OracleFinancial Services Software Chile Limitada Directors ... · meaningof Section 58 A of the Companies Act, 1956, and as such no amount of principal or interest wasoutstanding

Oracle Financial Services Software Chile Limitada

Directors’ Report

To the Members,

Your Directors are pleased to present Annual Report on the business and operations of your Company, together with the accounts for the year ended March 31, 2014.

FINANCIAL PERFORMANCE (Amount in ` million)

Particulars Year ended March 31, 2014

Year ended March 31, 2013

Revenue from operations 689.41 255.40 Other income (expenses), net 1.18 9.80 Total income 690.59 265.20 Depreciation and amortisation (0.78) (1.98) Profit before tax 163.31 (14.84) Provision for tax (55.16) (4.47) Profit for the year 108.15 (19.31)

OPERATIONS

• The amount shown as Total Income consists of Product licenses & related activities and other income (expenses) net.

• The Company’s revenue showed a positive growth of 160.40%. • The Company’s Gross Block (Fixed Assets) increased by 21.18% from ` 5.10 million

to ` 6.18 million.

DIVIDEND

Your directors do not recommend a dividend for the year ended March 31, 2014.

CAPITAL

The Issued, Paidup & Subscribed Capital of the Company is Rs. 70.49 million.

Your Company is a wholly owned subsidiary of Oracle Financial Services Software Limited.

FIXED DEPOSITS

During the financial year 201314, the Company has not accepted any fixed deposits within the meaning of Section 58 A of the Companies Act, 1956, and as such no amount of principal or interest was outstanding as on the date of the Balance Sheet.

DIRECTORS RESPONSIBILITY STATEMENT:

As required under Section 217(2AA) of the Companies Act, 1956 the Directors hereby confirm that:

i) In the preparation of the annual accounts, the applicable accounting standards had been followed along with proper explanation relating to material departures;

ii) The Directors have selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company as at the end of the financial year and of the profit of the Company for that period;

iii) The Directors have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of this act for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities;

iv) The Directors have prepared the annual accounts on a ‘going concern’ basis.

ACKNOWLEDGEMENTS:

Your Directors wish to thank its strategic alliance partners, service providers, hardware and other government and regulatory authorities for their support, guidance and cooperation. Your Directors also wish to place on record their sincere appreciation of the dedicated efforts put in by the employees of the Company during the year.

For and on behalf of the Board

Bala Hariharan Director

May 16, 2014

Fixed assets


BALANCE SHEET AS AT MARCH 31, 2014

EQUITY AND LIABILITIES Notes March 31, 2014 March 31, 2013

(Amounts in ` million)

Shareholders' funds Share capital Reserves and surplus

3 4

70.49 8.09

78.58

70.49 (100.06) (29.57)

Non current liabilities Other Longterm liabilities 5 0.32

0.32

Current liabilities Trade payable Other current liabilities Shortterm provisions

5 5 6

272.36 224.17 59.50

556.03

176.66 281.52 11.01

469.19

TOTAL 634.93 439.62

ASSETS

Noncurrent assets Fixed assets Tangible assets Capital workinprogress

Longterm loans and advances

7

8

0.53 0.02

0.55

0.23

8.50 8.73

Current assets Trade receivables Cash and bank balances Shortterm loans and advances Other current assets

10 11 8 9

313.25 214.06 0.76

106.31 634.38

157.12 205.50 9.22 59.05

430.89

TOTAL 634.93 439.62

Summary of significant accounting policies 2

The accompanying notes form an integral part of the financial statements.


STATEMENT OF PROFIT AND LOSS FOR THE YEAR ENDED MARCH 31, 2014

(Amounts in ` million) Notes Year ended March 31,

2014 2013

INCOME

Revenue from operations 12 689.41 255.40 Other income, net 13 1.18 9.80

Total income 690.59 265.20

EXPENSES

Cost of revenue 139.03 193.40 Employee costs 14 262.80 42.54 Travel related expenses (net of recoveries) 32.64 11.01 Professional fees 37.56 6.23 Other expenses 15 54.47 24.88 Depreciation and amortisation 7 0.78 1.98

Total expenses 527.28 280.04

Profit before tax 163.31 (14.84)

Tax expenses Tax expenses Current tax 55.16 4.47 Total tax expenses 55.16 4.47

Profit for the year 108.15 (19.31)

Summary of significant accounting policies 2

The accompanying notes form an integral part of the financial statements.


Notes annexed to and forming part of the financial statements for the year ended March 31, 2014

Note 1: Corporate Information

Oracle Financial Services Software Chile Limitada (“OFSS” or the “Company”) was incorporated in Chile with limited liability on July 28, 2010. OFSS is a subsidiary of Oracle Financial Services Software Ltd. (“Oracle”) with Oracle holding 99.9996 % ownership interest in the Company as at March 31, 2013. Oracle Financial Services Software B.V. holds 0.0004% ownership interest in the Company as at March 31, 2014.

The Company is principally engaged in the business of providing information technology solutions to the financial services industry worldwide.

Note 2: Summary of significant accounting policies

(a) Basis of presentation

The financial statements are prepared in accordance with accounting principles generally accepted in India under the historical cost convention on the accrual basis of accounting and complying in all material respects with the notified Accounting Standards by Companies (Accounting Standards) Rules, 2006. The financial statements have been prepared using uniform accounting policies for like transactions and other events in similar circumstances. The accounting policies have been consistently applied by the company and are consistent with those used in the previous years’.

The significant accounting policies adopted by the company, in respect of the financial statements are set out below.

(b) Use of estimates

The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent liabilities at the date of the financial statements and the results of operations during the reporting year end. Although these estimates are based upon management’s best knowledge of current events and actions, actual results could differ from these estimates.

(c) Fixed assets, capital work in progress, depreciation, and Impairment

Fixed assets and capital workinprogress

Fixed assets including assets under finance lease arrangements are stated at cost less accumulated depreciation. The company capitalizes all direct costs relating to the acquisition and installation of fixed assets. The cost of fixed assets not ready to use before balance sheet date are disclosed under ‘Capital workinprogress. The Company purchases certain specificuse application software, which is in ready to use condition, for internal use. It is estimated that such software has a relatively short useful life, usually less than one year. The Company, therefore, charges to income the cost of acquiring such software.

Depreciation and amortisation

Depreciation and amortisation are computed using straightline method, at the rates specified in Schedule XIV to the Act or based on the estimated useful life of assets, whichever is higher. Individual assets costing Rs. 5,000 or less are fully depreciated in the year of acquisition. The estimated useful life considered for depreciation of fixed assets is as follows:



Asset description Asset life (in years)

Tangible assets

Computer equipments 3

Impairment

The carrying amounts of assets are reviewed at each balance sheet date if there is any indication of impairment based on internal/external factors. An impairment loss is recognised wherever the carrying amount of an asset exceeds its recoverable amount. The recoverable amount is the greater of the assets net selling price and value in use. In assessing value in use, the estimated future cash flows are discounted to their present value using a pretax discount rate that reflects current market assessments of the time value of money and risk specific to assets. After impairment, depreciation is provided on a revised carrying amount of assets over its remaining useful life.

(d) Foreign currency transactions

Initial recognition

Foreign currency transactions are recorded in Indian rupees, by applying to the foreign currency amount the exchange rate between Indian rupees and the foreign currency at the date of the transaction.

Conversion

Foreign currency denominated monetary items is translated into rupees at the closing rates of exchange prevailing at the date of the balance sheet. Nonmonetary items, which are carried in terms of historical cost denominated in a foreign currency, are reported using the exchange rate at the date of the transaction.

Exchange differences

Exchange differences arising on the settlement of monetary items or on reporting Company’s monetary items at rates different from those at which they were initially recorded or reported in previous financial statement, are recognised as income or as expenses in the year in which they arise.

