UniVision Engineering Limited
Security Solutions
Forward-thinking technology
Annual Report
Year ended 31 March 2008
UNIVISION ENGINEERING LIMITED
Annual Report
Year ended 31 March 2008
Contents
Page
Board of Directors, Officers and Professional Advisers
Chairman’s Statement
Directors’ and Senior Management Biographies
Directors’ Report
Remuneration Report
Report on Corporate Governance
Statement of Directors’ Responsibilities
Independent Auditor’s Report to the Shareholders of UniVision
Engineering Limited
Group Income Statement
Group Balance Sheet
Parent Company Balance Sheet
Group Statement of Changes in Equity
Parent Company Statement of Changes in Equity
Group Cash Flow Statement
Parent Company Cash Flow Statement
Notes to the Financial Statements
Notice of Annual General Meeting
2
3
6
8
12
13
15
16
18
19
20
21
22
23
25
27
78
UNIVISION ENGINEERING LIMITED - 1 - ANNUAL REPORT 2008
BOARD OF DIRECTORS, OFFICERS
AND PROFESSIONAL ADVISERS
Board of Directors
Stephen Sin Mo KOO, Executive Chairman
Chun Hung WONG, Chief Executive Officer
Chun Pan WONG, Technical Director
Danny Kwok Fai YIP, Finance Director London E14 9TP
Richard FERNIE, Non-Executive Director UK
Andrew Ping Sum TANG, Non-Executive Director
Nominated Adviser and Broker
HB Corporate, a division of Hoodless Brennan plc,
40 Marsh Wall,
Docklands,
Senior Management
Mike Chiu Wah CHAN, Director of Operations
Yip Tak CHAN, Director of Sales and Marketing
1 Westferry Circus, Canary Wharf
London E14 4HD
Auditors
LITTLEJOHN
Audit Committee
Andrew Ping Sum TANG, Chairman
Richard FERNIE
Stephen Sin Mo KOO
Financial Public Relations
Remuneration Committee THREADNEEDLE COMMUNICATIONS
Richard FERNIE, Chairman 107-111 Fleet Street
Andrew Ping Sum TANG London EC4A 2AB
Stephen Sin Mo KOO
Company Secretary
Danny Kwok Fai YIP Computershare Investor Services (Channel
Registrars
Islands) Limited
Registered Office PO Box 83 Ordnance House
8/F Lever Tech Centre 31 Pier Road St Helier
69-71 King Yip Street Jersey JE4 8PW
Channel Islands
Kwun Tong
Kowloon
Hong Kong
Tel: (852) 2389 3256
Fax: (852) 2797 8053
E-mail: uvel@hk.uvel.com Bridgwater Road,
Website: www.uvel.com
Bristol BS99 7NH
UK
UK Depositary
Computershare Investor Services PLC
The Pavilions
AIM Stock Code: UVEL
UNIVISION ENGINEERING LIMITED - 2 - ANNUAL REPORT 2008
CHAIRMAN’S STATEMENT
INTRODUCTION
I am pleased to report on the results of the Group for the financial year ended 31 March 2008, our third year
as a public company, which has proved to be an exciting and successful period for UniVision.
Our business operates in two distinct areas, namely the provision of turn key Security and Surveillance
Systems, and in the Electrical and Mechanical (“E&M”) sector. The Security and Surveillance Systems
business, which provides a one stop shop for our clients’ needs and includes our subsidiary T-Com, has
continued its growth in the Greater China Region. The performance of this business has been stable over the
course of the year.
Our E&M business, which is operated through Leader Smart, our wholly owned subsidiary based in
Shanghai has had a successful year. We have expanded our presence and now have a successful operation in
the Zhongshan shopping mall in China. We will continue to expand and develop our E&M business,
although in the short term it is inevitable that its performance may be affected by the overall state of the
commercial property market in China.
As well as driving forward our organic growth, we will also look for further possible expansion in Security
and Surveillance businesses through select M&A targets within the South East Asia region.
We are considering developing our own, unique products to cater for the growing demand in the surveillance
and security industry, both domestically and abroad, such as video analysis devices and related applications.
We remain confident in the Group’s long-term growth potential.
FINANCIAL REVIEW
During the period under review, turnover increased by 63% to £14.5M (2007: £8.9m). This growth is
attributable to the profitable E&M business in China through our 100% owned subsidiary, Leader Smart
(Shanghai). Our Security and Surveillance businesses, including T-Com, remain stable. I am delighted that
turnover for the period was significantly higher than our internal forecasts.
Gross profit margin was 30% (2007: 32%). Administration and other operating expenses were in line with
the Group’s increase in capital investment, marketing and office expansion, rising to £2.7M (2007: £1.5M).
This increase is principally due to the additional administration costs of our subsidiaries T-Com and Leader
Smart Shanghai, which include business tax on service income. Further, one off expenses were incurred in
investigating the possibility of listing on a US market, and a full impairment loss of £0.34M was made
against a receivable from the PRC.
Net growth in adjusted profit before tax after excluding all one-off expenses increased by 43% to £2.2
million.
Basic earnings per share decreased to 0.36p from 0.39p due to the impairment loss and the one-off expenses.
.
MARKET REVIEW
The demand for surveillance products and systems in China has been growing at 25% - 35 % per annum due
to growing security concerns and the Chinese government’s pledge to improve public security. Industrial and
economic growth in the Greater China region is leading to an increase in the construction of facilities, such
as hotels, shopping centres, and convention and exhibition centres.
There is a continuing strong demand for IP Video such as Digital Video Server (DVS), Network Video
Recorders (NVRs) and Internet Protocol (IP) cameras. Specific examples of this include the upgrade of
traffic surveillance in Hong Kong and the upgrade of Digital Video Server (DVS) for the Hong Kong
Kowloon and Canton Railway, the Hong Kong MTRC and the Hong Kong Housing Authority, as well as the
new Hong Kong Government Headquarters and the Western Kowloon development complex.
UNIVISION ENGINEERING LIMITED - 3 - ANNUAL REPORT 2008
CHAIRMAN’S STATEMENT
(continued)
BUSINESS REVIEW
Markets
IP Video is providing the CCTV industry with a unique set of tools, particularly for use in the demanding
transportation industry which has used the analogue system for a decade.
The use of a Hybrid IP analogue system is the most cost effective way to connect IP and analogue cameras
with CCTV Matrix Controllers and DVS. Hybrid solutions provide large installed base analogue cameras
with a gateway to transmit video streams from networks and the Internet.
There are considerable opportunities in Greater China which is providing avenues for the Hybrid solutions.
The Group is looking into several different solutions, including Video compression technology MPEG-4 and
H.264, Digital Encoder and Decoder (Codec) with built-in video analysis algorithms. These systems are
particularly prevalent in the Homeland Security field, where new areas of focus will be centered on intruder
detection, loitering detection, left behind objects and trip wire will be the new area of interest.
We expect that the market will go towards more sophisticated and integrated systems as well as high-tech
products. The Board believes that UniVision will be among the pioneers in providing the most effective
solutions for businesses involved in airport, rail and traffic surveillance industry and we hope to expand our
sphere of business accordingly. By focusing on our core strength, we remain cautiously optimistic in our
future growth prospects.
Technologies, Solutions and Products
On the solutions side, an ongoing product development programme is in place to cater for the needs of the
Group’s growing client base in the Asia Pacific region.
The embedded DVR, which is sold under the Univision brand, has been used in several projects in Hong
Kong. The newly developed Video Amplifier with an on-screen display function has also been used in one of
our projects. We have received several other enquiries and excited by its potential. We are also working on
video analysis algorithms as well as some applications which we expect to launch in the coming year.
Acquisitions and Investments
The success of our investments in T-Com Tech. Co. Ltd and Leader Smart (Shanghai) Ltd has reinforced the
Company’s strategy of acquiring interests in companies with strategic value. Turnover at T-Com has
increased and its overall performance is improving. As for Leader Smart, it has enabled us to obtain WOFE
(Wholly Owned Foreign Enterprise) status within China and provides a platform to explore and expand
further the business in China. To this end, the Group is currently assessing a number of companies in related
fields with a view to making further strategic investments.
Contract Wins
During the reporting period, I am pleased to report that the Group was awarded a number of high profile
projects including CCTV systems in the following locations; there are numbers of projects in the Hong Kong
Airport for its expansion and renovation. They are: the upgrade of BHS and Terminal 1 Camera, the On-
Board CCTV for Terminal 1 APM’ Skypier CCTV system and East Hall modification work. The others
include the DVRS in East Rail Stations, the expansion for Lok Ma Chau Spur Line terminal and redundant
H.264 Digital Video Codec system for Olympic Games. We have also been awarded a contract for an E & M
System for the Ming Xuan Square Mall in Zhongshan, China. A similar project in Huangshan is under
negotiation and will hopefully commence soon.
UNIVISION ENGINEERING LIMITED - 4 - ANNUAL REPORT 2008
CHAIRMAN’S STATEMENT
(continued)
Macau Casinos
The business is declining due to the tightened control measure of the China Government policy. Projects for
building new hotel and casino are being delayed or withheld. We are expecting the business will continue
reducing.
MTR & Maintenance
Our maintenance contracts are particularly important to the business by providing strong visibility in our
revenue and I am delighted that we have continued to develop this side of the business. In particular, our
relationship with the Mass Transit Railway (“MTR”) has proved to be positive. A further extension of a 3-
year maintenance contract for the CCTV, Public Address and Passenger Information Display System (PIDS)
is expected in the coming year. There are also several renovation contracts anticipated for MTR in the fourth
quarter of 2008. We have also extended our services to cover the CCTV system in Ngong Ping 360, a
subsidiary of MTR, as well as ELV systems for some MTR managed properties
PROSPECTS
Our Security and Surveillance business remains stable, although competition remains high. The Company is
exploring new revenue streams from both the public and private sector in the Greater China Region. We are
working with partners in other areas to secure product distribution channels. We continue to enhance our
product and application development programmes.
The business model of E&M business with the property rights held as collateral as within Leader Smart
(Shanghai) this year has proven to be successful and profitable. At the Shopping Mall in Zhongshan, we
secured a contract that includes cash for engineering services and property rights. This model is, we believe,
unique. The management believes, in addition to diversifying our operations, it will enable us to hedge the
credit risk in doing business in China. This will also increase our related Security and Surveillance business.
WOFE status of Leader Smart (Shanghai) is an advantage to attract foreign capital to invest in China. The
Board is confident of making further significant progress in the current year.
Finally, on behalf of the Board, I would like to thank our customers, suppliers and shareholders for their
continued support of UniVision. I would also like to acknowledge the hard work of the management and all
the staff for their contribution and dedication to the Group.
MR. STEPHEN KOO
EXECUTIVE CHAIRMAN
30 September 2008
UNIVISION ENGINEERING LIMITED - 5 - ANNUAL REPORT 2008
DIRECTORS’ AND SENIOR
MANAGEMENT’S BIOGRAPHIES
DIRECTORS’ BIOGRAPHIES
Richard FERNIE – Non Executive Director (aged 62)
Mr. Fernie was appointed as a non-executive Director on 19 December 2006. Mr. Fernie holds a Bachelor of
Science degree from the University of Strathclyde. He has been a divisional managing director of
international electronic security business with turnover up to 100m pounds
Andrew Ping Sum TANG – Non Executive Director (aged 51)
Mr. Tang was appointed as a non-executive Director on 1 December 2005. Mr. Tang holds a Bachelor of
Commerce Degree from the University of Western Australia and a Masters Degree in Applied Finance from
Macquarie University. He is a member of the Hong Kong Hong Kong Institute of Certified Public
Accountants, a member of the Institute of Certified Public Accountants of Australia and the Hong Kong
Securities Institute, a director of the Institute of Securities Dealers and a member of the advisory board of the
Society of Registered Financial Planners of Hong Kong. Mr. Tang was a Manager of the Licensing
Department of Securities and Futures Commission from 1993 to 1995. He monitored the registrants under
Securities Ordinance and participated in the development of licensing systems and procedures. Mr. Tang has
over 10 years experience in the financial services industry. He was the Deputy Chairman and General
Manager of Hantec Investment Holdings Limited, a financial services group listed on the main board of the
Stock Exchange of Hong Kong. At present, Mr. Tang is the Director-China Business of Tai Fook Securities
Group, a leading securities group which listed on the main board of the Stock Exchange of Hong Kong.
Stephen Sin Mo KOO – Executive Chairman (aged 51)
Mr. Koo joined UniVision in 1998 and was appointed as a Director on 3 March 2003. He holds both a
Bachelor Degree from the University of Technology, Sydney, and a Masters Degree in Business from the
Royal Melbourne Institute of Technology in Australia. He was a director of MultiVision Holdings Limited
in 2001, prior to being appointed to the Board of UniVision. He is a Fellow of the Institute of Certified
Public Accountants of Australia.
Chun Hung WONG – Chief Executive Officer (aged 49)
Mr. Wong joined UniVision in 1998 and was appointed as CEO on 1 January 2008. Before the appointment,
he was the Director of Operations who responsible for the management of the Project and Maintenance
Divisions. Mr. Wong holds a Master of Business Administration degree from The Open University of Hong
Kong. He has over 20 years’ experience in project management. Mr. Wong is responsible for formulating
and overseeing the implementation of UniVision’s business development strategies and for the management
of the Company’s operations.
Chun Pan WONG – Technical Director (aged 48)
Mr. Wong joined UniVision in 1991 and was appointed as a Director on 25 March 1992. He has a degree in
Computer Science from the University of Edinburgh, Scotland, and over 16 years’ experience in the
surveillance industry. He is responsible for the development of UniVision’s state of the art CCTV control
and monitoring systems and smart card access systems.
UNIVISION ENGINEERING LIMITED - 6 - ANNUAL REPORT 2008
DIRECTORS’ AND SENIOR
MANAGEMENT’S BIOGRAPHIES
(Continued)
Danny Kwok Fai YIP –Finance Director (aged 44)
Mr. Yip was appointed as Finance Director on 18 September 2007. He was the Financial Controller for the
Group before the appointment. Mr. Yip obtained a Bachelor of Commerce (Accounting) degree from The
Curtin University of Technology. Before joining the Group, Mr. Yip was the Accounting Manager of Nissin
Food Group, the leading instant noodle manufacturing MNC. Mr. Yip has over 20 years’ experience in
finance and accounting in different industries. He is a fellow member of the Association of Chartered
Certified Accountants and a member of Hong Kong Institute of Certified Public Accountants. He also acts as
Company Secretary for the Corporate.
SENIOR MANAGEMENT’S BRIEF BIOGRAPHIES
Mike, Chiu Wah CHAN – Director of Operations (aged 34)
Mr. Chan joined UniVision as Assistant Engineer in December 1996, and was promoted to a number of
increasingly senior positions in maintenance and project department, prior to being appointed to his present
position on 2 January 2008. He is now responsible for the management of UniVision’s Project and
Maintenance Division. Mr. Chan holds a Bachelor of Engineering degree in Industrial and Manufacturing
System Engineering from the University of Hong Kong.
Yip Tak CHAN – Director of Sales and Marketing (aged 44)
Mr. Chan joined UniVision in 1995. He holds a Degree in Computing from the University of Northwest
Missouri and has over 10 years’ experience in sales and project management. He is responsible for
UniVision’s Sales and Marketing Division.
UNIVISION ENGINEERING LIMITED - 7 - ANNUAL REPORT 2008
UNIVISION ENGINEERING LIMITED
DIRECTORS’ REPORT
The Directors have pleasure in presenting their annual report together with the audited financial statements
of the Company and Group for the year ended 31 March 2008.
Principal Activities
The principal activities of the Company are the supply, design, consultation, installation and maintenance of
closed circuit television and surveillance systems, sale of security related products. The Group is involved in
similar activities as well as electrical and mechanical services.
Review of the Business
A review of the Company and Group and its future development is included in the Chairman’s Statement.
Financial Position
The Group’s consolidated profit for the year ended 31 March 2008 and the state of affairs of the Group at
that date are set out in the income statement on page 18 and in the balance sheet on page 19 respectively.
The Group’s changes in equity for the year ended 31 March 2008 are set out in the statement of changes in
equity on page 21.
The Group’s consolidated cash flow for the year ended 31 March 2008 is set out in the cash flow statement
on pages 23 to 24.
