Company registration number 05210127 (England and Wales)
VIRTUSA UK LIMITED
ANNUAL REPORT AND FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MARCH 2023
VIRTUSA UK LIMITED
COMPANY INFORMATION
Directors
Thomas Holler
Ashish Devalekar
Vaidyanathan Mahadevan
Eranga Ranpati Pathirage
(Appointed 3 May 2022)
Company number
05210127
Registered office
8th Floor
26 Finsbury Square
London
EC2A 1DS
Auditor
Morgan Berkeley Limited
Westgate Chambers
8a Elm Park Road
Pinner
Middlesex
HA5 3LA
VIRTUSA UK LIMITED
CONTENTS
Page
Strategic report
1 - 3
Directors' report
4 - 5
Independent auditor's report
6 - 8
Profit and loss account
9
Statement of comprehensive income
10
Balance sheet
11
Statement of changes in equity
12
Notes to the financial statements
13 - 24
VIRTUSA UK LIMITED
STRATEGIC REPORT
FOR THE YEAR ENDED 31 MARCH 2023
- 1 -

The directors present the strategic report for the year ended 31 March 2023.

Principal activities

Virtusa UK Limited's ("The Company", "we", ''us" or "our'') principal activity was the provision of software development and consultancy services to large enterprises in the financial services, communication, content and technology sectors. We help our clients solve critical business problems by leveraging a combination of our distinctive consulting approach, end-to-end digital engineering capabilities, unique platforming methodology, and deep domain and technology expertise. Virtusa UK is ultimately owned by Virtusa Corporation, which operates technology centres in India, Sri Lanka and Hungary.

 

On 1 April 2022, the company was acquired by Virtusa Consulting & Services Limited through a share for exchange. The company was previously fully owned by Virtusa Netherlands B.V. The acquisition was in line with the business consolidation strategy implemented in the UK. Virtusa Consulting & Services Limited acquired trade and assets of Virtusa UK Limited at a fair value consideration of £184m through interest bearing loan notes at a rate of 2.25% per annum.

 

Activities

As the entity's trade and assets were transferred, there was no economic activities for the whole financial year other than the interest receivable on the loan notes.

 

Strategy

The long-term strategy of this entity is to keep it as a dormant entity.

 

Outlook

The outlook is same as strategy, the entity will remain dormant for the foreseeable future.

 

Principal risks and uncertainties

As there will be no economic activities, hence, do not foresee any risks / uncertainties during coming years.

 

 

Geo political risk

As there is no economic activities, do not anticipate any Geo-Political risks to this entity.

 

VIRTUSA UK LIMITED
STRATEGIC REPORT (CONTINUED)
FOR THE YEAR ENDED 31 MARCH 2023
- 2 -
Section 172(1) Statement

This statement contains an overview of how the directors have performed their duty to promote the success of the company as set out in section 172(1) of the UK's Companies Act 2006. The section requires the director of the company to act in a way that would most likely promote the success of the company for the benefit of its shareholders. In doing this, the director must have regard, amongst other matters, to:

 

Decision Making

The Directors understand our business and the markets within which we operate. By focusing on our objectives, the strategy set by the board is intended to ensure that we continue to deliver value to our customers, partners, and other stakeholders. All matters that, under the Company's governance arrangements, are reserved for decision by the Directors are presented at senior management meetings. Directors are briefed on any potential impacts and risks for our customers, partners, and other stakeholders and how these are to be managed. The Directors consider these factors before making a final decision, which, they believe is in the best interests of the Company.

 

Employees

Employee engagement is a primary focus for the Directors of the Company, empowering employees to contribute to improving business performance and creating an environment in which everyone can fulfil their potential. We keep the Company's employees informed about what is happening across the company through our intranet, email, and leadership briefings.

 

 

Fostering business relationships with Suppliers, Customer and Others

The Directors recognise that fostering business relationships with key stakeholders, such as customers, suppliers, and regulatory authorities, is essential to the Company's success. As a subsidiary of a US entity, the Company follow a group wide Code of Business Conduct and Ethics, which provides all employees of the Group with guidance on the key principles that each employee should follow.

 

Impact on the community and the Environment

The Directors recognise the importance of leading a company that not only generates value for stakeholders but also contributes to wider society. Through the company's program, UK employees are encouraged to take part in charitable initiatives aimed at supporting local communities within which we operate.

 

Maintaining a reputation for high standards of business conduct

The Directors consider it is fundamental to maintain a culture focused on embedding responsible business behaviours. All employees of the Company are expected to act in accordance with the requirements of the Code of Business Conduct and Ethics, at all times.

 

The need to act fairly between members of the Company

The Directors recognise their responsibility in ensuring that all members of the Company are treated fairly regardless of age, gender and orientation. The Company has implemented a number of programs designated to celebrate the diversity that characterises our organisation.

VIRTUSA UK LIMITED
STRATEGIC REPORT (CONTINUED)
FOR THE YEAR ENDED 31 MARCH 2023
- 3 -

On behalf of the board

Eranga Ranpati Pathirage
Director
24 May 2023
VIRTUSA UK LIMITED
DIRECTORS' REPORT
FOR THE YEAR ENDED 31 MARCH 2023
- 4 -

The directors present their annual report and financial statements for the year ended 31 March 2023.

