UniVision Engineering Limited
Annual Report
Year ended 31 March 2010
UNIVISION ENGINEERING LIMITED
Annual Report
Year ended 31 March 2010
Contents
Page
Board of Directors, Officers and Professional Advisers
Chairman’s Statement
Directors’ and Senior Management’s Biographies
Directors’ Report
Remuneration Report
Report on Corporate Governance
Statement of Directors’ Responsibilities
Independent Auditor’s Report to the Shareholders of UniVision
Engineering Limited
Consolidated Statement of Comprehensive Income
Consolidated Statement of Financial Position
Company Statement of Financial Position
Consolidated Statement of Changes in Equity
Company Statement of Changes in Equity
Consolidated Statement of Cash Flows
Company Statement of Cash Flows
Notes to the Financial Statements
Notice of Annual General Meeting
2
3
7
9
13
14
16
17
19
20
21
22
23
24
26
27
70
UNIVISION ENGINEERING LIMITED - 1 - ANNUAL REPORT 2010
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
Andrew Ping Sum TANG, Non-Executive Director
Nominated Adviser and Broker
Allenby Capital Limited
Claridge House,
32 Davies Street, Mayfair
London W1K 4ND,
UK
Senior Management
Mike Chiu Wah CHAN, Director of Operations
Peter Yip Tak CHAN, Director of Sales and Marketing
Joint Broker
SVS Securities plc
21 Wilson Street
London EC2M 2SN
UK
Auditor
ZYCPA Company Limited
Certified Public Accountants
9/F Chinachem Hollywood Centre,
1-13 Hollywood Road,
Central, Hong Kong
Registrars
Computershare Investor Services
(Jersey) Limited
Queensway House,
Hilgrove Street,
St Helier,
Jersey JE1 1ES,
Channel Islands
UK Depositary
Computershare Investor Services PLC
The Pavilions,
Bridgwater Road,
Bristol BS13 8AE,
UK
Audit Committee
Andrew Ping Sum TANG, Chairman
Stephen Sin Mo KOO
Remuneration Committee
Andrew Ping Sum TANG, Chairman
Stephen Sin Mo KOO
Company Secretary
Danny Kwok Fai YIP
Registered Office
8/F Lever Tech Centre,
69-71 King Yip Street,
Kwun Tong, Kowloon,
Hong Kong
Tel: (852) 2389 3256
Fax: (852) 2797 8053
E-mail: uvel@hk.uvel.com
Website: www.uvel.com
AIM Stock Code: UVEL
UNIVISION ENGINEERING LIMITED - 2 - ANNUAL REPORT 2010
CHAIRMAN’S STATEMENT
INTRODUCTION
I am pleased to report the Group’s audited results for the financial year ended 31 March 2010.
The Group’s full year results have been materially and adversely affected by the impact of a full impairment
loss on the net assets of Leader Smart Engineering (Shanghai) Limited (“Leader Smart Shanghai” or the
“Subsidiary”), the Group’s wholly owned subsidiary in the People’s Republic of China (“PRC”). This is as a
result of the impact of litigation in which the Group is currently involved as announced by the Group on 16
July 2010, and therefore Leader Smart Shanghai is excluded from the Group’s consolidated results for the
year ended 31 March 2010. The litigation is being dealt with according to the laws and regulations in PRC.
The Board of UniVision believe, having taken legal advice from their attorney in PRC, that the Group have a
strong case to recover the right of control over Leader Smart Shanghai following a conclusion to the court
judgement. The Shanghai High Court reviewed the case on 4 August 2010 and the Board of UniVision
anticipate receiving a final verdict on the case shortly. Should the Group recover the right of control over
Leader Smart Shanghai, the aforementioned provision would be written back after re-consolidating Leader
Smart Shanghai into the Group’s accounts in the next financial period.
The turnover of the Group’s Security and Surveillance Systems business remained stable during the year,
despite the fact that some of our investments and projects were affected and delayed due to the unfavourable
market conditions. Our focus on maintenance services has successfully increased the maintenance revenue in
Hong Kong, which has lead to steady cash flow for the operation of the Group. We are now working on
several infrastructure projects to be implemented in the coming years in Hong Kong, and we also expect
growing demand for our Security and Surveillance Systems business in the Greater China Region. The Board
of UniVision anticipate an improved trading performance in this division in the coming years.
The expansion of our Electrical and Mechanical (“E&M”) business is ongoing. We are making steady
progress on the Zhongshan shopping mall and with a hotel project in Huangshan in the PRC. The Board of
UniVision remain confident that the shopping mall project will be completed and operational by the end of
2010 and they continue to evaluate alternative ways to generate value from the project. We are also currently
in negotiations on several potential new projects in PRC. With the expected appreciation of the RMB and the
property market in PRC, we are cautiously optimistic about our property linked E&M business for the
second half of 2010 and for 2011. We are in the process of establishing another WOFE (wholly-owned
foreign enterprise) in PRC with an investment cost of HK$30m (£2.6m), which will allow us the opportunity
for further expansion. We have also begun work on some new E&M projects in Hong Kong. The
development of our E&M business will depend on additional funding being available, as each project is
capital intensive.
FINANCIAL REVIEW
Due to the temporary loss of control over the financial and operating policies of the Subsidiary, pending a
court decision on the litigation with a former employee and legal representative, the assets, liabilities and
operating result of the Subsidiary have been deconsolidated from the Group’s reporting statements in the
year under review. The net asset value of £8.4m has been excluded from the Group’s Statement of Financial
Position. The loss from the deconsolidation is £8.3m while a £0.8m one-off impairment loss of goodwill for
the holding company of the Subsidiary has been incurred in the period. Total adverse impact on the financial
results from the deconsolidation is £9.1m in the Consolidated Statement of Comprehensive Income.
UNIVISION ENGINEERING LIMITED - 3 - ANNUAL REPORT 2010
CHAIRMAN’S STATEMENT
(Continued)
The Group incurred a substantial loss of £10.3m in the year under review mainly due to the full impairment
loss on the Group’s investment in the Subsidiary as detailed above. The above non-operating and one-off
items led to the Group’s total liabilities exceeding its total assets at the end of the year by £2m. Nevertheless,
we consider that the loss is mainly caused by the non-cash and provisional items. The Board of UniVision
believes that said provisions will be written back after re-consolidating the Subsidiary in the next financial
period should the Group recover the right of control over the Subsidiary following the court judgement.
The Group generated net cash of £1.3m from its operating activities in the period (2009: -£0.1m) and also
maintained the cash and cash equivalents at 31 March 2010 of £0.9m (31 March 2009: -£0.1m). This
illustrates the cash generating capacity from the Group’s continuing operations and a healthy cash position.
In addition, we believe that the Group will be able to continue to meet its financial obligations with the
continuing support from our major shareholder, Mayne Management Limited, for the extension of the
US$6m loan facility.
During the year under review the relative strengthening in the HK$ against sterling has led to an 8.65%
appreciation in the GBP reporting amount in the Consolidated Statement of Comprehensive Income, while a
relative weak closing rate at the year-end in the HK$ against sterling led to a 6.05% depreciation in the GBP
reporting amount in the Consolidated Statement of Financial Position. All figures in the Financial Statements
therefore need to be adjusted for comparison purposes.
Turnover in the period decreased by 30% to £6.4m (2009: £9.2m). This reduction was mainly due to the
exclusion of turnover in the deconsolidated Subsidiary and the reduction in construction contracts. On the
other hand, our maintenance contracts maintained the same revenue levels as last year for the Group as a
whole, including an increase in Hong Kong, which contributes a relatively higher profit margin and steady
cash flow for the Group’s operations. Our major customers in the Security and Surveillance Systems
business are public organisations and government departments which provide regular orders, reliable
payment schedules and close to zero default risk. With the expected rising demand for the Security and
Surveillance Systems business from sizeable proposed government infrastructure projects, we believe that
the Group’s turnover from this division will be improved in the next financial year.
Gross profit margin slightly reduced to 33.0% (2009: 33.4%) and remains relatively constant due to effective
cost control of our human resources, i.e. project and maintenance teams, sub-contractors, logistics teams, and
inventory.
Administration expenses decreased by 18.5% from last year to £1.7m (2009: £2m) mainly as a result of the
exclusion of the expenses of the Subsidiary from the Group. Finance costs decreased by 16.9% to £0.6m
(2009: £0.7m) due to the reduction of the loan interest rate payable to our holding company to 15% p.a. and
the cost saving measure of terminating loan and overdraft facilities to our Hong Kong company. No
significant capital investment occurred in the current year.
Loss before Interest and Tax (LBIT) was (£9.7m) (2009 earnings: £0.4m). Net loss before income tax was
£10.3m (2009 loss: £0.3m). Basic loss per share increased to 2.70p (2009 loss per share: 0.14p).
UNIVISION ENGINEERING LIMITED - 4 - ANNUAL REPORT 2010
CHAIRMAN’S STATEMENT
(Continued)
BUSINESS REVIEW
Markets
According to the newly published report “The China Market for CCTV and Video Surveillance Equipment –
2010 edition” by IMS Research, although 2009 was disappointing, the CCTV market is forecast to grow at a
compound annual growth rate of 20.2 percent between 2010 and 2014 and could be worth an estimated $3.5
billion by 2014. The major drivers for market growth are increasing investment from the government in
infrastructure and public security projects.
However, hybrid solutions are being adopted as an alternative when users are looking to update their existing
security infrastructure within a restricted budget. In particular the demand for hybrid DVRs is increasing.
The Board of UniVision expects the network video market to show strong growth in the coming years and
considers that the Company is well placed to benefit from this growth.
Though we continue to work towards a resolution towards the litigation surrounding our Subsidiary, the
E&M business is still our target growth area. Our growth in the E&M business will be largely dependent on
our access to funding as the nature of the contracts we are seeking to win are largely capital intensive.
Technologies, Solutions and Products
Our network video surveillance solutions are showing a strong level of demand. Due to the current trend of
falling prices of network based devices and increased performance capabilities, we see an increased
migration towards network video surveillance solutions in line with our product range in this area.
We are working to identify suitable products in this area of the market, such as video compression
technology, digital encoders and decoders with built-in video analysis algorithms and video management
platforms that will provide added value to our existing portfolio of products, in order to cope with the
changing market.
Acquisitions and Investments
The Group continues to assess possible opportunities of new investments with a view to making a further
strategic move.
MTR Corporation Limited (“MTR”) & Maintenance
Our maintenance contracts are particularly important to the business as they provide regular and reliable
revenue streams and cash flow. I am delighted that we have achieved substantial growth in this area of the
business. In particular, our relationship with the MTR railway in Hong Kong has proved to be extremely
positive. We are confident that we will be able to secure other contracts in future confirmed and planned
railway line developments in the coming five years.
UNIVISION ENGINEERING LIMITED - 5 - ANNUAL REPORT 2010
CHAIRMAN’S STATEMENT
(Continued)
GOING CONCERN AND AUDITOR’S REPORT
The financial statements show a loss of £10.3m during the year ended 31 March, 2010 and, as of that date,
the Group’s total liabilities exceed its total assets by £2.0m. In light of the sufficiency of proceeds from the
Group’s continuing operations and, on the basis that the Group can continue to successfully refinance or
obtain sufficient bank and other borrowings, the Board of UniVision are confident of meeting their financial
obligations when they fall due in the foreseeable future.
The financial statements do not include any adjustments that would result should there be a shortfall of
proceeds from the Group’s continuing operations or if other funding required by the Group from refinancing
or banks and other financial institutions is not forthcoming.
The report of the auditor on the financial statements for the year ended 31 March 2010 will not be qualified
but will include an emphasis of matter in respect of this uncertainty over going concern.
PROSPECTS
Our Security and Surveillance Systems business remains stable, although it declined slightly in the reporting
period as compared with 2009. Due to the infrastructure projects to be implemented in the coming years in
Hong Kong, as well as the expected growing demand for Security and Surveillance Systems solutions in the
Greater China Region, the Board of UniVision have a positive outlook for this area of our business in the
coming years.
The E&M business in the PRC is still one of our growth targets. However, our growth will depend on access
to funds. Additional funding will be required for certain current projects, as well as future potential projects.
Finally, on behalf of the Board of UniVision, 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 SIN MO KOO
EXECUTIVE CHAIRMAN
9 September 2010
UNIVISION ENGINEERING LIMITED - 6 - ANNUAL REPORT 2010
DIRECTORS’ AND SENIOR
MANAGEMENT’S BIOGRAPHIES
DIRECTORS’ BIOGRAPHIES
Andrew Ping Sum TANG – Non-executive Director (aged 53)
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 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. 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.
Mr. Tang was 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. He was the General Manager of Wing Fung
Financial Group. At present, Mr. Tang is a Director for an asset management company.
Stephen Sin Mo KOO – Executive Chairman (aged 53)
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 51)
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 was 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 50)
Mr. Wong joined UniVision in 1991 and was appointed as a Director on 25 March 1992. He holds a Master
Degree in Religious Studies in Chinese University of Hong Kong and a Bachelor Degree in Computer
Science from the University of Edinburgh, Scotland, and over 17 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.
Danny Kwok Fai YIP –Finance Director (aged 46)
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 Master of Corporate Finance degree from The Hong
Kong Polytechnic University and 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
Corporation.
UNIVISION ENGINEERING LIMITED - 7 - ANNUAL REPORT 2010
DIRECTORS’ AND SENIOR
MANAGEMENT’S BIOGRAPHIES
(Continued)
SENIOR MANAGEMENT’S BRIEF BIOGRAPHIES
Mike Chiu Wah CHAN – Director of Operations (aged 36)
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.
Peter Yip Tak CHAN – Director of Sales and Marketing (aged 46)
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 - 8 - ANNUAL REPORT 2010
UNIVISION ENGINEERING LIMITED
DIRECTORS’ REPORT
The Directors have pleasure in presenting their annual report together with the audited financial statements
of the Group and the Company for the year ended 31 March 2010.
Principal Activities
The principal activities of the Company are the supply, design, consultation, installation and maintenance of
closed circuit television and surveillance systems, and the 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 Group and its future development is included in the Chairman’s Statement.
