WNS (HOLDINGS) LTD | CIK:0001356570 | 3

  • Filed: 5/16/2018
  • Entity registrant name: WNS (HOLDINGS) LTD (CIK: 0001356570)
  • Generator: Donnelley Financial Solutions
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  • ifrs-full:DisclosureOfFinancialInstrumentsExplanatory

    13. Financial instruments

    Financial instruments by category

    The carrying value and fair value of financial instruments by class as at March 31, 2018 are as follows:

    Financial assets

     

         Loans and
    receivables
         Financial
    assets at
    FVTPL
         Derivative
    designated
    as cash flow
    hedges (carried
    at fair value)
         Available
    for
    sale
         Total
    carrying
    value
         Total fair
    value
     

    Cash and cash equivalents

       $ 99,829      $ —        $ —        $ —        $ 99,829      $ 99,829  

    Investment in fixed deposits

         21,548        —          —          —          21,548        21,548  

    Investments in marketable securities and mutual funds

         —          —          —          99,954        99,954        99,954  

    Trade receivables

         71,388        —          —          —          71,388        71,388  

    Unbilled revenue

         61,721        —          —          —          61,721        61,721  

    Funds held for clients

         10,066        —          —          —          10,066        10,066  

    Prepayments and other assets (1)

         4,410        —          —          —          4,410        4,410  

    Other non-current assets (2)

         10,243        —          —          —          10,243        10,243  

    Derivative assets

         —          2,212        12,771        —          14,983        14,983  
      

     

     

        

     

     

        

     

     

        

     

     

        

     

     

        

     

     

     

    Total carrying value

       $ 279,205      $ 2,212      $ 12,771      $ 99,954      $ 394,142      $ 394,142  
      

     

     

        

     

     

        

     

     

        

     

     

        

     

     

        

     

     

     

    Financial liabilities

     

         Financial
    liabilities at
    FVTPL
         Derivative
    designated
    as cash flow
    hedges (carried
    at fair value)
         Financial
    liabilities at
    amortized
    cost
         Total
    carrying
    value
         Total
    fair
    value
     

    Trade payables

       $ —        $ —        $ 19,703      $ 19,703      $ 19,703  

    Long term debt (includes current portion) (3)

         —          —          89,900        89,900        89,900  

    Other employee obligations (4)

         —          —          59,346        59,346        59,346  

    Provision and accrued expenses

         —          —          28,826        28,826        28,826  

    Other liabilities (5)

         11,388        —          2,447        13,835        13,835  

    Derivative liabilities

         946        7,809        —          8,755        8,755  
      

     

     

        

     

     

        

     

     

        

     

     

        

     

     

     

    Total carrying value

       $ 12,334      $ 7,809      $ 200,222      $ 220,365      $ 220,365  
      

     

     

        

     

     

        

     

     

        

     

     

        

     

     

     

    Notes:

     

    (1) Excluding non-financial assets $20,437.
    (2) Excluding non-financial assets $32,145.
    (3) Excluding non-financial asset (unamortized debt issuance cost) $769.
    (4) Excluding non-financial liabilities $14,892.
    (5) Excluding non-financial liabilities $13,566.

     

    The carrying value and fair value of financial instruments by class as at March 31, 2017 are as follows:

    Financial assets

     

         Loans and
    receivables
         Financial
    assets at
    FVTPL
         Derivative
    designated
    as cash flow
    hedges (carried
    at fair value)
         Available
    for
    sale
         Total
    carrying
    value
         Total fair
    value
     

    Cash and cash equivalents

       $ 69,803      $ —        $ —        $ —        $ 69,803      $ 69,803  

    Investment in fixed deposits

         24,673        —          —          —          24,673        24,673  

    Investments in marketable securities and mutual funds

         —          —          —          87,652        87,652        87,652  

    Investment in FMPs

         —          96        —          —          96        96  

    Trade receivables

         60,423        —          —          —          60,423        60,423  

    Unbilled revenue

         48,915        —          —          —          48,915        48,915  

    Funds held for clients

         9,135        —          —          —          9,135        9,135  

    Prepayments and other assets (1)

         4,262        —          —          —          4,262        4,262  

    Other non-current assets (2)

         10,791        —          —          —          10,791        10,791  

    Derivative assets

         —          5,041        36,941        —          41,982        41,982  
      

     

     

        

     

     

        

     

     

        

     

     

        

     

     

        

     

     

     

    Total carrying value

       $ 228,002      $ 5,137      $ 36,941      $ 87,652      $ 357,732      $ 357,732  
      

     

     

        

     

     

        

     

     

        

     

     

        

     

     

        

     

     

     

    Financial liabilities

     

         Financial
    liabilities at
    FVTPL
         Derivative
    designated
    as cash flow
    hedges (carried
    at fair value)
         Financial
    liabilities at
    amortized
    cost
         Total
    carrying
    value
         Total
    fair
    value
     

    Trade payables

       $ —        $ —        $ 14,239      $ 14,239      $ 14,239  

    Long term debt (includes current portion) (3)

         —          —          118,000        118,000        118,000  

    Other employee obligations (4)

         —          —          46,701        46,701        46,701  

    Provision and accrued expenses

         —          —          27,217        27,217        27,217  

    Other liabilities (5)

         19,678        —          1,086        20,764        20,764  

    Derivative liabilities

         26        4,757        —          4,783        4,783  
      

     

     

        

     

     

        

     

     

        

     

     

        

     

     

     

    Total carrying value

       $ 19,704      $ 4,757      $ 207,243      $ 231,704      $ 231,704  
      

     

     

        

     

     

        

     

     

        

     

     

        

     

     

     

    Notes:

     

    (1) Excluding non-financial assets $ 23,123.
    (2) Excluding non-financial assets $ 21,153.
    (3) Excluding non-financial asset (unamortized debt issuance cost) $1,257.
    (4) Excluding non-financial liabilities $16,912.
    (5) Excluding non-financial liabilities $13,720.

     

    For the financial assets and liabilities subject to offsetting or similar arrangements, each agreement between the Company and the counterparty allows for net settlement of the relevant financial assets and liabilities when both elect to settle on a net basis. In the absence of such an election, financial assets and liabilities will be settled on a gross basis.

    Financial assets and liabilities subject to offsetting, enforceable master netting arrangements or similar agreements as at March 31, 2018 are as follows:

     

    Description

    of types of

    financial assets

       Gross
    amounts of
    recognized
    financial
    assets
         Gross amounts
    of recognized
    financial
    liabilities offset
    in  the
    statement of
    financial
    position
         Net amounts
    of financial
    assets
    presented in
    the statement
    of  financial
    position
         Related amount not set off in
    financial instruments
         Net
    Amount
     
                Financial
    instruments
        Cash
    collateral
    received
        

    Derivative assets

       $ 14,983      $ —        $ 14,983      $ (4,215   $ —        $ 10,768  
      

     

     

        

     

     

        

     

     

        

     

     

       

     

     

        

     

     

     

    Total

       $ 14,983      $ —        $ 14,983      $ (4,215   $ —        $ 10,768  
      

     

     

        

     

     

        

     

     

        

     

     

       

     

     

        

     

     

     

     

    Description

    of types of

    financial liabilities

       Gross
    amounts of
    recognized
    financial
    liabilities
         Gross amounts
    of recognized
    financial assets
    offset in the
    statement  of
    financial
    position
         Net amounts
    of financial
    liabilities
    presented in
    the statement
    of  financial
    position
         Related amount not set off in
    financial instruments
         Net
    Amount
     
                Financial
    instruments
        Cash
    collateral
    pledged
        

    Derivative liabilities

       $ 8,755      $ —        $ 8,755      $ (4,215   $ —        $ 4,540  
      

     

     

        

