18th Aug 2009 07:00
18 August 2009
Innovation Group plc
Interim Management Statement
Innovation Group plc ("Innovation" or "the Group"), the leading provider of enterprise software, business process outsourcing ("BPO") and repair and service network management solutions to the global Property and Casualty insurance industry today publishes its Interim Management Statement for the period from 1 April 2009 to date in accordance with DTR 4.3 of the FSA Handbook.
Financial summary
The Board is pleased to announce that, in challenging conditions, both revenue and adjusted profit before tax have held up over the period.
As the Group's business model relies on incident volumes, reduced economic activity in our market (estimated to be in excess of 10%) has resulted in lower transactions in all our operating regions to the end of June. We have, however, seen these volumes start to stabilise during July. In addition, the German motor and UK property businesses' usual seasonal weather-related peaks have not materialised and volumes in our US BPO business, whilst continuing to grow, have grown more slowly than expected.
The Group has adopted a two-fold approach to mitigate these reduced claims volumes.
Firstly, we have focused on selling a blend of specialist technology and BPO products into existing and new customers as evidenced by recently announced contract wins.
Secondly, we have down-sized the business to match the claims volumes and implemented a cost reduction program across our operations that is expected to generate annualised cost savings of approx. £6m in our 2010 financial year. These cost reductions are a combination of reducing excess capacity and discretionary spend, productivity gains from the implementation of "Enterprise" (the use of our new Innovation Insurer technology in our BPO operations) across Europe and salary reductions in the United States and at the plc Board and executive management level. This restructuring will necessitate an exceptional charge in 2009 of approx. £2.0m from redundancy and office closure costs, the majority of which will be a cash cost in 2009.
At 30 June 2009 the cash balance was £25.3m (cash net of debt £1.5m) with Q4 expected, as usual, to be cash generative.
Board change
As announced separately today, Jane Hall has been appointed to the role of Group Finance Director.
Outlook
Despite reduced claims volumes, customer retention has been good and the pipeline remains strong. Recently announced wins help underpin revenues for 2009 and importantly provide a solid base moving into 2010.
While forecasting remains difficult in the current climate, we remain confident of adjusted profit before tax being within the range of market expectations.
- ENDS -
Enquiries:
|
Innovation Group Hassan Sadiq, Chief Executive Officer Jane Hall, Acting Group Finance Director |
Tel: +44 (0) 1489 898300 |
|
Financial Dynamics Juliet Clarke / Matt Dixon / Erwan Gouraud |
Tel: +44 (0) 20 7831 3113 |
About Innovation Group:
Innovation Group plc (LSE: TIG.L) is the leading provider of enterprise software, business process outsourcing and repair and service network management solutions to the global Property and Casualty industry. Innovation provides contact centres, repair networks, process management, supply chain and technology operations, and decision support analytics, to support accident management, repair and estimation and claims management services.
Innovation has over 1,000 global clients including AXA Insurance, RSA, AAA NCNU, LeasePlan, The Ford Motor Company, Aviva, Toyota (South Africa) and Zurich (UK). The Group processes more than 4 million claims per year with 20% direct claims cost saving achieved. Our 2,400 people are located in United Kingdom, Australia, Belgium, Canada, France, Germany, Japan, Netherlands, Pakistan, South Africa, Spain, United States.
www.innovation-group.com
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