EX-99.1 2 u00226exv99w1.htm EX-99.1 EARNINGS RELEASE OF WNS (HOLDINGS) LIMITED DATED MAY 7, 2009. Ex-99.1 Earning release of WNS (HOldings) Limited
Exhibit 99.1
(WNS LOGO)
WNS Announces Fourth Quarter and Full Year Fiscal 2009 Earnings;
Provides Guidance for Fiscal 2010
Quarterly Revenue Increases 14.1%; Revenue Less Repair Payments Increases 27.1%
Over the Corresponding Quarter in the Prior Fiscal Year
Annual Revenue Increases 17.3%; Revenue Less Repair Payments Increases 32.9%
Over the Prior Fiscal Year
NEW YORK and MUMBAI, May 7, 2009 — WNS (Holdings) Limited (NYSE: WNS), a leading provider of global business process outsourcing (BPO) services, today announced results for the fiscal fourth quarter and fiscal year 2009 ended March 31, 2009, and established guidance on revenue less repair payments and adjusted net income (or net income excluding amortization of intangible assets, share-based compensation, related fringe benefit taxes and minority interest) for fiscal 2010.
Fiscal Q4 2009
Revenue for the fiscal fourth quarter 2009 of $132.5 million represented an increase of 14.1% over the corresponding quarter in the prior fiscal year, while revenue less repair payments at $95.5 million increased 27.1% over the corresponding quarter in the prior fiscal year. The revenue less repair payments growth largely resulted from growth from Aviva Global Services (AGS) and Call 24/7 Limited, which WNS acquired in July and April 2008, respectively.
Net income for the fiscal fourth quarter 2009 was $2.4 million compared to $6.1 million during the corresponding quarter in the prior fiscal year. The net income in the current quarter was impacted primarily by amortization charges from the acquisition of AGS and higher foreign exchange losses.
Adjusted net income was $13.6 million, an increase of 34.5% over the corresponding quarter in the prior year. The primary drivers of this increase were revenue growth, tighter cost management, improved scale benefits and increased income from WNS’ acquisitions. This increase was partially offset by higher foreign exchange losses.
“WNS finished fiscal year 2009 on a strong note,” said Neeraj Bhargava, Group Chief Executive Officer. “We continued to see new client activity and our focus on operations has positively affected our profitability. While the global economy is expected to present challenges in fiscal 2010, we are well-positioned to execute on our plan and increase profitability during the next year.”
WNS recorded a basic income per ADS of $0.06 for fiscal fourth quarter 2009. Adjusted diluted net income per ADS (or diluted income per ADS excluding amortization of intangible assets, share-based compensation, related fringe benefit taxes and minority interest) was $0.32 for the quarter.
Fiscal Year 2009
For the fiscal year 2009, WNS achieved revenues of $539.3 million, representing an increase of 17.3% over the prior fiscal year. Revenue less repair payments of $386.4 million increased 32.9% over the prior year. The growth in revenue less repair payments was largely as a result of increased revenues associated with AGS and Call 24/7 Limited, which WNS acquired in July and April 2008, respectively.

 

 

