Hexaware Technologies Ltd, a leading global IT & BPO services provider, today announced financial results for Fourth Quarter and Full-Year 2006.

 

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Financial Highlights 

 

Fiscal year ended December 31, 2006

·      Revenue from operations was Rs 8,482.14 mn ($187.22 mn), an increase of 39.9%* over CY’ 05

·      Net Profit after tax was Rs 1,242.32 mn ($27.44 mn), an increase of 99.1%* over CY’05  

·    49 new clients added during the year; highest addition ever

·    129 active clients; 41 are Fortune 500 / Global 500 corporations

·     41 ‘million dollar’ clients were billed during the year vs. 30 such clients in CY’ 05

·     Increase in global headcount of 2183 to 5829 at the end of the year

·     Significant improvement in gross margins from 35.7% in CY’05 to 37.3% in CY’06. Improvements in operating margins from 9.9% to 13.2% and PAT margins from 10.3% to 14.6% over the same period

 

Fourth Quarter ended December 31, 2006

·    Consolidated Revenue from operations was Rs 2,402.18 mn ($53.76mn)

·    Net profit after tax was Rs 337.54 mn ($7.59mn)

·    Diluted EPS on an annualized basis was Rs 8.99; Basic EPS was Rs 9.46

·     Added $ 40.2 mn of new business orders

·    12 new clients acquired during the quarter

 

On November 28, 2006, Hexaware successfully closed the acquisition of FocusFrame Inc., a US based testing services firm, ahead of schedule.

 

“A notable achievement for the year has been the success in replacing the revenue and profitability lost on account of the transfer of ISC in November’05. We are starting CY’07 with an order book exceeding $ 170 mn for the year,” said Atul Nishar, Executive Chairman, Hexaware Technologies Ltd. He added, “The integration of operations and business with FocusFrame is going exceedingly well, and in some areas is ahead of schedule. We are on track to realize over $ 100 mn per annum in testing revenues within the next 3 years. Our recent performance, a solid order book, and a strong business environment give me the confidence that we can double our revenues and profits within the next 8-10 quarters.”

 

Commenting on the Q4’06 performance, Rusi Brij, Vice Chairman and CEO said, “The rupee’s rapid appreciation in Q4 was a negative surprise that reduced operating margins by 1.3% during Q4. But for external variables, we would have exceeded our profit guidance. We also continue to make investments in strengthening our future business competitiveness. The financial impact of these initiatives has been factored in our Q1 07 guidance.”

 

Guidance for the first Quarter CY 2007

 

 The Company has provided the following guidance for Q1’07 ending March 31, 2007     

 

Consolidated Revenue from operations is expected to be in the range of $ 59 - 60 mn

 

Consolidated Profit after Tax is expected to be between $ 7.8 -  8 mn at an exchange rate assumption of 1 USD = Rs 44.00

 

Operational Review

 

During the quarter, Hexaware successfully completed the acquisition of FocusFrame Inc., a US based firm specializing in automated testing of ERP and custom applications. The addition of FocusFrame is an integral component of Hexaware’s ongoing strategy to strengthen its Independent Testing Services Practice. The integration team led by Hari Murthy, President North America Operations, has met our 30 and 60 day goals. In the first two months, one new customer was added and 11 opportunities are currently being jointly pursued. A non-capitalised expense of $ 250,000 was incurred during the quarter.

 

Of the 12 new clients added during the quarter, 5 were in ERP, 1 in Testing, 3 in BA/BI, and 2 in BPO. The year was also marked with highest number of client additions of 49 taking the total of active clients to 129; currently the company has 41 Fortune 500 / Global 500 clients.

 

Hexaware also increased the ‘million dollar’ client additions (LTM basis) from 30 to 41 during the quarter of which 5 are in $5-$10 million category while another 4 billed more than $10 million each. Repeat business for CY’06 stood at 88.4%.

 

Total orders booked during Q4’ 06 was $ 40.2 mn. The new business booked during 2006 was $ 171.2 mn.

 

Margin Improvements during the year:

• Gross margins rose significantly to 37.3% in CY’06 compared to 35.7% in CY’05
• EBIDTA registered a healthy improvement to 15.6% from 13.0% reported in CY’05
• Operating margins were at 13.2% in CY’06 compared to 9.9% in CY’05
• Net margins improved substantially to 14.6% compared to 10.3% in CY 05
• The average blended utilization for the year was 70.5%.

Geography

 

The quarter saw 6 new clients from North America, 3 from Europe, and 1 from rest of the world region and 2 from Caliber Point, the Company’s BPO arm.

 

69.1% of revenues came from North America, with European share at 25.5 % and the balance 5.4% coming from rest of the world.

 

Dividend Declaration

The Board recommended a final dividend of 40% (Rs 0.80 per share) subject to the approval of shareholders at the ensuing Annual General Meeting. This brings the total dividend for the year to 80% or Rs 1.60 per share.

 

Significant Wins in Q4’06

 

A Fortune 500 US media house selected Hexaware for a multi-year multi-million dollar project to customize and implement PeopleSoft for Financials & Workforce management to align the business critical support functions and prepare the internal systems for Fusion readiness.

 

Hexaware is providing SAP expertise to a leading health major based in Europe. This multi-year project will provide migration and subsequently a 24X7 support of the supply-chain management application.

 

A large asset management firm based in North America selected Hexaware for its domain specialization in Investment Management & expertise in Eagle Systems, a leading Financial Services product. The engagement is to implement, customize and support the Eagle suite of products.

 

Forex Cover

 

The company currently has forward cover of $ 41.00 mn at an average rate of Rs 45.68

 

Billing rates

 

The average billing rate per hour for the quarter has remained stable at $ 66.10 for onsite locations, and at $ 22.92 for work done offshore.

 

Human Resources

The global headcount at the end of the quarter increased to 5,829. Technical personnel comprised 89.6% of the total work force. Attrition rose marginally to 15% on an annualized basis

 

Infrastructure

 

Hexaware added another 50,000 sq. ft facility, adjacent to the existing offices at Mahape. This new facility will have a seating capacity of 550 professionals. 

 

The company strengthened its operations in Pune. While 25 acres of land was acquired in Hinjewadi Phase III SEZ to build a state-of-the-art Campus, another 30,000 sq. ft in Pune to seat 300 professionals was also added.

 

 The Chennai Green campus is also on track and is expected to become operation in Q3’07.

 

Awards and recognitions

 

Hexaware won the Indiatimes Employer Branding Award 2007 for ‘Innovation in Career Development’. Hexaware was also nominated for the ‘Talent Management’ award.

 

Hexaware won the IT People Award 2007 for Excellence in Management.

 

Hexaware got nominated amongst the top 25 Companies for ‘National Award for Excellence in Corporate Governance – 2006’ by ICSI

 

Once again, Hexaware ranked among the prestigious Deloitte Technology Fast 50 India as well as the Deloitte Technology Fast 500 Asia Pacific 2006.

 

The company had the distinction of being among India’s best employers two years in a row and was ranked No. 6 on Dataquest-IDC’s Annual Best Employer Survey 2006; in 2005 the company was ranked No. 7.

  

Sourced From: Adfactors Public Relations Pvt Ltd