TIDMUVEL
RNS Number : 0938A
UniVision Engineering Ltd
19 May 2023
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: 19 May 2023
UniVision Engineering Limited
("UniVision" or the "Company")
Final Results for the year ended 31 March 2022
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 2022.
The Annual General Meeting will be held at UniVision Engineering
Limited, Unit 201, 2/F., Sunbeam Centre, 27 Shing Yip Street, Kwun
Tong, Kowloon, Hong Kong, on 9 June 2023 at 5:00 p.m.
The full Annual Report and Notice of AGM will shortly be posted
to shareholders and be made available on the Company's website,
www.uvel.com .
Highlights:-
-- Turnover decreased by 64.2% to GBP3.9m (2021: GBP10.9m);
-- Loss before income tax GBP10.27m (2021: profit GBP563K);
-- Cash flow used in operations GBP518K (2021: generated GBP34K);
-- Total Equity attributable to shareholders: negative GBP1.8m (2021: GBP8.2m);
-- Current ratio 0.6 (2021: 1.6); and
-- Loss per share 2.68p (2021: earning 0.15p)
For further information visit www.uvel.com or contact :
UniVision Engineering Limited Tel: +852 2389 3256
Stephen Koo, Executive Chairman www.uvel.com
Yip Tak Chan, Chief Executive Officer
SPARK Advisory Partners Limited Tel: +44 (0)20 3368 3551
(Nominated Adviser)
Mark Brady / Neil Baldwin www. sparkadvisorypartners.com
SI Capital Limited Tel: +44 (0)1483 413500
(Broker) www.sicapital.co.uk
Nick Emerson
CHAIRMAN'S STATEMENT
I am pleased to report the Company's audited results for the
financial year ended 31 March 2022.
Turnover for the year decreased by 64.2% (underlying rate) to
GBP3.9 m (2021: GBP 10.9m ). This decline was mainly due to the
expiry of several maintenance contracts and the delay of several
project delivery.
Loss for the year is GBP10.27m (2021: Profit GBP563K).
In the remainder of this report, I shall go into further details
relating to the major contract with MTRC, w inding up petitions and
dismissal, other settlements, financial review , business review
and end with prospect statement .
THE MAJOR CONTRACT WITH MTRC
A s announced on 17 June 2022, the Company has received formal
notice of termination of its contract with MTR Corporation Ltd
("MTRC"), for the replacement works of the CCTV systems for MTRC's
railway lines, for alleged breach of contract. The Company contests
this and continues to negotiate with MTRC to resolve the
matter.
This original MTRC contract was awarded to the Company five
years ago, in May 2017, with an expected completion date of
November 2023, but with subsequent contract add-ons this had been
expected run until July 2024.
Over the period to date the Contract has represented a
step-change to the Company's long-established business and
termination of the contract would represent a significant loss of
future revenue and profitability for the Company. However, the
Company would be able to re-deploy resources from this contract to
other projects to mitigate this reduction. The termination of the
MTRC contract wa s effective from 20 June 2022. Whilst the
termination of the MTRC contract occurred after the year end, the
certification of work completed, invoicing and approval for work
completed prior to the year end, which would normally take some
months to finalise in the normal course of events, is taking longer
given the termination of the contract and the need for both parties
to agree a final position.
Up to the financial year ended 31 M arch 2022 and the date of
termination , UniVision has invoiced a total amount of HK$207m .
The gross valuation of certified works on the Major Contract was
HK$226.5m as at 31 January 2022.
The Company has worked out and quantified the unbilled work done
and equipment for final account with MTRC including equipment, work
done, testing in progress, system development etc, . As per our
meeting with the MTRC on 21 November 2022, i t requires to be
verified by joint inspection performed by both parties before the
final account is concluded.
T he Company has called for meetings with MTRC to (i) collect
the retention amount around HK$19.5m, which was the 10% retention
money kept by MTRC; and (ii) clarify and quantify the unbilled work
done including equipment, work done, testing in progress, system
development and etc, . The final position is to be verified by
joint inspection performed by the Company and MTRC.
WINDING UP PETITIONS AND DISMISSAL
A s announced on 4 January 2022, our Company has received a
petition that has been brought by one of its sub-contractors,
namely, T&P Solutions Limited ("T&P"), formerly known as
T&P Construction Company Limited, in the High Court in Hong
Kong; alleging outstanding debts owed by the Company of
HK$5,955,760 (approximately GBP565,280) in relation to contractual
agreements between the Company and T&P. T&P has presented
the petition ("the Petition") for the Company to be wound up
pursuant to certain s ections of the Companies (Winding Up and
Miscellaneous Provisions) Ordinance in Hong Kong. The Company
intends to defend and oppose the Petition. Further, the Company has
a cross claim against T&P, inter alia, for breach of contract
and non-performance and it intends to claim damages for the same.
The first hearing has been conducted on 2 March 2022 that the
Company defended and opposed the Petition. A s announced on 11 May
2022, the Court hearing in respect of the Winding up petition wa s
adjourned to be heard on 18 October 2022.
The petition has been dismissed by the High Court in Hong Kong
on 18 October 2022. Costs have been awarded to UniVision on an
indemnity basis.
A s announced on 13 December 2022, our Company has received
another petition that has been brought by one of its equipment
suppliers for the contract with MTR Corporation, namely, Synnex
Technology International (HK) Limited ("Synnex"), in the High Court
in Hong Kong. The Petition alleges outstanding debts owed by the
Company of HK$12,945,834 (approximately GBP1.358 million) to Synnex
in respect of equipment supplied to the Company. Synnex has
presented the Petition for the Company to be wound up pursuant to
the provisions of the Companies (Winding Up and Miscellaneous
Provisions) Ordinance (Cap.32) in Hong Kong. The date of the Court
hearing was set for 8 February 2023.
The Company has reached a settlement agreement with Synnex. A s
announced on 16 February 2023, the petition has been dismissed by
the High Court in Hong Kong on 13 February 2023.
OTHER SETTLEMENTS
The Company has reached a settlement agreement with General
Resources Company (HK) Limited on the repayment of sub-contracting
fee amounting to approximately HK$1,163,000 by instalments in March
2023.
In addition, the Company has received a demand for indemnity of
HK$11,68l,430.27 by Berkshire Hathaway Specialty Insurance Company
("Berkshire Insurance") in terms of a surety bond facility granted
in 2017. The Company is in the final stage of the negotiation with
Berkshire Insurance to settle this amount by stage payment.
KML Engineering Limited, one of the Company's subcontractors,
claims a total amount of HK$4,114,658.81 together with interest and
legal costs in these proceedings. The Company has filed a partial
admission in the amount of HK$2,096,530.70 which has been accepted
by KML Engineering Limited in satisfaction of its whole claim. As a
result, Judgment has been entered on 6 March 2023 against the
Company respecting the amount of HK$2,096,530.70 in 3 monthly
instalments payable on the 1st day of each calendar month starting
from 1 April 2023 with fixed costs at HK$11,045.00.
OTHER SETTLEMENTS
On 24 April 2023 upon application of E-Star Engineering Company,
one of the Company's subcontractors, the Court has made an Order
for E-Star Engineering Company to enter summary judgment against
the Company as the Defendant in these proceedings regarding the
principal sum of HK$1,503,276.50 with interest (whereas interest
accrued as of 24 April 2023 is in the sum of HK$302,870.04) against
part of the claims with legal costs in respect of such application
to be paid by the Company to E-Star Engineering Company summarily
assessed at HK$90,673. By the same Order, the Company has been
granted unconditional leave to defend against E-Star Engineering
Company residual claim of HK$213,360.00 (the "Residual Claim").
These proceedings are now pending the filing of E-Star Engineering
Company's Amended Statement of Claim as regards the Residual Claim.
Before close of pleadings, it is uncertain as to the probable
outcome in respect of the Residual Claim. Similarly, it may be
improbable to give an estimate of the ultimate liability or amount
to be realised as to the Residual Claim at this stage.
Hang Cheong Engineering Limited, one of the Company's
subcontractors, claims a total amount of HK$806,400.00 together
with interest pursuant to ss.49 and 50 of the District Court
Ordinance (Cap.336) and legal costs. The Company has filed an
admission on the full amount of HK$806,400.00 as claimed by Hang
Cheong Engineering Limited. T he sum of HK$806,400.00 together with
interest thereon at the rate of (i) 8% per annum from 28 December
2022 to 31 December 2022 and (ii) 8.169% per annum from 1 January
2023 to the date of the Judgment and thereafter at judgment rate
until payment and fixed costs at HK$7,130.00.
DISPUTE WITH DIMENSION DATA
As previously announced, t he Company received a writ of summons
(Statement of Claim), Hong Kong High Court Action No. 2090 of 2020,
from the solicitors of Dimension Data China Hong Kong Limit ed ("
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, on the other
hand, regards the claim by alleging wrongful breach and thus
repudiation of the said sub-contract by Dimension Data. The Company
believes it has a counterclaim 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.
Both parties had engaged a mediator for the statutory mediation
on 17 August 2022. No agreement nor settlement was made in the
mediation. As out-of-court settlement between the parties is not
forthcoming, our solicitors has prepared the factual witness
statements filing to the Court. Both parties have exchanged the
witness statements to each other. These proceedings have entered
the stage of case management towards trial
MATERIAL UNCERTAINTY RELATED TO GOING CONCERN
The Company reported a loss of GBP10,265,495 for the year ended
31 March 2022. As at 31 March 2022, the Company's equity
attributable to the owners of the Company amounted to a deficit of
GBP1,808,945 and its current liabilities exceeded its current
assets by GBP4,030,769. The Company's bank borrowings were
collateralised by its deposits placed for life insurance policies
of GBP1,865,308. The Company had total unrestricted cash and bank
balances of GBP2,750. These conditions indicate that a material
uncertainty exists that may cast a significant doubt on the
Company's ability to continue as a going concern.