Results and dividends

The results for the year are set out on page 9.

Ordinary dividends were paid amounting to £187,730,720. The directors do not recommend payment of a further dividend.

Directors

The directors who held office during the year and up to the date of signature of the financial statements were as follows:

Shanaka Jayawardena
(Resigned 16 May 2022)
Thomas Holler
Ashish Devalekar
Vaidyanathan Mahadevan
Eranga Ranpati Pathirage
(Appointed 3 May 2022)
Auditor

Morgan Berkeley Limited were appointed as auditor to the company and in accordance with section 485 of the Companies Act 2006, a resolution proposing that they be re-appointed will be put at a General Meeting.

Energy and carbon report

As the company has not consumed more than 40,000 kWh of energy in this reporting period, it qualifies as a low energy user under these regulations and is not required to report on its emissions, energy consumption or energy efficiency activities.

Statement of directors' responsibilities

The directors are responsible for preparing the annual report and the financial statements in accordance with applicable law and regulations.

 

Company law requires the directors to prepare financial statements for each financial year. Under that law the directors have elected to prepare the financial statements in accordance with United Kingdom Generally Accepted Accounting Practice (United Kingdom Accounting Standards and applicable law). Under company law the directors must not approve the financial statements unless they are satisfied that they give a true and fair view of the state of affairs of the company and of the profit or loss of the company for that period. In preparing these financial statements, the directors are required to:

 

 

The directors are responsible for keeping adequate accounting records that are sufficient to show and explain the company’s transactions and disclose with reasonable accuracy at any time the financial position of the company and enable them to ensure that the financial statements comply with the Companies Act 2006. They are also responsible for safeguarding the assets of the company and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.

VIRTUSA UK LIMITED
DIRECTORS' REPORT (CONTINUED)
FOR THE YEAR ENDED 31 MARCH 2023
- 5 -
Statement of disclosure to auditor

So far as each person who was a director at the date of approving this report is aware, there is no relevant audit information of which the company’s auditor is unaware. Additionally, the directors individually have taken all the necessary steps that they ought to have taken as directors in order to make themselves aware of all relevant audit information and to establish that the company’s auditor is aware of that information.

On behalf of the board
Eranga Ranpati Pathirage
Director
24 May 2023
VIRTUSA UK LIMITED
INDEPENDENT AUDITOR'S REPORT
TO THE MEMBERS OF VIRTUSA UK LIMITED
- 6 -
Opinion

We have audited the financial statements of Virtusa UK Limited (the 'company') for the year ended 31 March 2023 which comprise the profit and loss account, the statement of comprehensive income, the balance sheet, the statement of changes in equity and notes to the financial statements, including significant accounting policies. The financial reporting framework that has been applied in their preparation is applicable law and United Kingdom Accounting Standards, including Financial Reporting Standard 102 The Financial Reporting Standard applicable in the UK and Republic of Ireland (United Kingdom Generally Accepted Accounting Practice).

In our opinion the financial statements:

Basis for opinion

We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK)) and applicable law. Our responsibilities under those standards are further described in the Auditor's responsibilities for the audit of the financial statements section of our report. We are independent of the company in accordance with the ethical requirements that are relevant to our audit of the financial statements in the UK, including the FRC’s Ethical Standard, and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

Conclusions relating to going concern

In auditing the financial statements, we have concluded that the directors' use of the going concern basis of accounting in the preparation of the financial statements is appropriate.

 

Based on the work we have performed, we have not identified any material uncertainties relating to events or conditions that, individually or collectively, may cast significant doubt on the company's ability to continue as a going concern for a period of at least twelve months from when the financial statements are authorised for issue.

 

Our responsibilities and the responsibilities of the directors with respect to going concern are described in the relevant sections of this report.

Other information

The other information comprises the information included in the annual report other than the financial statements and our auditor's report thereon. The directors are responsible for the other information contained within the annual report. Our opinion on the financial statements does not cover the other information and, except to the extent otherwise explicitly stated in our report, we do not express any form of assurance conclusion thereon. Our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the course of the audit, or otherwise appears to be materially misstated. If we identify such material inconsistencies or apparent material misstatements, we are required to determine whether this gives rise to a material misstatement in the financial statements themselves. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact.

 

We have nothing to report in this regard.

Opinions on other matters prescribed by the Companies Act 2006

In our opinion, based on the work undertaken in the course of our audit:

VIRTUSA UK LIMITED
INDEPENDENT AUDITOR'S REPORT (CONTINUED)
TO THE MEMBERS OF VIRTUSA UK LIMITED
- 7 -
Matters on which we are required to report by exception

In the light of the knowledge and understanding of the company and its environment obtained in the course of the audit, we have not identified material misstatements in the strategic report or the directors' report.

