PRESS RELEASE
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WNS Fiscal 2007 Net Income Increases 45.0%; Net Income (Excluding Share-Based Compensation Expense and Amortization of Intangible Assets) Increases 52.4%
"At the end of our first fiscal year as a public company, I am pleased to report that we have shown strong growth in revenue less repair payments of 48.5%. This is well ahead of the overall market growth rate of 32% as estimated by Nasscom," said Neeraj Bhargava, Group Chief Executive Officer. "Not only is our revenue engine powerful, we also achieved the higher end of our target net income range for the year. Also, our fourth quarter was very strong on both revenue growth and margins and the growth, in particular, strengthens our confidence in achieving next year's targets."
WNS recorded net income of $26.6 million for fiscal 2007. Further, it announced that net income excluding amortization of intangible assets and share-based compensation expense was $32.2 million for the year, which was at the higher end of its guidance range of $30.5 million to $32.5 million.
"The profitability from our incremental revenue allowed us to meet the higher end of our revenue guidance, despite a higher provision for income taxes and a higher national insurance contribution expense," said Zubin Dubash, Group Chief Financial Officer. "The higher national insurance contribution expense was driven by a large number of our UK employees exercising their stock options upon expiration of the post IPO lock-up period."
Financial Highlights: Fourth Quarter Ended March 31, 2007
-- Quarterly revenue of $110.7 million, up 109.1% from the corresponding quarter last year.
-- Quarterly revenue less repair payments of $64.0 million, up 54.5% from the corresponding quarter last year.
-- Quarterly net income of $8.9 million, up 140.8% from the corresponding quarter last year.
-- Quarterly net income (excluding share-based compensation expense and amortization of intangible assets) of $10.6 million, up 140.1% from the corresponding quarter last year.
-- Quarterly basic income per ADS of 22 cents, up from 10 cents for the corresponding quarter last year.
-- Quarterly basic income per ADS (excluding share-based compensation expense and amortization of intangible assets) of 26 cents, up from 13 cents for the corresponding quarter last year.
Financial Highlights: Fiscal Year Ended March 31, 2007
-- Revenue of $352.3 million, up 73.7% from fiscal 2006.
-- Revenue less repair payments of $219.7 million, up 48.5% from fiscal 2006.
-- Net income of $26.6 million, up 45.0% from fiscal 2006.
-- Net income (excluding share-based compensation expense and amortization of intangible assets) of $32.2 million, up 52.4% from fiscal 2006.
-- Basic income per ADS of 69 cents, up from 56 cents for fiscal 2006.
-- Basic income per ADS (excluding share-based compensation expense and amortization of intangible assets) of 83 cents, up from 64 cents for fiscal 2006.
Reconciliations of non-GAAP financial measures to GAAP operating results are included at the end of this release.
Key Announcements
-- As announced today, the acquisition of Marketics Technologies was completed on May 9, 2007.
-- Anish Nanavaty will take over the position of CEO - WNS Knowledge Services from Amit Bhatia. Mr. Nanavaty has been with WNS for five years and has played a key role in establishing the company's presence in the North American market. Over the last three years, he has focused on building WNS' travel sector focused business, leading several key client relationships. Prior to joining WNS, Mr. Nanavaty spent 10 years as a strategy consultant with The Monitor Group and Mars & Company in the US and India. Mr. Bhatia will move on to focus on talent management issues as part of the CEO's office.
-- Under the leadership of Akos Csernus, a new hire with a track record of working in the outsourcing industry in Europe with Genpact and PwC Consulting, WNS will set up a new delivery facility in Bucharest, Romania, with an initial capacity of 125 seats. This facility is expected to be commissioned by the second half of fiscal 2008.
Fiscal 2008 Guidance
WNS also provided its guidance for the fiscal year ending March 31, 2008:
-- The guidance assumes an exchange rate of 42 Indian Rupees to 1 US Dollar and 2.00 US Dollars to 1 Pound Sterling.
-- Revenue less repair payments expected to be between $302 million and $307 million representing a growth of between 37.5% and 39.7%. This guidance conservatively assumes the loss of revenue from January 2008 related to a Build-Operate-Transfer contract if the client exercises the transfer option in December 2007.
