Preliminary Results

29 Mar 2006 07:02

India Outsourcing Services PLC29 March 2006 For immediate release 29 March 2006 INDIA OUTSOURCING SERVICES PLC ('India Outsourcing' or 'the Company') Preliminary Results for the period ended 30 September 2005 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 2005. Highlights The Company has made significant progress in pursuing its strategy ofidentifying and evaluating potential acquisitions in the business processoutsourcing (BPO) industry primarily within India. Growth remains strong in the Indian BPO market, which is estimated to have grownby about 40 per cent during 2004/5 to reach $5 billion and is forecast to reach$21 billion by 2008 (source: NASSCOM - McKinsey). The Company has exercised careful cost control, reporting net cash of £359,795at 30 September 2005. A successful placing, post the period end in February2006, raised £3 million before expenses. On 21 March 2006, the Company announced that strategic investor Wheddon Limited,an investment vehicle associated with Vincent Tchenguiz' Consensus BusinessGroup, invested a further £0.5 million in the Company by subscribing for 1million shares at 50p per share. Amit Pau, Chief Executive of India Outsourcing Services, commented: "We arepleased to report considerable progress at the Company, highlighted by ourrecent £3 million fundraising and further £0.5 million investment from WheddonLimited. We are moving closer to identifying our first acquisition which,together with the continuing strong growth of the Indian BPO market, gives usconfidence in the future. " 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/Elly Williamson Extracts from the Chairman's statement and the report of the directors I am pleased to report India Outsourcing's maiden results for the period ended30 September 2005. The period under review, and the start of this financialyear, have both been exciting periods in the development of the Company. India Outsourcing joined AIM in December 2004 with the strategy of seeking,evaluating and completing the acquisition of companies in the business processoutsourcing (BPO) industry primarily in India. Since flotation we havecontinued to pursue this strategy, the rationale for which has been underlinedby the on-going formidable growth in the BPO industry. On flotation we implemented a rigorous search for acquisitions using specificcriteria to ensure that any potential acquisition meets the Company'sover-riding objective of creating value for shareholders. These criteria, whichpotential acquisitions must demonstrate, include requirements for the potentialacquisition to show strong growth prospects, recurring revenue streams, scalabledelivery platforms and established client relationships. During the period under review, we pursued in detail several potentialacquisitions, embarking on due diligence on one such target. However, duringthe due diligence process a change occurred in the target's customer base,potentially affecting the order book going forward. As a result we decided notto pursue the acquisition because of the additional element of risk associatedwith the transaction. While we incurred some professional fees, the decision notto pursue the acquisition met our strategic objective that any acquisition mustbe capable of creating value for shareholders. In total, we have evaluated around 50 potential acquisitions, primarily in Indiabut also in countries including the US, and we are moving closer to identifyingour initial preferred acquisition candidate. We have exercised careful cost control at the Company, having finished theperiod end with net cash of £359,795. Post the period end, our balance sheethas been strengthened considerably following a successful placing, announced on9 February 2006, to raise £3 million before expenses. In addition, WheddonLimited, a strategic investor in the Company and an investment vehicleassociated with Vincent Tchenguiz' Consensus Business Group, subscribed for anadditional 1,000,000 ordinary shares in the Company at 50p per share. We believe that this additional balance sheet strength has increased thecredibility of the Company with the vendors of potential acquisition targets inaddition to providing additional working capital. The placing broadened theCompany's institutional shareholder base and I would like to take thisopportunity to welcome all new shareholders to the Company. In addition, over the past few months, India Outsourcing has been working withConsensus Business Group, Vincent Tchenguiz' venture capital arm, to identifyopportunities where India Outsourcing could provide offshoring solutions toConsensus' portfolio companies. India Outsourcing reported a pre-tax loss of £424,369 for the period ended 30September 2005 and a loss per share of 3.48p. Outlook The current financial year has started well both in terms of progress inidentifying suitable acquisition candidates and in terms of the strengthenedbalance sheet that the recent placing has brought. We look forward withconfidence to the remainder of the current year and will update shareholders indue course on the further development of our strategy. Results and dividends The profit and loss account shows the loss for the period. The directors do not recommend the payment of a dividend for the period. Theloss will be transferred to reserves. Principal activities The principal activity of the company is to capitalise on acquisition andinvestment opportunities within the Business Process Outsourcing sectorprimarily in India. Haresh Kanabar Chairman 29 March 2006 INDIA OUTSOURCING SERVICES PLC Profit and loss account for the period ended 30 September 2005 £ Administrative expenses 432,503 Operating loss (432,503) Net interest receivable 8,134 Loss on ordinary activities before taxation (424,369) Tax on loss on ordinary activities - Loss on ordinary activities after taxation (424,369) Loss per share -basic and diluted (3.48)p All amounts relate to continuing activities. All recognised gains and losses for the period have been included in the profitand loss account. INDIA OUTSOURCING SERVICES PLC Balance sheet at 30 September 2005 £ £ Fixed assets 4,078Tangible assets Current assetsDebtors 5,037Cash at bank and in hand 359,795 364,832 Creditors falling due within one year 106,015 Net current assets 258,817 Total assets less current liabilities 262,895 Capital and reserves 181,250Called up share capital 506,014Share premium account (424,369)Profit and loss account Shareholders' funds - equity 262,895 INDIA OUTSOURCING SERVICES PLC Cash flow statement for the period ended 30 September 2005 £ £ Net cash outflow from operating activities (329,729) Returns on investments and servicing of financeInterest received 8,134 Net cash inflow from returns on investments and servicing of finance 8,134 Capital expenditurePurchase of tangible fixed assets (5,874) Net cash outflow for capital expenditure (5,874) Net cash outflow before financing (327,469) FinancingIssue of ordinary shares 800,000Expenses paid in connection with share issues (112,736) Cash inflow from financing 687,264 Increase in net cash in the period 359,795 Notes to the financial statements 1 Accounting policies Basis of preparation The financial statements have been prepared in accordance with currentlyapplicable Accounting Standards in the United Kingdom, which have been appliedconsistently, and under the historical cost convention. Tangible fixed assets Tangible fixed assets are stated at cost less depreciation. Depreciation isprovided at rates calculated to write off the cost less the estimated residualvalue of each asset over its expected useful economic life, as follows: Office and computer equipment - 2 years on a straight-line basis 2 Loss per ordinary share The calculation of basic and diluted loss per share of 3.48 pence is based onthe loss for the period of £424,369 and on 12,211,565 ordinary shares, being theweighted average number of ordinary shares in issue during the period ended 30September 2005. There were no potential ordinary shares at the period end. 3 Post balance sheet events On the 9 February 2006 the company announced that through Daniel Stewart, it hadconditionally placed 6,666,667 new ordinary shares raising a total of £3.0million before expenses. The Placing Shares were placed at 45p a share, on thebasis of the consolidation of every 10 ordinary shares of 1p each into 1ordinary share of 10p. The new ordinary shares of 10p each of the Company wereadmitted to trading on the AIM on 7 March 2006. The Placing to raise a total of £3 million before expenses will allow theCompany to pursue its strategy of identifying, evaluating and, ultimately,completing acquisitions in the business process outsourcing industry primarilywithin India. On the 21 March 2006 the company announced that it had placed an additional1,000,000 ordinary shares of 10p each at 50p a share, raising a total of £0.5million to Wheddon Limited. This purchase brings Wheddon's total shareholding to1,312,500 shares, equivalent to 13.85 per cent of the Company's issued sharecapital. 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 period ended 30 September 2005,and does 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 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