3 Sep 2012 07:00
3 September 2012
Mortice Limited
("Mortice" or the "Group")
PRELIMINARY RESULTS FOR YEAR ENDED 31 MARCH 2012
Mortice Limited (AIM:MORT), the AIM listed security and facilities management company with India focused operations, today announces its audited results for the financial year ended 31 March 2012.
Operating and financial highlights:
·; Revenue increased by 27% to US$ 61.0 million (2011: US$ 48.0 million) with growth achieved at all Mortice operating subsidiaries
·; EBITDA increased to US$ 4.1 million (2011: US$ 2.5 million) and EBITDA margin increased to 6.7% (2011: 5.1%)
·; Profit after tax increased by 99% to US$ 1.6 million (2011: US$ 0.8 million)
·; Revenue of Security business increased by 26% to US$ 44 million (2011: US$ 35 million)
·; Facilities Management (FM) business grew by 35% to US$ 16.7 million (2011: US$ 12.4 million)
The presentational currency of the Group's results is US dollars ("US$"), whilst the local and functional currency of the Group is Indian rupees ("INR"). The Group's US$ results were negatively impacted during the year from adverse exchange rate movements with INR falling more than 14% against the US$ during the year ended 31 March 2012. This resulted in a charge against profits of US$ 1.1 million (2011: gain US$ 91,000).
Commenting on the results, Manjit Rajain, Executive Chairman of Mortice said:
This is another year of impressive growth for Mortice with the Group making progress across all of its key business parameters. The Group's wholly owned subsidiaries, Peregrine Guarding Pvt Limited, Tenon property Services Pvt Ltd & Roto Power Projects Pvt Ltd have all made considerable progress during the year and the Board is optimistic that further organic revenue growth can be achieved in the current financial year ending 31 March 2013.
For further information please contact:
Mortice Limited Manjit Rajain, Executive Chairman | Tel: +91 981 800 0011 |
Seymour Pierce Limited Rick Thompson / David Foreman (Corporate Finance) Paul Jewell / Jeremy Stephenson (Corporate Broking) | Tel: +44 207 107 8010 |
Chairman's Statement
Overview
Our strategy to focus on organic growth and develop our integrated facilities management ("IFM") capabilities, together with our continuing objective of increasing our customer base, is progressing well. This has resulted in strong organic revenue and operating profit growth during the year.
Results
I am pleased to announce our financial results for the year 2011-12. Not only have we grown revenues at a commendable rate of 27%, we have also generated profits after taxation for the second consecutive year. The market potential for IFM as well as for security and security-related solutions in India is huge and is supported by the development of high end commercial complexes and retail outlets. These developments have significant positive impact across all our business segments, but particularly at Tenon, our IFM business, which is well positioned to deliver future growth.
We see our strong performance in 2011-12 as a clear sign that Mortice is on the right track in implementing "The Mortice way" strategy. Whilst we can provide single service offerings to customers, we are increasingly providing multi-service offerings including security, cleaning, engineering, annual maintenance contracts, catering and facility services, thereby providing a one-stop shop for all manner of non-core operations of our customers.
During the year, Group revenues grew by 27% to US$61 million (2011: US$48 million) and profit before tax increased by 103% to US$2.6million (2011: US$1.28 million).
The Mortice security business increased revenues by 26% to US$ 44 million (2011: US$ 35 million) and improved profit before taxation ("PBT") margin of 4.32% (2011: 3.06%). The increase in turnover was due to several significant contract wins in manufacturing, real estate, commercial complexes, hospitality, telecoms and banking sectors across four states of India where historically we did not have a significant presence. The reason for profit margins increasing was mainly due to the shedding of low margin contracts together with organic growth on relatively better margins.
The Mortice facility management business increased revenues by 35% to US$ 16.75 million (2011: US$ 12.43 million) and improved PBT margin of 4.46% (2011: 2.16 %). The significant increase in profit margin was due to organic growth from new contracts in the hospitality, manufacturing, pharmeceutical, banking and FMCG sectors across three states of India where, as with our security business, we did not previously have a significant presence. In addition, we have continued to negotiate improved contract rates with existing clients during the year which whilst increasing turnover, also increased profit margins generated on those contracts. The profit margins of the Group's facility management business also increased due to more efficient staff utilisation, with staff related costs being 1.5% lower than last year.
