Country for PR: United Kingdom
Contributor: PR Newswire Europe
Saturday, January 13 2018 - 00:26
AsiaNet
Infosys (NYSE: INFY) Announces Results for the Quarter Ended December 31, 2017
BANGALORE, India January 12, 2018/PRNewswire-AsiaNet/ --

    Reported year-on-year revenue growth of 8.0% in USD terms for the quarter 
and 24.3% operating margin

    1. Highlights of financial results for the quarter and nine months ended 
December 31, 2017

    (Logo: http://mma.prnewswire.com/media/610722/Infosys_Logo.jpg )

    - Q3 revenues grew year-on-year by 8.0% in USD terms; 5.8% in constant
      currency terms
    - Q3 revenues grew sequentially by 1.0% in USD terms; 0.8 % in constant
      currency terms
    - Q3 operating margin improved to 24.3% from 24.2% in Q2 18
    - Q3 EPS at $ 0.35, year-on-year growth of 46.1% and sequential growth of
      38.2%
    - Q3 EPS of $ 0.35 includes positive impact of $ 0.10 from Advance Pricing 
      Agreement (APA) with the US IRS
    - 9 months year-on-year revenue growth at 6.5% in USD terms; 5.6% in 
      constant currency terms
    - Q3 cash flow from operating activities were at $ 657 mn, compared to $ 441
      mn in Q2 18
    - Utilization excluding trainees at all-time high of 84.9%
    - Q3 standalone attrition declined to 15.8% from 17.2% in Q2 18
    - FY 18 revenue guidance in constant currency retained at 5.5%-6.5%
    - FY 18 operating margin range unchanged at 23%-25% 

    Financial Highlights

    Consolidated results under International Financial Reporting Standards 
(IFRS) for the quarter ended December 31, 2017

    - Revenues were $ 2,755 million for the quarter ended December 31, 2017
    - Operating profit was $ 669 million for the quarter ended December 31, 2017
      QoQ growth of 1.4%; YoY growth of 4.5%
    - Net profit was $ 796 million for the quarter ended December 31, 2017
      QoQ growth of 37.6%; YoY growth of 45.4%
    - Basic EPS at $ 0.35 for the quarter ended December 31, 2017 

    During the quarter, on account of the conclusion of an APA with the US IRS, 
net profit has increased which has led to an increase in Basic EPS by $ 0.10 
for the quarter

    Consolidated results under International Financial Reporting Standards 
(IFRS) for the nine months ended December 31, 2017

    - Revenues were $ 8,134 million for the nine months ended December 31, 2017
      YoY growth of 6.5% in reported terms; 5.6% in constant currency terms
    - Operating profit was $ 1,966 million for the nine months ended December 
      31, 2017 
      YoY growth of 4.3%
    - Net profit was $ 1,915 million for the nine months ended December 31, 2017
      YoY growth of 19.9% 

    During the nine months period ended December 31, 2017, on account of the 
conclusion of an APA with the US IRS, net profit has increased which has led to 
an increase in Basic EPS by $ 0.09

    "It is a privilege for me to be appointed as the CEO & MD of Infosys, 
helping our clients navigate the digital future and employees build new skills 
and capabilities. Our Q3 performance is strong. We had 8% year-on-year growth 
and 24.3% operating margin with US$ 593 million of free cash flow," said Salil 
Parekh, CEO & MD. "We are progressing towards stability and are well positioned 
to serve our clients in the new areas of demand," he added.

    "Increased adoption of our digital offerings and new services helped 
stabilize price realization. We were able to grow client relationships across 
revenue categories," said Pravin Rao, COO. "During the quarter, we provided 
compensation increases and higher variable payouts to our employees. Our 
investments in employees continues to deliver results as reflected in lower 
attrition."

    "Our operating margins were stable on the back of broad-based improvement 
in operational efficiency parameters. Our cash generation continued to be 
robust during the quarter," said M.D. Ranganath, CFO. "We successfully executed 
the share buyback of Rs. 13,000 crores in line with our capital allocation 
policy."

