Wipro Limited Announces Results for the Quarter ended June 30, 2018 under IFRS | Digital Conqueror

Wipro Limited Announces Results for the Quarter ended June 30, 2018 under IFRS

Business Wire IndiaWipro Limited (NYSE: WIT, BSE: 507685, NSE: WIPRO) today announced financial results under International Financial Reporting Standards (IFRS) for its quarter ended June 30, 2018.
 
Highlights of the Results
 
Results for the Quarter ended June 30, 2018:

  • Gross Revenue was Rs 139.8 billion ($2.0 billion1), up 1.5% sequentially and 2.6% YoY.
  • IT Services Segment Revenue at Rs 137.0 billion ($2.0 billion1), up 2.2% sequentially and 5.2% YoY.
  • IT Services Segment Revenue in dollar terms at $2,026.5 million, down 1.7% sequentially, up 2.8% YoY.
  • Non-GAAP constant currency IT Services Segment Revenue up 0.1% sequentially and 2.4% YoY.
  • IT Services Margin2 for the quarter at 17.2%. This includes a gain of Rs 2,529 million ($36.9 million1) from the sale of our hosted data center business in the quarter ended June 30, 2018.
  • EPS for the quarter at Rs 4.71 ($0.071) per share, an increase of 9.9% YoY.

 
Performance for the Quarter ended June 30, 2018
 
Abidali Z. Neemuchwala, CEO and Member of the Board said – “We have seen pickup in spending in the developed markets, particularly in North America and BFSI. Our investments in Digital continue to help us build differentiation in key industry segments, which is resulting in a consistent improvement in our client metrics. We have had a good quarter of order bookings and I am confident we are moving in the right direction.”
 
Jatin Dalal, Chief Financial Officer said -“We successfully concluded the sale of our hosted data center business in the quarter. We continue to improve our operating metrics and generated strong operating cash flows at 136% of our Net Income during the quarter.
 
Outlook for the Quarter ending September 30, 2018
 
We expect Revenue from our IT Services business to be in the range of $2,009 million to $2,049 million*. This translates to a sequential growth of 0.3% to 2.3%, excluding the impact of the divestment of our hosted data center services business which concluded in the quarter ended June 30, 2018.
 
* Outlook is based on the following exchange rates: GBP/USD at 1.34, Euro/USD at 1.18, AUD/USD at 0.75, USD/INR at 68.50 and USD/CAD at 1.29.
 
IT Services
 
Wipro continued its momentum in winning large deals globally as described below:
 
Wipro has won an applications cloud migration contract from a European investment bank for their repository of applications.
 
A major US airline has renewed its multi-year contract with Wipro for global contact center support and other business process services.
 
Wipro has won a multi-year business process operations transformation contract from an Australian construction and property management company. The engagement will leverage Wipro’s AI, cognitive-driven automation and platforms to standardize and transform the client’s finance and HR operations into a global shared services model.
 
Wipro has been awarded a multi-year cargo management contract by LATAM Cargo S.A., a leader in air cargo transport to, from and within Latin America. Wipro will deploy its end to end cargo management system, CROAMIS, for the client.
 
Wipro has been awarded a multi-year quality engineering transformation contract by a leading African financial services company. Our proprietary platforms – Wipro AssureNXT and Wipro HOLMESTM will drive cost optimization as well as standardize and transform the quality engineering landscape for the client.
 
Digital Highlights
 
We continue to see increasing traction in digital oriented deals as illustrated below:
 
A global pharmaceutical company has selected Wipro to support its strategic assessment and go-to-market approach for its diagnostics business unit. The project will leverage Wipro's industry expertise and service design methodology to help define a futuristic strategy roadmap for the business unit.
 
Wipro has won an application modernization and cloud migration contract from a global financial services company, aimed at driving greater business agility and improved end-customer experience.
 
Wipro and Designit have been selected by a leading North American student aid organization to help transform and reimagine its customer experience across its loan portals through redesigned business processes and digital touchpoints.
 
Wipro also continues to win deals in the cloud applications space by leveraging Appirio Cloud Services:

  • An American retailer has extended its HR transformation contract with Wipro. This program will improve the customer experience as well as the employee satisfaction in its stores.
  • A large medical advocacy group has selected Wipro as a partner to transform its employee and member experience. Wipro will implement a cloud-based solution to enhance the group’s human capital management, payroll and finance operations.

 
Analyst Accolades and Awards
 
Wipro was recognized as a Leader in the Nelson Hall NEAT assessment on Business Process Transformation through RPA & AI.

Wipro was recognized as a Leader in IDC MarketScape for Worldwide Manufacturing Information Transformation Strategic Consulting 2018 Vendor Assessment.
 