Key Performance Indicators (KPI)
2008 2007
Current Asset / Current Liabilities
Current Ratio:
1.8 2.45
:
Average Collection Period :
Account receivable / Sales per Day
:
43 days 88 days
Inventory Turnover :
Cost of goods sold / Inventory
Gross profit Margin :
Gross profit / Sales
Operating Profit Margin :
Operating Profit / Sales
Profit /Equity :
Operating Profit / Equity
:
:
:
:
10.4 6.0
30% 32%
9% 14%
20% 22%
Share Capital and Reserves
Details of the movements in share capital are set out in note 27 on pages 74
The movements in reserves during the year are set out in the statement of changes in equity on page 21
Dividends
The Directors do not propose the payment of a dividend for the year ended 31 March 2008 (2007: Nil).
Plant and Equipment
Details of the movements in plant and equipment are set out in note 17 on page 63 to 64
UNIVISION ENGINEERING LIMITED - 8 - ANNUAL REPORT 2008
DIRECTORS’ REPORT
(Continued)
Directors
The directors who held office during the year and to the date of this report were as follows:
(appointed on 1 January 2008)
Stephen Sin Mo KOO
Stephen Pui Ming CHAN (resigned on 31 December 2007)
Chun Hung WONG
Ronald Kwok Wai Sin (resigned on 31 July 2007)
Johnny Ka Siu TANG
(resigned on 1 Nov 2007)
Andrew Ping Sum TANG
Chun Pan WONG
Richard FERNIE
Danny Kwok Fai YIP (appointed on 18 September 2007)
Mr. Andrew Ping Sum TANG and Mr. Richard FERNIE retire by rotation at the forthcoming annual general
meeting in accordance with the Company’s Articles of Association and, being eligible, offers themselves for
re-election.
Directors’ Interests in Contracts
No director had a material interest in any contract of significance to the business of the Company to which
the Company was a party subsisted at the end of the year or at any time during the year.
Directors’ Interests in Shares
According to the register of Directors’ Shareholdings kept by the Company, particulars of interests of the
Directors (or their immediate families) who held office at the end of the financial year in the ordinary shares
of the Company are as set out in the table below:
Stephen Sin Mo KOO
Chun Hung WONG
Andrew Ping Sum TANG
Chun Pan WONG
Richard FERNIE
Danny Kwok Fai YIP
Ordinary Shares held as at 31 March 2008
-
80,710,000*
-
-
-
-
-
* The ordinary shares are registered under the name of Up Sky Investments Limited which is an investment
holding company incorporated under the laws of the British Virgin Islands and is wholly-owned by Mr.
Stephen Sin Moo KOO. Mr. Stephen Sin Mo KOO, is deemed to be interested in all the ordinary shares
registered in the name of Up Sky Investments Limited.
Save as disclosed in this report, none of the Directors (or their immediate families) who held office at the end
of the financial year had interests in the share capital of the Company during the financial year.
Directors’ Rights to Acquire Shares or Debentures
At no time during the year were rights to acquire benefits by means of the acquisition of shares in or
debentures of the Company granted to any director or their respective spouse or minor children, or were any
such rights exercised by them; or was the Company a party to any arrangement to enable the directors of the
Company to acquire by means of the acquisition of shares in, or debentures of any other body corporate.
UNIVISION ENGINEERING LIMITED - 9 - ANNUAL REPORT 2008
DIRECTORS’ REPORT
(Continued)
Substantial Shareholdings
As at 26 September 2008 the Directors had been informed of the following companies that held in 3% or
more of the Company’s issued ordinary share capital
Number of ordinary shares % of
capital
total
issued share
UniVision Holdings Limited (1)
Up sky Investments Limited (2)
Raven Nominees Limited
Pershing Nominees Limited
W B Nominees Limited
183,736,000
78,744,000
32,948,199
16,928,834
15,431,800
47.9
20.5
8.6
4.4
4.0
(1) UniVision Holdings Limited is an investment holding company incorporated under the laws of the British
Virgin Islands and is wholly-owned by Mayne Management Limited. Mayne Management Limited is a
wholly-owned subsidiary of Cameo Management Group Limited which, in turn, is a trustee of a trust set
up for the benefit of members of the Chen family, a Hong Kong based family with widespread
investments.
(2) Up Sky Investments Limited is an investment holding company incorporated under the laws of the British
Virgin Islands and is wholly-owned by Mr. Stephen Sin Mo KOO.
Payments to Creditors
The Group does not follow any code or standard on payment practice but instead the Group policy is to pay
all creditors in accordance with agreed terms of business.
Political and Charitable Donations
During the year the Company made no political or charitable contributions (2007: Nil).
Employees
The Group values staff involvement at all levels of operations, and uses various means to train, inform and
consult the employees. The Group encourages the management to discuss regularly with the employees on
both corporate and individual matters and discloses information to them that will increase their awareness of
the financial and economic factors affecting the Group.
The Group recognises its obligations to provide a fair consideration on all vacancies towards people with
disability and to ensure that such persons are not discriminated against on the grounds of their disability. For
those employees who become disabled during their employment period, the Group will give every effort to
ensure that their employment will continue and that sufficient training is arranged.
Annual General Meeting
The Annual General Meeting of the Company will be held at UniVision Engineering Limited, 8/F Lever
Tech Centre, 69-71 King Yip Street, Kwun Tong, Kowloon, Hong Kong, on 31 October 2008 at 5:00p.m.
The Notice of Meeting appears on page 78.
Annual Report
The annual report for the year ended 31 March 2008 will be sent to shareholders and will be
available, free of charge, from the offices of the Company’s nominated adviser, HB Corporate, a
division of Hoodless Brennan plc., at 40 Marsh Wall, London, E14 9TP and the Company’s
registrar, Computershare Investor Services (Channel Islands) Limited at PO Box 83, Ordnance
House, 31 Pier Road, St Helier, Jersey JE4 8PW, Channel Island from 13 October 2008.
UNIVISION ENGINEERING LIMITED - 10 - ANNUAL REPORT 2008
DIRECTORS’ REPORT
(Continued)
Auditors
A resolution to re-appoint the retiring auditor, Littlejohn, Chartered Accountants will be put at the
forthcoming Annual General Meeting.
By Order of the Board
Mr. Stephen Sin Mo KOO
Executive Chairman
Hong Kong
30 September 2008
UNIVISION ENGINEERING LIMITED - 11 - ANNUAL REPORT 2008
REMUNERATION REPORT
The Remuneration Committee presents this report to shareholders on behalf of the Board.
Membership of Remuneration Committee
The Remuneration Committee comprises Mr. Andrew Ping Sum TANG (our Non-executive Director), Mr.
Richard FERNIE (our Non-executive Director) and Mr. Stephen Sin Mo KOO (our Executive Chairman) and
is chaired by Mr. Richard FERNIE.
Policy Statement
The Remuneration Committee sets the remuneration and all other terms of employment of the executive
Directors with a vision to provide a package which is suitable for the responsibilities involved. The
remuneration of the executive directors is determined by the remuneration committee having regard to the
performance and experience of individuals, the overall performance of the Group and market trends.
Directors’ Remuneration
Details of individual Directors’ remuneration for the year are set out in the table below:
Salary and fees
£
39,648
52,087
-
28,628
8,043
12,603
7,850
-
7,660
4,468
7,660
Pension
Scheme
Contrib
ution
£
Bonus
£
2008
Total
£
2007
Total
£
574
-
-
766
191
447
255
-
-
-
4,340
-
2,368
-
670
-
-
-
40,222
56,427
-
31,762
8,234
13,720
8,105
50,479
60,018
14,258
32,148
-
-
14,501
-
7,660
4,468
7,660
4,753
8,147
3,395
2,000
Executive Directors
Stephen Pui Ming CHAN
Stephen Sin Mo KOO
*Johnny Ka Siu TANG
Chun Pan WONG
Chun Hung WONG
Danny Kwok Fai YIP
Ronald Kwok Wai SIN
Non-executive Directors
Tak Ding TAM
Andrew Ping Sum TANG
*Johnny Ka Siu TANG
Richard FERNIE
Directors’ Interests in Contracts and Interests in Shares
Details of Directors’ Interests in Contracts and Interest in Shares are given in the Directors’ Report.
UNIVISION ENGINEERING LIMITED - 12 - ANNUAL REPORT 2008
REPORT ON CORPORATE GOVERNANCE
Introduction
The Directors believe that their foremost function is to generate continuous profits for the Company’s
investors, and that this should be achieved by a policy of high standards of corporate governance, integrity
and ethics. As the Company is listed on AIM and not subject to the Listing Rules of the UK Listing
Authority, it is not officially required to comply with the provisions detailed in the Combined Code on
Corporate Governance. However, it is the intention of the Board to manage the Company’s and Group’s
affairs in accordance with this Code, in so far as is practical and appropriate for a public company of this size
and complexity. The following are a few examples on how the Directors have applied the principles of good
corporate governance to manage the Company throughout the year.
Board of Directors
The Board directs and controls the Company and is responsible for strategy and operating performance. It
meets regularly throughout the year and has adopted a schedule of matters specifically reserved for its
decision.
All Directors are elected by shareholders at the first opportunity after their initial appointment to the Board
and to be re-elected thereafter at intervals of not more than three years. Biographical information on all the
Directors is listed in the Directors’ and Senior Management’s Biographies section to the annual report, which
may help the shareholders to make a decision at the time of re-election.
Upon their appointments, the Directors are offered an opportunity to request for information and training
relevant to their legal and other duties. They are also given written guidelines and rules defining their
responsibilities within an AIM listed company.
The Board considers that all non-executive directors are independent of management and day to day
operation, and free from any commercial relationship with the Company. These non-executive directors do
not participate in any of the Company’s pension schemes or bonus. The Chairman of the Audit and
Remuneration Committee are both non-executive directors.
Nomination Committee
As the Board of Directors of the Company is small, there is no separate Nomination Committee. All
nominations to the Board are considered by all of the directors.
Audit Committee
Our Audit Committee comprises Mr. Richard FERNIE (Our Non-executive Director), Mr. Andrew Ping Sum
TANG (our Non-executive Director) and Mr. Stephen Sin Mo KOO (our Executive Chairman) and is chaired
by Mr. Andrew Ping Sum TANG. The Chairman of the Audit Committee has full discretion to invite any
Executive Directors to attend its meetings. The Audit Committee meets not less than twice per annum.
The responsibilities of the Committee are to:
- monitor the quality of the overall internal control system of all financial matters;
-
-
-
-
-
-
review the Company’s Accounting Policies and ensure compliance with accounting standards;
ensure that the financial performance of the Company is properly measured and reported on;
consider the appointment/re-appointment of the external auditor;
review the conduct of the audit and discuss the audit fees;
review reports from the Auditors relating to the Company’s accounting and internal controls;
to ensure the Company complies with the AIM Rules.
UNIVISION ENGINEERING LIMITED - 13 - ANNUAL REPORT 2008
REPORT ON CORPORATE GOVERNANCE
(Continued)
Remuneration Committee
Our Remuneration Committee comprises Mr. Andrew Ping Sum TANG (our Non-executive Director), Mr.
Richard FERNIE (our Non-executive Director) and Mr. Stephen Sin Mo KOO (our Executive Chairman) and
is chaired by Mr. Richard FERNIE. The Remuneration Committee meets as required.
The responsibilities of the Committee are to:
-
determine the specific remuneration package for each Director including Director’s fees, salaries,
allowances, bonuses, options, benefits-in-kind;
seek professional advice, including comparison with similar businesses, in order to correctly fulfil its
duties, as the Committee deems appropriate; and
-
In discharging its functions, the Committee may obtain independent external legal and other professional
advices as it deems necessary. The expenses of such advices shall be borne by the Company.
Internal Control
The Board of Directors is responsible for ensuring that the Company maintains an internal financial control
system with appropriate monitoring procedures for all Group companies. The purpose of this system is to
safeguard Company assets, maintain proper accounting records, and ensure that reliable financial
information are used within the Group and for publication purposes. However, the system is designed to
manage rather than completely eliminate risk and can only provide reasonable but not absolute assurance
against material misstatement.
In order to achieve the above responsibilities, the Board meets regularly and monitors the Company’s
internal financial control by reviewing the overall process and the performance of the systems, setting annual
budgets and monthly forecasts, and seeking any prior approval for all significant expenditure.
The Group currently does not have an internal audit department and after extensive review and consideration,
the Board has concluded that the existing control mechanisms are sufficient for the size of the Group. This
decision will be kept under review.
Going Concern
After making appropriate enquiries, the Directors have a reasonable expectation that the Company and the
Group have adequate resources to continue in operational existence for the foreseeable future. For this
reason, they continue to adopt the going concern basis in preparing the Company’s and Group’s financial
statements.
Investor Relations
The Company realizes that effective communication can increase the transparency and accountability to its
shareholders; as such, the Company discloses its information to its shareholders through RNS (i.e. the news
distribution service operated by the London Stock Exchange plc). The same information can also be found
on the Company’s website (www.uvel.com). The Company will make every effort to ensure that all price-
sensitive information is released publicly and immediately. If an immediate announcement is not possible,
the Company will try to publicize the information at the earliest time possible to ensure that the shareholders
and the public will have a fair access to it.
The Company will send the Annual Report and the notice of the Annual General Meeting (AGM) to all its
shareholders. This notice is also made available on RNS. The Company recognizes the importance of the
shareholders’ views and encourages them to attend the AGMs where they can share their opinions and direct
their queries and concerns towards the Directors, including the chairperson of each of the Board Committees.
The shareholders are also welcomed to discuss any issues on an informal basis at the conclusion of the
AGMs.
UNIVISION ENGINEERING LIMITED - 14 - ANNUAL REPORT 2008
STATEMENT OF DIRECTORS’ RESPONSIBILITIES
The Directors are responsible for preparing the Directors’ Report and the financial statements in accordance
with applicable law and regulations.
The Directors are responsible to prepare financial statements for each financial year which give a true and
fair view of the state of affairs of the Company and Group and of the profit or loss for that year.
In preparing those financial statements, the Directors are required to:
(cid:1)
(cid:1)
(cid:1)
(cid:1)
select suitable accounting policies and then apply them consistently;
make judgements and estimates that are reasonable and prudent;
state whether applicable accounting standards have been followed, subject to any material
departures disclosed and explained in the financial statements;
prepare the financial statements on the going concern basis unless it is inappropriate to presume
that the Company and Group will continue in business.
The Directors are responsible for keeping proper accounting records that disclose with reasonable accuracy
at any time the financial position of the Company. They have general responsibility for taking such steps as
are reasonably open to them to safeguard the assets of the Company and Group to prevent and detect fraud
and other irregularities.
UNIVISION ENGINEERING LIMITED - 15 - ANNUAL REPORT 2008
INDEPENDENT AUDITOR’S REPORT
TO THE SHAREHOLDERS OF
UNIVISION ENGINEERING LIMITED
Report on the financial statements
We have audited the accompanying financial statements (the ‘Financial Statements’) of Univision
Engineering Limited for the year ended 31 March 2008 which comprise the Group Income Statement,
the Group and Company Balance Sheet, the Group and Company Cash Flow Statement, the Group
and Company Statement of Changes in Equity, a summary of significant accounting policies and other
explanatory notes, as set out in note 1 to 31.
This report is made solely to the Company’s shareholders, as a body, in compliance with the AIM
Rules for Companies as published by the London Stock Exchange (‘AIM Rules’). Our work has been
undertaken so we might state to the Company’s shareholders those matters we are required to state to
them in an auditor’s report and for no other purpose. To the fullest extent permitted by law, we do not
accept or assume responsibility to anyone other than the Company and the Company’s shareholders as
a body for this report or for the opinions we have formed.
Management’s responsibilities for the financial statements
Management is responsible for the preparation and fair presentation of the Financial Statements in
accordance with International Financial Reporting Standards and in compliance with the AIM Rules.
This responsibility includes: designing, implementing and maintaining internal control relevant to the
preparation and fair presentation of financial statements that are free from material misstatement,
whether due to fraud or error; selecting and applying appropriate accounting policies; and making
accounting estimates that are reasonable in the circumstances.
