Listed companies must provide the information required by Appendix 7.2 of the Listing Manual. Adequate disclosure should be given to explain any material extraordinary item either as a footnote of the material extraordinary item or in the "Review of the performance of the group".

Third Quarter Financial Statement And Dividend Announcement for the Period Ended 31/12/2003

PART I  -  INFORMATION REQUIRED FOR ANNOUNCEMENTS OF QUARTERLY (Q1, Q2 & Q3), HALF-YEAR AND FULL YEAR RESULTS

1(a)  An income statement (for the group) together with a comparative statement for the corresponding period of the immediately preceding financial year.

 

MULTIVISION INTELLIGENT SURVEILLANCE LIMITED
INCOME STATEMENT
FOR THE THIRD QUARTER ENDED 31 DECEMBER 2003
(Expressed in Hong Kong dollars)
		The Group
		HK$'000
		3 months ended	3 months ended
		31/12/2003	31/12/2002
Turnover		34,394	23,300
Cost of sales		(14,870)	(11,418)
Gross profit		19,524	11,882
Other income		69	233
Selling expenses		4,059	1,720
Administrative expenses		3,593	1,607
Research and development		1,893	1,610
Profit from operations		10,048	7,178
Finance cost		(4)	(3)
Profit from ordinary activities before taxation		10,044	7,175
Taxation		(1,607)	(1,148)
Net profit for the period		8,437	6,027

1(b)(i)           A balance sheet (for the issuer and group), together with a comparative statement         as at the end of the immediately preceding financial year.

 

MULTIVISION INTELLIGENT SURVEILLANCE LIMITED
BALANCE SHEET
AS AT 31 DECEMBER 2003
(Expressed in Hong Kong dollars)
		The Group		The Company
		HK$'000		HK$'000
		As at	As at	As at	As at
		31/12/03	31/3/03	31/12/03	31/3/03
Non-current assets
Investment in subsidiary		45,000	-	19,462	19,462
Fixed assets		2,824	1,474	-	-
Intangible assets		59,269	51,115	-	-
		107,093	52,589	19,462	19,462
Current assets
Inventories		17,150	4,493	-	-
Trade receivables		39,980	25,670	-	-
Provision  for doubtful debts		-	-	-	-
Prepayments, deposits and other receivables		4,945	2,173	-	215
Amount due from subsidiary		-	-	152,302	58,831
Cash and cash equivalents		78,413	49,667	-
		140,488	82,003	152,302	59,046
Current liabilities
Obligations under hire purchase contract		-	133	-	-
Trade and other payable		2,451	10,958	173	139
Amount due to Directors		510	750	-	150
Obligations under finance leases		56	-	-	-
		3,017	11,841	173	289
Net current assets		137,471	70,162	152,129	58,757
Non-current liabilities
Obligation under hire purchase contract		-	22	-	-
Deferred taxation		9,312	4,758	-	-
Amount due to ultimate holding company
		9,312	4,780	-	-
Net assets		235,252	117,971	171,591	78,219
Representing:
Capital and reserves
Share capital		29,241	24,369	29,241	24,369
Capital contribution reserve		-	-	142,500	54,000
Contributed surplus		9,210	9,210	-	-
Share premium		142,500	54,000	-	-
Net profit/(loss) for period		23,909	25,320	-	(150)
Retained profits b/f		30,392	5,072	(150)	-
		235,252	117,971	171,591	78,219

1(b)(ii)          Aggregate amount of group borrowings and debt securities.

 

Amount repayable in one year or less, or on demand

 

Amount repayable after one year

 

Details of any collateral

 

Not applicable

 

1(c)  A cash flow statement (for the group), together with a comparative statement for the corresponding period of the immediately preceding financial year.

 

MULTIVISION INTELLIGENT SURVEILLANCE  LIMITED
STATEMENT OF CASH FLOW
FOR THE THIRD QUARTER  ENDED 31 DECEMBER 2003
(Expressed in Hong Kong dollars)
			3 months ended	3 months ended
			31/12/2003	31/12/2002
			HK$'000	HK$'000
Operating activities
Profit from ordinary activities before taxation			10,044	7,175
Adjustment for:
	Interest expenses		4	3
	Interest income		(24)	0
	Depreciation of fixed assets		408	146
	Amortisation of intangible assets		1,893	1,610
	Gain on disposal of fixed assets		-
Operating profit before changes in working capital			12,325	8,934
Changes in working capital
	(Increase)/Decrease  in inventories		(10,409)	(1,892)
	(Increase) in trade receivable		(12,328)	(1,408)
	Decrease/(Increase) in prepayment, deposits, and other receivable		(2,635)	(500)
	(Decrease)/Increase  in trade and other payable		(2,384)	1,594
	(Decrease)/Increase in amounts due to directors		(120)
Cash generated from operations			(15,551)	6,728
	Income tax refunded		-	0
	Interest received		24	0
	Interest paid		(4)	(3)
Net cash inflow/(outflow) from operating activities			(15,531)	6,725
Investing activities
	Payment for purchase of fixed assets		(734)
	Payment for development costs		(2,289)	(5,714)
	Investment in Subsidiary		(20,000)
	Proceeds from sales of fixed assets		-
			(23,023)	(5,714)
Financing activities
	Capital contributions		-
	Repayment of principal under hire purchase contract		(33)	(33)
	Issue of shares		-	58,107
	Share issue expenses		-	-
Net cash inflow from financing activities			(33)	58,074
Net increase in cash and cash equivalents			(38,587)	59,085
Cash and cash equivalents at beginning of the period			117,000	12,482
Cash and cash equivalents at end of this period			78,413	71,567
An analysis of cash and cash equivalents in as follows:
	Cash at bank and in hand		78,413	71,567

