WNS (HOLDINGS) LTD [WNS] Filings

Large accelerated filer

Accelerated filer

Non-accelerated filer

Smaller reporting company

Emerging growth company

10-Q 1 d91354d10q.htm FORM 10-Q Form 10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON

, D.C. 20549

Form

10-Q

(Mark One)

☒	Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the Quarterly Period ended June 30, 2024

☐	Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the Transition Period from to

Commission file number:

001-32945

WNS (HOLDINGS) LIMITED

(Exact name of registrant as specified in its charter)


Jersey, Channel Islands	001-32945	Not Applicable
(State or other jurisdiction of incorporation)	(Commission File Number)	(IRS Employer Identification No.)


Gate 4, Godrej & Boyce Complex
Pirojshanagar, Vikhroli (W) Mumbai, India Malta House, 36-38 Piccadilly, London 515 Madison Avenue , 8th Floor, New York, NY		400 079 W1J 0DP 10022
(Addresses of principal executive offices)		(Zip codes)

91-22-6826-2100

Registrant’s telephone number, including area code)

Not Applicable

(Former name or former address, if changed since last report)

Securities registered pursuant to Section 12(b) of the Act:


Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Ordinary shares, par value 10 Jersey pence per share	WNS	The New York Stock Exchange

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation

S-T

(§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a

non-accelerated

filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule

12b-2

of the Exchange Act.

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule

12b-2

of the Exchange Act). Yes ☐ No ☒

June 30, 2024, there were 44,170,987 ordinary shares (excluding 1,643,731 treasury shares), par value 10 Jersey pence per share, of the registrant issued and outstanding.

TABLE OF CONTENTS


	Item No.			Page No.
PART I			Financial Information
		1.	Unaudited Consolidated Financial Statements
			Unaudited Consolidated Balance Sheets as at June 30, 2024 and March 31, 2024		F-3
			Unaudited Consolidated Statements Of Income for the Three Months Ended June 30, 2024 and 2023		F-4
			Unaudited Consolidated Statements Of Comprehensive Income/(Loss) for Three Months Ended June 30, 2024 and 2023		F-5
			Unaudited Consolidated Statements Of Changes In Equity for the Three Months Ended June 30, 2024 and 2023		F-6
			Unaudited Consolidated Statements Of Cash Flows for the Three Months Ended June 30, 2024 and 2023		F-8
			Notes To Unaudited Interim Consolidated Financial Statements		F-9
		2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations		1
		3.	Quantitative and Qualitative Disclosures About Market Risk		34
		4.	Controls and Procedures		35
PART II			Other Information		1
		1.	Legal Proceedings		1
		1A.	Risk Factors		1
		2.	Unregistered Sales of Equity Securities and Use of Proceeds		1
		5.	Other Information		3
		6.	Exhibits		4
SIGNATURES					5

WNS (Holdings) Limited is incorporating by reference the information set forth in this Form

10-Q

into its registration statements on Form

S-8

filed on July 31, 2006 (File

No. 333-136168),

Form

S-8

filed on February 17, 2009 (File

No. 333-157356),

Form

S-8

filed on September 15, 2011 (File

No. 333-176849),

Form

S-8

filed on September 27, 2013 (File

No. 333-191416),

Form

S-8

filed on October 11, 2016 (File

No. 333-214042),

Form

S-8

filed on October 31, 2018 (File

No. 333-228070)

and Form

S-8

filed on October 21, 2020 (File

No. 333-249577).

CONVENTIONS USED IN THIS REPORT

In this report, references to “US” are to the United States of America, its territories and its possessions. References to “UK” are to the United Kingdom. References to “EU” are to the European Union. References to “India” are to the Republic of India. References to “China” are to the People’s Republic of China. References to “South Africa” are to the Republic of South Africa. References to “$” or “dollars” or “US dollars” are to the legal currency of the US, references to “

₹

” or “Indian rupees” are to the legal currency of India, references to “pound sterling” or “£” are to the legal currency of the UK, references to “pence” are to the legal currency of Jersey, Channel Islands, references to “Euro” are to the legal currency of the European Monetary Union, references to “South African rand” or “R” or “ZAR” are to the legal currency of South Africa, references to “A$” or “AUD” or “Australian dollars” are to the legal currency of Australia, references to “CHF” or “Swiss Franc” are to the legal currency of Switzerland, references to “RMB” are to the legal currency of China, references to “LKR” or “Sri Lankan rupees” are to the legal currency of Sri Lanka and references to “PHP” or “Philippine peso” are to the legal currency of the Philippines. Our financial statements are presented in US dollars and prepared in accordance with Generally Accepted Accounting Principles (“US GAAP”), as issued by the Financial Accounting Standards Board (“FASB”), as in effect as at June 30, 2024. To the extent the FASB issues any amendments or any new standards subsequent to June 30, 2024, there may be differences between US GAAP applied to prepare the financial statements included in this report and those that will be applied in our annual financial statements for the year ending March 31, 2025. Unless otherwise indicated, the financial information in this interim report on Form

10-Q

has been prepared in accordance with US GAAP, as issued by the FASB. Unless otherwise indicated, references to “GAAP” in this report are to US GAAP, as issued by the FASB. References to “IFRS” in this report are to International Financial Reporting Standards and its interpretations, as issued by the International Accounting Standards Board (“IASB”).

References to a particular “fiscal year” are to our fiscal year ended March 31 of that calendar year, which is also referred to as “fiscal”. Any discrepancies in any table between totals and sums of the amounts listed are due to rounding. Any amount stated to be $0.0 million represents an amount less than $5,000.

In this report, unless otherwise specified or the context requires, the term “WNS” refers to WNS (Holdings) Limited, a public company incorporated under the laws of Jersey, Channel Islands, and the terms “our company,” “the Company,” “we,” “our” and “us” refer to WNS (Holdings) Limited and its subsidiaries.

In this report, references to the “Commission” or the “SEC” are to the United States Securities and Exchange Commission.

We also refer in various places within this report to “revenue less repair payments,” which is a

non-GAAP

financial measure that is calculated as (a) revenue less (b) payments to repair centers for “repair services” where we act as the principal in our dealings with the third party repair centers and our clients in our BFSI strategic business unit (“SBU”). This

non-GAAP

financial information is not meant to be considered in isolation or as a substitute for our financial results prepared in accordance with GAAP.

EXPLANATORY NOTE

WNS, a public company incorporated in Jersey, Channel Islands, qualifies as a foreign private issuer in the United States for purposes of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). Since July 1, 2024, the Company has chosen to voluntarily file annual reports on Form

10-K,

quarterly reports on Form

10-Q

and current reports on Form

8-K

with the United States Securities and Exchange Commission (the “Commission”) instead of filing on the reporting forms available to foreign private issuers.

As announced previously, beginning the quarter covered by this report, the Company transitioned from preparing its financial statements in accordance with IFRS to preparing its financial statements in accordance with US GAAP. The financial statements and related information included in this report, including the comparative financial information for the previous fiscal periods, are presented in accordance with US GAAP, However, this report contains references to our annual report on Form

20-F

for our fiscal year ended March 31, 2024, which contains financial statements and related information presented in accordance with IFRS. Therefore, the financial statements and related information in this report may not be directly comparable to those included in our annual report on Form

20-F

for our fiscal year ended March 31, 2024.

On July 9, 2024, the Company furnished a report on Form

8-K

with the SEC containing a supplementary financial information package comprising its unaudited quarterly financial results for each of the quarters in fiscal 2024 and for full year fiscal 2024 and 2023 prepared in accordance with US GAAP. The supplementary financial information package sets forth the key impact on the Company’s quarterly financial statements for each of the quarters in fiscal 2024 and for full year fiscal 2024 and 2023 as a result of the Company’s transition to US GAAP.

F-1

Table of Contents

SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS

This report contains “forward-looking statements” that are based on our current expectations, assumptions, estimates and projections about our company and our industry. The forward-looking statements are subject to various risks and uncertainties. Generally, these forward-looking statements can be identified by the use of forward-looking terminology such as “anticipate,” “believe,” “estimate,” “expect,” “intend,” “will,” “project,” “seek,” “should” and similar expressions. Those statements include, among other things, the discussions of our business strategy and expectations concerning our market position, future operations, margins, profitability, liquidity and capital resources, tax assessment orders and future capital expenditures. We caution you that reliance on any forward-looking statement inherently involves risks and uncertainties, and that although we believe that the assumptions on which our forward-looking statements are based are reasonable, any of those assumptions could prove to be inaccurate, and, as a result, the forward-looking statements based on those assumptions could be materially incorrect. These risks and uncertainties include but are not limited to:

•

worldwide economic and business conditions;

•

our dependence on a limited number of clients in a limited number of industries;

•

currency fluctuations among the Indian rupee, the pound sterling, the US dollar, the Australian dollar, the Euro, the South African rand and the Philippine peso;

•

political or economic instability in the jurisdictions where we have operations;

•

regulatory, legislative and judicial developments;

•

increasing competition in the business process management (“BPM”) industry;

•

technological innovation;

•

our liability arising from cybersecurity attacks, fraud or unauthorized disclosure of sensitive or confidential client and customer data;

•

telecommunications or technology disruptions;

•

our ability to attract and retain clients;

•

negative public reaction in the US or the UK to offshore outsourcing;

•

our ability to collect our receivables from, or bill our unbilled services to, our 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;

•

the effects of our different pricing strategies or those of our competitors;

•

our ability to successfully consummate, integrate and achieve accretive benefits from our strategic acquisitions, and to successfully grow our revenue and expand our service offerings and market share;

•

future regulatory actions and conditions in our operating areas;

•

our ability to manage the impact of climate change on our business;

•

volatility of our share price; and

•

the possibility of a resurgence of coronavirus disease 2019

(“COVID-19”)

pandemic and related impact on our and our clients’ business, financial condition, results of operations and cash flows;

These and other factors are more fully discussed in this and our other filings with the SEC, including in “Risk Factors,” “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and elsewhere in our annual report on Form

20-F

for our fiscal year ended March 31, 2024.

In light of these and other uncertainties, you should not conclude that we will necessarily achieve any plans, objectives or projected financial results referred to in any of the forward-looking statements. Except as required by law, we do not undertake to release revisions of any of these forward-looking statements to reflect future events or circumstances.

F-2

Table of Contents

PART I - FINANCIAL INFORMATION

Item 1. Financial Statements

WNS (HOLDINGS) LIMITED

UNAUDITED CONSOLIDATED BALANCE SHEETS

(Amounts in thousands, except share and per share data)


			As at
	Notes		June 30, 2024			March 31, 2024
ASSETS
Current assets:
Cash and cash equivalents		5	$	83,916		$	87,431
Investments				217,266			156,531
Accounts receivable, net		6		128,902			124,570
Unbilled revenue		6		106,633			107,777
Funds held for clients		5		7,405			6,853
Derivative assets		15		7,648			5,847
Contract assets		20		13,257			11,949
Prepaid expense and other current assets		7		30,221			28,720

Total current assets				595,248			529,678
Goodwill		8		356,328			356,350
Other intangible assets, net		9		124,419			124,369
Property and equipment, net		10		71,813			73,740
Operating lease right-of-use assets		11		178,641			181,388
Derivative assets		15		2,652			1,914
Deferred tax assets		2 4		50,694			49,919
Investments				326			313
Contract assets		20		53,981			52,849
Other assets		7		63,480			63,553

TOTAL ASSETS			$	1,497,582		$	1,434,073

LIABILITIES AND EQUITY
Current liabilities:
Accounts payables			$	24,644		$	24,971
Provisions and accrued expenses				32,786			31,180
Derivative liabilities		15		9,092			3,968
Pension and other employee obligations		16		71,935			105,352
Short-term borrowings		13		73,000			40,000
Current portion of long-term debt		13		56,587			36,675
Contract liabilities		17		17,480			12,902
Income taxes payable		24		14,065			8,302
Operating lease liabilities		11		28,264			28,826
Other liabilities		18		43,310			19,852

Total current liabilities				371,163			312,028
Derivative liabilities		15		1,549			558
Pension and other employee obligations, less current portion		16		24,691			24,642
Long-term debt, less current portion		13		171,912			102,529
Contract liabilities		17		12,694			12,625
Operating lease liabilities, less current portion		11		159,084			161,054
Other liabilities, less current portion		18		118			13,897
Deferred tax liabilities		24		19,470			19,432

TOTAL LIABILITIES			$	760,681		$	646,765

Commitments and contingencies		27
Shareholders’ equity:
Share capital (ordinary shares $0.16 (£0.10) par value, authorized 60,000,000 shares; issued: 45,814,718 shares and 45,684,145 shares; each as at June 30, 2024 and March 31, 2024, respectively)		19		7,366			7,349
Additional paid-in capital				11,138			—
Retained earnings				1,065,500			1,034,388
Other reserves, net				3,939			6,129
Accumulated other comprehensive loss		12		(266,814	)		(260,558	)

Total shareholder’s equity, including shares held in treasury				821,129			787,308

Less: 1,643,731 shares as at June 30, 2024 and Nil as at March 31, 2024, held in treasury, at cost				(84,228	)		—

Total shareholders’ equity			$	736,901		$	787,308

TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY			$	1,497,582		$	1,434,073

See accompanying notes.

F-

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WNS (HOLDINGS) LIMITED

UNAUDITED CONSOLIDATED STATEMENTS OF INCOME

(Amounts in thousands, except share and per share data)


	Notes		Three months ended June 30,
			2024			2023
Revenue		20	$	323,115		$	326,501
Cost of revenue (1)				209,443			213,934

Gross profit				113,672			112,567
Operating expenses:
Selling and marketing expenses				21,540			19,968
General and administrative expenses				45,666			46,913
Foreign exchange loss/(gain), net				975			(905	)
Amortization of intangible assets		9		6,918			8,725

Operating income				38,573			37,866
Other income, net		22		(3,857	)		(4,780	)
Interest expense		21		4,381			3,642

Income before income taxes				38,049			39,004
Income tax expense		24		9,127			7,040

Net income			$	28,922		$	31,964

Earnings per share		25
Basic			$	0.64		$	0.67
Diluted			$	0.61		$	0.64
Weighted average number of shares used in computing earnings per share		25
Basic				45,443,899			47,997,486
Diluted				47,425,017			50,259,257

(1)	Exclusive of amortization expense

See accompanying notes.

F-

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WNS (HOLDINGS) LIMITED

UNAUDITED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

(Amounts in thousands, except share and per share data)


	Three months ended June 30,
	2024			2023
Net income	$	28,922		$	31,964
Other comprehensive income/(loss), net of taxes
Gain/(loss) on retirement benefits		712			(882	)
Foreign currency translation loss		(3,879	)		(178	)
(Losses)/gains on cash flow hedges		(3,089	)		2,446

Total other comprehensive (loss)/income, net of tax		(6,256	)		1,386

Total comprehensive income	$	22,666		$	33,350

See accompanying notes.

F-

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WNS (HOLDINGS) LIMITED

UNAUDITED CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY

(Amounts in thousands)


	Share capital														Treasury shares
	Number			Par value			Additional Paid-in Capital			Retained earnings		Other reserves*			Number			Amount			Accumulated Other Comprehensive Income/(Loss)			Total Equity
Balance as at April 1, 2023		48,360,817		$	7,690		$	70,437		$	979,284	$	6,765			—		$	—		$	(252,118	)	$	812,058
Shares issued for exercised options and RSUs (Refer Note 23)		97,472			12			(12	)		—		—			—			—			—			—
Purchase of treasury shares (Refer Note 19)		—			—			—			—		—			1,100,000			(85,677	)		—			(85,677	)
Cancellation of treasury shares (Refer Note 19)		(1,100,000	)		(140	)		(85,537	)		—		—			(1,100,000	)		85,677			—			—
Share-based compensation expense (Refer Note 23)		—			—			16,216			—		—			—			—			—			16,216
Transfer from other reserves on utilization		—			—			—			61		(61	)		—			—			—			—
Net income		—			—			—			31,964		—			—			—			—			31,964
Other comprehensive income		—			—			—			—		—			—			—			1,386			1,386

Balance as at June 30, 2023		47,358,289		$	7,562		$	1,104		$	1,011,309	$	6,704			—		$	—		$	(250,732	)	$	775,947

F-

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WNS (HOLDINGS) LIMITED

UNAUDITED CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY

(Amounts in thousands)


	Share capital												Treasury shares
	Number		Par value		Additional Paid-in Capital			Retained earnings		Other reserves*			Number		Amount			Accumulated Other Comprehensive Income/(Loss)			Total Equity
Balance as at April 1, 2024		45,684,145	$	7,349	$	—		$	1,034,388	$	6,129			—	$	—		$	(260,558	)	$	787,308
Shares issued for exercised options and RSUs (Refer Note 23)		130,573		17		(17	)		—		—			—		—			—			—
Purchase of treasury shares (Refer Note 19)		—		—		—			—		—			1,643,731		(84,228	)		—			(84,228	)
Share-based compensation expense (Refer Note 23)		—		—		11,155			—		—			—		—			—			11,155
Transfer from other reserves on utilization		—		—		—			2,190		(2,190	)		—		—			—			—
Net income		—		—		—			28,922		—			—		—			—			28,922
Other comprehensive loss		—		—		—			—		—			—		—			(6,256	)		(6,256	)

Balance as at June 30, 2024		45,814,718	$	7,366	$	11,138		$	1,065,500	$	3,939			1,643,731	$	(84,228	)	$	(266,814	)	$	736,901

Other reserves include the Special Economic Zone

Re-Investment

Reserve created out of the profits of eligible Special Economic Zones (“SEZ”) units in terms of the provisions of the Indian

Income-tax

Act, 1961. Further, these provisions require the reserve to be utilized by the Company for acquiring new plant and machinery for the purpose of its business (Refer Note 24).

