WNS (Holdings) Limited (NYSE: WNS), a leading provider of offshore
business process outsourcing (BPO) services, today announced
results for the fiscal year ended March 31, 2008 and released its
guidance for fiscal 2009. Revenue for fiscal 2008 of $459.9 million
increased 30.5% over the prior fiscal year. Revenue less repair
payments of $290.7 million increased 32.3% over the prior fiscal
year. This growth in revenue less repair payments for the year was
achieved despite the loss of First Magnus Financial Corporation as
a client following its bankruptcy filing in August 2007. First
Magnus Financial Corporation contributed $4.2 million in revenue
less repair payments in fiscal 2008, a decline from $15.0 million
in fiscal 2007. �WNS has ended fiscal 2008 on a strong note with
our profitability back on track and our sales engine gaining
momentum.� said Neeraj Bhargava, Group Chief Executive Officer. �In
spite of challenges in the mortgage area, we have accomplished 32%
growth in our revenue less repair payments, expanded our global
footprint, diversified our client base, delivered significant value
to our clients and strengthened our industry-focused BPO
businesses. We are excited about our prospects in fiscal 2009 and
are well prepared to execute against the tremendous opportunities
we see in the global BPO market.� Net income for fiscal 2008 was
$9.5 million, a decrease of 64.3% from the prior fiscal year. This
decrease was primarily due to a one-time impairment charge of $15.5
million in respect of goodwill and intangible assets and also costs
related to the redeployment of resources associated with the
bankruptcy of First Magnus Financial Corporation. Net income
(excluding share-based compensation, related fringe benefit taxes,
and amortization and impairment of goodwill and intangible assets)
was $37.0 million, an increase of 15.0% from the prior year. This
increase was achieved despite the loss of First Magnus Financial
Corporation as a client and the significant appreciation of the
Indian Rupee against the U.S. Dollar since fiscal 2007. WNS
recorded a basic income per ADS of $0.23 for fiscal 2008. Basic
income per ADS (excluding share-based compensation, related fringe
benefit taxes, and amortization and impairment of goodwill and
intangible assets) was $0.88 for the year. The fiscal fourth
quarter basic income per ADS of $0.14 was affected by unusually
high fringe benefit taxes on share-based compensation of $1.5
million, or $0.03 per ADS. This was essentially cash neutral for
WNS as these taxes were recovered from employees exercising stock
options and recognized as additional exercise price of options
under Additional Paid in Capital on our Balance Sheet. �Our fourth
quarter profitability was higher than expected as we managed our
operations tightly while investing in growth opportunities� said
Alok Misra, Group Chief Financial Officer. �Our cost structure,
expected recurring revenue stream, diverse client base and foreign
exchange hedging strategy prepare us well for the coming year.�
Financial Highlights: Fiscal Fourth Quarter Ended March 31, 2008
Quarterly revenue of $116.1 million, up 4.9% from the corresponding
quarter last year. Quarterly revenue less repair payments of $75.2
million, up 17.4% from the corresponding quarter last year.
Quarterly net income of $6.1 million, down 31.7% from the
corresponding quarter last year. Quarterly net income (excluding
share-based compensation, related fringe benefit taxes and
amortization of intangible assets) of $10.1 million, down 4.9% from
the corresponding quarter last year. Quarterly basic income per ADS
of $0.14, down from basic income per share of $0.22 for the
corresponding quarter last year. Quarterly basic income per ADS
(excluding share-based compensation, related fringe benefit taxes
and amortization of intangible assets) of $0.24, down from $0.26
for the corresponding quarter last year. Cash flows from operating
activities of $41.1 million for fiscal 2008, up from $39.3 million
for fiscal 2007 Financial Highlights: Fiscal Year Ended March 31,
2008 Revenue of $459.9 million, up 30.5% from fiscal 2007. Revenue
less repair payments of $290.7 million, up 32.3% from fiscal 2007.
Net income of $9.5 million, down 64.3% from fiscal 2007. Net income
(excluding share-based compensation, related fringe benefit taxes,
and amortization and impairment of goodwill and intangible assets)
of $37.0 million, up 15.0% from fiscal 2007. Basic income per ADS
of $0.23, down from $0.69 for fiscal 2007. Basic income per ADS
(excluding share-based compensation, related fringe benefit taxes,
and amortization and impairment of goodwill and intangible assets)
of $0.88, up from $0.83 for fiscal 2007. Reconciliations of
non-GAAP financial measures to GAAP operating results are included
at the end of this release. Key Organizational Developments In the
past quarter, WNS announced key measures to expand its global
service delivery capabilities, including: A joint-venture in the
Philippines with Advance Contact Solutions Inc., a leader in BPO
services and customer care, with an initial capacity of 200 seats.