 

We have nothing to report in respect of the following matters in relation to which the Companies Act 2006 requires us to report to you if, in our opinion:

Responsibilities of directors

As explained more fully in the directors' responsibilities statement, the directors are responsible for the preparation of the financial statements and for being satisfied that they give a true and fair view, and for such internal control as the directors determine is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error. In preparing the financial statements, the directors are responsible for assessing the company's ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the directors either intend to liquidate the company or to cease operations, or have no realistic alternative but to do so.

Auditor's responsibilities for the audit of the financial statements

Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor's report that includes our opinion. Reasonable assurance is a high level of assurance but is not a guarantee that an audit conducted in accordance with ISAs (UK) will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements.

Irregularities, including fraud, are instances of non-compliance with laws and regulations. We design procedures in line with our responsibilities, outlined above, to detect material misstatements in respect of irregularities, including fraud. We also considered laws and regulations that have a direct impact on the preparation of the financial statements, such as the Companies Act 2006.

 

We evaluated the directors’ and management’s incentives and opportunities for fraudulent manipulation of the financial statements (including the risk of override of controls) and determined that the principal risks were related to posting manual journal entries to manipulate financial performance.

Our audit procedures were designed to respond to those identified risks, including non-compliance with laws and regulations (irregularities) and fraud that are material to the financial statements. Our audit procedures included but were not limited to:

 

VIRTUSA UK LIMITED
INDEPENDENT AUDITOR'S REPORT (CONTINUED)
TO THE MEMBERS OF VIRTUSA UK LIMITED
- 8 -

Our audit procedures in relation to fraud included but were not limited to:

 

 

There are inherent limitations in the audit procedures described above and the primary responsibility for the prevention and detection of irregularities including fraud rests with management. As with any audit, there remained a risk of non-detection of irregularities, as these may involve collusion, forgery, intentional omissions, misrepresentations or the override of internal controls.

A further description of our responsibilities is available on the Financial Reporting Council’s website at: https://www.frc.org.uk/auditorsresponsibilities. This description forms part of our auditor's report.

Ash Dissanaike FCCA (Senior Statutory Auditor)
For and on behalf of Morgan Berkeley Limited
24 May 2023
Chartered Certified Accountants
Statutory Auditor
Westgate Chambers
8a Elm Park Road
Pinner
Middlesex
HA5 3LA
VIRTUSA UK LIMITED
PROFIT AND LOSS ACCOUNT
FOR THE YEAR ENDED 31 MARCH 2023
- 9 -
2023
2022
Notes
£
£
Turnover
3
-
141,474,980
Cost of sales
-
0
(125,391,573)
Gross profit
-
16,083,407
Administrative expenses
-
0
(11,216,521)
Other operating income
-
0
3,597,199
Operating profit
4
-
8,464,085
Interest receivable and similar income
7
4,148,338
1,854
Interest payable and similar expenses
8
-
0
(100,008)
Other non-operating income
-
2,598,175
Profit/(loss) on disposal of operations
177,785,730
-
Profit before taxation
181,934,068
10,964,106
Tax on profit
9
(788,183)
(2,536,342)
Profit for the financial year
181,145,885
8,427,764

The profit and loss account has been prepared on the basis that all operations are continuing operations.

VIRTUSA UK LIMITED
STATEMENT OF COMPREHENSIVE INCOME
FOR THE YEAR ENDED 31 MARCH 2023
- 10 -
2023
2022
£
£
Profit for the year
181,145,885
8,427,764
Other comprehensive income
Cash flow hedges gain arising in the year
432
1,524,718
Cash flow hedges gain reclassified to profit or loss
-
0
951,199
Tax relating to other comprehensive income
-
0
(634,752)
Other comprehensive income for the year
432
1,841,165
Total comprehensive income for the year
181,146,317
10,268,929
VIRTUSA UK LIMITED
BALANCE SHEET
AS AT 31 MARCH 2023
31 March 2023
- 11 -
2023
2022
Notes
£
£
£
£
Fixed assets
Tangible assets
11
-
0
1,006,659
Current assets
Debtors
13
1
43,134,165
Cash at bank and in hand
-
0
7,362,802
1
50,496,967
Creditors: amounts falling due within one year
14
-
0
(35,927,789)
Net current assets
1
14,569,178
Total assets less current liabilities
1
15,575,837
Creditors: amounts falling due after more than one year
15
-
0
(8,123,190)
Provisions for liabilities
Deferred tax liability
16
-
0
867,809
-
(867,809)
Net assets
1
6,584,838
Capital and reserves
Called up share capital
17
1
100
Share premium account
-
0
199,900
Hedging reserve
-
0
989,965
Profit and loss reserves
-
0
5,394,873
Total equity
1
6,584,838
The financial statements were approved by the board of directors and authorised for issue on 24 May 2023 and are signed on its behalf by:
Eranga Ranpati Pathirage
Director
Company registration number 05210127 (England and Wales)
VIRTUSA UK LIMITED
STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 31 MARCH 2023
- 12 -
Share capital
Share premium account
Hedging reserve
Profit and loss reserves
Total
Notes
£
£
£
£
£
Balance at 1 April 2021
100
199,900
(851,200)
(3,032,891)
(3,684,091)
Year ended 31 March 2022:
Profit for the year
-
-
-
8,427,764
8,427,764
Other comprehensive income:
Cash flow hedges gains
-
-
1,524,718
-
1,524,718
Gains reclassified to profit or loss
-
-
951,199
-
951,199
Tax relating to other comprehensive income
-
-
(634,752)
-
0
(634,752)
Total comprehensive income for the year
-
-
1,841,165
8,427,764
10,268,929
Balance at 31 March 2022
100
199,900
989,965
5,394,873
6,584,838
Year ended 31 March 2023:
Profit for the year
-
-
-
181,145,885
181,145,885
Other comprehensive income:
Cash flow hedges gains
-
-
432
-
432
Total comprehensive income for the year
-
-
432
181,145,885
181,146,317
Dividends
10
-
-
-
(187,730,720)
(187,730,720)
Redemption of shares
17
(99)
(199,900)
-
99
(199,900)
Other movements
-
-
(990,397)
1,189,863
199,466
Balance at 31 March 2023
1
-
0
-
0
-
0
1
VIRTUSA UK LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MARCH 2023
- 13 -
1
Accounting policies
Company information

