HOV Services cons operating income up YoY 292%

HOV Services cons operating income up YoY 292%

HOV Services, Ltd. (NSE: HOVS), among India's top tier BPO companies, reported strong consolidated financial results for the third fiscal quarter ended December 31, 2007.

Financial Highlights for Three and Nine Months ended December 31, 2007

Performance for the Third Fiscal Quarter ended December 31, 2007
Consolidated Total Income for the quarter climbed 409% to Rs 2,141.4 million from Rs 421.0 million for the corresponding period last fiscal year
292% increase in its consolidated Operating Income for the quarter to Rs 256.5 million from Rs 65.3 million for the corresponding period last fiscal year
Rupee appreciation against the USD was accretive to the company to the tune of Rs 52.1 million
The basic and diluted Earnings Per Share (EPS) is Rs 7.40 for the quarter
Pro forma diluted EPS is Rs 4.12 after giving effect to all shares that would be issued
Consolidated Total Income in the reporting quarter was 13% less than the 2nd quarter FY 2008 related to less of a foreign exchange gain recognized in the 3rd quarter

Performance for the Nine Months ended December 31, 2007
Consolidated Total Income for the Nine months has increased 385% to Rs 6,754.2 million from Rs 1,391.4 million for the corresponding period last fiscal year
384% increase in its consolidated Operating Income for the quarter to Rs 1,033.8 million from Rs 213.8 million for the corresponding period last fiscal year
279% increase in its consolidated Net Profit to Rs 529.4 million from Rs 139.8 million for the corresponding period last fiscal year
The basic and diluted Earnings Per Share for this nine month period is Rs 42.17 per share
Pro forma diluted EPS for this nine month is Rs 23.5 after giving effect to all shares that would be issued

Significant Developments during the Third Quarter

Highlights of Business Performance
Pace of Revenue Growth is expected to continue - in part due to success of end-to-end solution sales strategy and in part due to success of cross sell and upsell program across our top 350 customer
Added $19.8 million in customer contracts in the 3rd Fiscal Quarter with $10 million from existing customers; and $60.2 million over the last 3 quarters
Average deal size increased during the 3rd Fiscal quarter to $1.5 million from $0.6 million in the 1st quarter with many deals in the pipeline that are larger than average for the 3rd Fiscal quarter
Our top 350 cross sell/up sell program yielded $10.1 million in contract value in the 3rd quarter as compared to $1.7 million 2nd quarter when the program was launched
Strong ramp up and growth in Healthcare Payer/Provider services, ARM and Accounts Payable underway
Key Accomplishments and Noteworthy Items
Accounts Receivable Management ("ARM") business got a boost by acquisition of a portfolio of healthcare receivables for $20.4 million by our subsidiary
ARM business saw a decline in collections during the quarter due to customer sourcing decisions, economic environment and seasonality in the 3rd Fiscal quarter but decline was offset by growth in revenues due to acquisition of portfolio's
Substantial savings from integration and rationalization of global operations in the 4th Fiscal quarter and beyond;
Launch of new facility in China with capacity for approximately 1,400 associates of which 1,100 will be added in the 4th Fiscal quarter
Productivity gains achieved due to LEAN, six sigma and technology initiatives are gaining momentum to improve quality, reduce cost and turnaround time and are expected to increase capacity
The impact of the Rupee was accretive to the company to the tune of Rs52.1 million. This is due to the global footprint of the company deriving 98% of its revenues in North America with cost spread globally between US, Canada, India, China and Mexico. The company has USD denominated borrowings from US institutions which contributed substantially to the income due to foreign exchange gains
Rationalization strategy to leverage our core strengths and key service offerings across industry verticals resulted in divestiture of our Tax Services group. This negatively impacted our revenue growth in the current quarter by approximately $1.4 million
Diversified Client Base - Top 100 clients represent over 73% of total revenues
In a recent customer survey 98.1% of respondents said they would "definitely recommend" HOV Services to others

Global Presence and experienced HOVS Team
Over 11,641 associates and growing, strategically located across the globe India 8,600; North America 1,894; China 794; Mexico 353
To meet customer ramp up requirements, we need to add 2,301 associates; out of which we have added 135 as of December 31, 2007 and we are in the process of adding additional 2,166 employees by March 31, 2008
Our process re-engineering, improved utilization and productivity gain allowed us to absorb additional revenue without adding significant head count
Company was able to keep its annualized attrition rate at approximately 27% in line with expectations
Improvement of Utilization and consolidation is expected to both contribute to income and reduce number of associates needed by offsetting the effects of wage escalations and attrition in certain cities and delivery centers.

Sourced From: Concept Public Relations India Pvt. Ltd