Innovation Group

06/12/2011 Ben Jaglom

Insurance software specialist Innovation Group (TIG) declared a 54% rise in profits amidst a strong German market.

The AIM-quoted outfit announced pre-tax profits of £15.1m (2010: £9.8m) on sales of £175.9m (2010: £162.1m) for the year to September. Net cash stood at £32.7m (2010: £28.8m) while earnings per share of 1.04p (2010: 0.63p) were reported.

The surge was driven by a resolute performance in Germany, which saw sales climb 18.4% to £52m, with its South African operations seeing revenues grow by 5%. Growth was more modest in the UK, rising by 4.5% to £34.8m. This helped to offset a mixed set of results to the 'Rest of Europe' - with profits falling in this area from £300,000 to £200,000. Sales to the Asia Pacific region powered ahead by 12% amidst a strong performance in Australia.

In an interview with Growth Company Investor chief executive officer Andrew Roberts enthused on the 'substantial' growth in Germany adding that Innovation is looking towards 'combining organic and inorganic growth' and arguing one of its 'inherent strengths' is its geographic diversity.

Analysts at Panmure Gordon are forecasting pre-tax profits of £19.6m (EPS: 1.5p) on turnover of £204.8m for the year to September 2012.

Last recommended by Growth Company Investor this October at 19.25p as a speculative buy the shares currently trade at 17.75p. A company with exposure to robust markets in regions such as Australia and South Africa, its shares have traded between a relatively narrow range of 13.5p to 23p over the last 52 weeks. With moderate capital growth prospects and no dividend the shares look fairly priced and as a result we now rate Innovation as a hold.