1(d)(i)   A statement (for the issuer and group) showing either (i) all changes in equity or

(ii) changes in equity other than those arising from capitalisation issues and distributions to shareholders, together with a comparative statement for the corresponding period of the immediately preceding financial year.

 

 

1(d)(ii)  Details of any changes in the company's share capital arising from rights issue, bonus issue, share buy-backs, exercise of share options or warrants, conversion of other issues of equity securities, issue of shares for cash or as consideration for acquisition or for any other purpose since the end of the previous period reported on. State also the number of shares that may be issued on conversion of all the outstanding convertibles as at the end of the current financial period reported on and as at the end of the corresponding period of the immediately preceding financial year.

 

Nil

 

2.         Whether the figures have been audited or reviewed and in accordance with which auditing standard or practice.

 

The figures have not been audited or reviewed.

 

3.          Where the figures have been audited or reviewed, the auditors’ report (including any qualifications or emphasis of a matter).

 

Not applicable

 

4.         Whether the same accounting policies and methods of computation as in the issuer most recently audited annual financial statements have been applied.

 

Except as described in section 5 below, the Group has adopted the same accounting policies and methods of computation in the financial statements for the current reporting period compared with the audited financial statements for the year ended 31 March 2003

 

5.          If there are any changes in the accounting policies and methods of computation, including any required by an accounting standard, what has changed, as well as the reasons for, and the effect of, the change.

 

Starting from the second quarter of FY2004, we have reclassified the amortization of perpetual license costs from "product development costs" to "cost of sales" in the Group's income statement in order to provide a better understanding of the nature of this cost element. Such cost reclassification does not have any profit/loss impact on the Group's income statement.

 

6.         Earnings per ordinary share of the group for the current financial period reported on and the corresponding period of the immediately preceding financial year, after deducting any provision for preference dividends.

 

 

 

7.         Net asset value (for the issuer and group) per ordinary share based on issued share capital of the issuer at the end of the:-

(a) current financial period reported on; and

(b) immediately preceding financial year.

 

 

8.         A review of the performance of the group, to the extent necessary for a reasonable understanding of the group business. It must include a discussion of the following:

(a) any significant factors that affected the turnover, costs, and earnings of the group for the current financial period reported on, including (where applicable) seasonal or cyclical factors; and

(b) any material factors that affected the cash flow, working capital, assets or liabilities of the group during the current financial period reported on.

 

Our turnover amounted to approximately HK$34.4 million for the third quarter of FY2004, an increase of approximately 47.6% from that of approximately HK$23.3 million for the same period in FY2003. The growth in turnover was due mainly to our shipment of digital video surveillance products to our distributor Elixir Group Limited which started work on one major project in Macau this quarter.

Our gross profit amounted to approximately HK$19.5 million for the third quarter of FY2004, an increase of approximately 63.9% from that of approximately HK$11.9 million for the same period in FY2003. Our overall gross profit margin improved from 51% in the third quarter of FY2003 to 57% for the same period this year. This was due mainly to (i) the decrease in our general cost of production as a result of economies of scale; (ii) the increase in sales of higher margin products such as the solution-based NetCorder Legend Series as a result of our aggressive marketing strategies and the successful roll-out of some reputable projects; (iii) the acquisition of a perpetual license for use in the application software driver which contributed significant cost savings in licensing cost.

Our distribution and administrative expenses together amounted to approximately HK$7.7 million for the third quarter of FY2004, an increase of approximately 133% from that of approximately HK$3.3 million for the same period in FY2003. The increase was attributable to the increase in turnover and our sales, administration as well as customer support headcount to cope with the expansion of our business, including the establishment of major branch offices in the PRC, Macau and the United States of America.

Our product development costs amounted to HK$1.9 million for the third quarter of FY2004, an increase of approximately 19% from that of approximately HK$1.6 million for the same period in FY2003. Such increase was due mainly to the increase in the amortisation charge of capitalised product development costs which we incurred as a result of our continuous efforts in developing technologically advanced new products to maintain our competitive edge in the marketplace.

As a result of the above, our profit after taxation attributable to shareholders amounted to HK$8.4 million for the third quarter of FY2004, representing an increase of approximately 40% from HK$6 million for the same period in FY2003.

Our intangible assets increased by approximately 16% from HK$51.1 million as at 31 March 2003 to HK$59.3 million as at 31 December 2003.

Our inventories amounted to HK$17.2 million as at 31 December 2003, an increase of approximately 282% from that of HK$4.5 million as at 31 March 2003. The increase was due mainly to anticipation for order delivery when our Macau distributor commenced one major project in Macau.

Our trade receivables increased 55% from HK$25.7 million as at 31 March 2003 to HK$40.0 million as at 31 December 2003 as we started shipping our digital video surveillance products to our distributor Elixir Group Limited which began work on its major project in Macau this quarter.

Our prepayments, deposits and other receivables increased from HK$2.2 million as at 31 March 2003 to HK$4.9 million as at 31 December 2003. This was due mainly to the expansion of our business.

Our trade and other payables decreased by HK$8.5 million from HK$11.0 million as at 31 March 2003 to HK$2.5 million as at 31 December 2003 as the last instalment payment for the acquisition of the perpetual license of use of our application software driver had been settled.

The Group's deferred tax liabilities increased by HK$4.5 million from HK$4.8 million as at 31 March 2003 to HK$9.3 million as at 31 December 2003 as a result of the tax provision made on the profit generated in the first half year of FY2004.

The Group's operating activities recorded net cash outflow of HK$15.5 million for the third quarter of FY2004 ended 31 December 2003, a HK$22.2 million difference from the net cash inflow of HK$6.7 million for the same period of FY2003. This difference was mainly because of the increase in inventories and increase in trade receivable as we started shipping our digital video surveillance products to our distributor Elixir Group Limited for its major project in Macau this quarter.

The Group's investing activities recorded net cash outflow of HK$23.0 million for the third quarter of FY2004 ended 31 December 2003, an increase of HK$17.3 million from HK$5.7 million for the same period of FY2003. This was primarily due to the investment in setting up a joint venture in the PRC.

The Group has not been engaged in any material financing activities in the third quarter of FY2004 ended 31 December 2003, in contrast to the net cash inflow of HK$58 million for the same period of FY2003. The net cash inflow seen in the earlier period  was primarily due to the receipt of proceeds from the issue of new ordinary shares on 18 December 2002.
 
Overall, we recorded a decrease in cash and cash equivalents of approximately HK$38.6 million for the third quarter of FY2004.

 

9.         Where a forecast, or a prospect statement, has been previously disclosed to shareholders, any variance between it and the actual results.

 

Not applicable

 

10.       A commentary at the date of the announcement of the significant trends and competitive conditions of the industry in which the group operates and any known factors or events that may affect the group in the next reporting period and the next 12 months.

 

Demand for digital video surveillance products and solutions continue to grow as companies look to replace their analog products with digital video surveillance solutions. The Group will continue to leverage on our knowledge and experience in analog-to-digital platform migration and the vertical markets; and focus on delivering end-to-end solutions offerings to our customers moving forward.

We are building on our strategic alliances with our telecom partners and extending alliances to such operators, bundling our products with their broadband services. This is expected to bring the Group a steady and stable growth.

While the worldwide market demand for surveillance products has soared, the market has become highly competitive with more players entering the fray. We have seen companies roll out products similar to our newly launched hardware compression based systems  with higher image resolution. The Group will continue to invest in product and solution development to ensure that we stay at the forefront of the technology curve.

 

11.   Dividend

 

(a) Current Financial Period Reported On

 

Any dividend declared for the current financial period reported on?     None

 

(b) Corresponding Period of the Immediately Preceding Financial Year

 

Any dividend declared for the corresponding period of the immediately preceding financial year? 

 

None  

 

(c) Date payable

 

Not applicable

 

(d) Books closure date

 

Registrable Transfers received by the company up to 5.00 pm on <Enter the date here> will be registered before entitlements to the dividend are determined.

 

Not applicable

 

12.   If no dividend has been declared/recommended, a statement to that effect.

 

No dividend has been declared/recommended for this period.

 

 

PART II  -  ADDITIONAL INFORMATION REQUIRED FOR FULL YEAR ANNOUNCEMENT

(This part is not applicable to Q1, Q2, Q3 or Half Year Results)

 

13.   Segmented revenue and results for business or geographical segments (of the group) in the form presented in the issuer most recently audited annual financial statements, with comparative information for the immediately preceding year.

 

Not applicable

14.   In the review of performance, the factors leading to any material changes in contributions to turnover and earnings by the business or geographical segments.

 

Not applicable

 

             15.   A breakdown of sales.

 

Not applicable

 

16.   A breakdown of the total annual dividend (in dollar value) for the issuer latest full year and its previous full year.

 

Not applicable