Interim Results

21 December 2010

MORTICE LIMITED

Interim Results

Mortice Ltd (AIM:MORT) ("Mortice" or the "Company"), the AIM listed security and facilities management company based in India, today announces its interim results for six months ended 30 September 2010.

Operational highlights

·; Strong growth in business across all business verticals

·; Profit after tax of USD 275,627 for the six months ended 30 September 2010 compared to a loss of USD 520,167 for the same period last year

·; While revenue recorded growth of 60.6%, the total costs grew by only 49.9%

Facilities Management Services

·; More than 30 new contracts for the period under review with a spread around India. 

·; Increase in cross sales to Guarding services customers

·; The facilities management business has continued to grow and now employs approximately 4300 employees

Guarding Services

·; More than 80 new contracts for the period under review

·; Equal distribution of wins across North India and South India, increasing the Company's presence across India.

Financial highlights

·; Revenues increased to USD 21.9 million, an increase of 60.6% (30 September 2009: USD 13.6 million)

·; Guarding Revenues income increased to USD 15.9 million (30 September 2009: USD 11.0 million) an increase of 44.4%

·; Facilities Management Revenues USD 5.52 million (30 September 2009: US$ 2.3 million) an increase of 138.2%

·; Group Gross Margin of 16.1%

The revenue growth, when analysed in Indian rupee terms, has been 52.6% which, the directors believe is a reflection of the strengthening of the Indian Rupee against the US dollar during the period under review.

Further, the Company notes that as a part of the audit process for the financial year ended 31 March 2010, the statement of financial position as at 30 September 2009 has been re-presented due to reclassification of certain comparative figures. The Company has adopted the presentation of statement of comprehensive income by nature of the expense method. The affected items are disclosed in note 9 accompanying the unaudited financial statements for the half year ended 30 September 2010. The Company notes that these presentational changes do not have an impact on the originally stated profit, earnings per share or net asset figures.

Manjit Rajain, Executive Chairman, commented:

"Mortice group companies are well positioned in the market to take advantage of the growth in demand. With the increasingly encouraging economic outlook for India, our customers are continuing to seek growth opportunities, which, in turn, is resulting in the growth of their guarding and facilities management needs. Our large presence in India and the extensive network of branches around the country allows us to serve the customers where they need our services. With a strong team in place which is continuously engaged with the market, we believe Mortice has the ability to emerge as one of the leading players in the guarding and facilities management sector."

Vaibhav Dayal, Chief Executive Officer, commented:

"The growth in our business across our service lines is very encouraging and we believe that future investment will also reward present performance. Since we have now set up points of presence in most of the regional markets in India, we believe that the costs of delivering services in these markets will remain level, and help the Company's competitive position in these markets as well as aid in winning new clients while retaining existing contracts. We are thankful to shareholders for their belief in us and we believe that Mortice will continue to prosper since it continues to have a highly energised team of people."

The Unaudited Condensed Consolidated Interim Financial statements of the Company for the period ended 30 September 2010 are presented below and a full version of these will be available on the Company's website www.morticegroup.com.

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Note to Editors

Mortice Limited, the India based security and facilities Management Company incorporated in Singapore, listed on AIM in May 2008 is the holding company of Peregrine Guarding Private Limited (Peregrine), Tenon Property Services Private Limited (Tenon) (together referred to as the "Group") and Rotopower Projects Private Limited, an Indian Facilities Management company based in Delhi, which was acquired by the Group in June 2009.

Peregrine has been providing security services in India for 15 years, establishing a client base all over India and developing a strong pan-India presence providing manned guarding in the process.

Peregrine has its presence in 28 Indian states and has clients in a range of sectors including ITES, manufacturing, pharmaceutical, banking and healthcare.

Tenon and Rotopower together constitute the facilities management service offering of Mortice to the market. Tenon, the facilities management arm of Mortice, was established to provide superior quality facilities management services. Tenon today operates in 19 Indian states and serves clients across India with a comprehensive and sophisticated service offering to the market.

