25
2016 ANNUAL REPORT
Pantone Blue 3005
2016 ANNUAL REPORT
H.H. SHeikH MoHaMMed bin RaSHid al MaktouMVice PReSident and PRiMe MiniSteR of tHe uae and RuleR of dubai
3
H.H. SHeikH aHMed bin Saeed al MaktouMcHaiRMan and cHief executiVe, eMiRateS & aiRline gRouP
5
CONTENTS MeSSage fRoM tHe cHief executiVe officeR 8
MeSSage fRoM tHe Managing diRectoR 13
MeSSage fRoM tHe finance diRectoR 16
Plafond: WHat We do 18
financial RePoRt 1-18
PROJECT: DoubleTree Hilton
6 7
i am delighted to report that the year
2015-2016 has been a year of great
success for the business and one in
which we have achieved record revenue
and profit.
our success this year is the result of
the key initiatives that were instigated
in 2013 and that included a complete
organizational restructuring of the
business, aligned with a strategic and
proactive drive for growth.
this growth strategy has led to substantial
success across Plafond’s two core
businesses and is reflected in a healthy
revenue mix, with both the fit-out and the
Mechanical electrical and Plumbing (MeP)
project businesses each responsible for
just under 30% of the company’s total
revenue. combined fit-out and MeP
projects accounted for the majority of
the remainder of the revenue, while the
recently launched facilities Management
(fM) business made a small but
encouraging contribution in its first year
of operation.
the rapid expansion and success of
the commercial arm of the business has
created its own challenges, not least
the impact on the employee headcount
required to meet the increased operational
needs of the business. the number of
employees has grown from under 400 a
year ago to more than 1,400 at the end
of this year, a growth of more than 300%,
and has required a far more strategic
approach to the recruitment and retention
of staff.
the recruitment of highly skilled and
competent personnel is intrinsic to our
continued success and Plafond works
with its specialist recruitment partners to
source the best manpower in the market
and to ensure it has rigorous selection
and assessment processes in place. the
company is also committed to retaining its
high quality personnel through structured
training and personal development.
at the heart of the training and
development programme lies the
lean Six Sigma philosophy which is
now the cornerstone of all Plafond
business processes, providing greater
accountability, controls and savings. all
managerial personnel have committed to
the philosophy and to including lean Six
Sigma training as part of their personal
development plans. in the past year alone
68 staff members have completed Yellow
belt training, while 28 have completed
their green belt.
the organizational restructuring which
began in 2013 has delivered many
key process improvements across the
business and has led to the realignment
of the corporate infrastructure and the
development of a number of important
MeSSage fRoM tHe cHief executiVe officeR
“ThE bUSiNESS
imPROvEmENT PROCESSES
ARE ONgOiNg ANd ThE mANAgEmENT
TEAm hAS idENTifiEd A NUmbER Of
iNiTiATivES ThAT ARE CURRENTLy bEiNg
ROLLEd OUT ANd ThAT wiLL hAvE A
POSiTivE imPACT ON OPERATiONAL
dELivERy ANd EffiCiENCy”
gReg WaRd
PROJECT: Abu Dhabi National Exhibition Centre
8 9
FMMEP + FIT-OUTFIT-OUT
29%79m
27%72.6m
34%107.3m
34%105.4m
28%87.5m
4%12.6m
0%222.9k
44%119.5m
MEP
specialist management functions.
Significant amongst these are within the
legal, commercial, procurement and it
functions of the business.
the business improvement processes
are ongoing and the management team
has identified a number of initiatives that
are currently being rolled out and that
will have a positive impact on operational
delivery and efficiency.
one of the highlights is the Multi trade
Prefabrication factory, a manufacturing
facility that allows MeP components and
modules to be made offsite, replacing
the traditional processes of on-site
construction. the many benefits of
prefabrication include improved quality
of components, significant cost savings,
reduced labour costs and increased on-
site safety.
technological initiatives include the
introduction of a building information
Modelling (biM) system that will equip
our architectural and design teams with
tools to plan and design spaces more
innovatively and effectively, and the roll-
out of a Productivity tracking System,
providing better real-time productivity
reporting.
looking forward, we are extremely
optimistic about the future of the business
and although there are many challenges
facing the regional and global business
communities, we are convinced that
Plafond has the expertise, infrastructure
and ambition to meet these challenges
and to continue on its path of sustained
growth and commercial success.
it only remains for me to thank each and
every member of the Plafond team for their
continued loyalty and for their immense
contribution to the phenomenal success of
the company over the last 12 months.
greg Wardchief executive officer Plafond fit out llc
PROJECT: Tom & Serg
actual: 2015-16
Plafond’S gRoWtH StRategY iS Reflected in a HealtHY ReVenue Mix
budget: 2016-17
net PRofit tRend
aed ‘Million’ fY 2014-15 fY 2015-16 fY 2016-17 fY 2017-18 fY 2018-19net Profit trend 9.26 16.76 19.07 21.54 2613
audited Results financial Projections
fY 2014-15
fY 2015-16
fY 2016-17
fY 2017-18
fY 2018-19
10 11
Plafond recorded a very strong
commercial performance in the financial
year 2015-2016, generating revenue of
aed 271m and delivering a net profit of
aed 16.8m.
our two core project businesses,
Plafond fit-out and Plafond MeP
(Mechanical,electrical and Plumbing), sit
at the heart of our commercial success
and they continue to build on their
unrivalled reputation for delivering world
class projects at many of the region’s
most iconic buildings and facilities.
in the last year the project teams have
completed more than 60 projects across
the two businesses, with highlights
including works at the Palazzo Versace
Hotel; etihad’s first and business class
lounges; the Marhaba and business
class lounges at dubai international
airport; dubai Parks, bollywood Park; and
the city of arabia, iMg theme Park.
this year also saw the launch of Plafond
fM (facilies Management) Services,
offering a full range of hard and soft fM
services. the addition of this suite of
services now allows us to provide clients
with a complete end-to-end solution for
their building interiors, from fit-out and
MeP works, through to ongoing servicing
and maintenance.
as a company, our reputation in the
marketplace continues to grow and this
was highlighted when we were recognized
as one of the top 25 MeP contractors in
the Region by MeP Middle east magazine.
the company was also nominated for
contractor of the Year at the construction
Week awards 2015.
as part of the uae business community
and as an employer of more than 1,400
people in the Region, Plafond recognizes
that it has a responsibility to support the
community in which it operates and to
minimize the effect its operations have on
the local and global environment.
this year the company has supported
a variety of good causes, including the
autism 2016 golf challenge, which
benefitted the els for autism foundation
and the dubai autism centre, and
a sporting challenge event to raise
awareness and funds for children in
conflict-hit areas within the Middle east.
in the coming year, the company will be
formally developing its corporate Social
Responsibility (cSR) charter which will
focus on both the local community and
the environment.