Virtusa UK Limited is a private company limited by shares incorporated in England and Wales. The registered office is 8th Floor, 26 Finsbury Square, London, EC2A 1DS.

1.1
Accounting convention

These financial statements have been prepared in accordance with FRS 102 “The Financial Reporting Standard applicable in the UK and Republic of Ireland” (“FRS 102”) and the requirements of the Companies Act 2006.

The financial statements are prepared in sterling, which is the functional currency of the company. Monetary amounts in these financial statements are rounded to the nearest £.

The financial statements have been prepared under the historical cost convention, and certain financial instruments at fair value. The principal accounting policies adopted are set out below.

The Company's ultimate parent undertaking, Virtusa Corporation includes the Company in its consolidated financial statements. The consolidated financial statements of Virtusa Corporation are prepared in accordance with US GAAP and are available at 132 Turnpike Road, Suite # 300, Southborough, MA 01772, United States. In these financial statements, the company is considered to be a qualifying entity (for the purposes of this FRS) and has applied the exemptions available under FRS 102 in respect of the following disclosures:

 

 

As the consolidated financial statements of Virtusa Corporation include the equivalent disclosures, the Company has also taken the exemptions under FRS 102 available in respect of the following disclosures:

 

1.2
Going concern

Atruet the time of approving the financial statements, the directors have a reasonable expectation that the company has adequate resources to continue in operational existence for the foreseeable future. Thus the directors continue to adopt the going concern basis of accounting in preparing the financial statements.

VIRTUSA UK LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 MARCH 2023
1
Accounting policies
(Continued)
- 14 -
1.3
Turnover

Revenue represents the value recoverable (excluding value added tax) from customers for information technology services performed during the year. The Company's revenue is derived from software development and information technology services. These services are performed under both time and material and fixed price arrangements.

 

Revenue related to services performed without signed agreement or other persuasive evidence of an arrangement, is not recognised until the agreement is signed or such other evidence of an agreement exist. If customer collection is uncertain, revenue will be recognised based on cash collection. However, the cost related to the performance of these services are recognised in the period the services are rendered.

 

The Company recognises revenue on time and material contracts as the service are performed. Revenue from maintenance contracts is recognised on a pro rata basis on the number of months completed.

 

Revenue from fixed price contracts is recognised as the service is performed using the percentage of completion (POC) accounting method. The POC is determined by comparing the actual hours of work performed to date to the estimated total hours to complete each contract. Where the value of work performed differs from amounts invoiced to the customer, any excess work performed is recorded as accrued income and any shortfall is recorded as deferred income.

1.4
Tangible fixed assets

Tangible fixed assets are initially measured at cost and subsequently measured at cost or valuation, net of depreciation and any impairment losses.

Depreciation is recognised so as to write off the cost or valuation of assets less their residual values over their useful lives on the following bases:

Fixtures and fittings
14 % straightline method
Computers
20 - 33 % straightline method

The gain or loss arising on the disposal of an asset is determined as the difference between the sale proceeds and the carrying value of the asset, and is credited or charged to profit or loss.

1.5
Impairment of fixed assets

At each reporting period end date, the company reviews the carrying amounts of its tangible 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). Where 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.

Recoverable amount is the higher of fair value less costs to sell and value in use. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset for which the estimates of future cash flows have not been adjusted.

VIRTUSA UK LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 MARCH 2023
1
Accounting policies
(Continued)
- 15 -
1.6
Financial instruments

The company has elected to apply the provisions of Section 11 ‘Basic Financial Instruments’ and Section 12 ‘Other Financial Instruments Issues’ of FRS 102 to all of its financial instruments.

 

Financial instruments are recognised in the company's balance sheet when the company becomes party to the contractual provisions of the instrument.

 

Financial assets and liabilities are offset, with the net amounts presented in the financial statements, when there is a legally enforceable right to set off the recognised amounts and there is an intention to settle on a net basis or to realise the asset and settle the liability simultaneously.

