Wipro Limited Announces Results for the Quarter ended June 30, 2019 under IFRS

EPS grew by 12.5% YoY; Digital grew by 34.6% YoY

BANGALORE, India & EAST BRUNSWICK, N.J.–(BUSINESS WIRE)–#IFRS–Wipro Limited (NYSE: WIT) (BSE: 507685) (NSE: WIPRO) today announced financial results under International Financial Reporting Standards (IFRS) for its quarter ended June 30, 2019.

Highlights of the Results

Results for the Quarter ended June 30, 2019:

  • Gross Revenue was Rs 147.2 billion ($2.1 billion1), an increase of 5.3% YoY
  • IT Services Segment Revenue was $2,038.8 million, an adjusted2 increase of 4.3% YoY
  • Non-GAAP3 constant currency IT Services Segment Revenue declined by 0.7% QoQ. Adjusted2 Non-GAAP3 constant currency IT Services Segment Revenue grew 5.9% YoY
  • IT Services Operating Margin4 for the quarter was at 18.4%, an increase of 0.8% YoY
  • Net Income for the quarter was Rs 23.9 billion ($346 million1), an increase of 12.6% YoY
  • EPS for the quarter was Rs 3.97 per share, an increase of 12.5% YoY

Performance for the quarter ended June 30, 2019

Abidali Z. Neemuchwala, CEO and Executive Director said, “Our efforts on client mining have resulted in an addition of three customers in more than $100 Mn bucket. We will continue to build differentiated capabilities to drive business transformation for our customers by investing in our big bets.”

Jatin Dalal, Chief Financial Officer said, “We delivered IT Services margins of 18.4% and Free Cash Flows of 98.8% of our Net Income. We had a slower start to the year, we however remain focused on our operations and continue to invest in talent and capabilities for the future.”

Outlook for the Quarter ending September 30, 2019

We expect Revenue from our IT Services business to be in the range of $2,039 million to $2,080 million*. This translates to a sequential growth of 0.0% to 2.0%.

The Company had previously announced a buyback proposal for purchase of up to 323.1 million equity shares of Rs 2 each from the shareholders on a proportionate basis by way of a tender offer at a price of Rs 325 per equity share payable in cash for an aggregate amount not exceeding Rs 105 billion. After receipt of shareholders’ approval, the Company has filed the draft letter of offer for the buyback with SEBI. Upon receipt of approval from SEBI, we will complete the buyback process.

* Outlook is based on the following exchange rates: GBP/USD at 1.27, Euro/USD at 1.13, AUD/USD at 0.69, USD/INR at 69.59 and USD/CAD at 1.33

IT Services

Wipro continued its momentum in winning large deals globally as described below:

  • Wipro has won a multi-year technology and operations transformation contract from a European Bank. The program will enable the bank to optimize its existing technology and operations landscape, and invest in business transformation initiatives.
  • Wipro has won a multi-year engagement to support a key business transformation program at a leading UK-based insurance company.
  • Wipro has been awarded a Robotic Process Automation (RPA) contract by a US-based manufacturing company. Wipro will leverage its automation solutions and capabilities to develop BOTs for the client.
  • Wipro has won a business process services engagement with a large US-based telecom company. The program will leverage Wipro’s order management and fulfillment capabilities coupled with its telecom domain expertise.
  • Wipro has won a managed services contract from an eye care company. The company will manage and support cyber security, enterprise software and infrastructure services for the client.
  • A global airline has selected Wipro to improve passenger experience and loyalty by implementing digital self-service channels and transforming the airline’s IT infrastructure.
  • A large Canadian airport has awarded a strategic five-year IT operations and digital transformation contract to Wipro. The engagement will leverage Wipro’s integrated service delivery model, domain expertise, cloud and infrastructure services and the Wipro HOLMESTM artificial intelligence platform to transform the airport’s operations and enhance passenger experience.

Digital & Cloud Application Services Highlights

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

  • A global apparel company has selected Wipro as a strategic partner for a multi-year engagement in its digital and cloud transformation journey. Wipro will support the client’s IT infrastructure along with the integration and modernization of its entire application portfolio.
  • A US digital health pharmaceutical company has chosen Wipro Digital as its service delivery enablement partner to help improve the adoption and deployment of digital product and service experiences for its customers.
  • A multinational computer solutions company has selected Wipro Digital for cloud native modernization of its supply chain applications leveraging the Pivotal Cloud Foundry platform.
  • A large North American health insurer has selected Wipro Digital to support its ongoing engineering transformation and new ways of working while improving the speed, quality and volume of software releases across its IT environment.