(e) Revenue recognition

Revenue is recognised as follows:

Product licenses and related revenue:

License fees are recognised, on delivery and subsequent milestone schedule as per the terms of the contract with the end user.

Implementation and customisation services are recognised as services are provided, when arrangements are on a time and material basis. Revenue for fixed price contracts is recognised using the proportionate completion method till contracts reach 90% completion. Balance revenue is recognised at the time of receipt of customer acceptance.



Proportionate completion is measured based upon the efforts incurred to date in relation to the total estimated efforts to complete the contract. The Company monitors estimates of total contract revenue and cost on a routine basis throughout the delivery period. The cumulative impact of any change in estimates of the contract revenue or costs is reflected in the period in which the changes become known. In the event that a loss is anticipated on a particular contract, provision is made for the estimated loss.

Product maintenance revenue is recognized, over the period of the maintenance contract on a straight line basis.

The Company presents revenues net of service tax and value added taxes in its statement of profit and loss.

Cost and revenue in excess of billing is classified as unbilled revenue while billing in excess of revenue is classified as deferred revenue.

(f) Research and development expenses for software products

Research costs are expensed as incurred. Software product development costs are expensed as incurred unless technical feasibility of project is established, future economic benefits are probable, the Company has an intention and ability to complete and use or sell the software and the cost can be measured reliably. Software product development costs incurred subsequent to the achievement of technical feasibility are not material and are expensed as incurred.

(g) Leases

Where the Company is the lessee

Lease of assets under which substantially all the risks and benefits incidental to ownership are transferred to the Company are classified as finance leases. These assets are capitalized at the lower of the fair value and present value of the minimum lease payments at the inception of the lease term and disclosed as leased assets. Lease payments are apportioned between the finance charges and reduction of the lease liability based on the implicit rate of return. Finance charges are recognized as finance cost in the statement of profit and loss. Lease management fees, legal charges and other initial direct costs are capitalized.

Leases of assets under which all the risks and rewards of ownership are effectively retained by the lessor are classified as operating leases. Lease payments under operating leases are recognized as an expense in statement of profit and loss on a straightline basis over the lease term.

(h) Incometax

Tax expenses are determined in accordance with tax laws applicable in countries where such operations are domiciled. Advance taxes and provisions for current income taxes are presented in the balance sheet after offsetting advance taxes paid and income tax provisions arising in the same tax jurisdiction and enterprise.



(i) Provisions

A provision is recognised when an enterprise has a present obligation as a result of past event and it is probable that an outflow of resources will be required to settle the obligation, in respect of which a reliable estimate can be made. Provisions are not discounted to its present value and are determined based on management estimate required to settle the obligation at the balance sheet date. These are reviewed at each balance sheet date and adjusted to reflect the current management estimates.

(j) Contingent liabilities

A contingent liability is a possible obligation that arises from past events whose existence will be confirmed by the occurrence or nonoccurrence of one or more uncertain future events beyond the control of the Company or a present obligation that is not recognised because it is not probable that an outflow of resources will be required to settle the obligation. The Company does not recognise a contingent liability but discloses its existence in the financial statements.

(k) Cash and cash equivalents

Cash and cash equivalents in the balance sheet comprise cash at bank and in hand and short term investments with an original maturity of three months or less.

(This space is left blank intentionally)

Profit for the year 108.15 (19.31)


Notes annexed to and forming part of the accounts as at March 31, 2014

(Amounts in ` million) March 31, 2014 March 31, 2013

Note 3: Share capital

Issued, subscribed and fully paidup: 70.49 70.49 70.49 70.49

(a) Details of shareholders holding more than 5% shares in the company

March 31, 2014 March 31, 2013 Name of shareholder No. of Equity % holding No. of Equity % holding

shares shares

Oracle Financial Services Software limited NA 100.00% NA 100.00%

As per records of the Company, including its register of shareholders/ members and other declarations received from shareholders regarding beneficial interest, the above shareholding represents both legal and beneficial ownerships of shares.

(c) Reconciliation of shares outstanding at the beginning and at the end of the year

March 31, 2014 March 31, 2013 No. of equity Amounts in `̀̀̀ No. of equity Amounts in `̀̀̀

shares million shares million Outstanding at the beginning of year NA 70.49 NA 70.49 Issued during the year ESOP

Outstanding at the end of year NA 70.49 NA 70.49

(Amounts in ` million) March 31, 2014 March 31, 2013

Note 4: Reserves and surplus

Surplus in the statement of profit and loss account Balance, beginning of year (100.06) (80.75) Profit for the year 108.15 (19.31) Balance, end of the year 8.09 (100.06)

Total reserves and surplus 8.09 (100.06)

(Amounts in ` million) (Amounts in ` million) March 31, 2014 March 31, 2013

Noncurrent Current Noncurrent Current

Note 5: Liabilities

Trade payable Amount due to subsidiaries 257.88 26.09 Others 14.47 150.57

272.36 176.66

Accrued Expenses 27.90 59.05 Deferred Revenue 0.32 161.49 222.47 Other liabilities 34.79

0.32 224.17 281.52

0.32 496.53 458.18

Note 6: Provisions

For employee benefits For compensated absence 27.87 11.01

Other Provision Taxation, net of advance tax 31.63

59.50 11.01


Notes annexed to and forming part of financial statements as at March 31, 2014

Note 7: Tangible assets (Amounts in ` million)

Particulars Gross block Depreciation Net block

As at April 1, 2013

Additions Sale/ deletions

As at March 31, 2014

As at April 1, 2013

For the year Sale/ deletions




Computer equipments Owned 5.10 1.08 6.18 4.87 0.78

5.65 0.53 0.23 Total 5.10 1.08 6.18 4.87 0.78 5.65 0.53 0.23

As at March 31, 2013 4.28 0.82 5.10 2.89 1.98 4.87



(Amounts in ` million) (Amounts in ` million) March 31, 2014 March 31, 2013

Noncurrent Current Noncurrent Current

Note 8: Loans and advances (unsecured, considered good)

Advances recoverable in cash or in kind or for value to be received: Other advances

Advance tax, net of provision for taxes

0.76

0.76

8.50 8.50

9.22

9.22

Note 9: Other assets

Unbilled revenue Billed reimbursement expenses Amount due from subsidiaries

105.42 0.89

106.31

49.40 0.85 8.80 59.05

March 31, 2014 (Amounts in ` million)

Noncurrent Current March 31, 2013

(Amounts in ` million)

Noncurrent Current

Note 10: Trade receivables (unsecured)

Other receivables Consider good Consider doubtful

Provision for doubtful receivables

313.25 5.57

318.82 (5.57)

313.25

157.12

157.12

157.12

Note 11: Cash and bank balances

Cash and cash equivalents Balances with banks: Current accounts

214.06 214.06

205.50 205.50

Communication e nses 8.23



Note 12: Revenue from operations

Product licenses and related activities

Note 13: Other income, net

Other income (expense), net Foreign exchange gain (loss), net Miscellaneous income

Note 14: Employee Cost

Salaries and bonus Staff welfare expenses Contribution to provident and other funds

Note 15: Other expenses

Communication expenses xpe Rent Advertising expenses Repairs and maintenance: Computer equipments Rates and taxes Provision for doubtful debts, net Miscellaneous expenses

(Amounts in ` million) Year ended March 31,

2014 2013

689.41 255.40 689.41 255.40

1.18

1.18

8.48 1.32 9.80

1.18 9.80

253.68 42.54 3.76

5.36

262.80 42.54

8.23

11.50 11.36 0.11

0.05

5.89

5.77

22.92 13.52 54.47 24.88



Note 16: Leases

Where Company is lessee

Operating lease

The Company has taken certain office premises and residential premises for employees under operating lease, which expire at various dates through year 2018. Some of these lease agreements have a price escalation clause. Gross monthly rental expenses for the year ended March 31, 2014 aggregated to ` 11.50 million (March 31, 2013 ` 11.36 million). The minimum rental payments to be made in future in respect of these leases are as follows:

(Amount in ` million) March 31, 2014 March 31, 2013

Not later than one year 9.78 10.78 Later than one year but not later than five years 8.88 Later than five years

9.78 19.66

fit (loss) before taxes

na oca e expenses .


