OUT.L Regulatory News (OUT)

27 June 2014

Outsourcery plc

("Outsourcery" or the "Group")

Capital Markets Day Trading Update

Outsourcery plc (AIM: OUT) ("Outsourcery", the "Company" or the "Group"), the leading Cloud Service Provider ("CSP") that helps organisations of any size to reduce costs, increase productivity and work better, is pleased to announce a trading update in advance of its capital markets day for analysts and investors, which is to be held on Monday, 30 June 2014.

This update provides a report on the Group's recent performance; measures being taken to advance this progress; and the Group's financing.

Capital Markets Day

Outsourcery is hosting a Capital Markets Day on Monday, 30 June 2014 for analysts and investors. The event will take place at Microsoft's London offices at Cardinal Place, 80-100 Victoria Street, London SW1E 5JL. During the event a series of presentations will be given by senior personnel from Outsourcery's partners and customers including Microsoft, HP, Vodafone, a mid-market reseller partner and London Business School. These presentations will cover the cloud opportunity and respective cloud strategies of these organisations and their decision to partner with Outsourcery in pursuing those strategies.

To register to attend this event, please contact FTI Consulting on the numbers below.

Trading Update

We have continued to experience steady progress in generating revenue from our partners in the Small and Medium sized Enterprise ("SME") space. As outlined in our Preliminary Results announcement of 19 March, however, it is the activation of revenue generation from our strategic Enterprise partner base and from our 'Secure O-Cloud' pipeline (formerly IL3) that will have the most material impact on revenue growth over the medium-term.

In recent months we have completed, as planned, a number of on-boarding and integration processes with large Enterprise. We are pleased to report that we now have increasing visibility on a growing pipeline of opportunities from both their large Enterprise and mid-market end-customers, some of which we expect to see close in the coming weeks. At the same time we are in discussions with new potential strategic partners with large customer bases, significant sales forces and material revenue opportunities.

However, in spite of the pipeline, and certain important contract wins that have taken place in the period, the large-scale pipeline build of our strategic partner channel has taken longer to ramp up due to delays finalising the necessary organisational, system and their sales force readiness. This will have an impact in the short term on the growth of our Monthly Recurring Revenue ("MRR") during the year and, consequently, an impact on our reported revenue result for this financial year.

In response to this slower than expected MRR growth, the Group has taken action to proactively align its cost base. As such, the Group believes it is still on track to deliver a normalised PBT performance for this financial year that is in-line with current market expectations. The Group has reviewed all aspects of its cost base and expect to produce additional annualised cost savings of c.£1.0m per year from next financial year.

Operational Progress

During the period, we have continued to work closely with Microsoft on the Secure O-Cloud (formerly IL3) platform build-out. We are pleased to report that the build-out is on schedule, within budget and due for completion next month with accreditation and launch is still expected before the year end. We are delighted by the number of inbound enquiries about the Secure O-Cloud we have received from new partners, some of whom we expect to become large strategic partners during H2 2014 with regard to this unique capability. We are also hiring specialist and experienced public sector sales personnel to promote adoption of the platform and senior management are engaging directly with government. This supports the decision to make this important investment which we continue to expect will contribute revenue during FY 15 and onwards.

We have also successfully continued to win business directly in certain areas for O-Cloud deployment. In line with our strategy to be the leading provider of Microsoft cloud services whether deployed on our platform or Microsoft's, we are pleased to announce a win of a 3,000 end-user Office365 deployment. This has led to Outsourcery achieving 'Cloud Deployment Partner' status with Microsoft for Office365 related solutions, which we typically aim to integrate with our own solutions.

Funding

The Board believes that the Group has sufficient cash resources for its immediate needs. The Board expects that the Group will achieve monthly cash flow breakeven during the course of H2 2015, at which point the Group should become strongly cash generative and see margins expand due to the high operational leverage inherent in the Group's business model at scale.

The Board is prudently reviewing a number of options that may improve the Group's cash resources over the medium term as the delay to the expected revenue growth will push out our monthly cash flow break-even point despite the additional identified cost savings.

The financing options include, but are not limited to:

· Revision, amendment and/or extension to existing debt facilities; and/or

· Investment by one or more of the Group's strategic partners; and/or

· Raising of additional equity finance

The Board will update the market on its progress in investigating these options during the course of July.

For further information please contact

About Outsourcery

Organisations are increasingly considering how best to implement and use cloud services, but many still don't fully understand the cloud's potential - or how to access it effectively. Outsourcery helps organisations of any size to make sense of the cloud, working to change the ways in which they consume IT, enabling them to expand, save money and work better.

Outsourcery's services remove the need for organisations to own and manage expensive in-house, on premise IT systems, unified communications, conferencing services, video applications and IT infrastructure. Channelled through an extensive network of trusted partners, Outsourcery's end-customers range from ambitious start-ups to leading FTSE-100 companies.

Outsourcery has one of the broadest Microsoft-based cloud service offerings available today. It covers hosted software applications (software-as-a-service), virtualised servers (infrastructure-as-a-service), next generation unified communications and collaboration solutions as well as connectivity and professional services that help to customise and integrate solutions for partners and customers alike.

Outsourcery was the first company outside of the US to be named Microsoft's worldwide 'Hosting Solutions Partner of the Year' and is a Microsoft Certified Gold Partner with a total of eight competencies, of which three are gold and five are silver.

Outsourcery is a founding member of the Cloud Industry Forum, which sets standards for quality and transparency within the fast-growing cloud industry. The company also adheres to rigorous quality practices, holding ISO 27001, ISO 9001 and ISO 14001 accreditations, ensuring the highest levels of service, environmental standards and information security. Outsourcery is able to deliver 'Official' accredited solutions and is currently working in partnership with Microsoft and Dell to develop a separate secure cloud platform, giving Outsourcery the ability to deploy accredited solutions for central government, enabling the public sector to benefit from the cloud. Outsourcery employs 120 staff based in three UK offices, operates two UK data centres and was the UK's first certified carbon neutral CSP.

www.outsourcery.co.uk