WNS (Holdings) Limited (WNS) (NYSE: WNS), a leading provider of
global business process outsourcing (BPO) services, today announced
results for the 2012 fiscal fourth quarter and full year ended
March 31, 2012.
Highlights – Fiscal Fourth Quarter 2012
GAAP Financials
• Revenue of $113.3 million, down 28.9%
from $159.5 million in Q4 of last year (primarily due to change in
accounting for repair payments) and down 3.3% from $117.2 million
last quarter
• Profit of $4.4 million, compared to $8.8
million in Q4 of last year and $4.0 million last quarter
• Diluted earnings per ADS of $0.09,
compared to $0.19 in Q4 of last year and $0.09 last quarter
Non-GAAP Financial
Measures*
• Revenue less repair payments of $99.8
million, up 5.9% from $94.3 million in Q4 of last year and up 2.7%
from $97.2 million last quarter
• Adjusted Net Income (ANI) of $13.2
million, compared to $18.2 million in Q4 of last year and $12.1
million last quarter
• Adjusted diluted net income per ADS of
$0.27, compared to $0.40 in Q4 of last year and $0.27 last
quarter
Operations Update
• Added 5 new clients in the quarter,
expanded 2 existing relationships
• Days sales outstanding (DSO) at 35
days
• Global headcount of 23,874 as of March
31, 2012
Highlights – Fiscal Full Year 2012
GAAP
Financials
• Revenue of $474.1 million, down 23.1%
from $616.3 million in fiscal 2011 (primarily due to change in
accounting for repair payments)
• Profit of $12.5 million, compared to
$17.9 million in fiscal 2011
• Diluted earnings per ADS of $0.27,
compared to $0.40 in fiscal 2011
Non-GAAP Financial
Measures*
• Revenue less repair payments of $395.1
million, up 6.9% from $369.4 million in fiscal 2011
• ANI of $47.3 million, compared to $52.9
million in fiscal 2011
• Adjusted diluted net income per ADS of
$1.02, compared to $1.17 in fiscal 2011
As a reminder, in fiscal 2012 WNS re-negotiated contracts with
certain of its clients and repair centers in the Auto Claims
business, whereby the primary responsibility for providing the
services is borne by the repair centers instead of WNS and the
credit risk that the client may not pay for services is no longer
borne by WNS. As a result of these changes, WNS no longer accounts
for the amount received from these clients for payments to repair
centers and the payments made to repair centers for cases referred
by these clients as revenue and cost of revenue respectively. While
this change has resulted in lower year-over-year GAAP revenue
figures, it has had no material impact on operating metrics such as
revenue less repair payments. The contract re-negotiation process
is ongoing and aimed at simplifying WNS’s accounting
requirements.
Reconciliations of the non-GAAP financial measures discussed
below to our GAAP operating results are included at the end of this
release. See also “About Non-GAAP Financial Measures.”
Revenue less repair payments* in the fourth quarter increased
5.9% year-over-year, and 2.7% as compared to the previous quarter.
Sequential revenue growth was driven by favorable seasonality in
the Travel business, strength in our Healthcare and Utilities
verticals, and the continued ramp up of our large new insurance
client.
Adjusted gross margin* for the quarter was 35.5%, as compared to
the 36.1% in Q4 of last year, and 36.3% reported last quarter.
Sequentially, operating leverage from revenue growth and improved
productivity were offset by modest currency headwinds and
accelerated hiring relating to process transitions for our large
new client. Fourth quarter adjusted operating margin* was 17.5%, as
compared to 19.4% in Q4 of last year and 16.7% reported in the
third quarter. The sequential improvement was largely driven by a
$0.9 million reduction in foreign exchange losses versus the prior
quarter.
Adjusted net income (ANI)* in the fourth quarter was $13.2
million, up $1.0 million sequentially due to improved adjusted
operating margin* discussed above and a lower effective tax rate.
On a year-over-year basis, ANI* was down $5.1 million, with
favorability from revenue growth more than offset by a $3.8 million
impact due to a change in hedge accounting under IFRS, and $3.7
million of additional taxes largely as a result of the STPI tax
holiday expiration in India. On a full year basis, the impact of
these two items was $7.4 million and $10.0 million
respectively.