Outlook
Our strategy of organically growing all our operating segments, but particularly the IFM model has been successful to date, and the Board believes the Group is well positioned to generate further growth and that 2012-13 will be equally rewarding. There are exciting opportunities in our markets for Mortice to take advantage as organizations seek to grow their business activities without the distraction of non-core activities. We have strong relationships with our diverse, high quality client base and we are committed to continually providing them with better quality and cost effective services.
Extracts from the audited financial statements are provided below and the full version of the audited financial statements is available on the Company's website www.morticegroup.com. The Annual Report for the year ended 31 March 2012 will be posted to shareholders in due course.
Statements of financial position
as at 31 March 2012
2012 | 2011 | ||
US$ | US$ | ||
Assets | |||
Non-Current | |||
Goodwill | 1,285,587 | 1,472,925 | |
Other intangible assets | 93,553 | 125,825 | |
Plant and equipment | 1,164,316 | 1,293,372 | |
Long-term financial assets | 715,813 | 1,325,975 | |
Deferred tax assets | 1,325,870 | 1,304,169 | |
4,585,139 | 5,522,266 | ||
Current | |||
Inventories | 186,436 | 143,099 | |
Trade and other receivables | 16,560,561 | 12,305,018 | |
Prepaid taxes | 1,005,950 | 1,684,804 | |
Cash and cash equivalents | 1,704,137 | 2,508,965 | |
19,457,084 | 16,641,886 | ||
Total assets | 24,042,223 | 22,164,152 | |
Equity | |||
Capital and reserves | |||
Share capital | 9,555,312 | 9,555,312 | |
Reserves | (1,742,329) | (2,334,492) | |
7,812,983 | 7,220,820 | ||
Non-controlling interest | 13,712 | 4,982 | |
Total equity | 7,826,695 | 7,225,802 | |
Liabilities | |||
Non-current | |||
Employee benefit obligations | 624,776 | 494,790 | |
Borrowings | 155,605 | 172,333 | |
780,381 | 667,123 | ||
Current | |||
Trade and other payables | 10,095,809 | 9,918,519 | |
Borrowings | 5,339,338 | 4,352,708 | |
15,435,147 | 14,271,227 | ||
Total liabilities | 16,215,528 | 14,938,350 | |
Total equity and liabilities | 24,042,223 | 22,164,152 |
Consolidated statement of comprehensive income
for the financial year ended 31 March 2012
2012 | 2011 | |||
Note | US$ | US$ | ||
Income | ||||
Service revenue | 61,086,788 | 48,030,132 | ||
Other income | 188,930 | 162,041 | ||
Total income | 61,275,718 | 48,192,173 | ||
Expenses | ||||
Staff and related costs | 53,168,404 | 42,296,669 | ||
Materials consumed | 725,884 | 816,436 | ||
Other operating expenses | 3,292,579 | 2,628,960 | ||
Depreciation and amortisation | 478,018 | 413,157 | ||
Finance costs | 1,005,575 | 753,713 | ||
Total expenses | 58,670,460 | 46,908,935 | ||
Profit before taxation | 2,605,258 | 1,283,238 | ||
Tax expense | 934,294 | 445,202 | ||
Profit for the year | 1,670,964 | 838,036 | ||
Other comprehensive income: | ||||
Exchange differences on translating foreign operations | (1,070,071) | 91,388 | ||
Total comprehensive income for the year | 600,893 | 929,424 | ||
| ||||
Profit attributable to: | ||||
- Owners of the parent | 1,662,234 | 833,148 | ||
- Non-controlling interest | 8,730 | 4,888 | ||
1,670,964 | 838,036 | |||
Total comprehensive income attributable to: | ||||
- Owners of the parent | 592,163 | 924,536 | ||
- Non-controlling interest | 8,730 | 4,888 | ||
600,893 | 929,424 | |||
Earnings per share: | ||||
Basic and diluted | 3 | 0.03 | 0.02 |
Consolidated statement of changes in equity
for the financial year ended 31 March 2012
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 2010 | 9,555,312 | (408,173) | (2,850,855) | 6,296,284 | 94 | 6,296,378 |
Profit for the year | - | - | 833,148 | 833,148 | 4,888 | 838,036 |
Other comprehensive income | - | 91,388 | - | 91,388 | - | 91,388 |
Balance at 31 March 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 | - | (1,070,071) | - | (1,070,071) | - | (1,070,071) |
| ||||||
