Final Results

7 October 2014

IBEX Global Solutions Plc

("IBEX" or "the Company" or "the Group")

Final Results for the Year Ended 30 June 2014

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 final results for the year ended 30 June 2014.

Financial Highlights:

· Total Group revenue up 30.0% to $184.0 million (2013: $141.6 million)

· Adjusted gross profit (excluding depreciation and amortisation) of $32.0 million (2013: $22.9 million)

· Adjusted gross profit margin of 17.4% (2013: 16.1%)

· Adjusted Earnings before Interest, Depreciation, Amortisation and Share-based payments (EBITDA) of $9.1 million (2013: $4.6 million)

· Adjusted EBITDA margin of 4.9% (2013: 3.2%)

· Profit before tax of $0.7 million (2013: Loss before tax of $17.0 million)

· Net assets of $22.9 million as of 30 June 2014 (2013: $22.3 million)

· Net debt of $26.9 millionas of 30 June 2014 (2013: $2.9 million)

· Final dividend of 1.7 pence per share, representing a total dividend for the year of 3.6 pence per share

Operational Highlights:

· Admission to AIM enhanced the profile of IBEX amongst potential blue-chip clients

· Major new client wins including a global automotive company and a US-based cable provider

· Expanding scope of work across verticals with existing clients

· New site facilities opened in New Braunfels (Texas), Davao (Philippines) and Paranaque (Philippines)

· Invested in front line call centre agents to drive increased employee retention, a higher calibre workforce, and corresponding improved operational performance over time

· SG&A at approximately 13% of revenue, compares favourably to industry standards of 15-28%

· Number of employees as of 31 July 2014 in excess of 10,500, up approximately 40% on last year

Management Changes:

· Steve Kezirian is to stand down as CEO, search process for successor underway

· Non-executive, Mohammed Khaishgi, to stand in as interim CEO

Muhammad Ziaullah Khan Chishti, Chairman of the Group, commented: "Since the start of the 2015 financial year, we have continued to see strong growth and anticipate the balance of the year will provide further growth opportunities. Our core clients continue to deliver growing volumes of business to us and we remain confident that our sales team will deliver new client wins which will diversify our revenue streams, in line with our strategy."

Chairman's Statement

I am pleased to present my report as Chairman of IBEX for our first full year of operations as a publicly listed company. Following our initial public offering in June 2013, the Company has had a successful year with significant growth in both revenue and profitability. I believe the business is now demonstrating that it has momentum as we deliver on our plan to grow IBEX and deliver greater shareholder value and returns.

Financial Results

IBEX delivered significant growth in the year to 30 June 2014. Revenues were $184.0 million (2013: $141.6 million) and adjusted earnings before interest, taxation, depreciation, amortisation, exceptional items and employee share options payments (EBITDA) was $9.1 million (2013: $4.6 million), reflecting growth of 30.0% and 99.0%, respectively. Profit before tax was $0.7 million (2013: Loss before tax was $17.0 million). On an operating basis, the business is now cash flow positive after on-going interest charges and capital expenditures paid in cash.

In addition to its positive financial results, IBEX had several operational successes during the year. It broadened its service delivery offering by opening three state of the art contact centre facilities, of which two are located in the Philippines and one based in the US. It broadened its client base through several new wins, which we believe lay the foundations for continued top line growth.

Dividend

The Board hereby indicates its intent to pay final dividend of 1.7 pence per share, representing a total dividend for the year of 3.6 pence per share. The final dividend will be declared ahead of the Annual General Meeting, and expected to be paid before the end of the calendar year.

Planned Management Changes

Three years on from joining the Board, Steve Kezirian is to leave the Company and step down from his role as Chief Executive Officer. On behalf of the Board, I would like to thank Steve for his considerable contribution to IBEX since his appointment in 2011 and wish him well with for the future.

The Board intends to appoint Mohammed Khaishgi, an existing non-executive director, as full time Interim CEO to ensure a smooth transition and to lead IBEX's executive team while the Board finalises its search for a new, permanent CEO. 

Mohammed currently serves as Chief Operating Officer of The Resource Group International Limited, a substantial shareholder of the Company. His experience also includes senior roles at Align Technology, where he set up and oversaw their global contact centre and back office facilities. He is very familiar with IBEX and its day-to-day operational activities having been the interim CEO of IBEX in 2007, as well as currently serving as a non executive director.

The Board is considering internal and external candidates and we are grateful to Steve that he will continue to assist the business during this transition for the remainder of this calendar year. Once the Board has approved the appointment of a new CEO, we will provide a further update to the market.

Outlook

Since the start of the 2015 financial year, we have continued to see strong growth and anticipate the balance of the year will provide further growth opportunities. Our core clients continue to deliver growing volumes of business to us and we remain confident that our sales team will deliver new client wins which will diversify our revenue streams, in line with our strategy.

I would like to thank the management and staff of our Company for their extraordinary efforts and accomplishments during the year. In addition to delivering a transformative increase in revenues and client satisfaction, the team rebranded the business to its current identity of IBEX Global Solutions, and successfully executed its initial public offering. As a Board, we are grateful for their tireless efforts.

Muhammad Ziaullah Khan Chishti

Chairman

Chief Executive Officer's Review

Our Group delivered a very strong performance in the year ended 30 June 2014 and has continued to make good progress in the early months of the new trading year.

In our first full year as a public company, IBEX delivered revenue growth far beyond industry averages, whilst continuing to improve margins. New client wins, coupled with successfully deepening our existing relationships with clients across all verticals, bolstered results for the period and positioned the Company for continued growth in the year ahead.

Financial Review

The principal KPIs used by the board in measuring the performance of the Group are Revenue, Cost of Sales, Selling, General & Administrative expenses (SG&A), Adjusted EBITDA and Net Profit/Loss.

The Income Statement KPIs above are in line with internal projections and tracking positively against forecasts.

Revenue for the period was up 30.0% to $184.0 million (2013: $141.6 million) driven by increasing business from our established client base, expanding value-added service offerings and new client wins. Adjusted EBITDA rose 99.0% to $9.1 million (2013: $4.6 million), principally due to the rapid rate of growth in revenue and the operating leverage inherent in the business.

Profit before tax for the year was $0.7 million (2013: loss of $17.0 million). Profit per share was 2.02 cents. Cash in bank and on hand was $4.0 million (2013: $10.7 million). Net debt (cash and cash equivalents and net receivable of IPO proceeds, less third party borrowings) at the end of the year was $26.9 million (2013: $2.9 million). Net debt increased primarily as a result of borrowings to finance new and or expanded facilities, net working capital uses, and capital expenditures other than facilities including financing associated with the purchase of software licenses. During the period, we invested $12.4 million on new sites of which $8.4 million related to openings in the Philippines, with the balance of $3.2 million being spent on new sites in the US. Beyond site buildout, total capital expenditure was $5.6 million, of which $4.4 milllion was spent on centralised IT purchases, with the remainder directed to maintenance related capital expenditure.

Operational Review

The majority of our revenue growth for the period relates to additional work awarded to us by existing clients, whilst new client wins put the Group in a strong position to continue our growth trajectory in the year ahead.

During the year under review, the Company signed significant new contracts with a global automotive company, a leading US-based cable provider, various marketing services businesses, and leading players in the US energy sector. These wins reflect our established track record and our differentiated services which, when combined, help us to grow in the consumer technology and automotive verticals in particular. Meanwhile, the deregulation taking place in the utility industry is providing us with new opportunities to grow our business. Additionally, we are taking on new lines of work for clients. An example of this is where a client who previously relied on us for customer retention work has contracted IBEX to provide additional support with their billing enquiries and customer care calls.

Through continued diversification in its client base, both geographically and across industry verticals, the Group continues to create new growth opportunities that enhance the predictability and profitability of the overall business. To fuel this growth, the Company expanded its geographic footprint by adding three state-of-the-art call centres (two in the Philippines and one in the US), increasing its global footprint to 18 sites. In addition to new openings, the Group expanded two separate locations in the US and Philippines, capitalising on growth with existing clients and generating increased margin from those locations. To better service both existing and new customers globally, the Group opened sales offices in Dubai, which provide us with a foothold into the Gulf region (where we see opportunities in the airline and hospitality industry in particular) and in London, an office which will support our Bristol centre, from which we currently support clients in the automotive and pharmaceutical industries.

IBEX's business model has some distinct differences from those of our competitors in the Business Process Outsourcing ("BPO") industry. The IBEX management team believes in maintaining a lean operating model, and as a result SG&A is approximately 13% of Group revenue; this compares to 15-28% amongst many of our competitors globally. Given this cost advantage, IBEX can afford to invest in front line call centre agents vital to our business, which it does by offering higher salaries and better benefits. This in turn drives increased employee retention and a higher calibre workforce, which results in improved operational performance over time. In addition, by expanding its training and coaching environments, IBEX is able to deliver performance at or above expected levels much more quickly than any of its peers. This operational execution is motivational for the team and, more importantly, it gives our clients the confidence to entrust greater portions of their overall business to IBEX.

The results of this unique approach are manifested in the vendor scorecard rankings that management and our clients use on a daily basis. These scorecards track client-specific metrics, including but not limited to; customer satisfaction, sales conversion, and quality, which are fundamental to each client's respective business. We use this client-centric, performance-oriented structure to make real-time decisions around agent scheduling, performance-management and coaching, and levels of investment across the enterprise. An alignment of goals unique to each client drives appropriate behaviours and further strengthens the relationships.

Our Marketplace and Outlook

Being a public company has enhanced the profile of IBEX amongst potential blue-chip clients and we are pleased to report that we have made progress in our discussions with several potential new clients, many of which are household brand names. The past year demonstrated the momentum we have across new and existing verticals, and as we kicked off the current trading year we have continued to make good progress. Our core markets of the US and Philippines continue to appeal to decision-makers in the industry, and we are seeing a sustained improvement in the adoption of the UK and Pakistan as viable delivery locations for the most discerning of our clients. Delivering results is the most powerful tool in winning both new business and larger mandates from existing clients, who are demonstrating a willingness to launch new sites and move into new geographies with us.

Our industry remains fragmented despite continued consolidation amongst much of our competition. Recent estimates suggest that this will be a market worth $73.0 billion annually by 2016, according to HfS research, the leading analyst authority for the Global Service Industry. And yet today, the largest player boasts revenues of approximately $3.0 billion. Scale is important from both a service delivery and margin perspective, but clients continue to base the majority of their decisions on a company's ability to recruit, retain and develop individuals who service their end customer needs.

Whilst the global economic environment remains challenging for businesses operating in most sectors, IBEX is well positioned to assist its clients, providing critical resources and systems across a diversified global footprint in an efficient and scalable operating environment. The expertise of our staff and our results-driven approach are driving measurable results for our clients, all of whom continue to have significant needs for the foreseeable future.

Mohammed Khaishgi

Interim Chief Executive Officer

Consolidated Statement of Comprehensive Income for the year ended 30 June 2014

The accompanying notes are an integral part of these consolidated financial statements.

Consolidated Statement of Financial Position as at 30 June 2014

The accompanying notes are an integral part of these consolidated financial statements.

Consolidated Statement of Changes in Equity for the year ended 30 June 2014

The accompanying notes are an integral part of these consolidated financial statements.

Consolidated Statement of Cash Flows for the year ended 30 June 2014

The accompanying notes are an integral part of these consolidated financial statements.

Notes to the Consolidated Financial Statement for the year ended 30 June 2014

(1) Nature of the business

IBEX Global Solutions Plc (the Holding Company or 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. 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 Plc.

IBEX Group (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, 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).

The IBEX Group consists of:

(2) Basis of preparation

The consolidated financial statements have been prepared in accordance with International Financial Reporting Standards (including International Accounting Standards (IAS)) "IFRS" and International Financial Reporting Interpretations Committee (IFRIC) interpretations as adopted by the European Union (IFRS as adopted by the EU) and the Companies Act 2006 applicable to companies reporting under IFRS.

The consolidated financial statements have been prepared under the going concern assumption.

The Resource Group International Limited (TRGI) incorporated IBEX Global Solutions Limited on 26 March 2013. On 31 March 2013 IBEX Global Solutions Limited acquired 100% ownership of various subsidiaries (listed above - referred as "the Continuing Business Entities") from TRGI and issued its shares in exchange. Prior to this transaction TRGI directly controlled each of the Continuing Business Entities and, by virtue of its controlling interest in IBEX Global Solutions Plc, continues to control the Continuing Business Entities. As common control transactions are outside the scope of IFRS 3 (Business Combinations), the management has, as required by IAS 8 (Accounting Policies, Change in Accounting Estimates and Errors), used its judgement in developing and applying an accounting policy which reflects the economic substance of the transaction to account for the Continuing Business Entities.

The management considers pooling of interest method of accounting to be appropriate to account for the combination of various subsidiaries with the Holding Company. As a result, the Holding Company and its subsidiaries are presented as if they have legally been a group of companies for all periods presented. The following accounting principles are applied:

- the assets and liabilities of the Holding Company and its subsidiaries are recorded at book value;

- intangible assets and contingent liabilities are recognised only to the extent that they were recognised by the acquiree in accordance with applicable IFRS; and

- no goodwill is recorded.

These consolidated financial statements therefore represent a continuation of the financial statements of Continuing Business Entities with the Holding Company as the reporting entity.

(3) Ultimate parent undertaking and controlling entity

The Ultimate Parent Company is TRGI 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 publicly available. The ultimate controlling party of the Group are the directors of TRGI.

(4) Exceptional items

4.1 Operating expense

On 30 March 2013, TRG Customer Solutions Inc., IBEX Philippines Inc. and IBEX Global Solutions (Philippines) Inc. wrote off its balances with other affiliates as follows:

4.2 Other expense

Early termination fees were paid to Capital Source Bank (CSB) after the Company signed a Revolving Credit and Security Agreement with PNC Bank, National Association (PNC) for a new revolving line of credit (RLOC) to replace the CSB RLOC on 8 November 2013 (see note 14).

(5) Finance costs

(6) Intangible assets

Allocation of amortisation charge in the consolidated statement of comprehensive income

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.

In June 2014, one of the subsidiaries of the Parent Company entered into a financing arrangement with IBM Credit LLC to finance the purchase of software licenses from Microsoft Corporation (see note 12).

(7) Property, plant and equipment

Details of property, plant and equipment held under finance lease are as follows:

(8) Other non-current assets

Other non-current assets consist of the following:

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 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 30 June 2014 is $1.8 million, of which $1.6 million is classified as a non-current asset ($0.8 million each in long-term prepayment and long-term deferred expenses) and $0.2 million is classified as a current asset. As of 30 June 2013, the total value of this asset (net of amortisation) was $1.9 million, of which $1.1 million was classified as a non-current asset and $0.8 million was classified as a current asset.

(9) Trade and other receivables

Trade and other receivables consist of the following:

\* The Holding Company was admitted to AIM of the London Stock Exchange on 28 June 2013. The funds from the flotation were received on 2 July 2013.

Provision for doubtful debts

(10) Cash and cash equivalents

Cash and cash equivalents consist of the following:

(11) 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 2014 and 2013 are as follows:

These lease arrangements have interest rates ranging from 6.0% to 18.0% and 8.0% to 15.0% for the years ended 30 June 2014 and 30 June 2013, respectively. At the end of the lease term, the ownership of the assets shall be transferred to the respective entities of the Group.

(12) Financing arrangements

In June 2014, the US subsidiary of the Company (IBEX US) entered into a $3.3 million three-year financing agreement (IBM Agreement) with IBM Credit LLC to finance the purchase of software licenses (under a Select Agreement) from Microsoft Corporation (Microsoft). In June 2014, IBEX US also entered into a three-year Enterprise Agreement with Microsoft for 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 beginning in July 2014. The monthly payments under the Microsoft Enterprise Agreement during year one are approximately $100,000 per month beginning 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 licenses and cloud services to accommodate the needs of the IBEX Group and to facilitate the acquisition by the Company's parent, The Resource Group International, Ltd (TRGI), of software for TRGI and its non-IBEX subsidiaries. Consequently, TRGI, the Company and IBEX US have entered into an agreement as of July 2014 under which the 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.

In addition, IBEX US has financed the purchase of various property, plant and equipment during the current year with CIT Finance LLC (CIT). As of June 2014, IBEX US has financed $1.1 million of assets with CIT at the interest of approximately 6% per annum.

As of 30 June 2014, the outstanding liabilities from these transactions are shown in the consolidated statement of financial position as follows:

(13) Other non-current liabilities

(14) Working capital line of credit

On 8 November 2013, the Company signed a Revolving Credit and Security Agreement with PNC for a new $35.0 million RLOC to replace the CSB $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, the Company 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 Company 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.

(15) Trade and other payables

(16) Earnings per share

(a) Basic

Basic profit / (loss) per share is calculated by dividing the profit / (loss) attributable to equity holders of the Holding Company by the weighted average number of ordinary shares in issue during the year.

(b) Diluted

Diluted loss per share is 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 30 June 2013, the Holding Company had no dilutive potential ordinary shares. As of 30 June 2014, 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:

(17) Cash generated from / (used in) operations

(18) Capital risk management

The Board's objective is to maintain a capital structure that supports the Group's strategic objectives and shareholders' value. The Group's capital consists of cash and cash equivalents, debt balances (working capital line of credit, long-term and short-term lease liabilities) and equity attributable to equity holders.

The following table summarises the Capital of the Group:

The Group leverages the Working Capital Revolving Line of Credit to fund its working capital cycle as necessary. These borrowings, together with cash generated through operations, may be loaned internally or contributed as equity to certain subsidiaries.

(19) Subsequent events

The management evaluated subsequent events and transactions that occurred from the end of the reporting period through 6 October 2014, the date at which the consolidated financial statements were available to be issued, and concluded that no subsequent events require adjustment to or disclosure in these consolidated financial statements, except for the agreement that have entered into by the Company as of July 2014 with TRGI which was disclosed in note 12 and purchase of Avaya System by a subsidiary of the Company.

In September 2014, a subsidiary of the Company purchased $1.8 million in Avaya System hardware and software upgrades from North American Communications Resource, Inc. (NACR) and entered into related maintenance and other contracts with NACR for $0.5 million per year over a three year period. The Avaya System hardware and software upgrades (including the maintenance and related contracts) will support the growth of the Company's business globally.