The Company is considering and negotiating a number of financing
measures to improve the Company's liquidity and financial position,
including, but not limited to, the following:
-- In October 2022, the Company obtained a loan facility of
HK$12 million from a third party for short-term financing
purpose;
-- A potential investor has agreed to provide financial support
to the Company to maintain its normal operation. In addition, the
potential investor has provided a standby unconditional facility of
HK$20 million to the Company of which the Company will be able to
drawdown the facility to fulfil its financial needs;
-- The Company has been actively negotiating with the bank on its banking facilities;
-- The winding-up petitions against the Company were dismissed
subsequently in year 2023;
-- The Company is taking measures to tighten controls over various costs; and
-- With the financial assistance from the potential investor,
the Company has resumed a part of its business. The Company will
continue to actively enhance its market position by expanding its
customer base with the aim to attain profitable and positive cash
flow operations in the coming financial year.
The board of the Company have reviewed the Company's cash flow
projections prepared by management, which cover a period of not
less than twelve months from the date of this report. The board is
of the opinion that, taking into account the abovementioned plans
and measures, the Company will have sufficient working capital to
finance its operations and to meet its financial obligations as and
when they fall due within the next twelve months. Accordingly, the
board is satisfied that it is appropriate to prepare the financial
statements on a going concern basis.
FINANCIAL REVIEW
Highlights of Statement of Profit or Loss and Other
Comprehensive Income are:
-- Revenue decreased by 64.2% to GBP3.9m in the reporting period
(2021: GBP 10.9 m). This revenue decrease came mainly from the
expiry of several maintenance contracts and the delay of several
project delivery.
-- The r evenue from c onstruction contracts is the Company's
largest business segment, represented 87% of the total income
(2021: 82.7% ) Revenue from maintenance contracts represented 12%
of the total income (2021: 15% ) for the Company.
-- Contribution from maintenance contracts decreased by 71%,
compared to the prior year. The reduction in maintenance contracts
was mainly due to the maintenance contracts with MTRC was ended on
31 March 2021.
-- The gross loss was at GBP2.9m in the reporting year (2021:
gross profit of GBP 2 m). The main reason for changing from gross
profit to gross loss was because of the early termination of the
MTRC contract and resulting the unbilled work done and equipment
with MTRC.
-- Significant impairment loss and provision for this financial
year included the following items:
1. Impairment loss on contract assets of GBP0.54m (HK$5.8m)
2. Impairment loss on amount due from related companies of GBP2m (HK$21.3m)
3. Allowances of obsolete inventories of GBP2.2m (HK$23.4m)
4. Provision for indemnity claimed from Berkshire Insurance of GBP1.1m (HK$11.7m)
-- Administrative expenses decreased to GBP1.4 m (2021: GBP
1.73m). The decrease was caused mainly by reduction in number of
staff.
-- Loss before tax GBP10.27m in the reporting period (2021:
profit: GBP563K) was resulted from the s ignificant impairment loss
and provision as stated above.
-- The loss attributable to the shareholders of the Company also
increased to GBP10.27m for the financial year ended 31 March 2022,
compared to profit GBP563K for the last financial year.
-- As a result of loss attributable to shareholders, basic loss
per share was 2.68p for this reporting financial year (2021:
earning 0.15 p).
On the Statement of Financial Position , the highlights are:
-- Contract assets decreased to GBP2.9m as at 31 March 20 22 ,
from GBP8.4m as at 31 March 2021, mainly due to the early
termination of the Major Contract with MTRC.
-- Cash and bank balances stood at GBP323 K as at 31 March 20 22 (2021: GBP284K).
-- Trade and other payables increased to GBP6.6m as at 31 March
20 22 , from GBP5.2m as at 31 March 2021, mainly caused by slow
settlement to suppliers.
-- Deposits placed for two life insurance policies of GBP1.87m
as at 31 March 20 22, which are the value of the keyman insurance
plans placed as security for banking facilities provided by a
banker to the Company.
-- Bank borrowings of GBP2.1m as at 31 March 20 22 (2021:
GBP562K) represented the loan provided by a banker and pledged by
the insurance policy as above mentioned and other term loans.
On the Statement of Cash Flows, the highlights are:
-- The Company had negative cash flows from operations of GBP198
K in the reporting year (2021: positive GBP34K ).
-- The Company raised the new borrowings from the bank of
GBP2.47m f or financing the new keyman insurance of GBP939 K and
business operations.
-- Repayment of bank loans of GBP964 K.
During the year under review, a relative strengthening in the
HK$ at the year-end has led to a 3.7% depreciation in the GBP
reporting amount in the Statement of Financial Position . It led to
the non-cash other comprehensive loss of GBP5 K (2021: GBP902 K )
on exchange differences arising on translation of foreign
operations.
All figures in the above require to be adjusted for comparison
purposes. All comparative percentages stated in the Chairman's
Statement are adjusted to show the underlying change (net of
translation effect on foreign exchange).
BUSINESS REVIEW
I will include the following topics in this section: our
addressable market segments, business environment in which we
operate, our market segment, business environment, customer base,
and potential investors .
Addressable Market Segments
According to the M arket Research Report by ReportLinker :
Global Surveillance Camera Market: Analysis By System Type, By
Technology By Region Size and Trends with Impact of COVID-19 and
Forecast up to 2027, the video surveillance systems market is
expected to grow at a CAGR of 8.38% over the forecast period 2022
to 2027.
The main drivers for the growth are the rise in urban
population, increasing crime threats, growth in traffic management,
technological improvement and rising numbers of ATMs. Asia Pacific
Region held the major share of above 40% in the market. This market
has grown significantly due to its increasing use of security and
law enforcement, to reduce the crime rate in their countries. The
Board believes that our addressable market segment will undergo a
steady growth period
The use of video s urveillance in business is growing
significantly due to the increasing need for physical security, the
growth in adoption of AI, coupled with the use of cloud-based
services for centralized data. The growth of the video s
urveillance market is expected to be fuelled by the introduction of
new IP-based digital technologies, to detect and prevent
undesirable behaviour, such as shoplifting, thefts, vandalism, and
terror attacks. Alarm notification is the best way that the
security cameras can function in prevention and reduction of
crime.
The Board regard the CCTV surveillance market is growing with
the increasing demand for digital and intelligent video products.
The Company anticipates more business opportunities in government
infrastructure and public security projects. There is also growing
demand for wireless system such as 5G network for video s
urveillance to enhance public safety. The CCTV industry is further
enhanced with an integration of Video Analysis and Cloud Technology
for large database storage.
The new trends in this market, such as integration of artificial
intelligence systems in surveillance camera, adoption of IoT based
surveillance systems, emergence of video surveillance as a service
(VSaaS), etc. IoT systems are deployed in various sectors. The
growing adoption of IoT based surveillance systems provides the
growth opportunity to the surveillance camera market.
For the effect of COVID-19 pandemic, a wide range of
surveillance cameras are used to be an effective way to serve the
purpose of social distancing and keeping a check on COVID-19
patients. Thermal surveillance is initiated to check the
temperature to avoid the spread of COVID-19 infections.
Business Environment
COVID-19 has affected the business environment in Hong Kong in
last year. It caused adverse effects on the Hong Kong economy.
Nevertheless, the effect of COVID-19 pandemic, a wide range of
surveillance cameras are used to be an effective way to serve the
purpose of social distancing and keeping a check on COVID-19
patients. Thermal surveillance is initiated to check the
temperature to avoid the spread of COVID-19 infections.
Even though the Major Contract with MTRC was terminated, other
job contracts and orders are still in progress. With the
competitive advantage of our project experience in CCTV and network
systems, the Company will expect more new projects from MTRC.
The technology of v ideo analytics, such as facial recognition ,
is being enhanced rapidly and UniVision has actively participated
in this market. The Company got the experience in t he contract for
supply and installation of the video analytic monitoring system at
prisons. The video analytic solution of Smart Prisons is designed
to enhance the effectiveness of movement detection in confined
areas.
Customer base
MTRC remains the Company's largest customer this financial year.
In addition, Electrical and Mechanical Services Department
("EMSD"), Hong Kong Police Force ("HKPC") and Correctional Services
Department ("CSD") of the Hong Kong Government are other sources of
the Company's customer base.
To avoid the concentration of customers, the Company aims to
diversify its customer base particularly to the commercial and
private sector, such as sizeable multinational private
enterprises.
Potential Investors
As announced on 29 September 2022, the Company is in
negotiations with potential investors who are looking to make a
substantial investment in the Company. Our Board regards that with
the support of the potential investors, the Company will strength
its financial and technical position to meet the challenge.
PROSPECTS
The Government has announced new infrastructure projects
including the new railway lines and urban development in northern
territories. These projects will include large CCTV system for
safety protection. With the technical expertise and project
experience in s urveillance industry, the Company has the
competitive advantage to tender for these projects.
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 support
in the critical period.
