TCS Uruguay S.A. Financial statements for the year ended March 31, 2016 and independent review report

Transcription

1 TCS Uruguay S.A. Financial statements for the year ended March 31, 2016 and independent review report

2 TCS Uruguay S.A. Financial statements for the year ended March 31, 2016 and independent review report Content Independent review report of financial information Statement of financial position Statement of profit or loss and other comprehensive income Statement of cash flows Statement of changes in equity Notes to financial statements

3 Juncal 1385, 11 th. floor Montevideo, Uruguay Phone: Fax: Independent review report To the Members of the Board and Shareholders of TCS Uruguay S.A. We have reviewed the accompanying financial statements of TCS Uruguay S.A. expressed in Uruguayan pesos, which comprise the statement of financial position as at March 31, 2016, and the statement of profit or loss and other comprehensive income, statement of changes in equity and statement of cash flows for the year then ended, and a summary of significant accounting policies and other explanatory information. Management s Responsibility for the Financial Statements Management is responsible for the preparation and fair presentation of these financial statements in accordance with general accepted accounting standards in Uruguay, and for such internal control as management determines is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error. Reviewer s Responsibility Our responsibility is to express a conclusion on the accompanying financial statements. We conducted our review in accordance with International Standard on Review Engagements (ISRE) 2400 issued by the International Federation of Accountants (IFAC). ISRE 2400 requires us to conclude whether anything has come to our attention that causes us to believe that the financial statements, taken as a whole, are not prepared in all material respects in accordance with the applicable financial reporting framework. This Standard also requires us to comply with relevant ethical requirements. A review of financial statements in accordance with ISRE 2400 is a limited assurance engagement. The practitioner performs procedures, primarily consisting of making inquiries of management and others within the entity, as appropriate, and applying analytical procedures, and evaluates the evidence obtained. The procedures performed in a review are substantially less than those performed in an audit conducted in accordance with International Standards on Auditing. Accordingly, we do not express an audit opinion on these financial statements. Deloitte refers to one or more of Deloitte Touche Tohmatsu Limited, a UK private company limited by guarantee ( DTTL ), its network of member firms, and their related entities. DTTL and each of its member firms are legally separate and independent entities. DTTL (also referred to as Deloitte Global ) does not provide services to clients. Please see for a more detailed description of DTTL and its member firms. Deloitte provides audit, tax, consulting, and financial advisory services to public and private clients spanning multiple industries. With a globally connected network of member firms in more than150 countries, Deloitte brings world-class capabilities and deep local expertise to help clients succeed wherever they operate. Deloitte's approximately 225,400 professionals are committed to becoming the standard of excellence.

4 Conclusion Based on our review, nothing has come to our attention that causes us to believe that these financial statements do not present fairly, in all material respects, the financial position of TCS Uruguay S.A. as at March 31, 2016, and its financial performance and cash flows for the year then ended, in accordance with the International Financial Reporting Standards (IFRS). Emphasis on matters that do not affect the conclusion According to the Note 3, the Entity has opted to apply the International Financial Reporting Standards (IFRS) as accounting standards from to the option provided in the Decree 124/11, being this the first year of implementation. The Entity s business are carried within the commercial strategy and operation framework set by the controlling entity, as mentioned in Note 17, the Entity has significant transactions and maintains significant balances with related parties. Other matters Our review included as well the review of the translation of the financial statements from Uruguayan pesos into U.S. dollars, and, in our opinion, such translation has been performed in accordance with the methodology described in Note 3.b. April 29 th, 2016 Gonzalo Silva Partner, 2

