Preliminary Results

India Outsourcing Services PLC 29 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 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 2006. Highlights Owing to the rising valuations of BPO companies in India, the Company has decided to broaden its strategy and to seek appropriate acquisitions in geographies including the US and Europe Global growth of the BPO market is continuing at an impressive rate, reinforcing the Company's confidence in the choice of the BPO market as the focus of its acquisition and investment activities The Company has continued to exercise careful cost control, reporting net cash of £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 per share of 14.1p (2005: loss of 34.8p) Amit Pau, Chief Executive of India Outsourcing Services, commented: 'Whilst it is disappointing that the expectations of the vendors of many potential target companies in India have moved to a degree that makes acquisitions unrealistic, we continue to believe that the BPO market is the ideal focus for our acquisition and investment activities. We are therefore broadening our search for potential targets to geographies outside of India, including the USA and Europe.' For further information: India Outsourcing Services plc Tel: 020 7297 0010 Haresh Kanabar, Chairman Amit Pau, Chief Executive Teather & Greenwood Ltd Tel: 020 7426 9000 Mark Dickenson Sindre Ottesen Buchanan Communications Tel: 020 7466 5000 Mark Court Extracts from the Chairman's statement and the report of the directors I am pleased to report India Outsourcing Services' financial results for the year ended 30 September 2006. The period under review has in many ways been challenging but we enter the current year with a sound appreciation of the Indian Business Process Outsourcing (BPO) market and a revised strategy to ensure the delivery of our first acquisition as soon as practicably possible. The company's financial performance in the year was in line with management expectations. 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 share has been reduced to 14.1p compared with 34.8p in the corresponding period the loss per share has been reduced due to share issue. More than half of the loss incurred is due to the due diligence costs of an aborted transaction. The Company'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 at a price of 45p. At the same time the Company's shares were consolidated one share 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 by placing 1,000,000 shares at a price of 50p per share. India Outsourcing floated on AIM with the strategy of seeking, evaluating and completing the acquisition of companies in the Business Process Outsourcing (BPO) industry primarily in India. The BPO industry has grown quite substantially over the past few years and is expected to continue to grow strongly in the coming years. During the year we pursued in detail an acquisition by commissioning full legal accounting and commercial due diligence on a support services company operating within the US healthcare sector with a delivery facilities in the US and in India . However, after a very lengthy process, and in consultation with our advisers, we decided to abandon pursuit of the acquisition. Whilst, obviously, we are determined to complete our first acquisition as soon as practicable we are only prepared to entertain an acquisition if it offers a very clear opportunity to enhance shareholder value. It does not make sense to do a transaction at valuations that reduce the returns for our shareholders. The BPO market continues to grow steadily and is a very exciting sector in which to be involved. However, we have seen that valuation expectations from vendors, particularly in India, are quite high and verging on the unrealistic. This environment will make it very challenging for us to achieve our stated strategy of BPO acquisitions in India. Therefore we are now also looking at acquisitions in Europe and the USA. Outlook Whilst BPO is an exciting and growing sector in which to be involved, valuations particularly in India are becoming stretched. It is increasingly hard to find the type of value enhancing transaction in India that we require and we are therefore 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 and investment opportunities within the Business Process Outsourcing sector primarily 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 the profit and loss account. India Outsourcing Services Plc Balance sheet as at 30 September 2006 2006 2005 £ £ Fixed assets Tangible assets 1,141 4,078 1,141 4,078 Current assets Debtors 24,404 5,037 Cash 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 reserves Called up share capital 947,917 181,250 Share premium account 2,990,775 506,014 Profit 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 finance Interest received 84,904 8,134 Net cash inflow from returns on investments and servicing of 84,904 8,134 finance Capital expenditure Purchase of tangible fixed assets - (5,874) Net cash outflow for capital expenditure - (5,874) Net cash outflow before financing (848,368) (327,469) Financing Issue of ordinary shares 3,500,000 800,000 Expenses 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 those used in the preparation of the statutory accounts. The financial information is derived from the financial statements for the Year ended 30 September 2006,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 financial statements have been prepared under the historical cost convention and in accordance with the United Kingdom, Generally Accepted Accounting Practice. 2 Loss per share The calculation of loss per share of 14.1 pence (2005 - 34.8 pence) is based on the loss for the year of £875,555 (2005 - £424,369) and on the weighted average number 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 is considered to be antidilutive. The loss per share in the prior year has been restated as a result of share consolidation.. The Annual Report will be sent to all shareholders. Additional copies are available from 22 Soho Square, London W1D 4NS. This information is provided by RNS The company news service from the London Stock Exchange

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