3rd Feb 2009 07:00
3rd February 2009
The Innovation Group plc
Interim Management Statement
The Innovation Group plc ('Innovation' or 'the Company' or 'the Group'), the leading technology-led Business Process Outsourcing ('BPO') provider for the insurance sector, today publishes its Interim Management Statement in accordance with DTR 4.3 of the FSA handbook for the period ended 31st January 2009.
Financial Trading Summary
The Board is pleased to announce that despite the global economic downturn Innovation has achieved strong growth in the period. In the quarter to 31st December 2008, both revenues and adjusted profit before tax have increased significantly on the same period last year with revenue up 24% (17.5% organically). Due to the economic conditions the Group experienced a decrease in volumes of motor claims processed across the globe in the first quarter, resulting in lower than expected profits from this sector which have been offset by better performance in other divisions and results were also helped by positive foreign exchange gains. We ended December with approximately £30m gross cash (net cash £6m) and, as forecast, an operating cash outflow. New customer wins have remained strong during the period and demand for services was excellent.
Allstate Litigation
As previously announced, Allstate Insurance Company of Canada (Allstate) has commenced litigation relating to the design, development and implementation of customised software for their new policy management system. Also, as previously advised, we consider the claim to be speculative in the extreme and without foundation and we will defend it vigorously. Innovation has had a longstanding relationship with Allstate and we continue to work with them today to support their claims transformation project, which has been launched in all markets across Canada. Defence of the claim over the period of the action is anticipated to cost approximately £1m in legal fees and forfeited staff billing time.
Board Change
As previously announced, the Group is in the process of finding a new Non-Executive Chairman. Search consultants have been appointed and the process is progressing well. The Group plans to give a further update in advance of the AGM on March 16th.
Outlook
The outlook for the global economy is uncertain which is creating difficulty in forecasting. However, these same global conditions have increased demand for Innovation's services as customers look for rapid solutions to drive down costs.
In the current difficult trading environment, the Group continues to operate rigorous cost control and cash management and is paying close attention to customer service and any impact of late or non-payment by customers.
Our pipeline remains at a record high across the globe which should be further assisted by the launch of Innovation Insurer in March 2009 as planned. The Board is confident that overall full year results will be in line with its expectations.
Enquiries:
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The Innovation Group Hassan Sadiq, Chief Executive Officer Jane Hall, Acting Finance Director |
Tel: +44 (0) 1489 898300 |
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Financial Dynamic Ed Bridges / Erwan Gouraud / Juliet Clarke |
Tel: +44 (0) 20 7831 3113 |
Notes to Editors
The Innovation Group plc ("Innovation" or "the Group") provides BPO services and software solutions to insurers and other risk carriers. The software solutions are designed for the handling of policy and claims administrative processes within the insurance industry. The solutions can be utilised in connection with the Group's BPO operations or implemented on a stand alone basis. Approximately 84% of the Innovation Group's total revenues are now recurring with the remainder coming from the sale and support of its software solutions. The Group provides software and outsourcing services on a non-branded basis.
Industry analysts expect the BPO market to continue to grow across all geographic areas. According to a Gartner* report (July 2008) in the financial services industry this is forecast to be 10.5% compound annual growth rate (CAGR).
Innovation has over 1,000 global clients including Allstate, LeasePlan, The Ford Motor Company, Aviva, AXA Insurance, RSA, Toyota (South Africa) and Zurich (UK). The Group processes more than 4 million claims per year with 20% direct claims cost saving achieved. The software operates in 8 languages and the Group has approximately 2,400 people across offices in United Kingdom, Australia, Belgium, Canada, France, Germany, Japan, Netherlands, Pakistan, South Africa, Spain, United States.
*Gartner: Insurance BPO: Key Trends by Kimberly Harris Ferrante, July 2008
www.innovation-group.com
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