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Transguard GroupAnnual Report2018-19

Above and Beyond

The goals are clear, the road is paved and the clock ticks; there is no place for hesitation. There are many who talk, we accomplish.

“

His Highness Sheikh Mohammed bin Rashid Al MaktoumVice President and Prime Minister of the UAE and Ruler of Dubai

“

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Message from the Chairman, HH Sheikh Ahmed bin Saeed Al Maktoum

Message from the Chief Executive Officer, Dr. Abdulla Al Hashimi

Message from the Managing Director, Greg Ward

Financial Highlights

Leadership Team

Above and Beyond

Our Services

- Cash Services

- Security Services

- Manpower Services

- Aviation and Logistics

- Workforce Solutions

- Facilities Management

- Transguard Living

- Transguard Delivery

Setting the Standard for Business in our Region

Additional Awards and Accolades

New Acquisition Builds our Presence

New Businesses Expand our Portfolio

Sustainably Approaching the Future

Corporate Social Responsibility

Building for Tomorrow

Health and Safety

A Year in Review

Financial Report 2018-2019

Message from the ChairmanThe success of the UAE depends on the strength and integrity of its leaders and of the many businesses that drive the country’s economy. This is an inspirational story that continues to motivate people from all over the world, and Transguard’s journey represents one of its most compelling chapters.

With a continued focus on the success of its customers, Transguard’s major milestones over the past year have included the acquisition of G4S Cash Services, the launch of its Executive Protection division and the opening of the Transguard Living office in Ras al Khaimah.

As a result of its clearly innovative approach to business, Transguard also won four prestigious awards: The Mohammed Bin Rashid Al Maktoum Business Award, the Mohammed Bin Rashid Al Maktoum Business Innovation Award, the Dubai Quality Award and the Sheikh Khalifa Excellence Award.

A true success story that adds to the accomplishments of the nation, Transguard’s contributions to the UAE continue to position it as an invaluable part of Emirates Group and a trusted partner for its thousands of customers throughout the country.

His Highness Sheikh Ahmed bin Saeed Al MaktoumChairman and Chief Executive, Emirates Airline and Group

6 7

Message from the CEOFY2018/19 was a year of steady revenue growth of 11% and a growing order book. With its continued focus on profit improvement, Transguard ended the year with exceptional profit growth of 22%. Record contract wins of more than AED 2.8 billion represented a 33% increase from the previous year.

Commercial growth across the business was the result of strategic alignments, in particular with key customers like dnata, Dubai Parks & Resorts, Emaar Communities, Emirates Airlines, Etihad Airlines, L’Oreal, Meraas and Siemens. With further diversification into consumer services, an expanding presence in wider UAE geographies and targeting new customer and service segments, we are positioned to make the best use of opportunities for success in the next financial year.

Dr. Abdulla Al Hashimi Chief Executive Officer

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Message from the Managing DirectorGrowing from strength to strength, Transguard has ended this financial year with a strong performance of 11% revenue growth and 22% profit growth. Our strategy has its underpinnings in continued cost base improvement, as well as the continual development of our staff.

While it is true that Transguard’s business strategies, processes and overall performance are of the highest calibre, all of these things are carried out on a daily basis by a dedicated team that is not only talented but also passionate about driving our customers’ success.

In 2018, we made the decision to roll out Lean Six Sigma training at every level of Transguard. Led by our Transformation team, this methodology empowers our staff to make changes that eliminate waste and increase efficiency in their everyday work. To date, we’ve trained 650 employees, but every month the number of LSS-trained staff continues to grow.

So much of what we do at Transguard is built upon a strong foundation. Lean Six Sigma has provided this framework for our operations, but I also believe that our mandate goes deeper than that. As you’ll see in later pages of our Annual Report, Corporate Social Responsibility is woven into everything we do: From cutting back on our environmental footprint to providing a safe, comfortable life for the thousands of people who work for us, our success is a direct result of our investment in human capital.

As this new financial year progresses, Transguard is embarking on some unique digital initiatives that will further strengthen our position in the market, including a cutting-edge employee app (created by our in-house development team), biometric Time & Attendance and automated Rostering. I look forward to sharing our progress and what I already know will be significant results.

Greg WardManaging Director

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Transguard Group LLC

Revenue and Results Actual Actual Actual2018-19 2017-18 2016-17

Revenue AED 000’s 2,578,618 2,315,053 1,900,633EBITDA AED 000’s 265,545 211,849 184,022EBITDA Margin % 10% 9% 10%Operating Profit AED 000’s 218,248 174,617 154,609Operating Margin % 8% 8% 8%Profit Attributable to the Owner AED 000’s 186,780 150,158 125,128Profit Margin % 7% 6% 7%Headcount 66,926 64,774 55,399Revenue Growth 11% 22% 33%Headcount Growth 3% 17% 20%

Financial Highlights

Revenue AED ‘000s

2018-19

2017-18

2016-17

2,578,618

2,315,053

1,900,633

Consolidated Profit AED ‘000s

2018-19

2017-18

2016-17

199,679

163,431

146,041

Profit Attributable to the Owner AED ‘000s

2018-19

2017-18

2016-17

186,780

150,158

125,128Re

venu

e Gr

owth

Headcount Growth

2018 - 1966,926

2017 - 1864,744

2016-1755,399

11% 22%Prof

it Gr

owth

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The Leadership Team

HH Sheikh Ahmed bin Saeed Al MaktoumChairman and Chief Executive, Emirates Airline and Group

Nick BeerChief Financial Officer

Dr Abdulla Al HashimiChief Executive Officer

Greg WardManaging Director

Stephen BeesleyChief Operating OfficerFacilities Management

Tim MundellChief Security Officer

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Above and Beyond

Major growth is only possible with an equal amount of effort. At Transguard, the heart of our success is our people: At 66,926 strong, our people have worked incredibly hard to deliver not only major growth in every business unit but also to develop new opportunities that cut across the business, with results that are both impressive and exciting.

Our team comes from 90 countries around the world and are deployed in every imaginable sector throughout the United Arab Emirates. Our people are not only helping the nation’s businesses grow – we’re also propelling the success of the country itself. How? Because we never stop learning and growing.

The 2017 establishment of the Centre of Excellence (COE) has revolutionised the service levels that Transguard is able to offer to the market, with employees at every level of the business (from site-based up to senior management) completing an astonishing 800,000 training hours during FY2018/19. Current projections see the Transguard team completing more than 1 million training hours at the COE by 2020.

Worker welfare continues to be an important pillar of Transguard’s efforts, and to that end we’ve hosted more than 2,300 staff events this year. This includes our biannual Transguard Carnival, which, during the March edition, welcomed more than 4,000 guests, a record-breaking number of attendees. FY2018/19 also included the launch of TMart, a purpose-built convenience store in one of our accommodations in Al Quoz.

We’ve accomplished all of this and more while providing our new and existing customers with the highest level of service, something that we don’t take for granted. We’re proud of the hard work this team put in to FY 2018/19 and look forward to sharing even greater success stories with you over the coming year.

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Cash Services

Among the highlights of 2018, the late December acquisition of Abu Dhabi-based G4S Cash Services increased the market share of Transguard Cash to 95%, servicing more than 17,000 ATMs throughout the region. This acquisition has allowed Transguard to further drive value for the banking and financial sectors of the UAE by making cash management smarter and more cost effective. Under the terms of the agreement, more than 540 employees, 74 cash vans, the Abu Dhabi Cash Centre and all other assets of G4S Cash were acquired by Transguard.

Transguard Cash Services also opened its second Cash Deposit Centre (CDC) at The Dubai Mall, which acts as a teller counter for multiple banks, a time-saving alternative to standing in long bank queues to make a deposit. The result is faster service for everyone: Corporate and SME depositors can quickly deposit the day’s receipts in the CDC, while individual bank branches will experience queue reductions and because of that, additional opportunities to provide better customer service.

Other milestones for FY2018/19 include the management of more than 9 million notes and 1.5 million coins per day; meanwhile, our fleet travels a combined total of 1.8 million kilometers every month, which is the equivalent of 45 trips around the world.

12% Revenue Growth 10% Workforce Growth

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Security Services

In FY 2018/19, Transguard’s Security Services division continued to retain its coveted position as the country’s premier Tier 1 security company. In addition to a presence in nearly all major malls and tourist attractions in the UAE, this business unit added Executive Protection to its portfolio: Estimating the regional executive protection market to be valued at more than AED 20 million, Executive Protection from Transguard offers individually tailored personal security solutions for prominent business leaders, government officials, celebrities and families.

In mid-March, our Systems Integration division successfully completed building a state-of-the-art command, control and communications centre, the most technically advanced in the region, for one of its key clients in Dubai. Throughout the processes, our Systems Integration team has maintained operational and technical excellence by partnering with the foremost globally recognised command, control and communication technology system suppliers and ultimately delivering on our promise.

Other highlights from the year include the accreditation of all 13 K9 teams by Dubai Police and GCAA; in addition, our AVSEC flight operations security team has doubled in size.


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Manpower Services

With the renewal of more than 80 contracts at an annualized value of AED 1 billion, Manpower Services continues on its path of successful growth. In FY 2018/19, this division mobilized 2,200 people each month around the nation and worked on projects for most of the UAE’s major developers. Hospitality Solutions division grew by 500 employees; what’s more, the Emirates Flight Catering headcount increased from 3,600 to 5,900. With more than 70 contracts and three new service lines (Food & Beverage, Back of House and Front of House and Warehouse Staff), Transguard continues to be the premier supplier of talented, trained staff to the UAE’s most prestigious hotels and resorts.


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Aviation and Logistics

Our Aviation and Logistics business saw revenue growth of 13% and workforce growth of 16%. The diversity of our service portfolio continues to power our growth in other areas as well: For example, Transguard’s combined service portfolio has a very strong presence in the aviation sector, where we work with companies such as Emirates, for a combined contract value of AED 440 million.

With a significant presence in Al Maktoum, Abu Dhabi and Sharjah airports, Transguard also began its first project with Dubai Airports this year. A successful Bureau Veritas audit with no non-conformance reports or negative reports was a reflection of our continued efforts to provide the highest quality service to not only our clients, but to travellers from all over the world.


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Workforce Solutions

With 20% revenue growth, Workforce Solutions showed strong growth for Transguard last year, particularly in real estate and hospitality, with AED 217 million and AED 76 million in contracts, respectively. A strategic partnership with SAP also fortified our already strong ability to deploy the right manpower as required.

Three additional new solutions were launched in FY2018/19: Temping, executive search and PRO services, and with Transguard’s new Advanced Workforce Solutions license also available to our clients, this business unit has achieved significant growth in both the retail and distribution sectors.

20% Revenue Growth 4 New Services

12

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Facilities Management

Facilities Management experienced a particularly robust year, with AED 168 million in contracts on the books, representing revenue growth of 8%. Expansion in a number of sectors, including AED 22 million in contracts for major shopping malls in Dubai and Abu Dhabi, as well as popular residential areas in Dubai, reflect Transguard’s integral position within the UAE’s business landscape.

Under the umbrella of Facilities Management, Transguard introduced a number of new offerings in 2018, including landscaping, pest control and water tank cleaning. We were also honoured to receive three awards from Facilities Management Middle East, including Engineering Service of the Year, Education and Development Initiative of the Year and Security Company of the Year.

8% Revenue Growth 3 New Services

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Transguard Living

Now in its second full year of operations, Transguard Living experienced another remarkable period of growth, with triple-digit figures reflecting this division’s efforts in Dubai and beyond.

One major milestone was the opening of the Transguard Living office in Ras al Khaimah, which was also the first step toward covering the Northern Emirates. Other than Dubai and Abu Dhabi, which are high on our agenda, Ras Al Khaimah has the largest proportion of completed freehold communities in the UAE and therefore has huge growth potential. This move also provides direct access to Fujairah, where the real estate market is continuing to build pace.

This new office was a major step in Transguard Living becoming the first dedicated home services company to provide support right across the UAE. This will benefit professional landlords, property developers and real estate agents by providing a service that covers all emirates, making the process easier from a client-supplier perspective.


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Transguard Delivery

After the successful roll-out and consolidation of internal services, Transguard Delivery finished its first year of operations with some key wins to its credit.

First was the launch of transguarddelivery.com: The easy-to-use platform allows businesses to schedule shipments, organise cheque collection and to book courier services (as well as returns) with the use of the latest geo track-and-trace technology, which allows the ability to track packages in real time.

Next, Transguard Delivery introduced a four-hour delivery window, which can be booked through the website; customers can also choose nine-hour same-day service. Transguard Delivery will also offer next-day services in the near future.

This was a strategic move that will help broaden our scope of work beyond our existing corporate customers to provide a fully tracked pick-up and drop-off service. The UAE SME market makes up 95% of all business in the country, and we see the market as a key area of growth within the courier industry, as well as an opportunity to cement our position as their number one service provider.


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Setting the Standard for Business in the RegionIn April 2019, Transguard Group was awarded the Dubai Quality Award (DQA), which honours companies for their outstanding commitment to continuous improvement and business excellence. Transguard Cash Services previously won the award in 2018.

DQA, which is based on the Excellence Model used by the European Foundation for Quality Management (EFQM), evaluates nominations on Leadership, Strategy, People, Partnerships & Resources, and Processes, Products & Services, as well as Customer Results, People Results, Society Results, and Business Results. The Dubai Quality Award is the second level of three of the awarding programme, with the next and last level being the DQA Gold.

At Transguard, continuously improving all aspects of our business is at the forefront of our strategy and winning the Dubai Quality Award celebrates the brilliant people who continue to take this business forward. We’re extremely proud that Transguard was recognised by the Dubai Department of Economic Development for business excellence and of the example that we’re setting for business in Dubai and in the region.

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Additional Awards andAccolades

Providing the highest quality service to our customers is in our DNA, and in FY2018/19, Transguard’s reputation for excellence was further underscored by a number of impressive awards. The first accolades were awarded by Facilities Management Middle East, who recognised Transguard with Engineering Service of the Year, Education and Development Initiative of the Year and Security Company of the Year awards. A few months later, Bureau Veritas awarded us with a number of ISO certifications, including ISO 9001, ISO 14004 and OHSAS 18001.

Finally, after beginning 2019 with nearly AED 3 billion in contracts, Transguard has added four more achievements to its already impressive roster of accomplishments: The Mohammed Bin Rashid Al Maktoum (MRM) Business Award, the MRM Business Innovation Award, the Sheikh Khalifa Excellence Award and the Dubai Quality Award.

Presented to companies that contribute to the sustainable economic development of the UAE, these awards recognise Transguard’s industry-leading business practices and celebrate Transguard’s revolutionary approach to business practices and its ability to inspire companies on the national, regional and global levels; they also position Transguard as a benchmark for performance.

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New Acquisition Builds our PresenceIn late December, Transguard Group announced that it had acquired the assets, customers and a majority of the employees of Abu Dhabi-based G4S Cash Services LLC.

“Since its beginning, Transguard has been a major part of Dubai’s economy and its service offerings have helped the UAE grow,” said His Highness Sheikh Ahmed bin Saeed Al-Maktoum, Chairman and Chief Executive of Emirates Airline and Group. “[The] announcement is a reflection of Transguard’s hard work and dedication to continually improving the performance of the country’s cash sector.”

Established in 2001 with four cash vans and a single banking customer, the acquisition positions Transguard Cash as the most prolific member of the country’s cash management sector: Under the terms of the agreement, more than 540 employees, 74 cash vans, the Abu Dhabi Cash Centre and all other assets and business activities of G4S Cash (including ATM replenishment, ATM First Line, Cash in Transit, teller services, car park meter services, cash distribution and cash processing, coin processing and ATM residual processing and packing) were acquired by Transguard.

“The acquisition of G4S Cash [has allowed] Transguard to further drive value for the banking and financial sectors of the UAE by making cash management smarter and more cost effective,” said Dr. Abdulla Al Hashimi, Chief Executive Officer.

“We’re taking every opportunity to ensure that all of our customers, not only those we’re acquiring from G4S, have the opportunity to enjoy the Transguard experience of customer service,” said Greg Ward, Transguard’s Managing Director.

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New Businesses Expand our PortfolioNot content with ‘business as usual’, Transguard launched four unique services to complement its existing range of security services.

In early November 2018, Transguard formally added Executive Protection to its extensive Security portfolio. Extensive training in more than 16 different areas of expertise – including close protection journey management, security driving, surveillance awareness, venue security and more – have equipped the Executive Protection team with the skills necesary to offer executive protection that matches internationally recognised standards.

As the UAE’s only Executive Protection provider with unique airside access privileges, Transguard offers complete end-to-end services for overseas visitors that are available from touchdown to take off, undertaking the role of a dedicated security team throughout the duration of the client’s visit. In addition to high-visibility protection, Transguard also offers a more discrete security option with the same level of service that is tailored for business visits, tourists, families, young adults and children.

Our consumer division, Transguard Living, also spread its influence in FY2018/19, with the launch of its office in Ras al Khaimah, where it provides cleaning, repairs, painting, landscaping, pest control and relocation services to residents in communities including Al Hamra Village, Al Marjan Island, Mina Al Arab and beyond.

The new office, centrally located in Al Hamra Village, has already become a hub for serving the residents of Ras al Khaimah with response times of just an hour, unlimited callouts, air conditioning maintenance (up to three times a year), plumbing and electrical care.

Finally, in response to customer demand, our Facilities Management division added landscaping and pest control to its list of services. Formerly outsourced to a third party, these offerings were brought in-house with the aim of ensuring consistent quality and optimal pricing.

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Sustainably Approaching the FutureWith one of the largest workforces in the country, Transguard has a responsibility to manage its environmental footprint. To ensure that we’re using our resources responsibly, as well as keeping our operations sustainable, Transguard has embarked on an impressive roster of conservation efforts.

In June 2018, we began a project aimed at significantly reducing the amount of “wasted” energy in staff accommodations. Following an in-depth study, our teams focused on the most energy-contributing performance factors in our accommodations and mapped out potential solutions. The programme was rolled out across four accommodations and in just four months the result was significant savings, both in terms of energy consumption and cost: We reduced our energy consumption by more than 664,000 kWh, which is the equivalent of 53,000 gallons of gasoline or 164 tons of landfill waste. These energy savings also contributed to financial savings of more than AED 305,000.

Another Transguard water conservation project focuses on capturing and collecting waste condensate from air conditioning units to recycle it for everyday tasks. The result has been a dramatic reduction in water consumption: For example, a traditional car wash will use 79 gallons of water; a car washed with the recycled condensate uses only 6 gallons of water, a reduction of 92%.

The pilot programme, which is also located in one of the company’s accommodations, has already saved 10,824 gallons of water since the programme began in February 2019. Once implemented across all Transguard accommodations in Dubai, the project is expected to save 4.5 million gallons of water and to generate more than AED 280,000 in annual savings for Transguard.

Additional projects have also seen the company recycle nearly four tons of paper and 47 tons of plastic. With initiatives that harness the efforts of the entire company, from our colleagues at site to everyone in headquarters, Transguard is doing its part in every corner of the business.

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Corporate Social ResponsibilityWe believe that the integration of social, environmental and economic considerations into Transguard’s decision-making structures and processes is essential to creating a responsible, sustainable business.

11,641 post-event surveys

collected

115 CSR KPI’s completed across the business

346 CSR audits

conducted at our accommodations

167 sponsored activities

1.19 million kWh energy saved at

accommodations

101,057 employees participated

99% average satisfaction rate for our activities

3,095 employeeactivities

9.59 milliongallons of water saved

at our accommodations

150,000+spectators

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Building for TomorrowIn line with Transguard’s progressive HR policy, in 2018 the company began construction on a new state-of-the-art accommodation for over 2,700 employees in Jebel Ali. Due to be completed in 2020, some of the more notable features of the development include a dedicated medical clinic, a barber shop, a fully equipped gym, laundry facilities and a dining area offering a range of menus from Asia, Africa and Europe. A prayer hall, bike storage, recycling and ATM banking facilities will complement the G+4 building.

This new facility is the second construction project of its kind for Transguard; we broke ground on our first dedicated accommodations in 2017 with a G+7 facility in Jebel Ali that will house nearly 10,000 staff members and include the same amenities as the G+4 accommodation when complete.

In addition to providing a range of facilities for employees, the buildings will also benefit the environment by meeting the UAE’s Green Building compliance standards. LED lighting will be present throughout and solar panel water heating will be in operation, as well as grey water recycling. As part of Transguard’s enhanced human resource strategy, the move is aimed at offering the best living accommodation and facilities available in a congenial environment.

Our employees have always been our number one asset. This new development further underscores our commitment to offering the best living conditions available, which have been enhanced by our investment in recreational facilities. This provides our employees with an environment where they can rest, relax and feel at home, ultimately creating a happier and healthier workforce.

Another corporate initiative that Transguard is rolling out across its entire workforce is its welfare provision: The company has already invested more than AED 5 million in onsite healthcare centres catering to 20,000 employees, offering immediate access to quality medical facilities.

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Health and SafetyWith daily on-site and classroom training that equips our staff with the knowledge and tools they need to get their jobs done safely and efficiently, Transguard continued to make major strides with its safety initiatives.

-8% reduction in

minor accidents

+42% in safety initiative

events

195HSE audits conducted

46emergency

drills

0.25group Accident

Frequency Rate (AFR)is maintained

100+safety champions

trained

+20% in safety inspections

across the group

22 safety

initiatives

A Year in Review2018-2019

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Quarter 1Transguard awards ‘heroes’ atthe biannual Carnival.

Home check-in with Emirates announced.

April 1

April 23

Transguard Cash Services wins the Dubai Quality Award.

April 30

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Annual report announces AED 2.3 billion in revenue.

3,000+ cash staff receive training on operating and maintaining multi- brand ATMs.

May 4May 1

Team Transguard triumphs at the Joint Corporate Cricket match against Ziehl-Abegg.

May 2

Quarter 1

Transguard receives a number of awards from fmME, including Engineering Service of the Year, Education and Development Initiative of the Year and Security Company of the Year.

May 8

With a movie projected onto

a double decker bus, our site-based colleagues enjoyed

popcorn and refreshments, as

well as raffle prizes, activities and much

more.

Transguard teams up with Al Manzil Center to provide more opportunities for kids.

June 24 June 29

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Transguard hosts TG Olympics.

June 16

Quarter 2

Transguard plants 162 trees and plants across three of our employee

accommodations as part of the World

Environment Day campaign to promote awareness and action

for the environment.

During the Holy Month of Ramadan, Transguarddistributes 250 meals to a neighbouring mosque and more than 39,000 meals to our colleagues.

Transguard supports the UAE’s efforts to

encourage blood donations with a

blood drive.

July 8June 15

July 12

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Four of our security guards and a dedicated Client Manager receive appreciation awards for excellent service from one of our clients.

Transguard participates in the Hotelier Middle East Great GM Debate at Le Méridien Dubai Hotel and Conference Centre.

July 21

July 22

Quarter 2

Transguard begins rebranding its vehicle fleet.

August 12

Transguard employees take part in the Camp Ka Champ singing competition.

July 20

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Quarter 3

Transguard celebrates National Flag Day.November 1

Transguard unveils Executive Protection, a dedicated team offering bespoke executive protection to high-net-worth individuals, VIPs and celebrities.

November 12

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Transguard celebrates the launch of G+4, a new AED 114 million state-of-the-art accommodation that will house over 2,700 employees.

November 1

Transguard announces the acquisition of G4S Cash Services.

December 20

Transguard Living opens its first office in Ras Al Khaimah in Al Hamra Village.

December 17

Quarter 3

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Quarter 4Transguard announces

AED 2.8 billion in contracts.

January 1

January 25

The myTG app for Android and iOS launches.

More than 300 employees participate

in the Transguard Olympics.

February 3

120 Transguard employees help clean Al Mamzar Beach, collecting 191 bags of trash.

February 9

64 65

Transguard wins both the Mohammed Bin Rashid Al Maktoum Business Award and the Mohammed Bin Rashid Al Maktoum Business Innovation Award.

Transguard wins the Dubai Quality Award.

Transguard Cash wins the SKEA Gold Award, which was presented by Sheikh Hamed bin Zayed Al Nahyan.

February 27March 31

March 31Transguard unveils the aviation trainingdivision at the Centre of Excellence.

February 10

Quarter 4

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Financial Report2018-2019

Directors’ report and consolidated financial statements for the year ended 31 March 2019

Directors’ report

Independent auditor’s report

Consolidated statement of financial position

Consolidated income statement

Consolidated statement of comprehensive income

Consolidated statement of changes in equity

Consolidated statement of cash flows

Notes to the consolidated financial statements

1

2-3

4

4

4

5

6

7-24

Directors’ report for the year ended 31 March 2019

The Directors submit their report together with the audited consolidated financial statements of Transguard Group LLC (“the Company”) and its subsidiaries (together, “the Group”) for the year ended 31 March 2019.

Principal activities

The principal activities of the Group are to provide secure cash and valuable logistics, integrated facility services, security guarding services, aviation security including accredited training and aircraft protection, security solutions and workforce solutions ranging from construction to professional services.

Results

The results of the Group for the year ended 31 March 2019 are set out on page 4 of the consolidated financial statements.

Directors

The directors who served during the year and up to the date of this report were:

Executive Director• Dr. Abdulla Al Hashimi representing dnata

Non-executive Directors• H.H. Sheikh Ahmed bin Saeed Al-Maktoum representing dnata• Hamad Jassim Al Darwish Fakhroo representing Al Hail Holding LLC • Mohammed Al Shaiba Saleh Ghannam Al Mazrouei representing Al Hail Holding LLC

Auditors

The consolidated financial statements have been audited by PricewaterhouseCoopers who retire and, being eligible, offer themselves for re-appointment as auditors for the year ending 31 March 2020.