Rotopower was established 15 years ago and now serves in 28 states/union territories in India. It provides a range of facilities management services that include mechanical and electrical maintenance services, annual maintenance contracts and housekeeping services to a wide range of customers. Rotopower also provides services to telecom tower companies for the maintenance and running of electrical equipment.

Chairman's Statement

Both I and the other Directors of the Company believe that Mortice has had an excellent journey so far in the first six months of the financial year ending 31 March 2011. During the period, the Company's revenues for each of its business segments grew significantly. The Company grew by approximately 60.6% on the top line over the period. Furthermore, the Company added more than 80 new contracts in its Guarding divisions and 30 new contracts in its Facilities Management divisions, in the period under review, expanding its reach into diverse industry sectors such as, hospitality, retail, financial services, energy, media, manufacturing, IT and ITeS, commercial real estate, healthcare, insurance and telecoms. The Directors believe that the Company has now established itself as a strong and recognised brand in India and that this recognition will provide the Company with greater traction for future growth. Furthermore, the bottom-line performance of the Company has improved significantly, with the Company reporting a profit in the six month period ended 30 September 2010.

Over the financial year ended 31 March 2010, the Directors of the Company stated that, with the Indian economy showing signs of recovery and an increase in deal flow, the long term prospects of the Company remained positive. As Executive Chairman of the Company, I am delighted to say that, the Directors of the Company believe that Mortice has taken full advantage of the increasingly positive economic signs and that this will hopefully create a solid platform for future growth.

The Indian economy continues to grow at a notable rate, with the business, industry and agriculture sectors all expected to grow significantly over the fiscal year in India. The Indian Government has forecast GDP growth in the fiscal year 2010-11 to range between 8.40% - 9.10%. Increased investment and strong domestic demand are expected to be the underlying factors behind this economic growth. With the Indian economy showing continued signs of growth, the Directors of the Company believe that the long term prospects of the Company continue to remain positive.

Notes:

Source of GDP estimate : http://www.silobreaker.com/india-government-raises-gdp-growth-forecast-to-875-this-fiscal-year-5_2263919163422539798

Unaudited Condensed Consolidated Statements of Financial Position 

(All amounts in United States Dollars, unless otherwise stated)

 (The accompanying notes are an integral part of these unaudited condensed consolidated interim financial statements)

Unaudited Condensed Consolidated Statement of Comprehensive Income

(All amounts in United States Dollars, unless otherwise stated)

(The accompanying notes are an integral part of these unaudited condensed consolidated interim financial statements)

(The accompanying notes are an integral part of these unaudited condensed consolidated interim financial statements)

Unaudited Condensed Consolidated Statement of Changes in Equity

 (All amounts in United States Dollars, unless otherwise stated)

(The accompanying notes are an integral part of these unaudited condensed consolidated interim financial statements)

Unaudited Condensed Consolidated Statements of Cash Flows

(All amounts in United States Dollars, unless otherwise stated)

Notes to Unaudited Condensed Consolidated Interim Financial Statements

(All amounts in United States Dollars, unless otherwise stated)

1. INTRODUCTION

Mortice Limited ('the Company' or 'Mortice') was incorporated on 9 January 2008 as a public limited company in the Republic of Singapore. The Company's registered office is situated at 36 Robinson Road, #17-01 City House, Singapore 068877.

The Company was listed on the Alternative Investment Market (AIM) of the London Stock Exchange on 15 May 2008. The Company along with its subsidiaries (hereinafter, together referred to as 'the Group') are engaged in providing guarding services, facilities management services, mechanical and engineering maintenance services and sale of safety equipment and their installation. The Group's operations are spread across India. The various entities comprising the Group are defined below.

These unaudited condensed consolidated financial statements were approved by the Board on 21 December 2010.

The immediate and ultimate holding company is Mancom Holdings Limited, a company incorporated in British Virgin Islands.

