UniVision Engineering Ltd Trading Update (0249S)

TIDMUVEL

RNS Number : 0249S

UniVision Engineering Ltd

03 July 2020

RNS ANNOUNCEMENT: The information communicated in this announcement contains inside information for the purposes of Article 7 of Regulation 596/2014.

For immediate release: 3 July 2020

UniVision Engineering Limited

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

Trading update

UniVision (AIM: UVEL), the Hong Kong based group whose principal activities are the supply, design, installation and maintenance of closed circuit television (CCTV) and surveillance systems, and the sale of security related products, announces the following trading update for the year ended 31 March 2020 and the first quarter of this financial year.

Trading update and the Major Contract with MTR Corporation

In December 2019, the Group reported reduced revenues and margin for the first half of its financial year due to disruption in the business caused by the widely reported protests against the anti-extradition bill in Hong Kong which began in June 2019, which hit our construction revenues, and increased subcontractor charges which reduced margins in our maintenance. At the time, we expected some improvement in the second half of the year, but further protest disruption was expected. Unlike the hotel, travel, catering, retailing sectors, COVID-19 has not seriously affected the Company's business. Nevertheless, the outbreak and effects of Coronavirus in Hong Kong since January 2020 has further hindered installation plans which has slowed the Group's anticipated recovery in the second half of the year. Whilst unaudited revenue and profits have recovered when compared to the first half of the year, the Directors expect the full year results still to be substantially lower than the year to 31 March 2019.

The new financial year has started very well, with existing installation work getting more back to our expected levels as the limited disruption caused by COVID-19 to our business and the protests have reduced. In addition, the benefits of the Cooperation Framework Agreement signed with China Rail in January 2020 are already becoming apparent in relation to sub-contractor costs. The Group has also won new contract work outlined below; whilst the benefits of some of this new work will fall into the current financial year, some of this work will extend until the end of 2021/early 2022.

The Major Contract with the MTR Corporation Limited in Hong Kong ("MTR Corporation")(the "Major Contract") remains the major plank of the Group's current workload. With further agreed add-ons since May 2017 (including the one described below), the total current value of this contract is now HK$426.7 million (approximately GBP43.9 million at current exchange rates) spread over a six year period, with an expected completion date of November 2023. As at 31 March 2020, the Group has invoiced HK$131.5 million to MTRC, leaving a further HK$295.2 million over the remaining period of the contract. The gross valuation of certified works on the Major Contract was HK$156.3m up to 29 February 2020.

With revenues underpinned by the Major Contract and better sub-contractor cost visibility with China Rail as a partner, the Directors are confident of a return to growth in the current financial year and look forward to reporting on progress with the final results.

New contracts awarded

Four contracts, with total value of HK$27.9m (GBP 3.8 m) have been awarded to the Company towards the end of the first quarter ended 30 June 2020.

The Company has obtained additional works which have been confirmed by MTR Corporation under a s upplementary agreement to the main contract for the replacement and provision of the CCTV systems for 84 MTR stations and 69 stops of Light Rail, as announced in May 2017.

The additional works shall provide 187 fixed CCTV cameras in six MTR stations in order to monitor passengers at entrances at concourse level, entry/exit gate arrays, customer service centres, escalators, stairs and platforms. The scope of works include design, supply, manufacture, delivery to site, installation, testing, commissioning, integration to the Station CCTV S ystem and Station Video Archive Subsystem. The value of th e additional work is HK$16.9m.

Besides, the Company also won a new contract from City University of Hong Kong for upgrading CCTV S ystem on campus with two years warranty service. F urther, two contracts are awarded by Electrical and Mechanical Services Department of Hong Kong Government. One is for replacement of CCTV System in Cross Harbour Tunnel (Hunghom). The other one is the enhancement works of Video Analytic Monitoring System at Tai Tam Gap Correctional Institution. It is the additional order from the original contract awarded as announced in July 2019.

The benefits from these contracts will come through during the next two financial years.

Increased banking facilities

To assist with funding of this significant major contract and other potential sizeable projects, during the period the Company entered into a revised facility agreement with HSBC, to increase the scope and credit limit of banking facilities, including increase the trade facility to HK$26m of which overdraft limit increased to HK$8m and also provide a long term straight line loan facility of HK$9m. This facility has provided additional working capital to ensure that the MTRC contract and other projects can operate smoothly.

Announcement of final results

We anticipate being able to announce our final results, for the year ended 31 March 2020, in early September 2020.

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

 
 UniVision Engineering Limited           Tel: [phone] 
 Stephen Koo, Chairman                   www.uvel.com 
 Danny Kwok Fai Yip, Finance Director 
 Nicholas Lyth, 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

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