Our first set of unaudited financial statements prepared in accordance with US GAAP will be for the first quarter ended June 30, 2024, which will include certain comparative financial information for fiscal 2024. Until the adoption of US GAAP, the financial statements included in our annual reports on Form 20-F and reports on Form 6-K were prepared in accordance with the IFRS, as issued by the International Accounting Standards Board (“IASB”).
The Supplemental Financial Information is contained in an exhibit to a report on Form 8-K submitted to the US Securities and Exchange Commission on July 09, 2024. The Supplemental Financial Information sets forth the key impact on our quarterly financial statements for each of the quarters in fiscal 2024 and for full year fiscal 2024 and 2023 as a result of our transition to US GAAP. We provide the Supplemental Financial Information to help users of our financial statements better understand such impact of the transition to US GAAP on the Company’s financial statements that will be included as the comparative information in the Company’s consolidated interim financial statements for the quarterly periods during fiscal 2025 and for full year fiscal 2025 that will be prepared in accordance with US GAAP.
The consolidated financial information included in this report for the full year fiscal 2024 and 2023 under IFRS have been derived from our audited consolidated financial statements included in our annual report for the year ended March 31, 2024 on Form 20-F.
Impact of US GAAP on net income
The following table provides a summary of the significant differences between US GAAP and IFRS on our net income for the four quarters of fiscal 2024 and the years ended March 31, 2024 and 2023.
| Three months ended | Year ended | ||||||||||||||||||||||||
| June 30, | September 30, | December 31, | March 31, | March 31, | March 31, | ||||||||||||||||||||
| (US$ thousands) | 2023 | 2023 | 2023 | 2024 | 2024 | 2023 | |||||||||||||||||||
| Net income as per IFRS | $ | 30,136 | $ | 57,813 | $ | 39,636 | $ | 12,563 | $ | 140,148 | $ | 137,308 | |||||||||||||
| Net impact of US GAAP adjustment | 1,828 | 1,629 | 1,901 |
1,971 |
7,329 |
1,114 |
|||||||||||||||||||
| Net income as per US GAAP | $ | 31,964 | $ | 59,442 | $ | 41,537 |
$ | 14,534 |
$ | 147,477 |
$ | 138,422 |
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The primary impact as a result of conversion to US GAAP on net income for fiscal 2024 and 2023 is outlined below under “US GAAP adjustments to net income and shareholders’ equity”.
US GAAP adjustments to net income and shareholders’ equity
An explanation of how the transition from IFRS to US GAAP has affected the Company’s net income for the four quarters of fiscal 2024 and the years ended March 31, 2024 and 2023 and shareholders’ equity as of March 31, 2022, March 31, 2023, June 30, 2023, September 30, 2023, December 31, 2023 and March 31, 2024 is set out in the following tables and the notes outlined below under “Notes to reconciliation of net income and shareholders’ equity”:
Reconciliation of net income
| Three months ended | Year ended | ||||||||||||||||||||||||||||
| June 30, | September 30, | December 31, | March 31, | March 31, | March 31, | ||||||||||||||||||||||||
| (US$ thousands) | Notes | 2023 | 2023 | 2023 | 2024 | 2024 | 2023 | ||||||||||||||||||||||
| Net income as per IFRS | $ | 30,136 | $ | 57,813 | $ | 39,636 | $ | 12,563 | $ | 140,148 | $ | 137,308 | |||||||||||||||||
| Lease | 1 | 569 | 384 | 483 | (4) | 1,432 | 875 | ||||||||||||||||||||||
| Employee benefits | 2 | (3) | (4) | (3) | (20) | (30) | 85 | ||||||||||||||||||||||
| Income tax expense | 3 | 1,262 | 1,249 | 1,421 | 1,995 | 5,927 | 154 | ||||||||||||||||||||||
| Total US GAAP adjustments | $ |
1,828
|
$ |
1,629
|
$ |
1,901
|
$ |
1,971
|
$ |
7,329
|
$ |
1,114
|
|||||||||||||||||
| Net income as per US GAAP | $ |
31,964
|
$ |
59,442
|
$ |
41,537
|
$ |
14,534
|
$ |
147,477
|
$ |
138,422
|
|||||||||||||||||
Reconciliation of shareholders’ equity:
| March 31, | March 31, | June 30, | September 30, | December 31, | March 31, | ||||||||||||||||||||
| (US$ thousands) | Notes | 2022 | 2023 | 2023 | 2023 | 2023 | 2024 | ||||||||||||||||||
| Shareholders’ equity under IFRS | $ | 754,003 | $ | 801,136 | $ | 760,578 | $ | 816,326 | $ | 821,983 | $ | 765,728 | |||||||||||||
| Lease | 1 | 20,280 | 19,714 | 20,216 | 20,195 | 20,965 | 20,847 | ||||||||||||||||||
| Employee benefits | 2 | — | — | — | — | — | — | ||||||||||||||||||
| Net total impact | 20,280 | 19,714 | 20,216 | 20,195 | 20,965 | 20,847 | |||||||||||||||||||
