IBPO.L Regulatory News (IBPO)

12 July 2011

iEnergizer Limited

("iEnergizer" or the "Company")

MAIDEN ANNUAL RESULTS FOR THE YEAR ENDED 31 MARCH 2011

iEnergizer Limited, a leading international provider of third-party integrated business process solutions, is pleased to announce its maiden Annual Results for the year ended 31 March 2011. iEnergizer listed on the AIM market in September 2010 under the symbol IBPO.L.

Highlights

·; Successful admission to AIM in September 2010 placing £37m

·; Revenue up 41.7% to $49.36m (2010: $34.83m)

·; Underlying operating profit $16.3m (2010: $11.6m)

·; Operating profit margin kept stable at 33% (2010: 33.6%)

·; Maiden special dividend of 5.6p per ordinary share (Total £8.4m)

Sara Latham, Chairman said:

"We are very pleased to announce our maiden set of Annual Results as a listed business, in which the Company has delivered on all expectations set out at the time of the IPO.

"We have concentrated our efforts on delivering sustained top line growth, whilst at the same time maintaining operating margins at over 30%, a unique performance for a BPO business. I am also very pleased to be able to provide these results on a purely organic basis which shows the strength of our relationship with our clients and the ability to leverage those relationships to produce mutually beneficial results.

"The current financial year has started well and the Board looks to the future with confidence."

-Ends-

Enquiries:

Chairman's Statement

I am pleased to report that the Company has made significant operational and financial progress during this financial year. We have achieved the goals we set ourselves at the beginning of last year and have delivered another year of organic growth by providing third party integrated business process outsourcing (BPO) solutions to blue chip corporations throughout the world. I am delighted to announce that the results for the period were slightly ahead of market expectations following a significant upgrade during the year.

The strong performance of the Company has been delivered by focusing on its strengths and pursuing its strategy for organic growth which has expanded both its international and domestic businesses. This has been achieved by targeting new clients and also continuing to develop its existing large-scale, long-term relationships by providing a full range of high quality service offerings. iEnergizer prides itself on being an essential long term partner to its clients and not merely another external service provider. The Company delivers complex processes that often require a significant degree of customisation, which results in high quality service which is crucial to retaining existing clients and attracting new clients. The close relationships garnered with clients whilst delivering mission critical business processes can be exploited to cross sell other outsourcing services and also identify new industry-specific service offerings.

In addition to a robust operational and financial performance, the Company has also completed a significant corporate milestone by successfully listing on the AIM market of the London Stock Exchange in September 2010.

iEnergizer is a diversified business operating in a number of different sectors supplying a broad range of outsourcing services with an international client base. We believe that the varied service offering makes iEnergizer well placed to take advantage of the growing BPO opportunities both in the developed and emerging markets. We are seeing opportunities across the full service spectrum as companies in the developed markets are outsourcing activities in order to streamline their organisations, reduce costs and improve flexibility.

Our management team have worked incredibly hard and performed exceptionally well to achieve this growth during the year and I would like to thank them for their commitment and efforts, without which we would not have been able to deliver such high quality, value add services for our clients.

Sara Latham

Non-Executive Chairman Chief Executive's Review

Introduction

iEnergizer has a full service BPO offering across a range of sectors and countries with a strong financial track record of delivery which has consisted of significant organic growth.

I am pleased to announce that this robust performance has continued this year as the Company has increased top line growth by 41.7% whilst keeping its operating margin stable at 33%. This growth is achieved on purely organic basis. This is indicative of both the Company's strides within the BPO market and the complex, high-margin and high value solutions it provides for its clients.

Financial Overview

Revenue for the period was up 41.7% at $49.36m (2010: $34.83m). Operating profit increased to $16.3m (2010: $11.6m) with operating profit margin kept stable at 33% (2010: 33.6%). Profit before tax was $16.3m (2010: $118.8m - this figure was due to exceptional relating to an earlier restructuring) with EBITDA of $17.0m, giving a basic earnings per share of $0.13.

Business Review

The Company's outsourcing services are structured around industry-focused BPO services, including Banking Financial Services and Insurance (BFSI), Entertainment and Online Video Game, Information Technology and Telecom/Electronics as well as cross-industry BPO services, such as collections and customer services.

We have experienced growth from our existing client base as we have been able to leverage the established client relationships to cross sell across numerous verticals. We have also won a number of contracts during the period which have helped secure additional cash flow for the second half of the year. This trend has been seen in both the domestic Indian BPO market and the international markets during the year. Each of the service verticals has grown during the period.

