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".

MULTIVISION INTELLIGENT SURVEILLANCE LIMITED

Full Year Financial Statement And Dividend Announcement

Financial statements on combined results of the Group for the full year of FY2004 ended 31 March 2004. These figures have not been audited.

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
CONSOLIDATED INCOME STATEMENT
FOR THE YEAR ENDED 31 MARCH 2004
(Expressed in Hong Kong thousand dollars)
		FULL YEAR		FULL YEAR
		2004		2003
		HK$'000		HK$'000
Turnover		128,981		95,292
Cost of sales		(57,223)		(45,205)
Gross profit		71,758		50,087
Other income		3,024		2,036
Distribution expenses		(13,526)		(7,536)
Administrative expenses		(15,766)		(7,018)
Product development costs		(12,474)		(7,396)
Profit from operations		33,016		30,173
Finance cost Share of loss of an associate		(15) (736)		(15) -
Profit from ordinary activies before taxation		32,265		30,158
Income Tax		5,348		(4,838)
Profitafter taxation for the period		37,613		25,320

 

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 MARCH 2004
(Expressed in Hong Kong thousand dollars )
		The Group				The Company
		HK$'000				HK$'000
		As at		As at		As at		As at
		31.03.04		31.03.03		31.03.04		31.03.03
Non-current assets
Investment in subsidiaries		-		-		19,462		19,462
Investment in an associate		44,264		-		-		-
Fixed assets		3,481		1,474		-		-
Intangible assets		70,526		51,115		-		-
Deferred tax assets		590		-		-		-
		118,861		52,589		19,462		19,462
Current assets
Inventories		12,694		4,493		-		-
Trade receivables (net)		50,913		25,670		-		-
Prepayments, deposits and other receivables		2,171		2,173		11		215
Amount due from a subsidiary		-		-		151,991		58,831
Cash and cash equivalents		79,314		49,667		-		-
		145,092		82,003		152,002		59,046
Current liabilities
Obligations under a hire purchase contract		-		133		-		-
Trade and other payables		12,309		10,958		83		139
Provision for warranty costs		1,968		-		-		-
Amount due to Directors		650		750		-		150
		14,927		11,841		83		289
Net current assets		130,164		70,162		151,919		58,757
Non-current liabilities
Obligations under a hire purchase contract		-		22		-		-
Deferred tax liabilities		-		4,758		-		-
		-		4,780		-		-
Net assets		249,026		117,971		171,381		78,219
Representing:
Capital and reserves
Share capital Exchange reserve		29,241 70		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		37,613		25,320		(210)		(150)
Retained profits/(loss) b/f		30,392		5,072		(150)		-
		249,026		117,971		171,381		78,219

1(b)(ii) Aggregate amount of group¡¦s borrowings and debt securities

Amount repayable in one year or less, or on demand

 

As at 31/03/2004 In HK$'000		As at 31/03/2003 In HK$'000
Secured	Unsecured	Secured	Unsecured
HK$ 0	HK$ 0	HK$ 133	HK$ 0

 

Amount repayable after one year

As at 31/03/2004 In HK$'000		As at 31/03/2003 In HK$'000
Secured	Unsecured	Secured	Unsecured
HK$ 0	HK$ 0	HK$ 22	HK$ 0

 