Basic financial assets

Basic financial assets, which include debtors and cash and bank balances, are initially measured at transaction price including transaction costs and are subsequently carried at amortised cost using the effective interest method unless the arrangement constitutes a financing transaction, where the transaction is measured at the present value of the future receipts discounted at a market rate of interest. Financial assets classified as receivable within one year are not amortised.

Other financial assets

Other financial assets, including investments in equity instruments which are not subsidiaries, associates or joint ventures, are initially measured at fair value, which is normally the transaction price. Such assets are subsequently carried at fair value and the changes in fair value are recognised in profit or loss, except that investments in equity instruments that are not publicly traded and whose fair values cannot be measured reliably are measured at cost less impairment.

Impairment of financial assets

Financial assets, other than those held at fair value through profit and loss, are assessed for indicators of impairment at each reporting end date.

 

Financial assets are impaired where there is objective evidence that, as a result of one or more events that occurred after the initial recognition of the financial asset, the estimated future cash flows have been affected. If an asset is impaired, the impairment loss is the difference between the carrying amount and the present value of the estimated cash flows discounted at the asset’s original effective interest rate. The impairment loss is recognised in profit or loss.

 

If there is a decrease in the impairment loss arising from an event occurring after the impairment was recognised, the impairment is reversed. The reversal is such that the current carrying amount does not exceed what the carrying amount would have been, had the impairment not previously been recognised. The impairment reversal is recognised in profit or loss.

Derecognition of financial assets

Financial assets are derecognised only when the contractual rights to the cash flows from the asset expire or are settled, or when the company transfers the financial asset and substantially all the risks and rewards of ownership to another entity, or if some significant risks and rewards of ownership are retained but control of the asset has transferred to another party that is able to sell the asset in its entirety to an unrelated third party.

Classification of financial liabilities

Financial liabilities and equity instruments are classified according to the substance of the contractual arrangements entered into. An equity instrument is any contract that evidences a residual interest in the assets of the company after deducting all of its liabilities.

VIRTUSA UK LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 MARCH 2023
1
Accounting policies
(Continued)
- 16 -
Basic financial liabilities

Basic financial liabilities, including creditors, bank loans, loans from fellow group companies and preference shares that are classified as debt, are initially recognised at transaction price unless the arrangement constitutes a financing transaction, where the debt instrument is measured at the present value of the future payments discounted at a market rate of interest. Financial liabilities classified as payable within one year are not amortised.

 

Debt instruments are subsequently carried at amortised cost, using the effective interest rate method.

 

Trade creditors are obligations to pay for goods or services that have been acquired in the ordinary course of business from suppliers. Amounts payable are classified as current liabilities if payment is due within one year or less. If not, they are presented as non-current liabilities. Trade creditors are recognised initially at transaction price and subsequently measured at amortised cost using the effective interest method.

Other financial liabilities

Derivatives, including interest rate swaps and forward foreign exchange contracts, are not basic financial instruments. Derivatives are initially recognised at fair value on the date a derivative contract is entered into and are subsequently re-measured at their fair value. Changes in the fair value of derivatives are recognised in profit or loss in finance costs or finance income as appropriate, unless hedge accounting is applied and the hedge is a cash flow hedge.

 

Debt instruments that do not meet the conditions in FRS 102 paragraph 11.9 are subsequently measured at fair value through profit or loss. Debt instruments may be designated as being measured at fair value through profit or loss to eliminate or reduce an accounting mismatch or if the instruments are measured and their performance evaluated on a fair value basis in accordance with a documented risk management or investment strategy.

 

Cash flow hedges

The Company enters into forward foreign exchange contracts to mitigate the risk of changes in foreign exchange rates on intercompany transactions and forecasted transactions denominated in foreign currencies. The Company designates derivative contracts as cash flow hedges and any ineffective portions if they satisfy the criteria for hedge accounting. Changes in fair values of derivatives designated as cash flow hedges are deferred and recorded as a component of accumulated other comprehensive income, net of taxes, until the hedged transactions occur and are then recognized in the statements of income, the effective components are recognized in the same line item as the underlying and any ineffective components would be recognized as other income (expense). Changes in fair value of derivatives not designated as hedging instruments are recognized immediately in the statements of income.

 

With respect to derivatives designated as cash flow hedges, the Company formally documents all relationships between hedging instruments and hedged items, as well as its risk management objectives and strategy for undertaking various hedge transactions. The Company also formally assesses both at the inception of the hedge and on an ongoing basis, whether each derivative will be highly effective in offsetting changes in fair values or cash flows of the hedged item. If the Company determines that a derivative or a portion thereof is not highly effective as a hedge, or if a derivative ceases to qualify for hedge accounting, the Company prospectively discontinues hedge accounting with respect to that derivative.

 

Derecognition of financial liabilities

Financial liabilities are derecognised when the company’s contractual obligations expire or are discharged or cancelled.

1.7
Taxation

The tax expense represents the sum of the tax currently payable and deferred tax.

VIRTUSA UK LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 MARCH 2023
1
Accounting policies
(Continued)
- 17 -
Current tax

The tax currently payable is based on taxable profit for the year. Taxable profit differs from net profit as reported in the profit and loss account because it excludes items of income or expense that are taxable or deductible in other years and it further excludes items that are never taxable or deductible. The company’s liability for current tax is calculated using tax rates that have been enacted or substantively enacted by the reporting end date.

Deferred tax

Deferred tax liabilities are generally recognised for all timing differences and deferred tax assets are recognised to the extent that it is probable that they will be recovered against the reversal of deferred tax liabilities or other future taxable profits. Such assets and liabilities are not recognised if the timing difference arises from goodwill or from the initial recognition of other assets and liabilities in a transaction that affects neither the tax profit nor the accounting profit.

 

The carrying amount of deferred tax assets is reviewed at each reporting end date and reduced to the extent that it is no longer probable that sufficient taxable profits will be available to allow all or part of the asset to be recovered. Deferred tax is calculated at the tax rates that are expected to apply in the period when the liability is settled or the asset is realised. Deferred tax is charged or credited in the profit and loss account, except when it relates to items charged or credited directly to equity, in which case the deferred tax is also dealt with in equity. Deferred tax assets and liabilities are offset when the company has a legally enforceable right to offset current tax assets and liabilities and the deferred tax assets and liabilities relate to taxes levied by the same tax authority.

1.8
Employee benefits

The costs of short-term employee benefits are recognised as a liability and an expense, unless those costs are required to be recognised as part of the cost of stock or fixed assets.

 

The cost of any unused holiday entitlement is recognised in the period in which the employee’s services are received.

 

Termination benefits are recognised immediately as an expense when the company is demonstrably committed to terminate the employment of an employee or to provide termination benefits.

VIRTUSA UK LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 MARCH 2023
1
Accounting policies
(Continued)
- 18 -
1.9
Leases

Operating leases and finance leases are charged to the profit and loss account accordingly.

1.10
Foreign exchange

Transactions in currencies other than pounds sterling are recorded at the rates of exchange prevailing at the dates of the transactions. At each reporting end date, monetary assets and liabilities that are denominated in foreign currencies are retranslated at the rates prevailing on the reporting end date. Gains and losses arising on translation in the period are included in profit or loss.

2
Judgements and key sources of estimation uncertainty

In the application of the company’s accounting policies, the directors are required to make judgements, estimates and assumptions about the carrying amount of assets and liabilities that are not readily apparent from other sources. The estimates and associated assumptions are based on historical experience and other factors that are considered to be relevant. Actual results may differ from these estimates.

 

The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised where the revision affects only that period, or in the period of the revision and future periods where the revision affects both current and future periods.

Group pricing adjustment

 

The Company obtains significant proportions of the resources required from other entities within the Virtusa Corporation group. An initial price for such transactions is agreed and recorded within the appropriate line in the profit and loss account as determined by their nature. To reflect an appropriate allocation of overall profit within the group for the activities undertaken by each entity the group periodically determines adjustments to those prices. The directors do not consider these adjustments to relate solely or directly to individual profit and loss account lines and so do not allocate these adjustments.

3
Turnover and other revenue
2023
2022
£
£
Turnover analysed by class of business
Services
-
141,474,980
2023
2022
£
£
Other revenue
Interest income
4,148,338
1,854
2023
2022
£
£
Turnover analysed by geographical market
United Kingdom and Europe
-
139,321,357
Asia and Middle East
-
607,800
USA
-
1,545,823
-
141,474,980
VIRTUSA UK LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 MARCH 2023
- 19 -
4
Operating profit
2023
2022
Operating profit for the year is stated after charging/(crediting):
£
£
Exchange gains
-
0
(87,828)
Hedging and exchange (gains)/losses
-
0
74,393
Cash flow hedging gains reclassified to profit or loss
-
0
(668,275)
Fees payable to the company's auditor for the audit of the company's financial statements
-
0
35,000
Depreciation of owned tangible fixed assets
-
356,184
Operating lease charges
-
257,151
5
Employees

The average monthly number of persons (including directors) employed by the company during the year was:

2023
2022
Number
Number
Delivery
-
162
Leadership, Sales and Marketing
-
27
Finance, HR and Administration
-
9
Total
-
0
198

Their aggregate remuneration comprised:

2023
2022
£
£
Wages and salaries
-
0
29,182,180
Social security costs
-
3,577,484
-
0
32,759,664
6
Directors' remuneration
2023
2022
£
£
Remuneration for qualifying services
-
0
862,675
VIRTUSA UK LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 MARCH 2023
6
Directors' remuneration
(Continued)
- 20 -
Remuneration disclosed above include the following amounts paid to the highest paid director:
2023
2022
£
£
Remuneration for qualifying services
n/a
697,696

As total directors' remuneration was less than £200,000 in the current year, no disclosure is provided for that year.

The remuneration for other directors are paid by the ultimate parent, Virtusa Corporation and are not included in the amount above.

