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A Platform for Growth

MORTICE LIMITEDTHE YEAR IN REVIEW2009-10

1MORTICE LIMITED & ITS SUBSIDIARIES – ANNUAL REPORT & ACCOUNTS 2010

Contents

Chairman’s Statement 2

Chief Executive’s Statement 3

CEO’s Year in Review:

- Tenon Property Services 4

- Peregrine Guarding 5

- Roto Power Projects 6

Financial Review 8

Company Information 10

Board of Directors 12

Directors’ Report 16

Corporate Governance Report 19

Statement by Directors 21

Independent Auditor’s Report 22

Financial Statements 24

Notes to Financial Statements 28

MORTICE LIMITED & ITS SUBSIDIARIES – ANNUAL REPORT & ACCOUNTS 20102

A Platform for Growth

The key elements to our growth over the financial year have been client focusedoperations, the continuing trust of our customers, training and developmentof our employees, delivery of an enhanced service and, above all, totaltransparency! The directors believe that we will be able to further strengthenour business in the Facilities Management and Guarding industries and benefitfrom the overall size and scale of our operations.

At Mortice, we are dedicated to the pursuit of growth and excellence in ourpeople, as they are the major asset for a Facilities Management and Guardingservice provider. We will continue to evolve our people management practicesto make Mortice a preferred workplace.

Our ability to give working solutions to our clients in our chosen areas ofbusiness is well appreciated by the market and gets us their continued supportand co-operation, leading to the growth of our business.

Peregrine, the Company’s security services subsidiary, has now been operatingfor 15 years in the security industry in India. Today, the directors believe thatthe Company is one of the largest security providers in India. We are confidentthat we will be able to maintain and enhance this position through oursuccessful client relationships and repeat business contracts.

The Company acquired Roto Power in June 2009 and it has now beensuccessfully integrated within Tenon. The Directors are confident that thisacquisition will continue to show fruitful results in the future. Tenon, theCompany’s facilities management arm has continued to provide high levelservices to its customers across India, including remote locations, and this hasresulted in increased contracts wins, which, in turn has led to growth in thebusiness.

The platform we have now established is a result of a significant team effortunder challenging market conditions. The Indian economy continues along itsgrowth path and is expected to record 8.5 per cent GDP growth in 2010-2011,but in financial year 2011-2012, it is estimated that India’s GDP may grow at 9per cent with further growth to follow.

While the majority of the past financial year continued to witness the globaleconomic downturn, we started to see the beginning of market recovery towardsthe last quarter of the financial year. The Directors are, therefore, confidentthat markets will continue to recover in India and Mortice will be able to achievegrowth in the coming year.

Chairman’s Statement

MANJIT RAJAIN

Our ability to

give working

solutions to

our clients in

our chosen

areas of

business is well

appreciated by

the market and

gets us their

continued

support and

co-operation,

leading to the

growth of our

business.


Growing our Business

At the start of the financial year the Company had set a single primary objectiveto focus on growing the business. We sought to achieve this through thefollowing initiatives:

• Expanding the relationship with our clients - we aimed to strengthenand deepen our relationship with our existing clients by securingadditional business from them. We have established a platform whichhas enabled us to penetrate our existing clients more effectively.

• Expanding our areas of coverage – developed an India-wide presence,enhancing our capability to deliver our facilities management servicesto our customers.

• Acquisitions – we successfully completed the acquisition of Roto Powerand the integration of the business into the Group has progressedsmoothly. We have additionally been able to grow the business whileretaining Roto Power’s existing clients and the entire key managementteam.

The markets were relatively sluggish for the better part of the financial yearended 31 March 2010. However, we felt that there were notable improvementsover the course of the last quarter. We are confident that these improvementswill continue into the financial year ahead.

We have made considerable progress during the year towards the achievementof the above strategic objectives. The Company has reduced its cost basesignificantly in comparison to the previous year. We have secured, as keycustomers, several leading Indian and multinational corporations. The directorsbelieve that the Company is progressing well to become one of the leadingFacilities Management and Guarding service providers in India. We believe ourpeople are key to the success of the business and we are focused on retainingour employees in what has traditionally been a high turnover industry. In thisregard, we are seeking to implement several employee oriented initiatives,focusing on making Mortice a preferred place to work.

The directors feel that Mortice has moved to build up a solid platform for growthand believe that the Group can leverage the strengths built in the last financialyear to create value for our shareholders.

Chief Executive’s Statement

VAIBHAV DAYAL

We have

secured, as

key

customers,

several

leading

Indian and

multinational

corporations.

...We believe

our people

are key to

the success

of the

business...


The Year in Review

VAIBHAV DAYAL – GROUP CHIEF EXECUTIVE OFFICER

Tenon – A Platform for GrowthIntegrated Facilities Management (“IFM”) Services was launched as a business line under the Tenon brand in January2008 and commenced operations in April 2008. IFM is a widely expanding market in India since the growth of thisindustry closely tracks the development of real estate. As per the Knight Frank, India Organised Retail Market 2010,industry report, 55 million sq. ft. of new retail real estate is expected to be put on the market by the end of 2012. At thesame time, existing real estate, whether it is with the real estate developers or with corporates, are looking for new IFMsolutions. The same report also stated that between 2009 and 2011, 183.1 million sq. ft. of Grade A office space willcome onto the market. This will include around332 malls, equivalent to 102 million sq. ft., whichare in the pipeline in major tier 1 and tier 2 cities.Furthermore, a Cushman & Wakefield report,stated that the number of hotel rooms in Indiaare expected to increase by 80% in tier 1 and tier2 cities.

With the self-performing model of Tenon (i.e. allservices being performed in-house instead ofbeing outsourced to sub-vendors) we have asignificant edge over other competitors who areinternational players and who outsource theground delivery. We believe our model brings costbenefits to clients while improving the quality ofservices and we feel that it is for this reason wewon a number of customer contracts in thefinancial year.

Over the financial year Tenon has grownsignificantly in terms of revenue in comparisonto the previous year and that, while being arelatively new business, we have grown revenuesby approximately two and half times since thefinancial year ended 31 March 2009. This is aclear indication of market traction which webelieve has been a result of our innovative modeland the dedication of our teams.

Furthermore, we believe that the varied range of contracts which we have acquired this year is an indicator of our wideand universal appeal. On one hand we have acquired contracts which are with large blue chip companies and on theother hand we have been able to get the business of small and progressive companies. Interestingly, we have gained a


number of contracts where we service a largenumber of small branch offices of a single largecompany. Such branch offices are typicallydistributed across India and the pan-Indiareach of the Company has been a major comfortfactor for our clients

We always believed that there were significantsynergies between our Security and FMbusinesses and we feel that the above is anexample of how it can play out in an unexpectedway. We intend to develop this hub and spokemodel of contracts since we have gained relativesuccess with this model and the size of eachcontract can be substantially larger due to the number of offices and locations being serviced.

Over the financial year we have been able to gain a customer base in diverse sectors including IT/BPO, logistics, financialservices, residential and real estate developers. We believe that our IT platform, which we impliment for our clientsand which is an important part of the FM service delivery solution, is a cutting edge platform which we believe isbeing recognised as our USP. We intend to develop these platforms further and to continue expanding into otherdiverse sections of the market.

We are in a large market which we believe allows us lot of headroom for growth and our progress so far has been madepossible only by the dedication, team spirit and a shared common goal of all our employees. We are thankful to eachone of our colleagues for standing by us and we recognise our responsibility of giving them a good and satisfyingcareer.

The fluctuation in the market may continue for some time but Tenon Group of companies will welcome everyopportunity and be there for its shareholders, customers and employees.

Peregrine GuardingIn the financial year ended 31 March 2010 we saw Peregrine achieve a milestone by successfully completing 15 yearsof providing security services in India. It also saw the company grow a respectable 15.8 % INR in revenue compared tothe previous financial year. Encouraged by this positive trend, Peregrine took on the onus of refining its service deliverysystem. We believe that the platform for growth was modelled on an innovative program whereby security trainingwas imparted to management graduates, a first in the industry in India. We have also seen growth in the hospitalitysector where we have developed a hospitality ‘cell’ to train security personnel specifically appointed to this sector.

We are happy to celebrate the completion of 15 glorious years of Peregrine in the security industry and we are confidentthat, what we believe is, a history of success shall continue in the coming years as we plan to strive harder to becomethe market leaders. We believe that we have continued our trend of successful client relationships, with substantialamounts of our revenue being generated from repeat customers. We are confident that we will be able to enhance andfurther build on these relationships.


Peregrine has partnered with most of the major multinational and Indiancompanies in providing security service and security consulting. Today, it has aresource base offering comprehensive security services to a customer base of over850 clients.

With increasing privatisation and with the country and population being moresecurity conscious, we believe that security services in India will grow beyondany published projections. Peregrine plans to model its future business strategyon this expected market growth and is intent on carving a niche in the market ofhigh end security.

We have been, and want to, continue to provide cost effective and proactivesolutions. We are endeavouring to continuously introduce and implement new concepts for various clients. Consequently,we are looking at providing time and need based strategies for existing clients as well as offering them tangible andmeasurable solutions through voluntary audits.

At Peregrine, we have always been, and continue to be, “client centric” in our approach. We are continuing to grow ourbusiness and already in the financial year ending 31 March 2011 we have gained some very prestigious contracts whilemore are in the advanced stages of negotiation.

Roto PowerRoto Power Projects Private Limited (“Roto Power”) was acquired by Tenon inJune 2009 and we believe that the Roto Power business has benefited considerablyby the acquisition and integration into the Tenon Group.

During the financial year we focused on incorporating Tenon’s systems andprocedures into Roto Power’s operations where it fits with the business modelwhile at the same time importing several practices from Roto Power into Tenonas well. We had a major celebration at the beginning of July to mark the first


anniversary of Roto Power’s incorporation intothe Tenon family and we took heart in the factthat over the financial year we retained eachmember of its senior management and retainedeach of its key clients too. Roto Power’s businesshas also grown in revenues by around 25% inRupee terms in the financial year.

Over the financial year the business has grownand we have gained several new customers andenhanced our relationships with existingcustomers. We feel that the addition of aspecialised technical maintenance company toTenon Group has also led to the strengtheningof Tenon’s market offering, while we feel thatRoto Power has benefited by the scale andmarket reach of Tenon.

Through Roto Power, we have expanded ourreach in the telecom sector of India, an area ofvast opportunity. We believe that the telecomtower maintenance areas of our business hashuge headroom for growth since this is a verylarge sector in India and we feel that there areno major service vendors to support the numberof client across the country.

Furthermore, we have consolidated the officeinfrastructure of Peregrine, Tenon and RotoPower in Hyderabad, Chennai and Bangaloreand have been able to explore cost synergies inother areas of our operations as well. Roto Poweras a company has also acquired a license toconduct pest control activities as a selfperforming model (i.e. all services areperformed in-house). We believe that RotoPower in the near future will lay emphasis onbeing a uniform, pan-India organisation, witha strong presence across India with which wewill look to grow extensively. We belive RotoPower is a great addition to the Tenon family andwe look forward to a having stronger andhealthier organisation due to the contributionfrom the excellent team at Roto Power.


S. KRISHNASWAMY

Financial Review

CHIEF FINANCIAL OFFICER

OverviewI am pleased to report the financial results of Mortice Limited for the financial year1

ended 31 March 2010. The Company has been able to adapt to market pressures andhas managed to grow its revenue in the year ended 31st March 2010. In addition to theconservative cost management, which helped counter the pressures on margins, theCompany’s top line grew during the year with the addition of new clients and theexpansion of its existing clients. The lower margin levels were caused mainly by theeconomic environment and continued investment in the Facilities Management (FM)business. For the financial year ended 31 March 2010, we continued to invest in thedevelopment of our FM business through organic and inorganic growth and the Groupmanagement structure and these investments were reflected in the growth of thebusiness. With improving market conditions, continued cost optimisation and a focuson building a stable platform of growth, the directors expect a turnaround in the nearfuture and look forward to an exciting period ahead.

Income statementWhilst the income statement still shows a loss for the reasons explained above, duringthe year, the net operating EBITDA on service revenue at 0.89 % [2009: -4.43 %] showeda strong turnaround from the previous year. The EBITDA has been adjusted to excludefrom this measure, the ongoing listing expenses, non-recurring losses from generalcontracting business, write-offs and provisioning debts and advances.

RevenueDuring the year the Group achieved revenue of US$ 31.60 million, registering a growthof 34.7% over last year revenue of US$ 23.46 million. The revenue comprises US$ 24.17million [2009: 21.29 million] from guarding, US$ 6.78 million [2009: 1.45 million]from facilities management and the remainder from the projects business and otherincome.

ExpensesDuring the year under review, we attempted to keep the Group expenses in check,resulting in the Company reducing its staff costs by 2 percent from the previous year asa percentage of Group revenue. The operating expenses included non–recurringexpenses from write-offs and provisioning of about US$ 0.35 million. Depreciationcharges were higher because of the growth in capital spending in transport and otherinfrastructure for the guarding sector, plant assets for the FM sector and a relativelysmall depreciation and amortisation charge relating to intangible assets from theacquisition of Roto Power Projects Private Limited (“Roto Power”).

The company

has been able to

adapt to market

pressures and

has managed to

grow its revenue

in the year..

