• | Adoption of new and revised standards |
• | New accounting pronouncements |
• | In November 2009, the International Accounting Standards Board (IASB) issued IFRS 9, which introduced new requirements for the classification and measurement of financial assets. IFRS 9 was subsequently amended in October 2010 to include requirements for the classification and measurement of financial liabilities and for derecognition, and in November 2013 to include the new requirements for general hedge accounting. On July 24, 2014, the IASB published the final version of IFRS 9 'Financial Instruments'. IFRS 9, as revised in July 2014, introduces a new expected credit loss impairment model. The expected credit loss model requires an entity to account for expected credit losses and changes in those expected credit losses at each reporting date to reflect changes in credit risk since initial recognition. In other words, it is no longer necessary for a credit event to have occurred before credit losses are recognised. Also limited changes to the classification and measurement requirements for financial assets by introducing a 'fair value through other comprehensive income' (FVTOCI) measurement category for certain simple debt instruments. |
◦ | Classification and measurement: all financial assets and financial liabilities will continue to be measured on the same bases as is currently adopted under IAS 39. |
◦ | Impairment: the management of the Company does not anticipate that the application of the IFRS 9 Impairment requirements will have a material impact on the Company's consolidated financial statements. |
◦ | Hedge accounting: the management of the Company does not anticipate that the application of the IFRS 9 Hedge accounting requirements will have a material impact on the Company's consolidated financial statements. |
• | On May 28, 2014 the IASB published its new revenue Standard, IFRS 15 "Revenue from Contracts with Customers". IFRS 15 provides a single comprehensive model for entities to use in accounting for revenue arising from contracts with customers. IFRS 15 will supersede the current revenue recognition guidance including IAS 18 Revenue, IAS 11 Construction Contracts and the related interpretations when it becomes effective. The core principle of IFRS 15 is that an entity should recognise revenue to depict the transfer or promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. Specifically, the standard introduces a five-step approach to revenue recognition: |
• | Step 1: Identify the contract with the customer |
• | Step 2: Identify the performance obligations in the contract |
• | Step 3: Determine the transaction price |
• | Step 4: Allocate the transaction price to the performance obligations in the contracts |
• | Step 5: Recognize revenue when (or as) the entity satisfies a performance obligation. |
• | On January 13, 2016, the IASB issued the IFRS 16 which specifies how an IFRS reporter will recognize, measure, present and disclose leases. The standard provides a single lessee accounting model, with the distinction between operating and finance leases removed, requiring lessees to recognize assets and liabilities for all leases unless the lease term is 12 months or less or the underlying asset has a low value to be accounted for by simply recognizing an expense, typically straight line, over the lease term. Lessors continue to classify leases as operating or finance, with IFRS 16's approach to lessor accounting substantially unchanged from its predecessor, IAS 17. IFRS 16 supersedes IAS 17 and related interpretations. Furthermore, extensive disclosures are required by IFRS 16. As of December 31, 2017, the Company has non–cancellable operating lease commitments of $35,033 for office space and office equipment. IAS 17 does not require the recognition of any right-of-use or liability for future payments for these leases; instead, certain information is disclosed as operating lease commitment in note 26. If these arrangements meet the definition of a lease under IFRS 16, the Company will recognize a right–of–use asset and a liability in respect of them unless they qualify of a low value or short–term leases upon the application of IFRS 16. In contrast, for finance leases where the Company is a lessee, the Company will recognize an asset and a related finance lease liability for the lease arrangement. Management are currently assessing its potential impact of the application of IFRS 16. It is not practicable to provide a reasonable estimate of the financial effect on the amounts recognized in the Company's consolidated financial statements until the management complete the review. The standard is effective for annual periods beginning on or after January 1, 2019, with earlier application being permitted if IFRS 15 has also been applied. The Company has not opted for early application. |
