UniVision (AIM: UVEL), the Hong Kong based group whose principal activities are the supply, design, installation and maintenance of closed circuit television (CCTV) and surveillance systems, and the sale of security related products, announces the following trading update.
Contract with MTR Corporation
In May 2017, the Company announced a major contract with MTR Corporation (“MTRC”), the Hong Kong railway company, worth HK$389.4 million (approximately £38.1 million) spread over a six year period. Since that time, the Company has also agreed and announced add-ons to this contract, amounting to a further contract value of HK$17.9 million, taking it to a total value, to date, of HK$407.3 million. This contract is due for completion in November 2023. Until now, the Company has been working on the final part of the design stage of the project and has now commenced the installation stage. The first revenue has been invoiced this month and we expect regular billing, on work completed on a monthly basis, from now until the end of the contracted period. The Company provides updated work schedules to MTRC for approval from time to time. The additional maintenance services on this contract will remain open for acceptance by MTRC.
Increased bank financing
The Company has entered into a new facility agreement with the Hongkong and Shanghai Banking Corporation (“HSBC’). HSBC, the Company’s existing banker, has agreed to provide additional banking facilities including an invoice discounting/factoring facility of HK$45m, which will be used exclusively for the trade receivables from MTRC. Also, HSBC will provide a trade facility of HK$8m. Interest will be charged at HSBC’s HKD Best Lending Rate. This facility will provide additional working capital to ensure that the MTRC contract can operate smoothly alongside the rest of the Group’s operations.
In addition, the Company has been provided a surety bond facility of HK$30m by a leading insurance company, Berkshire Hathaway Specialty Insurance Company. The Company has used HK$11.7m of the facility for the performance bond of the MTRC contract. The unutilised facility as at today is HK18.3m and can be utilised for other potential projects in coming year.
Maintenance Contract renewal with MTRC
MTRC has renewed the existing contract with the Company to provide maintenance services to MTRC’s network of Closed Circuit Television (“CCTV”) systems and public address systems on six railway lines in Hong Kong. The contract has been renewed for a further three year period commencing on 1 January 2018.
The MTRC contract, which we won last May, was transformational for the business and will lead to a step-change in revenue and also profitability of the Group in the short to medium term. It has taken until now to get through the design phase and into implementation, but this is now starting in earnest and we shall keep shareholders updated as appropriate. Winning this significant contract has demonstrated UniVision’s capability to the market and has led to other enquiries and opportunities for the Group to tender for other potentially significant CCTV installation projects. The landscape is very competitive and the Company is not yet aware of the outcome of these opportunities, but we will keep shareholders informed of any developments when appropriate. With the major contract with MTRC, the Board believe that the amount of our current order book is in the region of HK$440m, which should provide a stable revenue platform for the Company in the coming few years.
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