... the Company’s

top line grew

during the year

with the

addition of new

clients and the

expansion of its

existing clients

1. Financial Year: 1 April 2009 to 31 March 2010.


Loss for the yearThe Company’s operations during the year under review resulted in a net loss of US$ 0.56 million after tax for the year.It is important to note that for comparative purposes, the functional currency (Indian Rupee) depreciation against theUnited States Dollar contributed to around a 3.3 % downgrade in the reported results. It is also important to note thatwe incurred no cash loss due to currency fluctuation since all our revenues are earned in INR and almost all of our costare in INR.

Earnings per shareBasic earnings per share reported a negative US$ 0.01 per share, attributable to the overall loss for the year.

Financial positionTotal Group assets as at 31 March 2010 stood at US$ 14.19 million [2009 : US$ 11.07 million], registering an increaseof US$ 3.12 million over the last financial year. Group borrowings were down by US$ 0.18 million on account of bankoverdrafts and net repayment under other loans and leases. The increase in tangible assets and net current assetsreflected the continuing growth of the business.

Goodwill and Intangible AssetsOn 22 June 2009 the Group acquired a 100% equity interest in Roto Power through a cash purchase amounting to US$2.09 million. The goodwill and intangible assets creation of US$ 1.60 million relates to the acquisition.

InvestmentsDuring the year, Mortice also invested a further 48,993 ordinary shares in its directly held subsidiary ‘Tenon PropertyServices’ which contributed towards additional investment as a part of their funding in the facility management business(Note 7 to the consolidated financial statements).

CashCash generation from operating activities before taxes and interest during the year turned positive to US$ 0.65 million[2009: US$ - 5.18 million] as a result of improvements coming from all segments of the business. During the year, thesurplus cash from operating activities and IPO proceeds was used for the acquisition of Roto Power. Borrowingswhich were paid off amounted to US$ 0.32 million.

ComparativesThe Company adopted IAS-1 which necessitated certain re-classifications to financial statements for 2009 in theStatement of Financial Position and Consolidated Statement of Comprehensive Income. (Note 29 to the consolidatedfinancial statements).


Company Information

Company registration number 200800770W

Registered office 36 Robinson Road

#17-01 City House

Singapore 068877

Directors Manjit Rajain (Executive Chairman)

Dr. Keith Hellawell QPM (Independent Director)

Arun Duggal (Independent Director)

Shanker Iyer FCA, OBE (Independent Director)

Chief Executive Officer Vaibhav Dayal

Audit Committee Arun Duggal (Chairman)

Dr. Keith Hellawell QPM

Shanker Iyer FCA, OBE

Remuneration Committee Dr. Keith Hellawell QPM (Chairman)

Arun Duggal

Share Registrar Computershare Investor Services (Jersey) Limited

Queensway House, Hilgrove Street, St Helier

Jersey JE1 1ES

Secretaries Chia Luang Chew Hazel

Lim Keng San Shirley

KCS Corporate Services Pte Ltd

36 Robinson Road, #17-01 City House

Singapore 068877


Bankers Standard Chartered Bank PLC

State Bank of India

Independent Auditor Foo Kon Tan Grant Thornton LLP

Public Accountants and Certified Public Accountants

47 Hill Street, #05-01

Singapore Chinese Chamber of Commerce & Industry Building

Singapore 179365

Nominated Adviser Grant Thornton UK LLP

30 Finsbury Sq

London EC2P 2YU

AIM Broker Seymour Pierce Limited

20 Old Bailey

London EC4M 7EN

Depository Computershare Investor Services PLC

The PavilionsBridgwater Road, Bristol BS99 6ZY


MANJIT RAJAIN, aged 46, Executive ChairmanMajor Manjit Rajain founded the Peregrine Group and is now the Executive Chairman ofMortice Ltd. Major Rajain was commissioned in the Indian Army’s 11 Armoured Regimentin 1984. During his seven years of service, Major Rajain served actively in Rajasthan andJammu & Kashmir. Following his release from the army, Major Rajain joined police forcewhere he attained senior position of Assistant Commandant stationed in Jammu &Kashmir. Using the security experience gained from his career in the military and thepolice force, Major Rajain demonstrated his entrepreneurial capability to establishPeregrine which he has developed over the last 15 years to become one of the top securityservice providers across the sub continent of India. Under his able leadership, Peregrinein 2006, was awarded as “Fastest Growing Security Company of the Year” for 2005-06 fromthe, then, Defense Minister. In 2007, Major Manjit Rajain, himself, was awarded “SecurityEntrepreneur of the Year” award for his outstanding achievements in Security Industry bythe, then, Home Minister of India.

Under his able guidance and dynamic direction, in 2009, Tenon Group acquired “RotoPower Projects” one of the most reputed company in the area of Maintenance andEngineering. By virtue of successful integration of this new entity into Tenon Group andby maintaining key Management of this company, Tenon Group became the “only” Groupproviding complete spectrum of integrated services for Facility Management.

ARUN DUGGAL, aged 64, Non-Executive DirectorMr. Arun Duggal is a Senior Advisor to TPG Capital, a major Private Equity firmheadquartered in San Francisco. He is an experienced international Banker and has advisedcompanies and financial institutions on Financial Strategy, M&A and Capital Raising. Heis the Chairman of Board of Directors of Shriram Capital Ltd, Transport Finance Company,Shriram Properties Pvt. Ltd, Shriram City Union Finance Ltd., and Shriram EPC Limited.He is the Vice Chairman of International Asset Reconstruction Company.

He is on the Board of Directors of Jubilant Energy Ltd., Patni Computers, Fund Management,Manipal Acunova Ltd., Zuari Industries, Info Edge (India), Dish TV India Ltd., MundraPort & SEZ Ltd., and IMA (formerly Economist Intelligence Unit, India), and MorticeLimited (Singapore). He is a member of the Investment Committee of Axis Private Equity.

He is a founder Director of Bellwether Microfinance Fund which provides equity capitalto promising Micro Finance organizations and helps them in capacity building. He is aTrustee of Centre for Civil Society, New Delhi, which focuses on improving the quality andaccess of education to students, especially for the poor. He is Senior Advisor (Asia Pacific)to Transparency International Berlin. Mr. Duggal had a 26 years career with Bank ofAmerica, mostly in the U.S., Hong Kong and Japan. His last assignment was as ChiefExecutive of Bank of America in India from 1998 to 2001.

Board of Directors


He has spent ten years (1981-1990) with the New York Corporate Office of Bank of Americahandling multinational relationships. From 1991-94 as Chief Executive of BA Asia Ltd., HongKong, he looked after Investment Banking activities for the bank in Asia. In 1995, he movedto Tokyo as the Regional Executive, managing Bank of America’s business in Japan, Australiaand Korea. From 2001 to 2003 he was Chief Financial Officer of HCL Technologies, India.

A Mechanical Engineer from the prestigious Indian Institute of Technology, Delhi, Mr.Duggal holds an MBA from the Indian Institute of Management, Ahmedabad. He teachesa course on Venture Capital & Private Equity at the Indian Institute of Management,Ahmedabad as a visiting Professor.

DR. KEITH HELLAWELL QPM, aged 66, Non-Executive DirectorDr. Keith Hellawell QPM is a highly renowned expert in the fields of security and facilitiesmanagement and brings significant professional experience and academic credentials withhim. As a highly decorated police officer, Dr. Hellawell has served as Chief Constable forthe West Yorkshire Police and Cleveland Police; and has advised senior government bodiesand officials, including the Home Secretary and Prime Minister of the UK, the EuropeanUnion, former Soviet Bloc countries, Los Angeles Police Department, Government of Cyprusand the FBI on diverse issues relating to combating crime.

In his professional capacity, Dr. Hellawell has served as a Director of Homework, a UK-based corporation involved in manufacturing and installing security alarms. He has, andcontinues, to lend his professional advice to several leading corporations as a Non-ExecutiveDirector – significantly, in the context of Mortice plc, to Dalkia plc, a leading FacilitiesManagement services provider. “He has ‘Chaired’ a number of international UK listedcompanies including Goldshield Plc- pharmaceuticals and is currently the Chairman ofSports Direct International, one of the largest sports retailers in Europe”.

Dr. Hellawell holds an LLB from London University and gained his MSc from CranfieldUniversity. He has also been awarded Honorary Doctorates from the Leeds/Bradford andHuddersfield Universities.

He has won several professional awards including “Communicator of the Year” (voted byPR industry), Top 50 most powerful men in Britain in a national newspaper survey and“Businessman of the Year” for the Yorkshire and Humber Region.

SHANKER IYER FCA, OBE, aged 59, Non-Executive DirectorMr. Iyer qualified as a Chartered Accountant in London in 1973. A partner of a major UKaccounting firm for over 10 years, Mr Iyer has been practising as an accountant in Singaporesince 1984. He founded Shanker Iyer & Co. in 1993.

Mr. Iyer has extensive experience in advising businesses and entrepreneurs on a wide rangeof business matters and acts as non-executive director for a number of companies. He hascontributed many articles to business and financial publications and is a regular speakerat conferences and courses held in Singapore and around the world.


Mr. Iyer’s professional activities include Chairman of International Fiscal Association, SingaporeBranch, and the Chairman of the Tax Committee of the Singapore International Chamber ofCommerce.

He currently serves as First Deputy Chairman of the Singapore International Chamber ofCommerce, is a Past President of both the European Chamber of Commerce, Singapore andthe British Chamber of Commerce, Singapore.

In January 2002, Shanker Iyer was conferred the honour of OBE for his services to Britishcommercial interests in Singapore.


Financial statementsMortice Limitedand its subsidiaries

For the financial year ended 31 March 2010


Directors’ Reportfor the financial year ended 31 March 2010

The directors submit this annual report to the members together with the audited consolidated financial statementsof the Group and statement of financial position of the Company for the financial year ended 31 March 2010.

The directors in office at the date of this report are:Manjit Rajain (Executive Chairman)

Dr. Keith Hellawell (Independent Director)

Arun Duggal (Independent Director)

Shanker Iyer (Independent Director)

The directors in office at the date of this report are: Manjit Rajain (Executive Chairman) Dr. Keith Hellawell QPM

(Independent Director) Arun Duggal (Independent Director) Shanker Iyer (Independent Director).

Arrangements to acquire shares or debenturesDuring and at the end of the financial year, neither the Company nor any of its subsidiaries was a party to anyarrangement the object of which was to enable the directors to acquire benefits through the acquisition of shares in ordebentures of the Company or of any other corporate body other than as disclosed in this report.

Directors’ interest in shares or debenturesAccording to the Register of Directors’ Shareholdings kept by the Company under Section 164 of the Companies Act,Cap. 50, none of the directors who held office at the end of the financial year had any interests in shares or debenturesof the Company and its related corporations except as follows:

Number of ordinary shares

Shares registered in Shares in which the Directorthe name of the Director is deemed to have an interest

Name of the Name of the Company As at As at As at As atDirector in which shares are held 1.4.2009 31.3.2010 1.4.2009 31.3.2010

Manjit Rajain Mortice Limited 1 1 - -

Mancom Holdings Ltd - - 40,000,000 40,000,000

Tenon Property Services Pvt Ltd 5,000 5,000 - -

Roto Power Projects Pvt Ltd - 10 - -

Directors’ benefitsSince the end of the previous financial year, no director has received or has become entitled to receive a benefit undera contract which is required to be disclosed under Section 201(8) of the Companies Act, Cap. 50, except as disclosed asfollows:


Director Annual remuneration (US$)

Manjit Rajain 311,208

Andrew Barker (Resigned on 15 December 2009) 185,330

Dr. Keith Hellawell 19,731

Arun Duggal 19,731

Shanker Iyer 4,116

Share optionsNo options were granted during the financial year to take up unissued shares of the Company.

No shares were issued by virtue of the exercise of options.

There were no unissued shares under option at the end of the financial year.

Audit committeeThe members of the Audit Committee as at the date of this report are:

Arun Duggal (Chairman)

Dr. Keith Hellawell

Shanker Iyer

The Audit Committee performs, amongst others, the functions set out in the Companies Act, Cap. 50. In performingthose functions, the Committee reviews:

- the audit plans of the Company’s auditors and their evaluation of the systems of internal accounting controlsarising from their audit examination, including assistance given by the Company’s officers to the auditors;

- the scope and results of internal audit procedures;

- the statement of financial position of the Company and the consolidated financial statements of the Groupbefore their submission to the Board of Directors; and

The Audit Committee has recommended to the Board of Directors the nomination of Foo Kon Tan Grant ThorntonLLP re-appointment as external auditors of the Company at the forthcoming Annual General Meeting.

Directors’ indemnitiesThe Company maintains Directors’ and officers’ liability insurance which gives appropriate cover for legal action broughtagainst its Directors.

Related party transactionsDetails of related party transactions are contained in Note 23 to the Consolidated Financial Statements.

Credit payment policyThe Company has no formal code or standard which deals specifically with the payment of suppliers. It is the Company’spolicy to settle the terms of payment with suppliers when agreeing the terms of the transaction so as to ensure thatsuppliers and the Company are aware of those terms and abide by them; however, the Company’s policy on the paymentof all creditors is to ensure that the terms of payment, as specified and agreed with the supplier, are not exceededunreasonably. Our standard terms of credit for trade purchases are 30 days.


Principal risks and uncertaintiesThe activities of the Group are subject to a number of risks. If any of these risks were to materialize, the Group’sbusiness, financial condition and results of future operations could be materially adversely affected by, among otherthings, delays, increased costs and/or reduced revenues. The principal risks are detailed in the Group’s admissiondocument of 15 May 2008 and include risks relating to the proposed business model, competitive risk, funding risk,dependence on key executives, political, regulatory and economic uncertainty, and general risks such as generaleconomic conditions.

