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Wipro Limited Net Income Grew 27% YoY

Companies mentioned in this article: Wipro Limited

BANGALORE, India and EAST BRUNSWICK, N.J., Jan. 17, 2014 /PRNewswire/ -- Wipro Limited (NYSE:WIT) today announced financial results under International Financial Reporting Standards (IFRS) for its third quarter ended December 31, 2013.

Highlights of the Results:
Results for the Quarter ended December 31, 2013:

    --  Revenues from continuing operations were rupees 113.3 billion ($1.8
        billion(1)), an increase of 18% YoY.
    --  Net Income from continuing operations was rupees 20.1 billion ($325
        million(1)), an increase of 27% YoY which includes a non-recurring
        expense incurred due to the cessation of manufacturing Wipro branded
        desktop, laptops and servers. Excluding the non-recurring expense, Net
        Income from continuing operations was rupees 20.3 billion ($328
        million(1)), an increase of 28% YoY.
    --  Non-GAAP Adjusted Net Income from continuing operations was rupees 20.1
        billion ($325 million(1)), an increase of 27% YoY.
    --  IT Services Revenue was $1,678.4 million, a sequential increase of 2.9%
        and YoY increase of 6.4%.
    --  IT Services Revenues in Rupee terms was rupees 103.3 billion ($1,668
        million(1)), an increase of 20% YoY.
    --  IT Services Earnings Before Interest and Tax (EBIT) was rupees 23.8
        billion ($384 million(1)), an increase of 33% YoY.
    --  Operating Income to Revenue for IT Services was 23% for the quarter.
    --  The Opus CMC acquisition (announced in December 2013) was completed in
        January 2014, upon completion of customary closing conditions. Opus
        CMC's revenue for calendar year 2013, prior to the closing of the
        acquisition, was approximately $43 million.
    --  Wipro declared an interim dividend of rupees 3 ($0.05(1)) per share
        /ADS.

Performance for the quarter ended December 31, 2013
Azim Premji, Chairman of Wipro, commenting on the results said, "As the global economy is progressing towards stability, we see optimism amongst clients, especially in the West. Corporations are leveraging technology to reduce operational costs and investing resources in differentiating themselves in the marketplace."

T K Kurien, Executive Director & Chief Executive Officer of Wipro, said, "Our focus on account management has yielded encouraging results. We continue to execute to our strategy for superior engagement with clients while investing in emerging technologies to drive towards a higher growth trajectory. During the quarter, our Global Infrastructure Services business grew strongly on revenues."

Suresh Senapaty, Executive Director & Chief Financial Officer of Wipro, said - "Our strategy of 'standardization at the core' is yielding results. Our investments in automation and productivity tools have driven efficiencies and helped us expand margins of IT Services by 54 basis points to 23%."

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 31, 2013, for cable transfers in Indian rupees, as certified by the Federal Reserve Board of New York, which was US $1= rupees 61.92. However, the realized exchange rate in our IT Services business segment for the quarter ended December 31, 2013 was US$1= rupees 61.53

Outlook for the Quarter ending March 31, 2014
We expect Revenues from our IT Services business to be in the range of $1,712 million to $1,745 million* including the revenues from our acquisition.

* Guidance is based on the following exchange rates: GBP/USD at 1.63, Euro/USD at 1.37, AUD/USD at 0.92, USD/INR at 62.0

IT Services
The IT Services segment had 146,402 employees as of December 31, 2013. We added 42 new customers for the quarter.

A leading integrated construction and support services company has selected Wipro as its sole preferred global strategic partner to provide integrated IT and BPO services. As part of the multi-year relationship, Wipro will deliver operational and cost efficiency through its outsourcing services and partner with the customer in business and technology transformation initiatives.

One of the world's largest consumer goods companies has renewed its infrastructure services contract with Wipro. Wipro will provide Network, Datacenter, Global Service Desk and Security Services in a managed services model and partner to transform their IT landscape.

One of the largest banks in Africa has extended its existing relationship with Wipro for an additional 3 years. This renewed engagement is a validation of the value that Wipro is bringing to the bank's 'transformation journey' in its capacity as an Enterprise Testing Partner.

A large global universal bank has selected Wipro as one of its strategic partners to provide application development, maintenance and testing services.

