Sinopec Engineering Group Co Ltd. — Annual Report 2013

Sep 30, 2013

Hong Kong Exchanges and Clearing Limited and The Stock Exchange of Hong Kong Limited take no responsibility for the contents of this announcement, make no representation as to its accuracy or completeness and expressly disclaim any liability whatsoever for any loss howsoever arising from or in reliance upon the whole or any part of the contents of this announcement.

UNIVERSE INTERNATIONAL HOLDINGS LIMITED 寰宇國際控股有限公司[*]

(Incorporated in Bermuda with limited liability)

(Stock Code: 1046)

ANNUAL RESULTS ANNOUNCEMENT FOR THE YEAR ENDED 30TH JUNE 2013

RESULTS

The board of directors (the “Directors”) of Universe International Holdings Limited (the “Company”) (the “Board”) hereby announces the consolidated results of the Company and its subsidiaries (collectively, the “Group”) for the year ended 30th June 2013, together with comparative figures for the year ended 30th June 2012 as follows:

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

Note Revenue 2 Cost of revenue 3 Impairment losses of film rights 3 Selling expenses 3 Administrative expenses 3 Other income Other (losses)/gains – net Increase in fair value of investment properties Other operating expenses 3 Finance income Finance cost Share of profit of a jointly controlled entity Loss before income tax Income tax credit 4 Loss attributable to the equity holders of the Company Other comprehensive income: Item that will not be reclassified subsequently to profit and loss: Fair value adjustment upon transfer from land and buildings to investment properties Total comprehensive income/(loss) for the year attributable to the equity holders of the Company Loss per share for loss attributable to the equity holders of the Company during the year(expressed in HK cent) – basic 5 – diluted 5

Year ended 30th June 2013 2012 HK$’000 HK$’000 (Restated) 79,106 75,881 (50,049) (59,079) (7,381) (1,470) (3,136) (3,124) (27,924) (28,275) 175 958 (115) 513 4,228 500 (188) (4,350) 397 923 (1,090) – 1,087 – (4,890) (17,523) 213 154 (4,677) (17,369) 10,980 938 6,303 (16,431) (0.27) (1.02) (0.27) (1.02)

• for identification purposes only

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CONSOLIDATED BALANCE SHEET

Note ASSETS Non-current assets Leasehold land Property, plant and equipment Investment properties Other intangible assets Film rights and films in progress Interest in a jointly controlled entity Loans and receivables Film deposits Deferred income tax assets Available-for-sale financial assets Deposits paid Current assets Inventories Accounts receivable 7 Deposits paid, prepayments and other receivables Cash and cash equivalents Non-current assets held for sale Total assets	2013 HK$’000 3,113 14,677 49,896 1,858 171,268 1,145 7,710 37,650 741 – – 288,058 3,284 24,758 28,273 50,430 106,745 1,654 396,457	As at 30th June 2012 HK$’000 (Restated) 3,195 16,570 9,100 1,858 120,756 – – 33,377 564 – – 185,420 3,384 16,702 31,237 71,076 122,399 – 307,819	2011 HK$’000 (Restated) 3,277 17,845 6,100 1,858 66,467 – – 32,502 625 1,275 1,730
			131,679
			3,619 50,518 6,810 79,432
			140,379
			–
			272,058

2

EQUITY Capital and reserves attributable to the equity holders of the Company Share capital Share premium Other reserves Retained earnings Total equity LIABILITIES Non-current liabilities Deferred income tax liabilities Current liabilities Accounts payable 8 Other payables and accrued charges Deposits received Amount due to the ultimate holding company Obligations under finance leases Taxation payable Total liabilities Total equity and liabilities Net current (liabilities)/assets Total assets less current liabilities Note	34,235 135,293 14,229 57,396 241,153 246 4,164 15,981 133,825 1 4 1,083 155,058 155,304 396,457 (46,659) 241,399 2013 HK$’000	34,235 135,293 3,249 62,073 234,850 282 4,302 7,739 59,547 1 15 1,083 72,687 72,969 307,819 49,712 235,132 As at 30th June 2012 HK$’000 (Restated)	32,492 127,211 821 79,442 2011 HK$’000 (Restated)
			239,966
			577
			4,529 8,511 17,400 1 71 1,003
			31,515
			32,092
			272,058
			108,864
			240,543

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Notes:

1. Basis of preparation

The consolidated financial statements of the Group have been prepared in accordance with Hong Kong Financial Reporting Standards (“HKFRSs”), which is a collective term referred to all applicable individual Hong Kong Financial Reporting Standards, Hong Kong Accounting Standards (“HKASs”) and Interpretations (“Ints”) issued by The Hong Kong Institute of Certified Public Accountants (“HKICPA”). The consolidated financial statements have been prepared under the historical cost convention, as modified by the revaluation of investment properties, non-current assets held for sale and available-for-sale financial assets, which are carried at fair value.

