UNIVISION ENGINEERING LIMITED

NOTES TO THE FINANCIAL STATEMENTS

For the year ended 31 March 2021

 

1.         GENERAL INFORMATION

 

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 Company's registered office is Unit 201, 2/F., Sunbeam Centre, 27 Shing Yip Street, Kwun Tong, Kowloon, Hong Kong.

 

These financial statements are presented in Sterling Pound ("£"), which is the presentation currency of the Company.

 

The Company is mainly engaged in the supply, design, installation and maintenance of closed circuit television and surveillance systems and the sale of security system related products in Hong Kong.

 

 

2.         BASIS OF PREPARATION

 

These financial statements have been prepared in accordance with International Financial Reporting Standards ("IFRSs") issued by the International Accounting Standards Board. The measurement basis used in the preparation of these financial statements is the historical cost basis.

 

The preparation of financial statements in conformity with IFRSs requires management to make judgements, estimates and assumptions that affect the application of policies and reported amounts of assets, liabilities, income and expenses. The estimates and associated assumptions are based on historical experience and various other factors that are believed to be reasonable under the circumstances, the results of which form the basis of making the judgements about carrying values of assets and liabilities that are not readily apparent from other sources. 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 revision affects both current and future periods. Judgements made by management in the application of IFRSs that have significant effect on the financial statements and key sources of estimation uncertainty are discussed in note 5 to the financial statements.

 

 

3.         APPLICATION OF NEW AND REVISED IFRSs

 

(a)       Initial application of IFRSs

 

In the current year, the Company initially applied the following IFRSs:

 

Amendments to IFRS 3	Definition of a Business
Amendments to IAS 1 and IAS 8	Definition of Material
Amendments to IFRS 9, IAS 39     and IFRS 7	Interest Rate Benchmark Reform
Conceptual Framework for     Financial Reporting 2018	Revised Conceptual Framework for Financial Reporting

 

The initial application of these financial reporting standards does not necessitate material changes in the Company's accounting policies and retrospective adjustments of the comparatives presented in these financial statements.

 

3.         APPLICATION OF NEW AND REVISED IFRSs

 

(b)       IFRSs in issue but not yet effective

 

The following IFRSs in issue at 31 March 2021 have not been applied in the preparation of these financial statements since they were not yet effective for the annual period beginning on 1 April 2020:

 

IFRS 17	Insurance Contracts2
Amendments to IFRS 3	Definition of Business2
Amendments to IAS 16	Property, Plant and Equipment: Proceeds before Intended     Use2
Amendments to IAS 37	Onerous Contracts - Cost of Fulfilling a Contract2
Amendments to IAS 39, IFRS 4, IFRS 7, IFRS 9 and IFRS 16	Interest Rate Benchmark Reform - Phase 22
Annual Improvements to IFRSs 2018-2020 Cycle	Revised Conceptual Framework for Financial Reporting2
Amendments to IFRS 16	COVID-19-Related Rent Concession1
Amendments to IAS 1	Classification of Liabilities as Current or Non-current3
Amendments to IFRS 10 and     IAS 28	Sale or Contribution of Assets between an Investor and its     Associate or Joint Venture4

 

¹                 Effective for the Company's annual financial statements beginning on 1 April 2021

²                 Effective for the Company's annual financial statements beginning on 1 April 2022

³                 Effective for the Company's annual financial statements beginning on 1 April 2023

⁴                 Effective for the annual periods beginning on or after a date to be determined

 

The Company is in the process of making an assessment of what the impact of these amendments, new standards and interpretations is expected to be in the period of initial application.

 

 

4.         SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

 

4.1       Segment reporting

 

An operating segment is a component of the Company that engages in business activities from which it may earn revenue and incurs expenses, including revenue and expenses that relate to transactions with other components of the Company. Operating segments are reported in a manner consistent with the internal reporting provided to the chief operating decision-maker.

 

4.2       Foreign currency

 

Functional and presentation currency

 

Items included in the financial statements of the Company are measured using the currency of the primary economic environment in which the Company operates (the "functional currency"), which is Hong Kong Dollar ("HK$"). These financial statements are presented in Sterling Pound ("£"), which is the Company's presentation currency. As the Company is listed on the AIM, the directors consider that this presentation is more useful for its current and potential investors.

 

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 re-measured.  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 profit or loss, except when deferred in other comprehensive income as qualifying cash flow hedges and qualifying net investment hedges.

 

4.         SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

 

4.3       Plant and equipment

 

Plant and equipment are initially recognised at cost and subsequently carried at cost less accumulated depreciation and accumulated impairment 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	3 - 5 years
Computer equipment	2 - 5 years
Motor vehicles	3 years

 

Fully depreciated plant and equipment are retained in the financial statements until the items are no longer in use.

 

The residual values, useful lives 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 the carrying amount of the asset only when it is probable that future economic benefits associated with the item will flow to the Company and the cost of the item can be measured reliably. All other repair and maintenance expenses are recognised in profit or loss when incurred.

 

4.4       Interest in an associate

 

Associate is an entity in which the Company has significant influence, but not control or joint control, over its management, including participation in the financial and operating policy decisions.

 

The results and assets and liabilities of the associate are incorporated in these financial statements using the equity method of accounting.  Under the equity method, interest in an associate is initially recorded at cost, adjusted for any excess of the Company's share of the acquisition-date fair values of the investee's identifiable net assets over the cost of the investment. The cost of the investment includes purchase price, other costs directly attributable to the acquisition of the investment, and any direct investment into the associate that forms part of the Company's equity investment. Thereafter, the investment is adjusted for post-acquisition changes in the Company's share of e investee's net assets and any impairment loss relating to the investment.  When the Company's share of losses of the associates equals or exceeds its interest in that associate (which includes any long-term interests that, in substance, form part of the Company's net investments in the associates), the Company discontinues recognising its share of further losses.  An additional share of losses is provided for and a liability is recognised only to the extent that the Company has incurred legal or constructive obligations or made payments on behalf of that associate.

 

Unrealised profits and losses resulting from transactions between the Company and its associates are eliminated to the extent of the Company's interest in the investee, except where unrealised losses provide evidence of an impairment of the asset transferred, in which case they are recognised immediately in profit or loss.

 

4.5       Impairment of non-financial assets

 

The carrying amounts of non-current assets, including plant and equipment and right-of-use assets, are reviewed at the end of each reporting period to determine whether there is any indication of impairment. If any such indication exists, the recoverable amount is estimated.

 

Calculation of recoverable amount

 

The recoverable amount of an asset is the greater of its fair value less costs of disposal and value in use. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset. Where an asset does not generate cash inflows largely independent of those from other assets, the recoverable amount is determined for the smallest group of assets that generates cash inflows independently (i.e. a cash-generating unit).

 

Recognition of impairment losses

 

An impairment loss is recognised in profit or loss if the carrying amount of an asset, or the cash-generating unit to which it belongs, exceeds the recoverable amount. Impairment losses recognised in respect of cash-generating units are allocated first to reduce the carrying amount of any goodwill allocated to the cash-generating unit (or group of units) and then, to reduce the carrying amount of the other assets in the unit (or group of units) on a pro rata basis, except that the carrying value of an asset will not be reduced below its individual fair value less costs of disposal (if measurable) or value in use (if determinable).

 

Reversals of impairment losses

 

An impairment loss is reversed if there has been a favourable change in the estimates used to determine the recoverable amount. A reversal of an impairment loss is limited to the asset's carrying amount that would have been determined had no impairment loss been recognised in prior years. Reversals of impairment losses are credited to profit or loss in the year in which the reversals are recognised.

 

4.6       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 selling price in the ordinary course of business less the estimated costs of completion and the estimated costs necessary to make the sale.

