New BEE Partner

5 December 2011

The Innovation Group plc('Innovation Group' or the 'Group')New Black Economic Empowerment Partner

The Innovation Group plc (LSE: TIG.L), a global provider of Business Process Outsourcing and software solutions to the insurance, fleet, automotive and property industries, is pleased to announce that it has concluded a transaction with a new South African Black Economic Empowerment ('BEE') partner, Zico Capital (Proprietary) Ltd ("Zico Capital").

Andy Roberts, Chief Executive Officer of The Innovation Group commented:

"I am delighted to welcome our new, strategic BEE partner Zico Capital. The transaction has also given us the opportunity to further strengthen our balance sheet by repaying £6.1 million of very high interest bearing debt. We look forward to the additional support that our new partner will bring in focussing on new opportunities for our South African business."

Background

On 22 May 2007 The Innovation Group plc announced it had divested a 25% shareholding in its South African subsidiary, Innovation Group (Proprietary) Ltd ('Innovation SA'), to Inthutuko Investments (Proprietary) Ltd ('Inthutuko') for ZAR132.0m (approximately £9.6m) before transaction costs. Inthutuko was 77.8% owned by the Innovation Group Employee Benefit Trust in South Africa and 22.2% by Jala Capital.

Inthutuko financed the acquisition through a ZAR132.0m (approximately £9.6m) loan from Barclays Bank plc for which the Group provided a guarantee. Loan repayments since then have resulted in an outstanding balance of ZAR75.0m (approximately £6.1m) on 2 December 2011.

In compliance with Accounting Standards, Inthutuko was consolidated in full under SIC-12 (Special Purpose Entities) with no minority interest adjustment to the Group results.

Changes effected on 2 December 2011

The Group purchased 100% of the share capital of Inthutuko for a nominal consideration. This transaction resulted in the Group holding 100% of the voting rights of Innovation SA. Immediately following this transaction, Innovation SA issued additional share capital equivalent to a 25% shareholding to Zico Capital for consideration of ZAR92.0m (approximately £7.1m). The Barclays Bank plc loan and the related interest rate swap will be fully settled from these proceeds and the guarantee to Barclays Bank fully discharged.

As a result, Zico Capital (Proprietary) Ltd, now has a 25% minority interest in Innovation SA, with the balance owned by the Group. The Group will recognise a minority interest for this 25% shareholding in regard to all future profits earned by Innovation SA.

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About Innovation Group:

The Innovation Group plc (LSE: TIG.L) is a global provider of business process outsourcing and software solutions to the insurance, fleet, automotive and property industries. Innovation Group 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 Group has over 800 global clients including AXA, RSA, American Modern Insurance Group, LeasePlan, The Ford Motor Company, Aviva, Toyota and Zurich. The Group processes more than 4 million claims per year with 20 per cent direct claims cost saving achieved. Innovation's 2,300 people are located in the United Kingdom, Australia, Belgium, Canada, France, Germany, Japan, India, Pakistan, South Africa, Spain and United States. www.innovation-group.com