     

     

        

     

     

        

     

     

       

     

     

        

     

     

     

    Total

       $ 8,755      $ —        $ 8,755      $ (4,215   $ —        $ 4,540  
      

     

     

        

     

     

        

     

     

        

     

     

       

     

     

        

     

     

     

     

    Financial assets and liabilities subject to offsetting, enforceable master netting arrangements or similar agreements as at March 31, 2017 are as follows:

     

    Description

    of types of

    financial assets

       Gross
    amounts of
    recognized
    financial
    assets
         Gross amounts
    of recognized
    financial
    liabilities offset
    in  the
    statement of
    financial
    position
         Net amounts
    of financial
    assets
    presented in
    the statement
    of  financial
    position
         Related amount not set off in
    financial instruments
         Net
    Amount
     
                Financial
    instruments
        Cash
    collateral
    received
        

    Derivative assets

       $ 41,982      $ —        $ 41,982      $ (1,712   $ —        $ 40,270  
      

     

     

        

     

     

        

     

     

        

     

     

       

     

     

        

     

     

     

    Total

       $ 41,982      $ —        $ 41,982      $ (1,712   $ —        $ 40,270  
      

     

     

        

     

     

        

     

     

        

     

     

       

     

     

        

     

     

     

     

    Description

    of types of

    financial liabilities

       Gross
    amounts of
    recognized
    financial
    liabilities
         Gross amounts
    of recognized
    financial assets
    offset in the
    statement  of
    financial
    position
         Net amounts
    of financial
    liabilities
    presented in
    the statement
    of  financial
    position
         Related amount not set off in
    financial instruments
         Net
    Amount
     
                Financial
    instruments
        Cash
    collateral
    pledged
        

    Derivative liabilities

       $ 4,783      $ —        $ 4,783      $ (1,712   $ —        $ 3,071  
      

     

     

        

     

     

        

     

     

        

     

     

       

     

     

        

     

     

     

    Total

       $ 4,783      $ —        $ 4,783      $ (1,712   $ —        $ 3,071  
      

     

     

        

     

     

        

     

     

        

     

     

       

     

     

        

     

     

     

    Fair value hierarchy

    The following is the hierarchy for determining and disclosing the fair value of financial instruments by valuation technique:

    Level 1 — quoted prices (unadjusted) in active markets for identical assets or liabilities.

    Level 2 — other techniques for which all inputs have a significant effect on the recorded fair value are observable, either directly or indirectly.

    Level 3 — techniques which use inputs that have a significant effect on the recorded fair value that are not based on observable market data.

    The fair value is estimated using the discounted cash flow approach and market rates of interest. The valuation technique involves assumptions and judgments regarding risk characteristics of the instruments, discount rates and future cash flows.

    The Company uses valuation techniques in measuring the fair value of financial instruments, where active market quotes are not available. In applying the valuation techniques, the Company makes maximum use of market inputs, and uses estimates and assumptions that are, as far as possible, consistent with observable data that market participants would use in pricing the instrument. Where applicable data is not observable, the Company uses its best estimate about the assumptions that market participants would make. These estimates may vary from the actual prices that would be achieved in an arm’s length transaction at the reporting date.

    The assets and liabilities measured at fair value on a recurring basis as at March 31, 2018 are as follows:-

     

                Fair value measurement at reporting date using  

    Description

       March 31,
    2018
         Quoted
    prices in
    active
    markets
    for identical
    assets
    (Level 1)
         Significant
    other
    observable
    inputs
    (Level 2)
         Significant
    unobservable
    inputs
    (Level 3)
     

    Assets

               

    Financial assets at FVTPL

               

    Foreign exchange contracts

       $ 2,212      $ —        $ 2,212      $ —    

    Financial assets at fair value through other comprehensive income

               

    Foreign exchange contracts

         11,709        —          11,709        —    

    Interest rate swaps

         1,062        —          1,062        —    

    Investments in marketable securities and mutual funds

         99,954        99,412        542        —    
      

     

