2014

Wipro Limited - Net Income Grew 41% YoY in the quarter IT Services Operating Margin Expanded by 150 basis points sequentially

IT Services Revenues Grew 24% YoY in the quarter; IT Services EBIT Grew 51% YoY in the quarter

Results for the quarter and year ended March 31, 2014 under IFRS

BANGALORE, India and EAST BRUNSWICK, N.J., April 17, 2014 /PRNewswire/ -- Wipro Limited (NYSE: WIT) today announced financial results under International Financial Reporting Standards (IFRS) for its fourth quarter and year ended March 31, 2014.

Highlights of the Results:
Results for the Quarter ended March 31, 2014:

  • Revenues from continuing operations were rupees 117.0 billion ($2.0 billion1), an increase of 22% YoY.
  • Net Income from continuing operations was rupees 22.3 billion ($371 million1), an increase of 41% YoY.
  • Non-GAAP Adjusted Net Income from continuing operations was rupees 22.3 billion ($371 million1), an increase of 42% YoY.
  • IT Services Revenue was $1,720.2 million, a sequential increase of 2.5% and YoY increase of 8.5%.
  • IT Services2 Revenues in Rupee terms was rupees 106.2 billion ($1.8 billion1), an increase of 24% YoY.
  • IT Services2 Earnings Before Interest and Tax (EBIT) was rupees 26.1 billion ($434 million1), an increase of 51% YoY.
  • IT Services2 Operating Margins was 24.5%, an expansion of 150 basis points sequentially.

Results for the Year ended March 31, 2014:

  • Revenues from continuing operations were rupees 437.6 billion ($7.3 billion1), an increase of 16% YoY.
  • Net Income from continuing operations was rupees 78.0 billion ($1.3 billion1), an increase of 27% YoY.
  • Non-GAAP Adjusted Net Income from continuing operations was rupees 78.0 billion ($1.3 billion1), an increase of 28% YoY.
  • IT Services Revenue was $6,617.9 million, YoY increase of 6.4%.
  • IT Services2 Revenues in Rupee terms was rupees 399.5 billion ($6.7 billion1), an increase of 18% YoY.
  • IT Services2 Earnings Before Interest and Tax (EBIT) was rupees 90.3 billion ($1.5 billion1), an increase of 29% YoY.
  • IT Services2 Operating Margins was 22.6% for the year an expansion of 195 basis points YoY.
  • Wipro declared a final dividend of rupees 5 ($0.08) per share /ADS, taking the total dividend declared during the year to rupees 8 ($0.13) per share/ADS.

 

1 For the convenience of the reader, the amounts in Indian rupees in this release have been translated into United States dollars at the noon buying rate in New York City on March 31, 2014, for cable transfers in Indian rupees, as certified by the Federal Reserve Board of New York, which was US $1= rupees 60.00. However, the realized exchange rate in our IT Services business segment for the quarter ended March 31, 2014 was US$1= rupees 61.73
2 For additional information on revenue and operating income by reportable segment on the  new basis of segmentation, please see the financial statements

Performance for the quarter and year ended March 31, 2014
Azim Premji, Chairman of Wipro, commenting on the results said, "The steady improvement in global economy, coupled with the exciting pace of technological advancements, presents us with opportunities to create innovative solutions to help our customers differentiate, compete and succeed in their respective markets."

T K Kurien, Executive Director & Chief Executive Officer of Wipro, said, "Our focus on process simplification, automation and platform-based delivery continues to deliver results and we are seeing the benefits through improved productivity, reduced timelines in execution and greater business agility. It is also gratifying to see that this focus has enabled improved win ratios and has also enhanced customer satisfaction."

Suresh Senapaty, Executive Director & Chief Financial Officer of Wipro, said, "We continue to systematically work on improving our operational efficiencies resulting in expansion of full year IT Services operating margins by 195 basis points."

Outlook for the Quarter ending June 30, 2014
We expect Revenues from our IT Services business to be in the range of $ 1,715 million to $ 1,755 million*.

* Guidance is based on the following exchange rates: GBP/USD at 1.66, Euro/USD at 1.37, AUD/USD at 0.90, USD/INR at 61.62

IT Services
The IT Services segment had 146,053 employees as of March 31, 2014. We added 59 new customers for the quarter.

Wipro has won a five-year infrastructure managed services contract with a Fortune 500 global leader in specialty chemicals. This strategic engagement leverages Wipro's global network of data centers, delivery center footprint, automation capabilities and extensive experience in infrastructure and technology transformation. Wipro will incorporate ServiceNXT, its next-generation integrated managed services framework for this contract as well as leverage its strategic technology alliances in the industry.

Wipro has won a seven-year engagement with Xoserve, an organization which is an integral part of the restructured gas distribution market in Britain. The contract will involve replacement of Xoserve's two-decade old legacy platform with best-in-class enterprise applications and more contemporary technologies, which will enable Xoserve to better meet the expected demand growth generated by the roll-out of smart meters in the United Kingdom.

A large global bank has selected Wipro as a strategic partner to provide quality assurance and automation services. As part of this multi-year contract, services that are currently managed by multiple incumbent vendors will transition to Wipro. Wipro will also help establish a 'Target Operating Model' for software testing as well as provide functional and non-functional testing and automation services for the bank.

A leading apparel and footwear company has renewed its multi-year engagement with Wipro, for application support services in a managed services model.  The services provided by Wipro will enhance the stability, resilience and reduce the total cost of ownership for the customer's organization-wide application landscape, which spans across several global brands and functions such as finance, supply chain, warehouse management and retail.

Wipro has won a deal from a multinational telecommunications company to manage IT and Network operations for their "Enterprise Business" in India. The scope of work includes design, build, feasibility, network operations and field support.

Wipro has won a large deal in the Basel II Risk & Compliance domain from a large state owned bank in India. The contract will provide Enterprise Risk Management for the Bank and its subsidiaries and will include the implementation of software, hardware, infrastructure management, and application sustenance.

Awards and accolades
Wipro was named 'Leader' in Worldwide Life Science Manufacturing and Supply Chain ITO by technology global research and advisory firm International Data Corporation (IDC) in its report IDC MarketScape: Worldwide Life Science Manufacturing and Supply Chain ITO 2013 Vendor Assessment, Doc #HI244265, November 2013. IDC evaluated leading Life Science Manufacturing and Supply Chain ITO Services providers across 24 criteria relating to current offering, strategy and market presence based on client inquiries, user needs assessments, and vendor and expert interviews.

IT Products

  • Our IT Products segment delivered Revenue of rupees 11.1 billion ($185 million1) for the quarter ended March 31, 2014, a YoY increase of 3%. Revenue for the year end March 31, 2014 was rupees 38.8 billion ($646 million1), a decrease of 1% YoY.
  • Earnings Before Interest and Tax (EBIT) for the quarter ended March 31, 2014 was rupees 143 million ($2 million1), a decrease of 47% YoY. EBIT for the year ended March 31, 2014 was rupees 310 million ($5 million1). a decrease of 69% YoY.The operating income of IT Products segment for the year includes non-recurring expense of rupees 209 million ($3 million1) incurred due to cessation of manufacturing of Wipro branded desktops, laptops and servers. Operating income of the IT Products segment excluding the above non-recurring expense is rupees 519 million ($9 million1).

Please see the table on page 8 for a reconciliation between (i) IFRS Net Income and non-GAAP Adjusted Net Income (excluding the impact of stock-based compensation) and (ii) IFRS IT Services Revenue and IT Services Revenue on a non-GAAP constant currency basis.

About Non-GAAP financial measures
This press release contains non-GAAP financial measures within the meaning of Regulation G and Item 10(e) of Regulation S-K. Such non-GAAP financial measures are measures of our historical or future performance, financial position or cash flows that are adjusted to exclude or include amounts that are excluded or included, as the case may be, from the most directly comparable financial measure calculated and presented in accordance with IFRS.

The table on page 8 provides Adjusted Net Income for the period, which is a non-GAAP measure that excludes the impact of accelerated amortization in respect of stock options that vest in a graded manner, and IT Services Revenue on a constant currency basis, which is a non-GAAP 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 consider a stock option award with a graded vesting schedule to be in substance a single award and not multiple stock option awards and accordingly believe the straight line amortization reflects the economic substance of the award. 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. We believe that the presentation of this Non-GAAP Adjusted Net Income, when shown in conjunction with the corresponding IFRS measure, provides useful information to investors and management regarding financial and business trends relating to its Net Income for the period.

These Non-GAAP financial measures are 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 these non-GAAP measures, 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.

For internal budgeting process, our management also uses financial statements that exclude the impact of accelerated amortization relating to stock options that vest in a graded manner. Management of the Company also uses Non-GAAP Adjusted Net Income, in addition to the corresponding IFRS measure, in reviewing our financial results.

Results for the quarter and year ended March 31, 2014, computed under IFRS, along with individual business segment reports, are available in the Investors section of our website at www.wipro.com.

Quarterly Conference Call
We will hold a conference call today at 06:45 p.m. Indian Standard Time (09:15 a.m. US Eastern Time) to discuss our performance for the quarter. 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 (NYSE: WIT)
Wipro provides comprehensive IT solutions and services, including systems integration, Information Systems outsourcing, IT enabled services, package implementation, software application development and maintenance, and research and development services to corporations globally. Wipro Limited is the first PCMM Level 5 and SEI CMM Level 5 certified IT Services Company globally.

For more information, please visit our websites at www.wipro.com.

Forward-looking and Cautionary 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, 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.

(Tables to follow)

 

WIPRO LIMITED AND SUBSIDIARIES

AUDITED CONDENSED CONSOLIDATED INTERIM STATEMENTS OF FINANCIAL POSITION

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












As of March 31, 


As of March 31,




2013


2014


2014

ASSETS








Goodwill



54,756


63,422


1,057

Intangible assets



1,714


1,936


32

Property, plant and equipment



50,525


51,449


857

Derivative assets



51


286


5

Available for sale investments



-


2,676


45

Non-current tax assets



10,308


10,192


170

Deferred tax assets



4,235


3,362


56

Other non-current assets



10,738


14,295


238

Total non-current assets



132,327


147,618


2,460









Inventories



3,263


2,293


38

Trade receivables



76,635


85,392


1,423

Other current assets



31,069


39,474


658

Unbilled revenues



31,988


39,334


656

Available for sale investments



69,171


60,557


1,009

Current tax assets



7,408


9,774


163

Derivative assets



3,031


3,661


61

Cash and cash equivalents



84,838


114,201


1,903

Total current assets



307,403


354,686


5,911









TOTAL ASSETS



439,730


502,304


8,371









EQUITY








Share capital



4,926


4,932


82

Share premium



11,760


12,664


211

Retained earnings



259,178


314,952


5,249

Share based payment  reserve



1,316


1,021


17

Other components of equity



7,174


10,472


175

Shares held by controlled trust



(542)


(542)


(9)

Equity attributable to the equity holders of the company



283,812


343,499


5,725

Non-controlling Interest



1,171


1,387


23

Total equity



284,983


344,886


5,748









LIABILITIES








Long - term loans and borrowings



854


10,909


182

Deferred tax liabilities



846


1,796


30

Derivative liabilities



118


629


10

Non-current tax liability



4,790


3,448


57

Other non-current liabilities



3,390


4,174


70

Provisions



9


6


-

Total non-current liabilities



10,007


20,962


349









Loans and borrowings and bank overdrafts



62,962


40,683


678

Trade payables and accrued expenses



48,067


52,256


871

Unearned revenues



10,347


12,767


213

Current tax liabilities



10,226


12,482


208

Derivative liabilities



975


2,504


42

Other current liabilities



10,989


14,394


240

Provisions



1,174


1,370


23

Total current liabilities



144,740


136,456


2,274

TOTAL LIABILITIES



154,747


157,418


2,623









TOTAL EQUITY AND LIABILITIES



439,730


502,304


8,371

















 

 

WIPRO LIMITED AND SUBSIDIARIES

CONDENSED CONSOLIDATED INTERIM STATEMENTS OF INCOME

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

















Three months ended March 31, 



Year ended March 31, 



2013


2014


2014



2013


2014


2014







Convenience translation into US $ in millions (Unaudited)







Convenience translation into US $ in millions (Unaudited)













Continuing Operations














Gross revenues

96,078


116,535


1,942



374,256


434,269


7,238

Cost of revenues

(67,008)


(77,700)


(1,295)



(260,665)


(295,488)


(4,925)

Gross profit

29,070


38,835


647



113,591


138,781


2,313















Selling and marketing expenses

(6,183)


(7,025)


(117)



(24,213)


(29,248)


(487)

General and administrative expenses

(5,820)


(6,510)


(108)



(22,032)


(23,538)


(392)

Foreign exchange gains/(losses), net

62


510


8



2,626


3,359


56

Results from operating activities

17,129


25,810


430



69,972


89,354


1,490















Finance expenses

(395)


(842)


(14)



(2,693)


(2,891)


(48)

Finance and other income

3,077


3,959


66



11,317


14,542


242

Profit before tax

19,811


28,927


482



78,596


101,005


1,684

Income tax expense

(3,973)


(6,536)


(109)



(16,912)


(22,600)


(377)

Profit for the period from continuing operation

15,838


22,391


373



61,684


78,405


1,307















Discontinued operation














Profit after tax for the period from discontinued operation

1,535


-


-



5,012


-


-

Profit for the period

17,373


22,391


373



66,696


78,405


1,307















Attributable to:














Equity holders of the company

17,287


22,265


371



66,359


77,967


1,300

Non-controlling interest

86


126


2



337


438


7

Profit for the period

17,373


22,391


373



66,696


78,405


1,307















Profit from continuing operations attributable to:














Equity holders of the company

15,756


22,265


371



61,362


77,967


1,300

Non-controlling interest

82


126


2



322


438


7



15,838


22,391


373



61,684


78,405


1,307

Earnings per equity share: 














Attributable to equity share holders of the company














Basic

7.04


9.07


0.15



27.05


31.76


0.53

Diluted

7.02


9.04


0.15



26.98


31.66


0.53















From continuing operations














Basic

6.42


9.07


0.15



25.01


31.76


0.53

Diluted

6.40


9.04


0.15



24.95


31.66


0.53















Weighted average number of equity shares used in computing earnings per equity share














Basic

2,455,037,295


2,455,543,231


2,455,543,231



2,453,218,759


2,454,745,434


2,454,745,434

Diluted

2,460,940,973


2,462,876,367


2,462,876,367



2,459,184,321


2,462,626,739


2,462,626,739















Additional Information














Segment Revenue














IT Services

85,538


106,193


1,770



338,431


399,509


6,658

IT Products

10,746


11,090


185



39,238


38,785


646

IT Services & Products

96,284


117,283


1,955



377,669


438,294


7,305

Consumer Care and Lighting (Discontinued operation)

10,440


-


-



40,594


-


-

Others (Discontinued operation)

3,393


-


-



14,785


-


-

Others

147


(238)


(4)



560


(666)


(11)

Total

110,264


117,045


1,951



433,608


437,628


7,294















Operating Income














IT Services

17,268


26,054


434



69,933


90,333


1,506

IT Products

268


143


2



990


310


5

IT Services & Products

17,536


26,197


436



70,923


90,643


1,511

Consumer Care and Lighting (Discontinued operation)

1,337


-


-



5,012


-


-

Others (Discontinued operation)

(23)


-


-



290


-


-

Others

(473)


(387)


(6)



(1,079)


(1,289)


(21)

Total

18,376


25,810


430



75,146


89,354


1,490















Reconciliation  of adjusted Non-GAAP profit to profit as per IFRS








Profit for the period attributable to Equity holders of the Company (Continuing operations)


15,756


22,265


371



61,362


77,967


1,300

Adjustments :














Accelerated amortization of stock options that vest in a graded manner


(68)


1


-



(308)


(3)


(0)

 Non-GAAP adjusted profit (Continuing operations)


15,687


22,266


371



61,054


77,963


1,300















Profit for the period attributable to Equity holders of the Company (Discontinued operations)


1,531


-


-



4,997


(0)


(0)

Adjustments :














Accelerated amortization of stock options that vest in a graded manner


(1)


-


-



(12)


-


-

 Non-GAAP adjusted profit (Discontinued operations)

1,530


-


-



4,984


(0)


(0)















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
















IT Services Revenue as per IFRS


1,720.2












Effect of Foreign currency exchange movement


2.8












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


1,717.4


























IT Services Revenue as per IFRS


1,720.2












Effect of Foreign currency exchange movement


11.8












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


1,732.0


























Segment Revenue and Operating Income as per new basis of segmentation






















SEGMENT


Three months ended March 31, 2014


Year ended March 31, 2014






Revenue


Operating Income


Revenue



Operating Income





BFSI


28,468


7,005


106,035



24,153





HLS


11,275


2,482


41,130



7,637





RCTG


15,412


4,048


58,893



13,012





ENU


17,173


4,887


63,923



17,418





MFG


19,095


4,909


74,423



17,348





GMT


14,770


3,332


55,105



11,569





UNALLOCATED


-


(609)


-



(804)





TOTAL IT SERVICES


106,193


26,054


399,509



90,333





IT PRODUCTS


11,090


143


38,785



310





RECONCILING ITEM


(238)


(387)


(666)



(1,289)





ENTITY TOTAL


117,045


25,810


437,628



89,354



















 

 

SOURCE Wipro Limited



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