The Innovation Group (TIG), which provides software and business process services to help insurers handle claims more efficiently, continues to make progress. Although turnover growth was not matched by a similar increase in net cash from operating activities - down 2 per cent at £16.6m - finance director Jane Hall says this was largely due to accrued income related to one contract. Cash from that is due in January 2013.
It has been a year of acquisitions, with the group splashing out £22.3m on companies to bolster its presence in Australia, the UK and Belgium. But even when stripping out their impact, which amounted to £11.5m in sales, revenues increased by 8 per cent on a constant currency basis.
Sales of business process services (BPS), which include motor and property, make up 88 per cent of turnover. Motor BPS accounts for £125.1m (£123.1m in 2011), but property was the fastest-growing segment. Buoyed by the Australian acquisition, property revenue increased from £19.8m to £37.4m. Innovation sees an emerging trend among insurers to combine software and BPS offerings, as illustrated by a recent Tier 1 insurer win in the US, worth £2.9m.
Andrew Roberts, chief executive, envisages an 80:20 revenue mix between BPO and software, which carries higher margins. "By 2015 I would expect the blended gross margin to be 45 per cent, up from the current 41 per cent," he says.
Broker N+1 Singer forecasts full-year adjusted pre-tax profits of £19.9m, giving EPS of 1.3p, up from £16.6m and 1.1p last year.
THE INNOVATION GROUP (TIG) | ||||
|---|---|---|---|---|
| ORD PRICE: | 24p | MARKET VALUE: | £233m | |
| TOUCH: | 23-24p | 12-MONTH HIGH: | 24p | LOW: 17p |
| DIVIDEND YIELD: | NIL | PE RATIO: | 34 | |
| NET ASSET VALUE: | 12p* | NET CASH: | £26m | |
| Year to 30 Sep | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2010 | 162 | -1.70 | -0.58 | nil |
| 2011 | 176 | 10.2 | 0.56 | nil |
| 2012 | 194 | 11.8 | 0.71 | nil |
| % change | +10 | +16 | +27 | - |
*Includes intangible assets of £114m, or 12p a share | ||||
