MORT.L Regulatory News (MORT)

26 Aug 2009 07:00



26 August 2009

Mortice Limited

FINAL RESULTS

Mortice Limited (AIM:MORT, "Mortice" or the "Company"), the AIM listed security and facilities management company based in India, today announces its final results for the year ended 31 March 2009.

 Operational highlights:

Group revenues increased to US $ 23.4m (+15.3%)

Operating in 28 of 35 Indian states and union territories

Commenting today, Manjit Rajain, Executive Chairman of Mortice Limited said:

"In a year in which the global economy took a severe downturn and many countries moved into recession, India achieved a GDP of 7.1%. Post economic downturn, India originally projected GDP would fall to 5.7% for FY2009-10 but has now revised its GDP projections to 6.5% with the services sector expected to grow by 8.2 per cent and we are already seeing an increase in new business inquiries and new wins. Our model for self-performing our facilities management services has attracted new customers during the recession as businesses have sought ways of reducing their costs. The track record we have now established has given Tenon, brand recognition within the marketplace and as a result of which we are seeing a growing number of new business enquiries."

Extracts from the audited financial statements are attached below and the full version of the audited financial statements will be available on the Company website www.morticegroup.com. The Annual Report for the year ended 31 March 2009 will be posted to shareholders and made available on the company website in due course. 

For further information please contact:

Mortice Limited
Manjit Rajain, Executive Chairman		Tel: +91 981 800 0011
Andrew Barker, Executive Director		Tel: +91 974 130 9401
Grant Thornton Corporate Finance
Fiona Owen		Tel: +44 207 383 5100
Jermyn Capital Partners PLC
Vishal Sodha		Tel: +44 207 399 2020
Pelham PR
Alex Walters / Francesca Tuckett		Tel : +44 207 337 1500

Statement by the Executive Chairman, Mr Manjit Rajain

The 'India Story' is well-known. Over recent years, off-shoring and outsourcing have helped to fuel the Indian economy and the facilities management and security industries have benefited and grown in parallel. Watching how these industries have developed in mature markets has helped us to see the immense opportunity for Mortice Limited ('Mortice' or the 'Company') in India today. With increasing privatisation and a rapidly growing public private partnership initiative programme, we remain confident that the market for our Facilities Management ('FM') and security services will grow beyond any published market projection.

In a year of increased extremist activity, Government, industry and the population at large have become more security conscious. In turn, the demand for security services has not dropped as much during the economic downturn as has been witnessed in many other industries. As reported in the Company's trading update on 8 June 2009, various factors have adversely impacted the Company and its subsidiaries (together the 'Group') financial performance during the year. Despite the impact that the downturn has had on business generally, the Group revenues for the year have still grown by 15.3% since the close of financial year 2007-08, which we believe is a creditable performance.

Apart from reducing our ability to achieve our projected sales, the Company had also announced on 24 December 2008, that the Board had decided not to pursue the general contracting business as it was highly likely to face a negative impact as a result of the economic slowdown and its direct impact on the real estate and infrastructure sectors, which would have resulted in lower margins and also had a high working capital requirement. 

As announced in the Company's trading update on 8 June 2009, the overall impact of the global economic slowdown including the weakening of the Indian Rupee against the US dollar, the charging of expenses associated with the Company's listing process, the cost of establishing our new FM business, and preliminary Mergers & Acquisitions ('M&A') activity and overseas market opportunity research, Mortice's first full year results reflect our investment in the business. Like many other businesses, we have reduced our cost base wherever we can do so without negatively impacting our plans for growth and we are extremely confident that the foundations we have laid will enable the Group to demonstrate superior growth during financial year 2009-10.

In a year in which the global economy took a severe downturn and many countries moved into recession, India achieved a GDP of 7.1%. Post economic downturn, India originally projected GDP would fall to 5.7% for FY2009-10 but has now revised its GDP projections to 6.5% with the services sector expected to grow by 8.2 per cent and we are already seeing an increase in new business inquiries and new wins. Our model for self-performing our facilities management services has attracted new customers during the recession as businesses have sought ways of reducing their costs. The track record we have now established has given Tenon brand recognition within the marketplace and we are also winning much new work at the expense of our established competitors.

With the establishment of a pan-India footprint for Tenon Property Services Limited ('Tenon') to match that of Peregrine Guarding Limited ('Peregrine'), we have achieved one of our key strategic objectives to fill a gap in the market by developing a service delivery platform to service customers with large, dispersed operations. In parallel, our team has developed a sophisticated technology platform to be able to monitor and manage these operations for our customers providing superior management information enabling timely, quality management decisions. This key achievement has given us the opportunity to bid for large pan-India contracts that will enable a step change in our revenue generation capability.

Many services businesses say that "People are their only asset." As a self-performing service provider, this is particularly the case with Mortice. The platform that we have now established is the result of a huge team effort during our first year of operation under very challenging market conditions and I thank them all.

We now, confidently, expect to see our investment come to fruition as we continue to expand our horizons.

Statement by the Executive Director, and Group CEO Mr Andrew Barker

Growing the Business

Your company set out with certain primary objectives at the start of the financial year, predominant amongst them to establish a differentiated outsourced facilities services corporation. This we aimed to do through the following five key initiatives:

Expanding our Services -  Establishing a platform for delivery of integrated facilities services through a model of "self-performance" by harnessing the spread and strength of the pan-India infrastructure of Peregrine Guarding to offer superior service standards across the country

Expanding our Markets -  Extending the reach of professional facilities services to address "non-traditional" sectors which have historically performed facilities services through own staff ("in-sourced") or local sub-contractor vendor bases ("out-tasked")

Expanding our Talent Base -  Developing top talent with expertise in the various diverse facets of FM and guarding including engineering services and critical infrastructure management, soft services delivery, quality, technology support and finance amongst others.

Expanding our Knowledge Base -  Developing a superior, customer focused, technology platform to provide a single client view for all facilities-related management information requirements to enable our customers to make informed, timely, quality decisions.

Expanding our Geographies -  Developing a pan-India capability for the delivery of our FM services.

We have made considerable progress during the year towards the achievement of these strategic objectives. Leading Indian and multinational corporations have bought our services and our track record to date has now established the Tenon brand as a quality, preferred alternative to the traditional facilities management sub-contracting model.

In anticipation of consolidation within the FM and security marketplace in India, considerable effort was also spent in reviewing the existing facilities services supplier base in India to identify suitable, potential acquisition targets. Surprisingly, we identified nearly 150 service providers covering every conceivable facet of the facilities management product. Many of these are small to medium size, local companies. Not surprisingly, industry consolidation has already started.

Since the close of the reporting period, Mortice has acquired Rotopower Projects, a medium-sized pan-India Mechanical & Electrical (M&E) turned facilities management service provider, which has given us strength in depth in this field and helped us to expand our geographic footprint into East India and strengthened our position in North India.

We are very excited about the acquisition of Rotopower as there are significant synergies across the group most notably in cross-sales opportunities. In the short time since the acquisition took place, we have seen a number of new sales leads passing between the group companies. Our expanded infrastructure has also given us the capacity to be able to manage a significantly larger business with a reduced incremental overhead. We are now also bidding into new geographies without the need to establish new offices in those areas where Rotopower already have a presence. The acquisition also provides us with an entry strategy for those Indian corporate who may not yet be ready for a full FM service but are used to outsourcing their M&E, housekeeping and security services. Once again, this underlines Tenon's strategy of providing "Services That Fit".

At a strategic level, the acquisition also helps us to adapt as a group to the changing strategies of our different customer market sectors. In the interests of generating productivity, we have various customers who have been moving from discrete services such as manned guarding, M&E and housekeeping to a "caretaker model" with multi-tasked employees. In the fast-growing telecommunications market in India, Rotopower are currently providing both discrete M&E services and "caretaker" services. Peregrine also has a significant presence in this market providing security services. As the market matures and we see more customers seeking similar cost-efficiency, the combined Tenon and Rotopower platform will enable us to respond to these changing demands.

A significant feature of our growing success has been the development of TeNet, a single client view, web-based suite of applications that support our service delivery and provide our clients and our management team with transparent, in depth management information. Our technology platform combined with our ability to deliver mandates in hinterland markets has opened up a much wider potential customer base for the many companies that have large, dispersed retail portfolios.

During the year, we have continued to attract top industry talent in all our subsidiaries. Our key resources come with many years of industry experience and qualifications in specialist facilities and security services fields. This has provided us with the ability to offer enhanced service standards and helped us to gain recognition for a refreshing and innovative approach to the delivery of our services.

Why India Needs Mortice?