MeSSage fRoM tHe Managing diRectoR
“OUR STRATEgiC
gOALS ARE TO CONTiNUE
TO gROw ThE CORE fiT-OUT ANd
mEP PROjECTS bUSiNESSES
ANd TO fURThER dEvELOP
OUR SERviCE OffERiNgS
wiThiN ThE fm mARkET.”
diMitRi PaPakonStantinou
PROJECT: Etihad Travel Mall
12 13
looking forward, the company has set
itself ambitious targets for the year
2016-2017 and beyond. our strategic
goals are to continue to grow the core
fit-out and MeP projects businesses and
to further develop our service offerings
within the fM market. We will focus both
on organic growth and expansion within
the uae and on the development of our
burgeoning business in Qatar and the
wider gcc region.
the future is bright and will see us continue
to build on the success we have achieved
over the last 12 months. importantly, this
success would not have been possible
without the 1,400 dedicated and highly
talented people that make up the Plafond
team and i would like to thank all of them
personally for their contribution.
dimitri PapakonstantinouManaging director Plafond fit out llc
PROJECT: Gama Aviation
gucci StoRe
MiRdif citY centRe, dubai
14 15
Revenue for the year 2015-2016 was
aed 271,508,208, an increase of 68%
on the previous year’s revenue of aed
161,630,374 which was double the
revenue achieved in the financial year
2013-2014. Profit and ebitda for the
year was also significantly improved,
rising from aed 9,260,458 and aed
12,167,030 in 2014-2015 to aed
16,760,197 and aed 19,846,681
respectively, representing growth of
81% in net profit.
further to the increase in net profits,
mainly arising from the top line growth
in revenue, the company improved its
net profit margin by 8% in 2015-2016.
this has been possible by achieving
efficiencies in certain elements of our
key business cycles via lean Six Sigma
techniques and also as a result of many
initiatives that were instigated in 2013.
looking forward, the company has set
itself ambitious targets for the year
2016-2017 and beyond. However, these
targets take into account the impact
of the current economic climate which
has imposed challenges on businesses,
both from an increased competition
perspective and through a scarcity of
resources.
the company’s mitigation strategies
include but are not limited to choosing its
customers and contractors carefully and
by undertaking rigorous due diligence
at the start of new relationships with
external stakeholders. despite the
slight downturn in the regional and local
economies, Plafond remains positive in
its ability to achieve double digit growth
in both revenue and profit.
our targeted revenue for 2016-2017 is
aed 313m, representing a 15% growth
from the current year. importantly, the
company has already secured future
projects valued at aed 300m, of which
aed 244m is expected to be delivered in
the next financial year.
last but not least, i would like to thank
team Plafond for making the above
results possible and i look forward to
continuing this journey with you in the
upcoming years.
adnan khanfinance director Plafond fit out llc
MeSSage fRoM tHe finance diRectoR
“dESPiTE ThE
SLighT dOwNTURN iN ThE
REgiONAL ANd LOCAL ECONOmiES,
PLAfONd REmAiNS POSiTivE iN iTS AbiLiTy
TO AChiEvE dOUbLE digiT
gROwTh iN bOTh REvENUE
ANd PROfiT”
adnan kHan
PROJECT: Palazzo-Versace
16 17
PLAfONd - whAT wE dO
PLAFOND PROFILE
Plafond, an emirates group company, is a professional, multi-discipline contracting
company specializing in interior fit-out and mechanical, electrical and plumbing (MeP)
projects, as well as providing a full range of facilities management (fM) services.
operating throughout the gcc and with a skilled workforce of more than 1,400, Plafond
has built an unrivalled reputation for quality, reliability, professionalism and safety.
Plafond ManageMent teaM
greg Ward - Chief executive officer
dimitri Papakonstantinou - Managing director
adnan Khan - finance director
tony Brooker - operations director
Stephen allen - non-executive director
nigel Hopkins - non-executive director
tHe SuM of uS
PROJECT: T3 Arrivals - Abu Dhabi Airport
18 19
PLAFOND FIT OuT PROJECTS
Plafond’s highly experienced technical and operational fit-out teams have delivered many of the region’s most iconic projects.
the fit-out teams offer full bespoke turn-key project solutions, from initial design through to building works, delivered by highly
experienced construction professionals and craftsmen.
keY SectoRS
commercial: corporate offices, showrooms and banks
Social infrastructure: education, healthcare and airports
Hospitality: Hotels, spas, restaurants and retail
PLAFOND MEP PROJECTS
Plafond’s MeP project teams offer a complete range of MeP design and installation services, including HVac systems,
refrigeration, electrical and plumbing works, delivered by highly skilled engineers and technicians.
PLAFOND PREFAbRICATION FACTORy
the Plafond Multi trade Prefabrication factory manufactures MeP components and modules offsite, delivering improved quality
of components, significant cost savings, reduced labour costs and increased on-site safety.
PLAFOND FM SERVICES
Plafond’s fM team offers a comprehensive range of hard and soft fM, as single or bundled services, and as fully integrated fM
solutions.
delivered to international fM best practice standards and guidelines, our services ensure that clients’ properties and facilities are
professionally and efficiently maintained and managed.
PLAFOND QuALITy ASSuRANCE
at Plafond, we believe quality, safety and productivity are equal shareholders in delivering our services and we are consistently
seeking continual improvement in everything we do.
PLAfONd PROfiLE
PROJECT: Eat Greek
20 21
PLAfONd PROfiLE
HEALTH, SAFETy & ENVIRONMENT
Plafond is committed to delivering all its projects and services to the highest quality standards, without occupational injuries or
il lness to its employees, contractors, visitors and other stakeholders. Plafond is further committed to ensuring that its operations
have the minimum impact possible on the environment.
accReditationS
iSo 9001:2008 Quality Management System
iSo 14001:2004 environment Management System
oHSaS 18001:2007 occupational Health & Safety Management System
oUR MiSSion StateMent
our Mission is to be the company of first choice for all our
stakeholders and we will achieve this by always striving
for operational excellence in everything that we do.
innovation, lean techniques, technical excellence and our
people are core to the success of the business.
PROJECT: T3 Arrivals - Abu Dhabi Airport
22 23
PROJECT: Gama Aviation
oUR ViSion
to be tHe coMPanY of fiRSt
cHoice foR all ouR StakeHoldeRS
to acHieVe tHe HigHeSt StandaRdS
of oPeRational excellence
to coMPete WitH WoRld claSS buSineSSeS
to continuallY cHallenge ouRSelVeS
to find a betteR WaY
oUR ValUeS
Make SafetY PeRSonal
‘’one teaM’’ etHoS
alWaYS deliVeR on ouR PRoMiSeS
WoRk in PaRtneRSHiP WitH ouR clientS
continuallY deVeloP ouR Staff
24 25
fiNANCiALREPORT
abu dHabi exHibition centRe
coffee club, al WaSl, dubai
eat gReek, dubai Mall
coffee club, gRand MoSQue
t2 - dubai aiRPoRt
doubletRee Hilton
bRunSWick, dubai
etiHad tRaVel Mall, dubai
PROJECT: Abu Dhabi National Exhibition Centre
26 27
Plafond fit out llC
finanCialRePoRt
2016
Plafond fit out llC
finanCialRePoRt
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Pages
directors’ report 1
independent auditor’s report 2
Statement of financial position 3
Statement of comprehensive income 3
Statement of changes in equity 4
Statement of cash flows 5
notes to the financial statements 6 - 18
DIRECTORS’ REPORT AND FINANCIAL STATEMENTS FOR THE yEAR ENDED 31 MARCH 201616
the directors submit their report together with the audited financial statements of Plafond fit out llc (“the company”) for the year ended 31 March 2016.
