Professional Documents
Culture Documents
Registered office:
Address:
THE HAGUE
Prinses Margrietpiantseen 50
2595 BR THE HAGUE
-____________________________
Initial
for Ident,tio
Ernst &
rposes only
g Accountants LLP
Build~r~ 0 botter
workjnq world
Table of contents
Directors report
1
2
3
4
5
6
Directors report
Balancesheetasatjune3O2ol4
Profit and loss account for the financial yearended June 302014
Statement of Cash Flows
Notesto the Financial Statements
Other information
2
7
8
9
10
19
Initiale .~
for ~dcntifica ~n pui puses only
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Yo
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Directors leport
1. Business development and envhenment
The Company is active in the sectors of software-led IT solutions, extemaily controlled infrastructure management and
the outsourcing of business processes.
Annual yleld
~ Companyhas decreased to 42,209,826 in comparison to
45,049,483 in the previous financial year. Due to the decrease in the operating expenses, the profit margin has
increased and consequently the profit has increased for the financial year. The annual profit amounted to
3,143,100.
ii. Companysftuatjon
Financial situatjon
Tangible fbced assets and depreclatlon
The depreciation was conducted according to the linear depreciation method. Deductions are recorded pro-rata for
acquisftions and disposals. For the financial year, the depreciation amounted to 72,671 (2012/13: 59,044).
ShareCapital in FY2013/14
As on June 30,2014, the capital stock and capital surplus together amount to an unchanged 18,151.
DMdend
During the financial year the Company has paid dividend of 2,000,000 to its shareholcier HCL Great Britain Limited.
Cash flow
During the financial year in consideratjon, there was net cash outfiow of 1,828,377 (2012/13: net cash infiow of
1,823,740). The main reason for increase in cash outfiow is due to the decrease in other liabilities because of
decrease in account payable- Group companies.
Performance development
Development of sales: Satisfactory development of sales due to the strong market conditions.
Development of costs: The operating costs decreased com mensurate to the overall business of the Company.
Development of profits: The profits before taxes amounted to 4,17 1,173. After income taxes, there was a profit for
thefinancialyearof 3,143,100.
Personnel
Initialed
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3
Personnel guldelines
The Company is obligated to treat all employees with equality, independent of sex, race, color, handicap or family
status. The Company offers continuing education and training for handicapped employees. 1f the handicap occurs
after entering the Company, the Company is obligated to continue employing this individual and adequately qualifying
this employee. The Company is also obligated to regularly communjcate relevant intemal news and decisions. 1f
decisjons are made that affect the emp(oyees, the employees opinions will be considered during the decision
process.
RbI~ lnfiuenclng development
The software industry is continuing to grow in a dynamic and strongly competitive environment. This sector is
characterjze~j by fast technological changes and innovations that constantly challenge the existing and conventional
business models.
The Company is confronted with multiple business risks, the most important of which are detailed below:
Dependences/con~tjo~
The group led bythe parentcompany, HCLTechnologjes Ltd. in India, which HCL Netherlands (B.V.) belongsto,
maintains a broad customer base to ensure the independence from individual clients, special services, or
geographical factors.
Competitlon
In order to continue to have a strong position in the market and to remain competitive, the Company has invested
considerably in software technology and other offshore technologies.
Human resources
Keeping with the parent Company, the Company approved an initiative by the name of uEmployee first. Togetherwith
other measures, the goal of this initiative is to make the Company an attractive employer.
Principe1 rlsks and uncertalnties
The software industry thrives on a dynamic and highly competitive business environment, characterised by rapid
technological changes and innovations that constantty challenge the conventional business models. The Company
faces several business risks, of which prominent ones are discussed below along with the Companys strategy to
mitigate these risks:
1. Technology related risks
Risk
The Company operates in an ever evolving and dynamic technology environment and it is of utmost importance that
the Company continuously reviews and upgrades its technology, resources and processes to avoid obsolescence.
HCLs strategy
The Company is not dependent on any single technology or platform. It has developed competencies in various
technologies, platforms and operating environment and offers wide range of technology options to clients to choose
from for their needs.
2. Competftion related risks
Risk
The overall market growth is slowing and more and more competitors are vying with each other for market share. The
line is diminishing between the tradftional IT services players and non-traditjonal players. Now the customers have
more choices of technology, vendors and service models which force every entity to perform to their best capabilities
and to enhance them.
F~JtiaIed
~ only
Buildir, a
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4
HCLs strategy
The Company has been quick to respond to the changing competitive dynamics. Our business model is increasingly
shifting from the traditional outsourcing to a non-linear model and growth Is being triggered by the altemative
outsourcing approach.
