Innovation Group reckons that 2009-10 was a “year of successful transition” as new management sorted out a company that was “overmanned and over-resourced”. There was a cull of senior management (including the board of the US subsidiary) to reduce employee numbers by 13 per cent to 2,250. Also a quarter of its offices were closed. The company reckons these actions will produce annualised savings of £4.7m of which £1.7m came in the last half year.
Innovation’s strategy is to make its main business process outsourcing - from operating call centres to claims handling for mainly the motor and property markets - more profitable. After cost cutting comes the roll-out of its own Enterprise technology platform to improve margins. In contrast 2009-10 software sales fell from £31m to £20m as one-off licence fees declined sharply. But they should be on the up next year. The latest results are also complicated by a number of exceptional items and amortisation. On an adjusted basis profits fell from £11.3m to £9.8m but they did benefit from exchange rate gains (notably against the rand) while £4m of Enterprise development costs were capitalised. Broker Investec forecasts 2010-11 sales of £175m and normalised profits up from £9m to £13.8m.
INNOVATION (TIG) | ||||
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ORD PRICE: | 13.75p | MARKET VALUE: | £128.6m | |
TOUCH: | 13.5-13.75p | 12-MONTH HIGH: | 14.25p | LOW: 9.75p |
DIVIDEND YIELD: | NIL | PE RATIO: | NA | |
NET ASSET VALUE: | 10p* | NET CASH: | £28.9m |
Year to 30 Sep | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
---|---|---|---|---|
2006 | 80 | 1.28 | 1.3 | nil |
2007 | 111 | 1.17 | 1.2 | nil |
2008 | 140 | -1.06 | -1.1 | nil |
2009 | 156 | -19.82 | -3.2 | nil |
2010 | 162 | -1.70 | -0.6 | nil |
% change | +4 | - | - | - |
Sector: Software. *Including £91.1m intangibles, or 10p a share. |