MR. STEPHEN SIN MO KOO
EXECUTIVE CHAIRMAN
19 May 20 23
STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME
For the year ended 31 March 202 2
Note
s 202 2 20 21
GBP GBP
Revenue 7(a) 3,962,568 10,945,287
(8,986,
Cost of revenue 10 (6,854,990) 278 )
------------ -----------
Gross ( loss)/ profit (2,892,422) 1,959, 009
422,5 6
Other income 8 74,545 0
Other gains and losses, net 9 6,500 (33,476)
Impairment loss on assets 10 (4,756,101) -
Provision for indemnity claimed from
an insurance company (1,100,185) -
Selling and d istribution expenses 10 (3,299) (4,570)
Administrative expenses 10 (1,447,825) (1,706,160)
(74,0 09
Finance cost s 12 (146,708) )
------------ -----------
(Loss)/profit before income tax (10,265,495) 563,3 54
Income tax 13 - -
------------ -----------
(Loss)/profit for the year (10,265,495) 563,3 54
============ ===========
Other comprehensive loss, net of tax
Item that may be reclassified subsequently
to profit or loss:
Exchange differences on translat ion
of financial statements (4,955) (901,758)
------------ -----------
Total comprehensive loss for the year (10,270,450) (338,404)
============ ===========
(Loss)/earnings per share - Basic 1
and diluted 4 (2.68p) 0.15p
============ ===========
STATEMENT OF FINANCIAL POSITION
As at 31 March 2022
Note 2022 2021
s
GBP GBP
ASSETS
Non-current assets
Plant and equipment 16 133,462 99,014
Right-of-use assets 17 327,484 61,092
Interest in an associate 18 5 5
Amounts due from related companies 30 - 2,842,805
Deposits placed for life insurance
policies 19 1,865,308 862,476
Prepayments 30,818 48,981
----------- ----------
Total non-current assets 2,357,077 3,914,373
----------- ----------
Current assets
Inventories 20 2,364,924 1,584,096
Trade and other receivable s 21 944,095 1,708,489
Contract assets 22 2,934,194 8,439,488
Cash and bank balances 23 323,173 284,354
----------- ----------
Total current assets 6,566,386 12,016,427
----------- ----------
Total assets 8,923,463 15,930,800
=========== ==========
LIABILITIES AND EQUITY
Current liabilities
Trade and other payable s 24 6,643,457 5,179,172
Contract liabilities 25 1,610,506 1,572,245
Bank borrowings 27 2,141,675 561,535
Lease liabilities 26 201,517 42,959
----------- ----------
Total current liabilities 10,597,155 7,355,911
----------- ----------
Non-current liabilities
2
Amount due to a related company 4 - 393,074
Lease liabilities 26 135,253 21,924
----------- ----------
Total non-current liabilities 135,253 414,998
----------- ----------
Total liabilities 10,732,408 7,770,909
----------- ----------
Capital and reserves
Share capital 28 3,890,257 3,890,257
Reserves (5,699,202) 4,269,634
----------- ----------
Total equity (1,808,945) 8,159,891
----------- ----------
Total liabilities and equity 8,923,463 15,930,800
=========== ==========
STATEMENT OF CHANGES IN EQUITY
For the year ended 31 March 202 2
Special Special
capital capital
Share Retained reserve reserve Translation
capital earnings "A" "B" reserve Total
GBP GBP GBP GBP GBP GBP
(Note (Note
1) 2)
Balance at 1
April 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) (901,758)
--------- ------------ -------- -------- ----------- -----------------------------
Total
comprehensive
loss - 563,354 - - (901,758) (338,404)
--------- ------------ -------- -------- ----------- -----------------------------
Dividend paid in
respect
of year 2020
(Note 15) - (207,843) - - - (207,843)
--------- ------------ -------- -------- ----------- -----------------------------
Total
transactions
with
owners,
recognised
directly
in equity - (207,843) - - - (207,843)
--------- ------------ -------- -------- ----------- -----------------------------
Balance at 31
March 20
21 3,890,257 2,805,847 155,876 143,439 1,164,472 8,159,891
========= ============ ======== ======== =========== =============================
Loss for the year - (10,265,495) - - - (10,265,495)
Other
comprehensive
loss,
net of tax
Exchange
difference
arising
on translation
of financial
statements - - - - (4,955) (4,955)
--------- ------------ -------- -------- ----------- -----------------------------
Total
comprehensive
loss - (10,265,495) - - (4,955) (10,270,450)
--------- ------------ -------- -------- ----------- -----------------------------
Dividend paid in
respect
of year 2021
(Note 15) - (93,952) - - - (93,952)
Capital
contribution
from a
shareholder - 395,566 - - - 395,566
--------- ------------ -------- -------- ----------- -----------------------------
Total
transactions
with
owners,
recognised
directly
in equity - 301,614 - - - 301,614
--------- ------------ -------- -------- ----------- -----------------------------
Balance at 31
March
2022 3,890,257 (7,158,034) 155,876 143,439 1,159,517 (1,808,945)
========= ============ ======== ======== =========== =============================
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 2022 and 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.
STATEMENT OF CASH FLOWS
For the year ended 31 March 202 2
Notes 202 2 20 21
GBP GBP
Cash flows from operating activities
(Loss)/profit before income tax (10,265,495) 563,354
Adjustments for:
Impairment loss on assets 10 4,756,101 -
Interest expense on bills payable
and factoring 12 64,612 49,479
Interest expense on bank borrowings 12 40,896 12,805
Interest expense on bank overdraft 12 26,310 4,682
Interest on lease liabilities 12 14,890 7,043
Interest income 8 (73,621) (26,773)
Depreciation of plant and equipment 16 57,177 55,607
Depreciation of right-of-use assets 17 164,630 173,933
Inventories written-off 9 - 32,787
Gain on lease modification - (122)
Gain on disposal of plant and equipment 9 (3,202) -
------------ -----------
Operating cash flows before working
capital changes (5,217,702) 872,795
Changes in operating assets and liabilities:
Prepayments and deposits 19,439 (17,191)
I nventories (2,904,670) (721,932)
T rade and other receivable s 35 740,532 640,552
Contract assets 5,107,048 (2,978,477)
A mounts due from related companies 856,397 (5,959)
Restricted bank deposits (320,423) -
T rade and other payables 1,223,289 1,834,113
Contract liabilities (22,169) 409,884
------------ -----------
Net cash (used in)/generated from
operating activities (518,259) 33,785
------------ -----------
Cash flows from investing activities
Interest received 8 73,621 26,773
Purchase of plant and equipment (91,147) (32,048)
Investment in an associate - (5)
Proceeds from disposal of plant and
equipment 7,534 -
Deposits placed for life insurance
policies (938,917) -
------------ -----------
Net cash used in investing activities (948,909) (5,280)
------------ -----------
Cash flows from financing activities
Bank i nterest paid 12 (131,818) (66,966)
Dividend paid to shareholders of the
Company 15, 35 (29,677) (65,653)
New bank loan s 31 2,473,948 -
Repayment of bank loans 31 (964,474) (54,355)
Capital element of lease liabilities
paid 31 (158,804) (177,430)
Interest element of lease liabilities
paid 31 (14,890) (7,043)
------------ -----------
Net cash generated from/(used in)
financing activities 1,174,285 (371,447)
------------ -----------
Net decrease in cash and cash equivalents (292,883) (342,942)
Cash and cash equivalents at beginning
of year 284,354 679,186
Effect of foreign exchange rate changes
, net 11,279 (51,890)
------------ -----------
Cash and cash equivalents at end
of year 23 2,750 284,354
============ ===========
1. GENERAL INFORMATION
UniVision Engineering Limited (the "Company") is incorporated in
Hong Kong with limited liability and its shares are listed on the A
IM of the London Stock Exchange. The address of the Company's
registered office is Unit 201, 2/F., Sunbeam Centre, 27 Shing Yip
Street, Kwun Tong, Kowloon, Hong Kong.
These financial statements are presented in Sterling Pound
("GBP"), which is the presentation currency of the Company.
The Company is mainly engaged in the supply, design,
installation and maintenance of closed circuit television and
surveillance systems and the sale of security system related
products in Hong Kong.
2 . B ASIS OF PREPARATION
Compliance with International Financial Reporting Standards
These financial statements have been prepared in accordance with
International Financial Reporting Standards ("IFRS s ") issued by
the International Accounting Standards Board. The measurement basis
used in the preparation of these financial statements is the
historical cost basis.
The preparation of financial statements in conformity with IFRS
s requires management to make judgements, estimates and assumptions
that affect the application of policies and reported amounts of
assets, liabilities, income and expenses. The estimates and
associated assumptions are based on historical experience and
various other factors that are believed to be reasonable under the
circumstances, the results of which form the basis of making the
judgements about carrying values of assets and liabilities that are
not readily apparent from other sources. Actual results may differ
from these estimates.
The estimates and underlying assumptions are reviewed on an
ongoing basis. Revisions to accounting estimates are recognised in
the period in which the estimate is revised if the revision affects
only that period, or in the period of the revision and future
periods if the revision affects both current and future periods.
Judgements made by management in the application of I FRS s that
have significant effect on the financial statements and key sources
of estimation uncertainty are discussed in note 5 to the financial
statements.
Adoption of going concern basis
The Company reported a loss of GBP10,265,495 for the year ended
31 March 2022. As at 31 March 2022, the Company's equity
attributable to the owners of the Company amounted to a deficit of
GBP1,808,945 and its current liabilities exceeded its current
assets by GBP4,030,769. The Company's bank borrowings were
collateralised by its deposits placed for life insurance policies
of GBP1,865,308 and accounts receivable of GBP381,812. The Company
had total unrestricted cash and bank balances of GBP2,750.
As disclosed in note 33 to the financial statements, the Company
was in breach of certain covenants in connection with its banking
facilities. Furthermore, as disclosed in note 34 to the financial
statements, the Company was the defendant of several litigations
during the year and subsequent to 31 March 2022. In June 2022, as
described in note 36 to the financial statements, the Company
received a formal notice of termination of its contract with MTR
Corporation Ltd ("MTRC") for the replacement works of the CCTV
System for MTRC's railway lines in Hong Kong, for alleged breach of
contract. The termination of MTRC contract represented a
significant loss of future revenue and profitability of the
Company.
The above conditions indicate the existence of material
uncertainties which cast significant doubt regarding the Company's
ability to continue as a going concern. In view of such
circumstances, management of the Company has given careful
consideration to the future liquidity and performance of the
Company and its available sources of financing in assessing whether
the Company will have sufficient financial resources to continue as
a going concern. Certain plans and measures have been or will be
taken by management to mitigate the Company's liquidity pressure
and to improve its cashflows which include, but are not limited to,
the following:
-- In October 2022, the Company obtained a loan of HK$12 million
from a third party for short-term financing purpose;
-- A potential investor has agreed to provide financial support
to the Company to maintain its normal operation. In addition, the
potential investor has provided a standby unconditional facility of
HK$20 million to the Company of which the Company will be able to
drawdown the facility to fulfil its financial needs;
-- The Company has been actively negotiating with the bank on its banking facilities;
-- The winding-up petitions against the Company (Note 34) were
dismissed subsequently in year 2023;
-- The Company is taking measures to tighten controls over various costs; and
-- With the financial assistance from the potential investor,
the Company has resumed a part of its business. The Company will
continue to actively enhance its market position by expanding its
customer base with the aim to attain profitable and positive cash
flow operations in the coming financial year.
