Team Internet Regulatory News (TIG)

17 February 2014

The Innovation Group plc

('Innovation Group' or the 'Group')

Acquisition of LAS Claims Management Ltd ("LAS")

- Extends Group service offering in to adjacent "wet" perils market -

Increases UK Property division's addressable market in terms of claims spend from £100m to £1.3bn

The Innovation Group plc (LSE: TIG.L), a global provider of Business Process Services ("BPS") and software solutions to the insurance, fleet, motor and property industries, is pleased to announce that today it entered into a sale & purchase agreement for the acquisition of LAS Claims Management Ltd and its associated companies ("together LAS") from Gresham Private Equity (the "Acquisition").

The consideration payable for the Acquisition will be £35m in cash, inclusive of an element of consideration to be deferred for two years post completion (currently expected to be circa. £1.2m). The Acquisition will be funded from part of the proceeds of a £65m new issue of Innovation Group shares which the Group is now commencing via a placing and open offer ("the Fundraise"). The Fundraise takes into account the acquisition of Crash-worth Limited, announced separately today in our Q1 IMS, the acquisition of LAS and in addition will give the Group the flexibility to pursue an additional bolt on acquisition in Motor, which is in very early stage discussions.

The Acquisition is conditional on the Fundraise and it is expected that completion of the Acquisition and Fundraise will occur before the end of March 2014.

About LAS

LAS provides its customers with a full suite of outsourced services that handle claims across a range of property-related perils including storm, burst pipes, flood, fire, theft and accidental damage. The vast majority of LAS's revenue comes from water-related claims: also known in the insurance industry as "wet" perils. The addition of "wet" perils skills and capabilities to the Group's service portfolio completes a key strategic goal for the Group, and will increase the UK Property division's addressable property market from a claims spend of £100m - currently available for its traditional subsidence (or "dry" perils) market - to £1.3bn. Over time, the Group will also be able to replicate this business model in other geographies it currently serves.

LAS's approach allows insurers to incorporate their own third party supply chain and their own software systems into the claim process, providing them with full transparency and enabling them to offer an enhanced service to their own customers. LAS also has the capability to manage the complete process of a given claim or a particular aspect of the claim, dependent upon its client's requirements.

LAS financials

In respect of the financial year ended 31 July 2012, LAS reported £34.3m of revenue (£8.3m net of claims costs), £0.3m loss before tax (after deducting £1.4m of interest relating to shareholder loan notes) and £17.8m of gross assets. However, since that balance sheet date the business has been restructured and it has secured several significant contract wins. The current annualised run-rate EBITDA at the date of completion is in excess of £3.5m.

Innovation Group's and LAS's offerings are highly complementary, as are their respective operations. It is expected that the combination of the two businesses will generate both significant revenue synergies and operational leverage.

The Acquisition and Fundraise taken together are expected to be accretive to EPS in the year ending 30 September 2014 and in the first full year following completion.

On completion, Darren Cooper, CEO of LAS, will join Innovation Group, together with others on the LAS senior management team. LAS will form part of the Group's enlarged UK Property division.

Commenting on the acquisition, Andy Roberts, CEO of The Innovation Group said:

"LAS represents an excellent strategic acquisition for the Group and for our UK Property business in particular. The addition of LAS opens up a significant opportunity to us to broaden our service proposition in the UK property market to cover a wider range of property claim perils. Our subsidence division has built up strong market share through its proven track record of significantly reducing claims costs, offering a unique fixed price model in the market and enhancing customer service. By adding a "wet" perils capability to our portfolio, run by a team with a similar track record and reputation we will increase our addressable market and provide an excellent opportunity for future cross-selling into our respective customer bases."

Enquiries:

About The Innovation Group plc:

Innovation Group (LSE: TIG) is a global provider of insurance software solutions and business process services. With revenues of £204.4m (US$332m) in 2013, it employs over 2,800 people across North America, Europe, Asia Pacific and South Africa and works with 15 of the top 20 global insurance markets, 16 of the top 20 global insurance companies and 3 of the world's top 5 fleet and lease management companies.

www.innovation-group.com