• | On December 8, 2016, the IASB published IFRIC 22, which was developed by the IFRS Interpretations Committee to clarify the accounting for transactions that include the receipt or payment of advance consideration in a foreign currency. The interpretation is being issued to reduce diversity in practice related to the exchange rate used when an entity reports transactions that are denominated in a foreign currency in accordance with IAS 21 in circumstances in which consideration is received or paid before the related asset, expense, or income is recognized. |
• | On June 7, 2017, the IASB published IFRIC 23 "Uncertainty over Income Tax Treatments", which was developed by the IFRS Interpretations Committee to clarify the accounting for uncertainties in income taxes. The interpretation is to be applied to the determination of taxable profit (tax loss), tax bases, unused tax losses, unused tax credits and tax rates, when there is uncertainty over income tax treatments under IAS 12. The interpretation specifically considers: |
◦ | Whether tax treatments should be considered collectively. |
◦ | Assumptions for taxation authorities' examinations. |
◦ | The determination of taxable profit (tax loss), tax bases, unused tax losses, unused tax credits and tax rates. |
◦ | The effect of changes in facts and circumstances. |
• | On September 11, 2014, the IASB issued amendments to IFRS 10 and IAS 28. These amendments clarify the treatment of the sale or contribution of assets from an investor to its associate or joint venture, as follows: |
◦ | require full recognition in the investor's financial statements of gains and losses arising on the sale or contribution of assets that constitute a business (as defined in IFRS 3 Business Combinations); |
◦ | require the partial recognition of gains and losses where the assets do not constitute a business, i.e. a gain or loss is recognised only to the extent of the unrelated investors' interests in that associate or joint venture. |
• | On June 20, 2016, the IASB issued amendments to IFRS 2 (share-based payments). The amendments clarify the accounting for cash-settled share-based payment transactions that include a performance condition, the classification of share-based payment transactions with net settlement features, and the accounting for modifications of share-based payment transactions from cash-settled to equity-settled. The directors of the Company do not anticipate that the application of these amendments will have a material impact on the Group's consolidated financial statements. The amendments are effective prospectively for annual periods beginning on or after January 1, 2018. Early adoption is permitted. |
• | On December 8, 2016, the IASB issued amendments to IAS 28 (Investments in associates and joint ventures) as a result of the IASB's annual improvement 2014–2016 project. The amendment clarifies that the election to measure at fair value through profit or loss an investment in an associate or a joint venture that is held by an entity that is a venture capital organization, or other qualifying entity, is available for each investment in an associate or joint venture on an investment-by- investment basis, upon initial recognition. |
• | On October 12, 2017 the IASB published the amendment to IAS 28 "Long-term Interests in Associates and Joint Ventures". This amendment clarifies that an entity applies IFRS 9 Financial Instruments to long-term interests in an associate or joint venture that form part of the net investment in the associate or joint venture but to which the equity method is not applied. |
• | On October 12, 2017 the IASB published the amendment to IFRS 9 "Prepayment Features with Negative Compensation". This amendment modifies the existing requirements in IFRS 9 regarding termination rights in order to allow measurement at amortised cost (or, depending on the business model, at fair value through other comprehensive income) even in the case of negative compensation payments. Under the amendments, the sign of the prepayment amount is not relevant, i. e. depending on the interest rate prevailing at the time of termination, a payment may also be made in favor of the contracting party effecting the early repayment. The calculation of this compensation payment must be the same for both the case of an early repayment penalty and the case of an early repayment gain. |
• | On December 12, 2017, the IASB issued amendments to the following standards as result of the IASB's annual improvements 2015-2017 project: |
◦ | IFRS 3 (Business combinations): clarifies that when an entity obtains control of a business that is a joint operation, it remeasures previously held interests in that business. |
◦ | IFRS 11 (Joint arrangements): clarifies that when an entity obtains joint control of a business that is a joint operation, the entity does not remeasure previously held interests in that business. |