PRINCIPAL ACTIVITIES
the company’s principal activities mainly include air conditioning system contracting, lifts and escalators contracting, electricity transmission and control apparatus installation, internal communication network installation and maintenance, safety, security systems and equipment installation, maintenance of electromechanical equipment, interior fit out, refurbishments and stones masonry works.
RESuLTS
the results of the company for the year ended 31 March 2016 are set out on page 3 of the financial statements.
DIRECTORS
the directors who served during the year are:
ExECuTIVE DIRECTORS
Mr. gregory Ward
Mr. demetrios Papakonstantinou
Mr. adnan iqbal khan
NON-ExECuTIVE DIRECTOR
Mr. Mike Mcgeever
Mr. Stephen John allen
Mr. nigel Hopkins
AuDITORS
the financial statements have been audited by Pricewaterhousecoopers who retire and, being eligible, offer themselves for re-appointment.
on behalf of the board:
director director
date 31 May 2016 date 31 May 2016
INDEPENDENT AuDITOR’S REPORT TO THE SHAREHOLDERS OF PLAFOND FIT OuT LLC
REPORT ON THE FINANCIAL STATEMENTS
We have audited the accompanying financial statements of Plafond fit out llc (“the company”) which comprise the statement of financial position as at 31 March 2016 and the statements of comprehensive income, changes in equity and cash flows for the year then ended and a summary of significant accounting policies and other explanatory information.
MANAGEMENT’S RESPONSIbILITy FOR THE FINANCIAL STATEMENTS
Management is responsible for the preparation and fair presentation of these 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 financial statements that are free from material misstatement, whether due to fraud or error.
AuDITOR’S RESPONSIbILITy
our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with international Standards on auditing. those standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement.
an audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. the procedures selected depend on the auditor’s judgement, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. in making those risk assessments, the auditor considers internal control relevant to the entity’s preparation and fair presentation of the financial statements 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 entity’s internal control. an audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by management, as well as evaluating the overall presentation of the financial statements.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.
OPINION
in our opinion, the financial statements present fairly, in all material respects, the financial position of the company as at 31 March 2016 and its financial performance and its cash flows for the year then ended in accordance with international financial Reporting Standards.
REPORT ON OTHER LEGAL AND REGuLATORy REQuIREMENTS
further, as required by the uae federal law no. (2) of 2015, we report that:
i. we have obtained all the information we considered necessary for the purposes of our audit;
i i. the financial statements have been prepared and comply, in all material respects, with the applicable provisions of the uae federal law no. (2) of 2015;
ii i. the company has maintained proper books of account;
iv. the financial information included in the directors’ report is consistent with the books of account of the company;
v. as disclosed in note 14 to the financial statements the company has not purchased or invested in any shares during the financial year ended 31 March 2016;
vi. note 10 to the financial statements discloses material related party transactions and the terms under which they were conducted;
vii. based on the information that has been made available to us, nothing has come to our attention which causes us to believe that the company has contravened during the financial year ended 31 March 2016 any of the applicable provisions of the uae federal law no. (2) of 2015 or of its articles of association which would materially affect its activities or its financial position as at 31 March 2016; and
viii. note 21 to the financial statements discloses that no social contributions were made during the financial year ended 31 March 2016.
Pricewaterhousecoopers
date: 31 May 2016
Paul Suddaby
Registered auditor number 309dubai, united arab emirates
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STATEMENT OF FINANCIAL POSITION
as at 31 Marchnote 2016 2015
aed aed aSSetSnon-current assetsPlant and equipment 5 1,501,813 956,510intangible assets 6 38,937,778 41,532,676Retentions receivable 7 12,707,191 8,175,036Prepayments 4,712,243 4,951,220
57,859,025 55,615,442Current assets trade and other receivables 9 186,292,027 102,582,229due from related parties 10 1,135,601 -cash and bank balances 11 6,573,006 11,964,220
194,000,634 114,546,449 total assets 251,859,659 170,161,891
eQUitY and liaBilitieSeQUitYCapital and reserves Share capital 14 300,000 300,000legal reserve 15 150,000 150,000contributed capital 27 36,949,381 36,949,381
Retained earnings 26,020,655 9,260,458
total equity 63,420,036 46,659,839
liaBilitieSnon-current liability Provision for employees’ end of servicebenefits 16 - 377,737
Current liabilities trade and other payables 12 155,213,922 96,295,414advances from customers 17 24,562,372 23,750,302due to a related party 10 8,663,329 3,078,599
188,439,623 123,124,315total liabilities 188,439,623 123,502,052total equity and liabilities 251,859,659 170,161,891
these financial statements were approved by the board of directors on 31st May 2016 and signed on its behalf by:
director director
STATEMENT OF COMPREHENSIVE INCOME
Year ended 31 Marchnote 2016 2015
aed aed
Revenue 19 271,508,208 161,630,374direct costs 20 (237,288,162) (141,150,390)
gross profit 34,220,046 20,479,984general and administrative expenses 21 (18,978,747) (13,836,699)other income 26 1,879,293 2,453,832
operating profit 17,120,592 9,097,117finance income 22 153,176 684,886finance costs 22 (513,571) (521,545)
finance (costs) / income - net (360,395) 163,341Profit for the year 16,760,197 9,260,458other comprehensive income - -
total comprehensive income for the year 16,760,197 9,260,458
STATEMENT OF CHANGES IN EQuITy
note Share capital legal reserve Contributed capital
(accumulatedlosses) / retained
earnings
total
aed aed aed aed aed
Balance at 1 april 2014 300,000 150,000 148,089,627 (111,140,246) 37,399,381
total comprehensive income for the year - - - 9,260,458 9,260,458
adjustment of accumulated losses 27 - - (111,140,246) 111,140,246 -
Balance at 31 March 2015 300,000 150,000 36,949,381 9,260,458 46,659,839
total comprehensive income for the year - - - 16,760,197 16,760,197
Balance at 31 March 2016 300,000 150,000 36,949,381 26,020,655 63,420,036
3 4
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STATEMENT OF CASH FLOwS
Year ended 31 Marchnote 2016 2015
aed aedCash flows from operating activitiesProfit for the year 16,760,197 9,260,458adjustments for:depreciation 5 421,214 283,981amortisation 6 2,665,270 2,622,591gain on disposal of motor vehicles 26 (21,379) -
Reversal of provision for impairment of deposits 9,21 (53,080) -
(Reversal of provision) / provision for em-ployees’ end of service benefits 16 (377,737) 86,645
Reversal of provision for impairment of trade receivables 9,21 (2,430,401) (1,873,585)
Reversal of provision for impairment of retentions receivable 7,21 (341,098) -
Receivables directly written-off 21 - 284,198Release of anticipated losses – net 20 (5,978,130) (131,478)charge / (release) for warranty – net 20 1,238,249 (1,246,749)
Reversal of liabilities no longer payable 26 (901,591) (784,179)
finance costs / (income) – net 22 360,395 (163,341)
operating cash flows before payment of employees’ end of service benefits, provision for warranty costs utilised and changes in working capital
11,341,909 8,338,541
Payments of employees’ end of service benefits 16 - (113,986)
Provision for warranty costs utilised during the year 12 (119,249) (490,570)
Changes in working capital:Retentions receivable – non-current (4,781,423) 4,053,589Prepayments – non-current 238,977 238,968
trade and other receivables (before move-ment in provisions for impairment net of write-offs)
(80,885,219) (22,994,697)