 

4.7       Financial instruments

 

Financial assets and financial liabilities are recognised when the Company becomes a party to the contractual provisions of the instrument.

 

Financial assets and financial liabilities are initially measured at fair value except for trade receivables arising from contracts with customers which are initially measured in accordance with IFRS 15. Transaction costs that are directly attributable to the acquisition or issue of financial assets and financial liabilities are added to or deducted from the fair value of the financial assets or financial liabilities, as appropriate, on initial recognition.

 

4.7.1    Financial assets

 

Classification and subsequent measurement of financial assets

 

Financial assets that meet the following conditions are subsequently measured at amortised cost:

 

-         the financial asset is held within a business model whose objective is to collect contractual cash flows; and

-         the contractual terms give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding.

 

All other financial assets are subsequently measured at fair value through profit or loss.

 

Impairment of financial assets

 

The Company recognises a loss allowance for ECL on financial assets and other assets which are subject to impairment under IFRS 9. The amount of ECL is updated at each reporting date to reflect changes in credit risk since initial recognition.

 

Lifetime ECL represents the ECL that will result from all possible default events over the expected life of the relevant instrument. In contrast, 12-month ECL represents the portion of lifetime ECL that is expected to result from default events that are possible within 12 months after the reporting date. Assessments are done based on the Company's historical credit loss experience, adjusted for factors that are specific to the debtors, general economic conditions and an assessment of both the current conditions at the reporting date as well as the forecast of future conditions.

 

The Company always recognises lifetime ECL for trade receivables and contract assets. The ECL on these assets is assessed individually for debtors with significant balances and/or collectively using a provision matrix with appropriate groupings. For all other instruments, the Company measures the loss allowance equals to 12-month ECL, unless when there has been a significant increase in credit risk since initial recognition, the Company recognises lifetime ECL. The assessment of whether lifetime ECL should be recognised is based on significant increases in the likelihood or risk of a default occurring since initial recognition.

 

In assessing whether the credit risk of a financial instrument has increased significantly since initial recognition, the Company compares the risk of default occurring on the financial instrument assessed at the reporting date with that assessed at the date of initial recognition. In making this reassessment, the Company considers that a default event occurs when (i) the borrower is unlikely to pay its credit obligations to the Company in full, without recourse by the Company to actions such as realising security (if any is held); or (ii) the financial asset is 90 days past due. The Company considers both quantitative and qualitative information that is reasonable and supportable, including historical experience and forward-looking information that is available without undue cost or effort.

 

In particular, the following information is taken into account when assessing whether credit risk has increased significantly since initial recognition:

 

-         failure to make payments of principal or interest on their contractually due dates;

-         an actual or expected significant deterioration in a financial instrument's external or internal credit rating (if available);

-         an actual or expected significant deterioration in the operating results of the debtor; and

-         existing or forecast changes in the technological, market, economic or legal environment that have a significant adverse effect on the debtor's ability to meet it obligation to the Company.

 

Depending on the nature of the financial instruments, the assessment of a significant increase in credit risk is performed on either an individual basis or a collective basis. When the assessment is performed on a collective basis, the financial instruments are grouped based on shared credit risk characteristics, such as past due status and credit risk ratings.

 

ECLs are re-measured at each reporting date to reflect changes in the financial instrument's credit risk since initial recognition. Any change in the ECL amount is recognised as an impairment gain or loss in profit or loss. The Company recognises an impairment gain or loss for all financial instruments with a corresponding adjustment to their carrying amount through a loss allowance account, except for investments in debts securities that are measured at fair value through other comprehensive income (recycling), for which the loss allowances are recognised in other comprehensive income and accumulated in the fair value reserve (recycling).

 

Interest income is calculated based on the gross carrying amount of the financial asset unless the financial asset is credit-impaired, in which case interest income is calculated based on the amortised cost (i.e. the gross carrying amount less loss allowance) of the financial asset.

 

At each reporting date, the Company assesses whether a financial asset is credit-impaired. A financial asset is credit-impaired when one or more events that have a detrimental impact on the estimated future cash flows of the financial asset have occurred. Evidence that a financial asset is credit-impaired includes the following observable events:

 

-         significant financial difficulties of the debtor;

-         a breach of contract, such as a default or delinquency in interest or principal payments;

-         it becoming probable that the borrower will enter into bankruptcy or other financial reorganisation;

-         significant changes in the technological, market, economic or legal environment that have an adverse effect on the debtor; or

-         the disappearance of an active market for a security because of financial difficulties of the issuer.

 

The gross carrying amount of a financial asset or contract asset is written off (either partially or in full) to the extent that there is no realistic prospect of recovery. This is generally the case when the Company determines that the debtor does not have assets or sources of income that could generate sufficient cash flows to repay the amounts subject to the write-off.

 

Subsequent recoveries of an asset that was previously written off are recognised as a reversal of impairment in profit or loss in the period in which the recovery occurs.

 

4.7.2    Financial liabilities and equity instruments

 

Debt and equity instruments issued by the Company are classified as either financial liabilities or as equity in accordance with the substance of the contractual arrangements and the definitions of a financial liability and an equity instrument.

 

Equity instrument

 

An equity instrument is any contract that evidences a residual interest in the assets of an entity after deducting all of its liabilities. Equity instruments issued by the Company are recognised at the proceeds received, net of direct issue costs.

 

Financial liabilities

 

Financial liabilities are subsequently measured at amortised cost, using the effective interest method.

 

Effective interest method

 

The effective interest method is a method of calculating the amortised cost of a financial liability and of allocating interest expense over the relevant period. The effective interest rate is the rate that exactly discounts estimated future cash payments (including all fees paid or received that form an integral part of the effective interest rate, transaction costs and other premiums or discounts) through the expected life of the financial liability or, where appropriate, a shorter period, to the net carrying amount on initial recognition. Interest expense is recognised on an effective interest basis.

 

4.7.3    Derecognition

 

The Company derecognises a financial asset only when the contractual rights to the cash flows from the asset expire, or when it transfers the financial asset and substantially all the risks and rewards of ownership of the asset to another entity.

 

On derecognition of a financial asset in its entirety, the difference between the asset's carrying amount and the sum of the consideration received and receivable and the cumulative gain or loss that had been recognised in other comprehensive income and accumulated in equity is recognised in profit or loss.

 

The Company derecognises financial liabilities when, and only when, the Company's obligations are discharged, cancelled or expire. The difference between the carrying amount of the financial liability derecognised and the consideration paid and payable is recognised in profit or loss.

 

4.7.4    Offsetting financial instruments

 

Financial assets and liabilities are offset and the net amount reported in the statement of financial position when there is a legally enforceable right to offset the recognised amounts and there is an intention to settle on a net basis or realise the asset and settle the liability simultaneously.

 

4.8       Cash and cash equivalents

 

Cash and cash equivalents comprise cash at bank and in hand, demand deposits with banks and other financial institutions, and short-term, highly liquid investments that are readily convertible into known amounts of cash and which are subject to an insignificant risk of changes in value, having been within three months of maturity at acquisition.

 

4.9       Dividend distributions

 

Dividend distributions to the Company's shareholders are recognised as liabilities in the financial statements in the period in which the dividends are approved by the shareholders or directors, where appropriate.

 

4.10     Revenue recognition

 

Revenue from contracts with customers

 

Under IFRS 15, the Company recognises revenue when (or as) a performance obligation is satisfied, i.e. when "control" of the goods or services underlying the particular performance obligation is transferred to the customer.

 

A performance obligation represents a good or service (or a bundle of goods or services) that is distinct or a series of distinct goods or services that are substantially the same.