Financial Position
The Group’s loss for the year ended 31 March 2010 and the state of affairs of the Group at that date are set
out in the consolidated statement of comprehensive income on page 19 and in the consolidated statement of
financial position on page 20 respectively.
The Group’s and the Company’s changes in shareholders’ equity for the year ended 31 March 2010 are set
out in the consolidated and the Company’s statement of changes in equity on page 22 and 23, respectively.
The Group’s and the Company’s cash flow for the year ended 31 March 2010 is set out in the consolidated
and the Company’s statement of cash flows on pages 24 to 26.
Key Performance Indicators (KPI)
Current Ratio:
Current Assets / Current Liabilities
Average Collection Period :
Trade receivables (net of allowance
for doubtful debts) / Sales per Day
Inventory Turnover :
Cost of sales / Inventories
Gross profit Margin :
Gross profit / Sales
Net Loss Margin :
Loss attributable to equity holders of
the Company / Sales
Loss /Equity :
Loss attributable to equity holders of
the Company / Equity
Share Capital and Reserves
Details of the movements in share capital are set out in note 27 on page 66.
2010
2009
0.7
1.7
39 days
74 days
4.5
5.9
33%
33%
-160%
-6%
-504%
-6%
:
:
:
:
:
:
The movements in reserves during the year are set out in the consolidated statement of changes in equity on
page 22.
UNIVISION ENGINEERING LIMITED - 9 - ANNUAL REPORT 2010
DIRECTORS’ REPORT
(Continued)
Dividends
The Directors do not propose the payment of a dividend for the year ended 31 March 2010.
Plant and Equipment
Details of the movements in plant and equipment are set out in note 16 on pages 57 to 58.
Directors
The directors who held office during the year and to the date of this report were as follows:
Stephen Sin Mo KOO
Chun Hung WONG
Andrew Ping Sum TANG
Chun Pan WONG
Danny Kwok Fai YIP
Mr. Stephen Sin Mo KOO and Mr. Danny Kwok Fai YIP retire by rotation at the forthcoming annual general
meeting in accordance with the Company’s Articles of Association and, being eligible, the current directors
offer 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, its holding company, or its subsidiaries was a party 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:
Ordinary Shares held as at 31 March 2010
Stephen Sin Mo KOO
Chun Hung WONG
Andrew Ping Sum TANG
Chun Pan WONG
Danny Kwok Fai YIP
88,367,700*
-
-
-
-
* 78,744,000 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 Mo 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.
UNIVISION ENGINEERING LIMITED - 10 - ANNUAL REPORT 2010
DIRECTORS’ REPORT
(Continued)
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, its holding company, or its subsidiaries 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.
Substantial Shareholdings
As at 31 August 2010 the Directors had been informed of the following companies that held 3% or more of
the Company’s issued ordinary share capital:
Number of ordinary shares % of total issued share capital
UniVision Holdings Limited (1)
Up Sky Investments Limited (2)
Raven Nominees Limited
W B Nominees Limited
183,736,000
78,744,000
15,506,680
15,481,800
47.9
20.5
4.0
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 (2009: 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 make 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 5 October 2010 at 5:00p.m.
The Notice of Meeting appears on page 70.
UNIVISION ENGINEERING LIMITED - 11 - ANNUAL REPORT 2010
DIRECTORS’ REPORT
(Continued)
Annual Report
The annual report for the year ended 31 March 2010 will be sent to shareholders and will be available, free
of charge, from the offices of the Company’s nominated adviser, Allenby Capital Limited at Claridge House,
32 Davies Street, Mayfair, London W1K 4ND, UK and the Company’s registrar, Computershare Investor
Services (Jersey) Limited at Queensway House, Hilgrove Street, St Helier, Jersey JE1 1ES, Channel Islands
from 14 September 2010.
Auditor
ZYCPA Company Limited, Certified Public Accountants, remain as our auditor for the year. A resolution to
re-appoint ZYCPA Company Limited, Certified Public Accountants as auditor of the Company will be put to
the forthcoming Annual General Meeting.
By Order of the Board
Mr. Stephen Sin Mo KOO
Executive Chairman
Hong Kong
9 September 2010
UNIVISION ENGINEERING LIMITED - 12 - ANNUAL REPORT 2010
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) and
Mr. Stephen Sin Mo KOO (our Executive Chairman) and is chaired by Mr. Andrew Ping Sum TANG.
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 is set out in the table below:
Salary and
fees
£
Pension
scheme
contribution
£
Bonus
£
2010
Total
£
2009
Total
£
Executive Directors
Stephen Sin Mo KOO
Chun Pan WONG
Chun Hung WONG
Danny Kwok Fai YIP
Non-executive Directors
Andrew Ping Sum TANG
Richard FERNIE
66,444
38,303
47,244
31,903
9,771
-
-
977
977
977
-
-
5,537
2,394
3,908
2,638
71,981
41,674
52,129
35,518
65,754
37,348
42,845
30,965
-
-
9,771
-
8,926
8,182
Directors’ Interests in Contracts and Interests in Shares
Details of Directors’ Interests in Contracts and Interests in Shares are given in the Directors’ Report.
UNIVISION ENGINEERING LIMITED - 13 - ANNUAL REPORT 2010
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 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 bonuses. The Chairman of the Audit and
Remuneration Committees is a Non-executive Director.
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. 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 - 14 - ANNUAL REPORT 2010
REPORT ON CORPORATE GOVERNANCE
(Continued)
Remuneration Committee
Our Remuneration Committee comprises 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
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; and
seek professional advice, including comparison with similar businesses, in order to correctly fulfil its
duties, as the Committee deems appropriate.
-
In discharging its functions, the Committee may obtain independent external legal and other professional
advices as it deems necessary. The expense of such advice 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 is 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 periodic 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 realises that effective communication can increase 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 have 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 recognises 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 - 15 - ANNUAL REPORT 2010
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 for preparing financial statements for each financial year which give a true and
fair view of the state of affairs of the Group and the Company 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 Group and the Company 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 available to them to safeguard the assets of the Group and the Company to prevent and detect
fraud and other irregularities.
UNIVISION ENGINEERING LIMITED - 16 - ANNUAL REPORT 2010
INDEPENDENT AUDITOR’S REPORT
TO THE SHAREHOLDERS OF
UNIVISION ENGINEERING LIMITED
(incorporated in Hong Kong with limited liability)
We have audited the financial statements of UniVision Engineering Limited (the “Company”) and its
subsidiaries (collectively referred to as the “Group”) set out on pages 19 to 69, which comprise the
consolidated and the Company’s statements of financial position as at 31 March 2010, and the consolidated
statement of comprehensive income, the consolidated and the Company’s statements of changes in equity
and the consolidated and the Company’s statements of cash flows for the year then ended, and a summary of
significant accounting policies and other explanatory notes.
This report is made solely to the Company’s shareholders, as a body, in compliance with the Alternative
Investment Market Rules (“AIM Rules”) for companies as published by the London Stock Exchange plc.
Our work has been undertaken so that 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.
Directors’ responsibility for the financial statements
The directors of the Company are responsible for the preparation and the true and fair presentation of these
financial statements in accordance with International Financial Reporting Standards. This responsibility
includes designing, implementing and maintaining internal control relevant to the preparation and the true
and fair presentation of the 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 as to 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 true 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 the directors, as well as evaluating the overall presentation
of the financial statements.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our
audit opinion.
UNIVISION ENGINEERING LIMITED - 17 - ANNUAL REPORT 2010
INDEPENDENT AUDITOR’S REPORT
TO THE SHAREHOLDERS OF
UNIVISION ENGINEERING LIMITED
(incorporated in Hong Kong with limited liability)
Opinion
In our opinion, the financial statements give a true and fair view of the state of affairs of the Company and of
the Group as at 31 March 2010 and of the Group’s loss and cash flows for the year then ended in accordance
with International Financial Reporting Standards.
Emphasis of matter
Without qualifying our opinion, we would like to draw your attention that the financial statements show a
loss of £10,348,258 during the year ended 31 March 2010 and, as of that date, the Group’s total liabilities
exceed its total assets by £2,053,425. The directors of the Company consider that the sufficiency of proceeds
from the Group’s continuing operations and provided that the Group can continue to successfully refinance
or to obtain sufficient bank and other borrowings to meet in full their financial obligations when they fall due
in the foreseeable future. For these reasons, therefore, the financial statements have been prepared using the
going concern basis of accounting, the validity of which depends upon (i) sufficient proceeds from the
Group’s continuing operations and (ii) successful refinancing or grants of bank and other borrowings. The
financial statements do not include any adjustments that would result should there be shortfall of proceeds
from the Group’s continuing operations or if other funding required by the Company from refinancing or
banks and other financial institutions is not forthcoming.
ZYCPA Company Limited
Certified Public Accountants
Hong Kong, China
9 September 2010
UNIVISION ENGINEERING LIMITED - 18 - ANNUAL REPORT 2010
UNIVISION ENGINEERING LIMITED
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
For the year ended 31 March 2010
Revenue
Cost of sales
Gross profit
Other income
Selling and distribution expenses
Administrative expenses
Other operating expenses
Impairment loss recognised on goodwill
Impairment loss recognised on trade receivables
Impairment loss recognised on other receivables
Loss on deconsolidation of a subsidiary
Finance costs
Loss before tax
Income tax expense
Loss for the year
Note
2010
£
2009
£
6,473,743
9,228,523
(4,339,985)
(6,143,040)
2,133,758
3,085,483
143,360
(96,001)
(1,695,991)
-
(791,945)
(766,906)
(321,317)
(8,324,208)
(611,657)
127,920
(86,875)
(2,081,104)
(11,428)
(309,325)
(262,997)
(23,632)
-
(735,955)
(10,330,907)
(297,913)
(17,351)
(226,951)
(10,348,258)
(524,864)
8
17
21
28
9
10
13
Other comprehensive (loss)/income:
Exchange differences arising on translation of foreign operations
Release of translation reserve upon deconsolidation of a
subsidiary
(828,698)
2,444,208
(86,785)
-
Other comprehensive (loss)/income for the year
(915,483)
2,444,208
Total comprehensive (loss)/income for the year
(11,263,741)
1,919,344
(Loss)/profit for the year attributable to :
Owners of the Company
Non-controlling interests
Total comprehensive (loss)/income for the year attributable
to:
Owners of the Company
Non-controlling interests
Loss per share
Basic
Diluted
(10,340,804)
(7,454)
(554,580)
29,716
(10,348,258)
(524,864)
(11,255,214)
(8,527)
1,841,759
77,585
(11,263,741)
1,919,344
14
14
2.70p
N/A
0.14p
N/A
UNIVISION ENGINEERING LIMITED - 19 - ANNUAL REPORT 2010
UNIVISION ENGINEERING LIMITED
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
As at 31 March 2010
Note
2010
£
2009
£
ASSETS
Non-current assets
Plant and equipment
Goodwill
Total non-current assets
Current assets
Inventories
Trade and other receivables
Tax recoverable
Cash and bank balances
Total current assets
Total assets
LIABILITIES AND EQUITY
Current liabilities
Trade and other payables
Tax payable
Interest-bearing borrowings
Obligation under finance lease
Bank overdrafts
Total current liabilities
Non-current liability
Obligation under finance lease
Total liabilities
Capital and reserves
Share capital
Reserves
16
17
19
21
24
22
23
24
25
26
22
197,093
25,830
222,923
966,333
4,400,341
4,384
884,174
285,513
692,830
978,343
1,050,046
18,923,799
8,933
117,762
6,255,232
20,100,540
6,478,155
21,078,883
3,342,153
15,116
5,165,203
4,048
-
5,160,493
921,984
5,552,204
4,293
219,934
8,526,520
11,858,908
26
5,060
9,659
8,531,580
11,868,567
27
1,697,617
(3,974,852)
1,697,617
7,280,362
(Capital deficiency)/equity attributable to owners of the Company
(2,277,235)
8,977,979
Non-controlling interests
Total (capital deficiency)/equity
Total liabilities and equity
223,810
232,337
(2,053,425)
9,210,316
6,478,155
21,078,883
The financial statements on pages 19 to 69 were approved and authorised for issue by the Board of Directors
on 9 September 2010 and are signed on its behalf by:
Stephen Sin Mo KOO
Director
Chun Hung WONG
Director
UNIVISION ENGINEERING LIMITED - 20 - ANNUAL REPORT 2010
UNIVISION ENGINEERING LIMITED
COMPANY STATEMENT OF FINANCIAL POSITION
As at 31 March 2010
Note
2010
£
2009
£
ASSETS
Non-current assets
Plant and equipment
Investment in subsidiary undertakings
Total non-current assets
Current assets
Inventories
Trade and other receivables
Cash and bank balances
Total current assets
Total assets
LIABILITIES AND EQUITY
Current liabilities
Trade and other payables
Interest-bearing borrowings
Obligation under finance lease
Bank overdrafts
Total current liabilities
Non-current liability
Obligation under finance lease
Total liabilities
Capital and reserves
Share capital
Reserves
Total (capital deficiency)/equity
Total liabilities and equity
16
18
19
21
22
23
25
26
22
8,976
244,105
20,441
3,235,438
253,081
3,255,879
764,957
2,168,892
713,066
825,743
3,854,121
23,467
3,646,915
4,703,331
3,899,996
7,959,210
2,461,725
3,997,267
4,048
-
2,195,127
4,510,870
4,293
219,934
6,463,040
6,930,224
26
5,060
9,659
6,468,100
6,939,883
27
1,697,617
(4,265,721)
1,697,617
(678,290)
(2,568,104)
1,019,327
3,899,996
7,959,210
The financial statements on pages 19 to 69 were approved and authorised for issue by the Board of Directors
on 9 September 2010 and are signed on its behalf by:
Stephen Sin Mo KOO
Director
Chun Hung WONG
Director
UNIVISION ENGINEERING LIMITED - 21 - ANNUAL REPORT 2010
UNIVISION ENGINEERING LIMITED
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
For the year ended 31 March 2010
At 1 April 2008
Loss for the year
Exchange difference arising on translation of
foreign operations
Total comprehensive income for the year
At 31 March 2009
Loss for the year
Exchange difference arising on translation of
foreign operations
Release of translation reserve upon
deconsolidation of a subsidiary
Total comprehensive loss for the year
Share
capital
£
Share
premium
£
(Note 1)
Retained
earnings/
(accumulated
losses)
£
Special
capital
reserve “A”
£
(Note 2)
Special
capital
reserve “B”
£
(Note 3)
Translation
reserve
£
Sub-total
£
Non-
controlling
interest
£
Total
equity/
(capital
deficiency)
£
1,697,617
2,192,640
3,170,255
155,876
143,439
(223,607)
7,136,220
154,752
7,290,972
-
-
-
-
(554,580)
-
-
-
(554,580)
-
-
-
-
-
(554,580)
29,716
(524,864)
-
2,396,339
2,396,339
47,869
2,444,208
-
2,396,339
1,841,759
77,585
1,919,344
1,697,617
2,192,640
2,615,675
155,876
143,439
2,172,732
8,977,979
232,337
9,210,316
-
-
-
-
- (10,340,804)
-
-
-
-
- (10,340,804)
-
-
-
-
-
-
(10,340,804)
(7,454)
(10,348,258)
-
(827,625)
(827,625)
(1,073)
(828,698)
-
(86,785)
(86,785)
-
(86,785)
-
(914,410)
(11,255,214)
(8,527)
(11,263,741)
At 31 March 2010
1,697,617
2,192,640
(7,725,129)
155,876
143,439
1,258,322
(2,277,235)
223,810
(2,053,425)
The currency translation from Hong Kong Dollars (“HK$”) to the presentational currency of Sterling Pound
(“£”) used in the financial statements has no impact on the available distributable reserves of the Company at
31 March 2010.
Notes:
1.