5 TCS Uruguay S.A. Statement of financial position at March 31, 2016 (expressed in Uruguayan pesos and United States dollars) $ Equivalent in US$ Notes Assets Non-current assets Property, plant and equipment 4 123,884, ,979,018 3,902,871 5,561,438 Intangible assets 5 173, ,964 5,464 22,209 Investments in associates 73,116 73,116 2,303 2,844 Deferred tax assets ,000-16,886 - Other assets 8 935, ,876 29,479 29,479 Total non-current assets 125,603, ,380,974 3,957,003 5,615,970 Current assets Trade and other receivables 6 72,918,792 69,456,161 2,297,234 2,701,628 Other financial assets 7 191,025,302-6,018,061 - Other assets 8 43,421,120 39,057,720 1,367,939 1,519,224 Cash and bank balances 12,449, ,862, ,209 4,312,194 Total current assets 319,814, ,376,081 10,075,443 8,533,046 Total assets 445,417, ,757,055 14,032,446 14,149,016 Liabilities and equity Equity 9 Issued capital 540, ,000 28,128 28,128 Equity adjustment (2,445,624) (2,445,624) (127,390) (127,390) Traslation adjustment reserve - - (4,128,497) (1,897,638) Legal reserve 108, ,000 5,705 5,705 Retained earnings 66,676, ,155,091 5,409,807 6,387,662 Net income 287,586, ,785,653 9,916,320 5,022,145 Total equity 352,465, ,143,120 11,104,073 9,418,612 Liabilities Non-current liabilities Deferred tax liabilities 18-22, Total non- current liabilities - 22, Current liabilities Trade and other payables 10 8,925,621 15,898, , ,394 Other liabilites 11 84,026, ,692,766 2,647,180 4,111,120 Total current liabilities 92,952, ,591,058 2,928,373 4,729,514 Total liabilities 92,952, ,613,935 2,928,373 4,730,404 Total equity and liabilities 445,417, ,757,055 14,032,446 14,149,016 The accompanying notes are an integral part of these financial statements. The report dated April 29, 2016

6 TCS Uruguay S.A. Statement of profit or loss and other comprehensive income for the year ended March 31, 2016 (expressed in Uruguayan pesos and United States dollars) $ Equivalent in US$ Notes Revenue 935,413, ,634,802 32,385,369 34,044,271 Cost of sales 12 (576,701,397) (539,331,322) (19,952,711) (22,516,425) Gross profit 358,711, ,303,480 12,432,658 11,527,846 Investment income 13 2,936, ,097 95,545 5,175 Finance costs 14 - (724,613) - (31,132) Other gains and losses 15 58,553,913 8,972,468 1,988, ,638 Administration expenses 12 (136,395,506) (158,373,455) (4,733,261) (6,620,655) Profit before tax 283,806, ,303,977 9,783,590 5,250,872 Income/ (Loss) tax expense 18 3,779,676 (5,518,324) 132,730 (228,727) Profit for the year 287,586, ,785,653 9,916,320 5,022,145 Other comprehensive income Traslation adjustment - - (2,230,859) (1,036,940) Total comprehensive income for the year 287,586, ,785,653 7,685,461 3,985,205 The accompanying notes are an integral part of these financial statements. The report dated April 29, 2016

7 TCS Uruguay S.A. Statement of cash flows for the year ended March 31, 2016 (expressed in Uruguayan pesos and United States dollars) $ Equivalent in US$ Notes Cash flow from operating activities Income before income tax 283,806, ,303,977 9,916,320 5,250,872 Adjustments Depreciation 4 & 5 26,342,885 25,137, ,814 1,052,367 Provisions 1,168,827 27,162,422-1,137,122 Income from interests (573,302) - (19,866) - Loss for bad debts - 824,405-34,513 Operating profit before changes in working capital 310,745, ,428,705 10,809,268 7,474,874 Changes in working capital Trade and other receivables (3,462,631) (3,704,767) (119,984) (155,096) Other assets (1,278,563) (19,491,534) (44,304) (815,989) Trade and other payables (6,972,671) (17,277,673) (241,612) (723,309) Other liabilites (21,688,830) 32,575,460 (751,545) 1,363, ,342, ,530,191 9,651,823 7,144,212 Payment of income tax (614,532) (2,938,112) (21,294) (123,000) Cash flow from operating activities 276,727, ,592,079 9,630,529 7,021,212 Cash flow from investment activities Payments to related parties - (34,131,953) - (1,428,892) Sale of fixed assets 4 & 5 411, ,297 14,262 16,339 Acquisition of fixed assets 4 & 5 (7,262,847) (17,811,102) (251,666) (745,640) Net cash used in investing activities (6,851,278) (51,552,758) (237,404) (2,158,193) Cash flow from financing activities Dividends paid 9 (177,264,000) (24,475,000) (6,000,000) (1,000,000) Loans to related parties 7 (191,025,302) - (6,018,061) - Net cash used in financing activities (368,289,302) (24,475,000) (12,018,061) (1,000,000) Net increase/(decrease) in cash and equivalents (98,412,704) 92,564,321 (2,624,936) 3,863,019 Cash and cash equivalents at beginning of the year 110,862,200 18,297,879 4,312, ,212 Effects of exchange rate changes on cash balance - - (1,295,049) (358,037) Cash and cash equivalents at the end of the year 12,449, ,862, ,209 4,312,194 The accompanying notes are an integral part of these financial statements. The report dated April 29, 2016

