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 September 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 £10.9m (2020: £10.7m);
· Profit before income tax increased to £563K (2020 £452K);
· Cash flow generated from operations £34K (2020: negative £111K);
· Total Equity attributable to shareholders: £8.2m (2020: £8.7m);
· 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 | |
Danny Kwok Fai Yip, Finance Director |
|
Nicholas Lyth, Non-Executive Director | Tel: +44 (0)7769 906686 |
|
|
SPARK Advisory Partners Limited (Nominated Adviser) | Tel: +44 (0)20 3368 3550 |
Mark Brady / Neil Baldwin | |
|
|
|
|
SI Capital Limited (Broker) | Tel: +44 (0)1483 413500 |
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 £10.9m (2020: £10.7m). This increment 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 Corporation ("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 £563K (2020: £452K).
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 surveillance 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 the 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 £48.2 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 March 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, the 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 £10.9m in the reporting period (2020: £10.7m). 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 construction 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 £2m in the reporting period (2020: £2m), however, our gross margin was 17.9% which was lower than that of last reporting period (2020: 19.4%). The main reason for the decrease 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, the Company adopted measures to control the operating cost with its suppliers and subcontractors.
· The underlying profit for the current year was £170K (2020: £452K) which excluded other income from Hong Kong Government Employment Support £386K for the month of June to November 2020, £4.9K from Construction Industry Council "Anti-Epidemic Fund", and £2K subsidy from Transport Department. Total amount for the anti-epidemic relief from Hong Kong Government and public organization was £393K.
· Our operating expenses were mainly administration expenses. For the year, administrative expenses increased by 14% to £1.73m (2020: £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 £563K in the reporting period (2020: £452K) 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 £563K for the financial year ended 31 March 2021, compared to £452K for the last financial year.
· As a result of increase in profit attributable to shareholders, basic earnings per share increased to 0.15p for this reporting financial year (2020: 0.12p).
On the Statement of Financial Position, the highlights are:
· Contract assets increased to £8.4m as at 31 March 2021, from £6.2m 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 the 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 £284K as at 31 March 2021 (2020: £679K), representing a decrease of £395K.
· Total equity attributable to shareholders stood at £8.2m as at 31 March 2021 (As at 31 March 2020: £8.7m), or a decrease of £546K, mainly due to the loss of £902K on exchange differences on translation of financial statements from HK$ to £, the reporting currency.
· Deposit placed for a life insurance policy of £862K as at 31 March 2021, 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 £562K as at 31 March 2021 (2020: £682K) 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 Flows, the highlights are:
· The Company generated positive cash flow from operations of £34K in the reporting period (2020: negative £111K).
· 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 £54K.
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 £902K (2020: gain £549K) 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 Market 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 the 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 grown 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 surveillance 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 surveillance 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 surveillance 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 surveillance 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 video analytics, such as facial recognition, is being enhanced rapidly and UniVision has actively participated in this market, such as the 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 surveillance 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 expects 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 costs 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 2021
UNIVISION ENGINEERING LIMITED
STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME
For the year ended 31 March 2021
| Notes |
| 2021 |
| 2020 |
|
|
| £ |
| £ |
|
|
|
|
|
|
Revenue | 7(a) |
| 10,945,287 |
| 10,728,544 |
Cost of revenue | 10 |
| (8,986,278) |
| (8,647,222) |
|
|
|
|
|
|
Gross profit |
|
| 1,959,009 |
| 2,081,322 |
Other income | 8 |
| 422,560 |
| 36,905 |
Other gains and losses, net | 9 |
| (33,476) |
| (11,049) |
Selling and distribution expenses | 10 |
| (4,570) |
| (30,503) |
Administrative expenses | 10 |
| (1,706,160) |
| (1,529,749) |
Finance costs | 12 |
| (74,009) |
| (95,243) |
|
|
|
|
|
|
Profit before income tax |
|
| 563,354 |
| 451,683 |
Income tax | 13 |
| - |
| - |
|
|
|
|
|
|
Profit for the year |
|
| 563,354 |
| 451,683 |
|
|
|
|
|
|
Other comprehensive (loss)/income, net of tax |
|
|
|
|
|
Item that may be reclassified subsequently to profit or loss: |
|
|
|
|
|
Exchange differences on translation of financial statements |
|
| (901,758) |
| 548,560 |
|
|
|
|
|
|
Total comprehensive (loss)/income for the year |
|
| (338,404) |
| 1,000,243 |
|
|
|
|
|
|
Earnings per share - Basic and Diluted | 14 |
| 0.15p |
| 0.12p |
UNIVISION ENGINEERING LIMITED
STATEMENT OF FINANCIAL POSITION
As at 31 March 2021
| Notes |
| 2021 |
| 2020 |
|
|
| £ |
| £ |
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 receivables | 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 payables | 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 2021
| Share capital |
| Retained earnings |
| Special capital reserve "A" |
| Special capital reserve "B" |
| Translation reserve |
| Total |
|
| £ |
| £ |
| £ |
| £ |
| £ |
| £ |
|
|
|
|
|
| (Note 1) |
| (Note 2) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at 1 April 2019 | 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 2019 (Note 15) | - |
| (212,447) |
| - |
| - |
| - |
| (212,447) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total transactions with owners, recognised directly in equity | - |
| (212,447) |
| - |
| - |
| - |
| (212,447) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at 31 March 2020 | 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 2021
| Notes |
| 2021 |
| 2020 |
|
|
| £ |
| £ |
|
|
|
|
|
|
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 |
Inventories 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 |
Inventories |
|
| (721,932) |
| (336,416) |
Trade and other receivables | 34 |
| 640,547 |
| 37,560 |
Contract assets |
|
| (2,978,477) |
| (2,341,199) |
Amounts due from related companies |
|
| (5,959) |
| 378,665 |
Trade 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) |
|
|
|
|
|
|
Net cash used in investing activities |
|
| (5,275) |
| (912,591) |
|
|
|
|
|
|
Cash flows from financing activities |
|
|
|
|
|
Bank interest 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 loans | 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 ("£"), 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. BASIS OF PREPARATION
These financial statements have been prepared in accordance with International Financial Reporting Standards ("IFRSs") 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 IFRSs 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 IFRSs 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 IFRS 3 | Definition of a Business |
Amendments to IAS 1 and IAS 8 | Definition of Material |
Amendments to IFRS 9, IAS 39 and IFRS 7 | Interest Rate Benchmark Reform |
Conceptual Framework for Financial Reporting 2018 | Revised Conceptual Framework for Financial Reporting |
The initial application of these financial reporting standards does not necessitate material changes in the Company'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 2021 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 2020:
IFRS 17 | Insurance Contracts2 |
Amendments to IFRS 3 | Definition of Business2 |
Amendments to IAS 16 | Property, Plant and Equipment: Proceeds before Intended Use2 |
Amendments to IAS 37 | Onerous Contracts - Cost of Fulfilling a Contract2 |
Amendments to IAS 39, IFRS 4, IFRS 7, IFRS 9 and IFRS 16 | Interest Rate Benchmark Reform - Phase 22 |
Annual Improvements to IFRSs 2018-2020 Cycle | Revised Conceptual Framework for Financial Reporting2 |
Amendments to IFRS 16 | COVID-19-Related Rent Concession1 |
Amendments to IAS 1 | Classification of Liabilities as Current or Non-current3 |
Amendments to IFRS 10 and IAS 28 | Sale or Contribution of Assets between an Investor and its Associate or Joint Venture4 |
1 Effective for the Company's annual financial statements beginning on 1 April 2021
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 2023
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 ("£"), 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.
4.17 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 £1,452,000 (2020: £1,838,000) 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
|
| 2021 |
| 2020 |
|
| £ |
| £ |
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 |
| £ |
| £ |
| £ |
| £ |
|
|
|
|
|
|
|
|
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 |
| £ |
| £ |
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 £4,584 (2020: £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 exceeds 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 2021, the Company's banking facilities amounted to £5,292,641 (2020: £7,858,538) and the unused facilities were £3,458,873 (2020: £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 |
| average |
| 1 year |
| 1 year but |
| 2 years but |
| Total |
| amount |
| effective |
| or on |
| less than |
| less than |
| undiscounted |
| at 31 |
| interest rate |
| demand |
| 2 years |
| 5 years |
| cash flow |
| March 2021 |
| % |
| £ |
| £ |
| £ |
| £ |
| £ |
|
|
|
|
|
|
|
|
|
|
|
|
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 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| 5,786,196 |
| 416,350 |
| - |
| 6,202,546 |
| 6,198,664 |
|
| 2020 | ||||||||||
|
| Weighted |
| Within |
| More than |
| More than |
|
|
| Carrying |
|
| average |
| 1 year |
| 1 year but |
| 2 years but |
| Total |
| amount |
|
| effective |
| or on |
| less than |
| less than |
| undiscounted |
| at 31 |
|
| interest rate |
| demand |
| 2 years |
| 5 years |
| cash flow |
| March 2020 |
|
| % |
| £ |
| £ |
| £ |
| £ |
| £ |
|
|
|
|
|
|
|
|
|
|
|
|
|
| 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 2021, which is unchanged from 2020, 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 |
|
| £ |
| £ |
|
|
|
|
|
|
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:
| 2021 |
| 2020 |
|
| £ |
| £ |
|
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 |
| 546,926 |
|
Finance costs | (74,009) |
| (95,243) |
|
|
|
|
|
|
Profit before income tax | 563,354 |
| 451,683 |
|
(b) Information about major customers
Revenue of approximately £8,622,281 (2020: £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 |
|
| £ |
| £ |
|
|
|
|
|
|
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 |
|
| £ |
| £ |
|
|
|
|
|
|
Foreign exchange loss | (689) |
| (11,250) |
|
Gain on disposal of plant and equipment | - |
| 201 |
|
Inventories written-off | (32,787) |
| - |
|
|
|
|
|
|
| (33,476) |
| (11,049) |
|
10. EXPENSES BY NATURE
| 2021 |
|
| 2020 |
|
| £ |
|
| £ |
|
|
|
|
|
|
|
Cost of inventories recognised as expenses | 5,975,575 |
|
| 5,709,694 |
|
Sub-contracting costs | 1,341,994 |
|
| 1,185,287 |
|
Depreciation - owned 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 and allowances | Pension scheme contributions | 2021 |
| £ | £ | £ |
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 directors |
|
|
|
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 and allowances | Pension scheme contributions | 2020 |
| £ | £ | £ |
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 directors |
|
|
|
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 |
|
| £ |
| £ |
|
|
|
|
|
|
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 |
|
| £ |
| £ |
|
|
|
|
|
|
Profit before income tax | 563,354 |
| 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 recognised | (6,595) |
| (7,440) |
|
Utilisation of unrecognised tax losses | (34,656) |
| (77,963) |
|
|
|
|
|
|
Income tax | - |
| - |
|
(b) Deferred tax
At 31 March 2021, the Company's significant temporary difference included unused tax losses of £1,452,190 (2020: £1,838,451) available for offset against future taxable profits. No deferred tax asset has been recognised due to the uncertainty of future profit streams.
| 2021 |
| 2020 |
|
| £ |
| £ |
|
|
|
|
|
|
Balance 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 £563,354 (2020: £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. DIVIDENDS
(i) Dividends payable to equity shareholders of the Company attributable to the year:
| 2021 |
| 2020 |
|
| £ |
| £ |
|
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 |
|
| £ |
| £ |
|
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 and fixtures |
| Computer equipment |
| Motor vehicles |
| Total |
|
| £ |
| £ |
| £ |
| £ |
|
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 |
|
|
|
| £ |
| £ |
| £ |
|
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 26). The leases typically run for an initial period of 2 to 5 years.
18. INTEREST IN ASSOCIATE
|
|
|
|
| 2021 |
| 2020 |
|
|
|
|
|
| £ |
| £ |
|
|
|
|
|
|
|
|
|
|
Cost of unlisted investment in associate |
|
|
|
| 5 |
| - |
|
|
|
|
|
|
|
|
|
|
Notes:
Details of the Company's associate, which are accounted for using the equity method in the financial statements, at the end of the reporting period, are as follows:
| Place of | Issued and | Proportion |
| Proportion |
|
|
|
| establishment | paid-up | of ownership |
| of voting |
| Principal |
|
Name of associate | and operation | capital | interest |
| power held |
| activity |
|
|
|
|
|
|
|
|
|
|
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 |
|
| £ |
| £ |
|
|
|
|
|
|
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: £nil) on slow-moving inventories.
Inventories write-off of £32,787 (2020: £nil) was recorded for the year.
21. TRADE AND OTHER RECEIVABLES
| 2021 |
| 2020 |
|
| £ |
| £ |
|
|
|
|
|
|
Trade receivables | 403,230 |
| 634,931 |
|
Less: allowance for doubtful debts | (59,319) |
| (66,024) |
|
|
|
|
|
|
Trade receivables, net | 343,911 |
| 568,907 |
|
Other receivables | 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 |
|
| £ |
| £ |
|
|
|
|
|
|
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 |
|
| £ |
| £ |
|
|
|
|
|
|
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:
| 2021 |
| 2020 |
| ||||||||
| Expected loss rate |
| Gross carrying amount |
| Loss allowance |
| Expected loss rate |
| Gross carrying amount |
| Loss allowance |
|
| % |
| £ |
| £ |
| % |
| £ |
| £ |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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 £284,072 (2020: £406,007) 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 |
|
| £ |
| £ |
|
|
|
|
|
|
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 2021, the gross amount of contract assets was £8,530,832 (2020: £6,344,943) and the provision of impairment was £91,344 (2020: £101,667).
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:
| 2021 |
| 2020 |
| ||||||||
| Expected loss rate |
| Gross carrying amount |
| Loss allowance |
| Expected loss rate |
| Gross carrying amount |
| Loss allowance |
|
| % |
| £ |
| £ |
| % |
| £ |
| £ |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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 |
|
| £ |
| £ |
|
|
|
|
|
|
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 |
|
| £ |
| £ |
|
|
|
|
|
|
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 £301,052 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 |
|
| £ |
| £ |
|
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 |
|
| £ |
| £ |
|
|
|
|
|
|
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 £1,316,446 (2020: £956,616).
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 |
| ||||
| minimum lease payments |
| lease payments |
| ||||
| 2021 |
| 2020 |
| 2021 |
| 2020 |
|
| £ |
| £ |
| £ |
| £ |
|
|
|
|
|
|
|
|
|
|
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 |
|
|
|
|
|
|
|
|
|
|
| 64,883 |
| 284,165 |
| 68,020 |
| 294,475 |
|
Less: Future finance charges |
|
|
|
| (3,137) |
| (10,310) |
|
|
|
|
|
|
|
|
|
|
Present value of lease obligation |
|
|
|
| 64,883 |
| 284,165 |
|
27. BANK BORROWINGS
| 2021 |
| 2020 |
|
| £ |
| £ |
|
|
|
|
|
|
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 |
|
| £ |
| £ |
|
Issued and fully paid: |
|
|
|
|
383,677,323 ordinary shares 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.
Saved 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 |
|
| £ |
| £ |
|
|
|
|
|
|
Salaries, bonus and allowances | 320,660 |
| 560,115 |
|
The remuneration of key management personnel comprises the remuneration of Executive Directors and key executives.
Executive Directors include the Executive Chairman, Chief Executive Officer and Finance Director of the Company. The remuneration of the Executive Directors 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 Remuneration Committee and the Directors' remuneration is provided in the Remuneration Report and the Report on Corporate Governance to the Annual Report and note 11 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 2021, there are balances of £284,072 (2020: £406,007) due from Mr. Stephen Sin Mo KOO respectively, a Director of the Company, which are unsecured, interest-free and repayable on demand (Notes 21).
(b) At 31 March 2021, there is a payable balance of £393,074 (2020: £437,500) due to a shareholder, Univision Holdings Limited, which is unsecured, interest-free and repayable after 12 months (Note 24).
(c) At 31 March 2021, there are receivable balances of £2,842,805 (2020: £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 company |
| Bank borrowings |
| Lease liabilities |
| Total |
|
| £ |
| £ |
| £ |
| £ |
|
|
|
|
|
|
|
|
|
|
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 |
|
| £ |
| £ |
|
Within: |
|
|
|
|
Operating cash flows | 86,680 |
| 54,411 |
|
Financing cash flows | 184,473 |
| 184,738 |
|
|
|
|
|
|
| 271,153 |
| 239,149 |
|
These amounts relate to the following:
| 2021 |
| 2020 |
|
| £ |
| £ |
|
|
|
|
|
|
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 £2,433,318 (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 2021, the facilities were utilised to the extent of £1,272,233.
(b) The revolving term facilities amounted to £1,403,837 (equivalent to HK$15,000,000) were secured by floating charges over the bills receivable from the Company's major customer. At 31 March 2021, no facilities were utilised.
(c) The revolving term facilities amounted to £613,184 (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 £561,535.
(d) The straight line loans facilities amounted to £842,302 (equivalent to HK$9,000,000) were secured by the life insurance policy of the Company. At 31 March 2021, 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 £2,187,500 (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 £1,272,863.
(b) The revolving term facilities amounted to £2,604,167 (equivalent to HK$25,000,000) 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 facilities amounted to £682,486 (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 £2,083,333 (equivalent to HK$20,000,000) were secured by a charge over deposits limited to £625,000 (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 £301,052 (equivalent to HK$2,890,100) were secured by a charge over a fixed deposit of £301,052 (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 £142,189 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$2.5million. HSBC has provided a long-term loan of approximately HK$7.1million 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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