1st Nov 2006 09:35
Innovation Group PLC01 November 2006 For Immediate Release 1 November 2006 THE INNOVATION GROUP PLC Acquisition The Innovation Group plc (the "Group"), which provides outsourcing services andsoftware solutions to insurance providers, is pleased to announce that it hasacquired an effective 61.86% of Holmwoods and Back and Manson (South Africa)(Pty) Ltd ("HBM") for a cash consideration of ZAR 63.84m (£4.5m). In addition there exists a put option, exercisable at the discretion of aminority shareholder by no later than 1 November 2009, for the Group to acquirean additional 30.58% of HBM from such minority shareholder on the same valuationbasis as the existing transaction, limited to a maximum consideration of ZAR66.15m (£4.6m). HBM, through its subsidiary, is the leading supplier of travel insuranceadministration and consulting services in South Africa. In the twelve months to30 June 2006, HBM reported turnover of ZAR 41.4m (£2.9m) and a pre-tax profit ofZAR 20.1m (£1.4m). Gross assets were ZAR 34.6m (£2.42m). Hassan Sadiq, Chief Executive of The Innovation Group, said: "We are delighted with the acquisition of HBM which extends our insuranceoutsourcing capabilities in South Africa. This acquisition is in line with ourstrategy of increasing Group recurring revenues, already representing 69% ofgroup turnover." Enquiries: The Innovation Group plc 01489 898300Hassan Sadiq, Chief Executive Officer Paul Smolinski, Group Finance DirectorSmithfield 020 7360 4900Sara Musgrave/Tania Wild Notes to editors: At the Innovation Group, we provide outstanding depth into the insurance valuechain and leverage our software and outsourcing expertise to devise a solutiondesigned for maximum impact. Our clients-insurers, banks, retailers,manufacturers and government-have the flexibility to choose how to use oursolutions and offerings. From outsourcing to insourcing to licencing software inthe world's largest insurance markets, including North America, the U.K.,Germany, South Africa, Australia and Japan, our clients use our expertise togenerate positive change within their organisation and on their bottom-line. The Group's proposition is modular, offering a range of solutions from 'buildingblocks' for step change to complete solutions for radical transformation. Wework with clients to generate new products and support their sales, employingour call centres to convert prospects into policyholders, and our software toquote and manage these policies moving forward. In the event of an incident-beit home, auto or manufacturer warranty-our call centres, claims professionalsand software manage every step of the claims process to realise greaterefficiency, improved customer satisfaction, and higher profits. Key market facts: • BPO Market to grow to $110 Billion in North America by 2009. The growth of the BPO market continues to outpace other IT services. In North America, BPO will grow by an 8.8 per cent compound annual growth rate by 2009. (Gartner 2005) • Due to the high systems maintenance costs of mature insurance organisations, only 30 per cent of IT budgets are available for developing new systems and technologies to improve business support. (Gartner, 2005) • Two of the top five priorities of these insurers are regulatory compliance and cost containment. (Forrester Research, 2005) • 79 per cent of insurers polled are planning to or are currently executing system consolidation in the next 12 months to address critical issues. (Forrester Research, 2005) • Of those planning system consolidation, 55 per cent are planning to address policy systems; 48 per cent are expected to address claims systems. (Forrester Research, 2005) • Claims system replacement is more prevalent in the US P&C insurance industry. Research shows that 35 per cent of insurers are assessing this approach versus 22 per cent of insurers that are simply renovating their existing system. This trend is being fuelled by the advancement in the vendor market and need to deploy solutions rapidly. (Gartner, 2005) This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
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