Analyst Accolades and Awards

  • Wipro was positioned as a Leader in IDC MarketScape Worldwide Artificial Intelligence Services 2019 Vendor Assessment (Doc #US44514819, April 2019)
  • Wipro was ranked among the HFS Top 10 Finance and Accounting Service Providers, 2019
  • Wipro was ranked among the HFS Top 10 Energy Service Providers, 2019
  • Wipro was featured as a leading service provider in the HFS Top 10 Google AI Services, 2019
  • Wipro was recognized as a leader by Everest Group in Digital Workplace Services PEAK MatrixTM 2019
  • Wipro was positioned as a leader by Everest Group in Next-generation IT Infrastructure Services in Insurance PEAK Matrix™ Assessment 2019
  • Wipro was recognized as a leader by Everest Group in Enterprise Platform IT Services in BFS PEAK Matrix™ Assessment 2019
  • Wipro was positioned as a Leader in Gartner Magic Quadrant for Data Center Outsourcing and Hybrid Infrastructure Managed Services, North America. 13 June 2019

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

  • IT Products Segment Revenue for the quarter was Rs 2.4 billion ($35.0 million1).
  • IT Products Operating Margin for the quarter was -16.9%.

India State Run Enterprises (ISRE)

  • India SRE Segment Revenue for the quarter was Rs 2.1 billion ($31.1 million1).
  • India SRE Operating Margin for the quarter was -29.7%.

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.

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 June 30, 2019, 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/wipro190717.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. 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 68.92, as published by the Federal Reserve Board of Governors on June 30, 2019. However, the realized exchange rate in our IT Services business segment for the quarter ended June 30, 2019 was US$1= Rs 70.39.
  2. YoY & QoQ growth rates for Q1’20 have been computed by adjusting revenues of Q4’19 & Q1’19 for the impact from the divestment of our hosted data center services business and Workday & Cornerstone business. Non-adjusted growth was -1.8% QoQ and 2.5% YoY.
  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

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, 2019

 

As at June 30, 2019

 

 

 

 

 

Convenience

translation into US

dollar in millions

(unaudited) Refer Note

2(iii)

ASSETS

Goodwill

116,980

116,926

1,697

Intangible assets

13,762

13,098

190

Property, plant and equipment

70,601

71,626

1,039

Right-of-use assets

16,107

234

Financial assets

Derivative assets

173

161

2

Investments

6,916

7,375

107

Trade receivables

4,373

4,373

63

Other financial assets

5,146

5,091

74

Investments accounted for using the equity method

1,235

1,216

18

Deferred tax assets

5,604

6,587

96

Non-current tax assets

20,603

11,445

166

Other non-current assets

15,872

11,009

160

Total non-current assets

261,265

265,014

3,846

Inventories

3,951

4,142

60

Financial assets

Derivative assets

4,931

4,732

69

Investments

220,716

182,348

2,646

Cash and cash equivalents

158,529

241,405

3,503

Trade receivables

100,489

95,819

1,390

Unbilled receivables

22,880

26,903

390

Other financial assets

14,611

8,987

130

Contract assets

15,038

16,692

242

Current tax assets

7,435

6,197

90

Other current assets

23,086

23,918

347

571,666

611,143

8,867

Assets held for sale

240

Total current assets

571,906

611,143

8,867

 

TOTAL ASSETS

833,171

876,157

12,713

 

EQUITY

Share capital

12,068

12,071

175

Securities premium reserve

533

970

14

Retained earnings

534,700

558,063

8,097

Share-based payment reserve

2,617

2,299

33

Other components of equity

18,198

19,502

283

Equity attributable to the equity holders of the Company

568,116

592,905

8,602

Non-controlling interest

2,637

2,770

40

TOTAL EQUITY

570,753

595,675

8,642

 

LIABILITIES

Financial liabilities

Long – term loans and borrowings

28,368

22,475

326

Lease liabilities

10,748

156

Other financial liabilities

5

Deferred tax liabilities

3,417

4,161

60

Non-current tax liabilities

11,023

12,361

179

Other non-current liabilities

5,258

5,428

79

Provisions

2

2

Total non-current liabilities

48,068

55,180

800

Financial liabilities

Loans, borrowings and bank overdrafts

71,099

81,502

1,183

Derivative liabilities

1,310

1,556

23

Trade payables and accrued expenses

88,304

84,041

1,219

Lease liabilities

6,115

89

Other financial liabilities

644

669

10

Contract liabilities

24,768

22,398

325

Current tax liabilities

9,541

10,586

154

Other current liabilities

18,046

17,889

260

Provisions

638

546

8

Total current liabilities

214,350

225,302

3,271

TOTAL LIABILITIES

262,418

280,482

4,071

 

TOTAL EQUITY AND LIABILITIES

833,171

876,157

12,713

 