Net income for the full year ended March 31, 2009 was $8.1 million compared to $9.5 million in the prior fiscal year. The net income decrease was a result of amortization charges from the acquisition of AGS and foreign exchange losses, partially offset by improved synergies in operations.
Adjusted net income was $46.6 million, an increase of 26.0% over fiscal 2008. The primary drivers of this increase were revenue growth, tighter cost management, improved scale benefits, and increased income from WNS’ acquisitions. These increases were partially offset by higher foreign exchange losses.
WNS recorded a basic income per ADS of $0.19 for the fiscal year 2009. Adjusted diluted net income per ADS (or diluted income per ADS excluding amortization of intangible assets, share-based compensation, related fringe benefit taxes and minority interest) was $1.08 for the year.
On April 2, 2009, WNS announced that it was making a voluntary prepayment of $5 million on its existing $200 million term loan facility as permitted under the terms of the loan agreement. This payment was made on April 14, 2009.
“We have made significant progress in improving our working capital and tightening our capital expenditure, thanks largely to the synergies from our recent acquisitions, which combined with our improved profitability resulted in the strong free cash flow that we have realized this quarter. This will continue to be our area of focus.” said Alok Misra, Group Chief Financial Officer.
Financial Highlights: Fiscal Fourth Quarter Ended March 31, 2009
•   Quarterly revenue of $132.5 million, up 14.1% from the corresponding quarter last year.
•   Quarterly revenue less repair payments of $95.5 million, up 27.1% from the corresponding quarter last year.
•   Quarterly net income of $2.4 million compared to $6.1 million from the corresponding quarter last year.
•   Quarterly adjusted net income (or net income excluding amortization of intangible assets, share-based compensation, related fringe benefit taxes and minority interest) of $13.6 million, up 34.5% from the corresponding quarter last year.
•   Quarterly basic income per ADS of $0.06, compared with $0.14 for the corresponding quarter last year.
•   Quarterly adjusted diluted net income per ADS (or diluted income per ADS excluding amortization of intangible assets, share-based compensation, related fringe benefit taxes and minority interest) of $0.32, up from $0.24 for the corresponding quarter last year.
Financial Highlights: Fiscal Full Year Ended March 31, 2009
•   Annual revenue of $539.3 million, up 17.3% from the prior fiscal year.
•   Annual revenue less repair payments of $386.4 million, up 32.9% from the prior fiscal year.
•   Annual net income of $8.1 million compared to $9.5 million from the prior fiscal year.
•   Annual adjusted net income (or net income excluding amortization of intangible assets, share-based compensation, related fringe benefit taxes and minority interest) of $46.6 million, up 26.0% from the prior fiscal year.
•   Annual basic income per ADS of $0.19, compared with $0.23 for the prior fiscal year.
•   Annual adjusted diluted net income per ADS (or diluted income per ADS excluding amortization of intangible assets, share-based compensation, related fringe benefit taxes and minority interest) of $1.08, up from $0.86 for the prior fiscal year.
Reconciliations of non-GAAP financial measures to GAAP operating results are included at the end of this release.

 

 

Fiscal 2010 Guidance
WNS is providing the following guidance for the fiscal year ending March 31, 2010:
•   Revenue less repair payments is expected to be between $385 million and $390 million. This assumes an average USD to GBP exchange rate of 1.40 to 1.45 for the 2010 fiscal year.
•   Adjusted net income (or net income excluding amortization of intangible assets, share-based compensation, related fringe benefit taxes and minority interest) is expected to range between $50 million and $52 million. This assumes an average INR to USD exchange rate of 49 to 50 for the 2010 fiscal year.
“Although we are facing currency and economic headwinds which impact our top line, we are confident that we will increase our profitability and free cash flows as a result of the actions that we have taken to improve our operating leverage and our continued balance sheet focus,” continued Misra.
Conference Call
WNS will host a conference call on May 7, 2009 at 8 am (ET) to discuss the company’s quarterly and full year results. To participate, callers can dial: +1- 800-295-3991; international dial-in +1-617-614-3924; participant passcode 1352836. A replay will also be made available for one week following the call at +1-888-286-8010; international dial-in +1-617-801-6888; passcode 89145684, for a period of three months beginning two hours after the end of the call. A webcast will be available online at www.wns.com.
About WNS
WNS Holdings Ltd. [NYSE: WNS] is a leading global business process outsourcing company. Deep industry and business process knowledge, a partnership approach, comprehensive service offering and a proven track record enables WNS to deliver business value to some of the leading companies in the world. WNS is passionate about building a market-leading company valued by our clients, employees, business partners, investors and communities. For more information, visit www.wns.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, which includes WNS Assistance and Chang Limited, 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.
In order to provide accident-management services, the Company arranges for the repair through a network of repair centers. Repair costs are invoiced to customers. Amounts invoiced to customers for repair costs paid to the automobile repair centers are recognized as revenue. The Company uses revenue less repair payments for “fault” repairs as a primary measure to allocate resources and measure segment performance. Revenue less repair payments is a non-GAAP measure which is calculated as revenue less payments to repair centers. For “Non fault repairs,” revenue including repair payments is used as a primary measure. As the Company provides a consolidated suite of accident management services including credit hire and credit repair for its “Non fault” repairs business, the Company believes that measurement of that line of business has to be on a basis that includes repair payments in revenue.
The Company believes that the presentation of this non-GAAP measure provides useful information for investors regarding financial performance. 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 US GAAP.
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 US Private Securities Litigation Reform Act of 1995. These forward-looking statements include statements regarding expected future financial results. 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 technological innovation; telecommunications or technology disruptions; future regulatory actions and conditions in our operating areas; our dependence on a limited number of clients in a limited number of industries; our ability to attract and retain clients; our ability to expand our business or effectively manage growth; our ability to hire and retain enough sufficiently trained

