SEC Filings

20-F
WNS (HOLDINGS) LTD filed this Form 20-F on 05/16/2018
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Table of Contents

Selling and marketing expenses increased by $8.2 million to $38.7 million in fiscal 2018 from $30.5 million in fiscal 2017, primarily due to an increase in employee costs as a result of an increase in sales headcount and higher travel cost. Further, the appreciation of the pound sterling and Indian rupee against the US dollar by an average of 1.4% and 3.9% respectively, in fiscal 2018, as compared to the average exchange rate for fiscal 2017, resulted in an increase in selling and marketing expenses.

The foreign exchange gains were primarily due to higher gains of $8.5 million from our US dollar denominated hedges as a result of an appreciation of the pound sterling against the US dollar and our rupee denominated hedges as a result of a appreciation of the Pound Sterling against the Indian rupee, partially offset by a higher foreign currency revaluation loss of $8.0 million arising from a loss of $4.1 million for the year ended March 31, 2018 as against a gain of $3.9 million for the year ended March31, 2017

Fiscal 2017 compared to Fiscal 2016

Segment operating profit in the WNS Global BPM segment decreased by 4.2% to $112.3 million in fiscal 2017 from $117.2 million in fiscal 2016. The decrease was primarily attributable to higher cost of revenue, higher general and administrative expenses, and higher selling and marketing expense, partially offset by higher segment revenue and higher foreign exchange gains.

Our cost of revenue increased by $46.5 million to $361.0 million in fiscal 2017 from $314.5 million in fiscal 2016, primarily on account of (i) an increase in employee costs by $33.6 million on account of higher headcount, (ii) an increase in facilities costs by $11.0 million due to an expansion of our existing facility in Gurgaon, India, the addition of new facilities in South Africa and addition of new facilities due to our acquisitions of Value Edge, Denali, and HealthHelp, (iii) an increase in depreciation cost by $1.6 million, and (iv) an increase in travel cost by $0.3 million. Also, the depreciation of the Indian rupee and South African rand against the US dollar by an average of 2.6% and 2.3%, respectively, in fiscal 2017, as compared to the respective average exchange rates in fiscal 2016, resulted in a lower cost of revenue of approximately $6.0 million.

Our other costs include selling and marketing expenses, general and administrative expenses and foreign exchange loss or gain. Our other costs increased by $7.1 million to $84.7 million in fiscal 2017 from $77.6 million in fiscal 2016, primarily on account of (i) an increase in general and administrative expenses by $9.4 million, and (ii) an increase in selling and marketing expenses by $1.4 million partially offset by an increase in foreign exchange gain by $3.7 million.

General and administrative expenses increased by $9.4 million to $68.9 million in fiscal 2017 from $59.5 million in fiscal 2016, primarily due to an increase in employee costs as a result of higher salaries on account of a higher headcount and wage inflation, higher legal and professional expenses (including costs related to our acquisitions) and higher other costs, and higher travel cost, partially offset by the depreciation of the Indian rupee and South African rand against the US dollar by an average of 2.6% and 2.3%, respectively, for fiscal 2017, as compared to the respective average exchange rates for fiscal 2016.

Selling and marketing expenses increased by $1.4 million to $30.5 million in fiscal 2017 from $29.1 million in fiscal 2016, primarily due to an increase in employee costs as a result of an increase in sales headcount and higher travel cost, partially offset by lower marketing costs, and the depreciation of the pound sterling against the US dollar by an average of 13.4% in fiscal 2017, as compared to the average exchange rate for fiscal 2016 resulted in a lower cost.

The foreign exchange gains were primarily due to higher gains of $2.8 million from our rupee and pound denominated hedge contracts as a result of a depreciation of the pound sterling against the US dollar, and a higher foreign currency revaluation gain of $0.8 million arising from a $3.9 million gain in fiscal 2017 from a gain of $3.1 million in fiscal 2016.

Segment Profit

Segment profit in the WNS Global BPM segment increased by 28.7% to $131.4 million in fiscal 2018 from $102.1 million in fiscal 2017. The increase in profit was primarily attributable to higher operating profit, lower provision for income taxes and higher other income, net, partially offset by higher finance expense.

The other income, net increased by $2.0 million in fiscal 2018 to $9.8 million from $7.8 million in fiscal 2017 primarily due to higher cash and cash equivalents and investments, partially offset by lower interest yield and earnings due to funds utilized for our share repurchases in fiscal 2018.

The finance expense for fiscal 2018 was $4.1 million as compared to $0.5 million in fiscal 2017 primarily due to interest on long term loans obtained during the fourth quarter of fiscal 2017 to fund our acquisitions of Denali and HealthHelp.

Provision for income taxes in fiscal 2018 was $15.3 million as compared to $17.4 million in fiscal 2017. Provision for income taxes was lower primarily on account of a one-time tax benefit of $ 1.7 million arising from a corporate legal restructuring and a net one-time tax benefit $ 5.2 million resulting from the adjustments to the deferred tax balances due to a reduction in US corporate tax rate and transition tax charge on undistributed income of a foreign subsidiary (pursuant to the 2017 US Tax Reforms), partially offset by higher taxable profits during the year.

 

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