Infosys: 37.8% Growth in Digital Portfolio Leads to Strong 9.8% Growth in FY 20
BENGALURU, India, April 20, 2020 /PRNewswire/ -- "I am proud of the Infosys team that has worked exceptionally well to achieve 93% remote working today and ensuring consistent service delivery for our clients in this rapidly changing environment. Our focus on the health of our employees and our commitment to our clients helped us navigate the past few weeks," said Salil Parekh, CEO and MD. "We had an exceptional year in financial year 2020 with growth of 9.8% and operating margin of 21.3%. While the immediate short-term will be challenging, looking ahead, we can see that there is a strong interest to consolidate with partners with high-quality and agile service delivery and strong financial resilience. I am confident we will emerge from this stronger."
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31.7%
YoY
6.4% YoY
21.1% Q4
-0.8% CC
$1.65bn Q4
37.8%
FY
9.8% FY
21.3% FY
-1.4% Reported
$9.0bn FY
Digital
CC
growth
CC growth
Operating margin
QoQ growth Large deal signings
-- FY20 revenues grew by 8.3% in USD, 9.8% in constant currency
-- FY 20 operating margin at 21.3%
-- FY 20 Free Cash Flow at $2.15 billion; Free Cash Flow to net profit
conversion at 92%
-- Q4 20 revenues grew year-on-year by 4.5% in USD; 6.4% in constant
currency
-- Q4 20 revenues declined sequentially by 1.4% in USD; 0.8% in constant
currency
-- Q4 20 Digital revenues at $1,341 million (41.9% of total revenues),
year-on-year growth of 31.7% and sequential growth of 2.6% in constant
currency
-- Announces final dividend of `9.50 per share
-- Considering the business uncertainty emanating from COVID-19, the
company is unable to provide guidance on revenues and margins for FY 21
at this stage. The company will provide guidance after visibility
improves
1. Financial Highlights - Consolidated results under International Financial Reporting Standards (IFRS)
For the quarter ended March For the Year ended March
31, 2020 31, 2020
Revenues were $3,197 Revenues were $12,780
million, growth of 4.5% million, growth of 8.3%
YoY and decline of 1.4% YoY
QoQ
Operating profit was $674 Operating profit was $2,724
million, increase of 2.6% million, growth of 1.0%
YoY and decline of 5.2% YoY. Operating margin was
QoQ. Operating margin was 21.3%.
21.1%.
Basic EPS was $0.14, growth Basic EPS was $0.55, growth
of 4.2% YoY and decline of of 8.3% YoY
5.7% QoQ
"We completed a satisfying year on multiple counts - growth in all verticals and geographies, significant increase in large deal wins, good client mining and operational discipline", said Pravin Rao, COO. "The impact caused by COVID-19 since last few weeks of March has led to significant displacement in the operating model while severely testing business continuity plans of companies. We demonstrated what a 'Live Enterprise' truly is by improving the infrastructure and technology enablement for our employees in a short time span and ensuring business continuity for clients."
"We continue to remain focused on execution excellence in a period of high uncertainty. Our relentless focus on liquidity will be supported by our strong Balance Sheet of $3.6 billion cash, backed by accelerated cost take-outs and operational rigor", said Nilanjan Roy, CFO. "The final dividend of `9.50 per share is a testimony of a strong free cash flow performance for FY 20."
2. COVID-19 update
As the world comes together to manage the impact of the crisis caused by COVID-19, Infosys is making every effort to tackle the turbulence. The company is prioritizing employee well-being, assuring services for business continuity and strategizing offerings to improve business resilience for its clients, while also supporting community initiatives. Over 93% of our workforce is enabled to work from home, in countries still under lockdown, and from the company's offices, wherever possible - are all in sync with the company's priorities and working tirelessly to help make sure clients are running their businesses and preparing for a future of resilience. (Please refer to the separate press release on our COVID-19 response released today)
3. Update on whistleblower matters
The Audit Committee appointed an external legal counsel to conduct an independent investigation into the whistleblower allegations which have been previously disclosed to stock exchanges on October 22, 2019 and to the Securities Exchange Commission (SEC) on Form 6-K on the same date. As previously disclosed on January 10, 2020 the outcome of the investigation has not resulted in restatement of previously issued financial statements.