 

 

employees to support our operations; negative public reaction in the US or the UK to offshore outsourcing; regulatory, legislative and judicial developments; increasing competition in the business process outsourcing industry; political or economic instability in India, Sri Lanka and Jersey; worldwide economic and business conditions, including a slowdown in the US and Indian economies and in the sectors in which our clients are based and a slowdown in the BPO and IT sectors world-wide; our ability to successfully grow our revenues, expand our service offerings and market share and achieve accretive benefits from our acquisition of Aviva Global Services Singapore Private Limited and our master services agreement with Aviva Global Services (Management Services) Private Limited; our ability to successfully consummate strategic acquisitions, as well as other risks detailed in our reports filed with the US 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. References to “$” and “USD” refer to the United States dollars, the legal currency of the United States; references to “GBP” refer to the British Pound, the legal currency of Britain; and references to “INR” refer to Indian Rupees, the legal currency of India.
     
CONTACT:
    
Investors:
   Media:
Alan Katz
   Josh Passman
VP — Investor Relations
   CJP Communications
WNS (Holdings) Limited
   +1 212 279 3115 ext. 203
+1 212 599-6960 ext. 241
   jpassman@cjpcom.com
ir@wnsgs.com
    

 

 

WNS (HOLDINGS) LIMITED
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(Amounts in thousands, except per share data)
                                 
    Three months ended    
    March 31,   Year ended March 31,
    2009   2008   2009   2008
     
 
                                
Revenue
                                
Third parties
   $ 131,772     $ 115,133     $ 536,022     $ 456,401  
Related parties
     741       988       3,242       3,466  
           
 
     132,513       116,121       539,264       459,867  
Cost of revenue
     99,887       88,786       410,316       363,322  
           
Gross profit
     32,626       27,335       128,948       96,545  
Operating expenses
                                
Selling, general and administrative expenses
     17,119       21,418       75,522       72,699  
Amortization of intangible assets
     8,012       663       24,912       2,869  
Impairment of goodwill and intangible assets
     —       —       —       15,464  
           
Operating income
     7,495       5,254       28,514       5,513  
Other income (expense), net
     262       2,221       (5,639 )     9,184  
Interest (expense) income, net
     (4,460 )     20       (11,782 )     (3 )
           
Income before income taxes
     3,297       7,495       11,093       14,694  
Provision for income taxes
     958       1,435       3,302       5,194  
           
Income before minority interest
     2,339       6,060       7,792       9,500  
Minority interest
     107       —       287       —  
           
Net income
   $ 2,446     $ 6,060     $ 8,079     $ 9,500  
           
 
                                
Basic income per share
   $ 0.06     $ 0.14     $ 0.19     $ 0.23  
Diluted income per share
   $ 0.06     $ 0.14     $ 0.19     $ 0.22  

 

 

     
Reconciliation of revenue less repair payments (non-GAAP) to revenue (GAAP)
 
Amount in
thousands
                                 
    Three months ended March 31,   Year ended March 31,
    2009   2008   2009   2008
     
 
Revenue less repair payments (Non-GAAP)
   $ 95,543     $ 75,153     $ 386,373     $ 290,717  
Add: Payments to repair centers
     36,970       40,968       152,891       169,150  
     
Revenue (GAAP)
   $ 132,513     $ 116,121     $ 539,264     $ 459,867  
     
     
Reconciliation of cost of revenue (non-GAAP to GAAP)
 
Amount in
thousands
                                 
    Three months ended March 31,   Year ended March 31,
    2009   2008   2009   2008
     
 
Cost of revenue (Non-GAAP)
   $ 62,917     $ 47,818     $ 257,425     $ 194,172  
Add: Payments to repair centers
     36,970       40,968       152,891       169,150  
     
Cost of revenue (GAAP)
   $ 99,887     $ 88,786     $ 410,316     $ 363,322  
     
     
Reconciliation of selling, general and administrative expense (non-GAAP to GAAP)
  
Amount in
thousands
                                 
    Three months ended March 31,   Year ended March 31,
    2009   2008   2009   2008
     
 
Selling, general and administrative expenses (excluding share-based compensation expense and FBT1) (Non-GAAP)
   $ 14,862     $ 18,632     $ 65,301     $ 65,997  
Add: Share-based compensation expense
     2,426       1,323       9,775       4,380  
Add: FBT1
     (169 )     1,463       446       2,322  
     
Selling, general and administrative expenses (GAAP)
   $ 17,119     $ 21,418     $ 75,522     $ 72,699  
     
 
1   FBT means the fringe benefit taxes on options and restricted share units granted to employees under the WNS 2002 Stock Incentive Plan and the WNS 2006 Incentive Award Plan (as applicable) payable by WNS to the government of India.

