Mortice Limited 1 The Company s Annual Report and Accounts for the financial year ended on 31 st March, 2013 together with a notice convening the Company s Annual General Meeting at 36, Robinson Road, #17-01, City House, Singapore 068877 at 3.00 P.M. Singapore Time on 27 th August, 2013 have been posted to shareholders. Copies of the Annual Report and Accounts are available on the Company s website: www.tenonservices.com Financial highlights: Revenue has grown by 24% in INR terms and 9% in USD terms Guarding services has grown by 20% in INR terms and 5% in USD terms Facilities Management services has grown by 36 % in INR terms and 20% in USD terms Profit before taxation of Group has grown by 29% in INR terms to 159 million ( 2011-12: INR 123 million) and 12% in USD terms to 2.92 million ( 2011-12: US$ 2.60 million) Profit after taxation of Group has grown by 36 % in INR terms to 107.5 million ( 2011-12: INR 78.6 million) and 18% in USD terms to 1.97 million ( 2011-12: US$ 1.67 million) The Directors are pleased by the performance but, due to significant negative fluctuations of currency, the performance in reporting currency is modest compared to that reported under the functional currency Commenting on the results, Manjit Rajain, Executive Chairman of Mortice said: We have had another good year with success in achieving organic growth driven by new and expanded contracts. The economic environment remains challenging; and we have organized the business to focus on long-term Security and facilities management opportunities. We expect outsourcing opportunities will continue to grow, with a trend towards more clients seeking to access integrated services. We are positioned to build further on our long track record of sustained profitable growth. Chairman s Statement for Annual Report Overview Our Company is continuing its focus on growing its integrated facility management operations through increasing our number of large customers. The Company is also exploring possibilities of growing its electronic security segment. The Company s existing security business continues to perform very well whilst having tremendous potential for further growth. Results I am delighted to announce the financial results of the Group for the financial year 2012-2013. Our performance during the year has been very good with strong revenue and profit growth, particularly in local currency terms and despite a moderation of macro economic growth in India. Our strategy of providing services that exceed client expectations [and those of our competitors] has helped us retain our key clients whilst winning new clients and contributed to the improved financial performance of the Group during the year. It is my pleasure to note that our revenue increased from US$61.09 million (INR 2,928.85 million) to US$66.7 2 million (INR 3,632.79 million) compared to the previous financial year. This revenue growth equates to 24.0% in INR terms, and 9.2% in US dollars, a lower amount due to the strengthening of US dollars during the year.
Mortice Limited 2 Further, the Group has continued to be profitable with profit before taxation ( PBT ) increasing to US$2.93 million (INR 159.19 million) (2012: US$2.61 million equivalent to INR 123.34 million) representing an increase of 12.3% in US dollar terms and 29.1% in INR terms. Revenue at our security business has increased by 5.5% to US$46.43 million (INR 2,527.91 million) (2012: US$44.02 million equivalent to INR 2,110.54 million) although PBT decreased (in US dollar terms) to US$1.84 million (2012: US$1.90 million) but increased by 10% in INR terms from INR 91.13 million to 100.28 million. The main reason for the growth has been the winning of several significant new contracts during the year in manufacturing, real estate, commercial complexes, hospitality, telecoms and banking across India. Revenue at our facility management business has increased by 20.1% to US$20.13 million (INR 1,095.86 million) (2012: US$16.76 million equivalent to INR 803.43 million) and PBT has increased by some 60% in US dollar terms and 82.2% in INR terms to US$1.20 million (INR 65.22 million) (2012: US$0.75 million equivalent to INR35.81 million).the main reason behind this significant increase is due to winning several high margin contracts in the hospitality, manufacturing, pharmaceutical, banking and FMCG sectors across India. We are determined to continue our existing performance in this segment which will enhance our overall growth Our facility management business has historically been higher margin than our security business and our focus during the year of concentrating on more profitable contracts has positively contributed to PBT both in absolute terms and also from a margin perspective. Whilst we are confident our Group can continue to grow organically within its existing geographies, the Board is exploring the possibility of growth by acquisition as well as organic growth into new regions. Outlook The current economic condition of India continues to be good although statistical analysis indicates that growth will be more moderate than has been the case in more recent years. We therefore need to be cautiously ambitious and our ability to provide excellent services to our clients will enable Mortice to continue generating strong and improving financial results.