 

Control is transferred over time and revenue is recognised over time by reference to the progress towards complete satisfaction of the relevant performance obligation if one of the following criteria is met:

 

-         the customer simultaneously receives and consumes the benefits provided by the Company's performance as the Company performs;

-         the Company's performance creates or enhances an asset that the customer controls as the Company performs; or

-         the Company's performance does not create an asset with an alternative use to the Company and the Company has an enforceable right to payment for performance completed to date.

 

Otherwise, revenue is recognised at a point in time when the customer obtains control of the distinct good or service.

 

A contract asset represents the Company's right to consideration in exchange for goods or services that the Company has transferred to a customer that is not yet unconditional. It is assessed for impairment in accordance with IFRS 9. In contrast, a receivable represents the Company's unconditional right to consideration, i.e. only the passage of time is required before payment of that consideration is due.

 

A contract liability represents the Company's obligation to transfer goods or services to a customer for which the Company has received consideration (or an amount of consideration is due) from the customer.

 

A contract asset and a contract liability relating to the same contract are accounted for and presented on a net basis.

 

Contracts with multiple performance obligations (including allocation of transaction price)

 

For contracts that contain more than one performance obligations (provision of design and installation services and sales of goods), the Company allocates the transaction price to each performance obligation on a relative stand-alone selling price basis.

 

The stand-alone selling price of the distinct good or service underlying each performance obligation is determined at contract inception. It represents the price at which the Company would sell a promised good or service separately to a customer. If a stand-alone selling price is not directly observable, the Company estimates it using appropriate techniques such that the transaction price ultimately allocated to any performance obligation reflects the amount of consideration to which the Company expects to be entitled in exchange for transferring the promised goods or services to the customer.

 

Over time revenue recognition: measurement of progress towards complete satisfaction of a performance obligation

 

The progress towards complete satisfaction of a performance obligation is measured based on input method, which is to recognise revenue on the basis of the Company's efforts or inputs to the satisfaction of a performance obligation relative to the total expected inputs to the satisfaction of that performance obligation, that best depicts the Company's performance in transferring control of goods or services.

 

Service revenue from supply, design and installation of closed circuit television and surveillance systems is recognised over time by reference to the progress towards complete satisfaction of the relevant performance obligation using input method as the Company's performance does not create an asset with an alternative use to the Company and the Company has an enforceable right to payment for performance completed to date.

 

Service revenue from maintenance contracts is recognised over time as the customer simultaneously receives and consumes the benefits provided by the Company. Revenue is recognised on a straight-line basis because the Company's inputs are expended evenly throughout the performance period.

 

Trading income is recognised at a point in time when the customer obtains control of the distinct good.

 

4.11     Leases

 

At inception of a contract, the Company assesses whether the contract is, or contains, a lease. A contract is, or contains, a lease if the contract conveys the right to control the use of an identified asset for a period of time in exchange for consideration. Control is conveyed where the customer has both the right to direct the use of the identified asset and to obtain substantially all of the economic benefits from that use.

 

As a lessee

 

Where the contract contains lease component(s) and non-lease component(s), the Company has elected not to separate non-lease components and accounts for each lease component and any associated non-lease components as a single lease component for all leases.

 

At the lease commencement date, the Company recognises a right-of-use asset and a lease liability, except for short-term leases that have a lease term of 12 months or less and leases of low-value assets. When the Company enters into a lease in respect of a low-value asset, the Company decides whether to capitalise the lease on a lease-by-lease basis. The lease payments associated with those leases which are not capitalised are recognised as an expense on a systematic basis over the lease term.

 

Where the lease is capitalised, the lease liability is initially recognised at the present value of the lease payments payable over the lease term, discounted using the interest rate implicit in the lease or, if that rate cannot be readily determined, using a relevant incremental borrowing rate. After initial recognition, the lease liability is measured at amortised cost and interest expense is calculated using the effective interest method. Variable lease payments that do not depend on an index or rate are not included in the measurement of the lease liability and hence are charged to profit or loss in the accounting period in which they are incurred.

 

The right-of-use asset recognised when a lease is capitalised is initially measured at cost, which comprises the initial amount of the lease liability plus any lease payments made at or before the commencement date, and any initial direct costs incurred. Where applicable, the cost of the right-of-use assets also includes an estimate of costs to dismantle and remove the underlying asset or to restore the underlying asset or the site on which it is located, discounted to their present value, less any lease incentives received. The right-of-use asset is subsequently stated at cost less accumulated depreciation (Note 17) and impairment losses.

 

The lease liability is remeasured when there is a change in future lease payments arising from  a change in an index or rate, or there is a change in the Company's estimate of the amount expected to be payable under a residual value guarantee, or there is a change arising from the reassessment of whether the Company will be reasonably certain to exercise a purchase, extension or termination option. When the lease liability is remeasured in this way, a corresponding adjustment is made to the carrying amount of the right-of-use asset, or is recorded in profit or loss if the carrying amount of the right-of-use asset has been reduced to zero.

 

The Company presents right-of-use assets and lease liabilities separately in the statement of financial position.

 

4.12     Employee benefits

 

Employee benefits comprise short-term employee benefits and contributions to defined contribution retirement plans.

 

Short-term employee benefits, including salaries, annual bonuses, paid annual leave and leave passage, 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.

 

Contributions to the defined contribution scheme are charged to profit or loss when incurred.

 

4.13     Government grants

 

Government grants are recognised at their fair value where there is reasonable assurance that the grant will be received and all attaching conditions will be complied with. When the grant related to an expense item, it is recognised as income on a systematic basis over the periods that the costs, which it is intended to compensate, are expensed.

 

Where the grant relates to an asset, the fair value is credited to a deferred income account and is released to profit or loss over the expected useful life of the relevant asset by equal annual instalments or deducted from the carrying amount of the asset and released to profit or loss by way of a reduced depreciation charge.

 

4.14     Income tax

 

Income tax expense for the year comprises current and deferred tax. Tax is recognised in the statement of profit or loss and other comprehensive income, 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 end of the reporting period in the countries where the Company operates and generates taxable income. Management periodically evaluates 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 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 a 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 end of the reporting period 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 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.

 

4.15     Provisions and contingent liabilities

 

Provisions are recognised for other liabilities of uncertain timing or amount when the Company has a legal or constructive obligation arising as a result of a past event, it is probable that an outflow of economic benefits will be required to settle the obligation and a reliable estimate can be made. Where the time value of money is material, provisions are stated at the present value of the expenditure expected to settle the obligation.

 

Where it is not probable that an outflow of economic benefits will be required, or the amount cannot be estimated reliably, the obligation is disclosed as a contingent liability, unless the probability of outflow is remote.  Possible obligations, whose existence will only be confirmed by the occurrence or non-occurrence of one or more future events are also disclosed as contingent liabilities unless the probability of outflow is remote.

 

4.16     Events after the reporting period

 

Events after the reporting period that provide additional information about the Company at the end of the reporting period or those that indicate the going concern assumption is not appropriate are adjusting events and are reflected in the financial statements. Events after the reporting period that are not adjusting events are disclosed in the notes to the financial statements when material.

 

4.17     Related parties

 

A person or a close member of that person's family is related to the Company if that person:

 

(i)         has control or joint control over the Company;

(ii)        has significant influence over the Company; or

(iii)       is a member of the key management personnel of the Company or the Company's parent.

 

An entity is related to the Company if any of the following conditions applies:

 

(i)         The entity and the Company are members of the same group (which means that each parent, subsidiary and fellow subsidiary is related to the others).

(ii)        One entity is an associate or joint venture of the other entity (or an associate or joint venture of a member of a group of which the other entity is a member).

(iii)       Both entities are joint ventures of the same third party.