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
CONSOLIDATED CASH FLOW STATEMENT
FOR THE YEAR ENDED 31 MARCH 2004
(Expressed in Hong Kong thousand dollars )
			Full year		Full year
		Note	2004		2003
			HK$'000		HK$'000
Operating activities
Profit from ordinary activities before taxation			32,265		30,158
Adjustment for:
	Interest expense		15		15
	Interest income		(253)		(95)
	Depreciation of fixed assets		1,693		654
	Amortisation of intangible assets		15,624		7,396
	Impairment loss on intangible assets		2,450		-
	Share of losses of an associate		736		-
	Gain on disposal of fixed assets		-		(6)
Operating profit before changes in working capital			52,530		38,122
Changes in working capital
	Decrease/(increase) in inventories		(8,201)		(890)
	Decrease/(increase) in trade receivable		(25,243)		(12,014)
	Decrease /(increase) in prepayment , deposits, and other receivable		2		(968)
	Increase/(decrease) in trade and other payables		1,351		(7,802)
	Increase/(decrease) in provision for warranty costs		1,968		-
	Increase/(decrease) in amounts due to directors		(100)		750
Cash generated from operations			22,307		17,198
	Interest received		253		95
	Interest paid		(15)		(15)
Net cash generated from operating activities			22,545		17,278
Investing activities
	Payment for the purchase of fixed assets		(3,700)		(1,095)
	Payment for development costs		(8,075)		(5,415)
	Technology transfer fees paid		(29,410)		(30,800)
	Payment for the purchase of an associate		(45,000)		-
	Proceeds from sales of fixed assets		-		17
Net cash used in i nves ting activities			(86,185)		(37,293)
Financing activities
	Repayment of principal under hire purchase contract		(155)5)		(133)
	Issue of shares		97,667		71,836
	Share issue expenses		(4,295)		(12,929)
Net cash generated from financing activities			93,217		58,774
Net increase in cash and cash equivalents			29,577		38,759
Cash and cash equivents at beginning of the year			49,667		10,908
Effect of foreign exchange rates changes			70		-
Cash and cash equivalents at end of the year			79,314		49,667
An analysis of cash and cash equivalents in as follows:
	Cash at bank and in hand		79,314		49,667

 

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

The Group
	Share	Contributed	Statutory	Share	Other	Retained
	Capital	Surplus	Reserves	Premium	Reserves	Profits	Total
	HK$'000	HK$'000	HK$'000	HK$'000	HK$'000	HK$'000	HK$'000
At 1 April,2003	24,369	9,210	-	54,000	-	30,392	117,971
Exchange reserve					70		70
New shares issued for
public subscription	4,872	-	-	92,795	-	-	97,667
Share issue expenses	-	-	-	(4,295)	-	-	(4,295)
Net profit for the year	-	-	-	-	-	37,613	37,613
At 31 March 2004	29,241	9,210		142,500	70	68,005	249,026
The Company
	Share	Contributed	Statutory	Share	Other	Accumulated
	Capital	Surplus	Reserves	Premium	Reserves	Losses	Total
	HK$'000	HK$'000	HK$'000	HK$'000	HK$'000	HK$'000	HK$'000
At 1 April 2003	24,369	-	-	54,000	-	(150)	78,219
New shares issued for
public subscription	4,872	-	-	92,795	-	-	97,667
Share issue expenses	-	-	-	(4,295)	-	-	(4,295)
Net loss for the year	-	-	-	-	-	(210)	(210)
At 31 March 2004	2 9,241	0	0	142,500	0	(360)	171,381

 

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

 

On 15 July 2003, 69,600,000 new ordinary shares of HK$0.07 each were issued to the public at S$0.317 each for a total cash consideration of approximately HK$97,667,000, before issue expenses of approximately HK$4,295,000.

2. Whether the figures have been audited, or reviewed and in accordance with which standard (e.g. the Singapore Standard on Auditing 910 (Engagements to Review Financial Statements), or an equivalent standard)

These 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 matter)

Not applicable.

4. Whether the same accounting policies and methods of computation as in the issuer ¡¦s 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 as 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 period reported on and the corresponding period of the immediately preceding financial year, after deducting any provision for preference dividends

Earnings/(Loss) per ordinary share for the
Year after deducting any provision for
preference dividends:
	FY 2004	FY 2003
Based on weighted average number of
ordinary shares in issue (Please see note	9.46 HK cents	8.49 HK cents
below)
On a fully diluted basis (Please see note	9.37 HK cents	Not Applicable
below)

Note 6a : Basic earnings per share

 

The calculation of basic earnings per share is based on the Group¡¦s profit attributable to shareholders of HK$37,613,000 (FY2003:HK$25,320,000) and the weighted average of 397,568,723 (FY2003:298,191,853) ordinary shares in issue during the year.

 

Note 6b : Diluted earnings per share

 

The calculation of diluted earnings per share is based on the Group¡¦s profit attributable to shareholders of HK$37,613,000 and the weighted average of 401,314,101 ordinary shares after adjusting for the effects of all dilutive potential ordinary shares under the company¡¦s share option scheme. There were no dilutive potential ordinary shares for the year ended 31 March 2003 and therefore diluted earnings per share are not presented for that year.

