SEC Filings

6-K
WNS (HOLDINGS) LTD filed this Form 6-K on 01/31/2019
Entire Document
 
Form 6-K
Table of Contents

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

 

Form 6-K

 

 

Report of Foreign Private Issuer

Pursuant to Rule 13a-16 or 15d-16 under

the Securities Exchange Act of 1934

For the quarter ended December 31, 2018

Commission File Number 001—32945

 

 

WNS (HOLDINGS) LIMITED

(WNS (Holdings) Limited)

 

 

Gate 4, Godrej & Boyce Complex

Pirojshanagar, Vikhroli (W)

Mumbai 400 079, India

+91-22 - 4095 - 2100

(Address of principal executive office)

 

 

Indicate by check mark whether the registrant files or will file annual reports under cover Form 20-F or Form 40-F.

Form 20-F   ☒             Form 40-F   ☐

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(1):   ☐

Note: Regulation S-T Rule 101(b)(1) only permits the submission in paper of a Form 6-K if submitted solely to provide an attached annual report to security holders.

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(7):   ☐

Note: Regulation S-T Rule 101(b)(7) only permits the submission in paper of a Form 6-K if submitted to furnish a report or other document that the registrant foreign private issuer must furnish and make public under the laws of the jurisdiction in which the registrant is incorporated, domiciled or legally organized (the registrant’s “home country”), or under the rules of the home country exchange on which the registrant’s securities are traded, as long as the report or other document is not a press release, is not required to be and has not been distributed to the registrant’s security holders, and, if discussing a material event, has already been the subject of a Form 6-K submission or other Commission filing on EDGAR.

 

 

 


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WNS (Holdings) Limited is incorporating by reference the information set forth in this Form 6-K into its registration statements on Form S-8 filed on July 31, 2006 (File No: 333-136168), Form S-8 filed on February 17, 2009 (File No. 333-157356), Form S-8 filed on September 15, 2011 (File No. 333-176849), Form S-8 filed on September 27, 2013 (File No. 333-191416), Form S-8 filed on October 11, 2016 (File No. 333-214042) and Form S-8 filed on October 31, 2018 (File No. 333-228070).

CONVENTIONS USED IN THIS REPORT

In this report, references to “US” are to the United States of America, its territories and its possessions. References to “UK” are to the United Kingdom. References to “India” are to the Republic of India. References to “China” are to the People’s Republic of China. References to “South Africa” are to the Republic of South Africa. References to “$” or “dollars” or “US dollars” are to the legal currency of the US, references to “ ” or “rupees” or “Indian rupees” are to the legal currency of India, references to “pound sterling” or “£” are to the legal currency of the UK, references to “pence” are to the legal currency of Jersey, Channel Islands, references to “Euro” are to the legal currency of the European Monetary Union, references to “South African rand” or “R” or “ZAR” are to the legal currency of South Africa, references to “A$” or “AUD” or “Australian dollars” are to the legal currency of Australia, references to “CHF” or “Swiss Franc” are to the legal currency of Switzerland, references to “RMB” are to the legal currency of China, references to “LKR” or “Sri Lankan rupees” are to the legal currency of Sri Lanka, references to “PHP” or “Philippine Peso” are to the legal currency of the Philippines and references to “NZD” or “New Zealand dollar” are to the legal currency of New Zealand. Our financial statements are presented in US dollars and prepared in accordance with International Financial Reporting Standards and its interpretations (“IFRS”), as issued by the International Accounting Standards Board (“IASB”), as in effect as at December 31, 2018. To the extent the IASB issues any amendments or any new standards subsequent to December 31, 2018, there may be differences between IFRS applied to prepare the financial statements included in this report and those that will be applied in our annual financial statements for the year ending March 31, 2019. Unless otherwise indicated, the financial information in this interim report on Form 6-K has been prepared in accordance with IFRS, as issued by the IASB. Unless otherwise indicated, references to “GAAP” in this report are to IFRS, as issued by the IASB. References to “our ADSs” in this report are to our American Depositary Shares, each representing one of our ordinary shares.

References to a particular “fiscal year” are to our fiscal year ended March 31 of that calendar year, which is also referred to as “fiscal”. Any discrepancies in any table between totals and sums of the amounts listed are due to rounding.

In this report, unless otherwise specified or the context requires, the term “WNS” refers to WNS (Holdings) Limited, a public company incorporated under the laws of Jersey, Channel Islands, and the terms “our company,” “the Company,” “we,” “our” and “us” refer to WNS (Holdings) Limited and its subsidiaries.

In this report, references to the “Commission” or the “SEC” are to the United States Securities and Exchange Commission.

We also refer in various places within this report to “revenue less repair payments,” which is a non-GAAP financial measure that is calculated as (a) revenue less (b) in our auto claims business, payments to repair centers for “fault” repair cases where we act as the principal in our dealings with the third party repair centers and our clients. This non-GAAP financial information is not meant to be considered in isolation or as a substitute for our financial results prepared in accordance with GAAP.

 

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SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS

This report contains “forward-looking statements” that are based on our current expectations, assumptions, estimates and projections about our company and our industry. The forward-looking statements are subject to various risks and uncertainties. Generally, these forward-looking statements can be identified by the use of forward-looking terminology such as “anticipate,” “believe,” “estimate,” “expect,” “intend,” “will,” “project,” “seek,” “should” and similar expressions. Those statements include, among other things, the discussions of our business strategy and expectations concerning our market position, future operations, margins, profitability, liquidity and capital resources, tax assessment orders and future capital expenditures. We caution you that reliance on any forward-looking statement inherently involves risks and uncertainties, and that although we believe that the assumptions on which our forward-looking statements are based are reasonable, any of those assumptions could prove to be inaccurate, and, as a result, the forward-looking statements based on those assumptions could be materially incorrect. These risks and uncertainties include but are not limited to:

 

 

worldwide economic and business conditions;

 

 

political or economic instability in the jurisdictions where we have operations;

 

 

our dependence on a limited number of clients in a limited number of industries;

 

 

regulatory, legislative and judicial developments;

 

 

increasing competition in the business process management industry;

 

 

technological innovation;

 

 

telecommunications or technology disruptions;

 

 

our ability to attract and retain clients;

 

 

our liability arising from fraud or unauthorized disclosure of sensitive or confidential client and customer data;

 

 

negative public reaction in the US or the UK to offshore outsourcing;

 

 

our ability to expand our business or effectively manage growth;

 

 

our ability to hire and retain enough sufficiently trained employees to support our operations;

 

 

the effects of our different pricing strategies or those of our competitors;

 

 

our ability to successfully consummate, integrate and achieve accretive benefits from our strategic acquisitions, and to successfully grow our revenue and expand our service offerings and market share;

 

 

future regulatory actions and conditions in our operating areas; and

 

 

volatility of our ADS price.

These and other factors are more fully discussed in our other filings with the SEC, including in “Risk Factors,” “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and elsewhere in our annual report on Form 20-F for our fiscal year ended March 31, 2018. In light of these and other uncertainties, you should not conclude that we will necessarily achieve any plans, objectives or projected financial results referred to in any of the forward-looking statements. Except as required by law, we do not undertake to release revisions of any of these forward-looking statements to reflect future events or circumstances.

 

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Part I- FINANCIAL INFORMATION

WNS (HOLDINGS) LIMITED

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL POSITION

(Amounts in thousands, except share and per share data)

 

     Notes      As at
December 31, 2018
    As at
March 31, 2018
 

ASSETS

       

Current assets:

       

Cash and cash equivalents

     5      $ 85,315     $ 99,829  

Investments

     6        49,607       120,960  

Trade receivables, net

     7        73,804       71,388  

Unbilled revenue

     7        55,712       61,721  

Funds held for clients

        9,936       10,066  

Derivative assets

     13        14,955       11,738  

Prepayments and other current assets

     8        20,718       24,847  
     

 

 

   

 

 

 

Total current assets

        310,047       400,549  

Non-current assets:

       

Goodwill

     9        130,049       135,186  

Intangible assets

     10        82,098       89,652  

Property and equipment

     11        57,377       60,606  

Derivative assets

     13        6,742       3,245  

Deferred tax assets

        21,853       27,395  

Investments

     6        80,311       542  

Other non-current assets

     8        59,025       42,388  
     

 

 

   

 

 

 

Total non-current assets

        437,455       359,014  
     

 

 

   

 

 

 

TOTAL ASSETS

      $ 747,502     $ 759,563  
     

 

 

   

 

 

 

LIABILITIES AND EQUITY

       

Current liabilities:

       

Trade payables

      $ 20,002     $ 19,703  

Provisions and accrued expenses

     15        27,703       28,826  

Derivative liabilities

     13        4,721       6,466  

Pension and other employee obligations

     14        55,649       64,617  

Current portion of long-term debt

     12        27,838       27,740  

Contract liabilities

     16        4,654       2,908  

Current taxes payable

        1,995       1,262  

Other liabilities

     17        14,691       15,739  
     

 

 

   

 

 

 

Total current liabilities

        157,253       167,261  

Non-current liabilities:

       

Derivative liabilities

     13        542       2,289  

Pension and other employee obligations

     14        10,466       9,621  

Long-term debt

     12        47,526       61,391  

Contract liabilities

     16        1,185       571  

Other non-current liabilities

     17        10,402       11,662  

Deferred tax liabilities

        11,209       11,812  
     

 

 

   

 

 

 

Total non-current liabilities

        81,330       97,346  
     

 

 

   

 

 

 

TOTAL LIABILITIES

      $ 238,583     $ 264,607  
     

 

 

   

 

 

 

Shareholders’ equity:

       

Share capital (ordinary shares $0.16 (10 pence) par value, authorized 60,000,000 shares; issued: 51,069,370 shares and 54,834,080 shares; each as at December 31, 2018 and March 31, 2018, respectively)

     18        8,046       8,533  

Share premium

        262,168       371,764  

Retained earnings

        448,473       364,424  

Other components of equity

        (153,417     (115,534
     

 

 

   

 

 

 

Total shareholders’ equity, including shares held in treasury

        565,270       629,187  
     

 

 

   

 

 

 

Less: 1,100,000 shares as at December 31, 2018 and 4,400,000 shares as at March 31, 2018, held in treasury, at cost

     18        (56,351     (134,231
     

 

 

   

 

 

 

Total shareholders’ equity

        508,919       494,956  
     

 

 

   

 

 

 

TOTAL LIABILITIES AND EQUITY

      $ 747,502     $ 759,563  
     

 

 

   

 

 

 

See accompanying notes.

 

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WNS (HOLDINGS) LIMITED

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF INCOME

(Amounts in thousands, except share and per share data)

 

            Three months ended December 31,     Nine months ended December 31,  
     Notes      2018     2017     2018     2017  

Revenue

     19      $  199,746     $ 188,598     $  598,638     $ 555,246  

Cost of revenue

     20        125,205       124,450       387,110       374,722  
     

 

 

   

 

 

   

 

 

   

 

 

 

Gross profit

        74,541       64,148       211,528       180,524  

Operating expenses:

           

Selling and marketing expenses

     20        10,905       10,559       33,293       29,925  

General and administrative expenses

     20        28,171       28,345       83,936       87,094  

Foreign exchange gain, net

        (1,854     (4,364     (5,034     (13,532

Amortization of intangible assets

        3,945       3,927       11,867       11,546  
     

 

 

   

 

 

   

 

 

   

 

 

 

Operating profit

        33,374       25,681       87,466       65,491  

Other income, net

     22        (3,644     (2,473     (10,003     (7,676

Finance expense

     21        812       976       2,484       3,115  
     

 

 

   

 

 

   

 

 

   

 

 

 

Profit before income taxes

        36,206       27,178       94,985       70,052  

Income tax expense

     24        7,623       892       19,224       8,144  
     

 

 

   

 

 

   

 

 

   

 

 

 

Profit after tax

      $ 28,583     $ 26,286     $ 75,761     $ 61,908  
     

 

 

   

 

 

   

 

 

   

 

 

 

Earnings per ordinary share

     25           
     

 

 

   

 

 

   

 

 

   

 

 

 

Basic

      $ 0.57     $ 0.52     $ 1.51     $ 1.23  
     

 

 

   

 

 

   

 

 

   

 

 

 

Diluted

      $ 0.55     $ 0.51     $ 1.45     $ 1.18  
     

 

 

   

 

 

   

 

 

   

 

 

 

See accompanying notes.