Wipro was recognized as a Leader in Everest Group’s Know Your Customer-Anti Money Laundering (KYC-AML) BPO – State of the Market with Services PEAK Matrix™ Assessment 2018.
 
Wipro has been awarded the National Intellectual Property (IP) Award 2018 by Intellectual Property Office (IPO), Government of India and The Department of Industrial Policy and Promotion (DIPP), in the ‘Top Public Limited Company / Private Limited Company for Patents & Commercialization in India’ category.
 
All product names, logos, and brands are property of their respective owners.
 
IT Products

  • IT Products Segment Revenue for the quarter ended June 30, 2018 was Rs 3.5 billion ($51.6 million1).
  • IT Products Margin for the quarter was -20.9%.

Please refer the table at the end for reconciliation between IFRS IT Services Revenue and IT Services Revenue on a non-GAAP constant currency basis.
 
About Non-GAAP Financial Measures
 
This press release contains non-GAAP financial measures within the meaning of Regulation G and Item 10(e) of Regulation S-K. Such non-GAAP financial measures are measures of our historical or future performance, financial position or cash flows that are adjusted to exclude or include amounts that are excluded or included, as the case may be, from the most directly comparable financial measure calculated and presented in accordance with IFRS.
 
The table at the end of the release provides IT Services Revenue on a constant currency basis, which is a non-GAAP financial measure that is calculated by translating IT Services Revenue from the current reporting period into U.S. dollars based on the currency conversion rate in effect for the prior reporting period. We refer to growth rates in constant currency so that business results may be viewed without the impact of fluctuations in foreign currency exchange rates, thereby facilitating period-to-period comparisons of our business performance.
 
This non-GAAP financial measure is not based on any comprehensive set of accounting rules or principles and should not be considered a substitute for, or superior to, the most directly comparable financial measure calculated in accordance with IFRS, and may be different from non-GAAP measures used by other companies. In addition to this non-GAAP measure, the financial statements prepared in accordance with IFRS and the reconciliation of these non-GAAP financial measures with the most directly comparable IFRS financial measure should be carefully evaluated.
 
Results for the quarter ended June 30, 2018, prepared under IFRS, along with individual business segment reports, are available in the Investors section of our website www.wipro.com

Quarterly Conference Call 
We will hold an earnings conference call today at 07:15 p.m. Indian Standard Time (09:45 a.m. U.S. Eastern Time) to discuss our performance for the quarter. The audio from the conference call will be available online through a web-cast and can be accessed at the following link- http://services.choruscall.eu/links/wipro180720.html
 
An audio recording of the management discussions and the question and answer session will be available online and will be accessible in the Investor Relations section of our website at www.wipro.com

About Wipro Limited
 
Wipro Limited (NYSE: WIT, BSE: 507685, NSE: WIPRO) is a leading global information technology, consulting and business process services company. We harness the power of cognitive computing, hyper-automation, robotics, cloud, analytics and emerging technologies to help our clients adapt to the digital world and make them successful. A company recognized globally for its comprehensive portfolio of services, strong commitment to sustainability and good corporate citizenship, we have over 160,000 dedicated employees serving clients across six continents. Together, we discover ideas and connect the dots to build a better and a bold new future.

Forward-Looking Statements
 

The forward-looking statements contained herein represent Wipro’s beliefs regarding future events, many of which are by their nature, inherently uncertain and outside Wipro’s control. Such statements include, but are not limited to, statements regarding Wipro’s growth prospects, its future financial operating results, and its plans, expectations and intentions. Wipro cautions readers that the forward-looking statements contained herein are subject to risks and uncertainties that could cause actual results to differ materially from the results anticipated by such statements. Such risks and uncertainties include, but are not limited to, risks and uncertainties regarding fluctuations in our earnings, revenue and profits, our ability to generate and manage growth, complete proposed corporate actions, intense competition in IT services, our ability to maintain 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, our ability to successfully complete and integrate potential acquisitions, liability for damages on our service contracts, the success of the companies in which we make strategic investments, withdrawal of fiscal governmental incentives, political instability, war, legal restrictions on raising capital or acquiring companies outside India, unauthorized use of our intellectual property and general economic conditions affecting our business and industry. Additional risks that could affect our future operating results are more fully described in our filings with the United States Securities and Exchange Commission, including, but not limited to, Annual Reports on Form 20-F. These filings are available at www.sec.gov. We may, from time to time, make additional written and oral forward-looking statements, including statements contained in the company’s filings with the Securities and Exchange Commission and our reports to shareholders. We do not undertake to update any forward-looking statement that may be made from time to time by us or on our behalf.