The acquisition of UK auto insurance claims processor Call 24/7,
which extends the market leadership position of WNS in this space.
WNS also continued to receive recognition for its excellence in
finance and accounting services. Recently, the company was
recognized for �Outstanding finance and accounting best practices�
by FAO Research Inc. on two client engagements. Fiscal 2009
Guidance WNS also provided guidance for the fiscal year ending
March 31, 2009: Revenue less repair payments is expected to be
between $373 million and $378 million. This guidance factors in no
revenue from the Build-Operate-Transfer contract with AVIVA from
June 2008, assuming AVIVA exercises its option in May 2008 to
require us to transfer to it the Pune facility related to this
contract. Net income (excluding share-based compensation and
related fringe benefit taxes, amortization and impairment of
goodwill and intangible assets) is expected to be between $44.0
million and $46.0 million. Conference Call WNS will host a
conference call on May 16, at 8 a.m. (EDT) to discuss the company's
quarterly results. To participate, callers can dial 1-800-295-3991
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 [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. With over 18,000 employees, WNS is passionate about
building a market leading company valued by our clients, employees,
business partners, investors and communities. 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 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 U.S. 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 consummate strategic acquisitions, 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
(Amounts in thousands, except per share data) � � Three months
ended March 31, � Year ended March 31, 2008 � 2007 � 2008 � 2007 �
� Revenue Third parties $115,133 $109,987 $456,401 $345,216 Related
parties 988 � 684 � 3,466 � 7,070 116,121 110,671 459,867 352,286
Cost of revenue 88,786 � 85,157 � 363,322 � 271,174 Gross profit
27,335 25,514 96,545 81,112 Operating expenses Selling, general and
administrative expenses 21,418 16,280 72,699 52,461 Amortization of
intangible assets 663 456 2,869 1,896 Impairment of goodwill,
intangible and other assets - � - � 15,464 � - Operating income
5,254 8,778 5,513 26,755 Other income (expense), net 2,221 1,251
9,184 2,500 Interest income (expense), net 20 � - � (3) � (100)
Income before income taxes 7,495 10,029 14,694 29,155 Provision for
income taxes 1,435 � 1,156 � 5,194 � 2,574 Net income $6,060 �
$8,873 � $9,500 � $26,581 � Basic income per share $0.14 $0.22
$0.23 $0.69 Diluted income per share $0.14 $0.21 $0.22 $0.65
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) to revenue (GAAP) � Amount in thousands � Three months
ended � Year ended March 31, 2008 � March 31, 2007 � March 31, 2008
� March 31, 2007 � � � � � � � Revenue less repair payments
(Non-GAAP) 75,153 � 64,034 � 290,717 219,700 Add: Payments to
repair centers 40,968 46,637 169,150 132,586 Revenue (GAAP) 116,121
110,671 459,867 352,286 Reconciliation of cost of revenue (non-GAAP
to GAAP) � Amount in thousands � Three months ended � Year ended
March 31, 2008 � March 31, 2007 � March 31, 2008 � March 31, 2007 �
� � � � � � Cost of revenue (Non-GAAP) 47,818 � 38,520 � 194,172
138,588 Add: Payments to repair centers 40,968 46,637 169,150
132,586 Cost of revenue (GAAP) 88,786 85,157 363,322 271,174
Reconciliation of selling, general and administrative expense
(non-GAAP to GAAP) � Amount in thousands � Three months ended �
Year ended March 31, 2008 � March 31, 2007 � March 31, 2008 � March
31, 2007 � � � � � � � Selling, general and administrative expenses
(excluding share-based compensation expense and FBT1) (Non-GAAP)
18,632 � 15,461 � 65,997 49,773 Add: Share-based compensation
expense 1,323 819 4,380 2,688 Add: FBT1 1,463 2,322 Selling,
general and administrative expenses (GAAP) 21,418 16,280 72,699
52,461 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 � Year ended March 31, 2008 � March
31, 2007 � March 31, 2008 � March 31, 2007 � � � � � � � Operating
income (excluding share-based compensation, amortization of
intangible assets, impairment of goodwill and intangible assets,