3. Business continuity & information security
Risk
The Company is dealing in maintaining, developing and operating time critical Business and IT applications for
varlous customers and any catastrophe may halt business activities and cause irreparable damage to the brand
reputation of the Company. Similarly, the vital need for confidentiality and security of confidential data both
belonging to clients as well as the Company itself also pose risks of leaks, loss or compromise of information.
HCLs strategy
The Company has put in place a comprehensive business continuity program to ensure that It meets its business
continuity and disaster recovery related requirements. There is also an Information Security team to assess and
manage the information security and data privacy and related risks by leveraging on People, Processes & Technology.
Resean,h and Development
As the Company has the function of a sales office, the research and development is done centrally by HCL
Technologies Limited.
III. Prognosis of future development
The Directors believe that future profits wiU be created through the positive business development. In order to sustain
the business operations, the parent company is obligated to provide financial support if needed. The company will
focus on three catogeries of service for development of business:
Software Services : Information Technology (IT) services such as custom application development and
maintenance, technology services, product engineering, and package implementation.
lnfrastructure Services : Infrastructure related IT enabled services such as Remote lnfrastructure Management
(RIM), data centeroperations, end usercomputing, network management, and security management.
Business Process Outsourcjnp Services : IT enabled services such as technical helpdesk, back office
services, transactjon processing, and cali centerservjces.
Below are the berif Out look on bissuness:
1. Outlook on R&D:
The research and development is done centrally by the parent company, HCL Technologies Ltd.
2. Outlook on business (e.g. expectation of sales, customers, etc.), inciuding but not limited to:
The Company has strong customer base in the Netherlands and primarily having the active engagements with approx.
20 well known costumers.
Many of the engagements are pan European in nature so delivering services to multiple countries within EIJ region.
As Netherlands is conveniently located within EU region and given its strong economic performance is a good hub for
our growth in EU region. Plus, in order to service clients in the region the Company will invest in a local talent pool
more as opposed to delivering from global delivery centers. The Company requires significant amount of local
consulting capability and program management capability to manage such large dient engagements. The Company
has recently started the process to set-up a small delivery center in The Hague to service the clients across the region
Initialed
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1i
Ernst& Younq Accountants LLP
Building 8 better
worblng world
5
in the new wave of Customer Experience Service Delivery~ and to help clients to become more digitized
organizations.
This will create more employment opportunftles in the reglon and will ultimately lead more jobs in the local market.
Immediately, we do anticipate new jobs to be fulfilled from the local market either through direct recruitment or on a
contract basis from our local partners.
2.1 Strategy of financing and expected or planned future financing
The Company may require investment funds mostly on two fronts operational expense of the company and
sales/marketing investments. As per the plan, the Company does not need any bank or business credit in order to
property execute the business plan in the Netherlands and the same shall be financed from the HCL group company
for the meeting the funding requirement.
2.2 Strategy of human resources and expected or planned future changes to human resources
The Company is expecting to have growth in the business in Netherland as well as in EU regions, hence more
employment opportunities will result in the company.
2.3 Known future circumstances which significantly influence the profitability or recoverability
The Company is consistently growing year on year and also expecting a good business opportunities which will result
in not only in growth of the company but also growth of the region. The company is focusing on the following:
Engagement of local talent people more as opposed to delivering from global delivery centers.
