WNS (NYSE:WNS)
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WNS (Holdings) Limited (NYSE: WNS), a leading provider of offshore
business process outsourcing (BPO) services, today announced results for
the fiscal year ended March 31, 2008 and released its guidance for
fiscal 2009.
Revenue for fiscal 2008 of $459.9 million increased 30.5% over the prior
fiscal year. Revenue less repair payments of $290.7 million increased
32.3% over the prior fiscal year. This growth in revenue less repair
payments for the year was achieved despite the loss of First Magnus
Financial Corporation as a client following its bankruptcy filing in
August 2007. First Magnus Financial Corporation contributed $4.2 million
in revenue less repair payments in fiscal 2008, a decline from $15.0
million in fiscal 2007.
“WNS has ended fiscal 2008 on a strong note
with our profitability back on track and our sales engine gaining
momentum.” said Neeraj Bhargava, Group Chief
Executive Officer. “In spite of challenges in
the mortgage area, we have accomplished 32% growth in our revenue less
repair payments, expanded our global footprint, diversified our client
base, delivered significant value to our clients and strengthened our
industry-focused BPO businesses. We are excited about our prospects in
fiscal 2009 and are well prepared to execute against the tremendous
opportunities we see in the global BPO market.”
Net income for fiscal 2008 was $9.5 million, a decrease of 64.3% from
the prior fiscal year. This decrease was primarily due to a one-time
impairment charge of $15.5 million in respect of goodwill and intangible
assets and also costs related to the redeployment of resources
associated with the bankruptcy of First Magnus Financial Corporation.
Net income (excluding share-based compensation, related fringe benefit
taxes, and amortization and impairment of goodwill and intangible
assets) was $37.0 million, an increase of 15.0% from the prior year.
This increase was achieved despite the loss of First Magnus Financial
Corporation as a client and the significant appreciation of the Indian
Rupee against the U.S. Dollar since fiscal 2007.
WNS recorded a basic income per ADS of $0.23 for fiscal 2008. Basic
income per ADS (excluding share-based compensation, related fringe
benefit taxes, and amortization and impairment of goodwill and
intangible assets) was $0.88 for the year. The fiscal fourth quarter
basic income per ADS of $0.14 was affected by unusually high fringe
benefit taxes on share-based compensation of $1.5 million, or $0.03 per
ADS. This was essentially cash neutral for WNS as these taxes were
recovered from employees exercising stock options and recognized as
additional exercise price of options under Additional Paid in Capital on
our Balance Sheet.
“Our fourth quarter profitability was higher
than expected as we managed our operations tightly while investing in
growth opportunities” said Alok Misra, Group
Chief Financial Officer. “Our cost structure,
expected recurring revenue stream, diverse client base and foreign
exchange hedging strategy prepare us well for the coming year.”
Financial Highlights: Fiscal Fourth
Quarter Ended March 31, 2008
Quarterly revenue of $116.1 million, up 4.9% from the corresponding
quarter last year.
Quarterly revenue less repair payments of $75.2 million, up 17.4% from
the corresponding quarter last year.
Quarterly net income of $6.1 million, down 31.7% from the
corresponding quarter last year.
Quarterly net income (excluding share-based compensation, related
fringe benefit taxes and amortization of intangible assets) of $10.1
million, down 4.9% from the corresponding quarter last year.
Quarterly basic income per ADS of $0.14, down from basic income per
share of $0.22 for the corresponding quarter last year.
Quarterly basic income per ADS (excluding share-based compensation,
related fringe benefit taxes and amortization of intangible assets) of
$0.24, down from $0.26 for the corresponding quarter last year.
Cash flows from operating activities of $41.1 million for fiscal 2008,
up from $39.3 million for fiscal 2007
Financial Highlights: Fiscal Year Ended
March 31, 2008
Revenue of $459.9 million, up 30.5% from fiscal 2007.
Revenue less repair payments of $290.7 million, up 32.3% from fiscal
2007.
Net income of $9.5 million, down 64.3% from fiscal 2007.
Net income (excluding share-based compensation, related fringe benefit
taxes, and amortization and impairment of goodwill and intangible
assets) of $37.0 million, up 15.0% from fiscal 2007.
Basic income per ADS of $0.23, down from $0.69 for fiscal 2007.
Basic income per ADS (excluding share-based compensation, related
fringe benefit taxes, and amortization and impairment of goodwill and
intangible assets) of $0.88, up from $0.83 for fiscal 2007.
