Covid crisis hinders UniVision recovery

The AIM-traded firm put that down to the disruption in the business caused by protests against the anti-extradition bill in Hong Kong, which began in June, and hit its construction revenues and increased subcontractor charges, which reduced margins in its maintenance.

At the time, the board expected some improvement in the second half, but further protest disruption was expected.

Unlike the hotel, travel, catering and retailing sectors, Covid-19 had “not seriously affected” the company's business, the board said.

“Nevertheless, the outbreak and effects of coronavirus in Hong Kong since January has further hindered installation plans which has slowed the group's anticipated recovery in the second half of the year.

“Whilst unaudited revenue and profits have recovered when compared to the first half of the year, the directors expect the full-year results still to be substantially lower than the year to 31 March 2019.”

The new financial year had started “very well”, with existing installation work getting closer to its expected levels as the disruption caused by Covid-19 and the protests had reduced.

In addition, the benefits of the cooperation framework agreement signed with China Rail in January were already becoming apparent in relation to subcontractor costs, the board said.

The group also won new contract work, explaining that while the benefits of some of that new work would fall into the current financial year, some of it would extend until the end of 2021 and early 2022.

UniVision said the major contract with Hong Kong’s MTR Corporation, which operates the special administrative region’s rapid transit network, remained the major plank of its current workload.

With further agreed add-ons since May 2017, the total current value of this contract was now HKD 426.7m (£43.9m) spread over a six year period, with an expected completion date of November 2023.

As at 31 March, the group had invoiced HKD 131.5m to MTR, leaving a further HKD 295.2m over the remaining period of the contract.

The gross value of certified works on the contract was HKD 156.3m up to 29 February.

With revenues underpinned by the major contract, and better subcontractor cost visibility with China Rail as a partner, the firm’s board said it was confident of a return to growth in the current financial year.

“To assist with funding of this significant major contract and other potential sizeable projects, during the period the company entered into a revised facility agreement with HSBC, to increase the scope and credit limit of banking facilities, including increase the trade facility to HKD 26m, of which overdraft limit increased to HKD 8m, and also provide a long term straight line loan facility of HKD 9m,” the board said.

“This facility has provided additional working capital to ensure that the MTR contract and other projects can operate smoothly.”

UniVision said it would announce its final results, for the year ended 31 March in early September.

At 1436 BST, shares in UniVision Engineering were up 5.22% at 1.21p.