Wipro Limited Announces Results for the Quarter ended December 31, 2018 under IFRS | Digital Conqueror

Wipro Limited Announces Results for the Quarter ended December 31, 2018 under IFRS

Wipro Limited (NYSE: WIT, BSE: 507685, NSE: WIPRO) today announced financial results under International Financial Reporting Standards (IFRS) for its quarter ended December 31, 2018.
 
As stated in our last quarter’s earnings release, we have carved out the India State Run Enterprises (ISRE i.e. Public Sector Undertakings and Government business in India) from our IT Services segment into a separate segment effective quarter ended December 31, 2018.
 
Highlights of the Results for the quarter ended December 31, 2018

  • Gross Revenue was Rs 150.6 billion ($2.2 billion1) and grew 3.6% QoQ and 10.2% YoY

  • Non-GAAP3 constant currency IT Services Segment Revenue grew by 2.4% QoQ. Adjusted2 Non-GAAP constant currency IT Services Segment Revenue grew 7.0% YoY

  • IT Services Segment Reported Revenue was at $2,046.5 million and grew 1.8% QoQ

  • IT Services Operating Margin4 for the quarter was at 19.8% and expanded by 480bps QoQ and 496bps YoY

  • Net Income for the quarter was Rs 25.1 billion ($360.8 million1) and grew by 29.6% YoY

  • EPS for the quarter was Rs 5.57 ($0.081) per share and grew 38.2% YoY

  • Wipro declared an interim dividend of Rs 1 ($0.011) per equity share/ADS

  • Wipro’s Board of Directors recommended issue of bonus shares to shareholders (including stock dividend to ADS holders) in the ratio of 1:3 (One equity share for every Three equity shares held), subject to approval of shareholders.

Performance for the Quarter ended December 31, 2018
Abidali Z. Neemuchwala, CEO and Executive Director said, “Our strategic investments, backed by strong client relationships and client spends towards enterprise modernization and digital transformation have enabled us to deliver a very satisfying quarter.”
 
Jatin Dalal, Chief Financial Officer said, “Relentless focus on the quality of revenues and operational improvements have led to the expansion of IT Services Operating Margins to 19.8%. Our Operating Cash flows grew by 19.5% on YoY basis and was at 142% of Net Income.”
 

  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 69.58, as published by the Federal Reserve Board of Governors on December 31, 2018. However, the realized exchange rate in our IT Services business segment for the quarter ended December 31, 2018 was US$1= Rs 71.66.
  2. YoY growth rates for Q3’19 have been computed by adjusting revenues for Q3’18 for the impact from the divestment of our hosted data center services business.
  3. Constant currency revenue for a period is the product of volumes in that period times the average actual exchange rate of the corresponding comparative period.
  4. IT Services Operating Margin refers to Segment Results Total as reflected in IFRS financials.



Outlook for the Quarter ending March 31, 2019
We expect Revenue from our IT Services business to be in the range of $2,047 million to $2,088 million*. This translates to a sequential growth of 0.0% to 2.0%.
 
*    Outlook is based on the following exchange rates: GBP/USD at 1.27, Euro/USD at 1.14, AUD/USD at 0.72, USD/INR at 71.11 and USD/CAD at 1.32
 
IT Services
Wipro continued its momentum in winning large deals globally as described below:

  • A leading foods distribution company has selected Wipro as its technology modernization and digital transformation partner. Wipro will provide a range of services that will include digital, data science and infrastructure services

  • An Australasian government agency has selected Wipro as its cloud transformation partner. The engagement, which will leverage Wipro’s cloud migration expertise and the Wipro HOLMESTM artificial intelligence and automation platform, will migrate the client’s existing applications to hybrid cloud, and provide applications development and infrastructure support

  • A leading global financial services firm has chosen Wipro to be its workplace modernization partner. This multi-year engagement will leverage Wipro’s VirtuaDeskTM solution and partner ecosystem and will help the client enhance their user experience in an outcome-based model

  • Wipro has won an end-to-end managed security services contract from a leading American global telecommunications company

