Wipro Records 10% YoY Growth in Profit After Tax in the Quarter; Year-to-date Growth of 16%
BANGALORE, India and EAST BRUNSWICK, New Jersey, January 21, 2011 /PRNewswire/ --
- Results for the quarter ended December 31, 2010 under IFRS
Wipro Limited (NYSE: WIT) today announced financial results under International Financial Reporting Standards (IFRS) for its third fiscal quarter ended December 31, 2010.
Highlights of the Results:
Results for the Quarter ended December 31, 2010
- IT Services Revenue in dollar terms was $1,344 million, a sequential
increase of 5.6% and YoY increase of 19.3%. Non-GAAP constant currency
revenue was $1325 million.
- IT Services Revenues were Rs. 59.49 billion ($1,328 million(1)),
representing an increase of 15% over the same period last year.
- Total Revenues were Rs. 78.29 billion ($1.75 billion(1)), representing
an increase of 12% over the same period last year.
- Net Income was Rs. 13.19 billion ($294 million(1)), representing an
increase of 10% over the same period last year.
- Non-GAAP Adjusted Net Income (excluding impact of accelerated
amortization of stock based compensation) was Rs. 13.09 billion ($292
million(1)), representing an increase of 9% over the same period last
year.
- IT Services Earnings Before Interest and Tax (EBIT) was Rs.13.21
billion ($295 million(1)), representing an increase of 8% over the same
period last year.
- IT Services added 36 new clients in the quarter.
- Net addition of 3,591 employees in the current quarter.
- Consumer Care and Lighting Revenue grew 21% over the same period last
year and EBIT grew 14%.
- Wipro declares an interim dividend of Rs.2 ($0.04(1)) per share /ADS.
Performance for the quarter ended December 31, 2010 and Outlook for the quarter ending March 31, 2011
Azim Premji Chairman of Wipro, commenting on the results said -
"We announced the appointment of TK Kurien as the Chief Executive Officer of IT Business and Executive Director, Wipro Limited effective February 1, 2011. The Joint CEO structure was one of the key factors that successfully helped us navigate the worst economic crisis of our times. With the change in environment, there is a need for a simpler organization structure. Kurien's track record with customers, passion for excellence, coupled with strategic thinking and rigor in execution makes him uniquely positioned to lead Wipro through the next phase of growth."
Suresh Senapaty, Executive Director & Chief Financial Officer of Wipro, said -
"The Operating Margins for IT Services Business was flat, despite lower working days and drop in utilization."
Outlook for the Quarter ending March 31, 2011
We expect Revenues from our IT Services business to be in the range of $1,384 million to $1,411 million, a sequential increase of 3% to 5%*
* Guidance is based on the following constant currency exchange rates: GBP/USD at 1.58, Euro/USD at 1.35, AUD/USD at 1.01, USD/INR at 44.98
Wipro Limited
Total Revenue for the quarter ended December 31, 2010 was Rs. 78.29 billion ($1.75 billion(1)), representing an increase of 12% over the same period last year. Net Income for the quarter ended December 31, 2010 was Rs.13.19 billion ($294 million(1)), representing an increase of 10% over the same period last year. Non-GAAP Adjusted Net Income (excluding impact of accelerated amortization of stock based compensation) for the quarter ended December 31, 2010 was Rs. 13.09 billion ($292 million(1)), representing an increase of 9% over the same period last year. Earnings Per Share for the quarter ended December 31, 2010 were Rs. 5.41 ($0.12(1)). Non-GAAP Adjusted Earnings Per Share (excluding the impact of accelerated amortization of stock based compensation) for the quarter ended December 31, 2010 were Rs. 5.37 ($0.12(1)).
Please see the table 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.
IT Services (76% of Total Revenue and 92% of Operating Income for the quarter ended December 31, 2010)
Our IT Services business segment recorded Revenue of Rs. 59.49 billion ($1,328 million(1)) for the quarter ended December 31, 2010, representing an increase of 15% over the same period last year. EBIT for this segment was Rs. 13.21 billion ($295 million(1)) for the quarter ended December 31, 2010, representing an increase of 8% over the same period last year.
Our Operating Income to Revenue for this segment was 22.2% for the quarter ended December 31, 2010.
We had 119,491 employees as of December 31, 2010, an increase of 3,591 people this quarter.
Wipro continues to move the business mix towards transformation business helping clients deliver better business outcomes.
Wipro won a large deal to provide next generation managed services to Pitney Bowes. The deal is an integrated applications and infrastructure contract that leverages Wipro's award winning integrated service management platform - Cigma - that allows for better measurement of business KPI.
The solution also includes our iGCC (Integrated Global Command Center) and Flex delivery models to enable non linearity in the solution and increase business benefits to the client. In addition, Wipro will also provide IP telephony services in a utility based model, helping the customer move from a capex model to an opex based model.
Wipro has signed a multi- year contract with one of the State Government's Administrative Office Courts in USA to develop and deploy a hosted system to assist one of its key citizen services. Wipro has entered into a multi-year outsourcing engagement with a leading Pet Supply retailer in USA to provide application development and maintenance services for business applications across their stores, online and business operations.
The Commonwealth Secretariat of UK has enlisted Wipro to redesign the next generation debt management software titled the Commonwealth Secretariat Debt Recording and Management System (CS-DRMS), which allows governments to manage their domestic, external, short, medium and long-term debt. This system will be deployed in 60 commonwealth and non-commonwealth countries.
Wipro won a five year outsourcing deal from one of the largest PSU banks in South India for rolling out the core banking solution for its regional rural bank initiative spread across Karnataka, Kerala and Uttar Pradesh. Wipro won a project from Bombay stock exchange (BSE) for building their DR centre at Hyderabad. The current quarter also saw some good wins coming from the government sector comprising of projects from the UID authority for enrollment services for Maharashtra state and a five year contract for automating the Treasury department of Assam.
In the Middle East, Wipro won a turnkey deal from an Islamic Insurance company, for enterprise applications covering ERP, CRM, portals and related infrastructure. Wipro also won a large multi-year, managed services deal from a leading Telecom Operator in Africa.
With years of experience in deploying enterprise applications, providing infrastructure and BPO services for its clients, Wipro has innovated a service delivery model that combines all three services in a utility model. The 'Source-to-Pay' platform, launched this quarter, allows Wipro to rapidly deploy procurement best practices, thereby realizing benefits of process efficiencies, an optimized platform and outsourced business process services in a box, while minimizing capex.
Wipro's experience and expertise both in technology and business were widely recognized this quarter.
Wipro was granted 2 Patents in the current Quarter. One patent is in the field of Master Data Management (MDM) and Information Exchange (MIX); and the second patent is for a SOA Solutions kit that enables rapid development of SOA applications
Awards and Recognition
Wipro was awarded the Microsoft Platform Modernization Award for Sales for 2010.
Wipro was also awarded the '2010 Outstanding Corporate Award' for contribution to the Embedded Systems and Very-Large-Scale Integration (VLSI) industry segment by Mentor Graphics and SiliconIndia.
Equaterra, an independent sourcing advisory in more than 60 countries, ranked Wipro #1 in Client Satisfaction, Applications Management, Infrastructure Management, Price and Governance; underlining Wipro as a leader for client satisfaction in its detailed UK IT service provider performance study.
For the fourth consecutive year, Wipro was recognized as a winner of the Global MAKE (Most Admired Knowledge Enterprises) Award 2010 and was inducted into the Global MAKE Hall of Fame 2010.
Resonating its firmly established leadership in Green IT, Wipro became the first Indian company to join Greenpeace's CoolIT Leaderboard rankings that assesses companies on their commitments and actions on energy and climate solutions. Wipro featured in the top 10 of a list that includes many global IT majors.
IT Products (11% of Total Revenue and 3% of Operating Income for the quarter ended December 31, 2010)
Our IT Products segment recorded Revenue of Rs. 8.79 billion ($196 million(1)) for the quarter ended December 31, 2010, representing a decline of 13% over the same period last year. EBIT for this segment was Rs. 408 million ($9 million(1)) for the quarter ended December 31, 2010, representing a decline of 32% over the same period last year.
The ratio of our Operating Income to Revenue for this segment was 4.6% for the quarter ended December 31, 2010.
Return on Average Capital Employed (ROCE) for the IT Services and Products segment was 39% on an annualized basis for the quarter ended December 31, 2010.
Consumer Care and Lighting (9% of Total Revenue and 6% of Operating Income for the quarter ended December 31, 2010)
Our Consumer Care and Lighting business segment recorded Revenue of Rs. 6.95 billion ($155 million(1)) for the quarter ended December 31, 2010, representing an increase of 21% over the same period last year. EBIT for this segment was Rs. 855 million ($19 million(1)) for the quarter ended December 31, 2010, representing an increase of 14% over the same period last year.
Operating Income to Revenue for this segment was 12.3% for the quarter ended December 31, 2010. ROCE for this segment was 16% on an annualized basis for the quarter ended December 31, 2010, compared to 16% for the same period last year.
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 which follows 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.
These Non-GAAP financial measure 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 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.
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. We consider a stock option award with a graded vesting schedule to be in substance a single award not multiple stock option awards. Further, we consider the services of the employee in each year covered by the stock option award to be equally valuable and accordingly believes that the straight line amortization reflects the economic substance of the stock option awards. However, we record the related stock compensation expenses on an accelerated amortization basis for IFRS reporting. Therefore, we believe that making available an adjusted net income number that excludes the impact of accelerated amortization from Net Income provides useful supplemental information to both management and investors about financial and business trends.
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.
A material limitation associated with the use of Non-GAAP Adjusted Net Income as compared to the IFRS measure of Net Income is that it does not include costs which are recurring in nature and may not be comparable with the calculation of Net Income for other companies in our industry. We compensate for these limitations by providing full disclosure of the effects of this non-GAAP measure, by presenting the corresponding IFRS financial measure and by providing a reconciliation to the corresponding IFRS measure.
We believe that the presentation of IT Services Revenue on a non-GAAP constant currency basis, when shown in conjunction with the corresponding IFRS measure, provides useful information to investors and management regarding financial and business trends relating to IT Services Revenue. As noted above, IT Services Revenue on a non-GAAP constant currency basis 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 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.
Results for the quarter ended December 31, 2010, computed under IFRS, along with individual business segment reports, are available in the Investors section of our website at www.wipro.com.
Quarterly Conference Calls
We will hold conference calls today at 02:00 p.m. Indian Standard Time (03:30 a.m. US Eastern Time) and at 6:45 p.m. Indian Standard Time (8:15 a.m. US Eastern Time) to discuss our performance for the quarter and answer questions sent to email ID: rajendra.shreemal@wipro.com or sridhar.ramasubbu@wipro.com. 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 http://www.wipro.com.
About Wipro Limited
Wipro provides comprehensive IT solutions and services, including systems integration, information systems outsourcing, 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. Wipro's IT Services business was assessed at Level 5 for CMMI V 1.2 across Offshore and Onsite development centers.
Wipro also has a strong presence in niche market segments of Infrastructure Engineering and Consumer Products & Lighting.
Wipro's American Depositary Shares (ADSs) are listed on the New York Stock Exchange and equity shares are listed in India on the Stock Exchange - Mumbai, and the National Stock Exchange. For more information, please visit our websites at www.wipro.com, www.wiprocorporate.com and www.wipro.in
Forward-looking and Cautionary Statements
In addition to historical information, this press release contains certain "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. 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.
(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 December 30, 2010, for cable transfers in Indian rupees, as certified by the Federal Reserve Board of New York, which was US $1=Rs.44.80. However, the realized exchange rate in our IT Services business segment for the quarter ended December 31, 2010 was US$1=Rs.44.27
(Tables to follow)
WIPRO LIMITED AND SUBSIDIARIES
AUDITED CONDENSED CONSOLIDATED INTERIM STATEMENTS OF FINANCIAL
POSITION
(in millions, except share and per share data, unless otherwise
stated)
As of March 31, As of December 31,
------------ ------------------
2010 2010 2010
---- ---- ----
Convenience
translation
into US$ in
millions
(Unaudited)
-----------
ASSETS
------
Goodwill 53,802 54,437 1,215
Intangible
assets 4,011 3,669 82
Property,
plant and
equipment 53,458 56,269 1,256
Investment in
equity
accounted
investees 2,345 2,855 64
Derivative
assets 1,201 3,254 73
Non-current
tax assets 3,464 3,465 77
Deferred tax
assets 1,686 1,560 35
Other non-
current
assets 8,784 11,158 249
----- ------ ---
Total non-
current
assets 128,751 136,667 3,051
------- ------- -----
Inventories 7,926 8,738 195
Trade
receivables 50,928 61,150 1,365
Other current
assets 21,106 21,868 488
Unbilled
revenues 16,708 21,771 486
Available for
sale
investments 30,420 74,814 1,670
Current tax
assets 6,596 8,069 180
Derivative
assets 2,615 1,716 38
Cash and cash
equivalents 64,878 26,162 584
------ ------ ---
Total current
assets 201,177 224,288 5,006
-
TOTAL ASSETS 329,928 360,955 8,057
======= ======= =====
EQUITY
------
Share capital 2,936 4,907 110
Share premium 29,188 29,805 665
Retained
earnings 165,789 194,988 4,352
Share based
payment
reserve 3,140 1,324 30
Other
components of
equity (4,399) (834) (19)
Shares held by
controlled
trust (542) (542) (12)
---- ---- ---
Equity
attributable
to the equity
holders of
the company 196,112 229,648 5,126
Non-
controlling
Interest 437 644 14
Total equity 196,549 230,292 5,140
------- ------- -----
LIABILITIES
-----------
Long -term
loans and
borrowings 18,107 25,273 564
Deferred tax
liabilities 380 321 7
Derivative
liabilities 2,882 2,567 57
Non-current
tax liability 3,065 3,426 76
Other non-
current
liabilities 3,233 2,812 63
Provisions 100 110 2
Total non-
current
liabilities 27,767 34,509 770
------ ------ ---
Loans and
borrowings
and bank
overdrafts 44,404 33,254 742
Trade payables
and accrued
expenses 38,748 39,187 875
Unearned
revenues 7,462 8,392 187
Current tax
liabilities 4,850 6,540 146
Derivative
liabilities 1,375 1,105 25
Other current
liabilities 6,499 5,365 120
Provisions 2,274 2,311 52
Total current
liabilities 105,612 96,154 2,147
------- ------ -----
TOTAL
LIABILITIES 133,379 130,663 2,917
------- ------- -----
TOTAL EQUITY
AND
LIABILITIES 329,928 360,955 8,057
======= ======= =====
WIPRO LIMITED AND SUBSIDIARIES
AUDITED CONDENSED CONSOLIDATED INTERIM STATEMENTS OF INCOME
(in millions, except share and per share data, unless otherwise stated)
Three months ended December 31,
-------------------------------
2009 2010 2010
---- ---- ----
Convenience
translation
into US
$ in millions
(Unaudited)
Gross revenues 69,380 78,202 1,746
Cost of
revenues (47,766) (53,530) (1,195)
Gross profit 21,614 24,672 551
Selling and
marketing
expenses (4,770) (5,485) (122)
General and
administrative
expenses (3,702) (4,921) (110)
Foreign
exchange
gains/
(losses), net 394 91 2
Results from
operating
activities 13,536 14,357 320
Finance
expenses (203) (427) (10)
Finance and
other income 924 1,751 39
Share of
profits of
equity
accounted
associates 128 160 4
Profit before
tax 14,385 15,841 354
Income tax
expense (2,322) (2,582) (58)
Profit for the
period 12,063 13,259 296
------ ------ ---
Attributable
to:
Equity holders
of the
company 12,032 13,188 294
Non-
controlling
interest 31 71 2
Profit for the
period 12,063 13,259 296
====== ====== ===
Earnings per
equity share:
Basic 4.95 5.41 0.12
Diluted 4.91 5.39 0.12
Weighted
average
number of
equity shares
used in
computing
earnings per
equity share
Basic 2,429,598,228 2,437,889,531 2,437,889,531
Diluted 2,448,829,379 2,448,271,662 2,448,271,662
Additional
Information
Segment
Revenue
IT Services 51,648 59,486 1,328
IT Products 10,114 8,792 196
IT Services &
Products 61,762 68,278 1,524
Consumer Care
and Lighting 5,743 6,950 155
Others 2,269 3,065 68
Total 69,774 78,293 1,748
Operating
Income
IT Services 12,250 13,211 295
IT Products 602 408 9
IT Services &
Products 12,852 13,619 304
Consumer Care
and Lighting 748 855 19
Others (65) (119) (3)
Total 13,536 14,357 320
Reconciliation
of adjusted
Non-GAAP
profit to
profit as per
IFRS
Profit for the
period
attributable
to Equity
holders of
the Company 12,032 13,188 294
Adjustments :
Accelerated
amortization
of stock
options that
vest in a
graded manner 28 (95) (2)
Non-GAAP
adjusted
profit 12,060 13,093 292
====== ====== ===
Reconciliation
of Non-GAAP
Constant
Currency IT
Services
Revenue to IT
Services
Revenue as per
IFRS ($MN)
IT Services
Revenue as
per IFRS 1,344
Effect of
Foreign
currency
exchange
movement 19
Non-GAAP
Constant
Currency IT
Services
Revenue based
on previous
quarter
exchange
rates 1,325
IT Services
Revenue as
per IFRS 1,344
Effect of
Foreign
currency
exchange
movement (4)
Non-GAAP
Constant
Currency IT
Services
Revenue based
on previous
year exchange
rates 1,348
Nine months ended December 31,
------------------------------
2009 2010 2010
---- ---- ----
Convenience
translation
into US
$ in millions
(Unaudited)
Gross revenues 202,185 227,827 5,085
Cost of
revenues (138,534) (155,405) (3,469)
Gross profit 63,651 72,422 1,617
Selling and
marketing
expenses (13,500) (16,622) (371)
General and
administrative
expenses (11,230) (13,055) (291)
Foreign
exchange
gains/
(losses), net (772) 136 3
Results from
operating
activities 38,149 42,881 957
Finance
expenses (1,334) (1,297) (29)
Finance and
other income 3,091 4,525 101
Share of
profits of
equity
accounted
associates 354 509 11
Profit before
tax 40,260 46,618 1,041
-
Income tax
expense (6,279) (7,110) (159)
Profit for the
period 33,981 39,508 882
------ ------ ---
Attributable
to:
Equity holders
of the
company 33,842 39,222 875
Non-
controlling
interest 139 286 6
Profit for the
period 33,981 39,508 882
====== ====== ===
Earnings per
equity share:
Basic 13.94 16.10 0.36
Diluted 13.82 16.03 0.36
Weighted
average
number of
equity shares
used in
computing
earnings per
equity share
Basic 2,428,218,853 2,435,598,446 2,435,598,446
Diluted 2,448,311,201 2,446,171,990 2,446,171,990
Additional
Information
Segment
Revenue
IT Services 149,894 171,959 3,838
IT Products 29,305 27,805 621
IT Services &
Products 179,199 199,764 4,459
Consumer Care
and Lighting 16,500 20,014 447
Others 5,714 8,185 183
Total 201,413 227,963 5,088
Operating
Income
IT Services 34,900 39,529 882
IT Products 1,504 1,277 28
IT Services &
Products 36,404 40,806 911
Consumer Care
and Lighting 2,272 2,580 58
Others (527) (505) (11)
Total 38,149 42,881 957
Reconciliation
of adjusted
Non-GAAP
profit to
profit as per
IFRS
Profit for the
period
attributable
to Equity
holders of
the Company 33,842 39,222 875
Adjustments :
Accelerated
amortization
of stock
options that
vest in a
graded manner (101) (306) (7)
Non-GAAP
adjusted
profit 33,741 38,916 869
====== ====== ===
Reconciliation
of Non-GAAP
Constant
Currency IT
Services
Revenue to IT
Services
Revenue as per
IFRS ($MN)
IT Services
Revenue as
per IFRS
Effect of
Foreign
currency
exchange
movement
Non-GAAP
Constant
Currency IT
Services
Revenue based
on previous
quarter
exchange
rates
IT Services
Revenue as
per IFRS
Effect of
Foreign
currency
exchange
movement
Non-GAAP
Constant
Currency IT
Services
Revenue based
on previous
year exchange
rates
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