  1. For the convenience of the readers, the amounts in Indian Rupees in this release have been translated into United States Dollars at the certified foreign exchange rate of US$1 = Rs 68.46, as published by the Federal Reserve Board of Governors on June 30, 2018. However, the realized exchange rate in our IT Services business segment for the quarter ended June 30, 2018 was US$1= Rs 67.61.
  2. IT Services Margin refers to Segment Results Total.

 

WIPRO LIMITED AND SUBSIDIARIES
CONDENSED CONSOLIDATED INTERIM STATEMENT OF FINANCIAL POSITION
(Rupees in millions, except share and per share data, unless otherwise stated)
             
  As of March 31,   As of June 30,
    2018   2018   2018
            Convenience translation into US dollar in millions (unaudited) Refer footnote 1  
ASSETS            
Goodwill   117,584                        121,610                            1,776
Intangible assets                         18,113                         17,868                              261
Property, plant and equipment                         64,443                         65,357                              955
Derivative assets                               41                               29                                –  
Investments                           7,668                           6,448                                94
Investment in equity accounted investee                           1,206                           1,212                                18
Trade receivables                           4,446                           4,179                                61
Deferred tax assets                           6,908                           6,724                                98
Non-current tax assets                         18,349                         19,269                              281
Other non-current assets                   15,726                       16,547                            242
Total non-current assets                 254,484                     259,243                         3,786
             
Inventories                           3,370                           3,803                                56
Trade receivables                        100,990                         97,608                            1,426
Other current assets                         30,596                         26,415                              386
Unbilled receivables                         42,486                         26,691                              390
Contract assets    –                          18,209                              266
Investments                        249,094                        250,729                            3,662
Current tax assets                           6,262                           6,787                                99
Derivative assets                           1,232                           3,065                                45
Cash and cash equivalents                    44,925                      70,685                        1,033
                       478,955                      503,992                          7,363
Assets held for sale                    27,201                             –                               –  
Total  current assets                  506,156                     503,992                        7,363
                                                                                                
TOTAL ASSETS                   760,640                     763,235                      11,149
             
EQUITY            
Share capital                           9,048                           9,048                              132
Share premium                              800                              861                                13
Retained earnings                        453,265                        472,454                            6,901
Share based payment reserve                           1,772                           1,958                                29
Other components of equity                     18,051                      15,332                           224
Equity attributable to the equity holders of the Company                        482,936                        499,653                            7,299
Non-controlling interest                       2,410                        2,172                            32
TOTAL EQUITY                   485,346                    501,825                        7,331
             
LIABILITIES            
Long – term loans and borrowings                         45,268                         47,060                              687
Derivative liabilities                                 7                                –                                  –  
Deferred tax liabilities                           3,059                           2,407                                35
Non-current tax liabilities                           9,220                           8,925                              130
Other non-current liabilities                           4,230                           4,079                                60
Provisions                           3                              2                              –  
Total non-current liabilities                  61,787                      62,473                            912
             
Loans, borrowings and bank overdrafts                         92,991                         70,668                            1,032
Trade payables and accrued expenses                         68,129                         75,530                            1,103
Unearned revenues                         17,139                         18,801                              276
Current tax liabilities                           9,417                         13,304                              194
Derivative liabilities                           2,210                           3,287                                48
Other current liabilities                         16,613                         16,575                              242
Provisions                          796                         772                              11
                     207,295                   198,937                         2,906
Liabilities directly associated with assets held for sale                        6,212                            –                                –  
Total current liabilities                    213,507                   198,937                         2,906
                                                                                                
TOTAL LIABILITIES                    275,294                   261,410                         3,818
             
TOTAL EQUITY AND LIABILITIES                    760,640                   763,235                       11,149

 
 

WIPRO LIMITED AND SUBSIDIARIES
CONDENSED CONSOLIDATED INTERIM STATEMENTS OF INCOME
(Rupees in millions, except share and per share data, unless otherwise stated)
           
  Three months ended June 30,
  2017   2018   2018
           Convenience translation into US dollar in millions (unaudited) Refer Footnote 1 
Gross revenues                      136,261                          139,777                            2,042
Cost of revenues                      (97,111)                         (100,350)                          (1,466)
Gross profit                      39,150                           39,427                             576
           
Selling and marketing expenses                      (10,146)                           (10,813)                               (158)
General and administrative expenses                        (7,264)                            (8,608)                               (126)
Foreign exchange gains/(losses), net                            353                                771                                  11
Other Operating Income                              –                                2,529                                  37
           
Results from operating activities                      22,093                           23,306                                340
           
Finance expenses                        (1,601)                            (1,649)                                 (24)
Finance and other income                         6,327                              5,197                                  76
Share of profits/(loss) of equity accounted investee                              (1)                                 (53)                                  (1)
Profit before tax                      26,818                           26,801                                391
Income tax expense                    (5,994)                        (5,865)                             (86)
Profit for the period                    20,824                        20,936                             305
           