Reconciliations of non-GAAP financial measures to GAAP operating results
are included at the end of this release.
Key Organizational Developments
In the past quarter, WNS announced key measures to expand its global
service delivery capabilities, including:
A joint-venture in the Philippines with Advance Contact Solutions
Inc., a leader in BPO services and customer care, with an initial
capacity of 200 seats.
The acquisition of UK auto insurance claims processor Call 24/7, which
extends the market leadership position of WNS in this space.
WNS also continued to receive recognition for its excellence in finance
and accounting services. Recently, the company was recognized for “Outstanding
finance and accounting best practices” by FAO
Research Inc. on two client engagements.
Fiscal 2009 Guidance
WNS also provided guidance for the fiscal year ending March 31, 2009:
Revenue less repair payments is expected to be between $373 million
and $378 million.
This guidance factors in no revenue from the Build-Operate-Transfer
contract with AVIVA from June 2008, assuming AVIVA exercises its
option in May 2008 to require us to transfer to it the Pune facility
related to this contract.
Net income (excluding share-based compensation and related fringe
benefit taxes, amortization and impairment of goodwill and intangible
assets) is expected to be between $44.0 million and $46.0 million.
Conference Call
WNS will host a conference call on May 16, at 8 a.m. (EDT) to discuss
the company's quarterly results. To participate, callers can dial
1-800-295-3991 from within the U.S. or +1-617-614-3924 from any other
country. The participant passcode is 1352836. A replay will be made
available online at www.wnsgs.com for
a period of three months beginning two hours after the end of the call.
About WNS
WNS [NYSE: WNS] is
a leading global Business Process Outsourcing company. Deep industry and
business process knowledge, a partnership approach, comprehensive
service offering and a proven track record enables WNS to deliver
business value to some of the leading companies in the world. With over
18,000 employees, WNS is passionate about building a market leading
company valued by our clients, employees, business partners, investors
and communities. For more information, please visit our website at www.wnsgs.com.
About Non-GAAP Financial Measures
For financial statement reporting purposes, the company has two
reportable segments: WNS Global BPO and WNS Auto Claims BPO. In the auto
claims segment, WNS provides claims-handling and accident-management
services, in which it arranges for automobile repairs through a network
of third-party repair centers. In its accident-management services, WNS
acts as the principal in dealings with the third-party repair centers
and clients.
The amounts invoiced to WNS clients for payments made by WNS to
third-party repair centers are reported as revenue. As the company
wholly subcontracts the repairs to the repair centers, it evaluates its
financial performance based on revenue less repair payments to third
party repair centers, which is a non-GAAP measure.
WNS believes revenue less repair payments reflects more accurately the
value addition of the business process services it directly provides to
its clients. The presentation of this non-GAAP information is not meant
to be considered in isolation or as a substitute for the company's
financial results prepared in accordance with U.S. GAAP. WNS revenue
less repair payments may not be comparable to similarly titled measures
reported by other companies due to potential differences in the method
of calculation.
Safe Harbor Statement under the
provisions of the United States Private Securities Litigation Reform Act
of 1995
This news release contains forward-looking statements, as defined in the
safe harbor provisions of the U.S. Private Securities Litigation Reform
Act of 1995. These statements involve a number of risks, uncertainties
and other factors that could cause actual results to differ materially
from those that may be projected by these forward looking statements.
These risks and uncertainties include but are not limited to
technological innovation; telecommunications or technology disruptions;
future regulatory actions and conditions in our operating areas; our
dependence on a limited number of clients in a limited number of
industries; our ability to attract and retain clients; our ability to
expand our business or effectively manage growth; our ability to hire
and retain enough sufficiently trained employees to support our
operations; negative public reaction in the US or the UK to offshore
outsourcing; regulatory, legislative and judicial developments;
increasing competition in the business process outsourcing industry;
political or economic instability in India, Sri Lanka and Jersey;
worldwide economic and business conditions, including a slowdown in the
U.S. and Indian economies and in the sectors in which our clients are
based and a slowdown in the BPO and IT sectors world-wide; our ability
to successfully consummate strategic acquisitions, as well as other
risks detailed in our reports filed with the U.S. Securities and
Exchange Commission. These filings are available at www.sec.gov.