From a balance sheet perspective, WNS ended the fiscal fourth
quarter with $46.7 million in cash and an additional $26.4 million
in bank deposits and marketable securities. Gross debt at the end
of the fourth quarter reduced to $86.7 million as against $106.3
million at the end of Q3. Days sales outstanding for the fourth
quarter was 35 days, down from 36 days in the prior quarter.
“During the fiscal fourth quarter of 2012, WNS continued to
demonstrate both financial and operational progress. Revenue less
repair payments improved 7.3% on a constant currency basis* versus
the same quarter of last year, and adjusted operating margins*
expanded for the third consecutive quarter. Also during the
quarter, the company repaid $30 million on our term loan,
refinanced our debt and successfully completed a stock offering
which raised approximately $45 million of cash to fund growth
initiatives,” said Keshav Murugesh, WNS Group Chief Executive
Officer.
“Fiscal 2012 was a year of significant accomplishments and
overall progress for WNS. Highlights included a return to full-year
revenue growth, a re-built and robust new business pipeline,
reduced attrition rates, and a strengthened balance sheet. WNS was
able to deliver stable, competitive gross and operating margins
while aggressively investing in the long-term health of our
business. Key strategic initiatives during the year were focused on
sales force hiring, end-to-end verticalization of the company,
technology-enabling our solutions and expanding our global delivery
footprint. We believe that these investments will allow WNS to
continue enhancing our key differentiators and as a result,
position the company for future success,” continued Keshav.
“As we turn our attention to fiscal 2013, we are cautiously
optimistic about the macroeconomic environment for BPO services.
WNS’s key focus areas for 2013 include sales force productivity and
capital deployment to increase geographic reach, enhance and
automate our service offerings, and drive non-linear revenue
growth. These initiatives are aimed at improving the overall client
experience while enabling WNS to accelerate profitable revenue
growth.”
Fiscal 2013 Guidance
WNS has provided guidance for the fiscal year ending March 31,
2013 as follows:
- Revenue less repair payments* is
expected to be between $410 million and $430 million. This assumes
an average GBP to USD exchange rate of 1.60.
- ANI* is expected to range between $49
million and $53 million. This assumes an average USD to INR
exchange rate of 50.0.
“We have provided our first look at fiscal 2013 guidance based
on current revenue visibility levels and exchange rates. Our
initial guidance for the year reflects top line growth of 4% to 9%,
with 91% visibility to the midpoint of the range, and we expect to
update this guidance as we progress through the year. We believe
that our strategic initiatives will help position the company for
success in the BPO industry, and drive business value for all of
WNS’s key stakeholders,” said Alok Misra, WNS Group Chief Financial
Officer.
Conference Call
WNS will host a conference call on April 18, 2012 at 8:00 am
(Eastern) to discuss the company's quarterly and full year results.
To participate in the call, please use the following details:
+1-866-277-1181; international dial-in +1-617-597-5358; participant
passcode 38100617. A replay will be available for one week
following the call at +1-888-286-8010; international dial-in
+1-617-801-6888; passcode 50127400, as well as on the WNS website,
www.wns.com, beginning two hours after the end of the call.
About WNS
WNS (Holdings) Limited (NYSE: WNS), is a leading global business
process outsourcing company. WNS offers business value to 200+
global clients by combining operational excellence with deep domain
expertise in key industry verticals including Travel, Insurance,
Banking and Financial Services, Manufacturing, Retail and Consumer
Packaged Goods, Shipping and Logistics and Healthcare and
Utilities. WNS delivers an entire spectrum of business process
outsourcing services such as finance and accounting, customer care,
technology solutions, research and analytics and industry specific
back office and front office processes. WNS has over 23,000
professionals across 25 delivery centers worldwide including Costa
Rica, India, Philippines, Romania, Sri Lanka and United Kingdom.
For more information, visit www.wns.com.