     

        

     

     

        

     

     

        

     

     

     

    Total assets

       $ 114,937      $ 99,412      $ 15,525      $ —    
      

     

     

        

     

     

        

     

     

        

     

     

     

    Liabilities

               

    Financial liabilities at FVTPL

               

    Foreign exchange contracts

       $ 946      $ —        $ 946      $ —    

    Contingent consideration

         11,388        —          —          11,388  

    Financial liabilities at fair value through other comprehensive income

               

    Foreign exchange contracts

         7,809        —          7,809        —    
      

     

     

        

     

     

        

     

     

        

     

     

     

    Total liabilities

       $ 20,143      $ —        $ 8,755      $ 11,388  
      

     

     

        

     

     

        

     

     

        

     

     

     

     

     

    The assets and liabilities measured at fair value on a recurring basis as at March 31, 2017 are as follows:-

     

                Fair value measurement at reporting date using  

    Description

       March 31,
    2017
         Quoted
    prices in
    active
    markets
    for identical
    assets
    (Level 1)
         Significant
    other
    observable
    inputs
    (Level 2)
         Significant
    unobservable
    inputs
    (Level 3)
     

    Assets

               

    Financial assets at FVTPL

               

    Foreign exchange contracts

       $ 5,041      $ —        $ 5,041      $ —    

    Investment in FMPs

         96        96        —          —    

    Financial assets at fair value through other comprehensive income

               

    Foreign exchange contracts

         36,733        —          36,733        —    

    Interest rate swaps

         208        —          208        —    

    Investments in marketable securities and mutual funds

         87,652        87,223        429        —    
      

     

     

        

     

     

        

     

     

        

     

     

     

    Total assets

       $ 129,730      $ 87,319      $ 42,411      $ —    
      

     

     

        

     

     

        

     

     

        

     

     

     

    Liabilities

               

    Financial liabilities at FVTPL

               

    Foreign exchange contracts

       $ 26      $ —        $ 26      $ —    

    Contingent consideration

         19,678        —          —          19,678  

    Financial liabilities at fair value through other comprehensive income

               

    Foreign exchange contracts

         4,136        —          4,136        —    

    Interest rate swaps

         621        —          621        —    
      

     

     

        

     

     

        

     

     

        

     

     

     

    Total liabilities

       $ 24,461      $ —        $ 4,783      $ 19,678  
      

     

     

        

     

     

        

     

     

        

     

     

     

    Description of significant unobservable inputs to Level 3 valuation

    The fair value of the contingent consideration liability was estimated using a probability weighted method and achievement of revenue target with a discount rate of 2.5%. One percentage point change in the unobservable inputs used in fair valuation of the contingent consideration does not have a significant impact on its value.

    The fair value is estimated using discounted cash flow approach which involves assumptions and judgments regarding risk characteristics of the instruments, discount rates, future cash flows, foreign exchange spot, forward premium rates and market rates of interest.

    The movement in contingent consideration categorized under Level 3 fair value measurement is given below:

     

         For the year ended  
         March 31,
    2018
         March 31,
    2017
     

    Balance at the beginning of the year

       $ 19,678      $ —    

    Additions

         —          19,934

    Payouts

         (7,000      —    

    Gain recognized in the consolidated statement of income

         (1,553      (279

    Finance expense recognized in the consolidated statement of income

         263        23  
      

     

     

        

     

     

     

    Balance at the end of the year

         11,388        19,678  
      

     

     

        

     

     

     

    During the years ended March 31, 2018 and 2017, there were no transfers between Level 1 and Level 2 fair value measurements, and no transfers into and out of Level 3 fair value measurements.

    Fair value on a non-recurring basis as at March 31, 2017

    The non-recurring fair value measurement for the Auto Claim BPM CGU of $38,492 (before cost of disposal of $656) has been categorized as Level 3 fair value based on the inputs to the valuation technique used (Refer Note 9).