 

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WNS (HOLDINGS) LIMITED

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME/(LOSS)

(Amounts in thousands)

 

     Three months ended December 31,     Nine months ended December 31,  
     2018     2017     2018     2017  

Profit after tax

   $ 28,583     $ 26,286     $ 75,761     $ 61,908  

Other comprehensive income/(loss), net of taxes

        

Items that will not be reclassified to profit or loss:

        

Pension adjustment

     (536     119       (1,016     1,989  

Items that will be reclassified subsequently to profit or loss:

        

Changes in fair value of cash flow hedges:

        

Current period gain

     22,049       11,149       11,099       6,215  

Net change in time value of option contracts designated as cash flow hedges

     2,330       —         (1,342     —    

Reclassification to profit or loss

     (220     (6,244     305       (22,381

Foreign currency translation gain/(loss)

     6,902       11,915       (42,775     15,753  

Income tax (provision)/benefit relating to above

     (5,476     (655     (1,393     6,299  
  

 

 

   

 

 

   

 

 

   

 

 

 
   $ 25,585     $ 16,165     $ (34,106   $ 5,886  
  

 

 

   

 

 

   

 

 

   

 

 

 

Total other comprehensive income/(loss), net of taxes

   $ 25,049     $ 16,284     $ (35,122   $ 7,875  
  

 

 

   

 

 

   

 

 

   

 

 

 

Total comprehensive income

   $ 53,632     $ 42,570     $ 40,639     $ 69,783  
  

 

 

   

 

 

   

 

 

   

 

 

 

See accompanying notes.

 

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WNS (HOLDINGS) LIMITED

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY

(Amounts in thousands, except share and per share data)

 

                                Other components of equity                     
                                Foreign                                 
                                currency     Cash flow                        Total  
     Share capital      Share     Retained      translation     hedging     Pension     Treasury shares     shareholders’  
     Number      Par value      premium     earnings      reserve     reserve     adjustments     Number      Amount     equity  

Balance as at April 1, 2017

     53,312,559      $ 8,333      $ 338,284     $ 277,988      $ (132,167   $ 17,348     $ (35     3,300,000    $ (94,685   $ 415,066  

Shares issued for exercised options and restricted share units (“RSUs”) (Refer Note 23)

     1,389,419        181        1,166       —           —          —          —          —           —          1,347  

Purchase of treasury shares (Refer Note 18)

     —           —           —          —           —          —          —          1,100,000        (39,546     (39,546

Share-based compensation (Refer Note 23)

     —           —           23,506       —           —          —          —          —           —          23,506  

Purchase of equity from non-controlling interest

     —           —           (52     —           —          —          —          —           —          (52

Excess tax benefits relating to share-based options and RSUs

     —           —           826       —           —          —          —          —           —          826  
  

 

 

    

 

 

    

 

 

   

 

 

    

 

 

   

 

 

   

 

 

   

 

 

    

 

 

   

 

 

 

Transactions with owners

     1,389,419        181        25,446       —           —          —          —          1,100,000        (39,546     (13,919
  

 

 

    

 

 

    

 

 

   

 

 

    

 

 

   

 

 

   

 

 

   

 

 

    

 

 

   

 

 

 

Profit after tax

     —           —           —          61,908        —          —          —          —           —          61,908  

Other comprehensive income/(loss), net of taxes

     —           —           —          —           15,753       (9,867     1,989       —           —          7,875  
  

 

 

    

 

 

    

 

 

   

 

 

    

 

 

   

 

 

   

 

 

   

 

 

    

 

 

   

 

 

 

Total comprehensive income/(loss) for the period

     —           —           —          61,908        15,753       (9,867     1,989       —           —          69,783  
  

 

 

    

 

 

    

 

 

   

 

 

    

 

 

   

 

 

   

 

 

   

 

 

    

 

 

   

 

 

 

Balance as at December 31, 2017

     54,701,978      $ 8,514      $ 363,730     $ 339,896      $ (116,415   $ 7,481     $ 1,954       4,400,000      $ (134,231   $ 470,930  
  

 

 

    

 

 

    

 

 

   

 

 

    

 

 

   

 

 

   

 

 

   

 

 

    

 

 

   

 

 

 

 

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WNS (HOLDINGS) LIMITED

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY

(Amounts in thousands, except share and per share data)

 

                              Other components of equity                    
                              Foreign                                
                              currency     Cash flow                       Total  
     Share capital     Share     Retained      translation     hedging     Pension     Treasury shares     shareholders’  
     Number     Par value     premium     earnings      reserve     reserve     adjustments     Number     Amount     equity  

Balance as at March 31, 2018

     54,834,080     $ 8,533     $ 371,764     $ 364,424      $ (117,965   $ (20   $ 2,451       4,400,000   $ (134,231   $ 494,956  

Adoption of IFRS 9 (net of tax) (Refer Note 2)

     —          —          —          2,777        —          (2,761     —          —          —          16  

Adoption of IFRS 15 (net of tax) (Refer Note 2)

     —          —          —          5,511        —          —          —          —          —          5,511  

Balance as at April 1, 2018

     54,834,080       8,533       371,764       372,712        (117,965     (2,781     2,451       4,400,000       (134,231     500,483  

Shares issued for exercised options and restricted share units (“RSUs”) (Refer Note 23)

     635,290       85       (85     —           —          —          —          —          —          —     

Cancellation of treasury shares (Refer Note 18)

     (4,400,000     (572     (133,659     —           —          —          —          (4,400,000     134,231       —     

Purchase of treasury shares (Refer Note 18)

     —          —          —          —           —          —          —          1,100,000       (56,351     (56,351

Share-based compensation (Refer Note 23)

     —          —          23,501       —           —          —          —          —          —          23,501  

Excess tax benefits relating to share-based options and RSUs

     —          —          647       —           —          —          —          —          —          647  
  

 

 

   

 

 

   

 

 

   

 

 

    

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Transactions with owners

     (3,764,710     (487     (109,596     —           —          —          —          1,100,000       77,880       (32,203
  

 

 

   

 

 

   

 

 

   

 

 

    

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Profit after tax

     —          —          —          75,761        —          —          —          —          —          75,761  

Other comprehensive loss, net of taxes

     —          —          —          —           (42,775     8,669       (1,016     —          —          (35,122
  

 

 

   

 

 

   

 

 

   

 

 

    

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total comprehensive income/(loss) for the period

     —          —          —          75,761        (42,775     8,669       (1,016     —          —          40,639  
  

 

 

   

 

 

   

 

 

   

 

 

    

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Balance as at December 31, 2018

     51,069,370     $ 8,046     $ 262,168     $ 448,473      $ (160,740   $ 5,888     $ 1,435       1,100,000     $ (56,351   $ 508,919  
  

 

 

   

 

 

   

 

 

   

 

 

    

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

 

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WNS (HOLDINGS) LIMITED

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Amounts in thousands)

 

     Notes      Nine months ended December 31,  
            2018      2017  

Cash flows from operating activities:

        

Cash generated from operations

      $ 120,621      $ 113,018  

Income taxes paid

        (15,766      (15,293

Interest paid

        (1,944      (2,584

Interest received

        1,804        1,341  
     

 

 

    

 

 

 

Net cash provided by operating activities

        104,715        96,482  
     

 

 

    

 

 

 

Cash flows from investing activities:

        

Working capital adjustment towards acquisition of HealthHelp, net

     4(a)        —          (508

Adjustment towards acquisition of Denali, net

     4(b)        —          454  

Purchase of property and equipment and intangible assets

        (24,631      (27,830

Proceeds from sale of property and equipment

        103        284  

Proceeds from restricted cash held in escrow

     4(c)        —          239  

Government grant received

        —          168  

Government grant repaid

        (200      (50

Investment in fixed deposits

        (19,024      (14,105

Proceeds from maturity of fixed deposits

        24,395        —    

Proceeds from maturity of fixed maturity plans (“FMPs”)

        —          100  

Profit on sale of marketable securities

        730        —    

Dividends received

        32        2,381  

Investment in marketable securities (long-term)

        (78,823      —    

Marketable securities (short-term) sold / (purchased), net

        57,456        10,109  
     

 

 

    

 

 

 

Net cash used in investing activities

        (39,962      (28,758
     

 

 

    

 

 

 

Cash flows from financing activities:

        

Buyback of shares

        (56,351      (39,546

Proceeds from exercise of stock options

        —          1,347  

Repayment of long-term debt

        (14,050      (14,050

Excess tax benefit from share-based compensation expense

        1,352        243  

Purchase of equity of non-controlling interest

        —          (52

Payment of debt issuance cost

        —          (354
     

 

 

    

 

 

 

Net cash used in financing activities

        (69,049      (52,412
     

 

 

    

 

 

 

Exchange difference on cash and cash equivalents

        (10,218      4,549  

Net change in cash and cash equivalents

        (14,514      19,861  

Cash and cash equivalents at the beginning of the period

        99,829        69,803  
     

 

 

    

 

 

 

Cash and cash equivalents at the end of the period

      $ 85,315      $ 89,664  
     

 

 

    

 

 

 

Non-cash transactions:

        

Investing activities

        

(i) Liability towards property and equipment and intangible assets purchased on credit

      $ 2,968      $ 2,320  

(ii) Release of restricted cash, held in escrow

     4(c)        1,535        1,535  

Reconciliation of liabilities arising from financing activities:

 

                  Non-cash changes         
     Opening balance
April 1, 2018
     Cash flows     Amortization of debt
issuance cost
     Closing balance
December 31, 2018
 

Long-term debt (including current portion)

   $ 89,131      $ (14,050   $ 283      $ 75,364  
  

 

 

    

 

 

   

 

 

    

 

 

 

See accompanying notes

 

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Table of Contents

WNS (HOLDINGS) LIMITED

NOTES TO UNAUDITED CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS

(Amounts in thousands, except share and per share data)

 

1.

Company overview

WNS (Holdings) Limited (“WNS Holdings”), along with its subsidiaries (collectively, “the Company”), is a global business process management (“BPM”) company with client service offices in Australia, Dubai (United Arab Emirates), Germany, London (UK), New Jersey (US), New Zealand, Singapore and Switzerland and delivery centers in the People’s Republic of China (“China”), Costa Rica, India, the Philippines, Poland, Romania, Republic of South Africa (“South Africa”), Sri Lanka, Turkey, Spain, the United Kingdom (“UK”) and the United States (“US”). The Company’s clients are primarily in the travel, shipping and logistics services and utilities; retail and consumer products group; banking and financial, healthcare and insurance and consulting and professional services industries.

WNS Holdings is incorporated in Jersey, Channel Islands and maintains a registered office in Jersey at 22, Grenville Street, St Helier, Jersey JE4 8PX.

These unaudited condensed interim consolidated financial statements were authorized for issue by the Board of Directors on January 31, 2019.

 

2.

Summary of significant accounting policies

Basis of preparation

These condensed interim consolidated financial statements are prepared in compliance with International Accounting Standard (IAS) 34, “Interim financial reporting” as issued by the IASB. They do not include all of the information required in the annual financial statements in accordance with IFRS, as issued by the IASB and should be read in conjunction with the audited consolidated financial statements and related notes included in the Company’s annual report on Form 20-F for the fiscal year ended March 31, 2018.

The accounting policies applied are consistent with the policies that were applied for the preparation of the consolidated financial statements for the year ended March 31, 2018, except as mentioned below.

Adoption of IFRS 15

Effective April 1, 2018, the Company adopted IFRS 15 – “Revenue from Contracts with Customers” (“IFRS 15”). As a result, the Company has changed its accounting policy for revenue recognition, which has been detailed below.

The Company has applied the standard retrospectively with the cumulative effect being recognized as a transition adjustment to the Company’s opening retained earnings as at April 1, 2018. The comparative information has not been restated and continues to be reported in accordance with the principles of IAS 18 – “Revenue”. The initial application of the standard applies to active contracts as at April 1, 2018.

The key area impacted upon adoption of IFRS 15 relates to the accounting for sales commission costs. Specifically, under IFRS 15, a portion of sales commission costs have been recorded as an asset and amortized on a straight-line basis over the expected life of contract rather than expensed as incurred under the Company’s erstwhile accounting policy (Refer Note 19).

Revenue recognition

The Company derives revenue from BPM services, comprising back office administration, data management, customer interaction services management, and Auto Claims handling services.

Revenue from rendering services is recognized on an accrual basis when the promised services are performed for an amount that reflects the consideration to which the Company expects to be entitled in exchange for those services. Revenue from the end of last billing to the reporting date is recognized as unbilled revenue. Unbilled revenue for certain contracts is classified as contract assets, as the right to consideration is conditional on factors other than the passage of time. Revenue is net of value-added taxes and includes reimbursements of out-of-pocket expenses.

