The Group is once again pleased to report performance in line with Directors’ expectations, and that the current trading conditions meet the Directors’ expectations for both the core business and the Group’s recent acquisitions.
The results for the 9 months show significant turnover and growth as well as strong profitability and excellent cash management.
The success of the Group is underpinned by its strategy of combining acquired and existing technology to accelerate growth in all revenue streams. For example, following the acquisition of Motorcare in November 2000, the Group has achieved a circa 200% increase in it’s e-Managed Services run rate revenues, being the current volume of revenues we are achieving. This strategy enables the Group to leverage it’s existing client base by cross-selling and agreeing combined contracts.
Highlights
Revenue, Profits and Order Book at Record Levels
9 month Adjusted EPS up 146% at 5.04p
Record Performance in North America during the Quarter
No evidence of extending purchasing cycles due to Return on Investment (ROI)
Global IBM partnership goes from strength to strength
Trend of cross selling continues in Europe, Middle East and Africa (EMEA) and Asia Pacific (AP)
Successful integration of acquisitions
Consistent growth in e-Managed Services Business
Improvement in margins due to technology
Excellent Cash Performance
9 month Operating Cash inflow of £3.1m (June 2000: outflow of £0.2m)
Net funds of £114m (June 2000: £39m)
The Group’s Europe, Middle East and African operations achieved a strong operating margin (23.5%) in the 9 months to 30 June 2001 but was below that of the comparative period due to a change in revenue mix following the acquisition of Motorcare. Record growth in the division’s Transactional EManaged
Services Revenues were achieved with a circa 200% increase in reported revenue run rate following the acquisition of Motorcare in November 2000. Recurring revenue represented 42% of overall EMEA turnover in the 9 month period to 30 June 2001, and included strong growth and record results from both French and German operations.
Shortening sales cycles with increasing demand from the existing client base have been experienced due to the Return on Investment opportunity for the Group’s solutions, with significant support for penetration of key Continental European markets coming from IBM. The Group’s clients now control a significant and increasing market share in EMEA, including approximately 60% of the UK General Insurance and 35% of the German Auto Insurance Markets.
Results for the North American region show an exceptional margin for the 9 months ended 30 June 2001 (65.1%) with revenues ahead of target due to major contracts with blue chip clients. The acquisition of Huon was completed during the quarter increasing the Group’s presence in this territory, and operating margins are expected to normalise in the coming quarter. There has been no evidence of extended sales cycles, again due to ROI, and record revenues have been achieved, assisted by
upgrades and cross-selling. The IBM partnership has started to help penetration of the top 60 US insurance accounts and significant prospects exist for the Group within this region. Pyramid has been integrated ahead of plan and TiG’s solution set has been updated to include Workers Compensation functionality, which is seen as essential for the US market.
The Group’s results to 30 June 2001 currently show an effective tax rate after excluding the impact of goodwill amortisation (which is not allowable for tax) of 44%. This is inflated as a result of the Group’s current structure following recent acquisitions which restricts the ability to offset taxable losses against taxable profits. A reorganisation of the Group’s structure is underway following a period of consultation with our professional advisors, with significant progress expected by the year end.
The Group achieved an operational cash inflow of £3.1 million for the 9 months ended 30 June 2001 during a period of significant growth. Fundraising in the 9 months to 30 June 2001 led to a cash inflow of £240.0 million of which £147.3 million was used in acquiring subsidiaries. The overall movement in net funds over the 9 months to 30 June 2001 of £83.6 million combined with net funds of £30.2 million at the start of the period has resulted in net funds as at 30 June 2001 of £113.8 million.