     

    Derivative financial instruments

    The primary risks managed by using derivative instruments are foreign currency exchange risk and interest rate risk. Forward and option contracts up to 24 months on various foreign currencies are entered into to manage the foreign currency exchange rate risk on forecasted revenue denominated in foreign currencies and monetary assets and liabilities held in non-functional currencies. Interest rate swaps are entered to manage interest rate risk associated with the Company’s floating rate borrowings. The Company’s primary exchange rate exposure is with the US dollars and pound sterling against the Indian rupee. For derivative instruments which qualify for cash flow hedge accounting, the Company records the effective portion of gain or loss from changes in the fair value of the derivative instruments in other comprehensive income (loss), which is reclassified into earnings in the same period during which the hedged item affects earnings. Derivative instruments qualify for hedge accounting when the instrument is designated as a hedge; the hedged item is specifically identifiable and exposes the Company to risk; and it is expected that a change in fair value of the derivative instrument and an opposite change in the fair value of the hedged item will have a high degree of correlation. Determining the high degree of correlation between the change in fair value of the hedged item and the derivative instruments involves significant judgment including the probability of the occurrence of the forecasted transaction. When it is highly probable that a forecasted transaction will not occur, the Company discontinues the hedge accounting and recognizes immediately in the consolidated statement of income, the gains and losses attributable to such derivative instrument that were accumulated in other comprehensive income (loss).

    The following table presents the notional values of outstanding foreign exchange forward contracts, foreign exchange option contracts and interest rate swap contracts:

     

         As at  
         March 31,
    2018
         March 31,
    2017
     

    Forward contracts (Sell)

         

    In US dollars

       $ 242,418      $ 241,673  

    In United Kingdom Pound Sterling

         132,591        126,441  

    In Euro

         23,883        14,769  

    In Australian dollars

         48,147        43,474  

    Others

         2,332        3,511  
      

     

     

        

     

     

     
       $ 449,371      $ 429,868  
      

     

     

        

     

     

     

    Option contracts (Sell)

         

    In US dollars

       $ 107,629      $ 84,490  

    In United Kingdom Pound Sterling

         116,401        94,094  

    In Euro

         21,483        14,494  

    In Australian dollars

         28,828        19,412  

    Others

         927        1,978  
      

     

     

        

     

     

     
       $ 275,268      $ 214,468  
      

     

     

        

     

     

     

    Interest Rate Swap contracts

         

    In US dollars

         89,900        118,000  

    The amount of gain/ (loss) reclassified from other comprehensive income into consolidated statement of income in respective line items for the years ended March 31, 2018, 2017 and 2016 are as follows:

     

         Year ended March 31,  
         2018      2017      2016  

    Revenue

       $ 11,231      $ 7,952      $ 7,941  

    Foreign exchange gain, net

         15,766        16,896        6,281  

    Finance expense

         (561      (71      —    

    Income tax related to amounts reclassified into consolidated statement of income

         (9,965      (8,998      (5,230
      

     

     

        

     

     

        

     

     

     

    Total

       $ 16,471      $ 15,779      $ 8,992  
      

     

     

        

     

     

        

     

     

     

     

    As at March 31, 2018, a loss amounting to $1,015 on account of cash flow hedges in relation to forward and option contracts entered is expected to be reclassified from other comprehensive income into consolidated statement of income over a period of 24 months and a gain amounting to $995 on account of cash flow hedges in relation to interest rate swaps is expected to be reclassified from other comprehensive income into consolidated statement of income over a period of 48 months.

    Due to the discontinuation of cash flow hedge accounting on account of non-occurrence of original forecasted transactions by the end of the originally specified time period, the Company recognized in the consolidated statement of income, loss of $20, gain of $666 and $125, for the years ended March 31, 2018, 2017 and 2016, respectively.

