4. Impact on adoption of new IFRS

Adoption of IFRS 15

Effective April 1, 2018, the Company adopted IFRS 15. As a result, the Company has changed its accounting policy for revenue recognition, which has been detailed below.

The Company has applied the standard retrospectively with the cumulative effect being recognized as a transition adjustment to the Company’s opening retained earnings as at April 1, 2018. The comparative information has not been restated and continues to be reported in accordance with the principles of IAS 18 “Revenue.” The initial application of the standard applies to active contracts as at April 1, 2018.

The key area impacted upon adoption of IFRS 15 relates to the accounting for sales commission costs. Specifically, under IFRS 15, a portion of sales commission costs have been recorded as an asset and amortized on a straight-line basis over the expected life of contract rather than expensed as incurred under the Company’s former accounting policy (Refer Note 20).

Adoption of IFRS 9

On April 1, 2018, the Company adopted the standard IFRS 9 “Financial Instruments” (“IFRS 9”) by availing the relief from restating comparative information. This standard replaces IAS 39 “Financial Instruments: Recognition and Measurement” (“IAS 39”). The cumulative impact on adoption of the standard has been recognized as an adjustment to the Company’s opening retained earnings as at April 1, 2018.

The standard provides limited exception from prospective application of the new standard for the time value of options, when only the intrinsic value is designated by restating the comparative periods. The time value of options did not have any material impact on the consolidated financial statements. Hence, prior period comparative figures have not been restated and the cumulative impact has been recognized as an adjustment to the Company’s retained earnings as at April 1, 2018.

The key areas impacted upon adoption of the standard relates to the recognition of gains/losses on cash flow hedges on intercompany forecasted revenue transactions as part of revenues, which had previously been recognized in the foreign exchange gains/losses, net, accounting for time value of options and the presentation of classification and measurement of the Company’s financial instruments.

The impact of this standard resulted in an increase in retained earnings of $2,777 as at April 1, 2018 with a corresponding increase in the losses in other components of equity of $2,761, increase in trade receivables of $74 and a decrease in other non-current assets of $84.

The cumulative effect of the changes made to the Company’s consolidated statement of financial position as at April 1, 2018 as a result of the adoption of IFRS 15 and IFRS 9 is as follows:


	As at March 31, 2018 (as previously reported)			Transition adjustments on adoption of IFRS 15			Transition adjustments on adoption of IFRS 9			As at April 1, 2018 (as adjusted)
ASSETS
Current assets:
Cash and cash equivalents	$	99,829		$	—		$	—		$	99,829
Investments		120,960			—			—			120,960
Trade receivables, net		71,388			—			74			71,462
Unbilled revenue		61,721			—			—			61,721
Funds held for clients		10,066			—			—			10,066
Derivative assets		11,738			—			—			11,738
Prepayments and other current assets		24,847			1,520			—			26,367

Total current assets		400,549			1,520			74			402,143

Non-current assets:
Goodwill		135,186			—			—			135,186
Intangible assets		89,652			—			—			89,652
Property and equipment		60,606			—			—			60,606
Derivative assets		3,245			—			—			3,245
Deferred tax assets		27,395			(1,803	)		27			25,619
Investments		542			—			—			542
Other non-current assets		42,388			5,861			(84	)		48,165

Total non-current assets		359,014			4,058			(57	)		363,015

TOTAL ASSETS		759,563			5,578			17			765,158

LIABILITIES AND EQUITY
Current liabilities:
Trade payables		19,703			—			—			19,703
Provisions and accrued expenses		28,826			—			—			28,826
Derivative liabilities		6,466			—			—			6,466
Pension and other employee obligations		64,617			—			—			64,617
Current portion of long- term debt		27,740			—			—			27,740
Contract liabilities		2,908			27			—			2,935
Current taxes payable		1,262			—			—			1,262
Other liabilities		15,739			—			—			15,739

Total current liabilities		167,261			27			—			167,288

Non-current liabilities:
Derivative liabilities		2,289			—			—			2,289
Pension and other employee obligations		9,621			—			—			9,621
Long- term debt		61,391			—			—			61,391
Contract liabilities		571			37			—			608
Other non-current liabilities		11,662			—			—			11,662
Deferred tax liabilities		11,812			3			1			11,816

Total non-current liabilities		97,346			40			1			97,387

TOTAL LIABILITIES		264,607			67			1			264,675

Shareholders’ equity:
Share capital		8,533			—			—			8,533
Share premium		371,764			—			—			371,764
Retained earnings		364,424			5,511			2,777			372,712
Other components of equity		(115,534	)		—			(2,761	)		(118,295	)
Less: shares, held in treasury, at cost		(134,231	)		—			—			(134,231	)

