----------------------------
Total comprehensive
income - 451,683 - - 548,560 1,000,243
--------- --------- -------- -------- ----------- -----------------------------
Dividend paid in
respect
of year 201 9 (Note
15) - (212,447) - - - (212,447)
--------- --------- -------- -------- ----------- -----------------------------
Total transactions
with
owners, recognised
directly
in equity - (212,447) - - - (212,447)
--------- --------- -------- -------- ----------- -----------------------------
Balance at 31 March
20
20 3,890,257 2,450,336 155,876 143,439 2,066,230 8,706,138
========= ========= ======== ======== =========== =============================
Profit for the year - 563,354 - - - 563,354
Other comprehensive
loss,
net of tax
Exchange
difference
arising
on translation of
financial
statements - - - - (901,758) (901,759)
--------- --------- -------- -------- ----------- -----------------------------
Total comprehensive
loss - 563,354 - - (901,758) (338,405)
--------- --------- -------- -------- ----------- -----------------------------
Dividend paid in
respect
of year 2020 (Note
15) - (207,843) - - - (207,842)
--------- --------- -------- -------- ----------- -----------------------------
Total transactions
with
owners, recognised
directly
in equity - (207,843) - - - (207,842)
--------- --------- -------- -------- ----------- -----------------------------
Balance at 31 March
2021 3,890,257 2,805,847 155,876 143,439 1,164,472 8,159,891
========= ========= ======== ======== =========== =============================
The currency translation from Hong Kong dollar to the
presentation currency of Sterling Pound of these financial
statements has no impact on the available distributable reserves of
the Company as at 31 March 2021.
Notes:
1 . Special capital reserve "A"
Pursuant to the Order of the High Court dated 20 November 2004,
any future recoveries of the Company's accumulated provision for
obsolete inventories and provision for bad debts amounting to
HK$1,935,002 and HK$3,592,540 respectively will be credited to
non-distributable special capital reserve "A" account.
2 . Special capital reserve "B"
By a special resolution passed on 30 July 2004 and pursuant to
the Order of the High Court dated 20 November 2004, the authorised
and issued capital of the Company was reduced from HK$159,245,000
(divided into 31,849 ordinary shares of HK$5,000 each) to
HK$16,405,000 (divided into 3,281 ordinary shares of HK$5,000
each). The reduction of capital was effected by cancellation of
28,568 ordinary shares of HK$5,000 each in the issued and paid up
share capital of the Company. The Company established a
non-distributable special capital reserve "B" account into which
HK$2,071,307 was credited as a result of the capital reduction.
UNIVISION ENGINEERING LIMITED
STATEMENT OF CASH FLOWS
For the year ended 31 March 202 1
Notes 202 1 20 20
GBP GBP
Cash flows from operating activities
Profit before income tax 563,354 451,683
Adjustments for:
Interest expense on bills payable
and factoring 12 49,479 61,501
Interest expense on bank borrowings 12 12,805 21,205
Interest expense on bank overdraft 12 4,682 -
Interest on lease liabilities 12 7,043 12,537
Interest income 8 (26,773) (36,905)
Depreciation of plant and equipment 16 55,607 56,694
Depreciation of right-of-use assets 17 173,933 179,977
Inventor ies written-off 9 32,787 -
Gain on lease modification 8 (122) -
Gain on disposal of plant and equipment 9 - (201)
----------- -----------
Operating cash flows before working
capital changes 872,795 746,491
Changes in operating assets and liabilities:
Prepayments and deposit (17,191) 25,731
I nventories (721,932) (336,416)
T rade and other receivable s 34 640,547 37,560
Contract assets (2,978,477) (2,341,199)
A mounts due from related companies (5,959) 378,665
T rade and other payables 1,834,113 1,093,686
Contract liabilities 409,884 284,685
----------- -----------
Net cash generated from/(used in)
operating activities 33,780 (110,797)
----------- -----------
Cash flows from investing activities
Interest received 8 26,773 36,905
Purchase of plant and equipment (32,048) (39,498)
Proceeds from disposal of plant and
equipment - 201
Deposit placed for a life insurance
policy - (910,199)
----------- -----------
( 91 2,
Net cash used in investing activities (5,275) 591 )
----------- -----------
Cash flows from financing activities
Bank i nterest paid 12 (66,966) (82,706)
Dividend paid to shareholders of the
Company 15, 34 (65,653) (67,109)
Repayment of bank loans 31 (54,355) -
New bank loan s 31 - 659,606
Capital element of lease liabilities
paid 31 (177,430) (172,201)
Interest element of lease liabilities
paid 31 (7,043) (12,537)
----------- -----------
Net cash (used in)/ generated from
financing activities (371,447) 325,053
----------- -----------
Net decrease in cash and cash equivalents (342,942) (698,335)
Cash and cash equivalents at beginning
of year 679,186 1,312,211
Effect of foreign exchange rate changes
, net (51,890) 65,310
----------- -----------
Cash and cash equivalents at end of
year 23 284,354 679,186
=========== ===========
UNIVISION ENGINEERING LIMITED
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 31 March 2021
1. GENERAL INFORMATION
UniVision Engineering Limited (the "Company") is incorporated in
Hong Kong with limited liability and its shares are listed on the
Alternative Investment Market of the London Stock Exchange ("AIM").
The address of the Company's registered office is Unit 201, 2/F.,
Sunbeam Centre, 27 Shing Yip Street, Kwun Tong, Kowloon, Hong
Kong.
These financial statements are presented in Sterling Pound
("GBP"), which is the presentation currency of the Company.
The Company is mainly engaged in the supply, design,
installation and maintenance of closed circuit television and
surveillance systems and the sale of security system related
products in Hong Kong.
2 . B ASIS OF PREPARATION
These financial statements have been prepared in accordance with
International Financial Reporting Standards ("IFRS s ") issued by
the International Accounting Standards Board. The measurement basis
used in the preparation of these financial statements is the
historical cost basis.
The preparation of financial statements in conformity with IFRS
s requires management to make judgements, estimates and assumptions
that affect the application of policies and reported amounts of
assets, liabilities, income and expenses. The estimates and
associated assumptions are based on historical experience and
various other factors that are believed to be reasonable under the
circumstances, the results of which form the basis of making the
judgements about carrying values of assets and liabilities that are
not readily apparent from other sources. Actual results may differ
from these estimates.
The estimates and underlying assumptions are reviewed on an
ongoing basis. Revisions to accounting estimates are recognised in
the period in which the estimate is revised if the revision affects
only that period, or in the period of the revision and future
periods if the revision affects both current and future periods.
Judgements made by management in the application of I FRS s that
have significant effect on the financial statements and key sources
of estimation uncertainty are discussed in note 5 to the financial
statements.
3. APPLICATION OF NEW AND REVISED IFRSs
(a) Initial application of IFRSs
In the current year, the Company initially applied the following
IFRSs:
Amendments to I FRS Definition of a Business
3
Amendments to I AS 1 Definition of Material
and I AS 8
Amendments to I FRS Interest Rate Benchmark Reform
9, I AS 39
and I FRS 7
Conceptual Framework Revised Conceptual Framework for
for Financial Reporting
Financial Reporting
2018
The initial application of these financial reporting standards
does not necessitate material changes in the C ompany's accounting
policies and retrospective adjustments of the comparatives
presented in these financial statements.
3. APPLICATION OF NEW AND REVISED IFRSs
(b) IFRSs in issue but not yet effective
The following IFRSs in issue at 31 March 202 1 have not been
applied in the preparation of these financial statements since they
were not yet effective for the annual period beginning on 1 April
20 20 :
IFRS 17 Insurance Contracts(2)
Amendments to IFRS 3 Definition of Business (2)
Amendments to I AS 16 Property, Plant and Equipment: Proceeds
before Intended
Use(2)
Amendments to I AS 37 Onerous Contracts - Cost of Fulfilling
a Contract(2)
Amendments to I AS 39, Interest Rate Benchmark Reform -
I FRS 4, I FRS 7, I Phase 2(2)
FRS 9 and I FRS 16
Annual Improvements Revised Conceptual Framework for
to I FRSs 2018-2020 Financial Reporting (2)
Cycle
Amendments to IFRS 16 COVID-19-Related Rent Concession(1)
Amendments to I AS 1 Classification of Liabilities as
Current or Non-current (3)
Amendments to I FRS Sale or Contribution of Assets between
10 and an Investor and its
I AS 28 Associate or Joint Venture (4)
(1) Effective for the Company's annual financial statements
beginning on 1 April 202 1
(2) Effective for the Company's annual financial statements
beginning on 1 April 2022
(3) Effective for the Company's annual financial statements
beginning on 1 April 202 3
(4) Effective for the annual periods beginning on or after a
date to be determined
The Company is in the process of making an assessment of what
the impact of these amendments, new standards and interpretations
is expected to be in the period of initial application.
4. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
4.1 Segment reporting
An operating segment is a component of the Company that engages
in business activities from which it may earn revenue and incurs
expenses, including revenue and expenses that relate to
transactions with other components of the Company. Operating
segments are reported in a manner consistent with the internal
reporting provided to the chief operating decision-maker.