    2. Outlook for FY 2018

    The Company's outlook (consolidated) for the fiscal year ending March 31, 
2018, under IFRS is as follows:

    - Revenues are expected to grow 5.5%-6.5% in constant currency*;
    - Revenues are expected to grow 6.5%-7.5% in USD terms based on the exchange
      rates as of December 31, 2017** 

    *FY 17 constant currency rates - AUD/USD - 0.75; Euro/USD - 1.09; GBP/USD - 
1.30

    **Currency rates as of December 31, 2017 - AUD/USD - 0.78; Euro/USD - 1.20; 
GBP/USD - 1.35

    3. Board and Management Changes

    Based on the recommendations of the Nomination and Remuneration Committee, 
the Board in its meeting held on December 2, 2017 appointed Salil Parekh as the 
Chief Executive Officer and Managing Director of the Company with effect from 
January 2, 2018 for a period of 5 years, subject to the approval of 
shareholders and other regulatory requirements, if any. The Board re-designated 
Pravin Rao as the Chief Operating Officer and Whole Time Director with effect 
from January 2, 2018 upon stepping down as the interim Chief Executive Officer 
and Managing Director in accordance with the terms of his appointment. Further, 
Pravin Rao shall hold the office of Whole Time Director up to August 17, 2022.

    The postal ballot notice dated January 3, 2018 seeking the approval of 
shareholders including the terms of appointment of the above changes is 
available on the Company's website at the following link- 
https://www.infosys.com/investors/Documents/postal-ballot-jan2018.pdf

    Rajesh K. Murthy, President, has resigned from the company for personal 
reasons.  His last date with Infosys will be January 31, 2018. The Board places 
on record its deep appreciation for his commitment to Infosys over the last 26 
years and wishes him the very best for his future endeavours.

    4. Committee of Directors

    The Committee of Directors was formed on April 13, 2017 to support and 
advise the management in executing the Company's strategy. With the appointment 
of Salil Parekh as the CEO and Managing Director of the Company, the Committee 
of Directors stands dissolved with effect from January 12, 2018.

    5. Update on Shareholders consultation by SRC

    The Company has completed the previously announced shareholder 
consultation. The feedback received was presented and taken on record by the 
Board on January 11, 2018

    6. Signing of the Advance Pricing Agreement ("APA") with the US Internal 
Revenue Service

    Infosys has concluded an Advance Pricing Agreement ("APA") with the U.S. 
Internal Revenue Service ("IRS"). Under the APA, Infosys and the IRS have 
agreed on the methodology to allocate revenues and compute the taxable income 
of the Company's U.S. operations. This agreement covers financial years from 
2011 to 2021. The APA will enhance predictability of Infosys' tax obligations 
in respect of its U.S. operations.

    In accordance with the APA, Infosys has reversed tax provisions of 
approximately US$ 225 million made in previous periods which are no longer 
required (both under International Financial Reporting Standards and Indian 
Accounting Standards). Further, in line with the APA, Infosys expects to payout 
approximately US$ 233 million due to the difference between the taxes payable 
for prior periods as per the APA and the actual taxes paid for such periods. 
This amount is expected to be paid over the next few quarters.

    The reversal of the tax provisions of approximately US$ 225 million had a 
positive impact on the consolidated Basic EPS for the quarter ending December 
31, 2017 by approximately US$ 0.10. Further, on account of the APA methodology, 
Infosys expects its overall effective tax rate to be lower by about 100 basis 
points for future periods covered under the APA.

    7. Share buyback

    The Board, at its meeting on August 19, 2017, approved a proposal for the 
Company to buyback its fully paid-up equity shares of face value of INR 5 each 
from the eligible equity shareholders of the Company for an amount not 
exceeding INR 13,000 crore. The shareholders approved the said proposal of 
buyback of Equity Shares through the postal ballot that concluded on October 7, 
2017. The Buyback offer comprised a purchase of 11,30,43,478 Equity Shares 
aggregating 4.92% of the paid-up equity share capital of the Company at a price 
of INR 1,150 per Equity share. The buyback was offered to all eligible equity 
shareholders (including those who became equity shareholders as on the Record 
date by cancelling American Depository Shares and withdrawing underlying Equity 
shares) of the Company as on the Record Date (i.e. November 1, 2017) on a 
proportionate basis through the "Tender offer" route. The Company concluded the 
buyback procedures on December 27, 2017 and 11,30,43,478 equity shares were 
extinguished. The Company has funded the buyback from its securities premium 
and general reserve. In accordance with section 69 of the Companies Act, 2013, 
the Company has created 'Capital Redemption Reserve' of $ 9 million equal to 
the nominal value of the shares bought back as an appropriation from general 
reserve.

