One - Transguard Groupto UPS, Kuehne-Nagel, DHL and Freightworks. Aviation and Logistics Services 9%...

OneVision

“The race for excellence has no finish line.”

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

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The futureis together

Our diverse and dedicated workforce, consisting of 89 nationalities from across the globe have been the key driver of Transguard’s success. Our people continually strive to achieve our vision of becoming the organisation that changes the landscape of business support services in the region. We do this through our promise to our customers - to deliver operational excellence in everything we do – helping them to succeed, and to achieve their vision too.

We invest in the recruitment and retention of the right talent and immediately set our employees on the path to succeed, providing opportunities for career progression through training and mentorship. The Transguard Centre of Excellence is testament to this commitment. The 38,000 square feet, open plan training centre aims to train 100,000 Transguard employees by 2020.

In 2017-18, Transguard employee numbers grew 17% to 64,774 by 31 March 2018. To ensure that no employee is left behind we embarked on a transformative wellness and recreation programme seeing nearly 300 events taking place each month by the end of 2018, including launching the “Women of Inspiration” projects, a series of unique events designed especially for our female colleagues, by our female colleagues. On the International Day of Happiness, we launched an employee happiness video which generated 85k views in just 24 hours.

During 2017-18, more than 1,300 employees were recognised through the Transguard employee awards scheme which rewards and recognises employees throughout the year for demonstrating their commitment to our company’s values:

T R U S TTeam Relate Unique Safe Talent

Our People

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Table of ContentsFinancial Highlights

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

The Leadership Team

Our Services

- Transguard Cash Services

- Transguard Security Services

- Transguard Manpower Services

- Transguard Aviation and Logistics

- Transguard Workforce Solutions

- Transguard Integrated Facility Services

- Transguard Living

- Transguard Delivery Services

Dubai Government recognises Transguard’s Quality

#GrowWithTransguard

CSR: Dream 2020 Takes Flight

Health and Safety at the Heart of the Organisation

Breaking new Ground

A Year for the People 2017-2018

Financial Report 2017-2018

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FinancialHighlights

Financial HighlightsRevenue AED ‘000s

2017-18

2016-17

2015-16

2,315,053

1,900,633

1,426,602

Consolidated Profit AED ‘000s

2017-18

2016-17

2015-16

163,431

146,041

123,514

Profit Attributable to the Owner AED

2017-18

2016-17

2015-16

150,158

125,128

102,615

Revenue Growth

Transguard Group LLCRevenue and Results Actual Actual Actual

2017-18 2016-17 2015-16Revenue AED 000’s 2,315,053 1,900,633 1,426,602EBITDA AED 000’s 211,849 184,022 149,180EBITDA Margin % 9% 10% 10%Operating Profit AED 000’s 174,617 154,609 129,873Operating Margin % 8% 8% 9%Profit Attributable to the Owner AED 000’s 150,158 125,128 102,615Profit Margin % 6% 7% 7%Headcount 64,774 55,399 46,500 Revenue Growth 22% 33% 38%Headcount growth 17% 20% 55%

22%

Headcount Growth

2017 - 1864,774

2016 - 1755,399

2015-1646,500

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“Transguard Group is a home-grown success story.”

Transguard Group is a home-grown success story. Founded in 2001, as a Cash Management and Security Services provider, it has since flourished into one of the UAE’s most recognisable brands.

Since enhancing its service provision to include HR Outsourcing and Integrated Facility Services 13 years ago, the company has gone from strength-to-strength, consolidating its reputation in the market as a provider of the highest quality business support services in each of its business streams.

As a recent recipient of the Dubai Quality Award, an external body recognising “Business Excellence”, Transguard remains in 2017-18 at the forefront of its industry and will continue to provide world-class services to the Emirates Group and more than 1,000 other customers.

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

Message from the Chairman

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Transguard Group has recorded revenues of AED 2.3 billion (AED 2,315,053,294), representing a 22% year on year growth compared to 2016-17. Annual profit attributable to the owner increased by 20% for the financial year 2017-18. These are the highest recorded financial results in the company’s history. Every Transguard business unit reported growth in revenue this year and the workforce grew by 17% from 55,399 to 64,774 by 31 March 2018.

Underpinning Transguard’s financial achievements in 2017-18 are the increase in new contract wins, a 51% year on year increase compared to the previous year, a focus on continuous improvement which resulted in 60% of all Managers been trained in Lean Six Sigma and the creation of the Transguard Centre of Excellence, a new training and innovation centre for its employees.

In 2017-18, Transguard made considerable strides in its Corporate Social Responsibility programme including partnering with some of the UAE’s most respected charitable organisations such as the Emirates Red Crescent Society, Dubai Cares and the Al Ihsan Charity Association. In 2017 Transguard supported the Tarmeem Initiative, a project led by the Department of Economic Development and Ominyat, which involved the complete re-build and refurbishment of the Al Manzil school in Sharjah, a school for disadvantaged youth. Transguard provided 100 construction personnel, building materials and 50 volunteers over the course of two weeks to fast-track the project’s completion.

Dr. Abdulla Al Hashimi Chief Executive Officer

“We are on a mission to help our local economies and communitiesgrow and prosper.”

Message from the CEO

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This year we have been striving as a team to create an environment where Operational Excellence is embedded in the culture of the organisation. As the size of the workforce increased in 2017-18 to 64,774, it has been critical in the last financial year to ensure that our People Strategy was robust enough to honour our commitment of delivering Operational Excellence for our customers.

As this year’s financial results show, our team have been successful in this aim, reporting AED 2.3 billion (AED 2,315,053,294) in revenue and AED 150 million (AED 150,158,318) in profit attributable to the owner, which represents 22% year on year growth in revenue and 20% growth in profit. Customer retention remains high, at 95% and we have increased new contract wins by 51% year on year to the value of over AED 1.3 billion.

Our People Strategy is underpinned by the reconfiguration of our Career Framework which maps out the career pathway for every Transguard designation and the required skills and knowledge at each level. To support this upward mobility throughout the organisation the Centre of Excellence was created. Led by a team of 39 trainers, the Centre of Excellence is a state-of-the-art 38,000 square foot training centre with the capacity to train up to 450 personnel a day on 181 courses.

Retaining and nurturing talent and promoting from within are the hallmarks of our operation and have been a critical success factor in 2017-18. The combination of high levels of customer satisfaction and high levels of employee engagement have created an environment for success where the organisation has been able to grow and achieve so much in the last 12 months.

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

PeopleFirst

Greg WardManaging Director

“We want to create one of the most agile, educated and tech-savvy workforces in the region.”