Corporate governanceA statement on Corporate Governance is set out on pages 19 to 20.

Environmental responsibilityThe Company recognizes that the nature of the Group’s service delivery activities require it to have regard to thepotential impact that it and its subsidiary companies may have on the environment. The Company has adopted anEnvironmental Policy for the Group, and wherever possible the Company, ensures that all related companies areencouraged to comply with the local regulatory requirements with regard to the environment.

Charitable and political donationsNo charitable or political donations were made during the year.

Disclosure of information to AuditorsSo far as each Director at the date of approval of this report is aware, there is no relevant audit information of which theCompany’s auditors are unaware and each Director has taken all steps that he or she ought to have taken to makehimself or herself aware of any relevant audit information and to establish that the auditors are aware of that information.

Independent auditorThe independent auditor, Foo Kon Tan Grant Thornton LLP, Certified Public Accountants, has expressed its willingnessto accept re-appointment.

Annual general meetingThe Company will distribute a notice of Annual General Meeting to be held in October 2010 to lay the annual accountsbefore the shareholders and to deal with any other business for the consideration of the shareholders. The notice ofAnnual General Meeting will be distributed with this Annual Report.

RecommendationThe Board considers that the resolutions to be proposed at the Annual General Meeting are in the best interests of theCompany and it is their unanimous recommendation that shareholders support them.

On behalf of the Directors

MANIJT RAJAIN ARUN DUGGAL

Dated: 06 September 2010


Corporate Governance ReportIntroductionThe Board of Mortice Limited is committed to and is responsible for achieving high standards of corporate governance,integrity and business ethics for all of its activities.

Whilst the Group is not required under the AIM Rules for Companies to comply with the UK Corporate GovernanceCode (the “Governance Code”), the Board have taken account of the requirements of the Governance Code to theextent that they consider it appropriate and having regard to the Company’s size, Board structure, stage of developmentand resources. The Board provides the following disclosures, which it believes are necessary or valuable to readers.

Board of DirectorsAs at March 31, 2010 the Company’s Board of Directors comprised of four Directors, of which three were Non–ExecutiveDirectors. The Board considers that all Non-Executive Directors are independent of the Executive Director and are freefrom any business or other relationships that might materially interfere with the exercise of their independent judgment.Details of the Board meetings during the financial year, and attendance of the Directors, are set out in the table below;

Name Category No. of Board No. of Board Chairmanship Attendancemeetings held meetings attended in of each Director

during the during the Committees at last AGM the financial year financial year

Mr. Manjit Rajain Executive Director 7 7 1 Yes

Mr. Andrew Barker* Executive Director 7 7 - Yes

Mr. Arun Duggal Non-Executive Director 7 6 1 Yes#

Dr. Keith Hellawell Non-Executive Director 7 5 1 Yes#

Mr. Shanker Iyer** Non-Executive Director 7 1 - -

* Resigned from Board with effect from January 11, 2010.**Appointed as an Additional Director with effect from January 11, 2010.# Via teleconference.

Board proceduresThe Company plans and prepares the meeting agenda in advance of the Board and Committee meetings. Noticeconvening the Board and committee meetings are issued to the Board of Directors by the CFO along with detailedagenda and accompanying notes. Directors are encouraged to attend all Board meetings and meetings of Committeesof which they are members.

As a routine procedure, all the significant policy decisions that which would involve, appointment of key advisers,group business strategies, new investments, acquisitions, joint venture, collaborations, risk review, financing mattersand major capital outlays are all matters that are considered at full Board meetings. The following information isregularly provided to the Board as a part of agenda papers;

• Annual operating plans, budgets of each of the Group’s subsidiary operating divisions• Bi-monthly, half-yearly and annual results of the company and its subsidiaries for review• Operational updates of the Group’s subsidiaries• Minutes of the meetings of various Board committees


Board CommitteesThe company has three board level committees, namely the Audit Committee, Remuneration Committee andNomination Committee.

Audit CommitteeThe Audit Committee is comprised of three Non-Executive Directors and chaired by Mr. Arun Duggal and their othermembers are Dr. Keith Hellawell and Mr. Shanker Iyer.

The Committee met two times during the past financial year. The Executive Directors attend Audit Committee meetingsthrough invitation.

The Committee oversees the financial matters and examines reporting procedures, reviews internal controls, ensuresadherence to corporate governance practices and risk management systems, reviews company’s internal and externalaudit works, and monitor’s the fees and independence of the external auditors. The company’s external auditors areinvited to the meetings as many times as deemed necessary.

Internal auditThe management has introduced an internal audit function during the financial year. However, the Board and inparticular the Audit Committee, continue to define the scope of the audit and its reporting structure, commensurate tosize and the nature of the group.

Remuneration CommitteeThe Remuneration Committee is comprised of two Non-Executive Directors chaired by Dr. Keith Hellawell.

The Committee met once during the past financial year.

Nomination CommitteeThe Nomination Committee is comprised of one executive director and two Non-Executive Directors. The Committeechairman was the Chairman of the Board.

The Committee met once during the past financial year.

Disaster recoveryThe Group has established procedures over the security of data held on IT systems and has put in place disasterrecovery arrangements.

Investor relationsThe Board places significant importance on maintaining good communication with shareholders. The ExecutiveChairman is available to meet with institutional shareholders and analysts after the announcement of both the interimand final results and have and will undertake such meetings, whenever reasonably requested by shareholders andanalysts at other points during the course of the year. The Annual Report is sent to all shareholders at least 14 daysbefore the meeting and all shareholders are invited to attend the Company’s Annual General Meeting. The Group’sinvestor relations section, on the corporate website, contains information on current activities (www.morticegroup.com).


Statement by Directorsfor the financial year ended 31 March 2010

In the opinion of the directors,

(a) the accompanying statements of financial position, consolidated statement of comprehensive income,consolidated statement of changes in equity and the consolidated statement of cash flows, together with thenotes thereon, are drawn up so as to give a true and fair view of the state of affairs of the Company and of theGroup as at 31 March 2010 and of the results of the business, changes in equity and cash flows of the Group forthe financial year ended on that date; and

(b) at the date of this statement, there are reasonable grounds to believe that the Company will be able to pay itsdebts as and when they fall due.

On behalf of the Directors

MANJIT RAJAIN ARUN DUGGAL

Dated: 06 September 2010


Independent auditor’s report to the members ofMortice Limited

We have audited the accompanying financial statements of Mortice Limited (the “Company”) and its subsidiaries (the“Group”), which comprise the statements of financial position of the Group and of the Company as at 31 March 2010,consolidated statement of comprehensive income, consolidated statement of changes in equity and the consolidatedstatement of cash flows for the year then ended, and a summary of significant accounting policies and other explanatorynotes.

This report is made solely to the Company’s members, as a body, in accordance with Section 207 of the Companies Act,Cap. 50. Our audit work has been undertaken so that we might state to the Company’s members those matters we arerequired to state to them in an auditors’ report and for no other purposes. To the fullest extent permitted by law, we donot accept or assume responsibility to anyone other than the Company’s members as a body, for our audit, for thisreport, or for the opinions we have formed.

Management’s responsibility for the financial statementsManagement is responsible for the preparation and fair presentation of these financial statements in accordance withthe provisions of the Singapore Companies Act, Cap. 50 (the “Act”) and International Financial Reporting Standards.This responsibility includes:

(a) devising and maintaining a system of internal accounting controls sufficient to provide a reasonable assurancethat assets are safeguarded against loss from unauthorised use or disposition; and transactions are properlyauthorised and that they are recorded as necessary to permit the preparation of true and fair profit and lossaccounts and statements of financial position and to maintain accountability of assets;

(b) selecting and applying appropriate accounting policies; and

(c) making accounting estimates that are reasonable in the circumstances.

Auditor’s responsibilityOur responsibility is to express an opinion on these financial statements based on our audit. We conducted our auditin accordance with Singapore Standards on Auditing. Those standards require that we comply with ethical requirementsand plan and perform the audit to obtain reasonable assurance whether the financial statements are free from materialmisstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financialstatements. The procedures selected depend on the auditor’s judgement, including the assessment of the risks of materialmisstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditorconsiders internal control relevant to the entity’s preparation and fair presentation of the financial statements in orderto design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinionon the effectiveness of the entity’s internal control. An audit also includes evaluating the appropriateness of accountingpolicies used and the reasonableness of accounting estimates made by management, as well as evaluating the overallpresentation of the financial statements.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our auditopinion.


Opinion

In our opinion,(a) the consolidated financial statements of the Group and the statement of financial position of the Company are

properly drawn up in accordance with the provisions of the Act and International Financial Reporting Standardsso as to give a true and fair view of the state of affairs of the Group and of the Company as at 31 March 2010 andthe results, changes in equity and cash flows of the Group for the year ended on that date; and

(b) the accounting and other records required by the Act to be kept by the Company have been properly kept inaccordance with the provisions of the Act.

Foo Kon Tan Grant Thornton LLPPublic Accountants andCertified Public Accountants

Singapore,Dated: 06 September 2010


The Group The Company

2010 2009 2008 2010 2009 2008Notes US$ US$ US$ US$ US$ US$

AssetsNon-Current

Goodwill 4 1,456,936 - - - - -Other intangible

assets 5 142,895 - - - - -Plant and

equipment 6 983,524 677,163 609,147 - - -Subsidiaries 7 - - 7,675,465 6,849,675 394,675Long-term

financial assets 8 274,173 200,830 453,918 - - -Deferred tax assets 9 1,193,545 618,853 165,870 - - -

4,051,073 1,496,846 1,228,935 7,675,465 6,849,675 394675CurrentInventories 10 90,232 67,262 20,481 - - -Trade and other

receivables 11 8,337,955 5,890,694 4,520,318 11,882 8,532 551,215Current tax assets 1,010,468 357,829 - - - -Cash and bank

balances 12 697,408 3,253,140 390,420 53,615 1,294,212 5,02810,136,063 9,568,925 4,931,219 65,497 1,302,744 556,243

Total assets 14,187,136 11,065,771 6,160,154 7,740,962 8,152,419 950,918

EquityCapital and reservesShare capital 13 9,555,312 9,555,312 400,001 9,555,312 9,555,312 400,001Reserves 14 (3,259,028) (3,370,590) 617,361 (2,179,898) (1,789,858) (17,625)

6,296,284 6,184,722 1,017,362 7,375,414 7,765,454 382,376Minority interests 94 - 2,494 - - -

Total equity 6,296,378 6,184,722 1,019,856 7,375,414 7,765,454 382,376

LiabilitiesNon CurrentEmployee benefit

obligations 15 321,234 124,958 92,916 - - -Borrowings 16 138,952 230,632 335,154 - - -

460,186 355,590 428,070 - - -

CurrentTrade and other

payables 17 6,125,033 3,133,030 4,099,758 365,548 386,965 568,542Borrowings 16 1,305,539 1,392,429 612,470 - - -

7,430,572 4,525,459 4,712,228 365,548 386,965 568,542

Total liabilities 7,890,758 4,881,049 5,140,298 365,548 386,965 568,542

Total equity andliabilities 14,187,136 11,065,771 6,160,154 7,740,962 8,152,419 950,918

STATEMENTS OF FINANCIAL POSITIONas at 31 March 2010

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

AR 10-11 backup 2.pmd 9/17/2010, 6:25 PM24


CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOMEfor the financial year ended 31 March 2010

2010 2009Notes US$ US$

RevenueService income 31,491,418 23,156,372Other income 18 110,135 300,747

31,601,553 23,457,119ExpensesStaff and related costs 28,654,354 21,561,058Materials consumed 637,054 444,611Other operating expenses 2,305,488 4,125,778Depreciation and amortisation of non-financial assets 305,378 161,653Finance costs 19 415,119 407,880

Loss before taxation 20 (715,840) (3,243,861)Tax credit 21 159,420 314,384

Loss for the year (556,420) (2,929,477)

Other comprehensive income:Exchange differences on translating foreign operations 668,076 (1,060,968)

Total comprehensive income/(expense) for the year 111,656 (3,990,445)

Loss attributable to:- Equity holders of the Company (556,514) (2,926,983)- Minority interests 94 (2,494)

(556,420) (2,929,477)

Total comprehensive income/(expense) attributable to:- Equity holders of the Company 111,562 (3,987,951)- Minority interests 94 (2,494)

111,656 (3,990,445)

Loss per share:Basic and diluted 22 (0.01) (0.06)

Certain line items in the prior year have been reclassified. There is no change to the loss for the year (Note 29).