 

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WNS (HOLDINGS) LIMITED

NOTES TO UNAUDITED CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS

(Amounts in thousands, except share and per share data)

 

Revenue earned by back office administration, data management and customer interaction services management services

Back office administration, data management and customer interaction services contracts are based on the following pricing models:

 

  a)

per full-time-equivalent arrangements, which typically involve billings based on the number of full-time employees (or equivalent) deployed on the execution of the business process outsourced;

 

  b)

per transaction arrangements, which typically involve billings based on the number of transactions processed (such as the number of e-mail responses, or airline coupons or insurance claims processed);

 

  c)

subscription arrangements, which typically involve billings based on per member per month, based on contractually agreed rates;

 

  d)

fixed-price arrangements, which typically involve billings based on achievements of pre-defined deliverables or milestones;

 

  e)

outcome-based arrangements, which typically involve billings based on the business result achieved by our clients through our service efforts (such as measured based on a reduction in days sales outstanding, improvement in working capital, increase in collections or a reduction in operating expenses); or

 

  f)

other pricing arrangements, including cost-plus arrangements, which typically involve billing the contractually agreed direct and indirect costs and a fee based on the number of employees deployed under the arrangement.

Revenues under time-and-material contracts and subscription arrangements are recognized as the services are performed. Revenues are recognized on cost-plus contracts on the basis of contractually agreed direct and indirect costs incurred on a client contract plus an agreed upon profit mark-up. Revenues are recognized on unit-price based contracts based on the number of specified units of work delivered to a client. Such revenues are recognized as the related services are provided in accordance with the client contract.

Revenue for performance obligations that are satisfied over time is recognized in accordance with the methods prescribed for measuring the progress. The input method (cost or efforts expended) has been used to measure progress towards completion as there is a direct relationship between inputs and productivity.

In respect of arrangements involving subcontracting, in part or whole of the assigned work, the Company evaluates revenues to be recognized under criteria established by IFRS 15, Application guidance in paragraphs B34 to B38 “Principal versus agent considerations”.

Contracts with customers includes variability in transaction price primarily due to service level agreements, gain share, minimum commitment and volume discounts. Revenues relating to such arrangements are accounted for as variable consideration when the amount of revenue to be recognized can be estimated to the extent that it is probable that a significant reversal of any incremental revenue will not occur.

Amounts billed or payments received, where revenue recognition criteria have not been met, are recorded as deferred revenue and classified as contract liabilities. These are recognized as revenue when all the recognition criteria have been met. The costs related to the performance of BPM services unrelated to transition services (discussed below) are fulfilment costs classified as contract cost assets and recognized immediately when the conditions for revenue recognition have been met. Any upfront payment received towards future services is recognized over the period when such services are provided.

All incremental and direct costs incurred for acquiring contracts, such as certain sales commission, are classified as contract cost assets. Such costs are amortized over the expected life of the contract.

 

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WNS (HOLDINGS) LIMITED

NOTES TO UNAUDITED CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS

(Amounts in thousands, except share and per share data)

 

Other upfront fees paid to customers are classified as contract assets. Such costs are amortized over the expected life of the contract and recorded as an adjustment to the transaction price and reduced from revenue. For certain BPM customers, the Company performs transition activities at the outset of entering into a new contract. The Company has determined these transition activities do not meet the criteria of IFRS 15 to be accounted for as a separate performance obligation and has deferred revenue attributable to these activities. Accordingly, transition revenues are classified as contract liabilities and are subsequently recognized ratably over the period in which the BPM services are performed. Costs related to such transition services are fulfillment costs which are directly related to the contract and result in generation or enhancement of resources and are expected to be recoverable under the contract and thereby classified as contract cost assets and are recognized ratably over the estimated life of the contract. Further, the deferral of costs is limited to the amount of the deferred revenue. Any costs in excess of the deferred transition revenue are recognized in the period they are incurred.

All contracts entered into by the Company specify the payment terms. Usual payment terms range between 30 - 60 days.

Revenue earned by auto claims handling services

Auto claims handling services include claims handling and administration (“Claims Handling”), car hire and arranging for repairs with repair centers across the UK and the related payment processing for such repairs (“Accident Management”). With respect to Claims Handling, the Company receives either a per-claim fee or a fixed fee. Revenue for per claim fee is recognized over the estimated processing period of the claim, which currently ranges from one to two months and revenue for fixed fee is recognized on a straight line basis over the period of the contract. In certain cases, the fee is contingent upon the successful recovery of a claim on behalf of the customer. In these circumstances, the revenue is deferred until the contingency is resolved. Revenue in respect of car hire is recognized over the car hire term.

In order to provide Accident Management services, the Company arranges for the repair through a network of repair centers. The repair costs are invoiced to customers. In determining whether the receipt from the customers related to payments to repair centers should be recognized as revenue, the Company considers the criteria established by IFRS 15, Application guidance in paragraphs B34 to B38 “Principal versus agent considerations”. When the Company determines that it is the principal in providing Accident Management services, amounts received from customers are recognized and presented as third party revenue and the payments to repair centers are recognized as cost of revenue in the consolidated statement of income. Factors considered in determining whether the Company is the principal in the transaction include whether:

 

  a)

the Company has the primary responsibility for providing the services,

 

  b)

the Company negotiates labor rates with repair centers, and

 

  c)

the Company is responsible for timely and satisfactory completion of repairs.

If there are circumstances where the above criteria are not met and therefore the Company is not the principal in providing Accident Management services, amounts received from customers are recognized and presented net of payments to repair centers in the consolidated statement of income. Revenue from Accident Management services is recorded net of the repairer referral fees passed on to customers.

Revenue from legal services in the Auto Claims BPM segment is recognized on the admission of liability by the third party to the extent of fixed fees earned at each stage and any further income on the successful settlement of the claim.

Incremental and direct costs incurred to contract with a claimant are classified as contract cost assets and amortized over the expected period of benefit, not exceeding 15 months. All other costs to the Company are expensed as incurred.

For a description of the Company’s revenue recognition accounting policy in effect before the Company’s adoption of IFRS 15, see Note 2 — “Summary of significant accounting policies” under Item 18 —“Financial Statements” and Part I, Item 5—“Operating and Financial review and prospects”—“Critical Accounting Policies” in the Company’s annual report on Form 20-F for the year ended March 31, 2018.

Significant judgments

The Company’s determination of whether BPM services are considered distinct performance obligations that should be accounted for separately versus together may require significant judgment.

 

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WNS (HOLDINGS) LIMITED

NOTES TO UNAUDITED CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS

(Amounts in thousands, except share and per share data)

 

Adoption of IFRS 9

On April 1, 2018, the Company adopted the standard IFRS 9 – “Financial Instruments” (“IFRS 9”) by availing the relief from restating comparative information. This standard replaces IAS 39 – “Financial Instruments: Recognition and Measurement” (“IAS 39”). The cumulative impact on adoption of the standard has been recognized as an adjustment to the Company’s opening retained earnings as at April 1, 2018.

The standard provides limited exception from prospective application of the new standard for the time value of options, when only the intrinsic value is designated by restating the comparative periods. The time value of options did not have any material impact on the consolidated financial statements. Hence, prior period comparative figures have not been restated and the cumulative impact has been recognized as an adjustment to the Company’s retained earnings as at April 1, 2018.

The key areas impacted upon adoption of the standard relates to the recognition of gains/losses on cash flow hedges on intercompany forecasted revenue transactions as part of revenues which had previously been recognized in the foreign exchange gains/losses, net, accounting for time value of options and the presentation of classification and measurement of the Company’s financial instruments.

The impact of this standard resulted in an increase in retained earnings of $2,777 as at April 1, 2018 with corresponding increase in the losses in other components of equity of $2,761, in trade receivables of $74 and a decrease in other non-current assets of $84.

Below are the accounting policies for financial instruments consequent to the adoption of IFRS 9:

Financial instruments — initial recognition and subsequent measurement

 

  A

Financial instruments are classified in the following categories:

 

   

Non-derivative financial assets comprising at amortized cost or at fair value through profit or loss (“FVTPL”).

 

   

Non-derivative financial liabilities comprising at FVTPL or at amortized cost.

 

   

Derivative financial instruments under the category of financial assets or financial liabilities at FVTPL or at fair value through other comprehensive income (“FVOCI”).

The classification of financial instruments depends on the purpose for which those were acquired. Management determines the classification of the Company’s financial instruments at initial recognition.

Non-derivative financial instruments are recognized initially at fair value. Financial assets are derecognized when substantial risks and rewards of ownership of the financial asset have been transferred. In cases where substantial risks and rewards of ownership of the financial assets are neither transferred nor retained, financial assets are derecognized only when the Company has not retained control over the financial asset.

Subsequent to initial recognition, non-derivative financial instruments are measured as described below:

 

  i.

Non-derivative financial assets:

 

  a)

Financial assets at amortized cost

Financial assets that meet the following criteria are measured at amortized cost (except for investments that are designated at FVTPL on initial recognition):

 

  i)

the asset is held within a business model whose objective is to hold assets in order to collect contractual cash flows; and

 

  ii)

the contractual terms of the instrument give rise on specified dates to cash flows that are solely payment of principal and interest on the principal amount outstanding.

Financial assets at amortized costs are presented as current assets, except for those maturing later than 12 months after the balance sheet date which are presented as non-current assets. They are measured initially at fair value plus transaction costs and subsequently carried at amortized cost using the effective interest rate method, less any impairment losses.

 

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WNS (HOLDINGS) LIMITED

NOTES TO UNAUDITED CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS

(Amounts in thousands, except share and per share data)

 

  b).

Financial assets at FVTPL:

Financial assets that do not meet the amortized cost or FVOCI criteria are measured at FVTPL. Financial assets at FVTPL are measured at fair value at the end of each reporting period, with any gains or losses arising on re-measurement recognized in the consolidated statement of income. The gains or losses on disposal of financial assets at FVTPL are recognized in the consolidated statement of income.

Interest income on financial assets at FVTPL is recognized in the consolidated statement of income. Dividend on financial assets at FVTPL is recognized when the Company’s right to receive dividend is established.

 

  ii.

Non-derivative financial liabilities

All financial liabilities are recognized initially at fair value, except in the case of loans and borrowings which are recognized at fair value net of directly attributable transaction costs. The Company’s financial liabilities include trade and other payables, bank overdrafts, contingent consideration and loans and borrowings.

Trade and other payables maturing later than 12 months after the reporting date are presented as non-current liabilities.

After initial recognition, interest bearing loans and borrowings are subsequently measured at amortized cost using the effective interest rate method. Gains and losses are recognized in the consolidated statement of income when the liabilities are derecognized as well as through the effective interest rate method amortization process.

After initial recognition, contingent consideration are subsequently measured at fair value and the changes to the fair value are recognized in the consolidated statement of income.

 

  iii.

Derivative financial instruments and hedge accounting

The Company is exposed to foreign currency fluctuations on foreign currency assets, liabilities, net investment in foreign operations and forecasted cash flows denominated in foreign currency. The Company limits the effect of foreign exchange rate fluctuation by following established risk management policies including the use of derivatives. The Company enters into derivative financial instruments where the counter party is primarily a bank. The Company holds derivative financial instruments such as foreign exchange forwards, option contracts and interest rate swaps to hedge certain foreign currency and interest rate exposures.

Cash flow hedges

The Company recognizes derivative instruments as either assets or liabilities in the statement of financial position at fair value. Derivative instruments qualify for hedge accounting when the instrument is designated as a hedge; the hedged item is specifically identifiable and exposes the Company to risk; and it is expected that a change in fair value of the derivative instrument and an opposite change in the fair value of the hedged item will have a high degree of correlation.

For derivative instruments where hedge accounting is applied, the Company records the effective portion of derivative instruments that are designated as cash flow hedges in other comprehensive income/(loss) in the statement of comprehensive income, which is reclassified into earnings in the same period during which the hedged item affects earnings. The remaining gain or loss on the derivative instrument in excess of the cumulative change in the present value of future cash flows of the hedged item, if any (i.e., the ineffective portion) or hedge components excluded from the assessment of effectiveness, and changes in fair value of other derivative instruments not designated as qualifying hedges is recorded as gains/losses, net in the consolidated statement of income. If the hedging instrument expires or is sold, terminated or exercised, the cumulative gain or loss on the hedging instrument recognized in the cash flow hedging reserve (in other comprehensive income/(loss)) until the period the hedge was effective, remains in the cash flow hedging reserve until the forecasted transaction occurs. Cash flow hedge on interest rate swaps are recorded under finance expense, net. Cash flows from the derivative instruments are classified within cash flows from operating activities in the statement of cash flows.

When it is highly probable that a forecasted transaction will not occur, the Company discontinues the hedge accounting and recognizes immediately in the consolidated statement of income, the gains and losses attributable to such derivative instrument that were accumulated in other comprehensive income/(loss).

Gains/losses on cash flow hedges on forecasted revenue transactions are recorded in foreign exchange gains/losses forming part of revenue and changes in fair value of foreign currency derivative instruments not designated as cash flow hedges are recognized in the statement of income and reported within foreign exchange gains, net within results from operating activities.

 

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Table of Contents

WNS (HOLDINGS) LIMITED

NOTES TO UNAUDITED CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS

(Amounts in thousands, except share and per share data)

 

  iv.