Message from the Managing Director

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The LeadershipTeam

Tony LloydChief Financial Officer

Stephen BeesleyChief Operating Officer Integrated Facility Services

Tim MundellChief Security Officer

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

Dr Abdulla Al HashimiChief Executive Officer

Greg WardManaging Director

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OUR SERVICES

Innovatingthe cashindustry

Transguard’s Cash Services remains the market leader in cash management solutions. The business unit reported revenue growth of 9% year on year in 2017-18 and a workforce increase of 2%. Innovation, technology and strategic partnerships have been the key drivers of success in 2017-18.

Transguard’s exclusive partnership with global cash management provider Gunnebo has led to the introduction of automated ‘smart’ cash deposit machines across the UAE, a move that is transforming the cash management industry.

The business unit launched its new state-of-the-art Command and Control Centre this year and broadened its scope to include 24/7 maintenance services in addition to its Managed Services and Cash-In-Transit (CIT) solutions. The additions to its portfolio enables financial institutions to have a single point-of-contact for all their technology and servicing needs.

Cash Services 9% Revenue Growth

2% Workforce Growth

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Your Security isour business

Transguard’s Security Services remains the country’s premier, tier one security provider with a workforce of 7,781 as of 31 March 2018. This year the business unit reported revenue growth of 25% year on year and a workforce increase of 12%. Transguard’s Security Services boasts a unique and extensive portfolio, from Explosive Detection Dogs (K9) to Systems Integration and Consulting, in addition to its long-standing manned guarding capability.

Transguard’s Security Services puts technology and innovation at the core of its operations and in 2017-18 there has been a sharp increase in new contract wins that include security technology solutions such as ‘SmartGuard’ technology. This allows clients to have real-time information, images and video to support their security .

In May 2017 Transguard Security Services was awarded Facility Management Middle East’s “Security Company of the Year”.

Security Services 25% Revenue Growth

12% Workforce Growth

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Building on our continuedsuccess

Transguard’s Manpower Services continued its success in 2017-2018 with revenues growing by 28% year on year and the workforce growing by 12%. This year’s success is attributable to a growing number of construction and infrastructure projects taking place in the UAE and the success of new contract wins.

There has been significant growth in the hospitality sector where clients are seeing demonstrable savings through their HR Outsourcing strategy as well a marked improvement in the quality of service through the provision of well-trained and well-managed outsourced personnel. Transguard provides a range of staff to support the effective operations of many flagship UAE hotels.

Manpower Services 28% Revenue Growth


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Reachingnew heights

Transguard’s Aviation and Logistics grew in revenue by 9% year on year and increased the workforce by 16% in 2017-18. Transguard continues to provide world-class services to the Emirates Group and dnata and has a significant presence at Dubai Airport and Al Maktoum Airports.

The workforce peaked in 2017-18 and by 31 March 2017 employee numbers reached 8,056 personnel. Transguard won its first contract to provide Aviation Services to Etihad Airways. The move in to the logistics market has also been a key strategy in 2017-18 with Transguard winning contracts to provide services to UPS, Kuehne-Nagel, DHL and Freightworks.

Aviation and Logistics Services

9% Revenue Growth


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Creating successful Partnerships

Transguard’s Workforce Solutions reported 28% revenue growth year on year and a 6% increase in personnel. In October 2017 the HR Outsourcing division revamped its brand communications and extended its product offering to include onsite account management, temporary and permanent recruitment, PRO solutions and payroll services.

The Outsourcing of white collar services has bridged the gaps in administrative work, HR and employee services, while freeing up clients’ human capital to focus on the core operations of their business. Additionally, this service has been increasingly popular with Small and Medium-sized Enterprises (SMEs), as the benefits of reducing overheads and the increase in efficiencies is realised.

Workforce Solutions 28% Revenue Growth

6% Workforce Growth

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Delivering a world-class experience

Transguard’s Integrated Facility Service reported revenue growth of 30% and an increase in personnel by 24%. Growth was largely driven by excellent customer retention including the renewal of many key flagship contracts.

There has been significant growth of the team’s Projects division which delivers mechanical, electrical and plumbing (MEP) projects attracting a broader client base looking for more complex services. This year, Transguard was accredited by the National Inspection Council for Electrical Installation Contracting (NICEIC), the UK’s leading voluntary authority for electrical contractors.

The accreditation positions Transguard as an ‘Approved Contractor’ and highly competent provider of electrical technicians that met the stringent standards required for health and safety procedures, extensive risk assessment undertakings and various training programs.

Integrated FacilityServices

30% Revenue Growth


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Entering the Consumer Market

In January 2017, Transguard launched its first consumer facing business, Transguard Living.

The proposition offers consumers an array of end to end home maintenance solutions, providing residential homes with professional cleaning, electrical and plumbing repairs, painting and moving services.

The Transguard Living team are professionally trained to the highest industry standards. The appropriate cleaning courses are accredited by BICS, while also meeting Transguard Group’s internal standards. Customers currently enjoy a spectrum of over 30 home services, all backed up by a 24/7 Call Centre.

In its first year, Transguard Living has grown consistently month-on-month, with an annual growth rate of 500%. With over 4,000 homes in the past year that have been cleaned, fixed and moved by Transguard Living, we are excited to ensure that this business continues to change the landscape in the quality of home services across Dubai.

The ambition for the forthcoming financial year is to launch a suite of services under the arm of “Smart-Home” which will include services surrounding eco-saving energy solutions, and home automated solutions.

Transguard Living

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Joined multi-billion dollar UAE Courier market

In July 2017 Transguard announced its expansion of its business delivery service, Transguard Delivery. In a strategic move, Transguard aimed to broaden its scope of work beyond its existing corporate customers providing a fully-tracked, pick-up and drop-off service across the UAE. As macroeconomic factors continued to weigh on SMEs and the wider business community this year, more and more businesses were outsourcing post and parcel services to streamline their operations, and Transguard had the capabilities and expertise to expand this service. Transguard will provide customers with a selection of delivery options across a 7 day service offering. The services include Express (4-Hours), Economy (same day) and Standard (next day) deliveries across the UAE The expanded service aimed to utilise Transguard’s 15 years’ experience of business post and parcel delivery by targeting organisations beyond Transguard’s current network of customers. Courier services have long been an important component of our business offering. Transguard aimed to build on our existing network of over 1,000 clients. Additional services included airport mishandled baggage collections for business customers; internal mail services for corporate customers; e-commerce collection and delivery; and business post and parcel delivery.