For and on behalf of the Board,

........................................... ...…………………………Dr. Abdulla Al Hashimi Gregory WardChief Executive Officer Managing Director30 April 2019

1 2

Independent auditor’s report to the shareholders of Transguard Group LLC

Report on the audit of the consolidated financial statements

Our opinion

In our opinion, the consolidated financial statements present fairly, in all material respects, the consolidated financial position of Transguard Group LLC (the “Company”) and its subsidiaries (together the “Group”) as at 31 March 2019, and its consolidated financial performance and its consolidated cash flows for the year then ended in accordance with International Financial Reporting Standards.

What we have audited

The Group’s consolidated financial statements comprise:

● the consolidated statement of financial position as at 31 March 2019;● the consolidated income statement for the year then ended;● the consolidated statement of comprehensive income for the year then ended;● the consolidated statement of changes in equity for the year then ended;● the consolidated statement of cash flows for the year then ended; and● the notes to the consolidated financial statements, which include a summary of significant accounting policies.

Basis for opinion

We conducted our audit in accordance with International Standards on Auditing (ISAs). Our responsibilities under those standards are further described in the Auditor’s responsibilities for the audit of the consolidated financial statements section of our report.

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

Independence

We are independent of the Group in accordance with the International Ethics Standards Board for Accountants’ Code of Ethics for Professional Accountants (IESBA Code) and the ethical requirements that are relevant to our audit of the consolidated financial statements in the United Arab Emirates. We have fulfilled our other ethical responsibilities in accordance with these requirements and the IESBA Code.

Other information

The directors are responsible for the other information. The other information comprises the Directors’ report and financial highlights (but does not include the consolidated financial statements and our auditor’s report thereon).

Our opinion on the consolidated financial statements does not cover the other information and we do not express any form of assurance conclusion thereon.

In connection with our audit of the consolidated financial statements, our responsibility is to read the other information identified above and, in doing so, consider whether the other information is materially inconsistent with the consolidated financial statements or our knowledge obtained in the audit, or otherwise appears to be materially misstated.

If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact. We have nothing to report in this regard.

Responsibilities of management and those charged with governance for the consolidated financial statements

Management is responsible for the preparation and fair presentation of the consolidated financial statements in accordance with International Financial Reporting Standards and their preparation in compliance with the applicable provisions of the UAE Federal Law No. (2) of 2015, and for such internal control as management determines is necessary to enable the preparation of consolidated financial statements that are free from material misstatement, whether due to fraud or error.

In preparing the consolidated financial statements, management is responsible for assessing the Group’s ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless management either intends to liquidate the Group or to cease operations, or has no realistic alternative but to do so.

Those charged with governance are responsible for overseeing the Group’s financial reporting process.

Auditor’s responsibilities for the audit of the consolidated financial statements

Our objectives are to obtain reasonable assurance about whether the consolidated financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with ISAs will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these consolidated financial statements.

As part of an audit in accordance with ISAs, we exercise professional judgement and maintain professional scepticism throughout the audit. We also:

We communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit.

Identify and assess the risks of material misstatement of the consolidated financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.

Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Group’s internal control.

Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by management.

Conclude on the appropriateness of management’s use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Group’s ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor’s report to the related disclosures in the consolidated financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor’s report. However, future events or conditions may cause the Group to cease to continue as a going concern.

Evaluate the overall presentation, structure and content of the consolidated financial statements, including the disclosures, and whether the consolidated financial statements represent the underlying transactions and events in a manner that achieves fair presentation.

Obtain sufficient appropriate audit evidence regarding the financial information of the entities or business activities within the Group to express an opinion on the consolidated financial statements. We are responsible for the direction, supervision and performance of the group audit. We remain solely responsible for our audit opinion.

•

•

•

•

•.

•

Consolidated statement of financial positionAs at 31 March

Note 2019AED

2018AED

ASSETS

Non-current assets

Property, plant and equipment 5 956,187,759 514,522,613

Intangible assets 6 71,518,887 66,421,078

Prepayments 8 116,743,188 117,786,729

1,144,449,834 698,730,420

Current assets

Inventories 4,499,521 3,279,546

Trade and other receivables 8 784,238,099 773,483,485

Due from related parties 9 64,639,778 89,605,422

Cash and bank balances 10 38,285,925 35,924,248

891,663,323 902,292,701

Total assets 2,036,113,157 1,601,023,121

EQUITY AND LIABILITIES

EQUITY

Equity attributable to owners of the Company

Share capital 13 300,000 300,000

Legal reserve 14 150,000 150,000

Contributed capital 15 1,806,502 1,806,502

Retained earnings 583,412,049 468,945,820

Total equity attributable to owners of the Company 585,668,551 471,202,322

Non-controlling interests 111,154,898 108,383,584

Total equity 696,823,449 579,585,906

LIABILITIES

Non-current liabilities

Borrowings 12 587,763,198 160,624,035

Provision for employees’ end of service benefits 16 110,259,730 101,274,738

698,022,928 261,898,773

Current liabilities

Trade and other payables 11 466,084,891 377,089,678

Due to related parties 9 149,986 12,831,186

Borrowings 12 175,031,903 369,617,578

641,266,780 759,538,442

Total liabilities 1,339,289,708 1,021,437,215

Total equity and liabilities 2,036,113,157 1,601,023,121

Consolidated income statementYear ended 31 March

Note 2019AED

2018AED

Revenue 17 2,578,617,798 2,315,053,294

Direct costs 18 (2,139,091,801) (1,937,492,813)

Gross profit 439,525,997 377,560,481

Administrative expenses 19 (187,099,136) (182,694,360)

Impairment losses on financial assets - net 20 (34,732,431) (17,009,478)

Other income / (expenses) - net 22 553,759 (3,239,534)

Operating profit 218,248,189 174,617,109

Finance costs 23 (18,569,602) (11,186,044)

Profit for the year 199,678,587 163,431,065

Profit attributable to:

Owners of the Company 186,780,229 150,158,318


199,678,587 163,431,065

Consolidated statement of comprehensive incomeYear ended 31 March

Note 2019AED

2018AED


Other comprehensive income / (loss):

Item that will not be reclassified to income statement:

Remeasurement of retirement benefit obligations 16 6,307,000 (2,538,000)

Total comprehensive income for the year 205,985,587 160,893,065

Attributable to:

Owners of the Company 193,217,229 148,210,318


205,985,587 160,893,065

Independent auditor’s report to the shareholders ofTransguard Group LLC (continued)

Report on other legal and regulatory requirements

Further, as required by the UAE Federal Law No. (2) of 2015, we report that:

PricewaterhouseCoopers 30 April 2019

---------------------------Douglas O’MahonyRegistered Auditor Number 834Dubai, United Arab Emirates

3 4

These consolidated financial statements were approved by the Board of Directors on 30 April 2019 and signed on its behalf by:

........................................... ...…………………………Dr. Abdulla Al Hashimi Gregory WardChief Executive Officer Managing Director30 April 2019

The notes on pages 7 to 24 are an integral part of these consolidated financial statements

we have obtained all the information we considered necessary for the purposes of our audit;

the consolidated financial statements have been prepared and comply, in all material respects, with the applicable provisions of the UAE Federal Law No. (2) of 2015;

the Group has maintained proper books of account;

the financial information included in the report of the Directors is consistent with the books of account of the Group;

as disclosed in note 1 to the consolidated financial statements the Group has purchased and invested in shares during the year ended 31 March 2019;

note 9 to the consolidated financial statements discloses material related party transactions, and the terms under which they were conducted; and

based on the information that has been made available to us, nothing has come to our attention which causes us to believe that the Group has contravened during the year ended 31 March 2019 any of the applicable provisions of the UAE Federal Law No. (2) of 2015 or in respect of the Company, its Articles of Association which would materially affect its activities or its financial position as at 31 March 2019.

i)

ii)

iii)

iv)

v)

vi)

vii)

Consolidated statement of changes in equity

Attributable to owners of the Company

Share capitalAED

Legal reserveAED

Contributed capitalAED

Retained earningsAED

TotalAED

Non-controlling interests

Totalequity

Balance at 1 April 2017 300,000 150,000 1,806,502 348,735,502 350,992,004 105,700,837 456,692,841

Profit for the year - - - 150,158,318 150,158,318 13,272,747 163,431,065

Other comprehensive loss:

Remeasurement of retirement benefit obligations - - - (1,948,000) (1,948,000) (590,000) (2,538,000)

Total comprehensive income for the year - - - 148,210,318 148,210,318 12,682,747 160,893,065

Transactions with owners

Dividend (Note 25) - - - (28,000,000) (28,000,000) (10,000,000) (38,000,000)

Balance at 31 March 2018 300,000 150,000 1,806,502 468,945,820 471,202,322 108,383,584 579,585,906

Impact of changes in accounting policies (Note 28) - - - (6,751,000) (6,751,000) 2,956 (6,748,044)

At 1 April 2018 300,000 150,000 1,806,502 462,194,820 464,451,322 108,386,540 572,837,862

Profit for the year - - - 186,780,229 186,780,229 12,898,358 199,678,587

Other comprehensive income / (loss):

Remeasurement of retirement benefit obligations - - - 6,437,000 6,437,000 (130,000) 6,307,000

Total comprehensive income for the year - - - 193,217,229 193,217,229 12,768,358 205,985,587

Transactions with owners

Dividend (Note 25) - - - (72,000,000) (72,000,000) (10,000,000) (82,000,000)

Balance at 31 March 2019 300,000 150,000 1,806,502 583,412,049 585,668,551 111,154,898 696,823,449

5 6

Consolidated statement of cash flowsYear ended 31 March

Note 2019 2018

Cash flows from operating activities


Adjustments for:

Depreciation 5 38,842,674 28,983,259

Amortisation 6 8,362,881 8,248,153

16 41,511,105 35,156,571

Provision for impairment of trade receivables 20 33,422,310 17,355,535

Provision / (release of provision) for impairment of due from related parties 20 1,310,121 (346,057)

Finance costs 23 18,569,602 11,186,044

Provision for impairment of property 22 1,797,000 -

Write off of intangible asset 22 958,806 -

(Gain) / loss on disposal of property, plant and equipment 22 (1,493,512) 996,791

Operating cash flows before payment of employees’ end of service benefits and changes in working capital 342,959,574 265,011,361

Payments of employees’ end of service benefits 16 (26,110,113) (17,726,640)

Changes in working capital, net of acquisition of subsidiary:

Inventories (723,863) (582,823)

Prepayments – non current 1,043,541 917,410

Trade and other receivables before movement in provision for impairment (36,989,120) (256,474,538)

Due from related parties before movement in provision for impairment 21,963,195 (7,356,673)

Trade and other payables 78,086,342 135,201,246

Due to related parties (12,681,200) 11,754,039

Net cash generated from operating activities 367,548,356 130,743,382

Cash flows from investing activities

Purchase of property, plant and equipment 5 (492,417,218) (251,014,028)

Purchase of intangible assets excluding goodwill 6 (7,833,603) (8,059,242)

Payment for acquisition of subsidiary – net of cash acquired 26 (16,025,654) -

Proceeds from disposal of property, plant and equipment 19,105,910 586,604

Net cash used in investing activities (497,170,565) (258,486,666)

Year ended 31 March

Note 2019AED

2018AED

Cash flows from financing activities

Repayment of borrowings 12 (409,726,691) (243,542,677)

Drawdown of borrowings 12 651,123,458 423,846,578

Interest paid 23 (18,569,602) (11,186,044)

(82,000,000) (38,000,000)

Net cash provided by financing activities 140,827,165 131,117,857

Net increase in cash and cash equivalents 11,204,956 3,374,573

Cash and cash equivalents at beginning of year 27,080,969 23,706,396

Cash and cash equivalents at end of year 10 38,285,925 27,080,969



Provision for employees’ end of service benefits Dividend paid

Notes to the consolidated financial statements for the year ended 31 March 2019

1 Legal status and activities

Transguard Group LLC (“the Company”) and its subsidiaries (Note 7) (together, “the Group”) provide secure cash and valuable logistics, integrated facility services, security guarding services, aviation security including accredited training and aircraft protection, security solutions and workforce solutions ranging from construction to professional services.

The Company is a limited liability company incorporated in the United Arab Emirates under the UAE Federal Law No. (8) of 1984, as amended and operates under a trade licence issued in Dubai. This law has been superseded by UAE Federal Law No. 2 of 2015 effective 1 July 2015. The registered address of the Company is P. O. Box 22630, Dubai, United Arab Emirates.

The share capital of the Company is owned equally by dnata, a company incorporated in the Emirate of Dubai, UAE, with limited liability, under an Emiri Decree issued on 4 April 1987 and Al Hail Holding LLC, a limited liability company, established and registered in the Emirate of Abu Dhabi. The ‘Transguard’ trademark, name and logo are held by dnata.

During the year, Transguard Cash LLC, a subsidiary of the Company, purchased 100% share capital of G4S Cash Services LLC (Note 7).

2 Summary of significant accounting policies

The principal accounting policies applied in the preparation of these consolidated financial statements are set out below. These policies have been consistently applied to all the years presented, unless otherwise stated.

2.1 Basis of preparation

The consolidated financial statements have been prepared in accordance with International Financial Reporting Standards (“IFRS”) and interpretations issued by the IFRS Interpretations Committee (IFRS IC) applicable to companies reporting under IFRS. The consolidated financial statements comply with IFRS as issued by the International Accounting Standards Board (IASB). These consolidated financial statements have been prepared under the historical cost convention, unless otherwise stated.