The directors of the Company have reviewed the Company's cash
flow projections prepared by management, which cover a period of
not less than twelve months from the date of this report. The
directors are of the opinion that, taking into account the
abovementioned plans and measures, the Company will have sufficient
working capital to finance its operations and to meet its financial
obligations as and when they fall due within the next twelve
months. Accordingly, the directors are satisfied that it is
appropriate to prepare the financial statements on a going concern
basis.
Should the Company fail to achieve the abovementioned plans and
measures, it might not be able to continue to operate as a going
concern, and adjustments would have to be made to write down the
carrying value of the Company's assets to their recoverable
amounts, to provide for any further liabilities which might arise,
and to reclassify non-current assets and non-current liabilities as
current assets and current liabilities, respectively. The effects
of these adjustments have not been reflected in these financial
statements.
3. APPLICATION OF NEW AND REVISED IFRSs
(a) Initial application of new and revised IFRSs
In the current year, the Company initially applied the following
IFRSs:
Amendments to IFRS 16 COVID-19-Related Rent Concession
Amendments to IFRS 16 COVID-19-Related Rent Concessions
beyond 30 June 2021
Amendments to IAS 39, Interest Rate Benchmark Reform -
IFRS 4, Phase 2
IFRS 7, IFRS 9 and IFRS
16
The initial application of these amendments does not necessitate
material changes in the C ompany's accounting policies and
retrospective adjustments of the comparatives presented in these
financial statements.
(b) IFRSs in issue but not yet effective
The following IFRSs in issue at 31 March 202 2 have not been
applied in the preparation of these financial statements since they
were not yet effective for the annual period beginning on 1 April
20 21 :
IFRS 17 Insurance Contracts(1)
Amendments to IFRS 3 Definition of Business(1)
Amendments to I AS 16 Property, Plant and Equipment: Proceeds
before Intended Use(1)
Amendments to I AS 37 Onerous Contracts - Cost of Fulfilling
a Contract(1)
Annual Improvements Revised Conceptual Framework for
to I FRSs 2018-2020 Financial Reporting(1)
Cycle
Amendments to IAS 1 Classification of Liabilities as
Current or Non-current (2)
Amendments to IAS 8 Definition of Accounting Estimates
(2)
Amendments to IAS 12 Deferred tax related to Assets and
Liabilities arising from a Single
Transaction (2)
Amendments to I FRS Sale or Contribution of Assets between
10 and an Investor and its Associate or
I AS 28 Joint Venture (3)
(1) Effective for the Company's annual financial statements
beginning on 1 April 2022
(2) Effective for the Company's annual financial statements
beginning on 1 April 202 3
(3) Effective for the annual periods beginning on or after a
date to be determined
The Company is in the process of making an assessment of what
the impact of these amendments, new standards and interpretations
is expected to be in the period of initial application.
4. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
4.1 Segment reporting
An operating segment is a component of the Company that engages
in business activities from which it may earn revenue and incurs
expenses, including revenue and expenses that relate to
transactions with other components of the Company. Operating
segments are reported in a manner consistent with the internal
reporting provided to the chief operating decision-maker.
4.2 Foreign currency
Functional and presentation currency
Items included in the financial statements of the Company are
measured using the currency of the primary economic environment in
which the Company operates (the "functional currency"), which is
Hong Kong Dollar ("HK$"). These financial statements are presented
in Sterling Pound ("GBP"), which is the Company 's presentation
currency. As the Company is listed on the AIM, the directors
consider that this presentation is more useful for its current and
potential investors.
Transactions and balances
Foreign currency transactions are translated into the functional
currency using the exchange rates prevailing at the dates of the
transactions or valuation where items are re-measured. Foreign
exchange gains and losses resulting from the settlement of such
transactions and from the translation at year-end exchange rates of
monetary assets and liabilities denominated in foreign currencies
are recognised in profit or loss, except when deferred in other
comprehensive income as qualifying cash flow hedges and qualifying
net investment hedges.
4.3 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
Leasehold improvement 3 - 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
The Company recognises revenue when (or as) a performance
obligation is satisfied, i.e. when "control" of the goods or
services underlying the particular performance obligation is
transferred to the customer.
A performance obligation represents a good or service (or a
bundle of goods or services) that is distinct or a series of
distinct goods or services that are substantially the same.
Control is transferred over time and revenue is recognised over
time by reference to the progress towards complete satisfaction of
the relevant performance obligation if one of the following
criteria is met:
- the customer simultaneously receives and consumes the benefits
provided by the Company's performance as the Company performs;
- the Company's performance creates or enhances an asset that
the customer controls as the Company performs; or
- the Company's performance does not create an asset with an
alternative use to the Company and the Company has an enforceable
right to payment for performance completed to date.
Otherwise, revenue is recognised at a point in time when the
customer obtains control of the distinct good or service.
A contract asset represents the Company's right to consideration
in exchange for goods or services that the Company has transferred
to a customer that is not yet unconditional. It is assessed for
impairment in accordance with IFRS 9. In contrast, a receivable
represents the Company's unconditional right to consideration, i.e.
only the passage of time is required before payment of that
consideration is due.
A contract liability represents the Company's obligation to
transfer goods or services to a customer for which the Company has
received consideration (or an amount of consideration is due) from
the customer.
A contract asset and a contract liability relating to the same
contract are accounted for and presented on a net basis.
Contracts with multiple performance obligations (including
allocation of transaction price)
For contracts that contain more than one performance obligations
(provision of design and installation services and sales of goods),
the Company allocates the transaction price to each performance
obligation on a relative stand-alone selling price basis.
The stand-alone selling price of the distinct good or service
underlying each performance obligation is determined at contract
inception. It represents the price at which the Company would sell
a promised good or service separately to a customer. If a
stand-alone selling price is not directly observable, the Company
estimates it using appropriate techniques such that the transaction
price ultimately allocated to any performance obligation reflects
the amount of consideration to which the Company expects to be
entitled in exchange for transferring the promised goods or
services to the customer.
Over time revenue recognition: measurement of progress towards
complete satisfaction of a performance obligation
The progress towards complete satisfaction of a performance
obligation is measured based on input method, which is to recognise
revenue on the basis of the Company's efforts or inputs to the
satisfaction of a performance obligation relative to the total
expected inputs to the satisfaction of that performance obligation,
that best depicts the Company's performance in transferring control
of goods or services.
Service revenue from supply, design and installation of closed
circuit television and surveillance systems is recognised over time
by reference to the progress towards complete satisfaction of the
relevant performance obligation using input method as the Company's
performance does not create an asset with an alternative use to the
Company and the Company has an enforceable right to payment for
performance completed to date.
Service revenue from maintenance contracts is recognised over
time as the customer simultaneously receives and consumes the
benefits provided by the Company. Revenue is recognised on a
straight-line basis because the Company's inputs are expended
evenly throughout the performance period.
Trading income is recognised at a point in time when the
customer obtains control of the distinct good.
4.11 Leases
At inception of a contract, the Company assesses whether the
contract is, or contains, a lease. A contract is, or contains, a
lease if the contract conveys the right to control the use of an
identified asset for a period of time in exchange for
consideration. Control is conveyed where the customer has both the
right to direct the use of the identified asset and to obtain
substantially all of the economic benefits from that use.
As a lessee
Where the contract contains lease component(s) and non-lease
component(s), the Company has elected not to separate non-lease
components and accounts for each lease component and any associated
non-lease components as a single lease component for all
leases.
At the lease commencement date, the Company recognises a
right-of-use asset and a lease liability, except for short-term
leases that have a lease term of 12 months or less and leases of
low-value assets. When the Company enters into a lease in respect
of a low-value asset, the Company decides whether to capitalise the
lease on a lease-by-lease basis. The lease payments associated with
those leases which are not capitalised are recognised as an expense
on a systematic basis over the lease term.
Where the lease is capitalised, the lease liability is initially
recognised at the present value of the lease payments payable over
the lease term, discounted using the interest rate implicit in the
lease or, if that rate cannot be readily determined, using a
relevant incremental borrowing rate. After initial recognition, the
lease liability is measured at amortised cost and interest expense
is calculated using the effective interest method. Variable lease
payments that do not depend on an index or rate are not included in
the measurement of the lease liability and hence are charged to
profit or loss in the accounting period in which they are
incurred.
The right-of-use asset recognised when a lease is capitalised is
initially measured at cost, which comprises the initial amount of
the lease liability plus any lease payments made at or before the
commencement date, and any initial direct costs incurred. Where
applicable, the cost of the right-of-use assets also includes an
estimate of costs to dismantle and remove the underlying asset or
to restore the underlying asset or the site on which it is located,
discounted to their present value, less any lease incentives
received. The right-of-use asset is subsequently stated at cost
less accumulated depreciation (Note 17) and impairment losses.
The lease liability is remeasured when there is a change in
future lease payments arising from a change in an index or rate, or
there is a change in the Company's estimate of the amount expected
to be payable under a residual value guarantee, or there is a
change arising from the reassessment of whether the Company will be
reasonably certain to exercise a purchase, extension or termination
option. When the lease liability is remeasured in this way, a
corresponding adjustment is made to the carrying amount of the
right-of-use asset, or is recorded in profit or loss if the
carrying amount of the right-of-use asset has been reduced to
zero.
The Company presents right-of-use assets and lease liabilities
separately in the statement of financial position.
4.12 Employee benefits
Employee benefits comprise short-term employee benefits and
contributions to defined contribution retirement plans.
Short-term employee benefits, including salaries, annual
bonuses, paid annual leave and leave passage, contributions to
defined contribution retirement plans and the cost of non-monetary
benefits are accrued in the year in which the associated services
are rendered by employees. Where payment or settlement is deferred
and the effect would be material, these amounts are stated at their
present values.
Contributions to the defined contribution scheme are charged to
profit or loss when incurred.
4.13 Government grants
Government grants are recognised at their fair value where there
is reasonable assurance that the grant will be received and all
attaching conditions will be complied with. When the grant related
to an expense item, it is recognised as income on a systematic
basis over the periods that the costs, which it is intended to
compensate, are expensed.
Where the grant relates to an asset, the fair value is credited
to a deferred income account and is released to profit or loss over
the expected useful life of the relevant asset by equal annual
instalments or deducted from the carrying amount of the asset and
released to profit or loss by way of a reduced depreciation
charge.
4.14 Income tax
Income tax expense for the year comprises current and deferred
tax. Tax is recognised in the statement of profit or loss and other
comprehensive income , except to the extent that it relates to
items recognised in other comprehensive income or directly in
equity. In this case, the tax is also recognised in other
comprehensive income or directly in equity, respectively.
The current income tax charge is calculated on the basis of the
tax laws enacted or substantively enacted at the end of the
reporting period in the countries where the Company operates and
generates taxable income. Management periodically evaluates
positions taken in tax returns with respect to situations in which
applicable tax regulation is subject to interpretation. It
establishes provisions where appropriate on the basis of amounts
expected to be paid to the tax authorities.
Deferred income tax is recognised, using the liability method,
on temporary differences arising between the tax bases of assets
and liabilities and their carrying amounts in the financial
statements. However, deferred tax liabilities are not recognised if
they arise from the initial recognition of goodwill; deferred
income tax is not accounted for if it arises from initial
recognition of an asset or a liability in a transaction other than
a business combination that at the time of the transaction affects
neither accounting nor taxable profit or loss. Deferred income tax
is determined using tax rates (and laws) that have been enacted or
substantially enacted by the end of the reporting period and are
expected to apply when the related deferred income tax asset is
realised or the deferred income tax liability is settled.
Deferred income tax assets are recognised only to the extent
that it is probable that future taxable profit will be available
against which the temporary differences can be utilised.
Deferred income tax assets and liabilities are offset when there
is a legally enforceable right to offset current tax assets against
current tax liabilities and when the deferred income taxes assets
and liabilities relate to income taxes levied by the same taxation
authority on either the same taxable entity or different taxable
entities where there is an intention to settle the balances on a
net basis.
4.15 Provisions and contingent liabilities
Provisions are recognised for other liabilities of uncertain
timing or amount when the Company has a legal or constructive
obligation arising as a result of a past event, it is probable that
an outflow of economic benefits will be required to settle the
obligation and a reliable estimate can be made. Where the time
value of money is material, provisions are stated at the present
value of the expenditure expected to settle the obligation.
Where it is not probable that an outflow of economic benefits
will be required, or the amount cannot be estimated reliably, the
obligation is disclosed as a contingent liability, unless the
probability of outflow is remote. Possible obligations, whose
existence will only be confirmed by the occurrence or
non-occurrence of one or more future events are also disclosed as
contingent liabilities unless the probability of outflow is
remote.
4.16 Events after the reporting period
Events after the reporting period that provide additional
information about the Company at the end of the reporting period or
those that indicate the going concern assumption is not appropriate
are adjusting events and are reflected in the financial statements.
Events after the reporting period that are not adjusting events are
disclosed in the notes to the financial statements when
material.
4. 1 7 Related parties
A person or a close member of that person's family is related to
the Company if that person:
(i) has control or joint control over the Company;
(ii) has significant influence over the Company; or
(iii) is a member of the key management personnel of the Company or the Company's parent.
An entity is related to the Company if any of the following
conditions applies:
(i) The entity and the Company are members of the same group
(which means that each parent, subsidiary and fellow subsidiary is
related to the others).
(ii) One entity is an associate or joint venture of the other
entity (or an associate or joint venture of a member of a group of
which the other entity is a member).
(iii) Both entities are joint ventures of the same third party.
(iv) One entity is a joint venture of a third entity and the
other entity is an associate of the third entity.
(v) The entity is a post-employment benefit plan for the benefit
of employees of either the Company or an entity related to the
Company.
(vi) The entity is controlled or jointly controlled by a person
identified in the above paragraph.
(vii) A person identified in (i) of the above paragraph has
significant influence over the entity or is a member of the key
management personnel of the entity (or of a parent of the
entity).
(viii) The entity, or any member of a group of which it is a
part, provides key management personnel services to the Company or
to the Company's parent.
Close members of the family of a person are those family members
who may be expected to influence, or be influenced by, that person
in their dealings with the entity.
5. KEY SOURCES OF ESTIMATION UNCERTAINTY
The following are the key assumptions concerning the future and
other key sources of estimation uncertainty at the end of the
reporting period that have a significant risk of causing a material
adjustment to the carrying amounts of assets and liabilities within
the next financial year.
Going concern consideration
In the process of applying the Company's accounting policies,
apart from those involving estimations, management has prepared the
financial statements on the assumption that the Company will be
able to operate as a going concern in the coming year, which is a
critical judgement that has the most significant effect on the
amounts recognised in the financial statements. The assessment of
the going concern assumption involves making a judgement by the
Directors, at a particular point of time, about the future outcome
of events or conditions which are inherently uncertain. The
Directors consider that the Company has the capability to continue
as a going concern and the major events or conditions, which may
give rise to business risks, that individually or collectively may
cast significant doubt upon the going concern assumption are set
out in Note 2 to the financial statements.
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 2022, the Company has unused tax losses of
approximately GBP6,074,000 (2021: GBP1,452,000) available for
offset against future profits and no deferred tax asset has been
recognised thereon. In cases where there are future profits
generated to utilise the tax losses, a material deferred tax asset
may arise, which would be recognised in the statement of profit or
loss and other comprehensive income for the period in which such a
recognition takes place.
6. FINANCIAL INSTRUMENTS
(a) Categories of financial instruments
202 2 20 21
GBP GBP
Financial assets
Amounts due from related companies - 2,842,805
Deposits placed for life insurance
policies 1,865,308 862,476
Trade and other receivables 906,368 1,670,272
Cash and bank balances 323,173 284,354
========= =========
Financial liabilities
Trade and other payables 6,643,457 5,179,172
Amount due to a related company - 393,074
Bank borrowings 2,141,675 561,535
Lease liabilities 336,770 64,883
========= =========
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
------------------ ----------------
2022 2021 2022 2021
GBP GBP GBP GBP
Renminbi - 5,178 615,281 571,306
United States dollar 1,876,403 869,314 773,687 598,596
========= ======= ======= =======
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%
(2021: 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% (2021: 5%) change in foreign currency rates. "+" represents an
increase and "-" represents a decrease in the amount.
2022 2021
GBP GBP
Renminbi
Post-tax (loss)/profit for the year -/+ 30,764 +/- 28,306
========== ==========
United States dollar
Post-tax (loss)/profit for the year +/- 55,136 -/+ 13,536
========== ==========
Interest rate risk
The Company is exposed to fair value interest rate risk in
relation to its deposits placed for life insurance policies. 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 2021.
For the year ended 31 March 2022 , if interest rates had been 25
basis points higher/lower with all other variables held constant,
the Company's post-tax loss (2021: profit) for the year would
increase/decrease (2021: decrease / increase) by approximately GBP
6,400 (20 21 : GBP 4 ,600 ).
(ii) Credit risk
At 31 March 2022, the Company's maximum exposure to credit risk
in the event of the counterparties' failure to perform their
obligations in relation to each class of recognised financial
assets is the carrying amount of those assets as stated in the
statement of financial position .
In order to minimise credit risk, the management has a credit
policy in place and the exposure to these credit risks is monitored
on an ongoing basis. Credit evaluations of the counterparties'
financial position and conditions are performed on each and every
major debtor periodically.
The Company measures ECLs for trade and other receivables and
contract assets at an amount calculated using a provision matrix,
details of which are set out in notes 21 and 22 to the financial
statements. At the end of the reporting period, the Company had
concentrations of credit risk where trade and other receivables
balance of the Company's largest external customer exceed s 10% of
the total trade and other receivables at the end of the reporting
period.
The credit risk on deposits placed for life insurance policies
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 and potential investor to meet its
liquidity requirements in the short and longer term. At 31 March
202 2 , the Company's banking facilities amounted to GBP 4,440,541
(20 21 : GBP3,837,155) and the unused facilities were GBP1,873,458
(20 21 : GBP2,003,387).
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.
2022
Weighted
More More
average Within than than Carrying
1 year 2 years
effective 1 year but but Total amount
less less
interest or on than than undiscounted at 31
cash March
rate demand 2 years 5 years flows 2022
% GBP GBP GBP GBP GBP
Trade and other
payables 5 *6,643,457 - - 6,643,457 6,643,457
Bank borrowings 2.42 2,268,906 - - 2,268,906 2,141,675
Lease liabilities 5.125 214,087 127,956 10,695 352,738 336,770
--------- ------- ------- ------------ ---------
9,126,450 127,956 10,695 9,265,101 9,121,902
========= ======= ======= ============ =========
2021
----------------------------------------------------------------
More More
Weighted Within than than Carrying
1 year 2 years
average 1 year but but Total amount
less less
effective or on than than undiscounted at 31
interest cash March
rate demand 2 years 5 years flow 2021
% GBP GBP GBP GBP GBP
Trade and other
payables 5 *5,179,172 - - 5,179,172 5,179,172
Amount due to
a related company Nil - 393,074 - 393,074 393,074
Bank borrowings 1.61 562,280 - - 562,280 561,535
Lease liabilities 5.125 44,744 23,276 - 68,020 64,883
--------- ------- ------- ------------ ---------
6,202,54
5,786,196 416,350 - 6 6,198,664
========= ======= ======= ============ =========
* Represents interest rate applicable to bills payable. Other
items of trade and other payables are interest-free.