The preparation of consolidated financial statements in conformity with HKFRSs requires the use of certain critical accounting estimates. It also requires management to exercise its judgement in the process of applying the Group’s accounting policies. The actual results may differ from these estimates.

For the year ended 30th June 2013, the Group reported a net loss of HK$4,677,000, and as at the same date, the Group had net current liabilities of HK$46,659,000. Included in current liabilities were primarily deposits of HK$133,825,000 received from customers in advance. Majority of the deposits received will be recognized as income upon the delivery of the pre-recorded audio visual products and the materials for video features including the master tapes to the customers, in accordance with the terms of the underlying contracts. Notwithstanding the above, the consolidated financial statements are prepared on a going concern basis.

In order to strengthen the Group’s financial position, management has implemented measures to control operating costs and to tighten capital expenditure and investment policies to improve the Group’s cash flows. The Board has reviewed the Group’s cash flow projections prepared by management. The projections cover a period of twelve months ending 30th June 2014. The projections make key assumptions with regard to the anticipated cash flows from the Group’s operations. The Directors, after making due enquiries and considering the basis of management’s projections described above and after taking into account the reasonably possible changes in the operational performance, believe that there will be sufficient financial resources available to the Group at least in the coming twelve months to meet its financial obligations as and when they fall due. Accordingly, the Directors consider that it is appropriate to prepare the consolidated financial statements on a going concern basis.

The HKICPA has issued certain new and revised HKFRSs that are first effective or available for early adoption for the current accounting period of the Group. The Group has adopted the new and revised HKFRSs below, which are relevant to its operations, in the preparation of the consolidated financial statements.

			Effective for
			accounting periods
			beginning on or after
HKAS	1 (Amendment)	Presentation of Items of	1st July 2012
		Other Comprehensive Income
HKAS	12 (Amendment)	Deferred tax: Recovery of	1st July 2012
		Underlying Assets

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In December 2010, the HKICPA amended HKAS 12, ‘Income taxes’, to introduce an exception to the principle for the measurement of deferred tax assets or liabilities arising on an investment property measured at fair value. HKAS 12 requires an entity to measure the deferred tax relating to an asset depending on whether the entity expects to recover the carrying amount of the asset through use or sale. The amendment introduces a rebuttable presumption that an investment property measured at fair value is recovered entirely by sale. The amendment is applicable retrospectively to annual periods beginning on or after 1st January 2012 with early adoption permitted.

The Group has adopted this amendment retrospectively for the financial year ended 30th June 2012 and the effects of adoption are disclosed as follows.

The Group has investment properties measured at their fair values totalling HK$9,100,000 as at 1st July 2012 (1st July 2011: HK$6,100,000). As required by the amendment, the Group has re-measured the deferred tax relating to all investment properties amounting to HK$301,000 (1st July 2011: HK$63,000) according to the tax consequence on the presumption that they are recovered entirely by sale retrospectively. The comparative figures have been restated to reflect the change in accounting policy, as summarized below.

Effect on consolidated balance sheet

	As at 30th June	As at 30th June	As at 1st July
	2013	2012	2011
	HK$’000	HK$’000	HK$’000
Decrease in deferred tax liabilities	(2,811)	(301)	(63)
Increase in revaluation reserve	1,967	155	–
Increase in retained earnings	844	146	63

Effect on consolidated statement of comprehensive income

Increase in income tax credit Increase in other comprehensive income Decrease in basic loss per share (expressed in HK cent) Decrease in diluted loss per share (expressed in HK cent)	For the year ended 30th June 2013 2012 HK$’000 HK$’000 698 83 1,812 155 (0.04) (0.01) (0.04) (0.01)

The adoption of above new and revised HKFRSs has not led to any significant changes in the accounting policies applied in these consolidated financial statements, and has no material effect on the Group’s results and financial position for the current or prior accounting periods reflected in these consolidated financial statements except for the adoption of HKAS12 (Amendment).

The Group has not early adopted any new and revised HKFRSs which have been issued but not yet effective for the accounting period beginning 1st July 2012.

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The following new and revised standards, amendments to standard and interpretations have been published that are mandatory for the Group’s financial year beginning on or after 1st July 2013 or later periods but which the Group has not early adopted.