The preparation of consolidated financial statements in conformity with IFRS requires the use of certain critical accounting estimates. It also requires management to exercise its judgement in the process of applying the Group’s accounting policies. The areas involving a higher degree of judgement or complexity, or areas where assumptions and estimates are significant to the consolidated financial statements are disclosed in Note 4.

2.1.1 Changes in accounting policies and disclosures

New and amended standards adopted by the Group

The following new standards became applicable for the current reporting period and the Group had to change its accounting policies and make appropriate adjustments as a result of adopting these standards:

• IFRS 9 – “Financial Instruments”; and• IFRS 15 – “Revenue from contracts with customers”

The impact of adoption of these standards is disclosed in Note 28.

There are no other IFRSs, amendments or IFRIC interpretations that are effective that would be expected to have a material impact on the Group’s consolidated financial statements.

New standards and interpretations not yet adopted by the Group

Certain new accounting standards and interpretations, as detailed below, have been published that are not mandatory for 31 March 2019 reporting periods and have not been early adopted by the Group. The Group intends to adopt these standards as and when they become effective.

• IFRS 16, ‘Leases’ (effective from periods beginning 1 January 2019)

The IASB has issued a new standard for the recognition of leases. Under IFRS 16, a contract is, or contains, a lease if the contract conveys the right to control the use of an identified asset for a period of time in exchange for consideration. It will result in almost all leases being recognised on the consolidated statement of financial position, as the distinction between operating and finance leases is removed. Under the new standard, an asset (the right to use the leased item) and a financial liability to pay rentals are recognised. The only exceptions are short-term and low-value leases. The accounting for lessors will not significantly change. The mandatory date of adoption of the standard is 1 April 2019 for the Group. The Group intends to apply the simplified transition approach and will not restate comparative amounts for the year prior to first adoption. Right-of-use assets for property leases will be measured on transition as if the new rules had always been applied.

The Group has reviewed all of its leasing arrangements in light of the new accounting rules in IFRS 16. The standard will affect primarily the accounting for the Group’s operating leases. On 1 April 2019, the Group expects to recognise right-of-use assets of AED 457,053,496 and lease liabilities of AED 361,488,882 (after adjustments for prepayments and accrued lease payments recognised as at 31 March 2019). As a result, the Group’s net assets will decrease by AED 36,724,570. The Group expects that net profit for the year ending 31 March 2020 will decrease by AED 2,223,327 as a result of adopting the new standard.

There are no other IFRSs or IFRIC interpretations that are not yet effective that would be expected to have a material impact on the Group’s consolidated financial statements.

2.2 Consolidation

(a) Subsidiaries

Subsidiaries are entities (including structured entities) over which the Group has control. The Group controls an entity when the Group is exposed to, or has rights to, variable returns from its involvement with the entity and has the ability to affect those returns through its power to direct the activities of the entity. Subsidiaries are fully consolidated from the date on which control is transferred to the Group. They are deconsolidated from the date that control ceases.

The acquisition method of accounting is used to account for business combinations by the Group.

Inter-company transactions, balances, unrealised gains on transactions between Group companies are eliminated. Unrealised losses are also eliminated unless the transaction provides evidence of an impairment of the transferred asset. Accounting policies of subsidiaries have been changed where necessary to ensure consistency with the policies adopted by the Group.

Non-controlling interests in the results and equity of subsidiaries are shown separately in the consolidated income statement, consolidated statement of comprehensive income, consolidated statement of changes in equity and consolidated statement of financial position respectively.

(b) Changes in ownership interests

The Group treats transactions with non-controlled interests that do not result in a loss of control as transactions with equity owners of the group. A change in ownership interest results in an adjustment between the carrying amounts of the controlling and non-controlling interests to reflect their relative interests in the subsidiary. Any difference between the amount of the adjustment to non-controlling interests and any consideration paid or received is recognised in a separate reserve within equity attributable to owners of the Company.

When the Group ceases to consolidate or equity account for an investment because of a loss of control, joint control or significant influence, any retained interest in the entity is remeasured to its fair value with the change in carrying amount recognised in consolidated income statement. This fair value becomes the initial carrying amount for the purposes of subsequently accounting for the retained interest as an associate, joint venture or financial asset. In addition, any amounts previously recognised in other comprehensive income in respect of that entity are accounted for as if the Group had directly disposed of the related assets or liabilities. This may mean that amounts previously recognised in other comprehensive income are reclassified to consolidated income statement.

If the ownership interest in a joint venture or an associate is reduced but joint control or significant influence is retained, only a proportionate share of the amounts previously recognised in other comprehensive income are reclassified to consolidated income statement where appropriate.

2 Summary of significant accounting policies (continued)

2.2 Consolidation (continued)

(c) Acquisitions of entities under common control

Business combinations arising from transfers of interests in entities that are under the control of the Company are accounted using predecessor accounting. The assets and liabilities acquired are recognised at the carrying amounts on the date of acquisition and no adjustments are made to reflect the fair values. Any difference between the consideration given for the acquisition and carrying value of assets and liabilities acquired is recognised directly in equity. No goodwill is recognised as a result of the combination.

2.3 Property, plant and equipment

Property, plant and equipment are stated at historical cost less depreciation and impairment. Historical cost includes expenditure that is directly attributable to the acquisition of the items. Subsequent costs are included in the asset’s carrying amount or recognised as a separate asset, as appropriate, only when it is probable that future economic benefits associated with the item will flow to the Group and the cost of the item can be measured reliably. The carrying amount of the replaced part is derecognised. All other repairs and maintenance costs are charged to the consolidated income statement during the financial period in which they are incurred.

Land is not depreciated. Depreciation on other assets is computed using the straight-line method at rates calculated

The assets’ residual values and useful lives are reviewed, and adjusted if appropriate, at each reporting date. An asset’s carrying amount is written down immediately to its recoverable amount if the asset’s carrying amount is greater than its estimated recoverable amount.

Gains and losses on disposals are determined by comparing proceeds with carrying amount and are recognised within the consolidated income statement.

Capital work in progress is stated at cost. When commissioned, capital work-in-progress is transferred to the appropriate property, plant and equipment category and depreciated in accordance with Group’s policy.

2.4 Intangible assets

(a) Goodwill

Goodwill arises on the acquisition of subsidiaries and represents the excess of the consideration transferred, the amount of any non-controlling interest in the acquire and the acquisition-date fair value of any previous equity interest in the acquiree over the fair value of the identifiable net assets acquired. If the total of consideration transferred, non-controlling interest recognised and previously held interest measured at fair value is less than the fair value of the net assets of the subsidiary acquired, in the case of a bargain purchase, the difference is recognised directly in the consolidated income statement.

For the purpose of impairment testing, goodwill acquired in a business combination is allocated to each of the Cash Generating Units (“CGUs”), or groups of CGUs, that is expected to benefit from the synergies of the combination. Each unit or group of units to which the goodwill is allocated represents the lowest level within the entity at which the goodwill is monitored for internal management purposes. Goodwill is monitored at the operating segment level.

Goodwill impairment reviews are undertaken annually or more frequently if events or changes in circumstances indicate a potential impairment. The carrying value of the CGU containing the goodwill is compared to the recoverable amount, which is the higher of value in use and the fair value less costs of disposal. Any impairment is recognised immediately as an expense and is not subsequently reversed.

(b) Computer software

Acquired computer software licenses are capitalised on the basis of the costs incurred to acquire and bring to use the specific software. These costs are amortised over their estimated useful lives ranging from five to eight years.

Costs associated with maintaining computer software programmes are recognised as an expense as incurred. Development costs that are directly attributable to the design and testing of identifiable and unique software products controlled by the Group are recognised as intangible assets when the following criteria are met:

Directly attributable costs that are capitalised as part of the software product include the software development employee costs and an appropriate portion of relevant overheads.

Other development expenditures that do not meet these criteria are recognised as an expense as incurred. Development costs previously recognised as an expense are not recognised as an asset in a subsequent period.

Computer software development costs recognised as assets are amortised over their estimated useful lives.

Capital work-in-progress is stated at cost. When commissioned, capital work-in-progress is transferred to the appropriate intangible assets category and amortised in accordance with Group’s policy.

2.5 Impairment of non-financial assets

Assets that have an indefinite useful life are not subject to amortisation and are tested annually for impairment. Assets that are subject to depreciation/amortisation are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. An impairment loss is recognised for the amount by which the asset’s carrying amount exceeds its recoverable amount. The recoverable amount is the higher of an asset’s fair value less costs to sell and value in use. For the purposes of assessing impairment, assets are grouped at the lowest levels for which there are separately identifiable cash flows (cash-generating units).

Non-financial assets other than goodwill that suffered impairment are reviewed for possible reversal of the impairment at each reporting date.

Years

Buildings 20 - 25

Plant and machinery 3 - 12

Furniture and fixtures 10

Computer and office equipment 4 - 6

Motor vehicles 5 - 6

7 8

to allocate the cost of assets to their residual values over their estimated useful lives,

it is technically feasible to complete the software product so that it will be available for use;management intends to complete the software product and use or sell it;there is an ability to use or sell the software product;it can be demonstrated how the software product will generate probable future economic benefits;adequate technical, financial and other resources to complete the development and to use or sell the software product are available; andthe expenditure attributable to the software product during its development can be reliably measured.

••••

•

•

as follows:


2.6 Financial assets

Accounting policies applied from 1 April 2018

The application of the new standard required the management to apply the following new accounting policies:

(a) Classification

From 1 April 2018, the Group classifies its financial assets as those to be measured at amortised cost. The classification depends on the Group’s business model for managing the financial assets that whether the financial asset is held within a business model whose objective is to hold financial assets in order to collect contractual cashflows and the contractual terms of the cash flows that whether contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding. Management determines the classification of its financial assets at initial recognition.

(b) Recognition and derecognition

Regular way purchases and sales of financial assets are recognised on trade-date, the date on which the Group commits to purchase or sell the asset. Financial assets are derecognised when the rights to receive cash flows from the financial assets have expired or have been transferred and the Group has transferred substantially all the risks and rewards of ownership.

(c) Measurement

At initial recognition, the Group measures a financial asset at its fair value plus transaction costs that are directly attributable to the acquisition of the financial asset.

Subsequent measurement of debt instruments depends on the Group’s business model for managing the asset and the cash flow characteristics of the asset.

Assets that are held for collection of contractual cash flows where those cash flows represent solely payments of principal and interest are measured at amortised cost. Interest income from these financial assets is included in finance income using the effective interest rate method. Any gain or loss arising on derecognition is recognised directly in consolidated income statement and presented in other gains/(losses) together with foreign exchange gains and losses. Impairment losses are presented as separate line item in the consolidated income statement.

(d) Impairment of financial assets

For trade receivables, the Group applies the simplified approach permitted by IFRS 9, which requires expected lifetime losses to be recognised from initial recognition of the receivables, see note 4 for further details.

Accounting policies applied until 31 March 2018

a) Classification

The Group classifies its financial assets as loans and receivables. The classification depends on the purpose for which the financial assets were acquired. Management determines the classification of its financial assets at initial recognition.

Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market. They are included in current assets, except for maturities greater than 12 months after the reporting date. These are classified as non-current assets. The Group’s loans and receivables comprise ‘trade and other receivables (excluding prepayments and advances to suppliers)’ (Note 8), ‘due from related parties’ (Note 9) and ‘cash and bank balances’ (Note 10).

(b) Recognition and measurement

Loans and receivables are initially measured at fair value and subsequently carried at amortised cost using the effective interest method. Financial assets are derecognised when rights to receive cash flows have expired or have been transferred along with substantially all the risks and rewards of ownership.

(c) Impairment of financial assets

The Group assesses at the end of each reporting period whether there is objective evidence that a financial asset or a group of financial assets is impaired. A financial asset or a group of financial assets is impaired and impairment losses are incurred only if there is objective evidence of impairment as a result of one or more events that occurred after the initial recognition of the asset (a ‘loss event’) and that loss event (or events) has an impact on the estimated future cash flows of the financial asset or a group of financial assets that can be reliably estimated.

Evidence of impairment may include indications that the debtors or a group of debtors is experiencing significant financial difficulty, default or delinquency in interest or principal payments, the probability that they will enter bankruptcy or other financial reorganisation, and where observable data indicate that there is a measurable decrease in the estimated future cash flows, such as changes in arrears or economic conditions that correlate with defaults.

For loans and receivable category, the amount of the loss is measured as the difference between the asset’s carrying amount and the present value of estimated future cash flows (excluding future credit losses that have not been incurred) discounted at the financial asset’s original effective interest rate. The carrying amount of the asset is reduced and the amount of the loss is recognised in the consolidated income statement.

2.7 Offsetting financial assets and liabilities

Financial assets and liabilities are offset and the net amount reported in the consolidated statement of financial position when there is a legally enforceable right to offset the recognised amounts and there is an intention to settle on a net basis or realise the asset and settle the liability simultaneously. The legally enforceable right must not be contingent on future events and must be enforceable in the normal course of business and in the event of default, insolvency or bankruptcy of the Company or the counterparty.