Over the past 10 years since the recognition of FM services in India, the evolving industry has polarised into 2 distinct sets of service providers; international real estate (RE) service providers and local vendors. Whereas the RE service providers are offering higher value solutions, the cost of the service is prohibitive for many companies in India. By contrast, the low-cost, local vendor base does not provide the sophistication or quality of the RE service providers. Tenon was established to provide higher quality FM services at a cost that is attractive to a much wider customer base. Tenon's vertically integrated service delivery model unlocks value lost in the RE service provider model where service delivery is sub-contracted.

 

As we progress, your company's focus is to develop Tenon Property Services into a truly integrated outsourced management services corporation and to ensure that Peregrine continues its strong growth by offering a high-end, differentiated security product to support our customers' security needs in the face of increased extremist activity.

The Public Private Partnership (PPP) space in India is rapidly gathering momentum. India's 11th plan has projected an investment of nearly US$ 500 billion in infrastructure, of which 30% is expected to come from private investment. Recognizing the significant fillip that PFI and then PPP has given to the FM and security industries in other developed economies; we are seeking to establish ourselves as a credible operating partner for PPP projects.

Key Initiatives -  Pan-India FM Mandates

Tenon today operates in 16 Indian states and has harnessed the infrastructure of Peregrine Guarding (present in 23 states) to deliver superior quality FM services. Our remit in these states extends to hinterland towns and cities, where, corporate customers have formerly had to per force work with the local vendor base. For instance, we have been appointed for integrated facilities services by a leading multinational logistics corporation to manage their facilities in Mumbai, Pune, Ahmedabad, Kochi, Tirupur, Coimbatore, Jaipur, Hyderabad and Kolkata - of which 5 locations do not have the presence of professional facilities corporations.

Our ability to deliver services pan-India has enabled us to be able to bid to provide services to various, diverse retail operations. Many of these prospective customer outlets are in rural areas where locally-generated income has been largely unaffected by the FY09/10 economic downturn.

Key Initiative  - Non-traditional Sectors

Our innovative approach to FM services has resulted in our acceptance by corporations in sectors such as education and logistics, which have traditionally 'in-sourced' or 'out-tasked' FM services. We have also designed and implemented innovative programs for sectors such as retail inducing efficiency and professionalism into the management of logistics, personnel and monitoring compliance. Peregrine has significantly enhanced its presence in the sectors which have found our services to be of high value - these sectors include IT/ITeS, Telecom, Financial Services, Manufacturing, Retail and similar sectors where guarding acts as a key enabler of business safety, security and continuity.

Key Initiative - People

 We are a solely, facilities-focused company and can therefore offer exciting career paths and opportunities for employees to grow within the facilities management industry. This helps us attract top industry talent. Examples of our ability to draw such talent are visible across our organization including in our support services where we have been able to recruit seasoned practice experts for functions such as finance & accounting, corporate strategy, technology and HR.

These key appointments have helped us to strengthen our position in the facilities management and security services market.

  MORTICE LIMITED

(Incorporated in Singapore)

AND ITS SUBSIDIARIES

FINANCIAL STATEMENTS

FOR THE YEAR ENDED 31 MARCH 2009

BALANCE SHEETS AS AT 31 MARCH 2009

				Group				Company
	Note			2009		2008		2009			2008
				US$		US$		US$			US$
NON-CURRENT ASSETS
Plant and equipment	4			677,163		609,147		-			-
Investment in subsidiary	5			-		-		6,849,675			394,675
Deferred tax asset	6			618,853		165,870		-			-
Fixed deposits	7			111,933		14,589		-			-
Security deposits	8			88,897		439,329		-			-
				1,496,846		1,228,935		6,849,675			394,675
CURRENT ASSETS
Cash and cash equivalents	9			3,253,140		390,420		1,294,212			5,028
Trade receivables	10			4,630,997		3,690,329		-			-
Other receivables	11			1,617,526		829,989		8,532			551,215
Inventories, at cost	12			67,262		20,481		-			-
				9,568,925		4,931,219		1,302,744			556,243
CURRENT LIABILITIES
Trade payables	13			399,627		1,390,460		-			-
Other payables	14			2,733,403		2,709,298		386,965			568,542
Bank overdraft	9			1,241,451		200,389		-			-
Finance lease	15			60,760		43,029		-			-
Borrowings	16			90,218		369,052		-			-
				4,525,459		4,712,228		386,965			568,542
NET CURRENT ASSETS/(LIABILITIES)				5,043,466		218,991		915,779			(12,299)
NON-CURRENT LIABILITIES
Finance lease		15		(78,812)		(97,271)		-			-
Borrowings		16		(151,820)		(237,883)		-			-
Retirement benefit obligations		17		(124,958)		(92,916)		-			-
NET ASSETS				6,184,722		1,019,856		7,765,454			382,376
SHAREHOLDERS' EQUITY
Share capital		18		9,555,312		400,001		9,555,312			400,001
Reserves		19		(3,370,590)		617,361		(1,789,858)			(17,625)
				6,184,722		1,017,362		7,765,454			382,376
Minority interest		20		-		2,494		-			-
TOTAL EQUITY				6,184,722		1,019,856		7,765,454			382,376

The annexed notes form an integral part of and should be read in conjunction with these financial statements.

  INCOME STATEMENTS

FOR THE YEAR ENDED 31 MARCH 2009

			Group				Company
	Note		2009		09.01.2008 To 31.03.2008		2009		09.01.2008 To 31.03.2008
			US$		US$		US$		US$
REVENUE
Services income			23,156,372		3,390,490		-		-
Other income	21		300,747		1,569		166,454		-
Negative goodwill written back	22		-		651,478		-		-
Total revenue			23,457,119		4,043,537		166,454		-
COSTS AND EXPENSES
Services consumed	23		19,184,679		2,713,594		-		-
Depreciation of plant and equipment	4		161,653		20,401		-		-
Staff and related costs			2,860,657		471,020		306,762		-
Operating expenses	24		2,649,858		259,460		195,672		17,625
Initial Public Offering expenses			1,436,253		-		1,436,253		-
Finance costs	25		407,880		60,333		-		-
Total costs and expenses			26,700,980		3,524,808		1,938,687		17,625
(LOSS)/PROFIT BEFORE TAXATION	26		(3,243,861)		518,729		(1,772,233)		(17,625)
TAXATION	27		314,384		113,905		-		-
(LOSS)/PROFIT FOR THE YEAR/PERIOD			(2,929,477)		632,634		(1,772,233)		(17,625)
Attributable to:
Equity holders of the Company			(2,926,983)		632,642
Minority interest			(2,494)		(8)
			(2,929,477)		632,634
(Losses)/Earnings per share
- Basic and diluted	28		(0.06)		0.07

The annexed notes form an integral part of and should be read in conjunction with these financial statements.

 

STATEMENTS OF CHANGES IN EQUITY

FOR THE YEAR ENDED 31 MARCH 2009

	Attributable to equity holders of the Group
	Share  capital		(Accumulated losses)/Retained profits		Currency translation reserve		Total		Minority interest		Total
	US$		US$		US$		US$		US$		US$
Group
2009
Balance as at 1 April 2008	400,001		632,642		(15,281)		1,017,362		2,494		1,019,856
Issuance of ordinary shares (Note 18)	9,730,120		-		-		9,730,120		-		9,730,120
Share issue expenses (Note 18)	(574,809)		-		-		(574,809)		-		(574,809)
Loss for the year	-		(2,926,983)		-		(2,926,983)		(2,494)		(2,929,477)
Translation difference on consolidation	-		-		(1,060,968)		(1,060,968)		-		(1,060,968)
Balance as at 31 March 2009	9,555,312		(2,294,341)		(1,076,249)		6,184,722		-		6,184,722
2008
Issuance of subscribers' shares	400,001		-		-		400,001		-		400,001
Acquisition of subsidiaries	-		-		-		-		2,502		2,502
Profit for the period	-		632,642		-		632,642		(8)		632,634
Translation difference on consolidation	-		-		(15,281)		(15,281)		-		(15,281)
Balance as at 31 March 2008	400,001		632,642		(15,281)		1,017,362		2,494		1,019,856

 

The annexed notes form an integral part of and should be read in conjunction with these financial statements.

