WNS (Holdings) Limited (NYSE: WNS), a leading provider of global
business process outsourcing (BPO) services, today announced
results for the fiscal first quarter 2009 ended June 30, 2008 and
reaffirmed its guidance for fiscal 2009. Revenue for fiscal first
quarter 2009 of $122.9 million increased 9.3% over the
corresponding quarter in the prior fiscal year, while revenue less
repair payments of $82.2 million increased 17.8% over the
corresponding quarter in the prior fiscal year. This growth in
revenue less repair payments for the fiscal quarter was primarily
due to the strong operational performance of our global BPO
business, the revenue contribution from Call 24x7 which WNS
acquired in April 2008, and additional growth from the UK
automobile insurance claims business. �WNS has started fiscal 2009
with solid revenue growth and an increased focus on growing
profitability,� said Neeraj Bhargava, Group Chief Executive
Officer. �Our Auto Claims business, including our recent Call 24x7
acquisition, is delivering strong growth. We now also have revenue
momentum coming from new ramp-ups in our global BPO business which
has resulted from our concentrated sales efforts during the past
several quarters. The integration of our recent Aviva acquisition
is going well and we are seeing the growth opportunities we
expected. In this economy, our clients remain as focused as ever on
cutting costs while maintaining high levels of service, and we
believe that the growth they have committed to us, and the strong
sales momentum across all our businesses should help us withstand
any pressures that we might see from macro economic trends.� Net
income for fiscal first quarter 2009 was $3.3 million, a decrease
of 60.4% from the corresponding quarter in the prior fiscal year.
This decrease was primarily due to the impact on amortization from
acquisitions made during the quarter, foreign exchange losses from
hedging contracts and lower interest income. Adjusted net income,
or net income excluding share-based compensation, amortization of
intangible assets, and related fringe benefit taxes, was $8.2
million, a decrease of 23.5% from the corresponding quarter in the
prior year. This decrease was primarily due to the impact of
foreign exchange losses from hedging contracts and lower interest
income. The comparable fiscal first quarter of 2008 was the last
quarter with revenue contributions from First Magnus, a mature and
profitable mortgage client relationship and Aviva Sri Lanka. WNS
recorded a basic income per ADS of $0.08 for fiscal first quarter
2009. Adjusted income per ADS, or basic income per ADS excluding
share-based compensation, amortization of intangible assets, and
related fringe benefit taxes, was $0.19 for the quarter. �We
believe we are now well-positioned to achieve our adjusted net
income and net revenue goals for the remainder of the year, which
we revised upwards upon the announcement of the acquisition of
Aviva Global Services in July 2008.� said Alok Misra, Group Chief
Financial Officer. �Our adjusted operating margins this quarter
were approximately 12%. We expect margin improvement and a greater
impact to our earnings as the acquisitions that we completed during
this quarter become fully integrated. As our current hedges start
to unwind at the beginning of the fourth quarter of fiscal 2009, we
expect increased margins to flow to our bottom line.� Financial
Highlights: Fiscal First Quarter Ended June 30, 2008 Quarterly
revenue of $122.9 million, up 9.3% from the corresponding quarter
last year. Quarterly revenue less repair payments of $82.2 million,
up 17.8% from the corresponding quarter last year. Quarterly net
income of $3.3 million, down 60.4% from the corresponding quarter
last year. Quarterly adjusted net income (or, net income excluding
share-based compensation, amortization of intangible assets, and
related fringe benefit taxes) of $8.2 million, down 23.5% from the
corresponding quarter last year. Quarterly basic income per ADS of
$0.08, down from basic income per share of $0.20 for the
corresponding quarter last year. Quarterly adjusted basic income
per ADS (or, basic income per share excluding share-based
compensation, amortization of intangible assets, and related fringe
benefit taxes) of $0.19, down from $0.26 for the corresponding
quarter last year. 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: The announcement of the formation of a joint venture
with Advanced Contact Solutions, Inc., a pioneer and leader in BPO
services and customer care in the Philippines. The acquisition of
Chang Ltd., the holding company of Call 24/7 Ltd., an auto
insurance-claims processing services provider in the United
Kingdom. The acquisition of BizAps, a provider of SAP solutions to
optimize ERP functionality for finance and accounting processes.
The appointment of Steve Reynolds as Managing Director, North
America, where he will focus on driving sales and revenue growth in
that market. Fiscal 2009 Guidance WNS also reaffirmed the following
guidance provided for the fiscal year ending March 31, 2009:
Revenue less repair payments is expected to be between $425 million
and $435 million. Net income (excluding share-based compensation,
amortization and impairment of goodwill and intangible assets, and
related fringe benefit taxes) is expected to be between $46 million
and $49 million. Conference Call WNS will host a conference call on
August 14, 2008 at 8 am (EDT) to discuss the company's quarterly
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 online at www.wnsgs.com for a
period of three months beginning two hours after the end of the
call. 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.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, 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 in the segmental information
provides useful information for investors regarding the segment�s
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 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 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 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 June 30, 2008 �
June 30, 2007 � Revenue Third parties 122,036 111,808 Related
parties 908 � 715 122,944 112,523 Cost of Revenue (a) 98,487 �
90,206 Gross Profit 24,457 22,317 Operating expenses: Selling,
general and administrative expenses (a) 18,195 14,722 Amortization
of intangible assets 1,469 � 829 Operating income 4,793 6,766 Other
(expense) income, net (1,514) 2,686 Interest expense (147) Income
before income taxes 3,132 9,452 Benefit (provision) for income
taxes 208 � (1,013) Net income $3,340 � $8,439 Basic income per
share $0.08 $0.20 Diluted income per share $0.08 $0.20 Basic
weighted average ordinary shares outstanding 42,406,786 41,892,868
Diluted weighted average ordinary shares outstanding 43,502,669
43,085,843 � Note: (a) Includes the following share-based
compensation amounts: Cost of Revenue 798 516 Selling, general and
administrative expenses 2,266 989 Reconciliation of revenue less
repair payments (non-GAAP) to revenue (GAAP) � Three months ended
June 30, 2008 � June 30, 2007 � � � Revenue less repair payments
(Non-GAAP) 82,220 � 69,773 Add: Payments to repair centers 40,724
42,750 Revenue (GAAP) 122,944 112,522 � � Reconciliation of cost of
revenue (non-GAAP to GAAP) Three months ended June 30, 2008 � June
30, 2007 � � � Cost of Revenue (excluding payments to repair
centers and share-based compensation) (Non-GAAP) 56,965 46,940 Add:
Payments to repair centers 40,724 42,750 Add: Share-based
compensation expense 798 516 Cost of revenue (GAAP) 98,487 90,206 �
� Reconciliation of selling, general and administrative expense
(non-GAAP to GAAP) Three months ended June 30, 2008 � June 30, 2007
� � � Selling, general and administrative expenses (excluding
share-based compensation expense and FBT1 (Non-GAAP) 15,559 13,733
Add: Share-based compensation expense 2,266 989 Add: FBT1 370 �
Selling, general and administrative expenses (GAAP) 18,195 14,722 �
� Reconciliation of operating income (non-GAAP to GAAP) Three
months ended June 30, 2008 � June 30, 2007 � � � Operating income
(excluding share-based compensation, amortization of intangible
assets and FBT1) (Non-GAAP) 9,696 9,099 Less: Share-based
compensation expense 3,064 1,505 Less: Amortization of intangible
assets 1,469 829 Less: FBT1 370 � Operating income (GAAP) 4,793
6,766 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 net income (non-GAAP to GAAP) � Three months
ended June 30, 2008 � June 30, 2007 � � � Net income (excluding
share-based compensation, amortization of intangible assets and
FBT1) (Non-GAAP) 8,243 � 10,772 Less: Share-based compensation
expense 3,064 1,505 Less: Amortization of intangible assets 1,469
829 Less: FBT1 370 � Net income (GAAP) 3,340 8,439 � Three months
ended June 30, 2008 � June 30, 2007 � � � Basic income per ADS
(excluding share based compensation expense, amortization of
intangible assets and FBT1) (Non-GAAP) 0.19 � 0.26 Less:
Adjustments for share-based compensation expense, amortization of
intangible assets and FBT1 0.11 0.06 Basic income per ADS (GAAP)
0.08 0.20 � Three months ended June 30, 2008 � June 30, 2007 � � �
Diluted income per ADS (excluding share-based compensation expense,
amortization of intangible assets and FBT1) (Non-GAAP) 0.19 � 0.25
Less: Adjustments for share-based compensation expense,
amortization of intangible assets and FBT1 0.11 0.05 Diluted income
per ADS (GAAP) 0.08 0.20 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. WNS
(HOLDINGS) LIMITED CONDENSED CONSOLIDATED BALANCE SHEETS (Amounts
in thousands, except share and per share data) � � June 30, 2008
March 31,2008 ASSETS (Unaudited) Current assets: Cash and cash
equivalents $ 73,338 $ 102,698 Bank deposits and marketable
securities 3,113 8,074 Accounts receivable, net of allowance of
$2,019 and $1,784, respectively 70,841 47,302 Accounts receivable �
related parties 136 586 Funds held for clients 6,680 6,473 Employee
receivables 1,073 1,179 Prepaid expenses 6,614 3,776 Prepaid income
taxes 3,269 2,776 Deferred tax assets- current 743 618 Other
current assets � 10,362 � � 8,596 Total current assets 176,169
182,078 Goodwill 95,142 87,470 Intangible assets, net 25,496 9,393
Property, plant and equipment, net 46,126 50,840 Deferred contract
costs � non current 1,052 1,278 Deposits 6,794 7,391 Deferred tax
assets � non current � 10,460 � � 8,055 TOTAL ASSETS $ 361,239 � $
346,505 � LIABILITIES AND SHAREHOLDERS� EQUITY Current liabilities:
Account payable $ 31,201 $ 15,562 Accounts payable � related
parties � 6 Accrued employee costs 19,057 26,848 Deferred revenue �
current 5,423 7,790 Income taxes payable 2,345 1,879 Short term
line of credit 8,174 � Deferred tax liabilities � current 1,357 211
Accrual for earn out payment 33,360 33,699 Other current
liabilities � 30,450 � � 25,806 Total current liabilities 131,367
111,801 Deferred revenue � non current 2,673 1,549 Deferred rent
2,667 2,627 Accrued pension liability 1,637 1,544 Deferred tax
liabilities � non current 5,130 1,834 Liability on outstanding
derivative contracts � non current � 3,674 � � � TOTAL LIABILITIES
147,148 119,355 Shareholders� equity: Ordinary shares, $0.16 (10
pence) par value, authorized: 50,000,000 shares;Issued and
outstanding: 42,460,059 and 42,363,100 shares, respectively 6,641
6,622 Additional paid-in capital 171,609 167,459 Ordinary shares
subscribed: 10,776 and 1,666 shares, respectively 45 10 Retained
earnings 42,179 38,839 Accumulated other comprehensive income
(loss) � (6,383 ) � 14,220 Total shareholders� equity � 214,091 � �
227,150 TOTAL LIABILITIES AND SHAREHOLDERS� EQUITY $ 361,239 � $
346,505
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