As confidentially submitted to the Securities and Exchange Commission on April 9, 2021. This draft registration statement has not been filed publicly with the Securities and Exchange Commission and all information contained herein remains confidential.
Registration No. 333-
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form F-1
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
TDCX Inc.
(Exact name of Registrant as specified in its charter)
Cayman Islands | 7373 | Not Applicable | ||
(State or other jurisdiction of incorporation or organization) |
(Primary Standard Industrial Classification Code Number) |
(I.R.S. Employer Identification Number) |
750D Chai Chee Road,
#06-01/06 ESR BizPark @ Chai Chee
Singapore 469004
(65) 6309 1688
(Address, including zip code, and telephone number, including area code, of Registrants principal executive offices)
(Name, address, including zip code, and telephone number, including area code, of agent for service)
Copies to: | ||
Rajeev P. Duggal, Esq. Skadden, Arps, Slate, Meagher & Flom LLP 6 Battery Road Suite 23-02 Singapore 049909 (65) 6434-2900 |
Sharon Lau, Esq. Latham & Watkins LLP 9 Raffles Place #42-02 Republic Plaza Singapore 048619 (65) 6536-1161 |
Approximate date of commencement of proposed sale to the public: As soon as practicable after the effective date of this registration statement.
If any of the securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933, check the following box. ☐
If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. ☐
If this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. ☐
If this Form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. ☐
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933.
Emerging growth company ☒
If an emerging growth company that prepares its financial statements in accordance with U.S. GAAP, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 7(a)(2)(B) of the Securities Act. ☐
The term new or revised financial accounting standard refers to any update issued by the Financial Accounting Standards Board to its Accounting Standards Codification after April 5, 2012.
CALCULATION OF REGISTRATION FEE
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Title of Each Class of Securities to be Registered(1)(2) |
Proposed Maximum Aggregate Offering Price(2)(3) |
Amount of Registration Fee | ||
Class A ordinary shares, par value US$ per share | US$ | US$ | ||
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|
(1) | American depositary shares issuable upon deposit of ordinary shares registered hereby will be registered under a separate registration statement on Form F-6 (Registration No. ). Each American depositary share represents Class A ordinary shares. |
(2) | Includes (a) Class A ordinary shares initially offered and sold outside the United States that may be resold from time to time in the United States either as part of the distribution or within 40 days after the later of the effective date of this registration statement and the date the securities are first bona fide offered to the public, and (b) additional Class A ordinary shares that are issuable upon the exercise of the underwriters option to purchase additional shares to cover over-allotments, if any. |
(3) | Estimated solely for the purposes of computing the amount of the registration fee pursuant to Rule 457(o) under the Securities Act of 1933, as amended. |
The Registrant hereby amends this Registration Statement on such date or dates as may be necessary to delay its effective date until the Registrant shall file a further amendment which specifically states that this Registration Statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933, as amended, or until the Registration Statement shall become effective on such date as the Securities and Exchange Commission acting pursuant to said Section 8(a) may determine.
The information in this preliminary prospectus is not complete and may be changed. Neither we nor the selling shareholders may sell these securities until the registration statement filed with the Securities and Exchange Commission is effective. This preliminary prospectus is not an offer to sell these securities and it is not soliciting an offer to buy these securities in any jurisdiction where the offer or sale is not permitted.
PRELIMINARY PROSPECTUS (Subject to Completion)
, 2021
TDCX Inc.
American Depositary Shares
Representing Class A Ordinary Shares
This is the initial public offering of TDCX Inc. We are offering American Depositary Shares, or ADSs[, and the selling shareholders] identified in this prospectus are offering an additional ADSs. We will not receive any of the proceeds from the sale of our ADSs by the selling shareholders.
Prior to this offering, there has been no public market for our ADSs or ordinary shares. Each ADS represents of our Class A ordinary shares, par value US$ per ordinary share. It is currently estimated that the initial public offering price per ADS will be between US$ and US$ . We intend to apply for listing of our ADSs on the under the symbol .
We are a controlled company under the corporate governance rules of the New York Stock Exchange.
We are an emerging growth company under the U.S. federal securities laws and have elected to comply with certain reduced public reporting requirements.
Investing in our ADSs involves risks. See Risk Factors beginning on page 19.
Per ADS | Total | |||||||
Public offering price |
US$ | US$ | ||||||
Underwriting discount and commission(1) |
US$ | US$ | ||||||
Proceeds, before expenses, to TDCX Inc. |
US$ | US$ | ||||||
Proceeds, before expenses, to the selling shareholders |
US$ | US$ |
(1) | See Underwriting for a description of compensation and other items of value payable to the underwriters. [We and certain selling shareholders] have granted the underwriters the right to purchase up to an additional ADSs to cover over-allotments within 30 days after the date of this prospectus. |
Neither the Securities and Exchange Commission nor any state securities commission or any other regulator has approved or disapproved of these securities or determined if this prospectus is truthful or complete. Any representation to the contrary is a criminal offense.
Immediately prior to the completion of this offering, our outstanding share capital will be re-designated into Class A ordinary shares and Class B ordinary shares. Holders of Class A ordinary shares are entitled to one vote per share, while holders of Class B ordinary shares are entitled to ten votes per share. Holders of Class A ordinary shares and Class B ordinary shares will vote together as one class on all matters that require a shareholders vote. Each Class B ordinary share is convertible into one Class A ordinary share at any time by the holder thereof, while Class A ordinary shares are not convertible into Class B ordinary shares under any circumstance. Upon the completion of this offering, assuming the underwriters do not exercise their over-allotment option to purchase additional ADSs, Mr. Laurent Bernard Marie Junique, our Founder, Executive Chairman and Chief Executive Officer, will own an aggregate of Class B ordinary shares, which will represent % of the then total outstanding ordinary shares and % of total voting power of our outstanding shares (assuming the underwriters do not exercise their over-allotment option).
The underwriters expect to deliver the ADSs against payment to purchasers on or about , 2021.
Goldman Sachs |
Credit Suisse |
, 2021
You should rely only on the information contained in this prospectus. We have not authorized anyone to provide you with information different from that contained in this prospectus. If anyone provides you with different or inconsistent information, you should not rely on it. We are not making an offer to sell these securities in any jurisdiction where the offer or sale is not permitted. We are offering to sell ADSs and seeking offers to buy ADSs, only in jurisdictions where offers and sales are permitted. Unless otherwise noted, the information contained in this prospectus is accurate only as of the date of this prospectus, regardless of the time of delivery of this prospectus or any sale of the ADSs.
We have not taken any action to permit a public offering of the ADSs outside the United States or to permit the possession or distribution of this prospectus outside the United States. Persons outside the United States who come into possession of this prospectus must inform themselves about and observe any restrictions relating to the offering of the ADSs and the distribution of this prospectus outside of the United States.
Until and including , 2021 (the 25th day after the date of this prospectus), all dealers that buy, sell or trade ADSs, whether or not participating in this offering, may be required to deliver a prospectus. This is in addition to the dealers obligation to deliver a prospectus when acting as underwriters and with respect to their unsold allotments or subscriptions.
Market, Industry and Other Data
This prospectus includes estimates regarding market and industry data and forecasts, which are based on publicly available information, industry publications and surveys, reports from government agencies, reports by market research firms or other independent sources and our own estimates based on our managements knowledge of and experience in the market sectors in which we compete. Certain information in this prospectus is based on a report on the outsourced business support services industry prepared by Frost & Sullivan Limited, or Frost & Sullivan, which was commissioned by us.
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Trademarks and Intellectual Property
We own or otherwise have rights to the service mark TDCX mentioned in this prospectus that we use in conjunction with the marketing and sale of our services. This service mark is the property of TDCX Holdings Pte. Ltd. and it will eventually be licensed for use by us and our subsidiaries. This prospectus also mentions and cites trademarks, service marks, copyrights and trade names of other companies, which are the property of their respective owners. We do not intend our use or display of other companies trademarks, copyrights or trade names to imply a relationship with, or endorsement or sponsorship of us by any other companies. Solely for convenience, our trademark and trade name referred to in this prospectus may appear without the ® roundel or TM symbol, but such references are not intended to indicate, in any way, that we will not assert, to the fullest extent under applicable law, our rights to those trademarks and trade names.
Conventions that Apply to this Prospectus
Unless the context provides otherwise, for the purposes of this prospectus:
| ADR means American Depositary Receipt; |
| ADS means American Depositary Shares; |
| agent means an FTE, as classified under our employee classification system; |
| AI means artificial intelligence; |
| B2B means business-to-business; |
| B2C means business-to-consumer; |
| Class A ordinary share means our Class A ordinary shares of par value US$ per share; |
| Class B ordinary share means our Class B ordinary shares of par value US$ per share; |
| clients means our corporate clients with whom we have entered into contractual arrangements; |
| CRM means customer relationship management; |
| customers means the parties with whom we have customer interactions on behalf of our clients; |
| CX means customer experience; |
| Founder means Mr. Laurent Bernard Marie Junique, our founder, Executive Chairman and Chief Executive Officer; |
| FTE means full-time equivalent employee; |
| KPI means key performance indicator; |
| MSA means master services agreement; |
| new economy means high growth industries that are on the cutting edge of digital technology and are the driving forces of economic growth; |
| NYSE means the New York Stock Exchange; |
| SOW means statements of work; |
| TDCX HPL means TDCX Holdings Pte. Ltd. (formerly Agorae Pte Ltd); |
| TDCX KY means TDCX (KY) PTE LTD; |
| TDCX SG means TDCX (SG) Pte. Ltd.; |
| U.S. and United States means the United States of America; and |
| We, us, our, our Company and TDCX mean TDCX Inc. and its subsidiaries and associated companies, collectively. |
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Certain metrics presented in this prospectus, which include the annual voluntary attrition rate of our employees and our employee satisfaction scores, are calculated using internal company data. While we believe these metrics to be reasonable estimates for the applicable period of measurement, collected through our internal employee surveys and human resources management systems, there are inherent challenges in measuring employee satisfaction and similar metrics. In addition, we are continually seeking to improve the estimation and evaluation criteria that we use to calculate our annual voluntary attrition rate and employee satisfaction, and such estimates may change due to improvements or changes in our methodology. References to the average number of agents and average number of employees are an average of headcount at end of each month over the course of the given period.
We regularly review our processes for calculating these metrics, and from time to time we may discover inaccuracies in our metrics or make adjustments to improve their accuracy, including adjustments that may result in the recalculation of our historical metrics. In addition, our estimates may not be comparable to estimates of similar metrics published by third parties, such as research analysts, due to differences in methodology.
Basis of Presentation
TDCX was incorporated on April 16, 2020 and is 100% owned by our Founder in accordance with the laws of the Cayman Islands. TDCX was created to acquire our Founders shareholders interest in TDCX KY. On December 22, 2020, TDCX KY acquired our Founders 100% interest in TDCX HPL. Prior to September 2018, TDCX SG, was 60% owned by our Founder and 40% owned by a third party. In September 2018, the remaining 40% of TDCX SG was acquired by TDCX HPL by paying cash in an amount of S$38 million. In January 2019, our Founder reduced his 60% equity interest in TDCX SG through cancellation of his shares in TDCX SG, and TDCX SG became a wholly owned subsidiary of TDCX HPL. On March 23, 2021, TDCX acquired 100% of TDCX KY from our Founder. As TDCX, TDCX KY, TDCX HPL and TDCX SG were under common control of the Founder during all the periods presented, the acquisitions of TDCX SG and TDCX HPL by TDCX KY as well as the acquisition of TDCX KY by TDCX were accounted for in a manner similar to a pooling of interest with assets and liabilities all reflected at their historical amounts in our consolidated financial statements as if the reorganization had always been in place. As such, the consolidated financial statements were prepared as if TDCX had control over TDCX KY, TDCX HPL and TDCX SG for all periods presented. For more information, see Note 1 to our audited consolidated financial statements included elsewhere in this prospectus.
When we refer to U.S. dollars and US$ in this prospectus, we are referring to United States dollars, the legal currency of the United States. When we refer to S$, we are referring to Singapore dollars, the legal currency of Singapore. When we refer to IFRS, we are referring to International Financial Reporting standards, or IFRS, as issued by the International Accounting Standards Board, or IASB.
Unless otherwise noted, all translations from Singapore dollars to U.S. dollars and from U.S. dollars to Singapore dollars in this prospectus were made at a rate of S$1.3221 to US$1.00, being the rate in effect as of December 31, 2020. We make no representation that any Singapore dollar or U.S. dollar amount could have been, or could be, converted into U.S. dollars or Singapore dollar, as the case may be, at any particular rate, the rates stated below, or at all. On April 7, 2021, the rate was S$1.3413 to US$1.00.
Certain amounts, percentages and other figures included in this prospectus have been subject to rounding adjustments. Accordingly, amounts, percentages and other figures shown as totals in certain tables or charts may not be the arithmetic aggregation of those that precede them, and amounts and figures expressed as percentages in the text may not total 100% or, when aggregated may not be the arithmetic aggregation of the percentages that precede them.
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The following is a summary of material information discussed in this prospectus. This summary may not contain all the details concerning our business, our ADSs or other information that may be important to you. You should carefully review this entire prospectus, including the Risk Factors section and our financial statements and the related notes included elsewhere in this prospectus, before making an investment decision.
Overview
We are a high-growth digital customer experience solutions provider for innovative technology and other blue-chip companies. We have specific expertise in providing tailored digital customer experience solutions to manage complex customer interactions. We offer omnichannel CX solutions, sales and digital marketing services and content monitoring and moderation services. We have specific expertise in providing tailored digital customer experience solutions to manage complex customer interactions that go beyond providing boilerplate responses and which require a highly trained workforce capable of effectively delivering our differentiated services and solutions to our clients and their customers. Our focus on complex digital solutions enables us to provide higher value services and solutions for our clients. Our strategy has resulted in a highly attractive financial profile. We have experienced robust growth with our revenue, profit for the year and EBITDA growing at a CAGR of 54.9%, 50.3% and 60.7%, respectively, from the year ended December 31, 2018 to the year ended December 31, 2020. In the years ended December 31, 2018, 2019 and 2020, we recorded revenue of S$181.2 million, S$330.3 million and S$434.7 million (US$328.8 million), profit for the year of S$38.1 million, S$73.5 million and S$86.1 million (US$65.1 million) and EBITDA of S$55.4 million, S$108.1 million and S$142.9 million (US$108.1 million), respectively. For the same periods, we recorded net profit margins of 21.0%, 22.2% and 19.8%, respectively, and EBITDA margins of 30.6%, 32.7% and 32.9%, respectively.
We believe our employees and our distinctive corporate culture are key enablers of our success, a core strength and part of our competitive advantage. Our corporate culture is designed to foster a work environment that attracts, develops and retains a highly skilled workforce that can effectively engage in complex customer interactions. We focus on reinforcing a culture that emphasizes a sustainable and collaborative approach while being fully committed to our clients requirements. We strive to ensure that our distinctive culture is incorporated within all the relationships and processes of our organization and fits within our values and goals.
We have an international footprint. As of the date of this prospectus, we service our clients customers globally in more than 20 languages. This international footprint is supported by 11,351 employees as of December 31, 2020, who are located in offices in nine geographies: Singapore, the Philippines, Malaysia, Thailand, China, Japan, Spain, India and Colombia.
Our business comprises three key service offerings: (1) omnichannel CX solutions; (2) sales and digital marketing services; and (3) content monitoring and moderation services. We also offer services consisting of miscellaneous activities, such as providing workspaces to existing clients and providing human resource and administration services to clients. We help our clients manage relationships with their customers by providing digital customer experience solutions, such as after-sales service and customer support across ten industry verticals, including travel and hospitality, digital advertising and media and fast-moving consumer goods. Our sales and digital marketing services offering helps our clients market their products and services to potential customers in both the business-to-consumer, or B2C, and the business-to-business, or B2B, markets. Our content monitoring and moderation services offering helps our clients create a safe and secure online environment for social media platforms by providing a human touch to content monitoring and moderation services.
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Our competitive strengths
Digital customer experience solutions provider for high-growth technology disruptors
We provide a high value-added service platform to market-leading clients in the new economy sectors and traditional blue-chip clients who are undergoing digital transformation across their organizations. Frost & Sullivan defines the new economy as the high growth industries that are on the cutting edge of digital technology and are the driving forces of economic growth. These industries are seen as an evolution of the existing traditional economy aided by technological advancements and innovation. Our services provide synergies with our clients digital economy value chains and enable our clients to grow and transform their businesses consumer experience. We offer customized and differentiated customer contact solutions and possess the ability to handle complex and mission-critical digital customer experience interactions. These offerings are enhanced by our ability to solve problems for our clients by leveraging customer interaction data analytics to allow our clients to access real-time data which gives them valuable insights on their end-customers, allows them to improve business processes and make more prompt business decisions to resolve problems in a more timely manner.
We have leveraged our integrated omnichannel and multimodal solutions to shape user experiences in a world of evolving and proliferating digital communication and technology platforms from traditional channels, such as voice and email, to advanced technology driven channels, ranging from messaging and social media to AI-powered chat bots and in-app interactions. We are also able to synergize our in-house developed technology with third-party technology and platforms to solve operational issues which our clients are facing.
We have an international footprint with offices in nine geographies across Asia and in Spain and Latin America, which provides us with access to a broad talent pool and equips us with multilingual capabilities to serve a global customer base, including English and key Asian languages, such as Mandarin, Thai, Korean, Malay (Malaysia and Indonesia), Vietnamese and Japanese.
Strong focus on human capital development to deliver superior customer experiences
We believe the quality of our employees is a key differentiator in winning and retaining business, as well as in delivering a superior customer experience. Through our structured recruitment process and strong emphasis on career development, we strive to attract, develop and retain the industrys high caliber talent who possess deep knowledge of local customs and cultural sensitivities. As of December 31, 2020, we had 11,351 employees of which more than 60% are college or university graduates, including employees with masters degrees and/or doctorates, which helps us handle complex campaigns. Our employees have access to ongoing internally and externally developed supplementary training and certifications in a number of areas, such as COPC, a standard certification, which is a widely recognized standard across the customer experience industry.
In the years ended December 31, 2018, 2019 and 2020, our annual voluntary attrition rate, measured by the number of employees that voluntarily left us in a period divided by the average number of employees in such period, was 21.5%, 23.1% and 24.8%, respectively, compared to the industry average of 30% to 34% in the Asia Pacific region, according to Frost & Sullivan. Consistent with our improving attrition rates, employee satisfaction surveys have demonstrated a high degree of satisfaction. Our company-wide employee satisfaction scores were at 87%, 91% and 87% in the years ended December 31, 2018, 2019 and 2020, respectively. We conducted our survey for 2020 in July during the COVID-19 pandemic, which we believe reflects our continued commitment to our employees through this challenging period. We believe that our strong focus on human capital has been critical to our ability to minimize business disruptions and rehiring and training costs, resulting in high service quality for our clients. Our commitment to the development of our people is reflected in the multiple awards we have received, including the Best Companies to Work for In Asia 2020 (both our Thai and Philippines office), the Top 100 Asias Best Employer Brands 2019 from Employer Branding Awards (our Malaysian office) from
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the HR Asia Awards, the Great Place to Learn Certification from the Great Place to Work Institute & SkillsFuture Singapore in 2019 and 2020 (our Singapore office), and Asias Best Employer Brand Award from the World HRD Congress in 2018 (our Singapore office).
Well-positioned to capitalize on positive digital economy trends and increasing demand for our services
We believe favorable underlying industry trends continue to fuel the growth of our clients. According to Frost & Sullivan, there are a plethora of internet-based technology offshoots driving the new economy growth, including companies in the e-commerce, digital advertising, fintech, online gaming and sharing economy industries. Driven by fundamental shifts in consumer behavior and increased adoption of internet and mobile usage, the global market sizes of retail e-commerce sales, digital advertising spend and sharing economy (by transaction value) are estimated to grow at CAGRs of 14.5%, 15.3% and 18.2% from 2021 through 2025, respectively, as reported by Frost & Sullivan.
We believe our clients view their relationship with us as strategically important. New economy clients increasingly seek customized solutions in an evolving digital business services market that is increasingly becoming more complex. We believe the trend will continue as new economy clients rely on us to perform omnichannel CX solutions so that they can maintain their employee-lite, nimble business models, while we provide a service framework that can scale along with their growth. Furthermore, given their relative lack of physical touchpoints with their end-users, new economy clients tend to place a greater emphasis on the quality of customer experience service providers, where we believe we are strongly positioned. Our digital hiring platform, Flash, enables us to remain agile and keep up with the growth of our high-growth clients by allowing us to rapidly identify, evaluate and hire candidates as needed.
Attractive client base of some of the largest and most disruptive companies in fast-growing industries and markets along with traditional blue-chip companies which are undergoing digital transformations
Our client base consists of some of the leading names in their respective industries, such as Facebook and Airbnb, other fast-growing, new economy companies for which we can scale up projects as they grow, as well as traditional blue-chip companies that rely on us to partner in their digital transformation journey. In the past few years, we have proactively increased our new economy client base, which provides strong growth opportunities for us. As of December 31, 2020, 90% of our agents, which are the customer facing employees that work on our campaigns, were staffed on campaigns for new economy clients.
We seek to forge partnerships and create long-term relationships with our clients, where they view us as an integral part of their organization through the solutions we offer. By growing and partnering with them over the long term, we have expanded the scope of our services and solutions and have become seamlessly integrated into our clients operations, while helping them deliver on their brand promise. On a combined basis, Facebook and Airbnb accounted for a total of 52.0%, 65.9% and 60.4% of our revenue for the years ended December 31, 2018, 2019 and 2020, respectively.
Track record of high-growth financial performance
We focus on providing our clients with a differentiated level of service, which we believe enables us to grow our business together with the growth of our clients businesses as well as grow our share of our clients budget. Due to a combination of an increase in the amount of work for existing clients as well as attracting work from new clients, we increased the average number of our agents 118% from 3,701 for 2018 to 8,070 for 2020. During this period, we generated strong revenue, net profit and EBITDA growth at a CAGR of 54.9%, 50.3% and 60.7%, respectively from the year ended December 31, 2018 to the year ended December 31, 2020.
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Our ability to provide a differentiated level of service and higher valued and more sophisticated services, while efficiently increasing the scale of our business has resulted in our net profit margin of 21.0%, 22.2% and 19.8% and EBITDA margin of 30.6%, 32.7% and 32.9% for the years ended December 31, 2018, 2019 and 2020, respectively. Our EBITDA margin for 2020 is the highest among CX-centric outsourced service providers, according to Frost & Sullivan.
We have also managed our growth while maintaining a low debt profile. As of December 31, 2018, 2019 and 2020, we had a total debt to EBITDA ratio of 0.6, 0.3 and 0.3, respectively. Our strong balance sheet, combined with our ability to grow our business and generate cash flows, gives us a strong foundation for focused investments and further business expansion.
Dynamic and highly experienced management team
We have an experienced, hands-on and savvy management team who combine global expertise with local insights. Our Executive Chairman, Chief Executive Officer and founder, Mr. Laurent Bernard Marie Junique, has over 25 years of industry experience and has won numerous awards, including the Ernst & Young Entrepreneur of the Year in the Outsourced Solutions category for Singapore in 2018. Our management team has an average of over 15 years of relevant industry experience and most of our senior management have worked with us for over five years, which has allowed us to accumulate valuable operational experience and deep vertical expertise, while building and maintaining close relationships with our key clients. Our management team has been a champion in promoting a vibrant and distinctive culture that emphasizes teamwork, a high degree of flexibility, dedication to the client and alignment with client goals. Under the leadership of our management, we have been able to grow our Company from 1,400 employees as of December 31, 2012, the year we commenced servicing new economy clients, to 11,351 employees as of December 31, 2020.
Our growth strategy
Leverage network effects to expand client coverage and service offerings globally
Our growth strategy is to create a significant network in each of our markets so that we can gain local insights, on-the-ground capabilities and operational experience to expand our client coverage and digital offerings. We intend to achieve this through (i) deepening our relationships with our existing clients, (ii) growing our client base and (iii) extending and future-proofing our omnichannel capabilities. We expect the learning and insights from each client will enable us to deepen our expertise in key verticals and further expand our capabilities across service offerings, industries and regions, thereby creating network effects. As we scale and grow our expertise, we expect to penetrate more markets as the impact from our network effects increase.
Deepening our relationships with our existing clients
Our relationships with our new economy clients offer significant opportunities for growth. As we demonstrate the value that we provide, we are frequently able to expand the scale and scope of our services in a variety of ways and grow our wallet share. With our new economy clients strong business model scalability, we are well-positioned to ride their growth. We also find opportunities to cross-sell different types of digital offerings and use data analytics to provide integrated insight-driven strategies to help clients improve their business outcomes. In the past, clients who have engaged us for our services have been willing to turn over additional and more critical processes to us as we demonstrate our capabilities over time. As we become more intricately knowledgeable of our clients businesses and processes, we find opportunities to expand across the value chain and provide new and increasingly complex digital offerings to them via multiple channels to improve their processes. This in turn encourages client stickiness and is a factor that discourages our clients from turning to other providers.
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Growing our client base
We seek to develop long-term client relationships with new clients, especially with clients who (i) require similarly complex services as our existing clients, (ii) provide opportunities for us to deliver a wider range of capabilities and meaningful impact to their businesses, and (iii) facilitate robust pipeline development and a strong win-rate of new top-tier clients. We use a multifaceted, technology driven strategy to attract new economy clients.
Extending and future-proofing our omnichannel capabilities
We seek to improve our capabilities through continued investments in digital technology and use of third-party technology. We strive to grow our capabilities in future technologies and channels and to continuously evolve with new technology offerings, such as Internet of Things, or IoT, products, wearables and apps, among other areas.
Enhance our human capital and reinforce our distinct corporate culture
Our people are critical to our success. Our ability to grow will depend on our ability to continue to attract, train, and retain large numbers of talented individuals. We continue to focus on maintaining a work environment that would make TDCX an employer of choice. We intend to achieve this through various initiatives, including:
| working with new economy digital disruptor clients that are the companies of the future; |
| utilizing innovative recruiting techniques that will appeal to potential employees including young talent; |
| providing training and development throughout the tenure of an employees career, such that our employees remain educated and agile to meet our clients evolving requirements; |
| providing compensation with appropriate incentives that rewards employee commitment, resulting in high standards of customer experience and support for our clients; |
| supporting our employees in work from home situations with the technology ecosystem that enables them to remain productive and connected to training opportunities; |
| fostering a healthy work environment where employees work hard but have fun; and |
| having office locations in areas that are accessible and appealing, with office interior designs that are contemporary, collaborative and inspiring. |
We believe that maintaining a vibrant and distinctive culture is critical to growing our business.
Prudent expansion into new geographic markets
We have a wide footprint of delivery centers in a number of locations across Asia and in Colombia and Spain to serve domestic, regional and global markets and we plan to expand our coverage. As of the date of this prospectus, we had offices in a total of nine geographies, including newly opened offices in Beijing in 2017; Barcelona in 2018; Cebu and Yokohama in 2019; and Bogota, Hyderabad and Shanghai in 2020. The expansion into new locations was driven by our strategy of growing to meet the needs of our existing clients, such as our clients expanding into new markets or seeking to replace their existing service providers. Since adding offices in these locations, we have also added new clients based in these countries, as well as internationally who have been attracted by our increased geographical capacities. We intend to continue to expand our footprint prudently, but rapidly, to ensure we can meet the evolving needs of our clients, including processes requiring multi-jurisdictional and multi-lingual capabilities, and better position ourselves to win new engagements from our existing clients and attract new clients.
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In addition to expansion in recently entered markets, we have identified Eastern Europe, Korea and other Chinese regional markets where we do not currently operate as potential new markets for entry. In 2020, we established a new office in Hyderabad, India as an entry point to the Indian market and to serve as our hub for digital innovation, established an office in Bogota, Colombia in 2020 as an initial office marking our entrance into the Latin America market, and grew our China presence by establishing an office in Shanghai. We also intend to open an office in the Republic of Korea by 2022 and are exploring a potential opportunity to open an additional office in Europe as well. While there are no current operations in our offices in India and Colombia, we expect to begin operations in each in 2021. Key location criteria for setting up new offices include (i) the ability to tap a wide talent pool that has the desired skills to better cater to client requirements, (ii) minimal time zone difference with, and proximity to, existing and potential clients, and (iii) cost competitiveness.
Maintain operational efficiencies through streamlined operations
We strive to be a productive and efficient operator. For example, we utilize digital recruiting techniques, such as our Flash platform, to minimize recruiting costs and improve candidate selection accuracy. We are also adept at educating and developing our employees, through our TDU online learning platform of online courses and learning opportunities, which is a fast and flexible way to train our workforce across multiple geographies. Our innovative digital operating platform, Flash, which we had implemented prior to the COVID-19 pandemic, has enabled us to continue to implement our growth strategy in new markets despite social distancing restrictions on in-person meetings and training sessions. We have business excellence teams that review our standard operating procedures, design customer interaction playbooks and gather and implement best practices across the organization. Larger campaigns also have campaign-specific materials developed to meet specific client needs. In addition, insights gained through our data analytics capabilities also help us optimize staffing levels, track key performance indicators and employee engagement, and enhance workforce management to realize operational efficiencies. As we grow in scale, we intend to further centralize our procurement processes for our infrastructure, technology, telecommunication equipment and professional services in order to lower costs and streamline supplier relationships.
Prudent strategic acquisitions and opportunistic partnerships
We plan to continue to expand our capabilities globally as well as across industry verticals and service offerings. While we expect this will primarily occur through organic growth, from time to time, we expect to selectively evaluate strategic partnerships, alliances and acquisitions to develop or acquire:
| new clients within our existing client verticals, with minimal overlap with existing clients; |
| new client verticals with high growth potential, such as industries where demand exceeds our ability to scale our business organically and other industries such as in financial technology, digital marketing and gaming; |
| new language capabilities to enter into new, large and diverse markets such as Europe and Latin America; and |
| new operational capabilities which can improve our efficiencies and complement our existing offerings, including the ability to introduce new offerings. |
We believe that our strong balance sheet combined with our ability to grow our business and generate cash flows gives us a strong foundation for focused investments and further business expansion.
6
The chart below sets out our corporate structure as of the date of this prospectus.
(1) | Effective ownership (voting powers). |
(2) | Dormant entity |
(3) | Name to be changed after a name permitted by authorities is selected. |
Risks Related to Our Business and Industry
Below are certain risks associated with our business and industry. These risks are described in the section titled Risk Factors. These risks include the following:
| Our largest clients account for a significant portion of our total revenue and any loss of a large portion of business from any of those large clients could have a material adverse effect on our business, financial condition and results of operations; |
| Our failure to successfully implement our business strategy and global, growth-oriented business model and sustain our growth rate and financial performance could harm our business; |
| We operate in a highly competitive environment, and any failure to compete effectively against current and future competitors could adversely affect our revenue and profitability; |
| Our profitability will suffer if we are not able to maintain our pricing, control costs or continue to grow our business through higher value campaigns; |
7
| Effects of the novel coronavirus (COVID-19) as well as any other health pandemics on our and our clients business and operations could adversely affect our financial results; |
| Our success depends on the continued service of our Founder and certain of our key employees and management; |
| We may fail to attract and retain enough highly trained employees to support our operations; |
| A substantial portion of our operations and investments are located in Southeast Asia and we are therefore exposed to various risks inherent in operating and investing in the region; |
| Our key clients have significant leverage over our contractual terms and may terminate such contracts on short notice or require us to accept contractual terms that are more favorable to them; |
| Spending on omnichannel CX solutions by our clients and prospective clients is subject to fluctuations depending on many factors, including both the economic and regulatory environments in the markets in which they operate; |
| Increases in employee salaries and benefits expenses as well as changes to labor laws could affect our business; |
| We may be involved in disputes, legal, regulatory, and other proceedings arising out of our business operations, and may incur costs arising therefrom and may be affected by negative publicity which may have an adverse impact on our reputation and goodwill; |
| We may enter into contracts with significant fixed price elements or solely fixed price contracts with our clients and any failure to accurately price these arrangements may affect our profitability; |
| If our services do not comply with the service level and performance requirements required by our clients or we are in breach of our obligations under our contracts with our clients, it may result in reduced payments or the termination of our client agreements; |
| We are subject to risks associated with operating in the rapidly evolving new economy sectors; |
| We and our clients are subject to privacy, data protection and information security laws in the jurisdictions in which we and our clients operate; and |
| Our inability to protect our systems and data from continually evolving cybersecurity risks or other technological risks could affect our reputation among our clients and their customers and may expose us to liability. |
Corporate Information
We were incorporated in the Cayman Islands on April 16, 2020 as TDCX Capital Pte Ltd and subsequently changed our name to TDCX Inc. on January 29, 2021. Our registered office in the Cayman Islands is at the offices of Maples Corporate Services Limited, PO Box 309, Ugland House, Grand Cayman, KY1-1104, Cayman Islands. Our principal executive offices is at 750D Chai Chee Road, #06-01/06 ESR BizPark @ Chai Chee, Singapore, Singapore 469004. Our telephone number at this location is +65 6309 1688. Our principal website address is www.tdcx.com. The information contained on our website does not form part of this prospectus. Our agent for service of process in the United States is , located at .
Because we are incorporated under the laws of the Cayman Islands, you may encounter difficulty protecting your interests as shareholder, and your ability to protect your rights through the U.S. federal court system may be limited. Please refer to the sections entitled Risk Factors and Enforceability of Civil Liabilities for more information.
8
Implications of Being a Controlled Company
Upon the completion of this offering, Mr. Laurent Bernard Marie Junique, our Founder, Executive Chairman and Chief Executive Officer, will be the beneficial owner of an aggregate of ordinary shares, which will represent % of the then total outstanding ordinary shares and % of the total voting power of our outstanding ordinary shares % of the then total outstanding ordinary shares and % of the total voting power of our outstanding ordinary shares if the underwriters exercise their option to purchase additional ADSs in full. As a result, we will remain a controlled company within the meaning of the NYSE listing rules and therefore we are eligible for, and, in the event we no longer qualify as a foreign private issuer, we intend to rely on, certain exemptions from the corporate governance listing requirements of the NYSE.
Implications of Being an Emerging Growth Company
As a company with less than US$1.07 billion in revenue during our last fiscal year, we qualify as an emerging growth company as defined in the Jumpstart Our Business Startups Act of 2012, or the JOBS Act. An emerging growth company may take advantage of specified reduced reporting and other requirements that are otherwise applicable generally to public companies. These provisions include:
| being permitted to provide only two years of selected financial information (rather than five years) and only two years of audited financial statements (rather than three years), in addition to any required unaudited interim financial statements, with correspondingly reduced Managements Discussion and Analysis of Financial Condition and Results of Operations disclosure; and |
| an exemption from compliance with the auditor attestation requirement of the Sarbanes-Oxley Act of 2002, or the Sarbanes-Oxley Act, on the effectiveness of our internal control over financial reporting. |
We may take advantage of these reporting exemptions until we are no longer an emerging growth company. We will remain an emerging growth company until the earliest of (1) the last day of the fiscal year in which the fifth anniversary of the completion of this offering occurs, (2) the last day of the fiscal year in which we have total annual gross revenue of at least US$1.07 billion, (3) the date on which we are deemed to be a large accelerated filer under the Securities Exchange Act of 1934, as amended, or the Exchange Act, which means the market value of our ordinary shares that is held by non-affiliates exceeds US$700.0 million as of the prior June 30, and (4) the date on which we have issued more than US$1.0 billion in non-convertible debt during the prior three-year period. We may choose to take advantage of some, but not all, of the available exemptions. We have included three years of selected financial data in this prospectus in reliance on the first exemption described above. Accordingly, the information contained herein may be different than the information you receive from other public companies in which you hold stock.
Implications of Being a Foreign Private Issuer
Upon completion of this offering, we will report under the Exchange Act as a non-U.S. company with foreign private issuer status. Even after we no longer qualify as an emerging growth company, as long as we qualify as a foreign private issuer under the Exchange Act, we will be exempt from certain provisions of the Exchange Act that are applicable to U.S. domestic public companies, including:
| the sections of the Exchange Act regulating the solicitation of proxies, consents or authorizations in respect of a security registered under the Exchange Act; |
| the sections of the Exchange Act requiring insiders to file public reports of their stock ownership and trading activities and liability for insiders who profit from trades made in a short period of time; and |
| the rules under the Exchange Act requiring the filing with the Securities and Exchange Commission, or the SEC, of quarterly reports on Form 10-Q containing unaudited financial and other specified information, or current reports on Form 8-K, upon the occurrence of specified significant events. |
9
Both foreign private issuers and emerging growth companies are also exempt from certain more stringent executive compensation disclosure rules. Thus, even if we no longer qualify as an emerging growth company but remain a foreign private issuer, we will continue to be exempt from the more stringent compensation disclosures required of companies that are neither emerging growth companies nor foreign private issuers.
10
The Offering
Offering price |
We currently estimate that the initial public offering price will be between US$ and US$ per ADS. |
ADSs offered by us |
ADSs (or ADSs if the underwriters exercise the over-allotment option in full). |
ADSs offered by our selling shareholders |
ADSs. |
ADSs outstanding immediately after this offering |
ADSs (or ADSs if the underwriters exercise the over-allotment option in full). |
Ordinary shares outstanding immediately after this offering (includes ordinary shares represented by ADSs) |
ordinary shares (or ordinary shares if the underwriters exercise the over-allotment option in full), comprising Class A ordinary shares (or Class A ordinary shares if the underwriters exercise the over-allotment option in full) and Class B ordinary shares. |
Class B ordinary shares issued and outstanding immediately after the completion of the offering will represent % of our total issued and outstanding ordinary shares and % of the then total voting power (or % of our total issued and outstanding ordinary shares and % of the then total voting power if the underwriters exercise the over-allotment option in full). |
The ADSs |
Each ADS represents Class A ordinary shares. |
The depositary or its nominee will hold Class A ordinary shares underlying your ADSs. You will have rights as provided in the deposit agreement among us, the depositary and holders and beneficial owners of ADSs from time to time. |
We do not expect to pay dividends in the foreseeable future. If, however, we declare dividends on our Class A ordinary shares, the depositary will pay you the cash dividends and other distributions it receives on our Class A ordinary shares after deducting its fees and expenses in accordance with the terms set forth in the deposit agreement. |
You may surrender your ADSs to the depositary in exchange for Class A ordinary shares in accordance with the terms of the deposit agreement. The depositary will charge you fees for any exchange. |
We may amend or terminate the deposit agreement without your consent. If you continue to hold your ADSs after an amendment to the deposit agreement, you agree to be bound by the deposit agreement as amended. |
11
To better understand the terms of the ADSs, you should carefully read the Description of American Depositary Shares section of this prospectus. You should also read the deposit agreement, which is filed as an exhibit to the registration statement that includes this prospectus. |
Ordinary shares |
Our ordinary shares will consist of Class A ordinary shares and Class B ordinary shares immediately prior to the completion of this offering. Holders of Class A ordinary shares and Class B ordinary shares have the same rights except for voting and conversion rights. Each Class A ordinary share is entitled to one vote; each Class B ordinary share is entitled to ten votes and is convertible into one Class A ordinary share at any time by the holder thereof. Class A ordinary shares are not convertible into Class B ordinary shares under any circumstances. Upon any transfer of beneficial ownership of Class B ordinary shares by a holder thereof to any person or entity which is not an affiliate of such holder, such Class B ordinary shares shall be automatically and immediately converted into the same number of Class A ordinary shares. For a description of Class A ordinary shares and Class B ordinary shares, see Description of Share Capital. |
Over-allotment option |
We [and the Selling Shareholder] have granted to the underwriters an option, exercisable for 30 days from the date of this prospectus, to purchase up to an aggregate of additional ADSs at the initial public offering price, less underwriting discounts and commissions, solely for the purpose of covering over-allotments. |
Use of proceeds |
We expect that we will receive net proceeds from this offering of approximately US$ million, or approximately US$ million if the underwriters exercise their option to purchase additional ADSs from us in full, assuming an initial public offering price of US$ per ADS, the mid-point of the estimated range of the initial public offering price set forth on the cover of this prospectus, after deducting estimated underwriting discounts and commissions and estimated offering expenses payable by us. |
We plan to use the net proceeds of this offering as follows: US$[188.0] million to repay amounts outstanding under the Credit Suisse Facility, and the remainder to enable us to expand our business into new markets, which would include costs for premises, technology and systems and other infrastructure as well as for hiring of personnel and other expansion related expenses, and for general corporate purposes, including working capital needs and potential acquisitions. |
We will not receive any of the proceeds from the sale of the ADSs by the selling shareholders. |
Conflicts of Interest |
Because an affiliate of Credit Suisse Securities (USA) LLC, which is an underwriter in this offering, is the lender under the Credit Suisse Facility and will receive 5% or more of the net proceeds from this |
12
offering due to the repayment of the Credit Suisse Facility, Credit Suisse Securities (USA) LLC is deemed to have a conflict of interest within the meaning of Rule 5121 of the Financial Industry Regulatory Authority, Inc., or FINRA. Therefore, this offering will be conducted in accordance with FINRA Rule 5121, which requires, among other things, that a qualified independent underwriter has participated in the preparation of, and has exercised the usual standards of due diligence with respect to, this prospectus and the registration statement of which this prospectus forms a part. Goldman Sachs & Co. LLC has agreed to act as qualified independent underwriter for the offering and to undertake the legal responsibilities and liabilities of an underwriter under the Securities Act, specifically including those inherent in Section 11 of the Securities Act. We will agree to indemnify Goldman Sachs & Co. LLC against liabilities incurred in connection with acting as qualified independent underwriter, including liabilities under the Securities Act. See Use of Proceeds and Underwriting. |
Dividend policy |
We do not intend to pay any dividends on our ordinary shares or ADSs for the foreseeable future. Instead, we anticipate that all of our earnings, if any, will be used for the operation and growth of our business. See Dividends and Dividend Policy for more information. |
Lock-up |
We and each of our directors, executive officers and existing shareholders have agreed, subject to certain exceptions, for a period of [180] days after the date of this prospectus, not to, except in connection with this offering, offer, pledge, sell, contract to sell, sell any option or contract to purchase, purchase any option or contract to sell, grant any option, right or warrant to purchase, lend, or otherwise transfer or dispose of, directly or indirectly, any ADSs or ordinary shares or any other securities so owned convertible into or exercisable or exchangeable for ADSs or ordinary shares, or enter into any swap or other arrangement that transfers to another, in whole or in part, any of the economic consequences of ownership of the ADSs or ordinary shares. See Shares Eligible for Future Sale and Underwriting. |
Risk factors |
See Risk Factors and other information included in this prospectus for a discussion of factors you should carefully consider before deciding to invest in our ADSs. |
Payment and settlement |
The ADSs are expected to be delivered against payment on , 2021. The ADSs will be deposited with a custodian for, and registered in the name of a nominee of, , or , in New York, New York. In general, beneficial interests in the ADSs will be shown on, and transfers of those beneficial interests will be effected only through, records maintained by and its direct and indirect participants. |
Listing |
We will apply to list our ADSs on the NYSE. |
Proposed trading symbol |
13
Depositary |
(1) | As of , 2021, there were Class A ordinary shares outstanding. |
(2) | Except as otherwise indicated, all information in this prospectus assumes: |
| the adoption and effectiveness of our amended and restated memorandum and articles of association, which will occur immediately prior to the completion of this offering; and |
| no exercise by the underwriters of the over-allotment option to purchase up to an additional ADSs representing Class A ordinary shares from us [and certain selling shareholders.] |
14
Summary Consolidated Financial and Other Data
The following summary consolidated financial data as of December 31, 2019 and 2020 and for the years ended December 31, 2018, 2019 and 2020 have been derived from our audited consolidated financial statements included elsewhere in this prospectus., The summary financial data as of December 31, 2018 is derived from audited financial statements not included herein. The summary financial data set forth below should be read in conjunction with, and are qualified by reference to, Selected Consolidated Financial and Other Data, Managements Discussion and Analysis of Financial Condition and Results of Operations and our consolidated financial statements and notes thereto included elsewhere in this prospectus. Our consolidated financial statements are prepared and presented in accordance with IFRS as issued by the IASB. Our historical results do not necessarily indicate results expected for any future period.
Summary Consolidated Statement of Profit or Loss and Other Comprehensive Income
For the Year Ended December 31, | ||||||||||||||||
2020 | 2019 | 2018 | ||||||||||||||
S$ | US$ | S$ | S$ | |||||||||||||
(in thousands) | ||||||||||||||||
Revenue |
434,723 | 328,812 | 330,265 | 181,233 | ||||||||||||
Employee benefits expense |
(257,985 | ) | (195,133 | ) | (189,912 | ) | (109,373 | ) | ||||||||
Depreciation expense |
(33,065 | ) | (25,009 | ) | (24,599 | ) | (12,908 | ) | ||||||||
Rental and maintenance expense |
(10,603 | ) | (8,020 | ) | (9,220 | ) | (2,623 | ) | ||||||||
Recruitment expense |
(8,005 | ) | (6,055 | ) | (6,680 | ) | (3,792 | ) | ||||||||
Transport and travelling expense |
(1,504 | ) | (1,138 | ) | (2,083 | ) | (1,358 | ) | ||||||||
Telecommunication and technology expense |
(6,305 | ) | (4,769 | ) | (4,522 | ) | (2,385 | ) | ||||||||
Interest expense |
(3,058 | ) | (2,313 | ) | (2,893 | ) | (1,128 | ) | ||||||||
Other operating expense |
(15,836 | ) | (11,978 | ) | (10,478 | ) | (6,872 | ) | ||||||||
Gain on disposal of a subsidiary |
731 | 553 | | | ||||||||||||
Share of profit from an associate |
196 | 148 | | | ||||||||||||
Interest income |
594 | 449 | 465 | 268 | ||||||||||||
Other operating income |
7,514 | 5,683 | 717 | 546 | ||||||||||||
|
|
|
|
|
|
|
|
|||||||||
Profit before income tax |
107,397 | 81,230 | 81,060 | 41,608 | ||||||||||||
Income tax expenses |
(21,303 | ) | (16,113 | ) | (7,524 | ) | (3,520 | ) | ||||||||
|
|
|
|
|
|
|
|
|||||||||
Profit for the year |
86,094 | 65,117 | 73,536 | 38,088 | ||||||||||||
Other comprehensive income (loss)(1) |
536 | 405 | 840 | (71 | ) | |||||||||||
|
|
|
|
|
|
|
|
|||||||||
Total comprehensive income for the year |
86,630 | 65,522 | 74,376 | 38,017 | ||||||||||||
|
|
|
|
|
|
|
|
|||||||||
Basic and diluted earnings per share |
86,093 | 65,116 | 73,535 | 35,271 | ||||||||||||
Pro forma basic and diluted earnings per share(2) |
||||||||||||||||
|
|
|
|
|
|
|
|
Note:
(1) | Other comprehensive income (loss) includes remeasurement of retirement benefit obligation and exchange differences on translation of foreign operations. |
(2) | Unaudited basic and diluted pro forma net income (loss) per share data assumes that an additional of our shares of common stock were outstanding for the [three months period ended March 31, 2021], which represents the number of shares of common stock that we expect to be issued to fund the debt repayment with the net proceeds of this offering as described in Use of Proceeds. The number of shares of common stock that we expect to be issued to fund the debt repayment was calculated in accordance with Staff Accounting Bulletin Topic 3.A. by dividing $ million, which is the estimated cost to repay indebtedness with the proceeds of this offering as described in Use of Proceeds, by $ per share, the low end of the initial public offering price range included on the cover of this prospectus less underwriting discounts and commissions. |
15
Summary Consolidated Statement of Financial Position
As of December 31, | ||||||||||||||||
2020 | 2019 | 2018 | ||||||||||||||
S$ | US$ | S$ | S$ | |||||||||||||
(in thousands) | ||||||||||||||||
ASSETS |
||||||||||||||||
Current assets |
||||||||||||||||
Cash and cash equivalents |
59,807 | 45,237 | 35,920 | 23,973 | ||||||||||||
Fixed deposits |
7,727 | 5,844 | 837 | | ||||||||||||
Trade receivables |
36,919 | 27,925 | 55,278 | 27,605 | ||||||||||||
Contract assets |
46,842 | 35,430 | 26,523 | 18,605 | ||||||||||||
Other receivables |
12,257 | 9,271 | 9,210 | 5,392 | ||||||||||||
Tax recoverable |
| | | 350 | ||||||||||||
|
|
|
|
|
|
|
|
|||||||||
Total current assets |
163,552 | 123,707 | 127,768 | 75,925 | ||||||||||||
|
|
|
|
|
|
|
|
|||||||||
Non-current assets |
||||||||||||||||
Pledged deposits |
2,377 | 1,798 | 2,110 | 2,096 | ||||||||||||
Other receivables |
5,874 | 4,443 | 3,708 | 2,931 | ||||||||||||
Plant and equipment |
40,581 | 30,694 | 40,730 | 24,911 | ||||||||||||
Right-of-use assets |
29,221 | 22,102 | 22,840 | 18,586 | ||||||||||||
Loan to an associate |
| | 784 | | ||||||||||||
Deferred tax assets |
1,580 | 1,195 | 1,197 | 329 | ||||||||||||
Investment in an associate |
229 | 173 | 33 | 33 | ||||||||||||
|
|
|
|
|
|
|
|
|||||||||
Total non-current assets |
79,862 | 60,405 | 71,402 | 48,886 | ||||||||||||
|
|
|
|
|
|
|
|
|||||||||
Total assets |
243,414 | 184,112 | 199,170 | 124,811 | ||||||||||||
|
|
|
|
|
|
|
|
|||||||||
LIABILITIES AND EQUITY |
||||||||||||||||
Current liabilities |
||||||||||||||||
Other payables |
37,200 | 28,137 | 26,926 | 15,870 | ||||||||||||
Amount due to a director |
| | | 10,469 | ||||||||||||
Bank loans |
24,170 | 18,282 | 34,421 | 6,374 | ||||||||||||
Lease liabilities |
14,664 | 11,091 | 10,963 | 7,634 | ||||||||||||
Provision for reinstatement cost |
452 | 342 | | | ||||||||||||
Income tax payable |
13,257 | 10,027 | 6,956 | 3,229 | ||||||||||||
|
|
|
|
|
|
|
|
|||||||||
Total current liabilities |
89,743 | 67,879 | 79,266 | 43,575 | ||||||||||||
|
|
|
|
|
|
|
|
|||||||||
Non-current liabilities |
||||||||||||||||
Bank loans |
16,136 | 12,205 | | 24,174 | ||||||||||||
Lease liabilities |
17,823 | 13,481 | 14,498 | 12,495 | ||||||||||||
Provision for reinstatement cost |
5,617 | 4,249 | 4,955 | 1,817 | ||||||||||||
Defined benefit obligation |
1,435 | 1,085 | 769 | 315 | ||||||||||||
Deferred tax liabilities |
129 | 98 | 236 | 365 | ||||||||||||
|
|
|
|
|
|
|
|
|||||||||
Total non-current liabilities |
41,140 | 31,118 | 20,458 | 39,167 | ||||||||||||
|
|
|
|
|
|
|
|
|||||||||
Capital, reserves and non-controlling interest |
||||||||||||||||
Share capital |
* | * | * | * | ||||||||||||
Reserves |
(19,843 | ) | (15,009 | ) | (20,650 | ) | (21,604 | ) | ||||||||
Retained earnings |
132,371 | 100,122 | 120,094 | 63,673 | ||||||||||||
|
|
|
|
|
|
|
|
|||||||||
Equity attributable to owners of the Group |
112,528 | 85,113 | 99,444 | 42,069 | ||||||||||||
Non-controlling interests |
3 | 2 | 2 | 1 | ||||||||||||
|
|
|
|
|
|
|
|
|||||||||
Total equity |
112,531 | 85,115 | 99,446 | 42,070 | ||||||||||||
|
|
|
|
|
|
|
|
|||||||||
Total liabilities and equity |
243,414 | 184,112 | 199,170 | 124,811 | ||||||||||||
|
|
|
|
|
|
|
|
* | Amount is less than $1,000 |
16
Summary Consolidated Statement of Cash Flows
For the Year
Ended December 31, |
||||||||||||||||
2020 | 2019 | 2018 | ||||||||||||||
S$ | US$ | S$ | S$ | |||||||||||||
(Restated) | ||||||||||||||||
(in thousands) | ||||||||||||||||
Net cash from operating activities |
130,484 | 98,695 | 76,044 | 37,320 | ||||||||||||
Net cash used in investing activities |
(23,682 | ) | (17,913 | ) | (27,627 | ) | (20,863 | ) | ||||||||
Net cash used in financing activities |
(83,274 | ) | (62,986 | ) | (36,655 | ) | (10,680 | ) | ||||||||
|
|
|
|
|
|
|
|
|||||||||
Net increase in cash and cash equivalents |
23,528 | 17,796 | 11,762 | 5,777 | ||||||||||||
Effect of exchange rate changes on balance of cash held in foreign currencies |
359 | 272 | 185 | (71 | ) | |||||||||||
Cash and cash equivalents at the beginning of year |
35,920 | 27,169 | 23,973 | 18,267 | ||||||||||||
|
|
|
|
|
|
|
|
|||||||||
Cash and cash equivalents at the end of year |
59,807 | 45,237 | 35,920 | 23,973 | ||||||||||||
|
|
|
|
|
|
|
|
Other Financial and Operating Data
Year Ended December 31, |
||||||||||||
2020 | 2019 | 2018 | ||||||||||
Revenue (S$ thousands) |
434,723 | 330,265 | 181,233 | |||||||||
Profit for the year (S$ thousands) |
86,094 | 73,536 | 38,088 | |||||||||
EBITDA (S$ thousands)(1) |
142,926 | 108,087 | 55,376 | |||||||||
Net profit margin (%) |
19.8 | 22.2 | 21.0 | |||||||||
EBITDA margin (%)(1) |
32.9 | 32.7 | 30.6 | |||||||||
Number of clients(2) |
37 | 38 | 36 | |||||||||
Number of agents(2) |
9,128 | 7,213 | 4,608 | |||||||||
Revenue per agent (S$ thousands)(3) |
54 | 54 | 49 | |||||||||
Debt (bank loans) (S$ thousands) |
40,306 | 34,421 | 30,548 | |||||||||
Debt/EBITDA Ratio(1) |
0.3 | 0.3 | 0.6 |
Notes:
(1) | EBITDA, EBITDA margin and Debt/EBITDA Ratio are non-IFRS financial measures. We define EBITDA as profit for the year before interest expense, interest income, income tax expense and depreciation expense, EBITDA margin as EBITDA as a percentage of revenue, Debt as bank loans and Debt/EBITDA Ratio as bank loans divided by EBITDA. EBITDA, EBITDA margin and Debt/EBITDA Ratio are not measures calculated in accordance with IFRS. As a result of our early adoption of IFRS 16 Leases as of January 1, 2017 using the full retrospective approach, EBITDA and EBITDA margin disclosed may not be comparable to similarly titled measures reported by other companies as our calculation includes depreciation on the right-of-use assets and finance costs on lease liabilities. While we believe that EBITDA, EBITDA margin and Debt/EBITDA Ratio provide useful information to investors in understanding and evaluating our results of operations in the same manner as our management, our use of EBITDA, EBITDA margin and Debt/EBITDA Ratio has limitations as an analytical tool and you should not consider it in isolation or as a substitute for analysis of our financial results as reported under IFRS. See Managements Discussion and Analysis of Financial Condition and Results of OperationsKey Financial and Operational MetricsNon-IFRS Financial Measures for information regarding the limitations of using EBITDA, EBITDA margin and Debt/EBITDA Ratio as financial measures. |
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The following table presents a reconciliation of EBITDA to profit for the year and EBITDA margin to net profit margin, the most directly comparable financial measure calculated and presented in accordance with IFRS, for the periods indicated:
For the Year Ended December 31, | ||||||||||||||||||||||||||||
2020 | 2019 | 2018 | ||||||||||||||||||||||||||
S$ | US$ | Margin | S$ | Margin | S$ | Margin | ||||||||||||||||||||||
(in thousands, except percentages) | ||||||||||||||||||||||||||||
Revenue |
434,723 | 328,812 | | 330,265 | | 181,233 | | |||||||||||||||||||||
Profit for the year and net profit margin |
86,094 | 65,117 | 19.8 | % | 73,536 | 22.2 | % | 38,088 | 21.0 | % | ||||||||||||||||||
Adjustments: |
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Depreciation expense |
33,065 | 25,009 | 7.6 | % | 24,599 | 7.4 | % | 12,908 | 7.1 | % | ||||||||||||||||||
Income tax expenses |
21,303 | 16,113 | 4.9 | % | 7,524 | 2.3 | % | 3,520 | 2.0 | % | ||||||||||||||||||
Interest expense |
3,058 | 2,313 | 0.7 | % | 2,893 | 0.9 | % | 1,128 | 0.6 | % | ||||||||||||||||||
Interest income |
(594 | ) | (449 | ) | (0.1 | %) | (465 | ) | (0.1 | %) | (268 | ) | (0.1 | %) | ||||||||||||||
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EBITDA and EBITDA margin |
142,926 | 108,103 | 32.9 | % | 108,087 | 32.7 | % | 55,376 | 30.6 | % | ||||||||||||||||||
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(2) | The number of clients and number of agents are calculated as of December 31 of the year indicated. |
(3) | Revenue per agent is calculated as revenue for a period divided by the average of the number of agents at the end of each month during such period. We monitor our revenue per agent because we believe it measures our success in expanding our client relationships higher up the value chain. Our client contracts are mostly based on a fixed rate per FTE dedicated and assigned to the applicable campaign. Under our employee classification system, an FTE is classified as an "agent." |
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This offering and an investment in the ADSs involve a significant degree of risk. Prospective investors should carefully consider the risks described below, together with the financial and other information contained in this Prospectus before deciding to purchase the ADSs. There may be additional risks not presently known to us or that we currently believe to be immaterial, which could turn out to be material. Our business, financial condition and results of operations could be adversely affected by any of these risks, should they occur, and turn out to be material. If any of the following risks actually occurs, our business, financial condition and results of operations could be adversely affected and, as a result, the trading price of our Shares could decline and you could lose all or part of your investment in the ADSs.
This Prospectus also contains forward-looking statements which involve risks and uncertainties. Our actual results of operations could differ materially from those anticipated in these forward-looking statements due to a variety of factors, including the risks described below and those discussed in the section entitled Managements Discussion and Analysis of Financial Condition and Results of Operations and elsewhere in this Prospectus. See the section entitled Special Note Regarding Forward-Looking Statements of this Prospectus.
Before deciding to invest in the ADSs, prospective investors should seek professional advice from their advisors about their particular circumstances.
Risks Related to Our Business and Industry
Our largest clients account for a significant portion of our total revenue and any loss of a large portion of business from any of those large clients could have a material adverse effect on our business, financial condition and results of operations.
We are dependent upon the business relationships we have developed with our largest clients, including our ability to retain our clients. In the past we have derived and, as of the date of this prospectus, we believe that we will continue to derive, a significant portion of our revenue from our two largest clients, Airbnb and Facebook. On a combined basis these two clients accounted for a total of 52.0%, 65.9% and 60.4% of our revenue for the years ended December 31, 2018, 2019 and 2020, respectively. Our top five clients for each of 2018, 2019 and 2020, on a consolidated basis, accounted for a total of 83.4%, 88.9% and 83.8% of our total revenues in the years ended December 31, 2018, 2019 and 2020, respectively.
In addition, there can be no assurance that the volume of work to be performed by us for our largest clients will not vary significantly from year to year in the aggregate, particularly since we are not the exclusive service provider for our clients generally. Furthermore, one of the key services we provide to one of our largest clients is content monitoring and moderation, which has become a growth business for us. There can be no assurance that current trends related to content monitoring and moderation will not reverse. A number of factors other than the price and quality of the services we provide, such as a change in the financial profile of a client, change of leadership or strategy within a clients senior management, or a corporate reorganization, merger or other acquisition involving a client, could result in the loss or reduction of business from any of our clients, including our largest clients, and we cannot predict the timing or occurrence of any such event. The loss of revenue from our largest clients may have an adverse effect on our business, financial condition and results of operations.
Our failure to successfully implement our business strategy and global, growth-oriented business model and sustain our growth rate and financial performance could harm our business.
We are a high-growth digital customer experience solutions provider for technology disruptors and other blue-chip companies and provide omnichannel CX solutions, sales and digital marketing services, content monitoring and moderation services and other services. The execution of our business strategy is critical in order for our overall business to achieve economies of scale and increase our profitability.
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Our business strategy involves hiring, training and retaining skilled personnel, developing or acquiring technology solutions that we incorporate in our services and maintaining and growing a globally oriented expertise in the industries that comprise the new economy. Our business strategy may strain our existing management resources, operational, financial and management information systems and IT solutions to the point that they may no longer be adequate to support our operations, requiring us to incur significant expenditures in these areas. We expect that we will need to develop further financial, operational and management controls, reporting systems and procedures to accommodate future growth. We cannot assure you that we will be able to develop these controls, systems or procedures on a timely basis, or at all.
Our success in implementing our business strategy and global, growth-oriented business model may be adversely affected by other factors within and outside of our control, including the following:
| size, timing and profitability of significant campaigns or engagements with current or new clients; |
| changes in the volume of work we receive on a full-time equivalent basis from campaigns; |
| the inability to accurately predict and in a timely manner fulfill FTE requirements on our campaigns; |
| changes in global business services demand due to any reason, including changes in laws, regulations or perceptions of outsourcing operations to offshore service providers; |
| the inability to continually improve or adapt to rapid technology changes; |
| adverse changes to our cost structure; |
| our inability to operate and manage a larger operation as we grow our market share and enter into international markets; |
| existing or potential clients decisions to stay with existing service providers or move services we provide in-house; |
| the inability to win new campaigns through competitive bidding processes; |
| the inability to attract qualified employees; |
| the inability to manage foreign exchange fluctuations; |
| operational, financial and legal challenges (including compliance with foreign laws); |
| costs associated with entering new and unfamiliar geographies or commencing significant new campaigns for our current and future clients; and |
| negative press and reputational risks that adversely affect our brand, including similar risks to our industry. |
Our failure to successfully execute our business strategy and global, growth-oriented business model could also adversely affect our future operating performance and cash flow, which in turn could restrict our ability to source high quality human capital and talent, innovate new tools and services offerings, make our operations more efficient and grow our business. We cannot assure you that we will be able to successfully execute our growth strategy or implement our planned business strategy and failure to do so could have an adverse effect on our business, financial condition and results of operations.
We operate in a highly competitive environment, and any failure to compete effectively against current and future competitors could adversely affect our revenue and profitability.
Our industry is very competitive. We primarily compete on the basis of the quality of the services we provide and expertise in tailored services for our clients. We believe that the other principal competitive factors in the markets in which we operate are price, value proposition to clients, breadth of geographical reach and industry expertise. We primarily face competition from other customer experience business services providers as well as
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firms specializing in customer relationship management consulting, customer engagement solution providers and in-house customer engagement operations. We typically are not an exclusive service provider for our clients as they usually prefer to engage more than one provider in each customer region to reduce their provider concentration risk. See BusinessCompetition.
According to Frost & Sullivan, the growing impetus for modernizing the customer experience to maintain competitive differentiation, rising usage for non-voice channels in addition to other channels of communication, and building of efficient customer experience centers through the use of machine learning and artificial intelligence technologies are driving the demand for outsourced customer experience, or CX, services in the new economy industry. This trend may result in new and different competitors entering our markets. These competitors may include entrants from the telecommunications, IT, software and data networking industries or entrants in geographical locations with lower costs than those in which we operate.
Some of these competitors have and in the future may continue to have greater financial, human and other resources, longer operating histories in particular regions, greater geographical reach, greater technological expertise and more established relationships with particular clients and prospective clients. In addition, some of our competitors may enter into strategic or commercial relationships among themselves or with larger, more established companies in order to increase their ability to address customer and client needs and reduce operating costs, or enter into similar arrangements with potential clients. Further, trends of consolidation in our industry and among business services competitors may result in new competitors with greater scale, a broader footprint, better technologies and price efficiencies attractive to our clients.
We also may face competition from our clients if they decide to bring the services we provide in-house or consolidate the number of vendors they use for the services we provide. Increased competition, our inability to compete successfully, pricing pressures or loss of market share could result in reduced operating profit margins which could have a material adverse effect on our business, financial condition and results of operations.
Our profitability will suffer if we are not able to maintain our pricing, control costs or continue to grow our business through higher value campaigns.
Our profit margin, and therefore our profitability, is largely a function of our level of activity and the rates we are able to charge for our services. If we are unable to maintain the pricing for our services without corresponding cost reductions, our profitability will suffer. The pricing and levels of activity we are able to achieve are affected by a number of factors, including our clients perceptions of our ability to add value through our services, the length of time it takes to on-board new employees on any new or current campaigns, the volume of work for new clients or new campaigns with current clients, competition, the introduction of new services or products by us or our competitors, our ability to accurately estimate, attain and sustain revenue from client contracts and general economic conditions.
Our profitability is also a function of our ability to control our costs and improve our efficiency and productivity. As we increase the number of our employees and locations at which we operate and execute our global growth strategy, we may not be able to manage the significantly larger and more geographically diverse workforce that may result, which could adversely affect our ability to control our costs or improve our efficiency. Further, because there can be no assurance that our business will grow at the rate that we anticipate or that we will be successful in growing our business in new geographies and markets that we enter, we may incur expenses for the increased capacity for a significant period of time without a corresponding growth in our revenues.
Our agreements with our clients are typically for one to three year terms and many of our agreements have automatic renewal terms or renewal terms to be entered into at the election of our clients. Accordingly, we may be bound by pricing and other established terms during the renewal periods and so we may not be able to revise pricing or other terms to take account for market conditions, including changes in labor costs.
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We may be unable to reduce our capacity if demand for our services decreases or if we overestimate the future demand for our current clients. In the case where demand for our services decreases, we may have lower capacity utilization rates until we can decrease our labor capacity to meet any such decrease in demand.
Any failure by us to maintain our pricing, control or adjust costs to the level of activity or adjust the pricing and terms of our client agreements to market conditions could adversely affect our business, financial condition and results of operations.
Effects of the novel coronavirus (COVID-19) as well as any other health pandemics on our and our clients business and operations could adversely affect our financial results.
Contagious diseases have spread throughout the world, including in certain parts of Asia where the majority of our operations are located. Most recently, the global outbreak of the COVID-19 pandemic has created significant volatility and uncertainty and economic disruption. The COVID-19 pandemic is ongoing with new variants believed to be spreading across the world, and has caused adverse effects on our and our clients operations during 2020 and 2021. For example, as each jurisdiction in which we operate imposed social distancing measures and we were required to either partially or completely reduce physical headcount in our offices, we implemented a work from home strategy in order to comply with such measures. In many cases, this involved a certain period of transition while we worked with our employees to ensure adequate work from home working conditions, which resulted in temporary periods of lower productivity, and additional costs incurred as we worked to ensure that our employees have adequate equipment and systems to support their work from home arrangements. Work from home arrangements also present other issues, such as potential cybersecurity risks and there can be no assurance that the systems we have in place will be effective at preventing cybersecurity threats or that we and our clients would agree on an acceptable work from home arrangement or that we would be able to comply with the conditions of any agreed upon work from home plan. There can also be no assurance that we will be able to meet all local guidelines as we transition personnel back to the office and as local social distancing rules and regulations change in the jurisdictions in which we operate. Additionally, our delivery centers typically seat hundreds of employees in one location. An outbreak of COVID-19 or similar contagious infection in one or more markets in which we do business may result in disruptions or restrictions on our ability to continue operations without interruption, such as significant worker absenteeism, lower seat utilization rates, lower productivity, as well as temporary closures of our delivery centers or the facilities of our clients, which could adversely affect our ability to deliver our services. The spread or resurgence of COVID-19 in any country where we have operations could impair our day-to-day service delivery from our affected offices and client campaigns and result in, among other things, losses of revenue and cause us to fail to meet certain KPIs in our client contracts.
In addition, the effects of COVID-19 have adversely affected certain of our clients businesses, particularly our clients in or exposed to travel and hospitality industries. This effect on our clients businesses has, in turn, resulted in decreased demand for our services from our clients in those affected industries, including some of our largest clients on whom we are significantly dependent. In response to this decreased demand, we have reduced the number of employees dedicated to these campaigns and either re-allocated them to other campaigns or, if necessary, terminated their employment with us. There can be no assurance that our clients will not decide to further reduce their demand for our services due to COVID-19-related effects on their business and that we will not have to reduce headcount in response. Furthermore, our results of operations have been materially adversely impacted as a result of COVID-19 and there can be no assurance that we would not be materially and adversely impacted in the future from the effects of COVID-19 or another pandemic, including from any loss of business, if any of our clients face significant business disruptions or demand for our clients services falls as a result of COVID-19 (or any disease outbreak that results in a health pandemic). As our agreements typically have payment terms of 30 to 90 days, any change in our clients cash flows that restrict their ability to make payments for services we have rendered may adversely affect our cash flows and results of operations. Our clients have delayed, and may in the future delay, planned engagements or choose to terminate existing agreements prior to the end of any term for convenience or decide not to renew their agreements with us.
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Finally, COVID-19 or any other pandemic may result in difficulty accessing the capital markets on attractive terms, or at all, and a severe disruption and instability in the global financial markets, or deterioration in credit and financing conditions which could adversely affect our access to capital necessary to fund business operations or address maturing liabilities on a timely basis or at all.
Any outbreak of a contagious disease in Asia or elsewhere (including the recent COVID-19 coronavirus or other diseases in the future), or fear or public perception of an outbreak, could have a negative impact on the economy and business activity in the markets in which we and/or our clients operate, thereby adversely impacting our operations and business. Any outbreak of disease or prolonged epidemic in the geographies in which we or our clients operate could severely disrupt our business operations and have an adverse effect on our business, financial condition and results of operations. See BusinessCOVID-19 Risk Mitigation and Continuity of Operations.
Our success depends on the continued service of our Founder and certain of our key employees and management.
Our operational business model is focused on the empowerment of our country directors and our success (including maintaining our corporate culture) depends on the continued service and performance of our country directors as well as our executive officers and other key personnel. There is competition for experienced senior management and personnel with expertise in our industry, and we may not be able to retain our key personnel or recruit skilled personnel with appropriate qualifications and experience.
Furthermore, our Founder also serves as our Executive Chairman and Chief Executive Officer and his involvement in our Company is essential to the success of our Company. Our Founder plays a central role in the development and implementation of our business strategies and initiatives. At the time of this prospectus, we have not procured any key person insurance policy which covers our Founder.
Any decrease in the involvement of our Founder in our business or loss of key members of our personnel, particularly to competitors, could have an adverse effect on our business, financial condition and results of operations.
We may fail to attract and retain enough highly trained employees to support our operations.
The outsourced business support services industry relies on large numbers of highly trained employees at delivery centers. The demand for talent is even more important for business services companies, such as our Company, that provide complex and high-value services, including content moderation and digital services support. Therefore, our success depends to a significant extent on our ability to attract, hire, train and retain talented and skilled employees. Our industry is prone to high employee attrition, which requires us to continuously hire and train new employees. According to Frost & Sullivan, our industry has had an average annual attrition rate of 30% to 34% in the Asia Pacific region. There is significant competition for trained employees with the skills necessary to perform the services we offer to our clients, including employees that are proficient in certain high-demand languages. In addition, we compete for employees, not only with other companies in our industry, but also with companies in other industries and in many locations where we operate, there may be a limited number of highly trained employees for a number of reasons, including government-imposed regulations and policies related to expatriate and foreign permitting that could limit the number and availability of foreign workers in certain jurisdictions. We often rely on expatriate employees to fill roles that cannot be performed by locally-hired agents due to combination of specialized skillset, native languages and cultural skills. If qualified personnel cannot immigrate to or obtain work visas in a country where we require their services, we may have difficulty hiring the requisite number of local workers with the requisite skills for our campaigns, or we may exceed our budgets in order to do so. In particular, in Thailand, our subsidiary, Teledirect Telecommerce (Thailand) Limited, has been granted certain privileges by the Board of Investment of Thailand, or the BOI, which are comprised of incentives for business development in Thailand and includes, among other
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things, certain exceptions allowing us to hire foreign technicians and experts to work on promoted projects and the ability to secure visas for foreign employees with a faster approval time than is otherwise available for non-promoted businesses in Thailand. However, these privileges are subject to a number of conditions including the requirement to have no later than August 23, 2021 (i.e. within three years from the date of Board of Investment of Thailand certificate), and maintain through the promotion period, a ratio of domestic to foreign employee of at least three to one. As of December 31, 2020, our ratio of domestic to foreign employees in Thailand was approximately two to one. Although we are actively managing our headcount in Thailand to regain compliance with the BOIs domestic employee requirement, there can be no assurance that we will reach the requisite ratio by the current deadline, in which case the BOI could revoke our privileges and incentives, which could cause our foreign employees to lose their employment visas, which could materially affect our operations in Thailand.
Increased competition for qualified personnel could also have an adverse effect on our business. Additionally, a significant increase in the attrition rate among trained employees could result in increased costs, disrupted revenue streams and decreased profit margins.
In addition, our ability to maintain and renew existing engagements, obtain new business and increase our margins will depend, in large part, on our ability to attract, hire, train and retain skilled employees that enable us to keep pace with the growing demand for business services, evolving industry standards, new technology applications and changing client preferences. Our failure to attract, hire, train and retain personnel with the experience and skills necessary to fulfill the needs of our existing and future clients or to assimilate new employees successfully into our culture and our operations could have an adverse effect on our business, financial condition and results of operations.
A substantial portion of our operations and investments are located in Southeast Asia and we are therefore exposed to various risks inherent in operating and investing in the region.
For the year ended December 31, 2020, we derived 91.5% of our revenue from our operations in countries located in Southeast Asia. We intend to continue to develop and expand our business and capacity in Asia with our current and potential clients. Our operations and investments in Southeast Asia are subject to various risks related to the economic, political and social conditions of the countries in which we operate, including risks related to the following:
| inconsistent regulations, licensing and legal requirements may increase our cost of operations among the countries in Southeast Asia in which we operate; |
| currencies may be devalued or may depreciate or currency restrictions or other restraints on transfer of funds may be imposed; |
| the effects of inflation within Southeast Asia generally and/or within any specific country in which we operate in Southeast Asia; |
| governments may impose new or more burdensome regulations, taxes or tariffs; |
| political changes may lead to changes in the business environments in which we operate; |
| economic downturns, political instability, civil disturbances, military conflict, terrorism and general security concerns in the countries that either we or our clients operate may negatively affect our operations; |
| enactment or any increase in the enforcement of regulations related to personal data protection in the areas in which we operate that may incur compliance costs; |
| health epidemics (including the COVID-19 outbreak) may affect our operations and demand for our services; and |
| natural disasters like volcano and earthquakes may impact our operational sites severely. |
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Additionally, the laws in the countries we operate may change and their interpretation and enforcement may involve significant uncertainties that could limit the reliability of the legal protections available to us. We cannot predict the effects of future developments in the legal regimes in the countries we operate.
Any of the foregoing risks may adversely affect our business, financial condition and results of operations.
Our key clients have significant leverage over our contractual terms and may terminate such contracts on short notice or require us to accept contractual terms that are more favorable to them.
Our relationships with our clients are governed by master services agreements, or MSA, and a number of statements of work, or SOWs, which set out the details of our services we provide to our clients. Our current MSA with Facebook has a primary term of 12 months and automatic 12-month renewal periods thereafter (unless terminated by Facebook). One of our two current MSAs with Airbnb is currently expected to terminate on June 1, 2021, subject to renewal by us and Airbnb. Our other current MSA with Airbnb had an initial term of three years from June 2017, but was extended to June 1, 2021. While our MSAs have traditionally been renewed and have not been terminated by our largest clients as of the date of this prospectus, there can be no assurance that our agreements will be renewed upon their expiration or terminated early pursuant to their respective terms.
A contract termination, non-renewal of a contract when it expires, or significant reduction in the use and number of services under our contracts with our key clients could result in a lower utilization rate, which would result in decreased operating margins and profitability. We may not be able to replace any key clients that elect to terminate, scale back, or not renew its contract with us, which would have an adverse effect on our business, financial condition and results of operations.
Our key clients may require us to accept contractual terms that are less favorable to us. For example, if our key clients require us to extend the payment periods beyond the current 30 to 90 day typical range, our working capital levels and overall financial position could be adversely affected, which may make it more difficult to finance our capital expenditures or increase our borrowing costs.
Spending on omnichannel CX solutions by our clients and prospective clients is subject to fluctuations depending on many factors, including both the economic and regulatory environments in the markets in which they operate.
Our clients budgets for our services and reductions in client spending arising from or related to economic slowdown in the markets in which our clients operate have in the past adversely impacted our revenues, gross profits, operating margins and results of operations. Certain events outside of the control of our clients, such as regulatory and political developments, may occur and adversely affect our revenues, gross profits, operating margins and results of operations. These economic conditions can occur abruptly. For example, the recent COVID-19 outbreak has caused volatility and uncertainty in the global economy. COVID-19 has adversely impacted us and many of our clients, and the extent to which COVID-19 may continue to impact our financial condition or results of operations in the future is uncertain and will depend in part on its impact on our clients and prospective clients and their customers. See Effects of the novel coronavirus (COVID-19) as well as any other health pandemics on our and our clients business and operations could adversely affect our financial results.
Increased regulation, changes in existing regulation or increased government intervention in the industries in which our clients operate may adversely affect the growth of their respective businesses, which in turn may reduce demand for our services or cause us to incur additional costs in our processes or personnel, thereby negatively affecting our business, results of operations and financial condition. For example, our clients may be subject to stringent compliance requirements, including privacy and security standards for handling data, which could impact the manner in which we provide our services. Further, regulators have imposed guidelines for use of cloud computing services that mandate specific controls or require financial services enterprises to obtain
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regulatory approval prior to outsourcing certain functions. See also Anti-outsourcing legislation, if adopted, and negative perceptions associated with offshore outsourcing could impair our ability to serve our clients and materially adversely affect our business, results of operations and financial condition.
Reduced or delayed spending by our clients may also lead to our clients cancelling ongoing projects with us, requesting pricing reductions or consolidating the service providers that they partner with. In the past, such events have adversely impacted our utilization rates, monthly revenue per FTE, the competitiveness of our proposals and our gross margins.
The business challenges and pressures resulting from economic slowdown in the markets in which our clients operate could also affect their credit ratings and our credit terms with them, leading to adverse impact on our cash flow and results of operations. Any of the foregoing could adversely affect our business, financial condition and results of operations.
Increases in employee salaries and benefits expenses as well as changes to labor laws could affect our business.
Employee benefits expenses were S$109.4 million, S$189.9 million and S$258.0 million in the years ended December 31, 2018, 2019 and 2020, representing 78.5%, 76.7% and 77.4% of our total operating expenses in each year, respectively.
Employee salaries and benefits expenses in all of the countries in which we operate have increased over recent years as a result of economic growth, increased demand for business services and increased competition for trained and talented employees and we cannot assure that they will not continue to rise.
We attempt to control our costs as we grow our capacity in existing locations or enter into new geographies. We may need to increase salaries more significantly and rapidly than in previous periods as part of our efforts to remain competitive or meet the demand for our services, which may cause our labor costs to increase. In addition, depending on the state of the labor market for our employees at any given time, we may need to increase employee compensation more than in previous periods to remain competitive in attracting the quantity and quality of employees that our business requires. Wage increases may reduce our operating margins and adversely affect our profitability if our revenue remains stagnant or if we face price pressure from competition.
If we expand our operations into new geographies within which prospective employee pool have higher average wages and compensation expectations, our average or overall labor costs may increase which will reduce our margins and profitability, especially when we enter into new markets and seek to grow our business in new geographies where we have no track record.
Furthermore, most of the countries in which we operate have labor laws which protect the interests of workers, including statutorily mandated minimum wage increases, legislation that imposes financial obligations on employers and laws governing the employment of workers. We are also required to provide employee retirement by law in certain countries, such as the Philippines and Thailand, where we have made provisions for such retirement plans in our financial statements. Certain jurisdictions, such as Thailand and Singapore, also have laws that restrict our ability to hire foreign workers by setting caps on the proportion of foreign workers in the workforce of the applicable jurisdictions. In Thailand, we have received certain incentives issued by the Board of Investment of Thailand. See We may fail to attract and retain enough highly trained employees to support our operations.
These labor laws in one or more of the key jurisdictions in which we operate, including Singapore and the Philippines, may be modified in the future in a way that causes our costs to increase and any such changes may be detrimental to the business that we operate in such jurisdiction. The implementation or increase of additional labor laws in the countries we operate may reduce our profit margins and have an adverse effect on our business, financial condition and results of operations.
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We may be involved in disputes, legal, regulatory, and other proceedings arising out of our business operations, and may incur costs arising therefrom and may be affected by negative publicity which may have an adverse impact on our reputation and goodwill.
From time to time we are, and in the future may continue to be, involved in disputes with various parties in the course of our business including clients, employees and ex-employees. Such disputes may involve various matters such as business disputes, employment matters and regulatory compliance.
In particular, from time to time, we have been the subject of complaints and claims made by our ex-employees in relation to, for instance, claims of unfair dismissal and disputes over employment contracts and terms. These disputes may lead to legal or other proceedings and may result in costs, negative publicity, and the diversion of resources and managements attention regardless of the outcome. Any negative publicity arising from such disputes or complaints against our Company, whether founded or unfounded, may tarnish our reputation and goodwill and could cause our clients or future clients to not use our services.
In particular, the business practices of companies that offer content moderation and curation services have been subject to increasing scrutiny over their business practices and the treatment and wellbeing of the employees who work in these areas. Several other companies operating in other countries offering these services have been subject to lawsuits by their employees and ex-employees relating to allegations of post-traumatic stress disorder and related trauma. While we work diligently to ensure that our work practices and work culture support healthy employee well-being and we operate in countries with different legal regimes than other cases, there can be no assurances that we will not also be subject to similar legal actions. In addition, many of the services we provide our clients are complex, such as trust and safety verification and quality and compliance audits, we may face potential liability if we do not perform in accordance with the requirements of our agreements.
In addition, we may become involved in disputes, legal, regulatory, and other proceedings between our clients and third parties, such as our clients customers, in connection with the services that we provide. Some of our clients, and in particular our top clients, are larger than we are and may be more likely to become involved in such matters given the scale of their businesses. If we become involved in such matters, we may be required to expend significant resources, including our managements time, and incur significant expenses in defending against such actions. There can be no assurance that an adverse judgment or decision against us will not be significant. Our clients do not indemnify us for these types of costs, and there can be no assurance that such costs will be covered, in whole or in part, by our insurance policies.
Negative publicity or announcements may also include, amongst others, our involvement in litigation or regulatory investigations, online complaints or negative reviews of our business (anonymous or otherwise), or unfavorable third-party research reports on us. We cannot assure you that attempts to resolve any outstanding disputes would not be protracted or that similar claims would not be asserted. If we were to fail to win these disputes, we may incur losses and face liabilities. Further, even if we were to win these disputes, we may incur costs in mounting our defense and loss of business.
Responding to disputes and/or negative publicity arising from any of the above circumstances, regardless of their ultimate outcomes and notwithstanding that they may be baseless, frivolous or vexatious, can divert the time and effort of our management from our business. Claims and complaints that assert some form of wrongdoing, regardless of the factual basis for the assertions being made, may further result in negative publicity, lawsuits, or investigations by regulators. Any unfavorable decisions by regulators may result in regulatory sanctions against us and other person(s) responsible for the breach, including the imposition of fines and/or term of imprisonment, where applicable.
Further, we cannot assure you that the public perception of our business and our brands would not be materially affected in the event of such disputes or that we will be successful in defending such claims. Any negative impact on our reputation could materially and adversely affect our business, financial condition and results of operations.
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We may enter into contracts with significant fixed price elements or solely fixed price contracts with our clients and any failure to accurately price these arrangements may affect our profitability.
Many of our client contracts have significant fixed price elements. If we underestimate our project costs in tendering and bidding for a project from our clients, we may incur unanticipated costs that would reduce our profits or incur losses. Any failure by us to inaccurately evaluate our expected costs for a fixed-price contract may result in the decreased profitability of any such project and may have an adverse effect on our business, financial condition and results of operations. To address this risk, we try to incorporate pricing adjustments in our contracts in the event that there is a change in scope of work that can be activated under reasonable circumstances that are beyond assumptions made by us during our initial pricing (e.g., expanded work scope, foreign exchange volatility). There can be no assurance that such price adjustments will fully cover the actual costs to provide such services, which could have an adverse effect on our business, financial condition and results of operations.
If our services do not comply with the service level and performance requirements required by our clients or we are in breach of our obligations under our contracts with our clients, it may result in reduced payments or the termination of our client agreements.
Most of our contracts with clients contain service level and performance requirements, including requirements relating to the quality of our services and the timing and quality of responses to our end-customer based on certain key performance indicators, such as the time it takes for a customer experience matter to be closed out, customer satisfaction score and forecast accuracy. In some cases, the quality of services that we provide is measured by quality assurance indicators and surveys which are based in part on the results of direct monitoring by our clients of interactions between our employees and our clients end-customers. Failure to consistently meet service requirements of such end-customers or errors made by our employees in the course of delivering services to such end-customers could disrupt our clients businesses and result in a reduction in revenue or a claim against us for damages. For example, our agreements generally stipulate standards of service that, if not met by us, would result in lower payments to us. A failure or inability to meet these requirements of such representations could seriously damage our reputation and affect our ability to attract new business or result in a claim for damages against us, which could have a material adverse effect on our business, financial condition and results of operations.
We are subject to risks associated with operating in the rapidly evolving new economy sectors.
As a new economy business services provider dedicated to serving new economy participants internationally, we are subject to risks associated with the rapidly evolving nature of new economy sectors, including but not limited to the technology, consumer and retail, and hospitality sectors. Our future business, financial condition, and results of operations will largely depend on the development of the new economy sectors and their participants in the markets that we operate and target for future expansion.
According to Frost & Sullivan, as the outsourcing market in the traditional economy industry matures, service providers are now expanding their presence in the new economy high growth industries. New economy companies are investing in creating differentiated customer experiences and providing end-to-end customer engagement that can differentiate them from their competitors. However, there are significant uncertainties with respect to the growth and sustained profitability of new economy sectors in Asia and throughout the world, including changes in general economic conditions, market trends and regulatory environment. Most of these factors are beyond our control. For example, any adverse regulatory developments in new economy sectors in the countries in which we or our clients operate, such as new or more restrictive industry policies, could materially affect the results of operations and financial conditions of our clients participating in such industries, which may in turn reduce their demand for our services. As a result, our business, financial condition and results of operations could be adversely affected.
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We and our clients are subject to privacy, data protection and information security laws in the jurisdictions in which we and our clients operate.
We are typically required to collect and store sensitive data in connection with our services, including account access credentials, credit and debit card numbers, bank account numbers, social security numbers, names and addresses and other types of sensitive business or personal information. In many cases, customer information is stored in our clients proprietary systems to which our employees have user access. Although we have employed measures to protect against unauthorized access of such personal, confidential and proprietary information, as the complexity of information infrastructure continues to grow, the potential risk of security breaches and cyber-attacks increases. Such breaches can lead to shutdowns or system interruptions, and potential unauthorized disclosure of sensitive or confidential information which may result in potentially costly litigation. If any person, including any of our employees, penetrates our network security or otherwise mismanages or misappropriates sensitive or confidential client or customer data, we could be subject to significant fines for violating privacy or data protection and consumer laws or lawsuits from our clients or their customers for breaching contractual confidentiality provisions which could result in negative publicity, legal liability, loss of clients and damage to our reputation. We may be liable for any misappropriation of customers personal information which could also harm our relationship with our clients, and/or cause us to suffer financial losses and/or reputational harm. We may also be liable for damages in the case of such a security or network breach that results in an unauthorized or impermissible disclosure of client or customer data and information. Moreover, our insurance coverage for breaches or mismanagement of such data may not be sufficient to cover one or more large claims against us and our insurers may disclaim coverage as to any future claims.
Under data protection and personal information laws, we are typically required to manage, utilize and store sensitive or confidential client and customer data in connection with the services we provide. In Singapore, under the Personal Data Protection Act 2012, No. 26 of 2012 of Singapore, we are also required to, among others, notify individuals of: the purposes for the collection, use or disclosure of their personal data prior to such collection, use or disclosure and obtain the consent of individuals for any collection, use or disclosure of their personal data. In addition, under the European General Data Protection Regulation that took effect in May 2018, we must obtain consent and/or offer new controls to existing and new users in Europe before processing data for certain aspects of our service and are also subject to various regulations, including those that govern the storage and transfer of personal data.
Furthermore, we are subject to local data protection laws, consumer laws and/or do not call list regulations in most of the countries in which we operate, all of which may require us to make additional expenditures to ensure compliance with these regulations or future additional regulations. We also believe that we will be subject to additional such laws and regulations in the future that may be stricter than those currently in force. Although we take extensive efforts to comply with such applicable laws and regulations, failure or perceived failure by us to comply with rapidly evolving privacy and security laws, policies (including our own policies, which we may update from time to time), legal obligations or industry standards may result in governmental enforcement actions, litigation, fines and penalties or adverse publicity, could require us or our clients to change our or their business practices and could cause our clients to lose trust in us.
We seek to implement measures to protect sensitive and confidential client and customer data in accordance with client contracts and data protection laws and consumer laws. If any person, including any of our employees, penetrates our network security or otherwise mismanages or misappropriates sensitive or confidential client or customer data, we could be subject to significant fines for violating privacy or data protection and consumer laws or lawsuits from our clients or their customers for breaching contractual confidentiality provisions which could result in negative publicity, legal liability, loss of clients and damage to our reputation. We may be liable for any misappropriation of customers personal information which could also harm our relationship with our clients, and/or cause us to suffer financial losses and/or reputational harm.
We may also be subject to laws and regulations that restrict the flow of personal data across countries; such laws may constrain our activities and have an adverse impact on our business. Laws and regulations that impact our
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business, and particularly laws, regulations and other measures governments may take based on privacy and data protection concerns, are increasing in complexity, change frequently and at times conflict among the various jurisdictions where we do business. For instance, recent legal developments in Europe have created complexity and uncertainty regarding overseas transfers of personal data outside of the European Economic Area.
We may also be liable for damages in the case of such a security or network breach that results in an unauthorized or impermissible disclosure of client or customer data and information. Moreover, our insurance coverage for breaches or mismanagement of such data may not be sufficient to cover one or more large claims against us and our insurers may disclaim coverage as to any future claims. Any of the foregoing could adversely affect our business, financial condition and results of operations.
Our inability to protect our systems and data from continually evolving cybersecurity risks or other technological risks could affect our reputation among our clients and their customers and may expose us to liability.
In conducting our business, we process, transmit sensitive business information and personal information about our clients, their customers and other parties. We have certain responsibilities to card networks and their member financial institutions for any failure, including the failure of our associated third parties, to protect this information.
We have been a target of malicious third-party attempts to identify and exploit system vulnerabilities and penetrate or bypass our security measures in order to gain unauthorized access to our networks and systems or those of our associated third parties. A successful attempt could lead to the compromise of sensitive, business, personal or confidential information. As a result, we proactively employ multiple barriers and controls at different layers of our systems to defend our systems against intrusion and attack and to protect the data we collect. However, we cannot be certain that these measures will continue to successfully counter all current and emerging technology threats that are designed to breach our systems in order to gain access to confidential information. We also rely on third party vendors for aspects of our cybersecurity strategy, such as to conduct security reviews and penetration tests, and there can be no assurance that the tests conducted by these vendors, or measures we take in response to such tests, will be effective at identifying or preventing any cybersecurity threat.
Our computer systems and the computer systems of our clients, which we rely on, could be in the future subject to breach, and our data protection measures may not prevent unauthorized access. The techniques used to obtain unauthorized access, disable or degrade service, or sabotage systems change frequently and are often difficult to detect. Threats to our systems and our associated third parties systems can derive from human error, fraud or malice on the part of employees or third parties, or may result from accidental technological failure. Computer viruses and other malware can be distributed and could infiltrate our systems or those of our associated third parties. In addition, denial of service or other attacks could be launched against us for a variety of purposes, including to interfere with our services or create a diversion for other malicious activities. Our defensive measures may not prevent downtime, unauthorized access or use of sensitive data. While we maintain cyber errors and omissions insurance coverage that may cover certain aspects of cyber risks, our insurance coverage may be insufficient to cover all losses. Further, while we carefully select third parties with which we associate, we do not control their actions. Any problems experienced by these third parties, including those resulting from breakdowns or other disruptions in the services provided by such parties or cyber-attacks and security breaches, could adversely affect our ability to service our clients or their customers or otherwise conduct our business.
We could also be subject to liability for claims relating to misuse of personal information, such as unauthorized marketing purposes and violation of data privacy laws. We cannot provide assurance that the contractual requirements related to security and privacy that we impose on our employees who have access to client and customer data will be followed or will be adequate to prevent the unauthorized use or disclosure of data. In addition, we have agreed in certain agreements to take certain protective measures to ensure the confidentiality of client and customer data. Our clients are located in numerous jurisdictions around the world, and our clients may
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ask for broad undertaking from us pursuant to the privacy laws applicable to them and may decide not to do business with us if we do not agree to their privacy terms. Furthermore, the costs of systems and procedures associated with any protective measures that we are required to take by our clients may increase and could adversely affect our ability to compete effectively. Any failure to adequately enforce or provide these protective measures could result in liability, protracted and costly litigation, governmental and card network intervention and fines and, with respect to misuse of our clients and customers information, lost revenue and reputational harm.
Any type of security breach, attack or misuse of data described above or otherwise, whether experienced by us or an associated third party, could harm our reputation and deter existing and prospective clients from using our services or from making electronic payments generally, increase our operating expenses in order to contain and remediate the incident, expose us to unbudgeted or uninsured liability, disrupt our operations (including potential service interruptions), distract our management, increase our risk of regulatory scrutiny, result in the imposition of penalties and fines under state, federal and foreign laws. If we were to be removed from networks lists of Payment Card Industry Data Security Standard (PCI DSS) compliant service providers, our existing clients or other third parties may cease using our services. Also, prospective clients may choose to terminate their relationship with us, or delay or choose not to consider us. Any of the foregoing could adversely affect our business, financial condition and results of operations.
We may be unable to obtain future financing on favorable terms, or at all, to fund expected capital expenditure, potential opportunistic acquisitions and working capital requirements.
Our industry is characterized by high working capital requirements primarily relating to new investments in operating sites and employee resources to meet the requirements of our clients. We incur significant start-up costs related to investments in infrastructure to provide our services, including costs of establishing our delivery centers in accordance with our clients preferred specifications and hiring and training of employees, with such expenses being historically incurred before revenue is generated. There are also often additional start-up costs associated with entering new geographic markets, including expenses for establishing new operational centers as we grow our business and developing the infrastructure for engagements with clients in these new geographies.
We may, at some stage in the future, require funding for capital expenditures, potential opportunistic acquisitions or working capital. Our sources of additional funding, if required, may include the incurrence of debt or the issue of equity or debt securities or a combination of both. If we decide to raise additional funds through the incurrence of debt, our interest and debt repayment obligations will increase, and this could have a significant effect on our profitability and cash flows and we may be subject to additional covenants that could affect our business. Furthermore, in the event that we do decide to incur debt in the future, there can be no assurance that we will be successful in securing such additional financing on commercially reasonable terms, or at all. Any failure to obtain debt financing in the future could limit our ability to implement our growth strategy and could limit our ability to access cash flows from operations.
Any of the foregoing could have an adverse effect on our business, financial condition and results of operations.
We may be adversely affected by any failure to grow or protect our brand.
We believe the TDCX brand name and our reputation are important corporate assets that help distinguish our services from those of our competitors and contribute to our efforts in recruiting and retaining talented personnel.
In November 2019, we rebranded ourselves as TDCX and began providing services using our TDCX trademark. There are trademark registrations in ten jurisdictions in the name of TDCX Holdings Pte. Ltd.: Singapore, Malaysia, Hong Kong, the Philippines, China, European Union, Japan, India, Colombia, and the Cayman Islands. There are pending applications for trademark registration in three jurisdictions: Thailand, the United States and South Korea. While we believe that our prior brand, Teledirect, had a positive reputation, we
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created the TDCX brand to more clearly establish our brand identity in our industry. There is a risk that if we fail to establish or grow our brand or if negative information about us adversely affects our brand, even if false, our business could be adversely affected. In particular, damage to our reputation could be difficult and time-consuming to repair, could make potential or existing clients reluctant to select us for new engagements and could materially adversely affect our recruitment and retention efforts. Any failure to grow our brand or damage to our reputation could also reduce the value and effectiveness of the TDCX brand name and/or reduce investor confidence in us, and have an adverse effect on our business, financial condition and results of operations.
We may seek to acquire companies in the future and if we cannot find suitable targets or cannot integrate these companies properly into our business after acquiring them, it could adversely affect our business, financial condition and results of operations.
While we have grown organically almost exclusively, we may in the future as part of our global growth strategy pursue acquisitions of complementary businesses in certain geographies or exposure to certain industries, and acquisitions of companies with technologies that we can incorporate into our tailored client solutions. These transactions could be material to our financial condition and results of operations. Additionally, the inability to identify suitable acquisition targets or investments or the inability to complete such transactions may affect our ability to implement our growth strategy. Furthermore, we may not be able to integrate effectively such future acquisitions into our operations or our corporate culture and may not achieve the profitability we expect from such acquisitions. Even if we identify and pursue acquisitions, we may not complete future transactions in a timely manner, on a cost-effective basis, or at all, and we may not realize the expected benefits of any acquisition or investments. Other companies may compete with us for these strategic opportunities.
We also could experience negative effects on our results of operations and financial condition from acquisition-related charges, amortization of intangible assets and asset impairment charges, and other issues that could arise in connection with, or as a result of, the acquisition of the acquired company, including regulatory or compliance issues that could exist for an acquired company or business and potential adverse effects on results of operations through increased costs or otherwise. These effects, individually or in the aggregate, could cause a deterioration of our credit profile and result in reduced availability of credit to us or increased borrowing costs and interest expense in the future. Any such risks relating to future acquisitions could have a material adverse effect on our business, financial condition and results of operations.
Tax matters, including any reduction or withholding of tax benefits and other incentives we receive, new legislation and actions by taxing authorities may have an adverse effect on our operations, effective tax rate and financial condition.
We may not be able to predict our future tax liabilities due to the international nature of our operations, as we are subject to the complex and varying tax laws and rules of several foreign jurisdictions, including, as of the date of this prospectus, certain tax concessions and benefits from such local jurisdictions. For example, our subsidiary in Malaysia was awarded Multimedia Super Corridor status in 2005 by the Ministry of Finance and Ministry of International Trade and Industry Malaysia, which entitled the subsidiary to enjoy tax incentives under Malaysias Customized Incentive scheme. The scheme allows partial tax exemption for the subsidiary on the statutory income earned from its core operations for a certain period. However, these benefits expired on January 18, 2020. We have initiated discussions with relevant governmental agency authorities to renew such benefits on a retrospective basis. In the Philippines, we have benefited from an income tax holiday through our registration with the Philippine Economic Zone Authority, or PEZA. Our income tax holiday from PEZA for one of our sites expired on March 31, 2020. We have applied to PEZA for an extension to March 31, 2021. If we do not receive such extension, we expect to incur an additional income tax expense of at least 13.7 million Philippine pesos (approximately S$380,000). There can be no assurances that our application to extend any of these tax benefit schemes will be approved on a timely basis or at all. Our business, results of operations and financial condition could be adversely affected if tax contingencies are resolved adversely or if we become subject to increased levels of taxation.
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We are also subject to income taxes in numerous jurisdictions. Our tax expense and cash tax liability in the future could be adversely affected by numerous factors, including changes in tax laws, regulations, accounting principles or interpretations and the potential adverse outcome of tax examinations and pending tax-related litigation. Changes in the valuation of deferred tax assets and liabilities, which may result from a decline in our profitability or changes in tax rates or legislation, could have a material adverse effect on our tax expense. Certain tax-related judgements or conclusions that we make are based on our interpretation or understanding of tax laws in the countries in which we operate. Therefore, there can be no assurance that we will not undergo tax assessments and/or audits and that such proceedings will not result in further payments for taxes and tax-related costs and expenses for previous tax years, our current tax year, or tax years in the future. We are also subject to periodic tax audits by the relevant authorities in the jurisdictions in which we operate and, as of the date of this prospectus, are subject to ongoing tax audits. As tax exposures can involve technical interpretations of issues, it may require an extended period to resolve tax disputes. Many tax authorities have significant backlogs of other cases that may also result in extended periods to achieve resolution on open issues. The governments of foreign jurisdictions from which we deliver services may assert that we are not in compliance with the terms of any tax concession or benefit we currently receive or decide to change its laws with respect to such concessions and benefits.
Transfer pricing regulations to which we are subject require that any transaction among us and our subsidiaries be on arms-length terms. If the applicable tax authorities were to determine that the transactions among us and our subsidiaries do not meet arms length criteria, we may incur increased tax liability, including accrued interest and penalties. Such increase on our tax expenses would adversely affect our business, financial condition and results of operations.
Our business depends in part on our capacity to invest in technology as it develops and substantial increases in the costs of technology and telecommunications services that we rely on from third parties that could have a material adverse effect on our business, financial condition, results of operations and prospects.
The outsourced business support services industry is subject to the periodic introduction of new technology, which often can enable us to service our clients more efficiently and cost effectively. Our business is partly linked to our ability to recognize these new technological innovations and to apply these technological innovations to our business by incorporating them into our tailored solutions for our clients. See BusinessInformation Technology and Management Information Systems. If we do not recognize the importance of a particular new technology to our business in a timely manner or are not committed to investing in and developing such new technology and applying these technologies to our business, our current services may be less attractive to existing and potential clients, and we may lose market share to competitors who have recognized these trends and invested in such technology. Certain emerging technologies, such as artificial intelligence, may be disruptive to our industry, and our ability to identify, predict the outcomes of and incorporate disruptive technologies is key to our sustained business success. We will also be required to provide adequately trained personnel to address the increasingly sophisticated and tech savvy clients whose needs are constantly evolving. Furthermore, if we obtain access to an emerging technology through an acquisition, there can be no assurance that we will be successful in integrating that technology into our operations or business. Any such failure to recognize the importance of such technology or a decision not to invest and develop such technology that keeps pace with evolving industry standards and changing client demands could have a material adverse effect on our business, financial condition and results of operations.
Our operating results may fluctuate from one quarter to the next due to client and service mix and other factors.
Our operating results may differ significantly from quarter to quarter and our business may be affected by factors such as client losses, the timing of new contracts and of new product or service offerings, termination of existing contracts, variations in the volume of business from clients due to seasonal trends, the business decisions of our clients regarding the use of our services, start-up costs as we begin new campaigns for current or new clients,
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delays or difficulties in expanding our operational facilities or opening new operational facilities, changes to our revenue mix or to our pricing structure or that of our competitors, inaccurate estimates of resources and time required to complete ongoing campaigns, currency fluctuations and general economic conditions. In addition, while our business generally is not seasonal, our results may fluctuate because our clients businesses are impacted by seasonal effects that affect their use of our services, such as high travel seasons for our clients in the travel and hospitality industries or the winter holiday shopping season for consumer electronics clients.
In addition, the demand cycle for our services, typically from three to nine months (from the date the contract is entered into until the beginning of the provision of services), and the internal budget and approval processes of our prospective clients, make it difficult to predict the timing and success of new engagements with current or new clients. The demand cycle for a specific campaign depends on the campaign size, complexity and urgency of the client need. Also, we recognize revenue as and when the performance obligations set out in each campaign are satisfied and when the criteria for recognition are achieved. The financial benefit of gaining a new client may not be realized at the intended time due to delays in the implementation of our services or due to an increase in the start-up costs required in building our infrastructure to meet our current or future clients specifications with respect to any engagement. These factors may make it difficult for us to prepare accurate internal financial forecasts or replace anticipated revenue that is not received as a result of these delays. Any failure by us to predict and plan demand for our services for any of the foregoing reasons, including due to the effects of seasonality trends in the businesses of the clients, could adversely affect our business, financial condition and results of operations.
If we experience challenges with respect to labor relations, our overall operating costs and profitability could be adversely affected and our reputation could be harmed.
While we believe we have good relations with our employees, any work disruptions or collective labor actions may have an adverse impact on our services. While we do not have collective bargaining arrangements in most of the current jurisdictions in which we operate, our global growth strategy may involve our entrance into geographies where unions and collective bargaining agreements are more prevalent. As of December 31, 2020, only our workforce in Spain was subject to a collective bargaining agreement, namely, the nationwide collective bargaining agreement for all employers and employees in the Spanish telemarketing industry. If labor negotiations are not successful in Spain or any other geography we may enter into, where we become subject to a collective bargaining agreement, or we otherwise fail to maintain good relations with employees in any jurisdiction in which we operate, we could suffer a strike, work stoppage or other form of labor disruption. Any of the foregoing could harm our reputation and adversely affect our business, financial condition and results of operations.
Our business operations are subject to various regulations and changes in these regulations or enforcement thereof, could require us to make additional expenditures, restrict our business operations or expose us to certain costs related to non-compliance with such regulations.
Any changes in the enforcement of, or enactment of additional, regulations or laws in the jurisdictions in which we operate may subject us to additional expenses related to compliance with such laws or regulations or otherwise affect our business and operations. For example, stricter enforcement of the Indian Companies Act between 2015 and 2017 resulted in many Indian companies, including a dormant subsidiary of ours that has since been dissolved, being removed from the register of companies for various forms of corporate inactivity, and the directors of those companies, including our Founder and our current Chief Financial Officer, being disqualified from holding directorships in Indian companies for periods of five years (until October 31, 2021). Although this particular example of regulatory enforcement change has not and is not expected to impact our operations, it serves as an example of unanticipated regulatory risks that we are exposed to. Furthermore, if we are deemed to have violated any regulation or law in a jurisdiction in which we operate and/or where a delivery center is located, then we may be subject to fines and other expenses related to non-compliance thereof. Our business operations must be conducted in accordance with a number of sometimes conflicting government regulations in
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the various jurisdictions in which we operate, including consumer laws, as well as trade restrictions and sanctions, tariffs and labor relations. We are also subject to work permit, visa and immigration and other laws, regulations and requirements with respect to our employees in the countries in which we operate. We have in the past failed to comply with and may in the future fail to comply with such laws and regulations due to timing constraints and other reasons, which could subject us and our officers, directors and employees to liability and otherwise adversely impact our business. Any of the foregoing risks could have an adverse effect on our business, financial condition and results of operations. See also, Increases in employee salaries and benefits expenses as well as changes to labor laws could affect our business and We and our clients are subject to privacy, data protection and information security laws in the jurisdictions in which we and our clients operate.
Anti-outsourcing legislation, if adopted, and negative perceptions associated with offshore outsourcing could impair our ability to serve our clients and materially adversely affect our business, results of operations and financial condition.
The practice of outsourcing services to organizations operating in other countries is a topic of political discussion, including in the United States, which is our largest market in terms of location of our clients end-customers, as well as other regions in which we have clients or where their customers are located. For example, measures aimed at limiting or restricting outsourcing by U.S. companies may be put forward for consideration by the U.S. Congress and in state legislatures to address concerns over the perceived association between offshore outsourcing and the loss of jobs in the U.S. If any such measure is enacted, our ability to provide services to our clients could be impaired.
In addition, from time to time there has been publicity about purported negative experiences associated with offshore outsourcing, such as alleged domestic job loss and theft and misappropriation of sensitive client or customer data, particularly involving service providers in Asia. Current or prospective clients may elect to perform certain services themselves or may be discouraged from utilizing customer experience solutions providers like us due to negative perceptions that may be associated with us, our business model or our industry. Any slowdown or reversal of existing industry trends toward utilizing customer experience solutions providers would seriously harm our ability to compete effectively with competitors that provide the majority of their services from within the country in which our clients operate.
Our project start-up and implementation cycles require significant resource commitments.
From our initial business development engagement for a prospective project with either a new or existing client to our operational performance with respect to such a project, we are often required to invest significant capital, resources and time. Before committing to use our services for any specific new project, potential or current clients require us to expend substantial time and resources educating them as to the value proposition of our platform and assessing the feasibility of integrating our people, systems and processes with their operations. Our clients then evaluate our services before deciding whether to use them and, if they do decide to enter into an arrangement with us, we would then negotiate the requisite documentation, implement their specifications in our tailored solution (including establishing our delivery centers to our clients preferred specifications) and train our team leaders and other personnel that will be dedicated to the project. Therefore, our business prospecting and closure cycle, which generally ranges from six to 12 months, is subject to many risks and delays over which we have little or no control, including our clients decision to choose alternatives to our services (such as other providers or in-house offshore resources), the timing of our clients budget cycles and approval processes and the fluidity of our clients requirements and specifications for a given engagement. For further information related to risks from competition, see We operate in a highly competitive environment, and any failure to compete effectively against current and future competitors could adversely affect our revenue and profitability.
Implementing our services involves a significant commitment of resources over an extended period of time from both our clients and us. The period in which we train the personnel that will be dedicated to any specific client project generally ranges from two weeks to over two months. Our clients may also experience delays in obtaining
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internal approvals or delays associated with technology or system implementations, thereby further delaying the implementation process. Our current and future clients may not be willing or able to invest the time and resources necessary to implement our services, and we may fail to enter into arrangements for our services with potential clients to which we have devoted significant time and resources, which could have an adverse effect on our business, financial condition and results of operations.
While managing our growth, we may have difficulty updating our internal operational and financial systems as well as our existing internal accounting, financial and cost control systems.
Since our founding in 1995, and particularly from 2012, we have experienced rapid growth and significantly expanded our operations in key regions and client industries, especially with our clients involved in innovative businesses engaged in the new economy. For years ended December 31, 2018, 2019 and 2020, our number of agents was 4,608, 7,213 and 9,128, respectively. In the years ended December 31, 2018, 2019 and 2020, we generated revenue of S$181.2 million, S$330.3 million and S$434.7 million, respectively.
The rapid growth which we have experienced requires us to constantly monitor, evaluate and, if appropriate, reallocate our management and financial and operational resources. In order to manage growth effectively, we must recruit new employees, including employees in middle-management positions such as team leader roles, and implement and improve operational systems, procedures and internal controls on a timely basis.
In addition, we need to update our existing internal accounting, financial and cost control systems to ensure that we can access all necessary financial information in line with the increasing demands of our business. Any internal and disclosure controls and procedures, no matter how well conceived and operated, can provide only reasonable, but not absolute, assurance that the objectives of the control system are met. The design of a control system must consider the benefits of controls relative to their costs. Inherent limitations within a control system include the realities that judgments in decision-making can be faulty, and that breakdowns can occur because of simple errors or mistakes. Additionally, controls can be circumvented by individuals acting alone or in collusion with others to override controls, which may also include controls implemented by our clients. If we are unable to assert that our internal controls over financial reporting are effective now or in the future, or if our auditors are unable to express an opinion on the effectiveness of our internal controls, we could lose investor confidence in the accuracy and completeness of our financial reports.
If we fail to implement these systems, procedures and controls or update these systems on a timely basis, we may not be able to service our clients needs, hire and retain new employees, pursue new business, complete future acquisitions or operate our business effectively. Failure to effectively transfer new client business to our delivery centers, properly budget transfer costs, accurately estimate operational costs associated with new contracts or access financial, accounting or cost control information in a timely fashion could result in delays in executing client contracts, trigger service level penalties or cause our profit margins not to meet our expectations. Any of the foregoing factors could adversely affect our business, financial condition and results of operations.
If we fail to implement and maintain an effective system of internal controls, we may be unable to accurately or timely report our results of operations or prevent fraud, and investor confidence and the market price of our ADSs may be materially and adversely affected.
Prior to this offering, we were a private company with limited accounting personnel resources. Furthermore, prior to this offering, our management has not performed an assessment of the effectiveness of our internal control over financial reporting, and our independent registered public accounting firm has not conducted an audit of our internal control over financial reporting. Effective internal control over financial reporting is necessary for us to provide reliable financial reports and, together with adequate disclosure controls and procedures, are designed to prevent fraud.
Our internal controls relating to financial reporting have not kept pace with the expansion of our business. Our financial reporting function and system of internal controls may be less developed in certain respects than those
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of similar companies that operate in fewer or more developed markets and may not provide our management with as much or as accurate or timely information. The Public Company Accounting Oversight Board, or PCAOB, has defined a material weakness as a deficiency, or a combination of deficiencies in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of the annual or interim statements will not be prevented or detected on a timely basis.
In the course of auditing our consolidated financial statements as of and for the years ended December 31, 2018, 2019 and 2020, we and our independent registered public accounting firm identified three material weaknesses in our internal control over financial reporting as of December 31, 2018, 2019 and 2020, in accordance with the standards established by the Public Company Accounting Oversight Board of the United States. The material weaknesses identified related to (i) inappropriate segregation on several control processes, which includes the review and approval of journal accounting entries; (ii) lack of adequate controls over access rights to several IT systems, which includes excessive and conflicting rights granted to several accounting personnel; and (iii) insufficient financial reporting and accounting personnel with appropriate IFRS knowledge to prepare and review statement of cash flows relating to acquisition transaction in accordance with IFRS. There can be no assurance that any remediation actions we have undertaken will be effective or that other similar issues may not arise in the future.
As a result of the identification of these material weaknesses, we plan to take measures to remedy these control deficiencies. See Managements Discussion and Analysis of Financial Condition and Results of OperationsInternal Control over Financial Reporting. However, we can give no assurance that our planned remediation will be properly implemented or will be sufficient to eliminate such material weaknesses or that material weaknesses or significant deficiencies in our internal control over financial reporting will not be identified in the future. Our failure to implement and maintain effective internal controls over financial reporting could result in errors in our financial statements that could result in a restatement of our financial statements, cause us to fail to meet our reporting obligations and cause investors to lose confidence in our reported financial information, which may result in volatility in and a decline in the market price of the ADSs.
Upon the completion of this offering, we will become a public company in the United States subject to the Sarbanes-Oxley Act of 2002. Section 404 of the Sarbanes-Oxley Act of 2002, or Section 404, will require that we include a report of management on our internal control over financial reporting in our annual report on Form 20-F beginning with our annual report for the fiscal year ending December 31, 2021. In addition, if we cease to be an emerging growth company as such term is defined in the JOBS Act, our independent registered public accounting firm must attest to and report on the effectiveness of our internal control over financial reporting on an annual basis. Our management may conclude that our internal control over financial reporting is not effective. Moreover, even if our management concludes that our internal control over financial reporting is effective, our independent registered public accounting firm, after conducting its own independent testing, may issue a report that is qualified if it is not satisfied with our internal controls or the level at which our controls are documented, designed, operated or reviewed, or if it interprets the relevant requirements differently from us. In addition, after we become a public company, our reporting obligations may place a significant strain on our management, operational and financial resources and systems for the foreseeable future. We may be unable to timely complete our evaluation testing and any required remediation.
During the course of documenting and testing our internal control procedures, in order to satisfy the requirements of Section 404, we may identify other weaknesses and deficiencies in our internal control over financial reporting. In addition, if we fail to maintain the adequacy of our internal control over financial reporting, as these standards are modified, supplemented or amended from time to time, we may not be able to conclude on an ongoing basis that we have effective internal control over financial reporting in accordance with Section 404. Generally speaking, if we fail to achieve and maintain an effective internal control environment, we could suffer material misstatements in our financial statements and fail to meet our reporting obligations, which would likely cause investors to lose confidence in our reported financial information. This could in turn limit our access to capital markets, harm our results of operations, and lead to a decline in the trading price of our ADSs.
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Additionally, ineffective internal control over financial reporting could expose us to increased risk of fraud, misuse of corporate assets and legal actions under securities laws and subject us to potential delisting from the stock exchange on which we list, regulatory investigations and civil or criminal sanctions.
Our ability to provide our services depends in part upon the quality and reliability of the facilities and equipment provided by our technology, digital services and telecommunications providers, our reliance on a limited number of suppliers of such technology and the services and products of our clients.
The success of our business depends in part on our ability to provide high quality and reliable services, which in part depends upon the proper functioning of facilities and equipment (including appropriate hardware and software and technological applications) provided by third parties and our reliance on a limited number of suppliers of such technology, and is, therefore, beyond our control. As we lease our facilities from third parties, our ability to provide high quality and reliable services depends, in part, on our ability to maintain existing leases and accurately project our facility capacity requirements. Any early termination of a lease or failure to accurately predict facility requirements may cause us to have to relocate and cause disruptions to our services and business. When we enter new geographies, we often enter into shorter term arrangements with co-working space providers and these arrangements may be subject to more frequent changes or less intermediate term predictability.
We also depend on the telecommunication services provided by local telecommunication companies in the countries in which we operate, and any significant disruptions in these services would adversely affect our business. If these or other third party providers fail to maintain their equipment properly or fail to provide proper services in a timely or reliable manner, our clients may experience service interruptions. If interruptions adversely affect our services or the perceived quality and reliability of our services, we may lose client relationships or be forced to make significant unplanned investments in the purchase of additional equipment from other providers to ensure that we can continue to provide high quality and reliable services to our clients. In addition, if one or more of the limited number of suppliers of our technology cannot deliver or provide us with the requisite technology on a timely basis, our clients could suffer further interruptions. Any such interruptions may have a material adverse effect on our business, financial condition and results of operations.
Our key technology systems and facilities may be damaged in natural disasters such as earthquakes or fires or subject to damage or compromise from human error, technical disruptions, power failure, computer glitches and viruses, telecommunications and digital services failures, adverse weather conditions and other unforeseen events, all of which are beyond our control. Such events may cause disruptions to information systems, electrical power and telephone and digital service for sustained periods. Any significant failure, damage or destruction of our equipment or systems, or any major disruptions to basic infrastructure such as power and telecommunications and digital systems in the locations in which we operate, could impede our ability to provide services to our clients and thus adversely affect their businesses, which may have a negative impact on our reputation and may cause us to incur substantial additional expenses to repair or replace damaged equipment or facilities.
While we currently have property damage and comprehensive general liability insurance in force, our insurance coverage may not be sufficient to compensate for the costs of repairing the damage caused by such disruptive events and such events may not be covered under our policies. With respect to losses which are covered by our policies and subject to deductibles, exclusions, and/or limitations, it may be difficult and time-consuming to recover such losses from insurers. In addition, we may not be able to recover the full amount of losses incurred from the insurers. Prolonged disruption of our services, even if due to events beyond our control could also cause our clients to terminate their contracts with us, which would have a material adverse effect on our business, financial condition and results of operations.
In addition, in some areas of our business, we depend upon the quality and reliability of the services of our clients, which we help to sell to their end-customers. If the services we provide to our clients are disrupted due to technical difficulties or if there is any disruption to our services based on the foregoing factors, then the result may have an adverse effect on our business, financial condition and results of operations.
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Our debt service requirements and restrictive covenants limit our ability to borrow more money, to make distributions to our shareholders and to engage in other activities.
Our existing credit agreements contain a number of covenants that limit our ability and our subsidiaries ability to, among other things, transfer or dispose of assets, pay dividends or make distributions, incur additional indebtedness, create liens, make investments, loans and acquisitions, engage in transactions with affiliates, merge or consolidate with other companies or sell substantially all of our assets. Our credit agreements are guaranteed by us and certain of our subsidiaries and secured by substantially all of our and the assets of our borrower subsidiary and the guarantor subsidiaries. The terms of our credit agreements may restrict our current and future operations and could adversely affect our ability to finance our future operations or capital needs or to execute preferred business strategies. In addition, complying with these covenants may make it more difficult for us to successfully execute our business strategy and compete against companies who are not subject to such restrictions. Additionally, our obligations to repay principal and interest on our indebtedness make us vulnerable to economic or market downturns. If we are unable to comply with our payment requirements, our lenders may accelerate our obligations under our credit agreement and foreclose upon the collateral, or we may be forced to sell assets, restructure our indebtedness or seek additional equity capital, which would dilute our shareholders interests. Our failure to comply with any covenant could result in an event of default under the agreement and the lenders (or any subsequent lender) could make the entire debt immediately due and payable. If this occurs, we might not be able to repay our debt or borrow sufficient funds to refinance it. Even if new financing is available, it may not be on terms that are acceptable to us. These events could cause us to cease operations. For further details, see Description of Certain Indebtedness.
In addition, any increases in the cost of telecommunications and digital services and products provided by third parties, including equipment, software, information technology products and related services and workstations have a direct effect on our operating costs. The cost of telecommunications and digital services is subject to a number of factors, including changes in regulations and the market as well as competitive factors such as the concentration and bargaining power of technology and telecommunications and digital services providers and suppliers, most of which are beyond our control or which we cannot predict. The increase in the costs of these essential services and products could have an adverse effect on our business, financial condition and results of operations.
We may face difficulties as we expand our operations into countries in which we have no prior operating experience.
Our growth strategy relies on our global expansion in order to provide geographic breadth for our current and future clients. This may involve expanding into countries and regions other than those in which we currently operate and where we have less familiarity with local regulations, environment and procedures. It involves expanding our operations in recently entered markets such as Latin America, Europe and India, or entering into new countries and regions, such as in Korea and other Chinese regional markets where we do not currently operate, which have different cost structures, labor conditions, regulations and socioeconomic dynamics that may affect our results of operations. As we expand our business into new countries and regions, we may encounter economic, regulatory, personnel, technological and other difficulties that increase our expenses or delay our ability to start up our operations or become profitable in such countries. Any difficulty in the implementation of our global growth strategy may adversely affect our business, financial condition and results of operations.
We are exposed to currency fluctuations in the countries in which we operate against the U.S. dollar and Singapore dollar and any volatility in these currencies could adversely affect our business, financial condition and results of operations.
We earn revenue primarily denominated in U.S. dollars and Singapore dollars (which is our reporting currency). We make rental payments and incur expenses for employee compensation and other operating expenses in the local currencies in the jurisdictions in which we operate. There can be no assurance, however, that we will not
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take campaigns, in the future, that result in more exposure to local currencies. While inflation may not have a significant effect on the profit and loss of a local subsidiary itself, depreciation of the local currency against the U.S. dollar and/or Singapore dollar would reduce the value of the dividends payable to us from our operating companies. We present our financial results in Singapore dollars and our results of operations would be adversely affected if other currencies (including the U.S. dollar) depreciate significantly against the Singapore dollar. Furthermore, fluctuations in currency exchange rates may also affect the comparability of our financial results from period to period, as we convert our subsidiaries statement of financial position into Singapore dollars from other currencies at the period-end exchange rate, and income and cash flow statements at average exchange rates for the year.
The imposition of barriers to trade or escalation of trade disputes could materially and adversely affect demand for our services.
There has been a global escalation of barriers to trade in recent years, including with respect to the United States and China imposing tariffs and trade barriers on trade with each other. Any imposition of new tariffs or other trade barriers, or the escalation of any trade dispute, may adversely affect the global economy and businesses of our clients, which, in turn, would also adversely affect demand for our services. A downturn in the global economy or the economies of countries in which we or our clients operate as a result of any trade dispute could adversely affect our business, financial condition and results of operations.
In addition, current government actions undertaken by various governments to stimulate their respective economies and future government action, including interest rate decreases, changes in monetary policy or intervention in the exchange markets and other government action to adjust the value of the local currency, may trigger inflation. For example, governmental measures to control inflation may include maintaining a tight monetary policy with high interest rates, thereby restricting the availability of credit and reducing economic growth. As a result, interest rates may fluctuate significantly. Furthermore, losses incurred based on the exchange rate used may be exacerbated if regulatory restrictions are imposed when these currencies are converted into U.S. dollars.
The occurrence of such fluctuations, devaluations or other currency risks could have a material adverse effect on our business, financial condition and results of operations.
The United Kingdoms withdrawal from the European Union may have a negative effect on global economic conditions, financial markets and our business.
The United Kingdom formally withdrew from the European Union on January 31, 2020 and entered into a transition period, which ended on December 31, 2020. While the United Kingdom and the European Union entered into a trade and cooperation agreement that went into effect provisionally from January 1, 2021, significant political and economic uncertainty remains about whether the terms of the relationship will differ materially from the terms before withdrawal, including with respect to any possible trade deals with the European Union and measures related to mobility between the United Kingdom and the European Union.
These developments, or the perception that any of them could occur, have had and may continue to have a material adverse effect on global economic conditions and the stability of global financial markets, and may significantly reduce global market liquidity, restrict the ability of key market participants to operate in certain financial markets or restrict our access to capital. Any of these factors could have a material adverse effect on our business, financial condition and results of operations and reduce the price of our ADSs.
If our current insurance coverage is or becomes insufficient to protect against losses incurred, our business, financial condition, results of operations and prospects may be adversely affected.
We maintain some insurance coverage, including professional liability insurance and property insurance coverage for certain of our facilities and equipment for certain of our operations; however, we do not insure for
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all risks in our operations. If any claims for injury are brought against us, or if we experience any business disruption, litigation or natural disaster, we might incur substantial costs and diversion of resources.
We provide services that are integral to our clients businesses. If we were to default in the provision of any contractually agreed-upon services, our clients could suffer significant damages and make claims against us for those damages. Although we believe that we maintain sufficient insurance coverage comparable to other service providers in our industry, the occurrence of an event that causes losses in excess of the limits specified in our policies, or losses arising from events not covered by insurance policies (including any deductibles, exclusions or limitations), could materially harm our business, financial condition, results of operations and prospects. Additionally, we do not maintain key person insurance policies on any of our directors, officers or other personnel. There can be no assurance that any claims filed will be honored fully or timely under our insurance policies. Also, our financial condition may be affected to the extent we suffer any loss or damage that is not covered by insurance or which exceeds our insurance coverage.
Risks Related to Countries Where We Operate
Developments in the social, political, regulatory and economic environment in the countries where we operate, may have a material and adverse impact on us.
Our business, prospects, financial condition and results of operations may be adversely affected by social, political, regulatory and economic developments in countries in which we operate. Such political and economic uncertainties include, but are not limited to, the risks of war, terrorism, nationalism, nullification of contract, changes in interest rates, imposition of capital controls and methods of taxation. For example, we have considerable operations in Singapore, and negative developments in Singapores socio-political environment may adversely affect our business, financial condition, results of operations and prospects. Although the overall economic environment in Singapore and other countries where we operate appears to be positive, there can be no assurance that this will continue to prevail in the future.
Disruptions in the international trading environment may seriously decrease our international sales.
The success and profitability of our international activities depend on certain factors beyond our control, such as general economic conditions, labor conditions, political stability, macro-economic regulating measures, tax laws, import and export duties, transportation difficulties, fluctuation of local currency and foreign exchange controls of the countries in which we sell our services, as well as the political and economic relationships among the jurisdictions where we source products and jurisdictions where our clients customers are located. As a result, our services will continue to be vulnerable to disruptions in the international trading environment, including adverse changes in foreign government regulations, political unrest and international economic downturns. Any disruptions in the international trading environment may affect the demand for our services, which could impact our business, financial condition and results of operations.
Natural events, wars, terrorist attacks and other acts of violence involving any of the countries in which we or our clients have operations could adversely affect our operations and client confidence.
Natural disaster events (such as volcanos, floods and earthquakes), terrorist attacks and other acts of violence or war may adversely disrupt our operations, lead to economic weakness in the countries in which they occur and affect worldwide financial markets, and could potentially lead to economic recession, which could have an adverse effect on our business, financial condition and results of operations. These events could adversely affect our clients levels of business activity and precipitate sudden significant changes in regional and global economic conditions and cycles. These events also pose significant risks to our people and to our business operations around the world.
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Our subsidiaries in Thailand are subject to restrictions on foreign ownership of their shares under Thai law.
We have two subsidiaries in Thailand, namely, Teledirect Telecommerce (Thailand) Limited, or TDTH, in which TDCX SG owns 49% and two Thai shareholders own 51%, and Comparexpress Insurance Broker (Thailand) Ltd., or Comparexpress, in which TDTH, TDCX SG and our Founder hold 60%, 39.999% and 0.001%, respectively, of the total share capital. With respect to TDTH, the shareholders have agreed on certain arrangements, whereby (i) TDCX SG provided the Thai shareholders with interest-free loans for the payment for their shares in TDTH; (ii) such shares are pledged in favor of TDCX SG as security for repayment of such loans; (iii) so long as any amount relating to their respective loan remains unpaid, the Thai shareholders must, at TDCX SGs demand, assign to TDCX SG or its designee all of their voting rights pertaining to such shares in respect of any meeting of shareholders; and (iv) the Thai shareholders shall, upon notice from TDCX SG, sell and transfer such shares to TDCX SG or its designee. In addition, pursuant to the articles of association of TDTH, if and to the extent that it declares dividends, the Thai shareholders, as holders of preference shares, are entitled to receive preferential dividends in an amount of 10% of the par value of those preference shares (such par value being 100 Thai baht per preference share) before distribution of any dividends to the holders of ordinary shares.
Pursuant to the Thai Foreign Business Act B.E. 2542 (1999), or the FBA, a person or entity that is Non-Thai (as defined in the FBA and described in Regulatory Environment Thailand) cannot conduct certain restricted businesses in Thailand, including the businesses that our subsidiaries in Thailand operate, unless an appropriate license is obtained. As our subsidiaries in Thailand are more than 50%, owned by Thai persons or entities, our Thai subsidiaries are not required by the FBA to obtain the license prescribed thereunder. Under the FBA, it is also unlawful for a Thai national or entity to hold shares in a Thai company as a nominee for or on behalf of a foreigner in order to circumvent the foreign ownership restrictions. While there are no prescribed requirements or criteria under the FBA or promulgated by the Ministry of Commerce of Thailand for determining whether a Thai national or entity is holding shares in a Thai company with his or her own genuine investment intent or as a nominee for or on behalf of a foreigner, the investigation manual published in 2015 by the Department of Special Investigation, a government authority which is authorized to conduct investigations on potential violations of the FBA, indicates that the following factors, will be taken into account in an investigation: (i) the intention of the parties, (ii) the source of funds of both shareholders and the company and source of the companys working capital, (iii) the shareholding structure, types of shares, voting rights and control of the Thai and foreign shareholders in the Thai company and (iv) the distribution of dividends by the Thai company to the Thai and foreign shareholders.
In addition, the Civil and Commercial Code of Thailand (as amended) requires a private company to have a minimum number of three shareholders. Failure to comply with such minimum shareholder requirement are grounds on which a Thai court could order dissolution of the company.
Our Thai counsel, Thanathip & Partners Legal Counsellors Limited, is of the opinion that the ownership structure of each of our Thai subsidiaries is in compliance with the FBA based on, among other things, the fact that a majority of the share capital of each Thai subsidiary is held by Thai nationals or entities for their own benefit. The opinion of Thanathip & Partners Legal Counsellors Limited is filed as an exhibit to the registration statement of which this prospectus forms a part. There can be no assurance that the Ministry of Commerce of Thailand will not interpret the FBA or evaluate the shareholding structures or shareholding arrangements of our Thai subsidiaries differently and hence reach a different conclusion, which could lead to an action being brought in the Thai court. In the event of such action and if the Thai court determines that the ownership structure of any of our subsidiaries in Thailand for any reason constitute an illegal nominee arrangement, it may order sanctions, which may include criminal sanctions against us and the Thai shareholders of such subsidiaries in Thailand, and such subsidiaries may be ordered to cease operations in Thailand. If the ownership structure of our Thai subsidiaries is found to be invalid, existing arrangements permit TDCX SG to repurchase the relevant shareholders shares in order to sell them to a suitable third party or take other steps to comply with the FBA. Under such circumstances and despite potential sanctions with respect to past non-compliance, we would inform the Ministry of our intent and efforts to remedy any determination of non-compliance and seek possible relief from sanctions with an aim
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at enabling each of our Thai subsidiaries to continue its business operations going forward. There can be no assurance that the Ministry would grant us such relief or that we would be able to complete any sales of shares to a suitable third party in a timely manner.
If the PRC government deems that Agorae Beijings contractual arrangements do not comply with PRC regulatory restrictions on foreign investment or VATS License requirements, we could be subject to adverse consequences.
Agorae Beijing, our wholly owned subsidiary incorporated in the PRC, provides consulting services to Beijing Rongma Tiancheng Information Technology Co. Ltd., or RMTC, a third party domestically owned PRC company with relevant PRC call center licenses, to support RMTCs provision of call center services to customers in China. Agorae Beijings arrangements with RMTC include a revenue sharing agreement, pursuant to which substantially all of the proceeds from operations of RMTC are received by us.
Under the Foreign Investment Law of the Peoples Republic of China, or the PRC Foreign Investment Law, which came into effect as of January 1, 2020, businesses operating in industries on the negative list are subject to restrictions on foreign ownership. Call center services are a sub-segment of the value-added telecommunications sector, which was included on the negative list until July 2019 (pursuant to the Special Management Measures for the Market Entry of Foreign Investment (Negative List) (2018 Version) and its previous versions). As a result, prior to July 2019, a foreign owned entity, such as Agorae Beijing, could provide call center services in the PRC only through a joint venture with a PRC partner, and the foreign entity was able to hold no more than 50% of the equity in the joint venture. This restriction has been lifted pursuant to the Special Management Measures for the Market Entry of Foreign Investment (Negative List) (2019 Version) which came into effect on July 30, 2019. The Telecommunication Regulation of the Peoples Republic of China, or the PRC Telecommunication Regulation, which was enacted on September 25, 2000 and amended on July 29, 2014 and February 6, 2016, and the Measures on Administration of Licensing for Telecommunication Operation, or Measures on Administration of Licensing for Telecommunication Operation, which came into effect as of September 1, 2017, require that a call center operator in the value-added telecommunications industry obtain a value-added telecommunication service license, or VATS License. Although the restriction on foreign shareholding in call center services businesses has now been lifted, the national implementation rules on how a foreign owned entity can apply for the VATS License have not been promulgated, and it is unclear whether or when the national implementation rules will be enacted.
Agorae Beijing, notwithstanding its arrangements with RMTC, could be deemed to be engaging in a call center business in the PRC in contravention of the negative list and relevant regulations and be required to obtain a VATS License. In such circumstances, the PRC Ministry of Industry and Information Technology (or its local counterparts) could impose sanctions against Agorae Beijing for engaging in a call center business without obtaining a VATS License, including confiscating illegal income, imposing a penalty of three to five times of the entitys illegal income, ordering the entity to suspend its operations, invalidating relevant agreements and prohibiting the entity from obtaining a VATS License in the future. In addition, historical practices in contravention of relevant rules might have an adverse impact on our ability to obtain a VATS License in the future through Agorae Beijing. While TDCX Shanghai, our another wholly owned subsidiary incorporated in the PRC, has obtained a VATS License, the coverage of this license is limited to the Shanghai Free Trade Zone and does not include the business of Agorae Beijing. There can be no assurances that Agorae Beijing would be able to obtain a VATS License if we decided to apply for such a license or that, if we were able to obtain such a license, that we would not incur transition expenses and/or be able to directly hire employees on commercially reasonable terms or at all. Any of the foregoing could have an adverse effect on our business, financial condition, results of operations, prospects and reputation.
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Risks Relating to Investments in Cayman Companies
You may face difficulties in protecting your interests, and your ability to protect your rights through U.S. courts may be limited, because we are incorporated under Cayman Islands law, we conduct substantially all of our operations and all of our directors and executive officers reside outside of the United States.
We are an exempted company incorporated under the laws of the Cayman Islands. Our corporate affairs are governed by our memorandum and articles of association, the Companies Act (as revised), as amended from time to time, of the Cayman Islands and the common law of the Cayman Islands. The rights of shareholders to take action against the directors, actions by minority shareholders and the fiduciary duties of our directors to us under Cayman Islands law are to a large extent governed by the common law of the Cayman Islands. The common law of the Cayman Islands is derived in part from comparatively limited judicial precedent in the Cayman Islands as well as from the common law of England, the decisions of whose courts are of persuasive authority, but are not binding, on a court in the Cayman Islands. The rights of our shareholders and the fiduciary duties of our directors under Cayman Islands law are not as clearly established as they would be under statutes or judicial precedent in some jurisdictions in the United States. In particular, the Cayman Islands has a less developed body of securities laws than the United States. Some U.S. states, such as Delaware, have more fully developed and judicially interpreted bodies of corporate law than the Cayman Islands. In addition, Cayman Islands companies may not have standing to initiate a shareholder derivative action in a federal court of the United States.
Shareholders of Cayman Islands exempted companies like us have no general rights under Cayman Islands law to inspect corporate records (other than the memorandum and articles of association) or to obtain copies of lists of shareholders of these companies. Our directors have discretion under our articles of association to determine whether or not, and under what conditions, our corporate records may be inspected by our shareholders, but are not obliged to make them available to our shareholders. This may make it more difficult for you to obtain the information needed to establish any facts necessary for a shareholder motion or to solicit proxies from other shareholders in connection with a proxy contest.
Certain corporate governance practices in the Cayman Islands, which is our home country, differ significantly from requirements for companies incorporated in other jurisdictions such as the United States. To the extent we choose to follow home country practice with respect to corporate governance matters, our shareholders may be afforded less protection than they otherwise would under rules and regulations applicable to U.S. domestic issuers.
As a result of all of the above, our public shareholders may have more difficulty in protecting their interests in the face of actions taken by management, members of the board of directors or controlling shareholders than they would as public shareholders of a company incorporated in the United States.
Certain judgments obtained against us by our shareholders may not be enforceable.