Share premium
The Company may by resolution reduce the share premium account in any manner authorised and
subject to any conditions prescribed by law.
2.
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.
3.
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.
UNIVISION ENGINEERING LIMITED - 22 - ANNUAL REPORT 2010
UNIVISION ENGINEERING LIMITED
COMPANY STATEMENT OF CHANGES IN EQUITY
For the year ended 31 March 2010
Share
capital
£
Share
premium
£
Retained
earnings/
(accumulated
losses)
£
Special
capital
reserve “A”
£
Special
capital
reserve “B”
£
Translation
reserve
£
Total
equity/
(capital
deficiency)
£
1,697,617
2,192,640
1,876,996
155,876
143,439
(441,470)
5,625,098
-
-
-
-
-
-
(5,497,465)
-
(5,497,465)
-
-
-
-
-
-
-
(5,497,465)
891,694
891,694
891,694
(4,605,771)
1,697,617
2,192,640
(3,620,469)
155,876
143,439
450,224
1,019,327
-
-
-
-
-
-
(3,535,672)
-
(3,535,672)
-
-
-
-
-
-
-
(3,535,672)
(51,759)
(51,759)
(51,759)
(3,587,431)
At 1 April 2008
Loss for the year
Exchange difference arising on
translation of foreign operations
Total comprehensive loss for the year
At 31 March 2009
Loss for the year
Exchange difference arising on
translation of foreign operations
Total comprehensive loss for the year
At 31 March 2010
1,697,617
2,192,640
(7,156,141)
155,876
143,439
398,465
(2,568,104)
UNIVISION ENGINEERING LIMITED - 23 - ANNUAL REPORT 2010
UNIVISION ENGINEERING LIMITED
CONSOLIDATED STATEMENT OF CASH FLOWS
For the year ended 31 March 2010
Operating activities
Loss before tax
Adjustments for:
Interest income
Finance costs
Depreciation
(Recovery of)/write down of obsolete inventories
Write back on trade and other payables
Impairment loss recognised on trade receivables
Impairment loss recognised on other receivables
Impairment loss recognised on goodwill
Loss on disposal of plant and equipment
Loss on deconsolidation of a subsidiary
Operating cash flows before movements in working capital
(Increase)/decrease in inventories
Increase in trade and other receivables
Decrease/(increase) in tax recoverable
Increase in trade and other payables
Increase in tax payable
Cash generated from/(used in) operations
Income tax refund/(paid) – Taiwan
Note
2010
£
2009
£
(10,330,907)
(297,913)
8
9
16
19
8
10
10
17
10
28
(521)
611,657
55,043
(26,467)
(3,275)
766,906
321,317
791,945
21,454
8,324,208
531,360
(3,836)
(75,333)
4,039
843,186
-
1,299,416
38
(8,521)
735,955
191,933
89,435
(85,660)
290,801
23,632
309,325
398
-
1,249,385
215,513
(2,642,094)
(53,416)
1,099,440
1,505
(129,667)
(18,669)
Net cash generated from/(used in) operating activities
1,299,454
(148,336)
Investing activities
Interest received
Purchase of plant and equipment
Increase in pledged bank deposits
Proceeds on disposal of plant and equipment
Net cash outflow from deconsolidation of a subsidiary
8
28
521
(30,861)
369,056
773
(4,388)
8,521
(46,865)
(7,168)
735
-
Net cash generated from/(used in) investing activities
335,101
(44,777)
UNIVISION ENGINEERING LIMITED - 24 - ANNUAL REPORT 2010
UNIVISION ENGINEERING LIMITED
CONSOLIDATED STATEMENT OF CASH FLOWS (Continued)
For the year ended 31 March 2010
Financing activities
Interest paid
Repayment of obligation under finance lease
Repayment of interest-bearing borrowings
Note
2010
£
2009
£
(36,579)
(4,048)
(70,220)
(87,391)
(4,984)
(608,862)
Net cash used in financing activities
(110,847)
(701,237)
Net increase/(decrease) in cash and cash equivalents
1,523,708
(894,350)
Cash and cash equivalents at beginning of the year
(102,172)
438,498
Effect of foreign exchange rate changes
(537,362)
353,680
Cash and cash equivalents at end of the year
22
884,174
(102,172)
Analysis of the balance of cash and cash equivalents:
Cash and bank balances
Bank overdrafts
884,174
-
117,762
(219,934)
884,174
(102,172)
UNIVISION ENGINEERING LIMITED - 25 - ANNUAL REPORT 2010
UNIVISION ENGINEERING LIMITED
COMPANY STATEMENT OF CASH FLOWS
For the year ended 31 March 2010
Note
2010
£
2009
£
(3,535,672)
(5,497,465)
Operating activities
Loss before tax
Adjustments for:
Interest income
Finance costs
Depreciation
Write back on trade and other payables
Impairment loss recognised on investment in subsidiary undertakings
Impairment loss recognised on trade receivables
Impairment loss recognised on other receivables
Loss on disposal of plant and equipment
16
18
Operating cash flows before movements in working capital
Decrease in inventories
Decrease/(increase) in trade and other receivables
Decrease/(increase) in amounts due from subsidiaries
Decrease in trade and other payables
(308)
577,719
9,876
(3,275)
2,788,557
766,906
7,865
21
611,689
13,674
286,863
61,140
(207,749)
(7,567)
673,069
10,891
(85,660)
4,717,031
419,625
14,295
915
245,134
190,225
(41,876)
(673,183)
(379,780)
Net cash generated from/(used in) operating activities
765,617
(659,480)
Investing activities
Interest received
Purchase of plant and equipment
Increase in pledged bank deposits
Proceeds on disposal of plant and equipment
Net cash generated from investing activities
Financing activities
Interest paid
Repayment of obligation under finance lease
Proceeds from interest-bearing borrowings
Repayment of interest-bearing borrowings
308
(83)
369,056
-
369,281
(6,104)
(4,048)
-
(256,235)
7,567
(393)
(7,168)
74
80
(24,504)
(4,984)
90,579
-
Net cash (used in)/generated from financing activities
(266,387)
61,091
Net increase/(decrease) in cash and cash equivalents
868,511
(598,309)
Cash and cash equivalents at beginning of the year
Effect of foreign exchange rate changes
(196,467)
41,022
242,678
159,164
Cash and cash equivalents at end of the year
22
713,066
(196,467)
Analysis of the balance of cash and cash equivalents:
Cash and bank balances
Bank overdrafts
713,066
-
713,066
23,467
(219,934)
(196,467)
UNIVISION ENGINEERING LIMITED - 26 - ANNUAL REPORT 2010
UNIVISION ENGINEERING LIMITED
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 31 March 2010
1. GENERAL
UniVision Engineering Limited (“the Company”) is incorporated in Hong Kong with limited liability
and its shares are listed on the Alternative Investment Market of the London Stock Exchange (“AIM”).
The address of the registered office is 8/F Lever Tech Centre, 69-71 King Yip Street, Kwun Tong,
Kowloon, Hong Kong.
The financial statements are presented in Sterling Pound (“£”) and the functional currency of the
Company and its subsidiaries (hereinafter collectively referred to as the “Group”) is Hong Kong
Dollars (“HK$”). As the Company is listed on AIM, the directors consider that this presentation is
more useful for its current and potential investors.
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
electronic and mechanical services. The principal activities of its subsidiaries are set out in note 18 to
the financial statements.
2.
BASIS OF PREPARATION
(a) Going concern basis
In preparing the financial statements, the directors of the Company have given careful
consideration to the future liquidity of the Group in the light of the fact that the Group incurred a
loss of £10,348,258 during the year ended 31 March 2010 and, as of that date, the Group’s total
liabilities exceed its total assets by £2,053,425.
Taking into account the sufficiency of proceeds from its continuing operations and provided that
the Group can continue to successfully refinance or obtain sufficient bank and other borrowings,
the directors of the Company are satisfied that the Group will be able to meet in full its financial
obligations as they fall due for the foreseeable future and accordingly, the financial statements
have been prepared on a going concern basis.
(b) Subsidiary deconsolidated
Notwithstanding that the Group holds 100% equity interest in Leader Smart Engineering
(Shanghai) Limited (“LSSH”) for the year ended 31 March 2010, this company was no longer
regarded as a subsidiary of the Group as the directors of the Company are of the opinion that the
Group did not control this company during the year.
Pursuant to the shareholders’ meetings of LSSH held on 10 September 2009 and 12 October
2009 respectively, it was approved that the designation of Mr. Ip Kam Ming (“Ip”) as the
chairman, director and legal representative of LSSH was revoked with immediate effect, due to
his suspected misconduct and non-disclosure of conflict of interest. On 5 January 2010, the
holding company, Leader Smart Engineering Limited (“LSHK”) took legal action against Ip to
demand the return of LSSH’s corporate, financial and contract chops, business license,
certificate of approval and books and records (the “Properties”) and the case was lodged with
the Shanghai No.1 Intermediate People’s Court (the “Court”).
UNIVISION ENGINEERING LIMITED - 27 - ANNUAL REPORT 2010
UNIVISION ENGINEERING LIMITED
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 31 March 2010
2.
BASIS OF PREPARATION (CONT’D)
(b) Subsidiary deconsolidated (Cont’d)
In accordance with a civil ruling issued on 6 January 2010, the Properties of LSSH were sealed
and withheld by the Court and the directors of the Company were unable to access its
Properties. On 20 May 2010, the Court issued a civil judgement that Ip no longer legally acted
as the director, chairman and legal representative of LSSH and demanded Ip to return the
Properties to LSHK.
However Ip refused to follow the court decision and the Group commenced appeal proceedings
to the Shanghai High Court (the “High Court”) on 18 June 2010 and the trial was held at the
High Court on 4 August 2010.
The directors of the Company are of the opinion that the Group no longer has the power to
govern the financial and operating policies of LSSH and accordingly the Group no longer has
control of LSSH, notwithstanding that the Group holds a 100% equity interest in LSSH. It is no
longer regarded as a subsidiary of the Group from 1 April 2009, whereby certain transactions
were not approved by the Board of Directors of the Company, and are considered invalid and
unauthorised in LSSH during the year from 1 April 2009 to 31 March 2010. Hence, the directors
resolved to deconsolidate LSSH effective from 1 April 2009.
Accordingly, the results of LSSH were excluded from the consolidated financial statements
since 1 April 2009. The consolidated statement of comprehensive income presented a loss on
deconsolidation of £8,324,208. Details of the deconsolidation of LSSH are stated in note 28.
3.
APPLICATION OF NEW AND REVISED INTERNATIONAL FINANCIAL REPORTINGS
STANDARDS (“IFRSs”)
In the current year, the Group has applied the following new and revised standards, amendments and
interpretations (“new and revised IFRSs”) issued by the International Accounting Standards Board
which are or have become effective.
IAS 1 (Revised 2007)
IAS 23 (Revised 2007)
IAS 32 & 1 (Amendments)
Presentation of Financial Statements
Borrowing Costs
Puttable Financial Instruments and Obligations Arising on
IFRS 1 & IAS 27 (Amendments)
Cost of an Investment in a Subsidiary, Jointly Controlled
Entity or Associate
Liquidation
IFRS 2 (Amendment)
IFRS 7 (Amendment)
IFRS 8
IFRIC* - Int 9 & IAS 39 (Amendments) Embedded Derivatives
IFRIC - Int 13
IFRIC - Int 15
IFRIC - Int 16
IFRIC - Int 18
IFRSs (Amendments)
Vesting Conditions and Cancellations
Improving Disclosures about Financial instruments
Operating Segments
Customer Loyalty Programmes
Agreements for the Construction of Real Estate
Hedges of a Net Investment in a Foreign Operation
Transfers of Assets from Customers
Improvements to IFRSs issued in 2008, except for the
amendment to IFRS 5 that is effective for annual periods
beginning or after 1 July 2009
IFRSs (Amendments)
Improvements to IFRSs issued in 2009 in relation to the
amendment to paragraph 80 of IAS 39
UNIVISION ENGINEERING LIMITED - 28 - ANNUAL REPORT 2010
UNIVISION ENGINEERING LIMITED
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 31 March 2010
3.
APPLICATION OF NEW AND REVISED INTERNATIONAL FINANCIAL REPORTINGS
STANDARDS (“IFRSs”) (CONT’D)
* IFRIC represents the International Financial Reporting Interpretations Committee.
Except as described below, the adoption of the new and revised IFRSs has had no material effect on
the financial statements for the current or prior accounting periods.
IAS 1 (Revised 2007) Presentation of Financial Statements
IAS 1 (Revised 2007) has introduced terminology changes, including revised titles for the financial
statements and changes in the format and content of the financial statements.
IFRS 8 Operating Segments
IFRS 8 is a disclosure standard and has not resulted in a redesignation of the Group's reportable
segments as compared with the primary reportable segments (see note 7).
IAS 23 (Revised 2007) Borrowing Costs
In previous years, the Group expensed all borrowing costs that were directly attributable to the
acquisition, construction or production of a qualifying asset when they were incurred. IAS 23
(Revised 2007) removes the option previously available to expense all borrowing costs when incurred.
The adoption of IAS 23 (Revised 2007) has resulted in the Group changing its accounting policy to
capitalise all such borrowing costs as part of the cost of the qualifying asset.
The adoption of IAS 23 (Revised 2007) has had no effect on the reported results and financial position
of the Group for the current or prior accounting periods. Accordingly, no adjustment is required.
The Group has not early applied the following new and revised standards, amendments or
interpretations that have been issued but are not yet effective.
IFRSs (Amendments)
IFRSs (Amendments)
IFRSs (Amendments)
IAS 24 (Revised)
IAS 27 (Revised)
IAS 32 (Amendment)
IAS 39 (Amendment)
IFRS 1 (Revised)
IFRS 1 (Amendment)
IFRS 1 (Amendment)
IFRS 2 (Amendment)
IFRS 3 (Revised)
IFRS 9
IFRIC - Int 14 (Amendment)
IFRIC - Int 17
IFRIC - Int 18
IFRIC - Int 19
Amendments to IFRS 5 as part of improvements to IFRSs 20081
Improvements to IFRSs 20092
Improvements to IFRSs 20106
Related party disclosures7
Consolidated and separate financial statements1
Classification of rights issues4
Eligible hedged items1
First-time adoption of International Financial Reporting Standards1
Additional exemptions for first-time adopters3
Limited exemption from comparative IFRS 7 disclosures for first-
time adopters5
Group cash-settled share-based payment transactions3
Business combinations1
Financial instruments8
Prepayments of a minimum funding requirement7
Distributions of non-cash assets to owners1
Transfer of assets from customers1
Extinguishing financial liabilities with equity instrument5
1
Effective for annual periods beginning on or after 1 July 2009.
UNIVISION ENGINEERING LIMITED - 29 - ANNUAL REPORT 2010
UNIVISION ENGINEERING LIMITED
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 31 March 2010
3.
APPLICATION OF NEW AND REVISED INTERNATIONAL FINANCIAL REPORTINGS
STANDARDS (“IFRSs”) (CONT’D)
2
3
4
5
6
7
8
Amendments that are effective for annual periods beginning on or after 1 July 2009 and 1
January 2010, as appropriate.
Effective for annual periods beginning on or after 1 January 2010.
Effective for annual periods beginning on or after 1 February 2010.
Effective for annual periods beginning on or after 1 July 2010.
Effective for annual periods beginning on or after 1 July 2010 and 1 January 2011, as
appropriate.
Effective for annual periods beginning on or after 1 January 2011.
Effective for annual periods beginning on or after 1 January 2013.
The application of IFRS 3 (Revised) may affect the Group's accounting for business combination for
which the acquisition date is on or after 1 April 2010. IAS 27 (Revised) will affect the accounting
treatment for changes in the Group's ownership interest in a subsidiary.
The directors of the Company anticipate that the application of the other new and revised standards,
amendments or interpretations will have no material impact on the financial statements.
4.
SIGNIFICANT ACCOUNTING POLICIES
The financial statements have been prepared in accordance with IFRSs on the historical cost basis
except for certain financial instruments, which are measured at fair values, as explained in the
accounting policies set out below.
(a) Basis of consolidation
The consolidated financial statements incorporate the financial statements of the Company and
entities (including special purpose entities) controlled by the Company (its subsidiaries).
Control is achieved where the Company has the power to govern the financial and operating
policies of an entity so as to obtain benefits from its activities.
The results of subsidiaries acquired, disposed of or deconsolidated due to loss of control during
the year are included in the consolidated statement of comprehensive income from the effective
date of acquisition or up to the effective date of disposal or deconsolidation, as appropriate.
Where necessary, adjustments are made to the financial statements of subsidiaries to bring their
accounting policies into line with those used by other members of the Group.
All intra-group transactions, balances, income and expenses are eliminated on consolidation.
Non-controlling interests in the net assets of consolidated subsidiaries are presented separately
from the Group's equity therein. Non-controlling interests in the net assets consist of the
amount of those interests at the date of the original business combination and the minority's
share of changes in equity since the date of the combination. Losses applicable to the minority
in excess of the minority's interest in the subsidiary's equity are allocated against the interests of
the Group except to the extent that the minority has a binding obligation and is able to make an
additional investment to cover the losses.
UNIVISION ENGINEERING LIMITED - 30 - ANNUAL REPORT 2010
UNIVISION ENGINEERING LIMITED
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 31 March 2010
4.
SIGNIFICANT ACCOUNTING POLICIES (CONT’D)
(b)
Investment in subsidiaries
Investment in subsidiaries are carried at cost less accumulated impairment losses in the
Company’s balance sheet. On disposal of investment in subsidiaries, the difference between
disposal proceeds and the carrying amounts of the investments are recognised in profit or loss.
(c) Business combinations
The acquisition of businesses is accounted for using the purchase method. The cost of the
acquisition is measured at the aggregate of the fair values, at the date of exchange, of assets
given, liabilities incurred or assumed, and equity instruments issued by the Group in exchange
for control of the acquiree, plus any costs directly attributable to the business combination. The
acquiree's identifiable assets, liabilities and contingent liabilities that meet the conditions for
recognition under IFRS 3 “Business Combinations” are recognised at their fair values at the
acquisition date.
Goodwill arising on acquisition is recognised as an asset and initially measured at cost, being
the excess of the cost of the business combination over the Group's interest in the net fair value
of the identifiable assets, liabilities and contingent liabilities recognised. If, after reassessment,
the Group's interest in the net fair value of the acquiree's identifiable assets, liabilities and
contingent liabilities exceeds the cost of the business combination, the excess is recognised
immediately in profit or loss.
The interest of minority shareholders in the acquiree is initially measured at the minority's
proportion of the net fair value of the assets, liabilities and contingent liabilities recognised.
(d) Goodwill
Goodwill arising on an acquisition of a business is carried at cost less any accumulated
impairment losses and is presented separately in the consolidated statement of financial position.
For the purposes of impairment testing, goodwill arising from an acquisition is allocated to each
of the relevant cash-generating units, or groups of cash-generating units, that are expected to
benefit from the synergies of the acquisition. A cash-generating unit to which goodwill has
been allocated is tested for impairment annually, and whenever there is an indication that the
unit may be impaired. For goodwill arising on an acquisition in a financial year, the cash-
generating unit to which goodwill has been allocated is tested for impairment before the end of
that financial year. When the recoverable amount of the cash-generating unit is less than the
carrying amount of the unit, the impairment loss is allocated to reduce the carrying amount of
any goodwill allocated to the unit first, and then to the other assets of the unit pro rata on the
basis of the carrying amount of each asset in the unit. Any impairment loss for goodwill is
recognised directly in profit or loss. An impairment loss for goodwill is not reversed in
subsequent periods.
On subsequent disposal of the relevant cash-generating unit, the attributable amount of goodwill
capitalised is included in the determination of the profit or loss on disposal.
UNIVISION ENGINEERING LIMITED - 31 - ANNUAL REPORT 2010
UNIVISION ENGINEERING LIMITED
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 31 March 2010
4.
SIGNIFICANT ACCOUNTING POLICIES (CONT’D)
(e) Research and development expenditure
Expenditure on research activities is recognised as an expense in the period in which it is
incurred.
An internally-generated intangible asset arising from development (or from the development
phase of an internal project) is recognised if, and only if, all of the following have been
demonstrated:
(cid:2)
(cid:2)
(cid:2)
(cid:2)
(cid:2)
(cid:2)
the technical feasibility of completing the intangible asset so that it will be available for
use or sale;
the intention to complete the intangible asset and use or sell it;
the ability to use or sell the intangible asset;
how the intangible asset will generate probable future economic benefits;
the availability of adequate technical, financial and other resources to complete the
development and to use or sell the intangible asset; and
the ability to measure reliably the expenditure attributable to the intangible asset during
its development.
The amount initially recognised for internally-generated intangible asset is the sum of the
expenditure incurred from the date when the intangible asset first meets the recognition criteria.
Where no internally-generated intangible asset can be recognised, development expenditure is
charged to profit or loss in the period in which it is incurred.
Subsequent to initial recognition, internally-generated intangible asset is reported at cost less
accumulated amortisation and accumulated impairment losses.
(f)
Plant and equipment
(i) Measurement
(1) Other plant and equipment
All other items of plant and equipment are initially recognised at cost and
subsequently carried at cost less accumulated depreciation and accumulated
impairment losses.
(2) Components of cost
The cost of an item of plant and equipment are initially recognised includes its
purchase price and any cost that is directly attributable to bringing the asset to the
location and condition necessary for it to be capable of operating in the manner
intended by management. Cost also includes borrowing costs capitalised in
accordance with the Group’s accounting policy.
(ii) Depreciation
Depreciation on other items of plant and equipment is calculated using the straight-line
method to allocate their depreciable amounts over their estimated useful lives as follows:
UNIVISION ENGINEERING LIMITED - 32 - ANNUAL REPORT 2010
UNIVISION ENGINEERING LIMITED
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 31 March 2010
4.
SIGNIFICANT ACCOUNTING POLICIES (CONT’D)
(f)
Plant and equipment (Cont’d)
(ii) Depreciation (Cont’d)
Furniture and fixtures
Computer equipment
Motor vehicles
Leasehold improvements
Research assets
5 years
3 years
3 years
5 years
5 years
The residual values, estimated useful lives and depreciation method of plant and
equipment are reviewed, and adjusted as appropriate, at each balance sheet date.
(iii) Subsequent expenditure
Subsequent expenditure relating to plant and equipment that has already been recognised
is added to the carrying amount of the asset only when it is probable that future economic
benefits associated with the item will flow to the Group and the cost of the item can be
measured reliably. All other repair and maintenance expenses are recognised in profit or
loss when incurred.
(iv) Disposal
On disposal of an item of plant and equipment, the difference between the disposal
proceeds and its carrying amount is recognised in profit or loss.
(g)
Impairment of assets (other than goodwill and financial assets)
At the end of the reporting period, the Group reviews the carrying amounts of its assets to
determine whether there is any indication that those assets have suffered an impairment loss. If
any such indication exists, the recoverable amount of the asset is estimated in order to determine
the extent of impairment loss, if any. If the recoverable amount of an asset is estimated to be
less than its carrying amount, the carrying amount of the asset is reduced to its recoverable
amount. An impairment loss is recognised as an expense immediately.
Where an impairment loss subsequently reverses, the carrying amount of the asset is increased
to the revised estimate of its recoverable amount, but so that the increased carrying amount does
not exceed the carrying amount that would have been determined had no impairment loss been
recognised for the asset in prior years. A reversal of an impairment loss is recognised as income
immediately.
UNIVISION ENGINEERING LIMITED - 33 - ANNUAL REPORT 2010
UNIVISION ENGINEERING LIMITED
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 31 March 2010
4.
SIGNIFICANT ACCOUNTING POLICIES (CONT’D)
(h) Financial instruments
Financial assets and financial liabilities are recognised on the Group's consolidated statement of
financial position when a group entity becomes a party to the contractual provisions of the
instrument. Financial assets and financial liabilities are initially measured at fair value.
Transaction costs directly attributable to the acquisition or issue of financial assets and financial
liabilities (other than financial assets and financial liabilities at fair value through profit or loss)
are added to or deducted from the fair value of the financial assets or financial liabilities, as
appropriate, on initial recognition. Transaction costs directly attributable to the acquisition of
financial assets or financial liabilities at fair value through profit or loss are recognised
immediately in profit or loss.
(i)
Financial assets
The Group's financial assets are classified into loans and receivables.
(1) Effective interest method
The effective interest method is a method of calculating the amortised cost of a financial
asset and of allocating interest income over the relevant period. The effective interest rate
is the rate that exactly discounts estimated future cash receipts (including all fees and
points paid or received that form an integral part of the effective interest rate, transaction
costs and other premiums or discounts) through the expected life of the financial asset, or,
where appropriate, a shorter period to the net carrying amount on initial recognition.
Income is recognised on an effective interest basis for debt instruments.
(2) Loans and receivables
Loans and receivables are non-derivative financial assets with fixed or determinable
payments that are not quoted in an active market. Subsequent to initial recognition, loans
and receivables (including trade and other receivables and cash and bank balances) are
carried at amortised cost using the effective interest method, less any identified
impairment losses.
(3)
Impairment of loans and receivables
Loans and receivables are assessed for indicators of impairment at the end of the reporting
period. Loans and receivables are impaired where there is objective evidence that, as a
result of one or more events that occurred after the initial recognition of loans and
receivables, the estimated future cash flows of loans and receivables have been affected.
The objective evidence of impairment could include significant financial difficulty of the
issuer or counterparty; or default or delinquency in interest or principal payments; or it
becoming probable that the borrower will enter bankruptcy or financial re-organisation.
UNIVISION ENGINEERING LIMITED - 34 - ANNUAL REPORT 2010
UNIVISION ENGINEERING LIMITED
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 31 March 2010
4.
SIGNIFICANT ACCOUNTING POLICIES (CONT’D)
(h) Financial instruments (Cont’d)
(i)
Financial assets (Cont’d)
(3)
Impairment of loans and receivables (Cont’d)
For certain categories of loans and receivables, such as trade receivables, assets that are
assessed not to be impaired individually are subsequently assessed for impairment on a
collective basis. The objective evidence of impairment for a portfolio of receivables
could include the Group's past experience of collecting payments, an increase in the
number of delayed payments in the portfolio, observable changes in national or local
economic conditions that correlate with default on receivables.
An impairment loss is recognised in profit or loss when there is objective evidence that
the asset is impaired, and is measured as the difference between the asset's carrying
amount and the present value of the estimated future cash flows discounted at the original
effective interest rate.
The carrying amount of loans and receivables is reduced by the impairment loss directly
with the exception of trade receivables, where the carrying amount is reduced through the
use of an allowance account. Changes in the carrying amount of the allowance account
are recognised in profit or loss. When trade receivables are considered uncollectible, it is
written off against the allowance account. Subsequent recoveries of amounts previously
written off are credited to profit or loss.