Mortice Limited 3 Statements of financial position As at 31 March 2013 The Group The Company 2013 2012 2013 2012 US$ US$ US$ US$ Assets Non-Current Goodwill 1,209,174 1,285,587 - - Other intangible assets 72,691 93,553 - - Plant and equipment 1,217,756 1,164,316 - - Investment in subsidiaries - - 7,675,465 7,675,465 Long-term financial assets 1,247,553 715,813 - - Deferred tax assets 1,266,317 1,325,870 - - 5,013,491 4,585,139 7,675,465 7,675,465 Current Inventories 158,429 186,436 - - Trade and other receivables 18,567,741 16,560,561 25,936 28,035 Prepaid taxes 1,099,439 1,005,950 - - Cash and cash equivalents 1,375,209 1,704,137 35,632 27,780 21,200,818 19,457,084 61,568 55,815 Total assets 26,214,309 24,042,223 7,737,033 7,731,280 Equity Capital and reserves Share capital 9,555,312 9,555,312 9,555,312 9,555,312 Reserves (253,275) (1,742,329) (2,225,415) (2,227,636) 9,302,037 7,812,983 7,329,897 7,327,676 Non-controlling interest 21,504 13,712 - - Total equity 9,323,541 7,826,695 7,329,897 7,327,676 Liabilities Non-current Employee benefit obligations 735,948 624,776 - - Borrowings 334,728 155,605 - - 1,070,676 780,381 - - Current Trade and other payables 10,248,041 10,095,809 407,136 403,604 Borrowings 5,572,051 5,339,338 - - 15,820,092 15,435,147 407,136 403,604 Total liabilities 16,890,768 16,215,528 407,136 403,604 Total equity and liabilities 26,214,309 24,042,223 7,737,033 7,731,280
Mortice Limited 4 Consolidated statement of comprehensive income For the financial year ended 31 March 2013 Income 2013 2012 US$ US$ Service revenue 66,716,523 61,086,788 Other income 129,736 188,930 Total income 66,846,259 61,275,718 Expenses Staff and related costs 58,125,235 53,168,404 Materials consumed 655,838 725,884 Other operating expenses 3,701,604 3,292,579 Depreciation and amortisation 475,788 478,018 Finance costs 962,030 1,005,575 Total expenses 63,920,495 58,670,460 Profit before taxation 2,925,764 2,605,258 Tax expense (953,242) (934,294) Profit for the year 1,972,522 1,670,964 Other comprehensive income: Exchange differences on translating foreign operations (475,676) (1,070,071) (net of tax of nil) Total comprehensive income for the year 1,496,846 600,893 Profit attributable to: - Owners of the parent 1,962,057 1,662,234 - Non-controlling interest 10,465 8,730 1,972,522 1,670,964 Total comprehensive income attributable to: - Owners of the parent 1,489,054 592,163 - Non-controlling interest 7,792 8,730 1,496,846 600,893 Earnings per share: Basic and diluted 0.04 0.03
Mortice Limited 5 Consolidated statement of changes in equity For the financial year ended 31 March 2013 Share capital Exchange translation reserve (Accumulated losses)/ Retained earnings Total attributable to owners of the parent Noncontrolling interests Total equity US$ US$ US$ US$ US$ US$ Balance at 1 April 2011 9,555,312 (316,785) (2,017,707) 7,220,820 4,982 7,225,802 Profit for the year - - 1,662,234 1,662,234 8,730 1,670,964 Other comprehensive - (1,070,071) - (1,070,071) - (1,070,071) income exchange differences on translating foreign operations Total comprehensive - (1,070,071) 1,662,234 592,163 8,730 600,893 income Balance at 31 March 2012 9,555,312 (1,386,856) (355,473) 7,812,983 13,712 7,826,695 Balance at 1 April 2012 9,555,312 (1,386,856) (355,473) 7,812,983 13,712 7,826,695 Profit for the year - - 1,962,057 1,962,057 10,465 1,972,522 Other comprehensive - (473,003) - (473,003) (2,673) (475,676) income exchange differences on translating foreign operations Total comprehensive - (473,003) 1,962,057 1,489,054 7,792 1,496,846 income Balance at 31 March 2013 9,555,312 (1,859,859) 1,606,584 9,302,037 21,504 9,323,541