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CONSOLIDATED STATEMENT OF CASH FLOWSfor the financial year ended 31 March 2010

2010 2009US$ US$

Cash Flows from Operating ActivitiesLoss before taxation (715,840) (3,243,861)Adjustments for:Depreciation and amortisation of non-financial assets 305,378 161,653Interest expense 415,119 407,880Interest income (32,664) (94,160)Impairment of trade receivables 345,070 164,862Operating profit/(loss) before working capital changes 317,063 (2,603,626)Changes in operating assets and liabilitiesWorking capital changes:Trade and other receivables (2,447,261) (843,897)Inventories (22,970) (46,781)Trade and other payables 2,798,253 (1,681,769)Cash generated from/(used in) operations 645,085 (5,176,073)Income tax paid (929,023) (668,180)Interest paid (415,761) (408,355)Net cash used in operating activities (699,699) (6,252,608)

Cash Flows from Investing ActivitiesNet cash outflow on purchase of a subsidiary (Note 3) (1,694,330) -Acquisition of plant and equipment (Note 6) (29,045) (184,889)Proceeds from disposal of plant and equipment 13,389 27,203Interest received 60,216 66,733Net cash used in investing activities (1,649,770) (90,953)

Cash Flows from Financing ActivitiesIssuance of share capital - 9,730,120Payment for share issue expenses - (574,809)Repayment of finance lease obligation (56,292) (36,273)Repayment of bank loans and bank overdraft (267,949) (192,771)Withdrawal of security deposit 11,139 350,432Placement of pledged fixed deposit (84,482) (97,344)Bank overdraft obtained - 1,041,062Net cash (used in)/generated from financing activities (397,584) 10,220,417

Net (decrease)/increase in cash and cash equivalents (2,747,053) 3,876,856Cash and cash equivalents at beginning of year 3,253,140 390,420Effect of change in exchange rate on cash and cash equivalents 191,321 (1,014,136)

Cash and cash equivalents at end of year (Note 12) 697,408 3,253,140



NOTES TO THE FINANCIAL STATEMENTSfor the financial year ended 31 March 2010

1 IntroductionMortice Limited (‘the Company’ or ‘Mortice’) was incorporated on 9 January 2008 as a public limited company inSingapore. 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’) is engaged in providingguarding services, facilities management services, mechanical and engineering maintenance services and sale of safetyequipment and their installation. The Group’s operations are spread across India. The various entities comprising theGroup have been defined below.

Name of subsidiaries Country of Effective groupincorporation 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

Peregrine Protection Services Private Limited (‘Peregrine Protection’) India 99.48

Roto Power Projects Private Limited (‘Roto’) India 99.43

One new entity, Roto Power Projects Private Limited, was acquired by the Group during the year ended 31 March 2010.Details of the business combination have been specified in Note 3.

These audited consolidated financial statements were approved by the Board of Directors on 6 September 2010.

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

2 Basis of preparationThe consolidated financial statements of the Group and that of the Company have been prepared in accordance withInternational Financial Reporting Standards (IFRS) as issued by the International Accounting Standards Board (IASB).In addition to the presentation requirements prescribed under IFRS, the consolidated financial statements also includesinformation on the standalone statement of financial position of the Company as required under by the SingaporeCompanies Act, Cap. 50 in order for the financial statements show a true and fair view.

2.1 Significant accounting estimates and judgementsWhen preparing the consolidated financial statements management undertakes a number of judgments, estimatesand assumptions about recognition and measurement of assets, liabilities, income and expenses. The actual resultsmay differ from the judgments, estimates and assumptions made by management, and will seldom equal the estimatedresults. Information about significant judgments, estimates and assumptions that have the most significant effect onrecognition and measurement of assets, liabilities, income and expenses are discussed below.


The critical accounting estimates and assumptions used and areas involving a high degree of judgement are describedbelow:

(a) Depreciation of plant and equipmentThe cost of property, plant and equipment is depreciated on a straight line basis over their useful lives. At each statementof financial position date, judgement is used to determine whether there is any indication of impairment. If any suchindication exists, the asset’s recoverable amount is estimated. Changes in the expected level of usage and technologicaldevelopments could impact the economic lives and residual value of these assets, therefore depreciation charges couldbe revised. When considering impairment indicators, the Group considers both internal and external sources. Thesecarrying amounts of the assets are included in note 6.

(b) Valuation of Assets and Liabilities in a Purchase Price Allocation “PPA”On initial recognition, the assets and liabilities of the acquired business are included in the consolidated statement offinancial position at their fair values. In measuring fair value, management uses estimates about future cash flows anddiscount rates. However, the actual results may vary.

(c) Impairment of investment in subsidiaries and goodwillDetermining whether investment in subsidiaries and goodwill is impaired requires an estimation of the value-in-useof that investment. The value-in-use calculation requires the Group to estimate the future cash flows expected fromthe cash-generating units and an appropriate discount rate in order to calculate the present value of the future cashflows. Management has evaluated the recoverability of the investment based on such estimates.

(d) Income taxSignificant judgement is required in determining the capital allowances and deductibility of certain expenses duringthe estimation of the provision for income tax. There are also claims for which the ultimate tax determination isuncertain during the ordinary course of business. The Group and the Company recognise liabilities for expected taxissues based on estimates of whether additional taxes will be due. When the final tax outcome of these matters isdifferent from the amounts that were initially recognised, such differences will impact the income tax and deferred taxprovisions in the period in which such determination is made.

The Group’s income tax expense is based on the income and statutory tax rate imposed in the tax jurisdictions inwhich the subsidiaries conduct operations.

(e) Valuation of gratuity benefit and compensated absencesManagement estimates the defined benefit liability and liabilities for accumulating compensating absences annuallythrough valuations by an independent actuary. However, the actual outcome may vary due to estimation uncertainties.The estimate of its defined benefit liability and liability in respect of accumulating compensated absences as at 31March 2010 of USD 321,234 (2009: USD 124,958) is based on standard rates of inflation and mortality. It also takesinto account the Group’s specific anticipation of future salary increases. Discount factors are determined close to eachyear-end by reference to high quality corporate/government bonds that are denominated in the currency in which thebenefits will be paid and that have terms to maturity approximating to the terms of the related pension liability.Estimation uncertainties exist with regard to anticipation of future salary increases which may vary significantly infuture appraisals of the Group’s defined benefit obligations (refer to note 15 for details on actuarial assumptions usedin determining defined benefit liabilities).


(f) Deferred tax on lossesThe assessment of the probability of future taxable income in which deferred tax assets can be utilised is based on theGroup’s latest approved budgets, which is adjusted for significant non-taxable income and expenses and specific limitsto the use of any unused tax loss or credit. The tax rules in India and Singapore, in which, the Group operates are alsocarefully taken into consideration. If a positive forecast of taxable income indicates the probable use of a deferred taxasset, especially when it can be utilised without a time limit, that deferred tax asset is usually recognised in full. Therecognition of deferred tax assets that are subject to certain legal or economic limits or uncertainties is assessedindividually by management based on the specific facts and circumstances.

(h) Impairment of bad and doubtful debtsThe Group and the Company make allowances for bad and doubtful debts based on an assessment of the recoverabilityof trade and other receivables. Allowances are applied to trade and other receivables where events or changes incircumstances indicate that the balances may not be collectible. The identification of bad and doubtful debts requiresthe use of judgement and estimates. Where the expected outcome is different from the original estimate, such differencewill impact carrying value of trade and other receivables and doubtful debts expenses in the year in which suchestimate has been changed.

(i) Allowance for inventory obsolescenceInventories are stated at the lower of cost and net realisable value. In determining the net realisable value, the directorsestimate the future selling price in the ordinary course of business, less the estimated costs of selling expenses. Thecarrying amounts of inventories at the end of the reporting date are disclosed in Note 10 to the financial statements.

2.2 Changes in accounting policiesThe Group had adopted the following new interpretations, revisions and amendments to IFRS issued by the InternationalAccounting Standards Board, which are relevant to and effective for the Group’s financial statements for the annualperiod beginning on or after 1 January 2009:

Presentation of financial statementsIn September 2007, the IASB issued amendments to IAS 1 (Presentation of Financial Statements). These includeproposals for renaming certain sections of the financial statements, the requirement to publish an opening statementof financial position for the previous financial year in certain circumstances, separate presentation of changes inequity arising from transactions with owners and with non-owners, separate disclosure by component of amountsremoved from stockholders’ equity and recognised in income, and disclosure of the related income tax effect bycomponent in the statement of recognised income and expense. Accordingly the Group has applied this standard forannual periods beginning on or after 1 January 2009 and has also provided comparative information of previousperiod. The adoption of the standard does not affect the financial position but gives rise to additional disclosures. TheGroup has elected to present the ‘Statement of comprehensive income’ in a single statement.. The measurement andrecognition of the Group’s assets, liabilities, income and expenses is unchanged. However, some items that wererecognised directly in equity are now being recognised in other comprehensive income, for example, exchangedifferences on translation of foreign operations.

Amendments to IFRS 7 Financial Instruments: Disclosures - improving disclosures about financial instrumentsThe amendments require additional disclosures for financial instruments that are measured at fair value in the statementof financial position. These fair value measurements are categorised into a three-level fair value hierarchy, whichreflects the extent to which they are based on observable market data. A separate quantitative maturity analysis must


be presented for derivative financial liabilities that shows the remaining contractual maturities, where these are essentialfor an understanding of the timing of cash flows. The Group has taken advantage of the transitional provisions in theamendments and has not provided comparative information in respect of the new requirements.

Determination and presentation of operating segmentsThe adoption of IFRS 8 has not affected the identified operating segments for the Group. Reported segment results arenow based on internal management reporting information that is regularly reviewed by the chief operating decisionmakers i.e. Group’s Chief Executive Officer and Chairman. In the previous annual financial statements, segments wereidentified by reference to the dominant source and nature of the Group’s risks and returns.

2.3 Standards issued but not yet effectiveSummarised in the paragraphs below are standards, interpretations or amendments that have been issued till the dateof approval of these consolidated financial statements and will be applicable for transactions in the Group but are notyet effective. These have not been adopted early by the Group and accordingly have not been considered in thepreparation of the consolidated financial statements of the Group.

Management anticipates that all of these pronouncements will be adopted by the Group in the first accounting periodbeginning after the effective date of each of the pronouncements. Based on the Group’s current business model andaccounting policies, management does not expect material changes to the recognition and measurement principleson the Group’s consolidated financial statements when these Standards/Interpretations become effective. Informationon the new standards, amendments and interpretations that are expected to be relevant to the Group’s consolidatedfinancial statements is provided below.

IFRS 3 Business Combinations (Revised 2008) (effective from 1 July 2009)The standard is applicable for business combinations occurring in reporting periods beginning on or after 1 July 2009and will be applied prospectively. The new standard introduces changes to the accounting requirements for businesscombinations, using the acquisition method, and will have a significant effect on business combinations occurring infuture reporting periods.

IAS 27 Consolidated and Separate Financial Statements (Revised 2008) (effective from 1 July 2009)The revised standard introduces changes to the accounting requirements for the loss of control of a subsidiary and forchanges in the Group’s interest in subsidiaries. These changes will be applied prospectively in accordance with thetransitional provisions and so do not have an immediate effect on the Group’s financial statements.

IFRS 9 Financial Instruments (Issued November 2009) (effective from 1 January 2013) The IASB aims to replace IAS 39 Financial Instruments: Recognition and Measurement in its entirety by the end of2010, with the replacement standard to be effective for annual periods beginning 1 January 2013. IFRS 9 is the firstpart of Phase 1 of this project.

The main phases are:

Phase 1 : Classification and Measurement

Phase 2 : Impairment methodology

Phase 3 : Hedge accounting


In addition, a separate project is dealing with de-recognition. Management has yet to assess the impact that thisamendment is likely to have on the financial statements of the Group. However, they do not expect to implement theamendments until all chapters of the IAS 39 replacement have been published and they can comprehensively assessthe impact of all changes.

IAS 24 Related party disclosures (Issued November 2009) (effective from 1 January 2011)The IASB published a revised version of IAS 24 to provide exemption from IAS 24’s disclosures for transactions witha) a government that has control, joint control or significant influence over the reporting entity and b) ‘government-related entities’ (entities controlled, jointly controlled or significantly influenced by that same government). The revisedversion also amended the definition of related party to remove inconsistencies and depict the intended meaning.

Though the standard is applicable to the Group, the amendments from the previous version would not have any impacton the consolidated financial statements.

Annual Improvements (effective at various dates, earliest being 1 July 2010)The Improvements to IFRS’s minor amendments to nine International Financial Reporting Standards (IFRS). Theannual improvements process has been developed to address non-urgent, but necessary, minor amendments to IFRS’s.

Some of the applicable standards which are affected are summarised as under:

IFRS 7: Clarifies the disclosure requirements of the standard to remove inconsistencies, duplicative disclosurerequirements and specific disclosures that may be misleading.

IAS 1: Presentation of Financial Statements:Clarification of statement of changes in equity: Clarifies that entities may present the required reconciliations for eachcomponent of other comprehensive income either in the statement of changes in equity or in the notes to the financialstatements.

The above changes would not have a significant impact of the presentation disclosure of the consolidated financialstatements when these are adopted.

2.4 Summary of significant accounting policiesOverall considerationsThe financial accounting policies that have been used in the preparation of these consolidated financial statements aresummarised below. The consolidated financial statements have been prepared on a going concern basis. Themeasurement bases are described in the accounting policies below.

Basis of consolidationThe financial year of the Company and all subsidiaries in the Group ends on 31 March.

The financial statements of the Group include the financial statements of the Company and its subsidiaries, made upto the end of the financial year. All inter-company balances and significant inter-company transactions and resultingunrealised profits or losses are eliminated on consolidation and the consolidated financial statements reflect externaltransactions and balances only. Subsidiaries are consolidated from the date on which control is transferred to the


Group and cease to be consolidated from the date on which the Group ceases to have control of the subsidiaries.Acquisitions of subsidiaries are accounted for using the purchase method of accounting.

Where accounting policies of a subsidiary do not conform to those of the Company, adjustments are made onconsolidation when the amounts involved are considered significant to the Group.

