Wipro Limited Announces Results for the Quarter Ended September 30, 2018 Under IFRS | Digital Conqueror

Wipro Limited Announces Results for the Quarter Ended September 30, 2018 Under IFRS

Business Wire IndiaIT Services Segment Revenue1 up 10.4% YoY in INR terms
Adjusted2 IT Services Margin expanded to 18.1%

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

  • Gross Revenue was Rs 145.4 billion ($2.0 billion3).
  • IT Services Segment Revenue was Rs 143.8 billion ($2.0 billion3). Adjusted1 IT Services Segment Revenue was up 6.2% sequentially and 10.4% YoY in INR terms.
  • IT Services Segment Revenue in dollar terms at $2,041.2 million.
  • Adjusted1 Non-GAAP constant currency IT Services Segment Revenue up 2.8% sequentially and 5.1% YoY.
  • Adjusted2 IT Services Margin4 for the quarter was 18.1%. IT Services Margin4 reported was 14.6%.
  • Net Income was Rs 18.9 billion ($260.4 million3).
  • EPS for the quarter was Rs 4.19 ($0.063) per share.

Performance for the Quarter ended September 30, 2018
                                
Abidali Z. Neemuchwala, CEO and Member of the Board said – “Wipro has delivered a strong quarter on both revenue and margin growth. We won our largest deal to date and four of our Business Units grew over 4% sequentially in constant currency terms. The demand environment is robust, especially for digital transformation and enterprise scale modernization services.”
 
Jatin Dalal, Chief Financial Officer said – “Consistent improvement in our operating metrics reflects our relentless rigor of execution, which has resulted in our Adjusted2 IT Services Margin reaching 18.1% in quarter 2. We see automation as a key lever to drive margins going forward.
 
As part of our India business reorganization, we are carving out our India Public Sector Undertaking (PSU) and India Government business, given their distinct operating rhythm and need for differentiated execution rigor. The rest of our India strategy remains unchanged and will focus on enterprise customers, leveraging our new and core portfolio offerings in line with the global business. Given this, we will carve out the India PSU and India Government business out of our IT Services segment in our financials effective quarter ending December 31, 2018. The enterprise business in India will continue to be part of the IT Services segment. We will make the necessary disclosure pertaining to this carve out in our financials for the quarter ending December 31, 2018. Our outlook for the quarter ending December 31, 2018 reflects this change.
 
Outlook for the Quarter ending December 31, 2018
 
We expect Revenue from IT Services business to be in the range of $2,028 million to $2,068 million*. Comparable revenue excluding India PSU and India Government business for the quarter ended September 30, 2018 was $2,007 million. This translates to sequential growth outlook of 1.0% to 3.0%.
 
*Outlook is based on the following exchange rates: GBP/USD at 1.31, Euro/USD at 1.17, AUD/USD at 0.73, USD/INR at 72.02 and USD/CAD at 1.31.
 
IT Services Highlights
 
Wipro continued its momentum in winning large deals globally as described below:

  • Wipro has won a global multi-year digital workplace and managed network services contract from OMV, an Austrian integrated oil and gas company. The engagement will leverage Wipro’s automation capabilities and oil & gas industry expertise to standardize and transform the technology landscape, and lay the foundation for digitalization to improve employee experience at the client organization. 
  • Wipro has been chosen as an end-to-end system implementation and program management partner by a leading development financial institution. The project will streamline the client’s technology landscape and optimize their business processes while instituting industry best practices and solutions. Wipro will define future state business processes, design and implement a CRM layer, and develop product specifications and process flows for the client. 
  • Wipro has won a long-term digital strategic engagement with a leading healthcare company to enhance their user experience through IT service desk transformation. The contract will leverage artificial intelligence and automation for service desk transformation. 
  • Wipro will help a global nutrition company set up cloud-based IT infrastructure. This program will drive greater business agility, and improved employee and end-customer experience for the client.
  • Wipro has won a multi-year engagement from a leading Europe-based facility management company for transforming its IT operations. The program will help the client set up a futuristic, agile and scalable platform that will power digital initiatives through a next-gen delivery model, integrated platforms, hyper-automation and cloud technologies.

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

  • Wipro has been selected by a large North American bank to help create a new digital bank by providing and integrating strategy, design and technology services. 
  • A large global pharmaceutical company has selected Wipro Digital to streamline and modernize its clinical trial process for vaccines through an experience-led approach. 
  • A global financial services company has selected Wipro Digital to provide cloud-native development support, using Pivotal Cloud Foundry, as part of its ongoing cloud transformation program. 
  • Wipro has won a multi-year deal from a global beverages retailer to deliver a digital workplace management solution to manage the client’s world-wide physical assets.

Wipro continues to win deals in the cloud applications space by leveraging Appirio Cloud Services:

  • An American financial services company has extended its contract with Wipro. Wipro will help upgrade the user experience, integrate CRM touch-points and put together a financial services cloud capability roadmap for the client’s retail banking portfolio. 
  • Wipro has been chosen by a US-based healthcare organization for a cloud-based engagement that will help the client better manage its B2C and B2B stakeholder relationships.

Analyst Accolades and Awards

  • Wipro was recognized as a Leader in IT Infrastructure Services Automation – Market Trends and Services PEAK Matrix™ Assessment 2018: Become AI Aware or Fall Behind 
  • Wipro was positioned in the Winner's Circle of HfS Blueprint on Software Product Engineering Services 2018 
  • Wipro is recognized as a Leader in Embedded System Engineering Services PEAK Matrix™ Assessment: Enabling the Era of Connected and Intelligent Products 
  • Wipro was recognised as a ‘Leader’ by The Forrester Wave™: Digital Process Automation Service Providers 
  • Wipro is recognized as a Major Contender in Finance and Accounting Digital Augmentation Suite (F&A DAS) – Service Provider Landscape with Solutions PEAK Matrix™ Assessment 2018 
  • Wipro was selected as a member of the global Dow Jones Sustainability World Index (DJSI) – 2018 for the ninth year in succession. Launched in 2009, the S&P DJSI (World) is the gold standard for corporate sustainability. Inclusion in DJSI (World) index is based on a rigorous analysis of a company’s performance on 600 data points spread across 21 primary indicators and more than 120 secondary indicators across Economic, Environmental and Social dimensions.

 IT Products

  • IT Products Segment Revenue for the quarter was Rs 2.9 billion ($39.6 million3).
  • IT Products Margin for the quarter was -14.8%.

 
Please refer the tableat the end 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 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 September 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/wipro181024.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 175,000 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. Sequential and YoY revenue growth rates for the quarter ended September 30, 2018 are adjusted for the impact from the divestment of our hosted data center services business for the quarters ended June 30, 2018 and September 30, 2017.
  2. IT Services Margin and EPS for the quarter ended September 30, 2018 includes a loss of Rs 5,141 million from the settlement with one of our key customers. Adjusted IT Services Margin exclude the impact of this loss.
  3. 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 72.54, as published by the Federal Reserve Board of Governors on September 30, 2018. However, the realized exchange rate in our IT Services business segment for the quarter ended September 30, 2018 was US$1= Rs 70.44.
  4. IT Services Margin refers to Segment Results Total.

 

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 September 30,  
    2018 2018   2018  
          Convenience translation into US dollar in millions (unaudited) Refer Footnote 3  
ASSETS            
Goodwill   117,584 128,026   1,765  
Intangible assets   18,113 18,027   249  
Property, plant and equipment   64,443 68,370   943  
Derivative assets   41 17    
Investments   7,668 7,494   103  
Investment in equity accounted investee   1,206 1,305   18  
Trade receivables   4,446 4,179   58  
Deferred tax assets   6,908 8,861   122  
Non-current tax assets   18,349 20,237   279  
Other non-current assets   15,726 20,227   279  
Total non-current assets   254,484 276,743   3,816  
             
Inventories   3,370 4,060   56  
Trade receivables   100,990 106,382   1,466  
Other current assets   30,596 27,150   374  
Unbilled receivables   42,486 28,685   395  
Contract assets   18,573   256  
Investments   249,094 248,815   3,430  
Current tax assets   6,262 7,895   109  
Derivative assets   1,232 3,793   52  
Cash and cash equivalents   44,925 79,818   1,100  
    478,955 525,171   7,238  
Assets held for sale   27,201    
Total current assets   506,156 525,171   7,238  
             
TOTAL ASSETS   760,640 801,914   11,054  
             
EQUITY            
Share capital   9,048 9,048   125  
Share premium   800 879   12  
Retained earnings   453,265 491,401   6,774  
Share based payment reserve   1,772 2,260   31  
Other components of equity   18,051 17,414   240  
Equity attributable to the equity holders of the Company   482,936 521,002   7,182  
Non-controlling interest   2,410 2,312   32  
TOTAL EQUITY   485,346 523,314   7,214  
             
LIABILITIES            
Long – term loans and borrowings   45,268 52,329   721  
Derivative liabilities   7    
Deferred tax liabilities   3,059 2,475   34  
Non-current tax liabilities   9,220 9,543   132  
Other non-current liabilities   4,230 4,688   65  
Provisions   3 2    
 Total non-current liabilities   61,787 69,037   952  
             
Loans, borrowings and bank overdrafts   92,991 62,726   865  
Trade payables and accrued expenses   68,129 84,797   1,169  
Unearned revenues   17,139 23,607   325
Current tax liabilities   9,417 13,667   188
Derivative liabilities   2,210 6,487   89
Other current liabilities   16,613 17,507   241
Provisions   796 772   11
    207,295 209,563   2,888
Liabilities directly associated with assets held for sale   6,212  
Total current liabilities   213,507 209,563   2,888
TOTAL LIABILITIES   275,294 278,600   3,840
           
