Interim Results

Mortice Limited ("Mortice" or the "Company")

Interim Results

Mortice Limited (AIM: MORT), the AIM listed security and facilities management company with India focused operations, today announces its interim results for six months ended 30 September 2014.

Financial highlights:

· Group revenues increased by 19.40% in INR terms to INR 2,583 million and 17.27% in US$ terms to US$ 42.98 million compared to the six months to 30 September 2013 ("H1 2013").

· Guarding services revenue has grown by 21.4% in INR terms to INR 184.56 million and 19.2% in US$ terms to US$ 30.66 million compared to H1 2013.

· Facilities Management services revenue has grown by 15% in INR terms to INR 730.10 million and 13% in US$ terms to US$ 12.13 million compared to H1 2013.

· EBITDA has increased by 2% in US$ terms compared to H1 2013.

· Compared to the financial year ended 31st March 2014, PBT as a percentage of revenue has increased from 2.5% to 3.1% (H1 2013: 4.2%).

· Profit before taxation reduced by 14.1% in INR terms to INR 79.01 million (H1 2013: INR 92.02 million) and 16% in USD terms to US$1.3 million (H1 2013: US$ 1.6 million)

· There was a reduction in the value of INR compared with US$. The average price of US$1 in the period was INR 60.19, whereas the previous half year it was INR 59.11 resulting in a currency devaluation of 1.8%. INR is our functional currency while US$ is our reporting currency.

The Directors are pleased by the overall operational performance achieved in the first half year. Once again, due to negative fluctuations in exchange rates, the performance in the reporting currency is more moderate compared to that reported under the functional currency. As was reported in the annual financial results published on 15 September 2014 the business was negatively impacted by a number of factors related to several client companies ceasing to trade and this has continued to affect the level of profits, however the PBT % of revenue has increased from 2.5% of revenue in the financial year ending 31 March 2014 to 3.1% of revenue in this half year. With the improving business climate in India and the increase in clients that have been won recently, the Company is now well positioned to continue to grow and focus on increasing profits.

Statement by the Executive Chairman, Mr. Manjit Rajain

"During the period we have made excellent progress in increasing our share in the security and facilities management services industry in India. The growth has been achieved through a combination of organic business growth with existing clients and new long term contracts secured during the period. We have continued to display strong growth in headline revenue and made improvements in profitability through reduction of cost and concentration on high margin business.

I am also happy to share that India's economic outlook is progressing in the right direction and the new government appears to be both business friendly and making a serious effort to revive growth. A more focused approach by this Government to simplify and implement labour laws will help expedite the move to a far better organised and regulated security and facilities management industry. We would expect this to lead to consolidation which will be advantageous to a company of our size. Furthermore, premium clients have increased their focus on statutory compliance and good corporate governance, both of which will be supportive to our growth. All of these factors supported by accelerated economic growth and enhanced investments in infrastructure will certainly bring greater value to our business.

We continue to invest in building capacity and exploring new value added services in order to enhance the contribution generated by our business.

In additions to India, other SAARC countries are also gaining momentum in terms of economic growth and hence our plan to expand operations in emerging Asian economies should get a boost.

We remain confident and look forward to continuing our growth path."

For further information please contact:

The unaudited interim financial statements will be available on the Company's website, www.morticegroup.com, shortly. 

Unaudited condensed consolidated statement of financial position

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

Unaudited condensed consolidated statement of profit or loss and other comprehensive income

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

Unaudited condensed consolidated statement of changes in equity

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

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

These unaudited condensed consolidated financial statements were approved by the Board on 19 November 2014.

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 2014 have been prepared in accordance with IAS 34 Interim Financial Reporting as adopted by the European Union (EU), 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 2014.

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 ('US$'). The group's management has chosen to present the consolidated financial information in US$, 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

Notes to unaudited condensed consolidated interim financial statements (contd.)