We may, from time to time, make additional written and oral
forward-looking statements, including statements contained in our
filings with the Securities and Exchange Commission and our reports to
shareholders. You are cautioned not to place undue reliance on these
forward-looking statements, which reflect management’s
current analysis of future events. We undertake no obligation to
publicly update or revise any forward-looking statements, whether as a
result of new information, future events or otherwise.
WNS (HOLDINGS) LIMITED
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(Amounts in thousands, except per share data)
Three months ended March 31,
Year ended March 31,
2008
2007
2008
2007
Revenue
Third parties
$115,133
$109,987
$456,401
$345,216
Related parties
988
684
3,466
7,070
116,121
110,671
459,867
352,286
Cost of revenue
88,786
85,157
363,322
271,174
Gross profit
27,335
25,514
96,545
81,112
Operating expenses
Selling, general and administrative expenses
21,418
16,280
72,699
52,461
Amortization of intangible assets
663
456
2,869
1,896
Impairment of goodwill, intangible and other assets
-
-
15,464
-
Operating income
5,254
8,778
5,513
26,755
Other income (expense), net
2,221
1,251
9,184
2,500
Interest income (expense), net
20
-
(3)
(100)
Income before income taxes
7,495
10,029
14,694
29,155
Provision for income taxes
1,435
1,156
5,194
2,574
Net income
$6,060
$8,873
$9,500
$26,581
Basic income per share
$0.14
$0.22
$0.23
$0.69
Diluted income per share
$0.14
$0.21
$0.22
$0.65
Non-GAAP measure note:
In addition to its reported operating results in accordance with U.S.
generally accepted accounting principles (US GAAP). WNS has included in
the table below non-GAAP operating measures that the Securities and
Exchange Commission defines as “non-GAAP
financial measures”. Management believes that
such non-GAAP financial measures, when read in conjunction with the
company’s reported results, can provide
useful supplemental information for investors analyzing period to period
comparisons of the company’s results. The
non-GAAP financial measures disclosed by the company should not be
considered a substitute for, or superior to, financial measures
calculated in accordance with GAAP, and the financial results calculated
in accordance with GAAP and reconciliations to those financial
statements should be carefully evaluated.
Reconciliation of revenue less repair payments (non-GAAP) to
revenue (GAAP)
Amount in thousands
Three months ended
Year ended
March 31, 2008
March 31, 2007
March 31, 2008
March 31, 2007
Revenue less repair payments (Non-GAAP)
75,153
64,034
290,717
219,700
Add: Payments to repair centers
40,968
46,637
169,150
132,586
Revenue (GAAP)
116,121
110,671
459,867
352,286
Reconciliation of cost of revenue (non-GAAP to GAAP)
Amount in thousands
Three months ended
Year ended
March 31, 2008
March 31, 2007
March 31, 2008
March 31, 2007
Cost of revenue (Non-GAAP)
47,818
38,520
194,172
138,588
Add: Payments to repair centers
40,968
46,637
169,150
132,586
Cost of revenue (GAAP)
88,786
85,157
363,322
271,174
Reconciliation of selling, general and administrative expense
(non-GAAP to GAAP)
Amount in thousands
Three months ended
Year ended
March 31, 2008
March 31, 2007
March 31, 2008
March 31, 2007
Selling, general and administrative expenses (excluding share-based
compensation expense and FBT1) (Non-GAAP)
18,632
15,461
65,997
49,773
Add: Share-based compensation expense
1,323
819
4,380
2,688
Add: FBT1
1,463
2,322
Selling, general and administrative expenses (GAAP)
21,418
16,280
72,699
52,461
1 FBT means the fringe benefit taxes on options
and restricted share units granted to employees under the WNS 2002 Stock
Incentive Plan and the WNS 2006 Incentive Award Plan (as applicable)
payable by WNS to the government of India.