(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 2022, which is unchanged from 2021, 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 :
2022 2021
GBP GBP
Total liabilities 10,732,408 7,770,909
Cash and bank balances (323,173) (284,354)
----------- ---------
Net debt 10,409,235 7,486,555
=========== =========
Total equity (1,808,945) 8,159,891
=========== =========
Net debt-to-adjusted capital ratio N/A 92%
=========== =========
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 years ended 31 March
2022 and 2021.
(a) Segment revenues and results
The following is an analysis of the Company's revenue and
results by operating segment:
202 2 20 21
GBP GBP
Segment revenue by major products and
services
* Construction contracts 3,449,207 9,048,983
* Maintenance contracts 478,192 1,650,094
* Product sales 35,169 246,210
------------ ----------
Revenue from contracts with customers
and external customers 3,962,568 10,945,287
============ ==========
Segment (loss)/profit (10,118,787) 637,363
Finance costs (146,708) ( 74, 009)
------------ ----------
(Loss)/profit before income tax (10,265,495) 563,3 54
============ ==========
(b) Information about major customers
Revenue of approximately GBP1,818,042 (2021: GBP 8,622,281 ) is
derived from one external customer (2021: one external customer),
who contributed to 10% or more of the Company's revenue in 2022 and
2021.
8. OTHER INCOME
2022 2021
GBP GBP
Interest income 73,621 26,773
Government grants - Note - 392,936
Sundry income 924 2,851
------ -------
74,545 422,560
====== =======
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
2022 2021
GBP GBP
Foreign exchange gain/(loss), net 3,298 (689)
Gain on disposal of plant and equipment 3,202 -
Inventories written-off - (32,787)
6,500 (33,476)
===== ========
10. EXPENSES BY NATURE
(a) Cost of sales, selling and distribution, administrative expenses
2022 2021
GBP GBP
Cost of inventories recognised as expenses 2,869,723 5,975,575
Sub-contracting costs 2,036,477 1,341,994
Depreciation - Plant and equipment 57,177 55,607
Depreciation - Right-of-use assets 164,630 173,933
Selling and distribution cost 3,193 3,189
Short-term lease expenses 56,246 86,680
Other expenses 750,125 437,568
Staff costs, including directors' remuneration
--------- ----------
* Wages and salaries 2,249,025 2,494,170
* Pension scheme contributions 94,767 102,388
--------- ----------
2,343,792 2,596,558
Auditor's remuneration
* Audit services 24,751 25,904
--------- ----------
Total cost of sales, selling and distribution,
administrative expenses 8,306,114 10,697,008
========= ==========
(b) Impairment loss on assets
2022 2021
GBP GBP
Impairment loss on amounts due from
related companies 2,004,429 -
Impairment loss on contract assets 543,685 -
Allowance of obsolete inventories 2,207,987 -
Impairment loss on assets 4,756,101 -
========= ====
11. DIRECTORS' REMUNERATION
Directors' remuneration for the year is as follows:
Salaries, bonuses and allowances Pension scheme contributions 2022
GBP GBP GBP
Executive directors
Stephen Sin Mo KOO - - -
Peter Yip Tak CHAN 71,297 1,695 72,992
Edward Keung Hung LI 19,705 424 20,129
Danny Kwok Fai YIP 66,603 1,695 68,298
Ivan Chi Hung CHAN 59,900 1,695 61,595
-------------------------------- ---------------------------- -------
217,505 5,509 223,014
-------------------------------- ---------------------------- -------
Non-executive director s
Nicholas James LYTH 10,737 - 10,737
Ivor Colin SHRAGO 13,562 - 13,562
-------------------------------- ---------------------------- -------
24,299 - 24,299
-------------------------------- ---------------------------- -------
241,804 5,509 247,313
================================ ============================ =======
Messrs. Edward Keung Hung LI, Danny Kwok Fai YIP , Ivan Chi Hung
CHAN, Nicholas James LYTH and Ivor Colin SHRAGO resigned as the
Company's directors on 1 July 2021, 14 December 2022, 1 August
2022, 17 January 2022 and 23 November 2022 respectively .
Salaries, bonuses and allowances Pension scheme contributions 2021
GBP GBP GBP
Executive directors
Stephen Sin Mo KOO - - -
Peter Yip Tak CHAN 79,555 1,773 81,328
Edward Keung Hung LI 49,384 1,330 50,714
Danny Kwok Fai YIP 74,317 1,773 76,090
Ivan Chi Hung CHAN 49,800 1,330 51,130
-------------------------------- ---------------------------- -------
253,056 6,206 259,262
-------------------------------- ---------------------------- -------
Non-executive director s
Nicholas James LYTH 14,183 - 14,183
Ivor Colin SHRAGO 14,183 - 14,183
-------------------------------- ---------------------------- -------
28,366 - 28,366
-------------------------------- ---------------------------- -------
281,422 6,206 287,628
================================ ============================ =======
Messrs. Edward Keung Hung LI and Ivan Chi Hung CHAN were
appointed as the Company's directors on 24 June 2021 .
12. FINANCE COSTS
2022 2021
GBP GBP
Interest expense on bills payable and factoring 64,612 49,479
Interest expense on bank borrowings 40,896 12,805
Interest expense on bank overdraft 26,310 4,682
Interest on lease liabilities 14,890 7,043
------- ------
146,708 74,009
======= ======
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 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 (loss)/profit before
income tax is as follows:
2022 2021
GBP GBP
(Loss)/profit before income tax (10,265,495) 563,3 54
============ ========
Notional tax on (loss)/profit before
income tax, calculated at Hong Kong
profits tax rate of 16.5% (1,693,807) 92,953
Tax effect of non- taxable income (1,143) (64,835)
Tax effect of non- deductible expenses 977,897 13,133
Tax effect of temporary differences
not re cognised (12,635) (6,595)
Tax effect of unused tax losses not
recognised 729,688 -
U tilisation of unrecognised tax losses - (34,656)
------------ --------
Income t ax - -
============ ========
(b) Deferred tax
At 31 March 2022, the Company's significant temporary difference
included unused tax losses of GBP6,074,072 (2021: GBP1,452,190)
available for offset against future taxable profits. No deferred
tax asset has been recognised due to the uncertainty of future
profit streams.
2022 2021
GBP GBP
B alance at beginning of year 1,452,190 1,838,451
Adjusted loss for the year 4,422,353 -
Set-off against assessable profit for
the year - (210,035)
Foreign exchange difference 199,529 (176,226)
Balance at end of year 6,074,072 1,452,190
========= =========
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. (LOSS)/EARNINGS PER SHARE
The calculation of basic (loss)/earnings per share is based on
the loss attributable to the equity shareholders of the Company for
the year of GBP 10,265,495 (2021: profit attributable to the equity
shareholders of the Company of GBP 563,354 ), and the weighted
average of 383,677,323 (2021: 383,677,323) ordinary shares in issue
during the year.
There were no potential dilutive instruments at either financial
year end.
15. DIVIDS
(i) Dividends payable to equity shareholders of the Company attributable to the year:
2022 2021
GBP GBP
No final dividend proposed after the
reporting period (2021: 0.26 HK cents
, equivalent to 0.0243 pence, per ordinary
share) - 93,361
==== ======
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
2022 2021
GBP GBP
Final dividend in respect of the previous
financial year, approved and paid during
the year, of 0.26 HK cents, equivalent
to 0.0243 pence, per ordinary share
(2021: 0. 55 HK cents , equivalent to
0.05417 pence per ordinary share ) 93,952 207,843
====== =======
16. PLANT AND EQUIPMENT
Furniture Computer Motor Leasehold
and fixtures equipment vehicles improvement Total
GBP GBP GBP GBP GBP
Cost
At 1 April 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
Additions 5,967 4,871 55,078 25,231 91,147
Disposal - - (21,662) - (21,662)
Foreign translation
difference 7,292 5,039 5,359 817 18,507
------------- ---------- --------- ------------ --------
At 31 March 2022 195,791 135,403 148,780 26,048 506,022
============= ========== ========= ============ ========
Accumulated depreciation
At 1 April 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
Charge for the year 30,652 12,886 8,463 5,176 57,177
Disposal - - (17,330) - (17,330)
Foreign translation
difference 5,463 4,408 3,658 168 13,697
------------- ---------- --------- ------------ --------
At 31 March 2022 151,083 119,948 96,185 5,344 372,560
============= ========== ========= ============ ========
Net book value
At 31 March 2022 44,708 15,455 52,595 20,704 133,462
============= ========== ========= ============ ========
At 31 March 2021 67,564 22,839 8,611 - 99,014
============= ========== ========= ============ ========
17. RIGHT-OF-USE ASSETS
Motor Leasehold
vehicle properties Total
GBP GBP GBP
Cost
At 1 April 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
Additions - 445,031 445,031
Early termination of lease (33,624) - (33,624)
Foreign translation difference 212 17,844 18,056
-------- ---------- ---------
At 31 March 2022 - 551,537 551,537
-------- ---------- ---------
Accumulated depreciation
At 1 April 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
Charge for the year 3,362 161,268 164,630
Early termination of lease (8,966) - (8,966)
Foreign translation difference 35 7,372 7,407
-------- ---------- ---------
At 31 March 2022 - 224,053 224,053
-------- ---------- ---------
Net book value
At 31 March 2022 - 327,484 327,484
======== ========== =========
At 31 March 2021 27,843 33,249 61,092
======== ========== =========
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 AN ASSOCIATE
2022 2021
GBP GBP
Cost of unlisted investment
in an associate 5 5
==== ====
Details of the Company's associate at the end of the reporting
period are as follows:
Place of Issued and Proportion
establishment paid-up of ownership Principal
Name of associate and operation capital interest activity
Vision Key International
Limited Hong Kong HK$100 50% Inactive
The associate is inactive and the Company did not share any
post-acquisition financial results of the associate during the
year. The Company appointed one director to the associate's board
of directors which consists of three directors. The Company does
not control the associate.
19. DEPOSITS PLACED FOR A LIFE INSURANCE POLICY
In April 2019 and April 2021, the Company entered into life
insurance policies with an insurance company to insure Mr. Stephen
Sin Mo KOO, a Director of the Company. Under the policies, the
Company is the beneficiary and policy holder and the total insured
sum is US$5,000,000 (2021: US$2,500,000). The Company has paid
upfront deposits of US$1,203,528 and US$1,296,929 respectively. The
Company can terminate the policies 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 payments of
US$2,500,457 (2021: 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 amounts of
deposits placed for life insurance policies as at 31 March 2022 and
the Cash Value of the life insurance policies are
insignificant.
At 31 March 2022, the life insurance policies has been pledged
as security for banking facilities granted to the Company (Note
33).
20. INVENTORIES
2022 2021
GBP GBP
Raw materials 289,461 279,261
Finished goods 4,354,873 1,304,835
Less: allowance for obsolete inventories (2,279,410) -
----------- ---------
2,364,924 1,584,096
=========== =========
Provision for obsolete inventories for the year of GBP2,207,987
on slow-moving inventories is recognised (2021: GBPNil). No
inventories write-off for the year is recognised (2021:
GBP32,787).
21. TRADE AND OTHER RECEIVABLES
2022 2021
GBP GBP
Trade receivables 717,763 403,230
Less: allowance for doubtful debts (61,626) (59,319)
-------- ---------
Trade receivables, net 656,137 343,911
Other receivable s 123,153 1,198,861
Deposits and prepayments 164,805 165,717
Total carrying amount 944,095 1,708,489
======== =========
All of the trade and other receivables are expected to be
recovered within one year. At 31 March 2022, trade receivables of
GBP381,812 (2021 : Nil) were pledged as security for banking
facilities granted to the Company (Note 33).
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:
2022 2021
GBP GBP
At beginning of year 59,319 66,024
Foreign translation difference 2,307 (6,705)
------ -------
At end of year 61,626 59,319
====== =======
The ageing analysis of trade receivables, net at the end of the
reporting period is as follows:
2022 2021
GBP GBP
0 to 90 days 606,689 325,415
91 to 365 days 31,152 3,793
Over 365 days 18,296 14,703
------- -------
656,137 343,911
======= =======
The Company measures loss allowances for trade receivables at an
amount equals to lifetime ECLs, which is calculated using a
provision matrix. As the Company's historical credit loss
experience does not indicate significantly different loss patterns
for different customer segments, the loss allowance based on past
due status is not further distinguished between the Company's
different customer bases.
The following table provides information about the Company's
exposure to credit risk and ECLs for trade receivables at the end
of the reporting period:
202 2 20 21
----------------------------------- -----------------------------------
Expected Gross Expected Gross
loss carrying loss carrying
rate amount Loss allowance rate amount Loss allowance
% GBP GBP % GBP GBP
0 to 90 days - 606,689 - - 325,415 -
91 to 365 days - 31,152 - - 3,793 -
Over 365 days 77 79,922 61,626 80 74,022 59,319
--------- --------------
717,763 61,626 403,230 59,319
========= ============== ========= ==============
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 GBP58,062 (2021: GBP284,072) included 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 2022 and 2021.
22. CONTRACT ASSETS
2022 2021
GBP GBP
Supply , design and installation of closed
circuit television and surveillance systems
services 2,934,194 8,439,488
========= =========
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 transfers contract assets to trade receivables upon
achieving the specified milestones in the contracts.
Retention monies held by customers for contract works performed
at the end of each reporting period are included in contract
assets. The Company classifies contract assets as current because
the Company expects to realise them in its normal operating
cycle.
The Company makes specific provision for contract assets whose
credit risk are considered significantly increased or identified as
credit-impaired. For remaining balance of contract assets, the
Company makes general provision based on ageing analysis and
project status.
As at 31 March 202 2 , the gross amount of contract assets was
GBP3,590,362 (2021: GBP 8,530,832) and the provision of impairment
was GBP 656,168 (2021: GBP 91,344) .
The following table provides information about the Company's
exposure to credit risk and ECLs for contract assets at the end of
the reporting period:
202 2 20 21
----------------------------------- -----------------------------------
Expected Gross Expected Gross
loss carrying loss carrying
rate amount Loss allowance rate amount Loss allowance
% GBP GBP % GBP GBP
Within 3 years - 2,934,194 - - 8,439,488 -
Over 3 years 100 656,168 656,168 100 91,344 91,344
--------- --------------
3,590,362 656,168 8,530,832 91,344
========= ============== ========= ==============
Loss allowance was recognised amount of GBP543,685 (2021 : Nil)
in profit or loss during the years ended 31 March 2022.
23. CASH AND BANK BALANCES
(a) Cash at bank and in hand
2022 2021
GBP GBP
Cash at bank and in hand 323,173 284,354
======= =======
The balance as at 31 March 2022 included bank balances of
GBP320,423 which were restricted by the bank due to the petition
against the Company. The restriction was subsequently released in
year 2023.
(b) Cash and bank balances are denominated in the following currencies:
2022 2021
GBP GBP
Hong Kong dollar 318,200 273,095
Renminbi - 5,231
United States dollar 3,511 4,621
Others 1,462 1,407
======= =======
At 31 March 2022, the effective interest rate on bank deposits
was 0.7% (2021: 0.2%) per annum.
24. TRADE AND OTHER PAYABLES
2022 2021
GBP GBP
Current liabilities
Trade payables 2,483,253 2,109,753
Bills payable 425,408 1,272,233
Accruals and other payables 3,734,796 1,797,186
6,643,457 5,179,172
Non-current liabilities
Due to a related company (Note 30) - 393,074
--------- ---------
6,643,457 5,572,246
========= =========
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.
Accruals and other payables as at 31 March 2022 included the
provision for indemnity claimed from an insurance company of
GBP1,135,773 (2021 : Nil).
25. CONTRACT LIABILITIES
2022 2021
GBP GBP
Supply , design and installation of closed
circuit television and surveillance systems
services 1,610,506 1,572,245
========= =========
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 2022 that was
included in the contract liabilities at the beginning of the year
was amounted to GBP671,753 (2021: GBP1,316,446).
26. LEASE LIABILITIES
The following table shows the remaining contractual maturities
of the Company's lease liabilities at the end of the current
year:
Present value of Minimum
m inimum lease payments lease payments
202 2 20 21 202 2 20 21
GBP GBP GBP GBP
Within one year 201,517 42,959 214,087 44,744
In the second to fifth
year 135,253 21,924 138,651 23,276
------------- ---------- -------- --------
336,770 64,883 352,738 68,020
============= ==========
Less: Future finance
charges (15,968) ( 3,137)
-------- --------
Present value of lease
obligation 336,770 64,883
======== ========
27. BANK BORROWINGS
2022 2021
GBP GBP
Revolving loans 2,141,675 561,535
========= =======
The loans are denominated in Hong Kong Dollar and carry interest
at annual rate at range from 1.5% to 2.5% over 1 month Hong Kong
Interbank Offered Rate.
Details of securities are disclosed in note 33 to the financial
statements.
28. SHARE CAPITAL
2022 2021
GBP GBP
Issued and fully paid :
383,677,323 ordinary s hares of HK$55 ,
033 , 572, translated at historical rate 3,890,257 3,890,257
========= =========
The Company has one class of ordinary shares which has no par
value.
29. EMPLOYEE RETIREMENT BENEFITS
The Company operates a Mandatory Provident Fund scheme (the "MPF
scheme") under the Hong Kong Mandatory Provident Fund Schemes
Ordinance for employees employed under the jurisdiction of the Hong
Kong Employment Ordinance. The MPF scheme is a defined contribution
retirement scheme administered by independent trustees. Under the
MPF scheme, the Company and its employees are each required to make
contributions to the scheme at 5% of the employees' relevant
income, subject to a cap of monthly relevant income of HK$30,000.
Contributions to the MPF scheme vest immediately.
Save d as set out above, the Company has no other material
obligations to make payments in respect of retirement benefits of
the employees.
30. RELATED PARTY TRANSACTIONS
Compensation of key management personnel
The remuneration of the key management personnel of the Company
during the year was as follows:
2022 2021
GBP GBP
Salaries, bonus and allowances 308,909 320,660
======= =======
The remuneration of key management personnel comprise s the
remuneration of E xecutive D irectors and key executives.
Executive D irectors include the E xecutive C hairman, C hief E
xecutive O fficer and Finance Director of the Company. The
remuneration of the E xecutive D irectors is determined by the
Remuneration Committee having regard to the performance of
individuals, the overall performance of the Company and market
trends. Further information about the R emuneration C ommittee and
the D irectors' remuneration is provided in the Remuneration Report
and the Report on Corporate Governance to the Annual Report and
note 1 1 to the financial statements.
Key executives include the Director of Operations , Software
Development Manager and Sales Manager of the Company. The
remuneration of the key executives is determined by the Executive
Directors annually having regard to the performance of individuals
and market trends.
Biographical information on key management personnel is
disclosed in the Directors' Biographies section of the Annual
Report.
Transactions with related parties
(a) At 31 March 202 2 , there are balance s of GBP 58,062 (20 21
: GBP 284,072 ) due from Mr. Stephen Sin Mo KOO respectively , a D
irector of the Company , which are unsecured, interest-free and
repayable on demand (Note 21 ) .
(b) As at 31 March 2021, there was a balance of GBP 393,074 due
to a shareholder, Univision Holdings Limited, which was unsecured
and interest-free. This balance was unconditionally waived by the
shareholder during the year and the waiver of GBP395,566 was
recorded directly in equity as contribution from a shareholder.
(c) At 31 March 2022, there are gross receivable balances of GBP
7,685,610 (20 21 : GBP 8,230,672 ) and accumulated loss allowance
of GBP 7,685,610 ( 20 21 : GBP 5,387,867) due from related
companies controlled by common shareholders of the Company, which
are guaranteed by a shareholder of the Company, interest-free and
repayable after 12 months.
Apart from the transactions disclosed above and elsewhere in
these financial statements, the Company had no other material
transactions with related parties during the year.
31. CASH FLOWS FROM LIABILITIES ARISING FROM FINANCING ACTIVITIES
The table below details changes in the Company's liabilities
arising from financing activities, including both cash and non-cash
changes. Liabilities arising from financing activities are
liabilities for which cash flows were, or future cash flows will
be, classified in the Company's statement of cash flows as cash
flows arising from financing activities.
Amount
due toa
related Bank Lease
company borrowings liabilities Total
GBP GBP GBP GBP
At 1 April 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 - - (58,138) (58,138)
Interest on lease liabilities - - 7,043 7,043
Interest expense on bank
borrowings - 12,805 - 12,805
Foreign translation difference (44,426) (66,596) (18,877) (129,899)
--------- ----------- ------------ ---------
At 31 March 2021 and 1 April
2021 393,074 561,535 64,883 1,019,492
Financing cash flows:
New bank loans - 2,473,948 - 2,473,948
Repayment of bank loans - (964,474) - (964,474)
Interest paid - (40,896) - (40,896)
Capital element of lease
liabilities paid - - (158,804) (158,804)
Interest element of lease
liabilities paid - - (14,890) (14,890)
Other changes:
New leases - - 445,031 445,031
Debt forgiveness (395,566) - - (395,566)
Early termination of lease - - (24,658) (24,658)
Interest on lease liabilities - - 14,890 14,890
Interest expense on bank
borrowings - 40,896 - 40,896
Foreign translation difference 2,492 70,666 10,318 83,476
--------- ----------- ------------ ---------
At 31 March 2022 - 2,141,675 336,770 2,478,445
========= =========== ============ =========
Amounts included in the statement of cash flows for cash
outflows for leases comprise the following:
2022 2021
GBP GBP
Within:
Operating cash flows 56,246 86,680
Financing cash flows 173,694 184,473
------- -------
229,940 271,153
======= =======
T hese a mounts relate to the following:
2022 2021
GBP GBP
Lease rentals paid 229,940 271,153
======= =======
32. COMMITMENTS
Capital commitments
At 31 March 2022, the Company did not have any material
outstanding capital commitments.
33. BANKING FACILITIES
At 31 March 2022, the banking facilities of the Company
included:
(a) Revolving trade financing facilities amounted to
GBP2,527,953 (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. At 31 March 202 2 , the facilities were
utilised to the extent of GBP654,495.
(b) S traight line loans facilities amounted to GBP1,152,980 which were fully utilised.
(c) S traight line loans f acilities amounted to GBP759,608 which were fully utilised.
The above facilities were subject to the fulfilment of certain
covenants including, inter alia, the maintenance of the Company's
adjusted tangible net worth and the capped amount due from the
Company's related parties. In addition, the revolving trade
financing facilities were secured by the Company's accounts
receivable of GBP381,812 and the straight line loans facilities in
(b) above were secured by the deposits placed for life insurance
policies of GBP1,865,308.
The Company did not maintain the minimum adjusted tangible net
worth as requested by the bank as at 31 March 2022 and had breached
the related covenant. All the utilised bank facilities are
classified under current liabilities in the Company's statement of
financial position as at 31 March 2022. The Company is actively
negotiating with the bank on its banking facilities and so far, no
action has been taken against the Company.
At 31 March 2021, the banking facilities of the Company
included:
(a) Revolving trade financing facilities amounted to
GBP2,433,318 (equivalent to HK$ 26 ,000,000) and carried annual
interest at the Hong Kong Dollars Best Lending Rate with a
repayment term of 90 days. At 31 March 202 1 , the facilities were
utilised to the extent of GBP1,272,233.
(b) S traight line loans facilities amounted to GBP561,535 which were fully utilised.
(c) S traight line loans f acilities amounted to GBP842,302
(equivalent to HK$ 9,000,000 ) which were not utlised .
The above facilities were subject to the fulfilment of certain
covenants including, inter alia, the maintenance of the Company's
adjusted tangible net worth and the capped amount due from the
Company's related parties. In addition, the straight line loans
facilities in (b) above were secured by the deposits placed for
life insurance policies of GBP862,476. The Company did not breach
any of the facilities covenants as at 31 March 2021.
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. LITIGATIONS
The Company was the defendant of the following litigations
during the year ended 31 March 2022:
(a) 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 was alleging breach
of contract on part of the Company and claiming against the Company
for liquidated damages that Dimension Data had thereby suffered in
the amount of approximately HK$10,954,000 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. The Company and Dimension Data have
attempted mediation without forthcoming prospect of amicable
out-of-court settlement, whereas these proceedings have entered the
stage of case management towards trial.
The Company is of the opinion that the claim is highly
opportunistic and without merit and the management intends to
defend this claim rigorously.
(b) As announced by the Company on 4 January 2022, the Company
has received a petition that has been brought by one of its
sub-contractors, namely, T&P Solutions Limited ("T&P") in
the High Court in Hong Kong; alleging outstanding debts owed by the
Company of approximately HK$5,956,000 (approximately GBP565,280) in
relation to contractual agreements between the Company and T&P.
T&P has presented the petition ("the Petition") for the Company
to be wound up pursuant to certain sections of the Companies
(Winding Up and Miscellaneous Provisions) Ordinance in Hong Kong.
The Company intended to defend and oppose the Petition. Further,
the Company has a cross claim against T&P, inter alia, for
breach of contract and non-performance and it intends to claim
damages for the same. The first hearing has been conducted on 2
March 2022 that the Company defended and opposed the Petition. The
Court hearing in respect of the Winding up petition was adjourned
to be heard on 18 October 2022.
The petition was subsequently dismissed by the High Court in
Hong Kong on 18 October 2022. Costs have been awarded to the
Company on an indemnity basis.
Several additional litigations were brought against the Company
subsequent to 31 March 2022, details of which are set out in note
36 to the financial statements.
35. MAJOR NON-CASH TRANSACTION
During the year, the final dividend for the year ended 31 March
2021 payable to the shareholder, Mr. Stephen Sin Mo KOO , of
GBP64,275 (2021: GBP142,190) was set-off against with other
receivables .
36. EVENTS AFTER THE REPORTING PERIOD
(a) In June 2022, the Company has received formal notice of
termination of its contract with MTR Corporation Limited ("MTRC"),
for the replacement works of the CCTV systems for MTRC's railway
lines in Hong Kong, for alleged breach of contract.
The Company has called for meetings with MTRC to clarify and
quantify the unbilled work done including equipment, work done,
testing in progress, system development and etc,. The final
position is to be verified by joint inspection performed by the
Company and MTRC.
(b) On 22 June 2022, the Company has received a demand for
indemnity of HK$11,68l,430.27 by Berkshire Hathaway Specialty
Insurance Company ("Berkshire Insurance") in terms of a surety bond
facility for the Major Contract with MTRC. Berkshire Insurance has
paid the same amount to MTRC on 13 July 2022 and demanded the
Company to pay back per the guarantee agreement. The Company has
made full provision for the indemnity amount in the financial
statements. The Company is in the final stage of the negotiation
with Berkshire Insurance to settle this amount by instalment.
(c) As announced on 13 December 2022, the Company has received a
petition that has been brought by one of its equipment suppliers
for the contract with MTRC, namely, Synnex Technology International
(HK) Limited ("Synnex"), in the High Court in Hong Kong. The
Petition alleges outstanding debts owed by the Company of
HK$12,945,834 to Synnex in respect of equipment supplied to the
Company. Synnex has presented the Petition for the Company to be
wound up pursuant to the provisions of the Companies (Winding Up
and Miscellaneous Provisions) Ordinance (Cap.32) in Hong Kong.
The Company has reached a settlement agreement with Synnex. The
petition has been dismissed by the High Court in Hong Kong on 13
February 2023.
(d) On 17 October 2022, E-Star Engineering Company, one of the
Company's subcontractors, claimed a total amount of approximately
HK$1,739,000 together with interest and legal costs against the
Company. On 24 April 2023, the Court has made an Order for E-Star
Engineering Company to enter summary judgment against the Company
in these proceedings regarding the principal sum of approximately
HK$1,503,000 with interest accrued. By the same Order, the Company
has been granted unconditional leave to defend against E-Star
Engineering Company residual claim of approximately HK$213,00 (the
"Residual Claim"). These proceedings are now pending the filing of
E-Star Engineering Company's Amended Statement of Claim as regards
the Residual Claim.
(e) On 9 November 2022, KML Engineering Limited, one of the
Company's subcontractors, claims a total amount of approximately
HK$4,115,000 together with interest and legal costs on 9 November
2022. The Company has filed a partial admission in the amount of
approximately HK$2,097,000 which has been accepted by KML
Engineering Limited in satisfaction of its whole claim. The Company
has agreed with KML Engineering Limited to settle the amount by
installments.
(f) On 28 December 2022, Hang Cheong Engineering Limited, one of
the Company's subcontractors, claimed a total amount of
approximately HK$806,000 together with interest and legal costs.
The Company has filed an admission on the full amount as claimed by
Hang Cheong Engineering Limited. The Company is in negotiation with
Hang Cheong Engineering Limited on the settlement plan.
(g) A statutory demand dated 1 February 2023 was served by
General Resources Company (HK) Limited for the claimed amount of
approximately HK$1,163,000. The Company has reached a settlement
agreement with General Resources Company (HK) Limited of the
outstanding sub-contracting fee and hence no legal proceedings have
been commenced against the Company.
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May 19, 2023 12:42 ET (16:42 GMT)
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