~-
Significant amount of local consufting capabilfty and program management capability need to be added to
our overall portfollo
To pursue and explore inorganic means to acquire capability to meet our revenue goals and also capability
objectives
lnitia(
for iclentific tion purposes only
ants LLP
FINANCIAL STATEMENTS
For the financal year 01-07-2013 to 30-06-2014
Initia~e~\
for ideritific ion purposes only
Ernst & Y ung Accountants LLP
Build~ng a better
worki,q world
Assets
June 30, 2014
Fixed assets
Tangiblefixedasse~
Current assets
Receivables
Inventory
Cash at bank
Note(1)
35,592
100,662
35,592
100,662
Note (2)
12,447,048
Note (3)
1,646,275
13,068,614
52,989
3,474,652
14,093,323
16,596,255
Total assets
-_14,128,9 15
16,696,917
Shareholders equlty
Sharecapital
Retained eamings
Current Ilablifties
18,151
5,069,312
18,151
3,926,2 12
5,087,463
3,944,363
9,041,452
12,752,554
14,128,915
16,696,917
Note (4)
Note (5)
In It iaI~
for identiti ation purposes only
Erns
Accountants LLP
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a
wcrkin
Note (6)
Note (7)
Note (8)
Note (9)
Note (10)
Note (11)
Note (12)
Profftbeforetaxafjon
Income taxes
Net profit
Note (13)
42,209,826
(26, 186,220)
45,049,483
(29,599,313)
16,023,606
15,450,170
(8,150,157)
(1,367,885)
(72,671)
(2,201,041)
(8, 962,530)
(1,263,115)
(59,044)
(2,414,802)
(11,791,754)
(12,699,491)
(60,679)
(150,098)
4,171,173
2,600,581
(1,028,073)
(602,770)
3,143,100
1,997,811
InitiaIed~
for identificat ~urposes only
Ernst & You
Accountants LLP
Building a better
workinq world
June 30,2014
4,171,173
2,600,580
72,671
5,441
(3,28 1)
343, 186
278,379
52,989
(4,156,719)
(582,455)
181,384
59,044
5,659
(975)
2,599,176
(33,401)
223,338
1,124,387
(1,711,010)
4,866,798
3,281
(7,601)
(4,320)
975
(36,735)
(35,760)
(2,000,000)
(3,000,000)
(5,441)
(2,005,441)
(5659)
(1,639)
(3,007,295v
(1,828,377)
1,823,740
3,474,652
1,646,275
1,650,91.2
3,474,652
Operavngact]Wties
Profit before tax
Adjustments to reconcile net income witti
net cash provided by operating activitles:
Depreciation of tangible fixed assets
Interest expense
Interest Income
Change In receivables
-Change in otbercurrentassets
Change in inventoiy
Change in long term and short term liabilities
Income tax paid
Net cash provided by operating activities
-
investingach WtIes
Interest received
Investment in tangible fixed assets
Net cash used in investing activities
-
Financingactivitfes
Dividend paid
Interest paid
Interest paid to group company
Net cash provided byfinancing activities
-
Change in cash
In It ja
for identifi tion purposes only
Ernst & Youn
ccountants LLP
Bufldinq a better
worbirlq word
10
General
The Company forms part of the HCL group, the ultimate parent is HCL Technologies Ltd. at Uttar Pradesh, India. HCL
Netherlands B.V. is a whoIeiy owned subsidiary of HCL Great Britain lJmfted at Maidenhead, United Kingdom.
The financial statements are prepared in accordance with Part 9 of Book 2 of the Dutch clvii code.
Accounting Policies
(ii)
Use of estimates
The preparation offinancial statements in conformitywfth Dutch GAAP requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and ilabilities
at the date of the financial statements and the reported amounts of revenues and expenses during the reporting
period. Exampies of such estimates inciude estimates of expected contract costs to be incurred to complete software
development, provision for doubtful debts and estimated useful life of fixed assets. Actual resuits could differ from
these estimates. Any revision in accounting estimates is recognised prospectively in current and future periods.
(ii~
Fixed assets
Fixed assets are stated at the cost of acquisition inciuding incidental costs reiated to acquisition and Installation.
(iv)
Depreciation of fixed assets is provided on the straight-Iine method based on estimated usefui ilves as estimated by
the management. Depreciation is charged on a pro-rata basis for assets purchased/ sold during the year. Assets
costing less than 60.82 (approximately Rs.5,000) are fully depreciated in the year of purchase. The managements
estimate of the useful life of the various fixed assets is as foliows:
Description
Plant & Machinery
Computers
Software
Fumiture, fixtures
and office equipment
(v)
Operating Leases
Lease payments under an operating lease are recognised as an expense in the profit and loss account on straight
line basis over the lease term.
Initialed
for identificati
Em
rposes onky
11
(vi)
Revenue recognition
Revenue from software services comprlses income from time and material and fixed price contracts. Revenue with
respect to time and material contracts is recognized as related services are performed. Revenue from fixed price
contracts and fixed time frame contracts is recognized in accordance with the percentage completion method under
which the sales value of performance, including eamings thereon, is recognized on the basis of cost incurred in
respect of each contract as a proportion of total cost expected to be incurred. The cumulative impact of any revision in
estimates of the percentage of work completed is reflected in the year in which the change becomes known.
Provisions for estimated losses are made during the year in which a loss becomes probable based on current contract
estimates. Revenue from sate of licenses for the usa of software appilcations is recognized on transfer of title in the
user license. Revenue from annual service contracts is recognized on a pro rata basis over the period in which such
services are rendered. Income from revenue sharing agreements is recognized when the right to receive is established.
Eamings in excess of billing are classified as unbilled revenues, while billing in excess of eamings are classified as
uneamed revenue. lncremental revenue from existing contracts arising on future sales of the customer~ products will
be recognized when It is eamed. Revenue and related direct costa from transition services in outsourcing
arrangements are deferred and recognized over the perlod of the arrangement. Certain upfront non-recurring costa
incurred in the initial phases of outsourcing contracts and contract acquisition costa, are deferred and amortized
usually on a straight line basis over the term of the contract. The Company periodically estimates the undiscounted
cash flows from the arrangement and compares It with the unamortized costa. 1f the unamortized costa exceed the
undiscounted cash flow, a loss is recognized.
The Company accounts for volume discounts and pricing incentives to customers. The discount terms in the
Companys arrangemefits with customers generally entitle the customer to discounts, 1f the customer completes a
specified level of revenue transactions. In some arrangements, the level of discount varies with iricreases in the levels
of revenue transactions. The Company recognizes discount obligations as a reduction of revenue hased on the ratable
allocation of the discount to each of the underlying revenue transactions that result in progress by the customer
toward eaming the discount.
Revenues are shown net of sales tax; value added tax, service tax and appllcable discounts and aluwances. The
revenue is recognized net of discounts and allowances.
(vii)
Expenditure
Expenses are accounted for on the accrual basis and provisions are made for all known losses and liabilities. The cost
of services for software development is charged to profit and loss account in the same year.
(viii)
Foreign exchange transactions are recorded at the exchange rates prevailing at the date of transaction. Foreign
currency Realised gains and losses on foreign exchange transactions are recognised in the profit and loss account.
Foreign currency monetary assets and liabilities excluding loans in the nature of permanent investment are translated
at the financial year end rates and resultant gains/losses on foreign exchange translations are recognised in the profit
and loss account.
(ix)
Employee benefits
The Company and employees contribute to the social security scheme in accordance with the local statutory
requirements. The employees of the Company are entitled to compensated absences. The Company records an
obligation for compensated absences in the period in which the employee rendets the service that increase this
entitlement. The Company measures the expected cost of compensated absence as the additional amount that the
Company expects to pay as a resuit of the unused entitlement that has accumulated at the balance sheet date.
Initialed
~dentificat
12
(x)
Pension
The Company has contributory pension plans covering all its employees. Pension obligations are funded through
annual premiums.
(xi)
Taxatiopi
Company tax is calculated at the applicable rate on the resuft for the financial year, taking into account permanent
differences between profit calculated according to the financial statements and profit calculated for taxation
purposes, andwithwhlch defferedtaxassets(jfapplicable) areonlyvalued insofarasthejrreali~tion is likely.
(xii)
A provision is recognised when there is a present obligation as a result of a past event, it is probable that an outfiow of
resources will be required to settie the obligation and in respect of which reliable estimate can be made. A disciosure
for a contingent liability is made when there is a possible obligation or a present obligation that may, but probably will
not, require an outflow of resources. Where there is a possible obligation or a present obligation in respect of which
the likelihood of outflow of resources is remote, no provision or disciosure is made.
(xiii)
Risks:
The Companys operations expose itto a variety of financial risks that includeforeign exchange rate risks, credit risks
and Iiquidity risks. The group has adequate controls in place that seek to minimise the adverse effects of these
financial risks on the companysfinancial performance.
Foreign exchange rate risk arises from future commercial transactions and recognised assets and liabilities that are
denominated in a currency that is not the companys functional currency. Foreign currency monetary items are
reported using the closing rate. Non-monetary 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 arising on
the settlement of monetary items, or on reporting such monetaty items of company at rates different from those at
which they were initially recorded during the year, or reported in previous financial statements, are recognized as
income or as expenses in the year in which they arise.
Credit risk
The Company has no significant concentrations of credit risk as the company has a large number of customers which
are based in the UK. It has policies in place to ensure that the provisions of consulting services are made to renowned
customers or those with an appropriate credit history. The company also has policies and procedures in place for the
control and monitoring of its credit risk. The company has a dedicated team forthe close follow up for realisation from
the customers and adequate provision for doubtful debts is created wherever required as per group policy. During the
yearthere was no significant amount identified for which the company is required to create the provision.
Liquidity risk
Prudent liquidity risk management implies maintaining sufficient cash and short term bank deposits. The Directors do
not see any significant liquidity risk involved. The companys liquidity risk is further mitigated through the availability
of financing from its ultimate parent undertaking.
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(lxv)
The Company appiles the indirect method. The statement of cash flows is derived from the profit and loss account and
other changes between the opening and closing balance sheets, eliminating the effect of currency translation
differences.
