TIDMIBEX
RNS Number : 9379P
IBEX Global Solutions plc
24 February 2016
24 February 2016
IBEX Global Solutions Plc
("IBEX" or "the Company" or "the Group")
Interim Results for the Six Months ended 31 December 2015
IBEX Global Solutions Plc (AIM: IBEX), a leading provider of
contact centre services and other business process outsourcing
(BPO) solutions, is pleased to announce its interim results for the
six months ended 31 December 2015.
Financial Highlights:
-- Total Group revenue up 1.1% to $124.4 million (H1'15: $123.0 million)
-- Total Group revenue up 5.6% on H1'15 when adjusting for
impact of profitable one-off project work in H1'15
-- Adjusted gross profit margin of 19.2% (H1'15: 22.8%; or 19.4%
when further adjusting for positive impact of profitable one-off
work)
-- Adjusted EBITDA* down 38.5% to $7.8 million (H1'15: $12.7
million); up 4.7% on H1'15 when further adjusting for positive
impact of profitable one-off work in-period
-- Adjusted EBITDA* margin of 6.3% (H1'15: 10.3%; or 6.3% when
further adjusting for positive impact of profitable one-off
work)
-- Net income down 67.2% to $2.4 million (H1'15: $7.4 million;
up 12.6% on H1'15 when adjusting for positive impact of profitable
one-off work in-period)
-- Fully diluted earnings per share of 6.1 cents per share
(H1'15: 18.6 cents; or 5.4 cents when adjusting for positive impact
of profitable one-off work)
-- Strong momentum built from H2'15, with increased revenues (up
7.4%), adjusted gross profit (up 35.4%) and adjusted EBITDA (up
99.3%)
-- Net assets of $25.4 million at H1'16 (FY15: $25.5 million)
-- Net debt of $22.3 million at H1'16 (FY15: $18.6 million)
-- Interim dividend of $2.0 million (5.1 cents per share), in
line with policy of distributing a high proportion of net income
(H1'15: 6.8 cents per share)
-- Strong operational momentum into H2'16 reinforces Board's
confidence in reaffirming FY16 expectations
Operational Highlights:
-- Two new major blue chip client contracts were secured in the
Financial Services and Consumer Electronics sectors
-- Expanded into two new nearshore geographies: Nicaragua and
Jamaica with enabling clients and with capacity expected to be
reached in H2'16
-- Launched into new markets with two of our largest existing
clients via our Philippines operation and our newest nearshore
market, Jamaica; full impact of existing client ramps taking place
in H2'16
-- Opened additional seats in Davao, Philippines and began work on a new site in Metro Manila
-- Concluded a comprehensive Employee Satisfaction Survey to
design improved incentivisation programmes and maintain best in
class results for our clients
-- SG&A adjusted for depreciation at 13.0% of revenue,
compared to industry standards of 15-28%
* Adjusted for share-based payment, exceptional items and other
income
Muhammad Ziaullah Khan Chishti, Chairman of the Group,
commented:
"It gives me great pleasure to report to shareholders that IBEX
has again delivered a strong set of results, set against a
demanding prior year comparative, and maintaining the progress from
prior reporting periods. We are showing gains from our efforts to
drive profitability and we have expanded operations sensibly to
meet demand. IBEX continued not only to deepen relationships with
its existing client base, but has maintained our momentum by
winning new remits with additional global blue chip clients."
"The IBEX business model has capacity to generate ongoing
benefits for all clients, employees and shareholders alike and we
will continue to do everything in our power to capitalise on the
excellent prospects which lie ahead. We look forward to the future
with enthusiasm and confidence."
For further information, please visit www.ibexglobal.com or
contact:
IBEX Global Solutions Plc Tel: +44 800 043
Robert Dechant, CEO 4239
Karl Gabel, CFO
Liberum Capital Limited Tel: +44 20 3100
Nominated Adviser and Joint Broker 2000
Steve Pearce
Richard Bootle
Joshua Hughes
Cenkos Securities PLC Tel: +44 20 7397
Joint Broker 8900
Liz Bowman
Camilla Hume
Tavistock Tel: +44 20 7920
Public Relations Adviser 3150
Matt Ridsdale
Andrew Dunn
Chairman's Statement
Overview
It gives me great pleasure to report to shareholders that IBEX
has again delivered a strong set of results, maintaining the
progress from prior reporting periods.
We are showing gains from our strategy to drive profitability
and we have expanded operations sensibly to meet demand. IBEX
continued not only to deepen relationships with its existing client
base, but has maintained our momentum by winning new remits with
additional global blue chip clients.
IBEX is cementing its growing reputation as a "Top quartile"
Business Process Outsourcing (BPO) provider across the industry,
evidenced by the number of satisfied customers we support and our
growing market share.
Investment in our commercial proposition continues: we are
growing our global operational base, opening sites in new nearshore
geographies where necessary; maintaining our ongoing commitment to
develop, incentivise and retain the most knowledgeable and
responsive front-line staff in the industry; and we continue to
invest in the systems and IT infrastructure needed for our agents
to continue to operate efficiently and effectively on behalf of our
clients.
Today, the BPO industry as a whole is approximately $65 billion
and growing at a rate of 2-4% according to the leading analysts for
the global services industry. The industry remains highly
fragmented, as the number of multi-billion dollar competitors is
small and the largest 10 players represent just 23% of the
industry. As a result, IBEX has a unique opportunity to continue to
capture significant market share to support its year over year
growth projections.
Financial Results
IBEX delivered a solid set of results in the six-month period to
31 December 2015 with revenues up 1.1% to $124.4 million (H1'15:
$123.0 million) and adjusted EBITDA was $7.8 million or 6.3% of
revenue (H1'15: $12.7 million), a decline of 38.6%. Profit before
tax was $2.9 million (H1'15: $8.1 million).
Revenues for the period would have been up 5.6% after adjusting
for the approximately $5.2 million of revenue received in H1'15
from profitable one-off project work for a certain client.
Adjusting for this one-off project work, the adjusted EBITDA
would have been up 4.7% on H1'15 and net income up 12.6% on H1'15.
The H1'16 results also indicated significant operational momentum
from the previous sequential half, with revenues up 7.4% and
adjusted EBITDA up 99.3% from H2'15. With the currently ongoing
ramps within two of our existing clients as well as from our new
nearshore geographies, we expect this operational momentum to
continue into H2'16.
Dividend
In line with our policy of distributing a high proportion of net
income to our shareholders, the Board has announced an interim
dividend of $2.0 million, corresponding to 5.1 cents per share. The
dividend will be paid on 28 March 2016 to shareholders registered
on 4 March 2016. The ex-dividend date is 3 March 2016. The Company
is targeting an annual dividend in line with market consensus for
the full year.
Share buyback
In accordance with the terms of the general authority to make
market purchases of its own shares granted to it by shareholders of
the Company on 20 November 2015, and the announcement made by the
Company on 24 August 2015 to extend the period for making purchases
of its own shares until such time as the Board shall choose to
terminate for a total up to $1 million, the Company acquired for
cash in the market 39,082 ordinary shares in the capital of the
Company for treasury from 19 March 2015 to 31 December 2015 at a
price of 72 to 130 pence per share. IBEX will continue to make
additional purchases of its own shares in line with the above
general authority where the Board considers that it is appropriate
to do so. The buyback affirms the Board's confidence in the Group's
prospects and market position.
Summary
The IBEX business model has capacity to generate ongoing
benefits for all clients, employees and shareholders alike and we
will continue to do everything in our power to capitalise on the
excellent prospects which lie ahead.
We look forward to the future with enthusiasm and
confidence.
Muhammad Ziaullah Khan Chishti
Chairman
23 February 2016
Chief Executive Officer's Review
Introduction
The last financial year saw the Group make significant progress,
with rapid growth and record results. I am pleased to report that
the momentum generated during the last year has been maintained in
the first half of the 2016 financial year.
When I was appointed in April 2015, IBEX had established itself
as a company with a growing pedigree and a track record of solid
financial performance. It had developed excellent prospects, based
on a world-class service offering and a capable and
well-incentivised network of agents. IBEX enjoys strong client
relationships with blue-chip corporates and has a growing
reputation in the industry as the global BPO partner of choice for
some of the largest, household-name, brands in the world.
As with all businesses, there were also aspects where further
improvements needed to be made. Specifically in our case, we
identified opportunities to further strengthen our business by:
-- Reducing seasonality, by replacing non-recurring business with repeatable revenues
-- Developing nearshore capabilities to augment our global footprint and improve margins
-- Improving the financial performance of our Philippines
business and our US operations by more effectively managing our
agent productivity; and
-- Building a stronger and more robust technology platform
(MORE TO FOLLOW) Dow Jones Newswires
February 24, 2016 02:01 ET (07:01 GMT)
Since my appointment, I have sought to capitalise on the
strengths IBEX undoubtedly possesses and have begun the process of
implementing the improvements outlined above to establish a clear,
ambitious and achievable plan for sustainable growth in the
future.
Strategic approach
Central to our strategy is to enhance IBEX's position as
preferred BPO provider versus larger competitors. Our plan to
achieve this involves three key pillars:
1. We will strive to outperform our competitors by delivering
superior customer service, maintaining measurably higher levels of
client satisfaction;
2. We will leverage our agility as a smaller, established
player. We will be faster and more flexible than the competition in
meeting clients' service requirements and innovating where
required; and
3. We will provide clients with more cost effective solutions
than competitors. Our ability to be price competitive whilst
maintaining overall margin is underpinned by our lean SG&A
figure, which consistently stands in a range of 12-14% versus an
industry norm of 15-28%.
IBEX's leadership team believes that by taking this approach, we
are well positioned to be a consistent "Top Quartile" BPO services
provider, with even stronger client relationships and excellent
growth prospects than exist already. Ultimately, this approach
drives our ability to create long-term value for our shareholders,
clients and employees.
Operational Review
During the period, IBEX has made great progress improving upon
last year's operational achievements and the strategy that was set
out since I joined last year. We believe we are growing faster than
our market based on our proven ability to win market share and
outperform our competitors. Several of our largest clients,
including those new clients signed up during the period, have
expanded with us into new markets for them that include the
Philippines, Nicaragua and Jamaica. We believe that these growth
opportunities are a result of the trust and confidence that our
clients have in the IBEX brand and management team to deliver
exceptional results for them.
We have a blue chip client base which continues to grow,
allowing us to diversify our revenue streams. We believe we are
achieving this because both existing and new clients value our
highly productive workforce, a comprehensive suite of services
including sales, customer care and technical support. During the
period, we began the process of changing the mix of our seats with
a greater weighting afforded to higher margin, nearshore and
offshore capacity versus expansion of our onshore and offshore
centres. This is a reflection both of client demand and ultimately
our goal of enhancing the profitability of our business over
time.
We have also made great strides at improving our agent
productivity and utilisation with significant reductions in agent
attrition and absenteeism, which have allowed us to run a more
efficient business.
Client Development
We will continue to invest in our client relationships to ensure
we are seen as a valued strategic partner, by delivering on
contracts and bringing innovative services to our markets. We began
the process of building on our already solid client services team
under the leadership of Eric Owen, Executive Vice President, Client
Services, in late 2015.
We will strive to be a "Top Quartile" provider for all of our
clients as we grow our lines of business, services and geographies,
enabling us to continue gaining market share. We will look to
target new blue chip companies across key verticals such as
media/communications, retail, travel, financial services and
technology in which we already have an established reputation.
Additionally, we will seek new work from rapidly growing verticals
like healthcare and innovative companies that have the potential
for significant growth, by leveraging our value proposition to win
and deliver in new industries. We believe this will position us for
continued above market organic growth in the months and years
ahead.
During the period
In the first half of the financial year two new major blue chip
client contracts were secured in the Financial Services and
Consumer Electronics sectors. Based on the success of our initial
engagement in our new operation in Nicaragua, one of these new
clients has chosen us to support additionally in the Philippines,
taking advantage of IBEX's global footprint and contributing to our
goal of further diversification within our client base. We also
expanded into new geographies with two of our largest existing
clients, one of which enjoyed exceptional growth via our
Philippines operation; the other expanded into the nearshore
market. Based on the strength of these wins, we believe that the
Company is positioned to enjoy a strong second half of the
financial year.
Additionally, in the second half of the financial year and
beyond, a key focus of the management team is to grow revenues from
clients with which we have a relatively small proportion of their
BPO spend. Achieving this will give us a more diversified and
stable business mix in future years. We are well positioned to do
so by offering them superior BPO performance under existing
contracts and by demonstrating our ability to move quickly when
implementing flexible solutions at a lower cost than that of the
wider industry.
Our Markets
At the period end, IBEX had a network of more than 12,500
employees (up 3.2% on last year), working in 20 sites, spanning 7
countries. With the expansion into two nearshore markets during the
period, we will have approximately 1,000 additional seats up and
running by the end of March 2016. As a result of this investment,
we now have a better balance of onshore, offshore and nearshore
footprints to serve the U.S. market. The nearshore market has been
growing at the rate of 35% per annum over the past 5 years. To
exploit the opportunities this segment of the market clearly
presents, we will continue to expand into new nearshore markets
taking advantage of their proximity, time zone, U.S affinity and
great English and bilingual capabilities.
Our Philippines footprint today consists of four sites
comprising approximately 3,000 seats with 18% in provincial markets
(e.g. Davao) and 82% in Metro Manila. We will continue to look to
the provincial markets as locations to operate with lower costs and
reduced competition for agents.
As we move into the second half of 2016 and beyond, we intend to
bring our innovative solutions in Pakistan and Senegal to market as
disruptive, untapped geographies with labour rates well below
current industry equivalents and very limited competition. We
expect to see accelerated organic growth with high profitability as
we bring these solutions to the industry.
IBEX will carefully evaluate other new markets for expansion
with the goal of broadening our global footprint to service our
growing client base.
Our Sites
We will continue to drive our cost per seat capital expenditure
requirement down to 'best in class' while building out premier
facilities to create a great work environment for our agents. We
reduced our cost per seat by 20% for our recent expansions in the
Philippines and Nicaragua and we are confident we will be able to
continue to drive these costs down as we scale our business,
without compromising on the quality of service.
As we continue to grow we believe we will be able to operate
with approximately 2.5% of our revenue invested in the maintenance
and upkeep of our current centres, thus keeping them in great
condition while preventing issues downstream. We will also continue
to time the building-out of new sites in line with client demand,
enabling us to be extremely efficient in managing our capital
requirements in the future. Our seat utilisation rates during the
period improved from approximately 80% to above 85% and we intend
to continue growing utilisation going forward.
During the period
IBEX moved quickly into expansion in two new nearshore markets:
Nicaragua, supporting bilingual requirements for both English and
Spanish, and Jamaica, supporting high-volume English language
services.
In addition to the nearshore expansion, we opened an additional
capacity of 500 seats in Davao, Philippines and began work in
December on a new site in Metro Manila consisting of 800 additional
seats. We expect both new sites to be near to or at full capacity
in Q4 of the financial year 2016.
More than 60% of IBEX's headcount is based outside of the US.
Our total number of seats in December 2014 was approximately 8,000
and as at the period end was approximately 8,700.
People
Senior management function
Last year, IBEX made key appointments to senior management
roles, providing experience and closer control over vital areas of
responsibility. Gilbert Santa Maria was appointed Chief Operating
Officer and Eric Owen as Executive Vice President, Client Services.
Both continue to deliver great improvements in their respective
fields.
These appointments, combined with the recent addition of Jim
Ferrato as Chief Information Officer, mean that IBEX now has a
strong and responsive leadership team with the track record and
experience to achieve our goals.
Agents and front-line
In the BPO industry, front line agent retention is a key factor
which influences success across the sector. Higher rates of
retention deliver better client outcomes. Traditionally, companies
in our space deploy time and capital to train call centre and other
support staff, only to see those developing assets churn, meaning
the process has to begin again.
(MORE TO FOLLOW) Dow Jones Newswires
February 24, 2016 02:01 ET (07:01 GMT)
IBEX takes a different approach from many of its competitors.
Our ongoing goal is to be a great employer and attract and retain
elite industry talent. To do this, there is a need to provide a
competitive balance of remuneration, benefits, training and
development as well as other perks such as healthy meal options and
a pleasant work environment. This approach is working and is
extending the tenure of our agents, reducing future costs in
training and development, and enabling us to consistently deliver
results for our clients.
During the period
By applying our differentiated approach to our workforce, we
improved key metrics in agent attrition and absenteeism compared
with the prior year and industry norms. IBEX also concluded a
comprehensive Employee Satisfaction Survey which had an extremely
high participation rate of 74% and an overall satisfaction rating
of 92%. This has allowed us to design even better incentivisation
programmes and further understand how to achieve increased results
for our clients. These improvements have begun to make the desired
impact, delivering significant gross margin improvements in the
Philippines and in the US operations.
We will continue to measure our employees' satisfaction to
ensure that our people's interests are closely aligned with our
own. This will allow us to attract and more importantly, retain
extremely talented employees, reduce our costs to backfill agents
and create a further competitive advantage.
Infrastructure and IT
Investment in IBEX's IT infrastructure is another key factor in
our being able to provide clients with highly efficient and
effective services. We will continue to build our technology
infrastructure to ensure we meet the expected industrial standard
and provide high levels of reliability, redundancy, resilience and
security. We will also continue to leverage our back office IT
operations in low cost labour markets such as Pakistan and the
Philippines, which is one of the factors which supports our efforts
to keep overheads low.
During the period
Development of infrastructure is ongoing for IBEX and during the
period we made several important investments in our technology to
ensure we remain ahead of the curve. The management believes this
level of investment is appropriate and expects to retain a policy
of investment at similar levels in future years. Key improvements
have been made in our overall technology uptime.
Financial Review
The principal KPIs used by the Board in measuring the
performance of the Group continue to be Revenue, Cost of Sales,
Selling, General & Administrative expenses (SG&A), Adjusted
EBITDA, Net Income and Net Debt.
H1
H1 FY 2015
FY 2016 Restated* FY 2015
Continuing operations $'000s $'000s $'000s
--------- ----------- --------
Revenue 124,400 123,023 238,806
--------- ----------- --------
Cost of sales 104,624 97,928 200,027
Less depreciation
and amortisation 4,167 2,951 6,946
--------- ----------- --------
100,457 80.8% 94,977 77.2% 193,081 80.9%
--------- ----------- --------
Adjusted gross
profit 23,943 19.2% 28,046 22.8% 45,725 19.1%
--------- ----------- --------
SG&A 16,640 15,789 30,017
Less depreciation
and amortisation 480 396 851
--------- ----------- --------
16,160 13.0% 15,393 12.5% 29,166 12.2%
--------- ----------- --------
Adjusted EBITDA 7,783 6.3% 12,653 10.3% 16,559 6.9%
Depreciation and
amortisation,
exceptional items,
finance costs,
share based payment,
income tax
and other income 5,367 5,291 10,146
--------- ----------- --------
Net income 2,416 1.9% 7,362 6.0% 6,413 2.7%
========= =========== ========
Borrowings 27,047 29,870 21,609
Cash and cash equivalents (4,756) (3,725) (3,011)
--------- ----------- --------
Net debt 22,291 26,145 18,598
========= =========== ========
*Reclassification has been made to conform with the presentation
of an exceptional item and other income in the audited financial
statements for the fiscal year 2015.
The Income Statement KPIs above are in line with the Board's
expectations for the full year.
Revenue for the period has increased 1.1% to $124.4 million
(H1'15: $123.0 million) and increased 7.4% from H2'15 ($115.8
million). Revenue growth was driven primarily by increased business
from our existing client base. While revenue growth year-on-year
during the period was primarily due to an increase in the recurring
top line run rate, H1'15 revenue was impacted by profitable one-off
project work for a certain client.
Total Group revenue for the period increased 5.6% on H1'15 when
adjusting for positive impact of profitable one-off project work in
H1'15, while the adjusted EBITDA would have been up 4.7% and net
income up 12.6% on H1'15. The H1'16 results also indicated
significant operational momentum from H2'15 with revenues up 7.4%
and adjusted EBITDA up 99.3%.
Adjusted cost of sales for the period has increased 5.8% to
$100.5 million (H1'15: $95.0 million) and increased 2.4% from H2'15
($98.1 million). The increase in the cost of sales is mainly driven
by revenue growth.
Gross profit on an adjusted reported basis has declined by 14.6%
to $23.9 million (H1'15: $28.0 million), yielding a margin of 19.2%
vs. 22.8% in H1'15 and an increase of 35.4% from H2'15 ($17.7
million). Adjusted gross profit margin in H1'15 was 19.4% when
further adjusting for positive impact of profitable one-off
work.
Adjusted SG&A for the period has increased 5.0% to $16.2
million (H1'15: $15.4 million) and increased 17.4% from H2'15
($13.8 million). The increase in SG&A was attributed mainly to
the Company's commitment towards investing in itself to better
support its business.
Adjusted EBITDA on a reported basis has declined by 38.5% to
$7.8 million (H1'15: $12.7 million), yielding a margin of 6.3% vs.
10.3% in H1'15 and an increase of 99.3% from H2'15 ($3.9 million).
Adjusted EBITDA margin in H1'15 was 6.3% when further adjusting for
positive impact of profitable one-off work in-period.
Net income for the period has decreased 67.2% to $2.4 million
(H1'15: $7.4 million) and increased from H2'15 (net loss of $0.9
million). Net income in H1'15 was $2.1 million when adjusting for
positive impact of profitable one-off work in-period. Basic/diluted
earnings per share were 6.1 cents (H1'15: 18.6 cents; H2'15: loss
per share of 2.4 cents). Basic/diluted earnings per share in H1'15
was 5.4 cents when adjusting for positive impact of profitable
one-off work.
Current assets as at 31 December 2015 are $52.3 million (as of
30 June 2015: $42.8 million). The increase was driven by the change
in timing of collection of trade receivables. Non-current assets as
of 31 December 2015 were $33.5 million (as of 30 June 2015: $36.2
million).
Current liabilities as of 31 December 2015 were $50.3 million
(as at 30 June 2015: $39.6 million); the increase was primarily
driven by the change in timing of collection of trade receivables
which resulted in increased short-term borrowing. Non-current
liabilities as at 31 December 2015 were $10.1 million (as at 30
June 2015: $13.9 million); the decrease was primarily driven by
financing decisions and lease payments.
Net debt (third party borrowings less cash and cash equivalents)
at the end of the period was $22.3 million (31 December 2014: $26.1
million; 30 June 2015: $18.6 million). The reduction against the
comparable period was primarily driven by net cash generated from
operating activities of $18.4 million netted with the capital
expenditure of $9.8 million and dividend payment of $5.3 million in
the period from 1 January 2015 to 31 December 2015.
Summary and Outlook
This financial year has started well and we are pleased that our
strategy for growth is bearing fruit. We have won major new
contracts, deepened existing relationships, identified significant
new opportunities and expect to see the revenue growth associated
with these wins reflected during the second half of the financial
year as we continue to grow our market share.
IBEX has built a strong, healthy pipeline of sales opportunities
and generated positive momentum in our business. This, together
with the visibility provided by our recent client wins gives us
confidence that we will continue to deliver strong revenue growth
coupled with improving profitability.
Given our strong momentum into the second half of the fiscal
year, we are confident in reinforcing market expectations for
FY16.
On behalf of the Board and senior management at IBEX, I would
like to once again thank our dedicated and passionate employees
across the Group and look forward to our future successes
together.
Robert Dechant
Chief Executive Officer
Independent review report to the members of IBEX Global
Solutions Plc
Introduction
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February 24, 2016 02:01 ET (07:01 GMT)
We have reviewed the condensed set of financial statements in
the half-yearly financial report of IBEX Global Solutions Plc for
the six months ended 31 December 2015 which comprises the condensed
consolidated statement of comprehensive income, the condensed
consolidated statement of financial position, the condensed
consolidated statement of changes in equity, the condensed
consolidated cash flows and the related Notes 1 to 22. We have read
the other information contained in the half yearly financial report
which comprises only the interim results announcement, chairman's
statement and chief executive officer's review and considered
whether it contains any apparent misstatements or material
inconsistencies with the information in the condensed set of
financial statements.
This report is made solely to the company's members, as a body,
in accordance with International Standard on Review Engagements (UK
and Ireland) 2410, 'Review of Interim Financial Information
performed by the Independent Auditor of the Entity'. Our review
work has been undertaken so that we might state to the company's
members those matters we are required to state to them in an
independent review report and for no other purpose. To the fullest
extent permitted by law, we do not accept or assume responsibility
to anyone other than the company and the company's members as a
body, for our review work, for this report, or for the conclusion
we have formed.
Directors' responsibilities
The half-yearly financial report is the responsibility of, and
has been approved by, the Directors. The AIM rules of the London
Stock Exchange require that the accounting policies and
presentation applied to the financial information in the
half-yearly financial report are consistent with those which will
be adopted in the annual accounts having regard to the accounting
standards applicable for such accounts.
As disclosed in Note 4, the annual financial statements of the
Group are prepared in accordance with International Financial
Reporting Standards as adopted by the European Union.
The financial information in the half-yearly financial report
has been prepared in accordance with the basis of preparation in
Note 2.
Our responsibility
Our responsibility is to express to the Company a conclusion on
the condensed set of financial statements in the half-yearly
financial report based on our review.
Scope of review
We conducted our review in accordance with ISRE (UK and Ireland)
2410, 'Review of Interim Financial Information Performed by the
Independent Auditor of the Entity', issued by the Auditing
Practices Board for use in the United Kingdom. A review of interim
financial information consists of making enquiries, primarily of
persons responsible for financial and accounting matters, and
applying analytical and other review procedures. A review is
substantially less in scope than an audit conducted in accordance
with International Standards on Auditing (UK and Ireland) and
consequently does not enable us to obtain assurance that we would
become aware of all significant matters that might be identified in
an audit. Accordingly, we do not express an audit opinion.
Conclusion
Based on our review, nothing has come to our attention that
causes us to believe that the financial information in the
half-yearly financial report for the six months ended 31 December
2015 is not prepared, in all material respects, in accordance with
the basis of accounting described in Note 2.
GRANT THORNTON UK LLP
AUDITOR
LONDON
23 February 2016
Condensed Consolidated Statement of Comprehensive Income
For the six months ended 31 December 2015
Six months
Six months ended
Year
ended 31 December ended
31 December 2014 30 June
2015 Restated* 2015
(Unaudited) (Unaudited) (Audited)
Continuing operations Notes $'000's $'000's $'000's
Revenue 124,400 123,023 238,806
Cost of sales (104,624) (97,928) (200,027)
------------ ------------------ --------------
Gross profit 19,776 25,095 38,779
------------ ------------------ --------------
Selling, general and
administrative expenses (16,640) (15,789) (30,017)
Share based payments (84) 451 162
Exceptional items 7 - (1,375) (1,375)
Other income 15 617 627 1,298
Total selling, general
and administrative expenses (16,107) (16,086) (29,932)
------------ ------------------ --------------
Operating profit 3,669 9,009 8,847
------------ ------------------ --------------
Other expenses
Finance costs 6 (774) (938) (1,604)
Others - 6 -
------------ ------------------ --------------
Income before taxation 2,895 8,077 7,243
Income tax expense (479) (715) (830)
------------ ------------------ --------------
Net income for the period
attributable to the equity
holders of the holding
company 2,416 7,362 6,413
Other comprehensive income
Item that will not be
subsequently reclassified
to profit or loss -
Actuarial loss on retirement
benefits - - (225)
Item that will be subsequently
reclassified to profit
or loss -
Foreign currency translation
adjustment (15) (52) (86)
------------ ------------------ --------------
Total comprehensive income
attributable to equity
holders of the holding
company 2,401 7,310 6,102
============ ================== ==============
Earnings per share attributable
to equity holders of
the holding company
Basic earnings per share
(in US$) 8 0.061 0.186 0.162
============ ================== ==============
Diluted earnings per
share (in US$) 8 0.061 0.186 0.162
============ ================== ==============
The accompanying notes are an integral part of this
interim condensed consolidated financial information.
* Reclassification has been made to conform with
the presentation of an exceptional item and other
income in the audited financial statements for the
fiscal year 2015.
Condensed Consolidated Statement of Financial Position
31 December 2015
As of As of As of
31 December 31 December 30 June
2015 2014 2015
(Unaudited) (Unaudited) (Audited)
Notes $'000's $'000's $'000's
Assets
Non-current assets
Goodwill 8,644 8,644 8,644
Other intangible assets 9 4,552 6,156 5,385
Property and equipment 10 15,387 13,722 16,627
Deferred tax asset 845 1,034 1,040
Other non-current assets 11 4,029 4,784 4,534
------------ ------------------ ---------------
Total non-current assets 33,457 34,340 36,230
------------ ------------------ ---------------
Current assets
Trade and other receivables 12 42,459 50,575 32,289
Deferred expenses 3,281 3,334 3,348
Due from affiliates 1,788 3,338 4,167
Cash and cash equivalents 13 4,756 3,725 3,011
------------ ------------------ ---------------
Total current assets 52,284 60,972 42,815
------------ ------------------ ---------------
Total assets 85,741 95,312 79,045
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============ ================== ===============
Equity and liabilities
Equity attributable to
owners of the parent
Ordinary shares 602 602 602
Share premium 14,479 14,479 14,479
Capital redemption reserve 48,530 48,530 48,530
Treasury shares (58) - (19)
Other reserves 1,046 950 918
Deficit (39,222) (35,347) (38,986)
------------ ------------------ ---------------
Total equity 25,377 29,214 25,524
------------ ------------------ ---------------
Non-current liabilities
Deferred revenue 236 1,517 1,196
Obligation under finance
lease 14 5,480 6,202 7,159
Long-term financing 15 3,007 4,106 4,251
Other non-current liabilities 16 1,371 1,294 1,304
------------ ------------------ ---------------
Total non-current liabilities 10,094 13,119 13,910
------------ ------------------ ---------------
Current liabilities
Line of credit 17 11,961 14,035 3,273
Obligation under finance
lease 14 3,064 3,126 3,730
Current portion of financing 15 3,535 2,401 3,196
Trade and other payables 18 26,556 29,732 25,301
Deferred revenue 5,067 3,478 4,066
Due to affiliates 87 207 45
------------ ------------------ ---------------
Total current liabilities 50,270 52,979 39,611
------------ ------------------ ---------------
Total liabilities 60,364 66,098 53,521
------------ ------------------ ---------------
Total equity and liabilities 85,741 95,312 79,045
============ ================== ===============
The accompanying notes are an integral part of this
interim condensed consolidated financial information.
Condensed Consolidated Statement of Changes in Equity
For the six months ended 31 December 2015
Other reserves
Issued, Employee Foreign Actuarial
subscribed Capital share currency gain
and paid-up Share redemption Treasury option translation on retirement Total
capital premium reserve shares plan reserve benefits Deficit equity
$'000's $'000's $'000's $'000's $'000's $'000's $'000's $'000's $'000's
As at 1 July 2014 602 14,479 48,530 - 1,144 (535) 307 (41,647) 22,880
-------------------- ---------------- ------------------- ---------- ------------------ ---------------- ------------------- -------------------- -----------------
Comprehensive income
for the period
Net income - - - - - - - 7,362 7,362
Other comprehensive
loss - - - - - (52) - - (52)
-------------------- ---------------- ------------------- ---------- ------------------ ---------------- ------------------- -------------------- -----------------
- - - - - (52) - 7,362 7,310
-------------------- ---------------- ------------------- ---------- ------------------ ---------------- ------------------- -------------------- -----------------
Transactions with
owners
Dividend
distribution - - - - - - - (1,062) (1,062)
Employee share
based payments - - - - 86 - - - 86
-------------------- ---------------- ------------------- ---------- ------------------ ---------------- ------------------- -------------------- -----------------
- - - - 86 - - (1,062) (976)
-------------------- ---------------- ------------------- ---------- ------------------ ---------------- ------------------- -------------------- -----------------
As at 31 December
2014 (Unaudited) 602 14,479 48,530 - 1,230 (587) 307 (35,347) 29,214
-------------------- ---------------- ------------------- ---------- ------------------ ---------------- ------------------- -------------------- -----------------
Comprehensive income
for the period
Net income - - - - - - - (949) (949)
Other comprehensive
loss - - - - - (34) (225) - (259)
-------------------- ---------------- ------------------- ---------- ------------------ ---------------- ------------------- -------------------- -----------------
- - - - - (34) (225) (949) (1,208)
-------------------- ---------------- ------------------- ---------- ------------------ ---------------- ------------------- -------------------- -----------------
Transactions with
owners
Dividend
distribution - - - - - - - (2,690) (2,690)
Purchase of
treasury
shares - - - (19) - - - - (19)
Employee share
based payments - - - - 227 - - - 227
-------------------- ---------------- ------------------- ---------- ------------------ ---------------- ------------------- -------------------- -----------------
- - - (19) 227 - - (2,690) (2,482)
-------------------- ---------------- ------------------- ---------- ------------------ ---------------- ------------------- -------------------- -----------------
As at 30 June 2015
(Audited) 602 14,479 48,530 (19) 1,457 (621) 82 (38,986) 25,524
-------------------- ---------------- ------------------- ---------- ------------------ ---------------- ------------------- -------------------- -----------------
Comprehensive income
for the period
Net income - - - - - - - 2,416 2,416
Other comprehensive
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loss - - - - - (15) - - (15)
-------------------- ---------------- ------------------- ---------- ------------------ ---------------- ------------------- -------------------- -----------------
- - - - - (15) - 2,416 2,401
-------------------- ---------------- ------------------- ---------- ------------------ ---------------- ------------------- -------------------- -----------------
Transactions with
owners
Dividend
distribution - - - - - - - (2,652) (2,652)
Purchase of
treasury
shares - - - (39) - - - - (39)
Employee share
based payments - - - - 143 - - - 143
-------------------- ---------------- ------------------- ---------- ------------------ ---------------- ------------------- -------------------- -----------------
- - - (39) 143 - - - (2,548)
-------------------- ---------------- ------------------- ---------- ------------------ ---------------- ------------------- -------------------- -----------------
As at 31 December
2015 (Unaudited) 602 14,479 48,530 (58) 1,600 (636) 82 (39,222) 25,377
==================== ================ =================== ========== ================== ================ =================== ==================== =================
Condensed Consolidated Statement of Cash Flows
For the six months ended 31 December 2015
Six months
Six months ended
Year
ended 31 December ended
31 December 2014 30 June
2015 Restated* 2015
(Unaudited) (Unaudited) (Audited)
Note $'000's $'000's $'000's
Cash flows from operating
activities
Net cash generated from
operating activities 20 2,673 9,857 27,249
Interest paid (774) (1,526) (2,192)
Taxes paid (328) (225) (105)
------------ --------------------- ------------------
Net cash generated
from operating activities 1,571 8,106 24,952
------------ --------------------- ------------------
Cash flows from investing
activities
Purchases of property
and equipment (2,290) (929) (1,729)
Proceeds for sale of
assets - - 10
------------ --------------------- ------------------
Net cash used in investing
activities (2,290) (929) (1,719)
------------ --------------------- ------------------
Cash flows from financing
activities
Proceed from/ (repayments
on) line of credit 8,688 (2,668) (13,430)
Grants received - - 311
Payments of dividend (2,652) (1,062) (3,752)
Purchase of treasury
shares (39) - (19)
Payments on financing (1,568) (980) (2,332)
Payment of loan to affiliate - (1,355) (1,355)
Payments on capital
lease obligations (2,037) (1,353) (3,497)
------------ --------------------- ------------------
Net cash generated from/(used
in) financing activities 2,392 (7,418) (24,074)
------------ --------------------- ------------------
Effect of exchange rate
change on cash and
cash equivalents 72 (39) (153)
------------ --------------------- ------------------
Net increase /(decrease)
in cash and cash equivalents 1,745 (280) (994)
Cash and cash equivalents,
beginning of period 3,011 4,005 4,005
------------ --------------------- ------------------
Cash and cash equivalents,
end of period 4,756 3,725 3,011
============ ===================== ==================
The accompanying notes are an integral part of this
interim condensed consolidated financial information.
* Reclassification has been made to conform with
the presentation of loan and interest payments to
affiliate in the audited financial statements for
the fiscal year 2015.
Notes to the Condensed Consolidated Financial Information
For the six months ended 31 December 2015
1. Nature of the business
IBEX Global Solutions Plc (the Holding Company or the Parent
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. Its registered office is 3rd Floor, 5 Lloyds Avenue, London
EC3N 3AE. The Holding Company was incorporated under the Companies
Act 2006 with a fiscal year end of 30 June. On 28 June 2013 the
Holding Company was admitted to trade on the Alternative Investment
Market (AIM), a market operated by the London Stock Exchange Group
Plc.
IBEX Global Solutions Plc and subsidiaries (IBEX, IBEX Global,
IBEX Group or the Group) is a global portfolio of companies in the
contact centre and related business process outsourcing (BPO)
business, with operations in the United States, Philippines, the
United Kingdom, Pakistan, Senegal, Nicaragua and Jamaica. 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).
The IBEX Group consists of:
Holding company Location
IBEX Global Solutions
Plc UK
31 December
2015
Percentage
of holding
in ordinary
shares Statutory
Reporting
Subsidiaries Location % year
Lovercius Consultants
Limited Cyprus 100% June 2016
IBEX Global Europe S.a.r.l. Luxembourg 100% June 2016
TRG Customer Solutions,
Inc.
(trading as IBEX Global
Solutions, Inc.) USA 100% June 2016
TRG Customer Solutions
(Canada) Inc. Canada 100% June 2016
TRG Marketing Solutions
Limited UK 100% June 2016
Virtual World (Private)
Limited Pakistan 100% June 2016
IBEX Philippines Inc. Philippines 100% June 2016
IBEX Global Solutions
(Philippines) Inc. Philippines 100% June 2016
TRGCS Philippines Inc. Philippines 100% June 2016
The Resource Group Senegal December
SA Senegal 100% 2015
IBEX Global Solutions
(Private) Limited Pakistan 100% June 2016
IBEX Mena FZE Dubai 100% June 2016
IBEX I.P. Holdings Ireland
Limited Ireland 100% June 2016
IBEX Global Bermuda Limited Bermuda 100% June 2016
IBEX Global Solutions December
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Nicaragua SA Nicaragua 100% 2015
IBEX Global St. Lucia
Limited St. Lucia 100% June 2016
2. Basis of preparation
The interim condensed consolidated financial information is for
the six months ended 31 December 2015. This interim condensed
consolidated financial information does not constitute statutory
financial statements as defined in the Companies Act 2006. These
half yearly financial statements have been prepared on a consistent
basis and format with the Group's annual consolidated financial
statements for the year ended 30 June 2015. These half yearly
financial statements have been prepared under the going concern
assumption.
3. Ultimate parent undertaking and controlling entity
The Ultimate Parent Company, TRGI, is incorporated in Bermuda.
The parent company of the largest group to include the IBEX Group
in its consolidated financial statements is TRGI and its financial
statements are not publically available. The Directors of TRGI
ultimately control the Group.
4. Accounting policies
The interim condensed consolidated financial information has
been prepared in accordance with the accounting policies applied in
the Group's annual consolidated financial statements as of and for
the year ended 30 June 2015. The Group financial statements for the
year ended 30 June 2015 were prepared under International Financial
Reporting Standards as adopted by European Union.
The policies have been consistently applied to all the periods
presented, unless otherwise stated.
5. Operating segments
These consolidated financial statements have been prepared on
the basis of a single operating segment. Whilst the Group operates
in different locations, there are no multiple products or lines of
business upon which the results reported to the Chief Operating
Decision Maker are segregated and analysed.
94.7%, 94.9% and 93.6% of the total revenue was earned from
customers in the United States of America for the periods ended 31
December 2015 and 31 December 2014 and for the year ended 30 June
2015, respectively.
The following table summarises those non-related party customers
with revenue or accounts receivable in excess of 5.0% total revenue
or total receivables for the periods ended 31 December 2015 and
2014 and for the year ended 30 June 2015. The revenue analysis
below does not form part of the Group's segmental reporting but is
provided voluntarily.
Six months to 31 December 2015
--------------------------------------------------------------------
Revenue Accounts receivable
Percentage Percentage
of of
Amount total Amount total
$'000's % $'000's %
Client 1 37,782 30 7,135 19
Client 2 29,465 24 8,203 22
Client 3 16,358 13 8,913 24
Client 4 12,785 10 1,418 4
96,390 77 25,669 69
Others 28,010 23 12,067 31
124,400 100 37,736 100
============== ================= ============== =================
Six months to 31 December 2014
--------------------------------------------------------------------
Revenue Accounts receivable
Percentage Percentage
of of
Amount total Amount Total
$'000's % $'000's %
Client 1 38,328 31 20,016 43
Client 2 30,922 25 9,440 20
Client 3 15,742 13 7,355 16
Client 4 13,449 11 2,621 6
-------------- ----------------- -------------- -----------------
98,441 80 39,432 85
Others 24,582 20 7,171 15
123,023 100 46,603 100
============== ================= ============== =================
Year to 30 June 2015
--------------------------------------------------------------------
Revenue Accounts receivable
Percentage Percentage
of of
Amount total Amount Total
$'000's % $'000's %
Client 1 73,793 31 5,788 21
Client 2 55,937 23 7,422 27
Client 3 29,490 12 2,173 8
Client 4 28,270 12 2,551 9
187,490 78 17,934 65
Others 51,316 22 10,047 35
238,806 100 27,981 100
============== ================= ============== =================
Above clients are Fortune 100 and/or Fortune 500 companies.
Revenues are attributed to geographical areas based upon the
location in which the sale originated. The Holding Company is
domiciled in the United Kingdom.
Non-current assets located outside of the United Kingdom
comprises majority of assets of TRG Customer Solutions Inc., IBEX
Philippines Inc. and IBEX Global Solutions (Philippines) Inc. The
non-current assets outside of the UK as at 31 December 2015 and
2014 and 30 June 2015 are as follows:
31 Dec 31 Dec 30 June
2015 2014 2015
Location $'000's $'000's $'000's
TRG Customer Solutions,
Inc. USA 21,355 23,966 23,374
IBEX Philippines Inc. Philippines 1,712 2,338 2,114
IBEX Global Solutions
(Philippines) Inc. Philippines 7,981 6,300 8,694
Others Various 2,163 1,494 1,742
33,211 34,098 35,924
============== ============== ===========
6. Finance costs
Six months Six months Year
ended ended ended
31 December 31 December 30 June
2015 2014 2015
(Unaudited) (Unaudited) (Audited)
$'000's $'000's $'000's
Interest on bank borrowings 230 482 842
Interest on invoice discounting 66 - 15
Finance charges on finance
lease and financing arrangements
(see Note 15) 468 447 732
Bank charges 10 9 15
774 938 1,604
============ ============ ===============
7. Exceptional items
Six months
Six months ended
Year
ended 31 December ended
31 December 2014 30 June
2015 Restated 2015
(Unaudited) (Unaudited) (Audited)
$'000's $'000's $'000's
Severance and bonus - 1,375 1,375
- 1,375 1,375
============= ============= =============
Stephen M. Kezirian resigned as CEO and left his post as
Executive Director effective 7 October 2014, and by agreement
provided transition assistance through to 31 December 2014. The
financial terms of the aforementioned agreement have been reflected
in the disclosure above.
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Reclassification has been made in the statement of comprehensive
income for the six months ended 31 December 2014 to conform with
the presentation of an exceptional item in the audited financial
statements for the fiscal year 2015.
8. Earnings per share
(a) Basic
Basic earnings per share is calculated by dividing the profit
attributable to equity holders of the Holding Company by the
weighted average number of ordinary shares in issue during the
period.
Six months Six months Year
ended ended ended
31 December 31 December 30 June
2015 2014 2015
(Unaudited) (Unaudited) (Audited)
Profit attributable
to equity holders
of the holding company
(in US$'000's) 2,416 7,362 6,413
Weighted average number
of
ordinary shares in
issue 39,531,463 39,554,400 39,549,407
Basic earnings per
share (in US$) 0.061 0.186 0.162
============ ================ ==============
(b) Diluted
Diluted earnings per share are calculated by adjusting the
weighted average number of ordinary shares outstanding to assume
conversion of all dilutive potential ordinary shares that could be
issued from options outstanding for less than the average market
price. As of 31 December 2015, 31 December 2014 and 30 June 2015,
the reconciliation of the weighted average number of shares for the
purposes of diluted earnings per share to the weighted average
number of ordinary shares used in the calculation of basic earnings
per share is as follows:
31 December 31 December 30 June
2015 2014 2015
(Unaudited) (Unaudited) (Audited)
Weighted average number
of ordinary shares
(basic) 39,531,463 39,554,400 39,549,407
Shares deemed to be
issued for less than
average market price 78,449 14,602 70,841
Weighted average number
of ordinary shares
(diluted) 39,609,912 39,569,002 39,620,248
============ ================== =============
Six months Six months Year
ended ended ended
31 December 31 December 30 June
2015 2014 2015
(Unaudited) (Unaudited) (Audited)
Profit attributable
to equity holders
of the holding company
(in US$'000's) 2,416 7,362 6,413
Weighted average number
of
ordinary shares in
issue (diluted) 39,609,912 39,569,002 39,620,248
Diluted earnings per
share (in US$) 0.061 0.186 0.162
============ ================ ==============
9. Other intangible assets
The gross carrying amounts and accumulated amortisation of
intangible assets are shown below.
31 December 31 December 30 June
2015 2014 2015
(Unaudited) (Unaudited) (Audited)
$'000's $'000's $'000's
Cost 10,353 9,741 10,084
Accumulated amortisation (5,801) (3,585) (4,699)
4,552 6,156 5,385
============ ============ ============
The reconciliation of the carrying amounts of other intangible
assets is shown below.
Six months Six months Year
ended ended ended
31 December 31 December 30 June
2015 2014 2015
(Unaudited) (Unaudited) (Audited)
$'000's $'000's $'000's
Balance at beginning
of period 5,385 4,096 4,096
Additions 272 2,790 3,139
Amortisation (1,103) (730) (1,848)
Foreign currency adjustment (2) - (2)
Balance at end of period 4,552 6,156 5,385
============ ============ ============
10. Property and equipment
The gross carrying amounts and accumulated depreciation of
property and equipment are shown below.
31 December 31 December 30 June
2015 2014 2015
(Unaudited) (Unaudited) (Audited)
$'000's $'000's $'000's
Cost 46,059 37,330 43,767
Accumulated depreciation (30,672) (23,608) (27,140)
15,387 13,722 16,627
============ ============= =============
The reconciliation of the carrying amounts of property and
equipment is shown below.
Six months Six months
ended ended Year ended
31 December 31 December 30 June
2015 2014 2015
(Unaudited) (Unaudited) (Audited)
$'000's $'000's $'000's
Balance at beginning
of period 16,627 14,272 14,272
Additions 2,678 2,230 8,723
Disposals - - (11)
Depreciation (3,544) (2,617) (5,949)
Foreign currency adjustment (374) (163) (408)
Balance at end of period 15,387 13,722 16,627
============ ============= ================
11. Other non-current assets
Other non-current assets consist of the following:
31 December 31 December 30 June
2015 2014 2015
(Unaudited) (Unaudited) (Audited)
$'000's $'000's $'000's
Long-term deposits 1,248 1,148 1,218
Long-term deferred expenses 239 1,752 1,014
Long-term prepayment 1,511 803 1,369
Other 1,031 1,081 933
4,029 4,784 4,534
============ ============ ==============
On 31 March 2013 the Holding Company entered into a contract of
Standard Terms and Conditions with SATMAP Incorporated (SATMAP),
subsequently amended on 31 March 2013 and April 2013 (the contract
and the two amendments collectively, Agreement). Under the
Agreement, the Holding Company (a) issued additional share capital
of $1.0 million to TRGI, direct parent of the Holding Company and
indirect parent of SATMAP; and (b) issued a note in the amount of
$1.0 million payable to SATMAP. In exchange, the Holding Company
received an asset of $2.0 million in dedicated data services (up to
2000 call-centre seats) from SATMAP to be amortised over 120
months. The asset represents an advance payment for the proprietary
artificial intelligence and pattern recognition technology invented
and developed by SATMAP (SATMAP Services). The SATMAP Services
integrate with call-centre telephony and agent staffing to connect
in real time customers with agents most likely to produce improved
performance and service in call outcomes for such customers. As of
14 October 2013, the Holding Company (with the consent of SATMAP)
assigned all of its rights and obligations under the Agreement and
the note to TRG Customer Solutions, Inc. d/b/a IBEX Global
Solutions, Inc. (IBEX US), which assumed all such rights and
obligations. The assignment and assumption of the Agreement and the
note enables IBEX US to use the SATMAP Services in its call
centres. IBEX US deploys the SATMAP Services in its call centres to
enhance performance and as a value-added differentiator for its
clients, producing more revenue for both the clients and IBEX US.
The total value (net of amortisation) of this asset as of 31
December 2015 is $1.2 million, of which $1.0 million is classified
as a non-current asset (long-term prepayment) and $0.2 million is
classified as a current asset. As of 31 December 2014 and 30 June
2015, the total value of this asset (net of amortisation) was $1.6
million, of which $1.4 million was classified as a non-current
asset (long-term prepayment) and $0.2 million was classified as a
current asset.
12. Trade and other receivables
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Trade and other receivables consist of the following:
31 December 31 December 30 June
2015 2014 2015
(Unaudited) (Unaudited) (Audited)
$'000's $'000's $'000's
Trade receivables - gross 38,263 46,959 28,507
Less provision for doubtful
debts (527) (356) (526)
------------ ------------ -------------
Trade receivables - net 37,736 46,603 27,981
Prepayments and other
receivables 4,041 3,618 3,929
Deposits 682 354 379
42,459 50,575 32,289
============ ============ =============
Provision for doubtful debts
Six months Six months Year
ended ended ended
31 December 31 December 30 June
2015 2014 2015
(Unaudited) (Unaudited) (Audited)
$'000's $'000's $'000's
Balance at beginning
of period 526 374 374
Charge for the period 6 6 184
Foreign exchange differences (5) (18) (23)
Reversals/write offs
against provision - (6) (9)
Balance at end of period 527 356 526
============ ============ =============
13. Cash and cash equivalents
Cash and cash equivalents consist of the following:
31 December 31 December 30 June
2015 2014 2015
(Unaudited) (Unaudited) (Audited)
$'000's $'000's $'000's
Balances with banks in:
- current accounts 4,165 2,549 2,470
- deposit accounts 579 1,164 530
4,744 3,713 3,000
Cash on hand 12 12 11
4,756 3,725 3,011
============ =============== ============
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 31 December 2015, 31 December 2014 and 30 June
2015 are as follows:
31 December 2015
(Unaudited)
--------------------------------------------
Minimum Present
value
lease payments of payments
$'000's $'000's
Within one year 3,522 3,064
After one year but not more
than five years 6,113 5,480
--------------------- ---------------------
Total minimum lease payments 9,635 8,544
Less amounts representing finance
charges (1,091) -
--------------------- ---------------------
Present value of minimum lease
payments 8,544 8,544
Less current portion shown
under current liabilities (3,064) (3,064)
Obligation under finance lease
- non-current 5,480 5,480
===================== =====================
31 December 2014
(Unaudited)
--------------------------------------------
Minimum Present
value
lease payments of payments
$'000's $'000's
Within one year 3,741 3,126
After one year but not more
than five years 6,754 6,202
--------------------- ---------------------
Total minimum lease payments 10,495 9,328
Less amounts representing finance
charges (1,167) -
--------------------- ---------------------
Present value of minimum lease
payments 9,328 9,328
Less current portion shown
under current liabilities (3,126) (3,126)
Obligation under finance lease
- non-current 6,202 6,202
===================== =====================
30 June 2015
(Audited)
--------------------------------------------
Minimum Present
value
lease payments of payments
$'000's $'000's
Within one year 4,358 3,730
After one year but not more
than five years 8,079 7,159
--------------------- ---------------------
Total minimum lease payments 12,437 10,889
Less amounts representing finance
charges (1,548) -
--------------------- ---------------------
Present value of minimum lease
payments 10,889 10,889
Less current portion shown
under current liabilities (3,730) (3,730)
Obligation under finance lease
- non-current 7,159 7,159
===================== =====================
These lease arrangements have interest rates ranging from 5.0%
to 10.0% for the period ended 31 December 2015, from 6.0% to 18.0%
for the period ended 31 December 2014 and from 5.0% to 10.0% for
the period ended 30 June 2015. At the end of the lease term, the
ownership of the assets shall be transferred to the respective
entities of the Group.
15. Financing arrangements
In June 2014 the US subsidiary of the Holding Company (TRG
Customer Solutions, Inc., TRG CS or IBEX US) entered into a $3.3
million three-year financing agreement (IBM Agreement) with IBM
Credit LLC (IBM) to finance the purchase of software licences
(under a Select Agreement) from Microsoft Corporation (Microsoft).
In June 2014, IBEX US also entered into a three-year Enterprise
Agreement with Microsoft for the use of certain cloud software
services for approximately $1.1 million in year one, with minimum
service commitments of approximately $50,000 in each of years two
and three. The monthly financing payments under the IBM Agreement
are approximately $103,000 per month for 36 months which began in
July 2014. The monthly payments under the Microsoft Enterprise
Agreement during year one were approximately $100,000 per month
which began in July 2014, with minimum monthly service commitments
of approximately $4,000 in each of years two and three.
IBEX US acquired the Microsoft software licences and cloud
services to accommodate the needs of the IBEX Group and to
facilitate the acquisition by the Holding Company's parent, TRGI,
of software for TRGI and its non-IBEX subsidiaries. Consequently,
TRGI, the Holding Company and IBEX US have entered into an
agreement as of July 2014 under which the Holding Company has
sub-licensed to TRGI the use, for a fixed monthly consideration
(that includes a management fee / mark-up), of that portion of the
software and services purchased that correspond to the requirements
of TRGI and its non-IBEX subsidiaries. The management fee of $0.7
million for the six months ended 31 December 2015 was shown as
Other Income ($0.6 million) and set-off against Cost of Sales
($26,000) and Finance Costs ($75,000) in the statement of
comprehensive income. For the six months ended 31 December 2014,
the management fee of $1.4 million was shown as Other Income ($1.3
million) and set-off against Finance Costs ($0.1 million) in the
statement of comprehensive income. The management fee of $2.7
million for the year ended 30 June 2015 was shown as Other Income
($1.3 million) and set-off against Cost of Sales ($1.2 million) and
Finance Costs ($0.2
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million) in the statement of comprehensive income.
In addition, IBEX US has financed the purchase of various
property and equipment and software during the periods ended 31
December 2015, 31 December 2014 and 30 June 2015 with CIT Finance
LLC (CIT) and IBM. As of 31 December 2015, 31 December 2014 and 30
June 2015, IBEX US has financed $0.7 million, $3.1 million and $9.8
million, respectively, of assets with CIT and IBM at the interest
rates ranging from 6.0% to 8.0% per annum.
As of 31 December 2015, 31 December 2014 and 30 June 2015, the
outstanding liabilities from these transactions are shown in the
consolidated statement of financial position as follows:
31 December 2015
(Unaudited)
--------------------------------------------
Current Non-current
$'000's $'000's
IBM Credit LLC 2,610 2,168
CIT Finance LLC 702 394
PNC Bank, National Association
(PNC), see Note 17 223 445
3,535 3,007
===================== =====================
31 December 2014
(Unaudited)
--------------------------------------------
Current Non-current
$'000's $'000's
IBM Credit LLC 1,802 3,186
CIT Finance LLC 599 920
2,401 4,106
===================== =====================
30 June 2015
(Audited)
--------------------------------------------
Current Non-current
$'000's $'000's
IBM Credit LLC 2,514 3,501
CIT Finance LLC 682 750
3,196 4,251
===================== =====================
Future minimum lease payments to IBM and CIT at 31 December
2015, 31 December 2014 and 30 June 2015 are as follows:
31 December 31 December 30 June 2015
2015 2014
Minimum Present Minimum Present Minimum Present
lease value lease value lease value
payments of payments payments of payments payments of payments
$'000's $'000's $'000's $'000's $'000's $'000's
Within one year 3,855 3,535 2,785 2,401 3,626 3,196
After one year
but not more
than five years 3,103 3,007 4,391 4,106 4,404 4,251
--------- ------------ --------- ------------ --------- ------------
Total minimum
lease payments 6,958 6,542 7,176 6,507 8,030 7,447
Less amounts
representing
finance charges (416) - (669) - (583) -
--------- ------------ --------- ------------ --------- ------------
Present value
of minimum lease
payments 6,542 6,542 6,507 6,507 7,447 7,447
Less current
portion shown
under current
liabilities (3,535) (3,535) (2,401) (2,401) (3,196) (3,196)
Obligation under
finance lease
- non-current 3,007 3,007 4,106 4,106 4,251 4,251
========= ============ ========= ============ ========= ============
16. Other non-current liabilities
31 December 31 December 30 June
2015 2014 2015
(Unaudited) (Unaudited) (Audited)
$'000's $'000's $'000's
Deferred rent - long-term 652 733 649
Pensions - defined benefit
plan 617 437 494
Phantom stock plan 102 124 161
1,371 1,294 1,304
============ ================ ============
17. Working capital line of credit
On 8 November 2013, a subsidiary of IBEX (the Subsidiary) signed
a Revolving Credit and Security Agreement with PNC for a new $35.0
million Revolving Line Of Credit (RLOC) to replace the Capital
Source Bank $20.0 million RLOC. The said agreement will mature on 7
November 2016 and promises an interest rate of LIBOR +2.50% and or
the PNC Commercial Lending Rate (as publically announced) +0.25%.
During the course of the fiscal year 2014, the Subsidiary entered
into a waiver and an amendment (Amendment 1) whereby PNC waived the
Borrowers technical non-compliance with a certain covenant cap. On
2 October 2014, the Subsidiary entered into an amendment (Amendment
2) whereby PNC increased the caps associated with certain
covenants, increased indebtedness, and waived past technical
covenant non-compliance events.
In this agreement, the Subsidiary derived value from the choice
of interest rates, depending on the rate selected. This value
changes in response to the changes in the various interest rates
alternatives. Thus, a derivative is embedded within the loan
commitment, i.e. the facility terms which are agreed for a fixed
period until 2016. The part of the value associated with the loan
commitment derivative (the embedded derivative part) is derived
from the potential interest rate differential between the
alternative rates, i.e. it creates economic characteristics that
are different to a typical loan commitment.
The Subsidiary assessed that the derivative is considered to be
closely related and is not separated as part of the loan commitment
due to the following factors: (1) the instrument can be settled in
a way that PNC would recover substantially all of its investment
(the borrowed principal) since the derivative only impacts the
choice in interest rate; and (2) PNC will not generate a rate of
return that is at least twice that of the market return because no
matter which rate is selected, each interest rate alternative
available to the Subsidiary (each of the PNC, FFOR and 2 LIBOR
rates) represents a market rate of interest and would be impacted
in the same way by market factors.
During the course of the fiscal year 2015 the Subsidiary entered
into an amendment (Amendment 3) whereby PNC increased caps
associated with certain covenants. On 19 June 2015 the Subsidiary
entered into an amendment (Amendment 4) whereby PNC consented to
permit the Subsidiary to sell specific receivables to Citibank,
N.A. On 26 June 2015, the Subsidiary entered into an amendment
(Amendment 5) whereby PNC increased the RLOC to $40.0 million, with
a potential increase of up to a total of $50.0 million (subject to
PNC approval and conditions), included a $10.0 million
non-revolving line of credit to finance capital expenditures,
reduced the interest rate to LIBOR +1.75% and/or the PNC Commercial
Lending Rate for domestic loans, extended the maturity date to May
2020, and included certain standard financial covenants.
18. Trade and other payables
31 December 31 December 30 June
2015 2014 2015
(Unaudited) (Unaudited) (Audited)
$'000's $'000's $'000's
Trade payables 2,748 4,152 2,820
Accrued expenses and
payables 6,767 5,841 5,719
Accrued salaries and
wages 17,041 19,739 16,762
26,556 29,732 25,301
============ ================== =============
19. Contingencies and commitments
There have been no material changes in contingencies and
commitments during the period.
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