    Financial risk management

    Financial risk factors

    The Company’s activities expose it to a variety of financial risks: market risk, interest risk, credit risk and liquidity risk. The Company’s primary focus is to foresee the unpredictability of financial markets and seek to minimize potential adverse effects on its financial performance. The primary market risk to the Company is foreign exchange risk. The Company uses derivative financial instruments to mitigate foreign exchange related risk exposures. The Company’s exposure to credit risk is influenced mainly by the individual characteristic of each customer and the concentration of risk from the top few customers. The demographics of the customer including the default risk of the industry and country in which the customer operates also has an influence on credit risk assessment. The Company does not enter into or trade financial instruments, including derivative financial instruments, for speculative purposes.

    Risk management procedures

    The Company manages market risk through treasury operations. Senior management and Board of Directors approve the Company’s treasury operations’ objectives and policies. The activities of treasury operations include management of cash resources, implementation of hedging strategies for foreign currency exposures, implementation of borrowing strategies and monitoring compliance with market risk limits and policies. The Company’s foreign exchange committee, comprising the Chairman of the Board, Group Chief Executive Officer and Group Chief Financial Officer, is the approving authority for all hedging transactions.

    Components of market risk

    Exchange rate or currency risk:

    The Company’s exposure to market risk arises principally from exchange rate risk. Although substantially all of revenue is denominated in pound sterling and US dollars, a significant portion of expenses for the year ended March 31, 2018 (net of payments to repair centers made as part of the Company’s WNS Auto Claims BPM segment) were incurred and paid in Indian rupees. The exchange rates among the Indian rupee, the pound sterling and the US dollar have changed substantially in recent years and may fluctuate substantially in the future. The Company hedges a portion of forecasted external and inter-company revenue denominated in foreign currencies with forward contracts and options.

    Based upon the Company’s level of operations for the year ended March 31, 2018, a sensitivity analysis shows that a 10% appreciation or depreciation in the pound sterling against the US dollar would have increased or decreased, respectively, the Company’s revenue for the year ended March 31, 2018 by approximately $24,107. Similarly, a 10% appreciation or depreciation in the Indian rupee against the US dollar would have increased or decreased, respectively, the Company’s expenses incurred and paid in Indian rupee for the year ended March 31, 2018 by approximately $27,282.

     

    The foreign currency risk from non-derivative financial instruments as at March 31, 2018 is as follows:

     

         As at March 31, 2018  
         US Dollar     Pound
    Sterling
        Indian
    Rupees
        Australian
    Dollar
        Euro     Other
    currencies
        Total  

    Cash and cash equivalents

       $ 399       4,735       —         2,991       339       610       9,074  

    Trade receivables

         100,002       46,658       3,850       24,686       7,289       2,525       185,010  

    Unbilled revenue

         7,178       3,209       —         643       6,230       858       18,118  

    Prepayments and other current assets

         428       188       10       29       63       11       729  

    Other non-current assets

         3       —         —         —         —         16       19  

    Trade payables

         (27,613     (64,070     (6,989     (16,093     (1,429     (19     (116,213

    Provisions and accrued expenses

         (2,314     (291     (205     —         (154     (19     (2,983

    Pension and other employee obligations

         (134     —         —         —         (12     (306     (452

    Other liabilities

         (7     (4     —         —         —         —         (11
      

     

     

       

     

     

       

     

     

       

     

     

       

     

     

       

     

     

       

     

     

     

    Net assets/ (liabilities)

       $ 77,942       (9,575     (3,334     12,256       12,325       3,676       93,291  
      

     

     

       

     

     

       

     

     

       

     

     

       

     

     

       

     

     

       

     

     

     

    The foreign currency risk from non-derivative financial instruments as at March 31, 2017 is as follows:

     

         As at March 31, 2017  
         US Dollar     Pound
    Sterling
        Indian
    Rupees
        Australian
    Dollar
        Euro     Other
    currencies
        Total  

