UniVision Engineering Limited
Annual Report 2013

Plain-text annual report

UniVision Engineering Limited Annual Report Year ended 31 March 2013 UNIVISION ENGINEERING LIMITED Annual Report Year ended 31 March 2013 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 Balance Sheet Company Balance Sheet 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 UNIVISION ENGINEERING LIMITED - 1 - ANNUAL REPORT 2013 2 3 7 9 14 15 17 18 20 21 22 23 24 25 27 28 71 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 Nicholas James LYTH, Non-Executive Director Nominated Adviser and Broker Zeus Capital Limited 3 Ralli Courts, West Riverside, Manchester M3 5FT, UK. Senior Management Mike Chiu Wah CHAN, Director of Operations Peter Yip Tak CHAN, Director of Sales and Marketing Principal bankers Bank of China (Hong Kong) Citibank, N.A. Hong Kong and Shanghai Banking Corporation Hua Nan Commercial Bank (Taiwan) Audit Committee Nicholas James LYTH, Chairman Stephen Sin Mo KOO Remuneration Committee Nicholas James LYTH, Chairman Stephen Sin Mo KOO AIM Stock Code UVEL 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 Auditor HKCMCPA Company Limited Certified Public Accountants Unit 602, 6/F., Hoseinee House 69 Wyndham Street, 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 BS99 6ZZ, UK UNIVISION ENGINEERING LIMITED - 2 - ANNUAL REPORT 2013 CHAIRMAN’S STATEMENT INTRODUCTION I am pleased to report the Group’s audited results for the financial year ended 31 March 2013. Revenue from the Group’s Security and Surveillance Systems business remained stable. A slight drop of revenue in Hong Kong was made up by growth of revenue in Taiwan during the year. The drop of revenue in Hong Kong was mainly due to a d ecline in new product sales. We remain focused on maintenance services. This business is particularly attractive as it generates stable cash flow. Our order book shows significant growth compared to last year and we expect that the Hong Kong order book wi ll improve over the coming years due to the pipeline of large infrastructure projects. The sale of the Group’s interest in its shopping mall project in Zhongshan has moved to the arbitration process. We will keep the market informed of any updates. We rem ain committed to expanding our Electrical and Mechanical (“E&M”) business but it is subject to the availability of additional funding and we are exploring various methods to obtain extra funding. The Directors remain confident of the future of Univision and are optimistic about the Group’s prospects . FINANCIAL REVIEW The profit attributable to the equity holders of the Company is £92K (2012: £1.8m). The difference is due to last year the Group recognised a gain from forgiveness of interest and princ ipal due from its former major shareholder totalling £2m. The Group has provided for an impairment loss on trade and other receivables totalling £0.2m (2012: £0.4m). The Group generated positive net cash of £48K from its operating activities in the current year (2012: £0.4m). It maintained the cash and cash equivalents at 31 March 2013 of £0.6m (31 March 2012: £0.5m). During the year under review the relative strengthening in the HK$ against sterling has led to a 1.7% appreciation in the GBP reporting amount in the Consolidated Statement of Comprehensive Income . Also, a relative strengthening closing rate at the year-end in the HK$ against sterling has led to a 5.5% appreciation in the GBP reporting amount in the Consolidated Balance Sheet. All figures in the Financial Statements therefore needed to be adjusted for comparison purposes. Turnover in the year was decreased by 6% to £7.3m (2012: £7.8m). This decrease was mainly due to the reduction of £0.4m both in the Group’s product sales income and E&M business which was mainly caused by loss of sales to a one-off customer and decrease in sales orders from the existing customers due to increased market competition. The delay in the PRC construction project was the reason for the decrease in E&M business income The revenue from the construction contracts division (excluded the E&M business) recorded a growth of 7.8% and 6.7% respectively in Hong Kong and Taiwan even with increased market competition . The Group’s maintenance contracts fell 3% compared with last year due to fewer large orders from MTR Corporation Limited. UNIVISION ENGINEERING LIMITED - 3 - ANNUAL REPORT 2013  (Continued) CHAIRMAN’S STATEMENT The Group’s Security and Surveillance Systems business continues to provide stable cash flows. The major customers in the Security and Surveillance Systems business are public organisations and sizeable private enterprises, such as MTR Corporation Limited in Hong Kong, which provide regular orders and reliable payment schedules. The maintenance contract with MTR Corporation Limited has been renewed for a further three year commencing January 2012. Further, the Group was awarded a new construction contract by Hong Kong Government as announced in August 2012, for the Kai Tak Cruise Terminal with a contract value of HK$10.96m. It further strengthens the Group’s position in the Security and Surveillance Systems business in Hong Kong. Most of the revenue for this project will be booked in the first half financial year of 2013/14. The Directors believe there will be higher demand for Security and Surveillance Systems business from the local government infrastructure projects and from the commercial sector, such as the extension lines of MTR in Hong Kong. We anticipate that the Group’s turnover from this division will grow. The Management remain optimistic of the ability of the Group to compete in this highly competitive market place. Gross profit margin increased to 30.8% (2012: 29.2%). The major reason for this increase in was the improved gross profit from the Taiwan's maintenance contracts. These increased from 23% to 34% due to better pricing and cost control in projects. It did not though affect the growth in the value of Taiwan maintenance contracts in this current year. The increase in Gross Profit from 38% to 42% in the Group’s Hong Kong construction contracts and the increase in Gross Profit from 22% to 31% in the Group’s product sales business also c ontributed to the increase. These increases were offset to an extent by the effect of increasing material costs, wages and sub -contracting charges due to inflation during the year. Administration expenses remain constant at £1.7m (2012: £1.7m) mainly due to effective cost control .Finance costs dropped significantly during the year for the non -cash provision of financial guarantee liability in respect of a secured financing arrangement £ 304,831 in last year. The outstanding interest- free loan of US$3.95m due to Mayne Managem ent Limited, the former shareholder of the Group, is repayable on 31 March 2014. Our Taiwan subsidiary has improved and it declared a dividend of TWD3.2m (HK$0.8 4m) during the year. The holding company received the dividend HK$0.44m in December 2012 after deducting the withholding tax. No significant capital investment occurred in the current year. Profit before Interest and Tax (PBIT) was £0.3m (2012: £2.1m). Net profit before income tax was £0.2m (2012: £1.8m). Basic earning per share for this year was 0.02p (2012: 0.47p). The directors propose that the payment of a final dividend 0.78 HK cents (gross) per share for the financial year ended 31 March 2013 (2012: Nil) . The dividend timetable is as follows: Ex date Record date. Payment date 25 September 2013 27 September 2013 23 October 2013 The dividend is subject to approved by shareholders at the Annual General Meeting and has not been included as a liability in the financial statements. UNIVISION ENGINEERING LIMITED - 4 - ANNUAL REPORT 2013  (Continued) CHAIRMAN’S STATEMENT BUSINESS REVIEW Markets High Definition CCTV system has been a hot topic in recent time as IMS Research released the Video Surveillance Trends for 2013 about the predictions of key trends and opportunities in the video surveillance industry for 2013 and beyond . It has become more popular and a wide variety of equipment is available to the market. Apart from megapixel resolution network security cameras, which are predicted to out-sell standard resolution network security cameras, High Definition Serial Digital Interface (HD-SID) camera, which provides high definition real time a nd no latency video via coaxial cable are becoming another popular choice. It is ideally suited for existing analogue systems to migrate to High Definition system, as the existing cabling infrastructure can be re -used which reduces the expenditures of new cabling infrastructure. It also eliminates the requirement for fu rther investment on IT infrastructure employed on IP based system. We have identified a number of good suppliers, manufacturers as well as technology partners , to provide complete solutions to our customers using the latest available technology. Some pilot projects are underway. The Board is confident that we can exploit th ese opportunities in the coming years due to the expected growth of demand. Our representative in the region of United Arab Emirates for CCTV business has made some progress. Some projects are under negotiation and we expect to get the results soon. We are exploring this model to expand our business overseas. Our objective for the expansion of our Electrical and Mechanica l (“E&M”) business remains . However, due to the lack of available capital no new E&M contracts are currently being undertaken. The Board regards the extension of its activities in “Electrical and Mechanical” as the next step in delivering shareholder value. Acquisitions and Investments The Group continues to assess possible opportunities of new investments with a view to making a further strategic move. PROSPECTS Though we anticipate that the Taiwan business will slow down in the coming year, we are op timistic that our Security and Surveillance business will remain stable as we can see a strong pipeline of infrastructure projects in Hong Kong. The Board expect that the growing demand for its Network and the High Definition Security and Surveillance prod ucts will enable the Group to continue to prosper in these markets. The growth of the E&M business remains the main priority for the Group. We are seeking ways to raise additional funds to undertake these capital intensive projects and seek potential opp ortunities to work with other strategic partners to enable us to exploit this business. UNIVISION ENGINEERING LIMITED - 5 - ANNUAL REPORT 2013 CHAIRMAN’S STATEMENT (Continued) Finally, on behalf of the Board, I would like to thank our customers, suppliers and shareholders ’ for their continued support of UniVision. I would also like to acknowledge the hard work of the management and all the staff for their contribution and ded ication to the Group. MR. STEPHEN SIN MO KOO EXECUTIVE CHAIRMAN 16 September 2013 UNIVISION ENGINEERING LIMITED - 6 - ANNUAL REPORT 2013 DIRECTORS AND SENIOR MANAGEMENT’S BIOGRAPHIES DIRECTORS’ BIOGRAPHIES Nicholas James LYTH – Non-executive Director (aged 47) Mr. Lyth is a qualified chartered management accountant and has over 1 3 years experience as a finance professional, having spent a number of years as director of UK companies. He has lived and worked in China and can speak and write Mandarin. Nicholas is currently Non Executive Chairman of Taihua plc, an AIM quoted manufacturer of pharmaceuticals, based in China. He is responsible for day to day liaison with UK investors. Stephen Sin Mo KOO – Executive Chairman (aged 56) Mr. Koo joined UniVision in 19 98 and was appointed as a Director on 3 March 2003. He is responsible for overall strategic planning of our Group. He holds both a Bachelor Degree from the University of Technology, Sydney, and a Masters Degree in Business from the Royal Melbourne Institu te of Technology in Australia. He is the Director of Up Sky Investments Limited, the Group ’s ultimate parent company. He is a Fellow of the Institute of Certified Public Accountants of Australia. Chun Hung WONG – Chief Executive Officer (aged 54) 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 53) 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 49) 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, Australia. Before joining the Group, Mr. Yip was the Accounting Manager of Nissin Food Group, th e 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 2013 DIRECTORS’ AND SENIOR MANAGEMENT’S BIOGRAPHIES (Continued) SENIOR MANAGEMENT’S BRIEF BIOGRAPHIES Mike Chiu Wah CHAN – Director of Operations (aged 39) 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 manag ement 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 49) 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 the management of UniVision ’s Sales and Marketing Division. UNIVISION ENGINEERING LIMITED - 8 - ANNUAL REPORT 2013 UNIVISION ENGINEERING LIMI TED 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 20 13. 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 profit for the year ended 31 March 20 13 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 balance sheet on page 20, respectively. The Group’s and the Company’s changes in shareholders’ equity for the year ended 31 March 20 13 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 20 13 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 Debt to Equity Ratio : Debt / Equity Quick Ratio : (Current Assets –Inventories)/ Current Liabilities 2013 2012 1.8 1.8 31 days 32 days 4.5 31% 0.38 1.7 5.0 29% 0.38 1.7 : : : : : : UNIVISION ENGINEERING LIMITED - 9 - ANNUAL REPORT 2013 DIRECTORS’ REPORT (Continued) Share Capital and Reserves Details of the movements in share capital are set out in note 2 7 on page 63. The movements in reserves during the year are set out in the consolidated statement of changes in equity on page 22. Dividends The Directors propose that the payment of a final dividend of 0.78 HK cents (gross) per share for the financial year ended 31 March 2013. Plant and Equipment Details of the movements in plant and eq uipment are set out in note 16 on pages 54 to 55. 