1 Jul 2013 07:43
Mortice Limited
("Mortice" or the "Company")
Annual Report and Accounts
The Company's Annual Report and Accounts for the financial year ended on 31st 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 27th 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:
v Revenue has grown by 24% in INR terms and 9% in USD terms
v Guarding services has grown by 20% in INR terms and 5% in USD terms
v Facilities Management services has grown by 36 % in INR terms and 20% in USD terms
v 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)
v 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.
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$0.75 million equivalent to INR35.81 million).The main reason behind this significant increase is due to winning several high margin contracts in the hospitality, manufacturing, pharmaceutical, banking and FMCG sectors across India. We are determined to continue our existing performance in this segment which will enhance our overall growth
Our facility management business has historically been higher margin than our security business and our focus during the year of concentrating on more profitable contracts has positively contributed to PBT both in absolute terms and also from a margin perspective.
Whilst we are confident our Group can continue to grow organically within its existing geographies, the Board is exploring the possibility of growth by acquisition as well as organic growth into new regions.
Outlook
The current economic condition of India continues to be good although statistical analysis indicates that growth will be more moderate than has been the case in more recent years.
We therefore need to be cautiously ambitious and our ability to provide excellent services to our clients will enable Mortice to continue generating strong and improving financial results.
Statements of financial position
As at 31 March 2013
The Group | The Company | ||||
2013 | 2012 | 2013 | 2012 | ||
US$ | 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 | |
Consolidated statement of comprehensive income
For the financial year ended 31 March 2013
2013 | 2012 | |||
US$ | US$ | |||
Income | ||||
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 (net of tax of nil) | (475,676) | (1,070,071) | ||
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 |
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 | Non- controlling 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 income - exchange differences on translating foreign operations | - | (1,070,071) | - | (1,070,071) | - | (1,070,071) |
Total comprehensive income | - | (1,070,071) | 1,662,234 | 592,163 | 8,730 | 600,893 |
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 income - exchange differences on translating foreign operations | - | (473,003) | - | (473,003) | (2,673) | (475,676) |
Total comprehensive income | - | (473,003) | 1,962,057 | 1,489,054 | 7,792 | 1,496,846 |
Balance at 31 March 2013 | 9,555,312 | (1,859,859) | 1,606,584 | 9,302,037 | 21,504 | 9,323,541 |
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 |
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 28th 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.
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 inter-segment 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 amortisation | 132,946 | 128,220 | 341,792 | 348,812 | 1,050 | 986 | 475,788 | 478,018 |
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 profit/ (loss) before tax | 1,197,747 | 746,815 | 1,841,779 | 1,900,521 | (62,753) | (46,102) | 2,976,773 | 2,601,234 |
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 |
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.