New contracts and a significant level of renewals helped The Innovation Group (TIG) to boost profits sharply at the half-year stage, and more business wins in the second half suggest that the strong momentum is likely to continue.
The group provides software and business services to insurers to help them handle claims more efficiently, and notable contract wins were secured in the US, where the business also won a £2.6m contract early in the second half. Moreover, a major seven-year contract with Aviva was signed in the second half for the group's Innovation Symbility package, designed to reduce costs and accelerate the decision-making process. Innovation reckons this is worth around £1m a year.
And in April, a key partnership deal was secured with AXA France that will ensure a significant increase in the volume of claims passed to the group for handling. Innovation also made a string of minor acquisitions including the intellectual property rights of jointly-developed software suite Innovation Connect Enterprise for £2.1m, and spent £1.2m on assets from German group Sachcontrol in order to expand its German property loss-adjusting business.
Broker Investec Securities is forecasting full-year normalised pre-tax profits of £22.6m and EPS of 1.5p, up from £20.8m and 1.2p in 2012, rising to £30.4m and 1.8p in 2013-14.
| THE INNOVATION GROUP (TIG) | ||||
|---|---|---|---|---|
| ORD PRICE: | 27.5p | MARKET VALUE: | £268m | |
| TOUCH: | 27.25-27.5p | 12-MONTH HIGH: | 28p | LOW: 18p |
| DIVIDEND YIELD: | nil | PE RATIO: | 30 | |
| NET ASSET VALUE: | 13p* | NET CASH: | £26.8m | |
| Half-year to 31 Mar | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2012 | 94.8 | 3.97 | 0.06 | nil |
| 2013 | 99.8 | 6.83 | 0.35 | nil |
| % change | +5 | +72 | +483 | - |
*Includes intangible assets of £121m, or 12.4p a share | ||||