2. BASIS OF PREPARATION

These Condensed Consolidated Interim Financial Statements are for the six months ended 30 September 2010. They have been prepared in accordance with IAS 34 Interim Financial Reporting as developed and published by the International Accounting Standards Board ('IASB'), on a going concern basis. They do not include all of the information required in annual financial statements in accordance with IFRS, and should be read in conjunction with the consolidated financial statements of the Group for the year ended 31 March 2010.

The functional currency of the entities within the Group (other than the Company) is Indian Rupees (INR). The Company has a functional currency of United States Dollars ('USD'). The group's management has chosen to present the consolidated financial information in USD, the functional currency of the Company.

All inter-company transactions and balances are eliminated on consolidation and the unaudited condensed consolidated interim financial statements reflect external transactions only. The accounting periods of the subsidiaries are coterminous with that of the Company.

Previous period's amounts have been regrouped/ reclassified, wherever considered necessary to make them comparable with those of the current period.

3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

The accounting policies applied by the Group in these condensed consolidated interim financial statements are the same as those applied by the Group in its consolidated financial statements as at and for the year ended 31 March 2010.

The Group has adopted following amendment to IFRS issued by IASB which are relevant to and effective for the group financial statements for period beginning 1 April 2010.

IAS 27 Consolidated and Separate Financial Statements (Revised 2008) (effective for accounting periods beginning on or after 1 July 2009)

The revised standard introduces changes to the accounting requirements for the loss of control of a subsidiary and for changes in the Group's interest in subsidiaries. These changes have been applied in accordance with the standard in respect of group's interest in subsidiaries. The revised standard also gives guidance on computation of non-controlling interest results in a debit balance. In term with the transitional provisions of the standard, the company has not restated any profit or loss attribution for reporting periods before the amendment is applied.

4. TRANSFER OF FACILITY MANAGEMENT CONTRACTS

During the reporting period, customer contracts that were sub-contracted to Tenon Support Services by Tenon Property Services , both subsidiaries of the Company , have been transferred back to the Tenon Property Services, in respect of the business existing up to 31 May 2010. Going forward, Tenon Support Services will continue to operate the remaining contracts and source other non-facilities management business.

5. SEGMENT ANALYSES

The Group has reported segment results based on internal management reporting information that is regularly reviewed by the Group's Chief Executive Officer and Chairman. Chief Executive Officer and Chairman have concluded that the operating segment disclosure should be based on service offered by Group.

The reportable segments identified by the group are: guarding services and facility management services.

The revenue and profit generated by each of Group's business segments are summarized as follows:

Reconciliation on reportable segments profit/ (loss) to group loss is summarised as under:

*Relates to expenses and income recorded in Mortice

6. PROFIT / (LOSS) PER SHARE

The basic and diluted profit / (loss) per share for six months ended 30 September 2010 and 30 September 2009 have been calculated using the net results attributable to owners of Mortice Limited as the numerator.

Calculation of basic and diluted profit / (loss) per share is as follows:

7. RELATED PARTY TRANSACTIONS

Related parties include subsidiaries, key management and entities in which the key management has interest or control.

Disclosure of transactions between the Group and related parties and the status of outstanding balances as on 30 September 2010 and 30 September 2009 is as under:

The outstanding balance payable to related parties under the category of key management as at 30 September 2010 and 30 September 2009 are USD 29,335 and USD 36,534 respectively.

In addition to the above, the key management personnel participate in the gratuity plan of the Group.

Transactions with enterprises over which KMP'S are able to exercise significant influence

8. Operating lease commitments (non-cancellable)

At the financial position date, the Group and the Company were committed to making the following rental payments in respect of non-cancellable operating leases of office premises with an original term of more than one year:

9. Comparatives figures

The statement of financial position as at 30 September 2009 has been re-presented due to reclassification of certain comparative figures. The reclassified item are Restricted Cash, Other assets, Trade and Other receivables and Borrowings , which have been presented at the face of statement of financial position which was grouped under Long Term Financial assets, ,related party receivables, other current assets, Finance lease obligations, Long term Borrowings and Deferred consideration in prior year. In addition, the company had adopted the presentation of statement of comprehensive income by nature of expense method. The affected items are disclosed below. There is no change to the loss for the year.