 

STATEMENTS OF CHANGES IN EQUITY (…CONT'D)

FOR THE YEAR ENDED 31 MARCH 2009

	Attributable to equity holders of the group
	Share  capital		(Accumulated losses)/Retained profits		Currency translation reserve		Total		Minority interest		Total
	US$		US$		US$		US$		US$		US$
Company
2009
Balance as at 1 April 2008	400,001		(17,625)		-		382,376		-		382,376
Issuance of ordinary shares (Note 18)	9,730,120		-		-		9,730,120		-		9,730,120
Share issue expenses (Note 18)	(574,809)		-		-		(574,809)		-		(574,809)
Loss for the year	-		(1,772,233)		-		(1,772,233)		-		(1,772,233)
Balance as at 31 March 2009	9,555,312		(1,789,858)		-		7,765,454		-		7,765,454
2008
Issuance of subscriber's share	1		-		-		1		-		1
Issuance of ordinary shares	400,000		-		-		400,000		-		400,000
Loss for the period	-		(17,625)		-		(17,625)		-		(17,625)
Balance as at 31 March 2008	400,001		(17,625)		-		382,376		-		382,376

 

The annexed notes form an integral part of and should be read in conjunction with these financial statements

CONSOLIDATED CASH FLOW STATEMENT

FOR THE YEAR ENDED 31 MARCH 2009

		2009		09.01.2008 to 31.03.2008
	Note	US$		US$
Cash Flows From Operating Activities
(Loss)/profit before taxation		(3,243,861)		518,729
Adjustments for:
Depreciation of plant and equipment	4	161,653		20,401
Negative goodwill written back		-		(651,478)
Bad debt written off	26	134,684		-
Interest expense	25	407,880		60,333
Interest income	21	(94,160)		-
Provision for doubtful debts	24	199,023		-
Cash flows from operations before changes in working capital		(2,434,781)		(52,015)
Working capital changes, excluding changes relating to cash:
Trade receivables		(1,254,696)		(212,659)
Other receivables		241,954		87,136
Inventories, at cost		(46,781)		(20,481)
Trade payables		(990,833)		80,885
Other payables		61,005		(67,573)
Retirement benefit obligations		(32,042)		14,346
Cash absorbed by operations		(4,456,174)		(170,361)
Income tax paid		(668,180)		-
Interest paid		(408,355)		(60,333)
Interest received		66,733		-
Net cash absorbed by operating activities		(5,465,976)		(230,694)
Cash Flows From Investing Activities
Acquisition of plant and equipment	4	(372,169)		(98,022)
Net cash outflow on acquisition of subsidiaries		-		(394,675)
Proceeds from disposal of plant and equipment		27,203		557,562
Net cash (absorbed by)/generated from investing activities		(344,966)		64,865
CONSOLIDATED CASH FLOW STATEMENT (…CONT'D) FOR THE YEAR ENDED 31 MARCH 2009  Cash Flows From Financing Activities		2009 US$		09.01.2008 to 31.03.2008 US$
Issuance of share capital	18	9,730,120		400,001
Payment for share issue expenses	18	(574,809)		-
Proceeds from finance lease		72,463		140,300
Proceeds from borrowings		-		344,108
Advances to related parties		(605,082)		(62,070)
Repayment of finance lease obligation		(36,273)		-
Repayment of borrowings		(192,771)		-
Withdrawal/(placement) of security deposit		350,432		(439,329)
Placement of pledged fixed deposit		(97,344)		(14,589)
Net cash generated from financing activities		8,646,736		368,421
Net increase in cash and cash equivalents		2,835,794		202,592
Unrealised exchange difference		(1,014,136)		(12,561)
Cash and cash equivalents at the beginning of the year/period		190,031		-
Cash and cash equivalents at the end of the year/period	9	2,011,689		190,031

 

CONSOLIDATED CASH FLOW STATEMENT (…CONT'D)

FOR THE YEAR ENDED 31 MARCH 2009 

Note:

In the previous financial period, the Company acquired a subsidiary Company. 

The effect of the above acquisition on the cash flows of the Group was as follows:

	2008
	US$
Summary of the effect of acquisition of a subsidiary
Cash and cash equivalents	557,562
Trade receivables	3,477,670
Other receivables	881,167
Deferred tax asset	2,499
Plant and equipment	539,352
Trade payables	(1,309,575)
Retirement benefit obligations	(78,570)
Other payables	(2,758,686)
Long term borrowings	(262,827)
Minority shareholders interest	(2,539)
Currency translation adjustment	100
Net assets acquired	1,046,153
Negative goodwill on consolidation	(651,478)
Amount paid in consideration of acquisition	394,675
Cash and cash equivalents of acquired entity	557,562

The annexed notes form an integral part of and should be read in conjunction with these financial statements

  NOTES TO THE FINANCIAL STATEMENTS

FOR THE FINANCIAL YEAR ENDED 31 MARCH 2009

1. CORPORATE INFORMATION

Mortice Limited (Company Registration No: 200800770W) is a public limited Company, domiciled in Singapore. The Company's registered office is at 36 Robinson Road, #17-01 City House, Singapore 068877.

The Company was listed on Alternate Investment Market (AIM) of London Stock Exchange in United Kingdom on 15 May 2008, issuing 7,700,000 ordinary shares with proceeds amounting to US$9,730,120.

The principal activities of the Group are to provide guarding services, facilities management services, property management, fleet management and sale of safety equipment and their installation. There have been no significant changes in the nature of these activities during the financial year. 

The financial statements of the Group and of the Company as at 31 March 2009 and for the year then ended were authorised and approved by the Board of Directors for issuance on 25 August 2009. 

2. SIGNIFICANT ACCOUNTING POLICIES

a) Basis of preparation

The consolidated financial statements are prepared in accordance with the provision of Singapore Companies Act, Cap. 50 and International Financial Reporting Standards ("IFRS"). 

The consolidated financial statements, which are expressed in United States dollars are prepared in accordance with the historical cost convention, except as disclosed in the accounting policies.

The following standards, interpretations or amendments have been issued till the date of approval of these consolidated financial statements but are not yet effective. These have not been adopted early by the Group and accordingly have not been considered in the preparation of the consolidated financial statements of the Group.

  

2. SIGNIFICANT ACCOUNTING POLICIES (…CONT'D)

a. Basis of preparation (…Cont'd)

Standard or Interpretation	Effective dates
IAS 1: Presentation of Financial Statements: A Revised Presentation (Issued September 2007)	Annual periods beginning on or after 1 January 2009
IAS 23: Borrowing costs (Revised)	Annual periods beginning on or after 1 January 2009
IAS 27: Consolidated and Separate Financial Statements (Amendment January 2008)	Annual periods beginning on or after 1 July 2009
IAS 32 Financial Instruments: Presentation- and IAS 1 Presentation of Financial Statements: Puttable Financial Instruments and Obligations Arising on Liquidation Amendment (Issued 14 February 2008)	Annual periods beginning on or after 1 January 2009
IFRS 1 First Time Adoption of IFRS Revised (Issued 27 November 2008)	Periods beginning on or after 1 January 2009
IFRS 2: Share- based Payment (Amendment- January 2008)	Annual periods beginning on or after 1 January 2009
IFRS 3: Business Combinations (January 2008)	For acquisition dated on or after the beginning of the first annual reporting period beginning on or after 1 July 2009
IFRS 8: Operating Segments	Annual periods beginning on or after 1 January 2009
IFRIC 13: Customer Loyalty Programmes	Annual periods beginning on or after 1 July 2008
IFRIC 15: Agreements for the Construction of Real Estate	Annual periods commencing on or after 1 January 2009

  

2. SIGNIFICANT ACCOUNTING POLICIES (…CONT'D)

a) Basis of preparation (…Cont'd)

Standard or Interpretation	Effective dates
IFRIC 16: Hedges of a Net Investment in a Foreign Operation issued	Annual periods commencing on or after 1 October 2008
IFRIC 17: Distributions of Non-cash Assets to Owners	Annual periods beginning on or after 1 July 2009
IFRIC 18: Transfers of Assets from Customers	Annual periods beginning on or after 1 July 2009
Improvements to IFRS (Issued 22 May 2008)	Annual periods beginning on or after 1 January 2009
Amendments to IFRS 1 and IAS 27 Cost of an Investment in a subsidiary, jointly-controlled entity or associate (Issued May 2008)	Annual periods beginning on or after 1 January 2009
Improvements to IFRS (Issued 16 April 2009)	Various, earliest starting effective is for annual periods beginning on or after 1 July 2009
Amendment to IAS 39 Financial Instruments: Recognition and Measurement: Eligible Hedged Items (Issued July 2008)	Annual periods beginning on or after 1 July 2009
Amendment to IAS 39 Reclassification of Financial Assets: Effective Date and Transition (Issued November 2008)	Annual periods beginning on or after 1 July 2008
Amendment to IFRS 7 Improving Disclosures about Financial Instruments (Issued March 2009)	Annual periods beginning on or after 1 January 2009
Amendments to IFRIC 9 and IAS 39 Embedded Derivatives (Issued March 2009)	Annual periods beginning on or after 30 June 2009

 

The management anticipates that all of the above pronouncements will be adopted by the Group in the first accounting period beginning after the effective date of each of the pronouncements. Based on the Group's current business model and accounting policies, management does not expect material changes to the recognition and measurement principles on Group's financial statements when these Standards/ Interpretations become effective. However, the directors are aware that the application of the above standards and interpretations will require certain additional disclosures to be included in the Group's subsequent financial statements.

