Oracle Financial Services Software Limited

Transcription

1 CONDENSED CONSOLIDATED BALANCE SHEET AS AT DECEMBER 31, 2010 December 31, 2010 March 31, 2010 SOURCES OF FUNDS Shareholders' funds Share capital 419, ,274 Share application money pending allotment - 8,068 Reserves and surplus Securities premium 9,572,512 9,524,546 General reserve 10,145,191 10,145,191 Foreign currency translation reserve (805,149) (804,309) Gain on dilution of equity investment in joint venture Profit and loss account 31,003,161 23,610,287 Deferred tax liability 89,681 32,911 50,425,769 42,936,875 APPLICATION OF FUNDS Fixed assets Gross block 12,002,783 12,000,159 Less: Accumulated depreciation and amortisation / impairment 3,802,108 3,636,871 Net book value 8,200,675 8,363,288 Capital work-in-progress and advances 1,613,418 1,304,106 9,814,093 9,667,394 Investments Current investments (quoted) 9,982 9,982 Deferred tax assets 442, ,726 Current assets, loans and advances Sundry debtors 7,575,840 6,782,391 Cash and bank balances 27,112,875 22,045,843 Other current assets 2,389,013 2,327,793 Loans and advances 8,983,759 7,724,538 46,061,487 38,880,565 Less: Current liabilities and provisions Current liabilities 4,813,353 4,990,369 Provisions 1,089,012 1,030,423 5,902,365 6,020,792 Net current assets 40,159,122 32,859,773 50,425,769 42,936,875 Notes attached herein form an integral part of the condensed balance sheet.

2 CONDENSED CONSOLIDATED PROFIT AND LOSS ACCOUNT FOR THE NINE MONTH PERIOD ENDED DECEMBER 31, 2010 (Amounts in thousands of Indian Rupees, except share data) Nine month period ended December 31, Revenue 21,315,746 21,162,034 Cost of revenue (9,906,310) (10,283,622) Gross profit 11,409,436 10,878,412 Operating expenses Selling and marketing expenses (1,895,201) (1,781,466) General and administrative expenses (2,004,403) (1,883,232) Depreciation and amortisation (296,845) (374,385) Operating profit 7,212,987 6,839,329 Non-operating income (expense) Interest income 892, ,130 Foreign exchange gain (loss), net 86,200 (692,841) Other income, net 14,945 2,313 Profit before provision for taxes 8,206,521 6,689,931 Provision for taxes Current tax (1,869,208) (1,238,476) MAT credit 1,065, ,819 Deferred tax (10,302) (82,097) Net profit for the period before share of minority interest 7,392,874 6,178,177 Share of minority interest - (1,867) Net profit for the period 7,392,874 6,176,310 Earnings per share of Rs 5/- each (in `) Basic Diluted Number of shares used in computing earnings per share Basic 83,878,037 83,776,835 Diluted 84,002,349 83,913,767 Notes attached herein form an integral part of the condensed profit and loss account.

3 Notes annexed to and forming part of the condensed accounts for the nine month period ended December 31, 2010 (Amount in thousands of Indian Rupees, except options & per option price) 1. Background and nature of operations ( OFSS or the Company ) was incorporated in India with limited liability on September 27, The Company along with its subsidiaries and associate is principally engaged in the business of providing information technology solutions and business process outsourcing services to the financial services industry worldwide. OFSS has a suite of banking products, which caters to the needs of corporate, retail, investment banking, treasury operations and data warehousing. is a subsidiary of Oracle Global (Mauritius) Limited ( Oracle ) with Oracle having 80.44% ownership interest in the Company as at December 31, The Company has following subsidiaries and associate (hereinafter collectively referred as the Group ): Companies Country of Incorporation Ownership Interest Relationship Direct holding Oracle Financial Services Software B.V. The Netherlands 100% Subsidiary Oracle Financial Services Software Pte. Ltd. Singapore 100% Subsidiary Oracle Financial Services Software America, Inc. United States of America 100% Subsidiary ISP Internet Mauritius Company Oracle (OFSS) Processing Services Limited Republic of Mauritius India 100% 100% Subsidiary Subsidiary Oracle (OFSS) ASP Private Limited India 100% Subsidiary Oracle Financial Services Software Chile Limitada Chile 100% Subsidiary Oracle Financial Services Software (Shanghai) Limited Republic of China 100% Subsidiary Login SA France 33% Associate Subsidiaries of Oracle Financial Services Software America, Inc. Oracle Financial Services Software, Inc. United States of America 100% Subsidiary i-flex solutions Inc. (Canada) Canada 100% Subsidiary Mantas Inc. United States of America 100% Subsidiary Subsidiaries of Mantas Inc. Mantas Limited United Kingdom 100% Subsidiary Sotas Inc. United States of America 100% Subsidiary Mantas Singapore Pte. Ltd. Singapore 100% Subsidiary Mantas India Private Limited India 100% Subsidiary Subsidiaries of i-flex solutions Inc. (Canada) Castek Inc. (dissolved on September 1, 2010) United States of America 100% Subsidiary Castek Software Factory Ltd. (dissolved on United States of America 100% Subsidiary September 1, 2010) Castek RBG Inc. (dissolved on September 1, 2010) United States of America 100% Subsidiary Subsidiary of Oracle Financial Services Software B.V. Oracle Financial Services Software SA Greece 100% Subsidiary Subsidiary of Oracle Financial Services Software Pte ltd. Oracle Financial Services Consulting Pte. Ltd. Singapore 100% Subsidiary Subsidiaries of ISP Internet Mauritius Company i-flex Processing Services Inc. United States of America 100% Subsidiary Oracle (OFSS) BPO Services Limited India 100% Subsidiary

