- IBEX Global

THIS DOCUMENT IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION. If you are in any doubt about the contents of this
document, or the action you should take, you are recommended to seek immediately your own personal financial advice from your
stockbroker, bank manager, solicitor, accountant or other independent financial adviser duly authorised under the Financial Services and
Markets Act 2000 (as amended) (“FSMA”).
This document, which comprises an AIM admission document drawn up in accordance with the AIM Rules for Companies, has been issued in
connection with the application for admission to trading on AIM of the entire issued and to be issued ordinary share capital of the Company. This
document does not constitute an offer or constitute any part of an offer to the public within the meaning of sections 85 and 102B of FSMA. Accordingly
this document does not comprise a prospectus within the meaning of section 85 of FSMA and has not been drawn up in accordance with the
Prospectus Rules or approved by or filed with the Financial Conduct Authority or any other competent authority.
Application will be made for the New Ordinary Shares and the Existing Shares to be admitted to trading on AIM, a market operated by
London Stock Exchange plc (the “London Stock Exchange”). AIM is a market designed primarily for emerging or smaller companies to
which a higher investment risk tends to be attached than to larger or more established companies. AIM securities are not admitted to
the Official List of the United Kingdom Listing Authority. A prospective investor should be aware of the risks of investing in such
companies and should make the decision to invest only after careful consideration and, if appropriate, consultation with an independent
financial adviser. Each AIM company is required pursuant to the AIM Rules for Companies to have a nominated adviser. The nominated
adviser is required to make a declaration to the London Stock Exchange on Admission in the form set out in Schedule Two to the AIM
Rules for Nominated Advisers. The London Stock Exchange has not itself examined or approved the contents of this document.
The Directors, whose names appear on page 5 of this document, and the Company accept responsibility for the information contained in this document.
To the best of the knowledge and belief of the Directors and the Company (who have taken all reasonable care to ensure that such is the case), the
information contained in this document is in accordance with the facts and does not omit anything likely to affect the import of such information. All the
Directors accept individual and collective responsibility for compliance with the AIM Rules for Companies.
The whole of this document should be read. An investment in the Company is speculative. The attention of prospective investors is drawn in particular
to Part 2 of this document which sets out certain risk factors relating to any investment in Ordinary Shares. All statements regarding the Group's
business, financial position and prospects should be viewed in light of these risk factors.
IBEX GLOBAL SOLUTIONS PLC
(incorporated and registered in England and Wales with registered number 08462510)
PLACING OF 7,304,345 ORDINARY SHARES AT £1.47 PER ORDINARY SHARE
AND ADMISSION TO TRADING ON AIM
NOMINATED ADVISER AND JOINT BROKER:
JOINT BROKER:
LIBERUM CAPITAL LIMITED
CENKOS SECURITIES PLC
SHARE CAPITAL
(immediately following Admission)
Issued and fully paid ordinary shares of £0.01 each
Number
£
39,554,400
1.47
The New Ordinary Shares will rank pari passu in all respects with the Existing Shares and will rank in full for all dividends or other
distributions declared, made or paid on the Ordinary Shares after Admission. It is expected that Admission will take place and that trading
in the Ordinary Shares will commence on 28 June 2013. The Ordinary Shares are not traded on any recognised investment exchange and
no other applications have been made.
This document does not constitute an offer to sell or issue, or the solicitation of an offer to subscribe for or buy, Ordinary Shares to any
person in any jurisdiction to whom it is unlawful to make such offer or solicitation. In particular, this document is not for distribution in or into
the United States of America, Canada, Japan, the Republic of Ireland, the Republic of South Africa, Australia or New Zealand. The issue of the Ordinary
Shares has not been, and will not be, registered under the applicable securities laws of the United States of America, Canada, Japan, the Republic of
Ireland, the Republic of South Africa, Australia or New Zealand and the Ordinary Shares may not be offered or sold directly or indirectly within the United
States of America, Canada, Japan, the Republic of Ireland, the Republic of South Africa, Australia or New Zealand or to, or for the account or benefit
of, any persons within the United States of America, Canada, Japan, the Republic of Ireland, the Republic of South Africa, Australia or New Zealand.
The distribution of this document in certain jurisdictions may be restricted by law and therefore persons into whose possession this document comes
should inform themselves about and observe any such restriction. Any failure to comply with these restrictions may constitute a violation of the securities
laws of any such jurisdiction.
The Ordinary Shares have not and will not be registered under the US Securities Act of 1933 and may not be offered or sold within the United States.
Liberum Capital Limited and Cenkos Securities PLC who are authorised and regulated in the United Kingdom by the Financial Conduct Authority are
acting as nominated adviser and joint broker and joint broker respectively to the Company in connection with the proposed Placing and Admission and
will not be acting for any other person or otherwise be responsible to any person for providing the protections afforded to customers of Liberum Capital
Limited or Cenkos Securities PLC or for advising any other person in respect of the proposed Placing and Admission. Liberum Capital Limited's
responsibilities as the Company's nominated adviser under the AIM Rules for Companies and the AIM Rules for Nominated Advisers are owed solely to
the London Stock Exchange and are not owed to the Company or to any Director or to any other person in respect of such person's decision to acquire
shares in the Company in reliance on any part of this document. No representation or warranty, express or implied, is made by Liberum Capital Limited
or Cenkos Securities PLC as to any of the contents of this document (without limiting the statutory rights of any person to whom this document is issued)
and neither Liberum Capital Limited nor Cenkos Securities PLC have authorised the contents of any part of this document and they accept no liability
whatsoever for the accuracy of any information or opinions contained in this document or for the omission of any material information from this document
for which the Company and the Directors are solely responsible.
The information contained in this document has been prepared solely for the purposes of the Placing and Admission and is not intended to inform or
be relied upon by any subsequent purchasers of Ordinary Shares (whether on or off market) and accordingly no duty of care is accepted in relation to
them. Neither Liberum Capital Limited nor Cenkos Securities PLC have authorised the contents of any part of this document.
Certain statements made in this document are forward looking statements. Such statements are based on current expectations and are subject to a
number of risks and uncertainties that could cause actual results and performance to differ materially from any expected further results or performances,
express or implied, by the forward looking statements. Certain statements in this document are based on preliminary unaudited financial results and
management analysis and may differ from audited results. Factors that might cause forward-looking statements or statements based on unaudited
figures to differ materially from actual results include, among other things, regulatory and economic factors. The Company, Liberum and Cenkos each
disclaim any obligation to update any of the forward-looking statements or statements based on unaudited figures contained herein.
Copies of this document will be available free of charge during normal business hours on any day (except Saturdays, Sundays and public holidays) at
the offices of Mishcon de Reya, Summit House, 12 Red Lion Square, London WC1R 4QD from the date of this document until the date which is one
month from the date of Admission. Additionally, an electronic version of this Document will be available on the Company’s website, www.ibexcorp.com.
FORWARD LOOKING STATEMENTS
This document includes statements that are, or may be deemed to be, “forward-looking statements”.
These statements relate to, among other things, analyses and other information that are based on
forecasts of future results and estimates of amounts not yet determinable. These statements also relate to
the Group's future prospects, developments and business strategies.
These forward-looking statements can be identified by their use of terms and phrases such as “anticipate”,
“believe”, “could”, “estimate”, “expect”, “intend”, “may”, “plan”, “predict”, “project”, “will” or the negative of
those variations, or comparable expressions, including references to assumptions. These statements are
primarily contained in Part 1 of this document.
The forward-looking statements in this document, including statements concerning projections of the
Group’s future results, operations, profits and earnings, are based on current expectations and are subject
to risks and uncertainties that could cause actual results to differ materially from those expressed or implied
by those statements.
Certain risks to and uncertainties for the Group are specifically described in Part 2 of this document headed
“Risk Factors”. If one or more of these risks or uncertainties materialises, or if underlying assumptions prove
incorrect, the Group’s actual results may vary materially from those expected, estimated or projected. Given
these risks and uncertainties, potential investors should not place any reliance on forward-looking statements.
Forward-looking statements may and often do differ materially from actual results. Any forward-looking
statements in this document are based on certain factors and assumptions, including the Directors’ current
view with respect to future events and are subject to risks relating to future events and other risks,
uncertainties and assumptions relating to the Group’s operations, results of operations, growth strategy
and liquidity. Whilst the Directors consider these assumptions to be reasonable based upon information
currently available, they may prove to be incorrect. Prospective investors should therefore specifically
consider the risk factors contained in Part 2 of this document that could cause actual results to differ before
making an investment decision. Save as required by law or by the AIM Rules, the Company undertakes no
obligation to publicly release the results of any revisions to any forward-looking statements in this
document that may occur due to any change in the Directors’ expectations or to reflect events or
circumstances after the date of this document.
MARKET AND FINANCIAL INFORMATION
The data, statistics and information and other statements in this document regarding the markets in which
the Group operates, or the Group’s position therein, are based on the Group’s records or are taken or
derived from statistical data and information derived from the sources described in this document. In relation
to these sources, such information has been accurately reproduced from the published information and, so
far as the Directors are aware and are able to ascertain from the information provided by the suppliers of
these sources, no facts have been omitted which would render such information inaccurate or misleading.
Various figures and percentages in tables in this document have been rounded and accordingly may not
total. Certain financial data has also been rounded. As a result of this rounding, the totals of data presented
in this document may vary slightly from the actual arithmetical totals of such data. All times referred to in
this document are, unless otherwise stated, references to London time.
CURRENCIES
Unless otherwise indicated, all references in this document to: (a) “$”, “US Dollar”, “dollars”, are to the
lawful currency of the United States of America; (b) “GBP”, “£”, “pounds sterling”, “pounds”, “sterling”,
“pence” or “p” are to the lawful currency of the United Kingdom; (c) “Francs” is to the lawful currency of
Senegal; (d) “PP” is to the lawful currency of Philippines; and (e) “Rs” is to the lawful currency of Pakistan.”
2
CONTENTS
Placing Statistics and Expected Timetable of Principal Events
4
Directors, Secretary and Advisers
5
Definitions
6
Part 1
Information on the Group
9
Part 2
Risk Factors
30
Part 3
Financial Information
38
Part A – Accountant’s Report on the Historical Financial Information
of the Group for the three years ended 30 June 2012 and
six months ended 31 December 2012
39
Part B – Historical Financial Information of the Group for the three years
ended 30 June 2012 and six months ended 31 December 2012
41
Part C – Unaudited interim financial information of the Group for the six months
ended 31 December 2011 (with audited comparatives for the six months
ended 31 December 2012)
84
Part D – Unaudited interim financial information of the Group for the three months
ended 31 March 2013
96
Part 4 – Additional Information
109
3
PLACING STATISTICS AND EXPECTED TIMETABLE OF PRINCIPAL EVENTS
Placing Statistics
Placing Price
£1.47
Number of Existing Shares
32,250,055
Number of New Ordinary Shares
7,304,345
Number of Sale Shares
2,596,123
Number of Placing Shares
9,900,468
Enlarged Share Capital
39,554,400
Proportion of Enlarged Share Capital represented by Placing Shares
25 per cent.
Market capitalisation at the Placing Price
£58.1 million
Gross proceeds of the Placing
£14.6 million
Gross proceeds of the Placing attributable to the New Ordinary Shares
£10.7 million
Net proceeds of the Placing attributable to the New Ordinary Shares
Ticker
£9.3 million
IBEX
ISIN
GB00BBCRF441
SEDOL
BBCRF44
Expected Timetable of Principal Events
Event
Time and Date
Publication of this document
24 June 2013
Admission effective and dealings commence on AIM
8.00 a.m. on 28 June 2013
CREST accounts to be credited in respect of Placing Shares
8.00 a.m. on 28 June 2013
Despatch of definitive share certificates for Placing Shares
(where applicable) by
5 July 2013
Each of the times and dates set out above and mentioned elsewhere in this document may be
subject to change at the absolute discretion of the Company, Liberum and Cenkos without
further notice.
Exchange Rate
Prevailing exchange rate as the latest practicable date prior to the
publication of this document
4
£=US$1.546
DIRECTORS, SECRETARY AND ADVISERS
Directors
Stephen Kezirian (Chief Executive Officer)
Karl Gabel (Chief Financial Officer)
Muhammad Ziaullah Khan (“Zia”) Chishti (Non-executive Chairman)
Mohammedulla Khaishgi (Non-executive Director)
Tim Kelly (Non-executive Director)
John Leone (Non-executive Director)
Corporate Secretary
Jimmy Holland
Registered Office
3rd Floor
5 Lloyds Avenue
London
EC3N 3AE
Website
www.ibexglobal.com
Nominated Adviser
and Joint Broker
Liberum Capital Limited
Ropemaker Place, Level 12
25 Ropemaker Street
London
EC2Y 9LY
Joint Broker
Cenkos Securities plc
6.7.8 Tokenhouse Yard
London
EC2R 7AS
Legal advisers to the Group
Mishcon de Reya
Summit House
12 Red Lion Square
London
WC1R 4QD
Legal advisers to the Nominated
Adviser and Joint Brokers
Stephenson Harwood LLP
1 Finsbury Circus
London
EC2M 7SH
Auditors to the Group
Grant Thornton UK LLP
Grant Thornton House
Melton Street
London
NW1 2EP
Reporting Accountant
Grant Thornton UK LLP
30 Finsbury Square
London
EC2P 2YU
Registrar
Capita Registrars Limited
The Registry
34 Beckenham Road
Beckenham
Kent
BR3 4TU
Public Relations adviser
to the Group
Tavistock Communications Limited
131 Finsbury Pavement
London
EC2A 1NT
5
DEFINITIONS
Act
the Companies Act 2006
Admission
admission of the issued and to be issued share capital of the
Company to trading on AIM becoming effective in accordance with
the AIM Rules
AIM
AIM, a market operated by the London Stock Exchange
AIM Rules
the AIM Rules for Companies issued by the London Stock
Exchange and those of its other rules which govern the admission
to trading on, and the operation of companies on, AIM
Articles
the articles of association of the Company
Board or Directors
the board of directors of the Company as at Admission whose
names are set out on page 5 of this document
Cenkos
Cenkos Securities plc, of 6.7.8 Tokenhouse Yard, London,
EC2R 7AS, joint broker to the Company
certificated or in certificated form in physical paper form (that is, not in CREST)
City Code or Code
the City Code on Takeovers and Mergers
Company
IBEX Global Solutions PLC
Companies Acts
the meaning contained in section 2 of the Act
CREST
the relevant system (as defined in the UK CREST Regulations) in
respect of which Euroclear UK &Ireland Limited is the Operator (as
defined in the UK CREST Regulations)
CREST Regulations
the Uncertificated Securities Regulations 2001, as amended
CY
the calendar year ended 31 December
EBITDA
earnings before interest, tax, depreciation and amortisation
Enlarged Share Capital
the Existing Shares and the New Ordinary Shares
Existing Shares
the 32,250,055 Ordinary Shares in issue prior to the Placing
FCA
the Financial Conduct Authority
FY
the financial year of the Group ended 30 June
Group or IBEX
the Company and its direct and indirect subsidiaries
Historical Financial Information
historical financial information for the three years ended 30 June
2012 and the six months ended 31 December 2012 prepared
specifically for inclusion in this document
IBEX Inc.
TRG Customer Solutions, Inc. the main US operating subsidiary of
the Group
ISIN
International Securities Identification Number
6
Liberum
Liberum Capital Limited, of Ropemaker Place, Level 12,
25 Ropemaker Street, London EC2Y 9LY, nominated adviser and
joint broker to the Company
Lock-in and Orderly
Market Agreements
the conditional lock-in and orderly marketing agreements dated
24 June 2013 between (1) Liberum, (2) Cenkos, (3) each of the
Directors and TRGI, further details of which are set out in paragraph
12.3 of Part 4 of this document
London Stock Exchange
London Stock Exchange plc
New Ordinary Shares
the 7,304,345 new Ordinary Shares to be issued at the Placing
Price by the Company pursuant to the Placing
Ordinary Shares
ordinary shares of £0.01 each in the capital of the Company
Panel
the Panel on Takeovers and Mergers
Placees
the subscribers for Placing Shares pursuant to the Placing
Placing
the conditional placing by Liberum and Cenkos of the New Ordinary
Shares and the Sale Shares pursuant to and on the terms and
conditions set out in the Placing Agreement
Placing Agreement
the conditional agreement dated 24 June 2013 relating to the
Placing between (1) the Company, (2) the Directors, (3) TRGI, (4)
Liberum and (5) Cenkos, further details of which are set out in
paragraph 12.1 of Part 4 of this document
Placing Price
£1.47 per Placing Share
Placing Shares
the New Ordinary Shares and the Sale Shares
QCA
Quoted Companies Alliance
Registrars
Capita Registrars Limited
Reorganisation
means the reorganisation of the Group described in paragraph 11
of Part 4
Sale Shares
the 2,596,123 Existing Shares to be sold at the Placing Price
by TRGI pursuant to the Placing
Securities Act
the US Securities Act of 1933 (as amended)
Share Option Plans
(a) the employee share option scheme named the IBEX Global
Solutions PLC Share Option Plan intended to be adopted by the
Company following Admission and (b) the employee stock option
plan adopted between TRGI and the Company, details of which are
set out in paragraphs 4.1 and 4.2 of Part 4 of this document
Shareholders
holders of Ordinary Shares from time to time, following Admission
TIDM
Tradable Investment Display Mnemonic
TRG or The Resource Group
TRGI and its direct and indirect subsidiaries
TRGI
The Resource Group International Limited, a substantial
shareholder of the Company
7
uncertificated or in
uncertificated form
Ordinary Shares held in uncertificated form in CREST and title to
which, by virtue of the CREST Regulations, may be transferred by
means of CREST
United Kingdom or UK
the United Kingdom of Great Britain and Northern Ireland
UK Corporate Governance Code
the Corporate Governance Code on the principles of good
corporate governance and code of best practice published in
September 2012 by the Financial Reporting Council
US
the United States of America
£
pounds sterling, the lawful currency of the United Kingdom
$
dollar, the lawful currency of the United States of America
VAT
Value Added Tax
Note: Any reference to any provision of any legislation includes any amendment, modification, re-enactment or extension of it. Words
importing the singular include the plural and vice versa and words importing the masculine gender shall include the feminine or
neuter gender.
8
PART 1
INFORMATION RELATING TO THE GROUP
1. Overview
IBEX provides contact centre services and other business process outsourcing solutions to enterprise
customers. Over the past two years, IBEX has increased revenues at a compound annual growth rate of
16 per cent. and for the year ended 31 March 2013 IBEX generated unaudited revenues of $126.7 million.
IBEX employs approximately 8,000 staff in sixteen locations situated in five countries, and provides services
in eleven languages. IBEX has over 70 enterprise clients, with the Group’s five largest clients comprising
74 per cent. of FY 2012 revenues.
The Directors believe that the Group’s mix of business provides for revenue and profit stability and
predictability. Over 90 per cent. of the Group’s revenues derive from contact centre market segments that
involve extensive agent training, are essential to the Group’s clients’ ongoing corporate performance, and
can be difficult for clients to replace. Such segments include inbound customer support, inbound technical
assistance, and inbound sales order entry. Essentially all of the Group’s revenues derive from customer
contracts that provide for compensation based primarily on units of dedicated agent time, a measure that
is largely correlated to the Group’s costs.
The Group derives approximately 90 per cent. of its revenues from clients based in the US. The majority of
these revenues are served “onshore” from the Group’s eight locations in the US and the remainder is
served “offshore” with three locations in the Philippines and one in Senegal.
Corporations have increasingly chosen to outsource non-core business processes because of the potential
benefits of specialisation and cost efficiency provided by external vendors. During CY 2012, corporations
spent $290 billion globally on the outsourcing of business processes from remote locations. Of this total,
$58 billion was spent on the outsourcing of voice-based services such as customer service, technical
support and customer acquisition and retention, an amount forecasted to grow at a compound rate of over
5 per cent. for the next five years.
In 2011 and 2012, the Group initiated and pursued a strategy of increasing operating scale through organic
growth substantially in excess of industry levels, if necessary prioritising growth over short-term profitability.
As a consequence, in 2011 the Group reorganised its management team, recruiting Steve Kezirian as Chief
Executive Officer and Julie Casteel as Chief Sales and Marketing Officer with a mandate to focus on growth
from existing customers and the addition of new enterprise customers. This strategy has been a success
and the early investment in growth has resulted in an increase in revenues and profitability to the business
together with further opportunities to continue growth. In the first calendar quarter of 2013, Group revenues
increased 30.6 per cent. and EBITDA increased 116 per cent. respectively over the comparable quarter
in 2012.
The Group intends to continue its strategy of revenue growth through increased market share within its
current portfolio of clients together with the acquisition of new enterprise customers. At present, the Group
has a focus on US consumer technology and telecommunications companies. To diversify its revenues, the
Group intends to acquire clients in complementary industries such as health care and utilities and in
geographies such as Canada, the United Kingdom and France, where the Group either has incumbent
customers or possess language and delivery capability.
In conjunction with its strategy of increasing revenues, the Group has also focused on maintaining efficient
variable and fixed cost structures. The majority of the Group’s variable costs consist of labour expenses.
Accordingly, the Group focuses heavily on understanding the labour markets in which it operates and on
targeting wage and benefit levels for its staff that result in an optimal labour cost structure. Over the past
three years, this focus has contributed to an improvement in annual staff retention rates of over 20 per cent.
The Group has also pursued a strategy of minimising fixed overhead expenses by locating the majority of
its support functions in cost-efficient locations such as Pakistan and the Philippines, carefully managing
telecommunications costs and deploying internally developed and scalable management processes and
systems. The Directors believe that IBEX’s efficient cost structure is a key advantage for the Group.
9
2. Key Strengths
The Directors consider that IBEX has the following key strengths:
Management quality, depth, and alignment
The Group’s senior leadership team has over one hundred combined years of experience within the
contact centre industry. The Group’s Chief Executive Officer developed extensive experience in managing
large scale internal and outsourced contact centre operations during his positions as Vice President of
Telesales at Sprint Nextel Corporation and Chief Operating Officer of Cantor Gaming. The Group’s Chief
Sales and Marketing Officer has been in senior business development roles in the business process
outsourcing industry since 1990, and was responsible for new business development at one of IBEX’s
competitors as it grew from $30 million in annual revenues to over $1.7 billion over the course of her eleven
year tenure. The Group’s Chief Financial Officer and the Group’s Senior Vice President of North American
Operations each have over sixteen years of experience within IBEX or its predecessor businesses.
Investment in contact centre agent human capital
The Directors believe that the Group’s culture, compensation and benefit structure for its contact centre
agents represent a key differentiator within the industry. The Group maintains a deep commitment to its
core values of integrity, openness, and collegiality that the Directors believe help to facilitate the recruitment,
training and maintenance of an industry-leading workforce. IBEX has consistently sought to innovate in the
employee recruitment process, with particular emphasis on digital tools such as social media and online
recruitment, together with traditional channels of print and other broadcast media.
The Group has invested heavily in developing proprietary models and processes for correlating employee
compensation with employee retention and for setting efficient compensation levels consistent with
maximising its performance and profitability. This investment has resulted in a steadily improving employee
retention profile over the past three years while at the same time increasing Group margins and profitability
and improving the Group’s performance on its key accounts.
Performance focus
The Directors believe that the Group has deployed a culture of performance measurement and
management that has contributed significantly to the Group’s recent growth. The Group seeks to carefully
understand its clients’ principal operating metrics and then to manage its operations in order to optimise
those metrics. The Group maintains detailed daily, weekly, monthly and quarterly internal reviews of
performance and actively shifts operational focus in response to changing conditions. The Directors believe
that this focus has led to the Group’s clients perceiving IBEX as consistently meeting or exceeding key
client performance metrics which, in turn, has been a significant driver of the Group’s growth.
Durable and scalable incumbent client relationships
In the first calendar quarter of 2013 over 70 per cent. of the Group’s revenues derived from Fortune 500
companies that have been clients of the Group for over five years. Of the Group’s increase in revenues over
the last three years, approximately 45 per cent. is derived from net growth in business from existing clients
of the Group. The Directors believe that the Group’s enterprise clients place strong emphasis on the quality
and continuity of their customer-facing operations, consider IBEX in good standing and continue to
represent a substantial opportunity for the Group’s growth. All of the Group’s clients are contracted directly
with the Group, and, in aggregate, have a weighted average tenure with IBEX that exceeds five years.
Full service provider
The Group provides a full suite of contact centre services to its clients including 24/7 inbound and
outbound support, support in eleven languages, multi-site and multi-geography redundancy, an internally
redundant and global MPLS telecommunications network, call and screen recording and analysis, and
support for industry-standard technologies provided by Avaya, Cisco, Genesys, IEX/NICE and SATMAP.
The Group maintains experience in the telecommunications, technology, financial services, consumer retail,
healthcare, utility, media, travel and hospitality industries. The Group maintains deployments including
groups of shared agents to as many as 1,600 dedicated agents to certain significant clients. Accordingly,
the Directors believe that the Group favourably compares in the range and depth of its services relative to
its competitors.
10
Large market opportunity
The global outsourced contact centre industry represents a $58 billion per annum opportunity growing at
over 5 per cent. per year, with certain segments that are a focus of the Group such as offshore contact
centre outsourcing growing at over 25 per cent. annually. The outsourced industry is highly fragmented,
with the top 10 providers possessing less than a cumulative 30 per cent. market share. At present the
Group has less than a 1 per cent. market share within its industry. As such, the Directors believe that there
is significant opportunity for the Group to continue its rapid growth, both organically as the Group
continues to benefit from industry expansion and increasing market share, as well as inorganically through
selective acquisitions.
3. History and Background
The origins of the Group are in a $1.5 million investment in 2002 by TRG, a specialist investor in and advisor
to the business process outsourcing industry, in exchange for a 49 per cent. interest in a $7 million annual
revenue contact centre business named Alert Communications located in Los Angeles, California. At the time
of TRG’s investment, Alert Communications was recording annual EBITDA losses approaching $1 million,
reflecting an EBITDA margin of negative 15 per cent. Shortly after making its investment, TRG proceeded to
implement a program of relocating significant portions of Alert Communications agent and support staff to
lower-wage offshore locations. This program contributed towards moving Alert Communications to
profitability and validated a central assumption of TRG that substantial operational efficiencies existed within
the broader contact centre industry and could be captured through management focus and strength.
Subsequently, TRG proceeded to acquire and subsequently amalgamate a further six contact centre
businesses into the Group as it is constituted today. The seven businesses that are combined within IBEX
are:
Year
Business
Year of TRG transferred
Annual
lines
acquisition/
to IBEX revenue at
transferred
investment
control
transfer
to IBEX
Alert Communications
iSky1 (contact centre carve out)
2002
2004
2007
2007
$3 million
$17 million
Telespectrum
2004
2004
$60 million
Reese Teleservices
2005
2005
$40 million
Callworx
2005
2007
$3 million
Virtual World
2006
2013
$5 million
TRG Marketing Solutions
2009
2013
$2 million
Inbound customer care
Outbound customer satisfaction
surveys and inbound customer
care
Inbound and outbound contact
centre services for large
enterprises
Outbound customer acquisition
services for large enterprises
Outbound customer acquisition
services from the Philippines
Inbound contact centre
services for large enterprises
in Pakistan
Inbound and outbound contact
centre services for large
enterprises in the U.K.
1 Reflects contact centre operations of iSky only. iSky’s primary business was and continues to be customer experience
management.
At the time of their acquisition, both Reese Teleservices and Telespectrum had a substantial proportion of
their business mix devoted to outbound customer acquisition. This business mix was adversely impacted
by a combination of regulatory changes in the United States, such as federal “Do Not Call” legislation, and
increasing consumer resistance to outbound telemarking efforts. In addition, by 2006 it had become clear
that the technology and back office support platforms for both Reese and Telespectrum required significant
investment in order to remain competitive.
In its role as controlling shareholder, TRG responded to these shifts by operationally combining Reese
Teleservices, Telespectrum and Alert Communications and commenced the process of repositioning the
combined business as a global provider of high-value inbound customer care and technical support
contact centre services. The combination of the three businesses was branded TRG Customer Solutions
11
or “TRGCS”. The Resource Group acquired Callworx in the Philippines in 2005 to help establish a
significant offshore presence and transferred the operations to TRGCS management in 2007. By 2007 this
set of steps had resulted in TRGCS having a consolidated technology, support and management structure.
In the midst of the global financial crisis that started in 2008, TRGCS underwent a significant reduction in
revenues as several of its key customers reduced outsourced, outbound call volumes which, in turn,
substantially reduced profitability. TRGCS responded by further shifting its business mix towards more
stable, predictable and scaleable inbound customer care and technical support, closing five of its
unprofitable facilities, selling its sub-scale Canadian operations and substantially reducing its fixed costs.
By 2009, TRGCS had returned to profitability and by 2010 over 80 per cent. of its revenue was derived
from inbound customer care and technical support services.
Between 2010 and 2012, TRGCS made the strategic decision to invest heavily in management, a low cost
back office and support infrastructure, enhanced operational facilities and contact centre agents that would
support rapid revenue growth. Over this period, TRGCS recruited its current Chief Executive Officer, Steve
Kezirian and its current Chief Sales and Marketing Officer, Julie Casteel. Mr. Kezirian had substantial
experience in managing large scale internally and externally sourced inbound contact centres, having held
senior executive positions with Sprint Nextel, Tickets.com and Cantor Gaming. Similarly, Ms. Casteel had
demonstrated substantial new business development credentials, having served as EVP of Global Sales
and Marketing at Sitel, a competing provider of outsourced contact centre services, during its growth from
$30 million in annual revenues to over $1.7 billion in annual revenues.
In parallel, TRGCS renovated its existing network of seven continuing sites to adapt to its new business
model and opened three new sites that were specifically developed to serve enterprise-level inbound
contact centre services. Finally, over this period, TRGCS invested in the large scale recruitment and training
of contact centre agents to help execute against its rapidly growing revenue opportunity.
In March 2013, TRGCS rebranded itself as IBEX Global Solutions, completing its emergence as a global
provider of sophisticated, enterprise-scale contact centre solutions. Also in March 2013, TRG contributed
the balance of its contact centre assets to IBEX Global Solutions, gaining the Group significant operations
in the United Kingdom, Senegal, and Pakistan and establishing the Group’s final overall operating structure.
As of the time of this document, the Group has no material dependency on or obligations to TRG.
The Directors believe that, as a consequence of its efforts over the past five years, the Group has emerged
as a formidable competitor in the contact centre outsourcing industry, with a growing presence in the
broader business process outsourcing arena. Over the past two years, IBEX has increased revenues at a
compound annual growth rate of 16 per cent. and for the year ended 31 March 2013 IBEX generated
unaudited revenues of $126.7 million.
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4. Company Structure
IBEX is structured as a United Kingdom holding company owning a series of operating and billing
subsidiaries. A diagram of the corporate structure is shown below:
Note: The structure chart above does not, in all cases, reflect the actual corporate names of the relevant entities. They have been
named by their country of incorporation and operation for ease of reference.
* Minority holdings in these companies are held by third parties. Please see paragraph 1.7 of Part 4 for more information.
The IBEX corporate structure is designed so as to upstream all profitability into the holding Company in a
tax efficient manner. The main companies within the corporate structure are (current legal name mentioned
in parentheses wherever applicable):
Group Holding Company:
●
IBEX Global Solutions PLC. The IBEX holding company, which is seeking Admission to the London
Stock Exchange and which will receive proceeds raised from the offering. This holding company does
not have any client contracts or employ any IBEX staff.
Client Contracting and Onshore Service Delivery Entities:
●
IBEX US (TRG Customer Solutions Inc). – The US operating company, which holds all contracts
relating to North American clients and also employs all US based staff.
●
IBEX UK. (TRG Marketing Solutions Limited) – The UK operating company, which holds contracts
relating to UK clients and also employs all UK based staff.
●
Virtual World (Virtual World (Pvt) Limited) – This company holds all contracts relating to Pakistani
clients and employs all the Pakistan based staff dedicated exclusively to the domestic Pakistan
business.
Offshore Service Delivery Entities:
●
IBEX Philippines (TRG Philippines Inc) – This company employs all the IBEX Philippines employees. It
does not have any external client contracts and provides services to IBEX’s operating companies.
●
IBEX Global (Pvt) Limited – This company employs all the IBEX employees in Pakistan that provide
services to IBEX’s international operations. It does not hold any external client contracts.
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●
IBEX Senegal (The Resource Group Senegal S.A) – This company employs all the IBEX Senegal
employees. It provides services to IBEX’s operating companies and also has one domestic client.
IP and Offshore Service Billing Entities:
●
IBEX Luxembourg (IBEX Global Europe S.a.r.l.) – This company holds IBEX’s intellectual property. It
charges a royalty payment to the operating companies that utilize its intellectual property in order to
deliver services. Any profitability generated within this company is paid to the Company in the form of
dividends.
●
IBEX Cyprus (Lovercius Consultants Ltd.) – This company is a pass-through billing entity related to
offshore services. It contracts with various IBEX operating companies to provide offshore services and
sources these services from IBEX’s various offshore entities.
The Group structure was put in place as part of the Reorganisation, further details of which are set out in
paragraph 11 of Part 4.
5.
IBEX’s Business Process
Overview
The majority of IBEX’s clients are corporations that outsource some or all of their contact centre operations.
The Group’s specialisation is in the voice-based contact centre services area where it provides a complete
suite of voice-based services to clients. Some of these services include inbound technical support,
inbound customer care, inbound sales, inbound customer retention and outbound customer acquisition.
In a typical inbound voice-based engagement, customer calls made to the client’s toll free numbers are
routed (through leased lines sourced from a major telecommunications carrier) to IBEX’s PBX located at its
two data centres. Those data centres are connected to each of the Group’s contact centre facilities through
a private cloud. The call thus received at IBEX’s PBX is routed, via that private cloud, to the relevant group
of agents dedicated to that client/program and located within one of IBEX’s facilities. Concurrent with the
routing of the call (to the relevant agent), the Group’s centralised database servers trigger display on the
agent’s computer of software specific to the client program containing the call script as well as input
screens where the agent can enter information pertaining to the call.
In order to manage the large number of agents dedicated to each client program, the Group maintains an
operations management infrastructure. The central person within that infrastructure is the “supervisor”,
who is responsible for overseeing, motivating and coaching a group of twelve to eighteen agents and
provides coaching, motivation and monitoring to those agents. Each group of five to seven supervisors is
overseen by an “operations manager”, who has broad responsibility over the delivery of performance and
customer satisfaction goals. Within each facility, there are typically several operations managers who are
managed by a “site director” having responsibility over the entire facility.
The Group undertakes recruiting, training and quality monitoring programs with an objective of providing
an effective level of service delivery. It maintains a team of dedicated recruiters who specialise in identifying
and hiring appropriate talent for each client campaign. It also maintains a team of client-certified trainers
within each facility that work closely with each client so that appropriate baseline and client-specific training
is provided to each agent before going live on a client’s program. Once a client program is live, IBEX’s
network of quality assurance personnel monitor agent performance closely to adhere to client performance
objectives and to provide feedback to supervisors and operations managers for continuous agent
improvement. The quality assurance function for the Group is largely centralised and based in the Group’s
Philippines facilities, other than a few clients for whom quality assurance is carried out on-site at the facility
providing services to those clients.
The Group has a consolidated reporting and analytics database, IBEX Insight, that is intended to enable
the Group to provide a high quality of service delivery at cost-efficient levels. IBEX Insight tracks client
objectives such as Average Speed of Answer (the time it takes for an incoming call to be attended to by a
live agent) or Customer Satisfaction scores provided by third party monitoring services or sales metrics
such as Sales per Hour (in the case of sales-oriented programs). In addition, IBEX Insight also tracks cost
efficiency metrics such as Production to Pay (the percentage of payroll time that an agent is available to
take a call), Occupancy (the percentage of available time that an agent actually spends talking on the
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phone), or Attrition (the number of agents leaving the employee base each month at a given site/program,
expressed as a percentage of the overall agent population for that site/program). IBEX Insight is designed
to provide real-time data wherever possible and is intended to allow the Group’s operations management
to take early action in the event of any issues relating to effective service delivery.
The Group provides two other centralised support functions to ensure smooth service delivery. Its inbound
operations are heavily dependent upon a workforce management function, which is responsible for
determining staffing levels and schedules given call volumes provided by a client. The Group’s global
workforce management function is predominantly centralised and staffed out of the Group’s Philippines
facilities. The Group also maintains a pool of software developers, who are responsible for setting up and
maintaining the databases and reporting systems that support its call programs. The Group’s software and
technology function is largely centralised and provided from its Pakistan facilities.
The Group’s business process includes the client services function, which is distinct from the operations
organisation. Each large client has a dedicated client services executive that acts as the “voice of the
customer” within the Group and seeks to maximize client satisfaction, which in turn sets the stage for the
Group to increase its scope of work. This person is responsible for all day-to-day engagement with the
client and is tasked with ensuring that client requests are effectively carried out by the operations
organisation. The client service executive is also responsible for managing (from the Group’s side) the
quarterly business review process with the client, where the Group and the client discuss program
performance, near-term business outlook and value-added insights geared towards improving client-driven
metrics. The client services function has an independent reporting line into the Group CEO which allows
for a rapid feedback loop in the event of any client dissatisfaction.
The Group also offers an increasingly wide range of associated non-voice services (such as chat or email
support or back-office services such as fraud prevention or sales support). The revenues associated with
such services are relatively low at present but growing especially as the Group gains referenceable nonvoice clients.
Revenue model
The majority of the Group’s revenues are based upon a “price per minute” model where the Group charges
its clients a base rate per minute of time that an agent was actively servicing the client’s customers (more
commonly known as talk time, hold time and after-call work). Base rates are then adjusted up or down
depending upon the Group’s performance against metrics agreed with each client.
As the Group diversifies its service offering beyond outsourced contact centres, pricing structures become
more varied. The back office services offering, in particular, presents a wide variety of revenue models given
the less-uniform nature of services provided by each group of agents. In one instance, the Group has
adopted a cost-plus model where its client pays an overhead charge (which includes a margin for the
Group) over and beyond the direct cost of the employee. In another instance, where the contractual
arrangement is for the Group to manage the client’s captive centre, the Group is simply paid for its
management services (in operating the centres) whereas all other costs are paid directly by the client.
Key Operational Efficiency Drivers
A key operational efficiency consideration for the Group is to ensure that it staffs its call centres efficiently
given incoming call volumes and patterns. This is particularly important in the “price per minute” revenue
model where the workforce management responsibility is generally borne by the Group. In order to perform
effectively the Group attempts to protect itself against volume shortfalls by negotiating to have the client
confirm its forecast call volumes within 60-90 days before the start of each month and by having the client
pay for any significant shortfalls in forecast variances. Such arrangements vary from client to client; in some
cases, the client takes a different approach by requiring the Group’s agents (together with agents of all
other vendors servicing that client) to log directly into its own PBX, rather than delivering calls into the
Group’s PBX. In such cases, the client’s system will determine which vendor receives the next inbound call,
not the Group’s PBX, therefore the Group no longer controls workforce management. In such
circumstances it is however protected from significant volume and occupancy volatility because the client
compensates the Group to maintain a specified level of dedicated agents.
The largest portion of the Group’s variable costs is attributable to agent labour expenses. Accordingly,
efficient management of the cost of agent labour (including training costs) is key to the Group’s profitability.
15
The Group attempts to strike a balance between maintaining competitive compensation levels so as to
minimise agent attrition and target a high quality workforce that exceeds client metrics, but keeps
compensation at levels that enable the Group to remain profitable. The Directors believe that the Group is
known for agent compensation levels that are above average and further believe that this is a key
consideration in the Group’s revenue growth over the last two years. In particular, the Group is highly
focused on keeping attrition levels low, given that attrition has an outsized impact on Company profitability
both through the cost of replacement training and through foregone margin associated with a departing
employee. In addition, the Directors believe that employees with higher tenure would have a tendency to
perform better, thereby improving client metrics and therefore, the Directors believe, more easily growing
the Group’s share of the client’s outsourcing spend.
6. Overview of the Market
For the year ended 31 December 2012, corporations globally are estimated to have spent $290 billion on
business process outsourcing. Of this amount, approximately $58 billion was spent on outsourced voicebased contact centre services, whereas the remaining amount was spent on non-voice services such as
finance and accounting outsourcing, payroll and benefits administration and various types of industry
specific outsourcing such as insurance claims processing or bank mortgage processing or telecom/utilities
billing.
The global outsourced contact centre services spend of $58 billion is part of an overall global spend of
$234 billion in 2012 for all contact centre services (whether outsourced or in-house). While the proportion
of outsourcing within this overall figure is growing significantly, most corporations continue to use in-house
resources for their contact centre estate. HfS Research estimates that the global outsourced contact
centre market will grow by 5.5 per cent. per year to $73 billion by 2016.
Within the global outsourced contact centre services market, the North American region makes up
approximately 48 per cent. (or $28 billion per year) whereas the European region makes up a further 35
per cent. Within the North American region, 25 per cent. of services (by revenue) are provided from an
offshore location (primarily the Philippines, followed by India) while 75 per cent. are provided by agents
located within North America. In terms of industry breakdown, 65 per cent. of all outsourced contact centre
revenues correspond to the financial services and telecommunications/media industries. These industries
make up a large portion of the outsourced contact centre services industry because customer-facing
support within these industries is characterised by a high number of repetitive, transactional interactions
that are amenable to contact centre delivery. Other verticals within the outsourced contact centre services
industry that are experiencing high growth include the utilities and insurance industries.
Due to the lower billing rates for offshore service delivery (which bills on average at around 40-50 per cent.
of US based service delivery rates), the overall industry growth in dollar terms understates the true growth
in headcount terms given the increasing proportion of offshore agents. The Philippines offshore contact
centre market has, in particular, been expanding rapidly with $8 billion in revenues in 2012, corresponding
to 500,000 employees and growing at 25 per cent. per year. Of these, approximately 350,000 contact
centre employees serve the US market, compared to a US-based call centre workforce of nearly 4 million.
The Group’s principal addressable market has to date been the $28 billion outsourced North American
contact centre services market. The Group currently has a 0.5 per cent. share of this principal addressable
market. The Directors believe that the Group has the opportunity to increase this market share significantly
given its emphasis on quality of service delivery and the referenceability associated with its recent growth
within its two largest clients.
In addition to growing its principal addressable market, the Group intends to focus on two other market
segments. Firstly, it intends to diversify its contact centre reach by expanding into the European outsourced
contact centre market, particularly in the United Kingdom (where it already has a presence and a client
base) and France (where it has language specific delivery capabilities through its presence in Senegal).
Secondly, it intends to broaden its offering into other non-voice BPO areas, especially customer-facing
areas such as email support, chat and website administration but also finance and accounting and HR
administration services, where the Group has developed an initial presence over the last 12-18 months.
Both the above markets represent significant addressable opportunities, with the UK and French
outsourced contact centre market size estimated collectively at $10 billion per year, and the finance,
accounting and HR outsourcing market size estimated at $65 billion per year.
16
Finally, the Group has a niche presence in the domestic BPO market in Pakistan through its Virtual World
subsidiary which is the leading local outsourced contact centre provider. The market for BPO services
purchased by domestic corporations in Pakistan is below $50 million per year, with the Group having a 10
per cent. share at $5 million per annum.
Competition
The Group operates in a highly competitive environment. The global outsourced contact centre services
industry is characterised by large number of providers of significant scale. The largest provider (by
revenues) is Teleperformance with annual revenues of $3 billion and employee headcount of 128,000. The
20th largest global pureplay provider of outsourced contact centre services (EXL) has revenues of $450
million and headcount of 21,000. The above list does not include diversified professional services providers
that also offer outsourced contact centre services among their suite of offerings.
The top twenty providers constitute approximately 50 per cent. of the worldwide market (by revenues) for
outsourced contact centre services. The remaining 50 per cent. consists either of a large number of
providers that specialise in a particular industry or geography or a smaller number of diversified, global
providers generating below $400 million in annual revenue per annum. The Directors believe that
subsequent to its recent growth, IBEX would fit better within the latter category, which provides it with the
capability to compete head to head with larger vendors.
7.
Infrastructure, Technology, and Intellectual Property
Infrastructure
The Group provides voice-based services from a series of contact centre facilities across the globe as
detailed in the chart below. Facilities are primarily selected based upon availability of cost competitive and
well-educated agent populations. Within the US, those considerations drive the Group towards mid-sized
towns, often with some degree of depressed economic activity, that have sufficient critical population mass
to allow for recruitment of large groups of appropriately skilled labour. Outside the US, the Group’s principal
presence is in the Philippines, which is the largest and fastest growing contact centre services location
worldwide. Within the Philippines, the Group has historically focused its presence to the capital city of
Manila. However, given significant wage inflation and fixed cost pressures in Manila, the Group is actively
considering situating its next facility in a provincial city. The Group also has a sizeable presence in Pakistan.
The Pakistan location has limited international client facing activity given perception of country risk and the
Group has chosen to leverage the unsaturated labour pool for many of its in-house operations such as
technology and analytics. The Directors believe that the Group’s access to the Pakistan labour pool
provides it with a significant competitive advantage.
The chart below provides a list of the Group’s current contact centre locations.
17
The Group deploys various financial and operational arrangements that allow it to expand its facility
footprint in line with its revenues, without incurring significant up-front capital expenditures in the process.
Within the US, the Group aggressively negotiates with landlords as well as state governments to share the
cost of up front capital expenditures against long term lease or headcount commitments. The Group also
works actively with site selection firms who help identify facilities that are consistent with the Group’s
approach. Within the Philippines, where the market is more competitive and landlord-friendly, the Group
works with infrastructure leasing companies to vary the cost of upfront fit-out of new facility space.
