SEC Filings

6-K
WNS (HOLDINGS) LTD filed this Form 6-K on 08/06/2018
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Table of Contents

As at June 30, 2018, our Indian subsidiary, WNS Global, had unsecured lines of credit of 1,100.0 million ($16.1 million based on the exchange rate on June 30, 2018) from The Hongkong and Shanghai Banking Corporation Limited, $15.0 million from BNP Paribas, 1,200.0 million ($17.5 million based on the exchange rate on June 30, 2018) from Citibank N.A. and 810.0 million ($11.8 million based on the exchange rate on June 30, 2018) from Standard Chartered Bank for working capital purposes. Interest on these lines of credit would be determined on the date of the borrowing. These lines of credit generally can be withdrawn by the relevant lender at any time. As at June 30, 2018, there was no amount utilized from these lines of credit.

In February 2018, WNS UK renewed its working capital facility obtained from HSBC Bank plc. of £9.9 million ($13.1 million based on the exchange rate on June 30, 2018) until February 28, 2019. The working capital facility bears interest at Bank of England base rate plus a margin of 2.45% per annum. Interest is payable on a quarterly basis. The facility is subject to conditions to drawdown and can be withdrawn by the lender at any time by notice to the borrower. As at June 30, 2018, there was no outstanding amount under this facility.

As at June 30, 2018, our South African subsidiary, WNS Global Services SA (Pty) Ltd., had an unsecured line of credit of ZAR 20.5 million ($1.5 million based on the exchange rate on June 30, 2018) from The HSBC Bank plc. for working capital purposes. This facility bears interest at prime rate plus margin of 2.25% per annum. This line of credit can be withdrawn by the lender at any time. As at June 30, 2018, there was no outstanding amount under this facility.

In January 2017, our United States subsidiary, WNS North America Inc., obtained a term loan facility for $34.0 million from BNP Paribas, Hong Kong. The proceeds from this loan facility were used to finance our acquisition of Denali. The loan bears interest at a rate equivalent to the three-month US dollar LIBOR plus a margin of 1.27% per annum. In connection with the term loan, we have entered into an interest rate swap with a bank to swap the variable portion of the interest based on three month US dollar LIBOR to a fixed rate of 1.5610%. WNS North America Inc.’s obligations under the term loan are guaranteed by WNS. The term loan is secured by a pledge of shares of Denali held by WNS North America Inc. and security over the assets of WNS North America Inc. The facility agreement for the term loan contains certain covenants, including restrictive covenants relating to our indebtedness and financial covenants relating to our EBITDA to debt service ratio and total borrowings to EBITDA ratio, each as defined in the facility agreement. The loan matures in January 2020 and the principal is repayable in six semi-annual installments. The first five repayment installments are $5.7 million each and the sixth and final repayment installment is $5.8 million. On July 20, 2017, January 22, 2018 and July 20, 2018, we made scheduled repayments of $5.7 million each, following which, $17.1 million was outstanding under this loan facility.

In March 2017, our Mauritius subsidiary, WNS (Mauritius) Limited, obtained a term loan facility for $84.0 million from HSBC Bank (Mauritius) Ltd. and Standard Chartered Bank, UK. The proceeds from this loan facility were used to finance our acquisition of HealthHelp. The loan bears interest at a rate equivalent to the three-month US dollar LIBOR plus a margin of 0.95% per annum. In connection with the term loan, we have entered into interest rate swaps with banks to swap the variable portion of the interest based on three month US dollar LIBOR to a fixed rate of 1.9635%. WNS (Mauritius) Limited’s obligations under the term loan are guaranteed by WNS. The term loan is secured by a pledge of shares of WNS (Mauritius) Limited held by WNS. The facility agreement for the term loan contains certain covenants, including restrictive covenants relating to our indebtedness and financial covenants relating to our EBITDA to debt service ratio and total borrowings to EBITDA ratio, each as defined in the facility agreement. The loan matures in March 2022 and the principal is repayable in ten semiannual installments of $8.4 million each. On September 14, 2017 and March 14, 2018, we made scheduled repayments of $8.4 million each. As at June 30, 2018, $67.2 million was outstanding under this loan facility.

Based on our current level of operations, we expect that our anticipated cash generated from operating activities, cash and cash equivalents on hand, and use of existing credit facilities will be sufficient to fund our debt repayment obligations, estimated capital expenditures, share repurchase, contingent consideration for our acquisitions of Denali and HealthHelp and working capital needs for the next 12 months. However, if our lines of credit were to become unavailable for any reason, we would require additional financing to fund our debt repayment obligations, capital expenditures, share repurchase, contingent consideration for our acquisitions of Denali and HealthHelp and working capital needs. We currently expect our capital expenditures needs in fiscal 2019 to be approximately $32.0 million. The geographical distribution, timing and volume of our capital expenditures in the future will depend on new client contracts we may enter into or the expansion of our business under our existing client contracts. Our capital expenditure for the three months ended June 30, 2018 amounted to $9.2 million and our capital commitments (net of capital advances) as at June 30, 2018 was $7.9 million. Further, under the current challenging economic and business conditions as discussed under “— Global Economic Conditions” above, there can be no assurance that our business activity would be maintained at the expected level to generate the anticipated cash flows from operations. If the current market conditions deteriorate, we may experience a decrease in demand for our services, resulting in our cash flows from operations being lower than anticipated. If our cash flows from operations are lower than anticipated, including as a result of the ongoing downturn in the market conditions or otherwise, we may need to obtain additional financing to meet our debt repayment obligations and pursue certain of our expansion plans. Further, we may in the future make further acquisitions. If we have significant growth through acquisitions or require additional operating facilities beyond those currently planned to service new client contracts, we may also need to obtain additional financing. We believe in maintaining maximum flexibility when it comes to financing our business. We regularly evaluate our current and future financing needs. Depending on market conditions, we may access the capital markets to strengthen our capital position, and provide us with additional liquidity for general corporate purposes, which may include capital expenditures acquisitions, refinancing of our indebtedness and working capital. If current market conditions deteriorate, we may not be able to obtain additional financing or any such additional financing may be available to us on unfavorable terms. An inability to pursue additional opportunities will have a material adverse effect on our ability to maintain our desired level of revenue growth in future periods.

The following table shows our cash flows for the three months ended June 30, 2018 and June 30, 2017:

 

     Three months ended June 30,  
     2018      2017  
     (US dollars in millions)  

Net cash provided by operating activities

   $ 14.7      $ 14.1  

Net cash (used in)/provided by investing activities

   $ (19.7    $ 17.0  

Net cash (used in) / provided by financing activities

   $ (22.6    $ 1.1  

Cash Flows from Operating Activities

Net cash provided by operating activities increased to $14.7 million for the three months ended June 30, 2018 from $14.1 million for the three months ended June 30, 2017. The increase in net cash provided by operating activities was attributable to an increase in profit as adjusted by non-cash and other items by $6.4 million, a decrease in cash outflow towards income taxes paid by $1.9 million, a decrease in cash outflow towards interest paid by $0.2 million and an increase in cash inflow from interest received by $0.1 million, partially offset by an increase in cash outflow towards working capital requirements by $7.9 million.

 

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