Auditor’s responsibility
Our responsibility is to express an opinion on these financial statements based on our audit. We
conducted our audit in accordance with International Standards on Auditing. Those standards require
that we comply with ethical requirements and plan and perform the audit to obtain reasonable
assurance whether the financial statements are free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in
the financial statements. The procedures selected depend on the auditor’s judgments, including the
assessment of the risks of material misstatement of the financial statements, whether due to fraud or error.
In making those risk assessments, the auditor considers internal control relevant to the entity’s preparation
and fair presentation of the financial statements in order to design audit procedures that are appropriate in
the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s
internal control. An audit also includes evaluating the appropriateness of accounting policies used and the
reasonableness of accounting estimates made by management, as well as evaluating the overall
presentation of the financial statements.
UNIVISION ENGINEERING LIMITED - 16 - ANNUAL REPORT 2008
INDEPENDENT AUDITOR’S REPORT
TO THE SHAREHOLDERS OF
UNIVISION ENGINEERING LIMITED
(CONT’D)
Auditor’s responsibility (cont’d)
We read other information contained in the annual report and consider whether it is consistent with
the audited Financial Statements. The other information comprises only the Directors’ Report, the
Chairman’s Statement, Remuneration Committee Report and the Corporate Governance Statement.
We consider the implications for our report if we become aware of any apparent misstatement or
material inconsistencies with the Financial Statements. Our responsibilities do not extend to any other
information.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis
for our audit opinion.
Opinion
In our opinion the Financial Statements give a true and fair view of the financial position of the Group
and Company as at 31 March 2008 and of its financial performance and cash flows for the year then
ended in accordance with International Financial Reporting Standards and the information given in
the Directors’ Report is consistent with the Financial Statements.
Littlejohn
Chartered Accountants and
Registered Auditors
London
30 September 2008
UNIVISION ENGINEERING LIMITED - 17 - ANNUAL REPORT 2008
UNIVISION ENGINEERING LIMITED
GROUP INCOME STATEMENT
For the year ended 31 March 2008
Revenue
Cost of sales
Gross profit
Other income
Distribution costs
Administrative expenses
Other operating expenses
Profit from operations
Finance costs
Profit before taxation
Income tax
Profit for the year
Profit attributable to equity holders of the parent
Attributable to minority interest
Earnings per share
Basic
Diluted
Note
2008
£
2007
£
7
14,523,529
8,935,778
8
10
9
13
(10,160,841)
(6,053,721)
4,362,688
2,882,057
323,806
(71,826)
(1,959,772)
(716,914)
139,284
(63,345)
(1,403,744)
(77,353)
1,937,982
(239,952)
1,476,899
(44,476)
1,698,030
1,432,423
(435,712)
(30,659)
1,262,318
1,401,764
1,400,331
(138,013)
1,262,318
1,281,189
120,575
1,401,764
14
14
0.36p
N/A
0.39p
N/A
The notes numbered 1 to 31 form an integral part of these financial statements.
UNIVISION ENGINEERING LIMITED - 18 - ANNUAL REPORT 2008
UNIVISION ENGINEERING LIMITED
GROUP BALANCE SHEET
At 31 March 2008
Note
2008
£
2007
£
16
17
19
21
22
22
24
23
25
26
26
961,845
352,175
961,845
340,560
1,314,020
1,302,405
973,400
11,861,304
440,955
13,275,659
14,589,679
7,136,220
154,752
7,290,972
2,457
2,905,668
3,881,788
495,810
3,055
7,288,778
9,929
7,298,707
1,007,434
5,108,855
1,603,932
7,720,221
9,022,626
5,589,816
285,641
5,875,457
-
1,875,779
1,241,905
29,485
-
3,147,169
-
3,147,169
ASSETS
Non-current assets
Goodwill
Plant and equipment
Current assets
Inventories
Trade and other receivables
Cash and cash equivalents
Total assets
EQUITY
Capital and reserves
Minority interest
Total equity
LIABILITIES
Current liabilities
Bank overdrafts
Trade and other payables
Interest-bearing borrowings
Tax payable
Obligation under finance lease
Non-current liabilities
Obligation under finance lease
Total liabilities
Total equity and liabilities
14,589,679
9,022,626
These financial statements were approved by the Board on Directors on 30 September 2008 and
authorised for issue.
On behalf of the Board of Directors
Stephen Sin Mo KOO
Director
Chun Hung WONG
Director
The notes numbered 1 to 31 form an integral part of these financial statements.
UNIVISION ENGINEERING LIMITED - 19 - ANNUAL REPORT 2008
UNIVISION ENGINEERING LIMITED
PARENT COMPANY BALANCE SHEET
At 31 March 2008
Note
2008
£
2007
£
18
17
19
21
22
24
23
26
6,046,793
24,503
6,071,296
723,026
3,092,062
245,135
4,060,223
2,054,081
15,075
2,069,156
818,140
2,356,162
1,488,295
4,662,597
10,131,519
6,731,753
5,625,098
5,625,098
5,469,484
5,469,484
2,457
1,848,035
2,642,945
3,055
4,496,492
26
9,929
4,506,421
-
1,262,269
-
-
1,262,269
-
1,262,269
10,131,519
6,731,753
ASSETS
Non-current assets
Investment in subsidiary undertakings
Plant and equipment
Current assets
Inventories
Trade and other receivables
Cash and cash equivalents
Total assets
EQUITY
Capital and reserves
Total equity
LIABILITIES
Current liabilities
Bank overdrafts
Trade and other payables
Interest-bearing borrowings
Obligation under finance lease
Non-current liabilities
Obligation under finance lease
Total liabilities
Total equity and liabilities
These financial statements were approved by the Board on Directors on 30 September 2008 and
authorised for issue.
On behalf of the Board of Directors
Stephen Sin Mo KOO
Director
Chun Hung WONG
Director
The notes numbered 1 to 31 form an integral part of these financial statements.
UNIVISION ENGINEERING LIMITED - 20 - ANNUAL REPORT 2008
UNIVISION ENGINEERING LIMITED
GROUP STATEMENT OF CHANGES IN EQUITY
For the year ended 31 March 2008
Note
Share
capital
£
Share
Premium
£
Retained
earnings
£
Special
capital
reserve “A”
£
Special
capital
reserve “B”
£
Exchange
Reserve
£
Sub-total
£
Minority
interest
£
Total
Equity
£
Balance at 31 March 2006
1,451,085
1,278,981
488,735
155,876
143,439
95,023
3,613,139
-
3,613,139
Issue of shares for acquisition of a subsidiary
undertaking
18b, 27
22,991
217,039
Issue of shares upon placing
Share issue cost
Net profit for the year
Effect on translation
27
27
223,541
811,257
(114,637)
-
-
-
-
-
1,281,189
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
240,030
165,066
405,096
1,034,798
(114,637)
-
-
1,034,798
(114,637)
1,281,189
120,575
1,401,764
(464,703)
(464,703)
-
(464,703)
Balance at 31 March 2007
1,697,617
2,192,640
1,769,924
155,876
143,439
(369,680)
5,589,816
285,641
5,875,457
Net profit for the year
Effect on translation
-
-
-
-
1,400,331
-
-
-
-
-
-
1,400,331
(138,013)
1,262,318
146,073
146,073
7,124
153,197
Balance at 31 March 2008
1,697,617
2,192,640
3,170,255
155,876
143,439
(223,607)
7,136,220
154,752
7,290,972
The currency translation from Hong Kong dollars to the presentational currency of pound sterling used in
these financial statements has no impact on the available distributable reserves of the Company which at
31 March 2008 were £1,876,996 (2007: £1,675,594).
Nature of purposes of the reserves
i)
Share premium
The Company may by resolution reduce the share premium account in any manner
authorised and subject to any conditions prescribed by law.
ii)
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.
iii)
Special capital reserve “B”
By a special resolution passed on 30 July 2004 and 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.
The notes numbered 1 to 31 form an integral part of these financial statements.
UNIVISION ENGINEERING LIMITED - 21 - ANNUAL REPORT 2008
UNIVISION ENGINEERING LIMITED
PARENT COMPANY STATEMENT OF CHANGES IN EQUITY
For the year ended 31 March 2008
Note
Share
capital
£
Share
premium
£
Retained
earnings
£
Special
capital
reserve “A”
£
Special
capital
reserve “B”
£
Exchange
reserve
£
Total
Equity
£
Balance at 31 March 2006
1,451,085
1,278,981
488,735
155,876
143,439
95,023
3,613,139
Issue of shares for acquisition of a
subsidiary undertaking
18b, 27
22,991
217,039
Issue of shares upon placing
Share issue cost
Net profit for the year
Effect on translation
27
27
-
-
-
223,541
811,257
(114,637)
-
-
1,186,859
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
240,030
1,034,798
(114,637)
1,186,859
(490,705)
(490,705)
Balance at 31 March 2007
1,697,617
2,192,640
1,675,594
155,876
143,439
(395,682)
5,469,484
Net profit for the year
Effect on translation
-
-
-
-
201,402
-
-
-
-
-
-
201,402
(45,788)
(45,788)
Balance at 31 March 2008
1,697,617
2,192,640
1,876,996
155,876
143,439
(441,470)
5,625,098
The notes numbered 1 to 31 form an integral part of these financial statements.
UNIVISION ENGINEERING LIMITED - 22 - ANNUAL REPORT 2008
UNIVISION ENGINEERING LIMITED
GROUP CASH FLOW STATEMENT
For the year ended 31 March 2008
Note
2008
£
2007
£
CASH FLOWS FROM OPERATING ACTIVITIES
Profit before taxation
Adjustments for:
Depreciation
Gain on disposal of investment securities
Write down of /(recovery of) obsolete inventories, net
Written back on trade and other payables
Unrealised loss on investment account carried at fair value
Impairment losses on trade and other receivables
(Gain)/ loss on disposal of plant and equipment
Interest income
Interest expenses
Operating profit before working capital changes
(Increase)/decrease in inventories
Increase in trade and other receivables
Increase/(decrease) in trade and other payables
1,698,030
1,432,423
172,193
-
11,978
(30,848)
7,480
523,163
(681)
(21,172)
239,952
2,600,095
22,056
(6,791,047)
766,872
115,412
(30,105)
(205,064)
(51,730)
14,747
46,700
739
(19,966)
44,476
1,347,632
(48,130)
(477,002)
(439,630)
Net cash (used in)/generated from operations
(3,402,024)
382,870
Income tax paid – PRC
Net cash (used in)/generated from operating activities
(711)
(3,402,735)
-
382,870
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of plant and equipment
Net cash outflow from acquisition of subsidiary undertakings
(Increase)/decrease in pledged bank deposits
Proceeds from disposal of plant and equipment
Proceeds from disposal of investment securities
Purchase of investment securities
Interest received
18
(146,392)
-
(340,754)
1,880
-
-
21,172
(52,098)
(793,122)
37,402
46
876,784
(846,679)
19,966
Net cash used in investing activities
(464,094)
(757,701)
UNIVISION ENGINEERING LIMITED - 23 - ANNUAL REPORT 2008
UNIVISION ENGINEERING LIMITED
GROUP CASH FLOW STATEMENT (Continued)
For the year ended 31 March 2008
CASH FLOWS FROM FINANCING ACTIVITIES
Interest paid
Proceeds from issue of shares
Payment for issue of shares
Capital element of finance lease rentals paid
Interest element of finance lease rentals paid
Proceeds from new interest-bearing borrowings
Note
2008
£
2007
£
(73,839)
-
-
(764)
(148)
2,639,883
(44,476)
1,034,798
(114,637)
-
-
171,511
Net cash generated from financing activities
2,565,132
1,047,196
NET (DECREASE)/INCREASE IN CASH AND CASH
EQUIVALENTS
(1,301,697)
672,365
EFFECT OF CHANGES IN FOREIGN EXCHANGE RATE
136,263
(482,746)
CASH AND CASH EQUIVALENTS AT BEGINNING OF
YEAR
1,603,932
1,414,313
CASH AND CASH EQUIVALENTS AT END OF YEAR
22
438,498
1,603,932
Major non-cash transactions
There were no major non-cash transactions within 2008
On 10 October 2006, 5,363,990 new ordinary shares of HK$0.0625 were issued as partial consideration
for the acquisition of Leader Smart Engineering Limited (“Leader Smart”) and its subsidiary namely
Leader Smart Engineering (Shanghai) Limited (together “Leader Smart Group”) and were valued at
£240,030 of which £22,991 and £217,039 was credited to the Share Capital Account and Share Premium
Account respectively, before expenses.
On 14 March 2007, 52,500,000 new ordinary shares of HK$0.0625 were placed at a price of 2 pence per
share by HB Corporate. At the same time, 2,500,000 ordinary shares of HK$0.0625 were allotted and
issued at 2 pence per share to HB Corporate in satisfaction of their placing fee. £223,541 and £811,257
was credited to the Share Capital Account and the Share Premium Account in respect of this placing
respectively, before expenses.
The notes numbered 1 to 31 form an integral part of these financial statements.
UNIVISION ENGINEERING LIMITED - 24 - ANNUAL REPORT 2008
UNIVISION ENGINEERING LIMITED
PARENT COMPANY CASH FLOW STATEMENT
For the period ended 31 March 2008
CASH FLOWS FROM OPERATING ACTIVITIES
Net income
Adjustments for:
Depreciation
Recovery of obsolete inventories
Written back on trade and other payables
Unrealised loss on investment account carried at fair value
Impairment losses on trade and other receivables
(Gain)/ loss on disposal of investment securities
(Gain)/ loss on disposal of plant and equipment
Interest income
Interest expenses
Operating profit before working capital changes
Decrease/(increase) in inventories
(Increase)/decrease in trade and other receivables
Increase in amount due from subsidiaries
Increase in trade and other payables
2008
£
2007
£
201,402
1,186,859
7,640
-
(28,803)
7,480
17,576
-
(543)
(19,085)
179,264
364,931
87,109
(301,519)
(3,971,484)
327,151
5,623
(220,970)
(51,730)
14,747
46,700
(30,105)
498
(19,308)
-
932,314
(404,957)
696,536
(1,020,929)
170,147
Net cash (used in)/generated from operations
(3,493,812)
373,111
Income tax paid – PRC
Net cash (used in)/generated from operating activities
-
(3,493,812)
-
373,111
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of plant and equipment
(Increase)/decrease in pledged bank deposits
Proceeds from disposal of plant and equipment
Net cash outflow from acquisition of subsidiary undertakings
Proceeds from disposal of investment securities
Purchase of investment securities
Interest received
(18,286)
(338,500)
1,723
-
-
-
19,085
(8,912)
37,402
-
(793,122)
876,784
(846,679)
19,308
Net cash used in investing activities
(335,978)
(715,219)
UNIVISION ENGINEERING LIMITED - 25 - ANNUAL REPORT 2008
UNIVISION ENGINEERING LIMITED
PARENT COMPANY CASH FLOW STATEMENT (Continued)
For the period ended 31 March 2008
CASH FLOWS FROM FINANCING ACTIVITIES
Interest paid
Proceeds from issue of share
Share issuance expenses
Inception of finance lease
Capital element of finance lease rentals paid
Interest element of finance lease rentals paid
Proceeds from new interest-bearing borrowings
2008
£
2007
£
(13,151)
-
-
13,613
(756)
(148)
2,617,133
-
1,034,798
(114,637)
-
-
-
-
Net cash generated from financing activities
2,616,691
920,161
NET (DECREASE)/INCREASE IN CASH AND CASH
EQUIVALENTS
(1,213,099)
578,053
EFFECT OF CHANGES IN FOREIGN EXCHANGE RATE
(32,518)
(504,071)
CASH AND CASH EQUIVALENTS AT BEGINNING OF
YEAR
1,488,295
1,414,313
CASH AND CASH EQUIVALENTS AT END OF YEAR
22
242,678
1,488,295
UNIVISION ENGINEERING LIMITED - 26 - ANNUAL REPORT 2008
UNIVISION ENGINEERING LIMITED
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 31 March 2008
1. GENERAL INFORMATION
UniVision Engineering Limited (the “Company”) is incorporated in Hong Kong as a limited
company. The address of its registered office is 8/F Lever Tech Centre, 69-71 King Yip Street,
Kwun Tong, Kowloon, Hong Kong.