Network
Central to the Group’s business is the use of a robust global telecommunications network that connects
its agents to callers and to the databases that access information related to each call. The Group’s global
network is based upon the design principle of maintaining all core infrastructure (such as its PBX, servers
and databases) within a centralised, secure data centre which is in turn connected to its various locations
that house its agent workforce. The Group maintains two data centres in Hampton, VA and Pittsburgh, PA;
these two facilities are designed to cut over to each other in the event of an outage in any one data centre.
Given the above design, each contact centre location only contains the computer desktops supporting
each agent workstation as well as routers and switches that support these computers.
For its telecommunications lines connecting the data centres to callers and agents, the Group uses two
types of circuits. For connectivity to callers, the Group has dedicated leased telecommunications lines that
connect its data centres to the telecommunications carrier switching network. Clients instruct their carriers
to forward their toll free numbers to these dedicated lines; similarly for outbound traffic, the calls placed by
the Group’s agents are routed to the carrier network through these dedicated lines. For connectivity to
agents, the Group links its data centres to its contact centre facilities through a private cloud, which is
effectively a virtual leased line network, with the benefit of near 100 per cent. uptime given routing flexibility
by the carrier in the event of downtime on any one circuit path. This private cloud also carries data traffic
used by agents in connection with servicing client calls, as well as general data traffic such as email. In
some of its international sites where the carrier does not offer private cloud services, the Group has opted
for dedicated leased lines connecting its facilities directly to its US data centres. The Group has backed up
its private cloud/leased line arrangements described above with dedicated internet access at each site as
well as at the data centres for emergency use. It has also connected each of its two data centres to each
other through a high capacity leased line.
The Group uses CenturyLink Inc, the third largest telecommunications carrier in the US, for its private cloud
services connecting its data centres to its facilities for both voice and data traffic. Its total capacity used for
its private cloud services is two OC-3 circuits (one at each data centres) corresponding to 310 Mb/s, with
capacity to carry up to 5,000 simultaneous voice and data calls. On the client access side, the Group has
leased telecommunications lines from Verizon, Centurylink and Windstream with a total capacity to carry
approximately 10,000 simultaneous incoming and outgoing calls to and from its clients.
The Group primarily uses an Avaya S-8700 PBX for its inbound calls, which is the market standard for
large-scale enterprise contact centre applications. This PBX is split between both the Group’s data centres
so as to prevent dependency on one data centre for effective operation of the PBX. The Group also uses
an Asterisk-based PBX for a small portion of its inbound client calls as well as for internal corporate
telephony. For its outbound traffic, the Group uses predictive dialers from a variety of software vendors and
based upon hardware provided by Dialogix. For its application and database servers, the Group uses
hardware provided by Dell, Hewlett Packard and EMC Corporation.
The Group adheres to high standards of data security, and in particular those required by financial services
related clients. All client data is housed within its secure data centres in the US, which comply with safe
harbour standards imposed by non-US clients. The Group maintains ISO-27001 standards in its data
security processes and has been certified as compliant with the standards laid down by the Payment Card
Industry (PCI) for the handling of credit card transactions.
Software
The Group employs a 65-person software development team at its facilities in Pakistan. This team allows
the Group not only to target a high quality of scripting and reporting capabilities (required by all outsourced
contact centre clients) but also to develop customised software solutions for both client and internal uses.
18
The Directors believe that this latter capability places the Group at an advantage compared to many of its
competitors, many of whom have limited custom software development capabilities.
The Group’s internally developed software consists of two types – (a) large-scale development efforts for
key contact centre applications, and (b) tactical tools developed to address specific client requests. Within
the first category, the Group has developed its own integrated reporting system called IBEX Insight, its own
recruitment management system called RMS, its own Interactive Voice Response platform called IBEX IVR
and its own workforce management system called IBEX Force. By developing these applications, the
Group has been able to avoid the expense of third party software licenses. Within the second category, the
Group has developed several software tools ranging from an Agent Whisper system (which provides
agents with advance indication of the type of incoming call – developed for one of its telecommunications
clients) to an auto-login tool (developed for another client) that reduces agent log-in time by avoiding timeconsuming manual log-ins to many client applications.
The Group also has an unlimited and perpetual right of use to several key software applications developed
by its principal shareholder TRGI. These applications include the Group’s core Enterprise Resource
Planning system called BPO Suite that provides combined human resources, payroll, procurement and
operations reporting and integrated into the Group’s financial systems. These applications also include a
network voice recorder (NVR), a CRM application, dialer software and the Group’s Asterisk based PBX
software. These applications, if procured from outside vendors, are estimated to cost approximately
$5,000 per seat in capital expenditures as well as on-going maintenance costs. The Group has a dedicated
team responsible for maintaining and customising these key applications.
IBEX also provides its clients with the option of enhancing their contact centre performance through
SATMAP, a technology provided by a company majority owned by TRGI. SATMAP uses artificial intelligence
and statistical pattern recognition technology to identify pairings between callers and agents most likely to
result in high performance. SATMAP then interfaces with IBEX's underlying telephony to assign calls to
agents in real time to enhance call outcomes. IBEX served as a launch customer for SATMAP in 2009 and
has extensive SATMAP deployment experience.
Intellectual Property
The Group’s intellectual property is in the form of internally developed software (as referred to above),
algorithms (supporting the above underlying software) and client databases. The Group protects its
intellectual property through a variety of methods including copyright and contractual obligations.
Confidential information and trade secrets, including details of algorithms and databases and sensitive
information about customers, are protected by proprietary information and invention agreements and nondisclosure agreements entered into by the Group and its employees and contractors. Confidential
information is also protected by non-disclosure agreements entered into by the Group and its partners and
through the terms and conditions of its contractual agreements with its clients.
IBEX has to date chosen to develop its intellectual property as trade secrets rather than as patents. The
Directors believe that this choice avoids the expense of pursuing a patent portfolio, the public disclosure
of which may reduce the Group’s competitive advantage. In addition, the Directors hold the view that
policing the use of patents among competitors is not a productive use of capital or time in a servicesoriented business. The Directors believe that the Group’s trade secrets and other intellectual property are
an important source of value and vigorously seek to expand and protect those intellectual property assets.
8. Clients
The Group currently has over 70 client relationships. In FY 2012, the Group’s five largest customers, each
of which are on the Fortune 500 list, accounted for approximately 74 per cent. of the Group’s revenues.
Clients from the telecommunications industry made up over 50 per cent. of the Group’s revenues while the
technology industry made up a further 28 per cent. 91 per cent. of the Group’s revenue in FY 2012 was
sourced from clients based in the United States with the remainder attributable to clients in Canada, the
United Kingdom, Pakistan and Senegal.
19
Profiles of some of the clients currently serviced by the Group are provided below:
Technical support – technology industry
The client is one of the leading technology companies in the world. The Group provides technical support
for North American callers that need to troubleshoot issues associated with devices manufactured by the
client. Most of the calls received by the Group are within the “Level 1” category representing calls of
moderate technical complexity. The Group also now provides an increasing number of “Level 2” support
for calls that represent an increased degree of technical complexity that Level 1 support is unable to
resolve. 80 per cent. of all calls for this client handled by the Group are within the Level 1 category and
agents undergo a minimum of four weeks of training before dealing with inbound calls.
The Group provides service delivery to this client from four centres located in the US. During the fourth
quarter of FY 2013 the Group is undergoing significant growth in the number of agents servicing this client.
The Group has provided services to this client since 2008.
Inbound customer service & service – telecommunications industry
The client is one of the top two telecommunications companies in the US. The Group provides customer
service for the client’s wireline segment, supporting a range of products from traditional landline telephone
service to its broadband offering. The customer service provided by the Group’s agents consists mainly of
responding to billing queries and addressing other account questions such as moving or installation. An
important component of the call is a cross-sale to a higher-value added service such as broadband where
the client continues to make significant investments in its network footprint.
The Group provides service delivery from eight centres in the US and the Philippines. Agents undergo an
extensive six to eight week training program for this client. The Group is in the process of ramping service
delivery for this client as it diversifies service delivery for the broadband segment from additional locations.
The Group has provided services to this client since 2004.
Customer retention – cable/satellite industry
This client is one of the largest cable/satellite service providers in the US. The Group provides customer
retention services where agents receive calls from existing customers that intend to cancel service. The
Group’s agents attempt to retain the customer by determining the reason for the intended cancellation,
formulating a solution for the issue where possible and occasionally providing financial incentives for the
customer to retain service. Once the customer confirms continuation of service, the agents also cross-sell
other services offered by the client.
The Group’s delivery location for this client is in the US. Agents on this program undergo ten weeks of
training, given the critical nature of service to the end client. The Group has provided services to this client
since 2012.
Outbound customer acquisition – hospitality industry
The client generates approximately $2 billion in revenue per annum and is a global leader in loyalty
management, managing several leading frequent flyer programs as well as building and managing
customised loyalty programs for its customers. The Group provides outbound customer acquisition
services for one of the client’s business units that offers membership services (such as identity theft
protection products or travel discount packages) to Canadian consumers. The client has formed
partnerships with Canadian financial institutions where it markets the above membership services products
to customers of those financial institutions. The Group’s agents make outbound calls to these customers
to market the client’s membership services products.
The Group provides customer acquisition services for this program from its centres in the Philippines, US
and in Senegal (for French language services in Canada) and is the exclusive provider of such services for
its financial institution partners. The Group has provided services to this client since 2002.
20
Inbound customer service – financial services industry
The client is one of the leading providers of pre-paid debit cards and corporate payroll cards aimed at the
under-banked consumer segment in the US. The Group provides customer service to customers of the
client that are inquiring about their balance or about the fee structure related to the card.
The Group provides customer service for this client from the Philippines. The program has stringent data
security requirements given that agents are handling debit card information. This company has been a
client of the Group since 2011.
Managed services – online game services industry
The client is one of the largest online game services providers in Europe. It has a substantial offshore
operation providing back-office services such as accounting, fraud monitoring and other administrative
services. During CY 2012, the Group negotiated a managed services arrangement with the client where it
took over the management of the client’s Manila operation in exchange for a management fee. While the
staff continue to be employed by the client, the Group has become responsible for the day to day
management of the operation. The Group’s responsibilities include the attainment of performance and cost
objectives as well as the provision of all administrative services associated with the employment of people.
This company has been a client of the Group since 2012.
9. Strategy
The Group underwent a strategic shift in mid-2011 when its Directors decided to pursue growth
opportunities aggressively and make underlying investments in such opportunities if required.
Prior to 2011 the Group’s primary focus was on cost and cash efficiency, with additional revenue
opportunities being realised if they did not place an undue cash and cost burden upon the Group. In so
doing, the Group developed a low cost overhead structure that allowed it to realise an EBITDA margin of
5.6 per cent. on revenues of $86.6 million for FY10 and yet offer a diversified suite of services, albeit with
limited experience of large-scale delivery.
The change in strategy was driven by the need to create defensible competitive positions by developing
strategic relationships with clients. To do so, IBEX needed to become a large-scale vendor that was well
integrated into the client’s core delivery, rather than a niche player that was more susceptible to business
cycle risks. In so doing, the Group would additionally realise the positive margin effect of larger scale, which
would build upon the operating leverage of a cost effective overhead platform.
The initial implementation of that growth strategy was a significant increase in the scale of the Group’s two
largest clients, who offered significant growth potential at the time of the strategic shift. As a result, the
Group’s revenues have increased by 47 per cent. for the first calendar quarter of 2013 against the
comparable quarter in CY 2010.
The Group aims to continue its push for growth, with the objective of attaining a top twenty position among
global contact centre outsourcers by annual revenue within the next five years. The core strategies for
achieving that growth are as follows:
●
Grow existing clients, especially those outside the current top two clients, by targeting a high
quality of service and thereby placing itself in a position of capitalising on available growth
possibilities;
●
Win new clients on a sustained basis, with the objective of winning one client each quarter;
●
Expand into the European outsourced contact centre services market – with focus upon the
United Kingdom and France, using as levers the Group’s current presence in Bristol and Senegal
respectively;
●
Continue the diversification into non-voice services, as initiated over the last twelve months; and
●
Selective acquisitions that accelerate the Group’s exposure to a specific geographical or
industry vertical.
21
Growth of existing client base
The Group’s budget is built upon the expansion of its current client base, particularly outside its top two
clients. Within the current client base, the Group has identified five clients (outside the top two clients) that
regularly purchase outsourced contact centre services at a level of over 500 agents per vendor (equivalent
to over $15 million per year). These key clients include the Group’s fourth largest client, which is a leading
provider within the cable/satellite services industry; its largest outbound services client, which is a top
twenty commercial bank in the US with over $80 billion in assets and a subsidiary of a leading global bank;
and the Group’s largest client in the hospitality industry, which is one of the leading global loyalty
management services providers. Within each of these clients, the Group’s current scale and scope of
services is a small proportion of the client’s overall spend on outsourced contact centre services. The
Group’s immediate focus is on providing consistent service delivery on its current base of business with
these clients and exceeding their performance objectives. At the same time, the Group is aiming to deepen
and broaden the extent of its relationships within these client organisations so that it is in a position to
convert strong performance on its current business into an expansion of its offering.
The Directors believe that the Company also has significant further expansion potential with its top two
clients, both in terms of on-going expansion of its current business and broadening into new services areas
and business units.
Win new clients
The Group primarily employs a direct sales method in soliciting new clients. The Group has a dedicated
sales force that is responsible for identifying business development opportunities and pursuing and closing
those opportunities. The Group hires sales executives not only for their overall business development
approach and rigour but also for their knowledge and relationships within specific industries and verticals.
New clients tend to start service at a relatively small scale and grow their presence depending on
performance. This pattern generally applies both to smaller clients as well as large, Fortune 100 clients.
Consequently, the Group places significant emphasis on the launch process with a new client and invests
in up-front arrangements related to client on-boarding. To meet its growth objectives, the Group aims to
add one new client every quarter with enterprise potential.
Expansion into new geographies
The Group intends to diversify its client base beyond its current US base. The two geographies it intends
to focus on are Canada and Western Europe (particularly the United Kingdom and France). The Group
currently has a client base and/or service delivery capabilities associated with each of these geographies
which makes the expansion relatively cost-efficient and without significant diversion of management
bandwidth. The immediate focus of the Group relating to each of these geographies is to leverage its
relationships with its current predominantly US client base in order to provide services they may require for
their operations in Canada and Western Europe. The Group is already in detailed discussions with two
existing clients in relation to their expansion in the United Kingdom (using the Group’s existing facility in
Bristol) and in France (using the Group’s French language facility in Senegal).
Diversification into non-voice services
Most corporations that have significant contact centre operations increasingly need to offer non-voice
customer facing services such as email support, live chat and website administration. In order to have a
complete suite of customer-facing services, the Group has placed an emphasis on offering these services.
Within the broader area of back office non-voice services, the Group has so far been opportunistic with
contractual relationships established with two clients that approached the Group on taking over portions
of their back office functions. For these two clients, the Group now manages delivery at a combined scale
of 500 agents. Given its successful experience in this area, the Group is in a position to initiate an organised
non-voice business development function. However, the Group will focus on this area once it has achieved
significant momentum in its primary areas of strategic focus in the voice-based contact centre services
space.
Acquisitions
Where appropriate and on a selective basis, the Group may facilitate growth by opportunistically acquiring
companies that have a geographic or industry vertical presence that the Group finds attractive. Although
22
the Group does not at this stage have specific acquisition targets identified, should the opportunity arise,
the Directors would consider making such acquisitions where the IBEX model can be promptly and
profitably deployed.
10. Financial Information and Current Trading
In order to make a proper assessment of the results and financial position of the Group, investors should
not rely solely on the summary information set out below but should read the whole of this document,
including the financial information set out in Part 3 of this document.
Provided below is summary audited consolidated historical financial information for the Group for the 3
years ended 30 June 2012 as well as the six months ended 31 December 2012 which have been extracted
without material adjustment from Part 3 of this document, prepared in accordance with International
Financial Reporting Standards as adopted by the European Union. Also presented below is (i) reviewed
income statement data for the Group which has been extracted without material adjustment from the
reviewed income statement for the quarter ended 31 March 2013 included in Part 3 of this document and
(ii) reviewed balance sheet data of the Group as at 31 March 2013 which has been extracted without
material adjustment from the reviewed balance sheet as at 31 March 2013 included in Part 3 of this
document. The historical financial information retrospectively combines the entities forming the current
Group structure as if the combination had been in effect since 1 July 2009.
Year ended
30 June
2010
$’000’s
Revenue
Gross profit
Operating profit/(loss)
Net assets
86,620
–––––––––––
16,658
–––––––––––
654
–––––––––––
21,955
–––––––––––
–––––––––––
Year ended
30 June
2011
$’000’s
97,118
–––––––––––
17,491
–––––––––––
(513)
–––––––––––
20,135
–––––––––––
–––––––––––
Six months Three months
Year ended
ended
ended
30 June 31 December
31 March
2012
2012
2013
$’000’s
$’000’s
$’000’s*
104,286
–––––––––––
13,554
–––––––––––
(2,339)
–––––––––––
18,121
–––––––––––
–––––––––––
66,585
–––––––––––
9,154
–––––––––––
759
–––––––––––
18,517
–––––––––––
–––––––––––
35,433
–––––––––––
6,191
–––––––––––
1,443
–––––––––––
6,443
–––––––––––
–––––––––––
* Unaudited results
The Directors believe that these results are a reflection of the investment in growth undertaken over the
previous 18 months.
Trading for the period from 31 March 2013 to the date of this document is in line with management’s
expectations. Consistent with the Group’s budget for FY 2013, there is significant continued growth
underway in the Group’s top two clients, with large training programs taking place from March to July 2013.
The Group is aiming to add additional margin to the baseline established in the first quarter of CY 2013
upon the completion of these training programs and in the second half of the CY.
Overall, the Directors continue to see further sales growth opportunities within the current and target
customer base and the Directors look forward to the rest of the financial year with optimism.
11. Board of Directors and Senior Management
Zia Chishti – Non-executive Chairman
Zia is the Chief Executive Officer and Chairman of The Resource Group International. He represents TRGI’s
75 per cent. interest in the Company. Zia has served as the Chairman and CEO of Align Technology
(NASDAQ: ALGN) which he led from inception to a more than $500 million public valuation. Zia has worked
at Morgan Stanley and McKinsey and serves on multiple corporate and non profit boards. Zia is a graduate
of Columbia University and earned an MBA from Stanford Graduate School of Business.
23
Stephen Kezirian – Chief Executive Officer
Steve has over 17 years of management experience with a focus on customer operations. At Cantor
Gaming he was responsible for the firm’s technology, sales and operations teams, helping drive the growth
from a single-site operation into a multi-location, distributed operating environment. Previously, he served
as the youngest VP/GM at Sprint Nextel, where he was responsible for all phone-based sales and sales
support operations with a global workforce of over 5,000 in seven countries. Prior to that Steve also had
managerial positions at Tickets.com, an internet focussed live event ticketing company. Steve has also
served in various positions at Morgan Stanley, McKinsey and JH Whitney. Steve has a B.A. in Economics
from Harvard University and an MBA from Harvard Business School.
Karl Gabel – Chief Financial Officer
Karl joined IBEX at the time of its acquisition of Telespectrum Worldwide, Inc. in 2004, where he was VP
of Finance and was instrumental in the financial restructuring of Telespectrum Worldwide, Inc. prior to its
sale. Karl has over 15 years of experience in the contact centre industry, commencing with his first role as
Director of Revenue at Telespectrum in 1997. Karl has a B.S. in Accounting from Penn State University and
MBA from St. Joseph’s University.
Tim Kelly – Non-executive Director
Tim Kelly is a non-executive director of the Company. Tim was most recently the President and Chief
Executive of Network Solutions, an internet enablement provider service small businesses and consumers.
Tim led the company through a period of growth and expanding profitability, and in November 2011, drove
the successful sale of the company to Web.com. Prior to Network Solutions, Tim enjoyed a successful
career at Sprint Nextel, as President of the Consumer Division and as Chief Marketing Officer. Tim was also
President of Tickets.com, an Internet-focused live event ticketing company. Tim graduated from the
University of Florida with a Bachelor's in Marketing, and earned his MBA from Nova Southeast University.
Mohammed Khaishgi – Non-executive Director
Mohammed is Chief Operating Officer of The Resource Group. He represents TRGI’s 75 per cent. interest
in the Company. Prior to joining The Resource Group in 2003, Mohammed was a Senior Director at Align
Technology, where he managed Align’s offshore contact centre and back office services operations. He
was previously a Senior Investment Officer at the International Finance Corporation (private sector
investment arm of the World Bank) where he was responsible for investments in the Asian
telecommunications and technology sectors. Mohammed has a B.S. degree in Electrical Engineering from
University of Engineering and Technology in Lahore, Pakistan, a B.A. degree in Philosophy, Politics and
Economics from the University of Oxford where he was a Rhodes Scholar and an MBA from Harvard
Business School.
John Leone – Non-executive Director
John Leone is a non-executive director of the Company. John Leone is the Managing Director of
PineBridge Investments, an investor in TRGI. John works on sourcing, negotiating and executing private
equity transactions in Europe, Latin America, the Middle East and Africa. Prior to this role, John was
General Counsel of PineBridge Investments’ Emerging Markets Private Equity operations. Earlier in his
career, John was an attorney at Kirkland & Ellis LLP where he focused on advising private equity clients.
John earned a Juris Doctor, with High Honors, from The George Washington University Law School where
he was a member of the Law Review, and a Bachelor of Arts, Magna Cum Laude, from the State University
of New York at Binghamton.
Senior Management
Julie Casteel – Chief Sales and Marketing Officer
Julie has responsibility for sales and marketing for the Group. Julie has over 25 years of experience in the
BPO sector, most recently at Sitel where she oversaw their growth from $30 million in annual revenues to
over $1.7 billion over the course of her 11 year tenure. Prior to joining Sitel, she was Senior Vice President
of Global Integrated Sales at EDS responsible for multiline technology and business process outsourcing
offerings. Julie has a B.S. degree in Biology from Texas A&M University.
24
Nadeem Elahi – Senior Vice President, International Operations
Nadeem is responsible for international operations for the Group. Nadeem has over 20 years of experience
in general management and business development. Nadeem joined IBEX in 2007, when he started Virtual
World (which is now part of IBEX) and also took on responsibility for managing IBEX’s international contact
centre operations provided from Pakistan. Prior to IBEX, Nadeem was a founder-member of TRG (IBEX’s
controlling shareholder) and was responsible for its North American portfolio from 2002 to 2006. He was
previously part of the Global Business Development Group at Terra Lycos and prior to that he co-founded
FTA Direct Inc., a provider of internet-based, supply-chain solutions for the global textiles industry. Nadeem
has a B.A. in Mathematics and Economics from Brown University and MBA from Harvard Business School.
Brian Hiener – Vice President, Philippines Operations
Brian joined the Group in 2011 as VP of Philippine Operations. Previously, Brian spent 23 years with
Convergys Corporation, in numerous leadership roles spanning sales, care and back-office operational
environments. Given his extensive experience within a global operating footprint, Brian managed the
design, implementation and operations for several large telephony, mobility and cable roll-outs
internationally for Convergys. Brian is based in Manila.
Jimmy Holland – General Counsel and Chief Human Resources Officer
Jimmy has significant experience in the contact centre industry and was previously General Counsel of
TeleTech Holdings, a top 5 outsourced contact centre provider. Jimmy also has significant experience in
private equity as well as in debt and equity transactions and restructurings during 23 years in private
practice with large US law firms. He has counselled executive management and boards of directors on
legal, fiduciary and governance matters. Jimmy has a B.S. (Mathematics) and an M.A. (English Literature)
from Louisiana State University and a Juris Doctor from the Vanderbilt University School of Law.
Vickie Leslie – Senior Vice President, Global Performance Support
Vickie Leslie joined the Group in 2012 as Senior Vice President of Operations Support, and brings more
than 24 years of management experience in sales, service, marketing, and operations. During her 12 years
with Sprint Nextel, Vickie served in several leadership roles across Vendor Management, Marketing, and
Operations Support, most recently managing the Quality, Customer Experience and Root Cause Analysis
teams across 75 locations. Previously, Vickie spent 11 years at Idelman Telemarketing and APAC in a
variety of positions including Director of Operations. Vickie earned her bachelor’s degree from Kansas State
University.
Greg Rajchel – Senior Vice President, North American Operations
Greg brings more than 16 years of leadership experience within the BPO space. His understanding of the
business helps to pro-actively maintain a solution focused environment and is a strong believer in the voice
of the customer. Greg has been part of IBEX since the acquisition of Reese Teleservices, Inc. in 2004,
where he worked for 7 years holding various leadership positions in operations and client management.
Greg has an Associate’s Degree in Business Administration from Butler Community College.
12. Employees
The Group’s corporate headquarters are in Washington, DC., US. The Group employs approximately 3,750
people in the US, comprising primarily of agents located in the Group’s eight US contact centre facilities in
the states of Tennessee, Virginia, Oregon, West Virginia and Pennsylvania. The Group employs 2,100
people in the Philippines at its three facilities; these employees do not include the 430 people employed
by the Group’s managed services client. In Pakistan, the Group employs over 1,600 staff, divided between
employees of Virtual World (Pvt) Ltd which provides services to domestic clients in Pakistan, and the
remainder dedicated to the Group’s international operations. The Group employs 400 people in Senegal
and 50 in the United Kingdom.
13. Corporate Governance
The Directors recognise the importance of sound corporate governance and confirm that, following
Admission, they intend to comply with the Corporate Governance Guidelines (as devised by the QCA in
consultation with a number of significant institutional small company investors), to the extent appropriate
25
for a company of its nature and size. The Board also proposes to follow, as far as practicable, the
recommendations on corporate governance of the QCA for companies with shares traded on AIM.
This approach to corporate governance was proposed by the QCA as it considers the UK Corporate
Governance Code to be inappropriate to many AIM companies. The Corporate Governance Guidelines
state that, “The purpose of good corporate governance is to ensure that the company is managed in an
efficient, effective and entrepreneurial manner for the benefit of all shareholders over the longer term.”
Following Admission, the Board will meet at least four times per year to review, formulate and approve the
Company group’s strategy, budgets, and corporate actions and oversee the Company’s progress towards
its goals. It has established audit and remuneration committees with formally delegated duties and
responsibilities and with written terms of reference. From time to time separate committees may be set up
by the Board to consider specific issues when the need arises.
Audit Committee
The Board has established an audit committee with formally delegated duties and responsibilities. The
audit committee will be chaired by John Leone and its other members are Mohammedulla Khaishgi and
Tim Kelly. The audit committee will meet formally at least four times a year and otherwise as required. It will
be responsible for ensuring that the financial performance of the Group is properly reported on and
monitored, including reviews of the annual and interim accounts, results announcements, internal control
systems and procedures and accounting policies, reviewing and monitoring the extent of the non-audit
services undertaken by external auditors and advising on the appointment of external auditors.
Remuneration Committee
The remuneration committee will be chaired by Tim Kelly and its other members are Mohammedulla
Khaishgi and John Leone. It is expected to meet at such times as required however not less than two times
a year. Executive Directors may attend meetings at the committee’s invitation. The remuneration committee
has responsibility for determining, within agreed terms of reference, the Group's policy on the remuneration
packages of senior executives and specific remuneration packages for Executive Directors. This includes
agreeing with the Board the framework for remuneration of the CEO, all other Executive Directors, the
Company Secretary and such other members of the executive management of the Group as it is
designated to consider. It is furthermore responsible for determining the total individual remuneration
packages of each Director including, where appropriate, bonuses, incentives, pension rights and
compensation payments. It is also responsible for making recommendations for grants of options under
the Share Option Plans.
The remuneration of Non-executive Directors is a matter for the Board. No Director may be involved in any
discussions as to their own remuneration. From time to time the remuneration committee may consult with
shareholders on remuneration matters, regardless of any regulatory requirement or governance guideline
recommendation to do so.
Nomination Committee
The nomination committee will be an ad hoc committee constituted by the Board as and when required.
When constituted it will be chaired by an independent member of the Board. It will have responsibility for
reviewing the balance of the Board including its skills and experience, the state of the business and its
leadership needs, and give full consideration to succession planning. It will also have responsibility for
recommending new appointments to the Board.
14. Reasons for the Placing and Use of Proceeds
The gross proceeds of the Placing receivable by the Group are expected to be approximately £10.7 million
and are intended to be used for the retirement of existing debt.
The Directors believe that Admission will assist IBEX in its development by (i) raising its profile in the sector,
particularly internationally; (ii) providing investment to fund growth; (iii) increasing access to capital should
further finance be required to expand the business of IBEX; and (iv) providing transparent incentives for
existing and future management and employees.
26
Pursuant to the Placing:
●
New Ordinary Shares will be placed with institutional investors, representing approximately 18 per
cent. of the Enlarged Share capital and raising gross proceeds for the Group of £10.7 million (before
expenses); and
●
Sale Shares will be placed with institutional investors, representing approximately 7 per cent. of the
Enlarged Share Capital and raising gross proceeds for TRGI of £3.8 million (before expenses).
TRGI has agreed to enter into lock-in arrangements restricting its ability to sell or otherwise dispose of its
shares, further details of which are set out in paragraph 12.3 of this Part 1.
15. Details of the Placing
Liberum and Cenkos have entered into the Placing Agreement with the Company, the Directors and TRGI.
Under the Placing Agreement, Liberum and Cenkos have conditionally agreed, as agents of the Company,
to use their reasonable endeavours to procure subscribers for the New Ordinary Shares and, as agent of
TRGI, purchasers for the Sale Shares, in each case at the Placing Price. The majority of the Placing Shares
are being placed with institutional investors.
Completion of the Placing is conditional, inter alia, on Admission taking placing on or before 28 June 2013
(or such later date as the Company, Liberum and Cenkos may agree), but in any event not later than 6.00
p.m. on 31 July 2013) and on the Placing Agreement becoming unconditional and not being terminated
prior to Admission.
The New Ordinary Shares will be issued credited as fully paid and the Sale Shares are fully paid. On
Admission, the Placing Shares will rank pari passu in all respects with the Existing Ordinary Shares
including the right to receive all dividends or other distributions declared, made or paid after Admission.
The New Ordinary Shares to be issued by the Company pursuant to the Placing will represent
approximately 18 per cent. of the Enlarged Share Capital and will raise approximately £10.7 million ($16.6
million) gross of expenses (approximately £9.1 million ($14.1 million) net of expenses) for the Company. The
Placing Shares (being the aggregate of the New Ordinary Shares and the Sale Shares) will represent
approximately 25 per cent. of the Enlarged Share Capital. At the Placing Price, the Company will have a
market capitalisation of approximately £58.1 million.
16. Selling Shareholders
TRGI has, pursuant to the terms of the Placing Agreement, agreed to sell the Sale Shares at the Placing
Price, having provided customary warranties to Liberum and Cenkos in respect of title and its ability to sell
the Sale Shares.
Additional information regarding restrictions on dealing by TRGI is contained in paragraph 12.3 of this
Part 1.
17. Dividend Policy
The Board intends to implement a dividend policy in the financial year following Admission and pay cash
dividends to Shareholders provided that the Company has sufficient distributable reserves and it is
appropriate to do so.
18. Share Dealing Code
The Company has adopted a share dealing code for Directors and key employees which the Directors
believe appropriate for an AIM-quoted company. The Company will comply with Rule 21 of the AIM Rules
for Companies relating to directors’ dealings and, in addition, will take all reasonable steps to ensure
compliance by the Group’s applicable employees.
27
19. Incentive Arrangements
The Company intends to attract, retain and incentivise key employees, officers and directors through the
Share Option Plans. Details of the key terms of the Share Option Plans and the outstanding options
granted under those plans are set out in paragraphs 4.1 and 4.2 of Part 4 of this document.
20. Lock-ins and Orderly Market Agreements
Under the terms of the Lock-in and Orderly Market Agreements, each of the Directors have agreed not to
dispose of any interest in any Ordinary Shares owned by them prior to the date which is 12 months from
the date of Admission and, for a further 12 month period, only to dispose of their Ordinary Shares through
Liberum or Cenkos during that period in such a way as to maintain an orderly market. In addition, TRGI
has agreed not to dispose of any interest in Ordinary Shares owned by them prior to the date which is six
months from the date of Admission and, for a further period of 18 months, only to dispose of their Ordinary
Shares through Liberum or Cenkos during that period in such a way as to maintain an orderly market.
Further details of these arrangements are set out in paragraph 12.3 of Part 4 of this document.
21. Admission, Settlement and Dealings
Application has been made for the Ordinary Shares to be admitted to trading on AIM. It is expected that
Admission will become effective and that dealings will commence in the Ordinary Shares on 28 June 2013.
The Placing Shares have not been marketed in whole or in part to the public in conjunction with the
application for Admission. No temporary documents of title will be issued. All documents sent by or to a
Placee, or at his discretion, will be sent through the post at the Placee’s risk. Pending the despatch of
definitive share certificates, instruments of transfer will be certified against the register of members of the
Company.
CREST is a paperless settlement system enabling securities to be evidenced otherwise than by certificate
and transferred otherwise than by written instrument. The Directors have applied for the Ordinary Shares
to be admitted to CREST with effect from Admission and CREST has agreed to such admission.
Accordingly, the settlement of transactions in the Ordinary Shares following Admission may take place
within CREST if individual Shareholders so wish. CREST is a voluntary system and holders of Ordinary
Shares who wish to receive and retain share certificates will be able to do so. Where Placees have
requested to receive their Ordinary Shares in certificated form, share certificates will be despatched by first
class post within 14 days of the date of Admission.
22. Taxation
Tax
Information regarding UK taxation with regard to certain holders of the Ordinary Shares is set out in
paragraph 18 of Part 4 of this document. That information is intended only as a general guide to the current
tax position under UK law. If you are in any doubt as to your tax position, you should contact your
independent professional adviser
Tax Indemnity
The Company undertook the Reorganisation, and as a consequence, IBEX Inc. has entered into an
indemnification agreement with TRG Holdings, LLC and TRGI whereby TRG Holdings, LLC and TRGI
indemnify IBEX Inc., the Company and IBEX Global Europe S.a r.l in respect of certain taxes (i) relating to
the Reorganisation and (ii) measured by or imposed on net income attributable to the period prior to
31 March 2013 or the period after 31 March 2013 as a result of having been a member of the same tax
group as TRG Holdings. Further details of these arrangements are set out in paragraph 12.8 of Part 4 of
this document and the attention of investors is drawn to Part 2 of this document which provides further
information on the tax risks faced by the Group.
28
23. Relationship Agreement
Immediately following Admission, TRGI will be entitled to exercise or control the exercise of voting rights in
respect of approximately 75 per cent. of the Enlarged Share Capital and will have the ability to exercise a
controlling influence on the business of the Company and may cause or take actions that are not in, or may
conflict with, the best interests of the Company or its Shareholders as a whole. Accordingly, the Company,
Liberum, Cenkos and TRGI have entered into a relationship agreement which regulates the relationship
between TRGI and the Company and ensures that the Company is capable of carrying on its business at
arm’s length from TRGI. The principal terms of the relationship agreement are summarised in paragraph
12.6 of Part 4 of this Document.
24. City Code
The Company is not expected to be subject to the City Code at Admission, as its place of central
management and control is based in the USA and its securities are not traded on any regulated market.
As a result certain protections that are afforded to shareholders under the City Code, for example in relation
to a takeover of a company or certain stake-holding activities by shareholders, do not apply to the
Company at Admission. With effect from 30 September 2013, this residency test will no longer apply to
companies which have their registered offices in the UK, the Channel Islands or the Isle of Man and which
have securities admitted to trading on a multilateral trading facility (such as AIM) in the UK. This will have
the effect of bringing the Company within the ambit of the City Code even though its place of central
management and control was outside the UK, the Channel Islands or the Isle of Man.
However, certain protections have been incorporated into the Articles to protect the shareholders in the
period prior to 30 September 2013 which mirror the provisions of Rule 9 of the City Code (“Relevant Code
Provisions”) to the extent that it is possible to do so. The Articles provide that an acquisition of shares that
increased the aggregate holding of the acquirer and its concert parties to shares carrying 30 per cent. or
more of the voting rights of the Company is prohibited. Similarly, any acquisition of shares by a person
holding (together with its concert parties) shares carrying between 30 and 50 per cent. of the voting rights
in the Company if the effect of such acquisition were to increase the person’s percentage of voting rights
is also prohibited. The Board has, under the Articles, broad rights to sanction the relevant shareholder in
respect of such acquisitions or to provide a cure for such breaches by Shareholder resolution. The main
difference between these provisions and the Relevant Code Provisions is that the Panel does not have any
jurisdiction to enforce these provisions, but as set out above this is due to change on 30 September 2013.
Details of the key provisions of the Articles may be found in paragraph 6 of Part 4 of this document.
25. Related Party Transactions
Pursuant to the Reorganisation, various related party agreements were entered into between TRGI and its
associated companies and various members of the Group, with a view to underlining the Group's
independence from TRGI. Details of such agreements are set out in paragraph 14 of Part 4 of this
document.
26. Further Information
Your attention is drawn to Parts 2 to 4 of this document that provide additional information on the Group
and the markets in which it operates. You are advised to read the whole of this document and in particular,
the attention of prospective investors is drawn to Part 2 of this document that contains a summary of the
risk factors relating to an investment in the Company.
29
PART 2
RISK FACTORS
An investment in Ordinary Shares involves a high degree of risk. Accordingly, prospective investors should
carefully consider the specific risks set out below in addition to all of the other information set out in this
document before investing in Ordinary Shares. The investment offered in this document may not be
suitable for all of its recipients. Potential investors are accordingly advised to consult a professional adviser
authorised under FSMA who specialises in advising on the acquisition of shares and other securities before
making any investment decision. A prospective investor should consider carefully whether an investment
in the Group is suitable in the light of his or her personal circumstances and the financial resources available
to him or her.
The Directors believe the following risks to be the most significant for potential investors. However, the risks
listed do not necessarily comprise all those associated with an investment in the Group and are not set out
in any particular order of priority. Additional risks and uncertainties not currently known to the Directors or
which the Directors currently deem immaterial may also have an adverse effect on the Group and the
information set out below does not purport to be an exhaustive summary of the risks affecting the Group.
In particular, the Group’s performance may be affected by changes in market or economic conditions and
in legal, regulatory and tax requirements.
If any of the following risks were to materialise, the Group’s business, financial condition, results or future
operations could be materially adversely affected. In such cases, the market price of the Group’s shares
could decline and an investor may lose part or all of his or her investment.
Risks specific to the Group
The Group has a relatively short operating history and operates in an evolving market
While some of the predecessor companies of the Group have been in existence for longer periods of time,
the Group began commercial operations as a combined entity in 2006. The Group therefore has a
comparatively short operating history which makes an evaluation of the Group’s business and prospects
difficult.
The Group cannot be certain that its business strategy will be successful or that it will successfully address
these or other risks that may become material. The Group’s failure to address any of the risks described
here could have an adverse effect on its business.
Client concentration
The Group’s business relies on relationships with a limited number of clients and any deterioration of the
Group’s relationship with any particular client could have a material adverse effect on the Group’s
performance.
Contractual liability
Not all the customer agreements that the Group has entered into contain limitation of liability or exclusion
clauses in its favour. In addition, certain customer agreements render the Group liable and responsible for
all acts of its appointed retailer agents. There is an obvious risk that any litigation or other claims under
such agreements could result in significant financial detriment to the Group.
Volume fluctuations from clients
Many of the Group’s clients have no minimum volume commitments and could therefore deliver calls well
under the level required to profitably utilise their dedicated group of agents. Even where minimum volume
commitments do exist, the penalties triggered by any under-delivery of call volume may not make up for
the loss in profitability resulting from such an under-delivery. The Group could therefore be adversely
affected from any fluctuations in delivered call volume from its clients.
30
Reliance on the facility from CapitalSource Bank
The Group has the benefit of, and is reliant upon, a revolving credit and security facility from CapitalSource
Bank. The facility is an “asset based” credit facility which means that the loans are advanced from time to
time based on whether or not there are sufficient eligible assets under the borrowing base to support
advances made under the facility. Therefore there is a risk that if the Group does not have sufficient assets
under the borrowing base to support such advances, the bank will not honour the requests for such
advances.
Tax
Prior to the Reorganisation, IBEX Inc. was, among other entities, included in TRG Holdings, LLC’s
consolidated federal income tax returns and certain state tax returns. As part of this arrangement, IBEX
Inc. paid the amount of its attributable corporate income tax (if any) to TRG Holdings, LLC. Whilst the
Group has no reason to believe that any member of the TRG Holdings, LLC tax consolidated group
underreported or inaccurately reported matters that could affect the consolidated tax returns, there is a risk
that a state or federal taxing authority could pursue any member of TRG Holdings, LLC’s tax consolidated
group for unpaid tax liabilities and, as such, IBEX could be held jointly and severally liable for any unpaid
tax liabilities, as determined by the IRS, pursuant to the law related to consolidated tax filings, irrespective
of whether such tax liability was the primary responsibility of IBEX or another company in TRG Holdings,
LLC’s historic tax consolidated group.
In addition, the Reorganisation has been structured as a tax-free spin-off and TRGI has received a legal
opinion that the Reorganisation should constitute a tax free spin off under Section 355 of the US Inland
Revenue Code. However, a successful challenge against the tax-free status of this may result in a tax claim
falling upon TRG Holdings, LLC and therefore indirectly on IBEX under the joint and several liability that
comes with being part of a consolidated tax group.
The Reorganisation resulted in the Group being comprised of an international group of companies and
contractual relationships which the Directors believe will provide a tax efficient structure for the Group going
forward. There is a risk that a tax authority in one or more of the jurisdictions in which the Group conducts
its business may deem that taxes are payable above those declared and anticipated by the Group. Such
unpaid tax liabilities would have the effect of increasing the effective tax rate of the Group and may have a
material adverse effect on the financial position of the Company.
IBEX has, however, entered into an indemnity agreement which provides, amongst other things, that TRG
Holdings, LLC and TRGI will indemnify the Group from and against claims for unpaid corporate income
taxes from federal and certain state taxing authorities up to the date of the Reorganisation. The tax
indemnity also covers any tax incurred in the Reorganisation.
In the event that a state or federal taxing authority were to pursue the Group for unpaid tax liabilities, and
that TRGI were unable or unwilling to satisfy such liabilities pursuant to the Indemnity Agreement, the Group
would remain liable for these unpaid tax liabilities which could have a material adverse effect on the financial
position of the Group. In settling unpaid tax liabilities, TRG Holdings, LLC or TRGI, may choose to use
accrued net operating losses from within the tax consolidated group to offset the tax liability. Such
utilisation of net operating losses may impact on the net operating losses available to the Group going
forward to offset against its own taxable profits and hence increase the effective tax rate of the Group.
As security for TRGI's obligations under the indemnity agreement, TRGI has entered into a negative pledge
and lock-in deed with the Company and IBEX Inc. which is described in paragraph 12.9 of Part 4 of this
document.
IBEX expects to benefit from an overall effective tax rate of 7 per cent. following Admission as a result of
the Reorganisation. There is a risk that amounts paid or received under intra-group arrangements in the
past or in the future could be deemed for tax purposes to be lower or higher, as the case may be, or be
disregarded for the purposes of calculating tax which may increase the Group’s taxable income or
decrease the amount of relief available to the Group with a consequential material negative effect on its
financial and operating results.
31
Controlling shareholder
Following Admission, approximately 75 per cent. of the Enlarged Share Capital will be held by TRGI.
Notwithstanding the Relationship Agreement between TRGI and the Company, described in more detail in
paragraph 12.6 of Part 4 of this document, TRGI will, therefore, be able to exercise significant influence
over the Company’s corporate actions and activities and the outcome in general of matters pertaining to
the Group, including the appointment of the Company’s board of directors and the approval of significant
change of control transactions.
Dependence on key executives and personnel
The Group’s development and prospects are dependent upon the continued services and performance of
its Directors, senior management and other key personnel. The loss of the services of any of the Directors,
senior management or key personnel or a substantial number of talented employees or key consultants,
could cause disruption or the loss of experience, skills or customer relationships of such personnel, which
could have a material adverse effect on the Group’s business, financial condition and results of operations.
The Group is heavily reliant on telecommunications systems
The Group relies heavily on the efficient and uninterrupted operation of its computer and communications
systems and those of third parties, including the Internet and its call centre communications infrastructure.
The ability of clients to dispatch calls to the Group’s data centres and the Group to connect calls from its
data centres to its contact centre staff affects the revenue and profitability of the Group and the
attractiveness of its services. Any disruption of the such telecommunications systems generally or locally
to the Group or any failure of current or new computer and communication systems could impact the
Group’s business.
The Group’s future business performance depends on the renewal and award of contracts
The Group’s success depends on its ability to maintain relationships and renew contracts with existing
clients and to attract new clients. A substantial portion of the Group’s future revenues will be directly or
indirectly derived from existing clients as well as new contracts. The current contracts of the Group are not
of a long term nature, therefore failure to renew or extend existing contracts or to gain new business may
adversely affect the Group’s future.
Terms and termination of contracts
The Group’s contracts are typically of a short duration with the initial term of most material contracts falling
within the next 12 months. Many of the contracts of the Group can be terminated on thirty days’ notice by
the client and should any such contracts be terminated the Group would lose the benefit of the contract.
The loss of a major client, which accounts for a significant amount of the Group’s business and revenue,
may have a material impact on the Group’s revenue and profitability. In addition, certain contracts contain
provisions enabling the client to unilaterally impose amendments to the terms and conditions upon which
it does business with the Group. Any such amendments may adversely impact the Group’s revenue and
profits.
The Group’s future business performance depends on continuing client outsourcing
The Group’s business is reliant on the outsourcing of at least some aspects of customer or technical
support or customer acquisition by consumer and business facing companies. Historically such activities
have been at least partially if not wholly outsourced to companies such as the Group. However, should a
shift be made toward insourcing, this may have an impact on the Group’s revenue and profitability.
Disruptive marketplace
New disruptive changes in the marketplace could lead to alternative models of customer or technical
support by consumer and business facing companies, such as web-based self-service. Unless the Group
is able to lead change and/or adapt its model to such changes, any change in market practices for
customer and technical support, on which the Group’s business depends, may have an impact on the
Group’s revenue and profitability.
32
Technological risks
The Group operates in an industry where competitive advantage is heavily dependent on technology and
systems. It is possible that an increase in technological developments (including but not limited to its clients
or competitors) may reduce the importance of the Group’s function in the market.
Staying abreast of technological or systems changes may require substantial investment. The Group’s
existing working practices, technology platforms, databases and know-how may become obsolete or may
be superseded by new technologies or changes in customer requirements, which may have a material
adverse impact on the Group’s performance.
Intellectual property protection
The Group has not applied for and does not intend to apply for any patent protection for its IBEX Insight
or IBEX Force proprietary technologies.
Any failure to protect the Group’s intellectual property may result in another party copying or otherwise
obtaining and using its proprietary technology without authorisation. Although the Group seeks to control
the maintenance, development and use of its intellectual property including know-how via its employment
and client contracts and other working practices, there can be no certainty that such measures will always
prove sufficient to preserve the integrity of the Group’s intellectual property. There may not be adequate
protection for the intellectual property in every country in which the Group’s services are made available or
in which its technology is developed and deployed and policing unauthorised use of proprietary information
is difficult and expensive. Due to the Group’s size and limited cash resources, it may not be able to detect
and prevent infringement of its intellectual property.
Any misappropriation of the Group’s intellectual property could have a negative impact on the Group’s business
and its operating results. Furthermore, the Group may need to take legal action to enforce its intellectual
property, to protect trade secrets or to determine the validity or scope of the proprietary rights of others.
Litigation relating to the Group’s intellectual property, whether instigated by the Group to protect its rights or
arising out of alleged infringement of third party rights, may result in substantial costs and the diversion of
resources and management attention and there can be no guarantees as to the outcome of any such litigation.
Such costs and diversion could materially and adversely impact the Group’s profitable operation.
The Group may face online security breaches including hacking and vandalism
The Group relies on encryption and authentication technology to provide the security necessary to effect
the secure transmission of information such as personal data, credit or debit card numbers, from end
customers to its clients, as well as in the continual development of its technology platform, including
algorithms, databases and processes, across multiple locations. The Group cannot guarantee absolute
protection against unauthorised attempts to access its IT systems, including malicious third party
applications that may interfere with or exploit security flaws in its products and services. Viruses, worms
and other malicious software programs could, among other things, jeopardise the security of information
stored in a client customer’s computer or in the Group’s computer systems or attempt to change the
internet experience of client customers by interfering with the Group’s ability to connect with them. If any
compromise in the Group’s security measures were to occur and the Group’s efforts to combat this breach
are unsuccessful, the Group’s reputation may be harmed leading to an adverse effect on the Group’s
financial condition and future prospects.
The Group also processes personal data (some of which may be sensitive) as part of its business. There
is a risk that such data could become public if there were a security breach in respect of such data and, if
one were to occur, the Group could face liability under data protection laws and lose the goodwill of its
clients and /or prospective or existing client customers, which may have an adverse effect on the Group’s
financial condition and future prospects.
The Group may be affected by an increase in governmental regulation of calling practices
The application or modification of existing laws or regulations, or adoption of new laws and regulations
relating to the manner in which companies engage with their clients, especially in the area of customer
acquisition over the telephone, could adversely affect the manner in which the Group currently conducts
its outbound calling business. The law continues to tighten in terms of the manner in which marketers can
reach out to prospective customers, with variants of a “Do Not Call” law being adopted in multiple
33
jurisdictions. The law is also evolving in relation to what data may be retained by the Group in relation to
users interaction with the Group’s advertising, websites and call centres. Such changes in the law could
adversely effect the Group’s financial condition and future prospects.
Operations in international markets
As the Group has some of its operations in overseas territories, the Group has and expects to become
increasingly subject to diverse local legal and regulatory requirements. Violations of these laws and regulations
could result in fines and/or criminal sanctions against the Group, its officers and employees, as well as
challenges to its ability to conduct its business and its ability to offer products and services in one or more
countries. Such challenges could delay or prevent potential acquisitions and materially damage the Group’s
reputation, brand, international expansion efforts, ability to attract and retain employees and operating results.
The Group’s success depends, in part, on its ability to anticipate these risks and manage these difficulties.
The Group is also subject to a variety of other risks and challenges in operating in various countries,
including but not limited to: challenges caused by distance, language and cultural differences; general
economic conditions in each country or region; fluctuations in currency exchange rates; regulatory
changes; political unrest, terrorism and the potential for other hostilities; longer payment cycles and
difficulties in collecting debts; overlapping tax regimes; the ability to repatriate funds held by international
subsidiaries at favourable tax rates; difficulties in transferring funds from certain countries; and reduced
protection for intellectual property rights in some countries. If the Group is unable to manage the
international aspects of its business, its operating results and overall business may be significantly and
adversely affected.
Expansion into new geographic markets
The Group’s future growth will be dependent on its ability to generate business in additional geographical
markets. Whilst the Directors believe that geographical expansion will prove rewarding, there is no
guarantee that the Group will be able to generate the required level of sales or profitability if the costs of
entry into and operating in these new geographical areas prove to be higher than expected. Other
anticipated barriers to entry include language and the legal and regulatory regimes of the geography
concerned. There is also no guarantee that expansion into additional geographical markets will not cause
disruption and harm to the Group’s existing business.
Expansion into new vertical markets
The Group’s future growth will also be dependent on its ability to generate business in additional industry
sectors or vertical markets. Whilst the Directors believe that such expansion will prove rewarding, there is
no guarantee that the Group will be able to generate the required level of sales or profitability if the costs
of entry into and operation in these new vertical markets prove to be higher than expected.
Notwithstanding the experience of senior and other members of the management team in other sectors
beyond the core US telecommunications, technology and media industries, the Group’s strategy of
diversification into additional sectors, including energy, utilities, financial services and other consumer
facing industries, could expose it to additional risks including but not limited to legal and regulatory risk,
market or economic risk and tax related risk.
If any unforeseen risk relating to expansion into new industry sectors were to materialise, or the Group’s
ability to react to and manage any risk were to prove inadequate, the Group’s business, financial
conditions, results or future operations could be materially adversely affected. There is also no guarantee
that expansion into additional vertical markets will not cause disruption and harm to the Group’s existing
business.
Litigation
Whilst the Group has taken, and the Group intends to continue to take, such precautions as it regards
appropriate to avoid or minimise the likelihood of any legal proceedings or claims, or any resulting financial
loss to the Group, the Directors cannot preclude the possibility of litigation being brought against the
Group.
34
There can be no assurance that claimants in any litigation proceedings will not be able to devote
substantially greater financial resources to any litigation proceedings or that the Group will prevail in any
such litigation. Any litigation, whether or not determined in the Group’s favour or settled by the Group, may
be costly and may divert the efforts and attention of the Group’s management and other personnel from
normal business operations.
Ability to recruit and retain skilled personnel
The Company believes that it has appropriate incentive structures to attract and retain the calibre of
employees necessary to ensure the efficient management and development of the Group. However, any
difficulties encountered in hiring and retaining appropriate employees and the failure to do so may have a
detrimental effect upon the trading performance of the Group. The ability to attract and retain new
employees with the appropriate expertise and skills cannot be guaranteed.
Exchange rate risk
Exchange rate fluctuations could have a material adverse effect on the Group’s profitability or the price
competitiveness of its products and services. There can be no guarantee that the Group would be able to
compensate or hedge against such adverse effects and therefore negative exchange rate effects could
have a material adverse effect on the Group’s business and prospects, and its financial performance.
Rapid growth
In order to manage the further expansion of the Group’s business and the growth of its operations and
personnel, the Group may need to expand and enhance its infrastructure and technology, and improve its
operational and financial systems and procedures and controls from time to time in order to be able to
match that expansion, as well as procure working capital financing. There can be no assurance that the
Group’s current and planned personnel, infrastructure, systems, procedures and controls will be adequate
to support its expanding operations in the future or that the Group will be able to source the working capital
financing required for further growth. If the Group fails to manage its expansion effectively, its business,
operations and prospects may be materially and adversely affected.
Competition
Current and potential competitors of the Group may have substantially greater financial, technical and
marketing resources, longer operating histories, larger customer bases, greater name recognition and
more established relationships than the Group and so may be better able to compete in the Group’s target
markets.
Dividends
The payment of dividends by the Group is subject to it having sufficient distributable income and cash for
such purpose, each of which will depend on the underlying profitability and cash generation of the Group.
Directors and other key personnel
The Directors and other key personnel have and may have in the future additional professional
responsibilities and as such, may experience conflicts of interest and demands on their time to the possible
detriment of the Group.
General Market Risks
Potential requirement for further investment
Any future expansion, activity and/or business development may require additional capital, whether from
equity or debt sources. There can be no guarantee that the necessary funds will be available on a timely
basis, on favourable terms, or at all, or that such funds if raised, would be sufficient. If additional funds are
raised by issuing equity securities, dilution to the then existing shareholdings may result. Debt funding may
require assets of the Group to be secured in favour of the lender, which security may be exercised if the
Group were to be unable to comply with the terms of the relevant debt facility agreement. The level and
timing of future expenditure will depend on a number of factors, many of which are outside the Group’s
35
control. If the Group is not able to obtain additional capital on acceptable terms, or at all, it may be forced
to curtail or abandon such planned expansion activity.
Current operating results as an indication of future results
The Group’s operating results may fluctuate significantly in the future due to a variety of factors, many of
which are outside its control. Accordingly, investors should not rely on comparisons with the Group results
to date as an indication of future performance. Factors that may affect the Group’s operating results include
increased competition, an increased level of expenses, technological change necessitating additional
capital expenditure, slower than expected sales and changes to the statutory and regulatory regime in
which it operates. It is possible that, in the future, the Group’s operating results may fall below the
expectations of market analysts or investors. If this occurs, the trading price of the Ordinary Shares may
decline significantly.
Transfer pricing
There is a risk that amounts paid or received under intra-group arrangements in the past and/or the future
could be deemed for tax purposes to be lower or higher, as the case may be, or be disregarded for the
purposes of calculating tax which may increase the Group’s taxable income or decrease the amount of
relief available to the Group with a consequential negative effect on its financial and operating results.
Force Majeure
The Group’s operations now or in the future may be adversely affected by risks outside the control of the
Group including labour unrest, civil disorder, war, subversive activities or sabotage, fires, floods, explosions
or other catastrophes, epidemics or quarantine restrictions.
Taxation
Statements in this document in relation to tax and concerning the taxation of investors in Ordinary Shares
are based on current tax law and practice which is subject to change.
The taxation of an investment in the Company depends on the specific circumstances of the relevant
investor. Changes in tax laws or their interpretation could affect the Group’s financial condition or
prospects. The nature and amount of tax which members of the Group expect to pay and the reliefs
expected to be available to any member of the Group are each dependent upon a number of assumptions,
any one of which may change and which would, if so changed, affect the nature and amount of tax payable
and reliefs available. In particular, the nature and amount of tax payable is dependent on the availability of
relief under tax treaties in a number of jurisdictions and is subject to changes to the tax laws or practice in
any of the jurisdictions affecting the Group. Any limitation in the availability of relief under these treaties, any
change in the terms of any such treaty or any changes in tax law, interpretation or practice could increase
the amount of tax payable by the Group.
AIM
AIM securities are not admitted to the Official List. An investment in shares quoted on AIM may carry a
higher risk than an investment in shares quoted on the Official List. AIM has been in existence since June
1995 but its future success and liquidity in the market for the Company’s securities cannot be guaranteed.
AIM is a market designed primarily for emerging or smaller companies to which a higher investment risk
tends to be attached rather than for larger or more established companies. A prospective investor should
be aware of the risks of investing in such companies and should make the decision to invest only after
careful consideration and, if appropriate, consultation with an independent financial adviser authorised
under FSMA who specialises in advising on the acquisition of shares and other securities.
Investment risk
An investment in a share which is traded on AIM, such as the Ordinary Shares, may be difficult to realise
and carries a high degree of risk. The ability of an investor to sell Ordinary Shares will depend on there being
a willing buyer for them at an acceptable price. Consequently, it might be difficult for an investor to realise
his/her investment in the Company and he/she may lose all of his/her investment.
36
Investors should be aware that, following Admission, the market price of the Ordinary Shares may be
volatile and may go down as well as up and investors may therefore be unable to recover their original
investment and could even lose their entire investment. This volatility could be attributable to various facts
and events, including the availability of information for determining the market value of an investment in the
Company, any regulatory or economic changes affecting the Group’s operations, variations in the Group’s
operating results, developments in the Group’s business or its competitors, or changes in market sentiment
towards the Ordinary Shares. In addition, the Group’s operating results and prospects from time to time
may be below the expectations of market analysts and investors.
Market conditions may affect the Ordinary Shares regardless of the Group’s operating performance or the
overall performance of the sector in which the Group operates. Share market conditions are affected by
many factors, including general economic outlook, movements in or outlook on interest rates and inflation
rates, currency fluctuations, commodity prices, changes in investor sentiment towards particular market
sectors and the demand for and supply of capital. Accordingly, the market price of the Ordinary Shares
may not reflect the underlying value of the Group’s net assets, and the price at which investors may dispose
of their Ordinary Shares at any point in time may be influenced by a number of factors, only some of which
may pertain to the Group while others of which may be outside the Group’s control.
If the Group’s revenues do not grow, or grow more slowly than anticipated, or if its operating or capital
expenditures exceed expectations and cannot be adjusted sufficiently, the market price of its Ordinary
Shares may decline. In addition, if the market for securities of companies in the same sector or the stock
market in general experiences a loss in investor confidence or otherwise falls, the market price of the
Ordinary Shares may fall for reasons unrelated to the Group’s business, results of operations or financial
condition. Therefore, investors might be unable to resell their Ordinary Shares at or above the Placing Price.
Illiquidity
There will have been no public trading market for the Ordinary Shares prior to Admission. The Ordinary
Shares may therefore be illiquid in the short to medium term and, accordingly, an investor may find it difficult
to sell Ordinary Shares, either at all or at an acceptable price. Further, the Company can give no assurance
that an active trading market for the Ordinary Shares will develop, or if such a market develops, that it will
be sustained. If an active trading market does not develop or is not maintained, the liquidity and trading
price of the Ordinary Shares could be adversely affected and investors may have difficulty selling their
Ordinary Shares. The market price of the Ordinary Shares may drop below the Placing Price. Any
investment in the Ordinary Shares should be viewed as a long term investment.
37
PART 3
HISTORICAL FINANCIAL INFORMATION OF THE GROUP
Introduction to the Historical Financial Information of the Group
IBEX Global Solutions Plc
IBEX Global Solutions Plc, (IBEX or the Company) was incorporated on 26 March 2013 as IBEX Global
Solutions Limited and was re-registered as a public limited company on 4 June 2013. The Company is
incorporated under the Companies Act 2006 with a financial year end of 30 June.
No separate historical financial information is presented on the Company as it was incorporated outside of
the period covered by the historical financial information.
Refer to paragraph 11 of Part 4 for details on the formation of the IBEX Group on 29 March 2013.
Entities included within the historical financial information
The historical financial information for the three years and six months ended 31 December 2012, as
presented in Part 3B includes the following material entities which were all held under common control by
The Resource Group International Limited throughout the period of the historical financial information:
●
TRG Customer Solutions Inc (trading as IBEX Global Solutions)
●
TRG Customer Solutions (Canada) Inc
●
TRG Marketing Solutions Limited
●
Virtual World (Private) Limited
●
TRG Philippines Inc
●
TRG Global Solutions (Philippines) Inc
The Resource Group International Limited will control the Group post the flotation.
Basis of preparation
As the formation of the Group occurred between entities under common control by The Resource Group
International Limited, the historical financial information retrospectively combines the above entities for all
periods presented (at carrying values) as if the combination had been in effect since the beginning of the
first period presented being 1 July 2009.
The historical financial information reports results of operations from 1 July 2009. Similarly, the historical
financial information presents the combined statements of financial position as of the beginning of the period
as though the assets and liabilities had been transferred at their carrying value at that date.
38
PART 3A
ACCOUNTANTS’ REPORT ON THE HISTORICAL FINANCIAL INFORMATION OF THE
GROUP FOR THE THREE YEARS ENDED 30 JUNE 2012 AND SIX MONTHS ENDED
31 DECEMBER 2012
The Directors
IBEX Global Solutions Plc
1700 Pennsylvania Avenue NW, Suite 560
Washington DC
CO 80104
24 June 2013
Dear Sirs
IBEX Global Solutions Plc – Historical Financial Information for the three years ended 30 June
2012 and six months ended 31 December 2012
We report on the historical financial information of IBEX Global Solutions Plc and its subsidiary undertakings
as set out in Part 3B which comprises the combined statements of comprehensive income, combined
statements of financial position, combined statements of changes in equity, combined statements of cash
flows and accompanying notes, for the three years and six months ended 31 December 2012. This historical
financial information has been prepared for inclusion in the AIM Admission Document dated 24 June 2013
of IBEX Global Solutions PLC (the “Admission Document”) on the basis of preparation and under the
accounting policies as set out in notes 2 and 3 to the historical financial information.
This report is required by Paragraph (a) of Schedule Two of the AIM Rules for Companies and is given for
the purpose of complying with that regulation and for no other purpose.
Responsibilities
Save for any responsibility arising under Paragraph (a) of Schedule Two of the AIM Rules for Companies to
any person as and to the extent there provided, to the fullest extent permitted by law we do not assume
any responsibility and will not accept any liability to any other person for any loss suffered by any such other
person as a result of, arising out of, or in connection with this report or our statement, required by and given
solely for the purposes of complying with Paragraph (a) of Schedule Two of the AIM Rules for Companies,
consenting to the inclusion in the Admission Document.
As described in note 2 of the historical financial information, the directors of IBEX Global Solutions Plc are
responsible for preparing the historical financial information on the basis of preparation set out in note 2 to
the historical financial information.
It is our responsibility to form an opinion on the historical financial information as to whether the historical
financial information gives a true and fair view, for the purposes of the Admission Document, and to report
our opinion to you.
Basis of opinion
We conducted our work in accordance with the Standards for Investment Reporting issued by the Auditing
Practices Board in the United Kingdom. Our work included an assessment of evidence relevant to the
amounts and disclosures in the historical financial information. It also included an assessment of the
significant estimates and judgements made by those responsible for the preparation of the historical financial
information and whether the accounting policies are appropriate to the entity’s circumstances, consistently
applied and adequately disclosed.
We planned and performed our work so as to obtain all the information and explanations which we
considered necessary in order to provide us with sufficient evidence to give reasonable assurance that the
39
historical financial information is free from material misstatement, whether caused by fraud or other irregularity
or error.
Opinion
In our opinion, the historical financial information gives, for the purposes of the Admission Document, a true
and fair view of the state of affairs of IBEX Global Solutions Plc and its subsidiaries as at 30 June 2010, 30
June 2011, 30 June 2012 and 31 December 2012 and of its profits, cash flows and changes in equity for
the years ended 30 June 2010, 30 June 2011, 30 June 2012 and for the six month period ended
31 December 2012, in accordance with the basis of preparation set out in note 2 to the historical financial
information.
Declaration
For the purposes of Paragraph (a) of Schedule Two of the AIM Rules for Companies we are responsible for
this report as part of the Admission Document and declare that we have taken all reasonable care to ensure
that the information contained in this report is, to the best of our knowledge, in accordance with the facts
and contains no omission likely to affect its import. This declaration is included in the Admission Document
in compliance with Schedule Two of the AIM Rules for Companies.
Yours faithfully
GRANT THORNTON UK LLP
40
PART 3B
HISTORICAL FINANCIAL INFORMATION OF THE GROUP FOR THE THREE YEARS
ENDED 30 JUNE 2012 AND SIX MONTHS ENDED 31 DECEMBER 2012
Combined Statements of Comprehensive Income
For the years ended 30 June 2010, 2011 and 2012 and six months ended 31 December 2012
Notes
Continuing operations
Revenue
Cost of sales
Gross profit
Selling, general and administrative
expenses
Other income
4
22
30 June
2010
$’000’s
30 June
2011
$’000’s
30 June 31 December
2012
2012
$’000’s
$’000’s
86,620
(69,962)
97,118
(79,627)
104,286
(90,732)
–––––––––––
–––––––––––
–––––––––––
–––––––––––
16,658
17,491
13,554
9,154
(16,154)
150
(18,004)
–
(15,895)
2
(8,395)
–
–––––––––––
Operating profit/(loss)
Other (expenses)/income:
Finance costs
Gain on disposal of assets
26
33
Profit/(loss) before income taxes
23
Income tax expense
27
Net profit/(loss) from continuing
operations
Discontinued operations
Income from discontinued
operations, net of income taxes
Total comprehensive income/(loss)
attributable to equity holders
–––––––––––
–––––––––––
(513)
(2,339)
759
(1,908)
3,491
(1,977)
7
(1,700)
–
(931)
–
–––––––––––
2,237
(450)
–––––––––––
29
–––––––––––
Net profit/(loss)
Other comprehensive (loss)/income:
Foreign currency translation
adjustment
–––––––––––
654
1,787
32
66,585
(57,431)
1,816
(148)
–––––––––––
1,668
–––––––––––
–––––––––––
–––––––––––
–––––––––––
(2,483)
279
–––––––––––
(4,039)
(160)
–––––––––––
(2,204)
–
–––––––––––
(4,199)
–
–––––––––––
(2,204)
89
–––––––––––
(2,115)
–––––––––––
–––––––––––
(4,199)
(36)
–––––––––––
The accompanying notes are an integral part of this historical financial information
41
(4,235)
–––––––––––
–––––––––––
–––––––––––
(172)
(63)
–––––––––––
(235)
–
–––––––––––
(235)
(61)
–––––––––––
(296)
–––––––––––
–––––––––––
Combined Statements of Financial Position
As at 30 June 2010, 2011, 2012 and 31 December 2012
Assets
Goodwill
Other intangible assets
Property, plant and equipment
Other non-current assets
Deferred tax assets
Total non current assets
Current assets:
Trade and other receivables
Deferred expenses – current portion
Due from affiliates
Cash and cash equivalents
Notes
30 June
2010
$’000’s
30 June
2011
$’000’s
5
6
7
8
27
8,644
1,014
5,827
2,356
18
8,644
742
4,145
1,955
–
9
28
10
Total current assets
Equity and liabilities
Share capital and reserves
Share capital
Additional paid in capital
Other reserves
Retained loss
Total equity
Non current liabilities:
Deferred tax liabilities
Deferred revenue – non-current
portion
Obligation under finance lease –
non current portion
Due to affiliates – non-current
portion
Retirement benefits obligations
Other
Total non current liabilities
Current liabilities:
Line of credit
Obligation under finance lease –
current portion
Trade and other payables
Deferred revenue – current portion
Current income tax liabilities
Due to affiliates – current portion
–––––––––––
–––––––––––
–––––––––––
15,486
15,549
14,952
15,867
1,440
11,295
570
18,522
1,426
12,346
828
18,844
1,510
14,187
1,925
24,408
907
14,338
2,454
–––––––––––
–––––––––––
–––––––––––
29,172
33,122
36,466
Total equity and liabilities
–––––––––––
48,608
–––––––––––
52,015
–––––––––––
42,107
–––––––––––
57,059
–––––––––––
–––––––––––
–––––––––––
–––––––––––
–––––––––––
–––––––––––
–––––––––––
–––––––––––
1,464
37,508
173
(17,190)
1,464
37,557
508
(19,394)
1,464
39,621
629
(23,593)
1,464
40,271
610
(23,828)
–––––––––––
–––––––––––
–––––––––––
–––––––––––
21,955
20,135
18,121
18,517
1,062
704
759
806
611
404
195
–
14
16
174
676
680
28
20
658
103
545
2,141
171
498
2,208
288
729
2,477
353
711
27
–––––––––––
–––––––––––
–––––––––––
–––––––––––
2,995
4,092
4,855
5,027
15
9,745
11,158
11,983
14,597
14
16
130
9,829
1,656
387
334
94
11,279
1,556
–
294
679
14,487
1,800
–
90
372
17,537
918
–
91
28
–––––––––––
–––––––––––
–––––––––––
22,081
24,381
29,039
–––––––––––
Total liabilities
8,644
612
3,456
2,240
–
17,859
47,031
11
12
8,644
706
3,948
2,251
–
–––––––––––
–––––––––––
Total assets
30 June 31 December
2012
2012
$’000’s
$’000’s
25,076
–––––––––––
47,031
–––––––––––
–––––––––––
–––––––––––
28,473
–––––––––––
48,608
–––––––––––
–––––––––––
–––––––––––
33,894
–––––––––––
The accompanying notes are an integral part of this historical financial information
42
52,015
–––––––––––
–––––––––––
–––––––––––
33,515
–––––––––––
38,542
–––––––––––
57,059
–––––––––––
–––––––––––
Combined Statements of Changes in Equity
For the years ended 30 June 2010, 2011 and 2012 and six months ended 31 December 2012
Issued,
subscribed
and paid-up
capital
$’000’s
Balance as at 1 July 2009
Profit for the year
Other comprehensive income
Total comprehensive income
for the year
Issue of share capital
Employee share based
payment options
Transactions with owners
As at 30 June 2010
Net loss
Other comprehensive
income
Total comprehensive income
for the year
Issue of share capital
Employee share based
payment options
Transactions with owners
As at 30 June 2011
Net loss
Other comprehensive loss
Total comprehensive income
for the year
Issue of share capital
Employee share based
payment options
Transactions with owners
As at 30 June 2012
Net loss
Other comprehensive loss
Total comprehensive income
for the period
Issue of share capital
Employee share based
payment options
Transactions with owners
As at 31 December 2012
1,464
–
–
Additional
paid in
capital
$’000’s
31,020
–
–
Other reserves
Foreign
Employee
currency
share translation
option plan
reserve
$’000’s
$’000’s
711
–
–
(1,356)
295
Retained
loss
$’000’s
Total
equity
$’000’s
(18,563)
1,373
–
13,276
1,373
295
–––––––––––
–––––––––––
–––––––––––
–––––––––––
–––––––––––
–––––––––––
–
–
–
6,488
–
–
295
–
1,373
–
1,668
6,488
–
–––––––––––
–
–
–––––––––––
6,488
523
–––––––––––
523
–––––––––––
–––––––––––
–––––––––––
1,464
–
37,508
–
1,234
–
–
–
–
–
–––––––––––
–
–––––––––––
(1,061)
–
89
–––––––––––
–––––––––––
–––––––––––
–––––––––––
–
–
–
49
–
–
89
–
–
–––––––––––
–
–
–––––––––––
49
246
–––––––––––
246
–––––––––––
–––––––––––
–––––––––––
1,464
–
–
37,557
–
–
1,480
–
–
–
–––––––––––
–
–––––––––––
(972)
–
(36)
–––––––––––
–––––––––––
–––––––––––
–––––––––––
–
–
–
2,064
–
–
(36)
–
–
–––––––––––
–
–
–––––––––––
2,064
157
–––––––––––
157
–––––––––––
–––––––––––
–––––––––––
1,464
–
–
39,621
–
–
1,637
–
–
–
–––––––––––
–
–––––––––––
(1,008)
–
(61)
–––––––––––
–––––––––––
–––––––––––
–––––––––––
–
–
–
650
–
–
(61)
–
–
–––––––––––
–
–––––––––––
1,464
–––––––––––
–––––––––––
–
–––––––––––
650
–––––––––––
40,271
–––––––––––
–––––––––––
42
–––––––––––
42
–––––––––––
1,679
–––––––––––
–––––––––––
–
–––––––––––
–
–––––––––––
(1,069)
–––––––––––
–––––––––––
The accompanying notes are an integral part of this historical financial information
43
–
–––––––––––
–
–––––––––––
(17,190)
(2,204)
–
–––––––––––
(2,204)
–
–
–––––––––––
–
–––––––––––
(19,394)
(4,199)
–
–––––––––––
(4,199)
–
–
–––––––––––
–
–––––––––––
(23,593)
(235)
–
–––––––––––
(235)
–
–
–––––––––––
–
–––––––––––
(23,828)
–––––––––––
–––––––––––
523
–––––––––––
7,011
–––––––––––
21,955
(2,204)
89
–––––––––––
(2,115)
49
246
–––––––––––
295
–––––––––––
20,135
(4,199)
(36)
–––––––––––
(4,235)
2,064
157
–––––––––––
2,221
–––––––––––
18,121
(235)
(61)
–––––––––––
(296)
650
42
–––––––––––
692
–––––––––––
18,517
–––––––––––
–––––––––––
Combined Statements of Cashflows
For the years ended 30 June 2010, 2011 and 2012 and six months ended 31 December 2012
Notes
Cash flows from operating activities:
Cash (used in)/generated from
operations
29
Interest paid
Taxes paid
30 June
2010
$’000’s
30 June
2011
$’000’s
(4,942)
(1,908)
231
2,146
(1,977)
(628)
–––––––––––
–––––––––––
30 June 31 December
2012
2012
$’000’s
$’000’s
1,504
(1,700)
(457)
–––––––––––
(647)
(931)
(151)
–––––––––––
Net cash used in operating activities
(6,619)
(459)
(653)
(1,729)
Cash flows from investing activities:
Purchases of property and
equipment
Additions to intangible assets
Proceeds from sale of assets
(1,798)
(415)
5,328
(921)
(313)
–
(463)
(312)
–
(673)
–
–
–––––––––––
Net cash generated from/(used in)
investing activities
Cash flows from financing activities:
Repayments under financial
agreements
Borrowings on line of credit
Repayments on line of credit
Grants received
Capital contributions from parent
undertaking
Payments on capital lease
obligations
Cash and cash equivalents at
the end of the period
(775)
(673)
(6,693)
9,745
–
674
–
1,413
–
627
–
11,983
(11,158)
514
–
2,614
–
57
–
–
2,064
650
(159)
(849)
(303)
–––––––––––
–––––––––––
–––––––––––
–––––––––––
3,393
1,881
2,554
3,018
94
70
(29)
(87)
–––––––––––
–––––––––––
–––––––––––
–––––––––––
(17)
258
1,097
529
587
–––––––––––
10
–––––––––––
(1,234)
Net cash generated from financing
activities
Net (decrease)/increase in cash
and cash equivalents
Cash and cash equivalents at
the beginning of the period
–––––––––––
3,115
(333)
Effect of exchange rate changes
on cash and cash equivalents
–––––––––––
570
–––––––––––
–––––––––––
570
–––––––––––
828
–––––––––––
–––––––––––
828
–––––––––––
The accompanying notes are an integral part of this historical financial information
44
1,925
–––––––––––
–––––––––––
1,925
–––––––––––
2,454
–––––––––––
–––––––––––
Notes to the Historical Financial Information
30 June 2010, 2011, 2012 and 31 December 2012
(1) Nature of the business
IBEX Global Solutions Plc, (IBEX or the Company) was incorporated on 26 March 2013 as IBEX Global
Solutions Limited and was re-registered as a public limited company on 4 June 2013. The Company is
incorporated under the Companies Act 2006 with a financial year end of 30 June.
No separate historical financial information is presented on the Company as it was incorporated outside of
the period covered by the historical financial information.
Refer to Paragraph 11 of Part 4 for details on the formation of the IBEX Group on 29 March 2013.
IBEX Group is a global portfolio of companies in the contact center and related business process outsourcing
(BPO) business operating from the United States, Philippines, United Kingdom, Pakistan and Senegal.
Service offerings include customer care support, business and consumer inbound and outbound telesales
and technical support services. IBEX Group also offers enabling technology solutions including Interactive
Voice Response (IVR).
(2) Basis of preparation
The combined historical financial information for the three years and six months ended 31 December 2012
has been prepared in accordance with the requirements of the AIM Rules and in accordance with this basis
of preparation. The basis of preparation describes how the combined historical financial information has
been prepared in accordance with International Financial Reporting Standards as adopted by the European
Union (IFRS as adopted by the EU) except as described below.
As the formation of the Group occurred between entities under common control by The Resource Group
International Limited throughout the period of the historical financial information, the historical financial
information retrospectively combines the following material entities for all periods presented (at carrying
values) as if the combination had been in effect since the beginning of the first period presented being 1 July
2009.
●
TRG Customer Solutions Inc (trading as IBEX Global Solutions)
●
TRG Customer Solutions (Canada) Inc
●
TRG Marketing Solutions Limited
●
Virtual World (Private) Limited
●
TRG Philippines Inc
●
TRG Global Solutions (Philippines) Inc
The historical financial information reports results of operations from 1 July 2009. Similarly, the historical
financial information presents the combined statements of financial position as of the beginning of the period
as though the assets and liabilities had been transferred at their carrying value at that date. Financial
statements and historical financial information presented for the prior period are also retrospectively adjusted
to furnish comparative information.
IFRS’s as adopted by the EU do not provide for the preparation of combined financial information when the
Company does not control its subsidiaries during the period of the historical financial information and
accordingly in preparing the combined historical financial information certain accounting conventions
commonly used for the preparation of historical financial information for inclusion in investment circulars as
described in the Annexure to SIR 2000 (Investment Reporting Standard applicable to public reporting
engagements on historical financial information) issued by the UK Auditing Practices Board have been
applied. In addition to the above departure the application of these conventions result in the following material
45
departures from IFRS’s as adopted by the EU. In other respects IFRS’s as adopted by the EU has been
applied:
–
as the combined historical financial information has been prepared on a combined basis the Company
is unable to measure earnings per share. Accordingly the requirement of IAS 33 –Earnings per Share
– to disclose earnings per share, has not been complied with; and
–
the combined historical financial information does not constitute statutory accounts within the meaning
of section 434 of Companies Act 2006 and is not a set of general purpose financial statements under
paragraph three of IFRS 1 – First Time Adoption of International Financial Reporting Standards and
consequently the Company does not make an explicit and unreserved statement of compliance with
IFRS as adopted by the EU. A company is only permitted to apply the first-time adoption rules of IFRS
1 in its first set of financial statements where such a unreserved statement has been made. Although
such a statement has not been made here, the combined historical financial information has been
prepared as if the date of transition to IFRS was 1 June 2009, the beginning of the first period
presented, and the requirements of IFRS has been applied since that date
The Directors of the Company are responsible for preparation of this historical financial information.
(3)
Summary of significant accounting policies
(a)
Basis of combination
All significant intercompany balances and transactions have been eliminated upon combination. The
following subsidiaries of the Company have been excluded from combination on the grounds that they
are immaterial to the Group:
o
IBEX Global Private Limited
o
The Resource Group Senegal SA
(b)
Basis of measurement
This historical financial information has been prepared on the basis of the historical cost convention.
(c)
Functional and presentation currency
Items included in the financial statements of each of the IBEX entities are measured using the currency
of the primary economic environment in which the entity operates (‘the functional currency’).
The functional currency for each entity included in the combined historical financial information is as
follows:
Entity
Functional currency
IBEX Inc.
TRG Customer Solutions (Canada) Inc
TRG Marketing Solutions Limited
Virtual World (Private) Limited
TRG Philippines Inc/TRG Global Solutions (Philippines) Inc
United States Dollar
Canadian Dollar
Great Britain Pound
Pakistan Rupee
Philippine Peso
The historical financial information is presented in United States Dollars, being the Group’s presentation
currency.
(d)
Foreign currency translation
The results and financial position of all the IBEX entities that have a functional currency different from
the presentation currency of IBEX are translated into the presentation currency of the Group as follows:
(i)
assets and liabilities are translated at the closing exchange rate at the year end;
(ii)
income and expenses are translated at the average exchange rate; and
(iii)
all resulting exchange differences are recognised as a separate component of equity.
46
On combination, exchange differences arising from the translation of the net investment in a foreign
subsidiary are taken to other comprehensive income. When a foreign subsidiary, branch or operation
is sold, exchange differences that were recorded in equity are recognised in profit and loss in the
combined statement of comprehensive income.
(e)
Foreign currency transactions
Foreign currency transactions of the IBEX entities are translated into their respective functional
currencies at the rates of exchange approximating to those prevailing on the date of transaction.
Monetary assets and liabilities in foreign currencies are retranslated into their respective functional
currencies at the rates of exchange approximating to those prevailing at each year end. Exchange
gains and losses are included in the profit and loss within selling, general and administrative expenses.
(f)
Segment reporting
The Group has one operating segment being the provision of contact center and related business
process outsourcing services.
The single operating segment has been identified on the basis of internal reports that are regularly
reviewed by the Chief Operating Decision Maker to allocate resources and assess performance.
Executive management, being the executive leadership team, are considered to be the Chief Operating
Decision Makers.
(g)
Revenue recognition
Revenue is measured at the fair value of consideration received or receivable excluding rebates,
discount and related taxes.
Revenue from call center services is recognised as the services are performed on the basis of the
number of billable hours or other contractually agreed metrics.
Revenue from inbound and outbound telephonic and internet based communication services that are
customised to the customers’ needs is recognised at the contractual rates as services are provided.
Revenue for the initial training that occurs upon commencement of a new client contract is deferred if
that training is billed separately to a client. Training revenue is then amortised on a straight-line basis
over the life of the client contract as it is not considered to have a standalone value to the customer.
The related incremental direct expenses are deferred and charged to selling, general and administrative
expenses on a straight line basis over the life of the client contact as the related revenue is recognised.
These incremental direct expenses relate directly to each contract, generate or enhance resources
that will be used in satisfying performance obligations in the future and are expected to be recovered
in full.
(h)
Grants
Government grants are recognised at fair value where there is a reasonable assurance that the grant
will be received and the Group will comply with all attached conditions.
Government grants relating to costs are recognised in profit or loss in the combined statements of
comprehensive income over the period necessary to match the corresponding costs that are intended
to be compensated. These are netted off against the relevant costs in the profit and loss.
Government grants relating to property and equipment are deducted from the assets carrying value
resulting in a lower depreciation charge over the life of the asset.
(i)
Goodwill
Goodwill arising as a result of a business combination represents the excess of the cost of the business
combination over the Group’s interest in the net fair value of identifiable assets and liabilities of the
acquired business at the date of acquisition. Goodwill is initially recognised as an asset at cost and
subsequently measured at cost less impairment in value, if any.
47
Goodwill is tested for impairment on an annual basis and also when there is an indication of impairment.
Impairment losses on goodwill are not reversed. On disposal of an entity, the attributable amount of
goodwill is included in the determination of the profit or loss on disposal.
Goodwill is allocated to cash-generating units for the purpose of impairment testing. The allocation is
made to those cash-generating units or groups of cash-generating units that are expected to benefit
from the business combination in which the goodwill arose.
(j)
Intangible assets
Software
Software which can be separately identifiable is capitalised as an intangible asset at cost of acquisition
and then amortised over their estimated useful life of 3 years on a straight line basis.
Trademarks
Trademarks considered as intangible assets are capitalised at cost of acquisition. Trademarks with an
indefinite useful life are not amortised but are tested for impairment annually.
Patents
Patents are capitalised at cost of acquisition and amortised over their estimated useful life of 4 years
on straight line basis.
Intangible assets are stated at cost less accumulated amortisation and impairment in value, if any.
Amortisation is included within depreciation and amortisation in cost of sales and selling and
administrative expenses. Useful lives of intangible assets, other than goodwill, are reviewed at each
year end and adjusted if the impact on amortisation is significant.
Gains and losses on the disposal of intangible assets are taken to profit or loss in the combined
statement of comprehensive income. Subsequent expenditure is capitalised only when it increases
the future economic benefits embodied in the specific asset to which it relates. All other expenditure,
including expenditure on internally generated intangible assets which do not meet the IAS 38 criteria
as development costs, is recognised in profit or loss within the combined statement of comprehensive
income as incurred.
(k)
Property, plant and equipment
Property, plant and equipment are recorded at historical cost reduced by the value of grants received
that are used to acquire the property, plant and equipment, where applicable. Depreciation and
amortisation are provided using the straight line method over the estimated useful lives or the shorter
of estimated useful life or lease term for leased property.
33% (or period
of the lease if shorter)
Leasehold improvements
Furniture and fittings
Computers, communication and office equipment
Vehicles
20%
20% – 50%
20%
Expenditures for maintenance, repairs and improvements that do not prolong the useful life of an asset
are charged to operations as incurred. Additions and improvements that substantially extend the useful
life of the asset are capitalised. Any tenant allowance received is recognised as deferred income or
reduces the value of property and equipment.
An item of property and equipment is derecognised upon disposal or when no future economic benefits
are expected from its use or disposal. Gains and losses on disposals are determined by comparing
the sale proceeds with the carrying amount of the relevant assets. These are recognised in the profit
and loss.
48
(l)
Assets subject to finance leases
Leases of property, plant and equipment where the Group has substantially all the risks and rewards
of ownership are classified as finance leases. Assets subject to finance lease are initially recorded at
the lower of the present value of minimum lease payments under the lease agreements and the fair
value of the leased assets. The related obligation under the lease less financial charges allocated to
future periods is shown as a liability. Finance lease obligations are secured by the related assets held
under finance leases.
The financial charges are allocated to accounting periods in a manner so as to provide a constant
periodic rate of charge on the outstanding liability.
Depreciation on finance lease assets is provided on a straight line basis over the lesser of their estimated
useful life or the lease term.
(m) Operating leases
Leases in which a significant portion of the risks and rewards of ownership are retained by the lessor
are classified as operating leases. Payments made under operating leases (net of any incentives
received from the lessor) are charged to the profit and loss on a straight line basis over the lease term.
(n)
Financial instruments
Financial assets and financial liabilities are recognised at the time when the Group becomes a party to
the contractual provisions of the instrument.
Financial assets
The Group considers its financial assets to comprise cash, deposits, loan notes and various other
receivable balances that arise from its operations.
Trade receivables, deposits, loan notes and other receivables that have fixed or determinable payments
that are not quoted in an active market are classified as loans and receivables. Loans and receivables
are initially recorded at fair value and subsequently at amortised cost using the effective interest rate
method, less any impairment. Interest income is recognised by applying the effective interest rate,
except for short-term receivables when the recognition of interest would be immaterial.
The carrying amount of the financial asset is reduced by any impairment loss directly for all financial
assets with the exception of trade receivables where the carrying amount is reduced through the use
of an allowance account. When a trade receivable is considered uncollectable, it is written off against
the allowance account. Subsequent recoveries of amounts previously written off are credited against
the allowance account. Changes in the carrying amount of the allowance account are recognised in
profit and loss within the combined statement of comprehensive income. If in a subsequent period the
amount of the impairment loss decreases and the decrease can be related objectively to an event
occurring after the impairment was recognised, the previously recognised impairment loss is reversed
through profit and loss to the extent that the carrying amount of the financial asset at the date the
impairment is reversed does not exceed what the amortised cost would have been had the impairment
not been recognised.
The Group derecognises a financial asset or a portion of financial asset when, and only when, the
contractual rights to the cash flows from the assets expires; or it transfers the financial asset and
substantially all of the risks and rewards of ownership of the asset to another entity. If the Group neither
transfers nor retains substantially all of the risks and rewards of ownership and continues to control
the asset, the Group recognises its retained interest in the asset and associated liability for amounts it
may have to pay. If the Group retains substantially all the risks and rewards of ownership of a transferred
financial asset, the Group continues to recognise the financial asset and also recognises a collateral
borrowing for the proceeds received.
Financial liabilities
Financial liabilities and equity instruments are initially measured at fair value and are classified according
to the substance of the contractual arrangement entered into. Financial liabilities are subsequently
49
measured at amortised cost. The Group’s financial liabilities comprise trade payables, borrowings and
other payables balances that arise from its operations. They are classified as “financial liabilities
measured at amortised cost”. Finance charges are accounted for on an accrual basis in profit or loss
using the effective interest rate method and are added to the carrying amount of the investment to the
extent that are not settled in the period in which they arise. The Group derecognises financial liabilities
when the Group’s obligations are discharged, cancelled or they expire.
(o)
Impairment of non-financial assets
The carrying amounts of the Group’s assets are reviewed at each year end to determine whether there
is any indication of impairment loss. If any such indication exists, the asset’s recoverable amount is
estimated in order to determine the extent of the impairment loss, if any. An impairment loss is
recognised for the amount by which the assets carrying amount exceeds its recoverable amount. The
recoverable amount is the higher of an asset’s fair value less cost to sell and value in use. Impairment
losses are charged to income statement. During the year ended 30 June 2010, 2011, 2012 and
31 December 2012; no impairment was recorded.
(p)
Cash and cash equivalents
Cash and cash equivalents consist of cash and cheques in hand and bank deposits available on
demand.
(q)
Share capital
Ordinary shares are classified as equity. Equity instruments issued are recorded at the proceeds
received, net of direct issue costs.
As this historical financial information is prepared on a combined basis, share capital is a combination
of share capital as presented in each of the entities individual financial statements. Share capital in
individual entities has been translated into the presentation currency at historical rate ruling at the date
of the equity transaction.
As such the share capital will not represent the share capital of the Company post completion of the
transaction which will be solely that of the Company.
(r)
Additional paid in capital
Additional paid in capital represents capital contributions by parent entities which are not part of the
combined historical financial information.
(s)
Employee stock option plans
The ultimate parent entity, The Resource Group International Limited, maintains Stock Option Plans
(the Plans), which authorises the granting of stock options to employees of IBEX and TRGI, the previous
parent of the entities included within this combined historical financial information. Although the options
are exercisable in exchange for shares in TRGI and not each of the entities included within this historical
financial information, each entity recognises an expense related to the Plan for those options granted
to employees of each entity.
Each entity recognises as an expense the services acquired over the vesting period and the
corresponding increase in equity at the grant date fair value of the share options of The Resource
Group International Limited. As of 4 June 2013, the Company has its own stock option plan with
options granted to management over Ordinary Shares currently owned by TRGI. Any options of TRGI
granted to management of the Company have been retired.
(t)
Retirement benefits
The subsidiaries of the Company maintain their individual retirement benefit plans as follows:
TRG Customer Solutions Inc maintains the defined contribution TRG 401(k) Plan (the Plan), formerly
known as the TRG Customer Solutions, Inc. 401(k) Retirement Savings Plan. The Plan was amended
effective 1 January 2010 to: (i) comply with Economic Growth and Tax Relief Reconciliation Act; (ii)
50
eliminate the hardship withdrawal provision; (iii) change the eligibility to make Elective Deferrals; (iv)
change the Vesting Service to the Elapsed Time Method; and (v) rename the Plan to the TRG 401(k)
Plan. The plan is a single employer plan including the affiliated companies: TRGiSky, Inc., TRG Holdings,
LLC (“TRG”), TRG Field Solutions, Inc., TRG Satmap, Inc., Digital Globe Services, Inc. and Stratasoft,
Inc. Employees who meet certain eligibility requirements, as defined, are able to contribute up to federal
annual maximums. The Plan provides for company matching contributions of 25 per cent. of the first
6 per cent. of employee contributions to the Plan, which vests 25 per cent. per year over a four year
period. The company contributions to the plan for the fiscal year ended 30 June 2010, 2011 and 2012
and six months ended 31 December 2012 were $37,000, $31,000, $34,000 and $18,000 respectively.
IBEX Philippines Inc. operates an unfunded defined benefit plan. Under the plan, pension costs are
actuarially determined using the projected unit credit method. This method considers each period of
service as giving rise to an additional unit of benefit entitlement and measures each unit separately to
build up the final obligation. Gains or losses on the curtailment or settlement of pension benefits are
recognised when the curtailment or settlement occurs. Actuarial gains and losses are recognised as
income or expenses when the net cumulative unrecognised actuarial gains and losses for the retirement
plan at the end of the previous reporting period exceeded 10 per cent. of the higher of the present
value of the defined benefit obligation and the fair value of plan assets. These gains and losses are
recognised over the expected average remaining working lives of the employees participating in the
plan. Otherwise, the actuarial gain or loss is not recognised. When the benefits of the pension plan are
improved, the portion of the increased benefit relating to past service by employees is recognised in
the statement of comprehensive income on a straight line basis over the average period until the
benefits become vested. To the extent that the benefits vest immediately, the expense is recognised
immediately in profit or loss within the combined statement of comprehensive income.
Virtual World (Private) Limited, Pakistan operates a defined contribution plan (i.e. recognised provident
fund scheme) for all its permanent employees. Equal monthly contributions at the rate of 6.5 per cent.
of the basic salary are made to Provident Fund (“the Fund”) both by the subsidiary and employees.
The assets of the fund are held separately under the control of Trustees. Contributions made by the
subsidiary are charged to profit or loss within the combined statement of comprehensive income.
IBEX UK Limited operates the Axa Insurance Personal Pensions Scheme. This is a money purchase
scheme under which the subsidiary makes contributions for some employees.
(u)
Taxation
Current taxation
The charge for current taxation is based on taxable income at the current rates of taxation of the
respective countries of incorporation of the IBEX entities after taking into account applicable tax credits,
rebates and exemptions available, if any.
TRG Customer Solutions Inc files a combined US group return under TRG Holdings LLC. Other entities
file standalone tax returns in their respective jurisdictions.
Management periodically evaluates positions taken in tax returns with respect to situations in which
applicable tax regulation is subject to interpretation. It establishes provisions where appropriate on the
basis of amounts expected to be paid to the tax authorities.
Deferred taxation
Deferred tax is provided on all temporary differences at each year/period end, between the tax base
of the assets and liabilities and their carrying amounts for financial reporting purposes.
Deferred tax liabilities are recognised for all taxable temporary differences. Deferred tax assets are
recognised for all deductible temporary differences and unused tax losses to the extent that it is
probable that the deductible temporary differences will reverse in the future and sufficient taxable profits
will be available against which the deductible temporary differences and unused tax losses can be
utilised. However, deferred tax is not accounted for if it arises from initial recognition of an asset or
liability in a transaction other than a business combination that at the time of the transaction affects
neither accounting nor taxable profit or loss.
51
The carrying amount of all deferred tax assets is reviewed at each year/period end and reduced to the
extent that it is no longer probable that sufficient taxable profits will be available to allow all or part of
the deferred tax assets to be utilised.
Deferred tax assets and liabilities are measured at the tax rates that are expected to apply to the period
when the asset is realised or the liability is settled, based on the tax rates (and tax laws) that have been
enacted or substantively enacted at the date of statement of financial position.
(v)
Borrowing costs
Borrowing costs relating to the acquisition, construction or production of a qualifying asset are
recognised as part of the cost of that asset. All other borrowing costs are recognised as an expense
in the period in which they are incurred.
(w) Use of estimates and judgments
The preparation of the historical financial information in conformity with IFRSs as adopted by the EU
and subject to the departures set out in Note 2 basis of preparation, requires the use of certain critical
estimates that affect the reported amounts of assets and liabilities, revenues and expenses. It also
requires management to exercise its judgment in the process of applying the Group’s accounting
policies.
Estimates and judgments are continually evaluated and are based on historic experience and other
factors, including expectations of future events that are believed to be reasonable under the
circumstances. Due to the inherent uncertainty involved in making those estimates, actual results
reported in future periods could differ from those estimates. Revisions to accounting estimates are
recognised in the period in which the estimates are revised and in any future periods affected.
In the process of applying Group’s accounting policies, management has made the following estimates
and judgments which are significant to the historical financial information:
Recognition of training revenue and associated incremental direct expenses
Management have considered a number of alternative options for the recognition of training revenue
and associated incremental direct expenses and following this review they have concluded the
following:
–
as training revenue does not have a standalone value to the customer it should be amortised on
a straight line basis over the life the client contract;
–
as incremental direct expenses relate directly to each customer contract, generate or enhance
resources that will be used in satisfying performance obligations in the future and are expected
to be recovered in full they should be deferred and amortised on a straight line basis over the life
of the client contract.
Impairment of goodwill
The calculation for considering the impairment of the carrying amount of goodwill requires a comparison
of the present value of the cash-generating units to which goodwill has been allocated, to the value of
goodwill and the associated assets in the balance sheet, The calculation of present value requires an
estimate of the future cash flows expected to arise from the cash generating unit, the selection of a
suitable discount rate and terminal value.
The key assumptions made to relation to the impairment of goodwill are set out in Note 5.
Staff retirement plans and other employee benefits
The net defined benefit pension plan assets or liabilities are recognised in the Group balance sheet.
The determination of the position requires assumptions to be made regarding inter alia future salary
increases, mortality, discount rates and inflation. The key assumptions made in relation to the pension
plans are set out Note 20.
52
Provision for taxation
The US and Canadian entities are currently reported within consolidated tax filings of affiliated entities.
Management have estimated the standalone tax position of these entities for inclusion in this financial
information. The key assumptions made in relation to tax provisioning are set out in Note 27.
Classification of the disposal of IBEX Global Solutions (Canada) Inc
Management consider the sale of the trade and assets of IBEX Global Solutions (Canada) Inc in June
2010 to be that of a sale of a continuing foreign operation and as such has reclassified cumulative
foreign exchange differences in the gain on the disposal in the profit and loss within the statement of
comprehensive income. Further commentary is included within Note 33.
(x) Standards, Interpretations and Amendments not yet effective
The following standards, amendments and interpretations of approved accounting standards will be effective
for accounting periods beginning on or after 1 January 2013:
IAS 19 Employee Benefits (amended 2011) – (effective for annual periods beginning on or after 1 January
2013). The amended IAS 19 includes amendments that require actuarial gains and losses to be recognised
immediately in other comprehensive income; this change will remove the corridor method and eliminate the
ability for entities to recognise all changes in the defined benefit obligation and in plan assets in profit or
loss, which currently is allowed under IAS 19; and that the expected return on plan assets recognised in
profit or loss is calculated based on the rate used to discount the defined benefit obligation. The Group’s
policy is to account for actuarial gains and losses using the corridor method and with the change
unrecognised actuarial gains amounting to $133,515 at 30 June 2012 and 31 December 2012 would need
to be recognised in other comprehensive income.
IAS 27 Separate Financial Statements (2011) – (effective for annual periods beginning on or after 1 January
2013). IAS 27 (2011) supersedes IAS 27 (2008). Three new standards IFRS 10 – Combined Financial
Statements, IFRS 11 – Joint Arrangements and IFRS 12 – Disclosure of Interest in Other Entities dealing
with IAS 27 would be applicable effective 1 January 2013. IAS 27 (2011) carries forward the existing
accounting and disclosure requirements for separate financial statements, with some minor clarifications.
The amendments have no impact on financial information of the Group.
IAS 28 Investments in Associates and Joint Ventures (2011) – (effective for annual periods beginning on or
after 1 January 2013). IAS 28 (2011) supersedes IAS 28 (2008). IAS 28 (2011) makes the amendments to
apply IFRS 5 to an investment, or a portion of an investment, in an associate or a joint venture that meets
the criteria to be classified as held for sale; and on cessation of significant influence or joint control, even if
an investment in an associate becomes an investment in a joint venture. The amendments have no impact
on financial information of the Group.
Offsetting Financial Assets and Financial Liabilities (Amendments to IFRS 7) – (effective for annual periods
beginning on or after 1 January 2013). The amendments to IFRS 7 contain new disclosure requirements for
financial assets and liabilities that are offset in the statement of financial position or subject to master netting
agreement or similar arrangement.
The introduction of these standards and interpretations is not expected to have a material effect on the
historical financial information.
53
(4) Operating segments
This historical financial information has been prepared of the basis of a single operating segment. Whilst the
group operates in different locations, there are no multiple products or lines of services upon which the
results reported to the chief operating decision maker are segregated and analysed.
Revenue
Gross margin
Operating profit/(loss)
US GAAP to IFRS adjustments
Reportable operating profit/(loss)
30 June
2010
$’000’s
30 June
2011
$’000’s
86,620
16,658
625
29
97,118
17,491
(487)
(26)
30 June 31 December
2012
2012
$’000’s
$’000’s
104,286
13,554
(2,385)
46
–––––––––––
–––––––––––
–––––––––––
654
(513)
(2,339)
–––––––––––
–––––––––––
–––––––––––
–––––––––––
–––––––––––
–––––––––––
66,585
9,154
745
14
–––––––––––
759
–––––––––––
–––––––––––
91.97 per cent., 91.30 per cent., 90.81 per cent. and 91.67 per cent. of the total revenue was earned from
customers in the United States of America for the year ended 30 June 2010, 2011 and 2012 and six months
ended 31 December 2012 respectively.
The following table summarises those non related party customers with revenue or accounts receivable in
excess of 5 per cent. total revenue or total receivables for the years ended 30 June 2010, 2011, 2012 and
31 December 2012 respectively. The revenue analysis below does not form part of the Group’s segmental
reporting but is provided voluntarily for those customers whose revenue is below 10 per cent. of Group
revenue.
30 June 2010
Revenue
Accounts receivable
Percentage
Percentage
Amount
of total
Amount
of total
$’000’s
%
$’000’s
%
Client 1
Client 2
Client 3
Client 4
Client 5
Other
32,822
15,212
11,862
4,033
1,918
38
18
14
5
2
5,439
1,184
1,138
877
1,918
37
8
8
6
13
–––––––––––
–––––––––––
–––––––––––
–––––––––––
65,847
20,773
77
23
10,556
4,064
72
28
–––––––––––
–––––––––––
–––––––––––
86,620
100
14,620
–––––––––––
–––––––––––
–––––––––––
–––––––––––
–––––––––––
–––––––––––
–––––––––––
100
–––––––––––
–––––––––––
30 June 2011
Revenue
Accounts receivable
Percentage
Percentage
Amount
of total
Amount
of total
$’000’s
%
$’000’s
%
Client 1
Client 2
Client 3
Client 4
Client 5
Other
14,092
18,119
10,311
5,915
27,106
14
19
11
6
28
2,501
1,450
771
559
5,599
16
9
5
3
35
–––––––––––
–––––––––––
–––––––––––
–––––––––––
75,543
21,575
78
22
10,880
5,311
68
32
–––––––––––
–––––––––––
–––––––––––
97,118
100
16,191
–––––––––––
–––––––––––
54
–––––––––––
–––––––––––
–––––––––––
–––––––––––
–––––––––––
100
–––––––––––
–––––––––––
30 June 2012
Revenue
Accounts receivable
Percentage
Percentage
Amount
of total
Amount
of total
$’000’s
%
$’000’s
%
Client 1
Client 2
Client 3
Client 5
Client 6
Other
11,295
26,335
17,023
16,818
5,911
11
25
16
16
6
–
4,936
4,839
2,266
817
–
28
28
13
5
–––––––––––
–––––––––––
–––––––––––
–––––––––––
77,382
26,904
74
26
12,858
4,636
74
26
–––––––––––
–––––––––––
–––––––––––
104,286
100
17,494
–––––––––––
–––––––––––
–––––––––––
–––––––––––
–––––––––––
–––––––––––
–––––––––––
100
–––––––––––
–––––––––––
31 December 2012
Revenue
Accounts receivable
Percentage
Percentage
Amount
of total
Amount
of total
$’000’s
%
$’000’s
%
Client 2
Client 3
Client 4
Client 6
Client 7
Other
17,794
21,414
7,022
2,176
3,031
27
32
11
3
5
6,662
7,057
2,213
704
1,609
29
31
10
3
7
–––––––––––
–––––––––––
–––––––––––
–––––––––––
51,437
15,148
78
22
18,245
4,605
80
20
–––––––––––
–––––––––––
–––––––––––
66,585
100
22,850
–––––––––––
–––––––––––
–––––––––––
–––––––––––
–––––––––––
–––––––––––
–––––––––––
100
–––––––––––
–––––––––––
Client 4 does not represent 5 per cent. of revenues or receivables as of 30 June 2012. Clients 1 and client
5 do not represent 5 per cent. of revenues or receivables as of 31 December 2012. Above clients are Fortune
100 and/or Fortune 500 companies.
Details of segment assets and liabilities can be found in the combined statement of financial position. There
are no differences between US GAAP and IFRS.
Revenues are attributed to geographic areas based upon the location in which the sale originated. IBEX
Global Solutions Plc is domiciled in the United Kingdom. All revenues from external customers arose in the
United States of America in each of the reported periods.
Non-current assets located outside of the United Kingdom totalled $524,000, $522,000, $818,000 and
$747,000 for the years 30 June 2010, 2011 and 2012 and the six months to 31 December 2012 respectively.
(5)
Goodwill
30 June
2010
$’000’s
Cost and net book value
8,644
–––––––––––
–––––––––––
30 June
2011
$’000’s
8,644
–––––––––––
–––––––––––
30 June 31 December
2012
2012
$’000’s
$’000’s
8,644
–––––––––––
–––––––––––
8,644
–––––––––––
–––––––––––
Goodwill arose on the acquisition of the trade and assets of iSky and Murt Inc by TRG Customer Solutions
Inc and the merger of Resse with TRG Customer Solutions Inc. All goodwill is allocated to TRG Customer
Solutions Inc for impairment purposes.
55
Goodwill is tested annually for impairment or more frequently if there are indications that the value of goodwill
may have been impaired. Goodwill has been tested for impairment by comparing the carrying value with
the recoverable amount for the TRG Customer Solutions Inc cash generating unit.
Impairment of goodwill
Key assumptions applied in impairment workings:
The recoverable amount of the cash generating unit is determined on a value in use basis using cash flow
projections prepared by management covering a five-year period. The first year of the projections are based
on detailed budgets prepared by management as part of the Group’s performance and control procedures
Subsequent years are based on extrapolations using the key assumptions listed below. The discount rate
applied to cash flow projections beyond five-years is extrapolated using a terminal growth rate which
represents the expected long term growth rate of the BPO sector.
The following rates were used by the Group in the years ended 30 June 2010, 2011, 2012 and the six
months to 31 December 2012:
Revenue
growth
rate
%
Gross
margin
%
Discount
rate
%
Terminal
growth
rate
%
5%
5%
5%
5%
22.4%
22.4%
22.6%
16.5%
15.2
15.2
15.2
15.2
5.0
5.0
5.0
5.0
30 June 2010
30 June 2011
30 June 2012
31 December 2012
The calculation of value in use for the business operations is most sensitive to changes in the following
assumptions:
Revenue growth
Revenue growth assumptions have been derived from projections prepared by the management.
Management is of the view that these assumptions are reasonable considering current market conditions.
Cost of service delivery and gross margin
Cost of service delivery has been projected on the basis of multiple strategies planned by management to
ensure profitable operations. These strategies include cost minimisation mechanisms such as offshore
migration of labour, centralisation of support activities and increasing efficiency of service delivery, resulting
in improved gross margins over the forecasted period.
Operating expenses and capital expenditures
Operating expenses and capital expenditures have been projected taking into account growth in business
volumes and historical trends.
Discount rate
Discount rates reflect management estimates of the rate of return required for the business and are
calculated after taking into account the prevailing risk free rate, industry risk and business risk. Discount
rates are calculated using the weighted average cost of capital.
Management do not believe that a reasonably possible change in any of the key assumptions would result
in an impairment.
56
(6)
Intangible assets
Cost
At 1 July 2009
Additions and adjustments for grants received
Disposals
Foreign exchange differences
At 30 June 2010
Amortisation
At 1 July 2009
Amortisation charge for the year
Eliminated on disposals and adjustment for
grants received
Foreign exchange differences
At 30 June 2010
Net book value
At 30 June 2009
At 30 June 2010
Patents
$’000’s
Trademarks
$’000’s
Software
$’000’s
Total
$’000’s
196
–
–
–
371
–
–
–
1,686
415
(46)
3
2,253
415
(46)
3
–––––––––––
–––––––––––
–––––––––––
196
371
2,058
–––––––––––
2,625
–––––––––––
–––––––––––
–––––––––––
–––––––––––
115
43
–
–
731
754
846
797
–
–
–
–
(34)
2
(34)
2
–––––––––––
–––––––––––
–––––––––––
158
–
1,453
–––––––––––
81
–––––––––––
–––––––––––
38
–––––––––––
–––––––––––
–––––––––––
371
–––––––––––
–––––––––––
371
–––––––––––
–––––––––––
–––––––––––
955
–––––––––––
–––––––––––
605
–––––––––––
–––––––––––
–––––––––––
1,611
–––––––––––
1,407
–––––––––––
–––––––––––
1,014
–––––––––––
–––––––––––
Adjustments for grants received relate to government grants received for the reimbursement of expenditure
on intangible assets. In accordance with the Group accounting policies, this is deducted from the assets
carrying value.
57
Cost
At 1 July 2010
Additions and adjustments for grants received
Foreign exchange differences
At 30 June 2011
Amortisation
At 1 July 2010
Amortisation charge for the year
Foreign exchange differences
At 30 June 2011
Net book value
At 30 June 2010
At 30 June 2011
Cost
At 1 July 2011
Additions and adjustments for grants received
Foreign exchange differences
At 30 June 2012
Amortisation
At 1 July 2011
Amortisation charge for the year
Foreign exchange differences
At 30 June 2012
Net book value
At 30 June 2011
At 30 June 2012
Cost
At 1 July 2012
At 31 December 2012
Amortisation
At 1 July 2012
Amortisation charge for the period
At 31 December 2012
Net book value
At 1 July 2012
At 31 December 2012
Patents
$’000’s
Trademarks
$’000’s
Software
$’000’s
Total
$’000’s
196
–
–
371
–
–
2,058
313
4
2,625
313
4
–––––––––––
–––––––––––
–––––––––––
196
371
2,375
–––––––––––
2,942
–––––––––––
–––––––––––
–––––––––––
–––––––––––
158
38
–
–
–
–
1,453
549
2
1,611
587
2
–––––––––––
–––––––––––
–––––––––––
196
–
2,004
–––––––––––
38
–––––––––––
–––––––––––
–
–––––––––––
371
–––––––––––
–––––––––––
371
–––––––––––
605
–––––––––––
–––––––––––
371
–––––––––––
2,200
–––––––––––
1,014
–––––––––––
–––––––––––
742
–––––––––––
–––––––––––
–––––––––––
–––––––––––
–––––––––––
–––––––––––
–––––––––––
–––––––––––
196
–
–
371
–
–
2,375
217
10
2,942
217
10
–––––––––––
–––––––––––
–––––––––––
196
371
2,602
–––––––––––
3,169
–––––––––––
–––––––––––
–––––––––––
–––––––––––
196
–
–
–
–
–
2,004
254
9
2,200
254
9
–––––––––––
–––––––––––
–––––––––––
196
–
2,267
–––––––––––
–
–––––––––––
–––––––––––
–
–––––––––––
371
–––––––––––
–––––––––––
371
–––––––––––
371
–––––––––––
–––––––––––
335
–––––––––––
2,463
–––––––––––
742
–––––––––––
–––––––––––
706
–––––––––––
–––––––––––
–––––––––––
–––––––––––
–––––––––––
–––––––––––
–––––––––––
–––––––––––
Patents
$’000’s
Trademarks
$’000’s
Software
$’000’s
Total
$’000’s
196
–––––––––––
196
371
–––––––––––
371
2,602
–––––––––––
2,602
3,169
–––––––––––
3,169
–––––––––––
–––––––––––
–––––––––––
–––––––––––
196
–
–
–
2,267
94
2,463
94
–––––––––––
–––––––––––
–––––––––––
196
–
2,361
–––––––––––
–
–––––––––––
–––––––––––
–
–––––––––––
–––––––––––
58
–––––––––––
371
–––––––––––
–––––––––––
371
–––––––––––
–––––––––––
–––––––––––
335
–––––––––––
–––––––––––
241
–––––––––––
–––––––––––
–––––––––––
2,557
–––––––––––
706
–––––––––––
–––––––––––
612
–––––––––––
–––––––––––
Allocation of amortisation charge in the income statement
30 June
2010
Cost of sales
Selling, general and administrative expenses
754
43
30 June
2011
544
43
30 June 31 December
2012
2012
250
4
–––––––––––
–––––––––––
–––––––––––
797
587
254
–––––––––––
–––––––––––
–––––––––––
–––––––––––
–––––––––––
–––––––––––
93
1
–––––––––––
94
–––––––––––
–––––––––––
The intangible assets that have an indefinite life are trademarks and are considered to have an indefinite life
on the grounds of the proven longevity of the trademarks and the Group’s commitment to maintaining those
trademarks.
(7)
Property, plant and equipment
Leasehold
improvements
$’000’s
Furniture
and
fittings
$’000’s
Computers,
Communications
and Office
Equipment
$’000’s
2,626
1,436
12,820
125
17,007
730
(434)
4
342
(381)
9
350
(551)
(6)
1
–
5
1,423
(1,366)
12
Cost
At 1 July 2009
Additions and adjustments
for grants received
Disposals
Foreign exchange differences
At 30 June 2010
Depreciation
At 1 July 2009
Charge for the year
Eliminated on disposals and
adjustments for grants received
Foreign exchange differences
At 30 June 2010
Total
$’000’s
–––––––––––
–––––––––––
–––––––––––
–––––––––––
2,926
1,406
12,616
131
–––––––––––
17,076
–––––––––––
–––––––––––
–––––––––––
–––––––––––
–––––––––––
1,013
960
463
245
5,538
2,190
61
25
7,075
3,420
237
5
140
5
363
1
–
3
740
14
–––––––––––
–––––––––––
–––––––––––
–––––––––––
2,215
853
8,092
89
–––––––––––
Net book value
At 30 June 2009
Vehicles
$’000’s
1,613
–––––––––––
–––––––––––
711
–––––––––––
–––––––––––
–––––––––––
973
–––––––––––
–––––––––––
553
–––––––––––
–––––––––––
–––––––––––
7,282
–––––––––––
–––––––––––
4,521
–––––––––––
–––––––––––
–––––––––––
64
–––––––––––
–––––––––––
42
–––––––––––
–––––––––––
–––––––––––
11,249
–––––––––––
9,932
–––––––––––
–––––––––––
5,827
–––––––––––
–––––––––––
Adjustments for grants received relate to government grants received for the reimbursement of expenditure
on property, plant and equipment. In accordance with the Group accounting policies, this is deducted from
the assets carrying value.
59
Leasehold
improvements
$’000’s
Furniture
and
fittings
$’000’s
Computers,
Communications
and Office
Equipment
$’000’s
2,926
1,406
12,613
131
17,076
(87)
22
(284)
25
(909)
50
40
9
(1,240)
106
Cost
At 1 July 2010
Additions and adjustments
for grants received
Foreign exchange differences
At 30 June 2011
Depreciation
At 1 July 2010
Charge for the year
Adjustments for grants received
Foreign exchange differences
At 30 June 2011
–––––––––––
–––––––––––
–––––––––––
2,861
1,147
11,754
180
–––––––––––
–––––––––––
–––––––––––
–––––––––––
2,215
541
(243)
17
853
217
(357)
11
8,092
2,120
(1,833)
38
89
30
–
7
–––––––––––
–––––––––––
–––––––––––
–––––––––––
2,530
724
8,417
126
711
–––––––––––
–––––––––––
At 30 June 2011
331
–––––––––––
–––––––––––
553
–––––––––––
–––––––––––
423
–––––––––––
4,521
–––––––––––
–––––––––––
3,337
–––––––––––
42
–––––––––––
–––––––––––
54
15,942
–––––––––––
11,249
2,908
(2,433)
73
–––––––––––
11,797
–––––––––––
5,827
–––––––––––
–––––––––––
4,145
–––––––––––
–––––––––––
–––––––––––
–––––––––––
–––––––––––
–––––––––––
Leasehold
improvements
$’000’s
Furniture
and
fittings
$’000’s
Computers,
Communications
and Office
Equipment
$’000’s
Vehicles
$’000’s
Total
$’000’s
2,861
1,147
11,754
180
15,942
300
(5)
86
1
2,249
(42)
1
–
2,636
(46)
Depreciation
At 1 July 2011
Charge for the year
Adjustments for grants received
Foreign exchange differences
–––––––––––
–––––––––––
–––––––––––
–––––––––––
3,156
1,234
13,961
181
–––––––––––
18,532
–––––––––––
–––––––––––
–––––––––––
–––––––––––
–––––––––––
2,530
172
23
4
724
210
16
2
8,417
2,409
(39)
(30)
126
19
–
1
11,797
2,810
–
(23)
–––––––––––
–––––––––––
–––––––––––
–––––––––––
2,729
952
10,757
146
–––––––––––
At 30 June 2012
–––––––––––
–––––––––––
–––––––––––
–––––––––––
Cost
At 1 July 2011
Additions and adjustments
for grants received
Foreign exchange differences
Net book value
At 30 June 2011
Total
$’000’s
–––––––––––
–––––––––––
Net book value
At 30 June 2010
Vehicles
$’000’s
331
–––––––––––
–––––––––––
427
–––––––––––
–––––––––––
–––––––––––
423
–––––––––––
–––––––––––
282
–––––––––––
–––––––––––
60
–––––––––––
3,337
–––––––––––
–––––––––––
3,204
–––––––––––
–––––––––––
–––––––––––
54
–––––––––––
–––––––––––
35
–––––––––––
–––––––––––
–––––––––––
14,584
–––––––––––
4,145
–––––––––––
–––––––––––
3,948
–––––––––––
–––––––––––
Cost
At 1 July 2012
Additions
Foreign exchange differences
Depreciation
At 1 July 2012
Charge for the period
Foreign exchange differences
Leasehold
improvements
$’000’s
Furniture
and
fittings
$’000’s
Computers,
Communications
and Office
Equipment
$’000’s
3,156
102
7
1,234
28
15
13,961
490
55
At 31 December 2012
Total
$’000’s
181
55
3
18,532
673
80
–––––––––––
–––––––––––
–––––––––––
–––––––––––
3,265
1,277
14,506
239
–––––––––––
19,285
–––––––––––
–––––––––––
–––––––––––
–––––––––––
–––––––––––
2,729
106
9
952
96
8
10,757
972
46
146
7
3
14,584
1,181
66
–––––––––––
–––––––––––
–––––––––––
–––––––––––
2,844
1,056
11,775
156
–––––––––––
Net book value
At 30 June 2012
Vehicles
$’000’s
427
–––––––––––
–––––––––––
421
–––––––––––
–––––––––––
–––––––––––
282
–––––––––––
–––––––––––
221
–––––––––––
–––––––––––
–––––––––––
3,204
–––––––––––
–––––––––––
2,731
–––––––––––
–––––––––––
–––––––––––
35
–––––––––––
–––––––––––
83
–––––––––––
–––––––––––
–––––––––––
15,831
–––––––––––
3,948
–––––––––––
–––––––––––
3,456
–––––––––––
–––––––––––
During the year ended 30 June 2010 the Group received a tenant allowance of $558,000 to build out one
floor of its leased office space in Pittsburgh PA. The allowance was adjusted against the total capital
expenditure of $689,000. The remaining $131,000 was adjusted against the grant received by the Group
during the year of $375,000 from the Commonwealth of` Pennsylvania to be used for working capital
purposes, including salaries and the purchase of office equipment, as part of the Group’s expansion of
operations. Refer to Note 17 Grants.
The company also recorded a $127,000 reduction in the cost basis of additions for the year ended 30 June
2010 in property and equipment of one of its facilities in North Bay, Canada in relation to a grant received
from Northern Ontario Heritage Fund Corporation (NOHFC). Refer to Note 17 Grants.
61
Details of property, plant and equipment held under finance lease are as follows:
At 30 June 2010
Cost
Accumulated depreciation
Closing net book value
At 30 June 2011
Cost
Accumulated depreciation
Closing net book value
At 30 June 2012
Cost
Accumulated depreciation
Closing net book value
Computers
Communication
and office
equipment
$’000’s
Vehicles
$’000’s
Total
$’000’s
671
(442)
130
(89)
801
(531)
–––––––––––
–––––––––––
229
41
–––––––––––
–––––––––––
–––––––––––
–––––––––––
152
(6)
139
(120)
291
(126)
–––––––––––
–––––––––––
146
19
–––––––––––
165
–––––––––––
–––––––––––
–––––––––––
–––––––––––
–––––––––––
–––––––––––
1,923
(464)
56
(47)
1,979
(511)
–––––––––––
–––––––––––
1,459
9
1,937
(702)
Closing net book value
270
–––––––––––
–––––––––––
–––––––––––
–––––––––––
At 31 December 2012
Cost
Accumulated depreciation
–––––––––––
–––––––––––
–––––––––––
56
–
–––––––––––
–––––––––––
1,235
56
–––––––––––
–––––––––––
–––––––––––
–––––––––––
–––––––––––
1,468
–––––––––––
–––––––––––
1,993
(702)
–––––––––––
1,291
–––––––––––
–––––––––––
(8) Other non-current assets
Other non-current assets consist of the following:
Long term deposits
Long term note receivable
Long term deferred expenses
Other
30 June
2010
$’000’s
30 June
2011
$’000’s
732
707
600
317
1,044
–
357
554
30 June 31 December
2012
2012
$’000’s
$’000’s
1,359
–
195
697
–––––––––––
–––––––––––
–––––––––––
2,356
1,955
2,251
–––––––––––
–––––––––––
62
–––––––––––
–––––––––––
–––––––––––
–––––––––––
1,468
–
–
772
–––––––––––
2,240
–––––––––––
–––––––––––
(9) Trade and other receivables
Trade and other receivables consist of the following:
Trade receivables – gross
Less: provision for doubtful debts
Trade receivables – net
Prepayments and other
Deposits
Notes receivable
30 June
2010
$’000’s
30 June
2011
$’000’s
14,712
(92)
16,334
(143)
30 June 31 December
2012
2012
$’000’s
$’000’s
17,641
(147)
22,958
(108)
–––––––––––
–––––––––––
–––––––––––
–––––––––––
14,620
694
317
236
16,191
727
554
1,050
17,494
653
697
–
22,850
1,432
126
–
–––––––––––
–––––––––––
–––––––––––
15,867
18,522
18,844
–––––––––––
–––––––––––
–––––––––––
–––––––––––
30 June
2010
$’000’s
30 June
2011
$’000’s
79
25
(12)
92
83
(32)
–––––––––––
–––––––––––
–––––––––––
24,408
–––––––––––
–––––––––––
Provision for doubtful debts
Opening balance as of 1 July
Charge for the period
Reversals/write-offs against provision
Closing balance
30 June 31 December
2012
2012
$’000’s
$’000’s
143
17
(13)
–––––––––––
–––––––––––
–––––––––––
92
143
147
–––––––––––
–––––––––––
–––––––––––
–––––––––––
–––––––––––
–––––––––––
147
–
(39)
–––––––––––
108
–––––––––––
–––––––––––
(10) Cash and cash equivalents
Cash and cash equivalents consist of the following:
Balances with banks in:
– current accounts
– deposit accounts
Cash in hand
30 June
2010
$’000’s
30 June
2011
$’000’s
410
158
546
278
30 June 31 December
2012
2012
$’000’s
$’000’s
1,808
100
2,186
255
–––––––––––
–––––––––––
–––––––––––
–––––––––––
568
2
824
4
1,908
17
2,441
13
–––––––––––
–––––––––––
–––––––––––
570
828
1,925
–––––––––––
–––––––––––
–––––––––––
–––––––––––
30 June
2010
$’000’s
30 June
2011
$’000’s
–––––––––––
–––––––––––
–––––––––––
2,454
–––––––––––
–––––––––––
(11) Share capital
Opening and closing share capital
1,464
–––––––––––
–––––––––––
1,464
–––––––––––
–––––––––––
30 June 31 December
2012
2012
$’000’s
$’000’s
1,464
–––––––––––
–––––––––––
1,464
–––––––––––
–––––––––––
All shares are equally eligible to receive dividends and the repayment of capital, and represent one vote each
at the Annual General Meeting.
63
(12) Additional paid in equity
Opening additional paid in equity
Additional contributions from equity holders
Closing additional paid in equity
30 June
2010
$’000’s
30 June
2011
$’000’s
31,020
6,488
37,508
49
30 June 31 December
2012
2012
$’000’s
$’000’s
37,557
2,064
–––––––––––
–––––––––––
–––––––––––
37,508
37,557
39,621
–––––––––––
–––––––––––
–––––––––––
–––––––––––
–––––––––––
–––––––––––
39,621
650
–––––––––––
40,271
–––––––––––
–––––––––––
(13) Share option plan
The amount recognised as compensation cost in profit or loss within the combined statement of
comprehensive income for the years ended 30 June 2010, 2011, 2012 and the six months ended
31 December 2012 was $523,000, $246,000, $157,000 and $42,000 respectively.
The options have a maximum contractual term of no longer than ten years from their date of grant and
become exercisable with respect to one-third of the shares on the first anniversary of the grant date and
with respect to one thirty-sixth of the shares initially granted on a monthly basis thereafter over two years,
unless otherwise noted in the agreement. For all the options granted in the years ended 30 June 2010 and
2011 the exercise price was $1.21. No options were granted in the years ended 30 June 2012 or the period
ended 31 December 2012. The exercise prices were set by the Board of Directors at the entry price of the
external investors, which were negotiated in arm’s length transactions. No options have been exercised as
of 30 June 2010, 2011, 2012 and 31 December 2012.
The Group estimates the fair value of its stock options on the date of grant using the Black-Scholes optionpricing method, which requires the use of certain estimates and assumptions that affect the reported amount
of share-based compensation cost recognised in the historical financial information. These include estimates
of the expected term of stock options, expected volatility of The Resource Group International Limited’s
shares, expected dividends, and the risk-free interest rate.
(a)
Expected term
The expected term of options granted during the year ended 30 June 2010 and 2011 is six years. In
estimating the expected term, the Group applied the “simplified method,” which assumes all options
will be exercised midway between the vesting date and the contractual term of the option.
(b)
Volatility
As The Resource Group International Limited is a private company, estimated volatility was derived by
calculating the average historical volatility of certain comparable public companies in the call
centre/business process outsourcing sector over the expected term of the options. Management used
a volatility of 51.53 per cent. for grant calculations for the years ended 30 June 2010 and 2011.
(c)
Expected dividends
The expected dividend yield is 0 per cent. The Resource Group International Limited does not have a
history of paying dividends, nor does it anticipate paying dividends in the foreseeable future.
64
(d)
Risk-free rate
The risk free rate is the continuously compounded United States nominal treasury rate corresponding
to the expected term. The risk free rate used for options granted during the years ended 30 June 2010
and 2011 ranged from 2.83 per cent. to 3.01 per cent.
Number
of shares
No.
Options:
Outstanding at 30 June 2009
Granted
Forfeited or expired
1,420,000
1,010,000
(100,694)
Outstanding at 30 June 2010
2,329,306
–––––––––––
–––––––––––
–––––––––––
Granted
Forfeited or expired
685,000
(125,000)
–––––––––––
Outstanding at 30 June 2011
2,889,306
Granted
Forfeited or expired
–
(1,169,306)
Outstanding at 30 June 2012
1,720,000
–––––––––––
–––––––––––
–––––––––––
–––––––––––
–––––––––––
Granted
Forfeited or expired
–
(565,000)
–––––––––––
Outstanding at 31 December 2012
1,155,000
–––––––––––
–––––––––––
A summary of the status of the options held by employees of the Group under the Plan as of 30 June 2010,
2011, 2012 and 31 December 2012 is presented below:
30 June 2010
–––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––
Options outstanding
Exercise price
or range
$
1.12
1.21
Options exercisable
––––––––––––––––––––––––––––––––––––––––––––
––––––––––––––––––––––––––––––––––––––––––––
Shares
No.
Weighted
average
remaining
life
(years)
Weighted
average
exercise
price
$
Shares
No.
Weighted
average
remaining
life
(years)
Weighted
average
exercise
price
$
1,277,305
1,052,001
7.18
9.02
1.12
1.21
1,218,083
418,945
7.17
8.78
1.12
1.21
–––––––––––
2,329,306
–––––––––––
1,637,028
–––––––––––
–––––––––––
–––––––––––
–––––––––––
30 June 2011
–––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––
Options outstanding
Exercise price
or range
$
1.21
1.21
Options exercisable
––––––––––––––––––––––––––––––––––––––––––––
––––––––––––––––––––––––––––––––––––––––––––
Shares
No.
Weighted
average
remaining
life
(years)
Weighted
average
exercise
price
$
Shares
No.
Weighted
average
remaining
life
(years)
Weighted
average
exercise
price
$
1,277,305
1,612,001
6.18
8.67
1.12
1.21
1,277,305
717,140
6.18
7.95
1.12
1.21
–––––––––––
2,889,306
–––––––––––
1,994,445
–––––––––––
–––––––––––
–––––––––––
–––––––––––
65
30 June 2012
–––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––
Options outstanding
––––––––––––––––––––––––––––––––––––––––––––
Shares
No.
Weighted
average
remaining
life
(years)
Weighted
average
exercise
price
$
Shares
No.
Weighted
average
remaining
life
(years)
Weighted
average
exercise
price
$
620,000
1,100,000
5.08
8.03
1.12
1.21
620,000
745,278
5.08
7.77
1.12
1.21
Exercise price
or range
$
1.12
1.21
Options exercisable
––––––––––––––––––––––––––––––––––––––––––––
–––––––––––
–––––––––––
1,720,000
1,365,278
–––––––––––
–––––––––––
–––––––––––
–––––––––––
31 December 2012
–––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––
Options outstanding
––––––––––––––––––––––––––––––––––––––––––––
Shares
No.
Weighted
average
remaining
life
(years)
Weighted
average
exercise
price
$
Shares
No.
Weighted
average
remaining
life
(years)
Weighted
average
exercise
price
$
595,000
560,000
4.50
8.01
1.12
1.21
595,000
371,667
4.50
7.99
1.12
1.21
Exercise price
or range
$
1.12
1.21
Options exercisable
––––––––––––––––––––––––––––––––––––––––––––
–––––––––––
–––––––––––
1,155,000
966,667
–––––––––––
–––––––––––
–––––––––––
–––––––––––
The weighted-average grant date fair value of stock options granted during the years ended 30 June 2010
and 2011 were $0.65 and $0.60 respectively. As of 4 June 2013, the Company has its own stock option
plan with options granted to management over Ordinary Shares currently owned by TRGI. Any options of
TRGI granted to management of the Company have been refined.
(14) Liabilities against assets subject to finance lease
Liabilities against assets subject to finance lease are secured by the related assets held under finance leases.
Future minimum lease payments at 30 June 2010, 2011, 2012 and 31 December 2012 are as follows:
Within one year
After one year but not
more than five years
Total minimum lease
payments
Less: amounts representing
finance charges
Present value of minimum
lease payments
Less: current potion shown
under current liabilities
30 June 2010
Minimum
Present
lease
value of
payments payments
$’000’s
$’000’s
138
129
30 June 2011
Minimum
Present
lease
value of
payments payments
$’000’s
$’000’s
126
94
30 June 2012
Minimum
Present
lease
value of
payments payments
$’000’s
$’000’s
774
689
31 December 2012
Minimum
Present
lease
value of
payments payments
$’000’s
$’000’s
543
469
22
––––––––
17
––––––––
198
––––––––
174
––––––––
723
––––––––
666
––––––––
652
––––––––
583
––––––––
160
146
324
268
1,497
1,355
1,195
1,052
(14)
––––––––
–
––––––––
(56)
––––––––
–
––––––––
(142)
––––––––
–
––––––––
(143)
––––––––
–
––––––––
146
146
268
268
1,355
1,355
1,052
1,052
(130)
––––––––
16
––––––––
––––––––
(130)
––––––––
16
––––––––
––––––––
(94)
––––––––
174
––––––––
––––––––
(94)
––––––––
174
––––––––
––––––––
(679)
––––––––
676
––––––––
––––––––
(679)
––––––––
676
––––––––
––––––––
(372)
––––––––
680
––––––––
––––––––
(372)
––––––––
680
––––––––
––––––––
These lease arrangements have interest rates ranging from 8 per cent. to 15 per cent. for the periods ended
30 June 2010, 2011, 2012 and 31 December 2012. At the end of the lease term, the ownership of the
assets shall be transferred to the respective entities of the Group.
66
(15) Advances under financing agreement
Up until 5 January 2010, the entities within this combined historical financial information and other
subsidiaries of The Resource Group International Limited operated under a Purchasing Agreement whereby
they agreed to sell their account receivables with recourse to FCC, LLC d/b/a First Growth Capital (“First
Capital”). The one year agreement with First Capital allowed for advances of up to a total of $20 million to
the entities in the arrangement and required the parties to offer a minimum of $6 million in billed accounts
per month to First Capital. Failure to meet this minimum would have resulted in additional fees. The initial
funding received by the Group under this arrangement was used to repay the Group’s prior line of credit.
Under the terms of the agreement, First Capital agreed to advance up to 85 per cent. of the face value of
all accounts receivables generated by the Group. In addition, the parties to the arrangement were able to
borrow up to $3 million against services that had been performed but not yet billed to customers. The
agreement required the Group to maintain a minimum tangible net worth of $4 million. First Capital was
granted a general security interest in the Group as part of this agreement.
The Group was charged an interest rate of one month LIBOR plus 6 per cent. (subject to a floor of 7 per
cent.) on all advances. In addition the Group discounted each receivable amount sold to First Capital by
0.70 per cent. The discount was increased if a receivable was outstanding for more than 30 days. Also, the
Group was charged 0.40 per cent. on each receivable requiring credit insurance.
On 5 January 2010, the entities within this combined historical financial information and other subsidiaries
of The Resource Group International Limited converted the Purchasing Agreement to a Loan and Security
Agreement (“working capital line of credit”). The entities within this combined historical financial information
and other subsidiaries of The Resource Group International Limited received initial funding from the new
Loan and Security Agreement that was used to repay the borrowings from the Purchasing Agreement.
Working capital line of credit
On 5 January 2010, the entities within this combined historical financial information and other subsidiaries
of The Resource Group International Limited entered into a line of credit agreement (Agreement) with First
Capital. The Agreement had a $16 million cap with $13 million allocated to the Group, and a maturity date
of 31 March 2011, with an automatic one year renewal in the event either party did not notify its desire to
discontinue 60 days prior to the maturity date. Under the Agreement, the Group had the ability to draw up
to a certain percentage of its eligible receivables and a certain percentage, as defined in the Agreement, of
its eligible unbilled receivables subject to certain limitations, as defined in the Agreement. On 28 October
2010, the Group entered into an Amendment with First Capital which increased the unbilled receivables
cap, revised certain financial covenants, and waived past financial covenant violations.
On 20 July 2011, the entities within this combined historical financial information and other subsidiaries of
The Resource Group International Limited terminated the agreement with First Capital and entered into a
revolving line of credit (New Agreement) with Capital Source Bank (“CSB”). The initial funding under the New
Agreement was used to repay the borrowings under the previous line of credit from First Capital. The New
Agreement has a $15 million cap and a maturity date of 20 July 2014 and the Group has the ability to draw
up to a certain percentage, as defined in the Agreement, of its eligible billed and unbilled receivables. The
Group is subject to certain financial performance covenants, including a minimum Fixed Charge Coverage
Ratio and a minimum Cash Velocity Percentage, both defined in the New Agreement, to ensure continued
access to the line of credit. CSB has been granted a general security interest in the Group’s assets (with
certain limited exceptions) to secure the New Agreement. The Group is charged an interest rate of one
month LIBOR + 5 per cent. (subject to a one month LIBOR rate floor of 1.5 per cent.) per annum. In addition,
the Group is charged a monthly collateral management fee of 0.042 per cent. based on the previous month
average daily net loan balance and monthly unused line fee of 0.042 per cent. based on subtracting the
previous month average daily net loan balance from the Facility Cap, as defined in the New Agreement.
On 7 September 2012, CSB granted a waiver to the entities within this combined historical financial
information and other subsidiaries of The Resource Group International Limited for past financial covenant
defaults, pursuant to an amendment of the New Agreement and agreed to increase the cap to $20 million.
The amendment also included extending the maturity date to 20 July 2015 and required an equity investment
of $650,000 to the Group by The Resource Group International Limited within 30 days of closing the
amendment. The $650,000 investment was made on 1 October 2012. The Group is now charged an interest
rate of one month LIBOR + 6 per cent. (subject to one month LIBOR rate floor of 1.5 per cent.) per annum,
67
until the later of 31 March 2013, or the date when specific covenants are met, at which time the interest
rate payable will drop to one month LIBOR + 5 per cent. (subject to one month LIBOR rate floor of 1.5 per
cent.) per annum. The Group’s minimum Fixed Coverage Charge Ratio covenant is (0.25) to 1.0 for the
month ending August 2012 and increases to 1.20 to 1.0 starting with the month ended November 2012
and continuing for the remaining term of the New Agreement. The Group had complied with CSB for four
consecutive calendar months for the Fixed Charge Coverage Ratio.
Pursuant to another amendment to the New agreement dated 5 October 2012 the facility cap was
permanently increased to $20 million with an over advance Facility of $800,000 above the facility cap. The
over advance Facility had a maturity date of 31 December 2012.
(16) Trade and other payables
Trade creditors
Accrued expenses and payables
Accrued salaries and wages
30 June
2010
$’000’s
30 June
2011
$’000’s
3,870
1,869
4,090
4,715
1,739
4,825
30 June 31 December
2012
2012
$’000’s
$’000’s
4,821
1,917
7,749
–––––––––––
–––––––––––
–––––––––––
9,829
11,279
14,487
–––––––––––
–––––––––––
–––––––––––
–––––––––––
–––––––––––
–––––––––––
4,777
2,177
10,583
–––––––––––
17,537
–––––––––––
–––––––––––
(17) Grants
The Group received grants from various states during the years ended 30 June 30 2009, 2011 and 2012
and the six months ended 31 December 2012 as follows:
●
The Group received a Loan and a Conditional Contribution (grant) of $254,000 from Northern Ontario
Heritage Fund Corporation (“NOHFC”) related to North Bay facility on 30 November 2009. The funds
were bifurcated into a non-revolving term loan in aggregate principal amount of up to $127,000,
carrying an interest rate of 2.75 per cent. per annum, and grant of up to $127,000. Pursuant to the
sale by the Group of its Canadian assets, IBEX Global (Canada) Inc. and the NOHFC entered in to a
consent agreement whereby the NOHFC provided its consent to the sale of assets, and terminated all
covenants of IBEX Global (Canada) Inc. under the Loan and Conditional Contribution Agreement. As
a result, the Group paid back the loan on 28 June 2010. The Group recognised the grant as a reduction
in the carrying value of its fixed assets. Refer to Note 7 Property and Equipment.
●
The Group received grants totaling $548,000 from the State of West Virginia on 1 July 2010. These
funds were disbursed through the period ending 30 June 2011 to support a customised industrial
training program. The Group has received a letter from the State, dated 16 August 2011, confirming
that the Group has fulfilled and met the conditions of the grant.
●
The Group received a performance-based grant from the State of Virginia to reimburse recruiting and
training expenses for the call center in Hampton, Virginia. Based upon the forecasted creation of
additional jobs, the State will reimburse the Group for each net new job created after 1 January 2011.
Through 30 June 2011, the Group received $78,000 in creation of new jobs.
●
The Group was granted a total of $375,000 on 30 December 2009, from the Commonwealth of
Pennsylvania acting through the Department of Community and Economic Development. The funds
were used for working capital as part of the Group’s expansion of operations (the Project) in Allegheny
County, Pennsylvania. The grant requires the Group to create new, full-time jobs at the Project site
through 30 June 2012; and to meet certain other conditions. Based on present facts and
circumstances, the Group believes that it is on schedule for the creation of new full-time jobs by 30
June 2012. The Group has already met the remaining conditions.
●
The Group received grants in a total of $475,000 from the State of West Virginia during fiscal year
ended 30 June 2012 for its facilities in Beckley $159,000, Elkins $161,000 and Charleston $155,000.
These funds were treated as a reduction in cost of sales for the period ending 30 June 2013 to support
a customised industrial training program.
68
●
The Group recorded grant of $146,000 from State of Tennessee, Department of Economic and
Community Development for the provision of employee instruction/training and associated expenses
in support of the group’s commitment to maintain and increase jobs and income in Tennessee. The
Grant Contract is effective for the period commencing on 21 May 2012 and ending on 20 May 2015.
The total amount to be awarded to the group under this Grant Contract is $315,000. These funds
were treated as a reduction in cost of sales for the six months ended December 2012.
(18) Contingencies and commitments
Contingencies
The entities within this historical financial information are subject to lawsuits and claims filed in the normal
course of business. Management does not believe that the outcome of any of the proceedings will have a
material adverse effect on the Group’s business results of operations, liquidity or financial condition. Although
management does not believe that any such proceedings will have material effect, no assurances to that
effect can be given.
The significant claims or legal proceedings against the entities within this historical financial information are
as follows:
In March 2006, Reese Brothers, Inc. (RBI) filed a claim against the United States Postal Service (USPS)
challenging the constitutionality of “relationship test cooperative mailing regulations” promulgated by the
USPS and seeking damages in the nature of over-payments for postal charges, lost business, and other
injuries. In June 2006, the USPS filed a counter claim and third-party complaint joining Reese Teleservices,
Inc. (RTI), which was acquired by TRGGS during the year ended 30 June 2007, as a third-party defendant
under a theory of “successor-in-interest” status to RBI. This matter was settled in February 2013 by all
parties by an exchange of mutual releases, without any payments of money or other obligations.
In May 2012, the landlord (LL) of a former TRGCS Oil City centre (Facility) filed a case in the Court of Common
Pleas of Venango County, Pennsylvania. LL alleges that TRGCS remained in Facility through March 2012
and owed rent through that date. TRGCS has settled case for a $10,000 payment to be made on 31 March
2013, when an order releasing TRGCS in full and dismissing the case with prejudice will be entered.
Commitments
The Group has an annual telecommunication service commitment with one of its carriers. The carrier
agreement was signed in January 2012 for a three year term with minimum annual commitment for
$600,000. The agreement has a provision for an early termination at the one year anniversary with a sixty
day written notice.
The Group is also subject to early termination provisions in certain telecommunications contracts, which if
enforced by the telecommunications providers, would subject the Group to early terminations fees. To date,
these early termination provisions had not been triggered by the Group.
(19) Operating leases
Certain subsidiary IBEX companies have acquired computer equipment, software, office facilities, furniture
and fixtures and office premises under operating lease arrangements, of which certain arrangements contain
renewal options and escalation clauses for operating expenses and inflation. Rent expense is recognized
on a straight line basis over the life of the lease term. Future minimum lease rentals under operating leases
for years ending subsequent to 31 December 2012 are as follows:
Operating
leases
$’000’s
Within one year
After one year but not more than five years
More than five years
5,866
12,827
3,615
–––––––––––
22,308
–––––––––––
–––––––––––
69
Rental expenditure was approximately $3.8 million, $4 million, $5.6 million and $3.2 million for the years
ended June 30, 2010, 2011 and 2012 and six months ended 31 December 2012 respectively.
(20) Retirement benefits obligations
TRG Philippines Inc. operate an unfunded defined benefit plan for qualifying employees. Under the plan,
the employees are entitled to one half month’s salary for every year of service, with 6 months or more of
service considered as one year. One half month’s salary has been defined to include the following:
– 15 days salary based on the latest salary rate
– cash equivalent to 5 days service incentive leave
– one-twelfth of the 13th month’s pay
An employee is entitled to retirement benefits only upon attainment of a retirement age of 60 years and
completion of at least five years of previous credited service. No other post-retirement benefits are provided
to these employees. The most recent actuarial valuations of the present value of the defined benefit obligation
was carried out at 30 June 2012. The present value of the defined benefit obligation, and the related current
service cost and past service cost, were measured using the projected unit credit method.
The principal assumptions used for the purposes of the actuarial valuations are as follows:
30 June
2010
%
30 June
2011
%
10.58
8.00
9.41
8.00
Discount rate
Expected rate of salary increase
30 June 31 December
2012
2012
%
%
6.46
8.00
6.46
8.00
Amounts recognised within cost of sales in the combined statement of comprehensive income in respect
of defined benefit plan are as follows:
Current service cost
Interest on obligation
Actuarial (gains)/losses recognised during
the year
30 June
2010
$’000’s
30 June
2011
$’000’s
9
2
58
10
63
–––––––––––
74
–––––––––––
–––––––––––
–
–––––––––––
68
–––––––––––
–––––––––––
30 June 31 December
2012
2012
$’000’s
$’000’s
85
17
–
–––––––––––
102
–––––––––––
–––––––––––
57
15
(15)
–––––––––––
57
–––––––––––
–––––––––––
The amount included in the combined statement of financial position arising from a direct subsidiary, IBEX
Global Philippines, in respect of its defined benefit plan obligation as of 30 June 2010, 2011 and 2012 and
31 December 2012 is as follows:
Present value of unfunded defined benefit
obligation
Unrecognised actuarial gains/(losses)
30 June
2010
$’000’s
30 June
2011
$’000’s
87
16
181
(10)
30 June 31 December
2012
2012
$’000’s
$’000’s
155
133
–––––––––––
–––––––––––
–––––––––––
103
171
288
–––––––––––
–––––––––––
70
–––––––––––
–––––––––––
–––––––––––
–––––––––––
353
–
–––––––––––
353
–––––––––––
–––––––––––
The movement in the present value of the defined benefit obligation in the current period is as follows:
Opening present value of define benefit obligation
Foreign exchange differences
Current service cost
Interest cost
Actuarial (gains)/losses
Present value of defined benefit obligation
30 June
2010
$’000’s
30 June
2011
$’000’s
12
–
9
2
64
87
9
58
10
17
30 June 31 December
2012
2012
$’000’s
$’000’s
181
5
85
17
(133)
–––––––––––
–––––––––––
–––––––––––
87
181
155
–––––––––––
–––––––––––
–––––––––––
–––––––––––
30 June
2010
$’000’s
30 June
2011
$’000’s
63,916
4,217
(25)
18,008
75,701
3,495
24
18,411
–––––––––––
–––––––––––
155
141
57
–
–
–––––––––––
353
–––––––––––
–––––––––––
(21) Expenses by nature
Employee benefit expenses
Depreciation and amortisation
Foreign exchange gains and losses
Other expenses
Analysed as:
Cost of sales
Selling, general and administrative expenses
30 June 31 December
2012
2012
$’000’s
$’000’s
82,682
3,064
164
20,717
–––––––––––
–––––––––––
–––––––––––
86,116
97,631
106,627
53,226
1,275
166
11,159
–––––––––––
65,826
–––––––––––
–––––––––––
–––––––––––
–––––––––––
–––––––––––
–––––––––––
–––––––––––
–––––––––––
69,962
16,154
79,627
18,004
90,732
15,895
57,431
8,395
–––––––––––
–––––––––––
–––––––––––
86,116
97,631
106,627
–––––––––––
–––––––––––
–––––––––––
–––––––––––
30 June
2010
$’000’s
30 June
2011
$’000’s
–––––––––––
–––––––––––
–––––––––––
65,826
–––––––––––
–––––––––––
(22) Other income
Gain on write back of inter-company payables
150
–––––––––––
150
–––––––––––
–––––––––––
71
–
–––––––––––
–
–––––––––––
–––––––––––
30 June 31 December
2012
2012
$’000’s
$’000’s
2
–––––––––––
2
–––––––––––
–––––––––––
–
–––––––––––
–
–––––––––––
–––––––––––
(23) Profit before income taxes
Profit before taxation is stated after charging:
30 June
2010
$’000’s
30 June
2011
$’000’s
Operating lease expenses
Land and buildings
3,791
4,025
5,624
3,197
Depreciation and amortisation
Depreciation of property, plant and equipment:
Owned
Held under finance leases
Amortisation
Foreign exchange gains/losses
3,261
159
797
(25)
2,869
39
587
24
2,264
546
254
164
906
275
94
166
–––––––––––
–––––––––––
–––––––––––
–––––––––––
30 June 31 December
2012
2012
$’000’s
$’000’s
–––––––––––
–––––––––––
–––––––––––
–––––––––––
(24) Employee information
Expenses recognised for employee benefits are analysed below:
Salaries and other employee costs
Social security and other taxes
Employee share options expense
Retirement – contribution plan
Pensions – defined benefits plan
30 June
2010
$’000’s
30 June
2011
$’000’s
49,128
14,196
523
60
9
59,966
15,363
246
68
58
30 June 31 December
2012
2012
$’000’s
$’000’s
65,858
16,506
157
76
85
–––––––––––
–––––––––––
–––––––––––
63,916
75,701
82,682
–––––––––––
–––––––––––
–––––––––––
–––––––––––
–––––––––––
–––––––––––
42,779
10,310
42
38
57
–––––––––––
53,226
–––––––––––
–––––––––––
Average number of employees are analysed below:
Direct labour
Administrative staff
30 June
2010
$’000’s
30 June
2011
$’000’s
3,267
716
4,435
863
4,523
784
–––––––––––
–––––––––––
–––––––––––
3,983
5,298
5,307
–––––––––––
–––––––––––
–––––––––––
–––––––––––
(25) Remuneration of key management personnel
30 June
2010
$’000’s
30 June
2011
$’000’s
Managerial remuneration
Short term employee benefits
Retirement benefits
Employee share option
30 June 31 December
2012
2012
$’000’s
$’000’s
2,173
266
126
523
3,392
38
160
246
–––––––––––
–––––––––––
1,862
29
48
157
–––––––––––
–––––––––––
3,088
3,836
2,096
–––––––––––
–––––––––––
–––––––––––
6,655
–––––––––––
–––––––––––
30 June 31 December
2012
2012
$’000’s
$’000’s
–––––––––––
–––––––––––
–––––––––––
5,534
1,121
–––––––––––
–––––––––––
2,225
299
108
42
–––––––––––
2,674
–––––––––––
–––––––––––
The key management personnel include the senior management team having an annual base salary of
USD100,000 or more.
72
The number of key management personnel was 26, 27, 34, and 28 for the years ended 30 June 2010,
2011, 2012 and the six months ended 31 December 2012 respectively.
The number of key management personnel participating in defined contribution retirement benefit schemes
was 20, 20, 27, and 18 for the years ended 30 June 2010, 2011, 2012 and the six months ended
31 December 2012 respectively.
Remuneration for highest paid key management
30 June
2010
$’000’s
Managerial remuneration
Short term employee benefits
Retirement benefits
Employee share option
252
32
8
–
30 June
2011
$’000’s
289
–
23
3
30 June 31 December
2012
2012
$’000’s
$’000’s
335
–
–
73
–––––––––––
–––––––––––
–––––––––––
292
315
408
–––––––––––
–––––––––––
–––––––––––
–––––––––––
30 June
2010
$’000’s
30 June
2011
$’000’s
716
1,125
65
2
1,936
20
14
7
–––––––––––
–––––––––––
202
2
–
–
–––––––––––
204
–––––––––––
–––––––––––
(26) Finance costs
Interest on borrowings
Factoring fees
Finance charges on leased assets
Bank charges
30 June 31 December
2012
2012
$’000’s
$’000’s
1,531
6
162
1
–––––––––––
–––––––––––
–––––––––––
1,908
1,977
1,700
–––––––––––
–––––––––––
–––––––––––
–––––––––––
30 June
2010
$’000’s
30 June
2011
$’000’s
789
199
17
49
(29)
41
–––––––––––
–––––––––––
860
5
64
2
–––––––––––
931
–––––––––––
–––––––––––
(27) Income taxes
The tax provision consists of the following:
Current
US Federal tax
US State tax
Other than US
–––––––––––
–––––––––––
1,005
61
105
(456)
(7)
(76)
–––––––––––
(539)
–––––––––––
466
Income tax on continuing operations
Income tax on discontinued operations
–
21
84
–––––––––––
–––––––––––
–––––––––––
Deferred tax/(benefits)
US Federal tax
US State tax
Other than US
30 June 31 December
2012
2012
$’000’s
$’000’s
–––––––––––
–––––––––––
(286)
(42)
(12)
–––––––––––
(340)
–––––––––––
(279)
–––––––––––
–––––––––––
64
2
(11)
–––––––––––
55
–––––––––––
160
–
–
16
–––––––––––
16
–––––––––––
–––––––––––
36
9
2
–––––––––––
47
–––––––––––
63
–––––––––––
–––––––––––
–––––––––––
–––––––––––
–––––––––––
–––––––––––
–––––––––––
–––––––––––
450
16
(279)
–
160
–
63
–
–––––––––––
466
–––––––––––
–––––––––––
73
–––––––––––
(279)
–––––––––––
–––––––––––
–––––––––––
160
–––––––––––
–––––––––––
–––––––––––
63
–––––––––––
–––––––––––
Income from discontinued operations has been recognised in the combined statement of comprehensive
income net of the $16,000 charge above.
The US. tax provision calculations include TRG Customer Solutions Inc. trading as IBEX Global Solutions.
Additionally, included in the provision are TRG Customer Solutions Inc. trading as IBEX Global Solutions
and TRG Customer Solutions Canada Inc., TRG Marketing Solutions Limited and Virtual World (Private)
Limited.
Deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of
assets and liabilities for financial reporting purposes and the amounts used for income tax purposes, as well
as net operating losses and tax credit carry forward. Deferred tax assets and liabilities are measured using
the enacted tax rates that will apply to taxable income in the periods the deferred tax item is expected to be
settled or realized. The tax effects of the Group’s temporary differences and carry forwards are as follows:
Tax effect of deductible/(taxable temporary differences)
30 June
2010
$’000’s
Tax effect of deductible temporary differences:
– Provisions and write-offs against trade debts
6
– Unpaid accrued expenses/compensation
74
– Net operating losses
2,681
– Intangibles
112
Total deferred tax
Comprising:
Deferred tax asset
Deferred tax liability
30
52
5,347
96
–––––––––––
–––––––––––
2,873
3,844
5,525
(582)
(606)
(53)
–––––––––––
(1,241)
Less: Deferred tax asset not recognised
29
129
3,567
119
30 June 31 December
2012
2012
$’000’s
$’000’s
–––––––––––
–––––––––––
–––––––––––
Tax effect of taxable differences:
– Fixed assets
– Intangibles
– Prepayments and others
30 June
2011
$’000’s
–––––––––––
–––––––––––
(422)
(711)
(57)
–––––––––––
(1,190)
–––––––––––
–––––––––––
1,632
(2,676)
2,654
(3,358)
–––––––––––
–––––––––––
(1,044)
(704)
–––––––––––
–––––––––––
–––––––––––
–––––––––––
18
(1,062)
–
(704)
–––––––––––
(1,044)
–––––––––––
–––––––––––
–––––––––––
(704)
–––––––––––
–––––––––––
–––––––––––
–––––––––––
(426)
(777)
–
–––––––––––
(1,203)
–––––––––––
4,322
(5,081)
–––––––––––
(759)
–––––––––––
–––––––––––
–
(759)
–––––––––––
(759)
–––––––––––
–––––––––––
33
82
5,471
88
–––––––––––
5,674
–––––––––––
–––––––––––
(549)
(823)
–
–––––––––––
(1,372)
–––––––––––
4,302
(5,108)
–––––––––––
(806)
–––––––––––
–––––––––––
–
(806)
–––––––––––
(806)
–––––––––––
–––––––––––
Deferred tax asset on deductible temporary differences (including unused tax losses) has not been
recognised in these financial information, as the management is of the view that it is not probable that
sufficient taxable profits will be available in the foreseeable future against which deductible temporary
differences and unused tax losses can be utilised.
At 31 December 2012, the Group’s US federal and state net operating loss carry forwards for income tax
purposes are $4.4 million (30 June 2012: $3.8 million) which will begin to expire in 2032. The Group’s
Canadian subsidiary has net operating loss carry forwards of $12 million for Canadian income tax purposes,
expiring over the period 2015 through 2032. The Group’s UK subsidiary has net operating loss carry forward
of $2.6 million. These amounts are based on the income tax returns filed for the year ended 30 June 2012
and estimated amounts for the half year ended 31 December 2012. The timing and manner, in which the
group will utilise the US net operating loss carry forwards in any year, or in total, may be limited by provisions
of the Internal Revenue Code regarding changes in ownership.
Management has evaluated the Group’s tax positions and concluded that the Group had taken no uncertain
tax positions that require adjustment to the combined financial statements. The Group recognises interest
74
and penalties related to uncertain tax position in income tax expense. As of 31 December 2012; the Group
had no provision for interest or penalties related to uncertain tax position. The years 2009-2012 are open to
examination by the tax authorities.
Reconciliation of effective tax rate
Profit/(loss) for the year
Income tax expense/(benefit)
30 June
2010
$’000’s
30 June
2011
$’000’s
1,344
450
(2,204)
(279)
–––––––––––
1,794
–––––––––––
–––––––––––
Income tax expense/
(benefit) using applicable
tax rate
State taxes
(net of federal tax effect)
Effect of tax and
exchange rates in foreign
jurisdictions
Non-deductible
expenses
Change in unrecognised
temporary differences
–––––––––––
(2,483)
–––––––––––
–––––––––––
30 June 31 December
2012
2012
$’000’s
$’000’s
(4,199)
160
(235)
63
–––––––––––
–––––––––––
(4,039)
(172)
–––––––––––
–––––––––––
–––––––––––
–––––––––––
30 June
2010
% US$’000
30 June
2011
% US$’000
30 June
2012
% US$’000
31 December
2012
% US$’000
34
610
34
(844)
34
(1,373)
34
(58)
4
112
4
(122)
4
(145)
4
(6)
–
(11)
7
(163)
4
(152)
(28)
49
10
224
(7)
168
(3)
107
(30)
51
(28)
–––––––––
20
–––––––––
–––––––––
(485)
–––––––––
450
–––––––––
–––––––––
(27)
–––––––––
11
–––––––––
–––––––––
682
–––––––––
(279)
–––––––––
–––––––––
(43)
–––––––––
(4)
–––––––––
–––––––––
1,723
–––––––––
160
–––––––––
–––––––––
(16)
–––––––––
(36)
–––––––––
–––––––––
27
–––––––––
63
–––––––––
–––––––––
(28) Related parties – due to and from affiliates
During the years ended 30 June 2010, 2011 and 2012 and six months ended 31 December 2012, the
Group entered into transactions with certain affiliates owned wholly or partially by The Resource Group
International Limited, the ultimate parent of the IBEX Group. The transactions took place at fair value.
TRG Holdings LLC is 100 per cent. owned by The Resource Group International Limited and acts as a
holding company of The Resource Group International Limited businesses in US. Effective from 1 January
2009 to 31 December 2011 intercompany subcontracted services provided among different affiliates were
billed through TRG Holdings LLC.
TRG BPO Solutions, Inc. is 100 per cent. owned by TRG Holdings LLC. Effective from 1 January 2012
intercompany subcontracted services provided among differences affiliates were billed through TRG Holdings
LLC.
75
The related party transactions for the Group as of and for the years ended 30 June 2010, 2011 and 2012
and 31 December 2012 are as follows:
Service
delivery
revenue
$’000’s
TRG Holdings, LLC
The Resource Group
International Limited
Blasiar, Inc. (dba Alert)
Alert Inc.
TRG Marketing Services
Digital Globe Services
TRG SATMAP Inc.
TRG Senegal
TRG iSKY, Inc.
TRG Private Ltd.
Stratasoft, Inc
Balance as of 30 June 2010
Balance as of 30 June 2011
Total due
to affiliates
long term
$’000’s
1,899
4,538
1,039
–
(169)
–
828
340
–
–
–
–
837
–
–
–
–
–
–
–
–
–
–
–
–
–
101
360
9,408
32
178
20
157
–
–
(263)
–
–
–
–
–
–
–
(41)
(30)
–
–
–
–
–
–
–
–
(489)
–
–––––––––––
–––––––––––
–––––––––––
–––––––––––
3,904
4,538
11,295
(334)
–––––––––––
–––––––––––
Service
delivery
revenue
$’000’s
TRG Holdings, LLC
The Resource Group
International Limited
Blasiar, Inc. (dba Alert)
Alert Inc.
TRG Marketing Services
Digital Globe Services
TRG SATMAP Inc.
TRG Private Ltd.
TRG Senegal
TRG iSky, Inc.
Stratasoft, Inc
Year ended 30 June 2010
Service
Total due
Total due
delivery from affiliates
to affiliates
expense
current
current
$’000’s
$’000’s
$’000’s
–––––––––––
–––––––––––
–––––––––––
–––––––––––
–––––––––––
(658)
–––––––––––
–––––––––––
–––––––––––
–––––––––––
Year ended 30 June 2011
Service
Total due
Total due
delivery from affiliates
to affiliates
expense
current
current
$’000’s
$’000’s
$’000’s
Total due
to affiliates
long term
$’000’s
2,078
4,505
1,385
–
(947)
–
–
1,299
–
–
820
–
–
462
–
–
–
–
–
–
–
–
–
–
–
–
101
833
9,333
50
144
–
20
480
–
(262)
–
–
–
–
–
(7)
–
–
(25)
–
–
–
–
–
–
(1,194)
–
–
–
–––––––––––
–––––––––––
–––––––––––
–––––––––––
4,659
4,505
12,346
(294)
–––––––––––
–––––––––––
–––––––––––
–––––––––––
76
–––––––––––
–––––––––––
–––––––––––
–––––––––––
–––––––––––
(2,141)
–––––––––––
–––––––––––
Service
delivery
revenue
$’000’s
TRG Holdings, LLC
TRG BPO Solutions, Ir.
The Resource Group
International Limited
Blasiar, Inc. (dba Alert)
Alert Inc.
TRG Marketing Services
Digital Globe Services
TRG SATMAP Inc.
TRG Private Ltd.
TRG Senegal
TRG iSky, Inc.
Stratasoft, Inc
Balance as of 30 June 2012
Balance as of 31 December 2012
Total due
to affiliates
long term
$’000’s
966
1,393
2,336
2,471
41
1,965
–
–
(1,082)
–
–
–
502
–
–
898
–
–
485
–
–
–
–
–
–
–
–
–
38
–
–
101
857
10,604
33
60
–
20
506
–
(60)
–
–
–
–
–
(9)
–
–
(21)
–
–
–
–
–
–
(1,126)
–
–
–
–––––––––––
–––––––––––
–––––––––––
–––––––––––
4,244
4,845
14,187
(90)
–––––––––––
–––––––––––
Service
delivery
revenue
$’000’s
TRG Holdings, LLC
TRG BPO Solutions, Ir.
The Resource Group
International Limited
Alert Inc.
TRG Marketing Services
Digital Globe Services
TRG SATMAP Inc.
TRG Private Ltd.
TRG Senegal
TRG iSky, Inc.
Stratasoft, Inc
Year ended 30 June 2012
Service
Total due
Total due
delivery from affiliates
to affiliates
expense
current
current
$’000’s
$’000’s
$’000’s
–––––––––––
–––––––––––
–––––––––––
–––––––––––
–––––––––––
(2,208)
–––––––––––
–––––––––––
–––––––––––
–––––––––––
Year ended 31 December 2012
Service
Total due
Total due
delivery from affiliates
to affiliates
expense
current
current
$’000’s
$’000’s
$’000’s
Total due
to affiliates
long term
$’000’s
–
1,304
–
2,825
39
1,999
–
–
(1,082)
–
–
251
–
–
284
–
–
283
–
–
–
–
–
–
–
–
–
–
–
955
10,604
162
67
–
20
492
–
(63)
–
–
–
–
(7)
–
–
(21)
–
–
–
–
–
(1,395)
–
–
–
–––––––––––
–––––––––––
–––––––––––
–––––––––––
2,122
2,825
14,338
(91)
–––––––––––
–––––––––––
–––––––––––
–––––––––––
77
–––––––––––
–––––––––––
–––––––––––
–––––––––––
–––––––––––
(2,477)
–––––––––––
–––––––––––
(29) Cash (used in)/generated from operations
Profit/(loss) before income taxes
Adjustments for:
Depreciation and amortisation
Finance costs
Write back intercompany payable
Provision for retirement benefit expense
(Gain)/loss on sale of fixed assets
Income from discontinued operations
Employee share option expense
Changes in operating assets and liabilities:
Trade and other receivables
Trade and other payables
Deferred revenue/expense
Due to/from affiliates
Net cash (used in)/generated from operating
activities
30 June
2010
$’000’s
30 June
2011
$’000’s
2,237
(2,483)
(4,039)
(172)
4,217
1,908
150
5
(3,491)
29
523
3,495
1,977
–
68
7
3,064
1,700
–
102
–
1,275
931
–
57
–
246
157
42
(1,153)
(3,214)
227
(6,380)
(2,449)
943
(50)
392
(637)
3,022
113
(1,978)
(5,747)
3,123
(279)
119
–––––––––––
(4,942)
–––––––––––
–––––––––––
–––––––––––
2,146
–––––––––––
–––––––––––
30 June 31 December
2012
2012
$’000’s
$’000’s
–––––––––––
1,504
–––––––––––
–––––––––––
–––––––––––
(647)
–––––––––––
–––––––––––
(30) Financial instruments
(a) Financial risk management
The Group’s activities expose it to a variety of financial risks: market risk (including interest rate risk and
currency risk), credit risk and liquidity risk.
Financial instruments by category are as follows:
30 June
2010
$’000’s
Financial assets category: loans and receivables
Non-current assets
Long term deposits
732
Long term notes receivable
707
Current assets
Trade receivable
Deposits
Notes receivable
Due from affiliates
Cash and bank balances
1,044
–
30 June 31 December
2012
2012
$’000’s
$’000’s
1,359
–
–––––––––––
–––––––––––
–––––––––––
1,439
1,044
1,359
1,468
–
–––––––––––
1,468
–––––––––––
–––––––––––
–––––––––––
–––––––––––
14,620
317
236
11,295
570
16,191
554
1,050
12,346
828
17,494
697
–
14,187
1,925
22,850
126
–
14,338
2,454
–––––––––––
–––––––––––
–––––––––––
27,038
30,969
34,303
–––––––––––
28,477
Financial liabilities at amortised cost
Line of credit
Liabilities against assets subject to finance lease
Due to affiliates
Trade and other payables
30 June
2011
$’000’s
–––––––––––
32,013
–––––––––––
35,662
–––––––––––
39,768
–––––––––––
41,236
–––––––––––
–––––––––––
–––––––––––
–––––––––––
–––––––––––
–––––––––––
–––––––––––
–––––––––––
9,745
146
992
9,829
11,158
268
2,436
11,279
11,983
1,355
2,298
14,487
14,597
1,052
2,568
17,537
–––––––––––
–––––––––––
–––––––––––
20,712
25,141
30,123
–––––––––––
–––––––––––
78
–––––––––––
–––––––––––
–––––––––––
–––––––––––
–––––––––––
35,754
–––––––––––
–––––––––––
Risks managed and measured by the Group are explained below:
(b) Concentration of credit risk
Financial instruments which potentially expose the Group to concentrations of credit risk consist primarily
of cash and cash equivalents and accounts receivable (see Note 4). The Group’s cash and cash equivalents
are held with US and foreign commercial banks. The balance at times may exceed insured limits.
Credit rating breakup of balances:
AA
AAA-1
A+
A
ABBB+
Non-rated
30 June
2010
$’000’s
30 June
2011
$’000’s
8
30
–
307
118
77
21
9
21
84
–
2
191
90
436
4
30 June 31 December
2012
2012
$’000’s
$’000’s
29
4
246
1,557
–
–
72
17
–––––––––––
–––––––––––
–––––––––––
570
828
1,925
–––––––––––
–––––––––––
–––––––––––
–––––––––––
–––––––––––
–––––––––––
52
32
–
2,152
205
–
–
13
–––––––––––
2,454
–––––––––––
–––––––––––
The ageing of trade debtors at year end is as follows:
Due 0 to 30 days
Due 31 to 60 days
Due 61 to 90 days
Due 91 to 180 days
Due over 180 days
Less: provision for doubtful debts
30 June
2010
$’000’s
30 June
2011
$’000’s
13,926
399
228
86
73
(92)
13,586
505
1,883
286
74
(143)
30 June 31 December
2012
2012
$’000’s
$’000’s
14,738
2,218
342
267
76
(147)
–––––––––––
–––––––––––
–––––––––––
14,620
16,191
17,494
–––––––––––
–––––––––––
–––––––––––
–––––––––––
–––––––––––
–––––––––––
19,094
3,331
566
568
–
(709)
–––––––––––
22,850
–––––––––––
–––––––––––
The Group does not hold any collateral against these assets.
Financial assets other than trade debts do not contain any impaired or non-performing assets.
(c) Foreign currency risk
Currency risk arises mainly where receivables and payables exist due to transactions entered into foreign
currencies. The Group primarily has foreign currency exposures in Pakistan Rupee, Pound Sterling and
Philippine Peso. However the majority of the transactions of the Group are denominated in United States
Dollar ($) and accordingly foreign currency exposure is not significant to the Group’s financial position and
performance.
(d) Interest rate risk
Interest risk is the risk that the value of the financial instrument will fluctuate due to changes in the market
interest rates. The Group is exposed to interest rate risk in respect of borrowings and bank balances.
Effective interest rates and maturities are given in respective notes to the financial statements.
79
(e) Liquidity
Based on current operating plans, the Group believes that existing cash and cash equivalents will be
sufficient to meet the Group’s anticipated operating needs through the end of June 2013. However, there
are a number of assumptions built into the Group’s current operating plans. If these assumptions do not
materialise, the Group may need to seek additional financing or management may need to implement a
reduced spending plan to fund operations in the 2013 fiscal year.
Financial liabilities in accordance with their contractual maturities are presented below:
30 June 2010
Line of credit
Finance lease liabilities
Trade payables and accrued
expenses
Due to affiliates
Carrying
value
Total
contractual
cash flows
Less than
1 year
Between 1
to 2 years
Between 2
to 5 years
9,745
146
9,745
160
9,745
138
–
22
–
–
9,829
992
9,829
992
9,829
334
–
658
–
–
–––––––––––
–––––––––––
–––––––––––
–––––––––––
20,712
20,726
20,046
680
–––––––––––
–––––––––––
–––––––––––
–––––––––––
Carrying
value
Total
contractual
cash flows
11,158
268
11,279
2,436
–––––––––––
–––––––––––
–––––––––––
–
–––––––––––
–––––––––––
–––––––––––
–––––––––––
Less than
1 year
Between 1
to 2 years
Between 2
to 5 years
11,158
324
11,158
126
–
198
–
–
11,279
2,435
11,279
294
–
2,141
–
–
30 June 2011
Line of credit
Finance lease liabilities
Trade payables and accrued
expenses
Due to affiliates
–––––––––––
–––––––––––
–––––––––––
–––––––––––
25,141
25,196
22,857
2,339
–––––––––––
–––––––––––
–––––––––––
–––––––––––
Carrying
value
Total
contractual
cash flows
11,983
1,355
14,487
2,298
–––––––––––
–––––––––––
–––––––––––
–
–––––––––––
–––––––––––
–––––––––––
–––––––––––
Less than
1 year
Between 1
to 2 years
Between 2
to 5 years
11,983
1,497
11,983
774
–
723
–
–
14,487
2,298
14,487
90
–
2,208
–
–
30 June 2012
Line of credit
Finance lease liabilities
Trade payables and accrued
expenses
Due to affiliates
–––––––––––
–––––––––––
–––––––––––
–––––––––––
30,123
30,265
27,334
2,931
–––––––––––
–––––––––––
–––––––––––
–––––––––––
80
–––––––––––
–––––––––––
–––––––––––
–––––––––––
–––––––––––
–
–––––––––––
–––––––––––
31 December 2012
Line of credit
Liabilities against assets subject
to finance lease
Trade payables and accrued
expenses
Due to affiliates
Carrying
value
Total
contractual
cash flows
Less than
1 year
Between 1
to 2 years
Between 2
to 5 years
14,597
14,597
14,597
–
–
1,052
1,195
543
652
–
17,537
2,568
17,537
2,568
17,537
91
–
2,477
–
–
–––––––––––
–––––––––––
–––––––––––
–––––––––––
35,754
35,897
32,768
3,129
–––––––––––
–––––––––––
–––––––––––
–––––––––––
–––––––––––
–––––––––––
–––––––––––
–––––––––––
–––––––––––
–
–––––––––––
–––––––––––
(f) Fair value of financial instruments
Fair value is the amount for which an asset could be exchanged, or liability settled, between knowledgeable
willing parties in an arm’s length transaction. Consequently, differences can arise between the carrying value
and fair value estimates.
The estimated fair value of financial assets and liabilities is considered not significantly different from carrying
values as the items are either short-term in nature or periodically re-priced.
(31) Capital risk management
The Group’s objectives when managing capital are to safeguard the Group’s ability to continue as a going
concern in order to provide returns for shareholders and benefits for other stakeholders and to maintain an
optimal capital structure to reduce the cost of capital. The capital structure of the Group at the year end
consisted of cash and cash equivalents and equity attributable to equity holders of the parent, comprising
issued capital, reserves and retained losses. In order to maintain or adjust the capital structure, the Group
may adjust the amount of dividends paid to shareholders, return capital to shareholders, issue new shares
or sell assets to reduce debt.
(32) Divestiture of Door to Door Business Unit
The ultimate parent entity, The Resource Group International Limited, incorporated a wholly owned subsidiary
called TRG Field Solutions (“TRG FS”) to assume the operations of the Door to Door business unit of IBEX
US by virtue of a Contribution Agreement during fiscal year ended 30 June 2010.
As per the agreement, TRG agreed to transfer 110 shares of Series A Preferred Stock of IBEX US to TRG
FS at an amount of $1.035 million. TRG FS issued common stock for an equivalent amount to The Resource
Group International Limited as consideration for the preferred stock. At 31 July 2009, IBEX sold the assets
and contributed the liabilities of its Door to Door business unit to TRG FS. The net asset of the business unit
were sold in exchange for the retirement of the 100 shares of preferred stock owned by TRG FS in IBEX US.
The value of the preferred stock retired approximated the net asset value of the assets sold and liabilities
transferred on the transfer date.
81
Following is the summary of assets and liabilities related to the Group’s Field Solutions business unit that
was transferred to TRG FS as of 31 July 2009 and the summary of assets and liabilities as of 30 June 2009:
Accounts receivable
Prepaid expenses and other
Property and equipment
Accounts payable
Advances under financing agreement
Accrued expenses and other liabilities
31 July
2009
$’000’s
30 June
2009
$’000’s
3,921
156
27
(638)
(1,693)
(738)
4,119
153
27
(856)
(1,313)
(560)
–––––––––––
1,035
–––––––––––
–––––––––––
–––––––––––
1,570
–––––––––––
–––––––––––
The Group has reviewed the requirements of IFRS 5, “Non-Current Assets Held for Sale and Discontinued
Operations”, and determined that the spin-off of the Door to Door business unit met the criteria to be
presented as a discontinued operation.
Analysis of the result and cash flows of discontinued operations is as follows:
30 June
2010
$’000’s
Revenue
Cost of sales
1,443
(1,398)
–––––––––––
Profit before tax of discontinued operations
Tax
45
(16)
–––––––––––
Profit after tax of discontinued operations
29
–––––––––––
Operating cash flows
Investing cash flows
Financing cash flows
155
–
380
–––––––––––
Total cash flows
535
–––––––––––
–––––––––––
82
(33) Disposal – Canadian Operations of IBEX Global Solutions (Canada) Inc.
On 25 June 2010, IBEX Global Solutions (Canada) Inc. entered into an asset sale agreement with a third
party to dispose of substantially all of its Canadian assets and operations for a gross consideration of
approximately $6.3 million, which included a non-interest bearing promissory note receivable of
approximately $0.9 million payable over twenty-four months.
The details of the assets and liabilities disposed of were as follows:
$’000’s
Proceeds
Tangible fixed assets
Other assets
Goodwill
Accrued vacation
Sign up bonuses
6,271
507
31
2,666
(9)
(14)
–––––––––––
Gain on disposal of Canadian operations of IBEX Global Solutions (Canada) Inc
Reclassification of cumulative foreign exchange balance
Loss on retirement of assets
Total gain on sale of assets for the year ended 30 June 2010
3,090
–––––––––––
443
(42)
–––––––––––
3,491
–––––––––––
–––––––––––
The Group has reviewed the requirements of IFRS 5, “Non-Current Assets Held for Sale and Discontinued
Operations” and did not deem the sale of substantially all of its Canadian assets and operations to constitute
a separate component for the purposes of determining whether the disposal should be considered a
discontinued operation. This assessment was based upon the fact that all the activities, customers and
contracts of IBEX Global Solutions (Canada) Inc were operating as an amalgamated part of the Group
business, and the disposal of individual assets and operations did not constitute an operating unit on this
basis.
(34) Subsequent events
Please refer to Part 4 Additional Information for details of the following subsequent events:
–
changes in the share capital of the Company (paragraph 2 of Part 4)
–
adoption of an employee share options plan (paragraph 4 of Part 4)
–
formation of the Group and corporate structure (paragraph 11 of Part 4)
–
tax indemnification agreement related to the formation of the Group and corporate structure (paragraph
12.8 of Part 4)
83
PART 3C
UNAUDITED INTERIM FINANCIAL INFORMATION OF THE GROUP FOR THE
SIX MONTHS ENDED 31 DECEMBER 2011 (WITH AUDITED COMPARATIVES FOR THE
SIX MONTHS ENDED 31 DECEMBER 2012)
Combined Statements of Comprehensive Income
For the six months ended 31 December 2011 and 31 December 2012
Revenue
Cost of sales
Notes
2011
Unaudited
$’000’s
2012
Audited
$’000’s
3
52,485
(45,676)
66,585
(57,431)
–––––––––––
Gross profit
Selling, general and administrative expenses
6,809
(7,940)
–––––––––––
Operating (loss)/profit
(1,131)
Other expenses:
Finance costs
11
Loss before income taxes
Income tax expense
12
Net loss
Other comprehensive loss:
Foreign currency translation adjustment
(1,132)
–––––––––––
(2,263)
(87)
–––––––––––
(2,350)
4
–––––––––––
Total comprehensive loss attributable to equity holders
The accompanying notes are an integral part of this historical financial information
84
(2,346)
–––––––––––
–––––––––––
–––––––––––
9,154
(8,395)
–––––––––––
759
(931)
–––––––––––
(172)
(63)
–––––––––––
(235)
(61)
–––––––––––
(296)
–––––––––––
–––––––––––
Combined Statements of Financial Position
As at 31 December 2011 and 31 December 2012
Notes
Assets
Non current assets:
Goodwill
Other intangible assets
Property, plant and equipment
Other non-current assets
Total non current assets
Current assets:
Trade and other receivables
Deferred expenses
Due from affiliates
Cash and cash equivalents
2011
Unaudited
$’000’s
2012
Audited
$’000’s
8,644
835
4,244
1,992
8,644
612
3,456
2,240
–––––––––––
–––––––––––
15,715
14,952
20,117
1,426
12,754
2,292
24,408
907
14,338
2,454
4
5
Total current assets
–––––––––––
36,589
–––––––––––
Total assets
52,304
–––––––––––
–––––––––––
Equity and liabilities
Share capital and reserves
Share capital
Additional paid in capital
Other reserves
Retained loss
6
7
8
1,464
37,557
662
(21,744)
18,517
705
404
578
1,082
2,300
707
806
–
680
1,082
2,477
711
–––––––––––
–––––––––––
4,909
5,027
12,295
726
14,524
1,556
355
14,597
372
17,537
918
91
–––––––––––
29,456
–––––––––––
34,365
–––––––––––
Total equity and liabilities
52,304
–––––––––––
–––––––––––
The accompanying notes are an integral part of this historical financial information
85
1,464
40,271
610
(23,828)
–––––––––––
9
Total liabilities
57,059
–––––––––––
–––––––––––
17,939
Total non current liabilities
Current liabilities:
Line of credit
Obligation under finance lease – current portion
Trade and other payables
Deferred revenue – current portion
Due to affiliates – current portion
42,107
–––––––––––
–––––––––––
Total equity
Non current liabilities:
Deferred tax liabilities
Deferred revenue – non-current portion
Obligation under finance lease – non-current portion
Due to affiliates – non-current portion
Retirement benefits obligations
Other
–––––––––––
–––––––––––
33,515
–––––––––––
38,542
–––––––––––
57,059
–––––––––––
–––––––––––
Combined Statements of Changes in Equity
For the six months ended 31 December 2011 and 31 December 2012
Other reserves
Issued,
subscribed
and paid-up
capital
Amount
$000’s
As at 30 June 2011
(Audited)
Net loss
Other comprehensive income
Total comprehensive income
for the year
Employee share based
payment options
Transactions with owners
As at 31 December 2011
(Unaudited)
Net loss
Other comprehensive loss
Total comprehensive income
for the year
Issue of share capital
Employee share based
payment options
Transactions with owners
As at 30 June 2012
(Audited)
Net loss
Other comprehensive loss
Total comprehensive income
for the year
Issue of share capital
Employee share based
payment options
Transactions with owners
As at 31 December 2012
(Audited)
1,464
–
–
Additional
paid in
capital
$’000’s
Employee
share
option
plan
$’000’s
Foreign
currency
translation
reserve
$’000’s
Retained
loss
$’000’s
Total
equity
$000’s
37,557
–
–
1,480
–
–
(972)
–
4
(19,394)
(2,350)
–
20,135
(2,350)
4
–––––––––––
–––––––––––
–––––––––––
–––––––––––
–
–
–
4
–
–––––––––––
–
–
–––––––––––
–
150
–––––––––––
150
–––––––––––
–––––––––––
–––––––––––
1,464
–
–
37,557
–
–
1,630
–
–
–––––––––––
–––––––––––
–––––––––––
–
–
–
2,064
–
–
–
–––––––––––
–
–
–––––––––––
2,064
7
–––––––––––
7
–––––––––––
–––––––––––
–––––––––––
1,464
–
–
39,621
–
–
1,637
–
–
–––––––––––
–––––––––––
–––––––––––
–
–
–
650
–
–
–
–––––––––––
–
–––––––––––
1,464
–––––––––––
–––––––––––
–
–––––––––––
650
–––––––––––
40,271
–––––––––––
–––––––––––
42
–––––––––––
42
–––––––––––
1,679
–––––––––––
–––––––––––
–
–––––––––––
–
–––––––––––
(968)
–
(40)
–––––––––––
(40)
–
–
–––––––––––
–
–––––––––––
(1,008)
–
(61)
–––––––––––
(61)
–
–
–––––––––––
–
–––––––––––
(1,069)
–––––––––––
–––––––––––
The accompanying notes are an integral part of this historical financial information
86
–––––––––––
(2,350)
–
–––––––––––
–
–––––––––––
(21,744)
(1,849)
–
–––––––––––
(1,849)
–
–
–––––––––––
–
–––––––––––
(23,593)
(235)
–
–––––––––––
(235)
–
–
–––––––––––
–
–––––––––––
(23,828)
–––––––––––
–––––––––––
–––––––––––
(2,346)
150
–––––––––––
150
–––––––––––
17,939
(1,849)
(40)
–––––––––––
(1,889)
2,064
7
–––––––––––
2,071
–––––––––––
18,121
(235)
(61)
–––––––––––
(296)
650
42
–––––––––––
692
–––––––––––
18,517
–––––––––––
–––––––––––
Combined Statements of Cashflows
For and six months ended 31 December 2011 and 31 December 2012
Cash flows from operating activities:
Cash generated from /(used in) operations
Interest paid
Taxes paid
Notes
2011
Unaudited
$’000’s
2012
Audited
$’000’s
13
2,314
(1,132)
(126)
(647)
(931)
(151)
–––––––––––
Net cash used in operating activities
1,056
Cash flows from investing activities:
Purchases of property and equipment
(421)
–––––––––––
Net cash used in investing activities
Cash flows from financing activities:
Borrowings on line of credit
Repayment of line of credit
Grants received
Capital contributions from parent undertaking
Payments on capital lease obligations
Net cash generated from financing activities
Effect of exchange rate changes on cash and cash equivalents
Net increase in cash and cash equivalents
Cash at beginning of period
5
(673)
–––––––––––
(673)
12,295
(11,158)
–
–
(331)
2,614
–
57
650
(303)
–––––––––––
–––––––––––
806
23
3,018
(87)
–––––––––––
–––––––––––
1,464
828
529
1,925
2,292
–––––––––––
–––––––––––
The accompanying notes are an integral part of this historical financial information
87
(1,729)
(421)
–––––––––––
Cash at end of period
–––––––––––
–––––––––––
2,454
–––––––––––
–––––––––––
Notes to the Historical Financial Information
For the six months ended 31 December 2011 and 31 December 2012
(1) Nature of the business
IBEX Group is a global portfolio of companies in the contact center and related business process
outsourcing (BPO) business operating from the United States, Philippines, United Kingdom, Pakistan and
Senegal. Service offerings include customer care support, business and consumer inbound and outbound
telesales and technical support services. IBEX Group also offers enabling technology solutions including
Interactive Voice Response (IVR).
(2) Basis of preparation
The unaudited combined historical financial information for the six months ended 31 December 2011 and
31 December 2012 and as at those dates has been prepared for inclusion in the AIM Admission Document
dated 24 June 2013 on the basis of preparation and under the accounting policies set out in notes 2 and
3 to the audited combined historical financial information included in Part 3B.
This unaudited combined historical financial information does not constitute statutory accounts within the
meaning of section 434 of the Companies Act 2006, is not a set of general purpose financial statements
under paragraph three of IFRS 1 – First Time Adoption of International Financial Reporting Standards and
does not comply with IAS 34 – Interim Financial Reporting.
The Directors of the Company are responsible for preparation of this unaudited combined historical
financial information.
(3) Operating segments
This historical financial information has been prepared of the basis on a single reportable segment. Whilst
the group operates in different locations, there are no multiple products or lines of services upon which the
results reported to chief operating decision maker are segregated and analysed.
Revenue
Gross margin
Operating (loss)/profit
US GAAP to IFRS adjustments
2011
Unaudited
$000’s
2012
Audited
$000’s
52,485
6,809
(1,131)
–
66,585
9,154
745
14
–––––––––––
Reportable operating (loss)/profit
(1,131)
–––––––––––
–––––––––––
–––––––––––
759
–––––––––––
–––––––––––
92.65 per cent. and 91.67 per cent. of the total revenue was earned from customers in United States of
America for the six months ended 31 December 2011 and 2012 respectively.
88
The following table summarises those non related party customers with revenue or accounts receivable in
excess of 5 per cent. total revenue or total receivables for the six months ended 31 December 2011 and
2012 respectively. The revenue analysis below does not form part of the Group’s segmental reporting but
is provided voluntarily.
31 December 2011 (Unaudited)
Revenue
Accounts receivable
Percentage
Percentage
Amount
of total
Amount
of total
$000’s
%
$000’s
%
Client
Client
Client
Client
Client
1
2
3
5
6
Other
7,414
12,939
7,166
2,883
9,298
14
25
14
5
18
2,294
4,407
3,645
555
2,868
13
25
21
3
16
–––––––––––
–––––––––––
–––––––––––
–––––––––––
39,700
12,785
76
24
13,769
4,008
78
22
–––––––––––
–––––––––––
–––––––––––
52,485
100
17,777
–––––––––––
–––––––––––
–––––––––––
–––––––––––
–––––––––––
–––––––––––
–––––––––––
100
–––––––––––
–––––––––––
31 December 2012 (Audited)
Revenue
Accounts receivable
Percentage
Percentage
Amount
of total
Amount
of total
$000’s
%
$000’s
%
Client
Client
Client
Client
Client
Other
2
3
4
6
7
17,794
21,414
7,022
2,176
3,031
27
32
11
3
5
6,662
7,057
2,213
704
1,609
29
31
10
3
7
–––––––––––
–––––––––––
–––––––––––
–––––––––––
51,437
15,148
78
22
18,245
4,605
80
20
–––––––––––
–––––––––––
–––––––––––
66,585
100
22,850
–––––––––––
–––––––––––
–––––––––––
–––––––––––
–––––––––––
–––––––––––
–––––––––––
100
–––––––––––
–––––––––––
Client 4 does not represent 5 per cent. of revenues or receivables as of 31 December 2011 and client 1
and client 5 does not represent 5 per cent. of revenues or receivables as of 31 December 2012. Above
clients are Fortune 100 and/or Fortune 500 companies.
Details of segment assets and liabilities can be found in the combined statement of financial position. There
are no differences between US GAAP and IFRS.
Revenues are attributed to geographic areas based upon the location in which the sale originated. IBEX
Global Solutions Plc is domiciled in the United Kingdom. All revenues from external customers arose in the
United States of America in each of the reported periods.
Non-current assets located outside of the United Kingdom totalled $472,000 and $747,000 for the six
months to 31 December 2001 and 2012 respectively.
89
(4) Trade and other receivables
Trade and other receivables consist of the following:
Trade receivables – gross
Less: provision for doubtful debts
Trade receivables – net
Prepayments and other
Deposits
Notes receivable
2011
Unaudited
$000’s
2012
Audited
$000’s
18,090
(313)
22,958
(108)
–––––––––––
–––––––––––
17,777
1,602
246
492
22,850
1,432
126
–
–––––––––––
20,117
–––––––––––
24,408
–––––––––––
–––––––––––
–––––––––––
–––––––––––
2011
Unaudited
$000’s
2012
Audited
$000’s
2,152
110
2,186
255
(5) Cash and bank balances
Cash and cash equivalents consist of the following:
Balances with banks in:
– current accounts
– deposit accounts
Cash in hand
–––––––––––
–––––––––––
2,262
30
2,441
13
–––––––––––
2,292
(6)
–––––––––––
2,454
–––––––––––
–––––––––––
–––––––––––
–––––––––––
2011
Unaudited
$000’s
2012
Audited
$000’s
Share capital
Opening and closing share capital
1,464
–––––––––––
–––––––––––
1,464
–––––––––––
–––––––––––
All shares are equally eligible to receive dividends and the repayment of capital, and represent one vote at
the Annual General Meeting.
(7)
Additional paid in equity
Opening additional paid in equity (June 2011 and June 2012)
Additional contributions from equity holders
Closing additional paid in equity (December 2011 and December 2012)
90
2011
Unaudited
$000’s
2012
Audited
$000’s
37,557
–
39,621
650
–––––––––––
37,557
–––––––––––
–––––––––––
–––––––––––
40,271
–––––––––––
–––––––––––
(8) Reserves
Reserves consist of following:
Foreign currency translation reserve
Employee share option plan
2011
Unaudited
$000’s
2012
Audited
$000’s
(968)
1,630
(1,069)
1,679
–––––––––––
662
(9)
–––––––––––
610
–––––––––––
–––––––––––
–––––––––––
–––––––––––
2011
Unaudited
$000’s
2012
Audited
$000’s
4,601
2,320
7,603
4,777
2,177
10,583
Trade and other payables
Trade creditors
Accrued expenses and payables
Accrued salaries and wages
–––––––––––
14,524
–––––––––––
17,537
–––––––––––
–––––––––––
–––––––––––
–––––––––––
2011
Unaudited
$000’s
2012
Audited
$000’s
41,859
7,596
150
34
42
42,779
10,310
42
38
57
(10) Employee benefits expense
Expenses recognised for employee benefits are analysed below:
Salaries and other employee costs
Social security and other taxes
Employee share options expense
Pensions – contribution plan
Pensions – defined benefits plan
–––––––––––
49,681
–––––––––––
53,226
–––––––––––
–––––––––––
–––––––––––
–––––––––––
2011
Unaudited
$000’s
2012
Audited
$000’s
1,091
5
36
–
860
5
64
2
(11) Finance costs
Interest on borrowings
Factoring fees
Finance charges on leased assets
Bank charges
–––––––––––
1,132
–––––––––––
–––––––––––
91
–––––––––––
931
–––––––––––
–––––––––––
(12) Income taxes
The tax provision consists of the following:
Current
US Federal tax
US State tax
Other than US
2011
Unaudited
$000’s
2012
Audited
$000’s
–
10
49
–
–
16
–––––––––––
59
–––––––––––
–––––––––––
Deferred tax/(benefits)
US Federal tax
US State tax
Other than US
32
1
(6)
–––––––––––
28
–––––––––––
87
–––––––––––
–––––––––––
–––––––––––
16
–––––––––––
–––––––––––
36
9
2
–––––––––––
47
–––––––––––
63
–––––––––––
–––––––––––
The U.S. tax provision calculations include TRG Customer Solutions Inc. trading as IBEX Global Solutions.
Additionally, included in the provision are TRG Customer Solutions Inc. trading as IBEX Global Solutions
and TRG Customer Solutions Canada Inc., TRG Marketing Solutions Limited Virtual World (Private) Limited,
Pakistan, and TRG Philippines Inc..
Deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts
of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes, as
well as net operating losses and tax credit carry forward. Deferred tax assets and liabilities are measured
using the enacted tax rates that will apply to taxable income in the periods the deferred tax item is expected
to be settled or realized. The tax effects of the Company’s temporary differences and carry forwards are as
follows:
Tax effect of deductible/(taxable temporary differences)
Deductible temporary differences:
– Provisions and write-offs against trade debts
– Unpaid accrued expenses/compensation
– Net operating losses
– Intangibles
2011
Unaudited
$000’s
2012
Audited
$000’s
6
93
2,914
119
33
82
5,471
88
–––––––––––
3,132
–––––––––––
–––––––––––
Tax effect of taxable differences:
– Fixed assets
– Intangibles
– Prepayments and others
(386)
(712)
(57)
–––––––––––
(1,155)
(2,682)
Deductible temporary differences not recognised
–––––––––––
Deferred tax liability
(705)
–––––––––––
–––––––––––
–––––––––––
5,674
–––––––––––
–––––––––––
(549)
(823)
–
–––––––––––
(1,372)
(5,108)
–––––––––––
(806)
–––––––––––
–––––––––––
Deferred tax asset on deductible temporary differences (including unused tax losses) has not been
recognised in these financial statements, as the management is of the prudent view that it is not probable
that sufficient taxable profits will be available in the foreseeable future against which deductible temporary
differences and unused tax losses can be utilized.
92
At 31 December 2012, Company’s U.S. federal and state net operating loss carry forwards for income tax
purposes are $4.4 million (30 June 2012: $3.8 million) which will begin to expire in 2032. Company’s
Canadian subsidiary has net operating loss carry forwards of $12 million (30 June 2012: $12.3 million) for
Canadian income tax purposes, expiring over the period 2015 through 2032. Company’s UK subsidiary
has net operating loss carry forward of $2.6 million (30 June 2012: $2.6 million). These amounts are based
on the income tax returns filed for the year ended 30 June 2012 and estimated amounts for the half year
ended 31 December 2012. The timing and manner, in which the group will utilize the U.S. net operating
loss carry forwards in any year, or in total, may be limited by provisions of the Internal Revenue Code
regarding changes in ownership.
Management has evaluated the Company’s tax positions and concluded that the Company had taken no
uncertain tax positions that require adjustment to the Combined financial statements. The Group
recognizes interest and penalties related to uncertain tax position in income tax expense. As of
31 December 2012; the Company had no provision for interest or penalties related to uncertain tax
position. The years 2009-2012 are open to examination by the tax authorities.
Reconciliation of effective tax rate
31 December 31 December
2011
2012
Unaudited
Audited
US$’000
US$’000
Profit/(loss) for the period
Income tax expense/(benefit)
(2,351)
87
–––––––––––
(2,264)
–––––––––––
–––––––––––
31 December
2011
Unaudited
%
US$’000
Income tax expense/(benefit) using applicable
tax rate
State taxes
(net of federal tax effect)
Effect of tax and exchange
rates in foreign jurisdictions
Non-deductible expenses
Change in unrecognised
temporary differences
(235)
63
–––––––––––
(172)
–––––––––––
–––––––––––
31 December
2012
Audited
%
US$’000
34
4
(1)
(770)
(82)
(14)
34
4
(28)
(58)
(6)
49
(3)
(38)
62
862
(30)
(16)
51
27
–––––––––––
–––––––––––
–––––––––––
–––––––––––
(4)
–––––––––––
–––––––––––
93
87
–––––––––––
–––––––––––
(36)
–––––––––––
–––––––––––
63
–––––––––––
–––––––––––
(13) Cash flows from operating activities
Net loss
Adjustments for:
Depreciation and amortisation
Finance costs
Provision for retirement benefit expense
Stock-based compensation expense
Changes in operating assets and liabilities:
Trade and other receivables
Trade and other payables
Deferred revenue/expense
Due (to)/from affiliates
2011
Unaudited
$000’s
2012
Audited
$000’s
(2,263)
(172)
1,508
1,132
42
150
1,275
931
57
42
(1,492)
3,424
–
(188)
(5,745)
3,125
(279)
119
–––––––––––
2,314
–––––––––––
–––––––––––
–––––––––––
(647)
–––––––––––
–––––––––––
(14) Related parties – due to and from affiliates
During the six months ended 31 December 2011 and 2012, the Company entered into transactions with
certain affiliates owned wholly or partially by TRGI, the ultimate parent of IBEX. The transactions took place
at fair value.
TRG Holdings LLC is 100 per cent. owned by TRGI and acts as a holding company of TRGI businesses
in US. Effective from 1 January 2009 to 31 December 2011 intercompany subcontracted services provided
among different affiliates were billed through TRG Holdings LLC.
TRG BPO Solutions, Inc. is 100 per cent. owned by TRG Holdings LLC. Effective from 1 January 2012
intercompany subcontracted services provided among differences affiliates were billed through TRG
Holdings LLC.
The related party transactions for the Company as of and for the years ended 30 June 2010, 2011 and
2012 are as follows:
Service
delivery
revenue
$000’s
TRG Holdings, LLC
The Resource Group
International Limited
Alert Inc.
TRG Marketing Services
Digital Globe Services
TRG SATMAP Inc.
TRG Private Ltd.
TRG Senegal
TRG iSKY, Inc.
Stratasoft, Inc
Balance as of 31 December 2011
Year to 31 December 2011 (Unaudited)
Service
Total due
Total due
delivery from affiliates
to affiliates
expense
current
current
$000’s
$000’s
$000’s
Total due
to affiliates
long term
$000’s
967
2,336
1,394
–
(1,082)
–
246
–
–
638
–
–
193
–
–
–
–
–
–
–
–
38
–
–
943
9,331
96
526
–
20
444
–
(322)
–
–
–
–
(8)
–
–
(25)
–
–
–
–
–
(1,218)
–
–
–
–––––––––––
–––––––––––
–––––––––––
2,044
2,374
12,754
–––––––––––
–––––––––––
–––––––––––
–––––––––––
94
–––––––––––
–––––––––––
–––––––––––
(355)
–––––––––––
–––––––––––
–––––––––––
(2,300)
–––––––––––
–––––––––––
Service
delivery
revenue
$000’s
Due from affiliates:
TRG Holdings, LLC
TRG BPO Solutions, Ir.
The Resource Group
International Limited
Alert Inc.
TRG Marketing Services
Digital Globe Services
TRG SATMAP Inc.
TRG Private Ltd.
TRG Senegal
TRG iSky, Inc.
Due to affiliates:
Stratasoft, Inc
Balance as of 31 December 2012
Year to 31 December 2012 (Audited)
Service
Total due
Total due
delivery from affiliates
to affiliates
expense
current
current
$000’s
$000’s
$000’s
Total due
to affiliates
long term
$000’s
–
1,304
–
2,825
39
1,999
–
–
(1,082)
–
–
251
–
–
284
–
–
283
–
–
–
–
–
–
–
–
–
955
10,604
162
67
–
20
492
(63)
–
–
–
–
(7)
–
–
–
–
–
–
–
(1,395)
–
–
–
–––––––––––
2,122
–––––––––––
–––––––––––
–
–––––––––––
2,825
–––––––––––
–––––––––––
–
–––––––––––
14,338
–––––––––––
–––––––––––
(21)
–––––––––––
(91)
–––––––––––
–––––––––––
–
–––––––––––
(2,477)
–––––––––––
–––––––––––
(15) Subsequent events
Please refer to Part 4 Additional Information for details of the following subsequent events:
–
changes in the share capital of the Company (paragraph 2 of Part 4);
–
adoption of an employee share options plan ( paragraph 4 of Part 4);
–
formation of the Group and corporate structure (paragraph 11 of Part 4); and
–
tax indemnification agreement related to the formation of the Group and corporate structure
(paragraph 12.8 of Part 4).
95
PART 3D
UNAUDITED INTERIM FINANCIAL INFORMATION OF THE GROUP FOR THE
THREE MONTHS ENDED 31 MARCH 2013
Combined Statements of Comprehensive Income
For the three months ended 31 March 2012 and 31 March 2013
Revenue
Cost of sales
Notes
2012
Unaudited
$’000’s
2013
Unaudited
$’000’s
3
27,128
(23,066)
35,433
(29,242)
–––––––––––
Gross profit
Selling, general and administrative expenses
4,026
(3,853)
–––––––––––
209
1,443
(327)
–
–
(452)
(15,670)
–
11
–––––––––––
Loss before income taxes
Income tax expense
12
(118)
–
–––––––––––
Net loss
(118)
Other comprehensive loss:
Foreign currency translation adjustment
46
–––––––––––
Total comprehensive loss attributable to equity holders
(72)
–––––––––––
–––––––––––
The accompanying notes are an integral part of this historical financial information
96
6,191
(4,748)
–––––––––––
Operating profit
Other expenses:
Finance costs
Affiliate balances written off
Other income
–––––––––––
–––––––––––
(14,679)
(9)
–––––––––––
(14,688)
159
–––––––––––
(14,529)
–––––––––––
–––––––––––
Combined Statements of Financial Position
As at 31 March 2012 and 31 March 2013
Notes
Assets
Non current assets:
Goodwill
Other intangible assets
Property, plant and equipment
Other non-current assets
Total non current assets
Current assets:
Trade and other receivables
Deferred expenses
Due from affiliates
Cash and cash equivalents
2012
Unaudited
$’000’s
2013
Unaudited
$’000’s
8,644
748
3,900
2,030
8,644
570
3,295
2,276
–––––––––––
–––––––––––
15,322
14,785
20,370
1,426
12,906
2,279
26,746
480
306
3,260
4
5
Total current assets
–––––––––––
36,981
–––––––––––
Total assets
52,303
–––––––––––
–––––––––––
Equity and liabilities
Share capital and reserves
Share capital
Additional paid in capital
Other reserves
Retained loss
6
7
8
1,464
37,557
783
(21,862)
6,443
705
404
582
2,150
255
676
806
–
682
1,601
383
653
–––––––––––
–––––––––––
4,772
4,125
12,796
560
14,068
1,556
609
16,830
178
17,412
480
109
–––––––––––
29,589
–––––––––––
Total liabilities
34,361
–––––––––––
–––––––––––
Total equity and liabilities
52,303
–––––––––––
–––––––––––
The accompanying notes are an integral part of this historical financial information
97
3,844
40,271
844
(38,516)
–––––––––––
9
Total current liabilities
45,577
–––––––––––
–––––––––––
17,942
Total non current liabilities
Current liabilities:
Line of credit
Obligation under finance lease – current portion
Trade and other payables
Deferred revenue – current portion
Due to affiliates – current portion
30,792
–––––––––––
–––––––––––
Total equity
Non current liabilities:
Deferred tax liabilities
Deferred revenue – non-current portion
Obligation under finance lease – non-current portion
Due to affiliates – non-current portion
Retirement benefits obligations
Other
–––––––––––
–––––––––––
35,009
–––––––––––
39,134
–––––––––––
–––––––––––
45,577
–––––––––––
–––––––––––
Combined Statements of Changes in Equity
For the three months ended 31 March 2012 and 31 March 2013
Other reserves
As at 31 December 2011
(Unaudited)
Net loss
Other comprehensive loss
Total comprehensive
income for the year
Employee share based
payment options
Transactions with owners
As at 31 March 2012
(Unaudited)
Net loss
Other comprehensive loss
Total comprehensive
income for the year
Issue of share capital
Employee share based
payment options
Transactions with owners
As at 30 June 2012
(Audited)
Net loss
Other comprehensive loss
Total comprehensive
income for the year
Issue of share capital
Employee share based
payment options
Transactions with owners
As at 31 December 2012
(Audited)
Net loss
Other comprehensive loss
Total comprehensive
income for the year
Issue of share capital
Employee share based
payment options
Transactions with owners
As at 31 March 2013
(Unaudited)
Issued,
subscribed
and paid-up
capital
Amount
$000’s
Additional
paid in
capital
$’000’s
Employee
share
option
plan
$’000’s
Foreign
currency
translation
reserve
$’000’s
Retained
loss
$’000’s
Total
equity
$000’s
1,464
–
–
37,557
–
–
1,630
–
–
(968)
–
46
(21,744)
(118)
–
17,939
(118)
46
–––––––––––
–––––––––––
–––––––––––
–––––––––––
–––––––––––
–
–
–
46
(118)
–
–––––––––––
–
–
–––––––––––
–
75
–––––––––––
75
–––––––––––
–––––––––––
–––––––––––
1,464
–
–
37,557
–
–
1,705
–
–
–––––––––––
–––––––––––
–––––––––––
–
–
–
2,064
–
–
–
–––––––––––
–
–
–––––––––––
2,064
(68)
–––––––––––
(68)
–––––––––––
–––––––––––
–––––––––––
1,464
–
–
39,621
–
–
1,637
–
–
–––––––––––
–––––––––––
–––––––––––
–
–
–
650
–
–
–
–––––––––––
–
–
–––––––––––
650
42
–––––––––––
42
–––––––––––
–––––––––––
–––––––––––
1,464
–
–
40,271
–
–
1,679
–
–
–
–––––––––––
–
–––––––––––
(922)
–
(86)
–––––––––––
(86)
–
–
–––––––––––
–
–––––––––––
(1,008)
–
(61)
–––––––––––
(61)
–
–
–––––––––––
–
–––––––––––
(1,069)
–
159
–
–––––––––––
–
–––––––––––
(21,862)
(1,731)
–
–––––––––––
(1,731)
–
–
–––––––––––
–
–––––––––––
(23,593)
(235)
–
–––––––––––
(235)
–
–
–––––––––––
–
–––––––––––
(23,828)
(14,688)
–
–––––––––––
–––––––––––
–––––––––––
–––––––––––
–––––––––––
–
2,380
–
–
–
–
159
–
(14,688)
–
–
–––––––––––
2,380
–––––––––––
3,844
–––––––––––
–––––––––––
–
–––––––––––
–
–––––––––––
40,271
–––––––––––
–––––––––––
75
–––––––––––
75
–––––––––––
1,754
–––––––––––
–––––––––––
–
–––––––––––
–
–––––––––––
(910)
–––––––––––
–––––––––––
The accompanying notes are an integral part of this historical financial information
98
–
–––––––––––
–
–––––––––––
(38,516)
–––––––––––
–––––––––––
–––––––––––
(72)
75
–––––––––––
75
–––––––––––
17,942
(1,731)
(86)
–––––––––––
(1,817)
2,064
(68)
–––––––––––
1,996
–––––––––––
18,121
(235)
(61)
–––––––––––
(296)
650
42
–––––––––––
692
–––––––––––
18,517
(14,688)
159
–––––––––––
(14,529)
2,380
75
–––––––––––
2,455
–––––––––––
6,443
–––––––––––
–––––––––––
Combined Statements of Cashflows
For the three months ended 31 March 2012 and 31 March 2013
Cash flows from operating activities:
Cash generated used in operations
Interest paid
Taxes paid
Notes
2012
Unaudited
$’000’s
2013
Unaudited
$’000’s
13
106
(327)
(55)
(574)
(451)
(40)
–––––––––––
–––––––––––
Net cash used in operating activities
(276)
(1,074)
Cash flows from investing activities:
Purchases of property and equipment
Additions to intangible assets
(216)
(47)
(296)
–
–––––––––––
–––––––––––
Net cash used in investing activities
(263)
(296)
Cash flows from financing activities:
Borrowings on line of credit
Grants received
Payments on capital lease obligations
501
142
(164)
2,232
–
(207)
Net cash generated from financing activities
Effect of exchange rate changes on cash and cash equivalents
Net (decrease)/increase in cash and cash equivalents
Cash at beginning of period
Cash at end of period
–––––––––––
–––––––––––
479
47
2,025
151
–––––––––––
–––––––––––
(13)
2,292
806
2,454
–––––––––––
5
–––––––––––
–––––––––––
The accompanying notes are an integral part of this historical financial information
99
2,279
–––––––––––
3,260
–––––––––––
–––––––––––
Notes to the Historical Financial Information
For the three months ended 31 March 2012 and 31 March 2013
(1) Nature of the business
IBEX Group is a global portfolio of companies in the contact center and related business process
outsourcing (BPO) business operating from the United States, Philippines, United Kingdom, Pakistan and
Senegal. Service offerings include customer care support, business and consumer inbound and outbound
telesales and technical support services. IBEX Group also offers enabling technology solutions including
Interactive Voice Response (IVR).
(2) Basis of preparation
The unaudited combined historical financial information for the three months ended 31 March 2012 and
31 March 2013 and as at those dates has been prepared for inclusion in the AIM Admission Document
dated 24 June 2013 on the basis of preparation and under the accounting policies set out in notes 2 and
3 to the audited combined historical financial information included in Part 3B.
This unaudited combined historical financial information does not constitute statutory accounts within the
meaning of section 434 of the Companies Act 2006, is not a set of general purpose financial statements
under paragraph three of IFRS 1 – First Time Adoption of International Financial Reporting Standards and
does not comply with IAS 34 – Interim Financial Reporting.
The Directors of the Company are responsible for preparation of this unaudited combined historical
financial information.
(3) Operating segments
This historical financial information has been prepared of the basis on a single reportable segment. Whilst
the group operates in different locations, there are no multiple products or lines of services upon which the
results reported to chief operating decision maker are segregated and analysed.
Revenue
Gross margin
Operating profit
US GAAP to IFRS adjustments
2012
Unaudited
$000’s
2013
Unaudited
$000’s
27,128
4,026
209
–
35,433
6,191
1,443
–
–––––––––––
Reportable operating profit
209
–––––––––––
–––––––––––
–––––––––––
1,443
–––––––––––
–––––––––––
91.14 per cent. and 90.74 per cent. of the total revenue was earned from customers in United States of
America for the three months ended 31 March 2012 and 2013 respectively.
100
The following table summarises those non related party customers with revenue or accounts receivable in
excess of 5 per cent. total revenue or total receivables for the three months ended 31 March 2012 and
2013 respectively. The revenue analysis below does not form part of the Group’s segmental reporting but
is provided voluntarily.
31 March 2012 (Unaudited)
Revenue
Accounts receivable
Percentage
Percentage
Amount
of total
Amount
of total
$000’s
%
$000’s
%
Client
Client
Client
Client
1
2
3
4
Other
3,419
6,396
4,990
4,173
13%
24%
18%
15%
2,216
3,191
4,824
2,654
12%
18%
27%
15%
–––––––––––
–––––––––––
–––––––––––
–––––––––––
18,978
8,150
70%
30%
12,885
4,940
72%
28%
–––––––––––
–––––––––––
–––––––––––
27,128
100%
17,825
–––––––––––
–––––––––––
–––––––––––
–––––––––––
–––––––––––
–––––––––––
–––––––––––
100%
–––––––––––
–––––––––––
31 March 2013 (Unaudited)
Revenue
Accounts receivable
Percentage
Percentage
Amount
of total
Amount
of total
$000’s
%
$000’s
%
Client
Client
Client
Client
Other
2
3
4
5
10,978
9,553
3,253
2,757
31%
27%
9%
8%
7,032
9,634
2,074
1,094
28%
38%
8%
4%
–––––––––––
–––––––––––
–––––––––––
–––––––––––
26,541
8,892
75%
25%
19,834
5,247
78%
22%
–––––––––––
–––––––––––
–––––––––––
35,433
100%
25,081
–––––––––––
–––––––––––
–––––––––––
–––––––––––
–––––––––––
–––––––––––
–––––––––––
100%
–––––––––––
–––––––––––
Client 1 does not represent 5 per cent. of revenues or receivables as of 31 March 2013. Above clients are
Fortune 100 and/or Fortune 500 companies.
Details of segment assets and liabilities can be found in the combined statement of financial position. There
are no differences between US GAAP and IFRS.
Revenues are attributed to geographic areas based upon the location in which the sale originated. IBEX
Global Solutions Plc is domiciled in the United Kingdom. All revenues from external customers arose in the
United States of America in each of the reported periods.
Non-current assets located outside of the United Kingdom totalled $15.3 million and $14.8 million for the
three months to 31 March 2012 and 31 March 2013 respectively.
101
(4) Trade and other receivables
Trade and other receivables consist of the following:
Trade receivables – gross
Less: provision for doubtful debts
Trade receivables – net
Prepayments and other
Deposits
Notes receivable
2012
Unaudited
$000’s
2013
Unaudited
$000’s
18,112
(287)
25,517
(436)
–––––––––––
–––––––––––
17,825
1,804
240
501
25,081
1,520
145
–
–––––––––––
20,370
–––––––––––
26,746
–––––––––––
–––––––––––
–––––––––––
–––––––––––
2012
Unaudited
$000’s
2013
Unaudited
$000’s
13
2,228
250
2,998
(5) Cash and bank balances
Cash and cash equivalents consist of the following:
Balances with banks in:
– current accounts
– deposit accounts
Cash in hand
–––––––––––
–––––––––––
2,2241
38
3,248
12
–––––––––––
2,279
(6)
–––––––––––
3,260
–––––––––––
–––––––––––
–––––––––––
–––––––––––
2012
Unaudited
$000’s
2013
Unaudited
$000’s
1,464
–
1,464
2,380
Share capital
Opening share capital (December 2011 and December 2012)
Additional contributions from equity holders
Closing additional paid in equity (March 2012 and March 2013)
–––––––––––
1,464
–––––––––––
–––––––––––
–––––––––––
3,844
–––––––––––
–––––––––––
All shares are equally eligible to receive dividends and the repayment of capital, and represent one vote at
the Annual General Meeting.
(7)
Additional paid in equity
2012
Unaudited
$000’s
Additional paid in equity (March 2012 and March 2013)
102
37,557
–––––––––––
–––––––––––
2013
Unaudited
$000’s
40,271
–––––––––––
–––––––––––
(8) Reserves
Reserves consist of following:
Foreign currency translation reserve
Employee share option plan
2012
Unaudited
$000’s
2013
Unaudited
$000’s
(922)
1,705
(910)
1,754
–––––––––––
783
(9)
–––––––––––
844
–––––––––––
–––––––––––
–––––––––––
–––––––––––
2012
Unaudited
$000’s
2013
Unaudited
$000’s
3,778
2,584
7,706
4,989
2,274
10,149
Trade and other payables
Trade creditors
Accrued expenses and payables
Accrued salaries and wages
–––––––––––
14,068
–––––––––––
17,412
–––––––––––
–––––––––––
–––––––––––
–––––––––––
2012
Unaudited
$000’s
2013
Unaudited
$000’s
20,882
75
33
26,986
75
29
(10) Employee benefits expense
Expenses recognised for employee benefits are analysed below:
Salaries and other employee costs
Employee share options expense
Pensions – defined benefits plan
–––––––––––
20,990
–––––––––––
27,090
–––––––––––
–––––––––––
–––––––––––
–––––––––––
2012
Unaudited
$000’s
2013
Unaudited
$000’s
309
17
1
427
24
1
(11) Finance costs
Interest on borrowings
Finance charges on leased assets
Bank charges
–––––––––––
327
–––––––––––
–––––––––––
103
–––––––––––
452
–––––––––––
–––––––––––
(12) Income taxes
The tax provision consists of the following:
Current
US Federal tax
US State tax
Other than US
2012
Unaudited
$000’s
2013
Unaudited
$000’s
–
–
–
–
–
(9)
–––––––––––
–
Deferred tax/(benefits)
US Federal tax
US State tax
Other than US
–––––––––––
(9)
–––––––––––
–––––––––––
–––––––––––
–––––––––––
–
–
–
–
–
–
–––––––––––
–
–––––––––––
–
–––––––––––
–––––––––––
–––––––––––
–
–––––––––––
(9)
–––––––––––
–––––––––––
The U.S. tax provision calculations include TRG Customer Solutions Inc. trading as IBEX Global Solutions.
Additionally, included in the provision are TRG Customer Solutions Inc. trading as IBEX Global Solutions
and TRG Customer Solutions Canada Inc., TRG Marketing Solutions Limited and Virtual World (Private)
Limited, Pakistan, and TRG Philippines Inc..
Deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts
of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes, as
well as net operating losses and tax credit carry forward. Deferred tax assets and liabilities are measured
using the enacted tax rates that will apply to taxable income in the periods the deferred tax item is expected
to be settled or realized. The tax effects of the Company’s temporary differences and carry forwards are as
follows:
Tax effect of deductible/(taxable temporary differences)
Deductible temporary differences:
– Provisions and write-offs against trade debts
– Unpaid accrued expenses/compensation
– Net operating losses
– Intangibles
2012
Unaudited
$000’s
2013
Unaudited
$000’s
6
93
2,914
119
33
82
5,471
88
–––––––––––
3,132
–––––––––––
–––––––––––
Tax effect of taxable differences:
– Fixed assets
– Intangibles
– Prepayments and others
(386)
(712)
(57)
–––––––––––
(1,155)
(2,682)
Deductible temporary differences not recognised
–––––––––––
Deferred tax liability
(705)
–––––––––––
–––––––––––
–––––––––––
5,674
–––––––––––
–––––––––––
(549)
(823)
–
–––––––––––
(1,372)
(5,108)
–––––––––––
(806)
–––––––––––
–––––––––––
Deferred tax asset on deductible temporary differences (including unused tax losses) has not been
recognised in this financial information, as the management is of the prudent view that it is not probable
that sufficient taxable profits will be available in the foreseeable future against which deductible temporary
differences and unused tax losses can be utilized.
104
At 31 March 2013, Group’s US federal and state net operating loss carry forwards for income tax purposes
are $17.4 million (31 December 2012: $4.4 million) which will begin to expire in 2032. Group’s Canadian
subsidiary has net operating loss carry forwards of $3 million (31 December 2012: $12 million) for Canadian
income tax purposes, expiring over the period 2015 through 2032. Group’s UK subsidiary has net
operating loss carry forwards of $2.6 million (31 December 2012: $2.6 million). These amounts are based
on the income tax returns filed for the year ended 30 June 2012 and estimated amounts for the nine
months ended 31 March 2013. The timing and manner, in which the group will utilize the US net operating
loss carry forwards in any year, or in total, may be limited by provisions of the Internal Revenue Code
regarding changes in ownership.
Management has evaluated the Group’s tax positions and concluded that the Group had taken no
uncertain tax positions that require adjustment to the consolidated financial statements. The Group
recognises interest and penalties related to uncertain tax positions in income tax expense. As of 31 March
2013; the Group had no provision for interest or penalties related to uncertain tax positions. The years
2009-2012 are open to examination by the tax authorities.
Reconciliation of effective tax rate
Loss for the period
Income tax expense
31 March
2012
Unaudited
US$’000
31 March
2013
Unaudited
US$’000
(118)
–
(14,679)
(9)
–––––––––––
(118)
–––––––––––
–––––––––––
31 March 2012
Unaudited
%
US$’000
Income tax benefit using applicable tax rate
State taxes (net of federal tax effect)
Effect of tax and exchange rates in foreign
jurisdictions
Non-deductible expenses
Change in unrecognised temporary differences
(14,688)
–––––––––––
–––––––––––
31 March 2013
Unaudited
%
US$’000
34
4
(40)
(4)
34
4
(4,939)
(523)
70
(12)
(96)
(83)
14
113
(1)
(20)
(17)
144
2,855
2,454
–––––––––––
–––––––––––
–––––––––––
–
–
–
–––––––––––
–––––––––––
105
–––––––––––
–––––––––––
–––––––––––
–––––––––––
–––––––––––
–––––––––––
(9)
–––––––––––
–––––––––––
(13) Cash flows from operating activities
Net loss
Adjustments for:
Depreciation and amortisation
Finance costs
Affiliate balances written off
Income tax provision
Provision for retirement benefit expense
Stock-based compensation expense
Changes in operating assets and liabilities:
Trade and other receivables
Trade and other payables
Deferred revenue/expense
Due (to)/from affiliates
2012
Unaudited
$000’s
2013
Unaudited
$000’s
(118)
(14,688)
695
327
–
–
33
75
510
452
15,670
9
30
75
(291)
(567)
–
(48)
(2,374)
(140)
(11)
(116)
–––––––––––
106
–––––––––––
–––––––––––
–––––––––––
(574)
–––––––––––
–––––––––––
(14) Related parties – due to and from affiliates
During the three months ended 31 March 2012 and 2013, the Group entered into transactions with certain
affiliates owned wholly or partially by TRGI, the ultimate parent of IBEX. The transactions took place at fair
value.
TRG BPO Solutions, Inc. is 100 per cent. owned by TRG Holdings LLC. Effective from 1 January 2012
intercompany subcontracted services provided among differences affiliates were billed through TRG
Holdings LLC.
The related party transactions for the Group as of and for the three months ended 31 March 2012 and
2013 are as follows:
Service
delivery
revenue
$000’s
TRG Holdings, LLC
TRG BPO Solutions, Inc.
The Resource Group
International Limited
Alert Inc.
TRG Marketing Services
Digital Globe Services
TRG SATMAP Inc.
TRG Private Ltd.
TRG iSKY, Inc.
Stratasoft, Inc
Balance as of 31 March 2012
Year to 31 March 2012 (Unaudited)
Service
Total due
Total due
delivery from affiliates
to affiliates
expense
current
current
$000’s
$000’s
$000’s
Total due
to affiliates
long term
$000’s
–
4,491
–
5,193
39
1,852
–
–
(1,082)
–
126
–
–
572
–
124
–
–
–
–
–
–
–
–
–
–
957
9,332
118
59
–
491
–
(283)
–
–
–
–
(305)
–
(21)
–
–
–
–
–
(1,068)
–
–
–––––––––––
–––––––––––
–––––––––––
–––––––––––
5,313
5,193
12,848
(609)
–––––––––––
–––––––––––
–––––––––––
–––––––––––
106
–––––––––––
–––––––––––
–––––––––––
–––––––––––
–––––––––––
(2,150)
–––––––––––
–––––––––––
Service
delivery
revenue
$000’s
Due from affiliates:
TRG BPO Solutions, Inc.
The Resource Group
International Limited
Alert Inc.
Digital Globe Services
TRG SATMAP Inc.
TRG Private Ltd.
TRG iSKY, Inc.
Balance as of 31 March 2013
Year ended 31 March 2013 (Unaudited)
Service
Total due
Total due
delivery from affiliates
to affiliates
expense
current
current
$000’s
$000’s
$000’s
Total due
to affiliates
long term
$000’s
5,408
5,987
–
–
–
–
121
–
134
–
110
–
–
–
–
–
–
–
35
133
–
–
138
(109)
–
–
–
–
–
–
–
–
(1,601)
–
–––––––––––
–––––––––––
–––––––––––
–––––––––––
5,773
5,987
306
(109)
–––––––––––
–––––––––––
–––––––––––
–––––––––––
–––––––––––
–––––––––––
–––––––––––
–––––––––––
–––––––––––
(1,601)
–––––––––––
–––––––––––
(15) Group re-organisation
On 29 March 2013, internally generated intellectual property (Technology) with a carrying value of nil in IBEX
US was sold to The Resource Group International Limited in exchange for a promissory note worth
$7.5 million. Under the IFRS rules for common control accounting, no gain or loss was recognised in the
financial information. On the same date, IBEX US assigned the promissory note to TRG Holdings LLC.
On 30 March 2013, IBEX US and IBEX Philippines wrote off its inter-company balances with other affiliates
as follows:
Unaudited
$000’s
Due from affiliates (net)
TRG Holdings LLC
Alert, Inc.
TRG Marketing Services, Inc.
SKY, Inc.
BPO Solutions, Inc.
461
944
10,605
390
3,291
–––––––––––
Total
15,961
Due to affiliates
Stratasoft, Inc.
(21)
–––––––––––
Net write-off amount
15,670
–––––––––––
–––––––––––
On 30 March 2013, The Resource Group International Limited assumed liabilities worth $2.38 million and
$1.89 million, that were payable by IBEX UK and IBEX Senegal respectively to other affiliated TRG entities.
On the same date, IBEX UK and IBEX Senegal issued shares to The Resource Group International Limited
for $2.38 million and $1.89 million respectively to convert those debts in to equity.
107
IBEX US was previously a 100 per cent. subsidiary of TRG Holdings LLC (US). On 31 March 2013, as a
part of group reorganisation, TRG Holdings, LLC distributed shares in IBEX US to its parent The Resource
Group International Limited. On the same date, The Resource Group International Limited transferred
shares in the following entities to IBEX Global Solutions Limited:
Unaudited
$000’s
IBEX US
IBEX Marketing UK
Virtual World Pakistan
IBEX Philippines
IBEX Senegal
30,552
2,381
545
12,532
1,987
–––––––––––
Total
47,997
–––––––––––
–––––––––––
IBEX Global Solutions Limited issued shares worth $47.99 million to The Resource Group International
Limited as consideration. Assets and liabilities of the above entities were recognised in the combined
financial statements at their carrying amounts (at the date of transfer) as the share exchange took place
between entities under common control. No adjustments have been made in this combined historical
financial information for the investment and related share capital in IBEX Global Solutions Limited as this
would be eliminated in any consolidation.
IBEX Global Solutions Limited was formed on 26 March 2013 by The Resource Group International Limited
with a share capital of $21,788. It serves as a holding company for IBEX entities.
IBEX Global Solutions Limited issued additional share capital of $1 million on 31 March 2013 in exchange
for prepaid asset received from TRG International Limited. This prepaid asset represents advance payment
made to another affiliate (SATMAP, Inc.) for services to be used by IBEX.
IBEX Global Solutions, Limited (UK) formed IBEX Global Solutions Private Limited (Pakistan) and IBEX
Global Solutions Cyprus (formerly Lovercius Consultants Limited) on 31 March 2013.
(16) Subsequent events
Please refer to Part 4 Additional Information for details of the following subsequent events:
–
changes in the share capital of the Company (paragraph 2 of Part 4);
–
adoption of an employee share options plan ( paragraph 4 of Part 4);
–
formation of the Group and corporate structure (paragraph 11 of Part 4); and
–
tax indemnification agreement related to the formation of the Group and corporate structure
(paragraph 12.8 of Part 4).
108
PART 4
ADDITIONAL INFORMATION
1.
1.1
THE COMPANY
The Company is incorporated and trades under the name IBEX Global Solutions PLC.
1.2
The Company is domiciled in the United Kingdom and was incorporated and registered in England
and Wales on 26 March 2013 as a private limited company with the name IBEX Global Solutions
Limited and registered number 08462510. On 4 June 2013, following a special resolution passed
by the Shareholders, the Company was re-registered as a public company. The liability of its
members is limited.
1.3
The Company is governed by and its securities were created under the Act.
1.4
The Company’s registered office is located at 3rd Floor, 5 Lloyds Avenue, London EC3N 3AE and
its principal place of business is at 1700 Pennsylvania Avenue, Suite 560, Washington DC, 20006
USA. The telephone numbers of the Company’s registered address and principal place of business
are +44 (0)800 043 4239 and +1 202 289 9898 respectively.
1.5
The Company has no administrative, management or supervisory bodies other than the Board of
Directors, the remuneration committee and the audit committee, all of whose members are
Directors. Amicorp (UK) Secretaries Limited of 3rd Floor, 5 Lloyds Avenue, London EC3N 3AE, has
been appointed as corporate secretary and administrator of the Company.
1.6
The Group’s auditors during the period covered by the Historical Financial Information were (i) for the
three years ended 30 June 2012, KPMG LLP, and (ii) for the six months ended 31 December 2012,
Grant Thornton UK LLP, who are members of the Institute of Chartered Accountants in England and
Wales.
1.7
Details of the Company’s subsidiaries are set out in the table below:
Name
IBEX Inc.
TRG Marketing Solutions
Limited
Virtual World Private Limited
TRG Philippines Inc.
The Resource Group
Senegal SA
IBEX Global Solutions
Private Limited
IBEX Global Europe S.a r.l
Lovercius Consultants Limited
TRG Customer Solutions
(Canada) Inc.
TRG Global Solutions
(Philippines) Inc.
TRG Customer Solutions
(Philippines) Inc.
Function
USA operating
company
UK operating
company
Pakistan operating
company
Philippines services
company
Senegal services
company
Pakistan services
company
Intellectual property
licensing company
Off-shore billing entity
Canada Non-Trading
Company
Philippines services
company
Philippines dormant
company
* Please see notes below:
109
Country of
Incorporation
(and residence,
if different)
Delaware, USA
Per cent.
interest
100
Direct/
Indirect
Direct
England
100
Direct
Pakistan
100*
Direct
Philippines
100*
Direct
Senegal
100*
Direct
Pakistan
100*
Direct
Luxembourg
100
Direct
Cyprus
Canada
100
100
Direct
Indirect
Philippines
100*
Indirect
Philippines
100
Indirect
The Company holds 409,995 shares in the capital of TRG Philippines Inc. and each of the following directors of TRG
Philippines Inc. hold one share each: Steve Kezirian, Mohammed Khaishgi, Nauman Nizim, Brian Heiner and Nestor Dantes.
TRG Philippines Inc. holds 8,699,995 shares in the capital of TRG Global Solutions (Philippines) Inc. and each of the following
directors of TRG Philippines Inc. hold one share each: Steve Kezirian, Mohammed Khaishgi, Nauman Nizim, Brian Heiner and
Nestor Dantes.
The Company holds 93,309 shares in The Resource Group Senegal SA and Famara Ibrahima Sagna holds five shares.
The directors of IBEX Global Solutions Private Limited, Nadeem Elahi and Syed Adnan each hold one share in the capital of
IBEX Global Solutions Private Limited (being the entire issued share capital of IBEX Global Solutions Private Limited) on trust
for the Company.
The Company holds 3,257,680 shares in the capital of Virtual World Private Limited and each of the directors of Virtual World
Private Limited, namely Nadeem Elahi and Waseem Ahmed, hold one share.
2.
2.1
SHARE CAPITAL OF THE GROUP
The Company was incorporated with one ordinary share of £1.00, subscribed to by Chalfen
Nominees Limited. On 26 March 2013, Chalfen Nominees Limited transferred the subscriber share
to TRGI.
2.2
On 31 March 2013, the Company received an application for 1,566,470 ordinary shares of £1.00
each from TRGI in exchange for the transfer by TRGI of the legal and beneficial ownership of
1,566,470 ordinary shares of £1.00 each in the capital of TRG Marketing Solutions Limited. On the
same date, the sole director of the Group, Zia Chishti, approved the allotment and issue of
1,566,470 ordinary shares of £100 each to TRGI.
2.3
On 31 March 2013, the Company received a second application from TRGI for 30,683,484 ordinary
shares of £1.00 each in exchange for the transfer by TRGI of the following assets to the Company,
effective as of 31 March 2013:
2.3.1
93,309 shares of 1,000 Francs each in the capital of The Resource Group Senegal, which,
save for five shares held by Famara Ibrahima Sagna, comprise the entire issued share capital
of The Resource Group Senegal SA;
2.3.2
409,995 common stock in TRG Philippines Inc. of PP.100 each, together with the beneficial
ownership of five shares in the capital of TRG Philippines Inc. held on trust for TRGI by TRG
Philippines Inc.’s directors, which together comprise the entire issued share capital of TRG
Philippines Inc. pursuant to a deed of assignment of shares of stock entered into between
(1) TRGI and (2) the Group dated 31 March 2013;
2.3.3
3,257,680 shares of Rs.10 each in the capital of Virtual World Private Limited, together with
the beneficial ownership of two shares in Virtual World Private Limited held on trust for TRGI
by the directors of Virtual World, which together comprise the entire issued share capital of
Virtual World Private Limited;
2.3.4
1,500 shares of US$0.0001 each in the capital of IBEX Inc. which comprise the entire issued
share capital of IBEX Inc.;
2.3.5
€17,000 to be applied towards the Group’s costs of incorporating a Luxembourg subsidiary
which has a paid up capital of US$21,788; and
2.3.6
US$1,000,000 in prepaid SATMAP services pursuant to a first draft amendment to the
commercial schedule dated 31 March 2013 and a promissory note from TRGI of even date
in the sum of US$1,000,000 due in full on 30 June 2017 with an annual interest rate of
1.95 per cent. per annum.
2.4
On 31 March 2013, the sole director of the Company, Zia Chishti, approved the allotment and issue
of 30,683,484 ordinary shares of £1.00 in connection with the application detailed in paragraph 2.3
above.
2.5
On 31 May 2013, by means of a board decision of the sole director and a written resolution of the
sole member, the Company adopted a new set of articles of association and divided its shares with
a nominal value of £1 each into:
2.5.1 one ordinary share of £0.01 each in the capital of the Company; and
2.5.2 one deferred share of £0.99 each in the capital of the Company (a “Deferred Share”).
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2.6
On 31 May 2013, the Company received an application for 100 ordinary shares of £0.01 each from
Mohammedalla Khaishgi at par for the purpose of funding a buy-back of the Deferred Shares. On
the same date, by means of a board decision of the sole director and a written resolution of the sole
member, the Company granted its directors a general and unconditional authority under section 551
of the Act to allot shares in the Company up to an aggregate nominal amount of £1. Thereafter, 100
ordinary shares of £0.01 each were issued to Mr Khaishgi for an aggregate subscription price of £1.
2.7
On 31 May 2013, by means of a board decision of the sole director and a written resolution of the
eligible shareholder, the Company agreed to purchase 32,249,955 Deferred Shares from TRGI for a
total consideration of £1. On the same date, the Company entered into an off-market share
purchase agreement with TRGI to effect such transfer of Deferred Shares and upon completion of
such share buyback, the Deferred Shares were cancelled.
2.8
On 31 May 2013, Mr Khaishgi sold his interest in 100 ordinary shares of £0.01 each in the Company
to TRGI for aggregate consideration of £1.
2.9
The issued share capital of the Company immediately prior to the Placing and Admission was as
follows:
£
322,500.55
Number
32,250,055 Ordinary Shares
2.10 The issued share capital of the Company following the Placing and Admission will be as follows:
£
395,544
Number
39,554,400 Ordinary Shares
2.11 Of the 32,250,055 Ordinary Shares allotted and issued by the Company prior to Admission, 99.99
per cent. of the Ordinary Shares allotted and issued during the period were paid for with assets other
than cash.
2.12 The Placing will result in the allotment and issue of 7,304,345 New Ordinary Shares, diluting existing
holders of Ordinary Shares by 18 per cent.
2.13 Section 561(1) of the Act gives the Shareholders pre-emption rights on any issue of shares by the
Group to the extent not disapplied by a special resolution passed pursuant to section 570 of the
Act. Details of the current section 571 of the Act disapplication are set out in paragraph 2.14 below.
2.14 By ordinary and special resolutions passed on 20 June 2013:
2.14.1 the Directors were authorised, conditional on Admission, for the purposes of section 551 of
the Act to allot relevant securities of the Company:
(a)
up to an aggregate nominal amount of £73,043.45 in respect of the New Ordinary
Shares; and
(b)
otherwise than pursuant to sub-paragraph 2.14.1(a) above, up to one third of the
issued share capital of the Company immediately following Admission;
such authorisation expiring on the conclusion of the next annual general meeting of the Company
(unless previously renewed, varied or revoked by the Company in a general meeting); and
2.14.2 the Directors were authorised, conditional on Admission and subject to the passing of the
resolution summarised in paragraph 2.14.1 of this Part, to allot equity securities of the
Company pursuant to:
(a)
the authority summarised in paragraph 2.14.1(a) above, and
(b)
otherwise than pursuant to paragraph 2.14.2(a) above, up to 20 per cent. of the issued
share capital of the Company immediately following Admission,
as if section 561(a) of the Act did not apply to such allotments, such authorisation expiring on
the conclusion of the next annual general meeting of the Company (unless previously
renewed, varied or revoked by the Company in a general meeting).
2.15 It is anticipated the Placing Shares will be issued on the date of Admission.
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3.
3.1
SECURITIES BEING OFFERED/ADMITTED
The Ordinary Shares are ordinary shares of £0.01 each in the capital of the Company and were
issued in British Pounds Sterling.
3.2
The Ordinary Shares may be held in certificated form or under the CREST system, which is a
paperless settlement procedure enabling securities to be evidenced and transferred, otherwise than
by a written instrument in accordance with the CREST Regulations. The Company’s registrars,
Capita Registrars Limited, are responsible for keeping the Company’s register of members.
3.3
The dividend and voting rights attaching to the Ordinary Shares are set out in paragraph 6.2 of this
Part 4.
3.4
The par value of each Ordinary Share is £0.01.
3.5
The Company has no issued Ordinary Shares that are not fully paid up.
3.6
The Ordinary Shares have no right to share in the profits of the Group other than through a dividend,
distribution or return of capital; further details of which are set out in paragraph 6.3 of this Part 4.
3.7
Each Ordinary Share is entitled on a pari passu basis with all other issued Ordinary Shares to share
in any surplus on a liquidation of the Company.
3.8
The Ordinary Shares have no redemption or conversion provisions.
3.9
The Ordinary Shares are freely transferable provided that such shares are fully paid, the Company
has no lien over such shares, the instrument of transfer is duly stamped, is in favour of not more than
four joint transferees and is in respect of only one class of shares.
3.10 No person has made a public takeover bid for the Company’s issued share capital.
3.11 A shareholder is required pursuant to Disclosure and Transparency Rule 5 of the Disclosure and
Transparency Rules of the FCA, to notify the Group when he acquires or disposes of a major
proportion of the voting rights of the Group equal to or in excess of 3 per cent. of the nominal value
of that share capital.
3.12 The Company is not, until 30 September 2013, subject to the Code as its place of central
management and control is in the USA. Accordingly, the rules contained the Code governing
substantial acquisitions of shares will not apply to the Company at Admission. However, certain
protections under Rule 9 of the Code have been incorporated into the Articles. See paragraph 6 of
this Part 4 for further details. Any party intending to acquire all or a substantial part of the issued
share capital of the Company will not be obliged to comply with the provisions of the Code as to
announcements, equality of treatment for shareholders as to the value and type of consideration
offered, and will not be subjected to the scrutiny and sanctions of the Panel. In addition, in the event
such party acquires at least nine-tenths in value of the issued share capital of the Company to which
its offer relates it may, in accordance with the procedure set out in section 979 of the Act, require
the holders of any shares it has not acquired to sell them subject to the terms of the offer, and such
Shareholders may in turn require such party to purchase such shares on the same terms. With effect
from 30 September 2013, the ‘place of central management and control’ test will no longer apply
to companies which have their registered offices in the UK, the Channel Islands or the Isle of Man
and which have securities admitted to trading on a multilateral trading facility (such as AIM) in the
UK. This will have the effect of bringing the Company within the ambit of the Code even though its
place of central management and control is in the USA.
3.13 Save as disclosed in paragraphs 2, 4 and 8 of this Part 4:
3.13.1 no share or loan capital of the Company has been issued or is proposed to be issued;
3.13.2 there are currently no outstanding convertible securities, exchangeable securities or
securities with warrants issued by the Company;
3.13.3 there are no shares in the Company not representing capital;
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3.13.4 there are no shares in the Company held by or on behalf of the Company itself or by
subsidiaries of the Company;
3.13.5 there are no acquisition rights and/or obligations over authorised but unissued share capital
of the Company and the Company has made no undertaking to increase its share capital;
3.13.6 no person has any preferential or subscription rights for any share capital of the Company;
and
3.13.7 no share or loan capital of the Company or any member of the Company is under option or
agreed conditionally or unconditionally to be put under option.
4.
TERMS OF THE OPTIONS/CONVERSION RIGHTS
4.1
2013 Stock Plan
The Company intends to adopt an employee stock option plan (the 2013 Stock Plan) to enable
certain executives and employees of the Group to be granted options to acquire Ordinary Shares
and restricted stock awards (Options) in the capital of the Company. No Options have been granted
under the 2013 Stock Plan as at the date of this document.
The main features of the 2013 Stock Plan (which is not approved by HM Revenue and Customs) are
summarised below:
Eligibility
Options may be granted under the 2013 Stock Plan at the discretion of the Board or a committee
of the Board to employees, directors, and consultants of the Group.
Scheme limit
The number of grants that may be made pursuant to the 2013 Stock Plan are limited in the
aggregate to 982,004 Ordinary Shares. These Ordinary Shares have been reserved by the Company
for potential grants made under the 2013 Stock Plan.
Grant of options
Options may be granted at any time, at the discretion of the Board or a committee of the Board
provided that the grant of such Option would not breach the terms of any share dealing or corporate
governance code adopted by the Company or the AIM Rules from time to time or applicable or
regulation, or exceed the number of shares authorised and reserved for the 2013 Stock Plan.
Exercise price
The exercise price payable per Ordinary Shares is:
●
in the case of an employee of the Company owning 10 (ten) per cent. or more of the voting
power of all classes of share of the Company or its parent or any company in the Group, the
exercise of the Option shall be equal to or greater than 110 per cent. of the fair market value
of the ordinary shares on the date the Option is granted; and
●
in the case of any other employee, equal to or greater than 100 per cent. of the fair market
value.
The ‘fair market value’ shall, where possible, be the closing price per Ordinary Share reported in the
Wall Street Journal for the date of grant.
Amendment and Termination
The 2013 Stock Plan may be altered or terminated at any time, save that a termination or
amendment which materially and adversely affects or impairs the rights of subsisting option holders
shall not be made unless the option holder consents.
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Change of Control
In the event of a change of control of the Company, the administrator of the 2013 Stock Plan has
discretion as to how such options are determined.
4.2
TRGI Stock Plan
TRGI and the Company adopted an employee stock option plan on 4 June 2013 (the TRGI Stock
Plan) to enable certain executives and employees of the Group to be granted options by TRGI to
acquire Ordinary Shares and restricted stock awards (TRGI Options) over 4,301,890 Ordinary
Shares held by TRGI.
The main features of the TRGI Stock Plan (which is not approved by HM Revenue and Customs) are
summarised below:
Eligibility
Options may be granted under the TRGI Stock Plan at the discretion of the board of TRGI or a
committee of the board of TRGI to employees, directors, and consultants of the Group.
Scheme limit
The number of grants that may be made pursuant to the TRGI Stock Plan are limited in the
aggregate to 4,301,890 Ordinary Shares held by TRGI.
Grant of options
Options may be granted at any time, at the discretion of the board of TRGI or a committee of the
board of TRGI provided that the grant of such TRGI Option would not breach the terms of any share
dealing or corporate governance code adopted by the Company or the AIM Rules from time to time
or applicable or regulation, or exceed the number of shares authorised and reserved for the TRGI
Stock Plan.
Exercise price
The exercise price payable per Ordinary Shares is:
●
in the case of an employee of the Company owning 10 (ten) per cent. or more of the voting
power of all classes of share of the Company or its parent or any company in the Group, the
exercise of the Option shall be equal to or greater than 110 per cent. of the fair market value
of the Ordinary Shares on the date the Option is granted; and
●
in the case of any other employee, equal to or greater than 100 per cent. of the fair market
value.
The “fair market value” shall, where possible, be the closing price per share reported in the Wall
Street Journal for the date of grant.
Amendment and Termination
The TRGI Stock Plan may be altered or terminated at any time, save that a termination or
amendment which materially and adversely affects or impairs the rights of subsisting Option holders
shall not be made unless the Option holder consents.
Change of Control
In the event of a change of control of TRGI or the Company, the administrator of the TRGI Stock
Plan has discretion as to how such options are determined.
5.
5.1
CONTROL OF THE COMPANY
To the best of the knowledge of the Company, there are no persons except TRGI who directly or
indirectly control the Company, where control means owning 30 per cent. or more of the voting
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rights attaching to the share capital of the Company. The Company has entered into a relationship
agreement with TRGI to regulate their relationship. A summary of such relationship agreement is set
out at paragraph 12.6 of this Part 4.
5.2
The Company is not aware of any arrangements which may at a subsequent date result in a change
in control of the Company.
6.
ARTICLES OF ASSOCIATION
The Company’s articles were adopted pursuant to a special resolution of the Company passed on 3 June
2013. The Company’s articles contain provisions (among others) to the following effect:
6.1
Objects
There are no express objects or restrictions on objects in the Company’s articles, with the effect that
the objects of the Company are unrestricted in accordance with section 31 of the Act.
6.2
Voting
6.2.1 Subject to any rights or restrictions as to voting attached to any class of shares, at any
general meeting on a show of hands and on a poll every member who is present in person
and every person present who is the duly authorised representative of one or more
corporations and every member who is present by proxy has the number of votes provided
by the Act. In summary, that act provides that on a vote on a resolution on a show of hands:
6.3
(a)
each member present has one vote;
(b)
every proxy present who has been duly appointed by one or more members entitled
to vote on the resolution has one vote unless the proxy is appointed by more than one
such member and is instructed by one or more of those members to vote for the
resolution and by one or more other of those members to vote against it. In that case,
the proxy has one vote for and one vote against the resolution (and the articles provide
that for this purpose where a proxy is given discretion how to vote, this must be treated
as an instruction by the member to vote in the way that the proxy elects to exercise
that discretion); and
(c)
a person present as a duly authorised representative of a corporation is entitled to
exercise the same rights as the member would be entitled to (see (a) above) and where
a corporation authorises more than one person, each person has the same rights as
the corporation would have.
6.2.2
On a resolution on a poll every member has one vote in respect of each share and any or
all of the voting rights of the member may be exercised by one or more duly appointed
proxies or by one or more duly appointed corporate representatives.
6.2.3
A member is not entitled to vote if any calls or other monies due in respect of his shares
remain unpaid and a member may be disenfranchised where he, or a person appearing to
be interested in shares fails to comply with a notice from the Company under section 793
of the Act (section 793 notice) which may require him to indicate the capacity in which he
holds the shares or any interest in them.
Dividends and distributions
6.3.1 Dividends may be declared by ordinary resolution but must not in any event exceed the
amount recommended by the Directors.
6.3.2
Subject to the rights of persons (if any) entitled to shares with special dividend rights, all
dividends will be paid according to the amounts paid up (otherwise than in advance of calls)
on the nominal value of the shares on which the dividend is paid.
6.3.3
The Directors may from time to time pay to the members such interim dividends as appear
to them to be justified by the profits of the Company. If any member or any other person
appearing to be interested in shares held by that member representing 0.25 per cent. or
more of the class of shares concerned fails to supply to the Company any information
115
required by any section 793 notice (see “voting” above), the Directors may by notice to that
member direct that any dividend (or any part of it) or other amount payable on those shares
(except on a winding up of the Company) will be retained by the Company. The Company
will not be obliged to pay interest on that dividend and the member concerned will have no
right to receive any additional shares in the Company in lieu of any dividends.
6.3.4
On a winding up of the Company, the Company’s assets available for distribution must be
divided among the members in proportion to the nominal amounts of capital paid up or
credited as paid up on the shares held by them, subject to the terms of issue of or rights
attaching to any shares.
6.4
Unclaimed dividends
Any dividends unclaimed may be used for the benefit of the Company until claimed. Any dividend
which is still unclaimed twelve years after having become due for payment will be forfeited and revert
to the Group.
6.5
Untraced shareholders
The Company may sell any shares in the Company of a member or person entitled to shares by
transmission who is untraceable if, during the period of twelve years prior to the date of the
publication in both a national newspaper and a newspaper circulating in the area where the
member’s or person’s last known address is located of its intention to sell:
6.5.1
no cheque, warrant or money order addressed to the member or the person entitled by
transmission has been cashed;
6.5.2
no cash dividend has been satisfied by a transfer of funds;
6.5.3
the Company has paid at least three cash dividends (whether interim or final) and no such
dividend has been claimed;
6.5.4
the shares have been in issue during the 12 year period and the Company has received no
communication in respect of the shares from the holder or person entitled by transmission
during either the 12 year period or period of 3 months following the publication of the later
of the two advertisements.
6.6
Redemption
Subject to the provisions of the Act, the Company may issue shares which are to be redeemed or
are liable to be redeemed at the option of the Company or the member, and the Board may decide
the terms, conditions and manner of redemption of any such shares.
6.7
Variation of class rights
If at any time the capital of the Company is divided into different classes of shares, all or any of the
rights attached to any class of share may (unless the rights attached to the shares provide otherwise)
be varied or abrogated with the consent in writing of the holders of not less than three-quarters in
nominal value of the issued shares of that class or with the sanction of a resolution passed at a
separate general meeting of the holders of the shares of that class.
6.8
Alteration of share capital
6.8.1 There are no conditions imposed by the Company’s articles of association regarding
changes in the Company’s capital which are more stringent than required by the laws of
England and Wales. Accordingly, subject to complying with the Act (including any
requirement to pass a shareholder resolution or resolutions), the Company may alter its
share capital in the manner allowed for under the Act, including by sub-dividing or
consolidating and sub-dividing its share capital, redenominating or reducing its share capital
and purchasing its own shares.The Company’s articles contain provisions allowing the
Board to deal with fractions arising on consolidation and division or a sub-division of shares
as it thinks fit.
6.8.2
Statutory rights of pre-emption apply under the Act to the issue of any new shares for cash
consideration so that shares must first be offered to members pro rata to their existing
116
shares except to the extent the members have disapplied such pre-emption rights by
resolution at general meeting.
6.9
Transfer of shares
All transfers of certificated shares must be effected by instrument in writing, in any usual or other
form approved by the Directors and must be executed by or on behalf of the transferor and, if the
share is partly paid, by the transferee. Uncertificated shares may be transferred in accordance with
the Uncertificated Securities Regulations 2001 (SI 2001 No. 3755) and the facilities and
requirements of the relevant system (as defined under those regulations). The Directors may, in their
absolute discretion, decline to register any transfer of a share if:
6.9.1
the share is not fully paid;
6.9.2
there is a lien on the share;
6.9.3
it is in respect of more than one class of share;
6.9.4
it is to more than four joint holders;
6.9.5
it is not duly stamped (if so required by law); or
6.9.6
it has not been delivered for registration or is not supported by evidence of transfer of title,
provided in each case that the refusal to register could not prevent the shares of the same class from
continuing to be admitted to trading.
6.10 Calls on shares
6.10.1 The Board may make calls on the members (and persons entitled to shares by transmission)
in respect of any amounts unpaid on their shares (whether in respect of nominal amount or
premium). Each member must (subject to being given at least fourteen clear days’ notice
specifying when and where payment is to be made) pay to the Company as required by the
notice the amount called on his shares.
6.10.2 A call may be postponed or revoked in whole or in part as the Board decides. A person on
whom a call is made will remain liable for calls made on him notwithstanding the subsequent
transfer of the shares in respect of which the call was made. The joint holders of a share are
jointly and severally liable to pay all calls in respect of it.
6.11 Forfeiture
If a call remains unpaid after it has become due and payable, the Board may give to the person from
whom it is due not less than fourteen clear days’ notice requiring payment of the amount unpaid
together with any interest which may have accrued. The notice must state a place at which payment
is to be made and that if the notice is not complied with, the shares on which the call was made will
be liable to be forfeited. Any share forfeited will become the property of the Company.
6.12 Lien
The Company has a first and paramount lien on each issued share which is a partly paid share for
all amounts payable in respect of such share. The lien takes priority over any third party’s interest in
the share and extends to all dividends or other moneys payable by the Company in respect the
share. The Board may at any time declare any share exempt in whole or in part, from the provisions
of the articles on liens.
6.13 Disclosure of interest in shares
There are no provisions in the Articles by which persons acquiring, holding or disposing of a certain
percentage of the Company’s shares are required to make disclosure of their ownership percentage.
However, as set out in paragraph 3.11, the provisions of Chapter 5 of the Disclosure and
Transparency Rules made by the FCA under Part VI of FSMA apply.
6.14 Change of control
There are no provisions in the articles which would have the effect of delaying, deferring or
preventing a change of control of the Company.
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6.15 Directors
6.15.1 Remuneration of Directors
Each of the Directors is entitled to receive, by way of ordinary remuneration for his services
in each year, such sum as the Board may decide. The Directors are also entitled to be repaid
all travelling, hotel and other expenses properly incurred by them in connection with the
performance of their duties as Directors. The Board may also grant additional special
remuneration to any Director who, being called upon, performs any special duties outside
his ordinary duties as a Director.
6.15.2 Appointment of Directors
Directors may be appointed by an ordinary resolution of the Company in general meeting or
by the Board.
6.15.3 Number of Directors and votes
Unless and until otherwise determined by the Company by ordinary resolution, the number
of Directors (other than alternate Directors) may not be less than two in number. The quorum
necessary for the transaction of business of the Board may be fixed by the Board at two or
more and otherwise is two.
Questions arising at a meeting of directors must be decided by a majority of votes. In the
case of equality of votes, the chairman has a second or casting vote.
6.15.4 Directors’ permitted interests
A Director is permitted to enter into contracts or arrangements with the Group and persons
in which the Group is otherwise interested; hold any office or place of profit (except that of
auditor) with and be a director, officer or employee of (or party to any contract or
arrangement with) any body corporate promoted by the Group or in which the Group is
otherwise interested. The Director will not be accountable to the Company or the members
for any remuneration, profit or other benefit he derives from such interest and no such
transaction is be liable to be avoided. However, a Director must declare the nature and
extent of any direct or indirect interest in a transaction or arrangement with the Group under
sections 177 and 182 of the Act.
6.15.5 Directors’ conflicts of interest
Each Director must also declare any situation in which he has or can have a direct (or
indirect) interest which conflicts (or may conflict) with the interests of the Group which, if not
authorised or ratified would amount to a breach of section 175 of the Act (a conflict).
Authorisation of a Directors’ conflict may be given by the Board, not counting the Director
concerned or any other Director interested in that matter in the quorum and not counting
their vote(s). The authorisation may be subject to such terms and for such duration or
impose such limits or conditions as the authorisation specifies and may be terminated or
varied by the Board at any time. Unless otherwise provided by the authorisation, the Director
is authorised (without breaching his duties to the Company) not to disclose any information
to the Company which he has obtained otherwise than as a Director of the Company; and
to absent himself from Board meetings and discussions relating to the conflict. The Director
will not be accountable to the Company or the members for any remuneration, profit or other
benefit he derives from an interest so authorised and no such transaction is liable to be
avoided on the ground of the Director having an interest authorised by the Board.
6.15.6 Voting and counting to quorum on interested matters
A Director may not vote on or be counted to the quorum in relation to any contract or
arrangement or any other proposal in which he has an interest (otherwise than by virtue of
his interest in shares or debentures or other securities of, or otherwise in or through, the
Company) other than a resolution:
(a)
relating to a matter which cannot reasonably be regarded as likely to give rise to a
conflict of interest;
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(b)
relating to the giving of any security or indemnity to him in respect of money lent or
obligations incurred by him at the request of or for the benefit of any member of the
Group;
(c)
relating to the giving of any security or indemnity in respect of a debt or obligation of
any member of the Group for which he himself has assumed responsibility in whole
or in part under a guarantee or indemnity or by the giving of security;
(d)
relating to the giving to him of any indemnity where all the other Directors are being
offered indemnities on substantially the same terms;
(e)
relating to the funding by the Company of his expenditure on defending proceedings
(or to enable him to avoid incurring such expenditure) where all the other Directors are
being offered substantially the same arrangements;
(f)
relating to an offer of securities by any member of the Group in which he is or may be
entitled to participate as a holder of securities or in the underwriting or subunderwriting of which he is to participate;
(g)
relating to any proposal concerning any other body corporate in which he is interested
directly or indirectly and whether as an officer, shareholder, employee, creditor or
otherwise, provided that he is not the holder of a beneficial interest in one per cent.
or more of any class of equity share capital or of the voting rights in such body
corporate;
(h)
relating to an arrangement for the benefit of employees of any member of the Group
which does not award him any privilege or benefit not generally awarded to
employees to whom the arrangement relates;
(i)
relating to any proposal concerning the adoption, modification or operation of a
superannuation fund or retirement, death or disability benefit scheme which is
approved by or subject to the approval of the HM Revenue & Customs or relating to
any arrangement for the benefit of employees generally which does not accord to him
as a Director any privilege or advantage not generally accorded;
(j)
relating to any proposal concerning the purchase and/or maintenance of an insurance
policy under which a Director may benefit; or
(k)
relating to a matter authorised pursuant to paragraph 6.15.5 of this Part 4.
6.15.7 Qualification shares
There is no requirement for Directors to hold qualification shares.
6.15.8 Retirement by rotation
At each annual general meeting: any Director appointed by the Board since the last annual
general meeting; any Director who held office at the preceding two annual general meetings
and who did not retire by rotation at either of them; and any Director who agrees to do so
must retire by rotation. A Director who retires, if willing to act, may be reappointed.
6.15.9 Indemnity of Directors
Subject to the provisions of the Act, every director or other officer of the Company may be
indemnified out of the assets of the Company against any liability incurred by that Director
in connection with: any negligence, default, breach of duty or breach of trust in relation to
the Company or its subsidiaries; the activities of the Company or a subsidiary of the
Company in its capacity as a trustee of an occupational pension scheme; or any other
liability incurred by the Director as an officer of the Company or any of its subsidiaries.
The Directors of the Company may purchase and maintain insurance at the expense of the
Company for the benefit of any Director or former director of the Company or any of its
subsidiaries against any loss or liability which has been or may be incurred in connection
with that Director’s duties or powers in relation to the Company, any subsidiary of the
Company or any pension fund or employees’ share scheme of the Company or subsidiary
of the Company.
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6.16 General meetings
6.16.1 The Board must convene and the Company must hold annual general meetings in
accordance with the Act. The Board may convene other general meetings when it decides
to do so and on request by the members under section 303 of the Act.
6.16.2 An annual general meeting must be convened by at least 21 clear days’ notice. All other
general meetings must be convened by at least 14 clear days’ notice.
6.16.3 The notice must comply with legislation applicable to the Company, including the Act relating
to the content of notice of meetings including by specifying the place, day and time of the
meeting together with the general nature of the business to be transacted at the meeting,
and a statement of the members’ right to appoint a proxy. The notice may also specify the
time by which a person must be entered on the Register of Members in order for such a
person to have the right to attend and vote at the meeting.
6.17 Proceedings at general meetings
6.17.1 No business may be transacted at a general meeting other than the appointment of a
chairman of the meeting, unless at least two people entitled to attend and vote are present.
6.17.2 At a general meeting a resolution put to the vote of the meeting must be decided on a show
of hands, unless before, or upon the declaration of the result of, the show of hands a poll is
demanded by either:
(a)
the chairman of the meeting;
(b)
at least three members present in person or by proxy having the rights to vote at the
meeting;
(c)
a member or members present in person or by proxy representing not less than 10
per cent. of the total voting rights of all the members present in person or by proxy
and having the right to vote on the resolution; or
(d)
one or more members present in person or by proxy holding shares conferring a right
to vote on the resolution on which an aggregate sum has been paid up equal to not
less than 10 per cent. of the total sum paid up on all the shares conferring that right.
6.17.3 Unless a poll is demanded, a declaration by the chairman of the meeting that a resolution
has been carried, or carried unanimously or by a particular majority, or lost, or not carried by
a particular majority, and an entry to that effect in the book containing minutes of the
proceedings of general meetings of the Company, is conclusive evidence of the fact without
proof of the number or proportion of the votes recorded in favour of or against such
resolution.
6.18 Powers of borrowing and mortgaging
The Directors may exercise all the powers of the Company to borrow money, and to mortgage or
charge the whole or any part of its undertaking, property and assets and uncalled capital, and to
issue debentures and other securities.
6.19 Reserves
The Board may set aside out of the profits of the Company and carry to reserve such sums as it
decides. Such sums standing to reserve may be applied, at the Board’s discretion, for any purpose
to which the profits of the Company may properly be applied and, pending such application, may
either be employed in the business of the Company or be invested in such investments as the Board
decides.
6.20 Mandatory Offers (Code Provisions)
6.20.1 The provisions summarised below apply unless the Code applies to the Company.
6.20.2 Except with the consent of an ordinary resolution of independent Shareholders (i.e.
excluding a potential offeror and persons acting in concert with it) on a poll, and subject to
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exemptions for inadvertent mistake and other matters where Rule 9 of the Code would not
apply, when:
(a)
any Shareholder (or person acting in concert with such Shareholder) acquires,
whether in a single transaction or by a series of transactions over a period of time, an
interest in shares in the Company which (taken together with shares in which such
Shareholder or persons acting in concert with such Shareholder are interested) carry
30 per cent. or more of the voting rights of the Company; or
(b)
shares in the Company which in aggregate carry not less than 30 per cent. of the
voting rights of the Company but does not hold shares carrying more than 50 per
cent. of such voting rights and such Shareholder, or any person acting in concert with
such Shareholder, acquires an interest in any other shares which increases the
percentage of shares carrying voting rights in which he is interested, such
Shareholder shall extend an offer to the holders of all the issued (and to be issued)
shares in the Company except in certain circumstances where such acquisition has
been expressly authorised under the Lock-in and Orderly Market Agreement.
6.20.3 Such offer must be in cash at not less than the highest price paid by the offeror (or any
person acting in concert with it) for any interest in shares in the Company during the previous
12 months, and must be conditional only upon the offeror having received acceptances in
respect of shares which, together with shares acquired or agreed to be acquired before or
during the offer, will result in the offeror and any person acting in concert with it holding
shares carrying more than 50 per cent. of the voting rights of the Company. The offer must
be made on terms that would be required by the then current Code, save to the extent that
the board of directors otherwise determines. Any matter which under the Code would fall to
be determined by the Takeover Panel shall be determined by the board of directors in its
absolute discretion or by such person appointed by the board to make such determination.
6.20.4 Except with the consent of a majority of independent Shareholders (i.e. excluding an offeror
and persons acting in concert with it) on a poll, Shareholders shall comply with the
requirements of the Code (as if the Code applied to the Group) in relation to any dealings in
any shares in the Company and in relation to their dealings with the Company in relation to
all matters.
6.20.5 At all times when the Company would be in an “offer period” for the purposes of the Code
each Shareholder shall comply with the disclosure obligations set out in Rule 8 of the Code
as if the Code applied to the Company.
6.20.6 If any Shareholder defaults in making a mandatory offer pursuant to the Articles, or is
otherwise in default of the obligations in the Articles relating to takeovers, then the directors
may, inter alia, by a direction notice to such Shareholder (and any other Shareholder acting
in concert with such Shareholder) direct that:
(a)
in respect of the shares held by those Shareholders, the Shareholders shall not be
entitled to vote at a general meeting either personally or by proxy or to exercise any
other right conferred by membership in relation to meetings of the Company;
(b)
no payment shall be made of any sums due from the Company on such shares in
respect of dividend; and/or
(c)
the shares held by such Shareholder are to be sold.
Any decision to be made, or discretion to be exercised, by the directors shall be made or
exercised excluding any director who is (or may be) obliged to make an offer pursuant to the
Articles or who is acting in concert with any person who is (or may be) obliged to make such
an offer.
7.
7.1
DIRECTORS’ AND OTHER INTERESTS
As at the date of this document and as expected to be immediately following the Placing and
Admission, the holdings of the Directors and any other applicable employee of the Company (as
defined in the AIM Rules), and their families in the share capital of the Company (i) which would have
121
been required to be notified by the Company pursuant to Rule 17 of the AIM Rules; or (ii) which are
holdings of a person connected (within the meaning of section 252 of the Act) with a Director which
would, if the connected person were a Director, be required to be disclosed under (i) above and the
existence of which is known to or could with reasonable diligence be ascertained by the Directors
are as follows:
Name
% of
Number of
the issued
Ordinary
Ordinary
Shares Share Capital
prior to
prior to
the Placing
the Placing
TRGI
32,250,055
100%
Number of
Ordinary
Shares
upon
Admission
% of
issued
Share Capital
upon
Admission
Options
29,653,932
75%
Nil
* Muhammad Chishti and Mohammedulla Khaishgi are directors of TRGI.
7.2
As at the date of this document, the following options have been granted to Directors or otherwise
over Existing Shares under the TRGI Stock Plan:
Name
Stephen Kezirian
Karl Gabel
Tim Kelly
Per cent. of
enlarged
share capital
immediately
Number of
following
share options
Admission
Vesting
schedule
Exercise
period
(from)
Exercise
Price
1,495,443
3.8
591,946 options
vest on 30 June
2013; 31,155 stock
options vesting
monthly from
30 November
2015
30 June
2013
$1.55
442,307
1.1
221,154 options
vest on 30 June
2013; 12,286 stock
options vesting
monthly from
31 July 2013
30 June
2013
$1.55
49,848
0.1
12,462 options
vest on
31 December
2013; 1,039 stock
options vesting
monthly from
31 December
2016
31 December
2013
$1.55
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7.3
Save as disclosed in paragraph 7.1 and paragraph 7.2 above, the Group is not aware of any holding
(within the meaning of the AIM Rules) in the Group’s ordinary share capital which amounts or would,
immediately following the Placing and Admission, amount to 3 per cent. or more of the Group’s
issued ordinary share capital other than the following:
Name
% of
Number of
the issued
Ordinary
Ordinary
Shares Share Capital
prior to
prior to
the Placing
the Placing
Standard Life Investments Limited
Fidelity Investments International
Miton Capital Partners Limited
0
0
0
0
0
0
Number of
% of
Ordinary
issued
Shares Share Capital
upon
upon
Admission
Admission
2,530,119
2,125,300
1,870,088
6.40
5.37
4.73
The voting rights of the Shareholders set out in paragraphs 7.1 and 7.2 do not differ from the voting
rights held by other Shareholders.
7.4
There are no outstanding loans granted or guarantees provided by the Group to or for the benefit of
any of the Directors, nor are there any outstanding loans or guarantees provided by the Directors to
or for the benefit of the Group.
7.5
Save as disclosed in this paragraph 7, no Director has any interest, whether direct or indirect, in any
transaction which is or was unusual in its nature or conditions or significant to the business of the
Group taken as a whole and which was effected by the Group during the current or immediately
preceding financial year, or during any earlier financial year and which remains in any respect
outstanding or unperformed.
7.6
Save as otherwise disclosed in this document, none of the directors nor any member of their
respective families nor any person connected with the Directors (within the meaning of section 252
of the Act) has any holding, whether beneficial or otherwise, in the share capital of the Group.
7.7
None of the Directors nor any member of a Director’s family is dealing in any related financial product
(as defined in the AIM Rules) whose value in whole or in part is determined directly or indirectly by
reference to the price of the ordinary shares, including a contract for differences or a fixed odds bet.
8.
8.1
DIRECTORS’ SERVICE AGREEMENTS/LETTERS OF APPOINTMENT
The executive directors have entered into the following service/employment agreements with IBEX
Inc.:
8.1.1 Stephen Kezirian
An employment agreement with Mr Kezirian effective as of 1 December 2011, pursuant to
which Mr Kezirian will continue to be employed as Chief Executive Officer. Pursuant to the
agreement, Mr Kezirian’s annual salary will be $240,000. In addition he may receive a
discretionary cash or equity bonus that is currently targeted to be 40 per cent. of his gross
base salary. In addition, Mr Kezirian will be eligible to participate in any benefit plan offered by
IBEX Inc. and will be entitled to 15 days paid leave per year. Mr Kezirian may terminate his
employment for any reason with 3 months’ prior notice. IBEX Inc. may waive all or part of
such notice period. IBEX Inc. may terminate Mr Kezirian’s employment at any time by
providing 1 months’ notice. During his employment and for a 24 month period thereafter, Mr
Kezirian will be subject to non-solicitation of employees, non-solicitation of customers and,
for a 12 month period thereafter, non-competition covenants.
8.1.2 Karl Gabel
An employment agreement with Mr Gabel commencing on 21 January 2008 (as amended),
pursuant to which Mr Gabel will be employed as Chief Financial Officer and Executive Vice
President. Pursuant to the agreement, Mr Gabel’s annual salary will be $250,000. In addition
he may receive a discretionary cash bonus that is currently targeted to be 25 per cent. of his
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gross base salary. In addition, Mr Gabel will be eligible to participate in any benefit plan offered
by IBEX Inc. and will be entitled to 20 days paid leave per year. Mr Gabel may terminate his
employment for any reason on 3 months’ notice. IBEX Inc. may terminate Mr Gabel’s
employment at any time by providing one months’ notice. During his employment and for a
12 month period thereafter, Mr Gabel will be subject to non-solicitation of employees, nonsolicitation of customers and non-competition covenants.
8.2
Stephen Kezirian and Karl Gabel have entered into the following agreements with the Company to
serve as directors of the Company:
8.2.1 Stephen Kezirian
A letter of agreement with Mr Kezirian pursuant to which Mr Kezirian is invited to become a
director of the Company with effect from the date of his formal appointment to the Board,
being 4 June 2013. Pursuant to the agreement, Mr Kezirian’s annual salary will be $1 per
annum. In addition he will be reimbursed for any reasonable expenses incurred in connection
with his services as a director of the Company in accordance with the Company’s established
policies and the Articles. Mr Kezirian may terminate his service as director of the Company for
any reason with 3 month’s prior written notice. The Company may terminate his service as a
director of the Company for any reason with one prior written month’s notice. The Company
may terminate Mr Kezirian’s service as director upon the earlier of: (i) the conclusion of the full
terms of his directorship with the Company in the event that he is not re-elected as a director
of the Company at the Company’s annual general meeting; (ii) voluntary termination of his
directorship by the Company in accordance with the Articles by any means or for any reason
upon providing written notice; (iii) the date of termination of his employment with IBEX Inc.; or
(iv) the Company’s termination of his directorship immediately by written notice in the event of
a material breach of his fiduciary duties to the Company or his material breach of any
provision of his letter agreement. During his directorship and for the maximum period
permitted by law, Mr Kezirian will be subject to non-disclosure and non-disparagement
obligations.
8.2.2 Karl Gabel
A letter of agreement with Mr Gabel pursuant to which Mr Gabel is invited to become a
director of the Company with effect from the date of his formal appointment to the Board,
being 4 June 2013. Pursuant to the agreement, Mr Gabel’s annual salary will be $1 per
annum. In addition he will be reimbursed for any reasonable expenses incurred in connection
with his services as a director of the Company in accordance with the Company’s established
policies and the Articles. Mr Gabel may terminate his service as director of the Company for
any reason with 3 month’s prior written notice. The Company may terminate his service as a
director of the Company for any reason with one month’s prior written notice. The Company
may terminate Mr Gabel’s service as director upon the earlier of: (i) the conclusion of the full
terms of his directorship with the Company in the event that he is not re-elected as a director
of the Company at the Company’s annual general meeting; (ii) voluntary termination of his
directorship by the Company in accordance with the Articles of the Company by any means
or for any reason upon providing written notice; (iii) the date of termination of his employment
with IBEX Inc.; or (iv) the Company’s termination of his directorship immediately by written
notice in the event of a material breach of his fiduciary duties to the Company or his material
breach of any provision of the letter agreement. During his directorship and for the maximum
period permitted by law, Mr Gabel will be subject to non-disclosure and non-disparagement
obligations.
8.3
Each of the non-executive directors has entered into a letter of appointment with the Company
under the terms of which they agree to act as a non-executive director of the Company for a fee of
$60,000 per annum, save for Zia Chishti and Mohammedulla Khaishgi, who shall be paid $1. Each
non-executive director may terminate his service as director of the Company with 3 months’ prior
written notice. The Company may terminate a non-executive director’s employment at any time by
providing one months notice.
8.4
Save as disclosed in sub-paragraphs 8.1 to 8.3 above, there are no service contracts, existing or
proposed, between any Director and the Group.
124
8.5
Details of the commencement and expiration of the term of office of each Director and members of
the administrative, management and supervisory bodies of the Group who were in office during the
Group’s last financial year are set out below:
Name
Muhammad Ziaullah Khan
Chishti
Stephen Kezirian
Karl Gabel
Mohammedulla Khaishgi
Tim Kelly
John Leone
Jimmy Holland
Commencement
of Period of Office
26 March 2013
Date of expiration of term of Office
Annual General Meeting to be held in 2014
5 June 2013
5 June 2013
3 June 2013
5 June 2013
5 June 2013
16 May 2013
Annual General Meeting to be held in 2014
Annual General Meeting to be held in 2014
Annual General Meeting to be held in 2014
Annual General Meeting to be held in 2014
Annual General Meeting to be held in 2014
Indefinite
8.6
There are no service contracts in place between the Group or any subsidiary and any member of
the administrative/management or supervisory bodies which provides for benefits on termination of
employment.
9.
9.1
ADDITIONAL INFORMATION ON THE BOARD
In addition to directorships of the Group the Directors hold or have held the following directorships
or have been partners in the following partnerships within the five years prior to the date of this
document:
Director
(insert any previous names)
Muhammad Ziaullah Khan
Chishti
Stephen Kezirian
Age
41
39
Current Directorships
and Partnerships
The Resource Group
International Limited
Digital Globe Services, Ltd
The Resource Group
Pakistan Limited
SATMAP International
Holdings Limited
SATMAP, Incorporated
SATMAP Worldwide
Marketing Limited
IBEX Global Solutions
Limited
IBEX Global Solutions
Philippines
Kezirian Ventures LLC
Multiband Corporation
TRG Customer Solutions
(Canada) Inc.
TRG Marketing Solutions
Ltd
IBEX Global Senegal Ltd
Proginet Corporation
TRG Philippines, Inc.
TRG Global Solutions
(Philippines) Inc.
GL Beyond Income Fund
125
Past Directorships and
Partnerships
OrthoClear Incorporated
Align Technology, Inc.
Karl Gabel
Mohammedulla Khaishgi
49
45
None
The Resource Group
International Limited
IBEX Inc.
TRG Holdings LLC
Alert Communications Inc.
BPO Solutions Inc.
iSky Inc
SATMAP Incorporated
SATMAP International
Holdings Limited
TRG Marketing Services Inc.
TRG Philippines
None
Azgard Nine
Lever Arch (UK) plc
Tim Kelly
54
Zubie Inc
Network Solutions
Greenlight Connected
Solutions
John Leone
40
PineBridge Investment
Partners LLC
Nabbe Holdings GP, Ltd
The Resource Group
International Limited
TRG Pakistan Limited
Companhia Providencia
Industria e Comercia S.A.
PineBridge Latin America II
GP, LP
PineBridge GEM II GP, LP
PineBridge GEM Viaduct
GP, LP
PineBridge Kamchia GP, LP
PineBridge New Europe II
GP, LP
PineBridge RCP GP, LP
9.2
The Securities and Exchange Commission of Pakistan (“SECP”) brought proceedings against The
Resource Group Pakistan Limited and members of its management, including Zia Chishti, in relation
to default in complying with company regulations, failure to hold a company AGM in 2010 and the
associated failure to submit accounts at the AGM. As part of the proceedings, various individuals
were fined by the SECP, including a Rs. 250,000 (approximately £1,600) fine for Zia Chishti for two
separate violations of section 158(1) of the Companies Ordinance and Rule 7(1) of the Non Finance
Banking Company rules.
9.3
Mohammedulla Khaishgi was a director of Lever Arch (UK) plc from April 2006 to October 2009. The
company was placed into administration in November 2009 and subsequently dissolved in
November 2010. At the time of the administration the company’s assets were approximately
£40,000.
9.4
Save as disclosed above none of the directors has:
9.4.1
any unspent convictions in relation to indictable offences;
9.4.2
had any bankruptcy order made against him or entered into any voluntary arrangements;
9.4.3
been a director of a company which has been placed in receivership, compulsory liquidation,
creditors’ voluntary liquidation, administration, been subject to a voluntary arrangement or
any composition or arrangement with its creditors generally or any class of its creditors
whilst he was a director of that company or within the 12 months after he ceased to be a
director of that company;
126
9.4.4
been a partner in any partnership which has been placed in compulsory liquidation,
administration or been the subject of a partnership voluntary arrangement whilst he was a
partner in that partnership or within the 12 months after he ceased to be a partner in that
partnership;
9.4.5
been the owner of any assets or a partner in any partnership which has been placed in
receivership whilst he was a partner in that partnership or within the 12 months after he
ceased to be a partner in that partnership;
9.4.6
been publicly criticised by any statutory or regulatory authority (including recognised
professional bodies); or
9.4.7
been disqualified by a court from acting as a director of any company or from acting in the
management or conduct of the affairs of a Company.
10. EMPLOYEES
10.1 As at 31 December 2012, the Group had 6,900 employees. As at the date of this document, the
Group has 8,100 employees.
11. CORPORATE STRUCTURE AND PRE-ADMISSION REORGANISATION
11.1 The structure of the Group as at the date of Admission is set out below:
Note: The structure chart above does not, in all cases, reflect the actual corporate names of the relevant entities. They have
been named by their country of incorporation and operation for ease of reference.
* Minority holdings in these companies are held by third parties. Please see paragraph 1.7 of Part 4 for more information.
11.2 Prior to Admission, the Group was reorganised as detailed in this paragraph 11 (“Reorganisation”).
Prior to the Reorganisation:
11.2.1 TRG Holdings LLC held the entire issued share capital in IBEX Inc.;
11.2.2 TRGI held the entire issued share capital of:
(a)
TRG Philippines Inc.;
(b)
The Resource Group Senegal SA;
(c)
TRG Marketing Solutions Limited; and
127
(d)
Virtual World (Private) Limited; and
11.2.3 TRG (Private) Limited held the entire issued share capital in IBEX Global Solutions Pvt Ltd.
11.3 Pursuant to the Reorganisation (among other things):
11.3.1 the ownership of TRG Philippines Inc. has been transferred from TRGI to the Group by way
of (i) a tax-free distribution of TRG Philippines Inc.’s shares from TRG Holdings LLC to TRGI
and (ii) a contribution of the shares in TRG Philippines Inc. by TRGI to the Group;
11.3.2 the ownership of TRG Marketing Solutions Limited and Virtual World (Private) Limited has
been contributed by TRGI to the Group;
11.3.3 the ownership of TRG Philippines Inc. and The Resource Group Senegal SA has been
contributed by TRGI to the Group;
11.3.4 the ownership of IBEX Global Solutions Pvt Ltd has been transferred to the Group by TRG
(Private) Limited;
11.3.5 the Company incorporated IBEX Global Europe S.à.r.l;
11.3.6 the Company acquired the entire issued share capital of Lovercius Consultants Limited; and
11.3.7 IBEX Global Solutions Pvt Ltd purchased certain assets from TRG (Private) Limited.
11.4 A more detailed summary of the Reorganisation is set out below:
11.4.1 On 29 March 2013
IBEX Inc. sold certain of its internally developed intellectual property to TRGI for
US$7,500,000 in exchange for a promissory note issued by TRGI in favour of IBEX Inc.
(TRGI Promissory Note) pursuant to an intellectual property acquisition agreement dated
29 March 2013 (the IP Sale Agreement);
IBEX Inc. assigned the TRGI Promissory Note to TRG Holdings, LLC pursuant to an
assignment agreement entered into between (1) IBEX Inc. and (2) TRG Holdings, LLC and
accordingly the TRGI Promissory Note balances will be owed from TRGI to TRG Holdings,
LLC going forward; and
IBEX Inc. entered into an intellectual property licence agreement with TRGI (the TRGI IP
Licence), pursuant to which TRGI licences certain intellectual property to IBEX Inc. TRGI IP
Licence was later terminated with effect from 8 May 2013.
11.4.2 On 30 March 2013
TRG Marketing Solutions Limited received an application for shares from TRGI, for
1,566,468 ordinary shares in the capital of TRG Marketing Solutions Limited in exchange for
the cancellation and release by TRGI of a promissory note dated 30 March 2013 in the sum
of US$2,381,046 made by TRG Marketing Solutions Limited in favour of TRGI.
TRGI entered into a release agreement with TRG Marketing Solutions Limited pursuant to
which TRGI agreed to release and discharge TRG Marketing Solutions Limited of its
obligation to pay TRGI the sum of US$2,381,046 under the promissory note dated 30 March
2013.
IBEX Inc. entered into a release agreement with (1) TRG Holdings, LLC, (2) TRG Customer
Solutions (Canada) Inc, (3) Alert Communications, Inc (Alert), (4) TRG Marketing Solutions
Limited, (5) iSky, Inc (TRG iSky) and (6) BPO Solutions, Inc (BPO Solutions) pursuant to
which IBEX Inc. agreed to release and discharge each of these entities from their obligations
to pay IBEX Inc. the amounts owed to IBEX Inc. as at the date of the release agreement.
The Resource Group Senegal SA and TRGI entered into an assignment agreement pursuant
to which The Resource Group Senegal SA assigned amounts owed to TRG Holdings, LLC,
TRG Marketing Services Inc., TRG (Private) Limited, BPO Solutions, TRGiSky, TRG
Marketing Solutions Limited and TRG Philippines Inc. to TRGI in consideration for the issue
by The Resource Group Senegal SA of a promissory note in favour of TRGI in the amount
of US$674,173. The maturity date stated on the promissory note is 30 March 2014 and the
128
interest rate, which shall accrue from 30 March 2013 on the unpaid principal amount, is
1.95 per cent. per annum (Senegal Promissory Note).
The Resource Group Senegal SA and TRGI also entered into a release agreement pursuant
to which TRGI agreed to (i) release The Resource Group Senegal SA from the amount owed
to it pursuant to the Senegal Promissory Note and (ii) release The Resource Group Senegal
SA from its obligation to repay TRGI US$1,213,050 pursuant to certain intercompany
transactions in consideration for the allotment and issue by The Resource Group Senegal
SA of an additional 87,914 shares in the capital of The Resource Group Senegal SA to TRGI.
TRGI and the Company entered into an assignment agreement pursuant to which TRGI
transferred its 93,309 shares of 10,000 Francs each in the capital of The Resource Group
Senegal SA to the Company for a price of 933,090,000 Francs.
11.4.3 On 31 March 2013
The sole member and management committee of TRG Holdings, LLC jointly consented to
the distribution by TRG Holdings, LLC of its stock in IBEX Inc. to TRGI;
The board of IBEX Inc. unanimously consented to (i) the cancellation of its entire issued
stock, being 1,500 common shares, previously issued to TRG Holdings, LLC and (ii) the
issue of 1,500 common shares in the capital of IBEX Inc. as uncertificated shares to TRGI;
The board of IBEX Inc. unanimously consented to (i) the cancellation of its entire issued
stock, being 1,500 common shares, previously issued to TRGI and (ii) the issue of 1,500
common shares in the capital of IBEX Inc. as uncertificated shares to the Company;
The Company received an application for shares from TRGI, for 1,566,470 ordinary shares
of £1.00 each in the capital of the Company in exchange for the contribution by TRGI of
1,566,470 shares of £1.00 each in the capital of TRG Marketing Solutions Limited, being the
entire issued share capital of TRG Marketing Solutions Limited to the Company;
A record of decisions of the sole director of the Company indicates that the Company also
received an application for shares from TRGI, for 30,683,484 Ordinary Shares in exchange
for the contribution by TRGI of the following assets to the Company:
(a)
93,309 shares of 1,000 Francs each in the capital of The Resource Group Senegal
SA, which, save for five shares held by Famara Ibrahima Sagna (please refer to the
footnote in paragraph 1.7 of this Part 4), comprise the entire issued share capital of
The Resource Group Senegal SA;
(b)
409,995 common stock in TRG Philippines Inc. of PP.100 each, together with the
beneficial ownership of five shares in the capital of TRG Philippines Inc. held on trust
for TRGI by its directors (please refer to the footnote in paragraph 1.7 of this Part 4),
which together comprise the entire issued share capital of TRG Philippines Inc.;
(c)
3,257,680 shares of Rs.10 each in the capital of Virtual World Private Limited,
together with the beneficial ownership of two shares in Virtual World Private Limited
held on trust for TRGI by the directors of Virtual World Private Limited (please refer to
the footnote in paragraph 1.7 of this Part 4), which together comprise the entire
issued share capital of Virtual World Private Limited;
(d)
1,500 shares of US$0.0001 each in the capital of IBEX Inc. which comprise the entire
issued share capital of IBEX Inc.;
(e)
€17,000 to be applied towards the Company’s costs of incorporating a Luxembourg
subsidiary which has a paid up capital of US$21,788;
(f)
US$1,000,000 in prepaid SATMAP services pursuant to a first draft amendment to
the commercial schedule dated 31 March 2013 and a promissory note from TRGI of
even date in the sum of US$1,000,000 due in full on 30 June 2017 with an annual
interest rate of 1.95 per cent. per annum; and
(g)
TRGI and Lovercius Consultants Limited entered into an intellectual property licence
agreement pursuant to which TRGI licenses certain intellectual property to Lovercius
Consultants Limited for consideration of US$1.00.
129
11.4.4 On 1 April 2013
IBEX Global Solutions Pvt Ltd (as transferee) and TRG (Private) Limited (as transferor)
entered into an asset purchase agreement pursuant to which TRG Private sold a number of
assets to IBEX Global Solutions Pvt Ltd comprising:
(a)
computer hardware and call centre related equipment;
(b)
Rs. 13,379,052.62 receivable from Google;
(c)
Rs. 11,434,642.74 receivable from SquareTrade,
together with a promissory note in the sum of Rs.6,321,400.85 issued by TRG (Private)
Limited in favour of IBEX Global Solutions Pvt Ltd with a maturity date of 31 December 2017
and an interest rate of 12.5 per cent. per annum (TRG Promissory Note).
In consideration for the transfer of the assets to IBEX Global Solutions Pvt Ltd, it acquired
the following obligations of TRG (Private) Limited:
(d)
withholding tax salaries (Rs. 2,058,298);
(e)
provident fund payable (Rs. 2,010,517);
(f)
Employees Old-age Benefits Institution payable (Rs. 230,880);
(g)
salaries, wages and other benefits payable (Rs. 32,446,588);
(h)
AYK (Pvt) Ltd (Rs. 1,198,500); and
(i)
Mega Plus Pakistan (Rs. 7,784,012).
TRG (Private) Limited exercised its right under the TRG Promissory Note to offset the
amount of Rs. 6,321,40085 owed by Virtual World (Private) Limited to TRG (Private) Limited
against the sum owed by TRG (Private) Limited to IBEX Global Solutions Pvt Ltd pursuant
to the TRG Promissory Note.
11.4.5 On 8 May 2013
IBEX Global Europe S.à.r.l and TRGI entered into an intellectual property acquisition
agreement pursuant to which IBEX Global Europe S.à.r.l purchased certain intellectual
property from TRGI for consideration of US$1.00.
IBEX Global Europe S.à.r.l and IBEX Inc. entered into an intellectual property licence
agreement pursuant to which IBEX Global Europe S.à.r.l licenses certain intellectual property
to IBEX Inc.
11.4.6 On 28 May 2013
The board of IBEX Inc. unanimously consented to (i) the termination of the intellectual
property license agreement entered into between (1) IBEX Inc. and (2) TRGI on 29 March
2013 and (ii) the entry by IBEX Inc. into intellectual property licence agreements with each
of IBEX Global Europe S.à.r.l and Lovercius Consultants Limited dated 8 May 2013.
12. MATERIAL CONTRACTS
In addition to the Reorganisation documents detailed in paragraph 11 above and the related party
transactions detailed in paragraph 14 below, the following contracts, not being contracts entered into in
the ordinary course of business, have been entered into by the Company or a member of the Group within
the two years immediately preceding the date of this document and are, or may be, material:
12.1 A Placing Agreement dated 24 June 2013 between (1) the Company, (2) the Directors (3) TRGI (4)
Liberum and (5) Cenkos pursuant to which conditional upon, inter alia, Admission taking place on
or before 8.00 a.m. on 28 June 2013 (or such later time and or date as the Company, Liberum and
Cenkos may agree being not later than 6.00 p.m. on 31 July 2013), Liberum and Cenkos have
agreed to use reasonable endeavours, as agents for the Company, to procure subscribers for the
New Ordinary Shares proposed to be issued by the Company at the Placing Price and, as agent for
TRGI, to procure purchasers for the Sale Shares proposed to be sold by TRGI at the Placing Price.
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The Placing Agreement contains warranties from the Company, the Directors and TRGI and an
indemnity from the Company in favour of Liberum and Cenkos together with provisions which enable
Liberum and Cenkos to terminate the Placing Agreement in certain circumstances prior to
Admission including circumstances where any warranties are found to be untrue or inaccurate in any
material respect. The liability of the Directors for breach of warranty is limited. Under the Placing
Agreement the Company has agreed to pay Liberum and Cenkos a corporate finance advisory fee
and a maximum commission of 5 per cent. of the aggregate value of the New Ordinary Shares at
the Placing Price. TRGI will pay each of Liberum and Cenkos commission of 5 per cent. of the
aggregate value of the Sale Shares at the Placing Price.
The Company is responsible for the costs, charges and expenses properly and reasonably incurred
by, Liberum and Cenkos in connection with or incidental to the Placing and Admission, including (but
not limited to) the reasonable fees and expenses of Liberum and Cenkos’s legal advisers.
12.2 A broker agreement dated 19 June 2013 between (1) the Company and (2) Cenkos pursuant to
which Cenkos has agreed to act as joint-broker to the Company following Admission, for an annual
fee of £40,000 plus VAT and disbursements.
12.3 Lock-in and Orderly Market Agreements dated 24 June 2013 between (1) Liberum, (2) Cenkos (3)
the Company and (4) each of TRGI and the Directors pursuant to which, conditional on Admission:
12.3.1 each of the Directors have undertaken that they will not dispose of Ordinary Shares held by
them for a period of one year from the date of Admission; and
12.3.2 TRGI has undertaken that it will not dispose of Ordinary Shares held by them for a period of
six months from the date of Admission,
save with the consent of Liberum and Cenkos or in certain limited circumstances and then for a
further one year in case of the Directors and 18 months in case of TRGI will only dispose of Ordinary
Shares held by them through the Company’s broker from time to time.
12.4 A Nominated Adviser and Joint Broker Engagement Letter dated 5 April 2012 between (1) the Group
and (2) Liberum pursuant to which the Company has appointed Liberum to act as Nominated
Adviser and Joint Broker to the Company for the purposes of the AIM Rules. The Company has
agreed to pay Liberum a fee of £50,000 per annum for annum for its services as Nominated Adviser
and Joint Broker as well as any out of pocket expenses reasonably incurred by Liberum in
connection with the performance of its services under that engagement letter. The engagement
letter contains certain undertakings and indemnities given by the Company in respect of, inter alia,
compliance with all applicable laws and regulations. The engagement letter may be terminated with
or without cause by either party at any time.
12.5 An Engagement Letter dated 10 April 2012 between (1) the Company and (2) Cenkos pursuant to
which the Company has appointed Cenkos to act as Financial Adviser, Joint Broker and Placing
Agent to the Company for the purposes of the AIM Rules. The engagement letter contains certain
undertakings and indemnities given by the Company in respect of, inter alia, compliance with all
applicable laws and regulations. The engagement letter may be terminated by either party on one
months’ notice or immediately by Cenkos, for cause.
12.6 A Relationship Agreement dated 24 June 2013 between (1) the Company, (2) Liberum, (3) Cenkos
and (4) TRGI, pursuant to which, conditional on Admission, TRGI agrees that so long as it holds
more than 30 per cent. of the voting rights attaching to the issued Ordinary Shares:
12.6.1 the management of the Company shall be independent from TRGI’s involvement in day to
day governance and that all transactions and relationships between TRGI (and its affiliates)
and members of the Group will be at arm’s length and on normal commercial terms;
12.6.2 TRGI shall not do anything that would result in a member of the Group not being able to
carry on its business independently of TRGI;
12.6.3 TRGI shall not (and shall use reasonable efforts to procure that no member of its group) shall
acquire any further interest in Ordinary Shares where such additional interest would mean
that the aggregate of its interest (and those of its affiliates) exceeds 75 per cent. of the issued
Ordinary Shares;
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12.6.4 TRGI shall exercise its voting rights to procure that at all times at least two of the nonexecutive directors of the Company shall be independent of TRGI and its affiliates (and it is
agreed that two of the non-executive directors of the Company may be representatives of
TRGI);
12.6.5 TRGI shall not (and shall take all reasonable steps to ensure that none of its Affiliates shall),
save with the prior written consent of Liberum, exercise its voting rights in favour of any
proposed amendment to the Articles which violates the terms of the Relationship
Agreement;
12.6.6 save with the prior written consent of Liberum and Cenkos, TRGI shall not exercise its voting
rights in respect of any transaction between a member of the Group and TRGI (or a member
of its group) or in respect of any resolution required pursuant to the AIM Rules or where the
AIM Team of the London Stock Exchange requires that TRGI (or any of its affiliates) abstain
from voting; and
12.6.7 TRGI shall procure that any director nominated by it to the Board shall not vote in respect
of any matter involving an actual or potential transaction, dispute or conflict between TRGI
and the Company.
12.7 A Registrar Agreement dated 21 June 2013 between Capita Registrars Limited and the Company
pursuant to which the Company will appoint Capita Registrars Limited to act as the registrar of the
Ordinary Shares. The Registrar Agreement will contain an indemnity in terms of which the Company
indemnifies the registrar from any liabilities which the registrar may incur in the performance of its
duties under the Registrar Agreement, except insofar as such liabilities are incurred as a result of the
negligence, wilful default or fraud of the registrar. The Registrar Agreement will be terminable at the
instance of either party on three months’ written notice.
12.8 As described in paragraph 11 of this Part 4 of this document, effective as of 31 March 2013, Group
undertook the Reorganisation, and as a consequence, IBEX Inc. has entered into an indemnification
agreement dated 22 May 2013 with TRG Holdings, LLC and TRGI whereby TRG Holdings, LLC and
TRGI (TRG Companies) indemnify IBEX Inc., the Company and IBEX Global Europe S.à.r.l from and
against:
12.8.1 all national, federal, state or local income, franchise, withholding, sales or estimated taxes,
or any other tax of any kind incurred in any jurisdiction together with any interest and
penalties thereon (Taxes) incurred in the Reorganisation; and
12.8.2 all Taxes measured by or imposed on net income attributable to (a) the period on or prior to
31 March 2013 that are imposed on any current or former member of the TRG Holdings,
LLC’s controlled group, or (b) the period after 31 March 2013 that are imposed on IBEX Inc.
as having been a member of the TRG Holdings, LLC’s controlled group.
The indemnification agreement grants the TRG Companies the right to conduct and control the
defence of any inquiry or other proceeding with respect to any taxes that could result in an
indemnification claim against the TRG Companies subject to certain protections for the Company.
Under the indemnity agreement, IBEX Inc. agrees to indemnify and hold harmless TRGI and TRG
Holdings, LLC and its direct and indirect subsidiaries from and against any and all taxes directly
resulting from the breach of certain representations or warranties relating to provision of information
for the assessment of tax and from making any tax returns or filings which could result in a claim
under the indemnity (without the prior consent of TRGI (such consent not to be unreasonably
withheld, conditioned or delayed)).
12.9 As security for TRGI’s obligations under the indemnity agreement described in paragraph 12.8 of
this Part 4, TRGI has entered into a negative pledge and lock-in deed dated 24 June 2013 with the
Company and IBEX Inc. Under this deed, TRGI has:
12.9.1 covenanted with the Company and IBEX Inc. that it will not create any security over TRGI’s
interest in 14,900,000 Ordinary Shares. The negative pledge and lock-in deed contains a
mechanism to adjust the number of Ordinary Shares periodically restricted under such deed
by reference to the market price of Ordinary Shares with the result that Ordinary Shares with a
value of $33,800,000 will remain subject to such restrictions during the existence of such deed
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(provided that no more than 15,000,000 Ordinary Shares and no less than 10,000,000
Ordinary Shares may be subject to such restrictions);
12.9.2 undertaken, in addition to the lock-in arrangements described in paragraph 12.3 of this
Part 4, not to dispose of its interest in such shares prior to 30 June 2017; and
12.9.3 given certain representations, warranties and undertakings in relation to the Reorganisation
and certain other tax related matters.
The negative pledge and lock-in deed shall terminate on the earliest to occur of: (1) such time as,
by operation of law, no action may be brought by the US tax authorities which may give rise to a
claim under the indemnity agreement; (2) a final adjudication to the effect that no material claim
under the indemnity agreement may be brought; and (3) the termination of the indemnity agreement.
13. DEPENDENCE ON INTELLECTUAL PROPERTY ETC.
Save as set out in paragraph 14 of this Part 4, the Group is not dependent on any patents, licences,
industrial, commercial or financial contracts or new manufacturing processes which have a material effect
on the Group’s business or profitability.
14. RELATED PARTY TRANSACTIONS
The Group has entered into the following related party transactions:
14.1 The Group
Standard Terms and Conditions dated 31 March 2013, together with first and second amendments
to the standard terms and conditions dated 31 March 2013 and 5 April 2013 respectively, have been
entered into between the Group and SATMAP, Inc. (SATMAP) pursuant to which SATMAP provides
a proprietary software application and hardware system that recognises demographic and
psychographic patterns, used to effectively route calls between call centre operatives and
prospective customers. SATMAP is a company owned and controlled by TRGI.
14.2 IBEX Inc.
14.2.1 Services Agreement
Service agreement dated 1 April 2013 between IBEX Inc. and TRG Holdings LLC pursuant
to which IBEX Inc. provides TRG Holdings LLC with IT services including the hosting of
customer data at IBEX Inc.’s data centres in the United States (Data Services), provision of
dedicated and shares telecommunications lines and bandwidth (Telco Services) and the
provision of mobile phones and mobile phone service (Mobile Services). The Data Services
shall be provided to TRG Holdings LLC at cost plus 5 per cent. and the Telco and Mobile
Services shall be provided to TRG at cost.
14.2.2 Third Party Services Agreements
A third party services agreement dated 1 April 2013 between IBEX Inc. and TRG Holdings
LLC pursuant to which (i) IBEX Inc. and TRG Holdings LLC undertake to pay all amounts
due to third party providers providing health, dental and life insurance policies to employees
of IBEX Inc., TRG Holdings LLC and its affiliates and insurance policies covering IBEX Inc.,
TRG Holdings LLC and its affiliates and (ii) TRG Holdings LLC undertakes to indemnify IBEX
Inc. for any third party claims or other losses arising out of the provision of services by third
parties to IBEX Inc. or its affiliates or arising out of any breach by TRG Holdings LLC of any
obligation it owes to IBEX Inc. pursuant to the agreement.
An agreement dated 1 April 2013 between IBEX Inc. and TRG Holdings LLC pursuant to
which IBEX Inc. undertakes to continue to make the settlement payments to Canon
Financial Services for certain printers and/or photocopiers used by TRG Field Solutions, Inc.
in the sum of US$5,705 on the 25th of each month up to and including 25 January 2016.
TRG Holdings LLC also covenants to reimburse IBEX Inc. for any such settlement payments
it makes within 15 days of TRG Holdings LLC receiving notice from IBEX Inc. that it has
made a settlement payment. TRG Holdings LLC also undertakes to indemnify IBEX Inc. for
any third party claims or other losses arising out of the breach by TRG Holdings LLC of any
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obligation it owes to IBEX Inc. pursuant to the agreement.
14.2.3 Real Estate
A sub-lease agreement between IBEX Inc. and TRG Holdings LLC pursuant to which IBEX
Inc. subleases premises in Washington DC from TRG will be entered into prior to Admission.
14.2.4 Intellectual Property
An intellectual property acquisition agreement dated 29 March 2013 between IBEX Inc. and
TRGI pursuant to which TRGI purchased the following software from IBEX Inc.: Transcription
API, TRG Analytics, Client Portal, Data Spy, CMOS, Intake Tool, IVR, Portal DW, Recruitment
Management System, Security Module, Service Desk/Trakit, TRG Insight, TRG Whisper,
ClickIT, Exit Interview, GP 2013, iSite and TRG Foresight in consideration for the issue by
TRGI of a promissory note in the sum of US$7,500,000 in favour of IBEX Inc.
14.2.5 Release Agreements
Release agreement dated 30 March 2013 between IBEX Inc., TRG Holdings LLC, TRG
Customer Solutions (Canada) Inc., Alert Communications, Inc., TRG Marketing Solutions
Limited, TRGiSky, Inc. and BPO Solutions, Inc. pursuant to which IBEX Inc. released each
entity from its obligation to pay IBEX Inc. sums owed in consideration for the transfer by
each entity of US$1.00 to IBEX Inc.
14.2.6 401(k) Plan
The following entities have adopted IBEX Inc.’s 401(k) Plan: TRG Holdings LLC, TRG
Insurance Solutions, Inc, Stratasoft, Inc, TRGiSky, Inc., TRG Field Solutions and SATMAP.
14.3 TRG Customer Solutions (Canada) Inc.
Service agreement dated 1 April 2013 between TRG Customer Solutions (Canada) Inc. and TRG
Holdings LLC pursuant to which TRG Customer Solutions (Canada) Inc. provides TRG Holdings LLC
with payroll services in respect of its employees in Canada at cost plus 5 per cent.
14.4 TRG Marketing Solutions Limited
14.4.1 Service Agreement
Service agreement dated 1 April 2013 between TRG Marketing Solutions Limited and TRG
Holdings LLC pursuant to which TRG Marketing Solutions Limited provides TRG Holdings
LLC with payroll services relating to the employment of TRG Holdings LLC staff in the UK at
cost plus 5 per cent.
14.4.2 Release Agreement
Release agreement dated 30 March 2013 between TRG Marketing Solutions Limited and
TRGI pursuant to which TRGI releases TRG Marketing Solutions Limited from it is obligations
pursuant to the promissory note assigned to TRG Marketing Solutions Limited in the sum of
US$2,381,046.
14.5 Virtual World (Private) Limited
Unsecured Finance Facility dated 29 August 2011 between Virtual World (Private) Limited and TRG
(Private) Limited, a company wholly owned by TRG, pursuant to which TRG (Private) Limited has
made a facility of Rs.150,000,000 (approximately £1 million) available to Virtual World (Private)
Limited at an interest rate of 17 per cent. per annum, maturing on 1 September 2014.
14.6 IBEX Global Solutions Pvt Ltd
IBEX Global Solutions Pvt Ltd has entered into three separate lease agreements dated 27 March
2013 with TRG (Private) Limited as landlord in respect of the following premises: (i) 1 Kanal, 13
Marlas situated at Aitchison Road, off Raiwind Road, Lahore, (ii) 11th floor Southfall 1001, ISE
Towers situation at Jinnah Avenue blue area, and (iii) 7th floor, block B, FTC situation at Shahrah-EFaisal.
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14.7 Lovercius Consultants Limited
14.7.1 Service Agreement
Service agreement dated 1 April 2013 between Lovercius Consultants Limited and TRGiSky,
Inc., a company owned by TRGI, pursuant to which IBEX Global Europe S.à.r.l provides up
to 10 full time equivalent call centre agents and/or management personnel on a monthly
basis to TRGiSky, Inc. at cost plus 20 per cent.
Service agreement dated 1 April 2013 between Lovercius Consultants Limited and Alert
Communications, Inc. pursuant to which Lovercius Consultants Limited provides up to 10
full time equivalent call centre agents and/or management personnel on a monthly basis to
Alert Communications, Inc. at cost plus 20 per cent.
Service agreement dated 1 April 2013 between Lovercius Consultants Limited and Alert
Communications, Inc. pursuant to which Lovercius Consultants Limited provides call centre
agents and related personnel to Alert Communications, Inc. on a monthly basis for a fee
equal to 95 per cent. of all revenues actually collected by Alert Communications, Inc. from
its customer’s client.
Service agreement dated 1 April 2013 between Lovercius Consultants Limited and BPO
Solutions Inc. pursuant to which Lovercius Consultants Limited provides BPO Solutions Inc.
with call centre agents and related personnel on a monthly basis for a fee equal to 95 per
cent. of revenues actually collected by BPO Solutions Inc. from its customer’s clients.
Service agreement dated 1 April 2013 between Lovercius Consultants Limited and TRG
Marketing Services, Inc. pursuant to which Lovercius Consultants Limited provides TRG
Marketing Services, Inc. with call centre agents and related personnel on a monthly basis for
a fee equal to 95 per cent. of revenues actually collected by TRG Marketing Services, Inc.
from its customer’s client.
14.7.2 Intellectual Property
An intellectual property licence agreement dated 31 March 2013 between Lovercius
Consultants Limited and TRGI pursuant to which TRGI licenses the following software to
Lovercius Consultants Limited: BPO Suite, TRG Agent, TRG Dialer, TRG Network Recorder
and Web Dialer.
14.8 IBEX Global Europe S.à.r.l
14.8.1 Intellectual Property
An intellectual property acquisition agreement dated 8 May 2013 between IBEX Global
Europe S.à.r.l and TRGI pursuant to which IBEX Global Europe S.à.r.l purchased the
following software from TRGI: Transcription API, TRG Analytics, Client Portal, Data Spy,
CMOS, Intake Tool, IVR, Portal DW, Recruitment Management System, Security Module,
Service Desk/Trakit, TRG Insight, TRG Whisper, ClickIT, Exit Interview, GP 2013, iSite and
TRG Foresight for consideration in the sum of US$1.00.
An intellectual property licence agreement dated 8 May 2013 between IBEX Global Europe
S.à.r.l and TRGI pursuant to which IBEX Global Europe S.à.r.l licenses the following software
to TRGI: Transcription API, TRG Analytics, Client Portal, Data Spy, CMOS, Intake Tool, IVR,
Portal DW, Recruitment Management System, Security Module, Service Desk/Trakit, TRG
Insight, TRG Whisper.
14.9 The notes on the Historic Financial Information state that the expenses incurred by the Group for the
period ended 31 December 2012 in respect of the arrangements summarised above totalled
$2,568,000.
15. LITIGATION
15.1 IBEX Inc. has a civil lawsuit pending against it in the Circuit Court of Kanawha County, West Virginia.
The complaint was filed on 24 August 2012. The plaintiff claims that IBEX Inc. breached a 60-month
lease agreement with Davantic LLC for a commercial rental property by failing to pay rent allegedly
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due. The plaintiff has alleged damages of $12,000 in unpaid taxes on the property plus past and
future rents and taxes. IBEX Inc. estimates the maximum potential liability under this lawsuit to be
made up of unpaid rents and taxes for the period from July 2011 to March 2014, which rent is stated
in the lease as comprising $7,000 per month and taxes of $6,000 per year, plus any prejudgment
interest, attorney fees and costs awarded. It should be noted that the plaintiff has a duty to mitigate
its damages by reletting the property to a new tenant or by taking other steps to generate economic
return from the property. IBEX Inc. intends to defend this matter.
15.2 A complaint has been filed against IBEX Inc. before the West Virginia Human Rights Commission
alleging unlawful discrimination on the basis of race and unlawful retaliation within the meaning of
the West Virginia Human Rights Act. Ms Thomas is a former employee of TRG Insurance Solutions,
LLC. During her employment with TRG Insurance Solutions, LLC, Ms Thomas filed a racial
discrimination complaint with the Beckley Human Rights Commission in 2009. Later that year,
employees of TRG Insurance Solutions, LLC were informed that the company was closing and all
employees would be laid off. In January 2010, Ms Thomas interviewed for a position with IBEX Inc.
but did not get the position. She claims that IBEX Inc. failed to hire her because of her race and in
retaliation for a complaint she had previously filed against TRG Insurance Solutions, LLC. The
Plaintiff seeks $107,940.80 in damages, $92,313.21 in attorneys’ fees and costs, plus future pay
and interest.
A hearing on this matter was held before the West Virginia Human Rights Commission on
17-18 December 2012. There has not yet been a ruling. IBEX Inc. has defended and intends to
continue to defend this case vigorously and it believes that the case is without merit. IBEX Inc. has
asserted defences that (a) IBEX Inc.’s employment records show race-neutral employment
practices; and (b) IBEX Inc. is as a matter of law not liable for retaliation against a person whom it
did not employ.
15.3 Save as set out in paragraphs 15.1 and 15.2 of this Part 4, the Group is not involved nor has been
involved in any governmental, legal or arbitration proceedings in the previous twelve months which
may have or have had in the recent past a significant effect on the Group’s financial position or
profitability and, so far as the Directors are aware, there are no such proceedings pending or
threatened against the Group.
16. NO SIGNIFICANT CHANGE
There has been no significant change in the financial or trading position of the Group since 31 March 2013,
being the end of the last financial period for which unaudited interim financial information has been
published.
17. WORKING CAPITAL
The Directors are of the opinion, having made due and careful enquiry and having taken into account the
net proceeds of the Placing, that following Admission, the Group will have sufficient working capital for at
least 12 months from the date of Admission.
18. UNITED KINGDOM TAXATION
18.1 Introduction
The following paragraphs are intended as a general guide based on current legislation and HMRC
practice as at the date of this document regarding the UK tax position of Shareholders who are
resident or ordinarily resident in the United Kingdom for tax purposes and who beneficially hold their
shares as investments (otherwise than under an individual savings account (“ISA”)).
The following paragraphs do not constitute tax advice. In particular, Shareholders who
receive shares in connection with an employment contract with the Company or as an
office holder, should seek specific advice on their tax position. Any Shareholder who is in
doubt as to their tax position, or who is subject to tax in a jurisdiction other than the
United Kingdom, is strongly recommended to consult their professional advisers.
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18.2 Income Tax – taxation of dividends
Under current UK taxation legislation, no tax is withheld at source from dividend payments made by
the Company.
An individual Shareholder who is resident (for tax purposes) in the United Kingdom and who receives
a dividend paid by the Company will currently be entitled to receive a tax credit equal to 1/9th of the
cash dividend. The individual will be taxable upon the total of the dividend and the related tax credit
(the “gross dividend”) which will be regarded as the top slice of the individual’s income. An individual
Shareholder who is not liable to income tax at a rate greater than the basic rate (currently 20 per
cent.) will pay tax on the gross dividend at the dividend ordinary rate (currently 10 per cent.).
Accordingly, the tax credit will be treated as satisfying the individual’s liability to income tax in respect
of the dividend and there will be no further tax to pay. It should be noted however that there is no
right to claim any repayment of the tax credit from HMRC.
To the extent that the gross dividend (taken together with other taxable income) exceeds the
individual’s threshold for the higher rate of income tax the individual will, to that extent, pay tax on
the gross dividend at the dividend upper rate (currently 32.5 per cent). A UK resident individual
Shareholder who is liable to tax at the additional rate will be liable to tax on the gross dividend at the
rate of 37.5 per cent. After taking into account the 10 per cent. tax credit, a higher rate tax payer
will have further income tax to pay at the rate of 22.5 per cent. on the gross dividend (equivalent to
25 per cent. of the dividend received). An additional rate taxpayer will have further income tax to pay
at the rate of 27.5 per cent. on the gross dividend (equivalent to 30.55 per cent. of the dividend
received). Tax credits are not repayable to Shareholders with no income tax liability or whose liability
to income tax does not exceed the amount of tax credit.
Subject to exceptions for certain insurance companies and companies which hold shares as trading
stock, a Shareholder which is a company resident (for tax purposes) in the United Kingdom and
which receives a dividend paid by the Company will not in most circumstances be liable to
corporation tax or income tax on the dividend.
Trustees of discretionary trusts are liable to account for income tax at the dividend trust rate,
currently 37.5 per cent. of the gross dividend (equivalent to 30.55 per cent. of the dividend received).
United Kingdom pension funds and charities are generally exempt from tax on dividends which they
receive but are not entitled to claim repayment of the tax credit.
A Shareholder resident outside the UK may also be subject to foreign taxation on dividend income
under local law. Shareholders not resident in the UK should consult their own tax adviser on the
application of such provisions and the procedure for claiming relief.
18.3 Taxation on capital gains for Shareholders
To the extent that a Shareholder acquires Ordinary Shares allotted to him, the Ordinary Shares so
allotted will, for the purpose of tax on chargeable gains, be treated as acquired on the date of
allotment. The amount paid for the Ordinary Shares will generally constitute the base cost of a
Shareholder’s holding.
A disposal or deemed disposal of Ordinary Shares by a UK resident Shareholder may give rise to a
chargeable gain (or allowable loss) for the purposes of UK capital gains tax (“CGT”) (where the
Shareholder is an individual or a trustee of a settlement) or UK corporation tax on chargeable gains
(where the Shareholder is within the charge to UK corporation tax), depending on their
circumstances and subject to any available exemption or relief.
As regards an individual Shareholder or trustees of settlements, the principal factors that will
determine the extent to which a gain will be subject to CGT are (i) the extent to which he realises
any other capital gains in the tax year of assessment in which the gain arises, (ii) the extent to which
he was incurred capital losses in that or any earlier tax year or assessment and (iii) the level of annual
allowance of tax-free gains in the tax year of assessment in which the disposal takes place.
Subject to the availability of any such exemptions, reliefs and/or allowable losses, a disposal of
Ordinary Shares by UK resident (or ordinarily resident) individuals, trustees and personal
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representatives will generally be subject to CGT at the rate of 28 per cent. Individuals whose taxable
income for the year in question is less than the upper limit of the basic rate income tax band are
subject to CGT at the rate of 18 per cent„ except to the extent that the aggregate of their total
taxable income and gains (less allowable deductions) in that year exceeds the upper limit of the
basic rate income tax band. Any such excess over the upper Limit is subject to CGT at the rate of
28 per cent.
Subject to the availability of any exemptions, reliefs and/or allowable losses, a disposal of Ordinary
Shares by companies subject to UK corporation tax will generally be subject to UK corporation tax
at the prevailing rate of up to 23 per cent. Indexation allowance may be available to reduce any
chargeable gain arising on such disposal but cannot act to create or increase a chargeable loss.
18.4 Stamp duty and stamp duty reserve tax (“SDRT”)
Currently dealings in Ordinary Shares will normally be subject to stamp duty or SDRT. The transfer
on sale of Ordinary Shares will usually be liable to ad valorem stamp duty. at the rate of 0.5 per cent.
(rounded up, if necessary, to the next multiple of £5) of the amount or value of the consideration
paid. Stamp duty will normally be paid by the purchaser or transferee of the Ordinary Shares. An
unconditional agreement to transfer Ordinary Shares will normally give rise to a charge to SDRT, at
the rate of 0.5 per cent. of the amount or value of the consideration payable for such shares, but
such liability will be cancelled, or any SDRT paid refunded, if the agreement is completed by a duly
stamped instrument of transfer within six years of the date of the agreement or, if the agreement was
conditional, the date on which the agreement became unconditional. SDRT will normally be the
liability of the purchaser or transferee of the Ordinary Shares.
Under the CREST system for paperless share transfers, no stamp duty or SDRT will arise on a
transfer of shares into the system, unless the transfer into CREST is itself for consideration in money
or money’s worth. in which case a liability to SDRT will arise, usually at the rate of 0.5 per cent. of
the amount or value of consideration given. Transfers of shares within CREST are generally liable to
SDRT at the rate of 0.5 per cent. of the amount or value of the consideration payable rather than
stamp duty, and SDRT on relevant transactions settled within the system or reported through it for
regulatory purposes should usually be collected and accounted for to HMRC through the CREST
system.
The above statements are intended to be a general guide to the current stamp duty and SDRT
position. Certain categories of person are not liable to stamp duty or SDRT and others may be liable
at a higher rate than that referred to above or may, although not primarily liable for the tax, be
required to notify and account for it. Special rules apply to agreements made by market
intermediaries and to certain sale and repurchase and stock borrowing arrangements. Agreements
to transfer shares to charities should not give rise to a liability to stamp duty or SDRT.
The Government has announced its intention to abolish stamp duty on shares quoted on growth
markets such as the Alternative Investment Market and the ISDX Growth Market. It is expected
(subject to the outcome of consultations) that this will be in force from April 2014.
19. GENERAL
19.1 The gross proceeds of the Placing are expected to be £14.6 million. The total costs and expenses
relating to Admission and the Placing are payable by the Group and are estimated to amount to
approximately £1.3 million (excluding Value Added Tax). The net proceeds of the Placing are
expected to be £13.0 million.
19.2 Other than the current application for Admission, the Ordinary Shares have not been admitted to
dealings on any recognised investment exchange nor has any application for such admission been
made nor are there intended to be any other arrangements for dealings in the Ordinary Shares.
19.3 Liberum has given and not withdrawn its written consent to the inclusion in this document of
reference to its name in the form and context in which it appears.
19.4 Cenkos has given and not withdrawn its written consent to the inclusion in this document of
reference to its name in the form and context in which it appears.
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19.5 Grant Thornton UK LLP has given and not withdrawn its written consent to the inclusion in this
document of its accountant’s report in Part 3A and references thereto in the form and context in
which they appear. Grant Thornton UK LLP’s responsibility for its accountant’s report is as set out
in that accountant’s report.
19.6 Where information has been sourced from a third party this information has been accurately
reproduced. So far as the Group and the Directors are aware and are able to ascertain from
information provided by that third party, no facts have been omitted which would render the
reproduced information inaccurate or misleading.
19.6 The accounting reference date of the Group is 30 June.
19.7 The Placing price represents a premium over nominal value of £1.46 per ordinary share.
19.8 It is expected that definitive share certificates will be dispatched by hand or first class post by 5 July
2013. In respect of uncertificated shares it is expected that Shareholders’ CREST stock accounts
will be credited on 28 June 2013.
19.9 Save as disclosed above no person directly or indirectly (other than the Group’s professional
advisors and trade suppliers or save as disclosed in this document) in the last twelve months
received or is contractually entitled to receive, directly or indirectly, from the Group on or after
Admission (excluding in either case persons who are professional advisors otherwise than as
disclosed in this document and persons who are trade suppliers) any payment or benefit from the
Group to the value of £10,000 or more or securities in the Group to such value or any other benefit
to such value or entered into any contractual arrangements to receive the same from the Group at
the date of Admission.
20. AVAILABILITY OF ADMISSION DOCUMENT
Copies of this Admission Document are available free of charge from the Group’s registered office and at
the offices of Mishcon de Reya, Summit House, 12 Red Lion Square, London WC1R 4QD during normal
business hours on any weekday (Saturdays, Sundays and public holidays excepted) and shall remain
available for at least one month after Admission.
Dated: 24 June 2013
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