WNS (Holdings) Limited (NYSE: WNS), a leading provider of offshore
business process outsourcing (BPO) services, today announced its
results for the first fiscal quarter ended June 30, 2006. "WNS had
a strong quarter in terms of revenue growth," said Neeraj Bhargava,
Group Chief Executive Officer. "Our employee strength grew by 1,537
associates, or 14.7%, in the quarter, the highest growth that we
have experienced since our inception. We were on target in terms of
profitability and operational ramp up for the quarter and are
pleased with where we stand today as a public company in terms of
achieving our financial and operational goals." Financial
Highlights - First Quarter Fiscal 2007 -- Revenue for the quarter
ended June 30, 2006, was $53.0 million, up 3.6% from $51.2 million
in the quarter ended June 30, 2005. Revenue for the quarter grew
sequentially by 0.2% from $52.9 million in the previous quarter. --
Revenue less repair payments for the quarter ended June 30, 2006,
was $45.5 million, up 37.1% from $33.2 million in the quarter ended
June 30, 2005. Revenue less repair payments for the quarter grew
sequentially by 9.8% from $41.4 million in the previous quarter.**
-- Net income for the quarter ended June 30, 2006, was $4.6
million, up 5.0% from $4.4 million in the quarter ended June 30,
2005. Net income for the quarter grew sequentially by 24.6% from
$3.7 million in the previous quarter. -- Net income (excluding
amortization of intangible assets and share-based compensation
expense) for the quarter ended June 30, 2006, was $5.3 million, up
11.4% from $4.7 million in the quarter ended June 30, 2005. Net
income (excluding amortization of intangible assets and share-based
compensation expense) for the quarter grew sequentially by 19.3%
from $4.4 million in the previous quarter. -- Basic income per
share for the quarter ended June 30, 2006, was 13 cents, compared
with 14 cents for the quarter ended June 30, 2005. Basic income per
share for the previous quarter was 10 cents. (EPS calculation
excludes 4,473,684 shares issued by the company in its initial
public offering, which closed on July 31, 2006.) -- Basic income
per share (excluding amortization of intangible assets and
share-based compensation expense) for the quarter ended June 30,
2006, was 15 cents, compared with 15 cents in the quarter ended
June 30, 2005. Basic income per share (excluding amortization of
intangible assets and share-based compensation expense) for the
previous quarter was 13 cents. (EPS calculation excludes 4,473,684
shares issued by the company in its IPO which closed on July 31,
2006.) ** It is important to note that WNS revenue is generated
primarily from providing BPO services. The company has two
reportable segments for financial statement reporting purposes, WNS
Global BPO and WNS Auto Claims BPO. In the WNS Auto Claims BPO
segment the company 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 is
reported as revenue. Since 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 that
revenue less repair payments reflects more accurately the value
addition of the business process services that 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 US 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. Operating Highlights --
As of June 30, 2006, WNS had total employees of 11,970, up 49.5%
from 8,009 a year earlier, and 14.7% from 10,433 as of March 31,
2006. -- WNS entered into a definitive contract with a large
client, British Airways, which extended the expiration of the term
of our original contract from March 2007 to May 2012. Under the new
contract, the parties have agreed to change the basis of pricing
for a portion of the contracted services over a transition period
from a per-full-time-equivalent basis to a per-unit-transaction
basis. In WNS' IPO, British Airways, one of the company's selling
shareholders, sold 5,160,000 ordinary shares, reducing its
ownership in WNS (Holdings) Limited to zero from 14.6%. For fiscal
2006, British Airways accounted for 7.2% of WNS' revenue and 9.9%
of its revenue less repair payments. -- WNS also entered into a
definitive amendment to the contract with another large client,
AVIVA, that continues the relationship between the two companies.
Under the contract, the date on which AVIVA could require WNS to
transfer relevant projects and operations back to AVIVA has been
extended to on or after June 30, 2007, for its facility in Sri
Lanka and to on or after December 30, 2007, for a larger facility
in Pune. For fiscal 2006, AVIVA accounted for 9.8% of WNS' revenue
and 13.4% of its revenue less repair payments. Review of operating
results - GAAP basis Results of operations The following table sets
forth certain financial information as a percentage of revenue: -0-
*T Revenue -------------------------------------------------
-------------------- Quarters ended
-------------------------------------------------
-------------------- June March June 30, 31, 30,
------------------------------------------------- ------ ------
------ 2006 2006 2005
------------------------------------------------- ------ ------
------ ------------------------------------------------- ------
------ ------ Cost of revenue 70.6% 70.5% 75.7%
------------------------------------------------- ------ ------
------ Gross profit 29.4% 29.5% 24.3%
------------------------------------------------- ------ ------
------ Operating expenses:
------------------------------------------------- ------ ------
------ Selling, general and administrative expense 19.1% 21.5%
13.8% ------------------------------------------------- ------
------ ------ Amortization of intangible assets 0.9% 1.0% 0.1%
------------------------------------------------- ------ ------
------ Operating income 9.4% 7.0% 10.4%
------------------------------------------------- ------ ------
------ Non-operating income (expense), net (0.1)% 0.4% (0.1)%
------------------------------------------------- ------ ------
------ Provision for income taxes (0.6)% (0.5)% (1.7)%
------------------------------------------------- ------ ------
------ Net income 8.7% 7.0% 8.5%
------------------------------------------------- ------ ------
------ *T -- Revenue for the quarter ended June 30, 2006, was $53.0
million, compared with $51.2 million for the quarter ended June 30,
2005, an increase of 3.6%. Revenue for the quarter increased
sequentially by 0.2% from $52.9 million in the quarter ended March
31, 2006. -- Gross profit for the quarter ended June 30, 2006, was
$15.6 million or 29.4% of revenue, compared with $12.4 million or
24.3% of revenue, in the quarter ended June 30, 2005. The increase
in gross profit percentage in the quarter ended June 30, 2006,
compared with the year-earlier quarter, is due to the loss of a
significant client in WNS Auto Claims BPO which -- when compared
with the rest of the business, contributed to a comparatively lower
gross profit percentage. Gross profit for the quarter ended March
31, 2006 was $15.6 million, or 29.5% of revenue. -- SG&A
expenses for the quarter ended June 30, 2006, were $10.1 million,
or 19.1% of revenue, compared with $7.1 million, or 13.8% of
revenue, in the quarter ended June 30, 2005. The increase in
expenses is on account of higher travel, legal and professional
charges and employee-related costs such as staff welfare and
recruitment expenses. SG&A expenses for the quarter ended March
31, 2006, were $11.4 million, or 21.5% of revenue. This decline in
expenses is attributable to non-recurring expenses of $0.7 million
incurred for quarter ended March 31, 2006 for consulting and audit
fees, representing a portion of the professional fees relating to
preparation for becoming a public company, and $0.3 million, of
decreased travel costs during the quarter ended June 30, 2006. --
Operating income for the quarter ended June 30, 2006, was $5.0
million or 9.4% of revenue, compared with $5.3 million, or 10.4% of
revenue, in the quarter ended June 30, 2005. Operating income for
the quarter ended March 31, 2006, was $3.7 million or 7.0% of
revenue. Review of operating results - On a revenue less repair
payments (non-GAAP) basis Results of operations The following table
sets forth certain financial information as a percentage of revenue
less repair payments: -0- *T Revenue less repair payments
-------------------------------------------------
--------------------
-------------------------------------------------
-------------------- Quarters Ended
-------------------------------------------------
-------------------- June March June 30, 31, 30,
------------------------------------------------- ------ ------
------ 2006 2006 2005
------------------------------------------------- ------ ------
------ ------------------------------------------------- ------
------ ------ Cost of revenue 65.7% 62.4% 62.5%
------------------------------------------------- ------ ------
------ Gross profit 34.3% 37.6% 37.5%
------------------------------------------------- ------ ------
------ Operating expenses:
------------------------------------------------- ------ ------
------ Selling, general and administrative expense 22.3% 27.4%
21.3% ------------------------------------------------- ------
------ ------ Amortization of intangible assets 1.0% 1.2% 0.2%
------------------------------------------------- ------ ------
------ Operating income 11.0% 9.0% 16.0%
------------------------------------------------- ------ ------
------ Non-operating (expense) income, net (0.1)% 0.5% (0.2)%
------------------------------------------------- ------ ------
------ Provision for income taxes (0.7)% (0.6)% (2.6)%
------------------------------------------------- ------ ------
------ Net income 10.1% 8.9% 13.2%
------------------------------------------------- ------ ------
------ SG&A (excluding share-based compensation expense) 21.8%
26.9% 20.4% -------------------------------------------------
------ ------ ------ Operating income (excluding amortization of
intangible assets and share-based compensation expense) 12.5% 10.8%
17.1% ------------------------------------------------- ------
------ ------ *T -- Revenue less repair payments for the quarter
ended June 30, 2006, was $45.5 million, compared with $33.2 million
for the quarter ended June 30, 2005, an increase of 37.1%. Revenue
less repair payments grew sequentially by 9.8% from $41.4 million
for the quarter ended March 31, 2006. -- Gross profit for the
quarter ended June 30, 2006, was $15.6 million, or 34.3% of revenue
less repair payments, compared with $12.4 million, or 37.5% of
revenue less repair payments, in the quarter ended June 30, 2005.
Gross profit for the quarter ended March 31, 2006, was $15.6
million, or 37.6% of revenue less repair payments. This decline in
gross profit percentage in the quarter ended June 30, 2006 is due
to: -0- *T -- Significant increase in the number of new hires who
underwent training and could not be billed at full rates in the WNS
Global BPO and Auto Claims businesses. These employees are expected
to be billed at full rates in subsequent quarters. -- Addition of
three new facilities, which resulted in increased infrastructure
costs -- Incremental salary increase effective from April 1, 2006.
*T -- SG&A expenses (excluding share-based compensation
expense) for the quarter ended June 30, 2006, were $9.9 million, or
21.8% of revenue less repair payment, compared with $6.8 million,
or 20.4% of revenue less repair payment, in the quarter ended June
30, 2005. The increase in expenses is attributable primarily to
higher travel, legal and professional charges and employee-related
costs such as staff welfare and recruitment expenses. SG&A cost
(excluding share-based compensation expense) for the quarter ended
March 31, 2006, was $11.1 million, or 26.9% of revenue less repair
payments. This decline in SG&A expenses in the quarter ended
June 30, 2006 is attributable to non-recurring expenses of $0.7
million incurred for quarter ended March 31, 2006, for consulting
and audit fees representing a portion of the professional fees
relating to WNS' preparation to become a public company, and $0.3
million, reflecting decreased travel during the quarter ended June
30, 2006. -- Operating income (excluding amortization of intangible
assets and share-based compensation expense) for the quarter ended
June 30, 2006, was $5.7 million, or 12.5% of revenue less repair
payments, compared with $5.7 million, or 17.1% of revenue less
repair payments, in the quarter ended June 30, 2005. Operating
income (excluding amortization of intangible assets and share-based
compensation expense) for the quarter ended March 31, 2006, was
$4.5 million, or 10.8% of revenue less repair payments. On July 31,
2006, WNS closed its initial public offering of 12,763,708 ADSs
(including 8,290,024 ADSs offered by selling shareholders) priced
at $20 per ADS, for net proceeds to WNS of $78.1 million
(estimated), after deducting underwriting discounts and commissions
and estimated offering expenses. Fiscal 2007 Guidance WNS provides
the following guidance for the fiscal year ending March 31, 2007:
-- Revenue less repair payments expected to be US$205 million to
US$208 million -- Net income (excluding amortization of intangible
assets and share-based compensation expense expected to be US$30.5
million to US$32.5 million -- Capital expenditure for the year is
expected to be approximately US$25 million "Our sales momentum
continues to be strong both in terms of growth with existing
clients and new additions. Our revenue targets appear achievable
and we will also lower client concentration. As the year
progresses, we expect to get more leverage from our SG&A
expenses and expand our margins" said Neeraj Bhargava, Chief
Executive Officer. Conference call WNS will host a conference call
on Monday, August 21st at 8:00am (ET) to discuss the company's
quarterly results. To listen to this call please call 800-295-3991
from within the US and 617-614-3924 from any other country. The
participant passcode for this call is 13528361. A replay will be
made available on the web site at www.wnsgs.com from two hours
after the end of the call for a period of three months. 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. 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. -0- *T
WNS (HOLDINGS) LIMITED CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(UNAUDITED) (Amounts in thousands, except share and per share data)
Three months ended ----------------------------------- June 30,
March 31, June 30, ----------- ----------- ----------- 2006 2006
2005 ---------------------------------- ----------- -----------
----------- Revenue $53,026 $52,920 $51,182 Cost of revenue 37,430
37,323 38,736 Gross profit 15,596 15,597 12,446 Operating expenses
Selling, general and administrative expenses (refer note a below)
10,130 11,367 7,069 Amortization of intangible assets 471 508 68
Operating income 4,995 3,722 5,309 Other (expense) income, net (35)
277 68 Interest expense (32) (53) (137) Income before income taxes
4,928 3,946 5,240 Provision for income taxes (335) (261) (864) Net
income 4,593 3,685 4,376 Basic income per share $0.13 $0.10 $0.14
Diluted income per share $0.12 $0.10 $0.13 Basic weighted average
ordinary shares outstanding 35,220,868 35,174,350 31,209,074
Diluted weighted average ordinary shares outstanding 38,021,949
37,724,432 33,655,565 Note: a) Includes the following expense
Share-based compensation 212 231 291
---------------------------------- ----------- -----------
----------- *T 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 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) to revenue (GAAP) -0- *T
Amounts in thousands -------------------------------------------
-------------------------- Quarters ended
-------------------------------------------
-------------------------- June 30, March June 30, 31,
------------------------------------------- -------- --------
-------- 2006 2006 2005 -------------------------------------------
-------- -------- -------- Revenue less repair payments (Non-GAAP)
$45,509 $41,444 $33,188 -------------------------------------------
-------- -------- -------- Add: Payments to repair centers 7,517
11,476 17,994 ------------------------------------------- --------
-------- -------- Revenue (GAAP) $53,026 $52,920 $51,182
------------------------------------------- -------- --------
-------- *T Reconciliation of cost of revenue (non-GAAP to GAAP)
-0- *T Amounts in thousands
-------------------------------------------
-------------------------- Quarters ended
-------------------------------------------
-------------------------- June 30, March June 30, 31,
------------------------------------------- -------- --------
-------- 2006 2006 2005 -------------------------------------------
-------- -------- -------- Cost of revenue (Non- GAAP) $29,913
$25,847 $20,742 -------------------------------------------
-------- -------- -------- Add: Payments to repair centers 7,517
11,476 17,994 ------------------------------------------- --------
-------- -------- Cost of revenue (GAAP) $37,430 $37,323 $38,736
------------------------------------------- -------- --------
-------- *T Reconciliation of selling, general and administrative
expense (non-GAAP to GAAP) -0- *T Amounts in thousands
-------------------------------------------
-------------------------- Quarters ended
-------------------------------------------
-------------------------- June 30, March June 30, 31,
------------------------------------------- -------- --------
-------- 2006 2006 2005 -------------------------------------------