Transguard DeliveryServices

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Transguard Group, was honoured at the renowned Dubai Quality Awards and recognised by the Department of Economic Development for delivering business excellence across the organisation.

Transguard excelled across all categories in an extensive judging process, which had criteria including business results, leadership skills for shaping the future of the business and ensuring the organisations ongoing success, as well as adopting and implementing a diverse range of employee initiatives to ensure learning and development.

All of our staff are aligned with our business goals – providing quality service at every step of the client journey. This has resulted in reaffirming our position as a leader in cash management, security, manpower and integrated facility services and is the foundation for our future growth and expansion.

“Creating and fostering a culture of continuous improvement and business excellence has been key to Transguard’s enduring success.”Dr Abdulla Al Hashimi, CEO Transguard Group

Dubai Government recognises Transguard’s quality

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Creating a culture of learning anddevelopment

Transguard’s AED 3.8 million 38,000 square foot, Centre of Excellence is fully capable of developing Transguard’s expanding workforce. The new facility will host training courses for up to 450 staff every day, with the centre expected to run a near-24/7 operation during peak business periods, to meet intense industry demand.

Located in DIP between Emirates Road and Jebel Ali, and in close proximity to the Expo 2020 site, the two-storey centre comprises offices and classrooms on the first floor. On the ground floor several dedicated mock-up rooms, including a purpose-built apartment, office, clinic and even a fully furnished hotel room complete with a variety of materials and finishes requiring different maintenance solutions and methods. The centre also features a K9 unit with kennels for 16 dogs to support Transguard’s specialist dog handling and detection training.

Over 181 courses are being delivered, under nine key areas: Administration Skills, Hard Skills, Project Management Skills, Reporting Skills, Soft Skills, Software and Applications, Technical Skills, Transguard Leadership Skills and Transguard Management Skills. Additional courses range from Office Management, Document Control, Building Development and Critical Thinking, to Social Media Strategy, Team Building and Managing Safely.Courses in specialist cleaning, K9 handling and Lean 6 Sigma and English language courses are also delivered at the centre.

Transguard’s English language training is benchmarked against the Common European Framework of Language, which leads to officially and internationally recognised qualifications. At the point of recruitment, all staff members are tested for their English proficiency and those who excel are encouraged to take an internationally recognised Cambridge University English exam, a process managed by five Cambridge University qualified English Language teachers. The language training centre also offers intensive language courses and 96-hour development courses, as well as a range of self-study and home-study opportunities.

#GrowWithTransguard

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Dream 2020takes flight

Transguard’s CSR Goal “Dream 2020”, set out to build and strengthen each of the four pillars of CSR: People, Community, Environment and Marketplace.

Corporate SocialResponsibility

Over 400 trees planted

22,817 kW of energy saved

2 employee carnivals

1,252 employee health and well-being events

20,000 employee and family event spectators

300 regular sporting competitions

Team of 10 CSR representatives

2 employee Medical Centers

27 Women of Inspiration events

35 community projects

Usage of B5 biodiesel, which reduces 5% CO2

7% Electricity saved on split AC’s

1 million liters of water saved

50% reduction in office waste

Think Green campaign launch

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Health and Safety at the heart of the organisation

Transguard’s Health and Safety strategy is at the core of everything we do, and this year we continued building on our efforts to create a world-class health and safety culture.

Health and Safety

45% Reduction in minor accidents

11% Reduction inFirst Aid cases

0Environmental incident

ISO 14001:2015certificationcomplete

15HSE Eventsorganised

0.1Group AFRis maintained

1,200managers attended HSE training

OHSAS 18001:2007 recertificationawarded

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In 2017-18 Transguard began a two-year project to build two state-of-the-art employee accommodations that will meet the needs of Transguard’s growing workforce and Dubai’s Green Compliance framework.

The first of the two builds is 160,000 sq. ft. and when completed, will house up to 10,000 Transguard employees. The building’s amenities will include purpose built central processing units (kitchens), solar panel technology, LED lightening, water efficiency fittings, an on-site medical center and gymnasium.

The second accommodation will house 2,708 employees, and some of the more notable features include a communal dining area with numerous wide-screen TVs with multi-cultural channels and a library. There is also a nurses’ station, a prayer hall, a fully equipped gymnasium and a mini mart.

Transguard has already invested over one million dirhams in two dedicated employee medical clinics, offering immediate access to quality medical facilities in cases of illness or accident within our biggest employee accommodations.

This year Transguard moved 5,000 of its employees in to its newly acquired Al Tijarah residence which included a jogging track, basketball court and a volleyball court, as well as a recreation area with carrom boards, football and pool tables. In the community grounds surrounding the clusters, there is a full-size cricket pitch and a park. Other additional facilities due to come online include a supermarket, restaurants, a barber’s salon and an Internet café.

Transguard builds “green compliant” employee accommodation with state-of-the-art facilities

BreakingNew Ground

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2017-2018

A yearfor the people

Quarter 1

April 9

92 of Transguard’s facilities management personnel carried out work at, the Al Manar Al Iman Charity School in Ajman

May 21Inspired by Dubai’s 10X initiative Transguard launches TG10X for its employees

April 30Partnership with Standard Chartered Bank to integrate Smart Cash Deposit Machines with Transguard’s cash-in-transit services

Transguard employeesrecognised in fmME’s “Unsung Hero of the Year” award category

June 5Transguard’s HSE and CSR teams planted 65 saplings at our employee accommodations as part of World Environment Day

May 16

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May 16Transguard Security Services wins the “Security Company of the Year” fmME award May 16

fmMe Awards recognises Transguard’s Employee Medical Clinic in the “CSR Initiative of the Year” category

Transguard Security Services wins “Security Company of the Year” at the fmME awards

May 16

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Quarter 2July 23 Transguard organised 27 Iftars serving more than 30,000 meals at our employee accommodations

August 23CSR champions volunteering at the Manzil Center, Sharjah

September 25Integrated Facility Services and Transguard Living were proud participants at the FM Expo

September 22Transguard was awarded “Excellence in Training and Assessment within an International Accredited Training Organisation” at the BICSc Annual Awards 2017

Transguard participates in Hotelier Middle East’s Forum 2017 in Dubai

August 28

July 19Transguard hosts its annual Town Hall

August 23Transguard’s HSE team completed their 3rd Annual Foreign object debris (FOD) seminar

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Launch of AED 3.8 Million Centre of Excellence

October 25

October 1Transguard and Diebold Nixdorf form a strategic partnership for services and technology in the UAE

October 11Transguard Group joined the Etisalat team at GITEX to sign a partnership agreement, whereby etisalat will be providing Transguard with state-of-the art facilities to support the monitoring of Transguard’s ICT infrastructure technology in the UAE

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Quarter 3

Launch of Transguard Delivery Services, a fully-tracked pick-up and drop-off service across the UAE

November

November 15Workforce Solutions brand revitalisation launch

November 24X-Factor fun at our Ladies Accomodation

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November 22

Transguard joined forces with Dubai Municipality for the 24th Anniversary of the “Clean Up The World” Dubai 2017

November 22Transguard participated at the Al Noor Assistive TechX 2017 - an awareness initiative in the community

December 2Transguard was proud to be supporting Emirates Airline Dubai Rugby Sevens, the biggest sporting event of the year.

