BWI: Patni’s Q1 2010 Net Income* up 122.7% YoY

Press release from Business Wire India
Source: Patni Computer Systems
Thursday, April 29, 2010 10:00 AM IST (04:30 AM GMT)
Editors: General: Consumer interest, Economy; Business: Banking & financial services, Business services, Financial Analyst, Information technology, Media & entertainment, Stock exchanges; Technology
--------------------------------------------------
Patni's Q1 2010 Net Income* up 122.7% YoY


Mumbai, Maharashtra, India, Thursday, April 29, 2010 -- (Business Wire India) -- Patni Computer Systems Limited (Patni) today announced its financial results for the first quarter ended 31st March 2010

* Important Note: As stated in our earnings release of Q4 2009, based on reviews certain tax positions for previous years was written back which led to a one time increase in other income of US$ 1.5 million and decrease in tax expense of US$ 9.5 million. Consequently, profit after tax had increased by US$ 11.0 million for Q4 2009. These Variations were referred to as "Extra Ordinary Items" in said press release. In this release these have been separately shown as exclusion for non-GAAP presentation in respective lines of gross profit, other income, tax expense and net income, for comparative purposes and should be read together with the reported US GAAP results.

Performance Highlights for the quarter ended March 31,2010
. Revenues for the quarter at US$ 172.3 million (Rs.7,745.4 million)
o Up 1.3% QoQ from US$ 170.2 million (Rs.7,896.1 million)
o Up 10.0% YoY from US$ 156.7 million (Rs.7,969.1 million)
o Constant currency Revenues up 1.9 % for the quarter
o Revenue concentration of Top 10 customers reduced sequentially to 48.7% from 50.9% in previous quarter.

. Operating Income for the quarter at US$ 36.2 million (Rs.1,627.0 million)
o Up 8.7% QoQ from US$ 33.3 million (Rs.1,545.6 million)
o Up 126.6% YoY from US$ 16.0 million (Rs.812.4 million)
o Forex gain for the quarter US$ 4.8 million, up 49% QoQ

. Net Income for the quarter at US$ 33.3 million (Rs.1,497.1 million)
o Down 17.7% QoQ from US$ 40.5 million (Rs. 1,878.4 million)
o Up 13.1% QoQ from US$ 29.4 million (Excluding extra ordinary items)
o Up 122.7% YoY from US$ 15.0 million (Rs.760.7 million)

. EPS for the quarter at US$ 0.26 per share (US$ 0.52 per ADS).
Future Outlook:

. Q2 CY2010 Revenues are expected to be at US$ 171 million to US$ 172 million and Net Income (Excluding the hedging Gain/Loss) is expected to be in the range of US$ 27 million to US$ 28 million
-- This guidance is based on constant Rupee -USD rate of Rs.45.5.
-- Mark to Market foreign exchange gain during Q2 2010 is expected to be in the range of US$ 2.5 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, "Operating performance for Q1 2010 has been better than expectation. We are making strategic investments to our business in line with our micro vertical based strategy. These initiatives and expansion of coverage will start reflecting in higher market share for us in the mid term. Short term supply side pressures in term of higher than planned attrition were challenges that we faced and have been actioned for correctness. Overall we are pleased with the performance for the quarter. Our guidance for next quarter reflects short terms caution than mid to long term trends."

Speaking on the occasion, Mr. Surjeet Singh, Chief Financial Officer, said, "Our operating margins management efforts have paid off with well managed cost structures and efficient forex and treasury management as reflected in the numbers. Growth investments and initiatives are in place and are being executed. We will continue to focus on productivity based savings to fund operating investments as we scale our business through organic and in organic means."

