PRESS RELEASE
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WNS Net Income Increases 36.7% and Net Income (Excluding Amortization of Intangible Assets and Share-Based Compensation Expense) Increases 64.6% in Fiscal Second Quarter
Revenue Increases 76.9% and Revenue Less Repair Payments Increases
52.0%, Over Corresponding Quarter in the Prior Fiscal Year
MUMBAI, India & NEW YORK--(BUSINESS WIRE)--Nov. 14, 2006--WNS (Holdings) Limited (NYSE: WNS), a leading provider of offshore business process outsourcing (BPO) services, today announced strong results for the second fiscal quarter ended September 30, 2006.
"Our momentum continued to be very strong in the second quarter," said Neeraj Bhargava, Group Chief Executive Officer. "Our employee strength grew by over 1,000 people, revenue growth was above target, operational ramp-ups were on time and expenses under control. We strengthened our Board and our senior management team. All things considered, it was an excellent quarter for WNS."
Financial Highlights: Second Quarter Ended September 30, 2006
- Quarterly revenue of $86.6 million, up 76.9% from the corresponding quarter last year.
- Quarterly revenue less repair payments of $53.0 million, up 52.0% from the corresponding quarter last year.
- Quarterly net income of $6.0 million, up 36.7% from the corresponding quarter last year.
- Quarterly net income (excluding amortization of intangible assets and share-based compensation expense) of $7.4 million, up 64.6% from the corresponding quarter last year.
- Quarterly basic income per ADS of 16 cents, up from 14 cents for the corresponding quarter last year.
- Quarterly basic income per ADS (excluding amortization of intangible assets and share-based compensation expense) of 19 cents, up from 14 cents for the corresponding quarter last year.
- Revenue of $139.6 million, up 39.4% from the corresponding six months last year.
- Revenue less repair payments of $98.5 million, up 44.8% from the corresponding six months last year.
- Net income of $10.6 million, up 20.9% from the corresponding six months last year.
- Net income (excluding amortization of intangible assets and share-based compensation expense) of $12.7 million, up 37.4% from the corresponding six months last year.
- Basic income per ADS of 29 cents, up from 28 cents for the corresponding six months last year.
- Basic income per ADS (excluding amortization of intangible assets and share-based compensation expense) of 34 cents, up from 29 cents for the corresponding six months last year.
Reconciliations of non-GAAP financial measures to GAAP operating results are included at the end of this release.
"WNS had a good quarter with robust growth in revenue, accompanied with cost control resulting in improved margins as measured on a revenue less repair payments basis" said Zubin Dubash, Group Chief Financial Officer.
Key Announcements
- Pulak Prasad, who has served on the Board of Directors for four years as a representative of majority shareholder Warburg Pincus, stepped down on November 3, 2006.
- He was replaced by Richard Oliver Bernays, who joined the Board of Directors as an independent member on November 14, 2006. Mr. Bernays brings with him, more than 30 years of experience in the UK market, particularly in the financial services industry. He is the current chairman of the board at Hermes Pensions Management
WNS also updated its guidance for the fiscal year ending March 31, 2007:
"We continue to feel good about our guidance for the year and believe that we are well positioned to meet our targets for fiscal 2007," Mr. Bhargava said.
Conference call
WNS will host a conference call on Wednesday, November 15, 2006, at 7 a.m. (EST) to discuss the company's quarterly 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
CONDENSED CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
(Amounts in thousands, except share and per share data)
Three months ended Six months ended
September September September September
30, 30, 30, 30,
2006 2005 2006 2005
Revenue $86,590 $48,947 $139,616 $100,129
Cost of Revenue
(refer to note
below) 67,337 35,584 104,767 74,320
Gross Profit 19,253 13,363 34,849 25,809
Operating expenses:
Selling, general
and administrative
expenses (refer to
note below) 12,076 8,241 22,207 15,310
Amortization of
intangible assets 480 51 951 119
Operating income 6,697 5,071 11,691 10,380
Other (expense)
income, net (48) (2) (81) 66
Interest expense (68) (124) (101) (261)
Income before
income taxes 6,581 4,945 11,509 10,185
Provision for
income taxes (557) (539) (892) (1,403)
Net income 6,024 4,406 10,617 8,782
Basic income per
share $0.16 $0.14 $0.29 $0.28
Diluted income per
share $0.15 $0.13 $0.27 $0.26
Basic weighted
average ordinary
shares outstanding 38,372,397 31,439,757 36,805,243 31,325,046
Diluted weighted
average ordinary
