26. Operating segments
The Company has several operating segments based on a mix of industry and the types of services. The composition and organization of these operating segments currently is designed in such a way that the back office shared processes, i.e. the horizontal structure, delivers service to industry specific back office and front office processes i.e. the vertical structure. These structures represent a matrix form of organization structure, accordingly operating segments have been determined based on the core principle of segment reporting in accordance with IFRS 8 “Operating segments” (“IFRS 8”). Segment managers are responsible for the performance of the operating segments on a combined vertical structure which includes travel, shipping and logistics services; utilities, retail and consumer products group; banking and financial, healthcare and insurance services including auto claims; and others. The segment managers’ performance is reviewed by the Group Chief Executive Officer, who has been identified as the Chief Operating Decision Maker (“CODM”). The CODM evaluates the Company’s performance and allocates resources based on revenue growth of combined vertical structure.
The Company believes that the business process management services that it provides to customers in industries other than auto claims such as travel, shipping and logistics services; utilities, retail and consumer products group; banking and financial, healthcare and insurance; and others are similar in terms of services, service delivery methods, use of technology, and average long-term gross profit and hence meet the aggregation criteria in accordance with IFRS 8. WNS Assistance Limited and Accidents Happen Assistance Limited (which provide automobile repair through a network of third party repair centers), and WNS Assistance (Legal) Limited and WNS Legal Assistance LLP (which provides legal services in relation to personal injury claims), constitute WNS Auto Claims BPM, the performance of which is evaluated by the CODM separately. WNS Auto Claims BPM segment does not meet the aggregation criteria. Accordingly, the Company has determined that it has two reportable segments “WNS Global BPM” and “WNS Auto Claims BPM.”
In order to provide accident management services, the Company arranges for the repair through a network of repair centers. Repair costs paid to automobile repair centers are invoiced to customers and recognized as revenue except in cases where the Company has concluded that it is not the principal in providing claims handling services and hence it would be appropriate to record revenue from repair services on a net basis i.e. net of repair cost. The Company uses revenue less repair payments (non-GAAP) for “Fault” repairs as a primary measure to allocate resources and measure segment performance. Revenue less repair payments is a non-GAAP measure which is calculated as (a) revenue less (b) in the Company’s auto claims business, payments to repair centers for “Fault” repair cases where the Company acts as the principal in its dealings with the third party repair centers and its clients. For “Non-fault repairs,” revenue including repair payments is used as a primary measure. As the Company provides a consolidated suite of accident management services including credit hire and credit repair for its “Non-fault” repairs business, the Company believes that measurement of that line of business has to be on a basis that includes repair payments in revenue.
The segment results for the year ended March 31, 2018 are as follows:
| Year ended March 31, 2018 | ||||||||||||||||
| WNS Global BPM |
WNS Auto Claims BPM |
Inter segments* |
Total | |||||||||||||
|
Revenue from external customers |
$ | 722,542 | $ | 35,414 | $ | — | $ | 757,956 | ||||||||
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Segment revenue |
$ | 722,600 | $ | 35,414 | $ | (58 | ) | $ | 757,956 | |||||||
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Payments to repair centers |
— | 16,970 | — | 16,970 | ||||||||||||
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Revenue less repair payments (non-GAAP) |
722,600 | 18,444 | (58 | ) | 740,986 | |||||||||||
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Depreciation |
19,682 | 272 | — | 19,954 | ||||||||||||
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Other costs |
561,870 | 18,249 | (58 | ) | 580,061 | |||||||||||
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Segment operating profit |
141,048 | (77 | ) | — | 140,971 | |||||||||||
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Other income, net |
(9,757 | ) | (1,473 | ) | — | (11,230 | ) | |||||||||
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Finance expense |
4,065 | 199 | — | 4,264 | ||||||||||||
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Segment profit before income taxes |
146,740 | 1,197 | — | 147,937 | ||||||||||||
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Provision for income taxes |
15,319 | 112 | — | 15,431 | ||||||||||||
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Segment profit |
131,421 | 1,085 | — | 132,506 | ||||||||||||
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Amortization of intangible assets |
15,505 | |||||||||||||||
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Share based compensation expense |
30,565 | |||||||||||||||
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Profit |
$ | 86,436 | ||||||||||||||
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Addition to non-current assets |
$ | 32,337 | $ | 201 | $ | — | $ | 32,538 | ||||||||
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Total assets, net of elimination |
633,186 | 126,377 | — | 759,563 | ||||||||||||
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Total liabilities, net of elimination |
$ | 181,627 | $ | 82,980 | $ | — | $ | 264,607 | ||||||||
| * | Transactions between inter segments represent invoices issued by WNS Global BPM to WNS Auto Claims BPM for business process management services rendered by the former to the latter. |
No client individually accounted for more than 10% of the total revenue during the year ended March 31, 2018.