◦ | IAS 12 (Income tax): clarifies that all income tax consequences of dividends (i.e. distribution of profits) should be recognised in profit or loss, regardless of how the tax arises. |
◦ | IAS 23 (Borrowing costs): clarifies that if any specific borrowing remains outstanding after the related asset is ready for its intended use or sale, that borrowing becomes part of the funds that an entity borrows generally when calculating the capitalisation rate on general borrowings. |
• | On February 7, 2018, the IASB published the following amendments to IAS 19 "Plan Amendment, Curtailment or Settlement": |
◦ | If a plan amendment, curtailment or settlement occurs, it is now mandatory that the current service cost and the net interest for the period after the remeasurement are determined using the assumptions used for the remeasurement. |
◦ | In addition, amendments have been included to clarify the effect of a plan amendment, curtailment or settlement on the requirements regarding the asset ceiling. |
• | On March 29, 2018, the IASB issued the Amendments to References to the Conceptual Framework in IFRS Standards. The document contains amendments to IFRS 2, IFRS 3, IFRS 6, IFRS 14, IAS 1, IAS 8, IAS 34, IAS 37, IAS 38, IFRIC 12, IFRIC 19, IFRIC 20, IFRIC 22, and SIC-32. Not all amendments, however update those pronouncements with regard to references to and quotes from the framework so that they refer to the revised Conceptual Framework. Some pronouncements are only updated to indicate which version of the framework they are referencing to (the IASC framework adopted by the IASB in 2001, the IASB framework of 2010, or the new revised framework of 2018) or to indicate that definitions in the standard have not been updated with the new definitions developed in the revised Conceptual Framework. The amendments are effective for annual periods beginning on or after 1 January 2020. |
Company | Country | Main | Percentage ownership | |||||
of | Activity | As of December 31, | ||||||
incorporation | 2017 | 2016 | 2015 | |||||
Sistemas UK Limited | United Kingdom | Customer referral services and software development support | 100.00 | % | 100.00 | % | 100.00 | % |
Globant LLC | United States of America | Customer referral services and software development support | 100.00 | % | 100.00 | % | 100.00 | % |
Sistemas Colombia S.A.S. | Colombia | Software development and consultancy | 100.00 | % | 100.00 | % | 100.00 | % |
Global Systems Outsourcing S.R.L. de C.V. | Mexico | Software development and consultancy | 100.00 | % | 100.00 | % | 100.00 | % |
Software Product Creation S.L. | Spain | Software development and consultancy | 100.00 | % | 100.00 | % | 100.00 | % |
Globant España S.A. (sociedad unipersonal) | Spain | Investing activities | 100.00 | % | 100.00 | % | 100.00 | % |
Sistemas Globales Uruguay S.A. | Uruguay | Software development and consultancy | 100.00 | % | 100.00 | % | 100.00 | % |
Sistemas Globales S.A. | Argentina | Software development and consultancy | 100.00 | % | 100.00 | % | 100.00 | % |
IAFH Global S.A. | Argentina | Software development and consultancy | 100.00 | % | 100.00 | % | 100.00 | % |
Sistemas Globales Chile Ases. Ltda. | Chile | Software development and consultancy | 100.00 | % | 100.00 | % | 100.00 | % |
Globers S.A. | Argentina | Travel organization services | 100.00 | % | 100.00 | % | 100.00 | % |
Globant Brasil Consultoria Ltda. (1) | Brazil | Software development and consultancy | 100.00 | % | 100.00 | % | 100.00 | % |
Huddle Investment LLP (6) | United Kingdom | Investing activities | - | 100.00 | % | 100.00 | % | |
Huddle Group S.A. | Argentina | Software development and consultancy | 100.00 | % | 100.00 | % | 100.00 | % |
Huddle Group Corp. (2) | United States | Software development and consultancy | - | - | 100.00 | % | ||
Globant Peru S.A.C. | Peru | Software development and consultancy | 100.00 | % | 100.00 | % | 100.00 | % |
Globant India Privated Limited | India | Software development and consultancy | 100.00 | % | 100.00 | % | 100.00 | % |
Dynaflows S.A. | Argentina | Software development and consultancy | 66.73 | % | 66.73 | % | 66.73 | % |
We Are London Limited (4) | United Kingdom | Service design consultancy | 100.00 | % | 100.00 | % | - | |
L4 Mobile LLC (5) | United States of America | Software development and consultancy | 100.00 | % | 100.00 | % | - | |
Difier S.A. (6) | Uruguay | Software development and consultancy | 100.00 | % | 100.00 | % | - | |
(1) | On March 23, 2016, TerraForum Consultoría Ltda. was renamed Globant Brasil Consultoría Ltda. |
(2) | On October 31, 2016, Huddle Group Corp. was merged into Globant LLC. |
(3) | We are London Limited and We are Experience LLC were acquired on May 23, 2016 (see note 23). On October 31, 2016, We are Experience LLC was merged into Globant LLC. |
(4) | L4 Mobile LLC was acquired on November 14, 2016 (see note 23). |
(5) | Difier S.A. was acquired on November 14, 2016 (see note 23). |
(6) | Huddle Investment LLP was dissolved on June 30, 2017. |