-- Net income (excluding share-based compensation expense and amortization of intangible assets) is expected to be between $41.0 million to $ 43.0 million. This represents a growth of between 27.5% and 33.7%, despite the significant appreciation of the Indian Rupee.
-- Net income (excluding share-based compensation expense and amortization of intangible assets) guidance includes a loss of approximately $1.7 million expected from our new Eastern European facility announced today.
"Our analysis indicates that for every 1% depreciation/appreciation in the US dollar against the Indian rupee, our net income margins (excluding share-based compensation expense and amortization of intangible assets) will decrease/increase by approximately 0.5% for fiscal 2008," said Zubin Dubash, Group Chief Financial Officer. "Similarly, for every 1% depreciation/appreciation in the US dollar against the Pound Sterling, our net income margins (excluding share-based compensation expense and amortization of intangible assets) will increase/decrease by approximately 0.3% for fiscal 2008."
Conference Call
WNS will host a conference call on May 15, at 8 a.m. (EST) to discuss the company's quarterly and fiscal year results. To participate, callers can dial 800-295-3991 from within the U.S. or +1-617-614-3924 from any other country. The participant passcode is 1352836. A replay will be made available online at www.wnsgs.com for a period of three months beginning two hours after the end of the call.
About WNS
WNS is a leading provider of offshore business process outsourcing, or BPO, services. We provide comprehensive data, voice and analytical services that are underpinned by our expertise in our target industry sectors. We transfer the execution of the business processes of our clients, which are typically companies located in Europe and North America, to our delivery centers located primarily in India. We provide high quality execution of client processes, monitor these processes against multiple performance metrics, and seek to improve them on an ongoing basis.
Our ADSs are listed on the New York Stock Exchange. For more information, please visit our website at www.wnsgs.com.
About Non-GAAP Financial Measures
For financial statement reporting purposes, the company has two reportable segments: WNS Global BPO and WNS Auto Claims BPO. In the auto claims segment, WNS provides claims-handling and accident-management services, in which it arranges for automobile repairs through a network of third-party repair centers. In its accident-management services, WNS acts as the principal in dealings with the third-party repair centers and clients.
The amounts invoiced to WNS clients for payments made by WNS to third-party repair centers are reported as revenue. As the company wholly subcontracts the repairs to the repair centers, it evaluates its financial performance based on revenue less repair payments to third party repair centers, which is a non-GAAP measure.
WNS believes revenue less repair payments reflects more accurately the value addition of the business process services it directly provides to its clients. The presentation of this non-GAAP information is not meant to be considered in isolation or as a substitute for the company's financial results prepared in accordance with U.S. GAAP. WNS revenue less repair payments may not be comparable to similarly titled measures reported by other companies due to potential differences in the method of calculation.
Safe Harbor Statement under the provisions of the United States Private Securities Litigation Reform Act of 1995
This news release contains forward-looking statements, as defined in the safe harbor provisions of the U.S. Private Securities Litigation Reform Act of 1995. These statements involve a number of risks, uncertainties and other factors that could cause actual results to differ materially from those that may be projected by these forward looking statements. These risks and uncertainties include but are not limited to a slowdown in the U.S. and Indian economies and in the sectors in which our clients are based, a slowdown in the BPO and IT sectors world-wide, competition, the success or failure of our past and future acquisitions, attracting, recruiting and retaining highly skilled employees, technology, legal and regulatory policy as well as other risks detailed in our reports filed with the U.S. Securities and Exchange Commission. These filings are available at www.sec.gov. We may, from time to time, make additional written and oral forward-looking statements, including statements contained in our filings with the Securities and Exchange Commission and our reports to shareholders. You are cautioned not to place undue reliance on these forward-looking statements, which reflect management's current analysis of future events. We undertake no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.