8 TCS Uruguay S.A. Statement of changes in equity for the year ended March 31, 2016 (expressed in Uruguayan pesos) Reserves Legal Other Retained Total Note Issued capital reserve reserves earnings equity Balance at April 1, , ,000 (2,445,624) 147,630, ,832,467 Dividends paid in advance (24,475,000) (24,475,000) Profit for the year ,785, ,785, ,310,653 96,310,653 Balance at March 31, , ,000 (2,445,624) 243,940, ,143,120 Payment of dividends (177,264,000) (177,264,000) Profit for the year ,586, ,586, ,322, ,322,369 Balance at March 31, , ,000 (2,445,624) 354,263, ,465,489 The accompanying notes are an integral part of these financial statements. Statement of changes in equity for the year ended March 31, 2016 (expressed in United States dollars) Reserves Legal Other Retained Total Note Issued capital reserve reserves earnings equity Balance at April 1, ,128 5,705 (988,088) 7,387,662 6,433,407 Dividends paid in advance (1,000,000) (1,000,000) Translation adjustment - - (1,036,940) - (1,036,940) Profit for the year ,022,145 5,022, (1,036,940) 4,022,145 2,985,205 Balance at March 31, ,128 5,705 (2,025,028) 11,409,807 9,418,612 Payment of dividends (6,000,000) (6,000,000) Translation adjustment (2,230,859) (2,230,859) Profit for the year ,916,320 9,916, (2,230,859) 3,916,320 1,685,461 Balance at March 31, ,128 5,705 (4,255,887) 15,326,127 11,104,073 The accompanying notes are an integral part of these financial statements. The report dated April 29, 2016

9 TCS Uruguay S.A. Notes to financial statements for the year ended March 31, 2016 Note 1 - Basic information about the Company 1.1 Legal nature TCS Uruguay S.A. (the Company) is a private company whose headquarter is located on Monte Caseros 2600 and in Colonia 1329, in Montevideo, Uruguay. 1.2 Main activity The Company s main activities are the development of software, provision of IT services and process outsourcing services aimed at both local and foreign markets. Note 2 - Financial statements The financial statements have been approved by the Entity s Management for their issuance on April 29 th, 2016 and will be submitted to the Shareholders meeting for approval. Note 3 - Main accounting policies These financial statements have been prepared in accordance with the generally accepted accounting principles in Uruguay established by Decrees 37/010 and 291/14. Decree 37/10 sets the requirements about the current/non-current presentation of assets and liabilities in the balance sheet, and functional presentation criteria of earning and expenses in the income statement, shall apply. In appliance of the option provided by article 10 of Decree 291/14, the Company has opted the normative framework established in Decree 241/11. This last Decree establishes the application of the International Financial Reporting Standards issued by the International Accounting Standards Board. During the present fiscal year came into force the application of the following standards or revision of standards issued by the IASB: Amendments to IAS 19 Employee benefits Modification to IFRS Annual improvements to IFRS cycle Modification to IFRS Annual improvements to IFRS cycle This Amendments do not have an impact in the financial statements of the Company. In addition to this, at the date of approval of this financial statements, the standards and interpretations issued by the IASB that have not came into force are the followings: IFRS 9 Financial instruments IFRS 15 Revenue from contracts with customers Amendments to IFRS 11 Accounting for acquisitions of interests in joint operations Amendments to IAS 1 Disclosure initiative Amendments to IAS 16 and IAS 38 Clarification of acceptable methods of depreciation and amortization 1