Dividend

The Board is pleased to announce that on the back of its strong growth and cash generation this year, it is proposing to pay a special dividend of 5.6p per share, which will be paid during July/August 2011 to shareholders on the register on 31 March 2011. Looking forward, the Group is seeing significant opportunities to grow its operations and activities further which will require continuing investment. Your Board is committed to maintaining a strong but efficient balance sheet.

Strategy

The Group has delivered growth for its shareholders by following the strategies articulated in the Admission Document at the time of IPO; namely by:

- Expanding its revenues from the domestic Indian BPO market both by taking advantage of the growth in the market itself;

- Increasing the Group's share of that growing market;

- Growing its international client base with a focus on the US and UK;

- Maintaining and developing long term client relationships and increasing depth and breadth of services provided to them; and

- Differentiating itself through the quality and price at which it delivers its range of services by being flexible enough to evolve and provide services in complementary areas to deliver client orientated services.

The success of these strategies is evidenced in the Company's financial and operational performance and the Company is focused on pursuing these to drive growth looking forward.

Current Trading and Outlook

We continue to see attractive opportunities in both the domestic and international BPO markets and are gaining market share within all of the geographies that we operate in, by winning new contracts and developing established client relationships. In addition to servicing clients from offshore delivery centres, the Company has also started strengthening service delivery infrastructure in US and other geographies. In addition to organic growth from existing clients as well as new clients, the Company will also target potential strategic acquisitions to deliver on medium to long term consistent growth.

Anil Aggarwal

Chief Executive Consolidated Statements of Financial Position

(All amounts in United States Dollars, unless otherwise stated)

(The accompanying notes are an integral part of these Consolidated Financial Statements)

The Consolidated Financial Statements is being signed as of 08 July 2011, pursuant to resolution approved in the board meeting held on 06 July 2011.

Anil Aggarwal

Consolidated Income Statements

(All amounts in United States Dollars, unless otherwise stated)

Profit per share

(The accompanying notes are an integral part of these Consolidated Financial Statements)

Consolidated Statements of Changes in Equity

 (All amounts in United States Dollars, unless otherwise stated)

Consolidated Statements of Changes in Equity

 (All amounts in United States Dollars, unless otherwise stated)

(The accompanying notes are an integral part of these Consolidated Financial Statements)

Consolidated Statements of Cash Flows

(All amounts in United States Dollars, unless otherwise stated)

(The accompanying notes are an integral part of these Consolidated Financial Statements)

Notes to Consolidated Financial Statements

(All amounts in United States Dollars, unless otherwise stated)

1. INTRODUCTION

iEnergizer Limited (the 'Company' or 'iEnergizer ') was incorporated in Guernsey on 12 May 2010 pursuant to the Act of Royal Court of the Island of Guernsey.

iEnergizer was incorporated to serve as the holding company of iEnergizer Holdings Limited, Mauritius ("IHL"). iEnergizer acquired all of the ordinary shares of IHL from IHL's erstwhile immediate parent EICR (Cyprus) Limited("EICR" or "EICR Limited") on 15 June 2010. iEnergizer got listed on the Alternative Investment Market ('AIM') of London Stock Exchange on 14 September 2010.

iEnergizer Limited is a 'Company limited by shares' and is domiciled in Guernsey. The registered office of the Company is located at Mont Crevelt House, Bulwer Avenue, St. Sampson, Guernsey, GY2 4 LH.

iEnergizer through its subsidiaries iEnergizer Holdings Limited, iEnergizer Group FZ - LLC and iEnergizer IT Services Private Limited (together the 'Group') is engaged in the business of call centre operations and providing business process outsourcing (BPO) and back office services to their customers, who are primarily based in the United States of America and India, from its operating offices in Mauritius and India.

2. GENERAL INFORMATION AND STATEMENT OF COMPLIANCE WITH IFRS

The Consolidated Financial Statements of the Group for the year ended 31 March 2011 have been prepared in accordance with International Financial Reporting Standards (IFRS) as adopted by European Union.

The Consolidated Financial Statements have been prepared on a going concern basis, and are prepared and presented in United States Dollar (USD) which is the functional currency of the Company. Functional currency of each entity has been determined on the basis of the primary economic environment in which each entity of the Group operates.

3. GROUP RESTRUCTURING

Prior to acquisition by the Company, iEnergizer Holdings Limited was a subsidiary of EICR Limited. On 15 June 2010, the Company entered into a share exchange agreement with EICR Limited. As per the agreement, EICR Limited has transferred 2,099,346 shares of 1 USD each in iEnergizer Holdings Limited in exchange for the issue by the Company of 150,000,000 ordinary shares to EICR Limited. Consequent to this exchange, iEnergizer Holdings Limited became the wholly owned subsidiary of the Company and the Company became the wholly owned subsidiary of EICR Limited which was diluted to 78.71 percent upon listing of the Company on AIM.

