Transcript Slide 1

Financial Performance 2007-2008
V. Balakrishnan
Chief Financial Officer
Safe harbor
Certain statements made here concerning Infosys’ future growth prospects are forward-looking
statements 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, 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, 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 Infosys has made strategic investments,
withdrawal of governmental fiscal incentives, political instability, 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, 2008 and
the Quarterly Reports on Form 6-K for the fiscal quarters ended June 30, 2007, September 30,
2007 and December 31,2007. 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.
© Infosys Technologies Limited 2007-08
Highlights
» Revenues crossed US $4 billion in Fiscal 2008
» Revenue growth of 35% in US dollar terms as against
our guidance of 28-30% in April 2007
» Net Profit crossed US $1 billion in Fiscal 2008
» Maintained operating margins despite 11% rupee
appreciation
» Added 170 new clients during the year
» Gross addition of 33,177 employees (Net addition 18,946)
» Awarded the best presented Annual Report for fiscal 2007
by the Institute of Chartered Accountants of India (ICAI)
© Infosys Technologies Limited 2007-08
Highlights
» Recommended a final dividend of Rs. 7.25 per share
(145% on par value of Rs. 5 per share) and a special
dividend of Rs. 20 per share (400% on par value of
Rs. 5 per share). Including Interim dividend, the total
dividend recommended for the year is Rs. 33.25 per
share (665% on par value of Rs. 5 per share) amounting
to Rs. 1,902 cr which is the largest dividend payout by
any private sector company in India
» Dividend payout ratio increased up to 30% of net profits
from upto 20% of net profits from Fiscal 2009 onwards
© Infosys Technologies Limited 2007-08
While rupee appreciation impacted our revenue growth…
Revenues (Rs. cr.)
Gross profit (Rs. cr.)
Operating profit (Rs. cr.)
Based on consolidated Indian GAAP Financials
* Net profit after tax and minority interest, before exceptional item and tax reversals
© Infosys Technologies Limited 2007-08
Net profit* (Rs. cr.)
…We still maintained our margins.
Gross profit (%)
Operating profit (%)
* Net profit after tax and minority interest, before exceptional item and tax reversals
© Infosys Technologies Limited 2007-08
Net profit* (%)
Our revenues are well diversified
Revenue by Industry Vertical
Insurance, Banking
& Financial Services
Manufacturing
Telecom
Retail
Others
Revenue by Geography
North America
Europe
India
Rest of the World
© Infosys Technologies Limited 2007-08
Our service mix had become richer….
Increased contribution from new services (% to total revenue)
2004
2005
2006
2007
2008
18.2
18.8
19.7
21.1
23.8
Testing services
5.3
5.8
5.9
6.9
7.5
Infrastructure Management
2.1
3.0
3.6
4.4
4.9
Business Process
Management
1.6
2.7
4.0
4.7
5.7
Product Engineering Services
2.2
2.0
1.8
1.6
1.6
Other services
7.1
6.8
8.0
7.1
4.7
36.5
39.1
43.1
45.8
48.2
Consulting Services and
Package Implementation
Total
© Infosys Technologies Limited 2007-08
…which resulted in higher revenue productivity.
Variation in per-capita revenues (in US$ terms)
Onsite
2004
(2.9)%
2005
0.2%
2006
0.3%
2007
4.4%
6.9%
Offshore
(2.6)%
1.3%
0.8%
2.7%
6.1%
Blended
(5.0)%
(1.0)%
0.7%
4.9%
5.2%
© Infosys Technologies Limited 2007-08
2008
We Continued to leverage the Global Delivery Model
2007
2008
32.9
67.1
100.0
31.7
68.3
100.0
134,767
165,595
Offshore
274,989
357,196
Total
409,756
522,790
40.9
33.1
35.6
22.9
29.9
27.6
69.1
77.1
70.7
76.9
Effort mix (%)
Onsite
Offshore
Total
Billed person months
Onsite
Change in billed person months (%)
Onsite
Offshore
Total
Utilization rates
Including trainees (%)
Excluding trainees (%)
© Infosys Technologies Limited 2007-08
While wages went up during the year….
2007
Wage increase – Offshore
– Onsite
2008
13% -15% 13%-15%
2% - 3%
5%- 6%
Onsite salaries (% to revenues)
32.4%
32.0%
Offshore salaries (% to revenues)
15.6%
17.8%
599
702
24.9%
26.7%
Variable salaries (Rs. cr.)
Variable salary as a % of offshore salary
© Infosys Technologies Limited 2007-08
…we got the scale benefits in G&A
2007
2008
General & Administration expenses (Rs. cr.)
1,115
1,331
General & Administration cost / revenue (%)
8.0%
8.0%
© Infosys Technologies Limited 2007-08
While the currency appreciated sharply during the year….
2007
2008
This Year
45.06
40.00
Previous Year
44.21
45.06
% change
1.9%
(11.3%)
This Year
43.10
40.02
Previous Year
44.48
43.10
(3.1%)
(7.1%)
470
760
(21)
(98)
Benefit due to hedging (Rs. cr.)
63
103
Net impact (Rs. cr.)
42
5
Average rupee dollar rate
Period end rupee dollar rate
% change
Forward contracts and options
outstanding as at March 31 ($ mn)
Transaction & translation losses (Rs. cr.)
© Infosys Technologies Limited 2007-08
…. We reduced the impact through active hedging
Q1
Q2
Q3
Q4
FY08
Translation Gain / (Loss)
(Rs. cr.)
(114)
(32)
(36)
84
(98)
Forward contract – Gain /
(Loss) (Rs. cr.)
188
27
19
(131)
103
74
(4)
(17)
(47)
5
925
1,413
1,147
760
760
Grand Total (Rs. cr.)
Hedge position (USD mn)
© Infosys Technologies Limited 2007-08
We continued to invest for growth
2007
2008
929
916
Selling & Marketing expenses / revenues (%)
6.7
5.5
Sales & Marketing employees (No.)
537
604
43
57
167
201
(29)
(7)
(111)
(51)
NA
(7)
Sales & Marketing expenses (Rs. cr.)
Marketing offices (No.)
R&D Expenses (Rs. cr.)
Losses in subsidiaries (Rs. cr.)
China
Consulting
Mexico
© Infosys Technologies Limited 2007-08
The end result
Rs. cr.
2007
%
2008
%
13,893
100%
16,692
100%
Software development and BPM expenses
7,458
54%
9,207
55%
GROSS PROFIT
6,435
46%
7,485
45%
929
7%
916
5%
General and administration expenses
1,115
8%
1,331
8%
Operating profit before interest and depreciation
4,391
32%
5,238
31%
–
–
–
–
514
4%
598
4%
3,877
28%
4,640
28%
372
3%
704
4%
2
0%
–
–
4,247
31%
5,344
32%
386
3%
685
4%
3,861
28%
4,659
28%
6
–
–
–
3,867
28%
4,659
28%
11
–
–
3,856
28%
4,659
Income
Selling and marketing expenses
Interest
Depreciation
Operating profit after interest, depreciation and amortization
Other income
Provision for investments
NET PROFIT BEFORE TAX
Provision for taxation
NET PROFIT AFTER TAX
Exceptional item
NET PROFIT AFTER TAX, EXCEPTIONAL
ITEM & BEFORE MINORITY INTEREST
Minority interest
NET PROFIT AFTER TAX, EXCEPTIONAL ITEM & MINORITY INTEREST
© Infosys Technologies Limited 2007-08
28%
We have a strong Balance Sheet
Rs. cr.
SOURCES OF FUNDS
Share capital
Reserves and surplus
2008
%
2007
%
286
2
286
2
13,509
98
10,969
97
4
1
Minority interest
Total
–
13,795
100
11,259
100
Fixed assets
4,777
35
3,771
34
Investments
72
–
25
–
119
–
92
1
Sundry debtors
3,297
24
2,436
22
Cash & equivalents
8,235
60
6,008
53
Other current assets
1,486
11
1,077
10
Current liabilities
(4,191)
(30)
(2,150)
(19)
Total
13,795
100
11,259
100
APPLICATION OF FUNDS
Deferred tax assets
We continue to be a zero-debt company
© Infosys Technologies Limited 2007-08
Receivables were under control
Days of sales receivable – 67 days
Days of sales receivable – 64 days
0 – 30
31– 60
61 – 90
> 90
Age profile of accounts receivable
© Infosys Technologies Limited 2007-08
We continue to balance between liquidity and returns
Target
ROCE (%)
Times cost of capital
2.0
ROIC (%)
2006
2007
2008
44.9%
45.7%
41.4%
3.5
3.1
3.1
94.0%
88.8%
71.12%
Times cost of capital
3.0
7.3
5.9
5.3
Days sales outstanding
60
61
64
67
Cash & cash equivalents / total
assets*
40.0%
64.7%
50.3%
57.0%
Cash & cash equivalents /
revenue*
25.0%
49.4%
42.7%
49.1%
Upto 20%
19.4
19.9
19.8
Dividend % (% to net profits)**
Indian GAAP standalone
* Cash and cash equivalents include investments in liquid mutual funds
** Excluding Silver Jubilee special dividend in 2006
© Infosys Technologies Limited 2007-08
Performance of Subsidiaries
© Infosys Technologies Limited 2007-08
Infosys BPO Limited
» Formed : Apr 2002
» Investment (Rs. cr.) : 659
» Holding (%) – Mar 2008 : 99.98
Infosys BPO Limited
FY07
FY08
Growth(%)
Revenue (Rs. cr.)
662
937
41.5
PAT (Rs. cr.)
152
153
0.7
PAT / Revenue (%)
23.0
16.3
11,226
16,295
No. of Employees
© Infosys Technologies Limited 2007-08
45.2
Infosys Australia
» Acquired : Jan 2004
» Investment (Rs. cr.) : 66
» Holding (%) – Mar 2008 : 100.00
Infosys Technologies (Australia) Pty
Limited
FY07
FY08
Growth(%)
446
556
24.7
71
101
42.3
PAT / Revenue (%)
15.9
18.2
No. of Employees
306
363
Revenue (Rs. cr.)
PAT (Rs. cr.)
© Infosys Technologies Limited 2007-08
18.6
Infosys China
» Formed : Oct 2003
» Investment (Rs. cr.) : 46
» Holding (%) – Mar 2008 :100.00
Infosys Technologies (China) Co. Limited
Revenue (Rs. cr.)
FY08 PAT (Rs. cr.)
No. of Employees
© Infosys Technologies Limited 2007-08
FY07
60
(29)
669
FY08
77
(7)
699
Growth(%)
28.3
4.5
Infosys Consulting
» Formed : Apr 2004
» Investment (Rs. cr.) : 171
» Holding (%) – Mar 2008 : 100.00
Infosys Consulting Inc.,
Revenue (Rs. cr.)
PAT (Rs. cr.)
No. of Employees
© Infosys Technologies Limited 2007-08
FY07
FY08
Growth(%)
213
246
15.5
(111)
(51)
209
265
26.8
Infosys Mexico
Infosys Technologies S.de R.L.de C.V., Mexico
Formed
Investment (Rs. cr.)
Aug 2007
22
Holding (%) – Mar 2008
100.00
FY08 Revenue (Rs. cr.)
3
FY08 PAT (Rs. cr.)
(7)
Employees
75
© Infosys Technologies Limited 2007-08
Financial Highlights – US GAAP
© Infosys Technologies Limited 2007-08
Financial highlights
( US$ Million )
© Infosys Technologies Limited 2007-08
Financial highlights
Gross profit (%)
© Infosys Technologies Limited 2007-08
Operating income (%)
Net income (%)
The power of the intangibles
2006
2007
2008
26.0
26.0
26.0
148,499
203,270
251,970
27.6%
30.9%
32.5%
Attrition (%) – Including involuntary separation
11.2
13.7
13.4
Attrition (%) – Excluding involuntary separation
10.6
12.2
12.1
HR value (Rs. cr.)
46,637
57,452
98,821
Brand value (Rs. cr.)
22,915
31,617
31,863
EVA (Rs. cr.)
1,540
2,122
2,286
Value added (Rs. cr.)
8,030
11,879
14,820
R&D expenditure (Rs. cr.)
102
167
201
R&D expenditure / revenue (%)
1.07
1.30
1.30
Average age of employees (years)
Education index
Women employees / total employees (%)
© Infosys Technologies Limited 2007-08
The road ahead – Guidance FY09
Guidance
Indian GAAP
Revenue (FY09) Rs. cr.
Year on year growth
EPS (Rs.)
Year on year growth
19,894 – 20,214
19.2 – 21.1%
92.32 – 93.92
16.3 – 18.3%
US GAAP
Revenue (FY09) USD mn
4,971 – 5,051
Year on year growth
19.0 – 21.0%
EPS (USD)
2.31 – 2.35
Year on year growth
16.7 – 18.7%
© Infosys Technologies Limited 2007-08
Thank You
www.infosys.com