2.8 Inventories

Inventories are stated at the lower of cost and net realisable value. Cost is determined using the weighted average method. The cost of inventory comprises the cost of purchase and other costs incurred in bringing the inventory to its present location and condition. It excludes borrowing cost.

Net realisable value is the estimated selling price in the ordinary course of business, less applicable variable selling expenses.

2.9 Trade receivables

Trade receivables are amounts due from customers for services performed in the ordinary course of business. If collection is expected in one year or less (or in the normal operating cycle of the business if longer), they are classified as current assets. If not, they are presented as non-current assets.

Trade receivables are recognised initially at fair value and subsequently measured at amortised cost using the effective interest method, less provision for impairment.

2.10 Cash and cash equivalents

In the consolidated statement of cash flows, cash and cash equivalents include cash on hand, amounts held in bank accounts and bank overdrafts. In the consolidated statement of financial position, bank overdrafts are shown within borrowings in current liabilities.

2.11 Share capital

Ordinary shares are classified as equity.

2.12 Trade and other payables

These amounts represent liabilities for goods and services provided to the Group prior to the end of financial year which are unpaid. The amounts are unsecured and are usually paid within 30 days of recognition. Trade and other payables are presented as current liabilities unless payment is not due within 12 months after the reporting period. They are recognised initially at their fair value and subsequently measured at amortised cost using the effective interest method.


2.13 Borrowings

Bank borrowings are recognised initially at fair value, net of transaction costs incurred. Bank borrowings are subsequently carried at amortised cost. Any difference between the proceeds (net of transaction costs) and the redemption value is recognised in the consolidated income statement over the period of the bank borrowings using the effective interest method.

Fees paid on the establishment of loan facilities are recognised as transaction costs of the loan to the extent that it is probable that some or all of the facility will be drawn down. In this case, the fee is deferred until the draw-down occurs. To the extent there is no evidence that it is probable that some or all of the facility will be drawn down, the fee is capitalised as a pre-payment for liquidity services and amortised over the period of the facility to which it relates.

Borrowings are removed from the consolidated statement of financial position when the obligation specified in the contract is discharged, cancelled or expired. The difference between the carrying amount of a financial liability that has been extinguished or transferred to another party and the consideration paid, including any non-cash assets transferred or liabilities assumed, is recognised in consolidated income statement as other income or finance costs.

Where the terms of a financial liability are renegotiated and the entity issues equity instruments to a creditor to extinguish all or part of the liability (debt for equity swap), a gain or loss is recognised in consolidated income statement, which is measured as the difference between the carrying amount of the financial liability and the fair value of the equity instruments issued.

Borrowings are classified as current liabilities unless the Group has an unconditional right to defer settlement of the liability for at least 12 months after the reporting period.

2.14 Provision for employees’ benefits

A provision is made for the estimated liability for employees’ employed in the UAE for their entitlements to annual leave and leave passage as a result of services rendered by the employees up to the reporting date. A provision is also made for the full amount of the end of service benefits, using actuarial techniques, due to employees in accordance with the UAE Labour Law.

The Group employs a firm of independent actuaries to determine the value of employee benefits as at the reporting date, using actuarial techniques including the Projected Unit Credit Method. The present value of the employees’ end of service benefit liability is determined by discounting the estimated future cash outflows using interest rates of high-quality corporate bonds that are denominated in the currency in which the benefits will be paid, and that have terms to maturity approximating to the terms of the related pension obligation.

Actuarial gains and losses arising from experience adjustments and changes in actuarial assumptions are charged or credited to equity in other comprehensive income in the period in which they arise.

The liability for leave salary, leave passage and end of service benefits at the end of the year, and the charge for the year on account of these benefits have been recorded in line with the recommendations of the actuaries.

The provision relating to annual leave and leave passage is disclosed as a current liability, while that relating to employees’ end of service benefits is disclosed as a non-current liability.

2.15 Provisions

Provisions are recognised when the Group has a present legal or constructive obligation as a result of past events; it is probable that an outflow of resources will be required to settle the obligation; and the amount has been reliably estimated. Provisions are not recognised for future operating losses.

Where there are a number of similar obligations, the likelihood that an outflow will be required in settlement is determined by considering the class of obligations as a whole. A provision is recognised even if the likelihood of an outflow with respect to any one item included in the same class of obligations may be small.

2.16 Revenue recognition

The application of the new standard requires the management to apply the following new accounting policies:

Revenue is recognised to the extent that it is probable that the economic benefits will flow to the Group and the revenue can be reliably measured, regardless of when the payment is being made. Revenue is measured at the fair value of the consideration received or receivable, taking into account contractually defined terms of payment and excluding discounts, rebates and other sales taxes or duty. The following specific recognition criteria must also be met before the revenue is recognised:

(i) Revenue from rendering of services

As per the new policy, the Group recognises revenue from contracts with customers based on a five step model as set out in IFRS 15:

The Group satisfies a performance obligation and recognises revenue over time, if one of the following criteria is met:

For performance obligations where none of the above conditions are met, revenue is recognised at the point in time at which the performance obligation is satisfied. The Group is required to assess each of its contracts with customers to determine whether performance obligations are satisfied over time or at a point in time to determine the appropriate method of recognising revenue.

(ii) Accounting policies applied until 31 March 2018

Revenue is measured at fair value of the consideration received or receivable for the services rendered in the ordinary course of the Group’s activities. The Group recognises revenue when the amount of revenue can be reliably measured; it is probable that future economic benefits will flow to the entity; and specific criteria have been met for the Group’s activity as described below.

Rendering of services

Revenue arising from services rendered is recognised when the services have been rendered to the customers based on contractual terms.

9 10

Identify the contract(s) with a customer: A contract is defined as an agreement between two or more parties that creates enforceable rights and obligations and sets out the criteria for every contract that must be met.

Identify the performance obligations in the contract: A performance obligation is a promise in a contract with a customer to transfer a good or service to the customer.

Determine the transaction price: The transaction price is the amount of consideration to which the Group expects to be entitled in exchange for transferring promised goods or services to a customer, excluding amounts collected on behalf of third parties.

Allocate the transaction price to the performance obligations in the contract: For a contract that has more than one performance obligation, the Group will allocate the transaction price to each performance obligation in an amount that depicts the amount of consideration to which the Group expects to be entitled in exchange for satisfying each performance obligation.

Recognise revenue when (or as) the entity satisfies a performance obligation at a point in time

The customer simultaneously receives and consumes the benefits provided by the Group’s performance as the Group performs;

The Group’s performance creates or enhances an asset that the customer controls as the asset is created on enhanced; or

The Group’s performance does not create an asset with an alternative use to the Group and entity has an enforceable right to payment for the performance completed to date.

•

•

•

•

•

•

•

•


2.17 Leases

Operating leases

Leases in which a significant portion of the risks and rewards of ownership are retained by the lessor are classified as operating leases. Payments made under operating leases (net of any incentives received from the lessor) are charged to the consolidated income statement on a straight-line basis over the period of the lease.

2.18 Dividend distribution

Provision is made for the amount of any dividend declared, being appropriately authorised and no longer at the discretion of the Group, on or before the end of the reporting period but not distributed at the end of the reporting period.

2.19 Foreign currency translation

(a) Functional and presentation currency

Items included in the consolidated financial statements of each of the Group’s entities are measured using the currency of the primary economic environment in which the entity operates (‘the functional currency’). The consolidated financial statements are presented in United Arab Emirates Dirham (‘AED’), which is the Company’s functional and Group’s presentation currency.

(b) Transactions and balances

Foreign currency transactions are translated into the functional currency using the exchange rates prevailing at the dates of the transactions or valuation where items are re-measured. Foreign exchange gains and losses resulting from the settlement of such transactions and from the translation at year-end exchange rates of monetary assets and liabilities denominated in foreign currencies are recognised in the consolidated income statement.

Foreign exchange gains and losses that relate to borrowings and cash and cash equivalents are presented in the consolidated income statement within ‘finance costs’. All other foreign exchange gains and losses are presented in the consolidated income statement within ‘other income - net’.

The results and financial position of the subsidiaries are included in the consolidated financial statements in AED which is also the subsidiaries’ functional currency.

2.20 Borrowing costs

General and specific borrowing costs that are directly attributable to the acquisition, construction or production of a qualifying asset are capitalized during the period of time that is required to complete and prepare the asset for its intended use or sale. Qualifying assets are assets that necessarily take a substantial period of time to get ready for their intended use or sale. Other borrowing costs are expensed in the period in which they are incurred.

3 Financial risk management

3.1 Financial risk factors

The Group’s activity exposes it to a variety of financial risks: market risk (including foreign exchange risk, price risk and cash flow and fair value interest rate risk), credit risk and liquidity risk. The Group’s overall risk management programme focuses on the unpredictability of financial markets and seeks to minimise potential adverse effects on the Group’s financial performance.

(a) Market risk

(i) Foreign exchange risk

The Group’s exposure to foreign currency risk is minimal as the majority of its transactions are denominated in the Company’s functional currency or in a currency pegged to the Company’s functional currency.

(ii) Price risk

The Group has no exposure to price risk as it has no price sensitive financial instruments.

(iii) Cash flow and fair value interest rate risk

The Group’s cash flow interest rate risk arises from its borrowings with variable interest rates.

The table below indicates the interest rate exposure on borrowings with variable interest rates at 31 March 2019 and 2018. The analysis calculates the increase/ (decrease) on the consolidated income statement of a reasonably possible movement in interest rate:

The Group’s exposure to fair value interest rate risk arises from borrowings with fixed interest rates. Currently, the Group does not hedge the risk arising from its borrowings. However, the fair value interest rate risk does not exist as all of the Group’s borrowings are based on variable interest rates.

(b) Credit risk The Group is exposed to credit risk in relation to its monetary assets, mainly trade receivables (excluding prepayments and advances to suppliers), due from related parties and bank balances. The Group assesses the credit quality of the customer taking into account its financial position, past experience and other factors. It also has formal procedures to follow-up and monitor trade debtors.

The Group’s exposure to credit risk is influenced mainly by the individual characteristics of each customer. Significant amount of trade receivables of the Group are reputed and financially sound companies, which in the opinion of management reduces credit risk. Management constantly reviews and assesses the credit as well as business risk of having such a significant exposure to a single client.

In monitoring customer credit risk, customers are grouped according to their credit characteristics, ownership pattern, industry profile, geographic location, maturity and existence of previous financial difficulties.

3 Financial risk management (continued)

3.1 Financial risk factors (continued)

(b) Credit risk (Continued) Cash at bank comprises of balances with commercial banks. Credit ratings of these commercial banks have been obtained from Moody’s Corporation (‘Moody’s’). The table below analyses the balances with the banks at the reporting date.

*Not rated - Balances maintained with certain UAE banks with no formal credit rating. However, management views these banks to be high quality financial institutions.

Moody’s Rating

2019AED

2018AED

Banks

A ba1 22,807,964 8,504,463

B * 4,995,487 -

C baa3 2,066,698 18,057,142

D baa3 1,495,029 336,695

E a3 1,273,859 305,108

F ba1 980,742 204,628

G a3 794,676 334,462

H a3 776,704 639,793

I ba1 645,825 3,066,727

J ba2 432,352 -

K baa1 381,945 -

L ba2 364,277 -

M * 348,897 1,555,066

N * 328,378 328,378

O ba2 271,012 1,475,706

P baa3 172,239 776,139

38,136,084 35,584,307

Less than 1 yearAED

Between 1 year and 2

yearsAED

Between 2 years and 5

yearsAED

Over 5 yearsAED

Contractual cash flows

AED

Carrying Amount

AED

At 31 March 2019

Borrowings 207,005,058 121,668,685 250,184,847 326,046,226 904,904,816 762,795,101

Trade and other payables (excluding advances fromcustomers and VAT payable) (Note 11) 454,664,429 - - - 454,664,429 454,664,429

Due to related parties (Note 9) 149,986 - - - 149,986 149,986

661,819,473 121,668,685 250,184,847 326,046,226 1,359,719,231 1,217,609,516

At 31 March 2018

Borrowings 379,839,027 72,742,780 85,410,257 14,924,710 552,916,774 530,241,613

Trade and other payables (excluding advances from customers and VAT payable) (Note 11) 363,936,296 - - - 363,936,296 363,936,296

Due to related parties (Note 9) 12,831,186 - - - 12,831,186 12,831,186

756,606,509 72,742,780 85,410,257 14,924,710 929,684,256 907,009,095

(c) Liquidity risk

Prudent liquidity risk management includes maintaining sufficient cash and marketable securities, the availability of funding through an adequate amount of committed credit limits. Due to the dynamic nature of the underlying business, the Group maintains flexibility in funding by maintaining availability under committed credit lines.

The table below analyses the Group’s financial liabilities into relevant maturity groupings based on the remaining period at the reporting date to the contractual maturity date. The amounts disclosed in the table are the contractual undiscounted cash flows.

