Infosys (NYSE: INFY) Announces Results for the Quarter Ended September 30, 2018

PR75763

BENGALURU, India, October 16, 2018 /PRNewswire=KYODO JBN/ --

- Broad-based Growth and Digital Resulted in a Strong Q2 19

    "We are delighted with our broad-based growth across all business segments

and geographies during the quarter. This is a testimony to our strong client

relationships, digital led full service capabilities, and intense focus on the

needs of our clients," said Salil Parekh, CEO and MD. "Large deal wins at over

$2 billion during the quarter demonstrate our increased client relevance and

also give us better growth visibility for the near-term."

    (Logo: https://mma.prnewswire.com/media/633365/Infosys_Logo.jpg)

    - $2 Bn+ Large deal signings in Q2 19

    - 4.2% Q2 19 QoQ revenue growth in CC terms

    - 31.0% Digital revenue share in Q2 19

    - 7.1% H1 19 YoY revenue growth in CC terms

    - 23.7% Operating margin in Q2 19

    - Q2 19 revenues grew year-on-year by 7.1% in USD terms; 8.1% in constant

currency terms

    - Q2 19 revenues grew sequentially by 3.2% in USD terms; 4.2% in constant

currency terms

    - Digital revenues at $905 million (31.0% of total revenues), year-on-year

growth of 33.5% and sequential growth of 13.5% in constant currency terms

    - H1 revenues grew by 6.9% in USD terms; 7.1% in constant currency terms

    - Operating margin 23.7%, at higher end of guidance range

    - Q2 19 Basic EPS grew year-on-year by 5.7% in USD terms

    - Large deal wins crossed $2 billion

    - Declared interim dividend of INR 7 per share (approximately $0.10 per

ADS*)

    - FY 19 revenue guidance in constant currency retained at 6%-8%; Operating

margin guidance retained at 22%-24%

    *USD/INR exchange rate as of September 30, 2018

    1. Financial Highlights- Consolidated results under International Financial

Reporting Standards (IFRS)

    - For the Quarter ended September 30, 2018

    - Revenues were $2,921 million, growth of 7.1% YoY and 3.2% QoQ

    - Net profit was $581 million, growth of 0.5% YoY and 8.8% QoQ

    - Basic EPS was $0.13, growth of 5.7% YoY and 8.8% QoQ

    - For six months ended September 30, 2018

    - Revenues were $5,753 million, growth of 6.9% YoY

    - Net profit was $1,116 million, decline of 0.3% YoY

    - Basic EPS was $0.26, growth of 4.8% YoY

    "We had another quarter of solid operating parameters with utilization

being stable and offshore mix improving to all-time high," said U B Pravin Rao,

COO. "Our Digital services grew double digits sequentially, while growth in top

clients was also robust."

    "Our unwavering focus on strong financial performance on multiple fronts

continued to deliver results during the quarter. Operating margins for the

quarter as well as for the half year was at 23.7%, near the top end of our

guidance band," said M.D. Ranganath, CFO. "Operating Cash Flow was over $1

billion during the first half of the year and ROE was at 24.7%. We will

continue to make strategic investments in digital to leverage opportunities and

at the same time keep sharp focus on key operational efficiency parameters."

    2. Bonus issue of equity shares

    The Company has allotted 2,18,41,91,490 fully paid up equity shares of face

value ₹5/- each during the three months ended September 30, 2018 pursuant

to a bonus issue approved by the shareholders through postal ballot. The bonus

shares have been issued to celebrate 25th year of public listing in India and

to further increase the liquidity of its shares. Bonus share of one equity

share for every equity share held, and a bonus issue, viz., a stock dividend of

one American Depositary Share (ADS) for every ADS held, respectively, has been

allotted. Consequently, the ratio of equity shares underlying the ADSs held by

an American Depositary Receipt holder remains unchanged.

    3. Acquisitions

    - On September 7, 2018, Infosys Consulting Pte Limited (a wholly owned

subsidiary of Infosys Limited) entered into a definitive agreement to acquire

60% stake in Trusted Source Pte Ltd (a wholly owned subsidiary of Temasek

Management Services Pte. Ltd.), a Singapore-based IT services company for a

total consideration of upto SGD 12 million (approximately $9 million), subject

to regulatory approvals and fulfillment of closing conditions.

    - On October 11, 2018, Infosys Consulting Pte Limited (a wholly owned

subsidiary of Infosys Limited) acquired 100% of voting interests in Fluido Oy

(Fluido), a Nordic-based salesforce advisor and consulting partner in cloud

consulting, implementation and training services for a total consideration of

upto Euro 65 million (approximately $75 million), comprising of cash

consideration of Euro 45 million (approximately $52 million), contingent

consideration of upto Euro 12 million (approximately $14 million) and retention

payouts of upto Euro 8 million (approximately $9 million), payable to the

employees of Fluido over the next three years, subject to their continuous

employment with the group. The payment of contingent consideration to sellers

of Fluido is dependent upon the achievement of certain financial targets by

Fluido.

    4. Update on arbitration proceedings

    On September 17, 2018 the Arbitral Tribunal of Hon'ble Justice R.V.

Raveendran (retired) communicated the decision with regard to the dispute

between Infosys Ltd. and its former CFO Mr. Rajiv Bansal. The Company has

received legal advice and will comply with the award and make the necessary

payments.

    5. Shareholder visit to Mysuru campus

    Shareholders of the Company are being offered an opportunity to visit the

Company's campus in Mysuru on November 24, 2018. Shareholders who would like to

avail this opportunity need to register at http://www.infosys.com between

October 25, 2018 and November 15, 2018. As the number of shareholders the

company can host on this visit are limited, shareholders will be accommodated

on a first come, first serve basis. This visit is for shareholders only, and is

not extended to family and friends. This follows several requests made by

shareholders to visit the Company campus. The Company will provide transport

from its registered office in Electronics City, Bengaluru and incur all

associated costs for this visit from Bengaluru to Mysuru.

    About Infosys

    Infosys is a global leader in next-generation digital services and

consulting. We enable clients in 45 countries to navigate their digital

transformation. With over three decades of experience in managing the systems

and workings of global enterprises, we expertly steer our clients through their

digital journey. We do it by enabling the enterprise with an AI-powered core

that helps prioritize the execution of change. We also empower the business

with agile digital at scale to deliver unprecedented levels of performance and

customer delight. Our always-on learning agenda drives their continuous

improvement through building and transferring digital skills, expertise, and

ideas from our innovation ecosystem.

    Visit http://www.infosys.com to see how Infosys (NYSE: INFY) can help your

enterprise navigate your next.

    Safe Harbor

    Certain statements mentioned in this release concerning our future growth

prospects are forward-looking statements regarding our future business

expectations intended to qualify for the 'safe harbor' under the Private

Securities Litigation Reform Act of 1995, which involve a number of risks and

uncertainties that could cause actual results to differ materially from those

in such forward-looking statements. The risks and uncertainties relating to

these statements include, but are not limited to, risks and uncertainties

regarding fluctuations in earnings, fluctuations in foreign exchange rates, our

ability to manage growth, intense competition in IT services including those

factors which may affect 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, industry segment concentration, our ability to

manage our international operations, reduced demand for technology in our key

focus areas, disruptions in telecommunication networks or system failures, our

ability to successfully complete and integrate potential acquisitions,

liability for damages on our service contracts, the success of the companies in

which Infosys has made strategic investments, withdrawal or expiration of

governmental fiscal incentives, political instability and regional conflicts,

legal restrictions on raising capital or acquiring companies outside India, and

unauthorized use of our intellectual property and general economic conditions

affecting our industry. Additional risks that could affect our future operating

results are more fully described in our United States Securities and Exchange

Commission filings including our Annual Report on Form 20-F for the fiscal year

ended March 31, 2018. These filings are available at http://www.sec.gov.

Infosys 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. The company does not undertake to update any forward-looking

statements that may be made from time to time by or on behalf of the company

unless it is required by law.

    Infosys Limited and subsidiaries  

    Audited Condensed Consolidated Balance Sheet as at

               

                      (Dollars in millions except equity share data)

                                      September 30,       March 31,

                                          2018              2018

    ASSETS

    Current assets

    Cash and cash equivalents             2,462           3,041

    Current investments                   1,046             982

    Trade receivables                     2,039           2,016

    Unbilled revenue                        716             654

    Prepayments and other current assets    662             662

    Derivative financial instruments          3               2

                                          6,928           7,357

    Assets held for sale(3)                 270             316

    Total current assets                  7,198           7,673

    Non-current assets

    Property, plant and equipment         1,707           1,863

    Goodwill                                344             339

    Intangible assets                        50              38

    Investment in associate                   -               -

    Non-current investments                 713             883

    Deferred income tax assets              188             196

    Income tax assets                       839             931

    Other non-current assets                249             332

    Total non-current assets              4,090           4,582

    Total assets                         11,288          12,255

    LIABILITIES AND EQUITY

    Current liabilities

    Trade payables                          164             107

    Derivative financial instruments         43               6

    Current income tax liabilities          200             314

    Client deposits                          12               6

    Unearned revenue                        332             352

    Employee benefit obligations            214             218

    Provisions                               85              75

    Other current liabilities             1,080           1,036

                                          2,130           2,114

    Liabilities directly associated with

    assets held for sale(3)                  48              50

    Total current liabilities             2,178           2,164

    Non-current liabilities

    Deferred income tax liabilities          66              82

    Employee benefit obligations              6               7

    Other non-current liabilities            50              42

    Total liabilities                     2,300           2,295

    Equity

    Share capital- INR 5 ($0.16) par value

    4,800,000,000 (2,400,000,000) equity

    shares authorized, issued and

    outstanding 4,347,452,598

    (2,173,312,301), net of 20,930,382

    (10,801,956) treasury shares as at

    September 30, 2018 (March 31, 2018),

    respectively                            340             190

    Share premium                           261             247

    Retained earnings                    11,285          11,587

    Cash flow hedge reserve                 (3)               -

    Other reserves                          348             244

    Capital redemption reserve                9               9

    Other components of equity          (3,252)         (2,317)

    Total equity attributable to equity

    holders of the company                8,988           9,960

    Non-controlling interests              -               -

    Total equity          8,988           9,960

    Total liabilities and equity         11,288          12,255

    Infosys Limited and subsidiaries

    Audited Condensed Consolidated Statement of Comprehensive Income for the

    

                       (Dollars in millions except equity share and per equity

share data)

                                     Three    Three       Six          Six

                                     months   months     months      months

                                     ended     ended     ended        ended

                                    September September  September  September

                                    30, 2018   30, 2017  30, 2018   30, 2017

    Revenues                          2,921      2,728     5,753     5,379

    Cost of sales                     1,884      1,743     3,703     3,435

    Gross profit                      1,037        985     2,050     1,944

    Operating expenses:

    Selling and marketing expenses      154        132       303       269

    Administrative expenses             191        194       384       377

    Total operating expenses            345        326       687       646

    Operating profit                    692        659     1,363     1,298

    Other income, net                   105        137       212       263

    Reduction in the fair value of

    Disposal Group held for sale(3)       -         -       (39)        -

    Share in net profit/(loss) of

    associate, including

    impairment(4)                         -         -         -       (11)

    Profit before income taxes          797        796     1,536     1,550

    Income tax expense                  216        218       420       431

    Net profit                          581        578     1,116     1,119

    Other comprehensive income

    Items that will not be

    reclassified subsequently to

    profit or loss:

    Re-measurements of the net

    defined benefit

    liability/asset, net                  1          1        1          1

    Equity instruments through

    other comprehensive income, net       2          -        2          -

    Items that will be reclassified

    subsequently to profit or loss:

    Fair valuation of investments,

    net                                 (2)          2      (9)          6

    Fair value changes on

    derivatives designated as cash

    flow hedge, net                     (4)          3      (3)        (7)

    Foreign currency translation      (461)      (107)    (929)       (47)

    Total other comprehensive

    income/(loss), net of tax         (464)      (101)    (938)       (47)

    Total comprehensive income          117        477      178      1,072

    Profit attributable to:

    Owners of the Company               581        578    1,116      1,119

    Non-controlling interests             -         -        -           -

                                        581        578    1,116      1,119

    Total comprehensive income

    attributable to:

    Owners of the Company               117        477     178       1,072

    Non-controlling interests             -          -       -           -

                                        117        477     178       1,072

    Earnings per equity share(5)

    Basic ($)                          0.13       0.13    0.26        0.24

    Diluted ($)                        0.13       0.13    0.26        0.24

    Weighted average equity shares

    used in computing earnings per

    equity share

                                                                

    Basic            4,347,055,177 4,571,730,722 4,346,857,296 4,571,524,372    

    Diluted          4,352,208,472 4,575,052,366 4,351,915,210 4,575,765,068

    NOTES:

    1. The audited condensed consolidated Balance sheet and Statement of

Comprehensive Income for the three months and half year ended September 30,

2018 have been taken on record at the Board meeting held on October 16, 2018

    2. A Fact Sheet providing the operating metrics of the Company can be

downloaded from www.infosys.com [http://www.infosys.com ]

    3. During the three months ended June 30, 2018, on remeasurement, including

consideration of progress in negotiations on offers from prospective buyers for

Panaya, the Company has recorded a reduction in the fair value of Disposal

Group held for sale amounting to $39 million in respect of Panaya.

Consequently, profit for the half-year ended September 30, 2018 has decreased

by $39 million, resulting in a decrease in Basic earnings per equity share by

$0.01 (adjusted for September 2018 bonus issue) for the half-year ended

September 30, 2018

    4. During the quarter ended June 30, 2017, the Company has written down the

entire carrying value of the investment in its associate DWA Nova LLC amounting

to $11 million

    5. Previous period share numbers and EPS have been adjusted for September

2018 bonus issue in accordance with IAS 33, Earnings per share

    IFRS-INR Press Release:

https://www.infosys.com/investors/reports-filings/quarterly-results/2018-2019/Q2/Documents/IFRS-INR-press-release.pdf

    Fact Sheet:

https://www.infosys.com/investors/reports-filings/quarterly-results/2018-2019/Q2/Documents/fact-sheet.pdf

    Source: Infosys