SEC Filings

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

Cash Flows from Investing Activities

Net cash used in investing activities increased to $40.0 million for the nine months ended December 31, 2018 as compared to $28.8 million for the nine months ended December 31, 2017. This was primarily on account of a net cash outflow of $20.6 million towards marketable securities for the nine months ended December 31, 2018 as compared to a net cash inflow of $10.1 million from our investments in marketable securities for the nine months ended December 31, 2017; dividend received on our marketable securities of $0.03 million for the nine months ended December 31, 2018 as compared to $2.4 million for the nine months ended December 31, 2017; partially offset by a net cash inflow of $5.4 million from our fixed deposit investments for the nine months ended December 31, 2018 as compared to a cash outflow of $14.1 million towards our fixed deposit investments for the nine months ended December 31, 2017; a cash outflow of $24.6 million towards purchase of property, plant and equipment (comprising primarily leasehold improvements, furniture and fixtures, office equipment and information technology equipment) and intangible assets (comprising computer software) for the nine months ended December 31, 2018 as compared to $27.8 million for the nine months ended December 31, 2017.

Cash Flows from Financing Activities

Net cash used in financing activities was $69.0 million for the nine months ended December 31, 2018 as compared to $52.4 million for the nine months ended December 31, 2017. This was primarily on account of a cash outflow of $56.3 million towards share repurchase for the nine months ended December 31, 2018 as compared to $39.5 for the nine months ended December 31, 2017 and nil cash inflow from the exercise of options by grantees under our share-based incentive plans for the nine months ended December 31, 2018 as compared to $1.3 million for the nine months ended December 31, 2017, partially offset by an increase in cash inflow from excess tax benefit on share-based compensation expense of $1.4 million for the nine months ended December 31, 2018 as compared to $0.2 million for the nine months ended December 31, 2017.

Share Repurchases

In March 2018, our shareholders authorized a share repurchase program for the repurchase of up to 3.3 million of our ADSs, each representing one ordinary share, at a price range of $10 to $100 per ADS. Pursuant to the terms of the repurchase program, our ADSs may be purchased in the open market from time to time for 36 months from March 30, 2018, the date on which the shareholders resolution approving the repurchase program was passed. We intend to fund the repurchases of ADSs under the repurchase program with cash on hand. We are not obligated under the repurchase program to repurchase a specific number of ADSs, and the repurchase program may be suspended at any time at our discretion. We intend to hold the shares underlying any such repurchased ADSs as treasury shares.

During the nine months ended December 31, 2018, we repurchased 1,100,000 ADSs for a total consideration of $56.3 million (including transaction costs of $11,000), in the open market, under the above-mentioned share repurchase program. The shares underlying these ADSs are recorded as treasury shares.

During the nine months ended December 31, 2018, we received authorization from the Board of Directors to cancel, and cancelled, 4,400,000 ADSs that were held as treasury shares for an aggregate cost of $134.2 million. The effect of cancellation of these treasury shares was recognized in share capital amounting to $0.6 million and in share premium amounting to $133.6 million, in compliance with Jersey Law. There was no effect on the total shareholders’ equity as a result of this cancellation.

Tax Assessment Orders

Transfer pricing regulations to which we are subject require that any international transaction among the WNS group enterprises be on arm’s-length terms. We believe that the international transactions among the WNS group enterprises are on arm’s-length terms. If, however, the applicable tax authorities determine that the transactions among the WNS group enterprises do not meet arm’s-length criteria, we may incur increased tax liability, including accrued interest and penalties. This would cause our tax expense to increase, possibly materially, thereby reducing our profitability and cash flows. We signed an advance pricing agreement with the Government of India providing for the agreement on transfer pricing matters over certain transactions covered thereunder for a period of five years starting from April 2013. We have filed an application for a renewal of the advance pricing agreement for another five years starting from April 2018 and will continue to apply the same methodology as set out in the advance pricing agreement pending the renewal of the agreement. The applicable tax authorities may also disallow deductions or tax holiday benefits claimed by us and assess additional taxable income on us in connection with their review of our tax returns.

From time to time, we receive orders of assessment from the Indian tax authorities assessing additional taxable income on us and/or our subsidiaries in connection with their review of our tax returns. We currently have orders of assessment for fiscal 2004 through fiscal 2015 pending before various appellate authorities. These orders assess additional taxable income that could in the aggregate give rise to an estimated 3,068.8 million ($44 million based on the exchange rate on December 31, 2018) in additional taxes, including interest of 1,123.2 million ($16.1 million based on the exchange rate on December, 31, 2018).

 

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