7
Interest receivable and similar income
2023
2022
£
£
Interest income
Interest on bank deposits
-
0
1,854
Interest receivable from group companies
4,148,338
-
0
Total income
4,148,338
1,854
8
Interest payable and similar expenses
2023
2022
£
£
Interest on bank overdrafts and loans
-
8
Interest payable to group undertakings
-
0
100,000
-
0
100,008
9
Taxation
2023
2022
£
£
Current tax
UK corporation tax on profits for the current period
788,183
2,217,243
Deferred tax
Origination and reversal of timing differences
-
0
413,393
Adjustment in respect of prior periods
-
0
(94,294)
Total deferred tax
-
0
319,099
Total tax charge
788,183
2,536,342
VIRTUSA UK LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 MARCH 2023
9
Taxation
(Continued)
- 21 -

Of the charge to current tax in relation to discontinued operations, £0 relates to tax on profits and £0 arose on disposal.

The actual charge for the year can be reconciled to the expected charge for the year based on the profit or loss and the standard rate of tax as follows:

2023
2022
£
£
Profit before taxation
181,934,068
10,964,106
Expected tax charge based on the standard rate of corporation tax in the UK of 19.00% (2022: 19.00%)
34,567,473
2,083,180
Tax effect of expenses that are not deductible in determining taxable profit
-
0
22,720
Tax effect of income not taxable in determining taxable profit
(33,779,290)
-
0
Adjustments in respect of prior years
-
0
194,769
Permanent capital allowances in excess of depreciation
-
0
(83,426)
Transfer pricing provision and other adjustment
-
0
319,099
Taxation charge for the year
788,183
2,536,342

In addition to the amount charged to the profit and loss account, the following amounts relating to tax have been recognised directly in other comprehensive income:

2023
2022
£
£
Reclassifications from equity to profit or loss:
Relating to cash flow hedges
-
634,752

Factors that may affect future tax income

UK Corporation tax rate at 19% (effective 1 April 2020) was substantively enacted on 17 March 2020, reversing the previously enacted reduction in the rate from 19% to 17%. This will increase the company's future current tax charge accordingly. The deferred tax asset at 31 March 2023 has been calculated at 19% (2022: 19%)

In the 3 March 2021 budget, it was announced that the UK tax rate will increase to 25% from 1st April 2023. This will have a consequential effect on the company's future tax charge.

The company's tax returns are under enquiry with HM Revenue & Customs for the periods 2018, 2019, 2020 and 2021 in relation to transfer pricing exposures. Whilst the outcome of the enquiry is uncertain, with a range of possible outcomes, the provision reflects possible outcomes for those years. However, transfer pricing is a judgmental area and the final settlement may vary.

10
Dividends
2023
2022
£
£
Final paid
187,730,720
-
0
VIRTUSA UK LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 MARCH 2023
- 22 -
11
Tangible fixed assets
Fixtures and fittings
Computers
Total
£
£
£
Cost
At 1 April 2022
860,541
1,589,957
2,450,498
Transfers
(860,541)
(1,589,957)
(2,450,498)
At 31 March 2023
-
0
-
0
-
0
Depreciation and impairment
At 1 April 2022
586,859
856,980
1,443,839
Transfers
(586,859)
(856,980)
(1,443,839)
At 31 March 2023
-
0
-
0
-
0
Carrying amount
At 31 March 2023
-
0
-
0
-
0
At 31 March 2022
273,682
732,977
1,006,659
12
Financial instruments
2023
2022
£
£
Carrying amount of financial assets
Instruments measured at fair value through other comprehensive income
-
2,315,217

 

13
Debtors
2023
2022
Amounts falling due within one year:
£
£
Trade debtors
-
0
28,660,595
Corporation tax recoverable
-
0
1,875,627
Amounts owed by group undertakings
-
0
5,872,239
Derivative financial instruments
-
2,315,217
Other debtors
1
334,910
Prepayments and accrued income
-
0
744,994
1
39,803,582
Deferred tax asset (note 16)
-
0
45,151
1
39,848,733
VIRTUSA UK LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 MARCH 2023
13
Debtors
(Continued)
- 23 -
2023
2022
Amounts falling due after more than one year:
£
£
Other debtors
-
0
1,500,057
Prepayments and accrued income
-
0
1,689,693
-
3,189,750
Deferred tax asset (note 16)
-
0
95,682
-
0
3,285,432
Total debtors
1
43,134,165

Included within prepayments and accrued income is an amount of £nil (2022: £4,699) relating to fixed assets yet to be capitalised.

 

Derivative financial instruments

The forward exchange contracts are the only financial assets and financial liabilities carried at fair value. The fair value of forward exchange contracts is estimated by discounting the difference between the contractual forward price and the current forward price for the residual maturity of the contract. The fair value of such contracts at the balance sheet date is an asset of £nil (2022: £2,315,217) and a liability of £nil (2022: £nil)

 

 

14
Creditors: amounts falling due within one year
2023
2022
Notes
£
£
Trade creditors
-
0
1,018,842
Amounts owed to group undertakings
-
0
18,743,647
Taxation and social security
-
0
7,500,645
Deferred income
-
0
1,000,321
Other creditors
-
0
396,081
Accruals and deferred income
-
0
7,268,253
-
0
35,927,789
15
Creditors: amounts falling due after more than one year
2023
2022
£
£
Corporation tax
-
0
7,467,736
Other creditors
-
0
655,454
-
0
8,123,190
VIRTUSA UK LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 MARCH 2023
- 24 -
16
Deferred taxation