The Company cooperated with an investigation by the SEC regarding the same matters. In March 2020, the Company received notification from the SEC that the SEC has concluded its investigation and the Company does not anticipate any further action by the SEC on this matter. The Company is responding to all the inquires received from the Indian regulatory authorities and will continue to cooperate with the authorities for any additional requests for information. Additionally, in October 2019, a shareholder class action lawsuit was filed in the United States District Court for the Eastern District of New York against the Company and certain of its current and former officers for alleged violations of the US federal Securities Laws. The Company is presently unable to predict the scope, duration or the outcome of these matters.
4. Board changes
DN Prahlad, Independent Director, has resigned from the company to devote more time for his other business commitments with effect from April 20, 2020. The Board placed on record its appreciation for the services rendered by him during his tenure.
The Company announced the appointment of Uri Levine as an Independent Director of the Company, effective April 20, 2020, based on the recommendations of the Nomination and Remuneration Committee of the Board. The appointment is for a period of three years and is subject to the approval of shareholders.
Uri Levine is a passionate serial entrepreneur and disruptor. He co-founded Waze, the world's largest community-based driving traffic and navigation app, with more than 500 million drivers around the globe, which was acquired by Google on June 2013 for more than $1.1 billion. Uri has been in the high-tech business for the last 30 years with half of them in the start-up scene.
5. Client wins & Testimonials
-- "Thank you. For employing great people at Infosys. For above and beyond
service. And, for a long and prosperous relationship. Not all of our
partners were able to get their teams fully up and running. With great
pride, I was able to tell the leadership team that Infosys is fully
operational for us. Thank you! May Infosys and India weather this storm
well and emerge stronger", Head of US Operations at a global financial
services firm.
-- "Your team has supported a historic shift of office-based employees to
work-from-home-status in record time here in the US. The planning,
execution and subsequent experience of our staff in the new work
modality has been outstanding. The CEO and our board have recognized the
incredible efforts that have taken place from the IT teams", CIO of a
leading healthcare company.
-- Reckitt Benckiser (RB), a FTSE 100 company, has renewed its partnership
with Infosys to reimagine its infrastructure and application operations.
As part of this engagement, Infosys will bring in advanced AI and
Automation to build a Cognitive First IT Enterprise at Reckitt
Benckiser, offering a seamless digital experience for its enterprise
users.
-- E.ON has awarded Infosys a multi-year engagement to run and transform
its future workplace services. Infosys would transition the workplace
services for the E.ON group from the existing incumbent and then
continue to transform and operate it till 2025. This expands the
strategic partnership between E.ON and Infosys and builds upon the
existing contract which Infosys has with E.ON's subsidiary innogy.
Infosys would leverage its Digital Innovation Center in Düsseldorf,
Germany, to deliver services for this engagement.
-- Infosys has been selected by Siemens to deploy Wingspan, Infosys'
Digital Learning and Talent Transformation Platform. The company-wide
deployment of next generation, talent transformation platform will
enhance learning experience for 385,000 Siemens employees.
-- Infosys entered a long-term strategic partnership with GE Appliance, a
Haier company, to effectively streamline IT operations. As a part of
this alliance, Infosys will assist GE Appliances to accelerate their
digital and workplace transformation through automation-driven managed
IT services support across global command centres, service desks,
end-user computing, IT infrastructure, and applications.
-- A large CPG company selected Infosys to accelerate the transformation of
the company's digital technology capabilities and optimize costs. In
addition to being the strategic transformation partner Infosys will also
provide end-to-end support for enabling integrated operations across
Applications, Infrastructure and Cybersecurity.