If, in a subsequent period, the amount of impairment loss decreases and the decrease can
be related objectively to an event occurring after the impairment losses was recognised,
the previously recognised impairment loss is reversed through profit or loss to the extent
that the carrying amount of the asset at the date the impairment is reversed does not
exceed what the amortised cost would have been had the impairment not been recognised.
(ii) Financial liabilities and equity
Financial liabilities and equity instruments issued by a group entity are classified
according to the substance of the contractual arrangements entered into and the definitions
of a financial liability and an equity instrument.
An equity instrument is any contract that evidences a residual interest in the assets of a
group entity after deducting all of its liabilities.
(1) Effective interest method
The effective interest method is a method of calculating the amortised cost of a financial
liability and of allocating interest expense over the relevant period. The effective interest
rate is the rate that exactly discounts estimated future cash payments through the expected
life of the financial liability, or, where appropriate, a shorter period.
Interest expense is recognised on an effective interest basis.
UNIVISION ENGINEERING LIMITED - 35 - ANNUAL REPORT 2010
UNIVISION ENGINEERING LIMITED
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 31 March 2010
4.
SIGNIFICANT ACCOUNTING POLICIES (CONT’D)
(h) Financial instruments (Cont’d)
(ii) Financial liabilities and equity (Cont’d)
(2)
Financial liabilities
Financial liabilities including bank borrowings and trade and other payables are
subsequently measured at amortised cost, using the effective interest method.
(3) Equity instruments
Equity instruments issued by the Company are recorded at the proceeds received, net of
direct issue costs.
(iii) Derecognition
Financial assets are derecognised when the rights to receive cash flows from the assets
expire or, the financial assets are transferred and the Group has transferred substantially
all the risks and rewards of ownership of the financial assets. On derecognition of a
financial asset, the difference between the asset's carrying amount and the sum of the
consideration received and receivable and the cumulative gain or loss that had been
recognised in other comprehensive income is recognised in profit or loss. If the Group
retains substantially all the risks and rewards of ownership of a transferred financial asset,
the Group continues to recognise the financial asset and also recognises a collateralised
borrowing for the proceeds received.
Financial liabilities are derecognised when the obligation specified in the relevant
contract is discharged, cancelled or expires. The difference between the carrying amount
of the financial liability derecognised and the consideration paid or payable is recognised
in profit or loss.
(i) Construction contracts
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 - 36 - ANNUAL REPORT 2010
UNIVISION ENGINEERING LIMITED
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 31 March 2010
4.
SIGNIFICANT ACCOUNTING POLICIES (CONT’D)
(j)
Financial guarantee contracts
A financial guarantee contract is a contract that requires the issuer to make specified payments
to reimburse the holder for a loss it incurs because a specified debtor fails to make payment
when due in accordance with the original or modified terms of debt instrument. A financial
guarantee contract issued by the Group is initially measured at its fair value, less transaction
costs that are directly attributable to the issue of the financial guarantee contract. Subsequently,
the Group measures the financial guarantee contract at the higher of: (i) the amount of the
present legal or constructive obligation under the contract at the reporting date, as determined in
accordance with IAS 37 Provisions, Contingent Liabilities and Contingent Assets; and (ii) the
amount initially recognised less, where appropriate, cumulative amortisation.
(k)
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.
(l)
Borrowing costs
Borrowing costs directly attributable to the acquisition, construction or production of qualifying
assets, which are assets that necessarily take a substantial period of time to get ready for their
intended use or sale are added to the cost of those assets until such time as the assets are
substantially ready for their intended use or sale. Investment income earned on the temporary
investment of specific borrowings pending their expenditure on qualifying assets is deducted
from the borrowing costs eligible for capitalisation.
All other borrowing costs are recognised in profit or loss in the period in which they are
incurred.
(m) Revenue recognition
Revenue comprises the fair value of the consideration received or receivable for the sale of
goods and rendering of services in the ordinary course of the Group’s activities. Revenue is
shown net of business tax, value-added tax, rebates and discounts, and after eliminating sales
within the Group.
The Group recognises revenue when the amount of revenue and related cost can be reliably
measured, it is probable that future economic will flow to the entity and when specific criteria
have been made met for each of the Group’s activities as described below. The amount of
revenue is not considered to be reliably measurable until all contingencies relating to the sale
have been resolved. The Group bases its estimates on historical results, taking into consideration
the type of customer, the type of transaction and the specifics of each arrangement.
UNIVISION ENGINEERING LIMITED - 37 - ANNUAL REPORT 2010
UNIVISION ENGINEERING LIMITED
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 31 March 2010
4.
SIGNIFICANT ACCOUNTING POLICIES (CONT’D)
(m) Revenue recognition (Cont’d)
(i)
Construction contracts
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.
(ii) Maintenance contracts
Revenue from maintenance contracts is recognised on a straight line basis over the
maintenance periods thereof.
(iii) Product sales
Revenue from product sales 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.
(iv) Solution sales
Revenue from solution sales is recognised when the solution services are rendered.
(v) Management fee
Revenue from management service is recognised when the management services are
rendered.
(vi)
Interest income
Interest income is recognised as it accrues using the effective interest method.
UNIVISION ENGINEERING LIMITED - 38 - ANNUAL REPORT 2010
UNIVISION ENGINEERING LIMITED
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 31 March 2010
4.
SIGNIFICANT ACCOUNTING POLICIES (CONT’D)
(n) Taxation
Income tax expense represents the sum of the tax currently payable and deferred tax.
The tax currently payable is based on taxable profit for the year. Taxable profit differs from
profit as reported in the statement of comprehensive income because it excludes items of income
or expense that are taxable or deductible in other years and it further excludes items that are
never taxable or deductible. The Group's liability for current tax is calculated using tax rates
that have been enacted or substantively enacted by the end of the reporting period.
Deferred tax is recognised on differences between the carrying amounts of assets and liabilities
in the financial statements and the corresponding tax base used in the computation of taxable
profit, and is accounted for using the balance sheet liability method. Deferred tax liabilities are
generally recognised for all taxable temporary differences, and deferred tax assets are
recognised to the extent that it is probable that taxable profits will be available against which
deductible temporary differences can be utilised. Such assets and liabilities are not recognised if
the temporary difference arises from goodwill or from the initial recognition (other than in a
business combination) of other assets and liabilities in a transaction that affects neither the
taxable profit nor the accounting profit.
Deferred tax liabilities are recognised for taxable temporary differences arising on investments
in subsidiaries, except where the Group is able to control the reversal of the temporary
difference and it is probable that the temporary difference will not reverse in the foreseeable
future. Deferred tax assets arising from deductible temporary differences associated with such
investments are only recognised to the extent that it is probable that there will be sufficient
taxable profits against which to utilise the benefits of the temporary differences and they are
expected to reverse in the foreseeable future.
The carrying amount of deferred tax assets is reviewed at the end of the reporting period and
reduced to the extent that it is no longer probable that sufficient taxable profits will be available
to allow all or part of the asset to be recovered.
Deferred tax assets and liabilities are measured at the tax rates that are expected to apply in the
period in which the liability is settled or the asset is realised, based on tax rate (and tax laws)
that have been enacted or substantively enacted by the end of the reporting period. The
measurement of deferred tax liabilities and assets reflects the tax consequences that would
follow from the manner in which the Group expects, at the end of the reporting period, to
recover or settle the carrying amount of its assets and liabilities. Deferred tax is recognised in
profit or loss, except when it relates to items that are recognised in other comprehensive income
or directly in equity, in which case the deferred tax is also recognised in other comprehensive
income or directly in equity respectively.
(o) 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.
UNIVISION ENGINEERING LIMITED - 39 - ANNUAL REPORT 2010
UNIVISION ENGINEERING LIMITED
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 31 March 2010
4.
SIGNIFICANT ACCOUNTING POLICIES (CONT’D)
(o) Provisions and contingent liabilities (Cont’d)
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.
(p) Employee benefit – pension obligations
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) Leases
Leases are classified as finance leases whenever the terms of the lease transfer substantially all
the risks and rewards of ownership to the lessee. All other leases are classified as operating
leases.
The Group as lessee –
Assets held under finance leases are recognised as assets of the Group at their fair value at the
inception of the lease or, if lower, at the present value of the minimum lease payments. The
corresponding liability to the lessor is included in the statement of financial position as a finance
lease obligation. Lease payments are apportioned between finance charges and reduction of the
lease obligation so as to achieve a constant rate of interest on the remaining balance of the
liability. Finance charges are charged directly to profit or loss.
Operating lease payments are recognised as an expense on a straight line basis over the term of
the relevant lease. Benefits received and receivable as an incentive to enter into an operating
lease are recognised as a reduction of rental expense over the lease term on a straight line basis.
(r) Foreign currencies
In preparing the financial statements of each individual group entity, transactions in currencies
other than the functional currency of that entity (foreign currencies) are recorded in the
respective functional currency (i.e. the currency of the primary economic environment in which
the entity operates) at the rates of exchanges prevailing on the dates of the transactions. At the
end of the reporting period, monetary items denominated in foreign currencies are retranslated at
the rates prevailing at that date. Non-monetary items that are measured in terms of historical
cost in a foreign currency are not retranslated.
UNIVISION ENGINEERING LIMITED - 40 - ANNUAL REPORT 2010
UNIVISION ENGINEERING LIMITED
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 31 March 2010
4.
SIGNIFICANT ACCOUNTING POLICIES (CONT’D)
(r) Foreign currencies (Cont’d)
Exchange differences arising on the settlement of monetary items, and on the translation of
monetary items, are recognised in profit or loss in the period in which they arise, except for
exchange differences arising on a monetary item that forms part of the Company's net
investment in a foreign operation, in which case, such exchange differences are recognised in
other comprehensive income and accumulated in equity and will be reclassified from equity to
profit or loss upon disposal of the foreign operation.
For the purposes of presenting the financial statements, the assets and liabilities of the Group's
foreign operations are translated into the presentational currency of the Group (i.e. £) at the rate
of exchange prevailing at the end of the reporting period, and their income and expenses are
translated at the average exchange rates for the year, unless exchange rates fluctuate
significantly during the period, in which case, the exchange rates prevailing at the dates of
transactions are used. Exchange differences arising, if any, are recognised in other
comprehensive income and accumulated in equity (the translation reserve).
Goodwill and fair value adjustments arising on an acquisition of a foreign operation on or after 1
January 2005 are treated as assets and liabilities of the foreign operation and translated at the
rate of exchange prevailing at the end of the reporting period. Exchange differences arising are
recognised in other comprehensive income and accumulated in equity (the translation reserve).
5.
CRITICAL ACCOUNTING JUDGEMENTS AND KEY SOURCES OF ESTIMATION
UNCERTAINTY
In the application of the Group’s accounting policies, which are described in note 4, the directors of
the Company are required to make judgements, estimates and assumptions about the carrying amounts
of assets and liabilities that are not readily apparent from other sources. The estimates and associated
assumptions are based on historical experience and other factors that are considered to be relevant.
Actual results may differ from these estimates.
The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting
estimates are recognised in the period in which the estimate is revised if the revised if the revision
affects only that period, or in the period of the revision and future periods if the revision affects both
current and future periods.
(a) Critical judgements in applying the entity’s accounting policies
The following are the critical judgements, apart from those involving estimations (see below),
that the directors have made in the process of applying the entity’s accounting policies and that
have the most significant effect on the amounts recognised in financial statements.
(i)
Estimation of contract costs
Estimated costs to complete contracts are judged by the directors 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. The directors believe 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.
UNIVISION ENGINEERING LIMITED - 41 - ANNUAL REPORT 2010
UNIVISION ENGINEERING LIMITED
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 31 March 2010
5.
CRITICAL ACCOUNTING JUDGEMENTS AND KEY SOURCES OF ESTIMATION
UNCERTAINTY (CONT’D)
(a) Critical judgements in applying the entity’s accounting policies (Cont’d)
(i)
Estimation of contract costs (Cont’d)
The key assumptions concerning the future and other key sources of estimation
uncertainty at the end of the reporting periods, that have a significant risk of causing a
material adjustment to the carrying amounts of assets and liabilities within the next
financial year, are discussed below.
(b) Key sources of estimation uncertainty
The key assumptions concerning the future and other key sources of estimation uncertainty at
the end of the reporting periods, that have a significant risk of causing a material adjustment to
the carrying amounts of assets and liabilities within the next financial year, are discussed below.
(i) Write down of inventories
The identification of any write down of inventories of the Group requires the use of
judgement and estimates by the directors. The directors estimate 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. The
directors regularly review 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 2010, there was £(26,467) (2009: £89,435) (recovery
of)/write down of obsolete inventories recognised as (income)/expense in the consolidated
statement of comprehensive income.
(ii)
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 the directors. The directors 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
consolidated statement of comprehensive income. As at 31 March 2010, the total
carrying amount of trade and other receivables are £4,400,341 (2009: £18,923,799) (see
note 21 for detail of the allowance for doubtful debts).
UNIVISION ENGINEERING LIMITED - 42 - ANNUAL REPORT 2010
UNIVISION ENGINEERING LIMITED
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 31 March 2010
5.
CRITICAL ACCOUNTING JUDGEMENTS AND KEY SOURCES OF ESTIMATION
UNCERTAINTY (CONT’D)
(b) Key sources of estimation uncertainty (Cont’d)
(iii)
Impairment of goodwill
Determining whether goodwill is impaired requires an estimation of the value in use of
the cash-generating units to which goodwill has been allocated. The value in use
calculation requires the Group to estimate the future cash flows expected to arise from the
cash-generating unit and a suitable discount rate in order to calculate present value.
When the actual future cash flows are less than expected, a material impairment loss may
arise. The carrying amount of goodwill at 31 March 2010 was £25,830 (2009: £692,830)
and an impairment loss of £791,945 (2009: £309,325) recognised as an expense in the
consolidated statement of comprehensive income. Details of the calculation is set out in
note 17.