Group has not early adopted.
		Effective for
		accounting periods
		beginning on or after
Annual Improvements Project	Annual Improvements 2009-2011 Cycle	1st January 2013
HKAS 19 (Amendment)	Employee Benefits	1st January 2013
HKAS 27 (2011)	Separate Financial Statements	1st January 2013
HKAS 28 (2011)	Investments in Associates and Joint Ventures	1st January 2013
HKFRS 1 (Amendment)	First Time Adoption on Government Loans	1st January 2013
HKFRS 7 (Amendment)	Disclosures – Offsetting Financial Assets and	1st January 2013
	Financial Liabilities
HKFRS 10	Consolidated Financial Statements	1st January 2013
HKFRS 11	Joint Arrangements	1st January 2013
HKFRS 12	Disclosure of Interests in Other Entities	1st January 2013
HKFRS 13	Fair Value Measurement	1st January 2013
HKFRS 10, HKFRS 11 and	Consolidated Financial Statements, Joint	1st January 2013
HKFRS 12 (Amendments)	Arrangements and Disclosure of interests in
	Other Entities: Transition Guidance
HK(IFRIC) – Int 20	Stripping Costs in the Production Phase of	1st January 2013
	a Surface Mine
HKAS 32 (Amendment)	Presentation – Offsetting Financial Assets and	1st January 2014
	Financial Liabilities
HKAS 36 (Amendments)	Recoverable Amount Disclosures for	1st January 2014
	Non-Financial Assets
HKAS 39 (Amendments)	Novation of Derivatives	1st January 2014
HK(IFRIC) – Int 21	Levies	1st January 2014
HKFRS 10, HKFRS 12 and	Investment Entities	1st January 2014
HKFRS 27 (Revised 2011)
HKFRS 9	Financial Instruments	1st January 2015
HKFRS 7 and	Mandatory Effective Date and Transition	1st January 2015
HKFRS 9 (Amendments)	Disclosures

2. Segment information

Operating segments are reported in a manner consistent with the internal reporting provided to the chief operating decision-maker (the “CODM”). The CODM, who is responsible for allocating resources and assessing performance of the operating segments, has been identified as the Chairman of the Group that makes strategic decisions. The CODM has determined the operating segments based on these reports, as below:

• Distribution of films in various videogram formats

• Film exhibition, licensing and sub-licensing of film rights

• Leasing of investment properties

The CODM assesses the performance of the operating segments based on a measure of segment results. This measurement basis excludes the effects of non-recurring expenditure from the operating segments, such as increase in fair value of investment properties and provision for impairment of available-for-sale financial assets. Finance income and income tax expense are not included in the result for each operating segment that is reviewed by the CODM. Other information provided, except as noted below, to the CODM is measured in a manner consistent with that in the consolidated financial statements.

Total assets, excluding other intangible assets, available-for-sale financial assets, deferred income tax assets, cash and cash equivalents and other unallocated assets (including leasehold land, property, plant and equipment, interest in a jointly controlled entity, loans and receivables, film rights and films in progress, film deposits, deposits paid, prepayments and other receivables), are managed on a central basis. These are part of the reconciliation to total balance sheet assets.

The Group’s inter-segment transactions mainly consist of licensing of film rights, which are transferred at cost. The revenue from external parties reported to the CODM is measured in a manner consistent with that in the consolidated statement of comprehensive income.

There are no sales between geographical segments.

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Primary reporting format - business segments

Revenue External sales Inter-segment sales Results Segment results before impairment losses Impairment losses of film rights Segment results Increase in fair value of investment properties Finance income Finance cost Share of profit of a jointly controlled entity Loss before income tax Income tax credit Loss attributable to the equity holders of the Company Assets Segment assets Unallocated assets Total assets Liabilities Segment liabilities Unallocated liabilities Total liabilities Other information Capital expenditures Unallocated capital expenditures Total capital expenditures Depreciation and amortization of leasehold land Unallocated depreciation and amortization of leasehold land Total depreciation and amortization of leasehold land Amortization of film rights			2013	2013		Group HK$’000 79,106 – 79,106 (2,131) (7,381) (9,512) 4,228 397 (1,090) 1,087 (4,890) 213 (4,677) 173,607 222,850 396,457 140,652 14,652 155,304 28,265 92,071 120,336 361 641 1,002 36,167
	Sale of goods HK$’000 6,426 – 6,426 (4,016) – (4,016) – 11,215 1,984 2,382 240 2,981	Film exhibition, licensing and sub-licensing of film rights HK$’000 62,170 2,771 64,941 2,417 (7,381) (4,964) – 94,564 131,873 427 78 33,186	Leasing of investment properties HK$’000 920 – 920 458 – 458 4,228 49,910 335 25,422 – –	Others HK$’000 9,590 45 9,635 (990) – (990) – 17,918 6,460 34 43 –	Elimination HK$’000 – (2,816) (2,816) – – – – – – – – –

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2012

Revenue External sales Inter-segment sales Results Segment results before impairment losses Impairment losses of film rights Segment results Increase in fair value of investment properties Provision for impairment of available-for-sale financial assets Finance income Loss before income tax Income tax credit Loss attributable to the equity holders of the Company Assets Segment assets Unallocated assets Total assets Liabilities Segment liabilities Unallocated liabilities Total liabilities Other information Capital expenditures Unallocated capital expenditures Total capital expenditures Depreciation and amortization of leasehold land Unallocated depreciation and amortization of leasehold land Total depreciation and amortization of leasehold land Amortization of film rights	Sale of goods HK$’000 10,560 – 10,560 (4,959) – (4,959) – 10,891 1,968 1,528 393 3,525	Film exhibition, licensing and sub-licensing of film rights HK$’000 56,443 2,296 58,739 (8,463) (1,470) (9,933) – 63,668 46,346 172 82 37,928	Leasing of investment properties HK$’000 248 – 248 173 – 173 500 9,103 147 – – –	Others HK$’000 8,630 1,016 9,646 (1,222) – (1,222) – 12,278 2,809 59 46 –	Elimination HK$’000 – (3,312) (3,312) – – – – – – – – –	Group HK$’000 (Restated) 75,881 – 75,881 (14,471) (1,470) (15,941) 500 (3,005) 923 (17,523) 154 (17,369) 95,940 211,879 307,819 51,270 21,699 72,969 1,759 96,793 98,552 521 613 1,134 41,453

