$OUT.L – Outsourcery – from the Land of Penny Dreadfuls

penny

Sometimes, for amusement, I like to read the posts of hvs over on ADVFN. Maybe his writing is, shall we say, “not everyone’s cup of tea”, but if he is negative on a share, then it’s a strong sign that the share is to be avoided.

I came across this post in April 2016, where he posted the comment “Is it not bankrupt?”

To be fair, most of the bulletin board participants seems to have figured out that OUT was toast, but there were still rampers making comments like “Moving up again. Massive interest” and “hugely undervalued and qith [sic] the news with Vodafone im sure this will rally”.

On June 2016 the company announced appointment of administrators. The shares are currently suspended, and I assume that current holders will receive nothing.

This is presumably not the result you would have expected if you read their interim results, issued on 29 September 2015 (https://goo.gl/mbxCe3):

Outsourcery continues to secure a strong market position as a fully converged provider of cloud solutions with high profile partners and reference end-customers … Recurring revenue is increasing, and the Company is deliverying against a large addressable market … Gross margin has increased steadily

Subsequent proceedings were ominous, though:

  • On 6 October 2015, OUT issued an RNS stating that a co-CEO had purchased shares totally £5200. That does not seem to be much of an effort on his part, and I would naturally take that as a bearish, rather than bullish signal
  • On 4 November 2015, OUT announced the appointment of Ms de Sousa as Managing Director. More on that later!
  • On 24 November 2015, OUT announced a change of auditor. A change of auditor is grounds for suspicion. The auditors had been in place since 2011, so a reasonable man might argue that I am being over-cautious. In retrospect, though, it seems that the incumbent auditors were uncomfortable on signing off the numbers. I am guessing, of course, but with the benefit of hindsight, it is the most plausible explanation.
  • On 29 January 2016, OUT announced that de Sousa would no longer be taking up her position. Hmmm, what’s all this then? Apparently the decision was based on “family reasons”. It appears that she decided to have a baby, rather than join the gallant crew at OUT.
  • On 25 April 2016, OUT announced that it would release its full years results for the year ended 31 December 2015 by 30 June 2016. You have to ask yourself: why does such a small company need so long to prepare its accounts? The company did give unaudited figures, though, stating that revenues would be up 9%, and gross cash would be down by 64%. We are then given a killer sentence: “Whilst the full year results and current trading are in line with the Board’s expectations, this view factors in that revenue growth from the Company’s strategic partners has been impacted by further partner product launch delays outside of Outsourcery’s control.” Also “The Company will require further funding for short term working capital purposes” [emphasis mine]. Predictably, the shares tanked.
  • On 3 June 2016, OUT issued an update and suspension of trading. “Pursuant to the conditions of the working capital facilityWhile discussions with third parties are ongoing, they have had no material adverse impact on current business activity, with Outsourcery securing new direct customer contracts and continuing with further product development.it is no longer possible to present audited financial results for the year ended 31 December 2015 by 30 June 2016.
  • On 15 June 2016, it announced the appointment of administrators, and the resignation of its nominated advisor

So basically, game over.

Be careful out there.

 

 

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About mcturra2000

Computer programmer living in Scotland.
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