Hermes Pac. Regulatory News (HPAC)

29 Mar 2007 16:17

India Outsourcing Services PLC29 March 2007 For immediate release 29 March 2007 INDIA OUTSOURCING SERVICES PLC ('India Outsourcing' or 'the Company') Preliminary Results for the period ended 30 September 2006 India Outsourcing Services plc (AIM: IOS), a company formed to capitalise onacquisition and investment opportunities in the business process outsourcing(BPO) industry, is pleased to announce its preliminary results for the periodended 30 September 2006. Highlights Owing to the rising valuations of BPO companies in India, the Company hasdecided to broaden its strategy and to seek appropriate acquisitions ingeographies including the US and Europe Global growth of the BPO market is continuing at an impressive rate, reinforcingthe Company's confidence in the choice of the BPO market as the focus of itsacquisition and investment activities The Company has continued to exercise careful cost control, reporting net cashof £2.76 million at 30 September 2006 (30 September 2005: £0.36 million) Net loss in the period of £875,555 (2005: net loss of £424,369) and loss pershare of 14.1p (2005: loss of 34.8p) Amit Pau, Chief Executive of India Outsourcing Services, commented: "Whilst itis disappointing that the expectations of the vendors of many potential targetcompanies in India have moved to a degree that makes acquisitions unrealistic,we continue to believe that the BPO market is the ideal focus for ouracquisition and investment activities. We are therefore broadening our searchfor potential targets to geographies outside of India, including the USA andEurope." For further information: India Outsourcing Services plc Tel: 020 7297 0010Haresh Kanabar, ChairmanAmit Pau, Chief Executive Teather & Greenwood Ltd Tel: 020 7426 9000Mark DickensonSindre Ottesen Buchanan Communications Tel: 020 7466 5000Mark Court Extracts from the Chairman's statement and the report of the directors I am pleased to report India Outsourcing Services' financial results for theyear ended 30 September 2006. The period under review has in many ways beenchallenging but we enter the current year with a sound appreciation of theIndian Business Process Outsourcing (BPO) market and a revised strategy toensure the delivery of our first acquisition as soon as practicably possible. The company's financial performance in the year was in line with managementexpectations. The post tax loss in the year was £875,555 compared with a loss of£424,369 for the 13 months period ending September 2005 and the loss per sharehas been reduced to 14.1p compared with 34.8p in the corresponding period theloss per share has been reduced due to share issue. More than half of the lossincurred is due to the due diligence costs of an aborted transaction. TheCompany's net cash as at 30 September 2006 was £2.76 million. In March 2006 the Company raised £3 million gross by placing 6,666,667 shares ata price of 45p. At the same time the Company's shares were consolidated oneshare for every ten shares held. Also in March the Company raised a further£500,000 from Wheddon Limited who is a strategic investor in the company byplacing 1,000,000 shares at a price of 50p per share. India Outsourcing floated on AIM with the strategy of seeking, evaluating andcompleting the acquisition of companies in the Business Process Outsourcing(BPO) industry primarily in India. The BPO industry has grown quitesubstantially over the past few years and is expected to continue to growstrongly in the coming years. During the year we pursued in detail an acquisition by commissioning full legalaccounting and commercial due diligence on a support services company operatingwithin the US healthcare sector with a delivery facilities in the US and inIndia . However, after a very lengthy process, and in consultation with ouradvisers, we decided to abandon pursuit of the acquisition. Whilst, obviously,we are determined to complete our first acquisition as soon as practicable weare only prepared to entertain an acquisition if it offers a very clearopportunity to enhance shareholder value. It does not make sense to do atransaction at valuations that reduce the returns for our shareholders. The BPO market continues to grow steadily and is a very exciting sector in whichto be involved. However, we have seen that valuation expectations from vendors,particularly in India, are quite high and verging on the unrealistic. Thisenvironment will make it very challenging for us to achieve our stated strategyof BPO acquisitions in India. Therefore we are now also looking at acquisitionsin Europe and the USA. Outlook Whilst BPO is an exciting and growing sector in which to be involved, valuationsparticularly in India are becoming stretched. It is increasingly hard to findthe type of value enhancing transaction in India that we require and we aretherefore expanding our search for acquisitions to wider geographies. Results and dividends The profit and loss account is set out above and shows the loss for the year. The directors do not recommend the payment of a dividend for the year. Principal activities, trading review and future developments The principal activity of the company is to capitalise on acquisition andinvestment opportunities within the Business Process Outsourcing sectorprimarily in India. India Outsourcing Services Plc Profit and Loss Account for the year ended 30 September 2006 Notes Year 13 month period ended ended 30 September 30 September 2006 2005 £ £ Administrative expenses 960,459 432,503 Operating loss (960,459) (432,503) Net interest receivable 84,904 8,134 Loss on ordinary activities before taxation (875,555) (424,369) Tax on loss on ordinary activities - - Loss for the financial year (875,555) (424,369) Loss per share-basic and diluted 2 (14.1)p (34.8)p All amounts relate to continuing activities. All recognised gains and losses for the year ended have been included in theprofit and loss account. India Outsourcing Services Plc Balance sheet as at 30 September 2006 2006 2005 £ £Fixed assetsTangible assets 1,141 4,078 1,141 4,078 Current assetsDebtors 24,404 5,037Cash at bank and in hand 2,800,000 359,795 2,824,404 364,832 Creditors: amounts falling due within one year (186,777) (106,015)Net current assets 2,637,627 258,817 Net assets 2,638,768 262,895 Capital and reservesCalled up share capital 947,917 181,250Share premium account 2,990,775 506,014Profit and loss account (1,299,924) (424,369) Shareholders' funds 2,638,768 262,895 India Outsourcing Services Plc Cash Flow Statement for the year ended 30 September 2006 Year 13 month period ended ended 30 September 30 September 2006 2005 £ £ Net cash outflow from operating activities (933,272) (329,729) Returns on investments and servicing of financeInterest received 84,904 8,134 Net cash inflow from returns on investments and servicing of 84,904 8,134finance Capital expenditurePurchase of tangible fixed assets - (5,874) Net cash outflow for capital expenditure - (5,874) Net cash outflow before financing (848,368) (327,469) FinancingIssue of ordinary shares 3,500,000 800,000Expenses paid in connection with share issues (248,572) (112,736) Cash inflow from financing 3,251,428 687,264 Increase in net cash 2,403,060 359,795 India Outsourcing Services Plc 1 Accounting policies Basis of preparation The results have been prepared using accounting policies consistent with thoseused in the preparation of the statutory accounts. The financial information isderived from the financial statements for the Year ended 30 September 2006,anddoes not constitute full accounts within the meaning of Section 240 of theCompanies Act 1985. The financial statements on which the auditors have given anunqualified report do not contain a statement under Section 237 (2) or (3) ofthe Companies Act and will be delivered to the Registrar of Companies in duecourse. The financial statements have been prepared under the historical cost conventionand in accordance with the United Kingdom, Generally Accepted AccountingPractice. 2 Loss per share The calculation of loss per share of 14.1 pence (2005 - 34.8 pence) is based onthe loss for the year of £875,555 (2005 - £424,369) and on the weighted averagenumber of ordinary shares in issue during the year of 6,197,116 (2005 -1,221,156). Due to the loss in the year the effect of all potential ordinary shares isconsidered to be antidilutive. The loss per share in the prior year has been restated as a result of shareconsolidation.. The Annual Report will be sent to all shareholders. Additional copies areavailable from 22 Soho Square, London W1D 4NS. This information is provided by RNS The company news service from the London Stock Exchange