Mortice Limited 6 Consolidated statement of cash flows For the financial year ended 31 March 2013 2013 2012 US$ US$ Cash flows from operating activities Profit before taxation 2,925,764 2,605,258 Adjustments for: Depreciation and amortisation 475,788 478,018 Interest expense 962,030 1,005,575 Interest income (20,149) (68,771) Loss/(profit) on sale of fixed assets 3,148 (3,085) Impairment of trade receivables 214,322 85,614 Foreign exchange gain (20,537) (46,942) Bad debts written off 52,581 153,905 Operating profit before working capital changes 4,592,947 4,209,572 Changes in operating assets and liabilities Working capital changes: Trade and other receivables (3,257,923) (6,668,230) Inventories 16,907 (65,659) Trade and other payables 913,079 1,711,180 Cash generated /(used in) from operations 2,265,010 (813,137) Income tax paid (1,125,595) (435,842) Interest paid (1,094,791) (985,648) Net cash generated/(used in) from operating activities 44,624 (2,234,627) Cash flows from investing activities Acquisition of plant and equipment (Note 5) (378,615) (361,841) Proceeds from disposal of plant and equipment 4,187 15,674 Interest received 101,188 84,421 Net cash used in investing activities (273,240) (261,746) Cash flows from financing activities Repayment of long term borrowings - (14,235) Repayment of finance lease obligation (17,952) (138,440) Maturity of pledged fixed deposit (526,279) 476,294 Proceeds from short term borrowings, net 543,826 1,652,374 Net cash (used in) /generated from financing activities (405) 1,975,993 Net decrease in cash and cash equivalents (229,021) (520,380) Cash and cash equivalents at beginning of year 1,704,137 2,508,965 Effect of change in exchange rate on cash and cash equivalents (99,907) (284,448) Cash and cash equivalents at end of year (Note 11) 1,375,209 1,704,137
Mortice Limited 7 Notes to the consolidated financial statements For the financial year ended 31 March 2013 1 Introduction Mortice Limited ( the Company or Mortice ) was incorporated on 9 January 2008 as a public limited company in Singapore. The Company s registered office is situated at 36 Robinson Road #17-01, City House, Singapore 068877. The Company was listed on the Alternative Investment Market (AIM) of the London Stock Exchange on 15 May 2008. The Company together with its subsidiaries (hereinafter, together referred to as the Group ) is engaged in providing services such as guarding services, facilities management services, mechanical and engineering maintenance services, installation of safety equipment and sale of such equipment. The Group s operations are spread across India. The various entities comprising the Group have been defined below. Name of subsidiaries Country of incorporation Effective group shareholding (%) Tenon Property Services Private Limited ( Tenon Property ) India 99.48 Peregrine Guarding Private Limited ( PGPL ) India 99.48 Tenon Support Services Private Limited ( Tenon Support ) India 99.48 Tenon Project Services Private Limited ( Tenon Project ) India 99.48 Roto Power Projects Private Limited ( Roto ) India 99.43 These audited consolidated financial statements were approved by the Board of Directors on 28 th June 13 The immediate and ultimate holding company is Mancom Holdings Limited, a Ccompany incorporated in British Virgin Islands. 2-Basis of preparation The Consolidated financial statements for the year ended March 31, 2013 have been prepared in accordance with International Financial Reporting Standards (IFRS) as adopted by the European Union (EU). In addition to the presentation requirements prescribed under IFRS, the consolidated financial statements also includes information on the standalone statement of financial position of the Company as required by the Singapore Companies Act, Cap. 50 in order for the financial statements to show a true and fair view The consolidated financial statements for the year ended March 31, 2013 have been prepared in accordance with International Financial Reporting Standards (IFRS) as endorsed by the European Union (EU). All standards and interpretations issued by the International Accounting Standards Board (IASB) and the IFRS Interpretations Committee effective year-end March 31, 2012 have been endorsed by the EU, except that the EU did not adopt some paragraphs of IAS 39 applicable to certain hedge transactions. Mortice Limited has no hedge transactions to which these paragraphs are applicable. Consequently, the accounting policies applied by Mortice Limited also comply fully with IFRS as issued by the IASB. These accounting policies have been applied by group entities.
