|WNS (HOLDINGS) LTD filed this Form 20-F on 05/16/2018|
In April 2016, the IASB issued amendments to IFRS 15, clarifying some requirements and providing additional transitional relief for companies. The amendments do not change the underlying principles of IFRS 15 but clarify how those principles should be applied. The amendments clarify how to:
In addition to the clarifications, the amendments include two additional reliefs to reduce cost and complexity for a company when it first applies IFRS 15. The amendments have the same effective date as IFRS 15.
IFRS 15 is effective for fiscal years beginning on or after January 1, 2018. We will apply this standard retrospectively with the cumulative effect of initially applying this standard recognized at April 1, 2018 (i.e. the date of initial application in accordance with this standard) which will be based on specific terms of active contracts as at April 1, 2018. We have evaluated specific terms of such contracts, potential changes to accounting system and processes, and additional disclosure requirements that may be necessary.
We expect revenue recognition across the portfolio of services to remain largely unchanged, however there will be an impact on the timing of recognition of certain contract costs, which will now be amortized over the contract period rather than expensed as incurred. Further, some of our contracts have provisions primarily with regards to service level arrangements and discounts which we need to estimate at contract inception and account for in revenue. Based on the analysis completed to date, we do not currently expect that the adoption will have a material impact on consolidated revenue in our consolidated financial statements.
Key requirements of IFRS 9:
Replaces IAS 39s measurement categories with the following three categories:
Eliminates the requirement for separation of embedded derivatives from hybrid financial assets, the classification requirements to be applied to the hybrid financial asset in its entirety.
Requires an entity to present the amount of change in fair value due to change in entitys own credit risk in other comprehensive income.
Introduces new impairment model, under which the expected credit loss are required to be recognized as compared to the existing incurred credit loss model of IAS 39.
Fundamental changes in hedge accounting by introduction of new general hedge accounting model which:
IFRS 9 is effective for annual periods beginning on or after January 1, 2018.
Earlier application is permitted provided that all the requirements in the Standard are applied at the same time with two exceptions:
In October 2017, the IASB issued an amendment to IFRS 9 on the modification of financial liabilities measured at amortized cost that does not result in the derecognition of the financial liability. The amendment states that any adjustment to the amortized cost of the financial liability arising from a modification or exchange shall be recognized in the profit or loss at the date of the modification or exchange. A retrospective change of the accounting treatment may therefore become necessary if in the past the effective interest rate was adjusted, and not the amortized cost amount.
This amendment is to be applied retrospectively for fiscal years beginning on or after January 1, 2019, i.e. one year after the first application of IFRS 9 in its current version and early application is permitted. Additional transitional requirements and corresponding disclosure requirements must be observed when applying the amendments for the first time. We are currently evaluating the impact of this amendment on our consolidated financial statements.
We will adopt this standard effective April 1, 2018 by applying the relief from restating comparative information. The key areas impacted upon adoption of the new standard relates to the presentation of hedging instrument gain or losses on cash flow hedges on intercompany forecasted revenue transactions as part of revenues, accounting for time value of options and the presentation of classification and measurement of our financial instruments. Based on the analysis completed to date, we do not currently expect that the adoption will have a material impact on our consolidated financial statements.