11 12

2019AED

2018AED

Interest Costs

+100 basis points 6,456,183 4,356,680

-100 basis points (6,456,183) (4,356,680)

31 March 2019

Age category Loss % Gross carrying amount Provision

AED AED

0 - 30 days 0.97% 171,773,608 1,666,439

31 - 60 days 1.83% 105,839,280 1,933,442

61 - 90 days 3.65% 28,309,425 1,033,760

91 - 120 days 6.83% 12,763,671 872,375

121 - 150 days 11.40% 14,683,014 1,673,762

151 - 180 days 18.36% 10,590,023 1,943,921

181 - 210 days 29.32% 7,250,770 2,126,199

211 - 240 days 32.94% 11,784,738 3,882,377

241 - 270 days 37.13% 6,492,912 2,410,793

271 - 300 days 41.43% 9,213,628 3,816,922

301 - 330 days 44.28% 9,381,672 4,153,766

331 - 360 days 48.60% 6,294,809 3,059,485

360+ Days 60.14% 49,606,452 29,835,771

443,984,002 58,409,012

0 - 30 days

31 - 60 days

61 - 90 days

91 - 120 days

121 - 150 days

151 - 180 days

181 - 210 days

211 - 240 days

241 - 270 days

271 - 300 days

301 - 330 days

331 - 360 days

360+ Days

3 Financial risk management (continued)

3.2 Capital risk management

The Group’s objectives when managing capital are to safeguard the Group’s ability to continue as a going concern in order to provide returns for shareholders and benefits for other stakeholders and to maintain optimal capital structure to reduce the cost of capital.

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

Consistent with others in the industry, the Group monitors capital on the basis of the gearing ratio. This ratio is calculated as net debt divided by total capital. Net debt is calculated as total borrowings (including current and non-current amounts as shown in the consolidated statement of financial position) less cash and bank balances. Total capital is calculated as ‘total equity’ as shown in the consolidated statement of financial position plus net debt.

The gearing ratio at 31 March 2019 and 2018 was as follows:

3.3 Fair value estimation

The carrying value of the Group’s financial assets and financial liabilities as at 31 March 2019 and 2018 approximate their value.

4 Critical accounting estimates and judgements

Estimates and judgements are continually evaluated and are based on historical experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances.

The Group makes estimates and assumptions concerning the future. The resulting accounting estimates will, by definition, seldom equal the related actual results. The estimates and assumptions that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year are discussed below:

(a) Impairment of financial assets

The Group applies the IFRS 9 simplified approach to measure expected credit losses which uses a lifetime expected loss allowance for all trade receivables and due from related parties.

To measure the expected credit losses, trade receivables and due from related parties are grouped based on shared credit risk characteristics and the days past due. The expected loss rates are based on the payment profiles of sales over a period of 24 month before 31 March 2019 or 1 April 2018 (for opening balance restatement) respectively and the corresponding historical credit losses experienced within this period. The historical loss rates are adjusted to reflect current and forward-looking information on macroeconomic factors affecting the ability of the customers to settle the receivables. On that basis, the provision for impairment of trade receivables and due from related parties as at 31 March 2019 and 1 April 2018 (on adoption of IFRS 9) was determined as follows:

Trade receivables:

2019AED

2018AED

Borrowings (Note 12) 762,795,101 530,241,613

Less: cash and bank balances (Note 10) (38,285,925) (35,924,248)

Net debt 724,509,176 494,317,365

Total equity 696,823,449 579,585,906

Total capital 1,421,332,625 1,073,903,271

Gearing ratio 51% 46%

1 April 2018

Loss % Gross carrying amount Provision

AED AED

0.57% 157,754,002 896,482

1.49% 119,087,967 1,768,572

2.67% 32,903,566 878,522

5.39% 12,152,917 654,559

8.16% 8,116,832 662,704

10.90% 6,328,337 689,629

15.04% 8,338,420 1,253,816

17.12% 4,958,688 848,785

18.74% 5,094,219 954,675

19.95% 5,618,467 1,120,722

23.42% 2,370,209 555,162

24.78% 3,482,189 862,943

38.69% 44,781,467 17,327,444

410,987,280 28,474,015

13 14

Age category

4 Critical accounting estimates and judgments (continued)

(a) Impairment of financial assets (continued)

Due from related parties:

1 April 2018

Loss % Gross carrying amount Provision

AED AED

0.55% 45,700,824 250,451

1.49% 22,350,550 331,927

2.67% 8,233,326 219,829

5.39% 6,328,623 340,861

8.16% 6,652,565 543,153

10.90% 70,303 7,661

15.04% 81,503 12,255

17.12% 40,457 6,925

18.74% 45,167 8,465

19.95% 152,216 30,363

23.42% 12,340 2,890

24.78% - -

37.93% - -

89,667,874 1,754,780

31 March 2019

Age category Loss % Gross carrying amount Provision

AED AED

0 - 30 days 0.95% 37,248,207 352,264

31 - 60 days 1.83% 16,716,280 305,368

61 - 90 days 3.65% 246,413 8,998

91 - 120 days 6.83% 6,308,708 431,189

121 - 150 days 11.40% 2,604,742 296,922

151 - 180 days 18.36% 1,982,713 363,950

181 - 210 days 29.32% 126,168 36,997

211 - 240 days 32.94% - -

241 - 270 days 37.13% 76,303 28,331

271 - 300 days 41.43% 92,159 38,179

301 - 330 days 44.28% - -

331 - 360 days 48.60% 830 404

360+ Days 52.22% 2,302,156 1,202,299

67,704,679 3,064,901

0 - 30 days

31 - 60 days

61 - 90 days

91 - 120 days

121 - 150 days

151 - 180 days

181 - 210 days

211 - 240 days

241 - 270 days

271 - 300 days

301 - 330 days

331 - 360 days

360+ Days

Age category

(b) Useful lives of property, plant and equipment

Management assigns useful lives and residual values to property, plant and equipment based on the intended use and the economic lives of those assets. Subsequent changes in circumstances could result in the actual useful lives or residual values differing from initial estimates. Where management determines that the useful life or residual value of an asset requires amendment, the net book amount in excess of the residual value is depreciated over the revised remaining useful life.

(c) Provision for employees’ end of service benefits

The present value of employees’ end of service benefit obligations depends on a number of factors that are determined on an actuarial basis using a number of assumptions. The assumptions used in determining the net cost for end of service benefits include the discount rate. Any changes in these assumptions will impact the carrying amount of end of service benefit obligations.

The Group determines the appropriate discount rate at the end of each year. This is the interest rate that should be used to determine the present value of estimated future cash outflows expected to be required to settle the end of service benefit obligations. In determining the appropriate discount rate, the Group considers the interest rates of high-quality corporate bonds that are denominated in the currency in which the benefits will be paid and that have terms to maturity approximating the terms of the related end of service benefits obligation.

Other key assumptions for end of service benefit obligations are based in part on current market conditions. Additional information is disclosed in Note 16.

(d) Impairment assessment of goodwill

The Group tests annually whether the goodwill has suffered any impairment, in accordance with the accounting policy stated in Note 2.4. Management also assesses the impairment of goodwill whenever events or changes in circumstances indicate that the carrying value may not be recoverable. Factors that are considered important which could trigger an impairment review include evidence that no profits or cash flows will be generated from the related asset.

The recoverable amounts of cash generating units have been determined based on value-in-use calculations. These calculations require the use of estimates (Note 6).

If the budgeted cash flows used in the value-in-use calculation for the Group had been 5% lower than management’s estimates at 31 March 2019, the Group would not have recognised impairment on goodwill.

If the estimated weighted average cost of capital (“WACC”) used in the value-in-use calculation for the Group had been 1% higher than management’s estimates at 31 March 2019, the Group would not have recognised impairment on goodwill.

Land and buildingsAED

Plant and machineryAED

Furniture and fixturesAED

Computer and office equipment

AED

Motor vehiclesAED

Capital work in progressAED

TotalAED

Cost

At 1 April 2017 141,320,992 60,585,691 66,404,657 30,028,582 71,591,454 19,727,659 389,659,035

Additions 119,490,548 35,525,185 8,792,971 5,280,417 2,823,309 79,101,598 251,014,028

Transfer - 3,545,974 547,917 240,643 - (4,334,534) -

Disposals - (1,287,862) (127,142) (1,010) (5,674,316) - (7,090,330)

As at 31 March 2018 260,811,540 98,368,988 75,618,403 35,548,632 68,740,447 94,494,723 633,582,733

Additions 180,016,841 47,065,584 5,720,512 7,344,536 2,650,293 249,619,452 492,417,218

Acquisition of subsidiary (Note 26) - 384,773 235,420 38,858 6,840,949 - 7,500,000

Transfer - 3,151,000 4,119,564 - - (7,270,564) -

Disposals (12,480,000) (8,862,913) (1,186,975) (45,970) (313,507) (1,690,803) (24,580,168)

As at 31 March 2019 428,348,381 140,107,432 84,506,924 42,886,056 77,918,182 335,152,808 1,108,919,783

Accumulated depreciation and impairment

At 1 April 2017 1,974,682 19,978,049 20,579,677 20,529,807 32,521,581 - 95,583,796

Charge for the year 797,651 7,340,530 8,082,121 4,507,340 8,255,617 - 28,983,259

Transfer - 5,908 (5,908) - - - -

Disposals - (438,075) (79,600) (1,010) (4,988,250) - (5,506,935)

As at 31 March 2018 2,772,333 26,886,412 28,576,290 25,036,137 35,788,948 - 119,060,120

Charge for the year 6,219,187 11,469,333 8,449,302 4,460,666 8,244,186 - 38,842,674

Impairment (Note 22) - - - - - 1,797,000 1,797,000

Disposals - (6,345,349) (383,210) (28,384) (210,827) - (6,967,770)

As at 31 March 2019 8,991,520 32,010,396 36,642,382 29,468,419 43,822,307 1,797,000 152,732,024

Net book value

As at 31 March 2019 419,356,861 108,097,036 47,864,542 13,417,637 34,095,875 333,355,808 956,187,759

As at 31 March 2018 258,039,207 71,482,576 47,042,113 10,512,495 32,951,499 94,494,723 514,522,613

5 Property, plant and equipment 6 Intangible Assets

Additions under land and building represents AED 159 million (2018: AED 87 million) of labour camp building and AED 21 million (2018: 32 million) of land.

Certain buildings having a carrying amount of AED 1,654,496 (2018: AED 1,861,050) have been built over the leasehold land. The leases are expected to get renewed upon its expiry.

Depreciation expense has been allocated as follows:

Note 2019AED

2018AED

Direct costs 18 25,967,560 16,384,781

Administrative expenses 19 12,875,114 12,598,478

38,842,674 28,983,259

Computer softwareAED

Capital work in progressAED

GoodwillAED

TotalAED

Cost

At 1 April 2018 56,069,565 5,509,188 36,032,634 97,611,387

Additions 555,710 7,277,893 6,585,894 14,419,497

Write off (2,537,724) - - (2,537,724)

Transfer 187,113 (187,113) - -

As at 31 March 2019 54,274,664 12,599,968 42,618,528 109,493,160

Accumulated amortisation

At 1 April 2018 31,190,309 - - 31,190,309

Charge for the year (Note 18) 8,362,881 - - 8,362,881

Write off (1,578,917) - - (1,578,917)

As at 31 March 2019 37,974,273 - - 37,974,273

Net book value as at 31 March 2019 16,300,391 12,599,968 42,618,528 71,518,887

Cost

At 1 April 2017 51,628,886 1,890,625 36,032,634 89,552,145

Additions 3,504,465 4,554,777 - 8,059,242

Transfer 936,214 (936,214) - -

As at 31 March 2018 56,069,565 5,509,188 36,032,634 97,611,387

Accumulated Amortisation

At 1 April 2017 22,942,156 - - 22,942,156

Charge for the year (Note 18) 8,248,153 - - 8,248,153

As at 31 March 2018 31,190,309 - - 31,190,309

Net book value as at 31 March 2018 24,879,256 5,509,188 36,032,634 66,421,078

The Group’s goodwill value relates to CASS International Trading LLC (“CASS”) and Transguard Cash Services LLC with carrying values of AED 36,032,634 and AED 6,585,894, respectively (Note 26).

Goodwill has been tested for impairment using value in use model. The recoverable amount has been determined using discounted cash flow projections. Management has adopted a 5 year period to assess its value in use. Cash flows beyond the 5 year periods are extrapolated using the estimated growth rates stated below.

15 16

Refer Note 12 for details of property pledged as security by the Group.

6 Intangible assets (continued) Key assumptions used in value in use calculations

Key assumptions used to determine the value in use include:

Growth rate: estimates are based on management’s assessment of market share having regard to forecasted economic growth in the UAE and the demand for CASS’s and Transguard Cash Services LLC’s services.

Discount rate: reflects the current estimated weighted average cost of capital (“WACC”) of the Group.

Based on the value in use calculations no impairment of goodwill was identified. Management is of the opinion that it is unlikely there would be any material change in any of the key assumptions that would cause the recoverable amount of CASS or Transguard Cash Services LLC to fall below their respective carrying values, after having given due consideration to the economic outlook and the commercial assumptions underpinning the cash flow forecasts.