 

b) Basis of consolidation

The consolidated financial statements incorporate the financial statements of the Company and its subsidiaries. Control is achieved where the Company has the power to govern the financial and operating policies of an entity so as to obtain benefits from its activities. Acquisition of subsidiaries is accounted using the purchase method of accounting. The results of the subsidiaries' operations have been included in the consolidated financial statements from the effective date of acquisition or up to the effective date of disposal, as appropriate. All inter-Company transactions and balances are eliminated on consolidation and the consolidated financial statements reflect external transactions only. The accounting periods of the subsidiaries are coterminous with that of the Company. Negative goodwill represents the excess of the fair value of the subsidiary's net identifiable assets over the cost of acquisition at the date of acquisition. Negative goodwill is recognised immediately in the income statement.

In the Company's financial statements, investment in subsidiaries is carried at cost less any impairment in net recoverable value which has been recognised in the income statement.

c)  Foreign currency translation

Items included in the financial statements of each entity in the Group are measured using the currency of the primary economic environment in which the entity operates ("functional currency"). The functional currency of the Group is Indian rupee and the financial statements are presented in United States dollar, which is the presentation currency. 

The United States dollar is the presentation currency of the Group as the same is a widely accepted currency and reflects better the financial results to the market and the investors.

 

In presenting the financial statements of the individual entity, monetary assets and liabilities in foreign currencies are translated into United States dollar at rates of exchange closely approximate to those ruling at the balance sheet date and transactions in foreign currencies during the financial period are translated at rates ruling on transaction dates. Non-monetary items carried at fair values that are denominated in foreign currencies are retranslated at the rates prevailing on the date when the fair values were determined. Non-monetary items that are measured in terms of historical cost in a foreign currency are not retranslated.

Exchange differences arising on the settlement of monetary items, and on retranslation of monetary items are included in the income statement. Exchange differences arising on the retranslation of non-monetary items carried at fair values are included in the income statement for the year except for differences arising on the retranslation of other non-monetary items in respect of which gains and losses are recognised directly in equity. For such non-monetary items, any exchange component of that gain or loss is also recognised directly in equity. 

For consolidation purposes, the assets and liabilities of the foreign subsidiary Company are translated at the rate of exchange ruling at the balance sheet date and income statement items are translated at the average rate. The effects of translation are taken directly to foreign currency translation reserves within equity. Such translation differences are recognised in income statement in the period in which the subsidiary is disposed of.

d) Plant and equipment

Plant and equipment are stated at cost less accumulated depreciation and accumulated impairment loss. The cost of an asset comprises its purchase price and any directly attributable costs of bringing the asset to working condition for its intended use. Expenditure for additions, improvements and renewals are capitalised and expenditure for maintenance and repairs are charged to the income statement. If plant and equipment are sold or retired, their cost and accumulated depreciation and accumulated impairment losses (if any), are removed from the consolidated financial statements and any gain or loss resulting from their disposal is included in the income statement. 

Advances paid for the acquisition or construction of property, plant and equipment under construction which are outstanding at the balance sheet date and the cost of property, plant and equipment under construction before such date are disclosed as "Construction in Progress". No depreciation is provided on construction in progress.

e) Depreciation of plant and equipment

Depreciation is calculated to write off the cost of plant and equipment by the straight-line method over their estimated useful lives. The estimated useful lives are as follows:

Computers	3 years
Office equipment	5 years
Leasehold improvements	5 years
Machinery	5 years
Furniture and fittings	5 years
Motor vehicles	5 years

 

Assets held under finance leases are depreciated over their expected useful lives on the same basis as owned assets or, where shorter, the term of the relevant lease. 

The residual values and useful lives of plant and equipment are reviewed, and adjusted as appropriate, at each balance sheet date. Fully depreciated plant and equipment are retained in the financial statements until they are no longer in use. 

f)  Investment in subsidiaries

Unquoted equity investments in subsidiaries are stated at cost less accumulated impairment losses. On disposal of investment in subsidiary, the difference between the net disposal proceeds and the carrying amount of the investment is taken to the income statement. 

g) Cash and cash equivalents

Cash and cash equivalents consist of unsecured cash and bank balances, short-term and long-term fixed deposits, and bank overdraft. 

h) Effective interest rate method

The effective interest rate method is a method of calculating the amortised cost of a financial instrument and of allocating interest income or expense over the relevant period. The effective interest rate is the rate that discounts estimated future cash receipts or payments through the expected life of the financial instrument, or where appropriate, a shorter period. Income is recognised on an effective interest rate basis for debt instruments.

i) Trade and other receivables

Trade and other receivables are recognised initially at fair value and subsequently measured at amortised cost using the effective interest rate method less allowance for impairment. An allowance for impairment of receivables is established when there is objective evidence that the Group will not be able to collect all amounts due according to the original terms of receivables. The amount of the allowance is the difference between the asset's carrying amount and estimated future cash flows. The amount of the allowance is recognised in the income statement. 

j) Inventories

 

Inventories are stated at the lower of cost and net realisable value. In general, cost is determined on a first in first out basis. Cost includes all cost of purchase and other costs incurred in bringing the inventories to their present location and condition. Net realisable value is the price at which the inventories can be realised in the normal course of business after allowing for the costs of realisation. Work in progress represents material and equipment under installation which are stated at cost. Cost includes all direct expenditure and all appropriate overheads.

k) Trade and other payables

Financial liabilities are recognised on the Group's balance sheet when the Group becomes a party to the contractual provisions of the instrument.

Trade and other payables are initially measured at fair value, and subsequently measured at amortised cost, using the effective interest rate method.

The Group derecognises financial liabilities when, and only when, the Group's obligations are discharged, cancelled or expired.

l) Equity instruments

Equity instruments issued by the Group are recorded at the proceeds received, net of direct issue costs.

m) Revenue recognition

Revenue is measured at the fair value of the consideration received or receivable and represents amounts receivable for services provided in the normal course of business, net of discounts and sales related taxes. The following specific recognition criteria must also be met before revenue is recognised:

 

(i) Income from services is recognised upon rendering of services.

 

(ii) Interest income is recognised on a time apportioned basis.

 

n)  Income tax 

Income tax expense is calculated on the basis of tax effect accounting, using the liability method and is applied to all significant temporary differences.

Income tax on the profit or loss for the year comprises current and deferred tax. Income tax is recognised in the income statement except to the extent that it relates to items recognised directly to equity, in which case it is recognised in equity.

Current tax is the expected tax payable on the taxable income for the period using tax rates enacted or substantially enacted at the balance sheet date.

Deferred income tax is provided, using the liability method, on all temporary differences at the balance sheet date between the tax bases of assets and liabilities and their carrying amounts for financial reporting purposes. 

Deferred tax liabilities are recognised for all taxable temporary differences. 

Deferred tax assets are recognised for all deductible temporary differences, carry-forward of unabsorbed capital allowances and unused tax losses, to the extent that it is probable that taxable profit will be available against which the deductible temporary differences, carry-forward of unused tax credits and unused tax losses can be utilised.

At each balance sheet date, the Group re-assesses unrecognised deferred tax assets and the carrying amount of deferred tax assets. The Group recognises a previously unrecognised deferred tax asset to the extent that it has become probable that future taxable profit will allow the deferred tax asset to be recovered. The Group conversely reduces the carrying amount of a deferred tax asset to the extent that it is no longer probable that sufficient taxable profit will be available to allow the benefit of part or all of the deferred tax asset to be utilised. 

Deferred tax assets and liabilities are measured at the tax rates that are expected to apply to the period when the asset is realised or the liability is settled, based on tax rates (and tax laws) that have been enacted at the balance sheet date.

 

o) Impairment of assets

i. Non-financial assets

 

The carrying amounts of the Group's assets are reviewed at each balance sheet date to determine whether there is any indication of impairment. If any such indication exists, the asset's recoverable amounts are estimated in order to determine the extent of the impairment loss (if any). An impairment loss is recognised whenever the carrying amount of an asset exceeds its recoverable amount. The impairment loss is charged to the income statement unless it reverses a previous revaluation, credited to equity, in which case it is charged to equity. 

 

Where an impairment loss subsequently reverses, the carrying amount of the asset is increased to the revised estimate of its recoverable amount, provided the increased carrying amount does not exceed the carrying amount that would have been determined had no impairment loss been recognised for the asset in prior years. A reversal of an impairment loss is recognised immediately in the income statement, unless the relevant asset is carried at a revalued amount, in which case the reversal of the impairment loss is treated as a revaluation increase.

ii. Financial assets

The carrying amount of these assets is reduced through the use of an impairment allowance account which is calculated as the difference between the carrying amount and the present value of estimated future cash flows, discounted at the original effective interest rate. When the asset becomes uncollectible, it is written off against the allowance account. Subsequent recoveries of amounts previously written off are recognised against the same line item in the income statement.

The allowance for impairment loss account is reduced through the income statement in a subsequent period when the amount of impairment loss decreases and the related decrease can be objectively measured.

 

p) Provisions

Provisions are recognised when the Group has a present obligation (legal or constructive) as a result of a past event and it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation, and a reliable estimate can be made of the amount of the obligation.

 

q) Leases

Finance lease

Lease of assets where the Group assumes substantially the risks and rewards of ownership are classified as finance leases. 

Assets held under finance leases are recognised as assets of the Group at their fair values at the inception of the lease or, if lower, at the present values of the minimum lease payments. The corresponding liability to the lessor (net of finance charges) is included in the balance sheet as a finance lease obligation. Lease payments are apportioned between finance charges and reduction of the lease obligation so as to achieve a constant rate of interest on the remaining balance of the liability. Finance charges are charged directly to the income statement over the lease period so as to produce a constant periodic rate of interest on the remaining balance of the liability for each period.

Gains arising from the sale and finance leaseback of plant and equipment are determined based on fair values. Sale proceeds in excess of fair values are deferred and amortised over the minimum lease terms.

Operating lease

Lease of assets in which a significant portion of the risks and rewards of ownership are retained by the lessor are classified as operating leases. 

Rental payables under operating leases are charged to income statement on a straight line basis over the terms of the relevant lease. 

 

r) Employee benefits

Defined contribution plan

As required by law, the Company and its subsidiary make pension contributions to Provident Funds. Contributions are recognised as an expense in the income statements in the same period as the employment which gives rise to the contributions.

 

Employee leave entitlement

The subsidiaries provide for encashment of leave entitlement as at year end for all the employees. Hence, liabilities arising from employee entitlements to annual leave are recognised when due.

Employee Gratuity

Employees are entitled to gratuity based on the years of service provided they serve on a continuous basis for a period of 5 years. The liability for the same is calculated annually and recognised on the basis of actuarial valuation by an independent actuary using the projected unit credit method. Under this method, the projected accrued benefit is calculated at the beginning of the year and again at the end of the year for each benefit that will accrue for all active members of the plan.

s) Segment reporting

A business segment is a distinguishable component of the Group engaged in providing services that are subject to risks and returns that are different from those of other business segments. A geographical segment is a distinguishable component of the Group engaged in providing services within a particular economic environment that is subject to risks and returns that are different from those of segments operating in another economic environment.

3. CRITICAL ACCOUNTING JUDGEMENT AND KEY SOURCES OF ESTIMATION UNCERTAINTY

In the process of applying the Group's accounting policies, as described in note 2, management has made the following judgements and estimations that have the most significant effect on the amounts recognised in the financial statements:

(a) Plant and equipment

Management determines the estimated useful lives and residual values for the Group's plant and equipment. Management will revise the depreciation charge where useful lives and residual values are different to previously estimated, or it will write off or write down technically obsolete or non-strategic assets that have been abandoned or sold.

(b) Income taxes

The Group and the Company have exposure to income taxes in countries where it operates. Significant judgement is involved in determining the Group's and the Company's provision for income taxes. The Group and the Company recognise liabilities for expected tax issues based on estimates of whether additional taxes will be due. Where the final tax outcome of these matters is different from the amounts that were initially recognised, such differences will impact the income tax and deferred tax provision in the financial year in which such determination is made. At 31 March 2009, the carrying amounts of the Group's current income tax payable and deferred tax assets are disclosed in the balance sheets.

(c) Retirement benefit obligations

Management determines the assumptions used by an independent actuary to calculate the Group's retirement benefit obligations.

4. PLANT AND EQUIPMENT

	Computers		Office equipment		Machinery		Furniture & Fittings		Leasehold  Improvements		Motor Vehicles		Construction in Progress		Total
	US$		US$		US$		US$		US$		US$		US$		US$
Group
2009
Cost
As 1 April 2008	56,560		18,849		44,759		327,188		-		193,860		15,996		657,212
Additions	101,014		18,864		80,021		23,951		16,199		124,433		7,687		372,169
Disposals	(510)		(377)		-		-		-		(26,316)		-		(27,203)
Transfer	-		-		-		-		15,996		-		(15,996)		-
Currency translation difference	(12,169)		(4,062)		(9,646)		(70,510)		-		(41,778)		(3,448)		(141,613)
At 31 March 2009	144,895		33,274		115,134		280,629		32,195		250,199		4,239		860,565
Accumulated depreciation
As 1 April 2008	10,616		3,523		6,888		20,458		-		6,580		-		48,065
Charge for the year	34,062		5,290		16,691		59,455		1,421		44,734		-		161,653
Currency translation difference	(5,634)		(1,283)		(3,133)		(10,286)		(140)		(5,840)		-		(26,316)
At 31 March 2009	39,044		7,530		20,446		69,627		1,281		45,474		-		183,402
Net book value
At 31 March 2009	105,851		25,744		94,688		211,002		30,914		204,725		4,239		677,163

  

4. PLANT AND EQUIPMENT (…CONT'D)

	Computers		Office equipment		Machinery		Furniture & Fittings		Motor Vehicles		Construction in Progress		Total
	US$		US$		US$		US$		US$		US$		US$
Group
2008
Cost
Additions on acquisition of subsidiaries	41,660		18,454		42,481		330,885		117,712		16,232		567,424
Additions	15,505		663		2,894		1,104		77,856		-		98,022
Currency translation difference	(605)		(268)		(616)		(4,801)		(1,708)		(236)		(8,234)
At 31 March 2008	56,560		18,849		44,759		327,188		193,860		15,996		657,212
Accumulated depreciation
Additions on acquisition of subsidiaries	8,383		2,798		5,437		9,973		1,482		-		28,073
Charge for the period	2,355		766		1,530		10,630		5,120		-		20,401
Currency translation difference	(122)		(41)		(79)		(145)		(22)		-		(409)
At 31 March 2008	10,616		3,523		6,888		20,458		6,580		-		48,065
Net book value
At 31 March 2008	45,944		15,326		37,871		306,730		187,280		15,996		609,147

4.  PLANT AND EQUIPMENT (…CONT'D)

The Group's plant and equipment as at 31 March 2009 include assets under finance lease disclosed under Note 15 with net book value of US$241,027 (2008: US$187,280).

The Group's plant and equipment as at 31 March 2009 include computers and motor vehicles of US$59,593 (2008: Nil) which have been pledged as security for borrowings as disclosed under Note 16.

5. INVESTMENT IN SUBSIDIARY

	Company
	2009		2008
	US$		US$
Unquoted equity investment, at cost
At beginning of the year/period	394,675		-
Additions during the year/period	6,455,000		394,675
At end of the year/period	6,849,675		394,675

The details of the subsidiaries are as follows:

Name of Company	Country of incorporation	Principal activities	Financial Year End	Percentage of equity held  by the  company		Cost of  Investment
				2009	2008	2009	2008
						US$	US$
Direct subsidiary Company
held by the Company
Tenon Property Services Pvt Ltd **	India	Facilities & Property Management and Fleet Management Services	31 March	99.48%	99.36%	6,849,675	394,675

  

5. INVESTMENT IN SUBSIDIARY (…CONT'D)

Name of Company	Country of incorporation	Principal activities	Financial Year End	Percentage of equity held by the  company		Cost of  Investment
				2009	2008	2009	2008
						US$	US$
Sub-subsidiary Company
Held by subsidiary Company
Peregrine Guarding Pvt Ltd (Subsidiary of Tenon Property Services Pvt Ltd)**	India	Guarding, Safety and Security Services	31  March	100%	100%	377,783	377,783
Tenon Support Services Pvt Ltd (Subsidiary of Tenon Property Services Pvt Ltd)**	India	Guarding, Safety and Security Services	31  March	100%	-	2,010	-
Tenon Project Services Pvt Ltd (Subsidiary of Tenon Property Services Pvt Ltd)**	India	Guarding, Safety and Security Services	31  March	100%	-	2,010	-
Peregrine Protection Services Pvt Ltd (Subsidiary of Peregrine Guarding Pvt Ltd)**	India	Guarding, Safety and Security Services	31  March	100%	-	1,918	-

**Financial statements of the subsidiaries for the year ended 31 March 2009 were audited by Walker Chandiok & Co, Chartered Accountants, India. 

6. DEFERRED TAX ASSET

	Group
	2009		2008
	US$		US$
At the beginning of the period	165,870		-
Transfer from income statement (Note 27)	549,157		165,870
Currency translation difference	(96,174)		-
At the end of the period	618,853		165,870

The following are the deferred tax liabilities and assets recognised by the Group and movements thereon: 

	At 1 April 2008		Movement during the year		At 31 March 2009
	US$		US$		US$
Accelerated tax depreciation	3,684		420		4,104
Gratuity	(31,582)		(25,009)		(56,591)
Others	(8,892)		(16,077)		(24,969)
Tax losses carried forward	(79,281)		(460,478)		(539,759)
Unabsorbed capital allowances	(49,799)		48,161		(1,638)
	(165,870)		(452,983)		(618,853)

One of the subsidiary companies has unabsorbed tax losses and capital allowances amounting to approximately US$1,794,000 and US$29,000 (2008: US$233,000 and US$146,000), respectively available for offsetting against future taxable income of the subsidiaries for the next seven assessment years subject to conditions imposed by Indian Income Tax Act.

7. FIXED DEPOSITS

The Company has pledged its fixed deposits as security for a bank guarantee obtained as disclosed in Note 30 to the financial statements.

8. SECURITY DEPOSITS

Security deposits are interest free and have maturity periods ranging between 1 to 2 years.

The security deposits are considered to approximate their fair values and are denominated in Indian rupees.

9. CASH AND CASH EQUIVALENTS

	Group				Company
	2009		2008		2009		2008
	US$		US$		US$		US$
Cash at bank	1,956,318		191,193		1,294,212		5,028
Cash on hand	132,936		186,233		-		-
Fixed deposits	1,163,886		12,994		-		-
	3,253,140		390,420		1,294,212		5,028

The carrying amounts of cash and cash equivalents approximate their fair values and are denominated in the following currencies:

	Group				Company
	2009		2008		2009		2008
	US$		US$		US$		US$
Indian rupees	1,958,928		385,392		-		-
United States dollars	1,294,212		5,028		1,294,212		5,028
	3,253,140		390,420		1,294,212		5,028

For the purpose of the consolidated cash flow statement, the year end cash and cash equivalents comprised the following:

	Group
	2009		2008
	US$		US$
Cash at bank	1,956,318		191,193
Cash on hand	132,936		186,233
Fixed deposits (current)	1,163,886		12,994
	3,253,140		390,420
Less: Bank overdraft	(1,241,451)		(200,389)
	2,011,689		190,031

The bank overdraft bears interest of 12% per annum (2008: interest range from 11% to 13%) per annum. The bank overdraft is secured by a pledge of trade receivables (Note 10).

10. TRADE RECEIVABLES 

	Group				Company
	2009		2008			2009		2008
	US$		US$			US$		US$
Third parties	4,810,341		3,704,615			-		-
Less : Allowance for doubtful debts	(179,344)		(14,286)			-		-
	4,630,997		3,690,329			-		-

The Group's trade receivables are denominated in Indian rupees.

Trade receivables are recognised at their original invoiced amounts which represent their fair values on initial recognition. Trade receivables are non-interest bearing and are due for settlement within 90 days credit terms. The trade receivables are considered to be of short duration and are not discounted and the carrying values are assumed to approximate their fair values. 

Trade receivables of one of the subsidiaries are under floating charge security for bank overdraft (Note 9).

11. OTHER RECEIVABLES 

	Group					Company
	2009		2008				2009		2008
	US$		US$				US$		US$
Deposits	229,531		98,661				5,685		-
Employee advances	91,715		50,692				-		-
Prepayments	72,591		567,359				2,451		551,215
Advances - third parties	48,901		33,512				-		-
Tax recoverable	357,819	3	-				-		-
Advances - related parties	667,152		62,070				-		-
Interest receivable	27,713		365				-		-
Unbilled revenue	65,678		-				-		-
Other debtors - third parties	56,426		17,330				396		-
	1,617,526		829,989				8,532		551,215

Advances to related parties are unsecured, interest-free and repayable on demand. 

The carrying amounts of other receivables approximate their fair values. The Group's and Company's other receivables are denominated in the following currencies:

	Group				Company
	2009		2008			2009		2008
	US$		US$			US$		US$
Indian rupees	1,608,994		278,774			-		-
Pound sterling	8,532		-			8,532		-
United States dollars	-		551,215			-		551,215
	1,617,526		829,989			8,532		551,215

12. INVENTORIES, AT COST 

	Group				Company
	2009		2008			2009		2008
	US$		US$			US$		US$
Finished Goods	54,125		2,290			-		-
Work in Progress	13,137		18,191			-		-
	67,262		20,481			-		-

Work in progress represents material and equipment under installation at customer sites.

 

13. TRADE PAYABLES

The Group's trade payables are denominated in Indian rupees.

Trade payables are recognised at their original invoiced amounts which represent their fair values on initial recognition. Trade payables are considered to be of short duration and are not discounted and the carrying values are assumed to approximate their fair values.

14. OTHER PAYABLES

	Group				Company
	2009		2008			2009		2008
	US$		US$			US$		US$
Accruals for operating expenses	32,890		17,327			32,890		17,327
Advances - third parties	27,357		-			-		-
Salaries and wages payable	1,262,466		790,534	-		-		-
Dues and taxes payable	1,345,132		1,505,861			-		-
Provision for taxation	-		36,425			-		-
Other payables - third parties	14,114		-			14,114		-
Other payables - related parties	51,444		359,151			10,471		359,151
Other payables - subsidiaries	-		-			329,490		192,064
	2,733,403		2,709,298			386,965		568,542

Other payables are unsecured, interest-free and repayable within the next twelve months.

The carrying amounts of other payables approximate their fair values and are denominated in the following currencies:

	Group					Company
		2009		2008			2009		2008
		US$		US$			US$		US$
Indian rupees		2,686,399		2,691,971			339,961		551,215
Pound sterling		3,772		-			3,772		-
Singapore dollars		40,406		-			40,406		-
United States dollars		2,826		17,327			2,826		17,327
		2,733,403		2,709,298			386,965		568,542

15. FINANCE LEASE

	Group
	2009		2008
	US$		US$
Due within one year	76,233		59,106
Due within two to five years	86,330		110,346
	162,563		169,452
Finance charge allocated to future periods	(22,991)		(29,152)
	139,572		140,300
Representing finance lease liabilities:
Current	60,760		43,029
Non-current	78,812		97,271
	139,572		140,300

The carrying amounts of the non-current portion of finance lease obligations approximate their fair values. The finance lease obligations are denominated in Indian rupees. The average floating rate is at 13.33% (2008: 13.28%) per annum.

The Group's obligations under finance leases are secured by the lessors' title to the leased assets (Note 4).

16. BORROWINGS

	Group
	2009		2008
	US$		US$
Within one year	90,218		369,052
Within two to five years	151,820		237,883
	242,038		606,935

The Group's borrowings are denominated in Indian rupees.

The carrying amounts of borrowings approximate their fair values. The borrowings are secured against plant and equipment (Note 4) and subject to interest at rates ranging from 13.25% to 18.35% (2008: 12.00% to 21.00%) per annum. 

17. RETIREMENT BENEFIT OBLIGATIONS

In accordance with applicable Indian laws, the Group provides for gratuity, a defined benefit retirement plan ("the Gratuity Plan") covering eligible employees calculated by an independent actuary. The Gratuity Plan provides for a lump sum payment to vested employees on retirement, death, incapacitation or termination of employment of amounts that are based on last drawn salary and tenure of employment. Liabilities with regard to the Gratuity Plan are determined by actuarial valuation by the Company. The Group has not funded its obligation under the gratuity benefit plan. 

For determination of the Gratuity the following actuarial assumptions were used: 

Economic assumptions:-The principal assumptions are the discount rate and salary growth rate. The discount rate is generally based upon the market yield available on government bonds at the accounting date with a term that matches that of the liabilities and the salary growth rate takes account of inflation, seniority promotion and other relevant factors on long term basis.

The expense for the year and the liability as at year end in respect of the Group on account of the above plan is given below:

	2009		2008
	US$		US$
Reconciliation of funded status
A. Change in benefit obligation
Actuarial value of projected benefit obligation at the beginning of the financial year/period	92,916		9,220
Interest cost	5,662		803
Service cost	78,100		66,447
Actuarial (gain)/loss	(28,173)		15,507
Translation adjustment	(23,547)		939
Projected benefit obligation at the end of financial year/period	124,958		92,916
B. Amounts recognised in the income statement
Current service cost	78,100		66,447
Interest cost	5,662		803
Total actuarial (gain)/loss recognised in the year	(28,173)		15,507
Expense recognised in the income statement	55,589		82,758
C. Actuarial Gain and Loss	(28,173)		15,507

For determination of the gratuity liability, the following actuarial assumptions were used:

	Group
	2009		2008
Retirement age	58 years		58 years
Mortality table	LIC (94-96) duly modified		LIC (94-96) duly modified
Attrition rate per annum	53%		55%
Discount rate per annum	7%		8%
Rate of increase in compensation levels	8%		5%

18. SHARE CAPITAL

	Company
	2009		2008			2009				2008
	Number of ordinary shares					US$				US$
Issued ordinary shares
At the beginning of the year/period	40,000,001		-		400,001				-
Issued for subscriber's share	-		1		-				1
Issued for cash consideration	7,700,000		40,000,000		9,730,120				400,000
Share issue expenses	-		-		(574,809)				-
At the end of the year/period	47,700,001		40,000,001		9,555,312				400,001

All issued ordinary shares are fully paid. There is no par value for these ordinary shares.