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 Nicholas James LYTH Chun Pan WONG Danny Kwok Fai YIP Mr. Stephen Sin Mo KOO and 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 20 13 Stephen Sin Mo KOO Chun Hung WONG Nicholas James LYTH Chun Pan WONG Danny Kwok Fai YIP 278,203,700* - - - - UNIVISION ENGINEERING LIMITED - 10 - ANNUAL REPORT 2013  (Continued) DIRECTORS’ REPORT * 78,744,000 ordinary shares are registered under the name of Up Sky Investments Limited which is an investment holding co mpany 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. Following the Share Transaction on 8 July 2011, the entire stake of UniVision Holdings Limited (it holds 183,736,000 shares of the Company) was transferred to Up Sky Investments Limited, a company that is wholly owned by Mr. Stephen Koo. He is also interested in 15,723,700 ordinary shares in the Company. Therefore following the Share Transaction , he has a total direct and indirect interest in 278,203,700 ordinary shares in the Company, equivalent to 72.5% of the Company’s total issued share capital. Save as disclosed in this report, none of the Directors (or their immediate families) who held office at the end of the financial year had interests in the share capital of the Company during the financial year. Directors’ Rights to Acquire Shares or Debentures At no time during the year were rights to acquire benefits by means of the acquisition of shares in or debentures of the Company granted to any director or their respective spouse or minor children, or were any such rights exercised by them; or was the Company, 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 10 September 2013, the Directors had been informed of the following companies that held 3% or more of the Company’s issued ordinary share capital: UniVision Holdings Limited (1) Up Sky Investments Limited (2) W B Nominees Limited TD Direct Investing Nominees (Europe) Limited Number ordinary shares of % of total issued share capital 183,736,000 78,744,000 20,181,800 12,149,598 47.9 20.5 5.3 3.2 (1) UniVision Holdings Limited is an investment holding company incorporated under the laws of the British Virgin Islands and was formerly owned by Mayne Management Limited. Up Sky Investments Limited acquired the entire stake from Mayne Management Limited on 8 July 201 1 and became the major shareholder. UNIVISION ENGINEERING LIMITED - 11 - ANNUAL REPORT 2013  (Continued) DIRECTORS’ REPORT (2) Up Sky Investments Limited is an investment holding company incor porated 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 (201 2: 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 econom ic 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 wi ll be held at UniVision Engineering Limited, 8/F Lever Tech Centre, 69-71 King Yip Street, Kwun Tong, Kowloon, Hong Kong, on 21 October 2013 at 5:00 p.m. The Notice of Meeting appears on page 66. Annual Report The annual report for the year ended 31 Marc h 2013 will be uploaded on the Company’s website www.uvel.com on 16 September, 2013 and the hard copy will be sent to shareholders by our Registrars, Computershare Investor Services (Jersey) Limited. UNIVISION ENGINEERING LIMITED - 12 - ANNUAL REPORT 2013  (Continued) DIRECTORS’ REPORT Auditor HKCMCPA Company Limited, Certified Public Accountants , remain as our auditor for the year. A resolution to re-appoint HKCMCPA 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 16 September 2013 UNIVISION ENGINEERING LIMITED - 13 - ANNUAL REPORT 2013 REMUNERATION REPORT The Remuneration Committee presents this report to shareholders on behalf of the Board. Membership of Remuneration Committee The Remuneration Committee comprises Mr. Nicholas James LYTH (our Non-executive Director) and Mr. Stephen Sin Mo KOO (our Executive Chairman) and is chaired by Mr. Nicholas James LYTH. 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 responsibilit ies 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 director’s remuneration for the year are set out in the table below: Salary and fees Pension scheme contribution Bonus £ £ £ 2013 Total £ 2012 Total £ Executive Directors Stephen Sin Mo KOO Chun Pan WONG Chun Hung WONG Danny Kwok Fai YIP 39,158 41,630 54,772 37,176 571 1,183 1,183 1,183 - 3,769 6,730 3,369 39,729 46,582 62,685 41,728 84,001 43,443 56,188 39,772 Non-executive Director Nicholas James LYTH 11,747 - - 11,747 4,809 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 - 14 - ANNUAL REPORT 2013 REPORT ON CORPORATE GOVERNANCE Introduction The Directors believe that their foremost functio n 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 a t the time of re-election. Upon their appointments, the Directors are offered an opportunity to request information and training relevant to their legal and oth er 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 comme rcial relationship with the Company. These Non-executive Directors do not participate in any of the Company ’s pension schemes or bonus es. The Chairman of the Audit and Remuneration Committees is a Non-executive Director. Nomination Committee As the Board of Directors of the Company is relatively 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. Nicholas James LYTH (our Non-executive Director) and Mr. Stephen Sin Mo KOO (our Executive Chairman) and is chaired by Mr. Nicholas James LYTH. The Chairman of the Audit Committee has full discretion to invite any Executive Directors to attend its meetings. The Audit Committee meets not less tha n 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 Compan y’s accounting and internal controls; to ensure the Company complies with the AIM Rules. UNIVISION ENGINEERING LIMITED - 15 - ANNUAL REPORT 2013 REPORT ON CORPORATE GOVERNANCE (Continued) Remuneration Committee Our Remuneration Committee comprises Mr. Nicholas James LYTH (our Non-executive Director) and Mr. Stephen Sin Mo KOO (our Executive Chairman) and is chaired by Mr. Nicholas James LYTH. 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, 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. salaries, - 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 eve ry 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 recogni ses the importance of the shareholders’ views and encourages them to attend the AGMs where they can share their opinions and raise direct queries and concerns towards the Directors, including the chairperson of each of the Board Committees. The shareholders are also welcomed to discuss any is sues on an informal basis at the conclusion of the AGMs. UNIVISION ENGINEERING LIMITED - 16 - ANNUAL REPORT 2013 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 D irectors are required to:  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 depart ures 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 Co mpany to prevent and detect fraud and other irregularities. UNIVISION ENGINEERING LIMITED - 17 - ANNUAL REPORT 2013 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 Uni Vision Engineering Limited (the “Company”) and its subsidiaries (collectively referred to as the “Group”) set out on pages 20 to 70, which comprise the consolidated and the Company ’s balance sheet as at 31 March 2013, 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 are responsible for the preparation of financial statements that give a true and fair view in accordance with International Financial Reporting Standards issued by the International Accounting Standards Board and for such internal control as the directors determine is necessary to enable the preparation of financial statements that are free from material misstatement, whet her due to fraud or error. 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 amou nts and disclosures in the financial statements. The procedures selected depend on the auditor’s judgment, 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 of financial statements that give a true and fair view 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 director, as well as evaluating the overall prese ntation 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 - 18 - ANNUAL REPORT 2013 INDEPENDENT AUDITOR’S REPORT (CONTINUED) TO THE SHAREHOLDERS OF UNIVISION ENGINEERING L IMITED (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 2013 and of the Group’s profit and cash flows for the year then ended in accordance with International Financial Reporting Standards. HKCMCPA Company Limited Certified Public Accountants PANG KING SZE, RUFINA Practising Certificate number P05228 Hong Kong, China 16 September 2013 UNIVISION ENGINEERING LIMITED - 19 - ANNUAL REPORT 2013 UNIVISION ENGINEERING LIMITED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME For the year ended 31 March 2013 Note 2013 £ 2012 £ Revenue Cost of sales Gross profit Other income Selling and distribution expenses Administrative expenses Impairment loss recognised on trade and other receivables Gain from forgiveness of interest and principal Finance costs Profit before income tax Income tax expense Profit for the year 8 10 25(b) 9 10 13 Other comprehensive income: Exchange differences arising on translation of foreign operations Total comprehensive income for the year Profit / (loss) attributable to : Equity holders of the Company Non-controlling interests Total comprehensive income / (loss) attributable to: Equity holders of the Company Non-controlling interests Earnings per share Basic Diluted All revenues are from continuing operations. 7,313,425 7,780,444 (5,060,805) (5,505,251) 2,252,620 2,275,193 17,775 (106,807) (1,696,030) (188,148) - (37,727) 24,629 (94,583) (1,696,706) (427,642) 2,031,901 (350,067) 241,683 1,762,725 (57,278) (15,700) 184,405 1,747,025 615,952 384,304 800,357 2,131,329 92,143 92,262 1,798,569 (51,544) 184,405 1,747,025 697,526 102,831 2,181,901 (50,572) 800,357 2,131,329 14 14 0.02p 0.02p 0.47p 0.47p UNIVISION ENGINEERING LIMITED - 20 - ANNUAL REPORT 2013 UNIVISION ENGINEERING LIMITED CONSOLIDATED BALANCE SHEET As at 31 March 2013 Note 2013 £ 2012 £ 16 17 21 19 21 22 86,833 25,830 1,436,027 109,766 25,830 1,340,393 1,548,690 1,475,989 1,134,747 15,952,660 585,046 1,091,389 14,643,264 504,323 17,672,453 16,238,976 19,221,143 17,714,965 23 24(a) 25 31 26 4,534,103 1,350,264 3,528,205 332,588 7,522 4,221,000 1,233,412 3,235,052 310,438 8,062 9,752,682 9,007,964 26 27 15,669 21,918 9,768,351 9,029,882 1,697,617 7,470,794 1,697,617 6,773,268 ASSETS Non-current assets Plant and equipment Goodwill Trade and other receivables 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 Current tax liability Loan and borrowings Financial guarantee liabilities Obligation under finance lease Total current liabilities Non-current liability Obligation under finance lease Total liabilities Equity Share capital Reserves Equity attributable to equity holders of the Company 9,168,411 8,470,885 Non-controlling interests Total equity Total liabilities and equity 284,381 214,198 9,452,792 8,685,083 19,221,143 17,714,965 The financial statements on pages 20 to 70 were authorised for issue by the board of directors on 16 September 2013 and were signed on its behalf by: Stephen Sin Mo KOO, Director Chun Hung WONG, Director UNIVISION ENGINEERING LIMITED - 21 - ANNUAL REPORT 2013 UNIVISION ENGINEERING LIMITED COMPANY BALANCE SHEET As at 31 March 2013 Note 2013 £ 2012 £ 16 18 19 21 22 23 25 26 26 27 33,521 3,093,724 36,798 2,814,159 3,127,245 2,850,957 803,163 1,683,139 456,758 756,769 1,510,299 432,672 2,943,060 2,699,740 6,070,305 5,550,697 1,369,206 2,621,723 7,522 1,337,418 2,493,966 8,062 3,998,451 3,839,446 15,669 21,918 4,014,120 3,861,364 1,697,617 358,568 1,697,617 (8,284) 2,056,185 1,689,333 6,070,305 5,550,697 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 Loan and borrowings Obligation under finance lease Total current liabilities Non-current liability Obligation under finance lease Total liabilities Equity Share capital Reserves Total equity Total liabilities and equity The financial statements on pages 20 to 70 were authorised for issue by the board of directors on 16 September 2013 and were signed on its behalf by: Stephen Sin Mo KOO, Director Chun Hung WONG, Director UNIVISION ENGINEERING LIMITED - 22 - ANNUAL REPORT 2013 UNIVISION ENGINEERING LIMITED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY For the year ended 31 March 2013 Share capital £ Share premium £ (Note 1) Retained earnings/ (accumulated losses) £ Special capital reserve “A” £ (Note 2) Special capital reserve “B” £ (Note 3) Statutory surplus reserves £ Translation reserve £ Sub-total £ Non- controlling interest £ Total equity £ At 1 April 2011 1,697,617 2,192,640 467,159 155,876 143,439 Profit/ (loss) for the year Exchange difference arising on translation of foreign operations Total comprehensive income for the year - - - - - - 1,798,569 - 1,798,569 - - - - - - At 31 March 2012 Profit for the year Dividend distributed by a subsidiary Transfer to statutory surplus res erves Exchange difference arising on translation of foreign operations Total comprehensive income for the year 1,697,617 2,192,640 2,265,728 155,876 143,439 - - - - - - - - - - 92,143 - (7,927) - 84,216 - - - - - - - - - - - - - - - - - 7,927 1,632,253 6,288,984 264,770 6,553,754 - 1,798,569 (51,544) 1,747,025 383,332 383,332 972 384,304 383,332 2,181,901 (50,572) 2,131,329 2,015,585 8,470,885 214,198 8,685,083 - - - 92,143 92,262 184,405 - - (32,648) (32,648) - - - 605,383 605,383 10,569 615,952 7,927 605,383 697,526 70,183 767,709 At 31 March 2013 1,697,617 2,192,640 2,349,944 155,876 143,439 7,927 2,620,968 9,168,411 284,381 9,452,792 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 2013. 