7 Investment in subsidiaries

On 2 February 2011, the Company incorporated a wholly owned subsidiary, Transguard Cash LLC (“TG Cash”) through transfer of specific assets and liabilities of the Company’s Cash Generating Unit (“Cash Services operation”) to TG Cash.

Pursuant to its formation, the Company entered into a strategic alliance with Network International LLC, in order to facilitate the provision of ‘managed end-to-end Automated Teller Machines (“ATM”) services’ to the Group’s customers, through issuance of 50% equity interest in the TG Cash. This equity interest in TG Cash was issued for a cash consideration of AED 132,500,000.

Currently, the share capital of TG Cash is owned equally by the Company and Network International LLC. However, as per a management agreement, the Company has the sole right to manage and the power to govern and control the financial and operating policies of TG Cash and has exposure to the variable returns from its involvement with TG Cash.

On 30 June 2015, the Company acquired 99% controlling interest in CASS for a cash consideration of AED 35,000,000. The Group has 100% beneficial ownership of the subsidiary (Note 26).

On 20 December 2018, TG Cash acquired 100% controlling and beneficial interest in G4S Cash Services LLC for a consideration of AED 16,114,335. Subsequent to the acquisition, the name of G4S Cash Services LLC was changed to Transguard Cash Services LLC (Note 26).

Subsidiary company Percentage of equity

owned by the

Company

Percentage of equity

owned by NCI

Percentage of

beneficial interest owned by the

Company

Principal activities Country of incorporation

*Transguard Cash LLC

50% 50% 50% Providing cash management services including secure and

safe movement of cash and documents and ATM services

to banks.

UAE

*Transguard Cash Services LLC

50% 50% 50% Providing cash management services including secure and

safe movement of cash and documents and ATM services

to banks.

UAE

CASS International Trading LLC

99% 1% 100% Providing training for aviation and security personnel

UAE

Trade receivables are amounts due from customers for services performed in the ordinary course of business. They are generally due for settlement within a maximum of 90 days and therefore are all classified as current. Trade receivables are recognised initially at the amount of consideration that is unconditional unless they contain significant financing components, when they are recognised at fair value. The Group holds the trade receivables with the objective to collect the contractual cash flows and therefore measures them subsequently at amortised cost using the effective interest method. Details about the Group’s impairment policies and the calculation of the loss allowance are provided in Notes 2.6 and 4 (a).

A provision has been made for the estimated impairment amounts of trade and other receivables of AED 58,409,012 (2018: AED 23,418,299). This provision has been determined based on assumptions about risk of default and expected loss rates. The Group uses judgement in making these assumptions and selecting the inputs to the impairment calculation, based on Group’s historical credit losses, existing market conditions as well as forward looking estimates at the end of each reporting period.

Movement in the Group’s provision for impairment of trade receivables are as follows:

The creation and release of provision for impaired receivables during the year have been recognised in the consolidated income statement under ‘Impairment losses - net’. Amounts charged to the provision account are written off when there is no expectation of recovering additional cash.

The maximum exposure to credit risk at the reporting date is the carrying value of each class of receivables.

The Group’s customers are based in the UAE. At 31 March 2019, five customers (2018: five customers) accounted for 17% (2018: 22%) of the total trade receivables. Management is confident that this concentration of credit risk will not result in a loss to the business.

The carrying amount of the Group’s trade and other receivables at 31 March 2019 and 2018 are denominated in AED.

The fair values of trade and other receivables approximate to their carrying amounts as at 31 March 2019 and 2018. The Group does not hold any collateral as security. The other classes within trade and other receivables do not contain impaired assets.

Included within trade and other receivables are ‘Prepayments’ and ‘Accrued income’ amounting to AED 116,743,188 (2018: AED 127,960,655) and AED 44,546,436 (2018: AED 42,641,820), respectively, pertaining to related parties, arising from transactions disclosed in Note 9.

9 Related party balances and transactions

Related parties include Company’s shareholders, subsidiaries, fellow subsidiaries or Directors and businesses controlled by the shareholders, subsidiaries, fellow subsidiaries or Directors or over which they exercise a significant management influence and key management personnel (“affiliates”).

Movement in the Group’s provision for impairment of balances due from related parties are as follows:

8 Trade and other receivables

All subsidiary undertakings are included in the consolidation.* It is considered a subsidiary as it is governed and controlled by the Company.

Summarised financial information for each subsidiary that has non-controlling interests is shown below:

The information above represents amounts before intercompany eliminations.

Transguard Cash LLC

2019AED

2018AED

Summarised consolidated statement of financial position

Current

Assets 127,037,007 153,024,415

Liabilities (88,257,225) (55,174,525)

Total current assets – net 38,779,782 97,849,890

Non-current

Assets 197,969,436 131,752,837

Liabilities (14,290,612) (12,686,747)

Total non-current assets/(liabilities) - net 183,678,824 119,066,090

Net assets 222,458,606 216,915,980

Summarised consolidated income statement

Revenue 315,306,842 281,042,488


Other comprehensive loss (260,000) (1,180,000)

Total comprehensive income 25,536,715 25,365,494

Total comprehensive income allocated to non-con-trolling interests 12,768,358 12,682,747

Summarised consolidated cash flows

Net cash generated from operating activities 100,795,390 57,534,467

Net cash used in investing activities (90,849,324) (47,417,439)

Net cash used in financing activities (10,000,000) (10,000,000)

Net (decrease)/increase in cash and cash equivalents (53,934) 117,028

Cash and cash equivalents at beginning of year 265,187 148,159

Cash and cash equivalents at end of year 211,253 265,187

2019AED

2018AED

Trade receivables 443,984,002 410,987,280

Provision for impairment of trade receivables (58,409,012) (23,418,299)

Trade receivables – net 385,574,990 387,568,981

Prepayments 228,049,255 233,412,986

Accrued income 213,382,273 199,214,299

Advances to suppliers 29,276,235 31,265,159

Other receivables 44,698,534 39,808,789

900,981,287 891,270,214

Long term portion of prepayments (116,743,188) (117,786,729)

784,238,099 773,483,485

2019AED

2018AED

Balance as at 1 April – calculated under IAS 39 23,418,299 20,836,770

Impact of changes in accounting policy (Note 28) 5,055,716 -

Restated balance at 1 April – calculated under IFRS 9 28,474,015 20,836,770

Provision for impairment of trade receivables (Note 20) 33,422,310 17,355,535

Acquisition of a subisdiary 1,277,357 -

Write off (4,764,670) (14,774,006)

Closing balance 58,409,012 23,418,299

2019AED

2018AED

Due from related parties

Shareholders and entities related to shareholders 65,156,638 88,851,299

Affiliates 2,548,041 816,575

67,704,679 89,667,874

Less: provision for impairment of due from related parties (3,064,901) (62,452)

64,639,778 89,605,422

Due to related parties

Shareholders and entities related to shareholders 149,986 12,831,186

2019AED

2018AED

Balance as at 1 April – calculated under IAS 39 62,452 408,509

Impact of changes in accounting policy (Note 28) 1,692,328 -

Restated balance at 1 April – calculated under IFRS 9 1,754,780 -

Provision / (reversal of provision) for impairment of balances due from related parties (Note 20) 1,310,121 (346,057)

Closing balance 3,064,901 62,452

18

The above balances arose from transactions in the normal course of business and are unsecured, non-interest bearing and will be settled within 12 months.

2019 2018

Growth rate 5% 5%

Discount rate 7.13% 6.75%

17

9 Related party balances and transactions (continued)

Related party transactions

During the year, the Group entered into the following significant transactions with related parties in the ordinary course of business. These transactions were carried out at prices and on terms applicable to non-related parties for similar transactions.

The closing balances arising from certain transactions are shown under ‘Prepayments’ and ‘Accrued income’ in Note 8

11 Trade and other payables

12 Borrowings

12 Borrowings (continued)

Cash and cash equivalents include the following for the purposes of the consolidated statement of cash flows:

10 Cash and bank balances

2019AED

2018AED

Sales to affiliates 569,297,648 721,799,135

5,269,145 11,571,023

30,540,353 12,014,213

Salaries and other benefits 8,445,856 7,605,372

End of service benefits 151,199 147,982

8,597,055 7,753,354

19 20

2019AED

2018AED

Cash on hand 149,841 339,941

Cash at bank 38,136,084 35,584,307

Cash and bank balances 38,285,925 35,924,248

2019AED

2018AED

Cash and bank balances 38,285,925 35,924,248

Bank overdraft (Note 12) - (8,843,279)

38,285,925 27,080,969

2019AED

2018AED

Trade payables 87,051,754 73,742,376

Accrued expenses 118,531,187 85,040,299

Accrued salaries 104,472,202 92,322,612

Provision for leave salary and leave passage 77,654,346 75,009,196

Retention payable 22,350,370 4,653,000

VAT payable 8,488,360 8,353,319

Advances from customers 2,932,102 4,800,063

Other payables and accruals 44,604,570 33,168,813

466,084,891 377,089,678

2019AED

2018AED

Non-current

Term loans 587,763,198 160,624,035

Current

Term loans 70,311,681 66,061,818

Revolving loans 70,000,000 225,000,000

Trade finance 34,720,222 69,712,481

Bank overdraft (Note 10) - 8,843,279

175,031,903 369,617,578

Total borrowings 762,795,101 530,241,613

The carrying amounts of the Group’s borrowings are denominated in United Arab Emirates Dirham (‘AED’).

Borrowings include term loans with repayment terms up to 8 years, short term revolving loans, and bank overdraft. The Group has complied with the financial covenants of its borrowing facilities during the years ended 31 March 2019 and 2018. Borrowings carry variable interest rates that are in line with current market terms.

Total borrowings include secured borrowings of AED 463,023,334 (2018: AED Nil). Bank borrowings are secured by the land and buildings of the Group (Note 5).

Bank balances are held in current accounts with locally incorporated banks and branches of international banks.

The amounts recognised in the consolidated income statement are as follows:

Reconciliation of provision for employees’ end of service benefits:

The principal actuarial assumptions were as follows:

Charge of AED 41,511,105 (2018: AED 35,156,571) (Note 21) was included in ‘direct costs’ and ‘administrative expenses’ amounting to AED 33,253,011 (2018: AED 29,467,003) and AED 8,258,094 (2018: AED 5,689,568) respectively.

13 Share capital

Share capital comprises 300 (2018: 300) authorised, issued and paid up shares of AED 1,000 each amounting to AED 300,000 (2018: AED 300,000).

14 Legal reserve

In accordance with the UAE Federal Law No. (2) of 2015, and the Company’s Articles of Association, 10% of the net profit of the Company for the year is transferred to a non-distributable legal reserve. Such transfers are required to be made until the reserve is equal to at least 50% of the paid-up capital of the Company. Since the legal reserve of the Company is already equal to 50% of the share capital, no additional amounts have been transferred to the legal reserve during the year.

15 Contributed capital

Contributed capital represents amounts contributed by dnata and is not repayable.

16 Provision for employees’ end of service benefits

The Group has undrawn facilities amounting to AED 1,388,910,970 (2018: AED 638,028,573).

The movement in borrowings (excluding bank overdrafts) is as follows:

Net debt reconciliation

2019AED

2018AED

Cash and bank balances (Note 10) 38,285,925 35,924,248

Borrowings - due within one year (including bank overdraft) (175,031,903) (369,617,578)

Borrowings – due after one year (587,763,198) (160,624,035)

(724,509,176) (494,317,365)

Cash and bank balances (Note 10) 38,285,925 35,924,248

Gross debt – variable interest rates (762,795,101) (530,241,613)

(724,509,176) (494,317,365)

Cash and and cash equivalents

(AED)

Borrowing due within one year

(AED)

Borrowing due after one year

(AED)Total

(AED)

Balance at 1 April 2017 23,706,396 (152,826,891) (188,267,542) (317,388,037)

Cash flows 3,374,573 (207,947,408) 27,643,507 (176,929,328)

Balance at 31 March 2018 27,080,969 (360,774,299) (160,624,035) (494,317,365)

Cash flows 11,204,956 185,742,396 (427,139,163) (230,191,811)

Balance at 31 March 2019 38,285,925 (175,031,903) (587,763,198) (724,509,176)

2019AED

2018AED

Opening balance 521,398,334 341,094,433

Additions during the year 651,123,458 423,846,578

Payments during the year (409,726,691) (243,542,677)

Closing balance 762,795,101 521,398,334

2019AED

2018AED

Present value of employees’ end of service benefits 110,259,730 101,274,738

The movement in the net liability over the year is as follows:

2019AED

2018AED

Opening balance 101,274,738 81,306,807

Charge for the year (Note 21) 41,511,105 35,156,571

Remeasurement of retirement benefit obligations (6,307,000) 2,538,000

Liabilities transferred to customers (109,000) -

Benefits paid (26,110,113) (17,726,640)

Closing balance 110,259,730 101,274,738

2019AED

2018AED

Current service cost 36,934,105 31,387,571

Interest cost 4,577,000 3,769,000

41,511,105 35,156,571

2019AED

2018AED

Valuation discount rate 4.8% per annum 4.6% per annum

Salary increase rate 5% per annum 5% per annum

Key management compensation

Rent and utilities payment to affiliates

Purchases from affiliates

.Liabilities from financing activities

16 Provision for employees’ end of service benefits (continued)

Sensitivity analysis of financial assumptions:

The sensitivity of the overall employees’ end of service benefits liability to changes in the principal financial assumptions is as follows:

17 Revenue

The Group recognise the revenue over time during the year as follows:

18 Direct Costs 21 Staff Costs

22 Other income/(expense) - net

23 Finance Costs

24 Contingencies and commitments

25 Dividend

26 Business Combination

19 Administrative expenses

20 Impairment losses on financial assets - net

Sensitivity analysis of demographic assumptions:

The sensitivity of the overall employees’ end of service benefits liability to changes in the principal demographic assumptions is as follows:

No social contributions were made during the years ended 31 March 2019 and 2018.