due from related parties (1,135,601) -advances from customers 812,070 11,947,833
Year ended 31 Marchnote 2016 2015
aed aed
trade and other payables (before movement in provision for warranty costs and anticipat-ed losses net of liabilities no longer payable)
64,679,229 7,544,432
due to a related party 5,584,730 (369,758)
net cash (used in) / provided by operating activities
(4,264,577) 8,154,352
Cash flows from investing activitiesPurchases of plant and equipment 5 (966,517) (730,529)
Proceeds from disposal of motor vehicles 21,379 1,531
Purchase of intangible assets 6 (70,372) (20,900)
Proceeds from maturity of fixed deposits 422,809 -
net cash used in investing activities (592,701) (749,898)
Cash flows from financing activityinterest paid (111,127) (107,393)
net (decrease) / increase in cash and cash equivalents (4,968,405) 7,297,061
cash and cash equivalents at the beginning of the year 11,326,184 4,029,123
Cash and cash equivalents at the end of the year
11 6,357,779 11,326,184
NOTES TO THE FINANCIAL STATEMENTS FOR THE yEAR ENDED 31 MARCH 2016
1 LEGAL STATuS AND ACTIVITIES
Plafond fit out llc (“the company”) is a limited liability company incorporated in the united arab emirates under the uae federal law no (8) of 1984, as amended, on 16 July 2001 and operates under a trade license issued in dubai. the registered address of the company is P.o. box 24689, dubai, united arab emirates.
the company’s principal activities mainly include air conditioning system contracting, lifts and escalators contracting, electricity transmission and control apparatus installation, internal communication network installation and maintenance, safety, security systems and equipment installation, maintenance of electromechanical equipment, interior fit out, refurbishments and stones masonry works.
on 1 november 2015, transecure llc (“Parent company”) transferred 100% of the controlling interest in the company to one of its shareholders, dnata, at its carrying value.
uae federal law no. 2 of 2015 (“companies law”) which is applicable to the company has come into effect on 1 July 2015. the company is currently assessing and evaluating the relevant provisions of the companies law. it has twelve months from the effective date of the companies law to fully comply with the companies law under the transitional provisions set out therein.
2 SuMMARy OF SIGNIFICANT ACCOuNTING POLICIES
the principal accounting policies applied in the preparation of these 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
these financial statements have been prepared in accordance with international financial Reporting Standards (“ifRS”) and interpretation issued by ifRS interpretations committee (“ifRS ic”) applicable to companies reporting under ifRS. the financial statements comply with ifRS as issued by the international accounting Standards board (iaSb). the financial statements have been prepared under the historical cost convention.
the preparation of 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 company’s accounting policies. the areas involving a higher degree of judgement or complexity, or areas where assumptions and estimates are significant to the financial statements are disclosed in note 4.
(a) New and amended standards adopted by the company
there are no other ifRSs, amendments or ifRic interpretations that are effective that would be expected to have a material impact on the company’s financial statements.
(b) New standards and interpretations not yet adopted by the company
certain new accounting standards and interpretations have been published that are not mandatory for 31 december 2015 reporting periods and have not been early adopted by the company.
• ifRS 9, ‘financial instruments’ (effective from 1 January 2018);
• ifRS 15, ‘Revenue from contracts with customers’ (effective from 1 January 2017); and
• ifRS 16, ‘leases’ (effective from 1 January 2019).
there are no other standards that are not yet effective that would be expected to have a material impact on the company in the current or future reporting periods and on foreseeable future transactions.
the company is assessing the impact of the above standards, amendments and interpretations to published standards on the company’s financial statements.
2.2 FOREIGN CuRRENCy TRANSLATION
(a) Functional and presentation currency
items included in the financial statements of the company are measured using the currency of primary economic environment in which the entity operates (‘the functional currency’). the financial statements are presented in united arab emirates dirham (‘aed’), which is also the company’s functional 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 remeasured. foreign exchange gains and losses resulting from the settlement of such transactions and from the translation of monetary assets and liabilit ies denominated in foreign currencies at year end exchange rates are recognised in the statement of comprehensive income.
2.3 PLANT AND EQuIPMENT
Plant and equipment are stated at historical cost less depreciation. Historical cost includes expenditure that is directly attributable to the acquisition of the asset. 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 asset will flow to the company and the cost of the asset can be measured reliably. the carrying amount of any component accounted for as a separate asset is derecognised when replaced. all other repairs and maintenance costs are charged to the statement of comprehensive income during the financial period in which they are incurred.
depreciation on assets is computed using the straight-line method at rates calculated to allocate the cost of assets net of residual values, over their estimated useful l ife, as follows:
Plant and machinery 4 years
Motor vehicles 3-4 years
office equipment 4 years
furniture, fixtures and computer equipment 4 years
the assets’ residual values and useful l ives 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 included in ‘other income’ in the statement of comprehensive income.
capital work-in-progress is stated at cost. When commissioned, capital work-in-progress is transferred to the appropriate plant and equipment category and depreciated in accordance with company policy. capital work-in-progress represents office fit out works at the new office premises.
Notes to the financial statements for the year ended 31 March 2016
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2 SuMMARy OF SIGNIFICANT ACCOuNTING POLICIES (CONTINuED)
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 acquiree 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 statement of comprehensive income.
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 l ives ranging from four to five years.
costs associated with maintaining computer software programmes are recognised as an expense as incurred.
(c) Customer relationships
customer relationships acquired in a business combination are recognised at fair value of future economic benefits anticipated to be derived through continuation of these relationships at acquisition date. customer relationships are amortised over estimated useful l ife of eight years.
2.5 IMPAIRMENT OF NON-FINANCIAL ASSETS
assets that have an indefinite useful l ife, for example goodwill, are not subject to amortisation and are tested annually for impairment, or more frequently if events or changes in circumstances indicate that they might be impaired. assets that are subject to depreciation or 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).
Prior impairments for non-financial assets (other than goodwill) are reviewed for possible reversal of the impairment at each reporting date.
2.6 FINANCIAL ASSETS
(a) Classification
the company 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
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 company’s loans and receivables comprise ‘retentions receivable’ (note 7), ‘trade and other receivables (excluding prepayments and advances to suppliers)’ (note 9), ‘due from related parties’ (note 10) and ‘cash and bank balances’ (note 11).
(b) Recognition and measurement
loans and receivables are initially recognised at fair value and subsequently measured at amortised cost using the effective interest method.