We are a Cayman Islands exempted company and substantially all of our assets are located outside of the United States. Most of our current operations are conducted in Asia. In addition, our current directors and executive officers are not United States nationals or residents. Substantially all of the assets of these persons are located outside the United States. As a result, it may be difficult or impossible for you to bring an action against us or against these individuals in the United States in the event that you believe that your rights have been infringed under the U.S. federal securities laws or otherwise. Even if you are successful in bringing an action of this kind, the laws of the Cayman Islands and of the jurisdictions that comprise the Asia region may render you unable to enforce a judgment against us, our assets, our directors and executive officers or the assets of our directors and executive officers. For more information regarding the relevant laws of the Cayman Islands and the Asia markets, see Enforceability of Civil Liabilities.
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Risks Relating to our Initial Public Offering and the ADSs
Our Founder, Executive Chairman and Chief Executive Officer, Mr. Laurent Bernard Marie Junique, has considerable influence over important shareholder matters due to his significant voting power over our shares. Our dual-class voting structure will, among other things, limit Class A ordinary shareholders ability to influence corporate matters and could discourage others from pursuing any change of control transactions that holders of our Class A ordinary shares may view as beneficial.
Our ordinary shares are divided into Class A ordinary shares and Class B ordinary shares. The rights of the holders of Class A ordinary shares and Class B ordinary shares are different only with respect to voting, conversion and transfer rights. Holders of Class A ordinary shares are entitled to one vote per share in respect of matters requiring the votes of shareholders, while holders of Class B ordinary shares are entitled to votes per share, subject to certain exceptions. Each Class B ordinary share is convertible into one Class A ordinary share at any time by the holder thereof, while Class A ordinary shares are not convertible into Class B ordinary shares under any circumstances. Upon any sale, transfer, assignment or disposition of any Class B ordinary shares by a holder thereof to any person or other entity, other than certain permitted transfers, or upon a change of ultimate beneficial ownership of any Class B ordinary shares from a holder thereof to any person who is not an affiliate of such holder, such Class B ordinary shares will be automatically and immediately converted into the equal number of Class A ordinary shares. Due to the disparate voting powers associated with our two classes of ordinary shares, Mr. Junique will hold approximately % of the aggregate voting power of our Company immediately following the completion of this offering (assuming no exercise by the underwriters of their option to purchase additional ADSs in full). As a result, Mr. Junique has considerable influence over matters such as electing or removing directors, approving any amendments to our constitution and approving material mergers, acquisitions or other business combination transactions. Furthermore, Mr. Junique has no obligation to guarantee our debt in the future and it may not be in his interest to do so. If Mr. Junique decides not to guarantee any future debt of the Company, it may adversely affect our ability to incur debt, or the terms of any debt we incur, in the future.
For the foreseeable future, investors in this offering and holders of our Class A ordinary shares and ADSs will not have a meaningful voice in our corporate affairs and that the control of our Company will be concentrated with Laurent Bernard Marie Junique. This concentrated control will, among other things, limit your ability to influence corporate matters and could also discourage others from pursuing any potential merger, takeover or other change of control transactions, which could have the effect of depriving the holders of our Class A ordinary shares and ADSs of the opportunity to sell their shares at a premium over the prevailing market price. For a description of the dual-class structure, see Description of Share Capital.
An active trading market for the ADSs may not develop, and you may not be able to sell your ADSs at or above the offering price.
Prior to the completion of this offering, there has been no public market for the ADSs or our Class A ordinary shares. An active trading market for the ADSs may never develop or be sustained following this offering. If an active trading market does not develop, you may have difficulty selling your ADSs at an attractive price, or at all. The price for the ADSs in this offering will be determined by negotiations among the selling shareholders, us and representatives of the underwriters, and it may not be indicative of prices that will prevail in the open market following this offering. Consequently, you may not be able to sell the ADSs at or above the offering price or at any other price or at the time that you would like to sell. An inactive market may also impair our ability to raise capital by selling the ADSs, and it may impair our ability to attract and motivate our personnel through equity incentive awards.
The trading price of the ADSs may be volatile in the future.
The ADSs may trade at prices significantly below the offering price and the price of the ADSs after this offering may fluctuate widely, depending on many factors, including:
| variations in our results of operations; |
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| perceived prospects for our business and operations and for omnichannel CX solutions and business services in general, differences between our actual financial and operating results and those expected by investors and analysts; |
| business or prospects of our clients and specifically new economy companies; |
| changes in analysts recommendations or perceptions; |
| changes in conditions affecting the outsourced business support services industry; |
| changes in market valuations and share prices of publicly listed companies with businesses similar to us; |
| broad stock market price fluctuations; |
| changes in general economic conditions; |
| the announcement of acquisitions by us, our clients or our competitors; |
| passage of legislation or changes in regulations; |
| the addition or departure of key personnel; |
| actions taken by our shareholders; |
| competition; |
| negative publicity about us, our shareholders, affiliates, directors, officers or employees, our content offerings, our business model, our services or our industry; |
| release of lock-up or other transfer restrictions on our outstanding equity securities or sales of additional equity securities; |
| potential litigation or regulatory investigations; or |
| other developments affecting us, our clients or our competitors. |
Furthermore, in recent years, the stock market has experienced significant price and volume fluctuations. This volatility has had a significant impact on the market price of securities issued by many companies, including companies in our and related industries. The volatility frequently appears to occur without regard to the operating performance of the affected companies. As a result, the price of the ADSs could fluctuate based upon factors that have little or nothing to do with us, and these fluctuations could materially reduce our share price.
Future sales of the ADSs, the Class A ordinary shares or our other equity securities, and the availability of a large number of such securities for sale, could depress the price of the ADSs.
The sale of a significant number of the ADSs, Class A ordinary shares or our other equity securities in the public market after this offering, or the perception that such sales may occur, could materially and adversely affect the market price of the ADSs. These factors could also materially impair our ability to raise capital through equity offerings in the future. See Shares Eligible for Future Sale for a discussion of possible future sales of the ADSs.
Upon completion of this offering, we will have ADSs outstanding (representing Class A ordinary shares), assuming no exercise by the underwriters of their option to purchase additional ADSs. The ADSs sold in this offering will be freely tradable without restriction under the Securities Act, except for any shares purchased by any of our existing affiliates, as that term is defined in Rule 144 under the Securities Act. Shares held by our existing shareholders may also be sold in the public market in the future, subject to the restrictions in Rule 144 and Rule 701 under the Securities Act and the applicable lock-up agreements. Although our executive officers, directors, the selling shareholders and certain holders of our capital stock, who will hold in aggregate Class A ordinary shares and Class B ordinary shares representing % of our issued share capital immediately
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following the completion of this offering (assuming no exercise by the underwriters of their option to purchase additional ADSs shares), will be subject to a lock-up, any substantial sale or perceived substantial sale of the ADSs, Class A ordinary shares or the Class B ordinary shares over a short period of time after the expiration of the lock-up period could cause the price of the ADSs to fall. In addition, certain representatives of the underwriters, on behalf of the underwriters, may release all or some portion of the shares subject to the lock-up agreements prior to the expiration of the lock-up period.
Similar sales of Class A ordinary shares or Class B ordinary shares by holders after vesting of awards or holders of options who have exercised their options under any incentive plan that we intend to implement could also cause the price of the Class A ordinary shares to fall.
Because the offering price for the ADSs is substantially higher than our net tangible book value per share, you will incur immediate and substantial dilution.
Purchasers of the ADSs will experience immediate and substantial dilution. After giving effect to the sale of the ADSs offered by this prospectus (assuming no exercise by the underwriters of their option to purchase additional ADSs), and after deducting the underwriting discounts and commissions and the estimated offering expenses payable by us in this offering, our net tangible book value as of , 2021, would have been S$ million, or S$ per share. This represents an immediate dilution of S$ per share to investors in this offering, based on an assumed offering price of S$ per share, which is the midpoint of the price range set forth on the cover page of this prospectus. For a calculation of the dilution purchasers in this offering will incur, see Dilution.
We have broad discretion in the use of the net proceeds received by us from this offering and may not use them effectively.
Our management will have broad discretion in the application of the net proceeds received by us from this offering and could spend the proceeds in ways that do not improve our results of operations or enhance the value of the ADSs and our Class A ordinary shares. Although we have not yet determined with certainty the manner and specific amounts in which we will allocate the net proceeds of this offering, we expect to use the net proceeds from this offering for working capital, to fund growth and for other general corporate purposes, which may include future acquisitions and potential repayment of indebtedness. However, our use of these proceeds may differ substantially from our current plans. The failure by our management to apply these funds effectively could result in financial losses that could adversely affect our business and cause the price of our ADSs to decline. Pending their use, we may invest the net proceeds received by us from this offering in a manner that does not produce income or that loses value.
The depositary for the ADSs will give us a discretionary proxy to vote our ordinary shares underlying your ADSs at shareholders meetings if you do not give voting instructions to the depositary, except in limited circumstances, which could adversely affect your interests.
Under the deposit agreement for the ADSs, the depositary will give us a discretionary proxy to vote our ordinary shares underlying your ADSs at shareholders meetings if you do not give voting instructions to the depositary, unless:
| we have failed to timely provide the depositary with our notice of meeting and related voting materials; |
| we have instructed the depositary that we do not wish a discretionary proxy to be given; |
| we have informed the depositary that there is substantial opposition as to a matter to be voted on at the meeting; |
| a matter to be voted on at the meeting would have a material adverse impact on shareholders; or |
| voting at the meeting is made on a show of hands. |
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The effect of this discretionary proxy is that, if you fail to give voting instructions to the depositary, you cannot prevent our ordinary shares underlying your ADSs from being voted, absent the situations described above, and it may make it more difficult for shareholders to influence our management. Holders of our ordinary shares are not subject to this discretionary proxy.
The voting rights of holders of ADSs are limited by the terms of the deposit agreement, and you may not be able to exercise your right to vote your ordinary shares.
As a holder of ADSs, you will only be able to exercise the voting rights with respect to the underlying ordinary shares represented by your ADSs in accordance with the provisions of the deposit agreement. You may not have the same voting rights as the holders of our ordinary shares and may not receive voting materials in time to be able to exercise your right to vote. Under the deposit agreement, you must vote by giving voting instructions to the depositary. If we ask for your instructions, then upon receipt of your voting instructions, the depositary will try to vote the underlying ordinary shares represented by your ADSs in accordance with these instructions. If we do not instruct the depositary to ask for your instructions, the depositary may still vote in accordance with instructions you give, but it is not required to do so. You will not be able to directly exercise your right to vote with respect to the underlying ordinary shares represented by your ADSs unless you withdraw the underlying ordinary shares represented by your ADSs from the depositary and become a registered holder of such ordinary shares. When a general meeting is convened, you may not receive sufficient advance notice to withdraw the underlying ordinary shares represented by your ADSs to allow you to vote with respect to any specific matter. If we ask for your instructions, the depositary will notify you of the upcoming vote and will arrange to deliver our voting materials to you. We have agreed to give the depositary prior notice of shareholder meetings as far in advance of the meeting date as practicable. Nevertheless, we cannot assure you that you will receive the voting materials in time to ensure that you can instruct the depositary to vote the ordinary shares underlying your ADSs. In addition, the depositary and its agents are not responsible for failing to carry out voting instructions or for their manner of carrying out your voting instructions. This means that you may not be able to exercise your right to vote and you may have no legal remedy if the underlying ordinary shares represented by your ADSs are not voted as you requested.
You may be subject to limitations on the transfer of your ADSs.
Your ADSs are transferable on the books of the depositary. However, the depositary may close its books at any time or from time to time when it deems expedient in connection with the performance of its duties. The depositary may close its books from time to time for a number of reasons, including in connection with corporate events such as a rights offering, during which time the depositary needs to maintain an exact number of ADSs on its books for a specified period. The depositary may also close its books in emergencies, and on weekends and public holidays. The depositary may refuse to deliver, transfer or register transfers of ADSs generally when our share register or the books of the depositary are closed, or at any time if we or the depositary thinks it is advisable to do so because of any requirement of law or of any government or governmental body, or under any provision of the deposit agreement, or for any other reason.
Because we do not expect to pay cash dividends in the foreseeable future after this offering, you must rely on a price appreciation of the ADSs for a return on your investment.
We currently intend to retain most, if not all, of our available funds and any future earnings after this offering to fund the development and growth of our business. As a result, we do not expect to pay any cash dividends in the foreseeable future. Therefore, you should not rely on an investment in the ADSs as a source for any future dividend income.
Our board of directors has complete discretion as to whether to distribute dividends, subject to certain requirements of Cayman Islands law. In addition, our shareholders may by ordinary resolution declare a dividend, but no dividend may exceed the amount recommended by our directors. Under Cayman Islands law, a
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Cayman Islands company may pay a dividend out of either profit or share premium account, provided that in no circumstances may a dividend be paid if this would result in the Company being unable to pay its debts as they fall due in the ordinary course of business. Even if our board of directors decides to declare and pay dividends, the timing, amount and form of future dividends, if any, will depend on our future results of operations and cash flow, our capital requirements and surplus, the amount of distributions, if any, received by us from our subsidiaries, our financial condition, contractual restrictions and other factors deemed relevant by our board of directors.
Accordingly, the return on your investment in the ADSs will likely depend entirely upon any future price appreciation of the ADSs. There is no guarantee that the ADSs will appreciate in value after this offering or even maintain the price at which you purchased the ADSs. You may not realize a return on your investment in the ADSs and you may even lose your entire investment in the ADSs.
You may experience dilution of your holdings due to an inability to participate in rights offerings.
We may from time to time distribute rights to our shareholders, including rights to acquire our securities. Under the deposit agreement for the ADSs, the depositary will not offer those rights to ADS holders unless both the rights and the underlying securities to be distributed to ADS holders are either registered under the Securities Act, or exempt from registration under the Securities Act with respect to all holders of ADSs. We are under no obligation to file a registration statement with respect to any such rights or underlying securities or to endeavor to cause such a registration statement to be declared effective. In addition, we may not be able to take advantage of any exemptions from registration under the Securities Act. Accordingly, holders of the ADSs may be unable to participate in our rights offerings and may experience dilution in their holdings as a result.
Although we have paid dividends in the past, our ability to pay dividends in the future depends on many factors and we cannot guarantee you that we will continue to pay dividends in the future.
Any future determination relating to our dividend policy will be made at the discretion of our board of directors and will depend on then existing conditions, including our financial condition, results of operations, contractual restrictions (including in the agreements governing our credit facilities or other debt instruments), capital requirements, business prospects and other factors our board of directors may deem relevant. In addition, pursuant to the Cayman Islands laws, no dividends may be paid except out of profits or share premium. Furthermore, existing and future financing arrangements may contain covenants that impose restrictions on our business and on our ability to pay dividends under certain circumstances.
We cannot provide assurances regarding the amount or timing of any potential future dividend payments and may decide not to pay dividends in the future. As a result, you should not rely on an investment in the ADSs to provide dividend income and if we do not pay dividends, capital appreciation, if any, of our ordinary shares will be a shareholders sole source of gain for the foreseeable future. See Dividends and Dividend Policy.
As a foreign private issuer and controlled company within the meaning of the NYSE rules, we are permitted to, and we will, rely on exemptions from certain corporate governance standards, including the requirement that a majority of our board of directors consist of independent directors. Our reliance on such exemptions may afford less protection to holders of the ADSs.
The NYSE corporate governance rules require listed companies to have, among other things, a majority of independent board members and independent director oversight of executive compensation, nomination of directors and corporate governance matters. As a foreign private issuer under the securities laws of the United States and controlled company within the meaning of the NYSE corporate governance standards, we are permitted to rely on exemptions from certain NYSE corporate governance practices.
A foreign private issuer must disclose in its annual reports filed with the SEC, each NYSE requirement with which it does not comply followed by a description of its applicable home country practice. As an exempted
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company incorporated in the Cayman Islands and listed on the NYSE, we expect to follow our home country practice with respect to the composition of our board of directors and we do not expect a majority of our directors to be independent. The Companies Act (as revised) of the Cayman Islands and our post-offering amended and restated memorandum and articles of association do not require for a majority of our directors to be independent. As such, unlike the position if we were required to comply with the requirements of the NYSE, we do not need to maintain a board comprising a majority of independent directors. As a result, non-independent directors, may, among other things, resolve governance issues regarding our Company.
As long as we rely on the foreign private issuer exemption to certain of the NYSE corporate governance standards, a majority of the directors on our board of directors are not required to be independent directors, our compensation committee is not required to be comprised entirely of independent directors and we will not be required to have a nominating and corporate governance committee. Therefore, our board of directors approach to governance may be different from that of a board of directors consisting of a majority of independent directors, and, as a result, the management oversight of our Company may be more limited than if we were subject to all of the NYSE corporate governance standards.
In the event we no longer qualify as a foreign private issuer, we intend to rely on the controlled company exemption under the NYSE corporate governance rules. A controlled company under the NYSE corporate governance rules is a company of which more than 50% of the voting power is held by an individual, group or another company. Following this offering, our Founder, Executive Chairman and Chief Executive Officer, will control a majority of the voting power of our outstanding ordinary shares, making us a controlled company within the meaning of the NYSE corporate governance rules. As a controlled company, we would be eligible to, and, in the event we no longer qualify as a foreign private issuer, we intend to elect not to comply with certain of the NYSE corporate governance standards, including the requirement that a majority of directors on our board of directors are independent directors and the requirement that our compensation committee and our nominating and corporate governance committee consist entirely of independent directors.
Accordingly, in the future you may not have the same protections afforded to holders of securities of companies that are subject to all of the requirements under United States federal securities laws and the NYSE corporate governance standards.
The requirements of being a public company may strain our resources, divert managements attention and affect our ability to attract and retain qualified board members.
As a public company, our management will have additional obligations that will require their attention and we will incur additional legal, accounting and other expenses that we have not incurred as a private company, including costs associated with public company reporting requirements. We also have incurred and will incur costs associated with the Sarbanes-Oxley Act, the Dodd-Frank Wall Street Reform and Consumer Protection Act and related rules implemented or to be implemented by the SEC and the rules of the NYSE. The expenses incurred by public companies generally for reporting and corporate governance purposes have been increasing. We expect these rules and regulations to increase our legal and financial compliance costs and to make some activities more time-consuming and costly, although we are currently unable to estimate these costs with any degree of certainty. These laws and regulations could also make it more difficult or costly for us to obtain certain types of insurance, including director and officer liability insurance and we may be forced to accept reduced policy limits and coverage or incur substantially higher costs to obtain the same or similar coverage. These laws and regulations could also make it more difficult for us to attract and retain qualified persons to serve on our board of directors, our board committees or as our executive officers and will require our management and personnel to devote a substantial amount of time to comply with these rules and regulations. Furthermore, if we are unable to satisfy our obligations as a public company, we could be subject to delisting of the ADSs and/or ordinary shares, fines, sanctions and other regulatory action and potentially civil litigation.
If, in the future, we are deemed not to be an emerging growth company, then under Section 404 of the Sarbanes-Oxley Act, we will be required to furnish a report by our management on our internal control over financial
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reporting. To achieve compliance with Section 404 within the prescribed period, we would become engaged in a process to document and evaluate our internal control over financial reporting, which is both costly and challenging. In this regard, we would need to dedicate internal resources, potentially engage outside consultants and adopt a detailed work plan to assess and document the adequacy of internal control over financial reporting, continue steps to improve control processes as appropriate, validate through testing that controls are functioning as documented and implement a continuous reporting and improvement process for internal control over financial reporting. Despite any future efforts, there is a risk that we will not be able to conclude, within the prescribed timeframe or at all, that our internal control over financial reporting is effective as required by Section 404. If we were to identify one or more material weaknesses, it could result in an adverse reaction in the financial markets due to a loss of confidence in the reliability of our financial statements.
You must rely on the judgment of our management as to the use of the net proceeds from this offering, and such use may not produce income which could result in a decrease in our ADS price.
We will retain broad flexibility and discretion in the application of the net proceeds from this offering and could spend the proceeds in ways that do not produce income or increase the ADS price. A portion of the net proceeds from our initial public offering is allocated for general corporate purposes. Shareholders will not have the opportunity to influence our managements decisions on how to use the net proceeds, even if the eventual use of proceeds deviates from the planned use of proceeds described in the section entitled Use of Proceeds. The net proceeds may be used for corporate purposes that do not improve our efforts to achieve or maintain profitability or increase the ADS price, and the net proceeds may be utilized in ways that do not produce income or that lose value and such utilization may cause losses. Our failure to apply these funds effectively could have a material and adverse effect on our business and financial condition.
We may lose our foreign private issuer status which would then require us to comply with the Exchange Acts domestic reporting regime and cause us to incur significant legal, accounting and other expenses.
We are a foreign private issuer and therefore we are not required to comply with certain reporting requirements of the Exchange Act applicable to US domestic issuers, including:
| the sections of the Exchange Act regulating the solicitation of proxies, consents or authorizations in respect of a security registered under the Exchange Act; |
| the sections of the Exchange Act requiring insiders to file public reports of their stock ownership and trading activities and liability for insiders who profit from trades made in a short period of time; |
| the rules under the Exchange Act requiring the filing with the SEC of quarterly reports on Form 10-Q containing unaudited financial and other specified information, or current reports on Form 8-K, upon the occurrence of specified significant events; |
| Regulation FD, which regulates selective disclosure of material information by issuers; and |
| certain more stringent executive compensation disclosure rules. |
In addition, foreign private issuers are not required to file their annual report on Form 20-F until four months after the end of each fiscal year, while US domestic issuers that are accelerated filers are required to file their annual report on Form 10-K within 75 days after the end of each fiscal year. As a result of the above, you may not have the same protections afforded to shareholders of public companies that are not foreign private issuers.
In order to maintain our current status as a foreign private issuer, either (a) a majority of our shares must be either directly or indirectly owned of record by non-residents of the United States or (b)(i) a majority of our executive officers or directors may not be United States citizens or residents, (ii) more than 50% of our assets cannot be located in the United States and (iii) our business must be administered principally outside the United States. If we lose this status, we would be required to comply with the Exchange Act reporting and other requirements
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applicable to US domestic issuers, which are more detailed and extensive than the requirements for foreign private issuers. We may also be required to make changes in our corporate governance practices in accordance with various SEC and NYSE rules. The regulatory and compliance costs to us under US securities laws if we are required to comply with the reporting requirements applicable to a US domestic issuer may be significantly higher than the cost we would incur as a foreign private issuer. As a result, we expect that a loss of foreign private issuer status would increase our legal and financial compliance costs and would make some activities highly time consuming and costly. We also expect that if we were required to comply with the rules and regulations applicable to US domestic issuers, it would make it more difficult and expensive for us to obtain director and officer liability insurance, and we may be required to accept reduced coverage or incur substantially higher costs to obtain coverage. These rules and regulations could also make it more difficult for us to attract and retain qualified members of our board of directors.
We are an emerging growth company and the reduced disclosure requirements applicable to emerging growth companies may make the ADSs less attractive to investors.
We are an emerging growth company, as defined in the JOBS Act, and we may take advantage of specified exemptions from various requirements that are otherwise applicable generally to public companies in the United States. These provisions include:
| the ability to present more limited financial data for this offering, including presenting only two years of audited financial statements and only two years of selected financial data, as well as only two years of related managements discussion and analysis of financial condition and results of operations disclosure; |
| an exemption from the auditor attestation requirement in the assessment of our internal control over financial reporting pursuant to the Sarbanes-Oxley Act; and |
| to the extent that we no longer qualify as a foreign private issuer, (1) reduced disclosure obligations regarding executive compensation in our periodic reports and proxy statements and (2) exemptions from the requirements of holding a nonbinding advisory vote on executive compensation, including golden parachute compensation. |
We may take advantage of certain of these provisions for up to five years after the date of this offering or such earlier time that we are no longer an emerging growth company. We would cease to be an emerging growth company if we have more than $1.07 billion in annual revenue, have more than $700 million in market value of our ordinary shares held by non-affiliates or issue more than $1.0 billion of non-convertible debt over a three-year period. We may choose to take advantage of some but not all of the above-described provisions. For example, Section 107 of the JOBS Act provides that an emerging growth company can use the extended transition period provided in Section 7(a)(2)(B) of the Securities Act for complying with new or revised accounting standards. However, we have elected to opt out of this provision and, as a result, we will comply with new or revised accounting standards as required when they are adopted for public companies. This decision to opt out of the extended transition period under the JOBS Act is irrevocable. We have taken advantage of reduced reporting requirements in this prospectus. Accordingly, the information contained herein may be different than the information you receive from other public companies.
We cannot predict if investors will find the ADSs less attractive as a result of our reliance on exemptions under the JOBS Act. If some investors find the ADSs less attractive as a result, there may be a less active trading market for the ADSs and our share price may be more volatile.
If securities or industry analysts do not publish research or publish unfavorable or inaccurate research about our business, the price of our ADSs and trading volume could decline.
The trading market for the ADSs will depend, in part, on the research reports that securities or industry analysts publish about us or our business. We may be unable to sustain coverage by well-regarded securities and industry
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analysts. If either none or only a limited number of securities or industry analysts maintain coverage of our Company, or if these securities or industry analysts are not widely respected within the general investment community, the trading price for the ADSs would be negatively impacted. In the event that we obtain securities or industry analyst coverage, if one or more of the analysts who cover us downgrade the ADSs or publish inaccurate or unfavorable research about our business, the price per ADS would likely decline. If one or more of these analysts cease coverage of our Company or fail to publish reports on us regularly, demand for the ADSs could decrease, which might cause the price per ADS and trading volume to decline.
We may be classified as a passive foreign investment company, or PFIC, for United States federal income tax purposes, which could subject U.S. Holders of the ADSs or ordinary shares to significant adverse United States income tax consequences.
For United States federal income tax purposes, a non-United States corporation, such as our Company, will be treated as a passive foreign investment company, or PFIC if, in the case of any particular taxable year, either (a) 75% or more of our gross income for such year consists of certain types of passive income or (b) 50% or more of the value of our assets (generally determined on the basis of a quarterly average) during such year produce or are held for the production of passive income. Based upon our current and expected income and assets (including goodwill and taking into account the expected proceeds from this offering) and the expected market price of our ADSs following this offering, we do not expect to be a PFIC for the current taxable year or the foreseeable future.
However, while we do not expect to be or become a PFIC, no assurance can be given in this regard because the determination of whether we are or will become a PFIC for any taxable year is a fact-intensive inquiry made annually that depends, in part, upon the composition and classification of our income and assets. Fluctuations in the market price of our ADSs may cause us to be or become a PFIC for the current or subsequent taxable years because the value of our assets for the purpose of the asset test, including the value of our goodwill and other unbooked intangibles, may be determined by reference to the market price of our ADSs (which may be volatile). The composition of our income and assets may also be affected by how, and how quickly, we use our liquid assets and the cash raised in this offering. It is also possible that the Internal Revenue Service may challenge our classification of certain income or assets or the valuation of our goodwill and other unbooked intangibles, which may result in our company being or becoming a PFIC for the current or future taxable years.
If we were to be or become a PFIC for any taxable year during which a U.S. Holder (as defined in Material Tax ConsiderationsUnited States Federal Income Tax Considerations) holds our ADSs or ordinary shares, certain adverse U.S. federal income tax consequences could apply to such U.S. Holder. See Material Tax ConsiderationsUnited States Federal Income Tax ConsiderationsPassive Foreign Investment Company Considerations.
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SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS
This prospectus contains forward-looking statements that relate to our current expectations and views of future events. These forward-looking statements are contained principally in the sections entitled Prospectus Summary, Risk Factors, Use of Proceeds, Managements Discussion and Analysis of Financial Condition and Results of Operations, Industry Overview and Business. These statements relate to events that involve known and unknown risks, uncertainties and other factors, including those listed under Risk Factors, which may cause our actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by the forward-looking statements.
In some cases, these forward-looking statements can be identified by words or phrases such as believe, plan, expect, intend, should, seek, estimate, will, aim and anticipate, or other similar expressions, but these are not the exclusive means of identifying such statements. All statements other than statements of historical facts included in this document, including those regarding future financial position and results, business strategy, plans and objectives of management for future operations (including development plans and dividends) and statements on future industry growth are forward-looking statements. In addition, we and our representatives may from time to time make other oral or written statements which are forward-looking statements, including in our periodic reports that we will file with the SEC, other information sent to our shareholders and other written materials.
These forward-looking statements are subject to risks, uncertainties and assumptions, some of which are beyond our control. In addition, these forward-looking statements reflect our current views with respect to future events and are not a guarantee of future performance. Actual outcomes may differ materially from the information contained in the forward-looking statements as a result of a number of factors, including, without limitation, the risk factors set forth in Risk Factors and the following:
| Changes in the laws, regulations, policies and guidelines in the jurisdictions in which we operate; |
| The regulatory environment in the jurisdictions in which we operate; |
| Competition in the outsourced business support services industry in the jurisdictions in which we operate; |
| Reliance on certain clients for a significant portion of our revenue; |
| Developments related to the COVID-19 pandemic, including with respect to the success of any vaccines and the ability of economies and our clients to recover from the economic effects of the pandemic; |
| Political instability in the jurisdictions in which we operate; |
| Breaches of laws or regulations in the operation and management of our current and future businesses and assets; |
| The overall economic environment and general market and economic conditions in the jurisdictions in which we operate; |
| Our ability to execute our strategies; |
| Changes in the need for capital and the availability of financing and capital to fund these needs; |
| Our ability to anticipate and respond to changes in the outsourced business support services industry, the markets in which we operate, and in client demands, trends and preferences; |
| Man-made or natural disasters, including war, acts of international or domestic terrorism, civil disturbances, occurrences of catastrophic events and acts of God such as floods, earthquakes, typhoons and other adverse weather and natural conditions that affect our business or assets; |
| The loss of key personnel and the inability to replace such personnel on a timely basis or on terms acceptable to us; |
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| Exchange rate fluctuations, including fluctuations in the exchange rates of currencies that are used in our business; |
| Changes in interest rates or rates of inflation; and |
| Legal, regulatory and other proceedings arising out of our operations. |
The forward-looking statements made in this prospectus relate only to events or information as of the date on which the statements are made in this prospectus. Except as required by law, we undertake no obligation to update or revise publicly any forward-looking statements, whether as a result of new information, future events or otherwise, after the date on which the statements are made or to reflect the occurrence of unanticipated events. You should read this prospectus and the documents that we reference in this prospectus and have filed as exhibits to the registration statement, of which this prospectus is a part, completely and with the understanding that our actual future results or performance may be materially different from what we expect.
This prospectus contains certain data and information that we obtained from various government and private publications; including industry data and information from Frost & Sullivan. Statistical data in these publications also include projections based on a number of assumptions. The market for outsourced business support services may not grow at the rate projected by such market data, or at all. Failure of this industry to grow at the projected rate may have a material and adverse effect on our business and the market price of our ADSs. In addition, the rapidly changing nature of the market for outsourced business support services results in significant uncertainties for any projections or estimates relating to growth prospects or future conditions. Furthermore, if any one or more of the assumptions underlying the market data are later found to be incorrect, actual results may differ from the projections based on these assumptions. You should not place undue reliance on these forward-looking statements.
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ENFORCEABILITY OF CIVIL LIABILITIES
Our company is an exempted company incorporated with limited liability under the laws of the Cayman Islands. We are incorporated in the Cayman Islands because of certain benefits associated with being a Cayman Islands company, such as political and economic stability, an effective judicial system, a favorable tax system, the absence of foreign exchange control or currency restrictions and the availability of professional and support services. However, the Cayman Islands has a less developed body of securities laws as compared to the United States and provides less protection for investors. In addition, Cayman Islands companies may not have standing to sue before the U.S. federal courts.
All of our current operations are conducted outside of the United States and all of our current assets are located outside of the United States, with the majority of our operations and current assets being located in Singapore, the Philippines, Malaysia and Thailand. All of the directors and executive officers of our Company and the auditors of our Company reside outside the United States and substantially all of their assets are located outside the United States. As a result, it may not be possible for investors to effect service of process within the United States upon us or any such persons, or to enforce in the United States any judgment obtained in the U.S. courts against us or any of such persons, including judgments based upon the civil liability provisions of the U.S. securities laws or any U.S. state or territory.
We have appointed as our agent upon whom process may be served in any action brought against us under the securities laws of the United States.
Cayman Islands
Maples and Calder (Hong Kong) LLP, or Maples, our counsel as to Cayman Islands law, has advised us that there is uncertainty as to whether the courts of the Cayman Islands would (i) recognize or enforce judgments of the U.S. courts obtained against us or our directors or executive officers that are predicated upon the civil liability provisions of the U.S. securities laws or any U.S. state, or (ii) entertain original actions brought in the Cayman Islands against us or our directors or executive officers that are predicated upon the U.S. securities laws or any U.S. state.
We have been advised by Maples that although there is no statutory enforcement in the Cayman Islands of judgments obtained in the federal or state courts of the United States (and the Cayman Islands are not a party to any treaties for the reciprocal enforcement or recognition of such judgments), a judgment obtained in such jurisdiction will be recognized and enforced in the courts of the Cayman Islands at common law, without any re-examination of the merits of the underlying dispute, by an action commenced on the foreign judgment debt in the Grand Court of the Cayman Islands, provided such judgment (a) is a judgment in personam rather than in rem, (a) is given by foreign court of competent jurisdiction, (b) imposes on the judgment debtor a liability to pay a liquidated sum for which the judgment has been given or, subject to judicial discretion, a non-monetary judgment in personam, (c) is final and conclusive, (d) is not in respect of taxes, a fine or a penalty or an attempt by a foreign state to act in excess of its jurisdiction by enforcing sovereign acts of that state outside of its own territory, and (e) was not obtained in a manner and is not of a kind the enforcement of which is contrary to natural justice or the public policy of the Cayman Islands. However, the Cayman Islands courts are unlikely to enforce a judgment obtained from the United States courts under civil liability provisions of the U.S. federal securities law if such judgment is determined by the courts of the Cayman Islands to give rise to obligations to make payments that are penal or punitive in nature. Because such a determination has not yet been made by a court of the Cayman Islands, it is uncertain whether such civil liability judgments from the U.S. courts would be enforceable in the Cayman Islands.
Singapore
There is uncertainty as to whether judgments of courts in the United States based upon the civil liability provisions of the securities laws of the United States or any state or territory of the United States will be
56
recognized or enforced by the Singapore courts, and there is doubt as to whether the Singapore courts will enter judgments in original actions brought in the Singapore courts based solely on the civil liability provisions of these securities laws. An in personam final and conclusive judgment in the federal or state courts of the United States under which a fixed or ascertainable sum of money is payable may generally be enforced as a debt in the Singapore courts under the common law as long as it is established that the Singapore courts have jurisdiction over the judgment debtor. However, the Singapore courts are unlikely to enforce a foreign judgment if (a) the foreign judgment is inconsistent with a prior local judgment that is binding on the same parties; (b) the enforcement of the foreign judgment would contravene the public policy of Singapore; (c) the proceedings in which the foreign judgment was obtained were contrary to principles of natural justice; (d) the foreign judgment was obtained by fraud; or (e) the enforcement of the foreign judgment amounts to the direct or indirect enforcement of a foreign penal, revenue or other public law.
In particular, the Singapore Courts may potentially not allow the enforcement of any foreign judgment for a sum payable in respect of taxes, fines, penalties or other similar charges, including the judgments of courts in the United States based upon the civil liability provisions of the securities laws of the United States or any state or territory of the United States. In respect of civil liability provisions of the United States federal and state securities law which permit punitive damages against us and our directors or executive officers, we are unaware of any decision by the Singapore courts which has considered the specific issue of whether a judgment of a United States court based on such civil liability provisions of the securities laws of the United States or any state or territory of the United States is enforceable in Singapore.
Philippines
The Philippines is a signatory to the United Nations Convention on the Recognition and Enforcement of Foreign Arbitral Awards, but it is not a party to any international treaty in relation to the recognition or enforcement of foreign judgments. However, generally accepted principles of international law, by virtue of its incorporation in the Philippine Constitution, form part of Philippine law even if its authority is not derived from treaty obligations. It is by virtue of the recognition by Philippine courts as a generally accepted principle of international law the widespread recognition and enforcement of foreign judgments, that Philippine law recognizes and enforces foreign judgments.
The enforceability of foreign judgments in the Philippines is specifically provided for in the 1997 Rules of Civil Procedure. Section 48 of Rule 39 of the Rules of Civil Procedure provides that a judgment or final order of a tribunal of a foreign country having jurisdiction to give the judgment or final order (a) in the case of a judgment or final order upon specific property, is conclusive upon the title to that property; and (b) in the case of a judgment or final order against a person, is presumptive evidence of a right between the parties and their successors in interest by a subsequent title.
A judgment of final order rendered by a foreign court may, however, be repelled by evidence that: (i) the court rendering such judgment had jurisdiction in accordance with its jurisdictional rules, (ii) the other party had notice of the proceedings, (iii) such judgment was not obtained by collusion or fraud or based on a clear mistake of fact or law, and (iv) such judgment was not contrary to public policy or good morals in the Philippines. Moreover, the Philippines enacted Republic Act No. 9285, otherwise known as the Alternative Dispute Resolution Act of 2004, to facilitate the enforcement of arbitral awards in the Philippines. In addition, Article 17 of the Civil Code of the Philippines provides that the judgment must not be contrary to laws that have for their object public order, public policy and good customs in the Philippines. Furthermore, Philippine courts have held that a foreign judgment is presumed to be valid and binding in the country from which it issues, until the contrary is shown, and the party contesting the foreign judgment has the burden of overcoming the presumption of its validity.
Malaysia
The United States is not one of the reciprocating countries under the Reciprocal Enforcement of Foreign Judgments Act 1958 of Malaysia, or REJA, and as such any foreign judgment obtained in the U.S. courts will not
57
be registerable in the courts of Malaysia in accordance with the provisions of REJA. Nevertheless, an action can be commenced in the courts of Malaysia based on the final and conclusive monetary judgment for a definite sum obtained from the U.S. courts as a common law claim for debt. Such judgment would, upon an action on the judgment at common law, be recognized and enforced by the courts of Malaysia, provided that (a) the judgment was not obtained by fraud or in breach of the principles of natural justice, (b) such judgment is not contrary to Malaysian public policy, and (c) the court giving such judgment had jurisdiction to do so according to Malaysian conflict of laws rules.
Thailand
Our Thai counsel, Thanathip & Partners Legal Counsellors Limited, has advised us that Thai courts will not enforce any judgment or order obtained outside Thailand, but that a judgment or order from a foreign court may, if duly authenticated and translated into Thai and in the discretion of a court in Thailand, be admitted as evidence of an obligation in a new proceeding instituted in that court, which would consider the issue on the evidence before it.
China
There is uncertainty as to whether the courts of the PRC would enforce judgments of United States courts obtained against us or these persons predicated upon the civil liability provisions of the United States federal and state securities laws. The recognition and enforcement of foreign judgments are provided for under the Civil Procedures Law of the Peoples Republic of China, or the PRC Civil Procedures Law, which was adopted on April 9, 1991, and amended on October 28, 2007, August 31, 2012 and June 27, 2017. PRC courts may recognize and enforce foreign judgments in accordance with the requirements of PRC Civil Procedures Law based either on treaties between China and the country where the judgment is made or on reciprocity between jurisdictions. China does not have any treaties or other form of reciprocity with the United States that provide for the reciprocal recognition and enforcement of foreign judgments. In addition, according to the PRC Civil Procedures Law, courts in the PRC will not enforce a foreign judgment against us or our directors and officers if they decide that the judgment violates the basic principles of PRC law or national sovereignty, security or public interest. As a result, it is uncertain whether and on what basis a PRC court would enforce a judgment rendered by a court in the United States.
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We expect that we will receive net proceeds from this offering of approximately US$ , based on an assumed initial public offering price of US$ per ADS, the mid-point of the estimated range of the initial public offering price set forth on the cover of this prospectus, after deducting the underwriting discounts and estimated offering expenses payable by us. If the underwriters exercise their option to purchase additional ADSs from us in full, we expect that we will receive additional net proceeds of US$ after deducting the underwriting discounts and estimated offering expenses payable by us.
A US$1.00 increase/(decrease) in the assumed initial public offer price of US$ per ADS would increase/(decrease) the net proceeds to us from this offering by approximately US$ , or approximately US$ if the underwriters exercise their option to purchase additional ADSs in full, assuming the number of ADSs offered by us, as set forth on the cover page of this prospectus, remains the same, and after deducting the underwriting discounts and estimated offering expenses payable by us.
The primary purposes of this offering are to create a public market for our shares for the benefit of all shareholders, retain talented employees by providing them with equity incentives, obtain additional capital and enhance our brand recognition. We plan to use the net proceeds of this offering as follows;
| US$[188.0] million to repay amounts outstanding under the term loan credit facility, or the Credit Suisse Facility, entered with Credit Suisse AG, Singapore Branch, or Credit Suisse AG, on March 16, 2021, including accrued and unpaid interest and premium (if any). See Description of Certain IndebtednessCredit Suisse Facility; and |
| the remainder to enable us to expand our business into new markets, which would include costs for premises, technology and systems and other infrastructure as well as for hiring of personnel and other expansion related expenses, and for general corporate purposes, including working capital needs and potential acquisitions. |
We will not receive any proceeds from the sale of ADSs by the selling shareholders.
The foregoing represents our current intentions based upon our present plans and business conditions to use and allocate the net proceeds of this offering. Our management, however, will have significant flexibility and discretion to apply the net proceeds of this offering. If an unforeseen event occurs or business conditions change, we may use the proceeds of this offering differently than as described in this prospectus. See Risk FactorsRisks Related to our Initial Public Offering and the ADSsWe have broad discretion in the use of the net proceeds received by us from this offering and may not use them effectively.
Pending any use described above, we plan to invest the net proceeds in short-term, interest bearing obligations, investment-grade instruments or certificates of deposit.
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The following table sets forth our capitalization as of December 31, 2020:
| on an actual basis; |
| on a pro forma basis to reflect (i) the automatic conversion of all of the shares held by our Founder into Class B ordinary shares on a one-for-one basis immediately prior to the completion of this offering; and |
| on a pro forma as adjusted basis to reflect (i) the above, (ii) the issuance and sale of Class A ordinary shares in the form of ADSs by us in this offering at an assumed initial public offering price of US$ per ADS, which is the midpoint of the estimated range of the initial public offering price shown on the front cover of this prospectus, after deducting the underwriting discounts and estimated offering expenses payable by us, assuming the underwriters do not exercise the over-allotment option, and (iii) the application of US$[188.0] million of the net proceeds of the offering to fully repay the amounts outstanding under the Credit Suisse Facility (including accrued and unpaid interest and premium, if any). |
The pro forma as adjusted information below is illustrative only, and our capitalization following the completion of this offering is subject to adjustment based on the actual initial public offering price of our ADSs and other terms of this offering to be determined at pricing. You should read this table in conjunction with Use of Proceeds, Selected Consolidated Financial and Other Data, Managements Discussion and Analysis of Financial Condition and Results of Operations and our consolidated financial statements and related notes included elsewhere in this prospectus.
As of December 31, 2020 | ||||||||||||
Actual | Pro Forma | Pro Forma as Adjusted |
||||||||||
(S$ in thousands) | ||||||||||||
Non-current liabilities |
||||||||||||
Bank loans |
16,136 | |||||||||||
|
|
|
|
|
|
|||||||
Long-term debt |
16,136 | |||||||||||
Equity: |
||||||||||||
Share capital |
* | |||||||||||
Reserves |
(19,843 | ) | ||||||||||
Retained earnings |
132,371 | |||||||||||
Non-controlling interests |
3 | |||||||||||
Total equity |
112,531 | |||||||||||
|
|
|
|
|
|
|||||||
Total capitalization |
128,667 | |||||||||||
|
|
|
|
|
|
* | Amount is less than $1,000 |
On March 16, 2021, we entered into the Credit Suisse Facility. As of the date of this prospectus, there is currently US$188.0 million outstanding. On March 23, 2021, we subsequently distributed US$188.0 million of proceeds from the Credit Suisse Facility to our Founder. See Use of Proceeds and Description of Certain IndebtednessCredit Suisse Facility.
60
We do not intend to pay any dividends on our ordinary shares or ADSs for the foreseeable future. Instead, we anticipate that all of our earnings, if any, will be used for the operation and growth of our business.
We do not have a fixed dividend policy. Any future determination to declare cash dividends would be subject to the discretion of our board of directors and would depend upon various factors, including our results of operations, financial condition and liquidity requirements, restrictions that may be imposed by applicable law and our contracts and other factors deemed relevant by our board of directors. Our Class B ordinary shares have the same general rights to dividends and other distributions as our Class A ordinary shares and no dividends or distributions may be declared on other classes of our shares without also being paid in the same manner to our Class B ordinary shares.
In the event we decide to pay dividends in the future, subject to the Companies Act of the Cayman Islands, our board of directors may from time to time declare dividends in any currency to be paid on our ordinary shares, and our shareholders may by ordinary resolution declare a dividend, but no dividend shall be declared in excess of the amount recommended by our board of directors. Under Cayman Islands law, a Cayman Islands company may pay a dividend out of either profits (including retained earnings) or share premium, provided that in no circumstances may a dividend be paid if this would result in our Company being unable to pay its debts as they fall due in the ordinary course of its business.
Even if our board of directors decides to pay dividends, the form, frequency and amount will depend upon our future operations and earnings, capital requirements and surplus, general financial condition, contractual restrictions and other factors that the board of directors may deem relevant. In addition, we are a holding company and depend on the receipt of dividends and other distributions from our subsidiaries to pay dividends on our ordinary shares. When making recommendations on the timing, amount and form of future dividends, if any, our board of directors will consider, among other things:
| our results of operations and cash flow; |
| our expected financial performance and working capital needs; |
| our future prospects; |
| our capital expenditures and other investment plans; |
| other investment and growth plans; |
| dividend yields of comparable companies globally; |
| restrictions on payment of dividend that may be imposed on us by our financing arrangements; and |
| the general economic and business conditions and other factors deemed relevant by our board of directors and statutory restrictions on the payment of dividends. |
If we pay any dividends on our shares, we will pay those dividends which are payable in respect of the underlying Class A ordinary shares represented by our ADSs to the depositary, as the registered holder of such Class A ordinary shares, and the depositary then will pay such amounts to our ADS holders in proportion to the underlying Class A ordinary shares represented by the ADSs held by such ADS holders, subject to the terms of the deposit agreement, including the fees and expenses payable thereunder. See Description of American Depositary Shares. Cash dividends on our Class A ordinary shares, if any, will be paid in U.S. dollars.
We are a holding company and depend on the receipt of dividends and other distributions from our subsidiaries to pay dividends on our ordinary shares. With the exception of Thailand, Malaysia, the Philippines and the PRC, there are no foreign exchange controls or foreign exchange regulations under current applicable laws of the various places of incorporation of our significant subsidiaries that would affect the payment or remittance of
61
dividends. With respect to Thailand, while Thai laws allow the outward remittance from Thailand of dividends, it is required that the dividend payment in Baht currency (after payment of applicable Thai taxes) must be converted into foreign currency prior to the outward remittance from Thailand as the bank of Thailand has a policy not to allow any person to bring Baht currency out of Thailand.
In Malaysia, the current foreign exchange administration rules allow non-residents to freely repatriate, in a foreign currency, profits and dividends arising from investments or proceeds from divestment of Malaysian Ringgit assets. Dividends are freely transferable out of the country and no exchange controls or approvals are required subject to applicable reporting requirements and withholding tax. However, prior permission from the Controller of Foreign Exchange of Malaysia is required for any person to undertake or engage in any dealing or transaction with the State of Israel or its residents, any entity owned or controlled, directly or indirectly, by the State of Israel or its residents, including any authority or agency of the State of Israel, or any dealing or transaction using or involving the currency of the State of Israel. Furthermore, the Malaysia Companies Act 2016 also provides that (a) generally, a company may only make a distribution to shareholders out of the profits of the company if the company is solvent; (b) before a distribution is paid by a company to a shareholder, such distribution shall be duly authorized by the directors of the company; and (c) unless provided in the constitution of the company, a company may reduce its share capital by a special resolution and either confirmation by a court or a solvency statement by the company.
In the Peoples Republic of China, the core regulations governing foreign currency exchange are the Foreign Exchange Administration Regulations of Peoples Republic of China, or the PRC Foreign Exchange Administration Regulations, promulgated on January 29, 1996, and amended on January 14, 1997 and August 1, 2008. Certain organizations in the PRC, including foreign invested enterprises, may purchase, sell and/or remit foreign currencies at certain banks authorized to conduct foreign exchange business upon providing valid commercial documents. Under the PRC Foreign Exchange Administration Regulations, overseas payment of dividends does not require regulatory approval or review.
According to the Company Law of the Peoples Republic of China, which came into effective on January 1, 2006 and was last amended on October 26, 2018, when a company distributes its profits of the current year, 10% of the profits shall be allocated to its statutory reserve fund. A company is not required to allocate to the statutory reserve fund once the cumulative amount of the statutory reserve fund reaches 50% or more of the companys registered capital. The statutory reserve fund can be used to cover the losses of a company. If there is any loss of a company accrued in previous years, the company shall use its profits from the current year to cover the losses before accruing the statutory reserve fund. After a company has accrued the statutory reserve fund from its profits, it may, upon a resolution of the shareholder(s), accrue a discretionary reserve fund from the profits. After losses of a company have been made up and allocation to the reserve fund has been made, the remaining profits from either the current year or previous years can be distributed to its shareholder(s). A company shall not make distribution to its holdings of its own equity interests. Under the laws of the Peoples Republic of China, dividends paid from our subsidiary located in Beijing are subject to a 10% withholding tax since its shareholder is a non-resident enterprise.
With respect to the Philippines, the board of directors of a Philippine company may only declare dividends out of unrestricted retained earnings. In the case of the payment of stock dividends, the same should be approved by stockholders holding or representing at least two-thirds (2/3) of the outstanding capital stock of the Philippine company. A holder of the shares of a Philippine company shall be entitled to full and immediate repatriation of capital and remittance of dividends, profits and earnings and such holders of shares of the Philippine company shall be entitled to source the foreign exchange necessary for such purposes from the Philippine banking system provided such foreign investment in the shares of the Philippine company has been registered with the Bangko Sentral ng Pilipinas, the central bank of the Philippines. Transfers of the assets of a Philippine company used in
relation to its PEZA-registered business require the consent or approval of PEZA. In addition, the transfer/sale of all or substantially all of the assets of a Philippine company shall be subject to the requirements of Act No. 3952, as amended, otherwise known as the Bulk Sales Law and the Revised Corporation Code of the Philippines.
62
If you invest in our ADSs, your interest will be diluted to the extent of the difference between the initial public offering price per ADS and our net tangible book value per ADS after this offering. Dilution results from the fact that the initial public offering price per ADS is substantially in excess of the book value per ordinary share attributable to the existing shareholders for our presently outstanding ordinary shares.
Our net tangible book value as of December 31, 2020 was approximately S$112.5 million (US$85.1 million), or US$112,531,000 per ordinary share as of that date. Our net tangible book value is determined by subtracting the value of our intangible assets and total liabilities from our total assets. Dilution is determined by subtracting net tangible book value per ordinary share, after giving effect to the additional proceeds we will receive from this offering, from the assumed initial public offering price of US$ per ADS (the midpoint of the estimated initial public offering price range set forth on the front cover of this prospectus) adjusted to reflect the ADS-to-ordinary share ratio, and after deducting underwriting discounts and estimated offering expenses payable by us. [Because the Class A ordinary shares and Class B ordinary shares have the same dividend and other rights, except for voting and conversion rights, the dilution is presented based on all issued and outstanding ordinary shares, including Class A ordinary shares and Class B ordinary shares.]
Without taking into account any other changes in net tangible book value after December 31, 2020, other than to give effect to our sale by us of Class A ordinary shares in the form of the ADSs in this offering at the assumed initial public offering price of US$ per ADS (the midpoint of the estimated initial public offering price range set forth on the front cover of this prospectus) after deducting underwriting discounts and estimated offering expenses payable by us and assuming no exercise of the underwriters option to purchase additional ordinary shares, our pro forma as adjusted net tangible book value as of December 31, 2019 would have been US$ , or US$ per ordinary share and US$ per ADS. This represents an immediate increase in net tangible book value of US$ per ordinary share and US$ per ADS to the existing shareholders and an immediate dilution in net tangible book value of US$ per ordinary share and US$ per ADS to new investors purchasing ADSs in this offering.
The following table illustrates such dilution:
Per Ordinary Share |
Per ADS | |||||||
Assumed initial public offering price |
US$ | US$ | ||||||
Net tangible book value as of December 31, 2020 |
US$ | [●] | US$ | |||||
Amount of dilution in net tangible book value to new investors in this offering |
US$ | US$ | ||||||
Percentage of dilution in net tangible book value to new investors in this offering |
% | % |
A US$1.00 increase/(decrease) in the assumed initial public offering price of US$ per ADS (the midpoint of the estimated initial public offering price range set forth on the front cover of this prospectus) would increase/(decrease) our pro forma as adjusted net tangible book value after giving effect to this offering by US$ per share and US$ per ADS and the dilution in net tangible book value per ordinary share to new investors in this offering by US$ per ordinary share and US$ per ADS, assuming no change to the number of ADSs offered by us as set forth on the cover page of this prospectus, and after deducting the underwriting discounts and estimated offering expenses payable by us.
Assuming the underwriters over-allotment option is exercised in full, our net tangible book value as of December 31, 2020 (after giving effect to this offering) would have been US$ million and US$ per outstanding ordinary share. This represents an immediate dilution in as adjusted net tangible book value of US$ per ordinary share to new investors in this offering.
The as adjusted information discussed above is illustrative only. Our net tangible book value following the completion of this offering is subject to adjustment based on the actual initial public offering price of our ordinary shares and other terms of this offering determined at pricing.
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The following table summarizes, on a pro forma as adjusted basis as of December 31, 2020, the differences between existing shareholders and the new investors with respect to the number of ordinary shares (in the form of ADSs or shares) purchased from us, the total consideration paid and the average price per ordinary share and per ADS paid before deducting the underwriting discounts and estimated offering expenses payable by us. The total number of ordinary shares does not include Class A ordinary shares underlying the ADSs issuable upon the exercise of the overallotment option granted to the underwriters.
Ordinary Shares Purchased |
Total Consideration | Average Price per Ordinary Share |
Average Price per ADS |
|||||||||||||||||||||
Number | Percent | Amount | Percent | |||||||||||||||||||||
Existing shareholders |
US$ | US$ | US$ | |||||||||||||||||||||
New investors |
US$ | US$ | US$ | |||||||||||||||||||||
Total |
100.0 | US$ | 100.0 | US$ | US$ | |||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
If the underwriters were to fully exercise the over-allotment option to purchase additional shares of our Class A ordinary shares from us, the percentage of shares of our shares held by existing shareholders would be %, and the percentage of shares of our common stock held by new investors would be %.
The pro forma information discussed above is illustrative only. Our net tangible book value following the completion of this offering is subject to adjustment based on the actual initial public offering price of our ADSs and other terms of this offering determined at pricing.
[The discussion and tables above assume no exercise of any share options outstanding nor any request by holders of restricted shares to register their vested restricted shares as of the date of this prospectus.] As of the date of this prospectus, there are Class A ordinary shares issuable upon exercise of outstanding [share options] at a [weighted/nominal] exercise price [of US$ per Class A ordinary share]. To the extent that any of these options are exercised, there will be further dilution to new investors.
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SELECTED CONSOLIDATED FINANCIAL AND OTHER DATA
The following selected consolidated financial data as of December 31, 2019 and 2020 and for the years ended December 31, 2018, 2019 and 2020 have been derived from our audited consolidated financial statements included elsewhere in this prospectus. The selected financial data as of December 31, 2018 is derived from audited financial statement not included herein. The selected financial data set forth below should be read in conjunction with, and are qualified by reference to, Managements Discussion and Analysis of Financial Condition and Results of Operations and our consolidated financial statements and notes thereto included elsewhere in this prospectus. Our consolidated financial statements are prepared and presented in accordance with IFRS as issued by the IASB. Our historical results do not necessarily indicate results expected for any future period.
Selected Consolidated Statement of Profit or Loss and Other Comprehensive Income
For the Year Ended December 31, | ||||||||||||||||
2020 | 2019 | 2018 | ||||||||||||||
S$ | US$ | S$ | S$ | |||||||||||||
(in thousands) | ||||||||||||||||
Revenue |
434,723 | 328,812 | 330,265 | 181,233 | ||||||||||||
Employee benefits expense |
(257,985 | ) | (195,133 | ) | (189,912 | ) | (109,373 | ) | ||||||||
Depreciation expense |
(33,065 | ) | (25,009 | ) | (24,599 | ) | (12,908 | ) | ||||||||
Rental and maintenance expense |
(10,603 | ) | (8,020 | ) | (9,220 | ) | (2,623 | ) | ||||||||
Recruitment expense |
(8,005 | ) | (6,055 | ) | (6,680 | ) | (3,792 | ) | ||||||||
Transport and travelling expense |
(1,504 | ) | (1,138 | ) | (2,083 | ) | (1,358 | ) | ||||||||
Telecommunication and technology expense |
(6,305 | ) | (4,769 | ) | (4,522 | ) | (2,385 | ) | ||||||||
Interest expense |
(3,058 | ) | (2,313 | ) | (2,893 | ) | (1,128 | ) | ||||||||
Other operating expense |
(15,836 | ) | (11,978 | ) | (10,478 | ) | (6,872 | ) | ||||||||
Gain on disposal of a subsidiary |
731 | 553 | | | ||||||||||||
Share of profit from an associate |
196 | 148 | | | ||||||||||||
Interest income |
594 | 449 | 465 | 268 | ||||||||||||
Other operating income |
7,514 | 5,683 | 717 | 546 | ||||||||||||
|
|
|
|
|
|
|
|
|||||||||
Profit before income tax |
107,397 | 81,230 | 81,060 | 41,608 | ||||||||||||
Income tax expenses |
(21,303 | ) | (16,113 | ) | (7,524 | ) | (3,520 | ) | ||||||||
|
|
|
|
|
|
|
|
|||||||||
Profit for the year |
86,094 | 65,117 | 73,536 | 38,088 | ||||||||||||
Other comprehensive income (loss)(1) |
536 | 405 | 840 | (71 | ) | |||||||||||
|
|
|
|
|
|
|
|
|||||||||
Total comprehensive income for the year |
86,630 | 65,522 | 74,376 | 38,017 | ||||||||||||
|
|
|
|
|
|
|
|
|||||||||
Basic and diluted earnings per share |
86,093 | 65,116 | 73,535 | 35,271 | ||||||||||||
|
|
|
|
|
|
|
|
|||||||||
Pro forma basic and diluted earnings per share(2) |
Note:
(1) | Other comprehensive income (loss) includes remeasurement of retirement benefit obligation and exchange differences on translation of foreign operations. |
(2) | Unaudited basic and diluted pro forma net income (loss) per share data assumes that an additional of our shares of common stock were outstanding for the [three months period ended March 31, 2021], which represents the number of shares of common stock that we expect to be issued to fund the debt repayment with the net proceeds of this offering as described in Use of Proceeds. The number of shares of common stock that we expect to be issued to fund the debt repayment was calculated in accordance with Staff Accounting Bulletin Topic 3.A. by dividing $ million, which is the estimated cost to repay indebtedness with the proceeds of this offering as described in Use of Proceeds, by $ per share, the low end of the initial public offering price range included on the cover of this prospectus less underwriting discounts and commissions. |
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Selected Consolidated Statement of Financial Position
As of December 31, | ||||||||||||||||
2020 | 2019 | 2018 | ||||||||||||||
S$ | US$ | S$ | S$ | |||||||||||||
(in thousands) | ||||||||||||||||
ASSETS |
||||||||||||||||
Current assets |
||||||||||||||||
Cash and cash equivalents |
59,807 | 45,237 | 35,920 | 23,973 | ||||||||||||
Fixed deposits |
7,727 | 5,844 | 837 | | ||||||||||||
Trade receivables |
36,919 | 27,925 | 55,278 | 27,605 | ||||||||||||
Contract assets |
46,842 | 35,430 | 26,523 | 18,605 | ||||||||||||
Other receivables |
12,257 | 9,271 | 9,210 | 5,392 | ||||||||||||
Tax recoverable |
| | | 350 | ||||||||||||
|
|
|
|
|
|
|
|
|||||||||
Total current assets |
163,552 | 123,707 | 127,768 | 75,925 | ||||||||||||
|
|
|
|
|
|
|
|
|||||||||
Non-current assets |
||||||||||||||||
Pledged deposits |
2,377 | 1,798 | 2,110 | 2,096 | ||||||||||||
Other receivables |
5,874 | 4,443 | 3,708 | 2,931 | ||||||||||||
Plant and equipment |
40,581 | 30,694 | 40,730 | 24,911 | ||||||||||||
Right-of-use assets |
29,221 | 22,102 | 22,840 | 18,586 | ||||||||||||
Loan to an associate |
| | 784 | | ||||||||||||
Deferred tax assets |
1,580 | 1,195 | 1,197 | 329 | ||||||||||||
Investment in an associate |
229 | 173 | 33 | 33 | ||||||||||||
|
|
|
|
|
|
|
|
|||||||||
Total non-current assets |
79,862 | 60,405 | 71,402 | 48,886 | ||||||||||||
|
|
|
|
|
|
|
|
|||||||||
Total assets |
243,414 | 184,112 | 199,170 | 124,811 | ||||||||||||
|
|
|
|
|
|
|
|
|||||||||
LIABILITIES AND EQUITY |
||||||||||||||||
Current liabilities |
||||||||||||||||
Other payables |
37,200 | 28,137 | 26,926 | 15,870 | ||||||||||||
Amount due to a director |
| | | 10,469 | ||||||||||||
Bank loans |
24,170 | 18,282 | 34,421 | 6,374 | ||||||||||||
Lease liabilities |
14,664 | 11,091 | 10,963 | 7,634 | ||||||||||||
Provision for reinstatement cost |
452 | 342 | | | ||||||||||||
Income tax payable |
13,257 | 10,027 | 6,956 | 3,229 | ||||||||||||
|
|
|
|
|
|
|
|
|||||||||
Total current liabilities |
89,743 | 67,879 | 79,266 | 43,575 | ||||||||||||
|
|
|
|
|
|
|
|
|||||||||
Non-current liabilities |
||||||||||||||||
Bank loans |
16,136 | 12,205 | | 24,174 | ||||||||||||
Lease liabilities |
17,823 | 13,481 | 14,498 | 12,495 | ||||||||||||
Provision for reinstatement cost |
5,617 | 4,249 | 4,955 | 1,817 | ||||||||||||
Defined benefit obligation |
1,435 | 1,085 | 769 | 315 | ||||||||||||
Deferred tax liabilities |
129 | 98 | 236 | 365 | ||||||||||||
|
|
|
|
|
|
|
|
|||||||||
Total non-current liabilities |
41,140 | 31,118 | 20,458 | 39,167 | ||||||||||||
|
|
|
|
|
|
|
|
|||||||||
Capital, reserves and non-controlling interest |
||||||||||||||||
Share capital |
* | * | * | * | ||||||||||||
Reserves |
(19,843 | ) | (15,009 | ) | (20,650 | ) | (21,604 | ) | ||||||||
Retained earnings |
132,371 | 100,122 | 120,094 | 63,673 | ||||||||||||
|
|
|
|
|
|
|
|
|||||||||
Equity attributable to owners of the Group |
112,528 | 85,113 | 99,444 | 42,069 | ||||||||||||
Non-controlling interests |
3 | 2 | 2 | 1 | ||||||||||||
|
|
|
|
|
|
|
|
|||||||||
Total equity |
112,531 | 85,115 | 99,446 | 42,070 | ||||||||||||
|
|
|
|
|
|
|
|
|||||||||
Total liabilities and equity |
243,414 | 184,112 | 199,170 | 124,811 | ||||||||||||
|
|
|
|
|
|
|
|
* | Amount is less than $1,000 |
66
Selected Consolidated Statement of Cash Flows
For the Year Ended December 31, | ||||||||||||||||
2020 | 2019 | 2018 | ||||||||||||||
S$ | US$ | S$ | S$ | |||||||||||||
(Restated) | ||||||||||||||||
(in thousands) | ||||||||||||||||
Net cash from operating activities |
130,484 | 98,695 | 76,044 | 37,320 | ||||||||||||
Net cash used in investing activities |
(23,682 | ) | (17,913 | ) | (27,627 | ) | (20,863 | ) | ||||||||
Net cash used in financing activities |
(83,274 | ) | (62,986 | ) | (36,655 | ) | (10,680 | ) | ||||||||
|
|
|
|
|
|
|
|
|||||||||
Net increase in cash and cash equivalents |
23,528 | 17,796 | 11,762 | 5,777 | ||||||||||||
Effect of exchange rate changes on balance of cash held in foreign currencies |
359 | 272 | 185 | (71 | ) | |||||||||||
Cash and cash equivalents at the beginning of year |
35,920 | 27,169 | 23,973 | 18,267 | ||||||||||||
|
|
|
|
|
|
|
|
|||||||||
Cash and cash equivalents at the end of year |
59,807 | 45,237 | 35,920 | 23,973 | ||||||||||||
|
|
|
|
|
|
|
|
Other Financial and Operating Data
Year Ended December 31, | ||||||||||||
2020 | 2019 | 2018 | ||||||||||
Revenue (S$ thousands) |
434,723 | 330,265 | 181,233 | |||||||||
Profit for the year (S$ thousands) |
86,094 | 73,536 | 38,088 | |||||||||
EBITDA (S$ thousands)(1) |
142,926 | 108,087 | 55,376 | |||||||||
Net profit margin (%) |
19.8 | 22.2 | 21.0 | |||||||||
EBITDA margin (%)(1) |
32.9 | 32.7 | 30.6 | |||||||||
Number of clients(2) |
37 | 38 | 36 | |||||||||
Number of agents(2) |
9,128 | 7,213 | 4,608 | |||||||||
Revenue per agent (S$ thousands)(3) |
54 | 54 | 49 | |||||||||
Debt (bank loans) (S$ thousands) |
40,306 | 34,421 | 30,548 | |||||||||
Debt/EBITDA Ratio(1) |
0.3 | 0.3 | 0.6 |
Notes:
(1) | EBITDA, EBITDA margin and Debt/EBITDA Ratio are non-IFRS financial measures. We define EBITDA as profit for the year before interest expense, interest income, income tax expense and depreciation expense, EBITDA margin as EBITDA as a percentage of revenue, Debt as bank loans and Debt/EBITDA Ratio as bank loans divided by EBITDA. EBITDA, EBITDA margin and Debt/EBITDA Ratio are not measures calculated in accordance with IFRS. As a result of our early adoption of IFRS 16 Leases as of January 1, 2017 using the full retrospective approach, EBITDA and EBITDA margin disclosed may not be comparable to similarly titled measures reported by other companies as our calculation includes depreciation on the right-of-use assets and finance costs on lease liabilities. While we believe that EBITDA, EBITDA margin and Debt/EBITDA Ratio provide useful information to investors in understanding and evaluating our results of operations in the same manner as our management, our use of EBITDA, EBITDA margin and Debt/EBITDA Ratio has limitations as an analytical tool and you should not consider it in isolation or as a substitute for analysis of our financial results as reported under IFRS. See Managements Discussion and Analysis of Financial Condition and Results of OperationsKey Financial and Operational MetricsNon-IFRS Financial Measures for information regarding the limitations of using EBITDA, EBITDA margin and Debt/EBITDA Ratio as financial measures. |
67
The following table presents a reconciliation of EBITDA to profit for the year and EBITDA margin to net profit margin, the most directly comparable financial measure calculated and presented in accordance with IFRS, for the periods indicated:
For the Year Ended December 31, | ||||||||||||||||||||||||||||
2020 |
|
2019 | 2018 | |||||||||||||||||||||||||
S$ | US$ | Margin | S$ | Margin | S$ | Margin | ||||||||||||||||||||||
(in thousands, except percentages) | ||||||||||||||||||||||||||||
Revenue |
434,723 | 328,812 | | 330,265 | | 181,233 | | |||||||||||||||||||||
Profit for the year and net profit margin |
86,094 | 65,117 | 19.8 | % | 73,536 | 22.2 | % | 38,088 | 21.0 | % | ||||||||||||||||||
Adjustments: |
||||||||||||||||||||||||||||
Depreciation expense |
33,065 | 25,009 | 7.6 | % | 24,599 | 7.4 | % | 12,908 | 7.1 | % | ||||||||||||||||||
Income tax expenses |
21,303 | 16,113 | 4.9 | % | 7,524 | 2.3 | % | 3,520 | 2.0 | % | ||||||||||||||||||
Interest expense |
3,058 | 2,313 | 0.7 | % | 2,893 | 0.9 | % | 1,128 | 0.6 | % | ||||||||||||||||||
Interest income |
(594 | ) | (449 | ) | (0.1 | %) | (465 | ) | (0.1 | %) | (268 | ) | (0.1 | %) | ||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
EBITDA and EBITDA margin |
142,926 | 108,103 | 32.9 | % | 108,087 | 32.7 | % | 55,376 | 30.6 | % | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(2) | The number of clients and number of agents are calculated as of December 31 of the year indicated. |
(3) | Revenue per agent is calculated as revenue for a period divided by the average of the number of agents at the end of each month during such period. We monitor our revenue per agent because we believe it measures our success in expanding our client relationships higher up the value chain. Our client contracts are mostly based on a fixed rate per FTE dedicated and assigned to the applicable campaign. Under our employee classification system, an FTE is classified as an agent. |
68
MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
You should read the following discussion and analysis of our financial condition and results of operations in conjunction with the information under Selected Consolidated Financial and Other Data and our consolidated financial statements and the related notes included elsewhere in this prospectus. This discussion contains forward-looking statements that involve risks, uncertainties and assumptions. Our actual results and the timing of selected events could differ materially from those anticipated in these forward-looking statements as a result of various factors, including those set forth under Risk Factors and elsewhere in this prospectus.
Overview
We are a high-growth digital customer experience solutions provider for innovative technology and other blue-chip companies. We have specific expertise in providing tailored digital customer experience solutions to manage complex customer interactions. We offer omnichannel CX solutions, sales and digital marketing services and content monitoring and moderation services. We have specific expertise in providing tailored digital customer experience solutions to manage complex customer interactions that go beyond providing boilerplate responses and which require a highly trained workforce capable of effectively delivering our differentiated services and solutions to our clients and their customers. Our focus on complex digital solutions enables us to provide higher value services and solutions for our clients. Our strategy has resulted in a highly attractive financial profile. We have experienced robust growth with our revenue, profit for the year and EBITDA growing at a CAGR of 54.9%, 50.3% and 60.7%, respectively, from the year ended December 31, 2018 to the year ended December 31, 2020. In the years ended December 31, 2018, 2019 and 2020, we recorded revenue of S$181.2 million, S$330.3 million and S$434.7 million (US$328.8 million), profit for the year of S$38.1 million, S$73.5 million and S$86.1 million (US$65.1 million) and EBITDA of S$55.4 million, S$108.1 million and S$142.9 million (US$108.1 million), respectively. For the same periods, we recorded net profit margins of 21.0%, 22.2% and 19.8%, respectively, and EBITDA margins of 30.6%, 32.7% and 32.9%, respectively.
We believe our employees and our distinctive corporate culture are key enablers of our success, a core strength and part of our competitive advantage. Our corporate culture is designed to foster a work environment that attracts, develops and retains a highly skilled workforce that can effectively engage in complex customer interactions. We focus on reinforcing a culture that emphasizes a sustainable and collaborative approach while being fully committed to our clients requirements. We strive to ensure that our distinctive culture is incorporated within all the relationships and processes of our organization and fits within our values and goals.
We have an international footprint. As of the date of this prospectus, we service our clients customers globally in more than 20 languages. This international footprint is supported by 11,351 employees as of December 31, 2020, who are located in offices in nine geographies: Singapore, the Philippines, Malaysia, Thailand, China, Japan, Spain, India and Colombia.
Our business comprises three key service offerings: (1) omnichannel CX solutions; (2) sales and digital marketing services; and (3) content monitoring and moderation services. We also offer services consisting of miscellaneous activities, such as providing workspaces to existing clients and providing human resource and administration services to clients. We help our clients manage relationships with their customers by providing digital customer experience solutions, such as after-sales service and customer support across ten industry verticals, including travel and hospitality, digital advertising and media and fast-moving consumer goods. Our sales and digital marketing services offering helps our clients market their products and services to potential customers in both the business-to-consumer, or B2C, and the business-to-business, or B2B, markets. Our content monitoring and moderation services offering helps our clients create a safe and secure online environment for social media platforms by providing a human touch to content monitoring and moderation services.
69
Factors Affecting Our Results of Operations
We believe that the growth and future success of our business depends on many factors. While each of these factors presents significant opportunities for our business, they also pose important challenges that we must successfully address in order to sustain our growth, improve our results of operations and establish and maintain profitability.
Demand for our services and the pace of adoption of omnichannel CX solutions
We believe the market remains in the early stages of adoption for digital services, and the demand for, and the pace of adoption of, our services is a key driver of our revenues. Over the last few years, the increasing pace of digital change has powered the growth of technology disruptors that rely on outsourced digital customer experience solution providers. Rapid digital change has also driven the disruption of traditional blue-chip companies that have been adopting digital service delivery models. According to Frost & Sullivan, the penetration of outsourced business support services in the traditional economy continues to steadily gain traction as companies expand the scope of the business functions they outsource, particularly as it relates to their digital transformation journey. This increased demand for digital omnichannel CX solutions provides us with the opportunity to further expand our share of our existing clients spending and add new clients, which, in turn, increases our revenues. We have evolved our services to focus on value-added high-complexity offerings. Our focus on handling complex and mission-critical digital customer experience interactions, enhanced by our ability to solve problems for our clients by leveraging customer interaction data analytics, have allowed us to work our way up the value chain and become a comprehensive solutions provider, which we believe has enabled us to continue growing our revenues.
Expanding relationships with existing clients
We are focused on deepening and broadening our engagements with, and campaigns for, our existing clients, and our success in doing so is an important driver of our revenue growth. We have historically proven our ability to significantly scale client relationships over time by expanding the scope and size of our engagements, as well as by taking on work higher up the value chain. For example, Facebook, Airbnb and a leading streaming platform became clients in 2014, 2015 and 2015, respectively, and are now among our key clients due to the expansion of relationships we have with them. In the year ended December 31, 2020, we had 41 clients spending annual fees with us of under S$5.0 million, and these clients provide opportunities for us to expand and upscale our engagements.
We monitor our revenue per agent, which is calculated as revenue for a period divided by the average number of agents for such period, because we believe it measures our success in expanding our client relationships higher up the value chain. Revenue per agent increased 9.3% from S$48,969 in the year ended December 31, 2018 to S$53,545 in the year ended December 31, 2019 and increased 0.6% from S$53,545 in the year ended December 31, 2019 to S$53,869 in the year ended December 31, 2020. Our ability to expand our relationships with our existing clients is driven by several factors such as our track record in consistently providing high quality services to our clients satisfaction across locations and campaigns while staying agile and flexible to serve our clients dynamic and evolving needs. Our strategy has been to open offices in new geographies where we believe that there is strong potential to expand our services offerings to existing clients, grow the number of FTEs we provide in existing campaigns and enhance our share of client spending. As a result, our new office rental and maintenance expenses and other related expenses may increase before we record commensurate increases in revenue or employee benefits expenses.
Delivering complex and high value services for our clients, which impacts pricing of our services and our profitability
We offer customized and differentiated CX solutions and possess the ability to handle complex and mission-critical customer experience interactions. These offerings go well beyond traditional business process
70
outsourcing of help desk functions, as they require a higher degree of training and employee competency to undertake interactions where customer-service scripts would be insufficient to resolve customer problems. This type of work produces higher value for our clients and enables us to price our services accordingly. We also have also increasingly started to gravitate towards high-value, complex interactions, which result in higher margins for our services. For example, since 2018, we have provided technical and customer support for a search engine clients top-tier advertising customers, which were previously handled entirely by our clients in-house team. See BusinessCase StudiesSearch Engine Client. Support for the clients top-tier customers was mission critical, of a higher order of complexity than other interactions with the client, and required shorter issue turnaround times. Consequently, we were able to price these services at higher levels and generate higher margins than other campaigns for this client. Our ability to innovate and offer complex and high value offerings when our clients need them is an important driver of our revenues and margins. Finally, as we expand our service offerings and geographies in which we have delivery centers, we are able to optimize our cost structure across our operations.
Adding new clients that support our growth strategy
From January 1, 2018 to December 31, 2020, we have acquired 26 new clients that we believe offer us the opportunity to effectively execute our growth strategy, even as our overall number of clients has declined. Our new clients are high-growth, new economy disruptors and traditional blue-chip companies engaged in businesses across multiple jurisdictions, whereas many of our legacy clients tended to be locally focused in only one or two jurisdictions. For example, since 2018, we have grown relationships with a global payments platform provider, a leading social network, a leading consumer electronics company, a leading regional e-commerce platform and a leading video game developer. Our newer multinational clients are capable of engaging us in campaigns across more jurisdictions and utilizing a wider range of our services because of their varied, dispersed and more complex business requirements. This transition to a multinational client base has driven the growth of our campaign volumes and revenues. As we continue to develop a multinational client base, we expect the volume of work from our clients across our entire platform to continue to grow. Our ability to add new multinational clients is a driver of our revenues and is impacted by factors such as positive market reputation of our services and our ability to handle complex client omnichannel CX solutions over a broad international footprint.
Efficiently recruiting and managing talent while managing labor costs
We believe the quality of our employees is a key differentiator in securing and retaining business, as well as in delivering a superior customer experience. Through our structured recruitment process and strong emphasis on career development, we strive to attract, develop and retain the industrys higher caliber talent. Our results of operations are impacted by: (1) our ability to recruit within short time frames and manage our employees as we scale our business; (2) our ability to optimize productivity; and (3) our ability to manage labor costs.
Attracting, recruiting and managing talent
Our ability to attract, recruit, nurture, train and develop new employees is critical to our ability to grow and scale our business. While we grow our revenues, we also seek to develop a talent pool that can deliver increasing revenue per agent. It is critical that we hire personnel accurately and efficiently with right profile candidates for new campaigns. For some fast deployment campaigns that require talents that are either highly skilled or not available in great abundance, we may utilize higher cost recruitment sourcing channels such as external recruitment agencies to supplement our internal direct hiring. However, after the initial ramp up phases, as the campaign begins to stabilize and normal employee attrition takes its course, our internal recruitment sourcing allow us to hire new employees at a lower cost. We streamlined our recruitment process and boosted the efficiency of our recruitment activities through the development and implementation of in-house proprietary recruitment systems that work in tandem with external human resource management software platform. For example, we developed Flash, a highly customized, remote, video-based recruitment platform that automates initial candidate screening and selection by conducting online interviews and administrating online tests. Our
71
development and implementation of Flash prior to the COVID-19 pandemic has enabled us to hire employees in growing geographic markets during the COVID-19 pandemic.
Personnel retention is one of our top priorities, and we dedicate resources to the educational development of our employees and employee wellbeing, including the development of their professional skills through obtaining relevant certifications and promoting participation in internal and external training sessions. In the year ended December 31, 2018, 2019 and 2020, our annual voluntary attrition rate, measured by the number of employees that voluntary left us in a period divided by the average number of employees in such period, was 21.5%, 23.1% and 24.8%, respectively, compared to the industry average of 30% to 34% in the Asia Pacific region, according to Frost & Sullivan. Reducing employee attrition helps us control our recruitment expense. In the years ended December 31, 2018, 2019 and 2020, our recruitment expense was 2.7%, 2.7% and 2.4% of our total operating expenses, respectively.
Improving productivity of employees
We believe that our people are our most important asset. We focus on maximizing our employees ability to deliver value to our clients through high-value work, which in turn increases our potential revenue per agent. We have developed effective and cost-efficient training and knowledge-base, or KB Tool, management tools, such as TDU, our online learning platform, and KB Tool, our data portal, which allow us to quickly and effectively train our employees to handle complex interactions and employ them in high-value work. Agents who deliver higher complexity services typically provide higher revenue per agent, on average, with employees providing content monitoring and moderation services providing the highest return, followed by employee providing sales and digital marketing services. We have also invested in technological infrastructure that allows us to enhance productivity, such as AI-enhanced chat-bot functionality that can automatically handle many interactions but can also seamlessly hand contact over to human staff to manage more difficult situations. This allows us to increase the volume of interactions that a single human can support.
Managing labor costs
Employee benefits expense primarily consists of the wages we pay to our employees and is our most significant expense, accounting for 78.5%, 76.7% and 77.4%, of our total operating expenses in the years ended December 31, 2018, 2019 and 2020, respectively. As we continue to grow our business, we expect that our number of employees will increase, which we expect to drive growth in our revenues as well as our employee benefits expense.
While we expect our labor costs to increase in the future as we continue to grow our business and number of employees, we aim to manage our labor costs so that they do not increase at a rate faster than our revenues. We typically formalize a new campaign or expansion of an existing campaign before we hire employees for those campaigns. Our client contracts are mostly based on a fixed rate per FTE dedicated and assigned to the applicable campaign. Under our employee classification system, a FTE is classified as an agent. We seek to secure new campaigns at projected revenue levels that match our estimates of the expansion of our work force and increased costs that we expect to incur based on our accumulated experience in the particular business segment and jurisdiction. When considering the fixed rate for such applicable FTE, we also consider factors such as anticipated cost and wage inflation applicable for the relevant office location and the employee skill set that we need.
Our employee benefits expense with respect to an ongoing campaign is usually relatively stable. However, our overall employee benefit expense varies by the mix of services that we provide and the campaigns we undertake. Employee wages vary by the type of service provided and the skill set of the relevant employees. Agents who deliver higher complexity services typically earn higher wages, on average, with employees providing content monitoring and moderation services receiving the highest wages, followed by employee providing sales and digital marketing services. As the requirements for services we provide change, our employee benefit expense
72
may also change. In addition, the compensation may also include variable components, such as bonuses and performance incentives. In particular, the compensation for employees providing sales and digital marketing services generally includes a higher composition of variable, performance-based commission component linked to a campaigns KPIs, such as sales attainment by agent.
Foreign exchange rate fluctuations
We conduct business in multiple countries and currencies, such as the U.S. dollar, Singapore dollar, Philippines peso and Malaysian ringgit, and the currencies of other countries where we have operations, and exchange rate fluctuations, especially between the Singapore dollar and the U.S. dollar, may impact our results of operations. We earn revenue primarily denominated in U.S. dollars and Singapore dollars. We incur rental payments, and expenses for employee compensation and other operating expenses in the local currencies of the jurisdictions in which we operate. Since our presentation currency is the Singapore dollar, and we translate revenues earned, expenses incurred or assets and liabilities denominated in such currencies to Singapore dollars when preparing our consolidated financial results, we are exposed to fluctuations in foreign exchange rates primarily on (i) fluctuations between the Singapore dollar, on the one hand, and other currencies in which we earn revenue, particularly the U.S. dollar, on the other hand, and (ii) fluctuations between the Singapore dollar, on the one hand and other currencies in which we have expenditures, particularly Philippine pesos, Thai baht and Malaysian ringgit, on the other hand. Currency fluctuations, especially the appreciation of the Singapore dollar relative to the U.S. dollar could negatively impact our results of operations, while an appreciation of the Singapore dollar relative to the Philippine peso, Thai baht, Malaysian ringgit and U.S. dollar could positively impact our results of operations. We are also exposed to foreign exchange rate fluctuations on assets and liabilities denominated in foreign currencies. In certain circumstances, we may utilize forward foreign exchange contracts or option contracts to hedge the risk of foreign exchange volatility of the Singapore dollar, Malaysian ringgit and Philippines peso. For further information regarding the impact of foreign exchange rate fluctuations on our results of operations and our use of foreign exchange derivative contracts, see Quantitative and Qualitative Disclosures About Market RiskForeign Currency Risk.
Income tax expense
We are subject to income taxes in Singapore, the Philippines, Malaysia, Thailand and the other jurisdictions where we have offices. Our income taxes, which is reflected on our consolidated statement of as Income tax expense, consists primarily of taxes incurred, or potential claims from, tax authorities in the jurisdictions in which we operate. Calculation of current tax is based on tax rates and tax laws that have been enacted or substantively enacted at the end of the applicable reporting period. Our effective tax rates differ from the statutory rate applicable to us primarily due to differences between domestic and foreign jurisdiction tax rates, tax credits, non-taxable items, non-deductible expenses, and the impact of tax concessions and benefits in certain jurisdictions. For example, our subsidiary in Malaysia was awarded the Multimedia Super Corridor status in 2005 by the Ministry of Finance and Ministry of International Trade and Industry of Malaysia, which entitled the subsidiary to enjoy tax incentives under the Customized Incentive scheme. The scheme allowed for a partial tax exemption for the subsidiary on the statutory income earned from its core operations for a certain period. However, these benefits expired on January 18, 2020. We have initiated discussions with relevant governmental agency authorities to renew such benefits on a retrospective basis and have applied for these benefits to be extended. In the Philippines, we have benefited from an income tax holiday through our registration with PEZA. Our income tax holiday by PEZA for one of our sites expired on March 31, 2020. We have applied to PEZA for an extension to March 31, 2021. If we do not receive such extension, we expect to incur an additional income tax expense of at least 13.7 million Philippine pesos (approximately S$380,000). Changes in the geographic mix of our revenue can cause our overall effective tax rate to vary from period to period. Our income tax expense for the years ended December 31, 2018, 2019 and 2020 was S$3.5 million, S$7.5 million and S$21.3 million, respectively.
A certain degree of judgment is required in evaluating our tax positions and determining our provision for income taxes. Tax exposures can involve technical interpretations of issues and may require an extended period
73
to resolve. Many tax authorities have significant backlogs of other cases that may also result in extended periods to achieve resolution on open issues. We cannot assure you that the final tax outcome of these matters will not be different from our current estimates. We adjust our reserves in light of changing facts and circumstances, such as the closing of a tax audits, statute of limitation lapses or the refinement of tax estimates. To the extent the final tax outcome of these matters differs from the amounts recorded, such differences will impact the provision for income taxes in the period in which such determination is made. See also, Risk FactorsRisks Related to Our Business and IndustryTax matters, including any reduction or withholding of tax benefits and other incentives we receive, new legislation and actions by taxing authorities may have an adverse effect on our operations, effective tax rate and financial condition.
Certain Income Statements Line Items
Revenue
We derive our revenues from providing services to our clients. Revenue is measured based on the consideration specified in a contract with a client and recognized as and when control of a service is transferred to a client, meaning when the performance obligations to the client are met. We usually enter into master service agreements with our clients, which provide a framework for services and statements of work. These statements of work define the scope, timing, pricing terms and performance obligations for each individual campaign under the respective master service agreements. Our contracts with our clients have both fixed and variable components. The agreements typically specify a fixed rate per FTE that comes with either a variable price component or fee deduction that is based on meeting (or the failure to meet) certain key performance indicators. Based on the transaction price in the agreement for each performance obligation, we invoice our clients on a monthly basis as each performance obligation is satisfied after adjusting for fee deductions based on whether we meet (or fail to meet) certain KPIs (where applicable) during that month. In general, we invoice our clients within five to 30 business days from end of the month and typically receive payment within the 30 to 90 day period from the invoice date set forth in our client contracts.
We discuss below the breakdown of our services by revenue and geographic segment and client concentration. For additional information regarding our revenue recognition policy, see Critical Accounting PoliciesRevenue Recognition.
Revenue by Service
Our business comprises three key service offerings: (1) omnichannel CX solutions; (2) sales and digital marketing services; (3) content monitoring and moderation services. We also receive service fee revenues from miscellaneous activities, such as revenues from renting out workspace within our offices and providing human resource and administration services to clients, as well as other miscellaneous service fees.
The following table sets forth our service provided, by amount and as a percentage of our revenues for the years ended December 31, 2018, 2019 and 2020.
For the Year Ended December 31, | ||||||||||||||||||||||||||||
2020 | 2019 | 2018 | ||||||||||||||||||||||||||
S$ | US$ | % of Revenue |
S$ | % of Revenue |
S$ | % of Revenue |
||||||||||||||||||||||
(in thousands, except percentages) | ||||||||||||||||||||||||||||
Revenue by Service |
||||||||||||||||||||||||||||
Omnichannel CX solutions |
283,427 | 214,376 | 65.2 | 217,349 | 65.8 | 120,238 | 66.4 | |||||||||||||||||||||
Sales and digital marketing |
66,235 | 50,099 | 15.3 | 46,839 | 14.2 | 43,124 | 23.8 | |||||||||||||||||||||
Content monitoring and moderation |
80,170 | 60,638 | 18.4 | 61,526 | 18.6 | 14,361 | 7.9 | |||||||||||||||||||||
Other service fees(1) |
4,891 | 3,699 | 1.1 | 4,551 | 1.4 | 3,510 | 1.9 | |||||||||||||||||||||
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Revenue |
434,723 | 328,812 | 100.0 | 330,265 | 100.0 | 181,233 | 100.0 | |||||||||||||||||||||
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Note:
(1) | Revenues from other service fees include revenues classified in our Consolidated Financial Statements as workspace, payroll outsourcing and other services. |
Geographic Segment
We have an international footprint. As of the date of this prospectus, we service our clients customers globally in more than 20 languages through our offices in nine geographies, namely: Singapore, Malaysia, Thailand, Philippines, Japan, China, Spain, India and Colombia. We present our revenue by geographic location based on which office delivers the service, irrespective of the location of the client engaging our services or the location of the customer that we are interacting with. The delivery center location out of which we provide services does not correlate consistently to the location of the customers of our clients. For example, a particular delivery center location may provide services to client As customers in North America, while a different delivery center location may provide services to client Bs customers in North America, as these determinations vary based on client choices, relevant skills, particular campaigns and other considerations. Delivery center locations out of which we provide services to a particular geography may also vary from period to period, client to client and service to service. Moreover, customers of our clients may access our services from various geographies and not just the location of their residence.
The following table sets forth our revenues by geography, by amount and as a percentage of our revenues for the years ended December 31, 2018, 2019 and 2020.
For the Year Ended December 31, | ||||||||||||||||||||||||||||
2020 | 2019 | 2018 | ||||||||||||||||||||||||||
S$ | US$ | % of Revenue |
S$ | % of Revenue |
S$ | % of Revenue |
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(in thousands, except percentages) | ||||||||||||||||||||||||||||
Geography(1) |
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Singapore(2) |
121,062 | 91,568 | 27.9 | 96,175 | 29.1 | 64,256 | 35.5 | |||||||||||||||||||||
Philippines(3) |
109,268 | 82,647 | 25.1 | 84,169 | 25.5 | 49,946 | 27.5 | |||||||||||||||||||||
Malaysia(2) |
112,976 | 85,452 | 26.0 | 82,795 | 25.1 | 48,421 | 26.7 | |||||||||||||||||||||
Thailand(2) |
54,185 | 40,984 | 12.5 | 41,445 | 12.5 | 12,961 | 7.1 | |||||||||||||||||||||
China |
11,500 | 8,698 | 2.6 | 16,099 | 4.9 | 3,927 | 2.2 | |||||||||||||||||||||
Japan |
22,759 | 17,214 | 5.2 | 9,008 | 2.7 | 1,722 | 1.0 | |||||||||||||||||||||
Spain(4) |
2,973 | 2,249 | 0.7 | 574 | 0.2 | | | |||||||||||||||||||||
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Total |
434,723 | 328,812 | 100.0 | 330,265 | 100.0 | 181,233 | 100.0 | |||||||||||||||||||||
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Notes:
(1) | For a description of the services provided in each of our offices in the above table, along with our offices in Colombia and India, which were opened after December 31, 2019, see Business Our Offices. |
(2) | The offices in Singapore, Malaysia and Thailand primarily provide support to Southeast Asian and North Asian customers in a variety of regional languages, including Mandarin Chinese speakers in the region, which we refer to as our Southeast Asia end-market. |
(3) | The offices in the Philippines primarily provide English language support to customers mainly in North America, the United Kingdom, Ireland, Australia and New Zealand, which we refer to as our Global English end-market. |
(4) | Our office in Spain was opened towards the end of 2018. |
Employee Benefits Expense
Our employee benefits expense consists primarily of wages and salaries paid to agents, support and management personnel, commissions and incentive payments, payments to defined contribution plans, directors remuneration and others.
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Depreciation Expense
Depreciation consists of depreciation expense recorded on right-of-use assets with respect to our property leases, leasehold improvements, furniture and fittings and office equipment and software, over an items useful life.
Rental and Maintenance Expense
Rental and maintenance expense consists of the rent we pay for the use of office equipment, including computer equipment, short term and temporary workspace rental and other costs associated with the maintenance and upkeep of our offices.
Recruitment Expense
Recruitment expenses consists of the expenses related to our recruitment efforts, such as staff referral bonuses, job board subscriptions, placement fee paid to recruiters, contract buyouts paid to former employers of new employees and the costs paid for immigration and work permits, travel and temporary accommodations for expatriate employees.
Transportation and Travelling Expense
Transportation and travelling expense consists of airfare, transport, hotels and other travel allowances paid to our employees for short-term travel.
Telecommunication and Technology Expense
Telecommunication and technology expense consists of telephone, voice, fax and mobile communication costs, data communication costs, information technology supplies, internet connection costs, data network lines and outsourced information technology services.
Interest expense
Interest expense consist of interest on our bank loans and interest on lease liabilities for our property leases.
Other Operating Expense
Other operating expenses consist of advertising costs, cloud software subscription fees, various professional service fees, stamp levies, insurance expense, utilities expense, cleaning and security costs, printing and stationery, other miscellaneous office and establishment costs and gain or loss from foreign exchange movement.
Other Comprehensive Income
We recognize certain items that will not be reclassified to profit or loss on our consolidated statement of income. In particular, we recognize the remeasurement of retirement benefit obligations, which is the fair value of our retirement benefit obligations, which are adjusted on an annual basis to account for changes to the actuarial assumptions used to calculate such amounts, including the relevant mortality rate and future cash flow discount rate.
We also recognize the exchange differences on translation of foreign operations as part of our total comprehensive income, which reflects the currency effects of consolidating our foreign operations.
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Results of Operations
The following table sets forth a summary of our consolidated results of operations, both actual amounts and as a percentage of revenues, for the years ended December 31, 2018, 2019 and 2020.
For the Year Ended December 31, | ||||||||||||
2020 | 2019 | 2018 | ||||||||||
S$ | S$ | S$ | ||||||||||
(in thousands) | ||||||||||||
Revenue |
434,723 | 330,265 | 181,233 | |||||||||
Employee benefits expense |
(257,985 | ) | (189,912 | ) | (109,373 | ) | ||||||
Depreciation expense |
(33,065 | ) | (24,599 | ) | (12,908 | ) | ||||||
Rental and maintenance expense |
(10,603 | ) | (9,220 | ) | (2,623 | ) | ||||||
Recruitment expense |
(8,005 | ) | (6,680 | ) | (3,792 | ) | ||||||
Transport and travelling expense |
(1,504 | ) | (2,083 | ) | (1,358 | ) | ||||||
Telecommunication and technology expense |
(6,305 | ) | (4,522 | ) | (2,385 | ) | ||||||
Interest expense |
(3,058 | ) | (2,893 | ) | (1,128 | ) | ||||||
Other operating expense |
(15,836 | ) | (10,478 | ) | (6,872 | ) | ||||||
Gain on disposal of a subsidiary |
731 | | | |||||||||
Share of profit from an associate |
196 | | | |||||||||
Interest income |
594 | 465 | 268 | |||||||||
Other operating income |
7,514 | 717 | 546 | |||||||||
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Profit before income tax |
107,397 | 81,060 | 41,608 | |||||||||
Income tax expenses |
(21,303 | ) | (7,524 | ) | (3,520 | ) | ||||||
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Profit for the year |
86,094 | 73,536 | 38,088 | |||||||||
Other comprehensive income (loss)(1) |
536 | 840 | (71 | ) | ||||||||
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Total comprehensive income for the year |
86,630 | 74,376 | 38,017 | |||||||||
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Basic and diluted earnings per share |
86,093 | 73,535 | 35,271 | |||||||||
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Note:
(1) | Other comprehensive income (loss) includes remeasurement of retirement benefit obligation and exchange differences on translation of foreign operations. |
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Selected Quarterly Results of Operations
The following table sets forth our unaudited condensed consolidated quarterly results of operations for each of the four quarters from January 1, 2020 to December 31, 2020. You should read the following table in conjunction with our consolidated financial statements and the related notes included elsewhere in this prospectus. We have prepared this unaudited condensed consolidated quarterly financial data on the same basis as we have prepared our audited consolidated financial statements. The unaudited condensed consolidated quarterly financial data include all adjustments, consisting only of normal and recurring adjustments, that our management considers necessary for a fair statement of our financial position and results of operation for the quarters presented.
For the Three Months Ended | ||||||||||||||||
December 31, 2020 |
September 30, 2020 |
June 30, 2020 |
March 31, 2020 |
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S$ | S$ | S$ | S$ | |||||||||||||
(in thousands) | ||||||||||||||||
Revenue |
120,174 | 105,269 | 103,074 | 106,206 | ||||||||||||
Employee benefits expense |
(68,863 | ) | (62,955 | ) | (62,765 | ) | (63,402 | ) | ||||||||
Depreciation expense |
(8,913 | ) | (8,519 | ) | (8,094 | ) | (7,539 | ) | ||||||||
Rental and maintenance expense |
(2,423 | ) | (2,324 | ) | (2,875 | ) | (2,981 | ) | ||||||||
Recruitment expense |
(2,230 | ) | (1,833 | ) | (1,691 | ) | (2,251 | ) | ||||||||
Transport and travelling expense |
(232 | ) | (602 | ) | (301 | ) | (369 | ) | ||||||||
Telecommunication and technology expense |
(1,691 | ) | (1,601 | ) | (1,536 | ) | (1,477 | ) | ||||||||
Interest expense |
(787 | ) | (775 | ) | (703 | ) | (793 | ) | ||||||||
Other operating expense |
(4,171 | ) | (2,613 | ) | (8,179 | ) | (873 | ) | ||||||||
Gain on disposal of a subsidiary |
| | | 731 | ||||||||||||
Share of profit from an associate |
196 | | | | ||||||||||||
Interest income |
169 | 180 | 121 | 124 | ||||||||||||
Other operating income |
1,984 | 1,664 | 3,503 | 363 | ||||||||||||
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Profit before income tax |
33,213 | 25,891 | 20,554 | 27,739 | ||||||||||||
Income tax expenses |
(6,251 | ) | (5,283 | ) | (5,050 | ) | (4,719 | ) | ||||||||
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Profit for the period |
26,962 | 20,608 | 15,504 | 23,020 | ||||||||||||
Other comprehensive income (loss)(1) |
(1,253 | ) | 445 | (400 | ) | 1,744 | ||||||||||
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Total comprehensive income for the period |
25,709 | 21,053 | 15,104 | 24,764 | ||||||||||||
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Basic and diluted earnings per share |
26,961 | 20,607 | 15,503 | 23,019 | ||||||||||||
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Note:
(1) | Other comprehensive income (loss) includes remeasurement of retirement benefit obligation and exchange differences on translation of foreign operations. |
Quarterly Trends
Our revenues and profitability have varied from quarter to quarter. Our revenues slightly decreased in the second quarter of 2020 due to decreased revenue from clients in the travel and hospitality sectors (including from Airbnb) from S$41.3 million in the first quarter of 2020 to S$29.9 million in the second quarter of 2020 resulting from the decrease in travel associated with COVID-19, however this was partially offset by an increase in revenue from existing and newly acquired new economy and traditional blue-chip clients in the same quarter. Revenues from these existing and newly acquired new economy clients continued to grow in the third and fourth quarters of 2020, while revenues from clients in the travel and hospitality sectors began to stabilize and, in some cases, recover. Our other operating expense increased in the second quarter primarily due to transaction costs associated with the offering as well as foreign currency losses arising from the effect of a weakened U.S. dollar on our U.S. dollar-denominated receivables and increased again in the fourth quarter primarily due to similar foreign currency losses as in the second quarter as well as costs associated with our transition into more
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permanent office space in Japan. We also incurred expenses due to the loss of deposits associated with office space which we were planning on utilizing in the second quarter and subsequently decided not to occupy. Our other operating income increased in the second and third quarters of 2020 due to government grants we received in response to the COVID-19 pandemic.
Comparison of Years Ended December 31, 2019 and 2020
Revenue. Our revenues increased by 31.6% to S$434.7 million (US$328.8 million) for the year ended December 31, 2020 from S$330.3 million for the year ended December 31, 2019 primarily due to a 31.5% increase in revenues from providing omnichannel CX solutions, a 36.3% increase in revenue from providing sales and digital marketing service, as well as a 30.3% increase in revenues from providing content monitoring and moderation services. In each case, the increase was primarily driven by increased demand for services from existing new economy clients.
| Our revenues from providing omnichannel CX solutions increased by 30.4% to S$283.4 million (US$214.4 million) for the year ended December 31, 2020 from S$217.4 million for the year ended December 31, 2019 primarily due to increased revenues from one of our largest clients from the expansion of existing campaigns in Singapore and the Philippines, which on a combined basis, contributed to a 157.1% increase in revenues from that client compared to 2019 revenue from that client. This includes campaigns which commenced in 2019 and were in effect for a full year in 2020. Furthermore, we also had increased revenues from another new economy client for services provided from our Malaysia delivery center, which contributed to an 202.4% increase in revenue from that client from 2019. In addition, we generated a 368.1% increase in revenues from a new economy client from 2019 that we onboarded from our Philippines and Japanese delivery centers in the fourth quarter of 2019, due to an increase in scale of these campaigns, as well as the full year effect of providing services to this client. During the same period, these gains were offset by a 13.2% decrease in revenue from clients in the travel and hospitality sectors (including from one of our largest clients), due to the disruptions in the travel industry caused by COVID-19, primarily with respect to services delivered out of our Philippines and Chinese service delivery locations. |
| Our revenues from providing sales and digital marketing services increased by 41.4% to S$66.2 million (US$50.1 million) for the year ended December 31, 2020 from S$46.8 million for the year ended December 31, 2019 primarily due to revenue generated from the expansion of existing campaigns (i) for an existing new economy client from our Singapore office; and (ii) from the expansion of an existing new economy client campaign from our Malaysia office. Our revenue also increased due to the commencement of a new campaign for an existing client from our Beijing office. |
| Our revenues from providing content monitoring and moderation services increased by 30.3% to S$80.2 million (US$60.6 million) for the year ended December 31, 2020 from S$61.5 million in the year ended December 31, 2019 primarily due to the continued expansion of existing content moderation campaigns for one of our largest clients from our Singapore and Thailand offices and the commencement of several new campaigns for this client in the fourth quarter of 2020 from our Thailand office. |
| Our revenues from our other service fees increased by 7.5% to S$4.9 million (US$3.7 million) for the year ended December 31, 2020 from S$4.6 million for the year ended December 31, 2019 primarily due to increase in revenue earned from new projects from our existing clients. |
Employee Benefits Expense. Our employee benefits expense increased by 35.8% to S$258.0 million (US$195.1 million) for the year ended December 31, 2020 from S$189.9 million for the year ended December 31, 2019 primarily due to an increase in employee headcount. Our average number of employees in 2020 increased 23.3% from 2019. The larger rate of increase in employee benefits expense as compared to our average headcount was due to expansion of our existing campaigns and commencement of new campaigns from our existing new economy clients, which had language and skill requirements that required us to hire higher-wage employees. Notwithstanding the overall increase in headcount and employee benefits expense, the decrease
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in activity of a number of campaigns, in particular with respect to the travel and hospitality sector, resulted in layoffs of agents engaged in such campaigns in the second and third quarter of 2020. Following these reductions in headcount, our overall headcount continued to increase as campaigns for clients in other sectors increased in activity throughout 2020.
Depreciation Expense. Our depreciation expense increased by 34.4% to S$33.1 million (US$25.0 million) for the year ended December 31, 2020 from S$24.6 million for the year ended December 31, 2019 primarily due to depreciation on right-of-use assets with respect to our property leases resulting from expansion of office space and/or new leases in Malaysia, the Philippines, Thailand, Shanghai, Colombia and India. In addition, there was increased depreciation on renovations and capital expenditures undertaken to support the growth of our business.
Rental and Maintenance Expense. Our rental and maintenance expenses increased by 15.0% to S$10.6 million (US$8.0 million) for the year ended December 31, 2020 from S$9.2 million for the year ended December 31, 2019 primarily due to increased physical co-working space required for our operations in Yokohama, Japan in 2019 as well as the cleaning and security costs and technology equipment installations in our new and expanded office spaces.
Recruitment Expense. Our recruitment expense increased by 19.8% to S$8.0 million (US$6.1 million) for the year ended December 31, 2020 from S$6.7 million for the year ended December 31, 2019 primarily related to our increase in employee headcount as our average number of employees in 2020 increased 23.3% from 2019. The increase in our recruitment expense was primarily due to increases in the number of our employees in the Philippines whom we hired to fulfill increased demand from our clients as we scaled up existing campaigns and commenced new campaigns and increased expenditure on immigration and work permits in Malaysia and the Philippines due to the increase in foreign employees situated in these offices.
Transport and Travelling Expense. Our transport and travelling expense decreased by 27.8% to S$1.5 million (US$1.1 million) for the year ended December 31, 2020 from S$2.1 million for the year ended December 31, 2019 primarily related to a decrease in travel as a result of COVID-19.
Telecommunication and Technology Expense. Our telecommunication and technology expense increased by 39.4% to S$6.3 million (US$4.8 million) for the year ended December 31, 2020 from S$4.5 million for the year ended December 31, 2019 primarily due to increased costs of telecommunications infrastructure and greater payments for software licenses as we expanded our business. In addition, our data usage significantly increased due to client preferences with respect to the retention of control of their customers information, which requires us to use more data to access customer information on our clients networks than if the customer information were stored on our own network.
Interest expense. Our interest expense increased by 5.7% to S$3.1 million (US$2.3 million) for the year ended December 31, 2020 from S$2.9 million for the year ended December 31, 2019 primarily due to an increase in interest expense on lease liabilities.
Other Operating Expense. Our other operating expenses increased by 51.1% to S$15.8 million (US$12.0 million) for the year ended December 31, 2020 from S$10.5 million for the year ended December 31, 2019 primarily due to transaction costs associated with the offering, an increase in professional fees and the forfeiture of upfront deposits paid by our subsidiary in Japan due to premature termination of the rental commitment in view of the planned relocation of the operations to its own-fitted office site in Yokohama scheduled by end of the second quarter of 2021. These increases were partly offset by reductions in realized and unrealized foreign exchange currency losses.
Gain on Disposal of a Subsidiary. Our gain on disposal of a subsidiary increased by 100.0% to S$0.7 million (US$0.6 million) for the year ended December 31, 2020 due to the disposal of a subsidiary in Indonesia during the year.
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Share of Profit from an Associate. Our share of profit from an associate increased by 100.0% to S$0.2 million (US$0.1 million) for the year ended December 31, 2020 due to recognition of the share of profit from an associate in Hong Kong during the year.
Other Operating Income. Our other operating income increased by 948.0% to S$7.5 million (US$5.7 million) for the year ended December 31, 2020 from S$0.7 million for the year ended December 31, 2019 primarily due to an increase in government grant and credit scheme subsidies in Singapore, the most significant of which relates to the Jobs Support Scheme, which contributed to an S$5.3 million increase.
Profit Before Income Tax. As a result of the foregoing, our profit before income tax increased by 32.5% to S$107.4 million (US$81.2 million) for the year ended December 31, 2020 from S$81.1 million for the year ended December 31, 2019.
Income Tax Expenses. Our income tax expenses increased by 183.1% to S$21.3 million (US$16.1 million) for the year ended December 31, 2020 from S$7.5 million for the year ended December 31, 2019. The rate of increase in income tax expenses was higher than the 32.5% increase in profit before tax because of the expiration of tax incentives in Malaysia in January 2020, which resulted in our Malaysian office paying standard corporate tax rates in 2020, as well as an increase in taxable profit generated from Singapore.
Profit for the year. As a result of the foregoing, our profit for the year increased by 17.1% to S$86.1 million (US$65.1 million) for the year ended December 31, 2020 from S$73.5 million for the year ended December 31, 2019.
Other Comprehensive Income. Our other comprehensive income was S$0.5 million (US$0.4 million) in 2020, compared to S$0.8 million in 2018, primarily due to effects of exchange rate differences on translation of foreign operations.
Total Comprehensive Income for the Year. As a result of the foregoing, our total comprehensive income for the year increased by 16.5% to S$86.6 million (US$65.5 million) for the year ended December 31, 2020 from S$74.4 million for the year ended December 31, 2019.
Comparison of Years Ended December 31, 2018 and 2019
Revenue. Our revenues increased by 82.2% to S$330.3 million for the year ended December 31, 2019 from S$181.2 million for the year ended December 31, 2018 primarily due to a 80.8% increase in revenues from providing omnichannel CX solutions, a 8.6% increase in revenue from providing sales and digital marketing service, as well as a 328.4% increase in revenues from providing content monitoring and moderation services. In each case, these increases were primarily driven by increased demand for services from existing clients.
| Our revenues from providing omnichannel CX solutions increased by 80.8% to S$217.4 million for the year ended December 31, 2019 from S$120.2 million for the year ended December 31, 2018 primarily due to increased revenues from two of our largest clients for key campaigns from our Singapore, Philippines and Malaysia offices, which on a combined basis, contributed to a 42.2% increase in revenues from 2018. This includes campaigns which commenced in the second half of 2018 and were in effect for a full year in 2019 with one of our largest clients. Furthermore, we also had increased revenues from one of our largest clients for services provided from our Japan and China delivery centers, which on a combined basis contributed to an 8.4% increase in revenue from 2018. In addition, we generated a 5.0% increase in revenues from 2018 from a new economy client that we onboarded from our Malaysia office in the second quarter of 2018, due to an increase in scale of the campaign, as well as the full year effect of providing services to this client. |
| Our revenues from providing sales and digital marketing services increased by 8.6% to S$46.8 million for the year ended December 31, 2019 from S$43.1 million for the year ended December 31, 2018 |
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primarily due to revenue generated from new campaigns (i) for an existing new economy client from our Japan office that commenced in December 2018 but that we scaled up through 2019; (ii) from our Malaysia office that commenced in the second quarter of 2019; and (iii) from our Beijing office in the second and third quarters of 2019. There were also campaigns that commenced in the first and third quarters of 2018 for the same new economy client from our Malaysia office and continued throughout the year in 2019. This new economy client contributed to a 21.7% increase in revenues from 2018. |
| Our revenues from providing content monitoring and moderation services increased by 328.4% to S$61.5 million for the year ended December 31, 2019 from S$14.4 million in the year ended December 31, 2018, primarily due to the commencement of a content moderation campaign for one of our largest clients in the third quarter of 2018 from our Singapore and Thailand offices. The campaign subsequently became fully operational and significantly contributed to our revenue in 2019. |
| Our revenues from our other service fees increased by 29.7% to S$4.6 million for the year ended December 31, 2019 from S$3.5 million for the year ended December 31, 2018 primarily due to an increase in revenue earned from new projects from our existing clients. |
Employee Benefits Expense. Our employee benefits expense increased by 73.6% to S$189.9 million for the year ended December 31, 2019 from S$109.4 million for the year ended December 31, 2018 primarily due to an increase in employee headcount. Our average number of employees in 2019 increased 66.4% from 2018. The larger rate of increase in employee benefits expense as compared to our average headcount was due to expansion of our existing campaigns and commencement of new campaigns from our existing new economy clients, which had language and skill requirements that required us to hire higher-wage employees. In addition, the full year effect with respect to employees of certain significant new campaigns that were launched in the third and fourth quarters of 2018 contributed to the increase in employee benefits expense for the year ended December 31, 2019.
Depreciation Expense. Our depreciation expense increased by 90.6% to S$24.6 million for the year ended December 31, 2019 from S$12.9 million for the year ended December 31, 2018 due to increased depreciation on renovations and capital expenditure incurred to keep pace with our business volume growth, especially in Singapore, Malaysia, Philippines and Thailand. In addition, there was increased depreciation on right-of-use assets with respect to our property leases resulting from expansion of office space, especially in Thailand.
Rental and Maintenance Expense. Our rental and maintenance expenses increased by 251.5% to S$9.2 million for the year ended December 31, 2019 from S$2.6 million for the year ended December 31, 2018 primarily due to increased physical co-working space required for our operations (for the establishment of our short term temporary workspace in Spain and Yokohama, Japan in 2019) as well as the technology equipment installations at these new premises.
Recruitment Expense. Our recruitment expense increased by 76.2% to S$6.7 million for the year ended December 31, 2019 from S$3.8 million for the year ended December 31, 2018 primarily related to our rapid increase in employee headcount as our average number of employees in 2019 increased 66.4% from 2018. The increase in our recruitment expense was primarily due to increases in the number of our employees in China, Japan, the Philippines and Malaysia whom we hired to fulfill increased demand from our clients as we scaled up existing campaigns and commenced new campaigns.
Transport and Travelling Expense. Our transport and travelling expense increased by 53.4% to S$2.1 million for the year ended December 31, 2019 from S$1.4 million for the year ended December 31, 2018 primarily related to the increase in our headcount and the expansion of our geographic footprint.
Telecommunication and Technology Expense. Our telecommunication and technology expense increased by 89.6% to S$4.5 million for the year ended December 31, 2019 from S$2.4 million for the year ended December 31, 2018 primarily due to increased costs of telecommunications infrastructure as we expanded our business. In addition, our data usage significantly increased due to client preferences with respect to the retention of control of their customers information, which requires us to use more data to access customer information on our clients networks than if the customer information were stored on our own network.
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Interest expense. Our interest expense increased by 156.5% to S$2.9 million for the year ended December 31, 2019 from S$1.1 million for the year ended December 31, 2018 primarily due to the increase in indebtedness in connection with bank loans as well as an increase in interest expense on lease liabilities.
Other Operating Expense. Our other operating expenses increased by 52.5% to S$10.5 million for the year ended December 31, 2019 from S$6.9 million for the year ended December 31, 2018 primarily due to an increase in utilities and maintenance expenses as a result of our increase in office space, as well as realized and unrealized foreign exchange currency loss.
Other Operating Income. Our other operating income increased by 31.3% to S$0.7 million for the year ended December 31, 2019 from S$0.5 million for the year ended December 31, 2018 due to an increase in government grant and credit scheme subsidies in Singapore.
Profit Before Income Tax. As a result of the foregoing, our profit before income tax increased by 94.8% to S$81.1 million for the year ended December 31, 2019 from S$41.6 million for the year ended December 31, 2018.
Income Tax Expenses. Our income tax expenses increased by 113.8% to S$7.5 million for the year ended December 31, 2019 from S$3.5 million for the year ended December 31, 2018. The rate of increase in income tax expenses was marginally higher than the 94.8% increase in profit before tax because of the larger contribution of taxable profit generated from our Singapore and Thailand offices, which were not entitled to tax incentives similar to those received by our offices in the Philippines and Malaysia over the same period.
Profit for the year. As a result of the foregoing, our profit for the year increased by 93.1% to S$73.5 million for the year ended December 31, 2019 from S$38.1 million for the year ended December 31, 2018.
Other Comprehensive Income. Our other comprehensive income was S$0.8 million in 2019, compared to minimal income in 2018, primarily due to effects of exchange rate differences on translation of foreign operations.
Total Comprehensive Income for the Year. As a result of the foregoing, our total comprehensive income for the year increased by 95.6% to S$74.4 million for the year ended December 31, 2019 from S$38.0 million for the year ended December 31, 2018.
Key Financial and Operating Metrics
We regularly monitor a number of financial and operating metrics to evaluate our business, measure our performance, identify trends affecting our business, formulate financial projections and make strategic decisions. Our financial and operating metrics may be calculated in a different manner than similarly titled metrics reported by other companies.
The following table sets forth our key financial and operating metrics as of and for the periods indicated.
Year Ended December 31, | ||||||||||||
2020 | 2019 | 2018 | ||||||||||
Revenue (S$ thousands) |
434,723 | 330,265 | 181,233 | |||||||||
Profit for the year (S$ thousands) |
86,094 | 73,536 | 38,088 | |||||||||
EBITDA (S$ thousands)(1) |
142,926 | 108,087 | 55,376 | |||||||||
Net profit margin (%) |
19.8 | 22.2 | 21.0 | |||||||||
EBITDA margin (%)(1) |
32.9 | 32.7 | 30.6 | |||||||||
Number of clients(2) |
37 | 38 | 36 | |||||||||
Number of agents(2) |
9,128 | 7,213 | 4,608 | |||||||||
Revenue per agent (S$ thousands)(3) |
54 | 54 | 49 | |||||||||
Debt (bank loans) (S$ thousands) |
40,306 | 34,421 | 30,548 | |||||||||
Debt/EBITDA Ratio(1) |
0.3 | 0.3 | 0.6 |
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Notes:
(1) | EBITDA and Debt/EBITDA Ratio are non-IFRS financial measures. See Non-IFRS Financial Measures for information regarding the limitations of using EBITDA as a financial measure. |
(2) | As of the end of the year. |
(3) | Revenue per agent is calculated as revenue for a period divided by the average of the number of agents at the end of each month during such period. We monitor our revenue per agent because we believe it measures our success in expanding our client relationships higher up the value chain. Our client contracts are mostly based on a fixed rate per FTE dedicated and assigned to the applicable campaign. Under our employee classification system, an FTE is classified as an "agent." |
Non-IFRS Financial Measurements
EBITDA, EBITDA margin and Debt/EBITDA Ratio are non-IFRS financial measures. We monitor EBITDA and EBITDA margin because they assist us in comparing our operating performance on a consistent basis by removing the impact of items not directly resulting from our core operations. We define EBITDA as profit for the year before interest expense, interest income, income tax expense and depreciation expense, EBITDA margin as EBITDA as a percentage of revenue, Debt as bank loans and Debt/EBITDA Ratio as bank loans divided by EBITDA. EBITDA, EBITDA margin and Debt/EBITDA Ratio are not measures calculated in accordance with IFRS. As a result of our early adoption of IFRS 16 Leases as of January 1, 2017 using the full retrospective approach, EBITDA and EBITDA margin disclosed may not be comparable to similarly titled measures reported by other companies as our calculation includes depreciation on the right-of-use assets and finance costs on lease liabilities. While we believe that EBITDA, EBITDA margin and Debt/EBITDA Ratio provide useful information to investors in understanding and evaluating our results of operations in the same manner as our management, our use of EBITDA, EBITDA margin and Debt/EBITDA Ratio have limitations as analytical tools and you should not consider these in isolation or as a substitute for analysis of our results of operations or financial condition as reported under IFRS.
The following table presents a reconciliation of EBITDA to profit for the year and EBITDA margin to net profit margin, the most directly comparable financial measure calculated and presented in accordance with IFRS, for the periods indicated:
For the Year Ended December 31, | ||||||||||||||||||||||||||||
2020 | 2019 | 2018 | ||||||||||||||||||||||||||
S$ | US$ | Margin | S$ | Margin | S$ | Margin | ||||||||||||||||||||||
(in thousands, except percentages) | ||||||||||||||||||||||||||||
Revenue |
434,723 | 328,812 | | 330,265 | | 181,233 | | |||||||||||||||||||||
Profit for the year and net profit margin |
86,094 | 65,117 | 19.8 | % | 73,536 | 22.2 | % | 38,088 | 21.0 | % | ||||||||||||||||||
Adjustments: |
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Depreciation expense |
33,065 | 25,009 | 7.6 | % | 24,599 | 7.4 | % | 12,908 | 7.1 | % | ||||||||||||||||||
Income tax expenses |
21,303 | 16,113 | 4.9 | % | 7,524 | 2.3 | % | 3,520 | 2.0 | % | ||||||||||||||||||
Interest expense |
3,058 | 2,313 | 0.7 | % | 2,893 | 0.9 | % | 1,128 | 0.6 | % | ||||||||||||||||||
Interest income |
(594 | ) | (449 | ) | (0.1 | %) | (465 | ) | (0.1 | %) | (268 | ) | (0.1 | %) | ||||||||||||||
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EBITDA and EBITDA margin |
142,926 | 108,103 | 32.9 | % | 108,087 | 32.7 | % | 55,376 | 30.6 | % | ||||||||||||||||||
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Liquidity and Capital Resources
Capital Resources
Our primary sources of liquidity are cash flows generated from operating activities and borrowings under our credit facilities. For further details, see Description of Certain Indebtedness. As of December 31, 2020, we had S$59.8 million (US$45.2 million) of cash and cash equivalents, S$7.7 million (US$5.8 million) of fixed deposits
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and S$2.4 million (US$1.8 million) of pledged deposits out of which S$1.9 million (US$1.4 million) is used to secure the facilities described below.
Our cash needs are primarily for the funding of capital expenditures and working capital.
We incur capital expenditures primarily for the expansion of offices, including for fixtures and furnishings for both new offices and existing offices. During the years ended December 31, 2018, 2019 and 2020, we incurred capital expenditures of S$19.7 million, S$29.0 million, and S$18.2 million, respectively. We principally source the funds for our capital expenditures from internally generated cash from operations.
Our primary working capital requirements arise typically from the timing gap between our payroll-related obligations, office and equipment lease, statutory payments and contributions, bills for capital expenditures and the invoicing and collection of fee income from our clients.
We believe that our available cash and cash equivalents and cash flows expected to be generated from operations will be adequate to satisfy our current and planned operations for the next 12 months. Our ability to expand and grow our business in accordance with our current plans and to meet our long-term capital requirements will depend on many factors, including the rate, if any, at which our cash flows increase, and the availability of public and private debt and equity financing. To the extent we pursue one or more significant strategic acquisitions, we may incur debt or issue equity to finance any such acquisitions. If we issue equity securities in order to raise additional funds, substantial dilution to existing shareholders may occur. If we raise cash through the issuance of indebtedness, or the refinancing of our existing credit facilities, we may be subject to additional contractual restrictions on our business.
Cash Flows
The following table summarizes our cash flows for the years ended December 31, 2018, 2019 and 2020.
For the Year Ended December 31, |
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2020 | 2019 | 2018 | ||||||||||
S$ | S$ | S$ | ||||||||||
(Restated) | ||||||||||||
(in thousands) | ||||||||||||
Net cash from operating activities |
130,484 | 76,044 | 37,320 | |||||||||
Net cash used in investing activities |
(23,682 | ) | (27,627 | ) | (20,863 | ) | ||||||
Net cash used in financing activities |
(83,274 | ) | (36,655 | ) | (10,680 | ) | ||||||
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Net increase in cash and cash equivalents |
23,528 | 11,762 | 5,777 | |||||||||
Effect of exchange rate changes on balance of cash held in foreign currencies |
359 | 185 | (71 | ) | ||||||||
Cash and cash equivalents at the beginning of year |
35,920 | 23,973 | 18,267 | |||||||||
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Cash and cash equivalents at the end of year |
59,807 | 35,920 | 23,973 | |||||||||
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Net cash from operating activities
Net cash from operating activities in the year ended December 31, 2020 was S$130.5 million (US$98.7 million), primarily comprising profit before income tax of S$107.4 million, adjusted for non-cash items including depreciation expense of S$33.1 million; a decrease in trade receivables of S$19.1 million primarily due to faster collection of outstanding trade receivables as a result of tightened credit controls in view of the COVID-19 pandemic situation and an increase in other payables of S$9.5 million primarily related to accrued employee benefit expenses and accrued other operating expenses as a result of the increased demand on staffing and other operating requirements, partially offset by an increase in contract assets of S$20.1 million, consisting of unbilled invoices for services performed towards the end of the year, and an increase in other receivables of S$5.0 million related to government grants and credit scheme subsidies in Singapore and deposits paid to landlords and contracts for the lease and fit out of new office space.
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Net cash from operating activities in the year ended December 31, 2019 was S$76.0 million, primarily comprising profit before income tax of S$81.1 million, adjusted for non-cash items including depreciation expense of S$24.6 million; an increase in trade receivables of S$27.2 million primarily due to an increase in our revenue, an increase in contract assets of S$7.7 million, consisting of unbilled invoices for services performed towards the end of the year, and an increase in other receivables of S$3.2 million related to deposits paid to landlords and contracts for the lease and fit out of new office space and prepayment of professional fees, partially offset by an increase in other payables of S$9.8 million primarily related to accrued employee benefit expense and accrued professional fees.
Net cash from operating activities in the year ended December 31, 2018 was S$37.3 million, primarily comprising profit before income tax of S$41.6 million, adjusted for non-cash items including depreciation expense of S$12.9 million; an increase in contract assets of S$10.4 million, consisting of unbilled receivables, an increase in trade receivables of S$7.1 million in line with our revenue growth; and an increase in other receivables of S$4.1 million related to deposits paid to landlords and contracts for the lease and fit out of new office space, partially offset by an increase in other payables of S$4.5 million primarily related to accrued employee benefit expense.
Net cash used in investing activities
Net cash used in activities in the year ended December 31, 2020 was S$23.7 million (US$17.9 million), primarily comprising of S$17.3 million for the expansion of our office space and S$6.9 million for an increase in fixed deposits, relating to our credit facility with OCBC, partially offset by S$0.8 million from repayment of loan from an associate.
Net cash used in investing activities in the year ended December 31, 2019 was S$27.6 million, consisting primarily of S$25.9 million for the expansion of our office space, S$0.8 million for investment in other financial assets and S$0.8 million for an increase in fixed deposits, relating to our credit facility with OCBC.
Net cash used in investing activities in the year ended December 31, 2018 was S$20.9 million, consisting primarily of S$19.0 million for the purchase of plant and equipment relating to the expansion of our office space and S$1.9 million for an increase in pledged deposits, relating to our credit facility with OCBC.
Net cash used in financing activities
Net cash used in financing activities in the year ended December 31, 2020 was S$83.3 million (US$63.0 million), primarily consisting of S$73.5 million for dividends paid, S$14.7 million for repayment of lease obligations and S$6.1 million related to the repayment of a bank loan, partially offset by S$12.0 million in proceeds from the drawdown of a bank loan.
Net cash used in financing activities in the year ended December 31, 2019 was S$36.7 million, primarily consisting of S$17.0 million for dividends paid, S$10.5 million from the repayment of a loan to one of our directors, S$11.6 million for repayment of lease obligations and S$6.1 million related to the repayment of a bank loan, partially offset by S$10.0 million in proceeds from the drawdown of a bank loan.
Net cash used in financing activities in the year ended December 31, 2018 was S$10.7 million, primarily consisting of S$38.0 million related to acquisition of non-controlling interests of TDCX SG in 2018, S$30.4 million in proceeds from the drawdown of a bank loan and a S$6.2 million from the drawdown of a loan from one of our directors, partially offset by S$5.3 million for repayment of lease obligations and S$3.0 million for dividends paid.
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Contractual Obligations
The following table sets forth our contractual obligations (including future interest payments) as of December 31, 2020.
As of December 31, 2020 | ||||||||||||||||||||
Total | On demand within 1 year |
2-3 years |
3-5 years |
More than 5 years |
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S$ | S$ | S$ | S$ | S$ | ||||||||||||||||
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Lease commitments for leases of low-value assets |
15,008 | 11,233 | 3,775 | | | |||||||||||||||
Lease liabilities |
32,487 | 14,664 | 13,831 | 3,992 | | |||||||||||||||
Capital commitments |
6,900 | 6,900 | | | | |||||||||||||||
Long-term debt |
40,306 | 24,170 | 8,248 | 7,888 | | |||||||||||||||
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Total |
94,701 | 56,967 | 25,854 | 11,880 | | |||||||||||||||
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Seasonality
We are not subject to any material fluctuations in our revenue and operating results due to seasonality.
Quantitative and Qualitative Disclosures About Market Risk
Credit Risk
Credit risk refers to the risk that a counterparty will default on its contractual obligations resulting in us incurring a financial loss. Our credit risk is primarily attributable to our cash and cash equivalents, trade receivables, contract assets and other receivables. Cash and cash equivalents are placed with credit-worthy financial institutions with high credit ratings assigned by international credit-rating agencies and accordingly we believe credit risk for our cash and cash equivalents is limited. We have adopted procedures in connection with extending credit terms to clients that involve monitoring client credit risk. Credit evaluations are performed on clients requiring credit over a certain amount. Before accepting any new client, we carry out basic research on the background of the new client and assess the potential clients credit quality and set credit limits by client. As of December 31, 2020, the net carrying amount of our trade receivables, contract assets and other receivables was S$36.9 million, S$46.8 million and S$12.9 million, respectively. We maintain allowances against receivables and contract assets. Credit losses and write-offs of accounts receivable balances have historically not been material to our consolidated financial results.
Foreign Currency Risk
We have operations in Singapore, Malaysia, Philippines, Thailand, China, Japan and Spain. Given that transactions occur in various foreign currencies, fluctuation in exchange rates of foreign currencies relative to the Singapore dollar may impact our consolidated financial statements.
The sensitivity analysis below includes only significant outstanding foreign currencies denominated monetary items. If the United States dollar strengthens/weakens by 5% against the relevant functional currencies, profit or loss will (decrease)/increase by:
For the Year Ended December 31, |
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2020 | 2019 | 2018 | ||||||||||
S$ | S$ | S$ | ||||||||||
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U.S. dollar |
(2,815 | ) | (1,475 | ) | (1,175 | ) |
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We also generally try to include foreign currency risk provisions when negotiating our master services agreements and/or statements of work that allow us to renegotiate our billing rates if the average of the relevant local currency fluctuates beyond a specified range compared to the average of our clients specified currency. The contracted range is typically between +/- 1% and +/- 5%. These rate revisions take place periodically, usually at the time of contract.
Interest Rate Risk
Interest rate risk arises from the potential changes in interest rates that may have an adverse effect on us in the current reporting period and future years. As of December 31, 2020, our primary interest rate risk related to a floating rates interest credit facility based in the prevailing cost of capital by the lenders plus a margin between 1.25% to 3%. See Description of Certain Indebtedness OCBC Facility. As of December 31, 2020, we did not have any other significant interest-bearing financial instruments with variable interest rates.
The sensitivity analysis below is based on the exposure to interest rates for non-derivative instruments at the end of the reporting period and, for floating rate instruments, the stipulated change taking place at the beginning of the financial year and being held constant throughout the reporting period. A 50 basis point increase or decrease represents managements assessment of a reasonably possible change in interest rates. As of December 31, 2020, we estimate that a 50 basis point increase in interest rates would decrease our profit before tax by S$0.2 million annually.
Liquidity Risk
Liquidity risk is managed by matching the payment and receipt cycle. We aim to maintain sufficient cash and cash equivalents and internally generated cash flows to finance our operations. We minimize liquidity risk by keeping credit lines (including working capital borrowings) available. As of December 31, 2018, 2019 and 2020, our current assets exceeded our current liabilities by S$32.3 million, S$48.5 million and S$73.8 million, respectively. As of December 31, 2020, we have an undrawn revolving credit facility of S$2.4 million with a financial institution.
Inflation
Inflationary factors such as increases in the cost of our services and overhead costs may adversely affect our operating results. Wage inflation in Singapore, the Philippines, Malaysia, Thailand and elsewhere where we employ a significant number of employees could also lead to payroll increases, which may adversely affect our results of operations. A high rate of inflation in the future may have an adverse effect on our ability to maintain current levels of profit margin and operating expenses as a percentage of revenues if the selling prices of our services do not increase in line with increases in costs.
Off-Balance Sheet Commitments and Arrangements
We have an operating lease commitment for low value assets of S$15.0 million and capital commitment for acquisition of plant and equipment of S$6.9 million as of December 31, 2020. We have not entered into any financial guarantees or other commitments to guarantee the payment obligations of any unconsolidated third parties. In addition, we have not entered into any derivative contracts that are indexed to our shares and classified as shareholders equity or that are not reflected in our consolidated financial statements. Furthermore, we do not have any retained or contingent interest in assets transferred to an unconsolidated entity that serves as credit, liquidity or market risk support to such entity. Moreover, we do not have any variable interest in any unconsolidated entity that provides financing, liquidity, market risk or credit support to us or engages in leasing, hedging or product development services with us.
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Critical Accounting Policies
The preparation of financial statements in conformity with IFRS requires our management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues, costs, expenses and other comprehensive income that are reported and disclosed in the financial statements and accompanying notes. These estimates are based on managements best knowledge of current events, historical experience, actions that we may undertake in the future and on various other assumptions that management believes to be reasonable under the circumstances.
An accounting policy is considered to be critical if it requires an accounting estimate to be made based on assumptions about matters that are highly uncertain at the time the estimate is made, and if different estimates that reasonably could have been used, or changes in the accounting estimates that are reasonably likely to occur periodically, could materially impact our consolidated financial statements. Some of our accounting policies require higher degrees of judgment than others in their application.
We consider the policies discussed below to be critical to an understanding of our consolidated financial statements as their application places significant demands on the judgment of our management. You should read the following descriptions of critical accounting policies, judgments and estimates in conjunction with our consolidated financial statements and the notes thereto and other disclosures included in this prospectus. For more information on our policies with respect to financial assets and financial liabilities, see Note 3 of our Consolidated Financial Statements.
Revenue Recognition
We measure our revenue based on the consideration specified in a client contract and statement of work with a client. Revenue is measured based on the consideration specified in a contract with a client and recognized as and when control of a service is transferred to a client. We primarily enter into master service agreements, with our clients, which provide a framework for services and statements of work. These statements of work define the scope, timing, pricing terms and performance obligations for each individual campaign under the respective master service agreements. Our contracts with our clients have both fixed and variable components. The agreements typically specify a fixed rate per FTE that comes with either a variable price component or fee deduction that is based on meeting (or the failure to meet) certain key performance indicators. Based on the transaction price as set up in the agreement for each performance obligation, we will invoice our clients on a monthly basis as each performance obligation is satisfied after adjusting for fee deduction based on whether the Company meets (or the failure to meet) certain key performance indicators (where applicable) during that month. In general, we invoice our clients within five to 30 days from end of the month and receive payment within 30 to 90 days from the invoice dates. Revenues from omnichannel CX solutions, sales and digital marketing, content monitoring and moderation, and workspace and payroll services are recognized over time when the performance obligation under our client agreements and statements of work, are satisfied. Interest income is accrued on a time basis, by reference to the principal outstanding and at the effective interest rate applicable. A contract asset is recorded when revenue is recognized prior to invoicing and a contract liability is recorded when the Company invoices the clients prior to satisfying the performance obligations. Our contracts do not include a significant financing component.
The Company incurs certain costs such as personnel and travel costs, hiring, on boarding and training employees and capital expenditures incurred in infrastructure, renovation and leases of office space which are incidental to its contracts with clients. IFRS 15 requires an entity to recognize an asset from the costs incurred to fulfil a contract with a client if the costs are not within the scope of another IFRS standard, and only if those costs meet all the following criteria:
| the costs relate directly to a contract or to an anticipated contract that the Company can specifically identify; |
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| the costs generate or enhance resources of the Company that will be used in satisfying (or in continuing to satisfy) performance obligations in the future; and |
| the costs are expected to be recovered. |
The Company recognizes costs as expenses as they are incurred when they relate to personnel and travelling, hiring and training employees when they do not meet the criteria above. In cases where the start-up costs to fulfil a contract include capital expenditures in infrastructure, renovation and leases of offices space, those costs are recorded based on the guidance included in IAS 16 Property Plant and Equipment and IFRS 16 Leases.
Income Tax
Our income tax expense represents the sum of the tax currently payable and deferred tax. Our tax currently payable is based on taxable profit for the year or period. Taxable profit differs from profit as reported in the consolidated statement of profit or loss and other comprehensive income because it excludes items of income or expense that are taxable or deductible in other years and it further excludes items that are not taxable or tax deductible. Our liability for current tax is calculated using tax rates (and tax laws) that have been enacted or substantively enacted in countries where we operate by the end of the reporting period.
A provision is recognized for those matters for which the tax determination is uncertain but it is considered probable that there will be a future outflow of funds to a tax authority. The provisions are measured at the best estimate of the amount expected to become payable. The assessment is based on the judgement of tax professionals within the Group supported by previous experience in respect of such activities and in certain cases based on specialist independent tax advice.
Our deferred tax is recognized on the differences between the carrying amounts of assets and liabilities in the financial statements and the corresponding tax bases used in the computation of taxable profit. Deferred tax liabilities are generally recognized for all taxable temporary differences and deferred tax assets are recognized to the extent that it is probable that taxable profits will be available against which deductible temporary differences can be utilized. Such assets and liabilities are not recognized if the temporary difference arises from goodwill or from the initial recognition (other than in a business combination) of other assets and liabilities in a transaction that affects neither the taxable profit nor the accounting profit.
Deferred tax liabilities are recognized for taxable temporary differences arising on investments in subsidiaries, except where we are able to control the reversal of the temporary difference and it is probable that the temporary difference will not reverse in the foreseeable future. Deferred tax assets arising from deductible temporary differences associated with such investments and interests are only recognized to the extent that it is probable that there will be sufficient taxable profits against which to utilize the benefits of the temporary differences and they are expected to reverse in the foreseeable future.
The carrying amount of deferred tax assets is reviewed at the end of each reporting period and reduced to the extent that it is no longer probable that sufficient taxable profits will be available to allow all or part of the asset to be recovered.
Deferred tax is calculated at the tax rates that are expected to apply in the period when the liability is settled or the asset realized based on the tax rates (and tax laws) that have been enacted or substantively enacted by the end of the reporting period. The measurement of deferred tax liabilities and assets reflects the tax consequences that would follow from the manner in which we expect, at the end of the reporting period, to recover or settle the carrying amount of its assets and liabilities.
Deferred tax assets and liabilities are offset when there is a legally enforceable right to set off current tax assets against current tax liabilities and when they relate to income taxes levied by the same taxation authority and we intend to settle its current tax assets and liabilities on a net basis.
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Current tax and deferred tax are recognized as an expense or income in profit or loss.
Leases
We lease the premises where we operate our business. We assess whether a contract is or contains a lease, at inception of the contract. We recognize a right-of-use asset and a corresponding lease liability with respect to all lease arrangements in which it is the lessee, except for short-term leases (defined as leases with a lease term of 12 months or less) and leases of low value assets (such as tablets and personal computers, small items of office furniture and telephones). For these leases, we recognize the lease payments as an operating expense on a straight-line basis over the term of the lease unless another systematic basis is more representative of the time pattern in which economic benefits from the leased assets are consumed.
Our lease liability is initially measured as the present value of the lease payments that are not paid at the commencement date. The lease payment shall be discounted using the interest rate implicit in the lease, as the interest rate implicit in the lease are not readily determined, we use the incremental borrowing rate. Our incremental borrowing rate is determined based on interest rate of our bank loan if we would have to pay to borrow over a similar term and with a similar security the funds necessary to obtain an asset of a similar value of the right-of-use asset in a similar economic environment.
Lease payments included in the measurement of the lease liability comprise:
| fixed lease payments (including in-substance fixed payments), less any lease incentives receivable; |
| the amount expected to be payable by the lessee under residual value guarantees; |
| the exercise price of purchase options, if the lessee is reasonably certain to exercise the options; and |
| payments of penalties for terminating the lease, if the lease term reflects the exercise of an option to terminate the lease. |
The lease liability is presented as a separate line in the consolidated statement of financial position. The lease liability is subsequently measured by increasing the carrying amount to reflect interest on the lease liability (using the effective interest method) and by reducing the carrying amount to reflect the lease payments made. We remeasure the lease liability (and makes a corresponding adjustment to the related right-of-use asset) whenever:
| the lease term has changed or there is a significant event or change in circumstances resulting in a change in the assessment of exercise of a purchase option, in which case the lease liability is remeasured by discounting the revised lease payments using a revised discount rate. |
| the lease payments change due to changes in an index or rate or a change in expected payment under a guaranteed residual value, in which cases the lease liability is remeasured by discounting the revised lease payments using an unchanged discount rate (unless the lease payments change is due to a change in a floating interest rate, in which case a revised discount rate is used). |
| a lease contract is modified and the lease modification is not accounted for as a separate lease, in which case the lease liability is remeasured based on the lease term of the modified lease by discounting the revised lease payments using a revised discount rate at the effective date of the modification. |
The right-of-use assets comprise the initial measurement of the corresponding lease liability, lease payments made at or before the commencement day, less any lease incentives received and any initial direct costs. They are subsequently measured at cost less accumulated depreciation and impairment losses.
Whenever we incur an obligation for costs to dismantle and remove a leased asset, restore the site on which it is located or restore the underlying asset to the condition required by the terms and conditions of the lease, a provision is recognized to the extent that the costs relate to a right-of-use asset.
Right-of-use assets are depreciated over the shorter period of lease term and useful life of the underlying asset. If a lease transfers ownership of the underlying asset or the cost of the right-of-use asset reflects that we expect to
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exercise a purchase option, the related right-of-use asset is depreciated over the useful life of the underlying asset. The depreciation starts at the commencement date of the lease.
The right-of-use assets are presented as a separate line in the consolidated statement of financial position.
We apply IAS 36 Impairment of Assets to determine whether a right-of-use asset is impaired and accounts for any identified impairment loss. For the years ended December 31, 2018, 2019 and 2020, we did not record any impairment related to our right-of-use assets.
Internal control over financial reporting
Our internal controls relating to financial reporting have not kept pace with the expansion of our business. Our financial reporting function and system of internal controls are less developed in certain respects than those of similar companies and may not provide our management with as much or as accurate or timely information. The Public Company Accounting Oversight Board, or PCAOB, has defined a material weakness as a deficiency, or a combination of deficiencies in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of the annual or interim statements will not be prevented or detected on a timely basis.
In the course of auditing our consolidated financial statements as of and for the years ended December 31, 2018, 2019 and 2020, we and our independent registered public accounting firm identified three material weaknesses in our internal control over financial reporting as of December 31, 2018, 2019 and 2020, in accordance with the standards established by the Public Company Accounting Oversight Board of the United States. The material weaknesses identified related to:
(i) | Inappropriate segregation on several control processes, which includes the review and approval of journal accounting entries; |
(ii) | Lack of adequate controls over access rights to several IT systems, which includes excessive and conflicting rights granted to several accounting personnel; and |
(iii) | Insufficient financial reporting and accounting personnel with appropriate IFRS knowledge to prepare and review statement of cash flows relating to acquisition transaction in accordance with IFRS. Such material weakness resulted in an error on the classification of the cash consideration paid to acquire non-controlling interest, which has been rectified by restatements of the consolidated statement of cash flows for the year ended December 31, 2018 to reclassify the cash consideration paid to acquire non-controlling interest from investing activities to financing activities. For details, please refer to note 35 to TDCXs consolidated financial statements for the years ended December 31, 2018, 2019 and 2020 included elsewhere in this registration statement. |
See Risk FactorsRisks Related to our Business and IndustryIf we fail to implement and maintain an effective system of internal controls, we may be unable to accurately or timely report our results of operations or prevent fraud, and investor confidence and the market price of our ADSs may be materially and adversely affected.
As a result of the foregoing, we developed several key remedial and improvement measures to strengthen our accounting operations and financial reporting functions. The measures that we are implementing include:
| Removing excessive and conflicting rights granted in our IT systems and in some cases where access is required, compensating controls are being put in place; |
| Implementing the segregation of duties and/or controls with respect to payroll and procurement processes and review of the controls in the area of finance, human resource and operations to ensure appropriate segregations are in place; |
| Where applicable, hired additional competent and qualified finance personnel to ensure required segregation of duties can be implemented; |
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| Implementing enhanced and robust user access rights to critical systems to minimize the exposure to conflicts of interest and/or the circumvention of approvals; |
| Implementing a financial reporting platform and system that is planned to be integrated with the financial operational system; and |
| Setting up an internal audit function to carry out audits and reviewing the internal accounting controls, processes and business practices within financial operations of the Company and its subsidiaries. |
We intend to remediate these material weaknesses in our internal control over financial reporting by the end of the first full calendar year after the completion of this offering. However, while we currently intend to continue implementing these measures, we cannot assure you that we will be able to continue implementing these measures in the future within such timeline or at all, or that we will not identify additional material weaknesses in the future.
We will continue to implement measures to remediate our internal control deficiencies in order to meet the deadline imposed by Section 404 of the Sarbanes Oxley Act. We may incur significant costs in the implementation of such measures. However, the implementation of these measures may not fully address the deficiencies in our internal control over financial reporting. See Risk FactorsRisks Related to Our Business and IndustryIf we fail to implement and maintain an effective system of internal controls, we may be unable to accurately or timely report our results of operations or prevent fraud, and investor confidence and the market price of our ADSs may be materially and adversely affected.
As a company with less than US$1.07 billion in revenue for our last fiscal year, we qualify as an emerging growth company pursuant to the JOBS Act. An emerging growth company may take advantage of specified reduced reporting and other requirements that are otherwise applicable generally to public companies. These provisions include exemption from the auditor attestation requirement under Section 404 of the Sarbanes-Oxley Act of 2002, in the assessment of the emerging growth companys internal control over financial reporting.
Recently Issued Accounting Pronouncements
For a description of recently issued accounting pronouncements that may potentially impact our financial position, results of operations or cash flows, see Note 2 to our audited consolidated financial statements included elsewhere in this prospectus.
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HISTORY AND CORPORATE STRUCTURE
Our history originates with the founding of Teledirect Pte Ltd by our Executive Chairman and Chief Executive Officer, Laurent Bernard Marie Junique in 1995 in Singapore. Teledirect Pte Ltd provided telemarketing and traditional customer services.
In 1997, WPP Singapore Pte Ltd, part of the WPP plc group, a London public company which is a provider of communications and advertising services globally, invested in Teledirect Pte Ltd by acquiring 40% of its shares.
In 1999, Oasix Pte Ltd was incorporated as a private company limited by shares under the Companies Act, Chapter 50 of Singapore. On May 17, 2001, Oasix Pte Ltd changed its name to Agorae Pte Ltd. In September 2018, Agorae Pte Ltd acquired the 40% of issued share capital of Teledirect Pte Ltd held by WPP Singapore Pte Ltd. In January 2019, our Founder reduced his 60% equity interest in Teledirect Pte Ltd through a cancellation of his shares in Teledirect Pte Ltd and Teledirect Pte Ltd became a wholly-owned subsidiary of Agorae Pte Ltd. On December 3, 2019, Agorae Pte Ltd changed its name to TDCX Holdings Pte. Ltd. On December 4, 2019, Teledirect Pte Ltd changed its name to TDCX (SG) Pte. Ltd.
On April 16, 2020, TDCX was incorporated as an exempted company in the Cayman Islands to acquire our Founders shareholders interest in TDCX KY, which it did on March 23, 2021 through a series of transactions contemporaneous with the drawdown of the Credit Suisse Facility. See Description of Certain Indebtedness Credit Suisse Facility. TDCX KY had previously acted as the holding company for our subsidiaries.
We operate our business through a number of direct and indirect subsidiaries. As of the date of this prospectus, we have subsidiaries in Singapore, the Philippines, Malaysia, Thailand, China, Japan, Spain, India, Colombia, Korea and Romania.
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The chart below sets out our corporate structure as of the date of this prospectus.
(1) | Effective ownership (voting powers). |
(2) | Dormant entity |
(3) | Name to be changed after a name permitted by authorities is selected. |
Our registered office is located at the offices of Maples Corporate Services Limited, PO Box 309, Ugland House, Grand Cayman, KY1-1104, Cayman Islands. Our principal executive offices are located at 750D Chai Chee Road, #06-01/06 ESR BizPark @ Chai Chee, Singapore, Singapore 469004. Our telephone number at this location is (65) 6309-1688. Our principal website address is www.tdcx.com. The information contained on our website does not form part of this prospectus.
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The Outsourced Services Market
Outsourcing is the process of hiring a third party service provider to manage IT and business processes. This enables an organization to focus on its main business operations and function. There are three major categories of outsourcing services:
Information & Technology Outsourcing, or ITO: Providing transactional-type IT and IT-related functions such as data center hosting, managed services, disaster recovery and business continuity, software development, application maintenance services, and technology and consulting services.
Knowledge Process Outsourcing, or KPO: Providing specialized and complex knowledge services for internal and external parties that could be outsourced, offshored or centralized to enhance a companys competitive advantage in terms of costs and economies of scale. Examples of KPO services include legal services, engineering R&D, pharmaceutical R&D, market and consulting research, data analysis, and taxation support.
Business Support Services, or BSS: Involves the contracting of operations and responsibilities of specific business functions (or processes) such as payroll, customer service, accounting and data recording to a third-party service provider.
Key BSS market segments and business functions:
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Market share of outsourced BSS industry
Within the outsourced BSS industry, CX services market is expected to become the largest segment in 2025E with 29.5% of the market share driven by the growing demand for customer experience center and services from new economy, banking and financial services industry, telecommunications, retail, and government verticals.
Outsourced BSS Market Size by Segment, Southeast Asia, 2020 and 2025E
Source: Frost & Sullivan.
Note: | Many of the outsourced business services providers, including the Company, have global operations with delivery locations around the world and serve clients and client customers that are located both in the same country as the delivery location (onshore) and in countries different from the delivery location (offshore). Therefore, market sizing has been conducted by segmenting revenue based on the delivery location, which includes both onshore and offshore data. 2020 numbers are based on estimation and may be subjected to update. |
BSS providers may also specialize in one or more specific customer industry verticals:
Key customer industry verticals
Banking & Financial Services |
Travel & Transportation | |
Insurance |
Healthcare | |
Manufacturing |
Pharmaceutical | |
Telecommunications |
Retail & Wholesale | |
Energy and Utility |
Key trends in the BSS industry
Globally, the BSS industry is continuing to evolve beyond resource expansion and cost arbitrage solutions. The industry is now focused on driving business outcomes and creating value for customers. Enterprises are looking to BSS providers to drive growth by streamlining their operations, reducing costs, improving customer centricity, maintaining compliance and regulatory policies, identifying new areas of growth, improving profitability, and providing advanced analytical capabilities and technical expertise.
While the adoption of technology in the BSS industry has enabled the automation of simpler tasks, there remains a significant portion of higher value-added workstreams that remain dependent on human expertise. In todays consumer-centric marketplace, businesses are dealing with customers who demand more personalized, relevant, and engaging experiences. For example, content moderation is used to strengthen cultural affinity, customer experience, and customer loyalty, and with the increasing complexity of the work and the rising regulatory oversight requirements, the need for human expertise will continue to grow significantly both in content moderation as well as other BSS verticals.
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BSS providers are also diversifying their geographic coverage to focus on emerging markets in Southeast Asia, Eastern Europe, and Latin America. In the Asia Pacific region, India, China, and the Philippines, followed by Malaysia are strong market contenders. These countries provide a multilingual and multicultural workforce, a significant existing shared services presence, an experienced talent pool, and proven expertise supported by various government incentives.
Outsourced BSS industry size
Outsourcing is becoming one of the approaches companies use to navigate the challenging competitive environment. Companies that preferred to keep the bulk of their core operations in-house are now starting to see the advantages of outsourcing. Additionally, as companies struggle to manage their legacy systems in-house, they are looking to transform their business processes through partnerships with outsourcing service providers. These key factors are expected to drive the growth of outsourced BSS globally at a CAGR of 4.2% from 2016 to 2025E, and in Southeast Asia at a CAGR of 5.3% over the same period.
Market Size of Outsourced BSS in the Traditional and New Economy Industries, Global, 2016-2025E
(1) | Source: Frost & Sullivan. |
(2) | Note: Many of the outsourced business services providers, including the Company, have global operations with delivery locations around the world and serve clients and client customers that are located both in the same country as the delivery location (onshore) and in countries different from the delivery location (offshore). Therefore, market sizing has been conducted by segmenting revenue based on the delivery location, which includes both onshore and offshore data. 2020 numbers are based on estimation and may be subjected to update. |
Customer Experience services industry
A subset of the BSS industry, the CX services industry involves customer services (in-bound) from help-desk and general enquiries, to more complicated tasks such as CRM management, selling, marketing, lead generation, presales/ post sales assistance, content moderation, and cross selling services (out-bound).
Dynamics of the CX Services Industry:
| An increased focus on CX is driving enterprises to outsource their CX services to leverage third party provider capabilities and expertise. |
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| The outsourced CX market has evolved to include key strategic elements beyond the traditional contact centers such as CX consulting and digital CX services. |
| Enterprise buyer expectations have evolved, as buyers increasingly look to partnering with service providers who embrace customer-centricity and proactively talk about the application of innovative solutions such as CX consulting, omnichannel platforms, automation, and analytics in CX centers. |
| Customer care services are delivered through multiple channels including traditional channels such as the telephone and new channels such as chat and social media. |
| Customer expectations are rapidly changing with ready access to information, influence of online experiences and adoption of new technologies. This forces organizations to develop new interactive models that deliver deeper personalized service and improved customer care, with CX services at the forefront of this trend. Some of the relevant technologies being implemented include cognitive artificial intelligence (AI), real-time analytics and chat bots to improve business processes, with the use cases to (i) automate repetitive tasks, (ii) enhance predictive analytics and (iii) provide better contextualization for agents to provide better customer experiences. |
| In addition, the growing impetus for modernizing the customer experience to maintain competitive differentiation, rising usage for non-voice channels in addition to other channels of communication, and building of efficient customer experience centers through the use of machine learning and AI technologies are driving the demand for CX services in the new economy industry. |
Key drivers of growth in the CX services industry
Investment in digital transformation initiatives
| The penetration of outsourced business support services in the traditional economy continues to steadily gain traction as companies expand the scope of the business functions they outsource, particularly as it relates to their digital transformation journey. |
| Customer interactions are no longer standalone activities, as customers are demanding a more comprehensive and consistent experience. Within digital transformation initiatives, building a differentiated CX through channel integration and contextual responses will be the leading requirement for CX-centered innovations. |
| BSS and CX services are transforming organizational processes by enabling new technologies such as automation and analytics. |
Achieving operational excellence
| Enterprises outsource their business processes to not only streamline operations and lower costs but also to have greater efficiencies from predictive analytics, customized solutions, and collaborative engagements. Enterprises will look to service providers to achieve operational excellence and process efficiencies through intelligent automation, advanced analytics, and alternate delivery models like business process as a service. |
Focusing on core business activities
| Setting up and operating in-house CX centers can be difficult and time-consuming. By outsourcing CX centers, businesses can focus on their products, day-to-day operations, and business plans, without having to worry about customer service and experience. |
Providing better customer support
| Customers have more options than ever before; by taking a proactive approach, providing 24/7 support service, and using multiple communication channels, enterprises can provide better services for their customers and increase customer satisfaction. |
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| Additionally, enterprises are able to provide better products and services to customers with a greater understanding of consumer behavior and feedback through analysis of customer interactions and needs. |
Outsourced CX services industry size
Organizations in the traditional economy are going through a digital transformation and are rethinking the way business is done. Customer-centric organizations are embracing the pivotal role outsourcers play in elevating customer experience. Building a differentiated CX through channel integration and contextual responses, implementation of a chatbot or conversational AI, and leveraging analytics for prediction and AI, will be the leading requirements for organizations looking to outsource their CX operations. Organizations in the new economy industries are partnering with outsourcing CX providers to remain agile to disrupt their competition while creating a differentiated CX and providing end-to-end customer engagement to set them apart from competitors.
Impact of COVID-19 pandemic on CX services
CX is gaining prominence due to the unexpected challenges brought on by the COVID-19 pandemic. Efficient customer service is more crucial than ever as a positive interaction with a company can create a lasting impact on brand loyalty. The speed at which the COVID-19 pandemic spread has severely affected people, businesses, and economies and has had varying impacts on different verticals. For instance, the airlines, hospitality, and tourism industries were adversely impacted while the eCommerce and healthcare industries witnessed significant growth.
The challenges brought on by the pandemic have also encouraged CX centers to innovate and embrace digital technologies to deliver consistent customer service. Reducing employee presence at work places, utilizing work at home agents (WAHA), and transferring operations to other less affected locations were some of the immediate measures taken to ensure business continuity. Organizations have had to adjust to new ways of functioning as many agents were relocated to work-from-home. This required businesses to deploy new technologies to handle increased call volumes and prioritize tickets and ensure data privacy and security.
The COVID-19 pandemic has expedited digital transformation investments in self-service tools, chatbot, cloud solutions, and rightshoring CX services. Service providers with skilled agents (both onshore and offshore), best-in-class technology, delivery models including on-premises and cloud, and digital transformation consulting competencies were able to deliver on the changes brought on by the pandemic quickly.
Impact of 5G technology on CX services
The new generation of 5G wireless technology promises to change how people use the internet through lightning-fast connection speeds, lower latency, and the ability to connect one million devices per square kilometer. This increased reliability, performance and efficiency is considered to be a massive advantage to companies that have to meet ever-changing customer expectations. This would also add to the proliferation of other technologies, including Internet of Things (IoT), augmented reality (AR) and virtual reality (VR), big data, and cloud computing. 5G is expected to bring about the following changes to CX services:
| Heightened consumer expectations: With improved reliability, performance and efficiency arising due to 5G, customers will develop new expectations from their brand interactions, and companies need to understand the need for speed and seamless mobile transactions to respond to customers feedback in real-time. |
| Widespread access to video support: With lower latency and faster network speeds, CX representatives can troubleshoot technical issues through screen-sharing and video chat to provide a more efficient customer service which is a critical part of the overall customer experience. This can also potentially reduce the number of product returns or in-home technician visits. |
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| Increased number of smart devices and ability to troubleshoot via self-service: 5G will supercharge the growth of the IoT and smart devices market and allow for better at-home troubleshooting. For instance, sensors in appliances could allow companies to schedule for servicing and to guide customers through simple troubleshooting steps. |
| Proliferation of AR/VR capabilities: Using 5Gs high speed and processing power, there will be a greater widespread use of AR/VR technology in the public domain. This can be used to boost interest in emerging concepts like virtual stores or an augmented reality on how a certain product will look like at home in real time. Customers will also use AR/VR to interact with chatbots and human agents alike for everything from shopping to technical support. |
| Higher big data processing power: 5G increases the volume of data that companies can collect to identify customer patterns and personalize CX. Based on greater convergence of IoT and customer data profiles, companies can harness the big data available and develop better customer support trends and develop in-store personalization. |
Market Size of Outsourced CX Services in the Traditional and New Economy Industries, Global, 2016-2025E
Source: Frost & Sullivan.
Note: | Many of the outsourced business services providers, including the Company, have global operations with delivery locations around the world and serve clients and client customers that are located both in the same country as the delivery location (onshore) and in countries different from the delivery location (offshore). Therefore, market sizing has been conducted by segmenting revenue based on the delivery location, which includes both onshore and offshore data. 2020 numbers are based on estimation and may be subjected to update. |
Rise of the internet and New Economy and its Implications for the BSS and CX industries
Both regionally and globally, the rise of the internet and the connected New Economy has been a significant growth driver behind the BSS and CX industries in the past three to five years. The following points provide an overview of the key drivers behind the growth in internet and New Economy.
Increased adoption of internet and mobile usage transforming consumer behavior:
| Internet and mobile usage has fundamentally changed consumer behavior driving the unprecedented growth of the New Economy industry. Users communicate, entertain themselves, and learn new skills using mobile phones. Increasingly, they also buy products, plan trips, and order food online. |
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Growth in global urbanization rates is driving an increased adoption of the internet, and therefore resulting in greater consumer inclusion within the New Economy:
| Growth in the urban population is driven by an overall population increase and by the upward shift in the percentage living in urban areas. |
| The United Nations estimates that the urban population in Southeast Asia will increase from 59.2% in 2015 to approximately 63.9% by 2024. This in turn will drive improved standard of living, higher productivity, higher wages, and higher purchasing capacity. |
Changing demographics, particularly in Southeast Asia, to a larger youth population resulting in a shift in how consumers buy their products and spend their money:
| The youth population, aged 15-29 years, is expected to increase from 138.5 million in 2015 to 141.8 million in 2024. |
| This youth population grew up with devices that allowed them to communicate with their friends and family, work on school projects, entertain themselves with games, videos and music, and discover information that aids them in their studies. As a result of their familiarity and reliance on technology and a connected experience, the youth population has become a natural and growing part of the New Economy. |
To this end, the youth, urban, middle class, and affluent consumers are more digitally engaged further propelling the New Economy era.
The New Economy
The New Economy refers to high growth industries that are on the cutting edge of technology and are the driving forces of economic growth.
The industry is seen as an evolution of the existing traditional economy aided by technology advancements and innovation. New Economy companies involved in technology, such as Alibaba, Amazon, Apple, Google (Alphabet), Facebook, Tencent, Microsoft and Tesla, have overtaken many other companies in terms of market capitalization.
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Rise of New Economy companies
Top 10 largest companies by market capitalization globally, December 2020
Rank |
Name |
Market capitalization (US$bn) |
||||
1 |
Apple | 2,260 | ||||
2 |
Saudi Aramco | 1,870 | ||||
3 |
Microsoft | 1,680 | ||||
4 |
Amazon | 1,630 | ||||
5 |
Alphabet | 1,190 | ||||
6 |
778 | |||||
7 |
Tencent | 698 | ||||
8 |
Tesla | 669 | ||||
9 |
Alibaba | 630 | ||||
10 |
Berkshire Hathaway | 544 | ||||
|
|
|||||
Total |
11,948 | |||||
Total market capitalization of New Economy companies |
9,534 | |||||
New Economy companies as % of top 10 |
79.8 | % | ||||
|
New Economy companies |
Source: Bloomberg.
Top 10 largest companies by market capitalization globally, December 2015
Rank |
Name |
Market capitalization (US$bn) |
||||
1 |
Apple | 587 | ||||
2 |
Alphabet |
528 | ||||
3 |
Microsoft | 443 | ||||
4 |
Berkshire Hathaway | 325 | ||||
5 |
Exxon Mobil |
325 | ||||
6 |
Amazon |
317 | ||||
7 |
|
296 | ||||
8 |
General Electric | 294 | ||||
9 |
Johnson & Johnson |
284 | ||||
10 |
Wells Fargo | 278 | ||||
|
|
|||||
Total |
3,677 | |||||
Total market capitalization of New Economy companies |
2,171 | |||||
New Economy companies as % of top 10 |
59.0 | % | ||||
|
New Economy companies |
Source: Bloomberg.
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Top 10 largest companies by market capitalization globally, December 2010
Rank |
Name |
Market capitalization (US$bn) |
||||
1 |
Exon Mobil | 369 | ||||
2 |
PetroChina | 303 | ||||
3 |
Apple | 296 | ||||
4 |
BHP Billiton | 243 | ||||
5 |
Microsoft | 239 | ||||
6 |
Industrial & Commercial Bank of China | 233 | ||||
7 |
Petrobras | 229 | ||||
8 |
China Construction Bank | 222 | ||||
9 |
Royal Dutch Shell |
208 | ||||
10 |
Nestle | 203 | ||||
|
|
|||||
Total |
2,545 | |||||
Total market capitalization of New Economy companies |
535 | |||||
New Economy companies as % of top 10 |
21.0 | % | ||||
|
New Economy companies |
Source: Bloomberg.
E-commerce
The E-commerce market is experiencing a burst of demand as a result of the rapid adoption and the fundamental shifts in consumer behavior. Consumers today purchase a wide range of items online, ranging from big ticket items to lower-cost but more frequent purchase items such as groceries, personal care, and apparel. This trend has seen a number of players in Southeast Asia emerge as e-commerce unicorns: Bukalapak, Lazada, Shopee, and Tokopedia.
Market Size of Retail Sales, Global, Southeast Asia, China, Japan and Europe, 2016-2025E
Source: Frost & Sullivan.
Note: | Many of the outsourced business services providers, including the Company, have global operations with delivery locations around the world and serve clients and client customers that are located both in the same country as the delivery location (onshore) and in countries different from the delivery location (offshore). Therefore, market sizing has been conducted by segmenting revenue based on the delivery location, which includes both onshore and offshore data. 2020 numbers are based on estimation and may be subjected to update. |
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Market Size of Retail E-commerce Sales, Global, Southeast Asia, China, Japan and Europe, 2016-2025E
Source: Frost & Sullivan.
Note: | Many of the outsourced business services providers, including the Company, have global operations with delivery locations around the world and serve clients and client customers that are located both in the same country as the delivery location (onshore) and in countries different from the delivery location (offshore). Therefore, market sizing has been conducted by segmenting revenue based on the delivery location, which includes both onshore and offshore data. 2020 numbers are based on estimation and may be subjected to update. |
Online marketplaces have become extremely popular among product vendors, marketers, and consumers for selling, advertising, and shopping, respectively. The global retail e-commerce sales market amounted to US$1.8 trillion in 2016 and increased to US$3.4 trillion in 2020 with a CAGR of 18.2%. It is further expected to increase from US$3.9 trillion in 2021 to US$6.7 trillion in 2025, at a CAGR of 14.5%.
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Digital Advertising
The digital advertising format includes e-mail advertising, social media advertising, search engine advertising, and mobile advertising. AdTech companies such as AdAsia, Nugit, CtrlShift, and AdEasy are all seeing a boost in funding.
Market Size of Advertising Spend, Global, Southeast Asia, China, Japan and Europe, 2016-2025E
Source: Frost & Sullivan.
Note: | Many of the outsourced business services providers, including the Company, have global operations with delivery locations around the world and serve clients and client customers that are located both in the same country as the delivery location (onshore) and in countries different from the delivery location (offshore). Therefore, market sizing has been conducted by segmenting revenue based on the delivery location, which includes both onshore and offshore data. 2020 numbers are based on estimation and may be subjected to update. |
Market Size of Digital Advertising Spend, Global, Southeast Asia, China, Japan and Europe, 2016-2025E
Source: Frost & Sullivan.
Note: | Many of the outsourced business services providers, including the Company, have global operations with delivery locations around the world and serve clients and client customers that are located both in the same country as the delivery location (onshore) and in countries different from the delivery location (offshore). Therefore, market sizing has been conducted by segmenting revenue based on the delivery location, which includes both onshore and offshore data. 2020 numbers are based on estimation and may be subjected to update. |
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Digital advertising spend, particularly through the mobile platform, is expected to surge as advertisers are looking to increasingly capitalize on the changing consumer patterns of prolonged mobile phone usage to reach out to more target customers at a lesser cost. The growing mobile and internet penetration, particularly the use of smartphones, has resulted in a significant increase in online advertising and digital marketing spend.
The Sharing Economy
The Sharing Economy is a model defined as a peer-to-peer (P2P) based activity of acquiring, providing, or sharing access to goods and services that is often facilitated by a community based online platform connecting buyers and sellers.
Market Size of Sharing Economy Sector (by Transaction Value), Global, Southeast Asia, China, Japan and Europe, 2016-2025E
Source: Frost & Sullivan.
Note: | Many of the outsourced business services providers, including the Company, have global operations with delivery locations around the world and serve clients and client customers that are located both in the same country as the delivery location (onshore) and in countries different from the delivery location (offshore). Therefore, market sizing has been conducted by segmenting revenue based on the delivery location, which includes both onshore and offshore data. 2020 numbers are based on estimation and may be subjected to update. |
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Market Size of Selected Traditional & Sharing Economy Markets (by Transaction Value), Global, 2016-2025E
Source: Frost & Sullivan.
Note: | Many of the outsourced business services providers, including the Company, have global operations with delivery locations around the world and serve clients and client customers that are located both in the same country as the delivery location (onshore) and in countries different from the delivery location (offshore). Therefore, market sizing has been conducted by segmenting revenue based on the delivery location, which includes both onshore and offshore data. 2020 numbers are based on estimation and may be subjected to update. |
Consumers are showing a robust appetite for the sharing-based services ranging from daily commuting to renting workspaces or booking places to stay during travel or holidays. By 2025, the global Sharing Economy is expected to contribute approximately 20% of the total sharing and traditional rental economy, led by China with more than 40% sharing economy penetration.
Key components of the Sharing Economy:
Accommodation sharing platforms
Accommodation sharing platforms connect homeowners with users who need a place to stay when they are travelling or renting for a short period of time via an online platform. Such companies include Airbnb, HomeAway, FlipKey, VRBO and HomeExchange.
The sharing accommodation market refers to the transactional value generated from such online short-term rental platforms. High internet penetration and excellent living experiences led the global sharing accommodation market size to grow during 2016 to 2019. In 2020, global travel demand declined significantly due to the pandemic crisis, causing the sharing accommodation market size to shrink to US$27.6 billion (CAGR of -1.7% from 2016 to 2020). This market is further expected to reach US$88.5 billion by 2025, growing at a CAGR of 18.4% between 2021 and 2025.
The sharing accommodation market in Southeast Asia is forecast to reach US$1.4 billion in 2025, growing at a CAGR of 23.6% between 2021 and 2025. Overall the sharing accommodation market will continue to grow at a faster pace than the traditional rental economy during the economy recovery period, with family travel and the millennial travelers being the key drivers.
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Sharing transportation platforms
Sharing transportation platforms primarily refer to online ride hailing companies, which mobilize passenger vehicles to provide a more convenient and efficient transportation choice for users via an online platform.
Rapid and successful commercialization of this ridesharing concept has not only nurtured new businesses such as Uber, Lyft, Grab, Gojek, Bolt, and DiDi, but has also brought a booming growth during 2016 to 2019. In 2020, travelling and commuting demand decreased due to the lockdown measures taken by governments worldwide and efforts by individuals to self-quarantine to control the pandemic spread, which led to the market shrinking to US$106.4 billion (CAGR of 11.9% from 2016 to 2020). Global sharing transportation is expected to further reach US$274.8 billion by 2025, growing at a CAGR of 15.4% between 2021 and 2025. This will be driven by improvements in internet penetration and mobile connectivity, increased usage, higher demand and value-add services.
Southeast Asia represents a substantial and viable market for ridesharing platform enterprises. The ridesharing industry in Southeast Asia is forecast to reach US$22.1 billion in 2025, growing at a CAGR of 18.0% between 2021 and 2025.
Sharing workspace platforms
Sharing workspace platforms primarily refers to co-working space rentals. Co-working space operators operate and lease a workspace which multiple lessees share, creating a community in the workspace. Examples of such platforms include WeWork, Kr Space, Regus, Nextdoor, and ReWork.
The global sharing workspace market was US$31.0 billion in 2020, and will grow at a CAGR of 26.6% from 2021 to 2025 to US$115.7 billion by 2025. This will be driven by an increased market demand from SMEs, startups, IT companies, and freelancers, as well as more revenues from value-add services provided.
The sharing workspace platform is expanding rapidly in Southeast Asia due to its tech-savvy population and the growing number of small enterprises and startups seeking non-traditional office structures. The sharing workspace market in Southeast Asia is still in the nascent stage, approximately US$1.1 billion in 2020, and is forecast to reach US$4.7 billion in 2025, growing at a CAGR of 30.9% between 2021 and 2025.
Online gaming
Online games are video games that are either partially or primarily played through the internet or any other computer network available. Online game can be categorized into three types, namely PC client games, PC web games, and mobile games.
Driven by the development of internet infrastructure and the increasing number of global game players, the global online gaming market has experienced solid growth in the past few years, reaching US$126.7 billion revenue in 2020, representing a CAGR of 15.6% from 2016 to 2020.
The online gaming market in Southeast Asia has experienced rapid growth in the past few years, with the market size having reached US$4.9 billion in 2020, representing a CAGR of 28.3% from 2016 to 2020, which was mainly driven by the continuous increasing penetration rate of smartphones and accessibility to internet. The Southeast Asia market is expected to reach US$8.3 billion by 2025, growing at a CAGR of 9.9% between 2021 and 2025.
Fintech
Fintech refers to utilizing advanced technologies, such as Artificial Intelligence (AI), blockchain, cloud computing, big data analytics and IoT in financial industry, to increase the efficiency in financial risk
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management, lower marketing cost of financial products, reduce homogeneous competition among financial institutions, recommend valuable suggestions to investors and provide conveniences to peoples daily life (e.g. digital payment).
The rapid development of the global financial industry led to a booming growth rate of the Fintech market from 2016 to 2019. However, in 2020, the growth of the Fintech market slowed down due to a decrease in consumption and borrowings as a result of the impact on the global economy caused by the pandemic crisis. The Fintech market was US$163.8 billion in 2020 and is expected to grow to US$491.8 billion in 2025, at a rate of 22.4% from 2021 to 2025, driven by more applications to be implemented in financial industry.
The Fintech market in Southeast Asia has witnessed rapid growth, as countries such as Singapore with an advanced financial infrastructure and system are preferred by investors and entrepreneurs to develop Fintech. Moreover, changes in peoples consumption behavior such as cashless payment and online shopping has further driven the Fintech market development. The market is expected to grow at CAGR of 31.6% during 2021 to 2025, reaching US$3.0 billion.
Outsourced BSS industry growthTraditional vs New Economy clients
Outsourced BSS industry size for Traditional and New Economy industries
The Traditional Economy industries are the largest segment of the outsourced BSS market. Traditional Economy clients utilize outsourced BSS to improve their operating cost efficiency and leverage the operational expertise of specialized outsourced BSS providers to deliver value-added services which cannot be managed in-house.
Penetration of outsourced BSS industry in Southeast Asia is expected to grow from 22.5% of the total BSS spend in 2020 to 24.1% in 2025. Outsourced BSS in the Traditional Economy continues to steadily gain traction as organizations expand the scope of the business functions they outsource, particularly, as part of their digital transformation journey.
The New Economy industries are fast becoming a powerful growth engine for the BSS industry as companies in this industry are increasingly partnering with service providers to grow exponentially as they focus on expansion into new markets and evolve to provide new products and services. The market is further driven by the growing number of digital advertising, e-commerce, and sharing platform, online gaming and fintech startups.
Additionally, the outsourcing BSS market in New Economy industries is evolving from demand for low complexity work to high value strategic services. Outsourcing a variety of functions including customer care, content management, content moderation, advertising campaign management, sales support services, and other back office support services is growing as service providers deliver the best service at a fraction of the cost. Outsourced BSS companies are also able to help companies meet their strategic goals to improve customer relationships and enhance customer experience journeys by offering sophisticated CX solutions.
Outsourcing is quickly becoming the preferred way for New Economy companies to grow in a competitive environment as service providers have the expertise and capabilities to provide personalized services at lower costs. Outsourcing also gives New Economy companies a competitive advantage as they can remain agile and scale at a fraction of the cost of building in-house resources and capabilities.
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Market Size of Outsourced BSS in the Traditional and New Economy Industries,
By Delivery Locations in Southeast Asia, 2016-2025E
Source: Frost & Sullivan.
Note: | Many of the outsourced business services providers, including the Company, have global operations with delivery locations around the world and serve clients and client customers that are located both in the same country as the delivery location (onshore) and in countries different from the delivery location (offshore). Therefore, market sizing has been conducted by segmenting revenue based on the delivery location, which includes both onshore and offshore data. 2020 numbers are based on estimation and may be subjected to update. |
Penetration Ratio of Outsourced BSS vs. the Total BSS Spend in the Traditional and New Economy Industries, By Delivery Locations in Southeast Asia, 2016-2025E
Source: Frost & Sullivan.
Note: | Many of the outsourced business services providers, including the Company, have global operations with delivery locations around the world and serve clients and client customers that are located both in the same country as the delivery location (onshore) and in countries different from the delivery location (offshore). Therefore, market sizing has been conducted by segmenting revenue based on the delivery location, which includes both onshore and offshore data. 2020 numbers are based on estimation and may be subjected to update. |
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Outsourced CX industry growthTraditional vs New Economy clients
Outsourced CX services for Traditional and New Economy industries
The outsourced CX services in the Traditional Economy will be driven by the growing demand for transformation of CX centers and delivery centers. Companies are discovering that their current voice-centric CX centers do not adequately support the level of service required to stay competitive. As CX continues to grow as a key competitive differentiator, the need for a platform that supports omnichannel customer service across all channels and touchpoints is becoming crucial.
New Economy companies are investing in creating differentiated customer experiences and providing end-to-end customer engagement that can enable them to set themselves apart from their competitors. A higher demand for modernizing CX to maintain competitive differentiation, rising demand for non-voice channels in addition to other channels of communication, and building efficient CX centers through the use of machine learning and AI technologies is driving the demand for outsourced CX services in the New Economy industry.
Market Size of Outsourced CX Services in the Traditional and New Economy Industries,
By Delivery Locations in Southeast Asia, 2016-2025E
Source: Frost & Sullivan.
Note: | Many of the outsourced business services providers, including the Company, have global operations with delivery locations around the world and serve clients and client customers that are located both in the same country as the delivery location (onshore) and in countries different from the delivery location (offshore). Therefore, market sizing has been conducted by segmenting revenue based on the delivery location, which includes both onshore and offshore data. 2020 numbers are based on estimation and may be subjected to update. |
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Penetration Ratio of Outsourced CX Services vs. the Total CX Services Spend in the Traditional and New Economy Industries, By Delivery Locations in Southeast Asia, 2016-2025E
Source: Frost & Sullivan.
Note: | Many of the outsourced business services providers, including the Company, have global operations with delivery locations around the world and serve clients and client customers that are located both in the same country as the delivery location (onshore) and in countries different from the delivery location (offshore). Therefore, market sizing has been conducted by segmenting revenue based on the delivery location, which includes both onshore and offshore data. 2020 numbers are based on estimation and may be subjected to update. |
CX industry and competitive landscape
The global outsourced CX market remains relatively fragmented, with global service providers competing with smaller, specialized service providers located in different regional market across North America, South America, Europe, Northern Africa and the Middle East, North Asia and Southeast Asia. Delivery centers in Southeast Asia and India predominantly serve customers in North America, Europe, and Australia. While the contribution of domestic business is comparatively smaller (less than 15%), locations like Malaysia are able to support multiple languages including English, Malay, Mandarin and several other Chinese dialects.
Despite the ongoing consolidation in the industry with a spate of mergers and acquisitions, the expanded scope of service capabilities driven by digital CX needs of enterprises is increasing the attractiveness of the CX market for not only incumbent service providers but also for niche service providers with differentiated digital and automation capabilities.
In Southeast Asia, the top 15 players are estimated to comprise just over 51% of market share by revenue in 2020. The top five outsourced CX service providers (excluding TDCX) by revenue in Southeast Asia are Teleperformance, Concentrix, Alorica, TTEC, and Telus with estimated market shares of 9.7%, 9.1%, 3.8%, 3.4% and 2.8% respectively. TDCX has 3.1% of the market share.
TDCXs primary competitive landscape
As TDCX has pivoted its business to become a digital service support provider for new economy clients, its competitive landscape changed significantly from traditional CX companies to providers who rely more on technology-solutions. TDCX is contending in the CX market segment by providing high value-added services with strength in multi-lingual capabilities, content monitoring and moderation services, digital marketing services, and real-time data analytics capabilities to market-leading clients in the new economy sectors and traditional blue-chip clients. Competition varies across its key service lines and includes global leaders / traditional CX companies, blended voice, non-voice CX companies and omnichannel CX companies, ranging from CX centric players to ITO centric players. Among its key competitors in the CX segment, TDCX has a
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significantly greater share of new economy clients as a percentage of its total client base, with 87.8% of its 2020 revenue base respectively coming from new economy clients, versus 7% for Teleperformance, and approximately 5% for Concentrix and TTEC. In addition, TDCX has set itself apart from its key competitors by setting personnel retention as one of its top priorities. In 2018, 2019 and 2020, the annual voluntary attrition rate, measured by the number of employees that voluntary left the Company in a period divided by the average number of employees in such period, was 21.5%, 23.1% and 24.8%, respectively, compared to the industry average of 30% to 34% in APAC.
Based on target sector and geographical focus, TDCXs primary competitors are:
Source: Frost and Sullivan
Note: VoxPro is a subsidiary of Telus International.
Omnichannel CX service providerskey advantages
While smaller in scale relative to the larger service providers, omnichannel CX service providers, including our Company, 24-7 Intouch, TaskUs and Voxpro, share similar key advantages over the larger competitors, including:
| Stronger presence with faster growing technology and start-up service ecosystems, including companies from ride sharing, social media, online food delivery, e-commerce, autonomous driving, online gaming and fintech domains. |
| Ability to quickly adapt to newer technologies and changing demands upon CX service providers as consumer behaviors change over time |
| Specialized, proprietary focused verticals and core capabilities, which can typically attract higher margins from clients given the specialized nature of work output |
| Greater focus on employee retention and engagement, including a greater ability to promote inclusive and attractive working cultures for the benefit of attracting and retaining talent |
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TDCXs primary competitive landscape benchmarking
Revenue scale
TDCXs revenue for 2020 was US$329 million, as compared to its peers median of US$2,659 million for 2020.
Outsourced BSS 2020 Group Revenues
Source: Frost & Sullivan.
Note: | Total company revenues for competitors may include non-BSS and / or non-CX related revenues, and excludes peers without public disclosure. Respective FX rates EURUSD, GBPUSD and SGDUSD of 1.2232, 1.3654 and 0.7565, respectively, are used for TDCXs peers. USDSGD FX rate of 1.3221 is used for TDCX. |
(1) | Telus Internationals 2020 numbers reflect the acquisition of Competence Call Center (acquired in Jan 2020) and Managed IT Services from Telus Corp. (acquired in Apr 2020). |
EBITDA margins
TDCXs 2020 EBITDA margins of 33% is superior to those of its peers, which have a median of 16%.
Outsourced BSS 2020 EBITDA Margins
Source: Public filings, Bloomberg.
Note: | Total company revenues and EBITDA for competitors may include non-BSS and / or non-CX related revenues, and excludes peers without public disclosure. |
(1) | Telus Internationals 2020 numbers reflect the acquisition of Competence Call Center (acquired in Jan 2020) and Managed IT Services from Telus Corp. (acquired in Apr 2020). |
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EBITDA per employee vs. Revenue Growth
Compared to its peers, TDCX has the highest revenue growth for the period 2018-2020. TDCX also has a relatively high EBITDA per employee due to the unique focus on clients from the new economy industries.
Source: Frost and Sullivan
Note: EBITDA margin is a non-IFRS measure that should not be considered in isolation or as a substitute for financial results reported under IFRS. Similarly titled non-IFRS measures may be calculated differently by or for different companies.
(1) | Average number of employees at the beginning and end of respective FY2020 periods as disclosed in company filings. |
Competitive moats in the CX services market
Ability to harness and successfully implement technology into operations
In the past, the BSS and CX industry was primarily looked at as a means for cost reduction, taking advantage of labor arbitrage. Increasingly, enterprises consider outsourcing as a competitive strategy to increase efficiency, accelerate innovation, and expedite product development lifecycles. Service providers have to make substantial investments in customer management and communication platforms as well as data analytics and AI solutions. Service providers who manage to develop the expertise and technical skills to implement these solutions successfully are able to create a moderate barrier to entry against new entrants.
Bargaining Power of Enterprise Clients
A significant number of outsourced BSS and CX clients are global enterprises / MNCs with greater financial ability to exert more buying and negotiating power against BSS and CX providers. Additionally, these clients often have the capability to move some of their outsourced processes back in-house. On the other hand, the outsourced BSS and CX markets are highly fragmented and it is relatively easy for clients to switch between BSS and CX providers. This has resulted in clients being able to negotiate for better contract pricing and value-added services, putting pressure on BSS and CX providers to sustain their revenues and margins in the long-run. The relatively competitive landscape is likely to defer new entrants.
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Capital
The BSS and CX industries are capital-intensive, as service providers need to make heavy investment in setting up the infrastructure and the necessary people adding pressure on profit margins and free cash flows. Over time, the BSS and CX industries have evolved into a revenue generating industry, however the budget and cost of doing business remains the primary concern for many outsourcing companies considering to enter the outsource BSS and CX market.
Opportunities in the CX services market
Higher Value Services
CX center service providers need to specialize in new technologies and their implementation to enable them to deliver on business outcomes. Enterprises are seeking to partner with service providers who offer innovative services thorough industry knowledge and experience. These higher value services translate directly into higher revenue opportunities.
Digital Services Platform
Customers are looking for personalized services along their experience journey when engaging with a brand. Heightened customer expectations are driven by real-time insights and digital experiences that customers can enjoy everywhere. Digital services platforms enable enterprises to make timely business decisions and create omnichannel experiences by providing access to real-time customers insights.
New Economy Market
As the traditional economy markets matures in terms of outsourcing services spending, service providers are now expanding their presence into the new economy high growth industries such as social media, search engine companies, and so on. These organizations are lean and outsource their business process operations, allowing for service providers to build long-term relationships and grow their wallet share.
Threats to the CX services market
Intense competition
The growth of the BSS market has led to the expansion of the industry. The high level of competition in this market segment is now a challenge for service providers requiring them to differentiate in the market.
Service providers are now investing in next-generation technologies such as analytics or chat bots or investing in training and retailing talent or specializing in certain horizontal or vertical BSS capabilities to grow in the market.
Global in-house operation centers
In the past global companies set up delivery centers to be able to control and manage their operations in-house. In the digital era, the scope of these in-house operation centers has matured from a delivery center for business processes to a strategic hub for R&D/engineering services. As the complexities of business licensing and the finding and hiring of necessary talent teams decrease in India, the Philippines, Eastern Europe, and Latin America, in-house operation centers will continue with their existing operational processes. This acts as a deterrent to the outsourcing services market.
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Challenges to the CX services market
Agent/Resource Recruitment and Retention
Hiring and retaining the right agents is always a challenge for CX center managers because it has a direct impact on customer relationships and experience. CX center agent retention has been a prolonged problem in the industry and therefore, management needs to promote a culture of tenure.
Delivering seamless multi-channel experiences
Creating an exceptional CX is about creating successful end-to-end journeys. Consumers use or shift between multiple channels and an effective CX management requires building consistency and integration between them.
Facebook, Twitter, Instagram, and other social media channels have now evolved into major customer service channels. There has been a tremendous challenge in integrating social media channels with more traditional customer service processes. This requires integration via infrastructure that supports omnichannel engagement.
Reevaluation of global delivery models
Due to the COVID-19 pandemic, the Philippines and India were significantly affected by lockdowns and movement control measures enforced by the respective governments. As a result, some companies have started pushing for onshore or rightshoring CX center delivery models.
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Our Mission
Our mission is to assist our partners and our people achieve higher success through innovative and high-performance solutions.
Overview
We are a high-growth digital customer experience solutions provider for innovative technology and other blue-chip companies. We have specific expertise in providing tailored digital customer experience solutions to manage complex customer interactions. We offer omnichannel CX solutions, sales and digital marketing services and content monitoring and moderation services. We have specific expertise in providing tailored digital customer experience solutions to manage complex customer interactions that go beyond providing boilerplate responses and which require a highly trained workforce capable of effectively delivering our differentiated services and solutions to our clients and their customers. Our focus on complex digital solutions enables us to provide higher value services and solutions for our clients. Our strategy has resulted in a highly attractive financial profile. We have experienced robust growth with our revenue, profit for the year and EBITDA growing at a CAGR of 54.9%, 50.3% and 60.7%, respectively, from the year ended December 31, 2018 to the year ended December 31, 2020. In the years ended December 31, 2018, 2019 and 2020, we recorded revenue of S$181.2 million, S$330.3 million and S$434.7 million (US$328.8 million), profit for the year of S$38.1 million, S$73.5 million and S$86.1 million (US$65.1 million) and EBITDA of S$55.4 million, S$108.1 million and S$142.9 million (US$108.1 million), respectively. For the same periods, we recorded net profit margins of 21.0%, 22.2% and 19.8%, respectively, and EBITDA margins of 30.6%, 32.7% and 32.9%, respectively.
We believe our employees and our distinctive corporate culture are key enablers of our success, a core strength and part of our competitive advantage. Our corporate culture is designed to foster a work environment that attracts, develops and retains a highly skilled workforce that can effectively engage in complex customer interactions. We focus on reinforcing a culture that emphasizes a sustainable and collaborative approach while being fully committed to our clients requirements. We strive to ensure that our distinctive culture is incorporated within all the relationships and processes of our organization and fits within our values and goals.
We have an international footprint. As of the date of this prospectus, we service our clients customers globally in more than 20 languages. This international footprint is supported by 11,351 employees as of December 31, 2020, who are located in offices in nine geographies: Singapore, the Philippines, Malaysia, Thailand, China, Japan, Spain, India and Colombia.
Our business comprises three key service offerings: (1) omnichannel CX solutions; (2) sales and digital marketing services; and (3) content monitoring and moderation services. We also offer services consisting of miscellaneous activities, such as providing workspaces to existing clients and providing human resource and administration services to clients. We help our clients manage relationships with their customers by providing digital customer experience solutions, such as after-sales service and customer support across ten industry verticals, including travel and hospitality, digital advertising and media and fast-moving consumer goods. Our sales and digital marketing services offering helps our clients market their products and services to potential customers in both the business-to-consumer, or B2C, and the business-to-business, or B2B, markets. Our content monitoring and moderation services offering helps our clients create a safe and secure online environment for social media platforms by providing a human touch to content monitoring and moderation services.
Our competitive strengths
Digital customer experience solutions provider for high-growth technology disruptors
We provide a high value-added service platform to market-leading clients in the new economy sectors and traditional blue-chip clients who are undergoing digital transformation across their organizations. Frost &
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Sullivan defines the new economy as the high growth industries that are on the cutting edge of digital technology and are the driving forces of economic growth. These industries are seen as an evolution of the existing traditional economy aided by technological advancements and innovation. Our services provide synergies with our clients digital economy value chains and enable our clients to grow and transform their businesses consumer experience. We offer customized and differentiated customer contact solutions and possess the ability to handle complex and mission-critical digital customer experience interactions. These offerings are enhanced by our ability to solve problems for our clients by leveraging customer interaction data analytics to allow our clients to access real-time data which gives them valuable insights on their end-customers, allows them to improve business processes and make more prompt business decisions to resolve problems in a more timely manner.
We have leveraged our integrated omnichannel and multimodal solutions to shape user experiences in a world of evolving and proliferating digital communication and technology platforms from traditional channels, such as voice and email, to advanced technology driven channels, ranging from messaging and social media to AI-powered chat bots and in-app interactions. We are also able to synergize our in-house developed technology with third-party technology and platforms to solve operational issues which our clients are facing.
We have an international footprint with offices in nine geographies across Asia and in Spain and Latin America, which provides us with access to a broad talent pool and equips us with multilingual capabilities to serve a global customer base, including English and key Asian languages, such as Mandarin, Thai, Korean, Malay (Malaysia and Indonesia), Vietnamese and Japanese.
Strong focus on human capital development to deliver superior customer experiences
We believe the quality of our employees is a key differentiator in winning and retaining business, as well as in delivering a superior customer experience. Through our structured recruitment process and strong emphasis on career development, we strive to attract, develop and retain the industrys high caliber talent who possess deep knowledge of local customs and cultural sensitivities. As of December 31, 2020, we had 11,351 employees of which more than 60% are college or university graduates, including employees with masters degrees and/or doctorates, which helps us handle complex campaigns. Our employees have access to ongoing internally and externally developed supplementary training and certifications in a number of areas, such as COPC, a standard certification, which is a widely recognized standard across the customer experience industry.
In the years ended December 31, 2018, 2019 and 2020, our annual voluntary attrition rate, measured by the number of employees that voluntarily left us in a period divided by the average number of employees in such period, was 21.5%, 23.1% and 24.8%, respectively, compared to the industry average of 30% to 34% in the Asia Pacific region, according to Frost & Sullivan. Consistent with our improving attrition rates, employee satisfaction surveys have demonstrated a high degree of satisfaction. Our company-wide employee satisfaction scores were at 87%, 91% and 87% in the years ended December 31, 2018, 2019 and 2020, respectively. We conducted our survey for 2020 in July during the COVID-19 pandemic, which we believe reflects our continued commitment to our employees through this challenging period. We believe that our strong focus on human capital has been critical to our ability to minimize business disruptions and rehiring and training costs, resulting in high service quality for our clients. Our commitment to the development of our people is reflected in the multiple awards we have received, including the Best Companies to Work for In Asia 2020 (both our Thai and Philippines office), the Top 100 Asias Best Employer Brands 2019 from Employer Branding Awards (our Malaysian office) from the HR Asia Awards, the Great Place to Learn Certification from the Great Place to Work Institute & SkillsFuture Singapore in 2019 and 2020 (our Singapore office), and Asias Best Employer Brand Award from the World HRD Congress in 2018 (our Singapore office).
Well-positioned to capitalize on positive digital economy trends and increasing demand for our services
We believe favorable underlying industry trends continue to fuel the growth of our clients. According to Frost & Sullivan, there are a plethora of internet-based technology offshoots driving the new economy growth, including
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companies in the e-commerce, digital advertising, fintech, online gaming and sharing economy industries. Driven by fundamental shifts in consumer behavior and increased adoption of internet and mobile usage, the global market sizes of retail e-commerce sales, digital advertising spend and sharing economy (by transaction value) are estimated to grow at CAGRs of 14.5%, 15.3% and 18.2% from 2021 through 2025, respectively, as reported by Frost & Sullivan.
We believe our clients view their relationship with us as strategically important. New economy clients increasingly seek customized solutions in an evolving digital business services market that is increasingly becoming more complex. We believe the trend will continue as new economy clients rely on us to perform omnichannel CX solutions so that they can maintain their employee-lite, nimble business models, while we provide a service framework that can scale along with their growth. Furthermore, given their relative lack of physical touchpoints with their end-users, new economy clients tend to place a greater emphasis on the quality of customer experience service providers, where we believe we are strongly positioned. Our digital hiring platform, Flash, enables us to remain agile and keep up with the growth of our high-growth clients by allowing us to rapidly identify, evaluate and hire candidates as needed.
Attractive client base of some of the largest and most disruptive companies in fast-growing industries and markets along with traditional blue-chip companies which are undergoing digital transformations
Our client base consists of some of the leading names in their respective industries, such as Facebook and Airbnb, other fast-growing, new economy companies for which we can scale up projects as they grow, as well as traditional blue-chip companies that rely on us to partner in their digital transformation journey. In the past few years, we have proactively increased our new economy client base, which provides strong growth opportunities for us. As of December 31, 2020, 90% of our agents, which are the customer facing employees that work on our campaigns, were staffed on campaigns for new economy clients.
We seek to forge partnerships and create long-term relationships with our clients, where they view us as an integral part of their organization through the solutions we offer. By growing and partnering with them over the long term, we have expanded the scope of our services and solutions and have become seamlessly integrated into our clients operations, while helping them deliver on their brand promise. On a combined basis, Facebook and Airbnb accounted for a total of 52.0%, 65.9% and 60.4% of our revenue for the years ended December 31, 2018, 2019 and 2020, respectively.
Track record of high-growth financial performance
We focus on providing our clients with a differentiated level of service, which we believe enables us to grow our business together with the growth of our clients businesses as well as grow our share of our clients budget. Due to a combination of an increase in the amount of work for existing clients as well as attracting work from new clients, we increased the average number of our agents by 118% from 3,701 for 2018 to 8,070 for 2020. During this period, we generated strong revenue, net profit and EBITDA growth at a CAGR of 54.9%, 50.3% and 60.7%, respectively from the year ended December 31, 2018 to the year ended December 31, 2020.
Our ability to provide a differentiated level of service and higher valued and more sophisticated services, while efficiently increasing the scale of our business has resulted in our net profit margin of 21.0%, 22.2% and 19.8% and EBITDA margin of 30.6%, 32.7% and 32.9% for the years ended December 31, 2018, 2019 and 2020, respectively. Our EBITDA margin for 2020 is the highest among CX-centric outsourced service providers, according to Frost & Sullivan.
We have also managed our growth while maintaining a low debt profile. As of December 31, 2018, 2019 and 2020, we had a total debt to EBITDA ratio of 0.6, 0.3 and 0.3, respectively. Our strong balance sheet, combined with our ability to grow our business and generate cash flows, gives us a strong foundation for focused investments and further business expansion.
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Dynamic and highly experienced management team
We have an experienced, hands-on and savvy management team who combine global expertise with local insights. Our Executive Chairman, Chief Executive Officer and founder, Mr. Laurent Bernard Marie Junique, has over 25 years of industry experience and has won numerous awards, including the Ernst & Young Entrepreneur of the Year in the Outsourced Solutions category for Singapore in 2018. Our management team has an average of over 15 years of relevant industry experience and most of our senior management have worked with us for over five years, which has allowed us to accumulate valuable operational experience and deep vertical expertise, while building and maintaining close relationships with our key clients. Our management team has been a champion in promoting a vibrant and distinctive culture that emphasizes teamwork, a high degree of flexibility, dedication to the client and alignment with client goals. Under the leadership of our management, we have been able to grow our Company from 1,400 employees as of December 31, 2012, the year we commenced servicing new economy clients, to 11,351 employees as of December 31, 2020.
Our growth strategy
Leverage network effects to expand client coverage and service offerings globally
Our growth strategy is to create a significant network in each of our markets so that we can gain local insights, on-the-ground capabilities and operational experience to expand our client coverage and digital offerings. We intend to achieve this through (i) deepening our relationships with our existing clients, (ii) growing our client base and (iii) extending and future-proofing our omnichannel capabilities. We expect the learning and insights from each client will enable us to deepen our expertise in key verticals and further expand our capabilities across service offerings, industries and regions, thereby creating network effects. As we scale and grow our expertise, we expect to penetrate more markets as the impact from our network effects increase.
Deepening our relationships with our existing clients
Our relationships with our new economy clients offer significant opportunities for growth. As we demonstrate the value that we provide, we are frequently able to expand the scale and scope of our services in a variety of ways and grow our wallet share. With our new economy clients strong business model scalability, we are well-positioned to ride their growth. We also find opportunities to cross-sell different types of digital offerings and use data analytics to provide integrated insight-driven strategies to help clients improve their business outcomes. In the past, clients who have engaged us for our services have been willing to turn over additional and more critical processes to us as we demonstrate our capabilities over time. As we become more intricately knowledgeable of our clients businesses and processes, we find opportunities to expand across the value chain and provide new and increasingly complex digital offerings to them via multiple channels to improve their processes. This in turn encourages client stickiness and is a factor that discourages our clients from turning to other providers.
Growing our client base
We seek to develop long-term client relationships with new clients, especially with clients who (i) require similarly complex services as our existing clients, (ii) provide opportunities for us to deliver a wider range of capabilities and meaningful impact to their businesses, and (iii) facilitate robust pipeline development and a strong win-rate of new top-tier clients. We use a multifaceted, technology driven strategy to attract new economy clients.
Extending and future-proofing our omnichannel capabilities
We seek to improve our capabilities through continued investments in digital technology and use of third-party technology. We strive to grow our capabilities in future technologies and channels and to continuously evolve with new technology offerings, such as Internet of Things, or IoT, products, wearables and apps, among other areas.
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Enhance our human capital and reinforce our distinct corporate culture
Our people are critical to our success. Our ability to grow will depend on our ability to continue to attract, train, and retain large numbers of talented individuals. We continue to focus on maintaining a work environment that would make TDCX an employer of choice. We intend to achieve this through various initiatives, including:
| working with new economy digital disruptor clients that are the companies of the future; |
| utilizing innovative recruiting techniques that will appeal to potential employees including young talent; |
| providing training and development throughout the tenure of an employees career, such that our employees remain educated and agile to meet our clients evolving requirements; |
| providing compensation with appropriate incentives that rewards employee commitment, resulting in high standards of customer experience and support for our clients; |
| supporting our employees in work from home situations with the technology ecosystem that enables them to remain productive and connected to training opportunities; |
| fostering a healthy work environment where employees work hard but have fun; and |
| having office locations in areas that are accessible and appealing, with office interior designs that are contemporary, collaborative and inspiring. |
We believe that maintaining a vibrant and distinctive culture is critical to growing our business.
Prudent expansion into new geographic markets
We have a wide footprint of delivery centers in a number of locations across Asia and in Colombia and Spain to serve domestic, regional and global markets and we plan to expand our coverage. As of the date of this prospectus, we had offices in a total of nine geographies, including newly opened offices in Beijing in 2017; Barcelona in 2018; Cebu and Yokohama in 2019; and Bogota, Hyderabad and Shanghai in 2020. The expansion into new locations was driven by our strategy of growing to meet the needs of our existing clients, such as our clients expanding into new markets or seeking to replace their existing service providers. Since adding offices in these locations, we have also added new clients based in these countries, as well as internationally who have been attracted by our increased geographical capacities. We intend to continue to expand our footprint prudently, but rapidly, to ensure we can meet the evolving needs of our clients, including processes requiring multi-jurisdictional and multi-lingual capabilities, and better position ourselves to win new engagements from our existing clients and attract new clients.
In addition to expansion in recently entered markets, we have identified Eastern Europe, Korea and other Chinese regional markets where we do not currently operate as potential new markets for entry. In 2020, we established a new office in Hyderabad, India as an entry point to the Indian market and to serve as our hub for digital innovation, established an office in Bogota, Colombia in 2020 as an initial office marking our entrance into the Latin America market, and grew our China presence by establishing an office in Shanghai. We also intend to open an office in the Republic of Korea by 2022 and are exploring a potential opportunity to open an additional office in Europe as well. While there are no current operations in our offices in India and Colombia, we expect to begin operations in each in 2021. Key location criteria for setting up new offices include (i) the ability to tap a wide talent pool that has the desired skills to better cater to client requirements, (ii) minimal time zone difference with, and proximity to, existing and potential clients, and (iii) cost competitiveness.
Maintain operational efficiencies through streamlined operations
We strive to be a productive and efficient operator. For example, we utilize digital recruiting techniques, such as our Flash platform, to minimize recruiting costs and improve candidate selection accuracy. We are also adept at
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educating and developing our employees, through our TDU online learning platform of online courses and learning opportunities, which is a fast and flexible way to train our workforce across multiple geographies. Our innovative digital operating platform, Flash, which we had implemented prior to the COVID-19 pandemic, has enabled us to continue to implement our growth strategy in new markets despite social distancing restrictions on in-person meetings and training sessions. We have business excellence teams that review our standard operating procedures, design customer interaction playbooks and gather and implement best practices across the organization. Larger campaigns also have campaign-specific materials developed to meet specific client needs. In addition, insights gained through our data analytics capabilities also help us optimize staffing levels, track key performance indicators and employee engagement, and enhance workforce management to realize operational efficiencies. As we grow in scale, we intend to further centralize our procurement processes for our infrastructure, technology, telecommunication equipment and professional services in order to lower costs and streamline supplier relationships.
Prudent strategic acquisitions and opportunistic partnerships
We plan to continue to expand our capabilities globally as well as across industry verticals and service offerings. While we expect this will primarily occur through organic growth, from time to time, we expect to selectively evaluate strategic partnerships, alliances and acquisitions to develop or acquire:
| new clients within our existing client verticals, with minimal overlap with existing clients; |
| new client verticals with high growth potential, such as industries where demand exceeds our ability to scale our business organically and other industries such as in financial technology, digital marketing and gaming; |
| new language capabilities to enter into new, large and diverse markets such as Europe and Latin America; and |
| new operational capabilities which can improve our efficiencies and complement our existing offerings, including the ability to introduce new offerings. |
We believe that our strong balance sheet combined with our ability to grow our business and generate cash flows gives us a strong foundation for focused investments and further business expansion.
Key Financial and Operational Metrics
The following table sets forth our key financial and operating metrics as of and for the periods indicated.
Year Ended December 31, | ||||||||||||
2020 | 2019 | 2018 | ||||||||||
Revenue (S$ thousands) |
434,723 | 330,265 | 181,233 | |||||||||
Profit for the year (S$ thousands) |
86,094 | 73,536 | 38,088 | |||||||||
EBITDA (S$ thousands)(1) |
142,926 | 108,087 | 55,376 | |||||||||
Net profit margin (%) |
19.8 | 22.2 | 21.0 | |||||||||
EBITDA margin (%)(1) |
32.9 | 32.7 | 30.6 | |||||||||
Number of clients(2) |
37 | 38 | 36 | |||||||||
Number of agents(2) |
9,128 | 7,213 | 4,608 | |||||||||
Revenue per agent (S$ thousands)(3) |
54 | 54 | 49 | |||||||||
Debt (bank loans) (S$ thousands) |
40,306 | 34,421 | 30,548 | |||||||||
Debt/EBITDA Ratio(1) |
0.3 | 0.3 | 0.6 |
Notes:
(1) | EBITDA, EBITDA margin and Debt/EBITDA Ratio are non-IFRS financial measures. We define EBITDA as profit for the year before interest expense, interest income, income tax expense and depreciation expense, |
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EBITDA margin as EBITDA as a percentage of revenue, Debt as bank loans and Debt/EBITDA Ratio as bank loans divided by EBITDA. EBITDA, EBITDA margin and Debt/EBITDA Ratio are not measures calculated in accordance with IFRS. As a result of our early adoption of IFRS 16 Leases as of January 1, 2017 using the full retrospective approach, EBITDA and EBITDA margin disclosed may not be comparable to similarly titled measures reported by other companies as our calculation includes depreciation on the right-of-use assets and finance costs on lease liabilities. While we believe that EBITDA, EBITDA margin and Debt/EBITDA Ratio provide useful information to investors in understanding and evaluating our results of operations in the same manner as our management, our use of EBITDA, EBITDA margin and Debt/EBITDA Ratio has limitations as an analytical tool and you should not consider it in isolation or as a substitute for analysis of our financial results as reported under IFRS. |
The following table presents a reconciliation of EBITDA to profit for the year and EBITDA margin to net profit margin, the most directly comparable financial measure calculated and presented in accordance with IFRS, for the periods indicated:
For the Year Ended December 31, | ||||||||||||||||||||||||||||
2020 | 2019 | 2018 | ||||||||||||||||||||||||||
S$ | US$ | Margin | S$ | Margin | S$ | Margin | ||||||||||||||||||||||
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Revenue |
434,723 | 328,812 | | 330,265 | | 181,233 | | |||||||||||||||||||||
Profit for the year and net profit margin |
86,094 | 65,117 | 19.8 | % | 73,536 | 22.2 | % | 38,088 | 21.0 | % | ||||||||||||||||||
Adjustments: |
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Depreciation expense |
33,065 | 25,009 | 7.6 | % | 24,599 | 7.4 | % | 12,908 | 7.1 | % | ||||||||||||||||||
Income tax expenses |
21,303 | 16,113 | 4.9 | % | 7,524 | 2.3 | % | 3,520 | 2.0 | % | ||||||||||||||||||
Interest expense |
3,058 | 2,313 | 0.7 | % | 2,893 | 0.9 | % | 1,128 | 0.6 | % | ||||||||||||||||||
Interest income |
(594 | ) | (449 | ) | (0.1 | %) | (465 | ) | (0.1 | %) | (268 | ) | (0.1 | %) | ||||||||||||||
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EBITDA and EBITDA margin |
142,926 | 108,103 | 32.9 | % | 108,087 | 32.7 | % | 55,376 | 30.6 | % | ||||||||||||||||||
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(2) | The number of clients and number of agents are calculated as of December 31 of the years indicated. |
(3) | Revenue per agent is calculated as revenue for a period divided by the average of the number of agents at the end of each month during such period. We monitor our revenue per agent because we believe it measures our success in expanding our client relationships higher up the value chain. Our client contracts are mostly based on a fixed rate per FTE dedicated and assigned to the applicable campaign. Under our employee classification system, an FTE is classified as an "agent." |
For further information on our key financial and operating metrics, see Managements Discussion and Analysis of Financial Condition and Results of Operations Key Financial and Operational Metrics.
Our Services and Solutions
Our business comprises three key service offerings: (1) omnichannel CX solutions; (2) sales and digital marketing services; and (3) content monitoring and moderation services. We also provide other services for clients, such as providing workspace at our offices in connection with existing campaigns and providing human resource and administration services to clients.
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The following table sets forth our service provided, by amount and as a percentage of our revenues for the years ended December 31, 2018, 2019 and 2020.
For the Year Ended December 31, | ||||||||||||||||||||||||||||
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Revenue by Service |
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Omnichannel CX solutions |
283,427 | 214,376 | 65.2 | 217,349 | 65.8 | 120,238 | 66.4 | |||||||||||||||||||||
Sales and digital marketing |
66,235 | 50,098 | 15.2 | 46,839 | 14.2 | 43,124 | 23.8 | |||||||||||||||||||||
Content monitoring and moderation |
80,170 | 60,638 | 18.4 | 61,526 | 18.6 | 14,361 | 7.9 | |||||||||||||||||||||
Other service fees(1) |
4,891 | 3,699 | 1.1 | 4,551 | 1.4 | 3,510 | 1.9 | |||||||||||||||||||||
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Revenue |
434,723 | 328,812 | 100.0 | 330,265 | 100.0 | 181,233 | 100.0 | |||||||||||||||||||||
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(1) | Revenues from other service fees include revenues classified in our Consolidated Financial Statements as workspace, payroll outsourcing and other services. |
Since 2012, when we secured our first new economy client, new economy clients have grown to contribute up to 66.8%, 82.5% and 87.8% of our total revenues for the years ended December 31, 2018, 2019 and 2020, respectively. Our top five clients for each of 2018, 2019 and 2020, on a consolidated basis, accounted for a total of 83.4%, 88.9% and 83.8% of our total revenues in the years ended December 31, 2018, 2019 and 2020, respectively.
We have an international footprint. As of the date of this prospectus, we service our clients customers globally in more than 20 languages. This international footprint is supported by 11,351 employees as of December 31, 2020, who are located in offices in nine geographies: Singapore, the Philippines, Malaysia, Thailand, China, Japan, Spain, India and Colombia (see Employees and CultureEmployees by Position and Geographic Location of Office Providing Services). For more information on our revenues by geographic segment, see Managements Discussion and Analysis of Financial Condition and Results of OperationsCertain Income Statements Line ItemsRevenuesGeographic Segment.
Omnichannel CX solutions
We help our clients manage their relationships by providing digital customer experience solutions, such as after-sales service and customer support across ten industry verticals, namely: (1) travel and hospitality, (2) digital advertising and media, (3) fast-moving consumer goods, (4) technology, (5) financial services, (6) fintech, (7) government and non-governmental organizations, (8) gaming, (9) e-commerce and (10) education. We offer omnichannel CX solutions to customers located in eleven offices in nine geographies across Asia and in Spain and Colombia. We provide information about our clients and their products and services to their customers and cover the entire customer life cycle. Customer contact occurs through phone call, online chat, SMS, email and a variety of other channels. Our customized services further integrate us into the strategic objectives of our clients, often leading to closer, more resilient client relationships. In addition to our highly tailored services for complex interactions, we are also able to provide omnichannel CX solutions such as end-user support and troubleshooting for software and consumer electronic devices and sales and digital marketing campaigns. Our key clients for these services include Airbnb, a leading international airline, a global payments platform provider and a multinational food and beverage company.
Sales and Digital Marketing Services
Our sales and digital marketing services help our clients market their products and services to their potential customers in both the B2C and the B2B markets. In the B2B market, we primarily help our digital advertising
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platform clients attract more advertisers and grow their Internet and social media advertising businesses. For example, we have been engaged by these advertising platforms to help small-and medium-sized businesses develop online advertising campaigns on our clients platforms. We do this by helping these enterprises optimize their advertising campaign key words and target demographics to make their advertisements more effective. This increased effectiveness translates to more business for our clients as their customers experience greater return on their advertising investments and become more likely to continue or expand advertising purchases. In the B2C market, we have sales and direct-marketing capabilities to support customer campaigns. Our sales and digital marketing services are supported by a suite of data analytical capabilities that provide business insights through user-friendly data visualizations. Our key clients for these services include Facebook and a leading search engine company.
Content Monitoring and Moderation Services
We commenced our first campaign for content monitoring and moderation services in 2018 and since then have rapidly expanded this service offering. Our content monitoring and moderation services create a safe and secure online environment for social media platforms by providing a human touch to content monitoring and moderation services. Effective content monitoring and moderation requires a good command and understanding of the specific language involved, as well as a good understanding of the regional and local political and social context of social media exchanges, which are fluid and constantly evolving. This makes it difficult for our clients to rely solely on technical solutions. Our clients expect our campaigns to be staffed with highly trained personnel who have specific experience in the geographies we monitor. Our teams review social media platforms for content that violates terms of service or is illegal pursuant to the specifications and guidelines provided by the client. Our content monitoring and moderation teams are supported by a positive work culture and a supportive environment focused on their health and wellbeing, including having access to dedicated mental wellness professionals who are co-located in our offices. This helps ensure a higher level of employee engagement and lower levels of attrition as we remain focused on ensuring the wellbeing of our employees.
Other services
We provide additional services that we typically offer to select existing clients in support of existing engagements that these clients have with us. These services include providing workspace at our offices in connection with existing campaigns.
Operations
We are capable of providing our services on a 24/7 basis from our eleven offices. As of December 31, 2020, we also have more than 1,000 agents on assignment to clients. We provide services in more than 20 languages, including English and key Asian languages, such as Mandarin, Thai, Korean, Malay (Malaysia and Indonesia), Vietnamese and Japanese and have capabilities in Asian unicorn languages such as Bhutanese, Dhivehi and Sinhalese. Some of our campaigns are served out of multiple offices. Our engagements are organized by campaign, with each campaign being serviced by a dedicated team. All of our newly employed agents go through an initial training process, as well as campaign-specific training. The total training period can last up to three months in some cases. We have made significant investments in infrastructure, proprietary technologies, management and development processes that capitalize on our extensive experience managing large and regional operations. As of December 31, 2020, we were engaged by 37 clients and on 101 active campaigns. Multiple teams can serve each client, as a single client may have multiple campaigns that are each organized around discrete work requirements and specifically organized and staffed with campaign-specific training to address the particular needs and specifications of the campaign. If and when a campaign is complete, our employees are assigned to a different campaign, including to different campaigns with the same client to utilize client-specific know-how.
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The following table sets out our staffing structure for a typical client campaign:
As of December 31, 2020, we had campaign teams staffed by up to several thousand employees. Campaign teams are supported by campaign specific technologies, which are often provided by our clients (such as proprietary client-developed customer relationship management, or CRM, software or telephony systems), licensed or developed by us or our clients (see Information Technology and Management Information Systems).
Our operating structure gives us the flexibility to quickly adapt to client requirements and changing circumstances. In the past, we have been successful at quickly ramping up new campaigns or expanding existing campaign teams on short timelines. For an example of our scaling capability, see Our Services and SolutionsCase StudyNew Economy Client.
Data Analytics
As part of our value-added services for our customer service operations, we have a dedicated team of data analytics specialists who help monitor both our employee performance and our clients customer satisfaction metrics, such as customer satisfaction, net promoter score, average holding time, and first call resolution. As of December 31, 2020, we have a team of over 100 analytics personnel that support our global operations platform. We are focused on the use of data analytics to optimize our platform in order to meet our clients needs by allowing us to provide continuous access to key performance indicators of our clients and also to empower our resource allocation and identify areas that we can improve upon. Our regional business analytics team is a key part of our success as it supports the decision-making processes of our management team, human resources and finance functions, business development efforts and our business excellence optimization strategies. Finally, for certain of our campaigns, we include dedicated data analysts to support the campaign teams.
In order to ensure that the benefits of our data analytics platform are integrated into our services at the operator level, we encourage our employees to take various data analytics training programs we have available, as well as advanced training available to the analytics team. These courses include both introduction to data analytics and key concepts as well as advanced classes for data analysis, including topics such as thinking processes, reporting and charting, and data analytics presentation to clients. The goal of this training is to empower our employees by giving them a basic understanding of how data analytics is incorporated into our client solutions. In addition to the training that we offer our employees generally, we also provide training to our data analytics specialists through a combination of mentoring and best practices sharing. We believe that this training offered to our employees generally, as well as to our data analytics specialists, helps us offer solutions that integrate a robust data analytics offering for our clients with a workforce that understands and is empowered to incorporate data analytics into their daily work.
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Finally, our data analytics is supported by our data warehousing infrastructure. Our Enterprise Data Warehouse, or TED, is a cloud-based data warehouse which we implemented instead of a traditional tiered, on-premises approach. TED allows us to scale our data warehousing capability to match the pace and scale of growth of our digital client base. TED serves as the ultimate repository for our business data. TED is hosted by a leading cloud storage provider and enables us to provide actionable insights to our clients who need us to guide them on the changes happening at the frontline of their businesses with their clients.
Communication Channels
Our services are delivered through our reliable and scalable technology-enabled, omnichannel platform. Our omnichannel approach integrates direct customer contact through digital channels, allowing us to engage with the customer through multiple channels of interaction. We cover traditional channels such as voice-only telephone communications, fax and email communications. As our clients customers increasingly transition towards digital communication and integrated internet-of-things networks, we have evolved and invested in our capabilities to adapt to emerging technologies, such as through online text chat, video-chat, SMS messages and social media. We are selectively rolling out our chat-bot capabilities, based on technologies licensed from third parties, to allow natural language processing and artificial intelligence supported interactions. We are constantly evaluating new communication technologies, such as internet-of-things related capabilities, with the aim of integrating these channels into our platform. See Research and Development. We view our history through the types of customer interactions we have had and believe that we are now in a digital transformation phase, which began in 2012, after undergoing a telemarketing phase (from our founding to 2007) and traditional customer care phase (from 2007 to 2012).
Each of our channels is available simultaneously and integrated with our other services, so customers using different forms of communication can be treated similarly and in an efficient manner. This omnichannel approach can be used in combination with any service or solution in our portfolio.
Our Offices
We operate from eleven offices in nine geographies (Singapore, Malaysia, Thailand, Philippines, China, Japan, Spain, India and Colombia) which (i) allow us to respond to market demand and growth opportunities in domestic, regional and global markets across Southeast Asia and the Global English end-markets (which includes North America, the United Kingdom, Ireland, Australia and New Zealand), China, Japan and Europe; (ii) provides us with access to diverse talent pools; (iii) equips us with multi-lingual capabilities; and (iv) enables us to leverage time zones to provide 24/7 service. A country director leads the operations in each country in which we operate and is responsible for operations and maintaining client relationships within that country.
Our offices are located in accessible and appealing locations which are designed to provide our employees with an enjoyable and productive work experience. Designed to be modern, collaborative and inspiring, our offices have a number of dedicated spaces where our employees can interact and re-energize during the work day, including reading rooms, themed meeting areas and entertainment areas such as music and games rooms. Our culture is key to our ability to attract and retain a motivated and talented workforce and our offices are specially designed to support our culture and employees. Unless otherwise stated, each office represents our entire operations in a given country, but may be spread across multiple premises.
| SingaporeOur headquarters in Singapore was opened in 1995 upon our founding as Teledirect Pte Ltd. As of December 31, 2020, the office supported 18 active campaigns, including campaigns with some of our most established clients. As of December 31, 2020, it was staffed by 1,092 agents. Our Singapore office services large multinational corporations which have their regional headquarters in Singapore, and certain Singapore government agencies. We provide omnichannel CX solutions, sales and digital marketing services and content monitoring and moderation services from our Singapore office. |
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| PhilippinesWe opened our Manila office in 2014 and our Cebu office in 2019. As of December 31, 2020, our Philippines offices supported 21 active campaigns. As of December 31, 2020, they were staffed by 4,265 agents. Our Philippines offices leverage a talented employee pool of proficient English speakers to service Global English end-markets, including North America, United Kingdom, Ireland, Australia and New Zealand. We provide omnichannel CX solutions and sales and digital marketing services from our offices in the Philippines. |
| MalaysiaWe opened our Kuala Lumpur office in 2001. As of December 31, 2020, the office supported 41 active campaigns. As of December 31, 2020, it was staffed by 2,140 agents. Our Kuala Lumpur office services Southeast Asian and North Asian customers in a variety of regional languages. We provide omnichannel CX solutions and sales and digital marketing services from our Malaysia office. |
| ThailandWe opened our Bangkok office in 2005. As of December 31, 2020, the office supported eight active campaigns. As of December 31, 2020, it was staffed by 1,178 agents. Our Bangkok office serves as our hub in the Indochina region and we support our clients operations that require native speakers from emerging markets such as Vietnam, Cambodia and Laos, in addition to Thailand. We provide omnichannel CX solutions, sales and digital marketing services and content monitoring and moderation services from our Thailand office. |
| ChinaWe opened our Beijing office in 2017 and our Shanghai office in 2020. As of December 31, 2020, our China offices supported five active campaigns and was staffed by 181 agents. Our offices in Beijing and Shanghai primarily supports Mandarin language campaigns for international clients with operations in China. We provide omnichannel CX solutions and sales and digital marketing services from our Beijing and Shanghai offices. |
| JapanWe opened our Yokohama office in 2019. As of December 31, 2020, the office supported five active campaigns. As of December 31, 2020, the office was staffed by 229 agents. The office primarily supports Japanese-language campaigns. We provide omnichannel CX solutions and sales and digital marketing services from our Yokohama office. |
| SpainWe opened our office in Barcelona in 2018. As of December 31, 2020, the office supported three active campaigns. As of December 31, 2020, it was staffed by 43 agents. This is our first office outside of Asia and the first in Europe. The Spanish office will act as our hub for expansion in Europe. We provide sales and digital marketing services from our Spain office. |
| IndiaWe opened our office in Hyderabad in 2020. As of December 31, 2020, the office had not yet commenced operating any campaigns. The India office will act as our hub for expansion in India and service Global English end-markets. We also expect that our India office will be able to serve as a digital hub that will allow us to grow our technology capabilities throughout our Company. We intend to provide omnichannel CX solutions, sales and digital marketing services and content monitoring and moderation services from our India office. |
| ColombiaWe opened our office in Bogota in 2020. As of December 31, 2020, the office had not yet commenced operating any campaigns. This is our first office in Latin America and will act as our hub for expansion in Latin America, as well as into North America, as requested by our clients. We intend to provide omnichannel CX solutions, sales and digital marketing services and content monitoring and moderation services from our Colombia office. |
COVID-19 Risk Mitigation and Continuity of Operations
In response to the COVID-19 pandemic, we have implemented a number of procedures and strategies with the support of our clients. We established an internal COVID-19 task force, which is overseen by our Internal Audit Director. The task force includes representatives from each country in which we have operations as well as each function from our corporate team (such as human resources) and conducts regular telephonic or video meetings
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to discuss developments in each countrys operations and best practices that are being undertaken by each country to ensure employee safety and continuity of our operations. Our management works closely with our COVID-19 task force to ensure synchronization of the task force and operations throughout our Company organization more broadly. Along with the organizational measures we have taken with respect to our COVID-19 task force, we have also increased the cleaning frequency of our premises and order (as needed) items such as face masks and hand sanitizer for our offices. Finally, in the jurisdictions in which we operate, we have also identified and coordinated with vendors for deep sanitization services in the event any of our employees has been at our premises and contracted the COVID-19 virus. For further information regarding risks related to COVID-19, see Risk FactorsRisks Related to Our Business and IndustryEffects of the novel coronavirus (COVID-19) as well as any other health pandemics on our and our clients business and operations could adversely affect our financial results.
Employee Safety
The primary focus of our management and COVID-19 task force throughout the COVID-19 pandemic is employee safety. For our employees that are working from our offices, we monitor their health conditions and conduct temperature checks at least once a day when they enter our premises. We also require that our employees and visitors to our offices complete travel declaration forms. We send regular email updates regarding the pandemic and travel advisories and other measures a relevant jurisdiction may put into place to ensure our employees remain safe throughout the COVID-19 pandemic. With the support of our clients, we have also incorporated work from home policies in all of the jurisdictions in which we operate, subject to our client agreement on a campaign by campaign basis. In each of the jurisdictions in which we operate, we have complied with the local regulatory requirements and guidance with respect to maintaining only essential workforce in the office. At the peak of the COVID-19 pandemic in 2020, approximately 80% of our employees worked at home in accordance with our work from home policies.
Continuity of Operations
We continue to work with our clients to ensure continuity of our operations and minimize any disruption of our services throughout the period of the pandemic. Many of our clients, including some of our largest clients, have asked us to initiate our business continuity plans under our agreements. These plans may include splitting up our teams on specific campaigns among multiple locations within a given jurisdiction, having a certain percentage of employees staffed on a given campaign work from home or having all employees on such campaign work from home, depending on the client and/or agreement. We are fully supportive of work from home programs and have issued the necessary equipment to our employees that work from home in order to support their productivity. We also work with our employees to ensure that they have an adequate working environment to remain productive by consulting with them on conditions appropriate for a home office. Working from home guidelines have been provided to our employees to ensure compliance with the required standards for service delivery under our agreements with our clients. We anticipate that the implementation of a continuity of operations plan which includes certain work from home policies may remain in place after the COVID-19 pandemic as part of our continuity of operations procedures generally.
Case Studies
New Economy Client
Situation
| Our client has a large online marketplace, including global operations and access to almost every country in the world. |
| Due to its rapid growth over the last five to ten years, our client needed a partner who could keep up with their aggressive global scaling demands without compromising the quality of its customers experience. |
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Solution
| Working closely with our client to formulate the service requirements of our engagement, we provided a tailored solution involving the design and development of scenario-based training programs, with an emphasis on service quality, customer experience and innovation and the dedication of business analytics experts to monitor and analyze customer trends and performance data as they provide actionable insights geared towards process efficiency and innovation. |
| In addition, we provided executive sponsorship, including an efficient management to employee ratio as well as the inclusion of a Director of Operations and Director of Support. |
| We were also able to provide additional depth in our support to our customer experience offerings by hiring, training and managing highly skilled Mandarin-speaking agents as well as by implementing a dedicated support team to manage overflow of customer support tickets from the onshore support team. |
Results
| Our initial engagement in 2015 with the client began with 50 FTEs for omnichannel CX solutions in the Philippines. |
| In 2017, we expanded our engagement and began providing services in our Malaysia office. By December 31, 2017, we had over 800 FTEs for this engagement covering services rendered from our Malaysia and Philippines offices. In 2018, we launched operations in China and Japan to support the client. |
| Our engagement expanded to include more complex services, such as trust and safety verification for our clients customers, the incorporation of a dispute resolution process between our client and its customers, as well as conducting global quality and compliance audits of the clients in-house customer contact team and the other third parties that they have engaged as client experience service providers (including our competitors). We also included native Mandarin and Thai speakers in our service offerings from our Malaysia office. |
| We expanded to more than 2,500 FTEs as of December 31, 2020. |
Search Engine Client
Situation
| Our client is a leading search engine company. We began providing sales and digital marketing services to our clients customers in Malaysia with less than 15 FTEs based in our Malaysia office in 2012. |
Solution
| We worked closely with our client to deliver services beyond our clients expectation by routinely exceeding the minimum KPIs required under our agreements with our client. |
| When our client required us to scale up in terms of project size within a short time frame, we were able to do so by utilizing Flash to evaluate more than 1,500 new employee candidates in order to meet our clients expanded requirements. |
Results
| In 2018 and 2019, our client engaged us to provide sales and digital marketing services to our clients top-tier customers, which was previously handled entirely by our clients in-house team. |
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| As of December 31, 2020, we have been engaged on 34 active campaigns with this client. We provide services to this client from five different countries (Singapore, Malaysia, Philippines, China and Japan), with a total of more than 900 FTEs. We provide services to the clients customers in more than 10 different languages, including Vietnamese, Korean and Japanese. |
Sales and Marketing
We market our services primarily through our business development team. Our business development team, which is led by our Philippines country director, has coverage teams for each of the Asia Pacific, North American and European regions. Once opportunities are discovered by the business development team, a dedicated pitch team works with our operating personnel, including our CEO and country directors, to develop proposals and pursue these opportunities. Relationships with existing clients are managed by our relationship managers, who are often the country directors at the locations where our client campaigns are focused and who are in charge of day-to-day operations on client campaigns. Our client relationship professionals collaborate with our operations teams, regional business analytics team and country directors to develop client-focused solutions that we pitch to our clients. Since the operations teams have day-to-day interactions with our clients, they provide valuable insight to our clients needs and issues. This allows us to incorporate client feedback quickly into our business development efforts and to tailor our proposals to known client needs.
While our business development team works to generate new leads and new clients, we believe that our growth has primarily been through a network effect based on our strong client relationships, client-centric focus and the desirable outcomes we have produced in campaigns for our clients. Our client relationships typically evolve from single, discrete campaigns into multiple and more complex campaigns across multiple client business lines or across new geographies. We focus our business development efforts on clients who require complex, high-value work where we believe we can provide significant value to our clients operations. We also focus on providing a differentiated level of service, which we believe enables us to grow our business together with the growth of our clients businesses and grow our share of our clients wallet. This also provides us with higher profit margins. We believe that expanding the services we provide to existing clients helps meet this goal because we have already firmly established our competencies and a basis of trust with our clients. See Case Studies.
The process for developing a new client or securing a new campaign typically begins with a formal request-for-proposal or a less formal request by a client to consider an issue they are facing. We also propose new campaigns based on client needs that our operating teams uncover. The business development team works with the operating teams to define the scope, services, assumptions and execution strategies for a proposed campaign and to develop campaign estimates and pricing and sales proposals. Senior management personnel typically are involved in the development of each proposal. The sales cycle varies depending on the type and size of service required and generally ranges from six months to over a year.
Contracts and Pricing Model
Our contracts are typically structured as a master service agreement that embodies the key terms of our engagement with our clients. Many of our clients have their own standard master service agreement, or MSA, templates they use with their service providers but we have a MSA template that caters to clients who do not have their own templates.
Each clients campaign is defined under a SOW, which sets out the services to be provided for each client campaign (including price, FTEs deployed, service level agreement and technical specifications). A SOW may also contain clauses that supersede the terms of the MSA as necessary for each campaign. This structure allows us to quickly define and implement new client campaigns as they come up without protracted legal discussions, which have been undertaken upfront in the MSA.
Our MSA contract terms typically range from one to three years, with new economy clients typically preferring one-year renewable contract terms. Our contracts also generally provide our clients a right to terminate any
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engagement at any time for convenience, subject in some cases to prior written notice. Typically, there are no amounts payable upon early termination. As we become more familiar of our clients businesses, we take advantage of opportunities to expand across the value chain and provide new and increasingly complex digital offerings to them via multiple channels to improve their processes. This in turn builds our clients confidence in us and encourages them to continue using our services.
Our contracts typically specify service levels that we must provide, as reflected by target key performance indicators selected by our clients according to their internal policies or requirements. Some examples of key performance indicators used by our clients are customer satisfaction and turnaround time. In the last five years, we have generally met our KPI requirements in most campaigns and none of our clients has terminated their respective agreement on the basis of consistent underperformance of KPIs.
Over the years, our pricing model has been modified, in part, based on industry trends and feedback we have received from our clients. Our current model includes a fixed rate per FTE and a variable price component that is based on meeting certain KPIs assessed periodically. Our pricing models for any given arrangement often include a fully priced rate per FTE or productive hour, subject to potential increases or deductions based on KPIs.
Clients
As of December 31, 2020, we were engaged by 37 clients, many of which are leaders in their respective industries and demand best-in-class service from their outsourcing partners. We have clients in a wide variety of industries which we organize under our ten industry verticals, including: (1) travel and hospitality, (2) digital advertising and media, and (3) fast-moving consumer goods. Our client base includes both long-standing marquee clients, as well as an expanding client base of new economy clients. Since 2012, when we acquired our first new economy client, new economy clients grew to contribute up to 66.8%, 82.5% and 87.8% of our total revenues for the years ended December 31, 2018, 2019 and 2020, respectively. See Risk FactorsRisks Related to Our Business and IndustryOur largest clients account for a significant portion of our revenue and any loss of a large portion of business from any of those large clients could have a material adverse effect on our business, financial condition and results of operations.
We have intentionally created an inclusive and diverse workplace culture that is compatible with that of our clients, and in particular, our new economy clients. We strive to assimilate into the local culture of the markets we serve and also create cultural alignment with our clients, which emphasizes a sustainable and collaborative approach to business and our five core values of (i) teamwork, (ii) innovation, (iii) courage, (iv) initiative and (v) trust. See Employees and Culture. We believe that this cultural compatibility is often a key reason for our clients selecting us as a services provider. For example, in our first project serving customers in China, our U.S.-based client emphasized that our cultural alignment was a factor in us being selected over other service providers with strong China-focused capabilities.
We believe that the services we provide to our clients are often mission-critical to their businesses. As a result, our clients often deeply integrate us into their customer service offerings. For a discussion of our revenue by geographic segment see Our Services and Solutions.
As part of the process for acquiring a new client, potential clients audit our business. After being awarded any new campaign, our clients will also periodically follow up with compliance audits, including audits conducted by third parties. We also have regular informal feedback from our clients on an ongoing basis. While the specific audit process varies from client to client, each client will typically conduct both a process and execution audit annually. Process audits typically cover a variety of areas, including cost management and invoicing accuracy; operational management including regular updates, clear roles and responsibilities; and information security management. Execution audits are mainly based on quantitative measure such as service-level and first-call resolution to evaluate customer care efficiency, operation efficiency and customer feedback.
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Innovation and Development
We consider the innovation and development of new products and services to be an important part of our ability to provide high-value services to our clients. We conduct all of our innovation and development activities in-house through a dedicated digital innovation team located in Malaysia. As of December 31, 2020, our team included approximately 30 employees and focused on six areas, namely design, content generation, digital marketing, social media, tech, research and development. The development team focuses on building tools using artificial intelligence and machine learning to augment the delivery of the desired customer experience. We have received numerous awards relating to our research and development efforts. See Awards and Recognition.
In the last few years, we have developed a number of innovative tools that enhance our service offerings, such as the TDCX mobile dashboard app, the Flash platform, AI-enhanced chat-bots and remote video support. We also enhanced productivity with robotic process automation and our enterprise data warehouse and we have also developed a remote monitoring application for security and fraud detection, which is in currently in prototype form. For more information on these tools, see Information Technology and Management Information Systems.
Competition
Our core competitors are other digital customer experience providers as well as our clients own internal capabilities to perform some or all of the services that we provide. Fast-growing new economy clients tend not to have significant in-house capabilities equivalent to the services that we offer as a specialist and instead rely on one or more outsourced digital customer experience providers. We typically are not an exclusive service provider for our new economy clients as they prefer to engage more than one provider in each customer region to reduce their provider concentration risk. A key consideration for these new economy clients in choosing a digital customer experience vendor has been the speed and flexibility of such vendor in scaling with, and responding to changes in, the clients business.
According to Frost & Sullivan, the customer experience outsourcing market in Southeast Asia is mature and fragmented as the top 15 service providers capture only slightly more than half of the market share by revenue. In the area of omnichannel CX solutions, we compete primarily against traditional customer experience service providers, boutique customer experience service providers, and, to a lesser extent, pure-play outsourcing service providers.
See Industry Overview and Risk FactorsRisks Related to Our Business and IndustryWe operate in a highly competitive environment, and any failure to compete effectively against current and future competitors could adversely affect our revenue and profitability.
Our competitive advantage is that we are an internationally integrated, human-capital-centric provider of digital customer experience solutions, to our clients with a specific expertise in providing tailored solutions and managing complex new economy interactions.
We expect that competition will increase and potentially include companies from other countries that have lower personnel costs than those in the countries we operate. A significant part of our competitive advantage is our ability to attract, train, and retain talented personnel. In addition, relative to competitors in the United States and Europe, as a service provider primarily located Southeast Asia, we have a wage cost advantage.
All comments in this prospectus with respect to our competitors are based on information available in the public domain or provided by Frost & Sullivan. We have no access to, nor do we seek, our competitors commercially sensitive information.
Employees and Culture
We believe that our employees and our distinctive corporate culture are key enablers to our success and form the core strength of our business model and a strategic pillar to our competitive advantage. Our corporate culture is
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designed to foster a work environment that attracts, develops and retains a highly skilled workforce that can effectively engage in complex new economy interactions. As of December 31, 2020, more than 60% of our employees were college or university graduates. We focus on reinforcing a culture that emphasizes a sustainable and collaborative approach to business while being fully committed to our clients businesses. Our commitment to the growth and well-being of our employees is important to our success and we monitor our employee satisfaction to evaluate our performance in supporting our employees. In an internal engagement survey we conducted in 2020, we received an employee satisfaction score of 87% from our employee respondents. We believe that our distinctive culture is incorporated within all relationships and processes in our organization and fits within our values and goals.
Our culture is defined by five core values: (i) teamwork, (ii) innovation, (iii) courage, (iv) initiative and (v) trust, as illustrated below:
We recognize that our success in delivering complex and high-value services to our clients has come from our ability to identify, recruit, train and retain a highly motivated workforce. A highly trained and skilled workforce allows us to provide higher quality and higher margin services and solutions to our clients. The critical success factor is to ensure that our entire leadership is aligned with the drivers of our culture that best fit into our business strategy and vision. To that end, we have developed key guiding principles across five areas that reinforce and exemplify our core values: (i) Recruiting and Selection, (ii) Retention, Employee Engagement and Compensation, (iii) Learning and Development, (iv) Compliance and Control and (v) Performance.
Recruiting and Selection
We use an iterative process of hiring with multiple screening processes, including online assessments and behavioral interview techniques to select employees who will be successful at our Company. We believe our hiring decisions are consistent and consensus driven among panel interviewers. We use online interview platforms, such as our proprietary system, Flash, to video record interviews so that interviews follow a uniform set of questions and multiple internal stakeholders and clients can participate in the interview. Flash automates many of the routine administrative tasks from recruitment and shortens our hiring time by as much as half. We focus on hiring an international mix of expatriates and native language speaking employees.
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We primarily recruit our employees through advertising on job boards and employee referrals. We focus on employee referrals, which we think helps us identify candidates who would fit within our Company culture and assimilate into the team. In the year ended December 31, 2020, over 63,000 job applicants were referred to us by our employees and more than 7,300 were successfully hired. We also use external recruitment agencies to help us hire employees in the new markets that we enter as well as to quickly scale up our hiring for new projects.
With our scalable business platform and our fast response time for the implementation of new client campaigns, we focus on both our ability to quickly staff a campaign and our ability to hire the right candidate who fits our criteria.
Retention, Employee Engagement and Compensation
In the year ended December 31, 2018, 2019 and 2020, our annual voluntary attrition rate, measured by the number of employees that voluntary left our Company in a period divided by the average number of employees in such period, was 21.5%, 23.1% and 24.8%, respectively, compared to the industry average of 30% to 34% in the Asia Pacific region, according to Frost & Sullivan.
Our dedicated engagement teams operate various employee engagement programs to promote retention. Our retention program begins as early as an employees first month with us. All employees go through a one-day induction program, conducted by our engagement champion team. Our induction program is also available online for new employees that work from home. The induction program introduces our Companys history, mission, vision and values to the new hires. The program also promotes the formation of new friendships among the new hires, which we find helps increase employee engagement and retention.
We monitor our employee engagement through weekly employee satisfaction surveys that enable our management to understand and quickly address concerns of our employees. In 2020, we started conducting weekly internal surveys that asked a single question each week, which increased survey participation compared to our previous comprehensive monthly surveys. The increased frequency and the broad range of topics covered over time has allowed us to develop a more timely and complete understanding of our workforce.
Each of our client campaign teams has a dedicated human resources manager and engagement champions who are responsible for the wellbeing of that campaign team. We encourage wellness by promoting a sense of community among our employees. We believe that this sense of community is particularly important to our employees, especially employees under 35, who represent over half of our employees, and our expatriate employees who often relocate to join our Company. Our engagement team also organizes regular wellness events to promote physical and mental health, such as yoga and meditation and we have continued to provide these during the COVID-19 pandemic through online sessions. We also offer free annual health check-ups and employ psychologists for our content monitoring and moderation teams to help them deal with the particular stresses of content monitoring and moderation.
We pay our employees on a salary basis, with additional bonuses and incentive payments depending upon the client and campaign. Benefits include transport allowance, medical insurance, social security, telephone allowance and onsite food and refreshments at our physical offices.
Learning and Development
We believe that the opportunity for advancement is one of the key factors supporting our long-term employee retention. As of December 31, 2020, we have a team of over 200 trainers that lead our new employee initiation programs, client-campaign-specific training programs and our internal development programs.
New employees undergo an initial training program of up to three months when they join us. This training program is designed to instill our corporate values and culture from day one. It also helps our new employees
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understand the work we do as well as how to undertake that work competently and in accordance with regulatory frameworks governing data privacy such as the General Data Protection Regulation (GDPR EU) and the Personal Data Protection Act 2012, No. 26 of 2012 of Singapore. Campaign-specific training programs that provide staff with specific knowledge of our clients products, services, procedures and systems are developed in cooperation with our clients during project set-up. Throughout the life cycle of the campaign, our learning and development team continues to work with the client to refine and improve the programs to ensure that our services meet our clients rigorous standards. Some campaign-specific-training programs involve up to an additional six months of training before an employee is fully integrated into a campaign team. Our employees customer knowledge is supported by our Knowledge Base Tool, or KB Tool, which is a digital product library and user portal that provides our employees quick and easy access to client-specific information they need to handle customer interactions. The KB Tool is regularly updated with information learned from our direct experience on client campaigns. We also use third-party tools such as LinkedIn Learning to connect and conduct general training sessions with our employees.
We also believe that personal and career developmental opportunities are important to the success of our business. Our commitment to having a highly skilled workforce and ability to compete on quality includes ensuring our employees throughout our Company have the necessary tools, skills and support to effectively do their job and build a career. Our internal surveys, which are based on self-reported employee information, show that: 85% of our employees felt that they had opportunities to grow and learn; 98% of our employees knew what is expected from them; and 96% of our employees strongly understand and aligned their work to the vision and mission of our Company.
As a growing organization, we recognize that our leadership pipeline is critical to our future success. Our employees have access to a wide range of classroom courses including functional skills, leadership skills and data analytics programs provided by our internal learning and development department to ensure that they are equipped to deliver complex and high-value services for our clients. We provide additional training on performance analytics and on-demand knowledge modules through our TDU online learning platform, which contains recorded presentations, quizzes and interactive modules on key skills such as compliance and security, self-management, inter-personal relations, leadership and business development. Many of our employees have received COPC CX Implementation Leader certifications offered by COPC, Inc., an industry leader in customer experience operations qualifications. Our Malaysian office has received an ISO 18295:2017 certification for customer contact center operations. We also have over 900 employees with Google Ads certifications as of December 31, 2020, which includes employees that have been certified pursuant to client requirements.
We utilize the GROW coaching method, which is a goal-oriented best practice for employee development. GROW stands for (1) Goal, (2) Current Reality, (3) Options (or Obstacles) and (4) Will (or Way Forward). All of our managers and team leaders receive training in the use of the model and coaching sessions are documented and tracked using our in-house coaching tool. The GROW model is central to our approach to staff development.
Performance and Compliance
We depend on our ability to consistently perform to the highest standards. In addition, we are typically required to provide certain minimum thresholds of service quality under our client contracts. Our performance tracking is enhanced by our real-time data reporting and analysis, which helps us identify issues with individual and campaign level performance. Our team leaders conduct weekly evaluations with our team members based on our data analysis of key performance indicators.
The performance and compliance metrics that we track vary by client and campaign. Generally with respect to our omnichannel CX solutions, we track metrics over five key areas: quality, accessibility, efficiency, cost performance and strategic impact.
Quality metrics measure subjective quality of the services we provide from the point of view of the customer. Some examples include customer satisfaction scores, which rate customer happiness with a given interaction,
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first contact resolution, which measures whether or not a problem was resolved in the customers first interaction with us, customer effort scores, which measures the ease in which the customer was able to obtain answers from us, and net promoter scores, which rates the likelihood that a customer would recommend our service to others.
Accessibility scores measure how easy it is for customers to reach us. These scores are typically objective, and include service-level scores, which measure the number of calls answered within a certain number of seconds (i.e., 80% of all calls answered in 20 seconds (or approximately three telephone rings)), abandoned call rate, which is the number of callers who hang up the phone before the call is answered, and turnaround time, which measures the speed in which we complete a ticket or close an issue logged by a customer.
Efficiency metrics measure resource wastage and redundancy, and include metrics such as forecast accuracy, which measures how actually call and interaction load compare to the forecasted load, and average handling time, which measures how long it takes on average to resolve a customer interaction.
Cost performance metrics measure the cost per interaction, which can be lowered by increasing operational efficiency.
Strategic impact metrics measure the ability of our operations to deliver sustainable performance, and include items such as employee engagement scores and employee attrition.
We also track many campaign-specific metrics. For example, for sales calls, we track our contact rates (the percentage of people in our target list we were able to reach) and our conversation rate (the percentage of contacted persons who chose to buy the product being sold). With respect to technical support campaigns, we track items such as the technical service resolution rate (what percentage of problems did we resolve remotely) and the no parts used rate (the percentage of onsite service requisitions which were unnecessary since they did not require any replacement of parts).
Employees by Position and Geographic Location of Office Providing Services
The following table sets out the number of our employees by job classification:
As of December 31, | ||||||||||||
2020 | 2019 | 2018 | ||||||||||
Agents(1) |
9,128 | 7,213 | 4,608 | |||||||||
Project Support |
1,361 | 1,365 | 678 | |||||||||
Support Staff |
862 | 636 | 445 | |||||||||
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|
|
|
|
|
|||||||
Total |
11,351 | 9,214 | 5,731 | |||||||||
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|
|
|
|
Note:
(1) | Under our employee classification system, a FTE under our MSAs and SOWs is classified as an agent. |
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The following table sets out the number of our agents by the geographic location of the office providing services.
As of December 31, | ||||||||||||
2020 | 2019 | 2018 | ||||||||||
Singapore |
1,092 | 913 | 821 | |||||||||
Philippines |
4,265 | 2,847 | 1,596 | |||||||||
Malaysia |
2,140 | 1,876 | 1,244 | |||||||||
Thailand |
1,178 | 881 | 695 | |||||||||
China |
181 | 493 | 217 | |||||||||
Japan |
229 | 190 | 35 | |||||||||
Spain |
43 | 13 | | |||||||||
India(1) |
| | | |||||||||
Colombia(1) |
| | | |||||||||
|
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|
|
|
|
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Total |
9,128 | 7,213 | 4,608 | |||||||||
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|
|
|
|
Note:
(1) | As of December 31, 2020, the office had not yet commenced operating any campaigns. |
The following table sets out the number of our total employees by the geographic location of the office providing services or conducting operations.
As of December 31, | ||||||||||||
2020 | 2019 | 2018 | ||||||||||
Singapore |
1,278 | 1,099 | 986 | |||||||||
Philippines |
4,692 | 3,542 | 2,003 | |||||||||
Malaysia |
3,102 | 2,552 | 1,586 | |||||||||
Thailand |
1,633 | 1,180 | 848 | |||||||||
China |
284 | 580 | 267 | |||||||||
Japan |
295 | 233 | 40 | |||||||||
Spain |
59 | 28 | 1 | |||||||||
India |
| | | |||||||||
Colombia |
8 | | | |||||||||
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|
|
|
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Total |
11,351 | 9,214 | 5,731 | |||||||||
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The delivery center location out of which the Company provides services (and from where our employees and agents provide services) does not correlate consistently to the location of the customers of the Companys clients. For example, a particular delivery center location may provide services to client As customers in North America, while a different delivery center location may provide services to client Bs customers in North America, as these determinations vary based on client choices, relevant skills, particular campaigns and other considerations. Delivery center locations out of which the Company provides services to a particular geography may also vary from period to period, client to client and service to service. Moreover, customers of the Companys clients may access the Companys services from various geographies and not just the location of their residence.
We hire primarily permanent employees for our campaigns, though we may hire temporary employees on fixed-term contracts. We do not match employee contract durations to campaign duration and we assign our employees to other campaigns at the end of a client engagement. Substantially all of our employees are employed on a full-time basis.
As of the date of this prospectus, our workforce in Spain was under the Spanish telemarketing industrys collective bargaining agreement.
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Information Technology and Management Information Systems
The technologies we utilize in the delivery of our services are a mix of licensed software, proprietary, in-house developed software, and software provided by our clients. We have a flexible, scalable and reliable technology platform that enables us to deliver customizable services and solutions for our clients in line with their business requirements. Our information technology team includes experts on technology project management, infrastructure management, information security and operational service delivery, thereby permitting us to adapt our infrastructure services to our clients through various phases of our clients engagements.
Flash
Flash is a highly customizable remote, video-based recruitment platform which we use to record video assessments, provide written assessments and conduct live interviews. The system provides a question bank and customizable assessments which are tailor-made for each clients operating environment. Flash allows us to video-record employee interviews for the benefit of our clients, asking the questions clients need us to ask. This allows us to interview employee candidates in local time zones yet enables clients to view these interviews at any preferred time in their own time zone. This allows our clients to provide input on the employees that will be staffed on their campaigns and creates trust with our clients since they get to participate in the hiring process and ensure that we are calibrated and hire personnel not only with the relevant skills and knowledge, but who also fit within our culture. In particular, the system allows us to more efficiently recruit expatriate employees, since it allows us to interview candidates across jurisdictions quickly and effectively and track and monitor the overall recruitment process.
The system also helps to reduce the amount of administrative work involved in recruiting by providing commenting and other collaboration procedures to allow the recruitment team to evaluate candidates. The system supports data analytics, as well as automated interview scheduling, candidate onboarding capabilities and online contract signing. Overall, we believe that the system reduces the amount of time it takes to recruit a new hire by up to half.
Since implementing Flash into our workflows, we have used it to interview over 183,000 candidates as of December 31, 2020. As an internally developed product, it has also enabled significant cost savings compared to external products, which have many of the same functions, but charge on a per-interview basis. For us, Flash is scalable at no additional cost.
We are excited about Flash as the next stage of development sees the enablement of speech analytics and voice recognition for authentication and emotional overlaying on spoken response. We believe that coupling spoken analytics and emotional analytics with facial recognition and options for work at home agents will bring Flash to the forefront of technological innovation in selection and hiring.
TeleSmart CRM
Our TeleSmart CRM platform allows multi-stakeholder case management, online knowledge base management, automated SMS-based follow-up, automatic inbound and outbound email coverage and online data analytics that allow managers and our clients to review real-time performance indicators. The platforms ability to analyze the data from customer interactions allows us to perform root cause analysis on possible client product issues. For example, through the use of keywords analysis presented through various social media channels and customer interactions, along with sentiment analysis, we were able to successfully identify product issues relating to a fast-moving consumer goods client and notify them of such an issue. In another example, we were able to analyze the responses and feedback collected from customers, and identify underlying issues related to one of our clients products, in the consumer electronics sector. As a result, the client had sufficient time to develop a product fix and initiate product recall and replacement for all affected customers. A key feature of the system is its ability to integrate with established telephony system platforms, chat visualizers and email services in order to provide an omnichannel view of customers for our clients.
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TDCX Mobile Dashboard App
Our TDCX Mobile Dashboard App provides easy access to key metrics for client campaigns such as service levels, call and contact volumes, among others. Prior to the implementation of this app, daily performance reports were compiled in spreadsheets and distributed to clients via email, which was tedious to prepare, error-prone and subject to time lag. Our TDCX Mobile Dashboard App was created to streamline the delivery of performance data to clients for their campaigns. Clients can access campaign dashboards on iOS and Android devices. The interactive dashboards allow clients to compare metrics (whether daily, weekly or monthly), to analyze trends and progression over time, and drill down on specific parameters for more detail. The dashboard is fully integrated with our analytics systems and is fully automated.
Browser-based Video Chat Platform
We have created a browser-based video-support platform based on a third-party programming interface that uses hyperlink technology for quicker set-up and authentication compared to other video-chat support technologies, which require end-customers to install new apps on their mobile device. Nexmo provides APIs which allow us to send text messages to customers. The video-support function allows live interaction with customers, which provides more dedicated and immediate addressing of customer feedback. For example, it allows us to view the issues with a clients products directly, so that we can provide on-the-spot solutions in certain situations to our clients customers. This has decreased the cost to our clients by reducing the number of occurrences when the shipment of non-defective products back to our client for support is necessary.
Licensed Technologies and Other Third-Party Technologies
We are also rolling out AI-enhanced chat-bot functionality, based on licensed technologies, which is currently live with two clients. These are hybrid chat-bots that can automatically handle customer interactions but can also seamlessly hand contact over to human staff to manage more complex situations. This allows us to provide a higher level of service at a lower cost.
We deploy web-based robotic process automation technologies licensed from Automation Anywhere, which allows us to automate many of our routine business processes. As of December 31, 2020, we have implemented over 30 automation projects, including information gathering, data entry, data monitoring and validation and quality control processes. The robotic process automation technologies are fully integrated with our internal systems so that all information flow is automated. These technologies have been particularly helpful in report generation, where business analysts may need to refer to reports generated by as many as seven different systems to prepare information for our clients. These systems have automated tedious, repetitive, time-consuming activities that were prone to human error.
We also license various contact center platforms and technologies, such as automatic call distributors, from vendors including Avaya, Aspect, Asternic and Vicidial. We also use the NICE platform to record calls for quality assurance. NICE also provides our workforce management platform which can integrate with our automatic call distributors, to provide a historical record of our interactions, leading to accurate forecasting and scheduling of our workforce. For general back-office functions, we employ SAP Business One, as a business management software which we use for our finance and accounting functions, SAP Success factors, as our human resources information system; and Syncpay, our cloud payroll software application. We have also licensed other products that integrate with our proprietary systems, such as Zendesk CRM and Nexmo which integrate with our video chat functions, Twilio, a cloud communications platform, which integrates with Flash and our browser-based video chat platform, and Google Cloud for data backup.
We often utilize the software platforms developed or implemented by our clients. Many of our clients, particularly our new economy clients, have their own licensed or proprietary customer relationship management or call management software packages that they have implemented. We utilize these systems and integrate them with our internal technology to form a seamless part of our clients customer management systems.
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Databases and Infrastructure
An integral feature of our Flash, TDCX Mobile Dashboard App and TeleSmart CRM systems is the use of a relational database management system, which gives us the ability to run customizable reports using a variety of reporting engines.
We believe that our infrastructure redundancy, security and capacity is, at a minimum, consistent with the standards of our industry generally. We work closely with several leading original equipment manufacturers and principal technology partners to ensure our infrastructure is able to support our current operations and expected growth. The robustness of our telecommunications network has allowed us to achieve high levels of network availability for day-to-day operations.
Our business continuity management plan includes strategies to mitigate certain inherent risks and failures in critical platforms and applications by using a combination of redundancies and resilience in our technology infrastructure, telecom networks and distributed computing, relying on a combination of state-provided and privately owned power sources, a distribution of work between our multiple service delivery centers and multi-vendor transportation and logistics management. We also employ a dedicated team of trained professionals to help maintain continuity in Singapore, the Philippines, Malaysia and Thailand, where we have reached a critical mass to necessitate such a structure. We typically operate across multiple buildings in the same city to avoid building-related outages, and we employ power backups in the form of heavyweight uninterruptible power supply systems backed by diesel generators. We also have the ability to provide backup sites across our network and from one country to another, where our clients make their global automatic call distributor platforms available to us.
We have received certifications such as ISO 9001:2015 and ISO 27001:2013 for optimal management of various aspects of information security, including personnel, physical, systems and facility security. Our information security framework takes into account compliance requirements and protection of our clients and their customers information. We work on the principle of storing no customer data wherever possible in order to keep customer data and data privacy on the networks of our clients. Most clients do not require us to store customer data. Where we do, all reasonable efforts are made to secure such data, by keeping the data on servers in our data centers which are physically and logically partitioned and protected. All our clients are on separate virtual-local area networks and are logically partitioned from one another. Client contracts usually specify data protection obligations and levels of data protection.
On a physical level, all our locations have security-controlled access that is restricted only to personnel who have a need to be present on the call floor for operational reasons.
Intellectual Property
In November 2019, we rebranded ourselves as TDCX and began providing services using our TDCX trademark. There are trademark registrations in ten jurisdictions in the name of TDCX Holdings Pte. Ltd.: Singapore, Malaysia, Hong Kong, the Philippines, China, European Union, Japan, India, Colombia, and the Cayman Islands. There are pending applications for trademark registration in three jurisdictions: Thailand, the United States and South Korea.
Our contracts usually provide that all intellectual property created for the use of our clients will automatically be assigned to our clients. We also use our clients software systems and third-party software platforms to provide our services. We customarily enter into licensing and nondisclosure agreements with our clients with respect to the use of their software systems and platforms.
Facilities
Our corporate headquarters is located in Singapore and, as of December 31, 2020, we leased properties in Singapore, the Philippines, Malaysia, Thailand, China, Japan, Spain, India and Colombia. Our largest footprint in
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terms of leased property spaces that support our operations are the Philippines, where we lease approximately 205,214 square feet, Malaysia, where we lease approximately 172,348 square feet, and Singapore, where we lease approximately 96,245 square feet and includes our corporate headquarters.
In addition, we have obtained a right to use facilities in Spain and Japan from co-working space providers. Once we have established business in a new geography, as part of our scaling process, we will enter into leases in order to support our operations.
Awards and Recognition
Since our founding, we have received over 270 awards to date, including:
| Best Outsourced Contact Centre Of The Year (Above 100 Seats) Gold AwardAwarded by 20th Contact Centre Association of Singapore International Contact Centre Awards to our Singapore office in 2020; |
| Best Companies to Work for In Asia 2020Awarded by HR Asia Award Philippines to our Philippines office in 2020; |
| Best Companies to Work for In Asia 2020Awarded by HR Asia Award Thailand to our Thailand office in 2020; |
| Best Employer Branding Silver AwardAwarded in the 15th Employer Branding Awards by Asia Recruitment Award to our Malaysia office in 2020; |
| Most Attractive Graduate Employers To Work For in 2021 (Ranked Third in the BPO Category)Awarded by Graduates Choice Award to our Malaysia office in 2020; |
| Top 100 Asias Best Employer BrandsAwarded in the 14th Employer Branding Awards by the Employer Branding Institute to our Malaysia office in 2019; |
| Best Companies to Work for In Asia 2019Awarded by HR Asia Award Philippines to our Philippines office in 2019; |
| Malaysias Best Employer Brand AwardAwarded by World HRD Congress to our Malaysia office in 2019; |
| Best SupplierValue Add and Innovation Award for Global Customer Care Awarded by a search engine client to our Malaysia office in 2019; |
| Great Place to Learn CertificationAwarded by Great Place to Work Institute & SkillsFuture Singapore to our Singapore office in 2019; |
| Great Place to Learn CertificationAwarded by Great Place to Work Institute & SkillsFuture Singapore to our Singapore office in 2020; |
| CEO Service Excellence AwardOutstanding PartnerAwarded by an airline client to our employee in our Singapore office in 2019; |
| Winner for Enterprise 50 AwardAwarded by KPMG and Business Times to TDCX HPL in 2019; |
| 17th Annual Ernst & Young Entrepreneur of the Year in the Outsourced Solutions category Awarded by Ernst & Young Singapore to our Founder in 2018; |
| Asias Best Employer Brand AwardAwarded by World HRD Congress to our Singapore office in 2018; and |
| Most Innovative Productivity Solution Silver AwardAwarded by 18th Contact Centre Association of Singapore International Contact Centre Awards to our Singapore office in 2018. |
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Insurance
We maintain property insurance policies covering our equipment and facilities in accordance with customary industry practice. We carry occupational injury, medical, pension, maternity and unemployment insurance for our employees, in compliance with applicable regulations. We do not carry general business interruption or key person insurance. We will continue to review and assess our risk portfolio and make necessary and appropriate adjustments to our insurance practices to align with our needs and with industry practice in Singapore and in the market in which we operate.
Litigation and Other Legal Proceedings
As of the date hereof, we are not party to any significant proceedings.
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Due to the geographic diversity of our operations and services, our operations are subject to a variety of rules and regulations. We are subject to all of the local regulations generally applicable to businesses in the jurisdictions in which we operate, including with respect to employment, health and safety, competition, tax and other regulations. We set out below brief descriptions of certain regulations particularly significant for our operations. See Risk FactorsRisks Related to Countries Where We OperateDevelopments in the social, political, regulatory and economic environment in the countries where we operate, may have a material and adverse impact on us.
Singapore
The Personal Data Protection Act 2012, No. 26 of 2012 of Singapore, or the PDPA, generally requires organizations to give notice and obtain consents prior to collection, use or disclosure of personal data (data, whether true or not, about an individual who can be identified from that data or other accessible information). The PDPA also imposes various obligations upon organizations, or the Main Data Protection Obligations, that relate to, among other things, the access to, the correction of, the protection of, the retention of and the transfer of, personal data. In addition, the PDPA requires organizations to check national Do-Not-Call registries prior to sending marketing messages addressed to Singapore telephone numbers through voice calls, fax or text message.
The PDPA specifies various offenses that apply for failure to comply with PDPA requirements, which could apply to both organizations and their officers, depending on the circumstances. The PDPA also created a regulatory agency, the Personal Data Protection Commission, which has the power to give directions to organizations for compliance with the PDPA, including the power to require an organization to pay a penalty of up to S$1 million for breach of PDPA requirements (or, under amendments to the PDPA which have been passed but which are not expected to be in force until early 2022, up to 10% of the organizations annual turnover in Singapore where that turnover exceeds S$10 million). Apart from this, an individual has a right of private action against an organization for breach of the Main Data Protection Obligations if the individual suffers loss or damage directly as a result of a contravention of the Main Data Protection Obligations by an organization. The relief which a court may grant includes damages, injunctions and relief by way of declaration.
The Employment of Foreign Manpower Act, Chapter 91A of Singapore, provides that no person shall employ a foreign employee unless the foreign employee has a valid work pass. Work passes are issued by the Controller of Work Passes.
The Employment Act, Chapter 91 of Singapore, or the Singapore EA, prescribes certain minimum conditions of service that employers are required to provide to their employees, including (i) minimum days of statutory annual and sick leave; (ii) paid public holidays; (iii) statutory protection against wrongful dismissal; (iv) provision of key employment terms in writing; and (v) statutory maternity leave and childcare leave benefits. In addition, certain statutory protections relating to overtime and hours of work are prescribed under the Singapore EA, but only apply to limited categories of employees , such as an employee (other than a workman or a person employed in a managerial or an executive position) who receives a salary of up to S$2,600 a month. Other employment-related benefits which are prescribed by law include (i) contributions to be made by an employer to the Central Provident Fund, under the Central Provident Fund Act (Chapter 36) in respect of each employee who is a citizen or permanent resident of Singapore; (ii) the provision of statutory maternity, paternity, childcare and adoption leave benefits (in each case subject to the fulfilment of certain eligibility criteria) under the Child Development Co-savings Act (Chapter 38A); (iii) statutory protections against dismissal on the grounds of age, and statutory requirements to offer re-employment to an employee who attains the prescribed minimum retirement age, under the Retirement and Re-employment Act (Chapter 274A); and (iv) statutory requirements relating to work injury compensation, and workplace safety and health, under the Work Injury Compensation Act (Chapter 354) and the Workplace Safety and Health Act (Chapter 354A), respectively.
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There is no minimum statutorily prescribed wage in Singapore. Singapore employment law also does not prescribe any mandatory annual wage supplement, bonus payments or severance payments to be provided by an employer to its employees. Any such payment to be made to an employee (including as to frequency and amount) is at the discretion of the employer. An employer and its employee are generally free to agree on a notice period for termination of employment. If the employment contract does not provide for a notice period, the employer must adhere to the minimum notice periods stipulated in the Singapore EA. The Singapore EA confers a statutory right on either party to terminate the employment relationship immediately without waiting for the expiry of the notice period by paying salary in lieu of notice.
Philippines
Under Philippine law, any person intending to conduct business within a local government units administrative jurisdiction is required to secure a business permit issued by the local chief executive of such local government unit. The conduct of business operations without the required business permit may result in the payment of fines that may vary depending on the amounts prescribed in the tax ordinance of the relevant local government unit, and closure of the business. In the case of any violation of the ordinances of the relevant local government unit, as well as other applicable Philippine law, the local government unit may impose fines, and in certain cases, revoke or cancel a business permit. If a business permit is revoked or cancelled, the local government unit shall also order the closure of the business.
Certain companies may avail of certain incentives under Philippine law, subject to compliance with applicable rules and regulations of PEZA. PEZA is a government corporation that operates, administers and manages designated special economic zones, or Ecozones, around the Philippines. An Ecozone may contain any or all of the following: industrial estates, export processing zones, free trade zones, and tourist or recreational centers. PEZA-registered enterprises within an Ecozone are entitled to fiscal and non-fiscal incentives such as, but not limited to, income tax holidays. The enjoyment by PEZA-registered enterprises of certain fiscal and non-fiscal incentives is subject to the terms and conditions of their respective registration agreements with PEZA and continuing compliance with the PEZA rules and regulations and related laws.
Transfers of assets of the PEZA-registered enterprises used in relation to its PEZA-registered business require the consent or approval of PEZA. In addition, the transfer/sale of all or substantially all of the assets of the corporation shall be subject to the requirements of Act No. 3952, as amended, otherwise known as the Bulk Sales Law and the Revised Corporation Code of the Philippines.
In respect of declaration and payment of dividends, the board of directors of a Philippine corporation may only declare dividends out of unrestricted retained earnings. The issuance of stock dividends requires the ratification of at least two-thirds (2/3) of the outstanding capital stock of the corporation.
The Data Privacy Act of 2012 of the Philippines, or the Philippine Data Privacy Act, is a comprehensive and strict privacy legislation aimed to protect the fundamental human right to privacy of data subjects by: (a) protecting the privacy of individuals while ensuring free flow of information; (b) regulating the collection, recording, organization, storage, updating or modification, retrieval, consultation, use, consolidation, blocking, erasure or destruction of personal data; and (c) ensuring that the Philippines complies with international standards set for data protection through National Privacy Commission, or the NPC. The Philippine Data Privacy Act mandates companies to inform the individuals about how their personal information is collected and processed. It also ensures that all personal information must be (a) collected and processed with lawful basis, which includes consent, and only for reasons that are specified, legitimate, and reasonable; (b) handled properly, ensuring its accuracy and retention only for as long as reasonably needed; and (c) discarded properly to avoid access by unauthorized third parties. Under the Philippine Data Privacy Act and its implementing rules, all Philippine companies shall comply with the following: (a) appoint a data protection officer; (b) conduct a privacy impact assessment; (c) adopt a privacy management program and privacy policy; (d) implement privacy and data protection measures; and (e) establish a breach reporting procedure. In addition, companies with at least
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250 employees or access to sensitive personal information of at least 1,000 individuals are required to register their data processing systems with the NPC. Non-compliance with applicable provisions of the Philippine Data Privacy Act may, upon notice and hearing, be subject to compliance and enforcement orders, cease and desist orders, temporary or permanent bans on the processing of personal data, or payment of fines. In the case of non-compliant corporations, the penalty of fine and/or imprisonment shall be imposed upon the responsible officers (e.g., data protection officer, compliance officer), as the case may be, who participated in, or by their gross negligence, allowed the commission of the crime and/or security breach.
With respect to labor and employment, the Department of Labor and Employment, or DOLE, is the Philippine government agency which has exclusive authority in the administration and enforcement of labor and employment laws such as the Labor Code of the Philippines and the Occupational Safety and Health Standards and such other laws as specifically assigned to it or to the Secretary of the DOLE.
Republic Act No. 6727, otherwise known as the Wage Rationalization Act of the Philippines, or RA 6727, mandates the fixing of minimum wages applicable to different industrial sectors including retail and service establishments. Pursuant to RA 6727, the relevant Regional Tripartite Wages and Productivity Board issues wage orders which prescribe the daily minimum wage rates per industry per locality within the region and in some instances depending on the number of workers and the capitalization of enterprises. The wage increases prescribed under the wage orders generally apply to all private sector workers and employees receiving the daily minimum wage rates or those receiving up to a certain daily wage ceiling, where applicable, regardless of their position, designation, or status of employment, and irrespective of the method by which their wages are paid.
Under the Labor Code of the Philippines, employees may be retired upon reaching the retirement age established in the employment contract or applicable collective bargaining agreement, if any. In the absence of any agreement providing for retirement benefits of employees, an employee, who has served at least five years in an establishment which employs more than 10 employees, may retire upon reaching the age of 60 years or more but not beyond 65, which is the compulsory retirement age. The minimum retirement pay shall be equivalent to one-half month salary for every year of service, a fraction of at least six months being considered as one whole year. The retirement benefits mandated by the Labor Code of the Philippines are separate and distinct from those granted by the Social Security System, or SSS.
An employer or any person who uses the services of another person in business, trade, industry or any undertaking is required under Republic Act No. 11199, the Social Security Act of 2018, to ensure coverage of employees following procedures set out by the law and the SSS. Under the said law, an employer must deduct from its employees their monthly contributions in an amount corresponding to his salary, wage, compensation or earnings during the month in accordance with the monthly salary credits, the schedule and the rate of contributions as may be determined and fixed by the Social Security Commission, pay its share of contribution and remit these to the SSS within a period set by law and/ or SSS regulations.
Employers are likewise required to ensure enrollment of its employees in a National Health Insurance Program administered by the Philippine Health Insurance Corporation a government corporation attached to the Department of Health tasked with ensuring sustainable, affordable and progressive social health insurance pursuant to the provisions of Republic Act No. 10606, the National Health Insurance Act of 2013. On February 20, 2019, Republic Act No. 11223, the Universal Health Care Act, was enacted, which amended certain provisions of the National Health Insurance Act of 2013. Under the said law, all Filipino citizens are now automatically enrolled into the National Health Program. However, membership is classified into two types, direct contributors and indirect contributors. Direct contributors refer to those who have the capacity to pay premiums, are gainfully employed and are bound by an employer-employee relationship, or are self-earning, professional practitioners, migrant workers, including their qualified dependents, and lifetime members. On the other hand, indirect contributors refer to all others not included as direct contributors, as well as their qualified dependents, whose premium shall be subsidized by the national government including those who are subsidized as a result of special laws. Every member is also granted immediate eligibility for health benefit package under the program.
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Under Republic Act No. 9679, the Home Development Mutual Fund Law of 2009, all employees who are covered by the SSS must also be registered with and covered by the Home Development Mutual Fund, more commonly referred to as the Pag-IBIG Fund.
Malaysia
In general, there is a requirement to obtain business premise and advertisement licenses from the relevant local councils and authorities in accordance with the Local Government Act 1976 and the relevant by-laws and regulations for operating business premises in Malaysia. Most local or district councils have Licensing of Trades, Businesses and Industries By-Laws which stipulate, among others, that no person shall carry on any trade, business or industry in any place or premise within the respective district council unless he is licensed. Each set of by-laws applies within the boundaries of each local or district council. It is an offence for any person to use any premise for operating any business premise without a business premise license, which on conviction, is punishable with a fine not exceeding RM2,000 or to imprisonment for a term not exceeding one year or both and in the case of a continuing offence, to a fine not exceeding RM200 for each day during which the offence is continued after conviction.
Under the Personal Data Protection Act 2010 of Malaysia, or the Malaysian PDPA, organizations are required to (i) obtain consent from the individuals prior to collecting, using or disclosing their personal data unless the limited exceptions under the Malaysian PDPA arises; (ii) inform individuals in writing in two languages (i.e. English and the national language) of, amongst other things, the purposes for which their personal data will be processed and the third parties to whom their personal data will be disclosed; and (iii) ensure that the personal data collected will be processed in a safe and secure manner in accordance with the security standards prescribed under the Personal Data Protection Standard 2015.
An organization that fails to comply with the provisions under the Malaysian PDPA may, if found guilty, be liable to a financial penalty up to a maximum of RM500,000 and any person who, at the time of the commission of the offence, was a director, chief executive officer, chief operating officer, manager, secretary or any person in a managerial capacity may also be jointly or severally liable with the organization and be subject to imprisonment of up to a maximum of five years.
With respect to employee considerations, companies in Malaysia are also subject to the requirements under the Employees Provident Fund Act 1991, or the EPF Act, the Employees Social Security Act 1969, or the ESS Act, and the Employment Insurance System Act 2017, or the EIS. The EPF Act imposes statutory obligation on employers and employees to make contribution to the employees provident fund, or the EPF, which is a pension fund that is mandatory (with a few exceptions) for all Malaysian employees. The EPF is a saving scheme for retirement purposes of an employee.
The ESS Act provides for social security for employment injury contingencies in favor of employees and is administered by the Social Security Organisation. It provides the right to claim benefits such as invalidity pension, disablement benefit, dependents benefit, funeral benefit and survivors pension. With effect from June 1, 2016, employers are required to make monthly deductions and contributions for all employees depending on their ages but regardless of their monthly wages, and generally calculated based on their monthly wages.
The EIS is an act administered by the Social Security Organization to provide certain benefits and a re-employment program for insured persons in the event of loss of employment. The EIS will provide temporary financial aid for up to six months for retrenched employees until they find new employment. Under the EIS, every employee and employer is required to pay mandatory monthly contributions to the Social Security Organisation in accordance with the prescribed rates.
In Malaysia, the Employment (Restriction) Act 1968 provides that a non-citizen shall not be employed in any business in Malaysia without a valid employment permit. A foreign employee is required to obtain a work permit
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such as employment pass or professional visit pass issued by the Department of Immigration, Malaysia in order to carry out employment in Malaysia.
Thailand
The Foreign Business Act B.E. 2542 (A.D. 1999), or the FBA, is the primary law regulating foreign participation or ownership of business operations in Thailand. Unless otherwise permitted by other applicable laws (e.g. Investment Promotion Act B.E. 2520 (A.D. 1977) (as amended), other bilateral treaties and etc.), foreign business operations in Thailand will generally be subject to the FBA and a Non-Thai person (as defined in the FBA) cannot conduct certain restricted businesses in Thailand, unless a foreign business license is obtained.
Under the FBA, a Non-Thai is defined as:
(i) | a natural person not holding Thai nationality; |
(ii) | a juristic person not registered in Thailand; |
(iii) | a juristic person registered in Thailand and having the following characteristics: |
(a) | a juristic person at least one-half (50%) of whose share capital is held by persons under paragraph (i) or (ii), or a juristic person at least one-half (50%) of whose total capital is invested by persons under paragraph (i) or (ii); or |
(b) | a limited partnership or a registered ordinary partnership whose managing partner or manager is a person under paragraph (i); or |
(iv) | a juristic person registered in Thailand at least one-half (50%) of whose share capital is held by persons under paragraph (i), (ii) or (iii), or a juristic person at least one-half (50%) of whose total amount of capital is invested by persons under paragraph (i), (ii) or (iii). |
In addition, any investment by the Thai partners must be genuine and can be proved to the satisfaction of Thai courts that the Thai partners do not hold shares for or on behalf of the Non-Thai person in breach of applicable foreign shareholding limit. The Civil and Commercial Code of Thailand (as amended) requires a private company to have a minimum number of three shareholders. Failure to comply with such minimum shareholder requirement may be grounds for a Thai court to order dissolution of the company.
The Life Insurance Act B.E. 2535 (A.D. 1992) (as amended) and the Non-Life Insurance Act B.E. 2535 (A.D. 1992) (as amended) and relevant rules and regulations issued thereunder by the Office of Insurance Commission of Thailand regulate, amongst other, an operation of insurance brokerage business in Thailand, whereby any person wishing to engage in insurance brokerage business must obtain a requisite license before commencing such businesses.
The Commercial Registration Act B.E. 2499 (A.D. 1956) (as amended) and relevant rules and regulations issued thereunder by the Ministry of Commerce of Thailand require operators of certain prescribed businesses, including trading of products or services by electronics via internet system, to register themselves with the relevant Commercial Registration Office. Likewise, the Personal Data Protection Act B.E. 2562 (A.D. 2019), or the Thai PDPA, which will come into full effect on June 1, 2021, regulates the collection, storage, usage, disclosure and transfer of personal data of individuals in Thailand. In brief, the Thai PDPA requires data controllers and data processors to comply with the requirements prescribed thereunder, including, amongst others, consent requirements, lawful grounds, privacy notice, disclosure and transfer restrictions, and rights of data subjects.
We are also the recipient of certain investment incentives provided by the BOI. The Investment Promotion Act B.E. 2520 (A.D. 1977) (as amended) empowers the BOI to grant investment incentives to qualified business activities in Thailand. In particular, the BOI incentives primarily include (i) tax incentives (e.g. exemption or
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reduction of corporate income tax and import duties for machinery and raw materials); and (ii) non-tax incentives (e.g. permission to own land, remittance of foreign currency and bringing skilled workers into Thailand). In this connection, the BOI incentives are granted according to the type of qualified business activities (i.e. Activity-based incentives), whereby additional incentives may be granted for businesses which stimulate competitiveness enhancement, decentralization and industrial area development (i.e. Merit-based incentives). See Risk FactorsRisks Related to our Business and IndustryWe may fail to attract and retain enough highly trained employees to support our operations.
The principal laws governing labor matters in Thailand are the Civil and Commercial Code (as amended) on contracts relating to the hire of services, the Labor Protection Act B.E. 2541 (A.D. 1998) (as amended), the Labor Relations Act B.E 2518 (A.D. 1975) (as amended), the Social Security Act B.E. 2533 (A.D. 1990) (as amended) and the Workmens Compensation Act B.E. 2537 (A.D. 1994) (as amended), which regulate work hours, holidays, leaves, wages, overtime, work rules and regulations, severance pay, welfare, and other similar matters. In the case of a termination of employment, the employer is obligated to provide prior notice to any employees being terminated not less than one wage payment period in advance or pay wages to such employees in lieu of the advance notice, which must be paid on the termination date. Likewise, an employer is generally required to make payment of severance pay to employees if their employment is terminated through no fault of their own in an amount ranging from 30 to 400 days worth of their remuneration, depending on an individual employees period of employment.
China
Agorae Beijing, our wholly owned subsidiary incorporated in the PRC, provides consulting services to Beijing Rongma Tiancheng Information Technology Co. Ltd., or RMTC, a third party domestically owned PRC company with relevant PRC call center licenses, to support RMTCs provision of call center services to customers in China. Agorae Beijings arrangements with RMTC include a revenue sharing agreement, pursuant to which substantially all of the proceeds from operations of RMTC are received by Agorae Beijing.
Under the PRC Foreign Investment Law, businesses operating in industries on the negative list are subject to restrictions on foreign ownership. Call center services are a sub-segment of the value-added telecommunications sector, which was included on the negative list until July 2019 (pursuant to the Special Management Measures for the Market Entry of Foreign Investment (Negative List) (2019 Version)). The PRC Telecommunication Regulation and the Measures on Administration of Licensing for Telecommunication Operation requires that a call center operator in the value-added telecommunications industry obtain a VATS License. As a result, prior to July 2019, a foreign owned entity, such as Agorae Beijing, could provide call center services in the PRC only through a joint venture with a PRC partner and the foreign entity was able to hold no more than 50% of the equity in the joint venture. Although the restriction on foreign shareholding in call center services businesses has now been lifted, the national implementation of rules on how a foreign owned entity can apply for the VATS License have not been promulgated, and it is unclear whether or when the national implementation rules will be enacted. See Risk FactorsRisks Related to Countries Where We OperateIf the PRC government deems that Agorae Beijings contractual arrangements do not comply with PRC regulatory restrictions on foreign investment or VATS License requirements, we could be subject to adverse consequences.
The Cybersecurity Law of the Peoples Republic of China, or the PRC Cybersecurity Law, which came into effect as of June 1, 2017 and the relevant regulations require that network operators, which includes, among others, call center services providers, take technical measures and other necessary measures to safeguard the safe and stable operation of the networks, effectively respond to network security incidents, prevent illegal and criminal activities, and maintain the integrity, confidentiality and availability of data. The PRC Cybersecurity Law also reaffirms the principles and requirements on personal information protection and strengthens the obligations of network operators in the process of collecting, using, disclosing, storing and transferring personal information. Network operators who do not comply with the PRC Cybersecurity Law may be subject to fines, suspension of operation, shutdown of websites, revocation of business license, and, in severe cases, criminal liabilities.
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The Provisions on Protection of Personal Information of Telecommunication and Internet Users, or the PRC TIUPIP Provisions, which came into effect as of September 1, 2013, particularly focuses on the protection of personal information of end-users of telecommunications services and internet information services. The PRC TIUPIP Provisions requires telecommunication service operators, which includes, among others, call center services providers, to adhere to the principles of legality, appropriateness and necessity, when collecting and using end-users personal information in the process of providing services. The PRC TIUPIP Provisions also includes detailed procedural requirements that service providers must follow to collect and use end-users personal information and measures that service providers should take to prevent the leakage, destruction, tampering or loss of end-users personal information. Service providers who do not abide by the PRC TIUPIP Provisions may be subject to warnings, fines and, in severe cases, criminal liabilities.
Pursuant to the Labor Law of the Peoples Republic of China, or the PRC Labor Law, promulgated on July 5, 1994, and amended on August 27, 2009 and December 29, 2018, the PRC Labor Contract Law of the Peoples Republic of China, or the PRC Labor Contract Law, promulgated on June 29, 2007, and amended on December 28, 2012 and the relevant regulations on labor protection in the PRC, labor relationships between employers and employees must be specified in written form and employers must pay wages to employees in amounts not lower than local minimum wages standards. An employer may legally terminate a labor contract and dismiss its employees after reaching agreement upon negotiations with the employee or, where applicable, by fulfilling statutory conditions. However, the PRC Labor Contract Law requires the payment of statutory severance pay upon the termination of an employment contract in most cases. With respect to employee benefits, employers are required to register with the relevant social insurance authorities and provide their employees with welfare schemes covering pension, unemployment insurance, maternity insurance, work-related injury insurance and medical insurance. Employers are also required to register with the relevant administrative centers for housing fund and deposit housing funds for their employees. Employers shall make all social insurance contributions and housing fund contributions on a monthly basis. Except for mandatory exceptions such as force majeure, social insurance premiums and housing provident fund may not be paid late, reduced or be exempted.
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Directors and Executive Officers
The following table sets forth the names, ages, and positions of our directors and executive officers as of the date of this prospectus. The current business address of each of our directors and executive officers is 750D Chai Chee Road, #06-01/06 ESR BizPark @ Chai Chee, Singapore 469004.
Directors and Executive Officers |
Age | Position/Title | ||||
Directors: |
||||||
Mr. Laurent Bernard Marie Junique | 55 | Chairman and Chief Executive Officer (CEO) | ||||
Mr. Tze Neng Chin | 53 | Chief Financial Officer | ||||
Mr. Edward Goh | 44 | EVP Corporate Development | ||||
Mr. Chia Ling Koh | 49 | Independent Director | ||||
Ms. Yee Peng Tan | 47 | Independent Director | ||||
Executive Officers(1): | ||||||
Mr. Tony Bruno | 59 | EVP North Asia & Business Strategy | ||||
Ms. Sophie Chelmick | 45 | SVP Spain & Romania | ||||
Mr. Andy Cranshaw | 59 | SVP Learning & Development | ||||
Mr. Byron Fernandez | 44 | EVP Malaysia & India & Group Chief Information Officer (CIO) | ||||
Mr. Chee Gay Lim | 51 | EVP Group Chief Human Resources Officer (CHRO) | ||||
Mr. Michael Pan | 40 | SVP Digital Innovation | ||||
Ms. Angie Tay | 45 | EVP Singapore & Thailand & Group Chief Operating Officer | ||||
Mr. Ricart Valvekens | 40 | EVP Philippines & the Americas |
Note:
(1) | Other than directors who are also executive officers. |
A description of the business experience and present position of each director and executive officer is provided below:
Directors
Laurent Bernard Marie Junique founded the Company in Singapore in 1995 and is one of the pioneers in the industry in Asia with over 25 years of outsourcing experience. He ensures that the Company delivers innovative solutions that have a profound impact on clients businesses. Mr. Junique leveraged his unified vision to grow our Company into one of the global leading outsourced business services providers and trusted customer experience partner to some of the worlds most valuable brands. Mr. Junique emerged as one of the leading voices in the global business process outsourcing industry when he received the 2018 Ernst & Young Entrepreneur of the YearOutsourced Solutions Award. Prior to founding our Company, Mr. Junique worked in the telemarketing business as a managing director at Phone Communication Pte Ltd. Mr. Junique has a bachelors degree in marketing from E.S.A.E/E.S.I.A.E Paris.
Tze Neng Chin has served as our Chief Financial Officer (formerly referred to as Group Finance Director) since May 2005. He is responsible for operational areas of accounting and finance, treasury, taxation, general insurance matters of the Company. His work also includes managing the budgeting and forecasting of our Companys financial performance for the board of directors and shareholders iteration. Mr. Chins initial accounting career was with Kuala Lumpurs office of Coopers and Lybrand (now a part of PricewaterhouseCoopers) where his role was largely to serve clients for statutory audit compliance and special audit assignments. He has also worked in finance roles at Malayan Cement Berhad, which later became part of the French-based Lafarge SA. Immediately prior to joining our Company, Mr. Chin worked at a German-owned decorative paper maker and supplier, Interprint, as a Financial Controller for approximately two years. Mr. Chin has an Australian degree holder from RMIT University, Melbourne as well as various professional
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qualifications such as a designated Chartered Accountant as re-designated by Malaysian Institute of Accountants (MIA) on June 28, 2001 and a Certified Practising Accountant by the Australian Society of Certified Practising Accountants on November 30, 1994.
Edward Goh has served as our EVP Corporate Development since 2017. He is responsible for strategic decisions to grow and restructure our businesses as well as establish strategic partnerships, and achieve optimal value creation for the organization. Prior to joining us in 2017, he worked for Bank Julius Baer as Managing Director Senior Advisor in the investment finance team. He has 15 years of experience in corporate finance, strategy research and credit. Since joining our Company in 2017, Mr. Goh has worked closely with the CEO and other executive officers to enhance ownership structure, create access to funding options, and support expansion plans into new markets. Edward earned his Bachelor of Business degree from Nanyang Technological University in 2000 and his Master of Business Administration degree from Imperial College, London in 2003. He is also a Chartered Financial Analyst.
Chia Ling Koh serve as an independent non-executive director on our board of directors. He also serves in the position of Managing Director for the Singapore law practice OC Queen Street LLC, a member firm of Osborne Clark and previously was a partner at Bird & Bird from 2006 to July 2016. Mr. Koh earned his Bachelor of Laws degree from the University of London in 1996 and Master of Laws in Media, Communication and Information Technology from the University of New South Wales in 2000. Mr. Koh also has a Master of Technology in Knowledge Engineering degree from the National University of Singapore, which he earned in 2004.
Yee Peng Tan serve as an independent non-executive director on our board of directors. She also serves as a director on the board of directors of Vanguard Health Fund Limited, 1FSS Pte Ltd and Hercules Pte Ltd. Ms. Tan also previously worked at KPMG LLP as a partner where she led the healthcare and biomedical sciences practice and managed an audit portfolio of numerous entities listed on the Singapore stock exchange (SGX). Ms. Tan also served as an adjunct associate professor at Nanyang Technological University (Nanyang Business School) from 2009 to 2018. Ms. Tan earned her Bachelor of Accountancy degree from Nanyang Technological University in 1995.
Executive Officers
Laurent Bernard Marie Junique has served as our CEO since 1995. For further information, see Directors.
Tony Bruno has served as EVP North Asia & Business Strategy since October 2017. He is responsible for all business operations, business development and growth in China and Japan. Prior to joining us, he was the Head of International Operations at 24/7 Intouch, overseeing all non-Americas operations, business and development opportunities. Prior to that he led PCCW Teleservices as their Executive Director overseeing PCCW Teleservices businesses in all locations. He previously held various roles in general management, sales, marketing and operations. Mr. Bruno obtained his degree from the University of Manchester in Math and Physics in 1983.
Sophie Chelmick has served as our SVP Spain since October 2018. She is responsible for launching the TDCX business in Spain and Romania. She has over 15 years of experience in managing Pan-European customer operations that positively impact business results for clients. She achieves this by building great relationships with her clients at all levels while in parallel building and supporting talented operational teams who consistently produce ambitious sales, productivity and quality results. Prior to joining us in 2018, she worked for CPM International, part of the Omnicom Group as their Business Unit Director for Key European Accounts. She earned her degree from University of London in 1997 and her post-graduate degree from University of Aberdeen in 2000. She is also a COPC certified practitioner.
Tze Neng Chin has served as our Chief Financial Officer (formerly referred to as Group Finance Director) since May 2005. For further information, see Directors.
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Andy Cranshaw joined our Company as SVP Learning & Development in July 2019. He is responsible for overseeing the next phase in the development of our Companys training practice as we create a Global Learning and Development culture that will differentiate our Company both as an employer and as a partner for our clients. Andy is a well-respected educator in customer experience and contact center management and before joining our Company was Director Southeast Asia for COPC Inc. He has over 25 years of experience in business process outsourcing management roles and CX consulting, 22 of which have been spent in Southeast Asia and has personally delivered hundreds of training programs for Contact Center staff and managers throughout the Asia Pacific region as well as in the United Kingdom and the United States. Mr. Cranshaw is a founding member of the Contact Center Association of Malaysia from whom he is the recipient of a career achievement award for his service to the Malaysian contact center industry.
Byron J. Fernandez has served as our EVP Malaysia since September 2014 and our Chief Information Officer since January 2019. Additionally, in March 1, 2020, Mr. Fernandez assumed responsibility as EVP for India. In 2019, his role was expanded to serve as our Chief Information Officer and he is now responsible for information technology deployments globally. Prior to joining us in 2014, he worked for SRG Asia Pacific Sdn. Bhd. as their General Manager and for Vision IP Services (now known as Redberry) as their Head of Operations. Byron earned his MBA degree from Olympia College in 2002 and his Advanced Diploma in Computer Science from Informatics Institute in 1998. Byron is also a CIAC Certified Strategic Leader and a COPC Certified Implementation Leader. Byron has over 18 years of experience in the outsourcing industry.
Chee Gay Lim joined our Company in 2017 as Chief Human Resources Officer for Malaysia before promoted to Group Chief Human Resources Officer in March 2021. Chee Gay has more than 20 years of experience in human resources, manufacturing, information technology, and supply chain management. He has held management and board positions at country and regional levels and managed teams in the US, Europe, and Asia. He has a specific expertise in group-level human resources transformation, employer branding, digitalization of human resources processes, leadership development, building diversity and inclusion culture and operational excellence for sustainable growth. Chee Gay has been named the Top 101 Fabulous Global Tech Human Resources Leaders by the CHRO (Chief Human Resource Officers) Board in 2020, Top 100 Human Resources Leaders with CSR Initiatives by the World HRD Congress in 2019, National Human Resources Leader of the Year by the Malaysia Institute Human Resources Management in 2018 and Human Resources Professional of the Year by the World Congress HRD in 2017. He is also certified in Six Sigma Black Belt, Lean, Design Thinking, COPC, and Associate, Life Management InstituteTM. He graduated from University Science Malaysia with Bachelor of Applied Science(Hons) in 1994. He is Malaysia Lifesaving Sports Coach and Malaysia l Lifesaving Society Chief Examiner while actively involved in water drowning prevention CSR activities across the country.
Edward Goh has served as our EVP Corporate Development since 2017. For further information, see Directors.
Michael Pan joined our Company in 2014 as the Regional Digital Marketing Manager. In March 2020, he was promoted to SVP for Digital Innovation, where he oversees TDCXs broad marketing initiatives including branding, digital marketing, digital innovation, and exponential technologies such as artificial intelligence, augmented and virtual reality, machine learning, finance technology, and internet of things. Michael sits on several international judging panels for prominent digital awards and is a member of the Interactive Media Council, Web Marketing Association, Academy of the Interactive & Visual Arts and The One Club for Creativity. Michael also was formerly employed as the head of one of the largest digital agencies in Malaysia. He was also one of the first in Asia to be inducted into Googles #CertifiedChamps Hall of Fame for completing all Google Ads certifications. Michael graduated with a Bachelor of Arts (Hons) in Creative Multimedia from Limkokwing University of Creative Technology in 2007.
Angie Tay has been with our Company since 2004. Ms. Tay has served as our EVP Singapore & Thailand since October 2018 and was appointed to the position of Chief Operating Officer of the Company on January 12, 2021. She is responsible for leading over 2000 staff in both countries. She has more than 15 years of business process
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outsourcing experience from designing customer access strategies, inbound customer contact, outbound outreach and all supporting functions of a high performing contact center. Prior to joining us in 2004, she worked for MobileOne Pte Limited as their Customer Service Executive and for Standard Chartered Bank as their Customer Service Manager. Angie earned her Bachelor of Business degree from Nanyang Technological University in 1997 and her Executive MBA from Nanyang Technological University in 2014. Ms. Tay is a certified COPC Coordinator, as well as a certified Six Sigma Green Belt from Singapore Quality Institute. She is also the Vice Chairman of the Contact Center Association of Singapore and a member in the Total Defence Awards Evaluation Board (2017 to 2020). Ms. Tay is also a member of Republic Polytechnic School of Hospitality School Advisory Committee (2018 to 2020).
Ricart Valvekens has served as our EVP Philippines since 2015 and, additionally, assumed responsibility as EVP for the Americas in February 1, 2020. He is responsible for overall operations in the Philippines. Prior to joining us, he worked for Nestle as their Regional Customer Service Manager covering the whole of Asia. Ricart earned his Masters degree in European Marketing and Management from IDRAC Business School in 2002 and also attended an Executive Program in Strategy and Organization at Stanford University in 2019. Ricart has 15 years of customer experience and outsourcing industry experience.
Board of Directors
Upon the closing of this offering, our board of directors will consist of five directors, of whom two will be independent. Our board of directors has determined that none of our independent directors has a relationship that would interfere with the exercise of independent judgment in carrying out the responsibilities of director and that each of these directors is independent as that term is defined under the rules of NYSE. There are no family relationships among any of our directors or executive officers.
[Our directors do not have fixed terms of office. Directors can be appointed and removed or replaced by an ordinary resolution of the shareholders. In addition, directors may be appointed either to fill a vacancy arising from the resignation of a former director or as an addition to the existing board of directors by the affirmative vote of a simple majority of the directors present and voting at a meeting of the board of directors.] A director is not required to hold any shares in our Company to qualify to serve as a director.
Duties of Directors
Under Cayman Islands law, our directors owe fiduciary duties to our Company, including a duty of loyalty, a duty to act honestly, and a duty to act in what they consider good faith to be in our best interests. Our directors must also exercise their powers only for a proper purpose. Our directors also have a duty to exercise the skills they actually possess and such care and diligence that a reasonably prudent person would exercise in comparable circumstances. In fulfilling their duty of care to us, our directors must ensure compliance with our memorandum and articles of association, as amended and restated from time to time, and the class rights vested thereunder in the holders of the shares. Our company has the right to seek damages if a duty owed by our directors is breached. In certain limited exceptional circumstances, a shareholder may have the right to seek damages in our name if a duty owed by our directors is breached.
Board Committees
Our board of directors has established an Audit and Risk Committee, a Remuneration Committee and a Nominating Committee. As a foreign private issuer, we are permitted to follow home country corporate governance practices under the Corporate Governance Rules of the New York Stock Exchange.
Audit and Risk Committee
The Audit and Risk Committee, which is expected to comprise , and , will assist our board of directors in overseeing our accounting and financial reporting processes and the audits of our financial
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statements. Mr. serves as chairman of the Audit and Risk Committee. Our board of directors has determined that each member of the Audit and Risk Committee satisfies the independence requirements of Section 303A of the Corporate Governance Rules of the NYSE and the independence requirements of Rule 10A-3 under the Exchange Act. Our board of directors has also determined that qualifies as an audit committee financial expert within the meaning of the SEC rules.
The Audit and Risk Committees responsibilities will include:
| recommending the appointment of the independent auditor to the general meeting of shareholders; |
| the appointment, compensation, retention and oversight of any accounting firm engaged for the purpose of preparing or issuing an audit report or performing other audit services; |
| pre-approving the audit services and non-audit services to be provided by our independent auditor before the auditor is engaged to render such services; |
| evaluating the independent auditors qualifications, performance and independence, and presenting its conclusions to the full board on at least an annual basis; |
| reviewing and discussing with the Board and the independent auditor our annual audited financial statements and quarterly financial statements prior to the filing of the respective annual and quarterly reports; |
| reviewing our compliance with laws and regulations, including any initiatives or major litigation or investigations against us that may have a material impact on our financial statements, and assessing our risk management, compliance procedures and hiring of independent auditor employees; and |
| approving or ratifying any related person transaction (as defined in our related person transaction policy) in accordance with our related person transaction policy, which is intended to be adopted by our board of directors with effect upon the completion of this offering. |
The Audit and Risk Committee will meet as often as one or more members of the audit committee deem necessary, but in any event will meet at least four times per year. The Audit and Risk Committee will meet at least once per year with our independent accountant, without our executive officers being present.
Remuneration Committee
The Remuneration Committee, which is expected to comprise , and , will assist the board of directors in determining executive officer compensation. will serve as chairman of the Remuneration Committee. Our board of directors has determined that and satisfy the independence requirements of Section 303A of the Corporate Governance Rules of the New York Stock Exchange. Under SEC and NYSE rules, there are heightened independence standards for members of the Remuneration Committee, including a prohibition against the receipt of any compensation from us other than standard board member fees. Although foreign private issuers are not required to meet this heightened standard, [all of our expected Remuneration Committee members meet this heightened standard.] The Remuneration Committee assists the board in reviewing and approving the compensation structure, including all forms of compensation, relating to our directors and executive officers. Our chief executive officer may not be present at any committee meeting during which their compensation is deliberated upon.
The Remuneration Committees responsibilities include:
| identifying, reviewing and proposing policies relevant to executive officer compensation; |
| analyzing the possible outcomes of the variable remuneration components and how they may affect the remuneration of the executive officers; |
| evaluating each executive officers performance in light of such goals and objectives and determining each executive officers compensation based on such evaluation; |
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| determining any long-term incentive component of each executive officers compensation in line with the remuneration policy and reviewing our executive officer compensation and benefits policies generally; and |
| reviewing and assessing risks arising from our compensation policies and practices. |
Nominating Committee
The Nominating Committee, which is expected to comprise , and , will assist our board of directors in identifying individuals qualified to become members of our board of directors consistent with criteria established by our board of directors. serves as chairman of the Nominating Committee. The Nominating Committee assists our board of directors in identifying individuals qualified to become members of our board of directors and executive officers consistent with criteria established by our board of directors and in developing our corporate governance principles.
The Nominating Committees responsibilities include:
| identifying individuals qualified to become members of our board of directors and ensuring these individuals have the requisite expertise; |
| reviewing and evaluating the composition, function and duties of our board of directors; |
| recommending nominees for selection to our board of directors and its corresponding committees; |
| making recommendations to the board as to determinations of board member independence; |
| leading our board of directors in a self-evaluation, at least annually, to determine whether it and its committees are functioning effectively; |
| overseeing and recommending for adoption by the general meeting of shareholders the compensation for our board of directors;; and |
| developing and recommending to the board our rules governing the board, reviewing and assessing the adequacy of such rules governing the board and recommending any proposed changes to the board. |
Code of Business Conduct and Ethics
Compensation of Directors and Executive Officers
The compensation for each of our executive officers comprises base salary, discretionary bonus, equity compensation, contractual benefits and contributions to defined contribution plans. Total compensation paid and benefits in kind provided to our directors and executive officers for the year ended December 31, 2020 was S$ million.
We have not set aside or accrued any amount to provide pension, retirement or other similar benefits. For a description of share incentive grants to our directors and officers, see Performance Share Plan.
Performance Share Plan
On , 2021, we adopted the TDCX Performance Share Plan, or our PSP, which allows us to offer Class A common shares or ADSs to our employees, consultants, officers and executive directors. Pursuant to the PSP, the aggregate nominal number of shares over which our board of directors may award is [Class A common shares] or % of our total outstanding shares on a fully diluted as-converted basis as of the effective date of the PSP.
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Eligibility. We may award Class A common shares or ADSs to our employees, consultants, officers and executive directors provided that such person, on the date of the award, is at least 21 years of age.
Release of Shares. Class A common shares or ADSs awarded under the PSP and in connection with a share award may be released and delivered to a plan participant based on certain performance criteria being satisfied over any performance period as prescribed pursuant to the PSP (and to the extent that such performance criteria has been satisfied) and certain other conditions being met. These conditions include no misconduct by such person prior to the release of any Class A common shares or ADSs pursuant to an award; there has been no winding up of the Company due to insolvency; or termination (subject to customary exceptions). A committee comprising certain members of our board of directors, or the PSP Committee, is responsible for administering the PSP and has the discretion to release or determine any award lapsed in the case of certain conditions, which include, among others, a transfer of beneficial ownership of an award due to a bankruptcy of a plan participant, the death or disability of a participant (and in such case the disability results in the participant no longer being employed by the Company), or any other event approved by such PSP Committee.
Transfer Restrictions. Class A common shares or ADSs awarded to any person are subject to certain limitations on transfer. The Class A common shares or ADSs awarded under the PSP shall not be transferred, charged, assigned, pledged, or otherwise disposed of, in whole or in part, during any retention period determined by the PSP Committee (except to the extent set out in any award letter or as determined by the PSP Committee, in its sole discretion).
Termination of the Scheme. The PSP remains in force at the discretion of the PSP Committee, subject to a maximum period of 10 years from the date of the adoption. The termination of the scheme shall not affect Class A common shares or ADSs that have been awarded in accordance with the plan, whether or not such options have been released.
The following table summarizes, as of December 31, 2020, the number of Class A common shares (including common shares represented by ADSs) over which awards have been granted to our executive officers and are outstanding under the PSP.
Name | Number of Class A common shares over which awards have been granted and are outstanding |
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[●] |
[●] | |||
Other Individuals |
[●] | |||
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Total |
[●] | |||
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Employment Agreements and Indemnification Agreements
Other than as disclosed above, none of our directors has entered into service agreements with our Company or any of our subsidiaries that provides for benefits upon termination of employment.
We plan to enter into indemnification agreements with each of our directors and executive officers, to be effective upon the completion of this offering. Under these agreements, we agree to indemnify our directors and executive officers against certain liabilities and expenses incurred by such persons in connection with claims made by reason of their being a director or officer of our Company.
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PRINCIPAL AND SELLING SHAREHOLDERS
The following table sets forth information with respect to the beneficial ownership of our ordinary shares, as of the date of this prospectus and as adjusted to reflect the sale of ADSs offered by us and the selling shareholders in our initial public offering (assuming the underwriters do not exercise their option to purchase additional ADSs), for:
| each of our directors and executive officers; |
| each person known to us to beneficially own 5.0% or more of our Class A ordinary shares or Class B ordinary shares; and |
| [each [other] selling shareholder]. |
The calculations of percentage ownership as of the date of this prospectus are based on ordinary shares outstanding as of , comprising (i) Class A ordinary shares and (ii) Class B ordinary shares. The calculations of percentage ownership after this offering assumes the sale of Class A ordinary shares (represented by ADSs) pursuant to this offering, assuming the underwriters do not exercise their option to purchase additional ADSs.
For the purpose of this table, beneficial ownership is determined in accordance with the rules of the SEC. Except as indicated below, the persons named in the table have sole voting and investment power with respect to all ordinary shares shown as beneficially owned by them. In computing the number of shares beneficially owned by a person and the percentage ownership of that person, we have included shares that the person has the right to acquire within 60 days of , including through the exercise of any option, warrant or other right or the conversion of any other security. These shares, however, are not included in the computation of the percentage ownership of any other person.
Ordinary Shares Beneficially Owned Prior to Offering |
Class A Ordinary Shares Being Offered and Sold in This Offering |
Ordinary Shares Beneficially Owned After This Offering |
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Number of Class A Ordinary Shares |
Number of Class B Ordinary Shares |
% of Total Ordinary Shares |
% of Aggregate Voting Power |
Number | % | Class A Ordinary Shares |
Class B Ordinary Shares |
% of Total Ordinary Shares |
% of Aggregate Voting Power |
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Directors and Executive Officers: |
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Laurent Bernard Marie Junique |
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All of our directors and executive officers as a group |
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Principal and Other Selling Shareholders: |
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As of the date of this prospectus, none of our record holders were located in the United States. We are not aware of any arrangement that may, at a subsequent date, result in a change of control of our Company.
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The following is a description of related party transactions we have entered into since January 1, 2018.
Credit Suisse Facility
On March 16, 2021, we entered into a term loan credit facility agreement with Credit Suisse AG. The credit facility provides for borrowings in an aggregate amount of US$188.0 million. Contemporaneous with TDCXs acquisition of our Founders shareholder interests in TDCX KY, we drew upon the credit facility on March 23, 2021 and subsequently distributed all US$188.0 million of the proceeds to our Founder. As of the date of this prospectus, the outstanding balance is US$188.0 million.
All of our obligations under our term loan credit facility agreement are guaranteed by TDCX Holdings and TDCX KY and secured by a mortgage of our Founders shares in TDCX Inc., TDCX Incs shares of TDCX KY and TDCX KYs shares in TDCX Holdings. Additionally, our Founder is required to maintain an amount equal to 80% of the amount outstanding under the facility deposited in a collateralized bank account with Credit Suisse AG, which shall accrue interest at a rate equal to the rate accrued on borrowings under the facility minus 100 basis points, until, among others, repayment of the facility. We are also required to maintain an interest reserve account and an equity cure account with Credit Suisse AG. Our term loan credit facility agreement contains a number of covenants that, among other things, impose certain restrictions on our ability, subject to certain exceptions, to:
| create or permit any security over our assets or the assets of our subsidiaries; |
| be a creditor to any financial indebtedness; |
| substantially change the general nature of our business; |
| declare, make or pay any dividend or other distribution; and |
| issue any shares or grant to any person any conditional or unconditional options, warrant or other right to call or otherwise acquire any of our shares or shares of our subsidiaries except in connection with the initial public offering of shares in our Company. |
Our facility agreement contains financial covenants including: (a) maintaining a ratio of EBITDA to finance charges of not less than 6:1 for a trailing 12-month period at the end of each financial year and quarter; and (b) maintaining a ratio of total net debt to EBITDA of not more than 2:1 for a trailing 12-month period at the end of each financial year and quarter. See Description of Certain IndebtednessCredit Suisse Facility.
Shareholder Loan to Teledirect Hong Kong Limited
We own a 10% equity interest in Teledirect Hong Kong Limited, or TDHKL. We have not entered into any shareholders agreement with TDHKL and do not have any contractual veto or consent rights in relation to TDHKL. We also do not have any express contractual right to nominate or appoint any directors to the board or persons to the management of TDHKL, though TDCX HPL is currently a member of the board of directors of TDHKL.
We entered into a shareholder loan agreement dated December 20, 2019 with TDHKL, Michael Thomas Cowell and Milton Kung, or Mr. Cowell and Mr. Kung, together, the TDHKL Individual Shareholders. Pursuant to the shareholder loan agreement, we provided TDHKL with a loan of 6.5 million Hong Kong dollars. Outstanding principal amounts drawn under the loan accrue interest at the HSBC Best Lending Rate on the last business day of the preceding month of the due date plus a 3% spread per annum from the date of the advance until the date of repayment. Interest is payable on a quarterly basis. In addition to a conversion right with respect to any outstanding amounts, and notwithstanding a buyback option under which the Individual Shareholders have the
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option to buy back any conversion shares, we also have the right to exercise a call option for an additional 40% interest of TDHKL within three years of our exercise of the conversion right. Any exercise of the buyback option by the Individual Shareholders does not affect our right to exercise our call option under the shareholder loan agreement.
Event of default provisions include if TDHKL (a) fails to pay TDCX HPL any amount due (including principal and interest), (b) becomes subject to proceedings to wind up TDHKL, (c) becomes insolvent or (d) enters into a scheme of arrangement with its creditor(s). Upon the occurrence of a default and upon at least 14 days written notice by TDCX HPL to TDHKL and continued default by TDHKL, then TDCX HPL may terminate the shareholders loan agreement upon 30 days prior written notice of such termination and all outstanding amounts owed under the shareholders loan agreement shall become immediately due.
The shareholder loan has been repaid as of December 31, 2020.
Employment Agreements and Indemnification Agreements
For a description of our other agreements with our board members and executive officers, see ManagementEmployment Agreements and Indemnification Agreements.
Related Party Transaction Policy
Our board of directors has adopted a related party transaction policy with effect from , 2021, to set forth the policies and procedures for the review and approval or ratification of related person transactions.
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DESCRIPTION OF CERTAIN INDEBTEDNESS
The following is a summary of certain provisions of the agreements evidencing our material indebtedness as of the date of this prospectus. This summary does not purport to be complete, and is subject to, and is qualified in its entirety by reference to, all of the provisions of such agreements and instruments, including the definitions of certain terms therein that are not otherwise defined in this prospectus.
CREDIT SUISSE FACILITY
On March 16, 2021, we entered into a term loan credit facility agreement with Credit Suisse AG. The credit facility provides for borrowings in an aggregate amount of US$188.0 million. Contemporaneous with TDCXs acquisition of our Founders shareholder interests in TDCX KY, we drew upon the credit facility on March 23, 2021 and subsequently distributed all US$188.0 million of the proceeds to our Founder. As of the date of this prospectus, the outstanding balance is US$188.0 million. We intend to use proceeds from the offering to fully repay this term loan credit facility, including accrued and unpaid interest and premium (if any), in accordance with the terms of this facility agreement. See Use of Proceeds.
Interest Rate and Maturity
Borrowings under our credit facility bear interest at a rate per annum equal to an applicable margin of 3.15% over the London interbank offered rate administered by ICE Benchmark Administration Limited, or LIBOR, for the 18 month period after the utilization date under the facility agreement and then, at any time thereafter, 3.45% over LIBOR. The term of the facility is 24 months after the utilization of the facility; provided that the maturity of the loan may be extended for an additional 12-month period.
Repayment and Prepayments
Amounts owed under the facility shall be due and payable at the end of the term, provided that if the term is extended for an additional 12-month period pursuant to the facility agreement, then the principal amount of the facility shall be repaid in three installments, with the first, second and third installments falling due on the dates that are 24 months, 30 months and 36 months after the utilization date of the facility, respectively. Amounts owed under the facility shall be become due and payable on the tenth business day after an initial public offering of shares in our Company. Prepayment of the facility within six months of the utilization date of the facility (other than, among others, in connection with an initial public offering) may result in our payment of a certain make whole amount.
Security, Certain Covenants and Events of Default
All of our obligations under our term loan credit facility agreement are guaranteed by TDCX Holdings and TDCX KY and secured by a mortgage of our Founders shares in TDCX Inc., TDCX Incs shares of TDCX KY and TDCX KYs shares in TDCX Holdings. Additionally, our Founder is required to maintain an amount equal to 80% of the amount outstanding under the facility deposited in a collateralized bank account with Credit Suisse AG, which shall accrue interest at a rate equal to the rate accrued on borrowings under the facility minus 100 basis points, until, among others, repayment of the facility. We are also required to maintain an interest reserve account and an equity cure account with Credit Suisse AG. Our term loan credit facility agreement contains a number of covenants that, among other things, impose certain restrictions on our ability, subject to certain exceptions, to:
| create or permit any security over our assets or the assets of our subsidiaries; |
| be a creditor to any financial indebtedness; |
| substantially change the general nature of our business; |
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| declare, make or pay any dividend or other distribution; and |
| issue any shares or grant to any person any conditional or unconditional options, warrant or other right to call or otherwise acquire any of our shares or shares of our subsidiaries except in connection with the initial public offering of shares in our Company. |
Our term loan credit facility agreement contains financial covenants including: (a) maintaining a ratio of EBITDA to finance charges of not less than 6:1 for a trailing 12-month period at the end of each financial year and financial quarter; and (b) maintaining a ratio of total net debt to EBITDA of not more than 2:1 for a trailing 12-month period at the end of each financial year and quarter.
OCBC China Facility
On August 30, 2019, Agorae Information Consulting (Beijing) Co., Ltd. or Agorae Beijing, one of our wholly owned subsidiaries, entered into a credit letter agreement with OCBC Wing Hang Bank (China) Limited, or OCBC China. The credit letter agreement provides for a revolving credit line in an aggregate amount of RMB12 million. While the term of this agreement is not defined therein, the term of each withdrawal thereunder is no more than six months. The annual interest rate is the applicable one year loan prime rate plus 1%. In addition to customary covenants and events of default, Agorae Beijing undertakes not to pay any dividend to its shareholder or change its shareholding structure without the prior written consent of OCBC China and that any loan provided by its shareholder shall be subordinate to the loan under this agreement. The credit line granted under this agreement is guaranteed by a standby letter of credit provided by OCBC Bank with an amount of US$2 million.
OCBC Facility
On April 29, 2019, we entered into a credit facility with Oversea-Chinese Banking Corporation Limited, or OCBC. The credit facility provides for borrowings in an aggregate amount of S$56.5 million and includes a S$7.6 million interest rate derivatives facility, a S$20.0 million advance facility, a S$27.4 million refinancing facility and a S$1.5 million bankers guarantee. This credit facility was amended on October 16, 2019, to, among other things, provide for a S$5.0 million foreign exchange facility and reduce the S$7.6 million interest rate derivatives facility to S$3.5 million.
On October 16, 2019 and March 18, 2020, we drew down loans of S$10.0 million and S$7.0 million respectively from the advance facility. The facility bears an interest rate of 1.25% per annum over the prevailing cost of funds for the financial institution lender (as determined by the financial institution lender). The loan is repayable on demand.
On April 30, 2020, we entered into a temporary bridging loan agreement with the same financial institution lender and subsequently on July 30, 2020, we drew down a principal amount of S$5.0 million. The facility bears an interest rate of 2.5% per annum. The bank loan is denominated in Singapore dollar with 53 equal monthly repayments commencing on March 1, 2021 and matures on August 1, 2025. No repayment has been made during the year ended December 31, 2020. Bank loans approximate fair value as at end of reporting period.
Interest Rate
Borrowings under our advance facility bear interest at a rate per annum equal to an applicable margin of 1.25% over the prevailing cost of funds for OCBC (as determined by OCBC) for interest periods of up to six months. Borrowings under our refinancing facility bear interest at a rate per annum of 3.0% over the prevailing cost of funds for OCBC.
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Prepayments
The refinancing facility is subject to mandatory prepayment if it becomes illegal for OCBC to perform its obligations pursuant to the facilities agreement dated September 18, 2018, or the Refinancing Facilities Agreement. We may voluntarily repay any outstanding loan under the refinancing facility upon providing OCBC 30 days prior written notice, subject to certain customary requirements such as the prepayments having to be of an amount that reduces our loans by a minimum amount of S$200,000. Prepayments under the advance facility is permitted, subject to payment of break funding costs.
Interest Period and Maturity
Borrowings under the advance facility pursuant to the credit facilities letter agreement are repayable on demand and each advance under the advance facility shall be repaid on its due date or rolled over at OCBCs discretion. Interest periods shall be up to six months in term. Borrowings under the refinancing facility are due in 19 equal quarterly instalments of S$1.52 million and a final repayment of all amounts outstanding under the Refinancing Facilities Agreement 60 months after the utilization of the refinancing facility. The refinancing facility matures 60 months after the utilization of the refinancing facility pursuant to the Refinancing Facilities Agreement.
Guarantee and Security
All of our obligations under the credit facilities letter agreement are secured by a first priority charge on outstanding shares in certain of our operating subsidiaries (TDCX (MY) Sdn. Bhd. (all shares) and TDCX SG (all shares)) a first priority fixed and floating charge over all of TDCX SGs present and future assets, a fixed charge over TDCX SGs accounts receivables, a charge over operating accounts maintained with OCBC, a guarantee and indemnity from TDCX HPL for all monies owed and a guarantee and indemnity from our Founder for all monies owed.
Certain Covenants and Events of Default
Our credit facilities letter agreement contains a number of covenants that, among other things, restrict, subject to certain exceptions, the ability of our restricted subsidiaries, or collectively with TDCX SG, TDCX group, (as applicable) to:
| to incur additional indebtedness and guarantee indebtedness (TDCX group); |
| create or have outstanding any security over present or future property, undertaking, assets or revenue (TDCX group); |
| transfer of all or substantially all of our assets (except for the purpose of a reconstruction, amalgamation or reorganization on terms approved prior to such transfer by OCBC) (TDCX group); |
| remove Laurent Bernard Marie Junique as Chief Executive Officer (TDCX SG); |
| change the general nature of our business (TDCX group); |
| declare dividends in excess of 50% of net profits after tax throughout the tenure of the facilities under the credit facilities letter agreement (TDCX SG); |
| grant loans or make investments (TDCX SG); |
| enter into certain transactions with affiliates (TDCX SG); and |
| seek additional trade and working capital, treasury (including interest hedging and foreign exchange) and/or corporate finance facilities without providing OCBC with a first right to pitch for any of the foregoing (TDCX group). |
Our credit facilities letter agreement contains financial covenants including: (a) tangible net worth of TDCX SG remaining not less than S$16.0 million at all times; (b) for TDCX SG, a maximum ratio of total indebtedness to
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tangible net worth not exceeding 1.5x at all times; (c) tangible net worth of TDCX HPL remaining not less than S$42.0 million at all times; (d) for TDCX HPL, a maximum ratio of total indebtedness to tangible net worth not exceeding 1.5x at all times; and (e) TDCX HPL maintains a consolidated ratio of EBITDA divided by short term debt, current position of long term loan and interest repayments of at least 3.0x at all times.
Notwithstanding the covenants set forth above, in 2019, TDCX SG distributed dividends in excess of 50% of its net profit after tax, in respect of which we received a waiver on March 2, 2020. As a result, as of December 31, 2019, amounts outstanding under this loan are classified as a current liability in our consolidated statement of financial position. On September 2, 2020, the Group has obtained a written waiver of loan covenants to distributed dividends in excess of 50% of its net profit after tax for the period effective from August 1, 2020 to December 31, 2020. The Group was in compliance with its financial covenants for the year ended December 31,
2020.
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We are an exempted company incorporated with limited liability in the Cayman Islands and our affairs are governed by our amended and restated memorandum and articles of association, the Companies Act (as revised) of the Cayman Islands, which we refer to as the Cayman Companies Act, and the common law of the Cayman Islands.
As of the date of this prospectus, our authorized share capital is US$ divided into [(i) ordinary shares, par value US$ each and (ii) convertible preference shares, par value US$ each].
We plan to adopt an amended and restated memorandum and articles of association or post-IPO memorandum and articles of association, which will become effective and replace our current amended and restated memorandum and articles of association in its entirety immediately prior to completion of this offering. Our post-IPO memorandum and articles of association will provide that, upon the completion of this offering, we will have two classes of shares, the Class A ordinary shares and Class B ordinary shares. Our authorized share capital upon completion of the offering will be (i) US$ divided into Class A ordinary shares of a par value of US$ each, (ii) Class B ordinary shares of a par value of US$ each. All issued and outstanding ordinary shares, all outstanding convertible shares and all issued and outstanding convertible preference shares (except ordinary shares held by ) will be automatically converted by way of re-designation and re-classification of existing shares into Class A ordinary shares on a one-for-one basis immediately prior to the completion of the offering. Ordinary shares held by will be automatically converted by way of re-designation and re-classification of existing shares into Class B ordinary shares on a one-for-one basis immediately prior to the completion of the offering.
The following are summaries of certain material provisions of our post-IPO memorandum and articles of association and the Cayman Companies Act insofar as they relate to the material terms of our shares.
Exempted Company
We are an exempted company incorporated with limited liability under the Cayman Companies Act. The Cayman Companies Act distinguishes between ordinary resident companies and exempted companies. Any company that is registered in the Cayman Islands but conducts business mainly outside of the Cayman Islands may apply to be registered as an exempted company. The requirements for an exempted company are essentially the same as for an ordinary resident company except for the exemptions and privileges listed below:
| an exempted company does not have to file an annual return disclosing its shareholders with the Registrar of Companies; |
| an exempted company is not required to open its register of members for public inspection; |
| an exempted company does not have to hold an annual general meeting; |
| an exempted company may obtain an undertaking against the imposition of any future taxation (such undertakings are usually given for 20 years in the first instance); and |
| an exempted company may register by way of continuation in another jurisdiction and be deregistered in the Cayman Islands. |
Ordinary Shares
General
All of our issued and outstanding ordinary shares are fully paid and non-assessable. Upon the completion of this offering, our ordinary shares will be divided into Class A ordinary shares and Class B ordinary shares. Holders of our Class A ordinary shares and Class B ordinary shares will have the same rights except for voting and
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conversion rights. Each Class A ordinary share is entitled to one vote, and each Class B ordinary share is entitled to ten votes and is convertible into one Class A ordinary share. Class A ordinary shares are not convertible into Class B ordinary shares under any circumstances. Our shareholders who are non-residents of the Cayman Islands may freely hold and vote their ordinary shares. Our post-IPO memorandum and articles prohibit us from issuing bearer or negotiable shares. Our company may not issue shares to bearer and our ordinary shares are issued in registered form, which will be issued when registered in our register of members.
Conversion
Each Class B ordinary share is convertible into one Class A ordinary share at any time by the holder thereof. Class A ordinary shares are not convertible into Class B ordinary shares under any circumstances. Each Class B ordinary share will automatically and immediately convert into one Class A ordinary share, upon the following:
| any transfer of beneficial ownership of Class B ordinary shares by a beneficial owner thereof to any person or entity which is not an affiliate of such owner; or |
| Mr. Laurent Bernard Marie Junique beneficially owning, directly or indirectly, in the aggregate less than 10% of the number of total Class A ordinary shares and Class B ordinary shares outstanding from time to time. |
Each conversion of Class B ordinary shares into a Class A ordinary shares in accordance with this provision shall be effected by our Company re-designating and re-classifying the relevant Class B ordinary shares into the relevant number of Class A ordinary shares on a one-for-one basis.
Dividends
The holders of our ordinary shares are entitled to receive such dividends as may be declared by our board of directors subject to our post-IPO memorandum and articles of association and the Cayman Companies Act. In addition, our shareholders may be ordinary resolution declare a dividend, but no dividend may exceed the amount recommended by our board of directors. Under Cayman Islands law, dividends may be paid only out of profits, or out of the share premium account (subject to a solvency test being met on the day immediately following the date that the dividend is paid). No dividend may be declared and paid unless our directors determine that, immediately after the payment, we will be able to pay our debts as they fall due in the ordinary course of business and we have funds lawfully available for such purpose.
Register of Members
Under Cayman Islands law, we must keep a register of members and there must be entered therein:
| the names and addresses of the members, together with a statement of the shares held by each member, and such statement shall confirm (i) the amount paid or agreed to be considered as paid, on the shares of each member, (ii) the number and category of shares held by each member, and (iii) whether each relevant category of shares held by a member carries voting rights under the articles of association of the company, and if so, whether such voting rights are conditional; |
| the date on which the name of any person was entered on the register as a member; and |
| the date on which any person ceased to be a member. |
Under Cayman Islands law, the register of members of our Company is prima facie evidence of the matters set out therein (i.e., the register of members will raise a presumption of fact on the matters referred to above unless rebutted) and a member registered in the register of members will be deemed as a matter of Cayman Islands law to have legal title to the shares as set against its name in the register of members. Upon the completion of this offering, our register of members will be immediately updated to record and give effect to the issue of Class A ordinary shares by us to , as the depositary (or its custodian or nominee). Once our register of members has been updated, the shareholders recorded in the register of members shall be deemed to have legal title to the shares set against their name.
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If the name of any person is, without sufficient cause, entered in or omitted from the register of members, or if default is made or unnecessary delay takes place in entering on the register the fact of any person having ceased to be a member, the person or member aggrieved or any member or our Company itself may apply to the Grand Court of the Cayman Islands for an order that the register be rectified, and the Court may either refuse such application or it may, if satisfied of the justice of the case, make an order for the rectification of the register.
Voting Rights
Holders of our ordinary shares have the right to receive notice of, attend, speak and vote at general meetings of our Company. In respect of matters requiring a shareholder vote, each Class A ordinary share will be entitled to one vote and each Class B ordinary share will be entitled to ten votes. Our Class A ordinary shares and Class B ordinary shares shall vote together as a single class on all matters submitted to a vote of our shareholders, except as may otherwise be required by law. At any general meeting a resolution put to the vote of the meeting shall be decided on a show of hands, unless a poll is (before or on the declaration of the result of the show of hands) [demanded by the chairman or one or more shareholder present in person or by proxy entitled to vote]. An ordinary resolution to be passed by the shareholders requires the affirmative vote of a simple majority of the votes cast in a general meeting. A special resolution requires the affirmative vote of no less than two-thirds of the votes cast in a general meeting. [Both ordinary resolutions and special resolutions may also be passed by a unanimous written resolution signed by all the shareholders of our Company, as permitted by the Cayman Companies Act and our post-IPO memorandum and articles of association.] A special resolution will be required for important matters such as a change of name or making changes to our memorandum and articles of association and as required in accordance with the Cayman Companies Act.
General Meetings and Shareholder Proposals
As a Cayman Islands exempted company, we are not obliged by the Cayman Companies Act to call shareholders annual general meetings. Our post-IPO memorandum and articles of association provide that we may (but are not obliged to) in each year hold a general meeting as our annual general meeting in which case we will specify the meeting as such in the notices calling it, and the annual general meeting will be held at such time and place as may be determined by our directors. We, however, will hold an annual shareholders meeting during each fiscal year, as required by the New York Stock Exchange Listed Company Manual.
Cayman Islands law provides limited rights for shareholders to requisition a general meeting. However, additional rights may be provided in a companys articles of association. Our post-IPO amended and restated memorandum and articles of association allow our shareholders holding shares representing in aggregate at least percent of the paid up voting share capital of our Company entitled to vote at general meetings to requisition a shareholders meeting.
A quorum required for a meeting of shareholders consists of one or more shareholders holding, in aggregate, at least a majority of the votes attaching to all paid up share capital of our Company present in person or by proxy or, if a corporation or other non-natural person, by its duly authorized representative. Advance notice of at least seven clear calendar days is required for the convening of our annual general meeting and other shareholders meetings.
Transfer of Ordinary Shares
Subject to the restrictions in our post-IPO memorandum and articles of association, any of our shareholders may transfer all or any of his or her ordinary shares by an instrument of transfer in the usual or common form or any other form approved by our board of directors.
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Our board of directors may, in its absolute discretion, decline to register any transfer of any ordinary share which is not fully paid up or on which we have a lien. Our board of directors may also decline to register any transfer of any ordinary share unless:
| the instrument of transfer is lodged with us, accompanied by the certificate for the ordinary shares to which it relates and such other evidence as our board of directors may reasonably require to show the right of the transferor to make the transfer; |
| the instrument of transfer is in respect of only one class of shares; |
| the instrument of transfer is properly stamped, if required; |
| in the case of a transfer to joint holders, the number of joint holders to whom the ordinary share is to be transferred does not exceed four; and |
| a fee of such maximum sum as the NYSE may determine to be payable or such lesser sum as our board of directors may from time to time require is paid to us in respect thereof. |
If our board of directors refuses to register a transfer it shall, within three calendar months after the date on which the instrument of transfer was lodged, send to each of the transferor and the transferee notice of such refusal.
The registration of transfers may, on 10 calendar days notice being given by advertisement in such one or more newspapers, by electronic means or by any other means in accordance with the NYSE rules, after compliance with any notice required of the NYSE, be suspended and the register closed at such times and for such periods as our board of directors may from time to time determine, provided, however, that the registration of transfers shall not be suspended nor the register closed for more than 30 calendar days in any calendar year.
Issuance of Additional Shares
Our post-IPO memorandum and articles of association authorizes our board of directors to issue additional ordinary shares from time to time as our board of directors shall determine, to the extent of available authorized but unissued shares. Our post-IPO memorandum and articles of association also authorize our board of directors (or our shareholders, by ordinary resolution) to establish from time to time one or more series of preference shares and to determine, with respect to any series of preference shares, the terms and rights of that series, including:
| the designation of the series; |
| the number of shares of the series; |
| the dividend rights, dividend rates, conversion rights, voting rights; and |
| the rights and terms of redemption and liquidation preferences, |
provided that should the creation of any such new class or series of shares have the effect of materially adversely varying the rights of our existing classes of shares, then the separate approval of such affected existing classes would be required.
Our board of directors may issue preference shares without further action by our shareholders to the extent authorized but unissued. Issuance of these shares may dilute the voting power of holders of ordinary shares.
Liquidation
On the winding up of our Company, if the assets available for distribution amongst our shareholders shall be more than sufficient to repay the whole of the share capital at the commencement of the winding up, the surplus shall be distributed amongst our shareholders pro rata in proportion to the par value of the shares held by them at the commencement of the winding up, subject to a deduction from those shares in respect of which there are
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monies due, of all monies payable to our Company for unpaid calls or otherwise. If our assets available for distribution are insufficient to repay all of the paid-up capital, the assets will be distributed so that the losses are borne by our shareholders in proportion to the par value of the shares held by them. [Any distribution of assets or capital to a holder of Class A Ordinary Shares and a holder of Class B Ordinary Shares will be the same in any liquidation event.] We are an exempted company incorporated under the Cayman Companies Act with limited liability, and under the Cayman Companies Act, the liability of our members is limited to the amount, if any, unpaid on the shares respectively held by them. Our post-IPO memorandum and articles of association contains a declaration that the liability of our members is so limited.
Calls on Ordinary Shares and Forfeiture of Ordinary Shares
Our board of directors may from time to time make calls upon shareholders for any amounts unpaid on their ordinary shares in a notice served to such shareholders at least fourteen calendar days prior to the specified time and place of payment. The ordinary shares that have been called upon and remain unpaid on the specified time are subject to forfeiture.
Redemption, Repurchase and Surrender of Ordinary Shares
We may issue shares on terms that such shares are subject to redemption, at our option or at the option of the holders thereof, on such terms and in such manner as may be determined, before the issue of such shares, by our board of directors or by a special resolution of our shareholders. Our company may also repurchase any of our shares provided that the manner and terms of such purchase have been approved by our board of directors or by ordinary resolution of our shareholders, or are otherwise authorized by our post-IPO memorandum and articles of association. The premium (if any) payable in respect of any shares being redeemed or purchased may be paid out of profits of our Company, out of the share premium account or out of the proceeds of a fresh issue of shares made for the purposes of the redemption or purchase. Alternatively, as authorized under our post-IPO memorandum & articles of association, our Company may make a payment in respect of the redemption or purchase of its own shares out of capital provided that immediately following the date on which the payment out of capital is proposed to be made, our Company shall be able to pay its debts as they fall due in the ordinary course of business. In addition, under the Cayman Companies Act no such share may be redeemed or repurchased (a) unless it is fully paid up, (b) if such redemption or repurchase would result in there being no issued shares outstanding, or (c) if the Company has commenced liquidation. In addition, our Company may accept the surrender of any fully paid share for no consideration.
Variation of Rights of Shares
All or any of the rights attached to any class of shares may, unless otherwise provided by the terms of issue of the shares of or the rights attaching to that class, be materially adversely varied with the unanimous consent in writing of the holders of the issued shares of the relevant class or with the sanction of a resolution passed at a separate meeting of the holders of the shares of such class by a majority of two-thirds of the votes cast at such a meeting.
The rights conferred upon the holders of the shares of any class issued with preferred or other rights shall not, subject to any rights or restrictions for the time being attached to the shares of that class, be deemed to be materially adversely varied by, inter alia, the creation, allotment or issue of further shares ranking pari passu with or subsequent to them or the redemption or purchase of any shares of any class by the Company. The rights of the holders of shares shall not be deemed to be materially adversely varied by the creation or issue of shares with preferred or other rights including, without limitation, the creation of shares with enhanced or weighted voting rights.
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Inspection of Books and Records
Holders of our ordinary shares will have no general right under Cayman Islands law to inspect or obtain copies of our register of members or our corporate records (other than our memorandum and articles of association and register of mortgages and charges).
Changes in Capital
Our shareholders may from time to time by ordinary resolutions:
| increase the share capital by such sum, to be divided into shares of such classes and amount, as the resolution prescribes; |
| consolidate and divide all or any of our share capital into shares of a larger amount than our existing shares; |
| convert all or any of its paid up shares into stock and reconvert the stock into paid up shares of any denomination; |
| sub-divide our existing shares, or any of them into shares of a smaller amount than that fixed by our post-IPO memorandum of association, provided that in the subdivision the proportion between the amount paid and the amount, if any, unpaid on each reduced share will be the same as it was in case of the share from which the reduced share is derived; and |
| cancel any shares which, at the date of the passing of the resolution, have not been taken or agreed to be taken by any person and diminish the amount of our share capital by the amount of the shares so canceled. |
Our shareholders may by special resolution reduce our share capital and any capital redemption reserve in any manner authorized by law.
History of Securities Issuances
The following is a summary of our securities issuances in the past three years.
Ordinary Shares
On , 2021, we completed a share split pursuant to which each ordinary share was sub-divided into ordinary shares, resulting in an increase in the number of issued ordinary shares from ordinary shares to ordinary shares.
On 2021, we reclassified ordinary shares as Class A ordinary shares and ordinary shares as Class B ordinary shares.
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CERTAIN CAYMAN ISLANDS COMPANY CONSIDERATIONS
We are an exempted company incorporated under the laws of the Cayman Islands. The following discussion summarizes material differences between the rights of holders of our ordinary shares and the rights of holders of the common stock of a typical corporation incorporated under the laws of the State of Delaware which result from differences in the laws of the Cayman Islands and Delaware.
This discussion does not purport to be a complete statement of the rights of holders of our ordinary shares under applicable law in the Cayman Islands or the rights of holders of the common stock of a typical corporation under applicable Delaware law.
Our corporate affairs are governed by our memorandum and articles of association, as we expect them to be amended and restated with effect upon completion of this offering, by the Companies Act of the Cayman Islands and the common law of the Cayman Islands. We cannot predict whether Cayman Islands courts would reach the same conclusions as Delaware or other courts in the United States. Accordingly, you may have more difficulty in protecting your interests under Cayman Islands law in the face of actions by our management, directors or controlling shareholder than would shareholders of a corporation incorporated in a U.S. jurisdiction that has developed a substantial body of case law.
Differences in Corporate Law
The Companies Act is modeled after that of English law but does not follow recent statutory enactments in England. In addition, the Companies Act differs from laws applicable to U.S. corporations and their shareholders. Set forth below is a summary of the significant differences between the provisions of the Companies Act applicable to us and the laws applicable to companies incorporated in the State of Delaware.
Mergers and Similar Arrangements
The Companies Act permits mergers and consolidations between Cayman Islands companies and between Cayman Islands companies and non-Cayman Islands companies. For these purposes, (a) merger means the merging of two or more constituent companies and the vesting of their undertaking, property and liabilities in one of such companies as the surviving company, and (b) a consolidation means the combination of two or more constituent companies into a consolidated company and the vesting of the undertaking, property and liabilities of such companies to the consolidated company.
In order to effect such a merger or consolidation, the directors of each constituent company must approve a written plan of merger or consolidation, which must then be authorized by (a) a special resolution of the shareholders of each constituent company, and (b) such other authorization, if any, as may be specified in such constituent companys articles of association.
In order to effect such a merger or consolidation, Cayman Islands law requires a written plan of merger or consolidation to be approved by the directors of each constituent company and authorization by (a) a special resolution of the shareholders of each constituent company and (b) such other authorization, if any, as may be specified in such constituent companys articles of association.
A merger between a Cayman parent company and its Cayman subsidiary or subsidiaries does not require authorization by a resolution of shareholders of that Cayman subsidiary if a copy of the plan of merger is given to every member of that Cayman subsidiary to be merged unless that member agrees otherwise. For this purpose a subsidiary is a company of which at least ninety percent (90%) of the issued shares entitled to vote are owned by the parent company.
The consent of each holder of a fixed or floating security interest over a constituent company is required unless this requirement is waived by a court in the Cayman Islands.
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The written plan of merger or consolidation must be filed with the Registrar of Companies in the Cayman Islands together with a declaration as to the solvency of the consolidated or surviving company, a declaration as to the assets and liabilities of each constituent company and an undertaking that a copy of the certificate of merger or consolidation will be given to the members and creditors of each constituent company and that notification of the merger and consolidation will be published in the Cayman Islands Gazette. Save in certain circumstances, a dissenting shareholder of a Cayman constituent company is entitled to payment of the fair value of his shares upon dissenting to a merger or consolidation. The fair value of the shares will be determined by the Cayman Islands court if it cannot be agreed among the parties. The exercise of dissenter rights will preclude the exercise by the dissenting shareholder of any other rights to which he or she might otherwise be entitled by virtue of holding shares, save for the right to seek relief on the grounds that the merger or consolidation is void or unlawful. Court approval is not required for a merger or consolidation effected in compliance with these statutory procedures.
In addition, there are statutory provisions that facilitate the reconstruction and amalgamation of companies, by way of schemes of arrangement, provided that the arrangement is approved by a majority in number of each class of shareholders and creditors with whom the arrangement is to be made, and who must in addition represent three-fourths in value of each such class of shareholders or creditors, as the case may be, that are present and voting either in person or by proxy at a meeting, or meetings, convened for that purpose. The convening of the meetings and subsequently the arrangement must be sanctioned by the Grand Court of the Cayman Islands. While a dissenting shareholder has the right to express to the court the view that the transaction ought not to be approved, the court can be expected to approve the arrangement if it determines that:
| the statutory provisions as to the required majority vote have been met; |
| the shareholders have been fairly represented at the meeting in question and the statutory majority are acting bona fide without coercion of the minority to promote interests adverse to those of the class; |
| the arrangement is such that may be reasonably approved by an intelligent and honest man of that class acting in respect of his interest; and |
| the arrangement is not one that would more properly be sanctioned under some other provision of the Companies Act. |
Alternatively, Cayman Islands law also contains a statutory power of compulsory acquisition which may facilitate the squeeze out of dissentient minority shareholder upon a takeover offer. When a takeover offer is made and accepted by holders of 90.0% of the shares affected within four months, the offeror may, within a two-month period commencing on the expiration of such four month period, require the holders of the remaining shares to transfer such shares to the offeror on the terms of the offer. An objection can be made to the Grand Court of the Cayman Islands but this is unlikely to succeed in the case of an offer which has been so approved unless there is evidence of fraud, bad faith or collusion.
If an arrangement and reconstruction by way of scheme of arrangement is thus approved, or if a takeover offer is made and accepted in accordance with the foregoing statutory procedures, the dissenting shareholder would have no rights comparable to appraisal rights, save that objectors to a takeover offer may apply to the Grand Court of the Cayman Islands for various orders that the Grand Court of the Cayman Islands has a broad discretion to make, which would otherwise ordinarily be available to dissenting shareholders of Delaware corporations, providing rights to receive payment in cash for the judicially determined value of the shares.
Shareholders Suits
Derivative actions have been brought in the Cayman Islands courts. In principle, the Company will be the proper plaintiff in any claim based on a breach of duty owed to it, and a claim against (for example) the Companys officers or directors usually may not be brought by a shareholder. However, based on English authorities, which would in all likelihood be of persuasive authority and be applied by a court in the Cayman Islands, the Cayman
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Islands courts can be expected (and have had occasion) to follow and apply the common law principles (namely the rule in Foss v. Harbottle and the exceptions thereto) which permit a minority shareholder to commence a class action against, or derivative actions in the name of our Company when:
| a company acts or proposes to act illegally or ultra vires and is therefore incapable of ratification by the shareholders; |
| the act complained of, although not ultra vires, could only be effected duly if authorized by more than a simple majority vote that has not been obtained; and |
| those who control the Company are perpetrating a fraud on the minority. |
A shareholder may have a direct right of action against the Company where the individual rights of that shareholder have been infringed or are about to be infringed.
Indemnification of Directors and Executive Officers and Limitation of Liability
Cayman Islands law does not limit the extent to which a companys memorandum and articles of association may provide for indemnification of officers and directors, except to the extent any such provision may be held by the Cayman Islands courts to be contrary to public policy, such as to provide indemnification against civil fraud or the consequences of committing a crime. Our post-offering amended and restated memorandum and articles of association, which will become effective immediately upon the completion of this offering, will permit, to the fullest extent permissible under Cayman Islands law, indemnification of our officers and directors against all actions, proceedings, costs, charges, expenses, losses, damages or liabilities incurred or sustained by them, other than by reason of their own dishonesty, willful default or fraud, in connection with the execution or discharge of their duties, powers, authorities or discretion as directors or officers of our Company, including without prejudice to the generality of the foregoing, any costs, expenses, losses or liabilities incurred by them in defending (whether successfully or otherwise) any civil proceedings concerning our Company or its affairs in any court whether in the Cayman Islands or elsewhere. This standard of conduct is generally the same as permitted under the Delaware General Corporation Law for a Delaware corporation. In addition, we have entered into indemnification agreements with our directors and executive officers that provide such persons with additional indemnification beyond that provided in our post-offering amended and restated memorandum and articles of association.
Insofar as indemnification for liabilities arising under the Securities Act may be permitted to our directors, officers or persons controlling us under the foregoing provisions, we have been informed that in the opinion of the SEC, such indemnification is against public policy as expressed in the Securities Act and is therefore unenforceable.
Directors Fiduciary Duties
Under Delaware corporate law, a director of a Delaware corporation has a fiduciary duty to the corporation and its shareholders. This duty has two components: the duty of care and the duty of loyalty. The duty of care requires that a director act in good faith, with the care that an ordinarily prudent person would exercise under similar circumstances. Under this duty, a director must inform himself of, and disclose to shareholders, all material information reasonably available regarding a significant transaction. The duty of loyalty requires that a director acts in a manner he reasonably believes to be in the best interests of the corporation. He must not use his corporate position for personal gain or advantage. This duty prohibits self-dealing by a director and mandates that the best interest of the corporation and its shareholders take precedence over any interest possessed by a director, officer or controlling shareholder and not shared by the shareholders generally. In general, actions of a director are presumed to have been made on an informed basis, in good faith and in the honest belief that the action taken was in the best interests of the corporation. However, this presumption may be rebutted by evidence of a breach of one of the fiduciary duties. Should such evidence be presented concerning a transaction by a director, the director must prove the procedural fairness of the transaction, and that the transaction was of fair value to the corporation.
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As a matter of Cayman Islands law, a director of a Cayman Islands company is in the position of a fiduciary with respect to the Company and therefore it is considered that he or she owes the following duties to the Company: a duty to act bona fide in the best interests of the Company; a duty not to make a personal profit based on his or her position as director (unless the Company permits him or her to do so) and a duty not to put himself or herself in a position where the interests of the Company conflict with his or her personal interest or his or her duty to a third party. A director of a Cayman Islands company owes to the Company a duty to act with skill and care. It was previously considered that a director need not exhibit in the performance of his or her duties a greater degree of skill than may reasonably be expected from a person of his or her knowledge and experience. However, English and Commonwealth courts have moved towards an objective standard with regard to the required skill and care and these authorities are likely to be followed in the Cayman Islands.
[Under our post-offering amended and restated memorandum and articles of association, directors who are in any way, whether directly or indirectly, interested in a contract or proposed contract with our Company must declare the nature of their interest at a meeting of the board of directors. Following such declaration, a director may vote in respect of any contract or proposed contract notwithstanding his or her interest.]
Shareholder Action by Written Consent
Under the Delaware General Corporation Law, a corporation may eliminate the right of shareholders to act by written consent by amendment to its certificate of incorporation. [Cayman Islands law and our post-offering amended and restated articles of association provide that shareholders may not approve corporate matters by way of a unanimous written resolution signed by or on behalf of each shareholder.]
Shareholder Proposals
Under the Delaware General Corporation Law, a shareholder has the right to put any proposal before the annual meeting of shareholders, provided it complies with the notice provisions in the governing documents. A special meeting may be called by the board of directors or any other person authorized to do so in the governing documents, but shareholders may be precluded from calling special meetings.
Cayman Islands law does not provide shareholders any right to put a proposal before a meeting or requisition a general meeting. However, these rights may be provided in a companys articles of association. Our post-offering amended and restated articles of association allow our shareholders holding not less than one-third of all voting power of our share capital in issue to requisition a shareholders meeting, in which case our board of directors will be obliged to convene an extraordinary general meeting and put the resolutions so requisitioned to a vote at such meeting. Other than this right to requisition a shareholders meeting, our post-offering amended and restated articles of association do not provide our shareholders any other right to put a proposal before a shareholders general meeting. As an exempted company in the Cayman Islands, we are not obliged by law to call shareholders annual general meetings.
Cumulative Voting
Under the Delaware General Corporation Law, cumulative voting for elections of directors is not permitted unless the corporations certificate of incorporation specifically provides for it. Cumulative voting potentially facilitates the representation of minority shareholders on a board of directors since it permits the minority shareholder to cast all the votes to which the shareholder is entitled on a single director, which increases the shareholders voting power with respect to electing such director. There are no prohibitions in relation to cumulative voting under the laws of the Cayman Islands but our post-offering amended and restated articles of association do not provide for cumulative voting. As a result, our shareholders are not afforded any less protections or rights on this issue than shareholders of a Delaware corporation.
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Removal of Directors
Under the Delaware General Corporation Law, a director of a corporation with a classified board may be removed only for cause with the approval of a majority of the outstanding shares entitled to vote, unless the certificate of incorporation provides otherwise. Under our post-offering amended and restated articles of association, directors may be removed with or without cause, by an ordinary resolution of our shareholders. An appointment of a director may be on terms that the director shall automatically retire from office (unless he has sooner vacated office) at the next or a subsequent annual general meeting or upon any specified event or after any specified period in a written agreement between the Company and the director, if any; but no such term shall be implied in the absence of express provision. In addition, a directors office shall be vacated if the director (i) becomes bankrupt or makes any arrangement or composition with his creditors; (ii) is found to be or becomes of unsound mind or dies; (iii) resigns his office by notice in writing to the Company; (iv) without special leave of absence from our board of directors, is absent from three consecutive meetings of the board of directors and the board of directors resolves that his office be vacated or, (v) is removed from office pursuant to any other provisions of our post-offering amended and restated articles of association.
Transactions with Interested Shareholders
The Delaware General Corporation Law contains a business combination statute applicable to Delaware corporations whereby, unless the corporation has specifically elected not to be governed by such statute by amendment to its certificate of incorporation, it is prohibited from engaging in certain business combinations with an interested shareholder for three years following the date that such person becomes an interested shareholder. An interested shareholder generally is a person or a group who or which owns or owned 15% or more of the targets outstanding voting share within the past three years. This has the effect of limiting the ability of a potential acquirer to make a two-tiered bid for the target in which all shareholders would not be treated equally. The statute does not apply if, among other things, prior to the date on which such shareholder becomes an interested shareholder, the board of directors approves either the business combination or the transaction which resulted in the person becoming an interested shareholder. This encourages any potential acquirer of a Delaware corporation to negotiate the terms of any acquisition transaction with the targets board of directors.
Cayman Islands law has no comparable statute. As a result, we cannot avail ourselves of the types of protections afforded by the Delaware business combination statute. However, although Cayman Islands law does not regulate transactions between a company and its significant shareholders, it does provide that such transactions must be entered into bona fide in the best interests of the Company and not with the effect of constituting a fraud on the minority shareholders.
Dissolution and Winding up
Under the Delaware General Corporation Law, unless the board of directors approves the proposal to dissolve, dissolution must be approved by shareholders holding 100% of the total voting power of the corporation. Only if the dissolution is initiated by the board of directors may it be approved by a simple majority of the corporations outstanding shares. Delaware law allows a Delaware corporation to include in its certificate of incorporation a supermajority voting requirement in connection with dissolutions initiated by the board. Under Cayman Islands law, a company may be wound up either compulsorily by an order of the courts of the Cayman Islands or voluntarily, by a special resolution of its members or on the occurrence of an event or expiry of period specified in its articles of association, or, if the Company is unable to pay its debts as they fall due, by an ordinary resolution of its members. The court has authority to order winding up in a number of specified circumstances including where it is, in the opinion of the court, just and equitable to do so. Under the Companies Act and our post-offering amended and restated articles of association, our Company may commence winding up upon the passing of a special resolution of our shareholders.
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Variation of Rights of Shares
Under the Delaware General Corporation Law, a corporation may vary the rights of a class of shares with the approval of a majority of the outstanding shares of such class, unless the certificate of incorporation provides otherwise. Under Cayman Islands law and our post-offering amended and restated articles of association, as our share capital is divided into more than one class of shares, we may vary the rights attached to any class with the written consent of the holders of a majority of the issued shares of that class or with the sanction of an ordinary resolution passed at a general meeting of the holders of the shares of that class.
Amendment of Governing Documents
Under the Delaware General Corporation Law, a corporations governing documents may be amended with the approval of a majority of the outstanding shares entitled to vote, unless the certificate of incorporation provides otherwise. As permitted by Cayman Islands law, our post-offering amended and restated memorandum and articles of association may only be amended with a special resolution of our shareholders.
Rights of Non-resident or Foreign Shareholders
There are no limitations imposed by our post-offering amended and restated memorandum and articles of association on the rights of non-resident or foreign shareholders to hold or exercise voting rights on our shares. In addition, there are no provisions in our post-offering amended and restated memorandum and articles of association that require our company to disclose shareholder ownership above any particular ownership threshold.
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DESCRIPTION OF AMERICAN DEPOSITARY SHARES
American Depositary Shares
, as depositary, will register and deliver the ADSs. Each ADS will represent ownership of Class A ordinary shares, deposited with , as custodian for the depositary. Each ADS will also represent ownership of any other securities, cash or other property which may be held by the depositary. The depositarys corporate trust office at which the ADSs will be administered is located at . The principal executive office of the depositary is located at .
The Direct Registration System, or DRS, is a system administered by The Depository Trust Company, or DTC, pursuant to which the depositary may register the ownership of uncertificated ADSs, which ownership shall be evidenced by periodic statements issued by the depositary to the ADS holders entitled thereto.
We will not treat ADS holders as our shareholders and accordingly, you, as an ADS holder, will not have shareholder rights. Cayman Islands law governs shareholder rights. The depositary will be the holder of the Class A ordinary shares underlying your ADSs. As a holder of ADSs, you will have ADS holder rights. A deposit agreement among us, the depositary and you, as an ADS holder, and the beneficial owners of ADSs sets out ADS holder rights as well as the rights and obligations of the depositary. The laws of the State of New York govern the deposit agreement and the ADSs.
The following is a summary of the material provisions of the deposit agreement. For more complete information, you should read the entire deposit agreement and the form of American Depositary Receipt. For directions on how to obtain copies of those documents, see Where You Can Find More Information.
Holding the ADSs
How will you hold your ADSs?
You may hold ADSs either (1) directly (a) by having an American Depositary Receipt, or ADR, which is a certificate evidencing a specific number of ADSs, registered in your name, or (b) by holding ADSs in DRS, or (2) indirectly through your broker or other financial institution. If you hold ADSs directly, you are an ADS holder. This description assumes you hold your ADSs directly. ADSs will be issued through DRS, unless you specifically request certificated ADRs. If you hold the ADSs indirectly, you must rely on the procedures of your broker or other financial institution to assert the rights of ADS holders described in this section. You should consult with your broker or financial institution to find out what those procedures are.
Dividends and Other Distributions
How will you receive dividends and other distributions on the shares?
The depositary has agreed to pay to you the cash dividends or other distributions it or the custodian receives on Class A ordinary shares or other deposited securities, after deducting its fees and expenses. You will receive these distributions in proportion to the number of Class A ordinary shares your ADSs represent as of the record date (which will be as close as practicable to the record date for our Class A ordinary shares) set by the depositary with respect to the ADSs.
| Cash. The depositary will convert or cause to be converted any cash dividend or other cash distribution we pay on the Class A ordinary shares or any net proceeds from the sale of any Class A ordinary shares, rights, securities or other entitlements under the terms of the deposit agreement into U.S. dollars if it can do so on a practicable basis, and can transfer the U.S. dollars to the United States and will distribute promptly the amount thus received. If the depositary shall determine in its judgment that such conversions or transfers are not practical or lawful or if any government approval or license is needed and cannot be obtained at a reasonable cost within a reasonable period or otherwise sought, the deposit |
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agreement allows the depositary to distribute the foreign currency only to those ADS holders to whom it is possible to do so. It will hold or cause the custodian to hold the foreign currency it cannot convert for the account of the ADS holders who have not been paid and such funds will be held for the respective accounts of the ADS holders. It will not invest the foreign currency and it will not be liable for any interest for the respective accounts of the ADS holders. |
| Before making a distribution, any taxes or other governmental charges, together with fees and expenses of the depositary, that must be paid, will be deducted. See Material Tax Considerations. It will distribute only whole U.S. dollars and cents and will round down fractional cents to the nearest whole cent. If the exchange rates fluctuate during a time when the depositary cannot convert the foreign currency, you may lose some or all of the value of the distribution. |
| Shares. For any Class A ordinary shares we distribute as a dividend or free distribution, either (1) the depositary will distribute additional ADSs representing such Class A ordinary shares or (2) existing ADSs as of the applicable record date will represent rights and interests in the additional Class A ordinary shares distributed, to the extent reasonably practicable and permissible under law, in either case, net of applicable fees, charges and expenses incurred by the depositary and taxes and/or other governmental charges. The depositary will only distribute whole ADSs. It will try to sell Class A ordinary shares which would require it to deliver a fractional ADS and distribute the net proceeds in the same way as it does with cash. The depositary may sell a portion of the distributed Class A ordinary shares sufficient to pay its fees and expenses, and any taxes and governmental charges, in connection with that distribution. |
| Elective Distributions in Cash or Shares. If we offer holders of our Class A ordinary shares the option to receive dividends in either cash or shares, the depositary, after consultation with us and having received timely notice as described in the deposit agreement of such elective distribution by us, has discretion to determine to what extent such elective distribution will be made available to you as a holder of the ADSs. We must timely first instruct the depositary to make such elective distribution available to you and furnish it with satisfactory evidence that it is legal to do so. The depositary could decide it is not legal or reasonably practicable to make such elective distribution available to you. In such case, the depositary shall, on the basis of the same determination as is made in respect of the Class A ordinary shares for which no election is made, distribute either cash in the same way as it does in a cash distribution, or additional ADSs representing Class A ordinary shares in the same way as it does in a share distribution. The depositary is not obligated to make available to you a method to receive the elective dividend in shares rather than in ADSs. There can be no assurance that you will be given the opportunity to receive elective distributions on the same terms and conditions as the holders of Class A ordinary shares. |
| Rights to Purchase Additional Shares. If we offer holders of our Class A ordinary shares any rights to subscribe for additional shares, the depositary shall having received timely notice as described in the deposit agreement of such distribution by us, consult with us, and we must determine whether it is lawful and reasonably practicable to make these rights available to you. We must first instruct the depositary to make such rights available to you and furnish the depositary with satisfactory evidence that it is legal to do so. If the depositary decides it is not legal or reasonably practicable to make the rights available but that it is lawful and reasonably practicable to sell the rights, the depositary will endeavor to sell the rights and in a riskless principal capacity or otherwise, at such place and upon such terms (including public or private sale) as it may deem proper distribute the net proceeds in the same way as it does with cash. The depositary will allow rights that are not distributed or sold to lapse. In that case, you will receive no value for them. |
| If the depositary makes rights available to you, it will establish procedures to distribute such rights and enable you to exercise the rights upon your payment of applicable fees, charges and expenses incurred by the depositary and taxes and/or other governmental charges. The depositary shall not be obliged to make available to you a method to exercise such rights to subscribe for Class A ordinary shares (rather than ADSs). |
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| U.S. securities laws may restrict transfers and cancellation of the ADSs represented by shares purchased upon exercise of rights. For example, you may not be able to trade these ADSs freely in the United States. In this case, the depositary may deliver restricted depositary shares that have the same terms as the ADSs described in this section except for changes needed to put the necessary restrictions in place. |
| There can be no assurance that you will be given the opportunity to exercise rights on the same terms and conditions as the holders of Class A ordinary shares or be able to exercise such rights. |
| Other Distributions. Subject to receipt of timely notice, as described in the deposit agreement, from us with the request to make any such distribution available to you, and provided the depositary has determined such distribution is lawful and reasonably practicable and feasible and in accordance with the terms of the deposit agreement, the depositary will distribute to you anything else we distribute on deposited securities by any means it may deem practicable, upon your payment of applicable fees, charges and expenses incurred by the depositary and taxes and/or other governmental charges. If any of the conditions above are not met, the depositary will endeavor to sell, or cause to be sold, what we distributed and distribute the net proceeds in the same way as it does with cash; or, if it is unable to sell such property, the depositary may dispose of such property in any way it deems reasonably practicable under the circumstances for nominal or no consideration, such that you may have no rights to or arising from such property. |
The depositary is not responsible if it decides that it is unlawful or impractical to make a distribution available to any ADS holders. We have no obligation to register ADSs, shares, rights or other securities under the Securities Act. We also have no obligation to take any other action to permit the distribution of ADSs, shares, rights or anything else to ADS holders. This means that you may not receive the distributions we make on our shares or any value for them if we and/or the depositary determines that it is illegal or not practicable for us or the depositary to make them available to you.
Deposit, Withdrawal and Cancellation
How are ADSs issued?
The depositary will deliver ADSs if you or your broker deposit Class A ordinary shares or evidence of rights to receive Class A ordinary shares with the custodian. Upon payment of its fees and expenses and of any taxes or charges, such as stamp taxes or stock transfer taxes or fees, the depositary will register the appropriate number of ADSs in the names you request and will deliver the ADSs to or upon the order of the person or persons entitled thereto.
Except for Class A ordinary shares deposited by us in connection with this offering, no shares will be accepted for deposit during a period of 180 days after the date of this prospectus. The 180 day lock up period is subject to adjustment under certain circumstances as described in the section entitled Shares Eligible for Future SalesLock-up Agreements.
How do ADS holders cancel an American Depositary Share?
You may turn in your ADSs at the depositarys corporate trust office or by providing appropriate instructions to your broker. Upon payment of its fees and expenses and of any taxes or charges, such as stamp taxes or stock transfer taxes or fees, the depositary will deliver the Class A ordinary shares and any other deposited securities underlying the ADSs to you or a person you designate at the office of the custodian. Or, at your request, risk and expense, the depositary will deliver the deposited securities at its corporate trust office, to the extent permitted by law.
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How do ADS holders interchange between Certificated ADSs and Uncertificated ADSs?
You may surrender your ADR to the depositary for the purpose of exchanging your ADR for uncertificated ADSs. The depositary will cancel that ADR and will send you a statement confirming that you are the owner of uncertificated ADSs. Alternatively, upon receipt by the depositary of a proper instruction from a holder of uncertificated ADSs requesting the exchange of uncertificated ADSs for certificated ADSs, the depositary will execute and deliver to you an ADR evidencing those ADSs.
Voting Rights
How do you vote?
You may instruct the depositary to vote the Class A ordinary shares or other deposited securities underlying your ADSs at any meeting at which you are entitled to vote pursuant to any applicable law, the provisions of our memorandum and articles of association, and the provisions of or governing the deposited securities. Otherwise, you could exercise your right to vote directly if you withdraw the Class A ordinary shares. However, you may not know about the meeting sufficiently enough in advance to withdraw the Class A ordinary shares.
If we ask for your instructions and upon timely notice from us by regular, ordinary mail delivery, or by electronic transmission, as described in the deposit agreement, the depositary will notify you of the upcoming meeting at which you are entitled to vote pursuant to any applicable law, the provisions of our memorandum and articles of association, and the provisions of or governing the deposited securities, and arrange to deliver our voting materials to you. The materials will include or reproduce (a) such notice of meeting or solicitation of consents or proxies; (b) a statement that the ADS holders at the close of business on the ADS record date will be entitled, subject to any applicable law, the provisions of our memorandum and articles of association, and the provisions of or governing the deposited securities, to instruct the depositary as to the exercise of the voting rights, if any, pertaining to the Class A ordinary shares or other deposited securities represented by such holders ADSs; and (c) a brief statement as to the manner in which such instructions may be given. Voting instructions may be given only in respect of a number of ADSs representing an integral number of Class A ordinary shares or other deposited securities. For instructions to be valid, the depositary must receive them in writing on or before the date specified. The depositary will try, as far as practical, subject to applicable law and the provisions of our memorandum and articles of association, to vote or to have its agents vote the Class A ordinary shares or other deposited securities (in person or by proxy) as you instruct. The depositary will only vote or attempt to vote as you instruct.
We cannot assure you that you will receive the voting materials in time to ensure that you can instruct the depositary to vote the Class A ordinary shares underlying your ADSs. In addition, there can be no assurance that ADS holders and beneficial owners generally, or any holder or beneficial owner in particular, will be given the opportunity to vote or cause the custodian to vote on the same terms and conditions as the holders of our Class A ordinary shares.
The depositary and its agents are not responsible for failing to carry out voting instructions or for the manner of carrying out voting instructions. This means that you may not be able to exercise your right to vote and you may have no recourse if the Class A ordinary shares underlying your ADSs are not voted as you requested.
In order to give you a reasonable opportunity to instruct the depositary as to the exercise of voting rights relating to deposited securities, if we request the depositary to act, we will give the depositary notice of any such meeting and details concerning the matters to be voted at least days in advance of the meeting date.
Compliance with Regulations
Information Requests
Each ADS holder and beneficial owner shall (a) provide such information as we or the depositary may request pursuant to law, including, without limitation, relevant Cayman Islands law, any applicable law of the United
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States, our memorandum and articles of association, any resolutions of our Board of Directors adopted pursuant to such memorandum and articles of association, the requirements of any markets or exchanges upon which the Class A ordinary shares, ADSs or ADRs are listed or traded, or to any requirements of any electronic book-entry system by which the ADSs or ADRs may be transferred, regarding the capacity in which they own or owned ADRs, the identity of any other persons then or previously interested in such ADRs and the nature of such interest, and any other applicable matters, and (b) be bound by and subject to applicable provisions of the laws of the Cayman Islands, our memorandum and articles of association, and the requirements of any markets or exchanges upon which the ADSs, ADRs or Class A ordinary shares are listed or traded, or pursuant to any requirements of any electronic book-entry system by which the ADSs, ADRs or Class A ordinary shares may be transferred, to the same extent as if such ADS holder or beneficial owner held Class A ordinary shares directly, in each case irrespective of whether or not they are ADS holders or beneficial owners at the time such request is made.
Disclosure of Interests
Each ADS holder and beneficial owner shall comply with our requests pursuant to Cayman Islands law, the rules and requirements of the NYSE and any other stock exchange on which the Class A ordinary shares are, or will be, registered, traded or listed or our memorandum and articles of association, which requests are made to provide information, inter alia, as to the capacity in which such ADS holder or beneficial owner owns ADS and regarding the identity of any other person interested in such ADS and the nature of such interest and various other matters, whether or not they are ADS holders or beneficial owners at the time of such requests.
Fees and Expenses
As an ADS holder, you will be required to pay the following service fees to the depositary bank and certain taxes and governmental charges (in addition to any applicable fees, expenses, taxes and other governmental charges payable on the deposited securities represented by any of your ADSs):
Service |
Fees | |
To any person to which ADSs are issued or to any person to which a distribution is made in respect of ADS distributions pursuant to stock dividends or other free distributions of stock, bonus distributions, stock splits or other distributions (except where converted to cash) | Up to US$0.05 per ADS issued | |
Cancellation of ADSs, including the case of termination of the deposit agreement | Up to US$0.05 per ADS cancelled | |
Distribution of cash dividends | Up to US$0.05 per ADS held | |
Distribution of cash entitlements (other than cash dividends) and/or cash proceeds from the sale of rights, securities and other entitlements | Up to US$0.05 per ADS held | |
Distribution of ADSs pursuant to exercise of rights | Up to US$0.05 per ADS held | |
Distribution of securities other than ADSs or rights to purchase additional ADSs | Up to US$0.05 per ADS held | |
Depositary services | Up to US$0.05 per ADS held on the applicable record date(s) established by the depositary bank |
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As an ADS holder, you will also be responsible to pay certain fees and expenses incurred by the depositary bank and certain taxes and governmental charges (in addition to any applicable fees, expenses, taxes and other governmental charges payable on the deposited securities represented by any of your ADSs) such as:
| Fees for the transfer and registration of Class A ordinary shares charged by the registrar and transfer agent for the Class A ordinary shares in the Cayman Islands (i.e., upon deposit and withdrawal of Class A ordinary shares). |
| Expenses incurred for converting foreign currency into U.S. dollars. |
| Expenses for cable, telex and fax transmissions and for delivery of securities. |
| Taxes and duties upon the transfer of securities, including any applicable stamp duties, any stock transfer charges or withholding taxes (i.e., when Class A ordinary shares are deposited or withdrawn from deposit). |
| Fees and expenses incurred in connection with the delivery or servicing of Class A ordinary shares on deposit. |
| Fees and expenses incurred in connection with complying with exchange control regulations and other regulatory requirements applicable to Class A ordinary shares, deposited securities, ADSs and ADRs. |
| Any applicable fees and penalties thereon. |
The depositary fees payable upon the issuance and cancellation of ADSs are typically paid to the depositary bank by the brokers (on behalf of their clients) receiving the newly issued ADSs from the depositary bank and by the brokers (on behalf of their clients) delivering the ADSs to the depositary bank for cancellation. The brokers in turn charge these fees to their clients. Depositary fees payable in connection with distributions of cash or securities to ADS holders and the depositary services fee are charged by the depositary bank to the holders of record of ADSs as of the applicable ADS record date.
The depositary fees payable for cash distributions are generally deducted from the cash being distributed or by selling a portion of distributable property to pay the fees. In the case of distributions other than cash (i.e., share dividends, rights), the depositary bank charges the applicable fee to the ADS record date holders concurrent with the distribution. In the case of ADSs registered in the name of the investor (whether certificated or uncertificated in direct registration), the depositary bank sends invoices to the applicable record date ADS holders. In the case of ADSs held in brokerage and custodian accounts (via DTC), the depositary bank generally collects its fees through the systems provided by DTC (whose nominee is the registered holder of the ADSs held in DTC) from the brokers and custodians holding ADSs in their DTC accounts. The brokers and custodians who hold their clients ADSs in DTC accounts in turn charge their clients accounts the amount of the fees paid to the depositary banks.
In the event of refusal to pay the depositary fees, the depositary bank may, under the terms of the deposit agreement, refuse the requested service until payment is received or may set off the amount of the depositary fees from any distribution to be made to the ADS holder.
The depositary may make payments to us or reimburse us for certain costs and expenses, by making available a portion of the ADS fees collected in respect of the ADR program or otherwise, upon such terms and conditions as we and the depositary bank agree from time to time.
Payment of Taxes
You will be responsible for any taxes or other governmental charges payable, or which become payable, on your ADSs or on the deposited securities represented by any of your ADSs. The depositary may refuse to register or transfer your ADSs or allow you to withdraw the deposited securities represented by your ADSs until such taxes
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or other charges are paid. It may apply payments owed to you or sell deposited securities represented by your ADSs to pay any taxes owed and you will remain liable for any deficiency. If the depositary sells deposited securities, it will, if appropriate, reduce the number of ADSs to reflect the sale and pay to you any net proceeds, or send to you any property, remaining after it has paid the taxes. You agree to indemnify us, the depositary, the custodian and each of our and their respective agents, directors, employees and affiliates for, and hold each of them harmless from, any claims with respect to taxes (including applicable interest and penalties thereon) arising from any refund of taxes, reduced rate of withholding at source or other tax benefit obtained for you. Your obligations under this paragraph shall survive any transfer of ADRs, any surrender of ADRs and withdrawal of deposited securities or the termination of the deposit agreement.
Reclassifications, Recapitalizations and Mergers
If we |
Then: | |
Change the nominal or par value of our Class A ordinary shares | The cash, shares or other securities received by the depositary will become deposited securities. | |
Reclassify, split up or consolidated any of the deposited securities | Each ADS will automatically represent its equal share of the new deposited securities. | |
Distribute securities on the Class A ordinary shares that are not distributed to you, or recapitalize, reorganize, merge, liquidate, sell all or substantially all of our assets, or take similar action | The depositary may distribute some or all of the cash, shares or other securities it received. It may also deliver new ADSs or ask you to surrender your outstanding ADRs in exchange for new ADRs identifying the new deposited securities. |
Amendment and Termination
How may the deposit agreement be amended?
We may agree with the depositary to amend the deposit agreement and the form of ADR without your consent for any reason. If an amendment adds or increases fees or charges, except for taxes and other governmental charges or expenses of the depositary for registration fees, facsimile costs, delivery charges or similar items, including expenses incurred in connection with foreign exchange control regulations and other charges specifically payable by ADS holders under the deposit agreement, or materially prejudices a substantial existing right of ADS holders, it will not become effective for outstanding ADSs until 30 days after the depositary notifies ADS holders of the amendment. At the time an amendment becomes effective, you are considered, by continuing to hold your ADSs, to agree to the amendment and to be bound by the ADRs and the deposit agreement as amended. If any new laws are adopted which would require the deposit agreement to be amended in order to comply therewith, we and the depositary may amend the deposit agreement in accordance with such laws and such amendment may become effective before notice thereof is given to ADS holders.
How may the deposit agreement be terminated?
The depositary will terminate the deposit agreement if we ask it to do so, in which case the depositary will give notice to you at least 90 days prior to termination. The depositary may also terminate the deposit agreement if the depositary has told us that it would like to resign, or if we have removed the depositary, and in either case we have not appointed a new depositary within 90 days. In either such case, the depositary must notify you at least 30 days before termination.
After termination, the depositary and its agents will do the following under the deposit agreement but nothing else: collect distributions on the deposited securities, sell rights and other property and deliver Class A ordinary shares and other deposited securities upon cancellation of ADSs after payment of any fees, charges, taxes or other governmental charges. Six months or more after the date of termination, the depositary may sell any
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remaining deposited securities by public or private sale. After that, the depositary will hold the money it received on the sale, as well as any other cash it is holding under the deposit agreement, for the pro rata benefit of the ADS holders that have not surrendered their ADSs. It will not invest the money and has no liability for interest. After such sale, the depositarys only obligations will be to account for the money and other cash. After termination, we shall be discharged from all obligations under the deposit agreement except for our obligations to the depositary thereunder.
Books of Depositary
The depositary will maintain ADS holder records at its depositary office. You may inspect such records at such office during regular business hours but solely for the purpose of communicating with other holders in the interest of business matters relating to our Company, the ADRs and the deposit agreement.
The depositary will maintain facilities in the Borough of Manhattan, The City of New York to record and process the issuance, cancellation, combination, split-up and transfer of ADRs.
These facilities may be closed at any time or from time to time when such action is deemed necessary or advisable by the depositary in connection with the performance of its duties under the deposit agreement or at our reasonable written request.
Limitations on Obligations and Liability
The deposit agreement expressly limits our obligations and the obligations of the depositary and the custodian. It also limits our liability and the liability of the depositary. The depositary and the custodian:
| are only obligated to take the actions specifically set forth in the deposit agreement without gross negligence or willful misconduct; |
| are not liable if any of us or our respective controlling persons or agents are prevented or forbidden from, or subjected to any civil or criminal penalty or restraint on account of, or delayed in, doing or performing any act or thing required by the terms of the deposit agreement and any ADR, by reason of any provision of any present or future law or regulation of the United States or any state thereof, the Cayman Islands or any other country, or of any other governmental authority or regulatory authority or stock exchange, or on account of the possible criminal or civil penalties or restraint, or by reason of any provision, present or future, of our memorandum and articles of association or any provision of or governing any deposited securities, or by reason of any act of God or war or other circumstances beyond its control (including, without limitation, nationalization, expropriation, currency restrictions, work stoppage, strikes, civil unrest, revolutions, rebellions, explosions and computer failure); |
| are not liable by reason of any exercise of, or failure to exercise, any discretion provided for in the deposit agreement or in our memorandum and articles of association or provisions of or governing deposited securities; |
| are not liable for any action or inaction of the depositary, the custodian or us or their or our respective controlling persons or agents in reliance upon the advice of or information from legal counsel, any person presenting Class A ordinary shares for deposit or any other person believed by it in good faith to be competent to give such advice or information; |
| are not liable for the inability of any holder of ADSs to benefit from any distribution on deposited securities that is not made available to holders of ADSs under the terms of the deposit agreement; |
| are not liable for any special, consequential, indirect or punitive damages for any breach of the terms of the deposit agreement, or otherwise; |
| may rely upon any documents we believe in good faith to be genuine and to have been signed or presented by the proper party; |
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| disclaim any liability for any action or inaction or inaction of any of us or our respective controlling persons or agents in reliance upon the advice of or information from legal counsel, accountants, any person presenting Class A ordinary shares for deposit, holders and beneficial owners (or authorized representatives) of ADSs, or any person believed in good faith to be competent to give such advice or information; and |
| disclaim any liability for inability of any holder to benefit from any distribution, offering, right or other benefit made available to holders of deposited securities but not made available to holders of ADS. |
The depositary and any of its agents also disclaim any liability (i) for any failure to carry out any instructions to vote, the manner in which any vote is cast or the effect of any vote or failure to determine that any distribution or action may be lawful or reasonably practicable or for allowing any rights to lapse in accordance with the provisions of the deposit agreement, (ii) the failure or timeliness of any notice from us, the content of any information submitted to it by us for distribution to you or for any inaccuracy of any translation thereof, (iii) any investment risk associated with the acquisition of an interest in the deposited securities, the validity or worth of the deposited securities, the credit-worthiness of any third party, (iv) for any tax consequences that may result from ownership of ADSs, Class A ordinary shares or deposited securities, or (v) for any acts or omissions made by a successor depositary whether in connection with a previous act or omission of the depositary or in connection with any matter arising wholly after the removal or resignation of the depositary, provided that in connection with the issue out of which such potential liability arises the depositary performed its obligations without gross negligence or willful misconduct while it acted as depositary.
In addition, the deposit agreement provides that each party to the deposit agreement (including each holder, beneficial owner and holder of interests in the ADRs) irrevocably waives, to the fullest extent permitted by applicable law, any right it may have to a trial by jury in any lawsuit or proceeding against the depositary or our Company related to our shares, the ADSs or the deposit agreement.
In the deposit agreement, we and the depositary agree to indemnify each other under certain circumstances.
Requirements for Depositary Actions
Before the depositary will issue, deliver or register a transfer of an ADS, split-up, subdivide or combine ADSs, make a distribution on an ADS, or permit withdrawal of Class A ordinary shares, the depositary may require:
| payment of stock transfer or other taxes or other governmental charges and transfer or registration fees charged by third parties for the transfer of any Class A ordinary shares or other deposited securities and payment of the applicable fees, expenses and charges of the depositary; |
| satisfactory proof of the identity and genuineness of any signature or any other matters contemplated in the deposit agreement; and |
| compliance with (A) any laws or governmental regulations relating to the execution and delivery of ADRs or ADSs or to the withdrawal or delivery of deposited securities and (B) such reasonable regulations and procedures as the depositary may establish, from time to time, consistent with the deposit agreement and applicable laws, including presentation of transfer documents. |
The depositary may refuse to issue and deliver ADSs or register transfers of ADSs generally when the register of the depositary or our transfer books are closed or at any time if the depositary or we determine that it is necessary or advisable to do so.
Your Right to Receive the Shares Underlying Your ADSs
You have the right to cancel your ADSs and withdraw the underlying Class A ordinary shares at any time except:
| when temporary delays arise because: (1) the depositary has closed its transfer books or we have closed our transfer books; (2) the transfer of Class A ordinary shares is blocked to permit voting at a shareholders meeting; or (3) we are paying a dividend on our Class A ordinary shares; |
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| when you owe money to pay fees, taxes and similar charges; |
| when it is necessary to prohibit withdrawals in order to comply with any laws or governmental regulations that apply to ADSs or to the withdrawal of Class A ordinary shares or other deposited securities, |
| other circumstances specifically contemplated by Section I.A.(l) of the General Instructions to Form F-6 (as such General Instructions may be amended from time to time); or |
| for any other reason if the depositary or we determine, in good faith, that it is necessary or advisable to prohibit withdrawals. |
The depositary shall not knowingly accept for deposit under the deposit agreement any Class A ordinary shares or other deposited securities required to be registered under the provisions of the Securities Act, unless a registration statement is in effect as to such Class A ordinary shares.
This right of withdrawal may not be limited by any other provision of the deposit agreement.
Direct Registration System
In the deposit agreement, all parties to the deposit agreement acknowledge that the DRS and Profile Modification System, or Profile, will apply to uncertificated ADSs upon acceptance thereof to DRS by DTC. DRS is the system administered by DTC pursuant to which the depositary may register the ownership of uncertificated ADSs, which ownership shall be evidenced by periodic statements issued by the depositary to the ADS holders entitled thereto. Profile is a required feature of DRS which allows a DTC participant, claiming to act on behalf of an ADS holder, to direct the depositary to register a transfer of those ADSs to DTC or its nominee and to deliver those ADSs to the DTC account of that DTC participant without receipt by the depositary of prior authorization from the ADS holder to register such transfer.
In connection with and in accordance with the arrangements and procedures relating to DRS/Profile, the parties to the deposit agreement understand that the depositary will not verify, determine or otherwise ascertain that the DTC participant claiming to be acting on behalf of an ADS holder in requesting registration of transfer and delivery described in the paragraph above has the actual authority to act on behalf of the ADS holder (notwithstanding any requirements under the Uniform Commercial Code).
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SHARES ELIGIBLE FOR FUTURE SALE
Upon completion of this offering, we will have ADSs outstanding, representing approximately % of our outstanding Class A ordinary shares, assuming the underwriters do not exercise their over-allotment option to purchase additional ADSs.
All of the ADSs sold in this offering will be freely transferable in the United States by persons other than our affiliates without restriction or further registration under the Securities Act. Rule 144 of the Securities Act defines an affiliate of a company as a person that, directly or indirectly, through one or more intermediaries, controls or is controlled by, or is under common control with, our Company. All of our ordinary shares outstanding immediately prior to the completion of this offering are restricted securities as that term is defined in Rule 144 because they were issued in a transaction or series of transactions not involving a public offering. Restricted securities, in the form of ADSs or otherwise, may be sold only if they are the subject of an effective registration statement under the Securities Act or if they are sold pursuant to an exemption from the registration requirement of the Securities Act such as those provided for in Rules 144 or 701 promulgated under the Securities Act, which rules are summarized below. Restricted shares may also be sold outside of the United States to non-U.S. persons in accordance with Rule 904 of Regulation S under the Act. This prospectus may not be used in connection with any resale of our ADSs acquired in this offering by our affiliates.
Sales of substantial amounts of our ADSs in the public market could adversely affect prevailing market prices of our ADSs. Prior to this offering, there has been no public market for our shares or ADSs, and while we intend to apply for the listing of our ADSs on the NYSE, we cannot assure you that a regular trading market will develop in the ADSs. We do not expect that a trading market will develop for our ordinary shares not represented by ADSs.
Lock-Up Agreements
We have agreed, for a period of [180] days after the date of this prospectus, not to, except in connection with this offering, (1) offer, pledge, sell, contract to sell, sell any option or contract to purchase, purchase any option or contract to sell, grant any option, right or warrant to purchase, lend, or otherwise transfer or dispose of, directly or indirectly, any ADSs or ordinary shares or any other securities so owned convertible into or exercisable or exchangeable for ADSs or ordinary shares, (2) enter into any swap or other arrangement that transfers to another, in whole or in part, any of the economic consequences of ownership of the ADSs or ordinary shares, whether any such transaction described in clause (1) or (2) above is to be settled by delivery of ADSs, ordinary shares or such other securities, in cash or otherwise or (3) file any registration statement with the Securities and Exchange Commission relating to the offering of any ADSs or ordinary shares or any securities convertible into or exercisable or exchangeable for ADSs or ordinary shares.
Furthermore, each of our directors, executive officers and existing shareholders has also entered into a similar lock-up agreement for a period of [180] days from the date of this prospectus, subject to certain exceptions, with respect to our ordinary shares, ADSs and securities that are substantially similar to our ordinary shares or ADSs. These parties collectively own substantially all of our outstanding ordinary shares, without giving effect to this offering. Other than this offering, we are not aware of any plans by any significant shareholders to dispose of significant numbers of our ADSs or ordinary shares. However, one or more existing shareholders or owners of securities convertible or exchangeable into or exercisable for our ADSs or ordinary shares may dispose of significant numbers of our ADSs or ordinary shares in the future. We cannot predict what effect, if any, future sales of our ADSs or ordinary shares, or the availability of ADSs or ordinary shares for future sale, will have on the trading price of our ADSs from time to time. Sales of substantial amounts of our ADSs or ordinary shares in the public market, or the perception that these sales could occur, could adversely affect the trading price of our ADSs.
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Rule 144
In general, under Rule 144 as currently in effect, once we have been subject to the public company reporting requirements of Section 13 or Section 15(d) of the Exchange Act for at least 90 days, persons who are not our affiliates and have beneficially owned our Class A ordinary shares, including our ADSs, for more than six months but not more than one year may sell such Class A ordinary shares, including our ADSs, without registration under the Securities Act subject to the availability of current public information about us. Persons who are not our affiliates and have beneficially owned our Class A ordinary shares, including our ADSs, for more than one year may freely sell our Class A ordinary shares, including our ADSs, without registration under the Securities Act. Persons who are our affiliates (including persons beneficially owning 10% or more of our outstanding shares), and have beneficially owned our Class A ordinary shares for at least six months, may sell within any three-month period a number of restricted securities that does not exceed the greater of the following:
| 1.0% of the then outstanding ordinary shares of the same class, in the form of ADSs or otherwise, which immediately after this offering will equal ordinary shares, assuming the underwriters do not exercise their over-allotment option; or |
| the average weekly trading volume of our ordinary shares of the same class, in the form of ADSs or otherwise, during the four calendar weeks preceding the date on which notice of the sale on Form 144 is filed with the SEC by such person. |
Such sales are also subject to manner-of-sale provisions, notice requirements and the availability of current public information about us. In addition, in each case, these shares would remain subject to lock-up arrangements and would only become eligible for sale when the lock-up period expires.
Rule 701
Beginning 90 days after the date of this prospectus, persons other than affiliates who purchased ordinary shares under a written compensatory plan or contract may be entitled to sell such shares in the United States in reliance on Rule 701 under the Securities Act. Rule 701 permits affiliates to sell their Rule 701 shares under Rule 144 without complying with the holding period requirements of Rule 144. Rule 701 further provides that non-affiliates may sell these shares in reliance on Rule 144 subject only to its manner-of-sale requirements. However, the Rule 701 shares would remain subject to any applicable lock-up arrangements and would only become eligible for sale when the lock-up period expires.
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EXPENSES RELATED TO THIS OFFERING
Set forth below is an itemization of the total expenses, excluding underwriting discounts, which are expected to be incurred by us in connection with the offer and sale of the ADSs by us. With the exception of the SEC registration fee, the Financial Industry Regulatory Authority, or FINRA, filing fee, and the NYSE market entry and listing fee, all amounts are estimates.
SEC Registration Fee |
US$ | |||
FINRA Filing Fee |
||||
NYSE Market Entry and Listing Fee |
||||
Printing and engraving expenses |
||||
Legal fees and expenses |
||||
Accounting fees and expenses |
||||
Miscellaneous |
||||
|
|
|||
Total |
US$ | |||
|
|
These expenses will be borne by us, except for underwriting discounts, which will be borne by us and the selling shareholders in proportion to the numbers of ADSs sold in the offering by us and the selling shareholders, respectively.
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The following summary of certain Cayman Islands and U.S. federal income tax consequences of an investment in our ordinary shares and ADSs and is based upon laws and relevant interpretations thereof in effect as of the date of this prospectus, all of which are subject to change. This summary does not deal with all possible tax consequences relating to an investment in the ADSs or our ordinary shares, such as the tax consequences under U.S. state and local tax laws or under the tax laws of jurisdictions other than the Cayman Islands and the United States. You are encouraged to consult your own tax advisors concerning the overall tax consequences arising in your own particular situation under U.S. federal, state, local or foreign law of the ownership of our ordinary shares. To the extent that this discussion relates to matters of Cayman Islands tax law, it is the opinion of Maples and Calder (Hong Kong) LLP, our counsel as to Cayman Islands law.
Cayman Islands Tax Considerations
The Cayman Islands currently levies no taxes on individuals or corporations based upon profits, income, gains or appreciation and there is no taxation in the nature of inheritance tax or estate duty. There are no other taxes likely to be material to us levied by the government of the Cayman Islands except for stamp duties which may be applicable on instruments executed in, or, after execution, brought within the jurisdiction of the Cayman Islands. The Cayman Islands is not party to any double tax treaties that are applicable to any payments made to or by our Company. There are no exchange control regulations or currency restrictions in the Cayman Islands.
We have received an undertaking from the Governor in Cabinet of the Cayman Islands to the effect that, for a period of 20 years from the date of the undertaking, no law that thereafter is enacted in the Cayman Islands imposing any tax or duty to be levied on profits, income or on gains or appreciation shall apply to our Company or its operations; and that no tax to be levied on profits, income, gains or appreciations or which is in the nature of estate duty or inheritance tax shall be payable (a) on or in respect of the shares, debentures or other obligations of our Company; or (b) by way of the withholding in whole or in part of any relevant payment as defined in the Tax Concessions Law of the Cayman Islands.
Payments of dividends and capital in respect of our ordinary shares will not be subject to taxation in the Cayman Islands and no withholding will be required on the payment of a dividend or capital to any holder of our ordinary shares, nor will gains derived from the disposal of our ordinary shares be subject to Cayman Islands income or corporation tax.
No stamp duty is payable in respect of the issue of our ordinary shares or on an instrument of transfer in respect of our ordinary shares.
United States Federal Income Tax Considerations
The following discussion is a summary of U.S. federal income tax considerations generally applicable to the ownership and disposition of our ADSs and ordinary shares by U.S. Holders (as defined below) that acquire our ADSs in this offering and hold our ADSs as capital assets (generally, property held for investment) under the United States Internal Revenue Code of 1986, as amended (the Code). This discussion is based upon existing United States federal income tax law which is subject to differing interpretations or change, possibly with retroactive effect. No ruling has been sought from the Internal Revenue Service, or the IRS, with respect to any United States federal income tax consequences described below, and there can be no assurance that the IRS or a court will not take a contrary position. This discussion does not address all aspects of United States federal income taxation that may be relevant to particular investors in light of their specific circumstances, including investors subject to special tax rules (for example, certain financial institutions (including banks), cooperatives, pension plans, insurance companies, broker-dealers, traders in securities that have elected the mark-to-market method of accounting for their securities, partnerships and their partners, regulated investment companies, real estate investment trusts, and tax-exempt organizations (including private foundations)), investors who are not
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U.S. Holders, investors who own (directly, indirectly, or constructively) 10% or more of our stock (by vote or value), investors that will hold their ADSs or ordinary shares as part of a straddle, hedge, conversion, constructive sale, or other integrated transaction for United States federal income tax purposes, investors required to accelerate the recognition of any item of gross income with respect to our ADSs or ordinary shares as a result of such income being recognized on an applicable financial statement, or U.S. Holders that have a functional currency other than the U.S. dollar, all of whom may be subject to tax rules that differ significantly from those summarized below. In addition, this discussion does not discuss any non-United States tax, state or local tax, or non-income tax (such as the U.S. federal gift or estate tax) considerations, or any consequences under the alternative minimum tax or Medicare tax on net investment income. Each U.S. Holder is urged to consult its tax advisor regarding the United States federal, state, local, and non-United States income and other tax considerations of an investment in our ADSs or ordinary shares.
General
For purposes of this discussion, a U.S. Holder is a beneficial owner of our ADSs or ordinary shares that is, for United States federal income tax purposes, (i) an individual who is a citizen or resident of the United States, (ii) a corporation (or other entity treated as a corporation for United States federal income tax purposes) created in, or organized under the laws of, the United States or any state thereof or the District of Columbia, (iii) an estate the income of which is includible in gross income for United States federal income tax purposes regardless of its source, or (iv) a trust (A) the administration of which is subject to the primary supervision of a United States court and which has one or more United States persons who have the authority to control all substantial decisions of the trust or (B) that has otherwise validly elected to be treated as a United States person under the Code.
If a partnership (or other entity or arrangement treated as a partnership for United States federal income tax purposes) is a beneficial owner of our ADSs or ordinary shares, the tax treatment of a partner in the partnership will generally depend upon the status of the partner and the activities of the partnership. Partnerships holding our ADSs or ordinary shares and partners in such partnerships are urged to consult their tax advisors as to the particular United States federal income tax consequences of an investment in our ADSs or ordinary shares.
For U.S. federal income tax purposes, it is generally expected that a U.S. Holder of ADSs will be treated as the beneficial owner of the underlying shares represented by the ADSs. The remainder of this discussion assumes that a U.S. Holder of our ADSs will be treated in this manner. Accordingly, deposits or withdrawals of ordinary shares for ADSs will generally not be subject to U.S. federal income tax.
Dividends
The entire amount of any cash distribution paid with respect to our ADSs or ordinary shares (including the amount of any non-U.S. taxes withheld therefrom, if any) generally will constitute dividends to the extent such distributions are paid out of our current or accumulated earnings and profits, as determined under United States federal income tax principles, and generally will be taxed as ordinary income in the year received by the depositary, in the case of ADSs, or on the date of receipt by such U.S. Holder, in the case of ordinary shares. To the extent amounts paid as distributions on the ADSs or ordinary shares exceed our current or accumulated earnings and profits, such distributions will not be dividends, but instead will be treated first as a tax-free return of capital to the extent of the U.S. Holders adjusted tax basis in the ADSs or ordinary shares with respect to which the distribution is made, and thereafter as capital gain. However, we do not intend to compute (or to provide U.S. Holders with the information necessary to compute) our earnings and profits under United States federal income tax principles. Accordingly, a U.S. Holder will be unable to establish that a distribution is not out of earnings and profits and should expect to treat the full amount of the distribution as a dividend for United States federal income tax purposes.
Dividends will generally be treated as income from foreign sources for United States foreign tax credit purposes and will generally constitute passive category income. Depending on the U.S. Holders particular facts and
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circumstances, a U.S. Holder may be eligible, subject to a number of complex limitations, to claim a foreign tax credit in respect of any foreign withholding taxes imposed (at a rate not exceeding any applicable treaty rate) on dividends received on our ADSs or ordinary shares. A U.S. Holder who does not elect to claim a foreign tax credit for foreign tax withheld may instead claim a deduction, for United States federal income tax purposes, in respect of such withholdings, but only for a year in which such U.S. Holder elects to do so for all creditable foreign income taxes. The rules governing the foreign tax credit are complex. U.S. Holders are advised to consult their tax advisors regarding the availability of the foreign tax credit under their particular circumstances.
Dividends paid in non-U.S. currency will be included in the gross income of a U.S. Holder in a U.S. dollar amount calculated by reference to a spot market exchange rate in effect on the date that the dividends are received by the U.S. Holder, regardless of whether such foreign currency is in fact converted into U.S. dollars on such date. Such U.S. Holder will have a tax basis for United States federal income tax purposes in the foreign currency received equal to that U.S. dollar value. If such dividends are converted into U.S. dollars on the date of receipt, a U.S. Holder generally should not be required to recognize foreign currency gain or loss in respect thereof. If the foreign currency so received is not converted into U.S. dollars on the date of receipt, such U.S. Holder will have a basis in the foreign currency equal to its U.S. dollar value on the date of receipt. Any gain or loss on a subsequent conversion or other disposition of the foreign currency generally will be treated as ordinary income or loss to such U.S. Holder and generally will be income or loss from sources within the United States for foreign tax credit limitation purposes. U.S. Holders should consult their own tax advisors regarding the treatment of foreign currency gain or loss, if any, on any foreign currency received by a U.S. Holder that are converted into U.S. dollars on a date subsequent to receipt.
Sale or Other Disposition of ADSs or Ordinary Shares
A U.S. Holder will generally recognize capital gain or loss upon a sale or other disposition of ADSs or ordinary shares, in an amount equal to the difference between the amount realized and the U.S. Holders adjusted tax basis in such ADSs or ordinary shares, each amount determined in U.S. dollars. Any capital gain or loss will be long-term capital gain or loss if the ADSs or ordinary shares have been held for more than one year and will generally be United States source gain or loss for United States foreign tax credit purposes. The deductibility of a capital loss may be subject to limitations. Each U.S. Holder is advised to consult its tax advisor regarding the tax consequences if a foreign tax is imposed on a disposition of our ADSs or ordinary shares, including the availability of the foreign tax credit under its particular circumstances.
A U.S. Holder that receives Singapore dollars or another currency other than U.S. dollars on the disposition of our ADSs or ordinary shares will realize an amount equal to the U.S. dollar value of the non-U.S. currency received at the spot rate on the date of sale (or, if the ADSs or ordinary shares are traded on a recognized exchange and in the case of cash basis and electing accrual basis U.S. Holders, the settlement date). An accrual basis U.S. Holder that does not elect to determine the amount realized using the spot rate on the settlement date will recognize foreign currency gain or loss equal to the difference between the U.S. dollar value of the amount received based on the spot market exchange rates in effect on the date of sale or other disposition and the settlement date. A U.S. Holder will have a tax basis in the currency received equal to the U.S. dollar value of the currency received on the settlement date. Any gain or loss on a subsequent disposition or conversion of the currency will be United States source ordinary income or loss.
Passive Foreign Investment Company Considerations
For United States federal income tax purposes, a non-United States corporation, such as our Company, will be treated as a passive foreign investment company, or PFIC if, in the case of any particular taxable year, either (a) 75% or more of our gross income for such year consists of certain types of passive income or (b) 50% or more of the value of our assets (generally determined on the basis of a quarterly average) during such year produce or are held for the production of passive income. Based upon our current and expected income and assets (including goodwill and taking into account the expected proceeds from this offering) and the expected market
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price of our ADSs following this offering, we do not expect to be a PFIC for the current taxable year or the foreseeable future.
However, while we do not expect to be or become a PFIC, no assurance can be given in this regard because the determination of whether we are or will become a PFIC for any taxable year is a fact-intensive inquiry made annually that depends, in part, upon the composition and classification of our income and assets. Fluctuations in the market price of our ADSs may cause us to be or become a PFIC for the current or subsequent taxable years because the value of our assets for the purpose of the asset test, including the value of our goodwill and other unbooked intangibles, may be determined by reference to the market price of our ADSs (which may be volatile). The composition of our income and assets may also be affected by how, and how quickly, we use our liquid assets and the cash raised in this offering. It is also possible that the Internal Revenue Service may challenge our classification of certain income or assets or the valuation of our goodwill and other unbooked intangibles, which may result in our company being or becoming a PFIC for the current or future taxable years.
If we are classified as a PFIC for any taxable year during which a U.S. Holder holds our ADSs or ordinary shares, and unless the U.S. Holder makes a mark-to-market election (as described below), the U.S. Holder will generally be subject to special tax rules on (i) any excess distribution that we make to the U.S. Holder (which generally means any distribution paid during a taxable year to a U.S. Holder that is greater than 125% of the average annual distributions paid in the three preceding taxable years or, if shorter, the U.S. Holders holding period for the ADSs or ordinary shares), and (ii) any gain realized on the sale or other disposition, including, under certain circumstances, a pledge, of ADSs or ordinary shares. Under the PFIC rules:
| such excess distribution and/or gain will be allocated ratably over the U.S. Holders holding period for the ADSs or ordinary shares; |
| such amount allocated to the current taxable year and any taxable years in the U.S. Holders holding period prior to the first taxable year in which we are a PFIC, each a pre-PFIC year, will be taxable as ordinary income; |
| such amount allocated to each prior taxable year, other than a pre-PFIC year, will be subject to tax at the highest tax rate in effect applicable to the U.S. Holder for that year; and |
| an interest charge generally applicable to underpayments of tax will be imposed on the tax attributable to each prior taxable year, other than a pre-PFIC year. |
If we are a PFIC for any taxable year during which a U.S. Holder holds our ADSs or ordinary shares and we own any equity in a non-United States entity that is also a PFIC, or a lower-tier PFIC, such U.S. Holder would be treated as owning a proportionate amount (by value) of the shares of the lower-tier PFIC for purposes of the application of these rules. U.S. Holders are advised to consult their tax advisors regarding the application of the PFIC rules to any of the entities in which we may own equity.
As an alternative to the foregoing rules, a U.S. Holder of marketable stock in a PFIC may make a mark-to-market election with respect to such stock, provided that certain requirements are met. The mark-to-market election is available only for stock that is regularly traded on a national securities exchange that is registered with the SEC, or on a foreign exchange or market that the IRS determines is a qualified exchange that has rules sufficient to ensure that the market price represents a legitimate and sound fair market value. Although we intend to apply for the listing of our ADSs on the NYSE, we cannot guarantee that our listing will be approved. Furthermore, we cannot guarantee that, once listed, our ADSs will continue to be listed and regularly traded on such exchange. U.S. Holders are advised to consult their tax advisors as to whether the ADSs are considered marketable for these purposes.
If an effective mark-to-market election is made with respect to our ADSs or ordinary shares, the U.S. Holder will generally (i) include as ordinary income for each taxable year that we are a PFIC the excess, if any, of the fair market value of ADSs or ordinary shares held at the end of the taxable year over its adjusted tax basis of such
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ADSs or ordinary shares and (ii) deduct as an ordinary loss the excess, if any, of its adjusted tax basis of the ADSs or ordinary shares held at the end of the taxable year over the fair market value of such ADSs or ordinary shares held at the end of the taxable year, but only to the extent of the net amount previously included in income as a result of the mark-to-market election. The U.S. Holders adjusted tax basis in the ADSs or ordinary shares would be adjusted to reflect any income or loss resulting from the mark-to-market election. If a U.S. Holder makes an effective mark-to-market election, in each year that we are a PFIC any gain recognized upon the sale or other disposition of the ADSs or ordinary shares will be treated as ordinary income and loss will be treated as ordinary loss, but only to the extent of the net amount previously included in income as a result of the mark-to-market election.
If a U.S. Holder makes a mark-to-market election in respect of a PFIC and such corporation ceases to be a PFIC, the U.S. Holder will not be required to take into account the mark-to-market gain or loss described above during any period that such corporation is not a PFIC.
Because a mark-to-market election generally cannot be made for any lower-tier PFICs that a PFIC may own, a U.S. Holder who makes a mark-to-market election with respect to our ADSs or ordinary shares may continue to be subject to the general PFIC rules with respect to such U.S. Holders indirect interest in any of our non-United States subsidiaries if any of them is a PFIC.
We do not intend to provide information necessary for U.S. Holders to make qualified electing fund elections, which, if available, would result in tax treatment different from (and generally less adverse than) the general tax treatment for PFICs described above.
If a U.S. Holder owns our ADSs or ordinary shares during any taxable year that we are a PFIC, such holder would generally be required to file an annual IRS Form 8621. Each U.S. Holder is advised to consult its tax advisor regarding the potential tax consequences to such holder if we are or become a PFIC, including the possibility of making a mark-to-market election.
THE DISCUSSION ABOVE IS A GENERAL SUMMARY. IT DOES NOT COVER ALL TAX MATTERS THAT MAY BE OF IMPORTANCE TO A PARTICULAR INVESTOR. EACH PROSPECTIVE INVESTOR IN THE OUR ADSS IS URGED TO CONSULT ITS OWN TAX ADVISER ABOUT THE TAX CONSEQUENCES TO IT OF OWNING AND DISPOSING OF OUR ADSS OR ORDINARY SHARES IN LIGHT OF SUCH PROSPECTIVE INVESTORS OWN CIRCUMSTANCES.
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We and the underwriters named below have entered into an underwriting agreement with respect to the ADSs being offered. Subject to certain conditions, each underwriter has severally agreed to purchase the number of ADSs indicated in the following table. Goldman Sachs & Co. LLC and Credit Suisse Securities (USA) LLC are the representatives of the underwriters.
Underwriters |
Number of ADSs | |||
Goldman Sachs & Co. LLC |
||||
Credit Suisse Securities (USA) LLC |
||||
Total |
The underwriters are committed to take and pay for all of the ADSs being offered, if any are taken, other than the ADSs covered by the option described below unless and until this option is exercised.
[The underwriters have an option to buy up to an additional ADSs in this offering to cover sales by the underwriters of a greater number of ADSs than the total number set forth in the table above. They may exercise that option for 30 days. If any ADSs are purchased pursuant to this option, the underwriters will severally purchase ADSs in approximately the same proportion as set forth in the table above.]
The following table shows the per ADS and total underwriting discounts and commissions to be paid to the underwriters by us. [Such amounts are shown assuming both no exercise and full exercise of the underwriters option to purchase additional ADSs.]
Paid by Us |
No Exercise | Full Exercise | ||||||
Per ADS |
||||||||
Total |
We estimate that the total expenses of this offering, including registration, filing and listing fees, printing fees and legal and accounting expenses, but excluding the underwriting discounts and commissions, will be approximately $ . We have agreed to reimburse the underwriters for certain of their expenses in the amount up to $ .
A prospectus in electronic format may be made available on the web sites maintained by one or more underwriters, or selling group members, if any, participating in the offering. The underwriters may agree to allocate a number of ADSs to underwriters and selling group members for sale to their online brokerage account holders. Internet distributions will be allocated by the representatives to underwriters and selling group members that may make Internet distributions on the same basis as other allocations.
ADSs sold by the underwriters to the public will initially be offered at the initial public offering price set forth on the cover of this prospectus. Any ADSs sold by the underwriters to securities dealers may be sold at a discount of up to $ per ADS from the initial public offering price. After the initial offering of the ADSs, the representatives may change the offering price and the other selling terms. Sales of ADSs made outside of the United States may be made by affiliates of the underwriters. The offering of the ADSs by the underwriters is subject to receipt and acceptance and subject to the underwriters right to reject any order in whole or in part.
We and our executive officers, directors, and holders of substantially all of our common stock and securities convertible into or exchangeable for our common stock have agreed or will agree with the underwriters, subject to certain exceptions, not to dispose of or hedge any of our or their common stock or securities convertible into or exchangeable for shares of common stock during the period from the date of this prospectus continuing through the date 180 days after the date of this prospectus, except with the prior written consent of Goldman Sachs & Co. LLC and Credit Suisse Securities (USA) LLC. [This agreement does not apply to any existing
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employee benefit plans.] See the section titled Shares Eligible for Future Sale for a discussion of certain transfer restrictions.
Prior to the offering, there has been no public market for the ADSs. Neither we nor the underwriters can assure investors that an active trading market will develop for the ADSs or that the ADSs will trade in the public market at or above the initial public offering price.
We have been approved to list our ADSs on under the symbol .
In connection with the offering, the underwriters may purchase and sell ADSs in the open market. These transactions may include short sales, stabilizing transactions, and purchases to cover positions created by short sales. Short sales involve the sale by the underwriters of a greater number of ADSs than they are required to purchase in the offering, and a short position represents the amount of such sales that have not been covered by subsequent purchases. A covered short position is a short position that is not greater than the amount of additional ADSs for which the underwriters option described above may be exercised. The underwriters may cover any covered short position by either exercising their option to purchase additional ADSs or purchasing ADSs in the open market. In determining the source of ADSs to cover the covered short position, the underwriters will consider, among other things, the price of ADSs available for purchase in the open market as compared to the price at which they may purchase additional ADSs pursuant to the option described above. Naked short sales are any short sales that create a short position greater than the amount of additional ADSs for which the option described above may be exercised. The underwriters must cover any such naked short position by purchasing ADSs in the open market. A naked short position is more likely to be created if the underwriters are concerned that there may be downward pressure on the price of the ADSs in the open market after pricing that could adversely affect investors who purchase in the offering. Stabilizing transactions consist of various bids for or purchases of ADSs made by the underwriters in the open market prior to the completion of the offering.
The underwriters may also impose a penalty bid. This occurs when a particular underwriter repays to the underwriters a portion of the underwriting discount received by it because the representatives have repurchased ADSs sold by or for the account of such underwriter in stabilizing or short covering transactions.
Purchases to cover a short position and stabilizing transactions, as well as other purchases by the underwriters for their own accounts, may have the effect of preventing or retarding a decline in the market price of our ADSs, and together with the imposition of the penalty bid, may stabilize, maintain or otherwise affect the market price of our ADSs. As a result, the price of our ADSs may be higher than the price that otherwise might exist in the open market. The underwriters are not required to engage in these activities and may end any of these activities at any time. These transactions may be effected on the , in the over-the-counter market or otherwise.
We have agreed to indemnify the underwriters against certain liabilities, including liabilities under the Securities Act of 1933, as amended.
The underwriters and their respective affiliates are full service financial institutions engaged in various activities, which may include sales and trading, commercial and investment banking, advisory, investment management, investment research, principal investment, hedging, market making, brokerage and other financial and non-financial activities and services. Certain of the underwriters and their respective affiliates have provided, and may in the future provide, a variety of these services to us and to persons and entities with relationships with us, for which they received or will receive customary fees and expenses.
In the ordinary course of their various business activities, the underwriters and their respective affiliates, officers, directors, and employees may purchase, sell or hold a broad array of investments and actively trade securities, derivatives, loans, commodities, currencies, credit default swaps, and other financial instruments for their own account and for the accounts of their customers, and such investment and trading activities may involve or relate to assets, securities, or instruments of the issuer (directly, as collateral securing other obligations or otherwise) or
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persons and entities with relationships with the issuer. The underwriters and their respective affiliates may also communicate independent investment recommendations, market color or trading ideas or publish or express independent research views in respect of such assets, securities, or instruments and may at any time hold, or recommend to clients that they should acquire, long or short positions in such assets, securities, and instruments.
Because an affiliate of Credit Suisse Securities (USA) LLC, which is an underwriter in this offering, is the lender under the Credit Suisse Facility and will receive 5% or more of the net proceeds from this offering due to the repayment of the Credit Suisse Facility, Credit Suisse Securities (USA) LLC is deemed to have a conflict of interest within the meaning of FINRA Rule 5121. Therefore, this offering will be conducted in accordance with FINRA Rule 5121, which requires, among other things, that a qualified independent underwriter has participated in the preparation of, and has exercised the usual standards of due diligence with respect to, this prospectus and the registration statement of which this prospectus forms a part. Goldman Sachs & Co. LLC has agreed to act as qualified independent underwriter for the offering and to undertake the legal responsibilities and liabilities of an underwriter under the Securities Act, specifically including those inherent in Section 11 of the Securities Act. We will agree to indemnify Goldman Sachs & Co. LLC against liabilities incurred in connection with acting as qualified independent underwriter, including liabilities under the Securities Act. Credit Suisse Securities (USA) LLC will not confirm any sales to any account over which it exercises discretionary authority without the specific written approval of the transaction from the account holder.
Canada
Resale restrictions
The distribution of the ADSs in Canada is being made only in the provinces of Ontario, Quebec, Alberta and British Columbia on a private placement basis exempt from the requirement that we prepare and file a prospectus with the securities regulatory authorities in each province where trades of the ADSs are made. Any resale of the ADSs in Canada must be made under applicable securities laws which may vary depending on the relevant jurisdiction, and which may require resales to be made under available statutory exemptions or under a discretionary exemption granted by the applicable Canadian securities regulatory authority. Purchasers are advised to seek legal advice prior to any resale of the securities.
Representations of Canadian purchasers
By purchasing ADSs in Canada and accepting delivery of a purchase confirmation, a purchaser is representing to us and the dealer from whom the purchase confirmation is received that:
| the purchaser is entitled under applicable provincial securities laws to purchase the ADSs without the benefit of a prospectus qualified under those securities laws as it is an accredited investor as defined under National Instrument 45-106Prospectus Exemptions; |
| the purchaser is a permitted client as defined in National Instrument 31-103Registration Requirements, Exemptions and Ongoing Registrant Obligations; |
| where required by law, the purchaser is purchasing as principal and not as agent; and |
| the purchaser has reviewed the text above under Resale Restrictions. |
Canadian purchasers are hereby notified that the underwriters are relying on the exemption set out in section 3A.3 or 3A.4, if applicable, of National Instrument 33-105Underwriting Conflicts from having to provide certain conflict of interest disclosure in this prospectus.
Statutory rights of action
Securities legislation in certain provinces or territories of Canada may provide a purchaser with remedies for rescission or damages if the offering memorandum (including any amendment thereto) such as this prospectus
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contains a misrepresentation, provided that the remedies for rescission or damages are exercised by the purchaser within the time limit prescribed by the securities legislation of the purchasers province or territory. The purchaser of these securities in Canada should refer to any applicable provisions of the securities legislation of the purchasers province or territory for particulars of these rights or consult with a legal advisor.
Enforcement of legal rights
All of our directors and officers as well as the experts named herein may be located outside of Canada and, as a result, it may not be possible for Canadian purchasers to effect service of process within Canada upon us or those persons. All or a substantial portion of our assets and the assets of those persons may be located outside of Canada and, as a result, it may not be possible to satisfy a judgment against us or those persons in Canada or to enforce a judgment obtained in Canadian courts against us or those persons outside of Canada.
Taxation and eligibility for investment
Canadian purchasers of ADSs should consult their own legal and tax advisors with respect to the tax consequences of an investment in the ADSs in their particular circumstances and about the eligibility of the ADSs for investment by the purchaser under relevant Canadian legislation.
European Economic Area
In relation to each Member State of the European Economic Area, each a Relevant State, no ADSs have been offered or will be offered pursuant to this offering to the public in that Relevant State prior to the publication of a prospectus in relation to the ADSs which has been approved by the competent authority in that Relevant State or, where appropriate, approved in another Relevant State and notified to the competent authority in that Relevant State, all in accordance with the Prospectus Regulation, except that offers of ADSs may be made to the public in that Relevant State at any time under the following exemptions under the Prospectus Regulation:
| to any legal entity which is a qualified investor as defined under Article 2 of the Prospectus Regulation; |
| to fewer than 150 natural or legal persons (other than qualified investors as defined under Article 2 of the Prospectus Regulation), subject to obtaining the prior consent of the underwriters for any such offer; or |
| in any other circumstances falling within Article 1(4) of the Prospectus Regulation, |
provided that no such offer of ADSs shall require us or any of the underwriters to publish a prospectus pursuant to Article 3 of the Prospectus Regulation or supplement a prospectus pursuant to Article 23 of the Prospectus Regulation.
For the purposes of this provision, the expression an offer to the public in relation to any ADSs in any Relevant State means the communication in any form and by any means of sufficient information on the terms of the offer and any ADSs to be offered so as to enable an investor to decide to purchase or subscribe for any ADSs, and the expression Prospectus Regulation means Regulation (EU) 2017/1129.
Hong Kong
The ADSs may not be offered or sold by means of any document other than (i) in circumstances which do not constitute an offer to the public within the meaning of the Companies Ordinance (Cap.32, Laws of Hong Kong), (ii) to professional investors within the meaning of the Securities and Futures Ordinance (Cap. 571, Laws of Hong Kong) and any rules promulgated thereunder, or (iii) in other circumstances which do not result in the document being a prospectus within the meaning of the Companies Ordinance (Cap.32, Laws of Hong Kong), and no advertisement, invitation or document relating to the ADSs may be issued or may be in the possession of
200
any person for the purpose of issue (in each case whether in Hong Kong or elsewhere), which is directed at, or the contents of which are likely to be accessed or read by, the public in Hong Kong (except if permitted to do so under the laws of Hong Kong) other than with respect to ADSs which are or are intended to be disposed of only to persons outside Hong Kong or only to professional investors within the meaning of the Securities and Futures Ordinance (Cap. 571, Laws of Hong Kong) and any rules promulgated thereunder.
Peoples Republic of China
This document may not be circulated or distributed in the PRC and the ADSs may not be offered or sold, and will not be offered or sold to any person for re-offering or resale directly or indirectly to any resident of the PRC or for the benefit of, legal or natural persons of the PRC except pursuant to applicable laws and regulations of the PRC. Further, no legal or natural persons of the PRC may directly or indirectly purchase any of the ADSs or any beneficial interest therein without obtaining all prior PRCs governmental approvals that are required, whether statutorily or otherwise. Persons who come into possession of this prospectus supplement are required by the issuer and its representatives to observe these restrictions. For the purpose of this paragraph, PRC does not include Taiwan and the special administrative regions of Hong Kong and Macau.
Singapore
This document has not been registered as a prospectus with the Monetary Authority of Singapore. Accordingly, this document and any other document or material in connection with the offer or sale, or invitation for subscription or purchase, of ADSs may not be circulated or distributed, nor may ADSs be offered or sold, or be made the subject of an invitation for subscription or purchase, whether directly or indirectly, to persons in Singapore other than (i) to an institutional investor (as defined in Section 4A of the Securities and Futures Act, Chapter 289 of Singapore, or the SFA) pursuant to Section 274 of the SFA, (ii) to a relevant person (as defined in Section 275(2) of the SFA) pursuant to Section 275(1) of the SFA, or any person pursuant to Section 275(1A) of the SFA, and in accordance with the conditions specified in Section 275 of the SFA and (in the case of an accredited investor) Regulation 3 of the Securities and Futures (Classes of Investors) Regulations 2018, or (iii) otherwise pursuant to, and in accordance with the conditions of, any other applicable provision of the SFA.
Where ADSs are subscribed or purchased under Section 275 of the SFA by a relevant person which is:
| a corporation (which is not an accredited investor (as defined in Section 4A of the SFA)) the sole business of which is to hold investments and the entire share capital of which is owned by one or more individuals, each of whom is an accredited investor; or |
| a trust (where the trustee is not an accredited investor) whose sole purpose is to hold investments and each beneficiary of the trust is an individual who is an accredited investor, |
securities or securities-based derivatives contracts (each term as defined in Section 2(1) of the SFA) of that corporation or the beneficiaries rights and interest (howsoever described) in that trust shall not be transferred within six months after that corporation or that trust has acquired ADSs pursuant to an offer made under Section 275 of the SFA except:
| to an institutional investor or to a relevant person, or to any person arising from an offer referred to in Section 275(1A) or Section 276(4)(i)(B) of the SFA; |
| where no consideration is or will be given for the transfer; |
| where the transfer is by operation of law; |
| as specified in Section 276(7) of the SFA; or |
| as specified in Regulation 37A of the Securities and Futures (Offers of Investments) (Securities and Securities-based Derivatives Contracts) Regulations 2018. |
201
Any reference to the SFA is a reference to the Securities and Futures Act, Chapter 289 of Singapore and a reference to any term as defined in the SFA or any provision in the SFA is a reference to that term as modified or amended from time to time by such of its subsidiary legislation as may be applicable at the relevant time.
Notification under Section 309B(1)(c) of the SFAThe classification of the ADSs offered or sold under this offering are prescribed capital markets products (as defined in the Securities and Futures (Capital Markets Products) Regulations 2018) and Excluded Investment Products (as defined in Monetary Authority of Singapore, or the MAS, Notice SFA 04-N12: Notice on the Sale of Investment Products and MAS Notice FAA-N16: Notice on Recommendations on Investment Products).
United Kingdom
No ADS have been offered or will be offered pursuant to the offering to the public in the United Kingdom prior to the publication of a prospectus in relation to the ADS which has been approved by the Financial Conduct Authority, except that offers of ADSs may be made to the public in the United Kingdom at any time:
| to any legal entity which is a qualified investor as defined under Article 2 of the UK Prospectus Regulation; |
| to fewer than 150 natural or legal persons (other than qualified investors as defined under Article 2 of the UK Prospectus Regulation), subject to obtaining the prior consent of the underwriters for any such offer; or |
| in any other circumstances falling within Section 86 of the FSMA, |
provided that no such offer of ADSs shall require us or any of the underwriters to publish a prospectus pursuant to Section 85 of the FSMA or supplement a prospectus pursuant to Article 23 of the UK Prospectus Regulation.
For the purposes of this provision, the expression an offer to the public in relation to any ADSs in the United Kingdom means the communication in any form and by any means of sufficient information on the terms of the offer and any ADSs to be offered so as to enable an investor to decide to purchase or subscribe for any ADSs and the expression UK Prospectus Regulation means Regulation (EU) 2017/1129 as it forms part of domestic law by virtue of the European Union (Withdrawal) Act 2018.
202
Certain legal matters of United States federal securities and New York State laws in connection with this offering will be passed upon for us by Skadden, Arps, Slate, Meagher & Flom LLP. The validity of the ordinary shares offered in this offering and certain legal matters as to Cayman Islands law will be passed upon for us by Maples and Calder (Hong Kong) LLP. Certain legal matters as to Thai law will be passed upon for us by Thanathip & Partners.
Certain legal matters of United States federal securities and New York State laws in connection with this offering will be passed upon for the underwriters by Latham & Watkins LLP.
Skadden, Arps, Slate, Meagher & Flom LLP may rely upon Maples Group with respect to matters governed by Cayman Islands law, Thanathip & Partners with respect to matters governed by Thai law, and Zhong Lun Law Firm with respect to matters governed by PRC law.
The financial statements and the related financial statement schedule included in this prospectus have been audited by Deloitte & Touche LLP, an independent registered public accounting firm, as stated in their report appearing herein (which report expresses an unqualified opinion on the financial statements and financial statement schedule and includes two explanatory paragraphs referring to the restatement for correction of an error and the translation of Singapore Dollars to United States Dollars). Such financial statements and financial statement schedule have been so included in reliance upon the report of such firm given upon the authority of such firm as experts in accounting and auditing. The office of Deloitte & Touche LLP is located at 6 Shenton Way, OUE Downtown 2, #33-00, Singapore 068809.
WHERE YOU CAN FIND MORE INFORMATION
We have filed a registration statement, including relevant exhibits, with the SEC on Form F-1 under the Securities Act with respect to the underlying ordinary shares represented by the ADSs to be sold in this offering. We have also filed a related registration statement on Form F-6 with the SEC to register the ADSs. For the purposes of this section, the term registration statement means the original registration statement and any and all amendments thereto including the schedules and exhibits to the original registration statement or any amendment. This prospectus, which constitutes a part of the registration statement on Form F-1, does not contain all of the information contained in the registration statement. You should read our registration statements and their exhibits and schedules for further information with respect to us and our ADSs.
Immediately upon the effectiveness of the registration statement on Form F-1 of which this prospectus forms a part, we will become subject to periodic reporting and other informational requirements of the Exchange Act as applicable to foreign private issuers. Accordingly, we will be required to file reports, including annual reports on Form 20-F, and other information with the SEC. All information filed with the SEC, including the registration statement, can be obtained over the Internet at the SECs website at www.sec.gov or inspected and copied at the public reference facilities maintained by the SEC at 100 F Street, N.E., Washington, D.C. 20549. You can request copies of documents, upon payment of a duplicating fee, by writing to the SEC.
As a foreign private issuer, we are exempt under the Exchange Act from, among other things, the rules prescribing the furnishing and content of proxy statements, and our executive officers, directors and principal shareholders are exempt from the reporting and short-swing profit recovery provisions contained in Section 16 of the Exchange Act. In addition, we will not be required under the Exchange Act to file periodic reports and financial statements with the SEC as frequently or as promptly as U.S. companies whose securities are registered under the Exchange Act. As we are a foreign private issuer, we will be required to file our annual report on Form 20-F within 120 days of the end of each year. However, we intend to furnish the depositary with our annual
203
reports, which will include a review of operations and annual audited consolidated financial statements prepared in conformity with IFRS, and all notices of shareholders meetings and other reports and communications that are made generally available to our shareholders. The depositary will make such notices, reports and communications available to holders of ADSs and, if we so request, will mail to all record holders of ADSs the information contained in any notice of a shareholders meeting received by the depositary from us.
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TDCX Inc. and its Subsidiaries (formerly known as TDCX Capital Pte Ltd)
Consolidated Financial Statements
CONTENTS
Page | ||||
F-4 | ||||
F-5 | ||||
Consolidated statements of profit or loss and other comprehensive income |
F-6 | |||
F-7 | ||||
F-8 - F-9 | ||||
F-10 - F-48 | ||||
F-49 - F-53 |
F-1
TDCX Inc. (formerly known as TDCX Capital Pte Ltd) and its Subsidiaries
(Registration No. 362018)
Consolidated Financial Statements
Years Ended December 31, 2018, 2019 and 2020
F-2
Page | ||||
Audited Consolidated Financial Statements of TDCX Inc. and its subsidiaries |
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F-4 | ||||
Consolidated Statement of Financial Position as of December 31, 2019 and 2020 |
F-5 | |||
F-6 | ||||
Consolidated Statement of Changes in Equity for the Years Ended December 31, 2018, 2019 and 2020 |
F-7 | |||
Consolidated Statement of Cash Flows for the Year Ended December 31, 2018, 2019 and 2020 |
F-8 | |||
F-10 | ||||
F-49 |
F-3
Report of Independent Registered Public Accounting Firm
To the Shareholders and the Board of Directors of TDCX Inc. (formerly TDCX Capital Pte Ltd)
Opinion on the Financial Statements
We have audited the accompanying consolidated statements of financial position of TDCX Inc. (formerly TDCX Capital Pte Ltd) and its subsidiaries (the Group) as of December 31, 2020 and 2019, and the related consolidated statements of profit or loss and other comprehensive income, changes in equity and cash flows for each of the three years in the period ended December 31, 2020, and the related notes and the schedule listed in Schedule I (collectively referred to as the financial statements). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Group as of December 31, 2020 and 2019, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2020, in conformity with International Financial Reporting Standards as issued by the International Accounting Standards Board.
Restatement of the 2018 Financial Statements
As discussed in Note 35 to the financial statements, the accompanying 2018 financial statements have been restated to correct a misstatement.
Convenience Translation
Our audits also comprehended the translation of Singapore Dollar into United States Dollar and, in our opinion, such translation has been made in conformity with the basis stated in Note 3 to the financial statements. Such United States Dollar amounts are presented solely for the convenience of readers outside of Singapore.
Basis for Opinion
These financial statements are the responsibility of the Groups management. Our responsibility is to express an opinion on the Groups financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Group in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Group is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits, we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Groups internal control over financial reporting. Accordingly, we express no such opinion.
Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.
/s/ Deloitte & Touche LLP
Singapore
April 9, 2021
We have served as the Groups auditor since 2019.
F-4
TDCX Inc. and its Subsidiaries (formerly known as TDCX Capital Pte Ltd)
Consolidated Statement of Financial Position
Note | December 31, 2020 |
December 31, 2020 |
December 31, 2019 |
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US$000 | S$000 | S$000 | ||||||||||||||
(Note 3) | ||||||||||||||||
ASSETS |
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Current assets |
||||||||||||||||
Cash and cash equivalents |
7 | 45,237 | 59,807 | 35,920 | ||||||||||||
Fixed deposits |
8 | 5,844 | 7,727 | 837 | ||||||||||||
Trade receivables |
10 | 27,925 | 36,919 | 55,278 | ||||||||||||
Contract assets |
11 | 35,430 | 46,842 | 26,523 | ||||||||||||
Other receivables |
12 | 9,271 | 12,257 | 9,210 | ||||||||||||
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Total current assets |
123,707 | 163,552 | 127,768 | |||||||||||||
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Non-current assets |
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Pledged deposits |
9 | 1,798 | 2,377 | 2,110 | ||||||||||||
Other receivables |
12 | 4,443 | 5,874 | 3,708 | ||||||||||||
Plant and equipment |
13 | 30,694 | 40,581 | 40,730 | ||||||||||||
Right-of-use assets |
14 | 22,102 | 29,221 | 22,840 | ||||||||||||
Loan to an associate |
15 | | | 784 | ||||||||||||
Deferred tax assets |
21 | 1,195 | 1,580 | 1,197 | ||||||||||||
Investment in an associate |
173 | 229 | 33 | |||||||||||||
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Total non-current assets |
60,405 | 79,862 | 71,402 | |||||||||||||
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Total assets |
184,112 | 243,414 | 199,170 | |||||||||||||
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LIABILITIES AND EQUITY |
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Current liabilities |
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Other payables |
16 | 28,137 | 37,200 | 26,926 | ||||||||||||
Bank loans |
17 | 18,282 | 24,170 | 34,421 | ||||||||||||
Lease liabilities |
18 | 11,091 | 14,664 | 10,963 | ||||||||||||
Provision for reinstatement cost |
19 | 342 | 452 | | ||||||||||||
Income tax payable |
10,027 | 13,257 | 6,956 | |||||||||||||
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Total current liabilities |
67,879 | 89,743 | 79,266 | |||||||||||||
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Non-current liabilities |
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Bank loans |
17 | 12,205 | 16,136 | | ||||||||||||
Lease liabilities |
18 | 13,481 | 17,823 | 14,498 | ||||||||||||
Provision for reinstatement cost |
19 | 4,249 | 5,617 | 4,955 | ||||||||||||
Defined benefit obligation |
20 | 1,085 | 1,435 | 769 | ||||||||||||
Deferred tax liabilities |
21 | 98 | 129 | 236 | ||||||||||||
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Total non-current liabilities |
31,118 | 41,140 | 20,458 | |||||||||||||
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Capital, reserves and non-controlling interests |
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Share capital |
22 | * | * | * | ||||||||||||
Reserves |
30 | (15,009 | ) | (19,843 | ) | (20,650 | ) | |||||||||
Retained earnings |
100,122 | 132,371 | 120,094 | |||||||||||||
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Equity attributable to owners of the Group |
85,113 | 112,528 | 99,444 | |||||||||||||
Non-controlling interests |
23 | 2 | 3 | 2 | ||||||||||||
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Total equity |
85,115 | 112,531 | 99,446 | |||||||||||||
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Total liabilities and equity |
184,112 | 243,414 | 199,170 | |||||||||||||
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* | Amount is less than S$1,000 |
See accompanying notes to financial statements.
F-5
TDCX Inc. and its Subsidiaries (formerly known as TDCX Capital Pte Ltd)
Consolidated Statement of Profit or Loss and Other Comprehensive Income
Note | 2020 | 2020 | 2019 | 2018 | ||||||||||||||||
US$000 | S$000 | S$000 | S$000 | |||||||||||||||||
(Note 3) | ||||||||||||||||||||
Revenue |
24 | 328,812 | 434,723 | 330,265 | 181,233 | |||||||||||||||
Employee benefits expense |
(195,133 | ) | (257,985 | ) | (189,912 | ) | (109,373 | ) | ||||||||||||
Depreciation expense |
(25,009 | ) | (33,065 | ) | (24,599 | ) | (12,908 | ) | ||||||||||||
Rental and maintenance expense |
(8,020 | ) | (10,603 | ) | (9,220 | ) | (2,623 | ) | ||||||||||||
Recruitment expense |
(6,055 | ) | (8,005 | ) | (6,680 | ) | (3,792 | ) | ||||||||||||
Transport and traveling expense |
(1,138 | ) | (1,504 | ) | (2,083 | ) | (1,358 | ) | ||||||||||||
Telecommunication and technology expense |
(4,769 | ) | (6,305 | ) | (4,522 | ) | (2,385 | ) | ||||||||||||
Interest expense |
(2,313 | ) | (3,058 | ) | (2,893 | ) | (1,128 | ) | ||||||||||||
Other operating expense |
(11,978 | ) | (15,836 | ) | (10,478 | ) | (6,872 | ) | ||||||||||||
Gain on disposal of a subsidiary |
553 | 731 | | | ||||||||||||||||
Share of profit from an associate |
148 | 196 | | | ||||||||||||||||
Interest income |
449 | 594 | 465 | 268 | ||||||||||||||||
Other operating income |
26 | 5,683 | 7,514 | 717 | 546 | |||||||||||||||
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Profit before income tax |
81,230 | 107,397 | 81,060 | 41,608 | ||||||||||||||||
Income tax expenses |
27 | (16,113 | ) | (21,303 | ) | (7,524 | ) | (3,520 | ) | |||||||||||
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Profit for the year |
25 | 65,117 | 86,094 | 73,536 | 38,088 | |||||||||||||||
Item that will not be reclassified to profit or loss: |
||||||||||||||||||||
Remeasurement of retirement benefit obligation |
(137 | ) | (181 | ) | (114 | ) | 48 | |||||||||||||
Item that may be reclassified subsequently to profit or loss: |
||||||||||||||||||||
Exchange differences on translation of foreign operations |
542 | 717 | 954 | (119 | ) | |||||||||||||||
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|
|
|
|
|
|
|
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Total comprehensive income for the year |
65,522 | 86,630 | 74,376 | 38,017 | ||||||||||||||||
|
|
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|
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|
|
|
|||||||||||||
Profit attributable to: |
||||||||||||||||||||
- Owners of the Group |
65,116 | 86,093 | 73,535 | 35,271 | ||||||||||||||||
- Non-controlling interests |
1 | 1 | 1 | 2,817 | ||||||||||||||||
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|
|
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|
|
|
|||||||||||||
65,117 | 86,094 | 73,536 | 38,088 | |||||||||||||||||
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Total comprehensive income attributable to: |
||||||||||||||||||||
- Owners of the Group |
65,521 | 86,629 | 74,375 | 35,145 | ||||||||||||||||
- Non-controlling interests |
1 | 1 | 1 | 2,872 | ||||||||||||||||
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|
|
|
|
|||||||||||||
65,522 | 86,630 | 74,376 | 38,017 | |||||||||||||||||
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|
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Basic and diluted earnings per share |
28 | 65,116 | 86,093 | 73,535 | 35,271 | |||||||||||||||
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|
|
|
|
|
|
|||||||||||||
Weighted average number of ordinary shares used in computing basic and diluted earnings per share |
1 | 1 | 1 | 1 | ||||||||||||||||
|
|
|
|
|
|
|
|
See accompanying notes to financial statements.
F-6
TDCX Inc. and its Subsidiaries (formerly known as TDCX Capital Pte Ltd)
Consolidated Statement of Changes in Equity
Note | Share Capital |
Reserves (Note 30) |
Retained earnings |
Equity attributable to owners of the Group |
Non- controlling interests |
Total | ||||||||||||||||||||||
S$000 | S$000 | S$000 | S$000 | S$000 | S$000 | |||||||||||||||||||||||
Balance at January 1, 2018 |
* | (469 | ) | 31,356 | 30,887 | 14,168 | 45,055 | |||||||||||||||||||||
Total comprehensive income for the year: |
||||||||||||||||||||||||||||
Profit for the year |
| | 35,271 | 35,271 | 2,817 | 38,088 | ||||||||||||||||||||||
Other comprehensive (loss) income |
| (174 | ) | 48 | (126 | ) | 55 | (71 | ) | |||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||
Total |
| (174 | ) | 35,319 | 35,145 | 2,872 | 38,017 | |||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||
Transaction with owners recognized directly in equity: |
||||||||||||||||||||||||||||
Acquisition of non-controlling interests |
23 | | (20,961 | ) | | (20,961 | ) | (17,039 | ) | (38,000 | ) | |||||||||||||||||
Dividends |
29 | | | (3,002 | ) | (3,002 | ) | | (3,002 | ) | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||
Total |
| (20,961 | ) | (3,002 | ) | (23,963 | ) | (17,039 | ) | (41,002 | ) | |||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||
Balance at December 31, 2018 |
* | (21,604 | ) | 63,673 | 42,069 | 1 | 42,070 | |||||||||||||||||||||
Total comprehensive income for the year: |
||||||||||||||||||||||||||||
Profit for the year |
| | 73,535 | 73,535 | 1 | 73,536 | ||||||||||||||||||||||
Other comprehensive income (loss) |
| 954 | (114 | ) | 840 | | 840 | |||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||
Total |
| 954 | 73,421 | 74,375 | 1 | 74,376 | ||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||
Dividends representing transactions with owners recognized directly in equity |
29 | | | (17,000 | ) | (17,000 | ) | | (17,000 | ) | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||
Balance at December 31, 2019 |
* | (20,650 | ) | 120,094 | 99,444 | 2 | 99,446 | |||||||||||||||||||||
Total comprehensive income for the year: |
||||||||||||||||||||||||||||
Profit for the year |
| | 86,093 | 86,093 | 1 | 86,094 | ||||||||||||||||||||||
Other comprehensive income (loss) |
| 717 | (181 | ) | 536 | | 536 | |||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||
Total |
| 717 | 85,912 | 86,629 | 1 | 86,630 | ||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||
Transfer of profits to legal reserve |
| 90 | (90 | ) | | | | |||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||
Transaction with owners recognized directly in equity: |
||||||||||||||||||||||||||||
Dividends |
29 | | | (73,545 | ) | (73,545 | ) | | (73,545 | ) | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||
Total |
| | (73,545 | ) | (73,545 | ) | | (73,545 | ) | |||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||
Balance at December 31, 2020 |
* | (19,843 | ) | 132,371 | 112,528 | 3 | 112,531 | |||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
* | Amount is less than S$1,000 |
See accompanying notes to financial statements.
F-7
TDCX Inc. and its Subsidiaries (formerly known as TDCX Capital Pte Ltd)
Consolidated Statement of Cash Flows
2020 | 2020 | 2019 | 2018 | |||||||||||||
US$000 | S$000 | S$000 | S$000 | |||||||||||||
(Note 3) | (Restated) | |||||||||||||||
Operating activities |
||||||||||||||||
Profit before income tax |
81,230 | 107,397 | 81,060 | 41,608 | ||||||||||||
Adjustments for: |
||||||||||||||||
Depreciation expense |
25,009 | 33,065 | 24,599 | 12,908 | ||||||||||||
Gain on early termination of right-of-use assets |
(128 | ) | (171 | ) | (21 | ) | | |||||||||
(Reversal) Loss allowance on trade and other receivables |
| | (18 | ) | 8 | |||||||||||
Bank facility fee |
41 | 54 | 55 | 6 | ||||||||||||
Interest income |
(449 | ) | (594 | ) | (465 | ) | (268 | ) | ||||||||
Interest expense |
2,313 | 3,058 | 2,893 | 1,128 | ||||||||||||
Remeasurement of retirement benefit obligation |
352 | 466 | 312 | 128 | ||||||||||||
Loss on disposal and write-off of plant and equipment |
2 | 3 | | 17 | ||||||||||||
Rent concession |
(393 | ) | (521 | ) | | | ||||||||||
Gain on disposal of a subsidiary |
(553 | ) | (731 | ) | | | ||||||||||
Share of profit from an associate |
(148 | ) | (196 | ) | | | ||||||||||
|
|
|
|
|
|
|
|
|||||||||
Operating cash flows before movements in working capital |
107,276 | 141,830 | 108,415 | 55,535 | ||||||||||||
Trade receivables |
14,446 | 19,099 | (27,226 | ) | (7,111 | ) | ||||||||||
Contract assets |
(15,175 | ) | (20,063 | ) | (7,734 | ) | (10,415 | ) | ||||||||
Other receivables |
(3,787 | ) | (5,007 | ) | (3,239 | ) | (4,146 | ) | ||||||||
Other payables |
7,189 | 9,505 | 9,833 | 4,503 | ||||||||||||
|
|
|
|
|
|
|
|
|||||||||
Cash generated from operations |
109,949 | 145,364 | 80,049 | 38,366 | ||||||||||||
Interest received |
449 | 594 | 465 | 268 | ||||||||||||
Income tax paid |
(11,727 | ) | (15,505 | ) | (4,793 | ) | (1,551 | ) | ||||||||
Income tax refunded |
24 | 31 | 323 | 237 | ||||||||||||
|
|
|
|
|
|
|
|
|||||||||
Net cash from operating activities |
98,695 | 130,484 | 76,044 | 37,320 | ||||||||||||
|
|
|
|
|
|
|
|
|||||||||
Investing activities |
||||||||||||||||
Purchase of plant and equipment (Note A) |
(13,109 | ) | (17,332 | ) | (25,940 | ) | (18,958 | ) | ||||||||
Proceeds from sales of plant and equipment |
2 | 3 | | | ||||||||||||
Payment for restoration of office |
| | (66 | ) | | |||||||||||
Increase in fixed deposits |
(5,192 | ) | (6,865 | ) | (837 | ) | | |||||||||
Increase in pledged deposits |
(199 | ) | (263 | ) | | (1,905 | ) | |||||||||
Disposal of a subsidiary |
(7 | ) | (9 | ) | | | ||||||||||
Repayment from (Loan to) an associate |
592 | 784 | (784 | ) | | |||||||||||
|
|
|
|
|
|
|
|
|||||||||
Net cash used in investing activities |
(17,913 | ) | (23,682 | ) | (27,627 | ) | (20,863 | ) | ||||||||
|
|
|
|
|
|
|
|
|||||||||
Financing activities |
||||||||||||||||
Acquisition of non-controlling interests (Note 23) |
| | | (38,000 | ) | |||||||||||
Dividends paid |
(55,627 | ) | (73,545 | ) | (17,000 | ) | (3,002 | ) | ||||||||
Drawdown of bank loan |
9,076 | 12,000 | 10,000 | 30,400 | ||||||||||||
Amount due to a director |
| | | 6,230 | ||||||||||||
Repayment of amount due to a director |
| | (10,474 | ) | | |||||||||||
Repayment of lease liabilities |
(10,759 | ) | (14,225 | ) | (11,590 | ) | (5,324 | ) | ||||||||
Interest paid |
(1,077 | ) | (1,424 | ) | (1,396 | ) | (831 | ) | ||||||||
Bank facility fee paid |
| | (115 | ) | (153 | ) | ||||||||||
Repayment of bank loan |
(4,599 | ) | (6,080 | ) | (6,080 | ) | | |||||||||
|
|
|
|
|
|
|
|
|||||||||
Net cash used in financing activities |
(62,986 | ) | (83,274 | ) | (36,655 | ) | (10,680 | ) | ||||||||
|
|
|
|
|
|
|
|
F-8
TDCX Inc. and its Subsidiaries (formerly known as TDCX Capital Pte Ltd)
Consolidated Statement of Cash Flows (contd)
2020 | 2020 | 2019 | 2018 | |||||||||||||
US$000 | S$000 | S$000 | S$000 | |||||||||||||
(Note 3) | (Restated) | |||||||||||||||
Net increase in cash and cash equivalents |
17,796 | 23,528 | 11,762 | 5,777 | ||||||||||||
Effect of foreign exchange rate changes on cash held in foreign currencies |
272 | 359 | 185 | (71 | ) | |||||||||||
Cash and cash equivalents at beginning of year |
27,169 | 35,920 | 23,973 | 18,267 | ||||||||||||
|
|
|
|
|
|
|
|
|||||||||
Cash and cash equivalents at end of year (Note 7) |
45,237 | 59,807 | 35,920 | 23,973 | ||||||||||||
|
|
|
|
|
|
|
|
Note A:
During the year, the additions to plant and equipment totaling S$18.2 million (2019: S$29.0 million,2018: S$19.7 million) comprises paid purchases totaling S$17.3 million (2019: S$25.9 million, 2018: S$18.9 million) and a provision of S$0.9 million (2019: S$3.0 million, 2018: S$0.7 million) for estimated future reinstatement cost relating to office improvements (Note 19).
See accompanying notes to financial statements.
F-9
TDCX Inc. and its Subsidiaries (formerly known as TDCX Capital Pte Ltd)
Notes to Consolidated Financial Statements
1 | General |
TDCX Inc. (TDCX) TDCX is a Company incorporated in Cayman Islands in April 2020 as TDCX Capital Pte Ltd and subsequent changed its name to TDCX Inc. (the Company) in January 2021. TDCX is 100% owned by its founder (the Founder) with a register share capital of S$1. TDCX and its consolidated subsidiaries (together, the Group) mainly provide outsource contact center services comprising sales and digital marketing, omnichannel customer experiences (CX) and social media content monitoring and moderation.
TDCX (SG) Pte. Ltd. (TDCX SG) and TDCX Holdings Pte. Ltd. (TDCXH) are companies incorporated in Singapore in October 1995 and June 1999 respectively. TDCX (KY) Pte. Ltd. (TDCX KY) is a Company incorporated in Cayman Islands in January 2020. TDCX SG, TDCXH and TDCX KY are consolidated subsidiaries of TDCX as a result of the reorganizations further described below.
Prior to September 2018, TDCX SG was 60% owned by the Founder and 40% owned by a third party. In September 2018, 40% of TDCX SG was acquired by TDCXH by paying cash in an amount of S$38 million (Note 23). In January 2019, the Founder reduced his 60% equity interest in TDCX SG through cancelation of his shares in TDCX SG and therefore, TDCX SG became a wholly owned subsidiary of TDCXH.
On December 22, 2020, TDCXH was acquired by TDCX KY by paying cash in an amount of S$2 and TDCXH became a wholly owned subsidiary of TDCX KY.
On March 23, 2021, TDCX acquired 100% of TDCX KY from the Founder. As TDCX, TDCX KY, TDCXH and TDCX SG were under common control of the Founder during all the periods presented, the acquisitions of TDCX SG and TDCXH by TDCX KY as well as the acquisition of TDCX KY by TDCX were accounted for in a manner similar to a pooling of interest with assets and liabilities all reflected at their historical amounts in the Groups consolidated financial statements as if the reorganization had always been in place. As such, the Groups consolidated financial statements were prepared as if TDCX has control over TDCX KY, TDCXH and TDCX SG for all periods presented.
The consolidated financial statements of the Group for the financial year ended December 31, 2020 were authorized for issue by the Board of Directors of TDCX on April 9, 2021.
2 | Adoption of new and revised standards |
New and amended IFRS Standards that are effective for the current year
Impact of the initial application of Covid-19-Related Rent Concessions Amendment toIFRS 16
In May 2020, the IASB issued Covid-19-Related Rent Concessions (Amendment to IFRS 16) that provides practical relief to lessees in accounting for rent concessions occurring as a direct consequence of COVID-19, by introducing a practical expedient to IFRS 16. The practical expedient permits a lessee to elect not to assess whether a COVID-19-related rent concession is a lease modification. A lessee that makes this election shall account for any change in lease payments resulting from the COVID-19-related rent concession the same way it would account for the change applying IFRS 16 if the change were not a lease modification.
The practical expedient applies only to rent concessions occurring as a direct consequence of COVID-19 and only if all of the following conditions are met:
a) | The change in lease payments results in revised consideration for the lease that is substantially the same as, or less than, the consideration for the lease immediately preceding the change; |
F-10
TDCX Inc. and its Subsidiaries (formerly known as TDCX Capital Pte Ltd)
Notes to Consolidated Financial Statements
b) | Any reduction in lease payments affects only payments originally due on or before June 30, 2021 (a rent concession meets this condition if it results in reduced lease payments on or before June 30, 2021 and increased lease payments that extend beyond June 30, 2021); and |
c) | There is no substantive change to other terms and conditions of the lease. |
In the current financial year, the Group has applied the amendments to IFRS 16 (as issued by the IASB in May 2020) in advance of its effective date.
Impact on accounting for changes in lease payments applying the exemption
The Group has applied the practical expedient retrospectively to all rent concessions that meet the conditions in IFRS 16:46B, and has not restated prior period figures.
The Group has benefited from an average 2 months waiver of lease payments on leased office space. The waiver of lease payments of S$0.5 million has been accounted for as a negative variable lease payment in profit or loss. The Group has derecognized the part of the lease liability that has been extinguished by the forgiveness of lease payments, consistent with the requirements of IFRS 9:3.3.1.
Amendments to IAS 1 and IAS 8 Definition of material
The Group has adopted the amendments to IAS 1 and IAS 8 for the first time in the current year. The amendments make the definition of material in IAS 1 easier to understand and are not intended to alter the underlying concept of materiality in IFRS Standards. The concept of obscuring material information with immaterial information has been included as part of the new definition.
The threshold for materiality influencing users has been changed from could influence to could reasonably be expected to influence. The definition of material in IAS 8 has been replaced by a reference to the definition of material in IAS 1. In addition, the IASB amended other Standards and the Conceptual Framework that contain a definition of material or refer to the term material to ensure consistency.
New and revised IFRS Standards in issue but not yet effective
At the date of authorization of these financial statements, the Group has not applied the following new and revised International Financial Reporting Standards (IFRS) that have been issued but are not yet effective:
Amendments to IAS 1 |
Classification of Liabilities as Current or Non-current | |
Amendments to IFRS 3 |
Reference to the Conceptual Framework | |
Amendments to IAS 16 |
Property, Plant and EquipmentProceeds before Intended Use | |
Annual improvements to IFRS |
Amendments to IFRS 1-First-time Adoption of International Standards, IFRS 9 Financial instruments, IFRS 16 Leases and IAS 41 Agriculture. |
The management do not expect that the adoption of the Standards listed above will have a material impact on the financial statements of the Group in future periods.
3 | Summary of significant accounting policies |
BASIS OF ACCOUNTINGThe consolidated financial statements have been prepared in accordance with IFRS issued by International Accounting Standards Board (IASB).
F-11
TDCX Inc. and its Subsidiaries (formerly known as TDCX Capital Pte Ltd)
Notes to Consolidated Financial Statements
The financial statements have been prepared in accordance with the historical cost basis, except as disclosed in the accounting policies below. Historical cost is generally based on the fair value of the consideration given in exchange for goods and services.
Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date, regardless of whether that price is directly observable or estimated using another valuation technique. In estimating the fair value of an asset or a liability, the Group takes into account the characteristics of the asset or liability which market participants would take into account when pricing the asset or liability at the measurement date. Fair value for measurement and/or disclosure purposes in these consolidated financial statements is determined on such a basis, except for leasing transactions that are within the scope of IFRS 16 Leases, and measurements that have some similarities to fair value but are not fair value, such as value in use in IAS 36 Impairment of Assets.
In addition, for financial reporting purposes, fair value measurements are categorized into Level 1, 2 or 3 based on the degree to which the inputs to the fair value measurements are observable and the significance of the inputs to the fair value measurement in its entirety, which are described as follows:
| Level 1 inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities that the entity can access at the measurement date; |
| Level 2 inputs are inputs, other than quoted prices included within Level 1, that are observable for the asset or liability, either directly or indirectly; and |
| Level 3 inputs are unobservable inputs for the asset or liability. |
The principal accounting policies adopted are set out below.
BASIS OF CONSOLIDATIONThe consolidated financial statements incorporate the financial statements of the Company and entities (including structure entities) controlled by the Group and its subsidiaries. Control is achieved when the Company:
| has power over the investee; |
| is exposed, or has rights, to variable returns from its involvement with the investee; and |
| has the ability to use its power to affect its returns. |
The Company reassesses whether or not it controls an investee if facts and circumstances indicate that there are changes to one or more of the three elements of control listed above.
When the Company has less than a majority of the voting rights of an investee, it has power over the investee when the voting rights are sufficient to give it the practical ability to direct the relevant activities of the investee unilaterally. The Company considers all relevant facts and circumstances in assessing whether or not the companys voting rights in an investee are sufficient to give it power, including:
| the size of the companys holding of voting rights relative to the size and dispersion of holdings of the other vote holders; |
| potential voting rights held by the company, other vote holders or other parties; |
| rights arising from other contractual arrangements; and |
| any additional facts and circumstances that indicate that the Company has, or does not have, the current ability to direct the relevant activities at the time that decisions need to be made, including voting patterns at previous shareholders meetings. |
F-12
TDCX Inc. and its Subsidiaries (formerly known as TDCX Capital Pte Ltd)
Notes to Consolidated Financial Statements
Consolidation of a subsidiary begins when the Company obtains control over the subsidiary and ceases when the Company loses control of the subsidiary. Specifically, the results of a subsidiary acquired or disposed of during the year are included in the consolidated statement of profit or loss and other comprehensive income from the date the Company gains control until the date when the Company ceases to control the subsidiary.
Where necessary, adjustments are made to the financial statements of subsidiaries to bring their accounting policies in line with the Groups accounting policies.
All intragroup assets and liabilities, equity, income, expenses and cash flows relating to transactions between the members of the Group are eliminated on consolidation.
Non-controlling interests in subsidiaries are identified separately from the Groups equity therein. Those interests of non-controlling shareholders that are present ownership interests entitling their holders to a proportionate share of net assets upon liquidation may initially be measured at fair value or at the non-controlling interests proportionate share of the fair value of the acquirees identifiable net assets. The choice of measurement is made on an acquisition-by-acquisition basis. Other non-controlling interests are initially measured at fair value. Subsequent to acquisition, the carrying amount of non-controlling interests is the amount of those interests at initial recognition plus the non-controlling interests share of subsequent changes in equity.
Profit or loss and each component of other comprehensive income are attributed to the owners of the Company and to the non-controlling interests. Total comprehensive income of the subsidiaries is attributed to the owners of the Company and to the non-controlling interests even if this results in the non-controlling interests having a deficit balance.
Changes in the Groups interest in a subsidiary that do not result in a loss of control are accounted for as equity transactions. The carrying amounts of the Groups interests and the non-controlling interests are adjusted to reflect the changes in their relative interests in the subsidiary. Any difference between the amount by which the non-controlling interests are adjusted and the fair value of the consideration paid or received is recognized directly in equity and attributed to owners of the company.
When the Group loses control of a subsidiary, the gain or loss on disposal recognized in profit or loss is calculated as the difference between (i) the aggregate of the fair value of the consideration received and the fair value of any retained interest and (ii) the previous carrying amount of the assets (including goodwill), less liabilities of the subsidiary and any non-controlling interests. All amounts previously recognized in other comprehensive income in relation to that subsidiary are accounted for as if the Group had directly disposed of the related assets or liabilities of the subsidiary (i.e. reclassified to profit or loss or transferred to another category of equity as required/permitted by applicable IFRS Standards). The fair value of any investment retained in the former subsidiary at the date when control is lost is regarded as the fair value on initial recognition for subsequent accounting under IFRS 9 when applicable, or the cost on initial recognition of an investment in an associate or a joint venture.
ASSOCIATEAn associate is an entity over which the Group has significant influence. Significant influence is the power to participate in the financial and operating policy decisions of the investee but is not control over those policies. The Group holds 10% ownership interests in a company. The Group accounts for this Company as an associate as it has significant influence by virtue of its representation on the Board.
The results and assets and liabilities of associates are incorporated in these consolidated financial statements using the equity method of accounting.
Under the equity method, an investment in an associate is initially recognized in the consolidated statement of financial position at cost and adjusted thereafter to recognize the Groups share of the profit
F-13
TDCX Inc. and its Subsidiaries (formerly known as TDCX Capital Pte Ltd)
Notes to Consolidated Financial Statements
or loss and other comprehensive income of the associate. When the Groups share of losses of an associate exceeds the Groups interest in that associate (which includes any long-term interests that, in substance, form part of the Groups net investment in the associate), the Group discontinues recognizing its share of further losses. Additional losses are recognized only to the extent that the Group has incurred legal or constructive obligations or made payments on behalf of the associate.
An investment in an associate is accounted for using the equity method from the date on which the investee becomes an associate. On acquisition of the investment in an associate, any excess of the cost of the investment over the Groups share of the net fair value of the identifiable assets and liabilities of the investee is recognized as goodwill, which is included within the carrying amount of the investment. Any excess of the Groups share of the net fair value of the identifiable assets and liabilities over the cost of the investment, after reassessment, is recognized immediately in profit or loss in the period in which the investment is acquired.
The requirements of IAS 28 Investments in Associate and Joint Ventures are applied to determine whether it is necessary to recognize any impairment loss with respect to the Groups investment in an associate. When necessary, the entire carrying amount of the investment (including goodwill, if any) is tested for impairment in accordance with IAS 36 Impairment of Assets as a single asset by comparing its recoverable amount (higher of value in use and fair value less costs to sell) with its carrying amount, any impairment loss recognized forms part of the carrying amount of the investment. Any reversal of that impairment loss is recognized in accordance with IAS 36 to the extent that the recoverable amount of the investment subsequently increases.
When a Group entity transacts with an associate of the Group, profits and losses resulting from the transactions with the associate are recognized in the Groups consolidated financial statements only to the extent of interests in the associate that are not related to the Group.
FINANCIAL INSTRUMENTSFinancial assets and financial liabilities are recognized on the statement of financial position when the Group becomes a party to the contractual provisions of the instruments. Transaction costs directly attributable to the acquisition of financial assets or financial liabilities at fair value through profit or loss are recognized immediately in profit or loss.
Financial assets and financial liabilities are initially measured at fair value. Transaction costs that are directly attributable to the acquisition or issue of financial assets and financial liabilities are added to or deducted from the fair value of the financial assets and financial liabilities, as appropriate, on initial recognition.
Financial assets
Classification of financial assets
Debt instruments mainly comprise bank balances and trade and other receivables which meet the following conditions and are subsequently measured at amortized cost:
| The financial asset is held within a business model whose objective is to hold financial assets in order to collect contractual cash flows only; and |
| The contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding. |
Debt instruments that meet the following conditions are subsequently measured at fair value through other comprehensive income (FVTOCI):
| The financial asset is held within a business model whose objective is achieved by both collecting contractual cash flows and selling the financial assets; and |
F-14
TDCX Inc. and its Subsidiaries (formerly known as TDCX Capital Pte Ltd)
Notes to Consolidated Financial Statements
| The contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding. |
Debt instruments that do not meet the amortized cost criteria or the fair value through other comprehensive income (FVTOCI) criteria are classified as fair value through profit or loss (FVTPL).
In addition, debt instruments that meet either the amortized cost criteria or the FVTOCI criteria may be designated irrevocably as at FVTPL upon initial recognition if such designation eliminates or significantly reduces a measurement or recognition inconsistency that would arise from measuring assets or liabilities or recognizing the gains and losses on them on different bases. The Group has designated debt instruments as at FVTPL as disclosed in Note 15.
Investments in equity instruments are classified as at FVTPL, unless the Group irrevocably elects to designate an equity investment that is neither held for trading nor a contingent consideration arising from a business combination as at FVTOCI on initial recognition. The Group has elected to designate the investment in equity instrument at FVTPL as disclosed in Note 15.
Financial assets at FVTPL are measured at fair value at the end of each reporting period, with any fair value gains or losses recognized in profit or loss. The net gain or loss recognized in profit or loss includes any dividend or interest earned on the financial asset.
Amortized cost and effective interest method
The effective interest method is a method of calculating the amortized cost of a debt instrument and of allocating interest income over the relevant period.
The effective interest rate is the rate that exactly discounts estimated future cash receipts (including all fees and points paid or received that form an integral part of the effective interest rate, transaction costs and other premiums or discounts) excluding expected credit losses, through the expected life of the debt instrument, or, where appropriate, a shorter period, to the gross carrying amount of the debt instrument on initial recognition.
The amortized cost of a financial asset is the amount at which the financial asset is measured at initial recognition minus the principal repayments, plus the cumulative amortization using the effective interest method of any difference between that initial amount and the maturity amount, adjusted for any loss allowance. On the other hand, the gross carrying amount of a financial asset is the amortized cost of a financial asset before adjusting for any loss allowance.
Interest income is recognized using the effective interest method for debt instruments measured subsequently at amortized cost, except for short-term balances when the effect of discounting is immaterial.
Cash and cash equivalents
Cash and cash equivalents in the statement of cash flows comprise cash on hand and demand deposits, bank overdrafts, and other short-term highly liquid investments that are readily convertible to a known amount of cash and are subject to an insignificant risk of changes in value.
Impairment of financial assets
The Group recognizes a loss allowance for expected credit losses (ECL) on trade and other receivables. The amount of expected credit losses is updated at each reporting date to reflect changes in credit risk since initial recognition of the respective financial instrument.
F-15
TDCX Inc. and its Subsidiaries (formerly known as TDCX Capital Pte Ltd)
Notes to Consolidated Financial Statements
The Group always recognizes lifetime ECL for trade receivables. The expected credit losses on these financial assets are estimated using a provision matrix based on the Groups historical credit loss experience, adjusted for factors that are specific to the debtors, general economic conditions and an assessment of both the current as well as the forecast direction of conditions at the reporting date, including time value of money where appropriate.
For all other financial instruments, the Group recognizes lifetime ECL when there has been a significant increase in credit risk since initial recognition. If, on the other hand, the credit risk on the financial instrument has not increased significantly since initial recognition, the Group measures the loss allowance for that financial instrument at an amount equal to 12-month ECL. The assessment of whether lifetime ECL should be recognized is based on significant increases in the likelihood or risk of a default occurring since initial recognition instead of on evidence of a financial asset being credit-impaired at the reporting date or an actual default occurring.
Lifetime ECL represents the expected credit losses that will result from all possible default events over the expected life of a financial instrument. In contrast, 12-month ECL represents the portion of lifetime ECL that is expected to result from default events on a financial instrument that are possible within 12 months after the reporting date.
Significant increase in credit risk
In assessing whether the credit risk on a financial instrument has increased significantly since initial recognition, the Group compares the risk of a default occurring on the financial instrument as at the reporting date with the risk of a default occurring on the financial instrument as at the date of initial recognition. In making this assessment, the Group considers both quantitative and qualitative information that is reasonable and supportable, including historical experience and forward-looking information that is available without undue cost or effort. Forward-looking information considered includes the future prospects of the industries in which the Groups debtors operate and impact of COVID-19, as well as consideration of various external sources of actual and forecast economic information that relate to the Groups core operations.
The Group presumes that the credit risk on a financial asset has increased significantly since initial recognition when contractual payments are more than 90 days past due, unless the Group has reasonable and supportable information that demonstrates otherwise.
The Group assumes that the credit risk on a financial instrument has not increased significantly since initial recognition if the financial instrument is determined to have low credit risk at the reporting date. A financial instrument is determined to have low credit risk if i) the financial instrument has a low risk of default, ii) the borrower has a strong capacity to meet its contractual cash flow obligations in the near term and iii) adverse changes in economic and business conditions in the longer term may, but will not necessarily, reduce the ability of the borrower to fulfill its contractual cash flow obligations.
The Group regularly monitors the effectiveness of the criteria used to identify whether there has been a significant increase in credit risk and revises them as appropriate to ensure that the criteria are capable of identifying significant increase in credit risk before the amount becomes past due.
Definition of default
The Group considers for internal credit risk management purposes and based on historical experience, that an event of default to have occurred when there is information obtained from internal or external sources that indicates the debtor is unlikely to pay its creditors, including the Group.
F-16
TDCX Inc. and its Subsidiaries (formerly known as TDCX Capital Pte Ltd)
Notes to Consolidated Financial Statements
Irrespective of the above analysis, the Group considers that default has occurred when a financial asset is more than 90 days past due unless the Group has reasonable and supportable information to demonstrate that a more lagging default criterion is more appropriate.
Credit-impaired financial assets
A financial asset is credit-impaired when one or more events that have a detrimental impact on the estimated future cash flows of that financial asset have occurred. These events include evidence that there is significant financial difficulty of the debtors or it is becoming probable that the debtor will enter bankruptcy.
Write-off policy
The Group writes off a financial asset when there is information indicating that the counterparty is in severe financial difficulty and there is no realistic prospect of recovery, e.g. when the counterparty has been placed under liquidation or has entered into bankruptcy proceedings. Financial assets written off may still be subject to enforcement activities under the Groups recovery procedures, taking into account legal advice where appropriate. Any recoveries made are recognized in profit or loss.
Measurement and recognition of expected credit losses
The measurement of expected credit losses is a function of the probability of default, loss given default (i.e. the magnitude of the loss if there is a default) and the exposure at default. The assessment of the probability of default and loss given default is based on historical data adjusted by forward-looking information as described above. As for the exposure at default, for financial assets, this is represented by the assets gross carrying amount at the reporting date.
For financial assets, the expected credit loss is estimated as the difference between all contractual cash flows that are due to the Group in accordance with the contract and all the cash flows that the Group expects to receive, discounted at the original effective interest rate.
If the Group has measured the loss allowance for a financial instrument at an amount equal to lifetime ECL in the previous reporting period, but determines at the current reporting date that the conditions for lifetime ECL are no longer met, the Group measures the loss allowance at an amount equal to 12-month ECL at the current reporting date.
The Group recognizes an impairment gain or loss in profit or loss for all financial instruments with a corresponding adjustment to their carrying amount through a loss allowance account.
Derecognition of financial assets
The Group derecognizes a financial asset only when the contractual rights to the cash flows from the asset expire, or when it transfers the financial asset and substantially all the risks and rewards of ownership of the asset to another party. If the Group neither transfers nor retains substantially all the risks and rewards of ownership and continues to control the transferred asset, the Group recognizes its retained interest in the asset and an associated liability for amounts it may have to pay. If the Group retains substantially all the risks and rewards of ownership of a transferred financial asset, the Group continues to recognize the financial asset and a collateralized borrowing for the proceeds received.
On derecognition of a financial asset measured at amortized cost, the difference between the assets carrying amount and the sum of the consideration received and receivable is recognized in profit or loss.
F-17
TDCX Inc. and its Subsidiaries (formerly known as TDCX Capital Pte Ltd)
Notes to Consolidated Financial Statements
Financial liabilities and equity instruments
Classification as debt or equity
Financial liabilities and equity instruments issued by the Group are classified according to the substance of the contractual arrangements entered into and the definitions of a financial liability and an equity instrument.
Equity instruments
An equity instrument is any contract that evidences a residual interest in the assets of the Group after deducting all of its liabilities. Equity instruments are recorded at the proceeds received, net of direct issue costs.
Other payables and bank loans
Other payables are initially measured at fair value, net of transaction costs, and are subsequently measured at amortized cost, using the effective interest method, with interest expense recognized on an effective yield basis, except for short-term payables when the recognition of interest would be immaterial.
Interest-bearing loans are initially recognized at fair value, and are subsequently measured at amortized cost, using the effective interest method.
Derecognition of financial liabilities
The Group derecognizes financial liabilities when, and only when, the Groups obligations are discharged, canceled or they expire.
PLANT AND EQUIPMENTPlant and equipment are stated at cost less accumulated depreciation and any accumulated impairment losses.
Depreciation is charged so as to write off the cost of assets, over their estimated useful lives, using the straight-line method, on the following bases:
Years | ||
Leasehold improvements |
Shorter of the useful lives or the lease terms (ranging from 2 to 6 years) | |
Furniture and fittings |
5 | |
Office equipment and software |
3 to 5 |
Depreciation of plant and equipment in progress commences when the assets are ready for their intended use. The estimated useful lives, residual value and depreciation method are reviewed at each year end, with the effect of any changes in estimate accounted for on a prospective basis.
Fully depreciated assets still in use are retained in the financial statements
Right-of-use assets are depreciated over the shorter period of the lease term and the useful life of the underlying asset. If a lease transfers ownership of the underlying asset or the cost of the right-of-use asset reflects that the Group expects to exercise a purchase option, the related right-of-use asset is depreciated over the useful life of the underlying asset.
The gain or loss arising on the disposal or retirement of a plant and equipment is determined as the difference between the sales proceeds and the carrying amounts of the asset and is recognized in profit or loss.
F-18
TDCX Inc. and its Subsidiaries (formerly known as TDCX Capital Pte Ltd)
Notes to Consolidated Financial Statements
IMPAIRMENT OF TANGIBLE ASSETSAt the end of each reporting period, the Group reviews the carrying amounts of its tangible assets to determine whether there is any indication that those assets have suffered an impairment loss. If any such indication exists, the recoverable amount of the asset is estimated in order to determine the extent of the impairment loss (if any). Where it is not possible to estimate the recoverable amount of an individual asset, the Group estimates the recoverable amount of the cash-generating unit to which the asset belongs.
Recoverable amount is the higher of fair value less costs to sell and value in use. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset for which the estimates of future cash flows have not been adjusted.
If the recoverable amount of an asset is estimated to be less than its carrying amount, the carrying amount of the asset is reduced to its recoverable amount. An impairment loss is recognized in profit or loss.
Where an impairment loss subsequently reverses, the carrying amount of the asset (cash-generating unit) is increased to the revised estimate of its recoverable amount, but so that the increased carrying amount does not exceed the carrying amount that would have been determined had no impairment loss been recognized for the asset in prior years. A reversal of an impairment loss is recognized in profit or loss to the extent that it eliminates the impairment loss which has been recognized for the asset in prior years immediately.
PROVISIONSProvisions are recognized when the Group has a present obligation (legal or constructive) as a result of a past event, and it is probable that the Group will be required to settle the obligation and a reliable estimate can be made of the amount of the obligation.
The amount recognized as a provision is the best estimate of the consideration required to settle the present and future obligation at the end of the reporting period, taking into account the risks and uncertainties surrounding the obligation. Where a provision is measured using the cash flows estimated to settle the present obligation, its carrying amount is the present value of those cash flows.
When some or all other economic benefits required to settle a provision are expected to be recovered from a third party, the receivable is recognized as an asset if it is virtually certain that reimbursement will be received and the amount of the receivable can be measured reliably.
REVENUE RECOGNITIONRevenue is measured based on the consideration specified in a contract with a customer and recognized as and when control of a service is transferred to a customer.
Revenues are recognized upon the application of the following steps:
1. Identification of the contract or contracts with a customer;
2. Identification of the performance obligations in the contract;
3. Determination of the transaction price;
4. Allocation of the transaction price to the performance obligations in the contract; and
5. Recognition of revenue when, or as, the performance obligation is satisfied.
The Group enters into master services agreements and statements of work which set out the details of the work streams for each campaign to be provided to the customers. The work streams are generally capable of being distinct and accounted for as separate performance obligations. Based on the transaction price as set up in the agreement for each performance obligation, the Group will invoice to the customers on a monthly basis as each performance obligation is satisfied after agreeing with the customers on any fee adjustments based on whether the Group meets (or the failure to meet) certain key performance indicators
F-19
TDCX Inc. and its Subsidiaries (formerly known as TDCX Capital Pte Ltd)
Notes to Consolidated Financial Statements
(where applicable) during that month. The Group recognizes the revenue using the right to invoice practical expedient as the output method because the amount it has the right to invoice corresponds directly with the value to the customer of the Groups performance completed to date, and any variable consideration would be resolved at the point of billing.
A contract asset is recorded when revenue is recognized prior to invoicing and a contract liability is recorded when the Group invoices the customers prior to satisfying the performance obligations. The contracts do not include a significant financing component as the normal credit term is between 30 to 90 days.
Revenue recognized from contracts with customers is disaggregated into categories that depict how the nature, amount, timing and uncertainty of revenue and cash flows are affected by economic factors.
| Omnichannel CX solutionsThe Group provides omnichannel CX solutions by providing information about its clients, products and services to their customers. The objective is to help its clients manage their relationships with their customers. This includes technical support for software, consumer electronic devices and telemarketing campaigns. Customer contact occurs through phone call, online chat, SMS, email and a variety of other channels and are typically on general enquiries or after-sales service issue resolution. Each service is viewed as one performance obligation and revenue is recognized over time by using the output method when the performance obligation is satisfied on a monthly basis measured by the value of the service performed to date. |
| Sales and digital marketingThe Group provides sales and digital marketing services through contacts made by the Groups sales and digital marketing agents with the objective to promote and sell the products of its customers. This primarily involves helping the digital advertising platform clients to attract more advertisers and grow their Internet and social media advertising businesses. Each scope of service is viewed as one performance obligation and revenue is recognized over time by using the output method when the performance obligation is satisfied on a monthly basis measured by the value of the service performed to date. |
| Content monitoring and moderationThe Group provides content monitoring and moderation services to a customer by way of content moderating, identification review, authenticity and access flows and other related services. This is performed through review of social media platforms for content that violates terms of service or is illegal pursuant to the specifications and guidelines provided by the client. Revenue is recognized over time by using the output method when the performance obligation is satisfied on a monthly basis measured by the value of the service performed to date. |
| Workspace, payroll services and other servicesThe Group provides workspace and payroll services through provision of fully equipped and serviced workstations and provision of payroll and human resource administration services to some of its customers. Revenue is recognized over time when the performance obligation is satisfied on a monthly basis measured by the value of the service performed to date. |
Value of the service performed is determined based on the hours incurred times a fixed rate as stipulated in the contract. Any variabilities in the transaction price are resolved before each billing.
The Group has elected to apply the practical expedient provided in IFRS 15, to recognize revenue in the amount to which it has the right to invoice and has not disclosed the aggregate amount of the transaction price allocated to the performance obligations that are unsatisfied (or partially unsatisfied) as of the end of the reporting period.
The Group incurred certain costs such as personnel and travel costs, hiring, on boarding and training employees and capital expenditures incurred in infrastructure, renovation and leases of office space which
F-20
TDCX Inc. and its Subsidiaries (formerly known as TDCX Capital Pte Ltd)
Notes to Consolidated Financial Statements
are incidental to its contracts with the customers. IFRS 15 requires an entity to recognize an asset from the costs incurred to fulfill a contract with a customer if the costs are not within the scope of another IFRS Standard, and only if those costs meet all the following criteria:
| the costs relate directly to a contract or to an anticipated contract that the Group can specifically identify; |
| the costs generate or enhance resources of the Group that will be used in satisfying (or in continuing to satisfy) performance obligations in the future; and |
| the costs are expected to be recovered. |
The Group recognized costs as expenses as they are incurred when they relate to personnel and traveling, hiring and training employees when they do not meet the criteria above. In cases where the start-up costs to fulfill a contract includes capital expenditures in infrastructure, renovation and leases of offices space, those costs are recorded based on the guidance included in IAS 16 Property Plant and Equipment and IFRS 16 Leases.
Interest income
Interest income is accrued on a time basis, by reference to the principal outstanding and at the effective interest rate applicable.
LEASES
The Group as a lessee
The Group leases office space to run its operation.
The Group assesses whether a contract is or contains a lease, at inception of the contract on the basis of whether the customer has the right to control the use of an identified asset for a period of time in exchange for consideration. The Group recognizes a right-of-use asset and a corresponding lease liability with respect to all lease arrangements in which it is the lessee, except for short-term leases (defined as leases with a lease term of 12 months or less) and leases of low value assets (such as tablets and personal computers, small items of office furniture and telephones). For these leases, the Group recognizes the lease payments as an operating expense on a straight-line basis over the term of the lease unless another systematic basis is more representative of the time pattern in which economic benefits from the leased assets are consumed.
The lease liability is initially measured at the present value of the lease payments that are not paid at the commencement date. The lease payment shall be discounted using the interest rate implicit in the lease. If the interest rate implicit in the lease cannot be readily determined, the Group uses the incremental borrowing rate. The Groups incremental borrowing rate is determined based on the interest rate of the Groups bank loans if the Group would have to pay to borrow over a similar term and with a similar security the funds necessary to obtain an asset of a similar value of the right-of-use asset in a similar economic environment.
Lease payments included in the measurement of the lease liability comprise:
| Fixed lease payments (including in-substance fixed payments), less any lease incentives receivable; |
| The amount expected to be payable by the lessee under residual value guarantees; |
| The exercise price of purchase options, if the lessee is reasonably certain to exercise the options; and |
F-21
TDCX Inc. and its Subsidiaries (formerly known as TDCX Capital Pte Ltd)
Notes to Consolidated Financial Statements
| Payments of penalties for terminating the lease, if the lease term reflects the exercise of an option to terminate the lease. |
The lease liability is presented as a separate line (current and non-current) in the consolidated statement of financial position.
The lease liability is subsequently measured by increasing the carrying amount to reflect interest on the lease liability (using the effective interest method) and by reducing the carrying amount to reflect the lease payments made.
The Group re-measures the lease liability (and makes a corresponding adjustment to the related right-of-use asset) whenever:
| The lease term has changed or there is a significant event or change in circumstances resulting in a change in the assessment of exercise of a purchase option, in which case the lease liability is remeasured by discounting the revised lease payments using a revised discount rate. |
| The lease payments change due to changes in an index or rate or a change in expected payment under a guaranteed residual value, in which cases the lease liability is remeasured by discounting the revised lease payments using an unchanged discount rate (unless the lease payments change is due to a change in a floating interest rate, in which case a revised discount rate is used). |
| A lease contract is modified and the lease modification is not accounted for as a separate lease, in which case the lease liability is remeasured based on the lease term of the modified lease by discounting the revised lease payments using a revised discount rate at the effective date of the modification. |
The right-of-use assets comprise the initial measurement of the corresponding lease liability, lease payments made at or before the commencement day, less any lease incentives received and any initial direct costs. They are subsequently measured at cost less accumulated depreciation and impairment losses.
Whenever the Group incurs an obligation for costs to dismantle and remove a lease improvement asset and restores the underlying lease assets to their original condition required by the terms and conditions of the lease, a provision is recognized to the extent that the costs relate to a right-of-use asset.
Right-of-use assets are depreciated over the shorter period of contracted lease term and useful life of the underlying asset. If a lease transfers ownership of the underlying asset or the cost of the right-of-use asset reflects that the Group expects to exercise a purchase option, the related right-of-use asset is depreciated over the useful life of the underlying asset. The depreciation starts at the commencement date of the lease.
The right-of-use assets are presented as a separate line in the consolidated statement of financial position.
The Group applies IAS 36 to determine whether a right-of-use asset is impaired and accounts for any identified impairment loss.
GOVERNMENT GRANTSGovernment grants are not recognized until there is reasonable assurance that the Group will comply with the conditions attaching to them and the grants will be received.
Government grants are recognized in profit or loss on a systematic basis over the periods in which the Group recognizes as expenses the related costs for which the grants are intended to compensate. Specifically, government grants whose primary condition is that the Group should purchase, construct or otherwise acquire non-current assets (including property, plant and equipment) are recognized as deferred income in the consolidated statement of financial position and transferred to profit or loss on a systematic and rational basis over the useful lives of the related assets.
F-22
TDCX Inc. and its Subsidiaries (formerly known as TDCX Capital Pte Ltd)
Notes to Consolidated Financial Statements
Government grants that are receivable as compensation for expenses or losses already incurred or for the purpose of giving immediate financial support to the Group with no future related costs are recognized in profit or loss in the period in which they become receivable.
BORROWING COSTSAll borrowing costs are recognized in profit or loss in the period in which they are incurred.
RETIREMENT BENEFIT COSTSPayments to defined contribution retirement benefit plans are charged as an expense when employees have rendered the services entitling them to the contributions. Payments made to state-managed retirement benefit schemes, such as the Singapore Central Provident Fund, are dealt with as payments to defined contribution plans where the Groups obligations under the plans are equivalent to those arising in a defined contribution retirement benefit plan.
For defined benefit retirement benefit plans, the cost of providing benefits is determined using the Projected Unit Credit Method, with actuarial valuations being carried out as at each reporting date. Remeasurement, comprising actuarial gains and losses, the effect of the changes to the asset ceiling (if applicable) and the return on plan assets (excluding interest), is reflected immediately in the statement of financial position with a charge or credit recognized in other comprehensive income in the period in which they occur. Remeasurement recognized in other comprehensive income is reflected immediately in retained earnings and will not be reclassified to profit or loss. Past service cost is recognized in profit or loss in the period of a plan amendment. Net interest is calculated by applying the discount rate at the beginning of the period to the net defined benefit liability or asset. Defined benefit costs are categorized as follows:
| Service cost (including current service cost, past service cost, as well as gains and losses on curtailments and settlements); |
| Net interest expense or income; and |
| Remeasurement. |
The Group presents the first two components of defined benefit costs in profit or loss in the line item employee benefits expense. Curtailment gains and losses are accounted for as past service costs.
The retirement benefit obligation recognized in the statement of financial position represents the actual deficit or surplus in the Groups defined benefit plans. Any surplus resulting from this calculation is limited to the present value of any economic benefits available in the form of refunds from the plans or reductions in future contributions to the plan.
A liability for a termination benefit is recognized at the earlier of when the entity can no longer withdraw the offer of the termination benefit and when the entity recognizes any related restructuring costs.
EMPLOYEE LEAVE ENTITLEMENTEmployee entitlements to annual leave are recognized when they accrue to employees. A provision is made for the estimated liability for annual leave as a result of services rendered by employees up to the end of the reporting period.
INCOME TAXIncome tax expense represents the sum of the tax currently payable and deferred tax.
Tax currently payable is based on taxable profit for the year. Taxable profit differs from profit as reported in the consolidated statement of profit or loss and other comprehensive income because it excludes items of income or expense that are taxable or deductible in other years and it further excludes items that are not taxable or tax deductible. The Groups liability for current tax is calculated using tax rates (and tax laws) that have been enacted or substantively enacted in countries where the Group and subsidiaries operate by the end of the reporting period.
F-23
TDCX Inc. and its Subsidiaries (formerly known as TDCX Capital Pte Ltd)
Notes to Consolidated Financial Statements
A provision is recognized for those matters for which the tax determination is uncertain but it is considered probable that there will be a future outflow of funds to a tax authority. The provisions are measured at the best estimate of the amount expected to become payable. The assessment is based on the judgement of tax professionals within the Group supported by previous experience in respect of such activities and in certain cases based on specialist independent tax advice.
Deferred tax is recognized on the differences between the carrying amounts of assets and liabilities in the financial statements and the corresponding tax bases used in the computation of taxable profit. Deferred tax liabilities are generally recognized for all taxable temporary differences and deferred tax assets are recognized to the extent that it is probable that taxable profits will be available against which deductible temporary differences can be utilized. Such assets and liabilities are not recognized if the temporary difference arises from goodwill or from the initial recognition (other than in a business combination) of other assets and liabilities in a transaction that affects neither the taxable profit nor the accounting profit. Deferred tax liabilities are recognized for taxable temporary differences arising on investments in subsidiaries, except where the Group is able to control the reversal of the temporary difference and it is probable that the temporary difference will not reverse in the foreseeable future. Deferred tax assets arising from deductible temporary differences associated with such investments and interests are only recognized to the extent that it is probable that there will be sufficient taxable profits against which to utilize the benefits of the temporary differences and they are expected to reverse in the foreseeable future.
The carrying amount of deferred tax assets is reviewed at the end of each reporting period and reduced to the extent that it is no longer probable that sufficient taxable profits will be available to allow all or part of the asset to be recovered.
Deferred tax is calculated at the tax rates that are expected to apply in the period when the liability is settled or the asset realized based on the tax rates (and tax laws) that have been enacted or substantively enacted by the end of the reporting period. The measurement of deferred tax liabilities and assets reflects the tax consequences that would follow from the manner in which the Group expects, at the end of the reporting period, to recover or settle the carrying amount of its assets and liabilities.
Deferred tax assets and liabilities are offset when there is a legally enforceable right to set off current tax assets against current tax liabilities and when they relate to income taxes levied by the same taxation authority and the Group intends to settle its current tax assets and liabilities on a net basis. Current and deferred tax are recognized as an expense or income in profit or loss.
FOREIGN CURRENCY TRANSACTIONS AND TRANSLATIONThe individual financial statements of each Group entity are measured and presented in the currency of the primary economic environment in which the entity operates (its functional currency). The consolidated financial statements of the Group are presented in Singapore Dollar.
In preparing the financial statements of the individual entities, transactions in currencies other than the entitys functional currency are recorded at the rates of exchange prevailing on the date of the transaction. At the end of each reporting period, monetary items denominated in foreign currencies are retranslated at the rates prevailing at the end of the reporting period. Non-monetary items carried at fair value that are denominated in foreign currencies are retranslated at the rates prevailing on the date when the fair value was determined. Non-monetary items that are measured in terms of historical cost in a foreign currency are not retranslated.
Exchange differences arising on the settlement of monetary items, and on retranslation of monetary items are included in profit or loss for the period. Exchange differences arising on the retranslation of non-monetary items carried at fair value are included in profit or loss for the period except for differences arising on the retranslation of non-monetary items in respect of which gains and losses are recognized in
F-24
TDCX Inc. and its Subsidiaries (formerly known as TDCX Capital Pte Ltd)
Notes to Consolidated Financial Statements
other comprehensive income. For such non-monetary items, any exchange component of that gain or loss is also recognized in other comprehensive income.
For the purpose of presenting consolidated financial statements, the assets and liabilities of the Groups foreign operations (including comparatives) are expressed in Singapore Dollars using exchange rates prevailing at the end of the reporting period. Income and expense items (including comparatives) are translated at the average exchange rates for the period, unless exchange rates fluctuated significantly during that period, in which case the exchange rates at the dates of the transactions are used. Exchange differences arising, if any, are recognized in other comprehensive income and accumulated in a separate component of equity under the header of foreign currency translation reserve.
Exchange differences arising from the translation of the net investment in foreign entities (including monetary items that, in substance, form part of the net investment in foreign entities) and of borrowings, are recognized in other comprehensive income and accumulated in a separate component of equity under the header of translation reserve.
CONVENIENCE TRANSLATIONThe translations of Singapore Dollar amounts into USD for the consolidated statement of financial position, consolidated statement of profit or loss and other comprehensive income, consolidated statement of cash flow, and segmental reporting as disclosed in Note 32 for the year ended December 31, 2020 are included solely for the convenience of readers outside of Singapore and have been made at the rate of S$1.3221 to US$1, the approximate rate of exchange at December 31, 2020. Such translations should not be construed as representations that the Singapore Dollar amounts could be converted into USD at that or any other rate.
4 | Critical accounting judgments and key sources of estimation uncertainty |
In applying the Groups accounting policies, which are described in Note 3, management is required to make Judgments, estimates and assumptions about the carrying amounts of assets and liabilities that are not readily apparent from other sources. The estimates and associated assumptions are based on historical experience and other factors that are considered to be relevant. Actual results may differ from these estimates.
The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognized in the period in which the estimate is revised if the revision affects only that period, or in the period of the revision and future periods if the revision affects both current and future periods.
Critical Judgments in applying the entity accounting policies
In the process of applying the accounting policies, management did not make any material Judgments that have significant effect on the amounts recognized in the financial statements apart from those involving estimates as discussed below.
Key sources of estimation uncertainty
The key assumptions concerning the future, and other key sources of estimation uncertainty at the end of the reporting period, that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year, are discussed below:
Expected credit loss for trade receivables and contract assets
The Group recognizes lifetime ECL for trade receivables and contract assets, using a provision matrix based on the Groups historical credit loss experience, adjusted for factors that are specific to the debtors,
F-25
TDCX Inc. and its Subsidiaries (formerly known as TDCX Capital Pte Ltd)
Notes to Consolidated Financial Statements
general economic conditions. The carrying amount of the trade receivables and contract assets at the end of the reporting period are disclosed in Notes 10 and 11 to the financial statements.
The management has assessed that, no impairment allowance is necessary in respect of trade receivables and contract assets, based on historical experience in the collection and ECL model, other than as disclosed in Notes 10 and 11 respectively. These receivables are mainly arising from customers that have a good credit record with the Group.
5 | Financial instruments, financial risks and capital management |
(a) | Categories of financial instruments |
The following table sets out the financial instruments as at the end of the reporting period:
December 31, 2020 |
December 31, 2019 |
|||||||
S$000 | S$000 | |||||||
Financial assets |
||||||||
Financial assets at amortized cost |
119,739 | 102,560 | ||||||
Financial assets at FVTPLLoan to associate |
| 784 | ||||||
|
|
|
|
|||||
Financial liabilities |
||||||||
Financial liabilities at amortized cost |
76,345 | 61,159 | ||||||
Lease liabilities |
32,487 | 25,461 | ||||||
|
|
|
|
(b) | Financial risk management policies and objectives |
The Groups overall risk management policy seeks to minimize potential adverse effects on financial performance of the Group. There has been no change to the Groups exposure to these financial risks or the manner in which it manages and measures the risk. The risks associated with these financial instruments and the policies to mitigate these risk are set out below.
(i) | Credit risk management |
Credit risk refers to the risk that a counterparty will default on its contractual obligations resulting in financial loss to the Group. The Groups credit risk is primarily attributable to its cash and cash equivalents and trade receivables and other receivables.
As at December 31, 2020, approximately 65% of the Groups trade receivable arose from 4 customers (2019: approximately 81% of the Groups trade receivable arose from3 customers). Apart from this, the Group does not have significant credit risk exposure to any single counterparty or any group of counterparties having similar characteristics. The Group defines counterparties as having similar characteristics if they are related entities.
Cash and cash equivalents are placed with credit-worthy financial institutions with high credit ratings assigned by international credit-rating agencies and therefore credit risk is limited. The Group has adopted procedures in extending credit terms to customers and monitoring its credit risk. Credit evaluations are performed on customers requiring credit over a certain amount. Before accepting any new customer, the Group carries out research on the credit risk of the new customer and assesses the potential customers credit quality and defines credit limits by customer. Limits attributed to customers are reviewed when necessary.
F-26
TDCX Inc. and its Subsidiaries (formerly known as TDCX Capital Pte Ltd)
Notes to Consolidated Financial Statements
The Groups current credit risk grading framework comprises the following categories:
Category |
Description |
Basis for recognizing ECL | ||
Performing |
The counterparty has a low risk of default and does not have any past-due amounts. |
12-month ECL | ||
Doubtful |
Amount is more than 90 days past due or there has been a significant increase in credit risk since initial recognition. |
Lifetime ECL not credit-impaired | ||
In default |
Amount is more than 120 days past due or there is evidence indicating the asset is credit-impaired. |
Lifetime ECL credit-impaired | ||
Write-off |
There is evidence indicating that the debtor is in severe financial difficulty and the Group has no realistic prospect of recovery. |
Amount is written off |
The table below details the credit quality of the Groups financial assets as well as maximum exposure to credit risk by credit risk rating grades:
Note | Internal credit rating |
12-month or lifetime ECL |
Gross carrying amount |
Loss allowance |
Net carrying amount |
|||||||||||||||||||
S$000 | S$000 | S$000 | ||||||||||||||||||||||
2020 |
||||||||||||||||||||||||
Trade receivables |
10 | (a) | |
Lifetime ECL (Simplified |
|
36,919 | | 36,919 | ||||||||||||||||
Contract assets |
11 | (a) | |
Lifetime ECL (Simplified |
|
46,842 | | 46,842 | ||||||||||||||||
Other receivables |
12 | Performing | |
12-month ECL |
|
12,909 | | 12,909 | ||||||||||||||||
|
|
|||||||||||||||||||||||
| ||||||||||||||||||||||||
|
|
|||||||||||||||||||||||
2019 |
||||||||||||||||||||||||
Trade receivables |
10 | (a) | |
Lifetime ECL (Simplified |
|
55,278 | | 55,278 | ||||||||||||||||
Contract assets |
11 | (a) | |
Lifetime ECL (Simplified |
|
26,523 | | 26,523 | ||||||||||||||||
Other receivables |
12 | Performing | |
12-month ECL |
|
8,415 | | 8,415 | ||||||||||||||||
|
|
|||||||||||||||||||||||
| ||||||||||||||||||||||||
|
|
F-27
TDCX Inc. and its Subsidiaries (formerly known as TDCX Capital Pte Ltd)
Notes to Consolidated Financial Statements
(a) | The Group determines the expected credit losses on these items by using a provision matrix, estimated based on historical credit loss experience based on the past due status of the debtors, adjusted as appropriate to reflect current conditions and estimates of future economic conditions. Accordingly, the credit risk profile of these assets is presented based on their past due status. |
(ii) | Interest rate risk management |
Interest rate risk arises from the potential changes in interest rates that may have an adverse effect on the Group in the current reporting period and future years.
The Groups primary interest rate relates to interest-bearing bank loans. The interest rate and terms of repayment of bank loans are disclosed in Note 17 of the financial statements.
The sensitivity analysis has been determined based on the exposure to interest rates for non-derivative instruments at the end of the reporting period and the stipulated change taking place at the beginning of the financial year and held constant throughout the reporting period in the case of instruments that have floating rates. A 50 basis point increase or decrease is used and represents managements assessment of the reasonably possible change in interest rates.
As at December 31, 2020 it is estimated that a 50 basis point change in interest rates will affect the Groups profit before tax by S$0.2 million (2019: S$0.2 million).
(iii) | Foreign currency risk management |
The Group has operations in different jurisdictions and transacts in various foreign currencies. At the end of reporting periods, the carrying amounts of significant monetary assets and monetary liabilities denominated in currencies other than the respective Group entities functional currencies are as follows:
Assets | Liabilities | |||||||||||||||
2020 | 2019 | 2020 | 2019 | |||||||||||||
S$000 | S$000 | S$000 | S$000 | |||||||||||||
United States Dollar |
75,104 | 38,205 | 18,785 | 7,820 | ||||||||||||
|
|
|
|
|
|
|
|
The sensitivity rate used when reporting foreign currency risk to key management personnel is 5%, which is the change in foreign exchange rate that management deems reasonably possible which will affect outstanding foreign currency denominated monetary items at period end. If the respective Group entities functional currencies strengthen/weaken by 5% against the United States Dollar (USD), profit or loss will (decrease)/increase by S$2.8 million (2019: S$1.5 million).
The decrease in carrying amount of monetary assets is due to prompt collection of outstanding trade receivables as a result of tightened credit controls and the increase monetary liabilities denominated in USD is due to the expansion of the Groups business in the regions that transact in USD.
(iv) | Liquidity risk management |
Liquidity risk is managed by matching the payment and receipt cycle. The Group maintains sufficient cash and cash equivalents and internally generated cash flows to finance its operations. The Group mitigates liquidity risk by maintaining some standby credit lines available.
F-28
TDCX Inc. and its Subsidiaries (formerly known as TDCX Capital Pte Ltd)
Notes to Consolidated Financial Statements
Non-derivative financial liabilities
The following table details the remaining contractual maturity for non-derivative financial liabilities. The tables have been drawn up based on the undiscounted cash flows of financial liabilities based on the earliest date on which the Group can be required to pay. Contractual undiscounted cash flows in the table below includes both interest and principal cash flows.
Interest rate |
On demand or within 1 year |
Within 2 to 3 years |
Within 3 to 5 years |
5 years onwards |
Total contractual undiscounted cash flows |
Adjustment | Carrying amount |
|||||||||||||||||||||||||
% | S$000 | S$000 | S$000 | S$000 | S$000 | S$000 | S$000 | |||||||||||||||||||||||||
December 31, 2020 |
||||||||||||||||||||||||||||||||
Non-interest bearing |
| 36,039 | | | | 36,039 | | 36,039 | ||||||||||||||||||||||||
Variable interest rate instruments |
|
1.6% to 4.7% |
|
23,736 | 7,463 | 5,051 | | 36,250 | (955 | ) | 35,295 | |||||||||||||||||||||
Fixed interest rate instruments |
2.5% | 1,043 | 1,200 | 3,065 | | 5,308 | (297 | ) | 5,011 | |||||||||||||||||||||||
Lease liabilities (fixed rate) |
|
1.6% to 8.8% |
|
15,968 | 14,860 | 4,278 | 69 | 35,175 | (2,688 | ) | 32,487 | |||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||
December 31, 2019 |
||||||||||||||||||||||||||||||||
Non-interest bearing |
| 26,738 | | | | 26,738 | | 26,738 | ||||||||||||||||||||||||
Variable interest rate instruments |
|
3.0% to 4.7% |
|
36,419 | | | | 36,419 | (1,998 | ) | 34,421 | |||||||||||||||||||||
Lease liabilities (fixed rate) |
|
3.0% to 8.8% |
|
12,073 | 14,578 | 618 | | 27,269 | (1,808 | ) | 25,461 | |||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-derivative financial assets
All non-derivative financial assets of the Group as at December 31, 2020 and 2019 are repayable on demand or due within one year from the end of the reporting period, and are non-interest bearing, except for fixed deposits, pledged deposits and other receivables as disclosed in Notes 8, 9 and 12 respectively.
(v) | Fair value of financial assets and financial liabilities |
The carrying amounts of financial assets and liabilities on the statement of financial position approximate their respective fair values due to the relatively short-term maturity of these financial instruments. The fair values of other classes of financial assets and liabilities are disclosed in the respective notes to financial statements.
(c) | Capital risk management policies and objectives |
Management reviews the capital structure at least annually to ensure that the Group will be able to continue as a going concern. The capital structure comprises only issued capital, reserves and retained earnings. The Groups overall strategy remains unchanged.
F-29
TDCX Inc. and its Subsidiaries (formerly known as TDCX Capital Pte Ltd)
Notes to Consolidated Financial Statements
6 | Remuneration of key management personnel |
The remuneration of directors and other members of key management personnel during the years were as follows:
2020 | 2019 | 2018 | ||||||||||
S$000 | S$000 | S$000 | ||||||||||
Wages, salaries, bonuses and others |
7,606 | 6,318 | 3,978 | |||||||||
Post-employment benefits |
287 | 150 | 130 | |||||||||
|
|
|
|
|
|
|||||||
7,893 | 6,468 | 4,108 | ||||||||||
|
|
|
|
|
|
7 | Cash and cash equivalents |
December 31, 2020 |
December 31, 2019 |
|||||||
S$000 | S$000 | |||||||
Cash on hand |
15 | 15 | ||||||
Cash at bank |
48,104 | 25,160 | ||||||
Fixed deposits |
11,688 | 10,745 | ||||||
|
|
|
|
|||||
59,807 | 35,920 | |||||||
|
|
|
|
Fixed deposits bear interest at an effective interest rate of 3.2% (2019: 2.9%) per annum and for tenure ranging from 7 days to 60 days (2019: 7 days to 60 days).
8 | Fixed deposits |
December 31, 2020 |
December 31, 2019 |
|||||||
S$000 | S$000 | |||||||
Fixed deposits |
7,727 | 837 | ||||||
|
|
|
|
Fixed deposits bear interest at an effective interest rate of 3.2% (2019: 2.9%) per annum and for tenure ranging from 90 days to 365 days (2019: 90 days to 365 days).
9 | Pledged deposits |
December 31, 2020 |
December 31, 2019 |
|||||||
S$000 | S$000 | |||||||
Pledged deposits |
2,377 | 2,110 | ||||||
|
|
|
|
The Group pledged deposits of S$1.9 million (2019: S$1.9mil) to a financial institution for securing of bank loans (Note 17). The remaining pledged deposits relate to deposits placed to comply with the local regulations of subsidiaries. Pledged deposits approximate fair value as at end of reporting period.
10 | Trade receivables |
December 31, 2020 |
December 31, 2019 |
|||||||
S$000 | S$000 | |||||||
Outside parties |
36,919 | 55,278 | ||||||
|
|
|
|
F-30
TDCX Inc. and its Subsidiaries (formerly known as TDCX Capital Pte Ltd)
Notes to Consolidated Financial Statements
The credit period on rendering of service to outside parties is 30 to 90 days (2019: 30 to 90 days). No interest is charged on the trade receivables during the credit period of the invoices. Thereafter, interest may be charged ranging from 12% to 15% per annum (2019: 12% to 15% per annum) on the outstanding balance.
Loss allowance for trade receivables has been measured at an amount equal to the lifetime ECL. The ECL on trade receivables are estimated using a provision matrix by reference to past default experience of the debtor and an analysis of the debtors current financial position, adjusted for factors that are specific to the debtors, and where relevant general economic conditions of the industry in which the debtors operate.
The following table details the risk profile of trade receivables from contracts with customers based on the Groups provision matrix. As the Groups historical credit loss experience does not show significantly different loss patterns for different customer segments, the provision for loss allowance based on past due status is not further distinguished between the Groups different customer base.
Trade receivables days past due | ||||||||||||||||||||||||
Current | 1 30 days |
31 60 days |
61 90 days |
> 90 days |
Total | |||||||||||||||||||
S$000 | S$000 | S$000 | S$000 | S$000 | S$000 | |||||||||||||||||||
December 31, 2020 |
||||||||||||||||||||||||
Estimated total gross carrying amount at default: |
||||||||||||||||||||||||
Outside parties |
27,552 | 7,710 | 1,496 | 121 | 40 | 36,919 | ||||||||||||||||||
Expected credit loss |
| | | | | | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
27,552 | 7,710 | 1,496 | 121 | 40 | 36,919 | |||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
Trade receivables days past due | ||||||||||||||||||||||||
Current | 1 30 days |
31 60 days |
61 90 days |
> 90 days |
Total | |||||||||||||||||||
S$000 | S$000 | S$000 | S$000 | S$000 | S$000 | |||||||||||||||||||
December 31, 2019 |
||||||||||||||||||||||||
Estimated total gross carrying amount at default: |
||||||||||||||||||||||||
Outside parties |
36,313 | 13,908 | 4,429 | 329 | 299 | 55,278 | ||||||||||||||||||
Expected credit loss |
| | | | | | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
36,313 | 13,908 | 4,429 | 329 | 299 | 55,278 | |||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
The following table shows the movement in ECL that has been recognized for trade receivables in accordance with the simplified approach set out in IFRS 9:
December 31, 2020 |
December 31, 2019 |
|||||||
S$000 | S$000 | |||||||
Balance at beginning of year |
| 8 | ||||||
Credit to profit or loss |
| (8 | ) | |||||
|
|
|
|
|||||
Balance at end of year |
| | ||||||
|
|
|
|
F-31
TDCX Inc. and its Subsidiaries (formerly known as TDCX Capital Pte Ltd)
Notes to Consolidated Financial Statements
11 | Contract assets |
December 31, 2020 |
December 31, 2019 |
|||||||
S$000 | S$000 | |||||||
Unbilled receivables |
46,842 | 26,523 | ||||||
|
|
|
|
Unbilled receivables are balances owed by the customers that arise from services performed. Any amount previously recognized as a contract asset is reclassified to trade receivables at the point at which it is invoiced to the customer. Contract assets increased by S$20.3 million (2019: S$7.9 million) due to the expansion of business.
Management estimates the loss allowance on amounts due from customers at an amount equal to lifetime ECL, taking into account the historical default experience and the future prospects of the industry in which the customers operate in. None of the amounts due from customers at the end of the reporting period is past due and management considered the amount to have low credit risk.
12 | Other receivables |
December 31, 2020 |
December 31, 2019 |
|||||||
S$000 | S$000 | |||||||
Prepayments |
4,500 | 4,503 | ||||||
Deposits |
9,115 | 5,874 | ||||||
Grant receivable |
722 | | ||||||
Others |
3,794 | 2,541 | ||||||
|
|
|
|
|||||
18,131 | 12,918 | |||||||
|
|
|
|
|||||
Analyzed as: |
||||||||
Current |
12,257 | 9,210 | ||||||
Non-current |
5,874 | 3,708 | ||||||
|
|
|
|
|||||
18,131 | 12,918 | |||||||
|
|
|
|
Non-current other receivables relate to refundable deposits for office tenancies and utilities that are non-interest bearing and are due for repayment in years 2022 to 2026 (2019: 2021 to 2023). Non-current other receivables approximate fair value as at end of reporting period.
For purpose of impairment assessment, other receivables are considered to have low credit risk as they are not due for payment at the end of the reporting period and there has been no significant increase in the risk of default on the receivables since initial recognition. Accordingly, for the purpose of impairment assessment for these receivables, the loss allowance is measured at an amount equal to 12-month ECL.
In determining the ECL, management has taken into account the historical default experience and the financial position of the counterparties, adjusted for factors that may be specific to the debtors in estimating the probability of default of each of these receivables, as well as the loss upon default in each case. Management has determined that those receivables are subject to immaterial credit loss and adequate loss allowance has been provided.
F-32
TDCX Inc. and its Subsidiaries (formerly known as TDCX Capital Pte Ltd)
Notes to Consolidated Financial Statements
Movement in loss allowance for other receivables:
December 31, 2020 |
December 31, 2019 |
|||||||
S$000 | S$000 | |||||||
Balance at beginning of year |
| 10 | ||||||
Credit to profit or loss |
| (10 | ) | |||||
|
|
|
|
|||||
Balance at end of year |
| | ||||||
|
|
|
|
F-33
TDCX Inc. and its Subsidiaries (formerly known as TDCX Capital Pte Ltd)
Notes to Consolidated Financial Statements
13 | Plant and equipment |
Leasehold improvements |
Furniture and fittings |
Office equipment and software |
Equipment-in-progress | Total | ||||||||||||||||
S$000 | S$000 | S$000 | S$000 | S$000 | ||||||||||||||||
Cost: |
||||||||||||||||||||
At January 1, 2019 |
16,755 | 4,369 | 21,006 | 2,140 | 44,270 | |||||||||||||||
Additions |
9,377 | 1,329 | 5,058 | 13,240 | 29,004 | |||||||||||||||
Reclassification |
6,976 | 2,122 | 3,509 | (12,607 | ) | | ||||||||||||||
Disposals |
(216 | ) | | (83 | ) | | (299 | ) | ||||||||||||
Written off |
(635 | ) | (92 | ) | (146 | ) | | (873 | ) | |||||||||||
Currency alignment |
356 | 132 | 354 | 61 | 903 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
At December 31, 2019 |
32,613 | 7,860 | 29,698 | 2,834 | 73,005 | |||||||||||||||
Additions |
3,228 | 659 | 3,643 | 10,701 | 18,231 | |||||||||||||||
Reclassification |
2,423 | 184 | 4,839 | (7,446 | ) | | ||||||||||||||
Disposals |
| | (28 | ) | | (28 | ) | |||||||||||||
Written off |
| | (279 | ) | | (279 | ) | |||||||||||||
Currency alignment |
449 | 95 | 313 | 23 | 880 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
At December 31, 2020 |
38,713 | 8,798 | 38,186 | 6,112 | 91,809 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Accumulated depreciation: |
||||||||||||||||||||
At January 1, 2019 |
6,555 | 1,417 | 11,387 | | 19,359 | |||||||||||||||
Depreciation for the year |
7,548 | 1,108 | 5,101 | | 13,757 | |||||||||||||||
Disposals |
(216 | ) | | (83 | ) | | (299 | ) | ||||||||||||
Written off |
(635 | ) | (92 | ) | (146 | ) | | (873 | ) | |||||||||||
Currency alignment |
99 | 32 | 200 | | 331 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
At December 31, 2019 |
13,351 | 2,465 | 16,459 | | 32,275 | |||||||||||||||
Depreciation for the year |
10,372 | 1,530 | 7,145 | | 19,047 | |||||||||||||||
Disposals |
| | (28 | ) | | (28 | ) | |||||||||||||
Written off |
| | (274 | ) | | (274 | ) | |||||||||||||
Currency alignment |
118 | 10 | 80 | | 208 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
At December 31, 2020 |
23,841 | 4,005 | 23,382 | | 51,228 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Carrying amount: |
||||||||||||||||||||
At December 31, 2019 |
19,262 | 5,395 | 13,239 | 2,834 | 40,730 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
At December 31, 2020 |
14,872 | 4,793 | 14,804 | 6,112 | 40,581 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
At December 31, 2020, the Group had entered into contractual commitments for the acquisition of plant and equipment amounting to S$6.9 million (2019: S$0.7 million).
F-34
TDCX Inc. and its Subsidiaries (formerly known as TDCX Capital Pte Ltd)
Notes to Consolidated Financial Statements
14 | Right-of-use assets |
Office space | ||||
S$000 | ||||
Cost: |
||||
At January 1, 2019 |
28,082 | |||
Additions |
14,917 | |||
Expired and early termination |
(4,688 | ) | ||
Currency alignment |
454 | |||
|
|
|||
At December 31, 2019 |
38,765 | |||
Additions |
22,837 | |||
Expired and early termination |
(8,707 | ) | ||
Currency alignment |
391 | |||
|
|
|||
At December 31, 2020 |
53,286 | |||
|
|
|||
Accumulated depreciation: |
||||
At January 1, 2019 |
9,496 | |||
Depreciation for the year |
10,842 | |||
Expired and early termination |
(4,554 | ) | ||
Currency alignment |
141 | |||
|
|
|||
At December 31, 2019 |
15,925 | |||
Depreciation for the year |
14,018 | |||
Expired and early termination |
(6,008 | ) | ||
Currency alignment |
130 | |||
|
|
|||
At December 31, 2020 |
24,065 | |||
|
|
|||
Carrying amount: |
||||
At December 31, 2019 |
22,840 | |||
|
|
|||
At December 31, 2020 |
29,221 | |||
|
|
Amount recognized in profit and loss
2020 | 2019 | 2018 | ||||||||||
S$000 | S$000 | S$000 | ||||||||||
Depreciation expense on right-of-use assets |
14,018 | 10,842 | 6,386 | |||||||||
Interest expense on lease liabilities (Note 25) |
1,559 | 1,383 | 725 | |||||||||
Expenses relating to lease of low value assets |
2,027 | 1,344 | 718 | |||||||||
|
|
|
|
|
|
The Group leases office space with lease term ranging from 1 to 5 years. At December 31, 2020, the total cash outflow for leases amount to S$14.7 million (2019: S$11.6 million).
15 | Loan to an associate |
December 31, 2020 |
December 31, 2019 |
|||||||
S$000 | S$000 | |||||||
Debt instrument at FVTPL |
| 784 | ||||||
|
|
|
|
Loan to associate represented a debt instrument issued by an associate and individual shareholders of the associate, held by TDCXH. The debt instrument is repayable at the demand of TDCXH during the term of
F-35
TDCX Inc. and its Subsidiaries (formerly known as TDCX Capital Pte Ltd)
Notes to Consolidated Financial Statements
3 years from December 21, 2020 and bears an interest of 3% above HSBC Best Lending Rate. At any time during the period that the principal and any interest thereon are outstanding, TDCXH had the option to convert the debt into equity representing a majority interest in this associate. Subsequent to the conversion, the individual shareholders reserved a right to buy back such majority interest within 4 months from the date of such conversion. Loan to an associate was measured at FVTPL. The loan was repaid in 2020.
16 | Other payables |
December 31, 2020 |
December 31, 2019 |
|||||||
S$000 | S$000 | |||||||
Outside parties |
35,875 | 26,617 | ||||||
Contract liabilities |
| 188 | ||||||
Deferred grant income |
1,161 | | ||||||
Others |
164 | 121 | ||||||
|
|
|
|
|||||
37,200 | 26,926 | |||||||
|
|
|
|
The average credit period on payables is 30 days (2019: 30 days). Interest is charged ranging from0% to 15% per annum (2019: 0% to 15%) on the outstanding balance.
17 | Bank loans |
December 31, 2020 |
December 31, 2019 |
|||||||
S$000 | S$000 | |||||||
Securedat amortized cost: |
||||||||
Bank loans |
40,306 | 34,421 | ||||||
|
|
|
|
|||||
Analysed between: |
||||||||
Current portion |
||||||||
Within 1 year |
24,170 | 34,421 | ||||||
Non-current portion |
||||||||
Within 2 to 5 years |
16,136 | | ||||||
|
|
|
|
|||||
40,306 | 34,421 | |||||||
|
|
|
|
|||||
Interest payable (included in bank loans) |
308 | 308 | ||||||
|
|
|
|
On September 18, 2018, TDCX SG entered into a financing facility with a financial institution lender and drew down a loan with principal amount of S$30.4 million. The facility bears an interest rate of 3% over the prevailing cost of funds for the financial institution lender (as determined by the financial institution lender). The bank loan is denominated in Singapore Dollars with 20 equal quarterly repayments commencing on January 17, 2019 and matures on October 17, 2023. During the year ended December 31, 2020, the TDCX SG has made repayments of S$6.0 million (2019: S$6.0 million).
On April 29, 2019, TDCX SG entered into a revised credit facility with the financial institution lender to provide for borrowings in an aggregate amount of S$56.5 million and includes a S$7.6 million interest rate derivatives facility, a S$20.0 million advance facility, a S$27.4 million refinancing facility and a S$1.5 million bankers guarantee. This credit facility was amended on October 16, 2019, to, among other things, provide for a S$5.0 million foreign exchange facility and reduce the S$7.6 million interest rate derivatives facility to S$3.5 million.
F-36
TDCX Inc. and its Subsidiaries (formerly known as TDCX Capital Pte Ltd)
Notes to Consolidated Financial Statements
On October 16, 2019 and March 18, 2020, TDCX SG drew down loans of S$10.0 million and S$7.0 million respectively from the advance facility. The facility bears an interest rate of 1.25% per annum over the prevailing cost of funds for the financial institution lender (as determined by the financial institution lender). The loan is repayable on demand.
On April 30, 2020, TDCX SG entered into a temporary bridging loan agreement with the same financial institution lender and subsequently on July 30, 2020, TDCX SG drew down a principal amount of S$5.0 million. The facility bears an interest rate of 2.5% per annum. The bank loan is denominated in Singapore Dollar with 53 equal monthly repayments commencing on March 1, 2021 and matures on August 1, 2025. No repayment has been made during the year ended December 31, 2020. Bank loans approximate fair value as at end of reporting period.
The bank loans are secured by:
(a) | Personal guarantee from a director; |
(b) | Guarantee from TDCXH ; |
(c) | Charge over a subsidiarys pledged bank deposits; |
(d) | Charge over shares of TDCX SG and a subsidiary in Malaysia; |
(e) | Deed of subordination; and |
(f) | Fixed and floating charge over all present and future assets by way of debenture. |
The bank loans contain covenants which requires TDCXH and TDCX SG to maintain the following:
(a) | TDCX SGs tangible net worth of not less than S$16 million; |
(b) | A ratio of TDCX SGs total indebtedness to tangible net worth of not more than 1.5 times; |
(c) | TDCXHs consolidated tangible net worth of not less than S$42 million; |
(d) | A ratio of TDCXHs consolidated total indebtedness to consolidated tangible net worth of not more than 1.5 times; |
(e) | TDCXHs consolidated debt service coverage ratio of not less than 3 times.; and |
(f) | TDCX SG shall not declare dividends in excess of 50% of its net profit after tax through the tenure facilities. |
In 2019, TDCX SG distributed dividends in excess of 50% of its net profit after tax, which caused a breach of the covenants for the bank loan facility. The Group has obtained a written waiver of this breach from the bank subsequent to the end of the financial year. As a result of the breach and subsequent receipt of the waiver obtained on March 2, 2020, TDCX SG did not have an unconditional right to defer the settlement as of December 31, 2019 and accordingly, has classified its total bank loan amounting to S$34.4 million to current liability in the consolidated balance sheet as of December 31, 2019.
On September 2, 2020, TDCX SG obtained a loan covenant waiver from the bank to waive the restriction to distribute dividends in excess of 50% of its net profit after tax, allowing TDCX SG to declare and pay dividends of up to 100% of its 2020 annual consolidated net profit after tax. The Group was in compliance with its financial covenants for the year ended December 31, 2020.
Reconciliation of liabilities arising from financing activities
The table below details changes in the Groups liabilities arising from financing activities, including both cash and non-cash changes. Liabilities arising from financing activities are those for which cash flows
F-37
TDCX Inc. and its Subsidiaries (formerly known as TDCX Capital Pte Ltd)
Notes to Consolidated Financial Statements
were, or future cash flows will be, classified in the Groups statement of cash flows as cash flows from financing activities.
Amount due to a director |
Bank loans | Lease liabilities (Note 18) |
||||||||||
S$000 | S$000 | S$000 | ||||||||||
At January 1, 2019 |
10,469 | 30,547 | 20,129 | |||||||||
Financing cash flow |
(10,474 | ) | 2,409 | (11,590 | ) | |||||||
Bank facility fee expense |
| 55 | | |||||||||
Non-cash changes: |
||||||||||||
- Accrued interest |
| 1,410 | 1,383 | |||||||||
- Additions to lease liabilities |
| | 15,339 | |||||||||
- Early termination of lease |
| | (155 | ) | ||||||||
- Currency alignment |
5 | | 355 | |||||||||
|
|
|
|
|
|
|||||||
At December 31, 2019 |
| 34,421 | 25,461 | |||||||||
Financing cash flow |
| 4,496 | (14,225 | ) | ||||||||
Bank facility fee expense |
| 54 | | |||||||||
Non-cash changes: |
||||||||||||
- Accrued interest |
| 1,335 | 1,559 | |||||||||
- Additions to lease liabilities |
| | 22,837 | |||||||||
- Early termination of lease |
| | (2,870 | ) | ||||||||
- Rent concession |
| | (521 | ) | ||||||||
- Currency alignment |
| | 246 | |||||||||
|
|
|
|
|
|
|||||||
At December 31, 2020 |
| 40,306 | 32,487 | |||||||||
|
|
|
|
|
|
18 | Lease liabilities |
December 31, 2020 |
December 31, 2019 |
|||||||
S$000 | S$000 | |||||||
Minimum lease payments |
||||||||
Amounts due for settlement within 12 months (shown under current liabilities) |
14,664 | 10,963 | ||||||
Amounts due for settlement after 12 months and not later than 5 years |
17,823 | 14,498 | ||||||
|
|
|
|
|||||
32,487 | 25,461 | |||||||
|
|
|
|
The Group does not face a significant liquidity risk with regard to its lease liabilities. Lease liabilities are monitored within the Groups treasury function. Lease liabilities approximate fair value as at end of reporting period.
As discussed in Note 2, the Group has derecognized S$0.5 million of the lease liability that has been extinguished by the forgiveness of lease payments on leased office space.
F-38
TDCX Inc. and its Subsidiaries (formerly known as TDCX Capital Pte Ltd)
Notes to Consolidated Financial Statements
19 | Provision for reinstatement cost |
December 31, 2020 |
December 31, 2019 |
|||||||
S$000 | S$000 | |||||||
At beginning of year |
4,955 | 1,817 | ||||||
Additions |
899 | 3,064 | ||||||
Accretion, recognized in finance cost |
140 | 100 | ||||||
Payment for reinstatement |
| (66 | ) | |||||
Currency alignment |
75 | 40 | ||||||
|
|
|
|
|||||
At end of year |
6,069 | 4,955 | ||||||
|
|
|
|
|||||
Analysed as: |
||||||||
Current |
452 | | ||||||
Non-current |
5,617 | 4,955 | ||||||
|
|
|
|
|||||
6,069 | 4,955 | |||||||
|
|
|
|
The provision is made based on managements best estimate for the reinstatement cost for its leasehold improvements, taking into account recent quotes received from contractors and is carry at its approximate fair value as at end of reporting period. The provision is recognized as an addition to leasehold improvements (Note 13) and is depreciated over its estimated useful lives.
20 | Defined benefit obligation |
A subsidiary in the Philippines is a participant in an unfunded, non-contributory defined benefit multi-employer retirement plan. The subsidiary provides for a defined benefit plan for all qualifying employees. The normal retirement shall accrue to the employee upon reaching retirement age of 60 with at least5 years of credited service. All employee may retire early with the consent of the subsidiary upon reaching the age of 50 and has completed at least 10 years of credited service.
A subsidiary in Thailand has obligations in respect of the severance payments they must make to employees upon retirement under labour law. The subsidiary treats these severance payment obligations as a defined benefit plan.
21 | Deferred tax assets/liabilities |
December 31, 2020 |
December 31, 2019 |
|||||||
S$000 | S$000 | |||||||
Deferred tax assets |
1,580 | 1,197 | ||||||
Deferred tax liabilities |
(129 | ) | (236 | ) | ||||
|
|
|
|
|||||
1,451 | 961 | |||||||
|
|
|
|
F-39
TDCX Inc. and its Subsidiaries (formerly known as TDCX Capital Pte Ltd)
Notes to Consolidated Financial Statements
Following are the major deferred tax liabilities and assets recognized by the Group:
Provisions | Accelerated tax depreciation |
Others | Total | |||||||||||||
S$000 | S$000 | S$000 | S$000 | |||||||||||||
At January 1, 2019 |
579 | (620 | ) | 5 | (36 | ) | ||||||||||
Credit to profit or loss (Note 27) |
124 | 501 | 379 | 1,004 | ||||||||||||
Overprovision in prior years (Note 27) |
(101 | ) | 71 | | (30 | ) | ||||||||||
Currency alignment |
| 23 | | 23 | ||||||||||||
|
|
|
|
|
|
|
|
|||||||||
At December 31, 2019 |
602 | (25 | ) | 384 | 961 | |||||||||||
Credit to profit or loss (Note 27) |
538 | 70 | (51 | ) | 557 | |||||||||||
Overprovision in prior years (Note 27) |
(67 | ) | | | (67 | ) | ||||||||||
Currency alignment |
5 | (11 | ) | 6 | | |||||||||||
|
|
|
|
|
|
|
|
|||||||||
At December 31, 2020 |
1,078 | 34 | 339 | 1,451 | ||||||||||||
|
|
|
|
|
|
|
|
22 | Share capital |
The issued share capital of the Company is US$1 consisting of 1 ordinary share of US$1 par value. The share is fully paid, carries one vote per share and a right to dividends as and when declared by the Company.
23 | Non-controlling interests |
On September 19, 2018, TDCXH acquired 40% paid-up share capital in TDCX SG from the non-controlling interest shareholder, which comprised an aggregate of 0.8 million ordinary shares for a total consideration of S$38 million. The transaction has been treated as an equity transaction between shareholders with the difference between the consideration and the book value of the equity interest in TDCX SG recorded in other reserve (Note 30).
24 | Revenue |
2020 | 2019 | 2018 | ||||||||||
S$000 | S$000 | S$000 | ||||||||||
Over time |
||||||||||||
Omnichannel CX solutions |
283,427 | 217,349 | 120,238 | |||||||||
Sales and digital marketing |
66,235 | 46,839 | 43,124 | |||||||||
Content monitoring and moderation |
80,170 | 61,526 | 14,361 | |||||||||
Workspace and payroll services |
4,409 | 4,007 | 2,520 | |||||||||
|
|
|
|
|
|
|||||||
434,241 | 329,721 | 180,243 | ||||||||||
|
|
|
|
|
|
|||||||
At a point in time |
||||||||||||
Other services |
482 | 544 | 990 | |||||||||
|
|
|
|
|
|
|||||||
434,723 | 330,265 | 181,233 | ||||||||||
|
|
|
|
|
|
F-40
TDCX Inc. and its Subsidiaries (formerly known as TDCX Capital Pte Ltd)
Notes to Consolidated Financial Statements
25 | Profit for the year |
Profit for the year has been arrived at after charging (crediting):
2020 | 2019 | 2018 | ||||||||||
S$000 | S$000 | S$000 | ||||||||||
Defined contribution plan |
8,828 | 6,759 | 4,932 | |||||||||
Wages, salaries, bonus and other benefits |
246,724 | 180,707 | 103,599 | |||||||||
Gain on disposal of a subsidiary |
731 | | | |||||||||
Share of profit from an associate |
196 | | | |||||||||
Finance costs: |
||||||||||||
Interest on bank loans |
1,344 | 1,410 | 403 | |||||||||
Interest expense on lease liabilities |
1,559 | 1,383 | 725 | |||||||||
Accretion on provision for reinstatement cost |
141 | 100 | | |||||||||
Others |
14 | | | |||||||||
Professional fees |
6,135 | 1,661 | 773 | |||||||||
Forfeiture of office lease deposit |
1,094 | | | |||||||||
Gain on early termination of right-of-use assets |
(171 | ) | (21 | ) | | |||||||
Utilities expense (included in other operating expenses) |
1,953 | 2,080 | 988 | |||||||||
Foreign exchange lossnet (included in other operating expenses) |
1,753 | 2,118 | 9 | |||||||||
|
|
|
|
|
|
26 | Other operating income |
2020 | 2019 | 2018 | ||||||||||
S$000 | S$000 | S$000 | ||||||||||
Government grant and credit scheme subsidies |
6,311 | 543 | 400 | |||||||||
Rent concessions |
521 | | | |||||||||
Interest income from an associate |
55 | | | |||||||||
Others |
627 | 174 | 146 | |||||||||
|
|
|
|
|
|
|||||||
7,514 | 717 | 546 | ||||||||||
|
|
|
|
|
|
In 2020, the Group received wage support for local employees under the Jobs Support Scheme (JSS) amounting to S$6.3 million from the Singapore Government as part of the Governments measures to support businesses during the period of economic uncertainty impacted by COVID-19. Grant income is recognized in profit or loss on a systematic basis over the period of uncertainty in which the related salary costs for which the grant is intended to compensate is recognised as expenses.
F-41
TDCX Inc. and its Subsidiaries (formerly known as TDCX Capital Pte Ltd)
Notes to Consolidated Financial Statements
27 | Income tax expenses |
2020 | 2019 | 2018 | ||||||||||
S$000 | S$000 | S$000 | ||||||||||
Income tax: |
||||||||||||
Current year |
19,488 | 7,986 | 3,504 | |||||||||
(Over) Under provision of prior years |
(69 | ) | 181 | (54 | ) | |||||||
|
|
|
|
|
|
|||||||
19,419 | 8,167 | 3,450 | ||||||||||
Deferred tax: |
||||||||||||
Current year (Note 21) |
(557 | ) | (1,004 | ) | (43 | ) | ||||||
Under provision of prior years (Note 21) |
67 | 30 | 29 | |||||||||
|
|
|
|
|
|
|||||||
(490 | ) | (974 | ) | (14 | ) | |||||||
Foreign withholding tax |
2,374 | 331 | 84 | |||||||||
|
|
|
|
|
|
|||||||
21,303 | 7,524 | 3,520 | ||||||||||
|
|
|
|
|
|
The income tax expense varied from the amount of income tax expense determined by applying the Singapore income tax rate of 17% (2019: 17%, 2018: 17%) to profit before income tax as a result of the following differences:
2020 | 2019 | 2018 | ||||||||||
S$000 | S$000 | S$000 | ||||||||||
Profit before income tax |
107,397 | 81,060 | 41,608 | |||||||||
|
|
|
|
|
|
|||||||
Tax at the domestic income tax rate |
18,258 | 13,780 | 7,073 | |||||||||
Tax effect of expenses that are not deductible in determining taxable profit |
2,099 | 834 | 23 | |||||||||
(Over) Under provision in prior years |
(2 | ) | 211 | (25 | ) | |||||||
Tax exempt income (Note A) |
(2,274 | ) | (7,004 | ) | (3,004 | ) | ||||||
Effect of different tax rates of subsidiaries operating in other jurisdictions |
(45 | ) | (987 | ) | (1,140 | ) | ||||||
Deferred tax asset not recognized |
1,263 | 1,100 | 453 | |||||||||
Previously unrecognized and unused tax losses now recognized as deferred tax assets |
| (403 | ) | | ||||||||
Utilization of tax losses previously not recognized as deferred tax asset |
(364 | ) | (279 | ) | | |||||||
Foreign withholding tax |
2,374 | 331 | 84 | |||||||||
Others |
(6 | ) | (59 | ) | 56 | |||||||
|
|
|
|
|
|
|||||||
Tax expense for the year |
21,303 | 7,524 | 3,520 | |||||||||
|
|
|
|
|
|
Note A: Tax exempt income represent income of subsidiaries located in Singapore, Malaysia and Philippines that benefit from tax holiday. Refer to below for additional information on those subsidiaries tax holidays.
F-42
TDCX Inc. and its Subsidiaries (formerly known as TDCX Capital Pte Ltd)
Notes to Consolidated Financial Statements
The Group entities have unutilized tax losses carry forward available for offsetting against future taxable income as follows:
2020 | 2019 | 2018 | ||||||||||
S$000 | S$000 | S$000 | ||||||||||
Tax losses carry forward |
||||||||||||
Amount at beginning of year |
7,004 | 4,431 | 4,039 | |||||||||
Utilized during the year |
(2,142 | ) | (1,131 | ) | (78 | ) | ||||||
Recognized as deferred tax |
| (1,612 | ) | | ||||||||
Arising during the year |
6,095 | 5,316 | 470 | |||||||||
|
|
|
|
|
|
|||||||
Amount at end of year |
10,957 | 7,004 | 4,431 | |||||||||
|
|
|
|
|
|
|||||||
Deferred tax asset on above unrecorded |
2,363 | 1,100 | 523 | |||||||||
|
|
|
|
|
|
No deferred tax asset has been recognized in respect of the tax losses carried forward from certain subsidiaries due to the uncertainty of future profit streams. The realization of the future income tax benefits from tax losses carried forwards is available for an unlimited future period subject to the compliance with conditions imposed by law and the relevant tax authorities.
A subsidiary in Malaysia was awarded the Multimedia Super Corridor status in 2005 by the Ministry of Finance and Ministry of International Trade and Industry Malaysia, which entitles the subsidiary to enjoy customized tax incentive scheme. The scheme allows partial tax exemption for the subsidiary on the statutory income earned from its core operations for a certain period. The scheme was extended and customized for 5 years in 2015, and has expired on January 18, 2020. The subsidiary is currently in the process of obtaining the extension from Ministry of Finance and Ministry of International Trade and Industry Malaysia. The subsidiary has recognized income tax expense.
A subsidiary in Philippines was registered as a PEZA Ecozone Information Technology (Export) Enterprise granted by the Philippine Economic Zone Authority (PEZA) which avails the subsidiary to the Income Tax Holiday (ITH) for a period of 4 years from the commencement of operations at the initial operational site in 2015. The ITH period can be further extend up to 2 years with application to PEZA when stipulated conditions are met. On April 2020, the subsidiary was granted an extension of ITH to March 2020. The extension of the ITH expired in March 2020 and the subsidiary has submitted an application for extension of the ITH. Despite the income tax holiday having expired in March 2020 for one of the approved sites the subsidiary continued to claim the tax benefits as management has assessed that it is more likely than not that an extension will be granted. If the subsidiary does not receive the extension, the Group would have incurred additional income tax expenses of S$0.4 million for the year ended December 31, 2020.
Had the Group not enjoyed income tax holidays for the years ended December 31, 2018, 2019 and 2020, the increase in income tax expenses and resulting basic and diluted earnings per share amounts would have been as follows:
2020 | 2019 | 2018 | ||||||||||
S$000 | S$000 | S$000 | ||||||||||
Increase in income tax expenses |
2,083 | 8,017 | 3,950 | |||||||||
|
|
|
|
|
|
2020 | 2019 | 2018 | ||||||||||
S$000 | S$000 | S$000 | ||||||||||
Basic and diluted earnings per share |
84,010 | 65,518 | 31,321 | |||||||||
|
|
|
|
|
|
F-43
TDCX Inc. and its Subsidiaries (formerly known as TDCX Capital Pte Ltd)
Notes to Consolidated Financial Statements
28 | Basic and diluted earnings per share |
The calculation of the basic and diluted earnings per share attributable to the shareholders of the Group is based on the following data:
2020 | 2019 | 2018 | ||||||||||
S$000 | S$000 | S$000 | ||||||||||
Earnings |
||||||||||||
Earnings for the purposes of basic and diluted earnings per share (profit for the year attributable to owners of the Group) |
86,093 | 73,535 | 35,271 | |||||||||
|
|
|
|
|
|
2020 | 2019 | 2018 | ||||||||||
Number of shares |
||||||||||||
Weighted average number of ordinary shares for the purposes of basic and diluted earnings per share |
1 | 1 | 1 | |||||||||
|
|
|
|
|
|
2020 | 2019 | 2018 | ||||||||||
S$000 | S$000 | S$000 | ||||||||||
Basic and diluted earnings per share |
86,093 | 73,535 | 35,271 | |||||||||
|
|
|
|
|
|
29 | Dividends |
Tax-exempt dividends of S$73.5 million per ordinary share totaling S$73.5 million (2019: S$17 million, 2018: S$3 million) in respect of the year ended December 31, 2020 (2019: December 31, 2019, 2018: December 31, 2018) were paid.
30 | Reserves |
Reserves comprise of:
(a) | Translation reserves |
Exchange differences relating to the translation of the net assets of the Groups foreign operations, which relate to subsidiaries only, from their functional currency into the Groups presentation currency, being Singapore Dollars, are recognized directly in the translation reserves.
(b) | Legal reserves |
Legal reserve arose from:
| a subsidiary in Thailand whereby, according to the Civil and Commercial Code of Thailand, an entity must appropriate at least one-twentieth of the profit arising from the business of the entity to a legal reserve at each distribution of dividend, until the legal reserve reaches one-tenth of the capital of the entity. Such legal reserve is not available for distribution as dividend until the entity is finally wound up. |
| subsidiaries in Peoples Republic of China (PRC) whereby, accordingly to the laws applicable to the PRC Domestic Enterprises and PRC Foreign Investment Enterprises, the PRC subsidiaries must make annual appropriations of not less than 10% of after-tax profit from after-tax profit to non-distributable statutory reserve. These reserve funds can only be used for specific purposes and are not distributable as cash dividends. |
F-44
TDCX Inc. and its Subsidiaries (formerly known as TDCX Capital Pte Ltd)
Notes to Consolidated Financial Statements
(c) | Other reserves |
On September 19, 2018, TDCXH acquired 40% paid-up share capital in TDCX SG from the non-controlling interest holder, which comprised an aggregate of 0.8 million ordinary shares for a total consideration of S$38 million. The transaction has been treated as an equity transaction between shareholders with the difference between the consideration and the book value of the equity interest in TDCX SG recorded in other reserve.
On December 22, 2020, the Founder transferred his 100% equity interest in TDCXH to TDCX KY for a consideration of S$2. The transaction has been treated as an equity transaction between shareholders with the difference between the consideration and the book value of the equity interest in TDCXH recorded in other reserve.
On March 23, 2021, the Founder transferred his 100% equity interest in TDCX KY to TDCX. The transaction has been treated as an equity transaction under common control. Refer to Note 1 for further details.
31 | Restricted net assets |
Some of TDCXs consolidated subsidiaries have certain restrictions on their ability to pay dividends or make intercompany loans and advances pursuant to the following legal restrictions and financing arrangements:
(1) | PRC legal restrictions permit payments of dividends by TDCXs PRC subsidiaries only out of their retained earnings, if any, determined in accordance with PRC regulations. |
(2) | Other legal restrictions for the subsidiaries in PRC and Thailand for the distribution of dividend. Refer to Note 30(b) for further details. |
(3) | Refer to Note 17 for the bank loan covenants for the restrictions. |
The balance of restricted net assets TDCXs consolidated subsidiaries held was S$72.4 million as at December 31, 2020.
32 | Segmental reporting |
Information reported to the Groups chief operating decision maker (CODM), who are directors of the Group, in order to allocate resources and assess its performance, and for which discrete financial information is available, is based on each business units performance located in each country where a set of similar services are offered. Country directors (i.e. segment managers) are responsible for performance of the respective countrys business units and are directly accountable to the Groups CODM.
F-45
TDCX Inc. and its Subsidiaries (formerly known as TDCX Capital Pte Ltd)
Notes to Consolidated Financial Statements
Based on an overall evaluation of all facts and circumstances, and after combining operating segments with similar economic characteristics that comply with the aggregation criteria specified in IFRS 8 Operating segments, the Group has determined that it operates as a single reportable segment. The information below includes information about the Groups products and services, geographical areas, and major customers.
2020 | 2020 | 2019 | 2018 | |||||||||||||
US$000 | S$000 | S$000 | S$000 | |||||||||||||
Revenue |
||||||||||||||||
Omnichannel CX solutions |
214,376 | 283,427 | 217,349 | 120,238 | ||||||||||||
Sales and digital marketing |
50,099 | 66,235 | 46,839 | 43,124 | ||||||||||||
Content monitoring and moderation |
60,638 | 80,170 | 61,526 | 14,361 | ||||||||||||
Workspace, payroll and other services |
3,699 | 4,891 | 4,551 | 3,510 | ||||||||||||
|
|
|
|
|
|
|
|
|||||||||
328,812 | 434,723 | 330,265 | 181,233 | |||||||||||||
|
|
|
|
|
|
|
|
Analysis of revenue and carrying amount of non-current asset by geography
The Group presents revenue by geographical location based on which office delivers the service, irrespective of the location of the customer engaging the Groups services or location of the customer that the Group is interacting with.
Revenue | Non-current assets | |||||||||||||||||||||||
2020 | 2020 | 2019 | 2018 | December 31, 2020 |
December 31, 2019 |
|||||||||||||||||||
US$000 | S$000 | S$000 | S$000 | S$000 | S$000 | |||||||||||||||||||
Singapore |
91,568 | 121,062 | 96,175 | 64,257 | 5,427 | 10,916 | ||||||||||||||||||
Philippines |
82,647 | 109,268 | 84,169 | 49,946 | 29,621 | 25,800 | ||||||||||||||||||
Malaysia |
85,452 | 112,976 | 82,795 | 48,420 | 11,246 | 10,599 | ||||||||||||||||||
Thailand |
40,984 | 54,185 | 41,445 | 12,961 | 11,317 | 11,884 | ||||||||||||||||||
China |
8,698 | 11,500 | 16,099 | 3,927 | 2,606 | 3,410 | ||||||||||||||||||
Japan |
17,214 | 22,759 | 9,008 | 1,722 | 836 | 1,205 | ||||||||||||||||||
Spain |
2,249 | 2,973 | 574 | | 2,449 | 186 | ||||||||||||||||||
India |
| | | | 3,745 | | ||||||||||||||||||
Colombia |
| | | | 3,224 | | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
328,812 | 434,723 | 330,265 | 181,233 | 70,471 | 64,000 | |||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
Information about major customers
During the year, the Group had revenue transactions with major customers that amounted to more than 10% of the Groups revenue as follows:
2020 | 2019 | 2018 | ||||||||||
S$000 | S$000 | S$000 | ||||||||||
Customer |
||||||||||||
A |
160,625 | 100,988 | 58,111 | |||||||||
B |
102,003 | 116,550 | 36,188 | |||||||||
C |
54,585 | 40,832 | 24,890 | |||||||||
D |
* | * | 24,690 | |||||||||
|
|
|
|
|
|
|||||||
317,213 | 258,370 | 143,879 | ||||||||||
|
|
|
|
|
|
*Represents less than 10% of the Groups revenue in 2020 and 2019.
F-46
TDCX Inc. and its Subsidiaries (formerly known as TDCX Capital Pte Ltd)
Notes to Consolidated Financial Statements
33 | Commitments |
Lease commitments for leases of low-value assets are as follows:
2020 | 2019 | 2018 | ||||||||||
S$000 | S$000 | S$000 | ||||||||||
Payable within one year |
11,233 | 3,336 | 869 | |||||||||
Payable in the second to fifth year inclusive |
3,775 | 3,766 | 1,134 | |||||||||
|
|
|
|
|
|
|||||||
15,008 | 7,102 | 2,003 | ||||||||||
|
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|
|
|
34 | Events after the reporting period |
On March 23, 2021, TDCX acquired 100% of TDCX KY from the Founder as disclosed in Note 1. As part of this transaction, TDCX entered into a term loan credit facility agreement with a third party financial institution on March 16, 2021. The credit facility provides for borrowings in an aggregate amount of US$188 million. Contemporaneous with TDCXs acquisition of the Founders shareholder interests in TDCX KY, TDCX drew upon the credit facility on March 23, 2021 and subsequently distributed all US$188 million of the proceeds to the Founder (the 2021 Loan). The 2021 Loan carries interest rate of 3.15% above 3-month London interbank offered rate (LIBOR) for the first 18 months and 3.45% above 3-month LIBOR subsequently. The 2021 Loan is scheduled to be repaid on March 23, 2023, with an option to extend for 12 months. If the repayment term is extended for an additional 12 months, the loan shall be repaid in three instalments with the first instalment (being 25% of the outstanding principal) due 24 months after the drawdown of the loan, the second instalment (being a further 25% of the outstanding principal) due 30 months after the drawdown of the loan and the final instalment (the remaining outstanding balance) due 36 months after the drawdown of the loan. The 2021 Loan is guaranteed by TDCXH and TDCX KY and secured by a mortgage of the Founders shares in TDCX. Additionally, the Founder is required to maintain an amount equal to 80% of the amount outstanding under the 2021 Loan deposited in a collaterized bank account with the third party financial institution.
The acquisition of TDCX KY by TDCX was accounted for in a manner similar to a pooling of interests as disclosed in Note 1.
The 2021 Loan and related payment to the Founder are considered non-adjusting events after the reporting period and do not impact the Groups consolidated financial statements as of and for the year ended December 31, 2020.
35 | Restatement |
Subsequent to the issuance of the Groups 2018 and 2019 financial statements, the Group determined that it had misclassified its cash outflow of S$38 million paid to acquire 40% paid-up capital in TDCX SG from non-controlling interests holder as investing activities in the consolidated statement of cash flows for the year ended December 31, 2018. As a result, the Groups previously issued consolidated statement of cash flows for the year ended December 31, 2018 has been restated from the amounts previously reported to reflect the cash consideration paid to acquire non-controlling interests as cash flow from financing activities.
F-47
TDCX Inc. and its Subsidiaries (formerly known as TDCX Capital Pte Ltd)
Notes to Consolidated Financial Statements
The effect of the restatement is as follows:
As previously reported |
Adjustment | As restated |
||||||||||
S$000 | S$000 | S$000 | ||||||||||
Statement of cash flows |
||||||||||||
for the year ended December 31, 2018 |
||||||||||||
Cash used in investing activities |
(58,863 | ) | 38,000 | (20,863 | ) | |||||||
Net cash from (used in) financing activities |
27,320 | (38,000 | ) | (10,680 | ) | |||||||
|
|
|
|
|
|
F-48
Additional Information Financial Statement Schedule I
Condensed Financial Information of Parent Company
Statements of Financial Position
December 31, 2020 |
December 31, 2020 |
December 31, 2019 |
||||||||||
US$000 | S$000 | S$000 | ||||||||||
Assets |
||||||||||||
Non-current assets |
||||||||||||
Investment in subsidiaries |
85,113 | 112,528 | 99,444 | |||||||||
|
|
|
|
|
|
|||||||
Total assets |
85,113 | 112,528 | 99,444 | |||||||||
|
|
|
|
|
|
|||||||
Equity |
||||||||||||
Share capital |
* | * | * | |||||||||
Reserve |
(15,009 | ) | (19,843 | ) | (20,650 | ) | ||||||
Retained earnings |
100,122 | 132,371 | 120,094 | |||||||||
|
|
|
|
|
|
|||||||
Total equity |
85,113 | 112,528 | 99,444 | |||||||||
|
|
|
|
|
|
* | Amount is less than S$1,000 |
F-49
Additional Information Financial Statement Schedule I
Condensed Financial Information of Parent Company
Statement of Profit or Loss and Other Comprehensive Income
2020 | 2020 | 2019 | 2018 | |||||||||||||
US$000 | S$000 | S$000 | S$000 | |||||||||||||
(Note 4) | ||||||||||||||||
Share of profit from its subsidiaries |
64,981 | 85,912 | 73,421 | 35,319 | ||||||||||||
|
|
|
|
|
|
|
|
|||||||||
Profit before tax |
64,981 | 85,912 | 73,421 | 35,319 | ||||||||||||
Income tax expense |
| | | | ||||||||||||
|
|
|
|
|
|
|
|
|||||||||
Profit for the year, representing total comprehensive income for the year |
64,981 | 85,912 | 73,421 | 35,319 | ||||||||||||
|
|
|
|
|
|
|
|
F-50
Additional Information Financial Statement Schedule I
Condensed Financial Information of Parent Company
Statement of Cash Flows
2020 | 2020 | 2019 | 2018 | |||||||||||||
US$000 | S$000 | S$000 | S$000 | |||||||||||||
(Note 4) | ||||||||||||||||
Operating activities |
||||||||||||||||
Profit before income tax |
64,981 | 85,912 | 73,421 | 35,319 | ||||||||||||
Adjustments to reconcile net profit to net cash generated from operating activities Investment in subsidiaries |
(64,981 | ) | (85,912 | ) | (73,421 | ) | (35,319 | ) | ||||||||
|
|
|
|
|
|
|
|
|||||||||
Net cash used in operating activities |
| | | | ||||||||||||
Investing activity |
||||||||||||||||
Net cash used in investing activity |
| | | | ||||||||||||
Financing activity |
||||||||||||||||
Net cash used in financing activity |
| | | | ||||||||||||
Net increase in cash and cash equivalent |
| | | | ||||||||||||
Cash and cash equivalents at beginning of year |
| | | | ||||||||||||
|
|
|
|
|
|
|
|
|||||||||
Cash and cash equivalents at end of year |
| | | | ||||||||||||
|
|
|
|
|
|
|
|
F-51
Additional Information Financial Statement Schedule I
Condensed Financial Information of Parent Company
Notes of the Condensed Financial Statements
1. | Organisation and principal activities |
In anticipation of an initial listing in the United States, the Company was incorporated under the laws of the Cayman Islands on April 16, 2020 as the holding company for acquiring the shares of TDCX KY. The Company has no operations.
2. | Basis for preparation |
The condensed financial information of the Company has been prepared using the same accounting policies as set out in the Groups consolidated financial statements.
3. | Investments in subsidiaries |
The Company and its subsidiaries were included in the consolidated financial statements where the inter-company transactions and balances were eliminated upon consolidation. For the purpose of the Companys stand-alone financial statements, its investments in subsidiaries were reported using the equity method of accounting. The Companys share of income from its subsidiaries were reported as equity in earnings of subsidiaries in the accompanying parent company financial statements.
4. | Convenience translation |
The condensed financial information of the Company are presented in Singapore Dollar. The translations of Singapore Dollar amounts into USD for the financial statements for the year ended December 31, 2020 are included solely for the convenience of readers outside Singapore and have been made at the rate of S$1.3221 to US$1, the approximate rate of exchange at December 31, 2020. Such translations should not be construed as representations that the Singapore Dollar amounts could be converted into USD at that or any other rate.
5. | Share capital |
The issued share capital of the Company is US$1 consisting of 1 ordinary share of US$1 par value. The share is fully paid, carries one vote per share and a right to dividends as and when declared by the Company.
6. | Events after the reporting period |
The Company entered into a term loan credit facility agreement with a third party financial institution on March 16, 2021. The credit facility provides for borrowings in an aggregate amount of US$188 million. Contemporaneous with the Companys acquisition of the Founders shareholder interests in TDCX KY, the Company drew upon the credit facility on March 23, 2021 and subsequently distributed all US$188 million of the proceeds to the Founder (the 2021 Loan). The 2021 Loan carries interest rate of 3.15% above 3-month London interbank offered rate (LIBOR) for the first 18 months and 3.45% above 3-month LIBOR subsequently. The 2021 Loan is scheduled to be repaid on March 23, 2023, with an option to extend for 12 months. If the repayment term is extended for an additional 12 months, the loan shall be repaid in three instalments with the first instalment (being 25% of the outstanding principal) due 24 months after the drawdown of the loan, the second instalment (being a further 25% of the outstanding principal) due 30 months after the drawdown of the loan and the final instalment (the remaining outstanding balance) due 36 months after the drawdown of the loan. The 2021 Loan is guaranteed by TDCXH and TDCX KY and secured by a mortgage of the Founders shares in TDCX. Additionally, the Founder is required to maintain an amount equal to 80% of the amount outstanding under the 2021 Loan deposited in a collaterized bank account with the third party financial institution.
F-52
Additional Information Financial Statement Schedule I
Condensed Financial Information of Parent Company
Notes of the Condensed Financial Statements
The 2021 Loan and related payment to the Founder are considered non-adjusting events after the reporting period and do not impact the Companys financial statements as of and for the year ended December 31, 2020.
F-53
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 6. INDEMNIFICATION OF DIRECTORS AND OFFICERS
Cayman Islands laws do not prohibit or restrict a company from indemnifying its directors and officers against personal liability for any loss they may incur arising out of the Companys business, except to the extent such provision may be held by the Cayman Islands courts to be contrary to public policy, such as to provide indemnification against civil fraud or the consequences of committing a crime. The indemnity extends only to liability for their own negligence and breach of duty other than breaches of fiduciary duty and not where there is evidence of dishonesty, willful default or fraud.
[The post-IPO memorandum and articles of association that we expect to adopt to become effective immediately prior to the completion of this offering provide for indemnification of officers and directors for actions, proceedings, costs, charges, expenses, losses, damages or liabilities incurred or sustained by such officer or director other than by reason of such Indemnified Persons own dishonesty, willful default or fraud as determined by a court of competent jurisdiction, in or about the conduct of our Companys business or affairs (including as a result of any mistake of judgment) or in the execution or discharge of his duties, powers, authorities or discretions.]
[We intend to enter into indemnification agreements with each of our directors and officers. These agreements will require us to indemnify these individuals to the fullest extent permitted under Cayman Islands law against liabilities that may arise by reason of their service to us, and to advance expenses incurred as a result of any proceeding against them as to which they could be indemnified, subject to our Company reserving its rights to recover the full amount of such advances in the event that he or she is subsequently found to have been negligent or otherwise have breached his or her trust or fiduciary duties to our Company or to be in default thereof, or where the Cayman Islands courts have declined to grant relief.]
The form of underwriting agreement to be filed as Exhibit 1.1 to this registration statement will also provide for indemnification of us and our officers and directors.
Insofar as indemnification for liabilities arising under the Securities Act may be permitted to directors, officers or persons controlling us pursuant to the foregoing provisions, we have been informed that in the opinion of the SEC such indemnification is against public policy as expressed in the Securities Act and is therefore unenforceable.
ITEM 7. RECENT SALES OF UNREGISTERED SECURITIES
[During the past three years, we have issued and sold the following securities without registering such securities under the Securities Act. We believe that each of the following issuances was exempt from registration under the Securities Act pursuant to Section 4(a)(2) of the Securities Act regarding transactions not involving a public offering or in reliance on Regulation S under the Securities Act regarding sales by an issuer in offshore transactions. No underwriters were involved in these issuances of securities.]
Securities/Purchaser |
Date of Sale or |
Number of |
Consideration2 | |||
Ordinary shares | ||||||
[insert Purchaser] |
II-1
ITEM 8. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
(a) | Exhibits |
See Exhibit Index beginning on page II-[7] of this registration statement.
(b) | Financial Statement Schedules |
All supplement schedules are omitted because of the absence of conditions under which they are required or because the data is shown in the financial statements or notes thereto.
ITEM 9. UNDERTAKINGS
The undersigned registrant hereby undertakes to provide to the underwriters at the closing specified in the underwriting agreements certificates in such denominations and registered in such names as required by the underwriters to permit prompt delivery to each purchaser.
Insofar as indemnification for liabilities arising under the Securities Act may be permitted to directors, officers and controlling persons of the registrant pursuant to the foregoing provisions, or otherwise, the registrant has been advised that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Act and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the registrant of expenses incurred or paid by a director, officer or controlling person of the registrant in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, the registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Act and will be governed by the final adjudication of such issue.
The undersigned registrant hereby undertakes that:
1) | For purposes of determining any liability under the Securities Act, the information omitted from the form of prospectus filed as part of this registration statement in reliance upon Rule 430A and contained in a form of prospectus filed by the registrant pursuant to Rule 424(b)(1) or (4) or 497(h) under the Securities Act shall be deemed to be part of this registration statement as of the time it was declared effective. |
2) | For the purpose of determining any liability under the Securities Act, each post-effective amendment that contains a form of prospectus shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof. |
3) | As to securities sold for cash, state the aggregate offering price and the aggregate underwriting discounts or commissions. As to any securities sold otherwise than for cash, state the nature of the transaction and the nature and aggregate amount of consideration received by the registrant. |
II-2
TDCX Inc.
EXHIBIT INDEX
No. |
Description | |
1.1* | Form of Underwriting Agreement | |
3.1* | Amended and Restated Memorandum and Articles of Association of TDCX Inc., to become effective upon the completion of this offering | |
4.1* | Form of American Depositary Receipt evidencing American Depositary Shares (included in Exhibit 4.3) | |
4.2* | Specimen certificate for Class A ordinary shares | |
4.3* | Form of Deposit Agreement among TDCX Inc., the depositary and all holders of the American Depositary Receipts issued thereunder | |
5.1* | Form of opinion of Maples and Calder (Hong Kong) LLP as to the validity of Class A ordinary shares being registered and certain Cayman Islands tax matters | |
8.1* | Form of opinion of Maples and Calder (Hong Kong) LLP regarding certain Cayman tax matters (included in Exhibit 5.1) | |
10.1 | Facility Agreement, dated March 16, 2021, by and among TDCX Inc. and Credit Suisse AG, Singapore Branch | |
10.2 | Facilities Letter Agreement, dated April 29, 2019, by and between Teledirect Pte Ltd and Oversea-Chinese Banking Corporation Limited | |
10.3 | ||
10.4 | ||
10.5* | Shareholders Loan Agreement, dated December 20, 2019, by and among Teledirect Hong Kong Limited, TDCX Holdings Pte. Ltd., Michael Thomas Cowell and Milton Kung | |
10.6* | Form of director and executive officer indemnification agreement | |
10.7* | TDCX Performance Share Plan | |
10.8# | Call Center Services Agreement among Facebook Ireland Limited and Teledirect Pte Ltd dated November 18, 2019 | |
10.9*# | Master Services Agreement for Contact Center Services among Airbnb Ireland Unlimited Company and Teledirect Telecommerce Sdn. Bhd. dated October 2, 2017 | |
10.10*# | Master Services Agreement for Contact Center Services among Airbnb Ireland UC and Teledirect Telecommerce (Philippines) Inc. dated June 1, 2017 | |
10.11*# | Letter Agreement among AirBnB Ireland UC, TDCX (PH) Inc., TDCX Japan K.K. and TDCX Holdings Pte. Ltd. dated June 1, 2020 | |
21.1 | List of subsidiaries of TDCX Inc. | |
23.1* | Consent of Maples and Calder (Hong Kong) LLP (included in Exhibit [5.1]) | |
23.2* | Consent of Deloitte & Touche LLP, registered public accounting firm | |
23.3* | Consent of Thanathip & Partners Legal Counsellors Limited (included in Exhibit 99.1) |
II-3
No. |
Description | |
24.1 | Power of Attorney (included on signature page) | |
99.1* | Opinion of Thanathip & Partners Legal Counsellors Limited regarding certain Thai legal matters | |
99.2 | Consent of Frost & Sullivan Limited |
* | To be filed by amendment. |
# | Confidential portions of the exhibit have been omitted. |
II-4
Pursuant to the requirements of the Securities Act, the registrant certifies that it has reasonable grounds to believe that it meets all of the requirements for filing on Form F-1 and has duly caused this registration statement to be signed on its behalf by the undersigned, thereunto duly authorized, in Singapore, on , 2021.
TDCX Inc. | ||
By: |
| |
Name: | ||
Title: |
We, the undersigned directors of TDCX Inc. and executive officers of TDCX Inc. and its subsidiaries hereby severally constitute and appoint , and , and each of them singly (with full power to each of them to act alone), our true and lawful attorneys-in-fact and agents, with full power of substitution and resubstitution in each of them for him and in his name, place and stead, and in any and all capacities, to sign any and all amendments (including post-effective amendments) to this Registration Statement (or any other Registration Statement for the same offering that is to be effective upon filing pursuant to Rule 462(b) under the Securities Act), and to file the same, with all exhibits thereto and other documents in connection therewith, with the Securities and Exchange Commission, granting unto said attorneys-in-fact and agents, and each of them, full power and authority to do and perform each and every act and thing requisite or necessary to be done in and about the premises, as full to all intents and purposes as he might or could do in person, hereby ratifying and confirming all that said attorneys-in-fact and agents or any of them or their or his substitute or substitutes may lawfully do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act, this Registration Statement has been signed by the following persons in the capacities and on the dates indicated.
Signature |
Title |
Date | ||
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||||
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II-5
SIGNATURE OF AUTHORIZED REPRESENTATIVE OF THE REGISTRANT
Pursuant to the Securities Act, the undersigned, the duly authorized representative in the United States of TDCX Inc., has signed this registration statement or amendment thereto in New York, New York, United States of America on , 2021.
AUTHORIZED U.S. REPRESENTATIVE | ||
By: |
| |
Name: | ||
Title: |
II-6
Exhibit 10.1
EXECUTION VERSION
[Linklaters Logo]
US$188,000,000
Facility Agreement
Dated 16 March 2021
for
TDCX INC.
arranged by
CREDIT SUISSE AG, SINGAPORE BRANCH
with
CREDIT SUISSE AG, SINGAPORE BRANCH
acting as Agent
and
CREDIT SUISSE AG, SINGAPORE BRANCH
acting as Security Agent
Ref: L-306666
INLAND REVENUE AUTHORITY OF SINGAPORE LOGO
Original
Certificate of Stamp Duty
Stamp Certificate Reference | : | 032032-00TJ3-1-767074921 | ||
Stamp Certificate Issued Date | : | 29/03/2021 | ||
Applicants Reference | : | L-306666 | ||
Document Reference Number | : | 2021032900558 ver. 1.0 | ||
Document Description | : | Declaration of Trust (Nominal) | ||
Date of Document | : | 16/03/2021 |
Stocks and Shares | : | Please refer to Annexure 1 for complete list of stocks and shares | ||
Trustee | : | CREDIT SUISSE AG, SINGAPORE BRANCH (UEN- OTHERS - S73FC2261L) | ||
Beneficiary | : | CREDIT SUISSE AG, SINGAPORE BRANCH (UEN- OTHERS - S73FC2261L) | ||
Stamp Duty | : | S$ 10.00 | ||
Total Amount | : | S$ 10.00 |
To confirm if this Stamp Certificate is genuine, you may do an authenticity check at https://estamping.iras.gov.sg.
SXXXX742B - 29/03/2021 | 032032-00TJ3-1-767074921 | |
2021032900558 | ||
ec1c11b0dcbee29f96b27e8570d11147 |
Page 1 of 2
INLAND REVENUE AUTHORITY OF SINGAPORE LOGO
Original
Certificate of Stamp Duty
Stamp Certificate Reference | : | 032032-00TJ3-1-767074921 | ||
Stamp Certificate Issued Date | : | 29/03/2021 | ||
Applicants Reference | : | L-306666 | ||
Document Reference Number | : | 2021032900558 ver. 1.0 | ||
Document Description | : | Declaration of Trust (Nominal) | ||
Date of Document | : | 16/03/2021 |
Annexure1
List of stocks and shares
1. | 1 shares in TDCX INC. (OTHERS - 362018) |
2. | 1 shares in TDCX (KY) PTE LTD (OTHERS - 358733) |
3. | 250000 shares in TDCX HOLDINGS PTE. LTD. (UEN-LOCAL CO - 199903205H) |
To confirm if this Stamp Certificate is genuine, you may do an authenticity check at https://estamping.iras.gov.sg.
SXXXX742B - 29/03/2021 | 032032-00TJ3-1-767074921 | |
2021032900558 | ||
ec1c11b0dcbee29f96b27e8570d11147 |
Page 2 of 2
CONTENTS
|
||||||
CLAUSE | PAGE | |||||
SECTION 1 | ||||||
INTERPRETATION | ||||||
1 |
Definitions and interpretation | 1 | ||||
SECTION 2 | ||||||
THE FACILITY | ||||||
2 |
The Facility | 26 | ||||
3 |
Purpose | 27 | ||||
4 |
Conditions of Utilisation | 27 | ||||
SECTION 3 | ||||||
UTILISATION | ||||||
5 |
Utilisation | 28 | ||||
SECTION 4 | ||||||
REPAYMENT, PREPAYMENT AND CANCELLATION | ||||||
6 |
Repayment | 29 | ||||
7 |
Illegality, voluntary prepayment and cancellation | 30 | ||||
8 |
Mandatory prepayment and cancellation | 31 | ||||
9 |
Makewhole Amount | 34 | ||||
10 |
Restrictions | 35 | ||||
SECTION 5 | ||||||
COSTS OF UTILISATION | ||||||
11 | Interest | 37 | ||||
12 | Interest Periods | 38 | ||||
13 | Changes to the calculation of interest | 38 | ||||
14 | Fees | 39 | ||||
SECTION 6 | ||||||
ADDITIONAL PAYMENT OBLIGATIONS | ||||||
15 | Tax gross-up and indemnities | 40 | ||||
16 | Increased costs | 43 | ||||
17 | Other indemnities | 45 | ||||
18 | Mitigation by the Lenders | 46 | ||||
19 | Costs and expenses | 47 | ||||
SECTION 7 | ||||||
GUARANTEE | ||||||
20 | Guarantee and indemnity | 49 | ||||
SECTION 8 | ||||||
REPRESENTATIONS, UNDERTAKINGS AND EVENTS OF DEFAULT | ||||||
21 | Representations | 52 | ||||
22 | Information undertakings | 59 | ||||
23 | Financial covenants | 63 | ||||
24 | General undertakings | 66 | ||||
25 | IRA and Equity Cure Account | 73 | ||||
26 | Events of Default | 74 |
i
SECTION 9 | ||||||
CHANGES TO PARTIES | ||||||
27 |
Changes to the Lenders |
81 | ||||
28 |
Changes to the Obligors |
86 | ||||
SECTION 10 | ||||||
THE FINANCE PARTIES | ||||||
29 |
Role of the Agent, the Security Agent and the Arranger |
87 | ||||
30 |
Application of Proceeds |
101 | ||||
31 |
Conduct of business by the Secured Parties |
103 | ||||
32 |
Sharing among the Finance Parties |
103 | ||||
SECTION 11 | ||||||
ADMINISTRATION | ||||||
33 |
Payment mechanics |
105 | ||||
34 |
Set-off |
108 | ||||
35 |
Notices |
108 | ||||
36 |
Calculations and certificates |
110 | ||||
37 |
Partial invalidity |
111 | ||||
38 |
Remedies and waivers |
111 | ||||
39 |
Amendments and waivers |
111 | ||||
40 |
Confidential Information |
115 | ||||
41 |
Confidentiality of Funding Rates |
118 | ||||
42 |
Counterparts |
120 | ||||
SECTION 12 | ||||||
GOVERNING LAW AND ENFORCEMENT | ||||||
43. |
Governing law |
121 | ||||
44. |
Enforcement |
121 | ||||
THE SCHEDULES | ||||||
SCHEDULE |
PAGE | |||||
SCHEDULE 1 The Original Lender |
122 | |||||
SCHEDULE 2 Conditions precedent |
123 | |||||
SCHEDULE 3 Conditions subsequent |
126 | |||||
SCHEDULE 4 Utilisation Request |
128 | |||||
SCHEDULE 5 Form of Transfer Certificate |
130 | |||||
SCHEDULE 6 Form of Assignment Agreement |
132 | |||||
SCHEDULE 7 Existing Financing |
135 | |||||
SCHEDULE 8 Form of Compliance Certificate |
137 | |||||
SCHEDULE 9 Timetables |
138 | |||||
SCHEDULE 10 Subsidiaries |
139 | |||||
SCHEDULE 11 Group Structure Chart |
140 |
ii
THIS AGREEMENT is dated 16 March 2021 and made between:
(1) | TDCX Inc., an exempted company incorporated under the laws of the Cayman Islands with registration number 362018 and having its registered office at the offices of Maples Corporate Services Limited, PO Box 309, Ugland House, Grand Cayman, KY1-1104 Cayman Islands, as borrower (the Borrower); |
(2) | TDCX (KY) PTE LTD, an exempted company incorporated under the laws of the Cayman Islands with registration number 358733 and having its registered office at the offices of Maples Corporate Services Limited, PO Box 309, Ugland House, Grand Cayman, KY1-1104 Cayman Islands (TDCX) and TDCX HOLDINGS PTE. LTD., a private company limited by shares incorporated in Singapore with company registration number UEN 199903205H and having its registered office at 750D Chai Chee Road, #06-01/06, ESR Bizpark @ Chai Chee, Singapore 469004 (TDCXH) as guarantors (the Guarantors); |
(3) | CREDIT SUISSE AG, SINGAPORE BRANCH (incorporated in Switzerland with limited liability) as mandated lead arranger and bookrunner (the Arranger); |
(4) | THE FINANCIAL INSTITUTION listed in Schedule 1 (The Original Lender) as lender (the Original Lender); |
(5) | CREDIT SUISSE AG, SINGAPORE BRANCH (incorporated in Switzerland with limited liability) as account bank (the Account Bank); |
(6) | CREDIT SUISSE AG, SINGAPORE BRANCH (incorporated in Switzerland with limited liability) as agent of the other Finance Parties (the Agent); and |
(7) | CREDIT SUISSE AG, SINGAPORE BRANCH (incorporated in Switzerland with limited liability) as security agent for the Secured Parties (the Security Agent). |
IT IS AGREED as follows:
SECTION 1
INTERPRETATION
1 | Definitions and interpretation |
1.1 | Definitions |
In this Agreement:
Accounting Principles means generally accepted accounting principles, standards and practices in Singapore, including IFRS.
Accounting Reference Date means, in respect of a member of the Group, the date on which the annual accounting period of that member of the Group ends.
Acquisition means the acquisition by the Borrower of the TDCX Shares on the terms of the Acquisition Documents.
Acquisition Agreement means the share purchase agreement dated on or about the date of this Agreement and made between the Borrower and the Sponsor relating to the sale and purchase of the TDCX Shares.
Acquisition Closing Date means the date on which the TDCX Shares are acquired in accordance with the Acquisition Agreement.
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Acquisition Documents means the Acquisition Agreement and any other document designated as an Acquisition Document by the Agent and the Borrower.
Affiliate means, in relation to any person, a Subsidiary of that person or a Holding Company of that person or any other Subsidiary of that Holding Company.
Anti-Corruption Laws means, without limitation, the United Kingdom Bribery Act 2010, the United States Foreign Corrupt Practices Act of 1977 and other similar legislation in other applicable jurisdictions.
APLMA means the Asia Pacific Loan Market Association Limited.
Assignment Agreement means an agreement substantially in the form set out in Schedule 6 (Form of Assignment Agreement) or any other form agreed between the relevant assignor, assignee and the Agent.
Authorisation means:
(a) | an authorisation, consent, approval, resolution, licence, exemption, filing, notarisation, lodgement or registration; or |
(b) | in relation to anything which will be fully or partly prohibited or restricted by law if a Governmental Agency intervenes or acts in any way within a specified period of lodgement, filing, registration or notification, the expiry of that period without intervention or action. |
Availability Period means the period from and including the date of this Agreement to and including the date which is 15 days after the date of this Agreement.
Banking Act means the Banking Act, Chapter 19 of Singapore.
Borrower Accounts Security Agreement means the first ranking Singapore law-governed security agreement dated on or about the date of this Agreement and made between the Borrower and the Security Agent in respect of the IRA and the Equity Cure Account.
Borrower Share Mortgage (Sponsor) means the first ranking Cayman law-governed equitable mortgage over shares dated on or about the date of this Agreement and made between the Sponsor and the Security Agent in respect of the shares of the Borrower.
Break Costs means the amount (if any) by which:
(a) | the interest (excluding Margin) which a Lender should have received for the period from the date of receipt of all or any part of its participation in the Loan or an Unpaid Sum to the last day of the current Interest Period in respect of the Loan or that Unpaid Sum, had the principal amount of the Loan or that Unpaid Sum received been paid on the last day of that Interest Period; |
exceeds:
(b) | the amount which that Lender would be able to obtain by placing an amount equal to the principal amount of the Loan or that Unpaid Sum received by it on deposit with a leading bank for a period starting on the Business Day following receipt or recovery and ending on the last day of the current Interest Period. |
Budget means:
(a) | the budget projecting the financial performance of the Group in relation to each of the Financial Years ended 31 December 2021, 31 December 2022 and 31 December 2023 to be delivered by the Borrower to the Agent pursuant to Clause 4.1 (Initial conditions precedent); and |
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(b) | in relation to any other period, any budget delivered by the Borrower to the Agent in respect of that period pursuant to Clause 22.4 (Budget). |
Business Day means a day (other than a Saturday or a Sunday or a public holiday) on which banks are open for general business in Singapore and:
(a) | in relation to the first and last day of any Interest Period of the Loan, which is a London Business Day and on which banks are open for general business in New York City; |
(b) | in relation to any day for payment of an amount which is denominated in US Dollars, on which banks are open for general business in New York City; and |
(c) | in relation to any day for payment of any other amount (not being an amount denominated in US Dollars), on which banks are open for general business in the principal financial centre of the jurisdiction(s) whose lawful currency the payment is to be made (provided that, if there is more than one such principal financial centre, that principal financial centre shall be as designated by the Agent (acting reasonably)). |
Cash means, at any time, cash (denominated in Singapore Dollars, US Dollars or any other freely transferable and freely convertible currency) in hand or at bank and (in the latter case) credited to an account in the name of any member of the Group with any reputable bank or financial institution and to which such member of the Group is alone (or together with other members of the Group) beneficially entitled and for so long as:
(a) | that cash is repayable on demand; and |
(b) | the cash is capable of being remitted to an Obligor. |
Cash Equivalent Investments means at any time:
(a) | certificates of deposit or time deposits maturing within one year of the relevant date of calculation; |
(b) | any investment in marketable debt obligations issued or fully guaranteed by a Governmental Agency of a country having a credit rating of either A-1 or higher by Standard & Poors Rating Services or F1 or higher by Fitch Ratings Ltd or P-1 or higher by Moodys Investors Service Limited, in each case, maturing within one year of the relevant date of calculation and not convertible or exchangeable to any other security; |
(c) | commercial paper not convertible or exchangeable to any other security: |
(i) | for which a recognised trading market exists; |
(ii) | which matures within one year of the relevant date of calculation; and |
(iii) | which has a credit rating of either A-1 or higher by Standard & Poors Rating Services or F1 or higher by Fitch Ratings Ltd or P-1 or higher by Moodys Investors Service Limited, or, if no rating is available in respect of the commercial paper, the issuer of which has, in respect of its long-term unsecured and non-credit-enhanced debt obligations, an equivalent rating; |
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(d) | any investment in money market funds which (i) have a credit rating of either A-1 or higher by Standard & Poors Rating Services or F1 or higher by Fitch Ratings Ltd or P-1 or higher by Moodys Investors Service Limited, (ii) invest substantially all their assets in securities of the types described in paragraphs (a) to (c) above and (iii) can be turned into cash on not more than 30 days notice; or |
(e) | any other debt security approved by the Majority Lenders, |
in each case, denominated in Singapore Dollars, US Dollars or any other freely transferable and freely convertible currency and to which any member of the Group alone (or together with other members of the Group) is beneficially entitled at that time and which is not issued or guaranteed by any member of the Group.
Change of Control means:
(a) | except as a result of the IPO, the Sponsor does not or ceases directly or indirectly to: |
(i) | have the power (whether by way of ownership of shares, proxy, contract, agency or otherwise) to: |
(A) | cast, or control the casting of, the Change of Control Percentage of the maximum number of votes that might be cast at a general meeting of the Borrower; |
(B) | appoint or remove all of the directors or other equivalent officers of the Borrower; or |
(C) | give directions with respect to the operating and financial policies of the Borrower with which the directors or other equivalent officers of the Borrower are obliged to comply; or |
(ii) | hold directly, legally and beneficially the Change of Control Percentage of each class of the issued share capital of the Borrower (excluding any part of that issued share capital that carries no right to participate beyond a specified amount in a distribution of either profits or capital); |
(b) | following the Acquisition Closing Date, the Borrower does not or ceases directly or indirectly to: |
(i) | have the power (whether by way of ownership of shares, proxy, contract, agency or otherwise) to: |
(A) | cast, or control the casting of, 100 per cent. of the maximum number of votes that might be cast at a general meeting of TDCX; |
(B) | appoint or remove all of the directors or other equivalent officers of TDCX; or |
(C) | give directions with respect to the operating and financial policies of TDCX with which the directors or other equivalent officers of TDCX are obliged to comply; or |
(ii) | hold directly, legally and beneficially 100 per cent. of each class of the issued share capital of TDCX (excluding any part of that issued share capital that carries no right to participate beyond a specified amount in a distribution of either profits or capital); and |
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(c) | following the Acquisition Closing Date, TDCX does not or ceases directly or indirectly to: |
(i) | have the power (whether by way of ownership of shares, proxy, contract, agency or otherwise) to: |
(A) | cast, or control the casting of, 100 per cent. of the maximum number of votes that might be cast at a general meeting of TDCXH; |
(B) | appoint or remove all of the directors or other equivalent officers of TDCXH; or |
(C) | give directions with respect to the operating and financial policies of TDCXH with which the directors or other equivalent officers of TDCXH are obliged to comply; or |
(ii) | hold directly, legally and beneficially 100 per cent. of each class of the issued share capital of TDCXH (excluding any part of that issued share capital that carries no right to participate beyond a specified amount in a distribution of either profits or capital). |
Change of Control Percentage means:
(a) | 100 per cent. less the percentage of shares in the Borrower issued pursuant to the Employee Stock Option Plan; or |
(b) | such lower percentage as the Agent (acting reasonably) may agree. |
Code means the US Internal Revenue Code of 1986.
Commitment means:
(a) | in relation to the Original Lender, the amount set opposite its name under the heading Commitment in Schedule 1 (The Original Lender) and the amount of any other Commitment transferred to it under this Agreement; and |
(b) | in relation to any other Lender, the amount of any Commitment transferred to it under this Agreement, |
to the extent not cancelled, reduced or transferred by it under this Agreement.
Companies Act means the Companies Act, Chapter 50 of Singapore.
Compliance Certificate means a certificate substantially in the form set out in Schedule 8 (Form of Compliance Certificate).
Confidential Information means all information relating to the Borrower, any Obligor, the Group, the Finance Documents or the Facility of which a Finance Party becomes aware in its capacity as, or for the purpose of becoming, a Finance Party or which is received by a Finance Party in relation to, or for the purpose of becoming a Finance Party under, the Finance Documents or the Facility from either:
(a) | any member of the Group or any of its advisers; or |
(b) | another Finance Party, if the information was obtained by that Finance Party directly or indirectly from any member of the Group or any of its advisers, |
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in whatever form, and includes information given orally and any document, electronic file or any other way of representing or recording information which contains or is derived or copied from such information but excludes:
(i) | information that: |
(A) | is or becomes public information other than as a direct or indirect result of any breach by that Finance Party of Clause 40 (Confidential Information); |
(B) | is identified in writing at the time of delivery as non-confidential by any member of the Group or any of its advisers; or |
(C) | is known by that Finance Party before the date the information is disclosed to it in accordance with paragraph (a) or (b) above or is lawfully obtained by that Finance Party after that date, from a source which is, as far as that Finance Party is aware, unconnected with the Group and which, in either case, as far as that Finance Party is aware, has not been obtained in breach of, and is not otherwise subject to, any obligation of confidentiality; and |
(ii) | any Funding Rate. |
Confidentiality Undertaking means a confidentiality undertaking substantially in a recommended form of the APLMA or in any other form agreed between the Borrower and the Agent.
Default means an Event of Default or any event or circumstance specified in Clause 26 (Events of Default) which would (with the expiry of a grace period, the giving of notice, the making of any determination under the Finance Documents or any combination of any of the foregoing) be an Event of Default.
Delegate means any delegate, sub-delegate, agent, attorney or co-trustee appointed by the Security Agent or a Receiver.
Disruption Event means either or both of:
(a) | a material disruption to those payment or communications systems or to those financial markets which are, in each case, required to operate in order for payments to be made in connection with the Facility (or otherwise in order for the transactions contemplated by the Finance Documents to be carried out) which disruption is not caused by, and is beyond the control of, any of the Parties; or |
(b) | the occurrence of any other event which results in a disruption (of a technical or systems-related nature) to the treasury or payments operations of a Party preventing that, or any other Party: |
(i) | from performing its payment obligations under the Finance Documents; or |
(ii) | from communicating with other Parties in accordance with the terms of the Finance Documents, |
and which (in either such case) is not caused by, and is beyond the control of, the Party whose operations are disrupted.
Employee Stock Option Plan means the options issued pursuant to any employee stock option plan of the Borrower, provided that the aggregate number of shares in the Borrower issued pursuant to such options shall not exceed 5 per cent. of the issued share capital of the Borrower.
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Environmental or Social Approval means any Authorisation required by an Environmental and Social Law.
Environmental or Social Claim means any claim, proceeding, formal notice or investigation by any person in connection with:
(a) | a breach, or alleged breach, of an Environmental or Social Law; or |
(b) | any accident, fire, explosion or other event of any type involving an emission or substance which is capable of causing harm to any living organism or the environment. |
Environmental or Social Law means any applicable law concerning:
(a) | occupational health and safety; |
(b) | community welfare, and/or land or property rights; |
(c) | the pollution or protection of the environment; or |
(d) | any emission or substance which is capable of causing harm to any living organism or the environment. |
Equity Cure Account means an account (denominated either in Singapore Dollars or in US Dollars) identified as the Equity Cure Account in the name of the Borrower held with the Account Bank in Singapore (as the same may be redesignated, substituted or replaced from time to time with the prior written consent of the Agent).
Event of Default means any event or circumstance specified as such in Clause 26 (Events of Default).
Existing Financial Indebtedness means the Financial Indebtedness listed in Part I of Schedule 7 (Existing Financing).
Facility means the term loan facility made available under this Agreement as described in Clause 2.1 (The Facility).
Facility Office means the office or offices notified by a Lender to the Agent in writing on or before the date it becomes a Lender (or, following that date, by not less than five Business Days written notice) as the office or offices through which it will perform its obligations under this Agreement.
FATCA means:
(a) | sections 1471 to 1474 of the Code and any associated regulations; |
(b) | any treaty or law of any other jurisdiction, or relating to an intergovernmental agreement between the US and any other jurisdiction, which (in either case) facilitates the implementation of any law referred to in paragraph (a) above; and |
(c) | any agreement pursuant to the implementation of any treaty or law referred to in paragraph (a) or (b) above with the US Internal Revenue Service, the US government or any governmental or taxation authority in any other jurisdiction. |
FATCA Application Date means:
(a) | in relation to a withholdable payment described in section 1473(1)(A)(i) of the Code (which relates to payments of interest and certain other payments from sources within the US), 1 July 2014; or |
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(b) | in relation to a passthru payment described in section 1471(d)(7) of the Code not falling within paragraph (a) above, the first date from which such payment may become subject to a deduction or withholding required by FATCA. |
FATCA Deduction means a deduction or withholding from a payment under a Finance Document required by FATCA.
FATCA Exempt Party means a Party that is entitled to receive payments free from any FATCA Deduction.
Finance Document means this Agreement, any Assignment Agreement, the Upfront Fee Letter, any Security Document, the Subordination Deed, any Transfer Certificate, any Utilisation Request and any other document designated as such by the Agent and the Borrower.
Finance Party means the Agent, the Account Bank, the Security Agent, the Arranger or a Lender.
Financial Indebtedness means any indebtedness for or in respect of:
(a) | moneys borrowed; |
(b) | any amount raised by acceptance under any acceptance credit facility or dematerialised equivalent; |
(c) | any amount raised pursuant to any note purchase facility or the issue of bonds, notes, debentures, loan stock or any similar instrument; |
(d) | the amount of any liability in respect of any Lease Liabilities; |
(e) | receivables sold or discounted (other than any receivables to the extent they are sold on a non-recourse basis); |
(f) | any amount raised under any other transaction (including any forward sale or purchase agreement) of a type not referred to in any other paragraph of this definition having the commercial effect of a borrowing; |
(g) | any derivative transaction entered into in connection with protection against or benefit from fluctuation in any rate or price (and, when calculating the value of any derivative transaction, only the marked-to-market value (or, if any actual amount is due as a result of the termination or close-out of that derivative transaction, that amount) shall be taken into account); |
(h) | shares which are expressed to be redeemable on or before the date falling six months after the Termination Date or are otherwise classified as borrowings under the Accounting Principles; |
(i) | any counter-indemnity obligation in respect of a guarantee, indemnity, bond, standby or documentary letter of credit or any other instrument issued by a bank or financial institution; and |
(j) | the amount of any liability in respect of any guarantee or indemnity for any of the items referred to in paragraphs (a) to (h) above. |
Financial Year has the meaning given to that term in Clause 23.1 (Financial definitions).
First Repayment Date has the meaning given to that term in Clause 6.1 (Repayment of Loan).
Funding Rate means any individual rate notified by a Lender to the Agent pursuant to paragraph (a)(ii) of Clause 13.3 (Cost of funds).
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Funds Flow Statement means a funds flow statement in agreed form between the Borrower and the Agent.
Governmental Agency means any government or any governmental agency, semi-governmental or judicial or quasi-judicial or administrative entity or authority (including any stock exchange or any self-regulatory organisation established under any law).
Group means, at any time, the Borrower and its Subsidiaries from time to time.
Group Structure Chart means the group structure chart set out in Schedule 11 (Group Structure Chart) or otherwise delivered to the Agent from time to time in accordance with paragraph (f) of Clause 22.5 (Information: miscellaneous).
Holding Company means, in relation to a person, any other person in respect of which it is a Subsidiary.
IFRS means international accounting standards within the meaning of the IAS Regulation 1606/2002 to the extent applicable to the relevant financial statements.
Indirect Tax means any goods and services tax, consumption tax, value added tax or any Tax of a similar nature.
Interest Payment Date has the meaning given to that term in Clause 11.2 (Payment of interest).
Interest Period means, in relation to the Loan, each period determined in accordance with Clause 12 (Interest Periods) and, in relation to an Unpaid Sum, each period determined in accordance with Clause 11.3 (Default interest).
Interpolated Screen Rate means, in relation to the Loan, the rate (rounded to the same number of decimal places as the two relevant Screen Rates) which results from interpolating on a linear basis between:
(a) | the Screen Rate for the longest period (for which the Screen Rate is available) which is less than the Interest Period of the Loan; and |
(b) | the Screen Rate for the shortest period (for which the Screen Rate is available) which exceeds the Interest Period of the Loan, |
each as of the Specified Time on the applicable Quotation Day.
IPO means the listing or admission to trading on any stock or securities exchange or market of any shares or securities of any member of the Group, including any sale or issue by way of listing, flotation or public offering (or any equivalent circumstances) of any shares, securities or American Depository Shares of the Borrower.
Ipso Facto Event means an Obligor is the subject of:
(a) | any proceedings as described in section 440 of the IRDA; or |
(b) | any process which under any law with a similar purpose may give rise to a stay on, or prevention of, the exercise of contractual rights. |
IRA means a US Dollar denominated account identified as the Interest Reserve Account in the name of the Borrower with account number A010365867USD held with the Account Bank in Singapore (as the same may be redesignated, substituted or replaced from time to time with the prior written consent of the Agent).
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IRA Amount means, on any date, an amount denominated in US Dollars equal to the aggregate of:
(a) | (from the date of this Agreement to the first Interest Payment Date) the Upfront Fee; and |
(b) | the aggregate amount of interest estimated by the Agent as being payable by the Borrower under this Agreement on the Interest Payment Date immediately following such date (calculated based on the aggregate amount of the Loan outstanding as at such date, applying the relevant interest rate most recently determined in relation to the Loan and assuming no intervening prepayments of the Loan occurring after such date). |
IRA Balance means, at any time, the credit balance (if any) of the IRA at that time.
IRDA means the Insolvency, Restructuring and Dissolution Act 2018 (No. 40 of 2018) of Singapore.
Joint Venture means any joint venture entity, whether a company, unincorporated firm, undertaking, association, joint venture or partnership or any other entity.
Junior Finance Party means any of the Original Junior Finance Parties or any other creditor in respect of Financial Indebtedness of an Obligor whose rights in respect of their Financial Indebtedness are subordinated to the rights of the Lenders pursuant to the Subordination Deed.
Lease Liabilities means any lease or hire purchase contract, a liability under which would, in accordance with the Accounting Principles, be treated as a balance sheet liability.
Legal Reservations means:
(a) | the principle that equitable remedies may be granted or refused at the discretion of a court and the limitation of enforcement by laws relating to insolvency, liquidation, reorganisation, court schemes, moratorium, administration, judicial management and other laws generally affecting the rights of creditors; |
(b) | the time barring of claims under the applicable statutes of limitation, the possibility that an undertaking to assume liability for or indemnify a person against non-payment of stamp duty may be void and defences of set-off or counterclaim; and |
(c) | similar principles, rights and defences under the laws of any Relevant Jurisdiction. |
Lender means:
(a) | any Original Lender; and |
(b) | any bank, financial institution, trust, fund or other entity which has become a Party as a Lender in accordance with Clause 27 (Changes to the Lenders), |
which, in each case, has not ceased to be Lender in accordance with the terms of this Agreement.
LIBOR means, in relation to the Loan:
(a) | the Screen Rate as of the Specified Time for US Dollars and for a period equal in length to the Interest Period of the Loan; or |
(b) | as otherwise determined pursuant to Clause 13.1 (Unavailability of Screen Rate), |
and, if, in either case, that rate is less than zero, LIBOR shall be deemed to be zero.
Loan means a loan made or to be made under the Facility or the principal amount outstanding for the time being of that loan.
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London Business Day means a day (other than a Saturday or a Sunday or a bank holiday) on which commercial banks are open for general business, including dealings in interbank deposits in London.
Majority Lenders means a Lender or Lenders whose Commitments aggregate more than 662⁄3 per cent. of the Total Commitments (or, if the Total Commitments have been reduced to zero, aggregated more than 662⁄3 per cent. of the Total Commitments immediately prior to the reduction).
Makewhole Amount has the meaning given to that term in Clause 9.1 (Definitions).
Margin means, in relation to the Loan:
(a) | in respect of the period from and including the Utilisation Date of the Loan to and including the date falling 18 Months after that Utilisation Date, 3.15 per cent. per annum; and |
(b) | at any time thereafter, 3.45 per cent. per annum. |
Material Adverse Effect means a material adverse effect on:
(a) | the business or financial condition of the Obligors or of the Group, in each case, taken as a whole; |
(b) | the ability of an Obligor or a Security Provider to perform its payment or other material obligations under the Finance Documents; or |
(c) | subject to the Legal Reservations and the applicable Perfection Requirements, the validity or enforceability of, or the effectiveness or ranking of any Security granted or purported to be granted pursuant to any of, the Finance Documents or the rights or remedies of any Finance Party under any of the Finance Documents. |
Material Licences means any material licences, permits and Authorisations necessary for the conduct of the business, trade and ordinary activities of members of the Group and the lack of which would adversely affect its ability to conduct a material part of its business or trade.
Material Subsidiary means:
(a) | a Subsidiary of the Borrower, the total assets, EBITDA or total revenues of which (consolidated where that Subsidiary itself has Subsidiaries) as at the date as at which its latest audited consolidated financial statements were prepared or, as the case may be, for the financial period to which those financial statements relate account for eight per cent. or more of the consolidated total assets, EBITDA or total revenues of the Group (all as calculated by reference to the latest audited consolidated financial statements of the Group); or |
(b) | a Subsidiary of the Borrower to which has been transferred (whether in a single transaction or a series of transactions (whether related or not)) the whole or substantially the whole of the assets of a Subsidiary which immediately prior to such transaction(s) was a Material Subsidiary. |
For the purposes of this definition:
(i) | if a Subsidiary becomes a Material Subsidiary under paragraph (b) above, the Material Subsidiary by which the relevant transfer was made shall, subject to paragraph (a) above, cease to be a Material Subsidiary; and |
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(ii) | if a Subsidiary is acquired by the Borrower after the end of the financial period to which the latest audited consolidated financial statements of the Group relate, those financial statements shall be adjusted as if that Subsidiary had been shown in them by reference to its then latest audited financial statements until audited consolidated financial statements of the Group for the financial period in which the acquisition is made have been prepared. |
Month means a period starting on one day in a calendar month and ending on the numerically corresponding day in the next calendar month, except that:
(a) | (subject to paragraph (c) below) if the numerically corresponding day is not a Business Day, that period shall end on the next Business Day in that calendar month in which that period is to end if there is one, or if there is not, on the immediately preceding Business Day; |
(b) | if there is no numerically corresponding day in the calendar month in which that period is to end, that period shall end on the last Business Day in that calendar month; and |
(c) | if an Interest Period begins on the last Business Day of a calendar month and, consistent with the terms of this Agreement, that Interest Period is to be of a duration equal to a whole number of Months, that Interest Period shall end on the last Business Day in the calendar month in which that Interest Period is to end. |
The above rules will only apply to the last Month of any period.
New Lender has the meaning given to that term in Clause 27.1 (Assignments and transfers by the Lenders).
New Shareholder Injection means:
(a) | any proceeds of any payment made for the subscription of shares in the Borrower by the Sponsor; or |
(b) | any Financial Indebtedness advanced to the Borrower by the Sponsor by way of a loan, subordinated to the Financial Indebtedness under the Finance Documents pursuant to the Subordination Deed. |
Obligor means the Borrower or a Guarantor.
Obligors Agent means the Borrower, which has been appointed to act on behalf of each other Obligor in relation to the Finance Documents pursuant to Clause 2.3 (Obligors Agent).
Original Financial Statements means the audited consolidated financial statements of TDCXH for the Financial Year ended 31 December 2019.
Original Junior Finance Party means any of the creditors listed in Schedule 1 (The Original Junior Finance Parties) to the Subordination Deed dated on or about the date of this Agreement as original junior finance parties.
Original Jurisdiction means, in relation to an Obligor or a Security Provider, the jurisdiction under whose laws that Obligor or Security Provider is incorporated as at the date of this Agreement.
Participant means each person to whom a Lender will make payments under a Participation Agreement.
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Participating Lender has the meaning given to that term in paragraph (c) of Clause 6.2 (Extension option).
Participation means a fee letter, sub-participation, credit derivative (including a credit default swap or credit linked note), loan participation note, total return swap (or similar transactions of broadly equivalent economic effect) or any other agreement between (or instrument in favour of) a Lender and a Participant, whether directly or indirectly, under which the Lender is obliged to make certain payments to the Participant by reference to, one or more Finance Documents and/or one or more Obligors, but excluding any assignment, transfer or novation of any of a Lenders Commitments and/or rights and/or obligations in accordance with Clause 27.1 (Assignments and transfers by the Lenders).
Participation Agreement means each agreement or letter between a Lender and a Participant in respect of a Participation.
Party means a party to this Agreement.
Perfection Requirements means the making of the appropriate registrations, filings, endorsements, notarisation, stamping, notifications or other actions or steps to be made in any jurisdiction in order to perfect Security created by a Security Document and/or in order to achieve the relevant priority for the Security created thereunder.
Permitted Acquisition means:
(a) | the Acquisition; |
(b) | the acquisition of Cash Equivalent Investments; |
(c) | an acquisition by a member of the Group of an asset sold, leased, transferred or otherwise disposed of by another member of the Group in circumstances constituting a Permitted Disposal; |
(d) | an acquisition of shares or securities pursuant to a Permitted Share Issue; |
(e) | the acquisition or establishment of, or involvement in, any share or interest in any Permitted Joint Venture; |
(f) | an acquisition by any member of the Group of the business or undertaking of another member of the Group, where such acquisition is an integral part of any merger permitted under Clause 24.11 (Merger); |
(g) | the incorporation of a company which has not traded and has no assets or liabilities prior to incorporation and which becomes a member of the Group; |
(h) | an acquisition or investment: |
(i) | which is in respect of assets or businesses in the same nature and of the same scope as the Groups business as conducted on the date of this Agreement; and |
(ii) | the value of which acquisition or investment (when aggregated with the value of all other acquisitions and investments permitted under the preceding paragraphs and made in the same Financial Year) does not exceed S$25,000,000 (or its equivalent in another currency or currencies), |
provided that such acquisition or investment does not result in a breach of any provision of this Agreement; and
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(i) | any other acquisition with the prior written consent of the Majority Lenders. |
Permitted Disposal means any sale, lease, licence, transfer or other disposal which does not relate to any Transaction Security:
(a) | of assets made by any member of the Group in the ordinary course of trading of the disposing entity on arms length terms; |
(b) | of any asset (other than shares) by a member of the Group to another member of the Group; |
(c) | of assets (other than shares, businesses and Real Property) in exchange for other assets comparable or superior as to type, value and quality and for a similar purpose (other than an exchange of a non-cash asset for cash) on arms length terms; |
(d) | of obsolete, worn out or redundant vehicles, plant and equipment for cash and on arms length terms; |
(e) | to a Joint Venture, to the extent permitted by Clause 24.14 (Joint ventures); |
(f) | of Cash Equivalent Investments for cash or in exchange of other Cash Equivalent Investments; |
(g) | of cash for a purpose not otherwise prohibited under the Finance Documents and on arms length terms; |
(h) | constituted by a licence of intellectual property in favour of (i) any person on arms length commercial terms or (ii) another member of the Group; |
(i) | of shares in the Borrower pursuant to the IPO, provided that Clause 8.2 (IPO) is complied with; |
(j) | arising as a result of any Permitted Security; |
(k) | of shares in Comparexpress Pte. Ltd., Comparexpress Insurance Broker (Thailand) Ltd and/or Teledirect Hong Kong Limited; |
(l) | of assets on arms length terms where the higher of the market value and consideration receivable (when aggregated with the higher of the market value and consideration receivable for any other sale, lease, licence, transfer or other disposal not allowed under the preceding paragraphs) does not exceed S$25,000,000 (or its equivalent in another currency or currencies) in any Financial Year; and |
(m) | any other disposal with the prior written consent of the Majority Lenders. |
Permitted Financial Indebtedness means Financial Indebtedness:
(a) | arising under the Finance Documents; |
(b) | arising under a transaction for spot or forward delivery entered into in connection with protection against fluctuation in currency or interest rates where that exposure arises in the ordinary course of trade or in respect of the Loan, but not a transaction for investment or speculative purposes; |
(c) | arising under a Permitted Loan or a Permitted Guarantee or as permitted by Clause 24.23 (Treasury Transactions); |
(d) | of any person acquired by a member of the Group after the date of this Agreement which is incurred under arrangements in existence at the date of acquisition, but not incurred or increased or having its maturity date extended in contemplation of, or since, that acquisition, and outstanding only for a period of 30 days following the date of acquisition; |
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(e) | arising under the Existing Financial Indebtedness, provided that the principal amount of such Existing Financial Indebtedness shall not be increased after the date of this Agreement; |
(f) | relating to Lease Liabilities of vehicles, plant, equipment or computers; |
(g) | not permitted by the preceding paragraphs and the outstanding amount of which does not exceed S$50,000,000 (or its equivalent in other currencies) in aggregate for the Group at any time; and |
(h) | incurred with the prior written consent of the Majority Lenders. |
Permitted Guarantee means:
(a) | any guarantee arising under the Finance Documents; |
(b) | the endorsement of negotiable instruments in the ordinary course of trade; |
(c) | any performance or similar bond guaranteeing performance by a member of the Group (or a counter indemnity to a bank or financial institution providing such performance or similar bond) under any contract entered into in the ordinary course of business; |
(d) | any guarantee of a Joint Venture to the extent permitted by Clause 24.14 (Joint ventures); |
(e) | any guarantee permitted under Clause 24.9 (Financial Indebtedness), including, for the avoidance of doubt, the guarantee executed by TDCXH in respect of TDCXSGs obligations to Oversea-Chinese Banking Corporation Limited under the Existing Financial Indebtedness; |
(f) | any guarantee given in respect of the netting or set-off arrangements permitted pursuant to paragraph (b) of the definition of Permitted Security; |
(g) | any guarantee or indemnity given by any member of the Group in connection with any leases (other than finance or capital leases) entered into by any member of the Group; |
(h) | any guarantee not permitted by the preceding paragraphs, where the aggregate principal liability (whether actual or contingent) of members of the Group under all such guarantees does not exceed S$50,000,000 (or its equivalent in other currencies) in aggregate at any time; and |
(i) | incurred with the prior written consent of the Majority Lenders. |
Permitted Joint Venture means any investment in any Joint Venture:
(a) | where: |
(i) | the Joint Venture is engaged in a business substantially the same as that carried on by the Group; and |
(ii) | in any Financial Year, the aggregate (the Joint Venture Investment) of: |
(A) | all amounts subscribed for shares in, lent to, or invested in all such Joint Ventures by any member of the Group; |
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(B) | the contingent liabilities of any member of the Group under any guarantee given in respect of the liabilities of any such Joint Venture; and |
(C) | the market value of any assets transferred by any member of the Group to any such Joint Venture, |
does not exceed S$25,000,000 (or its equivalent in other currencies); and
(b) | made with the prior written consent of the Majority Lenders. |
Permitted Loan means:
(a) | any trade credit extended by any member of the Group to its customers on normal commercial terms and in the ordinary course of its trading activities; |
(b) | Financial Indebtedness which is referred to in the definition of, or otherwise constitutes, Permitted Financial Indebtedness (except under paragraph (c) of that definition); |
(c) | a loan made to a Joint Venture to the extent permitted under Clause 24.14 (Joint ventures); |
(d) | a loan made by an Obligor to another Obligor; |
(e) | a loan made by a member of the Group which is not an Obligor to another member of the Group which is not an Obligor; |
(f) | a loan made by a member of the Group which is not an Obligor to an Obligor, provided that any indebtedness incurred by such Obligor in connection with such loan is subordinated to the rights of the Lenders pursuant to the Subordination Deed; |
(g) | a loan made by an Obligor to a member of the Group which is not an Obligor, provided that: |
(i) | this paragraph (g) shall not permit a loan made by an Obligor to TDCX (PH), Inc. or TDCX (MY) Sdn BHD; and |
(ii) | the outstanding principal amount of which, when aggregated with the outstanding principal amount of all other loans under this paragraph (g) made to that member of the Group does not exceed S$10,000,000 (or its equivalent in other currencies) in aggregate for that member of the Group at any time; and |
(h) | any other loan made with the prior written consent of the Majority Lenders. |
Permitted Security means:
(a) | any lien arising by operation of law and in the ordinary course of trading and not as a result of any default or omission by any member of the Group, and provided that the debt which is secured thereby is paid when due or contested in good faith by appropriate proceedings and properly provisioned; |
(b) | any netting or set-off arrangement entered into by any member of the Group in the ordinary course of its banking arrangements for the purpose of netting debit and credit balances of members of the Group but only so long as: (i) such arrangement does not permit credit balances of any Obligor to be netted or set off against debit balances of members of the Group other than an Obligor; and (ii) such arrangement does not give rise to other Security over the assets of any Obligor in support of liabilities of any member of the Group other than an Obligor; |
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(c) | any payment or close out netting or set-off arrangement pursuant to any Treasury Transaction or foreign exchange transaction entered into by a member of the Group which constitutes Permitted Financial Indebtedness, excluding any Security or Quasi-Security under a credit support arrangement; |
(d) | any Security or Quasi-Security created pursuant to any Finance Document; |
(e) | any Security or Quasi-Security arising under any retention of title, hire purchase or conditional sale arrangement or arrangements having similar effect in respect of goods supplied to a member of the Group in the ordinary course of trading and on the suppliers standard or usual terms and not arising as a result of any default or omission by any member of the Group; |
(f) | any Quasi-Security arising as a result of a disposal which is a Permitted Disposal; |
(g) | any Security or Quasi-Security over or affecting any asset acquired by a member of the Group after the date of this Agreement, if: |
(i) | the Security or Quasi-Security was not created in contemplation of the acquisition of that asset by a member of the Group; |
(ii) | the principal amount secured has not been increased in contemplation of or since the acquisition of that asset by a member of the Group; and |
(iii) | the Security or Quasi-Security is removed or discharged within three months of the date of acquisition of such asset; |
(h) | any Security or Quasi-Security over or affecting any asset of any company which becomes a member of the Group after the date of this Agreement, where the Security or Quasi-Security is created prior to the date on which that company becomes a member of the Group, if: |
(i) | the Security or Quasi-Security was not created in contemplation of the acquisition of that company; |
(ii) | the principal amount secured has not increased in contemplation of or since the acquisition of that company; and |
(iii) | the Security or Quasi-Security is removed or discharged within three months of that company becoming a member of the Group; |
(i) | any Security or Quasi-Security arising as a consequence of any Lease Liabilities permitted pursuant to paragraph (f) of the definition of Permitted Financial Indebtedness; |
(j) | any Security over rental deposits arising in the ordinary course of trading in respect of any property leased or licensed by a member of the Group, provided that the deposit does not exceed 12 months rent for the relevant property; |
(k) | any Security or Quasi-Security over bank accounts granted as part of that banks standard terms and conditions; |
(l) | any Security or Quasi-Security over ownership interests in Joint Ventures to secure mutual obligations to other Joint Venture partners; |
(m) | any Security or Quasi-Security arising as a result of legal proceedings being contested in good faith and which is discharged within 30 days of such Security or Quasi-Security first arising; |
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(n) | any Security or Quasi-Security arising by operation of law in respect of Taxes being contested in good faith which is discharged by no later than 30 days after it first arose, and provided that such Security or Quasi-Security will not rank in priority to any Security created under any Security Document; |
(o) | up to the date falling three months after the date of this Agreement, any Security or Quasi-Security listed in Part II of Schedule 7 (Existing Financing) except to the extent the principal amount secured by that Security or Quasi-Security exceeds the amount stated in that Schedule; |
(p) | any Security or Quasi-Security securing indebtedness, the principal amount of which (when aggregated with the outstanding principal amount of any other indebtedness which has the benefit of Security or Quasi-Security given by any member of the Group other than any permitted under paragraphs (a) to (n) above) does not exceed S$50,000,000 (or its equivalent in other currencies); and |
(q) | any Security or Quasi-Security granted with the prior written consent of the Majority Lenders. |
Permitted Share Issue means an issue of:
(a) | ordinary shares by the Borrower pursuant to the Employee Stock Option Plan where such issue does not lead to a Change of Control of the Borrower; |
(b) | shares by the Borrower pursuant to the IPO provided that Clause 8.2 (IPO) is complied with; and |
(c) | shares by a member of the Group which is a Subsidiary of the Borrower to its shareholders, provided that where such shareholder is a member of the Group, it shall acquire: |
(i) | (where such newly issued shares are of a class then currently in issue as a class) the number of such shares that is at least in proportion to their respective then current percentage holdings in that class of shares; and |
(ii) | (where such newly-issued shares are of a different class from those then currently in issue as a class) the number of such shares that is at least in proportion to the highest then current percentage holding in all other existing equity classes of shares, |
and, in each case, where (if the existing shares of the Borrower or the Subsidiary of the Borrower are the subject of the Transaction Security) the newly-issued shares also become subject to the Transaction Security on the same terms.
Positive Net Worth Date means the first date on which financial statements and Compliance Certificates are delivered under Clause 22.1 (Financial statements) and Clause 22.2 (Provision and contents of Compliance Certificate) showing that the value of the consolidated assets of the Group is no less than its consolidated liabilities (taking into account contingent and prospective liabilities).
Quasi-Security means any arrangement or transaction of a nature, or with an effect, described in paragraph (b) of Clause 24.3 (Negative Pledge).
Quotation Day means:
(a) | in relation to any period for which an interest rate is to be determined, two London Business Days before the first day of that period, unless market practice differs in the Relevant Interbank Market in which case the Quotation Day will be determined by the Agent in accordance with market practice in the Relevant Interbank Market (and if quotations would normally be given by leading banks in the Relevant Interbank Market on more than one day, the Quotation Day will be the last of those days); and |
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(b) | in relation to any Interest Period the duration of which is selected by the Agent pursuant to Clause 11.3 (Default interest), such date as may be determined by the Agent (acting reasonably). |
Real Property means:
(a) | any freehold, leasehold or immovable property; and |
(b) | any buildings, fixtures, fittings, fixed plant or machinery from time to time situated on or forming part of that freehold, leasehold or immovable property. |
Receiver means a receiver, a receiver and manager, an administrative receiver or other receiver or manager in respect of the whole or any part of the Security Assets.
Related Fund means, in relation to a fund (the first fund), a fund which is managed or advised by the same investment manager or investment adviser as the first fund or, if it is managed by a different investment manager or investment adviser, a fund whose investment manager or investment adviser is an Affiliate of the investment manager or investment adviser of the first fund.
Relevant Interbank Market means the London interbank market.
Relevant Jurisdiction means, in relation to an Obligor or a Security Provider;
(a) | its Original Jurisdiction; |
(b) | any jurisdiction where any asset subject to or intended to be subject to the Transaction Security to be created by it is situated; |
(c) | any jurisdiction where it conducts its material business; and |
(d) | the jurisdiction whose laws govern the perfection of any of the Security Documents entered into by it. |
Repayment Date means each date specified in paragraph (b) of Clause 6.1 (Repayment of Loan) for the payment of a Repayment Instalment (or, if that day is not a Business Day, the immediately preceding Business Day).
Repayment Instalment means each instalment for repayment of the Loan specified in paragraph (b) of Clause 6.1 (Repayment of Loan).
Repeating Representations means each of the representations set out in Clauses 21.1 (Status) to 21.4 (Power and authority), 21.6 (Governing law and enforcement), paragraph (a) of 21.10 (No default), paragraphs (a), (b) and (d) of 21.12 (Financial statements), 21.14 (Pari passu ranking), 21.18 (Sanctions) to 21.20 (Anti-money laundering), 21.22 (Good title to assets), 21.29 (No immunity) and 21.30 (Authorised signatories).
Representative means any delegate, agent, manager, administrator, nominee, attorney, trustee or custodian.
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Restricted Countries means, as of the date of this Agreement, Cuba, Iran, North Korea, Syria and the region of Crimea and/or any other country or region so designated from time to time by a Sanctions Authority, as notified from time to time to the Borrower by the Agent (acting on behalf of any Lender).
Restricted Parties means any person, entity or party:
(a) | listed on any Sanctions List or a person, entity or party acting on behalf of such a person, entity or party; |
(b) | located, domiciled, resident in or incorporated under the laws of a country that is the target of country-wide Sanctions; |
(c) | the government of a Restricted Country; |
(d) | otherwise a target of Sanctions; or |
(e) | controlling, owned or controlled by, or under common control with, any person, entity or party referred to under paragraphs (a) to (d) above. |
Sanctions means any trade, economic or financial sanctions laws, regulations or embargoes enacted, imposed or enforced by any Sanctions Authority.
Sanctions Authority means:
(a) | the United States; |
(b) | the United Nations; |
(c) | the European Union; |
(d) | Switzerland; |
(e) | Hong Kong; |
(f) | Singapore; |
(g) | the respective governmental institutions and agencies of any of the foregoing, including, without limitation, the United States Treasury Departments Office of Foreign Assets Control (OFAC), the US Department of State, and Her Majestys Treasury, the Secretariat for Economic Affairs of Switzerland, the Swiss Directorate of International Law, the Hong Kong Monetary Authority and the Monetary Authority of Singapore; or |
(h) | any other body notified from time to time in writing to the Borrower by the Agent (acting on behalf of any Lender). |
Sanctions List means the Specially Designated Nationals and Blocked Persons list publicly issued by OFAC, the Consolidated List of Financial Sanctions Targets in the UK publicly issued by Her Majestys Treasury, or any similar list issued or maintained and made public by, or any public announcement of a Sanctions designation made by, any of the authorities of the United States, the United Kingdom, Switzerland, Hong Kong, Singapore, the United Nations or the European Union.
Screen Rate means the London interbank offered rate administered by ICE Benchmark Administration Limited (or any other person which takes over the administration of that rate) for US Dollars for the relevant period displayed (before any correction, recalculation or republication by the administrator) on pages LIBOR01 or LIBOR02 of the Thomson Reuters screen (or any replacement Thomson Reuters page which displays that rate) or, in each case, on the appropriate page of such other information service which publishes that rate from time to time in place of Thomson Reuters. If such page or service ceases to be available, the Agent may specify another page or service displaying the relevant rate after consultation with the Borrower.
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Secured Liabilities means all present and future liabilities and obligations at any time due, owing or incurred by an Obligor or a Security Provider to any Secured Party under the Finance Documents, both actual and contingent and whether incurred solely or jointly, as principal or surety or in any other capacity together with any of the following matters relating to or arising in respect of those liabilities and obligations:
(a) | any refinancing, novation, deferral or extension; |
(b) | any claim for breach of representation, warranty or undertaking or on an event of default or under any indemnity given under or in connection with any document or agreement evidencing or constituting any other liability or obligation falling within this definition; |
(c) | any claim for damages or restitution; and |
(d) | any claim as a result of any recovery by any Obligor or any Security Provider of a payment, prepayment, repayment, redemption, defeasance or discharge of those liabilities or obligations on the grounds of preference or otherwise, |
and any amounts which would be included in any of the above but for any discharge, non-provability, unenforceability or non-allowance of those amounts in any insolvency or other proceedings.
Secured Party means a Finance Party, a Receiver or any Delegate.
Security means a mortgage, charge, pledge, lien or other security interest securing any obligation of any person or any other agreement or arrangement having a similar effect.
Security Assets means all of the assets of the Obligors and the Security Providers which from time to time are, or are expressed to be, the subject of the Transaction Security.
Security Document means:
(a) | the Borrower Share Mortgage (Sponsor); |
(b) | the Borrower Accounts Security Agreement; |
(c) | the TDCX Share Mortgage; |
(d) | the TDCXH Share Mortgage; or |
(e) | any other security document that may at any time be entered into which creates (or is expressed to create) Security for any of the Secured Liabilities and designated as such by the Security Agent. |
Security Property means:
(a) | the Transaction Security expressed to be granted in favour of the Security Agent as security agent for the Secured Parties and all proceeds of that Transaction Security; |
(b) | all obligations expressed to be undertaken by an Obligor or a Security Provider to pay amounts in respect of the Secured Liabilities to the Security Agent as security agent for the Secured Parties and secured by the Transaction Security together with all representations and warranties and undertakings expressed to be given by an Obligor, a Security Provider or any other person in favour of the Security Agent as security agent for the Secured Parties; and |
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(c) | any other amounts or property, whether rights, entitlements, choses in action or otherwise, actual or contingent, which the Security Agent is required by the terms of the Finance Documents to hold as security agent for the Secured Parties. |
Security Providers means the Sponsor and any other person(s) who at any time creates Security for any of the Secured Liabilities.
Specified Time means a day or time determined in accordance with Schedule 9 (Timetables).
Sponsor means Junique Laurent Bernard Marie, a citizen of France with passport number 18FV12224 and his residential address at 17 Rebecca Road, Rebecca Park, Singapore 266695.
Subordination Deed means a subordination deed dated on or about the date of this Agreement, between, among others, the Borrower, the Original Junior Finance Parties and the Agent.
Subsidiary means, in relation to any company or corporation, a company or corporation:
(a) | which is controlled, directly or indirectly, by the first mentioned company or corporation; |
(b) | more than half the issued equity share capital of which is beneficially owned, directly or indirectly, by the first mentioned company or corporation; or |
(c) | which is a Subsidiary of another Subsidiary of the first mentioned company or corporation, |
and, for this purpose, a company or corporation shall be treated as being controlled by another if that other company or corporation is able to direct its affairs and/or to control the composition of its board of directors or equivalent body.
Tax means any tax, levy, impost, duty or other charge or withholding of a similar nature (including any penalty or interest payable in connection with any failure to pay or any delay in paying any of the same).
TDCX Share Mortgage means the first ranking Cayman law-governed equitable mortgage over shares to be made between the Borrower and the Security Agent in respect of the shares of TDCX.
TDCX Shares means 100 per cent. of each class of the issued share capital of TDCX.
TDCXH Share Mortgage means the first ranking Singapore law-governed security agreement over shares to be made between TDCX and the Security Agent in respect of the shares of TDCXH.
TDCXSG means TDCX (SG) Pte. Ltd., a private company limited by shares incorporated in Singapore with company registration number UEN 199507681R and having its registered office at 750D Chai Chee Road, #06-01/06, ESR Bizpark @ Chai Chee, Singapore 469004.
Termination Date means the date which is 24 Months after the Utilisation Date or (in the event an extension is granted pursuant to Clause 6.2 (Extension option)) the date which is 36 Months after the Utilisation Date, and, if that day is not a Business Day, the immediately preceding Business Day.
Total Commitments means the aggregate of the Commitments, being US$188,000,000 at the date of this Agreement.
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Transaction Security means the Security created or evidenced or expressed to be created or evidenced under the Security Documents.
Transfer Certificate means a certificate substantially in the form set out in Schedule 5 (Form of Transfer Certificate), in a recommended form of the APLMA from time to time or in any other form agreed between the Agent and the Borrower.
Transfer Date means, in relation to an assignment or a transfer, the later of:
(a) | the proposed Transfer Date specified in the relevant Assignment Agreement or Transfer Certificate; and |
(b) | the date on which the Agent executes the relevant Assignment Agreement or Transfer Certificate. |
Treasury Transactions means any derivative transaction entered into in connection with protection against or benefit from fluctuation in any rate or price.
Unpaid Sum means any sum due and payable but unpaid by an Obligor under the Finance Documents.
Upfront Fee has the meaning given to that term in the Upfront Fee Letter.
Upfront Fee Letter means the fee letter dated on or about the date of this Agreement between, among others, the Borrower and the Arranger, setting out the fee referred to in Clause 14.1 (Upfront fee).
US means the United States of America.
Utilisation means a utilisation of the Facility.
Utilisation Date means the date of a Utilisation, being the date on which the Loan is to be made.
Utilisation Request means a notice substantially in the form set out in Schedule 4 (Utilisation Request).
1.2 | Construction |
(a) | Unless a contrary indication appears, any reference in this Agreement to: |
(i) | the Account Bank, the Agent, the Arranger, any Finance Party, any Junior Finance Party, any Lender, any Obligor, any Party, any Secured Party, the Security Agent, any Security Provider or the Sponsor shall be construed so as to include its successors in title, permitted assigns and permitted transferees to, or of, its rights and/or obligations under the Finance Documents; |
(ii) | a document in agreed form is a document which is previously agreed in writing by or on behalf of the Borrower and the Agent or, if not so agreed, is in the form specified by the Agent; |
(iii) | assets includes present and future properties, revenues and rights of every description; |
(iv) | an authorised signatory means a person that has been duly authorised by another person (the other person) to execute or sign any Finance Document (or other document or notice to be executed or signed by the other person under or in connection with any Finance Document) on behalf of that other person; |
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(v) | a Finance Document or any other agreement or instrument is a reference to that Finance Document or other agreement or instrument as amended, novated, supplemented, extended, restated (however fundamentally and whether or not more onerously) or replaced from time to time and includes any change in the purpose of, any extension of or any increase in any facility or the addition of any new facility under that Finance Document or other agreement or instrument, and including any waiver or consent granted in respect of any term of any Finance Document from time to time; |
(vi) | guarantee means (other than in Clause 20 (Guarantee and indemnity)) any guarantee, letter of credit, bond, indemnity or similar assurance against loss, or any obligation, direct or indirect, actual or contingent, to purchase or assume any indebtedness of any person or to make an investment in or loan to any person or to purchase assets of any person where, in each case, such obligation is assumed in order to maintain or assist the ability of any other person to meet its indebtedness; |
(vii) | including shall be construed as including, without limitation (and cognate expressions shall be construed similarly). |
(viii) | indebtedness includes any obligation (whether incurred as principal or as surety) for the payment or repayment of money, whether present or future, actual or contingent; |
(ix) | a Lenders participation in the Loan or an Unpaid Sum includes an amount (in the currency of the Loan or such Unpaid Sum) representing the fraction or portion (attributable to such Lender by virtue of the provisions of this Agreement) of the total amount of the Loan or such Unpaid Sum and the Lenders rights under this Agreement in respect thereof. |
(x) | a person includes any individual, firm, company, corporation, government, state or agency of a state or any association, trust, joint venture, consortium, partnership or other entity (whether or not having separate legal personality) or two or more of the foregoing; |
(xi) | a regulation includes any regulation, rule, official directive, request or guideline (whether or not having the force of law) of any governmental, intergovernmental or supranational body, agency, department or of any regulatory, self-regulatory or other authority or organisation; |
(xii) | shares or share capital includes issued shares and other equivalent ownership interests (and shareholder and similar expressions shall be construed accordingly); |
(xiii) | a law includes common or customary law and any constitution, decree, judgment, legislation, order, ordinance, regulation, statute, treaty or other legislative measure, in each case, of any jurisdiction whatever (and lawful and unlawful shall be construed accordingly); |
(xiv) | a law or a provision of law is a reference to that law or, as applicable, that provision as amended or re-enacted from time to time; and |
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(xv) | a time of day is a reference to Singapore time. |
(b) | The determination of the extent to which a rate is for a period equal in length to an Interest Period shall disregard any inconsistency arising from the last day of that Interest Period being determined pursuant to the terms of this Agreement. |
(c) | Section, Clause and Schedule headings are for ease of reference only. |
(d) | Unless a contrary indication appears, a term used in any other Finance Document or in any notice or certificate given under or in connection with any Finance Document has the same meaning in that Finance Document, notice or certificate as in this Agreement. |
(e) | A Default or an Event of Default is continuing if it has not been remedied or waived in writing. |
(f) | Where this Agreement specifies an amount in a given currency (the specified currency) or its equivalent, the equivalent is a reference to the amount of any other currency which, when converted into the specified currency utilising the Agents spot rate of exchange (or, if the Agent does not have an available spot rate of exchange, any publicly available spot rate of exchange selected by the Agent (acting reasonably)) for the purchase of the specified currency with that other currency at or about 11:00 a.m. (Singapore time) on the relevant date, is equal to the relevant amount in the specified currency. |
1.3 | Currency symbols and definitions |
(a) | S$, SGD and Singapore Dollars denote the lawful currency of Singapore. |
(b) | US$, USD and US Dollars denote the lawful currency of the US. |
1.4 | Third party rights |
(a) | Unless expressly provided to the contrary in a Finance Document a person who is not a Party has no right under the Contracts (Rights of Third Parties) Act, Chapter 53B of Singapore (the Third Parties Act) to enforce or to enjoy the benefit of any term of this Agreement. |
(b) | Subject to Clause 39.3 (Other exceptions) but otherwise notwithstanding any term of any Finance Document, the consent of any person who is not a Party is not required to rescind or vary this Agreement at any time. |
(c) | Any Receiver, Delegate or any person described in paragraph (b) of Clause 29.12 (Exclusion of liability) may, subject to this Clause 1.4 and the Third Parties Act, rely on any Clause of this Agreement which expressly confers rights on it. |
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SECTION 2
THE FACILITY
2 | The Facility |
2.1 | The Facility |
Subject to the terms of this Agreement, the Lenders make available to the Borrower a US Dollar term loan facility in an aggregate amount equal to the Total Commitments.
2.2 | Finance Parties rights and obligations |
(a) | The obligations of each Finance Party under the Finance Documents are several. Failure by a Finance Party to perform its obligations under the Finance Documents does not affect the obligations of any other Party under the Finance Documents. No Finance Party is responsible for the obligations of any other Finance Party under the Finance Documents. |
(b) | The rights of each Finance Party under or in connection with the Finance Documents are separate and independent rights and any debt arising under the Finance Documents to a Finance Party from an Obligor is a separate and independent debt in respect of which a Finance Party shall be entitled to enforce its rights in accordance with paragraph (c) below. The rights of each Finance Party include any debt owing to that Finance Party under the Finance Documents and, for the avoidance of doubt, any part of the Loan or any other amount owed by an Obligor which relates to a Finance Partys participation in the Facility or its role under a Finance Document (including any such amount payable to the Agent on its behalf) is a debt owing to that Finance Party by that Obligor. |
(c) | A Finance Party may, except as specifically provided in the Finance Documents, separately enforce its rights under or in connection with the Finance Documents. |
2.3 | Obligors Agent |
(a) | Each Obligor (other than the Borrower) by its execution of this Agreement irrevocably appoints the Borrower to act on its behalf as its agent in relation to the Finance Documents and irrevocably authorises: |
(i) | the Borrower on its behalf to supply all information concerning itself contemplated by this Agreement to the Finance Parties and to give all notices and instructions, to make such agreements and to effect the relevant amendments, supplements and variations capable of being given, made or effected by any Obligor notwithstanding that they may affect that Obligor, without further reference to or the consent of that Obligor; and |
(ii) | each Finance Party to give any notice, demand or other communication to that Obligor pursuant to the Finance Documents to the Borrower, |
and, in each case, that Obligor shall be bound as though that Obligor itself had given the notices and instructions or executed or made the agreements or effected the amendments, supplements or variations, or received the relevant notice, demand or other communication.
(b) | Every act, omission, agreement, undertaking, settlement, waiver, amendment, supplement, variation, notice or other communication given or made by the Obligors Agent or given to the Obligors Agent under any Finance Document on behalf of another Obligor or in connection with any Finance Document (whether or not known to any other Obligor and whether occurring before or after such other Obligor became an Obligor under any Finance Document) shall be binding for all purposes on that Obligor as if that Obligor had expressly made, given or concurred with it. In the event of any conflict between any notices or other communications of the Obligors Agent and any other Obligor, those of the Obligors Agent shall prevail. |
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3 | Purpose |
3.1 | Purpose |
The Borrower shall apply all amounts borrowed by it under the Facility towards paying the Sponsor the purchase price for the TDCX Shares under and in accordance with the terms of the Acquisition Agreement, as described in the Funds Flow Statement.
3.2 | Monitoring |
No Finance Party is bound to monitor or verify the application of any amount borrowed pursuant to this Agreement.
4 | Conditions of Utilisation |
4.1 | Initial conditions precedent |
(a) | The Borrower may not deliver a Utilisation Request unless the Agent has received all of the documents and other evidence listed in Schedule 2 (Conditions precedent) in form and substance reasonably satisfactory to the Agent. The Agent shall notify the Borrower and the Lenders promptly upon being so satisfied. |
(b) | Other than to the extent that the Majority Lenders notify the Agent in writing to the contrary before the Agent gives the notification described in paragraph (a) above, the Lenders authorise (but do not require) the Agent to give that notification. The Agent shall not be liable for any damages, costs or losses whatsoever as a result of giving any such notification. |
4.2 | Further conditions precedent |
The Lenders will only be obliged to comply with Clause 5.4 (Lenders participation) if on the date of the Utilisation Request and on the proposed Utilisation Date:
(a) | no Default is continuing or would result from the proposed Loan and none of the circumstances described in Clause 8.1 (Change of Control) has occurred; |
(b) | the Repeating Representations and any other representations expressed to repeat on such date in any other Finance Document to be made by each Obligor or each Security Provider are true in all material respects; |
(c) | the IRA Balance is, or will with the funds from that Utilisation be, at least equal to the IRA Amount. |
4.3 | Maximum number of Loans |
(a) | The Borrower may not deliver a Utilisation Request if as a result of the proposed Utilisation, more than one Loan would be outstanding. |
(b) | The Borrower may not request that the Loan be divided. |
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SECTION 3
UTILISATION
5 | Utilisation |
5.1 | Delivery of a Utilisation Request |
The Borrower may utilise the Facility by delivery to the Agent of a duly completed Utilisation Request not later than the Specified Time.
5.2 | Completion of a Utilisation Request |
(a) | The Utilisation Request is irrevocable and will not be regarded as having been duly completed unless: |
(i) | the proposed Utilisation Date is a Business Day within the Availability Period; |
(ii) | the currency and amount of the Utilisation comply with Clause 5.3 (Currency and amount); |
(iii) | the proposed Interest Period complies with Clause 12 (Interest Periods); and |
(iv) | it specifies the account and bank (which must be in the principal financial centre of the country of the currency of the Utilisation) to which the proceeds of the Utilisation are to be credited. |
(b) | Only one Loan may be requested in the Utilisation Request. |
5.3 | Currency and amount |
(a) | The currency specified in the Utilisation Request must be US Dollars. |
(b) | The amount of the proposed Loan must be: |
(i) | a minimum of US$10,000,000 or in higher integral multiples of US$1,000,000 or, if less, the Total Commitment; and |
(ii) | in any event, such that it is less than or equal to the Total Commitment. |
5.4 | Lenders participation |
(a) | If the conditions set out in Clause 4 (Conditions of Utilisation) and Clause 5.1 (Delivery of a Utilisation Request) to Clause 5.3 (Currency and amount) have been met, each Lender participating in the Facility shall make its participation in the Loan available by the Utilisation Date through its Facility Office. |
(b) | The amount of each Lenders participation in the Loan will be equal to the proportion borne by its Commitment to the Total Commitments immediately prior to making the Loan. |
(c) | The Agent shall notify each Lender of the amount of the Loan and the amount of its participation in the Loan, in each case, by the Specified Time. |
5.5 | Cancellation of Commitment |
The Commitments which, at that time, are unutilised shall be immediately cancelled (without any fee, premium or penalty) on the earlier of:
(a) | the Utilisation Date; or |
(b) | the last day of the Availability Period. |
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SECTION 4
REPAYMENT, PREPAYMENT AND CANCELLATION
6 | Repayment |
6.1 | Repayment of Loan |
(a) | Subject to paragraph (b) below, the Borrower shall repay the Loan in full on the applicable Termination Date. |
(b) | If an extension in respect of the Loan is agreed in accordance with Clause 6.2 (Extension option) below, the Borrower shall repay the Loan in instalments by repaying on each Repayment Date an amount which reduces the outstanding amount of the Loan by an amount equal to the relevant percentage of the principal amount of the Loan outstanding on the First Repayment Date: |
Repayment Date |
Repayment Instalment | |
24 Months after the Utilisation Date (the First Repayment Date ) | 25 per cent. | |
30 Months after the Utilisation Date | 25 per cent. | |
36 Months after the Utilisation Date | 50 per cent. (or, if different, the balance of the Loan which is outstanding) |
(c) | The Borrower may not reborrow any part of the Facility which is repaid. |
6.2 | Extension option |
(a) | The Borrower may request that the Termination Date be extended subject to the terms of this Clause 6.2 by giving notice to the Agent not less than 60 days (and not more than 120 days) before the date which is 24 months after the Utilisation Date with the effect that the Termination Date shall be the date which is 36 Months after the Utilisation Date. |
(b) | A notice served by the Borrower pursuant to paragraph (a) above shall be irrevocable. |
(c) | The Agent shall promptly notify each Lender participating in the Loan (a Participating Lender) of any such request. |
(d) | Each Participating Lender shall notify the Agent of its decision (which shall be in its sole discretion) whether or not to agree to any such request not later than 30 days before the date which is 24 Months after the Utilisation Date (and, if any Participating Lender has not notified the Agent of its acceptance of any such request on or before such date, it shall be deemed to have refused such request) and the Agent shall promptly notify the Borrower whether or not each Participating Lender has agreed to such request. |
(e) | Promptly following receipt of notification from the Agent pursuant to paragraph (d) above, the Borrower may elect by notice to the Agent to accept the extension offered by all the relevant Participating Lender(s) who agreed to the extension request (the Relevant Participating Lenders), in which case, the Termination Date shall be extended in relation to the Commitments and participations of the Relevant Participating Lender(s). |
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(f) | Notwithstanding any other provision in this Agreement: |
(i) | the Borrower may only request that the Termination Date be extended once; and |
(ii) | the Relevant Participating Lenders will only be obliged to comply with the provisions of this Clause 6.2 if on the date of any extension request: |
(A) | no Event of Default is continuing or would result from the proposed extension; and |
(B) | the Repeating Representations to be made by each Obligor are true in all material respects. |
(g) | If any Participating Lender does not agree to the extension request, its participation in the outstanding Loan shall be repaid in accordance with paragraph (a) of Clause 6.1 (Repayment of Loan). |
(h) | If any extension is agreed in accordance with this Clause 6.2, the Borrower shall pay to the Agent (for the account of each Relevant Participating Lender) a fee in such amount and at such time as may be agreed between the Borrower and that Relevant Participating Lender. |
7 | Illegality, voluntary prepayment and cancellation |
7.1 | Illegality |
If, at any time it is or will become unlawful in any applicable jurisdiction for any Lender to perform any of its obligations as contemplated by this Agreement or to fund or maintain its participation in the Loan or it is or will become unlawful for any Affiliate of a Lender for that Lender to do so:
(a) | then that Lender shall promptly notify the Agent upon becoming aware of that event; |
(b) | upon the Agent notifying the Borrower, each Commitment of that Lender will be immediately cancelled (without any fee, premium or penalty); and |
(c) | the Borrower shall repay that Lenders participation in the Loan on the last day of the Interest Period for the Loan occurring after the Agent has notified the Borrower or, if earlier, the date specified by that Lender in the notice delivered to the Agent (being no earlier than the last day of any applicable grace period permitted by law) and that Lenders corresponding Commitment(s) shall be immediately cancelled (without any fee, premium or penalty) in the amount of the participations to be repaid. |
7.2 | Voluntary cancellation |
The Borrower may, if it gives the Agent not less than five Business Days (or such shorter period as the Majority Lenders may agree) prior notice, cancel (without any fee, premium or penalty but subject to Clause 9 (Makewhole Amount)) the whole or any part (being a minimum amount of US$5,000,000 or in higher integral multiples of US$1,000,000) of the Facility. Any cancellation under this Clause 7.2 shall reduce the Commitments of the Lenders rateably.
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7.3 | Voluntary prepayment |
(a) | The Borrower may, subject to Clause 10.1 (Notices of cancellation or prepayment), if it gives the Agent not less than five Business Days (or such shorter period as the Majority Lenders may agree) prior notice, prepay the whole or any part of the Loan (but, if in part, being an amount that reduces the Loan by a minimum amount of US$5,000,000 or in higher integral multiples of US$1,000,0000). |
(b) | The Loan may only be prepaid after the last day of the Availability Period (or, if earlier, the day on which the Commitment is zero). |
(c) | Any prepayment made under this Clause 7.3: |
(i) | shall be applied in prepayment of the Loan; and |
(ii) | if an extension is agreed in accordance with Clause 6.2 (Extension option) above, shall satisfy the obligations under Clause 6.1 (Repayment of Loan) in inverse chronological order. |
7.4 | Right of repayment and cancellation in relation to a single Lender |
(a) | If: |
(i) | by reason of the introduction after the date of this Agreement of, or any change after the date of this Agreement in (or in the interpretation, administration or application of) any law, any sum payable to any Lender by the Borrower is required to be increased under paragraph (a) of Clause 15.2 (Tax gross-up) to a greater extent than would have been required had that payment been made to that Lender on the date of this Agreement; or |
(ii) | any Lender claims indemnification from the Borrower under Clause 15.3 (Tax indemnity) or Clause 16.1 (Increased Costs), |
the Borrower may, subject to Clause 10.1 (Notices of cancellation or prepayment), whilst the circumstance giving rise to the requirement for that increase or indemnification continues, give the Agent notice of cancellation of the Commitment(s) of that Lender and its intention to procure the repayment of that Lenders participation in the Loan.
(b) | On receipt of a notice of cancellation referred to in paragraph (a) above, the Commitment(s) of that Lender shall be immediately reduced to zero (without any fee, premium or penalty but subject to Clause 9 (Makewhole Amount)). |
(c) | On the last day of each Interest Period which ends after the Borrower has given notice of cancellation under paragraph (a) above (or, if earlier, the date specified by the Borrower in that notice), the Borrower shall repay that Lenders participation in the Loan together with all interest and other amounts payable to such Lender under the Finance Documents and that Lenders Commitment(s) shall be immediately cancelled (without any fee, premium or penalty but subject to Clause 9 (Makewhole Amount)) in the amount of the participations repaid. |
8 | Mandatory prepayment and cancellation |
8.1 | Change of Control |
If a Change of Control exists, occurs or has occurred:
(a) | the Borrower shall promptly notify the Agent upon becoming aware of that event; |
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(b) | a Lender shall not be obliged to fund the Utilisation; and |
(c) | if a Lender so requires and notifies the Agent within 21 days of the Borrower notifying the Agent of the event the Agent shall, by not less than five Business Days notice to the Borrower, cancel the Commitment of that Lender and declare the participation of that Lender in the Loan, together with accrued interest thereon, and all other amounts accrued or outstanding under the Finance Documents immediately due and payable, whereupon such Commitment will be immediately cancelled (without any fee, premium or penalty but subject to Clause 9 (Makewhole Amount)), any Commitment of that Lender shall immediately cease to be available for further utilisation and the participation of that Lender in the Loan, accrued interest thereon and all other amounts in connection therewith shall become immediately due and payable. |
8.2 | IPO |
If an IPO occurs or has occurred:
(a) | the Borrower shall promptly notify the Agent; |
(b) | no Lender shall be obliged to fund the Utilisation; and |
(c) | the Commitment of each Lender will be immediately cancelled (without any fee, premium or penalty) and the Loan, together with accrued interest, and all other amounts accrued or outstanding under the Finance Documents shall become due and payable on the tenth Business Day after the IPO. |
8.3 | Disposal and Insurance Proceeds |
(a) | For the purposes of this Clause 8.3 and Clause 8.5 (Application of mandatory prepayments and cancellations): |
Disposal means a sale, lease, licence, transfer or other disposal by a person of any asset, undertaking or business (whether by a voluntary or involuntary single transaction or series of transactions).
Disposal Proceeds means the consideration receivable by any member of the Group (including any amount receivable in repayment of intercompany debt) for any Disposal made by any member of the Group except for Excluded Disposal Proceeds and after deducting:
(i) | any reasonable expenses which are incurred by any member of the Group with respect to that Disposal to persons who are not members of the Group; and |
(ii) | any Tax incurred and required to be paid by the seller in connection with that Disposal (as reasonably determined by the seller, on the basis of existing rates and taking account of any available credit, deduction or allowance). |
Excluded Disposal Proceeds means any proceeds of any Disposal which the Borrower notifies the Agent are:
(i) | made in accordance with paragraphs (a), (b), (f), (h) and (j) of the definition of Permitted Disposal; |
(ii) | made in accordance with paragraphs (c) and (e) of the definition of Permitted Disposal and applied in the purchase of replacement assets for use in the business of the Group as soon as possible (but in any event within 180 days, or such longer period as the Majority Lenders may agree) after receipt or committed to be applied within 180 days of receipt and actually applied as soon as possible but in any event within 180 days after being so committed; |
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(iii) | received in kind or by way of non-cash consideration; or |
(iv) | equal to or less than S$5,000,000 (or its equivalent in another currency or currencies) in respect of any individual Disposal or S$25,000,000 (or its equivalent in another currency or currencies) in aggregate in a series of related Disposals. |
Excluded Insurance Proceeds means any proceeds of an insurance claim which the Borrower notifies the Agent:
(i) | are, or are to be, applied to meet a third party claim; |
(ii) | are, or are to be applied to cover operating losses in respect of which the relevant insurance claim was made; |
(iii) | are, or are to be, applied in the replacement, reinstatement and/or repair of the assets or otherwise in amelioration of the loss in respect of which the relevant insurance claim was made as soon as possible (but in any event within 180 days, or such longer period as the Majority Lenders may agree) after receipt or committed to be applied within 180 days of receipt and actually applied as soon as possible but in any event within 180 days after being so committed; or |
(iv) | are equal to or less than S$2,000,000 (or its equivalent in another currency or currencies) in respect of any single insurance claim or S$5,000,000 (or its equivalent in another currency or currencies) in aggregate in a series of related insurance claims. |
Insurance Proceeds means the proceeds of any insurance claim under any insurance maintained by any member of the Group except for Excluded Insurance Proceeds and after deducting any reasonable expenses in relation to that claim which are incurred by any member of the Group to persons who are not members of the Group.
(b) | The Borrower shall prepay the Loan, and cancel the Commitment, in amounts equal to the following amounts at the times and in the order of application contemplated by Clause 8.5 (Application of mandatory prepayments and cancellations): |
(i) | the amount of Disposal Proceeds; and |
(ii) | the amount of Insurance Proceeds. |
8.4 | Non-completion of the Acquisition |
(a) | If the Acquisition Closing Date does not occur on or before the Utilisation Date: |
(i) | the Borrower shall promptly notify the Agent upon becoming aware of that event; and |
(ii) | the Commitment of each Lender will be immediately cancelled (without any fee, premium or penalty but subject to Clause 9 (Makewhole Amount)) and the Loan, together with accrued interest, and all other amounts accrued or outstanding under the Finance Documents shall become immediately due and payable. |
(b) | If any Acquisition Document is terminated, rescinded or repudiated prior to the occurrence of the Acquisition Closing Date, then: |
(i) | the Borrower shall inform the Agent of that event promptly following its occurrence; |
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(ii) | no Lender shall be obliged to fund the Utilisation; and |
(iii) | the Commitment of each Lender will be immediately cancelled (without any fee, premium or penalty but subject to Clause 9 (Makewhole Amount)) and the Loan, together with accrued interest, and all other amounts accrued or outstanding under the Finance Documents shall become immediately due and payable. |
8.5 | Application of mandatory prepayments and cancellations |
(a) | A prepayment of the Loan or cancellation of Commitment made under Clause 8.3 (Disposal and Insurance Proceeds) shall be applied in the following order: |
(i) | first, in cancellation of the Commitment (and the Commitments of the Lenders will be cancelled rateably); and |
(ii) | secondly: |
(A) | in prepayment of the Loan; and |
(B) | if an extension is agreed in accordance with Clause 6.2 (Extension option), such prepayment shall satisfy the obligations under Clause 6.1 (Repayment of Loan) in inverse chronological order. |
(b) | In the case of any prepayment relating to the amounts of Disposal Proceeds or Insurance Proceeds, the Borrower shall prepay the Loan as soon as reasonably practicable after receipt of those proceeds. |
(c) | Any amount to be applied in cancellation of Commitments pursuant to paragraph (a)(i) above shall be so applied, and such amount of the Commitments shall be cancelled (without any fee, premium or penalty but subject to Clause 9 (Makewhole Amount)), on and with effect from the date the Disposal Proceeds or Insurance Proceeds (as applicable) become subject to prepayment by (or on behalf of) the relevant member of the Group. |
8.6 | Excluded proceeds |
Where Excluded Disposal Proceeds and Excluded Insurance Proceeds include amounts which are intended to be used for a specific purpose within a specified period (as set out in the relevant definition of Excluded Disposal Proceeds or Excluded Insurance Proceeds), the Borrower shall ensure that those amounts are used for that purpose and, if requested to do so by the Agent, shall promptly deliver a certificate to the Agent at the time of such application and at the end of such period confirming the amount (if any) which has been so applied within the requisite time periods provided for in the relevant definition.
9 | Makewhole Amount |
9.1 | Definitions |
For the purposes of this Clause 9:
Makewhole Amount means, in relation to the Loan, an amount in US Dollars determined by the Agent to be equal to:
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where: | ||||
A | = | the Relevant Prepayment Amount on the Prepayment Date; | ||
B | = | the applicable Margin; | ||
C | = | the number of calendar days from and including the Prepayment Date to but excluding the Makewhole Termination Date; and | ||
D | = | 360. |
Makewhole Termination Date means, in relation to the Loan, the date falling six Months after the Utilisation Date of the Loan.
Prepayment Date has the meaning given to that term in Clause 9.2 (Makewhole Amount).
Relevant Prepayment Amount has the meaning given to that term in Clause 9.2 (Makewhole Amount).
9.2 | Makewhole Amount |
(a) | If all or any part of the Loan is required to be repaid, prepaid or is cancelled under this Agreement (other than pursuant to Clause 7.1 (Illegality) or Clause 8.2 (IPO)) prior to the Makewhole Termination Date (or, if the repayment is as a result of a notice of acceleration made pursuant to Clause 26.20 (Acceleration) prior to the Makewhole Termination Date even though payment is made only on or after the Makewhole Termination Date), or all or any part of the Commitment is cancelled by the Borrower, prior to the Makewhole Termination Date (the amount repaid, prepaid or cancelled being a Relevant Prepayment Amount), the Borrower shall, on the same date as each such repayment or prepayment is due or such cancellation is made (the Prepayment Date) pay to the Lenders the Makewhole Amount in cash. |
(b) | For avoidance of doubt, the Makewhole Amount does not include any payments arising pursuant to Clause 11.3 (Default interest). |
10 | Restrictions |
10.1 | Notices of cancellation or prepayment |
Any notice of cancellation or prepayment given by any Party under Clause 7 (Illegality, voluntary prepayment and cancellation) shall be irrevocable and, unless a contrary indication appears in this Agreement, shall specify the date or dates upon which the relevant cancellation or prepayment is to be made and the amount of that cancellation or prepayment.
10.2 | Interest and other amounts |
Any prepayment under this Agreement shall be made together with accrued interest on the amount prepaid and, subject to payment of the Makewhole Amount (if applicable) and Break Costs (if any), without premium or penalty.
10.3 | No reborrowing |
The Borrower may not reborrow any part of the Facility which is prepaid or repaid.
10.4 | Prepayment in accordance with Agreement |
The Borrower shall not repay or prepay all or any part of the Loan or cancel all or any part of the Commitment except at the times and in the manner expressly provided for in this Agreement.
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10.5 | No reinstatement of Commitments |
No amount of the Total Commitments cancelled under this Agreement may be subsequently reinstated.
10.6 | Agents receipt of notices |
If the Agent receives a notice under Clause 7 (Illegality, voluntary prepayment and cancellation) it shall promptly forward a copy of that notice to either the Borrower or the affected Lender, as appropriate.
10.7 | Effect of repayment and prepayment on Commitments |
If all or part of any Lenders participation in the Loan is repaid or prepaid, an amount of that Lenders Commitment (equal to the amount of the participation which is repaid or prepaid) will be deemed to be cancelled on the date of repayment or prepayment.
10.8 | Application of prepayments |
Any prepayment of the Loan (other than a prepayment pursuant to Clause 7.1 (Illegality), Clause 7.4 (Right of repayment and cancellation in relation to a single Lender) or Clause 8.1 (Change of Control)) shall be applied pro rata to each Lenders participation in the Loan.
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SECTION 5
COSTS OF UTILISATION
11 | Interest |
11.1 | Calculation of interest |
The rate of interest on the Loan for each Interest Period is the percentage rate per annum which is the aggregate of the applicable:
(a) | Margin; and |
(b) | LIBOR. |
11.2 | Payment of interest |
The Borrower shall pay accrued interest on the Loan on the last day of each Interest Period (and, if the Interest Period is longer than six Months, on the dates falling at six monthly intervals after the first day of the Interest Period) (an Interest Payment Date).
11.3 | Default interest |
(a) | If an Obligor fails to pay any amount payable by it under a Finance Document on its due date, interest shall accrue on the Unpaid Sum from the due date up to the date of actual payment (both before and after judgment) at a rate which, subject to paragraph (b) below, is the sum of 2 per cent. and the rate which would have been payable if the Unpaid Sum had, during the period of non-payment, constituted a Loan in the currency of the Unpaid Sum for successive Interest Periods, each of a duration selected by the Agent (acting reasonably). Any interest accruing under this Clause 11.3 shall be immediately payable by the Borrower on demand by the Agent. |
(b) | If any Unpaid Sum consists of all or part of the Loan which became due on a day which was not the last day of an Interest Period relating to the Loan: |
(i) | the first Interest Period for that Unpaid Sum shall have a duration equal to the unexpired portion of the current Interest Period relating to the Loan; and |
(ii) | the rate of interest applying to the Unpaid Sum during that first Interest Period shall be the sum of 2 per cent. and the rate which would have applied if the Unpaid Sum had not become due. |
(c) | Default interest (if unpaid) arising on an Unpaid Sum will be compounded with the Unpaid Sum at the end of each Interest Period applicable to that Unpaid Sum but will remain immediately due and payable. |
11.4 | Notification of rates of interest |
(a) | The Agent shall promptly notify the relevant Lenders and the Borrower of the determination of a rate of interest under this Agreement. |
(b) | The Agent shall promptly notify the Borrower of each Funding Rate relating to the Loan. |
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12 | Interest Periods |
12.1 | Interest Periods |
(a) | The Interest Period for the Loan shall, subject to paragraph (b) below, be three Months (or any other period agreed between the Borrower and the Agent (acting on the instructions of all the Lenders participating in the Loan). |
(b) | An Interest Period shall not extend beyond a Repayment Date or the Termination Date. |
(c) | Each Interest Period for the Loan shall start on the Utilisation Date or (if the Loan has already been made) on the last day of the preceding Interest Period of the Loan. |
12.2 | Non-Business Days |
If an Interest Period would otherwise end on a day which is not a Business Day, that Interest Period will instead end on the next Business Day in that calendar month (if there is one) or the preceding Business Day (if there is not).
13 | Changes to the calculation of interest |
13.1 | Unavailability of Screen Rate |
(a) | Interpolated Screen Rate: If no Screen Rate is available for LIBOR for the Interest Period of the Loan, the applicable LIBOR shall be the Interpolated Screen Rate for a period equal in length to the Interest Period of the Loan. |
(b) | Cost of funds: If paragraph (a) above applies but it is not possible to calculate the Interpolated Screen Rate, there shall be no LIBOR for the Loan and Clause 13.3 (Cost of funds) shall apply to the Loan for that Interest Period. |
13.2 | Market disruption |
If, before 5:00 p.m. (Singapore time) on the Business Day immediately following the Quotation Day for the relevant Interest Period, the Agent receives notifications from a Lender or Lenders (whose participations in the Loan exceed 35 per cent. of the Loan) that the cost to it of funding its participation in the Loan from whatever source it may reasonably select would be in excess of LIBOR, then Clause 13.3 (Cost of funds) shall apply to the Loan for the relevant Interest Period.
13.3 | Cost of funds |
(a) | If this Clause 13.3 applies, the rate of interest on each Lenders share of the Loan for the relevant Interest Period shall be the percentage rate per annum which is the sum of: |
(i) | the Margin; and |
(ii) | the rate notified to the Agent by that Lender as soon as practicable and in any event five Business Days before the date on which interest is due to be paid in respect of that Interest Period, to be that which expresses as a percentage rate per annum the cost to the relevant Lender of funding its participation in the Loan from whatever source it may reasonably select. |
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(b) | If this Clause 13.3 applies and the Agent or the Borrower so requires, the Agent and the Borrower shall enter into negotiations (for a period of not more than 30 days) with a view to agreeing a substitute basis for determining the rate of interest. |
(c) | Any alternative basis agreed pursuant to paragraph (b) above shall, with the prior consent of all the Lenders and the Borrower, be binding on all Parties. |
(d) | If this Clause 13.3 applies pursuant to Clause 13.2 (Market disruption) and: |
(i) | a Lenders Funding Rate is less than LIBOR; or |
(ii) | a Lender does not supply a quotation by the time specified in paragraph (a)(ii) above, |
the cost to that Lender of funding its participation in the Loan for that Interest Period shall be deemed, for the purposes of paragraph (a) above, to be LIBOR.
(e) | If this Clause 13.3 applies pursuant to Clause 13.1 (Unavailability of Screen Rate) but any Lender does not supply a quotation by the time specified in paragraph (a)(ii) above, then for the purposes of sub-paragraph (a)(ii) above, the rate of interest payable to that Lender shall be the weighted average of the rates notified to the Agent by each other Lender in accordance with paragraph (a)(ii) above. |
(f) | For the avoidance of doubt, in the event that no substitute basis for determining the rate of interest is agreed, the rate of interest shall continue to be determined in accordance with the terms of this Agreement. |
13.4 | Notification to Borrower |
If Clause 13.3 (Cost of funds) applies the Agent shall, as soon as is practicable, notify the Borrower.
13.5 | Break Costs |
(a) | The Borrower shall, within five Business Days of demand by a Finance Party, pay to that Finance Party its Break Costs attributable to all or any part of the Loan or an Unpaid Sum being paid by the Borrower on a day other than the last day of an Interest Period for the Loan or that Unpaid Sum, provided that no Break Costs shall be attributable if such payment is due to a business catastrophe caused by a force majeure event such as a pandemic or is made pursuant to Clause 8.2 (IPO). |
(b) | Each Lender shall, as soon as reasonably practicable after a demand by the Agent, provide a certificate confirming the amount of its Break Costs for any Interest Period in which they accrue. |
14 | Fees |
14.1 | Upfront fee |
The Borrower shall pay to the Arranger an upfront fee in the amount and at the times agreed in the Upfront Fee Letter.
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SECTION 6
ADDITIONAL PAYMENT OBLIGATIONS
15 | Tax gross-up and indemnities |
15.1 | Definitions |
(a) | In this Clause 15: |
Tax Credit means a credit against, relief or remission for, or repayment of any Tax.
Tax Deduction means a deduction or withholding for or on account of Tax from a payment under a Finance Document, other than a FATCA Deduction.
Tax Payment means an increased payment made by an Obligor to a Finance Party under Clause 15.2 (Tax gross-up) or a payment under Clause 15.3 (Tax indemnity).
(b) | Unless a contrary indication appears, in this Clause 15 a reference to determines or determined means a determination made in the absolute discretion of the person making the determination. |
15.2 | Tax gross-up |
(a) | All payments to be made by an Obligor to any Finance Party under the Finance Documents shall be made free and clear of and without any Tax Deduction unless such Obligor is required to make a Tax Deduction, in which case the sum payable by such Obligor (in respect of which such Tax Deduction is required to be made) shall be increased to the extent necessary to ensure that such Finance Party receives a sum net of any deduction or withholding equal to the sum which it would have received had no such Tax Deduction been made or required to be made. |
(b) | The Borrower shall promptly upon becoming aware that an Obligor must make a Tax Deduction (or that there is any change in the rate or the basis of a Tax Deduction) notify the Agent accordingly. Similarly, a Lender shall notify the Agent on becoming so aware in respect of a payment payable to that Lender. If the Agent receives such notification from a Lender it shall notify the Borrower and that Obligor. |
(c) | If an Obligor is required to make a Tax Deduction, that Obligor shall make that Tax Deduction and any payment required in connection with that Tax Deduction within the time allowed and in the minimum amount required by law. |
(d) | Within 30 days of making either a Tax Deduction or any payment required in connection with that Tax Deduction, the Obligor making that Tax Deduction shall deliver to the Agent, for the Finance Party entitled to the payment, evidence reasonably satisfactory to that Finance Party that the Tax Deduction has been made or (as applicable) any appropriate payment paid to the relevant taxing authority. |
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15.3 | Tax indemnity |
(a) | Without prejudice to Clause 15.2 (Tax gross-up), if any Finance Party is required to make any payment of or on account of Tax on or in relation to any sum received or receivable under the Finance Documents (including any sum deemed for the purposes of Tax to be received or receivable by such Finance Party whether or not actually received or receivable) or if any liability in respect of any such payment is asserted, imposed, levied or assessed against any Finance Party, the Borrower shall, within five Business Days of demand of the Agent, indemnify the Finance Party which suffers a loss or liability as a result against such payment or liability, together with any interest, penalties, costs and expenses payable or incurred in connection therewith, provided that this Clause 15.3 shall not apply to: |
(i) | any Tax imposed on and calculated by reference to the net income actually received or receivable by such Finance Party by the jurisdiction in which such Finance Party is incorporated; |
(ii) | any Tax imposed on and calculated by reference to the net income of the Facility Office of such Finance Party actually received or receivable by such Finance Party by the jurisdiction in which its Facility Office is located; |
(iii) | the extent a loss, liability or cost is compensated for by an increased payment under Clause 15.2 (Tax gross-up); or |
(iv) | a FATCA Deduction required to be made by a Party, |
but, for the avoidance of doubt and for the purposes of paragraphs (i) and (ii) above, Tax shall not include any sum deemed for the purposes of Tax to be received or receivable by such Finance Party but not actually receivable.
(b) | A Finance Party intending to make a claim under paragraph (a) above shall notify the Agent of the event giving rise to the claim whereupon the Agent shall notify the Borrower thereof. |
(c) | A Finance Party shall, on receiving a payment from an Obligor under this Clause 15.3, notify the Agent. |
15.4 | Tax credit |
If an Obligor makes a Tax Payment and the relevant Finance Party determines that:
(a) | a Tax Credit is attributable to an increased payment of which that Tax Payment forms part, to that Tax Payment or to a Tax Deduction in consequence of which that Tax Payment was required; and |
(b) | that Finance Party has obtained and utilised that Tax Credit, |
the Finance Party shall pay an amount to the Obligor which that Finance Party determines will leave it (after that payment) in the same after-Tax position as it would have been in had the Tax Payment not been required to be made by the Obligor.
15.5 | Stamp taxes |
The Borrower shall:
(a) | pay all stamp duty, registration and other similar Taxes payable in respect of any Finance Document, and |
(b) | within five Business Days of demand, indemnify each Secured Party against any cost, loss or liability that Secured Party incurs in relation to any stamp duty, registration or other similar Taxes paid or payable in respect of any Finance Document. |
15.6 | Indirect tax |
(a) | All amounts set out or expressed in a Finance Document to be payable by any Party to a Finance Party shall be deemed to be exclusive of any Indirect Tax. If any Indirect Tax is chargeable on any supply made by any Finance Party to any Party in connection with a Finance Document, that Party shall pay (unless that Party is the Agent, the Security Agent or the Arranger, in which case the Borrower shall pay) to the Finance Party (in addition to and at the same time as paying the consideration for that supply) an amount equal to the amount of the Indirect Tax. |
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(b) | Where a Finance Document requires any Party to reimburse or indemnify a Finance Party for any costs or expenses, that Party shall also at the same time pay and indemnify the Finance Party against all Indirect Tax incurred by that Finance Party in respect of the costs or expenses to the extent that the Finance Party reasonably determines that it is not entitled to credit or repayment in respect of the Indirect Tax. |
15.7 | FATCA Information |
(a) | Subject to paragraph (c) below, each Party shall, within 10 Business Days of a reasonable request by another Party: |
(i) | confirm to that other Party whether it is: |
(A) | a FATCA Exempt Party; or |
(B) | not a FATCA Exempt Party; |
(ii) | supply to that other Party such forms, documentation and other information relating to its status under FATCA as that other Party reasonably requests for the purposes of that other Partys compliance with FATCA; and |
(iii) | supply to that other Party such forms, documentation and other information relating to its status as that other Party reasonably requests for the purposes of that other Partys compliance with any other law, or exchange of information regime. |
(b) | If a Party confirms to another Party pursuant to paragraph (a)(i) above that it is a FATCA Exempt Party and it subsequently becomes aware that it is not, or has ceased to be a FATCA Exempt Party, that Party shall notify that other Party reasonably promptly. |
(c) | Paragraph (a) above shall not oblige any Finance Party to do anything, and paragraph (a)(iii) above shall not oblige any other Party to do anything, which would or might in its reasonable opinion constitute a breach of: |
(i) | any law; |
(ii) | any fiduciary duty; or |
(iii) | any duty of confidentiality. |
(d) | If a Party fails to confirm whether or not it is a FATCA Exempt Party or to supply forms, documentation or other information requested in accordance with paragraph (a)(i) or (ii) above (including, for the avoidance of doubt, where paragraph (c) above applies), then such Party shall be treated for the purposes of the Finance Documents (and payments under them) as if it is not a FATCA Exempt Party until such time as the Party in question provides the requested confirmation, forms, documentation or other information. |
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15.8 | FATCA Deduction |
(a) | Each Party may make any FATCA Deduction it is required to make by FATCA, and any payment required in connection with that FATCA Deduction, and no Party shall be required to increase any payment in respect of which it makes such a FATCA Deduction or otherwise compensate the recipient of the payment for that FATCA Deduction. |
(b) | Each Party shall promptly, upon becoming aware that it must make a FATCA Deduction (or that there is any change in the rate or the basis of such FATCA Deduction) notify the Party to whom it is making the payment and, in addition, shall notify the Borrower, the Agent and the other Finance Parties. |
16 | Increased costs |
16.1 | Increased Costs |
(a) | Subject to Clause 16.3 (Exceptions) the Borrower shall, within five Business Days of a demand by the Agent, pay for the account of a Finance Party the amount of any Increased Costs incurred by that Finance Party or any of its Affiliates as a result of (i) the introduction of or any change in (or in the interpretation, administration or application of) any law or (ii) compliance with any law made after the date of this Agreement or (iii) the implementation or application of or compliance with Basel III or CRD IV or any law that implements or applies Basel III or CRD IV. The term law in this paragraph (a) shall include any law concerning capital adequacy, prudential limits, liquidity, reserve assets or Tax. |
(b) | In this Agreement: |
Basel III means:
(i) | the agreements on capital requirements, a leverage ratio and liquidity standards contained in Basel III: A global regulatory framework for more resilient banks and banking systems, Basel III: International framework for liquidity risk measurement, standards and monitoring and Guidance for national authorities operating the countercyclical capital buffer published by the Basel Committee on Banking Supervision in December 2010, each as amended, supplemented or restated; |
(ii) | the rules for global systemically important banks contained in Global systemically important banks: assessment methodology and the additional loss absorbency requirement Rules text published by the Basel Committee on Banking Supervision in November 2011, as amended, supplemented or restated; and |
(iii) | any further guidance or standards published by the Basel Committee on Banking Supervision relating to Basel III. |
CRD IV means:
(i) | Regulation (EU) No 575/2013 of the European Parliament and of the Council of 26 June 2013 on prudential requirements for credit institutions and investment firms; and |
(ii) | Directive 2013/36/EU of the European Parliament and of the Council of 26 June 2013 on access to the activity of credit institutions and the prudential supervision of credit institutions and investment firms. |
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Increased Costs means:
(i) | a reduction in the rate of return from the Facility or on a Finance Partys (or its Affiliates) overall capital (including as a result of any reduction in the rate of return on capital brought about by more capital being required to be allocated by that Finance Party or one of its Affiliates); |
(ii) | an additional or increased cost; or |
(iii) | a reduction of any amount due and payable under any Finance Document, |
which is incurred or suffered by a Finance Party or any of its Affiliates to the extent that it is attributable to the undertaking, funding or performance by such Finance Party of any of its obligations under any Finance Document or any participation of such Finance Party in the Loan or any Unpaid Sum.
16.2 | Increased Cost claims |
(a) | A Finance Party intending to make a claim pursuant to Clause 16.1 (Increased Costs) shall notify the Agent of the event giving rise to the claim, following which the Agent shall promptly notify the Borrower. |
(b) | Each Finance Party shall, as soon as practicable after a demand by the Agent, provide a certificate confirming the amount of its Increased Costs. |
16.3 | Exceptions |
(a) | Clause 16.1 (Increased Costs) does not apply to the extent any Increased Cost is: |
(i) | attributable to a Tax Deduction required by law to be made by an Obligor; |
(ii) | attributable to a FATCA Deduction to be made by a Party; |
(iii) | compensated for by Clause 15.3 (Tax indemnity) (or would have been compensated for under Clause 15.3 (Tax indemnity) but was not so compensated solely because any of the exclusions in paragraph (a) of Clause 15.3 (Tax indemnity) applied); |
(iv) | attributable to the implementation or application of or compliance with the International Convergence of Capital Measurement and Capital Standards, a Revised Framework published by the Basel Committee on Banking Supervision in June 2004 in the form existing on the date of this agreement (but excluding any amendment arising out of Basel III and CRD IV) (Basel II) or any other law or regulation which implements Basel II (whether such implementation, application or compliance is by a government, regulator, Finance Party or any of its Affiliates); or |
(v) | attributable to the wilful breach by the relevant Finance Party or its Affiliates of any law or regulation. |
(b) | In this Clause 16.3, a reference to a Tax Deduction has the same meaning given to that term in Clause 15.1 (Definitions). |
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17 | Other indemnities |
17.1 | Currency indemnity |
(a) | If any sum due from an Obligor or a Security Provider under the Finance Documents (a Sum), or any order, judgment or award given or made in relation to a Sum, has to be converted from the currency (the First Currency) in which that Sum is payable into another currency (the Second Currency) for the purpose of: |
(i) | making or filing a claim or proof against that Obligor or Security Provider; or |
(ii) | obtaining or enforcing an order, judgment or award in relation to any litigation or arbitration proceedings, |
the Borrower shall as an independent obligation, within five Business Days of demand, indemnify each Secured Party to whom that Sum is due against any cost, loss or liability arising out of or as a result of the conversion, including any discrepancy between (A) the rate of exchange used to convert that Sum from the First Currency into the Second Currency and (B) the rate or rates of exchange available to that person at the time of its receipt of that Sum.
(b) | Each Obligor waives any right it may have in any jurisdiction to pay any amount under the Finance Documents in a currency or currency unit other than that in which it is expressed to be payable. |
17.2 | Other indemnities |
The Borrower shall, within five Business Days of demand, indemnify each Secured Party against any cost, loss or liability incurred by that Secured Party as a result of:
(a) | the occurrence of any Event of Default; |
(b) | any information produced or approved by or on behalf of an Obligor or the Sponsor in connection with the Facility being or being alleged to be misleading and/or deceptive in any respect; |
(c) | any enquiry, investigation, subpoena (or similar order) or litigation with respect to any Obligor or a Security Provider or with respect to the transactions contemplated or financed under the Finance Documents; |
(d) | a failure by an Obligor or a Security Provider to pay any amount due under a Finance Document on its due date or in the relevant currency, including, any cost, loss or liability arising as a result of Clause 32 (Sharing among the Finance Parties); |
(e) | funding, or making arrangements to fund, its participation in the Loan requested by the Borrower in a Utilisation Request but not made by reason of the operation of any one or more of the provisions of this Agreement (other than by reason of default or negligence by that Secured Party alone); or |
(f) | the Loan (or part of the Loan) not being prepaid in accordance with a notice of prepayment given by or on behalf of the Borrower. |
17.3 | Indemnity to the Agent |
The Borrower shall, within five Business Days of demand, indemnify the Agent against:
(a) | any cost, loss or liability incurred by the Agent (acting reasonably) as a result of: |
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(i) | investigating any event which it reasonably believes is a Default; |
(ii) | acting or relying on any notice, request or instruction which it reasonably believes to be genuine, correct and appropriately authorised; or |
(iii) | instructing lawyers, accountants, tax advisers, surveyors or other professional advisers or experts as permitted under this Agreement; and |
(b) | any cost, loss or liability (including for negligence or any other category of liability whatsoever) incurred by the Agent (otherwise than by reason of the Agents gross negligence or wilful misconduct) (or, in the case of any cost, loss or liability pursuant to Clause 33.9 (Disruption to payment systems etc.), notwithstanding the Agents negligence, gross negligence or any other category of liability whatsoever but not including any claim based on the fraud of the Agent) in acting as Agent under the Finance Documents. |
17.4 | Indemnity to the Security Agent |
(a) | The Borrower shall, within five Business Days of demand, indemnify the Security Agent and every Receiver and Delegate against any cost, loss or liability incurred by any of them as a result of: |
(i) | acting or relying on any notice, request or instruction which it reasonably believes to be genuine, correct and appropriately authorised; |
(ii) | the taking, holding, protection or enforcement of the Transaction Security; |
(iii) | the exercise of any of the rights, powers, discretions, authorities and remedies vested in the Security Agent and each Receiver and Delegate by the Finance Documents or by law; |
(iv) | any default by any Obligor or Security Provider in the performance of any of the obligations expressed to be assumed by it in the Finance Documents; |
(v) | instructing lawyers, accountants, tax advisers, surveyors or other professional advisers or experts as permitted under this Agreement; or |
(vi) | acting as Security Agent, Receiver or Delegate under the Finance Documents or which otherwise relates to any of the Security Property (otherwise, in each case, than by reason of the relevant Security Agents, Receivers or Delegates gross negligence or wilful misconduct). |
(b) | The Security Agent and every Receiver and Delegate may, in priority to any payment to the Secured Parties, indemnify itself out of the Security Assets in respect of, and pay and retain, all sums necessary to give effect to the indemnity in this Clause 17.4 and shall have a lien on the Transaction Security and the proceeds of the enforcement of the Transaction Security for all moneys payable to it. |
18 | Mitigation by the Lenders |
18.1 | Mitigation |
(a) | Each Finance Party shall, in consultation with the Borrower, take all reasonable steps to mitigate any circumstances which arise and which would result in any amount becoming payable under or pursuant to, or cancelled pursuant to, any of Clause 7.1 (Illegality), Clause 15 (Tax gross-up and indemnities) (other than Clause 15.6 (Indirect tax)) or Clause 16 (Increased Costs), including: |
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(i) | providing such information as the Borrower may reasonably request in order to permit the Borrower to determine its entitlement to claim any exemption or other relief (whether pursuant to a double tax treaty or otherwise) from any obligation to make a Tax Deduction; and |
(ii) | in relation to any circumstances which arise following the date of this Agreement, transferring its rights and obligations under the Finance Documents to another Affiliate or Facility Office. |
(b) | Paragraph (a) above does not in any way limit the obligations of any Obligor under the Finance Documents. |
18.2 | Limitation of liability |
(a) | The Borrower shall, within five Business Days of demand, indemnify each Finance Party for all costs and expenses reasonably incurred by that Finance Party as a result of steps taken by it under Clause 18.1 (Mitigation). |
(b) | A Finance Party is not obliged to take any steps under Clause 18.1 (Mitigation) if, in the opinion of that Finance Party (acting reasonably), to do so might be prejudicial to it. |
19 | Costs and expenses |
19.1 | Transaction expenses |
The Borrower shall within five Business Days of demand, pay the Agent, the Security Agent and the Arranger the amount of all costs and expenses (including legal fees) reasonably incurred by any of them (and, in the case of the Security Agent, by any Receiver or Delegate) in connection with the negotiation, preparation, printing and execution of:
(a) | this Agreement and any other documents referred to in this Agreement; and |
(b) | any other Finance Documents executed after the date of this Agreement. |
19.2 | Amendment costs |
If:
(a) | an Obligor or a Security Provider requests an amendment, waiver or consent; or |
(b) | an amendment or waiver is contemplated or agreed pursuant to Clause 39.4 (Replacement of Screen Rate), |
the Borrower shall, within five Business Days of demand, reimburse the Agent and the Security Agent for the amount of all costs and expenses (including legal fees) reasonably incurred by the Agent or the Security Agent (and, in the case of the Security Agent, by any Receiver or Delegate) in responding to, evaluating, negotiating, complying with or implementing the contemplated amendment, waiver or consent.
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19.3 | Enforcement and preservation costs |
The Borrower shall, within five Business Days of demand, pay to each Secured Party the amount of all costs and expenses (including legal fees) incurred by that Secured Party in connection with the enforcement of, or the preservation of any rights under, any Finance Document or the Transaction Security and with any proceedings instituted by or against that Secured Party as a consequence of it entering into a Finance Document or taking or holding the Transaction Security, or enforcing those rights.
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SECTION 7
GUARANTEE
20 | Guarantee and indemnity |
20.1 | Guarantee and indemnity |
Each Guarantor irrevocably and unconditionally jointly and severally:
(a) | guarantees to each Secured Party punctual performance by each other Obligor of all that other Obligors payment obligations under the Finance Documents; |
(b) | undertakes with each Secured Party that: |
(i) | whenever an Obligor does not pay any amount when due under or in connection with any Finance Document, that Guarantor shall within five Business Days of demand by the Agent pay that amount as if it was the principal obligor; and |
(ii) | if an Ipso Facto Event is continuing, then, within five Business Days of demand by the Agent, that Guarantor shall pay the Loan, accrued interest, the Makewhole Amount (if applicable) and other amounts referred to in Clause |
26.20 | (Acceleration) as if it was the principal obligor; and |
(c) | agrees with each Secured Party that if any obligation guaranteed by it is or becomes unenforceable, invalid or illegal, it will, as an independent and primary obligation, indemnify that Secured Party within five Business Days of demand against any cost, loss or liability it incurs as a result of any Obligor not paying any amount which would, but for such unenforceability, invalidity or illegality, have been payable by it under any Finance Document on the date when it would have been due. The amount payable by a Guarantor under this indemnity will not exceed the amount it would have had to pay under this Clause 20 if the amount claimed had been recoverable on the basis of a guarantee. |
20.2 | Continuing guarantee |
This guarantee is a continuing guarantee and will extend to the ultimate balance of sums payable by any Obligor under the Finance Documents, regardless of any intermediate payment or discharge in whole or in part.
20.3 | Reinstatement |
If any discharge, release or arrangement (whether in respect of the obligations of any Obligor or any security for those obligations or otherwise) is made by a Secured Party in whole or in part on the basis of any payment, security or other disposition which is avoided or must be restored in insolvency, liquidation, administration, judicial management or otherwise then the liability of each Guarantor under this Clause 20 will continue or be reinstated as if the discharge, release or arrangement had not occurred.
20.4 | Waiver of defences |
The obligations of each Guarantor under this Clause 20 will not be affected by an act, omission, matter or thing which, but for this Clause, would reduce, release or prejudice any of its obligations under this Clause 20 (whether or not known to it or any Secured Party), including:
(a) | any time, waiver or consent granted to, or composition with, any Obligor or other person; |
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(b) | the release of any other Obligor or any other person under the terms of any composition or arrangement with any creditor of any member of the Group; |
(c) | the taking, variation, compromise, exchange, renewal or release of, or refusal or neglect to perfect, execute, take up or enforce, any rights against, or security over assets of, any Obligor or other person or any non-presentation or non-observance of any formality or other requirement in respect of any instrument or any failure to realise the full value of any security; |
(d) | any incapacity or lack of power, authority or legal personality of or dissolution or change in the members or status of an Obligor or any other person; |
(e) | any amendment, novation, supplement, extension, restatement (however fundamental and whether or not more onerous) or replacement of any Finance Document or any other document or security, including any change in the purpose of, any extension of or any increase in any facility or the addition of any new facility under any Finance Document or other document or security; |
(f) | any unenforceability, illegality or invalidity of any obligation of any person under any Finance Document or any other document or security; |
(g) | any insolvency or similar proceedings; or |
(h) | this Agreement or any other Finance Document not being executed by or binding upon any other party. |
20.5 | Guarantor intent |
Without prejudice to the generality of Clause 20.4 (Waiver of defences), each Guarantor expressly confirms that it intends that this guarantee shall extend from time to time to any (however fundamental) variation, increase, extension or addition of or to any of the Finance Documents and/or any facility or amount made available under any of the Finance Documents.
20.6 | Immediate recourse |
Each Guarantor waives any right it may have of first requiring any Secured Party (or any trustee or agent on its behalf) to proceed against or enforce any other rights or security or claim payment from any person before claiming from that Guarantor under this Clause 20. This waiver applies irrespective of any law or any provision of a Finance Document to the contrary.
20.7 | Appropriations |
Until all amounts which may be or become payable by the Obligors under or in connection with the Finance Documents have been irrevocably paid in full, each Secured Party (or any trustee or agent on its behalf) may:
(a) | refrain from applying or enforcing any other moneys, security or rights held or received by that Secured Party (or any trustee or agent on its behalf) in respect of those amounts, or apply and enforce the same in such manner and order as it sees fit (whether against those amounts or otherwise) and no Guarantor shall be entitled to the benefit of the same; and |
(b) | hold in an interest-bearing suspense account any moneys received from any Guarantor or on account of any Guarantors liability under this Clause 20. |
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20.8 | Deferral of Guarantors rights |
Until all amounts which may be or become payable by the Obligors under or in connection with the Finance Documents have been irrevocably paid in full and unless the Agent (or, as the case may be, the Security Agent) otherwise directs, no Guarantor will exercise or otherwise enjoy the benefit of any right which it may have by reason of performance by it of its obligations under the Finance Documents or by reason of any amount being payable, or liability arising, under this Clause 20:
(a) | to be indemnified by an Obligor; |
(b) | to claim any contribution from any other guarantor of or provider of security for any Obligors obligations under the Finance Documents; |
(c) | to take the benefit (in whole or in part and whether by way of subrogation or otherwise) of any rights of the Secured Parties under the Finance Documents or of any other guarantee or security taken pursuant to, or in connection with, the Finance Documents by any Secured Party; |
(d) | to bring legal or other proceedings for an order requiring any Obligor to make any payment, or perform any obligation, in respect of which any Guarantor has given a guarantee, undertaking or indemnity under Clause 20.1 (Guarantee and indemnity); |
(e) | to exercise any right of set-off against any Obligor; and/or |
(f) | to claim or prove as a creditor of any Obligor in competition with any Secured Party. |
If any Guarantor receives any benefit, payment or distribution in relation to any such right it shall hold that benefit, payment or distribution (or so much of it as may be necessary to enable all amounts which may be or become payable to the Secured Parties by the Obligors under or in connection with the Finance Documents to be paid in full) on trust for the Secured Parties and shall promptly pay or transfer the same to the Agent or as the Agent may direct for application in accordance with Clause 33 (Payment mechanics).
20.9 | Additional security |
This guarantee is in addition to and is not in any way prejudiced by any other guarantee or security now or subsequently held by any Secured Party.
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SECTION 8
REPRESENTATIONS, UNDERTAKINGS AND EVENTS OF DEFAULT
21 | Representations |
Each Obligor makes the representations and warranties set out in this Clause 21 in relation to itself only) to each Finance Party on the date of this Agreement and on the Acquisition Closing Date (as though the Acquisition Closing Date had occurred).
21.1 | Status |
(a) | It is a limited liability corporation, duly incorporated and validly existing and, in relation to each Obligor incorporated in the Cayman Islands, in good standing, under the laws of its jurisdiction of incorporation. |
(b) | Each of: |
(i) | its Material Subsidiaries is a limited liability corporation, duly incorporated and validly existing under the law of its jurisdiction of incorporation; and |
(ii) | its Subsidiaries (other than its Material Subsidiaries) is a limited liability corporation, duly incorporated and validly existing under the law of its jurisdiction of incorporation, other than where failure to be duly incorporated or validly existing would not have or reasonably be expected to have a Material Adverse Effect. |
(c) | It and each of: |
(i) | its Material Subsidiaries has the power to own its assets and carry on its business as it is being conducted; and |
(ii) | its Subsidiaries (other than its Material Subsidiaries) has the power to own its assets and carry on its business as it is being conducted other than where failure to own such assets or carry on such business would not have or reasonably be expected to have a Material Adverse Effect. |
21.2 | Binding obligations |
Subject to the Legal Reservations and, in the case of the Security Documents, the applicable Perfection Requirements:
(a) | the obligations expressed to be assumed by it in each Finance Document to which it is a party are legal, valid, binding and enforceable obligations; and |
(b) | (without limiting the generality of paragraph (a) above), each Security Document to which it is a party creates the security interests which that Security Document purports to create and those security interests are valid and effective. |
21.3 | Non-conflict with other obligations |
The entry into and performance by it of, and the transactions contemplated by, the Finance Documents to which it is a party and the granting of the Transaction Security do not and will not conflict with:
(a) | any law applicable to it; |
(b) | its or any of its Subsidiaries constitutional documents; or |
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(c) | any agreement or instrument binding upon it or any of its Subsidiaries or any of its or any of its Subsidiaries assets or constitute a default or termination event (however described) under any such agreement or instrument, in each case to an extent or in a manner which has a Material Adverse Effect, |
nor (except as provided in any Security Document) result in the existence of, or oblige it or any of its Subsidiaries to create, any Security or Quasi-Security over any of their respective assets.
21.4 | Power and authority |
(a) | It has the power to enter into, perform and deliver, and has taken all necessary action to authorise its entry into, performance and delivery of, the Finance Documents to which it is a party and the transactions contemplated by those Finance Documents. |
(b) | No limit on its powers will be exceeded as a result of the borrowing, grant of security or giving of guarantees or indemnities contemplated by the Finance Documents to which it is a party. |
21.5 | Validity and admissibility in evidence |
Subject to the Legal Reservations, all Authorisations required:
(a) | to enable it lawfully to enter into, exercise its rights and comply with its obligations in the Finance Documents to which it is a party; |
(b) | to make the Finance Documents to which it is a party admissible in evidence in its Relevant Jurisdictions; and |
(c) | to enable it to create the Security expressed to be created pursuant to any Security Document and ensure that such Security has the priority and ranking it is expressed to have, |
have been obtained, effected, done, fulfilled or performed and are (or will by the required time be) in full force and effect save for complying with the applicable Perfection Requirements in relation to the Security constituted by the Security Documents, which Perfection Requirements will be satisfied as soon as reasonably practicable after execution of the relevant Security Documents and in any event within applicable time limits set out in the relevant Security Documents.
21.6 | Governing law and enforcement |
(a) | Subject to the Legal Reservations and, in the case of the Security Documents, the applicable Perfection Requirements, the choice of the law stated to be the governing law of each Finance Document will be recognised and enforced in its Relevant Jurisdictions. |
(b) | Subject to the Legal Reservations and, in the case of the Security Documents, the applicable Perfection Requirements, any judgment obtained in relation to a Finance Document in the jurisdiction of the stated governing law of that Finance Document will be recognised and enforced in its Relevant Jurisdictions. |
21.7 | Insolvency |
(a) | No corporate action, legal proceeding or other procedure or step described in Clause 26.7 (Insolvency proceedings) has been taken or, to the knowledge of any member of the Group, threatened in relation to a member of the Group, other than any corporate action, legal proceeding or other procedure or step taken in relation to a member of the Group (which is not an Obligor or Material Subsidiary) which would not have or reasonably be expected to have a Material Adverse Effect. |
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(b) | No creditors process described in Clause 26.8 (Creditors process) has been taken or, to the knowledge of any member of the Group, threatened in relation to a member of the Group. |
(c) | None of the circumstances described in Clause 26.6 (Insolvency) applies to a member of the Group, other than any circumstances applying to a member of the Group (which is not an Obligor or a Material Subsidiary) which would not have or reasonably be expected to have a Material Adverse Effect. |
21.8 | Deduction of Tax |
Subject to the Legal Reservations, it is not required under the law applicable where it is incorporated or resident or at the address specified in this Agreement to make any Tax Deduction (as defined in Clause 15.1 (Definitions)) from any payment it may make under any Finance Document.
21.9 | No filing or stamp taxes |
Subject to the Legal Reservations, under the law of its Relevant Jurisdiction it is not necessary that the Finance Documents be filed, recorded or enrolled with any court or other authority in that jurisdiction or that any stamp, registration, notarial or similar taxes or fees be paid on or in relation to the Finance Documents or the transactions contemplated by the Finance Documents except for complying with the applicable Perfection Requirements, and provided that (a) Cayman Islands stamp duty will be applicable in relation to any Finance Document which is executed in or taken to the Cayman Islands and (b) Singapore stamp duty will be applicable in relation to the TDCXH Share Mortgage and the Facility Agreement.
21.10 | No default |
(a) | No Event of Default is continuing or might reasonably be expected to result from the making of any Utilisation. |
(b) | No other event or circumstance is outstanding which constitutes a default or termination event (however described) under any other agreement or instrument which is binding on it or any of its Subsidiaries or to which its (or any of its Subsidiaries) assets are subject which, in each case, has or is reasonably likely to have a Material Adverse Effect. |
21.11 | No misleading information |
(a) | Any factual information provided by any Obligor in connection with the Facility was true, complete and accurate in all material respects as at the date it was provided or as at the date (if any) at which it is stated. |
(b) | Any financial projections or forecasts provided by any Obligor have been prepared on the basis of recent historical information and on the basis of reasonable assumptions. |
(c) | No event or circumstance has occurred or arisen and no information has been omitted from the information so provided and no information has been given or withheld that results in any information, forecasts or projections provided by any Obligor being untrue or misleading in any material respect. |
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(d) | All other written information provided by any Obligor to a Finance Party was true, complete and accurate in all material respects as at the date it was provided and is not misleading in any respect. |
21.12 | Financial statements |
(a) | The financial statements most recently supplied to the Agent (which, at the date of this Agreement, are the Original Financial Statements) were prepared in accordance with the Accounting Principles consistently applied save to the extent expressly disclosed in such financial statements. |
(b) | The financial statements most recently supplied to the Agent (which, at the date of this Agreement, are the Original Financial Statements) give a true and fair view of (if audited) or fairly present (if unaudited) the financial condition of the Group or TDCXH (as the case may be) as at the end of the relevant Financial Year and its results of operations during the relevant Financial Year save to the extent expressly disclosed in such financial statements. |
(c) | There has been no material adverse change in the business or financial condition of the Obligors or the business or consolidated financial condition of the Group, in each case, taken as a whole since the date of the Original Financial Statements. |
(d) | The most recent financial statements delivered pursuant to Clause 22.1 (Financial statements): |
(i) | have been prepared in accordance with the Accounting Principles as applied to the Original Financial Statements; and |
(ii) | fairly present the Groups consolidated financial condition as at the end of, and its consolidated results of operations for, the period to which they relate. |
21.13 | Acquisition Documents |
(a) | The Acquisition Documents contain all the material terms and conditions relating to the Acquisition. |
(b) | Neither the Sponsor nor the Borrower is in default of its material obligations under that Acquisition Document. |
(c) | No disclosures have been made by or on behalf of the Sponsor against any representation or warranty (howsoever described) under the Acquisition Agreement which has not been disclosed to the Agent in writing prior to the date of this Agreement. |
(d) | Neither the Sponsor nor the Borrower is entitled to exercise any of its termination rights (howsoever expressed) or otherwise decline to complete the Acquisition under the terms of the Acquisition Documents. |
21.14 | Pari passu ranking |
(a) | Subject to the Legal Reservations and the applicable Perfection Requirements, each Security Document creates (or, once entered into, will create) in favour of the Security Agent for the benefit of the Secured Parties the Security which it is expressed to create with the ranking and priority it is expressed to have. |
(b) | Without limiting paragraph (a) above, subject to the Legal Reservations and the applicable Perfection Requirements, its payment obligations under the Finance Documents rank at least pari passu with the claims of all its other unsecured and unsubordinated creditors, except for obligations mandatorily preferred by law applying to companies generally. |
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21.15 | No proceedings |
(a) | No litigation, arbitration or administrative proceedings (other than those of a frivolous or vexatious nature and which are discharged, stayed or dismissed within 45 days of commencement) of or before any court, arbitral body or agency which, if adversely determined, would reasonably be expected to have a Material Adverse Effect has or have (to its knowledge) been started or threatened in writing against it or any of its Subsidiaries. |
(b) | No judgment or order of a court, arbitral body or agency which would reasonably be expected to have a Material Adverse Effect has (to its knowledge) been made against it or any of its Subsidiaries. |
21.16 | No breach of laws |
It has not (and none of its Subsidiaries has) breached any law which breach has or is reasonably likely to have a Material Adverse Effect.
21.17 | Taxation |
(a) | Each Obligor and Material Subsidiary has paid when due all Taxes required to be paid by it other than any Taxes: |
(i) | being contested by it in good faith and in accordance with the relevant procedures; |
(ii) | which have been disclosed to the Arranger and for which adequate reserves are being maintained in accordance with the Accounting Principles; and |
(iii) | where payment can be lawfully withheld and will not result in the imposition of any penalty nor in any Security ranking in priority to the claims of any Finance Party under any Finance Document or to any Security created under any Security Document. |
(b) | It is resident for Tax purposes only in its Original Jurisdiction. |
21.18 | Sanctions |
It is not, nor is any of its directors or officers, a Restricted Party, and does not act directly or indirectly on behalf of a Restricted Party.
21.19 | Anti-corruption law |
(a) | Each member of the Group and (to the best of its knowledge and belief having made all reasonable enquiries) each of their officers, directors, employees and agents is in compliance with applicable Anti-Corruption Laws, and has not made, offered, promised or authorised any payment or giving of money, property, gifts or anything else of value, directly or indirectly, to any person to improperly influence decision making to obtain or retain business or an improper advantage in business. |
(b) | Each member of the Group has instituted and maintained policies and procedures designed to promote and achieve compliance with Anti-Corruption Laws. |
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(c) | No action, suit or proceeding by or before any court or governmental agency, authority or body or any arbitrator involving any member of the Group with respect to Anti-Corruption Laws is pending, and, to the best of its knowledge and belief having made all reasonable enquiries, no such actions, suits or proceedings are threatened or contemplated. |
21.20 | Anti-money laundering |
(a) | The operations of each member of the Group are, and have been, conducted at all times in compliance with applicable financial record keeping and reporting requirements and anti-money laundering statutes in each of the jurisdictions in which it is incorporated or domiciled (as the case may be) and of all jurisdictions in which each member of the Group conducts business, the rules and regulations thereunder and any related or similar rules, regulations or guidelines, issued, administered or enforced by any relevant governmental agency (collectively Anti-Money Laundering Laws). |
(b) | No action, suit or proceeding by or before any court or governmental agency, authority or body or any arbitrator involving any member of the Group with respect to Anti-Money Laundering Laws is pending and, to the best of the knowledge and belief of each member of the Group having made all reasonable enquiries, no such actions, suits or proceedings are threatened or contemplated. |
21.21 | Security and Financial Indebtedness |
(a) | No Security or Quasi-Security exists over all or any of the present or future assets of any member of the Group other than as permitted by this Agreement. |
(b) | No member of the Group has any Financial Indebtedness outstanding other than as permitted by this Agreement. |
21.22 | Good title to assets |
It and each of its Subsidiaries has a good and valid title to, or valid leases or licences of, or is otherwise entitled to use, and all appropriate Authorisations to use, the assets necessary to carry on its business as presently conducted, save where the lack of such title, leases, licences or Authorisations, as the case may be, could not reasonably be expected to have a Material Adverse Effect.
21.23 | Legal and beneficial ownership |
It and each Security Provider is the sole legal and beneficial owner of the respective assets over which it purports to grant Security.
21.24 | Legal and beneficial ownership of TDCX Shares |
(a) | All the TDCX Shares are: |
(i) | on and from the Acquisition Closing Date, beneficially owned by the Borrower; and |
(ii) | following registration of the Borrower as the owner of the TDCX Shares in the register of members of TDCX (which registration will be made on the Acquisition Closing Date), legally and beneficially owned by the Borrower, |
in each case, free from any claims, third party rights or competing interests.
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(b) | The TDCX Shares comprise, and on the Acquisition Closing Date will comprise, all of the issued shares in the capital of TDCX. |
(c) | There are no warrants or options, and on the Acquisition Closing Date there will be no warrants or options, in issue or outstanding in respect of the TDCX Shares. |
21.25 | Shares |
The shares of the Borrower, TDCX and TDCXH are fully paid and not subject to any option to purchase or similar rights. The constitutional documents of the Borrower, TDCX and TDCXH do not restrict or inhibit any transfer of those shares by the Security Agent upon its enforcement of the Transaction Security. There are no agreements in force or corporate resolutions passed which provide for the issue or allotment of, or grant any person the right to call for the issue or allotment of, any share or loan capital of any member of the Group (including any option or right of pre-emption or conversion).
21.26 | Group Structure Chart |
The Group Structure Chart is true, complete and accurate in all material respects and shows the following information:
(a) | each member of the Group (assuming the Acquisition Closing Date has occurred), including current name and company registration number, its Original Jurisdiction (in the case of an Obligor), its jurisdiction of incorporation (in the case of a member of the Group which is not an Obligor) and/or its jurisdiction of establishment, a list of shareholders and indicating whether a company is not a company with limited liability; |
(b) | details of all joint ventures, partnerships or other entities in which any member of the Group has any interest or participation; and |
(c) | all minority interests in any member of the Group and any person in which any member of the Group holds shares in its issued share capital or equivalent ownership interest of such person. |
21.27 | Subsidiaries |
The list of Subsidiaries of the Borrower provided in Schedule 10 (Subsidiaries) is true, complete and accurate as at the Acquisition Closing Date.
21.28 | Accounting Reference Date |
The Accounting Reference Date of each member of the Group is 31 December.
21.29 | No immunity |
In any proceedings taken in its jurisdiction of incorporation in relation to the Finance Documents to which it is a party, it will not be entitled to claim for itself or any of its assets immunity from suit, execution, attachment or other legal process.
21.30 | Authorised signatories |
Any person specified as its authorised signatory under Schedule 2 (Conditions precedent) or paragraph (g) of Clause 22.5 (Information: miscellaneous) is authorised to sign Utilisation Requests (in the case of the Borrower only) and other notices on its behalf.
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21.31 | Repetition |
(a) | The Repeating Representations are deemed to be made by each Obligor by reference to the facts and circumstances then existing on: |
(i) | the date of each Utilisation Request; |
(ii) | the first day of each Interest Period; and |
(iii) | in relation to any extension request made pursuant to Clause 6.2 (Extension option): |
(A) | the date of such extension request; and |
(B) | the date on which the extension which is the subject of such extension request is effective. |
(b) | The representations and warranties set out in Clauses 21.1 (Status) to 21.5 (Validity and admissibility in evidence), Clause 21.9 (No filing or stamp taxes), Clause 21.14 (Pari passu ranking) and Clause 21.22 (Good title to assets) shall, in addition to paragraph (a) above, be deemed to be made by each Obligor, by reference to the facts and circumstances then existing on the date of execution of each Security Document. |
22 | Information undertakings |
The undertakings in this Clause 22 remain in force from the date of this Agreement for so long as any amount is outstanding under the Finance Documents or any Commitment is in force.
22.1 | Financial statements |
The Borrower shall supply to the Agent, in sufficient copies, for all the Lenders:
(a) | as soon as the same become available, but in any event by the earlier of: |
(i) | 10 Business Days after such statements have been signed by the auditors of the Group; and |
(ii) | 150 days after the end of the Financial Year, |
the audited consolidated financial statements of the Group for that Financial Year; and
(b) | as soon as the same become available, but in any event within 60 days of the end of the first, second, third and fourth financial quarters of each of its Financial Years, the unaudited consolidated financial statements of the Group for that financial quarter. |
(c) | prior to the Postive Net Worth Date, as soon as the same become available, but in any event by the earlier of: |
(iii) | 10 Business Days after such statements have been signed by the auditors of the Group; and |
(iv) | 150 days after the end of the Financial Year, |
the audited consolidated financial statements of TDCXH for that Financial Year; and
(d) | prior to the Positive Net Worth Date, as soon as the same become available, but in any event within 60 days of the end of the first, second, third and fourth financial quarters of each of its Financial Years, the unaudited consolidated financial statements of TDCXH for that financial quarter. |
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22.2 | Provision and contents of Compliance Certificate |
(a) | The Borrower shall supply a Compliance Certificate to the Agent with each set of Financial Statements delivered pursuant to paragraphs (a) and (b) of Clause 22.1 (Financial statements). |
(b) | The Compliance Certificate shall, amongst other things, set out (in reasonable detail) computations as to compliance with Clause 23 (Financial covenants) as at the date as at which those financial statements were drawn up. |
(c) | Each Compliance Certificate shall be signed by one director of the Borrower. |
22.3 | Requirements as to financial statements |
(a) | Each set of financial statements delivered by the Borrower pursuant to Clause 22.1 (Financial statements) shall be certified by a director of the relevant company as giving a true and fair view of (in the case of any such financial statements which are audited), or fairly presenting (in the case of any such financial statements which are unaudited), the Groups or TDCXHs (as the case may be) consolidated financial condition and its results of operations as at the end of and for the period in relation to which those financial statements were drawn up. |
(b) | The Borrower shall procure that each set of financial statements delivered by the Borrower pursuant to Clause 22.1 (Financial statements) is prepared using the Accounting Principles, accounting practices and financial reference periods consistent with those applied in the preparation of the Original Financial Statements unless, in relation to any set of financial statements, it notifies the Agent that there has been a change in the Accounting Principles, the accounting practices or reference periods and the auditors of the Group deliver to the Agent: |
(i) | a description of any change necessary for those financial statements to reflect the Accounting Principles, accounting practices and reference periods upon which the Original Financial Statements were prepared; and |
(ii) | sufficient information, in form and substance as may be reasonably required by the Agent, to enable the Lenders to determine whether Clause 23 (Financial covenants) has been complied with and make an accurate comparison between the financial position indicated in those financial statements and the Original Financial Statements. |
Any reference in this Agreement to those financial statements shall be construed as a reference to those financial statements as adjusted to reflect the basis upon which the Original Financial Statements were prepared.
22.4 | Budget |
(a) | The Borrower shall supply to the Agent in sufficient copies for all the Lenders, as soon as the same become available but in any event within 30 days of the start of each Financial Year, a Budget in relation to that Financial Year and the following one Financial Year. |
(b) | The Borrower shall ensure that each Budget: |
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(i) | is in a form and in substance reasonably acceptable to the Agent and includes a projected consolidated profit and loss, balance sheet and cashflow statement for the Group, projected disposals and projected capital expenditure for the Group, projected financial covenant calculations and descriptions of the proposed activities of the Group for the Financial Years to which the Budget relates. The projections shall relate to the 12-month period comprising each Financial Year; |
(ii) | is prepared in accordance with the Accounting Principles and the accounting practices and financial reference periods applied to financial statements under Clause 22.1 (Financial statements); and |
(iii) | has been approved by the board of directors of the Borrower. |
(c) | If the Borrower updates or changes the Budget, it shall promptly deliver to the Agent, in sufficient copies for each of the Lenders, such updated or changed Budget together with a written explanation of the main changes in that Budget. |
22.5 | Information: miscellaneous |
The Borrower shall supply to the Agent (in sufficient copies for all the Lenders, if the Agent so requests):
(a) | at the same time as they are despatched, copies of all documents despatched by the Borrower to its shareholders generally (or any class of them) or despatched by the Borrower or any Obligors to its creditors generally (or any class of them); |
(b) | promptly, any announcement, notice or other document relating specifically to the Borrower posted onto any electronic website maintained by any stock exchange on which shares in or other securities of the Borrower are listed or any electronic website required by any such stock exchange to be maintained by or on behalf of the Borrower; |
(c) | promptly upon becoming aware of them, the details of any litigation, arbitration or administrative proceedings (other than those of a frivolous or vexatious nature and which are discharged, stayed or dismissed within 45 days of commencement) which are current or threatened in writing against any member of the Group, and which, if adversely determined, are reasonably likely to have a Material Adverse Effect; |
(d) | promptly upon becoming aware of them, the details of any judgment or order of a court, arbitral body or agency which is made against any member of the Group, and which is reasonably likely to have a Material Adverse Effect; |
(e) | as soon as reasonably practicable, such information as the Security Agent may reasonably require about the Security Assets and compliance of the Obligors and the Security Providers with the terms of any Security Document; |
(f) | as soon as reasonably practicable, any change in the structure of the Group from that set out in the latest Group Structure Chart delivered pursuant to this Agreement; |
(g) | as soon as reasonably practicable, notice of any change in authorised signatories of any Obligor or any Security Provider signed by a director or company secretary of such Obligor or Security Provider accompanied by specimen signatures of any new authorised signatories; |
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(h) | promptly (and in any event within three Business Days of the final determination of the initial offer price for the securities to be issued pursuant to the IPO) the initial offer price of such securities; and |
(i) | as soon as reasonably practicable on request, such further information regarding the financial condition, assets and operations of the Group and/or any member of the Group (including any requested amplification or explanation of any item in the financial statements, budgets or other material provided by any Obligor under this Agreement) as any Finance Party (through the Agent) may reasonably request except to the extent that the disclosure of such information would breach any applicable law or regulations or any applicable rules of any stock exchange or any duty of confidentiality. |
22.6 | Auditors |
The Borrower shall not (and shall ensure that no other member of the Group will) change its auditors from those retained by it as at the date of this Agreement except to any of PricewaterhouseCoopers, Ernst & Young, KPMG, Deloitte & Touche or otherwise with the consent of the Majority Lenders.
22.7 | Year-end |
The Borrower shall not (and shall ensure that no other member of the Group will) change its Accounting Reference Date.
22.8 | Notification of default |
(a) | Each Obligor shall notify the Agent of any Default (and the steps, if any, being taken to remedy it) promptly upon becoming aware of its occurrence (unless that Obligor is aware that a notification has already been provided by another Obligor). |
(b) | Promptly upon a request by the Agent, the Borrower shall supply to the Agent a certificate signed by two of its directors or senior officers on its behalf certifying that no Default is continuing (or if a Default is continuing, specifying the Default and the steps, if any, being taken to remedy it). |
22.9 | Direct electronic delivery by Company |
The Borrower may satisfy its obligation under this Agreement to deliver any information in relation to a Lender by delivering that information directly in accordance with Clause 35.5 (Electronic communication) to the extent that the Lender and the Agent agree to this method of delivery.
22.10 | Know your customer procedures |
(a) | Each Obligor shall promptly upon the request of the Agent or the Security Agent supply, or procure the supply of, such documentation and other evidence as is reasonably requested by the Security Agent or the Agent (for itself or on behalf of any Lender (including for any Lender on behalf of any prospective new Lender) in order for the Agent, the Security Agent, such Lender or, any prospective new Lender to conduct all know your customer and other similar procedures that it is required (or deems desirable) to conduct. |
(b) | Each Lender shall promptly upon the request of the Agent or the Security Agent supply, or procure the supply of, such documentation and other evidence as is reasonably requested by the Agent or the Security Agent (in each case, for itself) in order for the Agent or the Security Agent to conduct all know your customer and other similar procedures that it is required (or deems desirable) to conduct. |
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23 | Financial covenants |
23.1 | Financial definitions |
In this Agreement:
Borrowings means, as at any particular time, the aggregate outstanding principal, capital or nominal amount (and any fixed or minimum premium payable on prepayment or redemption) of the Financial Indebtedness of members of the Group (other than any indebtedness referred to in paragraph (g) of the definition of Financial Indebtedness and any guarantee or indemnity in respect of that indebtedness).
For this purpose, any amount outstanding or repayable in a currency other than Singapore Dollar shall on that day be taken into account in its Singapore Dollar equivalent at the rate of exchange that would have been used had an audited consolidated balance sheet of the Group been prepared as at that day in accordance with the Accounting Principles applicable to the Original Financial Statements.
EBITDA means, in respect of any Relevant Period, the consolidated operating profit of the Group before taxation:
(a) | before deducting any interest, commission, fees, discounts, prepayment fees, premiums or charges and other finance payments whether paid, payable or capitalised by any member of the Group (calculated on a consolidated basis) in respect of that Relevant Period; |
(b) | not including any accrued interest owing to any member of the Group; |
(c) | after adding back any amount attributable to the amortisation, depreciation or impairment of assets of members of the Group (and taking no account of the reversal of any previous impairment charge made in that Relevant Period); |
(d) | before taking into account any Exceptional Items; |
(e) | after deducting the amount of any profit (or adding back the amount of any loss) of any member of the Group which is attributable to minority interests; |
(f) | before taking into account any unrealised gains or losses on any financial instrument (other than any derivative instrument which is accounted for on a hedge accounting basis); and |
(g) | before taking into account any gain or loss arising from an upward or downward revaluation of any other asset at any time after the Original Financial Statements, |
in each case, to the extent added, deducted or taken into account, as the case may be, for the purposes of determining operating profits of the Group before taxation.
Exceptional Items means any exceptional, one off, non-recurring or extraordinary items.
Finance Charges means, in relation to any Relevant Period, the aggregate amount of interest and any other finance charges (whether or not paid, payable or capitalised) accrued by the Group in that Relevant Period in respect of Borrowings, including:
(a) | the interest element of leasing and hire purchase payments; |
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(b) | commitment fees, commissions, arrangement fees and guarantee fees; and |
(c) | amounts in the nature of interest payable in respect of any shares other than equity share capital, |
adjusted (but without double counting) by:
(i) | adding back the net amount payable (or deducting the net amount receivable) by members of the Group in respect of that Relevant Period under any interest or (so far as they relate to interest) currency hedging arrangements; and |
(ii) | deducting interest income of the Group in respect of that Relevant Period to the extent freely distributable to an Obligor in cash, |
as determined (except as needed to reflect the terms of this Clause 23) from the financial statements of the Group and Compliance Certificates delivered under Clause 22.1 (Financial statements) and Clause 22.2 (Provision and contents of Compliance Certificate).
Financial Quarter means the period commencing on the day after one Quarter Date and ending on the next Quarter Date.
Financial Year means the annual accounting period of the Group ending on 31 December in each year.
Interest Cover means the ratio of EBITDA to Finance Charges in respect of any Relevant Period.
Leverage means, in respect of any Relevant Period, the ratio of Total Net Debt on the last day of that Relevant Period to EBITDA in respect of that Relevant Period.
Quarter Date means each of 31 March, 30 June, 30 September and 31 December.
Relevant Period means each period of 12 months ending on or about the last day of the Financial Year and each period of 12 months ending on or about the last day of each Financial Quarter.
Secured Cash means any Cash or Cash Equivalent Investments that are the subject of any Security or Quasi-Security:
(a) | which secures obligations other than Borrowings; or |
(b) | which secure Borrowings, to the extent that the amount of such Cash and the market value of the Cash Equivalent Investments, the subject of that Security or Quasi-Security exceeds the principal amount of the Borrowings so secured or assured. |
Total Net Debt means, at any time, the aggregate amount of all obligations of members of the Group for or in respect of Borrowings at that time but:
(a) | excluding any such obligations to any other member of the Group; and |
(b) | deducting the aggregate amount of Cash and Cash Equivalent Investments held by any member of the Group at that time other than the amount of any Secured Cash, |
and so that no amount shall be included or excluded more than once.
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23.2 | Financial condition |
The Borrower shall ensure that:
(a) | Interest Cover: Interest Cover in respect of any Relevant Period ending on or after the date of this Agreement shall not be less than 6:1; and |
(b) | Leverage: Leverage in respect of any Relevant Period ending on or after the date of this Agreement shall not exceed 2:1. |
23.3 | Financial testing |
(a) | The financial covenants set out in Clause 23.2 (Financial condition) shall be calculated in accordance with the Accounting Principles applicable to the Original Financial Statements and tested by reference to each of the financial statements delivered pursuant to Clause 22.1 (Financial statements) (as adjusted, if necessary, pursuant to paragraph (b) of Clause 22.3 (Requirements as to Financial Statements)) and/or each Compliance Certificate delivered pursuant to Clause 22.2 (Provision and contents of Compliance Certificate). |
(b) | For the purpose of this Clause 23, no item shall be included or excluded more than once in any calculation. |
23.4 | Cure rights |
(a) | In the event that Clause 23.2 (Financial condition) is not complied with (or but for the operation of this Clause 23.4, would not be complied with) at any time, the Borrower shall be entitled within 15 Business Days of the date on which the relevant Compliance Certificate was delivered to the Agent (the Cure Period), to receive New Shareholder Injections in US Dollars or Singapore Dollars for the purposes of remedying any such failure to comply (the Cure Right) and upon receipt by the Borrower of the cash amount of such New Shareholder Injections (the Equity Cure Amount) into the Equity Cure Account: |
(i) | Leverage for that Relevant Period shall be recalculated on a pro forma basis as if Total Net Debt for that Relevant Period was reduced by an amount equal to that Equity Cure Amount (or, if the Equity Cure Amount is an amount in US Dollars, its equivalent in Singapore Dollars on the date of recalculation); and |
(ii) | Interest Cover for that Relevant Period shall be recalculated on a pro forma basis as if Borrowings for that Relevant Period were reduced by an amount equal to the Equity Cure Amount (or, if the Equity Cure Amount is an amount in US Dollars, its equivalent in Singapore Dollars on the date of recalculation) as if such reduction had taken place on the first day of that Relevant Period. |
(b) | If, after giving pro forma effect to the foregoing recalculations, the requirements of Clause 23.2 (Financial condition) have been complied with, such requirements shall be deemed to have been satisfied as of the relevant date of determination as though there had been no failure to comply with such requirements and the applicable breach or default of Clause 23.2 (Financial condition) (or related Event of Default) which had occurred shall be deemed cured for all purposes of the Finance Documents. |
(c) | No Equity Cure Amount may exceed the minimum amount necessary to ensure the relevant financial covenants would be complied with as so re-tested. |
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(d) | The Borrower shall not exercise the Cure Right more than once over the term of the Facility. |
24 | General undertakings |
The undertakings in this Clause 24 remain in force from the date of this Agreement for so long as any amount is outstanding under the Finance Documents or any Commitment is in force.
24.1 | Authorisations |
(a) | Each Obligor shall promptly obtain, comply with and do all that is necessary to maintain in full force and effect: |
(i) | any Authorisation required to: |
(A) | enable it to perform its obligations under the Finance Documents; and |
(B) | subject to the Legal Reservations and, in the case of the Security Documents, the applicable Perfection Requirements, ensure the legality, validity, enforceability or admissibility in evidence of any Finance Document or otherwise required for a purpose specified in Clause 21.5 (Validity and admissibility in evidence); and |
(C) | carry on its business where failure to do so has or is reasonably likely to have a Material Adverse Effect; and |
(ii) | each Material Licence. |
(b) | The Borrower shall promptly make the registrations, obtain all Authorisations and otherwise comply with other requirements specifically referred to in any legal opinion accepted pursuant to Clause 4 (Conditions of Utilisation). |
24.2 | Compliance with laws |
Each Obligor shall (and the Borrower shall ensure that each member of the Group will) comply in all respects with all laws to which it may be subject, if failure so to comply would materially impair each Obligors ability to perform its obligations under the Finance Documents.
24.3 | Negative pledge |
In this Clause 24.3, Quasi-Security means an arrangement or transaction described in paragraph (b) below.
Except as permitted under paragraph (c) below:
(a) | No Obligor shall (and the Borrower shall ensure that no other member of the Group will) create or permit to subsist any Security over any of its assets. |
(b) | No Obligor shall (and the Borrower shall ensure that no other member of the Group will) create or permit to subsist: |
(i) | any arrangement or transaction under which a member of the Group will sell, transfer or otherwise dispose of any of its assets on terms whereby they are or may be leased to or re-acquired by an Obligor or any other member of the Group; |
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(ii) | any arrangement or transaction under which a member of the Group will sell, transfer or otherwise dispose of any of its receivables on recourse terms; |
(iii) | any title retention arrangement; |
(iv) | any arrangement under which money or the benefit of a bank or other account may be applied, set-off or made subject to a combination of accounts; or |
(v) | any other preferential arrangement having a similar effect, |
in circumstances where the arrangement or transaction is entered into primarily as a method of raising or assuring the payment of Financial Indebtedness or of financing the acquisition of an asset.
(c) | Paragraphs (a) and (b) above do not apply to any Security or (as the case may be) Quasi-Security, which is Permitted Security. |
24.4 | Disposals |
(a) | Except as permitted under paragraph (b) below, no Obligor shall (and the Borrower shall ensure that no other member of the Group will), enter into a single transaction or a series of transactions (whether related or not) and whether voluntary or involuntary to sell, lease, transfer or otherwise dispose of any asset. |
(b) | Paragraph (a) above does not apply to any sale, lease, transfer or other disposal which is a Permitted Disposal. |
24.5 | Arms length basis |
(a) | Except as permitted under paragraph (b) below, no Obligor shall (and the Borrower shall ensure that no other member of the Group will) enter into any transaction with any person except in the ordinary course of trading on arms length terms and for full market value. |
(b) | The following transactions shall not be a breach of this Clause 24.5: |
(i) | intra-Group loans permitted under Clause 24.6 (Loans or credit); |
(ii) | any Permitted Disposal, to the extent made by a member of the Group to another member of the Group; and |
(iii) | any Permitted Share Issue, to the extent made by a member of the Group to another member of the Group. |
24.6 | Loans or credit |
(a) | Except as permitted under paragraph (b) below, no Obligor shall (and the Borrower shall ensure that no other member of the Group will) be a creditor in respect of any Financial Indebtedness. |
(b) | Paragraph (a) above does not apply to a Permitted Loan. |
24.7 | No guarantees or indemnities |
(a) | Except as permitted under paragraph (b) below, no Obligor shall (and the Borrower shall ensure that no other member of the Group will) incur or allow to remain outstanding any guarantee in respect of any obligation of any person. |
(b) | Paragraph (a) above does not apply to: |
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(i) | (in relation to the Borrower): |
(A) | prior to the Positive Net Worth Date, a guarantee which is a Permitted Guarantee referred to in paragraph (a) of the definition of Permitted Guarantee; and |
(B) | on and from the Positive Net Worth Date, a guarantee which is a Permitted Guarantee; and |
(ii) | (in relation to any member of the Group (other than the Borrower)) a guarantee which is a Permitted Guarantee. |
24.8 | Dividends and share redemption |
The Borrower shall not:
(a) | declare, make or pay any dividend, charge, fee or other distribution (or interest on any unpaid dividend, charge, fee or other distribution) (whether in cash or in kind) on or in respect of its share capital (or any class of its share capital); |
(b) | repay or distribute any dividend or share premium reserve; |
(c) | pay or allow any member of the Group to pay any management, advisory or other fee to or to the order of any Affiliate of the Borrower (other than to another member of the Group); or |
(d) | redeem, repurchase, defease, retire or repay any of its share capital or resolve to do so, |
in each case, without the prior written consent of the Majority Lenders.
24.9 | Financial Indebtedness |
(a) | Except as permitted under paragraph (b) below, no Obligor shall (and the Borrower shall ensure that no other member of the Group will) incur or allow to remain outstanding any Financial Indebtedness. |
(b) | Paragraph (a) above does not apply to: |
(i) | (in relation to the Borrower): |
(A) | prior to the Positive Net Worth Date, Financial Indebtedness which is Permitted Financial Indebtedness referred to in paragraph (a) of the definition of Permitted Financial Indebtedness; and |
(B) | on and from the Positive Net Worth Date, Financial Indebtedness which is Permitted Financial Indebtedness; and |
(ii) | (in relation to any member of the Group (other than the Borrower)) Financial Indebtedness which is Permitted Financial Indebtedness. |
24.10 | Share capital |
No Obligor shall (and the Borrower shall ensure that no other member of the Group will) issue any shares, grant to any person any conditional or unconditional option, warrant or other right to call for the issue or allotment of, subscribe for, purchase or otherwise acquire any share of any member of the Group (including any right of pre-emption, conversion or exchange), or alter any right attaching to any share capital of any member of the Group except pursuant to a Permitted Share Issue.
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24.11 | Merger |
No Obligor shall (and the Borrower shall ensure that no other member of the Group will) enter into any amalgamation, demerger, merger, consolidation or corporate reconstruction other than:
(a) | any sale, lease, transfer or other disposal permitted pursuant to Clause 24.4 (Disposals); or |
(b) | the solvent liquidation or reorganisation of any member of the Group which is not an Obligor or a Security Provider so long as any payments or assets distributed as a result of such liquidation or reorganisation are distributed to the shareholders of that member of the Group. |
24.12 | Change of business |
The Borrower shall procure that no substantial change is made to the general nature of the business of the Borrower, the Obligors or the Group taken as a whole from that carried on at the date of this Agreement.
24.13 | Acquisitions |
(a) | Except as permitted under paragraph (b) below, no Obligor shall (and the Borrower shall ensure that no other member of the Group will) invest in or acquire any: |
(i) | share in or any security issued by any person, or any interest therein or in the capital of any person, or make any capital contribution to any person; or |
(ii) | business or going concern. |
(b) | Paragraph (a) above does not apply to an acquisition of a company, of shares, securities or a business or undertaking (or, in each case, any interest in any of them) or the incorporation of a company which, in each case, is a Permitted Acquisition. |
24.14 | Joint ventures |
(a) | Except as permitted under paragraph (b) below, no Obligor shall (and the Borrower shall ensure that no other member of the Group will): |
(i) | enter into, invest in or acquire (or agree to acquire) any shares, stocks, securities or other interest in any Joint Venture; or |
(ii) | transfer any assets or lend to or guarantee or give an indemnity for or give Security for the obligations of a Joint Venture or maintain the solvency of any Joint Venture (or agree to do any of the foregoing). |
(b) | Paragraph (a) above does not apply to any acquisition of (or agreement to acquire) any interest in a Joint Venture or transfer of assets (or agreement to transfer assets) to a Joint Venture or loan made to or guarantee given in respect of the obligations of a Joint Venture if such transaction is a Permitted Joint Venture. |
24.15 | Preservation of assets |
Each Obligor shall (and the Borrower shall ensure that each other Material Subsidiary will) maintain in good working order and condition (ordinary wear and tear excepted) all of its assets necessary in the conduct of its business.
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24.16 | Environmental and social matters |
(a) | Each Obligor must ensure that it (and the Borrower must ensure that each other member of the Group) is and continues to be in compliance with all Environmental or Social Laws and Environmental or Social Approvals applicable to it, where failure to do so: |
(i) | has or is reasonably likely to have a Material Adverse Effect; or |
(ii) | would or is reasonably likely to result in any impact on the reputation of any Finance Party arising out of or in connection with any negative publicity or anticipated negative publicity regarding that Finance Party or any liability for any Finance Party. |
(b) | Each Obligor shall, promptly upon becoming aware, notify the Agent of: |
(i) | any Environmental or Social Claim current, or to its knowledge, pending or threatened; or |
(ii) | any circumstances reasonably likely to result in an Environmental or Social Claim, |
which:
(A) | has or, if substantiated, is reasonably likely to have a Material Adverse Effect; or |
(B) | would or, if substantiated, is reasonably likely to result in any impact on the reputation of any Finance Party arising out of or in connection with any negative publicity or anticipated negative publicity regarding that Finance Party or any liability for any Finance Party. |
24.17 | Anti-corruption law |
(a) | No Obligor shall (and the Borrower shall ensure that no other member of the Group will) directly or indirectly use the proceeds of the Facility for any purpose which would breach any applicable Anti-Corruption Laws. |
(b) | Each Obligor shall (and the Borrower shall ensure that each other member of the Group will): |
(i) | comply with, and use reasonable endeavours to ensure that each of its or their officers, directors, employees and agents will comply with, all applicable Anti- Corruption Laws; and |
(ii) | maintain policies and procedures designed to promote and achieve compliance with all applicable Anti-Corruption Laws. |
24.18 | Sanctions |
The Borrower undertakes not to use any of the funds advanced under this Agreement directly or indirectly for business activities relating to any Restricted Country. The Borrower also undertakes not to use any of the funds advanced under this Agreement directly or indirectly for business activities that are subject to Sanctions. This includes, in particular (but without limitation), business activities involving or providing benefits to any Restricted Party or Restricted Country.
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24.19 | Taxation |
(a) | Each Obligor shall (and the Borrower shall ensure that each Material Subsidiary will) pay and discharge all Taxes imposed upon it or its assets within the time period allowed without incurring penalties, unless and only to the extent that: |
(i) | such payment is being contested in good faith; |
(ii) | adequate reserves are being maintained for those Taxes and the costs required to contest them; and |
(iii) | such payment can be lawfully withheld and failure to pay those Taxes does not have or is not reasonably likely to have a Material Adverse Effect. |
(b) | No Obligor or Material Subsidiary may change its residence for Tax purposes. |
24.20 | Insurance |
(a) | Each Obligor shall (and the Borrower shall ensure that each Material Subsidiary will) maintain insurances (including business interruption insurance) on and in relation to its business and assets against those risks and to the extent as is usual for companies carrying on the same or substantially similar business located in the same or a similar location. |
(b) | All insurances must be with reputable independent insurance companies or underwriters. |
24.21 | Pari passu ranking |
Each Obligor shall ensure that at all times any unsecured and unsubordinated claims of a Finance Party against it under the Finance Documents rank at least pari passu with the claims of all its other unsecured and unsubordinated creditors except those creditors whose claims are mandatorily preferred by laws of general application to companies.
24.22 | Access |
Each Obligor shall (not more than once in every Financial Year, unless the Agent reasonably suspects an Event of Default is continuing) permit the Agent and/or the Security Agent and/or accountants or other professional advisers and contractors of the Agent or the Security Agent reasonable access during office hours and on reasonable notice at the risk and cost of the Obligor or Company to (a) the premises, assets, books, accounts and records of each member of the Group and (b) meet and discuss matters with management of the Group.
24.23 | Treasury Transactions |
No Obligor shall (and the Borrower will procure that no other member of the Group will) enter into any Treasury Transaction, other than:
(a) | any spot or forward delivery permitted under paragraph (b) of the definition of Permitted Financial Indebtedness; and |
(b) | any Treasury Transaction entered into for the hedging of actual or projected real exposures arising in the ordinary course of trading activities of a member of the Group and not for speculative purposes. |
24.24 | Further assurance |
(a) | Each Obligor shall (and the Borrower shall procure that each Security Provider will) promptly do all such acts or execute all such documents (including assignments, transfers, mortgages, charges, notices and instructions) as the Security Agent may reasonably specify (and in such form as the Security Agent may reasonably require in favour of the Security Agent or its nominee(s)): |
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(i) | to perfect the Security created or intended to be created under or evidenced by the Security Documents (which may include the execution of a mortgage, charge, assignment or other Security over all or any of the assets which are, or are intended to be, the subject of the Transaction Security) or for the exercise of any rights, powers and remedies of the Security Agent or the Finance Parties provided by or pursuant to the Finance Documents or by law; and/or |
(ii) | to facilitate the realisation of the assets which are, or are intended to be, the subject of the Transaction Security. |
(b) | Each Obligor shall (and the Borrower shall procure that each other Security Provider will) take all such action as is available to it (including making all filings and registrations) as may be necessary for the purpose of the creation, perfection, protection or maintenance of any Security conferred or intended to be conferred on the Security Agent or the Finance Parties by or pursuant to the Finance Documents. |
24.25 | Amendments to constitutional documents |
No Obligor shall amend, vary or supplement, or waive any of its rights and/or remedies under, or terminate, supersede or rescind, any of the constitutional documents of any Obligor or any company whose shares are subject to the Transaction Security, except for any amendment, variation, supplement, waiver, termination, superseding or rescission which does not materially and adversely affect any of the Finance Parties.
24.26 | Compliance with the Acquisition Documents |
(a) | The Borrower shall: |
(i) | comply with all its material obligations under the Acquisition Documents; |
(ii) | comply in all material respects with all applicable laws and regulations in relation to the Acquisition; and |
(iii) | take all reasonable steps to enforce any claim or right it has under the Acquisition Documents. |
(b) | The Borrower shall not: |
(i) | agree to any material variation or amendment in respect of an Acquisition Document without the consent of the Agent; or |
(ii) | waive, or agree to waive, any material term of an Acquisition Document without the prior written consent of the Agent. |
24.27 | Financial assistance |
The Borrower shall ensure that all payments between members of the Group and all guarantees issued by members of the Group under any Finance Document, are made or issued in compliance with any applicable law or regulation in any relevant jurisdiction concerning financial assistance by a company for the acquisition of, or subscription for, shares or concerning the protection of shareholders capital.
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24.28 | Conditions subsequent |
The Borrower shall ensure that the Agent has received all of the documents and other evidence listed in Schedule 3 (Conditions subsequent) in form and substance reasonably satisfactory to the Agent by no later than the first Utilisation Date. The Agent shall notify the Borrower and the Lenders promptly upon being so satisfied.
25 | IRA and Equity Cure Account |
25.1 | Maintenance |
(a) | The Borrower shall maintain the IRA with the Account Bank. |
(b) | The Borrower shall prior to the exercise of the Cure Right under Clause 23.4 (Cure Rights) open and, thereafter, maintain the Equity Cure Account with the Account Bank. |
(c) | The Borrower shall not open or maintain any current, deposit or other account with any bank or financial institution other than the IRA, the Equity Cure Account and any other account which the Agent or the Security Agent has consented to. The Borrower shall promptly notify the Agent and the Security Agent upon opening any new account. |
(d) | Subject to paragraph (a) of Clause 25.2 (Withdrawals), the Borrower shall maintain, at all times on and following the first Utilisation Date, in the IRA, an aggregate amount equal to or greater than the IRA Amount. |
(e) | The Agent shall re-calculate the IRA Amount on the last day of each Interest Period, taking into account any prepayments made or due to be made on or before the last day of that Interest Period and notify the Account Bank and the Borrower of the same. If the new IRA Amount is more than the IRA Balance, the Borrower shall promptly, and in any event within five Business Days of such notice, pay such amount into the IRA such that the IRA Balance is increased to an amount which is greater than or equal to the new IRA Amount. |
25.2 | Withdrawals |
(a) | If at any time an amount of the Secured Liabilities is due and payable but has not been paid on its due date, the Borrower hereby irrevocably authorises the Agent and the Security Agent severally, to withdraw (although neither the Agent nor the Security Agent is required to so withdraw) funds standing to the credit of the IRA and pay it to the account of the Agent pursuant to paragraph (b) of Clause 33.1 (Payments to the Agent) for application in accordance with Clause 33.5 (Partial payments). |
(b) | No withdrawal or transfer from the IRA may be made if to do so would cause the IRA to be overdrawn. |
(c) | If, as at each re-calculation date under paragraph (e) of Clause 25.1 (Maintenance) above, and provided that no Default is continuing on such date, any amounts standing to the credit of the IRA are in excess of the then applicable IRA Amount, the Borrower may, by notice to the Security Agent, request that the Security Agent provides its written consent to, and countersigns, an instruction to the Account Bank for the transfer of such amounts out of the IRA to an account in the name of the Borrower. The Security Agent will, within five Business Days of receipt of a notice from the Borrower, provide its consent to, and countersign, an instruction to the Account Bank for such withdrawal provided that: |
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(i) | no Default is continuing or would occur as a result of such withdrawal; and |
(ii) | immediately after such withdrawal, the amount standing to the credit of the IRA is not less than the then applicable IRA Amount. |
(d) | If the Borrower is in compliance with Clause 23.2 (Financial condition) without taking into account any relevant Equity Cure Amount (or a proportion of any such Equity Cure Amount) (as determined from the financial statements and Compliance Certificates delivered under Clause 22.1 (Financial statements) and Clause 22.2 (Provision and contents of Compliance Certificate)) for the Relevant Period immediately following the Relevant Period in which the Cure Right was exercised, and provided that no Default is continuing, the Borrower may, by notice to the Security Agent, request that the Security Agent provides its written consent to, and countersigns, an instruction to the Account Bank for the transfer of such amounts out of the Equity Cure Account to an account in the name of the Borrower. The Security Agent will, within five Business Days of receipt of a notice from the Borrower, provide its consent to, and countersign, an instruction to the Account Bank for such withdrawal provided that no Default is continuing or would occur as a result of such withdrawal. |
(e) | No sum may be transferred or withdrawn from the IRA or the Equity Cure Account by the Borrower except as expressly permitted or required by this Agreement, the Upfront Fee Letter or any Security Document. |
25.3 | General |
Neither the existence of the IRA, nor the insufficiency of funds in it, nor any inability to apply any funds in it towards the relevant payment, shall affect the obligation of any Obligor or any Security Provider to make all payments required to be made to the Finance Parties or any of them on the due date for such payments in accordance with the Finance Documents.
26 | Events of Default |
Each of the events or circumstances set out in this Clause 26 is an Event of Default (save for Clause 26.20 (Acceleration)).
26.1 | Non-payment |
An Obligor or a Security Provider does not pay on the due date any amount payable pursuant to a Finance Document at the place at and in the currency in which it is expressed to be payable, unless its failure to pay is caused by:
(a) | administrative or technical error; or |
(b) | a Disruption Event; and |
payment is made within five Business Days of its due date.
26.2 | Financial covenants and other obligations |
(a) | Any requirement of Clause 23 (Financial covenants) is not satisfied and the Borrower fails to exercise the Cure Right pursuant to Clause 23.4 (Cure Rights) within the Cure Period. |
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(b) | Any requirement of Clause 25 (IRA and Equity Cure Account) is not satisfied. |
(c) | Any requirement of Clause 24.28 (Conditions subsequent) is not satisfied. |
26.3 | Other obligations |
(a) | An Obligor, a Security Provider or a Junior Finance Party does not comply with any provision of the Finance Documents (other than those referred to in Clause 26.1 (Non-payment) and Clause 26.2 (Financial covenants and other obligations)). |
(b) | No Event of Default under paragraph (a) above will occur if the failure to comply is capable of remedy and is remedied within 15 Business Days of the earlier of (i) the Agent giving notice to the Borrower and (ii) an Obligor, a Security Provider or, as applicable, a Junior Finance Party, becoming aware of the failure to comply. |
26.4 | Misrepresentation |
(a) | Any representation or statement made or deemed to be made by an Obligor, a Security Provider or any Junior Finance Party in the Finance Documents or any other document delivered by or on behalf of any Obligor, any Security Provider or any Junior Finance Party under or in connection with any Finance Document is or proves to have been incorrect or misleading in any material respect (save that, where such representation or statement is qualified by reference to materiality or Material Adverse Effect, in any respect) when made or deemed to be made. |
(b) | No Event of Default under paragraph (a) above will occur if the misrepresentation or misstatement is capable of remedy and is remedied within 15 Business Days (or such longer period as the Agent may agree) of the earlier of (i) the Agent giving notice to the Borrower and (ii) an Obligor, a Security Provider or, as applicable, a Junior Finance Party, becoming aware of the misrepresentation or misstatement. |
26.5 | Cross-default |
(a) | Any Financial Indebtedness of any member of the Group is not paid when due nor within any originally applicable grace period. |
(b) | Any Financial Indebtedness of any member of the Group is declared to be or otherwise becomes due and payable prior to its specified maturity as a result of an event of default (however described). |
(c) | Any commitment for any Financial Indebtedness of any member of the Group is cancelled or suspended by a creditor of any member of the Group as a result of an event of default (however described). |
(d) | Any creditor of any member of the Group becomes entitled to declare any Financial Indebtedness of any member of the Group due and payable prior to its specified maturity as a result of an event of default (however described). |
(e) | No Event of Default will occur under this Clause 26.5 if the aggregate amount of Financial Indebtedness or commitment for Financial Indebtedness falling within paragraphs (a) to (d) above is less than S$20,000,000 (or its equivalent in any other currency or currencies). |
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26.6 | Insolvency |
(a) | A member of the Group: |
(i) | is unable or admits inability or is presumed or deemed to be unable to pay its debts as they fall due; |
(ii) | suspends making payments on any of its debts; or |
(iii) | by reason of actual or anticipated financial difficulties, commences negotiations with one or more of its creditors (excluding any Finance Party in its capacity as such) with a view to rescheduling any of its indebtedness, |
but where paragraph (a)(i), (ii) or (iii) apply to a member of the Group other than an Obligor or a Material Subsidiary, only to the extent that such event has or would reasonably be expected to have a Material Adverse Effect.
(b) | The value of the assets of any Obligor or Material Subsidiary is less than its liabilities (taking into account contingent and prospective liabilities). |
(c) | The value of the assets of any member of the Group (other than an Obligor or a Material Subsidiary) is less than its liabilities (taking into account contingent and prospective liabilities) and such event has or would reasonably be expected to have a Material Adverse Effect. |
(d) | A moratorium takes effect by operation of law or is declared in respect of: |
(i) | any indebtedness of any Obligor or Material Subsidiary; or |
(ii) | any indebtedness of any member of the Group (other than an Obligor or Material Subsidiary) where such moratorium or declaration has or would reasonably be expected to have a Material Adverse Effect. |
(e) | If a moratorium occurs or is declared or an Ipso Facto Event occurs, the ending of the moratorium or Ipso Facto Event will not remedy any Event of Default caused by that moratorium or Ipso Facto Event. |
26.7 | Insolvency proceedings |
(a) | Any corporate action, legal proceedings or other procedure or step is taken in relation to: |
(i) | the suspension of payments, a moratorium of any indebtedness, winding-up, dissolution, administration, judicial management, provisional supervision or reorganisation (by way of voluntary arrangement, scheme of arrangement or otherwise) of any member of the Group other than a solvent liquidation or reorganisation of any member of the Group which is not an Obligor or a Security Provider; |
(ii) | a composition, compromise, assignment or arrangement with any creditor of any member of the Group; |
(iii) | the appointment of a liquidator (other than in respect of a solvent liquidation of a member of the Group which is not an Obligor or a Security Provider), receiver, judicial manager, administrative receiver, administrator, compulsory manager, provisional supervisor or other similar officer in respect of any member of the Group or any of its assets; or |
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(iv) | the enforcement of any Security over any assets of any member of the Group, |
or any analogous procedure or step is taken in any jurisdiction (in each case, whether or not such action, proceedings, procedure or step is terminated or dismissed), save that no Event of Default will occur under paragraphs (i) to (iv) above where such event is taken in relation to a member of the Group which is not an Obligor or Material Subsidiary, unless such event has or would reasonably be expected to have a Material Adverse Effect.
(b) | This Clause 26.7 shall not apply to: |
(i) | any winding-up petition which is frivolous or vexatious and is discharged, stayed or dismissed within 45 days of commencement; or |
(ii) | any step or procedure contemplated by paragraph (b) of Clause 24.11 (Merger). |
26.8 | Creditors process |
Any expropriation, attachment, sequestration, distress or execution (or any analogous process in any jurisdiction) affects any asset or assets of a member of the Group having an aggregate value of S$20,000,000 (or its equivalent in another currency or currencies) and is not discharged within 45 days.
26.9 | Failure to comply with court judgment or arbitral award |
(a) | Any Obligor or Material Subsidiary fails to comply with or pay by the required time any sum due from it under any final judgment or any final order made or given by a court or arbitral tribunal or other arbitral body, in each case, of competent jurisdiction. |
(b) | Any member of the Group which is not an Obligor or Material Subsidiary fails to comply with or pay by the required time any sum due from it under any final judgment or any final order made or given by a court or arbitral tribunal or other arbitral body, in each case of competent jurisdiction, and such failure has or would reasonably be expected to have a Material Adverse Effect. |
26.10 | Unlawfulness and invalidity |
Subject to the Legal Reservations and the Perfection Requirements:
(a) | it is or becomes unlawful for an Obligor, a Security Provider or any Junior Finance Party to perform any of its obligations under the Finance Documents or any Transaction Security created or expressed to be created or evidenced by the Security Documents is not or ceases to be effective or does not or ceases to have the ranking and priority it is expressed to have; |
(b) | any obligation or obligations of any Obligor, any Security Provider or any Junior Finance Party under any Finance Documents are not or cease to be legal, valid, binding or enforceable and the cessation individually or cumulatively materially and adversely affects the interests of the Lenders under the Finance Documents; or |
(c) | any Finance Document is not or ceases to be in full force and effect or any Transaction Security is not or ceases to be legal, valid, binding, enforceable or effective or is alleged by a party to it (other than a Finance Party) to be ineffective. |
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26.11 | Repudiation and rescission of agreements |
An Obligor, a Security Provider or any Junior Finance Party rescinds or purports to rescind or repudiates or purports to repudiate a Finance Document or any of the Transaction Security or evidences an intention to rescind or repudiate a Finance Document or any Transaction Security.
26.12 | Cessation of business |
(a) | Any Obligor suspends or ceases to carry on all or a material part of its business. |
(b) | Any member of the Group which is not an Obligor or Material Subsidiary suspends or ceases to carry on all or a material part of its business, where such suspension or cessation has or would reasonably be expected to have a Material Adverse Effect. |
26.13 | Audit qualification |
The auditors of the Group qualify the audited annual consolidated financial statements of the Group in any material respect.
26.14 | Litigation |
Any litigation, arbitration, administrative proceedings or investigation is commenced:
(a) | in relation to the Finance Documents or the transactions contemplated in the Finance Documents; or |
(b) | otherwise against any member of the Group or its assets, |
which (in each case) is reasonably likely to be adversely determined and, if adversely determined, will have or is reasonably likely to have a Material Adverse Effect.
26.15 | Expropriation |
(a) | The authority or ability of any Obligor or Material Subsidiary to conduct its business is substantially limited or wholly or substantially curtailed by any seizure, expropriation, nationalisation or compulsory acquisition by or on behalf of any governmental or regulatory authority in relation to any Obligor or Material Subsidiary or any of its assets or the shares in that Obligor or Material Subsidiary (including the displacement of all or part of the management of any Obligor or Material Subsidiary). |
(b) | The authority or ability of any member of the Group which is not an Obligor or Material Subsidiary to conduct its business is substantially limited or wholly or substantially curtailed by any seizure, expropriation, nationalisation or compulsory acquisition by or on behalf of any governmental or regulatory authority in relation to that member of the Group or any of its assets or the shares in that member of the Group (including the displacement of all or part of the management of that member of the Group), where such event has or would reasonably be expected to have a Material Adverse Effect. |
26.16 | Key man |
(a) | The Sponsor does not or ceases to devote a substantial portion of his working time to the business and operations of the Group. |
(b) | The Sponsor engages in any business competing (directly or indirectly) with the business of any member of the Group. |
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(c) | The Sponsor: |
(i) | dies; or |
(ii) | is declared (by an appropriate authority) to be incompetent or of an unsound mind, incapacitated or unable to handle his own affairs. |
26.17 | Declared Company |
Any member of the Group is declared by the Minister of Finance to be a company to which Part IX of the Companies Act applies.
26.18 | Material Licences |
(a) | Any Material Licence is terminated, cancelled, suspended or revoked (whether wholly or in part) and is not replaced by an equivalent Authorisation reasonably satisfactory to the Agent. |
(b) | Any restrictions or conditions are imposed on any Material Licence (whether on renewal or otherwise) which has a Material Adverse Effect. |
(c) | Any Material Licence is modified or varied in a way that is adverse in any material respect to the interests of the Group as a whole. |
(d) | Any Material Licence expires and is not renewed on substantially the same terms where such expiry or failure to renew has or might have a Material Adverse Effect. |
26.19 | Material adverse change |
Any event or circumstance occurs which has or is reasonably likely to have a Material Adverse Effect.
26.20 | Acceleration |
On and at any time after the occurrence of an Event of Default which is continuing, the Agent may, and shall if so directed by the Majority Lenders:
(a) | by notice to the Borrower: |
(i) | without prejudice to the participation of any Lender in the Loan then outstanding: |
(A) | cancel each Commitment of each Lender (and reduce them to zero), whereupon they shall immediately be cancelled (and reduced to zero) and the Facility shall immediately cease to be available for further utilisation; or |
(B) | cancel any part of any Commitment (and reduce such Commitment accordingly), whereupon the relevant part shall immediately be cancelled (and the relevant Commitment shall be immediately reduced accordingly) and the Facility shall immediately cease to be available for further utilisation to the extent of such cancellation; |
(ii) | declare that all or part of the Loan, together with accrued interest, any Makewhole Amount and all other amounts accrued or outstanding under the Finance Documents be immediately due and payable, whereupon they shall become immediately due and payable; and/or |
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(iii) | declare that all or part of the Loan be payable on demand, whereupon they shall immediately become payable on demand by the Agent on the instructions of the Majority Lenders; and/or |
(b) | exercise or direct the Security Agent to exercise any or all of its rights, remedies, powers or discretions under the Finance Documents. |
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SECTION 9
CHANGES TO PARTIES
27 | Changes to the Lenders |
27.1 | Assignments and transfers by the Lenders |
(a) | Subject to this Clause 27, a Lender (the Existing Lender) may: |
(i) | assign any of its rights; or |
(ii) | transfer by novation any of its rights and obligations, |
under the Finance Documents to another bank or financial institution or to a trust, fund or other entity which is regularly engaged in or established for the purpose of making, purchasing or investing in loans, securities or other financial assets (the New Lender).
(b) | A Lender that transfers any part of its rights and obligations under the Finance Documents directly or indirectly by way of a Participation Agreement may inform the person to whom it proposes to transfer such rights and obligations of the provisions of Clause 39.6 (Buy-Out). |
(c) | Any reference in this Agreement to a Lender includes a New Lender and any person to whom rights have been transferred pursuant to Clause 39.6 (Buy-Out) but excludes a Lender if no amount is or may be owed to or by it under this Agreement. |
27.2 | Conditions of assignment or transfer |
(a) | Subject to paragraph (b) below, the consent of an Obligor is not required for any assignment or transfer by a Lender pursuant to this Clause 27. |
(b) | The Existing Lender shall give not less than 10 Business Days prior notice to the Borrower for any assignment or transfer pursuant to this Clause 27. |
(c) | An assignment will only be effective if the procedure and conditions set out in Clause 27.6 (Procedure for assignment) are complied with. |
(d) | A transfer will only be effective if the procedure set out in Clause 27.5 (Procedure for transfer) is complied with. |
(e) | Each New Lender, by executing the relevant Transfer Certificate or Assignment Agreement, confirms, for the avoidance of doubt, that the Agent has authority to execute on its behalf any amendment or waiver that has been approved by or on behalf of the requisite Lender or Lenders in accordance with this Agreement on or prior to the date on which the transfer or assignment becomes effective in accordance with this Agreement and that it is bound by that decision to the same extent as the Existing Lender would have been had it remained a Lender. |
27.3 | Assignment or transfer fee |
The New Lender shall, on the date upon which an assignment or transfer takes effect, pay to the Agent (for its own account) a fee of US$3,500.
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27.4 | Limitation of responsibility of Existing Lenders |
(a) | Unless expressly agreed to the contrary, an Existing Lender makes no representation or warranty and assumes no responsibility to a New Lender for: |
(i) | the legality, validity, effectiveness, adequacy or enforceability of the Finance Documents or any other documents; |
(ii) | the financial condition of any member of the Group or any Junior Finance Party; |
(iii) | the performance and observance by any Obligor, any Security Provider or any Junior Finance Party of its obligations under the Finance Documents or any other documents; or |
(iv) | the accuracy of any statements (whether written or oral) made in or in connection with any Finance Document or any other document, |
and any representations or warranties implied by law are excluded.
(b) | Each New Lender confirms to the Existing Lender and the other Finance Parties that it: |
(i) | has made (and shall continue to make) its own independent investigation and assessment of the financial condition and affairs of each Obligor, each Security Provider and each Junior Finance Party and its related entities in connection with its participation in this Agreement and has not relied exclusively on any information provided to it by the Existing Lender in connection with any Finance Document; and |
(ii) | will continue to make its own independent appraisal of the creditworthiness of each Obligor, each Security Provider and its related entities whilst any amount is or may be outstanding under the Finance Documents or any Commitment is in force. |
(c) | Nothing in any Finance Document obliges an Existing Lender to: |
(i) | accept a re-transfer or re-assignment from a New Lender of any of the rights and obligations assigned or transferred under this Clause 27; or |
(ii) | support any losses directly or indirectly incurred by the New Lender by reason of the non-performance by any Obligor, any Security Provider or any Junior Finance Party of its obligations under the Finance Documents or otherwise. |
27.5 | Procedure for transfer |
(a) | Subject to the conditions set out in Clause 27.2 (Conditions of assignment or transfer), a transfer is effected in accordance with paragraph (c) below when the Agent executes an otherwise duly completed Transfer Certificate delivered to it by the Existing Lender and the New Lender. The Agent shall, subject to paragraph (b) below, as soon as reasonably practicable after receipt by it of a duly completed Transfer Certificate appearing on its face to comply with the terms of this Agreement and delivered in accordance with the terms of this Agreement, execute that Transfer Certificate. |
(b) | The Agent shall not be obliged to execute a Transfer Certificate delivered to it by the Existing Lender and the New Lender unless it is satisfied that it and the Security Agent have completed all know your customer and other similar procedures that it or the Security Agent is required (or deems desirable) to conduct in relation to the transfer to such New Lender. |
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(c) | Subject to Clause 27.12 (Pro rata interest settlement), on the Transfer Date: |
(i) | to the extent that in the Transfer Certificate the Existing Lender seeks to transfer by novation its rights and obligations under the Finance Documents, each of the Obligors and the Existing Lender shall be released from further obligations towards one another under the Finance Documents and their respective rights against one another under the Finance Documents shall be cancelled (being the Discharged Rights and Obligations); |
(ii) | each of the Obligors and the New Lender shall assume obligations towards one another and/or acquire rights against one another which differ from the Discharged Rights and Obligations only insofar as that Obligor and the New Lender have assumed and/or acquired the same in place of that Obligor and the Existing Lender; |
(iii) | the Agent, the Arranger, the Security Agent, the New Lender and other Lenders shall acquire the same rights and assume the same obligations between themselves as they would have acquired and assumed had the New Lender been the Original Lender with the rights and/or obligations acquired or assumed by it as a result of the transfer and to that extent the Agent, the Arranger, the Security Agent and the Existing Lender shall each be released from further obligations to each other under the Finance Documents; and |
(iv) | the New Lender shall become a Party as a Lender. |
(d) | The procedure set out in this Clause 27.5 shall not apply to any right or obligation under any Finance Document (other than this Agreement) if and to the extent its terms, or any laws applicable thereto, provide for or require a different means of transfer of such right or obligation or prohibit or restrict any transfer of such right or obligation, unless such prohibition or restriction shall not be applicable to the relevant transfer or each condition of any applicable restriction shall have been satisfied. |
27.6 | Procedure for assignment |
(a) | Subject to the conditions set out in paragraph (d) below and in Clause 27.2 (Conditions of assignment or transfer), an assignment may be effected in accordance with paragraph (c) below when the Agent executes an otherwise duly completed Assignment Agreement delivered to it by the Existing Lender and the New Lender. The Agent shall, subject to paragraph (b) below, as soon as reasonably practicable after receipt by it of a duly completed Assignment Agreement appearing on its face to comply with the terms of this Agreement and delivered in accordance with the terms of this Agreement, execute that Assignment Agreement. |
(b) | The Agent shall not be obliged to execute an Assignment Agreement delivered to it by the Existing Lender and the New Lender unless it is satisfied that it and the Security Agent have completed all know your customer and other similar procedures that it or the Security Agent is required (or deems desirable) to conduct in relation to the assignment to such New Lender. |
(c) | Subject to Clause 27.12 (Pro rata interest settlement), on the Transfer Date: |
(i) | the Existing Lender will assign absolutely to the New Lender the rights under the Finance Documents expressed to be the subject of the assignment in the Assignment Agreement; |
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(ii) | the Existing Lender will be released by each Obligor and the other Finance Parties from the obligations owed by it (the Relevant Obligations) and expressed to be the subject of the release in the Assignment Agreement; and |
(iii) | the New Lender shall become a Party as a Lender and will be bound by obligations equivalent to the Relevant Obligations. |
(d) | The Lenders may utilise procedures other than those set out in this Clause 27.6 to assign their rights under the Finance Documents (but not, without the consent of the relevant Obligor or unless in accordance with Clause 27.5 (Procedure for transfer), to obtain a release by that Obligor from the obligations owed to that Obligor by the Lenders nor the assumption of equivalent obligations by a New Lender), provided that they comply with the conditions set out in paragraph (e) below. |
(e) | An assignment (whether pursuant to an Assignment Agreement or paragraph (c) above) will only be effective on receipt by the Agent (whether in an Assignment Agreement or otherwise) of written confirmation from the New Lender (in form and substance satisfactory to the Agent) that the New Lender will assume the same obligations to the other Finance Parties as it would have been under if it had been the Original Lender. |
(f) | The procedure set out in this Clause 27.6 shall not apply to any right or obligation under any Finance Document (other than this Agreement) if and to the extent its terms, or any laws applicable thereto, provide for or require a different means of assignment of such right or release or assumption of such obligation or prohibit or restrict any assignment of such right or release or assumption of such obligation, unless such prohibition or restriction shall not be applicable to the relevant assignment, release or assumption or each condition of any applicable restriction shall have been satisfied. |
27.7 | Copy of Transfer Certificate or Assignment Agreement to Borrower |
The Agent shall, as soon as reasonably practicable after it has executed a Transfer Certificate or an Assignment Agreement, send to the Borrower a copy of that Transfer Certificate or Assignment Agreement.
27.8 | Existing consents and waivers |
A New Lender shall be bound by any consent, waiver, election or decision given or made by the relevant Existing Lender under or pursuant to any Finance Document prior to the coming into effect of the relevant assignment or transfer to such New Lender.
27.9 | Exclusion of Agents liability |
In relation to any assignment or transfer pursuant to this Clause 27, each Party acknowledges and agrees that the Agent shall not be obliged to enquire as to the accuracy of any representation or warranty made by a New Lender in respect of its eligibility as a Lender.
27.10 | Assignments and transfers |
A Lender may not assign or transfer, to any Obligor, any Security Provider or any Affiliate of any Obligor or any Security Provider, any of such Lenders rights or obligations under any Finance Document, except with the prior written consent of all the Lenders.
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27.11 | Security over Lenders rights |
In addition to the other rights provided to Lenders under this Clause 27, each Lender may without consulting with or obtaining consent from any Obligor, at any time charge, assign or otherwise create Security in or over (whether by way of collateral or otherwise) all or any of its rights under any Finance Document to secure obligations of that Lender, including:
(a) | any charge, assignment or other Security to secure obligations to a federal reserve or central bank; and |
(b) | any charge, assignment or other Security granted to any holders (or trustee or representatives of holders) of obligations owed, or securities issued, by that Lender as security for those obligations or securities, |
except that no such charge, assignment or Security shall:
(i) | release a Lender from any of its obligations under the Finance Documents or substitute the beneficiary of the relevant charge, assignment or Security for the Lender as a party to any of the Finance Documents; or |
(ii) | require any payments to be made by an Obligor other than or in excess of, or grant to any person any more extensive rights than, those required to be made or granted to the relevant Lender under the Finance Documents. |
27.12 | Pro rata interest settlement |
(a) | If the Agent has notified the Lenders that it is able to distribute interest payments on a pro rata basis to Existing Lenders and New Lenders, then (in respect of any transfer pursuant to Clause 27.5 (Procedure for transfer) or any assignment pursuant to Clause 27.6 (Procedure for assignment), the Transfer Date of which, in each case, is after the date of such notification and is not on the last day of an Interest Period): |
(i) | any interest or fees in respect of the relevant participation which are expressed to accrue by reference to the lapse of time shall continue to accrue in favour of the Existing Lender up to but excluding the Transfer Date (Accrued Amounts) and shall become due and payable to the Existing Lender (without further interest accruing on them) on the last day of the current Interest Period (or, if the Interest Period is longer than six Months, on the next of the dates which falls at six Monthly intervals after the first day of that Interest Period); and |
(ii) | the rights assigned or transferred by the Existing Lender will not include the right to the Accrued Amounts, so that, for the avoidance of doubt: |
(A) | when the Accrued Amounts become payable, those Accrued Amounts will be payable to the Existing Lender; |
(B) | the amount payable to the New Lender on that date will be the amount which would, but for the application of this Clause 27.12, have been payable to it on that date, but after deduction of the Accrued Amounts; and |
(C) | any amendment or waiver that has the effect of changing or which relates to the Accrued Amounts or the date of payment of the Accrued Amounts shall not be made without the prior consent of the Existing Lender. |
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(b) | In this Clause 27.12, references to Interest Period shall be construed to include a reference to any other period for accrual of fees. |
(c) | An Existing Lender which retains the right to the Accrued Amounts pursuant to this Clause 27.12 but which does not have a Commitment shall be deemed not to be a Lender for the purposes of ascertaining whether the agreement of any specified group of Lenders has been obtained to approve any request for a consent, waiver, amendment or other vote of Lenders under the Finance Documents. |
28 | Changes to the Obligors |
No Obligor may assign any of its rights or transfer any of its rights or obligations under the Finance Documents.
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SECTION 10
THE FINANCE PARTIES
29 | Role of the Agent, the Security Agent and the Arranger |
29.1 | The Agent and the Security Agent |
(a) | Each of the Arranger and the Lenders appoints the Agent to act as its agent under and in connection with the Finance Documents. |
(b) | Each of the Arranger, the Lenders and the Agent appoints the Security Agent to act as security agent under and in connection with the Finance Documents. |
(c) | Any reference in this Agreement to security agent means that the Security Agent is acting as security agent and security trustee, and the Security Agent declares that it holds the Security Property on trust as security trustee for the Secured Parties on the terms contained in this Agreement. |
(d) | To the extent that the security trusts established by this Agreement are not effective to confer the benefit of any Transaction Security upon any Secured Party: |
(i) | the Security Agent shall act as security agent, and not as security trustee, for the relevant Secured Party in respect of that Transaction Security; and |
(ii) | paragraph (c) above shall not apply to that Transaction Security. |
(e) | Each of the Secured Parties authorises each of the Agent and the Security Agent to perform the duties, obligations and responsibilities and to exercise the rights, powers, authorities and discretions specifically given to the Agent and the Security Agent (as applicable) under or in connection with the Finance Documents together with any other incidental rights, powers, authorities and discretions. |
29.2 | Enforcement through Security Agent only |
The Secured Parties shall not have any independent power to enforce, or have recourse to, any of the Transaction Security or to exercise any right, power, authority or discretion arising under the Security Documents except through the Security Agent.
29.3 | Instructions |
(a) | Each of the Agent and the Security Agent shall: |
(i) | unless a contrary indication appears in a Finance Document, exercise or refrain from exercising any right, power, authority or discretion vested in it as Agent or Security Agent (as applicable) in accordance with any instructions given to it by: |
(A) | all Lenders if the relevant Finance Document stipulates the matter is an all Lender decision; and |
(B) | in all other cases, the Majority Lenders; and |
(ii) | not be liable for any act (or omission) if it acts (or refrains from acting) in accordance with paragraph (i) above (or, if this Agreement stipulates that the matter is a decision for any other Finance Party or group of Finance Parties, from that Finance Party or group of Finance Parties). |
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(b) | Each of the Agent and the Security Agent shall be entitled to request instructions, or clarification of any instruction, from the Majority Lenders (or, if the relevant Finance Document stipulates that the matter is a decision for any other Finance Party or group of Finance Parties, from that Finance Party or group of Finance Parties) as to whether, and in what manner, it should exercise or refrain from exercising any right, power, authority or discretion and the Agent or the Security Agent (as applicable) may refrain from acting unless and until it receives any such instructions or that clarification. |
(c) | Save in the case of decisions stipulated to be a matter for any other Finance Party or group of Finance Parties under the relevant Finance Document and unless a contrary indication appears in a Finance Document, any instructions given to the Agent or the Security Agent (as applicable) by the Majority Lenders shall override any conflicting instructions given by any other Parties and will be binding on all Finance Parties. |
(d) | Paragraph (a) above shall not apply: |
(i) | where a contrary indication appears in a Finance Document; |
(ii) | where a Finance Document requires the Agent or the Security Agent to act in a specified manner or to take a specified action; |
(iii) | in respect of any provision which protects the Agents or Security Agents own position in its personal capacity as opposed to its role of Agent or Security Agent for the relevant Finance Parties or Secured Parties (as applicable), including Clauses 29.7 (No fiduciary duties) to 29.12 (Exclusion of liability), Clauses 29.16 (Confidentiality) to 29.23 (Custodians and nominees) and Clauses 29.27 (Acceptance of title) to 29.30 (Disapplication of Trustees Act); or |
(iv) | in respect of the exercise of the Security Agents discretion to exercise a right, power or authority under any of: |
(A) | Clause 30.1 (Order of application); |
(B) | Clause 30.2 (Prospective liabilities); and |
(C) | Clause 30.5 (Permitted deductions). |
(e) | If giving effect to instructions given by the Majority Lenders would (in the Agents or (as applicable) the Security Agents opinion) have an effect equivalent to an amendment or waiver referred to in Clause 39 (Amendments and waivers), the Agent or (as applicable) Security Agent shall not act in accordance with those instructions unless consent to it so acting is obtained from each Party (other than the Agent or the Security Agent) whose consent would have been required in respect of that amendment or waiver. |
(f) | In exercising any discretion to exercise a right, power or authority under the Finance Documents where either: |
(i) | it has not received any instructions as to the exercise of that discretion; or |
(ii) | the exercise of that discretion is subject to paragraph (d)(iv) above, |
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the Agent or the Security Agent shall do so having regard to the interests of (in the case of the Agent) all the Finance Parties and (in the case of the Security Agent) all the Secured Parties.
(g) | The Agent or the Security Agent (as applicable) may refrain from acting in accordance with any instructions of any Finance Party or group of Finance Parties until it has received any indemnification and/or security that it may in its discretion require (which may be greater in extent than that contained in the Finance Documents and which may include payment in advance) for any cost, loss or liability which it may incur in complying with those instructions. |
(h) | Without prejudice to the remainder of this Clause 29.3, in the absence of instructions, each of the Agent and the Security Agent may act (or refrain from acting) as it considers to be in the best interest of (in the case of the Agent) the Finance Parties and (in the case of the Security Agent) the Secured Parties. |
(i) | Neither the Agent nor the Security Agent is authorised to act on behalf of a Finance Party (without first obtaining that Finance Partys consent) in any legal or arbitration proceedings relating to any Finance Document. This paragraph (i) shall not apply to any legal or arbitration proceeding relating to the perfection, preservation or protection of rights under the Security Documents or enforcement of the Transaction Security or Security Documents. |
29.4 | Duties of the Agent and the Security Agent |
(a) | The duties of the Agent and the Security Agent under the Finance Documents are solely mechanical and administrative in nature. |
(b) | Subject to paragraph (c) below, each of the Agent and the Security Agent shall promptly forward to a Party the original or a copy of any document which is delivered to the Agent or the Security Agent (as applicable) for that Party by any other Party. |
(c) | Without prejudice to Clause 27.7 (Copy of Transfer Certificate or Assignment Agreement to Borrower), paragraph (b) above shall not apply to any Transfer Certificate or any Assignment Agreement. |
(d) | Except where a Finance Document specifically provides otherwise, neither the Agent nor the Security Agent is obliged to review or check the adequacy, accuracy or completeness of any document it forwards to another Party. |
(e) | If the Agent or the Security Agent receives notice from a Party referring to any Finance Document, describing a Default and stating that the circumstance described is a Default, it shall promptly notify the other Finance Parties. |
(f) | If the Agent is aware of the non-payment of any principal, interest, commitment fee or other fee payable to a Finance Party (other than the Agent, the Arranger or the Security Agent) under this Agreement, it shall promptly notify the other Finance Parties. |
(g) | Each of the Agent and the Security Agent shall have only those duties, obligations and responsibilities expressly specified in the Finance Documents to which it is expressed to be a party (and no others shall be implied). |
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29.5 | Role of the Arranger |
Except as specifically provided in the Finance Documents, the Arranger has no obligations of any kind to any other Party under or in connection with any Finance Document.
29.6 | Role of the Security Agent |
The Security Agent shall not be an agent of (except as expressly provided in any Finance Document) any Finance Party or any Obligor, any Security Provider or any Junior Finance Party under or in connection with any Finance Document.
29.7 | No fiduciary duties |
(a) | Nothing in any Finance Document constitutes: |
(i) | the Agent or the Arranger as a trustee or fiduciary of any other person; or |
(ii) | the Security Agent as an agent, trustee or fiduciary of any Obligor, any Security Provider or any Junior Finance Party. |
(b) | None of the Agent, the Security Agent or the Arranger shall be bound to account to any other Finance Party or (in the case of the Security Agent) any Secured Party for any sum or the profit element of any sum received by it for its own account. |
29.8 | Business with the Group |
The Agent, the Security Agent and the Arranger may accept deposits from, lend money to and generally engage in any kind of banking or other business with any Obligor, any Security Provider, any Junior Finance Party or any Affiliate of an Obligor, a Security Provider or a Junior Finance Party.
29.9 | Rights and discretions |
(a) | Each of the Agent and the Security Agent may: |
(i) | rely on any representation, communication, notice or document believed by it to be genuine, correct and appropriately authorised and shall have no duty to verify any signature on any document; |
(ii) | assume that: |
(A) | any instructions received by it from the Majority Lenders, any Finance Parties or any group of Finance Parties are duly given in accordance with the terms of the Finance Documents; and |
(B) | unless it has received notice of revocation, that those instructions have not been revoked; and |
(iii) | rely on a certificate from any person: |
(A) | as to any matter of fact or circumstance which might reasonably be expected to be within the knowledge of that person; or |
(B) | to the effect that such person approves of any particular dealing, transaction, step, action or thing, |
as sufficient evidence that that is the case and, in the case of paragraph (A) above, may assume the truth and accuracy of that certificate.
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(b) | Each of the Agent and the Security Agent may assume (unless it has received notice to the contrary in its capacity as agent for the Finance Parties or security agent for the Secured Parties) that: |
(i) | no Default has occurred (unless, in the case of the Agent, it has actual knowledge of a Default arising under Clause 26.1 (Non-payment)); |
(ii) | any right, power, authority or discretion vested in any Party or any group of Finance Parties has not been exercised; and |
(iii) | any notice or request made by the Borrower (other than a Utilisation Request) is made on behalf of and with the consent and knowledge of all the Obligors. |
(c) | Each of the Agent and the Security Agent may engage and pay for the advice or services of any lawyers, accountants, tax advisers, surveyors or other professional advisers or experts appointed in accordance with the provisions of this Agreement. |
(d) | Without prejudice to the generality of paragraph (c) above or paragraph (e) below, each of the Agent and the Security Agent may at any time after a Default has occurred engage and pay for the services of any lawyers to act as independent counsel to the Agent or the Security Agent (as applicable) (and so separate from any lawyers instructed by the Lenders) if the Agent or the Security Agent (as applicable) in its reasonable opinion deems this to be necessary. |
(e) | Each of the Agent and the Security Agent may rely on the advice or services of any lawyers, accountants, tax advisers, surveyors or other professional advisers or experts (whether obtained by the Agent, the Security Agent or any other Party) and shall not be liable for any damages, costs or losses to any person, any diminution in value or any liability whatsoever arising as a result of its so relying. |
(f) | Each of the Agent and the Security Agent may act in relation to the Finance Documents and the Security Property through its officers, employees and agents and shall not: |
(i) | be liable for any error of judgement made by any such person; or |
(ii) | be in any way responsible for any loss incurred by reason of misconduct, omission or default on the part of any such person, |
unless such error or such loss was directly caused by the Agents or the Security Agents (as applicable) gross negligence or wilful misconduct.
(g) | Unless a Finance Document expressly provides otherwise, each of the Agent and the Security Agent may disclose to any other Party any information that it reasonably believes it has received as agent or security agent under the Finance Documents. |
(h) | Notwithstanding any other provision of any Finance Document to the contrary, none of the Agent, the Security Agent or the Arranger is obliged to do or omit to do anything if it would, or might in its reasonable opinion, constitute a breach of any law or a breach of a fiduciary duty or duty of confidentiality. |
(i) | Notwithstanding any provision of any Finance Document to the contrary, neither the Agent nor the Security Agent is obliged to expend or risk its own funds or otherwise incur any financial liability in the performance of its duties, obligations or responsibilities or the exercise of any right, power, authority or discretion if it has grounds for believing the repayment of such funds or adequate indemnity against, or security for, such risk or liability is not reasonably assured to it. |
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29.10 | Responsibility for documentation |
None of the Agent, the Security Agent or the Arranger is responsible or liable for:
(a) | the adequacy, accuracy or completeness of any information (whether oral or written) supplied by the Agent, the Security Agent, the Arranger, an Obligor, a Security Provider or a Junior Finance Party or any other person in or in connection with any Finance Document or the transactions contemplated in the Finance Documents or any other agreement, arrangement or document entered into, made or executed in anticipation of, under or in connection with any Finance Document; |
(b) | the legality, validity, effectiveness, adequacy or enforceability of any Finance Document or the Security Property or any other agreement, arrangement or document entered into, made or executed in anticipation of, under or in connection with any Finance Document or the Security Property; or |
(c) | any determination as to whether any information provided or to be provided to any Secured Party is non-public information, the use of which may be regulated or prohibited by applicable law relating to insider dealing or otherwise. |
29.11 | No duty to monitor |
Neither the Agent nor the Security Agent shall be bound to enquire:
(a) | whether or not any Default has occurred; |
(b) | as to the performance, default or any breach by any Party of its obligations under any Finance Document; or |
(c) | whether any other event specified in any Finance Document has occurred. |
29.12 | Exclusion of liability |
(a) | Without limiting paragraph (b) below (and without prejudice to any other provision of any Finance Document excluding or limiting the liability of the Agent, the Security Agent or any Receiver or Delegate), none of the Agent, the Security Agent nor any Receiver or Delegate will be liable for: |
(i) | any damages, costs or losses to any person, any diminution in value or any liability whatsoever arising as a result of taking or not taking any action under or in connection with any Finance Document or the Security Property, unless directly caused by its gross negligence or wilful misconduct; |
(ii) | exercising, or not exercising, any right, power, authority or discretion given to it by, or in connection with, any Finance Document, the Security Property or any other agreement, arrangement or document entered into, made or executed in anticipation of, under or in connection with any Finance Document or the Security Property; |
(iii) | any shortfall which arises on the enforcement or realisation of the Security Property; or |
(iv) | without prejudice to the generality of paragraphs (i) to (iii) above, any damages, costs or losses to any person, any diminution in value or any liability whatsoever arising as a result of: |
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(A) | any act, event or circumstance not reasonably within its control; or |
(B) | the general risks of investment in, or the holding of assets in, any jurisdiction, |
including (in each case) such damages, costs, losses, diminution in value or liability arising as a result of: nationalisation, expropriation or other governmental actions; any regulation, currency restriction, devaluation or fluctuation; market conditions affecting the execution or settlement of transactions or the value of assets (including any Disruption Event); breakdown, failure or malfunction of any third party transport, telecommunications, computer services or systems; natural disasters or acts of God; war, terrorism, insurrection or revolution; or strikes or industrial action.
(b) | No Party (other than the Agent, the Security Agent, that Receiver or that Delegate (as applicable)) may take any proceedings against any officer, employee or agent of the Agent, the Security Agent, a Receiver or a Delegate, in respect of any claim it might have against the Agent, the Security Agent, a Receiver or a Delegate or in respect of any act or omission of any kind by that officer, employee or agent in relation to any Finance Document or any Security Property and any officer, employee or agent of the Agent, the Security Agent, a Receiver or a Delegate may rely on this paragraph (b) subject to Clause 1.4 (Third party rights) and the provisions of the Third Parties Act. |
(c) | Neither the Agent nor the Security Agent will be liable for any delay (or any related consequences) in crediting an account with an amount required under the Finance Documents to be paid by the Agent or the Security Agent (as applicable) if the Agent or the Security Agent (as applicable) has taken all necessary steps as soon as reasonably practicable to comply with the regulations or operating procedures of any recognised clearing or settlement system used by the Agent or the Security Agent (as applicable) for that purpose. |
(d) | Nothing in this Agreement shall oblige the Agent, the Security Agent or the Arranger to carry out: |
(i) | any know your customer or other procedures in relation to any person; or |
(ii) | any check on the extent to which any transaction contemplated by this Agreement might be unlawful for any Finance Party or for any Affiliate of any Finance Party, |
on behalf of any Finance Party and each Finance Party confirms to the Agent, the Security Agent and the Arranger that it is solely responsible for any such procedures or checks that it is required to conduct and that it shall not rely on any statement in relation to such procedure or checks made by the Agent, the Security Agent or the Arranger.
(e) | Without prejudice to any provision of any Finance Document excluding or limiting the liability of the Agent, the Security Agent, any Receiver or Delegate, any liability of the Agent, the Security Agent, any Receiver or any Delegate arising under or in connection with any Finance Document or the Security Property shall be limited to the amount of actual loss which has been finally judicially determined to have been suffered (as determined by reference to the date of default of the Agent, the Security Agent, Receiver or Delegate or, if later, the date on which the loss arises as a result of such default) but without reference to any special conditions or circumstances known to the Agent, the Security Agent, Receiver or Delegate at any time which increase the amount of that loss. In no event shall the Agent, the Security Agent, Receiver or Delegate be liable for any loss of profits, goodwill, reputation, business opportunity or anticipated saving, or for special, punitive, indirect or consequential damages, whether or not the Agent, Security Agent, Receiver or Delegate has been advised of the possibility of such loss or damages. |
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29.13 | Lenders indemnity to the Agent and the Security Agent |
(a) | Each Lender shall (in proportion to its share of the Total Commitments or, if the Total Commitments are then zero, to its share of the Total Commitments immediately prior to their reduction to zero) indemnify the Agent, the Security Agent and every Receiver and every Delegate, within three Business Days of demand, against any cost, loss or liability (including for negligence or any other category of liability whatsoever) incurred by any of them (otherwise than by reason of the Agents, Security Agents, Receivers or Delegates gross negligence or wilful misconduct) (or, in the case of any cost, loss or liability pursuant to Clause 33.9 (Disruption to payment systems etc.) notwithstanding the Agents negligence, gross negligence or any other category of liability whatsoever, but not including any claim based on the fraud of the Agent) in acting as Agent, Security Agent, Receiver or Delegate under the Finance Documents (unless the relevant Agent, Security Agent, Receiver or Delegate has been reimbursed by an Obligor or a Security Provider pursuant to a Finance Document). |
(b) | Subject to paragraph (c) below, the Borrower shall immediately on demand reimburse any Lender for any payment that Lender makes to the Agent or Security Agent pursuant to paragraph (a) above. |
(c) | Paragraph (b) above shall not apply to the extent that the indemnity payment in respect of which the Lender claims reimbursement relates to a liability of the Agent or the Security Agent to an Obligor. |
29.14 | Resignation of the Agent and the Security Agent |
(a) | Each of the Agent and the Security Agent may resign and appoint one of its Affiliates as successor by giving notice to the other Finance Parties and the Borrower. |
(b) | Alternatively, the Agent or the Security Agent may resign by giving 30 days notice to the other Finance Parties and the Borrower, in which case the Majority Lenders (after consultation with the other Finance Parties and the Borrower) may appoint a successor Agent or Security Agent (as applicable). |
(c) | If the Majority Lenders have not appointed a successor Agent or Security Agent in accordance with paragraph (b) above within 20 days after notice of resignation was given, the retiring Agent or Security Agent (as applicable) (after consultation with the other Finance Parties and the Borrower) may appoint a successor Agent or Security Agent (as applicable). |
(d) | The retiring Agent or Security Agent (as applicable) shall, at its own cost, make available to the successor Agent or Security Agent (as applicable) such documents and records and provide such assistance as the successor Agent or Security Agent may reasonably request for the purposes of performing its functions as Agent or Security Agent (as applicable) under the Finance Documents. |
(e) | The resignation notice of the Agent or Security Agent (as applicable) shall only take effect upon: |
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(i) | the appointment of a successor; and |
(ii) | (in the case of the Security Agent) the transfer of the Security Property to that successor. |
(f) | Upon the appointment of a successor, the retiring Agent or Security Agent (as applicable) shall be discharged from any further obligation in respect of the Finance Documents (other than its obligations under paragraph (b) of Clause 29.28 (Winding up of security agent arrangements) and paragraph (d) above) but shall remain entitled to the benefit of Clause 17.3 (Indemnity to the Agent) and Clause 17.4 (Indemnity to the Security Agent) and this Clause 29 (and any fees for the account of the retiring Agent or Security Agent (as applicable) shall cease to accrue from (and shall be payable on) that date). Any successor and each of the other Parties shall have the same rights and obligations amongst themselves as they would have had if such successor had been an original Party. |
(g) | The Agent shall resign in accordance with paragraph (b) above (and, to the extent applicable, shall use reasonable endeavours to appoint a successor Agent pursuant to paragraph (c) above) if, on or after the date which is three months before the earliest FATCA Application Date relating to any payment to the Agent under the Finance Documents, either: |
(i) | the Agent fails to respond to a request under Clause 15.7 (FATCA Information) and the Borrower or a Lender reasonably believes that the Agent will not be (or will have ceased to be) a FATCA Exempt Party on or after that FATCA Application Date; |
(ii) | the information supplied by the Agent pursuant to Clause 15.7 (FATCA Information) indicates that the Agent will not be (or will have ceased to be) a FATCA Exempt Party on or after that FATCA Application Date; or |
(iii) | the Agent notifies the Borrower and the Lenders that the Agent will not be (or will have ceased to be) a FATCA Exempt Party on or after that FATCA Application Date, |
and (in each case) the Borrower or a Lender reasonably believes that a Party will be required to make a FATCA Deduction that would not be required if the Agent were a FATCA Exempt Party, and the Borrower or that Lender, by notice to the Agent, requires it to resign.
29.15 | Replacement of the Agent or the Security Agent |
(a) | After consultation with the Borrower, the Majority Lenders may, by giving 30 days notice to the Agent or the Security Agent, replace the Agent or the Security Agent by appointing a successor Agent or Security Agent. |
(b) | The retiring Agent or Security Agent shall (at the expense of the Lenders) make available to the successor Agent or Security Agent such documents and records and provide such assistance as the successor Agent or Security Agent may reasonably request for the purposes of performing its functions as Agent or Security Agent under the Finance Documents. |
(c) | The appointment of the successor Agent or Security Agent (as applicable) shall only take effect upon: |
(i) | the appointment of a successor; and |
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(ii) | (in the case of the Security Agent) the transfer of the Security Property to that successor. |
As from this date, the retiring Agent or Security Agent shall be discharged from any further obligation in respect of the Finance Documents (other than its obligations under paragraph (b) above) but shall remain entitled to the benefit of Clause 17.3 (Indemnity to the Agent), Clause 17.4 (Indemnity of the Security Agent) and this Clause 29 (and any agency or security agency fees for the account of the retiring Agent or Security Agent shall cease to accrue from (and shall be payable on) that date).
(d) | Any successor Agent or Security Agent and each of the other Parties shall have the same rights and obligations amongst themselves as they would have had if such successor had been an original Party. |
29.16 | Confidentiality |
(a) | In acting as agent or security agent for the Finance Parties or Secured Parties, the Agent or the Security Agent (as applicable) shall be regarded as acting through its agency division which shall be treated as a separate entity from any other of its divisions or departments. |
(b) | If information is received by another division or department of the Agent or the Security Agent, it may be treated as confidential to that division or department and the Agent or the Security Agent (as applicable) shall not be deemed to have notice of it. |
(c) | The Agent shall not be obliged to disclose to any Finance Party any information supplied to it by the Borrower or any Affiliates of the Borrower on a confidential basis and for the purpose of evaluating whether any waiver or amendment is or may be required or desirable in relation to any Finance Document. |
29.17 Relationship with the other Finance Parties
(a) | Subject to Clause 27.12 (Pro rata interest settlement), the Agent may treat the person shown in its records as Lender at the opening of business (in the place of the Agents principal office as notified to the Finance Parties from time to time) as the Lender acting through its Facility Office: |
(i) | entitled to or liable for any payment due under any Finance Document on that day; and |
(ii) | entitled to receive and act upon any notice, request, document or communication or make any decision or determination under any Finance Document made or delivered on that day, |
unless it has received not less than five Business Days prior notice from that Lender to the contrary in accordance with the terms of this Agreement.
(b) | Any Lender may by notice to the Agent appoint a person to receive on its behalf all notices, communications, information and documents to be made or despatched to that Lender under the Finance Documents. Such notice shall contain the address, fax number and (where communication by email or other electronic means is permitted under Clause 35.5 (Electronic communication)) email address and/or any other information required to enable the transmission of information by that means (and, in each case, the department or officer, if any, for whose attention communication is to be made) and be treated as a notification of a substitute address, fax number, email address (or such other information), department and officer by that Lender for the purposes of Clause 35.2 (Addresses) and paragraph (a)(ii) of Clause 35.5 (Electronic communication) and the Agent shall be entitled to treat such person as the person entitled to receive all such notices, communications, information and documents as though that person were that Lender. |
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(c) | Each Secured Party shall supply the Security Agent with any information that the Security Agent may reasonably specify as being necessary or desirable to enable the Security Agent to perform its functions as Security Agent. |
29.18 | Credit appraisal by the Lenders |
Without affecting the responsibility of any Obligor or a Security Provider for information supplied by it or on its behalf in connection with any Finance Document, each Lender confirms to the Agent, the Security Agent and the Arranger that it has been, and will continue to be, solely responsible for making its own independent appraisal and investigation of all risks arising under or in connection with any Finance Document, including:
(a) | the financial condition, status and nature of each member of the Group; |
(b) | the legality, validity, effectiveness, adequacy or enforceability of any Finance Document, the Security Property and any other agreement, arrangement or document entered into, made or executed in anticipation of, under or in connection with any Finance Document or the Security Property; |
(c) | whether that Lender has recourse, and the nature and extent of that recourse, against any Party or any of its respective assets under or in connection with any Finance Document, the Security Property, the transactions contemplated by the Finance Documents or any other agreement, arrangement or document entered into, made or executed in anticipation of, under or in connection with any Finance Document or the Security Property; |
(d) | the adequacy, accuracy or completeness of any information provided by the Agent, the Security Agent, any Party or by any other person under or in connection with any Finance Document, the transactions contemplated by any Finance Document or any other agreement, arrangement or document entered into, made or executed in anticipation of, under or in connection with any Finance Document; and |
(e) | the right or title of any person in or to, or the value or sufficiency of any part of, the Security Assets, the priority of any of the Transaction Security or the existence of any Security affecting the Security Assets. |
29.19 | Agents and Security Agents management time |
(a) | In the event of: |
(i) | an Event of Default; |
(ii) | the Security Agent being requested by an Obligor, a Security Provider or the Majority Lenders to undertake duties which the Security Agent and the Borrower agree to be of an exceptional nature or outside the scope of the normal duties of the Security Agent under the Finance Documents; or |
(iii) | the Security Agent and the Borrower agreeing that it is otherwise appropriate in the circumstances, the Borrower shall pay to the Security Agent any additional remuneration that may be agreed between the Security Agent and the Borrower or determined pursuant to paragraph (b) below. |
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(b) | If the Security Agent and the Borrower fail to agree upon the nature of the duties, or upon the additional remuneration referred to in paragraph (a) above or whether additional remuneration is appropriate in the circumstances, any dispute shall be determined by an investment bank (acting as an expert and not as an arbitrator) selected by the Security Agent (the costs of the investment bank being payable by the Borrower) and the determination of any investment bank shall be final and binding upon the Parties. |
29.20 | Deduction from amounts payable by the Agent or the Security Agent |
If any Party owes an amount to the Agent or the Security Agent under the Finance Documents, the Agent or the Security Agent (as the case may be) may, after giving notice to that Party, deduct an amount not exceeding that amount from any payment to that Party which the Agent or the Security Agent (as the case may be) would otherwise be obliged to make under the Finance Documents and apply the amount deducted in or towards satisfaction of the amount owed. For the purposes of the Finance Documents, that Party shall be regarded as having received any amount so deducted.
29.21 | Reliance and engagement letters |
Each Finance Party and Secured Party confirms that each of the Arranger, the Agent and the Security Agent has authority to accept on its behalf (and ratifies the acceptance on its behalf of any letters or reports already accepted by the Arranger, the Agent or the Security Agent) the terms of any reliance letter or engagement letters relating to any reports or letters provided by accountants, auditors or providers of due diligence reports in connection with the Finance Documents or the transactions contemplated in the Finance Documents and to bind it in respect of those reports or letters and to sign such letters on its behalf and further confirms that it accepts the terms and qualifications set out in such letters.
29.22 | No responsibility to perfect Transaction Security |
The Security Agent shall not be liable for any failure to:
(a) | require the deposit with it of any deed or document certifying, representing or constituting the title of any Obligor or any Security Provider to any of the Security Assets; |
(b) | obtain any licence, consent or other authority for the execution, delivery, legality, validity, enforceability or admissibility in evidence of any Finance Document or the Transaction Security; |
(c) | register, file or record or otherwise protect any of the Transaction Security (or the priority of any of the Transaction Security) under any law or to give notice to any person of the execution of any Finance Document or of the Transaction Security; |
(d) | take, or to require any Obligor or any Security Provider to take, any step to perfect its title to any of the Security Assets or to render the Transaction Security effective or to secure the creation of any ancillary Security under any law; or |
(e) | require any further assurance in relation to any Security Document. |
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29.23 | Custodians and nominees |
The Security Agent may appoint and pay any person to act as a custodian or nominee on any terms in relation to any Security Property as the Security Agent may determine, including for the purpose of depositing with a custodian this Agreement or any document relating to the Security Property and the Security Agent shall not be responsible for any loss, liability, expense, demand, cost, claim or proceedings incurred by reason of the misconduct, omission or default on the part of any person appointed by it under this Agreement or be bound to supervise the proceedings or acts of any person.
29.24 | Insurance by Security Agent |
The Security Agent shall not be obliged:
(a) | to insure any of the Security Assets; |
(b) | to require any other person to maintain any insurance; or |
(c) | to verify any obligation to arrange or maintain insurance contained in any Finance Document, |
and the Security Agent shall not be liable for any damages, costs or losses to any person as a result of the lack of, or inadequacy of, any such insurance.
29.25 | Delegation by the Security Agent |
(a) | Each of the Security Agent, any Receiver and any Delegate may, at any time, delegate by power of attorney or otherwise to any person for any period all or any right, power, authority or discretion vested in it in its capacity as such. |
(b) | That delegation may be made upon any terms and conditions (including the power to sub-delegate) and subject to any restrictions that the Security Agent, that Receiver or that Delegate (as the case may be) may, in its discretion, think fit in the interests of the Secured Parties. |
(c) | No Security Agent, Receiver or Delegate shall be bound to supervise, or be in any way responsible for any damages, costs or losses incurred by reason of any misconduct, omission or default on the part of, any such delegate or sub-delegate, except to the extent caused by its own gross negligence or wilful misconduct in choosing the delegate or sub-delegate. |
29.26 | Additional Security Agents |
(a) | The Security Agent may at any time appoint (and subsequently remove) any person to act as a separate trustee or as a co-trustee jointly with it: |
(i) | if it considers that appointment to be in the interests of the Secured Parties; |
(ii) | for the purposes of conforming to any legal requirement, restriction or condition which the Security Agent deems to be relevant; or |
(iii) | for obtaining or enforcing any judgment in any jurisdiction, |
and the Security Agent shall give prior notice to the Borrower and the Secured Parties of that appointment.
(b) | Any person so appointed shall have the rights, powers, authorities and discretions (not exceeding those given to the Security Agent under or in connection with the Finance Documents) and the duties, obligations and responsibilities that are given or imposed by the instrument of appointment. |
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(c) | The remuneration that the Security Agent may pay to that person, and any costs and expenses incurred by that person in performing its functions pursuant to that appointment, shall, for the purposes of this Agreement, be treated as costs and expenses incurred by the Security Agent. |
29.27 | Acceptance of title |
The Security Agent shall be entitled to accept without enquiry, and shall not be obliged to investigate, any right and title that any Obligor or any Security Provider may have to any of the Security Assets and shall not be liable for, or bound to require any Obligor to remedy, any defect in its right or title.
29.28 | Winding-up of security agent arrangements |
If the Security Agent, with the approval of the Agent, determines that:
(a) | all of the Secured Liabilities and all other obligations secured by the Security Documents have been fully and finally discharged; and |
(b) | no Secured Party is under any commitment, obligation or liability (actual or contingent) to make advances or provide other financial accommodation to any Obligor or any Security Provider pursuant to the Finance Documents, |
then:
(i) | the security agent arrangements and the trusts set out in this Agreement shall be wound up and the Security Agent shall release, without recourse or warranty, all of the Transaction Security and the rights of the Security Agent under each of the Security Documents; and |
(ii) | any Security Agent which has resigned pursuant to Clause 29.14 (Resignation of the Agent and the Security Agent) shall release, without recourse or warranty, all of its rights under each Security Document. |
29.29 | Powers supplemental to Trustees Act |
The rights, powers, authorities and discretions given to the Security Agent under or in connection with the Finance Documents shall be supplemental to the Trustees Act (Chapter 337 of Singapore) and in addition to any which may be vested in the Security Agent by law or otherwise.
29.30 | Disapplication of Trustees Act |
Section 1 of the Trustee Act 2000 shall not apply to the duties of the Security Agent in relation to the trusts constituted by this Agreement. Where there are any inconsistencies between the Trustees Act (Chapter 337 of Singapore) and the provisions of this Agreement, the provisions of this Agreement shall, to the extent permitted by law, prevail and, in the case of any inconsistency with the Trustees Act (Chapter 337 of Singapore), the provisions of this Agreement shall constitute a restriction or exclusion for the purposes of that Act.
29.31 | Relevant information |
Without affecting the responsibility of any Obligor for information supplied by it or on its behalf in connection with any Finance Document, each of the Lenders accepts and acknowledges to the Agent, the Security Agent and the Arranger that:
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(a) | some or all of the information (including, without limitations, financial projections and/or other financial data) that has or may be provided to the Lenders (through the Agent, the Security Agent or otherwise) is or may constitute inside information, price-sensitive information, material non-public information (or some other similar class of information as may be relevant) or otherwise be subject to legal or regulatory control due to its non-public nature in relation to any Obligor or any member of Group (the Price-Sensitive Information) and that the use of such information may be regulated or prohibited by applicable laws and regulations relating to, among other things, insider dealing and/or market abuse; |
(b) | upon possession of the Price Sensitive Information, a Lender may be prohibited or restricted under the applicable laws and regulations from, among other things, dealing in or counselling or procuring another person to deal in listed securities of any Obligor or any member of Group or their derivatives, or the listed securities of a related corporation (or any other relevant entity subject to the scope of applicable laws and regulations) of any Obligor or any member of Group or their derivatives, or otherwise from using or disclosing the Price Sensitive Information; |
(c) | none of the Agent, the Security Agent nor the Arranger will be liable for any action taken by it under or in connection with distributing the information, provided that, where it is required to act on the instructions of any Lender or Lenders, the Agent or the Security Agent may ask for a confirmation or certificate (in form and substance satisfactory to the Agent or the Security Agent) confirming that the instructing Lender or Lenders is or are not in possession of any Price Sensitive Information and that it is or they are not instructing the Agent or the Security Agent, as relevant, to act as a consequence of being in possession of any Price Sensitive Information; and |
(d) | any information received under or in connection with the Finance Documents shall not be used for any unlawful purpose, and each Lender shall make an independent evaluation of, and ensure its compliance with, any legal and regulatory restrictions on the use and/or disclosure of such information, including (without limitation) any applicable listing rules or other issued guidance or regulations relating to the trading of listed instruments. |
30 | Application of Proceeds |
30.1 | Order of application |
Subject to Clause 30.2 (Prospective liabilities), all amounts from time to time received or recovered by the Security Agent pursuant to the terms of any Finance Document or in connection with the realisation or enforcement of all or any part of the Transaction Security (for the purposes of this Clause 30, the Recoveries) shall be held by the Security Agent for application at any time as the Security Agent (in its discretion) sees fit, to the extent permitted by applicable law (and subject to the provisions of this Clause 30), in the following order:
(a) | in discharging any sums owing to the Security Agent, any Receiver or any Delegate; |
(b) | in payment of all costs and expenses incurred by the Agent or any Secured Party in connection with any realisation or enforcement of the Transaction Security taken in accordance with the terms of this Agreement; and |
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(c) | in payment to the Agent for application in accordance with Clause 33.5 (Partial payments). |
30.2 | Prospective liabilities |
Following the exercise by the Agent or the Security Agent of its rights under Clause 26.20 (Acceleration), the Security Agent may, in its discretion, hold any amount of the Recoveries in an interest bearing suspense or impersonal account(s) in the name of the Security Agent with such financial institution (including itself) and for so long as the Security Agent shall think fit (the interest being credited to the relevant account) for later application under Clause 30.1 (Order of application) in respect of:
(a) | any sum to the Security Agent, any Receiver or any Delegate; and |
(b) | any part of the Secured Liabilities, |
that the Security Agent reasonably considers, in each case, might become due or owing at any time in the future.
30.3 | Investment of proceeds |
Prior to the application of the proceeds of the Recoveries in accordance with Clause 30.1 (Order of application), the Security Agent may, in its discretion, hold all or part of those proceeds in an interest bearing suspense or impersonal account(s) in the name of the Security Agent with such financial institution (including itself) and for so long as the Security Agent shall think fit (the interest being credited to the relevant account) pending the application from time to time of those moneys in the Security Agents discretion in accordance with the provisions of this Clause 30.3.
30.4 | Currency conversion |
(a) | For the purpose of, or pending the discharge of, any of the Secured Liabilities, the Security Agent may convert any moneys received or recovered by the Security Agent from one currency to another, at a market rate of exchange. |
(b) | The obligations of any Obligor or any Security Provider to pay in the due currency shall only be satisfied to the extent of the amount of the due currency purchased after deducting the costs of conversion. |
30.5 | Permitted deductions |
The Security Agent shall be entitled, in its discretion:
(a) | to set aside by way of reserve amounts required to meet, and to make and pay, any deductions and withholdings (on account of taxes or otherwise) which it is or may be required by any applicable law to make from any distribution or payment made by it under this Agreement; and |
(b) | to pay all Taxes which may be assessed against it in respect of any of the Security Assets, or as a consequence of performing its duties, or by virtue of its capacity as Security Agent under any of the Finance Documents or otherwise (other than in connection with its remuneration for performing its duties under this Agreement). |
30.6 | Good discharge |
(a) | Any payment to be made in respect of the Secured Liabilities by the Security Agent may be made to the Agent on behalf of the Finance Parties and any payment made in that way shall be a good discharge, to the extent of that payment, by the Security Agent. |
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(b) | The Security Agent is under no obligation to make the payments to the Agent under paragraph (a) above in the same currency as that in which the obligations and liabilities owing to the relevant Finance Party are denominated. |
31 | Conduct of business by the Secured Parties |
No provision of this Agreement will:
(a) | interfere with the right of any Secured Party to arrange its affairs (tax or otherwise) in whatever manner it thinks fit; |
(b) | oblige any Secured Party to investigate or claim any credit, relief, remission or repayment available to it or the extent, order and manner of any claim; or |
(c) | oblige any Secured Party to disclose any information relating to its affairs (tax or otherwise) or any computations in respect of Tax. |
32 | Sharing among the Finance Parties |
32.1 | Payments to Finance Parties |
If a Finance Party (a Recovering Finance Party) receives or recovers, whether by set-off or otherwise, any amount from an Obligor other than in accordance with Clause 33 (Payment mechanics) (a Recovered Amount) and applies that amount to a payment due under the Finance Documents, then:
(a) | the Recovering Finance Party shall, within three Business Days, notify details of the receipt or recovery to the Agent; |
(b) | the Agent shall determine whether the receipt or recovery is in excess of the amount that the Recovering Finance Party would have been paid had the receipt or recovery been received or made by the Agent and distributed in accordance with Clause 33 (Payment mechanics), without taking account of any Tax which would be imposed on the Agent in relation to the receipt, recovery or distribution; and |
(c) | the Recovering Finance Party shall, within three Business Days of demand by the Agent, pay to the Agent an amount (the Sharing Payment) equal to such receipt or recovery less any amount which the Agent determines may be retained by the Recovering Finance Party as its share of any payment to be made, in accordance with Clause 33.5 (Partial payments). |
32.2 | Redistribution of payments |
The Agent shall treat the Sharing Payment as if it had been paid by the relevant Obligor or the relevant Security Provider and distribute it between the Finance Parties (other than the Recovering Finance Party) (the Sharing Finance Parties) in accordance with Clause 33.5 (Partial payments) towards the obligations of that Obligor or that Security Provider to the Sharing Finance Parties.
32.3 | Recovering Finance Partys rights |
On a distribution by the Agent under Clause 32.2 (Redistribution of payments) of a payment received by a Recovering Finance Party from an Obligor or a Security Provider, as between the relevant Obligor or the relevant Security Provider and the Recovering Finance Party, an amount of the Recovered Amount equal to the Sharing Payment will be treated as not having been paid by that Obligor or that Security Provider.
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32.4 | Reversal of redistribution |
If any part of the Sharing Payment received or recovered by a Recovering Finance Party becomes repayable and is repaid by that Recovering Finance Party, then:
(a) | each Sharing Finance Party shall, upon request of the Agent, pay to the Agent for the account of that Recovering Finance Party an amount equal to the appropriate part of its share of the Sharing Payment (together with an amount as is necessary to reimburse that Recovering Finance Party for its proportion of any interest on the Sharing Payment which that Recovering Finance Party is required to pay) (the Redistributed Amount); and |
(b) | as between the relevant Obligor or the relevant Security Provider and each relevant Sharing Finance Party, an amount equal to the relevant Redistributed Amount will be treated as not having been paid by that Obligor or that Security Provider. |
32.5 | Exceptions |
(a) | This Clause 32 shall not apply to the extent that the Recovering Finance Party would not, after making any payment pursuant to this Clause 32.5, have a valid and enforceable claim against the relevant Obligor or the relevant Security Provider. |
(b) | A Recovering Finance Party is not obliged to share with any other Finance Party any amount which the Recovering Finance Party has received or recovered as a result of taking legal or arbitration proceedings, if: |
(i) | it notified that other Finance Party of the legal or arbitration proceedings; and |
(ii) | that other Finance Party had an opportunity to participate in those legal or arbitration proceedings but did not do so as soon as reasonably practicable having received notice and did not take separate legal or arbitration proceedings. |
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SECTION 11
ADMINISTRATION
33 | Payment mechanics |
33.1 | Payments to the Agent |
(a) | On each date on which an Obligor or a Lender is required to make a payment under a Finance Document, that Obligor (subject to Clause 33.10 (Payments to the Security Agent)) or Lender shall make the same available to the Agent (unless a contrary indication appears in a Finance Document) for value on the due date at the time and in such funds specified by the Agent as being customary at the time for settlement of transactions in the relevant currency in the place of payment. |
(b) | Payment shall be made to such account in the principal financial centre of the country of that currency and with such bank as the Agent specifies. |
33.2 | Distributions by the Agent |
(a) | Each payment received by the Agent under the Finance Documents for another Party shall, subject to Clause 29.20 (Deduction from amounts payable by the Agent or the Security Agent), Clause 33.3 (Distributions to an Obligor), Clause 33.4 (Clawback and pre-funding) and Clause 33.10 (Payments to the Security Agent), be made available by the Agent, as soon as practicable after receipt to the Party entitled to receive payment in accordance with this Agreement (in the case of a Lender, for the account of its Facility Office), to such account as that Party may notify to the Agent by not less than five Business Days notice with a bank specified by that Party in the principal financial centre of the country of that currency. |
(b) | The Agent shall distribute payments received by it in relation to all or any part of the Loan to the Lender indicated in the records of the Agent as being so entitled on that date, provided that the Agent is authorised to distribute payments to be made on the date on which any transfer becomes effective pursuant to Clause 27 (Changes to the Lenders) to the Lender so entitled immediately before such transfer took place regardless of the period to which such sums relate. |
33.3 | Distributions to an Obligor |
The Agent and the Security Agent may (with the consent of the Obligor or in accordance with Clause 34 (Set-off)) apply any amount received by it for that Obligor in or towards payment (on the date and in the currency and funds of receipt) of any amount due from that Obligor under the Finance Documents or in or towards purchase of any amount of any currency to be so applied.
33.4 | Clawback and pre-funding |
(a) | Where a sum is to be paid to the Agent or the Security Agent under the Finance Documents for another Party, the Agent or, as the case may be, the Security Agent is not obliged to pay that sum to that other Party (or to enter into or perform any related exchange contract) until it has been able to establish to its satisfaction that it has actually received that sum. |
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(b) | Unless paragraph (c) below applies, if the Agent or the Security Agent pays an amount to another Party and it proves to be the case that it had not actually received that amount, then the Party to whom that amount (or the proceeds of any related exchange contract) was paid shall on demand refund the same to the Agent or, as the case may be, the Security Agent together with interest on that amount from the date of payment to the date of receipt by the Agent or, as the case may be, the Security Agent, calculated by it to reflect its cost of funds. |
(c) | If the Agent is willing to make available amounts for the account of the Borrower before receiving funds from the Lenders, then, if and to the extent that the Agent does so but it proves to be the case that it does not then receive funds from a Lender in respect of a sum which it paid to the Borrower: |
(i) | the Agent shall notify the Borrower of that Lenders identity and the Borrower shall on demand refund it to the Agent; and |
(ii) | the Lender by whom those funds should have been made available or, if that Lender fails to do so, the Borrower shall (to the extent that the Borrower has not already paid interest on that sum (reflecting the Agents funding cost) to the Agent) on demand pay to the Agent the amount (as certified by the Agent) which will indemnify the Agent against any funding cost incurred by it as a result of paying out that sum before receiving those funds from that Lender. |
33.5 | Partial payments |
(a) | If the Agent receives a payment that is insufficient to discharge all the amounts then due and payable by an Obligor under the Finance Documents, the Agent shall apply that payment towards the obligations of that Obligor under the Finance Documents in the following order: |
(i) | first, in or towards payment pro rata of any unpaid amount owing to the Agent, the Security Agent, any Receiver, any Delegate or the Arranger under the Finance Documents; |
(ii) | secondly, in or towards payment pro rata of any accrued interest, fee or commission due but unpaid under this Agreement; |
(iii) | thirdly, in or towards payment of amounts due pursuant to Clause 9 (Makewhole Amount); |
(iv) | fourthly, in or towards payment pro rata of any principal due but unpaid under this Agreement; and |
(v) | fifthly, in or towards payment pro rata of any other sum due but unpaid under the Finance Documents. |
(b) | The Agent shall, if so directed by the Majority Lenders, vary the order set out in paragraphs (a)(ii) to (a)(v) above. |
(c) | Paragraphs (a) and (b) above will override any appropriation made by an Obligor. |
33.6 | No set-off by Obligors |
All payments to be made by an Obligor under the Finance Documents shall be calculated and be made without (and free and clear of any deduction for) set-off or counterclaim.
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33.7 | Business Days |
(a) | Any payment under the Finance Documents which is due to be made on a day that is not a Business Day shall be made on the next Business Day in the same calendar month (if there is one) or the preceding Business Day (if there is not). |
(b) | During any extension of the due date for payment of any principal or Unpaid Sum under this Agreement, interest is payable on the principal or Unpaid Sum at the rate payable on the original due date. |
33.8 | Currency of account |
(a) | Subject to paragraphs (b) and (c) below, US Dollars is the currency of account and payment for any sum due from an Obligor under any Finance Document. |
(b) | A repayment of the Loan or an Unpaid Sum or a part of the Loan or an Unpaid Sum shall be made in the currency in which the Loan or that Unpaid Sum is denominated, pursuant to this Agreement, on its due date. |
(c) | Each payment of interest shall be made in the currency in which the sum in respect of which the interest is payable was denominated, pursuant to this Agreement, when that interest accrued. |
(d) | Each payment in respect of costs, expenses or Taxes shall be made in the currency in which the costs, expenses or Taxes are incurred. |
(e) | Any amount expressed to be payable in a currency other than US Dollars shall be paid in that other currency. |
33.9 Disruption to payment systems etc.
If either the Agent determines (in its discretion) that a Disruption Event has occurred or the Agent is notified by the Borrower that a Disruption Event has occurred:
(a) | the Agent may, and shall if requested to do so by the Borrower, consult with the Borrower with a view to agreeing with the Borrower such changes to the operation or administration of the Facility as the Agent may deem necessary in the circumstances; |
(b) | the Agent shall not be obliged to consult with the Borrower in relation to any changes mentioned in paragraph (a) above if, in its opinion, it is not practicable to do so in the circumstances and, in any event, shall have no obligation to agree to such changes; |
(c) | the Agent may consult with the Finance Parties in relation to any changes mentioned in paragraph (a) above but shall not be obliged to do so if, in its opinion, it is not practicable to do so in the circumstances; |
(d) | any such changes agreed upon by the Agent and the Borrower shall (whether or not it is finally determined that a Disruption Event has occurred) be binding upon the Parties as an amendment to (or, as the case may be, waiver of) the terms of the Finance Documents notwithstanding the provisions of Clause 39 (Amendments and waivers); |
(e) | the Agent shall not be liable for any damages, costs or losses to any person, any diminution in value or any liability whatsoever (including for negligence, gross negligence or any other category of liability whatsoever, but not including any claim based on the fraud of the Agent) arising as a result of its taking, or failing to take, any actions pursuant to or in connection with this Clause 33.9; and |
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(f) | the Agent shall notify the Finance Parties of all changes agreed pursuant to paragraph (d) above. |
33.10 | Payments to the Security Agent |
Notwithstanding any other provision of any Finance Document, at any time after any Security created by or pursuant to any Security Document becomes enforceable, the Security Agent may require:
(a) | any Obligor to pay all sums due under any Finance Document; or |
(b) | the Agent to pay all sums received or recovered from an Obligor under any Finance Document, |
in each case, as the Security Agent may direct for application in accordance with the terms of the Security Documents.
34 Set-off
While an Event of Default is continuing, a Finance Party may (but is not obliged to), without prior notice to an Obligor set off any matured obligation due from an Obligor under the Finance Documents (to the extent beneficially owned by that Finance Party) against any matured obligation owed by that Finance Party to that Obligor, regardless of the place of payment, booking branch or currency of either obligation. If the obligations are in different currencies, the Finance Party may convert either obligation at a market rate of exchange in its usual course of business for the purpose of the set-off. The relevant Finance Party shall, promptly after effecting such right of set-off, give notice of such set-off to the relevant Obligor, provided that any failure to do so shall not invalidate or otherwise prejudice that Finance Partys exercise of such right.
35 | Notices |
35.1 | Communications in writing |
Any communication to be made under or in connection with the Finance Documents shall be made in writing and, unless otherwise stated, may be made by fax or letter.
35.2 Addresses
The address and fax number (and the department or officer, if any, for whose attention the communication is to be made) of each Party for any communication or document to be made or delivered under or in connection with the Finance Documents is:
(a) | in the case of the Borrower and each other Obligor, that identified with its name below; |
(b) | in the case of each Lender or any other Obligor, that notified in writing to the Agent on or prior to the date on which it becomes a Party; and |
(c) | in the case of the Agent and the Security Agent, that identified with its name below, |
or any substitute address, fax number or department or officer as the Party may notify to the Agent (or the Agent may notify to the other Parties, if a change is made by the Agent) by not less than five Business Days notice.
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35.3 | Delivery |
(a) | Any communication or document made or delivered by one person to another under or in connection with the Finance Documents will only be effective: |
(i) | if by way of fax, when received in legible form; or |
(ii) | if by way of letter, when it has been left at the relevant address or five Business Days after being deposited in the post postage prepaid in an envelope addressed to it at that address, |
and, if a particular department or officer is specified as part of its address details provided under Clause 35.2 (Addresses), if addressed to that department or officer.
(b) | Any communication or document to be made or delivered to the Agent or the Security Agent will be effective only when actually received by it and then only if it is expressly marked for the attention of the department or officer identified with its signature below (or any substitute department or officer as it shall specify for this purpose). |
(c) | All notices from or to an Obligor shall be sent through the Agent. |
(d) | Any communication or document made or delivered to the Borrower in accordance with this Clause will be deemed to have been made or delivered to each of the Obligors. |
(e) | Any communication or document which becomes effective, in accordance with paragraphs (a) to (d) above, after 5:00 p.m. (Singapore time) in the place of receipt or on a day which is not a working day in that place, shall be deemed only to become effective on the following working day in that place. For this purpose, working days are days other than Saturdays, Sundays and bank holidays. |
35.4 | Notification of address and fax number |
Promptly upon changing its address or fax number, the Agent shall notify the other Parties.
35.5 | Electronic communication |
(a) | Any communication or document to be made or delivered by one Party to another under or in connection with the Finance Documents may be made or delivered by email or other electronic means (including by way of posting to a secure website) if those two Parties: |
(i) | notify each other in writing of their email address and/or any other information required to enable the transmission of information by that means; and |
(ii) | notify each other of any change to their address or any other such information supplied by them by not less than five Business Days notice. |
(b) | Any such electronic communication or delivery as specified in paragraph (a) above to be made between an Obligor and a Finance Party may only be made in that way to the extent that those two Parties agree that, unless and until notified to the contrary, this is to be an accepted form of communication or delivery. |
(c) | Any such electronic communication or document as specified in paragraph (a) above made or delivered by one Party to another will be effective only when actually received (or made available) in readable form and, in the case of any electronic communication or document made or delivered by a Party to the Agent, only if it is addressed in such a manner as the Agent shall specify for this purpose. |
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(d) | Any electronic communication or document which becomes effective, in accordance with paragraph (c) above, after 5:00 p.m. (Singapore time) or on a day which is not a working day in the place in which the Party to whom the relevant communication or document is sent or made available has its address for the purpose of this Agreement shall be deemed only to become effective on the following working day in that place. For this purpose, working days are days other than Saturdays, Sundays and bank holidays. |
(e) | Any reference in a Finance Document to a communication being sent or received or a document being delivered shall be construed to include that communication or document being made available in accordance with this Clause 35.5. |
35.6 | English language |
(a) | Any notice given under or in connection with any Finance Document must be in English. |
(b) | All other documents provided under or in connection with any Finance Document must be: |
(i) | in English; or |
(ii) | if not in English, and if so required by the Agent, accompanied by a certified English translation and, in this case, the English translation will prevail unless the document is a constitutional, statutory or other official document. |
36 | Calculations and certificates |
36.1 | Accounts |
In any litigation or arbitration proceedings arising out of or in connection with a Finance Document, the entries made in the accounts maintained by a Finance Party are prima facie evidence of the matters to which they relate.
36.2 | Certificates and determinations |
Any certification or determination by a Finance Party of a rate or amount under any Finance Document is, in the absence of manifest error, conclusive evidence of the matters to which it relates.
36.3 | Day count convention |
Any interest, commission or fee accruing under a Finance Document will accrue from day to day and is calculated on the basis of the actual number of days elapsed and:
(a) | in relation to Singapore Dollars, a year of 365 days; and |
(b) | in relation to US Dollars, a year of 360 days, |
or, in any case where the practice in the Relevant Interbank Market differs, in accordance with that market practice.
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37 | Partial invalidity |
If, at any time, any provision of a Finance Document is or becomes illegal, invalid or unenforceable in any respect under any law of any jurisdiction, neither the legality, validity or enforceability of the remaining provisions nor the legality, validity or enforceability of such provision under the law of any other jurisdiction will in any way be affected or impaired.
38 | Remedies and waivers |
No failure to exercise, nor any delay in exercising, on the part of any Finance Party or Secured Party, any right or remedy under a Finance Document shall operate as a waiver of any such right or remedy or constitute an election to affirm any Finance Document. No waiver or election to affirm any Finance Document on the part of any Finance Party or Secured Party shall be effective unless it is in writing. No single or partial exercise of any right or remedy shall prevent any further or other exercise or the exercise of any other right or remedy. The rights and remedies provided in each Finance Document are cumulative and not exclusive of any rights or remedies provided by law.
39 | Amendments and waivers |
39.1 | Required consents |
(a) | Subject to Clause 39.2 (All Lender matters) and Clause 39.3 (Other exceptions), any term of the Finance Documents may be amended or waived only with the consent of the Majority Lenders and the Obligors Agent (in accordance with Clause 2.3 (Obligors Agent) and paragraph (c) below) and any such amendment or waiver will be binding on all Parties. |
(b) | The Agent may effect, on behalf of any Finance Party, any amendment or waiver permitted by this Clause 39. |
(c) | Paragraph (c) of Clause 27.12 (Pro rata interest settlement) shall apply to this Clause 39. |
(d) | Without prejudice to the other provisions of this Agreement, each Obligor agrees to any such amendment or waiver permitted by this Clause 39 which is agreed to by the Obligors Agent. This includes any amendment or waiver which would, but for this paragraph (d), require the consent of all of the Obligors. |
39.2 | All Lender matters |
Subject to Clause 39.4 (Replacement of Screen Rate), an amendment or waiver of any term of any Finance Document that has the effect of changing or which relates to:
(a) | the definition of Majority Lenders in Clause 1.1 (Definitions); |
(b) | an extension to the date of payment of any amount under the Finance Documents; |
(c) | a reduction in the Margin, a reduction to the Makewhole Amount or a reduction in the amount of any payment of principal, interest, fees or commission payable; |
(d) | a change in currency of payment of any amount under the Finance Documents; |
(e) | an increase in any Commitment or the Total Commitments, an extension of the Availability Period or any requirement that a cancellation of Commitments reduces the Commitments of the Lenders rateably under the Facility; |
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(f) | a change to the Borrower, the Guarantors or a Security Provider; |
(g) | any provision which expressly requires the consent of all the Lenders; |
(h) | Clause 2.2 (Finance Parties rights and obligations), Clause 5.1 (Delivery of a Utilisation Request), Clause 7.1 (Illegality), Clause 8.1 (Change of Control), Clause 8.5 (Application of mandatory prepayments and cancellations), Clause 9 (Makewhole Amount), Clause 27 (Changes to the Lenders), Clause 28 (Changes to the Obligors), Clause 30 (Application of Proceeds), Clause 32 (Sharing among the Finance Parties), this Clause 39, the governing law of any Finance Document or Clause 44.1 (Jurisdiction of Singapore courts); |
(i) | the release of any guarantee and indemnity granted under Clause 20 (Guarantee and indemnity) or of any Transaction Security unless permitted under this Agreement or any other Finance Document or relating to a sale or disposal of an asset which is the subject of the Transaction Security where such sale or disposal is expressly permitted under this Agreement or any other Finance Document; |
(j) | (other than as expressly permitted by the provisions of any Finance Document) the nature or scope of: |
(i) | the guarantee and indemnity granted under Clause 20 (Guarantee and indemnity); |
(ii) | the Security Assets; or |
(iii) | the manner in which the proceeds of enforcement of the Transaction Security are distributed, |
(except, in the case of paragraphs (ii) and (iii) above, insofar as it relates to a sale or disposal of an asset which is the subject of the Transaction Security where such sale or disposal is expressly permitted under this Agreement or any other Finance Document);
(k) | the order of priority or subordination under the Subordination Deed; or |
(l) | the definition of Sanctions, Sanctions Authority or Sanctions List in Clause 1.1 (Definitions), or Clause 21.18 (Sanctions) or Clause 24.18 (Sanctions), |
shall not be made without the prior consent of all the Lenders.
39.3 | Other exceptions |
An amendment or waiver which relates to the rights or obligations of the Agent, the Security Agent or the Arranger (each in their capacity as such) may not be effected without the consent of the Agent, the Security Agent or the Arranger, as the case may be.
39.4 | Replacement of Screen Rate |
(a) | If, as at 30 June 2021, this Agreement provides that the rate of interest for the Loan is to be determined by reference to the Screen Rate, the Agent (acting on the instructions of the Majority Lenders) and the Borrower shall enter into negotiations in good faith with a view to agreeing the use of a Replacement Benchmark in place of the Screen Rate from and including a date no later than 31 September 2021. |
(b) | Subject to Clause 39.3 (Other exceptions), any amendment or waiver pursuant to paragraph (a) above which relates to: |
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(i) | providing for the use of a Replacement Benchmark in place of the Screen Rate; and |
(ii) |
(A) | aligning any provision of any Finance Document to the use of that Replacement Benchmark; |
(B) | enabling that Replacement Benchmark to be used for the calculation of interest under this Agreement (including any consequential changes required to enable that Replacement Benchmark to be used for the purposes of this Agreement); |
(C) | implementing market conventions applicable to that Replacement Benchmark; |
(D) | providing for appropriate fallback (and market disruption) provisions for that Replacement Benchmark; or |
(E) | adjusting the pricing to reduce or eliminate, to the extent reasonably practicable, any transfer of economic value from one Party to another as a result of the application of that Replacement Benchmark (and if any adjustment or method for calculating any adjustment has been formally designated, nominated or recommended by the Relevant Nominating Body, the adjustment shall be determined on the basis of that designation, nomination or recommendation), |
may be made with the consent of the Agent (acting on the instructions of the Majority Lenders) and the Borrower.
(c) | In this Clause 39.4: |
Relevant Nominating Body means any applicable central bank, regulator or other supervisory authority or a group of them, or any working group or committee sponsored or chaired by, or constituted at the request of, any of them or the Financial Stability Board.
Replacement Benchmark means a benchmark rate which is:
(i) | formally designated, nominated or recommended as the replacement for the Screen Rate by: |
(A) | the administrator of the Screen Rate (provided that the market or economic reality that such benchmark rate measures is the same as that measured by the Screen Rate); or |
(B) | any Relevant Nominating Body, |
and, if replacements have, at the relevant time, been formally designated, nominated or recommended under both paragraphs, the Replacement Benchmark will be the replacement under paragraph (B) above;
(ii) | in the opinion of the Majority Lenders and the Borrower, generally accepted in the international or any relevant domestic syndicated loan markets as the appropriate successor to the Screen Rate; or |
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(iii) | in the opinion of the Majority Lenders and the Borrower, an appropriate successor to the Screen Rate. |
39.5 | Excluded Commitments |
If any Lender fails to respond to a request for a consent, waiver, amendment of or in relation to any term of any Finance Document or any other vote of Lenders under the terms of this Agreement within 15 Business Days of that request being made (unless the Borrower and the Agent agree to a longer time period in relation to any request):
(a) | its Commitment shall not be included for the purpose of calculating the Total Commitments under the Facility when ascertaining whether any relevant percentage (including, for the avoidance of doubt, unanimity) of Total Commitments has been obtained to approve that request; and |
(b) | its status as a Lender shall be disregarded for the purpose of ascertaining whether the agreement of any specified group of Lenders has been obtained to approve that request. |
39.6 | Buy-Out |
(a) | Subject to the provisions of paragraphs (b) and (c) below, in the event that any consent to, waiver of or amendment to any provision of the Finance Documents requires the consent of all Lenders but only the consent of the Majority Lenders is obtained within 21 days of the request for such consent, waiver or amendment being given to the Lenders, one or more of the Majority Lenders supporting such consent, waiver or amendment (such one or more Lenders, the Supporting Lenders) may by giving at least 10 days notice require the Lenders who have not consented to such consent, waiver or amendment (the Dissenting Lenders) to transfer their rights and obligations in the Loan (together with a proportionate share of their rights and obligations under the Finance Documents) to one or more of the Supporting Lenders on the date notified to such Dissenting Lenders by the Supporting Lenders (being at least five Business Days after the date of such notice) (the Buy-Out Date), provided that, on or before the Buy-Out Date, such Dissenting Lenders are paid by the Supporting Lenders (pro rata based on the principal amount owed to each Supporting Lender or otherwise as agreed by the Supporting Lenders): |
(i) | the par value for the amount of the Loan to be transferred on the Buy-Out Date; and |
(ii) | all accrued and unpaid interest, Break Costs (if any, as if the relevant amount of the Loan was prepaid on the Buy-Out Date) and other amounts owing on the amount of the Loan to be transferred up to but excluding the Buy-Out Date. |
Upon payment by the Supporting Lenders of the amounts referred to in paragraphs (i) and (ii) above, the Dissenting Lenders rights and obligations in the Loan (together with a proportionate share of their interest, rights and obligations under the Finance Documents) shall be transferred by way of novation or by way of assignment, release and assumption to the Supporting Lenders (pro rata based on the principal amount owed to each Supporting Lender or otherwise as agreed by the Supporting Lenders) on the Buy-Out Date in accordance with Clause 27.5 (Procedure for transfer) or Clause 27.6 (Procedure for assignment) (as the case may be).
(b) | Each Lender may notify each Participant of any matter requiring all Lender approval and the provisions of this Clause 39.6 (Buy-Out). |
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(c) | If, when voting on a matter requiring all Lenders approval, a Lender splits its vote to reflect the instructions of its Participant, then any percentage of that Lenders vote cast against the requested consent, waiver or amendment, as the case may be, on the instructions of its Participant (the Dissenting Portion) shall be treated as a Dissenting Lender and the Supporting Lenders may require that Lender to terminate, unwind, liquidate or otherwise cancel its arrangements with its Participant (provided that the Supporting Lenders shall pay to such Lender all costs incurred in connection with such termination, unwinding, liquidation or cancellation) and transfer the interest, rights and obligation corresponding to the Dissenting Portion to the Supporting Lenders in accordance with paragraph (a) above. |
(d) | In order to effect the transfer referred to in paragraph (a) above, the Supporting Lenders shall complete a Transfer Certificate or Assignment Agreement (or, if required, Transfer Certificates or Assignment Agreements) and send a copy of such Transfer Certificate(s) or Assignment Agreement(s) (duly signed by the Supporting Lenders) to each relevant Dissenting Lender (each of whom shall promptly execute and deliver the Transfer Certificate(s) or Assignment Agreement(s) to the Facility Agent). |
39.7 | Vote |
Each Lender may have more than one vote in relation to its share in the Loan or Commitments for the purposes of counting towards any decision by that Lender under the Finance Documents and may split its vote in whatever percentages it may choose and may vote each percentage of its votes in different ways.
40 | Confidential Information |
40.1 | Disclosure of information |
(a) | Each Finance Party must keep confidential any Confidential Information. However, a Finance Party and any of its officers (as defined in the Banking Act) is entitled to disclose Confidential Information or any other information: |
(i) | which is publicly available, other than as a result of a breach by that Finance Party of this Clause 40; |
(ii) | in connection with any legal, arbitration, administrative or regulatory proceedings or procedure or any litigation, investigations or disputes; |
(iii) | if required to do so under any law or regulation (including, but not limited to, any regulation issued under the Banking Act and applicable to banks in Singapore in relation to the prevention of money laundering and/or countering the financing of terrorism) or the rules of any relevant stock exchange; |
(iv) | to a governmental, banking, taxation or other regulatory authority or similar body; |
(v) | to its employees, officers, directors, Representatives, partners, professional advisers and any other person providing services to it (including, without limitation, any provider of administrative, agency, custody or settlement services, external auditors, stock exchanges, clearing houses and other financial market utilities), and any trustee directly or indirectly connected to a Participation, provided that such person is under a duty of confidentiality, contractual or otherwise, to that Finance Party; |
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(vi) | to an adviser, agent or representative of any Obligor, any Security Provider or any Junior Finance Party or any of their affiliates; |
(vii) | to the head office, branches, representative offices, Subsidiaries, related corporations, Related Funds or Affiliate of any Finance Party (each a Finance Party Related Party) and each Finance Party Related Party shall be permitted to disclose information as if it were a Finance Party; |
(viii) | to any person permitted by any Obligor, any Security Provider or any Junior Finance Party; |
(ix) | to any Obligor, any Security Provider or any Junior Finance Party or any Party; |
(x) | to whom or for whose benefit that Finance Party charges, assigns or otherwise creates Security (or may do so) pursuant to Clause 27.11 (Security over Lenders rights); |
(xi) | to any person to whom information is required to be disclosed in connection with, and for the purposes of, facilitating the realisation of the Security Assets; |
(xii) | to the International Swaps and Derivatives Association, Inc. (ISDA) or any Credit Derivatives Determination Committee or sub-committee of ISDA where such disclosure is required by them in order to make any determination with respect to the obligations under the Finance Documents as they relate to a credit derivative transaction or other credit-linked transaction which incorporates the 2009 ISDA Credit Derivatives Determinations Committees and Auction Settlement Supplement or other provisions substantially equivalent thereto; |
(xiii) | to any person for the purpose of obtaining a valuation in connection with a Participation Agreement; |
(xiv) | to any person appointed by that Finance Party or by a person to whom paragraph (b) below applies to provide administration or settlement services in respect of one or more of the Finance Documents, including, without limitation, in relation to the trading of participations in respect of the Finance Documents as may be required to be disclosed to enable such service provider to provide any of the services referred to in this paragraph (a)(xiv) if the service provider to whom the information is to be given is bound to maintain the confidentiality of the relevant information; and |
(xv) | to any other person or a class of persons specified in the second column of the Third Schedule to the Banking Act. |
(b) | A Finance Party may disclose to: |
(i) | an Affiliate; |
(ii) | a transferee or assignee; |
(iii) | a Participant; |
(iv) | any potential transferee or assignee; |
(v) | any potential Participant; |
(vi) | any person who invests in or otherwise finances (or may potentially invest in or otherwise finance), directly or indirectly, any person referred to in paragraphs (i) to (v) above and any of that persons Related Funds, Affiliates, Representatives and professional advisers (an investor); or |
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(vii) | any person appointed by any Finance Party or by any person to whom paragraph (i) to (vi) above applies to receive communications, notices, information or documents delivered pursuant to the Finance Documents on its behalf (including, without limitation, any person appointed under paragraph (b) of Clause 29.17 (Relationship with the other Finance Parties)) (an Appointed Representative): |
(A) | a copy of any Finance Document; and |
(B) | any information which that Finance Party has acquired under or in connection with any Finance Document. |
However, before a potential transferee, assignee, investor or Participant may receive any Confidential Information, it must either agree with the relevant Finance Party to keep that information confidential on the terms of paragraph (a) above or execute in favour of the relevant Finance Party a confidentiality agreement in a form customarily required by that Finance Party, but on the basis that that potential transferee, assignee, investor or Participant may itself disclose the documents and information referred to in sub-paragraphs (e)(i) and (e)(ii) to an Affiliate or any person (the Further Potential Recipient) with whom it may enter, or has entered into, any kind of transfer of an economic or other interest in, or related to, this Agreement so long as the Further Potential Recipient agrees with that potential transferee, assignee, investor or Participant to keep that information confidential on the terms of paragraph (a) above or executes in favour of that potential transferee, assignee, investor or Participant a confidentiality agreement in a form customarily required by that potential transferee, assignee, investor or Participant.
(c) | This Clause 40 supersedes any previous confidentiality undertaking given by a Finance Party in connection with this Agreement prior to it becoming a Party. |
(d) | This Clause 40 is not, and shall not be deemed to constitute, an express or implied agreement by any Finance Party with the Borrower for a higher degree of confidentiality than that prescribed in Section 47 of the Banking Act and in the Third Schedule to the Banking Act. |
40.2 | Personal Data Protection Act |
(a) | If any Obligor provides the Finance Parties with personal data of any individual as required by, pursuant to or in connection with the Finance Documents, that Obligor represents and warrants to the Finance Parties that it has, to the extent required by law; (i) notified the relevant individual of the purposes for which data will be collected, processed, used or disclosed; and (ii) obtained such individuals consent for, and hereby consents on behalf of such individual to, the collection, processing, use and disclosure of his/her personal data by the Finance Parties, in each case, in accordance with, or for the purposes of, the Finance Documents, and confirms that it is authorised by such individual to provide such consent on his/her behalf. |
(b) | Each Obligor agrees and undertakes to notify the Agent promptly upon its becoming aware of the withdrawal by the relevant individual of his/her consent to the collection, processing, use and/or disclosure by any Finance Party of any personal data provided by that Obligor to any Finance Party. |
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(c) | Any consent given pursuant to this agreement in relation to personal data shall, subject to all applicable laws and regulations, survive death, incapacity, bankruptcy or insolvency of any such individual and the termination or expiration of this Agreement. |
40.3 | Entire agreement |
This Clause 40 constitutes the entire agreement between the Parties in relation to the obligations of the Finance Parties under the Finance Documents regarding Confidential Information and supersedes any previous agreement, whether express or implied, regarding Confidential Information.
40.4 | Inside information |
Each of the Finance Parties acknowledges that some or all of the Confidential Information is or may be price-sensitive information and that the use of such information may be regulated or prohibited by applicable legislation, including securities law relating to insider dealing and market abuse and each of the Finance Parties undertakes not to use any Confidential Information for any unlawful purpose.
40.5 | Notification of disclosure |
Each of the Finance Parties agrees (to the extent permitted by law) to inform the Borrower:
(a) | of the circumstances of any disclosure of Confidential Information made pursuant to paragraphs (a)(ii) to (iv) of Clause 40.1 (Disclosure of information), except where such disclosure is made to any of the persons referred to in that paragraph during the ordinary course of its supervisory or regulatory function; and |
(b) | upon becoming aware that Confidential Information has been disclosed in breach of this Clause 40.5. |
40.6 | Continuing obligations |
The obligations in this Clause 40 are continuing and, in particular, shall survive and remain binding on each Finance Party for a period of 12 months from the earlier of:
(a) | the date on which all amounts payable by the Obligors under or in connection with this Agreement have been paid in full and all Commitments have been cancelled or otherwise cease to be available; and |
(b) | the date on which such Finance Party otherwise ceases to be a Finance Party. |
41 | Confidentiality of Funding Rates |
41.1 | Confidentiality and disclosure |
(a) | The Agent and each Obligor agree to keep each Funding Rate confidential and not to disclose it to anyone, save to the extent permitted by paragraphs (b) and (c) below. |
(b) | The Agent may disclose: |
(i) | any Funding Rate to the Borrower pursuant to Clause 11.4 (Notification of rates of interest); and |
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(ii) | any Funding Rate to any person appointed by it to provide administration services in respect of one or more of the Finance Documents to the extent necessary to enable such service provider to provide those services if the service provider to whom that information is to be given has entered into a confidentiality agreement substantially in the form of the APLMA Master Confidentiality Undertaking for Use With Administration/Settlement Service Providers or such other form of confidentiality undertaking agreed between the Agent and the relevant Lender. |
(c) | The Agent may disclose any Funding Rate, and each Obligor may disclose any Funding Rate, to: |
(i) | any of its Affiliates and any of its or their officers, directors, employees, professional advisers, auditors, partners and Representatives if any person to whom that Funding Rate is to be given pursuant to this paragraph (i) is informed in writing of its confidential nature and that it may be price-sensitive information except that there shall be no such requirement to so inform if the recipient is subject to professional obligations to maintain the confidentiality of that Funding Rate or is otherwise bound by requirements of confidentiality in relation to it; |
(ii) | any person to whom information is required or requested to be disclosed by any court of competent jurisdiction or any governmental, banking, taxation or other regulatory authority or similar body, the rules of any relevant stock exchange (including, for the avoidance of doubt, for the purposes of the IPO) or pursuant to any applicable law if the person to whom that Funding Rate is to be given is informed in writing of its confidential nature and that it may be price-sensitive information except that there shall be no requirement to so inform if, in the opinion of the Agent or the relevant Obligor, as the case may be, it is not practicable to do so in the circumstances; |
(iii) | any person to whom information is required to be disclosed in connection with, and for the purposes of, any litigation, arbitration, administrative or other investigations, proceedings or disputes if the person to whom that Funding Rate is to be given is informed in writing of its confidential nature and that it may be price-sensitive information except that there shall be no requirement to so inform if, in the opinion of the Agent or the relevant Obligor, as the case may be, it is not practicable to do so in the circumstances; and |
(iv) | any person with the consent of the relevant Lender. |
41.2 | Related obligations |
(a) | The Agent and each Obligor acknowledge that each Funding Rate is or may be price-sensitive information and that its use may be regulated or prohibited by applicable legislation, including securities law relating to insider dealing and market abuse and the Agent and each Obligor undertake not to use any Funding Rate for any unlawful purpose. |
(b) | The Agent and each Obligor agree (to the extent permitted by law) to inform the relevant Lender: |
(i) | of the circumstances of any disclosure made pursuant to paragraph (c)(ii) of Clause 41.1 (Confidentiality and disclosure) except where such disclosure is made to any of the persons referred to in that paragraph during the ordinary course of its supervisory or regulatory function; and |
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(ii) | upon becoming aware that any information has been disclosed in breach of this Clause 41. |
42 | Counterparts |
Each Finance Document may be executed in any number of counterparts, and this has the same effect as if the signatures on the counterparts were on a single copy of the Finance Document.
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SECTION 12
GOVERNING LAW AND ENFORCEMENT
43. | Governing law |
This Agreement and any non-contractual obligations arising out of or in connection with it are governed by Singapore law.
44. | Enforcement |
44.1 | Jurisdiction of Singapore courts |
(a) | The courts of Singapore have exclusive jurisdiction to settle any dispute arising out of or in connection with this Agreement (including a dispute relating to the existence, validity or termination of this Agreement or any non-contractual obligation arising out of or in connection with this Deed) (a Dispute). |
(b) | The Parties agree that the courts of Singapore are the most appropriate and convenient courts to settle Disputes and accordingly no Party will argue to the contrary. |
(c) | Notwithstanding paragraph (a) and (b) above, no Finance Party shall be prevented from taking proceedings relating to a Dispute in any other courts with jurisdiction. To the extent allowed by law, the Finance Parties may take concurrent proceedings in any number of jurisdictions. |
44.2 | Service of process |
(a) | Without prejudice to any other mode of service allowed under any relevant law, each Obligor (other than an Obligor incorporated in Singapore): |
(i) | irrevocably appoints TDCXH as its agent for service of process (which includes service of all and any documents relating to such proceedings) arising out of or in connection with any proceedings before the courts of Singapore arising out of or in connection with any Finance Document (and TDCXH, by its execution of this Agreement, accepts that appointment); |
(ii) | agrees to maintain the appointment for service of process in Singapore for so long as any amount is outstanding under any Finance Document; and |
(iii) | agrees that failure by an agent for service of process to notify the relevant Obligor of the process will not invalidate the proceedings concerned. |
(b) | If any person appointed as an agent for service of process is unable under this Clause 44.2 to so act, the Borrower (on behalf of each relevant Obligors) shall immediately notify the Agent and, within five Business Days of such event taking place, appoint a replacement agent on terms acceptable to the Agent and notify the Agent of the name and address of the replacement agent. Failing such appointment and notification, the Agent may appoint a replacement agent to act on behalf of each relevant Obligor. |
(c) | This Clause 44.2 does not affect any other method of service allowed by law. |
THIS AGREEMENT has been entered into on the date stated at the beginning of this Agreement.
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SCHEDULE 1
The Original Lender
Name of Original Lender |
Commitment | |||
Credit Suisse AG, Singapore Branch (incorporated in Switzerland with limited liability) |
US$ | 188,000,000 | ||
|
|
|||
Total |
US$ | 188,000,000 | ||
|
|
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SCHEDULE 2
Conditions precedent
1 | Borrower, Guarantors and TDCXSG |
(a) | A copy of the constitutional documents of the Borrower, each Guarantor and TDCXSG, including, in respect of the Borrower and each Guarantor incorporated in the Cayman Islands, its register of members, register of directors and register of mortgages and charges. |
(b) | A copy of a resolution of the board of directors of the Borrower, each Guarantor and TDCXSG: |
(i) | approving the terms of, and the transactions contemplated by, the Finance Documents to which it is a party and resolving that it executes the Finance Documents to which it is a party; |
(ii) | authorising a specified person or persons to execute the Finance Documents to which it is a party on its behalf; |
(iii) | authorising a specified person or persons, on its behalf, to sign and/or despatch all documents and notices (including, if relevant, any Utilisation Request) to be signed and/or despatched by it under or in connection with the Finance Documents to which it is a party; and |
(iv) | (in the case of each Guarantor and TDCXSG) resolving that it is in the best interests of the Guarantor or, as applicable, TDCXSG to enter into the transactions contemplated by the Finance Documents to which it is a party. |
(c) | A specimen of the signature of each person authorised by the resolution referred to in paragraph (b) above. |
(d) | A copy of a resolution signed by all the holders of the issued shares in each Guarantor approving the terms of, and the transactions contemplated by, the Finance Documents to which it is a party. |
(e) | A certificate of the Borrower and each Guarantor (signed by a director) confirming that borrowing, guaranteeing or securing, as appropriate, the Total Commitments would not cause any borrowing, guaranteeing, security or similar limit binding on it to be exceeded. |
(f) | A certificate of an authorised signatory of the Borrower, each Guarantor and TDCXSG certifying that each copy document relating to it specified in this Schedule 2 is correct, complete and in full force and effect as at a date no earlier than the date of this Agreement. |
(g) | A certificate of good standing issued by the Registrar of Companies in the Cayman Islands in respect of the Borrower and each Guarantor incorporated in the Cayman Islands. |
(h) | A certificate of incumbency issued by the registered office provider of the Borrower and each Guarantor incorporated in the Cayman Islands. |
2 | The Acquisition |
(a) | A copy of each Acquisition Document duly executed by the parties to it. |
(b) | A certificate of the Borrower (signed by a director): |
(i) | confirming that all conditions to completion of the Acquisition under the Acquisition Agreement (other than payment of the purchase price) have been delivered or satisfied or (subject to Clause 24.26 (Compliance with the Acquisition Documents)) waived in accordance with the terms of the Acquisition Agreement; and |
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(ii) | confirming that all governmental, regulatory and/or competition authority authorisations and approvals required for completion of the Acquisition have been obtained, or any statutory period for objection by the relevant regulator or authority has irrevocably and permanently expired, and attaching copies of each such authorisation or approval. |
(c) | A copy of the Funds Flow Statement detailing the proposed movement of funds in connection with the Acquisition. |
(d) | Evidence that the total sources of funds (including the Facility) available to the Borrower on the Acquisition Closing Date are or will be sufficient to pay the full consideration payable in respect of the Acquisition in accordance with the Funds Flow Statement. |
(e) | Evidence that the Acquisition Closing Date will occur on the first Utilisation Date. |
(f) | A copy of the irrevocable instruction from the Borrower to Credit Suisse AG, Private Banking relating to the transfer of funds on the Acquisition Closing Date. |
3 | Finance Documents |
(a) | This Agreement duly executed by all original parties to it. |
(b) | The Subordination Deed duly executed by all parties to it. |
(c) | The Upfront Fee Letter duly executed by all parties to it. |
(d) | Each of the following Security Documents duly executed by all parties to it: |
(i) | the Borrower Share Mortgage (Sponsor); and |
(ii) | the Borrower Accounts Security Agreement. |
(e) | Each of the following Security Documents in agreed form between all parties to it: |
(i) | the TDCX Share Mortgage; and |
(ii) | the TDCXH Share Mortgage. |
(f) | A copy of all notices required to be sent under each Security Document executed by the Borrower or the relevant Security Provider. |
(g) | All share certificates, transfers and stock transfer forms or equivalent duly executed by the relevant Security Provider in blank in relation to the assets subject to or expressed to be subject to the Transaction Security and other documents of title and ancillary deliverables to be provided under each Security Document executed by the relevant Security Provider. |
4 | Legal opinions |
(a) | A legal opinion of Linklaters Singapore Pte. Ltd., legal advisers to the Arranger and the Agent in respect of Singapore law, substantially in the form distributed to the Original Lender prior to signing this Agreement. |
(b) | A legal opinion of Walkers (Singapore) Limited Liability Partnership, legal advisers to the Arranger and the Agent in respect of Cayman Islands law, substantially in the form distributed to the Original Lender prior to signing this Agreement. |
5 | IRA |
(a) | Evidence that the IRA has been opened with the Account Bank. |
(b) | Evidence that the IRA Balance is or will by the Utilisation Date be at least equal to the IRA Amount. |
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6 | Other documents and evidence |
(a) | Evidence that any process agent, required to be appointed by any Finance Document, has accepted its appointment. |
(b) | A copy of any other Authorisation or other document, opinion or assurance which the Agent considers to be necessary or desirable (if it has notified the Borrower accordingly not less than three Business Days prior to the first Utilisation Date) in connection with the entry into and performance of the transactions contemplated by any Finance Document or for the validity and enforceability of any Finance Document. |
(c) | A certified copy of the Original Financial Statements. |
(d) | A certified copy of the Budget. |
(e) | A certified copy of the Group Structure Chart. |
(f) | A copy of the agreed form of each legal opinion referred to in paragraph 4 of Schedule 3 (Conditions subsequent). |
(g) | Evidence satisfactory to the Agent that each Finance Party has carried out and is satisfied with the results of all know your customer and other similar procedures that it is required (or deems desirable) to conduct pursuant to the transactions contemplated in the Finance Documents. |
(h) | Evidence that the fees, costs and expenses then due from the Borrower pursuant to Clause 14 (Fees) and Clause 19 (Costs and expenses) have been paid or will be paid by the first Utilisation Date. |
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SCHEDULE 3
Conditions subsequent
1 | Obligors |
(a) | A certificate of an authorised signatory of the Borrower and TDCX certifying that: |
(i) | (other than the constitutional documents listed in paragraph (b) below) its constitutional documents previously delivered to the Agent pursuant to Clause 4.1 (Initial conditions precedent) have not been amended and remain in full force and effect; |
(ii) | the resolutions of its board of directors previously delivered to the Agent pursuant to Clause 4.1 (Initial conditions precedent) have not been amended and remain in full force and effect; |
(iii) | the resolution signed by all the holders of its issued shares previously delivered to the Agent pursuant to Clause 4.1 (Initial conditions precedent) have not been amended and remain in full force and effect |
(iv) | the specimen signatures of each person authorised by the resolutions referred to in paragraph (ii) above previously delivered to the Agent pursuant to Clause 4.1 (Initial conditions precedent) remain correct; |
(v) | securing the Total Commitments would not cause any borrowing, guaranteeing, security or similar limit binding on it to be exceeded; and |
(vi) | each copy document listed in this Schedule 3 is correct, complete and in full force and effect as at a date no earlier than each Finance Document to which it is a party. |
(b) | A copy of: |
(i) | the register of members of TDCX (updated to reflect the Borrower as a shareholder); |
(ii) | the register of members of Borrower (to be annotated with the security created under the Borrower Share Mortgage (Sponsor)); and |
(iii) | the register of mortgages and charges of Borrower (to be updated to reflect the security created under the Borrower Accounts Security Agreement). |
(c) | A certificate of good standing issued by the Registrar of Companies in the Cayman Islands in respect of the Borrower and TDCX (to the extent that the certificate previously delivered to the Agent is more than one month old). |
(d) | A certificate of incumbency issued by the registered office provider of the Borrower and TDCX (to the extent that the certificate previously delivered to the Agent is more than one month old). |
2 | The Acquisition |
Evidence that the Acquisition Closing Date has occurred.
3 | Finance Documents |
(a) | Each of the following Security Documents duly executed by all parties to it: |
(i) | the TDCX Share Mortgage; and |
(ii) | the TDCXH Share Mortgage. |
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(b) | All share certificates, transfers and stock transfer forms or equivalent duly executed by the relevant Obligors in blank in relation to the assets subject to or expressed to be subject to the Transaction Security and other documents of title to be provided under the Security Documents referred to in paragraph (a) above. |
4 | Legal opinions |
(a) | A legal opinion of Linklaters Singapore Pte. Ltd., legal advisers to the Arranger and the Agent in respect of Singapore law, substantially in the form distributed to the Original Lender prior to signing this Agreement. |
(b) | A legal opinion of Walkers (Singapore) Limited Liability Partnership, legal advisers to the Arranger and the Agent in respect of Cayman Islands law, substantially in the form distributed to the Original Lender prior to signing this Agreement. |
5 | Other documents and evidence |
(a) | Evidence that any process agent, required to be appointed by any Finance Document, has accepted its appointment. |
(b) | A copy of any other Authorisation or other document, opinion or assurance which the Agent considers to be necessary (if it has notified the Borrower accordingly not less than three Business Days prior to the Acquisition Closing Date) in connection with the entry into and performance of the transactions contemplated by any Finance Document or for the validity and enforceability of any Finance Document. |
(c) | Evidence satisfactory to the Agent that each Finance Party has carried out and is satisfied with the results of all know your customer and other similar procedures that it is required (or deems desirable) to conduct pursuant to the transactions contemplated in the Finance Documents. |
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SCHEDULE 4
Utilisation Request
From: | TDCX INC.as Borrower | |
To: | CREDIT SUISSE AG, SINGAPORE BRANCH (incorporated in Switzerland with limited liability) as Agent |
Dated:
TDCX Inc. US$188,000,000 Facility Agreement
dated [ ] (the Agreement)
1. | We refer to the Agreement. This is a Utilisation Request. Terms defined in the Agreement have the same meanings in this Utilisation Request unless given different meanings in this Utilisation Request. | |||
2. | We wish to borrow a Loan on the following terms: | |||
Proposed Utilisation Date: | [ ] (or, if that is not a Business Day, the next Business Day) | |||
Amount: | [ ] or, if less, the relevant Commitment | |||
Interest Period: | [Three] Months | |||
3. | We confirm that each condition specified in Clause 4.2 (Further conditions precedent) of the Agreement is satisfied on the date of this Utilisation Request. | |||
4. | [The proceeds of this Loan should be credited to [account].] | |||
5. | This Utilisation Request is irrevocable. |
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Yours faithfully | ||
|
||
authorised signatory for and on behalf of | ||
[Borrower] |
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SCHEDULE 5
Form of Transfer Certificate
To: | CREDIT SUISSE AG, SINGAPORE BRANCH (incorporated in Switzerland with limited liability) as Agent | |
From: | [The Existing Lender] (the Existing Lender) and [The New Lender] (the New Lender) |
Dated:
TDCX Inc. US$188,000,000 Facility Agreement
dated [ ] (the Agreement)
1. | We refer to the Agreement. This is a Transfer Certificate. Terms defined in the Agreement have the same meanings in this Transfer Certificate unless given different meanings in this Transfer Certificate. All references to Clauses in this Transfer Certificate are references to Clauses of the Agreement. |
2. | We refer to Clause 27.5 (Procedure for transfer): |
(a) | The Existing Lender and the New Lender agree to the Existing Lender transferring to the New Lender by novation and, in accordance with Clause 27.5 (Procedure for transfer), all of the Existing Lenders rights and obligations under the Agreement and the other Finance Documents which relate to that portion of the Existing Lenders Commitment and participations in the Loan under the Agreement as specified in the Schedule. |
(b) | The proposed Transfer Date is [ ]. |
(c) | The Facility Office and address, fax number and attention details for notices of the New Lender for the purposes of Clause 35.2 (Addresses) are set out in the Schedule. |
3. | The New Lender expressly acknowledges: |
(a) | the limitations on the Existing Lenders obligations set out in paragraphs (a) and (c) of Clause 27.4 (Limitation of responsibility of Existing Lenders); and |
(b) | that it is the responsibility of the New Lender to ascertain whether any document is required or any formality or other condition is required to be satisfied to effect or perfect the transfer contemplated by this Transfer Certificate or otherwise to enable the New Lender to enjoy the full benefit of each Finance Document. |
4. | The New Lender confirms that it is a New Lender within the meaning of Clause 27.1 (Assignments and transfers by the Lenders). |
5. | The Existing Lender and the New Lender confirm that the New Lender is not an Obligor or a Security Provider or an Affiliate of an Obligor or a Security Provider. |
6. | This Transfer Certificate may be executed in any number of counterparts and this has the same effect as if the signatures on the counterparts were on a single copy of this Transfer Certificate. |
7. | This Transfer Certificate and any non-contractual obligations arising out of or in connection with it are governed by Singapore law. |
8. | This Transfer Certificate has been entered into on the date stated at the beginning of this Transfer Certificate. |
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THE SCHEDULE
Commitment/Rights and obligations to be transferred
[Insert relevant details]
[Facility Office address, fax number and attention details for notices and account details for payments]
[Existing Lender] | [New Lender] | |||
By: | By: |
This Transfer Certificate is accepted by the Agent and the Transfer Date is confirmed as [ ].
CREDIT SUISSE AG, SINGAPORE BRANCH
as Agent
By:
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SCHEDULE 6
Form of Assignment Agreement
To: | CREDIT SUISSE AG, SINGAPORE BRANCH (incorporated in Switzerland with limited liability) as Agent and TDCX Inc. as Borrower, for and on behalf of each Obligor | |
From: | [the Existing Lender] (the Existing Lender) and [the New Lender] (the New Lender) | |
Dated: |
TDCX Inc. US$188,000,000 Facility Agreement
dated [ ] (the Agreement)
1. | We refer to the Agreement. This is an Assignment Agreement. Terms defined in the Agreement have the same meanings in this Assignment Agreement unless given different meanings in this Assignment Agreement. All references to Clauses in this Assignment Agreement are references to Clauses of the Agreement. |
2. | We refer to Clause 27.6 (Procedure for assignment): |
(a) | The Existing Lender assigns absolutely to the New Lender all the rights of the Existing Lender under the Agreement and the other Finance Documents which relate to that portion of the Existing Lenders Commitment(s) and participations in the Loan under the Agreement as specified in the Schedule. |
(b) | The Existing Lender is released from all the obligations of the Existing Lender which correspond to that portion of the Existing Lenders Commitment(s) and participations in the Loan under the Agreement specified in the Schedule. |
(c) | The New Lender becomes a Party as a Lender and is bound by obligations equivalent to those from which the Existing Lender is released under paragraph (b) above. |
3. | The proposed Transfer Date is [ ]. |
4. | On the Transfer Date, the New Lender becomes Party to the Finance Documents as a Lender. |
5. | The Facility Office and address, fax number and attention details for notices of the New Lender for the purposes of Clause 35.2 (Addresses) are set out in the Schedule. |
6. | The New Lender expressly acknowledges: |
(a) | the limitations on the Existing Lenders obligations set out in paragraphs (a) and (c) of Clause 27.4 (Limitation of responsibility of Existing Lenders); and |
(b) | that it is the responsibility of the New Lender to ascertain whether any document is required or any formality or other condition is required to be satisfied to effect or perfect the transfer contemplated by this Assignment Agreement or otherwise to enable the New Lender to enjoy the full benefit of each Finance Document. |
7. | The New Lender confirms that it is a New Lender within the meaning of Clause 27.1 (Assignments and transfers by the Lenders). |
8. | The Existing Lender and the New Lender confirm that the New Lender is not an Obligor or a Security Provider or an Affiliate of an Obligor or a Security Provider. |
9. | This Assignment Agreement acts as notice to the Agent (on behalf of each Finance Party) and, upon delivery in accordance with Clause 27.7 (Copy of Transfer Certificate or Assignment Agreement to Borrower), to the Borrower (on behalf of each Obligor) of the assignment referred to in this Assignment Agreement. |
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10. | This Assignment Agreement may be executed in any number of counterparts and this has the same effect as if the signatures on the counterparts were on a single copy of this Assignment Agreement. |
11. | This Assignment Agreement and any non-contractual obligations arising out of or in connection with it are governed by Singapore law. |
12. | This Assignment Agreement has been entered into on the date stated at the beginning of this Assignment Agreement. |
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THE SCHEDULE
Rights to be assigned and obligations to be released and undertaken
[Insert relevant details]
[Facility Office address, fax number and attention details for notices and account details for payments]
[Existing Lender] | [New Lender] | |
By: | By: |
This Assignment Agreement is accepted by the Agent and the Transfer Date is confirmed as [ ].
Signature of this Assignment Agreement by the Agent constitutes confirmation by the Agent of receipt of notice of the assignment referred to herein, which notice the Agent receives on behalf of each Finance Party.
CREDIT SUISSE AG, SINGAPORE BRANCH
as Agent
By:
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SCHEDULE 7
Existing Financing
PART I
EXISTING FINANCIAL INDEBTEDNESS
Name of member of the Group |
Financial Indebtedness |
Total Principal Amount of Indebtedness |
||||
TDCX (SG) Pte. Ltd. |
OCBC Loan S$30,400,000 | S$ | 16,720,000.00 | |||
TDCX (SG) Pte. Ltd. |
OCBC Specific Advance Facility | S$ | 17,000,000.00 | |||
TDCX (SG) Pte. Ltd. |
OCBC Temporary Bridging Loan | S$ | 5,000,000.00 | |||
TDCX (SG) Pte. Ltd. |
OCBC Standby Letter of Credit (US$2,000,000) | S$ | 2,655,800.00 | |||
TDCX (SG) Pte. Ltd. |
OCBC Interest rate swap | S$ | 122,911.26 | |||
TDCX (SG) Pte. Ltd. |
OCBC Bankers Guarantees in favour of SIA and ACRA | S$ | 1,408,491.50 | |||
TDCX (SG) Pte. Ltd. |
Lease Liabilities | S$ | 2,354,416.78 | |||
TDCX (MY) Sdn. Bhd |
Lease Liabilities | S$ | 4,825,864.54 | |||
TDCX (PH) Inc. |
Lease Liabilities | S$ | 10,024,416.18 | |||
Teledirect Telecommerce (Thailand) Limited |
Lease Liabilities | S$ | 710,257.12 | |||
Agorae Information Consulting (Beijing) Co., Ltd |
Lease Liabilities | S$ | 1,056,331.55 | |||
TDCX Information Consulting (Shanghai) Co., Ltd. |
Lease Liabilities | S$ | 89,694.55 | |||
TDCX Japan K.K. |
Lease Liabilities | S$ | 4,604,060.06 | |||
Gascaquen Teledirect, S.A. |
Lease Liabilities | S$ | 2,175,556.44 | |||
TDCX (CO) Pte. S.A.S. |
Lease Liabilities | S$ | 3,374,966.13 | |||
TDCX Digilab India Private Limited |
Lease Liabilities | S$ | 3,617,119.15 |
135
PART II
EXISTING SECURITY
Name of Member of Group |
Security/Quasi-Security |
Total Principal Amount of Indebtedness Secured |
||||
TDCX Holdings Pte. Ltd. |
Subordination Deed | S$ | 69,400,000 | |||
TDCX (SG) Pte. Ltd. |
Debenture | S$ | 69,400,000 | |||
TDCX (SG) Pte. Ltd. |
Charge over Accounts and Cash Security Agreement | S$ | 69,400,000 | |||
TDCX (SG) Pte. Ltd. |
Subordination Deed | S$ | 69,400,000 | |||
TDCX (SG) Pte. Ltd. |
Share Charge over TDCX (MY) Sdn. Bhd. | S$ | 69,400,000 | |||
TDCX Holdings Pte. Ltd. |
Share Charge over TDCX (SG) Pte. Ltd. | S$ | 69,400,000 |
136
SCHEDULE 8
Form of Compliance Certificate
To: | CREDIT SUISSE AG, SINGAPORE BRANCH (incorporated in Switzerland with limited liability) as Agent |
From: | TDCX Inc. as Borrower |
Dated: |
TDCX Inc. US$188,000,000 Facility Agreement
dated [ ] (the Agreement)
1. | We refer to the Agreement. This is a Compliance Certificate. Terms defined in the Agreement have the same meanings when used in this Compliance Certificate unless given different meanings in this Compliance Certificate. |
2. | We confirm that: [Insert details of covenants to be certified] |
3. | [We confirm that no Default is continuing.]* |
4. | [We confirm that the Material Subsidiaries are as follows: |
[insert list of Material Subsidiaries]]**
Signed: |
|
|||
Director |
* | If this statement cannot be made, the certificate should identify any Default that is continuing and the steps, if any, being taken to remedy it. |
** | Insert for Compliance Certificate delivered in respect of the audited consolidated financial statements of the Group. |
137
SCHEDULE 9
Timetables
D- refers to the number of Business Days before the relevant Utilisation Date.
Delivery of a duly completed Utilisation Request (Clause 5.1 (Delivery of a Utilisation Request)). | D-2 11:00 a.m. |
|||||
Agent notifies the Lenders of the Loan in accordance with Clause 5.4 (Lenders participation). | D-2 Noon |
|||||
LIBOR is fixed. | Quotation Day 11:00 a.m. (London time) |
138
SCHEDULE 10
Subsidiaries
1 | TDCX |
2 | TDCXH |
3 | TDCX (SG) Pte. Ltd. |
4 | TDCX (MY) Sdn. Bhd. |
5 | Teledirect Telecommerce (Thailand) Limited |
6 | Comparexpress Insurance Broker (Thailand) Ltd. |
7 | TDCX (PH) Inc. |
8 | TDCX Japan K.K. |
9 | Gascaquen Teledirect, S.A. |
10 | TDCX Digilab India Private Limited |
11 | Agorae Information Consulting (Beijing) Co., Ltd. |
12 | Comparexpress Pte. Ltd. |
13 | TDCX Information Consulting (Shanghai) Co., Ltd. |
14 | TDCX (CO) Pte. S.A.S. |
15 | TDCX Korea Ltd. |
For the avoidance of doubt, Teledirect Hong Kong Limited is not a Subsidiary of the Borrower.
139
140
|
141
142
SIGNATURE PAGES TO THE FACILITY AGREEMENT
The Borrower
TDCX INC.
Address: | 750D Chai Chee Road | |
#06-01/06 ESR BizPark@Chai Chee, | ||
Singapore 469004 | ||
Fax No:- | ||
Email Address: | Edward.goh@tdcx.com | |
Attention: | Edward Goh |
By: | /s/ Laurent Bernard Marie Junique | |
Laurent Bernard Marie Junique |
The Guarantors
TDCX (KY) PTE LTD
Address: | 750D Chai Chee Road | |
#06-01/06 ESR BizPark@Chai Chee, | ||
Singapore 469004 | ||
Fax No:- | ||
Email Address: | Edward.goh@tdcx.com | |
Attention: | Edward Goh |
By: | /s/ Laurent Bernard Marie Junique | |
Laurent Bernard Marie Junique |
TDCX HOLDINGS PTE. LTD.
Address: | 750D Chai Chee Road | |
#06-01/06 ESR BizPark@Chai Chee, | ||
Singapore 469004 | ||
Fax No:- | ||
Email Address: | Edward.goh@tdcx.com | |
Attention: | Edward Goh |
By: | /s/ Laurent Bernard Marie Junique | |
Laurent Bernard Marie Junique |
The Arranger
CREDIT SUISSEAG, SINGAPORE BRANCH
Address: | 1 Changi Business Park Central 1, #01-101 ONE@Changi City, Singapore 486036 | |
Fax No: +65 6212 2709 | ||
Email Address: | apac.loansvc@credit-suisse.com | |
Attention: | Singapore Loan Operations |
By: |
/s/ Chan Yik Ley | |
Chan Yik Ley | ||
Director |
The Agent
CREDIT SUISSEAG, SINGAPORE BRANCH
Address: | 1 Changi Business Park Central 1, #01-101 ONE@Changi City, Singapore 486036 | |
Fax No: +65 6212 2709 | ||
Email Address: | apac.loansvc@credit-suisse.com | |
Attention: | Singapore Loan Operations |
By: | /s/ Chan Yik Ley | |
Chan Yik Ley | ||
Director |
The Security Agent
CREDIT SUISSEAG, SINGAPORE BRANCH
Address: | 1 Changi Business Park Central 1, #01-101 ONE@Changi City, Singapore 486036 | |
Fax No: +65 6212 2709 | ||
Email Address: | apac.loansvc@credit-suisse.com | |
Attention: | Singapore Loan Operations |
By: | /s/ Chan Yik Ley | |
Chan Yik Ley | ||
Director |
The Original Lender
CREDIT SUISSEAG, SINGAPORE BRANCH
Address: | 1 Changi Business Park Central 1, #01-101 ONE@Changi City, Singapore 486036 | |
Fax No: +65 6212 2709 | ||
Email Address: | apac.loansvc@credit-suisse.com | |
Attention: | Singapore Loan Operations |
By: |
/s/ Chan Yik Ley | |
Chan Yik Ley | ||
Director |
The Account Bank
CREDIT SUISSEAG, SINGAPORE BRANCH
Address: | 1 Changi Business Park Central 1, #01-101 ONE@Changi City, Singapore 486036 | |
Fax No: +65 6212 2709 | ||
Email Address: | apac.loansvc@credit-suisse.com | |
Attention: | Singapore Loan Operations |
By: |
/s/ Chan Yik Ley | |
Chan Yik Ley | ||
Director |
Exhibit 10.2
[OCBC Bank Logo] |
Oversea-Chinese Banking Corporation Limited 65 Chulia Street OCBC Centre Singapore 049513 Co.Reg.No.: 193200032W |
PRIVATE AND CONFIDENTIAL
For Customers Retention
Our Ref: E/2019/109923/CP/TT/RC
29 April 2019
TELEDIRECT PTE LTD
750B Chai Chee Road
#04-05 To 08 Technopark @ Chai Chee
Singapore 469002
Attn: | Mr Laurent Junique |
Dear Sir(s)/Madam
CREDIT FACILITIES
We, Oversea-Chinese Banking Corporation Limited (the Bank), are pleased to make available to you the facilities set out below (collectively the Facilities and each a Facility), for a total amount not to exceed at any one time S$56,460,000, subject to the following terms and conditions.
The availability of the Facilities is also subject to completion of legal documentation and based on the Standard Terms and Conditions Governing Banking Facilities.
1. | LIMITS/QUANTUM |
Limit | ||||||
1.1 | Interest Rate Derivatives |
S$7,600,000 | ||||
1.2 | SGD Specific Advance Facility |
S$20,000,000 | ||||
Within SGD Specific Advance Facility limit, sublimit for: |
||||||
1.2.1 | Standby Letters of Credit (Maximum Tenor: 12 months) |
(US$2,000,000 | ) | |||
1.3 | Refinancing Facility (Principal outstanding as at 26/04/2019) |
S$27,360,000 | ||||
1.4 | Bankers Guarantee |
S$1,500,000 | ||||
Total: | S$56,460,000 |
Combined outstanding under 1.2 to 1.2.1 shall not exceed S$20,000,000 and/or individual sublimit at any one time.
Facilities 1.3 and 1 4 shall make reference to the Agreement dated 18/09/2018, the Accession Letter dated 10/10/2018 and the supplementary letter dated 29/11/2018 (Ref: E/2018/106993/CP/AT/JL).
EB CDT
[OCBC Bank Logo] |
Oversea-Chinese Banking Corporation Limited 65 Chulia Street OCBC Centre Singapore 049513 Co.Reg.No.: 193200032W |
Our Ref: E/2019/109923/CP/TT/RC TELEDIRECT PTE LTD |
2 PRIVATE & CONFIDENTIAL |
2. | PURPOSE |
2.1 | Interest Rate Derivatives |
: For interest rate derivative transactions (including, interest rate swaps up to 5 years. | ||
2.2 | SGD Specific Advance Facility |
: For working capital requirements. | ||
2.3 | Standby Letters of Credit |
: For the issuance of one or more Standby Letters of Credit. |
3. | PRICING |
3.1 | SGD Specific Advance Facility |
: 1.25% p.a. over the Banks prevailing Cost of Funds as determined by the Bank for interest periods of up to 6 months at your option. | ||
3.2 | Standby Letters of Credit |
: As per the Banks prevailing schedule of charges. |
The rate(s) applicable to the relevant Facility shall hereinafter be referred to as the Prescribed Rate. The Bank shall, at its absolute discretion at any time upon notification (but without your consent), be entitled to revise the Prescribed Rate, the periodic rests applicable to the relevant Facility, and the commission, fee or bank charges in respect of any of the Facilities granted to you. Such notification shall be conclusive and binding on you.
For the purpose of this Facility Letter, Cost of Funds means in relation to any period the rate payable by the Bank for the cost of borrowing in the currency of the relevant Facility for such period in respect of the relevant amount and (i) in the case of borrowing in Singapore Dollars, it means in relation to any period the rate payable by the Bank for the cost of borrowing in Singapore Dollars for such period in respect of the relevant amount plus the cost of maintaining statutory reserves and liquid assets and/or complying with other requirements as may be imposed from time to time by the Monetary Authority of Singapore (MAS) or such other authorities having jurisdiction over banks in Singapore and (ii) in the case of borrowing in foreign currencies, it means in relation to any period the rate payable by the Bank for the costs of borrowing such foreign currencies for such period in respect of the relevant amount plus the cost of maintaining statutory reserves and liquid assets and/or complying with other requirements as may be imposed from time to time by MAS or such other authorities having jurisdiction over banks in Singapore.
For the avoidance of doubt, the revised pricing and/or Prescribed Rate shall include among others, the aggregate of the margin, the Banks cost of funds (from whatever source it reasonably selects) and any mandatory cost.
EB CDT
[OCBC Bank Logo] |
Oversea-Chinese Banking Corporation Limited 65 Chulia Street OCBC Centre Singapore 049513 Co.Reg.No.: 193200032W |
Our Ref: E/2019/109923/CP/TT/RC TELEDIRECT PTE LTD |
3 PRIVATE & CONFIDENTIAL |
4. | SECURITY/SUPPORT |
The Facility will be secured by the following in form and substance satisfactory to the Bank:-
4.1 | Existing First Charge of at least 99.99% of the shares of Agorae Pte Ltd held by Junique Laurent Bernard Marie or such other security over securities, shares, stocks, bonds, notes, interest or units in mutual funds or unit trust schemes or other collective investment schemes, in form and substance acceptable to the Bank and as required by the Bank from time to time, whether quoted or otherwise (hereinafter referred to as the Charged Securities). |
4.2 | Existing First Charge of all your shares held by Agorae Pte Ltd or such other security over securities, shares, stocks, bonds, notes, interest or units in mutual funds or unit trust schemes or other collective investment schemes, in form and substance acceptable to the Bank and as required by the Bank from time to time, whether quoted or otherwise (hereinafter referred to as the Charged Securities). |
4.3 | Existing First Closed Charge of all shares of the operating entities, including but not limited to |
(i) | 100% of Teledirect Telecommerce Sdn Bhd held by you; |
(ii) | 99.95% of Teledirect Telecommerce (Philippines) Inc. held by Agorae Pte Ltd; |
or such other security over securities, shares, stocks, bonds, notes, interest or units in mutual funds or unit trust schemes or other collective investment schemes, in form and substance acceptable to the Bank and as required by the Bank from time to time, whether quoted or otherwise (hereinafter referred to as the Charged Securities).
4.4 | New First Closed Charge of all shares of the operating entities |
(i) | 100% of Teledirect Telecommerce (Thailand) Limited held by you and Anchalee Siripanichwong and Weerawan Chongvisal to be completed within 60 days upon disbursement of the Refinancing Facility to be granted to you; |
4.5 | Execution of such transfer or other forms and notices as may be required by the Bank from time to time in favour of the Bank or such other party as the Bank may in its absolute discretion direct or nominate and deliver the certificates relating to the Charged Securities (under Clauses 4.1 to 4.4 and 4.15) to the Bank or to its nominee(s). |
4.6 | Existing Debenture incorporating a Fixed and Floating First Charge over all your present and future assets. |
EB CDT
[OCBC Bank Logo] |
Oversea-Chinese Banking Corporation Limited 65 Chulia Street OCBC Centre Singapore 049513 Co.Reg.No.: 193200032W |
Our Ref: E/2019/109923/CP/TT/RC TELEDIRECT PTE LTD |
4 PRIVATE & CONFIDENTIAL |
4.7 | Existing Debenture incorporating a Fixed and Floating charge over existing and future assets of Agorae Pte Ltd. |
4.8 | Existing Fixed Charge over Accounts Receivables of debtors (except Singapore Airlines Limited (SIA) Krisflyer charged to Export Credit Insurance Corporation of Singapore (ECICS)) that makes up 20% of total Accounts Receivables. |
4.9 | Existing Charge of Cash and Security Agreement (First Party) over your operating account(s) maintained with the Bank. |
4.10 | Existing Subordination Deed by Junique Laurent Bernard Marie in respect of all liabilities owed to him by Agorae Pte Ltd including loans and advances he has provided for the Acquisition and any other loans he has provided, shall be subordinated to this Facility. |
Acquisition means the acquisition by Agorae Pte Ltd from the Vendor (WPP Singapore Pte. Ltd.) of 800,700 of your shares.
4.11 | Existing Deed of Subordination by the shareholders and/or related companies for all loans extended to you. |
4.12 | Existing Deed of Subordination by Junique Laurent Bernard Marie in respect of all liabilities owed to him by you, present and/or future, including loans and advances he has provided (or may, in future provide), shall be subordinated to this Facility. |
4.13 | Existing Deed of Guarantee and Indemnity for all monies dated 18/09/2018 from Junique Laurent Bernard Marie. |
4.14 | Existing Deed of Guarantee and Indemnity for all monies under the Facilities Agreement dated 18/09/2018 from Agorae Pte Ltd. |
4.15 | Existing First Charge of all your shares held by Junique Laurent Bernard Marie or such other security over securities, shares, stocks, bonds, notes, interest or units in mutual funds or unit trust schemes or other collective investment schemes, in form and substance acceptable to the Bank and as required by the Bank from time to time, whether quoted or otherwise (hereinafter referred to as the Charged Securities). |
5. | INTEREST RATE DERIVATIVES FACILITIES |
5.1 | With regard to any transaction relating to the Interest Rate Derivatives Facilities that are granted to you, you shall allow the Bank a right of first refusal to enter into any such transaction with you. All such transactions shall be subject to the terms of an ISDA Master Agreement entered or to be entered into between you and the Bank. |
EB CDT
[OCBC Bank Logo] |
Oversea-Chinese Banking Corporation Limited 65 Chulia Street OCBC Centre Singapore 049513 Co.Reg.No.: 193200032W |
Our Ref: E/2019/109923/CP/TT/RC TELEDIRECT PTE LTD |
5 PRIVATE & CONFIDENTIAL |
6. | SGD SPECIFIC ADVANCE FACILITY |
Availability/drawdown:
6.1 | Subject to the availability of funds to the Bank the SGD Specific Advance Facility (SGD SAF) will be available for drawdown by you from time to time on a revolving basis provided always that at any one time the aggregate principal sum of all advances made under the SGD SAF and remaining unpaid shall not exceed the SGD SAF limit applicable at that time. |
6.2 | Subject to the Banks absolute discretion to permit otherwise:- |
(a) | Each advance from the SGD SAF shall be of an amount of not less than S$100,000 and of integral multiples of S$100,000. |
(b) | The duration of each interest period shall be up to 6 months as notified to the Bank in your Notice of Drawing relating thereto. You shall select such interest periods as which shall enable you to comply with your obligations under this Facility Letter. |
(c) | Each interest period shall start on the last day of the preceding such period and the first interest period shall begin on the date of the first advance. |
(d) | The Notice of Drawing under the SGD SAF:- |
i. | subject to the Banks absolute discretion to permit otherwise, shall be given by you to the Bank not later than 11.00 a.m. on the third Business Day prior to the intended date of advance; |
ii. | must specify a proposed date of the advance which is a Business Day; and |
iii. | must be in writing in the form attached to this Facility Letter and shall be irrevocable and binding on you. |
(e) | If you fail to give the Notice of Drawing in accordance with paragraphs (b) and (d) above, the interest period shall, subject to the other provisions of this Clause, be 1 month. |
(f) | Any interest period which would otherwise end on a non-Business Day shall end on the next Business Day in that calendar month if there is one, or if there is not, on the immediately preceding Business Day. |
Repayment:
6.3 | The SGD SAF is repayable on demand. Without prejudice to the aforesaid, each advance with interest thereon shall be repaid on its due date or rolled over at the Banks absolute discretion. |
6.4 | Prepayment of drawings is permitted but subjected to break funding cost |
EB CDT
[OCBC Bank Logo] |
Oversea-Chinese Banking Corporation Limited 65 Chulia Street OCBC Centre Singapore 049513 Co.Reg.No.: 193200032W |
Our Ref: E/2019/109923/CP/TT/RC TELEDIRECT PTE LTD |
6 PRIVATE & CONFIDENTIAL |
6.5 | Amounts drawn under the SGD SAF can only be redrawn on its due date. |
7. | TRADE FACILITIES |
Standby Letter of Credit
7.1 | The Standby Letters of Credit shall be in format acceptable to the Bank. |
7.2 | To be solely issued to OCBC Wing Hang China for purpose of securing facilities to entities within your group and within China. |
Other Condition in relation to Trade Facilities
Notwithstanding anything to the contrary, the availability of any of the Trade Facilities stated above is subject to the absolute discretion of the Bank. As such, the Bank shall have the absolute discretion to reject your application for the Trade Facilities stated above and the Bank shall not be under any obligation whatever to render you any reason for its decision.
8. | FINANCIAL COVENANTS |
8.1 | You shall maintain your Tangible Networth at not less than S$16,000,000 at all times. |
Tangible Networth is defined as Networth less the sum of Intangibles.
8.2 | Your Leverage shall not exceed 1.5 times at all times. |
Leverage is defined as Total Liabilities over Tangible Networth.
8.3 | You shall procure that Agorae Pte Ltd maintains consolidated Tangible Networth of not less than S$55,000,000 at all times. |
Tangible Networth is defined as Networth less the sum of Intangibles.
8.4 | You shall procure that Agorae Pte Ltd consolidated Leverage shall not exceed 1.5 times at all times. |
Leverage is defined as Total Liabilities over Tangible Networth.
8.5 | You shall procure that Agorae Pte Ltd maintains consolidated Debt Service Coverage Ratio (DSCR) of not less than 3.0 times at all times. |
DSCR is defined as Earnings Before Interest, Tax, Depreciation and Amortisation (EBITDA) divided by short term debt, current portion of long term loan and interest repayments.
EB CDT
[OCBC Bank Logo] |
Oversea-Chinese Banking Corporation Limited 65 Chulia Street OCBC Centre Singapore 049513 Co.Reg.No.: 193200032W |
Our Ref: E/2019/109923/CP/TT/RC TELEDIRECT PTE LTD |
7 PRIVATE & CONFIDENTIAL |
9. | CONDITIONS PRECEDENT TO AVAILABILITY OF FACILITIES |
Applications by you to use the Facilities will not be accepted by the Bank unless you comply with all the conditions/covenants set out in this Facility Letter and such other provisions as the Bank may determine from time to time, and upon:-
9.1 | receipt of the following (where applicable) in form and substance acceptable to the Bank, including but not limited to:- |
(i) | Copy of your Certificate of Incorporation and Memorandum and Articles of Association and that of the guarantors, mortgagors, third party depositors and any persons (other than you) providing security for the Facilities (collectively the Surety), certified as a true copy by a Director or the Company Secretary. |
(ii) | Copy of your Board Resolutions and Shareholders Resolutions (if required by the Bank) and that of the Surety, if a corporation, in the Banks prescribed format and duly certified as a true copy by two Directors or a Director and the Company Secretary. |
(iii) | The duplicate of this Facility Letter and all security and support documents containing such terms and conditions as the Bank may in its absolute discretion require duly executed, stamped (where applicable) and perfected. |
(iv) | Statement Containing Particulars of Charge in respect of the relevant security documents for filing with the Accounting and Corporate Regulatory Authority. |
(v) | Form of Confirmation and Consent duly executed by the existing Guarantors. |
(vi) | All approvals or consents (government, regulatory, corporate or otherwise) required in connection with the Acquisition and the Facility have been obtained. |
(vii) | Duly executed ISDA Master Agreement. |
(viii) | Schedule to the Master Agreement. |
(ix) | Risk Disclosure Statement. |
(x) | Board Resolutions authorising your entry into the ISDA Master Agreement and transact in swap and derivative transactions. |
9.2 | the following conditions being satisfied:- |
(a) | There is no material adverse change in your financial condition, operating environment, management or any other conditions which in the opinion of the Bank will materially affect your ability to perform your obligations under this Facility Letter. |
EB CDT
[OCBC Bank Logo] |
Oversea-Chinese Banking Corporation Limited 65 Chulia Street OCBC Centre Singapore 049513 Co.Reg.No.: 193200032W |
Our Ref: E/2019/109923/CP/TT/RC TELEDIRECT PTE LTD |
8 PRIVATE & CONFIDENTIAL |
(b) | There exists no event of default as set out in the Banks Standard Terms and Conditions Governing Banking Facilities or any other event which would, with the giving of notice or passing or lapse of time and/or a relevant determination, constitute an event of default. |
(c) | All representations and warranties contained in this Facility Letter and in the Banks Standard Terms and Conditions Governing Banking Facilities have been complied with and would be correct in all respects if repeated on the date of advance, drawdown or availment of each of the Facilities by reference to the circumstances then existing. |
(d) | You shall provide any other document(s) as may be required by the Bank from time to time and adhere to and abide by all other conditions precedent as the Bank may in its absolute discretion impose. |
10. | BREAKFUNOING COSTS |
10.1 | If you fail to effect drawdown in respect of the SGD SAF, or satisfy the conditions for advance after the Notice of Drawing has been given by you, in addition to the other remedies of the Bank hereunder, you shall on demand, pay to the Bank such amount as the Bank may certify as necessary to compensate it for any costs incurred by the Bank resulting from your failure to effect the drawdown or a failure to satisfy the conditions for the advance, including but not limited to losses from re-employment of funds borrowed or contracted for to fund the advance at rates lower than the cost of such funds. |
10.2 | Any breakfunding costs incurred by the Bank, in respect of any amount prepaid before its original due date or in unwinding its funding prematurely (as determined by the Bank in its sole discretion) shall be borne by you and payable on the Banks demand notwithstanding that the prepayment or full settlement before the maturity of the Facilities is requested by the Bank. |
11. | DEFAULT INTEREST |
11.1 | Default interest shall be payable at the rate of 4.75% p.a. over the Banks Cost of Funds prevailing from time to time for financing in Singapore Dollars or such other rates as may be determined by the Bank in its absolute discretion on the following:- |
(a) | any part of the Facilities that is not paid on due date or upon demand, as the case may be; and |
(b) | any utilisation in excess of the approved limit of the Facilities. |
EB CDT
[OCBC Bank Logo] |
Oversea-Chinese Banking Corporation Limited 65 Chulia Street OCBC Centre Singapore 049513 Co.Reg.No.: 193200032W |
Our Ref: E/2019/109923/CP/TT/RC TELEDIRECT PTE LTD |
9 PRIVATE & CONFIDENTIAL |
12. | OTHER TERMS AND CONDITIONS |
12.1 | You shall maintain a minimum amount equivalent to a S$1,900,000 in the Debt Servicing Reserve Account maintained with the Bank at all times. |
12.2 | You shall procure that Junique Laurent Bernard Marie shall at all times:- |
(a) | owns (directly or indirectly) at least 50% of your issued and paid-up share capital. |
(b) | (i) is appointed as your Chief Executive Officer (ii) has and maintains the power to direct and (iii) is and remains actively involved in your management and in control throughout the tenure of the Facility. |
12.3 | You shall not declare dividends in excess of 50% of your net profits after tax throughout the tenure of the Facilities. |
12.4 | You shall maintain and shall procure that Teledirect Telecommerce Sdn Bhd maintains operating account with OCBC Bank (Malaysia) Berhad. |
12.5 | You and your group of companies shall give the Bank the first right to pitch for trade and working capital, treasury (include interest hedging and foreign exchange) and/or corporate finance businesses throughout the tenure of the Facilities. |
12.6 | There shall be no dividends restriction on Teledirect Pte Ltd Group by other lenders. |
12.7 | There shall be no granting of loans or guarantees or making of investments by you to any company within Teledirect Group or to any third party, other than (i) in the normal course of business or (ii) those disclosed and agreed prior to the execution of the Facility Agreement. |
12.8 | Negative Pledge |
So long as any monies remain outstanding and unpaid to the Bank, the Teledirect Pte Ltd Group (defined as you and your subsidiaries) will not create or have outstanding any security on or over the whole or any part of their present or future property, undertaking, assets or revenue of any kind to secure indebtedness except for:-
(i) | Existing security which has been disclosed to the Bank provided there is no increase in the amount already secured; |
(ii) | Liens or rights of set-off arising solely by operation of law in the ordinary course of business; and |
(iii) | Any security on or over their respective assets acquired or developed by it for the sole purpose of financing the acquisition or development of such assets and securing a principal amount not exceeding the cost of that acquisition or development. |
EB CDT
[OCBC Bank Logo] |
Oversea-Chinese Banking Corporation Limited 65 Chulia Street OCBC Centre Singapore 049513 Co.Reg.No.: 193200032W |
Our Ref: E/2019/109923/CP/TT/RC TELEDIRECT PTE LTD |
10 PRIVATE & CONFIDENTIAL |
12.9 | Documentation |
This offer is subject to completion of all documentation (as the Bank may require) in form and substance acceptable to the Bank. If the documentation are not completed within three (3) months from the date of acceptance of this Facility Letter, then this offer will lapse, unless the Bank in its absolute discretion agrees in writing to extend this offer.
12.10 | Applications |
Each application by you to use the Facilities in whole or in part shall be a request by you to the Bank to extend financing on the terms set out or referred to in this Facility Letter. No commitment by the Bank to extend financing shall arise until any application by you is accepted by the Bank either expressly or by the Bank extending financing to you.
You shall, unless otherwise agreed to by the Bank, maintain at least one operating account with the Bank for the day-to-day operation of your business for so long as any sum remains owing under the Facilities. You agree that the volume of your transactions including FX spot, forward and derivative transactions and Interest Rate swap and derivative transactions with the Bank would reasonably correspond with the utilization of the Facilities as well as the level and nature of your business activities.
To the extent that the same are not inconsistent with the express terms herein, the Banks Standard Terms and Conditions Governing Banking Facilities and any amendments, supplements or replacements thereto from time to time shall form part of and be deemed to be incorporated in this offer.
This Facility Letter when accepted will supersede the Banks previous Facility Letter(s) to you except for the Refinancing and Bankers Guarantee Facilities.
The Bank reserves the right to request you, from time to time, to furnish it with documentary evidence (in form and substance acceptable to the Bank) showing your compliance with all the terms and conditions required by the Bank and to execute any further document(s) deemed necessary by the Bank.
We trust that the above terms and conditions are acceptable to you. This offer will lapse after 14 days from the date of this Facility Letter, unless otherwise arranged.
Please signify your acceptance by signing and returning to us the duplicate copy of this Facility Letter together with a certified copy of your Board Resolution(s) in the form attached. Notwithstanding your failure to accept and return this Facility Letter within the deadline set out above, the use of the Facilities by you shall be deemed as your acceptance of all terms and conditions as stated.
EB CDT
[OCBC Bank Logo] |
Oversea-Chinese Banking Corporation Limited 65 Chulia Street OCBC Centre Singapore 049513 Co.Reg.No.: 193200032W |
Our Ref: E/2019/109923/CP/TT/RC TELEDIRECT PTE LTD |
11 PRIVATE & CONFIDENTIAL |
If you have any queries, please do not hesitate to contact Tim Tee at 6530 7417 who shall be pleased to assist you.
We are pleased to be of service to you and look forward to hearing from you in due course.
Yours faithfully
for OVERSEA-CHINESE BANKING CORPORATION LIMITED
/s/ Tim Tee |
/s/ Lee Hwee Boon | |||
Tim Tee Deputy Director Global Enterprise Banking |
Lee Hwee Boon Head, Middle Markets & Services Global Enterprise Banking |
We hereby accept the Facilities on the terms and conditions contained in this Facility Letter and in the Banks Standard Terms and Conditions Governing Banking Facilities (OCBC Legal I Oct 2018).
We confirm there is no change to our Memorandum and Articles of Association.
We hereby authorise the Bank to debit all interest payable, costs, charges, monthly payment instalments and fees including processing fees and insurance premium, if any, from our Current Account No: or any other account which we have or may have with the Bank.
|
For and on behalf of TELEDIRECT PTE LTD Name of Authorised Signatory(ies): Date: |
EB CDT
Exhibit 10.3
[OCBC Bank Logo] |
Oversea-Chinese Banking Corporation Limited 65 Chulia Street OCBC Centre Singapore 049513 Co.Reg.No.: 193200032W |
PRIVATE AND CONFIDENTIAL
For Customers Retention
Our Ref: E/2019/113879/CR/TT/RC
16 October 2019
TELEDIRECT PTE LTD
750B Chai Chee Road
#04-05 to 08 Technopark @ Chai Chee
Singapore 469002
Attn: | Mr Laurent Junique |
Dear Sir(s)/Madam
REVISION OF TERMS AND CONDITIONS FOR CREDIT FACILITIES
We refer to our Facility Letter dated 29/04/2019, duly accepted by you.
We are pleased to advise you that the Bank is agreeable to extend to you a new Foreign Exchange Facility limit of S$5,000,000 and existing Interest Rate Derivatives Facility limit shall be reduced to S$3,500,000.
Please be informed that the Bank is also agreeable to discharge the following securities:
(a) | Existing First Charge of at least 99.99% of the shares of Agorae Pte Ltd held by Junique Laurent Bernard Marie. |
(b) | Existing First Charge of all your shares held by Junique Laurent Bernard Marie. |
(c) | Existing First Closed Charge of 99.95% shares of Teledirect Telecommerce (Philippines) Inc. held by Agorae Pte Ltd. |
(d) | Existing Debenture incorporating a Fixed and Floating charge over existing and future assets of Agorae Pte Ltd. |
The discharge of the above (c) and (d) is subject to the following conditions:
(i) | Negative Pledge |
You shall procure that Agorae Pte Ltd undertakes and agrees that save for mortgages, charges, pledges, liens or any other encumbrances which are currently subsisting and which have been previously disclosed to the Bank, Agorae Pte Ltd shall not, without the Banks prior written consent, create or cause to subsist any mortgage, charge, pledge, lien or any other encumbrance whatsoever over the whole or any part of Agorae Pte Ltds undertakings and assets whatsoever and wheresoever situate, both present and future.
EB CDT
[OCBC Bank Logo] |
Oversea-Chinese Banking Corporation Limited 65 Chulia Street OCBC Centre Singapore 049513 Co.Reg.No.: 193200032W |
Our Ref: E/2019/113879/CRITT/RC TELEDIRECT PTE LTD |
2 PRIVATE & CONFIDENTIAL |
(ii) | Pari Passu |
You shall procure that Agorae Pte Ltd undertakes and agrees that Agorae Pte Ltd shall ensure and procure that its payment obligations under the Facility Letter rank and will at all times rank at least equally and rateably in all respects with all its other unsecured indebtedness except for such indebtedness as would, by virtue only of the law in force in Singapore from time to time, be preferred in the event of its dissolution.
Accordingly, clause 2.4 shall form part of the above Facility Letter whilst clauses 4 and 8.2 to 8.4 shall be amended and replaced as follows:
2. | PURPOSE |
2.4 | Foreign Exchange | : For forward contract including non-deliverable forward I FX swaps up to 6 months. |
4. | SECURITY/SUPPORT |
The Facility will be secured by the following in form and substance satisfactory to the Bank:-
4.1 | Existing First Charge of all your shares held by Agorae Pte Ltd or such other security over securities, shares, stocks, bonds, notes, interest or units in mutual funds or unit trust schemes or other collective investment schemes, in form and substance acceptable to the Bank and as required by the Bank from time to time, whether quoted or otherwise (hereinafter referred to as the Charged Securities). |
4.2 | Existing First Closed Charge of 100% of Teledirect Telecommerce Sdn Bhd held by you or such other security over securities, shares, stocks, bonds, notes, interest or units in mutual funds or unit trust schemes or other collective investment schemes, in form and substance acceptable to the Bank and as required by the Bank from time to time, whether quoted or otherwise (hereinafter referred to as the Charged Securities). |
4.3 | Execution of such transfer or other forms and notices as may be required by the Bank from time to time in favour of the Bank or such other party as the Bank may in its absolute discretion direct or nominate and deliver the certificates relating to the Charged Securities (under Clauses 4.1 and 4.2) to the Bank or to its nominee(s). |
4.4 | Existing Debenture incorporating a Fixed and Floating First Charge over all your present and future assets. |
4.5 | Existing Fixed Charge over your Accounts Receivables. |
EB CDT
[OCBC Bank Logo] |
Oversea-Chinese Banking Corporation Limited 65 Chulia Street OCBC Centre Singapore 049513 Co.Reg.No.: 193200032W |
Our Ref: E/2019/113879/CRITT/RC TELEDIRECT PTE LTD |
3 PRIVATE & CONFIDENTIAL |
4.6 | Existing Charge of Cash and Security Agreement (First Party) over your operating account(s) maintained with the Bank. |
4.7 | Existing Subordination Deed by Junique Laurent Bernard Marie in respect of all liabilities owed to him by Agorae Pte Ltd including loans and advances he has provided for the Acquisition and any other loans he has provided, shall be subordinated to this Facility. |
Acquisition means the acquisition by Agorae Pte Ltd from the Vendor (WPP Singapore Pte. Ltd.) of 800,700 of your shares.
4.8 | Existing Deed of Subordination by the shareholders and/or related companies for all loans extended to you. |
4.9 | Existing Deed of Subordination by Junique Laurent Bernard Marie in respect of all liabilities owed to him by you, present and/or future, including loans and advances he has provided (or may, in future provide), shall be subordinated to this Facility. |
4.10 | Existing Deed of Guarantee and Indemnity for all monies dated 18/09/2018 from Junique Laurent Bernard Marie. |
The Bank will discharge Junique Laurent Bernard Marie as guarantor in the event that you or your Group is successful in your public listing in the Singapore Exchange.
4.11 | Existing Deed of Guarantee and Indemnity for all monies under the Facilities Agreement dated 18/09/2018 from Agorae Pte Ltd. |
8. | FINANCIAL COVENANTS |
8.2 | Your Total Indebtedness to Tangible Networth shall not exceed 1.5 times at all times. |
Total Indebtedness is defined as the total loans, Bankers Guarantee amounts and all interest, commissions, fees, expenses and other moneys whatsoever which are at that time owing or expressed to be payable.
8.3 | You shall procure that Agorae Pte Ltd maintains consolidated Tangible Networth of not less than S$42,000,000 at all times. |
Tangible Networth is defined as Networth less the sum of Intangibles.
8.4 | You shall procure that Agorae Pte Ltd consolidated Total Indebtedness to Tangible Networth shall not exceed 1.5 times at all times. |
Total Indebtedness is defined as the total loans, Bankers Guarantee amounts and all interest, commissions, fees, expenses and other moneys whatsoever which are at that time owing or expressed to be payable.
EB CDT
[OCBC Bank Logo] |
Oversea-Chinese Banking Corporation Limited 65 Chulia Street OCBC Centre Singapore 049513 Co.Reg.No.: 193200032W |
Our Ref: E/2019/113879/CRITT/RC TELEDIRECT PTE LTD |
4 PRIVATE & CONFIDENTIAL |
This offer is subject to completion of all documentation (as the Bank may require) in form and substance acceptable to the Bank. If the documentation are not completed within three (3) months from the date of acceptance of this Facility Letter, then this offer will lapse, unless the Bank in its absolute discretion agrees in writing to extend this offer.
To the extent that the same are not inconsistent with the express terms herein, the Banks Standard Terms and Conditions Governing Banking Facilities and any amendments, supplements or replacements thereto from time to time shall form part of and be deemed to be incorporated in this offer.
Save for the above, all other terms and conditions as enumerated in our previous Facility Letters shall continue to apply so long as they are not inconsistent with this Facility Letter. In the event of any inconsistencies, the term and conditions enumerated in this Facility Letter shall prevail.
The Bank reserves the right to request you, from time to time, to furnish it with documentary evidence (in form and substance acceptable to the Bank) showing your compliance with all the terms and conditions required by the Bank and to execute any further document(s) deemed necessary by the Bank.
We trust that the above terms and conditions are acceptable to you. This offer will lapse after 14 days from the date of this Facility Letter, unless otherwise arranged.
Please signify your acceptance by signing and returning to us the duplicate copy of this Facility Letter. Notwithstanding your failure to accept and return this Facility Letter within the deadline set out above, the use of the Facilities by you shall be deemed as your acceptance of all terms and conditions as stated.
If you have any queries, please do not hesitate to contact Tim Tee at 6530 7417 who shall be pleased to assist you.
We are pleased to be of service to you and look forward to hearing from you in due course.
Yours faithfully
for OVERSEA-CHINESE BANKING CORPORATION LIMITED
/s/ Tim Tee |
/s/ Karen Soh | |||
Tim Tee Director Middle Markets & Services Global Enterprise Banking |
Karen Soh Team Head Director Middle Markets & Services Global Enterprise Banking |
EB CDT
[OCBC Bank Logo] |
Oversea-Chinese Banking Corporation Limited 65 Chulia Street OCBC Centre Singapore 049513 Co.Reg.No.: 193200032W |
Our Ref: E/2019/113879/CRITT/RC TELEDIRECT PTE LTD |
5 PRIVATE & CONFIDENTIAL |
We hereby accept the Facilities on the terms and conditions contained in this Facility Letter and in the Banks Standard Terms and Conditions Governing Banking Facilities (OCBC Legal / Oct 2018).
We confirm there is no change to our Memorandum and Articles of Association.
|
For and on behalf of TELEDIRECT PTE LTD Name of Authorised Signatory(ies): Date: |
EB CDT
Exhibit 10.4
OVERSEA-CHINESE BANKING CORPORATION LIMITED
STANDARD TERMS AND CONDITIONS GOVERNING BANKING FACILITIES
1. | TERMS INCORPORATED IN AGREEMENT |
1.1 | These terms and conditions shall form a part of and be deemed to be incorporated in the provisions of each letter of offer from Oversea-Chinese Banking Corporation Limited (hereinafter called the Bank which expression shall include its successors and assigns) to the Borrower (each a Facility Letter) and in each agreement entered into between the Bank and the Borrower pursuant to a Facility Letter. The expression the Borrower shall mean the person(s) and/or entity described as such in the Facility Letter or (in the absence of such description) the person(s) and/or entity to whom the Facility Letter is addressed. |
1.2 | For the purpose of each such agreement made pursuant to a Facility Letter, Security Documents means the instruments, deeds, documents or agreement evidencing any mortgage, charge, pledge or other form of encumbrance of or over the assets and property of the Borrower or other third party to the Bank and any guarantee or other form of security acceptable to the Bank, as may be specified in the Facility Letter as security for the Facilities to be provided thereunder, Surety means any person giving a guarantee or any other form of security and/or support (including but not limited to a mortgage, charge, pledge or such other form of encumbrance) in favour of the Bank under the Security Documents, references to corporation includes a limited liability partnership incorporated under the Limited Liability Partnership Act 2005 and references to shareholder includes a partner of a limited liability partnership. |
1.3 | Subject to the provisions of Clause 20, in the event of any conflict between the provisions herein and in the Facility Letter and/or the Security Documents, the provisions in the Facility Letter and/or the Security Documents as the case may be, shall prevail. |
2. | IMPLEMENTATION |
The facilities under the Facility Letter (the Facilities) can be drawndown only on completion of all requisite legal documentation in form and substance satisfactory to the Bank and the fulfilment of such conditions precedent as the Bank may require.
3. | INTEREST |
3.1 | All interest charged (including additional interest) will be calculated based on a 365-day year in respect of the Facilities denominated in Singapore Dollars and on a 360-day year in respect of the Facilities denominated in foreign currencies, with monthly or such other periodic rests as the Bank may specify and will be payable both before and after judgment as if the covenant to pay the same is an independent covenant. The Bank may vary the interest rate(s) (including additional interest) from time to time at its absolute discretion. |
3.2 | All interest shall accrue up to and including the actual date when payment is made. |
3.3 | Where interest is computed with annual rests:- |
(a) | The amount of interest payable from the date of the Facility Letter to the 31st day of December of the year of the Facility Letter, both dates inclusive, (in this subclause, the first interest period) shall be computed on the aggregate of all drawings and charges and expenditure imposed or expended by the Bank under the Facility during the first interest period from the date of each such drawing or imposition of each such charge or expenditure to the end of the first interest period. |
(b) | The amount of interest payable for any interest period of one year from the 1st day of January to the 31st day of December (both dates inclusive) of any year subsequent to the first interest period shall be computed on the following sums:- |
(i) | the aggregate of the outstandings under the Facility and any other charges or expenditure imposed or expended by the Bank including accrued interest under the Facility outstanding on the last day of the preceding year; |
(ii) | the aggregate of all drawings and all charges or expenditure imposed or expended by the Bank under the Facility during that year, from the date of each such drawing or imposition of each such charge or expenditure to the 31st day of December of that year (both dates inclusive). |
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3.4 | Where interest is computed with monthly rests:- |
(a) | The amount of interest payable from the date of the Facility Letter to the last day of the month of the Facility Letter, both dates inclusive (in this subclause, the first interest period) shall be computed on the aggregate of all drawings and charges and expenditure imposed or expended by the Bank under the Facility during the first interest period from the date of each such drawing or imposition of each such charge or expenditure to the end of the first interest period. |
(b) | The amount of interest payable for any interest period of one month from the first day of the month to the last day of the month (both dates inclusive) of any month subsequent to the first interest period shall be computed on the following sums:- |
(i) | the aggregate of the outstandings under the Facility and any other charges or expenditure imposed or expended by the Bank including accrued interest under the Facility outstanding on the last day of the preceding month; |
(ii) | the aggregate of all drawings and all charges or expenditure imposed or expended by the Bank under the Facility during that month, from the date of each such drawing or imposition of each such charge or expenditure to the last day of that month (both dates inclusive). |
4. | DEFAULT INTEREST |
4.1 | Default Interest at the rate specified in the Facility Letter or such other rates as may be determined by the Bank at its sole and absolute discretion from time to time, will be charged on all overdue payment in respect of the Facilities including trust receipts, instalments of principal and interest on loans, fees, commissions and all other charges not paid when due. |
4.2 | For overdraft not paid on demand and utilisation in excess of the approved limit, default interest will be charged at the rate specified in the Facility Letter or such other rates as may be determined by the Bank at its sole and absolute discretion from time to time. For the purpose of ascertaining whether the limit of the principal monies has been exceeded or not, all accumulated and capitalised interest shall be deemed to be principal monies. |
4.3 | Default interest on any overdue payment shall be payable on such date or dates as the Bank may specify by written notice to the Borrower and if not so paid shall be added to the overdue sum and itself bear interest accordingly. |
5. | RIGHT OF DEBIT |
Without prejudice to any other rights that the Bank may have, the Bank shall have the right (without any obligation) at any time, without prior notice, to debit the Borrowers account(s) with the Bank and/or to debit the balance of the overdraft facility (if any) with all accrued interest, unpaid principal and interest, overdue payments subject to trust receipts, term bills, outstandings in respect of performance guarantees, indemnities, bonds, fees, commissions, charges, the costs and expenses stated in Clause 26 and all other monies due on the Facilities and/or under the Facility Letter and/or the Security Documents provided no such debiting shall be deemed to be a payment of the amount due (except to the extent of any amount in credit in the Borrowers current account) or a waiver of any event of default under the Facility Letter or Security Documents or any other agreement relating to the Facilities. If such debiting causes the Borrowers account to be overdrawn, interest shall be payable accordingly.
6. | REORGANISATION/CHANGES IN MEMORANDUM AND ARTICLES OF ASSOCIATION |
Where the Borrower and/or the Surety is a corporation, the Borrower and/or the Surety shall not, without the Banks prior written consent (which will not be unreasonably withheld), undertake or permit any re-organisation, amalgamation, reconstruction, take-over, change of shareholders or any other schemes of compromise or arrangement affecting the Borrowers and/or the Suretys present constitution or amend or alter any of the provisions in the Borrowers and/or the Suretys Memorandum and Articles of Association or other constitutional document relating to the Borrowers and/or the Suretys borrowing powers and principal business activities.
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7. | CHANGE IN CONSTITUTION |
The Facility Letter and the Security Documents shall continue to be valid and binding on the Borrower notwithstanding any change in the Borrowers constitution, if a corporation, by amalgamation, consolidation, reconstruction or otherwise, and if a firm, by retirement, expulsion, death, admission, accession or change of any partners or otherwise.
8. | ALTERNATE CURRENCIES |
8.1 | In this Clause, Reference Currency means the currency referred to in the Facility Letter in which the Facilities are denominated and Alternate Currency and Alternate Currencies mean a currency or currencies other than the Reference Currency. |
8.2 | Where the Bank has agreed that the Borrower may make drawings in Alternate Currencies: - |
(a) | drawings in Alternate Currencies are subject to the availability of funds, and subject to the Borrower giving to the Bank not less than 2 business days (i.e. business days in the countries of the Reference Currency and relevant Alternate Currencies) prior to the date of drawing, written notice of drawing, specifying the amount and date of drawing; Provided Always that the Borrower shall assume and bear all the risks, arising from any oral instructions, including but not limited to those caused by misunderstandings or errors by the Bank regarding the identity of the person instructing the Bank on behalf of the Borrower, and the Borrower confirms that the Bank shall bear no responsibility nor have any liability in respect thereof; |
(b) | drawings will be in the amount of the relevant Alternate Currency converted from the Reference Currency at the relevant rate of exchange on the date of drawing; |
(c) | if the sums outstanding under the Facilities in an Alternate Currency when aggregated and calculated in the Reference Currency shall at any time exceed the limits of the Facilities calculated in the Reference Currency, the Borrower shall forthwith upon demand by the Bank, repay the amount in excess thereof; |
(d) | the Banks calculations as to amounts outstanding and/or the rate of exchange used by the Bank for purposes of conversion shall in the absence of manifest error be conclusive and binding upon the Borrower; and |
(e) | the Borrower shall on demand indemnify the Bank against all losses, costs and expenses incurred by the Bank in liquidating or employing deposits in an Alternate Currency acquired or contracted for by the Bank in order to fund the drawing. |
9. | PAYMENT OF FACILITIES |
9.1 | Unless otherwise provided in the Facility Letter, the Facilities shall be repayable on demand. |
9.2 | All payments to be made under the Facility Letter must be made before 11.00 a.m. on the date the payment is due and in the currency in which the drawing was advanced (Currency of Drawing), or such other currency which the Bank may specify and is immediately available and freely transferable funds to such account of the Bank at such bank as the Bank may specify in its sole discretion specified by the Bank from time to time. |
9.3 | If any sum shall fall due for payment on a day which is not a Business Day, such payment must be made on the next Business Day in the same calendar month (if there is one) or the preceding Business Day (if there is not). Business Day in these terms and conditions means a day (other than Saturday and Sunday) on which the Bank is open for business in Singapore and banks are open for business in the country of the Currency of Drawing. |
9.4 | All payments to be made under the Facility Letter shall be made free and clear without any set-off, counter-claim, deduction or withholding whatsoever. If under any applicable law the Borrower is unable to pay without any deduction or withholding, the Borrower will forthwith pay such additional amount so that the net amount received by the Bank will equal the full amount which would have been received had such deduction or withholding not been made, and the Borrower shall furnish to the Bank within the period for payment permitted by the applicable law, an official receipt of the relevant taxation or other authorities for the amounts deducted or withheld as aforesaid. |
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9.5 | If under any applicable law whether as a result of a judgment or an order of Court of any jurisdiction against the Borrower or the liquidation of the Borrower or for any other reason including any national or international, financial, political or economic conditions, currency availability or exchange controls, any payment under or in connection with the Facility Letter or the Security Documents is made or is recovered in a currency (the Other Currency) other than the Currency of Drawing, then to the extent that, the payment (when converted at the Rate of Exchange on the date of payment or in the case of liquidation the latest date for the determination of liabilities permitted by the applicable law) falls short of the amount remaining unpaid under the Facility Letter or the Security Documents, the Borrower shall as a separate and independent obligation fully indemnify the Bank against the amount of the shortfall. |
The indemnity shall give rise to a separate and independent cause of action and shall apply irrespective of any indulgence granted by the Bank and shall continue in full force and effect despite any judgment, order, claim or proof for a liquidated amount in respect of any sum due under the Facilities or any judgment or order.
Rate of Exchange means the rate at which the Bank is able on the relevant date to purchase the Currency of Drawing in such foreign exchange market as it may reasonably select with the Other Currency.
10. | REPRESENTATIONS AND WARRANTIES |
10.1 | The Borrower acknowledges that the Bank has made available all Facilities contemplated in the Facility Letter in full reliance on the following representations and warranties of the Borrower: - |
(a) | all authorisations of any governmental or other authority which are required to authorise the Borrower to own its assets, carry on its business as it is being conducted as of the date of the Facility Letter have been duly and unconditionally obtained and are in full force and effect and the Borrower, the Borrowers ultimate holding company and each subsidiary of the Borrowers holding company are in compliance in all respects with all laws, regulations rules and orders relating to the carrying on of its business (including but not limited to all applicable anti-corruption, environmental and social laws and governance requirements); |
(b) | all acts, conditions and things required to be done and performed by the Borrower precedent to the acceptance of the Facility Letter and execution of the Security Documents to constitute them valid obligations of the Borrower in accordance with their respective terms have been done and performed in due and strict compliance with all applicable laws and regulations; |
(c) | each of the Facility Letter when accepted and the Security Documents when executed will constitute the legal, valid and binding obligations of the Borrower and the Surety (as the case may be) and be enforceable in accordance with its terms; |
(d) | (where the Borrower is a corporation) the execution, delivery and performance by the Borrower of the transactions contemplated in the Facility Letter and the Security Documents are within the Borrowers corporate powers and have been duly authorised by all necessary corporate action; |
(e) | (where the Borrower is a corporation) the certified true copies of the Memorandum and Articles of Association, or other corporate constitutional documents, of the Borrower and the Shareholders and Board Resolutions of the Borrower relating to the approval and acceptance of the Facility Letter and execution of the Security Documents, are true and accurate copies of the corporate records of the Borrower; |
(f) | the acceptance and performance of the Facility Letter and the Security Documents do not and will not:- |
(i) | contravene or constitute a default or breach under any provision contained in any agreement, instrument, law, judgment, order, licence, permit or consent by which the Borrower or any of its assets is bound or affected; |
(ii) | cause any limitation on the Borrower or the powers of its directors (where applicable) , whether imposed by or contained in any law, order, judgment, agreement, instrument or otherwise to be exceeded; or |
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(iii) | result in the creation or imposition of any lien, charge, security , interest or other encumbrance over any assets of the Borrower other than those created by the Security Documents. |
(g) | neither the Borrower nor any Surety is in default in the payment or performance of any of their respective obligations for borrowed money or under any instrument or agreement binding on the Borrower or any Surety or any of their respective assets which may have a material adverse effect on their respective business , assets or condition or materially and adversely affect their ability to perform or observe their respective obligations under the Facility Letter or Security Documents; |
(h) | there are no litigation , arbitration or other proceedings or claims pending or threatened against the Borrower its related corporations or any Surety or any of their assets which may have a material adverse effect on their respective business , assets, or financial condition or ability to perform their respective obligations under the Facility Letter or the Security Documents; |
(i) | (where the Borrower is a corporation) no steps have been taken or are being taken to wind up the Borrower or to appoint a receiver and/or manager or judicial manager, liquidator, trustee in bankruptcy or any other such official over the Borrower, its assets or any of them; |
(j) | the Borrower has fully disclosed in writing to the Bank all facts and information relating to the Borrower which the Borrower knows or should reasonably know and which are material for disclosure to the Bank in the context of the Facility Letter; |
(k) | the Borrower will, if so required , make any disclosure, announcement or report pursuant to any legislation , laws, rules and regulations or otherwise to the relevant authorities; |
(l) | the Borrower has filed all tax returns which it is required by law to file and has duly paid and discharged all rents , rates , taxes, assessments fees and government charges levied against the Borrower or the Borrowers assets , properties , business and operations in accordance with the requirements of the relevant authorities. |
(m) | the Borrower has the power and authority to own assets and to conduct the business which the Borrower conducts and/or purports to conduct. The Borrower further represents and warrants to the Bank that the Borrower has not acted and is not acting in contravention of any law which may result in third parties obtaining priority over the Bank in respect of the security granted herein or such security being illegal, unenforceable, altered, affected, discharged or revoked ; |
(n) | the Borrower will not (whether by a single transaction or a number of related or unrelated transactions and whether at the same time or over a period of time) (i) sell, transfer, lease out, lend or otherwise dispose of the whole of its assets nor of any part of its assets which, when aggregated with all other disposals required to be taken into account under this paragraph is material in relation to its assets , or the disposal of which (when so aggregated) could have a material adverse effect on it or (ii) materially change the scope or nature of its business whether by disposal, acquisition or otherwise. The following disposals shall not be taken into account under this paragraph:- |
(aa) | disposals in the ordinary course of business; and |
(bb) | any disposal to which the Bank shall have agreed; |
(o) | the Borrower shall promptly notify the Bank in writing of any change in the address and/or telephone number of the Borrower or any Surety; |
(p) | neither the Borrower nor the Surety are involved in any activity prohibited under the Corruption Drug Trafficking and Other Serious Crimes (Confiscation of Benefits) Act (Cap. 65A) and all monies and security provided by them to the Bank are not derived in any way whatsoever from such prohibited activity and there are no pending or threatened court order issued in connection with the said Act which in any way adversely affects the Banks interests; |
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(q) | no security exists on or over the Borrowers assets except liens arising solely by operation of law and in the ordinary course of business (but any such lien must be discharged within 14 days after it arises) and any other security created or outstanding with the prior consent in writing of the Bank; |
(r) | there has been no material adverse change in the Borrowers or the Suretys financial condition or operations; and |
(s) | there exists no event of default referred to in Clause 14 thereof or any other event which would, with the giving of notice or passing or lapse of time and/or a relevant determination, constitute such an event of default. |
10.2 | The Borrower agrees that the abovementioned representations and warranties shall be deemed to be repeated upon each drawing of the Facilities. |
10.3 | Each of the representations and warranties contained in this clause shall survive and continue in full force and effect after the acceptance of the Facility Letter and the execution of the Security Documents and the Borrower hereby warrants to the Bank that the above representations and warranties will be true and correct and fully observed at all times during the continuance of the Security Documents as if repeated during such period by reference to the then existing circumstances. |
11. | FINANCIAL STATEMENTS |
The Borrower shall duly furnish and shall procure the Surety to furnish to the Bank:-
11.1 | annually as soon as possible and in any event not later than 120 days after the close of its financial year the audited financial statements of the Borrower and the Surety and the audited consolidated financial statements of the Borrower and the Surety and their related corporations, in each case consisting of a balance sheet as of the close of such financial year and a statement of its profits and loss for the period then ended in accordance with generally accepted accounting practices and principles consistently applied and signed by its auditors, such auditors to be acceptable to the Bank; |
11.2 | semi-annually as soon as possible and in any event not later than 90 days after the close of the first 6 months of its financial year the unaudited financial statements of the Borrower and the Surety, in each case consisting of a balance sheet as of the close of the first 6 months of such financial year and a statement of its profits and loss for the period then ended in accordance with generally accepted accounting practices and principles consistently applied; and |
11.3 | at the same time as sent to the shareholders of the Borrower and the Surety, any other document or information sent to such shareholder as such. |
12. | CONSENT TO DISCLOSURE |
The Borrower hereby expressly and irrevocably permits and authorises the Bank and the Banks officers to disclose, reveal and divulge at any time in such manner and under such circumstances as the Bank deems necessary or expedient in its sole discretion without prior reference to the Borrower, any and all information and particulars relating to and in connection with the Borrower, any and all of the Borrowers accounts with the Bank (whether held alone or jointly), the Borrowers credit standing and financial position , any transactions or dealings between the Borrower and the Bank , any facilities granted to the Borrower, the Facility Letter and/or the Security Documents , to any person at any time and from time to time, including but not limited to:-
12.1 | any person who may enter into a contractual relationship with the Bank; |
12.2 | any of the Banks subsidiaries, branches, agents, correspondents, agencies or representative offices; |
12.3 | the Banks auditors and professional advisors including its solicitors; |
12.4 | any of the Banks potential assignee or transferee; |
12.5 | the Surety; |
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12.6 | any person who is jointly or jointly and severally liable to the Bank with the Borrower and/or the Surety; |
12.7 | the police or any public officer conducting an investigation in connection with any offence including suspected drug trafficking offences; |
12.8 | the Banks stationery printers the vendors of the computer systems used by the Bank and to such person(s) installing and maintaining the same and other suppliers of goods or service providers engaged by the Bank; |
12.9 | the insurer(s) or valuer(s) or the proposed insurer(s) or valuer(s) of the properties and assets of the Borrower, the Surety and all other persons or parties in respect of any contracts of insurance, assignments or valuations thereof concerning the said properties or assets ; |
12.10 | any receiver appointed by the Bank; |
12.11 | any person to whom disclosure is permitted or required by any statutory provision by law; |
12.12 | any credit bureau of which the Bank is a member and/or any other member(s) of such credit bureau; and/ or |
12.13 | any governmental agencies and authorities in Singapore and elsewhere . |
12A. | DATA PROTECTION |
12A.1 | (Where personal data relating to the Borrower is or will be collected, used or disclosed by the OCBC Group (as defined herein) and/or the OCBC Representatives (as defined herein)) The Borrower consents to the Bank, its related corporations (collectively, the OCBC Group), and their respective business partners and agents (collectively, the OCBC Representatives) collecting (including by way of recorded voice calls), using and disclosing the Borrowers personal data for purposes reasonably required by the OCBC Group and the OCBC Representatives to enable them to provide any facilities (including without limitation the Facilities) to the Borrower. Such purposes are set out in a Data Protection Policy, which is accessible at www.ocbc.com/business-policies or available on request and which the Borrower has read and understood. |
12A.2 | (Where personal data relating to any of the Individuals (as defined herein) is or will be collected, used or disclosed by the OCBC Group and/or the OCBC Representatives) The Borrower hereby confirms and represents to the OCBC Group and the OCBC Representatives that with respect to any personal data of individuals (Individuals) disclosed to the OCBC Group and/or the OCBC Representatives in connection with any facilities granted to the Borrower (including without limitation the Facilities) or at the request of, or by or through the Borrower from time to time , the Individuals to whom the personal data relates have, prior to such disclosure, agreed and consented to such disclosure, and the collection (including by way of recorded voice calls), use and disclosure of their personal data by the OCBC Group and the OCBC Representatives for purposes reasonably required by them to enable them to provide any facilities (including without limitation the Facilities) to the Borrower. Such purposes are set out in a Data Protection Policy, which is accessible at www.ocbc ..com/business-policies or available on request and which the Borrower confirms that each of the Borrower and the Individuals have or will have read and consented to. |
13. | SECURITY COVERAGE |
13.1 | The Bank may at any time and from time to time conduct a valuation or assessment of the assets of the Borrower covered by the Security Documents and such valuation shall be final and conclusive. The cost of such valuation or assessment shall be for the account of the Borrower. |
13.2 | If at any time the Bank is of the opinion that the value(s) of the assets of the Borrower covered by the Security Documents has fallen below the security margins stipulated by the Bank, or in the absence of such stipulation, below the value(s) at the time the Facilities were granted (for any reason whatsoever, including but not limited to the relative fall in the value of the currency in which such assets are denominated), the Bank shall be entitled:- |
(a) | to require the Borrower to reduce its liabilities to the Bank by such extent as the Bank may in its absolute discretion determine; |
(b) | to require the Borrower to furnish to the Bank additional securities as shall be satisfactory to the Bank; |
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(c) | to realise and set-off the assets of the Borrower covered by the Security Documents against the Borrowers liabilities to the Bank; and/or |
(d) | to require prepayment and/or repayment of an amount to be specified by the Bank, |
by such date or within such period as the Bank may in its absolute discretion require.
14. | DEFAULT |
14.1 | lf:- |
(a) | the Borrower shall fail to pay any amount when due or outstanding under the Facilities, the Facility Letter and/or the Security Documents on the due date or on demand; |
(b) | the Borrower or any Surety of the Borrower shall commit any breach of the provision of, or fail to observe or perform any obligation under, the Facility Letter or any of the Security Documents; |
(c) | any representation, warranty of statement made or acknowledged or deemed to have been made or acknowledged by the Borrower or any Surety herein, the Facility Letter and/or any of the Security Documents proves to be incorrect, untrue or misleading or is breached in any material respect; |
(d) | any indebtedness of the Borrower or any Surety becomes due or capable of being declared due before its stated maturity, or any guarantee or similar obligation is not discharged at maturity or when called, or the Borrower or any Surety shall be in default under or commit a breach of any instrument or agreement relating to any such indebtedness guarantee or other similar obligation; |
(e) | an encumbrancer takes possession of, or a trustee, receiver and/or manager, judicial manager or similar officer is appointed in respect of, any of the assets or property of the Borrower or any Surety , or any distress or any form of execution is levied or enforced upon or sued against such assets or property ; |
(f) | the Borrower or any Surety becomes or is declared insolvent or convenes a meeting of creditors or proposes or make any arrangement or composition with or any assignment for the benefit of its creditors; |
(g) | any proceedings are commenced or a resolution is passed for the liquidation or winding-up (whether compulsory or voluntary) or for the bankruptcy (as the case may be) of the Borrower or any Surety; |
(h) | any provision of the Facility Letter or the Security Documents is or becomes for any reason invalid or unenforceable; |
(i) | there is a material adverse change in the condition (financial or otherwise) of the Borrower, the Surety or any of their respective subsidiaries which in the opinion of the Bank might materially affect the Borrowers and/or the Suretys continued operations or financial condition; |
(j) | any event has occurred which could in the opinion of the Bank prejudice the ability of the Borrower or any Surety to perform their obligations under the Facility Letter or the Security Documents ; |
(k) | any of the securities created pursuant to the Security Documents is in the opinion of the Bank in jeopardy and notice thereof has been given to the Borrower and/or the Surety; |
(l) | any step is taken by any person or agency with a view to the confiscation, seizure, compulsory acquisition, expropriation or nationalisation of any part of the assets or property of the Borrower and /or any Surety; |
(m) | (where the Borrower is a corporation) the Borrower is declared by the Minister to be a declared company under the provisions of Part IX of the Companies Act (Cap. 50); |
(n) | the Borrower shall cease or threaten to cease to carry on its business or intend to change the nature or scope of its business as now conducted; |
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(o) | the Borrower shall transfer or otherwise dispose of all or substantially all its respective assets to any person, firm or corporation (except for the purpose of and followed by a reconstruction, amalgamation or reorganisation on terms approved by the Bank before the step is taken) whether by way of scheme of arrangement or otherwise; |
(p) | it is or becomes unlawful for the Borrower to perform or comply with any one or more of its obligations under the Facility Letter and the Security Documents or for the Surety to perform or comply with any one or more of its obligations under the Security Documents; |
(q) | the Borrower becomes mentally unsound, incapable of handling its affairs or die; |
(r) | any event occurs which, under the law of any relevant jurisdiction, has an analogous or equivalent effect to any of the events mentioned in this Clause 14.1; or |
(s) | any of the foregoing events or analogous events or proceedings occur in relation to any Surety; |
then the Bank may upon the occurrence of any such event or at any time thereafter, by notice to the Borrower declare that the Facilities together with accrued interest and all amounts payable under the Facility Letter and the Security Documents are immediately due and payable, and the Borrower shall provide cash cover for all contingent liabilities and for all notes or bills accepted, endorsed or discounted and all bonds, guarantees, indemnities, documentary or other credits or any instruments whatsoever from time to time entered into by the Bank for the Borrowers account and any part of the Facilities which shall be undrawn shall be cancelled.
14.2 | Each decision of the Bank with respect to Clauses 14.1(j) and 14.1(k) shall be binding and conclusive on the Borrower. |
14.3 | If, in accordance with Clause 14. 1 above, the Facilities are declared to be in default, the Borrower will pay interest, on the amount outstanding under the Facility Letter and the Security Documents, from the time of default up to the time of actual payment (both before and after judgment) at the rate stipulated in Clause 4.1. |
14.4 | Upon the occurrence of any event of default as specified in the Facility Letter and/or the Security Documents, the Bank shall have the overriding right (without any obligation) to cover and/or reverse any or all transactions outstanding under the Facilities at such rate of exchange as the Bank is able, on the relevant date, to obtain in such foreign exchange market as it may in its sole discretion select, which rates shall be binding and conclusive on the Borrower. |
15. | INDEMNITY |
The Borrower will fully indemnify the Bank and hold the Bank harmless from and against all liabilities, costs, expenses, losses or damages whatsoever which the Bank may suffer or incur as a consequence of any of the following :-
15.1 | the failure of the Borrower to drawdown on the date specified in any notice of drawing; |
15.2 | the failure of the Borrower to drawdown the Facilities in full within the availability period stipulated in the Facility Letter (if any); |
15.3 | the failure of the Borrower to supply to the Bank such forms, documentation, and other information pursuant to Clause 16.9; or |
15.4 | the occurrence of any event of default referred to in Clause 14 hereof or any event which with the giving of any notice or lapse of time would constitute such event of default. |
Without prejudice to its generality, the foregoing indemnity shall extend to any interest, fees, or other sums whatsoever paid or payable on account of any funds borrowed by the Bank in order to carry any unpaid amount, and to any loss (including loss of profit), premium, penalty or expense which may be incurred in liquidating or employing deposits from third parties acquired to make maintain or fund the Facilities or any part thereof or any other amount due or becoming due under the Facility Letter.
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16. | UNDERTAKINGS |
The Borrower hereby undertakes and agrees that:-
16.1 | the Bank shall not be responsible nor liable for anything done or not done by the Bank hereunder or arising from the Banks exercise or enforcement of, or the Banks refusal or neglect to exercise or enforce, all or any of the Banks rights, powers, authorities, discretion and remedies hereunder; |
16.2 | save for mortgages, charges, pledges, liens or any other encumbrances which are currently subsisting and which have been previously disclosed to the Bank, the Borrower shall not, without the Banks prior written consent, create or cause to subsist any mortgage, charge, pledge, lien or any other encumbrance whatsoever over the whole or any part of the Borrowers undertakings and assets whatsoever and wheresoever situate, both present and future; |
16.3 | the Borrower shall ensure and procure that its payment obligations under the Facility Letter rank and will at all times rank at least equally and rateably in all respects with all its other unsecured indebtedness except for such indebtedness as would, by virtue only of the law in force in Singapore from time to time, be preferred in the event of its dissolution; |
16.4 | it will promptly deliver to the Bank and permit the Bank to obtain details of any proceedings which would have rendered its warranty under Clause 10.1(h) herein incorrect and such other information relating to the financial, administrative or other state or condition or the operations of the Borrower as the Bank may from time to time request; |
16.5 | the Borrower shall permit the Bank to enter into and upon any land or premises belonging to the Borrower or where it carries on its businesses and inspect the same and to inspect all accounts records and statements of the Borrower and the Borrower shall give to the Bank such written authorities and other directions and provide such facilities and access as the Bank may require as well as pay all costs, fees and other expenses whether legal or otherwise in respect of such inspection; |
16.6 | it will from time to time on request by the Bank at its own expense do or procure the doing of all such acts and will execute or procure the execution of all such documents as the Bank may consider necessary or desirable for giving full effect to the Facility Letter and the Security Documents or securing to the Bank the full benefits of all rights, powers and remedies conferred upon the Bank in the Facility Letter and the Security Documents; |
16.7 | upon any amendment or alteration to any of the provisions of the Borrowers Memorandum and Articles of Association or other constitutional document, to promptly provide the Bank with an up-to-date copy thereof, certified as true copy by the Borrowers directo r or company secretary or such other party approved by the Bank; |
16.8 | the Borrower shall maintain adequate insurance for such purposes and for such amounts as the Bank shall deem fit from time to time taken out with GREAT EASTERN GENERAL INSURANCE LIMITED or such other insurance company acceptable to the Bank on terms and conditions acceptable to the Bank and assigned/endorsed in favour of the Bank as mortgagee and loss payee and shall bear and promptly pay all premium charges. The policy(ies) and receipts for every premium paid in respect thereof shall be delivered and/or produced to the Bank without demand. If the Borrower defaults in taking up or maintaining or assigning such insurance as and when required by the Bank or paying the premium of any such insurance, the Bank may at its absolute discretion take up or maintain such insurance and all monies costs or expenses expended by the Bank in respect of such insurance shall forthwith be repaid to the Bank and until repayment shall bear interest at the default interest rate or such other rate as the Bank may specify from time to time; and |
16.9 | it will supply to the Bank such forms, documentation, and other information relating to its status pursuant to sections 1471 through 1474 of the US Internal Revenue Code of 1986, as amended (the Code), any current or future regulations or official interpretations thereof, any agreement entered into pursuant to those sections of the Code, any fiscal or regulatory legislation , rules or practices adopted pursuant to any intergovernmental agreement entered into in connection with the implementation of such sections of the Code (Applicable Laws and Regulations) as the Bank may reasonably request from time to time to ensure its compliance with the Applicable Laws and Regulations. |
16.10 | it will notify the Bank in writing of the occurrence of any event of default referred to in Clause 14 hereof or any other event which would, with the giving of notice or passing or lapse of time and/or a relevant determination, constitute an event of default immediately upon becoming aware of it and the action taken or proposed to be taken to remedy it. |
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17. | SET-OFF AND CONSOLIDATION |
The Bank may, without notice to the Borrower combine, consolidate or merge all or any of the Borrowers accounts with, and liabilities to, the Bank (whether in Singapore or elsewhere and whether in the Borrowers individual or joint names or jointly with others or in any other respect) and may set-off or transfer any sum standing to the credit of any such accounts in or towards the satisfaction of any of the Borrowers obligations and liabilities to the Bank (whether under the Facility Letter or otherwise, whether actual or contingent and whether or not such obligations or liabilities are accrued or not) and may do so notwithstanding that the balances on such accounts and the liabilities may not be expressed in the same currency and the Bank is hereby authorised to effect any necessary conversions at the Banks rate of exchange then prevailing.
18. | EVIDENCE OF INDEBTEDNESS |
18.1 | A statement certified by any officer of the Bank as to any amount due by the Borrower to the Bank under the Facility Letter and the Security Documents shall be conclusive evidence that such amount is in fact due and payable. |
18.2 | A certificate by the Bank as to the board lending rate, prime lending rate, Cost of Funds, Swap Offer Rate, SIBOR or such other rate of interest shall be conclusive and binding for all purposes upon the Borrower. |
19. | APPLICATION OF MONIES |
If any sum paid or recovered in respect of the Borrowers liabilities under the Facility Letter or any of the Security Documents is less than the amount then due, the Bank may apply that sum to principal, interest, fees or any other amounts due under the Facility Letter or the Security Documents in such proportions and order and generally in such manner as the Bank shall deem fit.
20. | REVIEW OF THE FACILITIES |
Notwithstanding anything to the contrary, express or implied, contained herein, the Facilities agreed to be made available and granted from time to time to the Borrower shall at the absolute discretion of the Bank be reviewed from time to time and the Bank shall, at its absolute discretion without prior notice to or consent from the Borrower, be entitled to:-
20.1 | vary the terms and conditions of, decrease or restructure any of the Facilities granted to the Borrower; or |
20.2 | cancel or terminate the Facilities granted to the Borrower, or any part thereof, whereupon such Facilities (or part thereof, as the case may be) shall cease to be available and all monies outstanding in respect of such Facilities (or part thereof, as the case may be) shall become immediately due and payable whether any formal demand shall have been made or not. |
Nothing contained in the Facility Letter and/or the Security Documents shall be deemed to impose on the Bank any obligation either at law or in equity to make or continue to make the Facilities available to the Borrower.
21. | THE BANK NOT ANSWERABLE FOR LOSS |
The Bank shall not be answerable for any involuntary loss happening in or about the exercise or execution of the powers, rights, remedies, authorities, discretion or trusts which may be vested in the Bank by virtue of the Facility Letter and/or the Security Documents or by law for the time being in force .
22. | RIGHTS CUMULATIVE, WAIVERS |
22.1 | The rights, powers and remedies of the Bank under the Facility Letter and the Security Documents are cumulative and may be exercised as often as the Bank considers appropriate and are in addition to any other rights, powers and remedies which the Bank has or may have under the general law. |
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22.2 | No failure or delay on the part of the Bank to exercise or enforce any of its rights, powers or remedies under the Facility Letter or the Security Documents shall impair or operate as a waiver of such rights, powers or remedies, and any single or partial exercise or enforcement of any such rights, powers or remedies shall not preclude any other or further exercise or enforcement thereof or of any other rights, powers or remedies. |
22.3 | The Banks rights are not capable of being waived except by an express waiver in writing. |
23. | SEVERABILITY |
The invalidity, illegality or unenforceability of any provision of the Facility Letter, the Security Documents or these terms and conditions under any law or regulation shall not in any way affect or impair the validity, legality or enforceability of the remaining provisions thereof or hereof but these terms and conditions shall be construed as if such invalid, unlawful or unenforceable provision or part thereof has never been contained herein.
24. | ASSIGNMENT OF RIGHTS |
The Bank may assign any or all its rights hereunder by notifying the Borrower and may, for this purpose, disclose to a potential assignee or transferee such information about the Borrower as may have been available to the Bank. The Borrower may not assign any of its rights without the Banks prior written consent.
25. | NOTICES |
25.1 | Any notice or demand required to be served on the Borrower by the Bank hereunder may be served: - |
(a) | on any of the Borrowers officers or partners personally; |
(b) | by letter addressed to the Borrower or to any of the Borrowers officers or partners and left at the Borrowers address known to the Bank or at the Borrowers registered office or at any one of the Borrowers principal places of business; |
(c) | by posting the same by letter addressed in any such manner as aforesaid to such last address, registered office or any such principal place of business; or |
(d) | by telex or facsimile addressed in any such manner as aforesaid to the Borrowers any then published telex or facsimile number, or the last such number advised to the Bank by the Borrower in writing. |
25.2 | If there are two or more Borrowers then any notice served in accordance herewith on one of the Borrowers shall be deemed validly served on all of the Borrowers. |
25.3 | Any notice or demand from the Bank: - |
(a) | sent by post in accordance with Clause 25.1 to an address in Singapore shall be deemed to have been served on the Borrower at 10.00a.m. (Singapore time) on the business day next following the date of posting or, in the case of an address outside Singapore, shall be deemed to have been served on the Borrower at 10.00 a.m. (Singapore time) on the third business day next following and exclusive of the date of posting; |
(b) | sent by hand shall be deemed to have been served on the Borrower when left at the address required by Clause 25.1; or |
(c) | sent by telex or facsimile in accordance with Clause 25.1 shall be deemed to have been served on the Borrower when despatched. |
In proving such service by post it shall be sufficient to show that the letter containing the notice or demand was properly addressed and posted and such proof of service shall be effective notwithstanding that the letter was in fact not delivered or was returned undelivered.
25.4 | Any communication from the Borrower shall be irrevocable and shall not be effective until received by the Bank. |
26. | EXPENSES |
The Borrower shall reimburse the Bank on demand for: -
26.1 | all costs, fees, expenses, stamp duties (including legal, administrative and out-of-pocket expenses) incurred by the Bank in connection with the granting of the Facilities, including but not limited to the costs, fees and expenses incurred for obtaining foreign legal opinion(s), searches conducted on the Borrower, the Surety and any assets or properties of the Borrower, the Surety and/or other third party, the preparation, execution and/or registration of the Facility Letter and the Security Documents; |
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26.2 | all legal fees on an indemnity basis and other costs and disbursements incurred in connection with administering , demanding and enforcing payment of monies due under the Facility Letter or otherwise in enforcing the Security Documents; and |
26.3 | all abortive charges (including legal fees and expenses) incurred by the Bank if the Borrower shall fail or refuse to proceed with the Facilities after acceptance of the Facility Letter. |
27. | TAXES |
27.1 | All sums payable by the Borrower under the Facility Letter and/or the Security Documents shall be paid (a) free of any restriction or condition, (b) free and clear of and (except to the extent required by law) without any deduction or withholding on account of any tax and (c) without any deduction or withholding (except to the extent required by law) on account of any other amount, whether by way of set-off, counterclaim or otherwise. |
27.2 | If (a) the Borrower or any other person is required by law to make any deduction or withholding on account of any such tax or other amount from any sum paid or payable by the Borrower to the Bank under the Facility Letter and/or the Security Documents or (b) the Bank (or any person on its behalf) is required by law to make any deduction or withholding from, or (except on account of tax on the overall net income of the Bank) any payment on or calculated by reference to the amount of, any sum received or receivable by the Bank under the Facility Letter and/or the Security Documents:- |
(i) | the Borrower shall notify the Bank of any such requirement or any change in any such requirement as soon as the Borrower becomes aware of it; |
(ii) | the Borrower shall pay any such tax or other amount before the date on which penalties attach thereto, such payment to be made (if the liability to pay is imposed on the Borrower) for its own account or (if that liability is imposed on the Bank) on behalf of and in the name of the Bank; |
(iii) | the sum payable by the Borrower in respect of which the relevant deduction, withholding or payment is required shall (except in the case of any such payment to the extent that its amount is not ascertainable when that sum is paid) be increased to the extent necessary to ensure that after the making of that deduction, withholding or payment, the Bank receives on the due date and retains (free from any liability in respect of any such deduction, withholding or payment) a net sum equal to what it would have received and so retained had no such deduction, withholding or payment been required or made; and |
(iv) | within 7 days after paying any sum from which it is required by law to make any deduction or withholding, and within 7 days after the due date of payment of any tax or other amount which it is required by paragraph (b) above to pay, the Borrower shall deliver to the Bank evidence satisfactory to the Bank of such deduction, withholding or payment and of the remittance thereof to the relevant taxing or other authority. |
27.3 | Without prejudice to the generality of the foregoing, in the event that any goods and services tax or any other taxes, levies or charges whatsoever now or hereafter required by law to be paid on or in respect of any sums payable to the Bank or any other matters under or relating to the Facility Letter, the Security Documents or the Facilities, the same shall (except to the extent prohibited by law) be borne by the Borrower and in addition to all other sums payable to the Bank by the Borrower hereunder, the Borrower shall pay to the Bank on demand a sum equivalent to the amount of such goods and services tax or other taxes, levies or charges or such part thereof which the law does not prohibit the Bank from collecting from the Borrower less any such part thereof as has been paid by the Borrower under the preceding sub-clause. |
27.4 | Without prejudice to the generality of the foregoing, the Borrowers obligations under this Clause 27 shall apply to any deduction or withholding imposed or collected pursuant to sections 1471 through 1474 of the Code, any current or future regulations or official interpretations thereof, any agreement entered into pursuant to those sections of the Code, any fiscal or regulatory legislation, rules or practices adopted pursuant to any intergovernmental agreement entered into in connection with the implementation of such sections of the Code. |
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28. | JOINT AND SEVERAL OBLIGATIONS OF THE BORROWER |
Where the Borrower is more than one person and/or entity, the representations and covenants on the part of the Borrower under the Facility Letter shall be deemed to be made by them jointly and severally.
29. | COMPENSATION FOR LOSS |
The Bank shall not be liable for any loss incurred by the Borrower (whether as a result of failure of transmission, communication or computer facilities, failure of electronic or mechanical equipment, failure of public transportation, common carrier communication or utility systems, unauthorized access, data or other theft (including the theft of passwords, codes or log-in sequences), forgery of signatorys signature, material alteration of requests for facilities, or other reason of any kind whatsoever) through no fault of the Bank.
30. | CHANGE IN CIRCUMSTANCES |
30.1 | If by reason of any national or international, financial, political or economic conditions, currency availability or exchange controls, or introduction of or any change in applicable law, regulation, directive, notice, circular, rule, guideline (the regulations) or in the interpretation or application thereof by any governmental authority or any agency of any state, it is or will become impracticable or unlawful or contrary to any of the regulations for the Bank to maintain or give effect to its obligations under the Facility Letter and Security Documents or if such introduction, change, interpretation or application imposes or modifies any capital adequacy or similar requirement (including a requirement which affects the Banks allocation of capital resources to its obligations), the Bank shall give notice thereof to the Borrower whereupon the Bank shall be deemed discharged from its obligations under the Facility Letter and the Security Document and the Borrower shall forthwith upon receipt of notice to this effect from the Bank, repay to the Bank all monies outstanding and unpaid and interest thereon accrued up to the date of payment. |
30.2 | If the Bank determines that, as a result of (a) the introduction of or any change in, or in the interpretation or application of, any law (which shall for this purpose include any removal or modification of any exemption currently in force in favour of the Borrower) or (b) compliance by it with any directive of any agency of any state:- |
(i) | the cost to the Bank of maintaining the Facilities and/or of making, maintaining or funding any drawing or overdue sum is increased; |
(ii) | any sum received or receivable by the Bank or the effective return to it under the Facility Letter and/or the Security Documents is reduced (except on account of tax on its overall net income); and/or |
(iii) | the Bank makes any payment (except on account of tax on its overall net income) or foregoes any interest or other return on or calculated by reference to the amount of any sum received or receivable by it under the Facility Letter and/or the Security Documents; |
the Borrower shall indemnify the Bank against that increased cost, reduction, payment or foregone interest or other return and, accordingly, shall from time to time on demand (whenever made) pay to the Bank the amount certified by it to be necessary so as to indemnify it.
31. | RIGHT OF PROOF/SUSPENSE ACCOUNT/PAYMENT IN GROSS |
Until and unless the whole of the monies and liabilities owing to the Bank with interest shall have been fully and completely paid and discharged,
31.1 | the Borrower and the Surety shall not be entitled as against the Bank to any right of proof in the bankruptcy of any person or winding-up of any corporation liable to the Bank or any other right under the Facility Letter and the Security Documents; |
31.2 | any monies received may be placed in a suspense account for so long as the Bank thinks fit without any obligation to apply the same or any part thereof towards discharge of such monies or liabilities and in the event of any proceedings in or analogous to bankruptcy, winding-up, liquidation, composition or arrangement, the Bank may prove for and agree to accept any composition in respect of the whole or any part of such monies and liabilities; and |
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31.3 | any monies or liabilities received from any person or estate capable of being applied towards discharge of such monies or liabilities shall be regarded for all purposes as payments in gross and if a bankruptcy order shall be made against any person liable to the Bank or an order be made or an effective resolution be passed for the winding-up of any corporation liable to the Bank, the Bank may prove for the whole of the monies and no monies received under such proof shall be considered as received under the Facility Letter or the Security Documents but the full amount owing shall be payable until the Bank has received from all sources 100 cents in the dollar. |
32. | UNFAIR PREFERENCE |
No disposition assurance security or payment which may be avoided under the provisions of the Bankruptcy Act (Cap. 20) or the Companies Act (Cap. 50) relating to unfair preference, transaction at an undervalue or otherwise, or any statutory modification or re-enactment thereof from time to time and no release or settlement which may have been given or made on the faith of any such disposition assurance security or payment shall prejudice the Banks right to recover from the Borrower and/or the Surety to the full extent of the monies and/or liabilities under the Facility Letter and/or the Security Documents. Such disposition assurance security payment release settlement (as the case may be) shall be regarded as never been granted or made.
33. | MORATORIUM |
The Facility Letter and the Security Documents and the Borrowers and the Suretys obligations and the rights of the Bank under the Facility Letter and Security Documents shall not be prejudiced diminished or affected or discharged or impaired nor shall the Borrower be released or exonerated by any moratorium or other period staying or suspending by any laws or statute rules regulations or proclamations or edicts decree or orders in Singapore or any other country or countries or the order of any court or other authority in or of Singapore or elsewhere all or any of the rights or remedies of the Bank.
34. | SPECIAL ACCOUNTANT |
In the event that, in the opinion of the Bank , circumstances have arisen which give reasonable cause for concern over the financial condition of the Borrower and/or the Borrowers ability to repay any part of the Facilities , the Borrower will, notwithstanding that an Event of Default has not occurred, forthwith upon the Banks request appoint a Special Accountant nominated by the Bank. The Bank may at its absolute discretion immediately after such request to appoint a Special Accountant make such appointment on the Borrowers behalf. The Special Accountant so appointed shall be the agent of the Borrower and the Borrower shall be solely responsible for his acts, defaults and remuneration . The Special Accountant shall have the following functions :-
34.1 | to carry out an audit of the accounts of the Borrower and report the outcome of such audit to the Bank; |
34.2 | to verify and submit to the Bank a list of the Borrowers accounts receivables; |
34.3 | to verify and submit to the Bank a list of the Borrowers creditors; and |
34.4 | to render such advisory services with respect to the financial affairs of the Borrower and to carry out such other functions as the Bank may specify in its request to the Borrower to appoint the Special Accountant. |
35. | SERVICE OF PROCESS |
The Borrower hereby agrees that personal service of any writ of summons or other originating process or sealed copy thereof pleadings or other documents may be effected on the Borrower by leaving the same at the place of business or abode or the address in Singapore of the Borrower last known to the Bank (and in this connection the Bank shall be entitled to rely on the records kept by it or that of any registry or government or statutory authority) and if the last known address of the Borrower shall be a postal box number or other hold mail address then personal service may be effected by posting the same to such address or address and the Borrower irrevocably confirms that service of such writs of summons originating process pleadings or documents in the manner aforesaid shall be deemed good sufficient personal service on the Borrower.
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36. | TELEPHONE, FACSIMILE AND EMAIL INDEMNITY |
36.1 | The Borrower shall fully indemnify the Bank against any consequences, claims, demands, proceedings, claims, liabilities, losses, actions, damages, costs and expenses (including legal costs on a full indemnity basis) whatsoever that may arise or be incurred by the Bank in agreeing at the Borrowers request to accept, rely and act on communication or instructions via the telephone, facsimile or email or in connection with any such communication or instructions, or the acting upon or carrying out such communication or instructions or the taking of steps in connection with or in reliance upon any such communication or instructions and the Borrower shall reimburse the Bank any sums on demand. Such indemnity shall extend to cover situations including but not limited to:- |
(a) | taking instructions given or purportedly given by or sent or purportedly sent by the Borrower and acting upon them; |
(b) | any error delay or failure whatsoever and wheresoever in any transmission and/or communication facilities; |
(c) | the access to and/or use of such forms of communications being prohibited, restricted, delayed or being otherwise affected by:- |
(i) | the laws and regulations of the country or jurisdiction from where the Borrower accesses and/or the terms and conditions prescribed by the relevant Internet Service Provider (ISP) in such country or jurisdiction of access; |
(ii) | any act or omission by the ISP; |
(iii) | any modification or upgrade of the Banks website; |
(iv) | any interruption of, interference with and tampering of such forms of communication; and/or |
(v) | any breakdown or malfunction of computer software or equipment whether belonging to the Bank or otherwise due to any cause whatsoever. |
36.2 | Any such forms of communication from the Borrower shall be irrevocable and shall not be effective until received by the Bank. The communication shall be deemed not to have been received (in the case of any communication made via facsimile) if the transmission thereof is not confirmed by an activity report stating the correct number of pages sent to the correct facsimile number and (in the case of any communication made via email) if the Bank has not acknowledged the receipt thereof by a reply email to the Borrower. Notwithstanding the foregoing, the Bank reserves the right at any time to treat such communication as having been received and effective. |
36.3 | The Borrower acknowledges that under no circumstances whatsoever is the Bank obliged to verify the authenticity of any instructions or communication given or purportedly given to the Bank by the Borrower. Notwithstanding the foregoing, the Bank reserves the right at any time to refrain from acting promptly upon any instructions or communication given or purportedly given by the Borrower in order to verify the authenticity thereof without incurring any responsibility for loss, liability or expense arising out of so refraining to act. |
36.4 | The Bank is authorised:- |
(a) | to rely and act upon any instructions or communication given or purportedly given to the Bank by the Borrower over the telephone or in writing signed or purportedly signed by the Borrower and sent or purportedly sent by post, facsimile or email and the Bank is not required to obtain a written confirmation thereof. The Borrower shall not hold the Bank liable for acting upon any instructions or communication notwithstanding that it is subsequently shown that the same was not given by the Borrower. The Borrower understands that any risk of misunderstanding, any error or loss resulting from instructions or communication given by unauthorised persons, any error or loss resulting from unauthorised alterations of instructions or any error loss or delay resulting from instructions or communication given over the telephone or from the use of the post, facsimile or email (whether or not arising from or in respect of equipment belonging to the Borrower or the Bank or otherwise) are entirely the Borrowers risk for which the Bank shall not be liable; |
(b) | to treat any instructions or communication given or purportedly given by the Borrower as new instructions or communication when it is unspecified that the instructions or communication are a confirmation or a change of the previous instructions or communication given; and |
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(c) | (without being obliged so to do) to record any telephone conversation made or purportedly made with the Borrower whether with or without the use of a tone warning device and the Bank may use such recordings and/or transcripts as evidence in any dispute. The Bank shall not be obliged to maintain such recordings and transcripts or keep any copies thereof. The Borrower shall not be entitled to listen to, peruse, make copies of or otherwise have access to such recordings and transcripts or any copies thereof. |
37. | CONTRACTS (RIGHTS OF THIRD PARTIES) ACT (CAP.53B) |
A person who is not a party to the Facility Letter shall have no rights under the Contracts (Rights of Third Parties) Act (CAP.53B) to enforce any of its terms.
38. | LAW AND JURISDICTION |
This Agreement, the Facility Letter and the Security Documents shall be governed, interpreted and construed in accordance with the laws of the Republic of Singapore, and the Borrower hereby irrevocably submits to the non-exclusive jurisdiction of the courts of Singapore but the Bank will be at liberty to proceed against the Borrower in any court in any other jurisdiction.
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Exhibit 10.8
CERTAIN IDENTIFIED INFORMATION HAS BEEN EXCLUDED BECAUSE THE
COMPANY BELIEVES IT IS BOTH NOT MATERIAL AND WOULD LIKELY CAUSE
COMPETITIVE HARM TO THE COMPANY IF PUBLICLY DISCLOSED
Call Center Services Agreement
This Call Center Services Agreement, together with one or more Statements of Work (each an SOW) signed by the Parties, (collectively, the Agreement) is entered into by and between Facebook Ireland Limited, with offices at 4 Grand Canal Square, Grand Canal Harbour, Dublin, 2, Ireland (Facebook) and Teledirect Pte Ltd, with offices at 750B Chai Chee Road, #04-05 to 08, Technopark@Chai Chee, Singapore 469002 (Company) effective as of November 18, 2015 (the Effective Date). The parties hereby agree as follows:
Recitals
1. | Facebook operates an online social networking platform through which it offers various products and services. |
2. | Company operates a call center through which it is capable of providing certain Services, in the Territory, including Thailand, Malaysia, Philippines and Singapore. |
3. | The parties desire to collaborate whereby Company will provide such Services in the Territory throughout the Term (defined below) conducted through call centers operated by Company. |
1. | Definitions. In addition to those definitions set forth elsewhere in this Agreement. the following capitalized terms shell have the meanings set forth below: |
(A) | Billable Hour(s) means [***]. |
(B) | Confidential Information means and includes (i) regardless of any marking or failure to mark or identity as confidential: the terms of this Agreement, the identification of and information regarding any and all Facebook employees and Users, all Materials, all Facebook Data, and any and all information, in any form, that is disclosed, provided or otherwise made available to Company in connection with this Agreement or to which Company may have access in connection with this Agreement, all technical and non-technical information concerning or related to the Facebook Properties (including the discovery, invention, research, improvement, development, marketing or sale thereof), analytics, processes, financial data and models, business and marketing plans, and general business operations, and (ii) all other information that is: either: (a) designated as confidential by Facebook at the time of disclosure; or (b) should reasonably be considered, given the nature of the information or the circumstances surrounding its disclosure, to be confidential. |
(C) | Company Personnel mean any employees of Company or Temp Staff, including but not limited to sales and account executives or operations managers, who are assigned to and/or perform any services in connection with the Facebook account relationship. |
(D) | Facebook Competitor(s) means [***]. |
(E) | Facebook Data means any and all data and information received, stored, collected or otherwise obtained or accessed by or made available to Company in connection with this Agreement, performance of this Agreement, access to any Sites (defined below) or any Systems (defined below) regarding any aspect of Facebooks business, including all personally identifiable information and all other data or information concerning or provided by or on behalf of any Facebook employee, User, business partner or content provider, and other information such as system procedures, employment practices, finances, inventions, business methodologies, trade secrets, copyrightable and patentable subject matter. |
(F) | Facebook Marks means Facebook trademarks, trade names, service marks, service names, logos, and distinct brand elements that appear from time to time on the Facebook Properties and are protected under copyright law or as to which Facebook and/or its affiliates have established trademark or trade dress rights, and any modification to the foregoing that may be created by Facebook during the Term. |
(G) | Facebook Properties means the online properties, products, services, websites, widgets, Facebook e-mail addresses and systems, applications and pages, including, without limitation, those accessible in whole or in part through any platform, medium or device, whether presently existing or later developed, that are developed in whole or in part by or for Facebook or its affiliates throughout the world. |
(H) | Facebook Property means, collectively, the Facebook Marks, Materials, Feedback, Facebook Data, Prospect Lists, Facebook Properties and Confidential Information, and all intellectual property rights contained therein. |
(I) | Laws mean, collectively, any and all statutes, regulations, rules, orders, codes, ordinances, and requirements of any and all governmental agencies, legislative bodies, and regulatory authorities that may be applicable to the activities contemplated by this Agreement, including but not limited to all consumer protection laws, advertising law, privacy laws and regulations, laws governing the handling, collection and/or processing of any Facebook Data (including, without limitation User information) or consumer payment, credit card or banking information. |
(J) | Materials mean, collectively, any and all offline and online marketing and promotional materials concerning Facebook, the Facebook Properties and advertising opportunities on the Facebook Properties in the Territory, as made available by Facebook and/or its affiliates from time to time, pursuant to this Agreement, and/or as approved by Facebook in advance and in writing. |
(K) | Services means, for purposes of this Agreement the call center services described in the applicable SOW, conducted through call centers operated and managed by Company in the Territory in accordance with the terms of this Agreement and all Laws. |
(L) | Term shall have the meaning set forth below in Section 15A. |
(M) | Territory means and is limited to the countries identified in the applicable SOW, but excluding any destinations that are currently (or at any time during the Term) subject to U.S. or EU embargoes or trade sanctions. |
(N) | User(s) means, individually and collectively, any person(s) or entity(ies) that has been, is and/or becomes an end user of, or is an existing advertiser or prospective advertiser on, any of the Facebook Properties, products or services offered or made available through the Facebook Properties, or products or services offered by affiliates or any entity(ies) that Facebook or its affiliates may acquire after the Effective Date, either within or outside the Territory. |
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2. | Scope of Relationship. |
(A) | General. Subject to the terms of this Agreement, Company will perform the Services in the Territory in accordance with the requirements and deadlines in the applicable SOW(s). The form of SOW is set forth in Exhibit A to this Agreement. SOWs may be entered into under this Agreement by Facebook or any of its affiliates. The entity that executes an SOW with Company shall be considered Facebook for all purposes of the SOW and this Agreement and the SOW shall be considered a two party agreement between Company and such entity. Facebook may request modifications to a SOW at any time. In that event, the parties will document such modifications in a written change order. Any impact to delivery dates and pricing must be mutually agreed. No change order shall be binding on either party until executed by Facebook and Company. |
(B) | Rights Reserved by Facebook. |
(i) | Company understands and agrees that the Services are non-exclusive and that Facebook will, directly and indirectly, provide services that are similar to or compete with the services provided by Company hereunder to any person or entity within or outside the Territory during and after the Term without limitation of any kind upon Facebook or its affiliates. Company hereby accepts the foregoing authorization under these terms and conditions and agrees to perform its obligations hereunder and comply with this Agreement. |
(ii) | Company acknowledges and agrees that nothing in this Agreement limits or shall in any way be construed as limiting: (a) Facebooks (or its affiliates) own advertising, marketing, promotion, sales, support, or account management activities either within or outside the Territory, during or after the Term, (b) Facebooks (or its affiliates) sale of any advertising or promotional opportunities on or in connection with any Facebook Properties, including but not limited to either within or outside the Territory, during or after the Term, (c) Facebooks appointment of other service providers, marketers, resellers, agents, licensees, or distributors, (d) Facebooks ability to sell directly to any person or entity, or (e) any other rights that Facebook has or may have in the future. Company further acknowledges and agrees that Facebook has the sole right to sell and license the advertising and promotional rights with respect to the Facebook Properties, and Facebook will retain any and all revenue generated from any sales or licenses of advertising or promotional rights. |
3. | Limited Exclusivity of Company. |
Unless agreed to in writing by Facebook, Company covenants and agrees to the following exclusivity obligations: Company will not, directly or indirectly, permit, assign or authorize any senior individual Company Personnel to work with or perform any services for any Facebook Competitor during and for a period of [***] from the date on which such applicable individual Company Personnel ceases to perform Services for Facebook (the Exclusivity Period). In this instance Senior Individual can be defined as Vendor Program Manager assigned to a Facebook Program. For the avoidance of doubt, call center agents or team leaders are not subject to this regulation.
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4. | Material License. |
(A) | Subject to Companys compliance with the terms and conditions of this Agreement, Company is granted a non-exclusive, non-transferable, revocable, limited license (without the right to sublicense) during the Term to use the Facebook Materials solely to provide Services in the Territory as expressly authorized under this Agreement; but not otherwise. Company also agrees to comply with the Facebook e-mail, trademark, communications and branding guidelines and requirements at all times in performing this Agreement, including, without limitation, with respect to all Services communications to Facebook employees and/or Users, if any, originating from a Facebook e-mail address or any other uses of the Facebook Properties. These e-mail, trademark, communications and branding guidelines will be furnished to Company and may be updated by Facebook from time to time. |
(B) | Company covenants and agrees that Company will not sublicense, sell, distribute, reproduce, modify, publicly perform, or display any Materials, in whole or in part, and that Companys use of the Materials will comply with this Agreement, all Laws and the guidelines provided by Facebook from time to time. |
(C) | Company will not use Facebook Marks or any Materials in a manner that reflects negatively, disparages, or tarnishes the name, reputation, image or goodwill of Facebook or its affiliates, or any of their respective products or services. |
5. | Covenants. |
(A) | General Covenants. Company covenants and agrees that it will: (i) act at all times and conduct its activities in a professional and competent manner and operate its business in a manner that reflects well on the goodwill, good name and good reputation of Facebook, (ii) perform all Services described in the applicable SOW (Services) with a degree of quality equal to or higher than applicable industry standards, (iii) perform its obligations hereunder utilizing its own personnel and agents but not utilizing subcontractors or vendors, (iv) not modify the Materials or create, combine or provide any other content or materials for use in connection with the Materials that has not been specifically approved in advance and in writing by Facebook, (v) not engage in any illegal, false or deceptive advertising or practices in the course of Companys business activities, including the Services, (vi) not make any representations, warranties, or guarantees to Facebook employees, Users, or any other person or entity on behalf of Facebook or regarding the Facebook Properties, (vii) not, directly or indirectly, whether acting on its own behalf or on behalf of any Facebook Competitor, solicit or attempt to solicit any Facebook employees or Users (viii) adhere to its obligations and commitments contained in Section 3 above for the duration of the applicable Exclusivity Periods, (ix) not use any Facebook Data to, directly or indirectly, advertise, market, promote or sell any third partys products, services, or offerings or any advertising opportunities in connection therewith to any User; and (x) ensure that all Services comply at all times with the terms of the service level agreement (SLA), if applicable, as set forth in the applicable SOW. [***] |
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(B) | Regulatory Clearances. Company acknowledges and agrees that the marketing and promotion of advertising opportunities on the Facebook Properties to Prospects in the Territory may require certain regulatory and governmental clearances, approvals, licenses, registrations, disclosures, fees and permits necessary to comply with Laws regarding such marketing and promotional activities. Company covenants and agrees that it will be solely responsible for (i) ensuring all content, information and material communicated in or via any Facebook e-mail address issued to Company complies with all Laws; and (ii) obtaining any and all such regulatory and governmental clearances, approvals, licenses. registrations, disclosures fees and permits necessary to perform Companys obligations herein. Accordingly, Company is responsible for any and all costs and expenses associated with its compliance with this provision and will promptly deliver to Facebook accurate and complete documentation and evidence of its compliance with this provision that Facebook may request from time to time. |
(C) | Compliance with Laws. Notwithstanding Section 18.C Company will comply with all applicable federal, state, county and/or local Laws and regulations and Executive Orders with respect to Companys employees, contractors, agents and authorized subcontractors who are providing Services on behalf of Company under this Agreement including, but not limited to: |
| wage and hour laws, health and safety laws, family and medical leave laws, military leave laws, workers compensation laws, and employment discrimination laws; |
| laws prohibiting discrimination in hiring and employment on the basis of sex, race, age, disability, religion, national origin or any other legally protected basis applicable to Companys applicants and employees in the jurisdiction(s) where the Services are provided; |
| laws regarding the timely payment of all taxes (e.g., self-employment, social, income, sales, and other applicable state, federal, and local taxes); |
| immigration laws and regulations applicable to their applicants and employees in any jurisdiction, and will not knowingly employ or continue to employ an unauthorized alien (as defined in subsection (h)(3) of the Immigration Reform and Control Act of 1986); and |
| United States Department of Commerce and other United States export control laws and regulations and equivalent laws and regulations outside the U.S., and not produce or distribute any software, products or technical data in any country where such production or distribution would be unlawful. |
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6. | Performance Standards. |
(A) | Training. Company covenants and agrees to require its staff, account executives and operations managers to participate in and undergo any and all training sessions, if any, that Facebook may offer from time to time. Company understands, however, that Facebook makes no commitment to provide such training or related resources but may do so in its sole discretion. |
(B) | Staffing and Organization. Company shall assign and manage Company Personnel as necessary to handle and operate the Services under this Agreement. Before assigning any individual Company Personnel to the Facebook account, Company shall: (1) notify Facebook of the proposed assignment, and (2) provide Facebook with a resume and such other information about the individual as may be reasonably requested by Facebook. If Facebook objects to the proposed assignment, the parties shall attempt to resolve Facebooks concerns on a mutually agreeable basis. Company will use best efforts to ensure continuity of Company Personnel performing the services during the Term. All dedicated Company Personnel will be required to complete [***] of service on the Facebook account before applying for another position within the Company. In the event of a voluntary resignation, involuntary termination for cause, illness, disability, death, reassignment, or long term leave of any Company Personnel with no less than [***] of service (Original Company Personnel) on the Facebook account, Company shall (A) give Facebook as much advance notice as reasonably possible of such development, (B) expeditiously identify suitable replacement Company Personnel, and (C) ensure that replacement Company Personnel is in place no later than the end of the assignment of the Original Company Personnel. If Facebook requests that Company remove any Company Personnel from the Facebook account, within three (3) business days after such request, Company will review and discuss the matter (including Facebook concerns) with Facebook. Company will thereafter promptly review the employees actions, record and performance, and handle the matter in full compliance with all applicable employment laws and Companys employment policies and procedures. Company hereby acknowledges and agrees that at all times that Company shall remain the employer for all Company Personnel assigned to Facebook under this Agreement for all purposes (including legal and tax purposes), and Company is solely responsible for full management of and all legal compliance obligations, including but not limited to those pertaining to employment laws, associated with Company Personnel and the promotion, demotion, termination or resignation of same. Company further acknowledges and agrees that Company Personnel are not employees or co-employees. nor shall they in any way be construed as such, of Facebook or Facebooks affiliates or agents. Company Personnel shall not be entitled to participate in any of Facebooks employee benefit plans and Company shall require Company Personnel to acknowledge in writing their agreement of the terms of this clause. Company will ensure that the contract between Company and Company Personnel contains substantially similar terms whereby Company is the employer of Company Personnel and Company Personnel are not a contractor or self-employed worker, and Company Personnel are not employees, nor shall they in any way be construed as such, of Facebook or Facebooks affiliates or agents. |
Performance Metrics: Monthly goals will be set out and defined by the applicable SOW (the Monthly Goals). The Company must on a quarterly basis meet no less than [***] of the Monthly Goal. At all times the Company must ensure that no more than [***] of the Company Personnel perform below [***] of the Monthly Goals.
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(C) | Facilities. The services provided by Company shall be from one or more Company facilities, each meeting or exceeding the applicable industry standards and any specific minimum physical space or other requirements as may be set forth in the applicable SOW (each, a Company Facility) The Company Facility will be segregated (logically and physically) from the other facilities of Company that are used to provide services to any customers other than Facebook. For purposes of this Agreement, a Company Facility may be a portion of a larger Company building or operation, provided it meets the requirements of this Agreement and Facebooks approval. |
(D) | Facility Proposals and Selection. No services will be provided to any Facebook Competitor from the same floor within the Company Facility at which Facebook services are to be provided pursuant to this Agreement. Company shall ensure no Company personnel who perform services for any Facebook Competitor will have access to the applicable Company Facility from which services are provided to Facebook. Company will ensure that each Company Facility and the infrastructure contained within it are a safe and healthy workplace that is maintained and secured in accordance with best industry standards and practices. |
(E) | Facility Management. The day-to-day operation of each Company Facility will be supervised and managed by Company in a manner necessary to provide the services as required under this Agreement. Facebook shall be entitled to assign Facebook employees and agents to review operations of arty Company Facility from time to time. Any such Facebook employee or agent shall not have any supervisory or managerial responsibility with respect to any Company employees or services. |
(F) | Changes to Staffing Facilities or Service. Except for the voluntary resignation, involuntary termination for cause. illness, disability or death of any Company personnel, Company shall not make any changes to the services, more than [***] Company Personnel (including but not limited to sales and account representatives, or operations managers) assigned to the Facebook account within [***], or to the location of the Company Facilities assigned to the Facebook account, without the prior written approval of Facebook. Facebook may approve or reject any or all such changes in its sole discretion. |
7. | Compensation. |
(A) | Fees. Company shall be paid for Billable Hours under the rate structure and currency set forth in the applicable SOW (Compensation), for the Services (the Fees), subject to the maximum stated in that SOW. [***] Any and all invoices for Fees shall also be accompanied and supported by detailed time entries for each increment of a Billable Hour expended in performing the Services. |
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(B) | Expenses. [***] |
(C) | Invoices. Fees and expenses shall not be invoiced by Company unless each invoice is accompanied by a detailed report identifying the basis for such Fees and expenses covered by that invoice. In addition, Company will ensure that all invoices include the applicable PO number and are sent to the PO Bill To address. Company understands that in no event will Facebook process any invoice that does not comply with these requirements or that does not include the applicable report and supporting documentation. |
(D) | Taxes. Each party is solely responsible for the payment of taxes on its own net income. |
(E) | Payment. Payments shall be made in [***] as set forth in the applicable SOW or as otherwise determined by Facebook, within [***] of receipt of an undisputed invoice. Facebook reserves rights of setoff and withholding from any amounts otherwise due Company. Facebook further reserves the right to dispute any invoice in good faith and non-payment of a disputed invoice shall not constitute a breach by Facebook or permit suspension on Companys part. |
(F) | Reporting. Company will provide Facebook with reports, data and analysis containing information in reasonable detail regarding its performance of the Services, and any other information that Facebook may reasonably require. All reports delivered or made available to Facebook become Facebook Confidential Information and Facebook Property. |
(G) | Audits. [***] |
8. | Security. |
(A) | Site and System Access. If Company obtains or is granted access to any: (a) Facebook and/or Facebook affiliate facility or location (each a Site) and/or (b) Facebooks and/or any of its affiliates respective (owned, leased or licensed) systems, networks, software programs, databases, computers. telecommunications or other information systems owned, controlled or operated by or on their respective behalf (collectively Systems), then such access, in all cases, is subject to Companys compliance with all then-current Facebook policies, including, but not united to all security, safety, environmental, information technology, legal, and business conduct policies. Any access to any Sites and/or Systems is strictly for the purpose of Companys performance of the Services during the Term, but not otherwise. In no event shall Company access or make use of any Sites or Systems except to perform the Services. |
(B) | Data Security. [***] |
9. | Confidentiality. |
In the performance of or otherwise in connection with this Agreement, Facebook may provide, disclose or otherwise make available to Company certain Confidential Information. Company covenants and agrees that it and its employees and agents will hold such Confidential Information in strict confidence and will: (i) use the Confidential Information solely for the purpose of providing the Services to Facebook, but not otherwise; (ii) take suitable precautions and measures to maintain the confidentiality of the Confidential Information at all times; and (iii) not disclose the Confidential Information to any person or entity other than employees of Company who have a need to know the Confidential Information to perform Companys obligations under this Agreement, provided such employees are bound to written obligations of confidentiality with respect to the Confidential Information that are no less restrictive than those contained herein. Company agrees to have all Company Personnel assigned to provide services to Facebook or any of its subsidiaries sign an agreement that substantially covers the confidentiality and assignment rights as set out in the Form Confidential Information and Invention Assignment Agreement (CIIAA) (Exhibit B) prior the date on which Services are first rendered to Facebook.
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10. | Ownership. |
(A) | General. All rights, title and interest, including all intellectual property rights, in and to the Facebook Property are and shall remain the sole and exclusive property of Facebook. Company acknowledges and agrees that: (i) Facebook owns all information concerning the Users, (ii) Facebook maintains User information derived from sources other than Company, and (iii) Facebook owns any and all information collected by Company and/or Facebook from Users, whether or not Company has derived or maintains identical information or has or asserts any rights therein; all of the foregoing listed in (i) through (iii) are included in the meaning of Facebook Data. Company hereby disclaims any right or interest whatsoever in the Facebook Data and agrees not to contest Facebooks rights therein. Nothing in this Agreement shall confer in Company any right of ownership in any Facebook Property, and Company shall not purchase or bid on keywords that are Facebook Marks or any combination of keywords which are or include Facebook Marks from any third party advertising program. |
(B) | Reservation. Company shall not dispute or contest Facebooks ownership of the Facebook Property. This Agreement does not grant Company any implied rights or licenses with respect to Facebook Property. All rights and privileges not expressly granted by Facebook in this Agreement are hereby reserved by Facebook. Company agrees that any goodwill associated with or arising from use of the Facebook Marks by Company shall inure to the benefit of Facebook. |
(C) | Feedback. [***] |
11. | Representations and Warranties. |
(A) | Mutual. [***] |
(B) | Company Representations. [***] |
(C) | Disclaimer. [***] |
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12. | Indemnification. [***] |
13. | Limitation of Liability. |
(A) | [***] |
(B) | [***] |
(C) | [***] |
(D) | [***] |
(E) | [***] |
14. | Term and Termination. |
(A) | Term. Unless terminated earlier as provided herein, the initial term of this Agreement shall be for a period of twelve (12) months from the Effective Date (Initial Term). Unless Facebook provides written notice of its election not to renew this Agreement upon no less than fifteen (15) days written notice prior to expiration of the then-current term, this Agreement shall automatically renew for additional twelve (12) month periods (each a Renewal Term). The Initial Term and all Renewal Terms shall be collectively referred to as the Term. |
(B) | Termination. |
(i) | Except for any of the instances of default identified in Section 15B(ii) below, either party may terminate this Agreement upon written notice in the event the other party breaches any of its obligations hereunder and fails to cure such breach within [***] of its receipt of the written termination for cause notice. |
(ii) | Notwithstanding anything to the contrary, Facebook shall have the right to terminate this Agreement immediately upon notice and without the offer of any cure period in the event of any of the following events of default: [***] |
(iii) | Facebook may terminate this Agreement and/or any SOW at any time and for any reason or no reason upon [***] written notice. Any termination of a SOW shall not result in termination of any other SOW(s) or this Agreement. However any termination of this Agreement shall result in termination of all then-pending SOW(s). |
(C) | Effect of Termination. Upon expiration or any termination of this Agreement: (i) Company will immediately cease and desist all Services: (ii) Company will immediately cease and desist use of the Materials, including Facebook Marks; (iii) Company will promptly return to Facebook all Materials and Confidential Information, and (iv) Company shall reasonably cooperate with Facebook to transition the Services to Facebook or its designated service provider. |
(D) | Survival. All defined terms and the following Sections of this Agreement shall survive expiration or any termination of this Agreement: 1 (Definitions), 2B (Scope of Relationship), 3 (Exclusivity), 5B-5C (Materials License), 6 (Covenants), 10 (Confidentiality), 11 (Ownership), 12 (Representations and Warranties), 13 (Indemnification), 14 (Limitation of Liability), 15C (Effect of Termination), 15D (Survival), 16 (Publicity), 17 (Dispute Resolution) and 18 (General). |
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15. | Publicity. |
Company understands and agrees that (A) it will not use Facebooks name, logo or trademarks or issue any public announcements or press releases regarding this Agreement, (B) Company is prohibited from confirming or commenting on any information, public or otherwise, concerning Facebook or its business, regardless of its accuracy, without Facebooks prior specific written permission in each instance, and (C) Company will keep confidential the nature of its relationship with Facebook (including, but not limited to the business purposes under this Agreement).
16. | Dispute Resolution. |
In the event of any dispute or controversy between the parties, the parties shall attempt to resolve the dispute in a fair and reasonable way. To that end, the parties shall first attempt to resolve such dispute or controversy through one senior management member of each party. Notwithstanding the foregoing, Facebook is entitled to and shall have the right to immediately seek equitable relief in order to protect any rights with respect to Companys obligations as set forth in Section 3 (Limited Exclusivity), Section 7F (Changes to Staffing, Facilities and Services), Facebooks Confidential Information, ownership in Facebook Property and/or intellectual property assets of Facebook, its affiliates and/or licensors. Company hereby waives any bond requirements that may otherwise be applicable in order for Facebook to pursue or be granted such equitable relief.
17. | General. |
(A) | Independent Contractors. Company is an independent contractor and not an employee, partner, agent or joint venturer. Company will be solely responsible for any and all obligations and payments due with respect to its employees and contractors. Neither party will make any commitment, by contract or otherwise, binding upon the other or represent that it has any authority to do so. This is not an exclusive agreement as to Facebooks obligations, duties or authorizations. Company agrees that Facebook reserves the right to engage and use other parties to provide services that are the same or similar to the Services and other services offered and/or performed by Company hereunder. |
(B) | Assignment. Neither party may assign this Agreement without the prior written consent of the other party and any attempt to do so will be null and void. Notwithstanding the foregoing, Facebook may assign this Agreement to an entity in connection with a reorganization, merger, consolidation, acquisition, or other transaction involving all or substantially all of the voting securities or assets of Facebook upon written notice to Company. |
(C) | Governing Law. This Agreement will be governed and construed under the laws of Singapore without regard to conflicts of law provisions. Any suit or proceeding arising out of or relating to this Agreement will be brought in the courts in Singapore, and each party irrevocably submits to the jurisdiction and venue of such courts. |
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(D) | Insurance. Company, at its sole cost and expense, will maintain in effect at all times during the Term adequate insurance to cover any liabilities which may arise as a result of Companys performance under this Agreement. Companys insurance coverage, however, will not limit Companys liability under this Agreement. |
(E) | Nondiscrimination. To the extent required by applicable law, Company shall comply with the following: (a) Company shall abide by the requirements of 41 CFR 60-741.5(a). This regulation prohibits discrimination against qualified individuals on the basis of disability, and requires affirmative action by covered prime contractors and subcontractors to employ and advance in employment qualified individuals with disabilities; (b) Company shall abide by the requirements of 41 CFR 60-300.5(a). This regulation prohibits discrimination against qualified protected veterans, and requires affirmative action by covered prime contractors and subcontractors to employ and advance in employment qualified protected veterans; and (c) Company shall also abide by the requirements of Executive Order 11246 and the requirements of 41 C.F.R. §60-1.4(3) which requires Company to take affirmative action to ensure that applicants are employed, and that employees are treated during employment, without regard to their race, color, religion, sex, or national origin. Such action shall include, but not be limited to the following: Employment, upgrading, demotion, or transfer, recruitment or recruitment advertising; layoff or termination; rates of pay or other forms of compensation; and selection for training, including apprenticeship. |
(F) | Anti-Bribery. Company, in connection with its provision of the Services pursuant to this Agreement shall refrain from: (i) offering, giving or promising, directly or indirectly, money or anything of value to any person in any manner that would constitute commercial bribery or an illegal kickback, or would otherwise violate any applicable anti-bribery law, and (ii) offering, giving or promising, directly or indirectly, money or anything of value to a Government Official or other person to influence a Government Official in his or her official capacity, induce a Government Official to do or omit to do any act in violation of his or her lawful duty, or to secure any improper advantage in order to assist in obtaining or retaining business for or with, or directing business to, any person. For the purposes of this section, anything of value shall include, but not be limited to, cash or a cash equivalent, discounts, gifts, use of materials, facilities or equipment, entertainment, drinks, meals, transportation, lodging, or promise of future employment. Government Official shall mean any official or employee of any national, state, regional, provincial, city, local, tribal, or foreign government; any official or employee of any government department, agency, commission, or division; any official or employee of any state-owned or state-controlled enterprise; any official or employee of a public educational, scientific or research institution; any political party or any official or employee of a political party; any candidate for public office, any official or employee of a public international organization; any person acting on behalf of or any relatives or close family/household members of any of those listed above. |
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(G) | Entire Agreement. This Agreement is the entire agreement of the parties as to the subject matter and supersedes all prior written and oral agreements and understandings relating to same. This Agreement may only be modified or amended in a writing signed by the parties. |
(H) | Waiver. No provision of this Agreement will be waived by any act, omission or knowledge of a party or its agents or employees except specifically in a writing signed by the waiving party. |
(I) | Severability. If any provision is deemed by a court unenforceable or invalid, that provision will be stricken or modified and the remainder of this Agreement will be in full force and effect. |
(J) | Counterparts. This Agreement including any and all SOW(s), may be executed in counterparts, each of which will be deemed an original and together will constitute the same instrument. An executed version of this Agreement that is scanned and delivered via email or fax, will, for all purposes be deemed an original. |
(K) | Authority. Each party represents that the individual signing this Agreement has the requisite legal authority to bind the party on whose behalf he/she is signing. |
The parties have executed this Agreement by their duly authorized representatives as of Effective Date.
Agreed to and Accepted by: |
Agreed to and Accepted by: | |
Company: Teledirect Pte Ltd |
Facebook Ireland Limited | |
Signature: |
Signature: | |
Title: |
Title: | |
Date: |
Date: |
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Exhibit A
STATEMENT OF WORK No. ________
NO SERVICES MAY BE PERFORMED UNTIL FACEBOOK AND COMPANY SIGN THIS STATEMENT OF WORK AND FACEBOOK ISSUES A VALID PURCHASE ORDER (IF APPLICABLE)
Call Center Services
The purpose of this SOW is to describe the Services that Company will provide to [Facebook Ireland Limited with offices at Grand Canal Square, Grand Canal Harbour, Dublin, 2, Ireland (Facebook) under the terms of the Call Center Services Agreement entered into between the parties on _______________ (the Agreement). This SOW is made pursuant to and shall be governed by the Agreement. Capitalized terms used in this SOW but not defined herein shall have the meanings given in the Agreement. This SOW is effective as of ________________ (SOW Effective Date). Unless terminated earlier in accordance with the terms of the Agreement, the initial term of this SOW shall be for a period of [***] from the SOW Effective Date (Initial SOW Term). Unless Facebook provides written notice of its election not to renew this SOW upon no less than [***] written notice prior to expiration of the then-current term, this SOW shall automatically renew for additional [***] (each a Renewal SOW Term). The Initial SOW Term and all Renewal SOW Terms shall be collectively referred to as the SOW Term.
1. | Point of Contact. |
[NAME)
[ADDRESS)
[EMAIL, PHONE/FAX]
2. | Territory. |
Company will provide the Services in the following countries: [INSERT APPLICABLE COUNTRIES]
3. | Description of Services |
[INSERT THE APPLICABLE DESCRIPTION OF CALL CENTER SERVICES]
4. | Quality Assurance. |
Facebook will perform random Quality Assurance audits on both hard metrics as well as subjective assessments such as language and grammar quality, professionalism, accuracy of product knowledge, and brand representation.
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5. | Company Facility: |
The following Company Facility is approved by Facebook: _________________________
6. | Service Levels: |
Company agrees to adhere to the following service levels throughout the Term:
[INSERT THE APPLICABLE SERVICE LEVELS]
7. | Compensation: |
Subject to the terms of the Agreement and this SOW, Company shall be paid the following compensation (all amounts in USD).
A. | [***] |
B. | [***] |
C. | [***] |
D. | [***] |
E. | [***] |
Maximum Payment Amount: Based on the assumptions and requirements set forth In Exhibit A and notwithstanding anything to the contrary, unless otherwise agreed upon in writing by Facebook, the amounts for which Facebook is invoiced by Company under this Agreement shall not exceed a maximum aggregate figure of [***] for each [***] period during the Term. Furthermore, Company acknowledges that in no event is Facebook offering to pay or committing to spend this amount or any particular amount with Company during the Term or during any [***] period within the Term.
The parties have executed this SOW by their duly authorized representatives as of Effective Date.
Agreed to and Accepted by: |
Agreed to and Accepted by: | |
Company: |
Facebook Ireland Limited | |
Signature: |
Signature: | |
Title: |
Title: | |
Date: |
Date: |
15
Exhibit B
FORM CONFIDENTIAL INFORMATION AND INVENTION ASSIGNMENT AGREEMENT
[***]
16
Exhibit 21.1
List of Subsidiaries
Subsidiaries |
Place of Incorporation | |
Agorae Information Consulting (Beijing) Co., Ltd | Peoples Republic of China | |
Comparexpress Insurance Broker (Thailand) Ltd | Thailand | |
Comparexpress Pte Ltd | Singapore | |
Gascaquen Teledirect, S.A. | Spain | |
TDCX Digilab India Private Limited | India | |
TDCX Holdings Pte. Ltd. | Singapore | |
TDCX Information Consulting (Shanghai) Co., Ltd. | Peoples Republic of China | |
TDCX Japan K.K. | Japan | |
TDCX Korea Ltd | Korea | |
TDCX (CO) Pte. S.A.S. |
Colombia | |
TDCX (Europe) S.R.L. |
Romania | |
TDCX (KY) PTY LTD. |
Cayman Islands | |
TDCX (MY) Sdn. Bhd. |
Malaysia | |
TDCX (PH) Inc. |
Philippines | |
TDCX (SG) Pte. Ltd. |
Singapore | |
Teledirect Telecommerce (Thailand) Limited |
Thailand |
Exhibit 99.2
_____________, 2021
TDCX Inc.
750D Chai Chee Road,
#06-01/06 ESR BizPark @ Chai Chee,
Singapore, Singapore 469004
Re: Consent of Frost & Sullivan
Ladies and Gentlemen,
Reference is made to the registration statement on Form F-1 (the Registration Statement) filed by TDCX Inc. (the Company) with the United States Securities and Exchange Commission (the SEC) under the Securities Act of 1933, as amended, in connection with its proposed initial public offering (the Proposed IPO).
We hereby consent to the use of and references to our name and the inclusion of information, data and statements from our research reports and amendments thereto, including, without limitation, the industry report titled Outsourced Business Support Services Market Independent Research (collectively, the Reports), and any subsequent amendments to the Reports, as well as the citation of our independent valuation reports and amendments thereto, (i) in the Registration Statement and any amendments thereto, including, but not limited to, under the Prospectus Summary, Risk Factors, Managements Discussion and Analysis of Financial Condition and Results of Operations, Industry Overview and Business sections; (ii) in any written correspondence with the SEC, (iii) in any other future filings with the SEC by the Company, including, without limitation, filings on Form 20-F, Form 6-K and other SEC filings (collectively, the SEC Filings), (iv) on the websites or in the publicity materials of the Company and its subsidiaries and affiliates, (v) in institutional and retail roadshows and other activities in connection with the Proposed IPO, and (vi) in other publicity and marketing materials in connection with the Proposed IPO.
We further hereby consent to the filing of this letter as an exhibit to the Registration Statement and any amendments thereto and as an exhibit to any other SEC Filings by the Company for the use of our data and information cited for the above-mentioned purposes.
[Signature page follows]
Yours faithfully, |
For and on behalf of Frost & Sullivan Limited |
Name: |
Title: |
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