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Secondary reporting format – geographical segments

Hong Kong and Macau Asia (other than Hong Kong and Macau) North America Australia and New Zealand Europe Others	Revenue Year ended 30th June 2013 2012 HK$’000 HK$’000 38,188 28,790 40,283 46,546 328 1 – 63 297 481 10 – 79,106 75,881	Total assets As at 30th June 2013 2012 HK$’000 HK$’000 357,078 268,054 39,317 39,694 3 – – – 35 59 24 12 396,457 307,819	Capital expenditures Year ended 30th June 2013 2012 HK$’000 HK$’000 120,336 98,552 – – – – – – – – – – 120,336 98,552	Capital expenditures Year ended 30th June 2013 2012 HK$’000 HK$’000 120,336 98,552 – – – – – – – – – – 120,336 98,552
				98,552

3. Expenses by nature

Amortization of film rights Amortization of leasehold land Depreciation of owned assets Depreciation of leased assets Impairment losses of film rights Provision for impairment of available-for-sale financial assets Provision for impairment of accounts receivable Write-off of accounts receivable Write-off of film deposits Cost of inventories sold Employee benefits expenses (Note)	Year ended 30th June 2013 2012 HK$’000 HK$’000 36,167 41,453 82 82 909 995 11 57 7,381 1,470 – 3,005 – 142 – 650 77 – 2,734 4,390 18,326 20,232

Note: For the year ended 30th June 2013, there was no share-based compensation recognized in the consolidated statement of comprehensive income (2012: HK$1,490,000).

4. Income tax credit

Hong Kong profits tax has been provided at the rate of 16.5% (2012: 16.5%) on the estimated assessable profit of the Group for the year.

The amount of income tax credit/(expense) credited/(charged) to the consolidated statement of comprehensive income represents:

Hong Kong profits tax Deferred income tax	Year ended 30th June 2013 2012 HK$’000 HK$’000 (Restated) – (80) 213 234 213 154	Year ended 30th June 2013 2012 HK$’000 HK$’000 (Restated) – (80) 213 234 213 154
		154

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5. Loss per share

Basic

Basic loss per share is calculated by dividing the loss attributable to the equity holders of the Company over the weighted average number of ordinary shares in issue during the year.

Loss attributable to the equity holders of the Company (HK$’000) Weighted average number of ordinary shares in issue Basic loss per share (HK cent per share)	2013 4,677 1,711,770,370 0.27	2012 (Restated) 17,369
		1,698,909,960
		1.02

The basic and diluted loss per share for the year ended 30th June 2013 are the same because the effect of the assumed conversion of all dilutive potential ordinary shares outstanding during the year was anti-dilutive (2012: same).

6. Dividend per share

The Board did not recommend the payment of a final dividend (2012: same).

7. Accounts receivable

Accounts receivable Less: Provision for impairment of accounts receivable Accounts receivable – net	As at 30th June 2013 2012 HK$’000 HK$’000 24,900 16,844 (142) (142) 24,758 16,702	As at 30th June 2013 2012 HK$’000 HK$’000 24,900 16,844 (142) (142) 24,758 16,702
		16,702

The carrying amounts of accounts receivable approximates to their fair values.

As at 30th June 2013 and 2012, the ageing analysis of the accounts receivable is as follows:

Current to 90 days 91 days to 180 days Over 180 days	As at 30th June 2013 2012 HK$’000 HK$’000 10,175 10,051 4,761 4,030 9,822 2,621 24,758 16,702	As at 30th June 2013 2012 HK$’000 HK$’000 10,175 10,051 4,761 4,030 9,822 2,621 24,758 16,702
		16,702

Sales of videogram products are with credit terms of 7 days to 60 days. Sales from film exhibition, licensing and sub-licensing of film rights are on open account terms.

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8. Accounts payable

As at 30th June 2013 and 2012, the ageing analysis of the accounts payable by invoice date is as follows:

Current to 90 days 91 days to 180 days Over 180 days	As at 30th June 2013 2012 HK$’000 HK$’000 1,511 1,623 167 139 2,486 2,540 4,164 4,302	As at 30th June 2013 2012 HK$’000 HK$’000 1,511 1,623 167 139 2,486 2,540 4,164 4,302
		4,302

9. Pending litigations

• (a) A court action was commenced in the Court of First Instance of the Hong Kong Special Administrative Region on 17th April 2002 by The Star Overseas Limited (“Star”), an independent third party, against Universe Entertainment Limited (“UEL”), an indirect wholly owned subsidiary of the Company.

