Press release from Business Wire India
Source: Patni Computer Systems
Wednesday, July 28, 2010 10:32 AM IST (05:02 AM GMT)
Editors: General: Consumer interest, Economy; Business: Banking & financial services, Business services, Financial Analyst, Information technology, Media & entertainment, Stock exchanges; Technology
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Patni's Q2 2010 Net Income up 10.7% YoY
Mumbai, Maharashtra, India, Wednesday, July 28, 2010 -- (Business Wire India) -- Patni Computer Systems Limited (Patni) today announced its financial results for the second quarter ended 30th June 2010
Performance Highlights for the quarter ended June 30,2010
. Revenues for the quarter at US$ 167.6 million (Rs.7,776.3 million)
o Down 2.8% QoQ from US$ 172.3 million (Rs.7,745.4 million)
o Up 3.5% YoY from US$ 161.9 million (Rs.7,729.1 million)
o Revenue concentration of Top 10 customers remained flat at 48.6% from 48.7% in previous quarter.
. Operating Income for the quarter at US$ 31.5 million (Rs.1,461.4 million)
o Down 13.0% QoQ from US$ 36.2 million (Rs.1,627.0 million)
o Up 29.8% YoY from US$ 24.3 million (Rs.1,158.3 million)
. Net Income for the quarter at US$ 31.7 million (Rs.1,473.0 million)
o Down 4.7% QoQ from US$ 33.3 million (Rs. 1,497.1 million)
o Up 10.7% YoY from US$ 28.7 million (Rs.1,368.5 million)
. EPS for the quarter at US$ 0.24 per share (US$ 0.49 per ADS).
Future Outlook:
. Q3 CY2010 Revenues are expected to be at US$ 176 million to US$ 177 million and Net Income (Excluding the hedging Gain/Loss) is expected to be in the range of US$ 22.5 million to US$ 23.0 million
-- This guidance is based on constant Rupee -USD rate of Rs.46.
-- Mark to Market foreign exchange gain during Q3 2010 is expected to be in the range of US$ 1 million based on current estimates. This may change depending on further currency movements during the quarter and will impact our Net Earnings accordingly.
Management Comments
Mr.Jeya Kumar, Chief Executive Officer, said "While there is a general improvement in demand environment predictability and sustainability of growth is still challenging. We experienced the same in current quarter as some of the projects starts were behind expected schedules in our portfolio. We are confident that our strategic investments will pay off in mid to long run with execution of differentiation in micro verticals to gain leadership in our chosen industry market segments. Inorganic efforts are expected to pick pace and will result in higher growth going forward as we remain bullish on our overall prospects to scale the business ."
Speaking on the occasion, Mr. Surjeet Singh, Chief Financial Officer, said, "Focused cost management efforts have resulted in overall improvement of margin profile for the year as we absorbed the wage increases during the quarter in line with expectations besides neutralizing forex changes with superior risk management in an otherwise constant pricing environment. Cash investments continue to be at the operating side in innovation and platform purchases in line with our strategy besides organic investments in geographical diversification"
Corporate Developments
Acquisitions and Alliances:
. Acquisition of CHCS services Inc, subsidiary of Universal American Corp
On June 9 2010, Patni completed the acquisition of CHCS services Inc, fully owned subsidiary of Universal American , for a consideration of USD 6 M. Through this acquisition Patni will enter Third Party Administration business as extension to its Insurance Services portfolio, significantly enhancing its existing BPO capabilities to deliver end-to-end platform based solutions.
. Strategic partnership with Serco Group Plc, UK
Patni enhanced its Strategic Partnership with Serco Group Plc by entering into a long term contract including purchase of Intellectual Property to provide services in Education and e learning under managed services model in UK and Ireland markets with right to sell in other select markets.
. Japan's JR Kyushu and Patni sign JV pact
Patni recently announced the signing of a joint venture (JV) pact between JR Kyushu System Solutions Inc. (JRQSS), the IT systems arm of Japan's Kyushu Railway Company. The new company christened 'JR Kyushu Patni Systems, Inc. is a 51:49 partnership between JRQSS and Patni Japan respectively. The JV is aimed at providing high quality, cost effective IT and product engineering services to the Japanese enterprise market.
Awards & Recognition:
. Patni BPO receives top honors at 'BPO Excellence Awards 2009-10'
Patni recently announced that it has received the distinguished 'Stars of the Industry - BPO Excellence Awards' in three categories: 'BPO Organization of the Year,' 'Operational Excellence and Quality,' and 'Social Change Agent.' The BPO Excellence Awards are given out each year in India by the business group 'Stars of the Industry,' recognizing outstanding performance and contribution of BPO players to the industry.
Certifications:
. Patni awarded Platinum Partner status in the Oracle® PartnerNetwork
Patni recently received the 'Platinum partner' status as part of the Oracle PartnerNetwork (OPN) program. This prestigious partner status recognizes Patni for its in-depth expertise and excellence in showcasing capabilities across the entire suite of Oracle solutions in areas of application development, testing and reporting.
Appointments:
. Patni appoints Frank Khoshnoud to head Manufacturing,Retail and Distribution business
Patni appointed Frank Khoshnoud as Senior Vice-President and Head of Manufacturing, Retail and Distribution (MRD) Industry Vertical. Frank is an industry veteran with 25 years of experience in the technology and consulting industry and joins Patni from Satyam, where he served as Senior Vice-President and Head of Global Automotive Business Group.
Financial Statements Analysis:
Revenues
Revenues during the quarter is lower than guidance at US$ 167.6 million (Rs.7,776.3 million) sequential decrease of 2.8% as compared to US$ 172.3 million (Rs.7,745.4 million). Number of active clients were 280 at quarter end as compared to 260 in Q1 2010. New clients acquisitions during the quarter were 11.
Gross Margin
Gross Margins were at 35.0% or US$ 58.7 million (Rs.2,724.4 million) against 38.3% or US$ 66.0 million (Rs.2,968.4 million) in the previous quarter. Gross Margin is lower due to negative impact of ~2.3% on account of compensation increase and 1.3 % due to planned lower utilization sequentially.
Non cash expenses were US$ 5.5 million which includes depreciation and amortization expenses of US$ 4.8 million and stock option charge of US$ 0.7 million. Corresponding expenses for Q1 were US$ 4.5 million for depreciation and amortization and US$ 0.8 million for stock option charge.
Selling General and Administrative Expenses (SGA Expenses)
Sales and marketing expenses during the quarter were at US$ 14.4 million (Rs.670.1 million) at 8.6% as compared to US$ 15.9 million (Rs.712.7 million) at 9.2% in the previous quarter due to period cost changes.
G&A expenses during the quarter were at US$ 17.1 million (Rs.795.0 million) or 10.2% as compared to US$ 18.2 million (Rs.816.9 million) at 10.5% during the previous quarter.
Non cash expenses is US$ 3.7 million which includes depreciation and amortization expenses at US$ 2.3 million for the quarter as against US$ 2.2 million in Q1 2010 and stock option charge at US$ 1.4 million for the quarter remained unchanged as compared to previous quarter .
Foreign exchange gain/loss
The revaluation and mark to market foreign exchange gain for the quarter were at US$ 4.3 million (Rs.197.6 million) as compared to foreign exchange gain of US$ 4.8 million (Rs.214.3 million) during the previous quarter.
The quarter end rate for debtor's revaluation was Rs.46.4. Outstanding contracts at the end of Q2 2010 were about US$ 398.0 million which were contracted in the range of Rs.41.0 to Rs.48.0.
Operating Income
Operating Income including foreign exchange gain / loss was at US$ 31.5 million (Rs.1,461.4 million) or at 18.8% during the quarter as compared to US$ 36.2 million or at 21.0% during previous quarter due to changes in gross margin of (-) 3.3%, SGA of (+) 1.3% as above with marginal change in forex gain loss ( -) 0.2%
Other Income
For Q2 CY2010, other income (including interest and dividend income net of interest expenses, profit/loss on sale of investments and other miscellaneous income) stood at 4.1% or US$ 6.9 million (Rs.322.1 million) during the quarter as compared to 2.6% or US$ 4.4 million (Rs.198.2 million) during previous quarter due to better yields and booking of gains before maturity.
Profit before Tax
Based on above, Profit before tax for the quarter at 22.9% was US$ 38.4 million (Rs.1,783.5 million), as compared to US$ 40.6 million (Rs.1,825.2 million) at 23.6% during previous quarter.
Income Taxes
Income tax for the quarter was at US$ 6.7 million (Rs.310.5 million) at an effective tax rate of 17.4% during the quarter as compared to 18.0 % during previous quarter.
Net Income
Consequently, net income for the quarter is at 18.9% at US$ 31.7 million (Rs.1,473.0 million), as compared to previous quarter net income of US$ 33.3 million (Rs.1,497.1 million) at 19.3%.
Balance Sheet and Cash Flow changes
During the quarter, against net income of US$ 31.7 million (Rs.1,473.0 million),cash from operating activities was at US$ 35.5 million (Rs.1,648.8 million), net of changes in current assets and liabilities of US$ (-) 5.7 million (Rs.263.1 million) and non cash charges of US$ 9.5 million (Rs.438.8 million)
Net cash used in investing activities was US$ 18.2 million (Rs.842.8 million). This includes routine capital expenditure of US$ 4.2 million (Rs.193.4 million),inorganic and operating assets purchases of US$ 19.0 million (Rs.880.4 million) in total , net proceeds from sale of investments of US$ 5.0 million (Rs.231.0 million).
Net cash outflow on financing activities was US$ 4.9 million (Rs.229.5 million) comprising of proceeds from common shares issued under ESOP of US$ 2.8 million (Rs.128.9 million) and payment of dividend of US$ 8.4 million (Rs. 390.8 million) and US$ 0.7 million (Rs.32.4 million) on other financing activities.
Net Revaluation loss on Cash and Cash equivalent was US$ 17.7 million (Rs. 821.5 million) million due to quarter end change in revaluation rate of Rupee from Rs.44.91 per USD in previous quarter to Rs.46.65 per USD during the current quarter end.
Over all cash and cash equivalents (including short term investments) post revaluation, were therefore at US$ 466.6 million (Rs.21,655.3 million), as compared to US$ 470.4 million (Rs.21,144.8 million) at the close of previous quarter.
Receivables at the end of Q2 2010 were at US$117.5 million (Rs. 5,454.4 million) as compared to US$ 114.3 million at the end of Q1 2010. Number of days outstanding (Including Unbilled receivables) for current quarter was 84 days as compared to 80 days in Q1 2010
Important Notes to this release:
- Fiscal Year
Patni follows a January - December fiscal year. The current review covers the financial and operating performance of the Company for the quarter ended June 30, 2010
- U.S. GAAP
A Consolidated Statement of Income in US GAAP is available on page 3 of the Fact Sheet attached to this release
- Percentage analysis
Any percentage amounts, as set forth in this release, unless otherwise indicated, have been calculated on the basis of the U.S. Dollar amounts derived from our consolidated financial statements prepared in accordance with U.S. GAAP, and not on the basis of any translated Rupee amount. Calculation of percentage amounts on the basis of Rupee amounts may lead to results that are different, in a material way, from those calculated as per U.S. Dollar amounts.