    Cash and cash equivalents

       $ 599       253       —         2,606       1,323       35       4,816  

    Trade receivables

         98,713       53,668       2,996       23,373       5,370       3,192       187,312  

    Unbilled revenue

         4,656       1,241         3,062       3,205       494       12,658  

    Prepayments and other current assets

         428       130       3       66       30       14       671  

    Other non-current assets

         3       —         —         —         —         16       19  

    Trade payables

         (40,600     (71,039     (3,986     (19,205     (1,140     (312     (136,282

    Provisions and accrued expenses

         (1,706     (504     (105     (128     (68     (208     (2,719

    Pension and other employee obligations

         (56     —         —         —         (31     (165     (252

    Other liabilities

         (5     (2     —         —         —         14       7  
      

     

     

       

     

     

       

     

     

       

     

     

       

     

     

       

     

     

       

     

     

     

    Net assets/ (liabilities)

       $ 62,032       (16,253     (1,092     9,774       8,689       3,080       66,230  
      

     

     

       

     

     

       

     

     

       

     

     

       

     

     

       

     

     

       

     

     

     

     

    Other currencies includes mainly currencies such as Swiss Franc (CHF), Singapore Dollar (SGD), Philippine Peso (PHP), Canadian Dollar (CAD), Polish Zloty (PLN), Sri Lankan Rupee (LKR), Romanian Leu (RON), South African Rand (ZAR) and New Zealand Dollar (NZD).

    As at March 31, 2018, every 5% appreciation or depreciation of the respective foreign currencies compared to the functional currency of the Company would impact the Company’s profit before tax from operating activities by approximately $3,751.

    Interest rate risk:

    The Company’s exposure to interest rate risk arises from borrowings which have a floating rate of interest, which is linked to the US dollar LIBOR. The risk is managed by the Company by maintaining an appropriate mix between fixed and floating rate borrowings and by the use of interest rate swap contracts. The costs of floating rate borrowings may be affected by the fluctuations in the interest rates. In connection with the term loan facilities entered in fiscal 2017, the Company entered into interest rate swap agreements with the banks in fiscal 2017. These swap agreements effectively convert the term loans from variable US dollar LIBOR interest rates to fixed rates, thereby managing the Company’s exposure to changes in market interest rates under the term loans. The outstanding swap agreements as at March 31, 2018 aggregated $89,900.

    The Company monitors its positions and does not anticipate non-performance by the counterparties. The Company intends to selectively use interest rate swaps, options and other derivative instruments to manage exposure to interest rate movements. These exposures are reviewed by appropriate levels of management on a periodic basis. The Company does not enter into hedging agreements for speculative purposes.

    Credit risk:

    Credit risk arises from the possibility that customers may not be able to settle their obligations as agreed. Trade receivables are typically unsecured and are derived from revenue earned from customers primarily located in the United Kingdom and the United States. Credit risk is managed through periodical assessment of the financial reliability of customers, taking into account the financial condition, current economic trends, analysis of historical bad debts and ageing of trade receivables. The credit risk on marketable securities, FMPs, mutual funds, bank deposits and derivative financial instruments is limited because the counterparties are banks and mutual funds with high credit-ratings assigned by international credit-rating agencies.

     

    The following table gives details in respect of the percentage of revenue generated from the Company’s top customer and top five customers:

     

         Year Ended March 31,  
         2018     2017     2016  

    Revenue from top customer

         6.8     9.0     10.9

    Revenue from top five customers

         29.4     32.1     30.7

    Financial assets that are neither past due nor impaired

    Cash equivalents, bank deposits, marketable securities and investments in mutual funds, investment in FMPs, unbilled revenue and other assets, are neither past due nor impaired, except trade receivables as described below.