Minority interests represent the portion of statement of comprehensive income and net assets in subsidiaries not heldby the Group. They are presented in the consolidated statement of financial position within equity, separately from theparent shareholders’ equity, and are separately disclosed in the consolidated statement of comprehensive income.

Business combinationsBusiness combinations are accounted for using the purchase method. The purchase method involves the recognitionof the acquiree’s identifiable assets and liabilities, including contingent liabilities, regardless of whether they wererecorded in the financial statements prior to acquisition. On initial recognition, the assets and liabilities of the acquiredsubsidiary are included in the consolidated statement of financial position at their fair values, which are also used asthe bases for subsequent measurement in accordance with the Group’s accounting policies. Goodwill represents theexcess of acquisition cost over the fair value of the Group’s share of the identifiable net assets of the acquiree at the dateof acquisition. Any excess of identifiable net assets over acquisition cost is recognised in statement of comprehensiveincome immediately after acquisition.

SubsidiariesFor consolidation purposes, a subsidiary is an entity controlled by the Group. Control exists when the Group has thepower to govern the financial and operating policies of an entity so as to obtain benefits from its activities. The existenceand effect of potential voting rights that are currently exercisable or convertible are considered when assessing whetherthere is control.

Shares in subsidiaries are stated at cost less allowance for any impairment losses on an individual subsidiary basis.The purchase method of accounting is used to account for the acquisition of subsidiaries. The cost of an acquisition ismeasured as the fair value of the assets given, equity instruments issued or liabilities incurred or assumed at the dateof exchange, plus costs directly attributable to the acquisition. Identifiable assets acquired and liabilities assumed in abusiness combination are measured initially at their fair values on the date of acquisition, irrespective of the extent ofminority interest.

GoodwillGoodwill acquired in a business combination is initially measured at cost being the excess of the cost of the businesscombinations over the Group’s interest in the net fair value of the identifiable assets, liabilities and contingent liabilities.Following initial recognition, goodwill is measured at cost less accumulated impairment losses. Goodwill is reviewedfor impairment, annually or more frequently if events or changes in circumstances indicate that the carrying valuemay be impaired. Goodwill is tested for impairment on an annual basis and any impairment is charged to the statementof comprehensive income.

Foreign currency translationThe functional currency of the entities within the Group (other than the Company) is Indian Rupees (INR). TheCompany has a functional currency of United States Dollars (‘USD’). Management has chosen to present the consolidatedfinancial information in USD, the functional currency of the Company.


A currency other than the functional currency of entities within the Group is a foreign currency. Foreign currencytransactions are translated into the functional currency of the respective Group entity, using the exchange rates prevailingat the dates of the transactions. Monetary assets and liabilities denominated in foreign currencies are retranslated atthe rate of exchange ruling at the reporting date. Foreign exchange gains and losses resulting from the settlement ofsuch transactions and from the re-measurement of monetary items at year-end exchange rates are recognised instatement of comprehensive income. Non-monetary items measured at historical cost are translated using the exchangerates at the date of the transaction (not retranslated).

Non-monetary items measured at fair value are translated using the exchange rates at the date when fair value wasdetermined.

In the Group’s consolidated financial statements, all assets, liabilities and transactions of Group entities with a functionalcurrency other than USD (the Group’s presentation currency) are translated into USD upon consolidation. The functionalcurrency of the entities in the Group has remained unchanged during the reporting period.

On consolidation, assets and liabilities have been translated into USD at the closing rate at the reporting date. Incomeand expenses have been translated into the Group’s presentation currency at the average rate over the reporting period.Exchange differences are recognised in the “Exchange translation reserve” in equity.

Other intangible assetsThe Group’s other intangible assets include externally acquired customer relationships and brand as part of the businesscombination further described in Note 5.

Customer relationshipsThe customer relationships have been acquired as part of a business combination and thus have been recognised atthe fair value at the date of acquisition.

These relationships have been amortised on a straight line basis over five years, which is considered as the useful lifeof the asset.

BrandBrand was acquired as part of the business combination and thus has been recognised at the fair value at the date ofacquisition.

Management considers the life of the brand to be indefinite. The brand will not be amortised until its useful life isdetermined to be finite. It would be tested for impairment annually and whenever there is an indication that it may beimpaired.

Plant & equipment and depreciationPlant and equipment are stated at cost less accumulated depreciation and impairment losses, if any. The cost of anasset comprises its purchase price and any directly attributable costs of bringing the asset to working condition for itsintended use. Expenditure for additions, improvements and renewals are capitalised and expenditure for maintenanceand repairs are charged to the statement of comprehensive income.


Subsequent expenditure relating to plant and equipment that have been recognised is added to the carrying amountof the asset when it is probable that future economic benefits, in excess of the standard of performance of the assetbefore the expenditure was made, will flow to the Group and the cost can be reliably measured. Other subsequentexpenditure is recognised as an expense during the financial year in which it is incurred.

Depreciation is computed utilising the straight-line method to write off the cost of these assets over their estimateduseful lives.

Computers and computer software 3 years

Office equipment 5 years

Plant and machinery 5 years

Furniture and fixtures 5 years

Vehicles 5 years

The cost of leasehold improvements is charged to statement of comprehensive income on a straight line basis over theperiod of lease or three years, being the useful life of leasehold improvements, whichever is shorter.

Construction-in-progress is not depreciated until the assets are completed and ready for use.

For acquisitions and disposals during the financial year, depreciation is provided from the day of acquisition to theday before disposal respectively. Depreciation methods, useful lives and residual values are reviewed at end of eachreporting date and changes, if any, are accounted for prospectively.

The gain or loss arising on the disposal or retirement of an asset is determined as the difference between the saleproceeds and the carrying amount of the asset and is recognised in the statement of comprehensive income.

Fully depreciated plant and equipment are retained in the books of accounts until they are no longer in use.

The carrying amounts of plant and equipment are reviewed yearly in order to assess whether their carrying amountsneed to be written down to recoverable amounts. Recoverable amount is defined as the higher of value in use and netselling price.

Financial assetsThe Group and the Company classify its financial assets, other than hedging instruments, into “loans and receivables”

All financial assets are recognised on their trade date - the date on which the Group and the Company commit topurchase or sell the asset. Financial assets are initially recognised at fair value, plus directly attributable transactioncosts except for financial assets at fair value through statement of comprehensive income, which are recognised at fairvalue.

Derecognition of financial instruments occurs when the rights to receive cash flows from the investments expire or aretransferred and substantially all of the risks and rewards of ownership have been transferred. An assessment forimpairment is undertaken at least at each balance sheet date whether or not there is objective evidence that a financialasset or a group of financial assets is impaired.


The Group and the Company carry on its statement of financial position the following category of financial assets as atend of the reporting date.

Loans and receivablesLoans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted inan active market. They arise when the Group and the Company provide money, goods or services directly to a debtorwith no intention of trading the receivables. They are included in current assets, except for maturities greater than 12months after the balance sheet date. These are classified as non-current assets.

Loans and receivables are subsequently measured at amortised cost using the effective interest method, less provisionfor impairment. Any change in their value is recognised in statement of comprehensive income. Any reversal shall notresult in a carrying amount that exceeds what the amortised cost would have been had any impairment loss not beenrecognised at the date the impairment is reversed. Any reversal is recognised in the statement of comprehensive income.

Receivables are provided against when objective evidence is received that the Group and the Company will not be ableto collect all amounts due to it in accordance with the original terms of the receivables. The amount of the write-downis determined as the difference between the asset’s carrying amount and the present value of estimated future cashflows.

The Group’s cash and bank balances, trade and other receivables fall into this category of financial instruments.

Long-term financial assetsRestricted cash balanceRestricted cash represents deposits that have been pledged with banks or created as security to meet contractualobligations towards other parties and which are not freely available for use by the Group. The restricted cash balanceis accounted as financial assets under the category of loans and receivables, the recognition and measurement principlesfor which are explained above.

Security depositsSecurity deposits mentioned above are interest free and have maturity period ranging between 1 to 2 years. Since theimpact of discounting is not significant on such security deposits, amount paid is also considered to be equivalent totheir fair value on initial measurement.

InventoriesInventories are stated at the lower of cost and net realisable value. Cost includes all cost of purchase and other costsincurred in bringing the inventories to their present location and condition. Costs of ordinarily interchangeable itemsare assigned using the first in, first out cost method. Net realisable value is the estimated selling price in the ordinarycourse of business less any applicable selling expenses. Work-in-progress represents material equipment underinstallation which are stated at cost. Cost includes all direct expenditure and all appropriate overheads.

Cash and cash equivalentsCash and cash equivalents comprise cash and balances, short-term and long-term fixed deposits.


Other provisions and contingent liabilitiesProvisions are recognised when the Group has a present obligation (legal or constructive) as a result of a past event, itis probable that an outflow of resources embodying economic benefits will be required to settle the obligation and areliable estimate can be made of the amount of the obligation. Where the Group expects some or all of a provision to bereimbursed, for example under an insurance contract, the reimbursement is recognised as a separate asset but onlywhen the reimbursement is virtually certain. The expense relating to any provision is presented in the Statement ofComprehensive Income net of any reimbursement. If the effect of the time value of money is material, provisions aredetermined by discounting the expected future cash flows at a pre-tax rate that reflects current market assessments ofthe time value of money and, where appropriate, the risks specific to the liability. Where discounting is used, theincrease in the provision due to the passage of time is recognised as other finance expense

In those cases where the possible outflow of economic resource as a result of present obligations is considered improbableor remote, or the amount to be provided for cannot be measured reliably, no liability is recognised in the statement offinancial position.

Financial liabilitiesThe Group’s and the Company’s financial liabilities include bank borrowings, finance lease liabilities and payables.

Financial liabilities are recognised when the Group and the Company become a party to the contractual agreements ofthe instrument. All interest-related charges are recognised as expenses in “finance costs” in the statement ofcomprehensive income.

Borrowings are recognised initially at fair value of proceeds received less attributable transaction costs, if any.Borrowings are subsequently stated at amortised cost which is the initial fair value less any principal repayments. Anydifference between the proceeds (net of transaction costs) and the redemption value is taken to the Statement ofComprehensive Income over the period of the borrowings using the effective interest method.

Borrowings which are due to be settled within 12 months after the end of reporting date are included in currentliabilities in the statement of financial position even though the original terms was for a period longer than 12 monthsand an agreement to refinance, or to reschedule payments, on a long-term basis is completed after the end of reportingdate and before the financial statements are authorised for issue. Borrowings to be settled within the Group’s normaloperating cycle are classified as current. Other borrowings due to be settled more than 12 months after the end ofreporting date are included in non-current liabilities in the statement of financial position.

Payables, which represent the consideration for goods and services received, whether or not billed to the Group andthe Company, are initially measured at fair value, and subsequently measured at amortised cost, using the effectiveinterest method. Payables include trade and the other payables in the statement of financial position.

Finance lease liabilities are measured at initial value less the capital element of lease repayments (see policy on financeleases).

LeasesFinance leasesWhere assets are financed by lease agreements that give rights approximating to ownership, the assets are capitalisedas if they had been purchased outright at values equivalent to the present value of the total rental payable during the


periods of the leases and the corresponding lease commitments are included under liabilities. The excess of the leasepayments over the recorded lease obligations is treated as finance charges which are amortised over each lease term togive a constant effective rate of charge on the remaining balance of the obligation.

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

Rentals on operating lease are charged to the Statement of Comprehensive Income on a straight-line basis over thelease term. Lease incentives, if any, are recognised as an integral part of the net consideration agreed for the use of theleased asset. Penalty payments on early termination, if any, are recognised in the Statement of Comprehensive Incomewhen incurred.

Income taxesTax expense recognised in statement of comprehensive income comprises the sum of deferred tax and current tax.

Current taxCalculation of current tax is based on tax rates applicable for the respective years in respective tax jurisdictions. Currentincome tax assets and/or liabilities comprise those obligations to, or claims from, fiscal authorities relating to thecurrent or prior reporting periods, that are unpaid/un-recovered at the reporting date. Current tax is payable on taxableprofit, which differs from the statement of comprehensive income in the financial statements.

Deferred taxDeferred income taxes are calculated, without discounting using the balance sheet liability method on temporarydifferences between the carrying amounts of assets and liabilities and their tax bases using the tax laws that have beenenacted or substantively enacted by the reporting date. However, deferred tax is not provided on the initial recognitionof an asset or liability unless the related transaction is a business combination or affects tax or accounting profit. Taxlosses available to be carried forward and other income tax credits available to the Group are assessed for recognitionas deferred tax assets.

Deferred tax liabilities are always provided for in full. Deferred tax assets are recognised to the extent that it is probablethat they will be able to be utilized against future taxable income.

Deferred tax assets and liabilities are offset only when the Group has a right and intention to set off current tax assetsand liabilities from the same taxation authority.

Employee benefitsThe Group provides post employment benefits through defined contribution plans as well as defined benefit plans.

Defined contribution planA defined contribution plan is a plan under which the Group pays fixed contributions into an independent fundadministered by the government. The Group has no legal or constructive obligations to pay further contributions afterits payment of the fixed contribution. The Group contributes to state-run provident fund according to eligibility of theindividual employees. The contributions recognised in respect of defined contribution plans are expensed as they falldue.


Defined benefit planThe defined benefit plans sponsored by the Group defines the amount of the benefit that an employee will receive oncompletion of services by reference to length of service and last drawn salary. The legal obligation for any benefitsremains with the Group. The Group’s defined benefit plans include amounts provided for gratuity obligations.