On 15 May 2008, the Company was listed on Alternate Investment Market (AIM) of London Stock Exchange in United Kingdoms and issued 7,700,000 ordinary shares at a price of £0.65, which included a premium of £0.64.

The holders of ordinary shares are entitled to receive dividends as declared from time to time and are entitled to one vote per share at meeting of the Company. All shares rank equally with regard to the Company's residual assets.

Share issue expenses directly incurred in relation to issue of new shares which are classified as equity are treated as a reduction of the proceeds. Common costs relating to issue of new equity and listing of the Company's shares are allocated on a proportionate basis.

19. RESERVES

	Group				Company
	2009		2008			2009		2008
	US$		US$			US$		US$
Currency translation reserve
Balance at the beginning of the year/period	(15,281)		-			-		-
Exchange differences on consolidation	(1,060,968)		(15,281)			-		-
Balance at the end of the year/period	(1,076,249)		(15,281)			-		-
Retained profits
Balance at the beginning of the year/period	632,642		-			(17,625)		-
(Loss)/Profit for the year/period	(2,926,983)		632,642			(1,772,233)		(17,625)
Balance at the end of the year/period	(2,294,341)		632,642			(1,789,858)		(17,625)
Total reserves	(3,370,590)		617,361			(1,789,858)		(17,625)

20. MINORITY INTEREST

	Group
	2009		2008
	US$		US$
Balance at the beginning of the year/period	2,494		-
Cost of investment	-		2,502
Loss for the year/period	(2,494)		(8)
Balance at the end of the year/period	-		2,494

The loss absorbed by the equity holders of the Company is US$3,524 (2008: US$Nil).

21. OTHER INCOME

	Group				Company
	2009		09.01.2008			2009		09.01.2008
	US$		to			US$		to
			31.03.2008					31.03.2008
Foreign exchange gain	199,662		-			140,946		-
Interest income	94,160		-			25,508		-
Others	6,925		1,569			-		-
	300,747		1,569			166,454		-

22. NEGATIVE GOODWILL WRITTEN BACK

In the previous period, negative goodwill written back represented the excess of the fair value of the subsidiaries net identifiable assets over the cost of acquisition at the date of acquisition as the result of a bargain purchase.

23. SERVICES CONSUMED

	Group
	2009		09.01.2008 to 31.03.2008
	US$		US$
Purchases consumed	262,057		15,759
Facility management expenses	679,887		-
Bonuses and wages	16,049,971		2,382,398
Contribution to provident funds	1,162,052		176,759
Others	1,030,712		138,678
	19,184,679		2,713,594

24. OPERATING EXPENSES

	Group				Company
	2009		09.01.2008 to 31.03.2008			2009		09.01.2008 to 31.03.2008
	US$		US$			US$		US$
Advertisement	11,706		5,172			-		-
Bad debt written off	134,684		-			-		-
Business promotion and marketing	78,098		-			41,296		-
Entertainment	45,315		-			-		-
Fringe benefit expenses	56,384		18,240			-		-
Insurance	45,886		-			13,954		-
Legal and professional fees	376,115		9,443			94,186		2,827
Postage	13,047		-			-		-
Printing and stationery	36,199		7,846			-		-
Provision for doubtful debts	199,023		14,268			-		-
Rental	397,490		60,211			-		-
Repair and maintenance	363,644		27,846			-		-
Telephone and fax	124,636		14,372			455		-
Travelling	508,417		55,605			3,306		-
Utilities	26,539		-			-		-
Others	232,675		46,457			42,475		14,798
	2,649,858		259,460			195,672		17,625

25. FINANCE COSTS

	Group
	2009		09.01.2008 to 31.03.2008
	US$		US$
Interest on bank overdraft	13,872		50,970
Interest on term loan	47,562		3,737
Interest on finance lease	20,216		3,423
Interest allocated from a related party	247,829		-
Others	78,401		2,203
	407,880		60,333

26. (LOSS)/PROFIT BEFORE TAXATION

(Loss)/profit before taxation is arrived at after charging:

	Group				Company
	2009		09.01.2008 to 31.03.2008			2009		09.01.2008 to 31.03.2008
	US$		US$			US$		US$
Bad debts written off	134,684		-			-		-
Staff Contribution to provident funds	1,162,052		176,579			-		-
Directors' remuneration	874,038		156,254			260,668		-
Director CPF contributions	1,390		-			1,390		-
Director fees	44,704		-			44,704		-
Accommodation and office rental	397,456		60,210			-		-
Rental of office equipment	9,563		3,760			-		-

27. TAXATION

	Group				Company
	2009		09.01.2008 to 31.03.2008			2009		09.01.2008 to 31.03.2008
	US$		US$			US$		US$
Current year taxation:
- Singapore taxation	-		-			-		-
- India taxation	234,773		51,965			-		-
Deferred tax benefit (Note 6)	(549,157)		(165,870)			-		-
	(314,384)		(113,905)			-		-

  

27. TAXATION (…CONT'D)

The current year's income tax benefit varied from the amount of income tax (benefit)/expense determined by applying the applicable Singapore statutory income tax rate of 17% (2008: 18%) to the (loss)/profit before income tax as a result of the following differences: 

	Group				Company
	2009		2008			2009		2008
	US$		US$			US$		US$
Accounting (loss)/profit	(3,243,861)		518,729			(1,772,233)		(17,625)
Income tax (benefit)/expense at applicable rate	(551,456)		93,371			(301,280)		(3,173)
Non taxable income	-		(135,516)			-		-
Non allowable expenses	834,566		11,165			301,280		3,173
Difference in tax rate	(584,015)		4,889			-		-
Accelerated tax depreciation	4,662		1,950			-		-
Gratuity	-		(16,720)			-		-
Tax losses carried forward	-		(41,972)			-		-
Unabsorbed capital allowances	-		(26,364)			-		-
Others	(18,141)		(4,708)			-		-
	(314,384)		(113,905)			-		-

One of the subsidiary companies has unabsorbed tax losses and capital allowances amounting to approximately US$1,794,000 and US$29,000 (2008: US$233,000 and US$146,000), respectively available for offsetting against future taxable income of the subsidiaries for the next seven assessment years subject to conditions imposed by the Indian Income Tax Act.

28. (LOSSES)/EARNINGS PER SHARE

The basic and diluted (losses)/earnings per share for six months have been calculated using the net results attributable to shareholders as the numerator.

Calculation of basic and diluted (losses)/earnings per share are as follows:

	2009		09.01.2008 to 31.03.2008
(Losses)/Earnings attributable to equity holders (in US$)	(2,926,983)		632,642
Weighted average number of ordinary shares outstanding for basic  and diluted (losses)/earnings per share	46,771,782		9,095,891
Basic and diluted (losses)/earnings per share (US$ per share)	(0.06)		0.07

29. OPERATING LEASE COMMITMENTS

At the balance sheet date, the Group and the Company had commitments in respect of operating leases as follows:

	Group
	2009		2008
	US$		US$
Within one year	188,232		186,532
Within two to five years	65,308		43,989
	253,540		230,521

Operating lease commitments represent rental payable by the Group for offices and guest houses. The leases have varying terms and renewal rights.

30. OTHER COMMITMENTS

The Company had obtained bank guarantees totalling US$259,937 (2008: US$67,382) in favour of customers with respect to the Company's activities. The bank guarantees are secured by fixed deposits (Note 7) amounting to US$111,933 (2008: US$14,589).

 

31. RELATED PARTY TRANSACTIONS

An entity or individual is considered a related party of the Group for the purpose of the financial statements if: 

(i) it possesses the ability (directly or indirectly) to control or exercise significant influence over the financial and operating decisions of the Group or vice versa; or 

(ii) it is subject to common control or common significant influence.

In addition to the information disclosed elsewhere in the financial statements, related party transactions between the Group and Company and its related parties, the following transactions are the significant related party transactions entered into by the Company and the Group on terms agreed between the parties:

	Group
	2009		09.01.2008 to 31.03.2008
	US$		US$
Rent paid to related party	200,110		-
Repayments of loan from related parties	1,166,040		-
Receipts of loan to related parties	53,961		1,063,489
Advances from related parties	40,973		-
Advances to related parties	666,687		54,426
Assets purchased from a shareholder	-		5,629

  

31. RELATED PARTY TRANSACTIONS (…CONT'D)

Details of Related Party Transactions				Group
	2009		2009				09.01.2008 to 31.03.2008			09.01.2008 to 31.03.2008
	US$		US$				US$			US$
Rent paid to related party	-		200,110				-			-
-Micro Azure Computers Pvt Ltd	200,110		-				-			-
Repayments of loan from related parties	-		1,166,040				-			-
-Peregrine Security Pvt Ltd	1,165,775		-				-			-
-Peregrine Facilities Management Systems Pvt Ltd	265		-				-			-
Receipts of loan to related parties	-		53,961				-			1,063,489
-Peregrine Facilities Management Systems Pvt Ltd	18,559		-				1,063,489			-
-ADL Management consultants Pvt Ltd	40		-				-			-
-Peregrine Safety Systems Pvt Ltd	35,362		-				-			-
Advances from related parties	-		40,973				-			-
-ADL Management consultants Pvt Ltd	39,254		-				-			-
-Micro Azure Computers Pvt Ltd	1,719		-				-			-
Advances to related parties	-		666,687				-			54,426
-Peregrine Security Pvt Ltd	666,687		-				-			-
-Peregrine Facilities Management Systems Pvt Ltd	-		-				18,558			-
-Peregrine Safety Systems Pvt Ltd	-		-				35,362			-
ADL Management consultants Pvt Ltd	-		-				506			-
Assets purchased from a shareholder	-		-				-			5,629
-Manjit Rajain	-		-				5,629

31. RELATED PARTY TRANSACTIONS (…CONT'D)

Compensation of directors and key management personnel

The remuneration of directors and other members of key management of the Group during the financial year/period are as follows:

	Group
	2009		09.01.2008 to 31.03.2008
	US$		US$
Short-term benefits	874,038		156,254

32. IMMEDIATE AND ULTIMATE HOLDING COMPANY

The Company's immediate and ultimate holding Company is Mancom Holdings Limited, a Company incorporated in the British Virgin Islands.

33. FINANCIAL RISK AND CAPITAL RISK MANAGEMENT

a) Liquidity risk

Prudent liquidity risk management implies maintaining sufficient cash and marketable securities, the availability of funding through an adequate amount of committed credit facilities. Due to the dynamic nature of the underlying businesses, the Group aims to maintain flexibility in funding by keeping committed credit lines available. Group's financial liabilities which give rise to liquidity risk have been summarised below:

	Due within 6 months		Due in 6 to 12 months		Due in 1 to 5 years
	US$		US$		US$
2009
Trade payables	399,627		-		-
Other payables	2,733,403		-		-
Borrowings	42,102		48,116		151,820
Finance lease	29,348		31,412		78,812
	3,204,480		79,528		230,632
2008
Trade payables	1,357,639		32,821		-
Other payables	2,672,873	-	-		-
Borrowings	322,367		46,685		237,883
Finance lease	20,804		22,225		97,271
	4,373,683		101,731		335,154

b) Foreign currency risk

The Group is not exposed to currency translation risk as almost all of its transactions are denominated in Indian rupees except for certain transactions in United States dollars and Pound Sterling.

c) Credit risk

Credit risk is managed through adopting the policy of dealing only with customers having an appropriate credit history and the application of monitoring procedures. The carrying amount of each financial asset in the balance sheet represents the Group's maximum exposure to credit risk. The Company has no significant concentrations of credit risk with any single customer.

The credit risk for trade receivables is mainly concentrated in India and the ageing analysis for the trade receivables of the Group and the Company as at year end are as follows: 

	Group
	2009		2008
	US$		US$
Due less than 3 months	3,893,786		3,032,059
Due between 3 - 6 months	339,952		200,551
Due between 6 - 12 months	208,759		351,921
Due more than 12 monhts	188,500		105,798
	4,630,997		3,690,329

d) Interest rate risk

The Group's exposure to market risk for changes in interest rates is disclosed in notes 9, 15 and 16 to the financial statements.

e) Fair values

The carrying amounts of cash and cash equivalents, trade and other receivables, related party balances, trade and other payables, current portion of finance lease and borrowings approximate their fair values due to their short-term nature.

f) Capital risk

The Group's objectives when managing capital are: to safeguard the Group and the Company's ability to continue as a going concern, so that it can continue to provide returns for shareholders and benefits for other stakeholders, and to provide an adequate return to shareholders by pricing products and services commensurately with the level of risk. The management sets the amount of capital in proportion to risk. The management manages the capital structure and makes adjustments to it in the light of changes in economic conditions and the risk characteristics of the underlying assets. The board of directors monitors the Group's capital based on net debt and total capital. Net debt is calculated as trade payables, other payables, finance lease, bank overdraft, retirement benefit obligations and borrowings less cash and bank balances. Total capital is calculated as equity plus net debt.

	Group				Company
	2009		2008		2009		2008
	US$		US$		US$		US$
Net debt	1,627,909		4,713,453		(907,247)		563,514
Total equity	6,184,722		1,019,856		7,765,454		382,376
Total capital	7,812,631		5,733,309		6,858,207		945,890

The Company is not subject to externally imposed capital requirements.

 

NOTES TO THE FINANCIAL STATEMENTS FOR THE FINANCIAL YEAR ENDED 31 MARCH 2009 (…CONT'D)

34. SEGMENT REPORTING

	Facilities management services		Guarding services		Other operations		Eliminations		Total operations
	2009	2008	2009	2008	2009	2008	2009	2008	2009	2008
	US$	US$	US$	US$	US$	US$	US$	US$	US$	US$
Total external revenue	1,709,993	23,486	21,104,590	3,368,573	476,082	-	-	-	23,290,665	3,392,059
Inter-segment revenue	216,497	-	253,793	591	-	-	(470,290)	(591)	-	-
Total segment revenue	1,926,490	23,486	21,358,383	3,369,164	476,082	-	(470,290)	(591)	23,290,665	3,392,059
Segment results	(1,983,445)	(232,852)	865,054	178,061	54,643	-			(1,063,748)	(54,791)
Unallocated expenses									(1,938,687)	(17,625)
Unallocated income									166,454	651,478
Results from operating activities									(2,835,981)	579,062
Finance expenses	(5,107)	(329)	(402,495)	(60,004)	(278)	-			(407,880)	(60,333)
Income tax expense	491,540	126,906	(181,857)	(13,001)	4,701	-			314,384	113,905
(Loss)/profit for the year									(2,929,477)	632,634
Segment assets	5,262,936	919,640	8,293,731	5,529,848	68,422	-	(3,862,062)	(845,577)	9,763,027	5,603,911
Unallocated assets									1,302,744	556,243
Consolidated assets									11,065,771	6,160,154
Segment liabilities	876,041	779,710	7,019,693	4,259,839	74,767	-	(3,476,417)	(467,793)	4,494,084	4,571,756
Unallocated liabilities									386,965	568,542
Consolidated liabilities									4,881,049	5,140,298
Other segment items
Capital expenditure	130,331	13,656	241,838	84,392	-	-
Depreciation	15,828	271	145,825	20,130	-	-

\* The financial statements cover financial period from 9 January 2008 to 31 March 2008

35. SHARE BASED EMPLOYEE REMUNERATION

The Board of Directors of the Company resolved on 14 July 2009 to cancel the share options scheme with retrospective effect.

36. SUBSEQUENT EVENTS

On 22 June 2009, Tenon Property Services Pvt Ltd acquired 100% shares in Rotopower Project Pvt Ltd (Rotopower), a Company incorporated in India. Rotopower Project Pvt Ltd is engaged in the business of mechanical and engineering maintenance, housekeeping and also providing services to telecom tower companies at the tower sites for the maintenance and running of the electrical equipments etc.

Tenon Property Services Pvt Ltd acquired 21,500 shares of Rotopower for a consideration of INR 100 million (US$1.9 million). The acquisition was made by Tenon Property Services Pvt Ltd out of the funds raised from the listing on AIM. In settlement for the acquisition, the Tenon Property Services Pvt Ltd made an upfront payment of INR 85 million (US$1.6 million). Further, as a part of deal structure, the Company is entitled to be indemnified by the selling shareholders (Indemnifier) towards contingencies and representations and warranties listed in the Share purchase agreement. The balance purchase consideration of INR 15 million (US$0.3 million) will be paid after 2 years from the date of closing.

37. COMPARATIVE FIGURES

The financial statements for the year ended 31 March 2009 cover the financial period from 1 April 2008 to 31 March 2009 while the previous financial statements cover the financial period from 9 January 2008 to 31 March 2008; hence, the income statement, changes in equity, cash flows and related notes are not comparable.

ENDFR PUUPARUPBPUA