TOTAL EQUITY AND LIABILITIES   760,640 801,914   11,054
                                                                           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 September 30,   Six months ended September 30,  
    2017   2018   2018   2017   2018   2018  
             Convenience translation into US dollar in millions (unaudited) Refer Footnote 3            Convenience translation into US dollar in millions (unaudited). Refer Footnote 3  
Gross Revenues   134,234   145,410   2,005   270,495   285,187   3,931  
Cost of revenues   (94,694)   (101,770)   (1,403)   (191,805)   (202,120)   (2,786)  
Gross profit   39,540   43,640   602   78,690   83,067   1,145  
                           
Selling and marketing expenses   (9,867)   (10,814)   (149)   (20,013)   (21,627)   (298)  
General and administrative expenses   (7,085)   (13,696)   (189)   (14,349)   (22,304)   (307)  
Foreign exchange gains/(losses), net   453   1,217   17   806   1,988   27  
Other operating income     269   4     2,798   39  
Results from operating activities   23,041   20,616   285   45,134   43,922   606  
                           
Finance expenses   (1,434)   (1,569)   (22)   (3,035)   (3,218)   (44)  
Finance and other income   6,709   5,136   71   13,036   10,333   142  
Share of profit /(loss) of equity accounted investee   5   20     4   (33)    
Profit before tax   28,321   24,203   334   55,139   51,004   704  
Income tax expense   (6,426)   (5,347)   (74)   (12,420)   (11,212)   (155)  
Profit for the period   21,895   18,856   260   42,719   39,792   549  
                           
Profit attributable to:                          
Equity holders of the Company   21,917   18,889   260   42,682   40,095   553  
Non-controlling interest   (22)   (33)     37   (303)   (4)  
Profit for the period   21,895   18,856   260   42,719   39,792   549  
                           
Earnings per equity share:                          
Attributable to equity share holders of the Company                          
Basic   4.52   4.19   0.06   8.81   8.90   0.12  
Diluted   4.52   4.19   0.06   8.80   8.89   0.12  
                           
Weighted average number of equity shares used in computing earnings per equity share                          
Basic   4,845,485,149   4,503,556,411   4,503,556,411   4,844,289,024   4,503,618,086   4,503,618,086  
Diluted   4,852,992,546   4,513,452,637   4,513,452,637   4,852,340,224   4,513,533,464   4,513,533,464  

   

Additional Information              
  Three months ended September 30,   Six months ended September 30,
Segment Revenue 2017 2018 2018   2017 2018 2018
IT Services Business Units              
BFSI 36,349 44,105 608              71,283 85,159 1,174
HEALTH 17,989 18,364 253   37,139 36,573 504
CBU            20,989 23,532 324   41,524 45,519 628
ENU            17,769 18,239 251   35,233 35,444 489
TECH            18,515 19,581 270   36,179 39,085 539
MFG            11,495 11,732 162   23,173 23,036 318
COMM              8,583 8,220 113   17,414 15,960 220
IT SERVICES TOTAL          131,689 143,773 1,981   261,945 280,776 3,872
IT PRODUCTS              2,988 2,876 40   9,331 6,408 88
RECONCILING ITEMS                  10  (22) –     25  (9) –  
TOTAL          134,687 146,627 2,021   271,301 287,175 3,960
               
Segment Result              
IT Services Business Units              
BFSI              6,055 7,725 106   11,496 14,874 205
HEALTH              2,698 2,659 37   5,432 4,729 65
CBU              3,244 4,156 57   6,178 6,771 93
ENU              3,435  (2,084)  (29)   7,086 606 8
TECH              3,748 4,644 64   7,229 8,708 120
MFG              1,652 2,247 31   3,346 3,649 50
COMM              1,147 1,070 15   2,596 1,824 25
UNALLOCATED                805 310 4   1,337 1,005 14
OTHER OPERATING INCOME                  –   269 4            –   2,798 39
TOTAL IT SERVICES            22,784 20,996 289   44,700 44,964 619
IT PRODUCTS                  88  (426)  (6)   119 (1,166)  (16)
RECONCILING ITEMS                169 46 1   315 124 2
TOTAL            23,041 20,616 284   45,134 43,922 605
FINANCE EXPENSE            (1,434)  (1,569)  (22)    (3,035)  (3,218)  (44)
FINANCE AND OTHER INCOME              6,709 5,136 71   13,036 10,333 142
SHARE OF PROFIT/(LOSS) OF EQUITY ACCOUNTED INVESTEE 5 20 0   4  (33)  (0)
PROFIT BEFORE TAX            28,321 24,203 333   55,139 51,004 703
INCOME TAX EXPENSE            (6,426)  (5,347)  (74)    (12,420)  (11,212)  (155)
PROFIT FOR THE PERIOD           21,895 18,856 259   42,719 39,792 548
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) 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 September 30, 2018    
IT Services Revenue as per IFRS  $                     2,041.2      
Effect of Foreign currency exchange movement  $ 18.7      
Non-GAAP Constant Currency IT Services Revenue based on previous quarter exchange rates  $                     2,059.9      
           
Three Months ended September 30, 2018    
IT Services Revenue as per IFRS  $                     2,041.2      
Effect of Foreign currency exchange movement  $  50.7      
Non-GAAP Constant Currency IT Services Revenue based on exchange rates of comparable period in previous year  $                     2,091.9      
           

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