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 i nventories 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 O rder 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 - 23 - ANNUAL REPORT 2013 UNIVISION ENGINEERING LIMITED COMPANY STATEMENT OF CHANGES IN EQUITY For the year ended 31 March 2013 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 (5,159,781) 155,876 143,439 494,578 (475,631) - - - - - - 2,160,317 - 2,160,317 - - - - - - - 2,160,317 4,647 4,647 4,647 2,164,964 1,697,617 2,192,640 (2,999,464) 155,876 143,439 499,225 1,689,333 - - - - - - 257,598 - 257,598 - - - - - - - 257,598 109,254 109,254 109,254 366,852 At 1 April 2011 Profit for the year Exchange difference arising on translation of foreign operations Total comprehensive income for the year At 31 March 2012 Profit for the year Exchange difference arising on translation of foreign operations Total comprehensive income for the year At 31 March 2013 1,697,617 2,192,640 (2,741,866) 155,876 143,439 608,479 2,056,185 UNIVISION ENGINEERING LIMITED - 24 - ANNUAL REPORT 2013 UNIVISION ENGINEERING LIMI TED CONSOLIDATED STATEMENT OF CASH FLOWS For the year ended 31 March 2013 Note 2013 £ 2012 £ Cash flows from operating activities Profit before income tax Adjustments for: Non-cash finance costs Finance costs paid Interest income recognised in profit or loss Depreciation of plant and equipment Allowance for obsolete inventories Impairment loss recognised on trade and other receivables Gain on disposal of plant and equipment Gain from forgiveness of interest and principal 8 16 10 10 10 25(b) Changes in operating assets and liabilities: Increase in inventories Increase in trade and other receivables Increase in trade and other payables Cash generated from operations Income tax paid 241,683 1,762,725 - 37,726 (1,516) 65,904 27,585 188,148 (510) - 304,831 45,236 (805) 78,402 31,061 427,642 (281) (2,031,901) 559,020 616,910 (13,029) (506,618) 35,950 (214,364) (37,430) 65,578 75,323 430,694 (27,793) (9,024) Net cash generated from operating activities 47,530 421,670 Cash flows from investing activities Interest received Purchase of plant and equipment Proceeds from disposal of plant and equipment Net cash used in investing activities 8 1,516 (38,548) 510 (36,522) 805 (43,409) 281 (42,323) UNIVISION ENGINEERING LIMITED - 25 - ANNUAL REPORT 2013 UNIVISION ENGINEERING LIMITED CONSOLIDATED STATEMENT OF CASH FLOWS (Continued) For the year ended 31 March 2013 Note 2013 £ 2012 £ Cash flows from financing activities Interest paid Dividend paid to non-controlling interests Repayment of obligation under finance lease Proceed from loan and borrowings Repayment of loan and borrowings Net cash from/(used in) financing activities Net increase/(decrease) in cash and cash equivalents (37,726) (32,648) (8,175) 112,060 - 33,511 44,519 (45,236) - (10,291) - (849,081) (904,608) (525,261) Cash and cash equivalents at beginning of year 504,323 1,023,526 Effect of changes in exchange rates 36,204 6,058 Cash and cash equivalents at end of year 22 585,046 504,323 UNIVISION ENGINEERING LIMITED - 26 - ANNUAL REPORT 2013 UNIVISION ENGINEERING LIMITED COMPANY STATEMENT OF CASH FLOW S For the year ended 31 March 2013 Cash flows from operating activities Profit before income tax Adjustments for: Non-cash finance costs Finance costs paid Interest income recognised in profit or loss Depreciation of plant and equipment Dividend income received from a subsidiary Impairment loss recognised on investment in subsidiar y undertakings Impairment loss recognised on trade and other receivables Gain from forgiveness of interest and principal Changes in operating assets and liabilities: Increase in inventories (Increase)/decrease in trade and other receivables Increase in amounts due from subsidiaries (Decrease)/increase in trade and other payables Note 2013 £ 2012 £ 257,598 2,160,317 1,361 (1,275) 15,081 (35,631) 16 18 - 1,800 (572) 6,760 - - - - 154,648 40,387 (2,031,901) 237,134 331,439 (2,359) (87,899) (111,362) (43,944) (53,889) 70,646 (483,001) 363,241 Net cash (used in)/generated from operating activities (8,430) 228,436 Cash flows from investing activities Interest received Purchase of plant and equipment Dividend income received from a subsidiary Proceeds from disposal of plant and equipment Net cash from/(used in) investing activities Cash flows from financing activities Interest paid Repayment of obligation under finance lease Repayment of loan and borrowings Net cash used in financing activities Net decrease in cash and cash equivalents Cash and cash equivalents at beginning of year Effect of changes in exchange rates 1,275 (9,894) 35,631 - 27,012 (1,361) (8,175) (16,316) 572 (6,711) - - (6,139) (1,800) (10,291) (641,231) (25,852) (653,322) (7,270) (431,025) 432,672 31,356 859,245 4,452 Cash and cash equivalents at end of year 22 456,758 432,672 UNIVISION ENGINEERING LIMITED - 27 - ANNUAL REPORT 2013 UNIVISION ENGINEERING LIMITED NOTES TO THE FINANCIAL STATEMENTS For the year ended 31 March 2013 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 Company and its subsidiaries (hereinafter collectively referred to as the “Group”) are engaged in the supply, design, installation and maintenance of closed circuit television and surveill ance 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 1 8 to the financial statements. 2. BASIS OF PREPARATION The financial statements have been prepared in accordance with International Financial Reporting Standards (“IFRS”) as issued by the International Accounting Standards Board ( “IASB”). The financial statements have been prepared under the historical cost convention basis, except as disclosed in the accounting policies below. The preparation of financial statements in conformity with IFRS requires the use of certain critical accounting estimates. It also requires management to exercise its judgement and assumptions in the process of applying its accounting policies. The areas involving a higher degree of judgement or complexity, or areas where assumptions and estimates are significant to the financial statements are disclosed in note 4. 3. APPLICATION OF NEW AND REVISED I NTERNATIONAL FINANCIAL REPORTING STANDARDS (“IFRSs”) (i) New and amended standards, and interpretations mandatory for the first time for the financial year beginning 1 January 2012 and relevant to the Company: There are no IFRSs or IFRIC interpretations that are effective for the first time for the financial year beginning 1 January 2012 that would be expected to have a material impact on the Company. (ii) New and amended standards, and interpretations mandatory for the first time for the financial year beginning 1 January 2012 but not currently relevant to the Company: A number of new standards and amendments to standards and interpretations are effective for annual periods beginning after 1 January 2012, and have not been applied in preparing the financial statements. None of these is expected to have a significant effect on the financial statements of the Company. UNIVISION ENGINEERING LIMITED - 28 - ANNUAL REPORT 2013 UNIVISION ENGINEERING LIMITED NOTES TO THE FINANCIAL STATEMENTS For the year ended 31 March 2013 3. APPLICATION OF NEW AND REVISED INTERNATIONAL FINANCIAL REPORTING STANDARDS (“IFRSs”) (CONTINUED) - Amendments to IFRS 1, ‘First time adoption’ on fixed dates and hyperinflation. The first amendment replaces references to a fixed date of 1 January 2004 with “the date of transition to IFRSs”, thus eliminating the need for companies adopting IFRSs for the first time to restate derecognition transaction s that occurred before the date of transition to IFRSs. The second amendment provides guidance on how an entity should resume presenting Financial Information in accordance with IFRSs after a period when the entity was unable to comply with IFRSs because its functional currency was subject to severe hyperinflation. - IFRS 7, ‘Financial instruments: Disclosures’ was amended in October 2012 for the transfer of financial assets. These amendments are as part of the IASB’s comprehensive review of off Statement of Financial Position activities. The amendmen ts promote transparency in the reporting of transfer transactions and improve users’ understanding of the risk exposures relating to transfers of financial assets and the effect of those risks on an entity’s fina ncial position, particularly those involving securitisation of financial asset. - Amendments to IAS 12, ‘Income Taxes’ on deferred tax. Currently IAS 12 requires an entity to measure the deferred tax relating to an asset depending on whether the entity expects to recover the carrying amount of the asset through use or sale. It can be difficult and subjective to assess whether recovery will be through use or through sale when the asset is measured using the fair value model in IAS 40 Investment Property. Henc e this amendment introduces an exception to the existing principle for the measurement of deferred tax assets or liabilities arising on investment property measured at fair value. As a result of the amendments, SIC 21, ‘income taxes – recovery of revalued non-depreciable assets’, would no longer apply to investment properties carried at fair value. The amendments also incorporate into IAS 12 the remaining guidance previously contained in SIC 21, which is accordingly withdrawn. (iii) New standards, amendments and interpretations issued but not effective for the financial year beginning 1 January 2012 and not early adopted are as follows. Unless otherwise stated, the Directors are assessing the possible impact of the following standards on the Company: - IFRS 9, ‘Financial instruments’, addresses the classification, measurement and recognition of financial assets and financial liabilities. IFRS 9 was issued in November 2009 and October 2010. It replaces parts of IAS 39 that relate to the classification and measureme nt of financial instruments. IFRS 9 requires financial assets to be classified into two measurement categories: those measured as at fair value and those measured at amortised cost. The determination is made at initial recognition. The classification depen ds on the entity’s business model for managing its financial instruments and the contractual cash flow characteristics for the instrument. For financial liabilities, the standard retains most of the IAS 39 requirements. The main change is that, in cases wh ere the fair value option is taken for financial liabilities, the part of a fair value change due to an entity’s own credit risk is recorded in other comprehensive income rather than the income statement, unless this creates an accounting mismatch. The Com pany is yet to assess IFRS 9’s full impact and intends to adopt IFRS 9 no later than the accounting period beginning on or after 1 January 2015. The Company will also consider the impact of the remaining phases of IFRS 9 when completed by the Board. UNIVISION ENGINEERING LIMITED - 29 - ANNUAL REPORT 2013 UNIVISION ENGINEERING LIMITED NOTES TO THE FINANCIAL STATEMENTS For the year ended 31 March 2013 3. APPLICATION OF NEW AND REVISED INTERNATIONAL FINANCIAL REPORTING STANDARDS (“IFRSs”) (CONTINUED) - - - IFRS 10 “Consolidated Financial Statements” builds on existing principles by identifying the concept of control as the determining factor in whether an entity s hould be included within the consolidated Financial Information of the parent company. The standard provides additional guidance to assist in the determination of control where this is difficult to assess. This standard is effective for periods beginning on or after 1 January 2013; IFRS 11 “Joint Arrangements” provides for a more realistic reflection of joint arrangements by focusing on the rights and obligations of the arrangement, rather than its legal form (as is currently the case). The standard addr esses inconsistencies in the reporting of joint arrangements by requiring a single method to account for interests in jointly controlled entities. This standard is effective for periods beginning on or after 1 January 2013; IFRS 12 “Disclosure of Interes ts in Other Entities” is a new and comprehensive standard on disclosure requirements for all forms of interests in other entities, including joint arrangements, associates, special purpose vehicles and other off balance sheet vehicles. This standard is effective for periods beginning on or after 1 January 2013; - Amendments to IFRS 10, ‘Consolidated Financial Statements’, IFRS 11, ‘Joint Arrangements and IFRS 12, ‘Disclosure of Interests in Other Entities’, provide additional transition relief to IFRSs 10,1 1 and 12 by limiting the requirement to provide adjusted comparative information to only the preceding comparative period. For disclosures related to unconsolidated structured entities, the amendments will remove the requirement to present comparative information for periods before IFRS 12 is first applied. The Company is yet to assess the full impact of these amendments and intends to adopt the amended standards no later than the accounting period beginning on or after 1 January 2013. - IFRS 13 “Fair Value Measurement” improves consistency and reduces complexity by providing, for the first time, a precise definition of fair value and a single source of fair value measurement and disclosure requirements for use across IFRSs. It does not extend the use of fair value accounting, but provides guidance on how it should be applied where its use is already required or permitted by other standards. This standard is effective for periods beginning on or after 1 January 2013; - Amendments to IFRS 1 “First -time Adoption of International Financial Reporting Standards” require that first-time adopters apply the requirements in IFRS 9 “Financial Instruments” and IAS 20 “Accounting for Government Grants and Disclosure of Government Assistance” prospectively to government lo ans existing at the date of transition to IFRSs. Entities may choose to apply the requirements retrospectively if the information needed to do so had been obtained at the time of initially accounting for the loan. This standard is effective for annual pe riods beginning on or after 1 January 2013. - - IAS 27 “Separate Financial Statements” replaces the current version of IAS 27 “Consolidated and Separate Financial Statements” as a result of the issue of IFRS 10 (see above). This revised standard is effective for periods beginning on or after 1 January 2013; IAS 28 “Investments in Associates and Joint Ventures” replaces the current version of IAS 28 “Investments in Associates” as a result of the issue of IFRS 11 (see above). This revised standard is effective for periods beginning on or after 1 January 2013; UNIVISION ENGINEERING LIMITED - 30 - ANNUAL REPORT 2013 UNIVISION ENGINEERING LIMITED NOTES TO THE FINANCIAL STATEMENTS For the year ended 31 March 2013 3. APPLICATION OF NEW AND REVISED INTERNATIONAL FINANCIAL REPORTING STANDARDS (“IFRSs”) (CONTINUED) - Amendments to IAS 19 “Employment Benefits” eliminate the option to defer the recognition of gains and lo sses, known as the “corridor method”; streamline the presentation of changes in assets and liabilities arising from defined benefit plans, including requiring remeasurements to be presented in other comprehensive income; and enhance the disclosure requirements for defined benefit plans, providing better information about the characteristics of defined benefit plans and the risks that entities are exposed to through participation in those plans. This standard is effective for annual periods beginning on or after 1 January 2013; - Amendments to IAS 32 “Financial Instruments: Presentation” add application guidance to address inconsistencies identified in applying some of the criteria when offsetting financial assets and financial liabilities. This includes cla rifying the meaning of “currently has a legally enforceable right of set -off” and that some gross settlement systems may be considered equivalent to net settlement. This standard is effective for annual periods beginning on or after 1 January 2014; - ‘Annual Improvements 2009 – 2011 Cycle’ sets out amendments to various IFRSs as follows:       An amendment to IFRS 1, ‘First -time Adoption’ clarifies whether an entity may apply IFRS 1: (a) if the entity meets the criteria for applying IFRS 1 and has applied IFRS 1 in a previous reporting period; or (b) if the entity meets the criteria for applying IFRS 1 and has applied IFRSs in a previous reporting period when IFRS 1 did not exist. The amendment to IFRS 1 also addresses the transitional provisions for borrowing costs relating to qualifying assets for which the commencement date for capitalization was before the date of transition to IFRSs. An amendment to IAS 1, ‘Presentation of Financial Statements’ clarifies the requirements for providing comparative informatio n: (a) for the opening Statement of Financial Position when an entity changes accounting policies, or makes retrospective restatements or reclassifications; and (b) when an entity provides Financial Statements beyond the minimum comparative information requirements. An amendment to IAS 16, ‘Property, Plant and Equipment’ addresses a perceived inconsistency in the classification requirements for servicing equipment. An amendment to IAS 32, ‘Financial Instruments: Presentation’ addresses perceived inconsistencies between IAS 12, ‘Income Taxes’ and IAS 32 with regard to recognizing the consequences of income tax relating to distributions to holders of an equity instrument and to transaction costs of an equity transaction. An amendment to IAS 34, ‘Interim Fin ancial Reporting’ clarifies the requirements on segment information for total assets and liabilities for each reportable segment. UNIVISION ENGINEERING LIMITED - 31 - ANNUAL REPORT 2013 UNIVISION ENGINEERING LIMITED NOTES TO THE FINANCIAL STATEMENTS For the year ended 31 March 2013 4. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES 4.1 Basis of consolidation (a) Subsidiaries Subsidiaries are all entities (inc luding special purpose entities) over which the Group has the power to govern the financial and operating policies generally accompanying a shareholding of more than one half of the voting rights. The existence and effect of potential voting rights that ar e currently exercisable or convertible are considered when assessing whether the Group controls another entity. Subsidiaries are fully consolidated from the date on which control is transferred to the Group. They are deconsolidated from the date that control ceases. The Group uses the acquisition method of accounting to account for business combinations. The consideration transferred for the acquisition of a subsidiary is the fair values of the assets transferred, the liabilities incurred and the equity in terests issued by the Group. The consideration transferred includes the fair value of any asset or liability resulting from a contingent consideration arrangement. Acquisitions related costs are expensed as incurred. Identifiable assets acquired and liabil ities and contingent liabilities assumed in a business combination are measured initially at their fair values at the acquisition date. On an acquisition -by-acquisition basis, the Group recognises any non- controlling interest in the acquiree either at fair value or at the non-controlling interest’s proportionate share of the acquiree ’s net assets. Investments in subsidiaries are accounted for at cost less impairment. Cost is adjusted to reflect changes in consideration arising from contingent consideration amendments. Cost also includes direct attributable costs of investment. The excess of the consideration transferred, the amount of any non-controlling interest in the acquiree and the acquisition -date fair value of any previous equity interest in the acquiree over the fair value of the Group’s share of the identifiable net assets acquired is recorded as goodwill. If this is less than the fair value of the net assets of the subsidiary acquired in the case of a bargain purchase, the difference is recognised directly in the statement of comprehensive income. Inter-company transactions, balances and unrealised gains on transactions between group companies are eliminated. Unrealised losses are also eliminated. Accounting policies of subsidiaries have been changed where necessary to ensure consistency with the policies adopted by the Group. UNIVISION ENGINEERING LIMITED - 32 - ANNUAL REPORT 2013 UNIVISION ENGINEERING LIMITED NOTES TO THE FINANCIAL STATEMENTS For the year ended 31 March 2013 4. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) 4.1 Basis of consolidation (continued) (b) Transactions with non-controlling interests The Group treats transactions with non-controlling interests as transactions with equity owners of the Group. For purchases from non -controlling interests, the difference between any consideration paid and the relevant share acquired of the carrying value of net assets of the subsidiary is recorded in equity. Gains or losses on disposals to non-controlling interests are also recorded in equity. When the Group ceases to have control or significant influence, any retained interest in the entity is remeasured to its fair value, with the change in carrying amount recognised in profit or loss. The fair value is the initial carrying amount for the purposes of subsequently accounting for the retained interest as an associate, joint venture or financial asset. In addition, any amounts previou sly recognised in other comprehensive income in respect of that entity are accounted for as if the Group had directly disposed of the related assets or liabilities. This may mean that amounts previously recognised in other comprehensive income are reclassi fied to profit or loss. If the ownership interest in an associate is reduced but significant influence is retained, only a proportionate share of the amounts previously recognised in other comprehensive income are reclassified to profit or loss where appr opriate. 4.2 Segment reporting An operating segment is a component of the Group that engages in business activities from which it may earn revenues and incurs expenses, including revenues and expenses that relate to transactions with other components of the Group. Operating segments are reported in a manner consistent with the internal reporting provided to the chief operating decision -maker. The chief operating decision - maker is responsible for allocating resources and assessing performance of the operat ing segments. 4.3 Foreign currency (a) Functional and presentation currency Items included in the financial statements of each of the Group’s entities are measured using the currency of the primary economic environment in which the entity operates (“th e functional currency”). The consolidated and company financial statements are presented in Sterling Pound (“£”), which is the Group’s presentation currency. As the Company is listed on AIM, t he directors consider that this presentation is more useful for its current and potential investors. The functional currency of the Group ’s entity is summarised as follows: 1. 2. 3. 4. UniVision Engineering Limited T-Com Technology Co. Limited Leader Smart Engineering Limited Leader Smart Engineering (Shanghai) Limited (“LSSH”) Hong Kong Dollars (“HK$”) New Taiwan Dollars (“NTD”) Hong Kong Dollars (“HK$”) (“RMB”) Renminbi Yuan UNIVISION ENGINEERING LIMITED - 33 - ANNUAL REPORT 2013 UNIVISION ENGINEERING LIMITED NOTES TO THE FINANCIAL STATEMENTS For the year ended 31 March 2013 4. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) 4.3 Foreign currency (continued) (b) Transactions and balances Foreign currency transactions are translated into the functional currency using the exchange rates prevailing at the dates of the transactions or valuation where items are remeasured. Foreign exchange gains and losses resulting from the settlement of such transactions and from the translation at year-end exchange rates of monetary assets and liabilities denominated in foreign currencies are recognised in the income statement, except when deferred in other comprehensive income as qualifying cash flow hedges and qualifying net investment hedges. Foreign exchange gains and losses that relate to borrowings and cash and bank balances are presented in the income statement within “finance income or cost”. All other foreign exchange gains and losses are presented in the statement of comprehensive income within “administrative expense” or “other income”. Changes in the fair value of monetary securities denominated in foreign currency classified as available for sale are analysed between translation differences resulti ng from changes in the amortised cost of the security and other changes in the carrying amount of the security. Translation differences in respect of changes in amortised cost are recognised in profit or loss, and other changes in carrying amount are recognised in other comprehensive income. Translation differences on non -monetary financial assets and liabilities such as equities held at fair value through profit or loss are recognised in profit or loss as part of the fair value gain or loss. Translation differences on non-monetary financial assets, such as equities classified as available for sale, are included in other comprehensive income. (c) Group companies The results and financial position of all the group entities (none of which has the currency of a hyper- inflationary economy) that have a functional currency different from the presentation currency are translated into the presentation currency as follows: (i) (ii) assets and liabilities for each balance sheet presented are translated at the closing rate at the date of that balance sheet; income and expenses for each income statement are translated at average exchange rates (unless this average is not a reasonable approximation of the cumulative effect of the rates prevailing on the transaction da tes, in which case income and expenses are translated at the rate on the dates of the transactions); and (iii) all resulting exchange differences are recognised in other comprehensive income. On consolidation, exchange differences arising from the trans lation of the net investment in foreign operations, and of borrowings and other currency instruments designated as hedges of such investments, are taken to other comprehensive income . When a foreign operation is partially disposed of or sold, exchange diff erences that were recorded in equity are recognised in the income statement as part of the gain or loss on sale. Goodwill and fair value adjustments arising on the acquisition of a foreign entity are treated as assets and liabilities of the foreign entity and translated at the closing rate. UNIVISION ENGINEERING LIMITED - 34 - ANNUAL REPORT 2013 UNIVISION ENGINEERING LIMITED NOTES TO THE FINANCIAL STATEMENTS For the year ended 31 March 2013 4. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) 4.4 Plant and equipment Plant and equipment are initially recognised at cost and subsequently carried at cost less accumulated depreciation and accumulated impa irment loss. The cost of an asset comprises its purchase price and any directly attributable costs of bringing the asset to working condition for its intended use. On disposal of an item of plant and equipment, the difference between the net disposal proceeds and its carrying amount is taken to profit or loss. Depreciation is calculated using the straight -line method to allocate their depreciable amounts over the estimated useful lives as follows: Furniture and fixtures Computer equipment Motor vehicles Research assets 3 - 5 years 2 - 5 years 3 years 3 - 5 years Fully depreciated plant and equipment are retained in the financial statements until they are no longer in use and no further charge for depreciation is made in respect of these assets. The residual values, useful life and depreciation method are reviewed at the end of each reporting period to ensure that the amount, method and period of depreciation are consistent with previous estimates and the expected pattern of consumption of the future economic benefits embodied in the items of plant and equipment. The effects of any revision are recognised in profit or loss when the changes arise. Subsequent expenditure relating to plant and equipment that has already been recognised is added to 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 whe n incurred. 