3. SIGNIFICANT ACCOUNTING POLICIES

The interim financial statements have been prepared in accordance with the accounting policies adopted in the Group's most recent annual financial statements for the year ended 31 March 2014 except for the application of the following standards as of 1 April 2014.

a. IFRS 10 "Consolidated Financial Statements"

b. IFRS 11 "Joint Arrangements"

c. Amendments to IAS 32

The effect of applying these standards are described below-

IFRS 10 'Consolidated Financial Statements' (IFRS 10)

IFRS 10 supersedes IAS 27 'Consolidated and Separate Financial Statements' (IAS 27) and SIC 12 'Consolidation-Special Purpose Entities'. IFRS 10 revises the definition of control and provides extensive new guidance on its application. These new requirements have the potential to affect which of the Group's investees are considered to be subsidiaries and therefore change the scope of consolidation. The requirements on consolidation procedures, accounting for changes in non-controlling interests and accounting for loss of control of a subsidiary are unchanged. The remainder of IAS 27, "Separate Financial Statements", now contains accounting and disclosure requirements for investments in subsidiaries, joint ventures and associates only when an entity prepares separate financial statements and is therefore not applicable in the Group's consolidated financial statements.

Management has reviewed its control assessments in accordance with IFRS 10 and has concluded that there is no effect on the classification (as subsidiaries or otherwise) of any of the Group's investees held during the period or comparative periods covered by these financial statements.

IFRS 11 'Joint Arrangements' (IFRS 11)

"Joint Arrangements" ("IFRS 11"), which replaces IAS 31, "Interests in Joint Ventures" and SIC-13, "Jointly Controlled Entities - Non-monetary Contributions by Ventures", requires a single method, known as the equity method, to account for interests in joint operations and joint ventures. The proportionate consolidation method to account for joint ventures is no longer permitted to be used. IAS 28, "Investments in Associates", was amended as a consequence of the issuance of IFRS 11. In addition to prescribing the accounting for investments in associates, it now sets out the requirements for the application of the equity method when accounting for joint ventures. The application of the equity method has not changed as a result of this amendment. The Group has not entered into any joint arrangements, hence this is not applicable.

Offsetting financial assets and financial liabilities - amendments to IAS 32

These amendments clarify the meaning of 'currently has a legally enforceable right to set-off' and the criteria

for non-simultaneous settlement mechanisms of clearing houses to qualify for offsetting. These amendments

have no impact on the Group

4. ESTIMATES

When preparing the interim financial statements, management undertakes a number of judgments, estimates and assumptions about recognition and measurement of assets, liabilities, income and expenses. The actual results may differ from the judgments, estimates and assumptions made by management, and will seldom equal the estimated results.

The judgments, estimates and assumptions applied in the interim financial statements, including the key sources of estimation uncertainty were the same as those applied in the Group's most recent annual financial statements for the year ended 31 March 2014.

Notes to unaudited condensed consolidated interim financial statements (contd.)

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 to group profit is summarised as under:

6. EARNINGS PER SHARE

Both basic and diluted earnings per share have been calculated using the profit or loss attributable to shareholders of Mortice Limited as the numerator.

Calculation of basic and diluted profit per share is as follows:

Notes to unaudited condensed consolidated interim financial statements (contd.)

7. RELATED PARTY TRANSACTIONS

A. Related party relationship

Disclosure of Related parties and relationship between the parties:

Ultimate Holding Company Mancom Holdings Limited

Entities on which KMP exercise significant influence: Peregrine Services Private Limited

(where transaction occurred) Micro Azure Computers Private Limited

Peregrine Protection Services Private Limited

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

Significant related party transactions, other than those disclosed elsewhere in the financial statements, are as follows:

Transaction with key management:

The outstanding balance payable to related parties under the category of key management as at 30 September 2014 and 30 September 2013 is US$ 31,735 and US$ 28,775 respectively.  

Notes to unaudited condensed consolidated interim financial statements (contd.)

8. PROPERTY, PLANT AND EQUIPMENT

The acquisitions of property, plant and equipment, for the six months ended 30 September 2014 are US$521,030 (six months ended 30 September 2013: US$273,534 and for the twelve months ended 31 March 2014 are US$968,826).

9. FINANCIAL INSTRUMENTS

(Financials assets and liabilities measured at amortised cost)

Fair values

The carrying amount of financial assets and liabilities with a maturity of less than one year is assumed to approximate their fair values.

However, the Group and the Company do not anticipate that the carrying amounts recorded at financial position date would be significantly different from the values that would eventually be received or settled.

The carrying amounts of assets and liabilities presented in the statement of financial position relates to the following categories of assets and liabilities: