EBIT margin up 280 basis points Y-o-Y in CY 2012; EBIT up 56% Y-o-Y

Transcription

1 CY 2012 revenues up 34% in ` terms and 18% in $ terms EBIT margin up 280 basis points Y-o-Y in CY 2012; EBIT up 56% Y-o-Y PAT for the year 2012: ` Crores; up 23% Y-o-Y Diluted EPS increased to ` 10.9 per share; Dividend: ` 5.4 per share CY 2012 Highlights With 18% annual revenue growth rate in $ terms, Hexaware recorded above industry revenue growth once again for the year Gross margin improved by 80 basis points (bps) Y-o-Y to 39.2%from 38.4%. EBITDA margin at 20.9%; Margin expansion of 270 bps Y-o-Y from 18.2% EBIT margin increased 280 bps Y-o-Y from 16.5% in 2011 to 19.3% in 2012 Profit before Tax was up 31% Y-o-Y; at ` 404 Crores Y-o-Y 2012 Profit after Tax (PAT) grew to ` Crore up 23% Y-o-Y Diluted Earnings Per Share (EPS) increased from ` 8.9 Y-o-Y to ` 10.9 in 2012 Board recommends final dividend of ` 1.20 per share (60%); Total dividend for 2012 is ` 5.40 per share (270%) as against ` 4.00 per share (200%) for the year 2011 Dividend payout for the year 2012 at: ` Crore; Dividend payout ratio including dividend distribution tax for the year 2012 is 57% Capital Expenditure for the year 2012 was ` 74.4 Crore Global Headcount increased to 9,069 at the end of December 2012; 752 employees added during the year 2012 Fresher addition of 525 during the year 2012; Year 2012 saw attrition at low levels consistently Q Highlights Q revenue was at $ 92.4 mn (in ` terms at ` Crore); in-line with the revised quarterly revenue guidance of $ 92.0 mn Q Gross margin was at 36.1% Q EBITDA margin was at 16.9%; in-line with the revised outlook for the quarterly operating margin issued for Q Operating Profit (EBIT) Margin was at 15.1%; down 480 basis points from 19.9% in Q3 2012; in-line with the revised profit margin outlook provided Profit after Tax was at ` 66.2 Crore; Diluted EPS at` 2.20 per share DSO including unbilled accrued revenues as at December 31, 2012 remained at 77 days, same as Q Cash & Cash equivalents at the end of December 2012 increased significantly to ` 447 Crores; up ` 43.7 Crores from Q new clients added in Q4 2012; 47 in CY 2012 cutting across all focus areas Attrition for the quarter ended December 2012 was at 8.7%; down from 13.9% for the same period a year ago For immediate release 1

2 Mumbai February 11, 2013: Hexaware Technologies Limited, a leading global provider of IT, BPO and Consulting services has reported in-line performance for the fourth quarter of the calendar year ended December 31, In line with the Dividend policy announced in 2011, Hexaware Board has decided to continue with the liberal dividend policy and the Company intends to distribute approximately 50% of the net profits (Profit after Tax) as dividend. Given the financial strength as well as the evident growth prospects, dividend will continue to be declared every quarter remarked Atul Nishar, Chairman, Hexaware Technologies Limited. With the investments made to strengthen our competencies and expansion of our field force strength in accordance to our Strategic Plan, we remain confident of delivering double digit revenue growth for the year Further, with multiple cost levers at hand, we believe operating margin expansion will commence immediately in Q and continue going forward. For Q1 2013, on a constant currency basis, we expect operating margin to expand basis points Q-o-Q sequentially stated P. R. Chandrasekar, CEO & Vice Chairman, Hexaware Technologies Limited. Q Revenue Guidance Revenue for Q is likely to be in the region of $ 94.0 mn - $ 95.0 mn (exchange rates taken at 1 = 1.58 $, 1 = 1.34 $ and 1 $ = ` 53.52); a Q-o-Q sequential revenue growth of 1.7% - 2.8%. Final Dividend Recommendation The Board of Directors has recommended a final dividend of ` 1.20 per share (60%) on equity shares of Rs. 2/- each, subject to the approval of the shareholders at the Annual General Meeting (AGM). The twentieth Annual General Meeting (AGM) of the Company is scheduled for April 30, With this recommendation for the final dividend, the total dividend for the year 2012 amounts to ` 5.40 per share (270%) up from ` 4.00 per share (200%) for the year In line with the Dividend Policy announced earlier in 2011, the Board of Directors declared three interim dividends during the year. The interim dividends were ` 1.50 per share (75%) twice for Q and Q respectively and ` 1.20 per share (60%) for Q on equity shares of ` 2 each. The total dividend declaration will result in a cash outflow of ` Crore for dividend payment including tax, amounting to a dividend payout ratio of 57% for the year 2012 The Register of Members and Share Transfer Books will remain closed from April 1, 2013 to April 5, 2013 (both dates inclusive) for the purpose of AGM and for ascertaining the shareholders entitled for final dividend. Further to the approval by the shareholders at the AGM to be held on April 30, 2013, the final dividend shall be paid on May 4, Banking and Financial Services Vertical - Business Update The largest focus vertical at Hexaware grew by 28% Y-o-Y in CY 2012 in spite of the prevalent conditions. With the extensive specialization in certain niche areas of Capital For immediate release 2

3 Markets segment, especially Asset Management, Hexaware is in a position to add value to its several clients through its differentiated services and innovative solutions. The business growth was aided by Hexaware s proprietary work in developing Intellectual Property Assets around Enterprise Data Management (EDM). The service offering was further augmented with the launch of Analytics for Investment Management (AIM) tool kit. The current version, EDM 3.0, is a multifaceted offering that includes Technology & Business Architecture consulting, Multi product niche such as Eagle, GoldenSource, CADIS, Integrated IT and BPO services, Specialized Accelerators, Processes, Methodologies, and Approach for addressing common data issues in Capital Markets Industry. AIM is a prebuilt repository of dashboards, KPIs and reports supported by a dimensional data model for Investment reporting for a 360 degree view of the Portfolios and Assets under Management (AUM) they manage, in conjunction with the Trades, Performance and Risk related thereto. This highly domain intensive solution has been extremely well received by multiple existing clients and several new clients during the year Spurred by the innovation & solutions developed at the Centers of Excellence (CoE) around certain product platforms, this Vertical is well positioned to deliver yet another year of above company growth for the year 2013; continuing with the strong relative outperformance reported in the year Asia Pacific Geography - Market Commentary During the year 2012, Asia Pacific Geography registered growth of 30% Y-o-Y compared to Hexaware has expanded its foot print in this Emerging Geography to capitalize on the growth opportunities in large markets such as Australia, India and ASEAN region. The Company has made investments and increased its field presence by adding dedicated subject matter experts (SMEs) and Horizontal practitioners to drive growth further. The revenue contribution from APAC as a Geographical Region is likely to be around 8% in the year 2013 en-route to attaining the stated objective of generating 10% of the Company s revenues over the medium term. Sales Organization Update For the last three years now, the Company has continued to make investments steadily in both strengthening & expanding its field force presence globally. At the start of 2013, the Company has a healthy mix of Hunters, Account Managers and Practice Professionals globally. The Company has a well-defined action plan ready for implementation to sustain revenue growth rates consistently at an above industry level over the medium term. Significant Business Updates During the previous quarter, the Company added 11 new clients across all its key focus areas. Of these, 2 clients were added in the Banking and Financial Services (BFS) Domain and in Travel and Transportation Vertical each and 1 client was added in the Healthcare and Insurance space. From a horizontal service line perspective, 5 clients were won in Enterprise Solutions space, 3 in Quality Assurance & Testing Services (QATS) business segments and 1 in Business Intelligence & Business Analytics (BI / BA). For immediate release 3

4 Of the 11 clients added in Q4 2012, 3 customers are based in Americas, 2 in Europe and 6 in Asia Pacific (APAC) region. For the quarter just completed, 69.2% of revenues originated from Americas, 23.2% from Europe, and the remaining 7.6% from the Asia Pacific region. Repeat business remained healthy at 93.4%. The number of clients registering annual revenues in excess of $ 20 mn each remained steady at 3; clients in the $ 10 mn - $ 20 mn range increased to 5, 7 clients in the $ 5 mn - $ 10 mn range, 40 clients in the $ 1 mn - $ 5 mn category and 55 clients with $ 1 mn+ range all on a trailing twelve months basis. At the end of the quarter, the number of active clients improved to 218. Over the last couple of years, the average size of the Top 10 client segment has expanded from approximately $ 11 mn in CY 2010 to around $ 18 mn in CY Given the emphasis on the Account Management Practices at Hexaware, the Company remains confident that the growth in the Top 10 as a business segment will continue to be an integral component of ascertaining the growth path over the medium term. Emerging Technology - New Initiatives Update Hexaware has been consistently focusing on new initiatives and has been regularly investing in multiple Centers of Excellence (CoE) in order to tap into the huge market potential of these emerging technologies. Big Data During the year 2012, Hexaware has kick-started a specific CoE focused on Big Data as part of its Business Intelligence and Analytics practice. This CoE has enabled Hexaware to build core competencies in this area such as Hadoop ecosystem, MapReduce programming, advanced / predictive analytics, statistical modeling and text mining & analytics. The Company has also been broadening existing strategic partnerships to include Big Data related platforms and forming alliances with focused technology companies gaining access to certain solutions on Big Data platforms. Facility Updates In line with the corporate road-map, Hexaware has been expanding its presence in its own Green Campus spanning over 27 acres in Siruseri SEZ at Chennai. It currently accommodates 3,428 personnel at the end of During the last quarter, Caliber Point Business Solutions Limited, Hexaware s wholly owned subsidiary, has inaugurated a new facility in Coimbatore with a seating capacity of 248 Seats. Further, Caliber Point has 318 employees based out of the Group s 20 acres SEZ approved facility at Nagpur, Maharashtra. During the course of the year 2012, Hexaware has invested ` 74.4 Crores to expand its physical and technical (IT) infrastructure to provide for business expansion and drive growth over the medium term. For immediate release 4

5 Foreign Exchange Cover The Company has forward contracts worth $ 218 mn at an average rate of ` 52.4 and hedges worth 14 mn at an average exchange rate of ` 70.3 maturing over the course of the next eight quarters (from January 2013 till December 2014). Pricing The average bill rate per hour for Q improved sequentially to $ for onsite services and to $ for offshore locations. Human Capital Over the last several quarters, Hexaware has been steadily ramping up its delivery capability to cater to the demand uptake visible in the market place. The global headcount at the end of Q is 9,069; an increase of 752 compared with December 2011 and down 74 from a quarter (Q3 2012) ago. Technical personnel comprised 92.3% of the total work force. Attrition for Q reduced to 8.7% as compared to 13.9% for Q Industry Recognition Hexaware won the EMC Transformers Award for its Cloud and Disaster Recovery (DR) implementation. This Award recognizes innovation and the change brought in Indian enterprises though smart and judicious use of IT. This was conferred by the IDG media group. Hexaware has been mentioned in the Gartner report titled EITL Analyst Insight: Best Practices in Application Testing dated 15th October 2012 by Christina Anderson. Hexaware has been mentioned in the Gartner report titled Competitive Landscape: IT Services Providers to the Global Insurance Industry, 2012 dated 19th October 2012 by Derry N. Finkeldey. Hexaware has been mentioned in The Gartner CRM Vendor Guide, 2013 dated 4th December 2012 by Jim Davies and Ed Thompson, et al. Hexaware has been mentioned in the Gartner report titled Magic Quadrant for Oracle Application Management Service Providers, Worldwide dated 20th December 2012 by Christopher Ambrose, Helen Huntley and Gilbert van der Heiden. Gartner does not endorse any vendor, product or service depicted in its research publications, and does not advise technology users to select only those vendors with the highest ratings. Gartner research publications consist of the opinions of Gartner's research organization and should not be construed as statements of fact. Gartner disclaims all warranties, expressed or implied, with respect to this research, including any warranties of merchantability or fitness for a particular purpose. For immediate release 5

6 About Hexaware Hexaware is a leading global provider of IT & BPO and consulting services. The Company focuses on key domains such as Banking, Financial Services, Insurance, Travel, Transportation, Logistics, Life Sciences and Healthcare. Our business philosophy, Your Success is Our Focus, is demonstrated through the success we ensure for our clients. Hexaware focuses on delivering business results and leveraging technology solutions by specializing in Business Intelligence & Analytics, Enterprise Solutions, Quality Assurance and Testing Services, Remote Infrastructure Management Services and Legacy Modernization. Founded in 1990, Hexaware has a well-established global delivery model armed with proven proprietary tools and methodologies, skilled human capital and SEI CMMI-Level 5 certification. For additional information logon to Safe Harbor Statement Certain statements in this press release concerning our future growth prospects are forwardlooking statements, which involve a number of risks, and uncertainties that could cause actual results to differ materially from those in such forward-looking statements. The risks and uncertainties relating to these statements include, but are not limited to, risks and uncertainties regarding fluctuations in earnings, our ability to manage growth, intense competition in IT services including those factors which may affect our cost advantage, wage increases in India, our ability to attract and retain highly skilled professionals, time and cost overruns on fixed-price, fixed-time frame contracts, client concentration, restrictions on immigration, our ability to manage our international operations, reduced demand for technology in our key focus areas, disruptions in telecommunication networks, our ability to successfully complete and integrate potential acquisitions, liability for damages on our service contracts, the success of the companies in which Hexaware has made strategic investments, withdrawal of governmental fiscal incentives, political instability, legal restrictions on raising capital or acquiring companies outside India, and unauthorized use of our intellectual property and general economic conditions affecting our industry. For more information contact: Sreedatri Chatterjee Hexaware Technologies Limited Tel: +91 (22) / 83 sreedatric@hexaware.com Issued on behalf of Hexaware Technologies by: Madiha Vahid Adfactors PR Private Limited Tel: madiha.vahid@adfactorspr.com For immediate release 6

7 Consolidated Income Statement (as per Indian GAAP) ` Mn Quarterly Data Head Q4 12 Q3 12 QoQ% Q4 11 YoY% Revenues 5,023 5, % 4, % Direct Costs 3,210 3, % 2, % Gross Profit 1,813 2, % 1, % Selling, General And Administration % % EBITDA 847 1, % % Depreciation and Amortization % % Operating Profit = EBIT 758 1, % % Other Income (net) % % Forex Gains / (Losses) (45) (39) 17.1% (53) -14.0% Profit Before Tax 806 1, % % Provision for Tax % % Profit After Tax % % Key Ratios Q4 12 Q3 12 QoQ Q4 11 YoY Gross Margin 36.1% 39.6% -3.5% 40.7% -4.6% SG&A to Revenue 19.2% 17.9% 1.3% 17.7% 1.5% EBITDA 16.9% 21.6% -4.7% 23.0% -6.1% Operating / EBIT Margin 15.1% 19.9% -4.8% 21.6% -6.5% Profit before tax 16.0% 21.0% -5.0% 23.0% -7.0% Profit after Tax 13.2% 16.6% -3.4% 20.4% -7.2% EPS-INR Basic (0.61) 3.01 (0.78) Diluted (0.60) 2.95 (0.75) Minor differences in the QoQ and in the YoY columns on account of rounding-off For immediate release 7

8 Consolidated Income Statement (as per Indian GAAP) ` Mn Head FY 12 FY 11 YoY% Gross Revenues 19,482 14, % Direct Costs 11,846 8, % Gross Profit 7,636 5, % Selling / General And Administration 3,561 2, % EBITDA 4,075 2, % Depreciation and Amortization % Operating Profit = EBIT 3,750 2, % Other Income (net) % Forex Gains / (Losses) (113) % Profit Before Tax 4,040 3, % Provision for Tax % Profit After Tax 3,276 2, % Key Ratios FY 12 FY 11 YoY Gross Margin 39.2% 38.4% 0.8% SG&A to Revenue 18.3% 20.1% -1.8% EBITDA 20.9% 18.2% 2.7% Operating / EBIT Margin 19.3% 16.5% 2.8% Profit before tax 20.7% 21.2% -0.5% Profit after Tax 16.8% 18.4% -1.6% EPS-INR Basic Diluted Minor differences in the YoY column on account of rounding-off For immediate release 8

9 Consolidated Balance Sheet (as per Indian GAAP) As at Dec Head Liabilities As at Sept ` Mn As at Dec Equity Share Capital Reserves 12,206 11,820 10,611 Forex MTM (761) (522) (1,036) Total 12,039 11,890 10,162 Assets Gross Fixed Assets 7,192 6,975 6,482 Less: Depreciation 1,993 1,905 1,697 Net Fixed Assets 5,199 5,070 4,785 Deferred Tax Asset (Net) Current Assets Cash and cash equivalent 4,472 4,035 4,606 Debtors 3,649 2,960 2,993 Current Asset - Forex (MTM) Others 2,260 2,880 1,946 Total Current assets 10,382 10,084 9,545 Current Liability - Forex (MTM) Dividend Pending Payout Other Current Liabilities 2,980 2,920 3,450 Total 12,039 11,890 10,162 For immediate release 9

10 Financial and Operational Metrics Performance Review Revenue Growth Vertical Split Service Lines Split `, Mn Q4 FY 12 Q3 FY 12 Q2 FY 12 Q1 FY 12 Q4 FY 11 FY 12 FY 11 Revenue from Operations 5,023 5,075 5,001 4,383 4,319 19,482 14,505 %, q-o-q (1.0) Other Income % Q4 FY 12 Q3 FY 12 Q2 FY 12 Q1 FY 12 Q4 FY 11 FY 12 FY 11 Banking and Capital Markets Travel & Transportation Healthcare & Insurance Emerging Segments Total % Q4 FY 12 Q3 FY 12 Q2 FY 12 Q1 FY 12 Q4 FY 11 FY 12 FY 11 Application Development & Maintenance (ADM) Enterprise Solutions Testing / QATS (Quality Assurance and Testing Services) Business Intelligence & Analytics Business Process Management (BPM) Remote Infrastructure Management Services (Remote IMS) Total Geography Onsite: Offshore Mix % Q4 FY 12 Q3 FY 12 Q2 FY 12 Q1 FY 12 Q4 FY 11 FY 12 FY 11 Americas Europe Asia Pacific Total % Q4 FY 12 Q3 FY 12 Q2 FY 12 Q1 FY 12 Q4 FY 11 FY 12 FY 11 Onsite Offshore Total Client data Repeat Business % Q4 FY 12 Q3 FY 12 Q2 FY 12 Q1 FY 12 Q4 FY Clients billed No Q4 FY 12 Q3 FY 12 Q2 FY 12 Q1 FY 12 Q4 FY Clients added No Q4 FY 12 Q3 FY 12 Q2 FY 12 Q1 FY 12 Q4 FY 11 FY 12 FY For immediate release 10

11 DSO Days Q4 FY 12 Q3 FY 12 Q2 FY 12 Q1 FY 12 Q4 FY 11 Billed Including Unbilled Accruals Billing Rates $ / Hour Q4 FY 12 Q3 FY 12 Q2 FY 12 Q1 FY 12 Q4 FY 11 FY 12 FY 11 Onsite Offshore Revenue Concentration % Q4 FY 12 Q3 FY 12 Q2 FY 12 Q1 FY 12 Q4 FY 11 FY 12 FY 11 Top Top Top Client Size Nos (Last Twelve Months) Q4 FY 12 Q3 FY 12 Q2 FY 12 Q1 FY 12 Q4 FY 11 More than $ 1 Mn Between $ 1 to 5 Mn Between $ 5 to 10 Mn Between $ 10 to 20 Mn Over $ 20 Mn People Numbers IT Services % Q4 FY 12 Q3 FY 12 Q2 FY 12 Q1 FY 12 Q4 FY 11 Billable Personnel Onsite 19.3% 18.8% 18.6% 18.5% 18.8% Offshore 73.0% 73.4% 73.5% 73.4% 72.9% Total 92.3% 92.2% 92.1% 91.9% 91.7% Marketing (Incl. Sales 1.9% 2.0% 1.9% 1.8% 1.8% Support) Others (Incl. Tech. 5.8% 5.8% 6.0% 6.3% 6.5% Support) Grand Total 100.0% 100.0% 100.0% 100.0% 100.0% Utilization % Q4 FY 12 Q3 FY 12 Q2 FY 12 Q1 FY 12 Q4 FY 11 FY 12 FY 11 Including Trainees Attrition Rate % Q4 FY 12 Q3 FY 12 Q2 FY 12 Q1 FY 12 Q4 FY 11 Last Twelve Months Rupee Dollar Rate Q4 FY 12 Q3 FY 12 Q2 FY 12 Q1 FY 12 Q4 FY 11 FY 12 FY 11 Period Closing rate Period average rate For immediate release 11

12 ` Mn Bank / Institution Name Account Account Total HDFC Ltd IDBI Bank Ltd Bank Of America ABN Amro Bank Union Bank of India Commerz Bank HDFC Bank Ltd The Royal Bank of Scotland SCB DBS bank HSBC National Australia Bank Ltd Canara Bank ICICI bank Ltd Rabo CITI Bank Banco Santander Metropolitian Bank BANAMEX Scotia Bank UBS Bank Andhra Bank Kotak Bank Societe Generale Mizuho Bank Bank of India Handelsbanken State Bank of India UCO Bank Bawag P.S.K. Bank Remittance in Transit CASH Grand Total , , Details of Investments in Mutual Funds Templeton Birla Sundaram ICICI Kotak HDFC ` Mn DSP Blackrock Grand Total 2, For immediate release 12

13 Consolidated Income Statement (as per Indian GAAP) USD K Quarterly Data Head Q4 12 Q3 12 QoQ% Q4 11 YoY% Revenues 92,398 92, % 84, % Direct Costs 59,048 56, % 49, % Gross Profit 33,349 36, % 34, % Selling / General And Administration 17,765 16, % 14, % EBITDA 15,584 20, % 19, % Depreciation and Amortization 1,644 1, % 1, % Operating Profit = EBIT 13,940 18, % 18, % Other Income (net) 1,707 1, % 2, % Forex Gains / (Losses) (833) (694) 20.1% (1,000) -16.7% Profit Before Tax 14,813 19, % 19, % Provision for Tax 2,646 4, % 2, % Profit After Tax 12,167 15, % 17, % Key Ratios Q4 12 Q3 12 QoQ Q4 11 YoY Gross Margin 36.1% 39.6% -3.5% 40.6% -4.5% SG&A to Revenue 19.2% 17.9% 1.3% 17.7% 1.5% EBITDA 16.9% 21.7% -4.8% 22.9% -6.0% Operating / EBIT Margin 15.1% 19.9% -4.8% 21.4% -6.3% Profit before tax 16.0% 21.0% -5.0% 22.9% -6.9% Profit after Tax 13.2% 16.6% -3.4% 20.3% -7.2% Minor differences in the QoQ and in the YoY columns on account of rounding-off For immediate release 13

14 Consolidated Income Statement (as per Indian GAAP) USD K Head FY 12 FY 11 YoY% Gross Revenues 364, , % Direct Costs 221, , % Gross Profit 142, , % Selling / General And Administration 66,700 62, % EBITDA 76,277 55, % Depreciation and Amortization 6,064 5, % Operating Profit = EBIT 70,213 50, % Other Income (net) 7,570 9, % Forex Gains / (Losses) (2,017) 5, % Profit Before Tax 75,765 65, % Provision for Tax 14,255 8, % Profit After Tax 61,510 56, % Key Ratios FY 12 FY 11 YoY Gross Margin 39.2% 38.2% 1.0% SG&A to Revenue 18.3% 20.2% -1.9% EBITDA 20.9% 18.0% 2.9% Operating / EBIT Margin 19.3% 16.3% 3.0% Profit before tax 20.8% 21.1% -0.3% Profit after Tax 16.9% 18.3% -1.4% Minor differences in the YoY column on account of rounding-off For immediate release 14