UniVision Engineering : Interim Results 2018

7 December 2018

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

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

Interim Results

For the Six Months Ended 30 September 2018

UniVision (AIM: UVEL), the Hong Kong based Group whose principal activities are the supply, design, installation and maintenance of closed-circuit television and surveillance systems, and the sale of security related products, is pleased to announce its unaudited interim results for the six months ended 30 September 2018.

Highlights:

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

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

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

For further information visitwww.uvel.com or contact:
UniVision Engineering Limited	Tel: [phone]
Stephen Koo, Chairman	www.uvel.com
Chun Pan Wong, Chief Executive Officer
Danny Kwok Fai Yip, Finance Director
Nicholas Lyth, Non-Executive Director	Tel: [phone]
Ivor Shrago, Non-Executive Director	Tel: [phone]
SPARK Advisory Partners Limited
	Tel: [phone]
(Nominated Adviser)
Mark Brady / Neil Baldwin	www.sparkadvisorypartners.com
SI Capital Limited	Tel: [phone]
(Broker)	www.sicapital.co.uk
Nick Emerson

CHAIRMAN'S STATEMENT

INTRODUCTION

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

THE MAJOR CONTRACT WITH MTRC

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

The master contract provides for the replacement works of the Closed-Circuit Television (CCTV) systems for numerous railway lines of MTRC in Hong Kong. Under the contract, the Company will replace the existing analogue CCTV system installed in the stations along the specified lines with a unified IP-based CCTV system.

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

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

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

FINANCIAL REVIEW

The profit attributable to the equity holders of the Company is £1m (2017: £213K). The improvement in results performance in the period is mainly attributable to:-

• i) 264% growth in the income from construction contracts;

• ii) Improved gross profit margin of 6% from maintenance contracts.

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

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

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

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

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

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

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

During the period under review, the relative weak of the HK$ against GBP has led to 3.7% depreciation in the GBP reporting amount in the Consolidated Statement of Comprehensive Income. Also, a relative strengthening of HK$ at the period-end has led to a 7.6% appreciation in the GBP reporting amount in the Consolidated Statement of Financial Position. It also the reason for the significant gain of £509K on exchange differences arising on the translation (H1 2017: loss £446K). All figures in GBP in the Financial Statements therefore needed to be adjusted for comparative purposes. The financial data is also presented in HK$ to provide a comparison with the comparative figures in 2017 that were unaffected by exchange rate fluctuations.

BUSINESS REVIEW

Markets

The increasing demand for wireless network infrastructure is the key growth driver for this market. The demand to replace analogue systems with Internet protocol based systems is also expected to boost the market.

The Board believes that winning the Major Contract from MTRC should allow UniVision to market its brand to purchasers of similar systems outside Hong Kong.

The Company intends to explore other market segments, such as rolling stock business on railways, to strengthen business growth in the Group.

Business

Under the Major Contract, the Company performs as network service provider in the application of CCTV systems. The Board considers the viability for the Company entering the new business as a provider of network service and information technology in the application in other fields.

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

Customers

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

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

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

Acquisitions and Investments

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

PROSPECTS

The high demand for its network and high definition security and surveillance system provides the Group with an excellent opportunity for future growth in these markets.

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

Finally, on behalf of the Board, I would like to thank our customers, suppliers, sub-contractors, bankers and shareholders for their continued support of UniVision. I would also like to express my gratitude to the management team and all staff for their continued support, contribution and dedication to the Group.

MR. STEPHEN SIN MO KOO

EXECUTIVE CHAIRMAN

7 December 2018

UniVision Engineering Limited

Statements of Comprehensive Income (Unaudited) For the six months ended 30 September 2018

For the six months ended 30 September

2018	2017	2018	2017
HK$'000	HK$'000	￡'000	￡'000
Revenue	66,798	23,224	6,373	2,298
Cost of sales	(49,081)	(15,914)	(4,683)	(1,575)
Gross profit	17,717	7,310	1,690	723
Other income	21	206	2	20
Other loss	(56)	0	(5)	0
Selling and distribution expenses	(651)	(659)	(62)	(65)
Administrative expenses	(6,196)	(4,700)	(591)	(465)
Finance costs	(226)	0	(22)	0
Profit before income tax	10,609	2,157	1,012	213
Income tax	0	0	0	0
Profit for the period	10,609	2,157	1,012	213
Other comprehensive income/(loss):
Exchange differences arising on translation of foreign
0	0	509	(446)
operations
Total comprehensive income/(loss) for the period	10,609	2,157	1,521	(233)
Profit attributable to:
Equity shareholders of the Company	10,609	2,157	1,012	213
10,609	2,157	1,012	213
Total comprehensive income / (loss) attributable
Equity shareholders of the Company	10,609	2,157	1,521	(233)
10,609	2,157	1,521	(233)
Earnings per share - Basic and Diluted	HK Cents	HK Cents	Pence	Pence
Basic	2.7651	0.5621	0.2638	0.0556
Diluted	N/A	N/A	N/A	N/A