4.2 Foreign currency
Functional and presentation currency
Items included in the financial statements of the Company are
measured using the currency of the primary economic environment in
which the Company operates (the "functional currency"), which is
Hong Kong Dollar ("HK$"). These financial statements are presented
in Sterling Pound ("GBP"), which is the Company 's presentation
currency. As the Company is listed on the AIM, the directors
consider that this presentation is more useful for its current and
potential investors.
Transactions and balances
Foreign currency transactions are translated into the functional
currency using the exchange rates prevailing at the dates of the
transactions or valuation where items are re-measured. Foreign
exchange gains and losses resulting from the settlement of such
transactions and from the translation at year-end exchange rates of
monetary assets and liabilities denominated in foreign currencies
are recognised in profit or loss, except when deferred in other
comprehensive income as qualifying cash flow hedges and qualifying
net investment hedges.
4. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
4.3 Plant and equipment
Plant and equipment are initially recognised at cost and
subsequently carried at cost less accumulated depreciation and
accumulated impairment loss. The cost of an asset comprises its
purchase price and any directly attributable costs of bringing the
asset to working condition for its intended use.
On disposal of an item of plant and equipment, the difference
between the net disposal proceeds and its carrying amount is taken
to profit or loss.
Depreciation is calculated using the straight-line method to
allocate their depreciable amounts over the estimated useful lives
as follows:
Furniture and fixtures 3 - 5 years
Computer equipment 2 - 5 years
Motor vehicles 3 years
Fully depreciated plant and equipment are retained in the
financial statements until the items are no longer in use.
The residual values, useful lives and depreciation method are
reviewed at the end of each reporting period to ensure that the
amount, method and period of depreciation are consistent with
previous estimates and the expected pattern of consumption of the
future economic benefits embodied in the items of plant and
equipment. The effects of any revision are recognised in profit or
loss when the changes arise.
Subsequent expenditure relating to plant and equipment that has
already been recognised is added to the carrying amount of the
asset only when it is probable that future economic benefits
associated with the item will flow to the Company and the cost of
the item can be measured reliably. All other repair and maintenance
expenses are recognised in profit or loss when incurred.
4.4 Interest in an associate
Associate is an entity in which the Company has significant
influence, but not control or joint control, over its management,
including participation in the financial and operating policy
decisions.
The results and assets and liabilities of the associate are
incorporated in these financial statements using the equity method
of accounting. Under the equity method, interest in an associate is
initially recorded at cost, adjusted for any excess of the
Company's share of the acquisition-date fair values of the
investee's identifiable net assets over the cost of the investment.
The cost of the investment includes purchase price, other costs
directly attributable to the acquisition of the investment, and any
direct investment into the associate that forms part of the
Company's equity investment. Thereafter, the investment is adjusted
for post-acquisition changes in the Company's share of e investee's
net assets and any impairment loss relating to the investment. When
the Company's share of losses of the associates equals or exceeds
its interest in that associate (which includes any long-term
interests that, in substance, form part of the Company's net
investments in the associates), the Company discontinues
recognising its share of further losses. An additional share of
losses is provided for and a liability is recognised only to the
extent that the Company has incurred legal or constructive
obligations or made payments on behalf of that associate.
Unrealised profits and losses resulting from transactions
between the Company and its associates are eliminated to the extent
of the Company's interest in the investee, except where unrealised
losses provide evidence of an impairment of the asset transferred,
in which case they are recognised immediately in profit or
loss.
4.5 Impairment of non-financial assets
The carrying amounts of non-current assets, including plant and
equipment and right-of-use assets, are reviewed at the end of each
reporting period to determine whether there is any indication of
impairment. If any such indication exists, the recoverable amount
is estimated.
Calculation of recoverable amount
The recoverable amount of an asset is the greater of its fair
value less costs of disposal and value in use. In assessing value
in use, the estimated future cash flows are discounted to their
present value using a pre-tax discount rate that reflects current
market assessments of the time value of money and the risks
specific to the asset. Where an asset does not generate cash
inflows largely independent of those from other assets, the
recoverable amount is determined for the smallest group of assets
that generates cash inflows independently (i.e. a cash-generating
unit).
Recognition of impairment losses
An impairment loss is recognised in profit or loss if the
carrying amount of an asset, or the cash-generating unit to which
it belongs, exceeds the recoverable amount. Impairment losses
recognised in respect of cash-generating units are allocated first
to reduce the carrying amount of any goodwill allocated to the
cash-generating unit (or group of units) and then, to reduce the
carrying amount of the other assets in the unit (or group of units)
on a pro rata basis, except that the carrying value of an asset
will not be reduced below its individual fair value less costs of
disposal (if measurable) or value in use (if determinable).
Reversals of impairment losses
An impairment loss is reversed if there has been a favourable
change in the estimates used to determine the recoverable amount. A
reversal of an impairment loss is limited to the asset's carrying
amount that would have been determined had no impairment loss been
recognised in prior years. Reversals of impairment losses are
credited to profit or loss in the year in which the reversals are
recognised.
4.6 Inventories
Inventories are stated at the lower of cost and net realisable
value. Cost is determined using the weighted average method and
comprises design costs, raw materials, direct labour, other direct
costs and other costs incurred in bringing the inventories to their
present location and condition. Net realisable value is the
estimated selling price in the ordinary course of business less the
estimated costs of completion and the estimated costs necessary to
make the sale.
4.7 Financial instruments
Financial assets and financial liabilities are recognised when
the Company becomes a party to the contractual provisions of the
instrument.
Financial assets and financial liabilities are initially
measured at fair value except for trade receivables arising from
contracts with customers which are initially measured in accordance
with IFRS 15. Transaction costs that are directly attributable to
the acquisition or issue of financial assets and financial
liabilities are added to or deducted from the fair value of the
financial assets or financial liabilities, as appropriate, on
initial recognition.
4.7.1 Financial assets
Classification and subsequent measurement of financial
assets
Financial assets that meet the following conditions are
subsequently measured at amortised cost:
- the financial asset is held within a business model whose
objective is to collect contractual cash flows; and
- the contractual terms give rise on specified dates to cash
flows that are solely payments of principal and interest on the
principal amount outstanding.
All other financial assets are subsequently measured at fair
value through profit or loss.
Impairment of financial assets
The Company recognises a loss allowance for ECL on financial
assets and other assets which are subject to impairment under IFRS
9. The amount of ECL is updated at each reporting date to reflect
changes in credit risk since initial recognition.
Lifetime ECL represents the ECL that will result from all
possible default events over the expected life of the relevant
instrument. In contrast, 12-month ECL represents the portion of
lifetime ECL that is expected to result from default events that
are possible within 12 months after the reporting date. Assessments
are done based on the Company's historical credit loss experience,
adjusted for factors that are specific to the debtors, general
economic conditions and an assessment of both the current
conditions at the reporting date as well as the forecast of future
conditions.
The Company always recognises lifetime ECL for trade receivables
and contract assets. The ECL on these assets is assessed
individually for debtors with significant balances and/or
collectively using a provision matrix with appropriate groupings.
For all other instruments, the Company measures the loss allowance
equals to 12-month ECL, unless when there has been a significant
increase in credit risk since initial recognition, the Company
recognises lifetime ECL. The assessment of whether lifetime ECL
should be recognised is based on significant increases in the
likelihood or risk of a default occurring since initial
recognition.
In assessing whether the credit risk of a financial instrument
has increased significantly since initial recognition, the Company
compares the risk of default occurring on the financial instrument
assessed at the reporting date with that assessed at the date of
initial recognition. In making this reassessment, the Company
considers that a default event occurs when (i) the borrower is
unlikely to pay its credit obligations to the Company in full,
without recourse by the Company to actions such as realising
security (if any is held); or (ii) the financial asset is 90 days
past due. The Company considers both quantitative and qualitative
information that is reasonable and supportable, including
historical experience and forward-looking information that is
available without undue cost or effort.
In particular, the following information is taken into account
when assessing whether credit risk has increased significantly
since initial recognition:
- failure to make payments of principal or interest on their contractually due dates;
- an actual or expected significant deterioration in a financial
instrument's external or internal credit rating (if available);
- an actual or expected significant deterioration in the
operating results of the debtor; and
- existing or forecast changes in the technological, market,
economic or legal environment that have a significant adverse
effect on the debtor's ability to meet it obligation to the
Company.
Depending on the nature of the financial instruments, the
assessment of a significant increase in credit risk is performed on
either an individual basis or a collective basis. When the
assessment is performed on a collective basis, the financial
instruments are grouped based on shared credit risk
characteristics, such as past due status and credit risk
ratings.
ECLs are re-measured at each reporting date to reflect changes
in the financial instrument's credit risk since initial
recognition. Any change in the ECL amount is recognised as an
impairment gain or loss in profit or loss. The Company recognises
an impairment gain or loss for all financial instruments with a
corresponding adjustment to their carrying amount through a loss
allowance account, except for investments in debts securities that
are measured at fair value through other comprehensive income
(recycling), for which the loss allowances are recognised in other
comprehensive income and accumulated in the fair value reserve
(recycling).
Interest income is calculated based on the gross carrying amount
of the financial asset unless the financial asset is
credit-impaired, in which case interest income is calculated based
on the amortised cost (i.e. the gross carrying amount less loss
allowance) of the financial asset.
At each reporting date, the Company assesses whether a financial
asset is credit-impaired. A financial asset is credit-impaired when
one or more events that have a detrimental impact on the estimated
future cash flows of the financial asset have occurred. Evidence
that a financial asset is credit-impaired includes the following
observable events:
- significant financial difficulties of the debtor;
- a breach of contract, such as a default or delinquency in interest or principal payments;
- it becoming probable that the borrower will enter into
bankruptcy or other financial reorganisation;
- significant changes in the technological, market, economic or
legal environment that have an adverse effect on the debtor; or
- the disappearance of an active market for a security because
of financial difficulties of the issuer.
The gross carrying amount of a financial asset or contract asset
is written off (either partially or in full) to the extent that
there is no realistic prospect of recovery. This is generally the
case when the Company determines that the debtor does not have
assets or sources of income that could generate sufficient cash
flows to repay the amounts subject to the write-off.
Subsequent recoveries of an asset that was previously written
off are recognised as a reversal of impairment in profit or loss in
the period in which the recovery occurs.
4.7.2 Financial liabilities and equity instruments
Debt and equity instruments issued by the Company are classified
as either financial liabilities or as equity in accordance with the
substance of the contractual arrangements and the definitions of a
financial liability and an equity instrument.
Equity instrument
An equity instrument is any contract that evidences a residual
interest in the assets of an entity after deducting all of its
liabilities. Equity instruments issued by the Company are
recognised at the proceeds received, net of direct issue costs.
Financial liabilities
Financial liabilities are subsequently measured at amortised
cost, using the effective interest method.
Effective interest method
The effective interest method is a method of calculating the
amortised cost of a financial liability and of allocating interest
expense over the relevant period. The effective interest rate is
the rate that exactly discounts estimated future cash payments
(including all fees paid or received that form an integral part of
the effective interest rate, transaction costs and other premiums
or discounts) through the expected life of the financial liability
or, where appropriate, a shorter period, to the net carrying amount
on initial recognition. Interest expense is recognised on an
effective interest basis.
4.7.3 Derecognition
The Company derecognises a financial asset only when the
contractual rights to the cash flows from the asset expire, or when
it transfers the financial asset and substantially all the risks
and rewards of ownership of the asset to another entity.
On derecognition of a financial asset in its entirety, the
difference between the asset's carrying amount and the sum of the
consideration received and receivable and the cumulative gain or
loss that had been recognised in other comprehensive income and
accumulated in equity is recognised in profit or loss.
The Company derecognises financial liabilities when, and only
when, the Company 's obligations are discharged, cancelled or
expire. The difference between the carrying amount of the financial
liability derecognised and the consideration paid and payable is
recognised in profit or loss.
4.7.4 Offsetting financial instruments
Financial assets and liabilities are offset and the net amount
reported in the statement of financial position when there is a
legally enforceable right to offset the recognised amounts and
there is an intention to settle on a net basis or realise the asset
and settle the liability simultaneously.
4.8 Cash and cash equivalents
Cash and cash equivalents comprise cash at bank and in hand,
demand deposits with banks and other financial institutions, and
short-term, highly liquid investments that are readily convertible
into known amounts of cash and which are subject to an
insignificant risk of changes in value, having been within three
months of maturity at acquisition.
4.9 Dividend distributions
Dividend distributions to the Company's shareholders are
recognised as liabilities in the financial statements in the period
in which the dividends are approved by the shareholders or
directors, where appropriate.
4.10 Revenue recognition
Revenue from contracts with customers
Under IFRS 15, the Company recognises revenue when (or as) a
performance obligation is satisfied, i.e. when "control" of the
goods or services underlying the particular performance obligation
is transferred to the customer.
A performance obligation represents a good or service (or a
bundle of goods or services) that is distinct or a series of
distinct goods or services that are substantially the same.
Control is transferred over time and revenue is recognised over
time by reference to the progress towards complete satisfaction of
the relevant performance obligation if one of the following
criteria is met:
- the customer simultaneously receives and consumes the benefits
provided by the Company's performance as the Company performs;
- the Company's performance creates or enhances an asset that
the customer controls as the Company performs; or
- the Company's performance does not create an asset with an
alternative use to the Company and the Company has an enforceable
right to payment for performance completed to date.
Otherwise, revenue is recognised at a point in time when the
customer obtains control of the distinct good or service.
A contract asset represents the Company's right to consideration
in exchange for goods or services that the Company has transferred
to a customer that is not yet unconditional. It is assessed for
impairment in accordance with IFRS 9. In contrast, a receivable
represents the Company's unconditional right to consideration, i.e.
only the passage of time is required before payment of that
consideration is due.
A contract liability represents the Company's obligation to
transfer goods or services to a customer for which the Company has
received consideration (or an amount of consideration is due) from
the customer.
A contract asset and a contract liability relating to the same
contract are accounted for and presented on a net basis.
Contracts with multiple performance obligations (including
allocation of transaction price)
For contracts that contain more than one performance obligations
(provision of design and installation services and sales of goods),
the Company allocates the transaction price to each performance
obligation on a relative stand-alone selling price basis.
The stand-alone selling price of the distinct good or service
underlying each performance obligation is determined at contract
inception. It represents the price at which the Company would sell
a promised good or service separately to a customer. If a
stand-alone selling price is not directly observable, the Company
estimates it using appropriate techniques such that the transaction
price ultimately allocated to any performance obligation reflects
the amount of consideration to which the Company expects to be
entitled in exchange for transferring the promised goods or
services to the customer.
Over time revenue recognition: measurement of progress towards
complete satisfaction of a performance obligation
The progress towards complete satisfaction of a performance
obligation is measured based on input method, which is to recognise
revenue on the basis of the Company's efforts or inputs to the
satisfaction of a performance obligation relative to the total
expected inputs to the satisfaction of that performance obligation,
that best depicts the Company's performance in transferring control
of goods or services.
Service revenue from supply, design and installation of closed
circuit television and surveillance systems is recognised over time
by reference to the progress towards complete satisfaction of the
relevant performance obligation using input method as the Company's
performance does not create an asset with an alternative use to the
Company and the Company has an enforceable right to payment for
performance completed to date.
Service revenue from maintenance contracts is recognised over
time as the customer simultaneously receives and consumes the
benefits provided by the Company. Revenue is recognised on a
straight-line basis because the Company's inputs are expended
evenly throughout the performance period.
Trading income is recognised at a point in time when the
customer obtains control of the distinct good.
4.11 Leases
At inception of a contract, the Company assesses whether the
contract is, or contains, a lease. A contract is, or contains, a
lease if the contract conveys the right to control the use of an
identified asset for a period of time in exchange for
consideration. Control is conveyed where the customer has both the
right to direct the use of the identified asset and to obtain
substantially all of the economic benefits from that use.
As a lessee
Where the contract contains lease component(s) and non-lease
component(s), the Company has elected not to separate non-lease
components and accounts for each lease component and any associated
non-lease components as a single lease component for all
leases.
At the lease commencement date, the Company recognises a
right-of-use asset and a lease liability, except for short-term
leases that have a lease term of 12 months or less and leases of
low-value assets. When the Company enters into a lease in respect
of a low-value asset, the Company decides whether to capitalise the
lease on a lease-by-lease basis. The lease payments associated with
those leases which are not capitalised are recognised as an expense
on a systematic basis over the lease term.
Where the lease is capitalised, the lease liability is initially
recognised at the present value of the lease payments payable over
the lease term, discounted using the interest rate implicit in the
lease or, if that rate cannot be readily determined, using a
relevant incremental borrowing rate. After initial recognition, the
lease liability is measured at amortised cost and interest expense
is calculated using the effective interest method. Variable lease
payments that do not depend on an index or rate are not included in
the measurement of the lease liability and hence are charged to
profit or loss in the accounting period in which they are
incurred.
The right-of-use asset recognised when a lease is capitalised is
initially measured at cost, which comprises the initial amount of
the lease liability plus any lease payments made at or before the
commencement date, and any initial direct costs incurred. Where
applicable, the cost of the right-of-use assets also includes an
estimate of costs to dismantle and remove the underlying asset or
to restore the underlying asset or the site on which it is located,
discounted to their present value, less any lease incentives
received. The right-of-use asset is subsequently stated at cost
less accumulated depreciation (Note 17) and impairment losses.
The lease liability is remeasured when there is a change in
future lease payments arising from a change in an index or rate, or
there is a change in the Company's estimate of the amount expected
to be payable under a residual value guarantee, or there is a
change arising from the reassessment of whether the Company will be
reasonably certain to exercise a purchase, extension or termination
option. When the lease liability is remeasured in this way, a
corresponding adjustment is made to the carrying amount of the
right-of-use asset, or is recorded in profit or loss if the
carrying amount of the right-of-use asset has been reduced to
zero.
The Company presents right-of-use assets and lease liabilities
separately in the statement of financial position.