Wipro won a deal from a non-profit research institution in the Kingdom of Saudi Arabia to provide IT infrastructure and applications management services. Wipro has been chosen by a leading hospital group in Saudi Arabia to provide end-to-end IT Infrastructure services.

Awards and accolades

Wipro has been recognized by Amazon Web Services as an AWS Partner Network (APN) Premier Consulting Partner for 2014, marking the second year in a row that the Company has achieved this designation.

Wipro Life Sciences has been positioned as a 'Leader' in the IDC MarketScape: Worldwide Life Science Manufacturing & Supply Chain ITO 2013 Vendor Assessment (doc #HI244265, November 2013), being recognized for its account management capabilities. Wipro Healthcare and Life sciences continues to leverage its strengths in differentiated domain offerings - patient centricity and compliance through sales and marketing analytics, business intelligence and master data management.

Wipro was named as a leader in the India 200 Climate Disclosure Leadership Index (CDLI), for the second time in a row. Wipro continues to retain the top position with a disclosure score of 98/100. The average disclosure score of Indian companies is 68.

Wipro was named a "Leader" by technology global research and advisory firm Forrester Research Inc. in its report "The Forrester Wave(TM): Business Intelligence Service Providers in Asia Pacific, Q4 2013". Forrester Research Inc. evaluated leading Business Intelligence (BI) Services providers across 53 criteria relating to current offering, strategy and market presence based on client inquiries, user needs assessments, and vendor and expert interviews. It identified Wipro as a leader in Business Intelligence Services for Asia Pacific-based organizations.

Wipro received the '2013 ESCAP-Sasakawa Award for Disability-Inclusive Business in Asia and the Pacific' in the category 'Disability-Inclusive Multinational Enterprise'.

IT Products

    --  Our IT Products segment delivered Revenue of rupees 10.2 billion ($164
        million(1)) for the quarter, a YoY increase of 2%.
    --  EBIT was negative rupees 116 million (negative $2 million(1)) for the
        quarter. The operating income of IT Products segment for the quarter
        includes non-recurring expense of rupees 209 million ($3 million(1))
        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 93 million ($1.5
        million(1)).

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 ended December 31, 2013, 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 (08:15 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 December
                                                                          31,
                                     ---------------               ---------------

                                                2013                       2013                            2013
                                                ----                       ----                            ----

                                                                                             Convenience
                                                                                           translation into

                                                                                           US$ in millions

                                                                                             (Unaudited)
                                                                                          Refer note 2 (iv)
                                                                                           ----------------

    ASSETS
    ------

    Goodwill                                  54,756                     62,150                           1,004

    Intangible
     assets                                    1,714                      1,668                              27

    Property,
     plant and
     equipment                                50,525                     51,863                             838

    Derivative
     assets                                       51                        625                              10

    Non-current
     tax assets                               10,308                     10,981                             177

    Deferred tax
     assets                                    4,235                      4,653                              75

    Other non-
     current
     assets                                   10,738                     14,491                             234
                                              ------                     ------                             ---

    Total non-
     current
     assets                                  132,327                    146,431                           2,365
                                             -------                    -------                           -----


    Inventories                                3,263                      2,825                              46

    Trade
     receivables                              76,635                     85,091                           1,374

    Other
     current
     assets                                   31,069                     39,825                             643

    Unbilled
     revenues                                 31,988                     38,199                             617

    Available
     for sale
     investments                              69,171                     79,128                           1,278

    Current tax
     assets                                    7,408                      9,552                             154

    Derivative
     assets                                    3,031                      1,329                              21

    Cash and
     cash
     equivalents                              84,838                     79,932                           1,291
                                              ------                     ------                           -----

    Total
     current
     assets                                  307,403                    335,881                           5,424
                                             -------                    -------                           -----

    TOTAL ASSETS                             439,730                    482,312                           7,789
                                             =======                    =======                           -----


    EQUITY
    ------

    Share
     capital                                   4,926                      4,931                              80

    Share
     premium                                  11,760                     12,463                             201

    Retained
     earnings                                259,178                    301,338                           4,867

    Share based
     payment
     reserve                                   1,316                      1,045                              17

    Other
     components
     of equity                                 7,174                     10,318                             167

    Shares held
     by
     controlled
     trust                                      (542)                      (542)                             (9)
                                                ----                       ----                             ---