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WNS (HOLDINGS) LIMITED

UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Amounts in thousands)


	Three months ended June 30,
	2024			2023
Cash flows from operating activities:
Net income	$	28,922		$	31,964
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization		13,865			14,436
Share-based compensation expense		11,155			16,216
Amortization of debt issuance cost		90			99
Allowance for expected credit losses (“ECL”)		586			343
Unrealized foreign currency exchange (gain), net		(4,412	)		(1,948	)
Income from mutual funds		(2,814	)		(2,591	)
Loss/(gain) on sale of property and equipment		34			(147	)
Deferred tax benefit		(2,291	)		(6,000	)
Unrealized loss on derivative instruments		3,214			1,253
Reduction in carrying amount of operating lease right-of-use assets		7,149			6,919
Changes in operating assets and liabilities, net of effects of acquisitions:
Account receivables and unbilled revenue		(3,398	)		(16,804	)
Other assets		(4,826	)		(6,997	)
Account payables		(1,425	)		(165	)
Contract liabilities		4,569			3,427
Other liabilities		(29,996	)		(35,473	)
Operating lease liabilities		(6,872	)		(5,831	)
Income taxes payable		7,858			14,213

Net cash provided by operating activities		21,408			12,914

Cash flows from investing activities:
Proceeds from working capital adjustment on acquisition of Vuram		—			141
Payment for property and equipment and intangible Assets		(10,723	)		(17,839	)
Proceeds from sale of property and equipment		82			193
Investment in fixed deposits		(6,384	)		(21,717	)
Proceeds from maturity of fixed deposits		11,237			7,008
Mutual funds (purchased)/sold, net (short-term)		(62,696	)		34,140

Net cash (used in)/provided by investing activities		(68,484	)		1,926

Cash flows from financing activities:
Payment for repurchase of shares		(77,951	)		(85,622	)
Repayment of long-term debt		(10,539	)		(10,604	)
Proceeds from long-term debt		100,000			—
Contingent consideration paid towards acquisition of Optibuy		—			(2,192	)
Proceeds from short-term borrowings		33,000			39,896
Payment of debt issuance cost		(284	)		—

Net cash provided by/(used in) financing activities		44,226			(58,522	)

Effect of exchange rate changes on cash, cash equivalents and restricted cash*		(113	)		(2,142	)
Net change in cash, cash equivalents and restricted cash		(2,963	)		(45,824	)
Cash, cash equivalents and restricted cash at the beginning of the period		94,284			137,309

Cash, cash equivalents and restricted cash at the end of the period	$	91,321		$	91,485

Supplemental cash flow information:
Cash paid for interest		(3,220	)		(2,540	)
Cash (paid)/refunded for income taxes		(3,278	)		1,342
Supplemental disclosure of non-cash investing and financing activities:
(i) Liability towards property and equipment and intangible assets purchased on credit	$	8,919		$	6,239
(ii) Lease liabilities arising from obtaining operating lease right-of-use assets		5,428			6,761

*	Restricted cash represents funds held for clients.

See accompanying notes

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WNS (HOLDINGS) LIMITED

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

(Amounts in thousands, except share and per share data)

1. Company overview

WNS (Holdings) Limited (“WNS Holdings”), along with its subsidiaries (collectively, “the Company”), is a global business process management (“BPM”) company with client service offices in Sydney (Australia), Canada, Dubai (United Arab Emirates), Germany, London (UK), New York (US), Mexico, and Switzerland and delivery centers in Canada, the People’s Republic of China (“China”), Costa Rica, India, Malaysia, the Philippines, Poland, Romania, Republic of South Africa (“South Africa”), Sri Lanka, Turkey, the United Kingdom (“UK”) and the United States (“US”).

WNS Holdings is incorporated in Jersey, Channel Islands and maintains a registered office in Jersey at 22, Grenville Street, St Helier, Jersey JE4 8PX.

2. Summary of significant accounting policies

a.	Basis of preparation and consolidation

These unaudited consolidated financial statements have been prepared, in compliance with United States generally accepted accounting principles (“US GAAP”) and the rules and regulations of the Securities and Exchange Commission (the “SEC”) for reporting on Form

10-Q.

The Company consolidates all of its subsidiaries. Subsidiaries are consolidated from the date control commences until the date control ceases.

All inter-company and intra-company balances, transactions, income and expenses including unrealized income or expenses are eliminated on consolidation.

The standalone financial statements of subsidiaries are fully consolidated on a line-by-line basis. Intra-group balances and transactions, and gains and losses arising from intra-group transactions, are eliminated while preparing consolidated financial statements. Accounting policies of the respective individual subsidiaries and equity affiliates are aligned wherever necessary, so as to ensure consistency with the accounting policies that are adopted by the Company under US GAAP.

b.	Use of estimates

The preparation of unaudited consolidated financial statements in conformity with US GAAP requires management to make estimates that affect the application of accounting policies and the reported amount of assets, liabilities, income, expenses and contingent liability. Actual results may differ from those estimates.

Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognized in the period in which the estimates are revised and in any future period affected. Significant items subject to such estimates and assumptions include the useful lives of property and equipment, business combinations, intangible assets and goodwill, revenue recognition, allowance for credit losses, valuation allowances for deferred tax assets, current income taxes, the valuation of derivative financial instruments, the measurement of lease liabilities and operating lease

right-of-use

(“ROU”) assets, measurements of share-based compensation expense, assets and obligations related to employee benefits, unrecognized tax benefits and other contingencies.

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WNS (HOLDINGS) LIMITED

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

(Amounts in thousands, except share and per share data)

c.	Business combinations

Business combinations are accounted for using the acquisition method of accounting in accordance with Accounting Standard Codification (“ASC”) Topic 805

, “Business Combinations.”

The cost of an acquisition is measured at the fair value of the assets transferred, equity instruments issued and liabilities incurred at the date of acquisition. The consideration of the acquisition also includes the fair value of any contingent consideration. Identifiable tangible and intangible assets acquired and liabilities and contingent liabilities assumed in a business combination are measured initially at their fair value on the date of acquisition. Significant estimates are required to be made in determining the value of contingent consideration and intangible assets.

Acquisition-related costs that the Company incurs in connection with a business combination such as finders’ fees, legal fees, due diligence fees, and other professional and consulting fees are expensed as incurred.

d.	Functional and presentation currency

The financial statements of each of the Company’s subsidiaries are presented using the currency of the primary economic environment in which these entities operate (i.e. the functional currency). The consolidated financial statements are presented in US dollars (“USD”) which is the presentation currency of the Company and has been rounded off to the nearest thousands.

e.	Foreign currency transactions and translation

Transactions in foreign currency

Transactions in foreign currency are translated into the functional currency using the exchange rates prevailing at the dates of the transactions. Foreign exchange gains and losses resulting from the settlement of such transactions and from the translation at the exchange rates prevailing at the reporting date of monetary assets and liabilities denominated in foreign currencies are recognized in the consolidated statement of income. Gains/losses relating to remeasurement of trading activities are disclosed under foreign exchange gains/losses and remeasurement with functional currency of financing activities are disclosed under interest expenses. In the case of foreign exchange gains/losses on borrowings that are considered as a natural economic hedge for the foreign currency monetary assets, such foreign exchange gains/losses, net are presented within results from operating activities.

ii.

Foreign operations

For the purpose of presenting consolidated financial statements, the assets and liabilities of the Company’s foreign operations for which the functional currency is other than the US dollar are translated into US dollars using exchange rates prevailing at the reporting date. Income and expense are translated at the monthly average exchange rate for the respective period. Exchange differences arising, if any, are recorded in equity as part of the Company’s other comprehensive income. Such exchange differences are recognized in the consolidated statement of income in the period in which such foreign operations are disposed. Goodwill and fair value adjustments arising on the acquisition of foreign operation are treated as assets and liabilities of the foreign operation and translated at the exchange rate prevailing at the reporting date.

Foreign currency exchange differences arising from intercompany receivables or payables relating to foreign operations, the settlement of which is neither planned nor likely to occur in the foreseeable future, are considered to form part of net investment in foreign operation and are recognized in currency translation adjustment.

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WNS (HOLDINGS) LIMITED

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

(Amounts in thousands, except share and per share data)

f.	Derivative financial instruments and hedge accounting

The Company is exposed to foreign currency fluctuations on foreign currency assets, liabilities, net investment in foreign operations and forecasted cash flows denominated in foreign currency. The Company limits the effect of foreign exchange rate fluctuation by following established risk management policies including the use of derivatives. The Company enters into derivative financial instruments where the counterparty is primarily a bank. The Company holds derivative financial instruments such as foreign exchange forward and option contracts to hedge certain foreign currency exposures.

Cash flow hedges

The Company recognizes derivative instruments as either assets or liabilities in the balance sheet at fair value. Derivative instruments qualify for hedge accounting when the instrument is designated as a hedge; the hedged item is specifically identifiable and exposes the Company to risk; and it is expected that a change in fair value of the derivative instrument and an opposite change in the fair value of the hedged item will be highly effective.

For derivative instruments where hedge accounting is applied, the Company records the effective portion of derivative instruments that are designated as cash flow hedges in accumulated other comprehensive income/(loss), which is reclassified into earnings in the same period during which the hedged item affects earnings. The remaining gain or loss on the derivative instrument in excess of the cumulative change in the present value of future cash flows of the hedged item, if any (i.e., the ineffective portion) and changes in fair value of other derivative instruments not designated as qualifying hedges is recorded as gains/losses, net in the consolidated statement of income. If the hedging instrument expires or is sold, terminated or exercised, the cumulative gain or loss on the hedging instrument recognized in the cash flow hedging reserve (in other comprehensive income/(loss)) until the period the hedge was effective remains in the cash flow hedging reserve until the forecasted transaction occurs.

When it is highly probable that a forecasted transaction will not occur, the Company discontinues the hedge accounting and recognizes immediately, in the consolidated statement of income, the gains and losses attributable to such derivative instrument that were accumulated in other comprehensive income/(loss).

Gains/(losses) on cash flow hedges on forecasted revenue transactions are recorded under revenue. Changes in fair value of foreign currency derivative instruments not designated as cash flow hedges are recognized in the consolidated statement of income and reported within foreign exchange gains, net within results from operating activities.

ii.

Offsetting of financial instruments

Financial assets and financial liabilities are offset against each other and the net amount reported in the balance sheet if a right to set off exists.

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WNS (HOLDINGS) LIMITED

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

(Amounts in thousands, except share and per share data)

iii.

Fair value of financial instruments

The fair value of financial instruments that are traded in active markets at each reporting date is determined by reference to quoted market prices or dealer price quotations, without any deduction for transaction costs. For financial instruments not traded in an active market, the fair value is determined using appropriate valuation models. Where applicable, these models project future cash flows and discount the future amounts to a present value using market-based observable inputs including interest rate curves, credit risk, foreign exchange rates, and forward and spot prices for currencies.

Impairment of

non-derivative

financial assets

Loss allowance for accounts receivables and unbilled revenue with no significant financing component are measured at an amount equal to lifetime ECL. The Company applies the simplified approach for determining the lifetime ECL allowance using the Company’s historical credit loss experience adjusted for factors that are specific to the debtor.

g.	Equity and share capital

The Company has only one class of equity shares. Par value of the equity share is recorded as the share capital and the amount received in excess of par value is classified as additional

paid-in

capital. The credit corresponding to the share-based compensation expense is recorded in additional

paid-in

capital.

Treasury shares represent the consideration paid by the Company, including any directly attributable costs, to repurchase its own ordinary shares. Treasury shares are presented as a deduction from total equity. On cancellation of treasury shares, the amount paid is adjusted against share capital, to the extent of the par value of ordinary shares repurchased, and the balance is adjusted against additional paid-in capital or retained earnings.

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WNS (HOLDINGS) LIMITED

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

(Amounts in thousands, except share and per share data)

h.	Cash and cash equivalents

The Company considers all highly liquid investments with an initial maturity of up to three months to be cash equivalents. Cash equivalents are readily convertible into known amounts of cash and subject to an insignificant risk of changes in value.

i.	Investments

Mutual funds

The Company’s mutual fund investments represent liquid investments and are acquired principally for the purpose of earning daily income. Investments in mutual fund represent investments in mutual fund schemes wherein the mutual fund issuer has invested these funds in enterprise development funds. Investments which are expected to be redeemed after 12 months from the reporting date are classified as

non-current

investments; otherwise, they are classified as current investments.

ii.

Investments in fixed deposits

Investments in fixed deposits consist of term deposits with original maturities of more than three months with banks.

j.	Funds held for clients

Some of the Company’s agreements in the auto claims handling services allow the Company to temporarily hold funds on behalf of the client. The funds are segregated from the Company’s funds and there is usually a short period of time between when the Company receives these funds from the client and when the payments are made on the client’s behalf.

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WNS (HOLDINGS) LIMITED

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

(Amounts in thousands, except share and per share data)

k.	Property and equipment

Property and equipment are stated at historical cost less accumulated depreciation and amortization and accumulated impairment loss. Cost includes expenditures directly attributable to the acquisition of the asset. Depreciation and amortization is computed using the straight-line method over the estimated useful lives of the assets, which are as follows:


Asset description	Asset life (in years)
Buildings		20
Computers and software		3-4
Furniture, fixtures and office equipment		2-5
Vehicles		3
Leasehold improvements		Lesser of estimated useful life or lease term

Advances paid towards the acquisition of property and equipment and the cost of property and equipment not ready for use before the reporting date are disclosed as capital

work-in-progress.

The Company reviews property and equipment for impairment whenever events or changes in circumstances indicate that the related carrying amounts may not be recoverable. Such assets are required to be tested for impairment if the carrying amount of the assets is higher than the future undiscounted net cash flows expected to be generated from the assets. The impairment amount to be recognized is measured as the amount by which the carrying value of the assets exceeds their fair value. The Company determines fair value by using a discounted cash flow approach.

Goodwill

Goodwill represents the excess of the cost of an acquisition over the fair value of the Company’s share of the net identifiable assets of the acquired subsidiary at the date of acquisition. Goodwill is tested, at the reporting unit level, for impairment annually or if events or changes in circumstances indicate that the carrying amount may not be recoverable. Goodwill is carried at cost less accumulated impairment losses. Impairment loss on goodwill is not reversed. See further discussion on impairment testing is set forth under “impairment of intangible assets and goodwill” below.

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WNS (HOLDINGS) LIMITED

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

(Amounts in thousands, except share and per share data)

m.	Intangible assets

Intangible assets are recognized only when asset recognition criteria are met. Intangible assets acquired in a business combination are recorded at fair value using generally accepted valuation methods appropriate for the type of intangible asset. Intangible assets with definite lives are amortized over the estimated useful lives and are reviewed for impairment, if indicators of impairment arise. Intangible assets with indefinite lives are not amortized but instead are tested for impairment at least annually and written down to the fair value. See further discussion on impairment testing under “impairment of intangible assets and goodwill” below.

Software development costs

The Company capitalizes certain costs related to the development or enhancements to existing software products to be sold, leased or otherwise marketed and / or used for internal use. The Company begins to capitalize costs to develop or enhance software when planning stage efforts are successfully completed, management has authorized and committed project funding, and it is probable that the project will be completed and the software will be used as intended. Costs incurred prior to meeting these criteria, together with costs incurred for training and maintenance, are expensed as incurred and recorded within “General and administrative expenses” in the Company’s consolidated statements of income. Significant management judgments and estimates are required in the assessment of when technological feasibility is established, as well as in the ongoing assessment of the recoverability of capitalized costs. Costs that qualify as software development costs include external direct costs of materials and services utilized in developing or obtaining software and compensation and related benefits for employees who are directly associated with the software project. The capitalized costs are amortized on a straight-line basis over the estimated useful life. Costs associated with planning stage activities, training, maintenance and all post-implementation stage activities are expensed as incurred.

The Company’s definite lived intangible assets are amortized over the estimated useful life of the assets on a straight-line basis, as given below.


Asset description	Weighted average amortization period (in months)
Customer contracts		60
Customer relationships		162
Covenant not-to-compete		33
Trade names		36
Technology		94
Software		47
Service mark		Indefinite useful life

n.	Impairment of intangible assets and goodwill

Goodwill is not subject to amortization and

tested at least annually for impairment or whenever events or changes in circumstances indicate that it is more likely than not the fair value of reporting unit is less than its carrying amount. If, based on the quantitative impairment analysis, the carrying value of the goodwill of a reporting unit exceeds the fair value of such goodwill, an impairment loss is recognized in an amount equal to the excess, limited to the total amount of goodwill allocated to that reporting unit.

Intangible assets that are subject to amortization are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. Such assets are required to be tested for impairment if the carrying amount of the assets is higher than the future undiscounted net cash flows expected to be generated from the assets. The impairment amount to be recognized is measured as the amount by which the carrying value of the assets exceeds their fair value. The Company determines fair value by using a discounted cash flow approach. Previously recognized impairment loss is not reversed.

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WNS (HOLDINGS) LIMITED

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

(Amounts in thousands, except share and per share data)

o.	Employee benefits

Defined contribution plans

US savings plan

Eligible employees of the Company in the US participate in a savings plan (“the Plan”) under Section 401(k) of the United States Internal Revenue Code (“the Code”). The Plan allows for employees to defer a portion of their annual earnings on a

pre-tax

basis through voluntary contributions to the Plan. The Plan provides that the Company can make optional contributions up to the maximum allowable limit under the Code.

UK pension scheme

Eligible employees in the UK contribute to a defined contribution pension scheme operated in the UK. The assets of the scheme are held separately in an independently administered fund. The pension expense represents contributions payable to the fund maintained by the Company.

Provident fund

Eligible employees of the Company in India, the Philippines, South Africa, Sri Lanka and the UK participate in a defined contribution fund in accordance with the regulatory requirements in the respective jurisdictions. Both the employee and the Company contribute an equal amount to the fund which is equal to a specified percentage of the employee’s salary.

The Company has no further obligation under defined contribution plans beyond the contributions made under these plans. Contributions are charged to statement of income and are included in the consolidated statement of income in the year in which they accrue.

ii.

Defined benefit plan

Employees in India, the Philippines, Dubai and Sri Lanka are entitled to a defined benefit retirement plan covering eligible employees of the Company. The plan provides for a lump-sum payment to eligible employees, at retirement, death, and incapacitation or on termination of employment, of an amount based on the respective employees’ salary and tenure of employment (subject to a maximum of

approximately $24 per employee in India). In India contributions are made to funds administered and managed by the Life Insurance Corporation of India (“LIC”) and Aviva Life Insurance Company Private Limited (“ALICPL”) (together, the “Fund Administrators”) to fund the gratuity liability of an Indian subsidiary. Under this scheme, the obligation to pay gratuity remains with the Company, although the Fund Administrators administer the scheme.

The Company’s Sri Lanka subsidiary, Philippines subsidiary, Dubai branch and two Indian subsidiaries have unfunded gratuity obligations. (See also note 16 for references for Dubai)

Gratuity liabilities are determined by actuarial valuation, performed by an independent actuary, at each reporting date using the projected unit credit method. The Company recognizes the net obligation of a defined benefit plan in its balance sheet as an asset or liability, as the case may be, in accordance with Topic 715 –

“Compensation-Retirement Benefits.”

The discount rate is based on the government securities yield. Actuarial gains and losses arising from experience adjustments and changes in actuarial assumptions are recorded in other comprehensive income (loss) (“OCI”) and amortized to net periodic benefit cost over the expected remaining period of service of the covered employees using the corridor method. The Company believes that the assumptions utilized in recording its obligations under its plans are reasonable based on its experience and market conditions. These assumptions may not be within the control of the Company and accordingly it is reasonably possible that these assumptions could change in future periods.

The Company includes the service cost component of the net periodic benefit cost in the same line item or items as other compensation costs arising from services rendered by the respective employees during the period. The interest cost is included in interest expense. Expected return on plan assets and amortization of actuarial gains/loss are included in other income/(expense), net.

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WNS (HOLDINGS) LIMITED

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

(Amounts in thousands, except share and per share data)

iii.

Compensated absences

The Company’s liability for compensated absences is determined on the basis of an actuarial valuation using the projected unit credit method and is charged to consolidated statement of income in the year in which they accrue.

p.	Share-based payments

The grant date fair value of share-based payment grants given to employees is recognized as employee cost with a corresponding increase in equity. The Company accounts for equity-settled share-based compensation expense relating to share-based payments using a fair value method in accordance with ASC 718

“Compensation-Stock Compensation.”

Grants issued by the Company vest in a graded manner. Under the fair value method, the estimated fair value of awards is charged to income over the requisite service period, which is generally the requisite service period of the award, for each separately vesting portion of the award as if the award was, in substance, multiple awards.

The Company is required to estimate share-based compensation expense, net of estimated forfeiture and expectation of market and

non-market

conditions to be met. In determining the estimated forfeiture rate, the Company annually conducts an assessment of actual number of share-based payment grants that have been forfeited as well as those expected to be forfeited in the future. The Company considers factors such as the employee grade and historical experience while estimating expected forfeitures. The company accounts for liability classified share-based compensation expense at fair value at grant date and remeasures at each reporting period end.

q.	Provisions and accrued expenses

A provision is recognized in the balance sheet when the Company has a present legal or constructive obligation as a result of a past event, and it is probable that an outflow of economic benefits will be required to settle the obligation and a reliable estimate can be made of the amount of the obligation. If the effect is material, provisions are recognized at present value by discounting the expected future cash flows at a

pre-tax

rate that reflects current market assessments of the time value of money.

r.	Revenue recognition

The Company derives revenue from BPM services, comprising back-office administration, data management, customer experience services management, and auto claims handling services.

Revenue from rendering services is recognized on an accrual basis when the promised services are performed for an amount that reflects the consideration to which the Company expects to be entitled in exchange for those services. Revenue from the end of last billing to the reporting date is recognized as unbilled revenue. Unbilled revenue for certain contracts is classified as contract assets, as the right to consideration is conditional on factors other than the passage of time. Revenue is net of value-added taxes and includes reimbursements of

out-of-pocket

expenses.

Revenue earned by back-office administration, data management and customer experience services management services

Back-office administration, data management and customer experience services contracts are based on the following pricing models:

per full-time-equivalent arrangements, which typically involve billings based on the number of full-time employees (or equivalent) deployed on the execution of the business process outsourced;

per transaction arrangements, which typically involve billings based on the number of transactions processed (such as the number of

e-mail

responses, or airline coupons or insurance claims processed);

subscription arrangements, which typically involve billings based on per member per month, based on contractually agreed rates;

fixed-price arrangements, which typically involve billings based on achievements of

pre-defined

deliverables or milestones;

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WNS (HOLDINGS) LIMITED

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

(Amounts in thousands, except share and per share data)

outcome-based arrangements, which typically involve billings based on the business result achieved by our clients through our service efforts (such as measured based on a reduction in days sales outstanding, improvement in working capital, increase in collections or a reduction in operating expenses); or

other pricing arrangements, including cost-plus arrangements, which typically involve billing the contractually agreed direct and indirect costs and a fee based on the number of employees deployed under the arrangement.

Revenues under

time-and-material

contracts and subscription arrangements are recognized as the related services are provided in accordance with the client contract. Revenues are recognized on cost-plus contracts on the basis of contractually agreed direct and indirect costs incurred on a client contract plus an agreed upon profit

mark-up.

Revenues are recognized on unit-price based contracts based on the number of specified units of work delivered to a client.

Revenue for performance obligations that are satisfied over time is recognized in accordance with the methods prescribed for measuring the progress. The input method (cost or efforts expended) has been used to measure progress towards completion as there is a direct relationship between inputs and productivity.

In respect of arrangements involving

sub-contracting,

in part or whole of the assigned work, the Company evaluates revenues to be recognized under criteria established by ASC 606 Revenue Recognition, application guidance ASC

606-10-55-36

to 38)

Principal versus agent considerations.”

Contracts with customers include variability in transaction price primarily due to service level agreements, gain share, minimum commitment and volume discounts. Revenues relating to such arrangements are accounted for as variable consideration when the amount of revenue to be recognized can be estimated to the extent that it is probable that a significant reversal of any incremental revenue will not occur.

Amounts billed or payments received, where revenue recognition criteria have not been met, are recorded as deferred revenue and classified as contract liabilities. These are recognized as revenue when all the recognition criteria have been met. The costs related to the performance of BPM services unrelated to transition services (discussed below) are fulfilment costs classified as contract assets and recognized in the consolidated statement of income when the conditions for revenue recognition have been met. Any upfront payment received towards future services is classified as a contract liability and is recognized in the consolidated statement of income over the period when such services are provided.

All incremental and direct costs incurred for acquiring contracts, such as certain sales commission, are classified as contract assets. Such costs are amortized over the expected life of the contract.

Other upfront fees paid to customers are classified as contract assets. Such costs are amortized over the life of the contract and recorded as an adjustment to the transaction price and reduced from revenue.

For certain BPM customers, the Company performs transition activities at the outset of entering into a new contract. The Company has determined these transition activities do not meet the criteria of ASC 606 to be accounted for as a separate performance obligation and has deferred revenue attributable to these activities. Accordingly, transition revenues are classified as contract liabilities and are subsequently recognized ratably over the period in which the BPM services are performed. Costs related to such transition services are fulfillment costs which are directly related to the contract and result in generation or enhancement of resources and are expected to be recoverable under the contract and thereby classified as contract assets and are recognized ratably over the estimated life of the contract.

All contracts entered into by the Company specify the payment terms. Usual payment terms range between 30 to 60 days.

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WNS (HOLDINGS) LIMITED

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

(Amounts in thousands, except share and per share data)

Revenue earned by auto claims handling services

Auto claims handling services include claims handling and administration (“Claims Handling”), car hire and arranging for repairs with repair centers across the UK and the related payment processing for such repairs (“Accident Management”). With respect to Claims Handling, the Company receives either a

per-claim

fee or a fixed fee. Revenue for per claim fee is recognized over the estimated processing period of the claim, which currently ranges from one to two months and revenue for fixed fee is recognized on a straight-line basis over the period of the contract. In certain cases, the fee is contingent upon the successful recovery of a claim on behalf of the customer. In these circumstances, the revenue is deferred until the contingency is resolved. Revenue in respect of car hire is recognized over the car hire term.

In order to provide Accident Management services, the Company arranges for the repair through a network of repair centers. The repair costs are invoiced to customers. In determining whether the receipt from the customers related to payments to repair centers should be recognized as revenue, the Company considers the criteria established by ASC 606 under the application guidance in paragraphs

“Principal versus agent considerations.”

When the Company determines that it is the principal in providing Accident Management services, amounts received from customers are recognized and presented as third-party revenue and the payments to repair centers are recognized as cost of revenue in the consolidated statement of income. Factors considered in determining whether the Company is the principal in the transaction include whether:

the Company has the primary responsibility for providing the services,

the Company negotiates labor rates with repair centers, and

the Company is responsible for timely and satisfactory completion of repairs.

If there are circumstances where the above criteria are not met and therefore the Company is not the principal in providing Accident Management services, amounts received from customers are recognized and presented net of payments to repair centers in the consolidated statement of income. Revenue from Accident Management services is recorded net of the repairer referral fees passed on to customers.

Incremental and direct costs incurred to contract with a claimant are classified as contract assets and amortized over the expected period of benefit, not exceeding 15 months. All other costs to the Company are expensed as incurred.

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WNS (HOLDINGS) LIMITED

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

(Amounts in thousands, except share and per share data)

Leases

The Company leases most of its delivery centers and office facilities under operating lease agreements that are renewable on a periodic basis at the option of the lessor and the lessee. The lease agreements contain rent free periods and rent escalation clauses.

The Company assesses whether a contract contains a lease at the inception of the contract. A contract is, or contains, a lease if the contract conveys the right to control the use of an identified asset for a period of time in exchange for consideration. To assess whether a contract conveys the right to control the use of an identified asset, the Company assesses whether: (i) the contract involves the use of an identified asset, (ii) the Company has the right to obtain substantially all of the economic benefits from the use of the asset through the period of the lease, and (iii) the Company has the right to direct the use of the asset.

A lease is classified as a finance lease if any one of the following criteria are met: (1) the lease transfers ownership of the asset by the end of the lease term, (2) the lease contains an option to purchase the asset that is reasonably certain to be exercised, (3) the lease term is for a major part of the remaining useful life of the asset or (4) the present value of the lease payments equals or exceeds substantially all of the fair value of the asset.

Operating leases are presented within “Operating lease

right-of-use

assets, (“ROU”)”, “Current portion of operating lease liabilities” and “Operating lease liabilities, less current portion” in the Company’s balance sheets. Long-lived assets underlying finance leases are presented within “Property and equipment”.

At the date of commencement of the lease, the Company recognizes a ROU and a corresponding lease liability for all lease arrangements under which it is a lessee, except for short-term leases. ROU represent the Company’s right to use an underlying asset for the lease term and lease liabilities represent the Company’s obligation to make lease payments arising from the lease.

The lease arrangements include options to extend or terminate the lease before the end of the lease term. ROU and lease liabilities include these options when it is reasonably certain that they will be exercised.

The ROU are initially recognized at cost, which comprises the initial amount of the lease liability adjusted for any lease payments made at or prior to the commencement date of the lease plus any initial direct costs less any lease incentives. They are subsequently measured at cost less accumulated depreciation and impairment losses.

Lease expense for operating lease arrangements is recognized on a straight-line basis over the lease term reflecting single operating lease cost.

The lease liability is initially measured at amortized cost at the present value of the future lease payments. For leases under which the rate implicit in the lease is not readily determinable, the Company uses its incremental borrowing rate based on the information available at the date of commencement of the lease in determining the present value of lease payments. Lease liabilities are remeasured with a corresponding adjustment to the related ROU asset if the Company changes its assessment as to whether it will exercise an extension or a termination option.

The Company accounts for a modification of a lease contract as a separate contract for an additional right of use not included in the original lease and the increase in lease payment is commensurate with the standalone price for the additional right of use, adjusted for the circumstances of the particular contract. Modifications which are not accounted for as a separate contract are reassessed as at the effective date of the modifications based on the modified terms and conditions and the facts and circumstances as at that date. Upon modification, the Company remeasures the lease liability to reflect changes to the remaining lease payments and discount rates and recognizes the amount of the remeasurement of the lease liability as an adjustment to the ROU assets. However, if the carrying amount of the ROU assets is reduced to zero as a result of modification, any remaining amount of the remeasurement is recognized as an expense in consolidated statement of income.

In the case of

sub-leases,

where the Company is an intermediate lessor, the lease is classified as a finance lease or operating lease. A

sub-lease

is classified as a finance or operating lease by reference to the underlying asset. In the case of a finance lease, the Company has accounted for its interest in the head-lease and the

sub-lease

separately and recognized a net investment in the

sub-lease

accordingly. Rental income received from the

sub-lease

is treated as finance income in the consolidated statement of income. In case of an operating lease, rental income is recognized in the consolidated statement of income over the term of the

sub-lease.

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WNS (HOLDINGS) LIMITED

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

(Amounts in thousands, except share and per share data)

The Company has elected to not separate lease and

non-lease

components for all of its leases and to use the recognition exemptions for lease contracts that, at commencement date, have a lease term of 12 months or less and do not contain a purchase option (“short-term leases”).

t.	Interest expense

Interest expense comprises interest cost on borrowings, transaction costs, the gains or losses on settlement of related derivative instruments and interest on defined benefit obligations. The foreign exchange gains/losses on borrowings are considered as a natural economic hedge for the foreign currency monetary assets which are classified as foreign exchange gains/losses, net within results from operating activities. Borrowing costs are recognized in the consolidated statement of income using the effective interest method.

u.	Income taxes

Income tax comprises current and deferred tax. Income tax expense is recognized in the consolidated statement of income except to the extent it relates to items directly recognized in equity, in which case it is recognized in equity.

Current income tax

Current income tax for the current and prior periods are measured at the amount expected to be recovered from or paid to the taxation authorities based on the taxable profit for the period. The tax rates and tax laws used to compute the amount are those that are enacted by the reporting date and applicable for the period. The Company offsets current tax assets and current tax liabilities where it has a legally enforceable right to set off the recognized amounts and where it intends either to settle on a net basis.

Significant judgments are involved in determining the provision for income taxes including judgment on whether tax positions are probable of being sustained in tax assessments. A tax assessment can involve complex issues, which can only be resolved over extended time periods. The recognition of taxes that are subject to certain legal or economic limits or uncertainties is assessed individually by management based on the specific facts and circumstances. Though the Company has considered all these issues in estimating its income taxes, there could be an unfavorable resolution of such issues that may affect results of the Company’s operations.

ii.

Deferred income tax

Deferred income tax is recognized using the balance sheet approach. Deferred income tax assets and liabilities are recognized for all deductible and taxable temporary differences arising between the tax bases of assets and liabilities and their carrying amount in financial statements, except when the deferred income tax arises from the initial recognition of goodwill.

Deferred income tax assets and liabilities are measured at the tax rates that are expected to apply in the period when the asset is realized or the liability is settled, based on tax rates (and tax laws) that have been enacted at the reporting date.

Deferred tax assets are reduced by a valuation allowance if, based on available evidence, it is more likely than not that some portion or all of the deferred tax assets will not be realized.

The Company recognizes deferred tax liabilities for all taxable temporary differences except those associated with the investments in subsidiaries where the undistributed earnings are deemed to be reinvested indefinitely and will not be remitted in foreseeable future or that the earnings would be remitted in a tax-free manner.

The effect on deferred tax assets and liabilities of a change in tax rates or tax status is recognized in the statements of income in the period in which the change is identified. The Company releases (reclassifies) the tax effects from AOCI to the consolidated statements of income at the time of settlement of cash flows hedges and amortization of deferred actuarial gain/(loss) on retirement benefits.

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WNS (HOLDINGS) LIMITED

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

(Amounts in thousands, except share and per share data)

v.	Earnings per share

Basic earnings per share are computed using the weighted-average number of ordinary shares outstanding during the period adjusted for outstanding shares that are subject to repurchase during the period. Diluted earnings per share is computed by considering the impact of the potential issuance of ordinary shares, using the treasury stock method, on the weighted average number of shares outstanding during the period, except where the results would be anti-dilutive.

w.	Government grants

The Company recognizes government grants only when there is reasonable assurance that the conditions attached to them shall be complied with, and the grants will be received. Government grants related to depreciable assets are treated as deferred income and are recognized in the consolidated statement of income on a systematic and rational basis over the useful life of the asset. Government grants related to revenue are recognized as a reduction of expenses in the

consolidat

statements of income.

y.	Concentration of credit risk

Credit risk arises from the possibility that customers may not be able to settle their obligations as agreed. Accounts receivable are typically unsecured and are derived from revenue earned from customers primarily located in the UK and the US. Credit risk is managed through periodic assessment of the financial reliability of customers, taking into account the financial condition, current economic trends, analysis of historical bad debts and ageing of accounts receivable. The credit risk on investments, bank deposits and derivative financial instruments is limited because the counterparties are banks and mutual funds with high credit ratings assigned by

international

credit-rating agencies.

3. New accounting pronouncements not yet adopted by the Company:

Certain new standards, interpretations and amendments to existing standards have been published that are mandatory for the Company’s accounting periods beginning on or after April 1, 2024 or later periods. Those which are considered to be relevant to the Company’s operations are set out below:

In October 2023, the Financial Accounting Standards Board (“FASB”) issued Accounting Standard Update (“ASU”) 2023-06, Disclosure Improvements: Codification Amendments in Response to the SEC’s Disclosure Update and Simplification Initiative. This ASU:

•

modifies the disclosure or presentation requirements of a variety of Topics in the Codification. Certain of the amendments represent clarifications to or technical corrections of the current requirements. For entities subject to the SEC’s existing disclosure requirements and for entities required to file or furnish financial statements with or to the SEC in preparation for the sale of or for purposes of issuing securities that are not subject to contractual restrictions on transfer, the effective date for each amendment will be the date on which the SEC’s removal of that related disclosure from Regulation S-X or Regulation S-K becomes effective, with early adoption prohibited.

•

should be applied prospectively. For all entities, if by June 30, 2027, the SEC has not removed the applicable requirement from Regulation S-X or Regulation S-K, the pending content of the related amendment will be removed from the Codification and will not become effective for any entity.

The adoption of this ASU will not have a material impact on the Company’s unaudited consolidated financial statements. The Company will continue to monitor for SEC action, and plan accordingly for adoption.

ii.

In November 2023, FASB issued ASU No. 2023-07, Segment Reporting (“Accounting Standards Codification (“ASC”) Topic 280”): Improvements to Reportable Segment Disclosures. This ASU:

•

improves reportable segment disclosure requirements on an annual and interim basis for all public entities by requiring disclosure of significant segment expenses that are regularly reviewed by the chief operating decision maker (“CODM”) and included within each reported measure of segment profit or loss, an amount and description of its composition for other segment items, and interim disclosures of a reportable segment’s profit or loss and assets.

•

allows, in addition to the measure that is most consistent with US GAAP, the disclosure of additional measures of segment profit or loss that are used by the CODM in assessing segment performance and deciding how to allocate resources.

The ASU is effective for fiscal years beginning from April 1, 2024, and interim periods within fiscal years beginning from April 1, 2025, with early adoption permitted. The Company is currently evaluating the impact of this ASU on its unaudited consolidated financial statements.

iii.

In December 2023, FASB issued ASU No. 2023-09, Income Taxes (“ASC Topic 740”), Improvements to Income Tax Disclosures. This ASU:

•

expands disclosures relating to the entity’s income tax rate reconciliation, income taxes paid and certain other disclosures related to income taxes.

The ASU will be effective for annual periods beginning from April 1, 2025. The Company is currently evaluating the impact of this ASU on its unaudited consolidated financial statements.

iv.

In March 2024, FASB issued ASU No. 2024-01, Compensation-Stock Compensation (“ASC Topic 718”). This ASU:

•

clarifies how to evaluate whether profits interest and similar awards given to employees and non-employees are within the scope of share-based payment arrangement under ASC 718.

The ASU will be effective for annual periods beginning from April 1, 2025, including interim periods within those years.

The Company is currently evaluating the impact of this ASU on its unaudited consolidated financial statements.

In March 2024, FASB issued ASU No. 2024-02, Codification Improvements—Amendments to Remove References to the Concepts Statements. This ASU:

•

contains amendments to the ASC that remove references to various FASB Concepts Statements.

The ASU will be effective for annual periods beginning from April 1, 2025, with early adoption permitted. The adoption of this ASU will not have a material impact on the Company’s unaudited consolidated financial statements.

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WNS (HOLDINGS) LIMITED

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

(Amounts in thousands, except share and per share data)

4. Business Combination

The Smart Cube Limited

December 16, 2022

(“Acquisition date”), the Company acquired all ownership interests of

The Smart Cube Limited

and its subsidiaries (“The Smart Cube”), which provide digitally led market intelligence and analytics solutions in four key areas including procurement and supply chain, commercial sales and marketing, digital and analytics, and strategy and investment research. The Smart Cube is expected to complement the Company’s existing offerings and strengthen the Company’s capabilities in

high-end

procurement and advanced analytics.

The acquisition was for a total consideration of $

121,643

, including working capital adjustments of $

(507

) and a contingent consideration of $

15,761

, payable over a period of

2 years and 5 months

linked to The Smart Cube’s target revenues and adjusted earnings before interest, taxes, depreciation, and amortization (“EBITDA”) (with certain adjustments) as specified in the acquisition agreement. The fair value of the contingent consideration liability was estimated using Level 3 inputs which included an assumption for discount rate of

4.93

%. The potential undiscounted amount for all future payments that the Company could be required to make under the contingent consideration arrangement is between $

and $

17,286

. Further, deferred earn out of $

4,913

is payable over a period of

2 years and 5 months

commencing from the acquisition date, subject to continued employment. The Company has funded the acquisition primarily with a five year secured term loan.

The fair value of the customer relationship and customer contracts were determined by using the Multi-Period Excess Earnings Method (“MPEEM”) under income approach. The MPEEM is a specific application of the discounted cash flow method. The principle behind the MPEEM is that the value of an intangible asset is equal to the present value of the excess after-tax cash flows attributable only to the subject intangible asset after deducting Contributory Asset Charges (“CAC”). CAC represents the return on investment (“ROI”) an owner of the asset would require. The ROI is comprised of a pure investment return (commonly referred to as return on) and, in cases where the contributory asset deteriorates in value over time, a recoupment of the original investment amount (commonly referred to as return of).

The fair value of the covenant not-to-compete were determined by using Incremental cash flows method (with and without scenario analysis). The customer relationships, customer contracts and covenant not-to-compete are being amortized on a straight-line basis (which approximates the economic pattern of benefits) over the estimated economic life of

and

years, respectively.

During the year ended March 31, 2023, the Company incurred acquisition related costs of $

2,130

, which had been included in “general and administrative expenses” in the consolidated statement of income.

During the year ended March 31, 2024, the Company changed fair value of the contingent consideration with an assumption for discount rate of

6.45

%. The change in the fair value of contingent consideration amounting to $

538

was credited to the consolidated statement of income.

The purchase price has been allocated, as set out below, to the assets acquired and liabilities assumed in the business combination.


	Amount
Cash	$	6,777
Accounts receivables		6,672
Unbilled revenue		1,775
Prepaid expense and other current assets		961
Property and equipment		319
Operating lease right-of-use assets		1,736
Other intangible assets
- Customer relationships		26,759
- Customer contracts		1,972
- Covenant not-to-compete		1,309
- Software		1,305
Non-current assets		1,329
Deferred tax assets		1,372
Current liabilities		(6,241	)
Non-current liabilities		(1,352	)
Operating lease liabilities		(1,736	)
Deferred tax liabilities		(7,758	)

Net assets acquired		35,199
Less: Purchase consideration		(121,643	)

Goodwill on acquisition	$	86,444

Goodwill is attributable mainly to expected synergies and assembled workforce arising from the acquisition. Goodwill arising from this acquisition is not expected to be deductible for tax purposes.

The goodwill

has been allocated using a relative fair value allocation method to the Company’s reporting segments as follows: to the MRHP segment in the amount of $

74,604

, to the BFSI segment in the amount of $

8,594

and to the HCLS segment in the amount of $

3,246

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WNS (HOLDINGS) LIMITED

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

(Amounts in thousands, except share and per share data)

OptiBuy sp. z.o.o.

December 14, 2022

(“Acquisition date”), the Company acquired all ownership interests of

OptiBuy sp. z.o.o.

and its subsidiaries (“OptiBuy”), which helps clients leverage the capabilities of leading third-party procurement and supply chain platforms and also provides consulting, optimization, outsourcing, training services and implementation solutions to their clients. OptiBuy is expected to complement the Company’s existing offerings and strengthen the Company’s capabilities in

high-end

procurement services.

The acquisition was for a total consideration of Euro

30,192

31,756

, based on the exchange rate on December 14, 2022), including working capital adjustments of Euro

(280

) ($

(308

), based on the exchange rate on December 14, 2023) and a contingent consideration of Euro

5,800

6,103)

, payable over a period of

2 years 3 months

commencing from the Acquisition date linked to target adjusted EBITDA (with certain adjustments) as specified in the acquisition agreement. The fair value of the contingent consideration liability was estimated using Level 3 inputs which included an assumption for discount rate of

2.90

%. The potential undiscounted amount for all future payments that the Company could be required to make under the contingent consideration arrangement and deferred consideration is between Euro

and Euro

6,000

and $

6,313

, based on the exchange rate on December 14, 2022). Further, deferred earn out of Euro

1,000

1,052)

is payable over a period of

2 years and 3 months

commencing from the acquisition date, subject to continued employment. The Company has funded the acquisition with cash on hand.

During the year ended March 31, 2023, a contingent consideration of Euro

2,000

2,192

, based on the exchange rate on April 20, 2023) was paid by the Company to the sellers upon achievement of the target adjusted EBITDA (with certain adjustments) as specified in the acquisition agreement related to the first measurement period.

and

years, respectively.

During the year ended March 31, 2023, the Company incurred acquisition related costs of $

518

, which had been included in “general and administrative expenses” in the consolidated statement of income.

The purchase price has been allocated, as set out below, to the assets acquired and liabilities assumed in the business combination.


	Amount
Cash	$	1,081
Accounts receivables		1,936
Unbilled revenue		294
Prepaid expense and other current assets		355
Property and equipment		45
Operating lease right-of-use assets		234
Other intangible assets
- Customer relationships		3,434
- Customer contracts		932
- Covenant not-to-compete		956
- Software		122
Non-current assets		594
Deferred tax assets		17
Current liabilities		(2,557	)
Non-current liabilities		(53	)
Operating lease liabilities		(234	)
Deferred tax liabilities		(1,027	)

Net assets acquired		6,129
Less: Purchase consideration		(31,756	)

Goodwill on acquisition	$	25,627

Goodwill is attributable mainly to expected synergies and assembled workforce arising from the acquisition. Goodwill arising from this acquisition is not expected to be deductible for tax purposes.

The goodwill has been allocated to the Company’s MRHP reportable segment based upon the Company’s assessment of nature of services rendered by OptiBuy.

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WNS (HOLDINGS) LIMITED

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

(Amounts in thousands, except share and per share data)

Payment for business transfer (from a large insurance company)

The Company entered into an agreement with a large insurance company, effective October 18, 2022, under which the Company has acquired the contract and capabilities in the form of licensed resources (organized workforce) including the underlying operational process manuals. The purchase price of the transaction, which was paid with cash on hand, was $44,000.

The purchase price has been allocated, as set out below:


	Amount
Other intangible assets
- Customer contracts	$	37,890
Deferred tax liabilities		(9,300	)

Net assets acquired		28,590
Less: Purchase consideration		(44,000	)

Goodwill on acquisition	$	15,410

The fair value of the customer contracts were determined by using the Multi-Period Excess Earnings Method (“MPEEM”) under income approach. The MPEEM is a specific application of the discounted cash flow method. The principle behind the MPEEM is that the value of an intangible asset is equal to the present value of the excess

after-tax

cash flows attributable only to the subject intangible asset after deducting Contributory Asset Charges (“CAC”). CAC represents the return on investment (“ROI”) an owner of the asset would require. The ROI is comprised of a pure investment return (commonly referred to as return on) and, in cases where the contributory asset deteriorates in value over time, a recoupment of the original investment amount (commonly referred to as return of). The customer contracts assets are being amortized on a straight-line basis (which approximates the economic pattern of benefits) over the estimated economic life of 5 years 7 months.

Goodwill is attributable mainly to the benefits expected from the acquired organized workforce and is not expected to be deductible for tax purposes. The goodwill has been allocated to the Company’s BFSI reportable segment based upon the Company’s assessment of nature of services.

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WNS (HOLDINGS) LIMITED

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

(Amounts in thousands, except share and per share data)

Vuram Technology Solutions Private Limited

July 1, 2022

(“Acquisition date”), the Company acquired all ownership interests of

Vuram Technology Solutions Private Limited

and its subsidiaries (“Vuram”), which is a hyper automation services company that specializes in

low-code

enterprise automation and provides custom, scalable BPM solutions, including specific solutions for the banking and financial services, insurance, and healthcare industries. The Company is expected to leverage Vuram’s capability to accelerate new client transformation programs and enhance ongoing productivity improvements for existing engagements.

The Company paid a total consideration of $

170,347

, including cash and working capital adjustments of $

(141

) and a contingent consideration of $

21,670

, payable over a period of

18 months

commencing from the Acquisition date linked to Vuram’s target revenues and adjusted EBITDA (with certain adjustments) as specified in the acquisition agreement, for the acquisition. The fair value of the contingent consideration liability was estimated using Level 3 inputs which included an assumption for discount rate of

2.75

%. The potential undiscounted amount for all future payments that the Company could be required to make under the contingent consideration arrangement is between $

and $

22,300

. Further, deferred earn out of $

2,700

is payable over a period of

18 months

commencing from the Acquisition date, subject to continued employment. The Company has funded the acquisition with cash on hand.

During the year ended March 31, 2023, the Company incurred acquisition related costs of $

1,209

, which had been included in “general and administrative expenses” in the consolidated statement of income.

During the year ended March 31, 2024, the Company received $

141

towards working capital adjustments. Upon non achievement of Vuram’s target revenues and adjusted EBITDA (with certain adjustments) as specified in the acquisition agreement accordingly by the seller, the contingent consideration amounting to $

21,932

was reversed and credited to consolidated income statement during the year ended March 31, 2024 and the same is not expected to be taxable.

1.5

and

years, respectively.

The purchase price has been allocated, as set out below, to the assets acquired and liabilities assumed in the business combination.


	Amount
Cash	$	4,670
Investments		11,235
Accounts receivables		6,738
Unbilled revenue		705
Prepaid expense and other current assets		1,633
Property and equipment		707
Operating lease right-of-use assets		1,470
Other intangible assets
- Customer relationships		45,331
- Customer contracts		5,267
- Covenant not-to-compete		5,001
- Software & Trade name		92
Non-current assets		403
Deferred tax assets		632
Current liabilities		(7,799	)
Non-current liabilities		(1,265	)
Operating lease liabilities		(1,470	)
Deferred tax liabilities		(13,717	)

Net assets acquired		59,633
Less: Purchase consideration		(170,347	)

Goodwill on acquisition	$	110,714

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WNS (HOLDINGS) LIMITED

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

(Amounts in thousands, except share and per share data)

Goodwill is attributable mainly to expected synergies and assembled workforce arising from the acquisition. Goodwill arising from this acquisition is not expected to be deductible for tax purposes. The goodwill has been allocated using a relative fair value allocation method to each of the Company’s reporting segments as follows: to the BFSI segment in the amount of $59,805, to the MRHP segment in the amount of $43,621, to the TSLU segment in the amount of $6,158 and to the HCLS segment in the

amount

of $ 1,130.

5. Cash, cash equivalents and restricted cash

The Company considers all highly liquid investments with an initial maturity of up to three months to be cash equivalents. Cash, cash equivalents and restricted cash consist of following:


	As at
	June 30, 2024		March 31, 2024

Cash and bank balances	$	58,995	$	72,710
Short-term deposits with banks		24,921		14,721
Funds held for clients - Restricted cash		7,405		6,853

Total	$	91,321	$	94,284

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WNS (HOLDINGS) LIMITED

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

(Amounts in thousands, except share and per share data)

6. Accounts receivable and unbilled revenue, net

Account receivables and unbilled revenue consist of the following:


	As at
	June 30, 2024		March 31, 2024
Account receivables and unbilled revenue	$	237,434	$	233,735
Less: Allowances for ECL