Reconciliation of operating income (non-GAAP to GAAP)
Amount in thousands
Three months ended
Year ended
March 31, 2008
March 31, 2007
March 31, 2008
March 31, 2007
Operating income (excluding share-based compensation, amortization
of intangible assets, impairment of goodwill and intangible assets,
and FBT1) (Non-GAAP)
9,287
10,518
32,985
32,334
Less: Share-based compensation expense
1,907
1,284
6,816
3,683
Less: Amortization of intangible assets
663
456
2,869
1,896
Less: Impairment of goodwill and other assets
9,106
Less: Impairment of intangible assets
6,359
Less: FBT1
1,463
2,322
Operating income (GAAP)
5,254
8,778
5,513
26,755
Reconciliation of net income (non-GAAP to GAAP)
Amount in thousands
Three months ended
Year ended
March 31, 2008
March 31, 2007
March 31, 2008
March 31, 2007
Net income (excluding share-based compensation, amortization of
intangible assets, impairment of goodwill and intangible assets, and
FBT1) (Non-GAAP)
10,093
10,612
36,972
32,160
Less: Share-based compensation expense
1,907
1,284
6,816
3,683
Less: Amortization of intangible assets
663
456
2,869
1,896
Less: Impairment of goodwill and other assets
9,106
Less: Impairment of intangible assets
6,359
Less: FBT1
1,463
2,322
Net income (GAAP)
6,060
8,872
9,500
26,581
Reconciliation of basic income per ADS (non-GAAP to GAAP)
Three months ended
Year ended
March 31, 2008
March 31, 2007
March 31, 2008
March 31, 2007
Basic income per ADS (excluding share-based compensation expense,
amortization and impairment of goodwill and intangible assets, and
FBT1) (Non-GAAP)
$0.24
$0.26
$0.88
$0.83
Less: Adjustments for share-based compensation expense, amortization
and impairment of goodwill and intangible assets, and FBT1
$0.10
$0.04
$0.65
$0.14
Basic income per ADS (GAAP)
$0.14
$0.22
$0.23
$0.69
Reconciliation of diluted income per ADS (non-GAAP to GAAP)
Three months ended
Year ended
March 31, 2008
March 31, 2007
March 31, 2008
March 31, 2007
Diluted income per ADS (excluding share-based compensation expense,
amortization and impairment of goodwill and intangible assets, and
FBT1) (Non-GAAP)
$0.24
$0.25
$0.86
$0.78
Less: Adjustments for share-based compensation expense, amortization
and impairment of goodwill and intangible assets, and FBT1
$0.10
$0.04
$0.64
$0.13
Diluted income/(loss) per ADS (GAAP)
$0.14
$0.21
$0.22
$0.65
WNS (HOLDINGS) LIMITED
CONDENSED CONSOLIDATED BALANCE SHEETS
(Amounts in thousands, except share and per share data)
As of March 31,
2008
As of March 31,
2007
ASSETS
Current assets
Cash and cash equivalents
102,698
112,340
Bank deposits and marketable securities
8,074
12,000
Accounts receivable, net of allowance of $1,784 and $364,
respectively
47,302
40,340
Accounts receivable — related parties
586
252
Funds held for clients
6,473
6,589
Employee receivables
1,179
1,289
Prepaid expenses
3,776
2,162
Prepaid income taxes
2,776
3,225
Deferred tax assets
618
701
Other current assets
8,596
4,524
Total current assets
182,078
183,422
Goodwill
87,470
37,356
Intangible assets, net
9,393
7,091
Property and equipment, net
50,840
41,830
Deferred contract costs and other advances –
non current
1,278
—
Deposits
7,391
3,081
Deferred tax assets
8,055
3,101
TOTAL ASSETS
$346,505
$275,881
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities
Accounts payable
$15,562
$18,505
Accounts payable — related parties
6
246
Accrued employee costs
26,848
18,492
Deferred revenue — current
7,790
9,827
Income taxes payable
1,879
88
Obligation under capital leases — current
—
13
Deferred tax liabilities
211
—
Accrual – earn out payment for acquisition
33,699
—
Other current liabilities
25,806
16,239
Total current liabilities
111,801
63,410
Deferred revenue – non current
1,549
5,051
Deferred rent
2,627
1,098
Accrued pension liability
1,544
771
Deferred tax liabilities – non current
1,834
23
Commitments and contingencies
Total liabilities
119,355
70,353
Shareholders’ equity:
Ordinary shares, $0.16 (10 pence) par value, Authorized: 50,000,000
shares;
Issued and outstanding: 42,363,100 and 41,842,879 shares,
respectively
6,622
6,519
Additional paid-in-capital
167,459
154,952
Ordinary shares subscribed: 1,666 and 30,022 shares, respectively
10
137
Retained earnings
38,839
30,685
Accumulated other comprehensive income
14,220
13,235
Total shareholders’ equity
227,150
205,528
TOTAL LIABILITIES AND SHAREHOLDERS’
EQUITY
$346,505
$275,881