The segment results for the year ended March 31, 2017 are as follows:
| Year ended March 31, 2017 | ||||||||||||||||
| WNS Global BPM |
WNS Auto Claims BPM |
Inter segments* |
Total | |||||||||||||
|
Revenue from external customers |
$ | 557,904 | $ | 44,642 | $ | — | $ | 602,546 | ||||||||
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Segment revenue |
$ | 557,983 | $ | 44,642 | $ | (79 | ) | $ | 602,546 | |||||||
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Payments to repair centers |
24,102 | — | 24,102 | |||||||||||||
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Revenue less repair payments (non-GAAP) |
557,983 | 20,540 | (79 | ) | 578,444 | |||||||||||
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Depreciation |
16,598 | 305 | — | 16,903 | ||||||||||||
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Other costs |
429,074 | 20,147 | (79 | ) | 449,142 | |||||||||||
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Impairment of goodwill (Refer note 9) |
— | 21,673 | — | 21,673 | ||||||||||||
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Segment operating profit/(loss) |
112,311 | (21,585 | ) | — | 90,726 | |||||||||||
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Other income, net |
(7,785 | ) | (904 | ) | — | (8,689 | ) | |||||||||
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Finance expense |
547 | — | — | 547 | ||||||||||||
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Segment profit/(loss) before income taxes |
119,549 | (20,681 | ) | — | 98,868 | |||||||||||
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Provision for income taxes |
17,441 | 89 | — | 17,530 | ||||||||||||
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Segment profit/(loss) |
102,108 | (20,770 | ) | — | 81,338 | |||||||||||
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Amortization of intangible assets |
20,539 | |||||||||||||||
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Share-based compensation expense |
23,036 | |||||||||||||||
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Profit/(loss) |
$ | 37,763 | ||||||||||||||
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Addition to non-current assets |
$ | 111,280 | $ | 453 | $ | — | $ | 111,733 | ||||||||
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Total assets, net of elimination |
590,974 | 113,149 | — | 704,123 | ||||||||||||
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Total liabilities, net of elimination |
$ | 214,155 | $ | 74,902 | $ | — | $ | 289,057 | ||||||||
| * | Transactions between inter segments represent invoices raised by WNS Global BPM on WNS Auto Claims BPM for business process outsourcing services rendered by the former to latter. |
One customer in the WNS Global BPM segment accounted for 9.0% of the Company’s total revenue for the year ended March 31, 2017. The receivables from this customer comprised 7.1% of the Company’s total trade receivables as at March 31, 2017.
The segment results for the year ended March 31, 2016 are as follows:
| Year ended March 31, 2016 | ||||||||||||||||
| WNS Global BPM |
WNS Auto Claims BPM |
Inter segments* |
Total | |||||||||||||
|
Revenue from external customers |
$ | 508,864 | $ | 53,315 | $ | — | $ | 562,179 | ||||||||
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Segment revenue |
$ | 509,268 | $ | 53,315 | $ | (404 | ) | $ | 562,179 | |||||||
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Payments to repair centers |
— | 31,170 | — | 31,170 | ||||||||||||
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Revenue less repair payments (non-GAAP) |
509,268 | 22,145 | (404 | ) | 531,009 | |||||||||||
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Depreciation |
15,090 | 345 | — | 15,435 | ||||||||||||
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Other costs |
377,051 | 22,966 | (404 | ) | 399,613 | |||||||||||
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Segment operating profit/(loss) |
117,127 | (1,166 | ) | — | 115,961 | |||||||||||
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Other income, net |
(7,461 | ) | (1,033 | ) | — | (8,494 | ) | |||||||||
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Finance expense |
278 | — | — | 278 | ||||||||||||
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Segment profit/(loss) before income taxes |
124,310 | (133 | ) | — | 124,177 | |||||||||||
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Provision for income taxes |
20,905 | 275 | — | 21,180 | ||||||||||||
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Segment profit/(loss) |
103,405 | (408 | ) | — | 102,997 | |||||||||||
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Amortization of intangible assets |
25,198 | |||||||||||||||
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Share-based compensation expense |
17,919 | |||||||||||||||
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Profit/(loss) |
$ | 59,880 | ||||||||||||||
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Addition to non-current assets |
$ | 30,757 | $ | 1,101 | $ | — | $ | 31,858 | ||||||||
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Total assets, net of elimination |
373,195 | 152,256 | — | 525,451 | ||||||||||||
|
Total liabilities, net of elimination |
$ | 36,660 | $ | 80,602 | $ | — | $ | 117,262 | ||||||||
| * | Transactions between inter segments represent invoices raised by WNS Global BPM on WNS Auto Claims BPM for business process outsourcing services rendered by the former to latter. |
One customer in the WNS Global BPM segment accounted for 10.9% of the Company’s total revenue for the year ended March 31, 2016. The receivables from this customer comprised 10.0% of the Company’s total trade receivables as at March 31, 2016.
External Revenue
Revenues from the geographic segments based on domicile of the customer. The Company’s external revenue by geographic area is as follows:
| Year ended March 31, | ||||||||||||
| 2018 | 2017 | 2016 | ||||||||||
|
Jersey, Channel Islands |
$ | — | $ | — | $ | — | ||||||
|
US |
308,436 | 196,193 | 155,345 | |||||||||
|
UK |
258,863 | 248,588 | 264,889 | |||||||||
|
Australia |
66,626 | 49,053 | 40,308 | |||||||||
|
Europe (excluding UK) |
47,169 | 37,494 | 34,732 | |||||||||
|
South Africa |
42,841 | 42,717 | 30,086 | |||||||||
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Rest of the world |
34,021 | 28,501 | 36,819 | |||||||||
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Total |
$ | 757,956 | $ | 602,546 | $ | 562,179 | ||||||
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The Company’s non-current assets (excluding goodwill and intangible assets) by geographic area are as follows:
| As at March 31, |
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| 2018 | 2017 | |||||||
|
Jersey, Channel Islands |
$ | — | $ | — | ||||
|
UK |
756 | 1,228 | ||||||
|
North America |
5,112 | 6,493 | ||||||
|
India |
26,167 | 21,944 | ||||||
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South Africa |
10,529 | 11,449 | ||||||
|
Philippines |
14,050 | 10,583 | ||||||
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Rest of the world |
3,992 | 3,099 | ||||||
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Total |
$ | 60,606 | $ | 54,796 | ||||
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