The liability recognised in the statement of financial position for defined benefit plans is the present value of thedefined benefit obligation (DBO) at the reporting date less the fair value of plan assets, together with adjustments forunrecognised actuarial gains or losses and past service costs.

Management estimates the present value of the DBO annually through valuations by an independent actuary usingthe projected unit credit method. The present value of the defined benefit obligation is determined by discounting theestimated future cash outflows based on management’s assumptions.

The estimate of its post-retirement benefit obligations is based on standard rates of inflation and mortality. Discountrate is based upon the market yield available on government bonds at the reporting date with a term that matches thatof the liabilities and the salary increase taking into account inflation, seniority, promotion and other relevant factors.Actuarial gains and losses are included in the statement of comprehensive income of the year.

Short-term employee benefitsShort term benefits comprising of employee costs such as salaries, bonuses, and paid annual leave and sick leave areaccrued in the year in which the associated services are rendered by employees of the Group.

The liability for employee’s compensated absences becoming due or expected to be availed within one year from thereporting date are considered as short term benefits and are recognised on the basis of undiscounted value of estimatedamount required to be paid or estimated value of benefit expected to be availed by the employees.

Long-term employee benefitsThe liability for employee’s compensated absences which become due or expected to be availed after more than oneyear from the reporting date are considered as long term benefits and are recognised through valuation by anindependent actuary using the projected unit credit method at each reporting date. Actuarial gains and losses areincluded in the statement of comprehensive income of the year.

Key management personnelKey management personnel are those persons having the authority and responsibility for planning, directing andcontrolling the activities of the entity. The Executive Director of the Company and certain directors of subsidiaries areconsidered key management personnel.

Impairment of non-financial assetsThe carrying amounts of the Group’s and Company’s non-financial assets subject to impairment are reviewed at eachbalance sheet date to determine whether there is any indication of impairment. If any such indication exists, theasset’s recoverable amount is estimated.

If it is not possible to estimate the recoverable amount of the individual asset, then the recoverable amount of the cash-generating unit to which the asset belongs will be identified.


For the purposes of assessing impairment, assets are grouped at the lowest levels for which there are separatelyidentifiable cash flows (cash-generating units). As a result, some assets are tested individually for impairment andsome are tested at cash-generating unit level.

All individual assets or cash-generating units are tested for impairment whenever events or changes in circumstancesindicate that the carrying amount may not be recoverable.

An impairment loss is recognised for the amount by which the asset’s or cash-generating unit’s carrying amountexceeds its recoverable amount. The recoverable amount is the higher of fair value, reflecting market conditions, lesscosts to sell and value in use, based on an internal discounted cash flow evaluation. All assets are subsequently reassessedfor indications that an impairment loss previously recognised may no longer exist.

Any impairment loss is charged to the statement of comprehensive income.

Except for goodwill where impairment losses are not reversed, an impairment loss is reversed if there has been achange in the estimates used to determine the recoverable amount or when there is an indication that the impairmentloss recognised for the asset no longer exists or decreases.

A reversal of an impairment loss is credited as income in the income statement.

An impairment loss is reversed only to the extent that the asset’s carrying amount does not exceed the carrying amountthat would have been determined if no impairment loss had been recognised.

Related party transactionsThe Group’s related parties include subsidiaries, key management, and entities over which the key management areable to exercise significant influence.

Unless otherwise stated, none of the transactions incorporate special terms and conditions and no guarantees weregiven or received. Outstanding balances are usually settled in cash.

Revenue recognitionRevenue is recognised when the significant risks and rewards of ownership have been transferred to the buyer and theamount of revenue and the costs of the transaction can be measured reliably.

Revenue from guarding and provision of facility management and other manpower services is recorded net of tradediscounts, rebates and applicable taxes and is recognised upon performance of services and when there is a reasonablecertainty regarding collection at the fair value of the consideration received or receivable.

In respect of installation projects which overlap two reporting periods, revenue is recognised based on the percentageof project completion method. Percentage completion of the project is determined by comparing actual cost incurredtill reporting date to the estimate of total cost for completion of the project.

Interest income is recognised as interest accrues using effective interest method that is the rate that exactly discountsestimated future cash receipts through the expected life of the financial instrument to the net carrying amount of theasset.


Segment reportingIn identifying its operating segments, management generally follows the Group’s service lines, which represent themain products and services provided by the Group.

The activities undertaken by the Guarding segment includes the provision of guarding services. Facility managementservices are undertaken by the Facility Management segment. The activities undertaken in respect sale and installationof safety equipment do not meet the quantitative thresholds under IFRS 8 and thus have been disclosed under thesegment ‘Others’.

Each of these operating segments is managed separately as each of these service lines requires different technologiesand other resources as well as marketing approaches. All inter-segment transfers are carried out at arm’s length prices.

The measurement policies the Group uses for segment reporting under IFRS 8 are the same as those used in its financialstatements, except that:

- post-employment benefit expenses;- management overheads

are not included in arriving at the operating profit of the operating segments. In addition, corporate assets which arenot directly attributable to the business activities of any operating segment are not allocated to a segment.


3 Acquisition of Roto Power Projects Pvt. Ltd.

On 30 June, 2009, through one of its entities, Tenon Property Management Services Private Limited acquired 99.99%of the issued share capital of Roto Power Projects Private Limited (Roto), a private limited company incorporated inIndia. Roto is engaged in providing mechanical and engineering maintenance services in India.

The Group has acquired Roto for a consideration of US$ 2.09 million. As consideration for the Roto acquisition, TenonProperty has made an upfront payment of US$ 1.78 million and there is balance consideration of US$ 0.26 millionpayable on 30 June 2011.

Total cost of acquisition includes the components stated below:

2010US$

Purchase price, settled in cash 1,778,171

Deferred consideration (due in June 2011) 256,464

Other incidental expenses 59,460

Total cost of acquisition 2,094,095

Recognised at acquisition date*US$

Net assets acquiredIntangible asset 149,030Property, plant and equipment 49,912Cash and bank balances 143,301Trade receivables 1,035,484Other assets 166,933

Total assets 1,544,660

Trade payables 571,927Employee benefit obligations 215,041Deferred tax liability 49,022

Total liabilities 835,990

Net identifiable assets 708,670Goodwill on acquisition 1,385,425

Total cost of acquisition 2,094,095

Cost of acquisition (net of deferred consideration) 1,837,631Cash and bank balances acquired (143,301)

Net cash outflow on acquired subsidiary 1,694,330

The above figures are relevant on the date of acquisition of Roto.

* Disclosure of the carrying amounts of the acquiree’s assets and liabilities and the revenue and the profit and loss up to the date of acquisition immediatelybefore the combination in accordance with IFRS was impracticable. Roto had not applied IFRS prior to its acquisition as at 30 June 2009. Therefore,essential data needed for pro-forma IFRS accounts of Roto prior to the date of acquisition was not available.


Roto Power Projects Private Limited generated a profit of USD 188,738 from the date of acquisition up to 31 March2010.

The goodwill that arose on the combination can be attributed to the synergies expected to be derived from thecombination and the value of the workforce of Roto Power Projects Private Limited which cannot be recognised as anintangible asset under IAS 38 Intangible Assets. As per the purchase price allocation, no other intangible asset, otherthan customer relationships and brand, qualified for separate recognition. These circumstances contributed to theentire excess amount of consideration over net assets acquired, to be classified as goodwill.

4 Goodwill

A reconciliation of the goodwill is shown as under:

2010 2009The Group US$ US$

Gross carrying amount:Balance as at the beginning of year - -Acquired as part of business combination (Note 3) 1,385,425 -Translation adjustment 71,511 -

Balance as at the end of year 1,456,936 -

Impairment testing of goodwillThe recoverable amounts of the cash-generating units were determined based on value-in-use calculations estimatedby management to determine expected cash flows for the unit’s remaining useful life. As at 31 March 2010, themanagement estimated the value of the goodwill in respect of the acquisition of Roto not impaired.

The recoverable amounts are determined based on value in the calculations using cash flow projections from financialbudgets approved by management causing five year period. The pre-tax discount rate applied to the cash flow projectionsand the forecasted growth rates used to extrapolate cash flows beyond the five year period are as follows:

2010

Growth rates 25%Pre-tax discount rates 20%

The calculations of value in use are most sensitive to the following assumptions:

a) Growth rates - The forecasted growth rates are based on management estimationderived from past experience and external sources of information available.

b) Pre-tax discount rates - Discount rates reflect management’s estimates of the risks specific to thebusiness.


5 Other intangible assets

A summary of other intangible assets is shown below:

Brand Customer Totalrelationships

US$ US$ US$Cost

Balance as at 1 April 2008/31 March 2009 - - -

Acquisitions through business combination 61,442 87,758 149,200

Translation adjustment 3,098 4,425 7,523

Balance as at 31 March 2010 64,540 92,183 156,723

Accumulated amortizationBalance as at 1 April 2008/ 31 March 2009 - - -

Amortisation on acquisition through business combination - 13,164 13,164

Translation adjustment 664 664

Balance as at 31 March 2010 - 13,828 13,828

Carrying valueAt 31 March 2009 - - -

At 31 March 2010 64,540 78,355 142,895

Customer relationships are determined to have a finite life and is amortised on a straight-line basis over its estimatedeconomic useful life and assessed for impairment whenever there is an indication that the intangible asset may beimpaired. These have a useful life of approximately 5 years as at 31 March 2010.

Management has determined that the brand would be treated as having an indefinite useful life because it is expectedto contribute to net cash inflows to the Group indefinitely. As at 31 March 2010, the brand was not impaired.


6 Plant and equipment

Computer Office Plant and Furniture & Leasehold Vehicles Capital Total& computer equipment machinery fixtures improve- ** work-in-

software* *** ments progress

The Group US$ US$ US$ US$ US$ US$ US$ US$

Cost

At 1 April 2008 56,560 18,849 44,759 327,188 - 193,860 15,996 657,212

Acquisitions 101,014 18,864 80,021 23,951 32,195 124,433 (8,309) 372,169

Disposals/transfers (510) (377) - - - (26,316) - (27,203)

Translation adjustment (12,169) (4,062) (9,646) (70,510) - (41,779) (3,447) (141,613)

At 31 March 2009 144,895 33,274 115,134 280,629 32,195 250,198 4,240 860,565

Acquisitions 32,498 21,898 112,247 29,076 27,076 236,660 - 459,455

Acquisitions through

business combination 30,245 6,683 52,703 8,893 - 17,576 - 116,100

Disposals/transfers (1,325) (975) (16,482) (18,782)

Translation adjustment 21,745 5,725 23,137 37,983 5,509 44,192 546 138,837

At 31 March 2010 228,058 67,580 303,221 355,606 64,780 532,144 4,786 1,556,175

Accumulated depreciation

At 1 April 2008 10,616 3,523 6,888 20,458 - 6,580 - 48,065

Depreciation charge

for the year 34,062 5,290 16,691 59,455 1,421 44,734 - 161,653

Translation adjustment (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

Depreciation charge

for the year 65,175 11,713 46,330 64,272 7,913 96,812 - 292,215

Depreciation on

acquisitions through

business combination 17,716 2,719 32,960 2,772 - 5,386 - 61,553

Disposals - - - (364) - (5,359) - (5,723)

Translation adjustment 9,204 1,697 6,630 12,373 564 10,736 - 41,204

At 31 March 2010 131,139 23,659 106,366 148,680 9,758 153,049 - 572,651

Net book value

At 31 March 2009 105,851 25,744 94,688 211,002 30,914 204,724 4,240 677,163

At 31 March 2010 96,919 43,921 196,855 206,926 55,022 379,095 4,786 983,524

* The Group’s computer and computer software as at 31 March 2010 include assets under finance lease disclosed under Note 16.1 with netbook value of US$ 46,941 (2009 - NIL).**The Group’s vehicles as at 31 March 2010 include motor vehicles of US$ 369,092 (2009 - US$ 187,280) which have been pledged as securityunder finance lease as disclosed under Note 16.1.***The Group’s plant and machinery as at 31 March 2010 include equipment of US$14,377 (2009 - US$Nil) which have been pledged assecurity under finance lease as disclosed under Note 16.1.


Cash flow reconciliation of acquisition of plant and equipment is as follows:

The Group 2010 US$ 2009 US$

Acquisition during the year 459,455 372,169

Assets acquired through finance lease (430,410) (187,280)

Net cash flow used in acquisitions of plant and equipment 29,045 184,889


7 Subsidiaries

The Company 2010 US$ 2009 US$

Unquoted shares, at cost 7,675,465 6,849,675

The subsidiaries are:

Name Country of Cost of Percentage ofincorporation/ Investment equity held

principal place of 2010 2009 2010 2009 Principal business US$ US$ % % Activities

Held directly India 7,675,465 6,849,675 99.48% 99.48% Facilities andTenon Property propertyServices Pvt Ltd management

services

Held by Tenon PropertyServices Pvt LtdPeregrine Guarding India - - 100% 100% Guarding,Pvt Ltd safety and

security services

Tenon Support Services India - - 100% 100% Facilities andPvt Ltd property

managementservices

Tenon Project Services India - - 100% 100% Sale andPvt Ltd installation of

safety equipment

Roto Power Projects India - - 99.95% - Mechanical andPvt Ltd engineering

maintenanceservices

Held by PeregrineGuarding Pvt LtdPeregrine Protection India - - 100% 100% DormantServices Pvt Ltd


8 Long-term financial assets


Security deposit 77,758 88,897

Restricted cash 196,415 111,933

274,173 200,830

Security deposits are interest-free and have maturity periods ranging between 1 to 2 years. The fair values of theseamounts are not considered as materially different from their carrying amounts.