(iv)       One entity is a joint venture of a third entity and the other entity is an associate of the third entity.

(v)        The entity is a post-employment benefit plan for the benefit of employees of either the Company or an entity related to the Company.

(vi)       The entity is controlled or jointly controlled by a person identified in the above paragraph.

(vii)      A person identified in (i) of the above paragraph has significant influence over the entity or is a member of the key management personnel of the entity (or of a parent of the entity).

(viii)     The entity, or any member of a group of which it is a part, provides key management personnel services to the Company or to the Company's parent.

 

Close members of the family of a person are those family members who may be expected to influence, or be influenced by, that person in their dealings with the entity.

 

 

5.         KEY SOURCES OF ESTIMATION UNCERTAINTY

 

The following are the key assumptions concerning the future and other key sources of estimation uncertainty at the end of the reporting period that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year.

 

Revenue recognition on service contracts

 

The Company recognises revenue on service contracts from supply, design and installation of closed circuit television and surveillance systems by reference to the progress towards complete satisfaction of the relevant performance obligation using the input method, measured based on the proportion of contract costs incurred for work performed to date relative to the estimated total contract costs. The management regularly discusses with the project team in order to review and revise the estimates of the total contract costs and stage of completion of the work performed to date with reference to the performance and status of corresponding service contract work. Accordingly, revenue recognition on service contracts involves a significant degree of management estimates and judgment, with estimates being made to assess the total contract costs and contract costs incurred for work performed to date.

 

The management reviews and revises the estimates of total contract costs and contract costs incurred for work performed to date as the contract progresses, the actual outcome of the contract in terms of its total costs may be higher or lower than the estimates and this will affect the revenue and profit recognised.

 

Estimated provision of ECL for receivables measured at amortised cost and contract assets

 

The management of the Company estimates the amount of impairment loss for ECL on receivables measured at amortised cost and contract assets based on the credit risk of these assets. The amount of the impairment loss based on ECL model is measured as the difference between all contractual cash flows that are due to the Company in accordance with the contract and all the cash flows that the Company expects to receive, discounted at the effective interest rate determined at initial recognition. Where the future cash flows are less than expected, or being revised downward due to changes in facts and circumstances, a material impairment loss may arise.

 

The provision of ECL is sensitive to changes in estimates.

 

Income taxes

 

The Company is subject to profits tax in Hong Kong. Significant estimates are required in determining the provision for income taxes. There are many transactions and calculations for which the ultimate tax determination is uncertain during the ordinary course of business. Where the final tax outcome of these matters is different from the amounts that were initially recorded, such differences will impact the income tax and deferred tax provisions in the period in which such determination is made.

 

As at 31 March 2021, the Company has unused tax losses of approximately £1,452,000 (2020: £1,838,000) available for offset against future profits and no deferred tax asset has been recognised thereon. 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 statement of profit or loss and other comprehensive income for the period in which such a recognition takes place.

 

 

6.         FINANCIAL INSTRUMENTS

 

(a)        Categories of financial instruments

 

		2021		2020
		£		£
Financial assets
Amounts due from related companies		2,842,805		3,157,799
Deposit placed for a life insurance policy		862,476		941,772
Trade and other receivables		1,708,494		2,406,863
Cash and bank balances		284,354		980,238
Financial liabilities
Trade and other payables		5,179,172		3,824,759
Amount due to a related company		393,074		437,500
Bank borrowings		561,535		682,486
Lease liabilities		64,883		284,165

 

(b)        Financial risk management objectives and policies

 

Details of the Company's major financial instruments are disclosed in the respective notes. The risks associated with these financial instruments include currency risk, interest rate risk, credit risk and liquidity risk. The policies on how these risks are mitigated are set out below. The Company's management manages and monitors these exposures to ensure appropriate measures are implemented in a timely and effective manner.

 

(i)         Market risk

 

Currency risk

 

The Company has foreign currency transactions and foreign currency denominated financial assets and liabilities, which expose the Company to foreign currency risk.

 

The carrying amounts of the Company's foreign currency denominated financial assets and liabilities at the end of each reporting period are as follows:

 

	Assets				Liabilities
	2021		2020		2021		2020
	£		£		£		£
Renminbi	5,178		5,323		571,306		568,750
United States dollar	869,314		948,100		598,596		1,023,750

 

The Company currently does not have any policy on hedges of foreign currency risk.  However, the management monitors the foreign currency risk exposure and will consider hedging significant foreign currency risk should the need arise.

 

The following table details the Company's sensitivity to a 5% increase and decrease in Sterling Pound against the relevant foreign currencies with all other variables held constant. 5% (2020: 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 currency denominated financial instruments and adjusts their translation at the end of the reporting period for a 5% (2020: 5%) change in foreign currency rates. 

 

	2021		2020
	£		£
Renminbi
Post-tax profit for the year	29,796		29,654
United States dollar
Post-tax profit for the year	14,248		3,982

Interest rate risk

 

The Company is exposed to fair value interest rate risk in relation to its bank deposits. The Company is exposed to cash flow interest rate risk due to fluctuation of the prevailing market interest rate on bank borrowings which carry interest at prevailing market interest rates as shown in notes 27 and 33 to the financial statements.

 

The Company currently does not have an interest rate hedging policy. However, the management monitors interest rate exposure and will consider hedging significant interest rate exposure should the need arises.

 

The Company's exposure to interest rates on financial liabilities is detailed in the liquidity risk management section of this note.

 

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 end of the reporting period and on the assumption that the amount outstanding at the end of the reporting period was outstanding for the whole year and held constant throughout the financial year. The 25 basis points increase or decrease represents the management's assessment of a reasonably possible change in interest rates over the period until the next fiscal year. The analysis is performed on the same basis for 2020.

 

For the year ended 31 March 2021, if interest rates had been 25 basis points higher/lower with all other variables held constant, the Company's post-tax profit for the year would increase/decrease by approximately £4,584 (2020: £4,081).

 

(ii)       Credit risk

 

At 31 March 2021, 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 statement of financial position.

 

In order to minimise credit risk, the management has a credit policy in place and the exposure to these credit risks is monitored on an ongoing basis.  Credit evaluations of the counterparties' financial position and conditions are performed on each and every major debtor periodically. 

 

The Company measures ECLs for trade and other receivables and contract assets at an amount calculated using a provision matrix, details of which are set out in notes 21 and 22 to the financial statements. At the end of the reporting period, the Company had concentrations of credit risk where trade and other receivables balance of the Company's largest external customer exceeds 10% of the total trade and other receivables at the end of the reporting period.

 

The credit risk on deposit placed for a life insurance policy and liquid funds is limited because the counterparties are banks/financial institutions with high credit ratings assigned by international credit rating agencies.

 

The Company's exposure credit risk is considered limited.

 

(iii)      Liquidity risk

 

The Company is responsible for its own cash management, including the raising of loans to cover the expected cash demands. In managing liquidity risk, the Company's policy is to regularly monitor current and expected liquidity requirements and its compliance with lending covenants, to ensure that it maintains sufficient reserves of cash and adequate committed funding lines from the financial institutions to meet its liquidity requirements in the short and longer term. At 31 March 2021, the Company's banking facilities amounted to £5,292,641 (2020: £7,858,538) and the unused facilities were £3,458,873 (2020: £5,903,189).

 

The following table details the contractual maturities of the Company's non-derivative financial liabilities at the end of each reporting period, which is based on the undiscounted cash flows and the earliest date on which the Company can be required to pay. The table includes both interest and principal cash flows.

