(Alliance News) - UniVision Engineering Ltd on Thursday said a dispute with a subcontractor held back progress on a major contract, resulting in higher costs that more than halved profit.
Shares in UniVision were down 15% at 0.72 pence on Thursday morning in London. The stock is down 42% in 2021.
For the six months that ended September 30, UniVision reported pretax profit dropped 64% to GBP142,000 from GB394,000.
The Hong Kong-based CCTV and surveillance system company said that a dispute with a subcontractor over the value of work related to its Mass Transit Railway Corp contract was responsible for the fall.
MTRC is the company's largest customer, with UniVision providing replacement work on CCTV systems and installing CCTV system for numerous railway lines in Hong Kong.
UniVision commented that it believes that the sub-contractor performing installation works as part of the contract has under-performed tasks. This, the company noted, had resulted in major delays in the MTRC project and also increased costs, as Univision deployed its own resources to complete the outstanding work.
Further, a change of key network equipment caused additional delays. Combined, UniVision said these factors had hurt the process of certification and has led to slow billing to MTRC.
UniVision also recorded an impairment of GBP634,000 related to billings to MTRC for a maintenance contract. It took no such hit a year before.
Up to September 30, the company had invoiced MTRC HKD184.5 million, about GBP17.6 million, leaving HKD305.2 million remaining. Despite the recent issues, UniVision said it expects the completion of contracted works in July 2024 as originally intended.
Revenue rose 22% to GBP5.0 million from GBP4.1 million. The company cited increases in construction contract income for the rise which leaped 75% to HKD50.5 million from HKD28.9 million year-on-year.
Looking forward, UniVision said it remains cautious about its second half due to Covid-19 delaying projects.
By Heather Rydings; heatherrydings@alliancenews.com
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Univision (UVEL)