Steady progress from the new top team at claims management business process services and software firm, The Innovation Group (TIG). Indeed, TIG finished first half (to 31st March) with all geographies showing a profit at the ‘adjusted’ EBITDA level, which meant that finally there was a plus sign on the bottom line. Headline revenues grew by 11% (10% like-for-like) to £85.8m, with some £11m attributed to pass-through revenues. Operating margins hit 5.6% and this filtered down to a £2.5m net profit. Splendid.
I had a delightful chat with TIG CEO Andy Roberts (he of lightened load – see Roberts steps down from Kewill) and CFO Jane Hall just now. The aim of the exercise, so to speak, is to get the top line growing in ‘early teens’ percentages and to get each country market/region up to 20% EBITDA. On the latter point, South Africa (23% of revenues) is about there (19% margin to be precise) but profitability in the rest of the main regions lies all points between 16% (Germany) and three-tenths of b***** all (North America), so there’s still much work to do.
They key to all this is TIG’s core software platform, Insure Claims 7.0, which is also the base for its BPaaS (business process as a service) platform, Enterprise. The more work TIG can push onto the platforms, the better (in theory at least) the margins. In fact this is crucial to the model. I still feel TIG is rather thinly spread for a sub-£100m services company (outsourcing is 86% of total revenues) so the only hope of harmonising margins is through a highly leveraged common operating platform. Roberts and Hall are on the right track. They must not let themselves get distracted.
TechMarketView subscribers to our new BusinessProcessViews research programme can read more about the critical importance of BPaaS for the UK BPO market in John O’Brien’s latest report, Business Process Services: UK Market Trends & Forecasts 2011.