Notes forming part of the accounts for the year ended Mar 31, 2014

Note 17: SEGMENT INFORMATION

Business segments are defined as components of an enterprise about which separate financial information is available. This information is reviewed and evaluated regularly by the management, in deciding how to allocate resources and in assessing the performance.

The Company is organized geographically and by business segment. For management purposes the Company is primarily organised on a worldwide basis into following business segments:

Pro Product licenses and related activities ('Products')

The business segments are the basis on which the Company reports its primary operational information to management. Product licenses and related activities segment deals with banking software products like the FLEXCUBE suite of products. The related activities include enhancements, implementation and maintenance activities.

Year ended March 31, 2014 (Amounts in ` million)

Revenue

Segment result Unallocable expenses Other income, net Profit before tax Tax expenses Net profit

Particulars Products

689.41

180.63

Total

689.41

180.63 (21.45) 1.18

160.36 (55.16)

105.20

Year ended March 31, 2013 Particulars Products

(Amounts in ` million) Total

Revenue 255.40 255.40

Segment result 2.01 2.01 U ll bl Unallocable expenses (26 65) (26.65) Other income, net 9.80 Profit before tax (14.84) Tax expenses (4.47) Net profit (19.31)

Segment revenue and expense: Revenue is generated through licensing of software products as well as by providing software solutions to the customers including consulting services. The expenses which are not directly attributable to a business segment are shown as corporate expenses.

Note 18 : Previous year's figures have been reclassified, where necessary to conform with current year's presentation.

1.98


Statement of cash flow for the year ended March 31, 2013

(Amounts in ` million) Year ended March 31,

2014 2013

Cash flows from operating activities Profit (loss) before taxes 163.31 (14.84)

Adjustments to reconcile profit before provision for taxes to cash (used in) provided by operating activities :

Depreciation and amortisation 0.78 Provision for doubtful debts, net 5.77

Effect of exchange rate changes in cash and cash equivalent 6.19 (7.38) Operating (loss) before Working Capital changes 176.05 (20.24)

Changes in assets and liabilities, net of effect of acquisition Increase in trade payables 95.70 37.19 Increase in other long term liabilities 0.32 (Decrease) increase in other current liabilities (57.35) 145.81 Increase in shortterm provisions 16.86 0.21 (Increase) in trade receivables (161.90) (32.00) Decrease in longterm loans and advances 0.07 Decrease in shortterm loans and advances 8.46 2.29 (Increase) decrease in other current assets (47.26) 15.97

Cash from operating activities 30.88 149.30 Payment of domestic and foreign taxes (15.05) (9.71)

Net cash provided by (used in) operating activities 15.83 139.59

Cash flows from investing activities Additions to fixed assets including capital work in progress (1.08) (0.82)

Net cash (used in) investing activities (1.08) (0.82)

Net cash provided by financing activities Net cash provided by financing activities

Net increase (decrease) in cash and cash equivalents 14.75 138.77

Cash and cash equivalents at beginning of the year 205.50 59.35 Effect of exchange rate changes in cash and cash equivalents (6.19) 7.38 Cash and cash equivalents at end of the year 214.06 205.50

Component of cash and cash equivalents Balances with banks: Current accounts 214.06 205.50

Total cash and cash equivalents 214.06 205.50

Documents

OracleFinancial Services Software Chile Limitada Directors ... · meaningof Section 58 A of the Companies Act, 1956, and as such no amount of principal or interest wasoutstanding