Mortice Limited 8 3-Earnings per share Both the basic and diluted loss per share has been calculated using the profit attributable to shareholders of Mortice Limited as the numerator. Calculations of basic and diluted loss per share are as follows: The Group 2013 2012 US$ US$ Earnings attributable to equity holders (in US$) 1,962,057 1,662,234 Weighted average number of ordinary shares outstanding for basic and diluted earnings per share 47,700,001 47,700,001 Basic and diluted earnings per share (US$ per share) 0.041c 0.035c 4- Operating segments Segment accounting policies are the same as the policies described in Note 2. The Company accounts for intersegment sales and transfers as if the sales or transfers were to third parties at current market prices. Revenues are attributed to geographic areas based on the location of the assets producing the revenues. The following tables present revenue and profit information regarding industry segments for the years ended 31 March 2013 and 2012, and certain assets and liabilities information regarding industry segments as at 31 March 2013 and 2012. Facility management Guarding service Others Total 2013 2012 2013 2012 2013 2012 2013 2012 US$ US$ US$ US$ US$ US$ US$ US$ Segment revenue 20,125,948 16,755,524 46,426,177 44,015,433 164,398 315,831 66,716,523 61,086,788 Depreciation and 132,946 128,220 341,792 348,812 1,050 986 475,788 478,018 amortisation Materials consumed 502,325 441,727 12,824 8,685 140,689 275,472 655,838 725,884 Staff and related costs 17,554,211 14,672,779 40,521,494 38,424,049 49,530 71,576 58,125,235 53,168,404 Other operating expenses 622,975 647,451 2,864,512 2,448,709 35,705 13,533 3,523,192 3,109,693 Finance costs 115,744 118,532 843,776 884,657 177 366 959,697 1,003,555 Segment operating 1,197,747 746,815 1,841,779 1,900,521 (62,753) (46,102) 2,976,773 2,601,234 profit/ (loss) before tax Taxation (367,808) (310,063) (589,108) (622,641) 3,674 1,187 (953,242) (931,517) Segment net profit / (loss) 829,939 436,752 1,252,671 1,277,880 (59,079) (44,915) 2,023,531 1,669,717 Segment assets 10,005,674 8,575,086 16,008,484 15,337,661 138,583 73,661 26,152,741 23,986,408 Segment liabilities 3,294,916 3,252,470 13,472,931 12,797,035 61,693 108,328 16,829,540 16,157,833 Other segment information: Capital expenditures 233,124 107,276 357,222 400,565-3,226 590,346 511,067 Depreciation of plant and equipment 117,662 115,900 341,794 343,774 1,050 986 460,506 460,660
Mortice Limited 9 The totals presented for the Group's operating segments reconcile to the entity's key financial figures as presented in its financial statements as follows: The Group 2013 2012 US$ US$ Segment operating profit before tax 2,976,773 2,601,234 Reconciling items: Other income not allocated (Note 17) 129,736 188,930 Other expenses not allocated (Mortice Limited) (180,745) (184,906) Group profit before tax 2,925,764 2,605,258 Note to Editors: Mortice Limited Mortice, the India based security and facilities Management Company incorporated in Singapore, listed on AIM in May 2008 and is the holding company of Tenon Property Services Private Limited (Tenon), itself the holding company of Peregrine Guarding Private Limited (Peregrine) and Rotopower Projects Private Limited (Rotopower). Peregrine Guarding Private Limited Peregrine, the Company s Security Services subsidiary based in India was established in 1995 and provides manned guarding services and security solutions to a comprehensive pan-india client base. Peregrine operates on PAN India basis and has clients in a range of sectors including telecom, ITES, manufacturing, pharmaceutical, banking, real estate and healthcare. Tenon Property Services Private Limited Tenon, the Company s Integrated Facility Management subsidiary provides quality Integrated Facility Management services to a range of clients on a pan India basis. Roto Power Projects Pvt Limited Roto Power was established 15 years ago and currently operates in 28 states/union territories in India. The company was acquired by the Group in June 2009 and provides a range of mechanical and electrical engineering services including maintenance services, annual maintenance contracts and housekeeping services to a variety of customers. Rotopower also provides services to telecom tower companies for the maintenance and running of electrical equipment.