Attributable to:          
Equity holders of the Company                       20,765                            21,206                                310
Non-controlling interest                          59                           (270)                               (5)
Profit for the period                    20,824                         20,936                             305
           
           
Earnings per equity share:          
Attributable to equity share holders of the Company        
Basic                           4.29                               4.71                               0.07
Diluted                           4.28                               4.70                               0.07
           
Weighted average number of equity shares used in          
computing earnings per equity share          
Basic             4,845,115,238                  4,503,615,899                  4,503,615,899
Diluted             4,851,070,943                  4,511,794,217                  4,511,794,217
Additional Information          
Segment Revenue          
IT Services Business Units          
BFSI                       34,934                            41,054                                600
HLS                       19,150                            18,209                                266
CBU                       20,535                            21,987                                321
ENU                       17,464                            17,205                                251
TECH                       17,664                            19,504                                285
MFG                       11,678                            11,304                                165
COMM                       8,831                           7,740                              113
IT SERVICES TOTAL                      130,256                          137,003                              2,001
IT PRODUCTS                         6,343                              3,532                                  52
RECONCILING ITEMS                           15                               13                                –  
TOTAL                   136,614                       140,548                           2,053
           
Segment Result          
IT Services Business Units          
BFSI                         5,441                              7,149                                104
HLS                         2,734                              2,070                                  30
CBU                         2,934                              2,615                                  38
ENU                         3,651                              2,690                                  39
TECH                         3,481                              4,064                                  59
MFG                         1,694                              1,402                                  20
COMM                         1,449                                754                                  11
UNALLOCATED                            532                                695                                  10
OTHER OPERATING INCOME                            –                              2,529                               37
TOTAL IT SERVICES                       21,916                            23,968                                348
IT PRODUCTS                             31                               (740)                                 (11)
RECONCILING ITEMS                          146                               78                                1
TOTAL                      22,093                         23,306                             338
FINANCE EXPENSE                        (1,601)                            (1,649)                                 (24)
FINANCE AND OTHER INCOME                         6,327                              5,197                                  77
SHARE OF PROFIT/(LOSS) OF EQUITY ACCOUNTED INVESTEE                           (1)                              (53)                                –  
PROFIT BEFORE TAX                       26,818                            26,801                                391
INCOME TAX EXPENSE                     (5,994)                         (5,865)                              (86)
PROFIT FOR THE PERIOD                      20,824                           20,936                                305
           
Segment result represents operating profits of the segments and dividend income and gains or losses (net) relating to strategic investments, which are presented within “Finance and other income” in the statement of Income.
 
The Company is organized by the following operating segments: IT Services and IT Products.

IT Services: The IT Services segment primarily consists of IT Service offerings to customers organized by industry verticals.
Effective April 1, 2018, consequent to change in organization structure, the Company reorganized its industry verticals. The
Manufacturing (MFG) and Technology Business unit are split from the former Manufacturing & Technology (MNT) business unit.
The revised industry verticals are as follows: Banking, Financial Services and Insurance (BFSI), Health Business unit (Health BU) previously known as Health Care and Life Sciences Business unit (HLS), Consumer Business unit (CBU), Energy, Natural
Resources & Utilities (ENU), Manufacturing (MFG), Technology (TECH) and Communications (COMM). IT Services segment
also includes Others which comprises dividend income relating to strategic investments, which are presented within “Financial and other Income” in the interim condensed consolidated statement of income. Key service offerings to customers includes software application development and maintenance, research and development services for hardware and software design, business
application services, analytics, consulting, infrastructure outsourcing services and business process services.

Comparative information has been restated to give effect to the above changes.

IT Products: The Company is a value added reseller of desktops, servers, notebooks, storage products, networking solutions and packaged software for leading international brands. In certain total outsourcing contracts of the IT Services segment, the Company delivers hardware, software products and other related deliverables. Revenue relating to the above items is reported as revenue from the sale of IT Products.

           
Reconciliation  of Non-GAAP Constant Currency IT Services Revenue to IT Services Revenue as per IFRS ($MN)
           
Three Months ended June 30, 2018
IT Services Revenue as per IFRS    $                     2,026.5    
Effect of Foreign currency exchange movement    $                          37.7    
Non-GAAP Constant Currency IT Services Revenue based on previous quarter exchange rates    $                     2,064.2    
           
Three Months ended June 30, 2018
IT Services Revenue as per IFRS    $                     2,026.5    
Effect of Foreign currency exchange movement    $                          (7.2)    
Non-GAAP Constant Currency IT Services Revenue based on exchange rates of comparable period in previous year    $                     2,019.3    
           

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