The following are the major deferred tax liabilities and assets recognised by the company and movements thereon:

Liabilities
Liabilities
Assets
Assets
2023
2022
2023
2022
Balances:
£
£
£
£
Accelerated capital allowances
-
400,215
-
-
Bad debt
-
-
-
23,496
Unpaid liabilities
-
-
-
21,656
Derivative financial instruments
-
454,024
-
-
Lease
-
13,570
-
-
RDEC
-
-
-
95,681
-
867,809
-
140,833
There were no deferred tax movements in the year.
17
Share capital
2023
2022
2023
2022
Ordinary share capital
Number
Number
£
£
Issued and fully paid
of £1 each
1
100
1
100
18
Operating lease commitments
Lessee

At the reporting end date the company had outstanding commitments for future minimum lease payments under non-cancellable operating leases, which fall due as follows:

2023
2022
£
£
Within one year
-
0
388,122
Between two and five years
-
0
543,781
-
0
931,903
19
Ultimate controlling party

The Company is a subsidiary of Virtusa Consulting & Services Limited. The ultimate controlling party is Virtusa Corporation.

 

The largest group in which the results of the Company are consolidated is headed by Virtusa Corporation, incorporated in United States of America. The consolidated financial statements of the group are available at 132 Turnpike Road, Suite # 300, Southborough, MA 01772, United States.

2023-03-312022-04-01falseCCH SoftwareCCH Accounts Production 2023.200No description of principal activityShanaka JayawardenaThomas HollerAshish DevalekarVaidyanathan MahadevanEranga Ranpati Pathirage181145885052101272022-04-012023-03-3105210127bus:Director22022-04-012023-03-3105210127bus:Director32022-04-012023-03-3105210127bus:Director42022-04-012023-03-3105210127bus:Director52022-04-012023-03-3105210127bus:Director12022-04-012023-03-3105210127bus:RegisteredOffice2022-04-012023-03-31052101272023-03-31052101272021-04-012022-03-3105210127core:RetainedEarningsAccumulatedLosses2021-04-012022-03-3105210127core:RetainedEarningsAccumulatedLosses2022-04-012023-03-3105210127core:HedgingReserve2022-04-012023-03-3105210127core:HedgingReserve2021-04-012022-03-3105210127core:RevenueReservesInvestmentFundsOnly2021-04-012022-03-31052101272022-03-3105210127core:FurnitureFittings2023-03-3105210127core:ComputerEquipment2023-03-3105210127core:FurnitureFittings2022-03-3105210127core:ComputerEquipment2022-03-3105210127core:CurrentFinancialInstrumentscore:WithinOneYear2023-03-3105210127core:CurrentFinancialInstrumentscore:WithinOneYear2022-03-3105210127core:Non-currentFinancialInstrumentscore:AfterOneYear2023-03-3105210127core:Non-currentFinancialInstrumentscore:AfterOneYear2022-03-3105210127core:CurrentFinancialInstruments2023-03-3105210127core:CurrentFinancialInstruments2022-03-3105210127core:Non-currentFinancialInstruments2023-03-3105210127core:Non-currentFinancialInstruments2022-03-3105210127core:ShareCapital2023-03-3105210127core:ShareCapital2022-03-3105210127core:SharePremium2023-03-3105210127core:SharePremium2022-03-3105210127core:HedgingReserve2023-03-3105210127core:HedgingReserve2022-03-3105210127core:RetainedEarningsAccumulatedLosses2023-03-3105210127core:RetainedEarningsAccumulatedLosses2022-03-3105210127core:ShareCapital2021-03-3105210127core:SharePremium2021-03-3105210127core:HedgingReserve2021-03-3105210127core:RetainedEarningsAccumulatedLosses2021-03-3105210127core:ShareCapital2022-04-012023-03-3105210127core:SharePremium2022-04-012023-03-3105210127core:FurnitureFittings2022-04-012023-03-3105210127core:ComputerEquipment2022-04-012023-03-310521012712022-04-012023-03-310521012712021-04-012022-03-310521012722022-04-012023-03-310521012722021-04-012022-03-3105210127core:UKTax2022-04-012023-03-3105210127core:UKTax2021-04-012022-03-3105210127core:FurnitureFittings2022-03-3105210127core:ComputerEquipment2022-03-31052101272022-03-3105210127core:Non-currentFinancialInstruments12023-03-3105210127core:Non-currentFinancialInstruments12022-03-3105210127core:WithinOneYear2023-03-3105210127core:WithinOneYear2022-03-3105210127core:BetweenTwoFiveYears2023-03-3105210127core:BetweenTwoFiveYears2022-03-3105210127bus:PrivateLimitedCompanyLtd2022-04-012023-03-3105210127bus:FRS1022022-04-012023-03-3105210127bus:Audited2022-04-012023-03-3105210127bus:FullAccounts2022-04-012023-03-31xbrli:purexbrli:sharesiso4217:GBP