Corporate Developments

Appointments:
. Patni appoints Alison Fry as new HR Director for EMEA region

Patni announced that it has appointed Alison Fry as its new Human Resources Director for the EMEA region. Alison has more than 20 years' industry experience and will be responsible for the entire HR function within Patni's EMEA business. Alison joins Patni from Real HR Consulting, where she provided HR outsourcing consultancy to organizations in the financial and technology sectors. Before that, she worked in senior HR roles within companies such as TCS, SHL, Sony UK, Steria and Hitachi Data Systems.

Awards & Recognition:
. Patni wins award for innovative HR practices

Patni recently announced that it has received the award for 'Innovative Retention Strategies' at the World HRD Congress 2010. The prestigious global HRD event, which honors organizational transformation and development, saw a congregation of 189 companies from over 25 countries. Rajesh Padmanabhan, EVP and Global HR Head at Patni, was also awarded the prestigious 'HR Professional of the Year' for his leadership and contribution in the field of HR.

Expansion:
. Patni bags large multiyear contract from Universal American and enters TPA segment

Patni has announced a 5 year agreement for providing end-to-end policy administration services for Universal American Corp. (Universal American). Patni has also signed a definitive agreement to acquire CHCS Services, Inc., a wholly owned subsidiary of Universal American.
The acquisition creates a new hub for Patni in Pensacola, Fla. and establishes a new line of business for Patni as a Third-Party Administrator (TPA) in the insurance and healthcare sector, significantly enhancing its existing BPO capabilities to deliver end-to-end platform based solutions and TPA services to insurance providers' back-office transactions.

. Patni Establishes New BPO Delivery Center in Texas for North American Customers

Patni announced the establishment of a new North American hub for Business Process Outsourcing operations in El Paso, Texas. The move was triggered by a multiyear, multimillion-dollar BPO services contract with a leading healthcare technology and services provider. When fully staffed, it will employ more than 300 skilled professionals providing a wide range of insurance, financial services, F&A, technical support and multi-lingual helpdesk services to Patni's North American clients. In addition, the BPO services deal strengthens Patni's healthcare delivery capability across the Payers and Providers segment.

. Patni Computer Systems Opens New IT Delivery Center in Queretaro, Mexico

Patni recently hosted a ribbon-cutting ceremony to unveil a new state-of-the-art IT business center in Queretaro, Mexico, that will expand Patni's global delivery initiative and serve as the hub of the company's expansion efforts in Latin American markets. Patni is moving from its temporary facility into a permanent location in a high-rise building at ITESM Technological Park of Tech de Monterrey.

Financial Statements Analysis:

Revenues
Revenues during the quarter were higher by 1.3% sequentially to US$ 172.3 million (Rs.7,745.4 million), from US$ 170.2 million (Rs.7,896.1 million) in the preceding quarter. Revenue growth at constant currency was up 1.9%. Number of active clients were 260 at quarter end as compared to 272 in Q4 2009. New clients acquisitions during the quarter were 9.

Gross Margin
Gross Margins were at 38.3% or US$ 66.0 million (Rs.2,968.4 million) against 37.9% or US$ 64.5 million (Rs.2,995.1 million) in the previous quarter. Improvement in Gross margin is primarily on account of higher operating efficiencies.
Overall non cash expenses were US$ 5.3 million which includes depreciation and amortization expenses of US$ 4.5 million and stock option charge of US$ 0.8 million. Corresponding expenses for Q4 were US$ 4.9 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$ 15.9 million (Rs.712.7 million) at 9.2% as compared to US$ 14.2 million (Rs.660.1 million) at 8.4% in the previous quarter.
G&A expenses during the quarter were at US$ 18.2 million (Rs.816.9 million) or 10.5% as compared to US$ 18.4 million (Rs.852.8 million) at 10.8% during the previous quarter.
Overall non cash expenses is US$ 3.6 million which includes depreciation and amortization expenses at US$ 2.2 million for the quarter as against US$ 1.6 million in Q4 2009 and stock option charge at US$ 1.4 million for the quarter as against US$ 1.7 million in Q4 2009.

Foreign exchange gain/loss
The revaluation and mark to market foreign exchange gain for the quarter were at US$ 4.8 million (Rs.214.3 million) as compared to foreign exchange gain of US$ 3.2 million (Rs.148.5 million) during the previous quarter.
The quarter end rate for debtor's revaluation was Rs.44.91. Outstanding contracts at the end of Q1 2010 were about US$ 356 million which were contracted in the range of Rs.41.1 to Rs 49.4.

Operating Income
Operating Income including foreign exchange gain / loss was at US$ 36.2 million (Rs.1,627.0 million) or at 21.0% during the quarter as compared to US$ 33.3 million or at 19.6% during previous quarter.

Other Income
For Q1 CY2010, other income (including interest and dividend income net of interest expenses, profit/loss on sale of investments and other miscellaneous income) stood at 2.6% or US$ 4.4 million (Rs.198.2 million) during the quarter as compared to 2.5% or US$ 4.3 million (Rs.197.4 million) during previous quarter.
Other Income adjusted for Extra ordinary items was at US$ 2.7 million or at 1.6% during previous quarter.

Profit before Tax
Profit before tax for the quarter at 23.6% was US$ 40.6 million (Rs.1,825.2 million),higher by 8.1% as compared to US$ 37.6 million (Rs.1,743.0 million) during previous quarter. Profit before Tax adjusted for Extra Ordinary items was sequentially higher by 12.7% from US$ 36.0 million.

Income Taxes
Income tax for the quarter was at US$ 7.3 million (Rs.328.1 million) at an effective tax rate of 18.0%.

Net Income
Consequently, net income for the quarter is at 19.3% was US$ 33.3 million (Rs.1,497.1 million), lower by 17.7% as compared to previous quarter net income of US$ 40.5 million (Rs.1,878.4 million). Net Income adjusted for Extra ordinary items was sequentially higher by 13.1% from US$ at US$ 29.4 million.

Balance Sheet and Cash Flow changes
During the quarter, against net income of US$ 33.3 million (Rs.1,497.1 million),cash from operating activities was at US$ 13.3 million (Rs.596.7 million) net of changes in current assets and liabilities of US$ (-) 26.8 million and non cash charges of US$ 6.7 million.

Net cash used in investing activities was US$ 21.3 million (Rs.958.2 million) including capital expenditure of US$ 2.5 million (Rs.111.0 million),net cash invested in securities US$ 18.8 million (Rs.847.2 million).

Net cash inflow on financing activities was US$ 1.4 million (Rs.63.4 million) comprising proceeds from common shares issued of US$ 1.5 million (Rs.65.6 million) and US$(-) 0.1 million (Rs.2.2 million) on other financing activities. Over all cash and cash equivalents (including short term investments) post revaluation, were at US$ 467.3 million (Rs.21,006.7 million), as compared to US$ 439.3 million (Rs.20,384.3 million) at the close of Q4 2009.

Receivables at the end of Q1 2010 were at US$114.3 million as compared to US$ 109.4 million at the end of Q4 2009. Number of days outstanding (Including Unbilled receivables) for current quarter was 80 days as compared to 69 days in Q4 2009

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 March 31, 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 (BSE: PATNI COMPUT, 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 13 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:

Press Release with tables
For picture(s)/data to illustrate this release click below:

http://www.BusinessWireIndia.com/attachments/Patni_Q1_2010_PressRelease.doc
Patni_Q1_2010_PressRelease.doc
http://www.BusinessWireIndia.com/attachments/Fact Sheet Q110.pdf
Fact Sheet Q110.pdf


CONTACT DETAILS
Gaurav Agarwal, Investor Relations, Patni US, +1-617-914-8360, investors@patni.com
Gavin Desa, Investor Relations, Citigate Dewe Rogerson, +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

If you wish to change your Business Wire India selection please click on this link http://www.businesswireindia.com/media/news.asp and use your personal username and password to login.

Submit your press release at http://www.businesswireindia.com