2.7 OFFSETTING FINANCIAL INSTRuMENTS
financial assets and liabilit ies are offset and the net amount reported in the 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 IMPAIRMENT OF FINANCIAL ASSETS
Assets carried at amortised cost
the company assesses at each reporting date whether there is objective evidence that a financial asset or 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 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 statement of comprehensive income.
if, in a subsequent period, the amount of the impairment loss decreases and the decrease can be related objectively to an event occurring after the impairment was recognised (such as an improvement in the debtor’s credit rating), the reversal of the previously recognised impairment loss is recognised in statement of comprehensive income.
2 SuMMARy OF SIGNIFICANT ACCOuNTING POLICIES (CONTINuED)
2.9 INVENTORIES
inventories are stated at the lower of cost and net realisable value. cost is determined using the first-in-first-out method. the cost of inventory comprises the cost of purchase and other costs incurred in bringing the inventory to its present location and condit ion.
net realisable value is the estimated selling price in the ordinary course of business, less applicable variable selling expenses.
2.10 TRADE AND OTHER 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.
2.11 CASH AND CASH EQuIVALENTS
for the purpose of presentation in the statement of cash flows, cash and cash equivalents include cash on hand and amounts held in bank current accounts.
2.12 SHARE CAPITAL
ordinary shares are classified as equity.
2.13 TRADE AND OTHER PAyAbLES
these amounts represent liabilit ies for goods and services provided to the company prior to the end of financial year which are unpaid. the amounts are unsecured and are usually paid within 30 to 120 days of recognition. trade and other payables are presented as current liabilit ies 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.
2.14 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, using actuarial techniques, for the full amount of the end of service benefits, due to employees in accordance with the uae labor law.
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 company 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.
Provisions are measured at the present value of the expenditures expected to be required to settle the obligation using a pre-tax rate that reflects current market assessments of the time value of money and the risks specific to the obligation. the increase in the provision due to passage of time is recognised as interest expense.
2.16 PROVISION FOR wARRANTy
the company recognises the estimated liability for repairs related to projects for which terms of arrangements with customers stipulate existence of warranty period and for which warranty period has not yet expired. the provision is calculated based on the past history of the level of repair costs incurred.
2.17 REVENuE RECOGNITION
Revenue comprises the fair value of the consideration received or receivable for the services rendered in the ordinary course of the company’s activities. the company 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 each of the company’s activities as described below.
(a) Contract revenue
contract revenue is recognised under the percentage of completion method. When the outcome of the contract can be reliably estimated, profit is recognised by reference to the proportion that accumulated costs up to the year end bear to the estimated total costs of the contract.
losses on contracts are assessed on an individual contract basis and a provision is made for the full amount of the anticipated losses, including any losses relating to future work on a contract, in the period in which the loss is first foreseen. contract variations / claims are included in contract revenue when it is probable that the customer will approve the variation or accept the claim and the amount of revenue from variation or the claims amount accepted by customer can be reliably measured.
the aggregate of the costs incurred and the profit / loss recognised on each contract is compared against the progress bill ings up to the year end. the net balance is shown under trade and other receivables as due from customers on contracts. Where the progress bill ings exceed the sum of costs incurred and recognised profit / loss, the balance is shown under trade and other payables as due to customers on contracts.
(b) Services revenue
Revenue arising from services rendered is recognised when the services have been rendered to the customers.
(c) Interest income
interest income is recognised on a time-proportion basis using the effective interest method.
2.18 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 recognised in the statement of comprehensive income on a straight-line basis over the term of the lease.
Notes to the financial statements for the year ended 31 March 2016 (continued) Notes to the financial statements for the year ended 31 March 2016 (continued)
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3 FINANCIAL RISk MANAGEMENT
3.1 FINANCIAL RISk FACTORS
the company’s activity exposes it to a variety of financial risks: market risk (foreign exchange risk, price risk and cash flow and fair value interest rate risk), credit risk and liquidity risk. the company’s overall risk management programme focuses on the unpredictability of financial markets and seeks to minimise potential adverse effects on the company’s financial performance.
(a) Market risk
(i) foreign exchange risk
the company does not have any significant foreign currency exposure, as a significant proportion of the transactions during the year are denominated in aed or currencies to which aed is currently pegged.
(ii) Price risk
the company has no exposure to price risk as it has no price sensitive financial inst ruments.
(ii i) cash flow and fair value interest rate risk
the company’s exposure to fair value interest rate risk arises from non-current retentions with no interest rates. for discounting of retentions please refer to note 7.
the company is not exposed to any other material cash flow and fair value interest rate risk.
(b) Credit risk
the company is exposed to credit risk in relation to its monetary assets with external parties, mainly trade receivables, retentions receivable and bank balances. However, the company has policies in place that minimise its exposure. the management of the company assesses the credit quality of the customer, taking into account its financial position, past experience and other factors. the util isation of credit l imits is regularly monitored. also, the company has a formal procedure of monitoring and follow-up of the customers. further, the company has policy to place its cash with reputable commercial banks. the maximum exposure to credit risk is represented by the carrying value of financial assets on the statement of financial position date. the credit quality of ‘trade and other receivables’ is disclosed in note 9.
the table below shows the bank balance and margin deposits with major counterparties at the reporting date.
Moody’srating 2016 2015
banks aed aed
a a2 5,872,389 8,161,616
b baa1 164,596 2,227,170
c not rated - 829,664
d a2 213,920 462,494
e baa1 169,110 4,980
6,420,015 11,685,924
(c) Liquidity risk
liquidity risk is the risk that the company will be unable to meet its payment obligations associated with its financial l iabilit ies when they fall due. Prudent liquidity risk management includes maintaining sufficient cash and marketable securities, the availability of funding through an adequate amount of committed credit l imits and the ability to close out market positions. due to the dynamic nature of the underlying business, the company maintains flexibil ity in funding by maintaining availability under committed credit l ines.
the company’s financial l iabilit ies as at the statement of financial position date are all due within 12 months.
3.2 CAPITAL RISk MANAGEMENT
the company’s objectives when managing capital are to safeguard the company’s ability to continue as a going concern in order to provide returns for shareholders and to maintain an optimal capital structure to reduce the cost of capital. in order to maintain or adjust the capital structure, the company may adjust the amount of dividends paid to the shareholders.
as at 31 March 2016 and 2015, the company has no borrowings and thus its capital is ungeared.
3.3 FAIR VALuE ESTIMATION
the fair values of financial assets and financial l iabilit ies of the company as at 31 March 2016 and 2015 approximated to their carrying amounts as reflected in the financial statements.
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 company 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 liabilit ies within the next financial year are discussed below.
(a) Revenue recognition
contract revenue is recognised on a percentage of completion method. the stage of completion of a contract is determined based on the proportion of costs incurred for work performed to date, compared to the estimated total cost of the contract. total estimated costs are affected by changes in the expected cost of materials and labour, productivity, scheduling and other factors. additionally, external factors such as sub-contract work, customer requirements and other factors outside of management control, may affect the progress and estimated cost of a project’s completion and, therefore, the timing of revenue recognition. Management regularly reviews the estimates relating to contracts and revisions to profitably be reflected on an ongoing basis.