Offsetting of financial instruments

Financial assets and financial liabilities are offset against each other and the net amount reported in the consolidated statement of financial position if, and only if, there is a currently enforceable legal right to offset the recognized amounts and there is an intention to settle on a net basis, or to realize the assets and settle the liabilities simultaneously.

 

  v.

Fair value of financial instruments

The fair value of financial instruments that are traded in active markets at each reporting date is determined by reference to quoted market prices or dealer price quotations, without any deduction for transaction costs. For financial instruments not traded in an active market, the fair value is determined using appropriate valuation models. Where applicable, these models project future cash flows and discount the future amounts to a present value using market-based observable inputs including interest rate curves, credit risk, foreign exchange rates, and forward and spot prices for currencies.

 

  vi.

Impairment of non-derivative financial assets

The Company applies the forward-looking expected credit loss model (“ECL”) for recognizing impairment loss on financial assets which are not fair valued through profit or loss. Loss allowance for trade receivables and unbilled revenue with no significant financing component are measured at an amount equal to lifetime ECL. The simplified approach for determining the lifetime ECL allowance is performed in two steps:

 

   

all trade receivables and unbilled revenue that are in default, as defined above, are individually assessed for impairment; and

 

   

a general reserve is recognized for all other trade receivables (including those not past due) based on historical loss rates.

For all other financial assets, expected credit losses are measured at an amount equal to the twelve-month ECL, unless there has been a significant increase in credit risk from initial recognition in which case those are measured at lifetime ECL. The amount of expected credit losses (or reversal) that is required to adjust the loss allowance at the reporting date to the amount that is required to be recognized is recognized as an impairment gain/loss in the consolidated statement of income.

 

  vii.

Investments

 

  a.

Marketable securities and mutual funds

The Company’s marketable securities represent liquid investments and are acquired principally for the purpose of earning daily income. Investments in mutual funds represent investments in mutual fund schemes wherein the mutual fund issuer has invested these funds in enterprise development funds. Investments which are expected to be redeemed within 12 months from the reporting date are classified as current investments, otherwise they are classified as non-current.

These investments are designated at fair value through profit or loss and changes in fair value recognized in the consolidated statement of income. The fair value represents the original cost of the investment and the investment’s fair value at each reporting period.

 

  b.

Investments in fixed maturity plans

The Company’s investments in fixed maturity plans (“FMPs”) represent investments in mutual fund schemes wherein the mutual fund issuer has invested these funds in certificate of deposits with banks in India. The investments in FMPs are designated as fair value through profit or loss and change in fair value is recognized in the consolidated statement of income. The fair value represents original cost of an investment and the investment’s fair value at each reporting period or net asset value (“NAV”) as quoted.

The Company manages FMPs on a fair value basis in accordance with the entity’s documented risk management, investment strategy and information provided to the key managerial personnel. The returns on the investment are measured based on the fair value movement rather than looking at the overall returns on the maturity. The Company’s investment purchase and sale decisions are also based on the fair value fluctuations rather than a predetermined policy to hold the investment until maturity. Key management personnel believe that recording these investments through the consolidated statement of income would provide more relevant information to measure the performance of the investment.

For a description of the Company’s accounting policy for Financial instruments — initial recognition and subsequent measurement in effect before the Company’s adoption of IFRS 9, see Note 2 — “Summary of significant accounting policies” under Item 18 —“Financial Statements” and Part I, Item 5 — “Operating and Financial review and prospects”—“Critical Accounting Policies” in the Company’s annual report on Form 20-F for the year ended March 31, 2018.

 

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Table of Contents

WNS (HOLDINGS) LIMITED

NOTES TO UNAUDITED CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS

(Amounts in thousands, except share and per share data)

 

The cumulative effect of the changes made to the Company’s consolidated statement of financial position as at April 1, 2018 for the adoption of IFRS 15 and IFRS 9 is as follows:

 

     As at March 31, 2018
(as previously
reported)
    Transition
adjustments on
adoption of IFRS 15
    Transition
adjustments on
adoption of IFRS 9
    As at April 1,
2018 (as
adjusted)
 

ASSETS

        

Current assets:

        

Cash and cash equivalents

   $ 99,829     $ —     $ —     $ 99,829  

Investments

     120,960       —         —         120,960  

Trade receivables, net

     71,388       —         74       71,462  

Unbilled revenue

     61,721       —         —         61,721  

Funds held for clients

     10,066       —         —         10,066  

Derivative assets

     11,738       —         —         11,738  

Prepayments and other current assets

     24,847       1,520       —         26,367  
  

 

 

   

 

 

   

 

 

   

 

 

 

Total current assets

     400,549       1,520       74       402,143  
  

 

 

   

 

 

   

 

 

   

 

 

 

Non-current assets:

        

Goodwill

     135,186       —         —         135,186  

Intangible assets

     89,652       —         —         89,652  

Property and equipment

     60,606       —         —         60,606  

Derivative assets

     3,245       —         —         3,245  

Deferred tax assets

     27,395       (1,803     27       25,619  

Investments

     542       —         —         542  

Other non-current assets

     42,388       5,861       (84     48,165  
  

 

 

   

 

 

   

 

 

   

 

 

 

Total non-current assets

     359,014       4,058       (57     363,015  
  

 

 

   

 

 

   

 

 

   

 

 

 

TOTAL ASSETS

     759,563       5,578       17       765,158  
  

 

 

   

 

 

   

 

 

   

 

 

 

LIABILITIES AND EQUITY

    

Current liabilities:

        

Trade payables

     19,703       —         —         19,703  

Provisions and accrued expenses

     28,826       —         —         28,826  

Derivative liabilities

     6,466       —         —         6,466  

Pension and other employee obligations

     64,617       —         —         64,617  

Current portion of long- term debt

     27,740       —         —         27,740  

Deferred revenue

     2,908       27       —         2,935  

Current taxes payable

     1,262       —         —         1,262  

Other liabilities

     15,739       —         —         15,739  
  

 

 

   

 

 

   

 

 

   

 

 

 

Total current liabilities

     167,261       27       —         167,288  
  

 

 

   

 

 

   

 

 

   

 

 

 

Non-current liabilities:

        

Derivative liabilities

     2,289       —         —         2,289  

Pension and other employee obligations

     9,621       —         —         9,621  

Long- term debt

     61,391       —         —         61,391  

Deferred revenue

     571       37       —         608  

Other non-current liabilities

     11,662       —         —         11,662  

Deferred tax liabilities

     11,812       3       1       11,816  
  

 

 

   

 

 

   

 

 

   

 

 

 

Total non-current liabilities

     97,346       40       1       97,387  
  

 

 

   

 

 

   

 

 

   

 

 

 

TOTAL LIABILITIES

     264,607       67       1       264,675  
  

 

 

   

 

 

   

 

 

   

 

 

 

Share capital

     8,533       —         —         8,533  

Share premium

     371,764       —         —         371,764  

Retained earnings

     364,424       5,511       2,777       372,712  

Other components of equity

     (115,534     —         (2,761     (118,295

Less: shares, held in treasury, at cost

     (134,231     —         —         (134,231
  

 

 

   

 

 

   

 

 

   

 

 

 

Total shareholders’ equity

     494,956       5,511       16       500,483  
  

 

 

   

 

 

   

 

 

   

 

 

 

TOTAL LIABILITIES AND EQUITY

   $ 759,563     $ 5,578     $ 17     $ 765,158  
  

 

 

   

 

 

   

 

 

   

 

 

 

Details showing the classification and measurement of the Company’s financial instruments on adoption of IFRS 9 as at April 1, 2018:

 

    

IAS 39 Category

  

IFRS 9 Category

   Total
carrying
value
     Total fair
value
 

Cash and cash equivalents

   Loans and receivables    Financial assets at amortized cost    $ 99,829      $ 99,829  

Investment in fixed deposits

   Loans and receivables    Financial assets at amortized cost      21,548        21,548  

Investments in marketable securities and mutual funds

   Available for sale    Financial assets at FVTPL      99,954        99,954  

Trade receivables

   Loans and receivables    Financial assets at amortized cost      71,388        71,388  

Unbilled revenue

   Loans and receivables    Financial assets at amortized cost      61,721        61,721  

Funds held for clients

   Loans and receivables    Financial assets at amortized cost      10,066        10,066  

Prepayments and other assets

   Loans and receivables    Financial assets at amortized cost      4,410        4,410  

Other non-current assets

   Loans and receivables    Financial assets at amortized cost      10,243        10,243  

Derivative assets

   Financial assets at FVTPL    Financial assets at FVTPL      2,212        2,212  

Derivative assets

  

Derivative designated as cash flow hedges (carried

at fair value)

   Financial assets at FVOCI      12,771        12,771  
        

 

 

    

 

 

 

Total carrying value

         $ 394,142      $ 394,142  
        

 

 

    

 

 

 
           

 

15


Table of Contents

WNS (HOLDINGS) LIMITED

NOTES TO UNAUDITED CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS

(Amounts in thousands, except share and per share data)

 

The impact of adoption of IFRS 15 and IFRS 9 on the Company’s consolidated statement of financial position as at December 31, 2018 was as follows:

 

     As reported
(includes the impact
of adoption of IFRS
15 and IFRS 9)
    Adjustments on
adoption of IFRS 15
    Adjustments on
adoption of IFRS 9
    Balances
without
adoption of
IFRS 15 and
IFRS 9
 

ASSETS

        

Current assets:

        

Cash and cash equivalents

   $ 85,315     $ —       $ —     $ 85,315  

Investments

     49,607       —         —         49,607  

Trade receivables, net

     73,804       —         (16     73,788  

Unbilled revenue

     55,712       —         —         55,712  

Funds held for clients

     9,936       —         —         9,936  

Derivative assets

     14,955       —         —         14,955  

Prepayments and other current assets

     20,718       (1,789     —         18,929  
  

 

 

   

 

 

   

 

 

   

 

 

 

Total current assets

     310,047       (1,789     (16     308,242  
  

 

 

   

 

 

   

 

 

   

 

 

 

Non-current assets:

        

Goodwill

     130,049       —         —         130,049  

Intangible assets

     82,098       —         —         82,098  

Property and equipment

     57,377       —         —         57,377  

Derivative assets

     6,742       —         —         6,742  

Deferred tax assets

     21,853       1,803       (27     23,629  

Investments

     80,311       —         —         80,311  

Other non-current assets

     59,025       (5,311     132       53,846  
  

 

 

   

 

 

   

 

 

   

 

 

 

Total non-current assets

     437,455       (3,508     105       434,052  
  

 

 

   

 

 

   

 

 

   

 

 

 

TOTAL ASSETS

     747,502       (5,297     89       742,294  
  

 

 

   

 

 

   

 

 

   

 

 

 

LIABILITIES AND EQUITY

    

Current liabilities:

        

Trade payables

     20,002       —         —         20,002  

Provisions and accrued expenses

     27,703       —         —         27,703  

Derivative liabilities

     4,721       —         —         4,721  

Pension and other employee obligations

     55,649       —         —         55,649  

Current portion of long- term debt

     27,838       —         —         27,838  

Contract liabilities

     4,654       (13     —         4,641  

Current taxes payable

     1,995       —         —         1,995  

Other liabilities

     14,691       —         —         14,691  
  

 

 

   

 

 

   

 

 

   

 

 

 

Total current liabilities

     157,253       (13     —         157,240  
  

 

 

   

 

 

   

 

 

   

 

 

 

Non-current liabilities:

        

Derivative liabilities

     542       —         —         542  

Pension and other employee obligations

     10,466       —         —         10,466  

Long- term debt

     47,526       —         —         47,526  

Contract liabilities

     1,185       (11     —         1,174  

Other non-current liabilities

     10,402       —         —         10,402  

Deferred tax liabilities

     11,209       (3     (1     11,205  
  

 

 

   

 

 

   

 

 

   

 

 

 

Total non-current liabilities

     81,330       (14     (1     81,315  
  

 

 

   

 

 

   

 

 

   

 

 

 

TOTAL LIABILITIES

     238,583       (27     (1     238,555  
  

 

 

   

 

 

   

 

 

   

 

 

 

Share capital

     8,046       —         —         8,046  

Share premium

     262,168       —         —         262,168  

Retained earnings

     448,473       (5,856     205       442,822  

Other components of equity

     (153,417     586       (115     (152,946

Less: shares, held in treasury, at cost

     (56,351     —         —         (56,351
  

 

 

   

 

 

   

 

 

   

 

 

 

Total shareholders’ equity

     508,919       (5,270     90       503,739  
  

 

 

   

 

 

   

 

 

   

 

 

 

TOTAL LIABILITIES AND EQUITY

   $ 747,502     $ (5,297   $ 89     $ 742,294  
  

 

 

   

 

 

   

 

 

   

 

 

 

 

16


Table of Contents

WNS (HOLDINGS) LIMITED

NOTES TO UNAUDITED CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS

(Amounts in thousands, except share and per share data)

 

The impact of adoption of IFRS 15 and IFRS 9 on the Company’s consolidated statement of income for the three months ended December 31, 2018 was as follows:

 

     Three months ended December 31, 2018  
     As reported
(includes the
impact of adoption
of IFRS 15 and IFRS 9)
    Adjustments on
adoption of IFRS 15
    Adjustments on
adoption of IFRS 9
    Amounts
without
adoption of
IFRS 15 and
IFRS 9
 

Revenue

   $ 199,746     $ —       $ (29   $ 199,717  

Cost of revenue

     125,205       (1,162     —         124,043  
  

 

 

   

 

 

   

 

 

   

 

 

 

Gross profit

     74,541       1,162       (29     75,674  

Operating expenses:

        

Selling and marketing expenses

     10,905       354       —         11,259  

General and administrative expenses

     28,171       —         (39     28,132  

Foreign exchange gain, net

     (1,854     —         (5,279     (7,133

Amortization of intangible assets

     3,945       —         —         3,945  
  

 

 

   

 

 

   

 

 

   

 

 

 

Operating profit

     33,374       808       5,289       39,471  

Other income, net

     (3,644     —         —         (3,644

Finance expense, net

     812       —         —         812  
  

 

 

   

 

 

   

 

 

   

 

 

 

Profit before income taxes

     36,206       808       5,289       42,303  

Income tax expense

     7,623       —         1,090       8,713  
  

 

 

   

 

 

   

 

 

   

 

 

 

Profit after tax

   $ 28,583     $ 808     $ 4,199     $ 33,590  
  

 

 

   

 

 

   

 

 

   

 

 

 

The impact of adoption of IFRS 15 and IFRS 9 on the Company’s consolidated statement of income for the nine months ended December 31, 2018 was as follows:

 

     Nine months ended December 31, 2018  
     As reported
(includes the

impact of adoption
of IFRS 15 and IFRS 9)
    Adjustments on
adoption of IFRS 15
    Adjustments on
adoption of IFRS 9
    Amounts
without
adoption of
IFRS 15 and
IFRS 9
 

Revenue

   $ 598,638     $ —       $ 1,001     $ 599,639  

Cost of revenue

     387,110       732       —         387,842  
  

 

 

   

 

 

   

 

 

   

 

 

 

Gross profit

     211,528       (732     1,001       211,797  

Operating expenses:

        

Selling and marketing expenses

     33,293       (387     —         32,906  

General and administrative expenses

     83,936       —         (106     83,830  

Foreign exchange gain, net

     (5,034     —         (2,587     (7,621

Amortization of intangible assets

     11,867       —         —         11,867  
  

 

 

   

 

 

   

 

 

   

 

 

 

Operating profit

     87,466       (345     3,694       90,815  

Other income, net

     (10,003     —         —         (10,003

Finance expense, net

     2,484       —         —         2,484  
  

 

 

   

 

 

   

 

 

   

 

 

 

Profit before income taxes

     94,985       (345     3,694       98,334  

Income tax expense

     19,224       —         712       19,936  
  

 

 

   

 

 

   

 

 

   

 

 

 

Profit after tax

   $ 75,761     $ (345   $ 2,982     $ 78,398  
  

 

 

   

 

 

   

 

 

   

 

 

 

 

17


Table of Contents

WNS (HOLDINGS) LIMITED

NOTES TO UNAUDITED CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS

(Amounts in thousands, except share and per share data)

 

3.

New accounting pronouncements not yet adopted by the Company

Certain new standards, interpretations and amendments to existing standards have been published that are mandatory for the Company’s accounting periods beginning on or after April 1, 2018 or later periods. Those which are considered to be relevant to the Company’s operations are set out below.

 

i.

In January 2016, the IASB issued IFRS 16 – “Leases” (“IFRS 16”). Key changes in IFRS 16 include:

 

   

eliminates the requirement to classify a lease as either operating or finance lease in the books of lessee;

 

   

introduces a single lessee accounting model, which requires lessee to recognize assets and liabilities for all leases, initially measured at the present value of unavoidable future lease payment. Entity may elect not to apply this accounting requirement to short term leases and leases for which underlying asset is of low value;

 

   

replaces the straight-line operating lease expense model with a depreciation charge for the lease asset (included within operating costs) and an interest expense on the lease liability (included within finance costs);

 

   

requires lessee to classify cash payments for principal and interest portion of lease arrangement within financing activities and financing/operating activities respectively in the cash flow statements; and

 

   

requires entities to determine whether a contract conveys the right to control the use of an identified asset for a period of time to assess whether that contract is, or contains, a lease.

IFRS 16 replaces IAS 17 – “Leases” and related interpretations viz. IFRIC 4 – “Determining whether an Arrangement contains a Lease”; SIC-15 – “Operating Leases—Incentives”; and SIC-27 – “Evaluating the Substance of Transactions Involving the Legal Form of a Lease”.

IFRS 16 substantially carries forward lessor accounting requirements in IAS 17 –“Leases”. Disclosures, however, have been enhanced.

IFRS 16 is effective for annual reporting periods beginning on or after January 1, 2019. Early application is permitted for entities that apply IFRS 15 – “Revenue from Contracts with Customers” at or before the date of initial application of IFRS 16.

A lessee shall apply IFRS 16 either retrospectively to each prior reporting period presented or record a cumulative effect of initial application of IFRS 16 as an adjustment to opening balance of equity at the date of initial application.

The Company is currently evaluating the impact of this new standard on its consolidated financial statements.

 

18


Table of Contents

WNS (HOLDINGS) LIMITED

NOTES TO UNAUDITED CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS

(Amounts in thousands, except share and per share data)

 

ii.

In June 2017, the IFRIC issued IFRIC 23 – “Uncertainty over Income Tax Treatments” to clarify the accounting for uncertainties in income taxes, by specifically addressing the following:

 

   

the determination of whether to consider each uncertain tax treatment separately or together with one or more uncertain tax treatments;

 

   

the assumptions an entity makes about the examination of tax treatments by taxations authorities;

 

   

the determination of taxable profit (tax loss), tax bases, unused tax losses, unused tax credits and tax rates where there is an uncertainty regarding the treatment of an item; and

 

   

the reassessment of judgements and estimates if facts and circumstances change.

IFRIC 23 is effective for annual reporting periods beginning on or after January 1, 2019. Earlier application is permitted.

On initial application, the requirements are to be applied by recognizing the cumulative effect of initially applying them in retained earnings, or in other appropriate components of equity, at the start of the reporting period in which an entity first applies them, without adjusting comparative information. Full retrospective application is permitted, if an entity can do so without using hindsight.

The Company expects the adoption of this standard will have no material impact on its consolidated financial statements.

 

iii.

In February 2018, the IASB issued amendments to IAS 19 – “Employee Benefits” regarding plan amendments, curtailments and settlements. The amendments are as follows:

 

   

If a plan amendment, curtailment or settlement occurs, it is now mandatory that the current service cost and the net interest for the period after the remeasurement are determined using the assumptions used for the remeasurement;

 

   

In addition, amendments have been included to clarify the effect of a plan amendment, curtailment or settlement on the requirements regarding asset ceiling.

The above amendments are effective for annual periods beginning on or after January 1, 2019. Earlier application is permitted but must be disclosed.

The Company expects the adoption of these amendments will have no material impact on its consolidated financial statements.

 

iv.

In October 2018, the IASB issued amendments to IFRS 3 – “Business Combinations” regarding the definition of a “Business”. The amendments:

 

   

clarify that to be considered a business, an acquired set of activities and assets must include, at a minimum, an input and a substantive process that together significantly contribute to the ability to create outputs;

 

   

narrow the definitions of a business and of outputs by focusing on goods and services provided to customers and by removing the reference to an ability to reduce costs;

 

   

add guidance and illustrative examples to help entities assess whether a substantive process has been acquired;

 

   

remove the assessment of whether market participants are capable of replacing any missing inputs or processes and continuing to produce outputs; and

 

   

add an optional concentration test that permits a simplified assessment of whether an acquired set of activities and assets is not a business.

The above amendments are effective for business combinations for which the acquisition date is on or after the beginning of the first annual reporting period beginning on or after 1 January 2020.

The Company is currently evaluating the impact of these amendments on its consolidated financial statements.

 

19


Table of Contents

WNS (HOLDINGS) LIMITED

NOTES TO UNAUDITED CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS

(Amounts in thousands, except share and per share data)

 

4.

Business Combinations

 

  a)

HealthHelp

On March 15, 2017 (“Acquisition date”), the Company acquired all ownership interests of MTS HealthHelp Inc. and its subsidiaries (“HealthHelp”), which provides benefits management across several specialty healthcare areas, including radiology, cardiology, oncology, sleep care, orthopedics, and pain management, for a total consideration of $68,910, including working capital adjustments of $573 and a contingent consideration of $8,545, payable over a period of two years linked to revenue targets and continuation of an identified client contract. The fair value of the contingent consideration liability was estimated using level 3 inputs which included an assumption for discount rate of 2.5%. The potential undiscounted amount of all future payments that the Company could be required to make under the contingent consideration arrangement is between $0 and $8,876.

The Company funded the acquisition primarily with a five year secured term loan. The Company is expected to leverage Health Help’s capability in care management to address the needs of payor, provider and insurance organizations.

The Company incurred acquisition related costs of $1,809, which were included in “General and administrative expenses” in the consolidated statement of income for the year ended March 31, 2017.

During the year ended March 31, 2018, the Company made a payment of $573 towards working capital adjustments. During the year ended March 31, 2018, a contingent consideration of $3,114 was also paid by the Company to the sellers on achievement of the revenue target in relation to the identified client contract related to the first measurement period and an amount of $1,324 was reversed and credited to its consolidated income statement, due to the shortfall in revenue target achievement for the identified client contract, in accordance with the terms of the share purchase agreement.

The purchase price has been allocated, as set out below, to the assets acquired and liabilities assumed in the business combination.

 

     Amount  

Cash

   $ 3,119  

Trade receivables

     4,910  

Unbilled revenue

     2,016  

Prepayments and other current assets

     1,060  

Property and equipment

     4,612  

Intangible assets

  

- Software

     1,274  

- Customer contracts

     4,537  

- Customer relationships

     49,584  

- Service mark

     400  

- Covenant not-to-compete

     4,693  

- Technology

     4,852  

Non-current assets

     161  

Term loan

     (29,249

Current liabilities

     (2,555

Non-current liabilities

     (1,423

Deferred tax liability

     (18,163
  

 

 

 

Net assets acquired

   $ 29,828  

Less: Purchase consideration

     68,910  
  

 

 

 

Goodwill on acquisition

   $ 39,082  
  

 

 

 

Goodwill of $14,876 arising from this acquisition is expected to be deductible for tax purposes. Goodwill is attributable mainly to expected synergies and assembled workforce arising from the acquisition.

During the year ended March 31, 2018, the Company completed the accounting of the assets acquired and liabilities assumed on acquisition. Corresponding changes to the comparatives for the three and nine months ended December 31, 2017 were not made, as the impact of the change on finalization of purchase price allocation is not material.

 

20


Table of Contents

WNS (HOLDINGS) LIMITED

NOTES TO UNAUDITED CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS

(Amounts in thousands, except share and per share data)

 

  b)

Denali Sourcing Services Inc.

On January 20, 2017 (“Acquisition Date”), the Company acquired all outstanding shares of Denali Sourcing Services Inc. (“Denali”), a provider of strategic procurement BPM solutions for a purchase consideration of $38,668 (including the contingent consideration of $6,277, dependent on the achievement of revenue targets over a period of three years and deferred consideration of $522 payable in first quarter of fiscal 2018), including adjustments for working capital. The fair value of the contingent consideration liability was estimated using Level 3 inputs which included an assumption for discount rate of 2.5%. The potential undiscounted amount of all future payments that the Company could be required to make under the contingent consideration arrangement is between $0 and $6,578. The payment was funded through a three-year secured term loan.

Denali delivers global sourcing and procurement services to high-tech, retail and Consumer Packaged Goods (“CPG”), banking and financial services, utilities, and healthcare verticals. The acquisition of Denali is expected to add a strategic procurement capability to the Company’s existing Finance and Accounting services and will enable the Company to offer procurement solutions to its clients.

The Company incurred acquisition related costs of $502, which were included in “General and administrative expenses” in the consolidated statement of income for the year ended March 31, 2017.

During the year ended March 31, 2018, the Company made payment of $522 towards deferred consideration and an amount of $968 was reduced from the purchase consideration towards working capital adjustments. During the year ended March 31, 2018, a contingent consideration of $2,351 was also paid by the Company to the sellers on achievement of the revenue target related to the first measurement period.

The purchase price has been allocated, as set out below, to the assets acquired and liabilities assumed in the business combination.

 

     Amount  

Cash

   $ 1,204  

Trade receivables

     2,799  

Unbilled revenue

     1,258  

Prepayments and other current assets

     95  

Property and equipment

     53  

Deferred tax asset

     18  

Intangible assets

  

- Software

     3  

- Customer contracts

     3,025  

- Customer relationships

     8,000  

- Trade name

     545  

- Covenant not-to-compete

     1,718  

Non-current assets

     27  

Current liabilities

     (3,781

Short-term line of credit

     (475

Non-current liabilities

     (343

Deferred tax liability

     (5,020
  

 

 

 

Net assets acquired

   $ 9,126  

Less: Purchase consideration

     38,668  
  

 

 

 

Goodwill on acquisition

   $ 29,542  
  

 

 

 

Goodwill arising from this acquisition is not expected to be deductible for tax purposes. Goodwill is attributable mainly to expected synergies and assembled workforce arising from the acquisition.

During the year ended March 31, 2018, the Company completed the accounting of the assets acquired and liabilities assumed on acquisition. Corresponding changes to the comparatives for the three and nine months ended December 31, 2017 were not made, as the impact of the change on finalization of purchase price allocation is not material.

 

21


Table of Contents

WNS (HOLDINGS) LIMITED

NOTES TO UNAUDITED CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS

(Amounts in thousands, except share and per share data)

 

  c)

Value Edge

On June 14, 2016 (“Acquisition Date”), the Company acquired all outstanding equity shares of Value Edge Research Services Private Limited (“Value Edge”) which provides business research and analytics reports and databases across the domains of pharmaceutical, biotech and medical devices, for a total consideration of $18,265 including working capital adjustments of $765 and contingent consideration of $5,112 (held in escrow), subject to compliance with certain conditions, payable over a period of three years. The acquisition is expected to deepen the Company’s domain and specialized analytical capabilities in the growing pharma market, and provide the Company with a technology asset, which is leverageable across clients and industries.

The Company incurred acquisition related costs of $24, which were included in “General and administrative expenses” in the consolidated statement of income for the year ended March 31, 2017.

During the year ended March 31, 2018, the Company released from escrow an amount of $1,535 towards the first instalment of contingent consideration to the sellers. During the nine months ended December 31, 2018, the Company released from escrow an amount of $1,535 towards the second instalment of contingent consideration to the sellers.

The purchase price has been allocated, as set out below, to the assets acquired and liabilities assumed in the business combination.

 

     Amount  

Cash

   $ 432  

Trade receivables

     370  

Unbilled revenue

     706  

Investments

     87  

Prepayments and other current assets

     99  

Property and equipment

     78  

Deferred tax asset

     49  

Intangible assets

  

- Software

     10  

- Customer contracts

     701  

- Customer relationships

     1,894  

- Trade name

     104  

- Covenant not-to-compete

     2,655  

- Technology

     1,238  

Non-current assets

     74  

Current liabilities

     (1,236

Non-current liabilities

     (126

Deferred tax liability

     (2,281
  

 

 

 

Net assets acquired

   $ 4,854  

Less: Purchase consideration

     18,265  
  

 

 

 

Goodwill on acquisition

   $ 13,411  
  

 

 

 

Goodwill arising from this acquisition is not expected to be deductible for tax purposes (Refer Note 24). Goodwill is attributable mainly to expected synergies and assembled workforce arising from the acquisition.

 

22


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WNS (HOLDINGS) LIMITED

NOTES TO UNAUDITED CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS

(Amounts in thousands, except share and per share data)

 

5.

Cash and cash equivalents

The Company considers all highly liquid investments with an initial maturity of up to three months to be cash equivalents. Cash and cash equivalents consist of the following:

 

     As at  
     December 31,
2018
     March 31,
2018
 

Cash and bank balances

   $ 52,303      $ 47,738  

Short term deposits with banks (1)

     33,012        52,091  
  

 

 

    

 

 

 

Total

   $ 85,315      $ 99,829  
  

 

 

    

 

 

 
     

Note:

 

(1)

Short term deposits can be withdrawn by the Company at any time without prior notice and are readily convertible into known amounts of cash with an insignificant risk of changes in value.

 

6.

Investments

Investments consist of the following:

 

     As at  
     December 31,
2018
     March 31,
2018
 

Investments in marketable securities and mutual funds (1)

   $ 116,381      $ 99,954  

Investment in fixed deposits

     13,537        21,548  
  

 

 

    

 

 

 

Total

   $ 129,918      $ 121,502  
  

 

 

    

 

 

 
     

Note:

 

(1)

Marketable securities are investments made principally for the purpose of earning daily income. Investments which are expected to be redeemed within 12 months from the reporting date are classified as current investments, otherwise they are classified as non-current.

 

     As at  
     December 31,
2018
     March 31,
2018
 

Current investments

   $ 49,607      $ 120,960  

Non-current investments

     80,311        542  
  

 

 

    

 

 

 

Total

   $ 129,918      $ 121,502  
  

 

 

    

 

 

 
     

 

23


Table of Contents

WNS (HOLDINGS) LIMITED

NOTES TO UNAUDITED CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS

(Amounts in thousands, except share and per share data)

 

7.

Trade receivables and unbilled revenue, net

Trade receivables and unbilled revenue consist of the following:

 

     As at  
     December 31,
2018
     March 31,
2018
 

Trade receivables and unbilled revenue*

   $ 130,067      $ 133,673  

Less: Allowances for expected credit losses

     (551      (564
  

 

 

    

 

 

 

Total

   $ 129,516      $ 133,109  
  

 

 

    

 

 

 
     

 

*

As at December 31, 2018, unbilled revenue includes contract assets amounting to $1,412.

The movement in the allowances for expected credit losses is as follows:

 

     Three months ended December 31,      Nine months ended December 31,  
     2018      2017      2018      2017  

Balance as on March 31, 2018

   $ —        $ —        $ 564      $ —  

Impact of adoption of IFRS 9

     —          —          (74      —    
  

 

 

    

 

 

    

 

 

    

 

 

 

Balance at the beginning of the period

     310        2,653        490        1,713  

Charged to profit or loss

     308        92        402        1,419  

Write-offs, net of collections

     (19      (82      (304      (246

Reversals

     (33      (138      (41      (449

Translation adjustment

     (15      23        4        111  
  

 

 

    

 

 

    

 

 

    

 

 

 

Balance at the end of the period

   $ 551      $ 2,548      $ 551      $ 2,548  
  

 

 

    

 

 

    

 

 

    

 

 

 

 

24


Table of Contents

WNS (HOLDINGS) LIMITED

NOTES TO UNAUDITED CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS

(Amounts in thousands, except share and per share data)

 

8.

Prepayment and other assets

Prepayment and other assets consist of the following:

 

     As at  
     December 31,
2018
     March 31,
2018
 

Current:

     

Service tax and other tax receivables

   $ 810      $ 6,569  

Deferred transition cost*

     —          571  

Contract assets

     4,999        —    

Employee receivables

     1,602        1,099  

Advances to suppliers

     2,249        2,877  

Prepaid expenses

     6,397        7,994  

Restricted cash, held in escrow (Refer Note 4 (c))

     1,535        1,535  

Others assets

     3,126        4,202  
  

 

 

    

 

 

 

Total

   $ 20,718      $ 24,847  
  

 

 

    

 

 

 

Non-current:

     

Deposits

   $ 8,672      $ 8,708  

Income tax assets

     9,484        12,595  

Service tax and other tax receivables

     20,420        11,410  

Deferred transition cost*

     —          2,467  

Contract assets

     17,510        —    

Restricted cash, held in escrow (Refer Note 4 (c))

     —          1,535  

Others assets

     2,939        5,673  
  

 

 

    

 

 

 

Total

   $ 59,025      $ 42,388  
  

 

 

    

 

 

 

 

*

As at December 31, 2018, deferred transition cost is included within contract assets in accordance with IFRS 15.

 

9.

Goodwill

A summary of the carrying value of goodwill is as follows:

 

     As at  
     December 31,      March 31,  
     2018      2018  

Gross carrying amount

   $ 152,212      $ 159,500  

Accumulated impairment of goodwill

     (22,163      (24,314
  

 

 

    

 

 

 

Total

   $ 130,049      $ 135,186  
  

 

 

    

 

 

 
     

The movement in goodwill balance by reportable segment as at December 31, 2018 and March 31, 2018 is as follows:

Gross carrying amount

 

     WNS     

WNS

Auto

        
     Global BPM      Claims BPM      Total  

Balance as at April 1, 2017

   $ 129,878      $ 25,803      $ 155,681  

Goodwill initially arising on acquisitions

     (92      —          (92

Foreign currency translation adjustment

     767        3,144        3,911  
  

 

 

    

 

 

    

 

 

 

Balance as at March 31, 2018

   $ 130,553      $ 28,947      $ 159,500  
  

 

 

    

 

 

    

 

 

 

Foreign currency translation adjustment

     (4,727      (2,561      (7,288
  

 

 

    

 

 

    

 

 

 

Balance as at December 31, 2018

   $ 125,826      $ 26,386      $ 152,212  
  

 

 

    

 

 

    

 

 

 

Accumulated impairment losses on goodwill

 

     WNS     

WNS

Auto

        
     Global BPM      Claims BPM      Total  

Balance as at April 1, 2017

   $ —      $ 21,673      $ 21,673  

Foreign currency translation adjustment

     —          2,641        2,641  
  

 

 

    

 

 

    

 

 

 

Balance as at March 31, 2018

   $ —      $ 24,314      $ 24,314  

Foreign currency translation adjustment

     —          (2,151      (2,151
  

 

 

    

 

 

    

 

 

 

Balance as at December 31, 2018

   $ —        $ 22,163      $ 22,163  
  

 

 

    

 

 

    

 

 

 

 

25


Table of Contents

WNS (HOLDINGS) LIMITED

NOTES TO UNAUDITED CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS

(Amounts in thousands, except share and per share data)

 

10.

Intangible assets

The changes in the carrying value of intangible assets for the year ended March 31, 2018 are as follows:

 

Gross carrying value

  Customer
contracts
    Customer
relationships
    Intellectual
Property and
other
rights
    Trade
names
    Technology     Leasehold
benefits
    Covenant
not-to-
compete
    Service
mark
    Software     Total  

Balance as at April 1, 2017

  $ 167,001     $ 121,922     $ 3,861     $ 653     $ 6,131     $ 1,835     $ 9,451       400     $ 25,586     $ 336,840  

Additions

    —         —         250       —         —         —         —         —         7,369       7,619  

Translation adjustments

    93       940       470       —         (6     —         10       —         894       2,401  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Balance as at March 31, 2018

  $ 167,094     $ 122,862     $ 4,581     $ 653     $ 6,125     $ 1,835     $ 9,461     $ 400     $ 33,849     $ 346,860  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Accumulated amortization

                   

Balance as at April 1, 2017

  $ 157,976     $ 62,175     $ 3,861     $ 80     $ 172     $ 1,835     $ 964     $ —       $ 13,153     $ 240,216  

Amortization

    2,725       3,700       74       236       790       —         2,310       —         5,670       15,505  

Translation adjustments

    (62     873       470       (1     (4     —         12       —         199       1,487  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Balance as at March 31, 2018

  $ 160,639     $ 66,748     $ 4,405     $ 315     $ 958     $ 1,835     $ 3,286     $ —       $ 19,022     $ 257,208  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net carrying value as at March 31, 2018

  $ 6,455     $ 56,114     $ 176     $ 338     $ 5,167     $ —       $ 6,175     $ 400     $ 14,827     $ 89,652  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

The changes in the carrying value of intangible assets for the nine months ended December 31, 2018 are as follows:

 

Gross carrying value

  Customer
contracts
    Customer
relationships
    Intellectual
Property and
other
rights
    Trade
names
    Technology     Leasehold
benefits
    Covenant
not-to-
compete
    Service
mark
    Software     Total  

Balance as at April 1, 2018

  $ 167,094     $ 122,862     $ 4,581     $ 653     $ 6,125     $ 1,835     $ 9,461       400     $ 33,849     $ 346,860  

Additions

    —         —           —         —         —         —         —         5,698       5,698  

Translation adjustments

    (5,761     (1,426     (383     (7     (84     —         (199     —         (2,068     (9,928
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Balance as at December 31, 2018

  $ 161,333     $ 121,436     $ 4,198     $ 646     $ 6,041     $ 1,835     $ 9,262     $ 400     $ 37,479     $ 342,630  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Accumulated amortization

                   

Balance as at April 1, 2018

  $ 160,639     $ 66,748     $ 4,405     $ 315     $ 958     $ 1,835     $ 3,286     $ —       $ 19,022     $ 257,208  

Amortization

    2,009       2,755       94       146       583       —         1,681       —         4,599       11,867  

Translation adjustments

    (5,555     (1,226     (383     (6     (22     —         (101     —         (1,250     (8,543
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Balance as at December 31, 2018

  $ 157,093     $ 68,277     $ 4,116     $ 455     $ 1,519     $ 1,835     $ 4,866     $ —       $ 22,371     $ 260,532  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net carrying value as at December 31, 2018

  $ 4,240     $ 53,159     $ 82     $ 191     $ 4,522     $ —       $ 4,396     $ 400     $ 15,108     $ 82,098  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

 

26


Table of Contents

WNS (HOLDINGS) LIMITED

NOTES TO UNAUDITED CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS

(Amounts in thousands, except share and per share data)

 

11.