10 Amendments to IAS 16 and IAS 41 Agriculture: bearer plants Amendments to IAS 27 Consolidated and separate financial statements Amendments to IFRS 10 and IAS 28 Sale or contribution of assets between and investor and its associates or joint venture. Amendments to IFRS 10, IFRS 12 and IAS 28 Investment entities: applying the consolidation exception Amendment to IFRS Annual improvements to IFRS cycle Company s management estimates that the application of this modification will not have a significant impact in the financial statements. The significant accounting policies which have been adopted for the preparation of these financial statements are as follows: a. Preparation basis The financial statements have been prepared, in general, on the basis of their historical cost. Consequently, except for the mentioned in Note 3.h, assets, liabilities, income and expenses are valued at the amounts actually agreed upon for the original transaction. b. Functional currency and presentation currency Company s management deems that the Uruguayan peso is the Company s functional currency, as it is the currency of the primary economic environment in which the Company operates. The Company followed the methodology established in IAS 21 to translate the amounts in Uruguayan peso (functional currency) into United States dollars (presentation currency) which, under these circumstances, is allowed by a resolution of the Internal Audit of the Nation: Assets and liabilities for all balances presented (including comparative figures) were translated using exchange rates prevailing at the end of each reporting period ($ =31.742= US$ 1 and $ = US$ 1 was used for March 31, 2016 and 2015 respectively); Income and expense items for all statements presented were translated at the exchange rates prevailing on the dates of the transactions or at the average exchange rates for the period. Items of equity different from profit or loss for the year were translated at the year-end exchange rate. In particular, in order to maintain the capital in nominal terms as indicated by the legal regulations, the difference between that year end exchange rate and the ones prevailing on the dates of the transactions were recognized directly in equity as Translation reserve. c. Definition of capital to be maintained Income for the year has been considered as the difference that arises when comparing the equity at closing and beginning balances, after excluding increases and decreases from capital contributions and earning distributions. For the purpose of determining the year s results, all amounts involved in equity changes are expressed in Uruguayan pesos. No special provision has been made to take into account the likely coverage that may have been deemed fit in order to maintain the operating capacity of assets. d. Revenue recognition Revenues have been calculated based on the selling price of the services provided to third parties during the year. Cost of sales represents the amount of money the Company has paid or comprised to pay for rendering such services. Administrative and sales expenses and financial results susceptible of being allocated to periods have been recorded following such criteria. Revenue from contracts priced on a time and material basis is recognised as services are rendered and as related costs are incurred. 2

11 Revenue from software development contracts, which are generally time bound fixed price contracts, is recognised over the life of the contract using the percentage-of-completion method, with contract costs determining the degree of completion. Losses on such contracts are recognised when probable. Revenue in excess of billings is recognised as unbilled revenue in the statement of financial position; to the extent billings are in excess of revenue recognised, the excess is reported as unearned and deferred revenue in the statement of financial position. e. Cash and cash equivalents For the purpose of preparing the Cash flow statement, the Company defined cash and cash equivalents as cash. f. Property, plant and equipment and intangible assets Property, plant and equipment and intangible assets are valued at their historical costs restated until the fiscal year ended at March 31 st, The acquisitions made after the date before mentioned, are at their historical cost. The cost of improvements that extend the useful lives of the assets or increase its production capacity is activated. Maintenance costs are expensed. Depreciation is calculated on these values based on the straight-line method based on their estimated useful lives. The useful lives are as follows: Leasehold improvements Furniture and fixtures Vehicles Computer equipment Software Contract term 5 years 4 years 4 years 1 to 3 years Profits or losses arising from the abandonment or disposal of an element from Property, plant and equipment and intangible assets should be calculated as the difference between the net amount expected to be obtained from the sale, if any, and the carrying amount of the asset and should be recognized as profit or loss in the income statement. g. Impairment loss of tangible and intangible assets At the end of each reporting period, the Company reviews the carrying amounts of its tangible and intangible assets to determine whether there is any indication that those assets have suffered an impairment loss. If any such indication exists, the recoverable amount of the asset is estimated in order to determine the extent of the impairment loss (if any). When it is not possible to estimate the recoverable amount of an individual asset, the Company estimates the recoverable amount of the cash-generating unit to which the asset belongs. The recoverable amount is the greater between the fair value less the costs for sale and the value in use. The value in use is the current value of estimated cash flows, expected to derive from continued operation of the asset over its useful life, as well as its disposition or writing off. In order to determine the value in use, projected cash flows are discounted at their current value using a discount rate before taxes, reflecting the market s current evaluation over the cash temporary value and the specific risks of the asset under evaluation. If the recoverable amount of an asset (or cash-generating unit) is estimated to be less than its carrying amount, the carrying amount of the asset (or cash-generating unit) is reduced to its recoverable amount. An impairment loss is recognized immediately in profit or loss. When an impairment loss subsequently reverses, the carrying amount of the asset (or a cashgenerating unit) is increased to the revised estimate of its recoverable amount, but so that the increased carrying amount does not exceed the carrying amount that would have been determined had no impairment loss been recognized for the asset (or cash generating unit) in prior years. 3

12 h. Foreign currency Assets and liabilities in currencies other than the Uruguayan peso existing at balance date are translated at the prevailing exchange rate of each closing date. For balances in US dollars the exchange rate of $ =31.742= US$ 1 and $ = US$ 1 was used for March 31, 2016 and 2015 respectively. The resulting exchange rate differences are charged to the corresponding item in the income statement. Transactions in currency other than the Uruguayan peso are recorded at the prevailing exchange rate of that day. i. Taxes TCS Uruguay S.A. is subject to Income Tax on Business Activity (IRAE) but has part of its income exempted according to provisions of Articles 140 and 163 bis of Decree 150/007. Under the provisions of Law No dated January 7, 1998 and Decree No. 207/008 dated April 14, 2008, TCS Uruguay S.A. requested to be exempted from Income Tax (IRAE) on income derived from the rendering of remote services involving the outsourcing of business processes for overseas clients, and committed to increase to one hundred the number of direct qualified working positions, linked directly to that activity. By Resolution of the Ministry of Economy and Finance dated January 17, 2013, the activity of the company for providing remote services involving the outsourcing of business processes for overseas clients was declared to be a promotional investment and consequently an exemption from IRAE was obtained for a term of ten years as from the year beginning on 04/01/2010. According to Article 3 of Decree No. 207/008 and considering that the Company committed to maintain one hundred direct qualified posts, it has obtained a benefit of a 70% exemption of income from the promoted activity for the ten-year term. j. Financial instruments Financial assets and liabilities are recognized in the Company s financial statements when the Company becomes a party to the contractual provisions of the financial instrument. Accounts receivable Accounts receivable are expressed at their nominal value adjusted according to the provisions corresponding to estimated bad debts. Financial liabilities and equity The instruments of financial liabilities and equity are classified pursuant to the substance of the agreed upon agreements and with the definitions of financial liabilities and capital instruments. The economic substance of a financial instrument, above its legal form, is what will guide the classification to be given in the balance. The accounting policies adopted for specific financial liabilities and equity instruments are set out in the following paragraphs. Accounts payable Accounts payable are expressed at their nominal value. 4

13 Equity instruments Equity instruments issued by the Company are recorded at their historical costs in Uruguayan pesos, net of direct issuance costs. k. Consistency of accounting criteria The criteria applied in the valuation of assets and liabilities, as well as, the computation of net income are consistent with such applied on the fiscal year ended March 31, The adoption of the new financial standards mentioned in Note 3 did not have an effect over the figures issued in prior years related to the equity and profit of the Company. l. Use of estimates The preparation of financial statements requires that management make certain estimates and assumptions that affect the value of recorded assets and liabilities, contingent assets and liabilities disclosed as of balance sheet date and revenues and costs recognized during the fiscal year. Significant estimates and assumptions have been made regarding depreciations, deferred tax, recoverable value of long term assets and allowances. Actual results may differ from these estimates and evaluations made at the date of preparation of this financial statements. Note 4 - Property, plant and equipment The evolution of the balances is detailed below: (Expressed in Uruguayan pesos) Carrying amounts of: Leasehold improvements 92,673, ,587,374 Vehicles - - Furniture and fixtures 19,072,507 22,125,635 Computer equipments 12,139,213 14,266,009 Capital work in progress ,884, ,979,018 5

14 (Expressed in United States dollars) Carrying amounts of: Leasehold improvements 2,919,576 4,145,916 Vehicles - - Furniture and fixtures 600, ,618 Computer equipment 382, ,904 Capital work in progress - - 3,902,871 5,561,438 6

15 Note 5 - Intangible assets The evolution of the balances is detailed below: (Expressed in Uruguayan pesos) Carrying amounts of: Software 173, , , ,964 Cost Software Balance at April 1, ,156,814 Additions - Disposals - Balance at March 31, ,156,814 Additions - Disposals - Balance at March 31, ,156,814 Accumulated depreciation Software Balance at April 1, ,166,997 Depreciation expense 418,853 Balance at March 31, ,585,850 Depreciation expense 397,510 Balance at March 31, ,983,360 Carrying amounts at March 31, ,454 7

16 (Expressed in United States dollars) Carrying amounts of: Software 5,464 22,209 5,464 22,209 Cost Software Balance at April 1, ,263 Translation adjustment (16,473) Balance at March 31, ,790 Translation adjustment (23,338) Balance at March 31, ,452 Accumulated depreciation Software Balance at April 1, ,597 Depreciation expense 17,535 Translation adjustment (12,551) Balance at March 31, ,581 Depreciation expense 13,774 Translation adjustment (20,367) Balance at March 31, ,988 Carrying amounts at March 31, ,464 Note 6 - Trade and other receivables $ Equivalent in US$ Local receivables 2,168,191 2,350,890 68,307 91,442 Related parties (Note 17) 70,750,601 67,105,271 2,228,927 2,610,186 72,918,792 69,456,161 2,297,234 2,701,628 Trade and other receivables include amounts (see below for aged analysis) that are past due at the end of the reporting period for which the Company has not recognized an allowance for doubtful debts because they correspond to balances with related parties that are considered as recoverable. Aging of trade and other receivables: (Expressed in Uruguayan pesos) Local receivables Related parties Local receivables Related parties Less than 30 days 1,938,917 52,290,030 1,635,378 46,863,198 Between 31 and 60 days 72,997 7,017, ,583 3,926,695 Between 61 and 120 days 156,277 4,965, ,968 2,582,640 More than 120 days - 6,477, ,961 13,732,738 2,168,191 70,750,601 2,350,890 67,105,271 8

17 Note 7 - Other financial assets Corresponds to a short-term loan given to related parties for a total capital of US$ 6,000,000 with an annual interest rate of 4.5% (see Note 17). Note 8 - Other assets $ Equivalent in US$ Other current assets Tax credits 3,084,483 1,826,132 97,174 71,031 Related parties (Note 17) 38,609,375 34,964,521 1,216,350 1,360,011 Advances to employees 1,471,221 1,513,877 46,349 58,885 Advances to suppliers 256, ,165 8,066 23,189 Insurances paid in advance - 157,025-6,108 43,421,120 39,057,720 1,367,939 1,519,224 Other non-current assets Guarantee deposits 935, ,876 29,479 29, , ,876 29,479 29,479 Note 9 - Equity 9.1 Issued capital Paid in capital corresponds to 540,000 shares with a nominal value of $ 1 Uruguayan pesos each. 9.2 Legal reserve The Legal reserve has reached the maximum amount established by Article 93 of Law Retained earnings On February 19 th, 2015 it was determined to distribute dividends in advanced for a total of $ 24,475,000 (equivalent to US$ 1,000,000) in accordance to article 100 of Law On November 22nd, 2015 it was determined to distribute dividends to the stakeholders from the Retained earnings for a total amount of $17,264,000 (equivalent to US$ 6,000,000), which have been cancelled at year end. Note 10 - Trade and other payables $ Equivalent in US$ Local suppliers 1,482,505 7,353,293 46, ,020 Related parties (Note 17) 413,953 2,011,651 13,041 78,247 Provisions 7,029,163 6,533, , ,127 8,925,621 15,898, , ,394 9

18 Note 11 - Other liabilities $ Equivalent in US$ Payroll payable 407,943 1,254,778 12,852 48,807 Social security liabilities 15,348,212 16,754, , ,704 Provisions 54,453,669 76,235,759 1,715, Related parties (Note 17) 11,160,516 6,827, , ,579 Taxes liabilities 602,013 1,437,178 18,966 55,902 Others 2,054,430 3,182,626 64, ,794 84,026, ,692,766 2,647,180 4,111,120 The detailed of the provisions as well as the evolution of their balance is detailed below, expressed in Uruguayan pesos: Benefits to employees 52,294,409 58,628,227 Bonus 1,168,827 16,821,163 Other provisions 990, ,369 54,453,699 76,235,759 Benefit to employees Bonus Balance at April 1, ,908,830 - Additional provisions created 100,522,573 16,821,163 Reductions arising from payments 65,803,176 - Balance at March 31, ,628,227 16,821,163 Balance at April 1, ,628,227 16,821,163 Additional provisions created 107,879,820 1,168,827 Reductions arising from payments 114,213,638 16,821,163 Balance at March 31, ,294,409 1,168,827 10