(b) Impairment of trade, retentions and other receivables
the impairment charge reflects estimates of losses arising from the failure or inability of the parties concerned to make the required payments. Management’s judgement is required in evaluating customers’ debts to determine if they will be collected. the charge is based on the ageing of the customer accounts, the customer’s credit worthiness and the historic write-off experience. changes to the estimated impairment charge may be required if the financial condition of the customers were to improve
4 CRITICAL ACCOuNTING ESTIMATES AND JuDGEMENTS (CONTINuED)
or deteriorate. Management considers that the current level of impairment charge is appropriate and consistent with the loss estimated at year end.
(c) Estimated impairment of goodwill
the company 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 company had been 5% lower than management’s estimates at 31 March 2016, the company would not have recognised impairment on goodwill.
if the estimated cost of capital used in the value-in-use calculation for the company had been 1 % higher than management’s estimates at 31 March 2016, the company would not have recognised impairment on goodwill.
(d) Warranty provision
the company recognises the estimated liability on all projects under warranty at the statement of financial position date. Management continuously reviews the estimation relating to the warranty provision based on actual costs incurred during the year and revisions to profitability is reflected on an ongoing basis.
Notes to the financial statements for the year ended 31 March 2016 (continued) Notes to the financial statements for the year ended 31 March 2016 (continued)
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5 PLANT AND EQuIPMENT
Plant andmachinery
Motorvehicles
officeequipment
furniture, fixtures
and computer equipment
Capital work in
progress
total
aed aed aed aed aed aedCostat 1 april 2014 4,664,434 189,031 3,040,596 3,671,975 274,851 11,840,887additions - 378,500 790 315,423 35,816 730,529disposal - - - (1,750) - (1,750)transfer - - - 274,851 (274,851) -
at 31 March 2015 4,664,434 567,531 3,041,386 4,260,499 35,816 12,569,666additions 32,002 302,420 - 561,035 71,060 966,517disposal - (83,031) - - - (83,031)Write-off - - - (237) - (237)transfer - - - 106,876 (106,876) -
at 31 March 2016 4,696,436 786,920 3,041,386 4,928,173 - 13,452,915
accumulated depreciationat 1 april 2014 4,600,235 189,031 2,989,858 3,550,270 - 11,329,394charge for the year (note 20) 45,592 24,090 1,972 212,327 - 283,981disposal - - - (219) - (219)
at 31 March 2015 4,645,827 213,121 2,991,830 3,762,378 - 11,613,156charge for the year (note 20) 19,437 134,698 1,375 265,704 - 421,214disposal - (83,031) - - - (83,031)Write-off - - - (237) - (237)
at 31 March 2016 4,665,264 264,788 2,993,205 4,027,845 - 11,951,102
net book amount at 31 March 2016 31,172 522,132 48,181 900,328 - 1,501,813
at 31 March 2015 18,607 354,410 49,556 498,121 35,816 956,510
6 INTANGIbLE ASSETS
goodwill Computersoftware
Customer relationships
total
aed aed aed aedCostat 1 april 2014 59,424,931 634,108 20,100,000 80,159,039additions - 20,900 - 20,900
at 31 March 2015 59,424,931 655,008 20,100,000 80,179,939additions - 70,372 - 70,372
at 31 March 2016 59,424,931 725,380 20,100,000 80,250,311
accumulated amortisationat 1 april 2014 28,068,331 418,841 7,537,500 36,024,672charge for the year (note 21) - 110,091 2,512,500 2,622,591
at 31 March 2015 28,068,331 528,932 10,050,000 38,647,263charge for the year (note 21) - 152,770 2,512,500 2,665,270
at 31 March 2016 28,068,331 681,702 12,562,500 41,312,533
net book amount at 31 March 2016 31,356,600 43,678 7,537,500 38,937,778
at 31 March 2015 31,356,600 126,076 10,050,000 41,532,676
Management reviews the business performance based on type of business. it has identified mechanical, electrical and plumbing (“MeP”) and fit outs as main types of business. goodwill is monitored by the management at the entity level. as at the reporting date management has carried out an impairment test for goodwill. based on the findings there was no impairment charge recognised during the years ended 31 March 2016 and 2015.
the recoverable amount of a cash generating unit is determined based on value-in-use calculations. these calculations use pre-tax cash flow projections covering a three-year period, based on financial budgets approved by management. cash flows beyond the three-year period are extrapolated using estimated growth rates. the growth rate does not exceed the long-term average growth rate for the business in which the cash generating unit operates. the key assumptions used for value-in-use calculations for the cash generating unit are as follows:
• forecast cash flows based on past performance and expectations of market deve lopment .
• discount factor 12% (2015: 12%) which is believed to reflect the company’s cost of equity.
• growth rate 4% (2015: 4%) beyond the three-year period based on management estimates with regard to industry growth rates.
7 RETENTIONS RECEIVAbLE
2016 2015aed aed
Retentions 39,127,250 33,903,153Receivable within one year (note 9) (25,721,167) (25,278,493)
13,406,083 8,624,660
less: fair-value adjustment on long-term retentions receivables (698,892) (449,624)
12,707,191 8,175,036
Retentions receivable include amounts of aed 12,707,191 (2015: aed 8,175,036) which are receivable after twelve months from the reporting date and are interest free. the fair values of these amounts are based on anticipated cash inflows discounted at a rate of 5.5% (2015: 5.5%) per annum. the discount rate equals to eiboR plus an appropriate spread.
Movement in the fair value adjustment on long term retentions receivable is as follows:
2016 2015aed aed
at 1 april 449,624 720,358unwinding of discount (note 22) (153,176) (684,886)
fair value adjustment of long term retentions receivable (note 22) 402,444 414,152
at 31 March 698,892 449,624
the carrying amount of the company’s retentions receivable at 31 March 2016 and 2015 are denominated in aed. the maximum exposure to credit risk at the reporting date is the carrying value of retentions receivable mentioned above. the company does not hold any collateral as security.
the company’s customers are based in the uae. at 31 March 2016, the retentions receivable from five customers (2015: five customers) accounted for 43% (2015: 48%) of the total retentions receivable. Management is confident that this concentration of credit risk will not result in a loss to the business in view of the credit worthiness and no previous history of defaults of these customers.
as of 31 March 2016, retentions receivable of aed 29,706,042 (2015: aed 16,618,324) were fully performing.
as of 31 March 2016, retentions receivable of aed 8,722,316 (2015: aed 6,446,572) were past due but not impaired. the ageing analysis of these retentions is as follows:
Notes to the financial statements for the year ended 31 March 2016 (continued) Notes to the financial statements for the year ended 31 March 2016 (continued)
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7 RETENTIONS RECEIVAbLE (CONTINuED)
2016 2015aed aed
over 365 days 8,722,316 6,446,572
as of 31 March 2016, retentions receivable of aed nil (2015: aed 10,388,633) were impaired and fully provided for. these are over 365 days past due. these receivables relate to customers who are in unexpected difficult economic situations.
Movement in the company’s provision for impairment of retentions receivable – current is as follows:
2016 2015aed aed
at 1 april 10,388,633 14,013,276Reversal during the year (note 21) (341,098) -amounts written-off as uncollectible (10,047,535) (3,624,643)
at 31 March - 10,388,633
amounts charged to the provision account are written-off when there is no expectation of recovering additional cash.
8 INVENTORIES
2016 2015aed aed
Materials - 10,136,928Provision for impairment of slow moving inventories - (10,136,928)
- -
Movement in the company’s provision for impairment of slow moving inventories is as follows:
2016 2015aed aed
at 1 april 10,136,928 10,136,928Write-off during the year (10,136,928) -
at 31 March - 10,136,928
9 TRADE AND OTHER RECEIVAbLES
2016 2015aed aed
trade receivables 60,013,261 112,716,489Provision for impairment of trade receivables - (58,128,438)
60,013,261 54,588,051Retentions receivable within one year (note 7) 25,721,167 25,278,493
Provision for impairment of retentions receivable (note 7) - (10,388,633)
85,734,428 69,477,911Prepayments and other deposits 1,610,643 2,782,178Provision for impairment of deposits - (1,852,394)
87,345,071 70,407,695due from customers on contracts (note 18) 73,065,038 24,184,188
160,410,109 94,591,883advances to suppliers 25,881,918 7,990,346
186,292,027 102,582,229due from customers on contracts comprise:
contract costs incurred plus attributable profit on contracts in progress at period end 483,772,395 113,431,681
less: progress billings (410,707,357) (89,247,493)
73,065,038 24,184,188
the company’s customers are based in the uae and Qatar. at 31 March 2016, five customers (2015: five customers) accounted for 42% (2015: 54%) of the total trade receivables. Management is confident that this concentration of credit risk will not result in a loss to the business in view of the credit worthiness and no previous history of defaults of these customers.
as of 31 March 2016, trade receivables of aed 42,813,779 (2015: aed 38,771,693) were fully performing.
trade receivables that are less than six months past due are not considered impaired. as of 31 March 2016, trade receivables of aed 17,199,482 (2015: aed 15,816,358 ) were past due but not impaired. the ageing analysis of these trade receivables is as follows:
2016 2015aed aed
181 days to 365 days 7,254,085 2,017,158over 365 days 9,945,397 13,799,200
17,199,482 15,816,358
as of 31 March 2016, trade receivables of nil (2015: aed 58,128,438) were impaired and fully provided for. these receivables relate to customers who are in unexpected difficult economic situations.
9 TRADE AND OTHER RECEIVAbLES (CONTINuED)
the carrying amount of the company’s trade receivables at 31 March 2016 and 2015 are denominated in aed.
Movement in the company’s provision for impairment of trade receivables is as follows:
2016 2015aed aed
at 1 april 58,128,438 72,051,423Reversal for the year - net (note 21) (2,430,401) (1,873,585)amounts written-off as uncollectible (55,698,037) (12,049,400)
at 31 March - 58,128,438
in addition to the above, during the year, the company has directly written-off nil (2015: aed 284,198) against trade receivables which were deemed as uncollectible (note 21).
the impairment charge on trade receivables recognised in the statement of comprehensive income is included in ‘general and administrative expenses’ (note 21). amounts charged to the provision account are written-off when there is no expectation of recovering additional cash.
Movement in the company’s provision for impairment of deposits is as follows:
2016 2015aed aed
at 1 april 1,852,394 1,852,394Reversal for the year (note 21) (53,080) -amounts written-off as uncollectible (1,799,314) -
at 31 March - 1,852,394
10 RELATED PARTy bALANCES AND TRANSACTIONS
Related parties include the shareholders, fellow subsidiaries, associate, key management personnel and any businesses which are controlled, directly or indirectly by the shareholders or over which they exercise significant management influence (hereafter referred to as “affi l iates”).
Related party balances
the company maintains significant balances with its related parties which arise from commercial transactions in the normal course of business on an arm’s length basis as follows:
2016 2015aed aed
due from related partiesaffiliates 1,135,601 -
due to a related partyaffiliate 8,663,329 3,078,599
the amount due from / due to related parties are unsecured, non-interest bearing and respectively receivable / payable on demand. balances due from related parties are fully recoverable.
Related party transactions
during the year, the company entered into the following significant transactions on an arm’s length basis with related parties in the ordinary course of business.
Year ended 31 March
2016 2015aed aed
expenses incurred by affiliate on behalf of the company 52,803,494 33,911,943
Key management compensation Salaries 2,283,346 2,324,800 end of service and other benefits 118,917 113,525
2,402,263 2,438,325
11 CASH AND bANk bALANCES
2016 2015aed aed
cash on hand 152,991 278,296bank balances in current accounts 6,204,788 11,047,888fixed deposit 215,227 638,036
cash and bank balances 6,573,006 11,964,220
cash and cash equivalents include the following for the purposes of the statement of cash flows:
2016 2015aed aed
cash and bank balances 6,573,006 11,964,220less: fixed deposit (215,227) (638,036)
cash and cash equivalents 6,357,779 11,326,184
the fixed deposit earned interest at a rate approximating 0.5% per annum (2015: 1.5% per annum).
Notes to the financial statements for the year ended 31 March 2016 (continued) Notes to the financial statements for the year ended 31 March 2016 (continued)
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12 TRADE AND OTHER PAyAbLES
2016 2015aed aed
trade payables 40,676,008 37,589,549due to customers on contracts (note 18) 10,812,815 9,585,251accrued salaries and benefits 7,162,053 1,430,400Provision for warranty costs 4,534,846 3,415,846Provision for anticipated losses on contracts 1,133,988 7,112,118Provision for air passage 133,292 143,710other payables and accruals 90,760,920 37,018,540
155,213,922 96,295,414due to customers on contractsProgress billings 149,745,202 247,540,008
less: contract costs incurred plus attributable profit and loss on contracts in progress at the period end (138,932,387) (237,954,757)
10,812,815 9,585,251
included within ‘accrued salaries and benefits’ is an amount of aed 5.2 mill ion (2015: aed 1.4 mill ion) pertaining to a related party, arising from transactions disclosed in note 10.
Movement in the company’s provision for anticipated losses on contracts is as follows:
2016 2015aed aed
at 1 april 7,112,118 7,243,596charge for the year (note 20) 334,477 2,895,814Released during the year (note 20) (6,312,607) (3,027,292)
at 31 March 1,133,988 7,112,118
Movement in the company’s provision for warranty costs is as follows:
2016 2015aed aed
at 1 april 3,415,846 5,153,165charge for the year (note 20) 1,372,333 974,149Released during the year (note 20) (134,084) (2,220,898)utilised during the year (119,249) (490,570)
at 31 March 4,534,846 3,415,846
13 bORROwINGS
the total finance facilit ies granted by local banks to the company including the util ised balance, amounts to aed 115,000,000 (2015: aed 90,000,000) comprising overdraft facilit ies, letters of credits and letters of guarantees. these facilit ies are secured by corporate guarantee of the parent company.
14 SHARE CAPITAL
the share capital of the company comprises 300 authorised, issued and paid up shares of aed 1,000 each amounting to aed 300,000 (2015: aed 300,000). the company has not purchased or invested in any shares during the financial years ended 31 March 2016 and 2015.
15 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 equal to 50% of the share capital, no additional amounts have been transferred to the legal reserve during the years ended 31 March 2016 and 2015.
16 PROVISION FOR EMPLOyEES’ END OF SERVICE bENEFITS
2016 2015aed aed
at 1 april 377,737 405,078charge for the year - 86,645Payments during the year - (113,986)Reversal during the year (377,737) -
at 31 March - 377,737
in accordance with the provisions of iaS 19 (revised), management has carried out an exercise to assess the present value of its obligations as at 31 March 2015, using the projected unit credit method, in respect of employees’ end of service benefits payable under the uae labour law. under the method, an assessment was made of an employee’s expected service life with the company and the expected basic salary at the date of leaving the service. Management assumed an average increment/promotion cost of 3%. the expected liability at the date of leaving the service was discounted to its net present value using the discounted rate of 4.5%.
during the year, the full l iability pertaining to employees’ end of service benefits for employees under the company’s visa has been reversed, as the payroll (including gratuity) for these employees is processed on a monthly basis by an affi l iate on behalf of the company. the company, on a monthly basis, settles these liabilit ies towards its affi l iate, who is ultimately responsible for settling these liabilit ies with the employees.
17 ADVANCES FROM CuSTOMERS
advances are amounts received by the company from its clients before the related contract work is performed, and are released against approved progress bill ings for work performed on the contract proportionate to the amount of progress bill ings.
2016 2015aed aed
at 1 april 23,750,302 11,802,469amounts received during the year 37,532,362 16,046,536amounts released during the year (36,720,292) (4,098,703)
at 31 March 24,562,372 23,750,302
18 CONSTRuCTION CONTRACTS
contracts in progress at reporting date 2016 2015aed aed
amount due from customers on contract included in trade and other receivables (note 9) 73,065,038 24,184,188
amount due to customers on contract customers included in trade and other payables (note 12) (10,812,815) (9,585,251)
62,252,223 14,598,937
contract costs incurred plus recognised profits less recognised losses to date 622,704,782 351,386,438
less: progress billings (560,452,559) (336,787,501)
62,252,223 14,598,937
19 REVENuE
2016 2015aed aed
contract revenue 271,324,221 161,477,072Service revenue 183,987 153,302
271,508,208 161,630,374
20 DIRECT COSTS
2016 2015aed aed
Material costs 125,077,821 68,300,312Subcontractors and labour hire 55,195,893 34,003,897Staff costs (note 23) 52,528,554 30,853,329Rent and accommodation expenses 3,065,542 2,011,410
charge / (release) of warranty provision- net (note 12) 1,238,249 (1,246,749)
finance costs 848,708 1,385,796depreciation (note 5) 421,214 283,981Release of anticipated losses – net (note 12) (5,978,130) (131,478)other contract costs 4,890,311 5,689,892
237,288,162 141,150,390
21 GENERAL AND ADMINISTRATIVE ExPENSES
2016 2015aed aed
Staff costs (note 23) 14,996,100 8,389,317amortisation (note 6) 2,665,270 2,622,591Rent 646,204 467,779Receivables directly written-off (note 9) - 284,198
Reversal of provision for impairment of deposits (note 9) (53,080) -
Reversal of provision for impairment of retentions receivable (note 7) (341,098) -
Reversal of provision for impairment of trade receivables – net (note 9) (2,430,401) (1,873,585)
others 3,495,752 3,946,399
18,978,747 13,836,699
no social contributions were made during the financial year ended 31 March 2016.
22 FINANCE COSTS / (INCOME) – NET
2016 2015aed aed
fair value adjustment of long term retentions receivable (note 7)
402,444 414,152
others 111,127 107,393
513,571 521,545
unwinding of the fair value adjustment on non-current retentions receivable (note 7) (153,176) (684,886)
finance costs / (income) – net 360,395 (163,341)
23 STAFF COSTS
2016 2015aed aed
Salaries and wages 58,136,286 36,885,093other benefits 9,388,368 2,357,553
67,524,654 39,242,646Staff costs are allocated as follows:direct costs (note 20) 52,528,554 30,853,329general and administrative expenses (note 21) 14,996,100 8,389,317
67,524,654 39,242,646
Notes to the financial statements for the year ended 31 March 2016 (continued) Notes to the financial statements for the year ended 31 March 2016 (continued)
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24 COMMITMENTS
2016 2015aed aed
guarantees and performance bonds 81,680,287 63,557,804
letter of credit 1,080,000 -
lease commitments 468,955 273,093
the above were issued by the company’s bankers in the normal course of business.
25 FINANCIAL INSTRuMENTS by CATEGORy
the accounting policies for financial instruments have been applied to the line items below:
loans and receivables
other financial liabilities
total
aed aed aed31 March 2016financial assets
trade and other receivables (excluding prepayments and advances to suppliers)*
158,973,573 - 158,973,573
Retention receivable – non current 12,707,191 - 12,707,191
due from related parties 1,135,601 - 1,135,601cash and bank balances 6,573,006 - 6,573,006
179,389,371 - 179,389,371financial liabilitiestrade and other payables - 155,213,922 155,213,922due to a related party - 8,663,329 8,663,329
- 163,877,251 163,877,251
* excludes prepayments amounting to aed 1,436,536.
31 March 2015financial assets
trade and other receivables (excluding prepayments and advances to suppliers)* 93,662,099 - 93,662,099
Retention receivable – non current 8,175,036 - 8,175,036
cash and bank balances 11,964,220 - 11,964,220
113,801,355 - 113,801,355financial liabilitiestrade and other payables - 96,295,414 96,295,414due to a related party - 3,078,599 3,078,599
- 99,374,013 99,374,013
* excludes prepayments amounting to aed 929,784.
26 OTHER INCOME
2016 2015aed aed
liabilities no longer payable 901,591 784,179Write back of doubtful debts 156,456 1,605,473gain on disposal of motor vehicles 21,379 -others 799,867 64,180
1,879,293 2,453,832
27 CONTRIbuTED CAPITAL
till 22 March 2014, contributed capital represented amounts contributed by transguard llc and previous shareholders of Plafond technical Works llc and Stones corner building contracting llc. at 22 March 2014, beneficial interest in contributed capital, amounting to aed 148,089,627, was transferred to transecure llc.
on 8 december 2014, accumulated losses of aed 111,140,246 were adjusted against the contributed capital, in line with the shareholders’ resolution of that date.
Notes to the financial statements for the year ended 31 March 2016 (continued) Notes to the financial statements for the year ended 31 March 2016 (continued)
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Pantone Blue 3005
PLAFOND FIT OuT LLC
Office 3121 building 3Gold and Diamond Park,
Sheikh Zayed Road, Dubai uAEPO box 24689
Tel. +971 4 501 4800Fax +971 4 330 6430
www.plafondme.com
