Adjust for a slew of one-off costs and half-year pre-tax profits at insurance software and outsourcing specialist, Innovation, actually grew 26 per cent in the year to £7.3m. Chief executive Andrew Roberts says the business is in "good shape" – although the shares do look demandingly rated.
That performance was driven by the group's core outsourcing business, where revenues grew 13 per cent year-on-year to £83.5m. However, the mild winter resulted in lower motor claims which has dragged the group's gross margin down to 40 per cent from 41 per cent last year. Although Mr Roberts says claims in April and May this year have returned to stronger levels. Still, software license sales did fall 5 per cent in the period to £11.3m and the North American operation recorded a £1.1m loss – although the region is expected to turn profitable in the second half.
Going forward, strong cash generation may well prompt a maiden dividend next year, although Investec Securities isn't presently forecasting one. The broker expects full-year reported pre-tax profit of £12.6m, giving EPS of 0.7p and has upgraded 2013's estimates by 5 per cent.
THE INNOVATION GROUP (TIG) | ||||
|---|---|---|---|---|
| ORD PRICE: | 21p | MARKET VALUE: | £197.9m | |
| TOUCH: | 20.8-21p | 12-MONTH HIGH: | 23.3p | LOW:16.5p |
| DIVIDEND YIELD: | nil | PE RATIO: | 46 | |
| NET ASSET VALUE: | 12p* | NET CASH: | £27.2m | |
| Half-year to 31 Mar | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2011 | 85.8 | 4.26 | 0.22 | nil |
| 2012 | 94.8 | 3.97 | 0.12 | nil |
| % change | +10 | -7 | -45 | - |
Ex-div: - Payment: - *Includes intangible assets of £106.9m, or 11p per share | ||||