By the above action, Star alleged that a sum of US$935,872 (equivalent to HK$7,299,799) was payable by UEL to Star as its share of the licence fee of the movie entitled “Shaolin Soccer” (the “Movie”).

Pursuant to an Order (the “Order”) made by the High Court on 21st February 2003, UEL was ordered and had paid to Star a sum of HK$5,495,700, being part of the licence fee of the Movie received by UEL from Miramax Films (being the licencee of the Movie) and which was also part of the sum claimed by Star. Pursuant to the Order, UEL is also liable to pay Star interest in the sum of HK$350,905 and some of the costs of the application leading to the making of the Order, all of which have been settled. As the Order has not disposed of all the claims of US$935,872 (equivalent to HK$7,299,799) by Star, UEL is entitled to continue to defend the claim by Star for recovering the remaining balance in the sum of approximately HK$1,804,099 (HK$7,299,799 less HK$5,495,700).

On 30th April 2002, UEL issued a Writ of Summons against Star for the latter’s wrongful exploitation of certain rights in the Movie co-owned by both parties. UEL claimed to recover all losses and damages suffered by UEL as a result of the wrongful exploitation.

On 9th September 2002, Universe Laser & Video Co. Limited (“ULV”), an indirect wholly owned subsidiary of the Company, issued a Writ of Summons against Star for the latter’s infringement of the licensed rights in the Movie held by ULV. ULV claimed to recover all losses and damages suffered by ULV as a result of the said infringement.

In the opinion of legal counsel, it is premature to predict the outcome of the said claim made against UEL. The Board is of the opinion that the outcome of the claim against UEL will have no material financial impact to the Group for the year ended 30th June 2013.

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• (b) On 1st September 2008, Koninklijke Philips Electronics N.V. (“KPE”) issued a Writ of Summons against, among other persons, the Company, ULV and Mr Lam Shiu Ming, Daneil (one of the Directors), being three of the defendants named therein, in respect of damages arising from alleged infringement of the patents regarding Video Compact Disc owned by KPE.

In the opinion of legal counsel, it is premature to predict the outcome of the said claim made against the Company, ULV and Mr Lam Shiu Ming, Daneil. The Board is of the opinion that the outflow of economic benefits cannot be reliably estimated and accordingly no provision for any liability that may result has been made in the consolidated financial statements.

• (c) On 8th January 2010, KPE issued a Writ of Summons against, among other persons, the Company, ULV and Mr Lam Shiu Ming, Daneil (one of the Directors), being three of the defendants named therein, in respect of damages arising from alleged infringement of the patents regarding Digital Video Disc owned by KPE.

In June 2012, the action was discontinued against the Company and Mr Lam Shiu Ming, Daneil. The claim made against ULV has been agreed with KPE and appropriate provision was recognized accordingly in the consolidated financial statements for the year ended 30th June 2012.

No additional provision has been made in the consolidated financial statements for the year ended 30th June 2013. Based on the consultation with legal counsel, no further material outflow of economic benefits will be incurred for ULV.

Save as disclosed above, as at 30th June 2013, no litigation or claim of material importance is known to the Directors to be pending against either the Company or any of its subsidiaries.

10. Events after the balance sheet date

• (a) Universe Films Distribution Company Limited, an indirect wholly owned subsidiary of the Company, completed the sale transaction for disposal of the investment properties in Lantau Island to Eternal Good Development Limited (“EGDL”) on 11th July 2013, which have been classified as non-current assets held for sale measured at fair value as at 30th June 2013, for a total consideration of HK$1.8 million.

The entire issued share capital of EGDL is solely and beneficially owned by Mr Lam Shiu Ming, Daneil (one of the Directors). By virtue of the interests of Mr Lam Shiu Ming, Daneil in EGDL, the transaction constituted a connected transaction for the Company under Rule 14A.13(1) of the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited (the “Stock Exchange”) (the “Listing Rules”). The transaction was announced by the Company on 11th June 2013.

• (b) As announced on 16th September 2013, the Company and Astrum Capital Management Limited (the “Placing Agent”) entered into the placing agreement (the “Placing Agreement”), pursuant to which the Company appointed the Placing Agent as its agent to procure placees to subscribe for the warrants (the “Warrant(s)”), on a best efforts basis, at an issue price of HK$0.0025 per Warrant.

The Warrants will entitle the holders thereof to subscribe in cash up to an aggregate amount of HK$85.5 million for the new shares of the Company at an initial subscription price of HK$0.25 per Warrant (the “Initial Subscription Price”), subject to adjustments, for a period of 2 years commencing from the date of issue of the Warrants. Based on the Initial Subscription Price of HK$0.25 per new share to be allotted and issued upon exercise of the subscription right attaching to the Warrants, a maximum of 342,000,000 new shares (the “Warrant Shares”) will be allotted and issued by the Company.