    About Infosys Ltd.

    Infosys is a global leader in technology services and consulting. We enable 
clients in 45 countries to create and execute strategies for their digital 
transformation. From engineering to application development, knowledge 
management and business process management, we help our clients find the right 
problems to solve, and to solve these effectively. Our team of 200,000+ 
innovators, across the globe, is differentiated by the imagination, knowledge 
and experience, across industries and technologies that we bring to every 
project we undertake.

    Visit http://www.infosys.com to see how Infosys (NYSE: INFY) can help your 
enterprise thrive in the digital age.

    Safe Harbor

    Certain statements in this release including those concerning our future 
growth prospects, predictability of the Company's tax obligations in respect of 
its US operations,  the amount and timing of tax payments to be made by the 
Company, the impact on consolidated Basic EPS, and the Company's overall 
effective tax rate for future periods, are forward-looking statements 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 the profit margins 
for client contracts that are executed in whole or in part by the Company's US 
operations, as well as changes in US tax laws. Additional risks that could 
cause actual results to differ materially 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, 2017. 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. In addition, please note that any 
forward-looking statements contained herein are based on assumptions that we 
believe to be reasonable as of the date of this press release. 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 

Unaudited Condensed Consolidated Balance Sheets as of

                              (Dollars in millions except equity share data)
 				December 31, 2017	March 31, 2017
ASSETS 	 	 
Current assets 		
Cash and cash equivalents		   3,226	         3,489
Current investments	                     389	         1,538
Trade receivables			   2,057	         1,900
Unbilled revenue	                     573	           562
Prepayments and other current assets	     891	           749
Income tax assets			      84	             -
Derivative financial instruments	      13	            44
Total current assets	                   7,233	         8,282

Non-current assets		
Property, plant and equipment		   1,853	         1,807
Goodwill				     583	           563
Intangible assets			      94	           120
Investment in associate			       -	            11
Non-current investments			     957	           984
Deferred income tax assets	             184	            83
Income tax assets	                     863	           881
Other non-current assets	             122	           123

Total non-current assets		   4,656	         4,572
Total assets				  11,889	        12,854

LIABILITIES AND EQUITY 		
Current liabilities 		
Trade payables				      79	            57
Derivative financial instruments	       1	             -
Current income tax liabilities	 	     397	           599
Client deposits				      24	             5
Unearned revenue	 		     362	           274
Employee benefit obligations 	             227	           209
Provisions				      71	            63
Other current liabilities 	           1,040	           954
Total current liabilities 	           2,201	         2,161
Non-current liabilities 		
Deferred income tax liabilities		     100	            32
Employee benefit obligations		       8	             -
Other non-current liabilities 		      36	            24
Total liabilities 			   2,345	         2,217

Equity 		
Share capital- `5 ($0.16) par value 2,400,000,000 
(2,400,000,000) equity shares authorized, issued
and outstanding 2,173,143,893 (2,285,655,150),
net of 10,805,896 (11,289,514) treasury shares 
as of December 31, 2017 (March 31, 2017), 
respectively				     190	           199
Share premium				     243	           587
Retained earnings 			  11,099	        12,190
Cash flow hedge reserve			       -	             6
Other reserves				     161	             -
Capital redemption reserve	               9	             -
Other components of equity 		 (2,158)	        (2,345)
Total equity attributable to equity 
holders of the company			   9,544	        10,637
Non-controlling interests		       -	             -
Total equity				   9,544	        10,637
Total liabilities and equity 		  11,889                12,854



    Infosys Limited and subsidiaries   

Unaudited Condensed Consolidated Statements of Comprehensive Income 
                                                                                
                                         (Dollars in millions except share and 
per equity share data)

                Three months     Three months    Nine months       Nine months
                       ended            ended          ended            ended 
                 December 31,     December 31,    December 31,      December 
31, 
                         2017             2016           2017	          2016


Revenues	 	  2,755		2,551		8,134		7,639
Cost of sales    	  1,773		1,601		5,208		4,832
Gross profit		    982		  950	        2,926		2,807
Operating expenses:				
Selling and marketing 
expenses	            136		  131		  405		  402
Administrative expenses	    177	          179		  555	          519
Total operating expenses    313		  310		  960		  921
Operating profit	    669		  640		1,966		1,886
Other income, net	    149		  121		  413		  347
Share in associate's 
profit / (loss) 	      -		    -	 	    -		  (1)
Write-down of investment 
in associate	              -	            -		  (11)	           -
Profit before income taxes  818	          761	         2,368	        2,232


		Three months     Three months    Nine months       Nine months
                       ended            ended          ended            ended 
                 December 31,     December 31,    December 31,      December 
31, 
                        2017             2016           2017	          2016

Income tax expense	  22		  214		 453		  635
Net profit		 796		  547	       1,915	        1,597
Other comprehensive 
income Items that will 
not be reclassified 
subsequently to profit or loss: 				
Re-measurements of the net defined 
benefit liability/asset	    2		  (1)		   3	 	  (10)
Cumulative impact on 
reversal of unrealized gain
 on quoted debt securities
on adoption of IFRS 9	    -	            -	           -	           (5)
Equity instruments through 
other comprehensive income,
net	                    -	            -	           -	            -
				
Items that will be reclassified subsequently
to profit or loss: 				
Fair valuation of investments, 
net                        (4)	            -	           2	            -
Fair value changes on 
derivatives designated as 
cash flow hedge, net 	     1	           4	          (6)	            4
Foreign currency 
translation                229	        (189)	          182	         (243)
Total other comprehensive 
income, net of tax 	   228	        (186)	          181	         (254)
Total comprehensive 
income                   1,024	         361	        2,096	         1,343
				
Profit attributable to:				
Owners of the Company  	   796	         547	        1,915	        1,597
Non-controlling interests   -		   -		    -		    -
			   796           547	        1,915	        1,597
Total comprehensive income
attributable to:				
Owners of the Company  	 1,024	          361	        2,096     	1,343
Non-controlling interests    -	            -	            -	            -
			  1,024	          361	        2,096	        1,343
Earnings per equity share				
Basic ($)		   0.35		 0.24		  0.84		 0.70
Diluted ($)		   0.35		 0.24		  0.84		 0.70
Weighted average equity shares used in
computing earnings per equity share				
Basic		  2,275,074,804	  2,285,651,730	 2,282,186,771	 2,285,638,678
Diluted	          2,276,381,570	  2,286,229,042  2,284,287,492	 2,286,076,462
 
    NOTES:

    1. The unaudited Condensed Consolidated Balance sheets and Condensed 
Consolidated Statements of Comprehensive Income for the three months and nine 
months ended December 31, 2017 have been taken on record at the Board meeting 
held on January 12, 2018

    2. A Fact Sheet providing the operating metrics of the company can be 
downloaded from http://www.infosys.com

    3. Other income for three months and nine months ended December 31, 2017 
includes interest on income tax refund of $ 31 million and $ 41 million 
respectively

    4. During the quarter ended December 31, 2017, on account of the conclusion 
of an Advance Pricing Agreement ("APA") with the U.S. Internal Revenue Service 
("IRS"), the Company has in accordance with the APA, reversed income tax 
expense provision of $ 225 million which pertains to previous periods which are 
no longer required. Consequently, profit for the period  has increased and 
therefore has led to an increase in  Basic earnings per equity share by $0.10 
for quarter ended December 31, 2017 and $0.09 for nine months ended December 
31, 2017

    5. 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, an 
Infosys Innovation Fund Investment. The impact of write down on Q1 18 net 
profit is $ 11 million

    IFRS-INR Press Release: 
https://www.infosys.com/investors/reports-filings/quarterly-results/2017-2018/q3/Documents/IFRS-USD-press-release.pdf 


    Fact Sheet: 
https://www.infosys.com/investors/reports-filings/quarterly-results/2017-2018/q3/Documents/fact-sheet.pdf 


    Contacts:
    Investor Relations
    Sandeep Mahindroo
    +91-80-3980-1018
    Sandeep_Mahindroo@infosys.com 

    Media Relations
    Sarah Vanita Gideon
    +91-80-4156-3998
    Sarah_Gideon@infosys.com 

    Chiku Somaiya
    +1-7136706752
    Chiku.Somaiya@infosys.com 

    Source: Infosys