shares outstanding 41,093,046 33,630,411 39,521,044 33,643,619
Note:
Includes the
following share-
based compensation
amounts:
Cost of Revenue 153 - 153 -
Selling, general
and administrative
expenses 757 47 969 337
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 Six months ended
-----------------------------------------
September September September September
30, 2006 30, 2005 30, 2006 30, 2005
-----------------------------------------
-----------------------------------------
Revenue less repair
payments (Non-GAAP) $52,964 $34,838 $98,473 $68,025
Add: Payments to repair
centers 33,626 14,109 41,143 32,104
Revenue (GAAP) 86,590 48,947 139,616 100,129
Reconciliation of selling, general and administrative Amount in
expense (non-GAAP to GAAP) thousands
Three months ended Six months ended
-----------------------------------------
September September September September
30, 2006 30, 2005 30, 2006 30, 2005
-----------------------------------------
-----------------------------------------
Selling, general and
administrative expenses
(excluding share-based
compensation expense)
(Non-GAAP) $11,319 $8,194 $21,238 $14,973
Add: Share-based
compensation expense 757 47 969 337
Selling, general and
administrative expenses
(GAAP) 12,076 8,241 22,207 15,310
Amount in
Reconciliation of net income (non-GAAP to GAAP) thousands
Three months ended Six months ended
-----------------------------------------
September September September September
30, 2006 30, 2005 30, 2006 30, 2005
-----------------------------------------
-----------------------------------------
Net income (excluding
amortization of intangible
assets and share-based
compensation expense)
(Non-GAAP) $7,414 $4,504 $12,690 $9,238
Less: Amortization of
intangible assets 480 51 951 119
Less: Share-based
compensation expense 910 47 1,122 337
Net income (GAAP) 6,024 4,406 10,617 8,782
Reconciliation of basic income per ADS (excluding amortization of
intangible assets and share-based compensation expense) to basic
income per ADS (non-GAAP to GAAP)
Three months ended Six months ended
-----------------------------------------
September September September September
30, 2006 30, 2005 30, 2006 30, 2005
-----------------------------------------
-----------------------------------------
Basic income per ADS
(excluding amortization of
intangible assets and
share based compensation
expense) (Non-GAAP) $0.19 $0.14 $0.34 $0.29
Less: Adjustments for
amortization of intangible
assets and share-based
compensation expense $0.03 $0.00 $0.05 $0.01
Basic income per ADS (GAAP) $0.16 $0.14 $0.29 $0.28
WNS (HOLDINGS) LIMITED
CONDENSED CONSOLIDATED BALANCE SHEETS
(Amounts in thousands, except share and per share data)
September 30, March 31,
2006 2006
(Unaudited)
------------- ------------
ASSETS
Current assets
Cash and cash equivalents $ 92,238 $ 18,549
Accounts receivable, net of allowance
of $431 and $373, respectively 37,501 28,081
Funds held for clients 5,455 3,047
Deferred tax assets - 353
Prepaid expenses 3,500 1,225
Other current assets 6,322 6,140
------------- ------------
Total current assets 145,016 57,395
Goodwill 36,253 33,774
Intangible assets, net 7,938 8,713
Property and equipment, net 39,183 30,623
Deposits 2,450 2,990
Deferred tax assets 2,682 1,308
------------- ------------
TOTAL ASSETS $ 233,522 $ 134,803
============= ============
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities
Accounts payable $ 22,201 $ 23,074
Accrued employee costs 12,085 11,336
Deferred revenue 8,502 8,994
Income taxes payable 517 726
Obligations under capital leases -
current 47 184
Deferred tax liabilities 1,143 368
Other current liabilities 14,210 8,781
------------- ------------
Total current liabilities 58,705 53,463
Obligation under capital leases - non
current 17 2
Deferred rent 917 824
Deferred tax liabilities - non current 1,634 2,350
Shareholders' equity:
Preference shares, $0.15 (10 pence) par
value Authorized: 1,000,000 shares and
none, respectively, Issued and
outstanding - none
Ordinary shares, $0.15 (10 pence) par
value Authorized: 50,000,000 shares
and 40,000,000 shares, respectively
Issued and outstanding: 39,918,332 and
35,321,511 shares, respectively 6,144 5,290
Additional paid-in-capital 141,814 62,228
Ordinary shares subscribed, 163,511 and
4,346 shares, respectively 421 10
Retained earnings 14,721 4,104
Deferred share-based compensation (180) (582)
Accumulated other comprehensive income 9,329 7,114
------------- ------------
Total shareholders' equity 172,249 78,164
------------- ------------
TOTAL LIABILITIES AND SHAREHOLDERS'
EQUITY $ 233,522 $ 134,803
============= ============
CONTACT: WNS (Holdings) Limited
Investors:
Jay Venkateswaran, +1 212-599-6960
Senior VP - Investor Relations
ir@wnsgs.com
or
The Torrenzano Group
Media:
Mike Geczi, +1 212-681-1700, Ext. 156
mgeczi@torrenzano.com
SOURCE: WNS (Holdings) Limited