4 Notes annexed to and forming part of the condensed accounts for the nine month period ended December 31, 2010 (Amount in thousands of Indian Rupees, except options & per option price) 2. Accounting policies The Group has followed the same accounting policies in preparing the interim financial statements as were followed for the year ended March 31, 2010 except as follows: With effect from April 1, 2010, the Group changed its policy of revenue recognition for fixed price contracts related to customization projects. Hitherto, such revenue was restricted to the lower of proportionate completed efforts and acceptance received from the customer for the milestone achieved. During the nine month period ended December 31, 2010, revenue is recognized using proportionate completion method till contract reaches 90% completion. Balance revenue is recognized on receipt of customer acceptance. As a result of this change in policy, corresponding revenue and net profit of the Group and that of Products segment for the nine month period ended December 31, 2010 is higher by ` 360, During the nine month period ended December 31, 2010, the Board of Directors approved a new Employees Stock Option Scheme titled ESOP 2010 Scheme ( the Scheme ) for issue of 618,000 options at an exercise price of ` 2,050 per option to the eligible employees and directors of the Company and its subsidiaries. As per the Scheme, each of 20% of the total options granted will vest to the eligible employees and directors on completion of 12, 24, 36, 48 and 60 months and is subject to continued employment of the employee or director with the Company or its subsidiaries. Options have exercise period of 10 years. The Company uses the intrinsic value method of accounting for its employee share based compensation plan. As the exercise price of options granted equals the fair market value of the Company s equity share on the date of grant, no compensation expense is recorded by the Company. 4. Commitments and contingent liabilities ( i ) Capital Commitments Particulars December 31, 2010 March 31, 2010 Contracts remaining to be executed on capital account not provided for (net of advances) including capital commitment through issuance of letter of intents of ` 758,611 (March 31, 2010 ` 979,350) 1,141,501 1,957,451 (ii) Contingent liabilities A customer has filed a lawsuit against the Company and one of its subsidiaries claiming damages of upwards of ` 5,011,776 (Euro 84 million). The claims are being rigorously defended by the Company and the Company will also be raising counter claims on the customer for breach of contract and outstanding fees.

5 5. SEGMENT INFORMATION a) Product licenses and related activities ('Products') and b) IT solutions and consulting services ('Services') c) Business Processing Services ('BPO-Services') Notes annexed to and forming part of the condensed accounts for the nine month period ended December 31, 2010 The Group is organized by business segment and geographically. For management purposes the Group is primarily organised on a worldwide basis into three business segments: Nine month period ended December 31, 2010 Particulars Products Services BPO - Services Corporate Eliminations Total Revenue External revenue 13,656,474 7,309, , ,315,746 Inter-segment revenue ,919 - (191,919) - Total revenue 13,656,474 7,309, ,253 - (191,919) 21,315,746 Cost of revenue (5,223,854) (4,486,938) (195,518) - - (9,906,310) Gross profit 8,432,620 2,823, ,735 - (191,919) 11,409,436 Selling and marketing expenses (1,569,490) (270,035) (55,676) - - (1,895,201) General and administrative expenses (657,743) (330,806) (113,732) (902,122) - (2,004,403) Depreciation and amortisation (114,515) (117,657) (14,099) (50,574) - (296,845) Inter segment expense - (191,919) ,919 - Operating profit 6,090,872 1,912, ,228 (952,696) - 7,212,987 Interest income 892,389 Foreign exchange gain, net 86,200 Other income, net 14,945 Profit before provision for taxes 8,206,521 Provision for taxes (813,647) Net profit for the period before share of minority interest 7,392,874 Share of minority interest - Net profit 7,392,874 Other information Capital expenditure by segment 43,107 63, , ,439 Other non cash expenses 113,726 14,763 4, ,799 Segment assets 12,842,422 4,114, ,092 39,123,855-56,328,134 Segment liabilities 3,114, , ,585 1,833,384-5,992,046 Shareholders' funds ,336,088-50,336,088

6 Notes annexed to and forming part of the condensed accounts for the nine month period ended December 31, 2010 Nine month period ended December 31, 2009 Particulars Products Services BPO - Services Corporate Eliminations Total Revenue External revenue 13,562,773 7,078, , ,162,034 Inter-segment revenue ,759 - (152,759) - Total revenue 13,562,773 7,078, ,884 - (152,759) 21,162,034 Cost of revenue (5,652,891) (4,426,368) (204,363) - - (10,283,622) Gross profit 7,909,882 2,651, ,521 - (152,759) 10,878,412 Selling and marketing expenses (1,466,792) (249,086) (65,588) - - (1,781,466) General and administrative expenses (623,165) (394,390) (120,749) (744,928) - (1,883,232) Depreciation and amortization (177,283) (133,505) (18,667) (44,930) - (374,385) Inter segment expense - (152,759) ,759 - Operating profit 5,642,642 1,722, ,517 (789,858) - 6,839,329 Interest income 541,130 Foreign exchange loss, net (692,841) Other income, net 2,313 Profit before provision for taxes 6,689,931 Provision for taxes (511,754) Net profit for the period before share of minority interest 6,178,177 Share of minority interest (1,867) Net profit 6,176,310 Other information Capital expenditure by segment 32,761 18,086 8,040 68, ,793 Other non cash expenses 33,998 (2,817) ,181 Segment assets 12,035,793 3,772, ,881 31,273,914-47,331,584 Segment liabilities 2,920,489 1,140, ,079 1,834,777-6,032,585 Shareholders' funds ,298,999-41,298,999

7 Notes annexed to and forming part of the condensed accounts for the nine month period ended December 31, Aggregate expenses Nine month period ended December 31, Salaries and bonus 8,775,008 9,526,339 Staff welfare expenses 413, ,998 Contribution to provident and other funds 372, ,859 Travel related expenses (net of recoveries) 1,107,237 1,258,925 Professional fees 1,348, ,178 Application software 103, ,880 Communication expenses 205, ,120 Rent 672, ,832 Advertising expenses 23,997 50,452 Power 185, ,590 Insurance 14,379 16,095 Repairs and maintenance: Buildings and leasehold premises 13,846 29,076 Computer equipments 45,783 46,654 Others 43,872 40,492 Rates and taxes 35,838 54,532 Finance charge on leased assets 1,638 1,627 Provision for doubtful debts, net 132,759 (183,505) Bad debts ,686 Other expenses 310, ,490 13,805,914 13,948, Employee costs for the nine month period ended December 31, 2010 are net of ` 238,418 pertaining to write back of bonus provision of earlier year, no longer required due to changes in compensation policy of the Company. General and administrative expenses for the nine month period ended December 31, 2010 include provision of ` 122,067 in connection with a claim against the Company. Selling and marketing expenses for nine month period ended December 31, 2009 include reversal of referral fee provisions amounting to ` 184,476 based on a settlement agreement entered with a distributor. Prior period's figures have been reclassified, where necessary to conform with current period's presentation.

8 CONDENSED CONSOLIDATED STATEMENT OF CASH FLOW FOR THE NINE MONTH PERIOD ENDED DECEMBER 31, 2010 Nine month period ended December 31, Net cash provided by operating activities 4,662,910 5,742,704 Net cash (used in) investing activities (8,146,460) (2,372,266) Net cash provided by financing activities 30,707 35,765 Net (decrease) / increase in cash and cash equivalents (3,452,843) 3,406,203 Cash and cash equivalents at beginning of the period 6,854,470 4,912,371 Effect of exchange difference on cash and bank balances 170,917 (254,721) Cash and cash equivalents at end of the period 3,572,544 8,063,853 Cash and bank balances as per balance sheet * 27,112,875 21,025,056 Less: Bank deposits having maturity of more than 90 days (23,533,723) (12,944,711) Margin money deposit account (6,608) (16,492) Cash and cash equivalents at end of the period 3,572,544 8,063,853 * Includes amount kept in unclaimed dividend accounts of ` 3,485 (December 31, 2009 ` 1,003) not available for use by the Company.