December 4Director Greg Ward ranks 8th in fmME’s Power 50

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Quarter 4 February 8Dubai Police partnered with Transguard to provide a home security service to Dubai residents, which includes products such as burglar alarm systems, CCTV and Smart Home solutions

February 14Transguard teamed up with Zia Medical Center and Emirates Group Security to hold free health checkups for employees on World Cancer Awareness Day

February 5Transguard’s IFS team celebrates with our Managing Director Greg Ward, at a client recognitionevent highlighting the team’s outstanding contribution in Cleaning and facility management

January 28Kinberly Panlaqui launches our #GrowWithTransguard campaign

January 5Transguard was proud to be the Security Partner and Sponsor for the 2018 MEA Cash Cycle Seminar

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February 12Transguard Group and Dubai Police sign a Memorandum of Understanding to share marketing best practice

February 22Transguard win Expo 2020’s Cricket tournament

February 15Great turnout at Transguard’s 3rd Employee Olympic Games

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March 30

Thousand of employees and their families turn out for Transguard’s flagship bi-annual carnival

March 16

Transguard’s touch rugby team competed for charity in the Zurich 6’s Corporate Touch Rugby event

March 7The CSR team held a Women of Inspiration event in celebration of International Women’s Day.

March 11A total of 1,360 staff enjoyed a day out at the Dubai International Cricket Stadium to watch their heroes in action during this years PSL cricket tournament

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Financial Report2017-2018

Directors’ report and consolidated financial statements

for the year ended 31 March 2018

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

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2-3

4

4

4

5

6

7-24

Directors’ report for the year ended 31 March 2018

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 2018.

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 2018 are set out on page 7 of the consolidated financial statements

Directors

The directors, who served during the year and upto 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 2019.

For and on behalf of the Board,

........................................... ...…………………………Gregory Ward Tony LloydManaging Director Chief Financial Officer

30 April 2018

Independent auditor’s report to the shareholders ofTransguard 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 2018, 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

TThe Group’s consolidated financial statements comprise:

• the consolidated statement of financial position as at 31 March 2018;• 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 informationThe directors are responsible for the other information. The other information comprises the Directors’ report (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 and will 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 no 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 statementsManagement 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 statementsOur 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.

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Consolidated statement of financial position

Consolidated income statement

Consolidated statement of comprehensive income

These consolidated financial statements were approved by the Board of Directors on 30 April 2018 and signed on its behalf by:

……………………….... .........………………........

Gregory Ward Tony LloydManaging Director Chief Financial Officer

As at 31st March

Note 2018AED

2017AED

ASSETS

Non-current assets

Property, plant and equipment 5 514,522,613 294,075,239

Intangible assets 6 66,421,078 66,609,989

Prepayments 8 117,786,729 118,704,139

698,730,420 479,389,367

Current assets

Inventories 3,279,546 2,696,723

Trade and other receivables 8 773,483,485 534,364,483

Due from related parties 9 89,605,422 81,902,692

Cash and bank balances 10 35,924,248 23,706,396

902,292,701 642,670,294

Total Assets 1,601,023,121 1,122,059,661

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 468,945,820 348,735,502

Total equity attributable to owners of the Company 471,202,322 350,992,004

Non-controlling interests (“NCI”) 108,383,584 105,700,837

Total equity 579,585,906 456,692,841

LIABILITIES

Non-current liabilities

Borrowings 12 160,624,035 188,267,542

Provision for employees’ end of service benefits 16 101,274,738 81,306,807

261,898,773 269,574,349

Current liabilities

Trade and other payables 11 377,089,678 241,888,433

Due to related parties 9 12,831,186 1,077,147

Borrowings 12 369,617,578 152,826,891

759,538,442 395,792,471

Total liabilities 1,021,437,215 665,366,820

Total equity and liabilities 1,601,023,121 1,122,059,661

Year Ended 31st March

Note 2018AED

2017AED

Revenue 2,315,053,294 1,900,632,976

Direct costs 17 (1,937,492,813) (1,589,970,281)

Gross profit 377,560,481 310,662,695

Administrative expenses 18 (199,703,838) (156,926,523)

Other (expenses)/income – net 20 (3,239,534) 872,446

Operating profit 174,617,109 154,608,618

Finance costs 21 (11,186,044) (8,567,662)

Profit for the year 163,431,065 146,040,956

Profit attributable to:

Owners of the Company 150,158,318 125,128,382

Non-controlling interests 13,272,747 20,912,574

163,431,065 146,040,956

Year Ended 31st March

Note 2018AED

2017AED


Other comprehensive loss:

Item that will not be reclassified to income statement:Remeasurement of retirement benefit obligations 16 (2,538,000) (4,132,000)

Total comprehensive income for the year 160,893,065 141,908,956

Attributable to:

Owners of the Company 148,210,318 121,653,882

Non-controlling interests 12,682,747 20,255,074

160,893,065 141,908,956

3 4

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;

ii. 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;

iii. the Group has maintained proper books of account;

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

v. as disclosed in note 1 to the consolidated financial statements the Group has not purchased or invested in any shares during the year ended 31 March 2018;

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

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 Group has contravened during the year ended 31 March 2017 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 2018.

PricewaterhouseCoopers 30 April 2018

Mohamed ElBornoRegistered Auditor Number 946Dubai, United Arab Emirates

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

Auditor’s responsibilities for the audit of the consolidated financial statements(continued)

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

• 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.

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.