 
Digital & Cloud Application Services Highlights
We continue to see increasing traction in digital oriented deals as illustrated below:

  • As banks recognize the opportunity to turn large volumes of data within their organization into actionable insights, Wipro has been chosen as the exclusive partner by a global financial services company to improve decision making and customer and employee experience by tightly integrating data across their IT stack and within a full portfolio of applications

  • The strength of our technology expertise, digital framework for transformation and experience-led design has been recognized by a North American healthcare provider who has hired Wipro Digital to enable the design, development and launch of their new healthcare marketplace. We are their partner for a new brand, platform and service, bringing agility and new ways of working to them

  • Wipro Digital has been selected by a Middle Eastern telecommunications company to improve the customer experience of their digital self-service channels

  • A North American chemicals company has selected Wipro Digital to develop an artificial intelligence-based search solution that will transform decades of digitized information into actionable insights for their plant operations

  • A North American telecommunications company has awarded an IT development engagement to Appirio, which will leverage Appirio’s strengths in user experience, applications and testing services

 
Analyst Accolades and Awards
 

  • Wipro was recognised as a Leader and Star Performer by Everest Group in Digital Services – PEAK Matrix™ Assessment and Market Trends 2019

  • Wipro was recognised as a Leader by Everest Group in Cloud Enablement Services – Market Trends and Services PEAK Matrix™ 2019

  • Wipro was recognized as a Leader in IDC MarketScape: Worldwide DevOps Services 2018 Vendor Assessment, Doc #US41235417, November 2018

  • Wipro was ranked among the HFS Top 10 Digital Change Management Providers & Digital Technology Strategy and Consulting Services 2018

  • Wipro was recognised as a Leader and Star Performer by Everest Group in IT Security Services- Market Trends and PEAK Matrix TM Assessment 2019

  • Wipro was recognized as a Leader in Magic Quadrant for Application Testing Services, Worldwide by: Gartner, Magic Quadrant for Application Testing Services, Worldwide, Susanne Matson et al, 21 November 2018

Disclaimer: Gartner does not endorse any vendor, product or service depicted in its research publications, and does not advise technology users to select only those vendors with the highest ratings or other designation. Gartner research publications consist of the opinions of Gartner’s research organization and should not be construed as statements of fact. Gartner disclaims all warranties, expressed or implied, with respect to this research, including any warranties of merchantability or fitness for a particular purpose.

 
IT Products

 
India business from State Run Enterprises (SRE)

Please refer the table at the end of the release for reconciliation between IFRS IT Services Revenue and IT Services Revenue on a non-GAAP constant currency basis.
All product names, logos, and brands are property of their respective owners.
 
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 December 31, 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 (08:45 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/wipro190118.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.
 

WIPRO LIMITED AND SUBSIDIARIES
INTERIM CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION
( Rs in millions, except share and per share data, unless otherwise stated)
    As at March 31   As at December 31,  
   2018 2018   2018  
        Convenience translation into US dollar in millions (unaudited) Refer Footnote 1  
ASSETS          
Goodwill 117,584 123,192   1,771  
Intangible assets 18,113 15,445   222  
Property, plant and equipment 64,443 70,208   1,009  
Derivative assets 41 93   1  
Investments 7,668 7,461   107  
Investment in equity accounted investee 1,206 1,262   18  
Trade receivables 4,446 4,179   60  
Deferred tax assets 6,908 7,496   108  
Non-current tax assets 18,349 20,550   295  
Other non-current assets 15,726 19,598   282  
Total non-current assets 254,484 269,484   3,873  
           
Inventories 3,370 3,923   56  
Trade receivables 100,990 100,044   1,437  
Other current assets 30,596 25,829   371  
Unbilled receivables 42,486 24,322   350  
Contract assets 16,847   242  
Investments 249,094 212,103   3,048  
Current tax assets 6,262 7,818   112  
Derivative assets 1,232 5,543   80  
Cash and cash equivalents 44,925 142,769   2,052  
  478,955 539,198   7,748  
Assets held for sale 27,201    
Total current assets 506,156 539,198   7,748  
           