4.5 Goodwill Goodwill represents the excess of the cost of an acquisition over the fair value of the Group’s share of the net identifiable assets of the acquired subsidiary at the date of acquisition. Goodwill is tested annually for impairment and carried at cost less accumulated impairment losses. Impairment losses on goodwill are not reversed. Gains and losses on the disposal of an entity include the carrying amount of goodwill relating to the entity sold. Goodwill is allocated to cash -generating units for the purpose of impairment testing. The allocation is made to those cash-generating units or groups of cash -generating units that are expected to benefit from the business combination in which the goodwill arose, identified according to ope rating segment. UNIVISION ENGINEERING LIMITED - 35 - ANNUAL REPORT 2013 UNIVISION ENGINEERING LIMITED NOTES TO THE FINANCIAL STATEMENTS For the year ended 31 March 2013 4. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) 4.6 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:       the technical feasibility of completing the intangible asset so that it will be available fo r 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 a nd 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 . 4.7 Impairment of non-financial assets Assets that have an indefinite useful life, for example, goodwill or intangible assets not ready to use are not subject to amortisation and are tested annually for impairment. Other assets that are subject to amortisation or depreciation are reviewed for impairment whenev er events or changes in circumstances indicate that the carrying amount may not be recoverable. The difference between the carrying amount and the recoverable amount is recognised as an impairment loss in profit or loss. The recoverable amount is the highe r of an asset’s fair value less costs to sell and value in use. For the purposes of assessing impairment, assets are grouped at the lowest levels for which there are separately identifiable cash flows (cash-generating units). Non-financial assets other than goodwill that have suffered an impairment are reviewed for possible reversal of the impairment at each reporting date. UNIVISION ENGINEERING LIMITED - 36 - ANNUAL REPORT 2013 UNIVISION ENGINEERING LIMITED NOTES TO THE FINANCIAL STATEMENTS For the year ended 31 March 2013 4. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) 4.8 Financial assets Financial assets are recognised on the balance shee t when, and only when, the Group becomes a party to the contractual provisions of the financial instruments. (i) Classification The Group classifies its financial assets as loans and receivables. The classification depends on the purpose for which the assets were acquired. Management determines the classification of its financial assets at initial recognition. Loans and receivables are non -derivative financial assets with fixed or determinable payments that are not quoted in an active market. They are pr esented as current assets, except for those maturing later than twelve months after the end of the reporting period which are presented as non -current assets. Loans and receivables are presented as “trade and other receivables” and “cash and bank balances” on the balance sheet. Type of item 1. Bills receivable Nature and terms of item Certain customers pay accounts receivable with bills receivable from Taiwan banks with maturities less than twelve months. These are also referred to as “bankers” ac ceptances, which are unsecured, interest-free and to be matured in twelve months. 2. Loans Unsecured temporary advances to the subsidiaries, which are interest-free and eliminated upon consolidation. 3. Other receivables They include: a. Retention receivable under warranty provision among certain construction contracts for a period of twelve months b. Accrued income from maintenance contracts, which are billed or collected within twelve months. (ii) Recognition and derecognition Purchases and sales of financial assets are recogni sed and derecognised on trade dates – the dates on which the Group commits to purchase or sell the assets. Financial assets are derecognised when the rights to receive cash flows from the fi nancial assets have expired or have been transferred and the Group has transferred substantially all risks and rewards of ownership. On disposal of a financial asset, the difference between the carrying amount and the sale proceeds is recognised in profit or loss. UNIVISION ENGINEERING LIMITED - 37 - ANNUAL REPORT 2013 UNIVISION ENGINEERING LIMITED NOTES TO THE FINANCIAL STATEMENTS For the year ended 31 March 2013 4. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) 4.8 Financial assets (continued) (iii) Initial measurement Loans and receivables are initially recognised at fair value plus transaction costs. (iv) Subsequent measurement Loans and receivables are subsequently carried at amortised cost using the effective interest method, less any impairment. (v) Impairment of financial assets The Group assesses at the end of each reporting period whether there is objective evidence that a financial asset or a group of financial assets is impaired and recognises an allowance for impairment when such evidence exists. Significant financial difficulties of the debtor, probability that the debtor will enter bankruptcy, and default or significant delay in payments are objective evidence that these financial assets are impaired. The carrying amount of these assets is reduced through the use of an impairment allowance account which is calculated as the difference between the carrying amount and the presen t value of estimated future cash flows, discounted at the original effective interest rate. When the asset becomes uncollectible, it is written off against the allowance account. Subsequent recoveries of amounts previously written off are recognised agains t the same line item in profit or loss. The allowance for impairment loss account is reduced through profit or loss in a subsequent period when the amount of impairment loss decreases and the related decrease can be objectively measured. The carrying amount of the asset previously impaired is increased to the extent that the new carrying amount does not exceed the amortised cost, had no impairment been recognised in prior periods. 4.9 Financial liabilities Financial liabilities are recognised on the balance sheet when, and only when, the Group and Company becomes a party to the contractual provisions of the financial instrument. Financial liabilities are recognised initially at fair value, plus, in the case of financial liabilities other than derivatives, directly attributable transaction costs. Subsequent to initial recognition, financial liabilities are measured at amortised cost using the effective interest method. For financial liabilities, gains and losses are recognised in profit or loss when the liabilities are derecognised, and through the amortisation process. A financial liability is derecognised when the obligation under the liability is extinguished. UNIVISION ENGINEERING LIMITED - 38 - ANNUAL REPORT 2013 UNIVISION ENGINEERING LIMITED NOTES TO THE FINANCIAL STATEMENTS For the year ended 31 March 2013 4. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) 4.10 Construction contracts When the outcome of a construction contract can be estimated reliably, contract costs are recogni sed 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 tot al 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 recogni sed as an expense in the period in which they are incurred. 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 under the caption of “Trade and other receivables” or “Trade and other payables” in the balance sheet as the “Amounts due from customers for contracts-in-progress” (as an asset) or the “Amounts due to customers for contracts-in-progress” (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”. 4.11 Inventories Inventories are stated at the lower of cost and net realisable value. Cost is determined using the weighted average method and comprises design costs, raw materials, direct labour, other direct costs and other costs incurred in bringing the inventories to their present location and condition. Net realisable value is the estimated s elling price in the ordinary course of business less the estimated costs of completion and the estimated costs necessary to make the sale. 4.12 Borrowing costs Borrowing costs directly attributable to the acquisition, construction or production of qualif ying 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. Invest ment 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. 4.13 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. Subsequent ly, 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 recogni sed less, where appropriate, cumulative amorti sation. UNIVISION ENGINEERING LIMITED - 39 - ANNUAL REPORT 2013 UNIVISION ENGINEERING LIMITED NOTES TO THE FINANCIAL STATEMENTS For the year ended 31 March 2013 4. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) 4.14 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 wi thin 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 met for each of the Group’s activities as d escribed 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. (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 c osts 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 e stimated 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 term of the maintenance contract. (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) Interest income Interest income is recognised as it accrues using the effective interest method. (v) Dividend income Dividend income from investments is recognised when the shareholder ’s right to receive payment has been established (provided that it is probable t hat the economic benefits will flow to the Company and the amount of income can be measured reliably). UNIVISION ENGINEERING LIMITED - 40 - ANNUAL REPORT 2013 UNIVISION ENGINEERING LIMITED NOTES TO THE FINANCIAL STATEMENTS For the year ended 31 March 2013 4. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) 4.15 Income tax Income tax expense for the period comprises current and deferred tax. Tax is recognised in the income statement, except to the extent that it relates to items recognised in other comprehensive income or directly in equity. In this case, the tax is also recognised in other comprehensive income or directly in equity, respectively. The current income tax charge is calculated on the basis of the tax laws enacted or substantively enacted at the balance sheet date in the countries where the company and its subsidiaries operate and generate taxable income. Management periodically evaluat es positions taken in tax returns with respect to situations in which applicable tax regulation is subject to interpretation. It establishes provisions where appropriate on the basis of amounts expected to be paid to the tax authorities. Deferred income tax is recognised, using the liability method, on temporary differences arising between the tax bases of assets and liabilities and their carrying amounts in the consolidated financial statements. However, deferred tax liabilities are not recognised if they arise from the initial recognition of goodwill; deferred income tax is not accounted for if it arises from initial recognition of an asset or liability in a transaction other than a business combination that at the time of the transaction affects neither accounting nor taxable profit or loss. Deferred income tax is determined using tax rates (and laws) that have been enacted or substantially enacted by the balance sheet date and are expected to apply when the related deferred income tax asset is realised or the deferred income tax liability is settled. Deferred income tax assets are recognised only to the extent that it is probable that future taxable profit will be available against which the temporary differences can be utilised. Deferred income tax is provided on temporary differences arising on investments in subsidiaries and associates, except for deferred income tax liability where the timing of the reversal of the temporary difference is controlled by the group and it is probable that the temporary difference will not reverse in the foreseeable future. Deferred income tax assets and liabilities are offset when there is a legally enforceable right to offset current tax assets against current tax liabilities and when the deferred income taxes assets and liabilities relate to income taxes levied by the same taxation authority on either the same taxable entity or different taxable entities where there is an intention to settle the balances on a net basis. UNIVISION ENGINEERING LIMITED - 41 - ANNUAL REPORT 2013 UNIVISION ENGINEERING LIMITED NOTES TO THE FINANCIAL STATEMENTS For the year ended 31 March 2013 4. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) 4.16 Cash and cash equivalents In the statement of cash flows, cash and cash equivalents includes cash in hand, deposits held at call with banks, other short-term highly liquid investments with original maturities of three months or less. 4.17 Provisions 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 re quired to settle the obligation and the amount can been reliably estimated. Where the time value of money is material, provisions are stated at the present value of the expenditure expected to settle the obligation. Where it is not probable that an outfl ow 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 o ccurrence 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. 4.18 Employee benefit These comprise short term employee benefits and contributions t o 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. 