Restricted cash represent fixed deposits held with banks to secure bank guarantees in favour of customers with respectto the Group’s activities.

The security deposits and the restricted cash are considered to approximate their fair values and denominated inIndian Rupees.

9 Deferred tax assets


Balance at beginning 618,853 165,870

Transfer from statement of comprehensive income (Note 21) 471,276 549,157

Exchange adjustment 103,416 (96,174)

Balance at end 1,193,545 618,853

Deferred taxes arising from temporary differences and unused tax losses can be summarised as follows:

Deferred tax assets/(liabilities)

At 1 April Recognised Recognised At 31 March2009 in in 2010

comprehensive businessincome combination

US$ US$ US$ US$

Plant and equipment (4,104) 24,662 - 20,558

Retirement benefits and other employee benefits 56,591 82,627 - 139,218

Unutilised tax losses 541,397 358,068 - 899,465

Others 24969 153,618 (44,283) 134,304

618,853 618,975 (44,283) 1,193,545


Deferred tax assets have not been recognised in respect of the following items:


Tax losses 390,041 1,794,000

Capital allowances - 29,000

Tax losses 390,041 1,823,000

The tax losses are subject to agreement by the tax authorities and compliance with tax regulations in the respectivecountries in which the entities operate. The deductible temporary differences do not expire under current tax legislation.Deferred tax assets have not been recognised in respect of these items because it is not probable that future taxableprofit will be available against which the Group can utilise the benefits.

10 Inventories


Work-in-progress 85,220 13,137

Consumables 5,012 54,125

90,232 67,262

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

The balance includes inventories amounted to US$74,944 (2009 - US$62,837) which was pledged to secure bankoverdraft facility (Note 16.3)


11 Trade and other receivables


2010 2009 2008 2010 2009 2008US$ US$ US$ US$ US$ US$

Trade receivables- third parties 7,284,747 4,810,145 3,704,615 - - -

Allowances for impairmentof trade receivables:

Balance at beginning 179,148 14,286 - - - -

Charge for the year 345,070 164,862 14,286 - - -

Balance at end 524,218 179,148 14,286 - - -

Net trade receivables 6,760,529 4,630,997 3,690,329 - - -

Other receivables

Unbilled revenue 511,572 65,670 - - - -

Advances to related parties 649,550 667,152 62,070 - - -

Advances to third parties 46,488 48,901 33,512 - - -

Staff loans 97,087 91,715 50,692 - - -

Deposits 204,301 229,531 98,661 5,685 5,685

Prepayments 23,416 72,591 567,359 2,122 2,451 551,215

Others 45,012 84,137 17,695 4,075 396 -

1,577,426 1,259,697 829,989 11,882 8,532 551,215

8,337,955 5,890,694 4,520,318 11,882 8,532 551,215

The balance includes trade receivables amounted to US$ 4,347,532 (2009 - US$ 4,196,871) which was pledged tosecure bank overdraft facility (Note 16.3).

Related parties are entities over which key management are able to exercise control.

The advances to related parties are interest-free, unsecured and receivable on demand.


The ageing analysis of trade receivables due, but not impaired is as follows:


2010 2009 2010 2009

US$ US$ US$ US$

Not past due 3,693,044 2,232,866 - -

Past due 0 to 3 months 2,411,387 1,746,080 - -

Past due 3 to 6 months 211,501 285,808 - -

Past due over 6 months 444,597 366,243 - -

6,760,529 4,630,997 - -

The credit risk for trade receivables based on the information provided by key management, by geographical area, islocated in India.

12 Cash and bank balances


2010 2009 2010 2009

US$ US$ US$ US$

Fixed deposit - 1,163,886 - -

Cash at bank 618,914 1,956,316 53,615 1,294,212

Cash on hand 78,494 132,938 - -

697,408 3,253,140 53,615 1,294,212

Cash and bank balances are denominated in the following currencies:


2010 2009 2010 2009

US$ US$ US$ US$

United States Dollars 53,615 1,294,212 53,615 1,294,212

Indian Rupees 643,793 1,958,928 - -

697,408 3,253,140 53,615 1,294,212

The fixed deposits have an average maturity of 12 months (2009 - 12 months) from the end of the financial year withthe weighted average effective interest rates of 6.56% (2009 - 7.49%) per annum.


13 Share capital

No. of ordinary shares Amount

The Group and The Company 2010 2009 2010 2009US$ US$

Issued and fully paid, with no par valueBalance at beginning of year 47,700,001 40,000,001 9,555,312 400,001

Issue of ordinary shares - 7,700,000 - 9,730,120

Share issue expenses - - - (574,809)

Balance at end of year 47,700,001 47,700,001 9,555,312 9,555,312

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

14 Reserves


2010 2009 2010 2009US$ US$ US$ US$

Exchange translation reserve (408,173) (1,076,249) -

Accumulated losses (2,850,855) (2,294,341) (2,179,898) (1,789,858)

(3,259,028) (3,370,590) (2,179,898) (1,789,858)

Represented by:Distributable (3,259,028) (3,370,590) (2,179,898) (1,789,858)

Non-distributable - - - -

(3,259,028) (3,370,590) (2,179,898) (1,789,858)

Exchange fluctuation reserve arises from the translation of the financial statements of foreign entities whose functionalcurrencies are different from the presentation currency.

15 Employee benefit obligations

Long term employee benefit obligations comprise of the gratuity and long term compensated absences. These aresummarised as under:


Gratuity benefit plan (Note 15.1) 264,837 124,958

Long term compensated absences (Note 15.2) 56,397 -

321,234 124,958


15.1 Gratuity benefit planIn accordance with applicable Indian laws, the Group provides for gratuity, a defined benefit retirement plan (“theGratuity Plan”) covering eligible employees. The Gratuity Plan provides for a lump sum payment to vested employeeson retirement, death, incapacitation or termination of employment of amounts that are based on last drawn salaryand tenure of employment. Liabilities with regard to the Gratuity Plan are determined by actuarial valuation by eachof the Companies. The Group does not have an obligation to fund under the gratuity benefit plan.

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

2010 2009US$ US$

RECONCILIATION OF GRATUITY PLAN

A. Change in benefit obligation

Actuarial value of projected benefit obligation (PBO) (Opening balance) 124,958 92,916Liability acquired in business combination 103,220 -Interest cost 3,880 5,662Service cost 69,415 78,100Past Service cost 7,054 -Benefits paid (12,661) -Actuarial gain (60,749) (28,173)Translation adjustment 29,720 (23,547)PBO at the end year (Note 15) 264,837 124,958

B. Amounts recognised in statement of comprehensive incomeCurrent service cost 69,415 78,100Interest cost 3,880 5,662Past Service Cost 7,054 -Total actuarial gain recognised in the year (60,749) (28,173)Expense recognised in statement of comprehensive income 19,600 55,589

C. Total Actuarial Gain and LossActuarial gain (60,749) (28,173)

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

2010 2009

Discount Rate 8% 7%

Rate of increase in compensation levels 5% 8%

Demographic Assumptions

Retirement Age 58 years 58 years

Mortality table LIC(94-96) duly modified


15.2 Compensated absencesThe entities within the Group have either accumulating or non-accumulating compensated absences policy. The costof non-accumulating absences is charged to Statement of Comprehensive Income. The Group measures the expectedcost of accumulating compensated absences as the additional amount expected to be paid as a result of the unusedentitlement that has accumulated at the balance sheet. The defined benefit obligation is calculated annually by anindependent actuary using the projected unit credit method, where the present value of the defined benefit obligationis determined by discounting the estimated future cash outflows based on assumptions developed by the management.The discount rate is based upon the market yield available on government bonds/ high quality corporate bonds at thebalance sheet dates, which have a term that matches that of the liabilities. Other assumptions used in the valuationinclude an estimate of the salary increases, which takes into account inflation, seniority, promotion and other relevantfactors. The liability with respect to long term employee benefits in respect of compensated absences for the yearended 31 March 2010 is US$ 56,397 (2009: US$ NIL)

15.3 Provident fund benefitApart from being covered under the Gratuity Plan described earlier, employees of the Group also participate in aprovident fund plan. The Provident Fund (being administered by a trust) is a defined contribution scheme wherebythe Group deposits an amount determined as a fixed percentage of basic pay to the fund every month. The benefitvests upon commencement of employment. The Group does not have any further obligation in the plan beyond makingsuch contributions. Upon retirement or separation, an employee becomes entitled for this lump sum benefit, which ispaid directly to the concerned employee by the fund. The Group contributed US$1,543,837 and US$1,163,442 to theprovident fund plan, during the year ended 31 March 2010 and 31 March 2009, respectively.

16 Borrowings

2010 2009US$ US$

Non-currentObligations under finance leases (Note 16.1) 122,394 78,812

Bank loans (Note 16.2) 16,558 151,820

138,952 230,632CurrentObligations under finance leases (Note 16.1) 106,558 60,760

Bank loans (Note 16.2) 100,771 90,218

Other bank borrowing (Note 16.3) 1,098,210 1,241,451

1,305,539 1,392,429


16.1 Obligations under finance leases


Minimum lease payments payable:Due not later than one year 129,987 76,233

Due later than one year and not later than five years 145,254 86,330

Due later than five years - -

275,241 162,563Less:Finance charges allocated to future periods (46,289) (22,991)

Present value of minimum lease payments 228,952 139,572

Represented by:2010 2009

The Group US$ US$

Present value of minimum lease payments:

Due not later than one year (Note 16) 106,558 60,760

Due later than one year and not later than five years (Note 16) 122,394 78,812

Due later than five years - -

Present value of minimum lease payments 228,952 139,572

The average interest rate is at 13.26% (2009 - 13.33%) per annum.

The Group leases motor vehicles, computers and plant and equipment from non-related parties under finance leases.The finance lease obligations are secured by the underlying assets (Note 6).

16.2 Bank loans


Loans - unsecured 117,329 242,038

Amount repayable within one year (Note 16) (100,771) (90,218)

Amount repayable after one year (Note 16) 16,558 151,820

The average interest rate is 18% (2009 - 21.00%) per annum.

The amount repayable within one year is included under current liabilities whilst the amount repayable after one yearis included under non-current liabilities.

All the loans are fully repayable within next financial year, except a bank loan which is repayable by January 2012.


16.3 Other bank borrowings


Bank overdraft - secured (Note 16) 1,098,210 1,241,451

The bank overdraft bears interest of 13 % (2009 - 12 %) per annum. The bank overdraft is secured by a pledge ofcertain inventories (Note 10) and trade receivables (Note 11).

The borrowings are denominated in Indian Rupees.

17 Trade and other payables


2010 2009 2010 2009US$ US$ US$ US$

Trade payables

Third parties 629,761 413,741 1,970 14,114

Accruals 273,370 32,890 19,524 32,890

903,131 446,631 21,494 47,004Other payables

Deferred consideration 332,300 - - -

Salaries payable 2,815,159 1,262,466 3,993 -

Advances from customers 213,475 27,357 - -

Statutory dues payables 1,849,738 1,345,132 - -

Advances from related parties 11,230 51,444 10,471 10,471

Amount due to subsidiaries - - 329,590 329,490

6,125,033 3,133,030 365,548 386,965

Related parties includes key management and their spouse and entities over which key management are able to exercisecontrol.

Both the advances, from related parties and amounts due to subsidiaries are interest-free, unsecured and repayable ondemand.


18 Other income


Exchange gain - 199,662

Interest income 32,664 94,160

Other 77,471 6,925

110,135 300,747

19 Finance costs


Interest on bank overdraft 222,443 13,872

Interest on bank loans 38,255 47,562

Interest on finance lease 21,168 20,216

Interest allocated from a related party 26,250 247,829

Others 107,003 78,401

415,119 407,880

Interest allocated from a related party represents unsecured borrowings provided by the related party during the yearended 31 March 2009 and March 31 2010. The loans include an overdraft facility, finance leases in respect of motorvehicles and other banks loans transferred to a subsidiary (Note 23). This interest carries no margin and is back toback in nature. The effective interest rates range from 13% to 18% (2009 - 12% to 21%)

Related party is an entity over which key management are able to exercise control.


20 Loss before taxation


Loss before taxation has been arrived at after charging:

Impairment of trade and other receivables: - charge for the year 345,070 164,862

Legal and professional fees 311,692 376,115

Operating lease rentals - office 344,351 397490

Initial public offering expenses - 1,436,253

Staff costsOther than key management personnel

- Salaries, wages and other related costs 26,437,917 19,523,578- Provident fund contributions 1,543,837 1,163,442

21 Taxation


Current taxation 311,856 234,773

Deferred taxation (Note 9) (471,276) (549,157)

(159,420) (314,384)

The tax expense on the results of the financial year varies from the amount of income tax determined by applying theIndia statutory rate of income tax on profits as a result of the following:


Loss before taxation (715,840) (3,243,861)

Tax at statutory rate (177,036) (801,486)

Tax effect on non-deductible expenses 16,768 155,078

Tax effect on non-taxable income (29,624) -

Change in tax rate (35,835) -

Deferred tax asset not recognised 66,307 384,667

Accelerated tax depreciation - 4,662

Others - (57,305)

(159,420) (314,384)


Income tax is based on tax rate applicable on statement of comprehensive income in various jurisdictions in which theGroup operates. The effective tax at the domestic rates applicable to profits in the country concerned as shown in thereconciliation below have been computed by multiplying the accounting profit with effective tax rate in each jurisdictionin which the Group operates. The individual entity amounts have been then aggregated for the consolidated financialstatements. The effective tax rate applied in each individual entity has not been disclosed in the tax reconciliationabove as the amounts aggregated for individual group entities would not be a meaningful number.

