17 February 2010
Hogg Robinson Group plc
(`HRG', `the Company' or `the Group')
INTERIM MANAGEMENT STATEMENT
Hogg Robinson Group plc, the international corporate travel services company,
today issues an Interim Management Statement for the year ending 31 March 2010,
covering the period from 1 October 2009 to date.
Overview and summary
Since our last update on 27 November 2009, conditions in our markets have shown
some early signs of recovery. For example, the International Air Transport
Association has reported overall year-on-year increases in Revenue Passenger
Kilometres, which includes both business and leisure travel, for October,
November and December. Although the pattern of recovery is not yet consistent
across specific geographies, destinations in Asia Pacific, Latin America and
the Middle East have seen the strongest growth, helped by the economic recovery
in those regions. However, Europe and North America, our most important
regions, are not yet seeing as favourable an economic backdrop.
Despite the effect that the recent poor weather in Europe and North America had
on our clients' ability to travel, the return to more normal levels of client
activity has continued and we have traded broadly in line with our expectations
since October 2009. Client revenue for the four months under review was down by
approximately 6% compared to last year which equates to a 9% decline excluding
favourable currency movements. We have continued to manage our cost base
carefully to ensure that it remains appropriate for our revenue expectations.
Although the continued lack of visibility makes it difficult to predict the
outcome for the final two months of our financial year with certainty, the
Board continues to believe that the Group will deliver a full-year performance
in line with market expectations.
The early signs of stabilisation in the market which we noted at the time of
our interim results have continued. Some clients have relaxed their policies to
allow more frequent travel and the use of premium travel and accommodation. At
this point, however, the majority of our clients have not yet returned to the
`normal' levels of activity that existed prior to the onset of the global
recession and continue to maintain tight control of their overall travel spend.
With the majority of our revenue derived from client fees rather than supplier
commissions, HRG remains well positioned to benefit from increasing travel
frequency. Whilst upgrades in either the class of travel or standard of
accommodation are positive indicators of the broader business travel market,
they do not materially affect the revenue received by the Group.
Recent adverse weather conditions in Europe and North America resulted in
disruption for many travellers using air, train or other ground transportation,
particularly for those connecting to destinations in the UK and the USA. HRG
has been able to help its clients through this difficult period by making
alternative travel arrangements, often involving different suppliers and
routes. Our growing network of home-based travel consultants and telephony
call-flow switching was particularly valuable during this period. Given the
global nature of HRG's business, we do not anticipate any material impact on
the Group's full-year financial results from the inclement weather or from any
other short-term disruption in any one market.
HRG's client retention rate remains high and we have added several new clients
during the last four months. We have extended our relationships with British
Energy, CMHC, Diehl Stiftung, Hess, HSBC, KPMG, GFK, GTZ, Next, P&G, Pfizer and
Vinci, and added new clients including Bertelsmann, Novartis, Premier Farnell,
Volkswagen, the US Embassy and Wincanton. Client tenders are continuing at a
high level and our new business pipeline remains strong.
Cost reduction and efficiency
We remain committed to maintaining a cost base that is appropriate for our
ongoing revenue and continue to pursue additional efficiencies. The
restructuring initiatives set out in the half-year results in the UK and
Nordics are now complete and we will see the benefits of these actions in the
next financial year.
The Group has adequate committed funding in place at attractive rates until
September 2011. Based on our current forecasts, the Board believes that these
facilities provide sufficient headroom.
Articles of Association
As previously announced, the Directors have proposed an amendment to the
Company's Articles of Association in connection with the administration of the
borrowing limits in those Articles. A general meeting for this purpose will
take place on 5 March 2010 at the registered office of the Company.
David Radcliffe, Chief Executive of Hogg Robinson Group plc, commented:
"Clients continue to travel and we are seeing early signs of stabilisation,
albeit market conditions remain challenging with limited forward visibility.
With our global customer base and strong track record of helping clients
control their travel budgets, we are well placed to benefit as travel patterns
return to more normal levels. We have taken decisive action to control our cost
base without compromising service levels and will continue to do so.
The resilience of our performance in the face of some severe economic headwinds
is testament to the robustness of the business model. The last two months of
the year are always seasonally important but at this stage the Board continues
to believe that the Group will deliver a full-year performance in line with
- Ends -
Hogg Robinson Group +44 (0)1256 312 600
Julian Steadman, Group Finance Director
Angus Prentice, Head of Investor Relations
Tulchan Communications +44 (0)20 7353 4200
Notes to Editors
Hogg Robinson Group plc (HRG) (LSE: HRG), was established in 1845 and is an
international corporate travel services company with headquarters located in
Basingstoke, Hampshire, UK. The HRG network, including contracted partners,
extends to nearly 120 countries.
HRG's focus on its clients is underpinned by three differentiators - people,
technology and breadth of service. The company has experienced management and
skilled operators together with proprietary technology which has been developed
in-house. HRG offers a range of services around the globe to deliver value,
cost savings, efficiency and innovation, without compromise.
This announcement may contain forward-looking statements with respect to
certain of the plans and current goals and expectations relating to the future
financial conditions, business performance and results of Hogg Robinson Group.
By their nature, all forward-looking statements involve risk and uncertainty
because they relate to future events and circumstances that are beyond the
control of HRG, including amongst other things, HRG's future profitability,
competition with the markets in which the Company operates and its ability to
retain existing clients and win new clients, changes in economic conditions
generally or in the travel and airline sectors, terrorist and geopolitical
events, legislative and regulatory changes, the ability of its owned and
licensed technology to continue to service developing demands, changes in
taxation regimes, exchange rate fluctuations, and volatility in the Company's
share price. As a result, HRG's actual future financial condition, business
performance and results may differ materially from the plans, goals and
expectations expressed or implied in these forward-looking statements. HRG
undertakes no obligation to publicly update or revise forward-looking
statements, except as may be required by applicable law and regulation
(including the Listing Rules). No statement in this announcement is intended to
be a profit forecast or be relied upon as a guide to future performance.
The release, publication, transmission or distribution of this announcement in,
into or from jurisdictions other than the United Kingdom may be restricted by
laws and therefore persons in such jurisdictions into which this announcement
is release, published, transmitted or distributed should inform themselves
about and observe such restrictions. Any failure to comply with the
restrictions may constitute a violation of the securities laws of such