4.12 Employee benefits
Employee benefits comprise short-term employee benefits and
contributions to defined contribution retirement plans.
Short-term employee benefits, including salaries, annual
bonuses, paid annual leave and leave passage, contributions to
defined contribution retirement plans and the cost of non-monetary
benefits are accrued in the year in which the associated services
are rendered by employees. Where payment or settlement is deferred
and the effect would be material, these amounts are stated at their
present values.
Contributions to the defined contribution scheme are charged to
profit or loss when incurred.
4.13 Government grants
Government grants are recognised at their fair value where there
is reasonable assurance that the grant will be received and all
attaching conditions will be complied with. When the grant related
to an expense item, it is recognised as income on a systematic
basis over the periods that the costs, which it is intended to
compensate, are expensed.
Where the grant relates to an asset, the fair value is credited
to a deferred income account and is released to profit or loss over
the expected useful life of the relevant asset by equal annual
instalments or deducted from the carrying amount of the asset and
released to profit or loss by way of a reduced depreciation
charge.
4.14 Income tax
Income tax expense for the year comprises current and deferred
tax. Tax is recognised in the statement of profit or loss and other
comprehensive income , except to the extent that it relates to
items recognised in other comprehensive income or directly in
equity. In this case, the tax is also recognised in other
comprehensive income or directly in equity, respectively.
The current income tax charge is calculated on the basis of the
tax laws enacted or substantively enacted at the end of the
reporting period in the countries where the Company operates and
generates taxable income. Management periodically evaluates
positions taken in tax returns with respect to situations in which
applicable tax regulation is subject to interpretation. It
establishes provisions where appropriate on the basis of amounts
expected to be paid to the tax authorities.
Deferred income tax is recognised, using the liability method,
on temporary differences arising between the tax bases of assets
and liabilities and their carrying amounts in the financial
statements. However, deferred tax liabilities are not recognised if
they arise from the initial recognition of goodwill; deferred
income tax is not accounted for if it arises from initial
recognition of an asset or a liability in a transaction other than
a business combination that at the time of the transaction affects
neither accounting nor taxable profit or loss. Deferred income tax
is determined using tax rates (and laws) that have been enacted or
substantially enacted by the end of the reporting period and are
expected to apply when the related deferred income tax asset is
realised or the deferred income tax liability is settled.
Deferred income tax assets are recognised only to the extent
that it is probable that future taxable profit will be available
against which the temporary differences can be utilised.
Deferred income tax assets and liabilities are offset when there
is a legally enforceable right to offset current tax assets against
current tax liabilities and when the deferred income taxes assets
and liabilities relate to income taxes levied by the same taxation
authority on either the same taxable entity or different taxable
entities where there is an intention to settle the balances on a
net basis.
4.15 Provisions and contingent liabilities
Provisions are recognised for other liabilities of uncertain
timing or amount when the Company has a legal or constructive
obligation arising as a result of a past event, it is probable that
an outflow of economic benefits will be required to settle the
obligation and a reliable estimate can be made. Where the time
value of money is material, provisions are stated at the present
value of the expenditure expected to settle the obligation.
Where it is not probable that an outflow of economic benefits
will be required, or the amount cannot be estimated reliably, the
obligation is disclosed as a contingent liability, unless the
probability of outflow is remote. Possible obligations, whose
existence will only be confirmed by the occurrence or
non-occurrence of one or more future events are also disclosed as
contingent liabilities unless the probability of outflow is
remote.
4.16 Events after the reporting period
Events after the reporting period that provide additional
information about the Company at the end of the reporting period or
those that indicate the going concern assumption is not appropriate
are adjusting events and are reflected in the financial statements.
Events after the reporting period that are not adjusting events are
disclosed in the notes to the financial statements when
material.
4. 1 7 Related parties
A person or a close member of that person's family is related to
the Company if that person:
(i) has control or joint control over the Company;
(ii) has significant influence over the Company; or
(iii) is a member of the key management personnel of the Company or the Company's parent.
An entity is related to the Company if any of the following
conditions applies:
(i) The entity and the Company are members of the same group
(which means that each parent, subsidiary and fellow subsidiary is
related to the others).
(ii) One entity is an associate or joint venture of the other
entity (or an associate or joint venture of a member of a group of
which the other entity is a member).
(iii) Both entities are joint ventures of the same third party.
(iv) One entity is a joint venture of a third entity and the
other entity is an associate of the third entity.
(v) The entity is a post-employment benefit plan for the benefit
of employees of either the Company or an entity related to the
Company.
(vi) The entity is controlled or jointly controlled by a person
identified in the above paragraph.
(vii) A person identified in (i) of the above paragraph has
significant influence over the entity or is a member of the key
management personnel of the entity (or of a parent of the
entity).
(viii) The entity, or any member of a group of which it is a
part, provides key management personnel services to the Company or
to the Company's parent.
Close members of the family of a person are those family members
who may be expected to influence, or be influenced by, that person
in their dealings with the entity.
5. KEY SOURCES OF ESTIMATION UNCERTAINTY
The following are the key assumptions concerning the future and
other key sources of estimation uncertainty at the end of the
reporting period that have a significant risk of causing a material
adjustment to the carrying amounts of assets and liabilities within
the next financial year.
Revenue recognition on service contracts
The Company recognises revenue on service contracts from supply,
design and installation of closed circuit television and
surveillance systems by reference to the progress towards complete
satisfaction of the relevant performance obligation using the input
method, measured based on the proportion of contract costs incurred
for work performed to date relative to the estimated total contract
costs. The management regularly discusses with the project team in
order to review and revise the estimates of the total contract
costs and stage of completion of the work performed to date with
reference to the performance and status of corresponding service
contract work. Accordingly, revenue recognition on service
contracts involves a significant degree of management estimates and
judgment, with estimates being made to assess the total contract
costs and contract costs incurred for work performed to date.
The management reviews and revises the estimates of total
contract costs and contract costs incurred for work performed to
date as the contract progresses, the actual outcome of the contract
in terms of its total costs may be higher or lower than the
estimates and this will affect the revenue and profit
recognised.
Estimated provision of ECL for receivables measured at amortised
cost and contract assets
The management of the Company estimates the amount of impairment
loss for ECL on receivables measured at amortised cost and contract
assets based on the credit risk of these assets. The amount of the
impairment loss based on ECL model is measured as the difference
between all contractual cash flows that are due to the Company in
accordance with the contract and all the cash flows that the
Company expects to receive, discounted at the effective interest
rate determined at initial recognition. Where the future cash flows
are less than expected, or being revised downward due to changes in
facts and circumstances, a material impairment loss may arise.
The provision of ECL is sensitive to changes in estimates.
Income taxes
The Company is subject to profits tax in Hong Kong. Significant
estimates are required in determining the provision for income
taxes. There are many transactions and calculations for which the
ultimate tax determination is uncertain during the ordinary course
of business. Where the final tax outcome of these matters is
different from the amounts that were initially recorded, such
differences will impact the income tax and deferred tax provisions
in the period in which such determination is made.
As at 31 March 2021, the Company has unused tax losses of
approximately GBP1,452,000 (2020: GBP1,838,000) available for
offset against future profits and no deferred tax asset has been
recognised thereon. In cases where there are future profits
generated to utilise the tax losses, a material deferred tax asset
may arise, which would be recognised in the statement of profit or
loss and other comprehensive income for the period in which such a
recognition takes place.
6. FINANCIAL INSTRUMENTS
(a) Categories of financial instruments
202 1 20 20
GBP GBP
Financial assets
Amounts due from related companies 2,842,805 3,157,799
Deposit placed for a life insurance
policy 862,476 941,772
Trade and other receivables 1,708,494 2,406,863
Cash and bank balances 284,354 980,238
========= =========
Financial liabilities
Trade and other payables 5,179,172 3,824,759
Amount due to a related company 393,074 437,500
Bank borrowings 561,535 682,486
Lease liabilities 64,883 284,165
========= =========
(b) Financial risk management objectives and policies
Details of the Company's major financial instruments are
disclosed in the respective notes. The risks associated with these
financial instruments include currency risk, interest rate risk,
credit risk and liquidity risk. The policies on how these risks are
mitigated are set out below. The Company's management manages and
monitors these exposures to ensure appropriate measures are
implemented in a timely and effective manner.
(i) Market risk
Currency risk
The Company has foreign currency transactions and foreign
currency denominated financial assets and liabilities, which expose
the Company to foreign currency risk.
The carrying amounts of the Company's foreign currency
denominated financial assets and liabilities at the end of each
reporting period are as follows:
Assets Liabilities
---------------- ------------------
2021 2020 2021 2020
GBP GBP GBP GBP
Renminbi 5,178 5,323 571,306 568,750
United States dollar 869,314 948,100 598,596 1,023,750
======= ======= ======= =========
The Company currently does not have any policy on hedges of
foreign currency risk. However, the management monitors the foreign
currency risk exposure and will consider hedging significant
foreign currency risk should the need arise.