Safe Harbor Statement
This 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 are based on
our current expectations and assumptions about our Company and our
industry. Generally, these forward-looking statements may be
identified by the use of terminology such as “anticipate,”
“believe,” “estimate,” “expect,” “intend,” “will,” “seek,” “should”
and similar expressions. These statements include, among other
things, the discussions of our strategic initiatives and the
expected resulting benefits, industry environment, expectations
concerning our future financial performance and growth potential,
including our fiscal 2013 guidance and future profitability, and
expected foreign currency exchange rates. Forward-looking
statements inherently involve risks and uncertainties that could
cause actual results to differ materially from those expressed or
implied by such statements. Such 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; regulatory, legislative and judicial developments;
our ability to attract and retain clients; 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 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; the effects
of our different pricing strategies or those of our competitors;
and increasing competition in the BPO industry. These and other
factors are more fully discussed in our most recent annual report
on Form 20-F and subsequent reports on Form 6-K filed with or
furnished to the US Securities and Exchange Commission (SEC) which
are available at www.sec.gov. We caution you not to place undue
reliance on any forward-looking statements. Except as required by
law, we do not undertake to update any forward-looking statements
to reflect future events or circumstances.
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.
References to GAAP refers to International Financial Reporting
Standards, as issued by the International Accounting Standards
Board (IFRS).
About Non-GAAP Financial
Measures
The financial information in this release is focused on non-GAAP
financial measures as we believe that they reflect more accurately
our operating performance. Reconciliations of these non-GAAP
financial measures to our GAAP operating results are included
below. A discussion of our GAAP measures will be contained in item
5 Operating and Financial Review and Prospects accompanying our
fiscal 2012 financial statements to be submitted to the SEC under a
report on Form 20-F.
For financial statement reporting purposes, WNS has two
reportable segments: WNS Global BPO and WNS Auto Claims BPO.
Revenue less repair payments is a non-GAAP financial measure that
is calculated as (a) revenue less (b) in the auto claims business,
payments to repair centers (1) for “fault” repair cases where WNS
acts as the principal in its dealings with the third party repair
centers and its clients and (2) for “non-fault” repair cases with
respect to one client to whom WNS provides services similar to its
“fault” repair cases. WNS believes that revenue less repair
payments for “fault” repairs reflects more accurately the value
addition of the business process outsourcing services that it
directly provides to its clients. For more details, please see the
discussion in table footnote 3 on pages S-15 and S-16 of our
prospectus supplement dated February 9, 2012 filed with the
SEC.
Constant currency revenue less repair payments is a non-GAAP
financial measure. We present constant currency revenue less repair
payments so that revenue less repair payments may be viewed without
the impact of foreign currency exchange rate fluctuations, thereby
facilitating period-to-period comparisons of business performance.
Constant currency revenue less repair payments is calculated, for
the indicated periods, by restating the prior period’s revenue less
repair payments denominated in pound sterling or Euro, as
applicable, using the foreign exchange rate used for the latest
period.
WNS also presents (1) adjusted gross margin, which refers to
adjusted gross profit (calculated as gross profit excluding
share-based compensation expense) as a percentage of revenue less
repair payments, (2) adjusted operating margin, which refers to
adjusted operating profit (calculated as operating profit excluding
amortization of intangible assets and share-based compensation
expense) as a percentage of revenue less repair payments, and (3)
ANI, which is calculated as profit excluding amortization of
intangible assets and share-based compensation expense, and other
non-GAAP measures included in this release as supplemental measures
of its performance. WNS presents these non-GAAP measures because it
believes they assist investors in comparing its performance across
reporting periods on a consistent basis by excluding items that it
does not believe are indicative of its core operating performance.
In addition, it uses these non-GAAP measures (i) as a factor in
evaluating management’s performance when determining incentive
compensation and (ii) to evaluate the effectiveness of its business
strategies. These non-GAAP measures not meant to be considered in
isolation or as a substitute for WNS’s financial results prepared
in accordance with IFRS.
