TIG – first half ups and downs

(By Anthony Miller – Thursday, 7th May 2009 8:45am). Confirming its ‘business of two halves’ trading update last month (see Mixed bag of Easter trading updates), The Innovation Group (TIG) turned in a pretty respectable set of interim results overall (see here) despite continued losses in North America. Organic revenue growth was 14% (to £76m), and the H108 operating loss turned around to a 2.2% operating margin. Outsourcing now comprises 83% of TIG’s business, up from 75% in H108.

Peaking under the covers gives a clearer story. While first-half numbers were up yoy, they were down sequentially compared to H208. Revenues fell a tad (as reported) in H109 compared with H208, and the 2.2% H109 margin was much lighter that the 7.5% in H208. At the country level, TIG’s UK business grew 19% yoy (as reported) to £18.4m, but fell 16% compared to H208. ‘Adjusted’ EBITDA margins doubled yoy to 12%. The UK Motor Claims BPO operations doubled revenues to £6.8m. Motor claims BPO represents 63% of TIG’s revenues, with Germany its largest market (£16.6m). TIG CEO, Hassan Sadiq observed a substantial reduction in motor claims globally due to the economic downturn, especially in South Africa.

The UK motor claims BPO market is pretty well tied up between TIG, Capita, Sims and the number one player, India-based BPO pure-play, WNS (yes, the very same ex-BA captive), which reports later today. I recently met up with Tim Rankin, MD of WNS’ UK claims management business, WNS Assistance. He reckons only 20-30% of UK claims processing has yet been outsourced, so it seems there should be no shortage of opportunity. Let’s hope that TIG’s new chairman, Andy Roberts (see Andy Roberts takes chair at Innovation Group) can knock the business back into shape so TIG can claim its ‘fair share’ of this market!