The Company has its primary public listing on the Alternative Investment Market of the London
Stock Exchange (“AIM”).
The Company is engaged in the supply, design, installation and maintenance of closed circuit
television and surveillance systems, the sale of security system related products and provision for
electronical and mechanical services. The principal activities of the subsidiaries are set out in note
18 to the financial statements.
2.
B ASIS OF PREPARATION OF FINANCIAL STATEMENTS
The financial statements have been prepared in accordance with International Financial Reporting
Standards (IFRS), IFRIC interpretations and in accordance with the rules of the International
Accounting Standards Board (IASB). The financial statements have also been prepared under the
historical cost convention except that available-for –sale financial assets are stated at fair value.
The preparation of financial statements in conformity with IFRS requires the use of certain critical
accounting estimates. It also requires management to exercise its judgement in the process of
applying the accounting policies of the Company and its subsidiary undertakings (the “Group”).
The areas involving a higher degree of judgement or complexity, or areas where assumptions and
estimates are significant are disclosed in note 6.
Standards and Interpretations in issue but not yet effective or not relevant
IFRS 8 “Operating Segments” requires companies to adopt a management approach to reporting on
their operating segments. This standard is effective for annual financial statements for periods
beginning on or after 1 January 2009 but is not expected to have an impact on the Group's reporting
segments.
A revised version of IAS 1 “Presentation of Financial Statements” will require information in
financial statements to be aggregated on the basis of shared characteristics, and introduce a
statement of comprehensive income and is effective for annual periods beginning on or after 1
January 2009.
A revised version of IAS 23 “Borrowing Costs” removes the option of immediately recognising as
an expense borrowing costs that relate to assets that take a substantial period of time to get ready
for use or sale. It is not expected that this standard will have any material impact on the Group’s
reporting.
An amendment to IFRS 2 “Share-based Payment” clarifies that vesting conditions are service
conditions and performance conditions only, and specifies that all cancellations, whether by the
entity or by other parties, should receive the same accounting treatment. It is effective for annual
periods beginning on or after 1 January 2009 and is not expected to have an impact on the Group’s
reporting.
UNIVISION ENGINEERING LIMITED - 27 - ANNUAL REPORT 2008
UNIVISION ENGINEERING LIMITED
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 31 March 2008
2.
BASIS OF PREPARATION OF FINANCIAL STATEMENT (CONT’D)
Amendments to IFRS 1 “First-time Adoption of International Financial Reporting Standards” and
IAS 27 “Consolidated and Separate Financial Statements” address concerns that retrospectively
determining the cost of an investment in separate financial statements and applying the cost method
in accordance with IAS 27 on first-time adoption of IFRSs cannot, in some circumstances, be
achieved without undue cost or effort. It is effective for annual periods beginning on or after 1
January 2009 but it is not expected to have a material impact on the Group’s reporting.
Amendments to IAS 32 “Financial Instruments: Presentation” and IAS 1 “Presentation of Financial
Statements - Puttable Financial Instruments and Obligations Arising on Liquidation” improve the
accounting for particular types of financial instruments that have characteristics similar to ordinary
shares but are at present classified as financial liabilities. Effective from annual periods beginning
on or after 1 January 2009.
IFRIC 12 "Service Concession Arrangements" addresses how service concession operators should
apply existing IFRSs to account for the obligations they undertake and rights they receive in
service concession arrangements. IFRIC 12 is not applicable to the Group.
IFRIC 13 "Customer Loyalty Programmes" addresses accounting by entities that grant loyalty
award credits to customers who buy goods or services. IFRIC 13 is not applicable to the Group.
IFRIC 14 "IAS 19 - The Limit on a Defined Benefit Asset, Minimum Funding Requirements and
their Interaction" provides guidance on how to assess the limit in IAS 19 "Employee Benefits" on
the amount of the surplus that can be recognised as an asset but it is not expected to have a material
impact on the Group’s reporting.
IFRIC 15 “Agreements for the Construction of Real Estate” provides guidance on how to
determine whether an agreement for the construction of real estate is within the scope of IAS 11
Construction Contracts or IAS 18 Revenue and when revenue from the construction should be
recognised. It is effective for annual periods beginning on or after 1 January 2009 but it is not
expected to have a material impact on the Group’s reporting.
IFRIC 16 “Hedges of a Net Investment in a Foreign Operation” clarifies:
• whether risk arises from the foreign currency exposure to the functional currencies of the foreign
operation and the parent entity, or from the foreign currency exposure to the functional currency of
the foreign operation and the presentation currency of the parent entity’s consolidated financial
statements;
• which entity within a group can hold a hedging instrument in a hedge of a net investment in a
foreign operation, and in particular whether the parent entity holding the net investment in a foreign
operation must also hold the hedging instrument;
• how an entity should determine the amounts to be reclassified from equity to profit or loss for
both the hedging instrument and the hedged item when the entity disposes of the investment.
IFRIC 16 is not expected to have a material impact on the Group’s reporting.
UNIVISION ENGINEERING LIMITED - 28 - ANNUAL REPORT 2008
UNIVISION ENGINEERING LIMITED
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 31 March 2008
3.
BASIS OF CONSOLIDATION
The Group Financial Statements consolidate the financial statements of UniVision Engineering
Limited and all its subsidiary undertakings made up to 31 March 2008.
Subsidiaries are entities over which the Group has control. Control is the power to govern the
financial and operating policies of the entity so as to obtain benefits from its activities. The Group
obtains and exercises control through voting rights.
The acquisition of subsidiary undertakings has been accounted for using the purchase method of
accounting. The cost of an acquisition is measured as the fair value of the assets given, equity
instruments issued and liabilities incurred or assumed at the date of exchange, plus costs directly
attributable to the acquisition. Identifiable assets acquired and liabilities and contingent liabilities
assumed are measured initially at their fair values at the acquisition date. The excess of the cost of
acquisition over the fair value of the Group’s share of the identifiable net assets acquired is
recorded as goodwill.
Inter-company transactions, balances and unrealised gains on transactions between Group
companies are eliminated. Unrealised losses are also eliminated, unless the transaction provides
evidence of an impairment of the asset transferred. Amounts reported in the financial statements of
subsidiary undertakings have been adjusted where necessary to ensure consistency with the
Accounting Policies adopted by the Group.
The Group treats transactions with minority interests as transactions with parties external to the
Group. Disposals to minority interests result in gains and losses for the Group that are recorded in
the Income Statement. Purchases from minority interests result in goodwill, being the difference
between any consideration paid and the relevant share acquired of the carrying value of net assets
in the subsidiary undertakings.
Whilst none of the subsidiaries have a statutory year end of 31 March 2008, management accounts
have been produced and audited for the purposed of preparing Group Financial Statements.
UNIVISION ENGINEERING LIMITED - 29 - ANNUAL REPORT 2008
UNIVISION ENGINEERING LIMITED
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 31 March 2008
4. PRINCIPAL ACCOUNTING POLICIES (CONT’D)
The financial statements have been prepared in accordance with International Financial Reporting
Standards.
a) SUBSIDIARIES
Subsidiaries are entities controlled by the Group. Control exists when the Group has the
power to govern the financial and operating policies of an entity so as to obtain benefits from
its activities. In assessing control, potential voting rights that presently are exercisable are
taken into account.
An investment in a subsidiary is consolidated into the consolidated financial statements from
the date that control commences until the date that control ceases.
lntra-group balances and transactions and any unrealised profits arising from intra-group
transactions are eliminated in full in preparing the consolidated financial statements.
Unrealised losses resulting from intra-group transactions are eliminated in the same way as
unrealised gains but only to the extent that there is no evidence of impairment.
Minority interests represent the portion of the net assets of subsidiaries attributable to
interests that are not owned by the Company, whether directly or indirectly through
subsidiaries, and in respect of which the Group has not agreed any additional terms with the
holders of those interests which would result in the Group as a whole having a contractual
obligation in respect of those interests that meets the definition of a financial liability.
Minority interests are presented in the consolidated balance sheet within equity, separately
from equity attributable to the equity shareholders of the company. Minority interests in the
results of the Group are presented on the face of the consolidated income statement as an
allocation of the total profit or loss for the year between minority interests and the equity
shareholders of the Company.
Where losses applicable to the minority exceed the minority’s interest in the equity of a
subsidiary, the excess, and any further losses applicable to the minority, are charged against
the Group’s interest except to the extent that the minority has a binding obligation to, and is
able to, make additional investment to cover the losses. If the subsidiary subsequently reports
profits, the Group’s interest is allocated all such profits until the minority’s share of losses
previously absorbed by the Group has been recovered.
Loans from holders of minority interests and other contractual obligations towards these
holders are presented as financial liabilities in the consolidated balance sheet in accordance
with note 4(k) depending on the nature of the liability.
In the Company’s balance sheet, an investment in a subsidiary is stated at cost less
impairment losses (see note 4(e)).
b) GOODWILL
Goodwill represents the excess of the cost of a business combination over the Group’s
interest in the net fair value of the acquiree’s identifiable assets, liabilities and contingent
liabilities.
UNIVISION ENGINEERING LIMITED - 30 - ANNUAL REPORT 2008
UNIVISION ENGINEERING LIMITED
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 31 March 2008
4. PRINCIPAL ACCOUNTING POLICIES (CONT’D)
b) GOODWILL (Continued)
Goodwill is stated at cost less accumulated impairment losses. Goodwill is allocated to cash-
generating units and is tested annually for impairment (see note 4(e)(ii)).
Any excess of the Group’s interest in the net fair value of the acquiree’s identifiable assets,
liabilities and contingent liabilities over the cost of a business combination is recognised
immediately in the income statement.
On disposal of a cash-generating unit during the year, any attributable amount of purchased
goodwill is included in the calculation of the profit or loss on disposal.
c)
PLANT AND EQUIPMENT
Plant and equipment is stated at cost less accumulated depreciation and accumulated
impairment losses.
Depreciation is calculated to write off the cost of items of plant and equipment, less their
estimated residual value, if any, using the straight line method over their estimated useful
lives as follows:
Computer equipment
Furniture and fixtures
Leasehold improvements
Motor vehicles
Research assets
3 years
5 years
5 years
3 years
5 years
Gains or losses arising from the retirement or disposal of an item of plant and equipment are
determined as the difference between the net sales proceeds and the carrying amount of the
relevant asset, and are recognised in the income statement on the date of retirement of
disposal
Where parts of an item of plant and equipment have different useful lives, the cost or
valuation of the item is allocated on a reasonable basis between the parts and each part is
depreciated separately. Both the useful life of an asset and its residual value, if any, are
reviewed annually.
UNIVISION ENGINEERING LIMITED - 31 - ANNUAL REPORT 2008
UNIVISION ENGINEERING LIMITED
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 31 March 2008
4. PRINCIPAL ACCOUNTING POLICIES (CONT’D)
d) RESEARCH AND DEVELOPMENT COSTS
Expenditure on research activities, undertaken with the prospect of gaining new technical
knowledge and understanding, is recognised in the income statement as an expense as
incurred.
Expenditure on development activities is capitalised when the Group can demonstrate all of
the following:
i)
the technical feasibility of completing the product or process so that it will be available
for use or sale;
ii) its intention to complete the product or process and use or sell it;
iii) its ability to use or sell the product or process;
iv) the Group can demonstrate the existence of a market for the output of the product or
process; if it is to be used internally, the usefulness of the product or process;
v)
the availability of adequate technical, financial and other resources to complete the
development and to use or sell the product or process; and
vi) its ability to measure reliably the expenditure attributable to the product or process
during its development.
The expenditure capitalised includes the cost of materials, direct labour and an appropriate
proportion of overheads. Other development expenditure is recognised in the income
statement as an expense as incurred. Capitalised development expenditure is stated at cost
less accumulated amortisation and impairment losses.
Amortisation is charged to the income statement on a straight-line basis over the estimated
useful lives of the capitalised development costs.
UNIVISION ENGINEERING LIMITED - 32 - ANNUAL REPORT 2008
UNIVISION ENGINEERING LIMITED
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 31 March 2008
4. PRINCIPAL ACCOUNTING POLICIES (CONT’D)
e)
IMPAIRMENT OF ASSETS
i)
Impairment of receivables
Current and non-current receivables that are stated at cost or amortised cost are
reviewed at each balance sheet date to determine whether there is objective evidence
of impairment. Objective evidence of impairment includes observable data that comes
to the attention of the Group about one or more of the following loss events:
-
-
-
-
significant financial difficulty of the debtor;
a breach of contract, such as a default or delinquency in interest or principal
payments;
it becoming probable that the debtor will enter bankruptcy or other financial
reorganisation; and
significant changes in the technological, market, economic or legal environment
that have an adverse effect on the debtor.
If any such evidence exists, any impairment loss is determined and recognised as
follows:
-
For trade and other receivables and other financial assets carried at amortised
cost, the impairment loss is measured as the difference between the asset’s
carrying amount and the present value of estimated future cash flows,
discounted at the financial asset’s original effective interest rate (i.e. the
effective interest rate computed at initial recognition of these assets), where the
effect of discounting is material. This assessment is made collectively where
financial assets carried at amortised cost share similar risk characteristics, such
as similar past due status, and have not been individually assessed as impaired.
Future cash flows for financial assets which are assessed for impairment
collectively are based on historical loss experience for assets with credit risk
characteristics similar to the collective group.
UNIVISION ENGINEERING LIMITED - 33 - ANNUAL REPORT 2008
UNIVISION ENGINEERING LIMITED
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 31 March 2008
4. PRINCIPAL ACCOUNTING POLICIES (CONT’D)
e)
IMPAIRMENT OF ASSETS (Continued)
i)
Impairment of receivables (Continued)
-
If in a subsequent period the amount of an impairment loss decreases and the
decrease can be linked objectively to an event occurring after the impairment
loss was recognised, the impairment loss is reversed through the income
statement. A reversal of an impairment loss shall not result in the asset’s
carrying amount exceeding that which would have been determined had no
impairment loss been recognised in prior years.
Impairment losses are written off against the corresponding assets directly, except for
impairment losses recognised in respect of trade debtors included within trade and
other receivables, whose recovery is considered doubtful but not remote. In this case,
the impairment losses for doubtful debts are recorded using an allowance account.
When the Group is satisfied that recovery is remote, the amount considered
irrecoverable is written off against trade debtors directly and any amounts held in the
allowance account relating to that debt are reversed. Subsequent recoveries of amounts
previously charged to the allowance account are reversed against the allowance
account. Other changes in the allowance account and subsequent recoveries of
amounts previously written off directly are recognised in the income statement.
ii)
Impairment other assets
Internal and external sources of information are reviewed at each balance sheet date to
identify indications that the following assets may be impaired or, except in the case of
goodwill, an impairment loss previously recognised no longer exists or may have
decreased:
-
-
-
plant and equipment;
investments in subsidiaries; and
goodwill.
If any such indication exists, the asset’s recoverable amount is estimated. In addition,
for goodwill, intangible assets that are not yet available for use and intangible assets
that have indefinite useful lives, the recoverable amount is estimated annually whether
or not there is any indication of impairment.
UNIVISION ENGINEERING LIMITED - 34 - ANNUAL REPORT 2008
UNIVISION ENGINEERING LIMITED
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 31 March 2008
4.
PRINCIPAL ACCOUNTING POLICIES (CONT’D)
e)
IMPAIRMENT OF ASSETS (Continued)
ii)
Impairment other assets (Continued)
-
Calculation of recoverable amount
The recoverable amount of an asset is the greater of its net selling price 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 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 the income statement whenever the carrying
amount of an asset, or the cash-generating unit to which it belongs, exceeds its
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 to sell, or value in use, if determinable.
-
Reversals of impairment losses
In respect of assets other than goodwill, an impairment loss is reversed if there
has been a favourable change in the estimates used to determine the recoverable
amount. An impairment loss in respect of goodwill is not reversed. 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 the income statement in the year in which the
reversals are recognised.
UNIVISION ENGINEERING LIMITED - 35 - ANNUAL REPORT 2008
UNIVISION ENGINEERING LIMITED
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 31 March 2008
4.
PRINCIPAL ACCOUNTING POLICIES (CONT’D)
f)
INVENTORIES
Inventories are stated at the lower of cost and net realisable value. Cost is calculated using
the weighted average cost formula and comprises all costs of purchase, costs of conversion
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.