Human resource outsourcing includes revenue from manpower services, aviation and logistics and workforce solutions.

Managed services include revenue from facilities management and security services.

Dividend of AED 72,000,000 (AED 240,000 per share) (2018: AED 28,000,000 – AED 93,333 per share) has been approved by the Board of Directors and paid during the year to the shareholders of the Company.

a) Acquisition of Transguard Cash Services LLC

On 20 December 2018, TG Cash acquired 100% legal and beneficial ownership of G4S Cash Services LLC for a cash consideration of AED 16,114,335. Subsequent to the acquisition, the name of G4S Cash Services LLC was changed to Transguard Cash Services LLC.

The following table summarises the assets acquired and liabilities assumed and the non-controlling interest at the acquisition date:

Recognised amounts of identifiable assets acquired and liabilities assumed

The above were issued by the banks in the normal course of business.

a) Operating commitments

The Group leases office building and labour camps under non-cancellable operating lease agreements. The future minimum lease payments under the lease are as follows:

Impact on employees’ end of service benefits liability

Change in assumption Increase in assumption Decrease in assumption

Discount rate 0.1% Decrease by 1.71% Increase by 1.75%

Salary increase rate 0.1% Increase by 0.94% Decrease by 0.94%

Impact on employees’ end of service benefits liability

Change in assumption Increase in assumption Decrease in assumption

Withdrawal rate 10% Increase by 0.60% Decrease by 0.60%

2019AED

2018AED

Human resource outsourcing 1,570,384,516 1,423,488,472

Managed services 692,926,440 610,462,697

Cash services 315,306,842 281,102,125

2,578,617,798 2,315,053,294

2019AED

2018AED

Staff costs (Note 21) 1,564,779,429 1,400,627,387

Rent 274,450,004 256,763,021

Fuel and transportation 87,672,259 77,919,599

Visa and immigration 39,340,742 46,914,038

Consumables 27,373,149 25,590,667

Depreciation (Note 5) 25,967,560 16,384,781

Repairs and maintenance 20,837,989 14,422,225

Staff training expenses 8,549,787 10,755,468

Uniforms 8,697,258 9,167,607

Communication expenses 8,338,620 9,519,730

Amortisation (Note 6) 8,362,881 8,248,153

Insurance 7,281,077 5,690,799

Others 57,441,046 55,489,338

2,139,091,801 1,937,492,813

2019AED

2018AED

Salaries and wages 1,493,133,997 1,353,154,142

Leave salary and passage 89,635,805 79,537,722

End of service benefits (Note 16) 41,511,105 35,156,571

Other benefits 79,435,082 67,833,225

1,703,715,989 1,535,681,660

Staff costs are allocated as follows:

Direct costs (Note 18) 1,564,779,429 1,400,627,387

Administrative expenses (Note 19) 138,936,560 135,054,273

1,703,715,989 1,535,681,660

2019AED

2018AED

Foreign exchange gains / (losses) 1,671,480 (2,300,690)

Gain / (loss) on disposal of property, plant and equipment 1,493,512 (996,791)

Impairment of property (Note 5) (1,797,000) -

Write off of intangible asset (Note 6) (958,806) -

Others 144,575 57,947

553,759 (3,239,534)

2019AED

2018AED

Interest expense on borrowings 18,569,602 11,186,044

2019AED

2018AED

Guarantees 23,735,873 34,515,916

Letters of credit - 751,728

2019AED

2018AED

Not later than 1 year 130,932,223 194,483,713

Later than 1 year and not later than 5 years 142,329,441 343,398,222

Over 5 years 346,380 516,175

273,680,044 538,398,110

2019AED

2018AED

Staff Costs (Note 21) 138,936,560 135,054,273

Depreciation (Note 5) 12,875,114 12,598,478

Rent 12,779,815 10,822,028

License fees 9,649,475 7,904,656

Information technology expenditure 2,417,136 2,746,418

Fees and subscriptions 1,922,287 4,931,767

Marketing expenses 1,901,060 2,363,531

Stationery and supplies 1,762,006 1,477,950

Office maintenance 708,861 387,578

Business travel 181,655 98,402

Others 3,965,167 4,309,279

187,099,136 182,694,360

2019AED

2018AED

Provision for impairment of trade receivables (Note 8) 33,422,310 17,355,535

Provision / (release of provision) for impairment of balances due from related parties (Note 9) 1,310,121 (346,057)

34,732,431 17,009,478

21 22

Fair value recognised on acquisition

AED

Carrying valueAED

Consideration paid 16,114,335 -

Less: net identifiable assets

Property, plant and equipment (7,500,000) (7,500,000)

Trade and other receivables (12,352,519) (12,352,519)

Inventories (496,112) (496,112)

Cash and bank balances (88,681) (88,681)


Accrued liability – Unfavourable contracts 5,789,000 -

Net identifiable assets acquired (9,582,441) (15,317,441)

Goodwill (Note 6) 6,585,894 -

26 Business Combination (continued) 27 Financial instruments by category 28 Changes in accounting policies

28.1 IFRS 15 Revenue from contracts with customers

28.2 IFRS 9 Financial instruments

a) Acquisition of Transguard Cash Services LLC (continued)

Revenue and profit contribution

Since the date of acquisition, Transguard Cash Services LLC is operating as part of TG Cash, hence the revenues and net profit contributed to the Group for the period from 20 December 2018 to 31 March 2019 is not separately identifiable.

Purchase consideration – cash outflow

b) Acquisition of CASS

On 30 June 2015, the Group acquired 100% beneficial ownership of CASS for a cash consideration of AED 35,000,000.

The following table summarises the assets acquired and liabilities assumed and the non-controlling interest at the acquisition date:

Recognised amounts of identifiable assets acquired and liabilities assumed

The accounting policies for financial instruments have been applied to the line items below: This note explains the impact of the adoption of IFRS 15 “Revenue from contracts with customers” and IFRS 9 “Financial instruments” on the Group’s consolidated financial statements and also discloses the new accounting policies that have been applied from 1 April 2018, where they are different to those applied in prior periods.

As a result of the changes in the Group’s accounting policies, opening retained earnings in the consolidated financial statements has been adjusted. IFRS 9 and IFRS 15 were adopted without restating comparative information. The reclassifications and the adjustments arising from the new standards are therefore not reflected in the consolidated statement of financial position as at 31 March 2018 but are recognised in the opening retained earnings on 1 April 2018. The adjustments are explained in more detail below.

Impact of adoption

The IASB has issued a new standard for the recognition of revenue. IFRS 15 ‘Revenue from contracts with customers’ outlines a single comprehensive model of accounting for revenue arising from contracts with customers and supersedes IAS 11 which covers construction contracts and IAS 18 which covers contracts for goods and services. The new standard is based on the principal that revenue is recognised when control of a good or service transfers to a customer. The standard permits either a full retrospective or a modified retrospective approach for adoption.

The Group has adopted IFRS 15 from 1 April 2018 and applied the modified retrospective approach permitted by IFRS 15 upon adoption. Under the practical expedients available for this approach, Group has applied the requirements of the new standard to the contracts that are not completed as at the date of initial application.

During the impact assessment exercise, Group has reviewed its contracts and services in line with the requirements of IFRS 15. However, the impact of the changes is not considered material.

Impact of adoption

The following table shows the adjustments for each line item of the consolidated statement of financial position. Line items that were not affected by the changes have not been included. As a result, the subtotals and totals disclosed cannot be recalculated from the numbers provided.

Consolidated statement of financial position (extract)

(i) Classification and measurement

On 1 April 2018, the Group’s management has assessed which business models apply to the financial assets held by the Group and has classified its financial instruments into the appropriate IFRS categories. Management has concluded that there are no material reclassification of financial assets other than disclosed above.

(ii) Impairment of financial assets

The Group has the following types of financial assets that are subject to IFRS 9’s new expected credit loss model:

• Trade and other receivables (excluding prepayments and advances to suppliers); and• Due from related parties

The Group was required to revise its impairment methodology under IFRS 9 for each of these classes of assets. The impact of the change in the impairment methodology on the Group’s retained earnings and equity is disclosed above. While cash and cash equivalents are also subject to the impairment requirements of IFRS 9, the identified impairment loss was immaterial.

For the classes of financial assets identified above, Group has applied the simplified approach permitted by IFRS 9 which requires expected lifetime losses to be recognised from the initial recognition of these assets.

To measure the expected credit losses, trade receivables and due from related parties have been grouped on the past due days. The expected loss rates are based on the payment profiles of sales over a period of 24 month before 1 April 2018 and the corresponding historical credit losses experienced within this period. The historical loss rates are adjusted to reflect current and forward-looking information on macroeconomic factors affecting the ability of the customers to settle the receivables.

The loss allowance for trade receivables and contract assets reconciles to the opening loss allowance on 1 April 2018 as follows:

29 Comparative figures

Certain corresponding figures have been reclassified where appropriate to conform with current year’s presentation.

Trade receivables and due from related parties are written off when there is no reasonable expectation of recovery.

Revenue and profit contribution

The acquired business contributed revenues of AED 5,095,475 and net profit of AED 3,401,523 to the Group for the period from 1 July 2015 to 31 March 2016.

If the acquisition had occurred on 1 April 2015, consolidated pro-forma revenue and profit for the year ended 31 March 2016 would have been AED 6,327,495 and AED 4,139,011 respectively. These amounts have been calculated using the CASS results and adjusting them for:

• differences in the accounting policies between the Group and CASS, and • the additional depreciation and amortisation that would have been charged assuming the fair value adjustments to property, plant and equipment and intangible assets had applied from 1 April 2015.

Purchase consideration – cash outflow

Outflow of cash to acquire subsidiary, net of cash acquired AED

Cash consideration 16,114,335

Less: cash and bank balances acquired (88,681)

16,025,654

Outflow of cash to acquire subsidiary, net of cash acquired

AED

Cash consideration 35,000,000

Less: cash and bank balances acquired (240,186)

34,759,814

Fair value recognised on acquisition

AED

Carrying valueAED

Consideration paid 35,000,000

Less: net identifiable assets

Trade and other receivables (835,209) (835,209)

Cash and bank balances (240,186) (240,186)


Net identifiable liabilities acquired 1,032,634 1,032,634

Goodwill (Note 6) 36,032,634 -

Trade receivablesAED

Due from Related parties

AED

At 31 March 2018 – calculated under IAS 39 (Notes 8, 9) 23,418,299 62,452

Impact of change in accounting policy 5,055,716 1,692,328

Opening loss allowance as at 1 April 2018 – calculated under IFRS 9 (Note 8, 9) 28,474,015 1,754,780

Financial assets at amortised costs

AED

Financial liabilities at amortised cost

AED

TotalAED

At 31 March 2019

Financial assets

Trade and other receivables (exclud-ing prepayments and advances to suppliers) 643,655,797 - 643,655,797

Due from related parties 64,639,778 - 64,639,778

Cash and bank balances 38,285,925 - 38,285,925

746,581,500 - 746,581,500

As at 31 March 2018

AED

IFRS 9 ImpactAED

As at 1 April 2018

AED

Current assets

Trade and other receivables 773,483,485 (5,055,716) (768,427,769)

Due from related parties 89,605,422 (1,692,328) 87,913,094

Equity

Retained earnings 468,945,820 (6,751,000) 462,194,820

Non – controlling interests 108,383,584 2,956 108,386,540

At 31 March 2018

Financial assets

Trade and other receivables (exclud-ing prepayments and advances to suppliers) 626,592,069 - 626,592,069

Due from related parties 89,605,422 - 89,605,422

Cash and bank balances 35,924,248 - 35,924,248

752,121,739 - 752,121,739

Financial liabilities

Borrowings - 530,241,613 530,241,613

Trade and other payables (excluding advances from customers and VAT payable) - 363,936,296 363,936,296

Due to related parties - 12,831,186 12,831,186

- 907,009,095 907,009,095

Financial liabilities

Borrowings - 762,795,101 762,795,101

Trade and other payables (excluding advances from customers and VAT payable) - 454,664,429 454,664,429

Due to related parties - 149,986 149,986

- 1,217,609,516 1,217,609,516

23 24

[email protected]

Transguard Group HeadquartersPO Box 22630DubaiT: +971 (0)4 703 0500UAE Toll Free Number: 800 1800

Transguard Group PO Box 38897

Abu DhabiT: +971 (0)2 446 3711

transguard group · with a significant presence in al maktoum, abu dhabi and sharjah airports,...

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