WNS (HOLDINGS) LIMITED
CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
(Amounts in thousands, except share and per share data)
Three months ended Year ended
March 31, March 31, March 31, March 31,
2007 2006 2007 2006
(Unaudited) (Unaudited) (Unaudited)
Revenue 110,671 52,920 352,286 202,809
Cost of Revenue (refer
to note (a) below) 85,157 37,323 271,174 145,731
Gross Profit 25,514 15,597 81,112 57,078
Operating expenses:
Selling, general and
administrative
expenses (refer to
note (b) as below) 16,280 11,367 52,461 36,346
Amortization of
intangible assets 456 508 1,896 856
Operating income 8,778 3,722 26,755 19,876
Other income, net 1,251 277 2,500 456
Interest expense - (54) (100) (429)
Income before income
taxes 10,029 3,945 29,155 19,903
Provision for income
taxes (1,156) (261) (2,574) (1,574)
Net income 8,873 3,685 26,581 18,329
Basic income per share $0.22 $0.10 $0.69 $0.56
Diluted income per
share $0.21 $0.10 $0.65 $0.52
Basic weighted average
ordinary shares
outstanding 40,866,567 35,174,350 38,608,188 32,874,299
Diluted weighted
average ordinary
shares outstanding 42,796,992 37,724,432 41,120,497 35,029,766
Note:
Includes the
following share-
based compensation
amounts:
(a) Cost of Revenue 465 127 995 127
(b) Selling, general
and administrative
expenses 819 101 2,688 1,795
Non-GAAP measure note:
In addition to its reported operating results in accordance with U.S. generally accepted accounting principles (US GAAP). WNS has included in the table below non-GAAP operating measures that the Securities and Exchange Commission defines as "non-GAAP financial measures". Management believes that such non-GAAP financial measures, when read in conjunction with the company's reported results, can provide useful supplemental information for investors analyzing period to period comparisons of the company's results. The non-GAAP financial measures disclosed by the company should not be considered a substitute for, or superior to, financial measures calculated in accordance with GAAP, and the financial results calculated in accordance with GAAP and reconciliations to those financial statements should be carefully evaluated.
Reconciliation of revenue less repair payments (non-GAAP) Amount in
to revenue (GAAP) thousands
Three months
ended Year ended
------------------------------------
March March March
31, 31, 31, March 31,
2007 2006 2007 2006
-------- ---------------- ----------
-------- ---------------- ----------
Revenue less repair payments
(Non-GAAP) 64,034 41,444 219,700 147,906
Add: Payments to repair centers 46,637 11,476 132,586 54,903
Revenue (GAAP) 110,671 52,920 352,286 202,809
Amount in
Reconciliation of cost of revenue (non-GAAP to GAAP) thousands
Three months
ended Year ended
-----------------------------------
March March March
31, 31, 31, March 31,
2007 2006 2007 2006
-----------------------------------
-----------------------------------
Cost of revenue (Non-GAAP) 38,520 25,847 138,588 90,828
Add: Payments to repair centers 46,637 11,476 132,586 54,903
Cost of revenue (GAAP) 85,157 37,323 271,174 145,731
Reconciliation of selling, general and administrative
expense excluding share-based compensation expense (non-
GAAP) to selling, general and administrative expense Amount in
(GAAP) thousands
Three months
ended Year ended
----------------------------------
March March March
31, 31, 31, March 31,
2007 2006 2007 2006
----------------------------------
----------------------------------
Selling, general and administrative
expenses (excluding share-based
compensation expense) (Non-GAAP) 15,461 11,266 49,773 34,551
Add: Share-based compensation
expense 819 101 2,688 1,795
Selling, general and administrative
expenses (GAAP) 16,280 11,367 52,461 36,346
Reconciliation of operating income excluding share-based
compensation and amortization of intangible assets (non- Amount in
GAAP) to operating income (GAAP) thousands
Three months
ended Year ended
---------------------------------
March March March
31, 31, 31, March 31,
2007 2006 2007 2006
---------------------------------
---------------------------------
Operating income (excluding share-
based compensation and amortization
of intangible assets) (Non-GAAP) 10,518 4,458 32,334 22,654
Less: Share-based compensation
expense 1,284 228 3,683 1,922
Less: Amortization of intangible