    Equity
     attributable
     to the
     equity
     holders of
     the company           283,812                    329,553                    5,323

    Non-
     controlling
     Interest                                  1,171                      1,300                              21
                                                                                                            ---

    Total equity                             284,983                    330,853                           5,344
                                             -------                    -------                           -----


    LIABILITIES
    -----------

    Long -term
     loans and
     borrowings                                  854                     11,357                             183

    Deferred tax
     liabilities                                 846                      1,383                              22

    Derivative
     liabilities                                 118                      1,525                              25

    Non-current
     tax
     liability                                 4,790                      4,557                              74

    Other non-
     current
     liabilities                               3,390                      3,076                              50

    Provisions                                     9                          4                               -
                                                                                                            ---

    Total non-
     current
     liabilities                              10,007                     21,902                             354
                                              ------                     ------                             ---


    Loans and
     borrowings
     and bank
     overdrafts             62,962                     36,159                      584

    Trade
     payables
     and accrued
     expenses                                 48,067                     50,313                             813

    Unearned
     revenues                                 10,347                     12,856                             208

    Current tax
     liabilities                              10,226                     12,055                             195

    Derivative
     liabilities                                 975                      3,179                              51

    Other
     current
     liabilities                              10,989                     13,697                             221

    Provisions                                 1,174                      1,298                              21

    Total
     current
     liabilities                             144,740                    129,557                           2,091
                                             -------                    -------                           -----

    TOTAL
     LIABILITIES                             154,747                    151,459                           2,445
                                             -------                    -------                           -----


    TOTAL EQUITY
     AND
     LIABILITIES                             439,730                    482,312                           7,789
                                             =======                    =======                           =====


                                                                                                     WIPRO LIMITED AND SUBSIDIARIES

                                                                                           CONDENSED CONSOLIDATED INTERIM STATEMENTS OF INCOME

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


                                                                                                                                             Three months ended December 31,                          Nine months ended December 31,

                                                                                                                                         2012              2013                        2013           2012              2013                        2013
                                                                                                                                         ----              ----                        ----           ----              ----                        ----

                                                                                                                                                                 Convenience                                                  Convenience
                                                                                                                                                                 translation                                                  translation
                                                                                                                                                                 into US $ in                                                 into US $ in
                                                                                                                                                                   millions                                                     millions
                                                                                                                                                                 (Unaudited)                                                  (Unaudited)
                                                                                                                                                                  ----------                                                   ----------


    Continuing Operations

    Gross revenues                                                                                                                     95,140           112,713                       1,820        278,170           317,734                       5,131

    Cost of revenues                                                                                                                  (66,003)          (76,365)                     (1,233)      (193,657)         (217,788)                     (3,517)

    Gross profit                                                                                                                       29,137            36,348                         588         84,513            99,946                       1,614


    Selling and marketing expenses                                                                                                     (6,298)           (7,759)                       (125)       (18,030)          (22,224)                       (359)

    General and administrative expenses                                                                                                (5,557)           (5,775)                        (93)       (16,214)          (17,028)                       (275)

    Foreign exchange gains/(losses), net                                                                                                  747               604                          10          2,563             2,849                          46

    Results from operating activities                                                                                                  18,029            23,418                         378         52,832            63,543                       1,026


    Finance expenses                                                                                                                     (472)             (898)                        (15)        (2,298)           (2,049)                        (33)

    Finance and other income                                                                                                            2,896             3,812                          62          8,239            10,585                         171

    Profit before tax                                                                                                                  20,454            26,332                         425         58,773            72,079                       1,164

    Income tax expense                                                                                                                 (4,472)           (6,060)                        (98)       (12,939)          (16,064)                       (259)

    Profit for the period from continuing operation                                                                                    15,981            20,272                         327         45,834            56,015                         905
                                                                                                                                       ------            ------                         ---         ------            ------                         ---


    Discontinued operation

    Profit after tax for the period from discontinued operation                                                                         1,273                 -                           -          3,488                 -                           -

    Profit for the period                                                                                                              17,254            20,272                         327         49,322            56,015                         905
                                                                                                                                       ======            ======                         ===         ======            ======                         ===


    Attributable to:

    Equity holders of the company                                                                                                      17,164            20,147                         325         49,071            55,703                         900

    Non-controlling interest                                                                                                               90               125                           2            251               312                           5

    Profit for the period                                                                                                              17,254            20,272                         327         49,322            56,015                         905
                                                                                                                                       ======            ======                         ===         ======            ======                         ===


    Profit from continuing operations attributable to:

    Equity holders of the company                                                                                                      15,895            20,147                         325         45,595            55,703                         900

    Non-controlling interest                                                                                                               86               125                           2            239               312                           5

                                                                                                                                       15,981            20,272                         327         45,834            56,015                         905
                                                                                                                                       ======            ======                         ===         ======            ======                         ===

    Earnings per equity share:

    Attributable to equity share holders of the company

    Basic                                                                                                                                6.99              8.20                        0.13          20.01             22.69                        0.37

    Diluted                                                                                                                              6.98              8.18                        0.13          19.96             22.62                        0.37


    From continuing operations

    Basic                                                                                                                                6.48              8.20                        0.13          18.59             22.69                        0.37

    Diluted                                                                                                                              6.46              8.18                        0.13          18.55             22.62                        0.37


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

    Basic                                                                                                                       2,454,147,915     2,455,541,979               2,455,541,979  2,452,383,566     2,454,745,433               2,454,745,433

    Diluted                                                                                                                     2,458,907,939     2,462,432,622               2,462,432,622  2,458,419,557     2,462,073,492               2,462,073,492


    Additional Information

    Segment Revenue

    IT Services                                                                                                                        86,018           103,274                       1,668        252,893           293,316                       4,737

    IT Products                                                                                                                         9,969            10,155                         164         28,492            27,695                         447

    IT Services & Products                                                                                                             95,987           113,429                       1,832        281,385           321,011                       5,184

    Consumer Care and Lighting (Discontinued operation)                                                                                10,281                 -                           -         30,154                 -                           -

    Others (Discontinued operation)                                                                                                     3,727                 -                           -         11,392                 -                           -

    Others                                                                                                                                251              (112)                         (2)           412              (428)                         (7)

    Total                                                                                                                             110,246           113,317                       1,830        323,343           320,583                       5,177


    Operating Income

    IT Services                                                                                                                        17,917            23,790                         384         52,665            64,279                       1,038

    IT Products                                                                                                                           239              (116)                         (2)           722               167                           3

    IT Services & Products                                                                                                             18,156            23,674                         382         53,387            64,446                       1,041

    Consumer Care and Lighting (Discontinued operation)                                                                                 1,402                 -                           -          3,675                 -                           -

    Others (Discontinued operation)                                                                                                        36                 -                           -            313                 -                           -

    Others                                                                                                                               (135)             (256)                         (4)          (607)             (903)                        (15)

    Total                                                                                                                              19,459            23,418                         378         56,768            63,543                       1,026


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


    Profit for the period attributable to Equity holders of the Company (Continuing operations)                                        15,895            20,147                         325         45,595            55,703                         900

    Adjustments :

    Accelerated amortization of stock options that vest in a graded manner                                                                (68)                1                           -              -                (5)                         (0)

     Non-GAAP adjusted profit (Continuing operations)                                                                                  15,827            20,148                         325         45,595            55,698                         900
                                                                                                                                       ======            ======                         ===         ======            ======                         ===


    Profit for the period attributable to Equity holders of the Company (Discontinued operations)                                       1,269                 -                           -          3,476                 -                           -

    Adjustments :

    Accelerated amortization of stock options that vest in a graded manner                                                                 (1)                -                           -            (12)                -                           -

     Non-GAAP adjusted profit (Discontinued operations)                                                                                 1,268                 -                           -          3,464                 -                           -
                                                                                                                                        =====               ===                         ===          =====               ===                         ===


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


    IT Services Revenue as per IFRS                                                                                                   1,678.4

    Effect of Foreign currency exchange movement                                                                                         10.6

    Non-GAAP Constant Currency IT Services Revenue based on previous quarter exchange rates                                           1,667.8


    IT Services Revenue as per IFRS                                                                                                   1,678.4

    Effect of Foreign currency exchange movement                                                                                         29.0

    Non-GAAP Constant Currency IT Services Revenue based on previous year exchange rates                                              1,707.4

SOURCE Wipro Limited