Firstsource Solutions (FSL) Q4 07/08 earnings summary

Executive summary

• FY08 consolidated total income rose 59.1% to Rs. 13,337.2 million; net profit after tax increased 35.3% to Rs. 1,315.6 million.

• MedAssist acquisition expanded healthcare services into the US provider market; domestic services grew to 10.8% of income from services, from 3.8% in FY07.

• Growth came amid a weakening US economy, rupee appreciation and lower operating margins; management expected near-term macroeconomic and segment pressures.

Financial highlights

• Consolidated service income increased 51.9% to Rs. 12,406.1 million; total income rose 59.1% to Rs. 13,337.2 million in FY08.

• Consolidated PAT rose 35.3% to Rs. 1,315.6 million; PBT increased 39.5% to Rs. 1,431.9 million.

• Standalone total revenue rose 14.9% to Rs. 5,046.9 million, while PAT fell 22.4% to Rs. 576.4 million, reflecting FCCB/foreign-loan mark-to-market losses and higher depreciation.

• Operating EBITDA increased 39.4% to Rs. 2,309.4 million; operating EBIT rose 42.7% to Rs. 1,448.6 million.

• Operating cash flow was Rs. 2,268.5 million; investing outflow of Rs. 14,145.2 million primarily reflected the MedAssist acquisition.

Outlook and guidance

• FY09 expected to face negative macro trends, subdued global growth and pressure in some business segments; fundamentals of outsourcing and offshoring viewed as strong over the long term.

• Healthcare provider expansion, cross-selling and Indian domestic BFSI and telecom markets identified as future growth drivers.

• Barclays five-year US credit-card service and collections agreement was expected to generate around US$80 million in revenue.