(iv) Deferred taxation
As at 31 March 2010, the Group has unused tax losses of £5,368,856 (2009: £5,509,897)
available for offset against future profits. No deferred tax asset in relation to these unused
tax losses approximately to £885,861 (2009: £909,133) has been recognised in the
consolidated statement of financial position. In cases where there are future profits
generated to utilise the tax losses, a material deferred tax assets may arise, which would
be recognised in the consolidated statement of comprehensive income for the period in
which such future profits are recorded.
6.
FINANCIAL INSTRUMENTS
(a) Categories of financial instruments
Financial assets at amortised cost:
Loans and receivables (including cash and bank balances)
- Trade and other receivables
- Tax recoverable
- Cash and bank balances
Financial liabilities at amortised cost:
- Trade and other payables
- Tax payable
- Interest-bearing borrowings
- Obligation under finance lease
- Bank overdrafts
2010
£
2009
£
4,400,341
4,384
884,174
18,923,799
8,933
117,762
3,342,153
15,116
5,165,203
9,108
-
5,160,493
921,984
5,552,204
13,952
219,934
UNIVISION ENGINEERING LIMITED - 43 - ANNUAL REPORT 2010
UNIVISION ENGINEERING LIMITED
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 31 March 2010
6.
FINANCIAL INSTRUMENTS (CONT’D)
(b) Financial risk management objectives and policies
The Group’s major financial instruments include borrowings, trade and other receivables and trade and
other payables. Details of these financial instruments are disclosed in the respective notes. The risks
associated with these financial instruments include currency risk, interest rate risk, credit risk and
liquidity risk. The policies on how 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.
(i) Market risk
(1) Currency risk
Certain entities in the Group have foreign currency transactions and have foreign currency
denominated monetary assets and liabilities, which expose the Group to foreign currency risk.
The Company has foreign currency transactions, which expose the Company to foreign currency
risk.
The carrying amounts of the Group’s and the Company’s foreign currency denominated
monetary assets and monetary liabilities, mainly represented by trade and other receivables, cash
and bank balances, trade and other payables and borrowings, at the end of the reporting period
are as follows:
The Group
The Company
Assets
Liabilities
Assets
Liabilities
2010
2009
2010
2009
2010
2009
2010
2009
New Taiwan
Dollars
(“NTD”)
Renminbi
(“RMB”)
United State
Dollars
(“USD”)
Hong Kong
Dollars
(“HKD”)
112,770,825 99,503,118 93,930,365 79,234,535
- 131,452,650
15,216 24,686,512
-
-
-
-
-
7,272,227
15,216
172,076
347,897
38,453 7,448,385
6,426,536
346,274
21,109
7,413,019
6,264,365
29,769,288 38,287,502 17,739,283 24,175,432 29,243,150 34,312,446 ` 17,694,033 24,131,636
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.
UNIVISION ENGINEERING LIMITED - 44 - ANNUAL REPORT 2010
UNIVISION ENGINEERING LIMITED
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 31 March 2010
6.
FINANCIAL INSTRUMENTS (CONT’D)
(i) Market risk (Cont’d)
(1) Currency risk (Cont’d)
Sensitivity analysis
The following table details the Group’s sensitivity to a 5% increase and decrease in £ against the
relevant foreign currencies and all other variables were held constant. 5% (2009: 5%) is the
sensitivity rate used when reporting foreign currency risk internally to key management
personnel and represents management’s assessment of the reasonably possible change in foreign
exchange rates. The sensitivity analysis includes only outstanding foreign currencies
denominated monetary items and adjusts their translation at the year end for a 5% (2009: 5%)
change in foreign currency rates. A positive/(negative) number indicates a decrease/(increase)
in post-tax loss for the year when £ strengthens 5% (2009: 5%) against the relevant foreign
currencies. For a 5% (2009: 5%) weakening of £ against the relevant currency, there would be
an equal but opposite impact on the post-tax loss for the year.
NTD
Post-tax loss for the year
RMB
Post-tax loss for the year
USD
Post-tax loss for the year
HKD
Post-tax loss for the year
(2)
Interest rate risk
2010
£
2009
£
20,758
21,961
(78)
576,942
(248,970)
(237,543)
54,079
67,277
The Group and the Company is exposed to fair value interest rate risk in relation to fixed rate
bank deposits and borrowings at fixed rates. The Group and the Company is exposed to cash
flow interest rate risk due to fluctuation of the prevailing market interest rate on certain bank
borrowings which carry at prevailing market interest rates as shown in notes 25 and 26. The
Group currently does not have an interest rate hedging policy. However, management monitors
interest rate exposure and will consider hedging significant interest rate exposure should the
need arises.
The Group’s and the Company’s exposures to interest rates on financial liabilities are detailed in
the liquidity risk management section of this note.
UNIVISION ENGINEERING LIMITED - 45 - ANNUAL REPORT 2010
UNIVISION ENGINEERING LIMITED
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 31 March 2010
6.
FINANCIAL INSTRUMENTS (CONT’D)
(i) Market risk (Cont’d)
(2)
Interest rate risk (Cont’d)
Sensitivity analysis
The sensitivity analysis below has been determined based on the change in interest rates and the
exposure to interest rates for the non-derivative financial liabilities at the balance sheet date and
on the assumption that the amount outstanding at the balance sheet date was outstanding for the
whole year and held constant throughout the financial year. 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 2009.
For the year ended 31 March 2010, if interest rates has been 25 basis points higher/lower, with
all other variables held constant, the Group’s post-tax loss for the year would increase/decrease
by approximately £2,213 (2009: £3,283).
(ii) Credit risk
At 31 March 2010, the Group’s and the Company’s maximum exposure to credit risk in the
event of the counterparties’ failure to perform their obligations in relation to each class of
recognised financial assets is the carrying amount of those assets as stated in the consolidated
statement of financial position.
The Group’s credit risk is primarily attributable to its trade and other receivables. In order to
minimise the credit risk, the management of the Group 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 are 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 90 days from the date of billing.
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 exceed 10% of
the total trade and other receivables at the balance sheet date.
The credit risk on liquid funds is limited because the counterparties are banks with high credit
ratings assigned by international credit rating agencies. Also, the Group has no significant
concentration of credit risk, with exposure spread over a number of counterparties and
customers.
Further quantitative disclosures in respect of the Group’s and the Company’s exposure to credit
risk arising from trade and other receivables are set out in note 21.
UNIVISION ENGINEERING LIMITED - 46 - ANNUAL REPORT 2010
UNIVISION ENGINEERING LIMITED
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 31 March 2010
6.
FINANCIAL INSTRUMENTS (CONT’D)
(iii) 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. At 31 March 2010, the Group
has the aggregate banking facilities £2,346,849 (2009: £4,056,417), of which £1,178,913 were
unused (2009: £2,523,409).
The following table details the contractual maturities of the Group’s financial liabilities at the
balance sheet date, which is based on the undiscounted cash flows and the earliest date on which
the Group can be required to pay. The table includes both interest and principal cash flows.
The Group
2010
Non-derivative
financial
liabilities:
Bank overdrafts
Interest-bearing
borrowings
Trade and other
payables
Tax payable
Obligation under
finance lease
Financial guarantee
issued
Maximum amount
guaranteed (note
31)
Weighted
average
effective
interest rate
%
Within
1 year
or on
demand
£
More than
1 year but
less than
2 years
£
More than
2 years but
less than
5 years
£
Total
undiscounted
cash flow
£
Carrying
amount
at 31
March 2010
£
-
-
3.1%-15% 5,782,080
- 3,342,153
15,116
-
-
-
-
-
9.5%
4,842
6,052
9,144,191
6,052
-
-
-
-
-
-
-
-
5,782,080
5,165,203
3,342,153
15,116
3,342,153
15,116
10,894
9,108
9,150,243
8,531,580
2,700,856
-
-
2,700,856
-
UNIVISION ENGINEERING LIMITED - 47 - ANNUAL REPORT 2010
UNIVISION ENGINEERING LIMITED
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 31 March 2010
6.
FINANCIAL INSTRUMENTS (CONT’D)
(iii) Liquidity risk (Cont’d)
2009
Weighted
average
effective
interest rate
%
Within
1 year
or on
demand
£
More than
1 year but
less than
2 years
£
More than
2 years but
less than
5 years
£
Total
undiscounted
cash flow
£
Carrying
amount
at 31
March 2009
£
Non-derivative
financial
liabilities:
Bank overdrafts
Interest-bearing
borrowings
Trade and other
payables
Tax payable
Obligation under
finance lease
The Company
2010
Non-derivative
financial
liabilities:
Bank overdrafts
Interest-bearing
borrowings
Trade and other
payables
Obligation under
finance lease
4.7%
219,934
3.7%-15% 5,902,246
- 5,160,493
921,984
-
-
-
-
-
-
-
-
-
219,934
219,934
5,902,246
5,552,204
5,160,493
921,984
5,160,493
921,984
9.5%
5,135
5,135
6,418
16,688
13,952
12,209,792
5,135
6,418
12,221,345
11,868,567
Weighted
average
effective
interest rate
%
Within
1 year
or on
demand
£
More than
1 year but
less than
2 years
£
More than
2 years but
less than
5 years
£
Total
undiscounted
cash flow
£
Carrying
amount
at 31
March 2010
£
-
-
15% 4,596,857
- 2,461,725
-
-
-
9.5%
4,842
6,052
7,063,424
6,052
-
-
-
-
-
-
-
4,596,857
3,997,267
2,461,725
2,461,725
10,894
9,108
7,069,476
6,468,100
UNIVISION ENGINEERING LIMITED - 48 - ANNUAL REPORT 2010
UNIVISION ENGINEERING LIMITED
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 31 March 2010
6.
FINANCIAL INSTRUMENTS (CONT’D)
(iii) Liquidity risk
2009
Weighted
average
effective
interest rate
%
Within
1 year
or on
demand
£
More than
1 year but
less than
2 years
£
More than
2 years but
less than
5 years
£
Total
undiscounted
cash flow
£
Carrying
amount
at 31
March 2009
£
Non-derivative
financial
liabilities:
Bank overdrafts
Interest-bearing
borrowings
Trade and other
payables
Obligation under
finance lease
(c) Fair value
4.7%
219,934
4.7%-15% 4,831,527
- 2,195,127
-
-
-
-
-
-
219,934
219,934
4,831,527
4,510,870
2,195,127
2,195,127
9.5%
5,135
5,135
6,418
16,688
13,952
7,251,723
5,135
6,418
7,263,276
6,939,883
The fair values of financial assets and financial liabilities are determined in accordance with
generally accepted pricing models based on discounted cash flow analysis.
The directors of the Company consider that the carrying amounts of financial assets and
financial liabilities recorded at amortised cost in the financial statements approximate to their
fair values.
(d) 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.
UNIVISION ENGINEERING LIMITED - 49 - ANNUAL REPORT 2010
UNIVISION ENGINEERING LIMITED
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 31 March 2010
6.
FINANCIAL INSTRUMENTS (CONT’D)
(d) Capital risk management (Cont’d)
During 2010, the Group’s strategy, which was unchanged from 2009, 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.
The net debt-to-adjusted capital ratios of the Group and the Company at the end of the reporting
period were as follows:
Current liabilities
Trade and other payables
Bank overdrafts
Borrowings
Tax payable
Obligation under finance lease
Non-current liabilities
Obligation under finance lease
The Group
The Company
2010
£
3,342,153
-
5,165,203
15,116
4,048
8,526,520
2009
£
5,160,493
219,934
5,552,204
921,984
4,293
11,858,908
2010
£
2,461,725
-
3,997,267
-
4,048
6,463,040
2009
£
2,195,127
219,934
4,510,870
-
4,293
6,930,224
5,060
9,659
5,060
9,659
Total debt
8,531,580
11,868,567
6,468,100
6,939,883
Less: Cash and bank balances
884,174
117,762
713,066
23,467
Net debt
7,647,406
11,750,805
5,755,034
6,916,416
Total (capital
deficiency)/equity
Net debt-to-adjusted capital
ratio
(2,053,425)
9,210,316
(2,568,104)
1,019,327
-372%
128%
-224%
679%
7.
SEGMENT INFORMATION
(a) Business segments
The Group has adopted IFRS 8 with effect from 1 April 2009. IFRS 8 requires operating
segments to be identified on the basis of internal reports about the components of the Group that
are regularly reviewed by the chief operating decision maker, chief executive officer, for the
purpose of allocating resources to the segment and to assess its performance. In contrast, the
predecessor standard (IAS 14, Segment Reporting) required an entity to identify two sets of
segments (business and geographical) using a risks and returns approach. In the past, the
Group’s primary reporting format was business. The application of IFRS 8 has not resulted in a
redesignation of the Group’s reportable segments as compared with the primary reportable
segments determined in accordance with IAS 14, nor has the adoption of IFRS 8 changed the
basis of measurement of segment profit or loss.
UNIVISION ENGINEERING LIMITED - 50 - ANNUAL REPORT 2010
UNIVISION ENGINEERING LIMITED
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 31 March 2010
7.
SEGMENT INFORMATION (CONT’D)
(a) Business segments (Cont’d)
The Group is organised into the following business segments:
- Construction contracts
- Maintenance contracts
- Product sales
- Solution sales
- Management fee
(b) Segment revenue and results
The following is an analysis of the Group’s revenue and results by operating segment:
For the year ended 31 March 2010:
Construction
contracts
£
Maintenance
contracts
£
Product
sales
£
Solution
sales
£
Management
fee
£
Total
£
External sales
Inter-segment sales
Less: elimination
Revenue
Result
4,188,245
-
-
4,188,245
2,027,207
-
-
2,027,207
258,291
40,364
(40,364)
258,291
Segment loss
(5,540,746)
(3,621,376)
(557,128)
-
-
-
-
-
Unallocated income
Unallocated expenses
Finance costs
Loss before tax
For the year ended 31 March 2009:
-
-
-
-
-
6,473,743
40,364
(40,364)
6,473,743
(9,719,250)
-
-
(611,657)
(10,330,907)
Construction
contracts
£
Maintenance
contracts
£
Product
sales
£
Solution
sales
£
Management
fee
£
Total
£
6,417,135
-
-
6,417,135
2,073,129
-
-
2,073,129
382,837
139,507
(139,507)
382,837
351,259
-
-
351,259
4,163
-
-
4,163
9,228,523
139,507
(139,507)
9,228,523
External sales
Inter-segment sales
Less: elimination
Revenue
Result
Segment profit/(loss)
279,563
109,464
(1,444)
49,868
591
438,042
Unallocated income
Unallocated expenses
Finance costs
Loss before tax
-
-
(735,955)
(297,913)
UNIVISION ENGINEERING LIMITED - 51 - ANNUAL REPORT 2010
UNIVISION ENGINEERING LIMITED
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 31 March 2010
7.
SEGMENT INFORMATION (CONT’D)
(c)
Segment assets and liabilities
The following is an analysis of the Group’s assets and liabilities by operating segment:
At 31 March 2010
Construction
contracts
£
Maintenance
contracts
£
Product
sales
£
Solution
sales
£
Management
fee
£
Total
£
Assets
Segment assets
4,191,100
2,028,588
258,467
-
-
6,478,155
Unallocated assets
Consolidated total assets
Liabilities
-
6,478,155
Segment liabilities
5,519,581
2,671,604
340,395
-
-
8,531,580
Unallocated liabilities
Consolidated total
liabilities
At 31 March 2009
-
8,531,580
Construction
contracts
£
Maintenance
contracts
£
Product
sales
£
Solution
sales
£
Management
fee
£
Total
£
Assets
Segment assets
14,657,389
4,735,237
874,438
802,311
9,508
21,078,883
Unallocated assets
Consolidated total assets
Liabilities
-
21,078,883
Segment liabilities
8,252,914
2,666,199
492,356
451,745
5,353
11,868,567
Unallocated liabilities
Consolidated total
liabilities
-
11,868,567
UNIVISION ENGINEERING LIMITED - 52 - ANNUAL REPORT 2010
UNIVISION ENGINEERING LIMITED
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 31 March 2010
7.
SEGMENT INFORMATION (CONT’D)
(d) Other segment information
Amounts regularly provided to the chief operating decision maker but not included in the
measure of segment profit or segment assets and not allocated to any operating segments:
For the year ended 31 March 2010
Construction
contracts
£
Maintenance
contracts
£
Product
sales
£
Solution
sales
£
Management
fee
£
Capital expenditure *
19,034
9,213
1,174
Depreciation
35,611
17,236
2,196
-
-
-
-
For the year ended 31 March 2009
Construction
contracts
£
Maintenance
contracts
£
Product
sales
£
Solution
sales
£
Management
fee
£
Capital expenditure *
39,684
12,821
2,367
2,172
Depreciation
133,463
43,117
7,962
7,305
26
86
Total
£
29,421
55,043
Total
£
57,070
191,933
* Capital expenditure represented plant and equipment.
(e) Revenue from major products and services
The following is an analysis of the Group’s revenue from its major products and services:
Construction contracts
Maintenance contracts
Product sales
Solution sales
Management service
(f) Geographical segments
2010
£
4,188,245
2,027,207
258,291
-
-
2009
£
6,417,135
2,073,129
382,837
351,259
4,163
6,473,743
9,228,523
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 PRC, and all of the Group’s assets are located in the same geographic segment.
UNIVISION ENGINEERING LIMITED - 53 - ANNUAL REPORT 2010
UNIVISION ENGINEERING LIMITED
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 31 March 2010
8. OTHER INCOME
Exchange gain
Realised gain on investment securities
Interest income
Write back on trade and other payables
Sundry income
9.
FINANCE COSTS
Interest on bank loans and other borrowings wholly repayable
within five years
Finance charge on obligation under finance lease
10. LOSS BEFORE TAX
Loss before tax is stated after charging/(crediting):
Cost of inventories recognised as expenses *
Impairment loss recognised on trade receivables
Impairment loss recognised on other receivables
Impairment loss recognised on goodwill
(Recovery of)/write down of obsolete inventories
Auditor’s remuneration
- audit services (parent company)
Depreciation – leased plant and equipment
Depreciation – owned plant and equipment
Research and development costs
Operating lease charges – minimum lease payments
Loss on disposal of plant and equipment
2010
£
17,771
-
521
3,275
121,793
2009
£
31,152
1,105
8,521
85,660
1,482
143,360
127,920
2010
£
2009
£
610,900
757
735,264
691
611,657
735,955
2010
£
2009
£
2,165,974
766,906
321,317
791,945
(26,467)
2,871,041
290,801
23,632
309,325
89,435
(13,928)
5,902
49,141
25,756
114,019
21,454
66,477
5,391
186,542
41,783
125,375
398
* Cost of inventories recognised as expenses included a (recovery of)/write down of obsolete
inventories of £(26,467) (2009: £89,435) and written back on trade and other payables of £3,275
(2009: £85,660).
UNIVISION ENGINEERING LIMITED - 54 - ANNUAL REPORT 2010
UNIVISION ENGINEERING LIMITED
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 31 March 2010
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
2010
£
2009
£
81,752
82,862
126,390
2,931
108,480
2,678
211,073
194,020
2010
£
2009
£
1,747,441
74,810
1,493,222
72,963
1,822,251
1,566,185
13.
INCOME TAX IN THE CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
a)
Income tax in the consolidated statement of comprehensive income:
Current tax (credit)
Hong Kong profits tax
The PRC enterprise income tax
Other jurisdictions
2010
£
2009
£
(5,045)
-
22,396
4,609
215,462
6,880
17,351
226,951
No Hong Kong profits tax has been provided for in the financial statements as the Company has
sustained a loss during the year.
Taxes for subsidiary undertakings are calculated using the rates prevailing in the local
jurisdictions.
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 statement of financial position in respect of current tax payable.
UNIVISION ENGINEERING LIMITED - 55 - ANNUAL REPORT 2010
UNIVISION ENGINEERING LIMITED
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 31 March 2010
13.
INCOME TAX IN CONSOLIDATED STATEMENT OF COMPREHENSVE INCOME
(CONT’D)
(b) Reconciliation between income tax expense and accounting loss at the applicable tax rates:
2010
£
2009
£
Loss before tax
(10,330,907)
(297,913)
Notional tax on loss before tax, calculated at the rates
applicable to loss 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 recognised in prior
years
Tax effect of tax losses not recognised
Over provision in prior year
Income tax expense
14. LOSS PER SHARE
(613,269)
(6)
621,058
(2)
-
27,581
(18,011)
(704,590)
(44)
898,349
31,667
(1,214)
8,870
(6,087)
17,351
226,951
The calculation of basic loss per share is based on the loss attributable to the owners of the Company
for the year of £10,340,804 (2009: £554,580), and the weighted average of 383,677,323 (2009:
383,677,323) 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 for the year ended 31 March 2010 (2009: £Nil).
UNIVISION ENGINEERING LIMITED - 56 - ANNUAL REPORT 2010
UNIVISION ENGINEERING LIMITED
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 31 March 2010
16. PLANT AND EQUIPMENT
The Group
Furniture
and fixtures
£
Computer
equipment
£
Motor
vehicles
£
Leasehold
improvements
£
Research
assets
£
Total
£
Cost
At 1 April 2008
Additions
Disposals
Exchange realignment
160,363
3,089
(91,887)
88,930
218,483
47,702
(124,323)
20,971
102,253
6,279
(16,988)
29,131
55,620
-
(79,670)
24,050
763,927
-
-
203,244
1,300,646
57,070
(312,868)
366,326
At 31 March 2009
160,495
162,833
120,675
At 1 April 2009
Additions
Disposals
Deconsolidation of a
subsidiary
Exchange realignment
160,495
17,891
-
(11,180)
1,790
162,833
6,114
(713)
120,675
5,416
(3,611)
-
756
(29,326)
(3,532)
At 31 March 2010
168,996
168,990
89,622
-
-
-
-
-
-
-
967,171
1,411,174
967,171
-
(61,425)
1,411,174
29,421
(65,749)
(14,139)
9,449
(54,645)
8,463
901,056
1,328,664
Accumulated depreciation
At 1 April 2008
Charge for the year
Disposals
Exchange realignment
123,720
12,576
(91,887)
92,419
200,917
20,381
(124,108)
16,522
48,998
20,213
(15,783)
13,030
40,321
17,999
(79,670)
21,350
534,515
120,764
-
153,384
948,471
191,933
(311,448)
296,705
At 31 March 2009
136,828
113,712
66,458
At 1 April 2009
Charge for the year
Disposals
Deconsolidation of a
subsidiary
Exchange realignment
136,828
10,494
-
(4,265)
1,875
113,712
20,356
(692)
-
1,163
66,458
14,530
(3,611)
(7,918)
12
At 31 March 2010
144,932
134,539
69,471
Net book value
At 31 March 2010
24,064
34,451
20,151
At 31 March 2009
23,667
49,121
54,217
-
-
-
-
-
-
-
-
-
808,663
1,125,661
808,663
9,663
(39,256)
1,125,661
55,043
(43,559)
(6,788)
10,347
(18,971)
13,397
782,629
1,131,571
118,427
197,093
158,508
285,513
At the balance sheet date, the net book value of motor vehicle held under finance lease of the Group
and the Company was £6,193 (2009: £13,132).
UNIVISION ENGINEERING LIMITED - 57 - ANNUAL REPORT 2010
UNIVISION ENGINEERING LIMITED
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 31 March 2010
16. PLANT AND EQUIPMENT (CONT’D)
The Company
Furniture and
fixtures
£
Computer
equipment
£
Motor
vehicles
£
Leasehold
improvements
£
Total
£
Cost
At 1 April 2008
Additions
Disposals
Exchange realignment
73,722
80
(90,931)
29,868
111,474
399
(124,033)
45,166
20,797
-
(3,442)
8,425
5,551
-
(7,800)
2,249
211,544
479
(226,206)
85,708
At 31 March 2009
12,739
33,006
25,780
At 1 April 2009
Additions
Disposals
Exchange realignment
12,739
7
-
(726)
33,006
72
(94)
(1,885)
25,780
-
-
(1,471)
At 31 March 2010
12,020
31,099
24,309
-
-
-
-
-
-
71,525
71,525
79
(94)
(4,082)
67,428
Accumulated depreciation
At 1 April 2008
Charge for the year
Disposals
Exchange realignment
69,422
2,081
(74,671)
12,319
109,392
1,753
(101,854)
22,525
2,676
7,057
(1,837)
2,221
5,551
-
(6,405)
854
187,041
10,891
(184,767)
37,919
At 31 March 2009
9,151
31,816
10,117
At 1 April 2009
Charge for the year
Disposals
Exchange realignment
9,151
2,104
-
(418)
31,816
820
(73)
(1,780)
10,117
6,952
-
(237)
At 31 March 2010
10,837
30,783
16,832
Net book value
At 31 March 2010
At 31 March 2009
1,183
3,588
316
1,190
7,477
15,663
-
-
-
-
-
-
-
-
51,084
51,084
9,876
(73)
(2,435)
58,452
8,976
20,441
UNIVISION ENGINEERING LIMITED - 58 - ANNUAL REPORT 2010
UNIVISION ENGINEERING LIMITED
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 31 March 2010
17. GOODWILL
The Group
Cost
At 1 April 2008, 31 March 2009 and 31 March 2010
Accumulated impairment loss
At 1 April 2008
Impairment loss recognised in the year
Exchange realignment
At 31 March 2009
At 1 April 2009
Impairment loss recognised in the year
Exchange realignment
At 31 March 2010
Carrying amount
At 31 March 2010
At 31 March 2009
£
961,845
-
309,325
(40,310)
269,015
269,015
791,945
(124,945)
936,015
25,830
692,830
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:
Construction contracts
2010
£
2009
£
25,830
692,830
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.
UNIVISION ENGINEERING LIMITED - 59 - ANNUAL REPORT 2010
UNIVISION ENGINEERING LIMITED
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 31 March 2010
17. GOODWILL (CONT’D)
Key assumptions used for value-in-use calculations:
Gross margin
Growth rate
2010
2009
30%-40%
11%
15%-38%
15%
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, impairment loss of £791,945 is recognised for the year
(2009: £309,325).
18.
INVESTMENT IN SUBSIDIARY UNDERTAKINGS
Shares in subsidiary undertakings
Less: impairment loss recognised in the year
Exchange realignment
2010
£
2009
£
1,053,475
1,053,475
(1,191,416)
152,616
(658,272)
51,352
14,675
446,555
Amounts due from subsidiary undertakings
7,201,931
7,731,452
Less: impairment loss recognised in the year
Exchange realignment
Total
(7,146,630)
174,129
(4,058,759)
(883,810)
229,430
2,788,883
244,105
3,235,438
The amounts due from subsidiary undertakings are unsecured, interest-free and not expected to be
recovered within one year.
UNIVISION ENGINEERING LIMITED - 60 - ANNUAL REPORT 2010
UNIVISION ENGINEERING LIMITED
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 31 March 2010
18.
INVESTMENT IN SUBSIDIARY UNDERTAKINGS (CONT’D)
Particulars of the Group’s subsidiary undertakings at 31 March 2010 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
T-Com Technology Co
Taiwan
Limited
NT$80,000,000
Ordinary share
52.25%
-
Principal activities
Supply, design, installation and
maintenance of closed circuit
television and surveillance
systems and the sale of security
system related products
Leader Smart
Hong Kong
Engineering Limited
HK$10,000
Ordinary shares
100%
-
Investment holding and
engineering contractor
Leader Smart
Engineering
(Shanghai) Limited
The PRC
US$1,000,000
Registered capital
-
100%
Supply, design, installation and
maintenance of electrical and
mechanical systems,
construction decorations and
provision of engineering
consultancy services
Note: Leader Smart Engineering (Shanghai) Limited (“LSSH”) is a wholly-foreign owned enterprise
established in the PRC to operate for 20 years up to 2025. The results of LSSH were excluded
from the consolidated financial statements since 1 April 2009. Details of the deconsolidation
of LSSH are stated in notes 2(b) and 28.
19.