Note 9 provides information on the entity’s deferred tax assets and liabilities.

22 Loss per share

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

Calculations of basic and diluted loss per share are as follows:


Loss attributable to equity holders (in US$) (556,514) (2,926,983)

Weighted average number of ordinary shares outstanding

for basic and diluted loss per share 47,700,001 46,771,782

Basic and diluted loss per share (US$ per share) (0.01) (0.06)


23 Related party transactions

Related parties include subsidiaries, 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:

Transactions with key management:

Particulars 2010 2009US$ US$

Remuneration – short-term benefits 672,600 874,038

The outstanding balance payable to related parties under the category of key management as at 31 March 2010 and31 March 2009 is USD 16,374 and USD 21,202 respectively. These have been included under salaries payable underNote 17.

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


Entities over which key management are able to exercise control:

Overdraft facility utilised by a subsidiary (Note 19) - (1,544,842)

Inventories transferred to a subsidiary - (26,136)

Operating expenses paid on behalf of a subsidiary 388 2,289,781

Repayment of advances from a subsidiary (69,729) (2,593,420)

Transfer of motor vehicle to a subsidiary 141,635 -

Allocation of interest to a subsidiary - (237,796)

Non-trade amount received on behalf of a subsidiary (150,663) (120,998)

Hire charges paid on behalf of a subsidiary 26,506 192,481

Office rental paid by a subsidiary (126,539) (119,789)

Management consultancy services rendered by a subsidiary (32) (58,687)


24 Commitments

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


Not later than one year 184,044 188,232

Later than one year and not later than five years - 65,308

Later than five years - -

184,044 253,540

25 Operating segments

Segment accounting policies are the same as the policies described in Note 2. The Company generally accounts forinter-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 March2010 and 2009, and certain assets and liabilities information regarding industry segments as at 31 March 2010 and2009.


Faci

lity

man

agem

ent

Gu

ard

ing

Serv

ices

Oth

er o

per

atio

ns

Tot

alSe

rvic

es

2010

2009

2010

2009

2010

2009

2010

2009

US$

US$

US$

US$

US$

US$

US$

US$

Segm

ent

reve

nu

e6,

781,

663

1,4

49,3

7824

,169

,354

21,2

96,7

8254

0,40

141

0,21

231

,491

,418

23,1

56,3

72

Dep

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atio

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nd

am

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-fin

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15,8

2822

8,33

814

5,82

512

4-

305,

377

161,

653

Mat

eria

l con

sum

ed25

9,63

210

8,94

230

,657

10,1

2434

6,76

532

5,54

563

7,05

444

4,61

1

Staf

f an

d r

elat

ed c

osts

6,34

6,77

72,

439,

545

21,9

64,6

4318

,731

,001

163,

616

83,7

5028

,475

,036

21,2

54,2

96

Oth

er o

pera

tin

g ex

pen

ses

757,

889

875,

330

1,31

5,08

81,

606,

379

16,0

1612

,144

2,08

8,99

32,

493,

853

Fin

ance

cos

ts34

,625

5,1

0637

6,19

240

2,30

191

147

341

1,72

840

7,88

0

Segm

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254,

436

401,

152

12,9

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26,7

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Tax

atio

n25

8,97

649

1,54

0(9

9,45

8)(1

81,7

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(98)

4,63

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9,42

031

4,38

4

Segm

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et (

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154,

978

219,

366

12,8

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,070

)(2

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(1,2

91,5

37)

Segm

ent

asse

ts6,

995,

176

1,59

3,54

76,

866,

903

8,10

5,89

325

9,56

163

,587

14,1

21,6

409,

763,

027

Segm

ent l

iab

ilit

ies

2,36

5,11

328

8,63

15,

303,

139

4,15

7,85

118

6,54

947

,602

7,85

4,80

14,

494,

084

Oth

er s

egm

ent

info

rmat

ion

:

Cap

ital

exp

endi

ture

s10

6,05

913

0,33

135

2,09

824

1,83

81,

249

-45

9,40

637

2,16

9

Dep

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atio

n o

f pla

nt

and

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ipm

ent

63,7

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,828

228,

338

145,

825

124

-29

2,21

516

1,65

3


The totals presented for the Group’s operating segments reconcile to the entity’s key financial figures as presented in itsfinancial statements as follows:

2010 2009US$ US$

Segment operating loss before tax (426,772) (1,605,923)

Reconciling items:

Other income not allocated (Note 18) 110,135 300,747

Other expenses not allocated (Mortice Limited) (399,203) (1,938,685)

Group loss before tax (715,840) (3,243,861)

Segment assets 14,121,640 10,053,355

Reconciling items:

Other assets not allocated (Mortice Limited) 65,496 1,012,417

Total assets 14,187,136 11,065,771

Segment liabilities 7,854,801 4,823,574

Reconciling items:

Other liabilities not allocated (Mortice Limited) 35,957 57,475

Total liabilities 7,890,758 4,881,049

The operating subsidiaries are domiciled in India and there is only one geographical segment, i.e. India. Thus, noinformation has been presented by geographical segments.


26 Financial risk management objectives and policies

The Group reviews its risk profile on a transactional basis. The Group does not hold or issue derivative financialinstruments for trading purposes but may be a party to derivative financial instruments such as interest rate swapsand forward exchange contracts to hedge against fluctuations, if any, in interest rates or foreign exchange rates.The Group’s and the Company’s exposure to financial risks associated with financial instruments held in the ordinarycourse of business include:

26.1 Credit risk Credit risk is the risk that one party to a financial instrument will fail to discharge an obligation and cause the Companyor the Group to incur a financial loss. Company’s and the Group’s exposure to credit risk arises primarily from tradeand other receivables. For trade receivables, the Company and the Group adopt the policy of dealing only with customersof appropriate credit history, and obtaining sufficient security where appropriate to mitigate credit risk. For otherfinancial assets, they and the Group adopt the policy of dealing onlywith high credit quality counterparties.

The Company’s and the Group’s objective is to seek continual growth while minimising losses incurred due to increasedcredit risk exposure.

Most of the Group’s financial assets and liabilities are denominated in the functional currency of the entity in whichsuch financial assets or financial liability is held. Therefore, the Group doesn’t consider the risk of movement of foreignexchange risk as significant.

As at the statement of financial position date, the Group has concentration of credit risk in 5 customers amountingUS$582,406 (2009: US$779,054) representing approximately 8% (2009: 16%) of the total trade receivables of US$7,284,747. (2009: US$4,810,145)

The Group establishes an allowance for impairment that represents its estimates of incurred losses in respect of tradeand other receivables. The main components of the allowance are a specific loss component that relates to individuallysignificant exposures, and a collective loss component establish for groups of similar assets in respect of losses thathave been incurred but not yet identified. The collective loss allowance is determined based on historical data ofpayment statistic for similar financial assets.

The allowance account in respect of trade and other receivables is used to record impairment losses unless the Groupis satisfied that no recovery of the amount owing is possible. At that point, the financial assets are consideredirrecoverable and the amount charged to the allowance account is written off against the carrying amount of theimpaired financial assets.

Cash is held with reputable financial institutions.

26.2 Liquidity riskLiquidity risk is the risk that the Company or the Group will encounter difficulty in raising funds to meet commitmentsassociated with financial instruments. Liquidity risk may result from an inability to sell a financial asset quickly atclose to its fair value.

The Company’s and the Group’s exposure to liquidity risk arises primarily from mismatches of the maturities of financialassets and liabilities. The Company’s and the Group’s objective is to maintain a balance between continuity of fundingand flexibility through the use of stand-by credit facilities.


The table below analyses the maturity profile of the Company’s and the Group’s financial liabilities based on contractualundiscounted cash flows:

Less than Between Over Total1 year 2 and 5 years 5 years

The Group

At 31 March 2010

Trade and other payables 5,825,192 - - 5,825,192

Borrowings 1,305,539 138,952 - 1,444,491

7,130,731 138,952 - 7,269,683

At 31 March 2009

Trade and other payables 3,062,690 - - 3,062,690

Borrowings 1,392,429 230,632 1,623,061

4,455,119 230,632 - 4,685,751

The Company and the Group ensure that there are adequate funds to meet all its obligations in a timely and cost-effective manner.

26.3 Interest rate riskInterest rate risk is the risk that the fair value or future cash flows of the Company’s and the Group’s financial instrumentswill fluctuate because of changes in market interest rates determined from time to time.

The Group has certain bank borrowings on which it is exposed to interest rate risk, i.e. primarily the bank overdraft onwhich there are floating rates of interest, determined from time to time

Based on the volatility in interest rates in respect of the bank overdraft facility for the previous 12 months, themanagement estimates a range of 75 basis points to be appropriate. A decrease in market interest rate by 75 basispoints, will lead to an increase in the value of the loan by USD 8,237 resulting in increase in profit and equity for theyear ended 31 March 2010 and an equal and opposite effect in the case of an increase in the interest rates. During theyear ended 31 March 2009, an increase in market interest rate by 100 basis point will lead to a decrease in the value ofthe loan by USD 12,414 resulting in a decrease in profit and equity for the year ended 31 March 2009.

All other loans have a fixed rate of interest. The fair value of all borrowings is not considered to be materially differentfrom their carrying amounts.

26.4 Foreign currency riskCurrency risk is the risk that the value of a financial instrument will fluctuate due to changes in foreign exchange rates.Currency risk arises when transactions are denominated in foreign currencies.

The Group operates and sells its products/services in India and transacts in Indian rupees. As a result, the Group isnot exposed to movements in foreign currency exchange rates arising from normal trading transactions. Also theGroup does not use any financial derivatives such as foreign currency forward contracts, foreign currency options orswaps for hedging purposes.


26.5 Market price riskPrice risk is the risk that the value of a financial instrument will fluctuate due to changes in market prices.

The Group does not hold any quoted or marketable financial instruments, hence, is not exposed to any movement inmarket prices.

27 Capital management

The Group’s objectives when managing capital are:

(a) To safeguard the Group’s ability to continue as a going concern;

(b) To support the Group’s stability and growth; and

(c) To provide capital for the purpose of strengthening the Company’s risk management capability; and

(d) To provide an adequate return to shareholders

The Group actively and regularly reviews and manages its capital structure to ensure optimal capital structure andshareholder returns, taking into consideration the future capital requirements of the Group and capital efficiency,prevailing and projected profitability, projected operating cash flows, projected capital expenditures and projectedstrategic investment opportunities. The Group currently does not adopt any formal dividend policy.

In order to maintain or adjust the capital structure, the Group may adjust the amount of dividends paid to shareholders,return capital to shareholders, issue new shares, or sell assets to reduce debt.

There were no changes in the Group’s approach to capital management during the year.

The Company and its subsidiaries are not subject to externally imposed capital requirements.

The Group monitors gearing ratio i.e. total debt in proportion to its overall financing structure, i.e. equity and debt.Total debt comprises of all financial liabilities of the Group.

2010 2009US$ US$

Total equity 6,296,378 6,184,722

Total debts 7,269,683 4,685,751

Overall financing 13,566,061 10,870,473

Gearing ratio 0.53 0.43


28 Financial instruments

Fair valuesThe carrying amount of financial assets and liabilities with a maturity of less than one year is assumed to approximatetheir fair values.

However, the Group and the Company do not anticipate that the carrying amounts recorded at financial position datewould 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 followingcategories of assets and liabilities:

2010 2009US$ US$

Non-current assets

Loans and receivables

Security Deposit 77,758 88,897

Restricted Cash 196,415 139,066

Current assets

Loans and receivables

Trade receivables 6,760,529 4,630,997

Other current assets 346,400 405,383

Related party receivables 649,550 667,152

Cash and cash equivalents 697,408 3,253,140

Total financial assets 8,728,060 9,184,635

Non-current Liabilities

Finance lease obligations, excluding current portion 122,394 78,812

Long-term borrowings, excluding current portion 16,558 151,820

Current liabilities

Trade payables and other payables 5,825,192 3,062,690

Bank overdraft 1,098,210 1,241,451

Current portion of finance lease obligations 106,558 60,760

Current portion of long term borrowings 100,771 90,218

Total financial liabilities 7,269,683 4,685,751


29 Comparative figures

The statement of financial position as at 1 April 2008 has been re-presented due to reclassification of certain comparativefigures. The reclassified item is current tax assets which have been presented at the face of statement of financialposition which was grouped under other receivable in prior year. In addition, the company has adopted the presentationof statement of comprehensive income by nature of expense method. The affected items are disclosed below. There isno change to the loss for the year.

Items 2009 2009 Movements(reclassified)

Staff and related costs 2,860,657 21,561,058 18,700,401

Materials consumed - 444,611 444,611

Services consumed 19,184,679 - (19,184,679)

Other operating expenses 2,649,858 4,125,778 1,475,920

Initial public offering expenses 1,436,253 - (1,436,253)

Total 26,131,447 26,131,447 -

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www.morticegroup.com

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