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 period reported on and (b)

immediately preceding financial year

	FY 2004	FY2003
Net asset value of the Company per ordinary
share based on existing issue share capital	HK$ 0.41 per share	HK$ 0.19 per share
as at the end of the period on 31 March2004
Net asset value of the Group per ordinary
share based on existing issue share capital	HK$ 0.60 per share	HK$0.28 per share
as at the end of the period on 31 March 2004

 

8. A review of the performance of the group, to the extent necessary for a reasonable understanding of the group ¡¦s business. The review must discuss 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. It must also discuss any material factors that affected the cash flow, working capital, assets or liabilities of the group during the current financial period reported on

Sales turnover

Turnover for FY2004 grew 35% to HK$129.0 million from HK$95.3 million in FY2003. Improved sales of our core products, namely the NetServer systems and the Unet Client Workstations (UCWs), was the key growth driver. The increase in sales was mainly due to increasing market acceptance of our products. This resulted from increased marketing and promotion activities, successful implementation of projects, excellent end-user references as well as execution of our distribution strategy.

In terms of geographical segmentation of our sales turnover recorded for the year ended 31 March 2004, we experienced significant growth in sales to Macau and North America of approximately 7.7 times and 0.7 times respectively. The overall sales turnover generated from Hong Kong and the rest of the world was steady for the year while a decrease was recorded in sales turnover in the the People¡¦s Republic of China (¡§PRC¡¨) as a result of the recorganization of our distribution channels this year.

Related party transactions

During the relevant period and up to the date of these consolidated financial statements, the following significant related party transactions took place:

 

Notes:

 

i. During the periods presented, the Group sold goods to UniVision Engineering Limited ("UniVision Engineering") at terms similar to those provided to independent customers. UniVision Engineering is a provider of surveillance systems integration services in Hong Kong, and is approximately 53.33% (2003: 53.33%) and 46.67% (2003: 46.67%) beneficially owned by Mayne Management Limited and TriVision Limited respectively.

 

ii. During the year ended 31 March 2004, UniVision Engineering provided technical support services to the Group on certain project sales. Such fees were charged to the Group by UniVision Engineering were similar to those charged by independent service providers.

 

iii. During the year ended 31 March 2004, the Group subcontracted UniVision Engineering to perform installation works for the Group on certain project sales. Such fees were charged to the Group by UniVision Engineering were similar to those charged by independent subcontractors.

 

iv. During the year ended 31 March 2004, the Group purchased materials from UniVision Engineering. The prices charged to the Group by UniVision Engineering were similar to those charged by independent suppliers.

 

Notes:

 

i. During the year ended 31 March 2003, the Group purchased equipment from UniVision Engineering. The prices charged to the Group by UniVision Engineering were similar to those charged by independent suppliers.

Cost of sales

Cost of sales increased by HK$12.0 million or 27% to HK$57.2 million in FY2004 from HK$45.2 million in FY2003. Depsite the tremendous competition which is exerting pressure on the average selling price of our products, we have been able to achieve an improved gross profit margin of 55.6%, up from 52.6% in FY2003. This is a result of (i) higher sales of premium products such as customised NetServers and UCWs; (ii) better economies of scale in production with higher production volume; (iii) cost savings on licensing after the acquisition of a perpetual license for a software driver; and (iv) increasing sales of high-end hardware MPEG4 compression NetServers.

Operating expenses

Our total operating expenses increased by HK$19.8 million or 90% to approximately HK$41.8 million for FY2004 from HK$22 million in FY2003.

Distribution expenses amounted to HK$13.5 million in FY2004 from HK$7.5 million previously due to an expansion in our sales force and the set up of new subsidiaries in Europe and the USA.

Administrative expenses increased to HK$15.8 million in FY2004 from HK$7 million in FY2003 with the expansion of our technical support and administration teams due to the significant overall business growth.

Amortisation of development costs increased to HK$12.5 million from HK$7.4 million in FY2003 due to the significant investments made in our product development programs in FY2004.

Gross profit and net profit after taxation

Gross profit amounted to HK$71.8 million for FY2004, an increase of HK$21.7 million or 43% from that of approximately HK$50.1 million in FY2003. This growth corresponds to the increased in sales turnover for FY2004.