*See “About Non-GAAP Financial Measures” and the reconciliations
of the historical non-GAAP financial measures to our GAAP operating
results at the end of this release
WNS (HOLDINGS) LIMITED
CONSOLIDATED STATEMENTS OF
INCOME
(Amounts in millions, except per share
data)
Three months ended
Year ended March 31, March
31, Dec 31, March 31, 2012
2011 2011 2012 2011 Revenue $
113.3 $ 159.5 $ 117.2 $ 474.1 $ 616.3 Cost of revenue 78.2 125.8
82.1 340.9 490.0 Gross profit 35.1 33.7 35.1 133.2 126.2 Operating
expenses: Selling and marketing expenses 6.3 5.9 6.4 26.3 23.5
General and administrative expenses 13.0 15.3 12.5 51.3 56.4
Foreign exchange (gain) / loss, net 0.2 (4.3 ) 1.1 (1.9 ) (15.1 )
Amortization of intangible assets 7.1 8.0 7.0 29.5 31.8 Operating
profit 8.7 8.9 8.1 28.0 29.7 Other expenses (income), net 0.2
(0.5
) (0.2 ) (0.0 ) (1.1 ) Finance expense 0.9 1.2 1.0 4.0 11.4 Profit
before income taxes 7.5 8.2 7.3 24.0 19.4 Provision for income
taxes 3.1 (0.6 ) 3.2 11.5 1.5 Profit $ 4.4 $ 8.8 $ 4.0 $ 12.5 $
17.9 Earnings per share of ordinary share Basic $ 0.09 $
0.20 $ 0.09 $ 0.28 $ 0.40 Diluted $ 0.09 $ 0.19 $ 0.09 $
0.27 $ 0.40
Reconciliation of revenue (GAAP) to
revenue less repair payments (non-GAAP)
Three month ended Year
ended Mar 31, 2012 Mar 31, 2011
Dec 31, 2011 Mar 31, 2012
Mar 31, 2011 (US dollars in
millions) (US dollars in millions) Revenue (GAAP) $
113.3 $ 159.5 $ 117.2 $ 474.1
$ 616.3 Less: Payments to repair centers 13.5 65.2 20.0 79.1
246.9 Revenue less repair payments(Non-GAAP) $ 99.8 $ 94.3 $ 97.2 $
395.1 $ 369.4
Constant currency revenue lessrepair
payments (Non-GAAP)
$ 99.8 $ 93.0 $ 96.9 $ 395.1 $ 375.2
Reconciliation of gross profit (GAAP to
non-GAAP)
Three months ended
Year ended Mar 31, 2012 Mar 31,
2011 Dec 31, 2011 Mar 31, 2012
Mar 31, 2011 (US dollars in millions)
(US dollars in millions) Gross profit (GAAP) $ 35.1
$ 33.7 $ 35.1
$
133.2
$ 126.2
Add: Share-based compensationexpense
0.3 0.3 0.2 1.0 0.7
Adjusted gross profit
(excludingshare-based compensationexpense) (Non-GAAP)
$ 35.4 $ 34.0 $ 35.3 $ 134.2 $ 126.9
Reconciliation of selling and marketing
expenses (GAAP to non-GAAP)
Year ended Mar 31, 2012
Mar 31, 2011 (US dollars in millions) Selling
and marketing expenses (GAAP) $ 26.3 $ 23.5 Less:
Share-based compensation expense 0.4 0.2
Adjusted selling and marketing expenses
(excluding share-based compensation expense) (Non-GAAP)
$ 26.0 $ 23.2
Reconciliation of general and
administrative expenses (GAAP to non-GAAP)
Year ended Mar 31, 2012 Mar 31,
2011 (US dollars in millions) General and administrative
expenses (GAAP) $ 51.3 $ 56.4 Less: Share-based
compensation expense 3.9 2.3
Adjusted general and administrative
expenses (excludingshare-based compensation expense) (Non-GAAP)
$ 47.4 $ 54.0
Reconciliation of operating profit
(GAAP to non-GAAP)
Three months ended
Year ended
Mar 31, 2012
Mar 31, 2011 Dec 31, 2011
Mar 31, 2012 Mar 31, 2011 (US
dollars in millions) (US dollars in millions) Operating
profit (GAAP) $ 8.7 $ 8.9 $ 8.1
$
28.0
$ 29.7
Add: Amortization of intangibleassets
7.1 8.0 $ 7.0 29.5 31.8
Add: Share-basedcompensation expense
1.7 1.5 1.1 5.3 3.2
Adjusted operating profit(excluding