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

Consolidated statement of changes in equity

Attributable to owners of the Company

Share capitalAED Legal reserve

AEDContributed capital

AEDRetained earnings

AEDTotalAED

Non-controlling interests

AED

Totalequity

AED

Balance at 1 April 2016 300,000 150,000 1,806,502 247,081,620 249,338,122 92,945,763 342,283,885

Profit for the year - - - 125,128,382 125,128,382 20,912,574 146,040,956


Remeasurement of retirement benefit obligations - - - (3,474,500) (3,474,500) (657,500) (4,132,000)

Total comprehensive income for the year - - - 121,653,882 121,653,882 20,255,074 141,908,956

Transactions with owners

Dividend (Note 23) - - - (20,000,000) (20,000,000) (7,500,000) (27,500,000)

Balance at 31 March 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


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 23) - - - (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

Consolidated statement of cash flows

Year End at 31st March

Note 2018AED

2017AED

Cash flows from operating activities


Adjustments for:

Depreciation 5 28,983,259 22,105,140

Amortisation 6 8,248,153 7,308,371

Provision for employees’ end of service benefits 16 35,156,571 27,092,678

Provision/Release of provision for impairment of trade receivables 18 17,355,535 (1,534,211)

Release of provision for impairment of due from related parties 18 (346,057) (331,827)

Finance costs 21 11,186,044 8,567,662

Loss on disposal of property, plant and equipment 20 996,791 592,110

Operating cash flows before payment of employees’ end of service benefits and changes in working capital 265,011,361 209,840,879

Payments of employees’ end of service benefits 16 (17,726,640) (12,019,660)

Changes in working capital

Inventories (582,823) (1,466,087)

Prepayments – non current 917,410 793,538

Trade and other receivables net of movement in provision for impairment (256,474,538) (124,344,579)

Due from related parties before movement in provision for impairment (7,356,673) (4,245,160)

Trade and other payables 135,201,246 32,117,036

Due to related parties 11,754,039 (864,166)

Net cash generated from operating activities 130,743,382 99,811,801

Year End at 31st March

Note 2018AED

2017AED

Cash flows from investing activities

Purchase of property, plant and equipment 5 (251,014,028) (206,574,968)

Purchase of intangible assets 6 (8,059,242) (5,225,592)

Proceeds from disposal of property, plant and equipment 24 586,604 158,979

Net cash used in investing activities (258,486,666) (211,641,581)

Cash flows from financing activities

Repayment of borrowings 12 (243,542,677) (216,774,290)

Drawdown of borrowings 12 423,846,578 392,000,918

Interest paid 21 (11,186,044) (8,567,662)

Dividend paid (38,000,000) (27,500,000)

Net cash provided by financing activities 131,117,857 139,158,966

Net increase/(decrease) in cash and cash equivalents 3,374,573 27,329,186

Cash and cash equivalents at beginning of year 23,706,396 (3,622,790)

Cash and cash equivalents at end of year 10 27,080,969 23,706,396

5 6

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

Notes to the consolidated financial statements for the year ended 31 March 2018

1 Legal status and activitiesTransguard 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.

The Group did not invest or purchase any shares during the year ended 31 March 2018.

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 preparationThe 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.

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 Group has applied the following standards and amendments for the first time for their annual reporting period commencing 1 April 2017:

• Disclosure initiative – amendments to IAS 7

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 2018 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 9, ‘Financial instruments’ (effective from 1 January 2018)

In July 2014, the IASB issued the final version of IFRS 9 – Financial Instruments (IFRS 9), which reflects all phases of the financial instruments project and replaces IAS 39 – Financial Instruments: Recognition and Measurement and all previous versions of IFRS 9. The requirements of IFRS 9 will be adopted from 1 April 2018. IFRS 9 addresses the classification, measurement and derecognition of financial assets and financial liabilities, introduces new rules for hedge accounting and a new impairment model for financial assets. The new impairment model requires the recognition of impairment provisions based on expected credit losses (ECL) rather than only incurred credit losses as is the case under IAS 39. For trade receivables, a simplified approach is permitted by IFRS 9, which requires expected lifetime losses to be recognised from initial recognition of the receivables.

Group has assessed the impact of IFRS 9 in relation to estimated expected credit loss for its Trade receivables. In order to perform the assessment, management has used historical information in relation to revenue, outstanding receivables at year end and impairment expense and calibrated it by using future economic guidance to estimate a provision matrix.

Based on Group’s assessment, adoption of IFRS 9 will lead to an immaterial impact on expected credit losses in relation to consolidated financial statements.

• IFRS 15, ‘Revenue from contracts with customers’ (effective from 1 January 2018)

The IASB has issued a new standard for the recognition of revenue. This will replace IAS 18 which covers contracts for goods and services and IAS 11 which covers construction contracts. The new standard is based on the principle that revenue is recognised when control of a good or service is transferred to the customer. The standard permits either a full retrospective or a modified retrospective approach for the adoption. The Group will adopt the new standard from 1 April 2018.

Management assessed the impact of applying the new standard and does not expect any material impact on the Group.

2 Summary of significant accounting policies (continued)

2.1 Basis of preparation (continued)

2.1.1 Changes in accounting policies and disclosures (continued)

New standards and interpretations not yet adopted by the Group (continued)

• IFRS 16, ‘Leases’ (effective from 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 Company.

The Group is in the process assessing the potential impact of the application of IFRS 16 on the amounts reported and disclosures made in these consolidated financial statements.

There are no other standards that are not yet effective that would be expected to have a material impact on the Group in the current or future reporting periods and on foreseeable future transactions.

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.

(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 equipmentProperty, plant and equipment are stated at historical cost less depreciation. 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 to allocate the cost of assets to their residual values over their estimated useful lives, as follows:

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

Years

Buildings 20

Plant and machinery 3 - 12

Furniture and fixtures 10

Computer and office equipment 4 - 6

Motor vehicles 5 - 6

7 8


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:

• 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; and• the expenditure attributable to the software product during its development can be reliably

measured.

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.

the appropriate intangible assets category and amortised in accordance with Group’s policy.

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.

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

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 impairment at each reporting date.

2.6 Financial assets

(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.

2.7 Offsetting financial assets and liabilitiesFinancial 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 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.

2.9 InventoriesInventories 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.

2.10 Trade receivablesTrade 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

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.

2.12 Share capitalOrdinary shares are classified as equity.

2.13 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.

2.14 BorrowingsBank 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 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 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.

9 10


2.15 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.

2.16 ProvisionsProvisions 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.


2.20 Foreign currency translation (continued)

(b) Transactions and balances (continued)

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.

2.21 Borrowing costs

General and specific borrowing costs that are directly attributable to the acquisition, construction or production of a qualifying asset are capitalised 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 factorsThe 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.

(ii) Price riskThe Group has no exposure to price risk as it has no price sensitive financial instruments.

(iii) Cash flow and fair value interest rate riskThe 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 2018 and 2017. 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 impact of fair value interest rate risk is not significant as majority of 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.

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.

2.17 Revenue recognition

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.

2.18 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.

2.19 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.

2.20 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.

2017AED

2016AED

Interest Costs

+100 basis points 4,356,680 3,422,435

-100 basis points (4,356,680) (3,422,435)

11 12

Moody’s Rating

2018AED

2017AED

Banks

A baa3 18,057,142 875,944

B A2 8,504,463 19,295,642

C ba1 3,066,727 -

D N/A 1,555,066 -

E ba2 1,475,706 759,740

F baa3 776,142 -

G A3 639,793 159,156

H baa3 336,695 505,354

I ba1 334,462 759,495

J N/A 328,378 328,628

K A2 305,108 305,108

L ba1 204,625 328,807

M A3 - 10,900

35,584,307 23,328,774

2018AED

2017AED

Trade receivables

Counterparties without external credit rating

*Group 1 51,360,220 15,441,612

**Group 2 282,341,538 149,510,350

333,701,758 164,951,962

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 2018

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

Trade and other payables (excluding advances from customers) 372,289,615 - - - 372,289,615 372,289,615

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

764,959,828 72,742,780 85,410,257 14,924,710 938,037,575 915,362,414

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 2017

Borrowings 161,246,592 74,939,142 125,701,709 - 361,887,443 341,094,433

Trade and other payables (excluding advances from customers) 241,568,434 - - - 241,568,434 241,568,434

Due to related parties 1,077,147 - - - 1,077,147 1,077,147

403,892,173 74,939,142 125,701,709 - 604,533,024 583,740,014

3 Financial Risk Management (continued)

3.1 Financial risk factors (continued)

(b) Credit risk(continued)

The credit quality of trade receivables that are not impaired can be assessed by reference to historical information about counterparty default rates.

*Group 1 – new customers (less than 6 months).**Group 2 – existing customers (more than 6 months) with no defaults in the past.The balances due from related parties (net of provision for impairment) are expected to be fully recovered based on the credit history and future cash flows of related parties.

(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.

3 Financial risk management(continued)

3.2 Capital risk managementThe 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 and financial lease liabilities (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 2018 and 2017 was as follows:

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 trade and other receivablesThe impairment charge reflects estimates of losses arising from the failure or inability of the parties concerned to make the required payments. The charge is based on knowledge of customer’s business and financial standing, the customer’s ability and willingness to settle, 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 or deteriorate. Management considers that the current level of impairment charge is appropriate and consistent with the loss estimated at year end.

(b) Depreciation of property, plant and equipmentManagement 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 benefitsThe 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 goodwillThe 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 2018, the Group would not have recognised impairment on goodwill.

If the estimated cost of capital used in the value-in-use calculation for the Group had been 1% higher than management’s estimates at 31 March 2018, the Group would not have recognised impairment on goodwill.

13 14

2018AED

2017AED

Borrowings (Note 12) 530,241,613 341,094,433

Less: cash and bank balances (Note 10) (35,924,248) (23,706,396)

Net debt 494,317,365 317,388,037

Total equity 579,585,906 456,692,841

Total capital 1,073,903,271 774,080,878

Gearing ratio 46% 41%

5 Property, plant and equipment

Certain buildings having a carrying amount of AED 1,861,050 (2017: AED 2,041,157) have been built over the leasehold land. The leases are expected to get renewed upon its expiry.

Depreciation expense has been allocated as follows:

Assets held as collateral are explained under note 12.

Additions under land and building represents AED 85.6 million of labour camp building and AED 32 million of land.

Land and buildingsAED

Plant and machineryAED

Furniture and fixturesAED

Computer and office equipment

AEDMotor vehicles

AEDCapital work in progress

AEDTotalAED

Cost

At 1 April 2016 4,021,982 42,642,283 41,823,484 23,846,185 50,221,194 23,468,219 186,023,347

Additions 137,299,010 17,719,155 16,787,605 5,962,085 16,849,573 11,957,540 206,574,968

Transfer - 224,253 8,033,888 304,147 7,135,812 (15,698,100) -

Disposals - - (240,320) (83,835) (2,615,125) - (2,939,280)

As at 31 March 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

Accumulated Depreciation

At 1 April 2016 1,788,430 14,923,974 14,606,280 16,837,405 27,510,758 - 75,666,847

Charge for the year 186,252 5,054,075 6,017,585 3,713,389 7,133,839 - 22,105,140

Disposals - - (44,188) (20,987) (2,123,016) - (2,188,191)

As at 31 March 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

Net book value

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

As at 31 March 2017 139,346,310 27,718,309 45,824,980 9,498,775 39,069,873 19,727,659 294,075,239

15 16

Note 2018AED

2017AED

Direct costs 17 16,384,781 12,374,165

Administrative expenses 18 12,598,478 9,730,975

28,983,259 22,105,140

6 Intangible assets

Computer softwareAED

Capital work in progressAED

GoodwillAED

TotalAED

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 17) 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

Cost

At 1 April 2016 40,237,722 8,056,197 36,032,634 84,326,553

Additions 4,849,799 375,793 - 5,225,592

Transfer 6,541,365 (6,541,365) - -

As at 31 March 2017 51,628,886 1,890,625 36,032,634 89,552,145

Accumulated Amortisation

At 1 April 2016 15,633,785 - - 15,633,785

Charge for the year (Note 17) 7,308,371 - - 7,308,371

As at 31 March 2017 22,942,156 - - 22,942,156

Net book value as at 31 March 2017 28,686,730 1,890,625 36,032,634 66,609,989

Additional details on goodwill are disclosed in Note 24.

7 Investment in subsidiariesOn 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.

On 3 September 2012, the Group incorporated a subsidiary, Transguard Themis LLC (“TG Themis”) and had a 51% controlling interest in TG Themis. On 1 April 2015, the Company acquired the remaining 49% controlling interest in TG Themis for a cash consideration of AED 190,310 (Note 25).

On 30 June 2015, the Company acquired 99% controlling interest in CASS International Trading LLC (“CASS”) for a cash consideration of AED 35,000,000. The Group has 100% beneficial ownership of the subsidiary (Note 24).

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.

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 Themis LLC

99% 1% 100% Providing white-collar recruitment services.