Balance at 31 March 2012 | 9,555,312 | (1,386,856) | (355,473) | 7,812,983 | 13,712 | 7,826,695 |
Consolidated statement of cash flows
for the financial year ended 31 March 2012
2012 | 2011 | ||
US$ | US$ | ||
Cash Flows from Operating Activities | |||
Profit before taxation | 2,605,258 | 1,283,238 | |
Adjustments for: | |||
Depreciation and amortisation | 478,018 | 413,157 | |
Interest expense | 1,005,575 | 753,713 | |
Interest income | (68,771) | (84,543) | |
(Profit)/ loss on sale of fixed assets | (3,085) | 3,431 | |
Impairment of trade receivables | 85,614 | (67,723) | |
Foreign exchange loss /(gain) | (46,942) | 3,627 | |
Bad debts written off | 153,905 | - | |
Operating profit before working capital changes | 4,209,572 | 2,304,900 | |
Changes in operating assets and liabilities | |||
Working capital changes: | |||
Trade and other receivables | (6,668,230) | (3,586,183) | |
Inventories | (65,659) | (50,822) | |
Trade and other payables | 1,711,180 | 3,803,919 | |
Cash generated from operations | (813,137) | 2,471,814 | |
Income tax paid | (435,842) | (1,195,247) | |
Interest paid | (985,648) | (754,580) | |
Net cash (used in)/generated from operating activities | (2,234,627) | 521,987 | |
Cash Flows from Investing Activities | |||
Acquisition of plant and equipment (Note 5) | (361,841) | (428,060) | |
Proceeds from disposal of plant and equipment | 15,674 | 1,207 | |
Interest received | 84,421 | 11,953 | |
Net cash used in investing activities | (261,746) | (414,900) | |
Cash Flows from Financing Activities | |||
Repayment of long term borrowings | (14,235) | - | |
Repayment of finance lease obligation | (138,440) | (302,628) | |
Placement of pledged fixed deposit | 476,294 | (1,061,706) | |
Proceeds from short term borrowings, net | 1,652,374 | 3,032,555 | |
Net cash generated from financing activities | 1,975,993 | 1,668,221 | |
Net (decrease)/increase in cash and cash equivalents | (520,380) | 1,775,308 | |
Cash and cash equivalents at beginning of year | 2,508,965 | 697,408 | |
Effect of change in exchange rate on cash and cash equivalents |
(284,448) |
36,249 | |
Cash and cash equivalents at end of year | 1,704,137 | 2,508,965 |
Notes to the financial statements
for the financial year ended 31 March 2012
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 AIM Market of the London Stock Exchange on 15 May 2008. The Company, together with its subsidiaries (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 are:
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 |
The immediate and ultimate holding company is Mancom Holdings Limited, a Company incorporated in British Virgin Islands.
2 Basis of preparation
The financial information set out above for the years ended 31 March 2012 and 2011 were approved and authorised for issue by the board of directors on 21 August 2012. The financial information set out in this preliminary announcement does not constitute audited financial statements for the year ended 31 March 2012 but is derived from those statements upon which the company's auditors have given an unqualified report. The results have been prepared using accounting policies consistent with those used in the preparation of the statutory accounts.
The financial statements 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 for years ended 31 March 2012 have been endorsed by the EU, except that the EU did not adopt some paragraphs of IAS 39 application to certain hedge transactions. Mortice has no hedge transactions to which these paragraphs are applicable. Consequently, the accounting policies applied by Mortice fully comply with IFRS as issued by the IASB.
The preparation of the financial statements in conformity with IFRS require the use of estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial information, including the reported amounts of revenues and expenses during the reporting period. Although these estimates are based on management's best knowledge of current events and actions, actual results may ultimately differ from those estimates.