Property and equipment

The changes in the carrying value of property and equipment for the year ended March 31, 2018 are as follows:

 

Gross carrying value

   Buildings     Computers
and
software
    Furniture,
fixtures and
office
equipment
    Vehicles     Leasehold
improvements
    Total  

Balance as at April 1, 2017

   $ 10,246     $ 69,871     $ 68,877     $ 587     $ 60,992     $ 210,573  

Additions

     —         4,597       9,389       93       9,756       23,835  

Disposals/retirements

     —         (3,350     (1,718     (29     (2,303     (7,400

Translation adjustments

     (23     1,965       839       5       721       3,507  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Balance as at March 31, 2018

   $ 10,223     $ 73,083     $ 77,387     $ 656     $ 69,166     $ 230,515  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Accumulated depreciation

            

Balance as at April 1, 2017

   $ 4,208     $ 59,811     $ 51,431     $ 429     $ 41,180     $ 157,059  

Depreciation

     514       6,442       6,623       97       6,278       19,954  

Disposals/retirements

     —         (3,345     (1,674     (30     (2,308     (7,357

Translation adjustments

     (12     1,822       512       1       296       2,619  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Balance as at March 31, 2018

   $ 4,710     $ 64,730     $ 56,892     $ 497     $ 45,446     $ 172,275  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Capital work-in-progress

               2,366  
            

 

 

 

Net carrying value as at March 31, 2018

             $ 60,606  
            

 

 

 

The changes in the carrying value of property and equipment for the nine months ended December 31, 2018 are as follows:

 

Gross carrying value

   Buildings     Computers
and
software
    Furniture,
fixtures and
office
equipment
    Vehicles     Leasehold
improvements
    Total  

Balance as at April 1, 2018

   $ 10,223     $ 73,083     $ 77,387     $ 656     $ 69,166     $ 230,515  

Additions

     —         4,673       5,479       317       5,797       16,266  

Disposals/retirements

     —         (1,444     (1,785     (184     (681     (4,094

Translation adjustments

     (297     (5,226     (5,165     (51     (4,626     (15,365
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Balance as at December 31, 2018

   $ 9,926       71,086       75,916       738       69,656       227,322  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Accumulated depreciation

            

Balance as at April 1, 2018

   $ 4,710     $ 64,730     $ 56,892     $ 497     $ 45,446     $ 172,275  

Depreciation

     373       4,135       5,426       103       5,309       15,346  

Disposals/retirements

     —         (1,419     (1,758     (184     (580     (3,941

Translation adjustments

     (137     (4,745     (3,805     (37     (3,087     (11,811
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Balance as at December 31, 2018

   $ 4,946     $ 62,701     $ 56,755     $ 379     $ 47,088     $ 171,869  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Capital work-in-progress

               1,924  
            

 

 

 

Net carrying value as at December 31, 2018

             $ 57,377  
            

 

 

 

Certain property and equipment are pledged as collateral against borrowings with a carrying amount of $108 and $107 as at December 31, 2018 and March 31, 2018, respectively.

 

27


Table of Contents

WNS (HOLDINGS) LIMITED

NOTES TO UNAUDITED CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS

(Amounts in thousands, except share and per share data)

 

12.

Loans and borrowings

Long-term debt

The long-term loans and borrowings consist of the following:

 

                 As at  

Currency

  

Interest rate

   Final
maturity
(fiscal
year)
     December 31, 2018      March 31, 2018  

US dollars

   3M USD Libor +1.27%      2020        17,050        22,700  

US dollars

   3M USD Libor +0.95%      2022        58,800        67,200  
        

 

 

    

 

 

 

Total

           75,850        89,900  

Less: Debt issuance cost

           486        769  
        

 

 

    

 

 

 

Total

           75,364        89,131  

Current portion of long-term debt

         $ 27,838      $ 27,740  

Long-term debt

         $ 47,526      $ 61,391  

In January 2017, WNS North America Inc. obtained from BNP Paribas, Hong Kong, a three-year term loan facility of $34,000 at an interest rate equal to the three-month US dollar LIBOR plus a margin of 1.27% per annum to finance the acquisition of Denali. WNS North America Inc. has pledged its shares of Denali as security for the loan. In connection with the term loan, the Company has 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%. The facility agreement for the term loan contains certain financial covenants as defined in the facility agreement. This term loan is repayable in six semi-annual installments. The first five repayment installments are $5,650 each and the sixth and final repayment installment is $5,750. On July 20, 2017, January 22, 2018, July 20, 2018 and January 22, 2019, the Company made scheduled repayments of $5,650 each. As at December 31, 2018, the Company has complied with the financial covenants in all material respects in relation to this loan facility.

In March 2017, WNS (Mauritius) Limited obtained from HSBC Bank (Mauritius) Ltd. and Standard Chartered Bank, UK a five-year term loan facility of $84,000 at an interest rate equal to the three-month US dollar LIBOR plus a margin of 0.95% per annum to finance the acquisition of HealthHelp. The Company has pledged its shares of WNS (Mauritius) Limited as security for the loan. In connection with the term loan, the Company has 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%. The facility agreement for the term loan contains certain financial covenants as defined in the facility agreement. This term loan is repayable in ten semi-annual installments of $8,400 each. On September 14, 2017, March 14, 2018 and September 17, 2018 the Company made scheduled repayments of $8,400 each. As at December 31, 2018, the Company has complied with the financial covenants in all material respects in relation to this loan facility.

The Company has pledged trade receivables, other financial assets and property and equipment with an aggregate amount of $118,147 and $113,174 as at December 31, 2018 and March 31, 2018, respectively, as collateral for the above borrowings.

Short-term lines of credit

The Company’s Indian subsidiary, WNS Global Services Private Limited (“WNS Global”), has unsecured lines of credit with banks amounting to $59,572 (based on the exchange rate on December 31, 2018). The Company has also established a line of credit in the UK amounting to $12,616 (based on the exchange rate on December 31, 2018). Further the Company has also established a line of credit in South Africa amounting to $1,426 (based on the exchange rate on December 31, 2018).

As at December 31, 2018, no amounts were drawn under these lines of credit.

 

28


Table of Contents

WNS (HOLDINGS) LIMITED

NOTES TO UNAUDITED CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS

(Amounts in thousands, except share and per share data)

 

13.

Financial instruments

Financial instruments by category

The carrying value and fair value of financial instruments by class as at December 31, 2018 are as follows:

 

     Financial
assets at

amortized
cost
     Financial
assets at
FVTPL
     Financial
assets at
FVOCI
     Total
carrying
value
     Total fair
value
 

Cash and cash equivalents

   $ 85,315      $ —        $ —        $ 85,315      $ 85,315  

Investment in fixed deposits

     13,537        —          —          13,537        13,537  

Investments in marketable securities and mutual funds

     —          116,381        —          116,381        116,381  

Trade receivables

     73,804        —          —          73,804        73,804  

Unbilled revenue (1)

     54,300        —          —          54,300        54,300  

Funds held for clients

     9,936        —          —          9,936        9,936  

Prepayments and other assets (2)

     5,189        —          —          5,189        5,189  

Other non-current assets (3)

     8,672        —          —          8,672        8,672  

Derivative assets

     —          3,383        18,314        21,697        21,697  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Total carrying value

   $ 250,753      $ 119,764      $ 18,314      $ 388,831      $ 388,831  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Financial liabilities

 

     Financial
liabilities at
amortized
cost
     Financial
liabilities at
FVTPL
     Financial
liabilities at
FVOCI
     Total
carrying
value
     Total
fair
value
 

Trade payables

   $ 20,002      $ —        $ —        $ 20,002      $ 20,002  

Long-term debt (includes current portion)(4)

     75,850        —          —          75,850        75,850  

Other employee obligations (5)

     49,231        —          —          49,231        49,231  

Provision and accrued expenses

     27,703        —          —          27,703        27,703  

Other liabilities (6)

     2,229        10,058        —          12,287        12,287  

Derivative liabilities

     —          1,681        3,582        5,263        5,263  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Total carrying value

   $ 175,015      $ 11,739      $ 3,582      $ 190,336      $ 190,336  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Notes:

 

(1)

Excluding non-financial assets $1,412.

(2)

Excluding non-financial assets $15,529.

(3)

Excluding non-financial assets $50,353.

(4)

Excluding non-financial asset (unamortized debt issuance cost) $486.

(5)

Excluding non-financial liabilities $16,884.

(6)

Excluding non-financial liabilities $12,806.

 

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WNS (HOLDINGS) LIMITED

NOTES TO UNAUDITED CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS

(Amounts in thousands, except share and per share data)

 

The carrying value and fair value of financial instruments by class as at March 31, 2018 are as follows:

Financial assets

 

     Financial
assets at
amortized
cost
     Financial
assets at
FVTPL
     Financial
assets at
FVOCI
     Total
carrying
value
     Total fair
value
 

Cash and cash equivalents

   $ 99,829      $ —        $ —        $ 99,829      $ 99,829  

Investment in fixed deposits

     21,548        —          —          21,548        21,548  

Investments in marketable securities and mutual funds

     —          99,954        —          99,954        99,954  

Trade receivables

     71,388        —          —          71,388        71,388  

Unbilled revenue

     61,721        —          —          61,721        61,721  

Funds held for clients

     10,066        —          —          10,066        10,066  

Prepayments and other assets (1)

     4,410        —          —          4,410        4,410  

Other non-current assets (2)

     10,243        —          —          10,243        10,243  

Derivative assets

     —          2,212        12,771        14,983        14,983  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Total carrying value

   $ 279,205      $ 102,166      $ 12,771      $ 394,142      $ 394,142  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Financial liabilities

 

     Financial
liabilities at
amortized
cost
     Financial
liabilities at
FVTPL
     Financial
liabilities at
FVOCI
     Total
carrying
value
     Total
fair value
 

Trade payables

   $ 19,703      $ —        $ —        $ 19,703      $ 19,703  

Long-term debt (includes current portion)(3)

     89,900        —          —          89,900        89,900  

Other employee obligations (4)

     59,346        —          —          59,346        59,346  

Provision and accrued expenses

     28,826        —          —          28,826        28,826  

Other liabilities (5)

     2,447        11,388        —          13,835        13,835  

Derivative liabilities

     —          946        7,809        8,755        8,755  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Total carrying value

   $ 200,222      $ 12,334      $ 7,809      $ 220,365      $ 220,365  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 
              

Notes:

 

(1)

Excluding non-financial assets $20,437.

(2)

Excluding non-financial assets $32,145.

(3)

Excluding non-financial asset (unamortized debt issuance cost) $769.

(4)

Excluding non-financial liabilities $14,892.

(5)

Excluding non-financial liabilities $13,566.

For the financial assets and liabilities subject to offsetting or similar arrangements, each agreement between the Company and the counterparty allows for net settlement of the relevant financial assets and liabilities when both elect to settle on a net basis. In the absence of such an election, financial assets and liabilities will be settled on a gross basis.