| Income tax expense impact on above transactions |
3(a)
|
(3,045) |
(3,744)
|
(3,844)
|
(3,924)
|
(4,027)
|
(4,191)
|
||||||||||||||||||
| Income tax expense impact on share based compensation expense |
3(b)
|
(3,153)
|
(5,049)
|
(1,003)
|
583
|
2,356
|
4,924
|
||||||||||||||||||
| Total US GAAP adjustments |
14,082
|
10,921
|
15,369
|
16,854
|
19,294
|
21,580
|
|||||||||||||||||||
| Shareholders’ equity under US GAAP | $ | 768,085 | $ | 812,057 | $ | 775,947 | $ | 833,180 | $ | 841,277 | $ | 787,308 | |||||||||||||
1. Lease
a. Under IFRS, the Company, as lessee, applied the single lease model that is similar to the accounting for a finance lease under US GAAP. The expense recognition presented a higher portion of the total expense earlier in the lease term as a combination of straight-line depreciation of the Operating lease right-of-use (‘ROU’) asset and the effective interest rate method applied to the lease liability results in a decreasing rate of interest expense recognition throughout the lease term.
Under US GAAP, there is dual classification lease accounting model for lessees: finance leases and operating leases. The Company, as a lessee, has classified all its leases as operating leases and recognized a single lease expense, including both a ROU asset depreciation component and an interest expense component, on a straight-line basis throughout the lease term.
b. ROU asset measurement as at April 1, 2019, the date of transition to IFRS 16 -“Leases” and ASC 842 – “Classification and accounting treatment of Lease”:
Under IFRS, the Company elected to measure ROU assets related to certain lease contracts as if IFRS 16 -“Leases” had always been applied (but using the incremental borrowing rate at the date of initial application). Under US GAAP, upon transition to ASC 842, Leases, the Company measures ROU asset at an amount equal to the lease liability.
c. Under IFRS, the Company is required to impute interest on refundable security deposit with lessor. Imputed interest is considered as part of ROU assets. Under US GAAP, the Company is not required to impute interest on refundable security deposit with the lessor.
2. Employee benefits
a. Actuarial gains and losses: Under IFRS, the Company recognized actuarial gains and losses in other comprehensive income and does not reclassify actuarial gains and losses to the statement of income. Under US GAAP, the Company recognizes actuarial gains and losses in other comprehensive income and amortizes it to net periodic benefit cost over the expected remaining period of service of the covered employees using the corridor method.
b. Past service cost: Under IFRS, the Company recognizes past service costs associated with a plan amendment in the statement of income immediately when the plan amendment occurs. Under US GAAP, past service cost associated with plan amendment is initially recognized in full in other comprehensive income in the reporting period in which the amendment occurs and subsequently amortizes into employee benefit cost over the expected remaining period of service of the covered employees.
3. Income tax expense
The difference in deferred tax as compared to IFRS is primarily on account of:
a. Tax impact of above US GAAP adjustments.
b. Treatment of share-based compensation expense, as below:-
Under IFRS, income tax effects of share-based awards is measured based on an estimate of the future tax deduction, if any, for the award measured at the end of each reporting period. When the expected tax benefits from equity awards exceed the recorded cumulative recognized expense multiplied by the tax rate, the tax benefit up to the amount of the tax effect of the cumulative book compensation expense is recorded in the income statement; the excess is recorded in equity. When the expected tax benefit is less than the tax effect of the cumulative amount of recognized expense, the entire tax benefit is recorded in the income statement.
Under US GAAP, deferred taxes are recorded as share-based compensation expense is recognized, as long as that particular type of instrument ordinarily would result in a future tax deduction. The measurement of the deferred tax asset is based on the amount of compensation cost recognized for book purposes. Changes in the stock price do not impact the deferred tax asset or result in any adjustments prior to settlement or expiration. Upon settlement or expiration, excess tax benefits and tax deficiencies (the difference between the recorded deferred tax asset and the tax benefit of the actual tax deduction) are recognized within income tax expense in the consolidated statement of income.
US GAAP impact on earnings per ordinary share, basic and diluted
The following table provides the impact of US GAAP adjustments on basic earnings per ordinary share in fiscal 2024 and 2023:
| Three months ended | Year ended | ||||||||||||||||||||||||
| June 30, | September 30, | December 31, | March 31, | March 31, | March 31, | ||||||||||||||||||||
| (US$) | 2023 | 2023 | 2023 | 2024 | 2024 | 2023 | |||||||||||||||||||
| Basic earnings per ordinary share under IFRS | $ | 0.63 | $ | 1.22 | $ | 0.84 | $ | 0.27 | $ | 2.97 | $ |
2.85 | |||||||||||||
| Net impact of US GAAP adjustments |
0.04
|
0.03
|
0.04
|
0.04
|
0.15
|
0.02
|
|||||||||||||||||||
| Basic earnings per ordinary share under US GAAP | $ | 0.67
|
$ | 1.25
|
$ | 0.88
|
$ | 0.31
|
$ | 3.12
|
$ | 2.87
|
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| Three months ended | Year ended | ||||||||||||||||||||||||||||||||
| June 30, | September 30, | December 31, | March 31, | March 31, | |
March 31, |
|||||||||||||||||||||||||||
| (US$) | 2023 | 2023 | 2023 | 2024 | 2024 | 2023 | |||||||||||||||||||||||||||
| Diluted earnings per ordinary share under IFRS | $ | 0.60 | $ | 1.16 | $ | 0.81 | $ | 0.26 | $ | 2.83 | $ | 2.70 | |||||||||||||||||||||
| Net impact of US GAAP adjustments | 0.04 | 0.04 | 0.04 | 0.04 | 0.16 | 0.04 | |||||||||||||||||||||||||||
| Diluted earnings per ordinary share under US GAAP | $ | 0.64 | $ | 1.20 | $ | 0.85 | $ | 0.30 | $ | 2.99 | $ | 2.74 | |||||||||||||||||||||
| Three months ended | Year ended | ||||||||||||||||||||||||||||||||
| June 30, | September 30, | December 31, | March 31, | March 31, | |
March 31, |
|||||||||||||||||||||||||||
| (US$) | 2023 | 2023 | 2023 | 2024 | 2024 | 2023 | |||||||||||||||||||||||||||
| Diluted weighted average ordinary shares outstanding | 50,259,257
|
49,650,152 |
49,083,704 |
48,252,531 |
49,570,081
|
50,877,769 |
|||||||||||||||||||||||||||
| Net impact of US GAAP adjustments* |
—
|
— |
— |
— |
(258,307) |
(353,825) |
|||||||||||||||||||||||||||
| Diluted weighted average number of equity shares under US GAAP | 50,259,257
|
49,650,152 |
49,083,704 |
48,252,531 |
49,311,774
|
50,523,944 |
|||||||||||||||||||||||||||
* Under IFRS, dilutive potential ordinary shares are determined independently for each period presented. The number of dilutive potential ordinary shares included in the annual (or year-to-date) period is not equal to a weighted average of the dilutive potential ordinary shares included in each interim computation. Under US GAAP, the calculation of diluted EPS for year-to-date (including annual) periods is based on the weighted average number of the shares included in each interim period for that year-to-date period.
The following table provides the impact of US GAAP adjustments on diluted weighted average number of equity shares in fiscal 2024:
| For the period from April 1, 2023 to | |||||||||||||||||
| June 30, | September 30, | December 31, | March 31, | ||||||||||||||
| (US$) | 2023 | 2023 | 2023 | 2024 | |||||||||||||
| Diluted weighted average ordinary shares outstanding | 50,259,257
|
50,009,844 |
49,755,508 |
49,570,082
|
|||||||||||||
| Net impact of US GAAP adjustments* |
—
|
(56,736) | (92,903) | (258,308) |
|||||||||||||
| Diluted weighted average number of equity shares under US GAAP | 50,259,257
|
49,953,108 | 49,662,605 | 49,311,774 |
|||||||||||||
*Under IFRS, dilutive potential ordinary shares are determined independently for each period presented. The number of dilutive potential ordinary shares included in the annual (or year-to-date) period is not equal to a weighted average of the dilutive potential ordinary shares included in each interim computation. Under US GAAP, the calculation of diluted EPS for year-to-date (including annual) periods is based on the weighted average number of the shares included in each interim period for that year-to-date period.
