India Outsourcing Services plc (AIM: IOS), a company formed to capitalise on acquisition and investment opportunities in the business process outsourcing (BPO) industry, is pleased to announce its preliminary results for the period ended 30 September 2005.
Highlights
· The Company has made significant progress in pursuing its strategy of identifying and evaluating potential acquisitions in the business process outsourcing (BPO) industry primarily within India.
· Growth remains strong in the Indian BPO market, which is estimated to have grown by 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 £359,795 at 30 September 2005. A successful placing, post the period end in February 2006, 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 Business Group, invested a further £0.5 million in the Company by subscribing for 1 million shares at 50p per share.
Amit Pau, Chief Executive of India Outsourcing Services, commented: “We are pleased to report considerable progress at the Company, highlighted by our recent £3 million fundraising and further £0.5 million investment from Wheddon Limited. We are moving closer to identifying our first acquisition which, together with the continuing strong growth of the Indian BPO market, gives us confidence in the future. ”
For further information:
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India Outsourcing Services plc |
Tel: 020 7297 0010 |
Haresh Kanabar, Chairman |
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Amit Pau, Chief Executive |
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Teather & Greenwood Ltd |
Tel: 020 7426 9000 |
Mark Dickenson |
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Sindre Ottesen |
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Buchanan Communications |
Tel: 020 7466 5000 |
Mark Court/Elly Williamson |
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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 ended 30 September 2005. The period under review, and the start of this financial year, 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 process outsourcing (BPO) industry primarily in India. Since flotation we have continued to pursue this strategy, the rationale for which has been underlined by the on-going formidable growth in the BPO industry.
On flotation we implemented a rigorous search for acquisitions using specific criteria to ensure that any potential acquisition meets the Company’s over-riding objective of creating value for shareholders. These criteria, which potential acquisitions must demonstrate, include requirements for the potential acquisition to show strong growth prospects, recurring revenue streams, scalable delivery platforms and established client relationships.
During the period under review, we pursued in detail several potential acquisitions, embarking on due diligence on one such target. However, during the due diligence process a change occurred in the target’s customer base, potentially affecting the order book going forward. As a result we decided not to pursue the acquisition because of the additional element of risk associated with the transaction. While we incurred some professional fees, the decision not to pursue the acquisition met our strategic objective that any acquisition must be capable of creating value for shareholders.
In total, we have evaluated around 50 potential acquisitions, primarily in India but also in countries including the US, and we are moving closer to identifying our initial preferred acquisition candidate.
We have exercised careful cost control at the Company, having finished the period end with net cash of £359,795. Post the period end, our balance sheet has been strengthened considerably following a successful placing, announced on 9 February 2006, to raise £3 million before expenses. In addition, Wheddon Limited, a strategic investor in the Company and an investment vehicle associated with Vincent Tchenguiz’ Consensus Business Group, subscribed for an additional 1,000,000 ordinary shares in the Company at 50p per share.
We believe that this additional balance sheet strength has increased the credibility of the Company with the vendors of potential acquisition targets in addition to providing additional working capital. The placing broadened the Company’s institutional shareholder base and I would like to take this opportunity to welcome all new shareholders to the Company.
In addition, over the past few months, India Outsourcing has been working with Consensus Business Group, Vincent Tchenguiz’ venture capital arm, to identify opportunities where India Outsourcing could provide offshoring solutions to Consensus’ portfolio companies.
India Outsourcing reported a pre-tax loss of £424,369 for the period ended 30 September 2005 and a loss per share of 3.48p.
Outlook
The current financial year has started well both in terms of progress in identifying suitable acquisition candidates and in terms of the strengthened balance sheet that the recent placing has brought. We look forward with confidence to the remainder of the current year and will update shareholders in due 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. The loss will be transferred to reserves.
Principal activities
The principal activity of the company is to capitalise on acquisition and investment opportunities within the Business Process Outsourcing sector primarily in India.
Haresh Kanabar
Chairman
29 March 2006
INDIA OUTSOURCING SERVICES PLC
Profit and loss account for the period ended 30 September 2005
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£ |
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Administrative expenses |
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432,503 |
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Operating loss |
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(432,503) |
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Net interest receivable |
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8,134 |
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Loss on ordinary activities before taxation |
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(424,369) |
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Tax on loss on ordinary activities |
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- |
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Loss on ordinary activities after taxation |
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(424,369) |
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Loss per share -basic and diluted |
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(3.48)p |
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All amounts relate to continuing activities.
All recognised gains and losses for the period have been included in the profit and loss account.
INDIA OUTSOURCING SERVICES PLC
Balance sheet at 30 September 2005
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£ |
£ |
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Fixed assets |
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4,078 |
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Tangible assets |
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Current assets |
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Debtors |
5,037 |
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Cash at bank and in hand |
359,795 |
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364,832 |
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Creditors falling due within one year |
106,015 |
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Net current assets |
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258,817 |
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Total assets less current liabilities |
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262,895 |
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Capital and reserves |
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181,250 |
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Called up share capital |
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506,014 |
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Share premium account |
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(424,369) |
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Profit and loss account |
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Shareholders’ funds - equity |
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262,895 |
INDIA OUTSOURCING SERVICES PLC
Cash flow statement for the period ended 30 September 2005
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£ |
£ |
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Net cash outflow from operating activities |
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(329,729) |
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Returns on investments and servicing of finance |
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Interest received |
8,134 |
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Net cash inflow from returns on investments and servicing of finance
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8,134 |
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Capital expenditure |
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Purchase of tangible fixed assets |
(5,874) |
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Net cash outflow for capital expenditure |
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(5,874) |
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Net cash outflow before financing |
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(327,469) |
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Financing |
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Issue of ordinary shares |
800,000 |
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Expenses paid in connection with share issues |
(112,736) |
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Cash inflow from financing |
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687,264 |
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Increase in net cash in the period |
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359,795 |
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Notes to the financial statements
1 Accounting policies
Basis of preparation
The financial statements have been prepared in accordance with currently applicable Accounting Standards in the United Kingdom, which have been applied consistently, and under the historical cost convention.
Tangible fixed assets
Tangible fixed assets are stated at cost less depreciation. Depreciation is provided at rates calculated to write off the cost less the estimated residual value of each asset over its expected useful economic life, as follows:
2 Loss per ordinary share
The calculation of basic and diluted loss per share of 3.48 pence is based on the loss for the period of £424,369 and on 12,211,565 ordinary shares, being the weighted average number of ordinary shares in issue during the period ended 30 September 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 had conditionally placed 6,666,667 new ordinary shares raising a total of £3.0 million before expenses. The Placing Shares were placed at 45p a share, on the basis of the consolidation of every 10 ordinary shares of 1p each into 1 ordinary share of 10p. The new ordinary shares of 10p each of the Company were admitted to trading on the AIM on 7 March 2006.
The Placing to raise a total of £3 million before expenses will allow the Company to pursue its strategy of identifying, evaluating and, ultimately, completing acquisitions in the business process outsourcing industry primarily within India.
On the 21 March 2006 the company announced that it had placed an additional 1,000,000 ordinary shares of 10p each at 50p a share, raising a total of £0.5 million to Wheddon Limited. This purchase brings Wheddon’s total shareholding to 1,312,500 shares, equivalent to 13.85 per cent of the Company’s issued share capital.
Basis of preparation
The results have been prepared using accounting policies consistent with those used in the preparation of the statutory accounts. The financial information is derived from the financial statements for the period ended 30 September 2005, and does not constitute full accounts within the meaning of Section 240 of the Companies Act 1985. The financial statements on which the auditors have given an unqualified report do not contain a statement under Section 237 (2) or (3) of the Companies Act and will be delivered to the Registrar of Companies in due course.
The Annual Report will be sent to all shareholders. Additional copies are available from 22 Soho Square, London W1D 4N