	2021
	Weighted		Within		More than		More than				Carrying
	average		1 year		1 year but		2 years but		Total		amount
	effective		or on		less than		less than		undiscounted		at 31
	interest rate		demand		2 years		5 years		cash flow		March 2021
	%		£		£		£		£		£
Trade and other payables	Nil		5,179,172		-		-		5,179,172		5,179,172
Amount due to a related company	Nil		-		393,074		-		393,074		393,074
Bank borrowings	1.61		562,280		-		-		562,280		561,535
Lease liabilities	5.125		44,744		23,276		-		68,020		64,883
			5,786,196		416,350		-		6,202,546		6,198,664

 

		2020
		Weighted		Within		More than		More than				Carrying
		average		1 year		1 year but		2 years but		Total		amount
		effective		or on		less than		less than		undiscounted		at 31
		interest rate		demand		2 years		5 years		cash flow		March 2020
		%		£		£		£		£		£
	Trade and other payables	Nil		3,708,335		-		-		3,708,335		3,708,335
	Amount due to a related company	Nil		-		437,500		-		437,500		437,500
	Bank borrowings	3.55		684,538		-		-		684,538		682,486
	Lease liabilities	5.125		222,031		72,444		-		294,475		284,165
				4,614,904		509,944		-		5,124,848		5,112,486

 

(c)        Fair value

 

The directors of the Company consider that the carrying amounts of financial assets and financial liabilities recorded at amortised cost in these financial statements approximate their fair values at the end of the reporting period.

 

(d)        Capital risk management

 

The primary objectives when managing capital are to safeguard the Company's ability to continue as a going concern, so that it can continue to provide returns for shareholders and benefits for other stakeholders and to maintain an optimal capital structure to reduce the cost of capital.

 

The Company actively and regularly reviews and manages the 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 Company monitors its capital structure on the basis of a net debt-to-adjusted capital ratio.  For this purpose, net debt is defined as total debt less bank deposits and cash and cash equivalents. Adjusted capital comprises all components of equity less proposed dividends but not yet accrued.

 

The strategy during 2021, which is unchanged from 2020, is to maintain the net debt-to-adjusted capital ratio as low as feasible.  In order to maintain or adjust the ratio, the Company may adjust the amount of dividends paid to shareholders, return capital to shareholders, issue new shares or sell assets to reduce debt. 

 

The net debt-to-adjusted capital ratio of the Company at the end of the reporting period is as follows:

 

	2021		2020
	£		£
Total liabilities	7,770,909		6,545,356
Cash and bank balances	(284,354)		(980,238)
Net debt	7,486,555		5,565,118
Total equity	8,159,891		8,706,138
Net debt-to-adjusted capital ratio	92%		64%

 

 

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 allocation and assessment of segment performance focuses on types of goods or services delivered or provided. The Company has a single reportable operating segment in security and surveillance business for the year ended 31 March 2021.

 

(a)        Segment revenues and results

 

The following is an analysis of the Company's revenue and results by operating segment:

 

	2021		2020
	£		£
Segment revenue by major products and services
-   Construction contracts	9,048,983		8,891,163
-   Maintenance contracts	1,650,094		1,625,775
-   Product sales	246,210		211,606
Revenue from contracts with customers and external customers	10,945,287		10,728,544
Segment profit	637,363		546,926
Finance costs	(74,009)		(95,243)
Profit before income tax	563,354		451,683

 

(b)        Information about major customers

 

Revenue of approximately £8,622,281 (2020: £8,812,800) is derived from one external customer (2020: one customer), who contributed to 10% or more of the Company's revenue in 2021 and 2020.

 

 

8.         OTHER INCOME

 

	2021		2020
	£		£
Interest income	26,773		36,905
Government grants - Note	392,936		-
Gain on lease modification	122		-
Sundry income	2,729		-
	422,560		36,905

 

Note:

 

Government grants represent the approved amount of wage subsidies under the Employment Support Scheme launched by the HKSAR Government and subsidies received from the Anti-Epidemic Fund of the HKSAR Government.

 

 

9.         OTHER GAINS AND LOSSES, NET

 

	2021		2020
	£		£
Foreign exchange loss	(689)		(11,250)
Gain on disposal of plant and equipment	-		201
Inventories written-off	(32,787)		-
	(33,476)		(11,049)

 

 

10.       EXPENSES BY NATURE

 

	2021			2020
	£			£
Cost of inventories recognised as expenses	5,975,575			5,709,694
Sub-contracting costs	1,341,994			1,185,287
Depreciation - owned plant and equipment	55,607			56,694
Depreciation - right-of-use assets	173,933			179,977
Research and development costs	-			23,875
Selling and distribution cost	3,189			2,709
Short-term lease expenses	86,680			54,411
Other expenses	437,568			453,342
Staff costs, including directors' remuneration
-   Wages and salaries	2,494,170			2,415,640
-   Pension scheme contributions	102,388			99,379
	2,596,558			2,515,019
Auditor's remuneration
-   Audit services	25,904			26,466
Total cost of sales, selling and distribution, administrative expenses	10,697,008			10,207,474

 

 

11.       DIRECTORS' REMUNERATION

 

Directors' remuneration for the year is as follows:

 

	Salaries, bonuses and allowances	Pension scheme contributions	2021
	£	£	£
Executive directors
Stephen Sin Mo KOO	-	-	-
Peter Yip Tak CHAN	79,555	1,773	81,328
Keung Hung LI	49,384	1,330	50,714
Danny Kwok Fai YIP	74,317	1,773	76,090
Ivan Chi Hung CHAN	49,800	1,330	51,130
	253,056	6,206	259,262
Non-executive directors
Nicholas James LYTH	14,183	-	14,183
Ivor Colin SHRAGO	14,183	-	14,183
	28,366	-	28,366
	281,422	6,206	287,628

 

 

Messrs. Keung Hung LI and Ivan Chi Hung CHAN were appointed as the Company's directors on 24 June 2020.

 

	Salaries, bonuses and allowances	Pension scheme contributions	2020
	£	£	£
Executive directors
Stephen Sin Mo KOO	-	-	-
Peter Yip Tak CHAN	74,399	1,812	76,211
Chun Pan WONG	74,410	1,359	75,769
Danny Kwok Fai YIP	72,108	1,812	73,920
Mike Chiu Wah CHAN	51,472	1,057	52,529
	272,389	6,040	278,429
Non-executive directors
Nicholas James LYTH	14,497	-	14,497
Ivor Colin SHRAGO	14,497	-	14,497
	28,994	-	28,994
	301,383	6,040	307,423

 

 

 

Messrs. Mike Chiu Wah CHAN and Chun Pun WONG resigned as the Company's directors on 31 October 2019 and 26 December 2019 respectively.

 

 

12.       FINANCE COSTS

 

	2021		2020
	£		£
Interest expense on bills payable and factoring	49,479		61,501
Interest expense on bank borrowings	12,805		21,205
Interest expense on bank overdraft	4,682		-
Interest on lease liabilities	7,043		12,537
	74,009		95,243

 

13.       INCOME TAX

 

(a)        Income tax in the statement of profit or loss and other comprehensive income

 

No provision for Hong Kong profits tax has been accrued for in these financial statements as the Company has unused tax losses brought forward to offset against its taxable profit for the year.

 

Reconciliation between income tax and profit before income tax is as follows:

 

	2021		2020
	£		£
Profit before income tax	563,354		451,683
Notional tax on profit before income tax, calculated at Hong Kong profits tax rate of 16.5%	92,953		74,528
Tax effect of non-taxable income	(64,835)		(43)
Tax effect of non-deductible expenses	13,133		10,918
Tax effect of temporary differences not recognised	(6,595)		(7,440)
Utilisation of unrecognised tax losses	(34,656)		(77,963)
Income tax	-		-

 

(b)        Deferred tax

 

At 31 March 2021, the Company's significant temporary difference included unused tax losses of £1,452,190 (2020: £1,838,451) available for offset against future taxable profits. No deferred tax asset has been recognised due to the uncertainty of future profit streams.

 

	2021		2020
	£		£
Balance at beginning of year	1,838,451		2,178,697
Set-off against assessable profit for the year	(210,035)		(472,506)
Foreign exchange difference	(176,226)		132,260
Balance at end of year	1,452,190		1,838,451

 

No provision for deferred tax liabilities has been made in the financial statements as the tax effect of temporary differences arising from depreciation allowances is immaterial to the Company.

 

 

14.       EARNINGS PER SHARE

 

The calculation of basic earnings per share is based on the profit attributable to the equity shareholders of the Company for the year of £563,354 (2020: £451,683), and the weighted average of 383,677,323 (2020: 383,677,323) ordinary shares in issue during the year.

 

There were no potential dilutive instruments at either financial year end.

 

15.       DIVIDENDS

 

(i)         Dividends payable to equity shareholders of the Company attributable to the year:

 

	2021		2020
	£		£
Final dividend proposed after the reporting period of 0.26 HK cents, equivalent to 0.0243 pence per ordinary share (2020: 0.55 HK cents, equivalent to 0.0573 pence, per ordinary share)	93,361		219,815

 

The final dividend proposed after the reporting period has not been recognised as a liability at the end of the reporting period.

 

(ii)        Dividends payable to equity shareholders of the Company attributable to the previous financial year, approved and paid during the year

 

	2021		2020
	£		£
Final dividend in respect of the previous financial year, approved and paid during the year, of 0.55 HK cents, equivalent to 0.05417 pence, per ordinary share (2020: 0.55 HK cents, equivalent to 0.05537 pence per ordinary share)	207,843		212,447

 

 

16.       PLANT AND EQUIPMENT

	Furniture and fixtures		Computer equipment		Motor vehicles		Total
	£		£		£		£
Cost
At 1 April 2019	170,995		102,387		95,700		369,082
Additions	4,163		12,180		23,155		39,498
Disposal	-		-		(3,624)		(3,624)
Foreign translation difference	11,811		7,408		7,207		26,426
At 31 March 2020	186,969		121,975		122,438		431,382
Additions	15,310		16,738		-		32,048
Foreign translation difference	(19,747)		(13,220)		(12,433)		(45,400)
At 31 March 2021	182,532		125,493		110,005		418,030
Accumulated depreciation
At 1 April 2019	58,134		84,233		83,569		225,936
Charge for the year	31,195		11,038		14,461		56,694
Disposal	-		-		(3,624)		(3,624)
Foreign translation difference	5,049		6,129		6,077		17,255
At 31 March 2020	94,378		101,400		100,483		296,261
Charge for the year	31,755		12,155		11,697		55,607
Foreign translation difference	(11,165)		(10,901)		(10,786)		(32,852)
At 31 March 2021	114,968		102,654		101,394		319,016
Net book value
At 31 March 2021	67,564		22,839		8,611		99,014
At 31 March 2020	92,591		20,575		21,955		135,121

 

17.         RIGHT-OF-USE ASSETS

 

			Motor		Leasehold
			vehicle		properties		Total
			£		£		£
Cost
At 1 April 2019			-		280,492		280,492
Additions			-		157,254		157,254
Foreign translation difference			-		24,593		24,593
At 31 March 2020			-		462,339		462,339
Additions			35,163		-		35,163
Expiry of lease arrangements			-		(283,310)		(283,310)
Lease modification			-		(60,539)		(60,539)
Foreign translation difference			(1,751)		(29,828)		(31,579)
At 31 March 2021			33,412		88,662		122,074
Accumulated depreciation
At 1 April 2019			-		-		-
Charge for the year			-		179,977		179,977
Foreign translation difference			-		6,243		6,243
At 31 March 2020			-		186,220		186,220
Charge for the year			5,861		168,072		173,933
Expiry of lease arrangements			-		(283,310)		(283,310)
Lease modification			-		(2,523)		(2,523)
Foreign translation difference			(292)		(13,046)		(13,338)
At 31 March 2021			5,569		55,413		60,982
Net book value
At 31 March 2021			27,843		33,249		61,092
At 31 March 2020			-		276,119		276,119

 

            The Company has entered into lease agreements to obtain the right to use motor vehicle and properties as its office premises and warehouse and as a result incurred lease liabilities (Note 26). The leases typically run for an initial period of 2 to 5 years.

 

 

18.       INTEREST IN ASSOCIATE

					2021		2020
					£		£
Cost of unlisted investment in associate					5		-

Notes:

 

Details of the Company's associate, which are accounted for using the equity method in the financial statements, at the end of the reporting period, are as follows:

 

	Place of	Issued and	Proportion		Proportion
	establishment	paid-up	of ownership		of voting		Principal
Name of associate	and operation	capital	interest		power held		activity
Vision Key International Limited	Hong Kong	HKD100	50%		50%		Inactive

           

19.       DEPOSIT PLACED FOR A LIFE INSURANCE POLICY

 

            In April 2019, the Company entered into a life insurance policy with an insurance company to insure Mr. Stephen Sin Mo KOO, a Director of the Company. Under the policy, the Company is the beneficiary and policy holder and the total insured sum is US$2,500,000. The Company has paid an upfront deposit of US$1,203,528. The Company can terminate the policy at any time and receive cash back based on the cash value of the policy at the date of withdrawal, which is determined by the upfront deposit payment of US$1,203,528 plus accumulated interest earned and minus the accumulated insurance charge and policy expense charge ("Cash Value").

 

In addition, if withdrawal is made between the first to nineteenth policy year, as appropriate, a specified amount of surrender charge would be imposed.

 

The insurance company will pay the Company an interest of 4.25% per annum on the outstanding Cash Value for the first year. Commencing on the second year, the interest will be at least 2% guarantee interest per annum. The guarantee interest rate is also the effective interest rate for the deposit placed on initial recognition, determined by discounting the estimated future cash receipts through the expected life of the insurance policy, excluding the financial effect of surrender charge.

 

The deposit placed is carried at amortised cost using the effective interest method. The Directors considered that the possibility of terminating the policy during the first to nineteenth policy year was low and the expected life of the insurance policy remained unchanged since the initial recognition. Accordingly, the difference between the carrying amount of deposit placed for a life insurance policy as at 31 March 2021 and the Cash Value of the life insurance policy is insignificant.

 

At 31 March 2021, the life insurance policy has been pledged as security for banking facilities granted to the Company (Note 33).

 

 

20.       INVENTORIES

 

	2021		2020
	£		£
Raw materials	279,261		309,386
Finished goods	1,304,835		724,903
	1,584,096		1,034,289

 

No provision for obsolete inventories is recognised for the year (2020: £nil) on slow-moving inventories.

 

Inventories write-off of £32,787 (2020: £nil) was recorded for the year.

 

 

21.       TRADE AND OTHER RECEIVABLES

 

	2021		2020
	£		£
Trade receivables	403,230		634,931
Less: allowance for doubtful debts	(59,319)		(66,024)
Trade receivables, net	343,911		568,907
Other receivables	1,198,861		1,330,320
Deposits and prepayments	165,717		507,636
Total carrying amount	1,708,489		2,406,863

 

All of the trade and other receivables are expected to be recovered within one year. 

 

21.       TRADE AND OTHER RECEIVABLES (CONTINUED)

 

Trade receivables

 

Impairment losses in respect of trade receivables are recorded using an allowance account unless the Company is satisfied that recovery of the amount is remote, in which case the impairment loss is written off against trade receivables directly. Movements in the allowance for doubtful debts:

 

	2021		2020
	£		£
At beginning of year	66,024		61,806
Foreign translation difference	(6,705)		4,218
At end of year	59,319		66,024

 

The ageing analysis of trade receivables, net at the end of the reporting period is as follows:

 

	2021		2020
	£		£
0 to 90 days	325,415		470,672
91 to 365 days	3,793		88,190
Over 365 days	14,703		10,045
	343,911		568,907

 

The Company measures loss allowances for trade receivables at an amount equals to lifetime ECLs, which is calculated using a provision matrix. As the Company's historical credit loss experience does not indicate significantly different loss patterns for different customer segments, the loss allowance based on past due status is not further distinguished between the Company's different customer bases.

 

The following table provides information about the Company's exposure to credit risk and ECLs for trade receivables at the end of the reporting period:

 

	2021						2020
	Expected  loss rate		Gross carrying amount		Loss allowance		Expected  loss rate		Gross carrying amount		Loss allowance
	%		£		£		%		£		£
0 to 90 days	-		325,415		-		-		470,672		-
91 to 365 days	-		3,793		-		-		88,190		-
Over 365 days	80		74,022		59,319		87		76,069		66,024
			403,230		59,319				634,931		66,024

 

Expected loss rates are based on actual loss experience over the past 3 years. These rates are adjusted to reflect differences between economic conditions during the periods over which the historic data has been collected, current conditions and the Company's view of economic conditions over the expected lives of the receivables.

 

Other receivables

 

The amount of £284,072 (2020: £406,007) in other receivable is interest-free, repayable on demand and due from Mr. Stephen Sin Mo KOO, a Director of the Company.

 

No loss allowance was recognised in profit or loss during the years ended 31 March 2021 and 2020.

 

22.       CONTRACT ASSETS

 

	2021		2020
	£		£
Supply, design and installation of closed circuit television and surveillance systems services	8,439,488		6,243,276

 

The contract assets primarily relate to the Company's right to consideration for work completed and not billed because the rights are conditioned on the Company's future performance in achieving specified milestones at the reporting date on the comprehensive architectural services. The contract assets are transferred to trade receivables when the rights become unconditional. The Company typically transfer contract assets to trade receivables upon achieving the specified milestones in the contracts.

 

There was no retention monies held by customers for contract works performed at the end of each reporting period. The Company classifies these contract assets as current because the Company expects to realise them in its normal operating cycle.

 

The Company makes specific provision for contract assets whose credit risk are considered significantly increased or identified as credit-impaired. For remaining balance of contract assets, the Company makes general provision based on ageing analysis and project status.

 

As at 31 March 2021, the gross amount of contract assets was £8,530,832 (2020: £6,344,943) and the provision of impairment was £91,344 (2020: £101,667).

 

The following table provides information about the Company's exposure to credit risk and ECLs for contract assets at the end of the reporting period:

 

	2021						2020
	Expected  loss rate		Gross carrying amount		Loss allowance		Expected  loss rate		Gross carrying amount		Loss allowance
	%		£		£		%		£		£
Within 3 years	-		8,439,488		-		-		6,243,276		-
Over 3 years	100		91,344		91,344		100		101,667		101,667
			8,530,832		91,344				6,344,943		101,667

 

No loss allowance was recognised in profit or loss during the years ended 31 March 2021 and 2020.

 

 

23.      CASH AND BANK BALANCES

 

(a)        Cash and cash equivalents

 

	2021		2020
	£		£
Cash at bank and in hand	284,354		679,186
Deposits with banks	-		301,052
	284,354		980,238
Less: restricted cash	-		(301,052)
Cash and cash equivalents in the statement of cash flows	284,354		679,186

 

(b)        Cash and bank balances are denominated in the following currencies:

 

	2021		2020
	£		£
Hong Kong dollar	273,095		970,936
Renminbi	5,231		5,904
United States dollar	4,621		2,544
Others	1,407		854

 

(c)        Restricted cash

 

At 31 March 2020, bank balance of £301,052 was restricted as bank deposits with maturities less than three months. Such restricted bank balances were held for the purpose of the issuance of performance bonds in respect of maintenance contracts undertaken by the Company.

 

At 31 March 2021, the effective interest rate on bank deposits was 0.2% (2020: ranged from 0.2% to 2.7%) per annum.

 

 

24.       TRADE AND OTHER PAYABLES

 

	2021		2020
	£		£
Current liabilities
Trade payables	2,109,753		1,206,558
Bills payable	1,272,233		1,272,863
Accruals and other payables	1,797,186		1,345,338
	5,179,172		3,824,759
Non-current liabilities
Due to a related company (Note 30)	393,074		437,500
	5,572,246		4,262,259

 

Trade and other payables are expected to be repaid within one year, other than the amount due to a related company.

 

Bills payable carry interest at annual rate at the Hong Kong Best Lending Rate and are repayable within 90 days.

 

 

25.       CONTRACT LIABILITIES

 

	2021		2020
	£		£
Supply, design and installation of closed circuit television and surveillance systems services	1,572,245		1,316,446

 

Contract liabilities represent the Company's obligation to transfer performance obligation to customers for which the Company has received considerations from the customers.

 

Revenue recognised during the year ended 31 March 2021 that was included in the contract liabilities at the beginning of the year was amounted to £1,316,446 (2020: £956,616).

 

 

26.       LEASE LIABILITIES

 

The following table shows the remaining contractual maturities of the Company's lease liabilities at the end of the current year:

 

	Present value of				Minimum
	minimum lease payments				lease payments
	2021		2020		2021		2020
	£		£		£		£
Within one year	42,959		213,288		44,744		222,031
In the second to fifth year	21,924		70,877		23,276		72,444
	64,883		284,165		68,020		294,475
Less: Future finance charges					(3,137)		(10,310)
Present value of lease obligation					64,883		284,165

 

 

27.       BANK BORROWINGS

 

	2021		2020
	£		£
Revolving loans	561,535		682,486

 

The loans are denominated in Hong Kong dollar and carry interest at annual rate at 1.5% over Hong Kong Interbank Offered Rate.

 

Details of securities are disclosed in note 33 to the financial statements.

 

 

28.       SHARE CAPITAL

 

	2021		2020
	£		£
Issued and fully paid:
383,677,323 ordinary shares of HK$55,033,572, translated at historical rate	3,890,257		3,890,257

 

The Company has one class of ordinary shares which has no par value.

 

 

29.       EMPLOYEE RETIREMENT BENEFITS

 

The Company operates a Mandatory Provident Fund scheme (the "MPF scheme") under the Hong Kong Mandatory Provident Fund Schemes Ordinance for employees employed under the jurisdiction of the Hong Kong Employment Ordinance. The MPF scheme is a defined contribution retirement scheme administered by independent trustees. Under the MPF scheme, the Company and its employees are each required to make contributions to the scheme at 5% of the employees' relevant income, subject to a cap of monthly relevant income of HK$30,000. Contributions to the MPF scheme vest immediately.

 

Saved as set out above, the Company has no other material obligations to make payments in respect of retirement benefits of the employees. 

 

 

30.       RELATED PARTY TRANSACTIONS

 

Compensation of key management personnel

 

The remuneration of the key management personnel of the Company during the year was as follows:

 

	2021		2020
	£		£
Salaries, bonus and allowances	320,660		560,115

 

The remuneration of key management personnel comprises the remuneration of Executive Directors and key executives.

 

Executive Directors include the Executive Chairman, Chief Executive Officer 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 Company and market trends. Further information about the Remuneration Committee and the Directors' remuneration is provided in the Remuneration Report and the Report on Corporate Governance to the Annual Report and note 11 to the financial statements.

