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| | WNS Announces 3.6% YOY, Revenue Growth for the First Quarter of Fiscal 2007; and Announces 37.1% YOY, Revenue Less Repair Payments Growth for the First Quarter of Fiscal 2007 | MUMBAI, INDIA & NEW YORK, August 20 /CNW/ - WNS (Holdings) Limited (NYSE: WNS - News), 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:
<<
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%
------------------------------------------------- ------ ------ ------
- 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:
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%
------------------------------------------------- ------ ------ ------
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:
- 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.
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.
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
---------------------------------- ----------- ----------- -----------
>>
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)
<<
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
------------------------------------------- -------- -------- --------
>>
Reconciliation of cost of revenue (non-GAAP to GAAP)
<<
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
------------------------------------------- -------- -------- --------
>>
Reconciliation of selling, general and administrative expense (non-GAAP
to GAAP)
<<
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
------------------------------------------- -------- -------- --------
>>
Reconciliation of operating income (non-GAAP to GAAP)
<<
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
------------------------------------------- -------- -------- --------
>>
Reconciliation of net income (non-GAAP to GAAP)
<<
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
------------------------------------------- -------- -------- --------
>>
<<
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
----------- ---------
CONTACT: Investors:
WNS (Holdings) Limited
Jay Venkateswaran, +1 212 599 6960
ir@wnsgs.com
or
Media:
The Torrenzano Group
Mike Geczi, +1 (212) 681-1700, ext. 156
mgeczi@torrenzano.com
SOURCE: WNS (Holdings) Limited
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