- Convenience translation
A Consolidated Statement of Income as per Convenience Translation prepared in accordance with US GAAP is available on page 6 of the Fact Sheet attached to this release. We have translated the financial data derived from our consolidated financial statements prepared in accordance with U.S. GAAP for each period at the noon buying rate in the City of New York on the last business day of such period for cable transfers in Rupees as certified for customs purposes by the Federal Reserve Bank of New York. The translations should not be considered as a representation that such US Dollar amounts have been, could have been or could be converted into Rupees at any particular rate, the rate stated elsewhere in this document, or at all. Investors are cautioned to not rely on such translated amounts.
- Attached Fact Sheet (results & analysis tables)
Fact Sheet
About Patni Computer Systems Ltd:
Patni Computer Systems Limited (Patni) (BSE: 532517, NSE: PATNI, NYSE: PTI) is a global provider of IT Services and business solutions, servicing Global 2000 clients. Patni services its clients through its industry-focused practices, including banking, financial services (BFS) and insurance (I); manufacturing, retail and distribution (MRD); life sciences; communications, media and utilities (CMU), and its technology-focused practices.
With an employee strength of around 14,000; multiple global delivery centers spread across 14 cities worldwide; 28 international offices across the Americas, Europe and Asia-Pacific; Patni has registered revenues of US$ 656 million for the year 2009.
Patni's service offerings include application development and maintenance, enterprise application solutions, business and technology consulting, product engineering services, infrastructure management services, customer interaction services & business process outsourcing, quality assurance and engineering services.
Committed to quality, Patni adds value to its clients' businesses through well-established and structured methodologies, tools and techniques. Patni is an ISO 9001: 2008 certified and SEI-CMMI-Dev Level 5 (V 1.2) organization. In keeping with its focus on continuous process improvements, Patni adopts Six Sigma practices as an integral part of its quality and process frameworks.
Patni leverages its vast experience spanning three decades; deep domain expertise; full-spectrum services; and suites of IP-led solutions, methodologies and frameworks; in being an effective business transformation partner to its clients.
For more information on Patni, visit www.patni.com.
IMPORTANT NOTE:
Certain statements in this release concerning our future growth prospects are forward-looking statements, which involve a number of risks, and uncertainties that could cause actual results to differ materially from those in such forward-looking statements. The risks and uncertainties relating to these statements include, but are not limited to, risks and uncertainties regarding fluctuations in earnings, our ability to manage growth, intense competition in IT services including those factors which may affect our cost advantage, wage increases in India, our ability to attract and retain highly skilled professionals, time and cost overruns on fixed-price, fixed-time frame contracts, client concentration, restrictions on immigration, our ability to manage our international operations, reduced demand for technology in our key focus areas, disruptions in telecommunication networks, liability for damages on our service contracts, the success of the companies in which Patni has made strategic investments, withdrawal of governmental fiscal incentives, political instability, legal restrictions on raising capital or acquiring companies outside India, and unauthorized use of our intellectual property and general economic conditions affecting our industry. The company does not undertake to update any forward-looking statement that may be made from time to time by or on behalf of the Company.
To view the press release with tables, please click on the link given below:
Pess Release with tables
For picture(s)/data to illustrate this release click below:
http://www.BusinessWireIndia.com/attachments/Patni_Press_Release(1).doc
Patni_Press_Release(1).doc
http://www.BusinessWireIndia.com/attachments/Fact_Sheet(4).pdf
Fact_Sheet(4).pdf
CONTACT DETAILS
Gaurav Agarwal, Investor Relations, Patni US, +1-617-914-8360, investors@patni.com
Gavin Desa, Investor Relations, Citigate Dewe Rogerson India, +91 (22) 40075037, gavin@cdr-india.com
Heena Kanal, Media Relations, Patni India, +91 (22) 66930500, heena.kanal@patni.com
Tony Viola, Media Relations, Patni US, +1-617-354-7424, tony.viola@patni.com
KEYWORDS
CONSUMER, ECONOMY, BANKING, BUSINESS SERVICES, Financial Analyst, IT, MEDIA, STOCK EXCHANGES, TECHNOLOGY, PATNI.BO, PATNI.NS
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