and FBT1) (Non-GAAP) 9,287 � 10,518 � 32,985 32,334 Less:
Share-based compensation expense 1,907 1,284 6,816 3,683 Less:
Amortization of intangible assets 663 456 2,869 1,896 Less:
Impairment of goodwill and other assets 9,106 Less: Impairment of
intangible assets 6,359 Less: FBT1 1,463 2,322 Operating income
(GAAP) 5,254 8,778 5,513 26,755 Reconciliation of net income
(non-GAAP to GAAP) � Amount in thousands � Three months ended �
Year ended March 31, 2008 � March 31, 2007 � March 31, 2008 � March
31, 2007 � � � � � � � Net income (excluding share-based
compensation, amortization of intangible assets, impairment of
goodwill and intangible assets, and FBT1) (Non-GAAP) 10,093 �
10,612 � 36,972 32,160 Less: Share-based compensation expense 1,907
1,284 6,816 3,683 Less: Amortization of intangible assets 663 456
2,869 1,896 Less: Impairment of goodwill and other assets 9,106
Less: Impairment of intangible assets 6,359 Less: FBT1 1,463 2,322
Net income (GAAP) 6,060 8,872 9,500 26,581 Reconciliation of basic
income per ADS (non-GAAP to GAAP) � Three months ended � Year ended
March 31, 2008 � March 31, 2007 � March 31, 2008 � March 31, 2007 �
� � � � � � Basic income per ADS (excluding share-based
compensation expense, amortization and impairment of goodwill and
intangible assets, and FBT1) (Non-GAAP) $0.24 � $0.26 � $0.88 �
$0.83 Less: Adjustments for share-based compensation expense,
amortization and impairment of goodwill and intangible assets, and
FBT1 $0.10 $0.04 $0.65 $0.14 Basic income per ADS (GAAP) $0.14
$0.22 $0.23 $0.69 Reconciliation of diluted income per ADS
(non-GAAP to GAAP) � Three months ended � Year ended March 31, 2008
� March 31, 2007 � March 31, 2008 � March 31, 2007 � � � � � � �
Diluted income per ADS (excluding share-based compensation expense,
amortization and impairment of goodwill and intangible assets, and
FBT1) (Non-GAAP) $0.24 � $0.25 � $0.86 � $0.78 Less: Adjustments
for share-based compensation expense, amortization and impairment
of goodwill and intangible assets, and FBT1 $0.10 $0.04 $0.64 $0.13
Diluted income/(loss) per ADS (GAAP) $0.14 $0.21 $0.22 $0.65 WNS
(HOLDINGS) LIMITED CONDENSED CONSOLIDATED BALANCE SHEETS (Amounts
in thousands, except share and per share data) � � As of March 31,
2008 As of March 31, 2007 � � � ASSETS Current assets Cash and cash
equivalents 102,698 112,340 Bank deposits and marketable securities
8,074 12,000 Accounts receivable, net of allowance of $1,784 and
$364, respectively 47,302 40,340 Accounts receivable � related
parties 586 252 Funds held for clients 6,473 6,589 Employee
receivables 1,179 1,289 Prepaid expenses 3,776 2,162 Prepaid income
taxes 2,776 3,225 Deferred tax assets 618 701 Other current assets
8,596 � 4,524 Total current assets 182,078 183,422 � Goodwill
87,470 37,356 Intangible assets, net 9,393 7,091 Property and
equipment, net 50,840 41,830 Deferred contract costs and other
advances � non current 1,278 � Deposits 7,391 3,081 Deferred tax
assets 8,055 � 3,101 TOTAL ASSETS $346,505 � $275,881 � LIABILITIES
AND SHAREHOLDERS� EQUITY Current liabilities Accounts payable
$15,562 $18,505 Accounts payable � related parties 6 246 Accrued
employee costs 26,848 18,492 Deferred revenue � current 7,790 9,827
Income taxes payable 1,879 88 Obligation under capital leases �
current � 13 Deferred tax liabilities 211 � Accrual � earn out
payment for acquisition 33,699 � Other current liabilities 25,806 �
16,239 Total current liabilities 111,801 63,410 � Deferred revenue
� non current 1,549 5,051 Deferred rent 2,627 1,098 Accrued pension
liability 1,544 771 Deferred tax liabilities � non current 1,834 23
Commitments and contingencies Total liabilities 119,355 70,353
Shareholders� equity: Ordinary shares, $0.16 (10 pence) par value,
Authorized: 50,000,000 shares; Issued and outstanding: 42,363,100
and 41,842,879 shares, respectively 6,622 6,519 Additional
paid-in-capital 167,459 154,952 Ordinary shares subscribed: 1,666
and 30,022 shares, respectively 10 137 Retained earnings 38,839
30,685 Accumulated other comprehensive income 14,220 � 13,235 Total
shareholders� equity 227,150 � 205,528 TOTAL LIABILITIES AND
SHAREHOLDERS� EQUITY $346,505 � $275,881
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