The following table details the Company's sensitivity to a 5%
increase and decrease in Sterling Pound against the relevant
foreign currencies with all other variables held constant. 5%
(2020: 5%) is the sensitivity rate used when reporting foreign
currency risk internally to key management personnel and represents
management's assessment of the reasonably possible change in
foreign exchange rates. The sensitivity analysis includes only
outstanding foreign currency denominated financial instruments and
adjusts their translation at the end of the reporting period for a
5% (2020: 5%) change in foreign currency rates.
2021 2020
GBP GBP
Renminbi
Post-tax profit for the year 29,796 29,654
======= ======
United States dollar
Post-tax profit for the year 14, 248 3,982
======= ======
Interest rate risk
The Company is exposed to fair value interest rate risk in
relation to its bank deposits. The Company is exposed to cash flow
interest rate risk due to fluctuation of the prevailing market
interest rate on bank borrowings which carry interest at prevailing
market interest rates as shown in notes 27 and 33 to the financial
statements.
The Company currently does not have an interest rate hedging
policy. However, the management monitors interest rate exposure and
will consider hedging significant interest rate exposure should the
need arises.
The Company's exposure to interest rates on financial
liabilities is detailed in the liquidity risk management section of
this note.
The sensitivity analysis below has been determined based on the
change in interest rates and the exposure to interest rates for the
non-derivative financial liabilities at the end of the reporting
period and on the assumption that the amount outstanding at the end
of the reporting period was outstanding for the whole year and held
constant throughout the financial year. The 25 basis points
increase or decrease represents the management's assessment of a
reasonably possible change in interest rates over the period until
the next fiscal year. The analysis is performed on the same basis
for 2020.
For the year ended 31 March 2021 , if interest rates had been 25
basis points higher/lower with all other variables held constant,
the Company's post-tax profit for the year would increase /
decrease by approximately
GBP 4,584 (20 20 : GBP 4,081 ).
(ii) Credit risk
At 31 March 2021, the Company's maximum exposure to credit risk
in the event of the counterparties' failure to perform their
obligations in relation to each class of recognised financial
assets is the carrying amount of those assets as stated in the
statement of financial position .
In order to minimise credit risk, the management has a credit
policy in place and the exposure to these credit risks is monitored
on an ongoing basis. Credit evaluations of the counterparties'
financial position and conditions are performed on each and every
major debtor periodically.
The Company measures ECLs for trade and other receivables and
contract assets at an amount calculated using a provision matrix,
details of which are set out in notes 21 and 22 to the financial
statements. At the end of the reporting period, the Company had
concentrations of credit risk where trade and other receivables
balance of the Company's largest external customer exceed s 10% of
the total trade and other receivables at the end of the reporting
period.
The credit risk on deposit placed for a life insurance policy
and liquid funds is limited because the counterparties are
banks/financial institutions with high credit ratings assigned by
international credit rating agencies.
The Company's exposure credit risk is considered limited.
(iii) Liquidity risk
The Company is responsible for its own cash management,
including the raising of loans to cover the expected cash demands.
In managing liquidity risk, the Company's policy is to regularly
monitor current and expected liquidity requirements and its
compliance with lending covenants, to ensure that it maintains
sufficient reserves of cash and adequate committed funding lines
from the financial institutions to meet its liquidity requirements
in the short and longer term. At 31 March 202 1 , the Company's
banking facilities amounted to GBP 5,292,641 (20 20 : GBP7 ,858,538
) and the unused facilities were GBP 3,458,873 (20 20 : GBP 5,
903,189 ).
The following table details the contractual maturities of the
Company's non-derivative financial liabilities at the end of each
reporting period, which is based on the undiscounted cash flows and
the earliest date on which the Company can be required to pay. The
table includes both interest and principal cash flows.
2021
-------------------------------------------------------------------
Weighted Within More than More than Carrying
1 year 2 years
average 1 year but but Total amount
effective or on less than less than undiscounted at 31
interest March
rate demand 2 years 5 years cash flow 2021
% GBP GBP GBP GBP GBP
Trade and other
payables Nil 5,179,172 - - 5,179,172 5,179,172
Amount due to
a related company Nil - 393,074 - 393,074 393,074
Bank borrowings 1.61 562,280 - - 562,280 561,535
Lease liabilities 5.125 44,744 23,276 - 68,020 64,883
--------- --------- --------- ------------ ---------
6,202,54
5,786,196 416,350 - 6 6,198,664
========= ========= ========= ============ =========
2020
-------------------------------------------------------------------
Weighted Within More than More than Carrying
1 year 2 years
average 1 year but but Total amount
effective or on less than less than undiscounted at 31
interest March
rate demand 2 years 5 years cash flow 2020
% GBP GBP GBP GBP GBP
Trade and other
payables Nil 3,708,335 - - 3,708,335 3,708,335
Amount due to
a related company Nil - 437,500 - 437,500 437,500
Bank borrowings 3.55 684,538 - - 684,538 682,486
Lease liabilities 5.125 222,031 72,444 - 294,475 284,165
--------- --------- --------- ------------ ---------
4,614,904 509,944 - 5,124,848 5,112,486
========= ========= ========= ============ =========
(c) Fair value
The directors of the Company consider that the carrying amounts
of financial assets and financial liabilities recorded at amortised
cost in these financial statements approximate their fair values at
the end of the reporting period.
(d) Capital risk management
The primary objectives when managing capital are to safeguard
the Company's ability to continue as a going concern, so that it
can continue to provide returns for shareholders and benefits for
other stakeholders and to maintain an optimal capital structure to
reduce the cost of capital.
The Company actively and regularly reviews and manages the
capital structure to maintain a balance between the higher
shareholder returns that might be possible with a higher level of
borrowings and the advantages and security afforded by a sound
capital position, and makes adjustments to the capital structure in
light of changes in economic conditions.
The Company monitors its capital structure on the basis of a net
debt-to-adjusted capital ratio. For this purpose, net debt is
defined as total debt less bank deposits and cash and cash
equivalents . Adjusted capital comprises all components of equity
less proposed dividends but not yet accrued.
The strategy during 202 1 , which is unchanged from 20 20 , is
to maintain the net debt-to-adjusted capital ratio as low as
feasible. In order to maintain or adjust the ratio, the Company may
adjust the amount of dividends paid to shareholders, return capital
to shareholders, issue new shares or sell assets to reduce
debt.
The net debt-to-adjusted capital ratio of the Company at the end
of the reporting period is as follows :
2021 2020
GBP GBP
Total liabilities 7,770,909 6,545,356
Cash and bank balances (284,354) (980,238)
--------- ---------
Net debt 7,486,555 5,565,118
========= =========
Total equity 8,159,891 8,706,138
========= =========
Net debt-to-adjusted capital ratio 92% 64 %
========= =========
7. SEGMENT INFORMATION
Management has determined the operating segments based on the
reports reviewed by the chief operating decision maker, being the
chief executive officer, that are used to make strategic
decisions.
Information reported to the chief operating decision maker for
the purpose of resource allocation and assessment of segment
performance focuses on types of goods or services delivered or
provided. The Company has a single reportable operating segment in
security and surveillance business for the year ended 31 March
2021.
(a) Segment revenues and results
The following is an analysis of the Company's revenue and
results by operating segment:
202 1 20 20
GBP GBP
Segment revenue by major products and
services
* Construction contracts 9,048,983 8,891,163
* Maintenance contracts 1,650,094 1,625,775
* Product sales 246,210 211,606
---------- ----------
Revenue from contracts with customers
and external customers 10,945,287 10,728,544
========== ==========
Segment profit 637,363 546,92 6
Finance costs ( 74, 009) (95,243)
---------- ----------
Profit before income tax 563,3 54 451,683
========== ==========
(b) Information about major customers
Revenue of approximately GBP8,622,281 (2020: GBP 8,812,800 ) is
derived from one external customer (2020: one customer), who
contributed to 10% or more of the Company's revenue in 2021 and
2020.
8. OTHER INCOME
2021 2020
GBP GBP
Interest income 26,773 36,905
Government grants - Note 392,936 -
Gain on lease modification 122 -
Sundry income 2,729 -
------- ------
422,560 36,905
======= ======
Note:
Government grants represent the approved amount of wage
subsidies under the Employment Support Scheme launched by the HKSAR
Government and subsidies received from the Anti-Epidemic Fund of
the HKSAR Government.
9. OTHER GAINS AND LOSSES, NET
2021 2020
GBP GBP
(11,250
Foreign exchange loss (689) )
Gain on disposal of plant and equipment - 201
Inventories written-off (32,787) -
(33,476) (11,049)
======== ========
10. EXPENSES BY NATURE
2021 2020
GBP GBP
Cost of inventories recognised as expenses 5,975,575 5,709,694
Sub-contracting costs 1,341,994 1,185,287
Depreciation - o wned plant and equipment 55,607 56,694
Depreciation - right-of-use assets 173,933 179,977
Research and development costs - 23,875
Selling and distribution cost 3,189 2,709
Short-term lease expenses 86,680 54,411
Other expenses 437,568 453,342
Staff costs, including directors' remuneration
---------- ----------
* Wages and salaries 2,494,170 2,415,640
* Pension scheme contributions 102,388 99,379
---------- ----------
2,596,558 2,515,019
Auditor's remuneration
* Audit services 25,904 26,466
---------- ----------
Total cost of sales, selling and distribution,
administrative expenses 10,697,008 10,207,474
========== ==========
11. DIRECTORS' REMUNERATION
Directors' remuneration for the year is as follows:
Salaries, bonuses Pension scheme 2021
and allowances contributions
GBP GBP GBP
Executive directors
Stephen Sin Mo - - -
KOO
Peter Yip Tak
CHAN 79,555 1,773 81,328
Keung Hung LI 49,384 1,330 50,714
Danny Kwok Fai
YIP 74,317 1,773 76,090
Ivan Chi Hung
CHAN 49,800 1,330 51,130
253,056 6,206 259,262
Non-executive
director s
Nicholas James
LYTH 14,183 - 14,183
Ivor Colin SHRAGO 14,183 - 14,183
28,366 - 28,366
281,422 6,206 287,628
Messrs. Keung Hung LI and Ivan Chi Hung CHAN were appointed as
the Company's directors on 24 June 2020.
Salaries, bonuses Pension scheme 2020
and allowances contributions
GBP GBP GBP
Executive directors
Stephen Sin Mo - - -
KOO
Peter Yip Tak
CHAN 74,399 1,812 76,211
Chun Pan WONG 74,410 1,359 75,769
Danny Kwok Fai
YIP 72,108 1,812 73,920
Mike Chiu Wah
CHAN 51,472 1,057 52,529
272,389 6,040 278,429
Non-executive
director s
Nicholas James
LYTH 14,497 - 14,497
Ivor Colin SHRAGO 14,497 - 14,497
28,994 - 28,994
301,383 6,040 307,423
Messrs. Mike Chiu Wah CHAN and Chun Pun WONG resigned as the
Company's directors on 31 October 2019 and 26 December 2019
respectively.
12. FINANCE COSTS
2021 2020
GBP GBP
Interest expense on bills payable and factoring 49,479 61,501
Interest expense on bank borrowings 12,805 21,205
Interest expense on bank overdraft 4,682 -
Interest on lease liabilities 7,043 12,537
------ ------
74,009 95,243
====== ======
13. INCOME TAX
(a) Income tax in the statement of profit or loss and other comprehensive income
No provision for Hong Kong profits tax has been accrued for in
these financial statements as the Company has unused tax losses
brought forward to offset against its taxable profit for the
year.
Reconciliation between income tax and profit before income tax
is as follows:
2021 2020
GBP GBP
Profit before income tax 563,3 54 451,683
======== ========
Notional tax on profit before income
tax, calculated at Hong Kong profits
tax rate of 16.5% 92,953 74,528
Tax effect of non- taxable income (64,835) (43)
Tax effect of non- deductible expenses 13,133 10,918
Tax effect of temporary differences
not re cognised (6,595) (7,440)
U tilisation of unrecognised tax losses (34,656) (77,963)
-------- --------
Income t ax - -
======== ========
(b) Deferred tax
At 31 March 2021, the Company's significant temporary difference
included unused tax losses of GBP1,452,190 (2020: GBP1,838,451)
available for offset against future taxable profits. No deferred
tax asset has been recognised due to the uncertainty of future
profit streams.
2021 2020
GBP GBP
B alance at beginning of year 1,838,451 2,178,697
Set-off against assessable profit for
the year (210,035) (472,506)
Foreign exchange difference (176,226) 132,260
Balance at end of year 1,452,190 1,838,451
========= =========
No provision for deferred tax liabilities has been made in the
financial statements as the tax effect of temporary differences
arising from depreciation allowances is immaterial to the
Company.
14. EARNINGS PER SHARE
The calculation of basic earnings per share is based on the
profit attributable to the equity shareholders of the Company for
the year of GBP 563,354 (2020: GBP 451,683 ), and the weighted
average of 383,677,323 (2020: 383,677,323) ordinary shares in issue
during the year.
There were no potential dilutive instruments at either financial
year end.
15. DIVIDS
(i) Dividends payable to equity shareholders of the Company attributable to the year:
2021 2020
GBP GBP
Final dividend proposed after the reporting
period of 0.26 HK cents , equivalent
to 0.0243 pence per ordinary share (2020:
0.55 HK cents , equivalent to 0.0573
pence, per ordinary share) 93,361 219,815
====== =======
The final dividend proposed after the reporting period has not
been recognised as a liability at the end of the reporting
period.
(ii) Dividends payable to equity shareholders of the Company
attributable to the previous financial year, approved and paid
during the year
2021 2020
GBP GBP
Final dividend in respect of the previous
financial year, approved and paid during
the year, of 0. 55 HK cents, equivalent
to 0.05417 pence, per ordinary share
(2020: 0. 55 HK cents , equivalent to
0.05537 pence per ordinary share ) 207,843 212,447
======= =======
16. PLANT AND EQUIPMENT
Furniture Computer Motor
and fixtures equipment vehicles Total
GBP GBP GBP GBP
Cost
At 1 April 2019 170,995 102,387 95,700 369,082
Additions 4,163 12,180 23,155 39,498
Disposal - - (3,624) (3,624)
Foreign translation difference 11,811 7,408 7,207 26,426
------------- ---------- --------- --------
At 31 March 2020 186,969 121,975 122,438 431,382
Additions 15,310 16,738 - 32,048
Foreign translation difference (19,747) (13,220) (12,433) (45,400)
------------- ---------- --------- --------
At 31 March 2021 182,532 125,493 110,005 418,030
============= ========== ========= ========
Accumulated depreciation
At 1 April 2019 58,134 84,233 83,569 225,936
Charge for the year 31,195 11,038 14,461 56,694
Disposal - - (3,624) (3,624)
Foreign translation difference 5,049 6,129 6,077 17,255
------------- ---------- --------- --------
At 31 March 2020 94,378 101,400 100,483 296,261
Charge for the year 31,755 12,155 11,697 55,607
Foreign translation difference (11,165) (10,901) (10,786) (32,852)
------------- ---------- --------- --------
At 31 March 2021 114,968 102,654 101,394 319,016
============= ========== ========= ========
Net book value
At 31 March 2021 67,564 22,839 8,611 99,014
============= ========== ========= ========
At 31 March 2020 92,591 20,575 21,955 135,121
============= ========== ========= ========
17. RIGHT-OF-USE ASSETS
Motor Leasehold
vehicle properties Total
GBP GBP GBP
Cost
At 1 April 2019 - 280,492 280,492
Additions - 157,254 157,254
Foreign translation difference - 24,593 24,593
------- ---------- ---------
At 31 March 2020 - 462,339 462,339
Additions 35,163 - 35,163
Expiry of lease arrangements - (283,310) (283,310)
Lease modification - (60,539) (60,539)
Foreign translation difference (1,751) (29,828) (31,579)
------- ---------- ---------
At 31 March 2021 33,412 88,662 122,074
------- ---------- ---------
Accumulated depreciation
At 1 April 2019 - - -
Charge for the year - 179,977 179,977
Foreign translation difference - 6,243 6,243
------- ---------- ---------
At 31 March 2020 - 186,220 186,220
Charge for the year 5,861 168,072 173,933
Expiry of lease arrangements - (283,310) (283,310)
Lease modification - (2,523) (2,523)
Foreign translation difference (292) (13,046) (13,338)
------- ---------- ---------
At 31 March 2021 5,569 55,413 60,982
------- ---------- ---------
Net book value
At 31 March 2021 27,843 33,249 61,092
======= ========== =========
At 31 March 2020 - 276,119 276,119
======= ========== =========
The Company has entered into lease agreements to obtain the
right to use motor vehicle and properties as its office premises
and warehouse and as a result incurred lease liabilities (Note 2 6
). The lease s typically run for an initial period of 2 to 5
years.
18. INTEREST IN ASSOCIATE
2021 2020
GBP GBP
Cost of unlisted investment
in associate 5 -
==== ====
Notes:
Details of the Company's associa te, which are accounted for
using the equity method in the f inancial statements, at the end of
the reporting period, are as follows:
Place of Issued Proportion Proportion
and
establishment paid-up of ownership of voting Principal
Name of associate and operation capital interest power activity
held
Vision Key International
Limited Hong Kong HKD100 50% 50% Inactive
19. DEPOSIT PLACED FOR A LIFE INSURANCE POLICY
In April 2019, the Company entered into a life insurance policy
with an insurance company to insure Mr. Stephen Sin Mo KOO, a
Director of the Company . Under the policy, the Company is the
beneficiary and policy holder and the total insured sum is
US$2,500,000. The Company has paid an upfront deposit of
US$1,203,528. The Company can terminate the policy at any time and
receive cash back based on the cash value of the policy at the date
of withdrawal, which is determined by the upfront deposit payment
of US$1,203,528 plus accumulated interest earned and minus the
accumulated insurance charge and policy expense charge ("Cash
Value").
In addition, if withdrawal is made between the first to
nineteenth policy year, as appropriate, a specified amount of
surrender charge would be imposed.
The insurance company will pay the Company an interest of 4.25%
per annum on the outstanding Cash Value for the first year.
Commencing on the second year, the interest will be at least 2%
guarantee interest per annum. The guarantee interest rate is also
the effective interest rate for the deposit placed on initial
recognition, determined by discounting the estimated future cash
receipts through the expected life of the insurance policy,
excluding the financial effect of surrender charge.
The deposit placed is carried at amortised cost using the
effective interest method. The Directors considered that the
possibility of terminating the policy during the first to
nineteenth policy year was low and the expected life of the
insurance policy remained unchanged since the initial recognition.
Accordingly, the difference between the carrying amount of deposit
placed for a life insurance policy as at 31 March 2021 and the Cash
Value of the life insurance policy is insignificant.
At 31 March 2021, the life insurance policy has been pledged as
security for banking facilities granted to the Company (Note
33).
20. INVENTORIES
2021 2020
GBP GBP
Raw materials 279,261 309,386
Finished goods 1,304,835 724,903
--------- ---------
1,584,096 1,034,289
========= =========
No provision for obsolete inventories is recognised for the year
(2020: GBPnil) on slow-moving inventories.
Inventor ies write-off of GBP32,787 (20 20 : GBPnil) was
recorded for the year.
21. TRADE AND OTHER RECEIVABLES
2021 2020
GBP GBP
Trade receivables 403,230 634,931
Less: allowance for doubtful debts (59,319) (66,024)
--------- ----------
Trade receivables, net 343,911 568,907
Other receivable s 1,198,861 1,330,320
Deposits and prepayments 165,717 507,636
Total carrying amount 1,708,489 2,406,863
========= ==========
All of the trade and other receivables are expected to be
recovered within one year.
21. TRADE AND OTHER RECEIVABLES (CONTINUED)
Trade receivables
Impairment losses in respect of trade receivables are recorded
using an allowance account unless the Company is satisfied that
recovery of the amount is remote, in which case the impairment loss
is written off against trade receivables directly. Movements in the
allowance for doubtful debts:
2021 2020
GBP GBP
At beginning of year 66,024 61,806
Foreign translation difference (6,705) 4,218
------- ------
At end of year 59,319 66,024
======= ======
The ageing analysis of trade receivables, net at the end of the
reporting period is as follows:
2021 2020
GBP GBP
0 to 90 days 325,415 470,672
91 to 365 days 3,793 88,190
Over 365 days 14,703 10,045
------- -------
343,911 568,907
======= =======
The Company measures loss allowances for trade receivables at an
amount equals to lifetime ECLs, which is calculated using a
provision matrix. As the Company's historical credit loss
experience does not indicate significantly different loss patterns
for different customer segments, the loss allowance based on past
due status is not further distinguished between the Company's
different customer bases.
The following table provides information about the Company's
exposure to credit risk and ECLs for trade receivables at the end
of the reporting period:
202 1 20 20
---------------------------------------- ----------------------------------------
Expected Expected
loss Gross carrying loss Gross carrying
rate amount Loss allowance rate amount Loss allowance
% GBP GBP % GBP GBP
0 to 90 days - 325,415 - - 470,672 -
91 to 365 days - 3,793 - - 88,190 -
Over 365 days 80 74,022 59,319 87 76,069 66,024
-------------- --------------
403,230 59,319 634,931 66,024
============== ============== ============== ==============
Expected loss rates are based on actual loss experience over the
past 3 years. These rates are adjusted to reflect differences
between economic conditions during the periods over which the
historic data has been collected, current conditions and the
Company's view of economic conditions over the expected lives of
the receivables.
Other receivables
The amount of GBP284,072 (2020: GBP406,007) in other receivable
is interest-free, repayable on demand and due from Mr. Stephen Sin
Mo KOO, a Director of the Company.
No loss allowance was recognised in profit or loss during the
years ended 31 March 2021 and 2020.
22. CONTRACT ASSETS
2021 2020
GBP GBP
Supply , design and installation of closed
circuit television and surveillance systems
services 8,439,488 6,243,276
========= =========
The contract assets primarily relate to the Company's right to
consideration for work completed and not billed because the rights
are conditioned on the Company's future performance in achieving
specified milestones at the reporting date on the comprehensive
architectural services. The contract assets are transferred to
trade receivables when the rights become unconditional. The Company
typically transfer contract assets to trade receivables upon
achieving the specified milestones in the contracts.
There was no retention monies held by customers for contract
works performed at the end of each reporting period. The Company
classifies these contract assets as current because the Company
expects to realise them in its normal operating cycle.
The Company makes specific provision for contract assets whose
credit risk are considered significantly increased or identified as
credit-impaired. For remaining balance of contract assets, the
Company makes general provision based on ageing analysis and
project status.
As at 31 March 202 1 , the gross amount of contract assets was
GBP 8,530,832 (2020: GBP6,344,943 ) and the provision of impairment
was GBP 91,344 (2020: GBP101,667 ) .
The following table provides information about the Company's
exposure to credit risk and ECLs for contract assets at the end of
the reporting period:
202 1 20 20
---------------------------------------- ----------------------------------------
Expected Expected
loss Gross carrying loss Gross carrying
rate amount Loss allowance rate amount Loss allowance
% GBP GBP % GBP GBP
Within 3 years - 8,439,488 - - 6,243,276 -
Over 3 years 100 91,344 91,344 100 101,667 101,667
-------------- --------------
8,530,832 91,344 6 ,344,943 101,667
============== ============== ============== ==============
No loss allowance was recognised in profit or loss during the
years ended 31 March 2021 and 2020.
23. CASH AND BANK BALANCES
(a) Cash and cash equivalents
2021 2020
GBP GBP
Cash at bank and in hand 284,354 679,186
Deposits with banks - 301,052
------- ---------
284,354 980,238
Less: restricted cash - (301,052)
------- ---------
Cash and cash equivalents in the statement
of cash flows 284,354 679,186
======= =========
(b) Cash and bank balances are denominated in the following currencies:
2021 2020
GBP GBP
Hong Kong dollar 273,095 970,936
Renminbi 5,231 5,904
United States dollar 4,621 2,544
Others 1,407 854
======= =======
(c) Restricted cash
At 31 March 2020, bank balance of GBP301,052 was restricted as
bank deposits with maturities less than three months. Such
restricted bank balances were held for the purpose of the issuance
of performance bonds in respect of maintenance contracts undertaken
by the Company.
At 31 March 2021, the effective interest rate on bank deposits
was 0.2% (2020: ranged from 0.2% to 2.7%) per annum.
24. TRADE AND OTHER PAYABLES
2021 2020
GBP GBP
Current liabilities
Trade payables 2,109,753 1,206,558
Bills payable 1,272,233 1,272,863
Accruals and other payables 1,797,186 1,345,338
5,179,172 3,824,759
Non-current liabilities
Due to a related company (Note 30) 393,074 437,500
--------- ---------
5,572,246 4,262,259
========= =========
Trade and other payables are expected to be repaid within one
year, other than the amount due to a related company.
Bills payable carry interest at annual rate at the Hong Kong
Best Lending Rate and are repayable within 90 days.
25. CONTRACT LIABILITIES
2021 2020
GBP GBP
Supply , design and installation of closed
circuit television and surveillance systems
services 1,572,245 1,316,446
========= =========
Contract liabilities represent the Company's obligation to
transfer performance obligation to customers for which the Company
has received considerations from the customers.
Revenue recognised during the year ended 31 March 2021 that was
included in the contract liabilities at the beginning of the year
was amounted to GBP1,316,446 (2020: GBP956,616).
26. LEASE LIABILITIES
The following table shows the remaining contractual maturities
of the Company's lease liabilities at the end of the current
year:
Present value of Minimum
m inimum lease payments lease payments
202 1 20 20 202 1 20 20
GBP GBP GBP GBP
Within one year 42,959 213,288 44,744 222,031
In the second to fifth
year 21,924 70,877 23,276 72,444
----------- ------------ -------- -------
2 84 ,
64,883 16 5 68,020 294,475
=========== ============
Less: Future finance (10,310
charges ( 3,137) )
-------- -------
Present value of lease
obligation 64,883 284,165
======== =======
27. BANK BORROWINGS
2021 2020
GBP GBP
Revolving loans 561,535 682,486
======= =======
The loans are denominated in Hong Kong dollar and carry interest
at annual rate at 1.5% over Hong Kong Interbank Offered Rate.
Details of securities are disclosed in note 33 to the financial
statements.
28. SHARE CAPITAL
2021 2020
GBP GBP
Issued and fully paid :
383,677,323 ordinary s hares of HK$55 ,
033 , 572, translated at historical rate 3,890,257 3,890,257
========= =========
The Company has one class of ordinary shares which has no par
value.
29. EMPLOYEE RETIREMENT BENEFITS
The Company operates a Mandatory Provident Fund scheme (the "MPF
scheme") under the Hong Kong Mandatory Provident Fund Schemes
Ordinance for employees employed under the jurisdiction of the Hong
Kong Employment Ordinance. The MPF scheme is a defined contribution
retirement scheme administered by independent trustees. Under the
MPF scheme, the Company and its employees are each required to make
contributions to the scheme at 5% of the employees' relevant
income, subject to a cap of monthly relevant income of HK$30,000.