In the absence of explicit guidance available under IFRS on accounting of acquisition of common control entities, the Group has chosen to account for this transaction using "Pooling of interest method". As per the pooling of interest method, these consolidated financial statements have been prepared assuming that transfer of shares was completed on the first day of the period presented i.e. 01 April 2009. The share capital of Guernsey as at 1 April 2009 is determined as the equity issued to effect the transaction, equal to the net asset value of Mauritius as of 1 April 2010.

The difference between equity of iEnergizer Holdings Limited (the acquirer) and the net asset value of iEnergizer Holdings Limited (the acquiree in this case) as at 01 April 2009 is adjusted in equity under the heading 'merger reserve'. The adjustment taken to merger reserve has been computed as under:

4. BASIS OF PREPARATION

The significant accounting policies that have been used in the preparation of these consolidated financial statements are summarised below. The consolidated financial statements have been prepared on a going concern basis. The measurement bases are described in the accounting policies below.

These consolidated financial statements include the consolidated statement of financial position of iEnergizer Limited and its subsidiaries (together the 'Group') as of 31 March 2011 as prepared in accordance with IAS 27, Consolidated and Separate Financial Statements. The consolidated financial statements have been prepared on a going concern basis and are presented in United States dollar (USD).

The subsidiaries which are consolidated under the iEnergizer group comprise the following entities:

5. BUSINESS COMBINATION

Effective 01 May 2010, pursuant to a business purchase agreement, iEnergizer IT Services Private Limited (a wholly owned subsidiary of iEnergizer Holdings Limited, Mauritius) acquired certain assets including plant and equipment, accounts receivables and other receivables, liabilities, customer contracts and employees, constituting a business for a total net cash consideration of USD 2.53 million.

Following assets and liabilities are acquired in the business combination and recorded at their fair values:

The net assets and contracts have been acquired for furthering of the domestic business of iEnergizer IT Services Limited. Goodwill represents residual purchase consideration which is not attributable to any specific intangible asset and is resultant of synergies that such combination will result for iEnergizer IT Services Private Limited.

6. GOODWILL

The net carrying amount of goodwill can be analysed as follows:

For the purpose of annual impairment testing goodwill is allocated to the following CGU, which is expected to benefit from the synergies of the business combinations in which the goodwill arises.

The recoverable amounts of the CGU was determined based on value-in-use calculations, covering a detailed three to five year forecast, followed by an extrapolation of expected cash flows for the unit's remaining useful lives using the growth rates stated below.

The growth rate reflects the long-term average growth rate for the services rendered by the CGU. This is appropriate because this sector is expected to continue to grow at above-average rates for the foreseeable future. Management's key assumptions for India business unit include stable profit margins, which have been determined based on past experiences in this market. The Group's management believes that this is the best available input for forecasting this mature market.

7. OTHER INTANGIBLE ASSETS

The Intangible assets comprises of computer software, customer contracts.

These intangible assets will be amortised as follows

8. PROPERTY, PLANT AND EQUIPMENT

Property, plant and equipment comprise of the following:

9. LONG TERM FINANCIAL ASSETS

Security deposits are interest free unsecured deposits placed with owners of the property leased to the Group for operations in operating centres. The above security deposits have been discounted to arrive at their fair values at initial recognition using market interest rates applicable in India which approximates 8% per annum. These security deposits have maturity terms of 5 years. The management estimates the fair value of these deposits to be not materially different from the amounts recognised in the financial statements at amortised cost at each reporting date.

Restricted cash represents deposits that have been pledged with banks against guarantees issued to tax and other local authorities as security to meet contractual obligations towards other parties along with accrued interest on these deposits which is also inaccessible for use by the Group.

10. DEFERRED TAX ASSETS

11. TRADE RECEIVABLES

The trade receivables have been recorded at their respective carrying amounts and are not considered to be materially different from their fair values as these are expected to realise within a short period from the reporting dates. All of the Group's trade and other receivables have been reviewed for indicators of impairment. Certain trade receivables were found to be impaired and a provision for credit losses has been recorded.

In case of trade receivables, its customers are granted a small credit period of 30 to 75 days. Trade receivables are impaired in full when recoverability is considered doubtful based on estimates made by management. Top five customers for the year ended 31 March 2011 are USD 4,435,616 being 44.50 % (31 March 2010 USD 2,944,942 being 90.77%) of net trade receivables.

The analysis of provision for bad and doubtful debts is as follows:

12. OTHER CURRENT ASSETS

13. CASH AND CASH EQUIVALENTS

14. SHARE BASED PAYMENTS

On 27 August 2010, the Company entered into an option agreement with Arden Partners and Sara Latham. Under agreement with Arden Partners, they were granted the right to subscribe at the Placing Price for 159,654 Ordinary Shares (equivalent to 0.5 per cent. in number of the number of Placing Shares). Such right may be exercised at any time during the period starting on the date of Admission and ending on the third anniversary of Admission. Under agreement with Sara Latham, Ms. Latham was granted the right to subscribe at the placing price for 10,000 ordinary shares. Such right may be exercised between the first anniversary of admission and the fifth anniversary of admission, after which it will lapse to the extent it, has not been exercised.

Information on share option granted during the year:

These equity-settled share based payments are made on the basis of fair values of services rendered are determined by reference to the fair value of the equity instruments granted. This fair value is appraised using the Black Scholes model at the grant date. The fair value is measured at the grant date. The fair value excludes the impact of non-market vesting conditions. All share-based remuneration is recognised as an expense, allocated by the management to other expenses in statement of comprehensive income with a corresponding credit to 'retained earnings'.

Volatility to shares has been determined considering volatility in comparable companies. The fair value of option using Black Scholes model is USD 0.40 for Arden Partners and USD 0.49 for Sara Latham. The inputs to the Black Scholes model for warrants that have been granted during the reporting year are summarised as follows:

During the year ended 31 March 2011, these share options have been accounted for in accordance with the principles set out under IFRS 2: Share based payments.

15. EQUITY

The share capital of iEnergizer consists only of fully paid ordinary shares with a par value of GBP 0.01 per share (previous year USD 1.00 per share). All shares represent one vote at the shareholders' meeting of iEnergizer Limited and are equally eligible to receive dividends and the repayment of capital. The total number of shares issued and fully paid up of the company as on each reporting date is summarised as follows:

16. EMPLOYEE BENEFIT OBLIGATIONS

Employee benefits are accrued in the period in which the associated services are rendered by employees of the Group. Employee benefit obligations include the components as follows:

Gratuity

The Group provides gratuity benefit to its employees working in India. The gratuity plan is a defined benefit plan that, at retirement or termination of employment, provides eligible employees with a lump sum payment, which is a function of the last drawn salary and completed years of service.

Compensated absences

The Group has accumulating compensated absences policy. The Group measures the expected cost of accumulating compensated absences as the additional amount expected to be paid as a result of the unused entitlement that has accumulated at the statement of financial position.

The defined benefit obligation is calculated annually by an independent actuary using projected unit credit method. Changes in the present value of the defined benefit obligation with respect to gratuity and compensated absences are as follows:

Discount rate assumptions and expected rate of increase in compensation levels used in calculation of gratuity obligation are as follows

Defined contribution plans

Apart from being covered under the Gratuity Plan described earlier, employees of the Group also participate in a Provident Fund Plan in India. Contributions paid or payable are recognised as expense in the period in which they are due. During the year ended 31 March 2011, the Group contributed 63,573 towards the Provident Fund Plan in India.

17. OTHER CURRENT LIABILITIES

18. OTHER INCOME

19. LEASES

The Group's operating lease payments are cancellable and are due on premises taken on lease for operating activities.

Lease expense for premises taken on lease, recognised as expense in the consolidated statement of Income for the year ended 31 March 2011 is USD 399,122 (31 March 2010: USD 675,015). There were no sublease payments or contingent rent payments. Assets held under lease agreements are used exclusively by the Group and sublease of premises are not allowed as a part of the agreements.

The Group's financial lease payments are due on computers (including embedded software) taken on lease for operating activities. The net carrying value of computers taken on lease as at 31 March 2011 is USD 64,467 (31 March 2010: Nil).

The minimum lease rent payable for the assets taken on finance leases (included under current and non-current borrowings) are as under:

20. INCOME TAXES

Income tax is based on tax rate applicable on profit or loss in various jurisdictions in which the Group operates. The effective tax at the domestic rates applicable to profits in the country concerned as shown in the reconciliation below have been computed by multiplying the accounting profit with effective tax rate in each jurisdiction in which the Group operates. The entities at Guernsey and Dubai are zero tax entities.

Tax expense reported in the Income Statement and Statement of Other Comprehensive Income for the year ended 31 March 2011 and 31 March 2010 is as follows:

The relationship between the expected tax expense based on the domestic tax rates for each of the legal entities within the Group and the reported tax expense in profit or loss is reconciled as follows:

21. EARNINGS PER SHARE

The calculation of the basic earnings per share is based on the profits attributable to ordinary shareholders divided by the weighted average number of shares in issue during the year.

Calculation of basic and diluted profit per share for the year ended 31 March 2011 is as follows:

Basic earnings per share

Diluted earnings per share

* Shares to be issued under share options granted

22. RELATED PARTY TRANSACTIONS

The related parties for each of the entities in the Group have been summarised in the table below:

Disclosure of transactions between the Group and related parties and the outstanding balances is as under:

Transactions with parent company

Above receivables and payables from related parties do not bear any interest and are repayable on demand. Hence, the management is of the view that fair values of such receivables and payable closely approximates their carrying values.

Entity exercising significant influence

Transactions with KMP and relative of KMP

Key management personnel also participate in post employment benefit plans and other long term benefits provided by the Group. The amounts in respect of these towards the KMP cannot be segregated as these are based on actuarial valuation for all employees of the Group. During the year ended 31 March 2011 no key management personnel has exercised options granted to them.

23. SEGMENT REPORTING

Management currently identifies the Group's two service lines India and United States of America as operating segments on the basis of customers. These operating segments are monitored and strategic decisions are made on the basis of adjusted segment operating results.

The Chief Operating Decision Maker ("CODM") evaluates the Group's performance and allocates resources based on an analysis of various performance indicators by reportable segments. The Group's reportable segments are as follows:

1. India

2. United States of America (USA)

3. Rest of the World (ROW)

The CODM reviews revenue as the performance indicator and does not review the total assets and liabilities for each reportable segment.

The measurement of each segment's revenues, expenses and assets is consistent with the accounting policies that are used in preparation of the Consolidated Financial Statements.

In addition, two minor operating segments, for which the quantitative thresholds have not been met, are currently combined below under 'ROW'. The main source of revenue for these operating segments is same as for others. The Group provides similar services to all of its clients including call centre operations, business process outsourcing and back office services. Segment information can be analysed as follows for the reporting years under review:

Revenue from two of the customer's amounted to more than 10% of consolidated revenue during the year presented.

The segment related data for previous year is not presented as the data is not readily available with the management owing to business restructuring and change in management.

24. GAIN ON DISPOSAL OF SUBSIDIARIES

Newbury, the erstwhile parent of IHL, intended to exit from the BPO business and Mr. Anil Aggarwal wanted to enter into the business of providing BPO services to customers in India, the United Stated and other international customers.

With the above objectives in mind, Newbury sold its 100 per cent. equity interest in EICR, the immediate parent of IHL to Geophysical Sub-strata Limited, an entity beneficially controlled by Mr. Anil Aggarwal for a purchase consideration of USD 1. Under terms of this agreement:

(i) EICR will continue to be liable for payment of its existing loan of USD 168 million due to Newbury; and

(ii) Geophysical guaranteed this debt of USD 168 million owed by EICR and undertook to pay the debt to Newbury along with interest of 10 per cent. per annum. if the amount is not paid by EICR within next 3 years from the date of this agreement.

Granada, along with its three direct subsidiaries, is in the business of providing BPO services to the customers in India as well as outside India. On 30 March 2010, IHL sold its entire equity interest in Granada Services Private Limited for a total consideration of USD 131,238,000 (@USD 69 per share of Granada) to Birkbeck Investments (Mauritius), a fellow subsidiary of Newbury. Of the total consideration, USD 42,662,000 is receivable by IHL from Birkbeck Investments Ltd as of 31 March 2010.

This transaction lead to a complete change to IHLs business model since up to 29 March 2010, IHLs business model was to provide BPO services through its Indian subsidiaries while subsequent to the above transactions, IHL will use a third party service provider to provide BPO services to its customers. The disposal of Granada resulted in a gain of USD 107,159,030 as follows:

25. COMMITMENT AND CONTINGENCIES

At 31 March 2011, the Group had a capital commitment of USD 2,478 for acquisition of property, plant and equipment.

During the year, subsidiary of iEnergizer, IHL has issued a guarantee in favor of Hewlett Packard Financial Services India Private Limited for the repayment of debt amounting to USD 174,631 repayable by iEnergizer IT Services Private Limited.

26. FINANCIAL ASSETS AND LIABILITIES

Fair value of carrying amounts of assets and liabilities presented in the statement of financial position relates to the following categories of assets and liabilities: