Innovation wants £21m to compete with rivals

4th Dec 2009 08:24

Property and insurance software firm Innovation Group has reported a 12% rise in full-year adjusted profit and announced plans to raise £21m from a placing an open offer at 10p a share.The company, which said in November its net cash position was a lot better than the market had calculated, will pocket £12.6m from a firm placing and £8.4m from the placing and open offer.It says most of its competitors are substantially larger businesses and are well capitalized, putting Innovation at a relative disadvantage when seeking to contract with large insurance companies."The board believes that following the firm placing and placing and open offer, Innovation's financial position will be materially improved. As a consequence, Innovation will be better placed with existing and new customers to secure and service both larger and an increasing number of BPO contracts," it said."Innovation should in the future be able to achieve improved profitability and cash generation through the deployment of capital to fund a number of projects which will deliver enhanced efficiency in the group and improved commercial terms with customers and partners."Adjusted profit before tax in the year to 30 September 2009 is likely to be in line with market expectations, but net cash, at more than £10m, will be 'substantially ahead of market expectations', Innovation said in October.Adjusted profit rose to £11.3m in the 12 months ended 30 September, up from £10.1m a year ago, thanks to high margin one-off software licence sales of £8m in the second half. Revenue was up 11% to £155.9m.But the loss before tax grew to £19.8m from £3.8m in 2008 following an impairment of £21.5m, £20 of which relates to a write down of the carrying value of goodwill attributable to the US outsourcing business.