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 | 2012 | 2011 | |
US$ | US$ | ||
Earnings attributable to equity holders (in US$) | 1,662,234 | 833,148 | |
Weighted average number of ordinary shares outstanding for basic and | |||
diluted earnings per share | 47,700,001 | 47,700,001 | |
Basic and diluted earnings per share (US$ per share) | 0.03 | 0.02 |
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 2012 and 2011, and certain assets and liabilities information regarding industry segments as at 31 March 2012 and 2011.
Facility management | Guarding service | Others | Total | |||||
2012 | 2011 | 2012 | 2011 | 2012 | 2011 | 2012 | 2011 | |
US$ | US$ | US$ | US$ | US$ | US$ | US$ | US$ | |
Segment revenue | 16,755,524 | 12,432,481 | 44,015,433 | 35,053,600 | 315,831 | 544,051 | 61,086,788 | 48,030,132 |
Foreign exchange gain/(loss) | ||||||||
Total | ||||||||
Depreciation and amortisation | 128,220 | 124,673 | 348,812 | 288,150 | 986 | 334 | 478,018 | 413,157 |
Materials consumed | 441,727 | 392,449 | 8,685 | 9,036 | 275,472 | 414,951 | 725,884 | 816,436 |
Staff and related costs | 14,672,779 | 11,070,906 | 38,424,049 | 31,121,936 | 71,576 | 103,827 | 53,168,404 | 42,296,669 |
Other operating expenses | 647,451 | 508,827 | 2,448,709 | 1,879,023 | 13,533 | 20,663 | 3,109,693 | 2,408,513 |
Finance costs | 118,532 | 66,867 | 884,657 | 684,362 | 366 | 676 | 1,003,555 | 751,905 |
Segment operating profit/ (loss) before tax | 746,815 | 268,759 | 1,900,521 | 1,071,093 | (46,102) | 3,600 | 2,601,234 | 1,343,452 |
Taxation | (310,063) | (87,655) | (622,641) | (351,263) | 1,187 | (6,284) | (931,517) | (445,202) |
Segment net profit / (loss) | 436,752 | 181,104 | 1,277,880 | 719,830 | (44,915) | (2,684) | 1,669,717 | 898,250 |
Segment assets | 8,575,086 | 8,126,087 | 15,337,661 | 13,822,122 | 73,661 | 200,494 | 23,986,408 | 22,148,703 |
Segment liabilities | 3,252,470 | 3,424,218 | 12,797,035 | 11,352,408 | 108,328 | 114,500 | 16,157,833 | 14,891,126 |
Other segment information: | ||||||||
Capital expenditures | 107,276 | 262,355 | 400,565 | 438,003 | 3,226 | 186 | 511,067 | 700,543 |
Depreciation of plant and equipment | 115,900 | 106,414 | 343,774 | 288,150 | 986 | 334 | 460,660 | 394,898 |
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 | 2012 | 2011 | |
US$ | US$ | ||
Segment operating profit/(loss) before tax | 2,601,234 | 1,343,452 | |
Reconciling items: | |||
Other income not allocated (Note 17) | 188,930 | 162,041 | |
Other expenses not allocated (Mortice Limited) | (184,906) | (222,255) | |
Group profit before tax | 2,605,258 | 1,283,238 |
The Group | 2012 | 2011 | |
US$ | US$ | ||
Segment gross profit/(loss) before tax | 2,605,258 | 1,283,238 | |
Reconciling items: | |||
Tax allocated | 931,517 | 445,202 | |
Other tax not allocated (Mortice Limited) | 2,777 | - | |
Group profit/(loss) after tax | 1,670,964 | 838,036 |
2012 | 2011 | ||
The Group | US$ | US$ | |
Segment assets | 23,986,408 | 22,148,703 | |
Reconciling items: | |||
Other assets not allocated (Mortice Limited) | 55,815 | 15,449 | |
Total assets | 24,042,223 | 22,164,152 |
2012 | 2011 | ||
The Group | US$ | US$ | |
Segment liabilities | 16,157,833 | 14,891,126 | |
Reconciling items: | |||
Other liabilities not allocated (Mortice Limited) | 57,695 | 47,224 | |
Total liabilities | 16,215,528 | 14,938,350 |
The operating subsidiaries are domiciled in India and there is only one geographical segment, i.e. India. Thus, no information has been presented by geographical segments.
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.