6. Recognitions
-- Infosys was positioned as a leader in IDC MarketScape: North American
Distributed Energy Resource Management Systems Strategic Consultants and
Systems Integrators 2020 Vendor Assessment
-- Positioned as a leader in IDC MarketScape: Worldwide Business and
Industrial IoT Consulting and Systems Integration Services 2020 Vendor
Assessment
-- Recognized as a leader in IDC MarketScape: Worldwide Business and
Industrial IoT Engineering and Managed Services 2020 Vendor Assessment
-- Positioned as a Leader in the IDC MarketScape: Worldwide Integrated
Payment Platforms 2019-2020 Vendor Assessment
-- Ranked as a leader in NelsonHall NEAT for Cognitive and Self-Healing IT
Infrastructure Management Services
-- Ranked as a leader in NelsonHall NEAT for Digital Manufacturing Services
-- Infosys BPM has been recognized with the elite international award-
Brandon Hall Human Capital Excellence Awards, 2019 under three diverse
categories.
-- Infosys BPM has won the Best Practices in CSR Awards 2020 for the Skill
Development Initiative of IBPM at 6th International Conference of
Corporate Social Responsibility by Institute of Public Enterprise,
Hyderabad.
About Infosys
Infosys is a global leader in next-generation digital services and consulting. We enable clients in 46 countries to navigate their digital transformation. With nearly four 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 www.infosys.com to see how Infosys (NYSE: INFY) can help your enterprise navigate your next.
Safe Harbor
Certain statements in this release concerning our future growth prospects, financial expectations and plans for navigating the COVID-19 impact on our employees, clients and stakeholders 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 COVID-19 and the effects of government and other measures seeking to contain its spread, risks related to an economic downturn or recession in India, the United States and other countries around the world, changes in political, business, and economic conditions, 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, unauthorized use of our intellectual property and general economic conditions affecting our industry and the outcome of pending litigation and government investigation. 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, 2019. These filings are available at 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)
---
March 31, 2020 March 31, 2019
---
ASSETS
---
Current assets
---
Cash and cash equivalents 2,465 2,829
---
Current investments 615 958
---
Trade receivables 2,443 2,144
---
Unbilled revenue 941 777
---
Prepayments and other current
assets 739 827
---
Income tax assets 1 61
---
Derivative financial instruments 8 48
---
Total current assets 7,212 7,644
---
Non-current assets
---
Property, plant and equipment 1,810 1,931
---
Right-of-use assets(B3) 551 -
---
Goodwill 699 512
---
Intangible assets 251 100
---
Non-current investments 547 670
---
Deferred income tax assets 231 199
---
Income tax assets 711 914
---
Other non-current assets 248 282
---
Total non-current assets 5,048 4,608
---
Total assets 12,260 12,252
---
LIABILITIES AND EQUITY
---
Current liabilities
---
Trade payables 377 239
---
Lease liabilities(B3) 82 -
---
Derivative financial instruments 65 2
---
Current income tax liabilities 197 227
---
Client deposits 2 4
---
Unearned revenue 395 406
---
Employee benefit obligations 242 234
---
Provisions 76 83
---
Other current liabilities 1,321 1,498
---
Total current liabilities 2,757 2,693
---
Non-current liabilities
---
Lease liabilities(B3) 530 -
---
Deferred income tax liabilities 128 98
---
Employee benefit obligations 5 6
---
Other non-current liabilities 139 55
---
Total liabilities 3,559 2,852
---
Equity
---
Share capital- `5 ($0.16) par
value 4,800,000,000
(4,800,000,000) equity shares
authorized, issued and outstanding
4,240,753,210 (4,335,954,462)
equity shares fully paid up, net
of 18,239,356 (20,324,982)
treasury shares as at March 31,
2020 (March 31, 2019) 332 339
---
Share premium 305 277
---
Retained earnings 11,014 11,248
---
Cash flow hedge reserve (2) 3
---
Other reserves 594 384
---