assets 456 508 1,896 856
Operating income (GAAP) 8,778 3,722 26,755 19,876
Reconciliation of net income excluding share-based
compensation expense and amortization of intangible assets Amount in
(non-GAAP) to net income (GAAP) thousands
Three months
ended Year ended
---------------------------------
March March March
31, 31, 31, March 31,
2007 2006 2007 2006
---------------------------------
---------------------------------
Net income (excluding share-based
compensation and amortization of
intangible assets) (Non-GAAP) 10,612 4,421 32,160 21,107
Less: Share-based compensation
expense 1,284 228 3,683 1,922
Less: Amortization of intangible
assets 456 508 1,896 856
Net income (GAAP) 8,872 3,685 26,581 18,329
Reconciliation of basic income per ADS (excluding amortization of
intangibles assets and share-based compensation expense) to basic
income per ADS (non-GAAP to GAAP)
Three
months
ended Year ended
-----------------------
March March March March
31, 31, 31, 31,
2007 2006 2007 2006
-----------------------
-----------------------
Basic income per ADS (excluding amortization
of intangible assets and share based
compensation expense) (Non-GAAP) 0.26 0.13 0.83 0.64
Less: Adjustments for amortization of
intangible assets and share-based
compensation expense 0.04 0.03 0.14 0.08
Basic income per ADS (GAAP) 0.22 0.10 0.69 0.56
Reconciliation of diluted income per ADS (excluding amortization of
intangibles assets and share-based compensation expense) to diluted
income per ADS (non-GAAP to GAAP)
Three months
ended Year ended
------------------------------
March March March March
31, 31, 31, 31,
2007 2006 2007 2006
------------------------------
------------------------------
Diluted income per ADS (excluding
amortization of intangible assets and
share based compensation expense)
(Non-GAAP) 0.25 0.12 0.78 0.60
Less: Adjustments for amortization of
intangible assets and share-based
compensation expense 0.04 0.02 0.13 0.08
Diluted income per ADS (GAAP) 0.21 0.10 0.65 0.52
WNS (HOLDINGS) LIMITED
CONSOLIDATED BALANCE SHEETS
(Amounts in thousands, except share and per share data)
March 31, March 31,
2007 2006
(Unaudited)
---------------------
ASSETS
Current assets
Cash and cash equivalents $112,340 $ 18,549
Bank deposits 12,000 -
Accounts receivable, net of allowance of $364
and $373, respectively 40,340 25,976
Accounts receivable - related parties 252 2,105
Funds held for clients 6,589 3,047
Employee receivables 1,289 922
Prepaid expenses 2,162 1,225
Prepaid income taxes 4,526 2,488
Deferred tax assets - 353
Other current assets 4,524 2,730
---------------------
Total current assets 184,022 57,395
Goodwill 37,356 33,774
Intangible assets, net 7,091 8,713
Property and equipment, net 41,830 30,623
Deposits 3,081 2,990
Deferred tax assets 3,802 1,308
---------------------
TOTAL ASSETS 277,182 $134,803
=====================
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities
Accounts payable 18,505 $ 22,238
Accounts payable - related parties 246 836
Accrued employee costs 18,492 11,173
Deferred revenue 14,878 8,994
Income taxes payable 1,389 726
Obligations under capital leases - current 13 184
Deferred tax liabilities - 368
Other current liabilities 16,239 8,781
---------------------
Total current liabilities 69,762 53,300
Obligation under capital leases - non current - 2
Deferred rent 1,098 824
Accrued employee cost 771 163
Deferred tax liabilities - non current 23 2,350
Shareholders' equity:
Ordinary shares, $0.16 (10 pence) par value
Authorized: 50,000,000 shares and
40,000,000 shares, respectively
Issued and outstanding: 41,842,879 and
35,321,511 shares, respectively 6,519 5,290
Additional paid-in-capital 154,952 62,228
Ordinary shares subscribed, 30,022 and 4,346
shares, respectively 137 10
Retained earnings 30,685 4,104
Deferred share-based compensation - (582)
Accumulated other comprehensive income 13,235 7,114
---------------------
Total shareholders' equity 205,528 78,164
---------------------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $277,182 $134,803
=====================
SOURCE: WNS (Holdings) Limited
Investors:
WNS (Holdings) Limited
Jay Venkateswaran, 212-599-6960
Senior VP -- Investor Relations
ir@wnsgs.com
or
Media:
The Torrenzano Group
Al Bellenchia, 212-681-1700 ext. 156
abellenchia@torrenzano.com