19 Note 12 - Expenses by nature Cost of sales 2016 $ Equivalent in US$ Selling and administrative expenses Cost of sales Selling and administrative expenses Payroll and social security contributions 567,273,074 48,320,652 19,630,302 1,689,832 Depreciation - 26,342, ,814 Energy, water and communications 5,286,873 16,848, , ,885 Repair and maintenance 348,442 4,575,684 12, ,733 Leasehold - 21,173, ,911 Travelling expenses and transport 3,250,897 1,297, ,266 44,250 Fees - 3,318, ,218 Security expenses - 8,404, ,716 Marketing - 510,648-17,322 Stationery 15, , ,484 Other 526,142 5,417,867 17, , ,701, ,395,506 19,952,711 4,733,261 Cost of sales 2015 $ Equivalent in US$ Selling and administrative expenses Cost of sales Selling and administrative expenses Payroll and social security contributions 534,871,658 83,968,883 22,329,720 3,517,870 Depreciation - 25,137,902, - 1,054,194 Energy, water and communications 1,106,931 14,929,042 47, ,307 Repair and maintenance 822,341 1,387,956 34,393 58,228 Leasehold - 16,281, ,036 Travelling expenses and transport 1,410,932 2,674,208 58, ,963 Fees 424,241 1,367,650 17,350 57,557 Security expenses - 6,164, ,608 Marketing - 705,661-29,769 Stationery 73, ,145 3,090 12,723 Other 622,180 5,455,410 25, , ,331, ,373,455 22,516,425 6,620,655 Note 13 - Investment income $ Equivalent in US$ Interest income (Note 17) 2,936, ,097 95,545 5,249 2,936, ,097 95,545 5,249 11

20 Note 14 - Finance costs $ Equivalent in US$ Expenses - interest - (724,613) - (31,132) - (724,613) - (31,132) Note 15 - Other gains $ Equivalent in US Exchange rate difference 58,485,172 8,972,468 1,986, ,564 Other gains 68,741-2,335-58,553,913 8,972,468 1,988, ,564 Note 16 - Operating lease arrangements Operating leases relate to leases of buildings with lease terms between 1 6 years. The Company down not have an option to purchase the buildings at the expiry of the lease periods Payments recognized as an expense Minimum lease payments 21,173,992 16,281,252 21,173,992 16,281, Non-cancellable operating leases commitments Not later than 1 year 16,532,884 13,917,567 Later than 1 year and not later than 5 years 64,174,706 41,293,179 Later than 5 years 9,626,206 61,939,768 90,333, ,150,514 Note 17 - Related parties The Company has carried out transaction during the year and maintains, at yearend, balances with related parties whose nature and amounts are exposed below: $ Equivalent in US$ Assets Trade and other receivables current TCS America 44,706,748 61,032,666 1,408,441 2,373,981 TCS Brasil 19,202, ,961 - TCS Canada 6,841,186 6,072, , ,205 70,750,601 67,105,271 2,228,927 2,610,186 Other financial assets - current TCS México 191,025,302-6,018, ,025,302-6,018,061-12

21 $ Equivalent in US$ Other assets - current TCS India 31,802,660 29,660,985 1,001,911 1,153,720 TCS América 2,675,566 2,235,742 84,291 86,963 TCS México 2,346,704 1,245,830 73,931 48,459 TCS Colombia 1,707, ,464 53,791 30,863 TCS Holanda 76,816 62,216 2,420 2,421 TCS Iberoamerica , ,044 TCS Canada - 193,872-7,541 38,609,375 34,964,521 1,216,350 1,360,011 Liabilities Trade and aother payables - current TCS India 413,953 2,011,651 13,041 78, ,953 2,011,651 13,041 78,247 Other liabilities - current TCS India 9,706,548 5,032, , ,756 TCS México 1,111, ,989 35,002 4,862 TCS América 342, ,714 10,804 13,486 TCS Argentina - 1,323,371-51,475 11,160,516 6,827, , ,579 Transactions Sale of services TCS América 831,368, ,922,449 28,807,950 29,967,290 TCS Canada 49,752,580 73,776,308 1,723,988 3,085,341 TCS India 35,815,382 20,075,256 1,241, ,117 TCS Brasil 16,998, , ,935, ,774,013 32,362,018 33,886,748 Cost of services TCS India 15,185,881 38,110, ,210 1,601,523 TCS Mexico 1,781,413 1,346,961 61,728 56,367 16,967,294 39,457, ,938 1,657,890 Interest income TCS México 2,936,453-95,545-2,936,453-95,545 - Remuneration to the Board The members of the Company s board are not remunerated for carrying out their duties. Compensation to key management staff During the year ended March 31, 2016, remunerations to be paid to members of key management staff amounted to $ 12,184,537 equivalent to US$ 383,862. During the year ended March 31, 2015, remunerations to be paid to members of key management staff amounted to $ 11,236,019 equivalent to US$ 437,