 

 

     
Reconciliation of operating income (non-GAAP to GAAP)
 
Amount in
thousands
                                 
    Three months ended March 31,   Year ended March 31,
    2009   2008   2009   2008
     
 
Operating income (excluding amortization of intangible assets, share-based compensation expense, impairment of goodwill and intangible assets, and FBT1) (Non-GAAP)
   $ 18,731     $ 9,287     $ 67,294     $ 32,985  
Less: Amortization of intangible assets
     8,012       663       24,912       2,869  
Less: Share-based compensation expense
     3,393       1,907       13,422       6,816  
Less: Impairment of goodwill and intangible assets
     —       —       —       15,464  
Less: FBT1
     (169 )     1,463       446       2,322  
     
Operating income (GAAP)
   $ 7,495     $ 5,254     $ 28,514     $ 5,513  
     
     
Reconciliation of net income (non-GAAP to GAAP)
 
Amount in
thousands
                                 
    Three months ended March 31,   Year ended March 31,
    2009   2008   2009   2008
     
 
Net income (excluding amortization of intangible assets, share-based compensation expense, impairment of goodwill and intangible assets, FBT1 and minority interest) (Non-GAAP)
   $ 13,575     $ 10,093     $ 46,572     $ 36,972  
Less: Amortization of intangible assets
     8,012       663       24,912       2,869  
Less: Share-based compensation expense
     3,393       1,907       13,422       6,816  
Less: Impairment of goodwill and intangible assets
     —       —       —       15,464  
Less: FBT1
     (169 )     1,463       446       2,322  
Add: Minority interest
     107       —       287       —  
     
Net income (GAAP)
   $ 2,446     $ 6,060     $ 8,079     $ 9,500  
     
 
1   FBT means the fringe benefit taxes on options and restricted share units granted to employees under the WNS 2002 Stock Incentive Plan and the WNS 2006 Incentive Award Plan (as applicable) payable by WNS to the government of India.

Page 7 of 10

 

Reconciliation of basic income per ADS (non-GAAP to GAAP)
                                 
    Three months ended March 31,   Year ended March 31,
    2009   2008   2009   2008
 
                                
Basic income per ADS (excluding amortization and impairment of goodwill and intangible assets, share-based compensation expense, FBT1 and minority interest) (Non-GAAP)
   $ 0.32     $ 0.24     $ 1.10     $ 0.88  
Less: Adjustments for amortization and impairment of goodwill and intangible assets, share-based compensation expense, FBT1 and minority interest
     0.26       0.10       0.91       0.65  
     
Basic income per ADS (GAAP)
   $ 0.06     $ 0.14     $ 0.19     $ 0.23  
     
Reconciliation of diluted income per ADS (non-GAAP to GAAP)
                                 
    Three months ended March 31,   Year ended March 31,
    2009   2008   2009   2008
 
                                
Diluted income per ADS (excluding amortization and impairment of goodwill and intangible assets, share-based compensation expense, FBT1 and minority interest) (Non-GAAP)
   $ 0.32     $ 0.24     $ 1.08     $ 0.86  
Less: Adjustments for amortization and impairment of goodwill and intangible assets, share-based compensation expense, FBT1 and minority interest
     0.26       0.10       0.89       0.64  
     
Diluted income per ADS (GAAP)
   $ 0.06     $ 0.14     $ 0.19     $ 0.22  
     
 
1   FBT means the fringe benefit taxes on options and restricted share units granted to employees under the WNS 2002 Stock Incentive Plan and the WNS 2006 Incentive Award Plan (as applicable) payable by WNS to the government of India.