TOTAL ASSETS 760,640 808,682   11,621  
           
EQUITY          
Share capital 9,048 9,050   130  
Share premium 800 1,183   17  
Retained earnings 453,265 516,604   7,425  
Share based payment reserve 1,772 2,352   34  
Other components of equity 18,051 17,927   258  
Equity attributable to the equity holders of the Company 482,936 547,116   7,864  
Non-controlling interest 2,410 2,563   37  
TOTAL EQUITY 485,346 549,679   7,901  
           
LIABILITIES          
Long – term loans and borrowings 45,268 49,984   718  
Derivative liabilities 7    
Deferred tax liabilities 3,059 2,535   36  
Non-current tax liabilities 9,220 8,917   128  
Other non-current liabilities 4,230 4,452   64  
Provisions 3 4    
 Total non-current liabilities 61,787 65,892   946  
           
Loans, borrowings and bank overdrafts 92,991 53,863   774  
Trade payables and accrued expenses 68,129 79,271   1,138  
Unearned revenues 17,139 26,316   378
Current tax liabilities 9,417 14,674   211
Derivative liabilities 2,210 1,245   18
Other current liabilities 16,613 17,092   246
Provisions 796 650   9
  207,295 193,111   2,774
Liabilities directly associated with assets held for sale 6,212  
Total current liabilities 213,507 193,111   2,774
TOTAL LIABILITIES 275,294 259,003   3,720
         
TOTAL EQUITY AND LIABILITIES 760,640 808,682   11,621
                   



 

 

                                                                                                                       WIPRO LIMITED AND SUBSIDIARIES  
                                                                                        INTERIM CONDENSED CONSOLIDATED STATEMENT OF INCOME  
                                                                                            (Rs in millions, except share and per share data, unless otherwise stated)  
                           
    Three months ended December 31,   Nine months ended December 31,  
    2017   2018   2018   2017   2018   2018  
             Convenience translation into US dollar in millions (unaudited) Refer Footnote 1            Convenience translation into US dollar in millions (unaudited). Refer Footnote 1  
Gross Revenues   136,690   150,595   2,164   407,185   435,782   6,263  
Cost of revenues   (95,976)   (103,971)   (1,494)   (287,781)   (306,091)   (4,399)  
Gross profit   40,714   46,624   670   119,404   129,691   1,864  
                           
Selling and marketing expenses   (11,073)   (11,889)   (171)   (31,086)   (33,516)   (482)  
General and administrative expenses   (9,991)   (6,978)   (100)   (24,340)   (29,282)   (421)  
Foreign exchange gains/(losses), net   125   911   13   931   2,899   42  
Other operating income           2,798   40  
Results from operating activities   19,775   28,668   412   64,909   72,590   1,043  
                           
Finance expenses   (1,231)   (1,627)   (23)   (4,266)   (4,845)   (70)  
Finance and other income   6,160   5,362   77   19,196   15,695   226  
Share of profit /(loss) of equity accounted investee   10   7     14   (26)    
Profit before tax   24,714   32,410   466   79,853   83,414   1,199  
Income tax expense   (5,355)   (6,966)   (100)   (17,775)   (18,178)   (261)  
Profit for the period   19,359   25,444   366   62,078   65,236   938  
                           
Profit attributable to:                          
Equity holders of the Company   19,371   25,103   361   62,053   65,198   937  
Non-controlling interest   (12)   341   5   25   38   1  
Profit for the period   19,359   25,444   366   62,078   65,236   938  
                           
Earnings per equity share:                          
Attributable to equity share holders of the Company                          
Basic   4.03   5.57   0.08   12.85   14.47   0.21  
Diluted   4.03   5.56   0.08   12.83   14.45   0.21  
                           
Weighted average number of equity shares used in computing earnings per equity share                          
Basic   4,802,285,697   4,504,546,939   4,504,546,939   4,830,841,298   4,504,645,092   4,504,645,092  
Diluted   4,809,300,296   4,515,503,476   4,515,503,476   4,838,385,830   4,515,105,097   4,515,105,097  

 

 

 Additional Information              
  Three months ended December 31,   Nine months ended December 31,
Segment Revenue 2017 2018 2018     2017 2018  2018
IT Services Business Units              
BFSI          36,849 45,979      
661
                     106,364          129,219         1,857
HEALTH          18,450 19,241       
277
               
     55,577
       
55,793
        
802
CBU          19,580 22,875          329                  58,238     
65,646
        
943
ENU          16,491      18,996          273                  51,221       
54,202
        
779
TECH          18,630      19,104          275                  54,789      
  58,189
        
836
MFG          11,358    
11,981
       
172
                 34,434       
34,945
        
502
COMM            8,422      
8,480
         122                  25,824       
24,394
        
351
IT SERVICES TOTAL        129,780    146,656     
2,108
               386,447     
422,388
     
6,071
IT PRODUCTS            4,498        3,145            45                  13,829         
9,553
         
137
ISRE            2,566        1,713            25                     7,844        
  6,757
         
  97
RECONCILING ITEMS               (29)             (8)          
(0)
                      (4)   
(17)
         
  (0)
TOTAL        136,815    151,506       2,149                408,116      
438,681
     
6,305
               
Segment Result              
IT Services Business Units              
BFSI            6,777        9,095          131       
   18,293
  
24,182
        
348
HEALTH            2,360      
1,973
         
28
        
   7,798
    
6,698
        
 96
CBU            3,496        5,291            76          
  9,676
  
12,112
         
174
ENU  
(1,164)
       3,613        
52
        
   5,810
    
4,294
          
 62
TECH            3,740        4,177          
60
        
10,963
  
12,885
        
185
MFG            1,937        2,391            34         
   5,268
  
 6,065
         
  87
COMM            1,330      
1,578
           23          
  3,985
    
3,411
       
  49
UNALLOCATED               830           976          
14
         
  2,167
     
1,981
        
  28
OTHER OPERATING INCOME                  –              –              –                        –      
2,798
         
  40
TOTAL IT SERVICES          19,306      29,094          418            
63,960
       
 74,426
    
 1,070
IT PRODUCTS               195           212              
3
              
   314
       
    (954)
        
(14)
ISRE               284         (686)          (10)                
  330
     
  (1,054)
        
(15)
RECONCILING ITEMS               (10)             48              1            
      305
           
172
            
2
TOTAL          19,775      28,668          412          
   64,909
      
72,590
     
1,043
FINANCE EXPENSE          (1,231)      (1,627)          (23)           
  (4,266)
     
  (4,845)
      
 (70)
FINANCE AND OTHER INCOME            6,160     
5,362
     
   77
       
19,196
      
 15,695
       
 226
SHARE OF PROFIT/(LOSS) OF EQUITY ACCOUNTED INVESTEE       
   10
    
    7
       
  0
                 
  14
           
  (26)
       
(0)
PROFIT BEFORE TAX          24,714    
32,410
         466            
79,853
      
   83,414
    
  1,199
INCOME TAX EXPENSE          (5,355)      (6,966)        (100)          
(17,775)
    
  (18,178)
      
(261)
PROFIT FOR THE PERIOD      
  19,359
     25,444        
366
         
62,078
       
65,236
        
938

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, IT Products and India State Run Enterprises service segment (ISRE).
 
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) 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.
 
ISRE: India State Run Enterprises represents the business from Public Sector Undertakings and Government in India.

Reconciliation of Non-GAAP Constant Currency IT Services Revenue to IT Services Revenue as per IFRS ($MN)
 
Three Months ended December 31, 2018
IT Services Revenue as per IFRS                                                    $         2,046.5
Effect of Foreign currency exchange movement                              $              10.3
Non-GAAP Constant Currency IT Services Revenue based on       $        2,056.8
previous quarter exchange rates                                                                 
 
Three Months ended December 31, 2018
IT Services Revenue as per IFRS                                                    $         2,046.5
Effect of Foreign currency exchange movement                              $              38.3
Non-GAAP Constant Currency IT Services Revenue based on       $         2,084.8
exchange rates of comparable period in previous year          

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