22 Note 18 - Income tax 18.1 Income tax expense $ Equivalent Equivalent in US$ $ in US$ Current income tax (895,000) (31,942) (4,959,220) (206,164) Prior year adjustment 4,115, , Deferred income tax 558,877 17,781 (559,104) (22,563) Profit/(Loss) from income tax 3,779, ,730 (5,518,324) (228,727) 18.2 Reconciliation of income tax and book net income $ Profit (loss) before income tax 283,806, ,303,977 Income tax rate (70,951,673) (31,575,994) Adjustments Fiscal inflation adjustment - 20,720 Fixed assets 594,587 (361,558) Taxes and penalties 813,832 (1,061,049) Provisions (160,809) 1,752,422 Investment project - 5,794,005 Non-deductible expenses (266,131) (479,793) Net income not taxed (*) 52,056,761 25,313,259 Difference in the last year s income tax estimation 4,115,799 - Other adjustments 17,577, ,988 Profit/(Loss) from income tax 3,779,676 (5,518,324) Equivalent in US$ 132,730 (228,727) (*) In accordance with the Resolution issued by the Ministry of Economy and Finance on January 17 th, 2012, and the article 3 rd, of Decree 207/008, the Entity has an exoneration of the 70% of the income from outsourcing services of business process if TCS Uruguay S.C. generates 100 qualified working places; or an exoneration of the 100% in case it provides a minimum of 150 qualified working places and that their service is used in 100% on services to foreign countries. In relation to this, the Entity has accomplished with the first requirements receiving an exoneration of the 70% over the income product of this kind of services Assets and liabilities for deferred income tax Assets and liabilities for deferred income tax have been offset. The opening of deferred income tax account s balances before being offset is presented below: 2016 Originated by: 2015 Recognized in income statement 2016 Property, plant and equipment (29,177) 533, ,000 Previsions 6,300 25,700 32,000 Net deferred income tax assets (22,877) 558, ,000 Equivalent in US$ (890) 17,781 16,886 14

23 Note 19 - Financial risk management Exchange rate risk Exchange rate risk is determined by the exposure of the Company to foreign currency fluctuation, detailed as follows: 2016 US$ C$ R$ Equivalent $ Assets Cash and cash equivalent 381, ,118,842 Trade and other receivables 2,440, ,200 2,174, ,346,304 Other assets 313, ,955,307 Other financial assets 6,018, ,025,292 Total 9,153, ,200 2,174, ,445,745 Liabilities Trade and other payables 345,515 24,667-11,570,865 Other liabilities 164, ,209,307 Total 509,629 24,667-16,780,172 Net position 8,644, ,533 2,174, ,665, US$ C$ Equivalent $ Assets Cash and cash equivalent 4,240, ,020,608 Trade and other receivables 2,271, ,580 65,428,656 Other assets 1,425,592-36,650,540 Total 7,937, , ,099,804 Liabilities Trade and other payables 576,324-14,816,714 Other liabilities 48,672 26,891 1,797,413 Total 624,996 26,891 16,614,127 Net position 7,312, , ,485,677 The Company is mainly exposed to changes in the rate of the Uruguayan peso. The following table shows the sensitivity of the foreign currency position if: there is a devaluation scenario of 20% or an appreciation scenario of 20% for the exchange rate of the US dollar against the Uruguayan peso. (Figures expressed in Uruguayan pesos) Scenario 1 Devaluation Loss (54,875,665) Scenario 2 Appreciation Profit 54,875,665 Interest risk The Company does not hold significant commercial or financial assets or liabilities subject to the change in the interest rate, because the loans to related parties were made under fix rates (Note 17). 15

24 Credit risk The main financial assets of the Company consist of accounts receivable and related parties. The amounts presented in the balance sheet are net of provisions for bad debts estimated by Management, based on past experience and the assessment of its current financial situation. The Company accrues the largest concentration of its credits in the group s counterparts. Liquidity risks The Company is substantially financed by related parties (Note 17). Note 20 - Investment tax credit On June 25 th, 2015 the Ministry of Economy and Finance determined to give a tax benefit to TCS Uruguay S.A. under regulatory Decree 455/07 of Law of Promotion and protection of investments. This benefit grants an exemption of 50,166,818 IU from IRAE (Corporate income tax) for 40.71% of the eligible investment to be used in a 6-year term and an exemption from IP (Net worth tax) on movable fixed assets for the whole of their useful lives and on civil works for a term of 8 years. Note 21 - Subsequent events There have been no events or circumstances subsequent to March 31 st, 2016 that could significantly affect the Company s balance sheet, operating income and cash flows. 16

25 Juncal 1385, 11 th floor Montevideo, Uruguay Phone: Fax: