Note 14 - Investment in Equity-accounted Investees

6 Months Ended

Jun. 30, 2022

Notes to Financial Statements

Equity Method Investments and Joint Ventures Disclosure [Text Block]

Following are the entity wise details of equity-accounted investees:

	% of ownership interest						Carrying amount
Name of entity	June 30, 2022			December 31, 2021			June 30, 2022		December 31, 2021
a) CSS Corp LP		61.35	%		61.35	%		35,513		31,688
b) Immaterial associates								-		-
Carrying amount of investment in equity-accounted investees								35,513		31,688

	Three months ended June 30, 2022		Three months ended June 30, 2021		Six months ended June 30, 2022		Six months ended June 30, 2021
Aggregate amounts of the group’s share of income (loss) of equity-accounted investees		3,833		59		3,825		45

a) CSS Corp LP

On February 25, 2021, the Company announced a $25 million strategic minority investment in CSS Corp. (“CSS”), a new-age IT services and technology support solutions company that harnesses the power of AI, automation, analytics, cloud, and digital to address customer needs. Through this investment, Startek acquired an indirect beneficial interest in CSS of approximately 26%, with Capital Square Partners (“CSP” or “CSP Fund”), a Singapore-based Private Equity Fund Manager, and the Company’s majority shareholder, acquiring the majority controlling stake.

The Company and CSP Alpha Holdings Pte. Ltd., a subsidiary of the Company, participated in this transaction by (i) contributing $25 million to acquire approximately 62.5%* in CSS Corp LP, and (ii) paying $5 million to CSP Management Limited to acquire certain call options. These call options to acquire a controlling stake in CSS are only exercisable by the Company during the period from August 19, 2022, to April 19, 2023, without any obligation and are currently considered to be not substantive.

*Subsequently reduced to 61.35%

The Company has assessed CSS Corp LP to be a variable interest entity (‘VIE’) and per ASC 810-10-25-44 concluded that it is not the primary beneficiary. Amongst other factors, the Company’s basis of this conclusion is that it lacks the power to direct or control any significant activities of the VIE and that the design and structure of the VIE were not specifically for the benefit of the Company. Further, CSS Corp LP’s objectives as an investment company is an extension of the investment activities of CSP Fund. The Company has accordingly, accounted for this transaction under the equity-accounted investee method of accounting in accordance with ASC 323-30-S99-1. The Company's share of income (loss) of equity-accounted investee is accounted under the “equity method” as per which the share of income (loss) of equity-accounted investee has been added to the cost.

Summarized financial position
	June 30, 2022			December 31, 2021
Current assets		34			42
Non-current assets		57,964			51,690
Current and non-current liabilities		(111	)		(80	)
Net assets		57,887			51,652
		-			-
Company share in %		61.35	%		61.35	%
Company share		35,513			31,688
Carrying amount of investment in equity-accounted investee		35,513			31,688

Reconciliation to carrying amounts
	June 30, 2022		December 31, 2021
Opening net assets		31,688		-
Acquired during the year		-		25,000
Share of income of equity-accounted investees		3,825		6,688
Other comprehensive income		-		-
		35,513		31,688

Summarized statement of comprehensive income
	Three months ended June 30, 2022			Three months ended June 30, 2021			Six months ended June 30, 2022			Six months ended June 30, 2021
Revenue		-			-			-			-
Cost of services		-			-			-			-
Gross profit		-			-			-			-
Selling, general and administrative expenses		(26	)		(34	)		(34	)		(54	)
Operating loss		(26	)		(34	)		(34	)		(54	)
Unrealised gain on investment		6,273			139			6,268			139
Net income		6,247			105			6,234			85
Other comprehensive income		-			-			-			-
Total comprehensive income for the period		6,247			105			6,234			85
Aggregate amounts of the Company share of income of equity-accounted investee at 61.35%		3,833			64			3,825			52

b) Individually immaterial associates

The Company had individually immaterial investments in equity-accounted investee in Australia. It has 33.33% interest in Queensland Partnership Group Pty. Ltd and 16.67% interest in Services Queensland Partnership in Australia. The Company's share of income (loss) of equity-accounted investee, is accounted under the “equity method” as per which the share of income (loss) of equity-accounted investee had been added to the cost. In 2021 the Company had realized carrying amounts related to investment in individually immaterial associates.

Aggregate share of loss of immaterial associates was $5 and $7 for three months ended and six months ended June 30, 2021, respectively.