~iaIed(
for Identificati~purp05~~ only
L~Efltanf~
35,592
100,662
35,592
100,662
Machlnery
and
equipment
Net bookvalue atiuly 1,2013
Additions
Depreciation
Net book value at iune 30, 2014
Accumulated depreclatio n
100,662
7,601
(72,67 1)
122,971
36,735
(59,044)
35,592
100,662
296,193
223,522
Recelvables (2)
Trade receivables
Amounts receivable from group companies
Other amounts recejvable
Prepayments and accrued income
June 30.2013
8,678,026
1,677,251
159,402
2,553,935
12,447,048
13,068,614
The provision fordoubtful debts charged to Trade receivables amounted to 154,766 (2012/ 13: 239,615) and has been
charged to the profit and loss account.
lflitjafed
for identificatio .tJrposes only
Em
~~~0untants LLP
15
,lijneL3O. 2014
55,698
68,832
lune 30.2013
120,410
38,992
124,530
159,402
Ji~ne20. 2014
45 1,2 10
1,213,187
646,030
Jiji~e30. 201~
60 1,048
1,067,753
885,134
2,3 10,427
2,553,935
June 30.2014
1,646,275
June 30.2013
3,474,652
1,646,275
3,474,652
There are no restrictions on the availability of cash and cash equivalents. These are readily available.
18,151
-
18,151
Retalned
Eamlngs
3,926,212
3,143,100
(2,000,000)
5,069,312
Total
3,944,363
3,143,100
(2,000,000)
5,087,463
90,41,452
12,752,554
303,920
6,667,937
1,132,961
4,647.736
Initialed
(}
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BudIn~ a better
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16
Accruals and deferred income recognised in the balance sheet can be broken down as follows:
June3O.2Qj.4
321,934
465,392
1,9 16,483
1,60 1,209
June30.2Q~
451,670
480,768
1,339,792
2,375,506
4,305,018
4,647,736
The taxes and social security charges payable recognised in the balance sheet can be broken down as follows:
h~ne30. 2_Q1~
95, 728
787,688
137,651
111,894
1, 132,961
58,369
603,152
55,083
557,512
1,274,116
38,590,606
3,619,220
42,209,826
39,713,028
120,475
5,2 15,980
-
44,929,008
120,475
39,833,503
5,215,980
45,049,483
foi~e flnan~I~I
year end~
,hine_30.
2014
24,171.922
Forthe flnanclal
vear ended
1ijne~30,
2013
24.267,297
565,328
49,765
1,399,205
867,777
314,233
4,150,006
26,186,220
29,599,313
Initialed
for identificat~purposes only
Ernst & Vo ng Accountants LLP
BuiId~n~ a better
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8,150,157
8,962,530
345,050
The fixed differentiateci insurance premiums for future risks relating to employee disabillty are not expected to have
any material effect on future staff costs.
The statutory directors did not receive any remuneration in the current financial year (2012/13 : Nu).
~ear en~4
vear n~~
hineZO. 2014
183,024
1,184,861
1,367,885
1,263,115
Forthe fln~~j
year en4e4
June3O.
2014
280,53 1
245,472
681,135
165,568
108,398
719,937
2,201,041
Jiine 30.2013
913, 761
114, 162
542,6 16
78,737
175,871
589,655
2,414,802
12,571
Forthefinpn~j
vear ended
June 30. 2013
5,659
(975)
122,472
22,942
60,67
ni ta e
~dentih:ti:urposes~~~y
18
Forthefln.~p~~
year endedJiii~
30.~14
1,028,073
fQrU1efinancf~
year endedJij~
30.2013
602,770
1,028,073
602,770
The effective tax rate for the financial year is 24.65% (2012/13: 23.18%).
Workforce(13)
The average number of staff employed by the company in 2013/14 was 152 (2012/13:160) and all employees are
located in the Nethertands.
The Company has conciuded operating leases as lessee relating to Office Premises. The future minimum lease
payments can be broken down asfollows:
Less than lyear
Between land 5years
Morethansyears
Total
,[uiie3o.71,562
2014
~iine_30.29,150
2013
244,505
-
316,067
29,150
Initiale4
for identific ion purposes only
countants LLP
Build~ng a better
working world
19
7,080
Total
7,080
Other information
Subsequent Events
The Company has evaluated all the subsequent events through ~ ~3,~4~7which is the date on which these
financial statements were issued, and no events have occurred from the balance sheet date thmugh that date that
would have material impact on the financial statements.
Sep)-r~b~-
Anli umarChanana
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Initiafd
for identjfi .tion pur..
1
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