We registered a profit after taxation attributable to the shareholders of HK$37.6 million for FY2004, an increase of HK$12.3 million or 49% from HK$25.3 million in FY2003. This significant growth in profit after taxation was largely due to the successful expansion our digital video surveillance business in the year, on the basis of a well-developed customer base and proven reference sites. We have successfully claimed offshore profit which was not subjected to Hong Kong tax.

Intangible assets

Intangible assets increased to HK$70.5 million for FY2004 from HK$51.1 million in FY2003. This was primarily the result of (i) the acquisition of several software drivers for our products in the

banking and the gaming industry; and (ii) investment in new product development projects during the year under review.

Inventories

Higher inventories of HK$12.7 million as at 31 March 2004 compared to HK$4.5 million as at 31 March 2003 were mainly due to the anticipation for order delivery for one major project in Macau.

Trade receivables

Our trade receivables increased to HK$50.9 million as at 31 March 2004 from HK$25.6 milion previously. This increase was the result of higher amount of orders from our distributors throughout the year and the completion of several major projects in March 2004.

Trade and other payables

Trade and other payables was HK$12.3million as at 31 March 2004 from HK$11 million as at 31 March 2003. We maintained timely settlements to our assembly and manufacturing partners in the PRC in return for a guarantee of prompt manufacturing and delivery lead-time and quality work. This is critical as it enables our Company to maintain a good reputation as a reliable supplier of good quality products and keep a reasonably low level of inventories.

Provision for warranty costs

As at 31 March 2004, we have reserved around HK$2 million for warranty cost, compared with no researvation on this item as at 31 March 2003. This is mainly due to the several major projects finished in the PRC and Macau.

Deferred taxation

Due to the successful offshore claim, the Group recognized a tax gain of HK5.3 million from a deferred tax asset of HK$0.6 million at 31 March 2004. The Group had deferred tax liabilities of HK$4.7 million for FY2003.

Share capital and reserves

The Group's share capital increased by HK$4.9 million and the contributed surplus increased by HK$88.5 million due to the second placement of 69.6 million shares at S$0.317 per share during the year under review.

Cashflows

We recorded net cash inflow of HK$22.5 million from operating activities for FY2004, an increase of HK$5.2 million from HK$17.3 million for the same period in FY2003. This was due to an increase in trade receivables, trade and other payables, and inventories.

 

Cash flow from investing activities recorded outflow of HK$86.2 million for FY2004. This was primarily due to the investment in an associate in British Virgin Islands, and the payment of product research and development costs during the year under review.

 

Cash flow from financing activities registered inflow of HK$93.2 million for FY2004 due to the second placement of 69.6 million of ordinary shares at S$0.317 per share on 29 July 2003.

Overall, our Group recorded a consolidated net increase in cash and cash equivalents of HK$29.6 million for the year ended 31 March 2004.

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 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

The surveillance market remains intensely competitive as more systems with hardware compression capabilities appear. The Group¡¦s portfolio of systems now includes not just hardware compression but also leading-edge applications. We are also extending our strategic alliances to more telecom operators so that our products can be bundled with broadband services, thereby adding a new continuous income stream and extending our current distribution- and projects-driven business model. We believe this will ensure a steady and stable growth of the Company in this highly competitive environment.

 

The Group acquired the surveillance business from Acqis Technologies Inc. (¡§Acqis¡¨), OEM supplier for our NetServer Smart series of mobile surveillance products with wireless communication capabilities, in the last quarter of FY2004. The purchase includes perpetual access to 7 patents for iMod and iSat systems which are features found in NetServer Smart.

 

The NetServer Smart offers mobile surveillance with wireless communication and other features such as real-time video streaming, license plate recognition and alerts, critical for civic and safety purposes.

11. Dividend

(a) Current Financial Period Reported On

Any dividend declared for the current financial period reported on?

No.

 

(b) Corresponding Period of the Immediately Preceding Financial Year

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

No.

(c) Date payable

Not applicable.

(d) Books closure date

Not applicable.

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

No dividend is 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 ¡¦s most recently audited annual financia statements, with comparative information for the immediately preceding year

		Group
		Turnover		Profit/(loss) before
				Taxation and interest
		HK$'000		HK$'000
		Full year	Full year	Full year	Full year
		FY03/04	FY02/03	FY03/04	FY02/03
By geographical location
Hong Kong		7,775	6,394	2,416	290
PRC		56,336	62,886	14,869	21,257
Taiwan		-	708	-	157
North America		30,218