4.19 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 Company and the Group as lessee – Assets held under finance leases are recognised as assets of the Company and 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 balance sheet as a finance lease obligation. Lease payments are apportioned between finance charges and reductio n 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. UNIVISION ENGINEERING LIMITED - 42 - ANNUAL REPORT 2013 UNIVISION ENGINEERING LIMITED NOTES TO THE FINANCIAL STATEMENTS For the year ended 31 March 2013 5. CRITICAL ACCOUNTING JUDGEMENTS AND KEY SOU RCES 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 revision affects only that period, or in the period of the revision and future periods if the revisi on 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. (b) Key sources of estimation uncertainty The key assumptions concerning the future and other key sources of e stimation 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. (i) Impairment of trade and other receivables The estimation of impairment of 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 histo ry of customers in assessing the recoverability of trade and other receivables. When any indication comes to their attention that a trade and other receivable might not be recovered in full, impairment will be made and recognised as an expense in the cons olidated statement of comprehensive income. As at 31 March 2013, the total carrying amount of trade and other receivables are £15,952,660 (2012: £14,643,264). UNIVISION ENGINEERING LIMITED - 43 - ANNUAL REPORT 2013 UNIVISION ENGINEERING LIMITED NOTES TO THE FINANCIAL STATEMENTS For the year ended 31 March 2013 5. CRITICAL ACCOUNTING JUDGEMENTS AND KEY SOURCES OF ESTIMATION UNCERTAINTY (CONTINUED) (b) Key sources of estimation uncertainty ( continued) (ii) Deferred income tax As at 31 March 2013, the Group has unused tax losses of £5,331,538, (2012: £4,950,190) available for offset against future profits. A deferred tax asset of £879,740 (2012: £870,494) has not been recognised in respect of the unused tax losses. In cases where there are future profits generated to utilise the tax losses, a material deferred tax asset may arise, which would be recognised in the consolidated statement of comprehensive inc ome for the period in which such future profits are recorded. 6. FINANCIAL INSTRUMENTS (a) Categories of financial instruments Financial assets: Loans and receivables (including cash and bank balances) - Trade and other receivables - Cash and bank balances Financial liabilities: - Trade and other payables - Loan and borrowings - Financial guarantee liabilities - Obligation under finance lease 2013 £ 2012 £ 15,952,660 585,046 14,643,264 504,323 4,534,103 3,528,205 332,588 23,191 4,221,000 3,235,052 310,438 29,980 (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 fi nancial instruments are disclosed in the respective notes. The risks associated with these financial instruments include currency risk, interest rate risk, credit risk and liquidity risk. The policies on how these risks are mitigated are set out below. The management manages and monitors these exposures to ensure appropriate measures are implemented in a timely and effective manner. UNIVISION ENGINEERING LIMITED - 44 - ANNUAL REPORT 2013 UNIVISION ENGINEERING LIMITED NOTES TO THE FINANCIAL STATEMENTS For the year ended 31 March 2013 6. FINANCIAL INSTRUMENTS ( CONTINUED) (b) Financial risk management objectives and policies (continued) (i) Market risk (1) Currency risk Certain entities in the Group have foreign curren cy transactions and have foreign curren cy denominated monetary assets and liabilities , which expose the Group to foreign currency risk. The Company has foreign currency transactions, whi ch expose the Company to foreign currency risk. The carrying amounts of the Group’s and the C ompany’s foreign currency denominated monetary assets and monetary liabilities, mainly represented by trade and other receivables, cash and bank balances, trade a nd other payables and borrowings, at the end of the reporting period are as follows: The Group The Company Assets Liabilities Assets Liabilities 2013 2012 2013 2012 2013 2012 2013 2012 NTD RMB USD HK$ 91,745,343 114,796,596 102,480 25,823,460 72,480,103 128,211,210 150,604 26,225,513 77,936,668 37,918,302 3,948,718 16,251,432 66,761,917 37,841,095 3,974,359 16,996,772 - 116,700 101,159 23,643,127 - 23,850 142,250 - 85,597 3,948,718 22,897,287 ` 15,978,539 - - 3,974,359 16,996,772 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 - 45 - ANNUAL REPORT 2013 UNIVISION ENGINEERING LIMITED NOTES TO THE FINANCIAL STATEMENTS For the year ended 31 March 2013 6. FINANCIAL INSTRUMENTS ( CONTINUED) (i) Market risk (continued) (1) Currency risk (continued) 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% (2012: 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% (2012: 5%) change in foreign currency rates. A positive /(negative) number indicates a decrease/(increase) in post-tax profit/(loss) for the year when £ strengthens 5% (2012: 5%) against the relevant foreign currencies. For a 5% (2012: 5%) weakening of £ against the relevant currency, there would be an equal but opposite impact on the post-tax profit/(loss) for the year. NTD Post-tax profit for the year RMB Post-tax profit for the year USD Post-tax loss for the year HK$ Post-tax profit for the year (2) Interest rate risk 2013 £ 2012 £ 16,068 6,372 430,178 471,997 (134,404) (126,287) 42,883 39,077 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 - 46 - ANNUAL REPORT 2013 UNIVISION ENGINEERING LIMITED NOTES TO THE FINANCIAL STATEMENTS For the year ended 31 March 2013 6. FINANCIAL INSTRUMENTS ( CONTINUED) (i) Market risk (continued) (2) Interest rate risk (continued) 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 ye ar. 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 2012. For the year ended 31 March 2013, if interest rates had been 25 basis points higher/lower, with all other variables held constant, the Group’s post-tax profit for the year would increase/decrease by approximately £2,510 (2012: £2,646). (ii) Credit risk At 31 March 2013, 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 c onsolidated balance sheet. 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 mon itored 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 their 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 ri sk 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 Compan y’s exposure to credit risk arising from trade and other receivables are set out in note 21. UNIVISION ENGINEERING LIMITED - 47 - ANNUAL REPORT 2013 UNIVISION ENGINEERING LIMITED NOTES TO THE FINANCIAL STATEMENTS For the year ended 31 March 2013 6. FINANCIAL INSTRUMENTS ( CONTINUED) (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 2013, the Group had aggregate banking facilities of £2,456,940 (2012: £2,355,824), of which £1,550,458 were unused (2012: £1,614,739). 1. The following table details the contractual maturities of the Group’s and the Company’s financial liabilities at the balan ce 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 Non-derivative financial liabilities: Loan and borrowings Trade and other payables Financial guarantee liabilities Obligation under finance lease Financial guarantee Maximum amount guaranteed (note 30) Weighted average effective interest rate % Within 1 year or on Demand £ 2013 More than More than 2 years but 1 year but less than less than 5 years 2 years £ £ Total undiscounted cash flow £ Carrying amount at 31 March 2013 £ 3.39% - 3.91% 3,538,642 - 4,534,103 3.25%- 3.95% 332,588 8,744 8,414,077 - - 8,744 8,744 - - 3,538,642 3,528,205 4,534,103 4,534,103 332,588 332,588 9,471 26,959 23,191 9,471 8,432,292 8,418,087 7,930,000 - - 7,930,000 7,930,000 UNIVISION ENGINEERING LIMITED - 48 - ANNUAL REPORT 2013 UNIVISION ENGINEERING LIMITED NOTES TO THE FINANCIAL STATEMENTS For the year ended 31 March 2013 6. FINANCIAL INSTRUMENTS ( CONTINUED) (iii) Liquidity risk (continued) The Group Weighted average effective interest rate % Within 1 year or on demand £ 2012 More than More than 2 years but 1 year but less than less than 5 years 2 years £ £ Total undiscounted cash flow £ Carrying amount at 31 March 2012 £ 3.27%-5.75% 3,243,689 - - 4,221,000 310,438 - - - - - - 3,243,689 3,235,052 4,221,000 4,221,000 310,438 310,438 3.25%-3.95% 9,404 16,528 8,953 34,885 29,980 7,784,531 16,528 8,953 7,810,012 7,796,470 4,400,000 - - 4,400,000 4,400,000 Weighted average effective interest rate % Within 1 year or on demand £ 2013 More than More than 2 years but 1 year but less than less than 5 years 2 years £ £ Total undiscounted cash flow £ Carrying Amount at 31 March 2013 £ - 2,621,723 - 3.25%- 3.95% 1,369,206 8,744 3,999,673 - - 8,744 8,744 - - 2,621,723 2,621,723 1,369,206 1,369,206 9,471 26,959 23,191 9,471 4,017,888 4,014,120 Non-derivative financial liabilities: Loan and borrowings Trade and other payables Financial guarantee liabilities Obligation under finance lease Financial guarantee Maximum amount guaranteed (note 30) The Company Non-derivative financial liabilities: Loan and borrowings Trade and other payables Obligation under finance lease UNIVISION ENGINEERING LIMITED - 49 - ANNUAL REPORT 2013 UNIVISION ENGINEERING LIMITED NOTES TO THE FINANCIAL STATEMENTS For the year ended 31 March 2013 6. FINANCIAL INSTRUMENTS ( CONTINUED) (iii) Liquidity risk (continued) The Company Weighted average effective interest rate % Within 1 year or on Demand £ 2012 More than More than 2 years but 1 year but less than less than 5 years 2 years £ £ Total undiscounted cash flow £ Carrying amount at 31 March 2013 £ Non-derivative financial liabilities: Loan and borrowings Trade and other payables Obligation under finance lease (c) Fair value - 2,493,966 1,337,418 - 3.25%- 3.95% - - - - 2,493,966 2,493,966 1,337,418 1,337,418 9,404 16,528 8,953 34,885 29,980 3,840,788 16,528 8,953 3,866,269 3,861,364 The fair values of financial assets and financial liabilities are determined in accordance with generally accepted pricing models based on discounted cash flow ana lysis. 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 th e 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 de bt 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 - 50 - ANNUAL REPORT 2013 UNIVISION ENGINEERING LIMITED NOTES TO THE FINANCIAL STATEMENTS For the year ended 31 March 2013 6. FINANCIAL INSTRUMENTS ( CONTINUED) (d) Capital risk management (continued) During 2013, the Group’s strategy, which was unchanged from 2012, 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 pai d 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 Loan and borrowings Current tax liability Financial guarantee liabilities Obligation under finance lease Non-current liabilities Obligation under finance lease The Group The Company 2013 £ 4,534,103 3,528,205 1,350,264 332,588 7,522 9,752,682 2012 £ 4,221,000 3,235,052 1,233,412 310,438 8,062 9,007,964 2013 £ 1,369,206 2,621,723 - - 7,522 3,998,451 2012 £ 1,337,418 2,493,966 - - 8,062 3,839,446 15,669 21,918 15,669 21,918 Total debt 9,768,351 9,029,882 4,014,120 3,861,364 Less: cash and bank balances 585,046 504,323 456,758 432,672 Net debt Total equity 9,183,305 8,525,559 3,557,362 3,428,692 9,452,792 8,685,083 2,056,185 1,689,333 Net debt-to-adjusted capital ratio 97% 98% 173% 203% UNIVISION ENGINEERING LIMITED - 51 - ANNUAL REPORT 2013 UNIVISION ENGINEERING LIMITED NOTES TO THE FINANCIAL STATEMENTS For the year ended 31 March 2013 7. SEGMENT INFORMATION Management has determined the operating segments based on the reports reviewed by the chief operating decision maker, being the chief executive officer, that are used to make strategic decisions. Information reported to the chief operating decision maker for the purpose of resource a llocation and assessment of segment performance focuses on types of goods or services delivered or provided. The Group’s reportable operating segments are summarised as follows: - - Security and surveillance Electrical and mechanical (a) Segment revenues and results The following is an analysis of the Group’s revenue and results by operating segment: Segment revenue by major products and services : - Construction contracts - Maintenance contracts - Product sales Revenue from external customers Segment profit/(loss) Finance costs Profit/(loss) before income tax Segment revenue by major products and services: - Construction contracts - Maintenance contracts - Product sales Revenue from external customers Segment profit/(loss) Gain from forgiveness of interest and principal Finance costs Profit/(loss) before income tax Security and surveillance £ Year ended 31 March 2013 Electrical and mechanical £ Total £ 4,528,152 2,382,445 349,030 7,259,627 53,798 - - 53,798 509,740 (37,727) 472,013 (230,330) - (230,330) 4,581,950 2,382,445 349,030 7,313,425 279,410 (37,727) 241,683 Security and surveillance £ Year ended 31 March 2012 Electrical and mechanical £ Total £ 4,155,995 2,451,304 754,114 7,361,413 236,406 2,031,901 (45,236) 2,223,071 419,031 - - 419,031 (155,515) - (304,831) (460,346) 4,575,026 2,451,304 754,114 7,780,444 80,891 2,031,901 (350,067) 1,762,725 UNIVISION ENGINEERING LIMITED - 52 - ANNUAL REPORT 2013 UNIVISION ENGINEERING LIMITED NOTES TO THE FINANCIAL STATEMENTS For the year ended 31 March 2013 7. SEGMENT INFORMATION (CONTINUED) (b) Segment assets and liabilities The following is an analysis of the Group’s assets and liabilities by operating segment: Segment assets Unallocated assets Consolidated total assets Segment liabilities Unallocated liabilities Consolidated total liabilities Segment assets Unallocated assets Consolidated total assets Segment liabilities Unallocated liabilities Consolidated total liabilities Security and surveillance £ At 31 March 2013 Electrical and mechanical £ Total £ 5,415,732 - 5,415,732 5,746,092 - 5,746,092 13,805,411 - 13,805,411 19,221,143 - 19,221,143 4,022,259 - 4,022,259 9,768,351 - 9,768,351 Security and surveillance £ At 31 March 2012 Electrical and mechanical £ Total £ 4,709,805 - 4,709,805 5,274,794 - 5,274,794 13,005,160 - 13,005,160 17,714,965 - 17,714,965 3,755,088 - 3,755,088 9,029,882 - 9,029,882 UNIVISION ENGINEERING LIMITED - 53 - ANNUAL REPORT 2013 UNIVISION ENGINEERING LIMITED NOTES TO THE FINANCIAL STATEMENTS For the year ended 31 March 2013 7. SEGMENT INFORMATION (CONTINUED) (c) 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: Security and surveillance £ Year ended 31 March 2013 Electrical and mechanical £ Total £ Capital expenditure Depreciation Impairment loss recognised on goodwill 38,548 65,904 - - - - 38,548 65,904 - Security and surveillance £ Year ended 31 March 2012 Electrical and mechanical £ Total £ Capital expenditure Depreciation Impairment loss recognised on goodwill 43,409 78,402 - - - - 43,409 78,402 - * Capital expenditure represented plant and equipment. (d) Geographical segments In determining the Group’s geographical segments, re venues 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. (e) Information about major customers Revenues of approximately £3,619,984 (2012: £3,316,110) are derived from three single external customers (2012: two), who contributed to 10% or more of the Group ’s revenue for 2013 fiscal year. UNIVISION ENGINEERING LIMITED - 54 - ANNUAL REPORT 2013 UNIVISION ENGINEERING LIMITED NOTES TO THE FINANCIAL STATEMENTS For the year ended 31 March 2013 8. OTHER INCOME Exchange gain Interest income Gain on disposal of plant and equipment Sundry income 9. FINANCE COSTS Interest on bank loans and other borrowings wholly repayable within one year Finance charge on obligation under finance lease Financial guarantee liabilities 10. PROFIT BEFORE INCOME TAX Profit before income tax is stated after charging/(crediting): Cost of inventories recognised as expenses Impairment loss recognised on trade and other receivables Allowance for 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 Gain on disposal of plant and equipment Gain from forgiveness of interest and principal 2013 £ 2012 £ 6,337 1,516 510 9,412 17,775 20,429 805 281 3,114 24,629 2013 £ 2012 £ 36,366 1,361 - 37,727 43,436 1,800 304,831 350,067 2013 £ 2,396,205 188,148 27,585 37,938 10,813 55,091 11,134 131,072 (510) - 2012 £ 3,412,939 427,642 31,061 40,379 5,313 73,089 8,819 116,654 (281) (2,031,901) UNIVISION ENGINEERING LIMITED - 55 - ANNUAL REPORT 2013 UNIVISION ENGINEERING LIMITED NOTES TO THE FINANCIAL STATEMENTS For the year ended 31 March 2013 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 2013 £ 2012 £ 39,158 83,358 159,194 4,120 147,738 3,525 202,472 234,621 2013 £ 2012 £ 1,890,833 77,642 1,780,716 69,905 1,968,475 1,850,621 13. INCOME TAX IN THE CONSOLIDATED STATEMENT OF COMPREHENS IVE INCOME (a) Income tax in the consolidated statement of comprehensive income : Income tax expense Hong Kong profits tax PRC income tax Taiwan income tax 2013 £ 2012 £ - - 57,278 57,278 - - 15,700 15,700 No Hong Kong profits tax has been provided for in the financial statements as the Company has unused tax losses to offset against its taxable profit during the year . Taxes for subsidiary undertakings are calculated using the rates prevailing in the local jurisdictions , whereas PRC income tax rate is charged at 25% (2012: 25%) and Taiwan income rate is cha rged at 25% (2012: 25%). UNIVISION ENGINEERING LIMITED - 56 - ANNUAL REPORT 2013 UNIVISION ENGINEERING LIMITED NOTES TO THE FINANCIAL STATEMENTS For the year ended 31 March 2013 13. INCOME TAX IN CONSOLIDATED STATEMENT OF COMPREHENSVE INCOME (CONTINUED) (b) Reconciliation between income tax expense and accounting profit at the applicable tax rates: 2013 £ 2012 £ Profit before income tax 241,683 1,762,725 Notional tax on profit before income tax, calculated at the rates applicable to profit in the tax jurisdictions concerned Tax effect of non-taxable income Tax effect of non-deductible expenses Tax effect of temporary differences not recognised Utilisation of tax losses previously unrecognised deferred tax assets Tax losses not recognised as deferred tax assets Tax adjustments 61,865 (6,806) 53,970 (943) (36,431) 27,797 (42,174) 216,397 (499,342) 206,357 (2,772) (3,704) 104,785 (6,021) Income tax expense 57,278 15,700 14. EARNINGS PER SHARE The calculation of basic earnings per share is based on the profit attributable to the equity holders of the Company for the year of £92,143 (2012: £1,798,569), and the weighted average of 383,677,323 (2012: 383,677,323) ordinary shares in issue during the year. There were no potential dilutive instruments at either financial year end. 15. DIVIDENDS In respect of the current year, the Board of Directors propose that a dividend of £0.063 pence per share (equal to HK$0.78 cents per share, based on the prevailing exchange rate 1GBP =HK$12.3675 as at 16 September 2013) be paid to the shareholders (2012: Nil). This dividend is subject to approval by shareholders at the Annual General Meeting and has not been included as a liability in these consolidated financial statements. The total estimated dividend to be paid will be £241,980, based on the prevailing exchange rate as above-mentioned. The payment of this di vidend will not have any tax consequences of the Group. UNIVISION ENGINEERING LIMITED - 57 - ANNUAL REPORT 2013 UNIVISION ENGINEERING LIMITED NOTES TO THE FINANCIAL STATEMENTS For the year ended 31 March 2013 16. PLANT AND EQUIPMENT The Group Cost Furniture and fixtures £ Computer equipment £ Motor vehicles £ Research assets £ Total £ At 1 April 2011 Additions Disposals Foreign translation difference 155,218 14,311 (401) 766 153,076 2,930 - 761 88,640 61,580 (1,582) 663 544,566 - - 2,393 941,500 78,821 (1,983) 4,583 At 31 March 2012 169,894 156,767 149,301 546,959 1,022,921 At 1 April 2012 Additions Disposals Foreign translation difference 169,894 28,563 - 8,642 156,767 3,867 - 7,556 149,301 6,118 (10,426) 7,339 546,959 - - 24,235 1,022,921 38,548 (10,426) 47,772 At 31 March 2013 207,099 168,190 152,332 571,194 1,098,815 Accumulated depreciation At 1 April 2011 Charge for the year Disposals Foreign translation difference 131,869 14,679 (401) 662 138,666 13,571 - 736 74,119 17,925 (1,582) 439 487,982 32,227 - 2,263 832,636 78,402 (1,983) 4,100 At 31 March 2012 146,809 152,973 90,901 522,472 913,155 At 1 April 2012 Charge for the year Disposals Foreign translation difference 146,809 19,178 - 7,295 152,973 2,675 - 7,296 90,901 23,584 (10,426) 4,941 522,472 20,467 - 23,817 913,155 65,904 (10,426) 43,349 At 31 March 2013 173,282 162,944 109,000 566,756 1,011,982 Net book value At 31 March 2013 At 31 March 2012 33,817 23,085 5,246 3,794 43,332 58,400 4,438 86,833 24,487 109,766 At the balance sheet date, the net book value of motor vehicle held under finance lease of the Group and the Company was £20,683 (2012: £Nil). UNIVISION ENGINEERING LIMITED - 58 - ANNUAL REPORT 2013 UNIVISION ENGINEERING LIMITED NOTES TO THE FINANCIAL STATEMENTS For the year ended 31 March 2013 16. PLANT AND EQUIPMENT (CONTINUED) The Company Cost At 1 April 2011 Additions Disposals Foreign translation difference At 31 March 2012 At 1 April 2012 Additions Disposals Foreign translation difference At 31 March 2013 Accumulated depreciation At 1 April 2011 Charge for the year Disposals Foreign translation difference At 31 March 2012 At 1 April 2012 Charge for the year Disposals Foreign translation difference At 31 March 2013 Net book value At 31 March 2013 At 31 March 2012 Furniture and fixtures £ Computer equipment £ Motor vehicles £ Total £ 12,116 816 - 60 12,992 12,992 445 - 773 14,210 11,218 402 - 53 11,673 11,673 415 - 695 12,783 1,427 1,319 29,533 2,930 - 149 32,612 32,612 3,330 - 2,038 37,980 29,136 823 - 139 30,098 30,098 1,571 - 1,816 33,485 4,495 2,514 19,347 38,378 - 233 57,958 57,958 6,118 - 3,630 67,706 19,347 5,535 - 111 24,993 24,993 13,095 - 2,019 40,107 27,599 32,965 60,996 42,124 - 442 103,562 103,562 9,893 - 6,441 119,896 59,701 6,760 - 303 66,764 66,764 15,081 - 4,530 86,375 33,521 36,798 UNIVISION ENGINEERING LIMITED - 59 - ANNUAL REPORT 2013 UNIVISION ENGINEERING LIMITED NOTES TO THE FINANCIAL STATEMENTS For the year ended 31 March 2013 17. GOODWILL The Group Cost At 31 March 2012 and 31 March 2013 Less: accumulated impairment loss At 31 March 2012 and 31 March 2013 Net carrying amount At 31 March 2012 and 31 March 2013 £ 961,845 936,015 25,830 Impairment test for cash-generating unit containing goodwill Goodwill is allocated to the Group’s cash -generating unit (“CGU”) identified according to operating segment as follows: Security and surveillance 2013 £ 2012 £ 25,830 25,830 The recoverable amount of the CGU is determined based on value -in-use calculations. These calculations use cash flow projections based on financial budgets app roved by management covering a twelve month period. A discount rate of 15% has been used for the value -in-use calculations. Key assumptions used for value -in-use calculations: Gross margin Growth rate 2013 2012 25% 13% 25% 13% Management determined the budgets based on their experience and knowledge in the cons truction contracts operations. The discount rate used is pre -tax and reflects specific risks relating to the relevant segment. Based on the impairment test performed, no impairment loss is recognised for the year ( 2012: £Nil). UNIVISION ENGINEERING LIMITED - 60 - ANNUAL REPORT 2013 UNIVISION ENGINEERING LIMITED NOTES TO THE FINANCIAL STATEMENTS For the year ended 31 March 2013 18. INVESTMENT IN SUBSIDIARY UNDERTAKINGS Shares in subsidiary undertakings Less: impairment loss Add: foreign translation difference 2013 £ 2012 £ 1,053,475 1,053,475 (1,201,190) 161,537 (1,201,190) 161,537 13,822 13,822 Amounts due from subsidiary undertakings 7,979,454 7,431,823 Less: impairment loss Add: foreign translation difference Total (4,900,355) 803 (5,194,501) 563,015 3,079,902 2,800,337 3,093,724 2,814,159 The amounts due from subsidiary undertakings are unsecured, interest -free and not expected to be recovered within one year. Particulars of the Group’s subsidiary undertakings at 31 March 2013 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 Company Directly Indirectly Principal activities T-Com Technology Co Taiwan Limited NT$80,000,000 Ordinary share 52.25% Leader Smart Engineering Limited Hong Kong HK$10,000 Ordinary share 100% - - Supply, design, installation and maintenance of closed circuit television and surveillance systems and the sale of security system related products 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: enterprise established in the PRC to operate for 20 years up to 2025. Leader Smart Engineering (Shanghai) Limited (“LSSH”) is a wholly-foreign owned UNIVISION ENGINEERING LIMITED - 61 - ANNUAL REPORT 2013 19. INVENTORIES Raw materials Work in progress Finished goods Less: impairment loss UNIVISION ENGINEERING LIMITED NOTES TO THE FINANCIAL STATEMENTS For the year ended 31 March 2013 The Group The Company 2013 £ 2012 £ 327,168 365 931,783 1,259,316 (124,569) 309,713 - 873,685 1,183,398 (92,009) 2013 £ 327,168 - 475,995 803,163 - 2012 £ 309,713 - 447,056 756,769 - 1,134,747 1,091,389 803,163 756,769 The Group recognised a provision for obsolete inventories of £27,585 (2012: £31,061) on slow- moving inventories. 20. CONTRACTS-IN-PROGRESS The Group The Company 2013 £ 2012 £ 2013 £ 2012 £ 31,130,690 (16,068,072) 27,501,135 (13,828,772) 13,281,207 (13,198,376) 10,954,384 (10,969,760) 15,062,618 13,672,363 82,831 (15,376) 15,885,794 14,481,967 619,646 476,053 (415,066) (389,300) (159,908) (151,134) 15,470,728 14,092,667 459,738 324,919 Contract costs incurred plus attributable profits less foreseeable losses Progress billings to date Represented by: Amounts due from customers for contracts-in-progress Less: allowance for doubtful debts Amounts due from customers for contracts-in-progress, net (note 21) Amounts due to customers for contracts-in-progress (note 23) (408,110) (420,304) (376,907) (340,294) 15,062,618 13,672,363 82,831 (15,375) At 31 March 2013, the amount of retention receivables from construction customers recorded within “trade and other receivables” is £22,112 (2012: £3,915). Within amounts due from customers for construction contracts-in-progress are receivables totalling £11,901,827 (2012: £11,109,209), which have been pledged as security by the original land use rights certificate and the developing property of the customer in LSSH and expected to be collected within twelve months. UNIVISION ENGINEERING LIMITED - 62 - ANNUAL REPORT 2013 UNIVISION ENGINEERING LIMITED NOTES TO THE FINANCIAL STATEMENTS For the year ended 31 March 2013 21. TRADE AND OTHER RECEIVABLES Trade receivables Less: allowance for doubtful debts Trade receivables, net Other receivables Deposits and prepayments Amounts due from customers for contracts-in-progress, net (note 20) Pledged bank deposits Less: non-current portion – amounts due from customers for contracts-in-progress The Group The Company 2013 £ 2012 £ 2013 £ 2012 £ 1,254,491 1,259,604 551,822 557,961 (637,847) (584,602) (240,929) (227,710) 616,644 638,220 417,087 675,002 660,350 316,933 310,893 530,104 136,396 330,251 560,843 55,581 15,470,728 246,008 17,388,687 14,092,667 238,705 15,983,657 459,738 246,008 1,683,139 324,919 238,705 1,510,299 (1,436,027) (1,340,393) - - 15,952,660 14,643,264 1,683,139 1,510,299 All of trade and other receivables are expected to be recovered within one year , other than those separately disclosed. At 31 March 2013, the Group had pledged bank deposits of £246,008 (2012: £238,705) to banks for performance bonds in respect of co nstruction 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 remot e, in which case the impairment loss is written off against trade receivables directly. Movements in the allowance for doubtful debts: At 1 April Impairment loss recognised Reversal of impairment loss Bad debts written off Foreign translation difference The Group The Company 2013 £ 584,602 184,190 (162,923) - 31,978 2012 £ 1,442,176 135,394 - (1,008,679) 15,711 2013 £ 227,710 - - - 13,219 2012 £ 1,201,983 7,103 - (986,215) 4,839 At 31 March 637,847 584,602 240,929 227,710 At 31 March 2013, trade receivables of the Group and the Company amounting to Note: £184,190 (2012: £135,394) and £Nil (2012: £7,103) respectively are individually determined to be impaired and an impairment was provided. These individually impaired receivables were outstanding over one year at the balance sheet date. UNIVISION ENGINEERING LIMITED - 63 - ANNUAL REPORT 2013 UNIVISION ENGINEERING LIMITED NOTES TO THE FINANCIAL STATEMENTS For the year ended 31 March 2013 21. TRADE AND OTHER RECEIVABLES (CONTINUED) (b) Trade receivables that are not impaired The following is an ageing analysis of trade receivables at the bal ance sheet date that were past due but not impaired: 0 to 90 days 91 to 365 days Over 365 days The Group The Company 2013 £ 497,928 37,603 81,113 2012 £ 387,396 169,755 117,851 2013 £ 292,375 18,518 - 2012 £ 281,463 48,788 - 616,644 675,002 310,893 330,251 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. 22. CASH AND CASH EQUIVALENTS The Group The Company 2013 £ 2012 £ 2013 £ 2012 £ Cash and bank balances* 585,046 504,323 456,758 432,672 Cash and cash equivalents in the consolidated and the Company’s statement of cash flows 585,046 504,323 456,758 432,672 * At 31 March 2013, the Group maintained £34,264 (2012: £37,186) as restricted cash to secure against the banking facility. UNIVISION ENGINEERING LIMITED - 64 - ANNUAL REPORT 2013 UNIVISION ENGINEERING LIMITED NOTES TO THE FINANCIAL STATEMENTS For the year ended 31 March 2013 23. TRADE AND OTHER PAYABLES Trade payables Bills payable Due to a related party (note 29(b)) Accruals and other payables Amounts due to customers for contracts-in-progress (note 20) The Group The Company 2013 £ 2,329,100 125,359 42,376 1,629,158 2012 £ 2,093,917 110,770 39,061 1,556,948 2013 £ 48,325 - - 943,974 2012 £ 50,228 - - 946,896 408,110 420,304 376,907 340,294 4,534,103 4,221,000 1,369,206 1,337,418 24. INCOME TAX IN THE BALANCE SHEET (a) Current tax liability in the balance sheet represents: Hong Kong profits tax PRC income tax Taiwan income tax The Group The Company 2013 £ 2012 £ 2013 £ 2012 £ - 1,258,234 92,030 - 1,174,441 58,971 1,350,264 1,233,412 - - - - - - - - (b) Unrecognised deferred tax assets At 31 March 2013, the Company had unused tax losses of £5,331,538 (2012: £4,950,190) that were available for offset against future taxable profits of the Company. No deferred tax asset s have been recognised due to the unpredictability of the future profit streams. Such unused tax losses are available to be carried forward at no expiration. 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 Compan y. UNIVISION ENGINEERING LIMITED - 65 - ANNUAL REPORT 2013 UNIVISION ENGINEERING LIMITED NOTES TO THE FINANCIAL STATEMENTS For the year ended 31 March 2013 25. LOAN AND BORROWINGS Within one year or on demand: Secured bank loans (note a) Loan from a former shareholder (note b) The Group The Company 2013 £ 2012 £ 2013 £ 2012 £ 906,482 741,086 - - 2,621,723 2,493,966 2,621,723 2,493,966 3,528,205 3,235,052 2,621,723 2,493,966 Notes: (a) The secured bank loans carried interest at rates ranging from 3.39% to 3.91% per annum (2012: 3.232% to 5.75% per annum) and were secured by:- (i) Restricted cash (note 22) and; (ii) Personal guarantee by the Chairman of the Company, Mr. Stephen Sin Mo KOO (note 29(c)). (b) A loan of US$5,000,000 was provided on 31 December 2007 by Mayne Management Limited (“Mayne”), the former ultimate controlling party of UniVision Holdings Limited, which previously owned a 47.9% equity interest of the Company. The loan facility is used exclusively to finance a major construction project in the PRC. On 15 December 2011, Mayne agreed with the Company to forgive the accrued interest totalling US$2.865 million and US$1.0 million of the outstanding principal . The remaining loan balance becomes interest-free and is repayable by 31 March 201 4. Security over the Group’s interest in a shopping mall contract within the PRC has been provided. 26. OBLIGATION UNDER FINANCE LEASE At 31 March 2013 and 2012, the Group and the Company ha d obligations under finance leases as follows: Minimum lease payment 2013 £ 2012 £ Within one year Between two to five years Total minimum finance lease payments Less: future finance charges Present value of lease obligation 8,744 18,215 26,959 3,768 23,191 9,404 25,481 34,885 4,905 29,980 Present value of the minimum lease payment 2013 £ 7,522 15,669 2012 £ 8,062 21,918 23,191 29,980 UNIVISION ENGINEERING LIMITED - 66 - ANNUAL REPORT 2013 UNIVISION ENGINEERING LIMITED NOTES TO THE FINANCIAL STATEMENTS For the year ended 31 March 2013 27. SHARE CAPITAL Authorised : 800,000,000 ordinary shares of HK$0.0625 each 2013 £ 2012 £ 3,669,470 3,669,470 Issued and fully paid: 383,677,323 ordinary shares (2012: 383,677,323 ordinary shares) of HK$0.0625 each 1,697,617 1,697,617 The Company has one class of ordinary shares. 28. OPERATING LEASE COMMITMENTS At the balance sheet date, the total future minimum lease payments under non -cancellable operating leases for the office and warehouse premises are payable as follows: Within one year Between two to five years The Group The Company 2013 £ 60,728 6,080 66,808 2012 £ 62,547 27,367 89,914 2013 £ 19,074 - 19,074 2012 £ 18,574 13,415 31,989 UNIVISION ENGINEERING LIMITED - 67 - ANNUAL REPORT 2013 UNIVISION ENGINEERING LIMITED NOTES TO THE FINANCIAL STATEMENTS For the year ended 31 March 2013 29. RELATED PARTY TRANSACTIONS Compensation of key management personnel The remuneration of the key management of the Group during the year was as follows: - Salaries, bonus and allowances 2013 £ 2012 £ 284,533 307,270 The remuneration of key management personnel comprise s 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 1 1 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. Transactions with related parties (a) A loan of US$5,000,000 was provided on 31 December 2007 by Mayne Management Limited, the former ultimate controlling party of UniVision Holdings Limited, which previously owned a 47.9% equity interest in the Company. Effective from 15 December 2011, the principal amount was reduced to US$2,493,966 upon the forgiveness of certain accrued interest and principal. The balance becomes inter est-free and will mature due on 31 March 2014 (note 25(b)). (b) At 31 March 2013, there is a payable balance of £42,376 (2012: £39,061) due to Mr. Stephen Sin Mo KOO, the director of the Company, which is unsecured, interest-free and repayable on demand (note 23). (c) At 31 March 2013, the bank loans amounting to £0 (2012: £31,851) are personally guaranteed by the director of the Company, Mr. Stephen Sin Mo KOO . No charge has been requested for this guarantee (note 25(a)). Apart from the transactions disclosed above and elsewhere in the financial statements, the Group and the Company had no other material transactions with related parties during the year. UNIVISION ENGINEERING LIMITED - 68 - ANNUAL REPORT 2013 UNIVISION ENGINEERING LIMITED NOTES TO THE FINANCIAL STATEMENTS For the year ended 31 March 2013 30. FINANCIAL GUARANTEE In accordance with those certain supplemental agreements on the Sales an d Purchase Contract regarding the Zhongshan shopping mall project dated 10 December 2009, the Group’s wholly -owned subsidiary, LSSH provided a guarantee in respect of secured short -term financing arrangement with a maximum amount of up to £ 7.9 million (including outstanding principal and accrued interest and charges) 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 liable 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 2013, 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 “Z hongshan Project”), the Group is secured by certain beneficial interest in the Zhongshan Project on a recourse basis. At 31 March 2013, the fair market value of the Zhongshan Project amounted to £ 31 million, based on the appraisal report issued by an independent valuer. At 31 March 2013, the Company expects their interest in Zhongshan Project to be transferred to a committed purchaser at the consideration of RMB110 million (approximately £11 million), together with the contingent liability under the financi al guarantee, in the next twelve months. Hence, no additional provision of financial guarantee liabilities is required and the provision is expected to be reversed upon the subsequent sale of the Zhongshan Project. Financial guarantee liabilities 31. LEGAL PROCEEDINGS 2013 £ 2012 £ 332,588 310,438 Up to the date of this report, t he Group has received several legal claims against its wholly-owned subsidiary and the Company from its vendors in China in connection with the transactions previously entered into by the former director of LSSH. The Group plans to file counter -claims to the Court against the former director of LSSH for all costs and compensations in respect of these legal claims. At this point, the Group does not believe that these legal proceedings would have a material impact or result in significant contingencies to the Group and the Company, therefore no provision for any costs has been made. UNIVISION ENGINEERING LIMITED - 69 - ANNUAL REPORT 2013 UNIVISION ENGINEERING LIMITED NOTES TO THE FINANCIAL STATEMENTS For the year ended 31 March 2013 32. EVENTS AFTER THE REPORTING DATE On 22 August 2013, the Comp any, among Hua Xin and Jun Heng entered into an agreement on 22 August 2013 which is supplementary to the agreement dated 22 June 2012. This agreement commits Hua Xin and Jun Heng to complete the purchase of the Company’s interest in the Zhongshan Project no later than 28 February 2014 (“backstop date”). The first hearing of the Guangzhou Arbitration Commission , (the “Commission”) in relation to the dispute was heard on 14 June 2013 during which the Commission requested that all relevant parties provide it with further documentation relating to the dispute. Since that date there have been further hearings. The Commission will consider if it has sufficient information to constitute to a binding contract at a later date. Up to date of this report, the arbitration over the Zhongshan Project is still ongoing and is in the provision of evidence stage. There remains uncertainty as to both the decision of the Commission and the timing of this decision. In event that either the decision is still pending on 28 February 2014 or a decision has been handed down which is not in Hong Yi’s favour, the Company would have the option of either enforcing this agreement or renegotiating the backstop date. As part of consideration for the 51% interest include some assets that are currently owned by Hua Xin, Jun Heng or Hong Yi, the Board of Directors consider to allow some extension to the backstop date so as to improve its negotiating position over the precise composition of the consideration. UNIVISION ENGINEERING LIMITED - 70 - ANNUAL REPORT 2013 NOTICE OF ANNUAL GENERAL MEETING NOTICE IS HEREBY GIVEN THAT the 201 3 Annual General Meeting (AGM) 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 21 October 2013 at 5:00p.m. The following businesses will be transacted then: 1. 2. 3. 4. 5. 6. 7. To receive and adopt the Company ’s audited financial statements for the financial year ended 31 March 2013 together with the Directors’ report and the Independent Auditor’s report; To declare a final dividend for the financial year ended 31 March 20 13. To re-elect Mr. Stephen Sin Mo KOO who retired by rotation, as a Director of the Company; To re-elect Mr. Danny Kwok Fai YIP who retired by rotation, as a Director of the Company; To reappoint auditor HKCMCPA Company Limited, Certified Public Accountants , (formerly known as ZYCPA Company Limited ) as auditors of the Company, to hold office from the conclusion of the meeting to the conclusion of the next meeting, during which accounts will be laid before the Company and to authorize the Directors to adjust their remuneration packages; That the directors of the Company be and are hereby generally and unconditionally authorized to exercise all powers of the Company to allot ‘Ordinary Shares’ of HK$0.0625 each in the capital of the Company. 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 Compa ny’s next AGM 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. That the directors of the Company be and are hereby generally and unconditionally authorized to exercise all powers of the Company to repurchase the ’Ordinary Shares’ of HK$0.0625 each in the capital of the Company, including any form of depositary receipt. 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 AGM 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 repurchased after such expiry, and that the Directors may buy back Ordinary Shares in pursuance of such an offer or a n agreement as if such authority had not expired. By Order of the Board Mr. Stephen Sin Mo KOO Executive Chairman 16 September 2013 Registered office: 8/F Lever Tech Centre, 69-71 King Yip Street Kwun Tong, Kowloon, Hong Kong. UNIVISION ENGINEERING LIMITED - 71 - ANNUAL REPORT 2013 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 atte nd and, on a poll, to vote in place of the member. 2. A form of proxy is enclosed with this notice. To be valid, the form of proxy and any power of attorney or other authority (if any) under which it is signed, or a notarized and certified copy of that power of authority, must be lodged with the Company ’s registrars, c/o Computershare Investor Services Plc., The Pavilions, Bridgwater Road, Bristol BS99 6ZY, not less than 48 hours before the Annual General Meeting takes place. 3. Completion and return of a pro xy 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 16 September 2013 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 determin ing the rights of any person to attend or vote in the Annual General Meeting. UNIVISION ENGINEERING LIMITED - 72 - ANNUAL REPORT 2013 

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