Capital redemption reserve 17 10
---
Other components of equity (3,614) (2,870)
---
Total equity
attributable to equity holders of
the company 8,646 9,391
Non-controlling interests 55 9
---
Total equity 8,701 9,400
---
Total liabilities and equity 12,260 12,252
---
Infosys Limited and subsidiaries
---
Consolidated Statement of Comprehensive Income for the:
---
(Dollars in millions except equity share and per equity share data)
---
Unaudited Audited
3 months ended March 31, 2020 3 months ended March 31, 2019 Year ended March 31, 2020 Year ended March 31, 2019
---
Revenues 3,197 3,060 12,780 11,799
---
Cost of sales 2,133 2,028 8,552 7,687
---
Gross profit 1,064 1,032 4,228 4,112
---
Operating expenses
---
Selling and marketing
expenses 161 174 664 638
---
Administrative expenses 229 200 840 778
---
Total operating expenses 390 374 1,504 1,416
---
Operating profit 674 658 2,724 2,696
---
Other income, net (A3) (B2) 84 94 395 411
---
Finance cost(B3) (6) (24) -
---
Reduction in the fair value
of Disposal Group held for
sale(A1) - (39)
--- ---
Adjustment in respect of
excess of carrying amount
over recoverable amount on
reclassification from "Held
for Sale" (A2) - (65)
--- ---
Profit before income taxes 752 752 3,095 3,003
---
Income tax expense (A4) 160 171 757 803
---
Net profit 592 581 2,338 2,200
---
Other comprehensive income
---
Items that will not be reclassified subsequently to profit or
loss:
---
Re-measurements of the net
defined benefit liability/
asset, net (B4) (2) (24) (3)
---
Equity instrument through
other comprehensive income,
net - (5) 10
--- ---
(2) (29) 7
Items that will be reclassified subsequently to profit or loss:
---
Fair valuation of
investments, net 2 3 3 -
---
Fair value changes on
derivatives designated as
cash flow hedge, net - (2) (5) 3
--- ---
Foreign currency translation (473) 74 (720) (560)
---
(471) 75 (722) (557)
Total other comprehensive
income/(loss), net of tax (473) 75 (751) (550)
---
Total comprehensive income 119 656 1,587 1,650
---
Profit attributable to:
---
Owners of the Company 590 580 2,331 2,199
---
Non-controlling interests 2 1 7 1
---
592 581 2,338 2,200
Total comprehensive income attributable to:
---
Owners of the Company 117 655 1,582 1,649
---
Non-controlling interests 2 1 5 1
---
119 656 1,587 1,650
Earnings per equity share
---
Basic ($) 0.14 0.13 0.55 0.51
---
Diluted ($) 0.14 0.13 0.55 0.51
---
Weighted average equity shares used in computing earnings per
equity share
Basic 4,240,181,854 4,347,129,592 4,257,754,522 4,347,130,157
---
Diluted 4,245,981,386 4,353,023,863 4,265,144,228 4,353,420,772
---
NOTES:
A. Notes pertaining to previous year
1. During the year ended March 31, 2019, the Company had recorded a
reduction in the fair value amounting to $39 million in respect of its
subsidiary Panaya.
2. The Company had recorded an adjustment in respect of excess of carrying
amount over recoverable amount of $65 million in respect of its
subsidiary Skava during the year ended March 31, 2019.
3. Other income includes interest on income tax refunds amounting to $7
million for the year ended March 31, 2019.
4. During the year ended March 31, 2019, on account of conclusion of an
Advanced Pricing Agreement (APA) in an overseas jurisdiction, the Company
had reversed income tax expense provision of $14 million, which pertains
to previous periods.
B. Notes pertaining to the current quarter / year
1. The audited condensed consolidated Balance sheet and Statement of
Comprehensive Income for the year ended March 31, 2020 have been taken on
record at the Board meeting held on April 20, 2020.
2. Other income includes interest on income tax refunds amounting to $2
million for the three months ended March 31, 2020 and $37 million for the
year ended March 31, 2020.
3. On account of adoption of IFRS 16- Leases effective April 1, 2019.
4. Includes unrealized losses on certain investments carried in the PF trust
for the quarter and year ended March 31, 2020.
C. A Fact Sheet providing the operating metrics of the Company can be downloaded from www.infosys.com
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SOURCE Infosys