INTERIM CONDENSED CONSOLIDATED STATEMENT OF INCOME

(Rs in millions, except share and per share data, unless otherwise stated)

 

Three months ended June 30,

 

2018

2019

2019

Convenience translation

into US dollar in millions

(unaudited) Refer Note

2(iii)

Revenues

139,777

147,161

2,135

Cost of revenues

(100,350)

(104,273)

(1,513)

Gross profit

39,427

42,888

622

 

Selling and marketing expenses

(10,813)

(10,953)

(159)

General and administrative expenses

(8,608)

(8,119)

(118)

Foreign exchange gains/(losses), net

771

858

12

Other operating income

2,529

699

10

Results from operating activities

23,306

25,373

367

 

Finance expenses

(1,649)

(1,584)

(23)

Finance and other income

5,197

6,947

101

Share of net profit /(loss) of associates accounted for using the equity method

(53)

(16)

Profit before tax

26,801

30,720

445

Income tax expense

(5,865)

(6,699)

(97)

Profit for the period

20,936

24,021

348

 

Profit attributable to:

Equity holders of the Company

21,206

23,874

346

Non-controlling interest

(270)

147

2

Profit for the period

20,936

24,021

348

 

Earnings per equity share:

Attributable to equity share holders of the Company

Basic

3.53

3.97

0.06

Diluted

3.53

3.96

0.06

 

Weighted average number of equity shares

used in computing earnings per equity share

Basic

6,004,821,199

6,010,597,369

6,010,597,369

Diluted

6,015,725,623

6,025,352,442

6,025,352,442

 

Particulars

Three months ended

Year ended

June

30, 2019

March

31, 2019

June

30, 2018

March

31, 2019

Audited

Audited

Audited

Audited

Revenue

IT Services

BFSI

45,395

46,043

39,994

175,262

Health BU

18,871

19,288

18,200

75,081

CBU

22,366

23,667

20,596

89,313

ENU

18,432

18,628

17,099

72,830

TECH

18,660

18,402

19,504

76,591

MFG

11,336

11,551

11,247

46,496

COMM

8,454

8,286

7,710

32,680

Total of IT Services

143,514

145,865

134,350

568,253

IT Products

2,409

2,759

3,532

12,312

ISRE

2,143

1,787

2,653

8,544

Reconciling Items

(47)

(32)

13

(49)

Total Revenue

148,019

150,379

140,548

589,060

 

Other operating Income

IT Services

699

1,546

2,529

4,344

Total Other Operating Income

699

1,546

2,529

4,344

 

Segment Result

IT Services

BFSI

9,335

9,649

7,220

33,831

Health BU

2,929

1,940

2,076

8,638

CBU

3,506

4,716

2,608

16,828

ENU

2,196

2,787

2,731

7,081

TECH

3,526

3,031

4,064

15,916

MFG

2,092

2,262

1,398

8,327

COMM

1,518

985

758

4,396

Unallocated

720

1,161

695

3,142

Other Operating Income

699

1,546

2,529

4,344

Total of IT Services

26,521

28,077

24,079

102,503

IT Products

(407)

(93)

(740)

(1,047)

ISRE

(636)

(775)

(111)

(1,829)

Reconciling Items

(105)

111

78

283

Total

25,373

27,320

23,306

99,910

Finance Expense

(1,584)

(2,530)

(1,649)

(7,375)

Finance and Other Income

6,947

7,228

5,197

22,923

Share of profit/ (loss) of equity accounted investee

(16)

(17)

(53)

(43)

Profit before tax

30,720

32,001

26,801

115,415

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 (TECH) 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). 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.

India State Run Enterprise services segment (ISRE): This segment consists of IT Services offerings to entities/ departments owned or controlled by Government of India and/ or any State Governments.

Reconciliation of Non-GAAP Constant Currency IT Services Revenue to IT Services Revenue as per IFRS ($MN)

Three Months ended June 30, 2019

 

IT Services Revenue as per IFRS

$

2,038.8

Effect of Foreign currency exchange movement

$

12.4

Non-GAAP Constant Currency IT Services Revenue based on previous quarter exchange rates

$

2,051.2

 

Three Months ended June 30, 2019

 

IT Services Revenue as per IFRS

$

2,038.8

Effect of Foreign currency exchange movement

$

31.6

Non-GAAP Constant Currency IT Services Revenue based on exchange rates of comparable period in previous year

$

2,070.4

 

Contacts

Contact for Investor Relations

Aparna Iyer

Phone: +91-80-6142 7139

iyer.aparna@wipro.com

Abhishek Kumar Jain

Phone: +91-80-6142 6143

abhishekkumar.jain@wipro.com

Contact for Media & Press

Vipin Nair

Phone: +91-80-6142 6450

vipin.nair1@wipro.com

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