amortization ofintangible assets and share-based compensation
expense)(Non-GAAP)
$ 17.4 $ 18.3 $ 16.2 $ 62.7 $ 64.8
Reconciliation of profit (GAAP to
non-GAAP)
Three months ended
Year ended Mar 31, 2012 Mar 31,
2011 Dec 31, 2011 Mar 31, 2012
Mar 31, 2011 (US dollars in millions)
(US dollars in millions) Profit (GAAP) $ 4.4 $
8.8 $ 4.0
$
12.5
$ 17.9
Add: Amortization of intangibleassets
7.1 8.0 7.0 29.5 31.8
Add: Share-based compensationexpense
1.7 1.5 1.1
5.3 3.2
Adjusted net income (excludingamortization
of intangible assets andshare-based compensationexpense)
(Non-GAAP)
$ 13.2 $ 18.2 $ 12.1 $ 47.3 $ 52.9
Reconciliation of diluted income per
ADS (GAAP to non-GAAP)
Three months ended
Year ended Mar 31, 2012 Mar 31,
2011 Dec 31, 2011 Mar 31, 2012
Mar 31, 2011 Diluted earnings per ADS (GAAP) $
0.09 $ 0.19 $ 0.09 $ 0.27 $ 0.40
Add: Adjustments for amortization
ofintangible assets and share-basedcompensation expense
0.18 0.21 0.18 0.75 0.77
Adjusted diluted net income per
ADS(excluding amortization of intangibleassets and share-based
compensationexpense) (Non-GAAP)
$ 0.27 $ 0.40 $ 0.27 $ 1.02 $ 1.17
WNS (HOLDINGS) LIMITED
CONSOLIDATED BALANCE SHEETS
(Amounts in millions, except share and
per share data)
As at As at
As at
March 31,2012
March 31,2011
April 1,2010
ASSETS Current assets: Cash and cash equivalents $ 46.7 $
27.1 $ 32.3 Bank deposits and marketable securities 26.4 0.0 0.0
Trade receivables 66.4 78.6 44.8 Unbilled revenue 35.9 30.8 40.9
Funds held for clients 20.7 8.8 11.4 Current tax assets 3.9 8.5 5.6
Derivative assets 3.7 11.2 22.8 Prepayments and other current
assets 21.9 16.4 16.7 Total current assets 225.6 181.5 174.5
Non-current assets: Investments 0.0 0.0 — Goodwill 86.7 93.5 90.7
Intangible assets 115.1 156.6 188.1 Property and equipment 45.4
47.2 48.5 Derivative assets 1.5 2.3 8.4 Deferred tax assets 43.7
33.5 25.2 Other non-current assets 6.9 8.0 8.6 Total non-current
assets 299.4 341.1 369.5
TOTAL ASSETS $ 525.0
$ 522.6 $ 544.0 LIABILITIES
AND EQUITY Current liabilities: Trade payables $ 47.3 $ 43.7 $
27.9 Provisions and accrued expenses 31.9 32.9 43.4 Derivative
liabilities 9.8 10.0 17.6 Pension and other employee obligations
29.0 31.0 31.0 Short term line of credit 24.0 14.6 — Current
portion of long term debt 26.0 49.4 39.6 Deferred revenue 6.2 7.0
4.9 Income taxes payable 8.2 3.1 2.6 Other liabilities 5.2 4.1 8.7
Total current liabilities 187.6 195.8 175.7 Non-current
liabilities: Derivative liabilities 1.2 0.4 7.6 Pension and other
employee obligations 4.6 4.5 4.3 Long term debt 36.7 42.9 94.7
Deferred revenue 4.1 6.0 3.5 Other non-current liabilities 2.7 3.0
3.7 Deferred tax liabilities 4.1 5.1 8.2 Total non-current
liabilities 53.3 61.9 122.0
TOTAL LIABILITIES
$
240.9 $ 257.7 297.7
Shareholders’ equity:
Share capital (ordinary shares $0.16 (10
pence) par value, authorized60,000,000 shares; issued: 50,078,881,
44,443,726 and 43,743,953shares, respectively)
7.8 7.0 6.8 Share premium 263.5 211.4 207.0 Retained earnings 59.1
46.6 28.7 Other components of equity (46.4 ) (0.1 ) 3.9 Total
shareholders’ equity 284.1 264.9 246.3
TOTAL LIABILITIES AND
EQUITY $ 525.0 $ 522.6 $
544.0
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