 

Key executives include the Director of Operations, Software Development Manager and Sales Manager 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)        At 31 March 2021, there are balances of £284,072 (2020: £406,007) due from Mr. Stephen Sin Mo KOO respectively, a Director of the Company, which are unsecured, interest-free and repayable on demand (Notes 21).

 

(b)        At 31 March 2021, there is a payable balance of £393,074 (2020: £437,500) due to a shareholder, Univision Holdings Limited, which is unsecured, interest-free and repayable after 12 months (Note 24).

 

(c)        At 31 March 2021, there are receivable balances of £2,842,805 (2020: £3,157,799) due from related companies controlled by common shareholders of the Company, which are guaranteed by a shareholder of the Company, interest-free and repayable after 12 months.

 

Apart from the transactions disclosed above and elsewhere in these financial statements, the Company had no other material transactions with related parties during the year.

 

 

31.       CASH FLOWS FROM LIABILITIES ARISING FROM FINANCING ACTIVITIES

 

The table below details changes in the Company's liabilities arising from financing activities, including both cash and non-cash changes. Liabilities arising from financing activities are liabilities for which cash flows were, or future cash flows will be, classified in the Company's statement of cash flows as cash flows arising from financing activities.

 

	Amount due toa related company		Bank borrowings		Lease liabilities		Total
	£		£		£		£
At 1 April 2019	409,556		-		280,492		690,048
Financing cash flows:
New bank loans	-		659,606		-		659,606
Interest paid	-		(21,205)		-		(21,205)
Capital element of lease liabilities paid	-		-		(172,201)		(172,201)
Interest element of lease liabilities paid	-		-		(12,537)		(12,537)
Other changes:
New leases	-		-		157,254		157,254
Interest on lease liabilities	-		-		12,537		12,537
Interest expense on bank borrowings	-		21,205		-		21,205
Foreign translation difference	27,944		22,880		18,620		69,444
At 31 March 2020 and 1 April 2020	437,500		682,486		284,165		1,404,151
Financing cash flows:
Repayment of bank loans	-		(54,355)		-		(54,355)
Interest paid	-		(12,805)		-		(12,805)
Capital element of lease liabilities paid	-		-		(177,430)		(177,430)
Interest element of lease liabilities paid	-		-		(7,043)		(7,043)
Other changes:
New leases	-		-		35,163		35,163
Lease modification	-		-		(58,016)		(58,016)
Interest on lease liabilities	-		-		7,043		7,043
Interest expense on bank borrowings	-		12,805		-		12,805
Foreign translation difference	(44,426)		(66,596)		(18,999)		(130,021)
At 31 March 2021	393,074		561,535		64,883		1,019,492

 

Amounts included in the statement of cash flows for cash outflows for leases comprise the following:

           

	2021		2020
	£		£
Within:
Operating cash flows	86,680		54,411
Financing cash flows	184,473		184,738
	271,153		239,149

 

These amounts relate to the following:

           

	2021		2020
	£		£
Lease rentals paid	271,153		239,149

 

32.       COMMITMENTS

 

Capital commitments

 

At 31 March 2021, the Company did not have any material outstanding capital commitments.

 

 

33.       BANKING FACILITIES

 

At 31 March 2021, the banking facilities of the Company were as follows:

 

(a)        The revolving trade financing facilities amounted to £2,433,318 (equivalent to HK$26,000,000) and carried annual interest at the Hong Kong Dollars Best Lending Rate with a repayment term of 90 days. The facilities are subject to the fulfilment of certain covenants relating to the Company's net worth and the loans to its related parties.  If the Company is in breach of the covenants, the facilities would become payable on demand.  At 31 March 2021, the facilities were utilised to the extent of £1,272,233.

 

(b)        The revolving term facilities amounted to £1,403,837 (equivalent to HK$15,000,000) were secured by floating charges over the bills receivable from the Company's major customer. At 31 March 2021, no facilities were utilised.

 

(c)        The revolving term facilities amounted to £613,184 (equivalent to HK$6,551,867) were secured by the life insurance policy of the Company (Note 19). At 31 March 2021, the facilities were utilised to the extent of £561,535.

 

(d)        The straight line loans facilities amounted to £842,302 (equivalent to HK$9,000,000) were secured by the life insurance policy of the Company. At 31 March 2021, no facilities were utilised.

 

At 31 March 2020, the banking facilities of the Company were as follows:

 

(a)        The revolving trade financing facilities amounted to £2,187,500 (equivalent to HK$21,000,000) and carried annual interest at the Hong Kong Dollars Best Lending Rate with a repayment term of 90 days. The facilities are subject to the fulfilment of certain covenants relating to the Company's net worth and the loans to its related parties.  If the Company is in breach of the covenants, the facilities would become payable on demand.  At 31 March 2020, the facilities were utilised to the extent of £1,272,863.

 

(b)        The revolving term facilities amounted to £2,604,167 (equivalent to HK$25,000,000) were secured by floating charges over the bills receivable from the Company's major customer. At 31 March 2020, no facilities were utilised.

 

(c)        The revolving loans facilities amounted to £682,486 (equivalent to HK$6,551,867) were secured by the life insurance policy of the Company (Note 19). At 31 March 2020, these facilities were fully utilised.

 

(d)        The bonding line facilities amounted to £2,083,333 (equivalent to HK$20,000,000) were secured by a charge over deposits limited to £625,000 (equivalent to HK$6,000,000) granted by the Company. At 31 March 2020, no facilities were utilised.

 

(e)        The banking facilities for issuance of letter of credit and guarantee amounted to £301,052 (equivalent to HK$2,890,100) were secured by a charge over a fixed deposit of £301,052 (equivalent to HK$2,890,100) granted by the Company. At 31 March 2020, no facilities were utilised.

 

The Company regularly monitors its compliance with these covenants. Further details of the Company's management of liquidity risk are set out in note 6(b)(iii) to the financial statements.

 

 

34.       Contingent liabilities

 

On 14 December 2020, the Company received a writ of summons stating that it is being sued by Dimension Data China Hong Kong Limited ("Dimension Data"), and Dimension Data is alleging breach of contract on part of the Company and claiming against the Company for liquidated damages that Dimension Data has thereby suffered in the amount of HK$10,953,969 plus pre-judgment and post-judgment interest and legal costs. The Company, on the other hand, is defending the claim by alleging wrongful breach and thus repudiation of the said sub-contract by Dimension Data and counter-claiming against Dimension Data for loss and damages to be assessed and legal costs.

 

As of the date of this report, there is no mediation between the Company and Dimension Data.

 

The Company is of the opinion that the claim is highly opportunistic and without merit and the management intends to defend this claim rigorously.

 

In the opinion of directors of the Company, there were no other significant contingent liabilities from pending litigation or legal claims as at 31 March 2021.

 

 

35.       MAJOR NON-CASH TRANSACTION

 

During the year, the final dividend for the year ended 31 March 2020 payable to the shareholder, Mr. Stephen Sin Mo KOO, of £142,189 was set-off against with other receivables.

 

 

36.       EVENTS AFTER THE REPORTING PERIOD

 

On 19 August 2021, the Board of Directors proposed a final dividend for the year ended 31 March 2021. Further details are disclosed in note 15(i) to the financial statements.

 

On 19 April 2021, an additional life insurance plan ("keyman insurance plan") for the Group's Executive Chairman, Mr. Stephen Sin Mo KOO was provided by HSBC Life (International) Limited with sum insured of US$2.5million. HSBC has provided a long-term loan of approximately HK$7.1million for financing certain portion of the premium. The Company is the policy holder for the keyman insurance plan that is assigned to HSBC for security for the banking facilities.

 

 

~ ENDS ~