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The Warrant Shares will be issued under the general mandate granted to the Directors at the annual general meeting of the Company held on 29th November 2012. No listing of the Warrants will be sought on the Stock Exchange or any other stock exchanges. Application will be made to the Stock Exchange for the listing of, and permission to deal in, the Warrant Shares to be allotted and issued upon the exercise of the subscription rights attaching to the Warrants.

Assuming the maximum aggregate amount of HK$85.5 million of the Warrants are placed with the placee(s), the maximum gross proceeds from the issue of the Warrants is approximately HK$0.9 million and the maximum net proceeds from the placing of the Warrant is approximately HK$0.6 million. The net proceeds will be utilised by the Group as its general working capital.

Assuming the full exercise of the subscription rights attaching to the Warrants at the Initial Subscription Price, it is expected an additional amount of HK$85.5 million will be raised. Such funds will be utilised by the Group as its general working capital and for development of new investment opportunities.

Completion of the placing of the Warrants is conditional upon the Stock Exchange granting approval of the issue of the Warrants (if required) and granting or agreeing to grant the listing of, and permission to deal in, all Warrant Shares falling to be issued upon the exercise of the subscription rights attaching to the Warrants either unconditionally or subject to conditions to which the Placing Agent accepts. If the above condition is not fulfilled by 5:00 p.m. on 31st October 2013 (Hong Kong time) (or such later time or date as the Company and the Placing Agent may agree), the Placing Agreement will terminate and the placing of the Warrants will not proceed and neither the Company nor the Placing Agent shall have any claim against the other in respect of any matter or thing arising out of or in connection with the Placing Agreement save for any antecedent breach of any obligation under the Placing Agreement and in connection with any and all rights and obligations accrued prior to such termination.

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OPERATING RESULTS

The operating environment of the Group remained challenging in the past year. For the year ended 30th June 2013, the revenue of the Group slightly increased by 4.2% over the same period last year to HK$79.1 million while the loss attributable to the equity holders of the Company narrowed by 73.1% from HK$17.4 million (restated) to HK$4.7 million. Loss per share for the year was HK0.27 cent compared to HK1.02 cent (restated) in 2012.

Despite an increase in impairment losses of film rights to HK$7.4 million compared with HK$1.5 million last year, the Group’s results was improved mainly due to (i) satisfactory performance of film exhibition business; (ii) higher gross profit contribution from licensing of non-newly released films and television series which had been fully amortized in the previous years; (iii) increase in fair value of investment properties; and (iv) absence of two one-off expenses recorded last year, being those relating to share-based compensation of HK$1.5 million and a provision for impairment of available-for-sale financial assets of HK$3.0 million.

During the year under review, the local video distribution business continued to be affected by the unfavourable market environment. Nevertheless, this was offset by revenue growth from film exhibition, licensing and sub-licensing of film rights. Consequently, the total revenue for the year has maintained at similar level compared with last year. In particular, the revenue and gross profit from film exhibition in the year under review was satisfactory.

In anticipation of continued positive development in the property markets in Hong Kong and Macau, the Group has been actively seeking and reviewing property investment opportunities that would offer stable and satisfactory returns. As announced in October 2012 and April 2013, the Group has entered into a sale and purchase agreement to acquire certain investment properties, and has entered into a joint venture agreement to subscribe for 40% of registered capital of a company, which was incorporated in Macau and engaged in the business of investment of lands and properties in Macau, respectively. The Board believes that such investments would provide the Group with not only a potential for capital gains, but also a satisfactory and stable recurring income.

Looking ahead, we expect that the overall operating environment will remain challenging in the coming year. In light of this, the Group will continue to consider new investment opportunities and diversify to develop its business to maximize the returns for the shareholders of the Company in a prudent and pragmatic manner.

BUSINESS REVIEW

Video distribution

During the year under review, the local video distribution business remained sluggish where revenue from this business segment recorded a decline of 39.1% from HK$10.6 million to the HK$6.4 million. It contributed 8.1% (2012: 13.9%) of the Group’s consolidated revenue. The decrease in revenue from this business segment was mainly due to fewer new titles being released during the year under review, as management continued to adopt a cautious and prudent approach towards film acquisition in view of an adverse operating environment and keen competition.

As a result of the above, gross profit margin and gross profit of this business segment decreased to 11.0% (2012: 24.6%) and HK$0.7 million (2012: HK$2.6 million) respectively.

To respond to such difficult operating environment, the Group will continue to improve and streamline the cost structure of this business segment and exercise prudence when acquiring new titles for the local video distribution business.

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Film exhibition, licensing and sub-licensing of film rights

Revenue from this business segment for the year under review was HK$62.2 million, representing an increase of 10.1% over the same period last year. It accounted for 78.6% (2012: 74.4%) of the Group’s consolidated revenue.

Revenue from film exhibition was HK$7.7 million, representing an increase of 1.1 times compared with the same period last year while we are also delighted to record a gross profit of HK$205,000 (2012: gross loss of HK$5.4 million). This encouraging performance was mainly due to satisfactory box office of the films released for the year in particular “My Sassy Hubby”（「我老公唔生性」）and “Conspirators”（「同謀」）.

Revenue from licensing and sub-licensing of film rights increased slightly by 3.1% to HK$54.5 million from HK$52.8 million compared to the previous year. Meanwhile, gross profit margin of licensing and sublicensing of film rights increased at a larger extent from 25.9% to 37.4% as there was higher contribution from non-newly released films. The gross profit margin for such non-newly released films is typically higher because their cost had been fully amortized in previous years.

In terms of geographical contribution, overseas markets accounted for 47.6% (2012: 57.0%) of the Group’s total revenue during the year under review due to higher licensing income of non-newly released films generated from the local market. Revenue from the Mainland China market decreased by 15.5% to HK$29.6 million, accounting for 37.5% of the Group’s consolidated revenue (2012: 46.2%).

Leasing of investment properties

During the year under review, this business segment recorded a growth of 2.7 times in revenue to HK$920,000 from HK$248,000. As stated in the announcement dated 15th October 2012, the Group entered into a sale and purchase agreement to acquire certain investment properties for an aggregate consideration of HK$24.0 million and the agreement was completed on 15th November 2012. This contributed to the growth in revenue. Management believes that the Group will benefit from the anticipated growth in value of the investment properties while providing a steady income stream. The acquisition also expanded the Group’s investment properties portfolio in Hong Kong. Management will continue to review and evaluate potential investment opportunities in the property market that would offer stable and satisfactory returns.

OUTLOOK

China’s film market shows a good progress in its development. According to the State Administration of Radio Film and Television, the total accumulated box office in China hit record high and reached RMB10.99 billion in the first half of 2013. In response to the growing demand of for high-quality of entertainment experience in Hong Kong and China, the Group will put more resources into large-scale film productions that enables broader and deeper market penetration. The Group expects to release a number of blockbuster films, including “Out of Inferno 3D”（「逃出生天3D 」）starring Sean Lau and Louis Koo and “White Storm” （「掃毒」）starring Sean Lau, Louis Koo and Nick Cheung, in the coming year. Beside film production, management will also consider to make passive investment in film making and downstream investments in cinema network, both at home and abroad, to strengthen our overall competitiveness in the film industry.

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The Group currently has a professional production team with extensive expertise in the entertainment industry. In order to cope with the rapid expansion in the entertainment industry in China, the Group will actively seek other new investment opportunities in online entertainment and other culture-related businesses to further diversify our business stream in the entertainment industry in China aiming to become a leading integrator of the film and entertainment industry in Hong Kong and China.

The Group will continue to adopt its business diversification strategy and develop other new business operations. In order to maximize the returns for the shareholders of the Company, the Group will consider commencing a money lender business and investing in quality listed securities. Its approach not only diversifies the sources of income, but also provides additional resources to finance its core business, which in turn enhance the Group’s competitive edges.

FINANCIAL RESOURCES/LIQUIDITY AND CAPITAL STRUCTURE

The Group’s financial position remained healthy. As at 30th June 2013, the Group had cash balances of HK$50.4 million (2012: HK$71.1 million).

As at 30th June 2013, the Group had total assets of approximately HK$396.5 million, representing an increase of HK$88.6 million over that as at 30th June 2012. Such increase was mainly due to the increase in investment in film rights and films in progress.

The Group’s gearing ratio as at 30th June 2013 fell to almost zero (2012: almost zero), which was calculated on the basis of the Group’s long term borrowings including obligations under finance leases of approximately HK$4,000 (fully repayable within one year) and on the total equity of the Company of approximately HK$241.1 million.

Finance cost of HK$1,090,000 represents difference between a loan of HK$8.8 million advanced to a jointly controlled entity on 26th April 2013 and its present value measured at amortized cost using the effective interest method, which will be recognized as accretion income through the passage of time over the contractual loan period. There was no finance cost arising from borrowings for the year ended 30th June 2013 (2012: same).

In light of the fact that most of the Group’s transactions are denominated in Hong Kong dollars, Renminbi and United States dollars, management considers the Group’s exposure to fluctuations in exchange rates to be limited and thus no financial instruments for hedging purposes are used by the Group.

THE PLEDGE OF GROUP’S ASSETS

As at 30th June 2013, the Group did not have any pledged assets (2012: same).

EMPLOYEES AND REMUNERATION POLICIES

As at 30th June 2013, the Group employed 45 staff (2012: 45). Remuneration is reviewed annually and certain staffs are entitled to commission. In addition to basic salaries, staff benefits included discretionary bonus, medical insurance scheme and mandatory provident fund.