UAE

CASS International Trading LLC

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

personnel

UAE

Transguard Cash LLC

2018AED

2017AED

Summarised statement of financial position

Current

Assets 153,024,415 146,069,529

Liabilities (55,174,525) (29,063,331)

Total current assets – net 97,849,890 117,006,198

Non-current

Assets 131,752,837 104,936,742

Liabilities (12,686,747) (10,392,454)

Total non-current assets/(liabilities) - net 119,066,090 94,544,288

Net assets 216,915,980 211,550,486

Summarised income statement

Revenue 281,042,488 257,079,923


Other comprehensive loss (1,180,000) (1,315,000)

Total comprehensive income 25,365,494 40,510,147

Total comprehensive income allocated to non-controlling interests 12,682,747 20,255,074

Summarised cash flows

Net cash generated from operating activities 57,534,467 59,371,150

Net cash used in investing activities (47,417,439) (44,301,102)

Net cash used in financing activities (10,000,000) (15,000,000)

Net increase/(decrease) in cash and cash equivalents 117,028 70,048

Cash and cash equivalents at beginning of year 148,159 78,111

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

17 18

8 Trade and other receivables

2018AED

2017AED

Trade receivables 410,987,280 273,943,264

Provision for impairment of trade receivables (23,418,299) (20,836,770)

Trade receivables – net 387,568,981 253,106,494

Prepayments 233,412,986 218,208,751

Accrued income 199,214,299 133,648,233

Advances to suppliers 31,265,159 11,964,090

Other receivables 39,808,789 36,141,054

891,270,214 653,068,622

Long term portion of prepayments (117,786,729) (118,704,139)

773,483,485 534,364,483

The Group’s customers are based in the UAE. At 31 March 2018, five customers (2017: five customers) accounted for 22% (2017: 29%) of the total trade receivables. Management is confident that this concentration of credit risk will not result in a loss to the business.

As of 31 March 2018, trade receivables of AED 86,480,846 (2017: AED 72,346,270) were fully performing. Trade receivables of AED 290,408,096 (2017: AED 156,083,158) were past due but not impaired. These relate to a number of independent customers for whom there is no recent history of default.

The ageing analysis of these trade receivable is as follows:

As of 31 March 2018, trade receivables of AED 34,098,338 (2017: AED 45,513,836) were potentially impaired and partially provided for. The amount of provision against the receivables was AED 23,418,299 (2017: AED 20,836,770). These receivables mainly relate to customers which are in difficult financial situations. It was assessed that a portion of the receivables is expected to be recovered. The ageing of these receivables is given below:

The carrying amount of the Group’s trade and other receivables at 31 March 2018 and 2017 are denominated in AED. 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 ‘Administrative expenses’. 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 fair values of trade and other receivables approximate to their carrying amounts as at 31 March 2018 and 2017. 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 127,960,655 (2017: AED 125,497,677) and AED 42,641,820 (2017: AED 34,106,232), respectively, pertaining to related parties, arising from transactions disclosed in Note 9.

2018AED

2017AED

Up to 3 months 568,450 4,403,865

3 to 6 months 1,153,374 1,153,374

Over 6 months 32,376,514 40,484,047

34,098,338 45,513,836

2018AED

2017AED

Up to 3 months 225,210,333 140,838,143

3 to 6 months 30,221,041 15,147,464

Over 6 months 34,976,722 97,551

290,408,096 156,083,158

2018AED

2017AED

Opening balance 20,836,770 22,370,981

Provision / (reversal of provision) for impairment of trade receivables (Note 18) 17,355,535 (1,534,211)

Write off (14,774,006) -

Closing balance 23,418,299 20,836,770

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.

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.

10 Cash and Bank Balances

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

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

2018AED

2017AED

Due from related parties

dnata and entities related to dnata 88,851,299 80,528,651

Affiliates 816,575 1,782,550

89,667,874 82,311,201

Less: provision for impairment of due from related parties (62,452) (408,509)

89,605,422 81,902,692

2018AED

2017AED

Sales to affiliates 721,799,135 686,244,311

Purchases from affiliates 11,571,023 9,845,175

Rent and utilities payment to affiliates 12,014,213 20,461,775

Key management compensation

Salaries and other benefits 7,605,372 7,664,291

End of service benefits 147,982 154,416

7,753,354 7,818,707

2018AED

2017AED

Cash on hand 339,941 377,622

Cash at bank 35,584,307 23,328,774

Cash and bank balances 35,924,248 23,706,396

2017AED

2016AED

Cash and bank balances 35,924,248 23,706,396

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

27,080,969 23,706,396

2018AED

2017AED

Opening balance 408,509 740,336

Reversal of provision for impairment of balances due from related parties upon collection (Note 18) (346,057) (331,827)

Closing balance 62,452 408,509

Due to related parties

dnata and entities related to dnata 12,831,186 1,077,147

9 Related party balances and transactions

Related parties include Company’s shareholders, subsidaries, fellow subsidaries or Directors and businesses controlled by the shareholders, subsidaries, fellow subsidaries or Directors 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:

19

2018AED

2017AED

Trade payables 78,395,376 59,903,867

Accrued expenses 78,329,747 29,691,094

Provision for leave salary and leave passage 75,009,196 65,123,890

Accrued salaries 92,322,612 62,953,138

Advances from customers 4,800,063 319,999

Other payables and accruals 48,232,684 23,896,445

377,089,678 241,888,433

Other assets Liabilities from financing activities

Cash and and cash equivalents

(AED)

Borrowing due within one year

(AED)

Borrowing due after one year

(AED)Total

(AED)

Balance at 1 April 2016 (3,622,790) (30,939,243) (134,928,562) (169,490,595)

Cash flows 27,329,186 (121,887,648) (53,338,980) (147,897,442)

Balance at 31 March 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)

2018AED

2017AED

Cash and bank balances (Note 10) 35,924,248 23,706,396

Borrowings - due within one year (including bank over-draft) (369,617,578) (152,826,891)

Borrowings - due after one year (160,624,035) (188,267,542)

(494,317,365) (317,388,037)

Cash and bank balances (Note 10) 35,924,248 23,706,396

Gross debt – variable interest rates (530,241,613) (341,094,433)

2018AED

2017AED

Opening balance 341,094,433 165,867,805

Additions during the year 423,846,578 392,000,918

Payments during the year (243,542,677) (216,774,290)

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

2018AED

2017AED

Non-current

Term loans 160,624,035 188,267,542

Current

Term loans 66,061,818 41,369,276

Revolving loans 225,000,000 75,000,000

Trade finance 69,712,481 36,457,615

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

369,617,578 152,826,891

Total borrowings 530,241,613 341,094,433

11 Trade and other payables

12 Borrowings

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 7 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 2018 and 2017. Borrowings carry variable interest rates that are in line with current market terms.