Contributions to the MPF scheme vest immediately.
Save d as set out above, the Company has no other material
obligations to make payments in respect of
retirement benefits of the employees.
30. RELATED PARTY TRANSACTIONS
Compensation of key management personnel
The remuneration of the key management personnel of the Company
during the year was as follows:
2021 2020
GBP GBP
Salaries, bonus and allowances 320,660 560,115
======= =======
The remuneration of key management personnel comprise s the
remuneration of E xecutive D irectors and key executives.
Executive D irectors include the E xecutive C hairman, C hief E
xecutive O fficer and Finance Director of the Company. The
remuneration of the E xecutive D irectors is determined by the
Remuneration Committee having regard to the performance of
individuals, the overall performance of the Company and market
trends. Further information about the R emuneration C ommittee and
the D irectors' remuneration is provided in the Remuneration Report
and the Report on Corporate Governance to the Annual Report and
note 1 1 to the financial statements.
Key executives include the Director of Operations , Software
Development Manager and Sales Manager of the Company. The
remuneration of the key executives is determined by the Executive
Directors annually having regard to the performance of individuals
and market trends.
Biographical information on key management personnel is
disclosed in the Directors' and Senior Management's Biographies
section of the Annual Report.
Transactions with related parties
(a) At 31 March 202 1 , there are balance s of GBP 284,072 (20
20 : GBP 406,007 ) due from Mr. Stephen Sin Mo KOO respectively , a
D irector of the Company , which are unsecured, interest-free and
repayable on demand (Notes 21) .
(b) At 31 March 202 1 , there is a payable balance of GBP
393,074 (20 20 : GBP 437,500 ) due to a shareholder, Univision
Holdings Limited, which is unsecured, interest-free and repayable
after 12 months (Note 2 4 ).
(c) At 31 March 2021, there are receivable balances of GBP
2,842,805 (20 20 : GBP 3,157,799 ) due from related companies
controlled by common shareholders of the Company, which are
guaranteed by a shareholder of the Company, interest-free and
repayable after 12 months.
Apart from the transactions disclosed above and elsewhere in
these financial statements, the Company had no other material
transactions with related parties during the year.
31. CASH FLOWS FROM LIABILITIES ARISING FROM FINANCING ACTIVITIES
The table below details changes in the Company's liabilities
arising from financing activities, including both cash and non-cash
changes. Liabilities arising from financing activities are
liabilities for which cash flows were, or future cash flows will
be, classified in the Company's statement of cash flows as cash
flows arising from financing activities.
Amount
due toa
related Bank Lease
company borrowings liabilities Total
GBP GBP GBP GBP
At 1 April 2019 409,556 - 280,492 690,048
Financing cash flows:
New bank loans - 659,606 - 659,606
Interest paid - (21,205) - (21,205)
Capital element of lease
liabilities paid - - (172,201) (172,201)
Interest element of lease
liabilities paid - - (12,537) (12,537)
Other changes:
New leases - - 157,254 157,254
Interest on lease liabilities - - 12,537 12,537
Interest expense on bank
borrowings - 21,205 - 21,205
Foreign translation difference 27,944 22,880 18,620 69,444
-------- ----------- ------------ ---------
At 31 March 2020 and 1 April
2020 437,500 682,486 284,165 1,404,151
Financing cash flows:
Repayment of bank loans - (54,355) - (54,355)
Interest paid - (12,805) - (12,805)
Capital element of lease
liabilities paid - - (177,430) (177,430)
Interest element of lease
liabilities paid - - (7,043) (7,043)
Other changes:
New leases - - 35,163 35,163
Lease modification - - (58,016) (58,016)
Interest on lease liabilities - - 7,043 7,043
Interest expense on bank
borrowings - 12,805 - 12,805
Foreign translation difference (44,426) (66,596) (18,999) (130,021)
-------- ----------- ------------ ---------
At 31 March 2021 393,074 561,535 64,883 1,019,492
======== =========== ============ =========
Amounts included in the statement of cash flows for cash
outflows for leases comprise the following:
2021 2020
GBP GBP
Within:
Operating cash flows 86,680 54,411
Financing cash flows 184,473 184,738
------- -------
271,153 239,149
======= =======
T hese a mounts relate to the following:
2021 2020
GBP GBP
Lease rentals paid 271,153 239,149
======= =======
32. COMMITMENTS
Capital commitments
At 31 March 2021, the Company did not have any material
outstanding capital commitments.
33. BANKING FACILITIES
At 31 March 2021, the banking facilities of the Company were as
follows:
(a) The revolving trade financing facilities amounted to
GBP2,433,318 (equivalent to HK$ 26 ,000,000) and carried annual
interest at the Hong Kong Dollars Best Lending Rate with a
repayment term of 90 days. The facilities are subject to the
fulfilment of certain covenants relating to the Company's net worth
and the loans to its related parties. If the Company is in breach
of the covenants, the facilities would become payable on demand. At
31 March 202 1 , the facilities were utilised to the extent of
GBP1,272,233.
(b) The revolving term facilities amounted to GBP1,403,837
(equivalent to HK$ 1 5,000,000) were secured by floating charges
over the bills receivable from the Company's major customer. At 31
March 202 1 , no facilities were utilised .
(c) The revolving term facilities amounted to GBP613,184
(equivalent to HK$ 6,551,867 ) were secured by the life insurance
policy of the Company (Note 19) . At 31 March 2021, the facilities
were utilised to the extent of GBP561,535.
(d) The straight line loans f acilities amounted to GBP842,302
(equivalent to HK$ 9,000,000 ) were secured by the life insurance
policy of the Company . At 31 March 202 1 , no facilities were
utilised .
At 31 March 2020, the banking facilities of the Company were as
follows:
(a) The revolving trade financing facilities amounted to
GBP2,187,500 (equivalent to HK$ 21 ,000,000) and carried annual
interest at the Hong Kong Dollars Best Lending Rate with a
repayment term of 90 days. The facilities are subject to the
fulfilment of certain covenants relating to the Company's net worth
and the loans to its related parties. If the Company is in breach
of the covenants, the facilities would become payable on demand. At
31 March 2020, the facilities were utilised to the extent of
GBP1,272,863.
(b) The revolving term facilities amounted to GBP2,604,167
(equivalent to HK$ 2 5,000,000) were secured by floating charges
over the bills receivable from the Company's major customer. At 31
March 2020, no facilities were utilised .
(c) The revolving loans f acilities amounted to GBP682,486
(equivalent to HK$ 6,551,867 ) were secured by the life insurance
policy of the Company (Note 19) . At 31 March 2020, these
facilities were fully utilised .
(d) The bonding line facilities amounted to GBP2,083,333
(equivalent to HK$ 20,000,000 ) were secured by a charge over
deposits limited to GBP625,000 ( equivalent to HK$6,000,000)
granted by the Company . At 31 March 2020, no facilities were
utilised .
(e) The banking facilities for issuance of letter of credit and
guarantee amounted to GBP301,052 (equivalent to HK$ 2,890,100 )
were secured by a charge over a fixed deposit of GBP301,052 (
equivalent to HK$2,890,100) granted by the Company . At 31 March
2020, no facilities were utilised .
The Company regularly monitors its compliance with these
covenants. Further details of the Company's management of liquidity
risk are set out in note 6(b)(iii) to the financial statements.
34. Contingent liabilities
On 14 December 2020, the Company received a writ of summons
stating that it is being sued by Dimension Data China Hong Kong
Limited ("Dimension Data"), and Dimension Data is alleging breach
of contract on part of the Company and claiming against the Company
for liquidated damages that Dimension Data has thereby suffered in
the amount of HK$10,953,969 plus pre-judgment and post-judgment
interest and legal costs. The Company, on the other hand, is
defending the claim by alleging wrongful breach and thus
repudiation of the said sub-contract by Dimension Data and
counter-claiming against Dimension Data for loss and damages to be
assessed and legal costs.
As of the date of this report, there is no mediation between the
Company and Dimension Data.
The Company is of the opinion that the claim is highly
opportunistic and without merit and the management intends to
defend this claim rigorously.
In the opinion of directors of the Company, there were no other
significant contingent liabilities from pending litigation or legal
claims as at 31 March 2021.
35. MAJOR NON-CASH TRANSACTION
During the year, the final dividend for the year ended 31 March
2020 payable to the shareholder, Mr. Stephen Sin Mo KOO , of
GBP142,189 was set-off against with other receivables .
36. EVENTS AFTER THE REPORTING PERIOD
On 19 August 2021, the Board of Directors proposed a final
dividend for the year ended 31 March 2021. Further details are
disclosed in note 15(i) to the financial statements.
On 19 April 2021, an additional life insurance plan ("keyman
insurance plan") for the Group's Executive Chairman, Mr. Stephen
Sin Mo KOO was provided by HSBC Life (International) Limited with
sum insured of US$2.5m illion . HSBC has provided a long-term loan
of approximately HK$7. 1 m illion for financing certain portion of
the premium. The Company is the policy holder for the keyman
insurance plan that is assigned to HSBC for security for the
banking facilities.
ENDS
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September 06, 2021 11:30 ET (15:30 GMT)
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