Page 8 of 10

 

WNS (HOLDINGS) LIMITED
CONDENSED CONSOLIDATED BALANCE SHEETS
(Amounts in thousands, except share and per share data)
                 
    As of March 31,   As of March 31,
    2009   2008
ASSETS
                
Current assets
                
Cash and cash equivalents
   $ 38,931     $ 102,698  
Bank deposits and marketable securities
     8,925       8,074  
Accounts receivable, net of allowance of $1,935 and $1,784, respectively
     61,257       47,302  
Accounts receivable — related parties
     64       586  
Funds held for clients
     5,379       6,473  
Employee receivables
     745       1,179  
Prepaid expenses
     2,082       3,776  
Prepaid income taxes
     5,768       2,776  
Deferred tax assets
     1,743       618  
Other current assets
     38,647       8,596  
     
Total current assets
   $ 163,541     $ 182,078  
Goodwill
     81,679       87,470  
Intangible assets, net
     217,372       9,393  
Property and equipment, net
     55,992       50,840  
Other assets — non current
     11,449       1,278  
Deposits
     6,309       7,391  
Deferred tax assets — non current
     15,584       8,055  
     
TOTAL ASSETS
   $ 551,926     $ 346,505  
     
 
                
LIABILITIES AND SHAREHOLDERS’ EQUITY
                
Current liabilities
                
Accounts payable
   $ 30,879     $ 15,562  
Accounts payable — related parties
     42       6  
Long term debt — current
     45,000       —  
Short term line of credit
     4,331       —  
Accrued employee costs
     23,754       26,848  
Deferred revenue — current
     5,583       7,790  
Income taxes payable
     3,995       1,879  
Deferred tax liabilities — current
     —       211  
Accrual for earn out payment
     —       33,699  
Other current liabilities
   54,126       25,806  
     
Total current liabilities
   $ 167,710     $ 111,801  
Long term debt — non current
     155,000       —  
Deferred revenue — non current
     3,561       1,549  
Deferred rent
     1,967       2,627  
Accrued pension liability
     2,570       1,544  
Deferred tax liabilities — non current
     9,946       1,834  
Liability on outstanding derivative contracts — non current
     23,163       —  
Commitments and contingencies
                
TOTAL LIABILITIES
   $ 363,917     $ 119,355  
Minority interest
     13       —  
Shareholders’ equity:
                
Ordinary shares, $0.16 (10 pence) par value, Authorized: 50,000,000 shares;
                
Issued and outstanding: 42,607,403 and 42,363,100 shares, respectively
     6,667       6,622  
Additional paid-in-capital
     184,122       167,459  
Ordinary shares subscribed: Nil and 1,666 shares, respectively
     —       10  
Retained earnings
     46,917       38,839  
Accumulated other comprehensive (loss) income
     (49,710 )     14,220  
     
Total shareholders’ equity
     187,996       227,150  
     
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY
   $ 551,926     $ 346,505  
     

Page 9 of 10

 

WNS (HOLDINGS) LIMITED
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Amounts in thousands)
                 
    Year ended March 31,
    2009   2008
Cash flows from operating activities
                
Net cash provided by operating activities
   $ 62,897     $ 41,051  
 
                
Cash flows from investing activities
                
Acquisitions, net of cash received
     (290,994 )     (36,121 )
Purchase of facilities and property cost
     (22,693 )     (28,134 )
Proceeds from sale of assets, net
     342       178  
Transfer of delivery centre to AVIVA
     —       1,570  
Purchase of marketable securities and deposits
     (41,983 )     (48,181 )
Marketable securities and deposits sold
     39,710       52,150  
     
Net cash used in investing activities
     (315,618 )     (58,538 )
     
 
                
Cash flows from financing activities
                
Proceeds from exercise of stock options
     988       4,204  
Excess tax benefits from share-based compensation
     2,226       1,613  
Proceeds from issuance of long term debt, net
     198,803       —  
Initial public offering expenses
     —       (150 )
Principal repayments under capital lease
     (183 )     —  
Proceeds from short term line of credit
     16,416     —  
Repayment of short term line of credit
     (19,310 )     —  
     
Net cash provided by financing activities
     198,940       5,667  
     
 
                
Effect of exchange rate changes on cash and cash equivalent
     (9,986 )     2,178  
 
                
Net change in cash and cash equivalents
     (63,767 )     (9,642 )
Cash and cash equivalents at beginning of period
     102,698       112,340  
     
Cash and cash equivalents at end of period
   $ 38,931     $ 102,698  

Page 10 of 10