 

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WNS (HOLDINGS) LIMITED

NOTES TO UNAUDITED CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS

(Amounts in thousands, except share and per share data)

 

Financial assets and liabilities subject to offsetting, enforceable master netting arrangements or similar agreements as at December 31, 2018 are as follows:

 

    

Gross

amounts of

    

Gross amounts

of recognized

financial

liabilities offset

in the

    

Net amounts

of financial

assets

presented in

     Related amount not set off in
financial instruments
        

Description of types of financial assets

   recognized
financial
assets
     statement of
financial
position
     the statement
of financial
position
     Financial
instruments
    Cash
collateral
received
     Net
Amount
 

Derivative assets

   $ 21,697      $ —        $ 21,697      $ (3,285   $ —        $ 18,412  
  

 

 

    

 

 

    

 

 

    

 

 

   

 

 

    

 

 

 

Total

   $ 21,697      $ —        $ 21,697      $ (3,285   $ —        $ 18,412  
  

 

 

    

 

 

    

 

 

    

 

 

   

 

 

    

 

 

 
    

Gross

amounts of

    

Gross amounts

of recognized

financial assets

offset in the

    

Net amounts

of financial

liabilities

presented in

     Related amount not set off in
financial instruments
        

Description of types of financial liabilities

   recognized
financial
liabilities
     statement of
financial
position
     the statement
of financial
position
     Financial
instruments
    Cash
collateral
pledged
     Net
Amount
 

Derivative liabilities

   $ 5,263      $ —        $ 5,263      $ (3,285   $ —        $ 1,978  
  

 

 

    

 

 

    

 

 

    

 

 

   

 

 

    

 

 

 

Total

   $ 5,263      $ —        $ 5,263      $ (3,285   $ —        $ 1,978  
  

 

 

    

 

 

    

 

 

    

 

 

   

 

 

    

 

 

 

Financial assets and liabilities subject to offsetting, enforceable master netting arrangements or similar agreements as at March 31, 2018 are as follows:

 

    

Gross

amounts of

    

Gross amounts

of recognized

financial

liabilities offset

in the

    

Net amounts

of financial

assets

presented in

     Related amount not set off in
financial instruments
        

Description of types of financial assets

   recognized
financial
assets
     statement of
financial
position
     the statement
of financial
position
     Financial
instruments
    Cash
collateral
received
     Net
Amount
 

Derivative assets

   $ 14,983      $ —      $ 14,983      $ (4,215   $ —      $ 10,768  
  

 

 

    

 

 

    

 

 

    

 

 

   

 

 

    

 

 

 

Total

   $ 14,983      $ —      $ 14,983      $ (4,215   $ —      $ 10,768  
  

 

 

    

 

 

    

 

 

    

 

 

   

 

 

    

 

 

 
    

Gross

amounts of

    

Gross amounts

of recognized

financial assets

offset in the

    

Net amounts

of financial

liabilities

presented in

     Related amount not set off in
financial instruments
        

Description of types of financial liabilities

   recognized
financial
liabilities
     statement of
financial
position
     the statement
of financial
position
     Financial
Instruments
    Cash
collateral
pledged
     Net
Amount
 

Derivative liabilities

   $ 8,755      $ —      $ 8,755      $ (4,215   $ —      $ 4,540  
  

 

 

    

 

 

    

 

 

    

 

 

   

 

 

    

 

 

 

Total

   $ 8,755      $ —      $ 8,755      $ (4,215   $ —      $ 4,540  
  

 

 

    

 

 

    

 

 

    

 

 

   

 

 

    

 

 

 

Fair value hierarchy

The following is the hierarchy for determining and disclosing the fair value of financial instruments by valuation technique:

Level 1 — quoted prices (unadjusted) in active markets for identical assets or liabilities.

Level 2 — other techniques for which all inputs have a significant effect on the recorded fair value are observable, either directly or indirectly.

Level 3 — techniques which use inputs that have a significant effect on the recorded fair value that are not based on observable market data.

 

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WNS (HOLDINGS) LIMITED

NOTES TO UNAUDITED CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS

(Amounts in thousands, except share and per share data)

 

The assets and liabilities measured at fair value on a recurring basis as at December 31, 2018 are as follows:

 

            Fair value measurement at reporting date using  

Description

   December 31, 2018      Quoted
prices in
active
markets
for identical
assets

(Level 1)
     Significant
other
observable
inputs

(Level 2)
     Significant
unobservable
inputs

(Level 3)
 

Assets

           

Financial assets at FVTPL

           

Foreign exchange contracts

   $ 3,383      $ —        $ 3,383      $ —    

Investments in marketable securities and mutual funds

     116,381        115,930        451        —    

Financial assets at FVOCI

           

Foreign exchange contracts

     17,527        —          17,527        —    

Interest rate swaps

     787        —          787        —    
  

 

 

    

 

 

    

 

 

    

 

 

 

Total assets

   $ 138,078      $ 115,930      $ 22,148      $ —    
  

 

 

    

 

 

    

 

 

    

 

 

 

Liabilities

           

Financial liabilities at FVTPL

           

Foreign exchange contracts

   $ 1,681      $ —        $ 1,681      $ —    

Contingent consideration

     10,058        —          —          10,058  

Financial liabilities at FVOCI

           

Foreign exchange contracts

     3,582        —          3,582        —    
  

 

 

    

 

 

    

 

 

    

 

 

 

Total liabilities

   $ 15,321      $ —        $ 5,263      $ 10,058  
  

 

 

    

 

 

    

 

 

    

 

 

 

 

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WNS (HOLDINGS) LIMITED

NOTES TO UNAUDITED CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS

(Amounts in thousands, except share and per share data)

 

The assets and liabilities measured at fair value on a recurring basis as at March 31, 2018 are as follows:-

 

            Fair value measurement at reporting date using  

Description

   March 31,
2018
     Quoted
prices in
active
markets
for identical
assets
(Level 1)
     Significant
other
observable
inputs
(Level 2)
     Significant
unobservable
inputs
(Level 3)
 

Assets

           

Financial assets at FVTPL

           

Foreign exchange contracts

   $ 2,212      $ —      $ 2,212      $ —  

Investments in marketable securities and mutual funds

     99,954        99,412        542        —    

Financial assets at FVOCI

           

Foreign exchange contracts

     11,709        —          11,709        —    

Interest rate swaps

     1,062        —          1,062        —    
  

 

 

    

 

 

    

 

 

    

 

 

 

Total assets

   $ 114,937      $ 99,412      $ 15,525      $ —  
  

 

 

    

 

 

    

 

 

    

 

 

 

Liabilities

           

Financial liabilities at FVTPL

           

Foreign exchange contracts

   $ 946      $ —      $ 946      $ —    

Contingent consideration

     11,388        —          —          11,388  

Financial liabilities at FVOCI

           

Foreign exchange contracts

     7,809        —          7,809        —    
  

 

 

    

 

 

    

 

 

    

 

 

 

Total liabilities

   $ 20,143      $ —      $ 8,755      $ 11,388  
  

 

 

    

 

 

    

 

 

    

 

 

 

Description of significant unobservable inputs to Level 3 valuation

The fair value of the contingent consideration liability was estimated using a probability weighted method and achievement of revenue target with a discount rate of 2.5%. One percentage point change in the unobservable inputs used in fair valuation of the contingent consideration does not have a significant impact on its value.

The fair value is estimated using discounted cash flow approach which involves assumptions and judgments regarding risk characteristics of the instruments, discount rates, future cash flows and foreign exchange spot, forward premium rates and market rates of interest.

During the three and nine months ended December 31, 2018 and the year ended March 31, 2018, there were no transfers between Level 1 and Level 2 fair value measurements, and no transfers into and out of Level 3 fair value measurements.

Derivative financial instruments

The primary risks managed by using derivative instruments are foreign currency exchange risk and interest rate risk. Forward and option contracts up to 24 months on various foreign currencies are entered into to manage the foreign currency exchange rate risk on forecasted revenue denominated in foreign currencies and monetary assets and liabilities held in non-functional currencies. Interest rate swaps are entered to manage interest rate risk associated with the Company’s floating rate borrowings. The Company’s primary exchange rate exposure is with the US dollars and pound sterling against the Indian rupee. For derivative instruments which qualify for cash flow hedge accounting, the Company records the effective portion of gain or loss from changes in the fair value of the derivative instruments in other comprehensive income (loss), which is reclassified into earnings in the same period during which the hedged item affects earnings. Derivative instruments qualify for hedge accounting when the instrument is designated as a hedge; the hedged item is specifically identifiable and exposes the Company to risk; and it is expected that a change in fair value of the derivative instrument and an opposite change in the fair value of the hedged item will have a high degree of correlation. Determining the high degree of correlation between the change in fair value of the hedged item and the derivative instruments involves significant judgment including the probability of the occurrence of the forecasted transaction. When it is highly probable that a forecasted transaction will not occur, the Company discontinues the hedge accounting and recognizes immediately in the consolidated statement of income, the gains and losses attributable to such derivative instrument that were accumulated in other comprehensive income/(loss).

 

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WNS (HOLDINGS) LIMITED

NOTES TO UNAUDITED CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS

(Amounts in thousands, except share and per share data)

 

The following table presents the notional values of outstanding foreign exchange forward contracts, foreign exchange option contracts and interest rate swap contracts:

 

     As at  
     December 31,
2018
     March 31,
2018
 

Forward contracts (Sell)

     

In US dollars

   $ 221,944      $ 242,418  

In United Kingdom pound sterling

     152,731        132,591  

In Euro

     31,254        23,883  

In Australian dollars

     44,152        48,147  

Others

     2,272        2,332  
  

 

 

    

 

 

 
   $ 452,353      $ 449,371  
  

 

 

    

 

 

 
     

Option contracts (Sell)

     

In US dollars

   $ 135,771      $ 107,629  

In United Kingdom pound sterling

     110,071        116,401  

In Euro

     33,039        21,483  

In Australian dollars

     42,078        28,828  

Others

     112        927  
  

 

 

    

 

 

 
   $ 321,071      $ 275,268  
  

 

 

    

 

 

 

Interest rate swap contracts

     

In US dollars

   $ 75,850      $ 89,900  

The amount of gain/ (loss) reclassified from other comprehensive income into consolidated statement of income in respective line items for the three and nine months ended December 31, 2018 and 2017 are as follows:

 

     Three months ended December 31,      Nine months ended December 31,  
     2018      2017      2018      2017  

Revenue

   $ 113      $ 2,405      $ (578    $ 9,313  

Foreign exchange gain/(loss), net

     —          3,969        (2      13,581  

Finance expense, net

     107        (130      276        (512

Income tax related to amounts reclassified into consolidated statement of income

     (28      (2,347      (374      (8,339
  

 

 

    

 

 

    

 

 

    

 

 

 

Total

   $ 192      $ 3,897      $ (678    $ 14,043  
  

 

 

    

 

 

    

 

 

    

 

 

 
           

As at December 31, 2018, a gain amounting to $5,182 on account of cash flow hedges in relation to forward and option contracts entered is expected to be reclassified from other comprehensive income into consolidated statement of income over a period of 24 months and a gain amounting to $706 on account of cash flow hedges in relation to interest rate swaps is expected to be reclassified from other comprehensive income into consolidated statement of income over a period of 39 months.

Due to the discontinuation of cash flow hedge accounting on account of non-occurrence of original forecasted transactions by the end of the originally specified time period, the Company recognized in its consolidated statement of income for the three months ended December 31, 2018 and 2017 a gain of Nil each, and for the nine months ended December 31, 2018 and 2017 a loss of $2 and $20, respectively.

 

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WNS (HOLDINGS) LIMITED

NOTES TO UNAUDITED CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS

(Amounts in thousands, except share and per share data)

 

14.

Pension and other employee obligations

Pension and other employee obligations consist of the following:

 

     As at  
     December 31,
2018
     March 31,
2018
 

Current:

     

Salaries and bonus

   $ 48,385      $ 59,346  

Pension

     1,215        1,189  

Withholding taxes on salary and statutory payables

     6,049        4,082  
  

 

 

    

 

 

 

Total

   $ 55,649      $ 64,617  
  

 

 

    

 

 

 

Non-current:

     

Pension and other obligations

   $ 10,466      $ 9,621  
  

 

 

    

 

 

 

Total

   $ 10,466      $ 9,621  
  

 

 

    

 

 

 

 

15.

Provisions and accrued expenses

Provisions and accrued expenses consist of the following:

 

     As at  
     December 31,
2018
     March 31,
2018
 

Accrued expenses

   $ 27,703      $ 28,826  
  

 

 

    

 

 

 

Total

   $ 27,703      $ 28,826  
  

 

 

    

 

 

 

 

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WNS (HOLDINGS) LIMITED

NOTES TO UNAUDITED CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS

(Amounts in thousands, except share and per share data)

 

16.

Contract liabilities

Contract liabilities consists of the following:

 

     As at  
     December 31,
2018
     March 31,
2018
 

Current:

     

Payments in advance of services

   $ 2,474      $ 557  

Advance billings

     2,011        2,104  

Others

     169        247  
  

 

 

    

 

 

 

Total

   $ 4,654      $ 2,908  
  

 

 

    

 

 

 

 

     As at  
     December 31,
2018
     March 31,
2018
 

Non-current:

     

Payments in advance of services

   $ 1,163      $ 550  

Advance billings

     5        2  

Others

     17        19  
  

 

 

    

 

 

 

Total

   $ 1,185      $ 571  
  

 

 

    

 

 

 

 

17.

Other liabilities

Other liabilities consist of the following:

 

     As at  
     December 31,
2018
     March 31,
2018
 

Current:

     

Withholding taxes and value added tax payables

   $ 4,135      $ 5,117  

Contingent consideration (Refer Note 4(a), 4(b) and 4(c))

     8,438        8,233  

Deferred rent

     620        800  

Other liabilities

     1,498        1,589  
  

 

 

    

 

 

 

Total

   $ 14,691      $ 15,739