-------- -------- -------- Selling, general and administrative
expenses (excluding share-based compensation expense) (Non- GAAP)
$9,918 $11,136 $6,778 -------------------------------------------
-------- -------- -------- Add: Share-based compensation expense
212 231 291 ------------------------------------------- --------
-------- -------- Selling, general and administrative expenses
(GAAP) $10,130 $11,367 $7,069
------------------------------------------- -------- --------
-------- *T Reconciliation of operating income (non-GAAP to GAAP)
-0- *T Amounts in thousands
-------------------------------------------
-------------------------- Quarters ended
-------------------------------------------
-------------------------- June 30, March June 30, 31,
------------------------------------------- -------- --------
-------- 2006 2006 2005 -------------------------------------------
-------- -------- -------- Operating income (excluding share-based
compensation and amortization of intangible assets) (Non- GAAP)
$5,678 $4,461 $5,668 -------------------------------------------
-------- -------- -------- Less: Share-based compensation expense
212 231 291 ------------------------------------------- --------
-------- -------- Less: Amortization of intangible assets 471 508
68 ------------------------------------------- -------- --------
-------- Operating income (GAAP) $4,995 $3,722 $5,309
------------------------------------------- -------- --------
-------- *T Reconciliation of net income (non-GAAP to GAAP) -0- *T
Amounts in thousands -------------------------------------------
-------------------------- Quarters ended
-------------------------------------------
-------------------------- June 30, March June 30, 31,
------------------------------------------- -------- --------
-------- 2006 2006 2005 -------------------------------------------
-------- -------- -------- Net income (excluding share-based
compensation and amortization of intangible assets) (Non- GAAP)
$5,276 $4,424 $4,735 -------------------------------------------
-------- -------- -------- Less: Share-based compensation expense
212 231 291 ------------------------------------------- --------
-------- -------- Less: Amortization of intangible assets 471 508
68 ------------------------------------------- -------- --------
-------- Net income (GAAP) 4,593 3,685 4,376
------------------------------------------- -------- --------
-------- *T -0- *T WNS (HOLDINGS) LIMITED CONDENSED CONSOLIDATED
BALANCE SHEETS (Amount in thousands, except per share data) June
30, March 31, 2006 2006 (unaudited) ----------- --------- ASSETS
Current assets Cash and cash equivalents $11,645 $18,549 Accounts
receivable, net of allowance of $404 and $373, respectively 30,101
28,081 Funds held for clients 3,001 3,047 Deferred tax assets 339
353 Prepaid expenses 2,578 1,225 Other current assets 7,216 6,140
----------- --------- Total current assets 54,880 57,395 Goodwill
34,542 33,774 Intangible assets, net 8,243 8,713 Property and
equipment, net 34,369 30,623 Deposits 2,394 2,990 Deferred tax
assets 2,604 1,308 ----------- --------- TOTAL ASSETS $137,032
$134,803 =========== ========= LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities Accounts payable $17,286 $23,074 Line of credit
4,347 - Accrued employee costs 8,237 11,336 Deferred revenue 6,810
8,994 Income taxes payable 566 726 Obligations under capital leases
- current 121 184 Deferred tax liabilities 895 368 Other current
liabilities 12,184 8,781 ----------- --------- Total current
liabilities 50,446 53,463 Obligation under capital leases - non
current 21 2 Deferred rent 859 824 Deferred tax liabilities - non
current 2,146 2,350 Shareholders' equity: Preference shares, $0.15
(GBP 0.10) par value Authorized: 1,000,000 shares and one
respectively. Issued and outstanding - none Ordinary shares, $0.15
(GBP 0.10) par value Authorized: 50,000,000 shares and 40,000,000
shares, respectively Issued and outstanding: 35,328,173 and
35,321,511 shares, respectively 5,291 5,290 Additional
paid-in-capital 63,026 62,228 Ordinary shares subscribed, 57,337
and 4,346 shares, respectively 142 10 Retained earnings 8,697 4,104
Deferred share-based compensation (387) (582) Accumulated other
comprehensive income 6,791 7,114 ----------- --------- Total
shareholders' equity 83,560 78,164 ----------- --------- TOTAL
LIABILITIES AND SHAREHOLDERS' EQUITY $137,032 $134,803 ===========
========= *T
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