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Wipro Limited Announces Results for the Quarter ended June 30, 2019 under IFRS
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Date: 17-07-2019 6:45PM
Source: WIPRO
Category: Business/ Finance, Financial Analyst & Investors, General, Internet, Information Technology, Business Services, Events And Conferences, Major Diversified Industrial Groups, Technology, It & Tech
Location: East Brunswick, New Jersey, United States & Bangalore, Karnataka, India

Business Wire India
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
  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

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 an 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 Top10 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 on page 8 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.
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 $ 2,051.2
previous quarter exchange rates
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 $ 2,070.4
exchange rates of comparable period in previous year


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