When inventories are sold, the carrying amount of those inventories is recognised as an
expense in the period in which the related revenue is recognised. The amount of any write-
down of inventories to net realisable value and all losses of inventories are recognised as an
expense in the period the write-down or loss occurs. The amount of any reversal of any
write-down of inventories is recognised as a reduction in the amount of inventories
recognised as an expense in the period in which the reversal occurs.
g)
LEASED ASSETS
An arrangement comprising a transaction or a series of transactions is or contains, a lease if
the Group determines that the arrangement conveys a right to use a specific asset or assets
for an agreed period of time in return for a payment or a series of payments. Such a
determination is made based on an evaluation of the substance of the arrangement and is
regardless of whether the arrangement takes the legal form of a lease.
i)
Assets acquired under finance leases
Where the Group acquires the use of assets under finance leases, the amounts
representing the fair value of the leased asset or, if lower, the present value of the
minimum lease payments of such assets, are included in fixed assets and the
corresponding liabilities, net of finance charges, are recorded as obligations under
finance leases. Depreciation is provided at rates which write off the cost of the assets
over the term of the relevant lease or, where it is likely the Group will obtain
ownership of the asset, the life of the asset, as set out in note 4(c). Impairment losses
are accounted for in accordance with the accounting policy as set out in note 4(e).
Finance charges implicit in the lease payments are charged to the income statement
over the period of the leases so as to produce an approximately constant periodic rate
of charge on the remaining balance of the obligations for each accounting period.
UNIVISION ENGINEERING LIMITED - 36 - ANNUAL REPORT 2008
UNIVISION ENGINEERING LIMITED
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 31 March 2008
4.
PRINCIPAL ACCOUNTING POLICIES (CONT’D)
g)
LEASES ASSETS (Continued)
ii) Operating lease charges
Where the Group has the use of assets held under operating leases, payments made
under the leases are charged to the income statement in equal instalments over the
accounting periods covered by the lease term, except where an alternative basis is
more representative of the pattern of benefits to be derived from the leased asset.
Lease incentives received are recognised in the income statement as an integral part of
the aggregate net lease payments made. Contingent rentals are charged to the income
statement in the accounting period in which they are incurred.
h)
TRADE AND OTHER RECEIVABLES
Trade and other receivables are initially recognised at fair value and thereafter stated at
amortised cost less allowance for impairment losses for bad and doubtful debts, except where
the receivables are interest-free loans made to related parties without any fixed repayment
terms or the effect of discounting would be immaterial. In such cases, the receivables are
stated at cost less allowance for impairment losses for bad and doubtful debts.
i)
CONSTRUCTION CONTRACTS
The accounting policy for contract revenue is set out in note 4(n). When the outcome of a
construction contract can be estimated reliably, contract costs are recognised as an expense
by reference to the stage of completion of the contract at the balance sheet date. When it is
probable that total contract costs will exceed total contract revenue, the expected loss is
recognised as an expense immediately. When the outcome of a construction contract cannot
be estimated reliably, contract costs are recognised as an expense in the period in which they
are incurred.
Construction contracts in progress at the balance sheet date are recorded in the balance sheet
at the net amount of costs incurred plus recognised profit less recognised losses and progress
billings, and are presented in the balance sheet as the “Amounts due from construction
contract customers” (as an asset) or the “Amounts due to construction contract customers”
(as a liability), as applicable. Progress billings not yet paid by the customer are included in
the balance sheet. Amounts received before the related work is performed are included in the
balance sheet, as a liability, as “Advances received”.
UNIVISION ENGINEERING LIMITED - 37 - ANNUAL REPORT 2008
UNIVISION ENGINEERING LIMITED
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 31 March 2008
4.
PRINCIPAL ACCOUNTING POLICIES (CONT’D)
j)
CASH AND CASH EQUIVALENTS
Cash and cash equivalents represent cash at bank and on hand, demand deposits with banks
and other financial institutions, and short-term, highly liquid investments which are readily
convertible into known amounts of cash and subject to an insignificant risk of change in
value, having been within three months of maturity at acquisition. For the purpose of the
group cash flow statement, bank overdrafts which are repayable on demand and form an
integral part of the Group’s cash management are also included as a component of cash and
cash equivalents.
k)
TRADE AND OTHER PAYABLES
Trade and other payables are initially recognised at fair value and thereafter stated at
amortised cost unless the effect of discounting would be immaterial, in which case they are
stated at cost.
l)
INTEREST-BEARING BORROWINGS
Interest-bearing borrowings are recognised initially at fair value less attributable transaction
costs. Subsequent to initial recognition, interest-bearing borrowings are stated at amortised
cost with any difference between the amount initially recognised and redemption value being
recognised in the income statement over the period of the borrowings using the effective
interest method.
m) BORROWING COSTS
Borrowing costs are expensed in the income statement in the period in which they are
incurred, except to the extent that they are capitalised as being directly attributable to the
acquisition, construction or production of an asset which necessarily takes a substantial
period of time to get ready for its intended use or sale.
The capitalisation of borrowing costs as part of the cost of a qualifying asset commences
when expenditure for the asset is being incurred, borrowing costs are being incurred and
activities that are necessary to prepare the asset for its intended use or sale are in progress.
Capitalisation of borrowing costs is suspended or ceases when substantially all the activities
necessary to prepare the qualifying asset for its intended use or sale are interrupted or
completed.
UNIVISION ENGINEERING LIMITED - 38 - ANNUAL REPORT 2008
UNIVISION ENGINEERING LIMITED
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 31 March 2008
4.
PRINCIPAL ACCOUNTING POLICIES (CONT’D)
n) REVENUE RECOGNITION
Provided it is probable that the economic benefits will flow to the Group and the revenue and
costs, if applicable, can be measured reliably, revenue is recognised in the income statement
as follows:
(i) Revenue from the sales of goods is recognised on the transfer of risks and rewards of
ownership, which generally coincides with the delivery of goods to customers and the
passing of title to customers.
(ii)Revenue from service contracts is recognised on a straight line basis over the service
periods thereof.
(iii)Revenue from solution sales is recognised when the services are rendered.
(iv)Revenue from construction contracts is recognised when the outcome of a construction
contract can be estimated reliably:
-
-
revenue from a fixed price contract is recognised using the percentage of completion
method, measured by reference to the percentage of contract costs
incurred to date to estimated total contract costs for the contract; and
revenue from a cost plus contract is recognised by reference to the recoverable costs
incurred during the period plus an appropriate proportion of the total fee, measured by
reference to the proportion that costs incurred to date bear to the estimated total costs
of the contract.
When the outcome of a construction contract cannot be estimated reliably, revenue is
recognised only to the extent of contract costs incurred that it is probable will be recoverable.
Interest income is recognised as it accrues using the effective interest method.
o)
FOREIGN CURRENCY TRANSLATION
Foreign currency transactions during the year are translated at the foreign exchange rates
ruling at the transaction dates. Monetary assets and liabilities denominated in foreign
currencies are translated at the foreign exchange rates ruling at the balance sheet date.
Exchange gains and losses are recognised in the income statement.
Non-monetary assets and liabilities that are measured in terms of historical cost in a foreign
currency are translated using the foreign exchange rates ruling at the transaction dates. Non-
monetary assets and liabilities denominated in foreign currencies that are stated at fair value
are translated using the foreign exchange rates ruling at the dates the fair value was
determined.
UNIVISION ENGINEERING LIMITED - 39 - ANNUAL REPORT 2008
UNIVISION ENGINEERING LIMITED
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 31 March 2008
4.
PRINCIPAL ACCOUNTING POLICIES (CONT’D)
o)
FOREIGN CURRENCY TRANSLATION (Continued)
The results of foreign operations are translated into Hong Kong dollars at the exchange rates
approximating the foreign exchange rates ruling at the dates of the transactions. Balance
sheet items are translated into Hong Kong dollars at the foreign exchange rates ruling at the
balance sheet date. The resulting exchange differences are recognised directly in a separate
component of equity.
On disposal of a foreign operation, the cumulative amount of the exchange differences
recognised in equity which relates to that foreign operation is included in the calculation of
the profit or loss on disposal.
p)
EMPLOYEE BENEFITS
These comprise short term employee benefits and contributions to defined contribution
retirement plan.
Salaries, annual bonuses, paid annual leave, 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.
q)
PROVISIONS AND CONTINGENT LIABILITIES
Provisions are recognised for liabilities of uncertain timing or amount when the Group or 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 reliably estimated, 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 of economic benefits is
remote.
UNIVISION ENGINEERING LIMITED - 40 - ANNUAL REPORT 2008
UNIVISION ENGINEERING LIMITED
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 31 March 2008
4.
PRINCIPAL ACCOUNTING POLICIES (CONT’D)
r)
RELATED PARTIES
For the purpose of these financial statements, a party is considered to be related to the Group
if:
i)
the party has the ability, directly or indirectly through one or more intermediaries, to
control the Group or exercise significant influence over the Group in making financial
and operating policy decisions, or has joint control over the Group;
ii)
the Group and the party are subject to common control;
iii)
the party is an associate of the Group or a joint venture in which the Group is a
venturer;
iv)
v)
vi)
the party is a member of key management personnel of the Group or the Group’s
parent or a close family member of such an individual, or is an entity under the
control, joint control or significant influence of such individuals;
the party is a close family member of a party referred to in (i) or is an equity under the
control, joint control or significant influence of such individuals; or
the party is a post-employment benefit plan which is for the benefit of employees of
the Group or of any entity that is a related party of the Group.
Close family members of an individual are those family members who may be expected to
influence, or be influenced by, that individual in their dealings with the entity.
s)
INCOME TAX
Income tax for the year comprises current tax and movements in deferred tax assets and
liabilities. Current tax and movements in deferred tax assets and liabilities are recognised in
the income statement except to the extent that they relate to items recognised directly in
equity, in which case they are recognised in equity.
Current tax is the expected tax payable on the taxable income for the year, using tax rates
enacted or substantively enacted at the balance sheet date, and any adjustment to tax payable
in respect of previous years.
Deferred tax assets and liabilities arise from deductible and taxable temporary differences
respectively, being the differences between the carrying amounts of assets and liabilities for
financial reporting purposes and their tax bases. Deferred tax assets also arise from unused
tax losses and unused tax credits.
UNIVISION ENGINEERING LIMITED - 41 - ANNUAL REPORT 2008
UNIVISION ENGINEERING LIMITED
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 31 March 2008
4.
PRINCIPAL ACCOUNTING POLICIES (CONT’D)
s)
INCOME TAX (Continued)
Apart from certain limited exceptions, all deferred tax liabilities, and all deferred tax assets
to the extent that it is probable that future taxable profits will be available against which the
asset can be utilised, are recognised. Future taxable profits that may support the recognition
of deferred tax assets arising from deductible temporary differences include those that will
arise from the reversal of existing taxable temporary differences, provided those differences
relate to the same taxation authority and the same taxable entity, and are expected to reverse
either in the same period as the expected reversal of the deductible temporary difference or
in periods into which a tax loss arising from the deferred tax asset can be carried back or
forward. The same criteria are adopted when determining whether existing taxable temporary
differences support the recognition of deferred tax assets arising from unused tax losses and
credits, that is, those differences are taken into account if they relate to the same taxation
authority and the same taxable entity, and are expected to reverse in a period, or periods, in
which the tax loss or credit can be utilised.
The limited exceptions to recognition of deferred tax assets and liabilities are those
temporary differences arising from goodwill not deductible for tax purposes, the initial
recognition of assets or liabilities that affect neither accounting nor taxable profit (provided
they are not part of a business combination), and temporary differences relating to
investments in subsidiaries to the extent that, in the case of taxable differences, the Group
controls the timing of the reversal and it is probable that the differences will not reverse in
the foreseeable future, or in the case of deductible differences, unless it is probable that they
will reverse in the future.
The amount of deferred tax recognised is measured based on the expected manner of
realisation or settlement of the carrying amount of the assets and liabilities, using tax rates
enacted or substantively enacted at the balance sheet date. Deferred tax assets and liabilities
are not discounted.
The carrying amount of a deferred tax asset is reviewed at each balance sheet date and is
reduced to the extent that it is no longer probable that sufficient taxable profits will be
available to allow the related tax benefit to be utilised. Any such reduction is reversed to the
extent that it becomes probable that sufficient taxable profits will be available.
Additional income taxes that arise from the distribution of dividends are recognised when the
liability to pay the related dividends is recognised.
UNIVISION ENGINEERING LIMITED - 42 - ANNUAL REPORT 2008
UNIVISION ENGINEERING LIMITED
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 31 March 2008
4.
PRINCIPAL ACCOUNTING POLICIES (CONT’D)
s)
INCOME TAX (Continued)
Current tax balances and deferred tax balances, and movements therein, are presented
separately from each other and are not offset. Current tax assets are offset against current tax
liabilities, and deferred tax assets against deferred tax liabilities, if the Company or the
Group has the legally enforceable right to set off current tax assets against current tax
liabilities and the following additional conditions are met:
-
-
in the case of current tax assets and liabilities, the Company or the Group intends either
to settle on a net basis, or to realise the asset and settle the liability simultaneously; or
in the case of deferred tax assets and liabilities, if they relate to income taxes levied by
the same taxation authority on either:
-
-
the same taxable entity; or
different taxable entities which, in each future period in which significant amounts
of deferred tax liabilities or assets are expected to be settled or recovered, they
intend to realise the current tax assets and settle the current tax liabilities on a net
basis or realise and settle simultaneously.
UNIVISION ENGINEERING LIMITED - 43 - ANNUAL REPORT 2008
UNIVISION ENGINEERING LIMITED
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 31 March 2008
5.
FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICES
The Group’s major financial instruments include, borrowings, trade receivables and trade payables.
Details of these financial instruments are disclosed in the respective notes. The risk associated with
these financial instruments include credit risk, liquidity risk, currency risk and interest rate risk.
The policies on how to mitigate these risks are set out below. The management manages and
monitors these exposures to ensure appropriate measures are implemented in a timely and effective
manner.
a)
Credit risk
i) As at 31 March 2008, the maximum exposure to credit risk is represented by the
carrying amount of each financial asset in the consolidated balance sheet after deducting
any impairment allowance.
ii) In respect of trade and other receivables, in order to minimise risk, management has a
credit policy in place and the exposures to these credit risks are monitored on an ongoing
basis. Credit evaluations of its customers’ financial position and condition is performed
on each and every major customer periodically. These evaluations focus on the
customer’s past history of making payments when due and current ability to pay, and
take into account information specific to the customer as well as pertaining to the
economic environment in which the customer operates. Debts are usually due within 30
days from the date of billing.
iii) In respect of trade receivables, the Group’s exposure to credit risk is influenced mainly
by the individual characteristics of each customer. The default risk of the industry and
country in which customers operate also has an influence on credit risk. At the balance
sheet date, the Group had no significant concentrations of credit risk where individual
trade and other receivables balance exceeds 10% of the total trade and other receivables
at the balance sheet date.
iv) The credit risk on liquid funds is limited because the counterparties are banks with high
credit ratings assigned by international credit rating agencies.
Further quantitative disclosures in respect of the Group’s exposure to credit risk arising from
trade and other receivables are set out in note 21.
UNIVISION ENGINEERING LIMITED - 44 - ANNUAL REPORT 2008
UNIVISION ENGINEERING LIMITED
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 31 March 2008
5.
FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICES (CONT’D)
b)
Liquidity risk
In managing the liquidity risk, the Group’s policy is to regularly monitor and maintain an
adequate level of cash and cash equivalents determined by management to finance the
Group’s operations. Management also needs to ensure the continuity of funding for both the
short and long terms, and to mitigate the effects of cash flow fluctuation.
The following table details the remaining contractual maturities at the balance sheet date of
the Group’s and the Company’s financial liabilities which are based on the contractual
maturity date. The amounts disclosed in the table are the contractual undiscounted cash
flows (including interest payments computed using contractual rates or, if floating, based on
rates current at the balance sheet date) and the earliest date the Group and the Company can
be required to pay:
Group
Interest-bearing
borrowings
Trade and other
payables
Obligations under
finance leases
2008
More than More than
2 years but
1 year but
less than
less than
5 years
2 years
£
-
-
£
-
-
Total
contractual
undiscounted
cash flow
£
Carrying
amount
£
4,415,308
3,881,788
2,905,668
2,905,668
Within 1 year
or on demand
£
4,415,308
2,905,668
3,654
3,654
8,222
15,530
12,984
7,324,630
3,654
8,222
7,336,506
6,800,440
UNIVISION ENGINEERING LIMITED - 45 - ANNUAL REPORT 2008
UNIVISION ENGINEERING LIMITED
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 31 March 2008
5.
FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICES (CONT’D))
b)
Liquidity risk (Continued)
Group (Continued)
Interest-bearing
borrowings
Trade and other
payables
Company
Interest-bearing
borrowings
Trade and other
payables
Obligations under
finance leases
2007
More than More than
2 years but
1 year but
less than
less than
5 years
2 years
£
-
-
-
£
-
-
-
2008
Total
contractual
undiscounted
cash flow
£
Carrying
amount
£
1,274,317
1,241,905
1,875,779
1,875,779
3,150,096
3,117,684
More than More than
1 year but
2 years but
less than
2 years
Total
contractual
less than undiscounted
cash flow
£
5 years
£
Carrying
amount
£
-
-
3,146,371
2,642,945
1,848,035
1,848,035
Within 1 year
or on demand
£
1,274,317
1,875,779
3,150,096
Within 1 year
or on demand
£
3,146,371
1,848,035
3,654
3,654
8,222
15,530
12,984
4,998,060
3,654
8,222
5,009,936
4,503,964
2007
More than More than
1 year but
2 years but
less than
2 years
Total
contractual
less than undiscounted
cash flow
£
5 years
£
Carrying
amount
£
£
-
-
£
-
-
1,262,269
1,262,269
Within 1 year
or on demand
£
Trade and other
payables
1,262,269
UNIVISION ENGINEERING LIMITED - 46 - ANNUAL REPORT 2008
UNIVISION ENGINEERING LIMITED
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 31 March 2008
5.
FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICES (CONT’D)
c)
Foreign currency risk
The Group operates mostly in Hong Kong, Taiwan and PRC and revenue and
expenditure are mainly denominated in Hong Kong Dollars (“HKD”), New Taiwan
Dollars (“NTD”) and Renminbi (“RMB”). The Group is also exposed to foreign
currency risks as it engages in projects that were billed in United States dollars (“USD”).
The Group currently does not have any policy on hedges of foreign currency risk.
However, management monitors the foreign currency risk exposure and will consider
hedging significant foreign currency risk should the need arise.
The following table details the Group’s and the Company’s exposure at the balance sheet
date to currency risk arising from recognised assets or liabilities denominated in a
currency other than the functional currency of the entity to which they related.
Group
2008
NTD
RMB
USD
HKD
Trade and other receivables
Cash and cash equivalents
Interest-bearing borrowings
Trade and other payables
135,172,017
6,535,647
(74,950,869)
(61,372,707)
101,599,900
534,160
-
(6,533,774)
15,216
141,771
(5,000,000)
40,705,543
2,140,648
(2,000,000)
(553,973) (19,659,463)
Overall net exposure
5,384,088
95,600,286
(5,396,986) 21,186,728
UNIVISION ENGINEERING LIMITED - 47 - ANNUAL REPORT 2008
UNIVISION ENGINEERING LIMITED
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 31 March 2008
5.
FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICES (CONT’D)
c)
Foreign currency risk (Continued)
Group (Continued)
Trade and other receivables
Cash and cash equivalents
Interest-bearing borrowings
Trade and other payables
2007
NTD
RMB
USD
HKD
138,962,229
3,490,940
(80,758,263)
(32,114,742)
20,257,994
395,608
-
13,824
208,624
-
(2,027,823) `
(73,183)
24,142,719
6,914,394
-
(17,493,523)
Overall net exposure
29,580,164
18,625,779
149,265
13,563,590
Company
Trade and other receivables
Cash and cash equivalents
Interest-bearing borrowings
Trade and other payables
Overall net exposure
Trade and other receivables
Cash and cash equivalents
Trade and other payables
Overall net exposure
2008
NTD
RMB
USD
HKD
-
-
-
-
-
9,168,706
-
-
(2,787,741)
15,216
141,417
(5,000,000)
(553,973)
36,261,019
2,118,739
(2,000,000)
(19,615,667)
6,380,965
(5,397,340)
16,764,091
2007
NTD
RMB
USD
HKD
-
-
-
-
10,653,435
-
(167,505)
13,824
137,211
(73,183)
24,141,719
6,907,687
(17,483,128)
10,485,930
77,852
13,566,278
UNIVISION ENGINEERING LIMITED - 48 - ANNUAL REPORT 2008
UNIVISION ENGINEERING LIMITED
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 31 March 2008
5.
FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICES (CONT’D)
c) Foreign currency risk (Continued)
Sensitivity analysis
An analysis of the estimated change in the Group’s profit after tax (and the retained earnings)
in response to reasonably possible changes in the foreign exchange rates to which the Group
has significant exposure at the balance sheet date is presented in the following table.
Group
NTD
RMB
USD
HKD
2008
2007
Increase/
(decrease)
in foreign
exchange
rates
5%
(5%)
5%
(5%)
5%
(5%)
5%
(5%)
Effect on
profit after
tax and
retained
earnings
£
4,201
(4,201)
325,189
(325,189)
(136,323)
136,323
4,429
(4,429)
Increase/
(decrease)
in foreign
exchange
rates
5%
(5%)
5%
(5%)
5%
(5%)
5%
(5%)
Effect on
profit after
tax and
retained
earnings
£
24,187
(24,187)
65,338
(65,338)
4,025
(4,025)
2,859
(2,859)
The sensitivity analysis has been determined assuming that the change in foreign exchange
rates had occurred at the balance sheet date and had been applied to each of the Group entities’
exposure to currency risk for both derivative and non-derivative financial instruments in
existence at that date while all other variables remain constant. The stated changes also
represent management’s assessment of reasonably possible change in foreign exchange rates
until the next annual balance sheet date. In this respect, it is assumed that the pegged rate
between the HKD and the USD would be materially unaffected by any changes in movement
in value of the USD against other currencies. Results of the analysis as presented in the above
table represent an aggregation of the effects on each of the Group entities’ profit after tax and
equity measured in the respective functional currencies, translated into Pound at the exchange
rate ruling at the balance sheet date for presentation purposes. The analysis is performed on the
same basis for 2007.
UNIVISION ENGINEERING LIMITED - 49 - ANNUAL REPORT 2008
UNIVISION ENGINEERING LIMITED
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 31 March 2008
5.
FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICES (CONT’D)
d)
Interest rate risk
The Group’s interest rate risk arises primarily from interest-bearing borrowings. Borrowings
issued at variable rates and at fixed rates expose the Group to interest rate risk and fair value
interest rate risk respectively. The Group’s interest rate profile as monitored by management
is set out below.
The following table details the interest rate profile of the Group’s and the Company’s
interest-bearing financial liabilities less interest-bearing investments (excluding cash held for
short-term working capital purposes) (i.e. net borrowings) at the balance sheet date.
Group
Net fixed rate
borrowings:
Interest-bearing
borrowings
Variable rate
borrowings:
Bank loans
2008
2007
Effective
interest rate
Effective
interest rate
£
26.67%
2,514,021
-
£
-
5%
1,367,767
4.20% - 4.27%
1,241,905
Total net borrowings
3,881,788
1,241,095
Net fixed rate
borrowings as a
percentage of total
net borrowings
64.8%
-
UNIVISION ENGINEERING LIMITED - 50 - ANNUAL REPORT 2008
UNIVISION ENGINEERING LIMITED
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 31 March 2008
5.
FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICES (CONT’D)
d)
Interest rate risk (Continued)
Company
2008
2007
Effective
interest rate
Effective
interest rate
£
Net fixed rate
borrowings:
Interest-bearing
borrowings
Variable rate
borrowings:
Bank loans
26.67%
2,514,021
5%
128,924
-
-
Total net borrowings
2,642,945
Net fixed rate
borrowings as a
percentage of total
net borrowings
Sensitivity analysis
95.1%
£
-
-
-
-
At 31 March 2008, it is estimated that a general increase/decrease of 25 basis points in
interest rate, with all other variables held constant, would decrease/increase the Group’s
profit before tax by approximately £3,419 (2007: £3,105).
The sensitivity analysis above has been determined assuming that the change in interest rates
had occurred at the balance sheet date and had been applied to the exposure to interest rate
risk for the non-derivative financial liabilities in existence at that date. The 25 basis points
increase or decrease represents management’s assessment of a reasonably possible change in
interest rates over the period until the next annual balance sheet date. The analysis is
performed on the same basis for 2007.
UNIVISION ENGINEERING LIMITED - 51 - ANNUAL REPORT 2008
UNIVISION ENGINEERING LIMITED
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 31 March 2008
5.
FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICES (CONT’D)
e)
Fair value estimation
The fair values of cash and cash equivalents, bank deposits, trade and other receivables, trade
and other payables are not materially different from their carrying amounts because of the
immediate or short term maturity of these financial instruments. The carrying amounts of
bank loans and loans from a shareholder approximate their fair values.
f)
Capital risk management
The Group’s primary objectives when managing capital are to safeguard the Group’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 Group actively and regularly reviews and manages its 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 Group monitors its capital structure on the basis of a net debt-to-adjusted capital ratio.
For this purpose the Group defines net debt as total debt (which includes bank borrowings and
other financial liabilities) less bank deposits and cash. Adjusted capital comprises all
components of equity less unaccrued proposed dividends.
During 2008, the Group’s strategy, which was unchanged from 2007, was to maintain the net
debt-to-adjusted capital ratio as low as feasible. In order to maintain or adjust the ratio, the
Group may adjust the amount of dividends paid to shareholders, return capital to shareholders,
issue new shares or sell assets to reduce debt.
Neither the Company nor any of its subsidiary undertakings are subject to externally imposed
capital requirements.
UNIVISION ENGINEERING LIMITED - 52 - ANNUAL REPORT 2008
UNIVISION ENGINEERING LIMITED
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 31 March 2008
5.
FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICES (CONT’D)
f) Capital risk management (Continued)
The net debt-to-adjusted capital ratio at 31 March 2008 and 2007 was as follows:
Current liabilities
Trade and other payables
Bank overdrafts
Interest-bearing borrowings
Tax payable
Obligations under finance
lease
Group
2008
£
2007
£
Company
2008
£
2007
£
2,905,668
2,457
3,881,788
495,810
1,875,779
-
1,241,905
29,485
1,848,035
2,457
2,642,945
-
1,262,269
-
-
-
3,055
-
3,055
-
Non-current liabilities
7,288,778
3,147,169
4,496,492
1,262,269
Obligation under finance
lease
Total debt
Less: Cash and cash
equivalents
Net debt
Total equity
Net debt-to-adjusted
capital ratio
9,929
-
9,929
-
7,298,707
3,147,169
4,506,421
1,262,269
440,955
1,603,932
245,135
1,488,295
6,857,752
1,543,237
4,261,286
(226,026)
7,290,972
5,875,457
5,625,098
5,469,484
94%
26%
76%
N/A
UNIVISION ENGINEERING LIMITED - 53 - ANNUAL REPORT 2008
UNIVISION ENGINEERING LIMITED
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 31 March 2008
6.
CRITICAL ACCOUNTING ESTIMATES AND JUDGEMENTS
Estimates and judgements are continually evaluated and are based on historical experience and
other factors. These include expectations of future events that are believed to be reasonable under
the circumstances. Although these estimates are based on management’s best knowledge of current
events and actions, the actual results will, by definition, seldom equal those estimates. The
estimates and assumptions that involve a high degree of judgements are discussed below:
a) Estimation of contract costs
Estimated costs to complete contracts are judged by management through the application of
their experience and knowledge of the industry in which the Group operates. However,
contract performance can be difficult to predict accurately. Management believes that contract
budgets do not deviate materially from actual costs incurred due to a strong cost control system
with regular review of budgets which highlight any incidences that could affect estimated costs
to completion.
b) Estimation of write down of inventories
The identification of any write down of inventories of the Group requires the use of judgement
and estimates by management. Management estimates the net realisable value of inventories
with reference to the latest invoice prices and the value in use. Operational procedures are in
place to monitor the condition and usefulness of inventories. Management regularly reviews the
age of inventories to identify slow moving items and a physical inventory count is carried out
on a regular basis to identify obsolete or defective items. Write down will be established for
inventories where a drop in net realisable value has been identified. At 31 March 2008, there
was no write down of obsolete inventories recognised as expense in the income statement.
UNIVISION ENGINEERING LIMITED - 54 - ANNUAL REPORT 2008
UNIVISION ENGINEERING LIMITED
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 31 March 2008
6.
CRITICAL ACCOUNTING ESTIMATES AND JUDGEMENTS (CONT’D)
c) Estimation of impairment for trade and other receivables
The estimation of impairment for trade and other receivables includes an assessment of
recoverability of individual account balances and a review of ageing analysis of trade and other
receivables by management. Management will also review the credit history of customers in
assessing the recoverability of trade and other receivables. When any indication comes to their
attention that a trade and other receivables might not be recovered in full, impairment will be
made and recognised as an expense in the income statement.
d) Estimation of fair value of goodwill
The fair value is calculated as based on projections of the future profitability and cash flows for
each cash generating unit. Future cash flows are then discounted at an appropriate rate.
Management exercises its judgement in a number of forward looking areas. Since these
judgements relate to the future, actual results are likely to be different because events and
circumstances frequently do not occur as expected both due to error in estimation and external
events, and the differences may be material.
e) Deferred Taxation
Deferred tax assets are recognised for tax losses not yet used and temporary deductible
differences. As those deferred tax assets can only be recognised to the extent that it is probable
that future taxation profits will be available against which the unused tax credits can be utilised,
management’s judgement is required to assess the probability of future taxation profits.
Management’s assessment is constantly reviewed and deferred tax assets are recognised if it
becomes probable that future taxable profits will allow the deferred tax asset to be recovered.
UNIVISION ENGINEERING LIMITED - 55 - ANNUAL REPORT 2008
UNIVISION ENGINEERING LIMITED
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 31 March 2008
7. SEGMENT INFORMATION
Segment information is presented by way of two segment formats: (a) by business segment as a
primary segment reporting basis; and (b) by geographical segment as a secondary segment
reporting basis.
(a) Business segments
The Group is organised into the following business segments:
- Construction contracts
- Maintenance contracts
- Product sales
- Solution sales
Results by business segment for the year ended 31 March 2008 are as follows:
Income statement information:
Revenue
Profit from operations
Balance sheet information:
Assets
Construction
contracts
£
Maintenance
contracts
£
Product
Solution
sales
£
sales
£
Total
£
11,208,860
1,441,595
997,459
114,570
1,611,025
146,712
706,185
235,105
14,523,529
1,937,982
11,206,297
1,018,136
1,644,422
720,824
14,589,679
Liabilities
5,662,132
492,483
795,422
348,670
7,298,707
Other segment information:
Depreciation
Capital expenditure
132,894
109,843
11,826
10,998
19,100
17,764
8,373
7,787
172,193
146,392
Results by business segment for the year ended 31 March 2007 are as follows:
Income statement information:
Revenue
Profit from operation
Balance sheet information:
Assets
Unallocated
Construction
contracts
£
Maintenance
contracts
£
Product
sales
£
Solution
sales
£
Total
£
5,425,499
686,513
994,508
188,836
1,817,599
332,120
698,172
269,430
8,935,778
1,476,899
5,477,934
-
1,004,119
-
1,835,165
-
704,919
-
9,022,137
489
9,022,626
Liabilities
1,910,853
350,265
640,156
245,895
3,147,169
Other segment information:
Depreciation
Capital expenditure
70,070
31,630
12,844
5,798
23,474
10,597
9,024
4,073
115,412
52,098
UNIVISION ENGINEERING LIMITED - 56 - ANNUAL REPORT 2008
UNIVISION ENGINEERING LIMITED
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 31 March 2008
7. SEGMENT INFORMATION (CONT’D)
(b) Geographical segments
In determining the Group’s geographical segments, revenues are attributed to the segments
based on the location of the customers and assets are attributed to the segments based on the
location of the assets.
No further geographical segment information is presented as the Group’s revenue is materially
derived from customers based in one geographic segment comprising Hong Kong, Macau,
Taiwan and the People’s Republic of China (“PRC”), and all of the Group’s assets are located
in the same geographic segment.
8. OTHER INCOME
Exchange gains
Gain on disposal of plant and equipment
Gain on disposal of investment securities
Interest income *
Written back on trade and other payables
Sundry income
2008
£
2007
£
270,746
681
-
21,172
30,848
359
323,806
82,714
-
30,105
19,966
-
6,499
139,284
* The amount represents interest income on financial assets not at fair value through profit or
loss.
UNIVISION ENGINEERING LIMITED - 57 - ANNUAL REPORT 2008
UNIVISION ENGINEERING LIMITED
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 31 March 2008
9. PROFIT FROM TAXATION
Profit before taxation is stated after charging/(crediting):
Cost of inventories recognised as expenses *
Unrealised loss on investment account carried
at fair value
Impairment losses on trade and other receivables
Write down of/(recovery of) obsolete inventories, net
Auditors’ remuneration
- audit services (parent company)
- other services
Depreciation – leased plant and equipment
Depreciation – owned plant and equipment
Exchange gains
Research and development costs
Operating lease charges – minimum lease payments
Written back on trade and other payables
(Gain)/loss on disposal of plant and equipment
2008
£
2007
£
3,561,470
3,947,819
7,480
523,163
11,978
87,192
597
1,557
170,636
(270,746)
41,292
99,548
(30,848)
(681)
14,747
46,700
(205,064)
102,511
-
-
115,412
(82,714)
65,666
47,079
(51,730)
739
* Cost of inventories recognised as expenses included a net reversal of a provision for obsolete
inventories of £11,978 (2007: provision for obsolete inventories of £205,064) and a write back of
trade and other payables of £30,848 (2007: £51,730).
10. FINANCE COSTS
Interest on bank loans and other borrowings
wholly repayable within five years
Finance charge on obligation under finance lease
Total interest expenses on financial liabilities
not at fair value through profit or loss
2008
£
2007
£
239,804
44,476
148
-
239,952
44,476
UNIVISION ENGINEERING LIMITED - 58 - ANNUAL REPORT 2008
UNIVISION ENGINEERING LIMITED
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 31 March 2008
11. DIRECTORS’ REMUNERATION
Directors’ remuneration for the year is disclosed as follows:
Directors’ fees
Other emoluments:
Salaries, bonuses and allowances
Pension scheme contributions
12. STAFF COSTS (including directors’ remuneration)
Wages and salaries
Pension scheme contributions
2008
£
2007
£
76,215
92,535
99,810
2,233
178,258
95,146
2,105
189,786
2008
£
2007
£
1,209,323
60,569
990,520
69,340
1,269,892
1,059,860
UNIVISION ENGINEERING LIMITED - 59 - ANNUAL REPORT 2008
UNIVISION ENGINEERING LIMITED
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 31 March 2008
13. INCOME TAX IN THE CONSOLIDATED INCOME STATEMENT
a)
Income tax in the consolidated income statement represents:
Current tax
Hong Kong profit tax
PRC enterprise income tax
Other jurisdictions
2008
£
-
426,815
8,897
435,712
2007
£
-
-
30,659
30,659
No Hong Kong profits tax has been provided for in the financial statements as the Company
has accumulated tax losses brought forward which exceed the estimated assessable profits for
both financial years.
Taxes for subsidiary undertakings are calculated by the rates prevailing in the local
jurisdictions.
On 16th March 2007, the Fifth Plenary Session of the Tenth National People’s Congress
passed the Corporate Income Tax Law (“New Tax Law”) of the PRC which took effect on 1st
January 2008. The PRC income tax rate is unified to 25% for all enterprises.
The enactment of the New Tax Law is not expected to have any financial effect on the amounts
accrued in the consolidated balance sheet in respect of current tax payable.
(b) Reconciliation between tax expense and accounting profit at the applicable tax rates :
2008
£
2007
£
Profit before taxation
1,698,030
1,432,423
Notional tax on profit before taxation, calculated
at the rates applicable to profits in the tax
jurisdictions concerned
Tax effect of non-taxable income
Tax effect of non-deductible expenses
Tax effect of temporary differences not recognised
Tax effect of utilisation of tax losses not
314,591
(3,442)
98,044
67,898
267,254
(11,336)
7,842
10,305
recognised in prior years
(41,379)
(243,406)
Tax expense
435,712
30,659
UNIVISION ENGINEERING LIMITED - 60 - ANNUAL REPORT 2008
UNIVISION ENGINEERING LIMITED
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 31 March 2008
14. EARNINGS PER SHARE
The calculation of basic earnings per share is based on the profit attributable to equity holders of
the parent for the year of £1,400,331 (2007: £1,281,189), and the weighted average of 383,677,323
(2007: 327,814,621) ordinary shares in issue during the year.
There were no potential dilutive instruments at either financial year end.
15. DIVIDEND
No dividend has been declared or paid in the year ended 31 March 2008 (2007: £Nil).
16. GOODWILL
Group
Cost
At 1 April 2006
Arising from acquisition of subsidiary undertakings (note 18)
At 31 March 2007, 1 April 2007 and 31 March 2008
Impairment loss
At 1 April 2006, 1 April 2007 and 31 March 2008
Carrying amount
At 31 March 2008
At 31 March 2007
£
-
961,845
961,845
-
961,845
961,845
UNIVISION ENGINEERING LIMITED - 61 - ANNUAL REPORT 2008
UNIVISION ENGINEERING LIMITED
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 31 March 2008
16. GOODWILL (CONT’D)
Impairment test for cash-generating unit containing goodwill
Goodwill is allocated to the Group’s cash-generating unit (“CGU”) identified according to business
segment as follows:
2008
£
2007
£
Construction contracts
961,845
961,845
The recoverable amount of the CGU is determined based on value-in-use calculations. These
calculations use cash flow projections based on financial budgets approved by management
covering a twelve month period. A discount rate of 15% has been used for the value-in-use
calculations.
Key assumptions used for value-in-use calculations:
Gross margin
Growth rate
2008
£
2007
£
15% - 30%
15%
23% - 30%
20%
Management determined the budgets based on their experience and knowledge in the construction
contracts operations. The discount rate used is pre-tax and reflects specific risks relating to the
relevant segment.
Based on the impairment test performed, no impairment loss is recognised for the year (2007:
£Nil).
UNIVISION ENGINEERING LIMITED - 62 - ANNUAL REPORT 2008
UNIVISION ENGINEERING LIMITED
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 31 March 2008
17. PLANT AND EQUIPMENT
Group
Cost
At 1 April 2006
Acquisition of subsidiary
undertakings
Additions
Disposals
Exchange realignment
Furniture
and fixtures
£
Computer
equipment
£
Motor
vehicles
£
Leasehold
improvements
£
Research
assets
£
Total
£
82,782
124,451
14,666
6,353
-
228,252
48,031
15,544
-
93,268
5,574
-
(11,221)
(15,073)
48,101
11,705
(6,078)
(1,465)
47,296
-
-
(3,201)
601,786
19,275
-
3,413
838,482
52,098
(6,078)
(27,547)
At 31 March 2007
135,136
208,220
66,929
50,448
624,474
1,085,207
At 1 April 2007
Additions
Disposals
Exchange realignment
135,136
19,811
-
5,416
208,220
3,165
-
7,098
66,929
42,950
(11,461)
3,835
50,448
-
-
5,172
624,474
94,214
(1,488)
46,727
1,085,207
160,140
(12,949)
68,248
At 31 March 2008
160,363
218,483
102,253
55,620
763,927
1,300,646
Accumulated depreciation
At 1 April 2006
Acquisition of subsidiary
undertakings
Charge for the year
Written back on disposals
Exchange realignment
75,450
118,682
14,102
21,835
12,493
-
66,302
12,497
-
(10,243)
(15,030)
27,870
9,081
(5,293)
(1,864)
6,353
9,197
7,807
-
(1,558)
-
214,587
324,406
73,534
-
(974)
449,610
115,412
(5,293)
(29,669)
At 31 March 2007
99,535
182,451
43,896
21,799
396,966
744,647
At 1 April 2007
Charge for the year
Written back on disposals
Exchange realignment
99,535
21,413
-
2,772
182,451
12,865
-
5,601
43,896
12,933
(10,269)
2,438
21,799
16,690
-
1,832
396,966
108,292
(446)
29,703
744,647
172,193
(10,715)
42,346
At 31 March 2008
123,720
200,917
48,998
40,321
534,515
948,471
Net book value
At 31 March 2008
36,643
17,566
53,255
15,299
229,412
352,175
At 31 March 2007
35,601
25,769
23,033
28,649
227,508
340,560
During the year, additions to motor vehicles of the Group financed by new finance leases were
£13,748 (2007: £Nil). At the balance sheet date, the net book value of motor vehicles held under
finance leases of the Group and the Company was £14,017 (2007: £Nil).
UNIVISION ENGINEERING LIMITED - 63 - ANNUAL REPORT 2008
UNIVISION ENGINEERING LIMITED
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 31 March 2008
17. PLANT AND EQUIPMENT (CONT’D)
Company
Cost
At 1 April 2006
Additions
Disposals
Exchange realignment
Furniture
and
fixtures
HK$
Computer
equipment
HK$
Motor
vehicles
HK$
Leasehold
improvements
HK$
Total
HK$
82,782
1,280
-
124,451
2,755
-
(10,700)
(15,601)
14,666
4,877
(3,772)
(1,738)
6,353
-
-
(753)
228,252
8,912
(3,772)
(28,792)
At 31 March 2007
73,362
111,605
14,033
5,600
204,600
At 1 April 2007
Additions
Disposals
Exchange realignment
73,362
120
-
240
111,605
-
-
(131)
14,033
18,347
(11,461)
(122)
5,600
-
-
(49)
204,600
18,467
(11,461)
(62)
At 31 March 2008
73,722
111,474
20,797
5,551
211,544
Accumulated depreciation
At 1 April 2006
Charge for the year
Written back on disposals
Exchange realignment
75,450
1,795
-
118,682
2,816
-
(9,907)
(15,036)
14,102
1,012
(3,274)
(1,715)
6,353
-
-
(753)
214,587
5,623
(3,274)
(27,411)
At 31 March 2007
67,338
106,462
10,125
5,600
189,525
At 1 April 2007
Charge for the year
Written back on disposals
Exchange realignment
67,338
1,792
-
292
106,462
3,015
-
(85)
10,125
2,908
(10,269)
(88)
5,600
-
-
(49)
189,525
7,715
(10,269)
70
At 31 March 2008
69,422
109,392
2,676
5,551
187,041
Net book value
At 31 March 2008
4,300
2,082
18,121
At 31 March 2007
6,024
5,143
3,908
-
-
24,503
15,075
UNIVISION ENGINEERING LIMITED - 64 - ANNUAL REPORT 2008
UNIVISION ENGINEERING LIMITED
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 31 March 2008
18.
INVESTMENT IN SUBSIDIARY UNDERTAKINGS
2008
£
2007
£
Shares in subsidiary undertakings
1,053,475
1,053,475
Amounts due from subsidiary undertakings
4,993,318
1,000,606
Total
6,046,793
2,054,081
The amounts due from subsidiary undertakings are unsecured, interest-free and not expected to be
recovered within one year.
Particulars of the Group’s subsidiary undertakings at 31 March 2008 are set out below:
Name
Place of
incorporation and
operations
Issued and
fully paid up
share capital/
registered capital
Percentage
of equity
attributable to
the Group
Directly Indirectly
Principal
activities
T-Com Technology Co
Taiwan
Limited
NT$80,000,000
Ordinary share
52.25%
-
Supply, design, installation and
maintenance of closed circuit
television and surveillance
systems and the sale of
security system related products
Leader Smart
Engineering Limited
Hong Kong
HK$10,000
Ordinary shares
100%
-
Investment holding and
engineering contractor
Leader Smart
Engineering
(Shanghai)
Limited (note)
Note
PRC
USD1,000,000
Registered capitals
-
100% Supply, design, installation and
maintenance of closed circuit
television and surveillance
systems and provision of
engineering consultancy
services
Leader Smart Engineering (Shanghai) Limited is a wholly-foreign owned enterprise established in
mainland China to operate for 20 years up to 2025.
UNIVISION ENGINEERING LIMITED - 65 - ANNUAL REPORT 2008
UNIVISION ENGINEERING LIMITED
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 31 March 2008
18.
INVESTMENT IN SUBSIDIARY UNDERTAKINGS (CONT’D)
No acquisition of business has been made during the year ended 31 March 2008. The details of the
acquisition of business during the year ended 31 March 2007 are set out below.
(a) T-Com Technology Co Limited
On 17 May 2006, the Company acquired a 52.25% equity interest in T-Com Technology Co
Limited (“T-Com”) for a total consideration of £475,467.
The fair value of the subsidiary undertaking’s net assets on the date of acquisition is as
disclosed below:
Acquiree’s
carrying
amount
before
Fair
value
combination adjustment
£
£
Net assets acquired:
Plant and equipment
Inventories
Due from construction contract
customers
Trade and other receivables
Cash and cash equivalents
Bank loan, secured
Bills payable
Due to construction contract customers
Trade payables and accruals
337,736
562,027
696,250
503,346
45,159
(1,070,394)
(271,298)
(38,253)
(418,885
Minority interest
Represented by:
Cash consideration
Goodwill (see note 16)
Analysis of the net outflow of cash and cash
equivalents in respect of the acquisition is as follows:
Cash consideration paid
Cash and cash equivalents acquired
UNIVISION ENGINEERING LIMITED - 66 - ANNUAL REPORT 2008
Fair
value
£
337,736
562,027
696,250
503,346
45,159
(1,070,394)
(271,298)
(38,253)
(418,885)
345,688
(165,066)
180,622
475,467
(294,845)
180,622
(475,467)
45,159
(430,308)
UNIVISION ENGINEERING LIMITED
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 31 March 2008
18.
INVESTMENT IN SUBSIDIARY UNDERTAKINGS (CONT’D)
(a) T-Com Technology Co Limited (Continued)
From the date of acquisition to 31 March 2007, T-Com has contributed £128,430 to the net
profit to the Group. It is not possible to estimate the amount T-Com would have contributed
to the net profit of the Group had the acquisition taken place at the beginning of the year as T-
Com has both a different year end and accounting policies. The cost of preparing such
information would be excessive.
Goodwill is attributable to the benefit of expected synergies, revenue growth and future
market development of T-Com. These benefits are not recognised separately from goodwill as
the future economic benefits arising from them cannot be reliably measured.
UNIVISION ENGINEERING LIMITED - 67 - ANNUAL REPORT 2008
UNIVISION ENGINEERING LIMITED
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 31 March 2008
18.
INVESTMENT IN SUBSIDIARY UNDERTAKINGS (CONT’D)
(b) Leader Smart Engineering Limited
On 2 October 2006, the Company acquired 100% equity interest in Leader Smart for an
aggregate consideration of £606,920.
The fair value of the subsidiary undertaking’s net assets on the date of acquisition is as
disclosed below:
Acquiree’s
carrying
amount
before
Fair
value
combination adjustment
£
£
51,136
498,637
4,076
(613,929)
-
-
-
-
Net liabilities acquired:
Plant and equipment
Other receivables
Cash and cash equivalents
Trade payables and accruals
Represented by:
Cash consideration
Share consideration
Goodwill (see note 16)
Analysis of the net outflow of cash and cash equivalents
in respect of the acquisition is as follows:
Cash consideration paid
Cash and cash equivalents acquired
Fair
value
£
51,136
498,637
4,076
(613,929)
(60,080)
366,890
240,030
(667,000)
(60,080)
(366,890)
4,076
(362,814)
From the date of acquisition to 31 March 2007, Leader Smart has contributed loss of £34,100
to the net profit of the Group. It is not possible to estimate the amount Leader Smart would
have contributed to the net profit of the Group had the acquisition taken place at the beginning
of the year as Leader Smart has both a different year end and accounting policies. The cost of
preparing such information would be excessive.
Goodwill is attributable to the benefit of expected synergies, revenue growth and future
market development of Leader Smart. These benefits are not recognised separately from
goodwill as the future economic benefits arising from them cannot be reliably measured.
UNIVISION ENGINEERING LIMITED - 68 - ANNUAL REPORT 2008
19. INVENTORIES
Raw materials
Work in progress
Finished goods
UNIVISION ENGINEERING LIMITED
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 31 March 2008
2008
2007
Group
£
Company
£
Group
£
Company
£
317,136
634
655,630
973,400
317,136
634
405,256
330,413
6,211
670,810
723,026
1,007,434
330,413
6,211
481,516
818,140
The analysis of the amount of inventories recognised as an expense is as follows:
Carrying amount of inventories sold
Write down of inventories
Reversal of write down of inventories
20. CONSTRUCTION CONTRACTS IN PROGRESS
Group
2008
£
2007
£
3,549,492
11,978
-
4,152,883
-
(205,064)
3,561,470
3,947,819
Contract costs incurred plus
attributable profits less
foreseeable losses
Progress billings to date
Represented by:
Amounts due from
construction
contract customers
Amounts due to
construction
contract customers
2008
2007
Group
£
Company
£
Group
£
Company
£
16,039,782
(8,535,623)
5,730,929
(5,493,196)
7,761,795
(6,511,748)
5,061,197
(4,881,208)
7,504,159
237,733
1,250,047
179,989
8,333,620
1,021,233
1,849,509
763,951
(829,461)
(783,500)
(599,462)
(583,962)
7,504,159
237,733
1,250,047
179,989
At 31 March 2008, the amount of retention receivables from customers recorded within “trade and
other receivables” is £10,164 (2007: £10,254).
Within amounts due from construction contracts customers is the amount of £5,661,646 for which
the original land use rights certificate is held as security.
UNIVISION ENGINEERING LIMITED - 69 - ANNUAL REPORT 2008
UNIVISION ENGINEERING LIMITED
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 31 March 2008
21. TRADE AND OTHER RECEIVABLES
2008
2007
Group
£
Company
£
Group
£
Company
£
Trade receivables
Less: allowance for doubtful
debt
1,912,168
1,291,039
2,170,602
1,188,209
(189,183)
(22,170)
(12,373)
(12,373)
1,722,985
1,268,869
2,158,229
1,175,836
Bills receivable
Other receivables
Retention receivables
362,615
324,484
10,164
-
283,131
10,164
10,052
641,051
10,254
-
213,025
10,254
Loan and receivables
Deposits and prepayments
Amounts due from
construction contract
customers (note 20)
Pledged bank balances
2,420,248
642,533
1,562,164
43,762
2,819,586
315,611
1,399,115
68,947
8,333,620
464,903
1,021,233
464,903
1,849,509
124,149
763,951
124,149
11,861,304
3,092,062
5,108,855
2,356,162
All of the trade and other receivables are expected to be recovered within one year.
At 31 March 2008, the Group has pledged bank deposits of £464,903 (2007: £124,149) to banks for
performance bonds in respect of construction contracts undertaken by the Group and the Company.
a)
Impairment of trade receivables
Impairment losses in respect of trade debtors are recorded using an allowance account unless
the Group is satisfied that recovery of the amount is remote, in which case the impairment loss
is written off against trade debtors directly.
UNIVISION ENGINEERING LIMITED - 70 - ANNUAL REPORT 2008
UNIVISION ENGINEERING LIMITED
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 31 March 2008
21. TRADE AND OTHER RECEIVABLES (CONT’D)
Impairments
Movements in the allowance for doubtful debts
2008
2007
Group
£
Company
£
Group
£
Company
£
12,373
12,373
12,373
12,373
165,228
11,582
9,808
(11)
-
-
-
-
At 1 January
Impairment loss
recognised (note)
Effect of translation
At 31 December
189,183
22,170
12,373
12,373
Note:
As at 31 March 2008, trade receivables of the Group and the Company amounting to £165,228
(2007: £Nil) and £9,808 (2007: £Nil) respectively were individually determined to be impaired
and full impairment had been made. These individually impaired receivables were outstanding
for over 180 days as at the balance sheet date or were due from companies with financial
difficulties.
b) Trade receivables that are not impaired
The ageing analysis of trade debtors that are neither individually nor collectively considered to
be impaired are as follows:
Up to 3 months past due
Over 3 months but less
than 1 year past due
Over 1 year past due
2008
2007
Group
£
1,375,786
287,151
Company
£
1,017,121
216,681
Group
£
1,317,301
772,310
Company
£
1,058,492
48,996
60,048
35,067
68,618
68,348
1,722,985
1,268,869
2,158,229
1,175,836
Receivables that were past due but not impaired relate to a number of independent customers
that have a good track record with the Group. Based on past experience, management believes
that no impairment allowance is necessary in respect of these balances as there has not been a
significant change in credit quality and the balances are still considered fully recoverable. The
Company does not hold any collateral over these balances.
UNIVISION ENGINEERING LIMITED - 71 - ANNUAL REPORT 2008
UNIVISION ENGINEERING LIMITED
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 31 March 2008
22. CASH AND CASH EQUIVALENTS
2008
2007
Group
£
Company
£
Group
£
Company
£
Cash and bank balances
Short term bank deposits
440,955
-
245,135
-
671,873
932,059
558,235
930,060
Cash and cash equivalents
in the balance sheet
440,955
245,135
1,603,932
1,488,295
Bank overdrafts
(2,457)
-
Cash and cash equivalents
in the consolidated
cash flow statement
438,498
1,603,932
23. INTEREST-BEARING BORROWINGS
2008
2007
Group
£
Company
£
Group
£
Company
£
Within 1 year or on demand
Bank loans
- Secured (note a)
- Unsecured (note b)
Loan from related
1,238,843
128,924
-
128,924
1,241,905
-
company (note c)
2,514,021
2,514,021
-
3,881,788
2,642,945
1,241,905
Notes:
-
-
-
-
a)
b)
c)
The secured bank loan carried interest at rates ranging from 4.20% to 5.00% per annum
(2007: 4.20% to 4.27%) and were secured by the sales contracts from Formosa Plastics
Group.
The unsecured bank loans carried interest at prime rate minus 0.5% per annum (2007: Nil).
The prime rate as at 31 March 2008 is 5.25% per annum.
A loan of US$5 million was provided on 31 December 2007 by Mayne Management
Limited, the holding company of UniVision Holdings Limited which has a 47.9% equity
interest of the Company. The loan facility is used exclusively to finance a major construction
project in PRC. The loan carries interest at the rate of 26.67% pa. The loan includes interest
amounting to US$1 million which is payable on the maturity date of the loan on 30
September 2008. Security over 41% of the Group’s interest in a shopping mall contract
within the PRC has been provided.
UNIVISION ENGINEERING LIMITED - 72 - ANNUAL REPORT 2008
UNIVISION ENGINEERING LIMITED
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 31 March 2008
24. TRADE AND OTHER PAYABLES
Trade payables
Bills payable
Accrual for sales tax
Due to a director
Accruals and other payables
Financial liabilities
measured at amortised cost
Amounts due to construction
contract customers (note 20)
2008
2007
Group
£
Company
£
Group
£
Company
£
296,553
600,904
-
27,169
1,151,581
131,923
-
-
-
932,612
473,303
220,858
18,964
-
563,192
312,121
-
18,964
-
347,222
2,076,207
1,064,535
1,276,317
678,307
829,461
783,500
599,462
583,962
2,905,668
1,848,035
1,875,779
1,262,269
25.
INCOME TAX IN THE BALANCE SHEET
a) Current taxation in the consolidated balance sheet represents:
Provision for the year
Hong Kong profits tax
Overseas income tax
2008
2007
Group
£
Company
£
Group
£
Company
£
-
495,810
495,810
-
-
-
-
29,485
29,485
-
-
-
b) At the balance sheet date, the Company has unused tax losses of £4,213,736 (2007:
£4,461,050) that are available for offset against future taxable profits of the Company. No
deferred tax asset has been recognised due to the unpredictability of the future profit streams.
Tax losses may be carried forward indefinitely.
No provision for deferred tax liabilities has been made in the financial statements as the tax
effect of temporary differences is immaterial to the Group and the Company.
UNIVISION ENGINEERING LIMITED - 73 - ANNUAL REPORT 2008
UNIVISION ENGINEERING LIMITED
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 31 March 2008
26. OBLIGATION UNDER FINANCE LEASE
At 31 March 2008, the Group and the Company had obligations under finance leases repayable as
follows:
2008
Present value
2007
Present value
of the minimum Total minimum of the minimum Total minimum
lease payment
£
lease payment
£
lease payment
£
lease payment
£
Within 1 year
After 1 year but within
2 years
After 2 years but within
5 years
Less: total future
interest expense
Present value of lease
obligation
27. SHARE CAPITAL
3,055
3,055
6,874
9,929
12,984
3,654
3,654
8,222
11,876
15,530
2,546
12,984
-
-
-
-
-
-
-
-
-
-
-
-
2008
£
2007
£
Authorised :
800,000,000 oridinary shares of HK$0.0625 each
3,669,470
3,669,470
Issued and fully paid:
383,677,323 shares (2007: 383,677,323 shares) of
HK$0.0625 each
1,697,617
1,697,617
The Company has one class of ordinary shares.
UNIVISION ENGINEERING LIMITED - 74 - ANNUAL REPORT 2008
UNIVISION ENGINEERING LIMITED
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 31 March 2008
28. OPERATING LEASE COMMITMENTS
At the balance sheet date, the total future minimum lease payments under non-cancellable
operating leases for the office and warehouse premises are payable as follows:
Within one year
In the second to fifth years
inclusive
2008
2007
Group
£
Company
£
Group
£
Company
£
94,974
49,259
82,529
31,663
18,592
113,566
2,816
52,075
21,684
923
104,213
32,586
29. RELATED PARTY TRANSACTIONS
Compensation of key management personnel
The remuneration of the key management of the Group during the year was as follows:-
Salaries, bonus and allowances
247,181
256,525
The remuneration of key management personnel comprise the remuneration of executive directors
and key executives.
2008
£
2007
£
UNIVISION ENGINEERING LIMITED - 75 - ANNUAL REPORT 2008
UNIVISION ENGINEERING LIMITED
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 31 March 2008
29. RELATED PARTY TRANSACTIONS (CONT’D)
Compensation of key management personnel (CONT’D)
Executive directors include the executive chairman, the chief executive officer and the technical
director of the Company. The remuneration of the executive directors is determined by the
Remuneration Committee having regard to the performance of individuals, the overall performance
of the Group and market trends. Further information about the remuneration committee and the
directors’ remuneration is provided in the Remuneration Report and the Report of Corporate
Governance to the Annual Report and note 11 to the financial statements.
Key executives include the sales manager, the operations manager and the financial controller of
the Company. The remuneration of the key executives is determined by the executive directors
annually having regard to the performance of individuals and market trends.
Biographical information on key management personnel is disclosed in the Directors’ and Senior
Management’s Biographies section of the Annual Report.
Transactions with related companies
(a) A loan of US$5 million was provided on 31 December 2007 by Mayne Management
Limited , the holding company of UniVision Holdings Limited which has a 47.9% equity
interest in the Company. The loan includes interest amounting to US$1 million which is
payable on the maturity date of the loan on 30 September 2008. The loan is still outstanding at
the date of the approval of the Financial Statements (refer to note 31)
(b) At 31 March 2008, there is a receivable balance of £6,095 (2007: £5,423) in respect of legal
fees which were paid by the Group on behalf of UT Vision PTE, a company of which Stephen
Koo is a director.
30. LITIGATION
There was a dispute between Leader Smart Engineering Limited and a sub-contractor for an
outstanding receivable of RMB 2.5m relating to a PRC project. A legal claim was raised. The
Project was performed before the Group’s acquisition of Leader Smart Engineering Limited on 2
October 2006. All risks and benefits before the acquisition date are borne by the former
shareholders of Leader Smart Engineering Limited.
The dispute was fully settled and the Court Order has been released before the date of the approval
of the Financial Statements.
The Company has included an amount within other receivables for the sum recoverable under the
sales and purchase agreement with the former owners of Leader Smart Engineering Limited.
Leader Smart Engineering Limited has recognised the liability arising from this claim within
accruals and other payables.
UNIVISION ENGINEERING LIMITED - 76 - ANNUAL REPORT 2008
UNIVISION ENGINEERING LIMITED
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 31 March 2008
31. EVENTS AFTER THE BALANCE SHEET DATE
The loan of US$5 million provided by Mayne Management Limited, the holding company of
UniVison Holdings Limited which has a 47.9% equity interest in the Company, has been renewed,
with the accrued interest payable of US$1 million for a further twelve months to 30 September
2009. The accrued interest has been added to the initial loan amount and the new principal amount
for repayment is US$6 million. The loan carries interest at 15% pa which is repayable in full on or
before 1 October 2009.
UNIVISION ENGINEERING LIMITED - 77 - ANNUAL REPORT 2008
NOTICE OF ANNUAL GENERAL MEETING
NOTICE IS HEREBY GIVEN THAT the 2008 Annual General Meeting of UniVision Engineering
Limited will be held at UniVision Engineering Limited, 8/F Lever Tech Centre, 69-71 King Yip Street,
Kwun Tong, Kowloon, Hong Kong, on 31 October 2008 at 5:00P.M.. The following businesses will be
transacted then:
1. To receive and adopt the Company’s audited financial statements for the financial year ended 31
March 2008 together with the Directors’ report and the auditors’ report;
2. To re-elect Mr. Andrew Ping Sum TANG who retired by rotation, as a Non-Executive Director of the
Company;
3. To re-elect Mr. Richard FERNIE who retired by rotation, as a Non-Executive Director of the
Company;
4. To reappoint auditor Littlejohn, Chartered Accountants as auditors of the Company, to hold office
from the conclusion of the meeting to the conclusion of the next meeting, during which accounts will
be laid before the Company and to authorize the Directors to adjust their remuneration packages;
5. To consider and, if considered appropriate, pass the following resolution as an ordinary resolution
that the directors of the Company be and are hereby generally and unconditionally authorized to
exercise all powers of the Company to allot ordinary shares of HK$0.0625 each in the capital of the
Company (the ‘Ordinary Shares’). Such authority (unless and to the extent previously revoked,
varied or renewed by the Company during the general meeting) to expire 15 months after the date of
the passing of such resolution or on the conclusion of the Company’s next Annual General Meeting
to be held, following the date of passing such resolution, whichever occurs first, save that the
Company may before such expiry make any offer or agreement which would or might require
Ordinary Shares to be allotted after such expiry, and that the Directors may allot Ordinary Shares in
pursuance of such an offer or an agreement as if such authority had not expired. This authority
substitutes all subsisting authorities to the extent unused.
By Order of the Board
Mr. Stephen Sin Mo KOO
Executive Chairman
30 September 2008
Registered office:
8/F Lever Tech Centre,
69-71 King Yip Street,
Kwun Tong, Kowloon,
Hong Kong
UNIVISION ENGINEERING LIMITED - 78 - ANNUAL REPORT 2008
NOTES:
1. Only holders of Ordinary Shares, or their duly appointed representatives, are entitled to attend and vote at the
Annual General Meeting. A member so entitled may appoint one or more proxies (whether they are members
or not) to attend and, on a poll, to vote in place of the member.
2. A form of proxy is enclosed with this notice. To be valid, the form of proxy and any power of attorney or other
authority (if any) under which it is signed, or a notarized and certified copy of that power of authority, must be
lodged with the Company’s registrars, Computershare Investor Services (Channel Islands) Limited at PO Box
83, Ordnance House, 31 Pier Road, St Helier, Jersey JE4 8PW, Channel Island, not less than 48 hours before
the Annual General Meeting takes place.
3. Completion and return of a proxy does not preclude a member from attending and voting at the Annual General
Meeting.
4. The Company pursuant to Regulation 41 of the Uncertificated Securities Regulations 2001 specifies that only
those shareholders registered in the Register of Members of the Company as of 30 September 2008 are entitled
to attend or vote at the Annual General Meeting in respect to the number of shares registered in their name at
that time. Changes to entries on the Register after that time will be disregarded when determining the rights of
any person to attend or vote in the Annual General Meeting.
UNIVISION ENGINEERING LIMITED - 79 - ANNUAL REPORT 2008