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SHARE OPTION SCHEME

Pursuant to an ordinary resolution passed in the annual general meeting held on 26th November 2003, the Company conditionally approved and adopted a share option scheme (the “Scheme”) in compliance with the Listing Rules.

Pursuant to an ordinary resolution passed in the annual general meeting held on 29th November 2011 (the “2011 AGM”), the Company approved the refreshment of the scheme mandate limit, which is 10% of the total number of the issued shares of the Company as at the date of the 2011 AGM, under the Scheme. After the refreshment of the scheme mandate limit, the total number of share options available for issue under the Scheme as at the date of 2011 AGM was 171,177,037, which represented 10% of the total number of the issued shares of the Company as at the date of 2011 AGM.

On 27th June 2012, the Company granted 34,235,403 share options, which represented 2% of the total number of the issued shares of the Company as at 27th June 2012, to certain Directors and employees of the Group at the subscription price of HK$0.067 per share option which were vested immediately and exercisable for a three-year period between 27th June 2012 to 26th June 2015 (both days inclusive). Each share option gives the holder the right to subscribe for one ordinary share of the Company. None of the share options has been exercised or cancelled for the period from 27th June 2012 to 30th June 2013. There was no share option outstanding prior to 27th June 2012 under the Scheme.

The total number of share options available for issue under the Scheme as at 30th June 2013 was 136,941,634, which represented 8% of the total number of the issued shares of the Company as at 30th June 2013.

CORPORATE GOVERNANCE CODE AND CORPORATE GOVERNANCE REPORT

The Company has, throughout the year ended 30th June 2013, complied with the code provisions contained in Corporate Governance Code and Corporate Governance Report (the “Code”) set out in Appendix 14 to the Listing Rules except for the code provision A.2.1 of the Code for the separation of the roles of Chairman and Chief Executive Officer (“CEO”) as described in the following.

Code provision A.2.1 of the Code sets out that the roles of the Chairman and CEO should be separated and should not be performed by the same individual. The Company does not at present have any officer holding the position of CEO. Mr Lam Shiu Ming, Daneil is the founder and Chairman of the Company and has also carried out the responsibilities of CEO. Mr Lam possesses the essential leadership skills to manage the Board and extensive knowledge in the business of the Group. The Board considers the present structure to be more suitable to the Group because it can promote the efficient formulation and implementation of the Group’s strategies.

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INTERNAL CONTROL

The Directors have the overall responsibility for internal control and set appropriate policies. The Board, through the Audit Committee, has reviewed the effectiveness of the Group’s system of internal control.

In compliance with the code provision C.2.1 of the Code and to further improve the effectiveness of its internal control, the Company engaged an independent accounting firm (the “Consultant”) to conduct a review of the effectiveness of the system control of the Group for the year ended 30th June 2013. All findings for improvement and recommendations made by the Consultant, which require management’s attention, have been properly addressed and implemented by the Company during the year.

The system of internal control aims to help achieving the Group’s business objectives, effective and efficient operations, safeguarding assets and maintaining proper accounting records for provision of reliable financial information. The design of the system is to provide reasonable, but not absolute, assurance against material misstatement in the financial statement or loss of assets and to manage rather than eliminate all risks of failure in the Group’s operational systems and in the achievement of the Group’s business objectives. No material suspected frauds and irregularities, internal control deficiencies or infringement of relevant regulations and rules have come to the attention of Board to cause the Board to believe that the system of internal control is inadequate.

AUDIT COMMITTEE

The Audit Committee provides an important link between the Board and the Group’s auditor in matters coming within the scope of the Group’s audit. It also reviews the effectiveness of the external audit, internal control and risk evaluation. The Audit Committee comprises three independent non-executive Directors, namely Mr Ng Kwok Tung (as Chairman), Dr Leung Shiu Ki, Albert and Mr Ma Chun Fung, Horace. Three meetings were held during the year.

The annual results for the year ended 30th June 2013 of the Group have been reviewed by the Audit Committee.

PURCHASE, SALE OR REDEMPTION OF THE COMPANY’S LISTED SECURITIES

The Company has not redeemed any of its shares during the year. Neither the Company nor any of its subsidiaries has purchased or sold any of the Company’s listed securities during the year.

PUBLICATION OF ANNUAL RESULTS ANNOUNCEMENT AND ANNUAL REPORT

This annual results announcement is published on the websites of the Stock Exchange (www.hkexnews.hk) and the Company (www.uih.com.hk). The annual report for 2013 of the Company will be dispatched to the shareholders and will be available on the above websites in due course.

By Order of the Board Lam Shiu Ming, Daneil Chairman

Hong Kong, 30th September 2013

As at the date of this announcement, the Board comprises Mr Lam Shiu Ming, Daneil, Mr Yeung Kim Piu and Mr Lam Kit Sun as executive Directors and Mr Ng Kwok Tung, Dr Leung Shiu Ki, Albert and Mr Ma Chun Fung, Horace as independent non-executive Directors.

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