Total shareholders’ equity		494,956			5,511			16			500,483

TOTAL LIABILITIES AND EQUITY	$	759,563		$	5,578		$	17		$	765,158

Details showing the classification and measurement of the Company’s financial instruments on adoption of IFRS 9 as at April 1, 2018:

IAS 39 Category

IFRS 9 Category

Total carrying
value

Total fair
value

Cash and cash equivalents

Loans and receivables

Financial assets at amortized cost

99,829

Investment in fixed deposits

Loans and receivables

Financial assets at amortized cost

21,548

Investments in marketable securities and mutual funds

Available for sale

Financial assets at FVTPL

99,954

Trade receivables

Loans and receivables

Financial assets at amortized cost

71,388

Unbilled revenue

Loans and receivables

Financial assets at amortized cost

61,721

Funds held for clients

Loans and receivables

Financial assets at amortized cost

10,066

Prepayments and other assets

Loans and receivables

Financial assets at amortized cost

4,410

Other non-current assets

Loans and receivables

Financial assets at amortized cost

10,243

Derivative assets

Financial assets at FVTPL

2,212

Derivative assets

Derivative designated as cash flow hedges (carried at fair value)

Financial assets at FVOCI

12,771

Total carrying value

394,142

The impact of the adoption of IFRS 15 and IFRS 9 on the Company’s consolidated statement of financial position as at March 31, 2019 was as follows:


	As reported (includes the impact of adoption of IFRS 15 and IFRS 9)			Adjustments on adoption of IFRS 15			Adjustments on adoption of IFRS 9			Balances without adoption of IFRS 15 and IFRS 9
ASSETS
Current assets:
Cash and cash equivalents	$	85,444		$	—		$	—		$	85,444
Investments		67,913			—			—			67,913
Trade receivables, net		73,872			—			115			73,987
Unbilled revenue		66,752			—			—			66,752
Funds held for clients		7,063			—			—			7,063
Derivative assets		13,394			—			—			13,394
Contract assets		4,190			(1,820	)		—			2,370
Prepayment and other current assets		16,783			—			—			16,783

Total current assets		335,411			(1,820	)		115			333,706

Non-current assets:
Goodwill		130,811			—			—			130,811
Intangible assets		80,188			—			—			80,188
Property and equipment		60,998			—			—			60,998
Derivative assets		5,687			—			—			5,687
Deferred tax assets		23,772			1,219			(4	)		24,987
Investments		82,487			—			—			82,487
Contract assets		22,037			(6,967	)		—			15,070
Other non-current assets		44,239			—			112			44,351

Total non-current assets		450,219			(5,748	)		108			444,579

TOTAL ASSETS		785,630			(7,568	)		223			778,285

LIABILITIES AND EQUITY
Current liabilities:
Trade payables		17,831			—			—			17,831
Provisions and accrued expenses		27,619			—			—			27,619
Derivative liabilities		2,096			—			—			2,096
Pension and other employee obligations		68,121			—			—			68,121
Current portion of long-term debt		27,969			—			—			27,969
Contract liabilities		5,427			(9	)		—			5,418
Current taxes payable		2,603			—			—			2,603
Other liabilities		10,294			—			—			10,294

Total current liabilities		161,960			(9	)		—			161,951

Non-current liabilities:
Derivative liabilities		307			—			—			307
Pension and other employee obligations		11,248			—			—			11,248
Long- term debt		33,422			—			—			33,422
Contract liabilities		6,609			—			—			6,609
Other non-current liabilities		8,959			—			—			8,959
Deferred tax liabilities		10,706			(3	)		(1	)		10,702

Total non-current liabilities		71,251			(3	)		(1	)		71,247

TOTAL LIABILITIES		233,211			(12	)		(1	)		233,198

Shareholders’ equity:
Share capital		8,056			—			—			8,056
Share premium		269,529			—			—			269,529
Retained earnings		478,145			(7,864	)		(366	)		469,915
Other components of equity		(146,894	)		308			590			(145,996	)
Less: shares, held in treasury, at cost		(56,417	)		—			—			(56,417	)

Total shareholders’ equity		552,419			(7,556	)		224			545,087

TOTAL LIABILITIES AND EQUITY	$	785,630		$	(7,568	)	$	223		$	778,285

The impact of the adoption of IFRS 15 and IFRS 9 on the Company’s consolidated statement of income for the year ended March 31, 2019 was as follows:


	Year ended March 31, 2019
	As reported (includes the impact of adoption of IFRS 15 and IFRS 9)			Adjustments on adoption of IFRS 15			Adjustments on adoption of IFRS 9			Amounts without adoption of IFRS 15 and IFRS 9
Revenue	$	809,120		$	—		$	642		$	809,762
Cost of revenue		518,236			281			—			518,517

Gross profit		290,884			(281	)		642			291,245
Operating expenses:
Selling and marketing expenses		44,573			1,489			—			46,062
General and administrative expenses		115,261			—			(220	)		115,041
Foreign exchange gain, net		(4,495	)		—			(2,198	)		(6,693	)
Amortization of intangible assets		15,783			—			—			15,783

Operating profit		119,762			(1,770	)		3,060			121,052
Other income, net		(14,594	)		—			—			(14,594	)
Finance expense		3,204			—			—			3,204

Profit before income taxes		131,152			(1,770	)		3,060			132,442
Income tax expense		25,719			583			649			26,951

Profit after tax	$	105,433		$	(2,353	)	$	2,411		$	105,491

The

impact of the adoption of IFRS 15 and IFRS 9 on the Company’s consolidated cashflows for the year ended March 31, 2019 was as follows:


	Year ended March 31, 2019
	As reported (includes the impact of adoption of IFRS 15 and IFRS 9)			Adjustments on adoption of IFRS 15			Adjustments on adoption of IFRS 9			Amounts without adoption of IFRS 15 and IFRS 9
Cash flows from operating activities:
Profit after tax	$	105,433		$	(2,353	)	$	2,411		$	105,491
Adjustments to reconcile profit after tax to net cash generated from operating activities:
Depreciation and amortization		36,117			—			—			36,117
Share-based compensation expense		30,305			—			—			30,305
Amortization of debt issue cost		360			—			—			360
Allowances for ECL		659			—			—			659
Unrealized exchange loss/(gain), net		(2,441	)		—			—			(2,441	)
Current tax expense		27,526			—			—			27,526
Interest expense		2,844			—			—			2,844
Interest income		(2,556	)		—			—			(2,556	)
Income from marketable securities		(7,979	)		—			—			(7,979	)
Loss on sale of property and equipment		25			—			—			25
Deferred income taxes		(1,807	)		583			649			(575	)
Deferred rent		1,578			—			—			1,578
Excess tax benefit from share-based compensation expense		(1,260	)		—			—			(1,260	)
Unrealized (gain)/loss on derivative instruments		(372	)		—			(2,840	)		(3,212	)
Changes in operating assets and liabilities:
Trade receivables and unbilled revenue		(14,822	)		—			(190	)		(15,012	)
Other assets		(17,340	)		1,779			(30	)		(15,591	)
Trade payables		(585	)		—			—			(585	)
Contract liabilities		8,714			(9	)		—			8,705
Other liabilities		8,279			—			—			8,279

Cash generated from operating activities before interest and income taxes:		172,678			—			—			172,678
Income taxes paid		(22,992	)		—			—			(22,992	)
Interest paid		(2,521	)		—			—			(2,521	)
Interest received		2,489			—			—			2,489

Net cash provided by operating activities		149,654			—			—			149,654

Cash flows from investing activities:
Acquisition of HotelBeds		(233	)		—			—			(233	)
Payment of contingent considerations in relation to acquisitions		(6,922	)		—			—			(6,922	)
Government grants repaid		(200	)		—			—			(200	)
Purchase of property and equipment and intangible assets		(32,292	)		—			—			(32,292	)
Marketable securities (purchased)/sold, net		42,037			—			—			42,037
Proceeds from sale of property and equipment		120			—			—			120
Investment in fixed deposits		(27,899	)		—			—			(27,899	)
Proceeds from maturity of fixed deposits		31,336			—			—			31,336
Marketable securities (long-term) sold / (purchased), net		(78,823	)		—			—			(78,823	)
Profit on sale of marketable securities (short-term)		1,497			—			—			1,497
Dividends received		32			—			—			32

Net cash used in investing activities		(71,347	)		—			—			(71,347	)

Cash flows from financing activities:
Repurchase of shares		(56,417	)		—			—			(56,417	)
Repayment of long-term debt		(28,100	)		—			—			(28,100	)
Excess tax benefit from share-based compensation expense		1,260			—			—			1,260

Net cash used in financing activities		(83,257	)		—			—			(83,257	)

Exchange difference on cash and cash equivalents		(9,435	)		—			—			(9,435	)
Net change in cash and cash equivalents		(14,385	)		—			—			(14,385	)
Cash and cash equivalents at the beginning of the year		99,829			—			—			99,829

Cash and cash equivalents at the end of the year		85,444			—			—			85,444