Net debt reconciliation

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

13 Share capitalShare capital comprises 300 (2017: 300) authorised, issued and paid up shares of AED 1,000 each amounting to AED 300,000 (2017: AED 300,000).

14 Legal reserveIn 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 capitalContributed capital represents amounts contributed by dnata and is not repayable.

20

The Group has undrawn facilities amounting to AED 638,028,573 (2017: AED 358,759,016).

2018AED

2017AED

Present value of employees’ end of service benefits 101,274,738 58,763,789

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

Opening balance 81,306,807 58,763,789

Charge for the year (Note 19) 35,156,571 27,092,678

Remeasurement of retirement benefit obligations 2,538,000 4,132,000

Acquisition* - 3,338,000

Benefits paid (17,726,640) (12,019,660)

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

Impact on employees’ end of service benefits liability

Change in assumption

Increase in assumption

Decrease in assumption

Discount rate 0.1% Decrease by 1.68%

Increase by 1.72%

Salary increase rate 0.1% Increase by 1.85%

Decrease by 1.85%

Impact on employees’ end of service benefits liability

Change in assumption

Increase in assumption

Decrease in assumption

Withdrawal rate 10% Increase by 0.55%

Decrease by 0.55%2018

AED2017AED

Current service cost 31,387,571 24,367,996

Interest cost 3,769,000 2,724,682

35,156,571 27,092,678

2018AED

2017AED

Valuation discount rate 4.6% per annum 4.7% per annum

Salary increase rate 5% per annum 5% per annum

2018AED

2017AED

Staff costs (Note 19) 1,400,627,387 1,149,324,005

Rent 256,763,021 225,393,449

Fuel and transportation 77,919,599 59,451,341

Visa and immigration 46,914,038 36,589,990

Consumables 25,590,667 16,061,251

Depreciation (Note 5) 16,384,781 12,374,165

Repairs and maintenance 14,422,225 14,209,175

Staff training expenses 10,755,468 7,316,434

Communication expenses 9,519,730 8,153,132

Uniforms 9,167,607 8,173,915

Amortisation (Note 6) 8,248,153 7,308,371

Insurance 5,690,799 4,912,501

Others 55,489,338 40,702,552

1,937,492,813 1,589,970,281

16 Provision for employees’ end of service benefitsReconciliation of provision for employees’ end of service benefits:

*This represent new employees transferred to the Company during the year.

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

Charge of AED 35,156,571 (2017: AED 27,092,678) (Note 19) was included in ‘direct costs’ and ‘administrative expenses’ amounting to AED 29,467,003 (2017: AED 23,237,959) and AED 5,689,568 (2017: AED 3,854,719) respectively.

The principal actuarial assumptions were as follows:

17 Direct costs

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:

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:

21 22

2018AED

2017AED

Staff costs (Note 19) 135,054,273 122,775,011

Provision / (release of provision) for impairment of trade receivables (Note 8) 17,355,535 (1,534,211)

Depreciation (Note 5) 12,598,478 9,730,975

Rent 10,822,028 8,008,765

License fees 7,904,656 2,891,232

Fees and subscriptions 4,931,767 4,148,543

Information technology expenditure 2,746,418 1,994,575

Marketing expenses 2,363,531 2,140,233

Stationery and supplies 1,477,950 2,454,645

Office maintenance 387,578 267,964

Business travel 98,402 88,161

Release of provision for impairment of balances due from related parties (Notes 9) (346,057) (331,827)

Others 4,309,279 4,292,457

199,703,838 156,926,523

2018AED

2017AED

Interest expense on borrowings 11,186,044 8,567,662

2018AED

2017AED

Guarantees 34,515,916 25,283,596

Letters of credit 751,728 3,479,585

2018AED

2017AED

Foreign exchange losses (2,300,690) (110)

Loss on disposal of property, plant and equipment (996,791) (592,110)

Other income 57,947 1,464,666

(3,239,534) 872,446

2018AED

2017AED

Not later than 1 year 194,483,713 102,913,698

Later than 1 year and not later than 5 years 343,398,222 336,372,130

Over 5 years 516,175 40,058,142

538,398,110 479,343,970

2018AED

2017AED

Salaries and wages 1,353,154,142 1,124,137,076

Leave salary and passage 79,537,722 63,832,174

End of service benefits (Note 16) 35,156,571 27,092,678

Other benefits 67,833,225 57,037,088

1,535,681,660 1,272,099,016

Staff costs are allocated as follows:

Direct costs (Note 17) 1,400,627,387 1,149,324,005

Administrative expenses (Note 18) 135,054,273 122,775,011

1,535,681,660 1,272,099,016

18 Administrative expenses

No social contributions were made during the years ended 31 March 2018 and 2017.

19 Staff costs

20 Other (expenses) / income – net

21 Finance costs

22 Contingencies and commitments

(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:

23 DividendDividend of AED 28,000,000 (AED 93,333 per share) (2017: AED 20,000,000 – AED 66,667 per share) has been approved by the Board of Directors and paid during the year to the shareholders of the Company.

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

23 24

Fair value rec-ognised on acquisition

AEDCarrying value

AED

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)

Trade and other payables 2,108,029 2,108,029

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

Goodwill (Note 6) 36,032,634 -

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

24 Business combinationOn 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

Revenue and profit contributionThe 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

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.

Key assumptions used in value in use calculations

Key assumptions used to determine the value in use include:

Growth rate 5%Discount rate 6.75%

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 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 to fall below its carrying value, after having given due consideration to the economic outlook and the commercial assumptions underpinning the cash flow forecasts of CASS.

26 Financial instruments by category

The accounting policies for financial instruments have been applied to the line items below:

Loans and receivablesAED

Other financial liabilitiesAED

TotalAED

At 31 March 2018

Financial assets

Trade and other receivables (excluding 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 at amortised cost

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

Trade and other payables (excluding advances from customers) - 372,289,615 372,289,615

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

- 915,362,414 915,362,414

At 31 March 2017

Financial assets

Trade and other receivables (excluding prepayments and advances to suppliers) 422,895,781 - 422,895,781

Due from related parties 81,902,692 - 81,902,692

Cash and bank balances 23,706,396 - 23,706,396

528,504,869 - 528,504,869

Financial liabilities at amortised cost

Borrowings - 341,094,433 341,094,433

Trade and other payables (excluding advances from customers) - 241,568,434 241,568,434

Due to related parties - 1,077,147 1,077,147

- 583,740,014 583,740,014

[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

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