INVENTORIES
Raw materials
Work in progress
Finished goods
The Group
The Company
2010
£
2009
£
2010
£
2009
£
388,497
5,262
572,574
418,555
30,143
601,348
388,497
5,262
371,198
418,555
23
407,165
966,333
1,050,046
764,957
825,743
The analysis of the amount of inventories recognised as an expense is as follows:
Carrying amount of inventories sold
(Recovery of)/write down of obsolete inventories
2010
£
2009
£
2,192,441
(26,467)
2,781,606
89,435
2,165,974
2,871,041
UNIVISION ENGINEERING LIMITED - 61 - ANNUAL REPORT 2010
UNIVISION ENGINEERING LIMITED
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 31 March 2010
20. CONSTRUCTION CONTRACTS IN PROGRESS
Contract costs incurred plus
attributable profits less
foreseeable losses
Progress billings to date
Represented by:
Amounts due from construction
contract customers (note 21)
Amounts due to construction
contract customers (note 23)
The Group
The Company
2010
£
2009
£
2010
£
2009
£
11,384,702
(10,341,800)
24,320,035
(12,012,943)
8,210,875
(8,553,963)
7,844,911
(7,962,964)
1,042,902
12,307,092
(343,088)
(118,053)
2,247,009
13,695,491
830,524
1,085,082
(1,204,107)
(1,388,399)
(1,173,612)
(1,203,135)
1,042,902
12,307,092
(343,088)
(118,053)
At 31 March 2010, the amount of retention receivables from customers recorded within “trade and
other receivables” is £85,883 (2009: £66,344).
Within amounts due from construction contracts customers is the amount of £Nil (2009: £11,353,545)
for which the original land use rights certificate and the developing property are pledged as security in
LSSH.
21. TRADE AND OTHER RECEIVABLES
The Group
The Company
2010
£
2009
£
2010
£
2009
£
Trade receivables
Less: allowance for doubtful debts
2,042,502
(1,345,523)
2,430,301
(569,057)
1,756,031
(1,283,731)
1,986,310
(508,293)
696,979
1,861,244
472,300
1,478,017
Bills receivable
Other receivables
267,521
851,195
331,593
2,186,029
-
537,173
Loan and receivables
Deposits and prepayments
Amounts due from construction
contract customers (note 20)
Pledged bank deposits
1,815,695
83,941
4,378,866
189,009
1,009,473
75,199
2,247,009
253,696
13,695,491
660,433
830,524
253,696
-
534,181
2,012,198
96,408
1,085,082
660,433
4,400,341
18,923,799
2,168,892
3,854,121
UNIVISION ENGINEERING LIMITED - 62 - ANNUAL REPORT 2010
UNIVISION ENGINEERING LIMITED
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 31 March 2010
21. TRADE AND OTHER RECEIVABLES (CONT’D)
All of the trade and other receivables are expected to be recovered within one year.
At 31 March 2010, the Group has pledged bank deposits of £253,696 (2009: £191,076) 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 receivables 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 receivables directly.
Movements in the allowance for doubtful debts:
The Group
The Company
2010
£
At 1 April
Impairment loss recognised
Exchange realignment
569,057
766,906
9,560
2009
£
189,183
262,997
116,877
2010
£
508,293
766,906
8,532
2009
£
22,170
391,820
94,303
At 31 March
1,345,523
569,057
1,283,731
508,293
Note
At 31 March 2010, trade receivables of the Group and the Company amounting to
£766,906 (2009: £262,997) and £766,906 (2009: £391,820) respectively were
individually determined to be impaired and full impairment had been made. These
individually impaired receivables were outstanding for over 1 year as at the balance
sheet date or were due from companies with financial difficulties.
(b) Trade receivables that are not impaired
The following is an ageing analysis of trade receivables at the balance sheet date that were past
due but not impaired:
0 to 90 days
91 to 365 days
Over 365 days
The Group
The Company
2010
£
429,672
205,777
61,530
2009
£
822,042
498,961
540,241
2010
£
371,571
100,473
256
2009
£
501,380
496,934
479,703
696,979
1,861,244
472,300
1,478,017
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 - 63 - ANNUAL REPORT 2010
UNIVISION ENGINEERING LIMITED
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 31 March 2010
22. CASH AND CASH EQUIVALENTS
The Group
The Company
2010
£
2009
£
2010
£
2009
£
Cash and bank balances*
Bank overdrafts
884,174
-
117,762
(219,934)
713,066
-
23,467
(219,934)
Cash and cash equivalents in the
consolidated and the Company’s
statement of cash flows
884,174
(102,172)
713,066
(196,467)
*
At 31 March 2010 and 2009, the Group maintains £115,201 and £25,403 as restricted cash to
secure the bank loans as collateral (note 25).
23. TRADE AND OTHER PAYABLES
Trade payables
Bills payable
Due to a related party
Accruals and other payables
Financial liabilities measured at
amortised cost
Amounts due to construction
contract customers (note 20)
The Group
The Company
2010
£
371,280
413,072
2,642
1,351,052
2009
£
1,994,803
233,152
41,265
1,502,874
2010
£
40,616
-
-
1,247,497
2009
£
64,678
-
-
927,314
2,138,046
3,772,094
1,288,113
991,992
1,204,107
1,388,399
1,173,612
1,203,135
3,342,153
5,160,493
2,461,725
2,195,127
24.
INCOME TAX IN THE STATEMENT OF FINANCIAL POSITION
a)
Current taxation in the statement of financial position represents:
The Group
The Company
2010
£
2009
£
2010
£
2009
£
Provision for the year
Hong Kong profits tax
PRC enterprise income
tax
Other jurisdictions
(4,384)
5,612
-
15,116
10,732
916,372
-
921,984
Over payment for the year
Overseas income tax
-
8,933
UNIVISION ENGINEERING LIMITED - 64 - ANNUAL REPORT 2010
-
-
-
-
-
-
-
-
-
-
UNIVISION ENGINEERING LIMITED
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 31 March 2010
24.
INCOME TAX IN THE STATEMENT OF FINANCIAL POSITION (CONT’D)
b) Unrecognised deferred tax assets
At the balance sheet date, the Company has unused tax losses of £5,368,856 (2009: £5,509,897)
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. Such unused tax
losses are available to 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.
25.
INTEREST-BEARING BORROWINGS
Within 1 year or on demand
Secured bank loans (note a)
Loan from shareholder (note b)
The Group
The Company
2010
£
2009
£
2010
£
2009
£
1,167,936
3,997,267
1,313,074
4,239,130
-
3,997,267
271,740
4,239,130
5,165,203
5,552,204
3,997,267
4,510,870
Notes:
a)
The secured bank loans carried interest at rates ranging from 3.100% to 3.764% per annum
(2009: 3.73% to 5.11%) and were secured by:-
Restricted cash (note 22);
Personal guarantee by the Chairman, Mr. Stephen Sin Mo KOO and
(i)
(ii)
(iii) Guaranteed by the local government of Taiwan.
b)
A loan of US$5,000,000 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 the
PRC. The loan carries interest at the rate of 15% per annum (2009: 15%) and is payable on the
maturity date of 31 March 2011. Security over the Group’s interest in a shopping mall contract
within the PRC has been provided.
UNIVISION ENGINEERING LIMITED - 65 - ANNUAL REPORT 2010
UNIVISION ENGINEERING LIMITED
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 31 March 2010
26. OBLIGATION UNDER FINANCE LEASE
At 31 March 2010 and 2009, the Group and the Company had obligation under finance lease repayable
as follows:
Minimum lease payment
2010
£
2009
£
Present value of the minimum
lease payment
2010
£
2009
£
4,048
5,060
-
5,060
9,108
4,293
4,293
5,366
9,659
13,952
4,842
6,052
-
6,052
10,894
1,786
9,108
5,135
5,135
6,418
11,553
16,688
2,736
13,952
Within 1 year
After 1 year but within 2 years
After 2 years but within 5 years
Less: Future finance charges
Present value of lease obligation
27. SHARE CAPITAL
Authorised :
800,000,000 ordinary shares of HK$0.0625 each
2010
£
2009
£
3,669,470
3,669,470
Issued and fully paid:
383,677,323 ordinary shares (2009: 383,677,323 ordinary shares) of
HK$0.0625 each
1,697,617
1,697,617
The Company has one class of ordinary shares.
UNIVISION ENGINEERING LIMITED - 66 - ANNUAL REPORT 2010
UNIVISION ENGINEERING LIMITED
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 31 March 2010
28. DECONSOLIDATION OF SUBSIDIARY
The Group lost control of a wholly-owned subsidiary, LSSH during 2010 as a result of a legal dispute
(details provided in note 2(b)).
As a result of this dispute, the Group no longer has controlling power to govern the financial and
operating policies of LSSH so as to obtain benefit from its activities. Therefore, management has
decided to deconsolidate the assets and liabilities of LSSH at their carrying values at the date when
control was lost. Accordingly, the results of LSSH were excluded from the consolidated financial
statements of the Group since 1 April 2009. The consolidated statement of comprehensive income
presented a loss on deconsolidation of £8,324,208
The carrying values of LSSH at 1 April 2009 were as follow:
Assets:
Plant and equipment
Trade and other receivables
Cash and bank balances
Liabilities:
Trade and other payables
Tax payable
Net asset value
Loss on deconsolidation of a subsidiary
Translation reserve released upon deconsolidation
Analysis of net cash outflow of cash and cash equivalents arising
from deconsolidation of a subsidiary:
Cash and bank balances of a deconsolidated subsidiary
2010
£
35,636
11,457,351
4,388
(2,262,610)
(823,772)
8,410,993
(8,324,208)
(86,785)
-
4,388
UNIVISION ENGINEERING LIMITED - 67 - ANNUAL REPORT 2010
UNIVISION ENGINEERING LIMITED
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 31 March 2010
29. 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:
The Group
The Company
2010
£
2009
£
2010
£
2009
£
Within one year
In the second to fifth years
inclusive
106,470
91,342
52,967
46,262
149,302
3,557
152,732
240,644
56,524
15,913
11,478
27,391
30. RELATED PARTY TRANSACTIONS
Compensation of key management personnel
The remuneration of the key management of the Group during the year was as follows:-
2010
£
2009
£
Salaries, bonus and allowances
271,248
251,272
The remuneration of key management personnel comprises the remuneration of Executive Directors
and key executives.
Executive Directors include Executive Chairman, Chief Executive Officer, Technical Director and
Finance Director of the Company. The remuneration of the Executive Directors is determined by the
Remuneration Committee having regard to the performance of individuals, the overall performance of
the Group and market trends. Further information about the Remuneration Committee and the
directors’ remuneration is provided in the Remuneration Report and the Report on Corporate
Governance to the Annual Report and note 11 to the financial statements.
Key executives include Director of Operations and Director of Sales and Marketing 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.
UNIVISION ENGINEERING LIMITED - 68 - ANNUAL REPORT 2010
UNIVISION ENGINEERING LIMITED
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 31 March 2010
30. RELATED PARTY TRANSACTIONS (CONT’D)
Transactions with related parties
(a) A loan of US$5,000,000 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. Effective from 1 October 2008, the principal amount was revised to US$6,000,000
(including the accrued interest of US$1,000,000) and renewed with maturity date due on 31
March 2011 and charge at interest rate of 15% per annum on the revised principal amount.
(b) At 31 March 2010, there is a receivable balance of £Nil (2009: £6,629) in respect of legal fees
which were paid by the Group on behalf of UT Vision PTE, a company of which Mr. Stephen
Sin Mo KOO is a director.
31. FINANCIAL GUARANTEE
In accordance with the Circular of “Re-financing of Zhongshan shopping mall project” dated 10
December 2009, the Group’s wholly-owned subsidiary, LSSH provided guarantee to secured short-
term financing arrangement with the maximum amount up to £2.7 million at the date of report.
Pursuant to the terms of the guarantee, at any time from the date of guarantee, in event of default in
repayments, the Group is fully responsible to repay the outstanding loan principal, together with
penalty charges, accrued interest and related late fees, after netting off the pledged assets. The Group’s
guarantee period starts from the date of grant of the financial arrangement and ends when it is fully
repaid. At 31 March 2010, the secured short-term loan has become overdue and the financial
arrangement is in negotiations for extension, but has not yet reached a final agreement as to repayment
of the borrowings.
In connection with the Zhongshan shopping mall project (the “Zhongshan Project”), the Group
received a security over certain share of interest in the Zhongshan Project. At 31 March 2010, the fair
market value of the Zhongshan Project is amounted to £24,477,216, based on the appraisal report
issued by an independent valuer. The Group has engaged an independent valuer to measure the fair
value of such financial guarantee. Up to the date of the report, the Group determines that no provision
for financial guarantee is required because the maximum amount of the issued financial guarantee
contract in which the guarantee could be called is fully recovered by the fair value of certain interest
held by the Group in the Zhongshan Project.
32. LEGAL PROCEEDINGS
On 12 August 2010, the Company received a claim from its former attorney, Guzov Ofsink, LLC
(“Guzov”), for US$70,915 in purported unpaid legal fees. The case is currently pending in the New
York State Supreme Court, New York County, and is entitled Guzov Ofsink, LLC .v. UniVision
Engineering Limited, Index No. 105405/09. Guzov recently filed a motion for default judgement and
the Company opposed that motion and the Company interposed an answer with affirmative defenses
and counterclaims against Guzov for US$100,000. Guzov’s motion should be decided by the New
York State Supreme Court sometime in the next one to two months. At this point, the Group does not
believe that the motion would have a material impact or significant contingencies to the Group.
UNIVISION ENGINEERING LIMITED - 69 - ANNUAL REPORT 2010
NOTICE OF ANNUAL GENERAL MEETING
NOTICE IS HEREBY GIVEN THAT the 2010 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 5 October 2010 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
2010 together with the Directors’ report and the Independent Auditor’s report;
2. To re-elect Mr. Stephen Sin Mo KOO who retired by rotation, as a Director of the Company;
3. To re-elect Mr. Danny Kwok Fai YIP who retired by rotation, as a Director of the Company;
4. To reappoint auditor ZYCPA Company Limited, Certified Public 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 authorise 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 authorised 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
9 September 2010
Registered office:
8/F Lever Tech Centre,
69-71 King Yip Street,
Kwun Tong, Kowloon,
Hong Kong
UNIVISION ENGINEERING LIMITED - 70 - ANNUAL REPORT 2010
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 notarised and certified copy of that power of authority, must be
lodged with the Company’s registrars, Computershare Investor Services (Jersey) Limited at Queensway House,
Hilgrove Street, St Helier, Jersey JE1 1ES, Channel Islands, 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 8 September 2010 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 - 71 - ANNUAL REPORT 2010