    Financial assets that are past due but not impaired

    There is no other class of financial assets that is past due but not impaired, except for trade receivables, which forms part of the class “Loans and receivables.” The Company’s credit period generally ranges from 30-60 days. The age-wise break up of trade receivables, net of allowances that are past due beyond credit period, are as follows:

     

         As at  
         March 31,
    2018
         March 31,
    2017
     

    Neither past due nor impaired

       $ 56,372      $ 45,939  

    Past due but not impaired

         

    Past due 0-30 days

         9,578        8,260  

    Past due 31-60 days

         2,738        2,544  

    Past due 61-90 days

         834        1,174  

    Past due over 90 days

         1,866        2,506  

    Past due and impaired

         564        1,713  
      

     

     

        

     

     

     

    Total

       $ 71,952      $ 62,136  

    Allowances for doubtful trade receivables

       $ (564    $ (1,713
      

     

     

        

     

     

     

    Trade receivables, net of allowances for doubtful receivables

       $ 71,388      $ 60,423  
      

     

     

        

     

     

     

    Liquidity risk:

    Liquidity risk is the risk that the Company will encounter difficulty in meeting the obligations associated with its financial liabilities that are settled by delivering cash or another financial asset. The Company’s approach to managing liquidity is to ensure, as far as possible, that it will always have sufficient liquidity to meet its liabilities when due, under normal and stressed conditions, without incurring unacceptable losses or risking damage to the reputation. Typically the Company ensures that it has sufficient cash on demand to meet expected operational expenses and service financial obligations. In addition, the Company has concluded arrangements with well reputed banks and has unused lines of credit of $78,290 as of March 31, 2018 that could be drawn upon should there be a need.

     

    The contractual maturities of financial liabilities are as follows:

     

         As at March 31, 2018  
         Less than
    1 Year
         1-2 years      2-5 years      Total  

    Long term debt (includes current portion)(1)

       $ 28,100      $ 28,200      $ 33,600      $ 89,900  

    Trade payables

         19,703        —          —          19,703  

    Provision and accrued expenses

         28,826        —          —          28,826  

    Other liabilities

         10,680        3,154        —          13,834  

    Other employee obligations

         59,347        —          —          59,347  

    Derivative financial instruments

         6,466        2,289        —          8,755  
      

     

     

        

     

     

        

     

     

        

     

     

     

    Total(2)

       $ 153,122      $ 33,643      $ 33,600      $ 220,365  
      

     

     

        

     

     

        

     

     

        

     

     

     

    Notes:

     

    (1) Before netting off debt issuance cost of $769.
    (2) Non-financial liabilities are explained in the financial instruments categories table above.

     

         As at March 31, 2017  
         Less than
    1 Year
         1-2 years      2-5 years      Total  

    Long term debt (includes current portion)(1)

       $ 28,100      $ 28,100      $ 61,800      $ 118,000  

    Trade payables

         14,239        —          —          14,239  

    Provision and accrued expenses

         27,217        —          —          27,217  

    Other liabilities

         9,338        8,195        3,231        20,764  

    Other employee obligations

         46,701        —          —          46,701  

    Derivative financial instruments

         3,947        836        —          4,783  
      

     

     

        

     

     

        

     

     

        

     

     

     

    Total(2)

       $ 129,542      $ 37,131      $ 65,031      $ 231,704  
      

     

     

        

     

     

        

     

     

        

     

     

     

    Notes:

     

    (1) Before netting off debt issuance cost of $1,257.
    (2) Non-financial liabilities are explained in the financial instruments categories table above.

    The balanced view of liquidity and financial indebtedness is stated in the table below. This calculation of the net cash position is used by the management:

     

         As at  
         March 31,
    2018
         March 31,
    2017
     

    Cash and cash equivalents

       $ 99,829      $ 69,803  

    Investments

         121,502        112,421  

    Long term debt (includes current portion)(1)

         (89,900      (118,000
      

     

     

        

     

     

     

    Net cash position

       $ 131,431      $ 64,224  
      

     

     

        

     

     

     

    Note:

     

    (1) Before netting off debt issuance cost of $769 and $1,257 as at March 31, 2018 and March 31, 2017, respectively.